Gypsum industry news

US: Lafarge has announced that is preparing the sale of its North American gypsum business to US private equity firm Lone Star in a deal worth an enterprise value of US$700m.

Lafarge North America's Gypsum division manufactures gypsum wallboards and joint compounds throughout a network of plants in the United States and Canada, including three US gypsum wallboard plants. In 2012, these operations generated sales of US$310m. The assets have been held for sale in the Lafarge's consolidated balance sheet since 2011.

This transaction, which is expected to close very soon, is subject to the satisfaction of customary closing conditions.

Global building materials producer Lafarge reduced its net debt by Euro700m in 2012 to Euro11.3bn. It sold the majority of its worldwide gypsum business – in Asia, Europe, South America and Australia – to Boral and Etex in 2011. Lafarge retains a 20% stake in the joint venture with Etex.

US: Eagle Materials' revenue has increased by 30% to US$643m for its financial year to 31 March 2013, from US$495m in the same period of 2011 – 2012. The US-based building materials provider saw fourth quarter results improve across all business lines reflecting an improving construction market in the US.

Eagle's gross profit for the year more than doubled to US$103m in 2013 – 2012 from US$40.5m in 2012 – 2011. Revenues for its gypsum wallboard business rose by 41% to US$307m from US$218m. Sales volumes of wallboard rose by 17% to 177MM2 from 152MM2. Eagle attributed the increase in operating earnings to higher net wallboard sales prices and sales volumes.

US: A Florida-based property development built with 'defective' Chinese wallboard has reached a US$22m settlement with the manufacturer, supplier and installer, according to its attorney.

The settlements mark the first time a multifamily structure has received compensation under the multi-district litigation in New Orleans federal court, which consolidated Chinese wallboard lawsuits from the individual homeowner to the wallboard makers, said attorney Greg Weiss of Palm Beach Gardens. Weiss has represented the owners of 320-unit Villa Lago at Renaissance Commons in Boynton Beach.

Knauf Plasterboard Tianjin reached a global settlement in the litigation to pay for the repairs. It is estimated Knauf will have to pay US$10.2m to repair Villa Lago. A previous US$4.6m settlement had been reached with the builder, RJR Holdings II LLC, Boynton Beach. In a twist, RJR Holdings was both a defendant and a plaintiff after developing the property and still owning 130 units.

US: James Metcalf, the CEO of United States Gypsum, received a pay rise of 31% to US$7.7m in 2012, according to figures released in the company's proxy statement.

Although Metcalf's basic salary rose by 5% to US$867,000 in 2012, other perks such as stock awards, option awards and non-equity incentive plan compensation took the total from US$5.86m in 2011 to US$7.7m in 2012.

In 2012 the US wallboard manufacturer reported a loss of US$126m, reduced from US$390m in 2011.

US: More than a dozen lawsuits alleging price-fixing on the part of major manufacturers of wallboard have been consolidated in the Eastern District of Pennsylvania. The location was chosen as most of the parties are located in the area and a majority of the parties advocated for consolidation in that district. US District Judge Michael Baylson will handle the case.

"From at least September 2011 to the present the defendants, manufacturers of gypsum board, combined and conspired to fix and raise the prices at which they sold gypsum board in the United States beginning with large and coordinated price increases that all became effective on or about 1 or 2 January 2012," according to the complaint filed in one case originating in the Eastern District of Pennsylvania, Janicki Drywall versus CertainTeed.

Major manufacturers of wallboard have annual sales of more than US$5bn, according to the complaint and the defendants are seeking treble damages. The defendants in the suit account for more than 99% of wallboard sold in North America, according to the complaint. They are USG, National Gypsum, CertainTeed, Georgia-Pacific, American Gypsum, Lafarge, Temple-Inland and PABCO.

In a previous status conference for the Eastern District of Pennsylvania cases, Steven Bizar of Buchanan Ingersoll & Rooney was named as interim liaison counsel for the defence, while H Laddie Montague Jr of Berger & Montague had been named interim liaison counsel for the plaintiffs.

US: Progress on two new flue gas desulphurisation (FGD) projects in Colorado and Indiana have been announced. Neumann Systems Group has completed 60% of its US$73.5m contract to install an emissions scrubbing system at the Martin Drake Power Plant in Colorado and the first stage of the Indiana-Kentucky Electric Corporation's US$670m pollution-control project at the Clifty Creek plant in Indiana is now operational. Both of these projects will increase the supply of FGD gypsum in the US.

Neumann Systems Group has a 2011 contract worth US$121m to design, build and install an emission-scrubbing system on two of the Martin Drake Power Plant's three power production units. The NeuStream system is designed to remove more than 95% of the sulphur dioxide from the emissions of the two units, as required by US Environmental Protection Agency (EPA) rules that take effect in 2017, and convert it to gypsum that can be sold for fertiliser and building materials.

At the Indiana-Kentucky Electric Corporation's Clifty Creek Power plant in Indiana, plant officials announced that one of its two new flue gas desulphurisation scrubbers has begun feeding exhaust gas to produce cleaner emissions. These scrubbers will remove up to 98% of sulphur dioxide emissions creating synthetic gypsum. The Clifty Creek plant has six 217MW units that will feed to two scrubbers. The second scrubber is scheduled to begin operations in May 2013. The project began in 2007 but was postponed from 2009 to 2011 due to the economic downturn.

US: Holcim (US) Inc., a major cement manufacturer and part of Switzerland's Holcim Ltd., has filed an application with the Montana Department of Environmental Quality for an operating permit to quarry gypsum on 21.4 hectares (53 acres) of private land about 15km southeast of Geyser in Judith Basin County. The gypsum will be used to make cement at the company's Trident Cement Plant near Three Forks, according to Herb Rolfes, supervisor of the Department of Environmental Quality's (DEQ) Operating Permit Section. Gypsum has been mined at the site in the past.

"It should be a relatively benign type of mine," Rolfes said. "There's no real issues as far as chemistry or water quality that will be a problem." DEQ officials are reviewing the application and will write a draft environmental assessment that will be put out for public comment in the second quarter of 2013. About 3.9 hectares (nine acres) would be disturbed over the next five years, with about 21.4 hectares (53 acres) being disturbed over the estimated 18-year life of the mine.

US: The United States Geological Survey (USGS) has released data regarding gypsum production and consumption in the United States during 2012. This shows that a total of 9.9Mt of crude gypsum, 11.8Mt of synthetic gypsum and 12.1Mt of calcined gypsum was produced during the year. In 2011 the totals were 8.9Mt (crude), 11.8Mt (synthetic) and 11.9Mt (crude). Total consumption came to 24.6Mt, a 3.8% rise from 2011 when the country consumed 23.7Mt.

The leading crude gypsum-producing States were, in descending order, Oklahoma, Texas, Iowa, Nevada, and California, which together accounted for 58% of total output. Overall, 47 companies produced gypsum in 34 states and around 90% of all gypsum was used in wallboard and plaster production. Around 12% of the gypsum consumed was imported.

The USGS pointed to increased construction activity as the main driver of the increased demand, consumption (up 4%) and production (up 11%) of gypsum in the US in 2012. The average price of gypsum remained static at ~US$7/t crude (at mine) and ~US$30/t calcined (at plant). The USGS added that the US gypsum wallboard capacity in 2012 was in the region of 33Bn ft² (3.07Bn m²).

US: United States Gypsum (USG) has applied for a permit to withdraw up to 2.11 million litres/day of water for a gypsum plant near Crystal River in Florida. However, company spokesman Robert Williams said that the plant is not planned in the immediate future.

USG's permit application is pending with the Southwest Florida Water Management District. The district has sent USG a letter seeking more information to make sure that the planned withdrawals won't cause salt-water intrusion or otherwise harm the groundwater.

In 2011 USG purchased 72 hectares near the Progress Energy Florida power complex north of Crystal River to warehouse synthetic gypsum that is created by scrubbers at the coal-burning plants. Progress, whose parent company is Duke Energy, has a contract to sell the gypsum to USG, which is planning to build a warehouse sometime in 2013 to store the product until it is shipped to a wallboard manufacturer.

"USG proposes to construct a state-of-the art facility that is projected to bring 130 new jobs to the area and will incorporate water conservation to the greatest extent feasible," the company's consultant, Progressive Water Resources, wrote in its application letter to the water district. The letter requests a 20-year permit and states it is still negotiating for easements to the well sites and a pipeline that would transport water from the well to the manufacturing centre.

US: The US-based building materials provider Eagle Materials has reported financial results for the third quarter of the 2013 fiscal year, which ended on 31 December 2012. These showed that its revenue was up by 33% compared to the same period of the prior fiscal year. Earnings per share were up by 429% year-on-year.

Eagle's third quarter sales volumes improved across all business lines, with sales prices improving in all but one of it business lines. Its gypsum wallboard segment experienced the most significant improvement, with an increase in average net sales prices of 27% as compared with the same quarter of the prior fiscal year.

Eagle's Gypsum Wallboard and Paperboard division's third quarter operating earnings of US$24.8m were up by 362% compared to the same quarter of the 2012 fiscal year. Higher wallboard average net sales prices, higher gypsum wallboard and gypsum paperboard sales volumes and lower recycled paper input costs were the primary driver of the quarterly earnings increase.

Gypsum wallboard and paperboard revenues for the third quarter were US$100.3m, a 37% increase from the same quarter a year ago. The revenue increase reflects primarily higher wallboard average net sales prices and sales volumes. The average gypsum wallboard net sales price for the third quarter was US$120.55/1000ft2, 27% greater than the same quarter a year ago. Wallboard sales volume for the quarter of 519Mft2 represents a 23% year-on-year.