Silicon anode material developers move to lift output

Producers of silicon anode battery materials are moving from pilot-scale operations to building out commercial-scale capacity, as the adoption of alternatives to lithium-ion batteries with graphite anodes advances.

"Silane-based silicon anode material producers are starting to move forward for their next phase of expansion… from very small bench-scale pilot type operations to not full scale, full ambition, production but production that is significant enough that it's going to utilise a fair amount of silane," polysilicon and silicon gas producer REC Silicon chief executive Kurt Levens said.

Anode material producer activity is showing tangible progress in their next phase of development, with multiple facilities in the design phase and several breaking ground. REC Silicon is in ongoing discussions with "all of the major producers of silicon anode material via silane", Levens said.

REC has been receiving enquiries from companies that have enough funding in place to build capacity and expects to make announcements "around at least some of those opportunities" by the end of the year. The availability of silane from REC and local government incentives to build out the electric vehicle supply chain is prompting some silicon anode material producers to locate their facilities in Washington state.

Norway-based REC is the world's largest silane producer outside China, and it is taking the opportunity to prepare for the increase in demand, investing in the production of higher-end silicon gases.

REC is currently running its production facility in Butte, Montana, in the US at around 70pc of its full capacity, offering scope to ramp up output to supply silicon anode customers. And the company remains on track to restart its plant in Moses Lake, Washington, during the fourth quarter, having started construction work at the facility. It has secured contracts for raw materials including metallurgical-grade silicon and silicon tetrachloride. While REC has offtake agreements for material that will be produced at Moses Lake, it will still have 2,400t of silane available at full capacity - giving it a total of 4,500-5,000t that it can potentially supply to the burgeoning silicon anode sector.

"If there needs to be more plants built then we should be building plants. We have space in both of our facilities. We've been actively making plans for that," Levens said.

REC aims to have the additional polysilicon and silicon gas capacity from Moses Lake in place by the end of the year to coincide with the market recovery it expects in 2024. While demand has fallen given the ongoing downturn in the semiconductor industry, over the longer term, the company expects the market to rebound as the use of silicon in electronic components including advanced technology nodes and electric vehicles increases.

In the US, the CHIPS and Science Act, Inflation Reduction Act (IRA) and Infrastructure Act could result in the construction of 18 new semiconductor fabrication facilities over the next five years, which could mean in excess of 500t of demand for REC's silicon gases used in chip production, as well as additional semiconductor-grade polysilicon demand. The legislation also aims to spur domestic battery production.

REC raised its average selling price (ASP) for semiconductor-grade polysilicon by 58.9pc in the first quarter from the fourth quarter of 2022, as it passed on higher input costs. The company expects to raise its prices further in the second half of the year.

Demand from the semiconductor market remained under pressure from excess inventory during the first quarter, but there are indications from companies such as Micron, Samsung and Intel that the market is beginning to stabilise and could turn higher towards the end of the year, Levens noted.

REC sold 95t of semiconductor-grade polysilicon during the quarter, down from 188t a year earlier. Its total polysilicon output fell to 244t, down from 395t a year earlier, in part as the company reduced production in response to high electricity prices, which it expects to resolve by the third quarter of this year with new supply agreements and mitigation activities.

In the solar-grade semiconductor market, which REC is targeting with the Moses Lake restart, solar power installations were higher than forecast during the first quarter and are now forecast to come in above 300GW, exceeding last year's record high of around 265GW. Solar-grade polysilicon prices are "holding longer with a slower decline", the company said.

Prices for Chinese polysilicon rose by around 7pc in the first quarter from the fourth quarter, but have fallen by 16pc so far in the second quarter, while prices outside China remain strong. New plant expansions in China are coming on line, which is expected to increase polysilicon production by around 65pc in 2023 from 2022, balancing demand sooner than expected as rising solar panel ingot, wafer and cell plant construction has seen demand outpace supply.

"Prices are coming down, some not as fast as you would expect, given some of the levels of overcapacity that one would expect with the announced expansions," Leven said. "The price that is in effect in China is still well within the band that we would contemplate being a profitable band for companies to operate in. And then the price for polysilicon from producers outside China is still remaining very high and it has not come down to the same degree that the price in China has come down."

REC's joint venture polysilicon producer in Yulin in China's Shaanxi province is in discussions to expand its production capacity and expects the volume to be finalised before the end of the year.

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