Key Takeaways
SQM and state-owned Codelco are laying the groundwork for a major expansion at their Novandino lithium joint venture, targeting annual output of as much as 470,000 metric tons — a more than 70% increase from the roughly 270,000 tons guided for 2026.
"Reaching that level would require additional engineering work, further studies, potential changes to production quotas, and successful deployment of DLE technologies," Federico Gay, an analyst at Benchmark Mineral Intelligence, said. The firm is a leading data provider for lithium and battery raw materials.
The $3 billion overhaul of operations in the Atacama Desert calls for a phased approach. Production is expected to rise gradually to around 300,000 tons before the venture begins a seven-year transition to an integrated production system incorporating direct lithium extraction, or DLE, technologies designed to reduce water consumption in the salt flats. The 470,000-ton target was larger than many in the industry had anticipated because the project had previously been presented primarily as an environmental modernization effort rather than a capacity expansion, according to analysts.
The expansion plan cements Chile's position as one of the world's most important lithium suppliers and could pressure higher-cost producers elsewhere as the industry transitions from a global supply surplus. The SQM-Codelco partnership is a cornerstone of Chile's strategy to increase state participation in lithium production while expanding output from the country's high-grade brine resources. SQM, with a market capitalization of about $20.8 billion, trades on the New York Stock Exchange under the ticker SQM.
Phased Ramp and DLE Deployment
Under the current development plan filed in an environmental impact study on July 3, Novandino will first ramp output to approximately 300,000 tons annually before entering a seven-year transition period. The venture will deploy DLE technologies aimed at lowering water intensity in the Atacama salt flats, a critical environmental consideration for operations in one of the world's driest regions.
Gay said achieving the 470,000-ton capacity would take "several years, certainly not this decade," noting that additional engineering work, further studies and potential adjustments to production quotas are required before the target becomes feasible.
Global Lithium Market Implications
The planned expansion comes as global lithium consumption is projected to grow at double-digit rates, driven by electric vehicle adoption and grid-scale battery storage deployment. Chile's two largest lithium producers — SQM and Codelco through their joint venture — are positioning to capture a larger share of that demand growth.
The 470,000-ton target compares with Albemarle Corp., the other major lithium producer operating in Chile, which has its own expansion plans in the country. If realized, Novandino's output would represent a significant share of projected global lithium supply, potentially accelerating the consolidation of low-cost brine production over higher-cost hard-rock mining operations in Australia and Africa.
This article is for informational purposes only and does not constitute investment advice.
