Timminco cuts off UMG output, no rescue in “foreseeable future”

Business for general-use silicon metal has been brisk enough to justify a complete ramp-up of Timminco’s three furnaces to full production (since October), but the company has decided to suspend its upgraded metallurgical silicon (UMG-Si) operations on lack of demand for the solar-grade material.

March 22, 2010 – Business for general-use silicon metal has been brisk enough to justify a complete ramp-up of Timminco’s three furnaces to full production (since October), but the company has decided to suspend its upgraded metallurgical silicon (UMG) operations on lack of demand for the solar-grade material.

According to the company’s 4Q09 results, overall sales rose 33% sequentially to $25.5M, but that’s still a fraction of the $72M it posted a year ago; a 4Q09 loss of nearly $70M included $45.7M in restructuring charges, vs. $18.5M in 3Q09 and a $1.3M profit in 4Q08. Net losses for the year mounted to $134.2M ($51.6M in charges) vs. $22.6M in FY08, on 59% lower sales of $104.6M.

While proclaiming commitment to solar-grade silicon and helping customers make UMG wafers and cells “indistinguishable from those made with polysilicon,” the company has decided to suspend UMG production “pending evidence of sufficient customer demand and commitments to justify a resumption of production,” according to chairman/CEO Heinz Schimmelbusch, in a statement. “Market conditions” are being blamed for impacting both development of, and demand for, the company’s UMG products, both in the past few quarters and into “the foreseeable future” — badly enough that the company continues to be at “substantial liquidity risk and creating uncertainty as to the ability of the Company to continue as a going concern.”

In fact, Timminco’s sales for solar-grade Si were actually in the negative for 4Q09 (-$3.9M, 2mt worth), due to customer product returns of previously-shipped products. Sales in 3Q09 were $0.4M (16mt), and the company had issued shares to cover ~$25M worth of settlements from customer claims. FY09 solar UMG sales were $5.1M (182mt), down from $61.7M (1045mt) in 2008.

And Timminco’s solar UMG-Si pricing further illustrates the inevitable: ASPs were $36/kg in 4Q09, down from $39/kg in 3Q09 — and just half the $65/kg in 4Q08. For FY09, ASPs were $51/kg vs. $62/kg in the prior year.

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