Tough new standards for polysilicon plants
Beijing has set out tough standards on capacity expansion in the oversupplied, energy-intensive and pollution-prone polysilicon industry. Polysilicon is a key raw material for making solar power panels.
In a joint policy circular, the National Development and Reform Commission, the Ministry of Industry and Information Technology and the Ministry of Environmental Protection yesterday unveiled requirements on production scale, technology, pollution control and safety.
They effectively erected entry barriers for would-be industry participants, which would also force any incumbents who failed to meet the standards to upgrade facilities or face the prospect of being shut down or forced to sell out.
Key prerequisites for greenfield projects and expansion of existing plants included a minimum annual production scale of 3,000 tonnes and economical power consumption, moving from 80 kilowatt-hours per kg to 60 kWh per kg by the end of this year. It also required plants to recycle at least 98.5 per cent of waste hydrogen and fluorosilicone chemicals.
'New polysilicon plants will not be approved in principle before the government releases an updated catalogue on allowed investments,' the circular said. 'But projects (which are) using advanced technology and are environmentally friendly and energy efficient will still be vetted and permitted.'
Existing projects that fell short of the requirements would be compelled to overhaul their facilities. Failing this, they would have to close.
Banks are banned from providing credit to projects that cannot meet the new requirements.
CLSA solar sector analyst Charles Yonts said the industry was given an outline of the requirements last year.
'Only a handful of companies have a shot at meeting them,' he said.
Nomura Securities analyst Nitin Kumar estimated that 75 to 80 per cent of the mainland's installed polysilicon output capacity failed to meet new requirements. He said industry leaders Jiangsu-based GCL-Poly Energy and Jiangxi-based LDK Solar were expected to grab more market share.
'The majority of [the outdated capacity] is largely unprofitable at current spot market prices,' Nitin said. 'The policy is directed towards weeding out the unprofitable and weak players and not necessarily an end to polysilicon capacity additions.'
Still, it was premature to assume that the standards would lead to a string of acquisitions as the industry's technology-heavy nature meant leaders preferred to build new facilities, ICBC International head of research Alex Fan said.
A GCL spokesman said its silicon deposition power consumption stood at 60 to 65 kWh per kg, and its waste chemicals recycling ratio topped 99 per cent. Its share price rose 6.1 per cent to close at HK$3.63 yesterday.
