(Bloomberg) -- SQM, the biggest lithium producer after Albemarle Corp., is moving ahead with plans to more than double capacity in a bet that accelerating electric-vehicle demand will tighten a currently oversupplied market for the battery metal.
Reporting lower-than-expected third-quarter earnings, the Santiago-based company said its board approved an expansion as part of a $1.3 billion investment plan through 2024. Signs from China indicate that prices may have bottomed out and will improve next year, Pablo Altimiras, head of lithium and iodine, said on a call with analysts.
SQM is looking past the current lithium supply glut that has pushed down prices. In what BMO Capital Markets calls a volume-over-price strategy, the company wants to grow its market share and capitalize on a recovery when demand growth outpaces supply of the key rechargeable battery ingredient as part of a global energy transformation.
Soc. Quimica & Minera de Chile SA, as the company is known formally, expects lithium sales of 60,000 metric tons this year to increase by 30% next year, it said in an earnings statement late Wednesday.
In terms of lithium carbonate capacity, SQM will expand to 120,000 tons from 70,000 tons by the end of next year, while its hydroxide capacity will increase to 21,500 tons. Its board approved taking carbonate to 180,000 tons and hydroxide to 30,000 tons by 2023. Right now, it's producing at a rate of 75,000 tons a year.
As part of the investment plan through 2024, SQM will also boost mining capacity for iodine nitrates, develop a seawater pipeline and introduce sustainability measures to halve its use of brine and reduce water use by 40% by 2030.
The company's shares rose as much as 2.3% in New York on Thursday, extending a year-to-date gain to 73%.
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