Lithium giant SQM’s net income down 56% in Q3 due to lower prices

Chilean lithium giant Sociedad Quimica y Minera de Chile (NYSE: SQM) yesterday reported net income of $1,809.5 million in 9M 2023 ($6.33 per share), a decrease of approximately 34.3% from US$2,755.3 million in 9M 2022 ($9.65 per share).

The company also reported net income for the third quarter of 2023 of $479.4 million ($1.68 per share), a decrease of approximately 56.4% compared to $1,099.9 million ($3.85 per share) for the third quarter of 2022.

SQM said its third quarter 2023 results were impacted by “significantly lower” average sales prices in lithium and fertilizer business lines, partially offset by higher sales volumes, when compared to the same period last year, and higher iodine sales prices.

The company noted that realized average sales price in its lithium business decreased almost 47% year-on-year, adding that sales volumes reached historical high level of over 43,300 metric tons of lithium and derivatives in the third quarter of 2023, almost 4% higher when compared to the same period last year.

“The excess of inventory accumulated across battery and lithium chemical supply chains, particularly in Asia, as well as additional lithium supply, have put pressure on lithium market prices and could continue to have a negative impact on lithium prices in the short-term,” the company said in a press release.

However, SQM pointed out it continues to see “strong fundamentals” behind long-term lithium demand growth, supported by strong EV sales volumes and decarbonization targets across the globe.

Importantly, according to SQM, as the company continues with its expansions in Chile, its lithium carbonate capacity has reached 200,000 metric ton per year, and SQM expects to complete the expansion to 210,000 metric tons in the beginning of 2024, earlier than anticipated.

SQM said that in Australia, the first production of spodumene concentrate at Mt. Holland is expected during this quarter, while in China, the company has commenced lithium hydroxide production from lithium sulfate.

SQM is a leading lithium producer. The company also has other divisions servicing nutrition and industrial chemicals. In the Atacama Desert, located between Chile’s first and second regions, SQM has exclusive access to the world’s best and largest reserves of caliche ore and brines. The company possesses the most extensive reserves of iodine and nitrate, as well as the highest concentrations of lithium and potassium on record.

In addition, in 2017 the company began diversifying geographically by acquiring new resources to extract lithium from spodumene in Western Australia.

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