Key facts
- SQM's preferential shares rose more than 3% in Santiago.
- Scotiabank maintained its "Sector Outperform" rating and $105 price target for SQM.
- Scotiabank highlighted SQM's cost advantages at Chile's Salar de Atacama.
- SQM anticipates lithium incentive pricing around $18 per kilogram.
- SQM's all-in lithium cost is approximately $4,500 per metric ton, excluding Corfo payments.
- SQM may decide on an expansion at its Mt. Holland project in Australia in the coming months.
SQM's preferential shares climbed more than 3% in Santiago on Tuesday, buoyed by Scotiabank's reaffirmation of its positive outlook on the Chilean lithium producer. The bank maintained its "Sector Outperform" rating and a $105 price target, identifying SQM as a top pick for 2026.
Scotiabank's assessment, following meetings with SQM executives, is underpinned by expectations of robust lithium demand growth through the end of the decade. The bank also highlighted SQM's significant cost advantages at the Salar de Atacama, with an all-in lithium cost of approximately $4,500 per metric ton, excluding payments to the state development agency Corfo. This positions SQM as one of the industry's lowest-cost producers.
SQM anticipates lithium incentive pricing to be around $18 per kilogram, within a $15-to-$20 range. The company believes that sharp demand expansion will necessitate new supply from market entrants. SQM is also considering an expansion at its Mt. Holland project in Australia, which could potentially double its capacity to 100,000 metric tons, with half attributable to SQM. The company sees strong economics in battery energy storage systems (BESS), driven by cost competitiveness.
However, SQM acknowledges that it does not expect to maintain its current market share indefinitely due to the rapid pace of industry growth. The company also noted that environmental permitting remains the primary constraint on increasing new lithium supply.