Daqo New Energy Corp. (NYSE: DQ) ("Daqo New Energy" or the "Company"), a leading manufacturer of high-purity polysilicon for the solar PV industry, today announced that the Company's board of directors has approved its Phase 3A expansion project, which is expected to increase the polysilicon production capacity at the Company's Xinjiang manufacturing site from the current level of 12,150 metric tons (MT) to 18,000 MT. The Company currently expects capital expenditures for the expansion project to be approximately RMB620 million, having benefitted from the Company's ability to reutilize all possible idle polysilicon manufacturing equipment and related assets in Chongqing, as well as the existing shared facilities in Xinjiang.
The Company has officially launched the Phase 3A expansion project after the board approval. Initial work related to the project has already begun, including applications for relevant permits and approvals. Construction and equipment installation is expected to be completed by the end of 2016. The Company expects to commence initial production of the Phase 3A project in the first quarter of 2017 and achieve full production capacity by the end of the second quarter of 2017.
"The success of our Phase 2B project, which is expected to bring total production capacity to 12,150 MT at our Xinjiang site, gives us confidence that the company can continue to expand our production capacity and further enhance its advantage in cost structure in polysilicon production," commented Dr. Gongda Yao, Chief Executive Officer of Daqo New Energy. "With our new Hydrochlorination system now fully on-line and operating at better than anticipated levels in terms of production output, quality and efficiency, we believe we can further strengthen our industry-leading cost structure by reducing energy consumption and improving manufacturing efficiencies. By reutilizing our idle production equipment in Chongqing and taking advantage of the exiting shared facilities in Xinjiang, we believe that we will be able to achieve substantial savings in capital expenditures, and reduce it to very competitive levels on a per unit basis, resulting in enhanced return on investment. Moreover, our recently announced loan agreements with domestic Chinese banks afford us the flexibility to fund our expansion plan. Our Phase 3A expansion project is a very important step towards our goal of becoming one of the world's top producers of high-purity polysilicon in terms of cost competitiveness, and will allow us to better serve the demand of the global solar PV industry."
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