Hoku signs $678M silicon deal with Suntech

Catapulting it front and center on the high profile silicon supply stage, Hoku Materials, a division of Hawaii-based Hoku Scientific (NASDAQ: HOKU) has signed a 10-year supply contract with Chinese solar leader Suntech Power Holdings (NYSE: STP).

The news sent shares of Hoku up 53 percent, or $2.44, to close at $7.02.

A similar contract with Sanyo earlier this year sent shares of Hoku up 75 percent (see Hoku shares skyrocket on Sanyo polysilicon supply deal.)

Under the contract, up to approximately $678 million may be payable to Hoku during the ten-year period, subject to the achievement of quality and production milestones, the acceptance of product deliveries and other conditions, the two companies said.

The contract provides for the delivery of predetermined volumes of polysilicon each year at set prices, using a take-or-pay structure, beginning with the first shipment in 2009 and continuing over a ten-year period from the first shipment.

The contract also provides for an initial deposit of $2 million to Hoku upon signing and requires that Suntech make additional prepayments for products in the amount of $45 million.

Hoku Scientific only got into the silicon supply business last December (see Hoku Scientific getting into silicon production.)

The company is in the process of building a plant capable of producing 2,000 metric tons of polysilicon per year in Pocatello, Idaho.

Suntech is a leading solar energy company as measured by both production output and capacity of solar cells and modules.

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