| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 74.36 | -3 |
| Intrinsic value (DCF) | 21.60 | -72 |
| Graham-Dodd Method | 7.48 | -90 |
| Graham Formula | 41.97 | -45 |
Sociedad Química y Minera de Chile S.A. (SQM) is a leading global producer of specialty plant nutrients, lithium derivatives, iodine, and industrial chemicals. Headquartered in Santiago, Chile, SQM operates across multiple continents, supplying critical materials for agriculture, energy storage, pharmaceuticals, and industrial applications. The company’s diversified product portfolio includes potassium nitrate, lithium carbonates, and iodine derivatives, which are essential for fertilizers, batteries, medical imaging, and LCD/LED displays. SQM’s vertically integrated operations and access to Chile’s rich mineral resources, particularly lithium from the Salar de Atacama, provide a competitive edge in cost efficiency and supply reliability. As demand for lithium-ion batteries surges amid the global energy transition, SQM is strategically positioned to benefit from long-term growth in electric vehicles and renewable energy storage. The company also maintains a strong presence in agricultural inputs, supporting global food production. With operations spanning North America, Europe, and Asia, SQM is a key player in the specialty chemicals sector, balancing cyclical commodity exposure with high-margin specialty products.
SQM presents a compelling investment case due to its dominant position in lithium and iodine markets, both of which are experiencing structural demand growth. The company’s low-cost lithium production from the Salar de Atacama provides a margin advantage over peers, while its diversified revenue streams mitigate commodity price volatility. However, risks include geopolitical exposure to Chile’s evolving mining policies, potential lithium oversupply, and recent net income declines (-$404M in latest reporting). The stock’s high beta (1.14) reflects sensitivity to lithium price swings. Dividend investors may find the 2.1% yield attractive, but payout sustainability depends on lithium market recovery. Long-term upside hinges on EV adoption rates and SQM’s ability to expand capacity amid rising competition.
SQM maintains competitive advantages through three key pillars: 1) Resource access – its Atacama lithium operations boast some of the world’s highest lithium concentrations and lowest production costs; 2) Vertical integration – control over the full lithium production chain from brine to battery-grade carbonate/hydroxide; 3) Market leadership – it’s the #2 global lithium producer and #1 iodine producer with 30%+ market share. In lithium, SQM competes on cost with Albemarle but lacks the US producer’s geographic diversification. Its iodine dominance faces minimal competition due to high barriers to entry. The fertilizer business competes on quality rather than price, with potassium nitrate commanding premium margins. Challenges include reliance on Chilean operations (85% of EBITDA), exposing it to regulatory risks like potential royalty increases. Unlike pure-play lithium companies, SQM’s diversified model provides stability but may limit valuation upside during lithium booms. The company is investing in lithium hydroxide capacity to better serve cathode manufacturers, narrowing the gap with Ganfeng’s downstream capabilities.