Global Gypsum Newsletter

Issue: GGM56 / 26 October 2023

Headlines


Georgia-Pacific officially opened its new gypsum wallboard plant at Sweetwater in Texas earlier this month. The US$325m project is situated next to the company’s existing plant at the site, Sweetwater West, on the other side of a road. Canada-based Gyptech said in 2021 that it was supplying the equipment for the new high-speed line at the site.

When Georgia-Pacific first announced the new project in 2020, it mentioned that it would be able to keep its logistics costs low, use raw gypsum reserves and the existing workforce. Despite this, the plant has still created over 100 new jobs. The company also said that it anticipated closing its 60Mm2/yr Quanah plant, also in Texas, depending upon market conditions. This came to pass in March 2023. Altogether, both plants at Sweetwater will have a production capacity of around 93Mm2/yr. This implies that the new plant has a production capacity of around 60Mm2/yr, given that the existing plant’s capacity is 30Mm2/yr. Funnily enough this is the same as the Quanah plant.

The new plant at Sweetwater may be a sign that the US wallboard market is picking up again. Georgia-Pacific has invested some serious money and it is targeting Texas, a leading area for construction nationally. However, it does come with a few caveats. Firstly, the new plant at Sweetwater is replacing existing capacity at Quanah. Secondly, it is using some of the advantages of the existing plant such as its trucks and its proximity to its customers. This suggests that the company may be wary of building a new plant in a greenfield location with all the potential risks that might involve.

US wallboard sales have regularly peaked and troughed over the decades, like many other commodity markets, as demand and production capacity race each other. Sales of wallboard peaked around the year 2000 and then again in the mid 2000s before tailing off following the 2007 recession. They have been recovering ever since and started to get close to the levels seen in the first half of the 2000s in 2022 when the United States Geological Survey (USGS) reported wallboard sales of 2.6Bnm2.

Generally, the last tranche of new wallboard plants in the US were built or approved in the late 2000s before the financial downturn. These new sites included CertainTeed’s Roxboro plant in North Carolina and the Moundsville plant in West Virginia, Gold Bond Building Products’ Mount Holly plant in North Carolina and American Gypsum’s Georgetown plant in South Carolina. From this point though various plants were either closed or mothballed. Some of the latter have been restarted as the market slowly recovered. New plant projects in the 2010s tended to be upgrades or replacements. One example of this was USG’s plan to rebuild a production line at its Jacksonville plant in Florida, which was announced in late 2017 before Knauf took over the company in 2018. Another was National Gypsum’s scheme to reopen its Wilmington plant in North Carolina in 2019. At the same time in the 2010s there were a number of mergers and acquisitions including Lafarge’s sale of its gypsum business in North America in 2013, Knauf’s takeover of USG in 2019 and Saint-Gobain’s acquisition of Continental Building Products in 2020.

When Georgia-Pacific started building the new plant at Sweetwater in 2020 this marked the start of a new phase of US wallboard plant projects. American Gypsum announced plans for an upgrade to its Albuquerque gypsum wallboard plant in 2021, Gold Bond Building Products started building its long-delayed Eloy plant in Arizona in 2022 and it said it was spending US$90m on an upgrade to its Mount Holly gypsum wallboard plant in North Carolina in 2023, and CertainTeed revealed it wanted to build a second production line at its Palatka gypsum wallboard plant in Florida also in 2023.

Congratulations are due to Georgia-Pacific for the achievement at Sweetwater. Optimism for the US market in general may also be in order given the slow but steady stream of projects that have been announced and completed since 2020. The next step, when a company builds a new wallboard plant at a greenfield site in the US, looks set to happen when Gold Bond Building Products completes its Eloy plant.


US: Eagle Materials sold 139Mm2 of gypsum wallboard during the first half of its 2024 financial year (1 April 2023 – 30 September 2023), a decrease of 5% year-on-year from 147Mm2 in the same period in the 2023 financial year. This contributed sales worth US$428m, down by 2.9% and corresponding to 35% of total group sales. Overall, group revenue rose by 4.9% to US$1.22bn.

President and chief executive officer Michael Haack said "Market conditions for our construction materials remained resilient during the quarter, even as the Federal Reserve continued to raise interest rates and tighten money supply to contain inflation. Several factors helped offset the higher rates and supported demand for wallboard, including limited housing supply, strong homebuyer demand, increasing infrastructure awards and significant investment in domestic manufacturing facilities.” Haack added “the backlog of housing construction supported resilient wallboard shipments and orders, but we recognise the significant increase in interest rates may have an impact on residential construction activity in the future. Nonetheless, we expect that our portfolio of businesses will remain well-positioned for the second half of fiscal 2024."


Peru: Nicolás Restrepo, the Andean Region manager for Etex, says that an ongoing upgrade to the Huachipa gypsum wallboard plant is set to be finished by 2025. In an interview with the Gestión newspaper he revealed that the US$31.5m project should be 60% complete by the end of 2023. Once commissioned the upgrade will double the production capacity of the unit.


Japan: Chiyoda Ute intends to launch a gypsum board product, Chiyoda Hokkaido Board, which uses 50% recycled gypsum, from December 2023. The product will be manufactured at its Muroran plant in Hokkaido. Subsidiary Tokuyama Chiyoda Gypsum opened a gypsum recycling plant in Muroran in September 2023. Chiyoda Ute owns a 49% share in Tokuyama Chiyoda Gypsum and Tokuyama Corporation owns the remainder.


US: Beneficial Reuse Management (BRM) has acquired Pennsylvania-based gypsum wallboard recycling firm USA Gypsum (USAG).

BRM board chair Dave Schuurman said “The acquisition of USAG gives BRM an opportunity to further diversify our sources of gypsum to include recycled scrap wallboard, as well as to grow our geographic footprint. USAG’s operations will complement our existing gypsum processing operations, which provide gypsum in pelletised form to agricultural and other markets. This acquisition aligns perfectly with our mission of providing sustainable solutions for the management of industrial byproducts to divert materials away from landfills.”


Australia/New Zealand: Belgium-based Etex has signed an agreement with building materials company BGC to acquire the latter’s gypsum and fibre cement businesses. The gypsum business consists of wallboard, plasters, compounds and cornice production units, and includes the Perth gypsum wallboard plant in Western Australia. BGC also operates nine warehouses across Australia and New Zealand. Etex says that the deal expands its activities in the ‘attractive’ local market, with significant growth opportunities. Finalisation is expected in early 2024.

Etex CEO Bernard Delvaux said “This deal is a strategic opportunity for Etex to complement our footprint in Australia and further increase the accessibility of our products and services for customers. This will both reinforce our gypsum wallboard offering and position us well in the growing fibre cement activities through a broad product range and good channel access.”


US: Georgia-Pacific has officially opened its new gypsum wallboard plant at Sweetwater in Texas. The project had a budget of US$325m and it is the first new wallboard plant that Georgia-Pacific has built since 2004.

David Neal, president of Georgia-Pacific Gypsum said “The two operations combined will supply customers and distribution partners with more than 92Mm2 of gypsum products each year and create more than 100 new jobs. This investment strengthens Georgia-Pacific's capacity to meet growing customer needs in Texas' residential, commercial, and industrial construction markets.”

The new plant is adjacent to Georgia-Pacific’s first gypsum wallboard facility in Sweetwater, purchased by the company in 1996. The existing facility has been operating in Nolan County since the 1950s. Over the last year, Georgia-Pacific has invested approximately US$16m in technical and safety upgrades at the plant, including an Energy Optimization System (EOS), auto-guided vehicles (AGVs), an automated robotic riser system, auto-splicing equipment, and upgraded packaging equipment. It has also upgraded the employee facilities.


US: Saint-Gobain has acquired the remaining equity interest and assets of Seven Hills Paperboard, including a gypsum paper board liner manufacturing plant in Lynchburg, Virginia, from its joint venture partner WestRock. The purchase adds to the gypsum wallboard operations of Saint-Gobain’s CertainTeed Interior Products Group. The company said that the internal integration of gypsum paper board liner production represented a “significant” step in strengthening the supply chain for this material.

Mark Rayfield, President and Chief Executive Officer of Saint-Gobain North America and CertainTeed Canada said “The acquisition of these assets represents our continued commitment to our customers to provide quality gypsum wallboard products.” He added, “I would like to welcome our 80 new team members in Lynchburg and look forward to your contributions to our purpose, ‘To Make the World a Better Home.”


Brazil: The Administrative Court of the Brazilian Administrative Council of Economic Defence (CADE) has submitted for review the proposed acquisition by Knauf Brazil of a gypsum wallboard plant operated by Trevo Industrial de Acartonados. The Office of the Superintendent General (SG) noted after an investigation that the transaction would increase market concentration, exceeding the limits set out in the guides of CADE and the competition law. The gypsum wallboard market in Brazil has four suppliers, including Knauf and Trevo.

The review pointed out that imports are “unusual and cannot be considered a source of competition if Knauf raises the prices after merging with Trevo.” The SG also warned that other factors could lead to potential market collusion such the lack of history of competitive rivalry in terms of price, quality, or any other difference amongst the products.

Following its challenge to the proposed acquisition, the SG has submitted the case to a tribunal. At this stage a commissioner will review it and include it in the agenda for further adjudication.


India: The Directorate General of Trade Remedies (DGTR) has recommended a five-year anti-dumping duty on gypsum tiles imported from China and Oman. Saint-Gobain India initiated the investigation that started in late 2022. It considered gypsum tiles laminated on one side with polyvinyl chloride (PVC) or wax paper that are typically used in ceilings. The study concluded that the product had been “exported to India at a price below the normal value, resulting in dumping.”


India: Saint-Gobain plans to invest over US$400m in its different businesses, including gypsum wallboard, in Tamil Nadu. Company chair Pierre-Andre de Chalendar and chief executive officer Benoit Bazin met the Chief Minister MK Stalin, senior ministers and officials of the government of Tamil Nadu as part of the announcement. The new funding brings the company’s total investment in the state to over US$950m.


Oman: Oman exported 8.75Mt of gypsum in the first nine months of 2023, a rise of 23% year-on-year from 7.09Mt in the same period in 2022. Data from Oman-based Zawawi Minerals shows that 48% of exports were sent to India.


Austria: Saint-Gobain Austria, waste management company Saubermacher and construction firm PORR have secured permission to build a new gypsum-to-gypsum recycling plant in Stockerau. The plant will cost Euro7m. Saint-Gobain Austria said that the facility will support the government’s Raw Materials 2030 circular economic development plan.

CEO Peter Giffinger said "Gypsum is endlessly recyclable, but special quality criteria must be met in order for recycled gypsum to be used again to produce new panels.”


Kyrgyzstan: Representatives of Germany-based Knauf have discussed plans to build a gypsum plant in the country. Knauf General Partner Uwe Knotzer said that the company is preparing to build a plant in the northern Chüy Region, according to the Central Asian News Service. However, it is also considering constructing a plant in the southern Osh Region. As part of the meeting a memorandum of understanding and cooperation was signed between the National Investment Agency under the President of the Kyrgyz Republic and Knauf.


Canada/US: Saint-Gobain has signed a 15-year renewable electricity supply agreement (PPA) with TotalEnergies for the purchase of solar power for its 125 industrial sites in the US and Canada. This 100MW PPA, known as the Danish Fields Solar Project (Danish Fields), is expected to offset Saint-Gobain’s North American CO2 emissions from electricity (scope 2 emissions) by 90,000t/yr. The project is expected to come online by the end of 2024.

Danish Fields is the third PPA signed in North America by Saint-Gobain. The first PPA, with the Blooming Grove Wind Farm in Illinois, was signed in 2020, and the second, with TotalEnergies’ Cottonwood Bayou Solar Project in Texas, was signed in 2022. All three projects have been supported by Edison Energy, a leading energy and sustainability advisory that consults with the largest commercial, industrial and institutional energy users.

Mark Rayfield, the chief executive officer of Saint-Gobain North America, said “With this agreement, Saint-Gobain North America will further reduce its CO2 emissions, demonstrating how fast the manufacturing industry can transform when long term solutions are at hand. This renewable energy project is a new milestone on the way to meeting Saint-Gobain’s commitment to reduce scope 1 and 2 CO2 emissions by 33% by 2030 - compared to 2017 - and to reach carbon neutrality by 2050.”

The three projects combined are expected to represent a reduction of more than 70% in Saint-Gobain North America’s scope 2 emissions, compared to 2017 levels.


UK: British Gypsum’s non-loadbearing metal stud plasterboard partition systems, including shaft walls, have become one of the first products on the local market to carry the Code for Construction Product Information (CCPI) mark. The scheme is intended to provide assurance to end users that the product information for these products is clear, accurate, accessible, up-to-date and unambiguous.

The CCPI was initiated by the Construction Product Association (CPA) as a direct response to Judith Hackitt’s review of Building Regulations and Fire Safety set up in the wake of the Grenfell Tower fire in 2017. The CPA is a UK-based construction industry trade association.


Germany: Rigips held the first meeting for its specialist contractor advisory board on 13 – 14 September 2023 at the Brieselang gypsum wallboard plant in Brandenburg. The managing directors of 10 wallboard construction companies met to discuss the market and future challenges. The program for the two-day meeting included a tour of the plant and a workshop moderated by the Rigips product management and the research and development departments.

Danijel Lučić, the director of sales at Saint-Gobain Isover G+H and Saint-Gobain Rigips said “With the expertise of the 'Rigips Experts', we want to be even closer to the market, from product management through research and development to sales.” He added, “The members of the advisory board are all professionals in modern wallboard construction. We want to include these experts in our considerations when developing products and systems and also when developing messages for and in the market. Your feedback is enormously valuable for us in order to be able to prepare and make important decisions safely.”


Ireland/UK: Belgium-based Etex has appointed Oliver Cripps as its Head of Sustainability, UK and ireland to support its brands, including Siniat. His role will be to push the company’s sustainability agenda, heighten the environmental credentials of its operations and products and decrease reliance on raw materials.

Cripps has worked for 25 years in the sustainability sector in industries including tourism, land management and manufacturing. His previous jobs include Senior Sustainability Manager at Dyson Technology, where he led sustainability for the New Product Innovation and Research teams, and experience working with global furniture manufacturer, MillerKnoll to support research and development and corporate sustainability.


North America: Saint-Gobain has signed a 100MW solar power purchase agreement (PPA), called Danish Fields, with TotalEnergies. The Danish Fields PPA will supply Saint-Gobain North America with solar energy for 15 years, commencing in 2024. Saint-Gobain says that it expects the PPA to eliminate 90,000t/yr of CO2 emissions across its operations. This is the group’s third deal of its kind.

Saint-Gobain North America CEO Mark Rayfield said “With this agreement, Saint-Gobain North America will further reduce its CO2 emissions, demonstrating how fast the manufacturing industry can transform when long term solutions are at hand. This renewable energy project is a new milestone on the way to meeting Saint-Gobain’s commitment to reduce Scope 1 and 2 CO2 emissions by 33% by 2030 compared to 2017, and to reach carbon neutrality by 2050.”


US: Two members of GMS’ board of directors, Peter Browning and Teri McClure, have won national awards for corporate leadership. Browning won the National Association of Corporate Directors’ Lifetime Achievement Award, which recognises commitment to the improvement of corporate governance. Meanwhile, McClure won DirectWomen’s Board Excellence Award for women lawyers who have served with distinction.

GMS chair John Gavin said "On behalf of the entire board of directors of GMS, I congratulate Peter and Teri for these well-deserved honours. It is gratifying to see that organisations like these recognise the incredible talent that we on the board get to experience every day. The selections of Peter and Teri for these important distinctions speak not only to this level of talent but also underscore our commitment to the highest level of corporate governance standards and promoting diversity and corporate governance principles. We are fortunate to have directors of such high calibre serving on our Board and benefit from their extensive knowledge and experience."

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