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Jan 31, 2024

How they do investor relations at SQM

IR Magazine talks to Irina Axenova, head of IR at one of the world’s largest lithium producers

As the world gets more complex, so does the IR role. To put their equity stories in context, IR teams must stay abreast of geopolitics, macroeconomics and the increasing focus on sustainability, not to mention sector-specific trends.

For Sociedad Química y Minera de Chile (SQM), the Chilean chemical and mining company and one of the world’s largest producers of lithium, the range of factors that can affect its operations and financial performance are greater than most.

Irina Axenova, head of IR at SQM, says recent questions from investors and analysts have covered everything from negotiations with the Chilean government over lithium concessions to the war in Ukraine and strikes by automotive workers in the US.

Irina Axenova, SQM
Irina Axenova, SQM

‘One of the main challenges we face is the level of transparency and detail we are asked to provide,’ she says. ‘You have to be up to speed about what’s happening across the company and in the markets where we participate.’

SQM, listed on both the Santiago Stock Exchange and the NYSE, where it has a very active ADR program, has five major business areas. Alongside lithium, it also produces iodine, potassium, specialty fertilizers and industrial chemicals.

Lithium, though, has been the market’s central focus. The metal’s importance for batteries used in electric vehicles, mobile phones and renewable energy storage has led to soaring demand and highly volatile prices.

‘To give you an example, three years ago, the lithium spot price was approximately $5,000 a ton of lithium carbonate,’ says Axenova. ‘In 2022, that price went to $80,000 a ton. So within the span of a year or so, the spot price was more than 15 times higher.

‘That kind of price volatility generates a lot of ‘itchiness’ in the market – people react to every single piece of news. They’re calling us saying, Hey, the automotive strike in the US – how is that going to have an impact?

Political considerations

Investors have also been hungry for information about the future of the lithium industry in Chile. In April last year, left-wing President Gabriel Boric announced a new National Lithium Strategy, which aims to force more collaboration between the state and private industries over the country’s vast deposits.

Following months of private negotiations, SQM and the state-run National Copper Corporation of Chile announced in December a memorandum of understanding to form a new joint venture to produce lithium from the Salar de Atacama, Chile’s largest salt flats. The government entity will hold 50 percent plus one share of the new venture.

‘You have to navigate the Chilean political landscape,’ says Axenova. ‘People do not necessarily know what’s happening in Chile but they read the headlines, so you need to be able to explain what’s going on.’

Broader geopolitics are another key talking point. ‘If you look at the world around us, you need to see what’s happening and then how it could have an impact on the markets in which we operate, and ultimately company performance,’ adds Axenova. ‘It’s seeing whether what’s happening globally can add to your risk factors.

‘For example, in 2022 the war in Ukraine had a massive impact on the fertilizer markets, because Russia is one of the largest fertilizer producers. Sanctions and the blocking of supplies led to fertilizer prices going up several times in the course of a few months.’

SQM operations
SQM vehicles operating near its Nueva Victoria site

With such dynamic markets at play, SQM’s IR team has plenty to keep it occupied. Admin tasks are largely outsourced, says Axenova, and the company relies on the support of more than 15 covering sell-side banks.

‘We’ve always been well covered, but we are even more so now as one of the world’s largest lithium producers, with electric vehicles and the energy transition being such hot topics,’ she says. ‘There’s no shortage in demand when it comes to organizing roadshows or any other market activities.’

Given the high demand, the company attends several conferences and roadshows each year, with international trips taking in North America, Europe and Asia. The IR team is also responsible for corporate disclosures, including for the US market. ‘Busy’ is how Axenova describes the environment.

Along with meetings, travel and managing disclosures, Axenova says another major task for IR is bringing consistency to communications across the firm: ‘We’re a global company, with different business divisions and markets. There’s a massive group of stakeholders, from clients and communities to authorities, regulators, investors, and so on.

‘While we have different communication teams with responsibility for different stakeholders, an important role for IR internally is to co-ordinate that we’re all aligned on our messaging and disclosure strategy.’

IR journey

The international scope of Axenova’s current role reflects her own career path. After studying economics and mathematical methods in Moscow, she worked as a credit analyst at retail and corporate banks in the Russian capital.

Keen for overseas experience, she moved to London to pursue an MBA at the Cranfield School of Management and later worked on financial analysis for new products at Ford Motor Company’s technical development center at Dunton, Essex.

Family ties – Axenova’s husband is from Chile – led her to move to the South American country 10 years ago. After a stint as a commercial export manager in the wine industry, she joined SQM’s IR team in 2017 and took over the department at the start of 2023.

SQM's port operations in Tocopilla
SQM's port operations in Tocopilla

The language barrier proved an initial challenge on the move to Chile, says Axenova. ‘When I came to Chile I didn’t speak any Spanish,’ she explains. ‘I thought, as I spoke perfect English, people would understand me. But for job hunting you have to have a basic level of Spanish.’

Like Steve Jobs’ connected-dots theory, Axenova says looking back on her career shows a happy coincidence of experiences that prepared her well for working in IR. ‘All my previous background fitted really well,’ she says. ‘My corporate finance background, communications experience, client relationships – it all came together in this role.’

ESG & sustainability

Adding a further layer of complexity to IR at SQM is the growing focus on ESG issues. The company produces lithium by extracting brine from the salt flats and depositing it in evaporation ponds, a process that has raised concerns from local communities about the impact on the overall hydrologic system of the Salar de Atacama.

Part of the challenge of telling your sustainability story is that technology is affecting how you plan to achieve your goals, notes Axenova. SQM is currently planning to invest around $1.5 bn in the Salar Futuro project, which it hopes will lead to a long-term zero-water footprint at Salar de Atacama.

‘Your water footprint is not something everyone is talking about,’ she says. ‘The majority of ESG indicators are linked to carbon emissions. In our case, efficient water management is much more critical for the sustainability of our operations. That’s what we are focusing on, along with reducing our carbon footprint, fostering relationships with communities and investing in innovation and technology.

‘We know we can reach the goals we set for ourselves. But the action plan for getting there is changing, because the technology keeps evolving. When it comes to communication, you report based on the goals and your current plans on how to reach them. Come next year, our plans may evolve.’