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SQM aims to expand lithium production capacity with US$400M investment

Sociedad Quimica y Minera de Chile SA CEO Ricardo Ramos said the company expects to triple its lithium sales to 150,000 tonnes per year by 2025.

The company aims to increase its lithium production capacity in Chile to 180,000 t/y, with an increase to 120,000 t/y from the current 70,000 t/y capacity anticipated by the end of 2020.

Capital expenditure associated with the expansion is estimated at around US$400 million, or US$4,000/t.

The company increased its long-term debt to fund expansion projects while continuing to maintain a healthy balance sheet, Ramos added. The executive also noted that SQM will continue to invest in the Mount Holland lithium joint venture in Western Australia.

SQM expects lithium demand to increase to at least 1 million tonnes per year in 2025, compared to an estimated 350,000 t/y in 2019.

The company projected lithium sales of just under 50,000 tonnes in 2019, while it aims to produce more than 60,000 tonnes.

SQM said it will not limit sales to sustain prices. It remains optimistic about lithium pricing and plans to rebuild its inventory, targeting an equivalent of two to three months worth.

"Over the last few years, we have been selling more than our installed capacity, pressuring our lithium production process along with our entire supply chain, taking away the flexibility needed to respond to our customers," Ramos said.