Negotiating an FGD Supply Agreement

Presented at Global SynGyp 2015 by Robert Morrow

There are many challenges of negotiating a long-term supply agreement for synthetic gypsum. Two myths include: that the gypsum wallboard industry has a lot of money, and that FGD gypsum is a waste. Freight is the number one cost that producers and users have to take into account. The quality of the synthetic gypsum is critical, and largely involves ensuring that unwanted components are not present. The physical characteristics of the synthetic gypsum, in terms of handling and storage properties, can be crucial to its value. FGD gypsum from different sources will vary in its composition and its handling characteristics. Producers generally want a guaranteed 'take' for the FGD gypsum and typically want to publicise the deals. A consumer of gypsum such as a wallboard company wants a guaranteed 'supply,' without a guaranteed 'take' clause, and contract value secrecy. These two approaches are diametrically opposed and are difficult to square. It is in the interests of both parties to go with a long term deal - typically beyond 25 years - up towards the lifespan of the factory - because the costs to change are so high.

This document is available as a 32 page slide presentation.