Lithium, Iodine, and the Desert’s Secret: Why SQM’s Stock Just Jumped 20%
In a week crowded with earnings, geopolitics, and macro tremors, Sociedad Química y Minera de Chile S.A. (SQM) staged a rally that left market watchers blinking: a 20.1% surge in just five days. For a company rooted in Chile’s sun-scorched Atacama Desert, the move was anything but dry. Here’s why the market is suddenly electrified by SQM.
Desert Alchemy: A Turnaround Story in Three Acts
Just a year ago, SQM’s numbers were sobering. Lithium prices had cratered, revenues fell 18.3% year-over-year to $1.07 billion, and net income margins shriveled. Yet, as of August 16, 2025, SQM’s net income for Q1 hit $137.5 million—swinging from a $869 million loss in the same period last year. Revenue for Q1 2025 was nearly flat at $1.04 billion, but this stability—against a lithium glut—was itself an act of defiance.
Volume over Price: The Contrarian’s Playbook
While rivals trimmed sails, SQM pressed forward. Lithium sales volumes rocketed 27% year-over-year in Q1 2025, reaching 238,000 metric tons of lithium carbonate equivalent. This wasn’t just an operational flex: it was a statement. Even as average realized lithium prices plummeted 64% since 2022, the company’s bold expansion—$1.4 billion earmarked through 2025—became its shield. By betting on scale, SQM is poised to ride the next demand wave as EV battery demand is set to quadruple over the next decade, according to IEA projections.
Iodine: The Unsung Hero in the Portfolio
Lost in the lithium storm is another desert treasure: iodine. SQM’s iodine segment posted record prices in Q1, offsetting lithium’s volatility. Global iodine demand, projected to grow 5.8% annually through 2032, found SQM perfectly positioned. Applications from X-ray contrast media to LED screens kept prices robust, providing ballast to the income statement.
The Atacama Accord: Betting the Mine on the Future
Boldness isn’t just a function of geology. On January 1, 2025, SQM’s joint venture with state-owned Codelco became effective, unlocking the potential to extend Atacama operations by three decades. If finalized, this deal could lift Chilean output to 300,000 tons per year—cementing SQM’s strategic relevance as global battery wars intensify. The stock’s recent leap is the market’s verdict on the future value of these brine assets.
Risk, Currency, and the Geopolitical Labyrinth
SQM’s journey is not without shadows. Tax disputes totaling $986 million hang over its lithium unit, and a non-public SEC inquiry remains unresolved. Currency and political risk in Chile add an extra layer of volatility, especially compared to U.S.-based rival Albemarle. Yet, with a dividend yield hovering near 10.5% and a valuation at just 5.4x trailing EPS, investors are weighing risk against the megatrend tailwinds in electrification and energy storage.
Leadership Reset and the Chemistry of Confidence
On May 27, 2025, a boardroom shakeup brought new leadership to SQM. The timing was not lost on the market: renewed governance often precedes strategic resets. Add to this a $490 million investment in new lithium hydroxide processing and the imminent Mount Holland refinery launch in Australia, and the narrative shifts from survival to expansion.
Numbers That Move the Needle
Over the past year, SQM’s shares are up 25.6%, with a stunning 32.4% gain in the last three months—culminating in this week’s 20% leap. Cash and short-term investments top $3.6 billion, net debt is moderate, and free cash flow to EBITDA rebounded to 33.5% in the trailing twelve months. In a sector battered by price shocks and regulatory fog, these metrics speak volumes.
The Long Shadow of Megatrends
Investors are not buying just a mining company. They’re buying a call option on the future of mobility, energy transition, and—by extension—the entire EV supply chain. As battery manufacturing capacity is projected to double by 2030 and global EV adoption accelerates, SQM’s desert chemistry is suddenly the stuff of tomorrow’s headlines.