Lithium miner SQM dodges impacts from Chile protests, hit by lower prices

SANTIAGO (Reuters) - Chilean miner SQM SQMA.SN, the world's No. 2 lithium producer, said a month of violent protests in the South American nation would not dent the company's sales or volume forecasts for 2019.

FILE PHOTO: An aerial view shows the brine pools of SQM lithium mine on the Atacama salt flat in the Atacama desert of northern Chile, January 10, 2013. REUTERS/Ivan Alvarado/File Photo

Protests over inequality paralyzed major cities in the South American nation for weeks, leaving at least 23 dead, hobbling public transportation networks and causing around $1.5 billion in damages to private business.

“We have had some issues with transit of our products, workers and contractors,” said SQM CEO Ricardo Ramos of the company’s operations.

In late October, indigenous protesters said they had blocked access to SQM’s operations at Atacama.

“We are going to deliver our products to our customers according to our previous forecast despite the situation in Chile,” Ramos told investors on a conference call on Thursday. “I don’t foresee that this will be a strong issue in our business goals in the medium and long term.”

Albemarle, SQM´s top competitor and neighbor on Chile’s Atacama salt flat, said earlier this month that unrest had reduced Chilean production by about 500 tonnes but is not expected to have a material impact on annual results.

Chile is the world’s No. 2 producer of lithium, behind Australia. The metal is a key component of batteries used in cell phones, electric vehicles and other consumer goods.

SQM said late Wednesday profits had plunged in the third quarter, ahead of the protests, on sagging prices for the key battery metal and softer-than-expected demand this year from China.

Profits sank 27.5% to $60.5 million in the third quarter, from $83.5 million a year earlier, the company reported.

SQM said prices had fallen 28%, though sales volumes continued to grow, up 12% through September, and up 6% over the second quarter.

Lithium revenues fell 26.4% over the same quarter the previous year, as falling prices continued to offset increasing sales volumes.

Ramos said 2019 demand growth would likely hit 14%, lower than the company´s long-term estimates of 16% to 20%. The company said it nonetheless expected to meet 2019 sales volume targets of 47,000 tonnes of lithium, and remained “very positive about the long-term demand fundamentals.”

But a wave of new mine production even as China has scaled back subsidies have pushed down prices in recent months, prompting some miners to put near-term investments on ice in an industry already scrambling for capital.

Reporting by Dave Sherwood; Editing by Elaine Hardcastle and Lisa Shumaker