REC Silicon to manufacture in China
REC Silicon is a Norway based solar company, manufacturing polysilicon and silane gases for solar and semiconductor industry. The company spun off its solar cells, panels and wafer units in the last year to concentrate on polysilicon production. REC now plans to enter the biggest solar market in China. The company is planning to construct a FBR polysilicon plant in China, to circumvent anti-dumping duties. The Fluidized Bed Reactor or FBR technology produces polysilicon at lower cost. REC Silicon has its major polysilicon production in the US.
The expected plant will have a production capacity of 18,000MT of granular polysilicon, 1,000MT of Siemens polysilicon and 500MT of silane gas loading. It will cost around US$1 billion. It is a joint venture with Shaanxi Non-Ferrous Tian Hong New Energy Co, with REC Silicon having a 49% stake.
The solar industry looks to expand by 15-20% each year, as the industry is now more matured and stabilised. China and other Asia Pacific countries are anticipated to be the largest solar markets in the coming years. The Chinese government is pushing its renewable energy policies strongly, with the National Energy Administration’s new increased solar installation target of 17.8 GW for 2015. China hardly has any polysilicon production in the country and imports majorly from other countries. With REC moving its production bases in China, the company will avoid the duties imposed on overseas polysilicon producers. It will also mark the entry of the biggest poly manufacturer in China, which is also the largest solar hub with increasing demand. China will also have the advantage of a local manufacturer.
The company is amongst the very few European solar companies to survive the solar crisis. But it had to pay a price at every point. The company had to shut down expensive factories, cut on costs, give up production of wafers, cells and modules and also face stiff competition from low cost Chinese players. It remains to be seen if this move pays off well for the company. The shares of the company gained ~16% after the news.
Google+REC Silicon, one of the industry’s lowest cost producers, will get upfront payments of $198 million in return for allowing the venture to use its technology. Shaanxi Non-Ferrous will pay $254 million for a 51 percent stake, the companies said in the statement.
Source: Bloomberg
Does it make sense for such companies to establish manufacturing facilities in India?
Hi Akhil,
Thanks for your comment. I think REC is doing a right thing by opening a plant in China which is the largest solar market and is also expected to grow. REC will thus circumvent duties. Though India is also a growing solar market, but the country does not have many big panel manufacturers. China has all big panel manufacturers and makes more sense for REC to have a production base there.