Gypsum industry news

World: In the first major gypsum deal since the onset of the recession on 14 July 2011 Lafarge announced that is would sell its gypsum interests in Europe and South America to the Belgian Etex Group, its current joint-venture partner in South America.

Under the proposed agreement, Lafarge would receive net cash proceeds of approximately Euro850m and in addition would receive a 20% interest in the new partnership. The partnership would combine the European and South American Gypsum activities of both groups.

Lafarge's European and South American Gypsum division manufactures gypsum wallboard and other gypsum-based products such as plaster, joint compounds and plaster blocks. In 2010 the European and South American operations generated combined sales of Euro895m and their combined earnings before interest, tax, depreciation and amortisation were Euro115m. The group's other gypsum interests, including its joint-ventures in Asia with Boral, represent sales of around Euro500m/yr.

The deal will have to receive the approval of the relevant anti-trust authorities and the group will also conduct an information and consultation process with the relevant employee representative bodies.

Above: Summary of Lafarge wallboard assets 2010. The Global Gypsum Directory 2010 lists 45 Lafarge wallboard plants across 30 countries, with a total capacity of approximately 1.3BnM²/yr in 2009-10. Nearly 8000 people are directly employed by the unit. Key: Number of plants (Capacity in MM²/yr).

In a conference call, Bruno Lafont, Chairman and CEO of Lafarge said that Lafarge's gypsum interests represented a modest 9% of its sales in 2010 and that the sale was consistent with Lafarge's plan to focus on its core activities, which he listed as cement, concrete and aggregates. He highlighed the group's focus on providing building materials to rapidly-growing, developing markets with fast population growth rates and a need for new housing and infrastructure development.

He stressed that Lafarge would keep a 20% in the new joint-venture, which he expected to contribute positively to the group's balance sheet and was in line with the best interests of its shareholders.

Lafont summarised the assets in the deal, stating that all of the European interests held by Lafarge in France, the UK, Germany, Italy, Poland, Romania and the Netherlands represented around 60 industrial sites and that the move would affect approximately 3300 employees. In Lafarge's native France, the move affects four wallboard plants, seven associated plants that make jointing compounds and metal studs, five gypsum quarries and a total of 1400 employees.

In South America, the move affects four countries, namely Brazil, Argentina, Chile and Colombia. In these countries, Lafarge and Etex have been engaged in a joint-venture project dating back several years.

Lafont added that despite it being a small component of its operations, Lafarge currently has gypsum interests on all continents and will, for the meantime, be keeping hold of those in Asia, Australasia, Africa and North America. He said that keeping a 20% stake in its existing interests in the affected areas would allow it to, "benefit from the upturn when it comes." He said that it was appropriate for the group to 'keep a link' to gypsum, adding that Lafarge has the right to sell its 20% interest after five years.

He also said that the transaction would help Lafarge improve its relationship with existing partner Etex and allow both groups to expand the positive relationship that has been developed in South America throughout their newly-combined European operations. Lafont commented that the two groups shared the same values and a similar management style.

Speaking personally, he said that he was pleased to announce the deal and concluded that it was a positive move for Lafarge through maintaining its 20% stake, Etex and the shareholders of both groups.

In a statement issued by Lafarge before the conference call Lafont said, " This project unlocks immediate value for the Group while allowing Lafarge to participate in the new entity's future success. We are very pleased with the future prospects of this reinforced partnership with Etex Group, a strong industrial company with expertise in building materials and systems. This operation is positive for Lafarge and its shareholders and will contribute to the strengthening of the group's balance sheet and to the optimisation of its portfolio."

India: FACT-RCF Building Products Ltd (FRBL), a joint venture between Fertilisers and Chemicals Travancore (FACT) and the Mumbai-based Rashtriya Chemicals and Fertilizers (RCF), is expected to commission its gypsum-based reinforced wall panel and building components plant by September 2011.

The FRBL plant in Ambalamedu, Kerala is worth USD22.43m and is a 50:50 joint venture between the two public sector fertiliser companies. The unit is being built on 12 acres of land at FACT's Ambalamedu site.

According to a statement issued by the FRBL on 29 June 2011, the project is now 97% complete, with all machinery having been erected. The wet gypsum handling section has now been commissioned.

The calciner has been successfully lit up and some plaster was first made during the last week of May 2011. This unit is now fully operational. The start of the commissioning process for the mixing plant is expected towards the end of July 2011.

A team of engineers from Rapid Building Systems, the Australian technology and machinery provider for the project, is expected to arrive in Kochi and take up the commissioning of the wall panel manufacturing unit in September 2011.

The fibreglass reinforced gypsum panels are expected to revolutionise building culture in Kerala. The project originated with the idea of utilising the nearly 6Mt of gypsum stockpiled at the Ambalamedu and Udyogamandal sites owned by FACT.

The fibreglass reinforced panels can replace brick walls and give substantial savings in time and money invested in conventional buildings. Savings in cement, bricks and scarcer resources such as river sand are highlights of the new building component. Construction time can be reduced to about one-fifth of the normal time taken for erecting a conventional building.

The new FRBL unit has a capacity to produce around 39,000 panels, each of 36m2, per year. Interior wall putty and interior wall plaster will be other products from the new joint venture. The plant will require over 0.1Mt/yr of gypsum.

US: On 21 June 2011 United States Gypsum Co. was assigned a patent for 'Gypsum-containing product and method for producing same.' The inventors were named as Qiang Yu, Steven W Sucech, Brent E Groza, Raymond J Mlinac, Frederick T Jones and Paul J Henkels, all from the US.

According to the abstract released by the US Patent & Trademark Office, 'The invention provides a set gypsum-containing product having increased resistance to permanent deformation and a method for preparing it comprising forming a mixture of a calcium sulphate material, water and an appropriate amount of one or more enhancing materials chosen from condensed phosphoric acids, each of which comprises two or more phosphoric acid units; and salts or ions of condensed phosphates, each of which comprises two or more phosphate units. The mixture is then maintained under conditions sufficient for the calcium sulphate material to form a set gypsum material.'

Ukraine: Gross gypsum exports in the first five months of 2011 amounted to 27056 tons, bringing in USD2.01m. In May the country exported 6946t of gypsum, worth USD658,000. The values represent a 23% decrease in tonnage compared to the same period of 2010 and a financial decrease of 54.4%. May 2011 brought in 50.2% less than May 2010 in financial terms.

The leading exporters of gypsum in May 2011 were Knauf Gips Donbass LLC, Gipsovik OJSC, Ivano-Frankovsjiy Cement, Slate Combine OJSC and Mamalyzhskiy Gypsum Plant OJSC. The leading importer was Budfarfor Slavutsk Combine CJSC.

France: Lafarge's Olivier Guilluy has said that the company will not decide on a winning bid for its gypsum unit before September 2011. The business, reportedly valued at around Euro800m, has attracted around 10 serious bids from a variety of established gypsum wallboard producers and new players.

"In principle there will be no decision before the back-to-school season (in September)," said Guilluy. "A price has not yet been set for the division." In June 2010, local press reported that private equity funds, including Kohlberg Kravis Roberts & Co. and Carlyle, were in the running alongside industrial buyers including US-based Eagle Materials.Sources close to the situation have said the gypsum unit may be sold by geographic zone, split into Europe, North America and Asia, depending on whether antitrust rules complicate the sale or not.

Despite the high level of interest, Guilluy added that Lafarge may yet scrap the sale, depending on a decision to be made by its CEO Bruno Lafont. Guilluy said, "The unit generated about 9% of group sales in 2010, with revenue of Euro1.4bn and a current operating profit of Euro58m."