Sibelco and Pacific Quartz to vastly increase quartz sand production

One factor that was missing from the picture of the solar industry’s shortage, including in our recent coverage, was the production capacity announcements that one expects from such a shortage and price hike – like the millions of tons mooted for polysilicon.

We did say that the Chinese companies were expanding rapidly but mostly couldn’t serve the 4N8 purity needed for inner-face material, that synthetic quartz could be used beyond a certain price-point which was unclear due to most synthetic quartz in the world at present being made at 7N purity (excessive for Czochralski process crucibles), and that the two western high-purity quartz sand (HPQ) miners, Silbeco and The Quartz Corp had yet to announce production expansions.

All in all, quite confusing – so what a relief to see Sibelco do the normal, expected thing this week and announce a $200 million, expansion to double its HPQ production capacity, at its existing site in Spruce Pines, North Carolina, the best deposit in the world. In its announcement the company also mentions a 30% expansion in production from 2019 to 2022 – in which period the solar industry doubled. High-purity quartz is also used by semiconductors, but just as with silicon, much less mass is needed per dollar for electronics as compared to photovoltaics, so a shortage hits solar much more than semiconductors in general. The company deals in other materials, with this expansion investment amounting to 10% of its 2022 revenue.

Sibelco supplies nearly half (15,000) of the inner-face HPQ consumed by crucible makers, so doubling its production only means increasing total supply by 50%, only a bit more than enough to meet this year’s expected shortage. The solar industry will expand by 50% this year and next – but Sibelco’s expansion will take two years, ready in 2025.

There’s more news however, from four days before Sibelco’s announcement. Jiangsu Pacific Quartz, the giant Chinese quartz sand maker, announced it would issue convertible bonds worth $216 million to contribute to a $461 million yuan expansion to production capacity involving 60,000 tons high-purity quartz sand, 150,000 tons semi-conductor-grade HPQ, and 5,800 tons of semiconductor quartz products, with a 36-month lead time. It is questionable how much of this will meet the 4N8 purity requirement. At present, Pacific Quartz produces 5,000 tons suitable for 4N8, and 50,000 tons usable only as middle- and outer-layer.

For context, total production in the world for the solar industry is less than 100,000 tons, including the crucial 30,000 tons of 4N8 purity. Outer-layer sand has barely seen any price rise.

Notwithstanding the various caveats we’ve pointed out about how crucible consumption will change per kW – increased by the switch to N-type, decreased by various technical adjustments – this means the crucible shortage is going to intensify until these developments come online, and even then the adoption of synthetic product is still on the table, depending on what it will cost at a mass scale at 5N purity, and depending on how swiftly the solar industry climbs to 1,000 GW of annual manufacturing – it is a real possibility this decade.

Last week we reported that polysilicon had fallen to 28.3% of module cost while crucibles had risen to 3.7%. This week polysilicon fell to 27% of module cost while crucibles, for which price reporting is less consistent, have most likely reached 4%.

Given that the crucial shortage exists primarily for high-purity quartz and not crucible production capacity itself, it is somewhat surprising that Ojing Technology, a crucible maker, has just reported a 292% increase in net profit in Q1, while operating income “only” increased by 137%. Perhaps the answer is that price gouging can follow a strange logic in a volatile period, and that there are only three major crucible makers – the other two being Jiangyin Longyuan and Ningxia Jinglong, together outweighing the smaller players. Yesterday, Ojing stated that the crucible price continues to rise.

Moreover, wafer prices fell this week, even though the crucible makers, especially the big ones, are typically subordinate to wafer manufacturers (subsidiaries or in consistent 1:1 sales relationships, like Ojing Technology selling 90% to TCL Zhonghuan). Perhaps they are allowed to charge a lot because there is also a crucible production capacity shortage – not worth following closely because it is far more easily and swiftly solved than the mining-based quartz sand shortage.