18 February 2011, GCL-Poly Energy Holdings Limited announces that it has approved an investment of approximately HK$17.7 billion in the polysilicon and wafer facilities in the PRC in 2011 and 2012.
At the end of 2010, the Group annual production capacities of polysilicon and wafer were approximately 21,000 MT and 3,500 MW, respectively. Upon the completion of the technology upgrade and capacity expansion under the Group development plan: the annual production capacity of polysilicon is expected to achieve not less than 25,000 MT by end of 2011 and up to 65,000 MT by the middle of 2012; the wafer annual production capacity is expected to be ramped up to 6,500 MW by end of 2011. The new investment of approximately HK$17.7 billion will be funded by the Group internal resources and borrowings.
The Company plans to increase its wafer production capacity in Jiangsu province at its existing plants in Xuzhou, Wuxi, Suzhou and Changzhou. New wafer plants will also be set up in locations close to our customers in the PRC. The new polysilicon facilities will be located in the existing Xuzhou plant. The new investment allows the Company to further expand its polysilicon capacity (which is the major raw material for its downstream wafer business) as well as its business of monocrystalline and multicrystalline wafers, which will be sold as semi-finished materials to cell and module manufacturers.
In the second half of 2010, the Group renewed and entered into new long-term polysilicon products and wafer supply contracts with reputable domestic and overseas customers. The Group has to increase its capacities in order to fulfil the obligations of these long term supply contracts over the next four to six years.
Due to the Group continuous technology innovations and precise management methodologies, we have enhanced our product quality and reduced our costs consistently. As a result, production costs of the cell and module businesses will be decreased correspondingly which will drive down the photovoltaic power generation cost. Ultimately, subsidies required from the government will be reduced and global market demand will be further expanded. The Company is confident about the development of the global solar market and also confident to increase our capacities in order to meet the rising market demand. The Company believes it is a good opportunity to further invest in the polysilicon and wafer production facilities. The Board is of the view that the new investment of HK$17.7 billion and all transactions contemplated thereunder are in the interests of the Company and the shareholders of the Company as a whole.