Oslo, May 23, 2006: Renewable Energy Corporation (REC) has decided to more than double its production of polysilicon and commences construction of a third polysilicon plant. The new plant is based on the proprietary technology that REC has developed for production of granular polysilicon. The plant will add approximately 6,500 MT to REC's polysilicon production capacity. Annualized revenues from this expansion will represent NOK 1.8 to 2.0 billion based on current silicon pricing (according to Marketbuzz 2006).
REC Silicon has carried out front-end engineering and design work since the summer of 2005, and has tested its new technology in a single half-scale pilot reactor, which has generated output that satisfies all of the Company's quality and production criteria. Based on the test results REC will immediately commence on more detailed engineering and construction work for the plant that will be located in Moses Lake, Washington, USA. Mechanical completion of the plant is expected by the end of the first quarter 2008, with final completion and ramp-up of production in the third quarter of 2008.
The total capital requirement for the engineering and construction of the plant is estimated at USD 600 million, which is already fully funded under existing loan facilities and equity. The investment further strengthens REC Silicon's cost-leadership position, and enables REC Wafer, REC Solar and the joint venture EverQ to pursue high-growth business plans.
The new proprietary reactor technology is based on proprietary Intellectual Property Rights originally developed at REC Advanced Silicon Material LLC and further developed and commercialized at REC Solar Grade Silicon LLC, both of which REC Silicon currently controls 100%. The production technology is based on silane gas and significantly reduces the capital and operating costs from the current levels.
"We have run FBR pilot production over the past year and have seen very encouraging results. REC is currently cost competitive in the industry and this investment will further strengthen our position. The feedback we have received from solar cell pilot customers is that the outcome is identical to cells made with regular polysilicon", says CEO Erik Thorsen in REC ASA.
REC Silicon has put together an experienced project team for the construction of the plant, some of which were part of the project team that built the REC Advanced Silicon Materials polysilicon plant at Butte, Montana in 1996-98. REC's primary contractor in the expansion project is Fluor Corporation Inc, which is one of the world's largest engineering firms with extensive competencies in refinery and chemical plant design and construction.
REC Silicon produced 5,300 MT of polysilicon in 2005 and plans to increase its production of approximately ten percent this year. REC Silicon will continue to further de-bottleneck existing manufacturing plants in 2007.
The implementation and execution of expansions based on new technologies will always be associated with a higher risk level than in the ordinary course of business. Material delays in terms of timing and/or material increases in cost related to this project could have a material adverse affect on REC.
REC is uniquely positioned in the solar energy industry as the only company with a presence across the entire value chain. REC Silicon and REC Wafer are the world's largest producer of solar grade silicon and wafers for solar applications, while REC Solar produces solar cells and solar modules. REC Group had revenues in 2005 of 2.454 MNOK and an operating profit of 601 MNOK. Please see also www.recgroup.com
For more information, please contact;
Erik Thorsen, President & CEO, +47 67 81 52 60 (press)
Jon Andre Løkke, SVP & Investor Relation Officer, +47 67 81 52 65 (investor)
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