Gypsum industry news

Australasia: LafargeHolcim has said that, despite what has been reported recently in the media, its Australian and New Zealand operations are not for sale.

LafargeHolcim recently announced a plan to divest almost US$5bn of assets in 2016 after posting unexpectedly weak third-quarter results. Speculation had emerged that it might exit from the Australasia region.

However, according to local media, an internal email sent to staff on 30 November 2015, Holcim Australia Chief Executive Mark Campbell said the company was 'not currently being sold,' but could not rule out an exit in the long term.

"I have checked whether the LafargeHolcim group had made a decision to sell the businesses in Australia and New Zealand and started a sale process without my knowledge and the answer I have received is 'no,'" said Campbell. "That said, organisations change focus over time and it is impossible to say that we will always be part of the LafargeHolcim group."

Australian-listed rivals, including Boral, Fletcher Building and Adelaide Brighton, are seen as potential acquirers, should the multinational giant choose to sell off its local arm. Ireland's CRH may also be interested. However, Morgan Stanley said that many of LafargeHolcim's local competitors might run into competition issues, given that the market is concentrated among several large players. "Should Adelaide Brighton fully participate, we cannot rule out that the 50% share in Cement Australia would be divested due to Australian regulations, given Adelaide Brighton's already strong share in cement," said Morgan Stanley Analyst James Rutledge. "While we think Fletcher Building is unlikely to be in a position to participate in industry consolidation, a change in owner that was less integrated into the region may be a positive for Fletcher Building at the margin," said Rutledge. "Given Boral's strong share in aggregates and the concrete market, we believe it will be difficult to participate in industry consolidation."

While Lafarge has a limited local presence in Australia and New Zealand, Holcim bought a string of Australian assets from Mexico's Cemex in 2009 for US$2bn and now boasts more than 350 sites nationwide.

Australasia: LafargeHolcim is believed to be considering an exit from Australia and New Zealand, with the region under the spotlight as part of a strategic review globally of non-core assets. It is understood that a private equity firm has already made an approach for some assets, amid a period of global consolidation in the industry.

Lafarge sold its Australian gypsum operations four years ago for US$127m to Knauf, but Holcim has remained one of the most dominant suppliers in the Australian and New Zealand market of aggregates, concrete and concrete pipe and products. While the division is likely to be too large for Boral, it may pursue parts of the business or partner with another buyer to secure some of the LafargeHolcim assets. However, it is believed that the most likely acquirers include CRH and Votorantim.

Australia's construction industry has been enjoying strong conditions on the back of a recent boom in residential house prices in Melbourne and Sydney. Brickworks, the country's largest brick and tile maker, recently flagged a lift in its earnings for the 2016 financial year on the back of the strong momentum in its building products group.

Mexico: Panel Rey has announced that it will begin construction of a new wallboard plant in Cuidad Jurez, Chihuahau, Mexico. It will begin production in December 2016.

The plant is located 30km away from the US border at El Paso, Texas and will service the northwest markets of Mexico and Southwest in the US markets.

The company states that the production capacity of the plant is 15,000,000 boards/yr. It will also produce joint compounds and metal studs in the future.

The company states that it will continue its expansion in Central and South America.

US: USG Corporation has announced it has partnered with Honeybee Robotics, a spacecraft technology and robotics company, for the field testing of Honeybee's Planetary Deep Drill System. The field testing, which will take place at USG's Plaster City gypsum quarry in Salton Sea, California is part of Honeybee's broader Mars exploration program, which aims to better understand the planet and the capabilities needed to send humans to the planet by the 2030s.

"We are honored to be the only company in our industry to play a role in this innovative endeavour to advance planetary exploration and the broader field of science," said Dominic Dannessa, Senior Vice President of Operations and Chief Technology Officer at USG. "We believe innovation comes from inspired thinking inside our company and outside of it, so sharing our geotechnical expertise with Honeybee was a natural fit."

USG's Plaster City gypsum quarry was selected by Honeybee as the ideal site to test the Planetary Deep Drill due to gypsum's similarity to cryogenic ice observed on Mars, Enceladus, Europa and other planetary bodies. Honeybee will drill 100 feet into the depths of the gypsum quarry, which is significantly deeper than drills previously deployed to Mars were capable of accessing. The field test will assess the functionality of the Planetary Deep Drill and provide data for future improvements and enhancements. Scientists have suggested that inside gypsum crystals may be the ideal environment for life to exist on the surface or near surface or Mars.

Drilling at Plaster City will take place from mid-November 2015 until mid-December 2015.

Oman: Growing demand for gypsum, mainly from cement and wallboard manufacturers, should see exports from Oman reach 10Mt/yr by 2018, nearly double the present level, making it the fourth largest gypsum producing country, according to industry experts. Gypsum production is expected to hit 12Mt/yr by 2020.

Gypsum exports from Salalah Port rose from 4.15Mt in 2014 to 4.8Mt in the first 10 months of 2015. Exports are expected to reach 5.5Mt for the entire of 2015. Oman is the 10th-largest gypsum producing country in the world and is expected to become the sixth-largest in 2016, according to Zawawi Minerals' CEO Ramachandran. The US Geological Survey has estimated gypsum resources of around 950Mt in the southern part of the country. The gypsum demand growth is mainly from Asian countries like India, Japan, Indonesia, Vietnam and Bangladesh. There was a supply crunch from Thailand, where mineral mining had become heavily-regulated.

Zawawi Minerals partnered with United States Gypsum Corporation in 2012 and with Australia's Boral to launch the largest gypsum mining facility in the country. The US$16m, 3Mt/yr facility exports gypsum rock to India, Japan, Taiwan, Indonesia, Vietnam, South and East Africa, the UAE and Bangladesh. Zawawi Minerals also set up the Middle East's first Sheetrock brand gypsum wallboard plant in the Salalah Free Zone for US$37m. It has a production capacity of 10Mm².

"Oman has emerged as the single most important source for high grade natural gypsum for cement and gypsum wallboard manufacturers across Asia and South and East Africa. With higher production and little significant change in domestic consumption, Oman may continue to export the majority of its gypsum," said Ramachandran.