Gypsum industry news

Georgia-Pacific officially opened its new gypsum wallboard plant at Sweetwater in Texas earlier this month. The US$325m project is situated next to the company’s existing plant at the site, Sweetwater West, on the other side of a road. Canada-based Gyptech said in 2021 that it was supplying the equipment for the new high-speed line at the site.

When Georgia-Pacific first announced the new project in 2020, it mentioned that it would be able to keep its logistics costs low, use raw gypsum reserves and the existing workforce. Despite this, the plant has still created over 100 new jobs. The company also said that it anticipated closing its 60Mm²/yr Quanah plant, also in Texas, depending upon market conditions. This came to pass in March 2023. Altogether, both plants at Sweetwater will have a production capacity of around 93Mm²/yr. This implies that the new plant has a production capacity of around 60Mm²/yr, given that the existing plant’s capacity is 30Mm²/yr. Funnily enough this is the same as the Quanah plant.

The new plant at Sweetwater may be a sign that the US wallboard market is picking up again. Georgia-Pacific has invested some serious money and it is targeting Texas, a leading area for construction nationally. However, it does come with a few caveats. Firstly, the new plant at Sweetwater is replacing existing capacity at Quanah. Secondly, it is using some of the advantages of the existing plant such as its trucks and its proximity to its customers. This suggests that the company may be wary of building a new plant in a greenfield location with all the potential risks that might involve.

US wallboard sales have regularly peaked and troughed over the decades, like many other commodity markets, as demand and production capacity race each other. Sales of wallboard peaked around the year 2000 and then again in the mid 2000s before tailing off following the 2007 recession. They have been recovering ever since and started to get close to the levels seen in the first half of the 2000s in 2022 when the United States Geological Survey (USGS) reported wallboard sales of 2.6Bnm².

Generally, the last tranche of new wallboard plants in the US were built or approved in the late 2000s before the financial downturn. These new sites included CertainTeed’s Roxboro plant in North Carolina and the Moundsville plant in West Virginia, Gold Bond Building Products’ Mount Holly plant in North Carolina and American Gypsum’s Georgetown plant in South Carolina. From this point though various plants were either closed or mothballed. Some of the latter have been restarted as the market slowly recovered. New plant projects in the 2010s tended to be upgrades or replacements. One example of this was USG’s plan to rebuild a production line at its Jacksonville plant in Florida, which was announced in late 2017 before Knauf took over the company in 2018. Another was National Gypsum’s scheme to reopen its Wilmington plant in North Carolina in 2019. At the same time in the 2010s there were a number of mergers and acquisitions including Lafarge’s sale of its gypsum business in North America in 2013, Knauf’s takeover of USG in 2019 and Saint-Gobain’s acquisition of Continental Building Products in 2020.

When Georgia-Pacific started building the new plant at Sweetwater in 2020 this marked the start of a new phase of US wallboard plant projects. American Gypsum announced plans for an upgrade to its Albuquerque gypsum wallboard plant in 2021, Gold Bond Building Products started building its long-delayed Eloy plant in Arizona in 2022 and it said it was spending US$90m on an upgrade to its Mount Holly gypsum wallboard plant in North Carolina in 2023, and CertainTeed revealed it wanted to build a second production line at its Palatka gypsum wallboard plant in Florida also in 2023.

Congratulations are due to Georgia-Pacific for the achievement at Sweetwater. Optimism for the US market in general may also be in order given the slow but steady stream of projects that have been announced and completed since 2020. The next step, when a company builds a new wallboard plant at a greenfield site in the US, looks set to happen when Gold Bond Building Products completes its Eloy plant.

Brazil: The Administrative Court of the Brazilian Administrative Council of Economic Defence (CADE) has submitted for review the proposed acquisition by Knauf Brazil of a gypsum wallboard plant operated by Trevo Industrial de Acartonados. The Office of the Superintendent General (SG) noted after an investigation that the transaction would increase market concentration, exceeding the limits set out in the guides of CADE and the competition law. The gypsum wallboard market in Brazil has four suppliers, including Knauf and Trevo.

The review pointed out that imports are “unusual and cannot be considered a source of competition if Knauf raises the prices after merging with Trevo.” The SG also warned that other factors could lead to potential market collusion such the lack of history of competitive rivalry in terms of price, quality, or any other difference amongst the products.

Following its challenge to the proposed acquisition, the SG has submitted the case to a tribunal. At this stage a commissioner will review it and include it in the agenda for further adjudication.

Kyrgyzstan: Representatives of Germany-based Knauf have discussed plans to build a gypsum plant in the country. Knauf General Partner Uwe Knotzer said that the company is preparing to build a plant in the northern Chüy Region, according to the Central Asian News Service. However, it is also considering constructing a plant in the southern Osh Region. As part of the meeting a memorandum of understanding and cooperation was signed between the National Investment Agency under the President of the Kyrgyz Republic and Knauf.

Germany: Knauf Gips has started an upgrade at its Iphofen gypsum wallboard plant to switch its use of synthetic gypsum to natural gypsum. The project is taking place to prepare the unit for the local phase out of coal-fired power plants by 2038 at the latest. Early work at the site has involved using a 700t crane to lift material over the Würzburg-Nuremberg railway line, during planned renovation to the transport link in late July 2023. The company described the cost of the upgrade as a “mid-double-digit million sum.”

Ukraine: Knauf says that it hopes to rebuild its Donbass gypsum wallboard plant “as soon as conditions allow.” According to the Frankfurter Allgemeine Zeitung newspaper, the company has been supplying the local market from its Kiev plant. This unit was previously shut down but re-opened in mid-2022. Knauf also aspires to play a part in the reconstruction of social facilities for the country by assisting in the building of nurseries, schools and hospitals.

The company’s Donbass plant is located near to Bakhmut on the front line between the Russian and Ukrainian armed forces. The site was reportedly bombed directly in May 2022 during a Russian airstrike.

Eurogypsum added its views on the European Union’s (EU) proposed Critical Raw Materials Act (CRMA) last month. It wants gypsum to be added to the bill’s list of critical and strategic raw materials. It is not surprising that the European federation of national associations of producers of gypsum products might want to do this. However, when compared to rare earth minerals of the sort required to manufacture batteries for electric vehicles (EV), gypsum doesn’t seem all that, well, rare.

What may be rare though is people’s patience with new gypsum mines. The association’s argument is that gypsum is indeed abundant in the EU but that accessing it is increasingly becoming difficult. The EU’s sustainability agenda has made the energy efficiency of buildings as important as reducing CO₂ emissions from the transportation sector. Gypsum and other materials used to make lightweight building materials are a way of renovating existing buildings and improving energy efficiency. Therefore it suggests that the act should either recognise gypsum as strategic or introduce a new ‘essential’ category. This would then make the process of extracting gypsum more easy.

This approach ties back to initiatives such as one by the Federal Commission on Geosciences (BLA-GEO) in Germany, which previously started to compile an inventory of the nation’s gypsum deposits with the intention of putting this in front of policy makers. Nor is the gypsum sector alone in targeting the potentially lucrative retrofit market. In May 2023 Daikin, Danfoss, Knauf Insulation, Rockwool, Saint-Gobain, Signify and Velux signed an agreement to promote building energy efficiency in Central and Eastern Europe (CEE). Radek Bedrna, Knauf Insulation’s managing director for Eastern Europe and Middle East, noted that two thirds of the 43.6m homes in single- and multi-family houses in the CEE region were reportedly built before 1989 and are energy inefficient. The European Commission places transport-related greenhouse gas emissions at about 25% of the region’s total. Renovating buildings fully, by contrast, could save up to 5% of the EU’s emissions. Targeting transport emissions may be a higher priority for the EU but the savings from retrofitting are not trivial either.

Then - on cue in mid-June 2023 - there was an example of the difficulties gypsum product producers can face with building new quarries or enlarging old ones when expansion plans for a gypsum quarry supporting Placoplatre’s wallboard plant in Chambéry in France were scaled back from local opposition. The subsidiary of Saint-Gobain met similar issues in late 2022 when a public enquiry started examining its plans to build a new quarry at Fort Vaujours, Seine-Saint-Denis. This site is intended to serve the Vaujours gypsum wallboard plant as a replacement for its Bernouille quarry after the latter closes in 2026. This one has a happier ending, for the gypsum sector at least, since the project received an environmental permit in late May 2023. One of the key issues that came up in the enquiry was a disagreement over the means of extraction. A local environmental group favoured underground mining but an open-cast approach was preferred by the producer as it would yield much more gypsum. The latter was eventually approved.

What this suggests is that making gypsum an ‘essential’ raw material in Europe requires engagement with the general public as much as legislators. Some people may not like having a wind farm built near where they live but the chances are that there will be less opposition than building a new coal mine. Digging up new gypsum deposits should be presented as more like the former than the latter. Whizzing around in a new EV is generally seen as being more fun than bragging about how great the lamba factor is for one’s house. However, this may change if energy prices keep ticking upwards. Gypsum may not be rare but Eurogypsum and others can make a strong case for it being essential.

Kazakhstan: Germany-based Knauf has signed a deal with the government of the Zhambyl region to build a gypsum wallboard and dry building mixtures plant. The project has a cost of around Euro30m, according to InterFax. Completion is scheduled by 2026. Local subsidiary Knauf Gips Taraz is now developing design and estimate documentation for the construction of necessary infrastructure. Products from the proposed plant will be sold in the domestic market. The project is one of nine agreements between organisations from Germany and Kazakhstan announced during an official visit by German President Frank-Walter Steinmeier.

Kyrgyzstan: Germany-based Knauf is preparing to build a gypsum plant in the south of the country. Alexander Blumhardt, the Executive Manager CIS countries for Knauf Group, said that the company was ready to invest in the country, according to the Trend News Agency. He said that Knauf had already conducted market research and negotiations on the construction of a building materials plant. It is currently studying gypsum deposits in the proposed region.

Philippines: Knauf Gypsum Philippines has petitioned the Philippines Tariff Commission to reduce the import duty on imports of Omani gypsum to 0% of value. Currently, Oman’s gypsum enjoys a most favoured nation (MFN) reduced tariff rate of 3%. The Oman Daily Observer newspaper has reported that high gypsum wallboard demand has created short supply of gypsum in the Philippines, according to Knauf Gypsum Philippines. Beside the company’s wallboard operations, the raw material is also critical to cement production in the country.

The Philippines receives a minor share of Oman’s 8.74Mt/yr of natural gypsum exports. The Southeast Asian country has a housing backlog of 6m units.

Philippines: Knauf Gypsum Philippines has signed an agreement with the Department of Social Welfare and Development (DSWD) to provide construction skills training in Calabarzon. The partnership links to the country’s Pantawid Pamilyang Pilipino Program (4Ps), a poverty reduction scheme that started in 2019, according to the Manila Bulletin newspaper. Knauf Gypsum Philippines opened its first gypsum board training centre in the country in Quezon City in mid-2022. It has trained nearly 800 workers on gypsum board installation and jointing skills since the centre opened.