The dash to glass


Independent shareholders in state-controlled solar company Irico New Energy are unlikely to rebel over a plan to focus activities on the production of solar glass when the business holds an extraordinary meeting in China on December 28.

The Irico Group subsidiary is set to dispose of four non-solar-glass businesses to its state-controlled parent for a gain of around RMB69 million (US$10.5 million) and will spend RMB290 million (US$44.3 million) on PV glass production equipment from its parent in return.

The reason Irico New Energy is prepared to jettison its distracting operations is spelled out by Octal Capital, the financial advisor to the proposed transactions, in a letter to shareholders published by Hong Kong-listed Irico New Energy yesterday. Octal points to 18 GW of annual solar module production capacity which is due to come online in nearby Yiwu City by mid 2022, 10 GW of it as the first half of a planned 20 GW expansion announced by a solar manufacturer. Another 10 GW expansion planned by a manufacturer in Nanjing City, would bring 5 GW online this year, according to Octal.

New glass lines

That 23 GW of module-making capacity due by mid 2022 would be enough to consume all the output of Irico New Energy's planned RMB707 million (US$108 million) investment into four production lines to churn out 38.66 million square meters of ultra-thin, high transmissivity solar glass per year.

With manufacturers including Jinkosolar, Daqo and Canadian Solar having reported a shortage of solar glass, among other materials, and all the big solar players ramping up production capacity, Irico New Energy is focusing all its efforts on the solar panel component.

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As such, it will receive almost RMB453 million from its Irico Group parent company for its Irico Green Energy solar project development operation; its Irico New Material business, which has a wide range of revenue streams including the wholesale supply of coal; and loss-making cell and module manufacturer Jiangsu Yongneng. Research and development company Zhongdian Irico, a wholly-owned subsidiary of the state-owned China Electronics Company which controls Irico Group, will hand over an additional RMB129 million for Irico New Energy's household appliance and non-solar glass company Zhuhai Caizhu.

With the net assets of the business units concerned factored in, Irico New Energy estimates that will add up to a gain of just RMB69 million, but will enable it to focus energy on its solar glass strategy as it aims to treble its current 2,400-ton-per-day solar glass manufacturing capacity in 2024.


Some RMB55.2 million of the income from the business sell-off will be put by Irico New Energy towards that RMB707 million production line project – the total cost of which includes the RMB290 million due to Irico Group for the production equipment. Irico New Energy said it will devote RMB6.9 million from the sales to raw materials for the production project and the remaining RMB6.9 million will go towards paying down its debts, with financial adviser Octal reporting Irico New Energy had borrowings of RMB3.48 billion (US$532 million) at the end of October, plus lease liabilities of RMB8.55 million.

Independent shareholders attending the meeting in Shaanxi will also be asked to approve a consolidation of Irico New Energy stock which would involve every 20 RMB1 (US$0.15) shares being amalgamated into one new RMB1 share. The board said the move will enable it to attract new investors.

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