Electric car market booming lithium mining giant SQM is expected to grow global lithium demand by more than 40% this year

Chilean miner SQM, the world's second-largest lithium producer, said on Thursday that its second-quarter results surged as surging demand for electric vehicles boosted lithium sales and prices. The company also said that global lithium demand is accelerating faster than previously expected and is expected to grow by more than 40 per cent this year.

The company earned $89.8 million, or 31 cents per (EPS), in the second quarter, compared with $50.8 million, or 19 cents a share, a year earlier. The company said earnings in the first half of 2021 were up 65% from the same period last year.

SQM said the recovery in demand for lithium helped drive earnings growth. Lithium mine prices rose more than the company expected as demand for electric cars surged more than 150 per cent in the first half of the year compared with the same period a year earlier. Sales of lithium mines jumped more than 90% in the second quarter alone. The average price of lithium rose nearly 20% in the second quarter from the first quarter.

SQM is one of the veteran lithium producers in the world. In the lithium chemical industry, Chile's SQM, Abel (Albemarle) and FMC of the United States are known as the big three lithium suppliers, almost monopolizing 80% of the global production of lithium salt in brine. Lithium is a key raw material for mobile phone and electric car batteries.

SQM shares have risen more than 50 per cent over the past year, along with the rise in electric cars.

Global lithium demand is expected to grow by more than 40% this year

With the increasing momentum of the transition to clean energy and clean transportation, the outlook for lithium is further improving. SQM predicts that global lithium demand could grow by more than 40 per cent this year, with sales exceeding 95000 tonnes, up from its forecast of more than 85000 tonnes three months ago.

The company predicts that lithium prices will rise further along with demand in the second half of this year and is expected to be close to $10,000 a tonne by the fourth quarter of 2021. Total global demand for lithium is likely to exceed 1 million tons by 2025.

It is worth noting that optimism in the lithium industry has risen sharply compared with last year. Last year, during the coronavirus pandemic, mining and processing plants dried up, prompting many companies to shelve expansion plans.

SQM raised $1.1 billion in capital earlier this year to expand lithium, iodine and nitrate production, with the aim of more than doubling Chilean lithium carbonate production from 70, 000 tonnes to 180000 tonnes a year. The company expects to produce 140000 tons of lithium by 2022.