SQM-A.SN - Earnings call transcript Q3 2022 | Sociedad Química y Minera de Chile S.A.

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Operator

Good morning, and welcome to the SQM Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kelly O'Brien, Head of Investor Relations. ahead. go Please,

Kelly O'Brien

you the Thank conference SQM's conference webcast earnings will Good months for ended for live. being is nine recorded This September call be morning. and joining XX, call XXXX.

our and been find have our a release press to to earnings presentation a webcast. the uploaded can summary you where this with website link results of also Our

Pablo President Commercial Speaking Illanes, CFO; Gerardo Iodine Ramos, CEO; Vice of will to on President and be the Vice call answer today will Altimiras, Lithium Nitrates, and any and Smith, of be Senior Executive Ricardo available Felipe questions.

under begin, remind forward-looking expenses or statements growth, together economic let term a performances, to other Before SQM are could are cost best results differ other statements that we future the reflecting that the service is new line now as Chief you are to cause considered in law. revenues, a whether update as those profitability, or We statements identified those night. anticipated and me no States factors available materially Ricardo forward-looking result implement information, statements, product release earnings our including our obligation Executive United could or are and in concerning ability this and securities and other leave such currently factors. I conference public facts last sustainable defined otherwise, statements developments anticipated as outlook, forward-looking such the be with financial uncertainties that Ramos. stated statements, actual that, historical by laws. should risks, Commission business not company’s and estimates, items, of except, you synergies of risks, on filings information with statements, Securities our light to future of Any the required judgment that in and these with federal from of based number in plan, Officer, statements issued And of forward-looking factors successfully made uncertainties development affect our Exchange accuracy in our such the assume involves

Ricardo Ramos

thank call joining the Kelly. you, Good morning, and Thank you for today.

are saw results were We we prices. conditions published. pleased influenced record where in we by market and high results iodine lithium, the very positive These with

the gross nine This of success represented XX% of the overnight. During year, not happen first lithium months profit. our did

decades, we For in belief grown lithium enthusiasm recent only the have years. a and market in has that

begin the has heavily successful world. any XX,XXX to our We R&D than in the operations to and Chile XXX,XXX in tons to been We plant our metric continue hydroxide. will on in between other have in have hydroxide to lithium the public-private able look a Chile The neighboring recently metric an of communities bring formalized lithium China, tons in more capacity world. keeping around we Chile and capacity benefited level. through momentum announced driven player has parties, expansion both as we investing overhauled and Salar CORFO the alliance invested SQM purchase faster in unprecedented sulfate of that momentum as from Chile. announcement. We to which Yesterday, future, this and to our the in Futuro production us well allow has us going our process This forward from been lithium growing announced to the lithium to

the last compared are relating units forward we where completing to particularly in to strong lithium are to by have growth, industry, look this that the electric demand and project indicators we year. permits doubling necessary In vehicle We see seeing XXXX. sales China,

globally US up of vehicle United positive in XX% demand leading Europe sales a is starting the China lower are While a to the continued market these in the base, lithium grow still indicator could today, at we this vehicle while the the States. believe numbers momentum and also in year, growth year compared in of lithium to future. last markets the electric the Electric and

it seems are on and us will this and we strong of prices XXXX. levels growing lot growth a likely remain announced Chile into Given keep that incentivizing for this, These beyond to abroad. remainder the fundamentals at in historically what have of XXXX high

way continue in energy new to the in invest will and cost-effective and R&D, opportunities and green will lithium future. a the allow of transition We innovation that projects produce meet sustainable to

long-term or announced in the significant the business investment all remain recent views While business our we -- the lithium in have years, strong. in

invest projects to related and well. to expansion continue in We iodine nitrates as

and and have collaboration lithium main iodine, assigned for proving have that long-term During and contract to we the industries the where players commitment business the with we we in few our both our operate. past months, trust mutual the

Kelly O'Brien

now we can over to it questions. turn Operator,

Operator

We come now Joel session begin question [Operator will Capital Instructions] Our the Markets. from first question-and-answer BMO with Jackson will

You may now go ahead.

Joel Jackson

couple questions, morning. A I'll go of Hi, one. good one by

may or you a we may Are being And higher decline. in see of pricing your prices started getting than lithium have XXXX months, that your prices QX? you. a So by week lithium, realized seeing slightly spot shouldn't there's not prices lagged noise in levels lot few falling? considering Thank spot your you're to the quarter lag, this spot realized first

Felipe Smith

Smith. Yes. Hi, This good morning. is Felipe

levels, before, at mean, changing is prices. still sign the mentioned I seeing trend about contracts current all not still have price a futures, linked as are any of our the market course, but right future at to information levels. of are we the is spot mentioned now. We same you price And

expect next have the in -- pricing. change months significant So first we do the in remaining and to of year not the a of this first in year the

Joel Jackson

Okay.

with the topic. on go Let's

new to prices and also you more to Do reference futures price purchasing you including like this structures be and said. lithium new and emerging, exchanges, new all patterns? there lithium journalistic expect of seems contract assessments sales So, change

Felipe Smith

the that there indexes of coming that to we and indexes Well, reliable. older market. But welcome course, are -- new more are some we have in

the the discussion with more help the have index consider we have to will end, that is, which of transparency. on our customers. decision think part And that I at we

Joel Jackson

You earlier answers about mentioned of in one pricing. your futures

credible Are now are those on references? based liquid? think XXXX later So, exchanges that it new Are future new declining into prices emerging. customers is futures there's assessments? references some lithium that these that credible? Are they are Like prices, credible they or

Felipe Smith

But followed at end, just the those are We indexes. Yes. contracts our developments. market the based on current

Joel Jackson

much. very you Thank

Operator

Our next you ahead. Juvekar go P.J. from question come will now with may Citi.

P.J. Juvekar

Yes, hi. Good you. morning. Question for

Chile well your expanding conversion China. capacity plant as as You're in in and

sense consider With for conversion? bill, make in would the US IRA a the to plant for SQM it

Carlos Diaz

carbonate same At Well, we the lithium Diaz, At capacity the next our of XXXX. year be reach expect we're time, a total know, same lithium Good year, of XX,XXX Carlos for time, I'm ready our morning. same the total we as XXX,XXX Executive here working are President that of plant carbonate. as next lithium in to I'm hydroxide. buying of you in in new -- capacity expanding building a XX,XXX time, refining and new in and of a Chile expanding the the in and Lithium. a lithium the year on business, at China Vice will hydroxide conversion capacity in Australia

about XXXX. do our plant up is are That know to consumption fast Additional, announced Chile market US asked to in lithium that batteries. continue that we year alternatives XXX,XXX with Obviously, in And in capacity you the expanding or the the different of for in is reach to something what we our be plan. yesterday put hydroxide for that US. the growing are a studying another to could lithium we one

it's study. So, but we're scope, our in still under

P.J. Juvekar

are some biggest Some market. high? is think your And talked higher causing have they question about on a in you. weakness. Can And that then I about Brazil talk potash. Thank have Okay. people prices Brazil down inventories potash. think come in demand some you you people

your in XXXX? outlook for happened that XXXX, what's Given

Pablo Altimiras

explained general, because gas, only not are Altimiras in of the of price economies Pablo Also, would I because there is of only not has year, whole in a of Well, know, and a unusual pressure the morning. the demand materials speaking. Good cost Okay. -- been reduction the that very fertilizer, raw [indiscernible] say demand of cetera. product. fertilizer you industry et farmers' as manpower, is in lot the

important Brazil, the And So of have -- a the the they're buying starting at a been impact that Brazil the course, in know, product year. very way. in of beginning you demand not of exception. also as lot this in has

of now, right our still and that we So lot the view inventory, is explains saw low country, volumes that a we in quarter. have that this in

as Regarding I uncertainty. happen, before, to lot what will a are there of said still

will market I a think to to the Of little are know that recoveries now, to following it's difficult see happen. need bit we some but because say. going up situation, with of what what's that uncertainty, so wait order course, small on in we We

P.J. Juvekar

Brazil that demand So weaker season? would during say was planting, demand has finished you planting that I now think do is weaker XQ? just in the mean, you

Pablo Altimiras

We in recovery some see case. specific sales that see in you low. our our our Well, case, QX in were

As I But sign, we of the because inventories. said you getting are it's because starting seeing the there. before, know, still, of as level is demand that slow some

P.J. Juvekar

Okay.

are inventories so high. Okay,

Thank Okay. you.

Operator

question come Kim next will with Our from Jacob Scotiabank.

go ahead. You may now

Jacob Kim

This for Ben Kim couple Hi, I Jacob Isaacson. of is there. calling just in questions. had a

China, while you Looking it you that takes have Chile especially running, so mentioned these in expansions expansion before to hydroxide to at in capacity and jump line for a up through so, Chile, has the when get you any your And about accelerated Can talk projects if like this of an the Salar Futuro? whether hurdles. is other many accelerated time process? any been

Ricardo Ramos

Well, doing fast Yes. as as we we're as can. much

Chile we're the that new moment we XX,XXX. a same weeks start a for announced with to just time carbonate the we'll the the that And doing yesterday. to already in lithium expansion couple doing permit now in just lithium at hydroxide we're expanding start received so capacity that, reach just ago, the know with And with or of immediately, after for other same You the month that. side, the

last for doing or doing as I that and possible, And as are capacity our instead three building increasing the much two So, been and next we faster. the years keep three we four years, think doing we we in have that at of will or mean, least.

Jacob Kim

one good. Sounds just last And question.

you've of I long-term that pricing know terms pros pricing talked the contracts before are of Just in contracts, about place, there in and the contracts. some that you've mentioned these and pricing long-term cons

pricing? would market strategic that lock a in the as in there you is general, long-term Just they follow general conditions, you to point in identify when want time

Gerardo Illanes

we Yes. discussions customers, product. the today, to At with our healthiest market this that end, We in indexes. referring to believe contract the is way are our

for So, something of is definitely, us out is question that today. locking the prices

We We are is believe this following indexes. best. the

Jacob Kim

good. Sounds

Okay. so much. Thank you

Operator

BTG next from will Our Pérez-Novoa César question Pactual. with come

now may ahead. go You

César Pérez-Novoa

considering group and with considering hydroxide and to XX,XXX say will changed the that incremental the a My finally expansion assume here. progress you. SQM's authorities Good And investment, contributing a your bold expire we years? when press? Thank could On to facility any is in congratulations confident what this what afternoon what numbers with performance. Chile, economic be investment, on strong regarding the terms first next rationale, as should possible pricing. in this new you for CapEx I XXXX. certainly this numbers been how CORFO voiced also it has under contractual -- is your China, movement have with in questions have and start of all On terms? to have third and And one and XXXX? when lithium which pertinent this there for possibly And

attain quarter the quarter first a uptick qualitatively Maybe if spot could quarter-on-quarter you. and it had And price three seeking XXXX. be are -- there XX prices. increased to consistently into pricing Those year sales on a gentlemen. maybe of would of talk next that The my seems indicate numbers basis, has don't attain? mix what you days you been about or significant in third qualitatively but much four, levels -- XXXX know I you Thank direction that would questions, price

Gerardo Illanes

César. is Gerardo. This Hi,

We to questions. of one. each start first over the go will try will Carlos your with

Carlos Diaz

lithium, coming will more we the market, be been a outside as on that César. especially The explain in to is we in I year will in in China demand strong explaining Chile. said obviously, China. of believe we before, -- Chile, that Hello, I regarding and have -- bit we're about expansion very lithium little Australia. the the that hydroxide and working supply about What will need the hydroxide

we our capacity. feel very will best to confident that reach effort do So that we

the in shown have We done it. we have past

regarding know, so CORFO, And I don't Ricardo? to

Ricardo Ramos

ready this in we process considering are that project XXXX we even Futuro a hydroxide Carlos. you Thank be very itself, will you, what considering without and say may the It's agreement you're we to Salar are let comment forward the in scope good process, is important asking very XXXX. project -- that think, we It increase have the the about as the CORFO. explain, informing call means CORFO moving in XXXX that, capacity But with a in know, it's the good agreement the to stakeholders have today, the we I authorities project. César, me different of of about we

I'm far, the developing say to and what of objective we an is have Salar low deepening productive have are pleased Salar we de extremely with in the yields objective forward so Atacama. the full at agrees end, processes water a and So And activity we been very touch footprint. in carbon At looking far. interest the aim everyone agreement everyone maintaining a sustainable the that of that very balance is also a on good technology site. High at

maximum the We and a as are to design explained of de engineering a technological high-level of knowledge work significant This in survey years process we speed at before, complete after and advancing believe develop the that are very project, complex the I speak, definitions in Atacama. XX today, and Salar project. environmental as experience is of we and We have requires -- SQM, we experience. strongly

We resources the the the the the to evaluation. Chile XXXX. That's complete all framework. all have second authority submitted hope of and team, the definitions to to submit experience, environmental final important half consider assessment, prior It's to project We that is definitions Chile, the human to project the successfully complete of required the commitment Chilean in to environmental to in necessary project. during being very the in in a face progress the important

it's implies to the go far also that of XXXX. think this commitments operation beyond course, important I consider that project, year

positive Futuro working environmental all its in near out It necessary Chile. prior We has So is agreement that communities be must authorities the a for region development positive of for presentation course, for and of to Salar, the Chile in Salar be the positive way the evaluation. for of that with second carried project to CORFO, to the agree is for the SQM.

Gerardo Illanes

our your CapEx, have regarding regarding we about question your period for XXXX-XXXX. question the CapEx So announced

$XXX we of comprised will total of billion $XXX hydroxide of of million that, expect including billion nitrates be to billion, of CapEx plus We iodine $X $X operations, that and CapEx approximately business, is which maintenance the in here, lithium in expansion related regarding Australia, China investments announced of expansions including for yesterday Chile, question. $X.X your capacity, our and plus lithium I'm million that Carlos? those

Carlos Diaz

second China, Yeah, the still regarding we We're quarter year. in to of producing expect ramp-up next start the factory. to in the

expect April March that say, but to year. something, next so And we something is produce and in that

César Pérez-Novoa

right. All

Thank quarter XXXX? you. All right. Second

Felipe Smith

this is And Yeah. Felipe.

direction, For the price of a last yes, the regarding we question, have lot questions.

the for in believe our environment that we year well, this So XXXX. already mentioned of price press we and remain that will high, release the beginning rest the of

very are -- feedback the aggressive So very our well. as because strong. we They customers demand is all convinced very plans. The expansion with are from we stick to view. remains This that received we

play direction. will a are the And big believe demand that fundamentals there. in those price So we factor

César Pérez-Novoa

All right, Felipe.

correctly? open essentially, So assessment, market here we're XX% the the strong quarter, final if I conditions that a third market, correct exposed conclusion solid a to recall you you'll the be were in that XXXX the I can that because make on -- XXX% Is seeing? if on demand in the is to

Felipe Smith

year, market Yeah, we on very we exposed for to next entirely that. the confident almost so are price, will be

César Pérez-Novoa

questions. All all you and for Thank of right. taking you everyone, my Yes. thank

Operator

McCarthy next Andrew Capital. with will come Our CrediCorp question from

You may now go ahead.

Andrew McCarthy

the little thanks wanted bit. Q&A to presentation Many the to I session. the a over and Good call iodine everyone. switch day for and

very a in a about had terms kilo. $XX price strong of realization, You quarter

you're towards And that not? the into there. going Thanks. in first end yet and are wondering, my supply/demand of reaching we XXXX, Just year the how the segment prices would be That seeing dynamics question. or peak

Ricardo Ramos

the of we quarter also improvements capacity this it's been just But Okay. to said, the because other to we the the in of investing have and iodine media results the you would because you demand Well, explained to matter have of iodine iodine. I say especially very proud say able applications. there, business. that that for more has the about as is know, produce year, we also because in we operations. our have than to our of because able some as expand And been increase sales last been been our are

So customers our my the point have we deliver that is been iodine able to that needs.

to year, will you is the always depend, supply. as say. well, difficult said, Everything demand next regarding to and Regarding

some situation still affect to what uncertainty see but demand, the applications, because way we to some that happened. could Europe in have see of the run finally some Regarding we

one we regarding to that's supply have not And today, point. coming. well, the more So supply, seen

some need happen. order that to finally market more that to we know market. could Next also in year, to needs investing will still we but the we iodine, have deliver the new we that are be iodine we able that Anyhow, see believe capacity arrive, If to more capacity.

Andrew McCarthy

Thanks much. have in lithium, down been China. -- going some data around seeing of customs back very terms And especially volumes and and Great. prices just we to up recently in

wondering whether very mix maybe -- some months more your thoughts be that or effects much. if a that, you'd could there of effects saying that that's anything on in concerned you you're or Just certain about? Thanks onetime share bit that

Gerardo Illanes

that reflected information the price that to Hi, necessarily numbers. being not are this exports Andrew, since is that, there things the a our that there not are that's Gerardo. comes different Yeah, those is only lot and customers on But adjustments from shows of markets. information, like

export to thing the keep cases, in own taking on, also, inventories figures sold from product is in a is being our these consideration may conclusions to later of so where out to keep we the be the And our of market, to, we subsidiaries, another Chile that in strong product there So most mistake. subsidiaries.

quarter, the that quarter necessarily mean more one or than we're volumes the that previous fact going lower were doesn't less higher or the quarter. the So next sell significantly during particular significantly to

projecting volumes is tons. offices. being Chile than from XXX,XXX that year, sold And of are from more our is this total the includes to that also product and sold of lithium We that will going be be commercial for sold course, that, product

Andrew McCarthy

Okay. Gerardo Thanks,

Operator

will come Markets. next Loop Capital Chris question Kapsch Our with from

go now may You ahead.

Chris Kapsch

Yes, hi, thank you.

out it to Sort follow-up but question I on of a prior a flesh bit. a wanted

big attending a battery So Act, stimulus a EV Inflation IRA, the support and I'm US. industry at or about obviously for the Reduction conference or of there's discussion currently, lot materials the conference adoption which in provides

So understand, would the of because IRA as materials qualify under I materials trade partner. battery production a of status of processing in of the the the or free as structure Chile of Chile

IRA, just bill's could So implications just there terms two, there you as commercial within been US partners presumed status and US? curious, engagement in result this wondering, your of this of the status downstream step-up And a has because passage SQM's in qualification the in its the with your and of future trade was -- growth a in just potential this partner free footprint? confirm

Carlos Diaz

something to this is with Diaz. a We agreement is Carlos will free customer. States. -- our that Chile product qualify But Well, about this have shaky Yes. the that understand, I we United have as be our yes, for trade

Chris Kapsch

it engagement. just you're it Yes. implications. this wondering some intentions of Thank investment or -- commercial help the it your is your underwriting seeing I'm you. completely hydroxide in I'm decision? is did curious enthusiasm there's this just And is you legislation, if if just influence much just -- independent around announced, so that expansion is that the

Carlos Diaz

Yes.

said Chile. the with we States, We Those data contract a trade -- the product they will from is before from because developed project that agreement we the and customer, with coming have would What need customers a States. with understand product that have a in United coming I qualify as that our country the free the obviously, now they signed the [ph]. United have are

Chris Kapsch

you. Thank

Operator

Santhosh HSBC. Our with will come from Seshadri next question

go now may You ahead.

Santhosh Seshadri

this of first good the Hi, is, to new peak? support when production? normalization China, the is question the year? are online questions phasing by EV plans out end And of subsidies and those ramping My capital will quantify demand potential for demand demand And up secondly, do following and start see any morning. taking my is inventory possible to Thank necessary to Thanks are it in up you. that the battery that coming you

Kelly O’Brien

first you the could Sam, little -- repeat I have we that just think could missed a bit. just you may report question?

Santhosh Seshadri

China, Yes, I'm given normalization the phasing just is if China of subsidies by EV end in there any signs are of of off year. the this wondering lithium demand that

a prebuying EV. happening there So lot of is of

Felipe Smith

Yes. Hello. again. Felipe,

official for waiting the the are as subsidies government information from more next about year. We Chinese of

shown And see However, maturity, has the now. can that ending. very Chinese market we we the do growth subsidy and momentum impact some has strong more a that believe the of demand we also probably strong because a comment, meaning good not

we On And that demand. believe the that is the will help the momentum. something government Chinese potentially, there contrary, good a will announce

Santhosh Seshadri

Thank you.

Operator

question-and-answer the would O'Brien Kelly like This remarks. I to session. over concludes turn for conference closing our back to

Kelly O'Brien

everyone, for you and Thank day. operator, you, Thanks. thank have all great a joining. We you, hope

Operator

now conference for you joining presentation. has concluded. today's The Thank

now disconnect. may You

Sociedad Química y Minera de Chile (SQM) 17 Nov 222022 Q3 Earnings call transcript