SQM, the World’s Largest Lithium Producer by Market Value, Raises Sales Projection for 2023
SQM, the world’s largest lithium producer by market value, has increased its sales projection for this year and expressed optimism about prices following a 28% decline in its second-quarter earnings. The company, based in Santiago, Chile, reported attributable net income before special items of $307.9 million in the last quarter, according to a company statement.
SQM’s Financial Performance and Future Plans
Despite the drop in profits, SQM is advancing with its expansion plan. The company anticipates a 10% increase in sales volumes from its local plants this year and has also raised its sales projection for its operations in Australia. The global lithium price has plummeted due to a significant oversupply, but recent production cuts in China have sparked a price rebound. Nevertheless, prices remain 80% below their peak.
SQM maintained its global demand growth forecast at around 17% for this year. The company stated, “Recent market dynamics suggest that third-quarter prices could be higher than in the second quarter,” according to the accompanying slides of their earnings report.
Market Impact and Stock Performance
SQM’s stock price recently reached its highest level in over a year, aligning with other lithium producers. This surge followed the temporary shutdown of a major Chinese mine, operated by Contemporary Amperex Technology. SQM raised its international division sales projection to 20,000 tonnes of lithium carbonate equivalent. However, the company did not provide specific volume figures to detail the 10% increase in its Chilean division.
SQM’s Kwinana refinery, a joint venture in Australia, achieved its first commercial production in July.
Key Questions and Answers
- What is SQM and its significance? SQM, or Sociedad Química y Minera de Chile SA, is the world’s largest lithium producer by market value. Lithium is crucial for battery production, making SQM a key player in the global energy storage market.
- Why did SQM adjust its sales forecast upwards? Despite a 28% decline in second-quarter earnings, SQM remains optimistic about lithium prices due to recent production cuts in China and a projected 17% global demand growth.
- How did SQM’s stock performance react to the news? Following the temporary shutdown of a major Chinese lithium mine, SQM’s stock price reached its highest level in over a year, reflecting optimism about the company’s future prospects.
- What are SQM’s expansion plans? SQM anticipates a 10% increase in sales volumes from its local Chilean plants and has raised its sales projection for its Australian operations. The company’s Kwinana refinery achieved first commercial production in July.
