SQM presses on with lithium expansion as export prices slide

Lithium miner Sociedad Quimica y Minera de Chile SA has launched plans to raise $1.1 billion in new financing to increase its lithium carbonate production capacity in Chile to 180,000mt / year in 2023 from 70,000 mt / year currently, S&P Global Platts reports, as well as increasing its capacity in Australia. The growth in demand for lithium-ion batteries in vehicles, discussed in Panjiva's Nov. 17 research, is a major driver of the expansion, though there have been challenges with the global oversupply of lithium during the pandemic.

Panjiva's data shows that the total volume of Chilean lithium exports has proven robust in the wake of the pandemic and climbed by 31.0% year over year in October. Yet, the total value of exports dropped by 10.1% over the same period, implying a near one-third drop in average achieved prices per ton. The average price of $6,000 per ton in the past three months was the lowest since mid-2016.

SQM's total exports from Chile reached 58,700 tons in the 12 months to Oct. 31, Panjiva's data shows, following a 31.1% year over year increase in the three months to Oct. 31. That growth has been led by shipments to China which surged 76.9% higher and represented 42.2% of total shipments in the past 12 months.

That came at the expense of shipments to Japan which dropped by 68.0% while the U.S. represented just 3.0% of the total despite the rapid expansion of Tesla Inc.'s battery manufacturing operations there. The modest level of supplies may provide an impetus for the Biden administration to continue President Trump's push for increased critical minerals security by supporting Tesla's recently launched domestic supply chain concepts.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.