Lithium recovery has legs as demand outlook improves, SQM says

Top lithium producer SQM expects prices for the battery metal to extend gains as demand strengthens and the industry emerges from a global glut.

After posting record sales volume and better-than-expected revenue, SQM said global lithium demand probably will grow about 25% this year, a faster clip than previously indicated, led by electric vehicles and energy-storage systems.

SQM sees a “significantly stronger” price environment in the first quarter, chief executive officer Ricardo Ramos told analysts during a conference call Monday. The Santiago-based company’s view is also supported by supply restrictions in China.

It’s the first earnings report since SQM brought in state copper behemoth Codelco as a partner in the Atacama operations in northern Chile, where sales volume is expected to rise about 10% this year. Codelco’s share of profit is scheduled to be paid in April.

Formally known as Nova Andino Litio SpA, the SQM-Codelco venture is targeting a roughly 30% production increase in the coming years at the sprawling complex to tap growth in global lithium consumption as large-scale battery storage adds to demand from EVs.

The joint venture’s Chilean operations and a plant in China churned out 234,000 metric tons in 2025, a figure that is expected to reach almost 260,000 this year, more than previously thought. A similar pace of growth is expected at the company’s Australian operations. About 80% of volume is already under contract, with the other 20% earmarked for the spot market amid strong appetite in Asia.

The Atacama expansion could pressure higher-cost rivals as the industry emerges from a prolonged period of oversupply. To be sure, while spot prices have more than doubled from a June low, they’re still more than 70% below a 2022 peak.

The Atacama operation employs an evaporation technique that uses less water, chemicals and energy than hard-rock mining, as practiced in top-producer Australia. NovAndino is preparing to submit a proposal to regulators to introduce new techniques such as direct extraction, which could further lift output.

(By James Attwood)