Monday, May 17, 1999 | 2:37 a.m.
A California company hopes to cash in on high prices for construction wallboard by developing a gypsum mine north of Las Vegas, along with the area's fourth wallboard manufacturing plant.
An independent laboratory analysis of the deposit confirmed last week 95 percent purity of the deposit throughout a 6,000-foot test field, the company said.
That means the company could not only develop a wallboard plant, but it also could produce pharmaceutical and food grade calcium sulfate that sells for up to $1,500 a ton.
Monsoon International Manufacturing and Distribution Co., Parlier, Calif., has issued statements in the past six weeks about the company's plans to develop reserves north of Las Vegas. The company said the estimated value of gypsum reserves it recently acquired is more than $1 billion and would allow the company to operate a wallboard plant for 250 years.
The company said it would mine about 500,000 tons of gypsum annually and by its third year of operation produce 480 million square feet of wallboard.
Based on those production statistics, Monsoon would not be the largest gypsum producer in the valley. It would rank between the numbers produced by James Hardie Gypsum and PABCO Gypsum. A third existing operation, Georgia-Pacific Gypsum, does not disclose production figures.
Revenues from Monsoon's wallboard production are expected to reach $70 million a year while total revenues from all gypsum products including pharmaceutical, industrial and agricultural applications would reach $100 million a year.
Doug Dahl, chief executive officer of Monsoon, whose corporate focus has been on the development of machines that blow insulation into new homes, said the mine site is about 40 to 50 miles north of Las Vegas off Interstate 15.
The company said it would use the bright white high-purity gypsum product -- material with greater than 98.5 percent calcium sulfate content -- as a pharmaceutical and food grade material. Dahl said the company could get as much as $1,500 per ton and company engineers now believe they have more than 2 million tons of the high-quality material.
A lower grade of product, with calcium sulfate content of between 92 percent and 98.5 percent, can be used as a soil conditioner for golf courses, parks, school districts and other turf and landscape markets, Dahl said.
The company projects it has 100 million tons of that grade of material, which can command a price of about $100 per ton, he said.
Gypsum grade greater than 88 percent purity is used for wallboard, plaster manufacturing and as a raw material for Portland cement.
Russ Fields, president of the Nevada Mining Association, said because the market is so competitive, companies usually don't go into much detail about their holdings. That has led some critics to say they believe Monsoon doesn't have as many reserves as it claims.
Dahl said he is making the disclosure as part of his responsibility as the CEO of a publicly traded company.
"We knew it was big in the beginning," Dahl said in a telephone interview. "But it turned out to be bigger than we thought."
Dahl said Monsoon is contracting with German and Norwegian companies to develop the processing plant. He said it is too early to determine when the plant would go on line and how many employees it would hire.
Although he did not specify the exact location of the reserves, he said power and gas is available and the processing plant would be built on the site of the mine.
Monsoon would join three competitors in the Las Vegas area market in an industry struggling to meet consumers' needs.
Homebuilders say the price of drywall has gone up 25 percent in the past 15 months, generally as a result of low supply and high demand. The fast-growing Southwest has been particularly hard hit.
Because the building material is heavy, brittle but relatively inexpensive, wallboard usually is used within a 300-mile radius of where it is manufactured.
Jerry Walker, executive director of the Gypsum Association, a Washington, D.C., trade group that represents manufacturers in the United States and Canada, estimated that 60 percent to 80 percent of the product manufactured in Las Vegas stays in Southern Nevada with much of the rest of it shipped to Southern California.
Still, some companies with access to railheads will ship beyond the region and some builders in high-growth areas east of the Mississippi River are willing to pay top dollar to get it.
Walker said 1998 was a banner year for the industry. U.S. manufacturers shipped a record more than 27 billion square feet of gypsum board products last year. The industry consists of 11 companies that operate 75 plants, including the three in the Las Vegas area.
The industry expects to raise production capacity by 20 percent in the next four years to about 34 billion square feet with the addition of nine new plants and expansions at several facilities.
Walker said two new plants are scheduled to come on line this year in Bridgeport, Ala., and Clarksville, Tenn. The Alabama plant is operated by U.S. Gypsum, a subsidiary of Chicago-based USG Corp. and a regional competitor in the Southwest with a major operation east of San Diego.
USG is attempting to build its name recognition by becoming a marketing partner for the popular NASCAR Craftsman Truck Series. Last month the company announced its alliance with the popular stock car series, using a television spot that draws parallels between professional drywall crews and racing pit teams.
Local companies already have increased their production rates to try to meet growing demand.
PABCO Gypsum, which operates a plant between Sunrise Mountain and Lake Mead, in December doubled its production to meet customers' needs. PABCO business manager Jim O'Mara said his company not only supplies wallboard to regional customers but it also has a distribution network to supply outlets in the eastern United States.
PABCO, recognized by the state last year as the Southern Nevada Distinguished Business of the Year, is a division of Pacific Coast Building Products. The company's 4,200-acre gypsum deposit and plant manufactures 425 million square feet of gypsum board each year. PABCO, which has 120 full-time employees, was recognized for contributions to community programs and the Clark County School District Minerals Education Conference.
James Hardie Gypsum, which operates a factory in the Blue Diamond area, is a division of the multibillion-dollar international company James Hardie Industries Ltd. of Australia. James Hardie Gypsum has factories in Nashville, Ark., and Seattle in addition to Las Vegas and supplies building materials to every U.S. state, including Alaska and Hawaii.
Terry Sherman, manager of the James Hardie Gypsum plant near Blue Diamond, said his company, which supplies wallboard to Nevada and Southern California, expanded the Nevada operation in February 1998.
"We feel that our timing on expansion has been just right and we've caught the increased demand at just the right time," Sherman said.
The Nevada plant, which has 150 employees, is the largest of the three James Hardie plants -- but won't be when an upgrade to the Arkansas operation is completed later this year. When that occurs, the Arkansas facility will be twice as large as the Nevada operation.
The local operation produces 700 million square feet of wallboard a year.
Atlanta-based Georgia-Pacific Group has a wallboard production plant near the Apex exit of I-15 about 15 miles north of Las Vegas.
Gil Guericke, manager of Georgia-Pacific's Las Vegas operation, said his factory provides materials to Southern California, Southern Utah and Arizona as well as Las Vegas and the rest of the state.
Guericke said he could not disclose expansion plans or how much his plant produces, but he did say Monsoon's proposed operation would be larger than his.
Georgia-Pacific, which also manufactures paper products through its timber group, reported operating profits of $507 million nationwide for its building products division compared with $238 million the previous year.
When the company reported quarterly earnings and annual totals in January, the company's chief executive officer, Pete Correll, said the building products division performed better than the company anticipated because of strong demand and gypsum production, specifically, resulted in record earnings.
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