2024 South America Lithium Resources Field Trip—10th Stop: SQM

In recent years, the dramatic fluctuations in lithium prices have brought a mix of "sweet and bitter" experiences to industry chain enterprises. Although lithium prices have long lost their former glory, under the global advocacy for a low-carbon economy, the development prospects of the new energy industry chain remain promising, and the importance of lithium resources is becoming increasingly prominent.

As one of the regions richest in lithium resources globally, South America, particularly the "Lithium Triangle" (Bolivia, Argentina, and Chile), holds over 55% of the world's proven lithium resources. Therefore, South America's lithium resources play a critical role in the global energy transition.

Against this backdrop, SMM organized the 2024 South America Lithium Resources Field Trip. Led by SMM Client Manager Siyu Chen, the delegation visited lithium-related enterprises in South America from November 26 to December 7, 2024, toured local lithium mines and material companies, and held discussions with company executives to explore potential opportunities in lithium resource development, technical exchanges, and investment cooperation. On the afternoon of November 29, SMM and the delegation visited SQM's headquarters in Chile for in-depth exchanges.

Corporate Insights

SMM and the field trip members visited the Chilean headquarters office of SQM, where the company's VP of Strategy and Development, Pablo Hernández, warmly received the group and provided a detailed introduction to their business development.

SQM is a global mining company operating in northern Chile, engaged in industries of strategic importance to sustainable development, such as healthcare, food, technology, and clean energy that drives global progress. SQM holds a leading global position in its five major business areas: specialty plant nutrition, iodine and its derivatives, lithium and its derivatives, potassium, and solar salts.

On its 52nd anniversary, SQM remains committed to its corporate values of excellence, safety, integrity, and sustainability, actively advancing innovation and technological progress. The company has optimized its production, commercial, logistics, and management processes to adapt to the changing demands of global markets, ensuring business continuity under high sustainability standards. As a result, SQM has achieved outstanding performance and created greater value for its customers, shareholders, and local communities.

Technical Exchanges

SMM and the delegation engaged in in-depth discussions with SQM on the lithium market, the EV market, and the company's ESG initiatives and goals.

SQM expressed strong confidence in the future of the pure EV market, believing that as the potential demand for EVs in China continues to be unleashed, lithium market demand will keep rising. Global lithium demand is expected to reach approximately 1.2 million mt by 2024, showing significant growth. By 2030, the market share of pure EVs could reach 70%, driving a 90% increase in lithium demand, with China contributing 78% of global lithium demand.

In terms of supply, SQM expects lithium supply to increase to approximately 1.4 million mt in 2024, up 19% YoY. Additionally, by the end of the next decade, half of the global lithium supply is expected to come from recycling. Supply conditions will be influenced by various factors and competitors.

Furthermore, SQM forecasted the supply and demand situation for batteries, stating that most supply currently flows to the pure EV market, but future demand may come from energy storage and other sectors. In China, the market share of LFP batteries has grown significantly, while the share of ternary batteries may decline. The Chinese market has a larger share of pure EVs and higher EV penetration rates, with slower growth in other regions.

The core drivers of EV growth include cost and price reductions, internal combustion engine (IC) bans, the implementation of regional emission targets and regulations, as well as tariff and subsidy policies. China leads in offering competitively priced EVs, while other regions still need to improve in this area. The EU's tariffs on Chinese EV imports affect their price advantage and market entry, with rules and impacts evolving. Trump's stance on EVs remains uncertain, but subsidies and incentives for EV investments may change. In the long term, factors such as improved charging infrastructure, emission regulations, and cost reductions will benefit the EV market's development.

During the discussions, the company also addressed its ESG initiatives and goals. SQM emphasized its commitment to minimizing environmental impacts in northern Chile, aiming to achieve carbon neutrality by 2030. Its goals include improving water sustainability by reducing water extraction from sellers by 50% and increasing water reuse rates to 75%. The company actively maintains good relationships with local communities and plans to raise the female workforce participation rate from 20% to 24% to enhance social inclusivity. Beyond production, SQM adheres to the highest reporting and certification standards, avoiding contract fraud to promote overall human progress. The company participates in multiple global alliances and organizations, follows various systematic strategic improvement standards, and has set emission reduction targets for 2030 and 2040 to strengthen its governance framework and partnerships.

Group Photo

After the factory visit, SMM and the delegation took a group photo with SQM, fostering deeper cooperative friendships and paving the way for further exchanges and collaboration in the future!

Through this field trip and survey, SMM and the delegation gained a deeper understanding of SQM's development and a more profound insight into the market status, development trends, and challenges of the lithium battery industry in South America. They will continue to deepen cooperation with major enterprises to achieve complementary advantages and promote the development of the lithium battery industry.