The Department of Homeland Security Office of Strategy, Policy, and Plans has released its strategy for preventing the importation of goods mined or produced using forced labor from the Chinese region of Xinjiang, as called for under the Uyghur Forced Labor Prevention act (UFLPA), as well as a list of companies known or believed to be using forced labor that prohibited from having their product enter the US market
Passed in Dec. 2021, UFLPA seeks to ban the imports of all products from Xinjiang unless the products are determined to not be connected to forced labor of Uyghurs and other ethnic minorities in China. Xinjiang is home to 50% of the global supply of polysilicon, an essential material in conventional solar modules, and there has been concern that implementation of UFLPA would severely disrupt what has already become a strained solar supply chain.
While roughly half of the world’s polysilicon does not come from Xinjiang, it is difficult to trace where every single manufacturer gets all of their polysilicon from, and there could be potential for entire factories to be “contaminated” by a relatively small mix of Chinese polysilicon in an otherwise non-Chinese mix.
However, within the released strategy, only three polysilicon suppliers in the region are listed: Xinjiang Daqo New Energy, Xinjiang East Hope Nonferrous Metals, and Xinjiang GCL New Energy Material Technology. While these three companies do contribute to the global supply of polysilicon, Christian Roselund, senior policy analyst with Clean Energy associates shared the opinion with pv magazine USA that the outlined strategy can be seen as a best-case scenario for the solar industry, with other companies thought to be at-risk left off the list of banned imports.
“This shows that the entity list is being used in a surgical way, targeting only those suppliers who have already been identified in independent reports, instead of casting a broader net,” he said. “However, we will still have to see what implementation looks like on the ground.”
What still has yet to be seen is the actual action of implementation, as we don’t know how Homeland Security plans to handle the use of polysilicon ingots and wafers manufactured in China and then sent across the globe for use in cell and module production. The mixing of polysilicon from Xinjiang and elsewhere in China is widespread, as Chinese polysilicon factories process both together.
On Friday, an industry note from Philip Shen, managing director with ROTH Capital Partners said that JA Solar had an import shipment seized under the Hoshine withhold-release order (WRO), in what Shen describes as “a negative surprise for the industry.”
The WRO applies to silica-based products made by Hoshine Silicon Industry Co. and its subsidiaries, which was instituted after Customs and Border Patrol identified two indicators of forced labor during its investigation of Hoshine.
According to Shen, JA Solar was believed to have a supply line entirely removed from forced labor concerns, using polysilicon made in the US and Vietnamese wafers, cells, and ingots to manufacture its modules.
The seizure itself does not mean JA is guilty of using forced labor, and Shen said that the outcome of the company’s review following the seizure could serve as an important test for proving a non-Chinese supply chain in light of the WRO.
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