REC ASA Secures Long-term Polysilicon Contract

Renewable Energy Corporation (REC) entered into a long-term agreement for the supply of polysilicon to SUMCO TECHXIV Corporation (STC), a subsidiary of a global electronic wafer producer.

Under the agreement, REC will deliver polysilicon to STC worth approximately NOK 4.8 billion [US $785 million] over the next seven years. REC has also started ordering long lead-time items to secure further expansion of its polysilicon production in 2009-2010. “We are determined to pursue our strategy and commitment to grow solar. However, with our aggressive expansion ambition in polysilicon production, we also see an opportunity in continued supply of some polysilicon volumes to important customers in the electronic segment,” said Erik Thorsen, President and CEO of REC ASA. The new contract combines re-negotiated terms of existing supply contracts and an extension of volumes and duration. Deliveries will start this year and continue until 2013. Additional volume to the existing contract is close to 6,000 metric tons (MT), which will be supplied during the added years covered by the new contract. Due to improved pricing terms, the average price for REC Silicon’s total polysilicon sales is expected to increase slightly more than 15% from 2006 to 2007. Earlier guidance indicated an average price increase of up to 10%. “By executing this contract, REC Silicon will achieve more operational flexibility than the former agreement allowed,” said Goran Bye, Executive Vice President Silicon of REC ASA. While existing polysilicon expansion projects are running according to plan, REC has also started preparations for the next polysilicon expansion. Decision has been made to invest nearly US$ 50 million to procure long-lead items to ensure that additional capacity could come onstream in 2009/2010.
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