Saturday, October 16, 2010

Is First Solar Going to Buy Critical CdTe Supplier 5N Plus? (VNP.TO; FSLR; GE; HON)

The stock sure is acting like something is going on, it popped 8.4%, to $6.58 (Cdn.) on Friday, after trending up since late August on record earnings.
Here's the three month chart via Yahoo Finance:
Chart for5N PLUS INC. (VNP.TO)

Here's the first quarter earnings press release.

And the headline story, from Reuters Africa:
* First Solar accounts for about 70 pct of 5N Plus' revenue
* GE, others entering will exacerbate CdTe supply crunch
* CdTe demand seen at 260 metric tons by yr-end
* 5N Plus can produce 250 metric tons annually
* 5N Plus seen fetching hefty premium (For more Reuters DEALTALKs, click [DEALTALK/]

By Adveith Nair & Aftab Ahmed
BANGALORE, Oct 15 (Reuters) - Most of the world's solar panels use polysilicon, but as the race heats up to find the most efficient and cheapest way to harness the sun's energy, cadmium telluride (CdTe) and its biggest supplier, Canada's 5N Plus Inc (VNP.TO: Quote), are coming under the spotlight.

Given the emphasis on cheaper solar power, more companies plan to enter the thin-film market currently dominated by First Solar (FSLR.O: Quote).

And, as the market for low-cost thin-film panels grows, industry experts say First Solar, the biggest producer of thin-film panels that use CdTe, will look to buy 5N Plus to secure its supply of the semiconductor material.

CdTe has a 10-15 percent cost advantage over the more widely used silicon, but tellurium, a tin-coloured component of CdTe and a byproduct of the copper industry, is not widely available.
Apart from 5N Plus, the few other CdTe suppliers include China-based Apollo Solar (ASOE.OB: Quote) and Vital Chemicals, PPM Materials based in Germany, Japan's Nikko Metals, and Honeywell International's (HON.N: Quote) Honeywell Electronic Materials.

Analysts say annual global demand for CdTe will reach about 260 metric tons by year-end, virtually all of which can be produced by 5N Plus. Demand could hit 800 metric tons by 2013.

"There's a limited amount of tellurium in the world and First Solar needs a significant portion of it," said National Bank Financial analyst Rupert Merer. "It would make sense for them to try to lock up supply and increase their security."
"The numbers typically thrown around are roughly 400-500 metric tons of tellurium available every year, and First Solar will need well over half of that very soon," Merer noted.

Favorable government regulations and the lower cost of CdTe panels have prompted firms such as GE Inc (GE.N: Quote), Q-Cells (QCEG.DE: Quote) and privately-held Abound Solar to get interested.
GE plans to build 30 megawatt (MW) in 2011, but will then likely look to expand its capacity. Abound Solar has secured a $400 million grant from the U.S. Department of Energy and plans to build over 840 MW by the end of 2013.

"These two are going to be big competitors to First Solar," Stonecap Securities analyst Michael Goldberg said....MORE
5N plus came public at $3.00 (Cdn.) in December 2007. Here are some of our earlier posts:

January 6, 2008
Attention First Solar Investors (FSLR; VNP.TO)
Tellurium delirium getting you down, bunky?

One of FSLR's CdTe compounders, 5N Plus, will release financial results Tuesday, January 8 and will hold a
conference call on Wednesday January 9:...
...5N Plus came public December 20, 2007 at $3.00. It closed at $8.17 on Friday, up $0.58 on the day.
From the offering document, available at
March 28, 2008
First Solar: Materials for Solar Photovoltaic Cells II: Tellurium, Not So Rare After All (FSLR; VNP.TO)
...Sounds like a buy rec. on 5N Plus.
April 8, 2008
5N Plus Third Quarter Sales Up 50.5%, Profit Doubles; Webcast Today 10:00 AM EDT (VNP.TO; FSLR)

July 3, 2008
Solar: Peak Gallium? Indium?
Sometimes I feel as if we're doing a 'Groundhog Day' (or maybe it's just me, Rip Van Climateer).
Paul Erlich has a book out, forty years after 'The Population Bomb', folks are mentioning The Club of Rome, forty years after its founding and 36 years after 'The Limits to Growth'. Any moment I expect Julian Simon to arise from the grave with prop bets. Anywho, here's a year-old story that might be relevant today. From New Scientist via Nova (Australia):

"I get excited every time I see a street cleaner," says Hazel Prichard....
July 30 2008
First Solar Supplier 5NPlus: 5N Plus Inc. New German Facility Now Operational (FSLR; VNP.TO)

August 29, 2008
5N Plus Inc. Extends Supply Agreements with First Solar, Increases Minimum Quantities to be Ordered (FSLR, VNP.TO)

January 14, 2009
First Solar supplier [5N Plus] reports record revenue (VNP.TO: FSLR)
VNP was recently trading at $5.47 (Cdn.) down a dime. The company went public in December 2007 at $3.00. First Solar is down for the third straight day (downgrades Monday and Tues.) at $131.87 -$9.23....
And then the market bottomed on March 9,2009 and there were so many things that looked more attractive that, although we still followed VNP, we stopped posting.