The Indonesia Cement Industry market landscape in 2015, including major suppliers; cement projects under planning & construction and supply & demand projection up to 2025.

1. THE INDONESIA CEMENT INDUSTRY, 2015
MARKET LANDSCAPE
Hans Mohammad & Numada
The Indonesia cement industry has evolved significantly for the past 25 years. From only 14
million tons per year in 1990 demand to nearly 60 million in 2014, the average demand growth
over those years is 7% per annum. Demand in 1993 to 1994 was recorded as the highest during
25 years with 21% increased, from 18 million tons to 22 million tons. The industry also
experienced a deep plunge during the Asia financial crisis in 1997 – 1998, from 8% positive
growth in previous year, it left with 31% negative growth. It takes two years for the industry
before going back to the positive trend. Due to the crisis also, cement industry competition
landscape changed.
From mostly local ownership with the exception of Semen Andalas, because of the USD
denomination debts being borne by cement companies, local owners must sell most of shares to
foreign investors, which are also multinational cement players. Namely Indocement Tunggal
Perkasa sold to Heidelberg, Semen Gresik to Cemex and Semen Cibinong sold to Holcim. While
Cemex sold its shares in 2006, the rest are stayed and have transformed their portfolios to be
major players in Indonesia.
The international amalgamation between Holcim Ltd and Lafarge S.A will also affect the current
competition landscape in Indonesia. Due to each company owns a subsidiary in Indonesia but in
different regions. Holcim has strong presence in Java markets while Lafarge is in Sumatra. The
combination of these two will create balanced presence in Indonesia’s high volume markets.
The unique characteristic of the product in terms of cement weight has created a medium natural
barrier for players to enter other regions to market their cement. Unless they have excellent
distribution strategies, they would be forced to play within their local market.
Local Nationalism has also played a part in the cement industry in Indonesia. People from where
the factory is located, would prefer to purchase local product instead of competitors even though
the price was slightly lower. Good example of this is Semen Padang; in West Sumatra province,
where the factory is located its market share is always 90% .This can be a marketing strategy
challenge for new players to enter the market.
In terms of product packaging, bag takes 84% of total production in 2006. This is due to factors
such as:
 The absence ready-mix companies outside big and medium cities in Indonesia. Caused by
most people in small cities and villages being unaware of the benefits of using ready-mix
concrete; also the housing size being built is still below the economic scale of using
ready-mix.
 The road infrastructures in most small cities and villages are not in favour of ready-mix
trucks.

2.  Only big cities that have mega projects such as super blocks and high rise buildings, these
have create demand for fast and reliable quality concrete which can only be provided by
ready-mix companies and precast companies.
However, the packaging trend has changed slowly; in 2014 the composition percentage for bulk
has reached nearly 22%. Major factors contribute to the change are the increase use of ready-mix
concrete and the increase of precast production. The trend evolution can be seen in the table
below.
YEAR
Volume ('000 MT)
Packaging
Composition
Growth
BAG BULK BAG BULK BAG BULK
2006 26,772 5,117 84.0% 16.0% 5.4% -14.7%
2007 28,319 5,672 83.3% 16.7% 5.8% 10.8%
2008 32,186 5,914 84.5% 15.5% 13.7% 4.3%
2009 32,183 6,233 83.8% 16.2% 0.0% 5.4%
2010 34,191 6,587 83.8% 16.2% 6.2% 5.7%
2011 31,760 7,218 81.5% 18.5% -7.1% 9.6%
2012 44,152 10,820 80.3% 19.7% 39.0% 49.9%
2013 45,612 12,393 78.6% 21.4% 3.3% 14.5%
2014 46,834 13,072 78.2% 21.8% 2.7% 5.5%
Table 1 – Bag vs Bulk packaging (Source: ASI)
Chart 1 – Packaging composition evolution (Source: ASI)
There are 13 existing integrated cement manufacturers; one independent grinding plant in all
over Indonesia, located from Aceh to as far as Kupang in East Nusa Tenggara. The thirteen
integrated plant locations are depicted in the below map.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Bulk Bag

3. Map of Existing Integrated Cement Plants

4. Indonesian cement players have been enjoying high margins due to the oligopoly structure of the
industry, with the top 3 players controlling nearly 90% market share as well as the price of
cement. The average selling price FY2014 from 3 big players is reported at Rp968K/t, or 5%
higher from 2013 while the retail price of 2014 at Rp66,556 per 50 kg bag or Rp1,331K/t. The
historical mean growth of cement price is 4-5 % per year. The pressure come from government,
following the suggestion to cement SOEs producers (Semen Indonesia and Semen Baturaja )
to reduce retail prices by Rp3,000/bag nationwide, or around 5% due to lower fuel and coal
cost.
In USD-terms, however, due to the weak Rupiah to USD denomination, average cement
price in 2014 is 8% lower, to US$81/t. For import price the highest at USD73/t (2013-14) and
export at USD87/t(2012) data obtained from custom department.
Key Cement Producers
Semen Indonesia with its three subsidiaries is the largest cement manufacturer in Indonesia
based on production volume and market shares. SI subsidiaries which locate strategically in each
Indonesia region, has been able to support the group sales strategy by entering all provinces in
Indonesia. In addition, SI roles as the largest Government Owned Company in cement, has
brought its own obligation by becoming the balancer in the cement market and not only for profit
oriented.
As an individual company, INTP can be regarded as the largest manufacturer and producer. This
is achieved through its production capacity and production volume. Through innovative
marketing strategy in the past, INTP has its own community which translates to loyal customer
base. INTP was the first manufacturer that implement point rewards which later copied by other
players. Based on sales volume INTP is the 2nd
largest cement manufacturer.
Holcim Indonesia is the third largest cement company. Currently it only focuses on Java, by
selling 71% of its product in 2014 in Java island provinces. However following the strategic
merger with Lafarge recently, it will strengthen the position in the Indonesia market.
Semen Bosowa is the 4th
largest. Begun with only 1.8 MTPA plant in South Sulawesi, it has
expanded by constructing 2 grinding plants in Riau Island and East Java as well as the operation
of packing plants in several locations in Indonesia. With the completion of the 2nd
plant in
Maros, SB cement production capacity will be 7 MTPA.
Ranking of Cement Producers based on Sales Volume and Market share 2014
Rank Manufacturers Brand
Cement Sales
Volume (‘000T’)
Market Share
1 Semen Indonesia, Tbk
Semen Gresik
Semen Padang
Semen Tonasa
26,156 43.7%
2 Indocement Tunggal Semen Tiga Roda 18,189 30.4%

5. Perkasa
3 Holcim Indonesia Semen Holcim 8,756 14.6%
4 Semen Bosowa Maros Semen Bosowa 3,474 5.8%
5
Lafarge Cement
Indonesia
Semen Andalas 1,869 3.1%
6 Semen Baturaja, Tbk Semen Baturaja 1,263 2.1%
Source: Indonesia Cement Association
Demand vs Supply
Two factors that affecting cement demand as a whole are; Nation’s Gross Domestic Product
(GDP) and the availability of land in the mentioned country. The first factor, which is the
nation’s GDP might be applied for Indonesia. From the table below, cement demand growth and
Indonesia GDP formed the same trend.
GDP vs Cement Demand Growth
Source: Indonesia Statistical Bureau & Indonesia Cement Association
Indonesia GDP in 2014 only reached IDR 2,909 trillion (constant 2000 price) or 5.44% growth
compare to 2013, this showed economic deceleration for the past 3 years, from 6.49%, 6.26%
and 5.73% in 2011, 2012 and 2103 respectively. For 2015, World Bank has predicted Indonesia
economy will show further deceleration to 4.7% unless the Government carries out infrastructure
projects to maintain growth.
The slowdown of the GDP showed slowdown is not followed by the construction sector which
maintains stable position in 6.5% growth for two consecutive years. The growth was contributed
to the development of mainly residential and commercial projects. While Infrastructure projects
only give small contribution in the construction sector due to bureaucracy and different focus
that the previous government had. In addition, land acquisition has also become big stumbling
blocks in the infrastructure development in Indonesia. A project can be delayed for years before
it starts because of the original land owners can hold their land until they get compensations
according to their will. However, toward end of the old government era, regulation regarding

6. land acquisition procedure was passed, which give authority to the government to buy the needed
land for infrastructure project according to the market price. This law can be implemented fully
by the new government.
The new government led by Mr. Joko Widodo, emphasize more on infrastructures development,
proved by the groundbreaking of the development of toll road across Sumatra Island and Trans
Java toll roads. Other infrastructure projects are in the tender preparation process, which include
toll road project in Sulawesi, and Kalimantan islands, airports revitalization and power plant
construction. It is expected when these projects kick-off, the contribution of infrastructure project
to the construction sector become bigger than previously.
The later factor on what affect cement demand, will not be an issue in Indonesia. With the size of
nearly 2 million Km2
, cement industry still has enough room to grow. In addition, country’s
development followed by the development of cement plants are still focusing in Western side of
Indonesia and some regions in Eastern Indonesia such as some parts of Sulawesi and
Kalimantan. While majority regions in Eastern Indonesia, have not yet been seriously focused.
All players’ total installed capacities in 2014 were 74.1 million tons, we expect at the end of
2015 there will be additional of 8.8 MTPA cement capacity, which will bring the total install
cement capacity to 84 million ton. The utilisation rate for 2015 was approximately 80% due to
the inefficiency of old plants as well as the commission of new plants toward year contribute to
low utilization rate.
With several cement projects completed during 2015 coupled by slower cement growth due the
country’s economic deceleration, political instability and the slow start of infrastructure projects
(approximately they will only kick-off by end of 3Q2015), demand growth for 2015 is predicted
to repeat the 2008 – 2009 growth of 0.7%. During that period, the Global economic downturn
translated to low commodity prices. As a result demand for commercial and residential
properties were also affected domestically. However the growth on the following year is
expected to increase, we used a conservative growth of 7.2% taken from cement Compound
Annual Growth Rate (CAGR) from 1982 to 2014 demand.
Indonesia cement industry is forecasted to be oversupply from 2015 to 2024 should all
announced additional capacities from new and existing cement investors completed on schedule.
New cement investors will suffer most during this period because they have to fight the well-
established incumbents. In 2025 should they we are not additional capacity, Indonesia will have
tight cement supply.

7. Supply & Demand Projection
Various sources
Supply & Demand Table
Year
Installed
Capacity
(MT)
Production
Domestic
Consumption
Utilisation
rate
2011 54,603 48,433 48,037 89%
2012 60,103 55,149 54,989 92%
2013 62,353 57,977 58,704 93%
2014 75,163 61,694 61,711 82%
2015F 83,963 66,064 62,077 79%
2016F 101,863 75,339 66,596 74%
2017F 104,713 84,465 71,401 81%
2018F 111,713 90,614 76,558 81%
2019F 117,713 96,197 82,327 82%
2020F 125,413 106,045 86,629 85%
2021F 133,913 112,401 92,561 84%
2022F 133,913 115,698 99,199 86%
2023F 133,913 118,402 106,365 88%
2024F 133,913 121,437 114,063 91%
2025F 133,913 123,630 122,302 92%
Various sources
Cement installed capacity is expected to be stable from 2021 to 2025 since no firmed additional
capacity announcement being declared. Several new players have expressed their interest to
construct cement plants but all are completed in and or before 2020.

8. Low utilisation rate during 2014 until 2023 are caused by additional capacity that comes every
year from different plants. It takes at least 2 years before it is stabilized. Old and inefficient
equipment coupled by lack of power for some plants outside Java (i.e: Semen Baturaja in South
Sumatra and Anhui Conch in South Kalimantan) also contribute to the low utilization rate.
Cement Projects under planning and development
No Company Target Location
Declared
Capacity
(MT)
Declared
Commissioning
Year
Likelihood
to meet
the target
year
1
Lafarge Cement
Indonesia
North Sumatra 1.5 2019
2 Semen Baturaja South Sumatra 1.9 2017
3 Semen Padang
West Sumatra 3.0 2016
Nanggroe Aceh D 3.0 2019
4 Holcim Indonesia East Java 1.7 2015
5 Indocement TP
West Java 4.4 2016
North Sumatra 2.5 2018
Central Java 4.4 2020
6 Semen Gresik
Central Java 3.0 2016
West Java 2.0 2016
7 Semen Tonasa South Sulawesi 1.5 2015
8 Anhui & SDIC West Papua 1.5 2016
9 Siam Cement Group
Banten n.a 2018
West Java 1.8 2015
10 Cemindo Gemilang Banten 4.0 2016
11 Anhui Conch Cement
East Kalimantan 3.8 n.a
West Kalimantan 3.8 n.a
12 CTIEC
Central Java 1.5 2019
West Java 1.5 n.a
13
Sinar Tambang
Arthalestari
Central Java 1.7 2015
14 Fajar Semen Barru South Sulawesi 3.3 2020
15 Semen Jakarta Banten 1.2 2015
16 Sun Fook Industries Banten 1.2 2016
17 Surya Semeru Semen East Kalimantan 0.8 2016
Unlikely
Maybe
Most likely

9. Lafarge Cement Indonesia (LCI)
In the 80’s (when the name was still PT Semen Andalas), the company acquired land in Bahorok,
North Sumatra for future expansion plan. However, due to proximate location with the
Orangutan reservoir and objections from local and international communities as well as the
Central government the plan must be put on hold. Having had intensive and endless lobbying
with the central government, in 2015 the principle permit to build the plant was issued. However,
other more important priority which is the amalgamation with Holcim must be completed by the
end of this year. The construction of 1.5 MTPA plant is expected to be completed in 2019.
Semen Baturaja (SB)
In 2013, SB launched Initial Public Offering by releasing 23.76% shares to public. The fund
obtained was IDR 1.3 Trillion or USD 96 Million (USD 1 = IDR 13,500). The proceed would be
used to finance SB expansion plan by building a new cement plant called Baturaja II in the
location next the existing. The new plant is expected to commission in 2017 with installed
cement capacity of 1,850 KT and clinker capacity of 5,000 TPD or approximately 1,750 KT per
year.
Semen Padang (SP) a member of PT Semen Indonesia, Tbk
In 2013, SP constructed a brownfield project called Indarung VI located on the same area of the
existing plants. The plant is expected to complete on 3Q2015 with cement install capacity of
3MTPA.
Together with local investors, SP also plans to construct an integrated cement plant in Aceh
province, the capacity of such plant is 3MTPA with commissioning year is 2019.
PT Holcim Indonesia, Tbk (HIL)
Having completed its 1st
line in Tuban – East Java in June of 2014, HIL continues with the 2nd
line on the same location. The plant expected output is 1.7MTPA and the completion is end of
2015.
PT Indocement Tunggal Perkasa – Heidelberg Cement Group (ITP)
ITP announced to construct 3 cement plants, which consist of one Brownfield and two
Greenfield projects. The brownfield is located in the existing location in Citereup with cement
installed capacity of 4.4 MTPA, the plant is expected to complete in 2016. The other two
Greenfields located on North Sumatra with the capacity of 2.5 MTPA, the location is still not yet
declared. However, it is known ITP as acquired land in Langkat Regency with the capacity of
2.5MTPA and the project is scheduled to commence in 2016 and completed in 2018. The other
project is in Pati – Central Java, through its subsidiary PT Sahabat Mulia Sakti. The 4.4MTPA is
scheduled to commission in 2020.
PT. Semen Gresik (SG) a member of PT Semen Indonesia, Tbk
Currently the company is constructing an integrated plant in Rembang, Central Java. The
expected output is 3 MTPA and the project is completed in 2016. The other project is a cement
mill with no detail location is being announced. The grinding station is expected to complete in
3Q2016.

10. PT. Semen Tonasa (ST) a member of PT Semen Indonesia, Tbk
A new cement mill is in-progress on the current location, the capacity is 1,5MTPA and is
expected to complete in 2015.
Anhui Conch Cement Co, Ltd. (ANHUI) and Chinese State Development & Investment
Cooperation (SDIC)
ANHUI & SDIC have agreed to form strategic alliance to construct a million ton per annum
cement plant in West Papua in 2014. The plant is expected to commence its operation in 2017,
however current issue faced by the companies is land dispute between the owners, which might
result the 1st
plant in Papua will not commence on schedule.
PT Siam Cement Group (SCG)
SCG is planning to develop two integrated cement plants in Sukabumi, West Java through PT
Semen Jawa and the other one is in Bayah, Banten purchased from PT Boral Indonesia. The
Sukabumi plant is expected to commission in 3Q2015 with install capacity of the Sukabumi
plant is 1.8 MTPA. The Bayah plant is expected to commission in 2018 with the capacity of
2.5MTPA.
PT Cemindo Gemilang (CG)
Currently the company is constructing a 3.5 MTPA integrated plant in Bayah, Banten not far
from SCG site, the plant is expected to commence in 1Q2016. This local own company actually
has started to sell its cement in 2012 by importing from its sister company in Vietnam.
Anhui Conch Cement Co, Ltd (Anhui)
Anhui Conch Cement Co, Ltd. entered Indonesia in 2011 with big plans to open 4 plants in
South Kalimantan; West Papua; South Sulawesi and West Kalimantan with total clinker
production capacity of 36,400 TPD. However, besides the South Kalimantan and West Papua
plants, no further action and activities carried out in the areas declared.
China Triumph International Engineering Co, Ltd. (CTIEC)
Together with PT Gajah Tunggal, CTIEC plans to develop 1.5 MTPA plant in Grobogan, Central
Java and expected to complete in 2019. CTIEC was reported in the preparation stage to apply
needed licenses and permits in 2011, no further news about the progress.
PT Sinar Tambang Arthalestari (STAR)
Having completed the construction of its 1st
line in May 2015, STAR is now building the 2nd
line
with the same capacity of 2MTPA on the same location. It is expected to complete and
commission in 2018.
PT Fajar Semen Barru (FSB)
FSB is a subsidiary of Fajar group a media conglomerate company from South Sulawesi. The
plant location is in Barru Regency with cement capacity of 3.3 MTPA with expected completion
year in 2019.

11. Semen Jakarta, Ltd (SJL)
This grinding mill is a joint venture between Yong Hao Ltd, from China and PT Hanusa Prima of
Indonesia. The plant location is in Ciwandan, Banten province with the capacity of 1.2MTPA.
The plant is expected to complete at end of 2015.
PT Sun Fook Industries (SFI)
SFI will have a cement mill operate also in Bnaten Provice. The capacity installed in 1.2MTPA,
the plant is expected to commence commercially at the beginning of 2016.
PT Surya Semeru Semen (SSS)
Currently is constructing a 800KTPA cement mill in East Kalimantan. The plant is scheduled to
commission in 2016.