Comtec Solar Systems Group, a major Chinese maker of mono-crystalline solar wafers, says TPG Capital will invest up to HKD1.17 billion in the firm. TPG will subscribe to HKD780 million of unsecured convertible bonds due in 2016. The bonds are convertible into new ordinary Comtec shares at an initial conversion price of HKD3.90. TPG will also receive 95 million warrants with the right to subscribe for one ordinary share each, with an initial exercise price of HKD4.10 per warrant. The warrants have a maturity of five years. Comtec will raise HKD390 million if the warrants are all exercised. If the bonds are fully converted and warrants fully exercised, TPG will hold 295 million ordinary shares, or 21% of Comtec’s total enlarged issued share capital. Shanghai-based Comtec, which supplies wafers to solar cell and battery makers, said the proceeds would be used to expand its solar wafer production capacity. The company expected wafer production to reach 1,400 megawatt this year, up from its previous forecast of 1,000 MW, Comtec Chief Executive John Zhang said. Last year, Comtec increased production capacity to 600 MW from 200 MW in 2009. Revenue for the year was CNY1 billion, up 102% year on year, while net profit soared to CNY223 million from CNY25 million. The gross profit margin increased to 32.4% from 10.9% a year earlier. Zhang expected solar wafer prices to fall 10% this year, but said Comtec would maintain a healthy profit margin through cutting costs by 15%. TPG, which has USD48 billion of assets under management, said this was its first solar investment in China.

Shares in Xinjiang Goldwind Science & Technology, the second-largest wind turbine maker in China, plunged 11.8% on April 20 after it posted disappointing first-quarter results and warned that first-half profit may fall by up to half. The company reported a net first-quarter profit of CNY206.19 million, down 17% from the same period last year, while sales edged up 0.04% to CNY1.86 billion. It projected first-half net profit would decrease by “no more than 50%” compared to an interim profit of CNY772.75 million last year. “Company operations are expanding, sales growth remains stable, but the wind turbine generators’ average selling price has decreased significantly,” it said in a statement. Excluding non-recurring items like impairment and fair value changes in assets, and investment income and gains, core operating profit dropped 65.4% to CNY110.31 million. A JP Morgan report estimated the company made a gain of between CNY140 million and CNY150 million from the disposal of wind farms in the quarter. JP Morgan Analyst Boris Kan expected selling price falls to continue, given that market leader Sinovel is likely to continue to expand production capacity and smaller producers showed no signs of exiting the overcrowded industry. Only a handful of the more than 80 players are expected to survive in the long term. Overcapacity and intense competition saw Goldwind’s average selling price fall to between CNY3,500 and CNY3,600 per kilowatt from CNY4,750 in last year’s second half.

Chinese companies are attacking Western dominance in solar power, undercutting bigger rivals and winning orders in the booming USD12 billion photovoltaic power equipment industry. HSBC expects a 20% growth in global solar-power demand this year to 20 GW, thanks to solid demand from Europe and rising orders from markets such as Canada and India. Germany’s Centrotherm Photovoltaics and U.S. firms Applied Materials and GT Solar were the biggest equipment suppliers in 2010, according to California-based research firm VLSI, but Chinese companies are catching up fast. State-owned China Electronics Technology Group Corp (CETC), through its unit 48th Research Institute (CETC-48), was the industry’s No 9 in VLSI’s ranking, marking the first Chinese company to make it to the league of big equipment makers.  An increasing number of equipment makers are boosting production capacity and winning orders. Earlier this month, Zhejiang Jinggong Science & Technology said it won a CNY649 million contract to supply solar equipment to the country’s largest polysilicon company GCL-Poly Energy Holdings. The company had an order backlog of up to CNY1.8 billion as of March, according to KGI Research. China is the world’s biggest buyer of PV equipment, representing 51% of the market in 2010, up from 35% in 2006. It will remain the biggest buyer of PV equipment this year and next with the country’s plan to build 2,000 new solar cell manufacturing lines over the period, according to Nomura Securities. Home to the world’s largest solar cell producers such as Suntech Power Holdings and Yingli Green Energy Holding, China had been the biggest buyer of PV equipment from mostly European suppliers such as Centrotherm, Meyer Burger Technology and Manz Automation. But as local manufacturers like CETC, Jiangsu Huasheng Tianlong Photoelectric and Beijing Sevenstar Electronics Co improved product technology and boosted capacity, an increasing number of Chinese cell and panel makers are turning to locally produced equipment. Some local producers are undercutting rivals’ prices for equipment such as ingot-casting furnaces, screen printers and cutting blades by as much as 30%.

China should boost its fuel ethanol industry as part of its efforts to reduce carbon emissions and oil dependency, Yue Guojun, Assistant President of the China National Cereals, Oils and Foodstuffs Corp (COFCO) said. Last week, the National Biofuel Research and Development Center was established in Zhaodong, Heilongjiang province, the headquarters of COFCO’s biofuel and bio-energy subsidiary developing cellulosic ethanol, which can be made from biomass such as corn stalks and perennial grasses. Yue said the development of fuel ethanol will not affect China’s food supply because no more than 4 million tons of crops will be used for producing it, less than 1% of China’s total crop harvest each year. COFCO is also trying to master the technology to produce second-generation ethanol from corn stalks, perennial grasses and waste wood instead of main crops. Funded by COFCO, the Danish biotech company Novozymes and Sinopec, China’s largest cellulosic ethanol factory will go into production in September in Heilongjiang province. Its production target is 10,000 tons of fuel ethanol a year. China is the third-largest fuel ethanol market in the world, following Brazil and the United States. According to COFCO, its bio-ethanol production will reach 10 million tons a year by 2020, permitting a 10% drop in oil imports, the China Daily reports.

Heavy metals pollute 12 million tons of grain a year in China ― a loss which could have fed 40 million people. The contamination leads to economic losses totaling CNY20 billion, according to the Ministry of Land and Resources. The Ministry of Environmental Protection (MEP) has put the disposal of batteries, a major source of heavy metals pollution, on top of its agenda this year. Toxic metal readings of nearly 40% of farmland in the Pearl River Delta exceed legal limits, it reported. Chen Tongbin, an expert with the Chinese Academy of Sciences (CAS), estimated that 10% of the country’s farmland was polluted. It takes at least three years for farmland to recover and some chemicals remain for decades, said Li Zhi’an, an agricultural expert with the CAS. Nine Chinese ministries have launched a year-long joint campaign to tackle heavy metals pollution. Each province is required to release a list of lead-acid battery makers, assemblers and recyclers by the end of July, said Zhang Lijun, Vice Minister of Environmental Protection. Any plant violating regulations will be closed down. The Ministry aims that by 2015 heavy metal emissions in key areas will be reduced by 15% compared to 2007 levels, as part of China’s environment protection plan for the next five-year period. China makes half of the world’s batteries, yet the industry’s environmental record is poor. Most small and middle-sized manufacturers failed to follow safety controls, nor did they properly treat waste, revealed an inspection of 388 plants in 11 provinces. In 2009, Chinese battery makers released 12 million tons of heavy metal tainted liquid and 22 million tons of solid waste, the Shanghai Daily reports.