Canadian compound materials and specialty semiconductor manufacturer 5N Plus expects prices for tellurium and bismuth to stabilise this year.
The company, which started refining tellurium by-product from Rio Tinto's Kennecott copper mine in late December, is looking to further diversify its sourcing for its expanded plant in Montreal. The company will continue to invest in capacity building across its manufacturing sites in line with the ramp-up of its commercial agreements, said chief executive Gervais Jacques in its quarterly earnings call.
5N Plus reported strong demand from the renewable energy sector for compound materials used in solar panels, such as cadmium telluride (CdTe). The company is ramping up its capacity to supply US-based First Solar, which produces thin-film CdTe modules and panels. 5N is supplying First Solar from the Montreal plant as well as one of its German plants this year, but plans to ramp up capacity to supply more of the volume from Montreal from 2024, chief financial officer (CFO) Richard Perron said.
As of 31 December, 5N's order backlog had climbed to 253 days of annualised revenue, up by 61 days, or 32pc, from 30 September. The increase was attributed to the company's negotiations of long‐term contracts for specialty semiconductors, reflecting near‐term growth potential in renewable energy and space applications. The backlog refers to shipments over the next 12 months, but 5N has also received orders and commitments beyond 2023 in those sectors.
5N Plus expects sales to its space and renewable customers to increase throughout this year. It predicts the first quarter's sales to come in the lowest of all four quarters, followed by an increase in the second quarter, and the bulk of the volume and increase over 2022 coming in the second half of the year. The company expects revenue from the renewable industry in the second half of the year "to be materially better than the first half", Perron said. That reflects a seasonal increase in demand as solar project developers typically move to lock in government subsidies and meet year-end targets.
Demand from the space power market, with 5N's acquisition of Azur Space Solar Power in late 2021, is growing faster than the company's projections and it has responded by ramping up production to a 24/7 schedule to meet demand. The backlog of orders from the space sector represents approximately two times Azur's historical backlog.
Demand is also increasing for performance materials from the pharmaceutical and medical imaging sectors, with new applications emerging such as detector technology for CT scans in the medium term. And there is potential for demand from the defence and security sectors to grow.
In December, 5N Plus sold its chemical plant in Tilly, Belgium to Vital Materials. The plant refines bismuth metal to produce purified bismuth, bismuth oxide and bismuth nitrate, and lead from lead-bismuth alloys to produce industrial chemical, extractive and catalyst materials. 5N Plus has exited the low-margin extractive and catalytic sector with the sale.
"With the divestiture of Tilly, we now have a product offering where the actual metal content is lower and lower and continues to be lower than anything that has been in place a few years back. So we're less and less exposed to metal," Perron said, referring to the company's transition to manufacturing value-added materials from metal refining.
