In the first quarter of 2024, Lanzhou Silicon undertook robust initiatives to enhance quality and efficiency, with a primary focus on operational excellence. As a result of these endeavors, we are delighted to report a significant decrease of over RMB 2,000 per ton in the cost of metallic silicon compared to that of the previous year. Furthermore, our production of metallic silicon saw a remarkable year-on-year increase of 746 tons, representing a growth of approximately 6%. Notably, our output in March reached its highest level in the past six years, culminating in three consecutive months of operating profits. This achievement marks the successful fulfillment of our initial objectives set at the onset of the year.

All employees participated in the discussion on the topic “What Can I Do for Making Profits”

In the initial phase of 2024, Lanzhou Silicon embarked on a strategic initiative to reduce the production cost of silicon metal by RMB 2,000 per ton. This objective was aligned with Elkem’s operational benchmarks and tailored to the specific circumstances of silicon material production. The cost reduction mandate was systematically disseminated across various workshops and departments, translating into targeted actions within their respective functional scopes. These actions encompassed a spectrum of measures, from curtailing raw material procurement expenses and minimizing material wastage to optimizing energy consumption and reducing maintenance outlays.

To amplify these cost-saving and efficiency-improving measures, the EBS Center and Production Department spearheaded a collaborative effort, engaging staff at all levels in ideation sessions to refine cost-cutting and efficiency-enhancing initiatives. This was achieved by implementing profit improvement projects and eradicating inefficiencies across eight identified areas, as well as process enhancement, equipment uptime assurance, and elevation of production standards. The concerted efforts bore fruit, with 11 profit improvement projects and over 20 waste reduction initiatives being actively promoted. As of the end of March, the ongoing profit enhancement endeavors had culminated in an accumulative EBITDA of RMB 12 million, while activities aimed at waste elimination contributed an additional RMB 270,000 to the bottom line.

Meanwhile, Lanzhou Silicon galvanized a campaign “What Can I Do for Making Profit”, engaging the entire workforce in a substantive exchange on pivotal topics, challenges, innovative practices, and operational hurdles. This campaign crystallized into a detailed action plan comprising 392 specific improvement measures meticulously assigned to individual roles and responsibilities. The scope of these measures ranged from conserving office supplies such as A4 paper to optimizing kilowatt-hour usage during maintenance operations.

Employees embraced their roles as vanguards and exemplars of this initiative. They took the initiative to volunteer their time for the meticulous selection of raw materials, such as silica and wood chips at a proper coarse-grained level, ensuring the caliber of inputs for the furnaces and bolstering continuous, stable production processes. This incremental endeavor has progressively driven down the production costs per furnace, simultaneously cultivating a culture of cost-consciousness, frugality, and a sense of ownership among the staff at all levels.

Achieved operational excellence through multiple channels, allround improveme

To further improve the production operation status of each furnace, our production team has diligently worked to standardize and systematize the silicon metal smelting process. This has been achieved through team optimization, enhanced equipment operation rates, stable raw material input, and refined process operations. Consequently, we have witnessed a consistent rise in the metal silicon recovery rate, ensuring the operational efficiency of the electric furnaces.

The establishment of a technical department has bolstered our production R&D and process improvements, providing vital technical support. The professional smelting team has adeptly addressed longstanding operational challenges, while the production and maintenance teams have been instrumental in identifying and rectifying critical equipment issues that impact the thermal shutdown of electric furnaces. Notably, in February, the replacement of the problematic flue gas recovery system marked a significant milestone in enhancing load reduction production and preventing shutdowns in the second workshop. Moreover, we established a 30-day raw material preparation plan and a joint quality control team. This team ensures that the moisture content, granularity, and other quality indicators of raw materials meet our stringent standards.

Embracing a tailored approach, “one furnace, one strategy,” they have adapted the methods to suit individual furnace conditions, optimizing carbon distribution coefficients and electrical parameters to further increase silicon metal recovery rates across all furnace stations. This, coupled with ongoing standardized operations and upskilling training, has effectively mitigated operational issues such as furnace tampering, side leakage, and flame spraying, leading to increasingly stable electric furnace operations.

Lanzhou Silicon has also made strides in enhancing the mixing capacity of metallic silicon. Through the collaborative efforts of our procurement, quality control, finishing, and sales teams, they have successfully met our monthly supply objectives. In the first quarter alone, they dispatched a total of 16,780 tons of silicone to Elkem Xinghuo Silicones, thereby securing the raw material supply ahead of the “Phoenix Project” completion and stabilizing the organic silicon industry chain.

These accomplishments in the first quarter mark a promising start of Lanzhou Silicon’s journey in 2024. With a focus on quality and efficiency, surmounting challenges, and aiming for loftier business objectives, Lanzhou Silicon is poised for even greater successes in the year ahead.?