Development of China's Silicon Industry Should Proceed with Caution    
By Fu Jilai, CNCIC   

Silicon industry is a energy-intensive and high pollution industry    

Polysilicon and silicone are now highlighted. They both use high-purity silicon as raw material. The production of high-purity silicon needs to consume a large amount of electricity to reduce silica into silicon by charcoal in the electric furnace. Producing 10 000 tons of high-purity industrial silicon need to consume at least 125 million kWh of electricity and 45 000 cubic meters of timber. In addition, producing one ton of industrial silicon can discharge 2 300 - 2 500 cubic meters of exhaust gases with a temperature of 500 - 600 centigrade degree. These emissions can cause serious pollution to the air. Turning the timber into charcoal also discharges a lot of waste gases and heat.

Three major consumption areas of high-quality silicon    

1. Methyl chlorosilane segement   

The production of methyl chlorosilane needs to consume a large amount of chemical-grade silicon which is allowed to contain a lower level of iron, aluminum, calcium, lead and other harmful elements. Therefore, smelting silica into chemical grade silicon must use charcoal rather than coal char as the reducing agent. This is unlike the making of other grades of silicon or ferrosilicon.
   Currently in China, the methyl chlorosilane capacity reached 800 000 t/a. Plus the capacities that China National BlueStar Corporation and other companies are constructing and plan to build, China's methyl chlorosilane production capacity will increase about 1.0 million t/a in the future. If all of these plants (with a total methyl chlorosilane capacity of 1.6 million t/a) can run a full load, they will consume at least 400 000 tons of chemical-grade silicon each year. Correspondingly, this will consume 5.0 billion KWh of electricity and fell 2.25 million cubic meters of trees each year.

2. Exports  

Every year, China exports nearly 600 000 tons of silicon. In recent years, China has taken a series of measures to reduce the exports of silicon. However, according to China's import and export data of silicon in recent years, it seems that all the measures have not achieved the intended purpose. After the elimination of export tax rebates in 2005, China's export volume of silicon did not decrease but increased substantially compared with 2005. The implementation of differential power pricing policy in the metallic silicon industry in 2007 has not reduced the silicon export, neither. After the export tariff on silicon was increased to 10% in 2008, China's export volume of silicon in 2008 was flat with that in 2007. After the export tariff on silicon was enhanced to 15%, the exports of silicon did have a year-on-year decline in the first six months of 2009. But the decline was more likely brought by the impact of the global financial crisis. In September 2009, China exported 51 900 tons of industrial silicon, down 18.85% year on year, but up 21.84% month on month.
   Although China exports a large amount of industrial silicon, its export price is much lower than the normal silicon price in the international market. Since the 1990s, the European Union, the United States and Australia have imposed high anti-dumping tariffs to China's industrial silicon. Along with redundant construction and chaotic competition in China, has made China's silicon export prices always stay at a very low level, usually 20% - 30% and even 50% lower than the normal price in the international market.
   Between 2004 and 2006, the average FOB price of China's exported industrial silicon is between US$1 040 and 1 080/t. Since 2007, the price has increased a little. However, industrial silicon prices in the international market also increase as the export price of China's industrial silicon rises.
   In the first five months of 2009, the average export price of China's industrial silicon fell month on month. In May, it was US$1 600/t, dropping by almost US$1 000/t from the same period of 2008, down as high as 37.4%. However, in July, the industrial silicon price in China began to bottom out, followed a rise in its export price. In China, the actual trade price of silicon 553 rose from the lowest point, about RMB8 500/t, in July to RMB9 800/t in mid-October and remained stably at RMB10 500/t in early November. Because the export price of industrial silicon grew slower than its domestic selling price, China's export of industrial silicon began to decrease in October. Experts say that the rise in industrial silicon prices in July and August was mainly driven by its increasing export and domestic sales, and that the rise between September and early November was the result of increase in production costs and inventory.
   Each year, China exports a large amount of high-purity silicon to developed countries, about one third to Japan. In addition, a number of foreign-funded enterprises in China consume high-purity silicon locally.

3. Polysilicon   

According to statistics, as of March 2009, there have been as many as 55 polysilicon projects that have been built or are under construction and proposed to be constructed, with a total capacity of 200 000 t/a.
   At present, China's polysilicon production mainly adopts the modified Siemens process. This process uses high-purity silicon to react with hydrogen chloride to form trichlorosilane, which has a very wide explosion span and is highly corrosive, and then uses hydrogen to reduce trichlorosilane into polysilicon.
    In short, the total amount of chemical-grade silicon that supplied to the silicone industry, polysilicon industry and for export roughly reaches about 1.2 million tons every year in China. To this end, China needs to supply 15 billion KWh of electricity and 1.44 million tons of charcoal to silicon producers every year and needs to fell about 7 million cubic meters of trees and discharge countless amounts of heat and pollutants.