Gypsum industry news

Canada: Lafarge Canada has filed an application under the Environmental Management Act to discharge emissions from a pumice dryer and gypsum granulator at its mothballed cement plant at Kamloops in British Colombia. The building materials manufacturer plans to produce agricultural gypsum and dry pumice for concrete production at the site, according to the Kamloops This Week newspaper. The plant stopped cement production in late 2016.

Australasia: LafargeHolcim has said that, despite what has been reported recently in the media, its Australian and New Zealand operations are not for sale.

LafargeHolcim recently announced a plan to divest almost US$5bn of assets in 2016 after posting unexpectedly weak third-quarter results. Speculation had emerged that it might exit from the Australasia region.

However, according to local media, an internal email sent to staff on 30 November 2015, Holcim Australia Chief Executive Mark Campbell said the company was 'not currently being sold,' but could not rule out an exit in the long term.

"I have checked whether the LafargeHolcim group had made a decision to sell the businesses in Australia and New Zealand and started a sale process without my knowledge and the answer I have received is 'no,'" said Campbell. "That said, organisations change focus over time and it is impossible to say that we will always be part of the LafargeHolcim group."

Australian-listed rivals, including Boral, Fletcher Building and Adelaide Brighton, are seen as potential acquirers, should the multinational giant choose to sell off its local arm. Ireland's CRH may also be interested. However, Morgan Stanley said that many of LafargeHolcim's local competitors might run into competition issues, given that the market is concentrated among several large players. "Should Adelaide Brighton fully participate, we cannot rule out that the 50% share in Cement Australia would be divested due to Australian regulations, given Adelaide Brighton's already strong share in cement," said Morgan Stanley Analyst James Rutledge. "While we think Fletcher Building is unlikely to be in a position to participate in industry consolidation, a change in owner that was less integrated into the region may be a positive for Fletcher Building at the margin," said Rutledge. "Given Boral's strong share in aggregates and the concrete market, we believe it will be difficult to participate in industry consolidation."

While Lafarge has a limited local presence in Australia and New Zealand, Holcim bought a string of Australian assets from Mexico's Cemex in 2009 for US$2bn and now boasts more than 350 sites nationwide.

Australasia: LafargeHolcim is believed to be considering an exit from Australia and New Zealand, with the region under the spotlight as part of a strategic review globally of non-core assets. It is understood that a private equity firm has already made an approach for some assets, amid a period of global consolidation in the industry.

Lafarge sold its Australian gypsum operations four years ago for US$127m to Knauf, but Holcim has remained one of the most dominant suppliers in the Australian and New Zealand market of aggregates, concrete and concrete pipe and products. While the division is likely to be too large for Boral, it may pursue parts of the business or partner with another buyer to secure some of the LafargeHolcim assets. However, it is believed that the most likely acquirers include CRH and Votorantim.

Australia's construction industry has been enjoying strong conditions on the back of a recent boom in residential house prices in Melbourne and Sydney. Brickworks, the country's largest brick and tile maker, recently flagged a lift in its earnings for the 2016 financial year on the back of the strong momentum in its building products group.

Worldwide: Holcim and Lafarge have announced their intention to merge the two companies. The new company, LafargeHolcim, will have a major presence in the global building materials sector with combined production sites in 90 countries across cement, concrete and aggregates sectors. Combined sales of the two companies would amount to around Euro32bn and earnings before interest, taxes, depreciation and amortisation (EBITDA) would be Euro6.5bn.

Lafarge and Holcim confirmed that they would sell businesses worth 10 - 15% of the group's EBITDA to satisfy antitrust concerns, worth about Euro5bn in total. Two-thirds of the asset sales would be in Europe. The companies also have overlapping business operations in Canada, Brazil, India and China.

Lafarge sold the majority of its worldwide gypsum wallboard businesses in 2011 followed by the sale of its North American gypsum wallboard assets in 2013. However it retains plants in Mexico, South Africa and Turkey.