(Yicai Global) March 3 -- Shares in GCL-Poly Energy Holdings surged by over 10 percent in trading today after it was announced that a unit of the Chinese solar wafer materials producer and photovoltaic equipment maker Shangji Automation will build a CNY18 billion (USD2.8 billion) production plant for granular silicon, a main raw material of the monocrystalline wafers used in solar cells, to meet surging demand for PV power stations.

GCL-Poly Energy’s stock price [HKG:3800] was trading up 8.14 percent at HKD3.19 (USD0.42) at 1:50 p.m. China time. It had earlier reached HKD3.26. Shangji Automation [SHA:603185] climbed 2.55 percent to CNY161 (USD25).

Jiangsu Zhongneng Silicon Industry Technology Development will hold a 65 percent stake in the joint venture that will run the factory and Shangji Automation the remainder, the latter company said yesterday.

The factory, which will be located in the Inner Mongolia Autonomous Region in northern China, will have an annual output of 300,000 tons once up and running, it added. Constructed in three phases, the first phase will cost around CNY3.6 billion (USD557 million) and will have an annual capacity of 60,000 tons.

The deal will boost Hong Kong-based GCL-Poly’s production of granular silicon and ensure that Shangji Automation has a steady supply of the raw material it needs to build solar wafers and other PV equipment.

Both firms have seen orders shoot up in recent months. Wuxi, southeastern Jiangsu province-based Shangji Automation, which already owns a factory in Inner Mongolia, has penned silicon wafer supply contracts worth over CNY15 billion (USD2.3 billion) since the end of November.

And last month Xuzhou, southeastern Jiangsu province-based Zhongneng Silicon inked a CNY7.3 billion deal with solar wafer giant Longi Green Energy Technology to supply it with raw materials.

Editor: Kim Taylor