By Jun Ji-hye
OCI, Hanwha Chemical and other solar energy-related firms here are rushing to build plants abroad while downsizing their presence at home due to deteriorating business conditions, according to company officials Monday.
In particular, the Moon Jae-in administration's move to increase industry utility bills has unnerved polysilicon makers and other electricity-dependent manufacturers, prompting them to relocate to Southeast Asia and other emerging economies.
OCI Vice Chairman Lee Woo-hyun said he will consider building polysilicon plants in Malaysia after shuttering domestic factories, while Hanwha Chemical Vice Chairman Kim Chang-beom said his firm will build, if necessary, additional factories abroad, not in Korea.
OCI and Hanwha Chemical have already suffered difficulties after the Chinese government decided to suspend construction of new solar power plants last year. China is the No. 1 solar power market in the world, and demand for polysilicon there is huge.
Company officials said difficulties in expanding their business in Korea are being caused by a lack of government support and additional carbon costs in addition to the burden of electricity charges.
They said they already pay hundreds of billions of won in electricity bills a year.
"Electricity bills account for about 40 percent of manufacturing costs. It is not easy to increase domestic investment and expand business here as the government is moving to increase electricity charges further," an official from a polysilicon manufacturer said, asking not to be named.
Increasing the cost for the supply of electricity to industry was one of the election pledges of President Moon Jae-in who noted electricity for industrial use was cheaper than that for residential use.
Another official from a chemical company that produces polysilicon claimed governments of other countries such as the United States, China and Japan have reduced the electricity bills for polysilicon manufacturers, and this has helped companies there have price competitiveness.
"In contrast, Korean firms have found it difficult to secure price competitiveness although we need to compete in the global market," he said.
After a general meeting of shareholders, March 26, OCI Vice Chairman Lee Woo-hyun told reporters that the company pays 300 billion won ($264 million) in electricity bills annually.
"The government is moving to increase the cost again. If electricity charges are raised by about 5 percent, our operating profits will be reduced by 15 billion won," Lee said. "It is necessary to consider moving to Malaysia after shutting down factories in Korea."
In 2017, OCI took over a polysilicon factory in Malaysia as part of efforts to overcome increasing costs in Korea. OCI is currently moving to build additional factories there.
"The Malaysian government provides factory sites for free, and the country's electricity costs are one third cheaper than those in Korea," he said.
Hanwha Chemical Vice Chairman Kim Chang-beom said on the sidelines of the shareholder meeting, March 26, "If we need to build additional polysilicon factories, we will do it overseas. We have no plan to build additional factories in Korea as electricity costs are too high."
OCI, Hanwha Chemical and other solar energy-related firms here are rushing to build plants abroad while downsizing their presence at home due to deteriorating business conditions, according to company officials Monday.
In particular, the Moon Jae-in administration's move to increase industry utility bills has unnerved polysilicon makers and other electricity-dependent manufacturers, prompting them to relocate to Southeast Asia and other emerging economies.
OCI Vice Chairman Lee Woo-hyun said he will consider building polysilicon plants in Malaysia after shuttering domestic factories, while Hanwha Chemical Vice Chairman Kim Chang-beom said his firm will build, if necessary, additional factories abroad, not in Korea.
 |
| OCI Vice Chairman Lee Woo-hyun |
Company officials said difficulties in expanding their business in Korea are being caused by a lack of government support and additional carbon costs in addition to the burden of electricity charges.
They said they already pay hundreds of billions of won in electricity bills a year.
"Electricity bills account for about 40 percent of manufacturing costs. It is not easy to increase domestic investment and expand business here as the government is moving to increase electricity charges further," an official from a polysilicon manufacturer said, asking not to be named.
Increasing the cost for the supply of electricity to industry was one of the election pledges of President Moon Jae-in who noted electricity for industrial use was cheaper than that for residential use.
Another official from a chemical company that produces polysilicon claimed governments of other countries such as the United States, China and Japan have reduced the electricity bills for polysilicon manufacturers, and this has helped companies there have price competitiveness.
 |
| Hanwha Chemical Vice Chairman Kim Chang-beom |
After a general meeting of shareholders, March 26, OCI Vice Chairman Lee Woo-hyun told reporters that the company pays 300 billion won ($264 million) in electricity bills annually.
"The government is moving to increase the cost again. If electricity charges are raised by about 5 percent, our operating profits will be reduced by 15 billion won," Lee said. "It is necessary to consider moving to Malaysia after shutting down factories in Korea."
In 2017, OCI took over a polysilicon factory in Malaysia as part of efforts to overcome increasing costs in Korea. OCI is currently moving to build additional factories there.
"The Malaysian government provides factory sites for free, and the country's electricity costs are one third cheaper than those in Korea," he said.
Hanwha Chemical Vice Chairman Kim Chang-beom said on the sidelines of the shareholder meeting, March 26, "If we need to build additional polysilicon factories, we will do it overseas. We have no plan to build additional factories in Korea as electricity costs are too high."
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