Norway-headquartered polysilicon manufacturer REC Silicon ASA is hoping to restart its Moses Lake fab in the US by November 1, 2023 after South Korea's Hanwha Q Cells officially signed up to purchase the entire output to fuel its 8.4 GW local production plans.
The 10-year take-or-pay full-form supply agreement signed between their subsidiaries REC Solar Grade Silicon LLC and Hanwha Q Cells Georgia will replace the binding term sheet signed earlier this year (see REC Silicon Secures 100% Offtake Agreement With Hanwha).
Hanwha Q Cells' parent, Hanwha Solutions, and its South Korea based affiliate Hanwha Corporation are 33.3% stakeholders in REC.
Factoring in market prices, the duo estimates the total value of the agreement over the 10-year period at around $3 billion. REC explained, "The base price for the FBR granular polysilicon in the supply agreement will be determined by market indices (representative of markets outside and inside of China) adjusted for a premium for US-sourced low-carbon material."
According to the arrangement reached, for the initial 5 years, the base price will be subject to a price minimum and maximum to protect REC from potential low market prices in the near term. There is no minimum or maximum price fixed for the 2nd half of the agreement period. It will enable REC to benefit from higher polysilicon market prices in the future.
"The Supply Agreement was assessed by two independent third-party experts in the industry that confirmed to the REC Silicon ASA board of directors that the Supply Agreement is balanced, at arm's length, and contains consistent commercial terms to other similar polysilicon Supply Agreement transactions in the industry," reads the supply agreement.
The makers see the production of high-purity FBR granular polysilicon to also avail of the $3.00/kg tax credit under the Inflation Reduction Act (IRA).
The sizable prepayments to be made by Hanwha at the time of the signing of the supply agreement and at initial delivery will support the restart of the Moses Lake fab, stated REC. The factory has an installed annual capacity of 16,000 tons.
REC stated, "The re-opening of the Moses Lake operations will enable REC Silicon to provide High Purity Polysilicon to an emerging US solar value chain and together with the Butte operation potentially supply Silane gas for anode material to a fast-growing battery industry." The factory is forecast to reach full capacity utilization by the end of 2024.