High electricity prices push REC Silicon to end polysilicon production in Montana

REC Silicon announced today that it would shut down its polysilicon production capacity in Butte, Montana. The factory largely supplied the semiconductor industry, while REC Silicon’s restarted factory in Moses Lake, Washington, focuses on the solar industry.

REC Silicon said the shutdown of the Butte plant’s polysilicon efforts is necessary due to the regional structural imbalance in supply and demand for electricity, not necessarily because of the current state of the polysilicon industry itself. Discontinuing the polysilicon production at Butte will significantly reduce annual energy consumption and operating costs and is part of REC Silicon’s strategy to ensure long-term profitable operations. Silicon gas production will continue at the Butte plant.

The polysilicon efforts at the Butte plant will continue for six to nine months to fulfill polysilicon supply obligations. Once those contracts are fulfilled, the company will reduce the workforce in Butte. REC Silicon is working out the details with respect to the shutdown.

“The decision to shut down the polysilicon business in Butte was very difficult from a human perspective because of the impact on REC’s workforce,” said Kurt Levens, REC Silicon CEO. “The team in Butte has been resilient and resourceful, making vast improvements in our offerings and gaining a significant presence with key customers while balancing a focus on quality and cost. I am grateful for their hard work and dedication. We did everything in our power to return profitability to the polysilicon business in Butte, however, forecasts for sustained high electricity costs that are outside of our control necessitated this decision. After the transition has been fully executed, we expect an accretive impact to our earnings. Most importantly, we will have full focus on Butte’s globally leading silicon gases business. We will work towards executing more investment and product opportunities available due to that leading position as well as the tailwinds the Chips, IRA and Infrastructure Acts are providing.”

The short and mid-term increased electricity pricing in the region is not expected to abate and will not allow for profitable operations in the polysilicon business line, the company said. REC Silicon took short-term mitigative measures that included electricity hedging, optimized production and increased sales prices. These efforts minimized the losses in the short-term, however, the decision taken is primarily about the mid- to long-term viability of a very power-intensive polysilicon process located in a high electricity cost region, particularly relative to alternative manufacturers and regions.