Sociedad Quimica y Minera Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 28, 2025

Key Takeaways

  • SQM achieved its highest first quarter lithium sales ever, with volumes up 20% year-on-year, led by strong EV demand in China and Europe and growth in energy storage.
  • After relatively stable lithium prices in Q1, recent price declines are expected to drive average realized prices lower in Q2 2025.
  • Key capacity expansions remain on track, with Mt. Holland spodumene production progressing and the Tiajuna refinery near commissioning, while Chile projects target 240 kt of carbonate and 100 kt of hydroxide capacity.
  • The iodine division delivered a record average price in Q1 on tight supply and steady X-ray contrast media demand, as the seawater pipeline advancement and efficiency initiatives support future growth.
  • Potassium volumes fell sharply year-on-year as SQM prioritized high-lithium brines and shifted focus toward higher-value SPN products.
AI Generated. May Contain Errors.
Earnings Conference Call
Sociedad Quimica y Minera Q1 2025
00:00 / 00:00

Transcript Sections

Skip to Participants
Operator

Hello, everyone, and welcome to the SQM First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please note, this event is being recorded. Now it's my pleasure to turn the call over to the Investor Relations Officer, Isabel Bendig. The floor is yours.

Isabel Bendeck
Investor Relations at Sociedad Química y Minera de Chile

Thank you, operator. Good morning, and thank you for joining SQM earnings conference call for the first quarter twenty twenty five. This conference call will be recorded and is being webcast live. Our earnings press release and presentation with a summary of the results have been uploaded at our website, where you can also find a link to the webcast. Today's speakers include CEO, Ricardo Ramos CFO, Gerardo Ilanes Carlos Diaz, CEO of Lithium Chile Division Pablo Alpimidas, CEO of Iodine and Plant Nutrition Division Andres Montanas, Commercial Vice President of International Lithium Division Felipe Smith, Commercial Vice President of Lithium Chile Division Pablo Hernandez, Vice President of Strategy and Development of Lithium Chile Division and Juan Pablo Bellolio, Commercial Vice President of Ionan and Industrial Chemicals.

Isabel Bendeck
Investor Relations at Sociedad Química y Minera de Chile

Before we begin, I would like to remind you that statements made in this conference call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses, and other financial items along with expected cost synergies and product or service line growth are considered forward looking statements under the federal securities laws. These statements are not historical facts and may be subject to changes due to new information, future developments or other factors. We assume no obligation to update these statements except as required by law. For a complete forward looking statement, please refer to our earnings press release and presentation. I am now leaving you with our Chief Executive Officer, Mr. Ricardo Ramos.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

Thank you. Good morning, everyone, and thank you for joining us today. We're pleased to report that SKM began 2025 with solid operational and commercial performance. In the first quarter, we achieved the highest first quarter lithium sales volumes in our company's history, driven by a 20% year on year increase. This growth reflects sustained strong demand, particularly from electric vehicles market in China and Europe as well as growing adoption of energy storage systems worldwide.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

Lithium prices, on the other hand, were relatively stable during the first quarter twenty twenty five. But over the past few weeks, we have seen a decline in prices that we don't think is sustainable. In the industry, we was already showing negative results. In any case, as a result of this, our average realized prices for the second quarter twenty twenty five should be lower than the levels seen in the first quarter. In Australia, the production of spodumene concentrate at Mt.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

Holland is progressing well and the commissioning of the Tijuana refinery is also moving forward, with the expectation to see first product in the coming month. In Chile, we continue working in our capacity expansions to reach capacity to 240,000 metric tons of lithium carbonate and 100,000 metric tons of lithium hydroxide. Moving to our iodine business, we are pleased with another strong quarter. Prices have reached a record average amidst tight supply and steady demand, primarily driven by the X-ray contrast media application. Our seawater pipeline construction is advancing rapidly and will be key to expanding production capacity.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

In the meantime, we are investing in operational efficiencies to respond to customer needs and optimize output. In Specialty Plant Nutrition, sales volumes grew at a healthy pace. We also saw an upward trend in prices early in this year, mainly due to strong demand for potassium chloride and some supply disruptions. Market dynamics remain favorable across Latin America, The U. S.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

And Europe. In our potassium business, as anticipated, volumes were significantly lower compared to the same period last year. This reflects our strategy to reduce potassium production to give priority to high lithium content brines and focus on the production of more value added products within our SPN business lines. To summarize, SPN delivered strong commercial results in the first quarter despite a complex pricing environment. Our long term fundamentals remain intact.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

We are confident in our strategy, our investment in capacity and innovation and our commitment to sustainable high quality growth. Thank you all.

Isabel Bendeck
Investor Relations at Sociedad Química y Minera de Chile

Operator, we can now move to Q and A.

Operator

Thank you so much. And it comes from the line of Ben E. Saxon with Scotiabank. Please proceed.

Ben Isaacson
Ben Isaacson
Managing Director - Equity Research at Scotiabank

Thank you very much and good afternoon everyone. Three questions. First one, just a very straightforward simple question. You talked about the ASP in Q2 being a little bit lower than in Q1. Do you expect that on an operating cash flow basis, you will be breakeven or positive per metric ton in lithium in Q2?

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

Hi, Ben. How are you? This is Gerard Gallanes. We are far from breakeven cost. We were not expecting to be close to breakeven and significantly above that in the second quarter this year and in the upcoming quarter.

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

We believe we are one of the lowest cost producers. So we are far from that position.

Ben Isaacson
Ben Isaacson
Managing Director - Equity Research at Scotiabank

Perfect. And then another question for you Gerardo. Lithium prices are obviously lower than a lot of people expected this year. Your growth plans haven't changed. And so what the plug is now going to mean is less operating cash flow to fund that CapEx growth and a greater reliance on accessing capital markets.

Ben Isaacson
Ben Isaacson
Managing Director - Equity Research at Scotiabank

Can you talk about how your mind may or may not be changing in terms of capital structure of funding future projects now that lithium is coming in a little lower than expected?

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

Well, just before answering your question and you know, of course, we have other business lines and other products are doing quite well. So the capacity to generate cash that the company has is quite strong. On top of that, we have a strong balance sheet. We have a track record of having a very strong balance sheet and we plan to continue having a strong balance sheet. So we are constantly assessing all the projects that we have on our portfolio, of course understanding what is happening in the market.

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

But so far the financial or the balance sheet has not been a constraint and we don't expect it will be a constraint in the future either.

Ben Isaacson
Ben Isaacson
Managing Director - Equity Research at Scotiabank

Okay. And then just very last one, Ricardo, maybe for you. We're hearing a lot of noise and politics out of Chile right now and kind of a fight about the outcome and the future of the Codelco JV. I don't understand why this is even a debate or even being brought up. I thought this is a signed agreement and you're just kind of dotting the I's and crossing the T's and then it'll be effective Jan one.

Ben Isaacson
Ben Isaacson
Managing Director - Equity Research at Scotiabank

Can you talk about why is this even a debate right now in Chile and what are the different paths forward? Thank you.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

Okay. As you say at the beginning, it's a lot of noise, and I think that's the perfect word to describe what's going on. A lot of noise when you start digging into the numbers. It's a great deal. It's a great deal for the country.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

It's a great deal for the region, for the communities, for Codelco, for the scheme. It means it's something very good. Sometimes when you are in an election year, you have a lot of noise from everything. It's not the only noise in Chile. If you have a Chilean newspaper, we have a lot of different noises everywhere.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

It means an election year, you always have different discussions. But what is the real fact? The fact is that we are advancing according our original plan with Codelco, working very hard. We are now in the end of the process. Not not us.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

Corfo is in the end of the process of the consultation with the towns near the operations that's being carried out by Corfo. And finally, we are we submit all the documents re required by the regulatory authorities of free competition in China. Therefore, we think that the time frame for the transaction to be finally executed will be during the second half of this year. No changes about that. And, you will have it is a big transaction.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

Chile is a small country and these kind of transactions are important in a country where you have not many things going on. But at the end, it's it's just noise. I don't foresee any real reason or fundamentals to have any debate about the transaction.

Ben Isaacson
Ben Isaacson
Managing Director - Equity Research at Scotiabank

That makes sense. Thank you very much.

Operator

Thank you. One moment for our next question that comes from the line of Joel Jackson with BMO Capital Markets. Please proceed.

Joel Jackson
Joel Jackson
Managing Director at BMO Capital Markets

Hi, thanks. I'll ask my questions one by one as well. Team, I noticed in this slide deck in this release that you maintain your view that lithium demand will grow 17% globally as a market this year, but you no longer show your commentary from a few months ago. You think that SQMs sales themselves for lithium will grow about 15% year over year. Do you maintain that you will grow 15% sales this year? And if not, what's your new number?

Felipe Smith
Senior Commercial VP - Lithium at Sociedad Química y Minera de Chile

Yes. Hello, Joel. This is Felipe Smith. Look, considering the current market conditions with uncertainty derived from geopolitical and trade tensions, we have not really updated our annual volume forecast for 2025. However, regarding Q2, I can comment that we expect a similar or slightly lower volume versus the first quarter.

Joel Jackson
Joel Jackson
Managing Director at BMO Capital Markets

Okay. Second question would be, there's been some commentary out in the markets as prices in China have decreased a lot. You sell product to China. Obviously, you've got some contracts, I believe, floors. There's some discussion about customers fighting back and saying spot prices are below floors.

Joel Jackson
Joel Jackson
Managing Director at BMO Capital Markets

We want to pay lower prices. Can you comment on that dynamic and how you are dealing with it?

Felipe Smith
Senior Commercial VP - Lithium at Sociedad Química y Minera de Chile

Yeah. Joel, I would like to start saying that we have more than 200 customers worldwide. Each of these customers have a different type of private mechanism.

Joel Jackson
Joel Jackson
Managing Director at BMO Capital Markets

I'm talking about specifically in China. I know.

Felipe Smith
Senior Commercial VP - Lithium at Sociedad Química y Minera de Chile

I know. I know. Know.

Joel Jackson
Joel Jackson
Managing Director at BMO Capital Markets

Quality. Just China. I know. If you can talk about China, I'd really appreciate it. I know you have lots of customers, different qualities, different products, but maybe just in China specifically would be very helpful.

Felipe Smith
Senior Commercial VP - Lithium at Sociedad Química y Minera de Chile

Yeah. What I want to say, what I want to highlight is that with each customer, and this happens in China also, with each customer, we have different price mechanism and conditions that are all confidential. And I cannot comment, so I would ask you to please understand that I will not go into any specifics about that.

Joel Jackson
Joel Jackson
Managing Director at BMO Capital Markets

Okay. And just finally, and this follows up on Ben's question a little bit, but I think that SQMs philosophical demeanor has been, hey. We're gonna double our production over the next seven years because, hey. Global demand is growing three times. So why don't we're just we're just growing double our own capacity.

Joel Jackson
Joel Jackson
Managing Director at BMO Capital Markets

So there you go. We're not really adding to market. But, when I look at your commentary, and you talk about being the market's oversupplied, the market has probably caught you by surprise how weak it is. As stewards of capital here, do you not have to think about what is the right amount of capacity to add when it seems like there's a lot going on in this market that maybe is not easily visible or understood?

Carlos Díaz Ortiz
General Manager - Lithium Potassium Division at Sociedad Química y Minera de Chile

Hi, this is Carlos Diaz, CEO of Lithium Division in Chile. Yes, we're still working in Hispano capacity. We're the leader of production on lithium in the world, Minos will have the lowest cost in industry. And we continue with our program to to expand the capacity in Chile to produce more lithium sulfate to later to convert in China. It's been a successful business for us.

Carlos Díaz Ortiz
General Manager - Lithium Potassium Division at Sociedad Química y Minera de Chile

So we we are really confident about the demand, and we feel confident that we will do keeping expanding our capacity. So we we don't we don't see an issue there.

Joel Jackson
Joel Jackson
Managing Director at BMO Capital Markets

Sorry. Just one more for me. I get you're confident on demand, but it seems like you're not no one in the industry is confident on supply. You didn't raise some of your own commentary on this quarter. So don't you get worried that your view on supply could be wrong?

Carlos Díaz Ortiz
General Manager - Lithium Potassium Division at Sociedad Química y Minera de Chile

We know there is an oversupply, but I say we know there is a short term. We're confident in the long term going to oversupply is going to disappear and we have a good position to supply in this time. What I said before, we are the leader. We are the lowest cost producer in the industry.

Joel Jackson
Joel Jackson
Managing Director at BMO Capital Markets

Thank you very much.

Operator

Thank you. Our next question comes from Lucas Ferreira with JPMorgan. Please proceed. All right. One moment for our next question.

Operator

Lucas, if you can queue up again. Our next question is from Corine Blanchard with Deutsche Bank. Please proceed.

Corinne Blanchard
Corinne Blanchard
Analyst at Deutsche Bank

Hey, good morning, team. The first question would be on the Mt. Holland. We saw in a recent presentation from Wesfarmers that they decreased their volume guidance by 9% or 10%. So, wanted to see what your view here is and how do you think volume would be for 2025 and going into 2026?

Andres Fontannaz
Commercial Vice President at SQM International Lithium

Yes. Thanks, Corinne. This is Andres Fontanas from SQM International Lithium. You need to be careful with what Westfarmers reported, because they follow a fiscal year. Our guidance anyway, our guidance for this calendar year for SQM share is between 150,000 to 180,000 tonnes, which is around 10,000 tonnes lower than our range provided November year.

Andres Fontannaz
Commercial Vice President at SQM International Lithium

So and this revision is primarily due to the impact of bushfires and limited equipment availability. So as you know, during January, we were impacted by a regional bushfire and the surroundings of the mine and was a significant event in the region. Tens of thousand hectares were affected. But this kind of risk, we are the ones that you are prepared. So starting from the design of the plan to the implementation of procedures to having established and trained on risk management scenario.

Andres Fontannaz
Commercial Vice President at SQM International Lithium

Thanks to all of that, we can say that nobody was hurt, and we are extremely proud of the performance of the team and appreciative of Covalent's team, especially about their reaction and also that was recognized by the authorities in Western Australia. So that is what we can comment about production for 2025.

Corinne Blanchard
Corinne Blanchard
Analyst at Deutsche Bank

Thank you. And then a second question. Can you please remind us the dividend policy? I think we're getting some question about whether you're going to restart doing quarterly dividend or on your annual. So just if you can comment on policy dividend policy and the cadence of it. Thank you.

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

Hi, Corinne. This is Gerardo. The dividend policy that was approved by the Board and presented to shareholders established that the company will distribute 30% of its net income of 2025. The dividend policy also established or according to the law in Chile, that dividend has to be paid or has to be approved by shareholders in the ordinary shareholders meeting that is scheduled to happen in April year. Companies can pay interim dividends during the year.

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

Sometimes in the past, we, SQM, we have paid interim dividends. But at this moment, we are not considering these payments at least for the first quarter, and that will be assessed in the future. But the dividend policy establish a 30% dividend payment.

Corinne Blanchard
Corinne Blanchard
Analyst at Deutsche Bank

Thank you.

Operator

Thank you. One moment. For our next question, and it comes from Emerson Vieira with Goldman Sachs. Please proceed. All right.

Operator

One moment for our next question comes from Alejandro DeMichelis with Jefferies. Please proceed.

Alejandro Demichelis
Alejandro Demichelis
Managing Director - Equity Research at Jefferies Financial Group

Yes. Good morning. Thank you very much for taking my questions. Actually, two small questions, if I may, please. The first one is when you're talking about your growth plans and so, could you please confirm how you see your CapEx requirements for, say, this year or next year?

Alejandro Demichelis
Alejandro Demichelis
Managing Director - Equity Research at Jefferies Financial Group

That's the first question. And then the second question, a bit of a follow-up to the previous question on pricing, is how should we think about your realized prices if lithium prices continue to come down? Should we expect them to follow that path or should we expect them to be more moderated than what we see on the screens, let's call it?

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

Hi, Alejandro. This is Gerardo. Well, we usually review our CapEx plan once a year. And once that is reviewed, it is shared with the market. We should review our CapEx plan in the upcoming months and of course, we will share with the market the conclusions for that.

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

Today, we don't have any updates from what was shared a few months ago. We're working on the expansion of our lithium production facilities in Chile, carbonate and hydroxide, also expanding our abilities to produce lithium sulfate. On top of that, we're working on the Mt. Holland commissioning of the refinery. And on top of that, the initiatives that we're working on, on the nitrates and iodine side, where the most important one is the seawater pipeline that should let us expand in the future our capacity to produce more iodine. So no updates as of this moment.

Alejandro Demichelis
Alejandro Demichelis
Managing Director - Equity Research at Jefferies Financial Group

Okay. That's clear. Thank you.

Felipe Smith
Senior Commercial VP - Lithium at Sociedad Química y Minera de Chile

Yes. And hello, Alejandro. Regarding prices, well, as you probably know, after remaining relatively stable during Q4 twenty twenty four and Q1 twenty twenty five, with some daily fluctuations up and down, lithium prices in China started to go down about one point five months ago. And prices in Asia, outside China, have also been going down. So our sales volume is largely concentrated in China and our realized prices remain mainly linked to price indices.

Felipe Smith
Senior Commercial VP - Lithium at Sociedad Química y Minera de Chile

Consequently, we do expect a lower average sales price in Q2 compared to Q1.

Alejandro Demichelis
Alejandro Demichelis
Managing Director - Equity Research at Jefferies Financial Group

Okay. So the answer is that your prices will be linked to those indices, yes?

Felipe Smith
Senior Commercial VP - Lithium at Sociedad Química y Minera de Chile

Yes. Yes, indeed.

Alejandro Demichelis
Alejandro Demichelis
Managing Director - Equity Research at Jefferies Financial Group

That's clear. Thank you.

Operator

Thank you. Our next question is from Julia Sanyolo with Bank of America. Please proceed.

Julia Zaniolo
Julia Zaniolo
Equity Research Associate at Bank of America

Hi. Thank you for the call. My question is about your thoughts on huge interest analysis and investment in a leach and product in Chile. As we know, the market has an oversupply and prices are pressured. So if you could share your thoughts on how do you see your what impact do you expect for the market and supply and demand and also for SQM competitive positioning in Chile?

Pablo Hernández Mac-Donald
VP of Strategy & Development at SQM International Lithium

Hello, Julia. This is Paulo Hernandez. So during 2025, we expect the demand to reach around 1,400,000 metric tons, representing over 15% year over year growth. China remains with a significant lead in the EV market with more than 40% year over year growth and roughly 70% of the EV global sales. On the other hand, the European Union has had a very strong first quarter with The US having a slight decrease, but we continue to evaluate potential impacts on the corresponding new regulatory environment.

Pablo Hernández Mac-Donald
VP of Strategy & Development at SQM International Lithium

Overall, markets should continue to shift slightly towards some carbonate production, with LFP continuing their dominance in China and starting to expand abroad. During 2025, supply is expected to grow close to 15% as well, reaching between 1.5 to 1,600,000 metric tons, assuming no significant production delays occur in the market as consequence of the current low price environment.

Julia Zaniolo
Julia Zaniolo
Equity Research Associate at Bank of America

Okay. Thank you.

Operator

One moment for our next question. And it comes from the line of Jiraj Domik with Lorraine Bial. Please proceed. Oh, your volume is very low, mister Domik. If you can get higher. Barely. We can barely hear you.

Juraj Domic
Senior Associate at LarrainVial

Let me, webcam audio. No. I'll let me let me know if it it works. If not, I can send it by email.

Operator

Alright. That's a little bit better.

Juraj Domic
Senior Associate at LarrainVial

Okay. Okay. Perfect. So we have two questions. The first one regarding the lithium competition you're facing in China from other producers.

Juraj Domic
Senior Associate at LarrainVial

Because it seems that several of them should be struggling at these prices, but production, it seems that it's continuing. That's my first question. And in the and my second is, you mentioned in the fourth quarter that you were seeing some optimism over a positive trend in 2026. Has this view changed with the information so far in 2025?

Pablo Hernández Mac-Donald
VP of Strategy & Development at SQM International Lithium

Hey, Guerra. This is Paulo Hernandez. So regarding competition in China, of course, we face significant competitors in China. They have a large portion of the market. But as many of the competitors that we see in the lithium industry overall, some of them have had not so very good results, of course, due to the lithium price environment.

Pablo Hernández Mac-Donald
VP of Strategy & Development at SQM International Lithium

So I think this is a overall, the industry is struggling with this current pricing. And regarding your your question on prices for 2026, Of course, prices will be a consequence of the supply demand balance, so we will see how this year develops and and see what the impacts will be for for next year.

Juraj Domic
Senior Associate at LarrainVial

K. Perfect. Thank you.

Operator

You. And as a reminder, that is star one one if you do have a question. Our next question is from Lucas Ferreira with JPMorgan. Please proceed.

Lucas Ferreira
Lucas Ferreira
Executive Director at J.P. Morgan

Hi, everyone. I hope you hear me now. Sorry, my line dropped the previous time.

Operator

Yep, we can hear Perfect.

Lucas Ferreira
Lucas Ferreira
Executive Director at J.P. Morgan

I don't know if my question was answered while I was out, but it's pretty much the first question to confirm your CapEx numbers for this year and the next two years, if you can, and which are the main projects in pipeline now consuming these CapEx? The second question regarding productive cost of lithium. First, let's talk about Atacama, if the ramp up to two forty gives you sort of a fixed cost dilution effects, if there's anything in the carbon plant in the pipeline to help on reducing costs eventually. Pretty much if you can share any sort of what number to expect for cash cost in Chile, that would be great. And any initial views on the cost of production in Mt.

Lucas Ferreira
Lucas Ferreira
Executive Director at J.P. Morgan

Holland, how it's been evolving, if you have anything to share with us, that would be great. Thank you very much.

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

Lucas. Your CapEx question was answered already. If you want, we can discuss about that later. Carlos?

Carlos Díaz Ortiz
General Manager - Lithium Potassium Division at Sociedad Química y Minera de Chile

Hi, This is Gabriel Diaz. Regarding to the our cost in in Chile, I have to mention, well, you you already know that we have been facing very lowest prices during this year. And mainly because of that, we have been working in several cost reduction initiative in order to maintain our cost leadership in the market. We have been working at the same time increasing the capacity, working on quality, and all of that we have been improving the yield. So, we expect to reduce our operational costs during this year and the coming year.

Lucas Ferreira
Lucas Ferreira
Executive Director at J.P. Morgan

Perfect. So, should we expect a declining nominal costs for lithium in this year and the coming years? Is that fair to assume?

Carlos Díaz Ortiz
General Manager - Lithium Potassium Division at Sociedad Química y Minera de Chile

No. We expect a decline in the nominal cost. Yes. It's already happening in the first quarter.

Lucas Ferreira
Lucas Ferreira
Executive Director at J.P. Morgan

Thank you very much.

Andres Fontannaz
Commercial Vice President at SQM International Lithium

Lucas,

Andres Fontannaz
Commercial Vice President at SQM International Lithium

Andres Fontanaccia, regarding your question on Mt. Holland, let me start by saying that even at current prices, our Mt. Holland operation is cash positive, and we are executing as planned. So we continue to be in ramp up mode in the concentrator. So as you know, every operation in ramp up is facing higher cost.

Andres Fontannaz
Commercial Vice President at SQM International Lithium

But we are confident that over long term, our project will generate satisfactory returns because we do have an attractive cost structure. And on top of that, we will have an integrated lithium hydroxide production. And as you know, we are commissioning the refinery right now and we are very happy with the results of the commissioning, which is currently at 95%.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

Lucas, Ricardo Ramos speaking here.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

Just just want to to to to put a summary here that we have a positive view about the long term in the lithium industry. It means today, price environment is not sustainable. It means there's no way, the industry can survive these prices. SKM is probably the only one. I'm not sure it is the only, but one of the only that can have reasonable profits at today pricing.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

It means that price should improve in the future or probably in the near future. What we can say is that there's no one in the world best prepared. We are the best one in order to take advantage of the market. We have been very successful increasing capacity. Today, we have the capacity, the quality, the alternatives, the market, Australia.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

It means everything is in our favor to take advantage of the recovery of the prices that is coming. It means we cannot know, we don't know when, but market is very strong. It means demand is stronger than ever. The uses of the electric vehicles industry is better than expected in terms of quality of the cars, performance, whatever. That's why we think that even though there are some issues in the world, in the trading activities between different countries in the medium term, the this this demand will continue to increase, will continue to increase, and we are prepared to supply the lithium to the market.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

It means that we have a positive view. My my view is I don't have the crystal ball anyway, but my view is positive for next year. They think that prices will go back to a reasonable price environment, and I think the demand will continue to grow. We are gonna be the number one prepared. And and, again, as Carlos Diaz said before, we had all the time, it means our cost is by far the lowest cost, but it's even better today than what we used to be two years ago.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

I mean, the work in our facility has been great in terms that we have been able to have. And you see my numbers in our numbers in the first quarter, and our numbers speak by themselves in terms that we generate significant profits in the lithium industry even though prices were very low. That's something that we are very proud to it will continue in the near future. And in Australia, as was commented, now we think that we have one of the best production of spodumene and probably we will start producing now hydroxide that we are being integrated. Very good news.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

And probably we're a very strong competitor in the in the industry. Means, again, very I have a positive outlook in the in the medium, maybe long term. But, of course, we are facing a situation very complicated second quarter in terms of the pricing. Everyone is facing the situation, not only a scam. Everyone is selling in China.

Ricardo Ramos
CEO & General Manager at Sociedad Química y Minera de Chile

China is the big is the most important market in the world. There's no one big producer of lithium without selling their products in China, in the end facing what is the market price, and we think that we are the best one to do it.

Lucas Ferreira
Lucas Ferreira
Executive Director at J.P. Morgan

Thank you very much guys for the explanation.

Operator

Thank you so much. Our next question is from Constanza Gonzalez with Quest Capital. Please proceed. Constanza, if you can check your mute button.

Constanza González Muñoz
Senior Investment Analyst at Quest Capital

Hi. Thank you for taking my question. I have a question regarding Mount Holland that is not so clear for me. I I appreciate if you can clarify the information of passcode that you are considering right now by assuming in in the case of Mt. Holland project?

Constanza González Muñoz
Senior Investment Analyst at Quest Capital

Or could you give us more details about levels that you are seeing this quarter?

Andres Fontannaz
Commercial Vice President at SQM International Lithium

Consanza, Andres here. As I said before, we are still in ramp up mode. And in that period, of course, you are facing higher cost. But as mentioned, we as soon as we reach this stage, the project is cash flow positive even at these prices. So we are confident and very satisfied with the evolution of that project.

Constanza González Muñoz
Senior Investment Analyst at Quest Capital

Okay. Just to clarify, are you considering the depreciation in Manoho Land project too? Because if you look for the information in comparison with first quarter of twenty twenty four. The depreciation rise a lot, so that's why I was asking if you are considering that. Thanks.

Gerardo Illanes
VP - Services & Finance at Sociedad Química y Minera de Chile

Hi, Contanos. This is Gerardo. Andres was referring to cash cost in his statement.

Operator

All right. And this will conclude our question and answer session for today and our program as well. Thank you all for participating and you may now

Analysts
    • Isabel Bendeck
      Investor Relations at Sociedad Química y Minera de Chile
    • Ricardo Ramos
      CEO & General Manager at Sociedad Química y Minera de Chile
    • Ben Isaacson
      Managing Director - Equity Research at Scotiabank
    • Gerardo Illanes
      VP - Services & Finance at Sociedad Química y Minera de Chile
    • Joel Jackson
      Managing Director at BMO Capital Markets
    • Felipe Smith
      Senior Commercial VP - Lithium at Sociedad Química y Minera de Chile
    • Carlos Díaz Ortiz
      General Manager - Lithium Potassium Division at Sociedad Química y Minera de Chile
    • Corinne Blanchard
      Analyst at Deutsche Bank
    • Andres Fontannaz
      Commercial Vice President at SQM International Lithium
    • Alejandro Demichelis
      Managing Director - Equity Research at Jefferies Financial Group
    • Julia Zaniolo
      Equity Research Associate at Bank of America
    • Pablo Hernández Mac-Donald
      VP of Strategy & Development at SQM International Lithium
    • Juraj Domic
      Senior Associate at LarrainVial
    • Lucas Ferreira
      Executive Director at J.P. Morgan
    • Constanza González Muñoz
      Senior Investment Analyst at Quest Capital
Powered by Quartr