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SQM
Earnings call · Jun 2026 (Q2 FY26)

CHEMICAL & MINING CO OF CHILE Q2 FY26 earnings call SQM

Aug 19, 2026 Source

Executive summary

SQM Q2 FY26 — Strong Performance Across Main Business Lines

SQM reported strong Q2 FY26 results, driven by record lithium sales volumes and robust performance in iodine and specialty plant nutrition. The company is advancing significant capital projects, including the Salar Futuro project in Chile and the Mount Holland expansion in Australia, to support long-term growth and enhance competitiveness. Management expressed confidence in the lithium market fundamentals despite some near-term inventory concerns.

Highlights

4

  • Achieved record quarterly lithium sales volumes of more than 84,000 metric tons of lithium carbonate equivalent.

  • Accrued over $1.6 billion in payments to the Chilean government during H1 FY26.

  • Specialty plant nutrition sales volumes are expected to increase by approximately 10% for the full year 2026.

  • Total iodine production is expected to reach approximately 15,500 metric tons this year.

Concerns

2

  • Analyst noted a significant gap between spodumene average selling price increase and SQM's international LCE equivalent selling price in Q2.

  • Analyst raised concerns about a potential inventory build in battery storage, suggesting temporary oversupply risk in the lithium market over the next 12-18 months.

Guidance & targets

CategoryTargetConfidence
Global lithium demand
exceed 2.1 million metric tons
high materiality
High
Novandino Litio production (Chile)
between 280,000 and 290,000 metric tons of lithium carbonate equivalent
high materiality
High
Novandino Litio production capacity (Chile)
approximately 300,000 metric tons
high materiality
High
Mount Holland spodumene concentrate production capacity (SQM share)
approximately 350,000 metric tons per year
high materiality
High
Iodine production
approximately 15,500 metric tons
medium materiality
High
Specialty Plant Nutrition sales volumes growth
increase by approximately 10%
medium materiality
High
Total Capital Expenditures
approximately $3 billion
high materiality
High
Novandino Litio production (Chile)
close to 300,000
high materiality
High
Lithium hydroxide production (Mount Holland)
higher lithium hydroxide production than this year
medium materiality
Medium
Direct spodumene concentrate sales (Mount Holland)
probably lower than this year
medium materiality
Medium
Lithium sulfate production
in a range of 80,000 to 90,000 LCE equivalent
medium materiality
High
Lithium hydroxide production (Chile)
not more than 20,000 or 30,000
low materiality
Medium
International Lithium sales
around 27,000 to 30,000 tons LCE
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Lithium
Achieved record quarterly sales volumes from operations in Chile (Novandino Litio) and Australia (Covalent Lithium).
Quarterly sales volumes: >84,000 metric tons LCE
————

Deals & partnerships

Codelco Association for lithium operations in Chile under Novandino Litio

Novandino Litio, the association with Codelco, submitted environmental and technical documentation for the Salar Futuro project in July.

Wesfarmers Joint venture for Mount Holland mine and concentrator operations and expansion

Partnered with Wesfarmers for the Mount Holland mine and concentrator, recently announcing an expansion to double spodumene concentrate production capacity.

Capital programs

Salar Futuro project underway $3 billion
Start: July 2026

Benefit:increase production; significantly reducing the environmental footprint

Environmental and technical documentation submitted in July. Project involves approximately $3 billion investment over 7 years, aiming to transform operations in Salar de Atacama and establish a 'new beginning' for 30-60 years of operation.

Mount Holland mine and concentrator expansion announced

Benefit:double spodumene concentrate production capacity to approximately 350,000 metric tons per year (SQM share)

Expansion announced with partner Wesfarmers. The schedule reflects normal sequencing for a project of this scale, with construction expected to start mid-next year, taking 18-24 months, followed by commissioning in 2029.

Risks & headwinds

Lithium market price volatility current

very volatile market today, still difficult to predict prices too long

Mitigation:Contracts are based on indices, which are well known.

Potential temporary oversupply in lithium market due to inventory build in battery storage next 12 to 18 months; following years

Shipments of batteries for BESS are much larger than actual deployments, creating a gap.

Mitigation:Management attributes the gap to longer implementation times for large projects and some sales pulled forward due to expiring tax rebates in China. Still views BESS as a strong long-term demand factor.

New supply entering the iodine market FY26

A particular new project in Chile is expected to provide more product.

Mitigation:Expected to compensate for iodine demand growth of around 3%, not seen as a significant disruption to prices.

What to watch in Q3 FY26

Novandino Litio Q3 sales volume

Q3 FY26
Current strong, in line with Q2 (>84,000 metric tons LCE)
Target remain strong, in line with Q2

Why it matters

Indicates continued strong demand and operational execution in the core lithium business.

in terms of sales volume, we expect Q3 2026 to remain strong, in line with Q2, okay?

Q&A highlights

Inquired about Q3 lithium prices, volumes, and costs, specifically if gross margin would be similar to Q2.

Q3 sales volumes are expected to remain strong, in line with Q2. Average prices for Q3 are expected to be in line with the H1 average, based on indices. Costs are expected to be similar to Q2, reflecting continuous efficiency improvements and economies of scale.

“in terms of sales volume, we expect Q3 2026 to remain strong, in line with Q2, okay? And in terms of the price, I would say that the average price based on the indexes because you know that our contracts are all based on indices and indices are well known. Based on that, we believe that the price of Q3 should be more or less in line with what we saw as the average of the first semester.”

asked by Joel Jackson · answered by Felipe Smith

2 min read 7 chapters

Detailed narrative

Salar Futuro Project Advancement

SQM, through its association Novandino Litio with Codelco, submitted environmental and technical documentation for the Salar Futuro project in July. This project, which contemplates approximately $3 billion of investment over 7 years, is designed to transform operations in the Salar de Atacama. Management emphasized that Salar Futuro is not merely about increasing capacity but represents a comprehensive revamping and a 'new beginning' for 30-60 years of operation, aiming to enhance production while significantly reducing the environmental footprint.

Chilean Government Contributions

During the first half of 2026, SQM and its subsidiaries accrued more than $1.6 billion in payments to the Chilean government. These contributions include taxes, payments to local governments, and payments to CORFO, highlighting the company's significant economic impact in the region.

Lithium Market Dynamics and Supply Outlook

SQM now expects global lithium demand to exceed 2.1 million metric tons in 2026, supported by stronger-than-expected market demand. The company anticipates increased supply coming from various sources, including China (both spodumene and brine), ramp-up projects in Africa and Argentina, and restarts in Australia, driven by current price scenarios.

Iodine Market Outlook and New Supply

The iodine business delivered good results, benefiting from robust market demand and favorable pricing. SQM's seawater pipeline is currently in its commissioning phase, providing additional flexibility. While demand growth is forecast at around 3% for 2026, new supply, particularly from a new project in Chile, is expected to enter the market and largely compensate for this growth, suggesting a balanced market without significant price disruption.

Specialty Plant Nutrition Performance

The Specialty Plant Nutrition segment experienced a strong quarter, driven by higher sales prices and volumes. Market conditions were positively influenced by supply constraints in certain markets, although these conditions are expected to gradually normalize towards the end of the year. The company maintains its full-year forecast for sales volumes to increase by approximately 10% compared to 2025.

Mount Holland Expansion and Refinery Decision

SQM, in partnership with Wesfarmers, recently announced the expansion of the Mount Holland mine and concentrator, aiming to double spodumene concentrate production capacity to approximately 350,000 metric tons per year (SQM's share) with first production expected in 2030. The decision regarding a potential expansion of the refinery remains under analysis, with management aiming to reach full ramp-up by the second half of next year before finalizing plans.

Lithium Sulfate Production and Tolling

SQM has significantly increased its lithium sulfate production, expecting to produce 80,000 to 90,000 LCE equivalent next year. This includes production from its own plant in China, which is expanding to 30,000 LCE, and additional volume from tolling agreements with various suppliers. The company expressed satisfaction with its current tolling contracts and plans to continue these partnerships.

AI-generated summary of the company's earnings call. Not investment advice.