In short: Supply of silicone feedstock a reason to worry

When China's self-imposed brownouts of several major silicon metal refining facilities occurred in 2021, the tenuous nature of global capacity for the essential material fell into stark contrast for silicone rubber processors in North America.

For many, that was the moment when domestic manufacturers of silicone rubber—who depend on a steady stream of high-purity silicon metal—realized the effects of having about 70 percent (about 6 million of the 8.5 million metric tons produced globally in 2021) of the world's refined silicon metal produced at foundries in China.

"2021 exposed severe supply chain constraints in the global silicone rubber industry ... and things could get worse with the monopoly on capacity in China," said William Stockwell, chief technical officer with Philadelphia-based Stockwell Elastomerics Inc., a silicone rubber producer of high-end gaskets and seals. "The sudden constriction in silicon metal supply revealed the need to sound the alarm on this."

Only about 5 percent of global capacity is produced in the U.S., a distant fifth behind Russia, Brazil and Norway, according to Portland, Ore.-based Allied Market Research.

Five North American companies, including Canada's Sinova Global, Mississippi Silicon LLC and Ferroglobe plc, accounted for a majority of domestic production.

Dow Inc. also refines a portion of its own silicon metal — about 300,000 metric tons per year — through joint ventures with Ferroglobe at two North American locations.

Also looming ominous for the domestic silicone rubber industry is the fact that only one monomer producer remains on U.S. soil: Dow. Momentive Inc. moved its monomer production to Europe within the last two years.

Wacker Chemie AG in Munich, Shin-Etsu Chemical Co. Ltd. in Tokyo and Elkem of Oslo, Norway, import product to the U.S., but supply lines remain a problem.

"I am surprised more people are not shouting out to the world to pay attention to what is going on here," said Scott Kearns, president of Santa Fe Springs, Calif.-based ElastaPro Silicone Sheeting LLC. "There are some major downstream concerns in North America. There is only one [domestic monomer] producer left in Dow ... that, to me, should send chills down the spine of anyone who uses silicone elastomers or silicone products."

As for upstream high-purity silicon metal capacity, Kearns said he worries about the consequences if there is a conflict in the South China Sea, potentially cutting off a major supply line for the refined metal.

"In addition to a conflict or geopolitical issues ... to me, this is a big wake-up call from a national defense perspective," he said. "We are so reliant on Asia and China to produce metallurgical- and chemical-grade silicon.

"This is not an issue that we are going to solve today, and no individual has the answers, but it needs to be a continuing dialogue between North American producers and fabricators. We are all responsible for reinvesting in North American capacity.

"It may sting a bit at first, but in the big picture it is without a doubt in our best interest."

What occurred in 2021 in China — the brownouts combined with a drought that drastically reduced the country's hydroelectric power — laid bare this "great imbalance" in silicon metal capacity, Kearns said.

"When things smooth out, everything feels great — but we cannot lose sight of this great imbalance," he said. "It is all interrelated, and what happened last year ... that was really kind of the wake-up call."

An understanding of the production process for refining silicon metal begets an understanding of the capacity imbalance that many believe is looming over three domestic manufacturing industries, all of which have crucial roles in quality of life and national defense.

According to the U.S. Geological Survey, about 35 percent of silicon metal is refined as a chemical grade that is used for organosilicones and the silicone rubber industry; about 25 percent of refined silicon metal output is used to make polycrystalline (or electronic-grade) silicon for the semiconductor and solar power industries, though they are the markets seeing the highest growth; and about 40 percent of output is a metallurgical grade that is used to make silicon alloy for the metals industry, typically aluminum.

When used with aluminum, "silinum" improves castability, hardness and strength.

"Aluminum demand has been growing steadily in recent years, as a reflection of the economic activity in both the developed and developing world," Stockwell said. "This demand of lighter and more economical material has triggered a growth in silicon metal consumption by aluminum manufacturers."

The EV automotive industry already is spiking demand in the chemical-grade silicon metal that is coveted by silicone rubber processors.

"And these growth industries are competing for the same commodity," Stockwell said.

According to London-based Ferroglobe, which maintains North American refineries in Alloy, W.Va., along with a joing venture with Dow; Selma, Ala.; Beverly, Ohio; and Quebec, the amount of silicon metal used by the silicone rubber industry is about 3 million tons per year now, and is estimated to grow to 4.5 million tons per year in five years.

"We have had concerns voiced to us by customers about global supply chains and their surety of supply," said Chris Bowes, commercial director for North America for Ferroglobe.

Ferroglobe maintains quartz mines in South Africa, Spain and the U.S., and the entirety of its refined silicon metal produced in North America is used by North American customers, Bowes told Rubber News.

Silicon dioxide is one of the most ubiquitous materials in the Earth's crust, coming from quartz rock or sand, so it is not nearly as finite in its mining capacity as lithium, cobalt or manganese — other elements that are increasing in demand as the EV revolution sets in.

Silicon metal comes from SiO2, or silicon dioxide, which, when combined with a small percentage of carbon under an extreme amount of electricity-driven heat, loses most of its oxygen to the carbon, leaving 99.99-percent pure silicon metal.

Monomer facilities for the silicone rubber industry — like those from Momentive and Dow — purchase the refined chemical-grade silicon, then add polydimethylchloride, a catalyst and several processing steps (hydrolysis, in particular) that result in base silicone products — polydimethylsiloxane, or PDMS monomer, the "simplest" and most versatile member of the silicone family.

Converting silicon dioxide requires massive amounts of energy, and since China achieved the required high temperatures from coal, the atmosphere suffered, until the Chinese facilities were forced to shut down for a period.

The shutdowns were realized immediately by those in the silicone rubber processing, microchip and aluminum manufacturing industries, as prices rose and allocations, especially on the silicone rubber side, began in earnest.

Over the past two years, lead times for specification-grade silicone sheet, sponge and foam have been extended from a traditional lead time of six weeks to 24 and 30 weeks, Stockwell said.

"As the U.S.-based technology sector recovers from the effects of the pandemic and begins its next round of new product development, the silicone supply chain will not be able to supply gaskets and cushioning solutions for ruggedized equipment that are designed to operate in extreme environments," he said. "Gaskets are often the last component specified in the design of technical equipment. We foresee delays in new product launches.

"High-performance gasket providers are left to scramble for silicone rubber materials from a shrinking pool of raw materials. Progress will suffer."

Paul DiCaprio, president of Ballston Spa, N.Y.-based Specialty Silicone Products Inc., which provides materials for components in the medical, aerospace and defense sectors, said he also has major concerns about domestic capacity.

"Up until recently, silicon metal was never a thought in my mind," DiCaprio told Rubber News. "But what happened in December with the brownouts brought the issue to the fore.

"What I do know is that our silicone rubber suppliers told us back in January that silicon metal supply was tight due to production cutbacks in China, which were a result of an energy reduction edict by the Chinese government."

With so many silicone and liquid silicone rubber applications in rubber parts, urethane foams, sealants, adhesives, lubricants, food additives, coatings and cosmetics, the importance of adding refined silicon metal feedstock capacity in North America is self-evident.

It also is far from an easy fix.

Adding a foundry costs hundreds of millions of dollars, according to Ferroglobe's Bowes, and it is a lengthy process.

"Obviously capital — and not a small amount — is the major challenge, followed by the [environmental] permitting process. This presents big-time delays to adding capacity," Bowes said.

But all is not lost on this continent, as help from North American refineries Ferroglobe, Sinova and Mississippi Silicon appears to be on the way.

"The best response is that we have reopened our Selma, Ala., facility. We announced that last year when we started up one furnace," Bowes said. "And another will start up this month."

Bowes said the Selma plant had been inoperative since 2018. Total capacity with the addition was not immediately known.

"And that is additional domestic capacity coming back into the market," he said, adding that Ferroglobe has one other non-domestic option that is available as an import. "We are looking at a plant in South Africa that could also add capacity back into the U.S. market."

Mississippi Silicon did not return calls seeking comment. Its website notes that the Burnsville, Miss.-based company in 2015 invested $200 million to build anew, and now supplies about 10 percent of all silicon metal used in the U.S.

Mississippi Silicon works with the state governments of Mississippi, Kentucky, Alabama and the Tennessee Valley Authority in its operations.

And Edmonton, Alberta-based Sinova Global, a high-purity quartz and silicon metal products supplier, said in December 2021 that it will spend $150 million to open a new silicon metal refining plant in Tiptonville, Tenn.

Neither an estimated capacity nor timeline for the Tiptonville plant to open were immediately known. Sinova did not return calls seeking comment.

Silicon metal refined at the Tiptonville location will be used in solar cells, silicon anode batteries, aluminum and semiconductors, the company stated on its website.

"The huge support we have received from all levels of government was an important factor in our decision to select Tiptonville as the site for our new, state-of-the-art silicon metal plant," Sinova CEO Jayson Tymko, said in a release. "Tennessee's attractive business environment, integrated supply chain, skilled work force, and supportive regulation means we can rapidly develop our operations to supply the growing energy storage, solar power, aluminum and EV markets."

The plant is expected to employ more than 140 people long term and will be built on a 130-acre site in Lake County Industrial Park. The industrial park's infrastructure will provide access to high-voltage power and have highway and rail connections, as well as access to deep-water ports like New Orleans and Mobile, Ala.

Outside of these announcements from North American foundries, another solution backed by downstream LSR processors is the formation of public and private partnerships for silicon metal refining capital projects.

"Unfortunately, the major companies such as Dow and Momentive do not appear inclined to invest major capital to refine silicon metal for a vertically integrated supply chain," Stockwell said. "From my limited research, private entity and government partnerships are needed to secure adequate domestic capacity of silicon metal.

"Investment is needed to protect the semiconductor, automotive, aerospace, defense and health care sectors [and] clean U.S. energy technology could be utilized to reduce environmental impacts. We need leadership to champion this cause."

Philip Guy, general manager of Saint-Gobain Performance Plastics in Hoosick Falls, N.Y., told Rubber News that he would support a public-private partnership to increase domestic capacity of refined silicon metal.

"I'm not a big fan of government intervention, but that may be what is needed to serve [the planned Ohio] Intel facility and microchips ... some type of help is needed," he said. "I definitely have some concerns, as this is a complex problem.

"When we talk about China, it is not as dire a situation there, as there is basically a feeding system in China where they can produce for themselves. ... We can't do that."

Guy said monomer capacity — the basic building block for silicone rubber — is a bit of a different animal than the upstream metal refinement, as metal must be mined.

Monomer production is not confined solely to China (though much of the global capacity is there, as well), it just tends to go where the demand is so that supply can be unloaded.

But like Stockwell, Guy cited key national defense programs, like the hypersonic missile system, which remain dependent on the same silicone technology from 50 years ago.

"Defense systems cannot be built and will not work without these high-end materials," Guy said.

Specialty Silicone Products' DiCaprio sees the risks of standing pat and the rewards of being proactive in establishing increased domestic refined silicon metal capacity.

Unlike such critical defense applications where silicone is the only option, other industries are not so beholden to the elastomer.

"I see two risks," DiCaprio said. "If supply is constrained, then demand will not be satisfied, which opens the door for alternative materials to replace silicone. People are very resourceful. If they can't find raw materials to keep their business running, they will look for alternative materials. Silicone can't be replaced for many applications, and there are materials that may not be as good as silicone, but they might be good enough for some applications.

"Secondly, the price for silicon metal could get to a point where silicone products become so expensive that consumers will not be able to afford them or want to buy them (for every day purchases). If demand drops enough, companies like ours would have to reduce their work force."

DiCaprio advocated the acquisition of an existing silicon metal refinery by a major silicone monomer producer "that is not located in China."

"This will be beneficial ... for control and allocation of what is produced, to ensure they are getting what they need to keep their plants going," he said. "And it gives them the ability to expand capacity at an existing manufacturing site, which would be much easier than building a new plant."

Such an acquisition would give the purchasing company a better understanding of the technology and costs required to make silicon metal.

"And this would help them build a case to possibly build a new plant in the U.S.," he said.

Stockwell said inaction is not an option, as the "U.S. is relying on foreign resources to supply these basic elements" of silicone.

"This is a crazy time in the industry," he said. "Processors are scrambling to keep up. I am surprised that more people are not beating the drum with this looming trend, which in many ways is already here.

"You can't have silicone without silicon metal ... we have kind of lost it in terms of outsourcing. This is a critical issue for defense and for our security."