Timminco (TSX: TIM) shares rose 17.2 percent Friday after LDK Solar announced a deal to process silicon into solar wafers for Q-Cells.
LDK (NYSE: LDK) said it had signed an 11-year contract to process refined metallurgical silicon provided by Q-Cells, the world's largest solar-cell maker and one that doesn't produce its own silicon, starting this year.
What's the connection with Timminco?
Well, there may not be one. But the announcement set tongues wagging about the source of silicon, and investors and analysts have wondered whether Timminco is the silicon supplier.
It's not a difficult connection to make. Timminco, based in Canada, has announced deals to sell upgraded metallurgical silicon to Q-Cells. Meanwhile, Q-Cells has announced contracts to buy wafers from LDK without saying where the silicon will come from.
LDK, headquartered in China, is building its own silicon production plants, but plans to make higher-grade silicon from scratch, rather than upgrading less-pure metallurgical-grade silicon.
The announcement drew more attention than usual as the mystery that has launched a torrent of speculation about the possibility of a polyamorous relationship among the three high-profile companies.
Timminco is one of a handful of companies to have signed contracts to sell upgraded metallurgical silicon, which is potentially less costly than the silicon that has been widely used to make solar cells. Skeptics have questioned whether the refining technology can really deliver silicon that is good enough for solar cells more cheaply.
Meanwhile, Timminco announced earlier this year that it had inked a contract with a "leading manufacturer of wafers" to sell about 1,150 metric tons of its refined metallurgical silicon through December 2009. Timminco began shipping silicon to this unnamed customer earlier this year.
Timminco CEO Heinz C. Schimmelbusch wouldn't say whether the wafer maker was LDK when asked by an analyst during a second-quarter earnings call last month (see LDK 2Q Profit Triples, Margin Falls).
The company's investor relations representative also declined to comment on the LDK's announcement Friday. LDK and Q-Cells representatives didn't immediately respond to emails requesting more information.
But investors seemed to have come to their own conclusions, pushing Timminco's stock up C$2 to close at C$13.65 ($12.88) per share Friday. LDK's stock rose a tiny 0.12 percent to close at $40.76 per share.
Under the contract with Q-Cells, LDK will process at least 20,000 metric tons of solar-grade silicon from 2008 to 2018, with the possibility of processing 21,000 metric tons more during the same period, the company said. The contract is related to a previous announcement that LDK would provide Q-Cells with up to 5 gigawatts of silicon wafers between 2009 and 2018.
Get the scoop on the thin-film solar market with Greentech Media and the Prometheus Institute's new report Thin-Film PV 2.0 or at our upcoming event the Thin-Film Revolution in New York City on Sept. 15, 2008.