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Semen Indonesia plans to build power plant in West Sumatra

Publication Date : 17-06-2014

 

State-run cement producer Semen Indonesia is considering building a 100-megawatt (mw) coal-fired power plant to supply its facilities in Padang, West Sumatra, the construction of which is expected to start next year.

Semen Indonesia president director Dwi Soetjipto said the company was undertaking a study on the plan, particularly on the capacity of the power plant.

Once the power plant is completed, it will supply Semen's cement facility in Padang that expects to increase electricity consumption following the operationalisation of a new production line in 2016.

Dwi said his company hoped to conclude the study before year-end, so that it could begin construction next year.

“Our facilities in Padang need about 150 mw. Once the new factory starts operations, the total power needed might rise to 200 mw, so I think it won’t be too much to construct a new 100-mw plant,” he said.

Semen Indonesia, via its subsidiary, Semen Padang, launched the construction of its 3.25-trillion-rupiah (US$275.26 million) Indarung VI cement factory late last month.

The new factory, which will have an annual production capacity of 3 million tonnes of cement, is expected to commence operations in the second half of 2016.

With the operation of the new factory, Semen Padang’s total production capacity is expected to increase to 10.5 million tonnes of cement per year, up from the previous 7.5 million tonnes.

“We are focusing on building a plant to support the operation of our facilities, but if there is surplus of power from the plant we might also distribute it to local residents,” said Dwi.

He added that power plant construction usually cost the company about $150 per mw in investment.

The plant will use unusable coal with a high sulfur content.

Dwi said building infrastructure was becoming more pressing for the publicly listed giant, with higher power plant costs due to the rise in production and the increase in electricity prices bringing more burdens on the cement industry.

As of May 1, the government raised electricity prices by either 38.9 per cent or 64.7 per cent, depending on businesses’ power consumption.

The increases, however, will be phased in gradually every two months until the end of the year.

Semen Indonesia, according to its published annual report, saw its energy usage rise by 13.2 per cent year-on-year (y-o-y) to 2.52 million mw per hour in 2013.

Its electricity costs during the year rose by 30.1 per cent y-o-y to 1.88 trillion rupiah.

The company’s electricity costs made up about 39.8 per cent of its total costs last year.

In February, Semen Indonesia commenced the operation of Tonasa V facility in Pangkep, South Sulawesi, which is equipped with 2x35 mw coal-fired power plants to support its operations.

The total investment in the factory, which will produce 3 million tonnes of cement once fully operational, and the power plant stood at 3.5 trillion rupiah.

Semen Indonesia also agreed in a memorandum of understanding (MoU) signed late last year to cooperate with Japan-based JFE Engineering Corporation to construct a waste heat recovery power generator (WRHPG) in Tuban, East Java.

The system, which is expected to generate 28 mw of electric power using unused waste heat from the cement production process, is scheduled to begin construction before year-end to support the operation of the company’s Tuban facilities.

 

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