(Yicai Global) Jan. 25 -- Shares in Xinjiang Daqo New Energy sank as much as 10 percent today after the Chinese producer of polycrystalline silicon, a key raw material used in the solar industry, said it plans to raise funds to build a CNY8 billion (USD1.2 billion) facility that will double output, raising concerns about overcapacity.

Xinjiang Daqo’s share price [SHA:688303] closed down 6.41 percent at CNY49.91 (USD7.90). Earlier in the day it had slumped to CNY47.88, a new low since its trading debut in July last year.

The firm plans to secure CNY11 billion (USD1.7 billion) in a private placement to fund the building of a high-purity polysilicon plant in Baotou, northern Inner Mongolia Autonomous Region with an output of 100,000 tons a year, double the company’s current capacity, it said yesterday.

Costing CNY8 billion (USD126.4 million), the facility should be up and running by mid-2023, it added. The other CNY3 billion raised will go towards supplementing working capital.

The new plant will supply raw material to solar panel makers Longi Green Energy Technology, JA Solar Technology, Wuxi Shangji Automation and Shuangliang Eco-Energy Systems and Xinjiang Daqo New Energy who all have production bases in Inner Mongolia, it said.

However, it is not the only industry giant in the country to sense an opportunity as prices surged more than two-and-a-half times last year from the year before on strong demand. This year’s polysilicon output is expected to jump 65 percent from a year earlier to 860,000 tons, according to the China Nonferrous Metals Industry Association.

Net profit last year could soar as much as five-and-a-half times last year from 2020 to CNY5.8 billion (USD916.4 million) on a great increase in product prices, Xinjiang Daqo said in its annual results forecast yesterday.

Editor: Kim Taylor