(Yicai Global) March 16 -- Jolywood Sunwatt is planning to build a CNY14 billion (USD2.2 billion) high-purity polysilicon factory together with the Taiyuan municipal government in northern China as the Chinese photovoltaic equipment maker prepares to produce its own solar cell raw materials to offset surging costs.

The facility, which will be located in Taiyuan, Shanxi province, will have an annual capacity of 100,000 tons of high-purity polysilicon and 200,000 tons of industrial silicon that is lower in purity, the Suzhou, eastern Jiangsu-based firm said yesterday.

The plant will help offset the pressure from the rising prices of raw materials, it said. Polysilicon, the starting material used to make solar cells, now costs CNY246,600 (USD38,800) a ton, more than double what it did last March.

The first phase, costing CNY4.3 billion (USD677 million), will have a yearly output of 200,000 tons of industrial silicon and 10,000 tons of high-purity polysilicon, it said. It should start construction this year and be ready by 2024. No details on the timing of the second and final phase were given.

Jolywood will form a joint venture with the Taiyuan government that will oversee investment in as well as construction and operation of the plant. Jolywood will hold a 51 percent controlling stake in the JV, it added.

The facility will help to offset some of the raw material costs for a 16-gigawatt solar cell factory that Jolywood is already building in Taiyuan. The polysilicon, though, still needs to be made into solar wafers in order to build the solar panels. The first phase of this plant, costing CNY3 billion, will have an output of 8 GW and is expected to start operating in two years’ time, the firm said in May last year.

China produced 505,000 tons polysilicon last year, 28.8 percent more than the previous year, and imported 114,000 tons, a gain of 13.4 percent, according to statistics from the China Photovoltaic Industry Association.

Jolywood’s share price [SHE:300393] was trading up 0.86 percent at CNY22.29 (USD3.51) as of 2 p.m. China time today. Earlier in the day it had advanced 3.6 percent to CNY22.90.

Editor: Kim Taylor