SQM Cuts Capex As Lower Lithium Prices Weigh-In On Miners

Sociedad Química y Minera de Chile (SQM), the world's second-largest lithium producer, has announced a reduction in its capital expenditure (capex) plans for 2024, as lower lithium prices continue to impact the mining sector. The company, which is a significant player in the global lithium market, has been grappling with the effects of declining lithium prices, which have led to a sharp decline in its quarterly profits.



In the second quarter of 2024, SQM reported a 63.2% decline in quarterly profit, with net profit coming in at $213.6 million, or 75 cents per share, falling short of analysts' predictions of $296.7 million, or 95 cents per share (LSEG data). This decline was primarily due to lower average realized lithium prices, as noted by SQM's CEO, Ricardo Ramos: "The strong sales volumes growth in the lithium business in the second quarter was offset by significantly lower average realized lithium prices, as a result of lower market prices when compared to the same period last year" (Reuters, 2025).

To mitigate the effects of the declining lithium prices, SQM has implemented several strategies, including expanding its operations beyond Chile, investing in hard rock lithium mining, and acquiring strategic assets. However, these efforts have not been enough to offset the impact of lower lithium prices on the company's financial performance.

In response to the challenging market conditions, SQM has announced a reduction in its capex plans for 2024. The company had initially planned to invest around $1.6 billion in capital expenditure, but it has now revised this figure downwards. The reduction in capex is a strategic move by SQM to conserve cash and reduce its exposure to the volatile lithium market.

While the reduction in capex may help SQM to weather the current storm in the lithium market, it is important to note that the company's long-term growth prospects remain intact. SQM's expansion into hard rock lithium mining and international investments, such as its partnership with Azure Minerals, position the company for future growth by diversifying its lithium production sources and increasing its overall production capacity.

In conclusion, SQM's decision to cut its capex plans for 2024 is a strategic move to mitigate the impact of lower lithium prices on its financial performance. While the reduction in capex may have short-term implications for the company's growth prospects, SQM's long-term growth potential remains strong, thanks to its expansion into hard rock lithium mining and international investments. As the global demand for lithium continues to grow, driven by the increasing adoption of electric vehicles and energy storage systems, SQM is well-positioned to capitalize on these growth opportunities.