Chinese solar material maker GCL Technology mulls maiden overseas plant to bypass potential US trade barrier, tap EU market
- Jiangsu-based GCL Technology could unveil plans to set up its first overseas plant either in the Middle East or Europe as soon as this year, co-CEO Lan Tianshi said
- GCL aims to raise production of granular polysilicon to between 220,000 and 240,000 tonnes this year
GCL Technology, one of China’s largest solar material makers, is mulling overseas expansion to circumvent potential trade barriers from the United States and gain access to cheap green electricity.
The Jiangsu province-based producer of polysilicon controlled by entrepreneur Zhu Gongshan could unveil plans to set up a plants either in the Middle East or Europe as soon as this year, co-CEO Lan Tianshi said in an interview last week.
“The US is expected to impose some requirements or preferences on the countries of origin of solar panels and materials,” he said. “We hope to be able to circumvent them by establishing overseas production facilities.”
In December, Washington announced a preliminary decision to impose new duties on solar panel imports from major Chinese makers deemed to be circumventing tariffs by finishing their products in Southeast Asia. The tariffs may kick in as soon as the middle of next year after a two-year waiver from President Joe Biden expires.
An overseas plant would allow GCL to better serve customers that could relocate solar cell and panel production out of Southeast Asia. The US is not a priority for GCL’s overseas capacity buildout, because of the long construction lead times, Lan said.
In the Middle East, although electricity generation is still primarily fossil fuel-based, renewable energy can easily replace it and can also be ramped up rapidly because of ample land and year-long sun, he noted.
While solar material production is energy and carbon-intensive, GCL hopes to supply the European Union by using renewable energy for production in the Middle East.
Using green energy is important because from 2026, the EU will tax certain carbon-intensive products imported into the region, to level the playing field for imports and domestic products in terms of greenhouse gas emissions.
After GCL last year successfully ramped up polysilicon production using a more energy efficient method, which also lowered its production cost, the company is well positioned to supply the EU, Lan said.
“Since the carbon tax to be levied on solar panels made with our products will be lower, the total cost – panel plus carbon levy – borne by the end users using our materials will be lower,” he said.
After 12 years of research and development and absorbing the know-how of US-based SunEdison, whose solar material business it acquired in 2017, GCL grew its output of granular polysilicon six-fold to 45,599 tonnes last year, accounting for 43.5 per cent of its total output.
GCL said its fluidised bed reactor method used to make granular polysilicon has a 74 per cent lower carbon footprint than the conventional “Siemens process”, according to certification from ADEME, the French Environment and Energy Management Agency.
GCL aims to raise production of granular polysilicon to between 220,000 and 240,000 tonnes this year, Lan said. The output of rod polysilicon will fall to 20,000 tonnes from 59,124 tonnes last year.
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The company has an annual capacity of 260,000 tonnes of granular polysilicon, spread across Jiangsu and Sichuan provinces and the Inner Mongolia autonomous region.
It is building another 100,000 tonnes of granular silicon capacity in Inner Mongolia and will convert 40,000 tonnes of rod capacity to granular capacity in Jiangsu.
The cost of manufacturing granular silicon at the Jiangsu plant stood at 43.7 yuan (US$6.3) per kilogram, GCL said. This is 25 to 36 per cent lower than levels achieved in last year’s fourth quarter by rivals Daqo New Energy and Xinte Energy’s facilities in the Xinjiang Uygur autonomous region, according to an HSBC research report.
The bank’s analysts Daniel Yang and Evan Li forecast GCL’s manufacturing cost to fall to 30 yuan per kg by 2024, versus 38 yuan expected at closest rival Tongwei Group.
GCL posted a net profit of 16.4 billion yuan last year, more than triple the 5.24 billion yuan in 2021. HSBC’s analysts forecast profit to fall to 12.7 billion yuan this year and 7 billion yuan next year, as rising supply will see the average polysilicon price fall from 213 yuan per kg last year to 131 yuan this year and 71 yuan next year.
