Saudi Arabia has entered advanced talks with Chinese solar energy supplier GCL Technology Holdings Ltd. over the Chinese firm opening its first overseas factory in the Kingdom, as both countries look to move their economies away from fossil fuels and toward renewable energy.
As the second largest manufacturer of polysilicon in the world, GCL is looking to build a plant in the Middle Eastern nation that would be capable of producing 120,000 tons per year of the vital ingredient for the production of solar panels. Lan Tianshi, the Joint Chief Executive Officer of the company said in an interview that GCL Tech could begin its production as soon as 2025.
In another interview with Bloomberg Television Lan said, “Saudi Arabia has mature infrastructure and experience in industrial manufacturing,” adding that given the abundance of sunlight in the kingdom, it could support the transition of its nation from an oil giant to a solar energy producer for the region.
In Hong Kong on Thursday, Lan said that GCL Tech might consider establishing manufacturing outposts in other countries as well. However the process is thus far most advanced in Saudi Arabia. There, the company has already filed paperwork to register its local subsidiary, it has a team of roughly a dozen employees on the ground in the nation, and it has already begun official talks with local government officials and the royal commission.
Observers note the move by the Chinese company is just the latest instance of deepening ties between the kingdom and China, following Chinese President Xi Jinping’s visit to Riyadh in December, and the invitation extended at last month’s BRICS meeting to Saudi Arabia to join the trade alliance.
Lan noted that he and other executives of the company have visited both Saudi Arabia and Qatar, noting, “we want to speed up implementation,” in both locations. He also said the company has been looking at setting up an outpost in Mexico to serve the market in North America, and in Australia.
Speaking more broadly of the industry, Lan said that in China, solar companies are presently undergoing a wave of consolidations as fierce competition is leading to dwindling margins. Lan predicted the wave of consolidations in the solar supply chain would ultimately leave just five to ten companies standing.
Since the beginning of the year, polysilicon prices have plunged, leading several producers to discontinue their operations in June. According to BloombergNEF, it is expected that the second half of the year will see the emergence of a huge oversupply of the material.
However as solar prices have fallen, demand had increased, both in China and overseas. According to the China Photovoltaic Industry Association, China is poised to install a record level of new capacity this year, possibly approaching as much as 140 gigawatts.
It is the hope of GCL that by setting up a manufacturing facility in Saudi Arabia the company would be able to exploit the nations large potential market and the higher prices which the material commands overseas. In addition, the supply produced could also more easily be delivered to markets in Africa and Europe from a Saudi Arabian production facility.
