Chile’s SQM (Sociedad Química y Minera de Chile), the world’s second-largest lithium producer, experienced a significant 63.2% drop in its quarterly profit, reporting $213.6 million, or 75 cents per share, for the second quarter. This figure fell short of analysts’ expectations, which had anticipated a profit of $296.7 million, or 95 cents per share.
The company’s revenue for the quarter was $1.3 billion, aligning with analyst forecasts. SQM benefits from low-cost lithium production at the Atacama salt flat, which boasts the highest lithium concentration in brine globally. However, despite achieving record-high sales volumes of lithium, the company’s results were adversely impacted by a substantial decline in lithium prices.
CEO Ricardo Ramos indicated that the trend of falling prices is expected to persist, with current lithium price indices in China nearly 20% lower than the average for the second quarter of 2024. A report by Benchmark Mineral Intelligence highlighted a staggering 70% drop in lithium prices over the past year, largely due to weaker-than-expected global demand for electric vehicles, influenced by high borrowing costs and overall economic uncertainty.
Ramos noted that some lithium producers may need to reduce output as the low prices render projects economically unviable. Despite these challenges, SQM plans to continue its expansion efforts but will reassess specific markets and initiatives that may be deemed “less attractive” in the current environment.
In a related note, U.S. competitor Albemarle also reported a second-quarter loss and announced plans to cut costs in response to the prevailing market conditions.