Energy & Resources

Shedding some light

Solar firm Wuxi Suntech’s president goes missing

Polysilicone problems?

Polysilicone problems?

China’s solar power industry has seen its share of dark days, and perhaps no company more so than Wuxi Suntech, which went bankrupt in 2013 before being revived by a bailout from Shunfeng Photovoltaic (see WiC212). But in early April the storm clouds were gathering once more when the new president and CEO of Wuxi Suntech went missing. A month later and he has still not resurfaced publicly.

In a statement released on April 11, Wuxi Suntech announced that its president Tang Jun’s absence was due to him “helping with an investigation” – a phrase that stokes speculation about corruption.

In Tang’s case, the consensus is that his help is required for an investigation into the smuggling of polycrystalline silicone (or simply polysilicone), the raw material needed to produce the silicon wafers in solar panels.

According to 21CN Business Herald, China’s rise to become the world’s leading producer of solar panels coincided with waning demand for polysilicone in countries with domestic production capacity, such as Germany, South Korea and the United States. As a result, these countries began to rely on the Chinese buying their surplus supply. At the same time China began to raise its own production capacity of the raw material by 30% a year. Worried about losing market share, overseas exporters began dumping polysilicone.

As a response, China imposed anti-dumping levies on polysilicone imports from America in 2014. Securities Daily reports that in order to circumvent the levy, some US firms exploited a loophole that still allowed for polysilicone to be imported (if it was deemed to be for processing trade contracts) without incurring the anti-dumping levies.

But in September that same year a customs decree suspended all applications for businesses looking to establish polysilicone processing trade companies, and gave those already engaged in the service a year to shut down.

Some of the companies involved then took other measures to avoid the levy, including rerouting their cargo via Taiwan. Taiwan has no polysilicone production itself, 21CN reports, but data from China’s customs bureau started to show the island as a point of origin for many of the shipments, suggesting that US exporters were sending their cargo through Taiwan or simply forging their waybills.

Other efforts to evade the silicone duties include falsely labelling it as ‘waste’ or ‘scrap’, allowing it to be imported at a lower tax rate. The speculation is that Suntech’s absent president may have been caught up in a similar case.

“Last year, Zhejiang customs discovered a batch of silicone that had been falsely labelled as industrial silicone powder, with a weight of several hundred tonnes… this is the most likely case to have implicated Tang Jun,” an anonymous source told Securities Daily.

Because Tang Jun only joined Suntech this year, the company will hope not to be pulled any deeper into the scandal. Moreover, Wuxi Suntech has little need for imported polysilicone, so the risk of bringing it into China illegally seems a stupid one to take, Securities Daily reports. (However smuggled silicone from overseas can save as much as 10% on the cost of sourcing it in China, 21CN reports.)

The same industry insider believes that if Tang Jun has been implicated in cases of smuggling, they may date back to his former employment as president of Rietech Solar. China Business News reports that Rietech Solar was also involved in processing trade contracts in the period when anti-dumping duties were first levied on US imports. Even so, this wasn’t illegal at the time.

So it is possible that Tang Jun will return unscathed from his leave of absence, much like the boss of clothing firm Metersbonwe, who was helping the authorities himself earlier this year (see WiC310).

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