•    HOME   
•    NEWS   
•    BUSINESS   
•    INTERNATIONAL   
•    TECH   
•    SPORTS   
•    LIFE & TIMES   
•    OPINION   
•    MY JAKARTA   
•    BLOGS   

Cement maker PT Holcim Indonesia plans to raise $100 million through a bond issue or bank loans to finance the construction of a new factory in Tuban, East Java.

The project still needs to be approved by Swiss parent company Holcim, which is expected to rubber stamp the proposal in June.

“[We need] more than $100 million from external funding for the Tuban project” Olaf Nahe, chief financial officer of Holcim Indonesia, told reporters on Monday.

“The new factory will have a capacity of 1.7 million tons per year that will help us meet the national demand for cement,” added Eamon Ginley the president director of Holcim Indonesia.

The Tuban plant will increase the company’s total production capacity in the country to 10 million tons per year, helping meet increasing demand as the economy recovers.

According to Nahe, the company will likely raise the funds from a bond issue or syndicated bank loans.

Holcim Indonesia declined to disclose the value of the Tuban project, but said that it plans to use internal funds to cover most of the costs.

Holcim Indonesia has prepared 1,053 hectares of land for the project, which was scheduled to begin in 2009 but was halted because of the financial crisis.

Last year the company, which holds a 14 percent market share in the domestic cement industry, sold 7.2 million tons of cement, up from 6.9 million tons in 2008.

Holcim Indonesia more than tripled its net profit in 2009 to Rp 896 billion ($97.7 million) from Rp 282 billion in 2008 as economic conditions improved in the second half. Revenue increased to Rp 5.9 trillion from Rp 5.34 trillion in 2008.

In 2009, Holcim repaid $130 million out of total loans of $135 million and the company also repaid $95.7 million in subordinated notes.

Nationwide cement sales rose 13 percent in January from the same period a year ago as the economy bounced back from the financial crisis. Data from the Indonesia Cement Association (ASI) showed that domestic cement sales totaled 3.36 million tons in January, compared with 2.97 million tons a year earlier.