Sociedad Quimica Y Minera de Chile S.A. - ADR

Lithium (Chile + Australia): strong volume, firmer pricing, updated demand outlook - Reported record quarterly sales volumes >84,000 metric tons LCE (from Chile via Novandino Litio and from Australia via Covalent Lithium). - Lithium prices rose in 2Q on strong-than-expected demand; company expects global lithium demand >2.1 million metric tons in 2026 (raised view vs prior call by +200,000 tons). - 3Q expectations (guidance context): volumes expected in line with 2Q; price expected roughly in line with 1H averages (but explicitly “volatile,” difficult to predict). - What could be “surprising”: investors noted that Novandino realized pricing (LCE) dynamics vs International looked inconsistent QoQ; management explained differences largely come from mix/timing of shipments and conversion economics (spodumene → LCE) rather than purely index movement.

Lithium production outlook & capacity milestones - 2026 production guidance (Chile/Novandino Litio): ~280,000–290,000 t LCE, with ~300,000 t capacity by 2027. - Mount Holland (Australia, Covalent/Wesfarmers): announced expansion expected to double spodumene concentrate capacity to ~350,000 t/year, with first production expected in 2030 (management emphasized planning for safety/derisking). - Scale timing & mix: next year’s growth is expected to come with an increase in hydroxide vs this year, implying lower direct spodumene concentrate sales vs 2026 (but refinery decision at Covalent is still “open”). - Capacity composition detail (surprising/important): for 2027 ~300,000 t, management estimates ~20,000–30,000 t (~10%) from hydroxide, remainder ~220,000 t carbonate, with ~80,000 t from lithium sulfate pathway and ~220,000 t from Antofagasta chemical plant.

Salar Futuro (Chile): major milestone, significant capex, but more than just “capacity” - July milestone: Novandino Litio submitted environmental + technical documentation for Salar Futuro to authorities (next transformation stage at Salar de Atacama). - Investment plan: ~$3 billion over 7 years; goal is to increase production and significantly reduce environmental footprint, and management framed it as a “new beginning”/technology change for a multi-decade operation—not just incremental tons. - Investors’ concern addressed: some investors interpreted $/ton = capex efficiency incorrectly; management pushed back that Salar Futuro includes technology/environmental overhaul, so the headline cost per added ton shouldn’t be compared simplistically to prior expansion. - Longer-term framing (post-2030/2031): they expect to be mid-investment in Salar Futuro around 2031, and said long-term projections already incorporate required investments; more detail to come in future calls.