08 May 2013 (09:49 UTC-07 Tango)/27 Jumada t-Tania 1434/18 Ordibehest 1391/29 Ding-Si (3rd month) 4711
The massive, and expensive (to local tax payers), Hoku Materials polysilicon factory sits idle and unfinished in Pocatello, Idaho.
Red Neck right wingers like to point the finger at President Obama, saying ‘I told you so’ concerning ‘clean energy’ projects, but the reason for the demise of many solar power companies is actually the capitalist commodity market system and government interference.
Polysilicon prices have crashed and burned since construction started on the 50 American football fields long factory. It just isn’t worth it to produce the stuff used in solar power panels. In 2008 polysilicon was worth $400 per kilogram, it’s now crashed to a paltry $20.50!
Hoku Materials ghost town factory, Pocatello, Idaho. 50 football fields long at a cost of at least $400 million.
The ‘experts’ got everything wrong. They thought the high petroleum prices would drive societies into the arms of clean energy companies, but the problem is that so many clean energy companies started production that soon there was a glut of polysilicon on the market, even before the construction of Pocatello Hoku plant was close to being finished.
Then add to that the trade wars between China, the U.S. and European Union. Eventually, the Obama administration jacked up tariffs so high on Chinese polysilicon companies that it wasn’t worth it to do business in the U.S. By then Hoku Corporation (the parent of Hoku Materials) had become Chinese owned, due to financial problems (including Hoku Materials not being able to pay its construction contractor, JH Kelly, or pay its Idaho utility bills, so many times that both threatened to seize the property).
By the middle of 2012 the unfinished $400 million USD Pocatello polysilicon factory was moth balled, staffing reduced to just 30 people, with rumors of liquidation in bankruptcy court. By the end of 2012, the Chinese company that bought into Hoku (Tianwei) was getting blasted in the Chinese media for buying a pig in a poke. According to former Hoku Corporation CEO, Scott Paul, Tianwei invested “….more than $129 million of its own capital in Hoku, and they have provided for another $244 million in debt financing from banks in China.”
Now back to the ‘experts’. In February 2013, ‘experts’ predicted that polysilicon prices had bottomed out. They were wrong! Prices had hit $21 per kilogram, and polysilicon producers said there was no reason to produce anymore until the price went up over $25.
In March 2013, British media reported that prices had crashed 50% compared to the same time last year.
In April 2013, another report said that polysilicon prices could continue to crash because of the anti-free market tariffs imposed by the major players; China, South Korea, European Union and United States. And, the ‘experts’ again said prices had bottomed out. The average price at the end of April 2013 was $20.50.
So where does that leave Hoku Corporation’s Hoku Materials factory in Pocatello? Optimistic officials with the Bannock Development Corporation (a County level organization that worked hard to bring Hoku to Pocatello, including huge local tax breaks) think that anytime now Hoku will start production: “It’s a wait and see thing, depending on the market……Basically, [Hoku Corp.] needs to fire up the plant when it’s ready to go.”-John Regetz, Bannock Development
Sounds like the local development folks aren’t communicating with Hoku. The latest statement from the company indicates that bankruptcy and liquidation is the only option being considered: “….exploration of potential restructuring at Hoku Materials and Hoku Corporation is ongoing, with no formal update at this time.”-Hoku Corporation statement
“Restructuring” is code for bankruptcy/liquidation. So no Mister Regetz, it sounds like Hoku is not planning to “fire up the plant”.
Green/clean energy just doesn’t make big enough profits for the crony capitalist system. Another case in point is the recent announcement by BP (British Petroleum) that it will abandon it’s wind power operations near Idaho Falls, Idaho, as well as its wind and solar projects across the United States.
Also, don’t forget the artificial reduction in demand created by all those government tariffs.
The answer is that clean energy projects need to be run like a non-profit co-op, but the problem is that crony capitalists don’t like that and will do everything they can to prevent that from happening (’cause contrary to their propaganda, they do not like competition, especially if it’s from a non-profit).
More on the demise of Hoku Materials:
U.S. tariffs nail in the coffin for Hoku
Hoku better get its rear in gear
Investigation puts the brakes on Hoku