Chile's SQM, the world's second-largest lithium producer, saw more than $1-billion wiped from its market value on Thursday as investors reacted to a third quarter profit hammered by sliding prices of the key battery metal.

SQM's Santiago-listed shares had lost around 8% by early afternoon trading, accounting for some one-trillion Chilean pesos ($1.13-billion), a day after the company said its net income had more than halved from a year earlier.

In a conference with analysts, executives said they would not slow output, and instead continue producing lithium at maximum capacity and building up warehouse inventories, though sales volumes could be limited in line with market indices.

"The idea is to be prepared when inventories return to the normal level and customer purchases are reactivated," said SQM's lithium vice-president Carlos Diaz.

Prices for lithium, an ultralight metal used for electric vehicle (EV) batteries, have dropped more than 60% on fears of softening global demand for EVs. They hit a two-year low this month.

Nevertheless, SQM executives said they expect EV demand to remain resilient in the long-term.

SQM's senior commercial vice-president for lithium Felipe Smith attributed lower prices to softer EV demand outside China coupled with high component supplies causing excess inventories to accumulate across the whole battery supply chain.

Smith said SQM could contract its sales volumes in line with market indices, adding the firm had also entered into several new long-term index-linked supply deals.

Chile is looking to boost state control over its lithium industry with state miner Codelco leading talks with private miners such as SQM.

The talks cover areas such as how lithium production will be run on the Atacama salt flats, taking into account relations with local communities and environmental sustainability.

"We both agreed that having a sustainable operation in the long-term is the most important target," SQM CEO Ricardo Ramos said of the talks with Codelco over the Atacama development, adding that he did not expect significant production growth there.