Semen Gresik plans to control coal mine to secure supply

Indonesia-listed cement producer PT Semen Gresik Tbk said that it would take several steps to secure coal supplies amid fluctuations of coal price and to ensure continuity of supply and coal quality for a smooth production procsss.

The company said on Tuesday that the steps include using low-calorie coal; signing operational cooperation or long-term contracts with the coal mining company as well as long-term contracts on joint procurement with coal suppliers; optimizing use of alternative fuels; or controlling coalfields.

In the cement production process, coal is the main fuel for kiln operation. The company?s total consumption of coal in 2010 was 2.774 million tonnes, down by 1.19% from 2.808 million tonnes produced in the previous year, it said.

The decrease in coal consumption was affected by a decrease of 2.91% in the production of clinker from 2009, it said.

The company produced 18.2 million tonnes of cement in 2010, slightly higher compared to the year-ago output of 18.1 million tonnes. Semen Gresik?s share in domestic market stood at 43.3% with total supplies of of about 17.65 million tonnes.

The company is expecting that the local cement demand for this year will be growing more than 6 percent.

Semen Gresik has two other cement producer units PT Semen Padang in West Sumatra and PT Semen Tonasa in South Sulawesi. The company?s combined installed capacity is 19 million tonnes.

Currently, Semen Gresik is constructing a new cement plant in Tuban, East Java with a capacity of 2.5 million tonnes per year and an investment of US$304 million. As of the end of March 2011, the completion rate of the project had reached 81.58%. The project is expected to be commissioned in the first quarter of 2012

The company is also building another new cement plant in Pangkep, South Sulawesi, with a capacity of 2.5 million tonnes per year and an investment cost of $290 million. As of end of March 2011 the project has been completed at around 82.08%. The project is expected to be commissioned in the end of 2011

The company is also developing a power plant project in Pangkep, South Sulawesi, with a capacity of 2x35 MW and an investment cost of $ 114 million. The completion has reached 20.58% as of the end of March.

The company has appointed PT. Rekayasa Industri and Japanese firm Kawasaki Heavy Industries Ltd. as engineering, procurement and construction (EPC) for the project. The project?s completion is expected in the end of 2012.

The earthquake and tsunami that hit Japan in early March has not affected the delivery schedule of the main equipments from Kawasaki Heavy Industries, Ltd, it added. (denny)