On March 5, 2015 Canada Border Services Agency released its preliminary ruling under Canada’s Special Import Measures Act concerning alleged dumping and subsidizing of certain photovoltaic modules and laminates originating in the Peoples Republic of China. The preliminary ruling concludes that these modules have been dumped and subsidized and all such modules imported from March 5, 2015 will be subject to the collection of provisional duties pending the final outcome of the investigation. The specific provisional duty rates on these imports is 281%.
On January 31, 2015, the US Department of Commerce made a final ruling that photovoltaic cells from the Peoples Republic of China and Taiwan have also been dumped and are subsidized. As a result, the US International Trade Commission has imposed countervailing duties. Those products or components within the scope of the ruling are now subject to duties of 91%.
The Company currently imports photovoltaic modules, some of which are subject to countervailing duties in the United States and some of which are subject to Canada’s provisional duties. This release is to discuss the impact of these measures on Carmanah Technologies Corporation’s (the “Company”) business.
Overall the impact of these measures on Carmanah’s business is expected to be very limited. A specific discussion of each of the Company’s Divisions and the rationale for this statement follows:
Power Division – The Company’s Solar EPC business operates only in Canada and has, up until now, purchased solar PV modules manufactured under Canadian content guidelines for the Ontario Feed-in Tariff Program. However, the Ontario program has relaxed future Canadian content requirements and the solar developers, for whom Carmanah completes projects, were anticipating the use of lower cost PV modules.
Canadian module manufacturers and non-Chinese foreign suppliers are active competitors in the market and the Company believes there will still be abundant competition which will prevent significant increases in module cost. As well, the Company will suffer no profit margin losses as, by contract, all component costs are passed along to solar developers.
The Company’s Mobile Power business imports flexible solar panels, solar power modules and solar power portable kits into both the United States and Canada. Historically the modules and kits have been obtained from Chinese suppliers, but there are abundant manufacturers of non-Chinese origin. The Company is actively evaluating modules from these suppliers and expects that it can alter its supply chain with little or no impact on cost.
However, this is not the case for flexible solar panels which are only available in reliable form from Chinese suppliers. In order to preserve reasonable profit margins on these products, the Company has increased its prices on the products that use flexible components by approximately 15%. While such increase will not impact the Company’s competitive standing, the increase may cause some reduction in sales which is impossible to quantify at this time. Given that flexible panel based products are only about 2.5% of overall sales, the Company expects no meaningful financial impact.
Illumination Division – The Company’s Illumination Division utilizes modules from a variety of countries of origin including the Peoples Republic of China.
