REC Silicon announced that its subsidiary REC Advanced Silicon Materials is shutting down its polysilicon production capacity at its Butte, Montana facility, with layoffs to follow.
REC Silicon says the shutdown of the polysilicon business in Butte is primarily necessary due to the “regional structural imbalance in supply and demand” for electricity, and is part of REC Silicon’s strategy to ensure long-term profitable operations. Discontinuing the polysilicon production at Butte will significantly reduce its annual energy consumption and operating costs, the company said.
The Montana polysilicon facility will continue to produce for approximately six to nine months to fulfill supply obligations to the company’s customers, REC Silicon said. After the supply obligations are satisfied, the company expects layoffs at the Butte facility in addition to other positions across the company that support the Butte operations.
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“The team in Butte has been resilient and resourceful, making vast improvements in our offerings and gaining a significant presence with key customers while balancing a focus on quality and cost,” said Kurt Levens, REC Silicon CEO. “I am grateful for their hard work and dedication. We did everything in our power to return profitability to the polysilicon business in Butte, however, forecasts for sustained high electricity costs that are outside of our control necessitated this decision. After the transition has been fully executed, we expect an accretive impact to our earnings. Most importantly, we will have full focus on Butte’s globally leading silicon gases business. We will work towards executing more investment and product opportunities available due to that leading position as well as the tailwinds the Chips, IRA and Infrastructure Acts are providing.”
REC Silicon says the short and mid-term increased electricity pricing in the region is not expected to abate and will not allow for profitable operations in the polysilicon business line, even after it took short-term mitigative measures that included electricity hedging, optimized production, and increased sales prices. These efforts minimized the losses in the short-term, REC Silicon says, however, its decision was based on the mid to long-term viability of a power-intensive polysilicon process located in a high electricity cost region, relative to other manufacturers and regions.