SQM Reports Earnings for Twelve Months Ended 31 December 2021

Instant Max AI

(SQM, 2.Mar.2022) — Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported net income for the twelve months ended December 31, 2021 of US$585.5mn (US$2.05 per ADR), an increase from US$164.5mn (US$0.63 per ADR) reported for the twelve months ended 31 December 2020.

Gross profit reached US$1,090.1mn (38.1% of revenues) for the twelve months ended 31 December 2021, higher than US$482.9mn (26.6% of revenues) recorded for the twelve months ended 31 December 2020. Revenues totaled US$2,862.3mn for the twelve months ended 31 December 2021, representing an increase of 57.5% compared to US$1,817.2mn reported for the twelve months ended 31 December 2020.

The company also announced earnings for the fourth quarter of 2021, reporting net income of US$321.6mn (US$1.13 per ADR) compared to US$67mn (US$0.25 per ADR) for the fourth quarter of 2020. Gross profit for the fourth quarter of 2021 reached US$542.8mn; approximately 309.6% higher than the US$132.5mn recorded for the fourth quarter of 2020. Revenues for the fourth quarter of 2021 totaled US$1,084.3mn, an increase of approximately 111.0% compared to the fourth quarter of 2020, when revenues amounted to US$513.8mn.

SQM’s Chief Executive Officer, Ricardo Ramos, stated: “We are very proud that production goals set for 2021 were achieved, and in some cases even surpassed. As a result, we were able to supply stronger than expected demand growth in the lithium, iodine, potassium chloride and potassium nitrate markets and ultimately benefit from higher market prices. Consequently, our net income in 2021 was over three times higher than net income reported during 2020.”

He continued by saying, “We believe global lithium demand grew approximately 55% during 2021 when compared to 2020, mainly driven by new demand for electric vehicles. We believe electric vehicle demand more than doubled globally last year when compared to 2020 with China representing about 50% of total global electric vehicles sales last year. During 2021, market prices for lithium also grew as supply could not keep up with the strong demand growth.”

“Demand keeps on growing strongly, and we believe that the total demand will reach 1 million tons sooner than previously anticipated. Our current estimates for 2022 demand growth are over 30%. We do not believe that supply will be sufficient to meet this growth ultimately putting pressure on market prices, reaching levels never seen before. We are well positioned to face these opportunities; our capacity expansion to reach 180,000 tons should be completed in the coming months, allowing us to increase our market share in 2022 and as a result of the structure of our sales contracts, we should see a significant average price increase following the positive price trend seen in the market.”

Then he continued, “We want to continue growing in the lithium market. The Board has just approved an additional lithium capacity plan in Chile, which will allow us to reach 210,000 metric tons of lithium carbonate and 40,000 metric tons of lithium hydroxide. We expect this new capacity to be ready next year with a total CAPEX of US$250mn. This expansion plan will be met as we remain committed to our previously announced goal to reduce brine extraction and water usage in the Salar de Atacama. Completing an expansion with these characteristics while keeping capex relatively low and reducing brine extraction, has become possible only after years of research and development, yield improvements, expertise and of course a strong effort by our production and engineering teams, and we are proud of that.”

“In the iodine market, the post-Covid recovery was faster than we originally anticipated; we believe the market grew about 12% in 2021 compared to 2020. This was reflected in our sales volumes which increased 27% to 12,300 metric tons, in 2021 when compared to 2020. It is expected that our sales volumes will remain flat in 2022, but strong market conditions make us believe that the positive price environment could remain.”

The CEO continued by saying, “Given the existing shortage of potash and potassium-based fertilizers, we saw a significant increase of global potassium prices. During the fourth quarter 2021, prices increased significantly compared to the third quarter of 2021 and the fourth quarter of last year, 56% and 153%, respectively, reaching almost US$685 per metric ton. This positive trend should continue in the short term, and also have a positive impact on the pricing environment in the SPN business line during the first half of 2022.”

The CEO closed by saying, “We are working on a lot of new endeavours at SQM, major growth projects and of course increased efforts related to the sustainability of our operations.”

Sustainable Development

We submitted our first disclosure report under Climate Disclosure Project (CDP) and in our first participating in the ranking, we were categorized as B, meaning that according to CDP, management is taking coordinated action on climate issues. Related to our IRMA (The Initiative for Responsible Mining Assurance) efforts, we have begun the external audit part of the process. We are formally in phase 1 of the process, looking to begin Phase 2 on site in coming months.

In recent months, our environmental management system in our Port at Tocopilla was certified under ISO 14,001. We are working to certify in our Carmen Lithium facilities, Salar de Atacama and in Coya Sur during this year. Additionally, we are making progress in certifying our Occupational Health and Safety Management System under ISO 45,001.

As part of Race to Zero initiative and our aim to reduce our logistics carbon footprint, we have established an ambitious agenda to develop high tonnage transportation via electric trucks. This agenda considers several pilots in 2022 of different trucks that will perform tests in our operations. This will allow us to acquire the right knowledge and to accelerate the adoption of this new technology with the right technical support and competitiveness.

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