China and Chile

SQM plans to start producing lithium hydroxide in China in 2Q23

Bnamericas Published: Friday, November 18, 2022
SQM plans to start producing lithium hydroxide in China in 2Q23

Chile’s SQM looks to start producing up to 30,000t/y of lithium hydroxide at its recently acquired plant in China next year.

The company bought the Sichuan refinery plant in southwest China in September for US$140mn with the aim of producing lithium hydroxide from lithium sulfate sourced in Chile. 

“We hope to start producing in 2Q23,” said Carlos Díaz, SQM's business VP, told a conference call on Thursday.

The company's largest buyer of lithium is China for its electric vehicle (EV) market, which is expected to double this year compared to 2021, said SQM’s CEO Ricardo Ramos in a statement on Wednesday. 

And the global EV market is projected to grow 17.7% a year in 2022-27 to US$869bn, according to German market and consumer data firm Statista.

Due to the strong demand and low lithium supply, the metal prices have reached record levels, averaging US$56,000/t last quarter, the company said.

SQM believes that its sales should exceed 150,000t this year and that the balance between supply and demand will be adjusted during the rest of 2022. In addition, it estimates that high lithium prices will continue into 2023.

The company reported an increase of almost 90% year-on-year in earnings for January-September to US$2.76bn. The miner expects the positive results will continue since global lithium demand in 2022 will grow over 40%, it said in the release.

In addition, the company plans to expand its lithium carbonate capacity in Chile to 210,000t/y and lithium hydroxide capacity to 100,000t/y with an investment of US$360mn.

“We have the necessary permits and look forward to completing this project by 2025,” said Ramos in the conference call. “Both projects will allow us to have the flexibility to respond to the future market needs while keep on adding value to the Salar de Atacama operation,” he added. 

To increase production, SQM has launched its Salar Futuro project involving US$1.5bn, which “aims to adjust the water balance in the brines of the salt flat and also to achieve an extremely low carbon footprint. In the end, what we’re looking for is to deepen the sustainable productive activity in the Atacama salt flats,” Díaz said during the call.

SQM is working on the definition of technologies and engineering design for processing and developing. “It’s a very complex project that requires a high level of knowledge and experience. We firmly believe that we have this important experience after 25 years in the Salar de Atacama to successfully face the project,” Ramos told the call.

The company expects to submit the final project to environmental evaluation authorities during 2H24.

Despite the fact that the operating contract it has with development agency Corfo will expire in 2030, SQM’s plans go far beyond that year.

“So, working in agreement with Corfo is necessary prior to its presentation [of Salar Futuro] to the environmental authorities for evaluation. We all agree that the development of the Salar Futuro project has been carried out in a way that is positive in the region and for Chile and it has to be positive for the communities near the salar,” said the CEO.

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