REC ASA - Update on polysilicon expansion (&quo...
Sandvika, December 15, 2008: REC has, in early December, formally
accepted and taken control over the entire FBR-area and all related
equipment at the new plant under construction in Moses Lake,
Washington. The first reactor test runs have been successfully
completed. However, during final stages of the commissioning in the
silane gas production area, REC encountered quality issues with
certain standard prefabricated carbon steel pipes. Control measures
and repairs were initiated immediately. Based on the final
conclusions of the analysis undertaken during the last few days,
start-up of the silane production will be delayed until late January
2009. This will negatively affect production of polysilicon and, to
some extent, wafers and solar cells in 2008 and early 2009.
Although the FBR-area has been accepted and taken over by REC, the
company's mechanical integrity inspections have revealed quality
concerns relating to prefabricated carbon steel pipe welds in the
silane gas section. The level of weld defects is above industry
standard, and the quality falls outside the guaranteed standard
delivery specifications for these "off-the-shelf" pipes. All defect
pipes have been supplied by one particular pipe fabricator with "seal
of approval". The supplier has now taken full responsibility and has
accepted to cover costs related to necessary weld repairs to ensure a
safe startup.
Further, REC has, together with Fluor and a third party engineering
firm, spent the last few days finalizing the analysis related to the
total extent of the issue. Based on current weld repair rate and the
conclusion of the analysis, start up of commercial production is
moved to the end of January 2009. With the exception of the weld
repairs, the construction of the plant is currently complete.
"As a responsible producer we have a rigorous mechanical integrity
program which allowed us to discover the defective workmanship. The
delay is obviously very unfortunate given our tight polysilicon
situation, and we are working hard to mitigate and limit consequences
as much as possible," says Erik Thorsen, President & CEO of REC.
Simultaneously, start-up activities continue in the FBR section of
the plant. Last week, the first two reactors were started on inert
gas. This confirms that control systems and reactor characteristics
are working in line with expectations. Next week, REC intends to
start running full tests of the FBR reactors on silane gas from
existing plants.
"As we have taken over the FBR-section of the plant, we will continue
to prepare for startup of commercial production and the coming
ramp-up period in parallel with the ongoing weld repairs. We remain
comfortable with FBR from a technology perspective and its low cost
and high quality capabilities. However, there is always risks related
to starting up new technology", says Erik Thorsen.
Plant III was previously scheduled to produce up to 400 MT of
polysilicon by the end of 2008. Given an expected start-up of
commercial production towards the end of January 2009, the
2008-production will be reduced to only minor test volumes. For 2009,
the production is expected to be approximately 5,000 MT. The plant is
designed for an annual production capacity of 6,500 MT.
REC will host an analyst Q&A conference call today at 15:00 CET. Dial
inn details will be distributed during the morning.
For more information, please contact;
Erik Thorsen, President & CEO; +47 907 56 685
Jon Andre Løkke, SVP & IRO; +47 907 44 949
About REC
REC is uniquely positioned as one of the most integrated companies in
the solar energy industry. REC Silicon and REC Wafer are the world's
largest producers of polysilicon and wafers for solar applications.
REC Solar produces solar cells and solar modules and engage in
project development activities in selected segments of the PV market.
REC Group had revenues in 2007 of NOK 6,642 million and an operating
profit of NOK 2,588 million. Please also see www.recgroup.com.
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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