How SQM accelerated operational excellence with technology

In 2013, SQM, based in Santiago, Chile, became the first mining company to adapt the principles of lean management to the complexities of extracting minerals in some of the world’s most challenging locations. Three years into the company’s transformation, McKinsey spoke with three senior SQM executives about the organization’s progress—especially the lasting benefits from changing the way people lead.

Now, more than ten years after SQM’s journey began, leaders at every level of the company keep pushing to improve. The new urgency: deploy the latest technologies, including gen AI, to keep raising quality, reducing water and energy use, and investing in people, even as ore extraction becomes progressively more difficult.

McKinsey spoke with SQM’s Pablo Altimiras, CEO for iodine and vegetal nutrition; José Miguel Berguño, senior vice president for corporate services; and Carlos Díaz, CEO for lithium and potassium. The common themes they discussed included cultural transformation, technology and data integration, sustainability, leadership, continuous improvement, and the importance of involving people at all levels.

The discussion has been edited for brevity and clarity.

McKinsey: What does continuous improvement mean to SQM, especially over time?

Carlos Díaz: We started this journey more than ten years ago, in November 2013, pioneering the implementation of lean management in mining globally. This initiative, which we called “M1,” led to a significant cultural transformation, impacting production, cost reduction, quality, and overall worker culture (Exhibit 1). The continuous-improvement process has evolved into what we now call “M1+,” an updated version focusing more on digital technology while maintaining the core cultural values—lean plus technology.

José Miguel Berguño: At the beginning, we thought that this kind of transformation was just a methodology transformation. And we put a lot of focus on how to implement different kinds of tools. But as we learned, we moved the focus from the methodology by itself to how to transform our culture.

Pablo Altimiras: And it was really because of the cultural change that we saw results. We increased production in some plants by more than 60 percent while decreasing costs by 20 percent. At the same time, we significantly reduced the number of incidents and accidents: The rate fell by two-thirds in the first couple of years.

McKinsey: How has SQM’s approach to training and capability building evolved?

José Miguel Berguño: Our programs recognize that the complexity of our plants is constantly increasing. It’s completely different than five years ago or ten years ago. Moreover, the quality we must deliver keeps increasing as well.

Carlos Díaz: In lithium, for example, the purity required for batteries keeps rising. The product we delivered five years ago—even three years ago—does not meet today’s standards, and today’s product will not meet the standards two or three years from now. So we are constantly working with our leaders and their teams, holding regular meetings to discuss current and future plans. This approach ensures that everyone is aligned and understands the company’s direction.

Our training programs are designed to be attractive, to keep annual employee turnover to less than 2 to 3 percent. We focus on both cultural and technical training, especially since lithium processing is not typically covered in technical schools or universities in Chile.

McKinsey: That turnover rate is unusually low in the mining industry, no?

Carlos Díaz: We work hard to keep SQM attractive to potential candidates, with a strong culture and opportunities for learning and growth. We emphasize entrepreneurship, zero bureaucracy, and technical orientation. People sometimes raise concerns about possible cultural changes in the future, but we are committed to maintaining our current way of working—adapting it, as we are with our focus on technology in M1+, but following the same purpose, principles, and behaviors.

McKinsey: How is SQM integrating technology into its operations?

Carlos Díaz: We have been integrating advanced technology into our operations for over a decade, always with a focus on the value that technology could create.

José Miguel Berguño: M1+ arose in part out of our recognition that we had an opportunity to incorporate even more technology, such as advanced analytics and AI. We had reached the limits of relying mainly on expert people to navigate a much more complex process, especially with new pressures to raise yield in a more sustainable way.

Carlos Díaz: For example, we have significantly increased our lithium production while improving quality and reducing our carbon and water footprints. The use of data and technology allows us to adapt quickly to market changes and customer demands.

Pablo Altimiras: We see technology as just a different type of tool. The real question is how you use the technology. Think of how people are using chat-based gen AI platforms. I use them myself, and I’ve concluded that these sorts of tools must be available for everyone. They illustrate a constant challenge; what is important is to ask the right questions. Only then can the technology provide correct answers. That same thinking shapes our approach to deploying technology at our sites: it’s thinking through the right questions. That’s how you develop your capabilities as an organization so you can outcompete.

McKinsey: You’ve mentioned sustainability as a rising concern for SQM. What are some of the main challenges?

Carlos Díaz: Our customers, particularly in the electric-vehicle industry, demand lithium with the lowest possible environmental impact. We have several initiatives aimed at achieving these goals, such as the Salar Futuro project, which focuses on more sustainable brine-processing methods.

Pablo Altimiras: Sustainability obliges us to think differently. It gives us new ways to think about value—a very important word at our company—and that leads us to new opportunities.

José Miguel Berguño: For example, with M1+, we are working to increase our production by 10 percent over the next three years (Exhibit 2). That’s a very big challenge: more production, more yield, and a more sustainable process. Yet we are very optimistic, working in the same basic way as we have for ten years, with constant improvements to the quality of our methodology and to our technology. The real effort is to push our culture so that it can achieve these major results.

McKinsey: How does SQM ensure flexibility and adaptability in its operations?

Carlos Díaz: Flexibility and adaptability are crucial for us. We have to be able to respond to changing market conditions and customer requirements quickly. This involves using data and technology to make informed decisions and continuously improving our processes. Our performance dialogues, held every morning, involve various teams discussing challenges and potential solutions, ensuring that everyone is aligned and working toward common goals.

Pablo Altimiras: It’s the end-to-end thinking that really matters: not just optimizing a particular step but an entire process. In fertilizers, we could focus on our leaching operation, which produces a nitrate-rich solution that our chemical plants transform into final products. But by itself, optimizing the leaching process cannot optimize fertilizer production. We have to take into account that the solution will affect the plant.

Now we have data-driven AI models that consider the potential variability in the ore, the water we use, and the leaching process, all running in parallel with plant operations. That gives our people much greater ability to control each step so that we can use the fewest resources in maximizing yields and value. These technologies can detect patterns that would never have been possible to see before.

McKinsey: How do employees adapt to SQM’s culture?

Carlos Díaz: New employees, especially those fresh out of school or university, usually adapt well to our culture. They are generally more flexible and tech savvy, which aligns with our focus on continuous improvement and technological integration. For more experienced employees, the initial transformation was more challenging, but now the organization is well adapted, and new hires quickly learn to fit into our way of working.

José Miguel Berguño: The business has grown substantially since the original M1 program launched in 2013, though, so an increasing challenge is to move thousands of people in the same way—thinking together, making decisions according to the same methodology—while constantly evolving. Our capabilities have increased even more: It’s one thing to improve yield from 30 to 35 and much more complex to move from 80 to 85. A major initiative now is to help strengthen the connections between different areas within the company.

Pablo Altimiras: We’re building work groups, or cells, composed of people from different parts of the organization so that they can collaborate more effectively: someone from ore production, from the chemical plant, from our data team, and so forth. An increasingly important role is that of the production translator, who has expertise both in technology and in our processes. That person can help guide the problem-solving process by giving everyone in the room a common language.

McKinsey: That sounds like a pretty major shift in how people have traditionally worked.

Pablo Altimiras: It’s really just an example of what we call our “participation culture,” which works to prevent silos. I have a personal commitment to promote a no-silos culture. José Miguel mentioned our growth: SQM encompasses multiple mines, plants, a port facility. We have commercial offices in more than 40 countries. We need to fight every day to keep a silo culture from forming.

McKinsey: How has SQM’s evolution through M1 and M1+ changed how you lead?

Carlos Díaz: What hasn’t changed is that leadership at SQM involves being deeply involved in both operational and strategic aspects. For example, as senior leaders, we all participate in daily operational meetings and quality discussions, ensuring that we are always aligned with our goals. This hands-on approach helps us stay connected with the realities of our operations and make informed decisions that drive continuous improvement. What has changed, at least for me, is perspective. For example, I see things even more from the customer’s point of view, and that informs our decisions on questions such as the standards we impose on ourselves for our sustainability goals.

Pablo Altimiras: We all feel a need to increase the quality of our leadership. Ten years ago, becoming an “M1 leader”—leading on cultural change, demonstrating new behaviors—took maybe 30 percent of my time. To become an M1+ leader involves much more: to connect technology, advanced analytics, and AI, plus connecting with other managers and senior people. This is the personal challenge I have set for myself.

José Miguel Berguño: Leaders achieve sustainable results and build culture. We need leaders who connect productivity, safety, and organizational well-being objectives. Increasingly, it’s not just how to be a good leader on the topics I am responsible for but how to be a good second for other leaders on their topics so we can collaborate effectively and reduce friction. That’s essential for planning. At SQM, we are in a long-term business. Improvement cycles in lithium production take between 14 and 18 months, so throughout the company, we need to work with one another in a planning process that identifies where to focus today and in six, 12, or 18 months’ time.

Pablo Altimiras: It’s all part of a value chain mindset. Sometimes you need to be ready to prioritize an area that is not exactly yours. We have been working very hard to make sure the whole executive team works from this point of view.

McKinsey: What do you see as the next challenge for SQM and its culture?

Pablo Altimiras: Overall, our goals are simple: to protect the business that we have today, to maximize its potential value, and to look for new business opportunities. And we have three focuses for managing the business. First is a clear strategy—not a fancy one—based on a sound diagnosis of current conditions, with a direct line through to concrete, simple plans. Second is good processes—not just traditional operational excellence, but the ability to improve our processes, react quickly, and become more efficient. This is where technology is critical. Third, and most important, is people.

José Miguel Berguño: Yes, I see a need to dedicate more time to developing our people throughout the organization and helping them develop each other. It’s not just developing the people who work very close to us. It’s the second layer of people, the third layer. It’s more than just helping them resolve a discrete problem. It’s dedicating time so that they can collaborate effectively, even when working on complex issues.

Carlos Díaz: We need people who can adapt to different scenarios in service of our role as the largest single producer of lithium. And that is why I try to push to use more data, more technology, equipping people with information that was impossible to find before to increase our productivity and reduce our carbon footprint and water use.