Shares of Chilean lithium major Sociedad Quimica y Minera de Chile SA (NYSE:SQM) surged in the early session today after the company agreed to jointly develop lithium in the Salar de Atacama with Codelco, according to Bloomberg.
Under the deal, the two companies will set up a new company and develop lithium from 2025 to 2060. Codelco is a state-owned mining company. SQM’s contracts for the properties it leases from Chile’s economic development agency are set to expire in 2030. Now, the new entity will enable a smooth transition of production once Codelco’s lease contracts commence in 2031.
While SQM will contribute production assets, Codelco brings leases for Salar de Atacama properties to the table. The deal comes after months of negotiations, and Codelco will hold a majority stake in the joint effort. Chile holds one of the largest lithium reserves globally. The joint venture between SQM and Codelco is anticipated to pave the way for the country to expand its lithium production with similar deals in the future.
What is the Forecast for SQM Stock?
Overall, the Street has a Moderate Buy consensus rating on Sociedad Quimica y Minera de Chile. Following a nearly 25% jump in the company’s share price over the past month, the average SQM price target of $65.81 implies a modest 7.9% potential upside in the stock.
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