US Government Ban On Xinjiang Produced Solar Products

• Citing involvement in forced labor activities, US government is blacklisting some Chinese companies from Xinjiang, the polysilicon production hotbed of the world
• Hoshine Silicon, the largest producer of MG-Si is on the list along with subsidiaries of Daqo New Energy, East Hope Group, and GCL New Energies
• Analysts see an impending WRO for modules incorporating Xinjiang produced polysilicon as impacting the US solar installations
• China has said it will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises

A news report from Reuters cites 2 unidentified sources to claim that the US administration has ordered a ban on 'imports of a key solar panel material' from 5 Chinese companies producing it in Xinjiang, China. The Biden administration believes products by these companies involves forced labor of Uyghur and other Muslim minority groups in Xinjiang.

The companies are mentioned as Hoshine Silicon Industry Co, which is a raw silicon supplier to most polysilicon producers in China; a polysilicon production company of NYSE listed Daqo New Energy, Xinjiang Daqo new Energy Co.; a subsidiary of East Hope Group, Xinjiang East Hope Nonferrous Metals Co.; and GCL New Energy Holdings' subsidiary Xinjiang GCL New Energy Material Co.

Xinjiang Production and Construction Corps, a state-owned economic organization, is also part of the blacklist.

A document by the Bureau of Industry and Security (BIS) at the US Department of Commerce, to be published in the federal register on June 24, 2021 states that these companies are 'engaging in activities contrary to the foreign policy interests of the United States through participating in the practice of, accepting, or utilizing forced labor'.

Further on, it reads, "These entities have been implicated in human rights violations and abuses in the implementation of China's campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uyghurs, Kazakhs, and other members of Muslim minority groups in the Xinjiang Uyghur Autonomous Region."

Problem

Analysts with Roth Capital Partners warn the industry is not prepared for a withhold release order (WRO) on Hoshine, the largest supplier in China of MG-Si, a key raw material of polysilicon production with an annual capacity of 800,000 tons. The order can have a 'significant negative impact on the whole US solar industry'.

In an industry update dated June 23, 2021 before the above order was published, Roth pointed out, "We believe, if implemented, module imports would need to prove that there is no content from Hoshine in order to enter the US. Access to solar modules in the US, in our view, could be severely limited by this order as we believe isolating and tracing MG-Si through the supply chain could present a significant challenge."

Consultancy PV Infolink reiterated the same fear saying, "Overall, if modules and cells exported to the US have to be traced back to whether they use products from Hoshine Silicon, the scope of impact will be so big that it will not only affect US-based polysilicon and module manufacturers but renewable installations in the US, as it will become difficult to acquire enough modules."

Possible losers, and winners?

As for Daqo, which Roth analysts believe hasn't used forced labor in its silicon production facilities, the inclusion in the list could be 'highly problematic'. Its name in the list comes despite the company organizing a field trip for local and international journalists, solar industry analysts and investors to its Xinjiang located facility to prove it wasn't using forced labor at its plants (see JA Solar Secures 78,200 MT Polysilicon Supply From Daqo).

Other companies with 'meaningful US solar business' that may get impacted from this possible withhold release order (WRO) from Customs and Border Protection—as per Roth— include Array Technologies, Canadian Solar, Enphase Energy, FTC Solar, Hannon Armstrong Sustainable Infrastructure, JinkoSolar, Sunnova Energy, Sunrun, SolarEdge, Shoals Technologies, ReneSola, SunPower, Spartan Acquisition and Sunworks.

However, the players that stand to gain from this, as per the analysts include US based solar panel manufacturer First Solar whose technology rules out the use of polysilicon in its modules. SunPower's manufacturing spin-off Maxeon Solar Technologies too can be a winner since its uses polysilicon from US based Hemlock.

China's response

The Chinese Foreign Ministry in a media briefing on June 24, 2021 said it strongly condemns the US sanctions against Chinese companies based on lies and false information. These sanctions, Chinese Foreign Spokesperson Zhao Lijian, pointed out damages global industrial chain and supply chain. He added that the 'US uses human rights as a guise to suppress the development of Xinjiang's industries' and 'create forced unemployment and forced poverty to disrupt Xinjiang and curb China's development'.

"China will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises," added Lijian.

TaiyangNews will keep our readers updated of news developments in the space as and when they take place.