Chile mining group SQM's net profit slips on lower lithium prices
Adds CEO comment in paragraph 7, lithium market context in paragraqph 2
SANTIAGO, Nov 20 (Reuters) -SQM SQMA.SN, the world's second-largest lithium producer, reported a 73% drop in third-quarter net profit on Wednesday, as higher sales volumes failed to offset a sharp decline in prices due to a supply glut.
Lithium miners around the world have been impacted by a sustained drop in lithium prices in the past few months due to weaker-than-expected demand for electric vehicles. Lithium is a major component of batteries for electric cars.
SQM reported net profit of $131 million for the quarter, below analyst estimates of $162 million, based on LSEG data.
Revenue fell 41% year-on-year to $1.07 billion, in line with analyst forecasts.
Lithium sales volumes rose almost a fifth compared with the same period last year, but average prices plunged 67%, the mining group said. Between the second and third quarters, prices dropped 24% for the metal.
Prices are expected to fall further in the final months of the year, SQM said, tracking with the company's prior forecasts of weak pricing throughout 2024.
"Although demand continues to grow at a strong pace, mainly driven by strong EV sales growth in China, we continue to see the prices pressured by an oversupply," CEO Ricardo Ramos said in a statement.
The company said its third-quarter lithium sales included, for the first time, the SQM International division, which it launched in the prior quarter to focus on developing the company's lithium business outside Chile.
SQM, which also produces fertilizers and industrial chemicals, extracts lithium from the Atacama salt flat in northern Chile, a region with some of the world's highest lithium concentrations.
The company maintained its target for lithium sales volumes this year of 190,000 to 195,000 metric tons. Lithium made up 42% of its gross profit contribution this year.
Reporting by Daina Beth Solomon and Natalia Siniawski; Editing by Alexander Villegas and Jane Merriman
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