Chilean Lithium Giant SQM Reports Earnings Drop, Remains Bullish on Market Recovery
Sociedad Química y Minera de Chile S.A. (SQM), the world’s largest lithium producer by market value, has reported a substantial decline in second-quarter earnings while simultaneously signaling optimism about improving market conditions and expanding its production capacity.
The Santiago-based mining company saw its core earnings attributable to shareholders drop by 28% year-on-year to $307.9 million for t
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Chilean Lithium Giant SQM Reports Earnings Drop, Remains Bullish on Market Recovery
Sociedad Química y Minera de Chile S.A. (SQM), the world’s largest lithium producer by market value, has reported a substantial decline in second-quarter earnings while simultaneously signaling optimism about improving market conditions and expanding its production capacity.
The Santiago-based mining company saw its core earnings attributable to shareholders drop by 28% year-on-year to $307.9 million for the quarter ending June 30. Total revenues also fell by 19% to approximately $1 billion, reflecting both lower sales volumes and persistently weak lithium prices that have plagued the industry for over a year.
Despite these challenging results, SQM’s leadership expressed confidence in the market’s trajectory. Felipe Smith, Senior Commercial Vice President of Lithium, told analysts on Wednesday: “We expect that with the recent price recovery in China, our sales price in Q3 should be higher than in Q2.”
The company has raised its full-year sales volume guidance, pointing to improving demand conditions and recent price movements in the lithium market. SQM now projects a 10% increase in sales volumes from its Chilean operations in 2025 and has boosted expectations for its international division, anticipating sales of approximately 20,000 tons of lithium carbonate equivalent.
CEO Ricardo Ramos acknowledged some operational challenges in the statement, noting: “Some of the contracts we had in place hit the lower limits set in those contracts, affecting the volumes agreed.”
The global lithium market has been under significant pressure for more than a year, with prices remaining over 80% below their peak levels due to a supply glut and slower-than-expected growth in demand. However, recent developments in China have provided a glimmer of hope for producers.
Production cutbacks in China, including the temporary closure of a major lithium mine operated by battery manufacturer Contemporary Amperex Technology Co. Ltd. (CATL), have triggered a partial rebound in prices. The Chinese mine is expected to remain offline for at least three months, contributing to a price rally that has benefited global lithium producers.
In contrast to some industry competitors who have scaled back operations in response to market weakness, SQM is maintaining its aggressive expansion strategy. The company has reaffirmed its capital expenditure budget of $750 million for 2025, focusing on increasing its annual lithium carbonate capacity in Chile to 240,000 tons by 2026 and lithium hydroxide capacity to 100,000 tons by the end of 2025.
SQM also announced a significant milestone for its international operations, with its Kwinana refinery joint venture in Australia achieving first commercial production in July. The facility is expected to reach a nameplate capacity of 50,000 tons of lithium hydroxide annually by the end of 2026, with half of that output allocated to SQM.
The company’s approach suggests strong confidence in the medium-term fundamentals of the lithium market, particularly expectations for accelerating demand tied to the global energy transition and electrification efforts. While many higher-cost producers have opted to curtail output, delay projects, or adjust business models, SQM appears to be positioning itself to capitalize on an anticipated market recovery.
The lithium industry’s volatility continues to present challenges for producers worldwide, with oversupply concerns competing against long-term optimism about demand growth from electric vehicle manufacturers and energy storage applications. SQM’s decision to maintain its expansion trajectory amid market weakness reflects a strategic bet on the sector’s importance to global decarbonization efforts.
Analysts will be watching closely to see if the recent price uptick in China represents a temporary correction or the beginning of a more sustainable recovery for the lithium market, which remains central to global ambitions for renewable energy adoption and transportation electrification.
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30 Comments
The cost guidance is better than expected. If they deliver, the stock could rerate.
Good point. Watching costs and grades like a hawk this year.
Management hinted at expansion capex; cash flow coverage will matter if prices soften.
Production mix shifting toward Markets might help margins if metals stay firm.
Good point. Watching costs and grades like a hawk this year.
Good point. Watching costs and grades like a hawk this year.
Silver leverage is strong here; beta cuts both ways though.
Uranium names keep pushing higher—supply still tight into 2026.
Good point. Watching costs and grades like a hawk this year.
I like the balance sheet here—less leverage than peers.
Good point. Watching costs and grades like a hawk this year.
Nice to see insider buying—usually a good signal in this space.
Good point. Watching costs and grades like a hawk this year.
Good point. Watching costs and grades like a hawk this year.
I like the balance sheet here—less leverage than peers.
Good point. Watching costs and grades like a hawk this year.
Good point. Watching costs and grades like a hawk this year.
Uranium names keep pushing higher—supply still tight into 2026.
Good point. Watching costs and grades like a hawk this year.
I like the balance sheet here—less leverage than peers.
Good point. Watching costs and grades like a hawk this year.
Good point. Watching costs and grades like a hawk this year.
Silver leverage is strong here; beta cuts both ways though.
Good point. Watching costs and grades like a hawk this year.
Nice to see insider buying—usually a good signal in this space.
Good point. Watching costs and grades like a hawk this year.
Uranium names keep pushing higher—supply still tight into 2026.
Good point. Watching costs and grades like a hawk this year.
Good point. Watching costs and grades like a hawk this year.
I like the balance sheet here—less leverage than peers.