The polysilicon company draws another bad hand in the trade war.
A cash-strapped REC Silicon announced Thursday it’s considering the sale of its Butte, Montana facility, which produces silane gas for use in semiconductors.
Though the company hasn’t finalized a decision — REC spent months warning of the shutdown of its polysilicon plant in Washington state before actually sandbagging it — the move shows the trade war isn’t getting any easier for the Norwegian company that has most of its production based in the U.S.
“The Butte facility is a very strong asset. Under normal conditions, we’d rather hang on to it,” the company’s CFO James A. May told Greentech Media. “The problem is that we don’t have the necessary liquidity to meet all of our obligations. So, we’ve got to react now, before [we] get into a liquidity crunch.”
In recent months, REC has run the Montana facility at about 85 to 90 percent capacity. On Thursday, REC said it expects “a sharp decline” in Q3 shipments, primarily due to lower sales into China and less demand from other semiconductor markets. The softening in demand has curtailed silane gas prices by about 1.3 percent in Q3. Alongside the stasis at REC’s other U.S. manufacturing plant, that environment means the company may need to offload its Montana plant to stay afloat.
Though REC was idling at neutral cash in the spring, May said the “recent occurrences with the semiconductor market have pushed [REC] under that.”
REC completely stopped production at its Washington facility this summer, laying off 100 of its remaining employees and leaving behind a bare-bones maintenance staff. The “skeleton crew” is tasked with keeping the facility ready to restart production if and when REC regains access to the market in China, the world’s largest for polysilicon.
The company has been largely shut out of that market since 2014 due to duties and tariffs, scrambling to work out some relief for polysilicon players that once made the U.S. a dominant supplier. China now produces the global majority of polysilicon, a raw material used in solar panels. REC still contends that its technology is superior and cheaper than other polysilicon production. It’s also a 15 percent owner in a polysilicon plant in Yulin, China.
May said its too early to talk price, timing or potential buyers for the Montana facility, but REC expects to provide more information when it releases earnings on October 30. Any proceeds from the facility sale would go to “retire the company’s debts, to provide a buffer for contingent liabilities (tax examination and indemnity loan),” and to prep for a reopening of the Washington production facility.
While the Trump administration’s heavy hand on trade matters has fostered some hope within the company that it will get relief from tariffs, action hasn’t matched the anticipation.
“We’re not asking for any special treatment,” said May. “All we want is access to the market, because we are the lowest-cost producer in the world.”
Source: greentechmedia
