Indocement is part of the growing global green movement in environmentally-responsible manufacturing practices. It is proud to be the first company in South-East Asia to receive CER certification in the UN-sanctioned carbon trading program. Indocement’s two CDM projects involved the Blended Cement Project by producing Portland Composite Cement (PCC) and the Alternative Fuel Project. Both of these projects are expected to reduce emission of carbon to the tune of 6-7 million tons CERs between 1 January 2005 – 2012.

To date, Indocement has signed an agreement to sell part of the above CER, with Prototype Carbon Fund (PCF), a subsidiary of the World Bank.

Indocement has also maintained high marks on PROPER, an annual governmentled environmental audit that seeks to determine the level of compliance of major corporations with government regulations on environmental safety and conservation. PROPER audits are carried out on companies with operations that may impact on the environment. The latest audit on Indocement’s two cement factory sites confirmed the Company’s compliance to environmental safety standards and requirements, and in one of those factory sites even exceeding the standard norms and requirements. As part of greening program of its factory sites, Indocement planted some 56,200 trees in and around these sites in 2008.

Our Environmental and Social Commitments

This is a public account of Indocement environmental management and monitoring efforts including the recent Carbon Dioxide emission reductions initiatives.

Indocement has decided to further contribute to global climate protection by reducing Carbon Dioxide emissions by applying technologies and techniques not yet commonly applied in the Indonesian cement industry.

Cement industry contributes significantly to the global greenhouse gas emissions. In general terms, the environmental issues associated with cement plants - dust, noise, land use impacts, air and water quality - adds pressure to this industry with respect to sustainable development.

As many forces of change are influencing the cement industry, Indocement recognizes that to remain competitive in the future, business objectives of cement industry must take into account the sustainable development goal, namely to "meet the needs of the present without compromising the ability of future generations to meet their own needs" . Hence, Indocement continues to give significant efforts in minimizing the environmental impacts and to maximize development impact to the local community.

Commitment to minimize environmental impacts

In general terms, cement is manufactured by pyro-processing selected, prepared raw materials and fine grinding the produced clinker. Raw materials are limestone, silica (sand), alumina (clay), and iron oxide (iron ore). Small quantities of gypsum are added during fine grinding to retard setting time.

A range of environmental impacts is associated with cement manufacturing, the most prominent impacts being impact on air, land use, and the neighboring communities.

Being in operation for many years in Indonesia, Indocement's three plants apply a well-established environmental management and monitoring practices. A set of institutional, management, and monitoring measures are in place to guide Indocement operating in full compliance with applicable Indonesian environmental legislation and standards. Whenever practical and feasible, Indocement aims to avoid environmental and social impacts. If such impacts are inevitable, Indocement is committed to reduce them to acceptable levels.

The main sources of impact upon air quality in the cement industry are dust and gaseous emissions such as carbon dioxide. Indocement has installed Electrostatic Precipitators that meet stringent Indonesian and international standards. Dust and gaseous emissions are monitored on a regular basis and are in full compliance with applicable standards.

Raw material mining is the main impact on land topography and land use. Indocement operates mines quarries in close vicinity to its plants in accordance with Indonesian guidelines. Attention is given to post mining rehabilitation. Slopes are contoured to achieve acceptable levels of slope stability. Land surface rehabilitation is a continuous effort of Indocement management.

With regard to Indonesian environmental legislation and standards, Indocement obtained environmental operational permits in the form of approved Environmental Management Plans (Rencana Pengelolaan Lingkungan, RKL) and Environmental Monitoring Plans (Rencana Pemantauan Lingkungan, RPL) being part on the Environmental Impact Assessment study (Analisis Mengenai Dampak Lingkungan, AMDAL) for each factory. Appreciating various initiatives of Indonesian government on pollution control and air quality, Indocement is an early voluntary participant in the PROPER Program and the Blue Sky Program (Program Langit Biru) of the Government of Indonesia.

In addition to the requirements by the Government of Indonesia, Indocement maintains an accredited ISO 14001 Environmental Management System. The Environmental Management System is subject to regular third party verification.

In line with the international trend to publicly account for environmental and social performance Indocement has compiled an Environmental Management Plan summarizing the many individual environmental and social commitments implemented by Indocement. Individual environmental mitigation and management efforts are developed for all five natural resources, namely air, water, land, flora and fauna, and human resources.

Commitment to maximize development of local community

Of main importance for Indocement, is to maximize the development impact of our operation on the local community. A number of key principles guide Indocement's efforts of community development and public consultation.

Indocement is focusing its efforts on adjacent communities that are most likely associated with environmental issues. The key factor is to involve people with a common interest in protecting shared environment and quality of life.

Indocement emphasizes a collaborative approach in designing community development programs. Indocement liaise regularly with community leaders considered to represent the community's interest as well as interested individual community members. At present Indocement has implemented community development programs covering 12 villages. The current community development address issues on education, employment, socio-cultural values, infrastructure, and public health.

Indocement recognizes the importance of dialogue and trust. Trust is built by regular weekly community meetings and adopting an open approach to sharing information.

Commitment to global climate protection

The emission reductions measures to be adopted are introduction of new cement type using additive materials which requires less clinker than the Ordinary Portland Cement (OPC), but has comparable strength to that of OPC, and substituting some amount of fossil fuels with alternative fuels in form of various types of waste. Waste types presently studied include rice husk, palm shells, textiles, used tyres, and waste oils.

Changes to the existing facilities and cement manufacturing practice due to the introduction of additive materials and alternative fuels will result in environmental changes:

• The use of additive materials to reduce the clinker content in the final cement is of more relevance with respect to process technology and quality control rather than in terms of environmental and social concerns. Fuel consumption in producing clinker is reduced and so are overall gaseous emissions.
• Environmental issues associated with the use of alternative fuels in cement kilns is mainly the concerns about toxic emissions due to burning of alternative fuels. Extensive experience in other countries, however, demonstrates that the use of alternative fuels can be done without compromising the environmental performance of the plant. This will be supported by a specifically designed environmental monitoring program.

These changes and the environmental impacts associated to measures to reduce CO2 emissions are also addressed in the Environmental Management Plan of Indocement, including the management and monitoring efforts related to the emission reduction initiatives.

With respect to public disclosure of the planned emission reduction measures, the weekly community meetings serve as communication tool with neighboring communities. Planned emission reductions activities have been communicated in Bahasa Indonesia in several subsequent meetings held since October 2003. These meetings cover 12 villages, teachers, camat (head of districts) and informal leader. Further information demonstrating the proposed modification and expected environmental impacts will be provided to support the understanding of the project.