USG Corp. (USG: Quote) said it has entered into a strategic partnership with the Zawawi Group of Oman to meet the growing demand for its building products in the Middle East and India. The investment by USG opens up new opportunities for the company in the rapidly growing Indian wallboard market. USG expects the investment of aabout $60 million to be incurred over two years, with the majority in 2012.
USG's partnership with the Zawawi Group will be multifaceted. The first phase will be establishment of a mining joint venture through which USG will buy 55% of Zawawi Gypsum, which holds the mining rights to a gypsum quarry in Salalah, Oman. The joint venture will develop infrastructure and operate the quarry. Quarry mining operations are targeted for startup in the third quarter of 2013.
The second phase of the partnership will be a 50/50 manufacturing joint venture with Zawawi Minerals to build and operate a new low cost wallboard plant in the Salalah Free Zone, Oman. The plant site is in close proximity to the gypsum quarry and port facilities, facilitating efficient access into markets in India and the Middle East. The target for commencement of wallboard production operations is the fourth quarter of 2013.
USG also announced that it is exploring strategic alternatives for its wholly-owned European operations, including their possible sale. Those businesses include the manufacture and distribution of ceiling grid systems and finishing compounds throughout Europe and Russia.
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by RTT Staff Writer
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