Chilean lithium and iodine producer Sociedad Quimica y Minera
de Chile (SQM) increased its revenue from lithium and
derivatives by 7.7% to $500.9 million in the nine months
ended in September 2018, compared with $465.2 million in the
corresponding months of the year before.
Strong demand fundamentals arising from the growth of the
battery industry by 25% year on year in 2018, and higher
average achieved lithium prices of $16,500 per tonne, were said
by SQM to be the principal factors behind the increase in
SQM achieved an average price for lithium of $16,400 per
tonne in the first quarter of 2018, it said in an earnings
statement on Wednesday November 21.
Fastmarkets assessed the price of lithium carbonate, min
99-99.5% Li2CO3, large contracts, packed in bags, cif Asia, at
$14-18 per kg on October 31. This compared with $17-20 per kg
on December 27 last year.
Despite remaining at historical high levels, much higher
than the $5-6 per kg price range from 2015, contract prices
have decreased month on month since June 2018 due to the lower
spot prices in China.
Chinese domestic spot prices for battery-grade lithium
carbonate dropped by 55.14% to 74,000-83,000 yuan
($10,684-11,983) per tonne on November 22, from 180,000-170,000
yuan per tonne on November 3 last year, according to
Increased availability of lithium compounds in China and
slow demand have pushed prices down in the East Asian country
over the course of the past 11 months.
SQM sold 9,300 tonnes of lithium compounds in July-September
2018, 16% less than the total volume sold in April-June.
The lower sales played a part in delaying the first stage of
SQM’s production ramp-up, alongside logistical
challenges, the company said.
SQM expected to sell close to 45,000 tonnes of lithium
compounds throughout 2018, it said in the earnings report. This
was almost 5,000 tonnes less than the previous target of more
than 50,000 tonnes.
SQM also expected strong lithium prices due to demand from
the battery industry as well as delays that prevented other
lithium projects delivering material on schedule.
"During 2017, we announced an important lithium expansion
near Antofagasta [in Chile], which would allow us to increase
our capacity by almost 50%," Patricio de Solminihac,
SQM’s chief executive officer, said during an
earnings call on November 23.
"This project, which entailed a complete overhaul of our
existing plant, had a short timeline and very low capex. The
commissioning of the fully upgraded plant, as previously
announced, has been more challenging than expected, affecting
our ability to produce high-quality lithium during the third
quarter, and also our sales volumes. We are working diligently
to resolve these issues as soon as possible," he added.
"The ramp-up delay will probably affect our fourth-quarter
lithium and derivative sales volumes, delaying part of these
volumes into the first quarter of 2019," de Solminihac
SQM intends to expand production to 180,000 tonnes per year
by 2021 from 48,000 tpy in 2017, however, the delay in the
production increase is expected to affect volumes sold and
the speed at which the company will be able to reach this
The lithium and derivatives division of SQM accounted for
almost 54% of consolidated gross profit for the nine months
ended September 30, 2018.
SQM’s total revenues across all businesses
increased by 7.5% to $1.7 billion for the first three
quarters of 2018, up from $1.58 billion in the same period in