This article first appeared on GuruFocus.

• Revenue: Decreased by more than 3% year on year due to lower lithium prices.

• Lithium Sales Guidance: Updated to approximately 20,000 metric tons of lithium carbonate equivalent for the full calendar year 2025.

• Lithium Hydroxide Production: Kwinana refinery expected to produce 50,000 metric tons annually, with half attributable to SQM.

• Chilean Lithium Sales Volume: Expected to increase by at least 10% versus 2024.

• Iodine Segment Gross Margin: Adjusted gross margin of 57%, contributing more than 50% to total company gross profit.

• Specialty Plant Nutrition Business: Remains stable with resilient demand across key markets.

• Potassium Volumes: Lower as guided, but prices remain firm.

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Release Date: August 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sociedad Quimica Y Minera De Chile SA (NYSE:SQM) reported strong demand growth from the EV and BESS sectors, particularly in China and Europe.

• The Kwinana refinery project was completed on time and on budget, with a ramp-up underway, expected to produce 50,000 metric tons of lithium hydroxide annually.

• Iodine was the most profitable segment in the second quarter, with an adjusted gross margin of 57%, contributing more than 50% to the total company gross profit.

• The Specialty Plant Nutrition business remains stable, reflecting resilient demand across key markets.

• SQM’s diversified portfolio positions the company well to navigate a volatile environment, capturing strong fundamentals in the lithium market.

Negative Points

• Lower lithium prices compared to earlier in the year drove revenues down by more than 3% year on year.

• Lithium sales volumes from the Salar de Atacama were almost flat compared to last year due to lower prices triggering contract frauds.

• The expansion decision for the Mt. Holland project will not be taken during 2025, with a final decision expected next year.

• Potassium volumes in the fertilizers segment are lower as guided, despite firm prices.

• The company faces uncertainties in the iodine market, with demand growth limited by supply constraints.

Q & A Highlights

Q: Can you discuss the midterm and long-term goals for the Specialty Plant Nutrition (SPN) business? Is it based on volume, EBITDA, or margin per ton? A: Juan Pablo Bellolio, Commercial Vice President – Plant Nutrition and Specialty Products, explained that the SPN business is not only about potassium nitrate but also includes blends based on MPKs. The strategy is to continue growing by adding services and products, maintaining a solid brand, and keeping prices stable. The focus is on increasing volume while maintaining strong brand recognition.

Q: What is the current status of the Mt. Holland expansion, and how does it affect the CapEx outlook for Salar Futuro? A: Mark Fones, CEO of the SQM International Lithium Division, stated that the expansion decision for Mt. Holland will not be made in 2025. The company is progressing with approvals and engineering studies, with a final decision expected next year. The CapEx outlook for Salar Futuro will be periodically reviewed, considering market conditions and project progress.

Q: What could potentially disrupt iodine prices, and are there any signs of demand destruction or changes in supply outlook? A: Pablo Altimiras, Executive Vice President – Nitrates and Iodine, noted that iodine demand is expected to grow less than 1% this year due to supply constraints. However, strong fundamentals in applications like ex-contrast media support demand. Some capacity is expected next year, but no significant market changes are anticipated. The strategy is to maintain capacity to meet demand.

Q: Can you confirm the expected volumes for Mt. Holland and Kwinana, and how does the ramp-up compare to other Australian hydroxide plants? A: Mark Fones confirmed that SQM expects to sell 20,000 tons of lithium carbonate equivalent in 2025, with volumes concentrated in the second half of the year. The ramp-up is planned with detailed engineering and strong vendor support, aiming for a smoother process compared to other plants.

Q: How have recent changes in lithium market dynamics affected your order book and customer discussions? A: Felipe Smith, Commercial Vice President – Lithium in Chile Division, mentioned that sales volumes are expected to increase by at least 10% in the second half of the year. Prices have been recovering, particularly in China, and are expected to be higher in Q3. The strategy remains to produce at full capacity and serve customer needs without speculation.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.