REC looks at restarting Moses Lake production

FORNEBU, Norway — REC Silicon President and CEO Tore Torvund said the company is considering restarting production at its Moses Lake polysilicon facility following the conclusion of the Phase 1 trade agreement between the U.S. and China.

“This is the end of the trade war on polysilicon,” Torvund said during an early morning conference call in Norway to announce the company’s fourth-quarter 2019 earnings.

“That we might enter into the Chinese market without any (trade) duties, that’s a major achievement,” Torvund told investors and analysts on Friday.

As part of the Phase 1 deal, China explicitly agreed to include U.S. polysilicon as part of the $120 billion in U.S. goods the country will buy duty-free in 2020.

Torvund also said that the decision to allow U.S. polysilicon in without tariffs overrides the announcement by Chinese trade officials in mid-January that those tariffs would continue to remain in place.

China imposed tariffs on U.S.-made solar-grade polysilicon in 2013 after the administration of President Barack Obama slapped tariffs on Chinese-made solar panels, effectively blocking U.S. polysilicon from the Chinese market.

Since then, REC has laid off nearly all of its workforce in the Moses Lake area and halted production last July. The facility in Moses Lake is one of only two in the world to produce polysilicon using a patented process that allows a production line to run continuously for up to two years rather than the week the common Siemens process runs. That makes REC’s Moses Lake plant one of the lowest-cost polysilicon producers in the world, Torvund said.

The other facility is a joint-venture in Yulin, China, also partly owned by REC Silicon.

Torvund said REC has assurances from the Office of the U.S. Trade Representative that the administration of President Donald Trump will have REC’s back if the company has any problems trying to sell in the Chinese market.

In order to test China’s commitment, Torvund said REC will contact its Chinese customers and then attempt to make a couple of test shipments. If there are no problems, the company intends to resume production in Moses Lake.

“We feel very confident this agreement is in place,” he said.

However, if production is going to resume in Moses Lake, Torvund said REC will need to raise around $20 million to get the facility back up and running. The company hopes to secure that funding either through a new issue of shares or through selling its Butte, Montana, silane gas facility.

If all works out, Torvund said it would take about two months to restart the Moses Lake facility and that the plant could be running “at full capacity” by the end of the year.

Torvund also said he expects the solar-grade silicon market to improve in 2020, with more solar panels expected to be installed worldwide than in 2019.

“Polysilicon sales will improve,” he said.

For the last three months of 2019, REC Silicon posted a loss of $3 million on revenue of $31.8 million, and had roughly $29.4 million cash on hand. On Friday, shares of REC on the Oslobørs, Norway’s stock exchange, rose 4 percent to close at 4.12 Norwegian kroner (45 cents) per share.

Charles H. Featherstone can be reached at cfeatherstone@columbiabasinherald.com.