Bloomberg News

REC Considers Permanently Closing Some Norway Production

September 28, 2011

(Updates with closing share price in last paragraph.)

Sept. 28 (Bloomberg) -- Renewable Energy Corp. ASA will seek to permanently close parts of its solar energy-component production capacity in Norway after a slump in prices for solar wafers and cells.

Talks will start with employee representatives on shutting the multicrystalline-wafer plant in Glomfjord, several such plants at Heroeya and the solar-cell plant at Narvik, the Sandvika, Norway-based company said today. The move will reduce the company’s Norwegian annual wafer capacity by 775 megawatts, or 45 percent, and cut cell capacity by 180 megawatts.

“This is an unfortunate, but necessary step in the current market environment,” Chief Executive Officer Ole Enger said in a statement. “We’re currently working hard to regain the competitiveness of our remaining Norwegian operations.”

Estimates for costs and write downs for the closures will be presented in the third-quarter results, the company said.

The closures would affect about 700 employees and make permanent a temporary shutdown announced on May 24 in an industry struggling with oversupply. Demand for solar-energy components has weakened as European regulators cut subsidies, leading to an oversupply of wafers and modules.

‘Positive’ Move

“The fact that REC takes action and closes down uncompetitive capacity is positive,” Eirik Vegem Dahle and Per Kristian Reppe, analysts at Pareto Securities ASA, said today in a note. “Most of this capacity has already been temporarily curtailed due to high cost levels, and a permanent close is no surprise.”

The Norwegian government has no plans to buy the stake in REC that Orkla ASA is seeking to sell, Industry Minister Trond Giske said today in an interview. Ruling coalition parliamentarians said Norway should look at buying REC and Borregaard, newspaper Klassekampen reported Sept. 21.

The shares rose as much as 0.5 following the announcement and then fell after German power grid regulator, Bundesnetzagentur, said that solar panel installations in the world’s biggest solar market slumped 69 percent from a year earlier.

REC shares fell 12 percent to 5.74 in Oslo trading, while Solarworld AG fell 7.7 percent and Q-Cells SE 4.4 percent in Frankfurt.

--With assistance from Meera Bhatia in Oslo. Editors: Alex Devine, Todd White

To contact the reporter on this story: Stephen Treloar at streloar1@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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