First Solar Sell-Off Is Overdone 49 comments
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Competition – as I used to say to my sales force – has a way of keeping competitors honest. The real beneficiary of a healthy business duel, however, is the customer. Particularly when the competition gets down to price.
Nowhere is that more apparent right now than in the solar energy industry. Over the past few weeks, solar panel and module prices have been dropping through the floor. The reason can be summed up in just one word: China.
Executing a strategy not unlike the Japanese car companies did back in the 1970’s and 1980’s, Chinese solar panel manufacturers are selling solar panels for less than it costs to make them.
Suntech Power Holdings (NYSE: STP) and Yingli Green Energy Holding Company, Ltd. (NYSE:YGE) are doing it for two reasons: to gain market share and – more importantly – drive demand.
And in another page taken from the Japanese, Suntech is planning to build a module manufacturing plant here, primarily to avoid growing anti-China solar protectionism.
You see, the Obama administration wants to help American solar companies like First Solar, Inc. (Nasdaq: FSLR), but it doesn’t necessarily want to help the Chinese makers at the same time.
So the Chinese are quietly fighting back, offering inexpensive government-backed loans in support of their own solar module manufacturers.
The module makers themselves are weaving their way into solar industry trade groups to soften any would-be support for future protectionist legislation. This was done by the Japanese car companies, too.
In the end, it will be good news for homeowners and industrial customers of solar modules, as prices will continue to drop, both here and abroad. Low prices will continue to be the catalyst that drives solar installations, and should actually eliminate any subsidies faster than originally anticipated.
While solar is currently more expensive to generate electricity from than other conventional fossil fuel sources, in the next several years it will be the lowest-cost power available.
What about the huge drop in solar shares? Analysts seem to be divided, but my opinion is the sell-off is a little overdone, particularly when it comes to First Solar.
The reason is that First Solar’s panels are a different breed. It uses thin-film semiconductor technology that has a much lower cost than polysilicon-based panels – which is what most of the Chinese competitors are using.
As a result, First Solar’s cost structure continues to drop as fast as the prices of the modules themselves. The stock is off nearly $64 a share in the last two months, and seems to be firming.
Investors with an eye towards the long term – and who want to be in the solar sector — might want to consider this level as a place to pick up a few shares of First Solar as a buy-and-hold strategy.
I would avoid the Chinese panel makers for the present, until a clearer picture emerges regarding government-pricing policies towards the Chinese panel makers.
Disclosure: None
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This article has 49 comments:
Btw, for what it's worth, the analyst for M.Lynch / BofA who covers the solar sector, after an extensive analysis (the second in the last few months) just reiterated his target price objective of $180 for FirstSolar. Other major analysts have also opined on FSLR's strengths.
I think that FLSR anywhere under $130 is a buy; but, as i've remarked elsewhere in S.A. readers' comment sections, i don't think FSLR is necessarily a "buy and hold."
I'd wait for its cyclical, inevitable rise (the big hedge funds that hold solar stocks clearly prioritize buying FSLR, a nice support and "leaven" for FSLR's prices), and then i'd "sell high, buy low." For it has become almost a law of nature that Eric Savitz or someone else at Barron's magazine will do one of their fairly regular "hit jobs" on FSLR and drive its price way down so you can buy again. I foresee a scenario wherein FSLR's price will continue (as it has) to hit highs of $170-$200, and then lows of $120-$130, over and over.
What to do? "Rinse, lather, repeat," as the value investors say.....
I.e., "buy low, sell high, buy low, sell high, buy low, sell high....."
On Aug 26 09:36 AM Zenfar wrote:
> SPWRA and ENER are two other US names to look at.
On Aug 26 09:48 AM Zenfar wrote:
> I must say that FSLR remains on my watch list as this company could
> become the Cisco or Microsoft of the sector, buying out smaller companies
> as needed and leading the way in manufacturing and business execution.
> Maybe when Cramer gives up on the name, it will be buy time...
On Aug 26 11:44 AM Steve Pluvia wrote:
> Ummm yea. Why would FSLR buy a different technology that can't compete
> on any level with their own? My advice to you: Don't invest your
> own money, you don't have a clue about the alt energy sector. <br/>
thin film is far less efficient (60% generally), so it takes up far more space. what you fail to understand is that the BOS (balance of system) is quite expensive, esp. on a utility scale installation, double esp. in land-short Europe. thin film BOS is far more expensive than Si BOS. Si is so cheap right now that there is no financial reason to install a larger, less efficient thin film system--dollar per dollar, thin film SYSTEMS actually are larger and more complex per Watt because of the BOS costs, even though thin film PANELS are cheaper. thus, FSLR is lowering prices drastically to compete.
thin film is incredibly risky, and most likely will wind up marginal at best. you will be lucky if FSLR sticks at $90, no higher (valuation at current Si wafer proces). if you want to invest in solar, stay away from the vertically integrated companies-- specialization almost always wins in the end, esp in high tech. LDK, STP. sold STP at 18 b/c it will be flat for a couple years, still long LDK, short FSLR
Let's look back at one of several bills Senator Obama put forth:
"Obama’s Global Tax Proposal Up for Senate Vote:
A nice-sounding bill called the "Global Poverty Act," sponsored by Democratic presidential candidate and Senator Barack Obama, is up for a Senate vote on Thursday and could result in the imposition of a global tax on the United States. The bill, which has the support of many liberal religious groups, makes levels of U.S. foreign aid spending subservient to the dictates of the United Nations...
Jeffrey Sachs, who runs the U.N.'s "Millennium Project," says that the U.N. plan to force the U.S. to pay 0.7 percent of GNP in increased foreign aid spending would add $65 billion a year to what the U.S. already spends. Over a 13-year period, from 2002, when the U.N.'s Financing for Development conference was held, to the target year of 2015, when the U.S. is expected to meet the "Millennium Development Goals," this amounts to $845 billion. And the only way to raise that kind of money, Sachs has written, is through a global tax, preferably on carbon-emitting fossil fuels. "
www.aim.org/aim-column.../
The path to solar and green technology is hazy and how cap and trade plays will impact it.
Meanwhile, there is enough shale oil in the US to meet our energy needs for the next 250 years. Any stimulus money invested to try and develop this technology to protect the long term interests of the Nation?
dailyreckoning.com/oil.../
The Chinese have a stranglehold on tellurium.
If the Chinese want to own the solar energy business, they have the power to control their own destiny.
On Aug 26 04:19 PM Wisdom vs. Information wrote:
> disappointed by the continuing flow of articles about FSLR that fail
> to distinguish between the technologies.
>
> thin film is far less efficient (60% generally), so it takes up far
> more space. what you fail to understand is that the BOS (balance
> of system) is quite expensive, esp. on a utility scale installation,
> double esp. in land-short Europe. thin film BOS is far more expensive
> than Si BOS. Si is so cheap right now that there is no financial
> reason to install a larger, less efficient thin film system--dollar
> per dollar, thin film SYSTEMS actually are larger and more complex
> per Watt because of the BOS costs, even though thin film PANELS are
> cheaper. thus, FSLR is lowering prices drastically to compete.<br/>
>
> thin film is incredibly risky, and most likely will wind up marginal
> at best. you will be lucky if FSLR sticks at $90, no higher (valuation
> at current Si wafer proces). if you want to invest in solar, stay
> away from the vertically integrated companies-- specialization almost
> always wins in the end, esp in high tech. LDK, STP. sold STP at 18
> b/c it will be flat for a couple years, still long LDK, short FSLR
Tellurium is mostly produced as a byproduct of copper mining and refining, so that China by no means has a stranglehold on tellurium production, although it actually does have one mine that may be called a primary tellurium mine-the only one in the world- and that mine's output is today processed in China to solar grade tellurium, 5x9s. The real company to watch if you like FSLR is China's Apollo Solar, which is now supplying tellurium and other related rare metals in high grades to FSLR. Apollo is now traded in the US as a bulletin board stock, but it has applied to the NASDAQ for listing there.
I am going to China next week, and I will be speaking on materials for solar energy conversion at two conferences there. I will report my findings when I return after Sep.8.
On Aug 26 07:31 PM yellowhoard wrote:
> FSLR depends on cheap tellurium to manufacture it's panels.
>
> The Chinese have a stranglehold on tellurium.
>
> If the Chinese want to own the solar energy business, they have the
> power to control their own destiny.
Back to First Solar, there costs have been stable. Their thin film business has been enjoying the highest gross margins in the Solar industry and recently they announced that they will have to offer rebates to compete with polysilicon module sellers. This kind of makes First Solar loose some of its aura. Their gross margins will never be as high as they were and even though they will be selling more megawatts their cost advantage will be decreasing. This means that their undeserved status as the only viable long term play for solar can't last forever and the premium that their shares have been trading at compared to the rest of the industry is undeserved. Also this advantage has been one of the reasons the company has enjoyed the valuation it has and the ratio of analysts who were saying to be overweight/neutral has probably topped out. Their cost advantage will only diminish as conversation ratios increase for their competitors and as the cost of polysilicon goes the same way that the cost of the silicon in memory chips went. Also watch that 200 day MA for FSLR, it recently fell through it and I just dont see any support higher than 100, which may or may not hold.
Disclosure: Long STP
Uh, I think you missed the point. Oil and alternative energy have an inverse corrolation.
If cheap energy == cheap solar panels, then they should be running on their own solar panels!
On Aug 26 03:58 PM IT'$ OVER! wrote:
> I agree with the above comment. Low energy prices = lower cost of
> producing solar panels. We need to ramp up production of solar during
> times that energy is still cheap, that way we are not paying more
> in the future.
I really don't see support for FSLR until around the 100-105 area. Resistance is around 146, based on my work. Check out my comments on this site from early August. I like the company, but the time to buy, IMO, will be in the autumn.
I don't usually look at news items, but losing a CEO and Exec VP in the same year can't be very positive, IMO.
This means that FSLR's gross margins, which have traditionally been in the 50%+ range will DROP precipitously, exposing FSLR's stock to a real risk of going to $100 or below ($100 represents a forward PE of 10 to 12 against 2010 projected EPS).
If poly drops below the current $40-60/kg price (and I believe it will), the poly portion of the cost of a panel becomes very small and almost irrelevant. For example, assuming a poly price of $40/kg and 5 gm/watt of poly, the poly cost per watt is 20 cents (this time last year, poly costs per watt were running about $1.75/watt!).
Summary--I believe the upside on FSLR is limited, and downside is at least as likely as upside. I believe SOL and TSL are currently the best bets in the solar space with limited downside (unless the whole market crashes) and a decent prospect of 50% upside in the next 6-12 months. Both SOL and TSL are currently valued at a forward PE of about 10, and both will benefit from the fact that China is going at a breakneck speed to incentivize solar and from the fact that as their costs go down, poly-based Chinese manufacturers will grab more of the market share that FSLR would have had last year.
Jack Yetiv
This is very inaccurate. Solar only needs to drop by about 2x to be competitive, without government subsidies, with RETAIL electric rates (grid rates) in many places like California, Australia, Germany, Spain, etc. In some places, like Italy and some parts of California, solar is competitive with grid rates now because of high grid rates. Note that almost all other sources of electricity compete at the wholesale rate because they have to use the electric grid unlike solar. So please don’t do a direct price per kWh comparison of solar to other electricity sources like coal, natural gas, wind, nuclear, and oil.
There is a very good chart in this McKinsey report called “The economics of solar power” at www.mckinsey.com/clien... that shows what price per Watt is needed in each region for solar to be competitive. Note that this report is from June of 2008 before solar panel prices plunged so solar is much more competitive today than it was in June 2008. The chart shows that $6 per Watt is the current price of solar systems. Note that at about $3 per Watt, a solar system becomes competitive in some large markets like California, Australia, Germany, Spain, and the Netherlands.
If you are not familiar with McKinsey, it is one of the top management consultant companies in the world. Research from McKinsey should be considered high quality and unbiased. McKinsey is not some political think tank.
Please don' tease us. What are the tiny advantages of thin-film? Also, please teach us about “balance of system costs”, too. I can’t use your statement above unless you give details that I can concur with.
On Aug 26 04:19 PM Wisdom vs. Information wrote:
> disappointed by the continuing flow of articles about FSLR that fail
> to distinguish between the technologies.
>
> thin film is far less efficient (60% generally), so it takes up far
> more space. what you fail to understand is that the BOS (balance
> of system) is quite expensive, esp. on a utility scale installation,
> double esp. in land-short Europe. thin film BOS is far more expensive
> than Si BOS. Si is so cheap right now that there is no financial
> reason to install a larger, less efficient thin film system--dollar
> per dollar, thin film SYSTEMS actually are larger and more complex
> per Watt because of the BOS costs, even though thin film PANELS are
> cheaper. thus, FSLR is lowering prices drastically to compete.<br/>
>
> thin film is incredibly risky, and most likely will wind up marginal
> at best. you will be lucky if FSLR sticks at $90, no higher (valuation
> at current Si wafer proces). if you want to invest in solar, stay
> away from the vertically integrated companies-- specialization almost
> always wins in the end, esp in high tech. LDK, STP. sold STP at 18
> b/c it will be flat for a couple years, still long LDK, short FSLR
For example: the real price per solar-kwh is .48 Euro, but you get a refund of .28 Euro guaranteed for 10 years. On the other hand the price per nuclear-kwh is .02 Euro but you have to pay .20 Euro in order to finance this "climate change stuff" or whatever you would like to call it.
Here in the US I pay .12 $ or .0.08 Euro per kwh as a mix of everything and I think that is good, but I am afraid the US will go the European way. The consequence will be , well do the math with your last energy bill, my was 150 $ and will probably 500 $ then and this will be the last nail in our economy's coffin.
On Aug 27 11:34 AM Road Runner wrote:
> tom Andersen said, "When solar power is 10x cheaper than it is now,
> it will be competitive.".
>
> This is very inaccurate. Solar only needs to drop by about 2x to
> be competitive, without government subsidies, with RETAIL electric
> rates (grid rates) in many places like California, Australia, Germany,
> Spain, etc. In some places, like Italy and some parts of California,
> solar is competitive with grid rates now because of high grid rates.
> Note that almost all other sources of electricity compete at the
> wholesale rate because they have to use the electric grid unlike
> solar. So please don’t do a direct price per kWh comparison of solar
> to other electricity sources like coal, natural gas, wind, nuclear,
> and oil.
>
> There is a very good chart in this McKinsey report called “The economics
> of solar power” at www.mckinsey.com/clien...
> that shows what price per Watt is needed in each region for solar
> to be competitive. Note that this report is from June of 2008 before
> solar panel prices plunged so solar is much more competitive today
> than it was in June 2008. The chart shows that $6 per Watt is the
> current price of solar systems. Note that at about $3 per Watt, a
> solar system becomes competitive in some large markets like California,
> Australia, Germany, Spain, and the Netherlands.
>
> If you are not familiar with McKinsey, it is one of the top management
> consultant companies in the world. Research from McKinsey should
> be considered high quality and unbiased. McKinsey is not some political
> think tank.
Companies with patents, exclusive technology, good cost controls, and international markets are poised to do better. Hopefully some of them have management that knows how to use company advantages to sustain growth. I do think that there are too many players in solar currently, so I would expect more cooperative agreements for strategic growth, and some M&A activity would not be surprising in the near future. Access to credit, and caution, is holding back this market a bit.
While I think it is ridiculous that one analyst with a so-so track record has affected the solar market this much, on a good note this has been a nice reality check. Investors might want to read more and investigate more; consider whether this is a buying opportunity, or a good time to stay with a company.
Photovoltaic is all about the most bang for your buck, your ROI is determined by the cost per watt, multiplied by the lifespan of the device. Because of the inherently higher output of silicon cells, they will continue to remain the dominant pv technology until (and if) the cost of competing technologies can be reduced to such low levels that cost per watt is no longer a consideration. I doubt that such breakthroughs will occur in my lifetime. The real area of study (and possible financial gain) lie in the power storage technologies such as Lithium Iron batteries and supercapacitors. When you can cheaply and easily store solar electricity for long periods, it will make it easier to balance the grid based generating systems as well as making off grid systems more financially viable.
It is now possible to have a system installed in your home that will provide all your power needs for the life of the house - for about the price of an SUV. Unlike an SUV the home solar will not substantially decline in value over 7 years and has virtually no moving parts to wear out. The only weak spot is using a non-grid tied system requires the owner to have a substantial amount of lead acid batteries which require maintenance and will wear out after several years.
When the lead acid battery problem is solved, solar will take off like a rocket and since most homes don't have enough roof area to make thin film practical, I would expect silicon technology to maintain its substantial lead in market share.
The question is if Germany will continue its pro alternative energy policies that keep the electric rates higher than most other European countries. If they do, then when the price of solar drops to about $3 per peak Watt, it will be at grid parity, and there will be an incentive to install home and office building solar systems.
Even if Germany backs off it pro alternative energy policies and lowers eclectic rates, my premise that solar only needs to drop in price by 2x (to about $3 per Watt) to make it competitive in multiple places still stands. In fact, I see electric rates continuing to climb in most places because of ever increasing costs, especially running new high voltage power lines as in southern California. Some places like Italy generate a significant portion of electric from oil which is bound to increase.
The reasons he went to China apart from slave rates were the fact that the manufacture of the cells is very non eco friendly and the authorities here were not impressed with the byproducts and waste.
The Australian government is subsidizing renewable energy sources to win votes and buy popularity. it has nothing what so ever to do with anyones environment.
let those who enjoy the sight of ground wasting solar panels and ugly big white wind mills continue to tilt at them,Nuclear is the only efficient power generation known to man,it is held back by the same vote buying popularity seekers we now suffer under.
On Aug 27 03:00 PM Road Runner wrote:
> petra, I don’t think what you said about German electric rates contradicts
> the McKinsey report. On the graph “The growing competiveness of
> solar power” it shows Germany’s “average power price per household”
> (label on left side of graph) at about $.28 per kWh. Your numbers
> don’t counter this. It’s just that you broke down this number into
> its alternative energy components and non-alternative energy components.
>
>
> The question is if Germany will continue its pro alternative energy
> policies that keep the electric rates higher than most other European
> countries. If they do, then when the price of solar drops to about
> $3 per peak Watt, it will be at grid parity, and there will be an
> incentive to install home and office building solar systems.
>
> Even if Germany backs off it pro alternative energy policies and
> lowers eclectic rates, my premise that solar only needs to drop in
> price by 2x (to about $3 per Watt) to make it competitive in multiple
> places still stands. In fact, I see electric rates continuing to
> climb in most places because of ever increasing costs, especially
> running new high voltage power lines as in southern California. Some
> places like Italy generate a significant portion of electric from
> oil which is bound to increase.
Plus consider this new bad news:
Solar panel product maker Energy Conversion Devices Inc. posted a fiscal fourth-quarter loss, driven by hefty one-time charges and a sharp drop in demand for solar products as commercial construction declined, building owners deferred reroofing projects and project financing constraints continued.
China Sunergy Co. Ltd. said its second-quarter profit fell 43 percent but stronger shipments pushed results beyond analyst expectations.
Solar companies have been pummeled by industry-wide price cuts for solar panels, driven by an oversupply of product, scaled-back demand and the falling price of polysilicon, a key raw ingredient.
Credit Suisse analyst Satya Kumar cut his price target for Suntech Power Holdings Co. Ltd. to $12.50 from $16.50, citing the solar power company's sharp second-quarter profit drop. The company also estimated a 15 percent to 20 percent decline in average selling price in the third quarter.
Kumar said he prefers shares of Trina Solar Ltd. over Suntech, given Trina's stronger growth in shipments and lower polysilicon to panel cost structure. Kumar rates Suntech "Neutral."
FBR Capital Markets analyst Mehdi Hosseini said that even First Solar, the nation's largest solar panel maker and industry leader, faces a number of challenges in the near-term, namely, the delayed construction of the Sampra 48-MW project, uncertainties around the timing of financing for the Blythe and Tristate projects and the recent departure of the company's executive vice president of global marketing and business development. The company also needs to find a replacement for Mike Ahearn, the company's current CEO who announced earlier this year he is stepping down.
"Recent trends/checks support our thesis that...downside risks have yet to be fully dialed into the stock," Hosseini said. "We caution investors against unrealistic expectations associated with First Solar over the past year."
Hosseini rates the company "Underperform" with a price target of $110. Shares of First Solar fell $1.96, or 1.6 percent, to $124.76.
And look at the F4 insider dumping on FSLR one insider just dumped about 20,000 shares @ $124 on Tuesday.
My point is, the consumer in Germany is burdened with high taxes and social security and higher cost of living ( 19% sales tax ) and as mentioned the high energy prices, no wonder that about 25 % of the people even having a job still depend on partially welfare, and don't forget the unemployed etc.
That all together leads me to the conclusion that higher taxes and higher energy prices in the US will lead to a catastrophe, simply because their isn't anything like in Germany to offset this.
On Aug 27 03:00 PM Road Runner wrote:
> petra, I don’t think what you said about German electric rates contradicts
> the McKinsey report. On the graph “The growing competiveness of solar
> power” it shows Germany’s “average power price per household” (label
> on left side of graph) at about $.28 per kWh. Your numbers don’t
> counter this. It’s just that you broke down this number into its
> alternative energy components and non-alternative energy components.
>
>
> The question is if Germany will continue its pro alternative energy
> policies that keep the electric rates higher than most other European
> countries. If they do, then when the price of solar drops to about
> $3 per peak Watt, it will be at grid parity, and there will be an
> incentive to install home and office building solar systems.
>
> Even if Germany backs off it pro alternative energy policies and
> lowers eclectic rates, my premise that solar only needs to drop in
> price by 2x (to about $3 per Watt) to make it competitive in multiple
> places still stands. In fact, I see electric rates continuing to
> climb in most places because of ever increasing costs, especially
> running new high voltage power lines as in southern California. Some
> places like Italy generate a significant portion of electric from
> oil which is bound to increase.
You stock people are nuts and would sell out your own mother if it would make you a buck!
I knew the Chinese mine you talked about pretty well and have actually communicated with them. So let me correct your mis-conception here:
The Chinese mine, which is the ONLY primary tellurium mine in the whole world, is called Da Shui Gou (big water creek) mine in western Sichuan Provice, near the area devastated by last year's earthquake. The mine has an estimated reserve of about 600 metric tons of tellurium. The local government issued a mining permit of no more than 20 tons tellurium produced per year. Here is the web site of the mining company:
en.xinju.com/newEbiz1/...
Apollo Solar is actually a subsidary of Xin Ju mining. This is a solar panel company in direct competition with First Solar, as Xin Ju is not satisfied with selling low end and low added value raw materials. They want vertical integration, too, to maximize profit.
Concerned that Xin Ju might be recklessly over-produce tellurium and waste the natural resource, I contacted the local government. To my surprise they took it very serious that there was rumor that Xin Ju over-produced tellurium for short term profit. They sent a team to visit the site to find out what's going on, and come back to re-assure me that Xin Ju had not exceeded their mining quote, and that the local government, as the steward of this unique natural resource, would rigorously crack down on over-production.
I do not think FSLR can bet on China to supply their tellurium need.
More over, some thing dramatical happened recently which may suggest a divorce between FSLR and 5N Plus, the major CdTe supplier to FSLR. Obviously 5N Plus is trying to diversify their product offerings towards the area of electrothermal materials. They have hooked up with Amerigon (ARGN) for that matter.
On Aug 26 10:02 PM Jack Lifton wrote:
> Yellowhoard,
>
> Tellurium is mostly produced as a byproduct of copper mining and
> refining, so that China by no means has a stranglehold on tellurium
> production, although it actually does have one mine that may be called
> a primary tellurium mine-the only one in the world- and that mine's
> output is today processed in China to solar grade tellurium, 5x9s.
> The real company to watch if you like FSLR is China's Apollo Solar,
> which is now supplying tellurium and other related rare metals in
> high grades to FSLR. Apollo is now traded in the US as a bulletin
> board stock, but it has applied to the NASDAQ for listing there.
>
>
> I am going to China next week, and I will be speaking on materials
> for solar energy conversion at two conferences there. I will report
> my findings when I return after Sep.8.
>
>
++++++++++++++++++++++...
From: ICDAMorrow@aol.com
Sent: Tuesday, September 16, 2003 3:28 PM
To: Masten, Scott (NIH/NIEHS)
Cc: CBowen@FIRSTSOLAR.COM; gpovenmire@FIRSTSOLAR.... Ken_Zweibel@nrel.gov
Subject: Nomination of CdTe for NTP Studies
Dear Dr. Masten:
Attached please find the comments of the International Cadmium Association (ICdA) in support of the nomination of cadmium telluride (CdTe) for studies under the National Toxicology Program. Please feel free to contact me if you have any questions regarding our comments or would like further information.
Sincerely yours,
Hugh Morrow, President
North American Office
International Cadmium Association
What do you think about analysis made in regard to the supply for CdTe indicating that there is no where near enough resources on earth to provide for the worlds energy needs?
Thus, some suggest that FSLR current technology will run it self out of the market if (when?) solar does go big.
On Aug 28 07:07 PM Mark Anthony wrote:
> Jack:
>
> I knew the Chinese mine you talked about pretty well and have actually
> communicated with them. So let me correct your mis-conception here:
>
>
> The Chinese mine, which is the ONLY primary tellurium mine in the
> whole world, is called Da Shui Gou (big water creek) mine in western
> Sichuan Provice, near the area devastated by last year's earthquake.
> The mine has an estimated reserve of about 600 metric tons of tellurium.
> The local government issued a mining permit of no more than 20 tons
> tellurium produced per year. Here is the web site of the mining company:
>
>
> en.xinju.com/newEbiz1/...;br/>
>
> Apollo Solar is actually a subsidary of Xin Ju mining. This is a
> solar panel company in direct competition with First Solar, as Xin
> Ju is not satisfied with selling low end and low added value raw
> materials. They want vertical integration, too, to maximize profit.
>
>
> Concerned that Xin Ju might be recklessly over-produce tellurium
> and waste the natural resource, I contacted the local government.
> To my surprise they took it very serious that there was rumor that
> Xin Ju over-produced tellurium for short term profit. They sent a
> team to visit the site to find out what's going on, and come back
> to re-assure me that Xin Ju had not exceeded their mining quote,
> and that the local government, as the steward of this unique natural
> resource, would rigorously crack down on over-production.
>
> I do not think FSLR can bet on China to supply their tellurium need.
>
>
> More over, some thing dramatical happened recently which may suggest
> a divorce between FSLR and 5N Plus, the major CdTe supplier to FSLR.
> Obviously 5N Plus is trying to diversify their product offerings
> towards the area of electrothermal materials. They have hooked up
> with Amerigon (seekingalpha.com/symbo...) for that matter.
>
>
> On Aug 26 10:02 PM Jack Lifton wrote:
Tellurium can be supplied -- at higher cost -- if need be. A stoppage could actually bring the price down to a buy level, as long as the investor understands gross margin would be reduced by more expensive input prices.
Does anyone have an opinion about it? May be that is true in a weak sector, but solar seems strong for the coming years......