REC Silicon to launch joint venture in China


REC Silicon is expanding operations in China by teaming with Shaanxi Non-Ferrous Tian Hong New Energy Co., Ltd., on a new joint venture.

The Washington-based Norwegian group's subsidiaries REC Silicon AS and REC Silicon Inc entered into agreements with the Chinese company to form the new business, which will include production and sales joint ventures between REC Silicon AS and Shaanxi Non-Ferrous.

REC Silicon Inc signed a technology transfer deal with the company in order to transfer the exclusive, non-transferrable right to use its technology in China and Taiwan to the production joint venture.

The production venture will construct and operate a new plant for the production of silane gas, solar and electronic grade polysilicon utilizing REC Silicon's next generation fluidized bed reactor (FBR) technology.

"This joint venture is a key step in the worldwide growth of REC Silicon and will strengthen its leadership position in the industry," said REC Silicon CEO Tore Torvund. "It demonstrates the value of our technology and allows us to expand our capacity without requiring REC Silicon to use its current assets or to raise other funds in order to make its capital contribution."

The new plant will be located in Yulin, in Shaanxi Province, and is expected to have a capacity of 18,000 metric tons of granular polysilicon, an additional 1,000 metric tons of Siemens polysilicon and 500 metric tons of silane gas loading.

As part of these agreements, REC Silicon expects to receive upfront payments from Shaanxi Non-Ferrous totaling US$198 million in March and August for the production business' rights to use its technology. The company said the upfront payments would allow it to meet its 2014 debt obligations and increase its financial stability.

REC Silicon will contribute $244 million over the next three years in order to acquire a 49 percent equity interest in the production joint venture, while the Chinese group will pay $254 million over the same period for a 51 percent interest.

REC Silicon and Shaanxi Non-ferrous will also establish their 50-50 sales joint venture close to the start-up of the production business and determine the amount of capital contributions at a later date. This sales operation will oversee the marketing and sales of all products from the new production joint venture and all equivalent products from REC facilities in the United States.

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