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Silicon Market Overview

Although commonly referred to as silicon metal, silicon (symbol Si) is semi or non-metallic, and is
sometimes called a metalloid. Pure silicon is very rarely found in nature, and it is usually found
as a constituent of silicon dioxide (silica or quartz) and silicate minerals, such as feldspars. In
terms of mass, silicon makes up about 26% of the Earth's crust and is the second most abundant
element in the crust, after oxygen. Ferrosilicon is an alloy of silicon and iron containing between
20% and 95% Si. Both silicon and ferrosilicon are derived commercially from silica feedstock.

World production of silicon metal rose by an average of 3.4%py between 1990 and 1999, and by
4.9%py between 1999 and 2008, with particularly sharp increases in 1995 and 2003. In 2009
production fell by about 13% to 1.45Mt, with output falling in virtually all producing countries as a
consequence of the global economic slowdown. In 2010, production recovered to about 1.76Mt
(Figure 1).

Chinese output is thought to have risen from less than 300ktpy in the 1990s to 820kt in 2007 and
2008. After falling to 780kt in 2009, it rose back to about 820kt in 2010. Production capacity in
China in 2010 was put as high as 1.5Mtpy from some 200 operations. Brazil, Norway, the USA
and France are the other countries with major silicon production.

Brazilian production increased by an annual average rate of 6.6% between 2000 and 2005,
compared to a decline of 4.0%py in the USA. This was probably due to the availability of less
expensive power in Brazil, which exports about a third of its output to the USA.

After contracting sharply in 2009, global demand for both silicon metal and ferrosilicon recovered
in 2010 to about 1.8Mt and 7.4Mt (gross weight) respectively. Silicon’s use as an alloying
element in aluminium is the largest application for silicon metal, accounting for about 45% of
consumption (Figure 2). Chemicals, largely silicone, account for a further 35%. Aluminium
alloys and silicones are forecast to show healthy growth in the next five years.

The biggest shift in recent years has been the growth in the use of silicon for use in solar panels,
mainly via the production of polycrystalline (or multi-crystalline) silicon (polysilicon).

This use has grown from 3% of silicon use in the mid-2000s to about 12% in 2010. Continued
strong growth in silicon use in PV, is expected to lead to market growth for silicon in excess of
10%py. The quantity of silicon used in solar PV modules is expected to rival that in the high
volume silicon markets within a few years.

The ferrosilicon market is expected to show more modest expansion based largely on increased
steel production.

Global demand for silicon grew at an average rate of more than 8% between 2002 and 2008, but
fell by almost 20% in 2009, and recovered by the same amount in 2010. Ten countries
accounted for about 80% of the world market in 2010, with the USA, China, Germany and Japan
as the major markets (Figure 3).

Apparent consumption in China does not indicate the rapid market growth for silicon metal in the
mid-2000s that is seen with most other markets. One explanation is that production is
underestimated between 2004 and 2008. In 2009, however, a sharp decline in exports resulted
in apparent consumption more than doubling, assuming domestic production of about 780kt in
2009. Considerable volumes also probably went into stocks.

This information is provided courtesy of Roskill Information Services Ltd It
is for information only and does not necessarily represent the views of the MMTA.