Q-Cells and LDK Solar settle supply dispute: New wafer and module tolling agreement signed

The dispute over a solar wafer supply agreement between Q-Cells and LDK Solar has been settled out of court with both companies continuing their business partnerships and agreeing to a new tolling arrangement for solar cells and modules. According to Q-Cells both parties have resolved their differences over the interpretation of the disputed wafer supply contract and have ended all legal actions, including Q-Cells attempt to collect on a US$244.5 million bank guarantee.

However, the disputed supply contract has been amended, which will see Q-Cells receive approximately 20% in the current year and at least one third of the originally agreed volumes in 2010 and 2011. The total delivery volume for the ten-year agreement remains unchanged at around 6GWp.

Importantly, the pricing of the wafers would be made more flexible. This is due to the significant fall in polysilicon prices since mid-2008, which made many contracts uncompetitive with spot market purchases. Q-Cells also has the option to increase these volumes if required.

Q-Cells also announced a new tolling agreement between the two companies, which clarifies how the two companies would partner on large-scale utility projects in China and Europe, since the partnership was announced earlier this year.

Under the new tolling agreement, Q-Cells will supply solar cells to LDK Solar while LDK Solar will supply modules to Q-Cells on the same basis.

LDK Solar has only recently started production of solar modules and also has a sub-contracting deal with Best Solar for module production.

Q-Cells has been working most of the year to restructure its long-term supply contracts as demand for cells dramatically declined since the fourth quarter of 2008, only recovering in the third quarter of this year. The new agreement would seem to have resolved the over supply of wafers, which Q-Cells faced if the original contract has remained in place.