Due to the strong demand for new energy vehicles and the surge in lithium prices, the overseas lithium mining giant SQM (NYSE: SQM), in which Tianqi Lithium holds a stake, saw a large increase in its performance in the first quarter due to the effects of the previous expansion of production capacity. Battery recycling may become the company's next business focus.

SQM achieved revenue of 2.02 billion USD and a net profit of 796 million USD in the first quarter of this year, a year-on-year increase of 1071% and a quarter-on-quarter increase of 154.64%. Among them, the total revenue from the lithium business was 1.446 billion USD, a year-on-year increase of 969.5%. The company stated that the strong demand for new energy vehicles and the surge in lithium prices were the main reasons for the increase in net profit.

SQM is the world's second-largest lithium producer and has the right to mine the Atacama salt flats in Chile. SQM stated that the Shanghai lockdown in April had some impact on the volume of transactions in the Chinese market, but it has gradually increased since May. The company predicts that lithium sales this year can reach 140,000 tons.

According to a previous research report by Guojin Securities, as the second-largest shareholder of SQM, Tianqi Lithium is expected to gain higher investment returns from its rapid production capacity expansion. In 2021, Tianqi Lithium confirmed investment income from SQM was 760 million yuan, and in 2019 it made a significant long-term equity investment impairment provision of 5.279 billion yuan for its investment in SQM.