This article first appeared on GuruFocus.

• Lithium Sales Volume: Increased by 25% year-over-year, reaching approximately 69,000 metric tons of lithium carbonate equivalent.
• Contribution to Chilean State: Over $530 million in contributions through payments, taxes, and transfers to local governments in the first quarter.
• Projected Lithium Sales Volume Growth: Expected to grow by approximately 15% compared to 2025.
• Specialty Plant Nutrition Sales Volume Growth: Expected to grow by approximately 10% compared to 2025.

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Release Date: May 27, 2026

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 results for the first quarter of 2026, reflecting robust performance across key business lines.
• The partnership with Codelco through Novandinolithium completed its first full quarter of operations, generating over $530 million in contributions to the Chilean state.
• Lithium sales volumes increased by 25% year-over-year, with expectations for total lithium sales volumes to grow by approximately 15% compared to 2025.
• The specialty plant nutrition business line is expected to see a 10% growth in sales volumes, driven by reduced potassium nitrate exports from China.
• The company is advancing in the Salar Futuro project and expects to begin the environmental permitting process soon, indicating future growth potential.

Negative Points

• The company faces a high volatile price scenario in the lithium market, making it difficult to predict prices beyond the second quarter.
• Despite higher cash and cash equivalents, the company has significant obligations, including payments to Corfo and tax-related payments, which may limit cash availability for other uses.
• The iodine market faces potential supply disruptions, and there is uncertainty about whether supply will accelerate in the next two to three years, affecting pricing.
• Inflation and global uncertainties could impact the cost and returns of the Salar Futuro project, although the company remains optimistic about its viability.
• The effective tax rate was higher than usual due to increased profitability in the lithium business, leading to higher mining taxes.

Q & A Highlights

Q: How does the movement in the lithium battery business over the last year affect SQM's outlook on mid-cycle pricing? A: Pablo Hernandez, Vice President of Strategy and Development of the Lithium Chile Division, noted that the average sales price in Q1 2026 was approximately $18 per kilo, significantly higher than the $10 per kilo in Q4 2025. Prices are expected to remain volatile, making it difficult to predict beyond Q2 2026.

Q: How does SQM plan to utilize the windfall free cash flow generated by higher lithium prices? A: Gerardo Illanes Gonzalez, Chief Financial Officer, stated that while the company has historically distributed special dividends, no decision has been made yet for this quarter. The company is assessing opportunities for dividend distribution while considering tax-related payments and investments.

Q: What is causing the increase in specialty plant nutrition (SPN) business volumes, and how sustainable is this trend? A: Pablo Altimiras, Executive Vice President – Nitrates and Iodine, explained that the increase is due to China's suspension of potassium nitrate exports, allowing SQM to capture market share. The sustainability of this trend is uncertain due to potential changes in China's export policies.

Q: What gives SQM confidence that iodine prices will remain elevated despite potential supply increases? A: Pablo Altimiras highlighted that the iodine market has evolved with increased demand from applications like contrast media. Marginal projects are costlier, and strong demand growth supports current price levels.

Q: Can you provide details on the Salar Futuro project's CapEx and the impact of inflation on returns? A: Ricardo Ramos Rodriguez, Chief Executive Officer, mentioned that the estimated investment is around $30 billion. Inflation affects costs but also increases commodity prices, which should maintain project returns. The environmental study is expected to be filed by Q3 2026, with investment starting in 2030.

Q: What is the outlook for lithium volume growth, and how is it being achieved? A: Pablo Hernandez stated that SQM expects a 15% increase in lithium sales volumes year-over-year, driven by strong demand and production capacity maximization. The company aims to meet market needs with over 270,000 metric tons of production.

Q: How does SQM view the impact of inflation on the Salar Futuro project and its returns? A: Ricardo Ramos Rodriguez explained that while inflation is a concern, it also raises commodity prices, which should offset cost increases and maintain project returns. The project is expected to start investment in 2030.

Q: Can you explain the higher effective tax rate in the quarter? A: Gerardo Illanes Gonzalez noted that the higher tax rate is due to increased profitability from higher lithium prices, which raised the mining tax rate. The mining tax is based on profitability and export revenues.

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