REC Silicon prepared to power down the rest of its operation

REC Silicon prepared to power down the rest of its operation


The Norwegian polysilicon and silane gas producer has announced it will listen to offers for its production facility in Butte Montana after mothballing its other manufacturing operation – at Moses Lake, Washington – in the summer.



October 3, 2019

Having halted polysilicon production at its Moses Lake facility amid the China-U.S. trade war, Norwegian manufacturer REC Silicon ASA today announced it is prepared to consider putting the rest of the company into deep freeze to await a resolution between the White House and Beijing.


Since 2014, China has imposed trade measures on U.S.-made solar grade polysilicon in retaliation for earlier tariffs imposed on Chinese PV exports to America under the presidency of Barack Obama.


That has left REC, which has all of its manufacturing operations on U.S. soil, locked out of the world’s biggest solar market and in July prompted the company to shutter its poly production plant at Moses Lake, Washington for at least the rest of the year.


With the Trump administration ramping up tariffs on Chinese goods into a full-scale trade war, REC Silicon today announced in its third-quarter update it was prepared to field offers for its other U.S. production line, in Butte, Montana.


Silane gas operation


The fact any sale would leave the company without any operating wholly-owned production facilities – and the use of the phrase “retire the company’s debts” in relation to the proceeds of any sale, rather than the usual “pay down debts” – indicates operations at REC Silicon would almost entirely halt until the manufacturer could regain access to the Chinese polysilicon market.


Sale of the Butte facility, which supplies polysilicon and silane gases to semiconductor markets, would leave REC entirely dependent on the 15% stake it owns in a polysilicon plant in Yulin, China for revenue.


The dramatically changed nature of the business was illustrated by the fact the 142 MT of polysilicon shipped by REC in the latest three-month window – down from 201 MT in the previous quarter – was mentioned way down the press release issued to publicize today’s quarterly update.


Willing to sell


Instead, REC chose to emphasize its silane gas operation, as the supplier of 70% of the world’s market in such products. Even then, the 860 MT shipped in Q3 was 40 MT less than had been predicted in July for the quarter and REC said it had been forced to reduce the price 1.3% to maintain sales volume and expected little change in that level in the current quarter.


REC Silicon sells its gases to Asian semiconductor clients outside China and cited a fall in demand for the lower shipment volumes, although it stressed the trade war was the main reason for its latest reverse.


With just $46.2 million in the bank three days ago, the reasons for considering a sale of the Butte facility are obvious. REC, which also has a historic tax investigation by the Norwegian authorities hanging over it, said the proceeds of a sale would be “used to retire the company’s debts, to provide a buffer for contingent liabilities (tax examination and indemnity loan), and to prepare to restart FBR [fluidized bed reactor polysilicon] production in Moses Lake, Washington when the trade dispute with China is resolved and REC Silicon regains access to polysilicon markets in China.”


Over to you, President Trump.