Gypsum industry news

US: From the start of 2013 Progress Energy Florida has contracted to sell its entire output of synthetic gypsum produced at its Crystal River Energy Complex in Florida to United States Gypsum (USG).

Crystal River 4 and Crystal River 5, the two newest coat burners at the energy complex, produce 450,000t/yr of synthetic gypsum. Scrubbers were added to Crystal River plants 4 and 5 in 2009 and early 2010. Currently the byproduct is sold for use in making wallboard, cement and fertiliser.

A conveyor belt will be constructed to move the material from the Crystal River power complex to USG's adjacent property. USG purchased the 72ha site in 2011. It announced at the time it would be a storage facility to warehouse synthetic gypsum from the power plants.

Spokesman Scott Sutton from Duke Energy, owner of Progress Energy, emphasised that contract is for USG to take the synthetic gypsum to their property and store it until they ship it or use it. "One customer will remove it all; if we produce more they will have to take it and we have to produce a certain amount. It is a good deal for both of us."

"It is still pretty early in the process yet," said USG spokesman Bob Williams, referring to the plans for the Crystal River property. "It has gone beyond the design stage but construction has not started yet. It is not expected to be complete until sometime in 2013." He added that Crystal River will only be a transfer site and USG has no near-term plans to build a manufacturing plant at the site.

US: USG Corporation (USG) has announced the election of Matthew Carter Jr. to its board of directors. Carter will serve on the Audit and Governance committees of the USG board of directors. With his addition, USG's board now includes nine independent directors.

Carter is President, Sprint Global Wholesale & Emerging Solutions at Sprint Nextel Corporation. His leadership and experience spans more than 20 years across diverse industries with major companies such as Bristol Myers, Coca-Cola and Leap Wireless. Heavily involved in the telecommunications sector through his career, Carter holds a bachelor's degree from Northwestern University and a master of business administration from Harvard Business School.

"We are pleased to welcome Matt Carter to our board," said Jim Metcalf, chairman of the board, president and CEO of USG Corporation. "His history of leadership, vision, innovation and business transformation will be valuable assets as USG continues to create its own recovery and emerge as a stronger company."

US: USG Corporation (USG) has announced that it has entered into a definitive agreement for the sale of its wholly-owned European business operations to affiliates of Gebr. Knauf Verwaltungsgesellschaft KG for approximately US$80m. The amount is subject to adjustment based on working capital and net debt levels at the closing of the deal.

The businesses being sold include the manufacture and distribution of Donn brand ceiling grid and Sheetrock brand finishing compounds throughout Europe, Russia and Turkey.

"While USG's European operations have been performing well, we prefer to focus our investment in higher growth markets," said James S Metcalf, Chairman, President and CEO. "We contacted more than 60 potentially interested parties, including both strategic buyers and private equity firms, and decided to sell the businesses following a thorough evaluation that produced strong interest. We're pleased with the value we are receiving for this group of assets."

US/Oman: US-based USG Corporation (USG) has announced that it has entered into a strategic partnership with the Zawawi Group of Oman to meet the growing demand for its building products in the Middle East and India. The investment by USG opens up new opportunities for the group in the rapidly-growing Indian and Middle Eastern wallboard markets and will provide local projects better access to USG's industry-leading wallboard products.

USG's partnership with the Zawawi Group will be in two phases. The first phase will be establishment of a mining joint venture through which USG will acquire 55% of Zawawi Gypsum, which holds the mining rights to a gypsum quarry in Salalah, Oman. The joint venture will develop infrastructure and operate the quarry. The quarry is near to many ports and is thus in an ideal location to provide raw material for future USG wallboard plants and cement plants run by other companies. Quarry mining operations are targeted for startup in the third quarter of 2013.

The second phase of the partnership will see the construction of a 50/50 manufacturing joint venture between USG and Zawawi Minerals to build and operate a new wallboard plant in the Salalah Free Zone in Oman. The proposed plant site is close to the quarry and ports, allowing easy access to India and the rest of the Middle East. It is expected that the wallboard plant will be running by the end of 2013. USG expects the investment of approximately US$60m to be incurred over two years, with the majority in 2012.

"This is an important step forward in our strategic initiative to diversify the sources of USG's earnings by investing in higher-growth international markets," said James S Metcalf, Chairman, President and CEO of USG. "The market in India and the Middle East represents an attractive growth opportunity. We are thrilled to partner with a prominent and highly regarded organisation such as the Zawawi Group, whose business acumen and market knowledge will contribute to the success of the venture."

"Zawawi Minerals is committed to investing and participating in the industrial promotion of the nation, supporting the development march witnessed under the wise leadership of His Majesty Sultan Qaboos," said Alawi bin Qais al Zawawi, Chairman of Zawawi Minerals. "Part of our corporate agenda is our commitment and responsibility to adopt and deliver high international standards of operations for a safe and healthy environment for the local communities. This also includes bringing substantial, long-term benefits and job opportunities to the people of Dhofar Governorate. In addition, our mining and manufacturing projects in Salalah will enhance valuable foreign exchange earnings for the country as these operations are mostly export oriented," he added.

Ramachandran, CEO of Zawawi Minerals, said, "The company has been investing significantly to conduct detailed technical exploration of minerals and commercial feasibility study. The gypsum board and plaster of Paris manufacturing facility will be set up in the Salalah Free Zone adopting American environmentally-friendly manufacturing technology complying with all applicable national and international standards related to safety and environmental quality measures."

Ramachandran added that the joint projects would provide jobs for more than 320 people directly and indirectly and that they would be trained to a high level. He said that the combination of US-standard wallboard with 'Made-in-Oman' branding would enhance the Omani industrial brand image in the international marketplace.

US: USG Corporation has reported a net sales increase of 13% in the first quarter of 2012 whilst decreasing its overall net loss. The building materials manufacturer made net sales of US$812m in the three months ending on 31 March 2012 compared to US$721m in the same period in 2011. Operating profit rose from a loss of US$58m in 2011 to a gain of US$27m. However, the company remains in net loss after tax, reducing its loss from US$105m in 2011 to US$27m in 2012.

"Despite continuing low demand our emphasis on achieving operating profit is succeeding and continues to be a top priority," said James S Metcalf, Chairman, President and CEO. "Our focus on our customers, innovation and growing our adjacent businesses contributed to our first quarter results. All units showed improved results, supported by a modest increase in US wallboard demand and solid performance across our product lines including ceilings, substrates and joint compounds."

Of USG's gypsum assets its subsidiary the US Gypsum Company registered the strongest turnaround in the first quarter improving sales by 20% from US$318m in 2011 to US$381m in 2012. Operating profit rose from a loss of US$29m in 2011 to a gain of US$29m in 2012.

"Although demand in our core markets still remains near historical lows, we are confident our strategy will continue to move us toward positive net earnings," said Metcalf.

US: USG Corporation has reported a net loss of US$30.5m for January and February 2012, compared to US$82.3m for the same two-month period in 2011. The preliminary, unaudited results were announced in connection with USG's ongoing tender offer and consent solicitation relating to its 9.75% notes due 2014.

For the two-month period, USG reported net sales of US$517m and an operating profit of US$5.7m. For the comparable two-month period in 2011, USG reported net sales of US$447m and an operating loss of US$46.8m. The company has attributed the improved year-over-year results primarily to increases in its US average wallboard price and wallboard gross margin.

USG currently expects that operating results for March 2012 will reflect the continuing impact of the wallboard prices and gross margin increases. Complete results for the first quarter are expected to be announced on 17 April 2012.

US: USG Corporation has reported fourth quarter 2011 net sales of US$750m, up by nearly 8% from its fourth quarter 2010 net sales of US$696m. Its operating loss for the fourth quarter was US$42m, whereas in the same quarter of 2010 it was US$95m. Its fourth quarter 2011 net loss after-tax was US$100m, down from the US121m net loss a year earlier.

"While some markets remain at or near historically low levels, all of our businesses continue to benefit from the strategic actions we have taken to reduce costs and strengthen our operations," said James S Metcalf, Chairman, President and CEO. "United States Gypsum Company and L&W Supply Corporation, our two largest businesses, reduced their reported operating losses in 2011 compared to the prior year, while many of our other key units achieved an operating profit in 2011."

"The success of our SheetRock Brand UltraLight wallboard products in 2011 was one of the highlights of the year," Metcalf continued. "Market acceptance and customer feedback regarding both the 1/2 inch (12.7mm) product and the newer 5/8 inch (15.9mm) products have been outstanding. We foresee significant opportunities to extend the proprietary lightweight technology to other product categories, including our market-leading family of joint treatment products."

Looking ahead Metcalf said, "Our goal is to continue taking the actions necessary to achieve an adjusted operating profit as soon as possible. We will remain focused on strengthening our core businesses, diversifying our earnings and differentiating USG though innovation."

Canada: USG has announced that it permanently closing the Fundy Gypsum mine in Hantsport, Nova Scotia. 50 people were working at the mine until it was idled earlier in 2011. The Hantsport mine had been producing gypsum since 1934.

Robert Williams, spokesman for USG, said that the decision to close is a direct result of weak demand for USG's flagship wallboard Sheetrock® in the United States. because of the ongoing housing recession. He said being a stand-alone mine an expensive freighter ride away from USG's four US manufacturing plants also hurt the Hantsport mine's viability. Williams said finding another buyer will be difficult.

"The main use for gypsum is gypsum wallboard,"' he said. "It is unlikely that anyone else would have an appetite for it."

The company once employed hundreds of people and spent US$50m in the 1990s to upgrade the Hantsport operation.

US: USG has reported a deepening net loss of USD115m for the quarter ending 30 September 2011, compared to a loss of USD100m for the same period in 2010. Revenue rose 4.4% to USD792m, from USD758m in 2010.

A weak economy has been blamed for low levels of demand for the company's products. "Many of our key markets continue to experience recessionary levels of demand that are near record lows," said President and CEO James S. Metcalf.

USG's operating loss for gypsum in North America expanded to USD70m, from USD43m in 2010. It also had a USD17m operating loss for building products, compared to a USD24m loss in 2010. Its Worldwide Ceilings unit had a USD25m operating profit.

US: USG has taken ownership of about 180 acres in northwest Citrus County, Florida, to warehouse synthetic gypsum from the nearby Progress Energy power plant. Company spokesman Mark Joseph said that USG plans to store the gypsum until it is transported to company plants in North America.

USG received a trustee's deed on 14 September 2011 from the City National Bank of Florida, which owns about 400 acres near Power Line Road. According to the deed USG is the sole beneficiary of the trust.

Joseph said that the company's plans do not go further than storage of the material in warehouses at present. He added that the company has no plans at this time to manufacture drywall at the Citrus County site. "We took possession of the land to make it a storage facility," he said.

Joseph finished by saying that economic conditions require nothing more now than someplace to store and ship the material. However, he wouldn't rule out expansion, "We don't know what the future will bring... The Florida market is not the best right now for housing."