- VRX Silica Limited (ASX:VRX) is targeting the fast-growing solar panel market in Australia via its Muchea project.
- The Muchea project has better grain quality and size, which makes it suitable for the ultra-clear glass used in solar panels.
- The Company has already secured mining lease and miscellaneous licences for the Muchea project.
Silica sand is the most-used commodity on the earth after air and water. It is the key ingredient in all types of glassmaking, including high-tech glass and specialty solar panel. The production of high-quality glass for solar panels requires high-grade sand, which could be supplied by Australian silica sand players leveraging the continent’s abundant sand resources.
One such prominent silica sand player is VRX Silica Limited (ASX:VRX), which is in discussions to secure offtake agreements for its Arrowsmith and Muchea silica sand projects. With better grain quality and size, the Company’s Muchea silica sand project is tapping the ultra-clear market, which is dominated by the glass that is used in solar panels.
Australian solar panel installation
As per the Australian Renewable Energy Agency, solar photovoltaic (PV) generated about 10 per cent of the country’s electricity in 2020-21, with over 30 per cent of households having rooftop solar PV. Meanwhile, the country is supporting the global transition to net zero emissions by investing in its solar energy projects.
To meet 2050 greenhouse gas targets, the world needs over 400GW of solar installation per year. Interestingly, a record 140GW of solar capacity was added in 2020 worldwide. VRX Silica highlighted in its latest presentation that Australia’s 2.96 million solar PV installations had a combined capacity of 23.46GW, as of September 2021. Over the last 12 months, Australia has seen 4.12GW solar installations.
Moreover, Australia has the highest per capita solar capacity at 600W per capita, and the country’s installed solar capacity quadrupled between 2011 and 2016. There is an immense market opportunity in the Australian solar panel market as the top 10 producers of “cover glass” for solar panels are all Chinese companies currently.
Economic advantage of a world-class sand deposit at Muchea
The manufacturing of solar panels in Western Australia can cater to a huge and growing solar panel market in Australia. According to VRX Silica, Western Australia has the economic advantage of a top-notch sand deposit at Muchea with a gas pipeline in its vicinity.
The Company’s Muchea silica sand project holds the potential to supply raw material for premium ultra-clear cover glass production for solar panels. Thanks to Muchea’s high-grade sand, which makes it especially suitable for the ultra-clear glass used in solar panels.
Muchea is a large scale, world-class high-grade and low impurity silica sand project of VRX Silica, which has access to established infrastructure. The infrastructure includes water from Yaragadee deep aquifer, grid power, an underutilised railway connection to Kwinana (100km), and the location adjacent to Brand Highway.
The Company has already secured mining lease and miscellaneous licences for the Muchea project, which could help it in finalising sales contracts for high-quality silica sand products from the project. Notably, the demand from prospective customers for a long-term supply of silica sand from Muchea remains strong. The production of silica sand from the Muchea project is expected to follow Arrowsmith North, which could start production in CY2022 (subject to final environmental approvals).
As of 3:45 PM AEDT, VRX Silica shares were trading at A$0.165.