Chile’s Chemical and Mining Society (SQM), the world’s second largest producer of lithium, expects demand for key component in the batteries that power electric vehicles and cell phones to grow at “double-digit rates” this year.
Reporting quarterly earnings, the Chilean miner said that despite prices being affected by new supply entering the market, the commodity will remain strong thanks to rising demand.
SQM believes more supply for lithium carbonate and lithium hydroxide is needed and that demand for these products will continue to grow at “double-digit rates in the future”
The company believes lithium consumption could grow about 17% in 2019 to at least 315,000 tonnes, compared to the less than 260,000 tonnes it totalled last year.
SQM, however, saw earnings for the first three month of the year drop by nearly one-third due to the slump in lithium prices, but also higher royalties at its operations in Chile, considered to be the highest in the world.
Chief executive Ricardo Ramos said the company, which is expanding its lithium carbonate and lithium hydroxide capacity, sees operational flexibility as the key component of its strategy.
SQM last year struck a deal with the government to more than triple production by 2025 in exchange for paying sharply higher royalties and offering discounted lithium to domestic value-added producers of battery components.
The company expects to produce 60,000 tonnes of lithium this year, with sales volumes reaching between 45,000 and 50,000 tonnes.
By 2020, SQM predicts that sales volumes would jump 30% over 2019, reaching approximately 65,000 tonnes.
(Courtesy of Volkswagen | Source: USGS 2019.)
Once the company completes an ongoing $400 million-plant expansion, it expects to produce as much as 180,000 tonnes of lithium carbonate from its Salar de Atacama operations in Chile, overtaking US-based Albemarle as the world’s top lithium miner by 2022.
Chile, which holds about 52% of the world’s known lithium reserves, last year lost its top lithium producer crown to Australia.
The country, however, is working on reversing that situation. It predicts that lithium will soon become its second largest mining asset, behind copper. The commodity is currently the country’s fourth biggest export.
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