China’s LDK faces stock slump as Q-Cells ends supply deal

German solar cell company Q-Cells said today it has terminated a supply deal with China's LDK Solar, where LDK was supplying Q-Cells with solar wafers.

Q-Cells (XETRA:QCE.DE) said Xinyu-based LDK didn’t fulfill “significant contractual obligations” of an agreement signed in December 2007 (see LDK to supply 6GW of solar wafers to Q-Cells).

LDK’s (NYSE:LDK) stock was down 18.6 percent today at $5.52 in afternoon trading.

According to the agreement, LDK was to supply 43,000 tons of silicon from 2009 to 2018, with wafer supplies on the basis of approximately 1,000 of silicon for 2009.

Q-Cells said it initially paid $244.5 million under the agreement, which can be reclaimed with the contract’s termination and has been secured by a German bank. A Berlin district court refused to grant LDK a temporary injunction against a drawing down of the bank guarantee, according to Q-Cells.

The deal is linked to another multicrystaline wafer processing agreement announced in 2008 for LDK Solar to process a minimum of 20,000 metric tons of upgraded metallurgical grade solar-grade silicon from 2008 to 2018 (see LDK Solar signs silicon deal with Q-Cells and GT Solar to supply polysilicon reactors to LDK).

The two companies are experiencing a difference of opinions over the validity of the termination of the agreement, Q-Cells said. Direct discussions between the companies and a parallel arbitration process have not yet resulted in a settlement.

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