Boral the victor in cement price war

Boral has won a legal battle with construction group Wagners in the Queensland Supreme Court

Wagners suspended cement supplies to Boral for six months.

Boral has won a legal battle with construction group Wagners after the Queensland Supreme Court ruled it must meet lower prices offered by a competitor in the market.

Wagners took a financial hit last year after suspending supplies and launching legal action against its biggest cement customer over a pricing dispute.

It accused Boral of trying to force down contract prices after the construction materials giant said it had been ­offered cheaper supplies by Cement Australia, a 50-50 joint venture between Swiss supplier ­Holcim and HeidelbergCement’s Hanson.

After Boral issued a pricing notice, Wagners disputed whether the lower price was “bona fide” and suspended cement supplies to Boral for six months at a cost of $20m while waiting for a court ruling on the spat. It resumed deliveries on October 22 to Boral, which takes about 40 per cent of its cement.

Justice John Bond ruled that an October 2019 pricing notice for cheaper supplies from Cement Australia was “valid and ­effective”.

Boral will continue buying cement from Wagners until 2031 with the contract reflecting lower rates from competition in the market.

“The court’s findings provide some certainty for the parties moving forward around Boral’s ability to issue and rely on a pricing notice,” Wagners said. “This is important given the long-term nature of the cement supply agreement which remains binding on the parties until December 2031 and requires Boral to purchase a predetermined volume of cement from Wagners on an annual basis.”

Boral referred to an earlier statement welcoming the judgment.

“Boral welcomes the judgment by the Queensland Supreme Court and we are pleased with the long-term impacts of this result under our cement supply agreement with Wagners,” Boral Australia chief executive Wayne Manners said.

“The result fulfils our objective to exercise our contractual rights to ensure that we can source cement at competitive rates. Boral has pursued this objective in the best commercial interests of our business and our shareholders.”

Wagners on April 3 joined a swag of Australian corporates withdrawing their earnings guidance due to coronavirus volatility. Wagners shares fell 4.8 per cent to $1.20 on Thursday.