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Tokuyama sells Malaysia polysilicon business to competitor OCI

September 30, 2016
Chemical Value Chain

Tokuyama has announced that its board approved on 28 September the sale of its polysilicon subsidiary Tokuyama Malaysia to competitor OCI for $98 million. Tokuyama has been struggling with its money-losing Malaysian operations for several years.

Tokuyama Malaysia was established in 2009 to expand the group’s polysilicon business. Despite constructingthe polysilicon 1 and polysilicon 2 facilities at the Samalaju Industrial Park in Sarawak State, Malaysia, the company incurred impairment losses for virtually the entire book values of the two plants because of engineering issues and substantial deterioration in polysilicon market conditions, Tokuyama says.

The company tried to improve productivity at the Malaysian operation and had considered several options, including an alliance with OCI, a company active across a broad range of fields in the solar-cell market. But after evaluating the merits of the alliance, it decided selling the business to OCI is best.

Tokuyama Malaysia’s two polysilicon plants consist of a 6,200–metric tons/year facility that was mothballed sometime ago and a 13,800–metric tons/year unit that is operating. Under a medium-term plan, the target for annual production at the second plant is 11,000 metric tons/year, Tokuyama tells CW. Tokuyama also owns an 8,500–metric tons/year semiconductor-grade polysilicon plant at Shuman, Japan, that it intends to keep. The company has just resumed operations at an idled line there and plans to ship 7,000 metric tons, 90% of which is for semiconductor use, this year. “We intend to increase operating rates at the plant in the next five years,” the company says. Tokuyama Malaysia, in the fiscal year ended 31 March 2016, reported sales of ¥8.9 billion ($87.1 million), an operating loss of ¥10.3 billion, and a net loss of ¥135.5 billion.

OCI has the capacity to produce 52,000 metric tons/year of polysilicon at Gunsan, South Korea. Tokuyama says the sale will enable it to reduce the volatility of its financial results and rebuild its financial position. It will also allow the company to direct resources to core businesses.

The worldwide polysilicon market was estimated at €4.8 billion ($5.5 billion) in 2014, with solar-grade material accounting for 80% and semiconductor-grade material the remaining 20%. The largest polysilicon player is GCL-Poly (Shanghai, China), which accounts for 25% of the total, followed by Wacker Chemie with 19%, OCI with 14%, and Hemlock with 11%. Tokuyama’s share of the market was just 2% in 2014.

Despite the substantial decline in installed photovoltaic capacity in Europe and other areas, polysilicon demand is projected to increase about 10%, largely reflecting aggressive installation initiatives in China, the United States, and India, Tokuyama says. However, the company expects excess capacity to continue for the foreseeable future.

Tokuyama expects to record a loss of ¥8 billion with transferring Tokuyama Malaysia to OCI, which will be recorded as an extraordinary loss during the fourth quarter of the fiscal year ending 31 March 2017.

By Natasha Alperowicz

Source: Chemical Week

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