Record lithium volumes and capacity expansion offset battery storage risks
- Lithium is the largest business, making up 50.0% of 2025 revenue.
- SQM reached record lithium sales volumes of over 84,000 tons in the second quarter of 2026.
- Iodine is a key profit buffer, historically contributing over 40% of gross margin.
- The company will double its Mount Holland mine capacity by 2030.
- The Codelco joint venture is finalized, requiring SQM to give up operational control after 2030.
- Management warned of a possible slowdown in battery energy storage demand due to inventory buildups.
Volumes up, patience required
SQM is trying to win the lithium cycle by staying low cost and shipping more tons while weaker rivals feel pain. That plan is working on volume. The company delivered record lithium sales of over 84,000 tons in the second quarter of 2026 and plans to double its Mount Holland capacity by 2030.
The price story is improving rapidly. Lithium prices fell hard through 2024 and 2025, but management saw a sharp recovery in early 2026. Realized prices hit roughly $18 per kilogram in the first quarter, up from $10 late last year.
The bear case centers on execution delays, long-term control, and new demand wrinkles. The finalized Codelco agreement means SQM gives up management control in 2030. Additionally, management recently flagged a lag between shipments and deployments for battery energy storage systems, creating an inventory buildup that could slow near-term demand.
Finn's view is balanced. SQM has good assets, a strong balance sheet profile, and a valuable iodine business. But sentiment, execution delays, and the impending 2030 permit cliff require investors to proceed with caution.
Low-cost brine, high-cycle prices
SQM makes money by extracting minerals, processing them, and selling them into global supply chains. Its main asset is the Salar de Atacama in Chile, one of the best lithium brine resources in the world. The company will operate there through 2060 under the finalized Nova Andino Litio joint venture with Codelco.
The key advantage is cost. When lithium prices are weak, SQM can keep producing and protect share better than higher-cost producers. Long-term supply deals with large car makers, including Hyundai and Kia, help support demand.
The model relies on control and execution. SQM will lose control of the Nova Andino Litio joint venture after December 31, 2030, and will require a new environmental permit to continue operations. The company expects to invest $3 billion in its Salar Futuro project to maintain long-term production, having formally submitted the environmental documents in July 2026.
Battery growth, iodine cash
Lithium and derivatives
Lithium is used in EV batteries and energy storage. It is SQM's largest revenue line and the main source of upside as lithium prices recover.
Spodumene concentrate
This comes mainly from the Mount Holland asset in Australia. Because Kwinana is delayed, international lithium sales lean heavily toward concentrate.
Iodine and derivatives
Iodine is used in medical imaging and other specialty uses. It gives SQM a massive profitability cushion when lithium markets are weak.
Specialty plant nutrition
These are fertilizer products for higher-value crops. The segment expects volume growth in 2026 as it takes share from reduced Chinese exports.
Potassium
Potassium is tied to brine extraction and fertilizer markets. SQM has been shifting focus away from potash as it pushes lithium efficiency.
Industrial chemicals
This is a smaller line serving industrial uses. It helps round out the portfolio but does not drive the stock thesis.
Copper exploration
An early-stage joint venture with Ivanhoe Electric in northern Chile. It is a new effort to find future resources outside of the core battery minerals.
2025 sales mix
The mix uses fiscal 2025 revenue from SQM's 2025 Annual Report. Lithium is half of revenue, but iodine has a much higher profit weight than its sales share suggests.
What could go wrong
Lithium price whiplash
High impact · Medium oddsSQM's largest business is tied to lithium prices. While realized prices recovered to $18 per kilogram in early 2026, the market remains volatile. If that trend reverses, volume growth may not protect earnings.
Kwinana and Antofagasta delays
High impact · Medium oddsThe Kwinana refinery ramp-up moved into 2027, and the Antofagasta chemical plant expansion moved to 2028. These delays slow the move from raw or semi-processed material into higher-value lithium chemicals.
2030 control and permit cliff
High impact · High oddsSQM finalized the Nova Andino Litio joint venture with Codelco, extending Salar de Atacama operations through 2060. However, the agreement requires SQM to give up operational control after December 31, 2030. The current environmental permit also expires then.
EV policy and demand risk
Medium impact · Medium oddsLithium demand depends on electric vehicle and battery growth. Management has flagged policy uncertainty in the U.S. and Europe as a possible headwind. Slower EV demand would make it harder for the market to absorb SQM's higher output.
Battery storage inventory buildup
Medium impact · Medium oddsManagement recently noted a lag between battery shipments for energy storage systems and actual deployments. If inventory continues to build, it could slow near-term demand growth for lithium in this segment.
Compliance overhang
Medium impact · Medium oddsSQM faces a separate SEC subpoena tied to possible FCPA and anti-corruption law violations. A negative outcome could bring fines, strict controls, or investor distrust.
In one breath
What does SQM actually sell?
SQM sells lithium, iodine, specialty fertilizers, potassium, and industrial chemicals. Lithium is the largest business, while iodine is a key profit cushion.
Why does lithium pricing matter so much for SQM?
Lithium is used in EV batteries and energy storage, and it made up 50.0% of 2025 revenue. When lithium prices move, SQM's earnings power can move fast too.
Why is iodine important to the SQM thesis?
Iodine demand is helped by medical imaging and tight supply. It consistently acts as a highly profitable buffer that helps offset lithium market weakness.
What is the biggest near-term issue to watch?
Watch plant execution. Kwinana is pushed into 2027 and Antofagasta into 2028, so investors need proof that SQM can turn volume growth into higher-value chemical sales.
Sources and research notes
This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.
- Thesis reviewed
- August 23, 2026
- Score data
- September 27, 2026
- Reviewed by
- Shivam Bharuka
Comparable Specialty Chemicals companies
Companies near Sociedad Química y Minera de Chile S.A. in Finn's Specialty Chemicals industry ranking.
