SQM, Albemarle May Switch To Lithium Output, not Price Maximization

April 8, 2019

Competition for Chile’s lithium miners looks set to heat up. Mitsui has agreed to invest in a new mine in Brazil that could eventually produce 440,000 tons of raw lithium, the Financial Times reports. At the same time the U.S. government is organizing a conference of governmental departments, automakers and miners in May to consider ways to improve the electric vehicle supply chain in the United States, according to Reuters, which may include support the opening of mines with capacity to produce 77,900 tons of lithium carbonate by 2022.

The push to develop new lithium resources comes as exports from Chile – one of two leading exporting nations alongside Argentina – have slowed. Panjiva data shows exports fell 2.8% year over year in January after a 10.2% increase in 2018. The competition for resources can be seen in acceleration in purchases by buyers in South Korea – exports to which surged 37.3% year over year to a record high – and Japan, which rose 113.4% also to a record high. That’s come at the expense of buyers in the EU, China and the U.S.



Chart segments Chilean exports of lithium carbonate and hydroxide by destination. Source: Panjiva

Increased competition for supplies may also lead SQM – which accounted for 63.9% of the $958 million of exports from Chile in the 12 months to Jan. 31 – and Albermarle’s Rockwood which accounted for the remainder – to increase their exports. In particular it may require SQM to revisit its decision, outlined in Panjiva’s research of Mar. 4, to withhold some of its output this year.

So far they relied on price increases to drive revenues. That process continued in January with average export prices per ton having increased by 22.3% year over year to reach $13,738 per ton for lithium carbonate, the second highest on record. That followed a 16.7% rise in 4Q 2018.


Chart compares volume and value per ton of Chilean exports of lithium carbonate and hydroxide on a monthly and 12-month average basis. Source: Panjiva

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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