LDK to Supply Polysilicon to One of Its Polysilicon Suppliers?

LDK Solar Co., Ltd. (NYSE: LDK) continues to impress investors with unbelievable production expectations. On December 10, LDK announced a new agreement with Q-Cells AG promising to provide the German company with as much as 43,000 tons of polysilicon over 10 years.

LDK has no polysilicon production capacity. LDK has never produced polysilicon or any other chemical product. Polysilicon has been produced in commercial quantities since the 1950s.

Q-Cells AG confirmed the contract in a press statement of its own, claiming that “LDK shall supply the silicon from their current polysilicon plant being constructed or from volumes which will be covered by LDK’s other supply sources.”

These “other supply sources” include LDK’s customers. Q-Cells is one of LDK’s polysilicon suppliers.

It is also difficult to understand what Q-Cells means by “current polysilicon plant.” LDK recently announced that it had finished clearing the ground for its new plant, but so far no plant has been built. This minor detail does not prevent LDK from issuing wild predictions about future production capacities. LDK expects to start and complete construction so quickly that it will be able to produce “6,000 metric tons of polysilicon by the fourth quarter of 2008.”

To put LDK’s remarkable expectations into perspective, in 2006, MEMC Electronic Materials, Inc., a 50-year-old producer of polysilicon with two existing plants, plans to increase its polysilicon capacity from 4,000 metric tons per year to 8,000 metric tons over a two-year period.

Should LDK’s new plant produce 6,000 metric tons of polysilicon by the fourth quarter of 2008, LDK will suddenly metamorphose into one of the largest producers of polysilicon in the world. Not bad for a company that claimed the majority of its “polysilicon feedstock came from scraps and recyclable polysilicon” only 6 months ago.

Posted in Q-Cells AG

Manuel Asensio doesn’t bet often. But when he does, it’s wise to pay attention.

Paul Kaihla
eCompany Now
1 2 3 4 5 6 7 8 9
About Our Founder
Learn more about asensio.com's founder, Manuel P. Asensio, and the website's origins. Click here to be directed to Mr. Asensio’s professional biography.
Media Record
Click here to see selected articles that discuss asensio.com's work and its unique legacy. asensio.com also strives to maintain a complete record of articles dealing with the companies that are the subject of asensio.com research.
Investment Record
Click here to view a list of the companies that have been subjects of asensio.com reporting and click here to see the complete investment record.
Asensio and FINRA
Asensio & Company, Inc. and Manuel P. Asensio are the only dedicated short sellers ever to have been members of FINRA. This unique-minority membership created complications in the regulatory relationship. Being the first activist short investors and among the first FINRA member firms with a website added to the complexity. A statement by Mr. Asensio is available here. Information necessary to obtain a meaningful understanding of the dispute is available in complete form HERE.