- Write by:
-
Thursday, February 29, 2024 - 22:23:33
-
74 Visit
-
Print
SQM, the world’s No. 2 lithium producer, is plowing ahead with expansions in an oversupplied market, building stockpiles of the battery metal to be ready when purchasing rebounds.
The strategy is a doubled-edged sword for the market — by continuing to increase output when buyers are still running down inventories, SQM may help prolong the glut. But it’s also a bet on buyers returning as underlying electric-vehicle demand continues to grow in the shift away from fossil fuels.
SQM’s US depository receipts surged as much as 12%, its biggest intraday jump since March 2022.
Reporting an 82% drop in quarterly profit, the Santiago-based firm said the excess inventory that drove down lithium prices is expected to continue this year, keeping prices under pressure and resulting in an increase in its own sales of just 5% to 10% even as global demand rises at least 20%.
But as some suppliers rein in spending and output, low-cost SQM continues to run at full tilt. An expansion in Chile has pushed up its lithium carbonate capacity to 210,000 metric tons, with annual company-wide production set to come in at 220,000 tons to 230,000 tons. That would result in stockpiling of less than 50,000 tons, executives said on a call with analysts Thursday.
SQM, which is closely watched because it’s more exposed to spot prices than peers, sees stable prices in the short term and as is more positive after that, they said. There’s upside risk to prices from delays in new projects, chief executive officer Ricardo Ramos said, without naming them.
Over the next decade, lithium demand probably will grow fourfold, with the supply response contingent on higher prices, Gonzalo Gil, SQM’s head of lithium market intelligence, said on the call. He was responding to questions from CEO Ramos in a bid to dispel concerns about the pace of EV growth.
Codelco deal
SQM continues to work on a definitive deal with Codelco over a new operating arrangement under Chile’s new public-private participation model. The two firms reached a framework accord late last year, with SQM set to hand over a majority stake in its Chilean brine assets to state-owned Codelco in exchange for extending operations for three more decades.
“Together with the communities, we are working on the definitive documentation in the upcoming months and will inform the market once this process is concluded,” Ramos said.
Short Link:
https://www.miningnews.ir/En/News/628075
Jiang Weiping, the founder of major Chinese lithium producer Tianqi Lithium Corp., resigned as chairman after the ...
China’s Tianqi Lithium said on Thursday it has formally requested that a proposed joint venture between lithium company ...
India is in talks with several countries seeking partnerships for technical help on lithium processing, said four ...
Chile’s state copper company Codelco defended its proposed lithium production tie-up with SQM in response to criticism ...
Nigeria has revoked 924 dormant mining titles immediately and invites investors to freely apply for the affected ...
Chile’s state-run miner Codelco plans to select a partner for a future lithium project in one of the country’s top salt ...
Chile’s SQM called another investors meeting at the request of its second-largest shareholder, Tianqi Lithium Corp., ...
Lithium supplier Vulcan Energy on Wednesday announced the start of production of the first lithium chloride at its ...
A stuttering recovery in lithium prices is providing a fresh reminder of why the dramatic rally of recent years was ...
No comments have been posted yet ...