REC on track for 2023 restart, posts loss for Q4 2022
A nighttime view of REC Silicon in Moses Lake before the plant shut down a few years ago. The plant is now preparing to reopen and expand over time despite a loss for the last quarter of 2022.
FILE PHOTO
MOSES LAKE — REC Silicon CEO Kurt Levens said the company’s Moses Lake facility is still on track to resume production in the second half of 2023 and that the company has reached an agreement with South Korea-based Hanwha Solution to provide the company with silicon gas - silane - for the next generation of rechargeable batteries.
Speaking during an earnings presentation late Wednesday, Leven refused to give any details about either the silane agreement with Hanwha or the agreement announced earlier this year with the South Korean solar panel and chemical maker to supply the company with solar-grade silicon for the next 10 years.
“When we have a contract finalized, we will make an announcement,” Levens said. “It will be limited in details.”
Under the solar-grade polysilicon deal, REC has agreed to supply 100% of the output from its Moses Lake facility to Hanwha Solution for the next 10 years. In addition, Hanwha will make a significant pre-payment to REC for solar-grade silicon, though Levens said he would not disclose either the pre-payment amount or the price Hanwha would pay for polysilicon once production resumed.
“We don’t see our competitors disclosing such items, and our practice is not to disclose,” Levens said. “But we will disclose what we are required by regulations.”
Levens did say the agreement with Hanwha Solutions has “hard caps” on the upper and lower prices the company will pay, and that those prices would be based on multiple indices for refined silicon worldwide.
During its earnings announcement, Levens said REC Silicon posted a loss of $23.5 million on revenue of $31.5 million for the last three months of 2022, citing reduced sales in both silicon gas and polysilicon largely caused by much higher electricity prices for the company’s Butte, Montana, production facility. According to information provided during the presentation, spot electricity prices in Montana’s deregulated electricity market spiked at $240 per megawatt hour in August 2022 and then hit $279 per megawatt hour in December — far higher than a typical price of less than $50 per megawatt hour REC has paid in the last five years.
“This caught us by surprise, and caused us to defer production volumes,” Levens said. “We are going to do something about this, and we should have more information on that (later in 2023).”
Levens said once the Moses Lake facility resumes full production, the company should post annual earnings of between $100 million and $300 million — a figure that includes $48 million as part of a $3 per kilogram of solar-grade polysilicon tax credit from the federal government as part of the Inflation Reduction Act signed by President Joe Biden in late 2022.
The value of REC shares traded on the Oslo Bors, Norway’s stock exchange, rose nearly 10% on Thursday to close at 15.865 Norwegian kroner ($1.54) per share.
Charles H. Featherstone can be reached at cfeatherstone@columbiabasinherald.com.