Steel Giant Posco Decides to make a Surprise Solar Entry through Orkla Silicon Subsidiary Elkem Acquisition

POSCO is the world’s 3rd largest Steel Producer based out of South Korea.It has managed to come out of the GFC relatively unscathed and looking to diversify from its core steel operations.POSCO has said that it is in the early stages of a takeover of Elkem which is a Silicon Making Subsidiary of Norwegian Conglomerate Orkla.Note Elkem is one of the biggest producers of Raw Silicon which is  further refined into Polysilicon which makes the majority of the Electronics that we see today.Polysilicon Demand  has been skyrocketing in the recent years due to Exponential Growth of the Crystalline Silicon Solar Cells.This made Elkem decide on building a 5000 ton solar specific plant in Norway through a new cheaper process of refining Silicon called Metallurgical Silicon.However the 2008 GFC and poly Oversupply has made this process suspect as $400/kg poly prices went crashing down by 90%.Timminico,a Canadian Producer which was in the process of setting up a giant mg-Si plant has almost collapsed as orders for this less refined Polysilicon Form dried up.

Korean Companies have been Aggressively Expanding into Green Energy

South Korean Companies like LG,Samsung and Hyundai have already embarked on a major c-SI expansion plan while Hanwha the 3rd largest South Korean Conglomerate jumped ahead of its Korean peers acquiring a large stake in Chinese Solar Producer Solarfun.Now POSCO has become the latest Korean Entrant into the Solar Energy Sector.The Korean Government has strongly supported Green Industry through a Huge Stimulus Plan besides egging on its Chaebols.POSCO’s Steel Business seems to have little synergy with Elkem’s Silcon,Foundry Materials and Energy Sectors.But Korean Companies Renewable Energy Ambitions have made them diversify despite little synergies.Korean Shipbuilders have made huge investments into Wind Turbine Manufacturing despite little prior expertise in this area.It remains to be  seen how POSCO develops the Silicon Business which has many newcomers struggling and some going out of business.But incumbents like Wacker,Hemlock ,REC have managed 50% EBITDA despite 90% Fall in Prices so it may not be a bad sector to get in for an established manufacturing behemoth like POSCO.

POSCO in talks to buy Norway’s Elkem – Reuters

POSCO is considering a takeover of Norway’s Elkem, a maker of silicon for solar panels, the CEO of the South Korean group said, in a move that would give the world’s No.3 steelmaker a presence in the fast growing renewable energy materials space.In May POSCO said RIST, its research unit, had held talks with Elkem’s CEO on collaboration that could lead to “opportunities to take advantage of Elkem’s independent polysilicon-manufacturing technology,” Lee added.Oslo-based Elkem produces solar-grade silicon, metallurgical silicon, foundry industry alloys, carbon, and microsilica.Elkem operating revenues fell 18 percent last year to 7.433 billion Norwegian kroner ($1.18 billion).

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