Metallkraft AS
A business that has been taken over by
the Chinese.
15 March 2012
2 2
METALLKRAFT SERVES THE WAFER MANUFACTURERS
Silicon
metal Poly-
silicon Ingot Wafer Cell Module System
Metallkraft a SiC and PEG recycling company
Pictures: Jiangsu Shunda Group
There are two main markets: – The semiconductor market
– The solar cell market
Strategy for growth 2005 - 2008 –Semiconductor market
Revenue vs. EBITDA
0
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
7 000 000
8 000 000
2 005 2 006 2 007 2 008
EURO
Rev SiC Rev. Glykol EBITDA
Key budget figures
Burghausen
Freiberg
+ USA
+ Spain
+ Singapore
+ Deutsche Solar
CAPEX Freiberg:
Approx 2 MEuro
Silicon production
-Strong price and volume growth
Increasing silicon prices – Aggressive expansion plans to
increase silicon production
– More aggressive recycling
approaches
Strong growth in silicon
production – CAGR 26% 2006-2010
– Solar applications expected to
capture most of the increased
supply
The value of silicon is reflected
in the equity markets with the
four silicon players accounting
for 50% of the solar power
sector market capitalization
(MEMC, Wacker, REC and
Tokuyama)
Source: Photon International
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010
kt
Electronics sector Solar sector
Silicon production
36
44
52
65
85
110
Solar cell and module production
-Even higher expected growth rates
Cell and module production
expected to outgrow silicon
production – CAGR 52% 2006-2010
Supply of silicon from secondary
sources with sufficient quality for
PV cell production – 11% of total supply in 2005
Margin improvement in the solar
sector – outbidding electronics sector
Increased efficiency of silicone
use (40% 2006-2010)
Non-crystalline silicon
technologies are growing at high
rates
14
9,6
6,1
3,9
2,6
1,7
0
2
4
6
8
10
12
14
16
2005 2006 2007 2008 2009 2010
GW
Source: Photon International
Cell/module production
7
Financial highlights –Focus on the PV sector
0
50
100
150
200
250
300
350
400
450
2006 2007 2008 2009 2010
Rev
enu
es (
NO
Km
)
0 %
5 %
10 %
15 %
20 %
25 %
30 %
35 %
40 %
45 %
50 %
EB
ITD
A m
arg
in (
%)
Kristiansand Meraker China 1 Norway 2 USA Europe EBITDA margin
China – 25%
2008-2012 BUSINESS PLAN
Capacity to be installed during 2008 – 2012: – 22 modules
– 6 locations (two in China, four Europe/elsewhere)
– 220,000 tons annual spent slurry capacity
Working closely with leading wafer producers in
order to meet their global growth requirements
Clear and profitable presence in China
Total investment 2008 – 2012 of NOK 1.6 billion – Excludes SolarSil investment of NOK 200-400 mill
– Excludes expected net operational cash inflow of NOK
1.2 billion during the same period
China
Two out of six
9
Company structure Metallkraft Holding AS
Metallkraft China AS
Metallkraft
China 1
Metallkraft Norway AS
Metallkraft
Meraker
Metallkraft
Kristiansand
Metallkraft
SOG- Si
ABG Sundal Collier
11
Metallkraft expansion
11
Kristiansand
6,000mt November 2008
Customer: NorSun
Yangzhou
20,000mt March 2009
Customer: Shunda/Rietech and GCL/Tayal
Singapore
40,000mt 2010
Customer: REC
12
Market in crisis?
Source: Solarbuzz, 2012
Source: EPIA, 2012 Source: EPIA and Digitimes, 2012
Development in wafer prices
60% drop in polysilicon
price from peak level to
current spot USD 31/kg
PV grade SiC dropped 20-
25% in 2011 – European prices F600
dropped from EUR 4 to
EUR 3 per kg
– Chinese prices GC1500
RMB 27,000 to RMB 21,000
PEG prices have remained
stable
Steel wire costs dropped
40-50%
Development in input factors
15
MK has a 6-7% share of the global spent slurry market
Slurry recycling is capital intensive and rely on long-term stable
relationship with wafer manufacturer
Highly unstable market with dramatic cost cutting, bankruptcies, and
market consolidation
Metallkraft has lost its Kristiansand customer NorSun
Metallkraft has sold its factory/business in China to a Chinese recycler
Metallkraft is reluctant to commit to a slurry recycling project with the
prevailing uncertainties
Current situation
Heavily favored and subsidized industry
Chinese PV industry started in 2005
In 2010 China produced: – 50-60 % of global PV
– 65-70 % of all wafers
– 40,000 mt polysilicon (+ imports of 40,000 mt)
Chinese wafer capacity > 20 GWp
2010 has been the ”Year of GCL” – 0 wafers in January 2010
– Celebrated 3.5 GWp capacity Nov 1st 2010 through acquistions/constructions
– Target 7-8 GWp by mid-2011
– Builds new wafer capacity in 10 weeks
Costs per watt dropped from USD 3.5 to USD 2.0 (43%) mid-2008 to mid-2010
(source: UNEP 2010)
Chinese PV manufacture
Chinese market, Jiangsu Province
18
GCL
GCL
GCL, Trina, EGing
GCL (Hareon/Konca) GCL
Comtec SST
ET Solar Solarfun Rietech
Huantai
Rietech
Shunda
CEEG
Wafer consolidation
2010/11
GCL:
• Konca
• Hareon
• Canadian Solar
• Trina expansion
Rietech (Suntech):
• Rietech Yangzhou
• Rietech Zhenjiang
Independent:
• Trina
• Shunda
• Comtec
• ReneSola
• ET Solar
• EGing
• SST Kunshan
• HTSTech
• JA Solar
• Hanwha
• CEEG
• Others
Hanwha
Total cost focus
No expenditure or investment that are
not yield or quality related
No technology leadership
Labor or space saving devices are
irrelevant
Maintain several suppliers
Short-term or no contracts
Chinese PV manufacture
As reported by a (Norwegian ) Metallkraft engineer visiting a Chinese customer’s plants in Nov 2010: ”It`s hard not to be impressed when you see the XXX plants in
Xxxxxx. The buildings are very simple and have only the bare
essentials of infrastructure. F.ex. no heating in the factory office
building.
They focus purely on core business, and accept very
simple functional standards for everything that does not directly
affect quality or yield.
They use only local architects and contractors because they
thought it was too expensive to use the larger companies from
Shanghai.
Most of the employees in the office building including the
management team worked in outdoor winter clothing due to low
indoor temperature.
The people who showed us the production seemed very
competent and precise answers came without hesitation and the
answers seem very likely.They never hesitated to give us
information and we were free to take the pictures we wanted.
The plants did not show 5S standard, but according to Vice GM
Mr. Xxx it was the best standard they could have for the money
they wanted to spend.”
Low prices and ”good enough” quality
Keep up with capacity expansion
Continuous product development
Local decision making - JV
Chinese marketing tools
It doesn’t help to be Norwegian after the Nobel Peace Price – We lost 10MRMB in grants
– We have not been able to have visitors from China in Norway
– We lost the Multiple Visa
– In front of 2008 we were treated like Kings……
Successful suppliers
22
Metallkraft end story…From Norway to Singapore…
22
Kristiansand
6,000mt November 2008
Customer: NorSun
Yangzhou
20,000mt March 2009
Customer: Shunda/Rietech and GCL/Tayal
Singapore
40,000mt 2010
Customer: REC
Sold to a Chinese Recycler
MK HQ in 2012
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