A joint venture between Australia\u2019s two largest brick suppliers will proceed after getting the green light from the consumer watchdog.<\/p>\n
Boral and CSR\u2019s proposal to combine their east coast brick operations in a joint venture was first announced in April 2014. The joint venture will be 60 per cent owned by CSR and 40 per cent owned by Boral and aims to address the \u201csustained structural downward trend\u201d that the Australian brick manufacturers have been experiencing over the past three decades.<\/p>\n
In October, the Australian Competition and Consumer Commission (ACCC) released a statement of issues listing a number of competition concerns that could potentially arise from the creation of the joint venture. However, the consumer watchdog has now announced it will not oppose the transaction.<\/p>\n
\u201cCritical to the ACCC\u2019s decision was the assessment that Boral would be unlikely to remain in clay brick manufacturing in eastern Australia if the joint venture does not proceed,\u201d ACCC chairman Rod Sims explained. \u201cWithout this conclusion, the proposal raised considerable competition concerns.\u201d<\/p>\n
Although initially sceptical, Sims said further extensive inquiries and reviews of the companies\u2019 business records had led the ACCC to conclude that there was \u201csufficient evidence to support the claims that Boral would exit brick manufacturing on the east coast and that, on balance, the ACCC should not oppose the joint venture\u201d.<\/p>\n
Boral CEO and managing director Mike Kane said the decision was good news for customers, employees and shareholders. \u201cWith Australian brick manufacturing being challenged as a result of a reduction in brick usage and high input costs, the joint venture will allow us to drive efficiencies across the combined network of operations, creating a more sustainable business,\u201d he stated.<\/p>\n
\u201cThis joint venture is about retaining manufacturing in Australia and maintaining clay bricks as a choice for consumers,\u201d CSR CEO and managing director Rob Sindel added. \u201cIt will strengthen opportunities for employees and ensure that customers benefit from a strong supplier in the highly competitive cladding market in Australia.\u201d<\/p>\n
The formation of the joint venture is expected to result in a combined revenue of $230 million and initial overhead savings of $7 million to $10 million per annum. The integration of the businesses is expected to reach completion within the first half of 2015.<\/p>\n
Boral sells landfill business, relocates quarry operation<\/strong><\/p>\n In other Boral news, the building materials supplier has entered into an agreement to sell its Western Landfill business in Melbourne to Transpacific Industries for an upfront payment of $150 million as well as an additional $15 million for site preparation work. Boral will also receive earnings from Transpacific in the form of fixed payments and volume-based royalties for the life of the landfill.<\/p>\n The recently sold landfill business is co-located with Boral\u2019s asphalt, concrete and related operations and its Deer Park Quarry at a 1150ha site in Ravenhall, Melbourne. After operating Deer Park Quarry for 50 years in the southern section of the Ravenhall site since the quarry’s inception in 1965, Boral is now preparing to shift the operation into the northern section of the site.<\/p>\n Deer Park Quarry has an expected life of between 40 to 50 years and provides between two and three million tonnes of aggregate per year. According to Boral, moving the quarrying operation into the new section will ensure its ability to continue supplying hard rock aggregate for Melbourne\u2019s building and construction industries into the next decade.<\/p>\n The preparation work will involve the replacement of the existing processing plant, with construction expected to begin in 2016 and operations to commence in the following year.<\/p>\n","protected":false},"excerpt":{"rendered":"