Lithium miner SQM cuts 5% of Chile workforce as prices fail to bounce back

By Fabian Cambero and Daina Beth Solomon

SANTIAGO, June 25 (Reuters) - The world's second-biggest lithium miner SQM SQMA.SN has begun laying off 5% of its Chilean workforce as it contends with a protracted slump in global prices for the battery metal, according to a company source and a union memo to workers seen by Reuters on Wednesday.

Lithium prices have plunged nearly 90% since their peak in late 2022 due to overproduction in China and slower-than-expected demand for electric vehicles, forcing some miners to slash jobs and halt expansions.

SQM, which missed first-quarter profit estimates, previously said it expects weak prices through the first half of the year. It declined to comment on the layoffs.

A company source said the cuts - to both the lithium and fertilizer units - would not affect core operations and or production guidance. SQM had no immediate plans for further layoffs, the person added.

Reuters could not determine the exact number of dismissals.

SQM employed 8,344 people in Chile and elsewhere at the end of last year, according to its annual report, with three-quarters working at the northern Chile operations where it extracts and processes lithium.

A memo from the Sindicato SQM Salar union, dated Tuesday, said company management had informed the group's president that 25% to 30% of the layoffs would correspond to "general roles," and the rest to supervisors. They would take place at SQM's offices in Santiago, as well as the Atacama salt flat and its lithium processing plant in northern Chile, the memo said.

"As a union we regret the decision taken by the company, which affects our members, and we categorically question the reasons behind it," the memo said, without providing further details. It also offered support to workers who lost their jobs.

U.S. firm Albemarle, the only other lithium miner in Chile, cut workers last year as part of cost-cutting measures that it said helped to offset low lithium prices.