Chile’s Regulatory Review Puts SQM’s Future in Focus

The near-term trajectory for SQM's shares is heavily contingent on a pivotal regulatory review underway in Chile. A critical audit by the country's Comptroller General is examining the legality of the lithium mining company's landmark partnership with the state-owned copper giant, Codelco. The central question for investors is whether the agreement can be finalized before its contractual deadline of December 31.

Beyond the regulatory spotlight, supply-side developments are influencing market sentiment. A recent suspension of 27 mining licenses by China's Yichun Natural Resources Bureau has tightened supply, pushing lithium carbonate prices notably higher. This backdrop coincides with positive technical indicators for SQM's stock, which recently touched a 52-week high. The equity has delivered a one-year return exceeding 84% and a six-month gain of more than 104%. However, the Relative Strength Index suggests the stock may be overbought, potentially setting the stage for near-term volatility.

Financial analysts have been adjusting their outlooks:
* JPMorgan upgraded its rating to "Overweight," forecasting an EBITDA of $3.3 billion for 2026, driven by energy storage demand.
* Scotiabank established a price target of $80, while BMO Capital raised its target to $77.
* Demonstrating access to capital, SQM successfully placed a hybrid bond worth $430 million in the Chilean market.

The Crucial Audit Explained

The ongoing comptroller's investigation was triggered by complaints from lawmakers concerning the direct negotiation process for extending SQM's lithium exploitation rights in the Atacama salt flat through 2060. The core criticism centers on the absence of a competitive bidding procedure. This legal scrutiny introduces significant complexity, further heightened by Chile's impending change in government. While necessary international approvals are secured, the Comptroller's ruling represents the final administrative hurdle, with direct consequences for SQM's operational planning.

Should investors sell immediately? Or is it worth buying SQM?

The December Deadline and Potential Outcomes

All developments lead to the decisive date of December 31. The audit's findings will determine the partnership's fate.

Key implications:
* If the agreement is approved and formally executed, SQM will secure the contractual foundation for its Atacama operations until 2060.
* Should the parties fail to finalize the deal by the deadline, either side holds the right to annul the contract.
* A failure to meet the deadline would also result in a reduction of SQM's current lithium production quota by 300,000 metric tons through 2030.

The Comptroller's decision will therefore directly shape the company's operational roadmap and its medium-term supply position in the global lithium market.