Chilean miner SQM sees uncertain short-term demand for lithium

Brine pools and processing areas of SQM’s lithium mine on the Atacama salt flat, the world’s second biggest. (Image courtesy of Nutrien)

Chilean miner SQM said on Thursday it foresees strong long-term demand for lithium but offered a short-term prognosis clouded by the entry of new projects into the market and slowing growth of demand for the product this year.

The company’s new chief executive, Ricardo Ramos Rodriguez, said in an earnings call he expected sales volume in 2019 to rise slightly from 2018, along with modestly higher average market prices.

Beyond 2019, demand growth continues to look extremely healthy

He said SQM would increase its production of 50,000 metric tonnes (MT) of lithium to a below-market expectation of 60,000 MT for 2019, moving any surplus production into its strategic inventory, for release when market demand merits.

“Demand rose in 2018, surprised us again by surpassing 27 percent and is expected to grow at rates above 20 percent in 2019,” he said.

“Beyond 2019, demand growth continues to look extremely healthy, making us believe that the 1 million tonnes per year lithium market may happen sooner than originally anticipated.”

SQM, the world’s No. 2 producer of lithium, saw its B share price fall by 5.38 percent to 17,250 pesos after the earnings call at midday.

In a statement overnight the company said its revenue dipped by 1.6 percent in the fourth quarter to $565.2 million from $574.8 million in the fourth quarter of 2017. Its income dropped to $108.6 million in the fourth quarter from $110.5 million in the year-earlier period.

“As was expected, new supplies coming into the market make it more difficult for us to capture the price premium that we had in 2018,” said Ramos.

“It is very difficult to predict our sales volume for 2019 and 2020, it depends on supply and demand equilibrium. The timing of the start and the ramp-up of new projects is difficult to assess. We are very optimistic about the demand for lithium in the long-term.”

Ramos confirmed heavy rain in northern Chile earlier in February that caused suspension of operations would not affect its ability to fulfill sales contracts.

The results come amid concern about softening Chinese demand for lithium, the key ingredient in electric car batteries.

Earlier this month, U.S.-based lithium miner Livent that it believed sales to key market China could weaken 2019 because of macroeconomic uncertainty and concerns around electric car subsidies.

(By Aislinn Laing and Marion Giraldo; Editing by Steve Orlofsky)

5276 0

More Latin America News

Latest Stories

SaskatoonHomepage: Canpotex breaks ground on $55m potash railcar facility

Canpotex held a ground breaking ceremony at the railcar maintenance and staging facility located south of Potash Corp’s Lanigan mine on Friday. In business since 1972, Canpotex is the exclusive offshore marketing company for the three big provincial Saskatchewan potash players and maintains a fleet of 5,000 specialty railcars for its customers in about 30 countries around the world.

U.K. promises 50% cut in CO2 emissions by 2027

The U.K. has committed to halving its carbon emissions before 2027 following the publication of its ambitious fourth carbon budget. The rollout and development of renewable energy technologies, as well as the construction of new nuclear power plants, will play a key part in reducing the country's carbon emissions 50% when compared to 1990 levels. This will mean that net emissions for 2023-27 should not exceed 1.95 billion tonnes of carbon dioxide equivalent.

Analyst sees overseas profits for US coal firms

Forbes reported that demand for Appalachian coal should drive up profits for US producers. The market news is quoted as saying: India and Europe will likely to import more of the plentiful, dirtier-burning coal used by electric plants, Brean Murray Carret & Co. analyst Jeremy Sussman said in a research note Friday.

SIGN UP FOR OUR DAILY NEWSLETTER

Trading Room: Fortis to raise $236m for Kazakh potash mines

Trading Room reports that Melbourne-based Fortis Mining Ltd has agreed to raise $236m by selling new shares and notes to investors in Hong Kong and China to buy and develop two potash mines in Kazakhstan. ASX-listed Fortis, previously a gold and base metal explorer, acquired the rights to purchase the Chelkarskaya and Zhilyanskoe salt deposits in March. The deposits have an exploration target range of 6.5 – 6.6bn tonnes of potassium making them amongst the largest potash salt deposits in the world.

Uranium miner Mantra Tanzania sponsors mining training

IPP Media reports: Mantra Tanzania Limited has sponsored six students to complete a mine training course as part of an effort towards corporate social responsibility.
[Organizational capability manager Kevin] Flynn said the course curriculum was special for electricians, mechanics, fitters, water technicians and welders. “TCME acquired a licence from South Africa to use their curriculum at the college. This means that on completion, the students will be awarded certificates that can earn them jobs in mining companies in the country and in South Africa”, he said.

Hecla donation to UAF supports local vocational outreach and training for mining industry

Hecla Greens Creek Mining Co. has donated $300,000 to the University of Alaska Foundation (UAF) to fund a mining career development program at the University of Alaska Southeast, Juneau Empire reports.
It will aid students in preparing for mining industry jobs through education, job shadowing and training. “We’re giving the biggest amount of money we have in our history,” said Hecla President and Chief Executive Officer Philip Baker. Baker said there is a need for qualified employees in the industry and this outreach, combined with internships, will help provide a pathway for students coming out of high school and through college to go directly into the workforce.

ArcelorMittal launches CAN$2.1 billion dollar investment and the creation of 8000 jobs

The investment will allow ArcelorMittal Mines Canada to increase its annual production of iron ore concentrate from 14 million tons to 24 million tons by 2013. AMMC is also evaluating increasing its production of iron ore pellets from 9.2 million tons to 18.5 million tons. The scheme represents a total investment of CAN$2.1 billion dollars that will create 8,000 jobs during construction and more than 900 permanent jobs once completed. Commenting, Peter Kukielski, Member of the Group Management Board and Head of Mining for ArcelorMittal, said “ArcelorMittal Mines Canada is a flagship mining asset for the Group, which offers considerable opportunity for expansion. We have already announced our intention to grow our iron ore production to 100 million tons by 2015 and this expansion forms an important part of that.”

Minera Andes puts back Los Azules spin-out, cites ongoing litigation

Toronto stock exchange listed Minera Andes announced on Friday the proposed spin-out of its copper assets, including the 100%-owned Los Azules project, has been deferred. The gold, silver and copper exploration company cited weaker financial markets, financing uncertainties, and a delayed legal decision regarding its dispute with TNR Gold over claims on the Argentinean property, as contributing to the board’s decision.

SMH: New South Wales freezes coal and gas exploration licences

The Sydney Morning Herald reports on Friday that the state of New South Wales announced a 60-day freeze on new exploration licences for coal, coal seam gas and petroleum in a push to resolve the escalating conflict between farmers, miners and conservationists over land use. The need for a moratorium was questioned by the state's mining industry, which said billions of dollars in investment were at stake, but it said it broadly supported the development of a new approach to avoid conflict over valuable land.