GCL-Poly sells stake to back new polysilicon plant

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Jiangsu Zhongneng, a wholly owned subsidiary of GCL-Poly Energy, has agreed to transfer a 20% equity interest in Xinjiang GCL New Energy Materials Technology to Shenzhen-listed Tianjin Zhonghuan Semiconductor for CNY 300 million, according to a statement to the Hong Kong stock exchange.

GCL-Poly Energy will use the proceeds from the stake disposal to support the construction of a polysilicon production plant in Qitai county, in China’s remote Xinjiang region. The group revealed plans to build the facility, which will have an annual production capacity of 40,000 to 60,000 tonnes upon completion, earlier this year.

Upon completion of the transaction, Jiangsu Zhongneng will retain a 70% stake in Xinjiang GCL, while Tianjin Zhonghuan will hold 30%. Xinjiang GCL will remain an indirect, non-wholly owned subsidiary of GCL-Poly Energy.

In a separate agreement, Suzhou GCL Technology, another subsidiary of GCL-Poly Energy, agreed to team up with Tianjin Zhonghuan to increase the registered share capital of Inner Mongolia Zhonghuan Solar Material, via a capital contribution of CNY 2.99 billion. The capital injection will raise Inner Mongolia Zhonghuan’s registered capital from CNY 10 million to CNY 3 billion. Suzhou GCL Technology’s 30% stake in Inner Mongolia Zhonghuan will remain unchanged.

“The capital increase agreement can further consolidate the competitiveness of the group in monocrystalline silicon products,” the group said in a statement to the Hong Kong stock exchange.

In April, GCL-Poly Energy announced plans to invest in the construction of a polysilicon production plant in Qitai county, in China’s remote Xinjiang region. Meanwhile, in June, it said Jiangsu Zhongneng had agreed to buy new shares in Xinjiang GCL, in cooperation with Tianjin Zhonghuan. The group revealed plans to inject capital into Xinjiang GCL in August, via a new framework agreement with Tianjin Zhonghuan to support the development of the polysilicon plant.

GCL-Poly Energy recorded a net profit of CNY 1.19 billion in the first half, down sharply from a year earlier, as falling wafer prices cancelled out gains achieved by its PV project unit. Earlier this month,  group units GCL System Integration and GCL System Integration (Suzhou) agreed to buy 650 million polysilicon and monocrystalline wafers from GCL-Poly Suzhou, in a deal valued at CNY 3.59 billion.