(Yicai Global) Nov. 8 -- Shares of Tongwei and Trina Solar gained after the leading Chinese suppliers of photovoltaic products announced a joint plan to invest as much as CNY15 billion (USD2.3 billion) in new production.

Changzhou-based Trina Solar [SHA: 688599] closed 3.4 percent higher today at CNY17.26 (USD2.60), while Chengdu-based Tongwei [SHA: 600438] ended up 0.5 percent at CNY29.63.

The two companies will set up four joint venture project firms between them, according to separate statements released late yesterday.

The pair plans to spend CNY4 billion to build a plant capable of producing 40,000 tons of high-purity silicon a year in China’s Inner Mongolia Autonomous Region. Other projects include a CNY5 billion PV pull rod project in Leshan, Sichuan province with annual capacity of 15 gigawatts; a CNY1.5 billion PV slicing project in Chengdu with yearly capacity of 15 GW; and a CNY4.5 billion high-efficiency solar cell project also with a 15 GW capacity.

Units of Tongwei will own 65 percent of each new JV, and Tongwei the remainder. In addition to registered capital of CNY6 billion, which accounts for 40 percent of the total investment, the rest of the funds will be raised by the project firms themselves.

Once up and running, the high-purity silicon project will give priority to supplying products to the pull-rod project, and the slicing project will enjoy priority in receiving the pull-rod project’s products. The solar cell project will prioritize the use of raw materials provided by the slicing project and supply its products to Trina Solar and its affiliates at a higher priority.

The high-purity silicon project is expected to be completed and start production by the end of September 2022. Both the pull rod and slicing projects are expected to achieve the first phase of 7.5 GW production capacity by next September, with the full 15 GW capacity ready by the end of March 2022. The cell project is expected to be finished and put into operation by the end of next October.

The cooperation is conducive to increasing market share and ensuring stable production and sales of PV products, according to Tongwei, a relatively upstream company in the solar industry chain. It will help reduce the cost of purchasing raw materials and provide a guarantee for long-term stable supply, said Trina Solar, a relatively downstream company in the industry chain.

Besides the cooperative investment deals, Trina Solar also penned a standing procurement contract with Tongwei yesterday, in which the former will buy more than 72,000 tons of polysilicon products from Tongwei’s units across China between 2021 and 2023, with the prices settled through negotiations on a monthly basis.

Editor: Peter Thomas