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Oil Report

UPDATE 1-REC delays Moses Lake expansion start-up

(Adds analyst, shares)

OSLO, Feb 9 (Reuters) - Norwegian solar industry group Renewable Energy Corp. (REC) REC.OL on Monday announced a delay in the expansion of its polysilicon production plant in Moses Lake, Washington, now expected to start up in late March.

Shares in REC initially fell but rebounded, trading up 3.9 percent at 72.10 crowns at 0958 GMT, against a 2.2 percent rise on Oslo's benchmark index .OSEBX.

REC said last December that the expansion had been delayed to the end of January due to technical problems. On Feb. 2, REC Chief Executive Erik Thorsen told Reuters the Moses Lake start-up was “around the corner”.

“Following the completion of the repairs, a final process of systems checks and start-up procedures will be initiated, before the plant is expected to start commercial production in the second half of March,” REC said in a statement on Monday.

In 2002, REC bought a polysilicon plant in Moses Lake. After the $800 million expansion, the plant will have an annual production capacity of 6,500 tonnes -- more than half of REC’s total polysilicon production.

An analyst said its shares rose because the company had clarified the situation.

“There has been uncertainty over whether repairs on the mills were finished. There is more clarity around that now,” analyst Einar Stroemstad at First Securities said.

“Secondly...there have been fears of damages also on wafer- cell and module production due to a lack of silicon. It looks like they have managed to buy silicon in the market,” he said.

REC said it targeted polysilicon production for 2009 in the range of 10,000-11,000 tonnes, down from an already reduced 11,500 tonnes due to Moses Lake start-up problems.

But REC said that even with lower “upstream” production of polysilicon, the material used to absorb the sun’s energy, its “downstream” production of solar cells and panels would not be affected much.

“The revised start-up schedule should have limited negative effect on the production level further downstream in REC in the first quarter as long as external sourcing of polysilicon continues successfully,” it said. (Reporting by Aasa Christine Stoltz and Joergen Frich; Editing by Erica Billingham)

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