Chilean lithium miner SQM reported a 5.8% decline in its Q1 net profit to $749.9 million, despite a 12% on-year increase in total revenues, Kallanish reports.

According to ceo Ricardo Ramos, the financial results were in line with the company’s expectations following a 20% drop in lithium demand in the first three months of the year, compared to Q4 2022.

“As anticipated, advanced purchases in the previous quarter, the change in subsidies in China and the high level of stocks across the battery supply chain led to a weaker demand, predominantly in China, in the beginning of the year,” says Ramos.

Compared to the same period last year, lower sales volumes were offset by significantly higher average sales prices. Revenues from lithium and its derivatives increased 13.8% on-year in Q1 2023 to $1.64 billion, but sale volumes fell by 15.2% to 32,300 tonnes. The figures point to an overall average realised price of $50,965/t last quarter -- this covers spodumene concentrate, lithium carbonate and lithium hydroxide.

The performance in the January-March period yielded the Chilean treasury over £1 billion, SQM says, referring to its payments to CORFO.

“Based on the recent increase in customer activity, we believe that the destocking period has concluded and anticipate our sales volumes to recover in the upcoming months,” adds Ramos.

His optimism reflects the unchanged forecast of a 20% global lithium demand growth this year, with SQM keeping operations running at full capacity. The company expects global EV demand to rise by 30% this year. In Q1, it said EV sales increased over 20% on-year in China and more than 50% in the US.

The 2023 investment budget remains the same at around $1.2 billion, focusing on growth plans in Chile and abroad. Expansions at the Carmen lithium plant in Antofagasta, Chile, and construction at the Mt Holland site in Australia are advancing on schedule. The latter should produce its first spodumene concentrate by year-end, with battery-grade lithium hydroxide to follow in 2025. The lithium hydroxide plant in China is also due to start production in coming months, the miner confirms.

SQM also operates in the iodine, potassium and specialty plant nutrition markets.