The commercial arm of the German development bank KfW Ipex, and BNP Paribas are lending US$98mn to Swiss company Holcim for the construction of a cement plant in Indonesia.

“The financing is covered with an Euler Hermes export guarantee based on deliveries and services provided by ThyssenKrupp Resource Technologies,” Stefan Eitel, director team head of Metals & Mining at KfW Ipex tells GTR.

The loan has a term of 7.5 years and will have a fixed interest rate based on the commercial interest reference rate.

As the signing has concluded, Holcim is all set to begin construction of the plant, Eitel adds.

The cement plant, Tuban 2, will be built by German plant engineering unit of ThyssenKrupp, which constructed the first cement plant, Tuban 1, on the same site.

The total investment cost of the Tuban 2 plant is US$315mn and it will have a production capacity of 1.7 million tonnes per annum, bringing the total Tuban capacity to 3.4 million tonnes per annum.

This expansion is in response to a rapid increase in demand for cement in Indonesia.

GDP growth in Indonesia is expected to remain strong in the medium and long-term and there is significantly below-average per capita consumption of cement, which means that there is solid potential demand in the market, Eitel explains.