Indonesia’s largest cement producer, Semen Indonesia, is buying the local unit of Swiss company LafargeHolcim for about $917 million, a move that may consolidate Indonesia’s struggling industry.
“With this acquisition, the company will gain significantly greater production capacity, a broader product range and geographic reach,” the state-owned cement maker said in an announcement on Tuesday, adding that the move will enable it to completely leverage growth opportunities within the domestic market.
LafargeHolcim, the world’s largest cement producer, said in a separate statement it was selling its Indonesian business to Semen Indonesia as a part of a portfolio review to enhance its financial health.
The acquisition of Indonesia’s third-largest cement company will give the state-owned producer 4 cement plants with a capability of 14.8 metric tons per 12 months and 30 ready-mix concrete plants, Semen Indonesia said on Wednesday.
State-owned cement producer PT Semen Indonesia (SI) president and CEO Hendi Prio Santoso says the corporate will give you the option to supply 53 million tonnes of cement after acquiring PT Holcim Indonesia.
“Semen Indonesia controls 40 percent of the cement market in Indonesia, while Holcim controls 15 percent of the market. This means we are going to control 55 percent of the domestic market,” he said, in response to reports Jakarta Post.
Hendi said the corporate expected demand for cement to extend before the acquisition.
SI Corporate Secretary Agung Wiharto said there are 15 cement producers within the country with a combined production capability of 107 million tonnes, while domestic consumption reached 66.5 million tonnes.
He added that market demand rose to 70 million tonnes in 2017, leaving a niche of 37 million tonnes.
Agung estimated that offer and demand will balance in 2027, with an estimated annual demand growth of seven percent. He added that SI sales rose 5 percent from January to September, while the corporate’s capability utilization reached 90 percent.
“Without additional production capacity, Semen Indonesia would not be able to meet the growing market demand,” Agung added.
