Sociedad Química y Minera's Q1 2025: Unpacking Contradictions in Codelco JV, Lithium Prices, and Production Strategies

Codelco JV and timeline, lithium price outlook, Mt. Holland production and cash costs, lithium production and sales volume strategy, capacity expansion and production planning are the key contradictions discussed in Sociedad Química y Minera de Chile S.A.'s latest 2025Q1 earnings call.



Lithium Sales Volumes and Pricing:
- Sociedad Química y Minera de Chile S.A. (SQM) achieved the highest first quarter lithium sales volumes in its history, with a 20% year-on-year increase.
- Lithium prices were relatively stable during Q1 but have declined in recent weeks, impacting average realized prices for Q2 2025.
- The growth in sales volumes was driven by strong demand from the electric vehicles market in China and Europe, as well as growing adoption of energy storage systems worldwide.

Capacity Expansion and Production Growth:
- SQM is expanding its lithium production capacity in Chile, targeting 240,000 metric tons of lithium carbonate and 100,000 metric tons of lithium hydroxide.
- This expansion aims to capitalize on sustained demand and maintain SQM's competitive position in the global lithium market.
- The expansion is part of a long-term strategy to increase capacity and innovation, despite a complex pricing environment.

Iodine and Plant Nutrition Division Performance:
- SQM's Iodine division reported strong performance with record average prices amidst tight supply and steady demand.
- The growth was primarily driven by the X-ray contrast media application, with operational efficiencies implemented to optimize output.
- The company is investing in operational efficiencies and advancing its seawater pipeline construction to expand production capacity.

Potassium and Specialty Plant Nutrition:
- Volumes in the potassium business were significantly lower compared to the previous year, reflecting a strategy to reduce production in favor of high lithium content brands.
- Sales volumes in the Specialty Plant Nutrition division grew at a healthy pace, with an upward trend in prices, particularly for potassium chloride.
- Market dynamics remained favorable across Latin America, the U.S., and Europe, with demand for potassium chloride and supply disruptions driving growth.