Chile's SQM (NYSE: SQM), the world's second-largest lithium producer, said on Thursday it had earmarked US$3.4 billion of new capital spending by 2025 to boost its production capacity to 210,000 tonnes of lithium carbonate equivalent a year, from current levels of 180,000 tonnes per year.
The hefty planned investment comes as the Santiago-based company reported soaring profits last year on the back of higher prices for the metal driven by soaring demand from the electric vehicles (EVs) sector.
SQM posted net income of US$3.9 billion in 2022, an almost three-fold increase from the US$585.5 million it amassed in 2021.
Total revenues for the year hit US$10.7 billion compared to the almost $2.9 billion reported for the 12 months ended Dec. 31, 2021.
Lithium prices have skyrocketed - up by as much as 1,200% - over the past several years as supply has failed to match rampant demand. Car makers continue to scramble for the battery metals to make more EVs and comply with tougher climate rules from governments.
SQM noted it would invest $1.4 billion from the total planned for the 2023-2025, period this year, as it continues expanding its capacity in Chile. The copper-rich country currently generates about 29% of the world's supply, but it plans to double production by 2025 to about 250,000 tonnes of lithium carbonate equivalent.
SQM remains bullish on the long-term outlook for the lithium market. It now forecasts demand to reach almost 1.5 million tonnes by 2025.
"This strong demand growth expectations give us confidence as we remain focused on expanding our lithium production capacity," chief executive officer Ricardo Ramos said in a statement.
The firm announced in January an A$4.2 million (US$2.8 million) investment in Australia's Azure Minerals (ASX: AZS), which made it the lithium juniors largest shareholder. The company also said it planned to invest a further A$15.8 million (US$10.6 million) in Azure.
SQM has also partnered with Wesfarmers to develop the Mt Holland lithium asset in Western Australia. The project is expected to come online by the end of this year, with an initial production capacity of 50,000 tonnes of battery grade lithium hydroxide.
The lithium giant, which bought a refinery plant in southwest China last year, said the facility was expected to be completed in the second quarter of 2023. SQM's plan is to produce lithium hydroxide from lithium sulphate sourced in Chile.