Gypsum industry news

New Zealand: Germany’s Knauf and US-based USG have applied to the Commerce Commission asked for clearance for the two companies to merge. USG is active in New Zealand through its 50% interest in USG Boral Building Products, which supplies gypsum wallboard, suspended ceiling components and other building materials. Knauf is active in the import and supply of products used for modular suspended ceilings and insulation in New Zealand. The proposed merger is also to be assessed by competition authorities in several jurisdictions including Australia, USA and Singapore.

New Zealand: Fletcher Building has appointed Martin Brydon as a non-executive director with effect from 1 September 2018. Brydon, who is currently the chief executive officer (CEO) and managing director of Adelaide Brighton, is scheduled to retire from the Australian company later in 2018. Chairman Ralph Norris said that Fletcher Building is focusing on the New Zealand and Australian markets and that an Australian director who will help this strategy.

Brydon has worked for over 40 years in the Australian building products sector. He started his career as an indentured engineering cadet with BHP, before progressing to general management roles with Cockburn Cement, where he then served as CEO from 1998 - 1999. Brydon joined Adelaide Brighton in 1999 and held a number of general management roles before his appointment as CEO and managing director in 2014.

New Zealand: Fletcher Building has appointed Michele Kernahan as Chief Executive Building Products. His former position of Chief Executive Construction will be taken by Peter Reidy, currently Chief Executive KiwiRail. Both appointments are effective from early November 2018. David Thomas, currently serving as the Interim Chief Executive Building Products, will return to his role as General Manager Winstone Wallboards once the appointments are effective.

New Zealand: Fletcher Building’s subsidiary Winstone Wallboards plans to build a US$181m gypsum wallboard plant in Auckland. The new unit is expected to create around 200 new jobs, according to the New Zealand Herald newspaper. Negotiations at the Drury site have not yet been concluded yet. The company hopes that the new plant will be operational in 2021 or 2022. The new development is planned to meet local demands and upgrade the existing capacity at Winstone Wallboards’ Penrose plant in Auckland.

Peru: Eternit Perú plans to spend around US$8.7m towards security, technology and plant productivity by 2020. Over half of this investment, US$4.4m, will be spent in 2017, according to the El Comercio newspaper. The building materials producer intends to double its gypsum wallboard business by 2020 and it has started a new marketing campaign to support this aim. It has recently won a government tender to build 2600 temporary homes using its wallboard system and it also plans to start exporting products to New Zealand in the short term.

New Zealand: Fletcher Building has reported that its net profit rose by 51% year-on-year to US$114m in the half year that ended on 31 December 2015 from US$75.6m in the same period in 2014. Its sales rose by 2.5% to US$2.94bn from US$2.87bn. It attributed this to growth in its building products and distribution businesses making up for weaker earnings from Formica and New Zealand housing developments.

Fletcher Building reported that gypsum wallboard volumes via its Building Products division rose by 9% in the half year. Volumes of performance board rose by 12%. Sales volumes of insulation rose by 12% in New Zealand and 9% in Australia. It noted that its market share has also improved in both insulation markets due to competitive pricing following the strengthening of the US Dollar.

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.

New Zealand: Auckland's first comprehensive recycling facility for building industry waste, including wallboard, has been opened by the environment and building and housing minister Nick Smith, according to Live News.

"This new recycling facility is about greening the building industry, enabling 30,000t/yr of construction and demolition waste to be diverted from going to landfill. It will enable thousands of tonnes of wood, wallboard, steel, plastics and aggregates from the construction sector to be sorted and re-processed into a reusable form," said Smith.

The US$2.78m facility is part-funded by a government grant of US$1.39m from the Waste Minimisation Fund and has created 15 jobs in the local Onehunga community. The fund was established by the government from a US$6.6/t levy on waste going to landfill that was introduced on 1 July 2009. Over US$39.6m has been used to fund more than 100 projects in the past five years.

"The opening of this new facility is very timely with Auckland on the brink of its largest ever building boom. The house build rate has increased from 4000/yr to 8000/yr since 2011 and is expected to grow to over 12,000/yr. Each home constructed generates 4t of waste and it makes sense to recycle as much of this construction material as possible," said Smith.

Wood, plasterboard, steel, plastics, aggregates and cardboard are being targeted by CID Resource Recovery for recycling or reuse. Wood will be further processed into biofuel for industrial kilns, while old wallboard can be recycled for use as a soil conditioner. Scrap steel will be extracted by magnet and delivered to metal recyclers for processing and sale on the local or export markets. Various grades of plastic, card and paper will go to local recyclers for processing. Aggregates will be used locally for hardfill or drainage material on building or infrastructure projects.

"This sort of practical approach to recycling typifies the Government's Bluegreen approach to waste. We are partnering with business to find economically-viable ways to recycle waste and focusing on those areas where there are the biggest gains. This initiative is particularly significant as construction and demolition waste makes up half of New Zealand's total waste going to landfill," said Smith.

New Zealand: The Commerce Commission has completed its investigation into allegations that Winstone Wallboards Limited, a subsidiary of Fletcher Building, acted anti-competitively to maintain its market position in the manufacture and supply of wallboard. Based on the evidence gathered during the investigation, the Commission does not believe that Winstone has breached the Commerce Act 1986 and it will not be taking any further action.

"We have completed a thorough investigation and there is no evidence to suggest that Winstone has breached the Commerce Act in any of these areas," said Commission Chairman Mark Berry.

The Commission's investigation was centred on three areas: Winstone's alleged exclusive agreements with merchants, the rebates Winstone pays to merchants and Winstone's alleged practice of undercutting other wallboard suppliers on jobs. The initial investigation was completed in April 2014 and followed by additional interviews and further investigation.