Global Gypsum Newsletter

Issue: GGM25 / 14 April 2016

Headlines


UK: Etex Group has merged Siniat, Promat and EOS Facades to create Etex Building Performance UK. The new division will combine technical knowledge and research and development resources in the dry construction sector. Etex intends to create new products aimed at reduced installation times whilst catering to specifiers' requirements.

The division will employ over 500 people, with production sites in Bristol, Yorkshire and County Durham. It will be led by Neil Ash, the managing director of Siniat UK, who will become Head of Etex Building Performance UK. Each company will continue to trade separately in the UK as Siniat, Promat and EOS Facades.

"Our vision is singular - to be the leading expert in dry construction, concentrating our efforts on creating solutions for the buildings of tomorrow. The three brands within Etex Building Performance complement each other and are well known for their innovation, high-quality manufacturing and technical know-how," said Ash.

Siniat produces drywall products and Promat specialises in passive fire protection. Siniat acquired EOS Facades, a provider of Steel Frame Systems, on 8 April 2016,


Belgium: Etex's cladding and building board sales revenue rose by 5% year-on-year to Euro1.44bn in 2015 from Euro1.38bn in 2014. It attributed the growth to a strong market in the UK, stabilised performance in construction markets in Germany and the Benelux region and recovery in most of South America.

Overall the company reported that its revenue rose by 2.3% to Euro3.05bn from Euro2.99bn. However, its profit fell by 60% to Euro37m from Euro95m. This was attributed to restructuring in Argentina, France and Germany and impairment charges. The cladding and building board business represents 47% of Etex's building products portfolio. It built three gypsum wallboard plants, in Peru, Brazil and Romania, in 2015.

Etex expects to achieve modest growth in revenue and profit in 2016.


Honduras: Knauf International has acquired Caspian International in Honduras. Caspian International operates a gypsum wallboard plant in Choloma. The transaction also includes Cateras de Sula, a gypsum quarry in Honduras, and Caspian Panama, a commercial office.

"After our two recent acquisitions in Colombia, we are extremely pleased to strengthen our geographical footprint in the central American market... We are convinced that this acquisition is the beginning of a strong evolution in Central America and in the Caribbean Islands. As we have done in other countries, we will bring our expertise in plasterboard manufacturing to Central America, but also in other construction fields such as Aquapanel cement board, ceilings, jointing and Cleneo, our decorative boards," said Serge Azaïs, member of the Knauf Management Committee and CEO for South America. "Knauf Honduras will benefit from the strong knowledge of our Argentinian team, leading the integration process of the former Gypcen brand."


Russia: The Federal Antimonopoly Service (FAS) has approved an application by Knauf Gypsum Kuban to acquire a 100% stake in ZZSG. FAS ruled that the takeover would not have any effects for competition in the market sector.

ZZSG is a producer and seller of gypsum products in the Mari El federal region of Russia. Knauf Gypsum Kuban is a Russia subsidiary of Knauf.


China: China National Building Material Company's (CNBM) net profit has fallen by 83% year-on-year to US$157m in 2015. Its revenue fell by 17.8% to US$15.4bn. China's largest cement producer has blamed the loss of profits on a steep drop in cement sales due to a national slowdown in fixed-asset investments, infrastructure construction and real estate investments.

The state-owned building materials company also produces gypsum wallboard, insulation materials and ceiling systems. Revenue from the sale of lightweight building materials fell by 7.6% to US$1.09bn as the price of gypsum wallboard fell. However, revenue from mineral wool insulation sales and composite materials rose by 25.3% to US$501m due to increased sales of pipes, tanks and rotor blades.


US: Continental Building Products has elected Ed Bosowski to serve as chairman of the board of directors effective from 18 March 2016. He replaces Brad Boggess. Bosowski has been a member of the board of directors of the company since February 2014, and has over 30 years of experience in the gypsum wallboard industry.

The company also announced that Brad Boggess, Kyle Volluz and Grant Wilbeck resigned from the board of directors on 18 March 2016 following the sale by an affiliate of Lone Star Funds of all remaining shares of stock it held in the company. The three departing board members were affiliated to Lone Star Funds. The board of directors of Continental Building Products currently consists of five independent members and the company's president and CEO.


US: Transnational Group has delayed the start of gypsum mining and production at its property in Sandy Valley, Nevada. It blamed the setback on unforeseen delays by the Bureau of Land Management (BLM) in issuing Transnational's exploration permits due to the agency's lack of resources. It anticipates that it will will be able to obtain the necessary permits to commence exploration at the site within sixty to ninety days, barring any additional requests or delays by the BLM.

"Due to delays imposed by the BLM stemming from its lack of qualified geologists in our area that could not be foreseen by management, the timeline of our Sandy Valley Project has been extended. However, we expect to secure an exploration permit in the near future and anticipate that Transnational will continue its progress towards producing gypsum on this property," stated Transnational Group's CEO, Philip Dutoit.


Kuwait: Kuwait Gypsum Manufacturing and Trading has reported that its profit fell by 19.4% year-on-year to US$0.9m in 2015 from US$1.11m in 2014. Its profit in the fourth quarter of 2015 fell by 22.8% year-on-year to US$0.62m from US$0.80m. The wallboard producer runs a plant in Shuaiba producing boards under the K-GYPS brand.


Vietnam: Knauf Vietnam has signed a strategic cooperation agreement for the distribution of gypsum wallboard with Zinca Vietnam. A ceremony marking the signing was held on 12 March 2016 and attended by about 300 guests, including gypsum wallboard distributors, dealers, contractors, developers, and architects, according to local press.

"I believe this remarkable milestone will help us strengthen our nationwide coverage and promote brand awareness," said David Thomas, General Director of Knauf Vietnam. He added that the company's 20Mm2 wallboard plant in Hai Phong has started commissioning and is due to started selling commercial products by May 2016.

Knauf Vietnam was licensed in 2013 to build a gypsum wallboard plant. It has since established offices in Hai Phong, Hanoi, and Ho Chi Minh City and has been developing a distribution network throughout the country. In the meantime it has been selling products locally including StandardShield, MoistShield, FireShield, Knauf Danoline and Cleaneo.

Zinca Vietnam is a Vietnamese building materials manufacturer and distributor that was founded in 1995. It previously signed a cooperation deal with Saint-Gobain in 2007 to distribute Gyproc branded products in the country.


France/Switzerland: Saint-Gobain and the Burkard family have extended their agreement relating to the sale of shares of Schenker-Winkler Holding (SWH) and to extend the validity of the agreement until 30 June 2017. Saint-Gobain will then have an option to extend the agreement until 31 December 2018. SWH holds the majority of voting rights of Sika.

"Together, we are fully committed to this transaction. It makes sense from a strategic, industrial and financial standpoint for Saint-Gobain and for Sika, for their employees, for their customers and for all of their shareholders. The amendment to the agreement covers the longest of timelines to resolve related disputes, allowing SWH to regain its property rights," said Pierre-André de Chalendar, Chairman and CEO of Saint-Gobain.

In December 2014, Saint-Gobain announced its intention to buy a 16.1% stake in Sika for Euro2.6bn, thus acquiring control over the building materials producer. However, Sika's management and minority shareholders opposed the deal. At the end of January 2016, Saint-Gobain's finance chief Laurent Guillot told Reuters that the group still believed in a successful outcome despite the resistance it faced. In February 2016 Sika reiterated its opposition to the takeover in a financial statement saying that, "There is still no evidence to suggest there is any industrial logic behind the transaction."


Australia: Minotaur Exploration is looking to sell its gypsum deposit at Lake Purdilla, Eyre Peninsula in South Australia. The mineral exploration company reports that the 87Mt deposit has an estimated purity of 91% gypsum consisting of gypsarenite and selenite. The site has been classified as an Inferred Resource based on previous drilling programmes.

Lake Purdilla is believed to be the largest known undeveloped gypsum resource in South Australia. Minotaur Exploration estimates that the site could be mined at a rate of 1Mt/yr for over 50 years. Gypsum from the site would be suitable for domestic use for wallboard production, cement manufacture and agricultural use. It could also be eligible for export to Southeast Asia.

Previously Minotaur Exploration agreed a sale worth US$4.8m for the Lake Purdilla gypsum deposit in late October 2014. The buyer was unnamed.


Iran: Ammar Bashare, the director of the Middle East trade development section of Saint-Gobain, has expressed his company's desire to invest in the gypsum plaster industry in Semnan province. He made the comments in a meeting with Ali Asghar Joma'ei, the head of the province's Chamber of Commerce, Industry, Mine and Agriculture, as reported by the Islamic Republic News Agency.

Bashare said that Saint-Gobain is ready to invest in the local plaster industry and he hoped that his company could have more cooperation with local Iranian companies when the economic sanctions are lifted.

Joma'ei said that around 40 plaster producer companies are active in Semnan province and that foreign investors should bring modern technology into Iran. He also noted the readiness of a number of investors from Turkey and Germany in the industry. He added that the province is ready for 100% foreign investment or joint venture partnerships.

Semnan produces 40,000t/day of plaster. It exports plaster to Iraq, Turkmenistan and India.


Canada: Continental Building Products has announced that Chantal D Veevaete and Michael J Keough will join its Board of Directors as independent directors, effective from 14 March 2016. Veevaete will join the Compensation Committee and Keough will join the Nominating and Governance Committee. They will replace Chad Suss and Kevin Barner, who were affiliated with the Company's private equity sponsor, Lone Star Funds. Suss and Barner will resign effective from 11 March 2016.

Veevaete has experience in senior leadership positions in several industries, with a particular expertise in human resources. Most recently, from May 2012 through December 2014 Veevaete served as Senior Vice President, Human Resources of Phillips 66, a diversified energy and logistics company. Prior to that she helped implement the separation of Phillips 66 from ConocoPhillips. From April 2009 through January 2012 Veevaete served as Vice President, Human Resources of Chevron Phillips Chemical, and before that served in human resources roles for companies in the health care industry.

Keough has experience in senior leadership and operating roles, including serving as Chief Executive Officer of several manufacturing companies. Most recently, Keough served as President and Chief Executive Officer of Stronghaven, which has been a subsidiary of Hood Container Corporation since December 2013. From January 2005 through May 2010 Keough was President and Chief Executive Officer of Caraustar Industries, a manufacturer of paperboard and paperboard products.


US: Headwaters Resources has announced it has entered into a definitive agreement to purchase 100% of the membership interests of Synthetic Materials based in Louisville, Kentucky. The acquisition, which is subject to the satisfaction of certain closing conditions, is expected to close in Headwaters current fiscal year. It is intended to complement the coal combustion product management operations of Headwaters.

Synthetic Materials handles synthetic gypsum processing and management. It has 21 years of experience providing services to the flue gas desulfurisation industry, including the design and construction of gypsum dewatering systems, gypsum marketing, landfill and pond management. At present it provides operations and maintenance services at 10 different utility sites and manages over 4Mt/yr of bulk synthetic gypsum, generating approximately US$25m in annual revenue. The expected purchase price will range between US$38 – 45m, depending upon certain conditions.