SQM is expanding its lithium refinery in Chile’s Atacama Desert with a $490 million project to meet the rising demand for electric vehicle batteries.
Despite industry cutbacks due to oversupply and price falls, SQM continues to move forward, opting to increase its stock rather than reduce output.
The expansion could make this refinery the world’s largest, targeting a capacity of 300,000 metric tons annually.
This growth meets market demand and seeks to lessen China’s dominance in the battery supply chain by focusing on high-quality lithium hydroxide production.
SQM’s plan for a 300,000-ton capacity hinges on a deal with Codelco, in which Codelco will trade a stake in its brine assets for an operational extension.
This proposal awaits approval from major stakeholders like Julio Ponce and Tianqi Lithium Corp.
SQM consistently operates at maximum capacity to use its state-assigned quotas and maintain market share.
This strategy aims to avoid supply shortages and bolster buyer confidence.
Optimistic about the market’s future, SQM is producing more lithium than it sells, readying for a demand surge post-2025.
A month ago, another major player, Albemarle Corporation, signaled a critical shift in the lithium market, emphasizing that the current low prices are unsustainable.
As the leading global lithium supplier, the company predicts a necessary price increase to stimulate investments.
This adjustment is essential to meet the burgeoning demand, particularly from the electric vehicle (EV) battery sector.
The industry has seen a dramatic reduction in prices due to new mining initiatives, leading to an oversupplied market. Prices have dropped more than 80% from late 2022 highs.
Background – SQM’s Bold Lithium Expansion in Chile
Based in Chile, SQM is a frontrunner in the global lithium market, essential for electric vehicles and renewable energy storage.
Owned by multiple stakeholders, including significant shares held by Chinese chemical company Tianqi Lithium and Chilean entities, SQM’s strategic partnerships bolster its position as a key player in the energy transition.