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REC ASA - Secures a NOK 2.9 billion silicon powder contract

REC has entered into a long-term take-or-pay agreement for the supply of fine particulate silicon - or "silicon powder" - from the FBR-process. The contract has a value in excess of USD 500 million (~NOK 2.9 billion).

REC has entered into a long-term take-or-pay agreement with a PV-company based in Asia for the supply of fine particulate silicon from the FBR-process, so-called "silicon powder". Silicon powder has traditionally had low or negative value, due to storage and land-filling requirements. REC has developed technology to capture and package these fine silicon materials, which opens valuable commercial opportunities.

"This will enable us to increase the revenue and consequently the financial return on our latest polysilicon expansions, through the marketing of a product that REC presently does not intent to utilize internally", says Erik Thorsen, President & CEO of REC.

The contract has a value in excess of USD 500 million (~NOK 2.9 billion), and runs for seven years from 2009 through 2015. Prices and volumes are predetermined for the entire contract period, including clauses covering annual price adjustments in the case of cost escalations. Volumes delivered will start at a relatively low level and increase over time to approximately 1,500 MT per year. According to the agreement, REC Silicon will receive a prepayment fee of USD 65 million (~NOK 380 million) before the end of 2008. These "silicon powder"- volumes come in addition to already communicated volumes of prime material (i.e. FBR and Siemens prime).

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