Updated Jan. 3, 2025 to include Qcells’ statement.
REC Silicon announced that it is ceasing production at its Moses Lake, Washington, facility. The company shut down its polysilicon production facility in Montana earlier this year as well. REC Silicon now has no operating polysilicon efforts within the United States.
The company said that while production of polysilicon will be discontinued in Moses Lake, the equipment involved in production of silicon gases will be maintained in a “safe and recoverable mode that incurs minimal interim costs, allowing the unit to restart with reasonable notice.” This would allow REC Silicon to capitalize on future customer demand for silicon anode or other gases within the energy storage space.
The company stated it will now focus its business efforts on silicon gases.
The once-globally dominating polysilicon company was on track to be the first step in Hanwha Solutions’ quest to produce solar panels with a 100% American supply chain — REC Silicon polysilicon would be sent to Hanwha’s Qcells factories in Georgia to be made into ingots, wafers, cells and then panels. Hanwha became the largest shareholder in REC Silicon in 2022 and planned to buy all of the polysilicon product made in Moses Lake for 10 years. Hanwha’s investment in REC Silicon allowed the company to restart its Moses Lake operations after pressure from the Chinese market forced REC Silicon to close the site in 2018.
REC Silicon announced to shareholders that it began limited polysilicon production at Moses Lake in late 2023. The company had been working on improving the levels of impurities that “resulted primarily from the post-reactor product finishing and handling systems.” This included changing materials, procedures and operating conditions. REC Silicon worked with third-parties to evaluate the situation but ultimately was unsuccessful in attempts to rectify the issues.
The company received an “unsuccessful qualification test” earlier this month by its customer (assumed to be Hanwha). This was due to “lower-than-expected levels of crystallization and the ingot yield observed in the testing runs, which the customer deemed not to be acceptable for their production process at this stage.”
REC Silicon said its customer is unable to wait any longer for delivery of product that meets requirements, although production efforts at the Qcells ingot and wafer facility in Georgia have not yet started. REC Silicon said that with no other customers in the United States and limited customers outside of China, the best option is to cease production entirely.
REC Silicon said it is now in discussions with its customer regarding the cancellation of its contract, including the “elimination of any penalties and a deferral of the repayment of the initial pre-payment.”
The shutdown at Moses Lake will start immediately and could take three months. The workforce there will be reduced accordingly.
Jan. 3 update:
Qcells has provided a statement:
Despite this unfortunate news, Qcells’ business operations will not be significantly impacted. Qcells’ parent company Hanwha Solutions has signed a long-term agreement for polysilicon from OCI, a leading South Korean clean energy company which uses hydropower to produce its product in Malaysia. This polysilicon will be used to produce ingots, wafers and cells at our solar factory in Cartersville.
Ultimately, developments at REC underscore the challenges of rebuilding a solar supply chain in the U.S. while upholding the exceptional high quality, efficient, affordable and industry-leading solar panels Qcells offers.
We remain the only company in the U.S. to domestically produce ingots, wafers, cells and finished modules, all under one roof, at our Cartersville, Georia, facility. We are fully committed to growing our U.S. manufacturing operations and building a diverse supply chain in the U.S. and abroad.
My opinion on how this start up failed: Too many hands in the pocket, digging for gold…
I was hired at REC recently and for my professional experience in product handling, there was zero proper training in how poly should be handled or packaged. This company used German and Italian machines in their handling and not one person had complete knowledge experience or control on how to use the equipment. 50% of the people hired to work there actually cared about the job. The other half were only there because of how the public perceived the company as the “best paying job” in the area. Again, to many young kids hired thinking they know how the industrial game works with zero proper training.
Agreed. There have been many improvements made to the process since the first qualification sample was sent, and why Q-cells elected not to send another sample for qualification is indeed a mystery.
With all the new equipment and processes installed at REC to meet Hanwha’s requirements, it takes some amount of time after start-up to get everything synced-up and operating as designed. It’s not like a light switch that you turn on and it all works perfectly.
With all the money that Hanwha has invested in REC, it’s hard to believe that they would essentially just walk away?
Hanwha needs to kill the old expensive baby so the new DOE funded baby can survive better. #S Korea Business is ruthless.. Qcells is their lead horse and probably had less margin using REC.
Moses Lake as a silicon foundry seems to have had multiple problems over the years. On again off again manufacturing at the site, promises not kept by the likes of Violet Power that was ‘going’ to have a solar PV cell and panel manufacturing fab right across the street from the silicon foundry, didn’t flesh out.
Perhaps it is time for an entity like the SEC to get involved in this REC foundry to scrutinize the operation from management to investments by others. IF the proposition doesn’t work time and time again, one needs to revisit the “premise” of the entire business incorporation. Just sayin’.
Hi
I see that you have written an article about REC today.
Therefore, I would like to send you some info and hope that you will be able to dig up the real truth for us shareholders in REC and the market in general as REC is a listed company in Norway.
REC has spent over 5-600 million dollars to restart the ML department, and has hired several hundred new employees, and has spent a lot of money on training and large-scale production, then to close it all before it even got started.
Because the one China test says that the quality is not good enough. This is unrealistic So yes, it smells very bad and everything indicates that it is not the truth in this matter. Why did the customer, which is Q-Cells and which again through Hanwha controls both sides of the table, choose to send REC’s raw materials to be tested in China?
For some reason, the customer did not want to tell the market and REC which country they had sent the product for testing, but then after 5-7 weeks of waiting, a stock exchange announcement comes that REC’s products have been stopped in Chinese customs. We know that REC had to close the ML department in 2019 due to the Chinese tariff on products from REC.
Why would the testing company in China, which is governed by their regime, want REC’s product to be approved, when they do not want companies in the US in general to fail? And in the stock exchange announcement on September 13, REC confirms that the quality is accepted by both the customer and REC, but that it is only a formality to test the product.?
On December 17, the test results come from the Chinese company and of course we know the answer in advance where they believe the purity is not terrible. In the same announcement, REC management says that sometimes it takes more tests to get it approved, which is why REC has used this long waiting time to work on the quality and is preparing a new batch for testing.
But then comes the message just a few days later that gives everyone a shock that they can’t go ahead with it because the customer who is Hanhwa doesn’t want to wait any longer. It’s a shame for all those who have wasted their time sending the goods to China, who spent over 3 months for a false result.
Therefore, we small savers who are sitting with over 90% loss want you to be able to focus on this matter so that someone intervenes from the authorities in the US.
Hanwha is looking for something in REC, maybe they will drive it completely down, which they have managed to do and come up with some shameful bids. We want a fair and equal treatment of all shareholders.
With kind regards
Armando
Has REC Silicon been taken hostage by its shareholder Hanwha? After investing umpteen millions in the upgrade of its fluidized bed reactors (#FBR technology) and post-treatment systems for granular #polysilicon in Moses Lake, Washington (USA), REC Silicon suddenly announced on December 30 that it would cease its polysilicon production. The decision comes after a first qualification test for REC Silicon’s granular material in #China failed in December. The company’s argument, however, that its only polysilicon customer Qcells USA Corp., a subsidiary of Hanwha Group, “is not able to wait any longer for delivery of product” is strange as the start-up of #ingot and #wafer production at Qcells has been delayed to mid-2025. And there are more crudities. Something smells foul here. Retail shareholders sense a dirty game by Hanwha, which owns a 33% stake in REC Silicon, to take control of the company at their expense – see the comments by Armando Tyria on LinkedIn: https://lnkd.in/em8br54D
https://www.linkedin.com/posts/johannesbernreuter_fbr-polysilicon-china-activity-7279819228621279232-SBT4?utm_source=share&utm_medium=member_ios
REC Silicon – Results of Qualification Test
17/12/2024, 19:10:00
Regulatory
Moses Lake, Washington USA December 17, 2024: REC Silicon ASA (“REC Silicon” or the “Company”) has now received the results from the qualification test for its ultra-high purity polysilicon from the recently restarted silane-based high-purity granular production facility in Moses Lake, Washington.
The Company was notified yesterday by its customer of the results from the qualification test that was completed earlier this month through a third-party testing partner. Unfortunately, due to the impurity issues in the qualification material sent, the customer deemed the test to be unsuccessful. This was due to lower-than-expected levels of crystallization and the ingot yield observed in the testing runs, which the customer deemed not to be acceptable for their production process at this stage. The Company is in discussions with its customer to determine the feasibility of another test which will be contingent upon the Company making improvements in the manufacturing process at Moses Lake. The timing and likelihood of achieving the necessary improvements is uncertain at this point in time.
As a result of the unsuccessful qualification test, REC Silicon is reviewing multiple strategic options. This may include additional operational adjustments, contractual re-negotiations, and other mitigative actions.
REC Silicon continues to work on additional financing to ensure the Company’s financial flexibility. The Company will provide additional operational and financing details when such information becomes available.
REC Silicon – Update Regarding First Shipment of Ultra-High Purity Polysilicon
13/09/2024, 16:28:00
Regulatory
Moses Lake, Washington USA – September 13, 2024: REC Silicon ASA (“REC Silicon” or the “Company”) provides an operational update concerning the first shipment of ultra-high purity polysilicon from the recently restarted silane-based high-purity granular production facility in Moses Lake, Washington.
The Company is pleased to announce that following a series of modifications and mitigations in our process aimed at addressing a previously announced issue around higher than expected levels of an impurity in the product, all impurities have now been reduced to levels that are acceptable to our customer, and we have an agreement in principle to modify a specification subject to a final evaluation and qualification test, as is typical in the industry after such a modification.
The plant is running well, and the facility is now producing volumes for commercial shipments. Even though our production volumes are being ramped to the necessary level already, the first commercial shipment of product will need to be delayed to mid-October, to accommodate this final qualification step that our customer is undertaking.
Additionally, we can confirm that construction activities related to the restart of the Moses Lake facility are complete, including Silane IV and equipment will be started as needed during the planned ramp of capacity.
“Getting to this point and mitigating the previous impurity issue was the result of hard work by many dedicated personnel of the Company. We will soon be beginning a new phase for the facility where efforts are transitioning to continuous quality improvement to exceed the market standard, ramp-up, and optimization. There is still a large amount of work to be accomplished. We will strive to reach our full commercial production capacity as soon as we can while maintaining our focus on product quality. We appreciate the interactions with our customer in getting to this stage, our discussions have always centered around our aligned interests of our polysilicon enabling their efforts to create a complete PV solar value chain in the USA. This is demonstrably a positive outcome for both parties” says CEO Kurt Levens.
As a leading producer of silane gases and silicon materials, REC Silicon is well positioned to capitalize on the global megatrends of digitalization, energy transition and energy storage. The Company has developed a strong market position in the Semiconductor industry based on its operations in Butte, Montana. The successful restart of Moses Lake operations will enable REC Silicon to provide ultra-high purity polysilicon to the US solar value chain currently under construction while the Company also expects to supply silane gas in significant volumes for anode materials to a fast-growing battery industry.
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