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Dowa Boosts Silver Output for Japan Post-Quake Solar Demand (1)

May 12, 2013

Dowa Lifts Silver Output to Jump on Japan’s SolarBanks

Silver has dropped 22 percent this year. The metal, which reached a 2 1/2-year low on April 16, is the worst performer in Standard & Poor’s GSCI gauge of 24 commodities, which retreated 2.1 percent this year. Photographer: Munshi Ahmed/Bloomberg

Dowa Holdings Co. (5714), Japan’s biggest silver producer, will raise output 40 percent this year to meet solar-cell demand after the 2011 Fukushima disaster crippled a nuclear power plant and sent fossil fuel costs higher.

The Tokyo-based company plans to produce 500 metric tons of silver in the year that began April 1 from 357 tons in the previous year, said Hiromitsu Takagi, manager of the strategic planning and public relations department at Dowa Holdings. That would be the most since 2006, the company said.

Japan is expected to become the largest solar market after China this year, according to estimates by Bloomberg New Energy Finance, or BNEF. The forecast reflects the push by Japan to find alternative sources of energy following the earthquake and tsunami, which prompted the shutdown of all but two of the nation’s nuclear reactors. A rise in demand may support silver, which entered a bear market on April 2.

“We could increase silver output following an increase in silver-ore imports from suppliers such Chile,” Takagi said in an interview on May 10.

Silver has dropped 22 percent this year. The metal, which reached a 2 1/2-year low on April 16, is the worst performer in Standard & Poor’s GSCI gauge of 24 commodities, which retreated 3 percent this year.

Silver fell 0.7 percent to $23.7075 an ounce at 11:24 a.m. in Tokyo. The metal will average $31.25 an ounce in the fourth quarter, 32 percent more than now, based on the median of 14 analyst estimates compiled by Bloomberg.

Silver Powder

Dowa’s Kosaka plant in Akita prefecture has an annual capacity of 800 tons, using scrap, imported ore and intermediate products. Japan’s silver output rose 2.4 percent to 1,765 tons in 2012, according to Japan Mining Industry Association data.

Dowa Electronics Materials Co., a unit of Dowa Holdings, is the largest global supplier of silver powder for solar cells and expanded output capacity 38 percent to 110 tons a month in 2011, Takagi said. Global demand for silver powder will increase to 3,900 tons in 2014, a 44 percent jump from 2010, according to management consultant Fuji Chimera Research Institute Inc.

Toho Zinc, the second-biggest Japanese silver producer, expanded annual production capacity 18 percent to 400 tons in September at its Chigirishima smelter in Hiroshima. Toho produces silver as a byproduct of smelting lead ore.

Japan added 1,394 megawatts of clean energy capacity, most of it solar, between April last year and the end of January, the Ministry of Economy, Trade and Industry said on April 16.

Incentive Program

The country had 26,940 megawatts of clean energy capability at the end of 2012, according to BNEF. Solar accounts for about a third of all renewable energy, according to the data. The additions follow the introduction of an incentive program begun in July to increase clean energy such as wind and solar after the 2011 Fukushima nuclear disaster.

About 90 percent of the most commonly used photovoltaic cells, which convert sunlight into electricity, use silver paste, according to the Washington D.C.-based Silver Institute. More than 100 million ounces are projected for use by solar energy in 2015, according to the institute.

Solar panels accounted for 6.9 percent of the industrial demand for silver in 2011, according to CPM Group Inc. China, the world’s biggest silver user after the U.S., will account for 24 percent of photovoltaic demand in 2015, according to BNEF estimates.

To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net


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