SQM(US:SQM)2023-04-25 16:00Revenue and Financial Performance - For the year ended December 31, 2022, revenues from products originating from the Salar de Atacama represented 80% of consolidated revenues, with total revenues reported at US$8.9 billion[56][62]. - In 2022, the company achieved revenues of US$10,720.6 million, gross profit of US$5,736.6 million, and profit attributable to controlling interests of US$3,906.3 million[197]. - In 2022, lithium and its derivatives accounted for 76% of total revenues, a significant increase from 33% in 2021 and 21% in 2020[206]. - Specialty plant nutrients revenues rose to $1,172.3 million in 2022, representing a 29% increase from $908.8 million in 2021, with prices increasing approximately 75.7%[220]. - Revenues from iodine and iodine derivatives reached $754.3 million in 2022, up from $437.9 million in 2021, representing 7.0% of total revenues[247]. Market and Sales Dynamics - Approximately 67% of sales in 2022 were made in emerging markets, with 58% in Asia and Oceania[62]. - The company estimates that its sales of potassium nitrate accounted for approximately 45% of global potassium nitrate sales for agricultural uses by volume in 2022[221]. - In 2022, North America accounted for 42% of total revenues, an increase from 35% in both 2021 and 2020[236]. - The agricultural soluble potassium nitrate market experienced a consumption reduction of between 12% and 16% in 2022 due to strong price increases[228]. - The company sold specialty plant nutrients in approximately 103 countries, with no single customer representing more than 10% of revenues[235]. Production and Capacity Expansion - Capital expenditures in 2022 totaled US$905.2 million, primarily for lithium carbonate production capacity expansion from 120,000 metric tons to 180,000 metric tons per year and lithium hydroxide production capacity expansion from 21,500 metric tons to 30,000 metric tons per year[189]. - The company expects capital expenditures for 2023 to reach approximately US$1.2 billion, focusing on lithium carbonate and lithium hydroxide capacity expansions, as well as maintenance of production facilities[191]. - By the end of 2024, the company anticipates installed capacity of lithium carbonate and lithium hydroxide in Chile to reach approximately 210,000 metric tons and 40,000 metric tons, respectively[191]. - The company completed lithium carbonate and lithium hydroxide expansion projects in 2022, increasing production capacity to 180,000 metric tons and 30,000 metric tons, respectively[187]. - Capital expenditures for the 2023-2025 period are expected to total approximately US$3.4 billion, including US$1.4 billion for lithium capacity expansion and US$1.2 billion for nitrates and iodine capacity expansion[192]. Investment and Strategic Initiatives - The company has a US$3.4 billion investment plan for 2023-2025 to expand operations in lithium, iodine, and nitrate, including projects in Australia and China[65]. - The company may pursue acquisitions or joint ventures to strengthen its competitive position, which could require raising significant debt and/or equity, potentially affecting financial condition and future cash flows[155]. - In 2021, the company undertook a capital increase of US$1.1 billion to support its capital plan[175]. - The company entered into a 50/50 joint venture with Wesfarmers for the Mt. Holland lithium hydroxide project, with an investment of approximately US$700 million approved in 2021 for development costs[185][182]. Regulatory and Political Environment - The company faces risks related to the new National Lithium Strategy announced by the Chilean government in April 2023, which may create uncertainty in the lithium industry[55][57]. - The Chilean Congress is discussing a bill that could declare lithium mining to be in the national interest, potentially enabling the expropriation of lithium assets[135]. - The Chilean Congress approved a bill that amends the Water Code, introducing changes such as temporary water rights for a maximum of 30 years and prioritizing human consumption and sanitation[134]. - The Chilean Internal Revenue Service levied taxes amounting to US$ 127.1 million on SQM Salar for tax years 2012 to 2018, with a potential future assessment estimated at approximately US$ 745.3 million[136][138]. - The company is exposed to political risks and civil unrest in Chile, which could adversely affect its business, financial conditions, and results of operations[120]. Environmental and Sustainability Efforts - The company announced a sustainable development plan aiming for carbon neutrality and a 65% reduction in water usage and 50% reduction in brine extraction by authorized limits[101]. - The company is focused on sustainability, aiming to become carbon neutral and reduce water usage by 65% and brine extraction by 50% as part of its Sustainable Development Plan announced in October 2020[184]. - The company is undergoing ISO certification processes, including ISO 14001 and ISO 45001, to support decarbonization goals associated with energy management systems[104]. - The Port of Tocopilla was certified for Responsible Conduct, achieving level 2 certification in 2021, while the Nueva Victoria site was recertified at level 1 in 2022[103]. - The company is committed to sustainability, aiming to minimize environmental impacts and create value for stakeholders through responsible resource management[210]. Risks and Challenges - The company faces risks related to currency fluctuations, particularly with significant transactions in U.S. dollars and costs related to the Chilean peso[112]. - The company is exposed to labor strikes, with over 93% of employees in Chile, potentially affecting production levels and costs[75]. - International trade tensions, particularly between the U.S. and China, could negatively affect the company's financial performance and demand for lithium[96]. - The company has faced various lawsuits and arbitrations that could adversely impact its business and financial condition[78]. - Changes in weather patterns due to climate change could materially impact the company's operations and financial results, particularly in the agricultural sector[109]. Market Position and Competitive Landscape - The company is the world's largest producer of potassium nitrate and iodine, and one of the largest lithium producers, with 98% of sales in 2022 derived from countries outside Chile[193]. - The company is actively exploring metallic minerals, particularly copper, gold, and silver, in its mining properties, with confirmed high-grade mineralization at the Bufalo project[219]. - The principal means of competition in specialty nutrients include product quality, logistics, agronomic service expertise, and price[244]. - The company has developed marketing channels and brands, including Ultrasol and Champion, to enhance its product offerings[237]. - The restructured Qrop product portfolio includes a chloride-free line, enhancing product accuracy and availability for plants[237].