Xinte responds to silicon metal price spike with captive smelter

Chinese transformer maker Tebian Electric Apparatus Stock Co., Ltd. (TBEA) will invest CNY3 billion (US$469 million) in a new factory for metallurgical-grade silicon (silicon metal) with an annual production capacity of 200,000 metric tons (MT) in Inner Mongolia. That will secure the feedstock for the company’s polysilicon subsidiary Xinte Energy.

Construction of the silicon metal smelter in Damao Banner, a county-like administrative unit north to Baotou City, is slated to start already this December and to be completed within twelve months. The project, which TBEA announced on November 5, appears somewhat hasty as it comes only a few weeks after the silicon metal spot price soared to a new high of more than CNY67,000/ton (US$9,267/ton without value added tax) in late September.

The surge was driven by production curbs after many Chinese provinces failed to meet the energy consumption targets of the National Development and Reform Commission. Notably, smelters in Yunnan province, China’s second largest silicon metal production region, were ordered to reduce their monthly output to 10% of the August volume from September through December.

As Xinte’s competitor Daqo New Energy recently told at the presentation of its third-quarter results, it is difficult now to receive energy quotas for new industry projects in China. According to the investment framework agreement with the government of Damao Banner, however, TBEA will also build 5 GW of renewable energy plants in the region. That will probably earn the company the green light for its silicon smelter project, but approval documents are still outstanding.

Polysilicon plants consume approx. 1.1 kg of silicon metal for 1 kg of polysilicon product. With an annual capacity of 200,000 MT, TBEA’s factory will thus be able to supply almost all silicon metal required for Xinte’s new 100,000 MT polysilicon plant in Baotou (starting up in the second half of 2022) and its existing plant in Urumqi, Xinjiang (debottlenecking to reach a capacity of 100,000 MT in the spring of 2022).