Core Insights - Sociedad Química y Minera de Chile (NYSE: SQM) is the leading lithium producer with operations primarily in Chile and expansion projects in Australia and China, also a leader in other chemicals like iodine and specialty [1] Company Overview - SQM has a strong position in the lithium market, which is critical for electric vehicle batteries and renewable energy technologies [1] - The company is involved in various expansion projects aimed at increasing its production capacity and market reach [1] Industry Context - The demand for lithium is expected to grow significantly due to the increasing adoption of electric vehicles and renewable energy solutions [1] - SQM's operations in Chile provide a strategic advantage due to the country's rich lithium reserves [1]

Group 1 - Sociedad Química y Minera de Chile (SQM) is the leading lithium producer with operations mainly in Chile and expansion projects in Australia and China [1] - The company also leads in other chemicals such as iodine and specialty products [1] Group 2 - The analyst has over 10 years of experience researching various companies across different sectors, including commodities and technology [1] - The focus has shifted to a value investing-oriented YouTube channel after writing a blog for three years, covering hundreds of companies [1] - The analyst expresses a preference for covering metals and mining stocks but is also comfortable with other industries like consumer discretionary, REITs, and utilities [1]

Core Viewpoint - TAG Group has decided to terminate its joint venture with SQM in Sweden due to unmet preconditions by the Swedish Strategic Products Monitoring Agency, with no liabilities incurred by either party for the termination [1] Group 1: Project Termination - The joint venture aimed to develop critical minerals such as gallium, cesium, and lithium in Sweden [1] - TAG holds 100% ownership of the AERO project and has completed surface sampling in 2024, currently analyzing the results [1] - The termination was mutually agreed upon, allowing both parties to avoid any associated responsibilities [1] Group 2: Future Plans - TAG expressed willingness to negotiate with other interested parties to continue the project plans [1] - The company, established in 2007 and headquartered in Australia, focuses on battery materials production and innovative technology development [1]

Core Insights - In the first half of 2025, SQM and Albemarle sold 139,000 tons of lithium carbonate, representing a year-on-year increase of 7.8% and a 33% increase compared to the same period in 2022 [1] - The companies paid a total of $149 million in lithium mining fees to Corfo, a decrease of 46.5% from $279 million in the same period last year, and significantly lower than the $1.619 billion and $1.831 billion paid in 2022 and 2023 respectively [1] - Due to SQM's focus on the spot market, price fluctuations are more pronounced, with SQM paying $843 per ton of lithium carbonate to Corfo in the first half of 2025, while Albemarle paid $2,015 per ton [1]

Report Industry Investment Rating No relevant information provided. Core Viewpoints of the Report In Q2 2025, the overall supply of overseas lithium mines was stable with regional differentiation. The shipment volume of projects in Western Australia and North America increased quarter-on-quarter, while some projects in South America and Africa controlled market supply due to low prices. With the rebound of lithium prices in Q3, it is expected that overseas mines will release supply. The resource output of the three major production areas of Western Australia, South America, and Africa in the second half of the year is expected to be significantly higher than that in the first half, which can alleviate the gap caused by the shutdown of large domestic mines. Subsequently, attention should be paid to the operational continuity of regions such as Jiangxi, Qinghai, and Mali in the resource end [1]. Summary by Directory Australia - In Q2 2025, the shipment volume of Australian mines was about 1.007 million tons, a quarter-on-quarter increase of 16.9%. Greenbushes and Pilbara contributed the main increments. In the 2025 fiscal year (July 2024 - June 2025), the lithium concentrate output of the five major Australian mines was about 3.551 million tons, and it is expected to increase by about 10% in the 2026 fiscal year. The supply of Holland in the 2025 calendar year will double compared with the expectation. It is estimated that the average quarterly shipment volume of Australian mines in the next four quarters will be about 1 - 1.05 million tons, a year-on-year increase of about 10% [3]. - Greenbushes produced 340,000 tons of lithium concentrate in Q2 2025, basically flat quarter-on-quarter and a 2% year-on-year increase. The sales volume was 412,000 tons, a 13% quarter-on-quarter increase and a 22% year-on-year decrease. The average sales price was 725 US dollars/ton (FOB), a quarter-on-quarter decrease of 8%. The cash production cost increased by 7% quarter-on-quarter to 366 Australian dollars/ton, a year-on-year increase of 8%. In the 2025 fiscal year, the production volume was 1.479 million tons, and the unit cash production cost was 325 Australian dollars/ton, meeting the production and cost guidelines. It is expected that CGP3 will produce the first batch of ore around the end of 2025. The production and cash cost guidelines for the 2026 fiscal year are 1.5 - 1.65 million tons and 310 - 360 Australian dollars/ton respectively [4]. - In Q2 2025, the lithium concentrate output of Pilbara was 221,300 tons (SC5.1), a 77% quarter-on-quarter increase and a 2% year-on-year decrease. The sales volume was 216,000 tons (SC5.1), a 72% quarter-on-quarter increase and an 8% year-on-year decrease. The average sales price of spodumene concentrate was 703 US dollars/ton (China CIF, SC6; SC5.1 was 599 US dollars/ton), a 17% quarter-on-quarter decrease. The unit operating cost (including freight and royalties) was 462 US dollars/ton, a 7% quarter-on-quarter decrease and a 4% year-on-year decrease. It is expected that the lithium concentrate output in the 2026 fiscal year will be 820,000 - 870,000 tons, and the unit operating cost (FOB) will drop to 560 - 600 Australian dollars/ton [6]. - In Q2 2025, the total lithium concentrate output of Mt Marion was 124,000 tons, a 11% quarter-on-quarter and 30% year-on-year decrease. The shipment volume was 134,000 tons (SC4.6), a 3% quarter-on-quarter decrease and a 29% year-on-year decrease. The average sales price of lithium concentrate (SC6) was 607 US dollars/ton, a 28% quarter-on-quarter decrease. The cost was 717 Australian dollars/ton (SC6, FOB). In June 2025, its two shareholders will each inject up to 150 million Australian dollars into the project [7][8]. - Wodgina produced 166,000 tons of lithium concentrate in Q2 2025, a 32% increase both year-on-year and quarter-on-quarter. The sales volume was 136,000 tons, a 15% quarter-on-quarter increase and a 10% year-on-year increase. The average Li2O grade was 5.4%. The average realized price of lithium concentrate (SC6) was 674 US dollars/ton, a 20% quarter-on-quarter decrease. The cost was 641 Australian dollars/ton (SC6, FOB), a 17% quarter-on-quarter decrease. In the 2025 fiscal year, the cost was 849 Australian dollars/ton, meeting the cost guideline, and the production volume was 502,000 tons, higher than the guideline [9]. - In Q2 2025, the lithium concentrate output of Kathleen Valley was 85,892 tons, a 10% quarter-on-quarter increase. The sales volume was 97,330 tons, a 4% quarter-on-quarter increase. The average sales price was 740 US dollars/ton (SC6, SC5.2 was 633 US dollars/ton), a 9% quarter-on-quarter decrease. The unit operating cost was 576 US dollars/ton (FOB), a 31% quarter-on-quarter increase. The full sustaining cost (AISC) was 786 US dollars/ton (SC6.0, FOB), a 35% quarter-on-quarter increase. The 2026 fiscal year production guideline is 365,000 - 450,000 tons, a 24 - 53% year-on-year increase [10]. - Mt Holland's lithium salt sales volume in Q2 2025 was about 1,300 tons. The annual sales volume guideline for 2025 is expected to reach 20,000 tons LCE (50% equity), doubling the previous plan. The Quinana refinery in Australia has completed construction and produced the first batch of commercially - compliant products in July. It is expected to reach the nameplate capacity of 50,000 tons of lithium hydroxide by the end of 2026 (SQM accounts for 25,000 tons) [10]. South America - South American projects changed little this quarter. In Q2, companies such as SQM and Sigma controlled the shipment volume due to low lithium prices. It is expected that the sales volume in the second half of the year will have a large increase compared with the first half. The Argentine Chamber of Mining Companies expects that the Argentine lithium carbonate production in 2025 will increase by 75% year-on-year to 130,000 tons. SQM in Chile has a 20,000 - ton increase (+10%) in the Atacama Salt Lake. Brazilian hard - rock projects have cost advantages, and Grota do Cirilo and AMG lithium mines are operating at full capacity [13]. - In Q2 2025, SQM's lithium salt sales volume in Chile was 51,700 tons, a 1.1% quarter-on-quarter decrease. The total sales volume in the first half of the year was 108,100 tons. The average sales price was 9,144 US dollars/ton, a 27% year-on-year decrease. The unit sales cost was 7,038 US dollars/ton, an 18% year-on-year decrease and a 4% quarter-on-quarter increase. The company expects a significant increase in lithium sales in the second half of the year. The sales volume of SQM's Atacama Salt Lake business in Chile is expected to increase by 10% year-on-year in 2025, with an expected sales volume of about 220,000 tons [14][15]. - The Fenix project of Arcadium Lithium had problems with the transportation system in April and energy interruption due to snowfall in May. The total quarterly production of lithium resources was about 15,000 tons LCE (100% equity), a 29% quarter-on-quarter decrease. The production problems have been solved. The Fenix expansion project with a nameplate capacity of 10,000 tons of lithium carbonate is expected to be put into production in 2026 [16]. - The first - phase factory of Rincon lithium project produced the first batch of lithium products in December 2024, and the final system testing and commissioning were completed in Q2 2025. The construction of the 57,000 - ton expansion factory will start in Q3, and the first production is expected to be in 2028, reaching full - load production within three years [17]. - The first - phase 25,000 - ton/year lithium hydroxide factory of Hombre Muerto was completed in October 2024, and the second - phase is planned to be completed in the second half of 2025. The first - phase of Sal de Oro has a design capacity of 25,000 tons/year and started shipping products in September 2024, expected to reach full production in April 2025. The lithium carbonate production in 2024 was about 4,000 tons LCE, and about 16,000 tons LCE in 2025. The second - phase with a design capacity of 25,000 tons/year is planned to start construction in June 2025 and be put into production in 2026 [18]. - In Q2 2025, the total production of Caucharí - Olaroz was about 8,500 tons of lithium carbonate, a 18% quarter-on-quarter increase. The shipment volume was about 8,635 tons, a 21% quarter-on-quarter increase. The unit cash operating cost was 6,098 US dollars/ton, a quarter-on-quarter decrease of about 8%, and the unit total cash cost was 6,366 US dollars/ton, a quarter-on-quarter decrease of about 7%. The unit average realized price was about 7,400 US dollars/ton. The annual production target for 2025 is 30,000 - 35,000 tons. The company is promoting a new 40,000 - ton/year lithium carbonate capacity and evaluating the possibility of producing up to 150,000 tons of lithium carbonate using direct lithium extraction technology [19]. - The production of Centenario - Ratones in Q2 was about 270 tons of lithium carbonate, and the sales volume was 480 tons LCE. Due to technical problems in equipment commissioning in the first half of the year, the production target for 2025 is 4,000 - 7,000 tons, significantly lower than the previous guideline [20]. - The first - phase of Zijin Mining's 3Q lithium salt lake in Argentina is in industrial commissioning and optimization, and it is expected to start producing crude lithium carbonate products in Q3 2025, with an annual production of about 20,000 tons [21]. - In Q2 2025, the lithium concentrate output of Grota do Cirilo was 68,368 tons, a 38% year-on-year increase and flat quarter-on-quarter. The company controlled the shipment volume at low lithium prices. The sales volume was 40,350 tons, a 23% year-on-year and 34% quarter-on-quarter decrease. The single - ton sales cost was 584 US dollars, a 3% year-on-year and 5% quarter-on-quarter increase. The cash operating cost (China CIF) was 442 US dollars/ton, a 14% year-on-year and 3% quarter-on-quarter decrease. The unit total sustaining cost (AISC) was 594 US dollars/ton, a 24% year-on-year and 4% quarter-on-quarter decrease. The company expects the 2025 fiscal year production to reach 270,000 tons. The second - phase expansion is expected to increase the capacity by 250,000 tons/year in 2026 [22][23]. Africa - Six projects in Zimbabwe and Mali have completed capacity ramping up, but the shipment volume growth was limited in the first half of the year due to low lithium prices, maintenance, and technological transformation. The import of African lithium concentrate by China in the first seven months decreased by 13.7% year-on-year. The recovery of lithium prices may drive the supply increment in Zimbabwe, while the production and shipment rhythm of Chinese - funded lithium mines in Mali may be affected by local political changes [24]. - In the first half of 2025, Zhongkuang Resources' self - supplied raw materials achieved lithium salt sales of 17,869 tons, a year-on-year increase of about 6.37%. It directly sold 34,834 tons of self - produced spodumene concentrate [25]. - The original ore production scale of Sabi Star in Zimbabwe is 990,000 tons/year, and it can produce about 290,000 tons of lithium concentrate per year. The mine suspended production in Q1 for technological transformation and facility construction and resumed production in April. The supporting power plant was completed and put into operation in June [26]. - The lithium ore processing capacity of Yahua Group's Kamativi lithium mine project in Zimbabwe is 2.3 million tons/year, and the nameplate capacity of lithium concentrate is 350,000 tons/year. It is expected to produce about 280,000 tons of lithium concentrate in 2025 and reach full production in 2026 [27]. - Ganfeng Lithium completed the acquisition of 100% equity of Mali Lithium on July 2. The first batch of lithium concentrate was shipped from the mine in May and completed loading in late June, expected to arrive at Chinese ports in early August [28]. - The Bougouni mining area in Mali has a lithium ore mining and processing capacity of 1 million tons, with an expected annual output of more than 125,000 tons of spodumene concentrate. As of mid - August, more than 45,000 tons of lithium concentrate have been produced. The mine team is promoting the acquisition of export licenses from the Malian government [29]. North America - In Q2 2025, North American Lithium (NAL) produced 58,533 tons of lithium concentrate, a 35% quarter-on-quarter increase. The sales volume was 66,980 tons, a 148% quarter-on-quarter increase. The average sales price (FOB) dropped 8% to 1,054 Australian dollars/dry metric ton (682 US dollars/dry ton, a 4% decrease). The unit sales operating cost decreased 10% quarter-on-quarter to 1,232 Australian dollars/ton (FOB), a 5% quarter-on-quarter decrease in US dollars. The 2025 production target is 190,000 - 210,000 tons [30].

Core Viewpoint - Chilean Mining and Chemical Company (SQM.US) reported poor performance in Q2 due to weak lithium prices, but maintains a strong balance sheet and competitive production cost advantage, allowing it to absorb market weakness without significant credit deterioration [1] Financial Performance - Q2 revenue decreased by 19% year-on-year to 1 billion Reais [1] - EBITDA fell by 25% year-on-year to 308 million USD, with profit margin declining to 29.5%, a decrease of 2.4 percentage points year-on-year [1] - Lithium segment faced pressure, with stable sales of 53,100 tons (up 1% year-on-year), but revenue dropped by 33% year-on-year to 445 million USD [1] Market Dynamics - China may play a key role in stabilizing lithium prices in the short term, with plans to orderly clear 100,000 tons of lithium mica capacity this year [1] - If fully implemented, this could theoretically re-anchor marginal cost pricing at 20,000 USD/ton [1] - Despite execution pace depending on local factors, policy signals have made market shorts more cautious [1] Cost Structure - SQM has the lowest cash cost globally at approximately 4,000 USD/ton [1] - Even if prices rebound to the range of 12,000 to 14,000 USD/ton, the gross margin per ton can still maintain above 70%, indicating significant profit elasticity compared to higher-cost mines [1] Bond Ratings - The company received an "overweight" rating for its 34-year bonds, reflecting attractive valuation relative to peers and other Chilean assets [2] - The 29-year and 33-year bonds were rated "market weight" due to reasonable relative valuation [2] - The 50-year and 51-year bonds received a "underweight" rating as they do not provide sufficient spread to compensate for the additional term risk compared to mid-term bonds [2]

Group 1 - The largest lithium company in the world, SQM, is optimistic about the lithium market and plans to increase its lithium carbonate sales by 20,000 tons within the year [1] - Despite a 28% decline in global lithium prices in Q2, SQM remains committed to its expansion plans, with a 10% increase in lithium production at its local plants this year [1] - SQM completed its first batch of lithium hydroxide extraction with its Australian joint venture Kwinana in July, aiming for a production capacity of 50,000 tons by 2026, half of which will belong to SQM [1] - With a significant reduction in lithium production in China, SQM anticipates a 17% increase in global lithium demand for the year [1]

Core Viewpoint - The article discusses the investment potential of Sociedad Química y Minera de Chile (NYSE: SQM), highlighting its financial resilience and long-term value proposition for investors [1]. Company Analysis - The stock of SQM was previously trading at approximately $32.78, and a buy stance was maintained based on the company's strong financial fundamentals [1]. - The author emphasizes a focus on value companies with solid long-term potential, indicating a strategic investment approach [1]. Investor Insights - The author has over five years of personal investing experience and holds a PhD in Economics, which adds credibility to the analysis provided [1]. - The article aims to share knowledge and support individual investors through detailed analysis [1].

Group 1: Industry Insights - SQM reported a 28% decline in adjusted earnings to $307.9 million in Q2 due to falling lithium prices, which hit a multi-year low, but expects a price recovery driven by reduced production in China [1] - The global tablet shipment volume reached 39 million units in Q2 2025, marking a 9% year-on-year increase, supported by stable demand in China and EMEA regions [4] - The domestic lithium carbonate market experienced fluctuations, with a recent announcement from Jiangte Electric regarding the resumption of production at its subsidiary [6] Group 2: Market Prices - As of August 21, the price for battery-grade lithium carbonate is between 81,000 to 83,000 yuan per ton, while industrial-grade is between 78,500 to 79,500 yuan per ton [7] - The price for ternary materials ranges from 128,000 to 134,000 yuan per ton for single crystal 5 series and 146,000 to 151,000 yuan per ton for 8 series 811 type [8] - Phosphate lithium prices are stable, with power-type priced at 33,600 to 35,000 yuan per ton and energy storage-type at 32,600 to 33,200 yuan per ton [9] Group 3: Company Developments - BYD has launched a new line of lithium batteries for electric two and three-wheelers in partnership with JD Auto, offering eight products priced between 1,298 to 6,998 yuan [2] - Zhongwei New Materials signed a cooperation agreement with POSCO Future M to advance the production of lithium iron phosphate cathode materials [3] - Tianqi Lithium reported a net profit of 267 million yuan in the first half of the year, reflecting a year-on-year growth of 12.79% [13] Group 4: Battery and Energy Storage Market - The domestic lithium battery market remains stable, with global production expected to reach 2,100 GWh this year, and a slight increase in orders from second-tier battery manufacturers [15] - The domestic energy storage battery prices are stable, with a notable project in Inner Mongolia achieving a system price of 0.389 yuan per Wh [17] - New energy vehicle sales reached 244,000 units last week, showing a year-on-year increase of 13.10% [16]

Group 1 - The core viewpoint of the article highlights a significant decline in lithium carbonate prices, which have dropped approximately 70% over the past year, leading to a supply surplus in the market [1] - SQM's second-quarter revenue was reported at $1.04 billion, falling short of the expected $1.07 billion [1] - The net profit for SQM in the same period was $88.4 million, also below the anticipated $144 million [1] Group 2 - The low lithium prices have had a notable impact on SQM's performance, with an adjusted EBITDA of $308 million in the second quarter, which is lower than the expected $334 million [1] - SQM has indicated that the weak lithium prices have decreased the economic viability of some lithium projects [1]