Global Gypsum Newsletter

Issue: GGM18 / 12 December 2014

Headlines


UK: Veolia UK has introduced a new technology that it claims will transform non-recyclable paper and cardboard from household waste into a pulp called Pro-Fibre. The material can then be used in a range of products such as insulation and construction materials.

According to Veolia, the UK recycles about 815Mt/yr of recovered fibre, about 70% of the paper generated in the country. However, many different types of paper are rejected from recycling facilities because they have been contaminated with glass, sand, plastic, metal, food or grease. The contaminated paper has traditionally been sent to landfill or energy recovery facilities.

With its new system, Veolia will be able to convert the material into a recyclable material. It is investing Euro1.27m into the new technology at its facility in Sheffield, England, which will be able to treat up to 20,000Mt/yr and produce up to 14,000Mt/yr of Pro-Fibre. The process includes identifying and capturing the non-recyclable fibre fragments, pulping, cleaning, screening and a mechanical pressing stage.

The Pro-Fibre process includes five steps that will enable the removal contaminants to create a pulp that can replace virgin materials currently used in the construction and packaging industry, including insulation materials and biodegradable pots. Veolia is working with a specialist partner from the paper industry, which will analyse the properties of the Pro-Fibre so the companies can determine the product's commercial potential. The first batch of pulp is expected to be produced in early 2015. According to Veolia, Pro-Fibre can be manufactured either wet or dry and is suitable for businesses looking for a cost-effective and sustainable feedstock.


UAE: The Ministry of Environment and Water is set to issue a decree to regulate the production of mineral wool and fiberglass industries. The new regulations are intended to increase the environmental sustainability and performance of the industries. They will set out applications and pollution control techniques. Producers will also be required to prepare an environmental management plan specific to their operations.


Germany: Kaibel & Sieber, one of the international leaders in machinery and plant engineering for the insulation materials industry, is celebrating its 200th anniversary. The company has a long-standing reputation for technical competence and flexibility. Kaibel & Sieber provides a one-stop source for project development and design, manufacturing, installation including automation, maintenance and service as well as supply of spare parts.


Germany: Germany's BASF has switched its entire polystyrene-based insulation product portfolio for the European market to the new polymeric flame retardant (PolyFR). The change comes nine months ahead of the deadline laid out in the REACH regulation, which forbids the use of hexabromocyclododecane (HBCD) as a flame retardant as of 21 August 2015. This means BASF's 'Styropor' and 'Neopor' Expanded Polystyrene (EPS) and its 'Styrodur' extruded polystyrene (XPS) are only available with PolyFR from now on.

"By switching to PolyFR we can guarantee the supply of eco-efficient thermal insulation products for sustainable building projects in the future," said Giorgio Greening of the group's Styrenic Foams business unit. Using PolyFR allows producers to manufacture insulation materials that meet Class E under European standards.

To meet rising global demand for PolyFR, which has a better environmental profile than HBCD, a number of producers have set up new production plants, including the recent announcement by Albemarle and Israel Chemicals (ICL) to set up a PolyFR joint venture.


Latvia: The Latvian construction materials manufacturer, Tenapors, plans to invest Euro3.8m in a new production plant in Dobele. The new plant, which will produce insulation sandwich panels, will be completed in September 2015 and will employ 15 people. Roberts Kurma, director of the export department at Tenapors, said that the new plant would allow the company to double its production volume and sales in the Baltic States and Scandinavia. Tenapors had another factory in Valmiera, which produces insulation materials from geofoam.


Italy: Italy's top court has overturned an 18 year jail sentence for a Swiss billionaire who was convicted over his role in the country's biggest asbestos scandal. According to the court, too much time had passed since the alleged wrongdoing.

Stephan Schmidheiny was found guilty in 2012 of negligence at his company's Italian factories in the 1970s and 1980s, which eventually led to almost 3000 asbestos-related deaths. However Italy's highest court annulled the verdict on 19 Wednesday 2014, saying the statute of limitations had kicked in. The decision means that Schmidheiny will also escape having to pay millions of Euros in fines and compensation ordered by Italian courts in 2012 and 2013.

Prosecutors in the original trial said that Schmidheiny had not taken sufficient measures to protect the health of workers and nearby residents from the asbestos used at the Italian plants of his building material firm Eternit. The factories had used asbestos in the production of cement. The plants closed in 1986, but workers and local residents continue to suffer the consequences, with Italy's biggest union saying that the latest victim of an asbestos-related disease was only buried on 15 November 2014.

Prime minister Matteo Renzi said the ruling underscored the need to reform Italy's notoriously snail-paced judicial system. "We need to ensure that trials take less time and change the statute of limitations," said Renzi.


Serbia: Masterplast, a major producer of thermal insulation materials in Central and Eastern Europe, has announced that it plans to expand its plant located in Szabadka, Serbia. Masterplast will invest Euro400,000 of its own resources in the expansion and will launch trial production in its second fibreglass plant. 


Russia: TechnoNicol Corp, a manufacturer of roofing, waterproofing and thermal insulation materials, has agreed to acquire an additional 54.1% stake in Russia’s Krovlya Ooo, a building materials company. After the transaction, TechnoNicol will own a 98.25% stake in Krovlya.


UK/Canada: Kingspan Group has announced that it will buy the building products division of Vicwest Inc for US$136m in cash, inclusive of debt and reorganisation costs.

Kingspan said that the acquisition will be structured as the purchase by Kingspan of Vicwest and the simultaneous transfer of the Westeel business and assets to Ag Growth International. The total estimated consideration payable is US$333m, of which Kingspan will fund US$137m and AGI will fund US$196m. The acquisition of the building products business will be funded from Kingspan's existing credit facilities.

The division being bought comprises three insulation panel production plants and a number of profiling facilities across Canada and the US. Revenues for the year that ended 31 December 2013 were US$224m and pro forma earnings before interest, taxes, depreciation and amortisation (EBITDA) was US$11.7m. The unit had gross assets of US$111m at 30 June 2014.


US: Installed Building Products has acquired Installed Building Solutions (IBS), an installer of fibreglass insulation, spray foam insulation and waterproofing products. IBS primarily serves select markets across Minnesota, Wisconsin and North Dakota. Its sales for the 12 months that ended 30 September 2014 were approximately US$17.4m.


UK: Kingspan has reported 7% year-on-year growth in its third-quarter 2014 revenue, partly due to an upturn in the UK property market. It now expects to deliver a full-year trading profit in the region of Euro144m, up by 17% from the year ago period. Net debt at the end of September 2014 was Euro39.1m lower than at the same point in 2013, at Euro108m.


Bulgaria: Bulgarian insulation materials producer Hydroizomat has announced that its non-consolidated loss fell by 24% year-on-year to Euro95,100 in the first nine months of 2014. Non-consolidated revenues fell to Euro484,667 in January - September 2014 from Euro823,167 in the same period of 2013, while sales expenditures fell to Euro22,637 from Euro50,934. Its non-consolidated operating loss fell to Euro29,839 in the first nine months of 2014, compared to Euro92,605 in the same period of 2013.


US: Element Partners, a growth equity firm focused on investing in businesses providing innovative products, software and services to the energy and industrial markets, has executed a definitive agreement to sell Icynene to FFL Partners.

Established in 1986, Icynene manufactures and supplies spray foam insulation. In the past 25 years, more than 3Bnft2 of Icynene spray foam insulation has been installed in nearly 500,000 residential and commercial projects.


Australia: Boral CEO Mike Kane has said that Australia's brick industry will pay the price if the competition regulator sticks to its ‘narrow view’ of the brick market. He warned that plant closures and land sales were likely if the merger of Boral and CSR's brick businesses was blocked.

Boral announced plans to merge its east coast brick business with rival CSR in April 2014 in a bid to boost profitability. In its statement of issues in October 2014, the Australian Competition and Consumer Commission (ACCC) rejected Boral and CSR's definition of bricks as part of a broader cladding market and gave the preliminary conclusion that the deal would increase the price of bricks and reduce consumer choice.

Kane said that the ACCC's issues paper was ‘concerning.’ "We are in the fortunate position where the high price of land in Australian eastern metropolitan markets means that value will eventually be delivered for Boral shareholders if an ultimate exit over time is the only remaining option," said Kane. About 550 people work in Boral's brick business. Boral has cut more than 1000 jobs in the last two years. "Sadly for Australia, a narrow view by regulators will see the brick industry on the same trajectory as the auto, oil, refining, steel, aluminium and cement industries," said Kane.

ACCC chairman Rod Sims stressed that the issues paper was a preliminary view and the regulator was seeking more information. "Every time we assess a merger, the merger parties argue that our view is too narrow. Our preliminary view is that most residential houses use bricks, as distinct from other cladding,” he said. The ACCC plans to make its final decision on 18 December 2014.


Denmark: Rockwool is rolling out a new strategy under the management of the company's chairman of the board, Bjørn Høi Jensen, whose first decision was to replace CEO Eelco van Heel with Jens Birgersson.

Birgersson was chosen for the task due to his significant global experience. Rockwool wants to replace its present strategy, which involves aggressive investments in building plants, with a smarter global organisation and new ways of entering markets. According to Jensen, the previous strategy had not proved successful and the return on investment capital had not been impressive. The new strategy is expected to generate bigger earnings for Rockwool.


Ireland/US: Irish insulation and building materials manufacturer Kingspan has completed the acquisition of US firm Pactiv. The US$82m deal has been funded from Kingspan's existing cash resources.

Pactiv produces a range of extruded polystyrene (XPS) insulation products under the GreenGuard brand, which it supplies throughout the US from its manufacturing base in Virginia. Pactiv had sales of US$84m in the year to June 2014 and recorded an operating profit of US$10m in the period. The enterprise value is US$82m, of which US$72m is payable in cash on completion plus US$10m of working capital. Gross assets being acquired are US$30m.


Germany: The German cartel office has started a probe into the country's producers of insulating materials due to suspicions of possible prohibited price agreements. A spokesman of the cartel office in Bonn, North Rhine-Westphalia revealed that there had already been a large-scale raid with the support of the police in mid-March 2014. The investigators are trying to find out whether the companies held illegal talks concerning prices and sales regions for hard-resistance foam, which is used for insulation in new buildings. 


US: Johns Manville (JM), part of Berkshire Hathaway, has named Mary Rhinehart as chairman of the company. Rhinehart was appointed as president and CEO in November 2012.

Warren Buffett, chairman and CEO of Berkshire Hathaway, selected Rhinehart for this additional role due to her diligent leadership of JM. “With more than three decades of comprehensive experience at JM, Mary Rhinehart has proven not only her ability to succeed at every level, but also her commitment to the business and passion for JM’s employees and customers. Mary is the right choice for chairman of JM,” said Buffett.

Rhinehart has held a variety of roles during her 35-year career, including general managership of several Johns Manville business units. Before being named CEO, she was CFO, providing her breadth of experience in all financial operations of the company. Rhinehart’s wide range of responsibilities have also encompassed global business management and strategic business development. 

“I am proud to assume the role of chairman of Johns Manville and am grateful for the confidence Berkshire Hathaway has placed in me,” said Rhinehart. “Moving forward, JM will continue to win by delivering powerful experiences to our customers and employees, experiences that will create lasting relationships, sustainable competitive advantage and profitable growth.”


UAE: Rockwool International has won a new order to supply insulation to Abu Dhabi's Takreer refinery project. The refinery will have a 30,000 barrels/day capacity for crude oil and will produce 40,000t/yr of carbon black. The refinery is due for completion in December 2015.

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