Gypsum industry news

US: USG has proposed to the Forest Service that it be allowed to conduct exploratory core drilling on National Forest System (NFS) lands south of its Shoals gypsum wallboard plant in Indiana. The drilling is intended to verify probable mineral resources within a 520ha area of NFS land ahead of future mining activities that would occur from the plant, according to the Washington Times-Herald newspaper. The USG drilling proposal is for a duration of two years beginning in the spring of 2023.

USG owns the subsurface mineral rights for mining gypsum deposits while the Forest Service owns the surface rights to a portion of land located within the Hoosier National Forest. The Forest Service previously gave permission for USG to conduct drilling on most of the land in 1995 but it is currently evaluating the impact it would entail, considering mitigation options and seeking public comment.

UK/Ireland: Knauf UK and Ireland’s haulage contractor Nicholls has switched to using renewably generated liquefied natural gas (LNG) to power its trucks. The transition should reduce Knauf’s Scope 3 emissions generated by transporting its raw materials and products. Knauf’s emissions from deliveries represent roughly 23% of all Scope 3 emissions for the UK business.

Nicholls started trialling LNG powered trucks in 2018 and then built a local refuelling site. It currently uses 29 trucks that run on LNG. The haulage company still uses diesel power vehicles for some routes depending on distance and infrastructure.

Two news stories to note over the last two months indicate growth in the gypsum wallboard market in Romania. Firstly, Knauf announced plans in mid-October 2022 to build a new 30Mm²/yr gypsum wallboard plant at Huedin in Cluj County. Then, Germany-based Grenzebach’s local subsidiary revealed that it had broken ground on the construction of an upgrade to its Iasi production centre.

Knauf’s announcement follows work by the existing wallboard producers with plants in the country to increase their own local capacity. Saint-Gobain started building a new production line at its Turda plant in mid-2021 at a cost of Euro45m. It hopes to have the project completed by April 2023. Etex started work in mid-2022 on a Euro6m sludge drying unit at a coal-fired power plant in Oltenia that will supply synthetic gypsum for use at its Turceni plant. It is also working on logistics upgrades to Turceni and a separate plaster plant at Aghiresu.

Graph 1: Growth rate of the construction market in relation to market volume in selected emerging countries, 2020 – 2030. Source: Saint-Gobain financial report using data from IHS.

An indication of Saint-Gobain’s interest in the Romanian market can be seen in its universal registration document for 2021 where it outlined its strategy. It presented a graph of forecast growth rates in construction markets in selected developing markets between 2020 and 2030. The countries that are underlined in Graph 1 (above) are those where Saint-Gobain made large acquisitions or investments in 2021. Romania is interesting on this graph because it is the European country with the largest predicted growth rate. It also has a relatively low market volume suggesting potential for market growth, although note that the graph only shows selected countries.

Another reason why Knauf might be interested in Romania is that it is the largest country in the European Union in which the company does not have a wallboard plant. Knauf’s own take from its press release about why it decided to build a plant in Romania was that local per capita consumption of gypsum wallboard was around 3m²/yr compared to at least 6m²/yr in more mature markets elsewhere in Europe.

Etex’s subsidiary Siniat Romania reported a 20% year-on-year rise in turnover to Euro60m in 2021. This compares to a 24% rise in turnover to Euro307m by Saint-Gobain Romania. Andrei Popa, Etex’s Country Sales Manager Romania & SEE, told Agenda Constructiilor that Siniat Romania’s turnover grew by 25% year-on-year in the first eight months of 2022. However, it is unclear what difference Etex Group’s acquisition of insulation producer URSA in June 2022 made to the figures in Romania. Popa also revealed that the rise in turnover so far in 2022 was mainly down to price rises. This in turn had been promoted by mounting energy costs, particularly gas. The company described itself as a ‘big consumer of gas’ and reported that the price had risen seven times over the past year. One more point of interest to mention is that Popa described Etex as one of the largest exporters in the country, with 40% of local production sent over national borders. This also aligns with what Knauf said about its new plant. It intends to deliver half of the production from its proposed plant at Huedin to Hungary, Serbia and the Republic of Moldova. The other half will serve the domestic market in the north of Romania with imports from Bulgaria expected to continue to supply the south of the country.

The data above suggests why Saint-Gobain, Etex and Knauf have all invested in wallboard production units in Romania over the last two years. The local market has growth potential and the companies are also focused on exports to neighbouring countries. All this investment may also have contributed to Grenzebach’s decision to enlarge its production site at Iasi too. The ‘fly in the ointment’ here in the short term is the disruption to energy markets caused by the war in Ukraine. Siniat Romania mentioned its concern over gas prices above. Saint-Gobain also made similar comments on a general basis for Europe in its nine month financial results in late October 2022. It said that it was preparing continuity plans for its gas-consuming plants in Europe but added that its gypsum wallboard production lines were ‘extremely flexible.’ However, Romania is better prepared for problems with gas supplies compared to elsewhere in Europe because it produces around 90% of its requirements locally. Despite energy concerns at the moment, the long term potential for the wallboard market in Romania remains promising.

Norway: Norgips has appointed Christian Stålem as its managing director. He was previously the commercial director of the subsidiary of Knauf since May 2022. His promotion follows an interim period with Jan Ellringmann, a member of the group management, covering the position. Stålem previously worked as a sales director at BMI Group. Prior to this he held sales, business development and marketing positions at Circle K, Statoil and Capgemini Consulting.

UK: Knauf UK and Ireland has appointed Paul Campbell as its Commercial Director. He will be responsible for the strategic development of supply chains, customer support, marketing and technical functions. Campbell previously worked for British Gypsum for over 10 years in product management and marketing roles before becoming the Marketing & Technical Director, UK & Ireland at BMI Group in 2019.

Saudi Arabia: USG Boral Middle East has rebranded as USG Middle East (USG ME) with the tagline ‘Innovative Solutions Everytime.’ The company is a joint venture between Knauf-subsidiary USG and Juman Industrial Investment Company. It was originally founded in 1985 and later become part of USG Boral. It produces gypsum wallboard, ceiling, interior finishing, substrate and metal framing products.

Tanzania: Knauf Gypsum Tanzania says that it plans to more than double the production capacity of its 15Mm²/yr gypsum wallboard plant in Mkuranga, Pwani Region, to 43Mm²/yr. IPP Media News has reported that the company's planned investment in the project as US$49.3m. The producer expects that the expanded Mkuranga gypsum wallboard plant will increase its annual gypsum wallboard exports by 170%. When commissioned in 2025, the plant will be the largest in East and Sub-Saharan Africa.

Croatia: The Croatian Competition Commission (CCA) has started investigating Knauf for alleged market distorting behaviour from 2017 to 2021. In a statement the regulator said that the wallboard producer, has been accused of abusing, “…its dominant position by applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage. Concretely, the complainant claimed that Knauf applied different rebate schemes (discounts) and trading conditions that were not based on objectively justified criteria, which have directly resulted in distortion of competition in the preliminary defined relevant market in drywall gypsum boards.” The CCA will examine whether Knauf’s behaviour breached Articles 8 and 13 of the Croatian Competition Act.

Germany-based Knauf operates one gypsum wallboard plant in the country at Knin.

Georgia: Knauf inaugurated a new Euro30m plaster plant in Georgia on 13 October 2022, Sarke News has reported.

Georgian Minister of Economy Levan Davitashvili said that Georgia's current 'high economic growth' is partly due to Knauf's continued investment in its gypsum activities in the country. Davitashvili noted that Knauf has trained 1000 people at its construction industry training centre since 2018.

The minister said that Knauf continually raises the Georgian building materials industry to 'new standards.' He added "The professional knowledge brought by the company and the technologies introduced by it are also very important."

Romania: Germany-based Knauf has announced plans for the construction of a new gypsum wallboard plant at Huedin in Cluj County. The company said that it plans to invest Euro76m in the plant’s construction. It says that the investment will advance the Romanian government's 'energy savings offensive' by supporting a renovation drive for the country’s housing stock. The government aims to increase the national area of modern renovated properties by a factor of six, with a Euro30bn allocation from its Recovery and Resilience Fund.

Knauf's managing partner Alexander Knauf said “The commitment demonstrates our trust and confidence in the country and our employees. We look forward to becoming part of the local community. Together, we are setting new standards for building and living in Romania.”

Knauf had previously planned to build a 35Mm²/yr gypsum wallboard plant at Huedin at a cost of Euro70m. A mine at nearby Aghireșu would supply the planned plant with raw materials. The Aghireșu mine reportedly has 100 years' worth of gypsum reserves. Knauf first delayed its Huedin plant plans in 2009 in light of the economic situation at that time.