Driving Sustainable Lithium Solutions: SQM's Path to a Greener Future
Jose Miguel Berguño, Senior VP Corporate Services & Sustainability
In this interview, Jose Miguel Berguño, Senior VP Corporate Services & Sustainability at SQM, sheds light on the global demand for lithium, particularly in the context of the surging popularity of electric vehicles (EVs). With insights into SQM's environmentally and socially responsible practices throughout the lithium supply chain, Berguño discusses SQM's ambitious goals for net-zero lithium production by 2030.
Can you provide an overview of the current global demand for lithium and its relationship to the rising popularity of electric vehicles?
Given that the transportation sector is one of the important contributors to CO2 emissions, the rise of electric vehicles (EV) has become a central element of global climate policies and energy transition strategies aimed at decarbonizing the planet. Lithium-ion batteries remain the primary technology used in electric vehicles. Today, we assume that 70% of lithium demand is driven by electromobility, and we expect that by 2030 this figure will be almost 85%. S&P Global Commodity Insights forecasts indicate that EV sales are projected to reach 13.8 million in 2023. However, these sales are expected to significantly increase and surpass 30 million by the year 2030. Therefore, ensuring a stable lithium supply is of paramount importance in the pursuit of climate goals. However, to promote a sustainable world, it also needs a sustainable raw material. Hence SQM, the world's largest lithium producer by volume, places great emphasis on producing high-quality lithium chemicals from its operations in northern Chile in the most sustainable way possible, with a low carbon and water footprint and in harmony with the environment and the people who live there.
Could you share some insights into SQM's strategy for ensuring environmentally and socially responsible practices throughout the lithium supply chain?
According to several Life Cycle Assessment studies, the lithium chemicals produced by SQM already have one of the lowest water and carbon footprints of the entire industry worldwide. However, we have ambitious aspirations to maintain our leadership position in sustainable lithium production and we are willing to constantly challenge ourselves and exceed our own benchmarks time and time again. For more than 25 years, SQM has been investing in innovation and technology to develop sustainable lithium production and high-quality lithium carbonate and lithium hydroxide refining processes in Chile. This has made it possible to increase the output from our lithium refinery by a factor of four between 2018 and 2023, while reducing brine extractions at Salar de Atacama by more than 20% and water use by more than 50%.
And we have further ambitions: One year ago, the company presented its innovation roadmap for water-neutral lithium production in Chile, based on a combination of advanced evaporation technologies, direct lithium extraction and seawater adduction combined with a desalination plant. SQM is also part of the UN-backed global "RaceToZero" campaign, in line with the company’s goal to produce net zero lithium by 2030, and we are also member of the Global Battery Alliance. As for our social responsibility, our aim is to generate a positive impact for the nation, the region and its inhabitants. SQM’s lithium production in Chile is sharing significant value with the Chilean state and local stakeholders. In 2022, the value sharing from SQM’s lithium operation in Salar de Atacama amounted to USD $5 billion. This is the highest value sharing of any lithium operation in the world. In addition, we have a special responsibility towards our immediate neighbours, the local communities close to our operations. That's why SQM is fostering horizontal and positive relationships with the communities and has been carrying out a range of projects with the communities throughout the Atacama region that aim to improve social conditions in areas such as infrastructure, water, energy, health, education, and cultural heritage. SQM’s support consists of investment and transfer of technical know-how, with the communities defining and executing the projects themselves. The ambition is to promote initiatives that persist independently over time and create long-term value for the communities. This year, our efforts have been recognized by the most comprehensive and rigorous mining assurance standard in the world: SQM’s Salar de Atacama operation was the first lithium operation to achieve IRMA 75. Adhering to recognized industry standards helps ensure responsible mining practices and strengthen environmental, social and ethical sustainability in mining operations.
Could you explain how SQM is working towards carbon neutral lithium while simultaneously scaling up production to meet the increasing demand?
The key is to keep innovating and developing new technological solutions in order to be at the forefront of efficient lithium production and sustainable mining practices. Therefore, investments in R&D of over USD 40 million in 2023, partnerships with Chilean and foreign universities, and productive linkages with entrepreneurs, are all aimed at technological development. We are currently developing more than 40 projects, studies and collaboration agreements with Chilean and foreign universities.
One of the relevant areas of research are the production processes, which allow us to improve the efficiency, sustainability and quality of our lithium products. In this area, we are developing pilots in innovative technologies such as DLE and we have set up a 1,200 square meter pilot center at our operations in the Salar de Atacama. This is relevant because often the added value is understood only in terms of products. For SQM, it means being part of an ecosystem of innovation, entrepreneurship, cooperation with universities, public entities and other stakeholders in the region and the country. We understand the company as a social actor that drives development.
With this in mind, SQM launched in 2022 its corporate venture capital fund for SQM's lithium business to contribute and promote new lithium-related technologies. The program will impact with innovative solutions to address business challenges in the areas of lithium, recycling, water and electromobility.
At the same time, SQM is a global company with sales in over 110 countries and commercial offices in over 20 countries, and we plan not only to increase our production capacity at the refinery in Chile, but also to analyze new projects and diversify our production outside Chile. Today, we are expanding our presence in Australia, developing the Mount Holland lithium project, which is executed by our JV Covalent Lithium, together with our equal partners Westfarmers Limited. The Mt. Holland lithium project involves the development of an open-pit lithium mine and a processing plant at Mt. Holland and a refinery at Kwinana, Western Australia. The plant starts producing spodumene concentrate by the end of 2023 and lithium hydroxide by the first half of 2025. The project will have an initial production capacity of 50,000 metric tons of battery grade lithium hydroxide.
What is your key message to the COP28 and the World Climate Summit stakeholders with respect to a more sustainable future?
SQM actively contributes to the increase of the use of electric vehicles in the world, focusing on the decarbonization of the planet. Most stakeholders support the transition to a sustainable world, yet there is no mine without impact. The most important question today is: How do we want to define the mine of the future to ensure a sustainable, more circular and equitable transition? At SQM, we believe we have the right attributes to answer this question whilst continuing to be a sustainable production leader in the broader industry. The company’s vision is to become the most sustainable lithium producer in the world.
For this reason, we are very much looking forward to sharing SQM’s experience at COP28 and the World Climate Summit in Dubai, as both events will be a crucial turning point for the world to unite around tangible climate action and propose realistic solutions. Achieving this will require cooperation between civil society, governments, industries and sectors - and SQM wants to contribute to this.
SQM, a globally recognized chemical and mining company situated in northern Chile, strategically operates in industries crucial for sustainable development, including health, food, technology, and clean energies that power the world. As the largest lithium producer worldwide, SQM excels as a global leader across its five business lines: Specialty Plant Nutrition, Iodine and derivatives, Lithium and derivatives, Potassium, and Solar Salts. Embracing a forward-looking vision, SQM aspires to be the most sustainable lithium producer globally. To realize this goal, the company is committed to adhering to the highest national and international ESG (Environmental, Social, and Governance) standards, particularly at SQM’s Salar de Atacama lithium and potassium operation.
Learn more about SQM: https://www.sqm.com/
About Jose Miguel Berguño
Jose Miguel Berguño holds a degree in industrial engineering and an MBA from Pontificia Universidad. Católica de Chile. He joined SQM in 1998 as a Research Engineer. Three years later, he became Supply Chain Manager and, in 2006, Human Resources Manager. From 2010 to 2011, he was the National Director of the Sence Program at the Chilean Ministry of Labor and in 2012 HR Manager at Vitamina Work Life. In 2013, he returned as SQM's Performance and Supply Chain Manager. He was appointed VP of Human Resources and Performance in 2016. In March 2019, he assumed the vice-presidency of Nitrates Operations, a position he held until December 2021, when he was named Senior Vice-President of Corporate Services.