Chile’s SQM, the world’s second-largest lithium producer, on Thursday posted fourth-quarter net profit more than triple that of a year earlier, just beating estimates on surging demand and tight supplies for the white metal.
A scramble for lithium — which SQM extracts from brine from South America’s sprawling salt flats — has sent prices soaring in recent years as car makers look to produce more electric vehicles (EVs) to comply with more stringent climate rules.
SQM posted a quarterly net profit of $1.15 billion for the three months to Dec. 31, 2022, edging ahead of an average estimate of $1.14 billion by analysts polled by Refinitiv.
Revenue for the quarter also nearly tripled to $3.13 billion, beating an average estimate of $2.99 billion, lifting core earnings to $1.67 billion.
Chief Executive Ricardo Ramos said he was “well pleased with the extraordinary results.”
Profits were fueled by record sales volumes for lithium and its derivatives, which SQM mostly ships to Asia, the company said. Some sales anticipated this year were brought forward ahead of an expected end to Chinese EV subsidies, it said.
SQM posted fourth-quarter lithium volumes up 38% year-on-year to 43,000 tonnes, selling at a record average of $59,000 a tonne. A year earlier, lithium sold for just $14,600 a tonne.
In a separate statement, SQM said it planned to invest around $3.4 billion from 2023 to 2025, focusing on expanding its Chilean lithium capacities. The roadmap includes a $1.2 billion investment earmarked for this year.
SQM sells iodine as well and it said prices for the chemical used in X-rays also hit a record in the fourth quarter, predicting higher sales volumes and prices this year as it works to expand its capacity.