GCL-Poly Cracks Polysilicon Deals With LONGi & TZS

• GCL-Poly and Wuxi Shangji Automation have announced a joint venture agreement to produce granular polysilicon
• The plan is to invest RMB 18 billion to bring online 300,000 MT granular silicon in Inner Mongolia, China
• Initially agreed terms show the project is to come online in 3 phases with 60,000 MT planned under phase I for RMB 3.6 billion

Amid efforts to raise funds to implement its future business plans, Chinese polysilicon supplier GCL-Poly Energy Holdings has secured 2 big consignments to supply its polysilicon to 2 other Chinese companies on a long term basis.

One of the orders has been placed by LONGi Green Energy Technology and its 7 subsidiaries that has promised to buy a minimum of 91,400 metric tons (MT) of polysilicon comprising granular silicon between March 2021 and December 2023. Orders will be placed by LONGi Group on a monthly basis and prices will be negotiated as per market price. The deal is expected to cost LONGi a total of RMB 7.328 billion, excluding tax, considering RMB 90,600 per MT as average transaction price of monocrystalline high purity silicon materials.

The other order for 350,000 MT of polysilicon has been placed by Tianjin Zhonghuan Semiconductor (TZS) subsidiary Tianjin Huanrui Electronic Technology. GCL-Poly will attempt to complete the delivery between January 2022 to December 2026. Just as in LONGi contract, Tianjin Huanrui will place the order on monthly basis and negotiate prices.

Once the contract period between GCL-Poly and TZS is over, both the parties may choose to implement the agreement for 1 or 2 cycles or every 5 years. While GCL-Poly has not disclosed the estimated value of TZS' order, a report by Yicai Global believes if the price was the same as that of LONGi's order, both the orders together should hold a value of RMB 35 billion.

GCL-Poly says these agreements enhance the stable sales of polysilicon products in the ordinary course of business of the group while promoting wider application of granular silicon products, expanding its market share.

Confirmation of these 2 orders should provide some relief to the polysilicon manufacturer at a time when the company is scrambling for funds to pay back its loans. Recently, it defaulted on payment of $500 million that was due to be paid by January 30, 2021 for which it blamed deteriorating cash position and liquidity due to delays in subsidy payments from the Chinese National Renewable Energy Development Fund, among other industry issues. The management confirmed the group did not have enough existing internal resources to repay notes.

Meanwhile, it has been selling its solar power plant projects to raise funds to be able to pay off the debt which it plans to continue over the next 3 years. The latest in the list is a 50 MW PV station in China in which GCL-Poly and GCL New Energy (GNE) sold 99.2% equity interest to Beijing United Rongbang.

Production capacity increased

In a separate announcement, GCL-Poly said its subsidiary Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. has increased the production capacity of its fluidized bed reactor (FBR) based granular silicon from 6,000 MT previously to 10,000 MT. The increased capacity will formally commence production from February 3, 2021.

Referring to increased market demand for granular silicon and 'strong support' from its downstream customers that has enabled the latter manufacture high quality monocrystalline products with the use of 100% granular silicon, GCL-Poly said the company will continue to implement its plan to improve production capacity of granular silicon.

In October 2020, GCL-Poly said it was adding 10,000 MT black granular silicon production capacity in Leshan to meet demand for re-input materials in monocrystalline market (see GCL-Poly Adding 10,000 MT Granular Silicon Capacity).