Boral Cements $1 Billion U.S. Exit, Opening Doors for Eco Material Technologies
“It’s really one and one makes four, or hopefully more than four,” Mr Quasha said.
Green Cement, which operates a plant in Texas, has advanced technology that is reducing the amount of traditional cement used in concrete, as part of its effort to bring low-carbon products to the building materials industry . Cement production accounts for around 8% of global carbon dioxide emissions, like the steel industry.
Fly ash, a by-product of coal-fired power plants, is used to strengthen concrete and improve its “workability”, making it easier to pump. It also needs less water to use.
There are also numerous landfills where power companies have been storing fly ash for decades, which foreigners are increasingly seeking to “mine” as an additional source of supply.
Fly ash prices rise
Mr Quasha said demand for fly ash was up and so were prices.
“We continue to expect them to rise in the 9% range,” he said. “There are also cost pressures on the bottom line.”
With the acquisition of Boral’s fly ash business, Eco Materials holds 50% by volume of the fly ash market in the United States.
He said Eco Materials paid a reasonable price for the business without going overboard.
“I think it’s a fair price. I think we benefit from a lot of synergies,” he said. “It was a natural fit. We raced really hard.
Green Cement was seeking additional fly ash supplies as part of its own core strategy, and the acquisition solved that supply problem. At the same time, he brought into the stable a company that generated solid profits in its own right.
Private equity groups One Equity Partners – spun off from JP Morgan Chase – and Warburg Pincus are Eco Material’s main investors.
Oversubscribed Green Bonds
Mr Quasha said the $525 million “green bond” issue was four times oversubscribed.
He said Eco Material did not engage the services of former Boral CEO Mike Kane during its due diligence. Mr. Kane, an American who led Boral from 2012 to 2020, was the driving force behind Boral’s expansion into fly ash in the United States through the acquisition of the Headwaters business for $3.5 billion. in 2016.
Boral’s fly ash business operated from 100 different sites, had 50 terminals and approximately 50 contracts with electric utilities.
Mr Quasha said Eco Material was in a race to get more fly ash as the number of coal-fired power plants in the US began to decline in pursuit of a “greener” economy.
Boral’s fly ash business is centered in Texas, Illinois and Georgia. “Texas is the biggest market in the country. There are lots of roads and lots of bridges,” Mr. Quasha said.
The company was about to open a new pozzolana mine in Arizona with 500,000 tons of annual production to add to supplies. Pozzolan is used as a component in cement.
Mr Quasha served as head of Sanjeev Gupta’s GFG Alliance North American steel business for three years from 2018. North America was one of the most successful arms of the British billionaire’s global operations, which is still trying to finalize a refinancing after its main backer. , Greensill Capital, collapsed early last year.