SQM(SQM) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported close to $1.3 billion in revenues from the lithium business, approximately 10% lower compared to the previous quarter, primarily due to significantly lower realized sales prices, partially offset by record high sales volumes of over 43,000 metric tons during the quarter [22] - In the iodine business, revenues exceeded $210 million for Q3 2023, driven by a strong pricing environment with sales prices close to $70 per kilogram [23] Business Line Data and Key Metrics Changes - The fertilizer business generated nearly $300 million in revenues during Q3, supported by positive demand growth expected to continue into 2024 [11] - The lithium carbonate capacity in Chile reached 200,000 metric tons per year, with an expected completion of expansion to 210,000 metric tons by early 2024, almost a year earlier than anticipated [24] Market Data and Key Metrics Changes - The company noted a downward price trend for lithium that began at the start of the year, which is expected to continue for the remainder of 2023 due to excess inventories and additional supply entering the market [10] - The demand fundamentals for lithium remain strong, with an expected annual average growth of over 20% for the next five years, despite some softening of demand outside China [38] Company Strategy and Development Direction - The company is focused on sustainable operations and has received international recognition for its commitment to sustainability, achieving the highest score to date from IRMA [12] - The company is actively engaged in negotiations with CODELCO, emphasizing the importance of sustainability and environmental goals in their operations in the Salar de Atacama [15][31] Management's Comments on Operating Environment and Future Outlook - Management expressed that while there are challenges in the short term due to excess inventories, they remain optimistic about long-term growth driven by EV production and sales volume targets [10] - The company is prepared to build inventory in the coming quarters and is focused on maintaining production at maximum capacity while being disciplined in response to market conditions [27] Other Important Information - The company has been working on the Salar Futuro project for nearly three years, aiming for hydric neutrality in the Salar de Atacama Basin [31] - The company has made investments in DLE technology through a partnership with a French company, Adionics, to enhance its lithium production capabilities [60] Q&A Session Summary Question: Production and Inventory Management - Management confirmed that they are building inventory and are prepared to continue this strategy in the upcoming quarters [27] Question: Negotiations with CODELCO - Management highlighted the complexity of negotiations with CODELCO, focusing on environmental restrictions and sustainability goals [15][31] Question: Lithium Production Capacity and Costs - The company expects to reach 210,000 metric tons of lithium production capacity by early 2024 and is working on reducing costs through increased yield and efficiency [33][34] Question: Market Pricing and Demand - Management acknowledged the current downward pressure on lithium prices due to excess inventories but remains confident in long-term demand growth [38] Question: Future Production and Sustainability - Management reiterated that any future production increases will be contingent on maintaining sustainability and environmental goals [50][51]