Chilean miner SQM reported a steep drop in Q4 2024 profit as declining lithium prices started to weigh on profitability.

The world's second-largest lithium producer posted a net profit of $120.1 million, or $0.42 per share, down from $205.9 million in the same period last year, while analysts expected $130.95 million, or $0.52 per share. Quarterly revenue reached $1.07 billion, barely exceeding expectations of $1 billion. 

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The company's lithium and derivatives revenue in 2024 totaled $2.24 billion, a significant 56.7% decline from $5.18 billion in 2023. Despite a 21% increase in lithium sales volume, which reached nearly 205,000 metric tons of lithium carbonate equivalent, the average realized price plummeted by over 64%, from $30,467 per ton in 2023 to $10,936 per ton in 2024.

"On the lithium side, we are quite optimistic as we estimate that the market demand grew 25% in 2024 and we anticipate that global demand could grow around 17% this year, supported by electric car sales growth as well as battery energy storage systems in different markets around the globe," CEO Ricardo Ramos said in a press release.

"We believe that prices will remain relatively stable throughout this year, and remain optimistic about a positive trend starting in 2026," he added.

Looking ahead, SQM expects lithium sales volumes to increase by approximately 15% in 2025, including 10,000 metric tons from its Mt. Holland operation in Australia. Ramos also noted progress on the Kwinana refinery, which is on track to begin operations in the middle of this year.

Still, despite optimism, the management anticipates average realized lithium prices in 2025 to be lower than those from 2024, with the first quarter slightly below the last quarter of 2024.

SQM spent around $1.6 billion on capital expenditures in 2024, including $1.3 billion on expansion projects across its divisions. For 2025, the company plans to allocate around $1.1 billion in capex, with $550 million designated for its lithium operations in Chile, $350 million for the iodine and plant nutrition business, and $200 million for its international lithium ventures.

Prolonged lithium weakness is starting to influence lower capex, prompting miners to scrap some projects altogether. Sibanye-Stillwater recently said it would not proceed with the Rhyolite Ridge lithium-boron project in Nevada. According to Reuters, the board decided to halt the $500 million joint venture with Ioneer, citing that the project did not meet investment hurdle rates at current lithium pricing assumptions.

Price Action: SQM stock traded 1.80% to $37.67 premarket at the last check on Wednesday.

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