The Idaho-China story took a another turn Tuesday when a U.S. bankruptcy trustee, Gary Rainsdon, declared JH Kelly the highest bidder for the failed $700 million silicon manufacturing plant in Pocatello.
Rainsdon accepted Kelly’s $8.3 million bid and awarded it ownership of the plant pending completion of the paperwork. JH Kelly expects to take possession of the Hoku facility within a month.
The big loser was Baoding Tianwei Group, the Chinese government-backed energy company that took over Hoku Corp. before it failed and had invested more than $270 million in the plant that was built to sell polysilicon for solar panels on the world market.
But the polysilicon market remains in a glut, the result of the overproduction that has brought solar panel prices down to costs that make it competitive with other forms of energy production. That makes homeowners, commercial businesses and solar installers the winners in this chaos — inherent in an emerging market.
JH Kelly is not done with Tianwei.
“While we are satisfied with the auction results, the bankruptcy process itself has done little to cure the countless broken promises made by Tianwei officials to stakeholders, contractors and suppliers throughout Idaho,” said JH Kelly President Mason Evans. “We will continue to pursue resolution of those matters in other venues.”
JH Kelly is still seeking to recover the more than $25 million it is owed for work completed on the plant through the Office of the United States Trade Representative and federal court. In August, the Vancouver, Wash.-based contractor filed federal fraud and racketeering charges against Tianwei citing evidence of documented “promises, commitments and misrepresentation.”
In late September, U.S. Sens. Mike Crapo and Jim Risch and Rep. Mike Simpson wrote to Chinese Ambassador Cui Tiankai urging him to have Tianwei resolve the matter “in a fair and expeditious manner to avoid further injury to the people and businesses of Idaho and creating a rift in U.S.-China economic relations.”
In September, JH Kelly was required to translate court documents into Chinese and process them through the Hague Service Convention in the Netherlands before an agent in mainland China would review the federal fraud and racketeering complaint.
For Tianwei and China, the Hoku plant raises questions about what American companies and communities can expect when they invite Chinese investment as Pocatello did. In the heyday as the polysilicon plan was under construction, Tianwei officials told contractors that they could expect to get paid because “the full faith of the Chinese government is behind us,” JH Kelly Senior Vice President Mark Fleischauer told me.
At that point, Baoding Tianwei Group and Wells Fargo cut a financing deal in the wake of Chinese President Hu Jintao’s visit to the United States. Ding Qiang, vice chairman and president of Tianwei, who holds a post in the Chinese government, went to Pocatello during the visit and met with local and state officials.
The Hoku plant broke ground in 2007 and was initially expected to generate more than 200 full-time jobs. Hoku was purchased by China-based Tianwei in 2009. By 2012, construction ceased and the plant shuttered.
“As for the facility’s future,” Evans said, “we are committed to working with the city of Pocatello and the Bannock County Economic Development Commission to alleviate some of the damage caused by the failure of Hoku-Tianwei.”
It intends to help the community attract a new user to the property and work with local officials to market the plant over the next two years.