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SQM gets approval for lithium carbonate expansion

Chilean nitrates and lithium producer Sociedad Quimica y Minera de Chile (SQM) has received approval from a local environmental authority to expand its Salar de Atacama lithium carbonate production plant in northern Chile.
SQM gets approval for lithium carbonate expansion SQM gets approval for lithium carbonate expansion SQM gets approval for lithium carbonate expansion SQM gets approval for lithium carbonate expansion SQM gets approval for lithium carbonate expansion

SQM's Salar de Atacama operation in Chile

The US$400 million expansion will allow the company to increase its production of lithium carbonate, a precursor material for the production of lithium batteries, from 70,000 tonnes per year to 180,000tpy. The plant expansion is part of a $525 million investment plan announced in 2018 that aims to increase SQM's lithium production.

"We will continue being one of the major players in the lithium market as we have the capacity, the team, the technology, the financial resources and high-quality natural resources necessary in place," said CEO Ricardo Ramos in a statement earlier in the week.

The expansion will have two phases, with the first expected to boost output to about 120,000tpy by 2020 from its existing facilities. The second stage will require the development of additional installations, which are the reason the company sought approval from the Antofagasta Region Environmental Evaluation Commission.

Ramos said SQM aimed to rebuild its inventories to have two-to-three months of inventory but would not limit sales in order to sustain prices.

"Over the last few years we have been selling more than our installed capacity, pressuring our lithium process along with our entire supply chain, taking away the flexibility needed to respond to our customers. Producing levels slightly higher than what we expect to sell this year will allow us to recover part of our inventories, which will give us greater flexibility to face the market and the expansion challenges of our plants," he said.

SQM is the world's second largest producer of lithium. It has forecast 2019 lithium market demand as 350,000 tonnes, of which it will supply less than 60,000 tonnes. The company expects to grow its sales to 150,000tpy by 2025.