The solely remaining silicon metal producer in Germany --- Rottwerk (RW Silicium GmbH）--- is confronted with the imminent threat of factory closure by the end of March 2024. Heinz Schimmelbusch, CEO of AMG Mining GmbH, the parent company of Rottwerk, disclosed this information during an interview with the reporter from German Business Daily. The primary reason behind this predicament lies in the persistently high industrial electricity prices prevailing in Germany. "The current level of electricity prices poses a fatal challenge to silicon metal production," stated Schimmelbusch.
The company currently employs 120 staff members and has been compelled to make significant production reductions. It just operates one of the four internal combustion engines at present. Over half of the production costs are allocated towards electricity consumption.
Power cost twice higher than ever
Stephen Bauer, General Manager of RW Silicium Limited, stated that the production of one ton of silicon requires approximately 15,000 kw/h. Based on the prevailing electricity prices in Germany, the cost of pure electricity per ton amounts to around €1,800, while the market price slightly below €3,000 per ton.
According to reports from German media, the electricity cost for 1t of silicon was approximately €600 a few months ago. This indicates that the electricity price has doubled. Bauer drew a comparison with France, stating that competitors based in France benefit from electricity subsidies, resulting in their pure electricity costs being less than half of ours.
Soaring power price unattributable to Russia-Ukraine war
While many media outlets attribute the increase in energy prices to the Ukrainian war and its aftermath, Bauer holds a different perspective. He notes that, prior to the conflict, energy prices in Germany had already nearly doubled. The onset of war led to panic and a twenty-fold surge in electricity exchange rates. "Although our electricity prices have since returned to pre-war levels, they remain prohibitively high for silicon production," explained Bauer.
Bauer asserts that Germany, being the largest silicon consumer in Europe, heavily relies on imports for its supply. RW Silicium Limited's production of silicon metal contributes approximately 10% consumption around Germany. If RW Silicium ceases production, Germany will be entirely dependent on imports and lose its competitive edge in the silicon sector when compared to other countries.
Johannes Bernreuter, a renowned expert in the silicon industry at Bernreuter Research Centre, highlighted that based on data from the Shanghai Metal Market (SMM), global silicon metal production reached 3.82 million tons in 2021. Notably, China accounted for a significant share of this output with 2.91 million tons (76%), while the remaining 910 kt (24%) originated from Western countries such as Brazil (5%), North America (4%), and Norway (3%). Consequently, it is evident that China is the Top country currently in terms of silicon production worldwide. However, if RW Silicium faces potential closure, approximately 4% of Western production would be lost --- a development that could have severe implications for Wacker Chemie A.G., given their substantial reliance on RW Silicium Limited.
Enterprises calling for industrial electricity pricing
Bauer asserts that the sole solution to the problem lies in reducing electricity prices, a matter unfortunately beyond our control but reliant on politicians. He strongly urges the government to implement "programmable industrial electricity pricing."
According to Bern Reuters, the German Minister of Economy has indicated that Berlin is currently considering this matter, although the specific plan remains undisclosed. Bauer emphasized that the ambiguous stance of the German government will expedite RW silicium to go bankruptcy. Bern Reuters also urged policymakers to establish industrial electricity prices. Experts assert that Wacker concurs with this proposition, as it is imperative to safeguard Germany's energy-intensive industries against China's low-cost competition.
Rottwerk (RW Silicium GmbH), the last silicon metal producer in Germany, is compelled to close down due to Germany’s exorbitant electricity prices and tumultuous energy-making policies, which is undeniably regrettable.
