(Yicai Global) Feb. 9 -- TBEA’s shares soared after the Chinese producer of high-end power transformers unveiled a plan to invest in a new production line for high-purity polycrystalline silicon.

Shares of TBEA [SHA: 600089], which is based in Xinjiang Uygur Autonomous Region, closed 9.7 percent higher at CNY14 (USD2.20) today. The benchmark Shanghai Composite Index gained 2 percent.

The new production line, with annual capacity of 200,000 tons, will be built in the energy-rich Inner Mongolia Autonomous Region in response to huge orders from downstream photovoltaic silicon chipmakers, TBEA said in a statement yesterday. The firm also plans to build supporting production facilities for industrial silicon and a new energy power plant.

In addition to the polycrystalline silicon project, Xinte Energy, in which TBEA has a controlling stake, will construct an industrial silicon project with an annual output of 200,000 tons and a 10-gigawatt new energy power plant, TBEA said, citing agreements struck with local governments including that of Baotou, where the project is located.

The statement did not specify the sum of investment in the project, but said the first phase, with an estimated outlay of CNY8 billion (USD1.24 billion), involves the construction of a 100,000-ton capacity high-purity polycrystalline silicon production line.

The first phase also includes building a 5 gigawatt new energy power station. But the statement did not mention the amount of investment in the power station, nor did it specify whether it will be a wind or solar plant.

Demand Surge

The trend to build solar power plants has spurred demand in the entire industry chain. This has not only boosted the price of products, but also pushed various firms in the industry chain to pen long-term supply contracts with upstream suppliers, so as to guarantee raw material supplies. That has encouraged TBEA to expand its production capacity.

Work on the first phase will begin within a month after the site is ready for construction. It will be completed and put into operation in 18 to 24 months, the statement said.

The second phase will build the production line for the remaining 100,000 ton high-purity polycrystalline silicon output, the industrial silicon plant and add another 5 GW to the power station. No financial amounts were divulged. The start of construction is subject to government approval and the market situation.

Xinte Energy is a major supplier of polycrystalline materials in China. It has inked five-year supply contracts worth CNY34 billion (USD5.3 billion) with three downstream silicon chipmakers since last September, covering total supplies of 437,600 tons. TBEA revealed last month that it was looking to spin off Xinte Energy and had begun preparations for listing the unit in Shanghai or Shenzhen.

Editor: Peter Thomas