SQM expects lithium industry to grow by 17 per cent in 2019

Chilean lithium major Sociedad Química y Minera de Chile (SQM) has reported decreased sales in its March quarter but remains positive about the future of the lithium industry.

Despite earnings dropping from $US113.8 million ($164.9 million) in the first quarter of 2018 to $US80.5 million in the same period this year, SQM chief executive officer Ricardo Ramos expects increased demand in lithium to drive improved results this year.

“We believe the lithium demand could grow approximately 17 per cent in 2019 when compared to 2018, reaching at least 315,000 metric tonnes,” he said.

“The evolving electrical vehicle (EV) battery technology in the lithium market will require us to be flexible, and we believe this operational flexibility is essential, and is the key component of our strategy.”

SQM’s decreased earnings follows the lithium market being put under price pressure this year as new supply entered into the market, leading to average prices falling eight per cent in comparison to the fourth quarter last year.

The company’s lower margins in the lithium business line were impacted by lower average prices and increased costs relating to its new lease payment structure with production development company Corfo.

In line with its expectations, iodine and potassium chloride prices surged compared with the same period last year, while sales volumes grew in the iodine, speciality plant nutrition and lithium business lines.

“Lithium carbonate and lithium hydroxide demand is expected to continue to grow at double-digit rates in the future; accordingly, significant more supply of both product will be needed,” Ramos said.

SQM is continuing to expand in the lithium industry, particularly in lithium carbonate, which it aims to annual produce 120,000 metric tonnes of by 2021.

Ramos also commented on the proposed partnership it will form with Wesfarmers, which recently announced its intention to acquire Kidman Resources.

Kidman is SQM’s partner in the Mt Holland lithium project in Western Australia, with Ramos expressing his excitement to potentially work alongside Wesfarmers.

“We believe their experience and capabilities related to chemical processing, and their significant local infrastructure in Australia will be an important asset in the development of the project,” Ramos said.

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