OCI signs $1 billion polysilicon supply deal with US solar firm CubicPV

OCI Holdings Co., a leading South Korean chemical and green energy company, said on Tuesday it has clinched a $1 billion deal to supply polysilicon to US silicon solar wafer manufacturer CubicPV Inc.

Under the deal, OCI’s Malaysian affiliate OCIM Sdn. Bhd. will supply the solar cell raw material to the US firm for eight years from 2025.

Located at the Samalaju Industrial Park in Sarawak, Malaysia, OCIM produces 35,000 tons of low-carbon solar cell polysilicon annually through eco-friendly hydroelectric power and a 100% wastewater recycling process.

The company was established by Japan’s Tokuyama Corp. in 2009 and acquired by OCI in May 2017.

CubicPV, also known as Cubic, a major solar cell startup, is currently building a solar cell wafer plant in the US.

“This agreement with one of the world’s foremost leaders in polysilicon production is a testament to our manufacturing capabilities and the progress in our US manufacturing plans. OCIM’s high-quality, US-compliant silicon is in extremely high demand, and we are fortunate to lock in our supply with a trusted partner,” said CubicPV Chief Executive Frank van Mierlo.

OCI Holdings, a leading solar cell manufacturer and the only Korean producer of polysilicon, a raw material used to make photovoltaic cells for semiconductor wafers and solar panels, has actively pursued overseas expansion.

The latest deal with Cubic is OCI’s first contract since the Korean company turned into a holding company structure in May to focus on investment in growth sectors.

OCI said the deal represents a key step in its efforts to diversify its global silicon solar cell value chain.

“OCIM’s global reach and leadership in green energy continues to grow. We are delighted to name Cubic as our first US customer and to play a role in their manufacturing success. This agreement moves the world closer to realizing a sustainable value chain in one of the most critical industries for energy transition,” said OCI Holdings Chairman Lee Woo-hyun.

US IRA BENEFICIARY

OCI and CubicPV said their partnership eliminates the supply chain risk for Cubic’s customers by combining US-compliant silicon with American-made wafers.

Fully traceable, US-compliant silicon is currently one of the most sought-after raw materials in the renewable energy sector. The supply from OCIM not only satisfies US law but also meets the rigorous quality requirements of Cubic’s customers, they said.

Over the past six months, and after rigorous equipment validation and testing, Cubic said it has produced significant wafer volumes using OCIM silicon, all meeting or exceeding customer specifications.

OCI stands to benefit from the US government’s Inflation Reduction Act (IRA), which supports private firms’ investments in renewable energy projects in the country to respond to climate change.

The US has earmarked $369 billion in climate and energy provisions. OCI is expected to receive up to $560 million in subsidies from the US government over a decade from next year.

GLOBAL EXPANSION

OCI said in 2022 that it would invest $40 million to expand solar cell module production facilities at its US subsidiary, Mission Solar Energy.

With the expansion, Mission Solar’s cell module production capacity will increase to 1 gigawatt from the current 210 megawatts.

Helped by the tax incentives, US solar energy demand is forecast to grow from 15 GW a year in 2022 to 38 GW by 2025, analysts said.

Outside of the US, OCI is looking to North Africa for investment, Chairman Lee said.

OCI also plans to ramp up polysilicon production facilities at its Korean plant in Gunsan and a factory in Malaysia. OCI’s entire annual capacity will eventually double to more than 8 million tons, he said.

Write to Mi-Sun Kang at misunny@hankyung.com

In-Soo Nam edited this article.