Suntech Power Holdings Co., Ltd. (NYSE: STP), a leading manufacturers of photovoltaic (PV) cells and modules, has entered into a five-year silicon purchase $180 million agreement with Renewable Energy Corporation ASA (Oslo Stock Exchange: REC), the world’s largest manufacturer of multicrystalline silicon wafers for solar applications.
“This agreement will enable Suntech to further reduce spot market purchases of raw materials and improve our cost competitiveness in the future,” said Dr. Zhengrong Shi, Suntech’s chairman and CEO. “This agreement also enhances our strategic relationships with the world leading silicon and wafer manufacturers.”
The 5-year agreement is structured as a take-or-pay contract with a pre-determined fixed price that decreases on an annual basis. This price reduction curve will provide Suntech with wafers with an average cost measurably below spot market prices. The delivery of wafers under the contract is expected to begin in the first quarter of 2007.
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