SQM to Cut Lithium Investments Amid Market Slowdown

Chilean lithium producer SQM plans to reduce its investment budget to $1.2 billion in 2025, down from $1.6 billion in the previous year. Capital expenditures for lithium assets will decrease from $1.3 billion to approximately $900 million, with $550 million allocated for projects in Chile and $350 million for international developments.

SQM’s revenue from lithium and its derivatives is projected to reach $2.2 billion in 2024, a sharp decline from $5.2 billion in 2023 due to falling market prices. Analysts, including Joel Jackson of BMO, do not foresee significant improvement in 2025.

Despite the downturn, SQM aims to increase lithium sales by 15% year-on-year in 2025. The company is preparing to launch its Kwinana plant in Western Australia by mid-year, with an expected production of 10,000 tonnes of lithium carbonate equivalent.

SQM CEO Ricardo Ramos noted that global lithium demand rose by 25% in 2024 and is expected to grow another 17% in 2025, driven by the expansion of electric vehicles and energy storage. However, lithium production has outpaced demand, resulting in oversupply. Ramos anticipates that market conditions will improve by 2026.