Gypsum industry news

Australia: Gypsum Supplies has started loading from its newest pit at Lake Cowcowing, Western Australia.

Gypsum Supplies operates at Lake Hillman in Dalwallinu, Western Australia, where the family-run business has been supplying gypsum since 1978 to the industrial and agricultural markets.

"We are continuing to operate out of Kalannie as normal," said registered manager Daniel Nixon. "This pit is of very similar quality and analysis to the Kalannie pit." Naturally-occurring lake gypsum has a medium particle size and unlike synthetic gypsum, is not subject to rapid leaching from the soil profile and reportedly has superior spreading characteristics.

Gypsum is used in the agricultural industry for several reasons. It is used as a low-cost non-acidifying form of sulphur. Kalannie gypsum has 17.8% sulphur. Due to the high returns from growing canola in recent years, demand for gypsum as a low-cost form of sulphur has been strong.

Australia: Boral has reported a first-half 2015 profit of US$81.1m, benefiting from a recent overhaul of its business, a pickup in Australian demand for home-building products and a deeper push into Asian markets. Boral had reported a net loss of US$20.2m in the same period of 2014, as earnings were weighed down by asset write-downs.

Boral returned to profit in the second half of the 2014 fiscal year that ended on 31 June 2014, as it reaped the benefits from the earlier restructuring that reduced the size of its workforce and resulted in the closure of some unprofitable operations. "The restructuring and streamlining of Boral's businesses that has been taking place is enabling it to be more responsive to market changes," said chief executive Mike Kane.

Boral said that activity in the Australian housing market, which accounts for about 28% of total revenue, continued to gain pace during the period. A nascent housing recovery is underway in Australia, fuelled by record-low interest rates and demand from investors in major cities like Sydney. It is helping Boral to recover from several tough years, despite uncertainty about the outlook for the economy as a decade-long mining-investment boom slows. While the number of Australian home-building permits slipped by 3.3% month-on-month in December 2014, according to the latest government data, it followed a 7.7% rise in November 2014 from October 2014 and an 11.9% rise in October 2014 from September 2014.

Boral said that appetite for its products in other markets was also rising. It highlighted stronger gypsum demand in Korea and Thailand in particular, although it said that demand in China, where the property market is cooling, was subdued. In the US, Boral said that it was now seeing the benefits from a housing-market rebound and its own moves to restructure the business. The company said that it expects earnings to be 'broadly break-even' in the full 2015 fiscal year after considerable losses in recent years.

Australia: Knauf Plasterboard is expected to announce that it will begin the construction phase of a new plant at the Bundaberg Port in south-east Queensland. Knauf Plasterboard currently manufactures and distributes plasterboard and accessories out of its Melbourne and Sydney plants.

In 2014, the company bought land from Gladstone Ports Corporation at the Bundaberg Port and is expected to start building a new plant in March 2015. Company spokesman Brian Tisher said that the new plant would create 200 jobs in the construction phase and 55 new positions when the project was complete in 2016. Tisher said that most of the products made would be sold in Queensland, but some would be exported. He added that building the facility in Bundaberg was an obvious choice, as a 26km gas pipeline was recently installed. The plant should be operational by September 2016.

Australia/New Zealand: The Australian and New Zealand chiefs of Knauf's wallboard operations have resigned. Additionally, the New Zealand business is under review, having posted a loss in its first nine months of operations.

The head of the New Zealand wallboard unit, John Russ, has confirmed to local media that he has resigned and will leave the company in two weeks. Meanwhile Mark Norris, managing director of Knauf Plasterboard in Australia, resigned with immediate effect on 6 November 2014.

Knauf has struggled to gain traction in the New Zealand building market, which is dominated by Fletcher Building and it took Knauf longer than expected to gain approval for its products from BRANZ, a local independent research and testing institute, before it could start to sell to consumers. Even then, the company said that it faced resistance getting its products into stores, which had established relationships with Fletcher.

Australia: A wet winter has delayed construction activity in key east coast markets as New South Wales experienced its wettest August in 16 years. Boral's CEO Mike Kane has told shareholders that more heavy rain could buffet earnings in its construction, materials and cement division during the rest of 2014 and 2015.

"Expectations could be dampened if we are unable to realise potential property sales and some level of price increase in this very competitive market and if we experience extended periods of adverse weather," said Kane. However, he added that Boral expected to more than double earnings in its building products division in 2014 and 2015, which made US$8m in earnings before interest and tax in the 2013 – 2014 financial year. Kane said that rising energy and labour costs remained a concern across the group.

Chairman Bob Every said that Boral expects a resources industry slowdown, particularly in Queensland. "We are expecting continued softening in roads and infrastructure activity for most of fiscal 2015 before a solid multi-year pick-up from fiscal year 2016," said Every.

"In our 2015 financial year we continue to expect ongoing strong results from construction materials and cement, improvements from both the building products and Boral USA divisions and improvements in the underlying USG Boral business," said Kane. "We anticipate return on funds employed to improve, despite the shift to equity accounting on Boral's 50% interest in the Gypsum joint venture." Boral made a net profit of US$173m in ist 2014 financial year, an improvement on a US$212m loss suffered during the previous financial year.

Every also announced his intention to stand down in 2016: "I was re-elected by shareholders at Boral's annual general meeting last year and at the time I intended that, if I was re-elected, that this would be my last term on the board. My intentions are unchanged. Therefore, I will not stand for re-election in 2016. I will work with the board to identify the best possible candidate for a successor for the role of chairman and I will help to ensure an orderly transition process."

Australia: Minotaur has signed a conditional sale agreement on its gypsum deposit at Lake Purdilla on Eyre Peninsula in South Australia. Minotaur will receive US$4.8m in cash for the project, which is 5-15km south of Streaky Bay. The project has a target of 50-60Mt of gypsum. The sale is subject to the unnamed buyer conducting and being satisfied with a study into a port or trans-shipment of the gypsum, plus government transfer approvals.

Minotaur managing director Andrew Woskett said that the sale was part of the company's strategy to divest from industrial minerals and concentrate on copper, nickel and gold. "We've been trying to lighten our exposure to industrial minerals," said Woskett. "That's been proceeding for some time." The sale, which is scheduled to be completed by May 2015, would deliver more than the book value of the project. Earlier studies found that engineering work on a port was viable, but there were now more options, including barging and containerisation.

Australia: Building materials supplier Boral says that its prospects are improving as government infrastructure spending increases and industrial turmoil recedes. "After reporting lower earnings for two years running, we have clearly turned the corner," said Boral's chief executive Mike Kane.

Boral swung to an annual net profit after tax of US$161m in the financial year ending 30 June 2014, bouncing back from a US$192m net loss in the financial year ending 30 June 2013. The full-year result showed market conditions had improved across all of its divisions in Australia, the US and Asia.

Kane also expressed confidence in the American USG-Boral joint venture, which will soon launch a new lightweight gypsum board into 12 markets across Australia, Asia and the Middle East.

Australia: Len Buckeridge, Australia's 19th richest person, died of a heart attack at the age of 77 on 11 March 2014. The billionaire owner of Buckeridge Group of Companies (BGC), was a well-known and long-standing character in the Australian construction industry. The group has interests in gypsum wallboard, bricks and cement as well as residential construction.

Buckeridge built up BGC, which turns over US$2.25bn/yr, from humble beginnings in the 1960s following his training as an architect at Perth Technical College. Hard-but-fair in business, his determined approach saw him amass a personal fortune of over US$1.5bn via the group. Despite his success he retained a down-to-earth approach to the company's day-to-day operations, latterly running the business from the dining room table in his house at Mosman Park, near Perth.

His hard-nosed stance, which helped him in some aspects of his business life, also made him a controversial figure. Buckeridge was involved in a number of deeply-entrenched confrontations with construction unions in Australia. He also attempted to sue the Government in the Supreme Court over a stalled private port project. Upon his death, Buckeridge was described by former construction union boss Kevin Reynolds as 'a formidable opponent.' "People will remember Len as a person who was prepared to take on anyone and everyone whether it would be the unions, government, other employer groups or other builders," said Reynolds. "If Len believed in something he would take them on."

Buckeridge, who had been contemplating succession plans for BGC without coming to a conclusion prior to his death, owned 100% of the group. The Australian business world and the global cement and gypsum industries is awaiting news on how the future ownership of the company will look. Buckeridge is survived by his wife, six children and eight grandchildren.

Australia: Boral chief executive Mike Kane said that coal seam gas is critical to the future of Australian manufacturing as he warned that rising energy costs are threatening to kill the industry. The US executive has only been running Australia's Boral for about 18 months, but he has already slashed 1000 jobs and cut US$95.5m from the company's cost base.

Kane still has costs firmly in focus, saying that spiralling energy costs are seriously damaging manufacturers. "Coal seam gas is part of the future recovery for Australian manufacturing," he said. "If it is not exploited properly, I think Australian manufacturing has a use-by date attached to it because the inflationary pressures in energy will kill domestic manufacturing over time."

Gas and electricity costs Boral about US$91.1m/yr. The group's newly-signed contracts in New South Wales and Victoria will see Boral's cost of gas rise about 20% from 2014. Because of import parity pricing, it is difficult for Boral and its competitors to pass cost increases on to customers. However, Kane is testing the waters. At its half-year result in February 2014, when Boral reported a 73% jump in underlying half-year profit to US$82.4m, the company flagged its intent to raise concrete prices by 6% in April 2014.

Over the past decade the strong Australian Dollar, high wages, rising energy costs and static productivity have taken their toll on manufacturers. "The Australian economy is showing signs of recovery but it is still early days. Not all of the states are reaching the same rate so I would argue that Queensland, Victoria and South Australia still have a while to come," Kane said.

US/Australia: The Commission of New Zealand has granted clearance to USG Corporation and Boral Limited to enter into a joint venture.

The proposed joint venture relates to the two parties' operations in Asia, India, the Middle East and Australasia for the supply of plasterboard, ceiling tiles and ancillary building products such as metal studs and tracks, metal ceiling grids and metal ceiling battens.

The Commission found no significant overlap between USG and Boral in the plasterboard and ceiling tile markets and therefore focused its investigation on the supply of metal building products because the proposed joint venture would give USG Corporation an interest in Rondo Building Services Pty Ltd. At present, both USG and Rondo supply a range of metal building products in New Zealand.

The Commission was satisfied that the proposed joint venture will not have, or would not be likely to have, the effect of substantially lessening competition in separate markets for the supply of metal studs and tracks, metal ceiling battens and metal ceiling grid.

"In all three of these markets, the proposed joint venture would face competition from a number of different suppliers including both domestic manufacturers and importers," said Commerce Commission chairman Mark Berry.