Global Gypsum Newsletter

Issue: GGM20 / 16 June 2015

Headlines


Australia: The Gladstone Port Corporation has approved construction of a US$54m Knauf Plasterboard manufacturing plant at Bundaberg Port, Queensland to begin by the end of 2015. The project is anticipated to create up to 100 local jobs over the next 18 months, according to local media. The plant is due to be completed in January 2017.


Germany: Schenck has launched the AccuRate DMO Weighfeeder, which is suitable for weighing and feeding up to 500t/hr. According to Schenck, it is the perfect solution for a variety of heavy-duty industrial applications.

The drive system, with reducer and motor, are all directly mounted on the head pulley shaft reducing the need for alignments and maintenance. At the heart of the DMO is a direct multi-cell weighing system that does not use levers or counterbalance weights. This reduces any chance of error during the weighing process. The DMO comes in standard belt widths of 70 – 137cm with feed rate accuracies of ±0.5% over a 10:1 range. These rates are achievable in a range of material particle sizes up to 10cm lumps.


Jordan: According to local media, Luqman Shah, a young labourer, was killed when he was hit by rolling boulders while working in a gypsum mine in the Khandi Mountain near Lakki Banda village in Karak Tehsil.

Mehmood Shah, president of the Bright Future Gypsum Labour Welfare Union, said that landslide incidents in the mines in which labourers lose their lives and in which their families never receive any compensation, were on the rise. Shah said that the workers union sent the case of Luqman Shah to the mineral department to gain compensation for his family. He added that so far, the families of 27 killed workers out of 80 had been compensated by the department.


Vietnam: Saint-Gobain has increased its holding in Vinh Tuong Industrial Corp (VTI) from 14.8% to over 57% to consolidate its presence in the country. The deal will reinforce Saint-Gobain's presence in Vietnam, where it already operates a wallboard plant.

VTI is a major player in the Vietnamese construction materials market with expected sales of US$109m in 2015 from wallboard and wall solution sales. Financial details of the transaction were not disclosed.


US: According to local media, NB Power has paid J D Irving more than US$12.3m in penalties and contract renegotiation fees since 2009.

"The revelation that NB Power has a contract with J D Irving to provide gypsum from the oil-burning Coleson Cove plant until 2026 for Irving's wallboard plant and pay J D Irving when they can't deliver stunned many New Brunswickers," said David Coon, New Brunswick Green Party leader. "It reminds me of the contract this government currently has with J D Irving to supply an unsustainable volume of softwood from the Crown lands for years into the future or pay up if they can't deliver."

The 2005 contract commits NB Power's Coleson Cove generating station to provide a minimum amount of synthetic gypsum to Atlantic Wallboard every year until 2026. NB Power currently produces 20,000 - 30,000t/yr of gypsum. According to NB Power, the contract states that in the event of a production shortfall, NB Power must pay for the difference between the actual gypsum supplied and the minimum amount of gypsum agreed to in the contract. NB Power has paid US$5.33m in shortfall penalties since the 2009 - 2010 fiscal year. NB Power paid Atlantic Wallboard another US$5m in 2010 - 2011 so that it could reduce the annual cap that it is required to meet, thereby reducing the penalties it has to pay in the future.

Brent Staeben, director of marketing and communications for NB Power, said that the contract was again renegotiated recently, costing another US$2m. "The contract has evolved over time to reflect the fact that the production at Coleson is changing. We have been in constant talks and negotiations over the course of this contract with the buyer to ensure that it better reflects the production at the facility, said Staeben. NB Power has budgeted another US$829,000 for a penalty payment for 2015 - 2016.

Despite the fact that Coleson Cove is producing less gypsum than anticipated, Staeben sid that the contract still makes economic sense because the gypsum needs to be disposed of one way or another. "Originally we committed because we had some sense of how much we would be producing over time. We estimated that, at that time, when we looked into the future, we would need to landfill this," said Staeben. "The cost of landfilling would be significant, in the tens-of-millions of dollars. Even with the changing nature of production there, it's still a very, very good deal for New Brunswickers," he added.

"Without the synthetic gypsum from Coleson Cove, the project would not proceed as the economics to run a gypsum plant in Saint John, relying solely on natural gypsum rock, would not be viable," said Atlantic Wallboard's franchise application to the New Brunswick Energy and Utilities Board in 2006. The document also stated that, "Over time, however, synthetic gypsum from NB Power's generating stations will be supplemented by natural gypsum planned to be imported from out-of-province sources to produce wallboard products."


US: Oklahoma-based ACG Materials has appointed Paul Harrington as its new CEO. ACG Materials is a national provider of minerals, aggregates and related downstream products including gypsum, limestone, sand, gravel and anhydrite.

Paul Harrington joined ACG Materials in July 2014 as president and COO. Prior to July 2014, Harrington was executive vice president at Rain for Rent. Before that, he spent 24 years working for Holcim.


Israel: Israel Chemicals (ICL) is selling its gypsum, pharmaceutical and cosmetics (PCG) business to One Rock Capital Partners for an estimated US$50m.

The sale of the PCG business units is part of ICL's 'Next Step Forward' strategy to divest its non-core businesses to focus on its core businesses in the agriculture, food and engineered materials markets. Israel Chemicals Performance Products' gypsum business is mostly in the UK and focuses on dental applications.


UK: Mid UK Recycling Limited plans to extend its Wilsford Heath waste management facility at Ancaster, South Kesteven in Lincolnshire. If its plans are approved, the plant would recycle up to 350,000t/yr of waste mattresses and plastics.

Chris Mountain, managing director, said that the investment could run into 'multiple millions' of Euros. "We are an existing business, we employ 350 people in Sleaford, Caythorpe and the Ancaster site," said Mountain. "We will put in the main planning proposal in the next three months and as soon as we get the green light we'll start straight away." He said that initially the company wants to start by the end of December 2015, although it may take three years to complete the expansion. "We have been four years developing the site next-door, which is full to capacity now," he said. "The range of products we produce is getting wider and wider. It makes no sense to export those jobs out of the county."

There would be a building for machinery that could break down mattresses into resalable parts. Leftovers would form solid recovered fuel (SRF) products, which could by cement plants and power stations. Another building would be created for packing and storing gypsum from recycled wallboard, which would be sold to supermarkets as cat litter. The business would also bring in a new way of recycling rigid plastics, breaking them down into granules to sell to Lincolnshire manufacturers of drainage pipes, water pipes and car parts.


Spain: Uralita has appointed Javier Gonzalez as its new CEO after former CEO Javier Serratosa stepped down as a result of a debt refinancing agreement.

The refinancing contract granted private equity company KKR Fund control over the majority of the capital of Uralita's insulation subsidiary Ursa, which generated approximately 70% of the company's consolidated revenue in 2014. Serratosa, who continues to maintain a stake in Uralita, will thus assume the presidency of Ursa, in which Uralita will continue to hold a 10% stake. Uralita additionally reinforced its executive team through the appointment of Gonzalo Serratosa as vice president.


Egypt: Sales from Knauf's recently opened wallboard plant in Suez could reach US$15m in Egypt and Africa during the first year of production, according to Alexander Knauf, managing partner of the company. The company plans to sell 8Mm2 of gypsum wallboard during the first year of operation, Knauf said in a statement.


Russia: Turkey's Kastamonu Entegre plans to start construction of a gypsum wallboard plant in Kaluga, Russia. The plant will be located in the Lyudinovo Special Economic Zone (SEZ). Kastamonu Entegre signed an agreement with the regional authorities in 2014.


US: Continental Building Products has announced the appointment of Dennis Schemm as chief financial officer, effective from 11 May 2015.

"We are excited to welcome Schemm to our leadership team," said Jay Bachmann, Continental's CEO. "He has a proven history of experience, with more than 20 years in finance, including 16 years in senior management roles at publicly-traded industrial companies. His extensive and broad leadership capabilities will be instrumental to supporting our efforts as we further strengthen our low-cost position and generate additional cash flow as our end markets improve."

Schemm most recently served from 2013 to 2015 as vice president of global finance for Armstrong Flooring, a division of Armstrong Worldwide, where he oversaw the division's financial and accounting functions. From 2011 to 2013, Schemm served as director of global financial planning and analysis at Gilbarco Veeder Root, a Danaher Corporation, where he was responsible for operational and strategic planning and provided financial leadership for global operations and research and development.


Egypt: The German-Arab Chamber of Industry and Commerce (GACIC) has announced the opening of a new US$50m Knauf Egypt plant. The plant has a capacity of 15Mm2/yr of gypsum wallboard, 90,000t/yr of other gypsum products and 25Mm/yr of metal cutters. Construction in the Ataqa Suez industrial zone began in 2010. Suez was selected as the plant site because of its strategic location between raw materials sites, local markets and major export markets.


Uzbekistan: Knauf has started a new US$52.5m investment project at two of its plants in Bukhara. The move follows the signing of a new agreement in 2014 by Knauf and Uzstroymateriali JSC to boost economic cooperation between Uzbekistan and Germany.

Knauf has already invested US$51m in Uzbekistan. It has two plants in Bukhara: JV JSC Bukharagips, which produces dry building mixes and Knauf Gips Bukhara, which produces gypsum wallboard. The 60,000t/yr capacity Bukharagips plant started operations in August 2009, while the 20Mm3/yr capacity Knauf Gips Bukhara plant was built in 2011.


US: Eagle Materials Inc has reported its financial results for its 2015 fiscal year that ended on 31 March 2015.

Earnings before interest and income taxes increased by 32% year-on-year to US$265m, reflecting improved sales volumes across nearly all business lines, with cement sales volumes setting an annual record of 4.8Mt. Net sales prices also strengthened across all businesses. Fourth quarter earnings before interest and income taxes increased by 31% to US$44.4m, as fourth quarter sales volumes improved across nearly all businesses, reflecting improving construction fundamentals in the US.

On 3 March 2015, Eagle entered into a definitive agreement with Holcim (US) to purchase its 600,000t/yr granulated ground blast furnace slag (GGBFS) plant in South Chicago. The purchase price of US$30m is subject to customary post-closing adjustments and will be funded from operating cashflow. The transaction is expected to close in the second quarter of its 2016 fiscal year and is conditioned upon the closing of the Lafarge-Holcim global merger.

Operating earnings from gypsum wallboard and paperboard grew by 28% year-on-year to US$177m in the 2015 financial year. Revenues from gypsum wallboard and paperboard grew by 13% year-on-year to US$525m. Gypsum wallboard and paperboard fourth quarter operating earnings grew by 32% year-on-year to US$38.3m. The increase in operating earnings was primarily due to higher net wallboard and paperboard sales prices and higher wallboard sales volumes. Gypsum wallboard and paperboard revenues for the fourth quarter grew by 5% year-on-year to US$112m. The average gypsum wallboard net sales price for the quarter grew by 4% year-on-year to US$168.97/Mft2. Gypsum wallboard sales volumes grew by 5% year-on-year to 464Mft2 in the fourth quarter.


US: Wallboard recycler USA Gypsum has opened its US$3m wallboard recycling plant and corporate headquarters in the West Cocalico Township, Pennsylvania. The company said that the new buildings and equipment will produce better quality products more efficiently and will help USA Gypsum to divert even more wallboard waste from landfills.

The recycling plant also includes renovated buildings for packaging, storage and offices. In the past 10 years, USA Gypsum has diverted more than 225,000t of wallboard from landfills, converting it to beneficial use by farmers in the form of gypsum fertiliser, soil conditioners and amendments and gypsum animal bedding. In spite of this growth, USA Gypsum has estimated that less than 10% of wallboard scraps generated in Pennsylvania are recycled. USA Gypsum ships its gypsum products across the US and Canada.