[Ferro-Alloys.com] Chemical and material manufacturers OCI and Hanwha Solution are grappling with the thorny issue of what to do with their solar-grade polysilicon facilities and leftover workforce, having decided to cease production of the material.

The two companies decided to discontinue their production of polysilicon after a long period of low returns, but are still faced with the difficult task of selling off the facilities ― no mean feat during the current, aggravated economic environment ― and dealing with possible labor disputes following the relocation or dismissal of employees.

According to OCI, the firm is in talks with its labor union over the jobs of employees at its polysilicon plants in Gunsan, North Jeolla Province, but is yet to draw out a conclusion.

"We are in discussion over various options for the employees at the plant, but there is nothing we can speak about at this moment," an OCI official said.

OCI shut down three plants in Gunsan, North Jeolla Province, on Feb. 20. Of them, plant 1, which produces polysilicon for semiconductors, will resume operation on May 1, but plants 2 and 3, which are producing polysilicon for solar cells, will cease operations indefinitely.

The decision came after the company's profitability saw a sharp decline, saying in a conference call that there has been "a structural decline in polysilicon prices since 2012" and it is "skeptical about resuming the operation of plants 2 and 3."

The company has already calculated plants 2 and 3 as a 750.5 billion won ($617 million) loss in their assets, resulting in an 809.3 billion won net loss in its 2019 yearly earnings. The company said it is currently looking into various options for the facilities at the plants, but did not elaborate further.

Hanwha Solution is also deliberating over how to handle their remaining workforce and facilities.

"Currently, we are planning to maintain the same workforce and relocate employees to either other divisions within the company or other Hanwha affiliates," a Hanwha Solution official said. "Since our polysilicon plant will shut down by the end of this year, we will thoroughly review possible options until then."

Hanwha Solution has approximately 100 employees at its polysilicon plant in Yeosu, South Jeolla Province, which will cease production by the end of 2020.

Though the company said it will guarantee jobs for the staff at the Yeosu plant, it is yet to decide what to do with the plant facilities.

"Though there is not a fixed plan, we are considering using assets sites and some facilities and applying them to other business areas, as well as selling remaining facilities one by one," the Hanwha Solution official said.

Industry officials said the selling off the polysilicon facilities as a whole will be difficult for both OCI and Hanwha Solution, citing expensive power costs in Korea. OCI and Hanwha Solution pulled out of the polysilicon business due to unsurmountable competition from Chinese rivals, who benefit from the Chinese governments' indirect support of electricity costs. Power bills account for approximately 45 percent of the cost of producing polysilicon.

In a similar case, Woongjin Group put its polysilicon unit Woongjin Polysilicon up for sale in 2012 as the company filed for court receivership. The company had received nearly 1 trillion won in investments, but ended up selling at 32 billion won after eight botched sales attempts in six years.

"Because of this, both OCI and Hanwha Solution announced that they will quit the polysilicon businesses, not sell them off," an industry official said. "Since there is no buyer, it is difficult for them to sell off their entire business, so they are likely to sell facilities one by one at very low prices."

• [Editor:tianyawei]