Bitterfeld-Wolfen, Germany [RenewableEnergyWorld.com] Q-Cells SE has terminated the agreement concluded in December 2007 with the Chinese solar company LDK Solar for the supply of solar wafers, as Q-Cells says that LDK Solar did not fulfill significant contractual obligations. LDK Solar has responded by saying the company vigorously disagrees with Q-Cells’ claims.
The original agreement specified the supply of solar wafers on the basis of a contractually fixed amount of silicon totalling 43,000 tonnes for the years from 2009 to 2018, with wafer supplies on the basis of approximately 1,000 tonnes of silicon relating to 2009.
At the beginning of 2008, Q-Cells made a payment of US $244.5 million in the context of this agreement. Q-Cells said that this payment can be reclaimed in the event of termination of the agreement and is secured by a bank guarantee at a German bank upon first demand.
Q-Cells says direct discussions between the two companies and a parallel arbitration process at the International Chamber of Commerce (ICC) in Paris have not resulted in an amicable settlement yet. An application by LDK Solar for a temporary injunction to be issued against a drawing down of the bank guarantee was refused by the District Court in Berlin. Q-Cells will therefore make use of the possibility to draw down the bank guarantee linked to the payment made.
During rounds of discussions and negotiations, LDK Solar says it has clearly stated to Q-Cells that it has not only procured feed stock for the manufacturing of the solar wafers under the contract, but has also manufactured the requisite quantities of the solar wafers ready for shipment to Q-Cells at its indication of willingness to accept. LDK Solar made deliveries during the first quarter of 2009 pursuant to purchase orders of Q-Cells under the supply agreement.
In March 2009, LDK Solar suspended deliveries at the request of Q-Cells in order to engage in various negotiations with Q-Cells in the interest of reaching a mutually agreeable amendment to the supply agreement. During the negotiation process, Q-Cells unilaterally claimed, and has now publicly announced, the termination of the agreement. LDK Solar said that the termination is without any valid basis.
The supply agreement provides for LDK Solar to supply solar wafers to Q-Cells on the basis of contractually fixed amounts of polysilicon totaling 43,000 metric tons for the years from 2009 to 2018, with annual wafer supply quantity for 2009 set at 1,000 metric tons at fixed prices under the supply agreement.
At the beginning of 2008, Q-Cells made a prepayment of $244.5 million pursuant to the supply agreement. LDK Solar has also provided a bank guarantee in the same aggregate amount to guarantee the performance of its obligations relating to such prepayment under the supply agreement.
LDK Solar intends to vigorously defend its rights and interests as a result of Q-Cells’ wrongful termination of the supply agreement, the company said.