PT Semen Gresik is targeting a controlling stake in fellow state-owned cement producer, PT Semen Baturaja, which will launch an initial public offering later this year, according to reports.

Gresik would look at Baturaja’s IPO pricing to follow-up on the acquisition and if a large amount of shares is offered the company would look to buy a majority stake, Gresik’s President Dwi Soetjipto, said.

Baturaja is to sell a 30 per cent take in June or July this year, with proceeds expected to reach IDR1trn to part-finance the construction of a IDR2.5trn (USD279m) cement plant in South Sumatra. The new factory is set to have a production capacity of 1.5Mta with a completion date of 2015.

Baturaja's IPO process will begin next month as the company conducts a selection process to determine the underwriter for the initial shares offer, Baturaja's President Director Pamudji Raharjo said.

State-Owned Enterprises Minister Dahlan Iskan said Baturaja's current 1.5Mta capacity would be boosted to 2Mta by the end of this year, and the output would be used to meet demand in South and West Sumatra, Bengkulu, Jambi and Lampung.

Meanwhile, Gresik said it targeting cement production of 22.5Mt this year, up 15 per cent on the 19.8Mt achieved last year. The increase will be buoyed by the start of new operations at two plants – one in Tuban which will begin production in March and the other in Tonasa which will be completed by June. “ 'With the two plants, we're optimistic we can reach the target,' company CEO Dwi Sutjipto, said yesterday. The company also plans to build two new plants by 2015.