Finvest
SQM Materials · Lithium · Iodine · Chile · Thesis updated July 20, 2026

Cheap lithium, delayed plants, iodine support

01 Running thesis

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. Management now targets close to 260,000 tons of lithium carbonate equivalent production in 2026.

The price story is less clean. Lithium prices fell hard through 2024 and 2025, but Q4 brought a better sign: SQM's average realized lithium price rose nearly 14% from the prior quarter to close to $10 per kilogram. If that price turn holds, SQM gets more benefit from every extra ton it sells.

The bear case is about delays and trust. Kwinana, the Australian refinery, is now expected to ramp in 2027. The Antofagasta chemical plant expansion has moved to 2028. Those delays mean more sales stay in lower-value spodumene concentrate for longer, and some growth arrives later than hoped.

Finn's view is balanced. SQM has good assets, a strong balance sheet profile, and a valuable iodine business. But sentiment and recent operating performance are not yet clean enough to treat the recovery as a sure thing.

Mar 2026→Q4 brought a better lithium price signal, with realized prices up nearly 14% from Q3 and a 2026 production target near 260,000 tons LCE. The update was not all positive, because Kwinana moved into 2027 and Antofagasta moved to 2028.
Nov 2025▲China antitrust approval cleared a major step for the Codelco joint venture. SQM also raised International Lithium sales guidance to 23,000 to 24,000 tons LCE and kept expanding iodine capacity.
Aug 2025▲Kwinana was complete and had delivered on-spec product, while iodine contributed more than half of company gross profit in Q2. The Mt. Holland expansion decision was pushed beyond 2025.
May 2025→SQM posted record first-quarter lithium volumes, up 20% year over year, and kept Kwinana commissioning near completion. The offset was lower expected realized lithium prices in Q2.
Mar 2025▲SQM confirmed record 2024 lithium sales of nearly 205,000 metric tons and record iodine performance. Management also flagged U.S. and European EV policy uncertainty as a new demand risk.
Nov 2024▼Mt. Holland produced its first revenue and SQM kept volume targets high. The negative was a further 24% drop in realized lithium prices from Q2 and a new SEC subpoena tied to possible FCPA violations.
Aug 2024▲The baseline thesis was set around SQM's low-cost lithium position, record lithium and iodine volumes, and the Codelco deal extending Salar de Atacama operations through 2060.
02 Business model

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 with Codelco through 2060.

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, also help support demand.

The model breaks when price or execution goes wrong. A low-cost producer still earns less when lithium prices fall. Delayed plants also matter because chemical conversion earns more than selling concentrate alone.

03 Product portfolio

Battery growth, iodine cash

Growth engine

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 if lithium prices recover.

Option

Spodumene concentrate

This comes mainly from the Mount Holland asset in Australia. Because Kwinana is delayed, 2026 international lithium sales should lean heavily toward concentrate.

Cash cow

Iodine and derivatives

Iodine is used in medical imaging and other specialty uses. It contributed about 42% of 2025 gross margin, giving SQM a cushion when lithium is weak.

Steady

Specialty plant nutrition

These are fertilizer products for higher-value crops. The business is not the main growth story, but it adds diversity outside battery materials.

Steady

Potassium

Potassium is tied to brine extraction and fertilizer markets. SQM has been shifting focus away from potash as it pushes lithium efficiency.

Steady

Industrial chemicals

This is a smaller line serving industrial uses. It helps round out the portfolio but does not drive the stock thesis.

04 Business segments

2025 sales mix

Lithium and Derivatives50%growing fast
Iodine and Derivatives23%modest
Specialty Plant Nutrition22%flat
Potassium3%declining
Industrial Chemicals2%flat
Other Income1%flat

The mix uses fiscal 2025 revenue from SQM's 2025 Annual Report. Lithium is half of revenue, but iodine has much higher profit weight than its sales share suggests.

05 Risk factors

What could go wrong

Lithium price whiplash

High impact · High odds

SQM's largest business is still tied to lithium prices. Q4 showed a nearly 14% quarter-over-quarter price rebound, but one good quarter does not end the cycle. If realized prices fall back below management's recent levels, volume growth may not protect earnings.

We watchSQM's average realized lithium price per kilogram each quarter.

Kwinana and Antofagasta delays

High impact · Medium odds

The 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. They also raise the chance of cost creep.

We watchManagement updates on Kwinana ramp timing and the Antofagasta 240,000 ton chemical plant expansion.

Chile and compliance overhang

Medium impact · Medium odds

The Codelco joint venture reduces the long-term Chile license risk because it extends operations at the Salar de Atacama through 2060. Still, SQM faces a separate SEC subpoena tied to possible FCPA and anti-corruption law violations. A negative outcome could bring fines, controls, or investor distrust.

We watchAny SEC update, settlement, fine, or company disclosure about the FCPA inquiry.

EV policy and demand risk

Medium impact · Medium odds

Lithium 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.

We watchEV sales growth, battery demand forecasts, and changes to U.S. or European EV incentives.

Tianqi share sales

Medium impact · Medium odds

A large shareholder selling stock can weigh on the share price even if the business improves. The internal view flags Tianqi sales as a possible technical overhang. This risk is about market supply of shares, not SQM's mines or plants.

We watchFilings or market reports showing continued Tianqi share disposals.
06 Quick answers

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. In 2025, iodine contributed about 42% of gross margin, which helped offset lithium 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.