SQM readies another expansion in Chile lithium capacity

SQM is expecting to announce another expansion of its lithium operations in northern Chile as it rushes to keep up with booming demand for the mineral, CEO Ricardo Ramos told analysts May 19.

"Just wait a little bit and we will inform you if we have opportunities to move forward ... I am sure given the quality of the people in the Salar, we will have good news in the future," the executive said in a conference call.

SQM is currently ramping up production to 180,000 mt/year of lithium carbonate and 30,000 mt/year of lithium hydroxide from mid-2022, a threefold increase in output from 2018.

With the global lithium market expected to grow by 30% this year, following last year's 50% jump and set to reach 1 million mt annually by 2025, producers are struggling to keep up with demand.

Earlier this year, the company announced a new expansion to 210,000 mt/year of lithium carbonate and 40,000 mt/year of lithium hydroxide from next year.

"I don't want to announce a new increase in capacity every single quarter ... At least give me a couple of quarters before announcing a new increase," said Ramos.

Benefiting from a huge jump in lithium prices and rising production volumes, the company posted a tenfold increase in its first quarter profits to almost $800 million, prompting a slew of questions from analysts on how it plans to spend the cash.

Ramos said the company is pushing to double the capacity of its Mt Holland lithium hydroxide project, currently under construction in Western Australia, to 100,000 mt/year. It is due to reach a decision with its partner in the project, Australian conglomerate Wesfarmers, later this year.

The company is also probing possible joint ventures with South Korea's LG to recycle lithium or produce battery components in Chile or abroad, with preliminary results expected next month.

It could also consider acquisitions if it came across a project which made the right fit, Ramos said.

"We are always looking for M&A activity if it can generate value for the shareholders," the executive said.