UPDATE 1-Chile's SQM bets on higher sales, demand for lithium, announces new expansion

(Updates with quote from earnings call, additional context, details on expansion)

SANTIAGO, Nov 19 (Reuters) - Chilean miner SQM announced on Thursday plans for a fresh expansion of its Chile lithium operations by 2023, predicting its sales of the electric vehicle battery metal would continue their growth through 2021 even as profits flounder.

SQM said it had sold 17,700 tonnes of lithium in the third quarter, up 56% from the same period the previous year despite the global downturn and coronavirus pandemic.

The company said in a statement announcing its quarterly results that it would likely sell 30% more lithium in 2020 than in 2019, and predicted a similar jump in sales volume in 2021. SQM’s head of lithium, Pablo Altimiras, said the company’s optimism was further fueled by hints of higher prices in China, a critical market for the miner.

“We have seen in China a recovery in the price level, which could mean that we have already hit the floor,” Altimiras said in a conference call with stock analysts. “We should see better prices during the next year.”

Prices for lithium began to collapse on oversupply last year. Miners boosted output in anticipation of a demand rush from carmakers going into 2020, but the COVID-19 pandemic slammed the brakes on the electric vehicle revolution in China and elsewhere, denting profits and forcing many companies to shelve expansion plans.

SQM said its net income plunged 97% year-on-year to $1.7 million in the quarter, dragged down by the low prices and a one-time, $62.5 million settlement fee in a class action lawsuit.

Strong sales and a recovery in China however, underpinned a decision to ramp up production capacity to 180,000 and 30,000 metric tonnes of lithium carbonate and lithium hydroxide, respectively, by 2023, the company said.

The company already has the necessary environmental permits in place for the project, it said.

Reporting by Dave Sherwood; Editing by Kim Coghill and Steve Orlofsky

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