Poly and wafer price rises helped GCL with debt pile, seven-months-overdue figures indicate

The rising polysilicon price may be causing headaches for solar developers around the world but it certainly helped out beleaguered manufacturer GCL-Poly, as the firm's long-overdue financials – published on Monday – have indicated.

An average selling price of RMB53.2/kg ($8.32) for GCL's conventional rod silicon, in the first six months of last year, had more than doubled by the end of June, to RMB108.2 ($16.93). There was a similar, if less spectacular trend for the price of GCL's wafers too, which were shifting for an average RMB0.353/W ($0.055) in the first half of last year but would have set you back RMB0.530 ($0.083) in the January-to-June period just gone.

That was the main reason the heavily-indebted business – which is still in default thanks to its involvement in “several” litigation cases, according to its 2020 accounts – was able to post a first-half profit of RMB2.53 billion ($396 million), on the back of gross profits of RMB3.6 billion ($563 million) and six-month revenue of RMB8.78 billion ($1.37 billion).

The timeliness of that uptick was revealed in the full-year figures for a tough 2020 which were finally released on Monday, and which revealed an annual loss last year of RMB6.27 billion ($981 million) and left the company with a then-current assets-to-liabilities deficit of RMB17.2 billion ($2.69 billion) at the end of December.

Last year, GCL revealed, it manufactured 42,189 metric tons of polysilicon, generating revenue of RMB2.21 billion ($346 million); and 31,449 MW of solar wafers, to drum up RMB5.69 billion ($890 million), with the two income streams adding up to an annual loss of RMB4.87 billion ($762 million). In the first half of this, rising prices meant the 23,284 tons of poly produced – and 18,712 MW of wafers – generated RMB6.78 billion ($1.06 billion) for a solar materials division profit of RMB2.43 billion ($380 million).

Granular figures

GCL was eager to point out it has the capacity to produce 10,000 tons per year of its new granular silicon, which the company is touting as the key to truly ‘green' solar manufacturing, as it requires around two-thirds less electricity to produce than silicon manufactured using the Siemens method. GCL's granular product requires only 18 kWh of power per kilogram to make, according to GCL's first-half figures report for this year.

As a result, the 10,000 ton granular silicon plant GCL has up and running at Xuzhou, is set to be expanded to 30,000t this year, and 54,000t next year. The company also has agreements in place to jointly invest in a RMB18 billion ($2.82 billion), 300,000t fab in Baotou, Inner Mongolia, alongside mono wafer maker Wuxi Shangji Automation Co Ltd.

Those higher polysilicon and wafer prices, plus a continuing drive to sell off its GCL New Energy solar park estate, ensured GCL-Poly was able to reduce its big debt pile from RMB22.9 billion ($3.58 billion) of borrowings due within 12 months at the end of last year, to RMB10.7 billion ($1.67 billion) of current commitments at the end of June. Similarly, longer-term borrowings of RMB13.4 billion ($2.1 billion) at the end of December had come in to RMB6.25 billion ($978 million) six months later.

But there are still payment deadlines to be met, the next of them for an $11 million loan on November 9. That is the outstanding amount left over from a $100 million loan repayment which GCL failed to settle on time on June 23 and August 20, the company subsequently securing a stay of execution by handing over $89 million.

Project sales

The business has been busily selling off its Chinese solar farms to state-owned entities, with 69 project companies divested by the time the overdue set of financials was published, to generate RMB4.98 billion ($779 million), and with agreements in place to get rid of another 25 project companies for another RMB1.05 billion ($164 million). The associated windfall meant GCL's New Energy business turned a RMB1.26 billion ($197 million) loss in 2020 into a first-half profit of RMB160 million ($25 million).

With the parent company identifying RMB9.48 billion ($1.48 billion) of “assets held for sale” in its first-half figures, its rump 2.9 GW of solar generation capacity at the end of June appears set to shrink still further, as part of a planned transformation into an “assets light” operation, not least because those solar farms with the for sale signs carry an associated RMB6.37 billion ($997 million) of liabilities.

GCL-Poly will hope to soon be able to resume trading in its stock on the Hong Kong exchange after finally pushing its problematic 2020 and first-half numbers out of the door.

This article was amended on 29/10/21 to reflect GCL's usage of the figure MT reflects “metric tons,” rather than million tons or megatons, as previously indicated. The statement GCL produced 36,000 tons of granular silicon in the first half of this year was also inaccurate, and has been removed.

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