New York- and Santiago-listed Sociedad Química y Minera de Chile (SQM) has posted a sharp drop in full-year earnings, despite lithium volumes reaching new record levels as spodumene concentrate production started at Mt Holland, in Australia.

The company’s earnings decreased by about 48.5%, from $3.9-billion to $2.01-billion, in the 12 months ended December 31. Revenue fell by 30% to $7.47-billion in the year under review.

SQM’s earnings for the fourth quarter decreased from $1.15-billion in 2022 to $203.2-million in the final three months of 2023, marking a decrease of 82.3%.

"Our fourth quarter 2023 results reflected record-high sales volumes in the lithium business and increased sales volumes in the iodine and potassium business lines when compared to the previous quarter and the same period last year.

“Despite a downturn in lithium market prices when compared to the previous year, our focus on operational efficiency and ability to successfully execute capacity expansion projects have facilitated notable production growth in the lithium and iodine businesses over the past year,” said CEO Ricardo Ramos.

While continuing with its expansions in Chile, SQM expects lithium carbonate capacity to reach 210 000 metric tons during the first quarter of this year.

“As we enter into 2024, we anticipate another robust year of growth in the lithium market, with global demand increasing by at least 20%, supported by electric vehicle sales growth globally and increasing demand for battery materials.

“However, the excess in lithium and battery materials capacity seen during last year is expected to continue during this year, keeping pressure on lithium market prices,” he said.

SQM expects average lithium prices to remain relatively stable throughout the year and its sales volumes to increase slightly, subject to market conditions and any changes in supply:demand balance.

The miner spent close to $1.1-billion in capital expenditure (capex) last year. For 2024 to 2025, capex is forecast to be $2.4-billion, including $1.4-billion related to lithium capacity expansions in Chile, $700-million related to nitrates and iodine capacity expansions in Chile and $340-million related to the Mt Holland project.

SQM owns 50% of the Mt Holland project, which includes the Kwinana refinery.