SQM reports earnings up 54% in strong 2017 performance

By Martim Facada
Published: Thursday, 29 March 2018

SQM is ready to meet the challenge of satisfying global battery demand, its chief executive says, with prices of lithium and iodine both rising.

Chilean iodine and lithium producer SQM increased its earnings by 53.6% year-on-year in 2017.

Higher lithium prices were at the core of SQM’s strong overall performance, coupled with consistently strong demand growth, chief executive officer Patricio de Solminihac said during a conference call on the company’s results earlier this month.

"We achieved the same sales volumes in our lithium and derivatives business line in 2017 as in the previous year, but prices increased by 25%, with an average price of more than $13,500 per tonne in the fourth quarter [of 2017]," de Solminihac said.

Average prices for lithium carbonate battery grade (min 99.5%) rose on February 28 to $18.50 per kg on a cif Asia basis, and to $17.50 per kg on a cif United States/Europe basis, compared with $7 per kg in March 2016, according to Industrial Minerals’ market assessments.

The spot price of China-origin lithium carbonate (Li2CO3), ex-works China, battery grade (min 99.5%), remained at 150,000 yuan ($23,669) per tonne, according to Industrial Minerals’ assessment on March 1.

An agreement reached with Chilean economic development agency Corfo will allow the company to increase production without pumping more brine from the salars where it operates.

"SQM will expand production capacity to 70,000 tonnes [per year] of lithium carbonate in Chile this year, aiming to expand again… to 100,000 tpy by 2019 by improving the extraction rates of lithium from the salars," de Solminihac said during the conference call.

SQM produced close to 49,700 tonnes of lithium and derivatives in 2017.

De Solminihac said during the call that SQM would expand production at the Salar de Atacama according to market conditions, adding that the company is ready to service the demand generated by the rapid growth of the battery sector.

Iodine business

SQM’s iodine business has benefited greatly from the favorable market conditions and higher sales that have increased its global market share to 35%.

Throughout 2017, the company sold 12,700 tonnes of iodine and derivatives, 24.4% more than in 2016. It also started iodine capacity expansion in Nueva Victoria in central Chile at the end of 2017, in order to reach an effective iodine production capacity of 11,000 tpy.

The completion of the Nueva Victoria expansion will give SQM a total effective iodine production capacity of 14,000 tpy by the second half of 2018.

SQM said that average iodine prices were close to $20 per kg in 2017, down by 12.3% from 2016 but rebounding.