Companies: PVCS   

A manufacturer of silicon ingots and wafers for the booming solar panel industry, Oxford-based Crystalox has raised €20m (£13.5m) to move into the production of silicon feedstock.

The soaring demand for renewable energy – and specifically photovoltaic (hence the ‘PV’ in the name), or solar, cells – has meant there has been an outstripping of the supply of processed silicon, driving up the price in the last few years. Although silicon is the second most abundant element on earth, it needs to be processed to a very high level of purity to be used in solar cells.

By building its own production facility in eastern Germany, near to its raw materials supplier, Crystalox is moving even further up the product stream and will avoid paying the increasingly high market prices for silicon. The factory, whose construction should be aided by a €20m Government grant, is due to begin production in 2009 and will be producing 1,800 tonnes of polysilicon a year by 2011.

This adds a third leg to Crystalox, already a leading producer of multicrystalline silicon ingots and wafers, a cost-effective form of the element used in solar cells. One of the biggest markets for installing solar modules is Germany, where there are tax benefits for their residential use. Wafer sales, which represented 60% of output last year, are predominantly made to Japan’s Sharp, the world’s number one manufacturer of cells.

Established for more than 20 years, the group has trebled its sales and has been consistently profitable over the last five years, lifting sales 32% to €242m and pre-tax profits 56% to €49m last year.

With industrial demand for silicon inexorably rising, Crystalox is going from a strong position to an even stronger one, as its hefty debut market cap testifies. The shares have heated up from their 130p issue price to 139p already and should go further, although broker research is not yet publicly available.

PV Crystalox Solar	LSE	£454.23m	109.00p	-5.25p
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