Sociedad Química y Minera de Chile S.A.
Annual Report 2020
1) INDEX
2) IDENTIFICATION OF THE ENTITY .......................................................................................................... 3
2) A) IDENTIFICATION OF THE ENTITY: BASIC IDENTIFICATION ................................................................................ 3
2) B) IDENTIFICATION OF THE ENTITY: LEGAL CONSTITUTION ................................................................................. 3
2) C) IDENTIFICATION OF THE ENTITY: CONTACT INFORMATION.............................................................................. 3
3) DESCRIPTION OF BUSINESS ENVIRONMENT ....................................................................................... 4
3) A) DESCRIPTION OF BUSINESS ENVIRONMENT: HISTORICAL INFORMATION ......................................................... 4
3) B) DESCRIPTION OF BUSINESS ENVIRONMENT: INDUSTRIAL SECTOR ................................................................... 6
3) C) DESCRIPTION OF BUSINESS ENVIRONMENT: ACTIVITIES AND BUSINESSES .................................................... 10
3) D) DESCRIPTION OF BUSINESS ENVIRONMENT: PROPERTY AND FACILITIES ....................................................... 37
3) E) DESCRIPTION OF BUSINESS ENVIRONMENT: RISK FACTORS .......................................................................... 56
3) F) DESCRIPTION OF BUSINESS ENVIRONMENT: CAPITAL EXPENDITURE ............................................................. 75
4) OWNERSHIP AND SHARES ....................................................................................................................... 77
4) A) OWNERSHIP AND SHARES: OWNERSHIP ......................................................................................................... 77
4) B) OWNERSHIP STRUCTURE AND SHARES: SHARES AND THEIR CHARACTERISTICS AND RIGHTS ............... 82
5) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT .................................................. 86
5) A) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT: DIVERSITY WITHIN THE
BOARD OF DIRECTORS AS OF DECEMBER 31, 2020 ......................................................................................... 86
5) B) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT: DIVERSITY WITHIN
EXECUTIVE MANAGEMENT AS OF DECEMBER 31, 2020 ................................................................................. 87
5) C) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT: DIVERSITY WITHIN THE
ORGANIZATION AT DECEMBER 31, 2020 ....................................................................................................... 87
5) D) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT: SALARY GAP BY GENDER .. 89
6) A) MANAGEMENT AND PERSONNEL: ORGANIZATIONAL CHART ..................................................... 91
6) B) MANAGEMENT AND PERSONNEL: INFORMATION ABOUT THE BOARD OF DIRECTORS ......... 92
6) C) MANAGEMENT AND PERSONNEL: INFORMATION ABOUT THE DIRECTORS’ COMMITTEE ... 95
6) D) MANAGEMENT AND PERSONNEL: MAIN EXECUTIVES ................................................................... 98
6) E) MANAGEMENT AND PERSONNEL: NUMBER OF EMPLOYEES ........................................................ 99
6) F) MANAGEMENT AND PERSONNEL: SHARE OWNERSHIP OF EXECUTIVE OFFICERS AND BOARD
MEMBERS ....................................................................................................................................................... 100
7) INFORMATION ABOUT SUBSIDIARIES AND ASSOCIATES ........................................................... 101
7) A) INFORMATION ABOUT SUBSIDIARIES AND ASSOCIATES: SUBSIDIARIES AND ASSOCIATES101
8) INFORMATION ABOUT RELEVANT OR ESSENTIAL FACTS ......................................................... 113
9) SUMMARY OF COMMENTS AND PROPOSALS BY SHAREHOLDERS AND THE DIRECTORS’
COMMITTEE ................................................................................................................................................... 117
10) FINANCIAL REPORTS ............................................................................................................................ 118
10) A) FINANCIAL REPORTS OF THE REPORTING ENTITY ...................................................................... 118
10) B) SUMMARY FINANCIAL STATEMENTS ............................................................................................. 335
11) RESPONSIBILITY STATEMENT ..................................................................................................... 378
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2) IDENTIFICATION OF THE ENTITY
2) IDENTIFICATION OF THE ENTITY
2) A) IDENTIFICATION OF THE ENTITY: BASIC IDENTIFICATION
Company Name: Sociedad Química y Minera de Chile S.A.
Abbreviated Company Name: SQM
Legal Address: El Trovador 4285, Las Condes, Santiago, Chile
Chilean Taxpayer ID: 93.007.000-9
Type of Entity: Open stock corporation
2) B) IDENTIFICATION OF THE ENTITY: LEGAL CONSTITUTION
SQM was founded under the laws of the Republic of Chile. The Company was constituted by public deed
issued on June 17, 1968 by Mr. Sergio Rodríguez Garcés, Public Notary of Santiago. Its existence was
approved by Decree No. 1,164 of June 22, 1968, of the Ministry of Finance, and it was registered on June
29, 1968, in the Business Registry of Santiago, on page 4,537 No. 1,992.
2) C) IDENTIFICATION OF THE ENTITY: CONTACT INFORMATION
Corporate Headquarters:
Address: El Trovador 4285, Las Condes, Santiago, Chile
Telephone: +56 2 24252000
Fax: +56 2 24252268
Website: www.sqm.com
To contact our investor relations team:
Gerardo Illanes
CFO and Vice President of Corporate Finance
gerardo.illanes@sqm.com
Telephone: +56 2 24252485
Kelly O’Brien
Head of Investor Relations
kelly.obrien@sqm.com
Telephone: +56 2 24252074
Irina Axenova
Investor Relations
irina.axenova@sqm.com
Telephone: +56 2 24252280
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
3) DESCRIPTION OF BUSINESS ENVIRONMENT
3) A) DESCRIPTION OF BUSINESS ENVIRONMENT: HISTORICAL INFORMATION
Commercial exploitation of the caliche ore deposits in northern Chile began in the 1830s, when sodium
nitrate was extracted from the ore for use in the manufacturing of explosives and fertilizers. By the end
of the nineteenth century, nitrate production had become the leading industry in Chile, and the country
was the world’s leading supplier of nitrates. The accelerated commercial development of synthetic nitrates
in the 1920s and the global economic depression in the 1930s caused a serious contraction of the Chilean
nitrate business, which did not recover significantly until shortly before the Second World War. After the
war, the widespread commercial production of synthetic nitrates resulted in a further contraction of the
natural nitrate industry in Chile, which continued to operate at depressed levels into the 1960s.
We were formed in 1968 through a joint venture between Compañía Salitrera Anglo Lautaro S.A. (“Anglo
Lautaro”) and the Production Development Corporation (Corporación de Fomento de la Producción or
“Corfo”), a Chilean government entity. Three years after our formation, in 1971, Anglo Lautaro sold all
of its shares to Corfo, and we were wholly owned by the Chilean Government until 1983. In 1983, Corfo
began a process of privatization by selling our shares to the public and subsequently listing such shares
on the Santiago Stock Exchange. By 1988, all of our shares were publicly owned. Our Series B ADSs
have traded on the NYSE under the ticker symbol “SQM” since 1993. We accessed international capital
markets again for the issuance of additional ADSs in 1995 and 1999. On December 21, 2006, two groups
of shareholders, the “Pampa Group” (which includes the company Sociedad de Inversiones Pampa
Calichera S.A. and its related companies, Inversiones Global Mining Chile Limitada and Potasios de Chile
S.A.) and Kowa Group (which includes the companies Kowa Company Ltd., Inversiones La Esperanza
(Chile) Limitada, Kochi S.A and La Esperanza Delaware Corporation) signed a joint agreement and
became the controlling group of SQM.
Since our inception, we have produced nitrates and iodine, which are obtained from the caliche ore
deposits in northern Chile. In 1985, we began to use heap leaching processes to extract nitrates and iodine,
and in 1986 we started to produce potassium nitrate at our Coya Sur facility. Between 1994 and 1999, we
invested approximately US$300 million in the development of the Salar de Atacama project in northern
Chile, which enabled us to produce potassium chloride, lithium carbonate, potassium sulfate and boric
acid.
From 2000 through 2004, we principally consolidated the investments carried out in the preceding five
years. We focused on reducing costs and improving efficiencies throughout the organization. In addition,
in 2001, we signed a commercial distribution agreement with the Norwegian company Yara International
ASA, in order to take advantage of cost synergies in the Specialty Plant Nutrition business line.
Starting in 2005, we began strengthening our leadership position in our core businesses through a
combination of capital expenditures and advantageous acquisitions and divestitures. Our acquisitions have
included the Kemira Emirates Fertiliser Company (“Kefco”) in Dubai in 2005 and the iodine business of
Royal DSM N.V. (“DSM”) in 2006. We also entered into a number of joint ventures, including a joint
venture with Migao Corporation (“Migao”), signed in 2008, for the production of potassium nitrate, and
SQM VITAS, our joint venture with the French Roullier Group. Pursuant to the latter joint venture, in
2010, we launched a new line of soluble phosphate products, and in 2012 we built new plants for the
production of water-soluble fertilizers in Brazil (Candeias), Peru and South Africa (Durban). We have
also sold: (i) Fertilizantes Olmeca, our former Mexican subsidiary, in 2006, (ii) our stake in Impronta
S.R.L., our former Italian subsidiary, in 2007 and (iii) our former butyllithium plant located in Houston,
Texas, in 2008. These sales allowed us to concentrate our efforts on our core products.
The capital expenditure program has allowed us to add new products to our product lines and increase the
production capacity of our existing products. In 2005, we started production of lithium hydroxide at a
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
plant in the Salar del Carmen, near the city of Antofagasta in the north of Chile. In 2007, we completed
the construction of a new prilling and granulating plant. In 2011, we completed expansions of our lithium
carbonate capacity, achieving 48,000 metric tons of capacity per year. Since 2010, we have continued to
expand our production capacity of potassium products in our operations in the Salar de Atacama. In 2011,
we completed the construction of a new potassium nitrate facility in Coya Sur, increasing our overall
production capacity of potassium nitrate by 300,000 metric tons per year. In 2013, we completed
expansions in the production capacity of our iodine plants in Nueva Victoria. Our capital expenditure
program also includes exploration for metallic minerals. Our exploration efforts have led to discoveries
that in some cases may result in sales of the discovery and the generation of royalty income in the future.
Within this context, in 2013 we sold our royalty rights to the Antucoya mining project to Antofagasta
Minerals. In 2013 we also opened a trading office in Thailand.
In 2014, we invested in the development of new extraction sectors and production increases in both nitrates
and iodine at Nueva Victoria, reaching an approximate production capacity (including the Iris facility) of
8,500 metric tons per year of iodine at the facility. We also issued a bond in the international capital
markets for US$250 million, primarily to refinance existing indebtedness.
In 2015, we focused on increasing the efficiency of our operations. Within this context, we announced a
plan to restructure our iodine and nitrate operations. In an effort to take advantage of our highly efficient
production facilities at our Nueva Victoria site, we decided to suspend the mining and nitrate operations
and reduce iodine production at our Pedro de Valdivia site. During the year, we increased our iodine
production capacity at Nueva Victoria to approximately 9,000 metric tons per year.
In 2015, we focused on increasing the efficiency of our operations. Within this context, we announced a
plan to restructure our iodine and nitrate operations. In an effort to take advantage of our highly efficient
production facilities at our Nueva Victoria site, we decided to suspend the mining and nitrate operations
and reduce iodine production at our Pedro de Valdivia site. During 2017, we increased our iodine
production capacity at Nueva Victoria to approximately 10,000 metric tons per year. We continued
expanding in 2018, and today, including Pedro de Valdivia and Nueva Victoria, our current effective
iodine capacity is approximately 14,000 metric tons per year.
In 2016, we entered into a 50/50 joint venture with Lithium Americas to develop the Minera Exar lithium
project in Caucharí-Olaroz in the Jujuy province of Argentina. Our interest was sold to Ganfeng Lithium
Netherlands Co., BV in 2018. Ganfeng is responsible for a US$50 million deferred payment to us if certain
sales goals are met by the project. In 2016, we also made a capital contribution of US$20 million to
Elemental Minerals Limited (“Elemental Minerals”), an Australian based company whose main assets are
various potassium deposits in the Republic of Congo. We invested approximately US$20 million in
exchange for 18% of the company, and a right of first refusal for approximately 20% of the total potash
production of Elemental Minerals. Following this transaction at the end of 2016, Elemental Minerals
changed its name to Kore Potash Limited. The State General Reserve Fund of Oman invested US$20
million.
In 2017, we continued to expand our operations outside Chile and, together with our subsidiary SQM
Australia Pty, we entered into an agreement to acquire 50% of the assets of the Mt. Holland lithium project
in Western Australia. We entered into a 50/50 unincorporated joint venture with Kidman Resources
Limited (“Kidman”), with respect to the Mt. Holland lithium project, to design, construct and operate a
mine, concentrator and refinery to produce approximately 45,000 metric tons of lithium hydroxide per
year. SQM Australia Pty committed to pay a price of US$110 million for the 50% of the Mt. Holland
assets, which was split into an initial payment of US$25 million and a deferred payment of US$87.5
million, both payments subject to certain conditions precedent. SQM Australia Pty paid an additional (i)
US$10 million as part of the initial payment, and (ii) US$30 million once the deferred payment took place.
All payments subject to conditions under the purchase agreement with Kidman were executed by
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
December 2018. These investments are not included in the capital expenditure program amounts discussed
in the section below. These investments were carried out with internal financing.
On September 23, 2019, Wesfarmers Limited (“Wesfarmers”) acquired all the issued ordinary shares in
Kidman, becoming a 50% partner in the Mt. Holland lithium project in the joint venture with SQM
Australia Pty.
In September 2020, in the Salar de Atacama, we began a self-assessment process, which is the first step
in the Initiative for Responsible Mining Assurance’s (“IRMA”) rigorous responsible mining certification
process.
In October 2020, we announced our Sustainable Development Plan, which includes voluntarily expanding
our monitoring systems, promoting better and more meaningful conversations with neighboring
communities, becoming carbon neutral and reducing water by 65% and brine extraction by 50%. As part
of this plan, we also set a goal to obtain international certifications and participate in international
sustainability indices.
In November 2020, we were accepted into the Dow Jones Sustainability Chile and the Dow Jones
Sustainability MILA Pacific Alliance Indices.
On February 16, 2021, our Board approved the investment of approximately US$700 million for our 50%
share of the development costs of the Mt. Holland lithium hydroxide project in the joint venture with
Wesfarmers.
3) B) DESCRIPTION OF BUSINESS ENVIRONMENT: INDUSTRIAL SECTOR
i) PRODUCTS AND SERVICES
SQM is an integrated producer and seller of specialty plant nutrients, iodine, lithium, potassium fertilizers,
and industrial chemicals. Our products are based on the development of high quality natural resources that
make us a cost leader, supported by an international trading network specialized in sales in approximately
110 countries. SQM’s development strategy aims to maintain and enhance our global leadership in all of
our business lines.
For further information, see section 3) C) Description of Business Environment: Activities and Businesses.
ii) COMPETITION AND MARKET SHARE
See section 3) C) Description of Business Environment: Activities and Businesses.
iii) LEGAL FRAMEWORK
Government Regulations
Regulations in Chile Generally
We are subject to the full range of government regulations and supervision generally applicable to
companies engaged in business in Chile, including labor laws, social security laws, public health laws,
consumer protection laws, tax laws, environmental laws, free competition laws and securities laws. These
include regulations to ensure sanitary and safety conditions in manufacturing plants.
We conduct our mining operations pursuant to judicial exploration concessions and exploitation
concessions granted pursuant to applicable Chilean law. Exploitation concessions essentially grant a
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
perpetual right (with the exception of the Salar de Atacama rights, which have been leased to us until
2030) to conduct mining operations in the areas covered by such concessions, provided that annual
concession fees are paid. Exploration concessions permit us to explore for mineral resources on the land
covered thereby for a specified period of time, and to subsequently request a corresponding exploitation
concession.
Under Law No. 16,319 that created the Chilean Nuclear Energy Commission (Comisión Chilena de
Energía Nuclear or “CCHEN”), we have an obligation to the CCHEN regarding the exploitation and sale
of lithium from the Salar de Atacama, which prohibits the use of lithium for nuclear fusion. In addition,
CCHEN has imposed annual quotas that limit the total tonnage of lithium authorized to be sold.
We also hold water use rights granted by the respective administrative authorities and which enable us to
have a supply of water from rivers or wells near our production facilities sufficient to meet our current
operating requirements. See section 3) E) Description of Business Environment: Risk Factors. The Chilean
Constitution, the Water Code and related regulations are subject to change, which could have a material
adverse impact on our business, financial condition and results of operations.
We operate port facilities at Tocopilla, Chile for the shipment of products and the delivery of raw materials
in conformity with maritime concessions, which have been granted by the respective administrative
authority. These concessions are normally renewable on application, provided that such facilities are used
as authorized and annual concession fees are paid.
In 2005, Law No. 20,026, known as the Law to Establish a Specific Tax on Mining Activity” (Ley que
Establece un Impuesto Específico a la Actividad Minera or the “Royalty Law”), established a royalty tax
to be applied to mining activities developed in Chile. In 2010, modifications were made to the law and
taxes were increased.
On September 29, 2014, the Tax Reform was published, introducing significant changes to the Chilean
taxation system and strengthening the powers of the SII to control and prevent tax avoidance.
Subsequently, on February 8, 2016, Law No. 20,899 that simplifies the income tax system and modifies
other legal tax provisions was published. On February 24, 2020, Law No. 21,210 to modernize the tax
legislation was published. As a result of these reforms, open stock corporations, such as SQM, are subject
to the shareholder tax regime. The corporate tax rate that applies to us increased to 27% in 2018.
The Chilean government may again decide to levy additional taxes on mining companies or other
corporations in Chile, and such taxes could have a material adverse impact on our business, financial
condition and results of operations.
We are also subject to the Chilean Labor Code and the Subcontracting Law, which are overseen by the
Labor Authority (Dirección del Trabajo), the National Geology and Mining Service (Servicio Nacional
de Geología y Minería or “Sernageomin”), and the National Health Service. Recent changes to these laws
and their application may have a material adverse effect on our business, financial condition and results
of operations. See “Section 3E. Description of Business Environment: Risk Factors – We are exposed to
labor strikes and labor liabilities that could impact our production levels and costs”.
In addition, we are subject to Law No. 20,393, which establishes criminal liability for legal entities, for
the crimes of (a) asset laundering, (b) financing terrorism and (c) bribery. Potential sanctions for violations
under this law could include (i) fines, (ii) loss of certain governmental benefits during a given period, (iii)
a temporary or permanent bar against the corporation executing contracts with governmental entities, and
(iv) dissolution of corporation.
Finally, we are governed by the Securities Law and Law No. 18,046 on Corporations (Ley de Sociedades
Anónimas or the “Chilean Corporations Act”), which regulates corporate governance. Specifically, the
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
Chilean Corporations Act regulates, among other things, independent director requirements, disclosure
obligations to the general public and to the CMF, as well as regulations relating to the use of inside
information, the independence of external auditors, and procedures for the analysis of transactions with
related parties.
There are currently no material legal or administrative proceedings pending against us except as discussed
in Note 22.1 and 23 to our Consolidated Financial Statements and below under “Safety, Health and
Environmental Regulations in Chile.”
Safety, Health and Environmental Regulations in Chile
Our operations in Chile are subject to both national and local regulations related to safety, health and
environmental protection. In Chile, the main regulations on these matters that are applicable to us are the
Mine Health and Safety Act of 1989 (Reglamento de Seguridad Minera or the “Mine Health and Safety
Act”), the Health Code (Código Sanitario), the Health and Basic Conditions Act of 1999 (Reglamento
sobre Condiciones Sanitarias y Ambientales Básicas en los Lugares de Trabajo or the “Health and Basic
Conditions Act”), the Subcontracting Law and the Environmental Law of 1994, amended in 2010 (Ley
sobre Bases Generales del Medio Ambiente or the “Environmental Law”).
Health and safety at work are fundamental aspects in the management of mining operations, which is why
we have made constant efforts to maintain good health and safety conditions for the people working at our
mining sites and facilities. In addition to the role played by us in this important matter, the Chilean
government has a regulatory role, enacting and enforcing regulations in order to protect and ensure the
health and safety of workers. The Chilean government, acting through the Ministry of Health and the
Sernageomin, performs health and safety inspections at the mining sites and oversees mining projects,
among other tasks, and it has exclusive powers to enforce standards related to environmental conditions
and the health and safety of the people performing activities related to mining.
The Mine Health and Safety Act protects workers and nearby communities against health and safety
hazards, and it provides for enforcement of the law where compliance has not been achieved. Our Internal
Mining Standards (Reglamentos Internos Mineros) establish our obligation to maintain a workplace where
safety and health risks are managed appropriately. We are subject to the general provisions of the Health
and Basic Conditions Act, our own internal standards and the provisions of the Mine Health and Safety
Act. In the event of non-compliance, the Ministry of Health and particularly the Sernageomin are entitled
to use their enforcement powers to ensure compliance with the law.
In November 2011, the Ministry of Mining enacted Law No. 20,551 that Regulates the Closure of Mining
Sites and Facilities (Ley que Regula el Cierre de Faenas e Instalaciones Mineras). This statute entered in
force in November 2012 and required all mining sites to present or update their closure plans as of
November 2014. SQM has fulfilled this requirement for all of its mining sites and facilities. The main
requirements of the law are related to disclosures to the Sernageomin regarding decommissioning plans
for each mining site and its facilities, along with the estimated cost to implement such plans. The mining
site closure plans are approved by Sernageomin and the corresponding financial assurances are subject to
approval by the CMF. In both cases, SQM has received the requisite approvals.
We continuously monitor the impact of our operations on the environment and on the health of our
employees and other persons who may be affected by such operations. We have made modifications to
our facilities in an effort to eliminate any adverse impacts. Also, over time, new environmental standards
and regulations have been enacted, which have required minor adjustments or modifications of our
operations. We anticipate that additional laws and regulations will be enacted over time with respect to
environmental matters. There can be no assurance that future legislative or regulatory developments will
not impose new restrictions on our operations. We are committed to continuously improving our
environmental performance through our Environmental Management System (“EMS”). We strive to be
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
leaders in sustainability at a national and international level. In 2020, we began the ISO 14.001 certification
process for our operations in the Salar de Atacama and Salar del Carmen. This certification is being
overseen by TÜV-Rheinland.
We participate in voluntary evaluations with companies such as Ecovadis and seek international
certifications such as the Responsible Conduct certification from the Chilean Industrial Chemicals
Association, which applies to our operations at Nueva Victoria, and the Protect & Sustain certification
from the International Fertilizer Association, which applies to our operations at Coya Sur, the Salar de
Atacama, Tocopilla, Antofagasta and Santiago. In September 2020, in the Salar de Atacama, we began a
self-assessment process, which is the first step in IRMA’s rigorous responsible mining certification
process.
We have submitted and will continue to submit several environmental impact assessment studies related
to our projects to the governmental authorities. We require the authorization of these submissions in order
to maintain and to increase our production capacity.
International Regulations
We are subject to complex regulatory requirements in the various jurisdictions in which we operate,
including the following implemented during 2020:
The European Union’s European Food Safety Authority initiated a revision of the perchlorate limits in
food that have been in force and effect since June 2015. On May 20, 2020, the European Commission
adopted Regulation (EU) 2020/685 which sets out limits for perchlorate in certain foods. Regulation (EU)
2020/685 did not alter the previously established limit of 50 parts-per-million for perchlorate in fertilizer
(as set forth in Regulation (EU) 2019/1102), and thus will allow our fertilizer products to be sold in the
European Union without issue.
In addition, Regulation (EU) 2017/542 came into force in the European Union, pursuant to which SQM
notified the European Union’s Poison Notification Centre (PCN) of the classification and labelling
information for 83 mixtures from our specialty plant nutrition and potassium business lines sold by our
three European subsidiaries.
On March 12, 2019, Australia approved the new Industrial Chemicals (General) Rules 2019, which
regulates the import and production of industrial chemicals and replaces the current regulations. This new
regulation which entered into force on July 1, 2020, establishes the import requirements for chemical
substances for the product and the importer. It applies to iodine imports by SQM Oceania in Australia.
The SQM Oceania registry for the importation of iodine was updated under “Industrial Chemicals
(General) Rules 2019”, in June 2020 and before the deadline of July 1, 2020.
On May 25, 2019, Japan updated its standards for classification and labeling of chemical products (JIS Z
7252: 2019 and 7253: 2019) to certify them with the sixth version of the UN-GHS. This update has a
transition period of three years and will require review of safety data sheets and labeling of the products
that SQM sells in Japan, in 2020-2021. The process of reviewing Safety Data Sheets and labeling of the
products that SQM markets in Japan began, under the JIS Z 7252: 2019 & 7253: 2019 standards, which
has a deadline until May 2022. The safety sheets were updated in February 2021 and the labels will be
updated to December 2021.
In 2020 in South Korea, we began the registration process for three products under the K-REACH
regulations, using an Exclusive Representative in order to facilitate the regulatory compliance of our
customers in this market. Additionally, with the establishment of SQM’s commercial office in Seoul,
South Korea in 2020, the Korean Chemical Management Association (KCMA) was notified of all products
to be imported from our lithium and iodine business lines. In 2021, we will begin the process of providing
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
the respective competent authorities, including the Korean Ministry of Labor and Employment, with safety
data sheets for all products sold in South Korea under the K-OSHA regulations.
In 2020 in China, we completed the standardization of the registration of all of our lithium, iodine and
nitrate products.
As a result of the occurrence of Brexit in 2020, the chemical regulations set forth in EU REACH
(Registration, Evaluation, Authorisation and restriction of Chemicals) were brought into United Kingdom
law on January 1, 2021 and entitled UK REACH. SQM will be required to complete a second registration
process for products sold in the United Kingdom. We are currently preparing the relevant survey and
expect to complete the pre-registration process in 2021.
In compliance with the Technical Regulation of the Eurasian Economic Union on Safety of Chemical
Products (TR EAEU 041/2017), also known as Eurasia REACH (Eurasia’s equivalent to EU REACH), in
2020 we reported all direct agricultural and industrial products, and also fertilizer mixtures, of all of our
business lines sold in the Eurasian Economic Union, which includes Russia. With this reporting, we are
not required to register under TR EAEU 041/2017.
In December 2020, we completed the pre-registration of all of our products sold in Turkey in compliance
with the deadline under Turkey’s “KKDIK” (Turkey’s equivalent to EU REACH).
In October 2020, we provided an updated notification of all of our products sold in the United States under
the TSCA-CDR regulations before the United States Environmental Protection Agency.
On November 27, 2020, Chilean Customs issued exempt resolution No. 3421, pursuant to which Chile’s
lithium export control procedures have been modified to include the export of lithium carnalite, lithium
sulfate and lithium phosphate.
3) C) DESCRIPTION OF BUSINESS ENVIRONMENT: ACTIVITIES AND BUSINESSES
The Company
We believe that we are the world’s largest producer of potassium nitrate and iodine and one of the world´s
largest lithium producers. We also produce specialty plant nutrients, iodine derivatives, lithium
derivatives, potassium chloride, potassium sulfate and certain industrial chemicals (including industrial
nitrates and solar salts). Our products are sold in approximately 110 countries through our worldwide
distribution network, with 91% of our sales in 2020 derived from countries outside Chile.
Our products are mainly derived from mineral deposits found in northern Chile. We mine and process
caliche ore and brine deposits. The caliche ore in northern Chile contains the only known nitrate and iodine
deposits in the world and is the world’s largest commercially exploited source of natural nitrates. The
brine deposits of the Salar de Atacama, a salt-encrusted depression in the Atacama Desert in northern
Chile, contain high concentrations of lithium and potassium as well as significant concentrations of sulfate
and boron.
From our caliche ore deposits, we produce a wide range of nitrate-based products used for specialty plant
nutrients and industrial applications, as well as iodine and iodine derivatives. At the Salar de Atacama, we
extract brines rich in potassium, lithium, sulfate and boron in order to produce potassium chloride,
potassium sulfate, lithium solutions and bischofite (magnesium chloride). We produce lithium carbonate
and lithium hydroxide at our plant near the city of Antofagasta, Chile, from the solutions brought from the
Salar de Atacama. We market all of these products through an established worldwide distribution network.
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
Our products are divided into six categories: specialty plant nutrients; iodine and its derivatives; lithium
and its derivatives; potassium chloride and potassium sulfate; industrial chemicals and other commodity
fertilizers. Specialty plant nutrients are premium fertilizers that enable farmers to improve yields and the
quality of certain crops. Iodine and its derivatives are mainly used in the X-ray contrast media and biocides
industries and in the production of polarizing film, which is an important component in LCD screens.
Lithium and its derivatives are mainly used in batteries, greases and frits for production of ceramics.
Potassium chloride is a commodity fertilizer that is produced and sold by us worldwide. Potassium sulfate
is a specialty fertilizer used primarily in crops such as vegetables, fruits and industrial crops. Industrial
chemicals have a wide range of applications in certain chemical processes such as the manufacturing of
glass, explosives and ceramics, and, more recently, industrial nitrates are being used in concentrated solar
power plants as a means for energy storage. In addition, we complement our portfolio of plant nutrients
through the buying and selling of other commodity fertilizers for use mainly in Chile.
For the year ended December 31, 2020, we had revenues of US$1,817.2 million, gross profit of US$482.9
million and profit attributable to controlling interests of US$164.5 million. Our worldwide market
capitalization as of December 31, 2020 was approximately US$11.0 billion.
Specialty Plant Nutrition: We produce four main types of specialty plant nutrients: potassium nitrate,
sodium nitrate, sodium potassium nitrate and specialty blends. We also sell other specialty fertilizers
including third party products. All of these specialty plant nutrients are used in either solid or liquid form
mainly on high value crops such as vegetables, fruits and flowers. Our nutrients are widely used in crops
that employ modern agricultural techniques such as hydroponics, green housing, fertigation (where
fertilizer is dissolved in water prior to irrigation) and foliar application. Specialty plant nutrients have
certain advantages over commodity fertilizers, such as rapid and effective absorption (without requiring
nitrification), superior water solubility, increased soil pH (which reduces soil acidity) and low chloride
content. One of the most important products in this business line is potassium nitrate, which is sold in
crystalline or prill form, allowing for multiple application methods. Crystalline potassium nitrate products
are ideal for application by fertigation and foliar sprays, and potassium nitrate prills are suitable for soil
applications.
We have developed brands for marketing according to the different applications and uses of our products.
Our main brands are: UltrasolR (fertigation), QropR (soil application), SpeedfolR (foliar application) and
AllganicR (organic agriculture).
The new needs of more sophisticated customers demand that the industry provide integrated solutions
rather than individual products. Our products, including customized specialty blends that meet specific
needs along with the agronomic service provided, allow to create plant nutrition solutions that add value
to crops through higher yields and betterquality production. Because our products are derived from natural
nitrate compounds or natural potassium brines, they have certain advantages over synthetically produced
fertilizers, including the presence of certain beneficial trace elements, which makes them more attractive
to customers who prefer products of natural origin. As a result, specialty plant nutrients are sold at a
premium price compared to commodity fertilizers.
Iodine and its Derivatives: We believe that we are the world’s leading producer of iodine and iodine
derivatives, which are used in a wide range of medical, pharmaceutical, agricultural and industrial
applications, including x-ray contrast media, polarizing films for LCD/LED, antiseptics, biocides and
disinfectants, in the synthesis of pharmaceuticals, electronics, pigments and dye components.
Lithium and its Derivatives: We are a leading producer of lithium carbonate, which is used in a variety of
applications, including electrochemical materials for batteries used in electric vehicles, portable
computers, tablets, cellular telephones and electronic apparatus, frits for the ceramic and enamel
industries, heat-resistant glass (ceramic glass), air conditioning chemicals, continuous casting powder for
steel extrusion, pharmaceuticals and lithium derivatives. We are also a leading supplier of lithium
11
3) DESCRIPTION OF BUSINESS ENVIRONMENT
hydroxide, which is primarily used as an input for the lubricating greases industry and for cathodes for
high energy capacity batteries.
Potassium: We produce potassium chloride and potassium sulfate from brines extracted from the Salar de
Atacama. Potassium chloride is a commodity fertilizer used to fertilize a variety of crops including corn,
rice, sugar, soybean and wheat. Potassium sulfate is a specialty fertilizer used mainly in crops such as
vegetables, fruits and industrial crops.
Industrial Chemicals: We produce and sell three industrial chemicals: sodium nitrate, potassium nitrate
and potassium chloride. Sodium nitrate is used primarily in the production of glass, explosives, and metal
treatment, metal recycling and the production of insulation materials, among other uses. Potassium nitrate
is used in the manufacturing of specialty glass, and it is also an important raw material for the production
of frits for the ceramics, enamel industries, metal treatment and pyrotechnics. Solar salts, a combination
of potassium nitrate and sodium nitrate, are used as a thermal storage medium in concentrated solar power
plants. Potassium chloride is a basic chemical used to produce potassium hydroxide, and it is also used as
an additive in oil drilling as well as in food processing, among other uses.
Other Products and Services: We also sell other fertilizers and blends, some of which we do not produce.
We are the only company that produces and distributes the three main potassium sources: potassium
nitrate, potassium sulfate and potassium chloride.
The following table shows the percentage breakdown of our revenues for 2020, 2019 and 2018 according
to our product lines:
Specialty Plant Nutrition ...........
Iodine and Derivatives ...............
Lithium and Derivatives ............
Potassium ..................................
Industrial Chemicals ..................
Other .........................................
Total
2020
39%
18%
21%
12%
9%
2%
100%
2019
37%
19%
26%
11%
5%
2%
100%
2018
35%
14%
32%
12%
5%
2%
100%
Business Strategy
SQM is a global company that develops and produces diverse products for several industries essential for
human progress, such as health, nutrition, renewable energy and technology through innovation and
technological development. We aim to maintain our leading world position in the lithium, potassium
nitrate, iodine and thermo-solar salts markets by:
• Ensuring access to the best assets related to our current business lines by expanding our global
presence;
• Actively searching for attractive minerals allowing us diversification opportunities to replicate
and expand our existing mining capacities;
• Strengthening our operational, logistical and commercial excellence process from beginning to
end, while looking to be a cost leader; and
• Maintaining a conservative financial policy which allows us to successfully endure economic
cycles that could impact the markets in which we sell.
We are a dynamic company. In pursuit of our objectives, we expect to acquire and develop projects and
interests that are consistent with our existing and new businesses, either alone or with joint venture
partners. We may also divest or sell-down interests that we have acquired to deploy funds for other
investments or other purposes in pursuit of our objectives or to adjust risk or diversify our asset base.
12
3) DESCRIPTION OF BUSINESS ENVIRONMENT
We are a company built and managed by a culture based on excellence, safety, sustainability and integrity.
We work every day to expand this culture through the attraction, retention and development of talent as
well encouraging an inclusive and diverse work environment ensuring the unique knowledge and
innovation needed to sustain our business. We strive for safe and accident-free operations by promoting
conduct that favors the physical safety and psychological well-being of everyone who works directly and
indirectly with the Company.
We position ourselves as leaders in sustainability and commit to a sustainable future where we constantly
work to responsibly manage natural resources, protect human rights, care for the environment, form close
and trusting relationships with our neighboring communities and create value. Within these communities,
we support projects and activities with a focus on education, business development, and protection of the
environment and historical heritage. We create value for our clients through established commercial
models and the production and development of differentiated products that respond to their industry and
market specific needs, constantly creating and providing a sustainable improvement in the quality of life.
We will continue to create value for all of our stakeholders through responsible management of natural
resources, sustainable expansion projects and improvement of our existing operations, with a focus on
minimizing our environmental impacts by reducing our carbon, energy and water footprints and working
together with our shareholders, employees, customers, suppliers and communities.
Specialty Plant Nutrition
Our strategy in our specialty plant nutrition business is to: (i) leverage the advantages of our specialty
products over commodity-type fertilizers; (ii) selectively expand our business by increasing our sales of
higher margin specialty plant nutrients based on potassium and natural nitrates, particularly soluble
potassium nitrate and specialty blends; (iii) pursue investment opportunities in complementary businesses
to enhance our product portfolio, increase production, reduce costs, and add value to the marketing of our
products; (iv) develop new specialty nutrient blends produced in our mixing plants that are strategically
located in or near our principal markets in order to meet specific customer needs; (v) focus primarily on
the markets where we can sell our plant nutrients in soluble and foliar applications in order to establish a
leadership position; (vi) further develop our global distribution and marketing system directly and through
strategic alliances with other producers and global or local distributors; (vii) reduce our production costs
through improved processes and higher labor productivity so as to compete more effectively and (viii)
supply a product with consistent quality according to the specific requirements of our customers.
Iodine and its Derivatives
Our strategy in our iodine business is to: (i) reach and maintain a sufficient market share of the iodine
market in order to optimize the use of our available production capacity; (ii) encourage demand growth
and promote new iodine uses; (iii) participate in iodine recycling projects through the Ajay-SQM Group
(“ASG”); (iv) reduce our production costs through improved processes and higher productivity in order
to compete more effectively and (v) supply a product with consistent quality according to the requirements
of our customers.
Lithium and its Derivatives
Our strategy in our lithium business is to: (i) strategically allocate our sales of lithium carbonate and
lithium hydroxide; (ii) encourage demand growth and promote new lithium uses; (iii) selectively pursue
opportunities in the lithium derivatives business by creating new lithium compounds; (iv) reduce our
production costs through improved processes and higher productivity in order to compete more
effectively; (v) supply a product with consistent quality according to the requirements of our customers;
(vi) diversify our operations geographically and jurisdictionally; and (vii) diversifying our asset base or
adjusting risk by acquiring new projects and interests (either alone or with joint venture partners), divesting
existing projects or selling down our interests in projects.
Potassium
13
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Our strategy in our potassium business is to: (i) offer a portfolio of potassium products, including
potassium sulfate, potassium chloride and other fertilizers, to our traditional markets; (ii) have flexibility
to offer crystalized (standard) or granular (compacted) form products according to market requirements;
(iii) focus on markets where we have logistical advantages and synergies with our specialty plant nutrition
business and (iv) supply a product with consistent quality according to the specific requirements of our
customers.
Industrial Chemicals
Our strategy in our industrial chemical business is to: (i) maintain our leadership position in the industrial
nitrates market; (ii) encourage demand growth in different applications as well as exploring new potential
ones; (iii) become a long-term, reliable supplier for the thermal storage industry, maintaining close
relationships with R&D programs and industrial initiatives; (iv) reduce our production costs through
improved processes and higher productivity in order to compete more effectively and (v) supply a product
with consistent quality according to the requirements of our customers.
New Business Ventures
We constantly evaluate opportunities that are consistent with our existing and new businesses. We seek to
acquire interests in projects both inside and outside of Chile where we believe we have sustainable
competitive advantages, and we hope to continue doing so in the future.
In addition, we are actively conducting exploration for metallic minerals in the mining properties we own.
If such minerals are found, we may decide to exploit, sell or enter into an association to extract these
resources. Our exploration efforts are currently focused on the layer of bedrock that lies beneath the caliche
ore that we use as the primary raw material in the production of iodine and nitrates. This bedrock has
significant potential for metallic mineralization, particularly copper and gold. A significant portion of our
mining properties are located in the Antofagasta region of Chile, where many large copper producers
operate.
We have an in-house geological exploration team that explores the area directly, identifying drilling targets
and assessing new prospects. In 2020, the team identified six new targets and confirmed mineralization in
several of the targets. The number of perforated meters reached 33,523 meters and were made with four
internal machines. We also have a metal business development team that works to engage partners
interested in investing in metal exploration within our mining properties. As of December 31, 2020, we
had five option agreements in place with four mining companies and private equity firms. We participated
in the formation of two joint ventures as a result of exercising an option agreement with a junior mining
company.
Main Business Lines
Specialty Plant Nutrition
In 2020, specialty plant nutrients revenues decreased to US$701.7 million, representing 38.6% of our total
revenues for that year. We believe that we are the world’s largest producer of potassium nitrate. We
estimate that our 2020 sales volume represented approximately 51% of the total global potassium nitrate
used for all applications, remaining flat with our sales volume in 2019. We estimate that our sales
accounted for approximately 48% of global potassium nitrate sales for all agricultural uses by volume in
2020. During 2020, the agricultural potassium nitrate market increased approximately 5% when compared
to 2019. These estimates do not include potassium nitrate produced and sold locally in China, only Chinese
net imports and exports.
In addition to potassium nitrate, we produce the following specialty plant nutrients: sodium nitrate, sodium
potassium nitrate and specialty blends (containing various combinations of nitrogen, phosphate and
potassium and generally known as “NPK blends”).
14
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Our specialty plant nutrients have specific characteristics that increase productivity and enhance quality
when used on certain crops and soils. Our specialty plant nutrients have significant advantages for certain
applications over commodity fertilizers based on nitrogen and potassium, such as urea and potassium
chloride.
Our specialty plant nutrients advantages include that they:
•
•
are fully water soluble, allowing their more efficient use in hydroponics, fertigation, foliar
applications and other advanced agricultural techniques thus improving the water use
efficiency of crops to help conserve water;
are chloride-free, which prevents chloride toxicity in certain crops associated with high levels
of chlorine in plant nutrients;
• provide nitrogen in nitric form, thereby allowing crops to absorb nutrients faster than they
absorb urea- or ammonium-based fertilizers;
• do not release hydrogen after application, thereby avoiding increased soil acidity;
• possess trace elements, which promote disease resistance in plants; and
•
are more attractive to customers who prefer products of natural origin.
Specialty Plant Nutrition: Market
The target market for our specialty plant nutrients includes producers of high-value crops such as
vegetables, fruits, industrial crops, flowers, cotton and others. Furthermore, we sell specialty plant
nutrients to producers of chloride-sensitive crops. Since 1990, the international market for specialty plant
nutrients has grown at a faster rate than the international market for commodity-type fertilizers. This is
mostly due to: (i) the application of new agricultural technologies such as fertigation and hydroponics, and
the increasing use of greenhouses; (ii) the increase in the cost of land and the scarcity of water, which has
forced farmers to improve their yields and reduce water use; and (iii) the increase in demand for higher
quality crops, such as fruits and vegetables.
Over the last ten years, the compound annual growth rate for vegetable production per capita was 3%
while the compound annual growth rate for the world population was closer to 1%.
Worldwide scarcity of water and arable land drives the development of new agricultural techniques to
maximize the use of these resources. A good example of this is the more efficient use of water through
irrigation, which has grown at an average annual rate of 1% during the last 20 years (a pace similar to
population growth). Micro-irrigation, which results in even more efficient use of water, has grown at 10%
per year over the same period. Micro-irrigation systems, which include drip irrigation and micro-
sprinklers, are the most efficient forms of technical irrigation. These applications require fully water-
soluble plant nutrients. Our nitrate-based specialty plant nutrients are fully soluble in water and provide
nitrogen in nitric form, which helps crops absorb these nutrients faster than they absorb urea- or
ammonium-based fertilizers, facilitating a more efficient application of nutrients to the plant and thereby
increasing the crop’s yield and improving its quality.
The lowest global share of hectares under micro-irrigation over total irrigated hectares is in Asia, with a
figure of approximately 3%. This represents a high potential for the introduction of micro-irrigation in that
region, which is reflected in the high growth rates in Asia in recent years.
Potassium nitrate is an important market in China, although currently its demand is largely fulfilled by
domestic producers. Total demand of potassium nitrate in Asian countries totals approximately 400,000
to 420,000 metric tons, of which approximately 130,000 metric tons is needed for the tobacco industry
and approximately 120,000 metric tons is related to the horticulture business. Of the total, between 15,000
and 35,000 metric tons of potassium nitrate are imports.
15
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Specialty Plant Nutrition: Our Products
Potassium nitrate, sodium potassium nitrate, and specialty blends are higher margin products that use
sodium nitrate as a feedstock. These products can be manufactured in crystallized or prilled form. Specialty
blends are produced using our own specialty plant nutrients and other components at blending plants
operated by us or our affiliates and related companies in Brazil, Chile, China, Italy, Mexico, the
Netherlands, Peru, South Africa, Spain, and the United States.
The following table shows our sales volumes of and revenues from specialty plant nutrients for 2020, 2019
and 2018:
Sales volumes (Th. MT)
Sodium nitrate
Potassium nitrate and sodium potassium
nitrate
Specialty blends(1)
Other specialty plant nutrients(2)
Revenues (in US$ millions)
2020
2019
2018
25.6
575.2
271.3
164.4
701.7
30.2
617.4
238.9
155.3
25.0
673.4
242.5
141.6
723.9
781.8
(1) Includes Yara’s products sold pursuant to our commercial agreement.
(2) Includes trading of other specialty fertilizers.
In 2020, our specialty plant nutrients revenues decreased to US$701.7 million, representing 39% of our
total revenues for that year and a 3.1% decrease from US$723.9 million in specialty plant nutrients
revenues in 2019. Prices decreased approximately 2.6% in 2020.
Depending on the systems used to apply specialty nutrients, fertilizers can be classified as specialty field
fertilizers or water-soluble fertilizers.
Specialty field fertilizers are applied directly to the soil, manually or in a mechanized fashion. Their high
solubility levels, lack of chloride and absence of acidic reactions make them particularly advantageous for
tobacco, potatoes, coffee, cotton, and certain fruits and vegetables.
Water-soluble fertilizers are specialty nutrients that are delivered to the crops using modern irrigation
systems. As these systems feature refined technology, the products used in them must be highly soluble,
rich in nutrients, free of impurities and insoluble substances, and with a low salinity index. The leading
nutrient in this segment is potassium nitrate, whose optimal balance of nitric nitrogen and chloride-free
potassium (the two macronutrients most needed by plants) make it an indispensable source of nutrition for
crops that use modern irrigation systems.
Potassium nitrate is widely known to be a vital component in foliar feeding applications, where usage is
recommended in order to stave off nutritional deficiencies before the first symptoms appear, correct any
deficiencies that arise and prevent physiological stress. This nutrient also helps promote a suitable balance
between fruit production and/or growth, and plant development, particularly in crops with physiological
disorders.
Foliar feeding with potassium nitrate can have beneficial effects:
16
3) DESCRIPTION OF BUSINESS ENVIRONMENT
• when soil chemistry limits nutrient solubility and availability (pH, organic matter, type and
percentage of clay);
• when nutrient absorption through the roots is limited as a result of conditions that hamper
root growth (temperature, moisture, oxygen and loss of soil structure);
• when the plant’s local internal demand may surpass real internal nutrient redistribution
capacity, leaving the demand unsatisfied;
• when nutrient mobility is limited, such as when plants flower before the leaf growth phase,
•
imposing limiting factors on xylem nutrient transport;
to achieve rapid recovery from leaf stress caused by climatic conditions, soil conditions and
irrigation management.
SQM has consolidated a product portfolio of over 200 specialty fertilizer blends, including top brands
such as Ultrasol®, for fertigation; Qrop®, for application to the soil; Speedfol®, for foliar feeding and
Allganic® for organic crops. In recent years, we have added several products to our portfolio such as
QropTMKS in 2015 and Ultrasol®ution K in 2018.
We have restructured the Qrop products portfolio to include a chloride-free line for direct application to
the soil with a variety of specialized formulas and unique mixtures, which make these products highly
accurate and quickly available for the plant. Ultrasolution K® addresses the need for potassium-free
chloride and a nitrate safe for handling in the liquid fertilizer market, opening new opportunities for SQM
in in the cultivation of almonds and strawberries, in which water quality and efficiency are very important.
Other products developed by our research and development team during 2020 include Ultrasoline®,
Ultrasol K Acid®, ProP® and Prohydric®. Ultrasoline® is a new product that, together with potassium
nitrate, incorporates iodine, an essential element for plants, allowing better root growth, optimal
photosynthesis and better tolerance to oxidative stress, among other advantages.
Specialty Plant Nutrition: Marketing and Customers
In 2020, we sold our specialty plant nutrients in approximately 102 countries and to more than 1,100
customers. No customer represented more than 10% of our specialty plant nutrition revenues during 2020,
and our ten largest customers accounted in the aggregate for approximately 33% of revenues during that
period. No supplier accounted for more than 10% of the costs of sales for this business line.
The table below shows the geographical breakdown of our revenues:
Revenues breakdown
North America ...............................
Europe ...........................................
Chile ..............................................
Central and South America ...........
Asia and Others .............................
2020
35%
21%
14%
10%
20%
2019
34%
21%
15%
11%
20%
2018
31%
26%
14%
10%
19%
We sell our specialty plant nutrition products outside Chile mainly through our own worldwide network
of representative offices and through our distribution affiliates.
We maintain inventory of our specialty plant nutrients in our commercial offices in the main markets of
the Americas, Asia, Europe, the Middle East and Africa in order to facilitate prompt deliveries to
customers. In addition, we sell specialty plant nutrients directly to some of our large customers. Sales are
made pursuant to spot purchase orders and short-term contracts.
17
3) DESCRIPTION OF BUSINESS ENVIRONMENT
As part of our marketing strategy, we provide technical and agronomical assistance and support to our
clients. We have specific knowledge resulting from extensive research and numerous studies conducted
by our agronomical teams in close contact with producers throughout the world. The solid agronomical
knowledge is key for the development of specific formulas and hydroponic and fertirrigation nutritional
plans, which allows us to provide expert advice for producing crops that meet high quality standards for
the most efficient markets and in the most environmentally challenging conditions.
By working closely with our customers, we are able to identify their needs for new products and a possible
existence of higher-value-added markets. Our specialty plant nutrients are used on a wide variety of crops,
particularly value-added crops, where the use of our products enables our customers to increase yields and
achieve a premium price for their own products.
Our customers are located in both the northern and southern hemispheres. Consequently, we do not believe
there are any seasonal or cyclical factors that can materially affect the sales of our specialty plant nutrients.
Specialty Plant Nutrition: Fertilizer Sales in Chile
We market specialty plant nutrients in Chile through our subsidiary Soquimich Comercial S.A. (“SQMC”).
SQMC is one of the main players in the Chilean market, offering a wide range of products developed
specifically for the crops grown in the country which require specialty plant nutrients.
SQMC sells local products as well as products imported from different countries around the world.
All contracts and agreements between SQMC and its foreign suppliers of fertilizers contain standard and
customary commercial terms and conditions. SQMC has been able to obtain adequate supplies of these
products with good pricing conditions.
SQMC’s total sales reached US$118 million and US$128 million in 2020 and 2019, respectively. During
2020, no client represented more than 10% of the sales of the Company. According to the customs
information related to fertilizers, the market participation of fertilizers imported directly by SQMC during
2020 was approximately 22%.
Specialty Plant Nutrition: Competition
The principal means of competition in the sale of potassium nitrate are product quality, customer service,
location, logistics, agronomic expertise and price.
We believe that we are the world’s largest producer of sodium nitrate and potassium nitrate for agricultural
use. Our sodium nitrate products compete indirectly with specialty and commodity substitutes, which may
be used by some customers instead of sodium nitrate depending on the type of soil and crop to which the
product will be applied. Such substitute products include calcium nitrate, ammonium nitrate and calcium
ammonium nitrate.
In the potassium nitrate market, our largest competitor is Haifa Chemicals Ltd. (“Haifa”), in Israel, which
is a subsidiary of Trans Resources International Inc. We estimate that sales of potassium nitrate by Haifa
accounted for approximately 18% of total world sales during 2020 (excluding sales by Chinese producers
to the domestic Chinese market). Our sales accounted for approximately 48% of global potassium nitrate
sales by volume for the period.
ACF, another Chilean producer, mainly oriented to iodine production, has produced potassium nitrate
from caliche ore and potassium chloride since 2005. Kemapco, a Jordanian producer owned by Arab
Potash, produces potassium nitrate in a plant located close to the Port of Aqaba, Jordan. In addition, there
18
3) DESCRIPTION OF BUSINESS ENVIRONMENT
are several potassium nitrate producers in China, the largest of which are Yuantong and Migao. Most of
the Chinese production is consumed by the Chinese domestic market.
In Chile, our products mainly compete with imported fertilizer blends that use calcium ammonium nitrate
or potassium magnesium sulfate. Our specialty plant nutrients also compete indirectly with lower-priced
synthetic commodity-type fertilizers such as ammonia and urea, which are produced by many producers
in a highly price-competitive market. Our products compete on the basis of advantages that make them
more suitable for certain applications as described above.
Iodine and its Derivatives
We believe that we are the world’s largest producer of iodine. In 2020, our revenues from iodine and
iodine derivatives amounted to US$334.7 million, representing 18.4% of our total revenues in that year.
We estimate that our sales accounted for approximately 28% of global iodine sales by volume in 2020.
Iodine: Market
Iodine and iodine derivatives are used in a wide range of medical, agricultural and industrial applications
as well as in human and animal nutrition products. Iodine and iodine derivatives are used as raw materials
or catalysts in the formulation of products such as X-ray contrast media, biocides, antiseptics and
disinfectants, pharmaceutical intermediates, polarizing films for LCD and LED screens, chemicals,
organic compounds and pigments. Iodine is also added in the form of potassium iodate or potassium iodide
to edible salt to prevent iodine deficiency disorders.
X-ray contrast media is the leading application of iodine, accounting for approximately 23% of demand.
Iodine’s high atomic number and density make it ideally suited for this application, as its presence in the
body can help to increase contrast between tissues, organs, and blood vessels with similar X-ray densities.
Other applications include pharmaceuticals, which we believe account for 13% of demand; LCD and LED
screens, 12%; iodophors and povidone-iodine, 9%; animal nutrition, 8%; fluoride derivatives, 7%;
biocides, 6%; nylon, 4%; human nutrition, 4% and other applications, 14%.
During 2020, iodine demand was impacted significantly due to the economic crisis caused by Covid-19,
with total global demand decreasing by approximately 9% to 33,200 metric tons. Although the decrease
in demand occurred across product lines, two uses of iodine had growth compared to 2019: the use of
povidone-iodine grew by 6%, and the use of iodine for human nutrition grew by 1%. It is expected that
the majority of iodine applications will begin to recover demand during the course of 2021.
Iodine: Our Products
We produce iodine in our Nueva Victoria plant, near Iquique, and our Pedro de Valdivia plant, close to
María Elena. We have a total effective production capacity of approximately 14,800 metric tons per year
of iodine, including the Iris plant, which is located close to the Nueva Victoria plant.
Through ASG, we produce organic and inorganic iodine derivatives. ASG was established in the mid-
1990s and has production plants in the United States, Chile and France. ASG is the world’s leading
inorganic and organic iodine derivatives producer.
Consistent with our business strategy, we are constantly working on the development of new applications
for our iodine-based products, pursuing a continuing expansion of our businesses and maintaining our
market leadership.
We manufacture our iodine and iodine derivatives in accordance with international quality standards and
have qualified our iodine facilities and production processes under the ISO-9001:2015 program, providing
19
3) DESCRIPTION OF BUSINESS ENVIRONMENT
third party certification of the quality management system and international quality control standards that
we have implemented.
The following table shows our total sales volumes and revenues from iodine and iodine derivatives for
2020, 2019 and 2018:
Sales volumes (Th. MT)
Iodine and derivatives
Revenues (in US$ millions)
2020
2019
2018
9.7
334.7
12.7
371.0
13.3
325.0
Our revenues decreased to US$334.7 million in 2020 from US$371.0 million in 2019. This decrease was
primarily attributable to lower sales volumes during 2020. Average iodine prices were more than 18.9%
higher in 2020 than in 2019. Our sales volumes decreased 24.1% in 2020.
Iodine: Marketing and Customers
In 2020, we sold our iodine products in approximately 47 countries to approximately 250 customers, and
most of our sales were exports. Two customers each accounted for more than 10% of our iodine revenues
in 2020. These two customers accounted for approximately 42% of revenues, and our ten largest customers
accounted in the aggregate for approximately 77% of revenues. No supplier accounted for more than 10%
of the cost of sales of this business line.
The following table shows the geographical breakdown of our revenues:
2020
Revenues breakdown
North America ............................ 27%
Europe ......................................... 42%
Chile ........................................... 0%
Central and South America ......... 3%
Asia and Others .......................... 27%
2019
24%
33%
0%
2%
40%
2018
26%
34%
0%
2%
37%
We sell iodine through our own worldwide network of representative offices and through our sales, support
and distribution affiliates. We maintain inventories of iodine at our facilities throughout the world to
facilitate prompt delivery to customers. Iodine sales are made pursuant to spot purchase orders or within
the framework of supply agreements. Supply agreements generally specify annual minimum and
maximum purchase commitments, and prices are adjusted periodically, according to prevailing market
prices.
Iodine: Competition
The world’s main iodine producers are based in Chile, Japan and the United States. Iodine is also produced
in Russia, Turkmenistan, Azerbaijan, Indonesia and China.
Iodine is produced in Chile using a unique mineral known as caliche ore, whereas in Japan, the United
States, Russia, Turkmenistan, Azerbaijan, and Indonesia, producers extract iodine from underground
brines that are mainly obtained together with the extraction of natural gas and petroleum. In China, iodine
is extracted from seaweed.
Five Chilean companies accounted for approximately 55% of total global sales of iodine in 2020, including
SQM, with approximately 28%, and four other producers accounting for the remaining 27%. The other
Chilean producers are Atacama Chemical S.A. (Cosayach), controlled by the Chilean holding company
Inverraz S.A.; ACF Minera S.A., owned by the Chilean Urruticoechea family; Algorta Norte S.A., a joint
20
3) DESCRIPTION OF BUSINESS ENVIRONMENT
venture between ACF Minera S.A. and Toyota Tsusho; and Atacama Minerals, which is owned by Chinese
company Tewoo.
We estimate that eight Japanese iodine producers accounted for approximately 28% of global iodine sales
in 2020, including recycled iodine.
We estimate that iodine producers in the United States (one of which is owned by Toyota Tsusho and
another by Ise Chemicals Ltd., both of which are Japanese companies) accounted for nearly 5% of world
iodine sales in 2020.
Iodine recycling is a growing trend worldwide. Several producers have recycling facilities where they
recover iodine and iodine derivatives from iodine waste streams.
We estimate the 19% of the iodine supply comes from iodine recycling. Through ASG or alone, we are
also actively participating in the iodine recycling business using iodinated side-streams from a variety of
chemical processes in Europe and the United States.
The prices of iodine and iodine derivative products are determined by market conditions. World iodine
prices vary depending upon, among other things, the relationship between supply and demand at any given
time. Iodine supply varies primarily as a result of the production levels of the iodine producers (including
us) and their respective business strategies. Our annual average iodine sales prices increased to
approximately US$35 per kilogram in 2020, from the average sales prices of approximately US$29 per
kilogram observed in 2019.
Demand for iodine varies depending upon overall levels of economic activity and the level of demand in
the medical, pharmaceutical, industrial and other sectors that are the main users of iodine and iodine-
derivative products. Certain substitutes for iodine are available for certain applications, such as antiseptics
and disinfectants, which could represent a cost-effective alternative to iodine depending on prevailing
prices.
The main factors of competition in the sale of iodine and iodine derivative products are reliability, price,
quality, customer service and the price and availability of substitutes. We believe we have competitive
advantages compared to other producers due to the size and quality of our mining reserves and the
available production capacity. We believe our iodine is competitive with that produced by other
manufacturers in certain advanced industrial processes. We also believe we benefit competitively from the
long-term relationships we have established with our largest customers.
Lithium and its Derivatives
In 2020, our revenues from lithium sales amounted to US$383.4 million, representing 21.1% of our total
revenues. We believe we are one of the world’s largest producers of lithium carbonate and lithium
hydroxide, and we estimate that our sales volumes accounted for approximately 19% of the global lithium
chemicals sales volumes.
Lithium: Market
The lithium market can be divided into (i) lithium minerals for direct use (in which market SQM does not
participate directly), (ii) basic lithium chemicals, which include lithium carbonate and lithium hydroxide
(as well as lithium chloride, from which lithium carbonate may be made), and (iii) inorganic and organic
lithium derivatives, which include numerous compounds produced from basic lithium chemicals (in which
market SQM does not participate directly).
Lithium carbonate and lithium hydroxide are principally used to produce the cathodes for rechargeable
batteries, taking advantage of lithium’s extreme electrochemical potential and low density. Batteries are
21
3) DESCRIPTION OF BUSINESS ENVIRONMENT
the leading application for lithium, accounting for approximately 75% of total lithium demand, including
batteries for electric vehicles, which accounted for approximately 54% of total lithium demand.
There are many other applications both for basic lithium chemicals and lithium derivatives, such as
lubricating greases (approximately 5% of total lithium demand), heat-resistant glass (ceramic glass)
(approximately 5% of total lithium demand), chips for the ceramics and glaze industry (approximately 2%
of total lithium demand), chemicals for air conditioning (approximately 1% of total lithium demand), and
many others, including pharmaceutical synthesis and metal alloys.
Lithium’s main properties, which facilitate its use in this range of applications, are that it:
is the lightest solid metal and element at room temperature;
is low density;
•
•
• has a low coefficient of thermal expansion;
• has high electrochemical potential; and
• has a high specific heat capacity.
During 2020, lithium chemicals demand increased by approximately 6%, reaching approximately 330,000
metric tons. We expect applications related to energy storage to continue driving demand in the coming
years.
Lithium: Our Products
We produce lithium carbonate at our Salar del Carmen facilities, near Antofagasta, Chile, from highly
concentrated lithium chloride produced in the Salar de Atacama as a by-product of the potassium chloride
production. The annual production capacity of our lithium carbonate plant at the Salar del Carmen was
expanded and is now 70,000 metric tons per year. We are in the process of increasing our production
capacity to 180,000 metric tons per year. We believe that the technologies we use, together with the high
concentrations of lithium and the characteristics of the Salar de Atacama, such as high evaporation rate
and concentration of other minerals, allow us to be one of the lowest cost producers worldwide.
We also produce lithium hydroxide at the same plant at the Salar del Carmen, next to the lithium carbonate
operation. The lithium hydroxide facility has a production capacity of 13,500 metric tons per year and we
are in the process of increasing this production capacity to 30,000 metric tons per year. In addition, in
February 2021 our Board approved the investment for our 50% share of the development costs in the Mt.
Holland lithium project in our joint venture with Wesfarmers, which we expect will have a total production
capacity of 50,000 metric tons.
The following table shows our total sales volumes and revenues from lithium and its derivatives for 2020,
2019 and 2018:
Sales volumes (Th. MT)
Lithium and derivatives
2020
2019
2018
64.6
45.1
45.1
Revenues (in US$ millions)
383.4
505.7
734.8
Our revenues in 2020 were US$383.4 million, a 24.2% decrease from US$505.7 million in 2019, due to
lower prices during the year. The average price for 2020 was approximately 47.1% lower than the average
price in 2019.
Lithium: Marketing and Customers
22
3) DESCRIPTION OF BUSINESS ENVIRONMENT
In 2020, we sold our lithium products in approximately 42 countries to approximately 187 customers, and
most of our sales were to customers outside of Chile. One customer accounted for more than 10% of our
lithium revenues in 2020, accounting for approximately 12% of our lithium revenues. Our ten largest
customers accounted in the aggregate for approximately 58% of revenues. No supplier accounted for more
than 10% of the cost of sales of this business line. We make lease payments to Corfo which are associated
with the sale of different products produced in the Salar de Atacama, including lithium carbonate, lithium
hydroxide and potassium chloride. See Note 25.2 to our consolidated financial statements for the
disclosure of lease payments made to Corfo for all periods presented.
The following table shows the geographical breakdown of our sales for 2020, 2019 and 2018:
Revenues breakdown
North America ..................................
Europe ..............................................
Chile .................................................
Central and South America ..............
Asia and Others ................................
2020
7%
13%
0%
0%
80%
2019
9%
15%
0%
1%
75%
2018
9%
14%
0%
0%
76%
We sell lithium carbonate and lithium hydroxide through our own worldwide network of representative
offices and through our sales, support and distribution affiliates. We maintain inventories of these products
at our facilities throughout the world to facilitate prompt delivery to customers. Sales of lithium carbonate
and lithium hydroxide are made pursuant to spot purchase orders or within the framework of supply
agreements. Supply agreements generally specify annual minimum and maximum purchase commitments,
and prices are adjusted periodically, according to prevailing market prices. In December 2020, we signed
a nine-year sales contract with LG Energy Solution for up to 55,000 metric tons of lithium carbonate
equivalent.
Lithium: Competition
During 2020, the main lithium brines producers were Chile, Argentina and China, while the main lithium
mineral producers were Australia and China. With total sales of approximately 64,600 metric tons of
lithium carbonate and lithium hydroxide, SQM’s market share of lithium chemicals was approximately
19% in 2020. One of our main competitors is Albemarle Corporation (“Albemarle”), which produces
lithium carbonate and lithium chloride in Chile and the United States, along with lithium derivatives in
the United States, Germany, Taiwan and China, with a market share of approximately 22%. Albemarle
also owns 49% of Talison Lithium Pty Ltd. (“Talison”), an Australian company, that is the largest producer
of concentrated lithium minerals in the world, based in Western Australia. The remaining 51% of Talison
is owned by Tianqi Lithium Corp. (“Tianqi”), a Chinese company producing basic lithium chemicals in
China from concentrated lithium minerals. Talison sells a part of its concentrated lithium mineral
production to the direct use market, but most of its production, representing approximately 21% of total
lithium chemical demand, is converted into basic lithium chemicals in China by Tianqi and Albemarle.
Currently, Tianqi is planning to begin production at its lithium hydroxide plant in Australia, which is
expected to be operational during 2021. Tianqi is also a significant shareholder of ours, holding
approximately 25.86% of our shares. Albemarle plans to begin production at its lithium hydroxide plant
in Australia in late 2021.
Another important competitor is Livent Corporation (“Livent”), with an estimated market share of
approximately 6%. Livent has production facilities in Argentina through Minera del Altiplano S.A., where
it produces lithium chloride and lithium carbonate. In addition, Livent produces lithium derivatives in the
United States, the United Kingdom and China. Orocobre Ltd., based in Argentina, produces lithium
carbonate, with a market share of approximately 3%.
23
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Australia is an important source of concentrated lithium minerals. Since 2018, two producers have doubled
their production of concentrated mineral, which is then converted into lithium chemicals in China. One of
these producers is a joint venture between Ganfeng Lithium Co. (“Ganfeng”) and Mineral Resources Ltd
in the Mt. Marion project. Galaxy Resources Ltd. is another important producer with operations in Mt.
Cattlin. Additionally, Pilbara Minerals (which recently acquired Altura Mining), both produce from the
Pilgangoora deposit. In addition, there were at least ten other companies producing lithium in China from
brines or minerals in 2020.
We believe that lithium production will continue to increase in the near future, in response to an increase
in demand growth. A number of new projects to develop lithium deposits has been announced recently.
Some of these projects are already in the advanced stages of development and others could materialize in
the medium term.
Potassium
In 2020, our potassium chloride and potassium sulfate revenues amounted to US$209.3 million,
representing 11.5% of our total revenues and a 1.3% decrease compared to 2019, as a result of decreased
average prices. We estimate that we accounted for approximately 1% of global sales of potassium chloride
in 2020.
We produce potassium chloride by extracting brines from the Salar de Atacama that are rich in potassium
chloride and other salts.
Potassium is one of the three macronutrients that a plant needs to develop. Although potassium does not
form part of a plant’s structure, it is essential to the development of its basic functions. Potassium chloride
is the most commonly used potassium-based fertilizer. It is used to fertilize crops that can tolerate
relatively high levels of chloride, and to fertilize crops that are grown under conditions with sufficient
rainfall or irrigation practices that prevent chloride from accumulating to excess levels in the rooting
systems of the plant.
Some benefits that may be obtained through the use of potassium are:
•
increased yield and quality;
•
increased production of proteins;
•
increased photosynthesis;
•
intensified transport and storage of assimilates;
• prolonged and more intense assimilation period;
•
•
•
improved water efficiency;
regulated opening and closure of stomata; and
synthesis of lycopene.
Potassium chloride is also an important component for our specialty plant nutrition product line, where it
is used as a raw material to produce potassium nitrate.
Since 2009, our effective end product capacity has increased to over 2 million metric tons per year,
granting us improved flexibility and market coverage.
Potassium: Market
During the last decade, growth in demand for potassium chloride, and for fertilizers in general, has been
driven by several key factors, such as a growing world population, higher demand for protein-based diets
and less arable land. All of these factors contribute to fertilizer demand growth as a result of efforts to
maximize crop yields and use resources more efficiently. For the last ten years, the compound annual
24
3) DESCRIPTION OF BUSINESS ENVIRONMENT
growth for the global potassium chloride market was approximately 1 to 2%. We estimate that demand
increased 3 million metric tons in 2020, reaching approximately 67 million metric tons.
According to studies prepared by the International Fertilizer Industry Association, cereals account for
approximately 45% of world potassium consumption, including corn (14%), rice (13%) and wheat (3%).
Oilseeds, predominantly soybeans and palm oil, represent approximately 16% of total potassium demand.
Fruits and vegetables account for approximately 22% of world potassium demand, and sugar crops account
for close to 7%.
Potassium: Our Products
Potassium chloride differs from our specialty plant nutrition products because it is a commodity fertilizer
and contains chloride. We offer potassium chloride in two grades: standard and compacted. Potassium
sulfate is considered a specialty fertilizer and we offer this product in soluble grades.
The following table shows our sales volumes of and revenues from potassium chloride and potassium
sulfate for 2020, 2019 and 2018:
Sales volumes (Th. MT)
Potassium chloride and potassium sulfate
726.7
597.3
831.8
2020
2019
2018
Revenues (in US$ millions)
209.3
212.2
267.5
Our revenues in 2020 were US$209.3 million, a 1.3% decrease from US$212.2 million in 2019, due to
significantly lower prices during the year. Our sales volumes in 2020 were approximately 21.7% higher
than sales volumes reported last year.
Potassium: Marketing and Customers
In 2020, we sold potassium chloride and potassium sulfate to approximately 509 customers in
approximately 41 countries. No individual customer accounted for more than 10% of our revenues of
potassium chloride and potassium sulfate in 2020. We estimate that our ten largest customers accounted
in the aggregate for approximately 38% of such revenues. One supplier accounted for more than 10% of
the cost of sales of this business line, accounting for approximately 11% of the cost of sales for the business
line. We make lease payments to Corfo which are associated with the sale of different products produced
in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride. See Note
24.2 to our consolidated financial statements for the disclosure of lease payments made to Corfo for all
periods presented.
The following table shows the geographical breakdown of our sales for 2020, 2019 and 2018:
Revenues breakdown
2020
2019
2018
North America .............................
Europe ..........................................
Chile .............................................
Central and South America ..........
Asia and Others ............................
19%
14%
11%
35%
21%
20%
13%
13%
31%
23%
19%
17%
10%
30%
24%
Potassium: Competition
We estimate that we accounted for less than 1% of global sales of potassium chloride in 2020. Our main
competitors are Nutrien, Uralkali, Belaruskali and Mosaic. We estimate that in 2020, Nutrien accounted
25
3) DESCRIPTION OF BUSINESS ENVIRONMENT
for approximately 19% of global sales, Belaruskali accounted for approximately 18% of global sales,
Uralkali accounted for approximately 16% of global sales, and Mosaic accounted for approximately 14%
of global sales.
Industrial Chemicals
In 2020, our revenues from industrial chemicals were US$160.6 million, representing approximately 8.8%
of our total revenues for that year.
In addition to producing sodium and potassium nitrate for agricultural applications, we produce different
grades of these products, including prilled grades, for industrial applications. The grades differ mainly in
their chemical purity. We enjoy certain operational flexibility producing industrial nitrates, because they
are produced from the same process as their equivalent agricultural grades, needing only an additional step
of purification. We may, with certain constraints, shift production from one grade to the other depending
on market conditions. This flexibility allows us to maximize yields and to reduce commercial risk.
In addition to producing industrial nitrates, we produce, market and sell industrial-grade potassium
chloride.
Industrial Chemicals: Market
Industrial sodium and potassium nitrates are used in a wide range of industrial applications, including the
production of glass, ceramics, explosives, metal recycling, insulation materials, and metal treatments
together with various chemical processes.
In addition, this product line has also experienced growth from the use of industrial nitrates as thermal
storage in concentrated solar power plants (commonly known as “CSP”). Solar salts for this specific
application contain a blend of 60% sodium nitrate and 40% potassium nitrate by weight ratio and are used
as a storage and heat transfer medium. Unlike traditional photovoltaic plants, these new plants use a
“thermal battery” that contains molten sodium nitrate and potassium nitrate, which store the heat collected
during the day. The salts are heated up during the day, while the plants are operating under direct sunlight,
and at night they release the solar energy that they have captured, allowing the plants to operate even
during hours of darkness. Depending on the power plant technology, solar salts are also used as a heat
transfer fluid in the plant system and thereby make CSP plants even more efficient, increasing their output
and reducing the Levelized Cost of Electricity (LCOE).
We see a growing trend for the CSP application as a result of its economical long duration electricity
storage. The thermal storage of CSP plants helps to improve the stabilization of the electricity grid. Like
all large power generation plants, such large CSP power plants are capital intensive and require a relatively
long development period.
We supply solar salts to CSP projects around the world. In 2020, we sold approximately 160,000 metric
tons of solar salts to supply a CSP project in the Middle East. We expect to supply over 400,000 metric
tons to this project between 2020-2022. In addition, we believe there are ten major projects currently under
development worldwide that we believe we could supply between 2020-2025. As a result, we expect our
sales volumes of this product to surpass 1 million metric tons during the 2020-2025 period.
We are also experiencing a growing interest in using solar salts in thermal storage solutions not related to
CSP technology. Due to their proven performance, solar salts are being tested in industrial heat processes
and heat waste solutions. These new applications may open new opportunities for solar salts uses in the
near future.
Industrial Chemicals: Our Products
26
3) DESCRIPTION OF BUSINESS ENVIRONMENT
The following table shows our sales volumes of industrial chemicals and total revenues for 2020, 2019
and 2018:
Sales volumes (Th. MT)
Industrial chemicals
2020
2019
2018
225.1
123.5
135.9
Revenues (in US$ millions)
160.6
94.9
108.3
Revenues for industrial chemicals increased to US$160.6 million in 2020 from US$94.9 million in 2019,
as a result of higher sales volumes in this business line. Sales volumes in 2020 increased 82.3% compared
to sales volumes reported last year.
Industrial Chemicals: Marketing and Customers
We sold our industrial nitrate products in approximately 54 countries in 2020 to approximately 268
customers. One customer accounted for more than 10% of our revenues of industrial chemicals in 2020,
accounting for approximately 69%, and our ten largest customers accounted in the aggregate for
approximately 79% of such revenues. No supplier accounted for more than 10% of the cost of sales of this
business line. We make lease payments to CORFO which are associated with the sale of different products
produced in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride.
See Note 25.2 to our consolidated financial statements for the disclosure of lease payments made to
CORFO for all periods presented.
The following table shows the geographical breakdown of our sales for 2020, 2019 and 2018:
Revenues breakdown
2020
North America ............................ 15%
Europe ......................................... 7%
Chile ............................................ 3%
Central and South America ......... 3%
Asia and Others ........................... 72%
2019
29%
16%
42%
7%
6%
2018
25%
16%
4%
11%
43%
Our industrial chemical products are marketed mainly through our own network of offices, representatives
and distributors. We maintain updated inventories of our stocks of sodium nitrate and potassium nitrate,
classified according to graduation, to facilitate prompt dispatch from our warehouses. We provide support
to our customers and continuously work with them to develop new products and applications for our
products.
Industrial Chemicals: Competition
We believe that we are one of the world's largest producers of industrial sodium nitrate and potassium
nitrate. In 2020, our estimated market share by volume for industrial potassium nitrate was 73% and for
industrial sodium nitrate was 44% (excluding domestic demand in China and India).
Our competitors are mainly based in Europe and Asia, producing sodium nitrate as a by-product of other
production processes. In refined grade sodium nitrate, BASF AG, a German corporation, and several
producers in China and Eastern Europe are highly competitive. They produce industrial sodium nitrate as
a by-product of other production processes. Our industrial sodium nitrate products also compete indirectly
with substitute chemicals, including sodium carbonate, sodium sulfate, calcium nitrate and ammonium
nitrate, which may be used in certain applications instead of sodium nitrate and are available from a large
number of producers worldwide.
27
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Our main competitor in the industrial potassium nitrate business is Haifa, which we estimate had a market
share of 16% for 2020. We estimate that our market share was approximately 73% for 2020. Other
competitors are mostly based in China.
Producers of industrial sodium nitrate and industrial potassium nitrate compete in the marketplace based
on attributes such as product quality, delivery reliability, price, and customer service. Our operation offers
both products at high quality and with low cost. In addition, our operation is flexible, allowing us to
produce industrial or agricultural nitrates, maximizing our yields and reducing commercial risk. In
addition, with certain restrictions, we are able to adapt production from one grade to another depending
on market needs.
In the potassium chloride market, we are a relatively small producer, mainly focused on supplying regional
needs.
Other Products
SQM also receives income from the commercialization of third-party fertilizers (specialty and
commodity). These fertilizers are traded in large volumes worldwide and are used as raw material for our
specialty mixes or to complement our product portfolio. We have developed commercial management,
supply, flexibility and inventory management capabilities that allow us to adapt to the changing fertilizer
market in which we operate and obtain profits from these transactions.
Trend Information
Our revenues decreased 6.5% to US$1,817.2 million in 2020 from US$1,943.7 million in 2019. Gross
profit reached US$482.9 million (26.6% of revenues) in 2020, lower than US$560.1 million (28.8% of
revenues) recorded in 2019. Profit attributable to controlling interests decreased 40.8% to US$164.5
million in 2020 from US$278.1 million in 2019.
In January 2020 the World Health Organization deemed COVID-19 a global pandemic. In March 2020,
the Chilean Ministry of Health (Ministerio de Salud) declared a nationwide State of Emergency. In
response to the spread of COVID-19, the Chilean government has closed its borders for entry by non-
resident foreigners for a specified period of time, prohibited the docking of cruise ships at Chilean ports,
imposed quarantines on certain neighborhoods of the capital of Santiago and other cities and imposed a
nationwide curfew. These measures have not impacted imports or exports to or from Chile. However,
while we did see some impacts related to the shipment of products in and out of various other countries
and regions, particularly in the first half of 2020 with the information available today, we believe impacts
related to operations and demand on our products will be minimally impacted by COVID-19 in 2021.
Our Board and management continue to constantly monitor the situation and the potential impact that this
unprecedented event could have on SQM. As a precaution, our management has implemented several
measures to help reduce the spread COVID-19 at SQM, including the following measures to mitigate the
spread in the workplace: (i) flexible working day together with the incentive to work from home in those
cases where this is possible, (ii) avoidance of crowds, seminars and large meetings in the Company´s
offices and operating facilities, (iii) strengthening of personal hygiene protocols (use of hand sanitizer,
masks, etc.) and sanitation in plants, cafeterias and offices, and (iv) significant reductions in domestic and
international travel, along with mandatory quarantines for people who have arrived from high risk
destinations. We will continue to implement measures consistent with the evolving COVID-19 situation,
with reference to governmental and international health organization guidelines.
Revenues from lithium and derivatives totaled US$383.4 million during 2020, a decrease of 24.2%
compared to the US$505.7 million in 2019. During 2020, our sales volumes were 43% higher than sales
28
3) DESCRIPTION OF BUSINESS ENVIRONMENT
volumes reported in 2019. This was in line with our strategy to increase our market participation in an
effort to expand and maintain our relationship with important customers in the lithium market.
.
During 2020, we believe total lithium market demand reached approximately 330,000 metric tons, a 6%
growth compared to 2019, but lower than demand growth originally expected as a result of COVID-19.
However, we believe that market demand during the second half of the year was significantly higher than
market demand in the second half of 2019, mostly related to growth of electric vehicle sales volumes. We
believe that electric vehicle sales growth during 2020 increased over 40% when compared to 2019, and
this growth reached approximately 120% during the fourth quarter 2020 when compared to the same
period in 2019. We expect this momentum to continue into 2021 and believe that lithium demand growth
will reach almost 25% in 2021, and ultimately reach between 900,000 to 1 million metric tons in 2025.
Given these strong market growth indicators, our installed capacity and the quality of our production, we
believe that our 2021 sales volumes will increase, reaching more than 80,000 metric tons for the year.
During the fourth quarter of 2020, our average price reached just over US$5,300/metric ton, similar to the
average price seen during the third quarter of the same year. We believe that this could be the bottom of
the decreasing pricing trend and that we could see higher prices during the first half of 2021.
We remain particularly optimistic about the long-term growth of the lithium market. For this reason, we
expect to increase our lithium carbonate and lithium hydroxide capacity significantly in the coming year.
We expect our installed capacity of lithium carbonate and lithium hydroxide in Chile to reach
approximately 180,000 and 30,000 metric tons by the end of 2023. In addition, in February 2021 our Board
approved the investment for our 50% share of the development costs in the Mt. Holland lithium project,
our 50/50 joint venture with Wesfarmers, which we expect will have an initial production capacity of
50,000 metric tons of battery grade lithium hydroxide.
Revenues from sales of iodine and derivatives during 2020 were US$334.7 million, a decrease of 9.8%
compared to US$371.0 million generated in 2019. Our sales volumes in the iodine business line decreased
24% in 2020, but we saw prices remain stable throughout the year, hovering around US$35/kilogram.
Average prices in 2020 were 19% higher than the average prices seen in 2019.
Iodine and derivative market growth is particularly sensitive to the trends in the medical industry,
specifically X-ray contrast media, the pharmaceutical industry and the LCD polarizing market. As a result
of the spread of COVID-19, non-essential medical services declined during 2020, and we saw demand
related to these important markets decrease, leading to a total market decrease of about 9% when
comparing 2020 to 2019. We believe we will see a significant recovery during 2021 as the impact of the
pandemic fades away, mostly led by the X-ray contrast media, LCD and pharmaceutical markets and we
hope to increase market share during the year. We have announced plans to increase our capacity in this
business line to ensure that we have appropriate capacity available to meet future demand needs.
Revenues from the SPN business line in 2020 totaled US$701.7 million, a decrease of 3.1% compared to
$723.9 million reported in 2019.Our sales volumes in the specialty plant nutrition business line in 2020
were similar to sales volumes reported during 2019, decreasing slightly by 0.5%. Average prices in this
business lines decreased approximately 3% in 2020 when compared to 2019. In the potassium nitrate
market, demand growth was approximately 5% in 2020. We believe that this market growth was not
impacted significantly because the fertilizer industry in some geographical markets was deemed an
essential industry during the COVID-19 outbreak. In 2021, we expect to see similar demand growth. We
analyze the potassium nitrate market by assessing, among other things, arable land availability, global crop
production, and localized irrigation rates As an integrated producer of potassium chloride and potassium
nitrate, the higher prices of potassium chloride we are seeing in the market should not have a significant
impact on our production cost, while at the same time, our consolidated distribution network should help
insulate us from some of the higher cost of transportation we are seeing in the market. Consequently, even
29
3) DESCRIPTION OF BUSINESS ENVIRONMENT
though we believe we are the lowest cost producer in this market, we believe our competitive position in
this market should be stronger in 2021.
Potassium chloride and potassium sulfate revenues for 2020 totaled US$209.3 million, a 1.3% decrease
compared to the US$212.2 million reported in 2019. Revenues in this business line during 2020 were
impacted by lower average prices when compared to 2019, which were not offset by the higher sales
volumes in the business line. We believe that the potassium chloride market surpassed 67 million metric
tons in 2020, an increase of approximately 3 million metric tons compared to 2019. Average prices for
potassium chloride during the fourth quarter of 2020 were about US$244/metric ton, flat when compared
to the third quarter of 2020. During the first two months of 2021 we have seen higher prices, letting us
believe we will see higher prices throughout the rest of the year given the demand growth expected for
2021.
In October 2020, we announced our Sustainable Development Plan, which included voluntarily expanding
our monitoring systems, promoting better and more profound conversations with neighboring
communities and becoming carbon neutral and reducing water use by 65% and brine extraction by 50%.
The reduction of brine extraction described above will not have an impact on our capacity to produce
potassium salts to feed our potassium nitrate production in Coya Sur. However, it will have an impact on
our sales volumes available to third parties, gradually decreasing them year by year. Although in the first
years of brine extraction we expect to see a minor impact on the Company's gross margin (as a result of
accumulated inventories among other factors), the average impact over the next ten years on the gross
margin will be between US$25 million and US$30 million per year due to lower volumes of potassium
chloride available for sale.
Industrial chemicals revenues in 2020 reached US$160.6 million, a 69.3% increase compared to US$94.9
million in 2019. Our sales volumes in the industrial chemicals product line increased 82% in 2020
compared to 2019, as a result of higher sales volumes of solar salts. Our solar salt sales volumes were up
over 230% in 2020 when compared to 2019 reaching 160,000 metric tons. We expect industrial chemical
sales volumes in 2021 will increase again when compared to 2020, as we continue the delivery of almost
200,000 metric tons of solar salts in 2021 for a project requiring over 400,000 metric tons.
Production Process
Our integrated production process can be classified according to our natural resources:
caliche ore deposits, which contain nitrates, iodine and potassium; and
•
• brines from the Salar de Atacama, which contain potassium, lithium, sulfate, boron and
magnesium.
Caliche Ore Deposits
Caliche ore deposits are located in the First and Second Regions in northern Chile. During 2020, our
mining operations concentrated in the First Region where we mainly worked in the mining sector Tente
en el Aire and in the mining sectors Nueva Victoria Oeste, Norte and Sur. The Second Region mining
operations at the Pampa Blanca site, the El Toco mine (which is part of the María Elena site) and the Pedro
de Valdivia site were suspended in March 2010, November 2013 and November 2015, respectively, in an
effort to optimize our production facilities with lower production costs.
Caliche ore is found under a layer of barren overburden in seams with variable thickness from twenty
centimeters to four meters, and with the overburden varying in thickness between half a meter and two
meters.
30
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Before proper mining begins, the exploration stage is carried out, including complete geological
reconnaissance, sampling and drilling caliche ore to determine the quality and characteristics of each
deposit. Drill-hole samples are properly identified and tested at our chemical laboratories. With the
exploration information on a closed grid pattern of drill holes, the ore evaluation stage provides
information for mine planning purposes. Mine planning is done on a long-term basis (ten years), medium-
term basis (three to five years) and short-term basis (one year). Once all of this information has been
compiled, detailed planning for the exploitation of the mine takes place.
The mining process generally begins with bulldozers first removing the overburden in the mining area.
This process is followed by an inspection and review of the drill holes before production drilling and
blasting occurs to break the caliche seams. Front-end loaders and bulldozers load the ore onto off-road
trucks, which take it to the leaching heaps to be processed.
During 2020, SQM continued working with mining equipment to replace the drilling and blasting process
for mining some of the caliche ore and obtaining a smaller ore size (under 6 ½ inches) that allows a better
metallurgical recovery.
The run of mine ore is loaded in heaps and leached with water to produce concentrated solutions containing
iodine, nitrate and potassium. These solutions are then sent to plants where iodine is extracted through
both solvent-extraction and blow out processes. The remaining solutions are subsequently sent to solar
evaporation ponds where the solutions are evaporated and salts rich in nitrate and potassium are produced.
These concentrated salts are then sent to Coya Sur where they are used to produce potassium nitrate.
During 2020, the Pedro de Valdivia site generated solutions produced by leaching the mine tailings. These
solutions are treated at the iodide plant at Pedro de Valdivia. After iodide is obtained, the remaining
solutions, which are rich in nitrate and potassium, are sent to the solar evaporation ponds at Coya Sur in
order to be used in the production of potassium nitrate.
Caliche Ore-Derived Products
Caliche ore-derived products are sodium nitrate, potassium nitrate, sodium potassium nitrate and iodine.
Sodium Nitrate
During 2020, sodium nitrate for both agricultural and industrial applications was produced from nitrate
salts from our mining operations at Sur Viejo and fed to our new crystallization plant located in Coya Sur,
which began operating in December 2019. Crystallized sodium nitrate is an intermediate product that is
subsequently processed further at the Coya Sur production plants to produce sodium nitrate and sodium
potassium nitrate in different chemical and physical forms, including crystallized and prilled products.
Finally, the products are transported by truck to our port facilities in Tocopilla for shipping to customers
and distributors worldwide.
Potassium Nitrate
Potassium nitrate is produced at our Coya Sur facility using a production process developed in-house. The
brines generated by the leaching process at Pedro de Valdivia are pumped to Coya Sur’s solar evaporation
ponds for a nitrate concentration process. After the nitrate concentration process, the brine is pumped to a
conversion plant where potassium salts from the Salar de Atacama and nitrate and potassium salts
produced at Nueva Victoria or Coya Sur are added. A chemical reaction begins, transforming sodium
nitrate into potassium nitrate and discarding formed sodium chloride. This brine is pumped to a
crystallization plant, which crystallizes the potassium nitrate by cooling it at atmospheric pressure and
separating it from the liquid by centrifuge.
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
Our current potassium nitrate production capacity at Coya Sur is approximately 1,300,000 metric tons per
year. During 2020, we worked on several initiatives to improve productivity, including the commencement
of the construction of a new magnesium abatement plant in Sur Viejo which will allow for high content
potassium nitrate salt recovery from potassium salts from the Salar de Atacama. This plant will begin the
commissioning process in mid-2021. We also began the removal of magnesium in nitrates from Pedro de
Valdivia by using high sulfate salts from Pampa Blanca that allow for improved nitrate recovery during
the evaporation ponds process.
The potassium nitrate produced at Coya Sur is transported to Tocopilla for shipping and delivery to
customers and distributors. All potassium nitrate produced in crystallized or prilled form at Coya Sur has
been certified by TÜV-Rheinland under the quality standard ISO 9001:2015.
Sodium Potassium Nitrate
Sodium potassium nitrate is a mixture of approximately two parts sodium nitrate per one part potassium
nitrate. We produce sodium potassium nitrate at our Coya Sur prilling facilities using standard, non-
patented production methods we have developed. Crystallized sodium nitrate is supplied together with the
crystallized potassium nitrate to the prilling plant where it is mixed producing sodium potassium nitrate,
which is then melted and prilled. The prilled sodium potassium nitrate is transported to Tocopilla for bulk
shipment to customers.
The production process for sodium potassium nitrate is basically the same as that for sodium nitrate and
potassium nitrate. With certain production restraints and following market conditions, we may supply
sodium nitrate, potassium nitrate or sodium potassium nitrate, either in prilled or crystallized form.
The sodium potassium nitrate produced at Coya Sur is transported to Tocopilla for shipping and delivery
to customers and distributors.
Iodine and Iodine Derivatives
During 2020, we produced iodine at our facilities at Nueva Victoria (including the Iris facility) and Pedro
de Valdivia. Iodine is extracted from solutions produced by leaching caliche ore.
As in the case of nitrates, the process of extracting iodine from the caliche ore is well established, but
variations in the iodine and other chemical contents of the treated ore and other operating parameters
require a high level of know-how to manage the process effectively and efficiently.
The solutions resulting from the leaching of caliche ore carry iodine in iodate form. Part of the iodate
solution is reduced to iodide using sulfur dioxide, which is produced by burning sulfur. The resulting
iodide is combined with the rest of the untreated iodate solution to release elemental iodine in low
concentrations. The iodine is then extracted from the aqueous solutions and concentrated in iodide form
using a solvent extraction and stripping plant in the Pedro de Valdivia and Nueva Victoria facilities and
using a blow out plant in the Iris facility. The concentrated iodide is oxidized to metallic iodine, which is
then refined through a smelting process and prilled. We have obtained patents in the United States and
Chile (Chilean patent number 47,080) for our iodine prilling process.
Prilled iodine is tested for quality control purposes, using international standard procedures that we have
implemented. It is then packed in 20 to 50-kilogram drums or 350-to-700-kilogram maxi bags and
transported by truck to Antofagasta, Mejillones, or Iquique for export. Our iodine and iodine derivatives
production facilities have qualified under the ISO 9001:2015 program, providing third-party
certification—by TÜV-Rheinland—of the quality management system. The last recertification process
was approved in November 2020.
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
Our total iodine production in 2020 was 12,118 metric tons: 9,362 metric tons from Nueva Victoria, 1,250
metric tons from Iris, and 1,506 metric tons from Pedro de Valdivia. Nueva Victoria is also equipped to
toll iodine from iodide delivered from our other facilities. We have the flexibility to adjust our production
according to market conditions. Following the production facility restructuring at Pedro de Valdivia and
Nueva Victoria, along with the ramp-up of our new iodide plant in Nueva Victoria, our total current
effective production capacity at our iodine production plants is approximately 14,800 metric tons per year.
During 2020, we continued the development of the Tente en el Aire project, progressing with making
necessary environmental notices and obtaining permits required by governmental authorities. This project
expects to incorporate the use of 900 liters per second of seawater, increasing the mine area by more than
40,000 hectares and allowing for increased in production in the project’s first stage of 3,000 tons of iodine
and 250,000 tons of nitrate salts.
We use a portion of the iodine we produce to manufacture inorganic iodine derivatives, which are
intermediate products used for manufacturing agricultural and nutritional applications, at facilities located
near Santiago, Chile. We also produce inorganic and organic iodine derivative products together with
Ajay, which purchases iodine from us. In the past, we have primarily sold our iodine derivative products
in South America, Africa and Asia, while Ajay and its affiliates have primarily sold their iodine derivative
products in North America and Europe.
In September 2010, the Chilean Environmental Evaluation Service approved the environmental study of
our Pampa Hermosa project in the Tarapacá Region of Chile. This environmental permit allows for an
increase in the production capacity of our Nueva Victoria operations to 11,000 metric tons of iodine per
year and to produce up to 1.2 million metric tons of crystallized nitrates, mine up to 37 million metric tons
of caliche per year and use new water rights of up to 665.7 liters per second. In Iris, we are approved for
2,000 metric tons of iodine production per year, with an annual extraction of caliche ore up to 6.48 million
metric tons per year. In recent years, we have made investments in order to increase the water capacity in
the Nueva Victoria operations from two water sources approved by the environmental study of Pampa
Hermosa, expand the capacity of solar evaporation ponds, and implement new areas of mining and
collection of solutions. Our current production capacity at Nueva Victoria is approximately 13,000 metric
tons per year of iodine (including the Iris operations) and 1,000,000 metric tons per year of nitrates.
Additional expansions may be implemented from time to time in the future, depending on market
conditions.
Salar de Atacama Brine Deposits
The Salar de Atacama, located approximately 210 kilometers east of Antofagasta, is a salt-encrusted
depression in the Atacama Desert, within which lies an underground deposit of brines contained in porous
sodium chloride rock fed by an underground inflow from the Andes mountains, which is the result of
millions of years of climatic and tectonic impacts. Brines are pumped from depths of 15 to 150 meters
below surface, through a field of wells that are located in the Salar de Atacama, distributed in areas
authorized for exploitation, and which contain relatively high concentrations of potassium, lithium,
sulfates, boron and other minerals.
The brines are estimated to cover a surface of approximately 2,800 square kilometers and contain
commercially exploitable deposits of potassium, lithium, sulfates and boron. Concentrations vary at
different locations throughout the Salar de Atacama. Our mining exploitation rights to the Salar de
Atacama are pursuant to the Lease Agreement, which expires in 2030. The Lease Agreement, as amended
in January 2018, permits the CCHEN to establish a total accumulated production and sales limit of up to
349,553 metric tons of lithium metallic equivalent (1,860,670 tons of lithium carbonate equivalent), which
is in addition to the approximately 64,816 metric tons of lithium metallic equivalent (345,015 tons of
lithium carbonate equivalent) remaining from the originally authorized amount.
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
For the year ended December 31, 2020, revenues related to products originating from the Salar de Atacama
represented 33% of our consolidated revenues, consisting of revenues from our potassium business line
and our lithium and derivatives business line for the period. All of our products originating from the Salar
de Atacama are derived from our extraction operations under the Lease Agreement. As of December 31,
2020, only 10 years remain on the term of the Lease Agreement.
Products Derived from the Salar de Atacama Brines
The products derived from the Salar de Atacama brines are potassium chloride, potassium sulfate, lithium
carbonate, lithium hydroxide, lithium chloride, lithium sulfate, boric acid and bischofite (magnesium
chloride).
Potassium Chloride
We use potassium chloride in the production of potassium nitrate. Production of our own supplies of
potassium chloride provides us with substantial raw material cost savings. We also sell potassium chloride
to third parties, primarily as a commodity fertilizer.
In order to produce potassium chloride, brines from the Salar de Atacama are pumped to solar evaporation
ponds. Evaporation of the water contained in the brine, results in a crystallized mixture of salts with various
content levels of potassium, sodium and magnesium. In the first stage of the evaporation process, sodium
chloride salts (halite) precipitate, they are then harvested are removed; these salts are not used in the
production process of other products. In the second stage of the evaporation process, the remaining brine
from the first stage is transferred to other evaporation ponds where potassium chloride salts together with
sodium chloride (silvinite) precipitate, these salts are harvested and then sent for treatment at one of the
wet potassium chloride plants where potassium chloride is separated by a grinding, flotation, and filtering
process. In the final evaporation stage, salts containing magnesium are harvested and eventually can be
treated at one of the cold leach plants where magnesium is removed. Part of the potassium chloride is
transported approximately 300 kilometers to our Coya Sur facilities via a dedicated truck transport system,
where it is used in the production of potassium nitrate. The use of potassium chloride salts as a raw material
in Coya Sur allows us to capture significant savings, as it allows us to use potassium salts with different
qualities and to avoid buying and importing potassium chloride from external sources.
The remainder of the potassium chloride produced at the Salar de Atacama is shipped to our port in
Tocopilla in either crystalized (standard) or granular (compacted) form and then shipped and sold as a
commodity fertilizer to third parties. All of our potassium-related plants in the Salar de Atacama currently
have a nominal production capacity of up to 2.6 million metric tons per year. Actual production capacity
depends on volume, metallurgical recovery rates quality of the salts used in the process and quality of the
mining resources pumped from the Salar de Atacama.
The brine that remain in the evaporation pond system after removal of the sodium chloride and potassium
chloride generates a concentrated lithium chloride solution, which is used to produce lithium carbonate
(as described below) and generates salts rich in magnesium chloride (bischfite) as a by-product.
Lithium Chloride Solution and Lithium Carbonate
After the production of potassium chloride, a portion of the solutions remaining is sent to additional solar
concentration ponds adjacent to the potassium concentration ponds. At this stage, the solution is purified
and concentrated by precipitation to remove impurities it may still contain, including calcium, sulfate,
potassium, sodium and magnesium, reaching a lithium concentration level of approximately 6%. Next is
the process of concentration and purification of the remaining concentrated solution of lithium chloride,
which is transported by truck to the Salar del Carmen production facility located near Antofagasta,
approximately 195 kilometers southeast of the Salar de Atacama. At this plant, the solution is further
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
purified and treated with sodium carbonate to produce lithium carbonate, which is dried and then, if
necessary, compacted and finally packaged for shipment to customers.
The production capacity of our lithium carbonate facility since the end of 2019 has been 70,000 metric
tons per year. We are now expanding lithium carbonate capacity to reach 120,000 metric tons per year
during 2021.
Future production will depend on the actual volumes and quality of the lithium solutions sent by the Salar
de Atacama operations, as well as prevailing market conditions. Our future production will also be subject
to the extraction limit described in the Lease Agreement mentioned above.
Our lithium carbonate production quality assurance program has been certified by TÜV-Rheinland under
ISO 9001:2015 since September 2018.
Lithium Hydroxide
Lithium carbonate is sold to customers, and we also use it as a raw material for our lithium hydroxide
production, which started operations at the end of 2005. We currently have two lithium hydroxide plants,
one of which entered into operations at the end of 2018, and a total production capacity of 13,500 metric
tons per year. These plants are located in the Salar del Carmen, adjacent to our lithium carbonate
operations. In the production process, lithium carbonate is reacted with a lime solution to produce lithium
hydroxide brine and calcium carbonate salt, which is filtered and piled in reservoirs. The lithium hydroxide
solution is evaporated in a multi-effect evaporator and crystallized to produce the lithium hydroxide, which
is filtered, dried and packaged for shipment to customers.
During 2019 and 2020, we moved forward on an expansion plan which will allow us to produce an
additional 8,000 metric tons per year of lithium hydroxide, reaching a total capacity of 21,500 metric tons
per year. We believe this capacity level will be reached by the end of 2021.
Our lithium hydroxide production quality assurance program has been certified by TÜV-Rheinland under
ISO 9001:2015 since September 2018.
Potassium Sulfate and Boric Acid
Approximately 12 kilometers northeast of the potassium chloride facilities at the Salar de Atacama, we
use the brines from the Salar de Atacama to produce potassium sulfate, potassium chloride (as a by-product
of the potassium sulfate process) and, depending on market conditions, boric acid. The plant is located in
an area of the Salar de Atacama where high sulfate and potassium concentrations are found in the brines
to produce potassium sulfate. The brine is pumped to solar evaporation ponds, where sodium chloride salts
are precipitated, harvested and put into piles. After further evaporation, the sulfate and potassium salts
precipitate in different concentrations and are harvested and sent for processing to the potassium sulfate
plant. Potassium sulfate is produced using flotation, concentration and reaction processes, after which it is
crystallized, filtered, dried, classified and packaged for shipment.
Production capacity for the potassium sulfate plant is approximately 340,000 metric tons per year, of which
approximately 95,000 metric tons correspond to potassium chloride obtained as a byproduct of the
potassium sulfate process. This capacity is part of the total nominal plant capacity of 2.6 million metric
tons per year. In our dual plant complex, we may switch, to some extent, between potassium chloride and
potassium sulfate production. Part of the pond system in this area is also used to process potassium chloride
brines extracted from the low sulfate concentration areas found in the Salar de Atacama. Depending on
the conditions for the optimization of the deposit operation and/or market conditions, potassium sulfate
production can be modified to produce potassium chloride.
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
The principal by-products of the production of potassium sulfate are: (i) non-commercial sodium chloride,
which is deposited at sites near the production facility and (ii) remaining solutions, which are re-injected
into the Salar de Atacama or returned to the evaporation ponds. The principal by-products of the boric
acid production process are remaining solutions that are treated with sodium carbonate to neutralize acidity
and then are reinjected into the Salar de Atacama.
Raw Materials
The main raw material that we require in the production of nitrate and iodine is caliche ore, which is
obtained from our surface mines. The main raw material in the production of potassium chloride, lithium
carbonate and potassium sulfate is the brine extracted from our operations at the Salar de Atacama.
Other important raw materials are sodium carbonate (used for lithium carbonate production and for the
neutralization of iodine solutions), sulfuric acid, kerosene, anti-caking and anti-dust agents, ammonium
nitrate (used for the preparation of explosives in the mining operations), woven bags for packaging our
final products, electricity acquired from electric utilities companies, and liquefied natural gas and fuel oil
for heat generation. Our raw material costs (excluding caliche ore and salar brines and including energy)
represented approximately 16% of our cost of sales in 2020.
Since 2017, we have been connected to the central grid, which supplies electricity to the majority of cities
and industries in Chile. We have several electricity supply agreements signed with major producers in
Chile, which are within the contract terms. Our electricity needs are primarily covered by the Electrical
Energy Supply Agreement that we entered into with AES Gener S.A. on December 31, 2012. Pursuant to
the terms of the Electrical Energy Supply Agreement, we are required to purchase an amount of electricity
that exceeds the amount that we estimate we will need for our operations. The excess amount is sold at
marginal cost, which could result in a material loss for us.
For our supply of liquefied natural gas, we maintain a five-year contract with Engie, which was executed
in 2019. In addition, we have a supply of liquefied petroleum gas (LPG) from Lipigas in the Salar del
Carmen and the Salar de Atacama.
We obtain ammonium nitrate, sulfuric acid, kerosene and soda ash from several large suppliers, mainly in
Chile and the United States, under long-term contracts or general agreements, some of which contain
provisions for annual revisions of prices, quantities and deliveries. Diesel fuel is obtained under contracts
that provide fuel at international market prices.
We believe that all of our contracts and agreements with third-party suppliers with respect to our main raw
materials contain standard and customary commercial terms and conditions.
Water Supply
We hold water rights for the supply of surface and subterranean water near our production facilities. The
main sources of water for our nitrate and iodine facilities at Pedro de Valdivia, María Elena and Coya Sur
are the Loa and San Salvador rivers, which run near our production facilities. Water for our Nueva Victoria
and Salar de Atacama facilities is obtained from wells near the production facilities. In addition, we buy
water from third parties for our production processes at the Salar del Carmen lithium carbonate and lithium
hydroxide plants, and we also purchase potable water from local utility companies. We have not
experienced significant difficulties obtaining the necessary water to conduct our operations.
Research and Development, Patents and Licenses, etc.
One of the main objectives of our research and development team is to develop new processes and products
in order to maximize the returns obtained from the resources that we exploit. Our research is performed
36
3) DESCRIPTION OF BUSINESS ENVIRONMENT
by three different units, whose research topics cover all of the processes involved in the production of our
products, including chemical process design, phase chemistry, chemical analysis methodologies and
physical properties of finished products.
Our research and development policy emphasizes the following: (i) optimizing current processes in order
to decrease costs and improve product quality through the implementation of new technology, (ii)
developing higher-margin products from current products through vertical integration or different product
specifications, (iii) adding value to inventories and (iv) using renewable energy in our processes.
Our research and development activities have been instrumental in improving our production processes
and developing new value-added products. As a result, new methods of extraction, crystallization and
finishing products have been developed. Technological advances in recent years have enabled us to
improve process efficiency for the nitrate, potassium and lithium operations, improve the physical quality
of our prilled products and reduce dust emissions and caking by applying specially designed additives to
our products handled in bulk. Our research and development efforts have also resulted in new, value-added
markets for our products. One example is the use of sodium nitrate and potassium nitrate as thermal storage
in solar power plants.
We have patented several production processes for nitrate, iodine and lithium products. These patents have
been filed mainly in the United States, Chile and in other countries when necessary. The patents used in
our production processes include Chilean patent No. 47,080 for iodine (production of spherical granules
of chemicals that sublime) and Japanese patent No. 4,889,848 for nitrates (granular fertilizers).
Licenses, Franchises, and Royalties
We do not have contracts that give rise to an obligation for the Company to make payments for licenses,
franchises or royalties in any of our business lines, other than payments provided for in the Royalty Law.
We have subscribed purchase option contracts for mining concessions such that, in the event that third
parties exercise the respective option, we have the right to receive royalty payments as a result of the
exploitation of such concessions.
See section 3) D) Description of Business Environment: Property and Facilities for information about our
concessions.
3) D) DESCRIPTION OF BUSINESS ENVIRONMENT: PROPERTY AND FACILITIES
We carry out our operations through the use of mining rights, production facilities and transportation and
storage facilities. Discussion of our mining rights is organized below according to the geographic location
of our mining operations. Our caliche ore mining interests are located throughout the valley of the
Tarapacá and Antofagasta regions of northern Chile (in a part of the country known as “el Norte Grande”).
From caliche ore, we produce products based on nitrates and iodine, and caliche also contains
concentrations of potassium. Our mining interests in the brine deposits of the Salar de Atacama are found
within the Atacama Desert, in the eastern region of el Norte Grande. From these brines we produce
products based on potassium, sulfate, lithium and boron.
The map below shows the location of our principal mining operations and the exploitation and exploration
mining concessions that have been granted to us, as well as the mining properties that we lease from Corfo:
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
38
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Mining Concessions
Mining Concessions for the Exploration and Exploitation of Caliche Ore Mining Resources
We hold our mining rights pursuant to mining concessions for exploration and exploitation of mining
resources that have been granted pursuant to applicable law in Chile:
(1) “Mining Exploitation Concessions”: entitle us to use the land in order to exploit the mineral
resources contained therein on a perpetual basis, subject to annual payments to the Chilean
government.
(2) “Mining Exploration Concessions”: entitle us to use the land in order to explore for and verify the
existence of mineral resources for a period of two years, at the expiration of which the concession
may be extended one time only for two additional years, if the area covered by the concession is
reduced by half. We may alternatively request an exploitation concession in respect of the area
covered by the original exploration concession, which must be made within the timeframe
established by the original exploration concession.
A Mining Exploration Concession is generally obtained for purposes of evaluating the mineral resources
in a defined area. If the holder of the Mining Exploration Concession determines that the area does not
contain commercially exploitable mineral resources, the Mining Exploration Concession is usually
allowed to lapse. An application also can be made for a Mining Exploitation Concession without first
having obtained a Mining Exploration Concession for the area involved.
As of December 31, 2020, the surface area covered by Mining Exploitation Concessions that have been
granted in relation to the caliche resources of our mining sites is approximately 558,562 hectares. In
addition, as of December 31, 2020, the surface area covered by Mining Exploration Concessions in relation
to the caliche resources of our mining sites is approximately 400 hectares. We have not requested
additional mining rights.
Mining Concessions for the Exploitation of Brines at the Salar de Atacama
As of December 31, 2020, our subsidiary SQM Salar held exclusive rights to exploit the mineral resources
in an area covering approximately 140,000 hectares of land in the Salar de Atacama in northern Chile, of
which SQM Salar is only entitled to exploit the mineral resources in 81,920 hectares. These rights are
owned by Corfo and leased to SQM Salar pursuant to the Lease Agreement. Corfo cannot unilaterally
amend the Lease Agreement, and the rights to exploit the resources cannot be transferred. The Lease
Agreement provides for SQM Salar to (i) make quarterly lease payments to Corfo based on product sales
from leased mining properties and annual contributions to research and development, to local
communities, to the Antofagasta Regional Government and to the municipalities of San Pedro de Atacama,
María Elena and Antofagasta, (ii) maintain Corfo’s rights over the Mining Exploitation Concessions and
(iii) make annual payments to the Chilean government for such concession rights. The Lease Agreement
was entered into in 1993 and expires on December 31, 2030.
Under the terms of the Project Agreement, Corfo has agreed that it will not permit any other person to
explore, exploit or mine any mineral resources in the approximately 140,000 hectares area of the Salar de
Atacama mentioned above. The Project Agreement expires on December 31, 2030. The Project Agreement
expires on December 31, 2030.
SQM Salar holds an additional 239,942 hectares of constituted Mining Exploitation Concessions in areas
near the Salar de Atacama, which correspond to mining reserves that have not been exploited. SQM Salar
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
also holds Mining Exploitation Concessions that are in the process of being granted covering 1,430
hectares in areas near the Salar de Atacama.
In addition, as of December 31, 2020, SQM Salar held Mining Exploration Concessions covering
approximately 8,200 hectares and had applied for additional Mining Exploration Concessions of
approximately 8,700 hectares. Exploration rights are valid for a period of two years, after which we can
(i) request a Mining Exploitation Concession for the land, (ii) request an extension of the Mining
Exploration Concession for an additional two years (the extension only applies to a reduced surface area
equal to 50% of the initial area) or (iii) allow the concession to expire.
According to the terms of the Lease Agreement, with respect to lithium production, the CCHEN
established a total accumulated extraction limit set as amended by the Corfo Arbitration Agreement in
January 2018, up to 349,553 metric tons of lithium metallic equivalent (1,860,670 tons of lithium
carbonate equivalent), which is in addition to the approximately 64,816 metric tons of lithium metallic
equivalent (345,015 tons of lithium carbonate equivalent) remaining from the originally authorized
amount in the aggregate for all periods while the Lease Agreement is in force. As of December 31, 2020,
only 10 years remain on the term of the Lease Agreement.
Concessions Generally
As of December 31, 2020, approximately 98% of SQM’s mining interests were held pursuant to Mining
Exploitation Concessions and 1% pursuant to Mining Exploration Concessions. Of the Mining
Exploitation Concessions, approximately 97% already have been granted pursuant to applicable Chilean
law, and approximately 3% are in the process of being granted. Of the Mining Exploration Concessions,
approximately 8|% already have been granted pursuant to applicable Chilean law, and approximately 19%
are in the process of being granted.
In 2020, we made payments of US$6.5 million to the Chilean government for Mining Exploration and
Exploitation Concessions, including the concessions we lease from Corfo. These payments do not include
the payments we made directly to Corfo pursuant to the Lease Agreement, according to the percentages
of the sales price of products produced using brines from the Salar de Atacama.
The following table shows the Mining Exploitation and Exploration Concessions held by SQM, including
the mining properties we lease from Corfo, as of December 31, 2020:
Exploitation
Concessions
Exploration
Concessions
Total
Region of Chile
Region I..…………….
Region II……………..
Region III and others…...
Total……………...……
Total
Number
2,863
8,864
477
12,204
Hectares
539,131
2,322,904
107,988
2,970,023
Total
Number
5
133
2
140
Hectares
1,000
46,800
400
48,200
Total
Number
2,868
8,997
479
12,344
Hectares
540,131
2,369,704
108,388
3,018,223
The majority of the Mining Exploitation Concessions held by SQM were requested primarily for non-
metallic mining purposes. However, a small percentage of our Mining Concessions were requested for
metallic mining purposes. The annual payment to the Chilean government for this group of concessions is
higher.
Geological studies over mining properties that were requested primarily for non-metallic mining purposes
may show that the concession area is of interest for metallic mining purposes, in which case we must
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
inform the Sernageomin, indicating that the type of substance contained by such Mining Concessions has
changed, for purposes of the annual payment for these rights.
Caliche: Facilities and Reserves
Caliche: Facilities
During 2020, our mining operations concentrated in the First Region where we mainly worked in the
mining sector Tente en el Aire and in the mining sectors Nueva Victoria Norte. In November 2015, the
mining and nitrate operations at Pedro de Valdivia were suspended, and iodine production was reduced at
the Pedro de Valdivia site, in order to take advantage of the highly efficient production facilities at Nueva
Victoria. Operations at the Pampa Blanca site were suspended in 2010, and heap leaching operations at
the María Elena site were suspended in October 2013, although iodine processing continued until 2017.
Nueva Victoria
The Nueva Victoria mine and facilities are located 140 kilometers southeast of Iquique and are accessible
by highway. Since 2007, the Nueva Victoria mine includes the mining properties Soronal, Mapocho and
Iris. At this site, we use caliche to produce salts rich in nitrates and iodine, through heap leaching and the
use of solar evaporation ponds. The main production facilities at this site include the operation centers for
the heap leaching process, the iodide and iodine plants at Nueva Victoria and Iris and the evaporation
ponds at the Sur Viejo sector of the site. The areas currently being mined are located approximately 25
kilometers northeast of Nueva Victoria. Solar energy and electricity are the primary sources of power for
this operation.
Pampa Blanca
The mining facilities at Pampa Blanca, which is located 100 kilometers northeast of Antofagasta, have
been suspended since March 2010. At this site, we used caliche to produce nitrates and iodine through
heap leaching and the use of solar evaporation ponds. The main production facilities at this site included
the operation centers for the heap leaching system and the iodide plant. Electricity was the primary source
of power for this operation.
Pedro de Valdivia
The Pedro de Valdivia mine and facilities are located 170 kilometers northeast of Antofagasta and are
accessible by highway. At this site, we used caliche to produce nitrates and iodine through vat leaching
and solar evaporation ponds. The main production facilities at this site include the crushing, vat leaching,
fines processing, nitrate crystallization plant, and iodide and iodine plants. In November 2015, the mining
and nitrate operations at Pedro de Valdivia were suspended, and iodine production was reduced.
Electricity, natural gas and fuel oil are the primary sources of power for this operation.
María Elena
The María Elena mine and facilities, named El Toco, are located 220 kilometers northeast of Antofagasta
and are accessible by highway. Until February 2010, caliche was used at this facility to produce nitrates
and iodine through vat leaching. Subsequently, these facilities were equipped to produce nitrates and
iodine through the use of heap leaching and solar evaporation ponds. Heap leaching operations at this site
were suspended in October 2013. During 2017, we continued to produce solutions rich in iodine and
nitrates by leaching the mine tailings. which were treated at the iodide plant at María Elena, and
subsequently the prilled iodine is produced at Pedro de Valdivia. This process was discontinued at the end
of 2017.
Caliche: Reserves
Our in-house staff of geologists and mining engineers prepares our estimates of caliche ore reserves. The
Proven and Probable Reserve figures presented below are estimates and may be subject to modifications
41
3) DESCRIPTION OF BUSINESS ENVIRONMENT
due to natural factors that affect the distribution of mineral grades, which would, in turn, modify the
recovery of nitrate and iodine. Therefore, no assurance can be given that the indicated levels of recovery
of nitrates and iodine will be realized.
We estimate ore reserves based on evaluations, performed by engineers and geologists, of assay values
derived from sampling of drill-holes and other openings. Drill-holes have been made at different space
intervals in order to recognize mining resources. Normally, we start with 400x400 meters and then we
reduce spacing to 200x200 meters, 100x100 meters and 50x50 meters. The geological occurrence of
caliche ore is unique and different from other metallic and non-metallic minerals. Caliche ore is found in
large horizontal layers at depths ranging from one to four meters and has an overburden between zero and
two meters. This horizontal layering is a natural geological condition and allows the Company to estimate
the continuity of the caliche bed based on surface geological reconnaissance and analysis of samples and
trenches. Mineral resources can be calculated using the information from the drill-hole sampling.
A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic
material in or on the Earth’s crust in such form or quantity and of such grade or quality that it has
reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and
continuity of a mineral resource are known, estimated or interpreted from specific geological,
metallurgical and technological evidence.
A Measured Resource is the part of a Mineral Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated with a high level of confidence. The estimate
is based on detailed exploration, sampling and testing information gathered through appropriate sampling
techniques from locations such as outcrops, trenches, and exploratory drill holes.
An Indicated Mineral Resource is the part of a Mineral Resource for which tonnage, densities, shape,
physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence.
The estimate is based on detailed exploration, sampling and testing information gathered through
appropriate sampling techniques from locations such as outcrops, trenches and exploratory drill holes.
According to our experience in caliche ore, the grid pattern drill-holes with spacing equal to or less than
100 meters produce data on the caliche resources that is sufficiently defined to consider them Measured
Resources and then, adjusting for technical, economic and legal aspects, as Proven Reserves. These
reserves are obtained using the Kriging Method and the application of operating parameters to obtain
economically profitable reserves.
Similarly, the information obtained from detailed geologic work and samples taken from grid pattern drill-
holes with spacing equal to or less than 200 meters can be used to determine Indicated Resources. By
adjusting such Indicated Resources to account for technical, economic and legal factors, it is possible to
calculate Probable Reserves. Probable Reserves are calculated by using a polygon-based methodology
and have an uncertainty or margin of error greater than that of Proven Reserves. However, the degree of
certainty of Probable Reserves is high enough to assume continuity between points of observation.
Proven Reserves are the economically mineable part of a Measured Resource. The calculation of the
reserves includes the application of mining parameters including maximum overburden, minimum
thickness of caliche ore, stripping ratio, cutoff grade and application of dilution factors to the grade values.
Appropriate assessments, including pre-feasibility studies or feasibility studies, have been carried out and
include consideration of metallurgical, economic, marketing, legal, environmental, social and
governmental factors. These assessments demonstrate at the time of reporting that extraction is reasonably
justified.
Probable Reserves are the economically mineable part of an Indicated Resource and in some cases a
Measured Resource. The calculation of the reserves includes the application of mining parameters
42
3) DESCRIPTION OF BUSINESS ENVIRONMENT
including maximum overburden, minimum thickness of caliche ore, stripping ratio, cutoff grade and
application of dilution factors to the grade values. Appropriate assessments, including pre-feasibility
studies, have been carried out or are in process and include consideration of metallurgical, economic,
marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the
time of reporting that extraction is reasonably justified.
The estimates of Proven Reserves of caliche ore at each of our mines as of December 31, 2020 are set
forth below. The Company holds 100% of the concession rights for each of these mines.
Proven
Reserves (1)
(millions of
metric tons)
Nitrate
Average
Grade
(percentage by
weight)
Iodine
Average
Grade
(parts per
million)
Cutoff Grade
Average for Mine
(2)
91.9
83.3
54.7
279.6
6.9%
7.2%
5.7%
5.6%
424
436
538
439
Nitrate 6.0 %
Iodine 300 ppm
Iodine 300 ppm
Iodine 300 ppm
Mine
Pedro de Valdivia
María Elena
Pampa Blanca
Nueva Victoria
In addition, the estimates of our Probable Reserves of caliche ore at each of our principal mines as of
December 31, 2020, are as follows:
Probable
Reserves (3)
(millions of
metric tons)
Nitrate
Average
Grade
(percentage by
weight)
Iodine
Average
Grade
(parts per
million)
Cutoff Grade
Average for Mine
(2)
240.9
148.8
535.5
989.7
6.2%
7.2%
5.3%
5.2%
414
381
497
421
Nitrate 6.0 %
Iodine 300 ppm
Iodine 300 ppm
Iodine 300 ppm
Mine
Pedro de Valdivia
María Elena
Pampa Blanca
Nueva Victoria
Notes on reserves:
(1) The Proven Reserves set forth in the table above are shown before losses related to exploitation and mineral
treatment. Proven Reserves are affected by mining exploitation methods, which result in differences between the
estimated reserves that are available for exploitation in the mining plan and the recoverable material that is finally
transferred to the leaching vats or heaps. The average mining exploitation factor for each of our different mines
ranges between 80% and 90%, whereas the average global metallurgical recoveries of processes for nitrate and
iodine contained in the recovered material vary between 60% and 70%.
(2) The cutoff grades for the Proven and Probable Reserves vary according to the objectives of each mine. These
amounts correspond to the averages of the different areas.
(3) Probable Reserves can be expressed as Proven Reserves using a conversion factor, only for purposes of obtaining a
projection to be used for long-term planning purposes. On average, this conversion factor is higher than 60%,
depending on geological conditions and caliche ore continuity, which vary from mine to mine (Pedro de Valdivia
60%, María Elena 50%, Pampa Blanca 70% and Nueva Victoria 60%).
The complete technical supporting documentation for the information set forth in the table above was
prepared for each mine by the geologist Vladimir Tejerina and other engineering professionals employed
by SQM and validated by Ms. Marta Aguilera and Mr. Marco Lema.
Ms. Marta Aguilera is a geologist with more than 35 years of experience in the field. She is currently
employed by SQM as a Senior Consultant for the Mining Production area. Ms. Aguilera is a Competent
Person (Persona Competente), as that term is defined under Chilean Law No. 20,235, known as the Law
that Regulates the Position of Competent Persons and Creates the Qualifying Committee for
Competencies in Mining Resources and Reserves (Ley que Regula la Figura de las Personas Competentes
y Crea la Comisión Calificadora de Competencias de Recursos y Reservas Mineras or “Competent Person
43
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Law”). She is registered under No. 163 in the Public Registry of Competent Persons in Mining Resources
and Reserves in accordance with the Competent Person Law and related regulations. She has worked as
a geologist with both metallic and non-metallic deposits, with vast experience in the latter.
Mr. Marco Lema is a civil mining engineer with more than 35 years of experience. He works for SQM as
Superintendent of Geology and Engineering in the mining production area. Mr. Lema is a Competent
Person (Persona Competente), as that term is defined under Chilean Law No. 20,235, known as the Law
that Regulates the Position of Competent Persons and Creates the Qualifying Committee for
Competencies in Mining Resources and Reserves (Ley que Regula la Figura de las Personas Competentes
y Crea la Comisión Calificadora de Competencias de Recursos y Reservas Mineras or “Competent Person
Law”). He has experience working on metallic and non-metallic mine deposits.
Copies of the certificates of qualified competency issued by the Chilean Mining Commission are
presented below:
44
3) DESCRIPTION OF BUSINESS ENVIRONMENT
45
3) DESCRIPTION OF BUSINESS ENVIRONMENT
46
3) DESCRIPTION OF BUSINESS ENVIRONMENT
The proven and probable reserves shown above are the result of the evaluation of approximately 18.5%
of the total caliche-related mining property of our Company. However, we have explored more intensely
the areas in which we believe there is a higher potential of finding high-grade caliche ore minerals. The
remaining 81.5% of this area has not been explored or has had limited reconnaissance, which is not
sufficient to determine the potential and hypothetical resources. In 2020, we did not carry out basic
reconnaissance of new mining properties. With respect to detailed explorations, in 2020, we did not carry
out recategorizations of indicated resources. Our 2021 exploration program includes the exploration of
the Tente en el Aire sector, which totals 658 hectares, and the basic study of 4,100 hectares of the Mina
Oeste and Tente en el Aire Oeste sectors. The reserves shown in these tables are calculated based on
properties that are not involved in any legal disputes between SQM and other parties.
Caliche ore is the key raw material used in the production of iodine, specialty plant nutrients and industrial
chemicals. The following gross margins for the business lines specified were calculated on the same basis
as cut off grades used to estimate our reserves. We expect costs to remain relatively stable in the near
future.
Iodine and Derivatives.....
Specialty Plant Nutrition .
Industrial Chemicals ........
2020
Gross
Margin
50%
23%
26%
Price
US$35/kg
US$677/ton
US$713/ton
2019
Gross
Margin
38%
21%
33%
Price
US$29/kg
US$695/ton
US$768/ton
2018
Gross
Margin
33%
22%
33%
Price
US$24/kg
US$722/ton
US$797/ton
We maintain an ongoing program of exploration and resource evaluation on the land surrounding our
production mines, and other sites for which we have the appropriate concessions.
Brines from the Salar de Atacama: Facilities and Reserves
Salar de Atacama: Facilities
Salar de Atacama
Our facilities at the Salar de Atacama are located 210 kilometers to the east of the city of Antofagasta and
188 kilometers to the southeast of the city of María Elena. At this site we use brines extracted from the
salar to produce potassium chloride, potassium sulfate, boric acid, magnesium chloride salts and lithium
solutions, which are subsequently sent to our lithium carbonate plant at the Salar del Carmen for
processing. The main production plants at this site include the potassium chloride flotation plants (MOP-
H I and II), the potassium carnallite plants (PC I and extension), the potassium sulfate flotation plant (SOP-
H), the boric acid plant (ABO), the potassium chloride drying plant (Dual Plant or MOP-S), the potassium
chloride compacting plant (MOP-G), the potassium sulfate drying plant (SOP-S) and the potassium sulfate
compacting plant (SOP-G). Solar energy is the primary energy source used for the Salar de Atacama
operations.
Salar de Atacama: Reserves
Our in-house staff of hydrogeologists and geologists prepares our estimates of the reserve base of
potassium, sulfate, lithium and boron dissolved in brines at the Salar de Atacama. We have exploitation
concessions covering an area of 81,920 hectares, in which we have carried out geological exploitation,
brine sampling and geostatistical analysis. We estimate that our proven and probable reserves as of
December 31, 2020 are as follows:
Proven Reserves (1)
Probable Reserves (1)
Total Reserves
(millions of metric tons)
(millions of metric tons)
(millions of metric tons)
Potassium (K+) (2)
56.2
32.8
89.0
47
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Sulfate (SO4-2) (3)
Lithium (Li+) (4)
Boron (B3+) (5)
Notes on reserves:
42.9
6.0
1.6
31.7
3.1
1.0
74.6
9.1
2.7
(1) Metric tons of potassium, sulfate, lithium and boron considered in the proven and probable reserves are shown
before losses from evaporation processes and metallurgical treatment. The recoveries of each ion depend on both
brine composition and the process applied to produce the desired commercial products.
(2) Recoveries for potassium vary from 53% to 77%.
(3) Recoveries for sulfate vary from 27% to 45%.
(4) Recoveries for lithium vary from 34% to 60%.
(5) Recoveries for boron vary from 28% to 32%.
The information set forth in the table above was validated in February 2021 by Messrs. Andrés Fock and
Orlando Rojas using information that was prepared by SQM’s hydrogeologists, geologists and engineers
and external advisors.
Mr. Fock is a geologist with more than 16 years of experience in the field of mining hydrogeology. He is
currently employed by WSP as a Geologist. He is a Competent Person and is registered under No. 226 in
the Public Registry of Competent Persons in Mining Resources and Reserves, in accordance with the
Competent Person Law. As a hydrogeologist in Chile and abroad, he has evaluated multiple brine-based
projects and has experience evaluating resources and reserves.
Mr. Orlando Rojas is a civil mining engineer and independent consultant. He is Partner and Chief
Executive Officer of EMI-Ingenieros y Consultores S.A., whose offices are located at Los Domínicos No
7772, Las Condes, Santiago, Chile. He is a member of the Institute of Mining Engineers and is registered
under No. 118 in the Public Registry of Competent Persons in Mining Resources and Reserves in
accordance with the Competent Person Law and related regulations. He has worked as a mining engineer
for 40 years since graduating from university, including more than 34 years working on estimates for
reserves and resources.
Copies of the certificates of qualified competency issued by the Chilean Mining Commission are provided
below:
48
3) DESCRIPTION OF BUSINESS ENVIRONMENT
49
3) DESCRIPTION OF BUSINESS ENVIRONMENT
50
3) DESCRIPTION OF BUSINESS ENVIRONMENT
The cutoff grade for lithium extraction is set at 0.05% Li. The cost of the process is competitive in the
market despite a small cost increase due to the expansions in the evaporation area (to reach the required
Li concentration) and to the use of additives to maintain the quality of the brine that is used to feed the
plant.
A cutoff grade of 1.0% K is used in the calculation, considering a low margin scenario using only MOP-
S as and using diluted brine with higher levels of contaminants as the raw material and with recovery
yields of approximately 47%, which is on the lower end of the range. In this scenario, considering current
market conditions and market conditions from recent years, the production cost of MOP production is
still competitive.
The proven and probable reserves are based on production experience, drilling, brine sampling and geo-
statistic reservoir modeling in order to estimate brine volumes and their composition. We calculate the
reserve base, which is the volume of brine effectively drainable or exploitable in each evaluation unit, by
building a three-dimensional block model. The following variables are used to populate the model:
• Porosity: obtained from measurements of drainable porosity in core rocks, test pumping data,
geophysical records and changes in the level of the brine. The volume of brine is estimated on
the basis of the interpolation of the drainable porosity data.
• Grades: The brine chemistry is subjected to an exploratory data analysis and a variographic
analysis, in order to determine the chemical populations in the Salar. Subsequently, the grades
are interpolated using the Kriging method.
Based on the chemical characteristics, and the volume of brine, we determine the number of metric tons
for each of the chemical ions being evaluated. Reserve classification is finally achieved by using
geostatistical criteria and hydrogeological knowledge of the units that have been explored, as an indicator
between proven and probable reserves. In order to carry out a quantitative evaluation of the lithium and
potassium reserves, the Salar Hydrogeology Management used a tool, a numerical model of groundwater
flow and transport, which allows evaluating the evolution of the reservoir over time when stressed with
different mining extraction plans. This model is calibrated annually and is used for the projection and
optimization of the brine supply in the short (2 years) and medium (5 years) term in the Salar de Atacama.
Proven reserves are defined as hydrogeological units with proven historical brine yield production, and a
quality and piezometric brine monitoring network to control brine evolution over time, and that they have
a monitoring network to control the chemical and piezometric evolution of the brine over time. Probable
reserves are concentrated in those hydrogeological units identified with exploration data that support the
continuity of the resource and its extraction capacity by pumping, but without historical brine production.
Probable reserves and inferred resources are being continually explored in order to be able to reclassify
them as proven reserves and indicated or measured resources, respectively. This exploration includes
systematic packer testing, chemical brine sampling and long-term pilot production pumping tests.
We consider chemical parameters to determine the process to be applied to the brines. These parameters
are used to estimate potential restrictions on production yields, and the economic feasibility of producing
such commercial products as potassium chloride, potassium sulfate, lithium carbonate and boric acid is
determined on the basis of the evaluation.
Considering the authorized maximum net brine production rates under (RCA 226/06) and a voluntary
extraction under RCA 226/06, a total of 492 million cubic meters of brine is expected to be extracted from
the producing wells, corresponding to 1.05 million metric tons of lithium. Considering the voluntary
reduction plan announced by SQM during 2020, a total of 342 million cubic meters of brine will be
extracted from the producing wells, corresponding to 0.82 million metric tons of lithium. On the other
hand, the proven and probable in situ base reserve, within the authorized environmental extraction area
51
3) DESCRIPTION OF BUSINESS ENVIRONMENT
(RCA 226/06), corresponds to 1,533 million cubic meters of brine, corresponding to 5.3 million metric
tons of lithium, sufficient to satisfy the demand in both cases (RCA 226/06 and the Voluntary Extraction
Reduction Plan) for the project until the end of the concession.
Brines from the Salar de Atacama are the key raw material used in the production of potassium chloride
and potassium sulfate, and lithium and its derivatives. The following gross margins for the business lines
specified were calculated on the same basis as cut off grades used to estimate our reserves. We expect
costs to remain relatively stable in the near future.
2020
Gross
Margin
Price
2019
Gross
Margin
Price
2018
Gross
Margin
Price
Potassium Chloride
and Potassium Sulfate.
Lithium and
Derivatives .................
11%
23%
US$288/ton
17%
US$355/ton
19%
US$322/ton
US$5,931/ton
39%
US$11,212/ton
57%
US$16,289/ton
Other Production Facilities
Coya Sur
The Coya Sur site is located approximately 15 kilometers south of María Elena, and production activities
undertaken there are associated with the production of potassium nitrate and finished products. The main
production plants at this site include four potassium nitrate plants with a total capacity of 1,300,000 metric
tons per year. There are also five production lines for crystallized nitrates, with a total capacity of
1,200,000 metric tons per year, and a prilling plant with a capacity of 360,000 metric tons per year. The
potassium nitrate produced at Coya Sur is an intermediate product that is used as a raw material for the
production of finished products (crystallized nitrates and prilled nitrates). Therefore, the production
capacities listed above are not independent of one another and cannot be added together to obtain an overall
total capacity. Natural gas is the main source of energy for our Coya Sur operation.
Salar del Carmen
The Salar del Carmen site is located approximately 15 kilometers to the east of Antofagasta. The
production plants at this facility include the lithium carbonate plant, with a production capacity of 70,000
metric tons per year, and the lithium hydroxide plant, with a production capacity of 13,500 metric tons per
year. Electricity and natural gas are the main sources of energy for our Salar del Carmen operation.
52
3) DESCRIPTION OF BUSINESS ENVIRONMENT
The following table provides a summary of our production facilities as of December 31, 2020:
Facility
Type of Facility
Approximate
Size
(hectares) (1)
Nominal Production
Capacity
(thousands of metric
tons/year)
Weighted
Average
Age
(years) (2)
Gross Book
Value
(millions of US$)
(2)
Coya Sur (3) (4) ........ Nitrates production
1.518
María Elena (5) (6) Nitrates and iodine
35.830
Nueva Victoria (5) (7)
Pampa Blanca (5) (7)
(8)
Pedro de Valdivia
(3) (9) .......................
Salar de Atacama (3)
(10) .........................
production
Concentrated nitrate
salts and iodine
production
Concentrated nitrate
salts and iodide
production
Nitrates and iodine
production
Potassium chloride,
potassium sulfate,
lithium chloride, and
boric acid production
47.492
10.441
253.880
35.911
Salar del Carmen,
Antofagasta (3) .......
Lithium carbonate and
lithium hydroxide
production
Tocopilla (11) ......... Port facilities
126
22
Potassium nitrate:
1,300
Crystallized nitrates:
1,200
Prilled nitrates: 360
Nitrates: n/a
Iodine: 1.6
Prilled nitrates: 300
Iodine: 13.0
Nitrates: n/a
Iodine: n/a
Nitrates: n/a
Iodine: 3.2
Potassium chloride:
2,680
Potassium sulfate: 245
Boric acid: 15
Lithium carbonate: 70
Lithium hydroxide:
13.5
-
7.03
638.7
15.95
415.9
6.36
573.2
1.94
8.1
14.70
229.6
11.52
1,581.8
5.98
422.0
13.22
167.9
(1) Approximate size considers both the production facilities and the mine for María Elena, Nueva Victoria, Pampa
Blanca, Pedro de Valdivia and the Salar de Atacama. Mining areas are those authorized for exploitation by the
environmental authority and/or Sernageomin.
(2) Weighted average age and gross book value correspond to production facilities, excluding the mine, for María Elena,
(3)
Nueva Victoria, Pampa Blanca, Pedro de Valdivia and the Salar de Atacama.
Includes production facilities and solar evaporation ponds. During 2019, we began to work on the expansion of discard
deposit area of the new lithium hydroxide plant and accumulation ponds.
(4) The potassium nitrate produced at Coya Sur is an intermediate product that is used as a raw material for the production
of finished products (crystallized nitrates and prilled nitrates). Therefore, the production capacities listed above are
not independent of one another and cannot be added together to obtain an overall total capacity.
Includes production facilities, solar evaporation ponds and leaching heaps.
(5)
(6) Operations at the El Toco mine at María Elena were suspended in November 2013.
(7) The nominal production capacity for iodine considers the capacity of our plants. The effective capacity is 14,800
metric tons per year.
(8) Operations at Pampa Blanca were suspended in March 2010.
(9)
In November 2015, the mining and nitrate operations at Pedro de Valdivia were suspended, and iodine production
was reduced at the Pedro de Valdivia site, in order to take advantage of the highly efficient production facilities at
Nueva Victoria.
(10) Potassium chloride and potassium sulfate are produced in a dual plant, and the production capacity for each of these
products depends on the production mix. Therefore, the production capacities for these two products are not
independent of one another and cannot be added together to obtain an overall total capacity.
(11) The Tocopilla port facilities were originally constructed in 1961 and have been refurbished and expanded since that
time.
We directly or indirectly through subsidiaries own, lease or hold concessions over the facilities at which
we carry out our operations. Such facilities are free of any material liens, pledges or encumbrances, and
we believe they are suitable and adequate for the business we conduct in them.
53
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Extraction Yields
The following table shows certain operating data relating to each of our mines for 2020, 2019 and 2018:
(in thousands, unless otherwise stated)
Pedro de Valdivia(1)
Metric tons of ore mined ..........................................................
Average grade nitrate (% by weight) .......................................
Iodine (parts per million (ppm)) ...............................................
Metric tons of crystallized nitrate produced .............................
Metric tons of iodine produced ................................................
Maria Elena(2)
Metric tons of ore mined ..........................................................
Average grade nitrate (% by weight) .......................................
Iodine (ppm) ............................................................................
Metric tons of crystallized nitrate produced .............................
Metric tons of iodine produced ................................................
Coya Sur(3)
2020
2019
2018
–
–
–
–
1.5
–
–
–
–
–
–
–
–
–
1.4
–
–
–
–
–
–
–
–
–
1.0
–
–
–
–
–
Metric tons of crystallized nitrate produced .............................
935
763
699
Pampa Blanca(2)
Metric tons of ore mined ..........................................................
Iodine (ppm) ............................................................................
Metric tons of iodine produced ................................................
–
–
–
–
–
–
–
–
–
Nueva Victoria
Metric tons of ore mined ..........................................................
Iodine (ppm) ............................................................................
Metric tons of iodine produced ................................................
43,420
42,196
42,753
452
10.6
465
10.7
461
10.2
Salar de Atacama (4)
Metric tons of lithium carbonate produced ..............................
Metric tons of potassium chloride and potassium sulfate and
potassium salts produced ......................................................
72.2
62.3
62.3
1,476
1,049
1,049
(1)
In November 2015, mining and nitrate operations at Pedro de Valdivia were suspended, and iodine production was
reduced at the Pedro de Valdivia site, in order to take advantage of the highly efficient production facilities at Nueva
Victoria.
(3)
(2) Operations at the Pampa Blanca mine and Maria Elena were suspended in March 2010 and November 2013,
respectively. In María Elena, production of nitrate and iodine solutions continued in subsequent years from caliche
ore exploited in prior years.
Includes production at Coya Sur from treatment of nitrates solutions from María Elena and Pedro de Valdivia, nitrate
salts from pile treatment at Nueva Victoria, and net production from NPT, or technical grade potassium nitrate, plants.
(4) Lithium carbonate is extracted at the Salar de Atacama and processed at our facilities at the Salar del Carmen.
Potassium salts include synthetic sylvinite produced in the plant and other harvested potassium salts (natural sylvinite,
carnalites and harvests from plant ponds) that are sent to Coya Sur for the production of crystallized nitrates.
54
3) DESCRIPTION OF BUSINESS ENVIRONMENT
Transportation and Storage Facilities
The transportation of our products is carried out by trucks that are operated by dedicated third parties
through long-term contracts. Furthermore, we own port and storage facilities for the transportation and
management of finished products and consumable materials.
Our main centers for the production and storage of raw materials are the Nueva Victoria, Coya Sur and
Salar de Atacama facilities. Other facilities include chemical plants for the finished products of lithium
carbonate and lithium hydroxide at the Salar del Carmen plant. The Port of Tocopilla terminal, which we
own, has a surface area of approximately 22 hectares and is the principal facility for the storage and
shipment of our bulk products and packaged potassium chloride (MOP) and nitrates.
The nitrate finished products are produced at our Coya Sur facilities and then transported via trucks to the
Port of Tocopilla terminal where they are stored and shipped in bulk or packaged in polypropylene bags,
polyethylene or polypropylene FIBC big bags. The latter can also be transported and stored in an
alternative port (Mejillones) for later shipment.
The potassium chloride is produced at our Salar de Atacama facilities and we transport it by truck, either
to the Port of Tocopilla terminal or the Coya Sur facility. The product transported to Coya Sur is an
intermediate product that is used as a raw material for the production of potassium nitrate. On the other
hand, the product transported to the Port of Tocopilla is a final product that will be shipped or transported
to the client or affiliate. The raw material of nitrate for the production of potassium nitrate in Coya Sur is
currently produced at Nueva Victoria.
The lithium chloride solution, which contains a high concentration of boron, produced at our Salar de
Atacama facilities, is transported to the lithium carbon plant in the Salar del Carmen area where the
finished lithium carbonate is produced. Part of the lithium carbonate is provided to the adjacent lithium
hydroxide plant where the finished lithium hydroxide is produced. These two products are packed in
packaging of distinct characteristics (polyethylene bags, multi-layer or polypropylene FIBC big bags),
stored within the same facilities and secured in storerooms. Thereafter, they are consolidated into
containers that are transported by trucks to a transit warehouse or directly to port terminals for their
subsequent shipment. The port terminals used are currently suited to receive container ships and are
situated in Antofagasta, Mejillones and Iquique.
Iodine obtained from the same caliche used for the production of nitrates, is processed, packaged and
stored exclusively in the Pedro de Valdivia and Nueva Victoria facilities. The packaging used for iodine
are drums and polypropylene FIBC big bags with an internal polyethylene bag and oxygen barrier, which
at the time of transportation are consolidated into containers and sent by truck to port terminals suited for
their management, principally located in Antofagasta, Mejillones and Iquique. Thereafter, they are sent to
distinct markets by container ship or by truck to Santiago where iodine derivatives are produced in the
Ajay-SQM Chile plants.
The Port of Tocopilla terminal facilities are located approximately 186 kilometers north of Antofagasta,
approximately 124 kilometers west of María Elena and Coya Sur and 372 kilometers to the west of Salar
de Atacama. Our affiliate, Servicios Integrales de Tránsitos y Transferencias S.A. (SIT), operates facilities
for the shipment of products and the delivery of certain raw materials based on renewable concessions
granted by Chilean regulatory authorities, provided that the facilities are used in accordance with the
authorization granted and we pay an annual concession fee. The Port of Tocopilla terminal facilities
include a truck weighing machine that confirms product entry into the port and transfers the product to
distinct storage zones, a piezometer within the shipping system to carry out bulk product loaded onto ships,
a crane with a 40 ton capacity for the loading of sealed product onto ships and a nitrate mixing facility.
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
The storage facilities consist of a system of six silos, with a total storage capacity of 55,000 metric tons,
and a mixed storage area of open storehouses with a total storage capacity of approximately 250,000 metric
tons. In addition, to fulfill future storage needs, we will continue to make investments in accordance with
the investment plan outlined by management. The products are also put into bags at the Port of Tocopilla
terminal facilities where the bagging capacity is established by two bag packaging machines, one for sacks
and polypropylene FIBC big bags and one for FFS polyethylene. The products that are packaged in
Tocopilla may be subsequently shipped at the same port or may also be consolidated into trucks or
containers for its subsequent dispatch to clients by land or sea through containers from other ports,
principally located in Antofagasta, Mejillones and Iquique.
For the transportation of bulk product, the transportation belt system extends across the coastline to deliver
products directly to the hatches of bulk cargo ships. The nominal load capacity of this shipping system is
1,200 tons per hour. The transportation of packaged product is carried out utilizing the same bulk cargo
ships using trailers without motors located in the dock and loaded by a crane with a 40 ton capacity from
the Port of Tocopilla terminal. Thereafter, they are towed and unloaded using ship cranes to the respective
warehouses.
We normally contract bulk cargo ships to transfer the product from the Port of Tocopilla terminal to our
hubs around the world or to clients directly, who, in certain instances, use their own contracted vessels for
delivery.
Tocopilla processes related to the reception, handling, storage and shipment of bulk/packaged nitrates
produced at Coya Sur are certified by the third-party organization TÜV-Rheinland under the quality
standard ISO 9001:2015.
Computer System
In addition to the above-listed facilities, we operate varies computer and information systems linking our
principal subsidiaries to our operating and administrative facilities throughout Chile, and other parts of the
world. The computer and information system is used mainly for accounting, monitoring of supplies and
inventories, billing, quality control, research activities and production process and maintenance control.
The mainframe computing system is located at our offices in Santiago and our Chilean and international
subsidiaries are interconnected with each other, through data links.
In addition, we have cloud technologies, which allow us to support new business processes and respond
quickly and at low cost to changing conditions of our business and of the market.
A cyber security review is being carried out to highlight possible risks and mitigate them, including raising
awareness among our users related to best process and computational use practices.
3) E) DESCRIPTION OF BUSINESS ENVIRONMENT: RISK FACTORS
Risk Factors
Our operations are subject to certain risk factors that may affect SQM’s business financial condition or
results of operations. In addition to other information contained in this Annual Report, you should
carefully consider the risks described below. These risks are not the only ones we face. Additional risks
not currently known to us or that are known but that we currently believe are not significant may also
affect our business operations. Our business, financial condition, cash flows or results of operations could
be materially affected by the occurrence any of these risks.
Risks Relating to our Business
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
Our inability to extend or renew the mineral exploitation rights relating to the Salar de Atacama
concession, upon which our business is substantially dependent, beyond their current expiration date
in December 2030 could have a material adverse effect on our business, financial condition and results
of operations.
Our subsidiary SQM Salar S.A. (“SQM Salar”), as leaseholder, holds exclusive and temporary rights to
exploit mineral resources in the Salar de Atacama in northern Chile. These rights are owned by Corfo, a
Chilean government entity, and leased to SQM Salar pursuant to (i) a 1993 lease agreement over mining
exploitation concessions between SQM Salar and Corfo, as amended from time to time (the “Lease
Agreement”), and (ii) the Salar de Atacama project agreement between Corfo and SQM Salar, as amended
from time to time (the “Project Agreement”). The Lease Agreement provides for SQM Salar to (i) make
quarterly lease payments to Corfo based on product sales from leased mining properties and annual
contributions to research and development, to local communities, to the Antofagasta Regional Government
and to the municipalities of San Pedro de Atacama, María Elena and Antofagasta, (ii) maintain Corfo’s
rights over the mining exploitation concessions and (iii) make annual payments to the Chilean government
for such concession rights. The Lease Agreement expires on December 31, 2030.
Our business is substantially dependent on the exploitation rights under the Lease Agreement and the
Project Agreement, since all of our products originating from the Salar de Atacama are derived from our
extraction operations under the Lease Agreement. For the year ended December 31, 2020, revenues related
to products originating from the Salar de Atacama represented 33% of our consolidated revenues,
consisting of revenues from our potassium business line and our lithium and derivatives business line for
the period. As of December 31, 2020, only 10 years remain on the term of the Lease Agreement and we
had extracted approximately 28% of the total permitted accumulated extraction and sales limit of lithium
under the lithium extraction and sales limits.
Although we expect to begin the process of discussing the extension or renewal of the mineral exploitation
rights in the Salar de Atacama under the Lease Agreement and Project Agreement with Corfo well in
advance of the December 2030 expiration date, we cannot assure you that we will successfully reach an
agreement with Corfo to extend or renew our mineral exploitation rights beyond 2030. Any negotiation
with Corfo for an extension or renewal could involve renegotiation of any or all of the terms and conditions
of the Lease Agreement and Project Agreement, including, among other things, the lithium and potassium
extraction and sales limits, the lease payment rates and calculations, or other payments to Corfo.
In the event that we are not able to extend or renew the Lease Agreement beyond the current expiration
date of the Lease Agreement in 2030, we would be unable to continue extraction of lithium and potassium
under the Lease Agreement, which could have a material adverse effect on our business, financial
condition and results of operations.
Volatility of world lithium, fertilizer and other chemical prices and changes in production capacities
could affect our business, financial condition and results of operations.
The prices of our products are determined principally by world prices, which, in some cases, have been
subject to substantial volatility in recent years. World lithium, fertilizer and other chemical prices
constantly vary depending upon the relationship between supply and demand at any given time. Supply
and demand dynamics for our products are tied to a certain extent to global economic cycles and have
been impacted by circumstances related to such cycles. Furthermore, the supply of lithium, certain
fertilizers, or other chemical products, including certain products that we provide, varies principally
depending on the production of the major producers, (including us) and their respective business
strategies.
We expect that prices for the products we manufacture will continue to be influenced, among other things,
by worldwide supply and demand and the business strategies of major producers. Some of the major
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
producers (including us) have increased or decreased production and have the ability to increase or
decrease production.
Since we sell our products worldwide, with Asia, Europe and North America constituting our main
markets, border closures, decrease in commercial activity and difficulties and disruptions in the supply
chains in the markets in which we operate as a result of COVID-19 could materially affect our business.
We believe the impact on demand growth in the markets in which we sell our products, our sales volumes
and our average prices will depend on the duration of COVID-19 in the various regions in which we
operate, the efficiency of the measures implemented to contain the spread of COVID-19 in each country
and relevant fiscal incentives that may be implemented in such jurisdictions to promote economic
recovery. Most, if not all, of these factors are currently evolving on a rapid basis and we are currently
unable to predict with certainty the full potential magnitude of the impacts of the COVID-19 pandemic
on forecasts of market demand or our estimates of our sales volumes and average sale prices.
As a result of the above, the prices of our products may be subject to substantial volatility. High volatility
or a substantial decline in the prices or sales volumes of one or more of our products could have a material
adverse effect on our business, financial condition and results of operations.
Our sales to emerging markets and expansion strategy expose us to risks related to economic conditions
and trends in those countries.
We sell our products in more than 110 countries around the world. In 2020, approximately 44% of our
sales were made in emerging market countries: 8% in Latin America (excluding Chile); 12% in Africa
and the Middle East (excluding Israel); 9% in Chile and 14% in Asia and Oceania (excluding Australia,
Japan, New Zealand, South Korea and Singapore). In Note 25.1 to our consolidated financial statements,
we reported revenues from Chile, Latin America and the Caribbean and Asia and others of US$1.0 billion.
We expect to expand our sales in these and other emerging markets in the future. In addition, we may
carry out acquisitions or joint ventures in jurisdictions in which we currently do not operate, relating to
any of our businesses or to new businesses in which we believe we may have sustainable competitive
advantages. The results of our operations and our prospects in other countries in which we establish
operations will depend, in part, on the general level of political stability, economic activity and policies
in those countries as well as the duration of COVID-19 in the various regions in which we operate, the
efficiency of the measures implemented to contain the spread of COVID-19 in each country and relevant
fiscal incentives that may be implemented in such jurisdictions to promote economic recovery. Future
developments in the political systems or economies of these countries or the implementation of future
governmental policies in those countries, including the imposition of withholding and other taxes,
restrictions on the payment of dividends or repatriation of capital, the imposition of import duties or other
restrictions, the imposition of new environmental regulations or price controls or changes in relevant laws
or regulations, could have a material adverse effect on our business, financial condition and results of
operations in those countries.
Our inventory levels may vary for economic or operational reasons.
In general, economic conditions or operational factors can affect our inventory levels. Higher inventories
carry a financial risk due to increased need for cash to fund working capital and could imply an increased
risk of loss of product. At the same time, lower levels of inventory can hinder the distribution network
and process, thus impacting sales volumes. There can be no assurance that inventory levels will remain
stable. These factors could have a material adverse effect on our business, financial condition and results
of operations.
New production of iodine, potassium nitrate or lithium from current or new competitors in the markets
in which we operate could adversely affect prices.
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
In recent years, new and existing competitors have increased the supply of iodine, potassium nitrate and
lithium, which has affected prices for those products. Further production increases could negatively
impact prices. There is limited information on the status of new iodine, potassium nitrate or lithium
production capacity expansion projects being developed by current and potential competitors and, as such,
we cannot make accurate projections regarding the capacities of possible new entrants into the market and
the dates on which they could become operational. If these potential projects are completed in the short
term, they could adversely affect market prices and our market share, which, in turn, could have a material
adverse effect on our business, financial condition and results of operations.
We have a capital expenditure program that is subject to significant risks and uncertainties.
Our business is capital intensive. Specifically, the exploration and exploitation of reserves, mining and
processing costs, the maintenance of machinery and equipment and compliance with applicable laws and
regulations require substantial capital expenditures. We must continue to invest capital to maintain or to
increase our exploitation levels and the amount of finished products we produce. For example, we have a
US$1.9 billion investment plan for the years 2021-2024. The plan will allow us to expand our operations
of lithium, iodine and nitrate by accessing natural resources both in the Salar de Atacama and caliche ore
deposits in Chile as well as through the 50,0000 metric ton Mt. Holland lithium hydroxide project in
Western Australia (a joint venture that we are developing with our partner Wesfarmers). The plan also
aims to increase our mining capacity while protecting the environment, reduce operational costs and
increase our annual production capacity of nitrates and iodine to meet expected growth in those markets.
Mining industry development projects typically require a number of years and significant expenditures
before production can begin. Such projects could experience unexpected problems and delays during
development, construction and start-up.
Our decision to develop a project typically is based on the results of feasibility studies, which estimate the
anticipated economic returns of a project. The actual project profitability or economic feasibility may
differ from such estimates as a result of any of the following factors, among others: changes in tonnage,
grades and metallurgical characteristics of ore or other raw materials to be mined and processed; estimated
future prices of the relevant products; changes in customer demand; higher construction and infrastructure
costs; the quality of the data on which engineering assumptions were made; higher production costs;
adverse geotechnical conditions; availability of adequate labor force; availability and cost of water and
energy; availability and cost of transportation; fluctuations in inflation and currency exchange rates;
availability and terms of financing; and potential delays relating to social and community issues.
In addition, we require environmental permits for our new projects. Obtaining permits in certain cases
may cause significant delays in the execution and implementation of new projects and, consequently, may
require us to reassess the related risks and economic incentives.
This may require modifying our operations to incorporate the use of seawater and updating our mining
equipment and operational centers.
We cannot assure you that we will be able to maintain our production levels or generate sufficient cash
flow, that the proposed US$1.1 billion capital increase approved by our shareholders on January 22, 2021
will be successful or that we will have access to sufficient investments, loans or other financing
alternatives, to continue our activities at or above present levels, or that we will be able to implement our
projects or receive the necessary permits required for them in time. If the capital increase is not successful,
it may affect our ability to grow and maintain our leading world position in the lithium, potassium nitrate,
iodine and thermo-solar salts markets. Any or all of these factors may have a material adverse effect on
our business, financial condition and results of operations.
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
High raw materials and energy prices could increase our production costs and cost of sales, and energy
may become unavailable at any price.
We rely on certain raw materials and various energy sources (diesel, electricity, liquefied natural gas, fuel
oil and others) to manufacture our products. Purchases of energy and raw materials we do not produce
constitute an important part of our cost of sales, approximately 16% in 2020. In addition, we may not be
able to obtain energy at any price if supplies are curtailed or otherwise become unavailable. To the extent
we are unable to pass on increases in the prices of energy and raw materials to our customers or we are
unable to obtain energy, our business, financial condition and results of operations could be materially
adversely affected.
Our reserve estimates are internally prepared and not subject to review by external geologists or an
external auditing firm and could be subject to significant changes, which may have a material adverse
effect on our business, financial condition and results of operations.
Our caliche ore mining reserve estimates and our Salar de Atacama brine mining reserve estimates are
prepared by our own geologists and hydrogeologists and are not subject to authentication by external
geologists or an external auditing firm. However, our reserve estimates in the Salar de Atacama were
reviewed by qualified persons and this information is presented to Corfo. In the past, our reserve estimates
in the Salar de Atacama were also reviewed by the Superior Council for Scientific Investigations (Consejo
Superior de Investigaciones Científicas) or CSIC, and this information was presented to CCHEN.
Estimation methods involve numerous uncertainties as to the quantity and quality of the reserves, and
reserve estimates could change upwards or downwards. A downward change in our estimates and/or
quality of our reserves could affect future volumes and costs of production and therefore have a material
adverse effect on our business, financial condition and results of operations.
Chemical and physical properties of our products could adversely affect their commercialization.
Since our products are derived from natural resources, they contain inorganic impurities that may not
meet certain customer or government standards. As a result, we may not be able to sell our products if we
cannot meet such requirements. In addition, our cost of production may increase in order to meet such
standards. Failure to meet such standards could materially adversely affect our business, financial
condition and results of operations if we are unable to sell our products in one or more markets or to
important customers in such markets.
Changes in technology or other developments could result in preferences for substitute products.
Our products, particularly iodine, lithium and their derivatives, are preferred raw materials for certain
industrial applications, such as rechargeable batteries and liquid-crystal displays (LCDs). Changes in
technology, the development of substitute products or other developments could adversely affect demand
for these and other products which we produce. In addition, other alternatives to our products may become
more economically attractive as global commodity prices shift. Any of these events could have a material
adverse effect on our business, financial condition and results of operations.
We are exposed to labor strikes and labor liabilities that could impact our production levels and costs.
Over 92% of our employees are employed in Chile, of which approximately 67% were represented by 20
labor unions as of December 31, 2020. As of December 31, 2020, 13 collective bargaining agreements
had been renegotiated in advance, leaving the remaining seven to be renegotiated during 2021. We are
exposed to labor strikes and illegal work stoppages by both our own employees and our independent
contractors’ employees that could impact our production levels in both our own plants and our
independent contractors’ plants. If a strike or illegal work stoppage occurs and continues for a sustained
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
period of time, we could be faced with increased costs and even disruption in our product flow that could
have a material adverse effect on our business, financial condition and results of operations.
We are and might be subject to new and upcoming labor laws and regulations in Chile and may be
exposed to liabilities and potential costs for non-compliance.
We are subject to recently enacted and might be subject to new local labor laws and regulations that
govern, among other things, the relationship between us and our employees and will be subject to new
labor bills currently under discussion in the national congress, mainly as a result of the impact of the
global novel coronavirus (COVID-19) pandemic as well as to the economic and political volatility and
civil unrest in Chile beginning in October and November 2019. There have been changes and proposed
changes to various labor laws which include, but are not limited to, modifications related to teleworking,
inclusion of workers with disabilities, minimum wage, unemployment insurance benefits, employee and
employer relationships, pensions, profit sharing, regular work hours and other matters related to COVID-
19.
Any changes to regulations to which we are subject could have a material adverse effect on our business,
financial condition and results of operations.
Lawsuits and arbitrations could adversely impact us.
We are party to a range of lawsuits and arbitrations involving different matters as described in Note 22.1
to our Consolidated Financial Statements. Although we intend to defend our positions vigorously, our
defense of these actions may not be successful and responding to such lawsuits and arbitrations diverts
our management’s attention from day-to-day operations. Adverse judgments or settlements in these
lawsuits may have a material adverse effect on our business, financial condition and results of operations.
In addition, our strategy of being a world leader includes entering into commercial and production
alliances, joint ventures and acquisitions to improve our global competitive position. As these operations
increase in complexity and are carried out in different jurisdictions, we may be subject to legal
proceedings that, if settled against us, could have a material adverse effect on our business, financial
condition and results of operations.
We have operations in multiple jurisdictions with differing regulatory, tax and other regimes.
We operate in multiple jurisdictions with complex regulatory environments that are subject to different
interpretations by companies and respective governmental authorities. These jurisdictions may have
different tax codes, environmental regulations, labor codes and legal framework, which adds complexity
to our compliance with these regulations. Any failure to comply with such regulations could have a
material adverse effect on our business, financial condition and results of operations.
Environmental laws and regulations could expose us to higher costs, liabilities, claims and failure to
meet current and future production targets.
Our operations in Chile are subject to national and local regulations relating to environmental protection.
In accordance with such regulations, we are required to conduct environmental impact studies or
statements before we conduct any new projects or activities or significant modifications of existing
projects that could impact the environment or the health of people in the surrounding areas. We are also
required to obtain an environmental license for certain projects and activities. The Chilean Environmental
Evaluation Service (Servicio de Evaluación Ambiental) evaluates environmental impact studies submitted
for its approval. The public, government agencies or local authorities may review and challenge projects
that may adversely affect the environment, either before these projects are executed or once they are
operating, if they fail to comply with applicable regulations. In order to ensure compliance with
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
environmental regulations, Chilean authorities may impose fines up to approximately US$9 million per
infraction, revoke environmental permits or temporarily or permanently close facilities, among other
enforcement measures.
Chilean environmental regulations have become increasingly stringent in recent years, both with respect
to the approval of new projects and in connection with the implementation and development of projects
already approved, and we believe that this trend is likely to continue. Given public interest in
environmental enforcement matters, these regulations or their application may also be subject to political
considerations that are beyond our control.
We regularly monitor the impact of our operations on the environment and on the health of people in the
surrounding areas and have, from time to time, made modifications to our facilities to minimize any
adverse impact. Future developments in the creation or implementation of environmental requirements or
their interpretation could result in substantially increased capital, operation or compliance costs or
otherwise adversely affect our business, financial condition and results of operations.
The success of our current investments at the Salar de Atacama and Nueva Victoria is dependent on the
behavior of the ecosystem variables being monitored over time. If the behavior of these variables in future
years does not meet environmental requirements, our operation may be subject to important restrictions
by the authorities on the maximum allowable amounts of brine and water extraction. For example, on
December 13, 2017, the First Environmental Court of Antofagasta ordered the temporary and partial
closure of certain water extraction wells located in the Salar de Llamara. In October 2018, the First
Environmental Court of Antofagasta accepted our claim, and dismissed the restrictions without prejudice.
It is possible that third parties could seek to reinstate these restrictions in the future. On December 26,
2019, the First Environmental Court of Antofagasta ruled that the environmental compliance plan
presented by SQM Salar S.A. with respect to the Salar de Atacama and approved by the Chilean
Environmental Authority (Superintendencia del Medio Ambiente) or SMA, in January 2019 did not
comply with certain proposed measures of the completeness and efficiency requirements of the Chilean
environmental legislation.
SQM Salar S.A. has proposed to the SMA a new environmental compliance plan, which is currently
subject to review. We believe that the new proposed environmental compliance plan, safeguards the
protection of the environment and is evaluating all courses of action available under applicable law with
respect to this ruling.
Our future development depends on our ability to sustain future production levels, which requires
additional investments and the submission of the corresponding environmental impact studies or
statements. If we fail to obtain approval or required environmental licenses, our ability to maintain
production at specified levels will be seriously impaired, thus having a material adverse effect on our
business, financial condition and results of operations.
In addition, our worldwide operations are subject to international and other local environmental
regulations. Since environmental laws and regulations in the different jurisdictions in which we operate
may change, we cannot guarantee that future environmental laws, or changes to existing environmental
laws, will not materially adversely impact our business, financial condition and results of operations.
A significant percentage of our shares are held by two principal shareholder groups who may have
interests that are different from that of other shareholders and of each other. Any change in such
principal shareholder groups may result in a change of control of the Company or of its Board of
Directors or its management, which may have a material adverse effect on our business, financial
condition and results of operations.
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
As of December 31, 2020, two principal shareholder groups held in the aggregate 57.86% of our total
outstanding shares, including a majority of our Series A common shares, and have the power to elect six
of our eight directors. The interests of the two principal shareholder groups may in some cases differ from
those of other shareholders and of each other.
As of December 31, 2020, one principal shareholder group is Sociedad de Inversiones Pampa Calichera
S.A. and its related companies, Inversiones Global Mining Chile Limitada and Potasios de Chile S.A.
(together, the “Pampa Group”), owned approximately 32% of the total outstanding shares of SQM. As
reported to the CMF by Inversiones TLC SpA, a subsidiary of Tianqi Lithium Corporation (“Tianqi”), on
December 5, 2018, Inversiones TLC SpA currently owns 25.86% of the total shares of SQM.
Until November 30, 2018, the CMF considered the Pampa Group the controller of SQM. On this date, the
CMF determined that in accordance with the distribution of the shares of SQM, “the Pampa Group does
not exert decisive power over the management of the Company, and is therefore not considered a
controlling shareholder”. The CMF could change its decision in the future if circumstances change.
The divestiture by the Pampa Group or Tianqi, or potential changes in the circumstances that have led to
the determination of the CMF related to the controller status of the shareholders of the Company, or a
combination thereof, may have a material adverse effect on our business, financial condition and results
of operations.
Tianqi is a significant shareholder and a competitor of the Company, which could result in risks to free
competition.
Tianqi is a competitor in the lithium business, and as a result of the number of SQM shares that it owns, it
has the right to choose up to three Board members. Under Chilean law, we are restricted in our ability to
decline to provide information about us, which may include competitively sensitive information, to a
director of our company. On August 27, 2018, Tianqi and the Chilean antitrust regulator, the Chilean
National Economic Prosecutor’s Office (Fiscalía Nacional Económica), or FNE, entered into an
extrajudicial agreement, under which certain restrictive measures were implemented in order to (i)
maintain the competitive conditions of the lithium market, (ii) mitigate the risks described in the agreement
and (iii) limit Tianqi’s access to certain information of the Company and its subsidiaries, which is defined
as “sensitive information” under the agreement.
During the approval process of the extrajudicial agreement before the FNE, we expressed our concerns
regarding the measures contained in the extrajudicial agreement since, in the Company’s opinion, the
measures (i) could not effectively resolve the risks that Tianqi and the FNE have sought to mitigate, (ii)
are not sufficient to avoid access to our “sensitive information” that, in the possession of a competitor,
could harm us and the proper functioning of the market and (iii) could contradict the Chilean Corporations
Act.
The presence of a shareholder which is at the same time a competitor of ours and the right of this
competitor to choose Board members could generate risks to free competition and/or increase the risks of
an investigation of free competition against us, whether in Chile or in other countries, all of which could
have a material adverse effect on our business, financial condition and results of operations.
Our information technology systems may be vulnerable to disruption which could place our systems at
risk from data loss, operational failure, or compromise of confidential information.
We rely on various computer and information technology systems, and on third party developers and
contractors, in connection with our operations, including two networks that link our principal subsidiaries
to our operating and administrative facilities in Chile and other parts of the world and ERP software
systems, which are used mainly for accounting, monitoring of supplies and inventories, billing, quality
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3) DESCRIPTION OF BUSINESS ENVIRONMENT
control, research activities, and production process and maintenance control. In addition, we use cloud
technologies, which allows us to support new business processes and respond quickly and at low cost to
changing conditions in our business and of the markets. Our information technology systems are
susceptible to disruption, damage or failure from a variety of sources, including errors by employees or
contractors, computer viruses, cyber-attacks, misappropriation of data by outside parties, and various
other threats. We have taken measures to identify and mitigate these risks with the object of reducing
operational risk and improving security and operational efficiency, which also includes modernization of
existing information technology infrastructure and communications systems. However, we cannot
guarantee that due to the increasing sophistication of cyber-attacks our systems will not be compromised
and because we do not maintain specialized cybersecurity insurance, our insurance coverage for
protection against cybersecurity risk may not be sufficient. During the 2020, and as a result of the Covid-
19 pandemic we renewed the perimeter security platform, implemented security updates and applications
through the cloud, and the remote network access platform was strengthened and a plan to raise awareness
of best practices in the use of telework was also provided. Cybersecurity breaches could result in losses
of assets or production, operational delays, equipment failure, inaccurate recordkeeping, or disclosure of
confidential information, any of which could result in business interruption, reputational damage, lost
revenue, litigation, penalties or additional expenses and could have a material adverse effect on our
business, financial condition and results of operations.
Recent international trade tensions could have a negative effect on our financial performance.
Economic conditions in China, an important market for the Company, are sensitive to global economic
conditions. The global financial markets have experienced significant disruptions in the past, including
the recent international trade disputes and tariff actions announced by the United States, China and certain
other countries. The U.S. government has imposed significant tariffs on Chinese goods, and Chinese
government has, in turn, imposed tariffs on certain goods manufactured in the United States. There is no
assurance that the list of goods impacted by additional tariffs will not be expanded or the tariffs will not
be increased materially. We are unable to predict how China or U.S. government policy, in particular, the
outbreak of a trade war between China and the United States and additional tariffs on bilateral imports,
may continue to impact global economic conditions. If the list of goods is further expanded or the tariff
is further increased, global economic conditions of both countries could be impacted, and growth in
demand for lithium or other commodities could decrease, which may have a material adverse effect on
our business, financial condition and results of operations.
Outbreaks of communicable infections or diseases, or other public health pandemics, such as the
outbreak of the novel coronavirus (COVID-19) currently being experienced around the world, have
impacted and may further impact the markets in which we, our customers and our suppliers operate or
market and sell products and could have a material adverse effect on our operations business, financial
condition and results of operations.
Disease outbreaks and other public health conditions, such as the global outbreak of COVID-19 currently
being experienced, in markets in which we, our customers and our suppliers operate, could have a
significant negative impact on our revenues, profitability and business. Due to the COVID-19 outbreak,
there has been a substantial curtailment and disruption of business activities around the world. These
curtailments and disruptions include: manufacturing and other work stoppages, factory and other business
closings, slowdowns or delays; restrictions and limitations placed on workers and factories, including
quarantines and other limitations on the ability to travel and return to work; shortages and delays in
production or shipment of products or raw materials; and border closures. In response to the spread of
COVID-19, the Chilean government closed its borders for entry by non-resident foreigners for an extended
period of time, prohibited the docking of cruise ships at Chilean ports, from time to time imposed
quarantines on certain regions of Chile and imposed a nationwide curfew. These measures have not
materially impacted imports or exports to or from Chile. However, we have seen some impacts related to
the shipment of products in and out of various other countries and regions, which could further negatively
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impact our ability to ship products to customers and receive supplies from suppliers. Furthermore, the
COVID-19 outbreak could disrupt the supply chain for materials we need to implement the planned
expansions of our production capacity.
As a precaution, our management has implemented several measures to help reduce the speed at which
COVID-19 may spread in our Company, including measures to mitigate the spread in the workplace,
significant reductions in employee travel and a mandatory quarantine for people who have arrived from
high-risk destinations, in consultation with governmental and international health organization guidelines,
and will continue to implement measures consistent with the evolving COVID-19 situation. While these
measures have been implemented to reduce the risk of the spread of the virus in our facilities, there can be
no assurance that these measures will reduce or limit the impact of COVID-19 on our operations, business,
financial condition or results of operations. Our operations could be stopped as a result of, among other
reasons, regulatory restrictions or a significant outbreak of the virus among our staff, which could prevent
employees from reporting to shifts.
While the global impacts of the COVID-19 pandemic are constantly changing, international financial
markets have reflected the uncertainty associated with the slowdown of the global economy and the
potential impact if businesses, workers, customers and others are prevented or restricted from conducting
business activities due to quarantines, business closures or other restrictions imposed by businesses or
governmental authorities in response to the COVID-19 outbreak. An economic downturn could affect
demand for the products of our customers by their end-users and, in turn, demand from our customers for
our products.
If our stakeholders and other constituencies believe we fail to appropriately address sustainability and
other environmental, social and governance (ESG) concerns it may adversely affect our business.
In October 2020, we announced our sustainable development plan, which includes voluntarily expanding
our monitoring systems, promoting better and more profound conversations with neighboring
communities and becoming carbon neutral and reducing water by 65% and brine extraction by 50%. We
also announced a goal of obtaining international certifications and participating in international
sustainability indices which we consider essential for a sustainable future.
While we are dedicated to our efforts related to sustainability, if we fail to address appropriately all
relevant stakeholders’ concerns in connection with ESG criteria, we may face opposition, which could
negatively affect our reputation, delay operations, or lead to litigation threats or actions. If we do not
maintain our reputation with key stakeholders and constituencies and effectively manage these sensitive
issues, they could adversely affect our business, results of operations, and financial condition.
Climate change can create physical risks and other risks that could adversely affect our business and
operations and adverse weather conditions or significant changes in weather patterns could have a
material adverse impact on our results of operations.
The impact of climate change on our operations and our customers’ operations remains uncertain, but the
physical effects of climate change could have an adverse effect on us and our customers as experts believe
that climate change may be associated with more extreme weather conditions. These effects could include,
but may not be limited to, changes in regional weather patterns, including drought and rainfall levels,
water availability, sea levels, storm patterns and intensities and temperature levels, including increased
volatility in seasonal temperatures via excessively hot or cold temperatures. These extreme weather
conditions could vary by geographic location.
Severe climate change could have an adverse effect on our costs, production, or sales, especially with
respect to our solar operations in the Salar de Atacama, which require hot, arid summer weather conditions.
Prolonged periods of precipitation or cooler weather during the evaporation season could reduce
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evaporation rates, leading to decreases in our production levels. Similarly, changes in hydrology could
affect brine levels, impacting our mineral harvesting process. The occurrence of these climate events at
our solar operations could lead to decreased production levels, increased operating costs and require us to
make significant additional capital expenditures.
Weather conditions have historically caused volatility in the agricultural industry (and indirectly in our
results of operations) by causing crop failures or significantly reduced harvests, which can adversely affect
application rates, demand for our plant nutrition products and our customers’ creditworthiness. Weather
conditions can also lead to a reduction in farmable acres, flooding, drought or wildfires, which could also
adversely impact growers’ crop yields and the uptake of plant nutrients, reducing the need for application
of plant nutrition products for the next planting season which could result in lower demand for our plant
nutrition products and negatively impact the prices of our products.
Any prolonged change in weather patterns in our markets, as a result of climate change or otherwise, could
have a material adverse impact on the results of our operations.
Risks Relating to Financial Markets
Currency fluctuations may have a negative effect on our financial performance.
We transact a significant portion of our business in U.S. dollars, and the U.S. dollar is the currency of the
primary economic environment in which we operate. In addition, the U.S. dollar is our functional currency
for financial statement reporting purposes. A significant portion of our costs, however, is related to the
Chilean peso. Therefore, an increase or decrease in the exchange rate between the Chilean peso and the
U.S. dollar would affect our costs of production. The Chilean peso has been subject to large devaluations
and revaluations in the past and may be subject to significant fluctuations in the future. As of December
31, 2020, the Chilean peso exchange rate was Ch$710.95 per U.S. dollar, while as of December 31, 2019
the Chilean peso exchange rate was Ch$748.74 per U.S. dollar. The Chilean peso therefore appreciated
against the U.S. dollar by 5.0% in 2020.
As an international company operating in several other countries, we also transact business and have
assets and liabilities in other non-U.S. dollar currencies, such as, among others, the Euro, the South
African rand, the Mexican peso, the Chinese yuan, the Thai baht and the Brazilian real.
As a result, fluctuations in the exchange rates of such foreign currencies to the U.S. dollar may have a
material adverse effect on our business, financial condition and results of operations.
We may be subject to risks associated with the discontinuation, reform or replacement of benchmark
indices.
Interest rate, foreign exchange rate and other types of indices which are deemed to be “benchmarks” are
the subject of increased regulatory scrutiny and may be discontinued, reformed or replaced. For example,
in 2017, the U.K. Financial Conduct Authority announced that it will no longer persuade or compel banks
to submit rates for the calculation of the London interbank offered rate (“LIBOR”) benchmark after 2021.
This reform will, and other future reforms may, cause benchmarks to be different than they have been in
the past, or to disappear entirely, or have other consequences which cannot be fully anticipated which
introduces a number of risks for our business. These risks include (i) legal risks arising from potential
changes required to document new and existing transactions; (ii) financial risks arising from any changes
in the valuation of financial instruments linked to benchmark rates; (iii) pricing risks arising from how
changes to benchmark indices could impact pricing mechanisms on some instruments; (iv) operational
risks arising from the potential requirement to adapt IT systems, trade reporting infrastructure and
operational processes; and (v) conduct risks arising from the potential impact of communication with
customers and engagement during the transition period. Various replacement benchmarks, and the timing
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of and mechanisms for implementation are being considered. The transition away from LIBOR to risk-
free reference rates (RFRs) requires financial firms to make a variety of internal changes, for example
updating front-and back-office systems, retraining staff and redesigning processes, as well as potentially
modifying or renegotiating potentially thousands of LIBOR-linked contracts. All banks and other financial
market participants must eliminate their dependence on LIBOR by this date if they are to avoid disruption
when the publication of LIBOR ceases. Although as of December 31, 2020 we had approximately US$70
million short- and long-term debt that use a LIBOR benchmark, it is not currently possible to determine
whether, or to what extent, any such changes would affect us. However, the discontinuation or reformation
of existing benchmark rates or the implementation of alternative benchmark rates may have a material
adverse effect on our business, financial condition and results of operations.
Risks Relating to Chile
As we are a company based in Chile, we are exposed to political risks and civil unrest in Chile.
Our business, financial condition and results of operations could be affected by changes in policies of the
Chilean government, other political developments in or affecting Chile, legal changes in the standards or
administrative practices of Chilean authorities or the interpretation of such standards and practices, over
which we have no control. The Chilean government has modified, and has the ability to modify, monetary,
fiscal, tax, social and other policies in order to influence the Chilean economy or social conditions. We
have no control over government policies and cannot predict how those policies or government
intervention will affect the Chilean economy or social conditions, or, directly and indirectly, our business,
financial condition and results of operations. Changes in policies involving exploitation of natural
resources, taxation and other matters related to our industry may adversely affect our business, financial
condition and results of operations.
We are exposed to economic and political volatility and civil unrest in Chile. Changes in social, political,
regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing,
development and investment in Chile, as well as crises and political uncertainties in Chile, could adversely
affect economic growth in Chile. In October and November 2019, Chile experienced riots and widespread
mass demonstrations in Santiago and other major cities in Chile, triggered by an increase in public
transportation fares in the city of Santiago, which involved violence and significant property damage and
caused commercial disruptions throughout the country. As a result, on October 18, 2019 the Chilean
government declared a 15-day period state of emergency and imposed a nighttime curfew in the greater
Santiago region and other cities. The state of emergency has since been lifted and the Chilean government
has introduced several social reforms, including (i) an immediate 20% increase in government-subsidized
pensions; (ii) new insurance programs to cover catastrophic illnesses and medication; (iii) a guaranteed
minimum monthly income for wage earners of Ch$350,000 (approximately US$460.95), with the
difference between such guaranteed minimum monthly income and the minimum monthly wage
(Ch$301,000) to be borne by the Chilean government; (iv) the reversal of a previously announced 9.2%
price increase in energy tariffs; and (v) a 40% income tax bracket for individuals earning over Ch$15.0
million (approximately US$19,755.04) a month, increased from 35%. In addition, President Piñera
announced a pay cut for members of the Chilean Congress and the highest-paid civil servants and replaced
eight ministers of his government. On November 15, 2019, representatives of Chile’s leading political
parties agreed to hold a referendum, allowing Chileans to vote on whether to replace the Chilean
Constitution. In November 2020, a referendum was held to vote on two matters: (i) whether a new
constitution should be enacted and (ii) if so, whether a constituent convention should be comprised of an
elected mixed assembly of current Congress members and newly elected persons or entirely comprised of
newly-elected citizens. This referendum resulted in strong support for convening a fully elected
Constitutional Convention to draft Chile’s new constitution. The election of the members of this
convention will be held in April 2021. Each new article of the Constitution would have to be approved by
two thirds of the convention. The Constitutional Convention will have approximately one year, starting in
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April 2021, to complete the draft of the Constitution. An exit referendum with compulsory participation
will then be held to ratify the new Constitution.
The long-term effects of this social unrest are hard to predict, but could include slower economic growth,
which could adversely affect our profitability and prospects.
Changes to the Chilean Constitution could impact a wide range of rights, including mining rights, water
rights and property rights generally, and could affect our business, financial condition and results of
operations.
In response to the riots and mass demonstrations that occurred during October and November 2019, the
Chilean government held a national referendum in November 2020 which decided that a new Chilean
Constitution would be drafted by a special constituent assembly comprised entirely of citizens elected for
that task (“Elected Citizens”). As decided in the referendum, all Elected Citizens are to be elected in April
2021 and the draft Chilean Constitution will be presented by the drafters in September or December 2021
(depending on whether an extension is requested) for approval by the citizens of Chile in May or August
2022 (depending on whether an extension is requested). It is expected that the final draft of the new Chilean
Constitution will be submitted to a public referendum for approval. The existing Chilean Constitution has
been in place since 1980 and any new Chilean Constitution could change the political situation of Chile,
potentially changing a wide range of rights, including mining rights, water rights and property rights
generally, which could affect the Chilean economy and the business outlook for the country generally and
our business, financial condition and results of operations in particular.
Changes in regulations regarding, or any revocation or suspension of mining, port or other concessions
could affect our business, financial condition and results of operations.
We conduct our mining operations, including brine extraction, under exploitation and exploration
concessions granted in accordance with provisions of the Chilean Constitution and related laws and
statutes. Our exploitation concessions essentially grant a perpetual right (with the exception of the rights
granted to SQM Salar with respect to the Salar de Atacama concessions under the Lease Agreement
described above, which expires in 2030) to conduct mining operations in the areas covered by the
concessions, provided that we pay annual concession fees. Our exploration concessions permit us to
explore for mineral resources on the land covered thereby for a specified period of time and to
subsequently request a corresponding exploitation concession. Any changes to the Chilean Constitution
with respect to the exploitation and exploration of natural resources and concessions granted as a result of
the proposed Constitutional referendum could materially adversely affect our existing exploitation and
exploration concessions or our ability to obtain future concessions and could have a material adverse effect
on our business, financial condition and results of operations.
We also operate port facilities at Tocopilla, Chile, for the shipment of products and the delivery of raw
materials pursuant to maritime concessions, which have been granted under applicable Chilean laws and
are normally renewable on application, provided that such facilities are used as authorized and annual
concession fees are paid.
Any significant adverse changes to any of these concessions, any changes to regulations to which we are
subject or adverse changes to our other concession rights, or a revocation or suspension of any of our
concessions, could have a material adverse effect on our business, financial condition and results of
operations.
Changes in water rights laws and other regulations could affect our business, financial condition and
results of operations.
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We hold water use rights that are key to our operations. These rights were obtained from the Chilean Water
Authority (Dirección General de Aguas) for supply of water from rivers and wells near our production
facilities, which we believe are sufficient to meet current operating requirements. However, the Chilean
Water Rights Code (Código de Aguas or the “Water Code”) is subject to changes, which could have a
material adverse impact on our business, financial condition and results of operations. For example, a
series of bills are currently being discussed by the Chilean National Congress that seek to desalinate
seawater for use in mining production processes, amend the Mining Code for water use in mining
operations, amend the Chilean Constitution on water and introduce changes to the regulatory framework
governing the terms of inspection and sanction of water. As a result, the amount of water that we can
actually use under our existing rights may be reduced or the cost of such use could increase. In addition,
any changes to the Chilean Constitution with respect to water rights as a result of the proposed
Constitutional referendum could restrict our access to water required for our production operations and
materially adversely affect our existing operations or our ability to expand our operations in the future.
These and potential future changes to the Water Code, the Chilean Constitution or other relevant
regulations could have a material adverse effect on our business, financial condition and results of
operations.
The Chilean National Congress is considering a draft bill that declares lithium mining to be in the
national interest, which if passed in its current form, could enable the expropriation of our lithium
assets.
The Chilean National Congress is currently processing a bill, bulletin 10,638-08, which “Declares the
exploitation and commercialization of lithium and Sociedad Química y Minera de Chile S.A. to be of
national interest.” The purpose of this bill is to enable the potential expropriation of our assets, or our
lithium operations in general. The bill is subject to further discussion in the Chilean National Congress,
which includes several possible changes to its current wording. We cannot guarantee that the bill will not
eventually be approved by the Chilean National Congress, nor that its final wording will not refer to us or
our lithium operations. If the bill is approved as currently drafted, it could have a material adverse effect
on our business, financial condition and results of operations.
The Chilean government could levy additional taxes on mining companies operating in Chile.
In Chile, there is a royalty tax that is applied to mining activities developed in the country. The Chilean
National Congress is currently processing a bill, bulletin 12,093-08, which proposes to institute a royalty
fee of 3% on the value of extracted minerals. The bill is subject to further discussion in the Chilean
National Congress, which includes several possible changes to its current wording. We cannot guarantee
that the bill will not eventually be approved by the Chilean National Congress. If the bill is approved as
currently drafted, it could have a material adverse effect on our business, financial condition and results
of operations.
Ratification of the International Labor Organization’s Convention 169 concerning indigenous and
tribal peoples might affect our development plans.
Chile, a member of the International Labor Organization (“ILO”), has ratified the ILO’s Convention 169
(the “Indigenous Rights Convention”) concerning indigenous and tribal people. The Indigenous Rights
Convention established several rights for indigenous people and communities. Among other rights, the
Indigenous Rights Convention states that (i) indigenous groups should be notified and consulted prior to
the development of any project on land deemed indigenous, although veto rights are not mentioned, and
(ii) indigenous groups have, to the extent possible, a stake in benefits resulting from the exploitation of
natural resources in indigenous land. The extent of these benefits has not been defined by the Chilean
government. The Chilean government has addressed item (i) above through Supreme Decree No. 66,
issued by the Social Development Ministry. This decree requires government entities to consult
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indigenous groups that may be directly affected by the adoption of legislative or administrative measures,
and it also defines criteria for the projects or activities that must be reviewed through the environmental
evaluation system that also require such consultation. To the extent that the new rights outlined in the
Igndigenous Rights Convention become laws or regulations in Chile, judicial interpretations of the
convention of those laws or regulations could affect the development of our investment projects in lands
that have been defined as indigenous, which could have a material adverse effect on our business, financial
condition and results of operations. The Chilean Supreme Court has consistently held that consultation
processes must be carried out in the manner prescribed by Indigenous Rights Convention.
The consultation process may cause delays in obtaining regulatory approvals, including environmental
permits, as well as public opposition by local and/or international political, environmental and ethnic
groups, particularly in environmentally sensitive areas or in areas inhabited by indigenous populations.
Furthermore, the omission of the consultation process when required by law may result in the revocation
or annulment of regulatory approvals, including environmental permits already granted.
Consequently, operating projects may be affected since the omission of the consultation process, when
required by law, could lead to public law annulment actions pursuing the annulment of the environmental
permits granted.
However, this risk frequently arises during the environmental assessment phase when the environmental
permits are to be obtained. In such scenario, affected parties may take several legal actions to declare null
or void the environmental permits that omitted the consultation process, and in some cases, courts have
overturned environmental approvals in which consultation was not made as prescribed in the Indigenous
Rights Convention.
If the Indigenous Rights Convention affects our development plans, it could have a material adverse effect
on our business, financial condition and results of operations.
Chile has different corporate disclosure and accounting standards than those you may be familiar with
in the United States.
Accounting, financial reporting and securities disclosure requirements in Chile differ in certain significant
respects from those required in the United States. Accordingly, the information about us available to you
will not be the same as the information available to holders of securities issued by a U.S. company. In
addition, although Chilean law imposes restrictions on insider trading and price manipulation, applicable
Chilean laws are different from those in the United States, and the Chilean securities markets are not as
highly regulated and supervised as the U.S. securities markets.
Chile is located in a seismically active region.
Chile is prone to earthquakes because it is located along major fault lines. During 2017-2020, Chile has
experienced several earthquakes which had a magnitude of over 6.0 on the Richter scale. There were also
earthquakes in the past decade that caused substantial damage to some areas of the country. Chile has also
experienced volcanic activity. A major earthquake or a volcanic eruption could have significant negative
consequences for our operations and for the general infrastructure, such as roads, rail, and access to goods,
in Chile. Although we maintain industry standard insurance policies that include earthquake coverage, we
cannot assure you that a future seismic or volcanic event will not have a material adverse effect on our
business, financial condition and results of operations.
Risks Relating to our Shares and to our ADSs
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The price of our ADSs and the U.S. dollar value of any dividends will be affected by fluctuations in the
U.S. dollar/Chilean peso exchange rate.
Chilean trading in the shares underlying our ADSs is conducted in Chilean pesos. The depositary for our
ADSs will receive cash distributions that we make with respect to the shares in Chilean pesos. The
depositary will convert such Chilean pesos to U.S. dollars at the then prevailing exchange rate to make
dividend and other distribution payments in respect of ADSs. If the value of the Chilean peso falls relative
to the U.S. dollar, the value of the ADSs and any distributions to be received from the depositary will
decrease.
Developments in other emerging markets could materially affect the value of our ADSs and our shares.
The Chilean financial and securities markets are, to varying degrees, influenced by economic and market
conditions in other emerging market countries or regions of the world. Although economic conditions are
different in each country or region, investor reaction to developments in one country or region can have
significant effects on the securities of issuers in other countries and regions, including Chile and Latin
America. Events in other parts of the world may have a material effect on Chilean financial and securities
markets and on the value of our ADSs and our shares.
The prices of securities issued by Chilean companies, including banks, are influenced to varying degrees
by economic and market considerations in other countries. We cannot assure you that future developments
in or affecting the Chilean economy, including consequences of economic difficulties in other markets,
will not materially and adversely affect our business, financial condition or results of operations.
We are exposed to risks related to the weakness and volatility of the economic and political situation in
Asia, the United States, Europe, other parts of Latin America and other nations. Although economic
conditions in Europe and the United States may differ significantly from economic conditions in Chile,
investors’ reactions to developments in these other countries may have an adverse effect on the market
value of securities of Chilean issuers.
If these, or other nations’ economic conditions deteriorate, the economy in Chile, as both a neighboring
country and a trading partner, could also be affected and could experience slower growth than in recent
years, with possible adverse impact on our borrowers and counterparties.
Chile has considerable economic ties with China, the United States and Europe. In 2020, approximately
37.2% of Chile’s exports went to China, mainly copper. China’s economy has grown at a strong pace in
recent times, but a slowdown in economic activity in China may affect Chile’s GDP and export growth
as well as the price of copper, which is Chile’s main export. Chile exported approximately 14.0% of total
exports to the United States and 8.8% to Europe in 2020.
Chile was recently involved in international litigation with Bolivia regarding maritime borders. We cannot
assure you that crises and political uncertainty in other Latin American countries will not have an adverse
effect on Chile, the price of our securities or our business.
The volatility and low liquidity of the Chilean securities markets could affect the ability of our
shareholders to sell our ADSs.
The Chilean securities markets are substantially smaller, less liquid and more volatile than the major
securities markets in the United States. The volatility and low liquidity of the Chilean markets could
increase the price volatility of our ADSs and may impair the ability of a holder to sell our ADSs or to sell
the shares underlying our ADSs into the Chilean market in the amount and at the price and time the holder
wishes to do so.
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Our share or ADS price may react negatively to future acquisitions, divestitures, capital increases and
investments.
As world leaders in our core businesses, part of our strategy is to look for opportunities that will allow us
to consolidate and strengthen our competitive position in jurisdictions in which we currently do not
operate. Pursuant to this strategy, we may carry out acquisitions or joint ventures relating to any of our
businesses or to new businesses in which we believe we may have sustainable competitive advantages.
We may also seek to strengthen our leadership position in our core businesses through divestitures of
certain assets or stakes in subsidiaries that we believe will allow us to concentrate our efforts on our core
businesses. Depending on our capital structure at the time of any acquisitions or joint ventures, we may
need to raise significant debt and/or equity which will affect our financial condition and future cash flows.
We may also carry out capital increases in order to raise capital for our capital plan. In addition, any
divestitures we effect may not result in strengthening our position in our core businesses as anticipated.
Any change in our financial condition could affect our results of operations and negatively impact our
share or ADS price.
ADS holders may be unable to enforce rights under U.S. securities laws.
Because we are a Chilean company subject to Chilean law, the rights of our shareholders may differ from
the rights of shareholders in companies incorporated in the United States, and ADS holders may not be
able to enforce or may have difficulty enforcing rights currently in effect under U.S. federal or state
securities laws.
Our company is an open stock corporation incorporated under the laws of the Republic of Chile. Most of
our directors and officers reside outside the United States, principally in Chile. All or a substantial portion
of the assets of these persons are located outside the United States. As a result, if any of our shareholders,
including holders of our ADSs, were to bring a lawsuit against our officers or directors in the United
States, it may be difficult for them to effect service of legal process within the United States upon these
persons. Likewise, it may be difficult for them to enforce judgments obtained in United States courts
based upon the civil liability provisions of the federal securities laws in the United States against them in
the United States.
In addition, there is no treaty between the United States and Chile providing for the reciprocal enforcement
of foreign judgments. However, Chilean courts have enforced judgments rendered in the United States,
provided that the Chilean court finds that the United States court respected basic principles of due process
and public policy. Nevertheless, there is doubt as to whether an action could be brought successfully in
Chile in the first instance on the basis of liability based solely upon the civil liability provisions of the
United States federal securities laws.
As preemptive rights may be unavailable for our ADS holders, they have the risk of their holdings being
diluted if we issue new stock.
Chilean laws require companies to offer their shareholders preemptive rights whenever issuing new shares
of capital stock so shareholders can maintain their existing ownership percentage in a company. If we
increase our capital by issuing new shares, a holder may subscribe for up to the number of shares that
would prevent dilution of the holder’s ownership interest.
If we issue preemptive rights, United States holders of ADSs would not be able to exercise their rights
unless a registration statement under the Securities Act were effective with respect to such rights and the
shares issuable upon exercise of such rights or an exemption from registration were available. We cannot
assure holders of ADSs that we will file a registration statement or that an exemption from registration
will be available. We may, in our absolute discretion, decide not to prepare and file such a registration
statement. Although in connection with the pending capital increase approved by our shareholders on
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January 22, 2021, we expect to file a registration statement that would permit holders of ADSs to exercise
preemptive rights, if our ADS holders were unable to exercise their preemptive rights because we did not
file a registration statement, the ADS depositary would attempt to sell their rights and distribute the net
proceeds from the sale to them, after deducting the depositary’s fees and expenses. If the depositary could
not sell the rights, they would expire and have no further value and holders of ADSs would not realize
any value from them. In either case, ADS holders’ equity interests in us would be diluted in proportion
to the increase in our capital stock.
If we were classified as a Passive Foreign Investment Company by the U.S. Internal Revenue Service,
there could be adverse consequences for U.S. investors.
We believe that we were not classified as a Passive Foreign Investment Company (“PFIC”) for 2020.
Characterization as a PFIC could result in adverse U.S. tax consequences to a U.S. investor in our shares
or ADSs. For example, if we (or any of our subsidiaries) are a PFIC, our U.S. investors may become
subject to increased tax liabilities under U.S. tax laws and regulations and will become subject to
burdensome reporting requirements. The determination of whether or not we (or any of our subsidiaries
or portfolio companies) are a PFIC is made on an annual basis and will depend on the composition of our
(or their) income and assets from time to time.
Changes in Chilean tax regulations could have adverse consequences for U.S. investors.
Currently cash dividends paid by us to foreign shareholders are subject to a 35% Chilean withholding tax.
When the Company pays a corporate income tax on the income from which the dividend is paid, known
as a “First Category Tax”, a credit for all or a portion of the amount of the First Category Tax, depending
on the jurisdiction of the foreign shareholder, effectively reduces the rate of Withholding Tax, which was
equivalent of 23.90411% during 2020.
Foreign shareholders resident in a jurisdiction with a tax treaty in force with Chile will be credited with
100% of the Chilean corporate tax paid by us against the final taxes at the shareholder level. Foreign
shareholders resident in a non-treaty jurisdiction will be subject to a higher effective tax rate on dividends
because only a portion of the Chilean corporate tax paid by us will be credited against the final taxes at
the shareholder level. There is a temporary rule in effect since January 1, 2017, which has been extended
to December 31, 2026, that provides that treaty jurisdictions for this purpose will include jurisdictions
with tax treaties signed with Chile prior to January 1, 2020, even if such treaties are not in force. This is
currently the status of the treaty signed between the United States and Chile.
Additionally, pursuant to the current social and political agenda, it is expected that the Chilean
Government, based on a report prepared on January 2021 by a commission of experts, will introduce a
new tax reform bill aimed at limiting tax exemptions and/or preferential tax treatments contained in the
Chilean tax legislation, such as the exemption on capital gains arising from the sale of shares that are
publicly traded and have a high presence in the stock exchange.
Changes in Chilean tax regulations could have adverse consequences for U.S. investors.
General Risk Factors
Our measures to minimize our exposure to bad debt may not be effective and a significant increase in
our accounts receivable coupled with the financial condition of customers may result in losses that
could have a material adverse effect on our business, financial condition and results of operations.
Potentially negative effects of global economic conditions on the financial condition of our customers
may include the extension of the payment terms of our accounts receivable and may increase our exposure
to bad debt. While we have implemented certain safeguards, such as using credit insurance, letters of
73
3) DESCRIPTION OF BUSINESS ENVIRONMENT
credit and prepayment for a portion of sales, to minimize the risk, we cannot assure you that such
safeguards will be effective and a significant increase in our accounts receivable coupled with the financial
condition of customers may result in losses that could have a material adverse effect on our business,
financial condition and results of operations.
Quality standards in markets in which we sell our products could become stricter over time.
In the markets in which we do business, customers may impose quality standards on our products and/or
governments may enact stricter regulations for the distribution and/or use of our products. As a result, if
we cannot meet such new standards or regulations, we may not be able to sell our products. In addition,
our cost of production may increase in order to meet any such newly imposed or enacted standards or
regulations. Failure to sell our products in one or more markets or to important customers could materially
adversely affect our business, financial condition and results of operations.
Our business is subject to many operating and other risks for which we may not be fully covered under
our insurance policies.
Our facilities and business operations in Chile and abroad are insured against losses, damage or other
risks by insurance policies that are standard for the industry and that would reasonably be expected to be
sufficient by prudent and experienced persons engaged in businesses similar to ours.
We may be subject to certain events that may not be covered under our insurance policies, which could
have a material adverse effect on our business, financial condition and results of operations. Additionally,
as a result of major earthquakes and unexpected rains and flooding in Chile, as well as other natural
disasters worldwide, conditions in the insurance market have changed and may continue to change in the
future, and as a result, we may face higher premiums and reduced coverage, which could have a material
adverse effect on our business, financial condition and results of operations.
Our water supply could be affected by geological changes or climate change.
Our access to water may be impacted by changes in geology, climate change or other natural factors, such
as wells drying up or reductions in the amount of water available in the wells or rivers from which we
obtain water, that we cannot control. The use of seawater for future or current operations could increase
our operating costs. Any such change may have a material adverse effect on our business, financial
condition and results of operations.
Any loss of key personnel may materially and adversely affect our business.
Our success depends in large part on the skills, experience and efforts of our senior management team
and other key personnel. The loss of the services of key members of our senior management or employees
with critical skills could have a negative effect on our business, financial condition and results of
operations. If we are not able to attract or retain highly skilled, talented and qualified senior managers or
other key personnel, our ability to fully implement our business objectives may be materially and
adversely affected.
We are subject to Chilean and international anti-corruption, anti-bribery, anti-money laundering and
international trade laws. Failure to comply with these laws could adversely impact our business,
financial condition and results of operations.
We are required to be in compliance with all applicable laws and regulations in Chile and internationally
with respect to anti-corruption, anti-money laundering and other regulatory matters, including the FCPA.
Although we and our subsidiaries maintain policies and processes intended to comply with these laws,
74
3) DESCRIPTION OF BUSINESS ENVIRONMENT
we cannot ensure that these compliance policies and processes will prevent intentional, reckless or
negligent acts committed by our officers or employees.
If we or our subsidiaries fail to comply with any applicable anti-corruption, anti-bribery, anti-money
laundering or other similar laws, we and our officers and employees may be subject to criminal,
administrative or civil penalties and other remedial measures, which could have material adverse effects
on our and our subsidiaries’ business, financial condition and results of operations. Any investigation of
potential violations of anti-corruption, anti-bribery or anti-money laundering laws by governmental
authorities in Chile or other jurisdictions could result in an inability to prepare our consolidated financial
statements in a timely manner. This could adversely impact our reputation, ability to access the financial
markets and ability to obtain contracts, assignments, permits and other government authorizations
necessary to participate in our and our subsidiaries’ industry, which, in turn, could have adverse effects on
our and our subsidiaries’ business, financial condition and results of operations.
3) F) DESCRIPTION OF BUSINESS ENVIRONMENT: CAPITAL EXPENDITURE PROGRAM
We regularly review different opportunities to improve our production methods, reduce costs, increase
production capacity of existing products and develop new products and markets. Additionally, significant
capital expenditures are required every year in order to sustain our production capacity. We are focused
on developing new products in response to identified customer demand, as well as new products that can
be derived as part of our existing production or other products that could fit our long-term development
strategy.
Our capital expenditures in Chile have been mainly related to the organic growth and sustainability of our
business, including the construction of new facilities and the renovation of plants and equipment. In 2020,
we also worked on the expansion of our lithium carbonate and lithium hydroxide capacity in Chile, which
we believe will reach 120,000 metric tons and 21,500 metric tons respectively by the end of 2021. We
also began expansions related to the mining and production facilities of nitrates and iodine in Chile.
Our capital expenditures for the years ended December 31, 2020, 2019 and 2018 were as follows:
(in millions of U.S. dollars)
Capital Expenditures
2020
322.2
2019
321.3
2018
244.7
During 2020, we had total capital expenditures of US$322.2 million, a decrease compared to the US$450
million that was originally expected as a result in the delay of the purchasing of equipment. Our 2020
capital expenditure is primarily related to:
• Capacity expansion projects related to the increase of our lithium carbonate production from
70,000 metric tons per year to 120,000 metric tons per year in Chile;
• Capacity expansion of lithium hydroxide production from 13,500 metric tons per year to 21,500
metric tons per year in Chile;
• Optimization projects related to potassium nitrate production plants in Coya Sur; and
• General maintenance of all production units in order to ensure the fulfillment of production and
sales targets.
During 2019, we had total capital expenditures of US$321.3 million, primarily related to:
• Capacity expansion projects related to the completion of the increase of our lithium carbonate
production to 70,000 metric tons per year and the commencement of our lithium carbonate
expansion project to reach 120,000 metric tons per year.
75
3) DESCRIPTION OF BUSINESS ENVIRONMENT
• Capacity expansion of lithium hydroxide production from 13,500 metric tons per year to 21,500
•
metric tons per year in Chile;
Investments to increase iodine capacity to 14,800 metric tons per year in the Nueva Victoria mine;
and
• Capacity expansion and optimization projects related to potassium nitrate production plants II, III
and IV in Coya Sur.
During 2018, we had total capital expenditure of US$244.7 million, primarily related to:
• Capacity expansion projects related to increasing lithium carbonate production to 70,000 metric
tons per year and lithium hydroxide production to 13,500 metric tons per year in Chile;
Investments to increase iodine capacity to 14,000 in the Nueva Victoria mine;
•
• Capacity expansion project related to potassium nitrate production plants III and IV in Coya Sur;
and
• General maintenance of all production units and the Port of Tocopilla in order to ensure the
fulfillment of production and sales targets.
We believe that our capital expenditures for 2021 could reach approximately US$500 million focused on
the maintenance of our production facilities in order to strengthen our ability to meet our production goals
and to increase our production capacity, primarily related to lithium carbonate and lithium hydroxide
capacity expansions and nitrates and iodine capacity in Chile and development of our lithium project in
Australia. We expect our installed capacity of lithium carbonate and lithium hydroxide in Chile to reach
approximately 120,000 and 21,500 metric tons respectively by the second half of 2021, an increase of
50,000 metric tons of lithium carbonate and of 8,000 metric tons of lithium hydroxide compared to our
current effective capacity. We will also begin the development and purchase of long-lead time equipment
in connection with the Mt. Holland lithium project in Western Australia.
76
4) OWNERSHIP AND SHARES
4) OWNERSHIP AND SHARES
4) A) OWNERSHIP AND SHARES: OWNERSHIP
i) OWNERSHIP CONTROL SITUATION
As of December 31, 2020, SQM does not have a “controlling group” as such term is defined in Title XV
of Chilean Law No. 18,045.
ii) IDENTIFICATION OF NON-CONTROLLING MAJORITY SHAREHOLDERS
SQM has been informed that, as of December 31, 2020, Mr. Julio Ponce Lerou (ID No. 4.250.719-9) and
related persons control 100% of Inversiones SQYA Ltda. (“SQYA”) and 100% of Inversiones SQ Ltda.
These two companies control indirectly 32.00% of all shares of SQM (consisting of 71,871,838 Series A
shares and 12,341,049 Series B shares), as follows: (i) Inversiones SQ Ltda. controls 0.0258% of Norte
Grande S.A. (“Norte Grande”) and SQYA controls 67.59% of Norte Grande, which controls 76.82% of
Sociedad de Inversiones Oro Blanco S.A., which controls 88.64% of Sociedad de Inversiones Pampa
Calichera S.A. (“Pampa Calichera”), which controls 21.75% of SQM, as of December 31, 2020; (ii) Pampa
Calichera controls 99.99% of Inversiones Global Mining Chile Limitada, which controls 3.34% of SQM
and (iii) Norte Grande controls 76.34% of Nitratos de Chile S.A., which controls 98.89% of Potasios de
Chile S.A., which controls 10.07% of Pampa Calichera and 6.91% of SQM. Thus, Pampa Calichera and
its related companies, Inversiones Global Mining Chile Limitada and Potasios de Chile S.A. (together,
“Pampa Group”), control 32.00% of SQM.
As reported by Depósito Central de Valores S.A. (“DCV”), which keeps formal records of the shareholders
of the Company, as of December 31, 2020, Inversiones TLC SpA, a subsidiary of Tianqi Lithium
Corporation (“Tianqi”), is a direct owner of 62,556,568 of SQM´s shares, equivalent to 23.77% of SQM´s
total shares. In addition, as reported by Inversiones TLC SpA, Tianqi, through its subsidiaries, owns
5,516,772 Series B shares of SQM. Therefore, as of December 31, 2020, Tianqi beneficially owns 25.86%,
of SQM’s total shares.
As of December 31, 2019, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A.,
and Kowa Holding America Inc. (together, “Kowa Group”) are owners of 2.35% of all shares in SQM.
For the breakdown by series of share of the Pampa Group, Tianqi and Kowa Group ownership of shares
in SQM, see Section 4) A) iii) Identification of 12 Largest Shareholders.
iii) IDENTIFICATION OF 12 LARGEST SHAREHOLDERS
As of December 31, 2020, the 12 largest shareholders including both Series A and Series B shares were:
Series A + Series B
INVERSIONES TLC SPA
THE BANK OF NEW YORK MELLON ADRS1
SOCIEDAD DE INVERSIONES PAMPA CALICHERA SA2
POTASIOS DE CHILE SA
INV GLOBAL MINING CHILE LTDA
EUROAMERICA C DE B S.A.
Taxpayer ID
76,902,021-7
59,030,820-K
Number of
Shares
62,556,568
50,792,452
96,511,530-7
45,817,123
76,165,311-3
18,179,147
96,863,960-9
8,798,539
96,899,230-9
8,789,935
BANCO SANTANDER POR CUENTA DE INV EXTRANJEROS 97,036,000-K
BANCO DE CHILE POR CUENTA DE STATE STREET
97,004,000-5
7,294,827
6,971,782
%
Ownership
23.77%
19.30%
17.41%
6.91%
3.34%
3.34%
2.77%
2.65%
77
4) OWNERSHIP AND SHARES
BANCO DE CHILE POR CUENTA DE TERCEROS NO RESIDENTES 97,004,000-5
6,129,339
INVERSIONES LA ESPERANZA CHILE LIMITADA
79,798,650-K
BANCHILE CORREDORES DE BOLSA S A
96,571,220-8
BANCO DE CHILE POR CUENTA DE CITI NA NEW YORK CLIENT 97,004,000-5
4,193,763
2,885,960
1,909,712
Subtotal 12 Largest Shareholders, Series A and B
Total Shares, Series A and B
1 The Bank of New York Mellon is the depositary bank for the Company’s ADSs traded on the New York Stock
224,319,147
263,196,524
2.33%
1.59%
1.10%
0.73%
85.23%
100.00%
Exchange. Information about ADS holders is provided at the end of this section.
2 Total Sociedad de Inversiones Pampa Calichera S.A. 57,235,201 Series A and B shares; 11,418,078 Series B shares
are in the custody of various brokers.
As of December 31, 2020, the 12 largest shareholders of Series A shares were:
Series A
INVERSIONES TLC SPA
Taxpayer ID
76,902,021-7
SOCIEDAD DE INVERSIONES PAMPA CALICHERA SA 96,511,530-7
POTASIOS DE CHILE SA
INV GLOBAL MINING CHILE LTDA
76,165,311-3
96,863,960-9
INVERSIONES LA ESPERANZA CHILE LIMITADA 79,798,650-K
KOCHI SA
KOWA CO LTD
96,518,570-4
59,046,730-8
BANCHILE CORREDORES DE BOLSA S A
96,571,220-8
LARRAIN VIAL S A CORREDORA DE BOLSA 80,537,000-9
Number of
Shares
62,556,568
44,894,152
18,179,147
8,798,539
4,147,263
945,490
781,429
459,202
327,898
227,550
% Ownership
43.80%
31.43%
12.73%
6.16%
2.90%
0.66%
0.55%
0.32%
0.23%
0.16%
0.13%
0.12%
141,678,334
142,819,552
99.20%
100.00%
59,023,690-K
76,237,243-6
183,633
97,004,000-5
177,463
KOWA HOLDINGS AMERICA INC
SOC ADM DE FDOS DE CESANTIA DE CHILE II SA
FDO SOLIDARIO
BANCO DE CHILE POR CUENTA DE CITI NA NEW
YORK CLIENT
Subtotal 12 Largest Shareholders, Series A
Total Shares, Series A
78
4) OWNERSHIP AND SHARES
As of December 31, 2020, the 12 largest shareholders of Series B shares were:
Series B
THE BANK OF NEW YORK MELLON ADRS1
Taxpayer ID Number of Shares % Ownership
50,792,452
59,030,820-K
42.19%
EUROAMERICA C DE B S.A.
BANCO SANTANDER POR CUENTA DE INV
EXTRANJEROS
96,899,230-9
8,788,517
97,036,000-K
BANCO DE CHILE POR CUENTA DE STATE STREET 97,004,000-5
BANCO DE CHILE POR CUENTA DE TERCEROS NO
RESIDENTES
97,004,000-5
AFP HABITAT S. A.
AFP PROVIDA S.A.
AFP CAPITAL S. A.
AFP CUPRUM S. A.
98,000,100-8
76,265,736-8
98,000,000-1
76,240,079-0
BANCHILE CORREDORES DE BOLSA S A 96,571,220-8
BANCO DE CHILE POR CUENTA DE CITI NA NEW
YORK CLIENT
97,004,000-5
LARRAIN VIAL S A CORREDORA DE BOLSA 80,537,000-9
7,294,827
6,971,782
6,129,339
4,854,276
4,283,483
4,199,918
3,629,239
2,426,758
1,732,249
1,523,391
7.30%
6.06%
5.79%
5.09%
4.03%
3.56%
3.49%
3.01%
2.02%
1.44%
1.27%
Subtotal 12 Largest Shareholders, Series B2
102,626,231
85.25%
Total Shares, Series B
1 The Bank of New York Mellon is the depositary bank for the Company’s ADSs traded on the New York Stock
120,376,972
100.00%
Exchange. Information about ADS holders is provided at the end of this section.
2 Not included the total of 12,341,049 of Series B shares owned by Sociedad de Inversiones Pampa Calichera S.A., of
which 11,418,078 Series B shares are in the custody of various brokers.
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4) OWNERSHIP AND SHARES
The Bank of New York Mellon is the depositary bank for the Company’s ADSs traded on the New York
Stock Exchange. According to public 13F filings with the U.S. Securities and Exchange Commission, the
12 largest ADS holders as of December 31, 2020 were:
ADSs (Series B)
BlackRock Investment Management (U.K.), LTD
ClearBridge Investments, LLC
Aberdeen Standard Investments (U.K.)
EARNEST Partners, LLC
Macquarie Investment Management
The Vanguard Group, Inc.
Azvalor Asset Management, S.G.I.I.C., S.A.
State Street Global Advisors (SSgA)
Grantham Mayo Van Otterloo & Co., LLC
FIAM, LLC
Arrowstreet Capital, L.P.
BlackRock Advisors, LLC
Subtotal 12 Largest ADS Holders
Total ADSs as of December 31, 2020
Taxpayer
ID
Number of ADSs
% Ownership
Series B
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2,479,422
2,244,296
1,922,700
1,704,818
1,414,524
1,284,767
1,070,469
1,051,669
1,049,823
905,454
863,295
833,865
2.06%
1.86%
1.60%
1.42%
1.18%
1.07%
0.89%
0.87%
0.87%
0.75%
0.72%
0.69%
%
Ownership
Total
Shares
0.94%
0.85%
0.73%
0.65%
0.54%
0.49%
0.41%
0.40%
0.40%
0.34%
0.33%
0.32%
16,825,102
50,792,452
13.98%
42.19%
6.39%
19.30%
iv) TOTAL NUMBER OF SHAREHOLDERS
The following table shows the total number of SQM´s shareholders as of December 31, 2020:
Total Number of Shareholders, Series A and B
Total Number of Shareholders, Series A
Total Number of Shareholders, Series B
Shareholders
Registry
ADS
Holders
Registry
Total
Holders
1,358
374
1,262
82
-
82
1,440
374
1,344
v) SIGNIFICANT CHANGES IN SHARE OWNERSHIP
There has not been any significant change in share ownership of the Company during 2020. The last
important change in share ownership of the Company happened during 2018 when Nutrien Ltd., which
was one of the main shareholder groups with 32% of SQM's total shares as of December 31, 2017, divested
all its ownership in SQM. This was through the sale of its Series B shares on the Chilean securities market
in May 2018, and a sale of its Series A shares on the Chilean securities market to Inversiones TLC SpA,
a subsidiary of Tianqi Lithium Corporation, in December 2018. As of December 31, 2018, Nutrien Ltd.
had 0% of the total shares of SQM, and Inversiones TLC SpA had 25.86% of the total shares issued by
SQM.
Until November 30, 2018, the Pampa Group was considered by the CMF as the Company's controller.
However, starting from that date, the CMF determined that in accordance with the distribution of the
80
4) OWNERSHIP AND SHARES
shares of SQM, “the Pampa Group does not exert decisive power over the management of the Company,
and is therefore not considered a controlling shareholder”. The CMF could change its decision in the future
if circumstances change.
Tianqi Extrajudicial Agreement with the FNE
In August 2018, after an investigation by the FNE in connection with the proposed acquisition by Tianqi
of 23.77% of the Company’s Series A shares, Tianqi and the FNE entered into an extrajudicial agreement
(the “Extrajudicial Agreement”) which implemented certain restrictive measures in order to (i) maintain
the competitive conditions of the lithium market, (ii) mitigate the risks described in the Extrajudicial
Agreement and (iii) limit Tianqi’s access to certain information of the Company and its subsidiaries, which
are defined as sensitive under the Extrajudicial Agreement (“Sensitive Information”) (collectively, the
“Purpose”). Pursuant to the Extrajudicial Agreement, Tianqi agreed that, among other things:
• Tianqi will not nominate any of its directors, executives or employees to the SQM Board of
Directors;
• Tianqi and the directors nominated by it will not influence or intervene for the benefit of Tianqi
and prejudice the interests of SQM;
• The directors nominated by Tianqi will not participate nor will they be part of any committees,
the management or other decision-making bodies related to lithium of SQM or of any companies
controlled by SQM, unless nominated by independent directors;
• Tianqi will inform the FNE of any agreement in the lithium market, with Albemarle and/or SQM,
prior to its execution;
• Tianqi will notify the FNE of any event from which it acquires control or decisive influence in
SQM;
• Tianqi will disassociate any of its directors, executives or employees appointed by third parties,
who assumes a position described above in SQM;
• Tianqi will not request access to Sensitive Information from SQM;
• The directors nominated by Tianqi will not disclose Sensitive Information of SQM;
• The directors nominated by Tianqi will personally bind themselves to the obligations assumed
by Tianqi with the FNE; and
• Tianqi will report to the FNE the appointments and periodic compliance with its obligations.
The restrictions will remain in place for a period of four years and be automatically renewed for two more
years according to the terms of the Extrajudicial Agreement.
During the approval process for the Extrajudicial Agreement before the FNE, the Company expressed its
concerns to the Chilean Antitrust Court regarding the measures contained in the Extrajudicial Agreement
of since (i) it could not effectively resolve the risks that Tianqi and the FNE sought to mitigate, (ii) the
restrictions are not correctly oriented to avoid the access to Sensitive Information that, in the possession
of a competitor, could damage the Company and the proper functioning of the market and (iii) it could
contradict the Chilean Corporations Act (Law No. 18,046 on Corporations). The Extrajudicial Agreement
was approved in October 2018 by the Chilean Antitrust Court. A copy of the Extrajudicial Agreement, in
Spanish,
at
https://s25.q4cdn.com/757756353/files/doc_news/archive/c64b6ddc-7f23-44d9-8d7b-a20eeb3184a4.pdf
http://www.fne.gob.cl/wp-
the
and
content/uploads/2018/09/Acuerdo-Extrajudicial-FNE-Tianqi-con-firma-27.08.18.pdf.
the Company’s website
FNE’s website
been made
available
available
publicly
also
has
on
on
at
is
Pampa Group and Tianqi Shareholders’ Agreement
On April 10, 2019, the Pampa Group and Inversiones TLC SpA, a subsidiary of Tianqi, entered into a
shareholders’ agreement, with respect to certain corporate governance matters. The matters addressed by
the shareholders’ agreement include: (i) the management of the business and affairs of the Company by
81
4) OWNERSHIP AND SHARES
the Board of Directors, (ii) the election of replacement directors in the event of resignation of any of the
directors elected by each party to the Board of Directors as director elected by Series A, (iii) election of
certain directors elected by Tianqi to the Company’s Directors’ Committee, Corporate Governance
Committee and Safety, Health and Environmental Committee, (iv) access for Tianqi’s internal or external
auditors to SQM’s management and internal and external auditors for purposes of fulfilling Tianqi’s
accounting and disclosure obligations with respect to its investment in SQM, (v) support for having a
bilingual (Spanish/English) translator attend all SQM Board and Committee meetings to assist directors
who are not bilingual and (vi) support of the Company’s dividend policy for 2019, as proposed by the
Board of Directors in March 2019 for approval at the 2019 annual ordinary shareholders’ meeting. The
agreement has a term of one year. An English language copy of the agreement is included in an essential
fact (hecho esencial) filing made by Sociedad de Inversiones Pampa Calichera S.A. with the CMF on
April 11, 2019 available on the CMF’s website at www.cmfchile.cl.
On March 26, 2020, the Pampa Group and Inversiones TLC SpA amended the shareholders’ agreement
entered into on April 10, 2019 to (i) extend the term to the earliest of (A) our 2021 annual ordinary
shareholders’ meeting or (B) written notice of termination given by the Pampa Group or Tianqi in the
event that a director nominated by the non-notifying party ceases to serve as a director for any reason and
(ii) to agree to support the Company’s 2020 dividend policy, as proposed by the Board of Directors for
approval at the 2020 annual ordinary shareholders’ meeting. An English language copy of the amendment
is included in an essential fact (hecho esencial) filing made by Sociedad de Inversiones Pampa Calichera
S.A. with the CMF on March 26, 2020 and is available on the CMF’s website at www.cmfchile.cl.
Board Protocol for Presentation and Use of Sensitive Information
Following the acquisition by Tianqi of SQM´s shares from Nutrien Ltd. and Tianqi entering into the
Extrajudicial Agreement with the FNE, the Company’s Board of Directors deemed it necessary to adopt
measures aimed at achieving the purpose of the Extrajudicial Agreement, avoiding greater points of
contact between Sensitive Information and Tianqi, to complement the Extrajudicial Agreement. On
January 23, 2019, the Board of Directors approved a protocol for the presentation and use of Sensitive
Information, which amendment was subsequently approved by the Board on September 30, 2019. The
complete
at
https://s25.q4cdn.com/757756353/files/doc_news/archive/36421175-3a3d-4f36-88ae-
7302953d538d.pdf.
the Company's website
available
protocol
version
the
on
of
is
4) B) OWNERSHIP STRUCTURE AND SHARES: SHARES AND THEIR CHARACTERISTICS
AND RIGHTS
i) DESCRIPTION OF SERIES OF SHARES
Dividends are annually distributed to the Series A and Series B shareholders of record on the fifth business
day prior to the date for payment of the dividends. The By-laws do not specify a time limit after which
dividend entitlement elapses but Chilean regulations establish that after 5 years, unclaimed dividends are
to be donated to the Chilean Fire Department.
Article 5 of the Company’s By-laws establishes that Series B shares may in no case exceed fifty percent
of the issued, outstanding and paid shares of SQM. Series B shares have a restricted right to vote as they
can only elect one Director of the Company, regardless of their capital stock’s share. Series B shares have
the right to call for an Ordinary or Extraordinary Shareholders’ Meeting when the shareholders of at least
5% of the Series B shares request so and to call for an Extraordinary Board of Directors Meeting without
the Chairman’s authorization when it is requested by the Director elected by the shareholders of the Series
B shares. Series A shares have the option to exclude the Director elected by Series B shareholders from
the voting process in which the Chairman of the Board is to be elected, if there is a tie in the first voting
process. The second transitory article and articles 31 and 31 bis of the Company’s By-laws establish that
in General Shareholders’ Meetings each shareholder will have a right to one vote for each share he owns
82
4) OWNERSHIP AND SHARES
or represents and (a) that no shareholder will have the right to vote for himself or on behalf of other
shareholders of the same Series A or Series B shares representing more than 37.5% of the total outstanding
shares with right to vote of each Series and (b) that no shareholder will have the right to vote for himself
or on behalf of other shareholders representing more than 32% of the total outstanding shares with a right
to vote. In calculating a single shareholder’s ownership of Series A or B shares, the shareholder’s stock
and those pertaining to third parties related to them are to be added.
The second transitory article provides as follows:
“Throughout the period running from the date of the extraordinary shareholders’ meeting at which this
transitory article is incorporated, and December 31, 2030, the restriction against voting on behalf of more
than 37.5% of any series of shares in the Company, established in Article 31 hereof, shall be subject to the
following exception, applicable only to the election of board members by means of Series A shares in the
Company: If two or more persons, regardless of whether or not they are related parties to each other (the
incoming shareholders), act prior to December 31, 2030 such as to acquire a sufficient number of Series
A shares to allow them to hold voting powers for the selection of directors of the Company amounting to
more than 37.5% of that series, then any registered shareholder or group of shareholders holding more
than 37.5% of all Series A shares in the Company shall be entitled to vote for the selection of directors of
the Company amounting to whichever is less, between a number of the Series A shares that are held (i) by
existing shareholders as of that date, and (ii) by the incoming shareholders with voting rights. Similarly,
if for any reason a registered shareholder in the Company as of the date hereof who holds more than 37.5%
of Series A shares in the company between the date hereof and December 31, 2030, comes to hold more
voting shares for the selection of directors of the Company than the votes allocated for holding 37.5% of
said Series A shares, either through a joint action agreement with other shareholders, including existing
shareholders, or by any other means, then any other shareholder or group of shareholders in the Company
that is not a related party to the same and holds more than 37.5% of all voting Series A shares in the
Company, including both existing and incoming shareholders, shall be entitled to vote for the selection of
directors of the Company in accordance with whichever number of Series A shares in the Company is the
lesser, between (i) the number held by this shareholder or group of shareholders, and (ii) the existing
shareholder may have the capacity to vote in excess of the restriction amounting to 37.5% of said shares.”
Article 5 bis of the Company’s By-laws establishes that no person may directly or by means of related
third persons concentrate more than 32% of the Company’s total shares with right to vote.
Each Series A share and Series B share is entitled to share equally in the Company’s profits, i.e., they have
the same rights on any dividends declared on the outstanding shares of SQM.
The Company By-laws do not contain any provision relating to (a) redemption provisions (b) sinking
funds or (c) liability to capital calls by the Company.
As established in article 103 of Law No. 18,046, a company subject to the supervision of the SVS may be
liquidated in the following cases:
• Expiration of the duration term, if any, as established in its By-laws;
• All the shares end up in the possession of one individual for more than ten continuous days;
• By agreement of an Extraordinary Shareholders Meeting;
• By abolition, pursuant to applicable laws, of the decree that authorized its existence;
• Any other reason contemplated in its By-laws.
Article 40 of the Company’s By-laws states that in the event of liquidation, the Shareholders’ Meeting
will appoint a three-member receiver committee that will have the authority to carry out the liquidation
process. Any surplus will be distributed equally among the shareholders.
83
The only way to change the rights of the holders of the SQM shares, including holders of our ADSs, is by
modifying its By-laws, which can only be carried out by an Extraordinary Shareholders’ Meeting, as
established in article 28 of the Company By-laws.
4) OWNERSHIP AND SHARES
Total number of shares:
• Series A: 142,819,552
• Series B: 120,376,972
ii) DIVIDEND POLICY
SQM's dividend policy for 2020, reported at the Shareholders' Meeting held on April 23, 2020 and
modified as a result of the approval of the distribution and payment of a special dividend equivalent to
US$0.37994 per share charged to the retained earnings of the Company (the “Special Dividend”) by the
Extraordinary Shareholders' Meeting held on September 29, 2020, included the following:
(a) Distribute and pay to the corresponding shareholders, a percentage of the net income that shall be
determined per the following financial parameters as a final dividend (dividendo definitivo):
(i) 100% of the 2020 net income, when the following financial parameters are met: (a) that the
total current assets, divided by the total current financial liabilities is equal to or greater than
2.5 times, and (b) the sum of the total current liabilities and total non-current liabilities,
excluding both cash and cash equivalents and other current financial assets, divided by the
total equity is equal to or less than 0.8 times.
(ii) 80% of the 2020 net income, when the following financial parameters are met: (a) that the
total current assets, divided by the total sum of the total current financial liabilities is equal to
or greater than 2.0 times, and (b) the total sum of the current liabilities and total non-current
liabilities, excluding both cash and cash equivalents and other current financial assets divided
by the total equity is equal to or less than 0.9 times.
(iii) 60% of the 2020 net income, when the following financial parameters are met: (a) that the
total current assets, divided by the total sum of the total current financial liabilities is equal to
or greater than 1.5 times, and (b) the total sum of the current liabilities and total non-current
liabilities, excluding both cash and cash equivalents and other current financial assets divided
by the total equity is equal to or less than 1.0 times.
(iv) If none of the foregoing financial parameters are met, the Company shall distribute and pay
50% of the 2020 net income in favor of the respective shareholders as a final dividend.
(b) Distribute and pay only one interim dividend during 2020, which will be charged against the
aforementioned final dividend and that will be charged to the retained earnings reflected in the
consolidated financial statements as of March 31, 2020, the percentage distributed shall be
determined per the financial parameters expressed in letter a) above.
It is recorded that on May 19, 2020 the Company's Board of Directors agreed to distribute and
pay an interim dividend equivalent to US$0.17092 per share, charged to the Company's 2020
retained earnings. Said amount was paid in its equivalent in Chilean pesos according to the official
exchange rate on May 29, 2020 (the “Interim Dividend”).
(c) The Board of Directors will not approve the payment of other interim dividends charged against
the 2020 net income.
(d) At the ordinary general shareholders’ meeting that will be held in 2021, the Board of Directors
shall propose a final dividend pursuant to the percentages in financial parameters described in in
letter a) above discounting the Special Dividend and Interim Dividend. If the amount is equal to
84
4) OWNERSHIP AND SHARES
or less than the amount of the sum of the Special Dividend and the Interim Dividend, then no
additional amount will be distributed and the Interim Dividend will be understood to be paid as a
definitive dividend. In any case, the final dividend may not be less than the mandatory minimum
dividend that corresponds in accordance with Chilean law or the Company bylaws.
(e) If there is an excess of net income in 2020, this may be retained and assigned or allocated for
financing its own operations, to one or more investment projects of the Company, notwithstanding
a future distribution of special dividends (dividendos eventuales) charged to the retained earnings
previously approved at the shareholders’ meeting, or the possible and future capitalization of all
or part of the latter.
(f) The payment of additional dividends (dividendos adicionales) is not considered.
On September 29, 2020, the Extraordinary Shareholders' Meeting approved the payment of a special
dividend of US$100 million, equivalent to US$0.37994 per share, charged to the accumulated earnings of
the Company. This amount was paid on October 8, 2020.
iii) (1) STATISTICAL INFORMATION: DIVIDENDS
All series A and series B shares carry equal rights to share in any dividend declared on SQM’s shareholder
capital in circulation. During the past three years, the Company has paid out the following dividends:
Payout Year
US$ Total
(in millions)
US$/Share
2018
2018 (Special)
2018 (Interim)
2018 (Interim)
2018 (Interim)
2019
2019 (Interim)
2019 (Interim)
2019 (Interim)
2020
2020 (Provisorio)
2020 (Eventual)
110.5
100.0
113.8
133.9
83.5
108.6
80.5
70.2
60.5
66.9
45.0
100.0
0.41968
0.37994
0.43247
0.50864
0.31726
0.41274
0.30598
0.26669
0.22987
0.25414
0.17092
0.37994
iii) (2) STATISTICAL INFORMATION: SHARE TRANSACTIONS
SQM’s Series A and Series B shares are traded on the Santiago Stock Exchange and the Santiago
Electronic Stock Exchange. The Company’s Series B shares have been traded as ADSs on the New York
Stock Exchange since September 20, 1993.
Information on SQM’s shares on Chilean stock exchanges:
Average Price
(Ch$/Share)
Number of Shares Traded
2020
I Quarter
II Quarter
SQM-A
20,969.54
19,939.50
18,751.57
SQM-B
24,357.87
21,614.45
19,735.70
SQM-A
SQM-B
845,864
365,108
82,727
98,885,057
25,332,679
25,218,551
85
SQM-A
Amount Traded
(Millions of Ch$)
SQM-B
2,421,473
533,173
501,990
17,222
7,211
1,545
4) OWNERSHIP AND SHARES
III Quarter
IV Quarter
19,679.42
23,178.37
24,273.25
31,824.76
202,792
195,237
20,235,881
28,097,946
3,996
4,470
483,710
902,600
Source: Bloomberg, Composite Exchange
Information on SQM’s shares on the New York Stock Exchange:
Average Price
(US$/ADS)
Number of Shares Traded
Amount Traded
(Millions of US$)
2020
I Quarter
II Quarter
III Quarter
IV Quarter
SQM-B
31.14
26.97
24.04
31.16
42.12
SQM-B
246,579,825
77,223,924
50,922,179
48,206,058
70,227,664
Source: Bloomberg, Composite Exchange
SQM-B
7,710
2,045
1,233
1,491
2,940
5) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT
5) A) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT: DIVERSITY
WITHIN THE BOARD OF DIRECTORS AS OF DECEMBER 31, 2020
i) NUMBER OF PERSONS BY GENDER
Number of female directors
Number of male directors:
Female participation, %
ii) NUMBER OF PERSONS BY NATIONALITY
Number of Chilean directors:
Number of foreign directors:
Foreign directors, %
iii) NUMBER OF PERSONS BY AGE
Number of directors whose age is:
Under 30 years:
30 to 40 years:
41 to 50 years:
51 to 60 years:
61 to 70 years:
Over 70 years:
Average age, years
0
8
0%
6
2
25%
0
1
2
2
1
2
57
iv) NUMBER OF PERSONS BY YEARS OF SERVICE
Number of directors who, as of December 31, 2020, have held the position of director of SQM for:
86
5) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT
Less than 3 years:
Between 3 and 6 years:
More than 6 and less than 9 years:
Between 9 and 12 years:
More than 12 years:
Average tenure, years
3
5
0
0
0
3
5) B) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT: DIVERSITY
WITHIN EXECUTIVE MANAGEMENT AS OF DECEMBER 31, 2020
i) NUMBER OF PERSONS BY GENDER
Number of female executive officers:
Number of male executive officers:
Female participation, %
ii) NUMBER OF PERSONS BY NATIONALITY
Number of Chilean executive officers:
Number of foreign executive officers:
Foreign executive officers, %
iii) NUMBER OF PERSONS BY AGE
Number of executive officers whose age is:
Under 30 years:
30 to 40 years:
41 to 50 years:
51 to 60 years:
61 to 70 years:
Over 70 years:
Average age, years
2
10
17%
10
1
8%
0
4
6
1
1
0
46
iv) NUMBER OF PERSONS BY YEARS OF SERVICE
Number of executive officers who, as of December 31, 2020, have worked at SQM for:
Less than 3 years:
Between 3 and 6 years:
More than 6 and less than 9 years:
Between 9 and 12 years:
More than 12 years:
Average tenure, years
1
3
0
1
7
15
5) C) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT: DIVERSITY
WITHIN THE ORGANIZATION AS OF DECEMBER 31, 2020
i) NUMBER OF PERSONS BY GENDER
Total number of female employees:
Total number of male employees:
934
4,573
87
5) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT
ii) NUMBER OF PERSONS BY NATIONALITY
Total number of Chilean employees:
Total number of foreign employees:
5,079
428
iii) NUMBER OF PERSONS BY AGE
Total number of employees whose age is:
Under 30 years:
30 to 40 years:
41 to 50 years:
51 to 60 years:
61 to 70 years:
Over 70 years:
803
2,179
1,439
861
220
5
iv) NUMBER OF PERSONS BY YEARS OF SERVICE
Total number of employees who, as of December 31, 2020, have worked at SQM for:
Less than 3 years:
Between 3 and 6 years:
More than 6 and less than 9 years:
Between 9 and 12 years:
More than 12 years:
1,607
1,970
393
724
813
88
5) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT
5) D) SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT: SALARY GAP BY
GENDER
Proportion of the average gross base salary represented by female employees compared to male
employees, disclosed according to the type of position:
89
Position Type
Administrative
Senior Manager
Chief Executive Officer
Operations Manager
Manager
Head of Department
Operator
Profesional
Senior Profesional
Deputy Senior Manager
Supervisor
Technical Operator
Vicepresident
6) MANAGEMENT AND PERSONNEL
Hay Methodology
Group Level (1)
Female
Employees (%)
12
103%
13 (2)
18 (3)
19
109%
26 (3)
19 (3)
20 (3)
13
14
15
16
15
16
11
12
13
12 (2)
13
14
15
16 (3)
14
15
16
16
17
18
19 (3)
13
12
13
20 (3)
21
22 (3)
23 (3)
95%
106%
102%
101%
92%
107%
95%
92%
111%
100%
92%
120%
94%
96%
132%
101%
80%
103%
91%
104%
96%
79%
(1) The Hay Methodology is a system that is used at companies around the world in order to evaluate positions in such
a way that they can be compared among companies of different sizes and industries. Group levels are determined on
the basis of multiple variables, including company size and the level of responsibility assigned to the position (defined
primarily as a function of knowledge, autonomy and responsibility for results).
90
6) MANAGEMENT AND PERSONNEL
(2) All employees at this position/group level are women.
(3) All employees at this position/group level are men.
6) MANAGEMENT AND PERSONNEL
6) A) MANAGEMENT AND PERSONNEL: ORGANIZATIONAL CHART
Organizational Chart
g
(1) On February 1, 2021, Raul Puerto left the Company.
(2) On March 23, 2020, Rodrigo Vera became VP of Mining Operations.
91
6) MANAGEMENT AND PERSONNEL
6) B) MANAGEMENT AND PERSONNEL: INFORMATION ABOUT THE BOARD OF
DIRECTORS
i) GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS
SQM’s Board of Directors comprises 8 members, none of which are alternate directors. The entire Board of
Directors is regularly elected every three years at our ordinary shareholders’ meeting. The Board of Directors
may appoint replacements to fill any vacancies that occur during periods between elections. If a vacancy
occurs, the entire Board must be elected or re-elected at the next regularly scheduled meeting of shareholders.
The last election of the Board of Directors took place at the ordinary shareholders’ meeting held on April 25,
2019.
ii) IDENTIFICATION OF THE BOARD MEMBERS
Directors as of December 31, 2020:
Name
Title
Profession
Chilean
Taxpayer ID
Date of
Original
Election
Alberto Salas Muñoz
Chairman.
Independent
Civil Engineer
6.616.233-0
Apr. 2018
Date of
Last
Reelection
Apr. 2019
Board
Tenure
3 years
Economist
Director
Patricio Contesse Fica Vice Chairman Lawyer
Georges de
Bourguignon Arndt
Hernán Büchi Buc
Laurence Golborne
Riveros
Gonzalo Guerrero
Yamamoto
Francisco Ugarte
Larrain
Robert J. Zatta
Director
Independent
Director
Director
Director
Director
Lawyer
Civil Engineer
Industrial Civil
Engineer
Lawyer
Business
Administration
15.315.085-0
7.269.147-4
Apr. 2018
Apr. 2019
Apr. 2019
N/A
3 years
2 years
5.718.666-6
8.170.562-3
Apr. 2017
Apr. 2018
Apr. 2019
Apr. 2018
4 years
3 years
10.581.580-8
Apr. 2016
Apr. 2017
5 years
10.325.736-0
Apr. 2019
N/A
2 years
48.211.511-K
Apr. 2019
N/A
2 years
Average board tenure: 3 years. Percentage of independent directors: 25%. Percentage of non-executive
directors: 100%.
Directors not on the Board as of December 31, 2020 but who were on the Board within the last two years:
Name
Title
Profession
Chilean
Taxpayer ID
Arnfinn F. Prugger
Director Geoscientist
48.187.981-7
Date of
Original
Election
Apr. 2015
Date of
Last
Reelection
Apr. 2018
Date Left
Board
Apr. 2019
92
6) MANAGEMENT AND PERSONNEL
iii) REMUNERATIONS OF THE DIRECTORS
Summary of remunerations paid to members of the Board of Directors between January and December 2020 (in Ch$):
Board of Directors
SQM S.A.
Directors’ Committee
SQM S.A.
Corporate
Governance
Committee
SQM S.A.
Safety, Health
and
Environment
Committee
SQM S.A.
Total
Directors
Fixed
Variable
Fixed
Variable
Fixed
Fixed
Alberto Salas Muñoz
298,245,488
285,849,934
74,561,372
47,641,656
706,298,450
Patricio Contesse Fica
260,964,802
285,849,934
37,280,686
37,280,686
621,376,108
Georges de Bourguignon Arndt
206,698,152
142,924,967
68,899,384
47,641,656
Hernán Büchi Buc
223,684,116
142,924,967
37,280,686
Laurence Golborne Riveros
223,684,116
142,924,967
74,561,372
47,641,656
466,164,159
403,889,769
488,812,111
Gonzalo Guerrero Yamamoto
206,698,152
142,924,967
34,449,692
384,072,811
Francisco Ugarte Larrain
206,698,152
142,924,967
34,449,692
384,072,811
Robert J. Zatta
TOTAL
206,241,918
142,924,967
34,373,653
383,540,538
1,832,914,896
1,429,249,670
218,022,128 142,924,968
109,011,064
106,104,031
3,838,226,757
93
6) MANAGEMENT AND PERSONNEL
Summary of remunerations paid to members of the Board of Directors between January and December 2019 (in Ch$):
Board of Directors
SQM S.A.
Directors’ Committee
SQM S.A.
Corporate
Governance
Committee
SQM S.A.
Safety, Health
and
Environment
Committee
SQM S.A.
Total
Directors
Fixed
Variable
Fixed
Variable
Fixed
Fixed
Alberto Salas Muñoz
211,917,584
355,116,983
54,772,055
59,186,164
680,992,786
Patricio Contesse Fica
185,427,887
355,116,983
19,594,856
26,489,699
586,629,425
Georges de Bourguignon Arndt
134,555,100
44,851,700
Hernán Büchi Buc
165,833,031
177,558,483
15,582,343
59,186,161
26,489,699
Mark Fracchia
9,648,027
92,911,790
1,378,290
Laurence Golborne Riveros
165,833,031
177,558,491
54,772,054
59,186,164
179,406,800
444,649,717
103,938,107
457,349,740
Gonzalo Guerrero Yamamoto
182,818,995
177,558,491
Arnfinn F. Prugger
48,263,895
177,558,483
Darryl Stann
9,648,027
92,911,790
Francisco Ugarte Larrain
Robert J. Zatta
TOTAL
134,555,100
117,569,136
29,320,693
389,698,179
6,894,843
232,717,221
1,378,290
22,425,850
103,938,107
156,980,950
19,594,856
137,163,992
1,366,069,813 1,606,291,494 169,978,152 177,558,489
71,266,985
82,300,091
3,473,465,024
94
6) MANAGEMENT AND PERSONNEL
iv) ADVISORY SERVICES CONTRACTED BY THE BOARD OF DIRECTORS
During 2020, the Board of Directors contracted the following advisory services:
Entity
PriceWaterhouseCoopers
Others
TOTAL
Type of Service
Financial statement audit
Legal and other
Amount (US$)
US$1.34 million
US$0.10 million
US$1.44 million
v) BOARD OF DIRECTORS TRAINING
During 2020, the Board of Directors received annual training on the U.S. Foreign Corrupt Practices Act
(“FCPA”).
v) BOARD OF DIRECTORS ATTENDANCE
As discussed in article 15 of the Company’s By-laws, the Board will meet or be in session at least once a
month. Directors are expected to attend Board meetings in person or via telephone or video conference, in
which proper means are in place. Members of the Board and the Committees, upon which they serve, are
expected to attend meetings fully prepared and to remain in attendance for the duration of the meeting. Board
meeting attendance will be disclosed annually in the Board Report Card, which is published on the Company
website.
According to article 13 of the Company By-laws, a Director who does not attend 3 consecutive meetings due
to reasons not considered reasonable by the Board, will as a matter of fact stop performing his or her
functions, and must be replaced without delay and formalities. In this case, and in the event of conflict of
duties, resignation, dismissal, death, bankruptcy, or any other inability disabling a Director to perform his
duties, the Board will proceed to appoint the replacement Director(s) pursuant to the Law who will stay in
office and perform his or her duties until the next shareholder’s meeting to be held by the Company and at
which all Directors are to be re-elected.
During 2020, the Company's Board of Directors met 16 times through 13 ordinary meetings and three
extraordinary meetings. No director attended less than 85% of the total ordinary board meetings. Average
Board attendance was 96%.
6) C) MANAGEMENT AND PERSONNEL: INFORMATION ABOUT THE DIRECTORS’
COMMITTEE
i) DIRECTORS’ COMMITTEE FORMED IN ACCORDANCE WITH ARTICLE 50 PART TWO
OF LAW NO, 18,046
As of December 31, 2020, the Company had a Directors’ Committee to carry out the functions established
under Article 50, part two, of Law No. 18,046.
ii) IDENTIFICATION OF MEMBERS OF THE DIRECTORS’ COMMITTEE
As of December 31, 2020, the Company’s Directors’ Committee was comprised of three Directors: Georges
de Bourguignon A., Laurence Golborne R. and Alberto Salas M. Under the regulations in force as of
December 31, 2020, Messrs. Golborne and Salas held and continue to hold the position of Independent
Director. Mr. Salas held and continues to hold the position of Chairman of the Directors’ Committee.
95
6) MANAGEMENT AND PERSONNEL
The members of this Directors’ Committee were elected on April 25, 2019. On that date, the elected director
Georges de Bourguignon A. became a new member of the Directors´ Committee, replacing Hernan Büchi B.
The Directors’ Committee had previously remained unchanged since April 27, 2018.
iii) REMUNERATIONS OF THE DIRECTORS’ COMMITTEE
On April 23, 2020, it was agreed at the SQM Ordinary Shareholders’ Meeting that each Director sitting on
the Directors’ Committee would receive monthly remunerations of 200 UF, and annual remunerations
equivalent to 0,015% of the Company’s liquid net earnings for the 2020 financial year. This compensation
package is fixed regardless of the number of sessions held by the Committee during the period and separate
to the remunerations received by the members in their capacity as members of the Company’s Board of
Directors.
For further information about remunerations paid to the members of the Directors’ Committee during 2020
and 2019, see section 5) B) iii) Remunerations of the Directors.
iv) ACTIVITIES OF THE DIRECTORS’ COMMITTEE
During 2020, the Directors’ Committee of SQM (the “Committee”) analyzed (i) the Company’s Unaudited
Financial Statements and Reports; (ii) the Company’s Audited Financial Statements and Reports; (iii) the
Reports and proposals of external auditors, accounts inspectors and independent risk rating agencies for the
Company; (iv) the proposal to SQM’s Board of Directors about the external auditors and independent rating
agencies that the Board could recommend to the respective shareholders’ meeting for their subsequent
appointment; (v) the tax and other services, other than audit services, provided by the Company’s external
auditors and its subsidiaries in Chile and abroad; (vi) the remuneration and compensation plans for the
Company’s main executives; (vii) the Company's risk matrix; (viii) the activity related to the Company's
compliance program; (ix) the report on internal control of the Company and (x) the various matters referred
to in the Chapter titled “Directors’ Committee” included in SQM’s Financial Statements at December 31,
2020.
Regarding the above, the Committee:
(a)
(b)
(c)
Examined the information regarding the financial statements of SQM for the 2020 fiscal year and
the report issued thereon by the external auditors of SQM, Similarly, it also examined the Company’s
Interim Consolidated Financial Statements for the 2020 fiscal year.
Proposed to the Company’s Board of Directors the names of the External Auditors and the
Independent Credit Rating Agencies for SQM and the Company’s Board of Directors, in turn,
suggested their appointment to the respective Annual Ordinary Shareholders Meeting of SQM. The
Company’s Board of Directors approved said suggestions and the Shareholders’ Meeting also
ratified them.
Examined and approved the remuneration system and the compensation plans for the Company’s
employees and senior executives.
The Committee also (i) authorized the contracting by the Company of various consulting services with PwC
on non-audit related matters, (ii) reviewed the expenses of the Company's CEO, (iii) reviewed the reports
from the Company’s internal audit and risk and compliance areas; and (iv) examine the information presented
by the External Auditors in connection with critical audit mattes, this is audit matters that involves especially
challenging, subjective, or complex auditor judgments, that are required to be communicated to the
Committee.
The Committee issued the Annual Management Report referred to in Law No. 18,046.
96
6) MANAGEMENT AND PERSONNEL
During 2020, the Company did not enter into related party transactions which require to follow the
requirements and procedures established in title XVI of the Corporations Law, therefore the Committee was
not required to examine information regarding related party transactions, but did review a potential
transaction that was not entered into by the Company.
On April 23, 2020, the Annual General Shareholders’ Meeting of SQM approved an operational budget for
the Committee; the operational budget is equivalent to the sum of the annual remunerations of the members
of the Committee and US$250,000. The activities carried out by the Committee, as well as the expenses
incurred by it, are disclosed at the General Shareholders Meeting.
Article 50 bis of the Chilean Corporations Act states that the Committee should consist of three Directors, of
which at least one member should preferably be independent from the controller (i.e., any person or entity
who “controls” the company for Chilean law purposes), if any, and that their functions be remunerated.
v) ADVISORY SERVICES CONTRACTED BY THE DIRECTORS’ COMMITTEE
During 2020, the Committee incurred expenses of approximately US$441,000 related to the advisory services
of Internal Audit and SOX Audit.
97
6) MANAGEMENT AND PERSONNEL
6) D) MANAGEMENT AND PERSONNEL: MAIN EXECUTIVES
i) IDENTIFICATION OF EXECUTIVE OFFICERS
As of December 31, 2020, the following executives served on the Company’s executive management team:
Name
Position
Profession
Ricardo Ramos R.
Chief Executive Officer
Gerardo Illanes G.
Gonzalo Aguirre T.
Pablo Altimiras C.
Jose Miguel Berguño C.
Frank Biot
Carlos Díaz O.
Ignacia López B.
Natalia Pizarro G.
Raúl Puerto M.
Vice President of Corporate
Finance and Chief Financial
Officer
General Counsel
Vice President of Lithium and
Iodine Business
Vice President of Operations,
Nitrates and Iodine
Vice President of Nitrates and
Potassium Business
Vice President of Operations,
Potassium and Lithium
Public Affairs Manager
Vice President of People and
Performance
Internal Audit Manager
Francisco Sanchez V.
Rodrigo Vera D.
Risk Management and
Compliance Officer
Vice President of Mining
Operations
Chilean
Taxpayer ID
8.037.690-1
In Position
Since
Jan. 2019
13.904.120-8
Oct. 2018
Industrial Civil
Engineer
Industrial Civil
Engineer
Lawyer
13.441.419-7
Sep. 2016
Industrial Civil
Engineer
Industrial Civil
Engineer
Economist
Industrial Civil
Engineer
Journalist
Civil Engineer
Industrial
Engineer
Industrial Civil
Engineer
Industrial Civil
Engineer
13.657.862-6
Oct. 2018
10.903.992-6
Mar.2019
N/A
Oct. 2018
10.476.287-5
Mar. 2019
10.777.962-0
14.167.897-3
Oct. 2019
Abr. 2019
14.757.436-K
Jan. 2016
15.381.281-0
Apr. 2019
9.120.446-0
Apr.2020
ii) REMUNERATIONS OF MAIN EXECUTIVES
Remunerations for the main executives for 2020 and 2019 were as follows:
Year
Number of
Executives (1)
2020
2019
126
124
Fixed Salary
(Millions of Ch$)
13,694
13,422
Variable Salary
(Millions of Ch$)
3,036
3,916
Total Salary
(Millions of Ch$)
16,730
17,338
(1) Considers the average number of executives during the period.
iii) COMPENSATION PLANS
Executive incentive plans: the organization’s goal is to create value for its interest groups, and to this end
SQM S.A. has developed a variable incentives system that recognizes people’s commitment to the
organization and its operating results.
Directors: the only remunerations assigned to the Board of Directors are disclosed in section 5) B) iii)
Remunerations of the Directors. The Company has not implemented any incentive plans for its Directors.
SQM Executive Officers: the Company provides executives with an annual and a long-term bonus plan. Their
incentives are based on target achievement, individual contribution to the Company’s operating results, and
98
6) MANAGEMENT AND PERSONNEL
the Company’s performance. These incentives are structured in a minimum and maximum gross
remuneration and are paid once a year. SQM also operates a compensation plan designed to retain its
executives by providing bonuses linked to the to the Company’s performance through the SQM Series B
share price (Santiago Stock Exchange). A total of 29 Company executives are entitled to this compensation
plan, as long as they remain a part of the Company until a given date. This includes a 2020 bonus equivalent
to 177,905 shares, which is effective for those people still with the Company through the end of 2020, and a
2021 bonus for US$8.5 million, which will go into effect in equal parts for those who remain with the
Company at the end of each of the four quarters in 2021. The payment dates, where relevant, will be during
the quarter following the quarter when the benefit is made effective.
6) E) MANAGEMENT AND PERSONNEL: NUMBER OF EMPLOYEES
As of December 31, 2020, SQM and its subsidiaries had 5,507 employees, detailed as follows:
Employee Type
Executives
Professionals
Technicians and operators
Foreigners
Total
Parent
Subsidiaries
Total
30
94
267
17
408
85
1,156
3,310
548
5.099
115
1,250
3,577
565
5.507
99
6) MANAGEMENT AND PERSONNEL
6) F) MANAGEMENT AND PERSONNEL: SHARE OWNERSHIP OF EXECUTIVE OFFICERS
AND BOARD MEMBERS
We have been informed that the following Directors own shares of SQM as of December 31, 2020:
Name
Position
Alberto Salas Muñoz
Patricio Contesse Fica
Georges de Bourguingnon Arndt
Hernán Büchi Buc
Laurence Golborne Riveros
Gonzalo Guerrero Yamamoto
Francisco Ugarte Larrain
Robert J. Zatta
Chairman. Independent
Vice Chairman
Director
Director
Independent Director
Director
Director
Director
Percentage of Shares in
SQM
0%
0%
<1%
0%
0%
<1%
0%
0%
We have been informed that the following executive officers own shares of SQM as of December 31, 2020:
Name
Ricardo Ramos R.
Gerardo Illanes G.
Gonzalo Aguirre T.
Pablo Altimiras C.
Jose Miguel Berguño C.
Frank Biot
Carlos Díaz O.
Ignacia Lopez B.
Natalia Pizarró G.
Raúl Puerto M.
Francisco Sanchez V.
Position
Percentage of Shares in
SQM
Chief Executive Officer
Vice President of Corporate
Finance and Chief Financial Officer
General Counsel
Vice President of Lithium and
Iodine Business
Vice President of Operations,
Nitrates and Iodine
Vice President of Nitrates and
Potassium Business
Vice President of Operations,
Potassium and Lithium
Public Affairs Manager
Vice President of Human Resources
and Performance
Internal Audit Manager
Risk Management and Compliance
Officer
0%
<1%
0%
0%
<1%
0%
0%
0%
0%
0%
0%
100
7) INFORMATION ABOUT SUBSIDIARIES AND ASSOCIATES
7) A) INFORMATION ABOUT SUBSIDIARIES AND ASSOCIATES: SUBSIDIARIES AND ASSOCIATES
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Subsidiaries in Chile
Name of
Company
Type of
Company
Capital
Ownership
AGRORAMA S.A.
Corporation
US$140,660
AJAY-SQM CHILE
S.A.
Corporation
US$5,313,794
ALMACENES Y
DEPOSITOS
LTDA.
Limited
liability
corporation
US$1,092,724
COMERCIAL
AGRORAMA
LTDA
Limited
liability
corporation
US$1,125,280
COMERCIAL
HYDRO S.A.
Corporation
US$4,818,186
EXPLORACIONES
MINERAS S.A.
Corporation
US$30.100.000
99.999%
SQMC S.A.
0.001% SQM
Industrial S.A.
51% SQM S.A.
49% Otros no
relacionados
99% SQM
Potasio
S.A.
1% SQM S.A.
70% SQMC
S.A.
30% Otros no
relacionados
99.9999%
SQMC S.A.
0.0001%
Agrorama S.A.
0.269103%
SQM S.A.
99.730897%
SQM Potasio
S.A.
* Director, Gerente General o Ejecutivo Principal de SQM S.A.
Investment as
% of SQM
S.A.’s
individual
assets
0.00131%
0.32995%
Corporate Purpose Board of Directors
CEO / Legal
Representative
Relations /
Contracts with
parent company
Sales and distribution
of fertilizers,
pesticides and
agricultural inputs
Iodine derivatives
production, sales and
marketing
Rodrigo Millán Riffo
Rodrigo Real Ibaceta
Enrique Olivares Carlini
Rodrigo Real Ibaceta Distribución
Pablo Altimiras C.*
Andres Fontannaz
Alec Poitevint
Matt Webb
None
Carlos Grez
Ricardo Ramos R.*
Production and
distribution /
Commercial
agreement
Support
0.00735%
General deposit
activities
0.02773%
Sales and distribution
of fertilizers,
pesticides and
agricultural inputs
Rodrigo Real Ibaceta
Rodrigo Millán R.
Enrique Olivares C.
Tullio Callegari P.
Rodrigo Real Ibaceta Distribution
0.11622%
Import and marketing
of fertilizers
Carlos Ríos M.
Roberto Campusano B.
Rodrigo Real Ibaceta
Rodrigo Real Ibaceta
Support
0.93163%
Explotation of other
mines and quarries
José Miguel Berguño C.*
Ricardo Ramos R.*
Gerardo Illanes G. *
Ricardo Ramos R.*
Support
101
Name of
Company
Type of
Company
Capital
Ownership
INSTITUCION DE
SALUD
PREVISIONAL
NORTE GRANDE
LTDA.
ORCOMA
ESTUDIOS SPA
Limited
liability
corporation
Joint stock
company
US$70,330
99% SQM
Industrial S.A.
1% SQM S.A.
US$4,631,507
100% SQM S.A.
0.10938%
ORCOMA SPA
Joint stock
company
US$2,357,731
100% SQM S.A.
0.05677%
SERVICIOS
INTEGRALES DE
TRANSITOS Y
TRANSFERENCIAS
S.A.
SOCIEDAD
PRESTADORA DE
SERVICIOS DE
SALUD CRUZ DEL
NORTE S.A.
SOQUIMICH
COMERCIAL S.A.
Corporation
US$9,873,573
Corporation
US$70,330
Open Srock
Corporation
US$61,745,898
99.99966% SQM
Industrial S.A.
0.00034% SQM
S.A.
99% SQM
Industrial S.A.
1% SQM Potasio
S.A.
60.6383212% SQM
Industrial S.A.
0.0000004% SQM
S.A.
39.3616784% Otros
no relacionados
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Corporate
Purpose
Board of Directors
CEO / Legal
Representative
Relations /
Contracts with
parent
company
Investment
as % of SQM
S.A.’s
individual
assets
0.03958%
Not applicable
Humberto Riquelme
Support
José Miguel Berguño B.*
Pablo Altimiras C.*
Gerardo Illanes G.*
Carlos Diaz O. *
Rodrigo Vera D.*
Not applicable /
None
None
Ricardo Ramos R.*
José Miguel
Berguño C.*
Not applicable /
None
Ricardo Ramos R.*
Distribution
Sergio Figueroa
Rodríguez
Support
Rodrigo Real
Ibaceta
Distribution /
Supply
José Miguel Berguño B.*
Ricardo Ramos R.*
Pablo Altimiras C.*
Gerardo Illanes G.*
Carlos Diaz O. *
Mauricio Guerra Oliveros
Sergio Figueroa Rodriguez
Raquel Ahumada Cabrera
Bogdan Borkowski S.
Carlos Díaz O.*
Alfredo Doberti D.
Francisco Javier Fontaine S.
Gerardo Illanes G.*
Christian Lüders M.
Eugenio Ponce L.
Administration of
health matters for
SQM S.A.
Exploration,
measurement,
prospection and
research of mineral
deposits for
extraction, production
and mineral
processing
Exploration,
measurement,
prospection, research,
development and
operation of mineral
deposits for
extraction, production
and processing
Transport and storage
of merchandise
2.19170%
0.00204%
Provision of health-
related services
2.18640%
Production and
marketing of
fertilizers
102
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Corporate
Purpose
Board of Directors
CEO / Legal
Representative
Relations /
Contracts
with parent
company
Name of
Company
Type of
Company
Capital
Ownership
SQM INDUSTRIAL
S.A.
Corporation
US$715,066,287
99.047043% SQM
S.A.
0.952957% SQM
Potasio S.A.
Investment
as % of
SQM S.A.’s
individual
assets
39.05785%
SQM MAG SPA
Joint stock
company
US$10,000
100% SQM
Potasio S.A.
0.04822%
Operation of
extraction plants,
holdings and
transfer of mineral
substances and raw
materials
Mining exploration
and exploitation
José Miguel Berguño
C.*
Carlos Diaz O.*
Ricardo Ramos R.*
None
SQM NITRATOS
S.A.
Corporation
US$30,349,981
SQM POTASIO S.A. Corporation
US$257,010,492
99.99999782%
SQM S.A.
0.00000218%
SQM Potasio S.A.
99.999999% SQM
S.A.
0.000001% Otros
no relacionados
26.97320%
12.91972%
Production and sale
of fertilizers
SQM SALAR S.A.
Corporation
US$38,000,000
81.82% SQM
Potasio S.A.
18.18% SQM S.A.
45.32301%
Pablo Altimiras C.*
José Miguel Berguño
C.*
Carlos Diaz O.*
Gerardo Illanes G.*
Ricardo Ramos R.*
Pablo Altimiras C.*
José Miguel Berguño
C.*
Carlos Diaz O.*
Gerardo Illanes G.*
Ricardo Ramos R.*
Patricio Contesse F.*
Laurence Golborne R.*
Gonzalo Guerrero Y.*
Alberto Salas M.*
Ricardo Ramos R.*
None
Extraction of
minerals for
fertilizer and
chemical production
Exploitation and
marketing of
potassium, lithium
and other products
SOCIEDAD
CONTRACTUAL
MINERA BÚFALO
Sociedad
Contractual
Minera
US$22,949
99.9% SQM S.A.
0.1% SQM Potasio
S.A.
0.00894%
Export recognize
prosper investigate
and explore deposits
103
Ricardo Ramos R.*
Production
Ricardo Ramos R.*
José Miguel
Berguño C.*
Carlos Díaz O.*
Gerardo Illanes G.*
Pablo Altimiras C.*
Gonzalo Aguirre T.*
Actuando dos
cualquiera de ellos
en forma conjunta
Ricardo Ramos R.*
Production
Production
Ricardo Ramos R.*
Production
Ricardo Ramos R.*
Production
Ricardo Ramos R.*
Production
Filiales Internacionales
Name of
Company
Type of
Company
Capital
Ownership
ADMINISTRACION
Y SERVICIOS
SANTIAGO S.A. DE
C.V.
Variable
capital
corporation
US$6,612
99.998% SQM
Industrial S.A.
0.002% SQM North
America Corporation
Investment
as % of
SQM S.A.’s
individual
assets
0.00641%
Services
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Corporate
Purpose
Board of Directors
CEO / Legal
Representative
Relations /
Contracts
with parent
company
Christian Lüders M.
Ricardo Ramos R.*
Frank Biot*
Gerardo Illanes G.*
Gonzalo Aguirre T.*
Alvaro Fernandez G.
Patricio de Solminihac T.
Domingo Aguirre F.
Christian Lüders M.
Matías Murillo G.
Andrés Yaksic B.
None
Christian Lüders M.
Support
Christian Lüders M.
Support
Martim de Almeida
Sampaio
Support
Pablo Altimiras C.*
Gerardo Illanes G.*
Pablo Hernandez
Support
Corporation
US$1,000
Limited
liability
corporation
US$774,294
100% SQM
Investment
Corporation N.V.
29.18% SQM
Industrial S.A.
70.82% SQM Brasil
Ltda.
0.00619%
Marketing, importing
and exporting
0.00308%
Marketing advisory
services,
representation of
other foreign and
local companies,
administrative
support in general
Investment company
Corporation
US$338,124
100% SQM North
America Corporation
0.00721%
COMERCIAL
CAIMÁN
INTERNACIONAL
S.A.
NITRATOS
NATURAIS DO
CHILE SERVICIOS
LTDA.
NORTH
AMERICAN
TRADING
COMPANY
ROYAL SEED
TRADING A.V.V.
RS AGRO
CHEMICAL
TRADING CORP.
A.V.V.
Limited
liability
corporation
Limited
liability
corporation
US$6,000
US$6,000
1.67% SQM S.A.
98.33% SQM Potasio
S.A.
0.00050%
98.3333% SQM S.A.
1.6667% SQM Potasio
S.A.
0.12357%
Investment and
marketing of
moveable property
and real estate
Investment and
marketing of
moveable property
and real estate
IMC International
Management & Trust
Company N.V.
IMC International
Management & Trust
Company N.V.
Support
Support
IMC International
Management &
Trust Company
N.V.
IMC International
Management &
Trust Company
N.V.
104
Name of
Company
Type of
Company
Capital
Ownership
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Corporate
Purpose
Board of Directors
CEO / Legal
Representative
Relations /
Contracts
with parent
company
Investment
as % of
SQM S.A.’s
individual
assets
4.26682%
1.16230%
SOQUIMICH
EUROPEAN
HOLDINGS B.V.
SQM AFRICA PTY
LTD
SQM AUSTRALIA
PTY LTD
SQM (BEIJING)
COMMERCIAL CO.
LTDA.
SQM BRASIL
LTDA.
Limited
liability
corporation
Limited
liability
corporation
Limited
liability
corporation
Limited
liability
corporation
Limited
liability
corporation
US$49,265,296
US$70,699
25.23% SQM
Corporation N.V.
74.77% SQM
Investment
Corporation N.V.
100% Soquimich
European Holdings
B.V.
US$155,585,000
100% SQM Potasio
S.A.
3.64118%
Investment company
Marketing of
specialty plant
nutrients and
industrial products
Mining – Specifically
lithium
Kris Van den Bruel
Patrick Vanbeneden
Paul van Duuren
Dennis Beets
Frank Biot*
Patrick Vanbeneden
Emmanuel de Marez
Jay Leary
Pablo Altimiras C.*
Gonzalo Aguirre T.*
US$1,600,000
100% SQM Industrial
S.A.
0.29045%
Commission agent
and marketing of
chemical products
Patricio de Solminihac T.*
Frank Biot*
Ricardo Ramos R.*
US$2,890,000
99.29% SQM
Industrial
0.71% SQM S.A.
0.00524%
None
Investment
Ettienne Strydom
Distribution
Jay Leary
Victor Larrondo G.
Martim de
Almeida Sampaio
Investment and
exploration
activities
Distribution /
Commercial
agency
agreement
Support
None
Marketing advisory
services,
representation of
other foreign and
domestic companies,
administrative
support in general
Manufacturing,
import, sales and
export of fertilizers
Christian Luders
M.
Matias Murillo G.
Support
Christian Luders M.
Matias Murillo G.
Patricio de Solminihac T.
Gonzalo Aguirre T.*
Gerardo Illanes G.*
Frank Biot*
Sebastian Sanchez
SQM COLOMBIA
LTDA.
Join stock
company
US$1,291,915
100% SQM Industrial
S.A.
0.28279%
105
Name of
Company
Type of
Company
Capital
Ownership
SQM COMERCIAL
DE MEXICO S.A.
de C.V.
Variable
capital
corporation
US$22,044,533
SQM
CORPORATION
N.V.
SQM ECUADOR
S.A.
Corporation
US$12,939,718
Corporation
US$416,900
SQM EUROPE N.V. Corporation
US$18,656,745
99.94% SQM
Industrial S.A.
0.05% SQM Potasio
S.A.
0,01% SQM S.A.
99.9998% SQM
Industrial S.A.
0.0002% SQM S.A.
99.996% SQM
Industrial S.A.
0.004% SQM S.A.
99.42% Soquimich
European Holdings
B.V.
0.58% SQM S.A.
Investment
as % of
SQM S.A.’s
individual
assets
2.76566%
1.53535%
0.65699%
11.03132%
SQM FRANCE S.A.
Corporation
US$204,061
SQM HOLLAND
B.V.
Corporation
US$17,319,735
100% Soquimich
European Holdings NV
100% Soquimich
European Holdings NV
0.00842%
0.47975%
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Corporate
Purpose
Board of Directors
CEO / Legal
Representative
Relations /
Contracts
with parent
company
Christian Luders M. Distribution
Import, export and
marketing of
fertilizers
Christian Lüders M.
Ricardo Ramos R.*
Frank Biot*
Gerardo Illanes G.*
Gonzalo Aguirre T.*
Alvaro Fernandez G.
Patricio de Solminihac T.
Domingo Aguirre F.
Investment in
moveable goods
and real estate
Wholesale fertilizer
sales
Distribution and
marketing of
specialty plant
nutrients and
industrial products
in Europe,
Northern Africa
and the Middle and
Far East
Distribution
Plant for the
production and
distribution of
specialty plant
nutrients soluble in
water
TMF Group
TMF Group
Support
None
Christian Luders M. Distribution
Ricardo Ramos R.*
Gonzalo Aguirre T.*
Pablo Altimiras C.*
Gerardo Illanes G.*
Frank Biot*
Support and
distribution
None
Oliver Lecaplain
Support
Erik Borghijs
Patrick Vanbeneden
Kris Van den Bruel
Marc Goetschalckx
None
Production and
distribution
106
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Corporate
Purpose
Board of Directors
CEO / Legal
Representative
Relations /
Contracts
with parent
company
Distribution
Distribution and
marketing of
specialty plant
nutrients and
technical products
in Spain
Import trading and
distribution
services
Distribution and
sales of specialty
plant nutrients and
industrial products
in Europe, North
Africa and the
Middle and Far
East
Investment and
marketing of
moveable goods
and real estate
Marketing of
products in
Asia/Oceania and
marketing
assistance
Frank Biot*
Erik Borghys
Gerardo Illanes G.*
José Andrés
Cayuela
Enrique Torras
Erik Lütken R.
Frank Biot*
Patrick Vanbeneden
Rudy Ismanto
Ricardo Ramos R.*
Gonzalo Aguirre T.*
Pablo Altimiras C.*
Gerardo Illanes G.*
Not applicable
Not aplicable
Frank Biot*
Support and
distirbution
TMF Group
TMF Group
Support
Pablo Altimiras C.*
Gerardo Illanes
Andrés Stocker
Andrés Stocker
Distribution
and marketing /
Commercial
agency
agreement
Name of
Company
Type of
Company
Capital
Ownership
SQM IBERIAN S.A. Corporation
US$9,933,128
100% Soquimich
European Holdings NV
Investment
as % of
SQM S.A.’s
individual
assets
1.05098%
SQM INDONESIA
S.A.
Corporation
US$31,448
SQM
INTERNATIONAL
N.V.
Corporation
US$3,079,827
SQM
INVESTMENT
CORPORATION
N.V.
SQM JAPAN CO.
LTD.
Corporation
US$50,000
Limited
liability
corporation
US$87,413
0.00006%
0.78915%
3.52271%
0.60802%
80% Soquimich
European Holding
B.V.
20% Interés
Minoritario
99.42% Soquimich
European Holdings
B.V.
0.58% SQM S.A.
99.00% SQM Potasio
S.A.
1.00% SQM S.A.
15.8147% SQM
Potasio S.A.
84.0256% Soquimich
European Holdings
B.V.
0.1597% SQM S.A.
107
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Investment
as % of
SQM S.A.’s
individual
assets
0.01700%
0.37752%
Corporate
Purpose
Board of Directors
CEO / Legal
Representative
Relations /
Contracts
with parent
company
Sales, import and
export of chemical
products
Production and
marketing of
lithium derivatives
Pablo Altimiras C.
Gerardo Illanes G.
Pablo Altimiras
Distribution
None
Pablo Hernandez
Support
0.00369%
Services
Christian Lüders M.
Ricardo Ramos R.*
Frank Biot*
Gerardo Illanes G.*
Gonzalo Aguirre T.*
Alvaro Fernandez G.
Patricio de Solminihac T.
Domingo Aguirre F.
Gonzalo Aguirre T.*
Pablo Altimiras C. *
Frank Biot*
Gerardo Illanes G.*
Ricardo Ramos R.*
Frank Biot*
Patrick Vanbeneden
Gerardo Illanes G.*
Carlos Díaz O.*
David Masters
Stefan Debruyne
None
Christian Lüders M.
Not aplicable
Pablo Hernandez
Distribution
None
Distribution
Abdon Jesus Rojas
Lagos
Support
Name of
Company
Type of
Company
Capital
Ownership
SOQUIMICH LLC
SQM LITHIUM
SPECIALTIES
LIMITED
PARTNERSHIP,
L.L.P
SQM NITRATOS
MEXICO S.A. de
C.V.
Limited
liability
corporation
Limited
liability
corporation
Variable
capital
corporation
US$700,000
100% SQM Industrial
S.A.
US$33,712,430
US$5,636
99% SQM Virginia
LLC
1% North American
Trading Co.
99.998% SQM
Industrial S.A.
0.002% SQM North
America Corporation
SQM NORTH
AMERICA
CORPORATION
Corporation
US$79,576,550
SQM OCEANIA
PTY LIMITED
Limited
liability
corporation
US$1
51% SQM Industrial
S.A.
40% SQM S.A.
9% Soquimich
European Holdings
B.V.
100% SQM Soquimich
European Holdings
B.V.
3.49405%
0.09472%
Marketing of
nitrates, fertilizers,
iodine and lithium
in North America
Import, export and
distribution of
fertilizers and
industrial products
SQM PERÚ S.A.
Corporation
US$1,110,627
99.99093% SQM
Industrial S.A.
0.00907% SQM S.A.
0.00060%
Marketing of
agricultural and
industrial inputs
108
Name of
Company
Type of
Company
Capital
Ownership
SQM (THAILAND)
LIMITED
Corporation
US$3,364,341
99.996% SQM
European Holdings NV
0.004% Interés
Minoritario
Investment
as % of
SQM S.A.’s
individual
assets
0.08482%
Corporation
US$2,499,995
100% SQM Industrial
S.A.
2.03025%
Corporation
US$33,375,305
100% SQM North
America Corporation
0.69847%
SQM SHANGHAI
CHEMICALS
CORPORATION
SQM VIRGINIA
L.L.C.
SQMC HOLDING
CORPORATION
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Corporate
Purpose
Board of Directors
CEO / Legal
Representative
Relations /
Contracts
with parent
company
Marketing of
fertilizers and
industrial
chemicals
Patrick Vanbeneden
Andrés Stocker
Pablo Altimiras C.
Sales, import and
export, marketing
of chemical
products
Investment
company
Gonzalo Aguirre T.*
Gerardo Illanes G.*
Daniel Jimenez S.
Pablo Altimiras C.*
Gerardo Illanes G.*
None
Distribution
Aaron Lee
Distribution
Pablo Hernandez
Support
Corporation
US$3,000,000
99.9% SQM Potasio
S.A.
0.1% SQM S.A.
1.13121%
Investment
company
Carlos Diaz O.*
Felipe Smith de A.
Pablo Hernandez
Support
109
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
Corporate
Purpose
Board of Directors
CEO / Legal
Representative
Not applicable
Not applicable
Production,
distribution, sales
and marketing of
specialty plant
nutrients
Production and
distribution of
iodine derivatives
Production, sales
and marketing of
iodine derivatives
Exploration of
mineral resources
and project
development
Pablo Altimiras*
Andrés Fontannaz
Alec Poitevint
Matt Webb
Pablo Altimiras*
Andrés Fontannaz
Alec Poitevint
Matt Webb
David Hathorn
Timothy Keating
Trinidad Reyes P.
David Netherway
Bradley Sampson
Jonathan Trollip
Relations /
Contracts
with parent
company
Production and
distribution /
Commercial
agreement
Production and
distribution /
Commercial
agreement
Production and
distribution /
Commercial
agreement
Michel Pichon
Matt Webb
Bradley Sampson
Support
International Associates
Name of
Company
Type of
Company
Capital
Ownership
ABU DHABI
FERTILIZER
INDUSTRIES CO.
W.L.L. (U.A.E.)
AJAY EUROPE
SARL
Corporation
US$1,443,047
Corporation
US$3,975,721
AJAY NORTH
AMERICA L.L.C.
Corporation
US$10,383,786
KORE POTASH
PLC
Corporation
US$1,556,531
37% SQM Corporation
N.V.
63% Otros no
relacionados
50% Soquimich
European Holdings
B.V.
50% Otros no
relacionados
49% SQMC Holding
Corporation L.L.P.
51% Otros no
relacionados
20.20% SQM S.A.
79.80% Otros no
relacionados
Investment
as % of
SQM S.A.’s
individual
assets
0.33613%
0.28195%
0.40243%
0.62852%
110
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
7) B) INFORMATION ABOUT OTHER INVESTEES
Joint Ventures or Joint Control
Name of
Company
Type of
Company
Capital
Ownership
COVALENT
LITHIUM PTY LTD
Limited
liability
corporation
US$7
SICHUAN SQM-
MIGAO
CHEMICAL
FERTILIZER CO.
LTD.
PAVONI & C. SPA
SQM VITAS
BRASIL
SQM VITAS FZCO
Limited
liability
corporation
Limited
liability
corporation
Limited
liability
corporation
Sociedad de
zona franca
US$28,000,000
US$7,140,808
US$4,300,597
US$1,415,820
50% SQM Australia
Pty Ltd
50% Otros no
relacionados
50% SQM Industrial
S.A.
50% Otros no
relacionados
50% Soquimich
European Holdings
B.V.
50% Otros no
relacionados
99.99% SQM Vitas
FZCO
0.01% Otros no
relacionados
48.0769231% SQM
Industrial S.A.
1.92307692% SQM
S.A.
Investment
as % of
SQM S.A.’s
individual
assets
0.04254%
0.40653%
0.21739%
0.54642%
0.23893%
Corporate Purpose
Board of Directors
CEO / Legal
Representative
Administration, design,
execution, construction
and operation of
projects
Ian Hansen
Aaron Hood
Pablo Altimiras C.*
Eugenio Ponce L.
Ross Martelli
Production,
distribution, sales and
marketing of specialty
fertilizers
Alfredo Doberti
Frank Biot*
Liu Yaqin
Sun Pingfu
Production,
distribution, sales and
marketing of specialty
fertilizers
Production,
distribution, sales and
marketing of specialty
fertilizers
Production,
distribution, sales and
marketing of specialty
fertilizers
Patrick Vanbeneden
Frank Biot*
Giuseppe Casubolo
Aldo Bonaccorsi
Riccardo Carbone
Sara Pavoni
Patrick Vanbeneden
Karina Kuzmak-
Bourdet
Alfredo Doberti
Patrick Vanbeneden
Karina Kuzmak-
Bourdet
Frank Biot*
Sun Pingfu
Sara Pavoni
Leandro Ries
Patrick Vanbeneden
SQM VITAS PERÚ
S.A.C.
Sociedad
anónima
cerrada
US$4,063,802
99.99999% SQM Vitas
FZCO
0.00001% SQM
Industrial S.A.
0.50909%
Production,
distribution, sales and
marketing of specialty
fertilizers
Patrick Vanbeneden
Karina Kuzmak-
Bourdet
Alfredo Doberti
Diego San Martin
Relations /
Contracts
with parent
company
Administration,
design,
execution,
construction
and operation
of projects
services
Production and
distribution /
Commercial
agreement
Production and
distribution /
Commercial
agreement
Production and
distribution /
Commercial
agreement
Production and
distribution /
Commercial
agreement
Production and
distribution /
Commercial
agreement
111
7) INFORMACIÓN SOBRE SUBSIDIARIAS Y ASOCIADAS
112
8) INFORMATION ABOUT RELEVANT OR ESSENTIAL FACTS
8) INFORMATION ABOUT RELEVANT OR ESSENTIAL FACTS
Relevant or Essential Facts Pertaining to SQM S.A.
The events indicated below occurred or were reported as essential or of interest to the CMF, to the stock exchanges
and incorporated into the Company's website.
• On January 16, 2020, the Company announced the placement in international markets US$400 million principal
amount of its senior unsecured notes due 2050 at an annual interest rate of 4.25%, under the of Rule 144-A and SEC
Regulation S, under the United States Securities Act of 1933. The Company expects to use the net proceeds from
the offering of the notes for general corporate purposes, including funding its capital expenditure program and
reducing its outstanding indebteness, including the payment of its US$250 million of 5.50% notes due April 21,
2020 at maturity.
• On January 22, 2020, the Company informs the CMF of the issuance of US$400 million principal amount of its
senior unsecured notes.
• On January 23, 2020, the Company published new information on the Mount Holland lithium project in Western
Australia. Following the completion of the final feasibility study, the Company and its project partner Wesfarmers
Limited have decided to postpone the final investment decision until the first quarter of 2021.
The feasibility study confirmed that this project is one of the most competitive spodumene deposits in the world
and both parties remain committed to the project. In the coming months, the Company and Wesfarmers will continue
to evaluate new opportunities that will potentially enable the project to improve its infrastructure and operating
expenses, reduce capital expenditures, and continue to work with key customers to ensure alignment with product
specification requirements.
• On February 26, 2020, the Company reported that the Board of Directors agreed to call an ordinary shareholders'
meeting at 10:00 a.m. on Thursday, April 23, 2020.
• On March 16, 2020, the Company responded to a letter from the CMF regarding the outbreak of the COVID 19
virus, in which the following was mentioned:
1. Regarding the financial and operational effects that this situation could mean for the Company, it is worth noting
that the Company sells its products worldwide, with Asia, Europe and North America being its main markets. Border
closures, decrease in commercial activity and difficulties and disruptions in the supply chains in the markets in
which we sell have impacted our ability to fulfill our previous sales volume estimates for the first quarter, with the
main impact so far being a reduction of approximately 2,000 metric tons of lithium sales volumes in China. For the
rest of the year, the impact on our sales volumes and average prices will depend on the duration of the Virus in
different markets, the efficiency of the measures implemented to contain the spread of the Virus in each country
and fiscal incentives that may be implemented in different jurisdictions to promote economic recovery.
For now, our operations have not seen any material impacts related to the outbreak of COVID-19 virus. We have
taken measures to mitigate the impacts of this health emergency on our employees and limit the impact it could
have on our operations (described below in point 2). As of today, we do not expect this impact to be significant.
2. Regarding the measures that management has adopted or intends to adopt to mitigate possible financial and / or
operational effects, we inform that the Company has implemented a series of measures in its operations in Chile
and abroad that seek to protect its workers and reduce the speed at which the Virus spreads. The measures adopted
by the Company are:
a.
home in those cases where this is possible.
b.
The flexibility of the working day, arrival and departure times, together with the incentive to work from
Avoidance of crowds, seminars and large meetings in the Company´s offices and operating facilities.
113
8) INFORMATION ABOUT RELEVANT OR ESSENTIAL FACTS
Strengthening of personal hygiene protocols (use of alcohol gel, masks, etc.) and sanitation in plants,
Significant reduction in domestic and international travel, along with obligatory quarantine for people who
c.
cafeterias and offices.
d.
have arrived from high risk destinations
3. Regarding the existence of committed insurance and its level of coverage, we inform that as of today, we have
not identified any events which would trigger coverage from the insurance policies that the Company has contracted.
4. Finally, we hereby inform that we do not currently have any other information that management believes is
relevant to provide.
• On March 25, 2020, the Company reported as an essential fact:
That the Company's board of directors unanimously agreed to recommend to the ordinary shareholders' meeting
of the Company that was held on April 23, 2020, the distribution and payment, by concept of the definitive
dividend for fiscal year 2019, 100% of the net distributable profit obtained by the Company during the business
year 2019. The final dividend, calculated on the net profit of US$278,114,994, corresponded to an amount of
US$1.05668 per share. However, the amount of US$0.80254 per share was deducted from said final dividend,
which was already paid as interim dividends during 2019, leaving a balance of US$0.25414 per share.
The final dividend balance for business year 2019 was paid in its equivalent in pesos in national currency
according to the value of the observed dollar that appears published in the Official Gazette of April 23, 2020, in
favor of those shareholders of the Company who were registered in the respective Registry on the fifth business
day prior to the one on which it will be paid. Said amounts were proposed to be paid in favor of the shareholders,
personally or through their duly authorized representatives, starting at 9:00 a.m. on May 7, 2020.
• On March 27, 2020, the Company reported that management became aware of a modification to the agreement
reported as an event of interest to the Company on April 11, 2019, entered into between Sociedad de Inversiones
Pampa Calichera SA, Potasios de Chile SA and Inversiones Global Mining (Chile) Limitada, on the one hand
and, on the other, Inversiones TLC Spa, a subsidiary of Tianqi Lithium Corp. The modification of the agreement
was disclosed by Sociedad de Inversiones Pampa Calichera S.A. to the Chilean market through an essential fact.
• On April 23, 2020, the 45th ordinary general meeting of shareholders of the Company was held, in which the
following matters were agreed, among others:
(a) To approve the Company’s Balance Sheet, the Annual Report, the Financial Statements and the External
Auditors’ Report for the year ending on December 31, 2019.
(b) To appoint PricewaterhouseCoopers Consultores Auditores SpA as the Company’s External Auditors for the
period January 1 through December 31, 2020.
(c) To approve the distribution of a final dividend as recommended by the Board of Directors and communicated
as an essential fact (hecho esencial) on March 25, 2020.
(d) To approve the remuneration structure for the Board members, and the members of the Board committees,
and expenses associated with each.
• On May 19, 2020, the Company's board of directors agreed to pay a provisional dividend equivalent to
US$0.17092 per share, charged to the Company's profits for fiscal year 2020. Said amount will be paid in its
equivalent in pesos, national currency, according to the value of the Observed Dollar that appears published in
the Official Gazette on May 29, 2020.
• On August 25, 2020, the board of directors agreed to call an extraordinary shareholders' meeting to discuss the
approval and distribution of a special dividend (dividend eventual). The meeting was held on September 29,
2020, to submit to the shareholders' consideration the distribution and payment of a special dividend equivalent
to US$0.37994 per share charged to the retained earnings of the Company.
114
8) INFORMATION ABOUT RELEVANT OR ESSENTIAL FACTS
• Additionally, the board of directors agreed to modify the dividend policy agreed on March 25 for the business
year 2020 and to be informed at the ordinary shareholders' meeting held on April 23.
• On September 29, 2020, the shareholders of the Company, meeting in an extraordinary shareholders' meeting,
approved the distribution and payment of a special dividend equivalent to US$0.37994 per share charged to the
retained earnings of the Company.
• On October 8, 2020, the Company announced that it decided to deepen its commitment to the environment and
the sustainability of its operations and the entire value creation cycle in which the company participates.
• On October 30, 2020, the Company paid settlements issued by the Internal Revenue Service for ThUS$63,900.
• On November 11, 2020, the Company signed a binding term summary (the “Term Summary”) providing for a
settlement of the class action litigation with Lead Plaintiff Council of the Borough of South Tyneside, acting in
its capacity as the Administering Authority of the Tyne and Wear Pension Fund, captioned Villella v. Chemical
and Mining Company of Chile, Inc., 1:15-cv-02106-ER (S.D.N.Y.) (the “Class Action”). The Class Action
settlement will resolve the claims by class plaintiffs relating to alleged noncompliance with the securities laws
and regulations in the United States in connection with certain disclosures made by the Company. Pursuant to
the Term Summary, the Company has agreed to pay 62,500,000 United States dollars. The parties will negotiate
in good faith to execute a definitive stipulation of settlement and related documents to be filed for Court approval.
The amount to be paid under the settlement will be reflected as an expense in the financial statements of the
Company as of the third quarter of 2020, in the account “Other Expenses by Function”.
• On November 11, 2020, the DOJ filed a motion to dismiss the criminal information against the Company
reported in Note 23.
• On December 14, 2020, the Company was informed through a press release published today, that Kore Potash
has received correspondence from the Minister of Mines of the Republic of Congo expressing disappointment
at the speed of progress on the development of the projects in the Sintoukola Basin and questioning Kore Potash’s
compliance with its obligations to the Government of Congo. Kore Potash continues its discussions with the
Minister of Mines in relation to this matter, and SQM is monitoring the evolution of this dialogue. SQM's
financial statements as of September 30, 2020 reflect an investment in Kore Potash of approximately US$27
million in investment in associates for SQM’s 20.26% ownership interest in Kore Potash.
• On December 22, 2020, the Company announced that it has reached a long-term agreement to supply lithium
products to LG Energy Solution (LGES). As part of the agreement which will run from 2021 to 2029, SQM will
supply battery grade lithium carbonate and lithium hydroxide for the production of high-quality cathode material,
a key component of electric car battery cells. In total, the contract considers, approximately, 55,000 MT of
lithium carbonate equivalent (LCE). The signing of this large-scale long-term supply agreement is an important
milestone for SQM not only because it is part of its growth strategy, but also because it solidifies its prominent
position as a high-quality lithium supplier for the production of batteries for electric vehicles. LGES and SQM
are two significant players in the electromobility industry who are both fully committed to the development of
the industry’s future.
• On December 23, 2020, the Company informed the CMF that its board of directors had approved initiating the
process to increase the company’s capital of up to US$1.1 billion through the issuance of up to 22.4 million
Series B shares of common stock. The process will begin with an extraordinary shareholders’ meeting, in which
the shareholders will be asked to approve the capital increase. This vote will require approval of 2/3 of the Series
A shares, granting withdrawal rights to dissident Series A shareholders, and a majority of the Series A and Series
B shares voting together as a single class. The extraordinary shareholders’ meeting will be held on January 22,
115
8) INFORMATION ABOUT RELEVANT OR ESSENTIAL FACTS
2021. The capital increase will be subject to a mandatory 30-day preemptive rights offering period for existing
shareholders under Chilean law, and it is expected that a parallel preemptive rights offering will be made to
existing holders of the company’s American Depositary Receipts.
As a global company that develops and produces diverse products for several industries essential for human
progress, such as health, nutrition, renewable energy and technology, through innovation and technological
development, our need to invest in growth projects and new technologies is fundamental. The capital increase
proposed by the board of directors is intended to finance part of our ambitious US$1.9 billion investment plan
for the years 2021-2024 which will allow us to expand our operations of lithium, iodine and nitrates. Most of
this capex will be executed in Chile where we have access to great natural resources such as the Salar de Atacama
and our Caliche ore deposits. This plan also includes the 50,000 metric ton Mt. Holland lithium hydroxide project
in Western Australia, a 50/50 joint venture that we are developing with our partner Wesfarmers. We believe all
of these investments are necessary to grow and maintain our leading world position in the lithium, potassium
nitrate, iodine and thermo-solar salts markets:
o approximately US$1 billion is related to lithium carbonate expansion in Chile, from 70,000 metric
tons to 180,000 metric tons, the lithium hydroxide production expansions from 13,500 metric tons to
30,000 metric tons in Chile and the Mount Holland project in Australia,
o approximately US$440 million will be invested in our mining operations of caliche ore and plant
capacity for nitrates and iodine, of which US$150 million is related to a seawater pipeline project, and
o maintenance capex is expected to remain at approximately US$120 million per year while depreciation
is expected to average US$250 million per year.
The final investment decision on Mt. Holland project is expected to be taken by the board during the first quarter
2021, before the preemptive rights offering period.
Relevant or Essential Facts Pertaining to Soquimich Comercial S.A. (SQMC)
On March 24, 2020, it was reported that the board of directors of Soquimich Comercial S.A. agreed (1) to modify
the “Dividend Policy for Business Year 2019” in order to incorporate into said Policy the payment of the eventual
dividend for US$5,000,000. - equivalent to the amount of US$0.01837 per share, to be paid out of the accumulated
earnings of SQMC; (2) propose to the next Ordinary Shareholders' Meeting of the Company to be held in April
2020, which approves the distribution and payment of definitive dividends for the business year 2019, 100% of the
net profit for the year commercial of 2019, which reached the sum of US$5,078,587.13, which corresponds to a
final dividend of US$0.01866 per share; (3) accordingly, propose to the Ordinary Shareholders' Meeting to be held
next April, the payment of an eventual dividend of US$0.01837 per share, to be paid out of the accumulated profits
of SQMC, and a final dividend of US$0.01866 per share, corresponding to 100% of the net profits obtained by
SQMC in the 2019 business year.
On November 17, 2020, it was reported that the board of directors of Soquimich Comercial S.A. agreed (1) to
modify the “2020 Business Year Dividend Policy” in order to incorporate into said Policy the payment of the
eventual dividend for US$10,000,000. - equivalent to the amount of US$0.03675 per share, to be paid out of the
accumulated earnings of SQMC. Said payment will be submitted to the consideration of the next Extraordinary
Shareholders' Meeting of the Company, which was called for December 11, 2020 at 10:00 a.m. at Los Militares
4290, 1st floor, Las Condes, Santiago, so that it resolves in this regard and, if applicable, such eventual dividend
will be paid on December 21, 2020; (2) The amount of US$0.03675 per share corresponding to the eventual dividend
indicated, if applicable, will be paid in its equivalent in pesos, national currency, according to the dollar exchange
rate observed on the day on which said dividend is approved by the Extraordinary Shareholders' Meeting, in favor
of those SQMC shareholders who are registered in the respective Registry on the fifth business day prior to the one
on which the same will be paid.
116
8) INFORMATION ABOUT RELEVANT OR ESSENTIAL FACTS
On December 11, 2020, it was reported that the shareholders of Soquimich Comercial SA, met in an Extraordinary
Shareholders´ Meeting called for 10:00 am today, Friday, December 11, 2020, unanimously agreed to approve the
distribution of a eventual dividend, charged to the accumulated profits of the Company, in the amount of $27.12775
(twenty-seven point one two seven seven five) pesos per share. Said eventual dividend will be paid starting on
December 21, 2020, in favor of those SQMC shareholders who are registered in the respective Registry on the fifth
business day prior to that.
9) SUMMARY OF COMMENTS AND PROPOSALS BY SHAREHOLDERS AND THE DIRECTORS’
COMMITTEE
According to Chilean Law No, 18,046, section 3, article 74, there have been no comments or proposals from SQM’s
shareholders or Directors’ Committee regarding the Company’s business.
117
10) FINANCIAL REPORTS
10) FINANCIAL REPORTS
10) A) FINANCIAL REPORTS OF THE REPORTING ENTITY
Report of Independent Auditors
118
10) FINANCIAL REPORTS
119
10) FINANCIAL REPORTS
Table of Contents –Consolidated Financial Statements
CONSOLIDATED CLASSIFIED STATEMENTS OF FINANCIAL POSITION
CONSOLIDATED CLASSIFIED STATEMENTS OF FINANCIAL POSITION
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
NOTE 1 IDENTIFICATION AND ACTIVITIES OF THE COMPANY AND SUBSIDIARIES
124
125
126
127
128
130
133
HISTORICAL BACKGROUND .................................................................................................................................133
MAIN DOMICILE WHERE THE COMPANY PERFORMS ITS PRODUCTION ACTIVITIES ..................................................133
CODES OF MAIN ACTIVITIES ................................................................................................................................133
DESCRIPTION OF THE NATURE OF OPERATIONS AND MAIN ACTIVITIES ..................................................................133
OTHER BACKGROUND .........................................................................................................................................135
COVID-19 ..........................................................................................................................................................136
1.1
1.2
1.3
1.4
1.5
1.6
NOTE 2 BASIS OF PRESENTATION FOR THE CONSOLIDATED FINANCIAL STATEMENTS 138
ACCOUNTING PERIOD .........................................................................................................................................138
CONSOLIDATED FINANCIAL STATEMENTS ............................................................................................................138
BASIS OF MEASUREMENT ....................................................................................................................................139
ACCOUNTING PRONOUNCEMENTS .......................................................................................................................139
BASIS OF CONSOLIDATION ..................................................................................................................................141
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES ............................................................................................142
2.1
2.2
2.3
2.4
2.5
2.6
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES
143
CLASSIFICATION OF BALANCES AS CURRENT AND NON-CURRENT .........................................................................143
3.1
FUNCTIONAL AND PRESENTATION CURRENCY .....................................................................................................143
3.2
ACCOUNTING POLICY FOR FOREIGN CURRENCY TRANSLATION .............................................................................143
3.3
CONSOLIDATED STATEMENT OF CASH FLOWS ......................................................................................................145
3.4
ACCOUNTING POLICY FOR FINANCIAL ASSETS .....................................................................................................145
3.5
3.6
FINANCIAL LIABILITIES .......................................................................................................................................147
3.7 RECLASSIFICATION OF FINANCIAL INSTRUMENTS ......................................................................................................147
3.8 FINANCIAL INSTRUMENT DERECOGNITION.................................................................................................................147
3.9 DERIVATIVE AND HEDGING FINANCIAL INSTRUMENTS ...............................................................................................147
3.10 DERIVATIVE FINANCIAL INSTRUMENTS NOT CONSIDERED AS HEDGES ......................................................................149
3.11 DEFERRED ACQUISITION COSTS FROM INSURANCE CONTRACTS ................................................................................149
3.12
LEASES ..............................................................................................................................................................149
3.13 INVENTORY MEASUREMENT ....................................................................................................................................150
3.14 TRANSACTIONS WITH NON-CONTROLLING INTERESTS ..............................................................................................151
3.15 RELATED PARTY TRANSACTIONS ............................................................................................................................151
3.16 PROPERTY, PLANT AND EQUIPMENT ........................................................................................................................151
3.17 DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT ............................................................................................152
3.18 GOODWILL .........................................................................................................................................................152
3.19 INTANGIBLE ASSETS OTHER THAN GOODWILL ..........................................................................................................153
RESEARCH AND DEVELOPMENT EXPENSES ...........................................................................................................154
3.20
EXPLORATION AND EVALUATION EXPENSES ........................................................................................................154
3.21
3.22
IMPAIRMENT OF NON-FINANCIAL ASSETS ............................................................................................................154
3.23 MINIMUM DIVIDEND ...........................................................................................................................................155
3.24 EARNINGS PER SHARE .............................................................................................................................................155
3.25 CAPITALIZATION OF INTEREST EXPENSES ................................................................................................................155
3.26 OTHER PROVISIONS ................................................................................................................................................156
3.27 OBLIGATIONS RELATED TO EMPLOYEE TERMINATION BENEFITS AND PENSION COMMITMENTS ..................................156
COMPENSATION PLANS .......................................................................................................................................156
3.28
REVENUE RECOGNITION .....................................................................................................................................157
3.29
FINANCE INCOME AND FINANCE COSTS................................................................................................................157
3.30
3.31
CURRENT INCOME TAX AND DEFERRED ..............................................................................................................157
3.32 OPERATING SEGMENT REPORTING .........................................................................................................................158
120
3.33 PRIMARY ACCOUNTING CRITERIA, ESTIMATES AND ASSUMPTIONS ...........................................................................158
ENVIRONMENT ...................................................................................................................................................159
3.34
NOTE 4 CHANGES IN ACCOUNTING ESTIMATES AND POLICIES
160
10) FINANCIAL REPORTS
CHANGES IN ACCOUNTING ESTIMATES ................................................................................................................160
CHANGES IN ACCOUNTING POLICIES ....................................................................................................................160
4.1
4.2
NOTE 5 FINANCIAL RISK MANAGEMENT
161
FINANCIAL RISK MANAGEMENT POLICY ..............................................................................................................161
RISK FACTORS ...................................................................................................................................................161
RISK MEASUREMENT ..........................................................................................................................................165
5.1
5.2
5.3
NOTE 6 SEPARATE INFORMATION ON THE MAIN OFFICE, PARENT ENTITY AND JOINT ACTION
AGREEMENTS
166
6.1 PARENT’S STAND-ALONE ASSETS AND LIABILITIES ....................................................................................................166
6.2
PARENT ENTITY ..................................................................................................................................................166
NOTE 7 BOARD OF DIRECTORS, SENIOR MANAGEMENT AND KEY MANAGEMENT PERSONNEL
167
REMUNERATION OF THE BOARD OF DIRECTORS AND SENIOR MANAGEMENT .......................................................167
7.1
7.2
KEY MANAGEMENT PERSONNEL COMPENSATION .................................................................................................169
NOTE 8 BACKGROUND ON COMPANIES INCLUDED IN CONSOLIDATION AND NON-CONTROLLING
INTERESTS
170
BACKGROUND ON COMPANIES INCLUDED IN CONSOLIDATION ..............................................................................170
8.1
8.2
ASSETS, LIABILITIES, RESULTS OF CONSOLIDATED SUBSIDIARIES AS OF DECEMBER 31, 2020. ..............................173
8.3 BACKGROUND ON NON-CONTROLLING INTERESTS ....................................................................................................177
NOTE 9 EQUITY-ACCOUNTED INVESTEES
178
9.1 INVESTMENTS IN ASSOCIATES RECOGNIZED ACCORDING TO THE EQUITY METHOD OF ACCOUNTING ............................178
9.2 ASSETS, LIABILITIES, REVENUE AND EXPENSES OF ASSOCIATES .................................................................................180
OTHER INFORMATION .........................................................................................................................................181
9.3
9.4
DISCLOSURES ON INTEREST IN ASSOCIATES .........................................................................................................181
NOTE 10 JOINT VENTURES
182
10.1
POLICY FOR THE ACCOUNTING OF EQUITY ACCOUNTED INVESTMENT IN JOINT VENTURES .....................................182
10.2 DISCLOSURES OF INTEREST IN JOINT VENTURES ...................................................................................................182
INVESTMENT IN JOINT VENTURES ACCOUNTED FOR UNDER THE EQUITY METHOD OF ACCOUNTING ........................183
10.3
10.4 ASSETS, LIABILITIES, REVENUE AND EXPENSES FROM JOINT VENTURES ................................................................185
10.5 OTHER JOINT VENTURE DISCLOSURES ................................................................................................................186
10.6
JOINT VENTURES ................................................................................................................................................187
NOTE 11
CASH AND CASH EQUIVALENTS
188
TYPES OF CASH AND CASH EQUIVALENTS ............................................................................................................188
11.1
SHORT-TERM INVESTMENTS, CLASSIFIED AS CASH EQUIVALENTS .........................................................................188
11.2
11.3
INFORMATION ON CASH AND CASH EQUIVALENTS BY CURRENCY .........................................................................189
11.4 AMOUNT RESTRICTED CASH BALANCES ...............................................................................................................189
11.5
SHORT-TERM DEPOSITS, CLASSIFIED AS CASH EQUIVALENTS ................................................................................190
11.6 NET DEBT RECONCILIATION ...............................................................................................................................192
NOTE 12
INVENTORIES
193
NOTE 13
RELATED PARTY DISCLOSURES
195
13.1
RELATED PARTY DISCLOSURES ...........................................................................................................................195
13.2 RELATIONSHIPS BETWEEN THE PARENT AND THE ENTITY .....................................................................................195
13.3 DETAILED IDENTIFICATION OF RELATED PARTIES AND SUBSIDIARIES ...................................................................196
13.4 DETAIL OF RELATED PARTIES AND RELATED PARTY TRANSACTIONS.....................................................................199
TRADE RECEIVABLES DUE FROM RELATED PARTIES, CURRENT: ............................................................................200
13.5
13.6
TRADE PAYABLES DUE TO RELATED PARTIES, CURRENT:......................................................................................200
13.7 OTHER DISCLOSURES: .........................................................................................................................................200
NOTE 14
FINANCIAL INSTRUMENTS
201
TYPES OF OTHER CURRENT AND NON-CURRENT FINANCIAL ASSETS ......................................................................201
14.1
14.2
TRADE AND OTHER RECEIVABLES .......................................................................................................................202
14.3 HEDGING ASSETS AND LIABILITIES ..........................................................................................................................205
FINANCIAL LIABILITIES .......................................................................................................................................206
14.4
121
10) FINANCIAL REPORTS
14.5
TRADE AND OTHER PAYABLES ............................................................................................................................217
14.6 FINANCIAL ASSET AND LIABILITY CATEGORIES .......................................................................................................218
14.7
FAIR VALUE MEASUREMENT OF FINANCE ASSETS AND LIABILITIES .......................................................................220
14.8 ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS .........................................................................................223
NOTA 15 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
224
15.1 RIGHT-OF-USE ASSETS .............................................................................................................................................224
15.2
LEASE LIABILITIES ..............................................................................................................................................225
NOTE 16
INTANGIBLE ASSETS AND GOODWILL
231
16.1
NOTE 17
BALANCES .........................................................................................................................................................231
PROPERTY, PLANT AND EQUIPMENT
238
TYPES OF PROPERTY, PLANT AND EQUIPMENT .....................................................................................................238
17.1
17.2
CONCILIATION OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT BY TYPE: .......................................................240
17.3 DETAIL OF PROPERTY, PLANT AND EQUIPMENT PLEDGED AS GUARANTEE .................................................................244
IMPAIRMENT OF ASSETS ......................................................................................................................................244
17.4
17.5
COST OF CAPITALIZED INTEREST, PROPERTY, PLANT AND EQUIPMENT ..................................................................244
NOTE 18 OTHER CURRENT AND NON-CURRENT NON-FINANCIAL ASSETS
245
MINERAL RESOURCE EXPLORATION AND EVALUATION EXPENDITURE ...............................................................................246
NOTE 19
EMPLOYEE BENEFITS
247
PROVISIONS FOR EMPLOYEE BENEFITS ................................................................................................................247
19.1
19.2
POLICIES ON DEFINED BENEFIT PLAN ...................................................................................................................247
19.3 OTHER LONG-TERM BENEFITS .............................................................................................................................248
POST-EMPLOYMENT BENEFIT OBLIGATIONS .........................................................................................................248
19.4
STAFF SEVERANCE INDEMNITIES .........................................................................................................................250
19.5
19.6
EXECUTIVE COMPENSATION PLAN .......................................................................................................................251
NOTE 20
PROVISIONS AND OTHER NON-FINANCIAL LIABILITIES
252
TYPES OF PROVISIONS .........................................................................................................................................252
20.1
20.2 DESCRIPTION OF OTHER PROVISIONS ...................................................................................................................253
20.3 OTHER NON-FINANCIAL LIABILITIES, CURRENT ...................................................................................................254
20.4
CHANGES IN PROVISIONS ....................................................................................................................................255
NOTE 21
DISCLOSURES ON EQUITY
256
CAPITAL MANAGEMENT ......................................................................................................................................256
21.1
21.2 DISCLOSURES ON PREFERRED SHARE CAPITAL .....................................................................................................257
21.3 DISCLOSURES ON RESERVES IN EQUITY ...................................................................................................................258
21.4 DIVIDEND POLICIES ............................................................................................................................................260
21.5 INTERIM AND PROVISIONAL DIVIDENDS ...................................................................................................................262
21.6
POTENTIAL AND PROVISIONAL DIVIDENDS ...........................................................................................................262
NOTE 22
CONTINGENCIES AND RESTRICTIONS
263
LAWSUITS AND OTHER RELEVANT EVENTS ..........................................................................................................263
22.1
RESTRICTIONS TO MANAGEMENT OR FINANCIAL LIMITS .......................................................................................265
22.2
ENVIRONMENTAL CONTINGENCIES ......................................................................................................................266
22.3
TAX CONTINGENCIES .........................................................................................................................................266
22.4
CONTINGENCIES REGARDING TO THE CONTRACTS WITH CORFO: .........................................................................267
22.5
CONTINGENCIES RELATED TO THE CLASS ACTION LAWSUIT ................................................................................267
22.6
CONTINGENCIES ASSOCIATED WITH CONFLICTS BETWEEN SHAREHOLDERS OF THE ABU DHABI FERTILIZER
22.7
INDUSTRIES COMPANY ....................................................................................................................................................267
RESTRICTED OR PLEDGED CASH ..........................................................................................................................267
22.8
SECURITIES OBTAINED FROM THIRD PARTIES .......................................................................................................268
22.9
22.10
INDIRECT GUARANTEES ......................................................................................................................................268
NOTE 23
LAWSUITS AND COMPLAINTS
269
NOTE 24
ENVIRONMENT
270
24.1 DISCLOSURES OF DISBURSEMENTS RELATED TO THE ENVIRONMENT ....................................................................270
24.2 DETAILED INFORMATION ON DISBURSEMENTS RELATED TO THE ENVIRONMENT ...................................................271
24.3 DESCRIPTION OF EACH PROJECT, INDICATING WHETHER THESE ARE IN PROCESS OR HAVE BEEN FINISHED .............278
NOTE 25
GAINS (LOSSES) FROM OPERATING ACTIVITIES IN THE STATEMENT OF INCOME
OF EXPENSES, INCLUDED ACCORDING TO THEIR NATURE
283
122
10) FINANCIAL REPORTS
25.1
REVENUE FROM OPERATING ACTIVITIES CUSTOMER ACTIVITIES ...........................................................................283
COST OF SALES ...................................................................................................................................................285
25.2
25.3 OTHER INCOME ..................................................................................................................................................286
25.4 ADMINISTRATIVE EXPENSES ...............................................................................................................................286
25.5 OTHER EXPENSES ...............................................................................................................................................287
25.6 OTHER GAINS (LOSSES).......................................................................................................................................287
(IMPAIRMENT) /REVERSION OF VALUE OF FINANCIAL ASSETS IMPAIRMENT LOSSES ...............................................288
25.7
SUMMARY OF EXPENSES BY NATURE ...................................................................................................................288
25.8
25.9
FINANCE EXPENSES ............................................................................................................................................289
25.10 FINANCE INCOME ...............................................................................................................................................289
NOTE 26 REPORTABLE SEGMENTS
290
26.1
26.2
26.3
REPORTABLE SEGMENTS .....................................................................................................................................290
REPORTABLE SEGMENT DISCLOSURES: ................................................................................................................292
STATEMENT OF COMPREHENSIVE INCOME CLASSIFIED BY REPORTABLE SEGMENTS BASED ON GROUPS OF PRODUCTS
................................................................................................................................................................294
26.4 DISCLOSURES ON GEOGRAPHICAL AREAS ............................................................................................................296
26.5 DISCLOSURES ON MAIN CUSTOMERS ...................................................................................................................296
SEGMENTS BY GEOGRAPHICAL AREAS .................................................................................................................297
26.6
26.7
PROPERTY, PLANT AND EQUIPMENT CLASSIFIED BY GEOGRAPHICAL AREAS ..........................................................298
NOTE 27 EFFECT OF FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES
299
NOTE 28 DISCLOSURES ON THE EFFECTS OF FLUCTUATIONS IN FOREIGN CURRENCY
EXCHANGE RATES
NOTE 29 INCOME TAX AND DEFERRED TAXES
301
307
CURRENT AND NON-CURRENT TAX ASSETS ..........................................................................................................307
29.1
29.2
CURRENT TAX LIABILITIES ..................................................................................................................................308
29.3 INCOME TAX AND DEFERRED TAXES ........................................................................................................................309
NOTE 30
ASSETS HELD FOR SALE
317
NOTE 31
EVENTS OCCURRED AFTER THE REPORTING DATE
318
31.1 AUTHORIZATION OF THE FINANCIAL STATEMENTS ...............................................................................................318
31.2 DISCLOSURES ON EVENTS OCCURRING AFTER THE REPORTING DATE ....................................................................318
123
Consolidated Classified Statements of Financial Position
ASSETS
Current Assets
Cash and cash equivalents
Other current financial assets
Other current non-financial assets
Trade and other receivables, current
Trade receivables due from related parties, current
Current inventories
Current tax assets
Total current assets other than those classified as held for sale or disposal
Non-current assets or groups of assets classified as held for sale
Total non-current assets held for sale
Total current assets
Non-current assets
Other non-current financial assets
Other non-current non-financial assets
Trade receivables, non-current
Investments classified using the equity method of accounting
Intangible assets other than goodwill
Goodwill
Property, plant and equipment net
Right-of-use assets
Tax assets, non-current
Total non-current assets
Total assets
10) FINANCIAL REPORTS
As of
December 31,
2020
As of
December 31,
2019
Note N°
ThUS$
ThUS$
11.1
14.1
18
14.2
13.5
12
29.1
30
14.1
18
14.2
9.1-10.3
16.1
16.1
17.1
15.1
29.1
509,102
348,069
57,399
365,206
62,601
1,093,028
132,224
2,567,629
1,629
1,629
588,530
505,490
50,552
399,142
61,227
983,338
91,433
2,679,712
2,454
2,454
2,569,258
2,682,166
51,925
22,042
11,165
85,993
178,407
41,966
8,778
19,729
1,710
109,435
188,358
34,726
1,737,319
1,569,906
30,024
90,364
2,249,205
4,818,463
37,164
32,179
2,001,985
4,684,151
The accompanying notes form an integral part of these consolidated financial statements.
124
10) FINANCIAL REPORTS
Consolidated Classified Statements of Financial Position
Liabilities and Equity
As of
December 31,
2020
As of
December 31,
2019
Note N°
ThUS$
ThUS$
Current liabilities
Other current financial liabilities
Lease liabilities, current
Trade and other payables, current
Trade payables due to related parties, current
Other current provisions
Current tax liabilities
Provisions for employee benefits, current
Other current non-financial liabilities
Total current liabilities
Non-current liabilities
Other non-current financial liabilities
Lease liabilities, non-current
Trade and other payables, non-current
Other non-current provisions
Deferred tax liabilities
Provisions for employee benefits, non-current
Total non-current liabilities
Total liabilities
Equity
Equity attributable to owners of the Parent
Share capital
Retained earnings
Other reserves
Equity attributable to owners of the Parent
Non-controlling interests
Total equity
Total liabilities and equity
14.4
15.2
14.5
13.6
20.1
29.2
19.1
20.3
14.4
15.2
14.5
20.1
29.3
19.1
21
68,955
5,528
203,933
606
104,166
22,643
9,096
60,955
475,882
291,128
7,694
205,790
475
110,565
17,874
16,387
126,899
776,812
1,899,513
1,488,723
25,546
4,027
62,617
156,101
32,199
2,180,003
2,655,885
477,386
1,638,267
7,432
2,123,085
39,493
2,162,578
4,818,463
30,203
-
34,690
183,411
35,840
1,772,867
2,549,679
477,386
1,623,104
(14,223)
2,086,267
48,205
2,134,472
4,684,151
The accompanying notes form an integral part of these consolidated financial statements.
125
Consolidated Statements of Income
Consolidated Statements of Income
Note N°
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Other expenses
Impairment of financial assets and reversal of impairment losses
Other losses
Profit from operating activities
Finance income
Finance costs
Share of profit of associates and joint ventures accounted for using the equity method
Foreign currency translation differences
Profit before taxes
Income tax expense
Profit net
Profit attributable to:
Profit attributable to Owners of the Parent
Profit attributable to Non-controlling interests
25.1
25.2
25.3
25.4
25.5
25.7
25.6
25.10
17-25.9
9.1-10.3
27
29.3
Earnings per share
Note N°
Common shares
Basic earnings per share (US$ per share)
Diluted common shares
Basic earnings per share (US$ per share)
10) FINANCIAL REPORTS
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
1,817,191
1,943,655
(1,334,321)
(1,383,603)
482,870
26,893
(107,017)
(99,612)
4,684
(5,313)
302,505
13,715
(82,199)
8,940
(4,423)
238,538
(70,179)
168,359
164,518
3,841
168,359
560,052
18,218
(117,180)
(25,995)
(1,057)
(383)
433,655
26,289
(76,939)
9,786
(2,169)
390,622
(110,019)
280,603
278,115
2,488
280,603
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
0.6251
1.0567
0.6251
1.0567
The accompanying notes form an integral part of these consolidated financial statements.
126
10) FINANCIAL REPORTS
Consolidated Statements of Comprehensive Income
Consolidated Statements of Comprehensive Income
Profit net
Items of other comprehensive income that will not be reclassified to profit for the year, before taxes
Gains (losses) from measurements of defined benefit plans
Gains (losses) from financial assets measured irrevocably at fair value through other comprehensive income
Total other comprehensive income (loss) that will not be reclassified to profit for the year, before taxes
Items of other comprehensive income that will be reclassified to profit for the year, before taxes
Foreign currency exchange gains (losses)
(Losses) gains from cash flow hedges
Total other comprehensive income that will be reclassified to profit for the year
Other items of other comprehensive income, before taxes
Income taxes related to items of other comprehensive income that will not be reclassified to profit for the year
Income taxes relating to measurement of defined benefit pension plans through other comprehensive income
Benefit (income tax) relating to (losses) gains on financial assets measured irrevocably at fair value through
other comprehensive income
For the period from
January to December of
the year
2020
ThUS$
2019
ThUS$
168,359
280,603
974
9,784
10,758
14,000
(3,706)
10,294
21,052
(145)
(2,642)
(3,310)
1,152
(2,158)
787
1,908
2,695
537
702
(311)
Total income tax relating to components of other comprehensive income that will be not reclassified to profit
for the year
(2,787)
391
Income taxes relating to components of other comprehensive income that will be reclassified to profit for the
year
Income tax benefit (expense) related to (losses) gains from cash flow hedges
Total income tax relating to components of other comprehensive income that will be reclassified to profit for
the year
Total other comprehensive income
Total comprehensive income
Comprehensive income attributable to
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interest
1,001
(2,683)
1,001
(2,683)
19,266
187,625
(1,755)
278,848
183,941
276,137
3,684
2,711
187,625
278,848
The accompanying notes form an integral part of these consolidated financial statements.
127
Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows
Cash flows from (used in) operating activities
Classes of cash receipts from operating activities
Cash receipts from sales of goods and rendering of services
Cash receipts from premiums and benefits, annuities and other benefits from policies entered
Cash receipts derived from sub-leases
Classes of Payments
Cash payments to suppliers for the provision of goods and services
Cash payments to and on behalf of employees
Cash payments relating to variable leases
Other payments related to operating activities
Net cash generated from operating activities
Dividends received
Interest paid
Interest received
Interest paid on lease liabilities
Income taxes paid
Other cash inflows (1)
Net cash generated from operating activities
Cash flows from (used in) investing activities
Cash flows arising from the loss/gain of control of subsidiaries and other businesses
Proceeds from the sale of property, plant and equipment
Other payments to acquire interest in joint ventures
Acquisition of property, plant and equipment
Proceeds from sales of intangible assets
Proceeds (payments) related to futures, forward options and swap contracts
Purchases of intangible assets
Loans to related parties
Other cash inflows (outflows) (2)
Net cash generated used in investing activities
10) FINANCIAL REPORTS
Note
N°
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
1,940,720
2,044,746
14,763
188
2,925
361
(1,358,347)
(1,284,204)
(161,862)
(195,782)
(1,117)
(87,278)
347,067
5,387
(81,567)
17,046
(1,133)
(1,037)
(25,218)
541,791
14,449
(70,963)
25,809
(1,537)
(200,624)
(173,319)
96,058
182,234
90,741
426,971
20,996
1,680
(16,949)
(322,242)
8,203
(6,902)
(579)
(15,000)
163,702
(167,091)
994
487
(2,600)
(321,324)
28,126
1,403
(2,492)
-
(190,065)
(485,471)
(1) Other inflows of cash from operating activities include net increases (decreases) of value added tax, banking expenses, expenses
associated with obtaining loans and taxes associated with interest payments.
(2) Other inflows (outflows) of cash include investments and redemptions of time deposits and other financial instruments that do not
qualify as cash and cash equivalent in accordance with IAS 7, paragraph 7, since they mature in more than 90 days from the original
investment date.
The accompanying notes form an integral part of these consolidated financial statements.
128
10) FINANCIAL REPORTS
Note
N°
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(8,015)
400,000
(264,122)
(221,995)
(7,221)
450,000
(7,096)
(329,787)
(94,132)
105,896
(78,989)
47,396
(439)
(79,428)
588,530
509,102
(14,932)
32,464
556,066
588,530
Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows
Cash flows generated from (used in) financing activities
Repayment of lease liabilities
Proceeds from long-term loans
Repayment of borrowings
Dividends paid
Net cash generated (used in) from financing activities
Net (decrease) increase in cash and cash equivalents before the effect of changes in the exchange
rate
Effects of exchange rate fluctuations on cash and cash equivalents
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
11
The accompanying notes form an integral part of these consolidated financial statements.
129
10) FINANCIAL REPORTS
Consolidated Statements of Changes in Equity
Consolidated Statements of Changes in Equity
Share capital
Foreign
currency
translation
reserves
Hedge
reserves
Gains and
losses from
financial
assets
reserve
Actuarial
gains and
losses from
defined
benefit plans
reserve
Other
miscellaneous
reserves
Total
reserves
Retained
earnings
Equity
attributable
to owners of
the Parent
Non-
controlling
interests
Total Equity
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Equity at January 1, 2020
477,386
(25,745)
Net profit
Other comprehensive income
Comprehensive income
Dividends (1)
Other increases (decreases) in equity
Total changes in equity
-
-
-
-
-
-
-
14,176
14,176
-
-
14,176
Equity as of December 31, 2020
477,386
(11,569)
7,196
-
(2,705)
(2,705)
-
-
(2,705)
4,491
(270)
-
7,142
7,142
-
-
7,142
6,872
(9,490)
14,086
(14,223)
1,623,104
2,086,267
48,205
2,134,472
-
810
810
-
-
810
(8,680)
-
-
-
-
2,232
2,232
16,318
-
164,518
19,423
19,423
-
2,232
21,655
-
164,518
(149,355)
-
15,163
164,518
19,423
183,941
3,841
(157)
3,684
168,359
19,266
187,625
(149,355)
(10,118)
(159,473)
2,232
36,818
(2,278)
(8,712)
(46)
28,106
7,432
1,638,267
2,123,085
39,493
2,162,578
Consolidated Statements of Changes in Equity
Share capital
Foreign
currency
translation
reserves
Hedge
reserves
Gains and
losses from
financial
assets
reserve
Actuarial
gains and
losses from
defined
benefit plans
reserve
Other
miscellaneous
reserves
Total
reserves
Retained
earnings
Equity
attributable
to owners of
the Parent
Non-
controlling
interests
Total Equity
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Equity at January 1, 2019
477,386
(26,307)
Net Profit
Other comprehensive income
Comprehensive income
Dividends (1)
Other increases (decreases) in equity
Total changes in equity
-
-
-
-
-
-
-
562
562
-
-
562
Equity as of December 31, 2019
477,386
(25,745)
(1)
See Note 21.6
7,971
-
(775)
(775)
-
-
(775)
7,196
(1,111)
(6,884)
11,332
(14,999)
1,623,104
2,085,491
52,311
2,137,802
-
841
841
-
-
841
(270)
-
(2,606)
(2,606)
-
-
(2,606)
(9,490)
-
-
-
-
2,754
2,754
-
278,115
(1,978)
(1,978)
-
2,754
776
-
278,115
(278,115)
-
-
278,115
(1,978)
276,137
2,488
223
2,711
280,603
(1,755)
278,848
(278,115)
(6,817)
(284,932)
2,754
776
-
(4,106)
2,754
(3,330)
14,086
(14,223)
1,623,104
2,086,267
48,205
2,134,472
The accompanying notes form an integral part of these consolidated financial statements.
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10) FINANCIAL REPORTS
Glossary
The Following capitalized terms un these notes will have the following meaning:
“ADS’’ American Depositary Shares;
“CAM’’ Arbitration and Mediation Center of the Santiago Chamber of Commerce;
“CCHEN’’ Chilean Nuclear Energy Commission;
“CCS’’ cross currency swap;
“CINIIF’’ International Financial Reporting Interpretations Committee;
“CMF’’ Financial Market Commission;
“Directors’ Committee” The Company’s Directors’ Committee;
“Corporate Governance Committee’’ The Company’s Corporate Governance Committee;
“Health, Safety and Environment Committee’’ The Company’s Health, Safety and Environment
Committee;
“Lease Agreement’’ the mining concessions lease agreement signed by SQM Salar and Corfo in 1993, as
subsequently amended;
“Project Contract” project contract for Salar de Atacama undersigned by Corfo and SQM Salar in 1993, as
subsequently amended”;
“Corfo” Chilean Economic Development Agency;
“DCV’’ Central Securities Depository;
“DGA’’ General Directorate of Water Resources;
“Board” The Company’s Board of Directors;
“DOJ’’ United States Department of Justice;
“Dollar’’ o “US$’’ Dollars of the United States of America;
“DPA’’ Deferred Prosecution Agreement;
“EIEP’’ Passive foreign investment company;
“United States” United States of America;
“FCPA’’ Foreign Corrupt Practices Act of the USA;
“FNE’’ Chilean National Economic Prosecutor's Office;
“Management’’ the Company’s management;
"SQM Group’’ The corporate group composed of the Company and its subsidiaries
“Pampa Group’’ Jointly the Sociedad de Inversiones Pampa Calichera S.A., Potasios de Chile S.A. and
Inversiones Global Mining (Chile) Limitada;
“IASB’’ International Accounting Standards Board;
“SSI’’ Staff severance indemnities;
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10) FINANCIAL REPORTS
“IFRIC’’ International Financial Reporting Interpretations Committee;
“IPC” Consumer Price Index;
“IRS” interest rate swap;
“Securities Market Law” Securities Market Law No. 18,045;
“Corporate Law'' Ley 18,046 on corporations;
“ThUS$'' thousands of Dollars;
“MUS$'' millions of Dollars;
“IAS” International Accounting Standard;
“IFRS” International Financial Reporting Standard;
“ILO” International Labour Organization;
“WHO” World Health Organization;
“Pesos’’ or “Ch$” Chilean pesos, legal tender in Chile;
“SEC’’ Securities and Exchange Commission;
“Sernageomin’’ National Geology and Mining Service;
“SIC’’ Standard Interpretations Committee;
“SII” Chilean Internal Revenue Service;
“SMA” Environmental Superintendent’s Office;
“Company” Sociedad Química y Minera de Chile S.A.;
“SQM Industrial’’ SQM Industrial S.A.;
“SQM NA’’ SQM North America Corporation;
“SQM Nitratos’’ SQM Nitratos S.A.;
“SQM Potasio’’ SQM Potasio S.A.;
“SQM Salar’’ SQM Salar S.A.;
“Tianqi’’ Tianqi Lithium Corporation; and
“UF’’ Unidad de Fomento (a Chilean Peso based inflation indexed currency unit);
“WACC’’ Weighted Average Cost of Capital.
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10) FINANCIAL REPORTS
Note 1 Identification and Activities of the Company and Subsidiaries
1.1
Historical background
Sociedad Química y Minera de Chile S.A. is an open stock corporation founded under the laws of the Republic
of Chile and its Chilean Tax Identification Number is 93.007.000-9.
The Company was incorporated through a public deed dated June 17, 1968 by the public notary of Santiago
Mr. Sergio Rodríguez Garcés. Its existence was approved by Decree No. 1,164 of June 22, 1968 of the Ministry
of Finance, and it was registered on June 29, 1968 in the Registry of Commerce of Santiago, on page 4,537 No.
1,992. SQM’s headquarters are located at El Trovador 4285, Floor 6, Las Condes, Santiago, Chile, The
Company's telephone number is +(56 2) 2425-2000.
The Company is registered in the CMF under number 184 of March 18, 1983 and is therefore subject to
oversight by that entity.
1.2
Main domicile where the Company performs its production activities
The Company’s main domiciles are: Calle Dos Sur plot No. 5 - Antofagasta; Arturo Prat 1060 - Tocopilla;
Administration Building w/n - Maria Elena; Administration Building w/n Pedro de Valdivia - María Elena,
Anibal Pinto 3228 - Antofagasta, Kilometer 1378 Ruta 5 Norte Highway - Antofagasta, Coya Sur Plant w/n -
Maria Elena, kilometer 1760 Ruta 5 Norte Highway - Pozo Almonte, Salar de Atacama (Atacama Saltpeter
deposit) potassium chloride plant w/n - San Pedro de Atacama, potassium sulfate plant at Salar de Atacama
w/n – San Pedro de Atacama, Minsal Mining Camp w/n CL Plant CL, Potassium– San Pedro de Atacama,
formerly the Iris Saltpeter office w/n, Commune of Pozo Almonte, Iquique.
1.3
Codes of main activities
The codes of the main activities as established by the CMF, as follows:
-
-
-
1700 (Mining)
2200 (Chemical products)
1300 (Investment)
1.4
Description of the nature of operations and main activities
The products of the Company are mainly derived from mineral deposits found in northern Chile where mining
takes place and caliche and brine deposits are processed.
(a) Specialty plant nutrition: Four main types of specialty plant nutrients are produced: potassium nitrate,
sodium nitrate, sodium potassium nitrate and specialty blends. In addition, other specialty fertilizers
are sold including third party products.
(b) Iodine: The Company produces iodine and iodine derivatives, which are used in a wide range of
medical, pharmaceutical, agricultural and industrial applications, including x-ray contrast media,
polarizing films for LCD and LED, antiseptics, biocides and disinfectants, in the synthesis of
pharmaceuticals, electronics, pigments and dye components.
(c) Lithium: The Company produces lithium carbonate, which is used in a variety of applications,
including electrochemical materials for batteries, frits for the ceramic and enamel industries, heat-
resistant glass (ceramic glass), air conditioning chemicals, continuous casting powder for steel
extrusion, primary aluminum smelting process, pharmaceuticals and lithium derivatives. We are also
a leading supplier of lithium hydroxide, which is primarily used as an input for the lubricating greases
industry and for certain cathodes for batteries.
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10) FINANCIAL REPORTS
(d) Industrial chemicals: The Company produces three industrial chemicals: sodium nitrate, potassium
nitrate and potassium chloride. Sodium nitrate is used primarily in the production of glass, explosives,
and metal treatment. Potassium nitrate is used in the manufacturing of specialty glass, and it is also an
important raw material to produce of frits for the ceramics and enamel industries. Solar salts, a
combination of potassium nitrate and sodium nitrate, are used as a thermal storage medium in
concentrated solar power plants. Potassium chloride is a basic chemical used to produce potassium
hydroxide, and it is also used as an additive in oil drilling as well as in food processing.
(e) Potassium: The Company produces potassium chloride and potassium sulfate from brines extracted
from the Salar de Atacama. Potassium chloride is a commodity fertilizer used to fertilize a variety of
crops including corn, rice, sugar, soybean and wheat. Potassium sulfate is a specialty fertilizer used
mainly in crops such as vegetables, fruits and industrial crops.
(f) Other products and services: The Company also sells other fertilizers and blends, some of which we
do not produce. Mainly potassium nitrate, potassium sulfate and potassium chloride. This business line
also includes revenue from commodities, services, interests, royalties and dividends.
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10) FINANCIAL REPORTS
1.5
(a)
Other background
Employees
As of December 31, 2020, and 2019, the workforce was as follows:
As of December 31, 2020
As of December 31, 2019
Employees
SQM S.A.
other
subsidiaries
Total
SQM S.A.
other
subsidiaries
Total
Executives
Professionals
Technicians and operators
Foreign employees
Overall total
30
94
267
17
408
85
1,156
3,310
548
5,099
115
1,250
3,577
565
5,507
30
110
282
17
439
91
1,170
3,481
560
5,302
121
1,280
3,763
577
5,741
(b)
Main shareholders
As of December 31, 2020, there were 1,358 shareholders.
Following table shows information about the main shareholders of the Company’s Series A or Series B shares
in circulation as of December 31, 2020 and 2019, in line with information provided by the DCV, with respect
to each shareholder that, to our knowledge, owns more than 5% of the outstanding Series A or Series B shares.
The following information is derived from our registry and reports managed by the DCV and informed to the
CMF and the Chilean Stock Exchange:
Shareholders as of December 31, 2020
No. of Series A
% of Series A
shares
No. of Series B
% of Series B
shares
% of total
shares
Inversiones TLC SpA (1)
The Bank of New York Mellon, ADRs
Sociedad de Inversiones Pampa Calichera S.A. (2)
Potasios de Chile S.A.
Inversiones Global Mining (Chile) Limitada
Euroamerica C de B S. A.
Banco Santander via foreign investor accounts
Banco de Chile via State Street
Banco de Chile non-resident third party accounts
Inversiones la Esperanza de Chile Limitada
Banchile Corredora de Bolsa S. A.
Banco de Chile on behalf of Citibank NA New York
customers
62,556,568
43.80%
-
-
-
50,792,452
44,894,152
18,179,147
8,798,539
1,418
-
-
-
4,147,263
459,202
177,463
31.43%
12.73%
6.16%
-
-
-
-
2.90%
0.32%
0.12%
922,971
-
-
8,788,517
7,294,827
6,971,782
6,129,339
46,500
2,426,758
1,732,249
-
42.19%
0.77%
-
-
7.30%
6.06%
5.79%
5.09%
0.04%
2.02%
1.44%
23.77%
19.30%
17.41%
6.91%
3.34%
3.34%
2.77%
2.65%
2.33%
1.59%
1.10%
0.73%
135
10) FINANCIAL REPORTS
Shareholders as of December 31, 2019
No. of Series A
% of Series A
shares
No. of Series B
% of Series B
shares
% of total
shares
Inversiones TLC SpA (1)
Sociedad de Inversiones Pampa Calichera S.A. (2)
The Bank of New York Mellon, ADRs
Potasios de Chile S.A.
Inversiones Global Mining (Chile) Limitada
Banco Itaú via foreign investor accounts
Banco de Chile non-resident third party accounts
Banco Santander via foreign investor accounts
Euroamerica C de B S. A.
Banchile C de B S. A.
Inversiones la Esperanza de Chile Limitada
Bolsa de comercio de Santiago Bolsa de valores
62,556,568
44,894,152
-
18,179,147
8,798,539
-
109
-
3,056
491,729
4,147,263
30,590
43.80%
31.43%
-
12.73%
6.16%
-
-
-
-
0.34%
2.90%
0.02%
-
3,793,154
38,311,788
-
-
7,373,216
6,842,746
6,618,416
4,863,467
4,285,696
46,500
3,077,930
-
3.15%
31.83%
-
-
6.13%
5.68%
5.50%
4.04%
3.56%
0.04%
2.56%
23.77%
18.50%
14.56%
6.91%
3.34%
2.80%
2.60%
2.51%
1.85%
1.82%
1.59%
1.18%
(1) As reported by DCV, which records the Company's shareholders' register as of December 31, 2020 and
December 31, 2019, Inversiones TLC SpA, a subsidiary of Tianqi, is the direct owner of 62,556,568 shares of
SQM equivalent to 23.77% of SQM’s shares. Through Tianqi’s subsidiaries it owns 5,516,772 Series B SQM
shares as reported by Inversiones TLC Spa. So as of December 31, 2020, Tianqi owns 25.86% of SQM's total
Series A and B shares.
(2) Total Sociedad de Inversiones Pampa Calichera S.A. 57,235,201 Series A and B shares; 11,418,078 Series
B shares are held by different brokers.
1.6
Covid-19
In January 2020, the WHO deemed COVID-19 a global pandemic. In March 2020, the Chilean Ministry of
Health declared a nationwide State of Emergency. As a precaution, our management has implemented several
measures to help reduce the speed at which the coronavirus spreads, including measures to mitigate the spread
in the workplace, significant reductions in employee travel and a mandatory quarantine for people who have
arrived from high risk destinations, in consultation with governmental and international health organization
guidelines, and will continue to implement measures consistent with evolving coronavirus situation.
On March 16, 2020, the Company reported on various points in relation to the outbreak of the COVID-19 virus
and its being declared to be a global pandemic by the WHO.
(1) Regarding the financial and operational effects that this situation could mean for the Company, it is worth
noting that the Company sells its products worldwide, with Asia, Europe and North America being its
main markets. Border closures, decrease in commercial activity and difficulties and disruptions in the
supply chains in the markets in which we sell have impacted our ability to fulfill our previous sales volume
estimates, the impact on our sales volumes and average prices will depend on the duration of the virus in
different markets, the efficiency of the measures implemented to contain the spread of the virus in each
country and fiscal incentives that may be implemented in different jurisdictions to promote economic
recovery.
For now, our operations have not seen any material impacts related to the outbreak of COVID-19 virus.
We have taken measures to mitigate the impacts of this health emergency on our employees and limit the
impact it could have on our operations (described below in point 2).
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10) FINANCIAL REPORTS
(2) Regarding the measures that management has adopted or intends to adopt to mitigate possible financial
and/or operational effects, we inform that the Company has implemented a series of measures in its
operations in Chile and abroad that seek to protect its workers and reduce the speed at which the virus
spreads. The measures adopted by the Company are:
(a)
The flexibility of the working day, arrival and departure times, together with the incentive to work
from home in those cases where this is possible.
(b) Avoidance of crowds, seminars and large meetings in the Company´s offices and operating
facilities.
(c)
(d)
(e)
Strengthening personal hygiene protocols (use of alcohol-based gel, masks, etc.) and sanitation in
plants, cafeterias and offices.
Significant reduction in domestic and international travel, along with obligatory quarantine for
people who have arrived from high risk destinations.
The costs associated with the measures implemented by the company correspond primarily to
increased expenses in transportation, supplies, room and board, among others.
(3) Regarding the existence of committed insurance and its level of coverage, we inform that as of today, we
have not identified any events which would trigger coverage from the insurance policies that the Company
has contracted.
(4) Finally, we hereby inform that we do not currently have any other information that management believes
is relevant to provide.
As of December 31, 2020, there have been no significant changes in the impacts associated with COVID-19
reported to the CMF.
137
10) FINANCIAL REPORTS
Note 2 Basis of presentation for the consolidated financial statements
2.1 Accounting period
These consolidated financial statements cover the following periods:
(a) Consolidated Statements of Financial Position as of December 31, 2020 and 2019
(b) Consolidated Statements of Income for the periods from January 1 to December 31, 2020 and 2019.
(c) Consolidated Statements of Comprehensive Income from January 1 to December 31, 2020 and 2019.
(d) Consolidated Statements of Changes in Equity for the periods ended December 31, 2020 and 2019.
(e) Consolidated Statements of Cash Flows for the periods ended December 31, 2020 and 2019.
2.2 Consolidated financial statements
The consolidated financial statements of the Company and its subsidiaries have been prepared in accordance
with IFRS and represent the full, explicit and unreserved adoption of IFRS.
These consolidated financial statements fairly reflect the Company’s financial position, as of December 31,
2020 and 2019, the comprehensive results of operations, changes in equity and cash flows occurring for the
years then ended.
IFRS establish certain alternatives for their application, those applied by the Company are detailed in this Note
and Note 3.
The accounting policies used in the preparation of these consolidated annual accounts comply with each IFRS
in force at their date of presentation.
Pursuant to CMF requirements, on December 31, 2020 the effects related to the application of IFRS 16 “Leases”
are presented in separate items and the following reclassifications have been made with respect to the
information reported on December 31, 2019 to ensure a consistent presentation between periods, which are
considered not significant for the previously issued financial statements. See Note 4.
Items
Original balances
reported as of
December 31, 2019
Reclassification
Balances reclassified
as of December 31,
2019
Property, plant and equipment, (net)
Right-of-use assets
Other current financial liabilities
Lease liabilities, current
Other non-current financial liabilities
Lease liabilities, non-current
ThUS$
ThUS$
ThUS$
1,607,070
-
298,822
-
1,518,926
-
(37,164)
37,164
(7,694)
7,694
(30,203)
30,203
1,569,906
37,164
291,128
7,694
1,488,723
30,203
138
10) FINANCIAL REPORTS
2.3
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following:
(a) Inventories are recorded at the lower of cost and net realizable value.
(b) Financial derivatives measured at fair value.
(c) Certain financial investments measured at fair value with an offsetting entry in other comprehensive
income.
2.4 Accounting pronouncements
New accounting pronouncements
(a)
The following standards, interpretations and amendments are mandatory for the first time for annual
periods beginning on January 1, 2020:
Amendments and improvements
Description
Mandatory for annual periods
beginning on or after
Amendment to IAS 1 “Presentation of
Financial Statements” and “IAS 8”
Accounting Policies, Changes in
Accounting Estimates and Errors -
Published in October 2018.
This amendment establishes a consistent definition of materiality in all the
IFRCs and the Conceptual Framework for Financial Information; it clarifies
the explanation of the definition of material; and it incorporates some of the
guidelines in IAS 1 on immaterial information.
Amendment to IFRS 3 “Definition of a
Business” - Published in October
2018.
This amendment revises the definition of a business. Based on the feedback
received by the IASB, the application of the current guidance is frequently
seen as too complex, and results in too many transactions that qualify as
business combinations.
Amendments to IFRS 9, IAS 39 and
IFRS 7 “Reform to the referential
interest rate” Published in September
2019.
Amendment to IFRS 16 “Lease
Concessions” - Published in May
2020.
These amendments provide certain simplifications in relation to the reform
to the referential interest rates. These simplifications relate to hedge
accounting and affect the IBOR reform, which generally shouldn’t result in
the finalization of hedge accounting. However, any hedge ineffectiveness
should continue to be recorded in the results.
This amendment provides lessees with an optional exemption regarding the
assessment of whether a lease concession associated with COVID-19 is a
lease modification. Lessees may opt to account for lease concessions as they
would if there were no lease modifications. In many cases, this would give
rise to the accounting for a concession as a variable lease payment.
01-01-2020
01-01-2020
01-01-2020
01-01-2020
Management confirm that the adoption of the aforementioned standards, amendments and interpretations did not significantly impact the
company’s consolidated financial statements.
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10) FINANCIAL REPORTS
(b)
Standards, interpretations and amendments issued that had not become effective for financial
statements beginning on January 1, 2020 and which the Company has not adopted early are as follows:
Standards and Interpretations
Description
Amendment to IAS 1 “Presentation of
financial statements” on classification
of liabilities.
Reference
Framework - Amendments to IFRS 3.
Conceptual
the
to
Amendment to IAS 16 “Property, plant
and equipment”
Amendment to IAS 37, “Provisions,
contingent liabilities and contingent
assets.”
IFRS 9 Financial Instruments.
IFRS 16 Leases.
IFRS 1
International
Standards.
First-time Adoption of
Reporting
Financial
Amendment to IFRS 10 “Consolidated
Financial Statements” and IAS 28
“Investments in Associates and Joint
Ventures”, Published in September
2014.
These limited scope amendments of IAS 1 “Presentation of financial
statements” clarify that the liabilities will be classified as current or non-
current depending on the rights that exist at the close of the reporting
period. The classification is not affected by the expectations of the entity
or the events subsequent to the report date (for example, the receipt of a
waiver or noncompliance with the pact). The amendment also clarifies
what IAS 1 means when referring to “liquidation” of a liability. The
amendment must be applied retroactively in accordance with IAS 8. In May
2020, the IASB issued an “Exposure Draft” proposing deferral of the
effective application date to January 1, 2023.
Minor modifications were made to IFRS 3 “Definition of a Business” to
update references to the conceptual framework for financial reporting and
to add an exception to the recognition of contingent liabilities and
contingent assets within the scope of IAS 37 “Provisions, contingent
liabilities and contingent assets” and Interpretation 21 “Levies.” The
modifications also confirm that contingent assets should not be recognized
in the date of acquisition.
This prohibits companies from deducting from the cost of the property any
revenue received from the sale of articles produced while the company is
preparing the asset for its anticipated use. The company must recognize this
sales revenue and associated costs in the profit or loss for the fiscal year.
This clarifies for onerous contracts which inevitable costs a company must
include to assess whether a contract will result in a loss.
This clarifies which fees must be included in the 10% test for the
derecognition of financial liabilities.
Modification of illustrative example 13 to eliminate the illustration of lessor
payments in relation to improvements to rental properties, to eliminate any
confusion as to the treatment of lease incentives.
This enables entities that have measured their assets and liabilities against
book values in their head office books to also measure the accumulated
translation differences using the amounts notified by the head office. This
amendment will also apply to associates and joint ventures that have taken
the same IFRS 1 exemption.
These amendments address an inconsistency between the requirements in
IFRS 10 and those in IAS 28 in dealing with the sale or contribution of
assets between an investor and its associate or joint venture. The main
consequence of the amendments is that a full gain or loss is recognized
when a transaction involves a business (whether it is housed in a subsidiary
or not), A partial gain or loss is recognized when a transaction involves
assets that do not constitute a business, even if these assets are housed in
a subsidiary.
Mandatory for annual
periods beginning on or after
01-01-2022
01-01-2022
01-01-2022
01-01-2022
01-01-2022
01-01-2022
01-01-2022
undetermined
Management believes that the adoption of the above standards, amendments and interpretations will not have a significant impact on the
Company’s financial statements.
140
10) FINANCIAL REPORTS
2.5 Basis of consolidation
(a)
Subsidiaries
The Company established control as the basis of consolidation of its financial statements. The Company
controls a subsidiary when it is exposed, or has rights, to variable returns from its involvement with the
subsidiary and has the ability to affect those returns through its power over the subsidiary.
The consolidation of a subsidiary starts when the Group controls it and it is no longer included in the
consolidation when this control is lost.
Subsidiaries are consolidated through a line by line method, adding items that represent assets, liabilities,
income and expenses with a similar content, and eliminating operations between companies within the SQM
Group.
Results for dependent companies acquired or disposed of during the period are included in the consolidated
accounts from the date on which control is transferred to the SQM Group or until the date when this control
ends, as relevant.
To account for an acquisition of a business, the Company uses the acquisition method. Under this method, the
acquisition cost is the fair value of assets delivered, equity securities issued, and incurred or assumed liabilities
at the date of exchange. Assets, liabilities and contingencies identifiable assumed in a business combination are
measured initially at fair value at the acquisition date. For each business combination, the Company will
measure the non-controlling interest of the acquiree either at fair value or as proportional share of net
identifiable assets of the acquire.
The details of the consolidated companies can be found in Note 8.
141
10) FINANCIAL REPORTS
2.6
Investments in associates and joint ventures
(a) Joint ventures
Investments in joint arrangements are classified as joint operations or joint ventures. The classification depends
on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.
With respect to joint operations, the Company recognizes its direct right to the assets, liabilities, income and
expenses of the joint arrangement.
(b) Joint ventures and investments in associates
Interests in companies over which joint control is exercised (joint ventures) or where an entity has significant
influence (associates) are recognized using the equity accounting method. Significant influence is presumed
when the investor owns over 20% of the investee’s share capital. The investment is recognized using this
method in the statement of financial position at cost plus changes subsequent to acquisition and includes the
proportional share of the associate’s equity. For these purposes, the percentage interest in the associate is used.
The associated acquired goodwill is included in the investee’s book value and is not amortized. The debit or
credit to the income statement reflects the proportional share of the profit or loss of the associate or joint venture.
Unrealized gains from transactions with joint ventures or associates are eliminated in accordance with the
Company's percentage interest in such entities. Any unrealized losses are also eliminated, unless that transaction
provides evidence that the transferred asset is impaired.
Changes in associate’s or joint ventures equity are recognized proportionally with a charge or credit to "Other
Reserves" and are classified according to their origin. The reporting dates of the associate or joint ventures, the
Company and related policies are similar for equivalent transactions and events in similar circumstances. In the
event that significant influence is lost, or the investment is sold, or held for sale, the equity method is suspended,
not recognizing the proportional share of the gain or loss. If the resulting value under the equity method is
negative, the share of profit or loss is reflected as zero in the consolidated financial statements, unless there is
a commitment by the Company to restore the capital position of the Company, in which case the related risk
provision and expense are recorded.
Dividends received by these companies are recorded by reducing the value of the investment and are shown in
cash flows from operating activities, and the proportional share of the gain or loss recognized in accordance
with the equity method is included in the consolidated income statement under "Share of Gains (Losses) of
Associates and Joint Ventures Accounted for Using the Equity Method''.
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10) FINANCIAL REPORTS
Note 3 Significant accounting policies
3.1 Classification of balances as current and non-current
In the consolidated statement of financial position, balances are classified in consideration of their recovery
(maturity) dates; i.e., those maturing within a period equal to or less than 12 months are classified as current
counted from the closing date of the consolidated financial statements and those with maturity dates exceeding
the aforementioned period are classified as non-current.
The exception to the foregoing relates to deferred taxes, which are classified as non-current, regardless of the
maturity they have.
3.2
Functional and presentation currency
The Company’s consolidated financial statements are presented in United States dollars, without decimal
places, which is the Company’s functional and presentation currency and is the currency of the main economic
environment in which it operates. Consequently, the term foreign currency is defined as any currency other than
the U.S. dollar.
3.3 Accounting policy for foreign currency translation
(a)
SQM group entities:
The revenue, expenses, assets and liabilities of all entities that have a functional currency other than the
presentation currency are converted to the presentation currency as follows:
-
-
-
Assets and liabilities are converted at the closing exchange rate prevailing on the reporting date.
Revenues and expenses of each profit or loss account are converted at monthly average exchange rates.
All resulting foreign currency translation gains and losses are recognized as a separate component in
translation reserves.
In consolidation, foreign currency differences arising from the translation of a net investment in foreign entities
are recorded in shareholder’s equity (“other reserves”), At the date of disposal, such foreign currency translation
differences are recognized in the statement of income as part of the gain or loss from the sale.
143
The main exchange rates and UF used to translate monetary assets and liabilities, expressed in foreign currency
at the end and average of each period in respect to U.S. dollars, are as follows:
10) FINANCIAL REPORTS
Currencies
Brazilian real
New Peruvian sol
Argentine peso
Japanese yen
Euro
Mexican peso
Australian dollar
Pound Sterling
South African rand
Chilean peso
Chinese yuan
Indian rupee
Thai Baht
Turkish lira
UF (*)
(*) US$ per UF
Closing exchange rates
Average exchange rates
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
ThUS$
ThUS$
5.18
3.62
84.14
105.56
0.81
19.93
1.30
0.74
14.61
710.95
6.51
73.30
29.94
7.36
40.89
4.02
3.31
59.83
108.90
0.89
18.89
1.43
0.76
14.06
748.74
6.98
71.31
29.97
5.94
37.81
5.14
3.60
82.62
103.81
0.82
19.97
1.33
0.74
14.88
731.92
6.53
73.65
30.08
7.70
39.73
4.11
3.35
59.86
109.12
0.90
19.11
1.45
0.76
14.42
767.22
7.01
71.16
30.22
5.85
36.90
(b)
Transactions and balances
The Company’s non-monetary transactions in currencies other than the functional currency (Dollar) are
translated to the respective functional currencies of Group entities at the exchange rate on the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
retranslated to the functional currency at the exchange rate at that date. All differences are recorded in the
statement of income except for all monetary items that provide an effective hedge for a net investment in a
foreign operation. These items are recognized in other comprehensive income until disposal of the investment,
when they are recognized in the statement of income. Charges and credits attributable to foreign currency
translation differences on those hedge monetary items are also recognized in other comprehensive income.
Non-monetary assets and liabilities that are measured at historical cost in a foreign currency are retranslated to
the functional currency at the historical exchange rate of the transaction. Non-monetary items that are measured
based on fair value in a foreign currency are translated using the exchange rate at the date on which the fair
value is determined.
144
10) FINANCIAL REPORTS
3.4 Consolidated statement of cash flows
Cash equivalents correspond to highly liquid short-term investments that are easily convertible into known
amounts of cash and subject to insignificant risk of changes in their value and mature in less than three months
from the date of acquisition of the instrument.
For the purposes of the statement of cash flows, cash and cash equivalents comprise cash and cash equivalents
as defined above.
The statement of cash flows present cash transactions performed during the year, determined using the direct
method.
3.5 Accounting policy for Financial assets
Management determines the classification of its financial assets, in accordance with the provisions of IFRS 9,
at fair value (either through other comprehensive income, or through profit or loss), and at amortized cost. The
classification depends on the business model of the entity to manage the financial assets and the contractual
terms of the cash flows.
In the initial recognition, the Company measures its financial assets at fair value more or less, in the case of a
financial asset that is not accounted for at fair value through profit or loss, the transaction costs that are directly
attributable to the acquisition of the financial asset on the date when the Company commits to the purchase or
sale of an asset. In the case of account receivables and other accounts receivables, the transaction price at the
initial recognition is measured in accordance with the provisions of IFRS 15.
After initial recognition, the Company measures its financial assets according to the Company's business model
for managing its financial assets and the contractual terms of its cash flows:
(a) Financial instruments measured at amortized cost. Financial assets that meet the following conditions are
included in this category (i) the business model that supports it aims to maintain the financial assets to
obtain the contractual cash flows and the contractual conditions of the financial asset give place, on
specified dates, to cash flows that are only payments of the principal and interest on the outstanding
principal amount. The Company’s financial assets that meet these conditions are: (ii) cash equivalents;
(iii) related party receivables; (iv) trade debtors; (v) other receivables.
(b) Financial instruments at fair value. A financial asset should be measured at fair value through profit or loss
or fair value through other comprehensive income, depending on the following:
(i) "Fair Value Through Other Comprehensive Income": Assets held to collect contractual cash
flows and to be sold, where the asset cash flows are only capital and interest payments, are
measured at fair value through other comprehensive income. Changes in book values are
through other comprehensive income, except for the recognition of impairment losses,
interest income and exchange gains and losses, which are recognized in the income statement.
When a financial asset is derecognized, the cumulative gain or loss previously recognized in
other comprehensive income is reclassified from equity to the income statement. Interest
income from these financial assets is included in financial income using the effective interest
method. Exchange gains and losses are presented in the income statement and impairment
losses are separately presented in the income statement.
(ii) "Fair Value Through Profit and Loss": Assets that do not meet the amortized cost or "Fair
Value Through Other Comprehensive Income" criteria are valued at "Fair Value Through
Profit and Loss".
(c) Financial equity assets at fair value through other comprehensive income. Equity instruments that are not
classified as held for trading and which the Group has irrevocably chosen to recognize in this category.
145
10) FINANCIAL REPORTS
Financial asset impairment
The Company evaluates expected credit losses associated with its debt instruments carried at amortized cost
and fair value through other comprehensive income. The impairment method used depends on whether there
has been a significant increase in credit risk.
The Company applies the IFRS 9 simplified approach to measure expected credit losses using the lifetime
expected loss on all trade receivables. Expected credit losses are measured by grouping receivables by their
shared credit risk characteristics and days overdue.
The Company has concluded that the expected loss rates for trade receivables are a reasonable approximation
of the loss rates for these assets. Expected loss rates are based on sales payment profiles and historical credit
losses within this period. Historical loss rates are adjusted to reflect current and expected information regarding
macroeconomic factors that affect the ability of customers to meet their commitments.
Impairment losses from receivables and contract assets are shown as net impairment losses in the line
“Impairment of financial assets and reversal of impairment losses”, see Note 25.7. The subsequent recovery of
previously canceled amounts is accredited in the same line.
146
10) FINANCIAL REPORTS
3.6 Financial liabilities
Management determines the classification of its financial liabilities in accordance with the provisions of IFRS
9, at fair value or at amortized cost. The classification depends on the business model of the entity to manage
the financial assets and the contractual terms of the cash flows.
At the initial recognition, the Company measures its financial liabilities by their fair value more or less, in the
case of a financial liability that is not accounted for at fair value through profit or loss, the transaction costs that
are directly attributable to the acquisition of the financial liability. After initial recognition, the Company
measures its financial liabilities at amortized cost unless the Company, at the initial moment, irrevocably
designates the financial liability as measured at fair value through profit or loss.
Financial liabilities measured at amortized cost are commercial accounts payable and other accounts payable
and other financial liabilities.
Valuation at amortized cost is made using the effective interest rate method. Amortized cost is calculated by
considering any premium or discount on the acquisition and includes transaction costs that are an integral part
of the effective interest rate.
Financial liabilities are recorded as not current when they mature in more than 12 months and as current when
they mature in less than 12 months.
3.7 Reclassification of financial instruments
When the Company changes its business model for managing financial assets, it will reclassify all its financial
assets affected by the new business model. Financial liabilities cannot be reclassified.
3.8 Financial instrument derecognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire,
or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks
and rewards of ownership of the financial asset are transferred; and the control of the financial assets has not
been retained.
The Company derecognizes a financial liability when its contractual obligations or a part of these are
discharged, paid to the creditor or legally extinguished from the principle responsibility contained in the
liability.
3.9 Derivative and hedging financial instruments
Derivatives are recognized initially at fair value as of the date on which the derivatives contract is signed and,
they are subsequently assessed at fair value. The method for recognizing the resulting gain or loss depends on
whether the derivative has been designated as an accounting hedge instrument and, if so, it depends on the type
of hedging, which may be as follows:
a) Fair value hedge of assets and liabilities recognized (fair value hedges);
b) Hedging of a single risk associated with a recognized asset or liability or a highly probable forecast
transaction (cash flow hedge).
At the beginning of the transaction, the Company documents the relationship that exists between hedging
instruments and those items hedged, as well as their objectives for risk management purposes and the strategy
to conduct different hedging operations.
147
10) FINANCIAL REPORTS
The Company also documents its evaluation both at the beginning and at the end of each period if the derivatives
used in hedging transactions are highly effective to offset changes in the fair value or in cash flows of hedged
items.
The fair value of derivative instruments used for hedging purposes is shown in Note 14.3. Changes in the cash
flow hedge reserve are classified as a non-current asset or liability if the remaining expiration period of the
hedged item is more than 12 months, and as a current asset or liability if the remaining expiration period of the
hedged item is less than 12 months.
Derivatives that are not designated or do not qualify as hedging derivatives are classified as current assets or
liabilities, and changes in the fair value are directly recognized through profit or loss.
a)
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in
profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to
the hedged risk. The gain or loss relating to the effective portion of interest rate swaps that hedge fixed rate
borrowings is recognized in profit or loss within finance costs, together with changes in the fair value of the
hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion
is recognized in profit or loss within other income or other expenses. If the hedge no longer meets the criteria
for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest
method is used is amortized to profit or loss over the period to maturity using a recalculated effective interest
rate.
b)
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is initially recognized with a debit or credit
to other comprehensive income, while any ineffective portion is immediately recognized with a debit or credit
to income, as appropriate depending on the nature of the hedged risk. The amounts accumulated in net equity
are carried over to results when the hedged items are settled or when these have an impact on results.
When a hedging instrument no longer meets the criteria for hedge accounting, any cumulative deferred gain or
loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs.
When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of
hedging that were reported in equity are immediately reclassified to profit or loss.
148
10) FINANCIAL REPORTS
3.10 Derivative financial instruments not considered as hedges
Derivative financial instruments not considered as hedges are recognized at fair value with the effect in the
results of the year. The Company has derivative financial instruments to hedge foreign currency risk exposure.
The Company continually evaluates the existence of embedded derivatives in both its contracts and in its
financial instruments. As of December 31, 2020, and December 31, 2019, the Company does not have any
embedded derivatives.
3.11 Deferred acquisition costs from insurance contracts
Acquisition costs from insurance contracts are classified as prepayments and correspond to insurance contracts
in force, recognized using the straight-line method and on an accrual basis independent of payment date. These
are recognized under other non-financial assets.
3.12 Leases
(i) Right-of-use assets
The Company recognizes right-of-use assets on the initial lease date (i.e., the date on which the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, adjusted by any new measurement of the lease liability. The cost of right-of-use assets includes the
amount of recognized lease liabilities, direct initial costs incurred and lease payments made on the start date or
sooner, less the lease incentives received. Unless the Company is reasonably sure it will take ownership of the
leased asset at the end of the lease period, the assets recognized through right-of-use are depreciated in a straight
line during the shortest period of their estimated useful life and lease period. Right-of-use assets are subject to
impairment as per “IAS 36 Impairment of Assets”.
(ii) Lease liabilities
On the lease start date, the Company recognizes lease liabilities measured at present value of lease payments
that will be made during the lease period. Lease payments include fixed payments (including payments that are
essentially fixed), less incentives for lease receivables, variable lease payments that are dependent on an index
or rate and amounts that are expected to be paid as guaranteed residual value. Lease payments also include the
exercise price of a purchase option if the Company is reasonably sure it will exercise this and penalty payments
for terminating a lease, if the lease period reflects that the Company will exercise the option to terminate.
Variable lease payments that are not dependent on an index or rate are recognized as expenses in the period that
produces the event or condition that triggers payment.
When calculating the present value of lease payments, the Company uses the incremental borrowing rate on the
initial lease date if the interest rate implicit in the lease cannot be determined easily. After the start date, the
lease liability balance will increase to reflect the accumulation of interest and will diminish as lease payments
are made. Furthermore, the book value of lease liabilities is remeasured in the event of an amendment, a change
in the lease period, a change in the fixed lease payments in substance or a change in the assessment to buy the
underlying asset.
Payments made that affect lease liabilities are presented as part of the financing activities in the cash flow
statement.
(iii) Short-term leases and low-value asset leases
The Company applies the short-term lease recognition exemption to leases with a lease term of 12 months or
less starting on the start date and that don’t have a purchase option. It also applies the low-value asset lease
recognition exemptions. Lease payments in short-term leases and low-value asset leases are recognized as lineal
expenses during the lease term.
149
10) FINANCIAL REPORTS
(d) Significant judgments in the determination of the lease term for contracts with renewal options
The Company determines the lease term as the non-cancellable period of the lease, together with periods
covered by an option to extend the lease if it is reasonably certain that this will be exercised, or any period
covered by an option to terminate the lease, if it is reasonably certain that this will not be exercised.
The Company has the option, under some of its leases, to lease assets for additional terms. The Company applies
its judgment when assessing whether it is reasonably certain that it will exercise the option to renovate. In other
words, it considers all the relevant factors that create an economic incentive for it to exercise the option to
renovate. After the start date, the Company reevaluates the lease term if there is a significant event or change
in the circumstances that are under its control and affect its capacity to exercise (or not exercise) the option to
renovate.
3.13 Inventory measurement
The method used to determine the cost of inventories is the weighted average monthly cost of warehouse
storage. In determining production costs for own products, the company includes the costs of labor, raw
materials, materials and supplies used in production, depreciation and maintenance of the goods that participate
in the production process, the costs of product movement necessary to maintain stock on location and in the
condition in which they are found, and also includes the indirect costs of each task such as laboratories, process
and planning areas, and personnel expenses related to production, among others.
For finished and in-process products, the company has four types of provisions, which are reviewed quarterly:
1. Provision associated with the lower value of stock: The provision is directly identified with the product
that generates it and involves three types: (i) provision of lower realizable value, which corresponds to the
difference between the inventory cost of intermediary or finished products, and the sale price minus the
necessary costs to bring them to the same conditions and location as the product with which they are
compared; (ii) provision for future uncertain use that corresponds to the value of those products in process
that are likely not going to be used in sales based on the company’s long-term plans; (iii) reprocessing
costs of products that are unfeasible for sale due to current specifications.
2. Provision associated with physical differences in inventory: A provision is made for differences that
exceed the tolerance considered in the respective inventory process (physical and annual inventories are
taken for the productive units in Chile and the port of Tocopilla, the business subsidiaries depend on the
last zero ground obtained, but in general it is at least once a year), these differences are recognized
immediately.
3. Potential errors in the determination of stock: The company has an algorithm that is reviewed at least once
a year and corresponds to diverse percentages assigned to each inventory based on the product, location,
complexity involved in the associated measurement, rotation and control mechanisms.
4. Provisions undertaken by business subsidiaries: these are historical percentages that are adjusted as zero
ground is attained based on normal inventory management.
Inventories of raw materials, materials and supplies for production are recorded at acquisition cost. Cyclical
inventories are performed in warehouses, as well as general inventories every three years. Differences are
recognized at the moment they are detected. The company has a provision that makes quarterly calculations
from percentages associated with each type of material (classification by warehouse and rotation), these
percentages use the lower value resulting from deterioration or obsolescence as well as potential losses. This
provision is reviewed at least annually, and considers the historical profit and loss obtained in the inventory
processes.
150
10) FINANCIAL REPORTS
3.14 Transactions with non-controlling interests
Non-controlling interests are recorded in the consolidated statement of financial position within equity but
separate from equity attributable to the owners of the Parent.
3.15 Related party transactions
Transactions between the Company and its subsidiaries are part of the Company’s normal operations within its
scope of business activities. Conditions for such transactions are those normally effective for those types of
operations with regard to terms and market prices. The maturity conditions vary according to the originating
transaction.
3.16 Property, plant and equipment
Property, plant and equipment assets are stated at acquisition cost, net of the related accumulated depreciation,
amortization and impairment losses that they might have experienced.
In addition to the price paid for the acquisition of tangible property, plant and equipment, the Company has
considered the following concepts as part of the acquisition cost, as applicable:
(a)
(b)
Accrued interest expenses during the construction period that are directly attributable to the
acquisition, construction or production of qualifying assets, which are those that require a substantial
period prior to being ready for use. The interest rate used is that related to the project’s specific
financing or, should this not exist, the average financing rate of the investor company.
The future costs that the Company will have to experience, related to the closure of its facilities at the
end of their useful life, are included at the present value of disbursements expected to be required to
settle the and its subsequent variation is recorded directly in results.
Having initially recognized provisions for closure and refurbishment, the corresponding cost is
capitalized as an asset in “Property, plant and equipment” and amortized in line with the amortization
criteria for the associated assets.
Construction-in-progress is transferred to property, plant and equipment in operation once the assets are
available for use and the related depreciation and amortization begins on that date.
Extension, modernization or improvement costs that represent an increase in productivity, ability or efficiency
or an extension of the useful lives of property, plant and equipment are capitalized as a higher cost of the related
assets. All the remaining maintenance, preservation and repair expenses are charged to expense as they are
incurred.
The replacement of assets, which increase the asset’s useful life or its economic capacity, are recorded as a
higher value of property, plant and equipment with the related derecognition of replaced or renewed elements.
Gains or losses which are generated from the sale or disposal of property, plant and equipment are recognized
as income (or loss) in the period and calculated as the difference between the asset’s sales value and its net
carrying value.
Costs derived from the daily maintenance of property, plant and equipment are recognized when incurred.
151
10) FINANCIAL REPORTS
3.17 Depreciation of property, plant and equipment
Property, plant and equipment are depreciated through the straight-line distribution of cost over the estimated
technical useful life of the asset, which is the period in which the Company expects to use the asset. When
components of one item of property, plant and equipment have different useful lives, they are recorded as
separate assets. Useful lives are reviewed on an annual basis.
Fixed assets located in Salar de Atacama consider useful life to be the lesser value between the technical useful
life and the years remaining until 2030.
In the case of certain mobile equipment, depreciation is performed depending on the hours of operation.
The useful lives used for the depreciation and amortization of assets included in property, plant and equipment
in years are presented below:
Classes of property, plant and equipment
Minimum life or rate
(years)
Maximum life or rate
(years)
life or average rate
in years
Mining assets
Energy generating assets
Buildings
Supplies and accessories
Office equipment
Transport equipment
Network and communication equipment
IT equipment
Machinery, plant and equipment
Other property, plant and equipment
3.18
Goodwill
3
3
3
2
5
5
4
5
5
3
7
16
25
10
5
8
10
11
25
15
6
9
13
7
5
6
8
7
13
10
Goodwill acquired represents the excess in acquisition cost on the fair value of the Company's ownership of the
net identifiable assets of the subsidiary on the acquisition date. Goodwill acquired related to the acquisition of
subsidiaries is included in the line item goodwill, which is subject to impairment tests annually or more
frequently if events or changes in circumstances indicate that it might be impaired and is stated at cost less
accumulated impairment losses. Gains and losses related to the sale of an entity include the carrying value of
goodwill related to the entity sold.
This intangible asset is assigned to cash-generating units with the purpose of testing impairment losses. It is
allocated based on cash-generating units expected to obtain benefits from the business combination from which
the aforementioned goodwill acquired arose.
152
10) FINANCIAL REPORTS
3.19 Intangible assets other than goodwill
Intangible assets other than goodwill mainly relate to water rights, emission rights, commercial brands, costs
for rights of way for electricity lines, license costs and the development of computer software and mining
property and concession rights, client portfolio and commercial agent.
(a) Water rights
Water rights acquired by the Company relate to water from natural sources and are recorded at acquisition cost.
Given that these assets represent legal rights granted in perpetuity to the Company, they are not amortized, but
are subject to annual impairment tests.
(b) Rights of way for electric lines
As required for the operation of industrial plants, the Company has paid rights of way in order to install wires
for the different electric lines on third party land. These rights are presented under intangible asset. Amounts
paid are capitalized at the date of the agreement and amortized in the statement of income, according to the life
of the right of way.
(c) Computer software
Licenses for IT programs acquired are capitalized based on their acquisition and customization costs. These
costs are amortized over their estimated useful lives.
Expenses related to the development or maintenance of IT programs are recognized as an expense as and when
incurred. Costs directly related to the production of unique and identifiable IT programs controlled by the
Group, and which will probably generate economic benefits that are higher than its costs during more than a
year, are recognized as intangible assets. Direct costs include the expenses of employees who develop
information technology software and general expenses in accordance with corporate charges received.
The costs of development for IT programs are recognized as assets are amortized over their estimated useful
lives.
(d) Mining property and concession rights
The Company holds mining property and concession rights from the Chilean and Western Australian
Governments. Property rights from the State of Chile are usually obtained at no initial cost (other than the
payment of mining patents and minor recording expenses) and once the rights on these concessions have been
obtained, they are retained by the Company while annual patents are paid. Such patents, which are paid
annually, are recorded as prepaid assets and amortized over the following twelve months. Amounts attributable
to mining concessions acquired from third parties that are not from the Chilean Government are recorded at
acquisition cost within intangible assets.
(e) Estimated useful lives or amortization rates used for finite identifiable intangible assets
Finite useful life measures the length of, or number of production or similar units constituting that useful life.,
except for the mining claims granted by Corfo, which correspond to assets subject to restitution. For this reason
they are considered assets with a finite useful life and their useful life is assigned until the year 2030 when the
contract ends.
The estimated useful life for software which they are amortized corresponds to the periods defined by the
contracts or rights from which they originate.
a. Minimum and maximum amortization lives or rates of intangible assets:
153
10) FINANCIAL REPORTS
Estimated useful life or amortization rate
Minimum Life or
Rate
Maximum Life or
Rate
Water rights and rights of way
Mining rights granted by Corfo
Mining rights
IT programs
Indefinite
10 years
Indefinite
10 years
Unit-production method
2 years
8 years
3.20
Research and development expenses
Research and development expenses are charged to profit or loss in the period in which the expenditure was
incurred.
3.21
Exploration and evaluation expenses
The Company holds mining concessions for exploration and exploitation of ore, the Company gives the
following treatment to expenses associated with exploration and assessment of these resources:
(a) Caliche
Once the rights have been obtained, the Company records the disbursements directly associated with the
exploration and assessment of the deposit as an at cost asset. These disbursements include the following
items: geological surveys, drilling, borehole extraction and sampling, activities related to the technical
assessment and commercial viability of the extraction, and in general, any disbursement directly related to
specific projects where the objective is to find ore resources.
If the technical studies determine that the ore grade is not economically viable, the asset is directly charged
to profit and loss. If determined otherwise, the asset described above is associated with the extractable ore
tonnage which is amortized as it is used. These assets are presented in the “other non-current non-financial
assets” category, reclassifying the portion related to the area to be extracted that year as inventories.
(b) Metal exploration
Expenses related to metal exploration are charged to profit or loss in the period in which they are
recognized if the project assessed doesn't qualify for consideration as advanced exploration, otherwise
these are amortized during the development stage.
(c) Salar de Atacama exploration
Salar de Atacama exploration expenses are presented as non-current assets as the property, plant and
equipment category and correspond mainly to wells that can also be used in the extraction of the deposit
and/or monitoring, these are amortized over 10 years.
(d) Mount Holland exploration
Mount Holland exploration expenses are presented into “Property, Plant and Equipment”, specifically in
Constructions in progress and primarily consider exploration boreholes and complementary studies for the
lithium ore study of the area of Western Australia, Australia. These expenses will begin to be amortized in
the development stage.
3.22
Impairment of non-financial assets
Assets subject to depreciation and amortization are also subject to impairment testing, provided that an event
or change in the circumstances indicates that the amounts in the accounting records may not be recoverable, an
impairment loss is recognized for the excess of the book value of the asset over its recoverable amount.
154
10) FINANCIAL REPORTS
For assets other than goodwill, the Group annually assesses whether there is any indication that a previously
recognized impairment loss may no longer exist or may have decreased. Should such indications exist, the
recoverable amount is estimated.
The recoverable amount of an asset is the higher between the fair value of an asset or cash generating unit less
costs of sales and its value in use, and is determined for an individual asset unless the asset does not generate
any cash inflows that are clearly independent from other assets or groups of assets
In evaluating value in use, estimated future cash flows are discounted using a pre-tax discount rate that reflects
current market assessment, the value of money over time and the specific asset risks.
Impairment losses from continuing operations are recognized with a debit to profit or loss in the categories of
expenses associated with the impaired asset function.
A previously recognized impairment loss is only reversed if there have been changes in the estimates used to
determine the asset’s recoverable amount since the last time an impairment loss was recognized. If this is the
case, the carrying value of the asset is increased to its recoverable amount. This increased amount cannot exceed
the carrying value that would have been determined, net of depreciation, if an asset impairment loss had not
been recognized in prior years. This reversal is recognized with a credit to profit or loss.
Assets with indefinite lives are assessed for impairment annually.
The current value of future cash flows generated by these assets has been estimated given the variation in sales
volumes, market prices and costs, discounted with a WACC rate. For December 31, 2020, the WACC rate was
9.73%.
3.23 Minimum dividend
As required by Chilean law and regulations, our dividend policy is decided upon from time to time by our Board
of Directors and is announced at the Annual Ordinary Shareholders’ Meeting, which is generally held in April
of each year. Shareholder approval of the dividend policy is not required. However, each year the Board must
submit the declaration of the final dividend or dividends in respect of the preceding year, consistent with the
then-established dividend policy, to the Annual Ordinary Shareholders’ Meeting for approval. As required by
the Chilean Companies Act, unless otherwise decided by unanimous vote of the holders of issued shares, we
must distribute a cash dividend in an amount equal to at least 30% of our consolidated net income for that year
(determined in accordance with CMF regulations), unless and to the extent the Company has a deficit in retained
earnings. (See Note 21.4).
3.24 Earnings per share
The basic earnings per share amounts are calculated by dividing the profit for the year attributable to the
ordinary owners of the parent by the weighted average number of ordinary shares outstanding during the year.
The Company has not conducted any type of operation of potential dilutive effect that would entail the
disclosure of diluted earnings per share.
3.25 Capitalization of interest expenses
The cost of interest is recognized as an expense in the year in which it is incurred, except for interest that is
directly related to the acquisition and construction of tangible property, plant and equipment assets and that
complies with the requirements of IAS 23.
The Company capitalizes all interest costs directly related to the construction or to the acquisition of property,
plant and equipment, which require a substantial time to be suitable for use.
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10) FINANCIAL REPORTS
The financial expenses accrued during the construction period that are directly attributable to the acquisition,
construction or production of assets that qualify for this, use the corresponding interest rate for the financing
specific to the project; where this does not exist, the mean financing rate of the subsidiary that makes the
investment is used.
3.26 Other provisions
Provisions are recognized when:
• The Company has a present,legal or constructive obligation as the result of a past event.
•
It is more likely than not that certain resources must be used, to settle the obligation.
• A reliable estimate can be made of the amount of the obligation.
In the event that the provision or a portion of it is reimbursed, the reimbursement is recognized as a separate
asset solely if there is certainty of income.
In the consolidated statement of income, the expense for any provision is presented net of any reimbursement.
Should the effect of the value of money over time be significant, provisions are discounted using a discount rate
before tax that reflects the liability’s specific risks. When a discount rate is used, the increase in the provision
over time is recognized as a finance cost.
The Company’s policy is to maintain provisions to cover risks and expenses based on a better estimate to deal
with possible or certain and quantifiable responsibilities from current litigation, compensations or obligations,
pending expenses for which the amount has not yet been determined, collaterals and other similar guarantees
for which the Company is responsible. These are recorded at the time the responsibility or the obligation that
determines the compensation or payment is generated.
3.27 Obligations related to employee termination benefits and pension commitments
Obligations towards the Company’s employees comply with the provisions of the collective bargaining
agreements in force, which are formalized through collective employment agreements and individual
employment contracts, except for the United States, which is regulated in accordance with employment plans
in force up to 2002. (See more details in Note 19.4).
These obligations are valued using actuarial calculations, according to the projected unit credit method which
considers such assumptions as the mortality rate, employee turnover, interest rates, retirement dates, effects
related to increases in employees’ salaries, as well as the effects on variations in services derived from variations
in the inflation rate. The criteria in force contained in the revised IAS 19 are also considered.
Actuarial gains and losses that may be generated by variations in defined, pre-established obligations are
directly recorded in “Other Comprehensive Income”.
Actuarial losses and gains have their origin in deviations between the estimate and the actual behavior of
actuarial assumptions or in the reformulation of established actuarial assumptions.
The Company’s subsidiary SQM North America has established pension plans for its retired employees that are
calculated by measuring the projected obligation using a net salary progressive rate net of adjustments for
inflation, mortality and turnover assumptions, deducting the resulting amounts at present value. The net balance
of this obligation is presented under the “Non-Current Provisions for Employee Benefits” (refer to Note 19.4).
3.28
Compensation plans
Compensation plans implemented through benefits provided in share-based payments settled in cash are
recognized in the financial statements at their fair value, in accordance with IFRS 2. Changes in the fair value
of options granted are recognized with a charge to payroll in the results for the period (see Note 19.6).
156
10) FINANCIAL REPORTS
3.29
Revenue recognition
Revenue includes the fair value of considerations received or receivable for the sale of goods and services
during the performance of the Company's activities. Revenue is presented net of value added tax, estimated
returns, rebates and discounts and after the elimination of sales among subsidiaries.
Revenues are recognized when the specific conditions for each income stream are met, as follows:
(a) Sale of goods
The sale of goods is recognized when the Company has delivered products to the customer, and there is no
obligation pending compliance that could affect the acceptance of products by the customer. The delivery does
not occur until products have been shipped to the customer or confirmed as received by the customer, and the
related risks of obsolescence and loss have been transferred to the customer and the customer has accepted the
products in accordance with the conditions established in the sale, when the acceptance period has ended, or
when there is objective evidence that those criteria required for acceptance have been met.
Sales are recognized in consideration of the price set in the sales agreement, net of volume discounts and
estimated returns at the date of the sale. Volume discounts are evaluated in consideration of annual foreseen
purchases and in accordance with the criteria defined in agreements.
(b) Sale of services
Revenue associated with the rendering of services is recognized considering the degree of completion of the
service as of the date of presentation of the consolidated classified statement of financial position, provided that
the result from the transaction can be estimated reliably.
(c)
Income from dividends
Income from dividends is recognized when the right to receive the payment is established.
3.30 Finance income and finance costs
Finance income is mainly composed of interest income from financial instruments such as term deposits and
mutual fund deposits. Interest income is recognized in profit or loss at amortized cost, using the effective interest
rate method.
Finance costs are mainly composed of interest on bank borrowing expenses, interest on bonds issued and interest
capitalized for borrowing costs for the acquisition, construction or production or qualifying assets. Borrowing
costs and bonds issued are also recognized in profit or loss using the effective interest rate method.
3.31
Current income tax and deferred
Corporate income tax for the year is determined as the sum of current and deferred income taxes from the
different consolidated companies.
Current taxes are based on the application of the various types of taxes attributable to taxable income for the
period.
Differences between the book value of assets and liabilities and their tax basis generate the balance of deferred
tax assets or liabilities, which are calculated using the tax rates expected to be applicable when the assets and
liabilities are realized.
In conformity with current tax regulations, the provision for corporate income tax and taxes on mining activity
is recognized on an accrual basis, presenting the net balances of accumulated monthly tax provisional payments
for the fiscal period and associated credits. The balances of these accounts are presented in current income taxes
recoverable or current taxes payable, as applicable.
The income tax and variations in deferred tax assets or liabilities that are not the result of business combinations
are recorded in the statement of income accounts or equity accounts in the consolidated statement of financial
position, considering the origin of the gains or losses which have generated them.
157
10) FINANCIAL REPORTS
At each reporting period, the carrying amount of deferred tax assets is reviewed and recognized only if it is
probable that future taxable amounts will be available to allow the recovery of all or a portion of the deferred
tax assets.
With respect to deductible temporary differences associated with investments in subsidiaries, associated
companies and interest in joint ventures, deferred tax assets are recognized solely provided that it is more likely
than not that the temporary differences will be reversed in the near future and that there will be taxable income
with which they may be used. The deferred taxes related to items directly recognized in equity is registered
with effect on other comprehensive income and not with effect on income.
Deferred tax assets and liabilities are offset if there is a legally receivable right of offsetting tax assets against
tax liabilities and the deferred tax is related to the same tax entity and authority.
The recognized deferred tax assets refer to the amount of income tax to recover in future periods, related to:
a) deductible temporary differences;
b) compensation for losses obtained in prior periods, which have not yet been subject to tax deduction;
and
c) compensation for unused credits from prior periods.
The Company recognizes deferred tax assets when it has the certainty that they can be offset with tax income
from subsequent periods, unused tax losses or credits to date, but only when this availability of future tax income
is probable and can be used for offsetting these unused tax losses or credits.
The recognized deferred tax liabilities refer to the amount of income tax to pay in a future period, related to
taxable temporary differences.
3.32 Operating segment reporting
IFRS 8 requires that companies adopt a management approach to disclose information on the operations
generated by its operating segments. In general, this is the information that management uses internally for the
evaluation of segment performance and making the decision on how to allocate resources for this purpose.
An operating segment is a group of assets and operations responsible for providing products or services subject
to risks and performance that are different from those of other business segments. A geographical segment is
responsible for providing products or services in a given economic environment subject to risks and
performance that are different from those of other segments operating in other economic environments.
Allocation of assets and liabilities, to each segment is not possible given that these are associated with more
than one segment, except for depreciation, amortization and impairment of assets, which are directly allocated
in accordance with the criteria established in the costing process for product inventories to the corresponding
segments.
3.33 Primary accounting criteria, estimates and assumptions
Management is responsible for the information contained in these consolidated financial statements, which
expressly indicate that all the principles and criteria included in IFRS, as issued by the IASB, have been applied
in full.
In preparing the consolidated financial statements of Sociedad Química y Minera de Chile S.A. and its
subsidiaries, management has made judgments and estimates to quantify certain assets, liabilities, revenues,
expenses and commitments included therein. Basically, these estimates refer to:
- Estimated useful lives are determined based on current facts and past experience and take into
consideration the expected physical life of the asset, the potential for technological obsolescence,
and regulations. (See Notes 3.22, 16 and 17).
158
10) FINANCIAL REPORTS
-
Impairment losses of certain assets - Goodwill and intangible assets that have an indefinite useful
life are not amortized and are assessed for impairment on an annual basis, or more frequently if
the events or changes in circumstances indicate that these may have deteriorated Other assets,
including property, plant and equipment, exploration assets, goodwill and intangible assets are
reviewed for impairment whenever events or changes in circumstances indicate that their carrying
amounts exceed their recoverable amounts. If an impairment assessment is required, the
assessment of value in use often requires estimates and assumptions such as discount rates,
exchange rates, commodity prices, future capital requirements and future operating performance.
Changes in such estimates could impact the recoverable values of these assets. Estimates are
reviewed regularly by management (See Notes 16 and 17).
- Assumptions used in calculating the actuarial amount of pension-related and severance indemnity
payment benefit commitments (See Note 19) and determination of long-term provisions.
- Contingencies – The amount recognized as a provision, including legal, contractual, constructive
and other exposures or obligations, is the best estimate of the consideration required to settle the
related liability, including any related interest charges, considering the risks and uncertainties
surrounding the obligation. In addition, contingencies will only be resolved when one or more
future events occur or fail to occur. Therefore, the assessment of contingencies inherently involves
the exercise of significant judgment and estimates of the outcome of future events. The Company
assesses its liabilities and contingencies based upon the best information available, relevant tax
laws and other appropriate requirements (See Notes 22).
- Volume determination for certain in-process and finished products is based on topographical
measurements and technical studies that cover the different variables affecting products in stock
(density and moisture, among others), and related allowance.
- Estimates for obsolescence provisions to ensure that the carrying value of inventory is not in
excess of the net realizable Inventory valuation. (See Note 12).
Despite the fact that these estimates have been made on the basis of the best information available on the date
of preparation of these consolidated financial statements, certain events may occur in the future and oblige their
amendment (upwards or downwards) over the next few years, which would be made prospectively.
3.34
Environment
In general, the Company follows the criteria of considering amounts used in environmental protection and
improvement as environmental expenses. However, the cost of facilities, machinery and equipment used for the
same purpose are considered property, plant and equipment, as the case may be.
159
10) FINANCIAL REPORTS
Note 4 Changes in accounting estimates and policies
4.1
Changes in accounting estimates
There have been no changes in the methodologies used to determine such estimates in the periods presented.
4.2
Changes in accounting policies
The accounting principles and criteria were consistently applied in both periods, except for the new instructions
established by the CMF for the taxonomy of the financial statements in 2020. The presentation of right-of-use
assets and lease liabilities recognized under IFRS 16 has been modified. This change has been made as of
January 01, 2020 and retroactively as of December 31, 2019.
160
10) FINANCIAL REPORTS
Note 5 Financial risk management
5.1
Financial risk management policy
The Company’s financial risk management policy is focused on safeguarding the stability and sustainability of
the Company and its subsidiaries with regard to all such relevant financial uncertainty components.
The Company’s operations are subject to certain financial risk factors that may affect its financial position or
results. The most significant risk exposures are market risk, liquidity risk, currency risk, credit risk, and interest
rate risk, among others.
There could also be additional risks, which are either unknown or known but not currently deemed to be
significant, which could also affect the Company’s business operations, its business, financial position, or profit
or loss.
The financial risk management structure includes identifying, determining, analyzing, quantifying, measuring
and controlling these events. Management and in particular, Finance Management, is responsible for constantly
assessing the financial risk.
5.2 Risk Factors
(a)
Credit risk
A global economic contraction may have potentially negative effects on the financial assets of the Company,
which are primarily made up of financial investments and trade receivables, and the impact on of our customers
could extend the payment terms of the Company's receivables by increasing its exposure to credit risk. Although
measures are taken to minimize the risk, this global economic situation could mean losses with adverse material
effects on the business, financial position or profit and loss of the Company's operations.
Trade receivables: to mitigate credit risk, the Company maintains active control of collection and requires the
use of credit insurance. Credit insurance covers the risk of insolvency and unpaid invoices corresponding to
80% of all receivables with third parties. For the uncovered portion, the Company uses other instruments such
as letters of credit and prepayments. The credit risk associated with receivables is analyzed in Note 14.2 b) and
the associated accounting policy can be found in Note 3.5.
The concentration of credit risk with respect to sales debtors is reduced, due to the large number of companies
that comprise the Company's customer base and their distribution throughout the world.
No significant modifications have been made during the period to risk models or parameters used in comparison
to December 31, 2019, and no modifications have been made to contractual cash flows that have been significant
during this period.
Financial investments: correspond to time deposits whose maturity date is greater than 90 days and less than
360 days from the date of investment, so they are not exposed to excessive market risks. The counterparty risk
in implementation of financial operations is assessed on an ongoing basis for all financial institutions in which
the Company holds financial investments.
161
10) FINANCIAL REPORTS
The credit quality of financial assets that are not past due or impaired can be evaluated by reference to external
credit ratings (if they are available) or historical information on counterparty late payment rates:
Financial institution
Financial assets
Rating
As of
December 31,
2020
Moody´s
S&P
Fitch
ThUS$
Banco de Crédito e Inversiones
Banco de Chile
Banco Estado
Banco Itau Corpbanca
Banco Santander – Santiago
Scotiabank Sud Americano
Time deposits
Time deposits
Time deposits
Time deposits
Time deposits
Time deposits
P-1
P-1
P-1
P-2
P-1
-
JP Morgan US dollar Liquidity Fund Institutional
Legg Mason - Western Asset Institutional cash
reserves
Other banks with lower balances
Total
Investment fund
Aaa-mf
Investment fund
Time deposits
-
-
Financial institution
Financial assets
Banco de Crédito e Inversiones
Banco Itaú Corpbanca
Banco Santander – Santiago
Banco Scotiabank Sud Americano
JP Morgan Asset Management
Total
90 days to 1 year
90 days to 1 year
90 days to 1 year
90 days to 1 year
90 days to 1 year
Moody´s
P-1
P-2
P-1
-
P-1
Financial institution
Financial assets
A-1
A-1
A-1
A-2
A-1
-
AAAm
AAAm
-
Rating
S&P
A-1
A-2
A-1
-
A-1
Rating
-
-
-
-
-
F1+
AAAmmf
AAAmmf
-
9,002
10,503
1,001
7,299
16,702
7,002
102,753
107,625
86
261,973
As of
December 31,
2020
Fitch
ThUS$
-
-
-
F1+
N1+
185,589
49,006
45,168
31,668
34,028
345,459
As of
December 31,
2019
Moody´s
S&P
Fitch
ThUS$
Banco de Chile
Banco de Crédito e Inversiones
Banco Itaú Corpbanca
Banco Santander
Scotiabank Sud Americano
Banco Estado
BBVA Banco Francés
Time deposits
Time deposits
Time deposits
Time deposits
Time deposits
Time deposits
Time deposits
P-1
P-1
P-2
P-1
-
P-1
-
A-1
A-1
A-2
A-1
-
A-1
-
-
-
-
-
F1+
-
-
JP Morgan US dollar Liquidity Fund Institutional
Legg Mason - Western Asset Institutional cash
reserves
Total
Investment fund
Aaa-mf
Investment fund
-
AAAm
AAAm
AAAmmf
AAAmmf
50,221
42,096
39,093
2,708
14,428
500
53
181,155
146,078
476,332
162
Financial institution
Financial assets
10) FINANCIAL REPORTS
Rating
As of
December 31,
2019
Moody´s
S&P
Fitch
ThUS$
Banco Scotiabank Sud Americano
Banco de Crédito e Inversiones
Banco Santander (*)
Banco Itau Corpbanca
Banco Security
Banco de Chile
Banco Estado
Total
90 days to 1 year
90 days to 1 year
90 days to 1 year
90 days to 1 year
90 days to 1 year
90 days to 1 year
90 days to 1 year
P-2
P-1
P-1
P-2
-
-
P-1
-
A-1
A-1
A-2
A-2
-
A-1
-
-
-
-
F2
-
-
54,180
178,448
74,365
127,579
17,965
18,026
15,126
485,689
(*) This includes ThUS$ 1,870 associated with collateral in guarantee used to reduce the liquidity risk.
(b)
Currency risk
The functional currency of the company is the US dollar, due to its influence on the determination of price
levels, its relation to the cost of sales and considering that a significant part of the Company’s business is
conducted in this currency. However, the global nature of the Company's business generates an exposure to
exchange rate variations of several currencies with the US dollar. Therefore, the Company maintains hedge
contracts to mitigate the exposure generated by its main mismatches (net between assets and liabilities) in
currencies other than the US dollar against the exchange rate variation, updating these contracts periodically
depending on the amount of mismatching to be covered in these currencies. Occasionally, subject to the
approval of the Board, the Company ensures short-term cash flows from certain specific line items in currencies
other than the US dollar.
A significant portion of the Company’s costs, especially salary payments, is associated with the Peso. Therefore,
an increase or decrease in its exchange rate with the US dollar would affect the Company's profit and loss. By
the fourth quarter of 2020, approximately US$ 473 million accumulated in expenses are associated with the
Peso.
As of December 31, 2020, the Company held derivative instruments classified as hedges of foreign exchange
risks associated with 100% of all of the bond liabilities denominated in UF, for an asset at fair value of US$
18.41 million. As of December 31, 2019, a liability was recognized amounting to US$ 18.9 million.
Furthermore, on December 31, 2020, the Company held derivative instruments classified as hedges of foreign
exchange risks associated with 100% of all nominative term deposits in UF and in pesos, at a fair value of US$
21 million in liabilities. On December 31, 2019, an asset was recognized for an amount of US$ 16.4 million.
(c)
Interest rate risk
Interest rate fluctuations, primarily due to the uncertain future behavior of markets, may have a material impact
on the financial results of the Company. Significant increases in the rate could make it difficult to access
financing at attractive rates for the Company's investment projects.
The Company maintains current and non-current financial debt at fixed rates and LIBOR rate plus spread.
As of December 31, 2020, the Company has around 4% of its financial liabilities linked to variations in the
LIBOR rate. 100% of these obligations are covered by derivative instruments classified as interest rate hedging;
therefore, a significant rate increase would not impact our financial condition.
163
10) FINANCIAL REPORTS
(d)
Liquidity risk
Liquidity risk relates to the funds needed to comply with payment obligations. The Company’s objective is to
maintain financial flexibility through a comfortable balance between fund requirements and cash flows from
regular business operations, bank borrowings, bonds, short term investments, and marketable securities, among
others. For this purpose, the Company keeps a high liquidity ratio1, which enables it to cover current obligations
with clearance. (On December 31, 2020, this was 5.40).
The Company has an important capital expense program which is subject to change over time.
On the other hand, world financial markets go through periods of contraction and expansion that are
unforeseeable in the long-term and may affect SQM’s access to financial resources. Such factors may have a
material adverse impact on the Company’s business, financial position and results of operations.
The Company constantly monitors the matching of its obligations with its investments, taking due care of
maturities of both, from a conservative perspective, as part of this financial risk management strategy. As of
December 31, 2020, the Company had unused, available revolving credit facilities with banks, for a total of
US$ 478 million.
The position in other cash and cash equivalents are invested in highly liquid mutual funds with an AAA risk
rating.
(1) Unsecured obligations are presented on a contractual basis and have no effects related to anticipated redemptions.
As of December 31, 2020
(figures expressed in millions of US dollars)
Nature of undiscounted cash flows
Carrying
amount
Less than 1
year
1 to 5 years
Over 5 years
Total
Bank borrowings
Unsecured obligations (1)
Sub total
Hedging liabilities
Derivative financial instruments
Sub total
Current and non-current lease liabilities
Trade accounts payable and other accounts payable
Total
70.08
1,872.09
1,942.17
40.21
5.39
45.60
31.07
203.93
2,222.77
0.94
88.22
89.16
6.06
5.39
11.45
6.40
203.93
310.94
71.40
927.17
998.57
12.34
-
12.34
21.04
-
1,727.14
1,727.14
11.07
-
11.07
7.17
72.34
2,742.53
2,814.87
29.47
5.39
34.86
34.61
-
1,031.95
-
1,745.38
203.93
3,088.27
As of December 31, 2019
(figures expressed in millions of US dollars)
Nature of undiscounted cash flows
Carrying
amount
Less than 1
year
1 to 5 years
Over 5 years
Total
Bank borrowings
Unsecured obligations
Sub total
Hedging liabilities
Derivative financial instruments
Sub total
Current and non-current lease liabilities
Trade accounts payable and other accounts payable
Total
70.19
1,697.11
1,767.30
23.66
3.17
26.83
37.90
205.79
2,037.82
2.17
326.34
328.51
6.57
3.17
9.74
8.90
205.79
552.94
74.87
614.29
689.16
24.33
-
24.33
23.01
-
-
1,184.38
1,184.38
32.37
-
32.37
10.27
-
736.50
1,227.02
77.04
2,125.01
2,202.05
63.27
3.17
66.44
42.18
205.79
2,516.46
1 All current assets divided by all current liabilities.
164
10) FINANCIAL REPORTS
5.3 Risk measurement
The Company has methods to measure the effectiveness and efficiency of financial risk hedging strategies, both
prospectively and retrospectively. These methods are consistent with the risk management profile of the SQM
Group. See Note 14.8
165
Note 6 Separate information on the main office, parent entity and joint action
10) FINANCIAL REPORTS
agreements
6.1 Parent’s stand-alone assets and liabilities
Parent’s stand-alone assets and liabilities
Assets
Liabilities
Equity
6.2
Parent entity
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
4,173,308
(2,050,223)
2,123,085
4,069,649
(1,983,382)
2,086,267
Pursuant to Article 99 of the Securities Market Law, the CMF may determine that a company does not have a
controlling entity in accordance with the distribution and dispersion of its ownership. On November 30, 2018,
the CMF issued the ordinary letter No. 32,131 whereby it determined that the Pampa Group do not exert decisive
power over the management of the Company since it does not have a predominance in the ownership that allows
it to make management decisions. Therefore, the CMF has determined not to consider Pampa Group the
controlling entity of the Company and that the Company does not have a controlling entity given its current
ownership structure.
166
10) FINANCIAL REPORTS
Note 7 Board of Directors, Senior Management and Key management personnel
7.1 Remuneration of the Board of Directors and Senior Management
1)
Board of directors
SQM S.A. is managed by a Board of Directors which is composed of 8 regular directors, who are elected for a
three-year period. The Board of Directors was elected during the ordinary shareholders’ meeting held on April
25, 2019, which included the election of 2 independent directors.
As of December 31, 2020, the Company included the following committees and committee members:
- Directors’ Committee: This committee is comprised by Georges de Bourguignon, Laurence Golborne
Riveros y Alberto Salas Muñoz, and fulfills the functions established in Article 50 bis of Chilean Law
on publicly-held corporations. This committee takes on the role of the audit committee in accordance
with the US-based Sarbanes Oxley law.
- The Company’s Health, Safety and Environment Committee: This committee is comprised of Gonzalo
Guerrero Yamamoto, Patricio Contesse Fica y Robert J. Zatta.
- Corporate Governance Committee: This committee is comprised of Hernán Büchi Buc, Patricio
Contesse Fica y Francisco Ugarte Larrain.
During the periods covered by these financial statements, there are no pending receivable and payable balances
between the Company, its directors or members of Senior Management, other than those related to
remuneration, fee allowances and profit-sharing. In addition, there were no transactions conducted between the
Company, its directors or members of Senior Management.
2)
Board of Directors’ Compensation
Directors’ compensation differs according to the period during the corresponding year. Thus, from April 25,
2019 to April 22, 2020 (Period 2019-2020), Directors’ compensation was determined by the annual general
shareholders' meeting held on April 25, 2019. While for the following period (Period 2020-2021), Directors’
compensation was determined by the annual general shareholders' meeting held on April 23, 2020. For each of
these periods, Directors’ compensation is detailed as follows:
Period 2019-2020
a) The payment of a fixed, gross and monthly amount of UF 800 in favor of the Chairman of the Board of
Directors, of UF 700 in favor of the vice-president of the board of directors and of UF 600 in favor of the
remaining six directors and regardless of the number of Board of Directors’ Meetings held or not held
during the related month.
b) A variable gross amount payable in national currency to the Chairman and Vice President of the Company
equivalent to 0.12% of the net liquid income earned by the Company in 2019;
c) A variable gross amount payable in local currency to each Company director, excluding the Chairman and
Vice President of the Company, equivalent to 0.06% of the net liquid income earned by the Company in
2019.
Period 2020-2021:
(i) The payment of a fixed, gross and monthly amount of UF 800 in favor of the Chairman of the Board of
Directors, of UF 700 in favor of the vice-president of the board of directors and of UF 600 in favor of the
remaining six directors and regardless of the number of Board of Directors’ Meetings held or not held
during the related month.
(ii) A variable gross amount payable in national currency to the Chairman and Vice President of the Company
equivalent to 0.09% of the net liquid income that the Company effectively obtains during the 2020;
(iii) A variable gross amount payable in local currency to each Company director, excluding the Chairman and
Vice President of the Company, equivalent to 0.045% of the net liquid income that the Company effectively
obtains during the 2020.
167
10) FINANCIAL REPORTS
These fixed and variable amounts for both periods shall not be challenged and those expressed in percentage
terms shall be paid immediately after the respective annual general shareholders meeting approves the financial
statements, the annual report, the account inspectors report and the external auditors report for the respective
year. All amounts expressed in UF shall be paid in Chilean pesos at its value on the last day of the respective
calendar month, as determined by the CMF (formerly Superintendence of Banks and Financial Institutions) the
Chilean Central Bank or any other relevant institution that replaces them.
Accordingly, the compensation and profit sharing paid to members of the Directors' Committee and the directors
as of December 31, 2020 amounted to ThUS$ 4,582 and as of December 31, 2019 to ThUS$ 5,168.
3)
Directors’ Committee compensation
Directors' Committee compensation differs according to the period during the corresponding year. Thus, for the
Period 2019-2020, Directors’ Committee compensation was determined by the annual general shareholders'
meeting held on April 25, 2019. While for the Period 2020-2021, Directors’ Committee compensation was
determined by the annual general shareholders' meeting held on April 23, 2020. For each of these periods the
compensation of the Directors Committee comprises:
Period 2019-2020
a) The payment of a fixed, gross and monthly amount of UF 200 in favor of each of the 3 directors who were
members of the Directors’ Committee, regardless of the number of meetings of the Directors’ Committee
that have or have not been held during the month concerned.
b) The payment in domestic currency and in favor of each of the 3 directors of a variable and gross amount
equivalent to 0.02% of total net profit that the Company effectively obtains during the 2019 fiscal year.
Period 2020-2021
(i) The payment of a fixed, gross and monthly amount of UF 200 in favor of each of the 3 directors who were
members of the Directors’ Committee, regardless of the number of meetings of the Directors’ Committee
that have or have not been held during the month concerned.
(ii) The payment in domestic currency and in favor of each of the 3 directors of a variable and gross amount
equivalent to 0.015% of total net profit that the Company effectively obtains during the 2020 fiscal year.
These fixed and variable amounts for both periods shall not be challenged and those expressed in percentage
terms shall be paid immediately after the respective annual general shareholders meeting approves the financial
statements, the annual report, the account inspectors report and the external auditors report for the respective
year. All amounts expressed in UF shall be paid in Chilean pesos at its value on the last day of the respective
calendar month, as determined by the CMF (formerly Superintendence of Banks and Financial Institutions) the
Chilean Central Bank or any other relevant institution that replaces them.
4)
Health, Safety and Environmental Matters Committee:
The remuneration of this committee for the 2019–2020 period was composed of the payment of a fixed, gross,
monthly amount of UF 100 for each of the 3 directors on the committee regardless of the number of meetings
it has held. For the 2020-2021 period, this remuneration remains unchanged.
5)
Corporate Governance Committee
The remuneration for this committee for the 2019–2020 period was composed of the payment of a fixed, gross,
monthly amount of UF 100 for each of the 3 directors on the committees regardless of the number of meetings
it has held. For the 2020-2021 period, this remuneration remains unchanged.
6)
Guarantees constituted in favor of the directors
No guarantees have been constituted in favor of the directors.
7)
Senior management compensation:
168
10) FINANCIAL REPORTS
a) This includes monthly fixed salary and variable performance bonuses. (See Note 7.2)
b) The Company has an annual bonus plan based on goal achievement and individual contribution to the
Company’s results. These incentives are structured as a minimum and maximum number of gross
monthly salaries and are paid once a year.
In addition, there are retention bonuses for its executives (see Note 19.6)
c)
8)
Guarantees pledged in favor of the Company’s management
No guarantees have been pledged in favor of the Company’s management.
9)
mentioned in the above points.
Pensions, life insurance, paid leave, shares in earnings, incentives, disability loans, other than those
The Company’s Management and Directors do not receive or have not received any benefit during the ended
December 31, 2020 and the year ended December 31, 2019 or compensation for the concept of pensions, life
insurance, paid time off, profit sharing, incentives, or benefits due to disability other than those mentioned in
the preceding points.
7.2 Key management personnel compensation
As of December 31, 2020 and 2019, the number of the key management personnel is 126 and 124, respectively.
Key management personnel compensation
Key management personnel compensation
For the year ended
December 31,
2020
For the year ended
December 31,
2019
ThUS$
ThUS$
22,858
22,598
Please also see the description of the compensation plan for executives in Note 19.6.
169
Note 8 Background on companies included in consolidation and non-controlling interests
8.1
Background on companies included in consolidation
The following tables detail general information as of December 31, 2020 and, December 31, 2019, on the companies in which the group exercises control and
significant influence:
Subsidiaries
TAX ID No.
Address
Country of
Incorporation
Functional
Currency
Ownership Interest
Direct
Indirect
Total
10) FINANCIAL REPORTS
SQM Nitratos S.A.
SQM Potasio S.A.
Serv. Integrales de Tránsito y Transf.
S.A.
Isapre Norte Grande Ltda.
96.592.190-7 El Trovador 4285, Las Condes
96.651.060-9 El Trovador 4285, Las Condes
79.770.780-5 Arturo Prat 1060, Tocopilla
79.906.120-1 Anibal Pinto 3228, Antofagasta
Ajay SQM Chile S.A.
96.592.180-K Av. Pdte. Eduardo Frei 4900, Santiago
Almacenes y Depósitos Ltda.
79.876.080-7 El Trovador 4285, Las Condes
SQM Salar S.A.
SQM Industrial S.A.
79.626.800-K El Trovador 4285, Las Condes
79.947.100-0 El Trovador 4285, Las Condes
Exploraciones Mineras S.A.
76.425.380-9 El Trovador 4285, Las Condes
Sociedad Prestadora de Servicios de
Salud Cruz del Norte S.A.
Soquimich Comercial S.A.
Comercial Agrorama Ltda. (1)
Comercial Hydro S.A.
Agrorama S.A.
Orcoma Estudios SPA (2)
Orcoma SPA
SQM MaG SpA
76.534.490-5 Anibal Pinto 3228, Antofagasta
79.768.170-9 El Trovador 4285, Las Condes
76.064.419-6 El Trovador 4285, Las Condes
96.801.610-5 El Trovador 4285, Las Condes
76.145.229-0 El Trovador 4285, Las Condes
76.359.919-1 Apoquindo 3721 OF 131, Las Condes
76.360.575-2 Apoquindo 3721 OF 131, Las Condes
76.686.311-9 Los Militares 4290, Las Condes
Sociedad Contractual Minera Búfalo
77.114.779-8 Los Militares 4290, Las Condes
SQM Holland B.V. (3)
SQM North America Corp.
RS Agro Chemical Trading
Corporation A.V.V.
Nitratos Naturais do Chile Ltda.
Nitrate Corporation of Chile Ltd.
SQM Corporation N.V.
Foreign
foreign
foreign
foreign
foreign
foreign
Herikerbergweg 238, 1101 CM Amsterdam Zuidoost
2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA
Caya Ernesto O. Petronia 17, Orangestad
Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo Brazil
Aruba
1 More London Place London SE1 2AF
Pietermaai 123, P.O. Box 897, Willemstad, Curacao
United
Kingdom
Curacao
(1) SQM controls Soquimich Comercial, which in turn controls Comercial Agrorama Ltda, SQM has management control over Comercial Agrorama Ltda
(2) In January 2020, SQM S.A. acquired 49% of Orcoma Estudio SPA, taking ownership of 100% of the company.
(3) In June, 2020, SQM S.A. acquired the remaining 50% of SQM Holland B.V., taking ownership of 100% of the company. See Note 10.2 (a)
170
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Dollar
Dollar
Dollar
Peso
Dollar
Peso
Dollar
Dollar
Dollar
Peso
Dollar
Peso
Dollar
Peso
Dollar
Dollar
Dollar
Dollar
99.9999
99.9999
0.0003
1.0000
51.0000
0.0001
100.0000
-
100.0000
99.9997
100.0000
99.0000
-
100.0000
51.0000
1.0000
99.0000
100.0000
18.1800
81.8200
100.0000
99.0470
0.9530
100.0000
0.2691
99.7309
100.0000
-
-
-
-
-
100.0000
100.0000
60.6383
60.6383
70.0000
70.0000
100.0000
100.0000
100.0000
100.0000
100.0000
100.0000
-
99.9000
-
-
100.0000
100.0000
100.000
100.0000
0.1000
100.0000
Netherlands
Dollar
-
100.0000
100.0000
USA
Dollar
Dollar
Dollar
Dollar
Dollar
40.0000
60.0000
100.0000
98.3333
-
1.6667
100.0000
100.0000
100.0000
-
100.0000
100.0000
0.0002
99.9998
100.0000
Subsidiaries
TAX ID No.
Address
10) FINANCIAL REPORTS
Country of
Incorporation
Functional
Currency
Direct
Indirect
Total
Ownership Interest
0.0091
99.9909 100.0000
0.00401
99.9960 100.0000
0.7100
-
99.2900 100.0000
-
-
0.1000
99.9000 100.0000
0.1597
99.8403 100.0000
0.5800
99.4200 100.0000
-
-
-
-
80.0000
80.0000
- 100.0000 100.0000
- 100.0000 100.0000
0.0100
99.9900 100.0000
1.0000
99.0000 100.0000
1.6700
98.3300 100.0000
-
100.0000 100.0000
-
-
-
- 100.0000 100.0000
- 100.0000 100.0000
-
100.0000 100.0000
- 100.0000 100.0000
- 100.0000 100.0000
SQM Perú S.A.
SQM Ecuador S.A.
SQM Brasil Ltda.
SQI Corporation N.V. (4)
SQMC Holding Corporation.
SQM Japan Co. Ltd.
SQM Europe N.V.
SQM Italia SRL (5)
SQM Indonesia S.A.
North American Trading Company
SQM Virginia LLC
SQM Comercial de México S.A. de C.V.
SQM Investment Corporation N.V.
Royal Seed Trading Corporation A.V.V.
SQM Lithium Specialties Limited
Partnership
Soquimich SRL Argentina (6)
Comercial Caimán Internacional S.A.
SQM France S.A.
Administración y Servicios Santiago
S.A. de C.V.
SQM Nitratos México S.A. de C.V.
SQM Australia PTY
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
Avenida Camino Real N° 348 of. 702, San Isidro, Lima
Av. José Orrantia y Av. Juan Tanca Marengo Edificio Executive
Center Piso 2 Oficina 211
Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo
Pietermaai 123, P.O. Box 897, Willemstad, Curacao
2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta
From 1st Bldg 207, 5-3-10 Minami- Aoyama, Minato-ku, Tokio
Houtdok-Noordkaai 25a B-2030 Amberes
Via A. Meucci, 5 500 15 Grassina Firenze
Perumahan Bumi Dirgantara Permai, Jl Suryadarma Blok Aw No 15 Rt 01/09 17436 Jatisari Pondok Gede
2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA
2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA
Av. Moctezuma 144-4 Ciudad del Sol CP 45050, Zapopan, Jalisco México
Pietermaai 123, P.O. Box 897, Willemstad, Curacao
Caya Ernesto O. Petronia 17, Orangestad
2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA
Espejo 65 Oficina 6 – 5500, Mendoza
Edificio Plaza Bancomer
ZAC des Pommiers 27930, FAUVILLE
Av. Moctezuma 144-4 Ciudad del Sol CP 45050, Zapopan, Jalisco México
Av. Moctezuma 144-4 Ciudad del Sol CP 45050, Zapopan, Jalisco México
Level 16, 201 Elizabeth Street Sydney
Peru
Ecuador
Brazil
Curacao
USA
Japan
Belgium
Italy
Indonesia
USA
USA
Mexico
Curacao
Aruba
USA
Argentina
Panama
France
Mexico
Mexico
Australia
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
(4) In July 2020, this Company was liquidated.
(5) In July 2020, Soquimich European Holdings liquidated SQM Italia SRL.
(6) In December 2020, this Company was Liquited.
171
Subsidiaries
TAX ID No.
Address
10) FINANCIAL REPORTS
Country of
Incorporation
Functional
Currency
Direct
Indirect
Total
Ownership Interest
- 100.0000 100.0000
- 100.0000 100.0000
- 100.0000 100.0000
- 100.0000 100.0000
- 100.0000 100.0000
-
99.9960
- 100.0000 100.0000
99.9960
0.5800
99.4200 100.0000
- 100.0000 100.0000
- 100.0000 100.0000
Soquimich European Holding B.V.
SQM Iberian S.A.
SQM Africa Pty Ltd.
SQM Oceanía Pty Ltd.
SQM Beijing Commercial Co. Ltd.
SQM Thailand Limited
SQM Colombia SAS
SQM International N.V.
SQM (Shanghai) Chemicals Co. Ltd.
SQM Korea LLC (7)
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
Loacalellikade 1 Parnassustoren 1076 AZ Amsterdan
Provenza 251 Principal 1a CP 08008, Barcelona
Tramore House, 3 Wterford Office Park, Waterford Drive, 2191 Fourways, Johannesburg
Level 9, 50 Park Street, Sydney NSW 2000, Sydney
Room 1001C, CBD International Mansion N 16 Yong An Dong Li, Jian Wai Ave Beijing 100022, P.R.
Unit 2962, Level 29, N° 388, Exchange Tower Sukhumvit Road, Klongtoey Bangkok
Cra 7 No 32 – 33 piso 29 Pbx: (571) 3384904 Fax: (571) 3384905 Bogotá D.C. – Colombia.
Houtdok-Noordkaai 25a B-2030 Amberes
Room 4703-33, 47F, No.300 Middle Huaihai Road, Huangpu district, Shanghai
Suite 22, Kyobo Building, 15th Floor, 1 Jongno Jongno-gu, Seoul, 03154 South Korea
Holland
Spain
South Africa
Australia
China
Thailand
Colombia
Belgium
China
Korea
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
(7) This Company was formed in October 2020.
172
8.2 Assets, liabilities, results of consolidated subsidiaries as of December 31, 2020.
Subsidiaries
Currents
Non-currents
Currents
Non-currents
Assets
Liabilities
Revenue
Profit (loss)
Comprehensive
income (loss)
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
10) FINANCIAL REPORTS
SQM Nitratos S.A.
SQM Potasio S.A.
Serv. Integrales de Tránsito y Transf. S.A.
Isapre Norte Grande Ltda.
Ajay SQM Chile S.A.
Almacenes y Depósitos Ltda.
SQM Salar S.A.
SQM Industrial S.A.
Exploraciones Mineras S.A.
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
Soquimich Comercial S.A.
Comercial Agrorama Ltda.
Comercial Hydro S.A.
Agrorama S.A.
Orcoma SpA
Orcoma Estudio SpA
SQM MaG SPA
Sociedad Contractual Minera Búfalo
SQM Holland B.V.
SQM North America Corp.
RS Agro Chemical Trading Corporation A.V.V.
Nitratos Naturais do Chile Ltda.
Nitrate Corporation of Chile Ltd.
SQM Corporation N.V.
SQM Perú S.A.
SQM Ecuador S.A.
SQM Brasil Ltda.
Subtotal
475,132
16,680
55,142
812
25,441
256
855,683
950,058
16,572
279
136,623
683
4,834
55
3
4
1,491
50
3,767
124,679
5,155
-
5,076
7,696
25
26,490
217
63,848
1,108,579
36,291
839
1,549
51
1,035,088
679,345
22,293
571
13,796
970
15
-
2,365
4,559
521
323
16,248
21,085
-
128
-
56,356
-
918
1
395,914
155,379
75,848
795
9,563
-
814,686
634,105
9,010
305
56,293
4,215
14
5,631
35
411
1,129
350
460
5,047
23,323
6,485
181
713
-
214,914
113,230
-
396
12,630
23
4
10
-
-
6
-
4
107,801
1,638
88
3,109
-
3,607
83
23,074
508
-
-
-
-
-
59
2,111
33,730
-
188,973
2,465
36,383
3,224
38,193
-
581,494
853,550
13,513
2,390
117,982
1,432
28
244
-
-
2,559
-
1,227
212,410
-
-
-
-
-
40,570
29,791
6,067
71
1,857
(5)
51,849
150,594
1,972
55
7,560
(149)
12
175
(13)
(496)
197
-
(505)
(1,059)
(24)
195
-
40,489
29,722
6,060
79
1,857
50
51,517
151,442
1,972
32
7,606
(148)
12
179
(13)
(496)
197
-
(505)
1,828
(24)
195
-
(5,318)
(5,252)
(8)
471
(16)
(8)
471
(16)
2,712,903
3,065,739
2,302,413
380,774
2,089,797
283,843
287,246
173
10) FINANCIAL REPORTS
Revenue
Profit (loss)
Comprehensive
income (loss)
Currents
ThUS$
-
66,685
669,693
-
-
-
213,154
-
-
-
-
-
2,857
993
-
108,156
60,994
3,130
18,755
3,033
13,439
135,386
82,398
-
-
1,378,673
3,468,470
ThUS$
ThUS$
2,113
367
2,113
367
(12,791)
(12,791)
-
38
(5)
1,429
(12,265)
(40)
(5)
3
-
36
12
-
38
(5)
1,429
(12,071)
(40)
(5)
3
-
36
12
(20,411)
(20,151)
504
(920)
400
126
(387)
528
2,587
3,195
(2,641)
(33)
(38,160)
245,683
504
(920)
400
126
(387)
528
2,587
3,195
(2,641)
(33)
(37,706)
249,540
Subsidiaries
Currents
Non-currents
ThUS$
ThUS$
Currents
ThUS$
Non-currents
ThUS$
Assets
Liabilities
SQMC Holding Corporation L.L.P.
SQM Japan Co. Ltd.
SQM Europe N.V.
SQM Indonesia S.A.
North American Trading Company
SQM Virginia LLC
SQM Comercial de México S.A. de C.V.
SQM Investment Corporation N.V.
Royal Seed Trading Corporation A.V.V.
SQM Lithium Specialties LLP
Comercial Caimán Internacional S.A.
SQM France S.A.
Administración y Servicios Santiago S.A. de C.V.
SQM Nitratos México S.A. de C.V.
Soquimich European Holding B.V.
SQM Iberian S.A.
SQM Africa Pty Ltd.
SQM Oceania Pty Ltd.
SQM Beijing Commercial Co. Ltd.
SQM Thailand Limited
SQM Colombia SAS
SQM International NV
SQM Shanghai Chemicals Co. Ltd.
SQM Australia Pty Ltd.
SQM Korea LLC
Subtotal
Total
1,687
21,926
399,930
1
-
14,798
76,721
5,434
18,851
1,264
1,122
114
350
77
245
20,118
37,636
1,516
9,942
83
11,653
17,374
79,482
4,306
42
724,672
3,027,085
-
255
2,411
-
-
-
1,972
864
-
-
-
-
188
20
-
4
-
-
-
-
-
4,027
-
158
-
9,899
390,673
30,777
25,122
456,357
3
156
14,798
107,803
13,965
21
15,746
258
345
221
141
5,046
41,485
47,069
3,951
12,086
3,539
11,621
31,998
84,318
21,749
587
929,162
3,642,065
16,414
243
3,844
-
145
14,340
7,574
132,994
-
3
-
6
47
13
172,956
2,359
1,420
-
30
-
176
923
379
130,152
122
484,140
3,549,879
174
10) FINANCIAL REPORTS
8.2 Assets, liabilities, results of consolidated subsidiaries as of December 31, 2019.
Subsidiary
SQM Nitratos S.A.
Proinsa Ltda.
SQM Potasio S.A.
Serv. Integrales de Tránsito y Transf. S.A.
Isapre Norte Grande Ltda.
Ajay SQM Chile S.A.
Almacenes y Depósitos Ltda.
SQM Salar S.A.
SQM Industrial S.A.
Exploraciones Mineras S.A.
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
Soquimich Comercial S.A.
Comercial Agrorama Ltda.
Comercial Hydro S.A.
Agrorama S.A.
Orcoma SpA
Orcoma Estudio SpA
SQM MaG SPA
SQM North America Corp.
RS Agro Chemical Trading Corporation A.V.V.
Nitratos Naturais do Chile Ltda.
Nitrate Corporation of Chile Ltd.
SQM Corporation N.V.
SQM Perú S.A.
SQM Ecuador S.A.
SQM Brasil Ltda.
SQI Corporation N.V.
Subtotal
Assets
Liabilities
Revenue
Profit (loss)
Comprehensive
income (loss)
Current
ThUS$
Non-current
ThUS$
Current
ThUS$
Non-current
ThUS$
ThUS$
ThUS$
ThUS$
368,474
-
14,983
19,317
809
17,780
243
734,837
833,283
3,099
184
134,808
862
4,791
669
-
156
1,955
115,924
5,155
2
5,076
7,696
29
31,603
194
56
41,688
-
978,525
36,025
604
1,259
45
886,099
766,097
31,081
570
15,448
1,313
21
-
2,360
4,522
615
19,656
-
135
-
160,381
-
712
-
34
292,535
-
116,734
50,229
684
1,284
-
549,726
497,377
6,296
305
41,104
4,467
12
6,133
14
29
1,888
98,332
64
3,314
-
3,594
80
28,508
598
77
3,521
-
23,317
2,075
153
374
-
201,273
120,741
-
338
12,349
19
6
9
-
-
2
2,751
-
-
-
-
-
70
2,250
-
167,481
-
3,350
30,061
3,816
24,883
-
775,010
752,107
-
2,341
124,787
2,755
28
3,146
-
-
2,888
241,102
-
-
-
-
-
38,131
-
-
39,530
-
125,975
(2,650)
25
1,510
(8)
153,550
105,198
(213)
17
5,079
(836)
18
39,440
-
125,334
(2,703)
(2)
1,510
(85)
152,781
103,894
(213)
(14)
5,072
(837)
18
(1,407)
(1,376)
-
-
412
537
(25)
7
-
12,376
(141)
818
(231)
(3)
-
-
412
(214)
(25)
7
-
12,308
(141)
818
(231)
(3)
2,301,985
2,947,190
1,703,384
369,248
2,171,886
439,538
435,750
175
10) FINANCIAL REPORTS
Revenue
Profit (loss)
Comprehensive
income (loss)
Currents
Currents
ThUS$
1,687
66,015
361,059
15
1
39
14,804
72,023
5,518
18,834
1,264
165
1,122
114
402
97
1,299
41,680
47,594
3,459
9,695
1,081
10,089
-
32,549
34,367
5,661
Non-currents
ThUS$
-
201
2,824
-
-
-
-
2,387
975
-
-
-
-
-
211
18
30,802
4
-
-
-
-
37
-
-
-
56
ThUS$
-
168,557
729,730
-
-
-
-
216,185
-
-
-
-
-
-
3,463
1,008
-
105,634
63,567
2,085
14,487
5,354
7,574
-
75,229
77,599
-
730,633
2,434,017
37,515
406,763
1,470,472
3,642,358
ThUS$
ThUS$
2,585
270
5,387
5
-
-
(1)
2,983
(74)
(42)
(1)
(24)
(5)
-
21
13
2,585
270
5,387
5
-
-
(1)
2,983
(74)
(42)
(1)
(24)
(5)
-
21
13
11,750
11,682
361
(939)
444
(148)
369
(439)
-
800
(73)
(2,030)
21,212
460,750
361
(939)
444
(148)
369
(439)
-
800
(74)
(2,030)
21,143
456,893
Assets
Liabilities
Subsidiaries
Currents
Non-currents
ThUS$
ThUS$
SQMC Holding Corporation L.L.P.
SQM Japan Co. Ltd.
SQM Europe N.V.
SQM Italia SRL
SQM Indonesia S.A.
North American Trading Company
SQM Virginia LLC
SQM Comercial de México S.A. de C.V.
SQM Investment Corporation N.V.
Royal Seed Trading Corporation A.V.V.
SQM Lithium Specialties LLP
Soquimich SRL Argentina
Comercial Caimán Internacional S.A.
SQM France S.A.
Administración y Servicios Santiago S.A. de C.V.
SQM Nitratos México S.A. de C.V.
Soquimich European Holding B.V.
SQM Iberian S.A.
SQM Africa Pty Ltd.
SQM Oceania Pty Ltd.
SQM Beijing Commercial Co. Ltd.
SQM Thailand Limited
SQM Colombia SAS
Sacal S.A.
SQM International
SQM Shanghai Chemicals Co. Ltd.
SQM Australia Pty Ltd.
Subtotal
Total
28,889
68,805
429,926
1,158
3
157
14,804
102,068
13,811
44
15,752
57
256
345
235
140
5,851
52,750
57,639
5,440
11,723
4,912
9,505
-
40,652
36,250
12,113
913,285
3,215,270
16,190
228
4,608
-
-
145
14,345
7,597
30,888
-
3
-
-
6
72
18
174,968
2,350
1,728
-
20
11
151
-
831
133
108,068
362,360
3,309,550
176
10) FINANCIAL REPORTS
8.3 Background on non-controlling interests
Subsidiary
SQM Potasio S.A.
Ajay SQM Chile S.A.
Soquimich Comercial S.A.
Comercial Agrorama Ltda.
Agrorama S.A.
Orcoma Estudios SPA
SQM Indonesia S.A.
Total
% of interests in
the ownership
held by non-
controlling
interests
0.0000001%
49.00000%
39.36168%
30.00000%
0.00000%
0.00000%
20.00000%
Profit (loss) attributable to non-controlling
interests for the period ended
Equity, non-controlling interests for the
period ended
Dividends paid to non-controlling interests
for the period ended
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
-
910
2,976
(45)
-
-
-
3,841
-
740
1,999
(251)
-
-
-
2,488
-
8,189
32,078
(775)
-
-
1
39,493
-
8,517
38,103
(693)
-
2,277
1
48,205
-
1,238
8,880
-
-
-
-
-
882
5,935
-
-
-
-
10,118
6,817
177
10) FINANCIAL REPORTS
Note 9 Equity-accounted investees
9.1 Investments in associates recognized according to the equity method of accounting
As of December 31, 2020, and December 31, 2019, in accordance with criteria established in Note 2:
Associates
Equity-accounted investees
Share in profit (loss) of associates
and joint ventures accounted for
using the equity method for the
period ended
Share in other comprehensive
income of associates accounted for
using the equity method for the
period ended
Share in total other
comprehensive income of
associates accounted for using the
equity method for the period
ended
Abu Dhabi Fertilizer Industries WWL
Doktor Tarsa Tarim Sanayi AS (*)
Ajay North America
Ajay Europe SARL
SQM Eastmed Turkey (*)
Kore Potash PLC
Total
As of
December 31,
2020 (**)
ThUS$
As of
December 31,
2019 (**)
ThUS$
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
11,505
-
14,468
7,875
-
26,175
60,023
11,609
26,001
14,669
7,451
623
24,739
85,092
(156)
4,031
2,191
1,029
247
(224)
7,118
634
3,912
2,871
1,165
354
(534)
8,402
-
-
-
756
-
(374)
382
1
198
-
(179)
(42)
(549)
(571)
(156)
4,031
2,191
1,785
247
(598)
7,500
635
4,110
2,871
986
312
(1,083)
7,831
(*) As of December 31, 2020, these investments no longer form part of the group. See Note 9.4 (a).
(**) These investments include adjustments for unrealized results.
178
Associate
Description of the nature of the relationship
Address
Country of
incorporation
Share of
ownership in
associates
Abu Dhabi Fertilizer Industries WWL
Ajay North America
Ajay Europe SARL
Kore Potash PLC
Total
Distribution and commercialization of specialty
plant nutrients in the Middle East.
Production and distribution of iodine and iodine
derivatives.
Production and distribution of iodine and iodine
derivatives.
Prospecting, exploration and mining development.
PO Box 71871, Abu Dhabi
United Arab Emirates
1400 Industry RD Power Springs GA
30129
Z.I. du Grand Verger BP 227 53602
Evron Cedex
United States
France
L 3 88 William ST Perth, was 6000
United Kingdom
37%
49%
50%
20.20%
The companies described in the table below are related parties of the following associates:
(1) Doktor Tarsa Tarim Sanayi AS
(2) Terra Tarsa B.V.
(3) Abu Dhabi Fertilizer Industries WWL
10) FINANCIAL REPORTS
Dividends received for the period
ending
As of December
31, 2020
As of December
31, 2019
ThUS$
ThUS$
-
1,967
1,197
-
3,164
-
2,796
1,055
-
3,851
Associate
Description of the nature of the relationship
Domicile
Country of
incorporation
Share of
ownership in
associates
(*)
Dividends received for the period
ending
As of December
31, 2020
ThUS$
As of December
31, 2019
ThUS$
Distribution and trading of specialty plant nutrients. 74800 Ukraine, Kakhovka, 4 Yuzhnaya
Terra Tarsa Ukraine LLC (2)
Terra Tarsa BV (1)
Distribution and trading of specialty plant nutrients
in the Middle East.
Plantacote NV (1)
Sale of CRF and production and sales of WSNPK.
Doctochem Tarim Sanayai Ticaret LTD (1)
Terra Tarsa Don LLC (2)
Doktolab Tarim Arastirma San. (1)
International Technical and Trading
Agencies Co WLL (3)
Total
Production, distribution and trading of specialty
plant nutrition.
Distribution and sale of specialty fertilizers.
Laboratory services.
Str.
Herikerbergweg 238, Luna Arena,
1101CM Amsterdam PO Box 23393,
1100DW Amsterdam Zuidoost
Houtdok-Noordkaai 25a, 2030
Antwerpen, Belgium
Eski Büyükdere Cad No: 7 GIZ 2000
Plaza K:17 D:67-68 Maslak Sariyer
Ístambul.
Zorge Street, house 17, 344090,
Rostov-on-Don
27. Cd. No:2, 07190 Aosb 2.
Kısım/Döşemealtı, Antalya, Turkey
Ukraine
Holland
Belgium
Turkey
Russian
Federation
Turkey
Distribution and trading of specialty plant nutrients,
in the Middle East.
P.O Box: 950918 Amman 11195
Jordan
100%
50%
100%
100%
100%
100%
50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(*) This percentage does not consider the shareholdings of the holders of these subsidiaries.
179
10) FINANCIAL REPORTS
9.2 Assets, liabilities, revenue and expenses of associates
Associate
Current
Non-current
Current
Non-current
Assets
Liabilities
Revenue
Gain (loss) from
continuing
operations
Other
comprehensive
income
Comprehensive
income
As of December 31, 2020
For the period ended as of December 31, 2020
Abu Dhabi Fertilizer Industries WWL
Ajay North America
Ajay Europe SARL
Kore Potash PLC
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
29,313
18,513
22,032
5,691
75,549
8,586
15,749
1,493
124,112
149,940
6,706
4,737
7,773
786
20,002
101
-
-
-
101
6,641
42,920
41,950
-
91,511
(420)
4,471
2,058
(3,233)
2,876
-
-
1,736
486
2,222
(420)
4,471
3,794
(2,747)
5,098
Associate
Current
Non-current
Current
Non-current
Assets
Liabilities
Revenue
Gain (loss)
Other
comprehensive
income
Comprehensive
income
As of December 31, 2019
For the period ended as of December 31, 2019
Abu Dhabi Fertilizer Industries WWL
Doktor Tarsa Tarim Sanayi AS
Ajay North America
Ajay Europe SARL
SQM Eastmed Turkey
Kore Potash PLC
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
28,543
97,797
19,748
19,589
2,718
7,938
176,333
9,971
15,196
13,250
1,456
1,833
119,362
161,068
7,133
22,420
3,061
6,144
2,600
2,214
43,572
-
38,522
-
-
704
-
31,588
93,768
38,833
35,709
3,086
-
39,226
202,984
1,713
7,824
5,860
2,329
709
(2,716)
15,719
4
396
-
(358)
(84)
(2,791)
(2,833)
1,717
8,220
5,860
1,971
625
(5,507)
12,886
180
10) FINANCIAL REPORTS
9.3 Other information
The Company has no participation in unrecognized losses in investments in associates.
The Company has no investments that are not accounted for according to the equity method.
The basis of preparation of the financial information of associates corresponds to the amounts included in the
financial statements in conformity with IFRS.
9.4 Disclosures on interest in associates
(a) Transactions conducted in 2020:
• During the second quarter, Kore Potash PLC made a share payment to its non-executive board members
which resulted in a 0.60% share reduction for the company. This resulted in a transfer in equity of non-
controlling interest to other reserves in an amount of ThUS$ 754.
• During the third quarter of 2020 SQM S.A. increased its shares in Kore Potash PLC to 20.26% as a result
of the acquisition of 260,598,591 shares out of 584,753,846 shares issued for a capital increase
corresponding to ThUS$ 1,679.
• During the third quarter of 2020, its interest in Doktor Tarsa Tarim and its subsidiaries were sold through
Soquimich European Holdings B.V. at a value of ThUS$ 33,066, which brought about a loss of ThUS$
11,408. As of the end of the fourth quarter of 2020, there was a balance of ThUS$ 4,745 in other current
receivables and ThUS$ 9,491 in non-current receivables.
• During the fourth quarter of 2020, SQM Holland B.V. acquired a WSNPK business from Plantacote N.V.
at a value of ThUS$ 16,757, which generated goodwill of ThUS$7,380.
• During the third quarter of 2020, shares held in SQM Eastmed Turkey were sold through Soquimich
European Holdings B.V. at a value of ThUS$ 618, which brought about a loss of ThUS$ 408.
• During the fourth quarter of 2020, Kore Potash PLC made a share-based payment to its non-executive
board members, which resulted in a 0.06% share reduction for the company, finalizing with a share
percentage of 20.20%. This resulted in a decrease in consolidated equity of non-controlling interests in
other reserves of ThUS$ 79.
(b) Transactions conducted in 2019:
• SQM S.A. increased the capital of Kore Potash Ltd by ThUS$ 2,600 in July 2019, which increased its
interest to 19.67% of the shareholder’s investment.
• On December 11, 2019, Doktor Tarsa Tarim Sanayi AS acquired 100% of the shares in Doctochem Tarim
Sanayi Ticaret LTD.
181
10) FINANCIAL REPORTS
Note 10 Joint Ventures
10.1 Policy for the accounting of equity accounted investment in joint ventures
This accounting policy is described in Note 2.6. For these joint ventures there is no quoted market price to measure
these investments.
At the date of issuance of these financial statements, the Company is not aware of the existence of any significant
contingent liabilities associated with the partnerships in joint ventures.
10.2 Disclosures of interest in joint ventures
a)
Operations conducted in 2020
•
•
In the second quarter of 2020, the Company has taken 100% ownership of SQM Vitas BV through the
subsidiary Soquimich European Holdings with a cost of ThUS$ 1,276 and its name has been changed to
SQM Holland. (See Note 8.1)
In the second quarter of 2020, shares held in Arpa Speciali S.R.L. were sold through SQM Pavoni & C.,
SpA. at a value of ThUS$ 56, which brought about a loss of ThUS$ 125. An initial installment of ThUS$
17 was charged, leaving two pending installments of ThUS$ 20 maturing June 30, 2021 and June 30,
2022. The pending installments are classified as other accounts receivable.
•
In the third quarter of 2020, shares held in Coromandel SQM India were sold through Soquimich European
Holdings B.V. at a value of ThUS$ 1,505, which brought about a loss of ThUS$ 643.
• During fourth quarter of 2020, the shares in SQM Qingdao-Star Co, Ltd. were sold through SQM
Industrial S.A. for ThUS$ 1,303, which brought about a gain of ThUS$ 62. As of December 31, 2020, the
sale proceeds were recorded in other receivables.
• A subsequent event associated with the joint venture with Sichuan SQM Migao Chemical Fertilizers Co
Ltd. is reported in Note 31.2. Accordingly, the effect on the statement of income for the fourth quarter of
2020 under "Other gains (losses)" is a gain of ThUS$7,036 on the reversal of the impairment associated
with this investment.
b)
Operations conducted in 2019
• On January 01, 2019, SQM Vitas Perú changed its functional currency from the Peruvian sol to Dollar.
.
182
10) FINANCIAL REPORTS
10.3
Investment in joint ventures accounted for under the equity method of accounting
Joint venture
Description of the nature of the relationship
Domicile
Country of
incorporation
Share of interest
in ownership
Sichuan SQM Migao Chemical Fertilizers Co
Ltd.
Production and distribution of soluble fertilizers.
Coromandel SQM India
Production and distribution of potassium nitrate.
Huangjing Road, Dawan Town,
Qingbaijiang Dristrict, Chengdu
Municipality, Sichuan Province
1-2-10, Sardar Patel Road,
Secunderabad – 500003 Andhra
Pradesh
China
India
50%
50%
SQM Vitas Fzco.
Production and commercialization of specialty plant,
animal nutrition and industrial hygiene.
Jebel ALI Free Zone P.O. Box 18222,
Dubai
United Arab Emirates
50%
SQM Qingdao Star Corp Nutrition Co. Ltd.
Production and distribution of nutrient plant
solutions with specialties NPK soluble.
Longquan Town, Jimo City, Qingdao
Municipality, Shangdong Province
China
Pavoni & C. Spa
Covalent Lithium Pty Ltd.
Total
Production of specialty fertilizers and others for
distribution in Italy and other countries.
Corso Italia 172, 95129 Catania (CT),
Sicilia
Italy
Development and operation of the Mt Holland
Lithium project, which will include the construction
of a lithium extraction and refining mine.
L18, 109 St Georges Tce Perth WA
6000 |PO Box Z5200 St Georges Tce
Perth WA 6831
Australia
50%
50%
50%
The companies described in the following table are related to the following joint ventures:
(1) SQM Vitas Fzco.
(2) Pavoni & C. Spa.
Dividends received for the period
ending
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
-
-
-
2,223
-
-
2,223
-
-
10,598
-
-
-
10,598
Joint venture
Description of the nature of the relationship
Domicile
SQM Vitas Brasil Agroindustria (1)
Production and trading of specialty vegetable and
animal nutrition and industrial hygiene.
Via Cndeias, Km. 01 Sem Numero, Lote
4, Bairro Cia Norte, Candeias, Bahia.
SQM Vitas Perú S.A.C. (1)
Arpa Speciali S.R.L. (2)
Total
Production and trading of specialty vegetable and
animal nutrition and industrial hygiene
Production of specialty fertilizers and others for
distribution in Italy and other countries.
Av. Juan de Arona 187, Torre B, Oficina
301-II, San Isidro, Lima
Mantova (MN) Via Cremona 27 Int. 25
(*) The percentages presented correspond to the ownership used in the consolidation of the company.
Country of
incorporation
Share of interest
in ownership (*)
Brazil
Peru
Italy
49.99%
50%
50,48%
Dividends received for the period
ending
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
-
-
-
-
-
-
-
-
183
10) FINANCIAL REPORTS
Joint Venture
Coromandel SQM India (*)
SQM Vitas Fzco.
SQM Qingdao Star Corp Nutrition Co. Ltd. (*)
SQM Vitas B.V.
Pavoni & C. Spa
Covalent Lithium Pty Ltd. (**)
Sichuan SQM Migao Chemical Fertilizers Co
Ltd.(***)
Total
Equity-accounted investees
Share in profit (loss) of associates and
joint ventures accounted for using the
equity method, for the period ended
Share on other comprehensive income
of associates and joint ventures
accounted for using the equity method,
for the period ended
Share on total other comprehensive
income of associates and joint ventures
accounted for using the equity method
for the period ended
As of
December 31,
2020 (****)
As of
December 31,
2019 (****)
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
-
9,720
-
-
7,222
-
9,028
25,970
1,568
9,111
3,464
1,304
6,864
40
1,992
24,343
-
2,010
83
-
9
-
(280)
1,822
(98)
1,797
296
(15)
36
-
(632)
1,384
-
(1,469)
-
-
349
16
-
(1,104)
(38)
437
-
(27)
(255)
(13)
-
104
-
541
83
-
358
16
(280)
718
(136)
2,234
296
(42)
(219)
(13)
(632)
1,488
(*) As of December 31, 2020, these investments were no longer part of the group, see note 10.2 (a).
(**) As of December 31, 2020, this joint venture has a negative value of ThUS$ (92), which is presented in Other non-current provisions.
(***) See subsequent events in Notes 10.2 and 31.2.
(****) These investments include adjustments for unrealized gains.
The amounts described in the following box represent numbers used in the consolidation of the company:
Equity-accounted investees
Share in profit (loss) of associates and
joint ventures accounted for using the
equity method, for the period ended
Share on other comprehensive income
of associates and joint ventures
accounted for using the equity method,
for the period ended
Share on total other comprehensive
income of associates and joint ventures
accounted for using the equity method
for the period ended
As of
December 31,
2020
ThUS$
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
3,511
1,659
5,170
5,347
1,955
92
7,394
1,018
660
1,678
564
211
31
806
(1,469)
-
(1,469)
(225)
661
(1)
435
(451)
660
-
209
339
872
30
1,241
Associates
SQM Vitas Brasil Agroindustria (1)
SQM Vitas Perú S.A.C. (1)
Arpa Speciali S.R.L. (2)(*)
Total
The following companies are subsidiaries of:
(1) SQM Vitas Fzco.
(2) Pavoni & C. Spa
184
10) FINANCIAL REPORTS
10.4 Assets, liabilities, revenue and expenses from joint ventures
Joint Venture
Assets
Liabilities
Current
Non-current
Current
Non-current
Revenue
Gain (loss) from
continuing
operations
Other
comprehensive
income
Comprehensive
income
As of December 31, 2020
For the period ended December 31, 2020
Sichuan SQM Migao Chemical Fertilizers Co Ltd.
Coromandel SQM India
SQM Vitas Fzco.
SQM Qingdao Star Corp Nutrition Co. Ltd.
SQM Vitas Brasil Agroindustria
SQM Vitas Perú S.A.C.
Pavoni & C. Spa
Covalent Lithium Pty Ltd.
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
29,507
-
(496)
-
40,064
34,548
10,645
1,418
4,412
-
20,431
-
5,527
7,928
7,493
2,131
115,686
47,922
14,156
-
496
-
33,410
33,145
9,270
2,823
93,300
-
-
-
-
-
1,080
836
910
2,826
9
-
-
-
78,960
37,591
15,958
-
132,518
(562)
-
4,019
-
2,036
1,319
16
(232)
6,596
-
-
-
-
(2,938)
-
698
33
(2,207)
(562)
-
4,019
-
(902)
1,319
714
(199)
4,389
Joint Venture
Current
Non-current
Current
Non-current
Assets
Liabilities
Revenue
Gain (loss) from
continuing
operations
Other
comprehensive
income
Comprehensive
income
As of December 31, 2019
For the period ended December 31, 2019
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltd.
Coromandel SQM India
SQM Vitas Fzco.
SQM Qingdao Star Corp Nutrition Co. Ltd.
SQM Vitas B.V.
SQM Vitas Brasil Agroindustria
SQM Vitas Perú S.A.C.
Pavoni & C. Spa
Covalent Lithium Pty Ltd.
Total
28,668
4,504
9,695
7,534
2,609
46,118
29,452
9,444
1,616
139,640
5,129
633
1
26
-
7,299
8,378
7,074
958
29,498
-
-
-
-
-
-
6,044
735
383
7,162
7
8,197
36
12,003
-
87,901
28,590
14,296
-
151,030
(1,262)
(197)
3,595
592
(30)
1,128
421
71
-
4,318
-
(77)
(876)
-
(53)
(451)
1,322
(510)
(25)
(670)
(1,262)
(274)
2,719
592
(83)
677
1,743
(439)
(25)
3,648
13,472
1,704
1,136
632
2
40,334
24,855
8,466
2,111
92,712
185
10.5 Other Joint Venture disclosures
Joint Venture
Sichuan SQM Migao Chemical Fertilizers Co Ltd.
Coromandel SQM India
SQM Vitas Fzco.
SQM Qingdao Star Corp Nutrition Co. Ltd.
SQM Vitas B.V.
SQM Vitas Brasil Agroindustria
SQM Vitas Perú S.A.C.
Pavoni & C. Spa
Covalent Lithium Pty Ltd.
Total
Joint Venture
Sichuan SQM Migao Chemical Fertilizers Co Ltd.
Coromandel SQM India
SQM Vitas Fzco.
SQM Qingdao Star Corp Nutrition Co. Ltd.
SQM Vitas B.V.
SQM Vitas Brasil Agroindustria
SQM Vitas Perú S.A.C.
Pavoni & C. Spa
Covalent Lithium Pty Ltd.
Total
10) FINANCIAL REPORTS
Cash and cash equivalents
Other current financial liabilities
Other non-current financial liabilities
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
30
-
4,251
-
-
4,065
1,043
767
653
10,809
33
2,240
3,071
4,640
2,609
2,101
225
314
693
15,926
-
-
-
-
-
6,820
227
5,573
953
13,573
-
-
-
-
-
9,106
258
5,509
472
15,345
-
-
-
-
-
-
691
-
-
691
-
-
-
-
-
-
895
-
-
895
Depreciation and amortization expense for the
period ending
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
Interest expense for the period ending
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
Income tax benefit (expense) for the period
ending
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
-
-
(2)
-
-
(656)
(326)
(410)
(18)
(1,412)
-
(4)
(7)
-
(1)
(1,176)
(435)
-
(32)
(1,655)
244
-
-
-
-
(34)
(197)
(120)
714
607
153
(27)
-
(241)
-
181
(316)
(214)
-
(464)
(394)
-
(1)
-
-
(355)
(257)
(263)
(213)
(1,483)
(743)
(291)
-
(62)
-
(33)
(287)
(149)
(126)
(1,691)
186
10) FINANCIAL REPORTS
10.6 Joint Ventures
In 2017, together with our subsidiary SQM Australia Pty, we entered into an agreement to acquire 50% of the assets
of the Mt Holland lithium project in Western Australia. The Mt Holland Lithium Project consist, to design,
construct and operate a mine, concentrator and refinery to produce approximately 50,000 metric tons of lithium
hydroxide per year.
On January 23, 2020, after finalizing the definitive feasibility study, the Company and its project partner
Wesfarmers Limited, have decided to postpone the final investment decision to the first quarter of 2021.
In addition, the Company will finance the activities of Mt Holland for a year in an amount of US$ 30 million. As
of December 31, 2020, the Company had made contributions in the amount of US$ 30 million, of which, US$ 15
million was paid in favor of the partner in the project and presented as other receivables. If the Company does not
approve the investment decision, Wesfarmers Limited does not have an obligation to pay the joint venture an
amount equal to the amount contributed by the Company.
See subsequent events in Note 31.2.
187
10) FINANCIAL REPORTS
Note 11 Cash and cash equivalents
11.1 Types of cash and cash equivalents
As of December 31, 2020, and December 31, 2019, cash and cash equivalents are detailed as follows:
Cash on hand
Cash in banks
Other demand deposits
Total Cash
Cash
Cash equivalents
Short-term deposits, classified as cash equivalents
Short-term investments, classified as cash equivalents
Total cash equivalents
Total cash and cash equivalents
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
54
244,848
2,227
247,129
71
105,141
6,986
112,198
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
51,595
210,378
261,973
509,102
149,099
327,233
476,332
588,530
11.2
Short-term investments, classified as cash equivalents
As of December 31, 2020, and December 31, 2019, the short-term investments classified as cash and cash
equivalents relate to mutual funds (investment liquidity funds) for investments in:
Institution
Legg Mason - Western Asset Institutional Cash Reserves
JP Morgan US dollar Liquidity Fund Institutional
Total
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
107,625
102,753
210,378
181,155
146,078
327,233
Short-term investments are highly liquid mutual funds that are basically invested in short-term fixed rate notes in
the U.S. market.
188
10) FINANCIAL REPORTS
11.3
Information on cash and cash equivalents by currency
As of December 31, 2020, and December 31, 2019, information on cash and cash equivalents by currency is detailed
as follows:
Currency
Peso (*)
Dollar
Euro
Mexican Peso
South African Rand
Japanese Yen
Peruvian Sol
Indian rupee
Chinese Yuan
Indonesian rupee
Argentine Peso
Pound Sterling
Australian Dollar
South Korean won
Dirham United Arab Emirates
Polish Zloty
Total
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
7,190
454,402
17,144
1,378
14,286
1,646
3
6
11,597
3
-
19
8,240
558,572
3,131
2,103
3,929
1,559
4
6
2,484
3
3
3
1,411
8,492
16
-
1
-
-
1
509,102
588,530
(*) The Company maintains financial derivative instruments policies which allow management to convert term deposits
denominated in pesos and UF to Dollars.
11.4 Amount restricted cash balances
As of December 31, 2020, and December 31, 2019, cash balances are presented with some form of restriction (see
note 22.7).
Financial assets pledged as collateral
On November 4, 2004, Isapre Norte Grande has a guarantee equivalent to the total amount owed to its subsidiaries
and medical suppliers, which is administered and maintained by Banco de Chile.
As of December 31, 2020, and, December 31, 2019 pledged assets are as follows
Restricted cash balances
Isapre Norte Grande Ltda.
Total
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
731
731
551
551
189
11.5 Short-term deposits, classified as cash equivalents
The detail at the end of each period is as follows:
Receiver of the deposit
Type of deposit
Original
Currency
Interest Rate
Placement date
Expiration date
Principal
Interest accrued
to-date
As of
December 31,
2020
ThUS$
ThUS$
ThUS$
10) FINANCIAL REPORTS
Banco Santander - Santiago
Scotiabank Sud Americano
Banco de Chile
Banco de Chile
Banco crédito e inversiones
Scotiabank Sud Americano
Scotiabank Sud Americano
Banco Santander - Santiago
Scotiabank Sud Americano
Banco Santander - Santiago
Banco crédito e inversiones
Banco crédito e inversiones
Banco Estado
Scotiabank Sud Americano
Banco de Chile
Banco Itaú Corpbanca
Banco Itaú Corpbanca
Banco crédito e inversiones
Banco Itaú Corpbanca
Banco Santander - Santiago
Banco Santander - Santiago
Banco Itaú Corpbanca
BBVA Banco Francés
Total
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Peso
Dollar
0.35%
12-30-2020
03-30-2021
0.35%
0.61%
0.61%
0.46%
0.4%
0.4%
0.5%
0.5%
0.5%
0.51%
0.26%
0.14%
0.4%
0.56%
0.68%
0.68%
0.2%
0.4%
0.26%
0.15%
0.35%
1.8%
11-30-2020
01-08-2021
11-30-2020
01-08-2021
11-30-2020
01-08-2021
12-01-2020
01-15-2021
12-01-2020
01-15-2021
12-02-2020
01-20-2021
12-09-2020
01-25-2021
12-09-2020
01-25-2021
12-09-2020
01-25-2021
12-09-2020
01-25-2021
12-14-2020
01-29-2021
12-14-2020
01-29-2021
12-14-2020
01-29-2021
12-14-2020
12-18-2020
12-18-2020
12-23-2020
12-24-2020
12-29-2020
12-30-2020
12-29-2020
12-31-2020
01-29-2021
01-01-2021
02-01-2021
02-05-2021
02-08-2021
01-08-2021
02-12-2021
01-05-2021
03-06-2021
7,000
1,500
2,000
3,500
500
500
2,500
500
1,000
6,000
6,000
500
1,000
1,500
5,000
500
2,000
2,000
1,000
2,500
700
3,798
86
51,584
-
1
1
1
-
-
1
-
-
1
1
-
1
-
1
-
1
1
-
1
-
-
-
11
7,000
1,501
2,001
3,501
500
500
2,501
500
1,000
6,001
6,001
500
1,001
1,500
5,001
500
2,001
2,001
1,000
2,501
700
3,798
86
51,595
190
Banco crédito e inversiones
Banco crédito e inversiones
Banco de Chile
Banco de Chile
Banco de Chile
Banco Itaú Corpbanca
Scotiabank Sud Americano
Banco crédito e inversiones
Banco crédito e inversiones
Banco crédito e inversiones
Banco Estado
Banco Santander - Santiago
Banco Itaú Corpbanca
Banco Itaú Corpbanca
Banco Itaú Corpbanca
Banco Santander - Santiago
Scotiabank Sud Americano
Scotiabank Sud Americano
Scotiabank Sud Americano
Scotiabank Sud Americano
BBVA Banco Francés
Banco Itaú S.A.
Total
Receiver of the deposit
Type of deposit
Original
Currency
Interest Rate
Placement date
Expiration date
Principal
Interest accrued
to-date
As of
December 31,
2019
ThUS$
ThUS$
ThUS$
10) FINANCIAL REPORTS
3.45%
2.85%
3.45%
3.50%
3.45%
2.90%
2.16%
3.51%
3.75%
3.60%
2.15%
2.55%
2.55%
3.64%
2.80%
2.33%
2.45%
3.20%
3.40%
3.45%
39%
8%
11-18-2019
02-13-2020
12-26-2019
02-20-2020
11-15-2019
01-23-2020
11-15-2019
01-09-2020
11-15-2019
01-16-2020
12-26-2019
02-20-2020
12-30-2019
01-08-2020
11-21-2019
01-28-2020
12-02-2019
02-27-2020
11-25-2019
01-28-2020
12-16-2019
01-06-2020
12-09-2019
02-04-2020
12-16-2019
01-06-2020
11-29-2019
02-13-2020
11-12-2019
01-28-2020
10-16-2019
01-12-2020
12-17-2019
01-13-2020
11-13-2019
01-30-2020
12-02-2019
02-27-2020
11-18-2019
01-30-2020
12-26-2019
01-27-2020
10-17-2019
01-17-2020
18,000
20,000
14,000
18,000
18,000
33,000
6,812
1,000
2,000
1,000
500
1,700
2,500
1,500
2,000
1,000
3,600
500
2,000
1,500
52
64
74
8
62
80
79
13
-
4
6
4
-
3
3
5
8
5
3
2
5
6
1
-
18,074
20,008
14,062
18,080
18,079
33,013
6,812
1,004
2,006
1,004
500
1,703
2,503
1,505
2,008
1,005
3,603
502
2,005
1,506
53
64
148,728
371
149,099
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
Fixed term
On demand
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Peso
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
191
11.6 Net Debt reconciliation
This section sets out an analysis of net debt and relating movements for each of the periods presented. The definition of the net debt is described in Note 21.1.
10) FINANCIAL REPORTS
Net debt
Cash and cash equivalents
Other current financial assets
Other non-current financial hedge assets
Other current financial liabilities
Lease liabilities, current
Other non-current financial liabilities
Lease liabilities, non-current
Total
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
509,102
348,069
37,276
(68,955)
(5,528)
(1,899,513)
(25,546)
(1,105,095)
588,530
505,490
3,918
(291,128)
(7,694)
(1,488,723)
(30,203)
(719,810)
Cash and cash equivalents
As of
December 31,
2019
Amounts from
loans
Amounts from
interests
Other cash
income/expenses
Hedging and non-
hedging instruments
Exchange rate
differences
Others
As of
December 31,
2020
From cash flow
Not from cash flow
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Obligations with the public and bank loans
(1,753,028)
(136,692)
Current and non-current lease liabilities
Financial instruments derived from hedging
Financial instruments derived from non-hedging
(37,897)
(23,655)
(3,169)
8,015
814
-
Current and non-current financial liabilities
(1,817,749)
(127,863)
Cash and cash equivalents
Deposits that do not qualify as cash and cash
equivalents
Derivatives from hedge assets
Derivatives from other financial non-hedge
assets
588,530
485,689
21,188
2,532
-
-
-
-
73,933
1,133
7,634
-
82,700
-
-
(1,216)
-
7,819
-
-
-
7,819
(78,988)
(123,196)
(39,290)
6,902
Total
(719,810)
(127,863)
81,484
(226,753)
The definition of debt is described in Note 14.
-
-
(20,909)
(2,226)
(23,135)
-
-
56,207
(6,824)
26,248
(33,280)
-
-
-
(33,280)
(440)
(14,032)
-
-
(81,616)
(2,325)
(4,094)
-
(1,922,864)
(31,074)
(40,210)
(5,395)
(88,035)
(1,999,543)
-
(3,002)
388
-
509,102
345,459
37,277
2,610
(47,752)
(90,649)
(1,105,095)
192
Note 12 Inventories
The composition of inventory at each period-end is as follows:
Type of inventory
Raw material
Production supplies
Products-in-progress
Finished product
Total
10) FINANCIAL REPORTS
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
10,694
31,007
487,830
563,497
1,093,028
7,287
26,064
457,563
492,424
983,338
As of December 31, 2020, and December 31, 2019, the Company held caliche stockpiles, solutions in solar ponds
and intermediary salts amounting ThUS$ 422,535 and ThUS$ 393,600, respectively (including products in
progress).
As of December 31, 2020, bulk inventories recognized within work in progress and finished goods were ThUS$
108,909 and ThUS$ 176,561, respectively. As of December 31, 2019, bulk inventories recognized within work in
progress and finished goods were ThUS$ 104,295 and ThUS$ 204,686, respectively. Bulk products in progress do
not include ponds or stockpiles, but they do include intermediary salts on pads.
As of December 31, 2020, and 2019, inventory allowances recognized, amounted to ThUS$ 80,930 and ThUS$
88,174, respectively. For finished and in-process products, recognized allowances include the provision associated
with the lower value of stock (considers lower realizable value, uncertain future use, reprocessing costs of off-
specification products, etc.), provision for inventory differences and the provision for potential errors in the
determination of inventories (e.g., errors in topography, grade, moisture, etc.), (see Note 3.13).
For raw materials, supplies, materials and parts, the lower value provision was associated to the proportion of
defective materials and potential differences.
The breakdown of inventory allowances is detailed as follows:
Type of inventory
Raw material and supplies for production
Products-in-progress
Finished product
Total
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
1,934
66,122
12,874
80,930
2,488
71,468
14,218
88,174
The Company has not pledged inventory as collateral for the periods indicated above.
193
10) FINANCIAL REPORTS
As of December 31, 2020, and December 31, 2019, movements in provisions are detailed as follows:
Conciliation
Beginning balance
Increase in Lower Value (1)
Additional Provision Differences of Inventory (2)
Increase / Decrease eventual differences and others (3)
Provision Used
Total changes
Final balance
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
88,174
(5,404)
(704)
1,244
(2,380)
(7,244)
80,930
105,282
(6,987)
(123)
(6,262)
(3,736)
(17,108)
88,174
(1) There are three types of Lower Value Provisions: (a) Economic Realizable Lower Value, (b) Potential Inventory with Uncertain Future
Use and (c) Reprocessing Costs of Off-Specification Products.
(2) Provisions for Inventory Differences generated when physical differences are detected when taking inventory, which exceed the tolerance
levels for this process.
(3) This algorithm corresponds to the provision of diverse percentages based on the complexity in the measurement and rotation of stock, as
well as standard differences based on previous results, as is the case with provisions relating to Commercial Offices.
194
10) FINANCIAL REPORTS
Note 13 Related party disclosures
13.1
Related party disclosures
Balances pending at period-end are not guaranteed, accrue no interest and are settled in cash, no guarantees have
been delivered or received for trade and other receivables due from related parties or trade and other payables due
to related parties.
13.2
Relationships between the parent and the entity
Pursuant to Article 99 of Law of the Securities Market Law, the CMF may determine that a company does not have
a controlling entity in accordance with the distribution and dispersion of its ownership. On November 30, 2018,
the CMF issued the ordinary letter No. 32,131 whereby it determined that Pampa Group, do not exert decisive
power over the management of the Company since it does not have a predominance in the ownership that allows it
to make management decisions. Therefore, the CMF has determined not to consider Pampa Group as the controlling
entity of the Company and that the Company does not have a controlling entity given its current ownership
structure.
195
10) FINANCIAL REPORTS
13.3 Detailed identification of related parties and subsidiaries
As of December 31, 2020 and December 31, 2019, the detail of entities that are identified as subsidiaries or related
parties of the SQM Group is as follows:
Tax ID No
Name
Country of origin
Functional currency
Nature
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
96.801.610-5
96.651.060-9
96.592.190-7
96.592.180-K
79.947.100-0
79.906.120-1
79.876.080-7
Nitratos Naturais Do Chile Ltda.
Nitrate Corporation of Chile Ltd.
SQM North America Corp.
SQM Europe N.V.
Soquimich European Holding B.V.
SQM Corporation N.V.
SQM Comercial De México S.A. de C.V.
North American Trading Company
Administración y Servicios Santiago S.A. de C.V.
SQM Perú S.A.
SQM Ecuador S.A.
SQM Nitratos Mexico S.A. de C.V.
SQMC Holding Corporation L.L.P.
SQM Investment Corporation N.V.
SQM Brasil Limitada
SQM France S.A.
SQM Japan Co. Ltd.
Royal Seed Trading Corporation A.V.V.
SQM Oceania Pty Limited
Rs Agro-Chemical Trading Corporation A.V.V.
SQM Indonesia S.A.
SQM Virginia L.L.C.
Comercial Caimán Internacional S.A.
SQM África Pty. Ltd.
SQM Colombia SAS
SQM Internacional N.V.
SQM (Shanghai) Chemicals Co. Ltd.
SQM Lithium Specialties LLC
SQM Iberian S.A.
SQM Beijing Commercial Co. Ltd.
SQM Thailand Limited
SQM Australia PTY
SQM Holland B.V.
SQM Korea LLC
Comercial Hydro S.A.
SQM Potasio S.A.
SQM Nitratos S.A.
Ajay SQM Chile S.A.
SQM Industrial S.A.
Isapre Norte Grande Ltda.
Almacenes y Depósitos Ltda.
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Peso
Peso
Brazil
United Kingdom
United States
Belgium
Netherlands
Curacao
Mexico
United States
Mexico
Peru
Ecuador
Mexico
United States
Curacao
Brazil
France
Japan
Aruba
Australia
Aruba
Indonesia
United States
Panama
South Africa
Colombia
Belgium
China
United States
Spain
China
Thailand
Australia
Netherlands
Korea
Chile
Chile
Chile
Chile
Chile
Chile
Chile
196
Tax ID No
Name
Country of origin
Functional currency
Nature
10) FINANCIAL REPORTS
79.770.780-5
79.768.170-9
79.626.800-K
76.534.490-5
Servicios Integrales de Tránsitos y Transferencias
S.A.
Soquimich Comercial S.A.
SQM Salar S.A.
Sociedad Prestadora de Servicios de Salud Cruz
del Norte S.A.
76.425.380-9
Exploraciones Mineras S.A.
76.064.419-6
Comercial Agrorama Ltda.
76.145.229-0
Agrorama S.A.
76.359.919-1
Orcoma Estudios SPA
76.360.575-2
Orcoma SPA
76.686.311-9
SQM MaG SpA
77.114.779-8
Sociedad Contractual Minera Búfalo
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Dollar
Dollar
Dollar
Peso
Dollar
Peso
Peso
Dollar
Dollar
Dollar
Dollar
Abu Dhabi Fertilizer Industries WWL
Ajay North America
Ajay Europe SARL
Kore Potash PLC
Arab Emirates
United States
France
United Kingdom
Sichuan SQM Migao Chemical Fertilizers Co Ltda. China
SQM Vitas Fzco.
Arab Emirates
Arab Emirates dirham
Dollar
Euro
Dollar
Dollar
Arab Emirates dirham
SQM Star Qingdao Corp Nutrition Co., Ltd.
Covalent Lithium Pty Ltd.
Pavoni & C, SPA
Sociedad de Inversiones Pampa Calichera
96.529.340-K
Norte Grande S.A.
79.049.778-9
Callegari Agrícola S.A.
China
Australia
Italy
Chile
Chile
Chile
Brazil
Peru
SQM Vitas Brasil Agroindustria (1)
SQM Vitas Perú S.A.C. (1)
Abu Dhabi Fertilizer Industries WWL (2)
Oman
International Technical and Trading Agencies CO
WLL (2)
Jordan
Dollar
Dollar
Euro
Dollar
Peso
Peso
Real brazilian
Dollar
United Arab Emirates
dirham
United Arab Emirates
dirham
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
foreign
96.511.530-7
foreign
foreign
foreign
foreign
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Associate
Associate
Associate
Joint venture
Joint venture
Joint venture
Joint venture
Joint venture
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
(1)
(2)
These Companies are subsidiaries of the joint venture SQM Vitas Fzco.
These Companies are subsidiaries of the joint venture Abu Dhabi Fertilizer Industries WWL Ltda. and therefore it absorbs these and
takes responsibility of all of their assets and liabilities.
* The following entities were considered related parties as of December 31, 2019 (see Note 9.4 letter a and Note 10.2): SQI Corporation N.V.,
SQM Italia SRL, Doktor Tarsa Tarim, SQM Eastmed Turkey, Terra Tarsa Ukraine LLC, Terra Tarsa B.V., Plantacote N.V., Terra Tarsa Don
LLC, Doktolab Tarim Arastirma San., Doctochem Tarim Sanayi Ticaret Ltd. STI, Coromandel SQM India Sichuan SQM Migao Chemical
Fertilizers Co Ltd. and Arpa Speciali S.R.L.
197
10) FINANCIAL REPORTS
The following other related parties correspond to mining contractual corporations.
Tax ID No.
Name
Country of origin
Functional
currency
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Ara Dos Primera del Salar de Pampa Blanca, Sierra Gorda
Ara Tres Primera del Salar de Pampa Blanca, Sierra Gorda
Ara Cuatro Primera del Salar de Pampa Blanca, Sierra Gorda
Ara Cinco Primera del Salar de Pampa Blanca, Sierra Gorda
Curicó Dos Primera del Salar de Pampa Alta, Sierra Gorda
Curicó Tres Primera del Sector de Pampa Alta, Sierra Gorda
Evelyn Veinticuatro Primera de Sierra Gorda
Filomena Tres Primera de Oficina Filomena, Sierra Gorda
Filomena Cuatro Primera de Oficina Filomena, Sierra Gorda
Francis Cuatro Primera de Pampa Blanca, Sierra Gorda
Francis Cuatro Segunda del Salar de Pampa Blanca, Sierra Gorda
Francis Cuatro Tercera de Pampa Blanca, Sierra Gorda
Francis Cuatro Cuarta de Pampa Blanca, Sierra Gorda
Francis Cuatro Quinta de Pampa Blanca, Sierra Gorda
Francis Primera del Salar de Pampa Blanca de Sierra Gorda
Francis Segunda del Salar de Pampa Blanca de Sierra Gorda
Francis Tercera del Salar de Pampa Blanca de Sierra Gorda
Ivon Primera de Sierra Gorda
Ivon Décima Segunda de Sierra Gorda
Ivon Sexta de Sierra Gorda
Julia Primera de Sierra Gorda
Lorena Trigésimo Quinta de Sierra Gorda
Perseverancia Primera de Sierra Gorda
Tamara 40 Primera del Sector S.E. OF. Concepción, Sierra Gorda
Tamara Tercera de Oficina Concepción, Sierra Gorda
Tamara 40 Segunda del Sector S.E. OF Concepción, Sierra Gorda
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Peso
Relationship
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
198
10) FINANCIAL REPORTS
13.4 Detail of related parties and related party transactions
Transactions between the Company and its subsidiaries, associated businesses, joint ventures and other related
parties are part of the Company's common transactions. Their conditions are those customary for this type of
transactions in respect of terms and market prices. Maturity terms for each case vary by virtue of the transaction
giving rise to them.
As of December 31, 2020 and 2019, the detail of significant transactions with related parties is as follows
Tax ID No
Name
Nature
Country of origin
Transaction
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Doktor Tarsa Tarim Sanayi AS
Ajay Europe S.A.R.L.
Ajay Europe S.A.R.L.
Ajay North America LL.C.
Ajay North America LL.C.
Abu Dhabi Fertilizer Industries WWL
SQM Vitas Brasil Agroindustria
SQM Vitas Perú S.A.C.
SQM Vitas Fzco
Coromandel SQM India
SQM Star Qingdao Corp Nutrition Co., Ltd.
Terra Tarsa Ukraine LLC
Plantacote NV
Pavoni & CPA
Arpa Speciali S.R.L.
Associate
Associate
Associate
Associate
Associate
Associate
Turkey
France
France
USA
USA
Sale of products
Sale of products
Dividends
Sale of products
Dividends
United Arab Emirates Sale of products
Other related parties
Other related parties
Brazil
Peru
Sale of products
Sale of products
Joint venture
Joint venture
Joint venture
Other related parties
Other related parties
Joint venture
Other related parties
United Arab Emirates Dividends
India
China
Ukraine
Belgium
Italy
Italy
China
Sale of products
Sale of products
Sale of products
Sale of products
Sale of products
Sale of products
Dividends
SQM Star Qingdao Corp Nutrition Co., Ltd.
Joint venture
Terra Tarsa Don LLC
SQM Eastmed Turkey
Other related parties
Russian Federation
Sale of products
Associate
Turkey
Sale of products
As of
December
31, 2020
As of
December
30, 2019
ThUS$
ThUS$
1,053
23,162
1,197
20,259
1,967
-
41,341
17,723
-
1,510
-
737
-
1,125
-
2,223
-
-
14,767
21,348
1,055
16,932
2,796
3,749
46,876
24,138
10,598
3,955
1,929
1,280
4,096
3,152
2,359
-
40
47
Below is a list of transactions with clients and suppliers with whom a relationship with key Company personnel
was identified:
Tax ID No
Name
Nature
Country of origin
Transaction
10.581.580-8
71.644.300-0
72.012.000-3
76.389.727-3
76.825.265-3
76.839.170-k
90.193.000-7
92.580.000-7
96.806.980-2
97.004.000-5
99.012.000-5
90.266.000-3
92.580.000-7
96.529.340-K
Gonzalo Guerrero Yamamoto
Universidad del Desarrollo
Universidad Tecnológica de Chile
Sociedad Periodística El Libero
Link Capital Partners SpA
Proveedora Industrial Arrigoni
El Mercurio S.A.P.
Emp. Nac. Telecomunicaciones S.A.
Entel PCS Telecomunicaciones S.A.
Banco de Chile
Cia. de Seg. de Vida Consorcio Nacional
Enaex S.A.
Emp. Nac. Telecomunicaciones S.A.
Norte Grande S.A.
Chairman / director
Chairman / director
Chairman / director
Shareholders
Family of director
Director in common
Family of director
Family of director
Family of director
Director in common
Family of director
Director in common
Family of director
Director in common
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Services – Supplier
Services – Supplier
Services – Supplier
Services – Supplier
Services – Supplier
Services – Supplier
Services – Supplier
Services – Supplier
Services – Supplier
Services – Supplier
Services – Supplier
Servicies – Client
Servicies – Client
Lease
As of
December
31, 2020
ThUS$
20
125
41
-
224
5
36
1,847
264
44,696
71
19
43
135
199
10) FINANCIAL REPORTS
13.5 Trade receivables due from related parties, current:
Tax ID No
Name
Nature
Country of origin
Currency
Foreign
Foreign
Foreign
Foreign
96.511.530-7
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Total
Doktor Tarsa Tarim Sanayi AS
Ajay Europe S.A. R.L.
Ajay North America LLC.
Abu Dhabi Fertilizer Industries
WWL
Soc. de Inversiones Pampa
Calichera
SQM Vitas Brasil Agroindustria
SQM Vitas Perú S.A.C.
Coromandel SQM India
SQM Vitas Fzco.
Terra Tarsa Ukraine LLC
Terra Tarsa Don LLC
Plantacote NV
SQM Eastmed Turkey
Pavoni & C SpA
Arpa Speciali S.R.L.
Covalent Lithium Pty Ltd.
Sichuan SQM Migao Chemical
Fertilizers Co Ltd.
Allowance
Associate
Associate
Associate
Turkey
France
Dollar
Euro
United States of America Dollar
Associate
United Arab Emirates
United Arab Emirates Dirham
Other related parties Chile
Other related parties Brazil
Other related parties Peru
Joint venture
India
United Arab Emirates
Joint venture
Other related parties Ukraine
Other related parties Federation of Russia
Dollar
Dollar
Dollar
Indian Rupee
United Arab Emirates Dirham
Ukrainian hryvnia
Russian Ruble
Other related parties Belgium
Associate
Joint venture
Turkey
Italy
Other related parties
Italy
Joint venture
Australia
Joint venture
China
Euro
Euro
Euro
Euro
Australia
Dollar
As of
December
31, 2020
As of
December
31, 2019
ThUS$
ThUS$
-
4,625
2,956
595
6
24,335
24,205
-
236
-
-
-
-
1,095
-
84
4,464
-
62,601
110
3,712
2,290
803
6
27,275
23,475
1,792
234
7
13
657
47
1,028
134
-
-
(356)
61,227
The receivables for Sichuan SQM Migao Chemical Fertilizers Co Ltda. are presented net of provisions (provisions as of December 31, 2020
ThUS$ 6,502 and December 31, 2019 ThUS$ 10,965).
13.6 Trade payables due to related parties, current:
Tax ID No
Company
Nature
Country of
origin
Currency
Foreign
Foreign
Foreign
Foreign
Total
Ajay Europe S.A.R.L.
Ajay North America LL.C.
Associate
Associate
SQM Star Qingdao Corp Nutrition Co., Ltd.
Covalent Lithium Pty Ltd
Joint venture
Joint venture
France
United States of
America
China
Australia
Euro
Dollar
Dollar
Australian dollar
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
50
232
-
324
606
-
-
243
232
475
13.7 Other disclosures:
As of December 31, 2020, the Company has made contributions to Mt Holland in favor of Wesfarmers in the
amount of US$ 15 million. This value is presented in the financial statements in the line “Trade and other accounts
receivable.” For more details, see Note 10.6.
Note 7 describes the remuneration of the Board of Directors, administration and key management personnel.
200
Note 14 Financial instruments
14.1 Types of other current and non-current financial assets
Description of other financial assets
Financial assets at amortized cost (1)
Derivative financial instruments
- For hedging
- Non-hedging (2)
Total other current financial assets
Financial assets at fair value through other comprehensive income
Derivative financial instruments
- For hedging
Other financial assets at amortized cost
Total other non-current financial assets
Institution
Banco de Crédito e Inversiones
Banco Santander (3)
Banco Itau Corpbanca
Banco Security
Banco de Chile
Banco Estado
Scotiabank Sud Americano
JP Morgan Asset Management
Total
10) FINANCIAL REPORTS
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
345,459
485,689
-
2,610
348,069
14,569
37,276
80
51,925
17,270
2,531
505,490
4,785
3,918
75
8,778
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
185,589
45,168
49,006
-
-
-
31,668
34,028
345,459
185,400
74,365
120,628
17,964
18,026
15,126
54,180
-
485,689
(1) Corresponds to term deposits whose maturity date is greater than 90 days and less than 360 days from the investment date
constituted in the aforementioned financial institutions:
(2) Correspond to forwards and options that were not classified as hedging instruments (See detail in Note 14.3).
(3) As of December 31, 2020, there were no margin calls and as of December 31, 2019, this value was ThUS$ 1,870.
201
14.2 Trade and other receivables
Trade and other receivables
Trade receivables, current
Prepayments, current
Other receivables, current
Total trade and other receivables
See discussion about credit risk in Note 5.2.
Trade and other receivables
Receivables related to credit operations, current
Trade receivables, current
Prepayments, current
Other receivables, current
Current trade and other receivables
Other receivables, non-current
Non-current receivables
Total trade and other receivables
10) FINANCIAL REPORTS
As of December 31, 2020
As of December 31, 2019
Current
ThUS$
Non-current
ThUS$
Total
ThUS$
Current
ThUS$
Non-current
ThUS$
Total
ThUS$
313,265
19,900
32,041
365,206
-
-
11,165
11,165
313,265
19,900
43,206
376,371
367,583
20,309
11,250
399,142
-
-
1,710
1,710
367,583
20,309
12,960
400,852
As of December 31, 2020
As of December 31, 2019
Assets before
allowances
Allowance for
doubtful trade
receivables
Assets for trade
receivables, net
Assets before
allowances
Allowance for
doubtful trade
receivables
Assets for trade
receivables, net
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
327,586
327,586
20,684
36,664
57,348
11,165
11,165
(14,321)
(14,321)
(784)
(4,623)
(5,407)
-
-
313,265
313,265
19,900
32,041
51,941
11,165
11,165
383,775
383,775
21,092
15,659
36,751
1,710
1,710
(16,192)
(16,192)
(783)
(4,409)
(5,192)
-
-
367,583
367,583
20,309
11,250
31,559
1,710
1,710
396,099
(19,728)
376,371
422,236
(21,384)
400,852
202
10) FINANCIAL REPORTS
(a)
Portfolio analysis
As of December 31, 2020, and December 31, 2019 the detail of the renegotiated portfolio is as follows:
As of December 31, 2020
Portfolio analysis
Past due segments
Number of customers with
non-renegotiated portfolio
Gross non-renegotiated
portfolio ThUS$
Number of customers with
renegotiated portfolio
Gross renegotiated
portfolio ThUS$
Current
1 - 30 days
31 - 60 days
61 - 90 days
91 - 120 days
121 - 150 days
151 - 180 days
181 - 210 days
211 - 250 days
>250 days
Total
1,281
119
12
5
5
2
3
1
3
156
1,587
301,939
12,140
1,226
159
1,448
2,384
1,398
-
2
5,030
325,726
As of December 31, 2019
Portfolio analysis
23
8
-
-
1
2
4
2
6
64
110
179
60
-
-
41
2
12
5
114
1,447
1,860
Past due segments
Number of customers non-
renegotiated portfolio
Gross non-renegotiated
portfolio
ThUS$
Number of customers
renegotiated portfolio
Gross renegotiated
portfolio
ThUS$
Current
1 - 30 days
31 - 60 days
61 - 90 days
91 - 120 days
121 - 150 days
151 - 180 days
181 - 210 days
211 - 250 days
>250 days
Total
1,486
166
26
12
5
5
7
4
6
144
1,861
351,931
20,195
1,279
519
1,026
361
190
51
48
5,449
381,049
69
72
4
3
2
7
2
-
8
137
304
892
526
10
54
66
49
33
-
11
1,085
2,726
203
10) FINANCIAL REPORTS
(b)
Estimate for doubtful accounts
As of December 31, 2020
Trade accounts receivable days past due
Trade and other receivables
Current
1 to 30
days
31 to 60
days
61 to 90
days
Over 90
days
Trade
Trade
receivables
due from
related
parties
ThUS$
ThUS$
Expected Loss Rate on
Total Gross Book Value
Deterioration Estimate
1%
10%
302,118
12,200
3,187
1,207
39%
1,226
477
52%
159
83
79%
11,883
9,367
-
327,586
14,321
-
70,145
7,545
As of December 31, 2019
Trade accounts receivable days past due
Trade and other receivables
Current
1 to 30
days
31 to 60
days
61 to 90
days
Over 90
days
Trade
Trade
receivables
due from
related
parties
ThUS$
ThUS$
Expected Loss Rate on
Total Gross Book Value
Deterioration Estimate
1%
18%
352,823
20,721
5,285
3,664
34%
1,288
440
44%
573
251
78%
8,370
6,552
-
383,775
16,192
-
72,550
11,323
As of December 31, 2020, and December 31, 2019, movements in provisions are as follows:
Provisions
Provision Impairment Accounts receivable at the beginning of the Period
(Decrease) increase impairment of accounts receivable
Use of Provision Applied to Accounts Receivable
Impairment of Accounts Receivable Provision at the end of the Period
(1) Trade and Other Receivables Provision
(2) Current other Receivables Provision
(3) Provision Trade payables due to related parties, current
Recovery of Insurance
Impairment of Accounts Receivable Provision
Renegotiated Provision
Non-renegotiated Provision
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
32,707
(4,684)
(750)
27,273
14,321
5,407
7,545
347
27,273
1,728
25,545
32,634
1,057
(984)
32,707
16,192
5,192
11,323
320
32,707
1,905
30,802
204
10) FINANCIAL REPORTS
14.3 Hedging assets and liabilities
The balance represents derivative financial instruments measured at fair value which have been classified as hedges
for exchange and interest rate risks relating to the total obligations with the public associated with bonds in UF and
investments in Chilean pesos. As of December 31, 2020, the notional amount of cash flows agreed upon in US
dollars of the cross-currency swap contracts amounted to ThUS$ 565,295 (As of December 31, 2019 amounted to
ThUS$ 435,167).
Expressed in ThUS$
Assets / (Liabilities)
Derivative Instrument
Total Realized
Hedging Reserve in Gross
Equity
Hedging with debt as underlying as of December 31, 2020
Hedging Assets
Hedging Liabilities
Underlying Debt Hedge
Underlying Investment Coverage as of December 31, 2020
Hedging Assets
Hedging Liabilities
Underlying Investments Hedge
37,276
(19,195)
18,081
-
(21,004)
(21,004)
24,428
(12,956)
11,472
-
(20,626)
(20,626)
12,848
(6,239)
6,609
-
(378)
(378)
Expressed in ThUS$
Assets / (Liabilities)
Derivative Instrument
Total Realized
Hedging Reserve in Gross
Equity
Hedging with debt as underlying as of December 31, 2019
Hedging Assets
Hedging Liabilities
Underlying Debt Hedge
Underlying Investment Coverage as of December 31, 2019
Hedging Assets
Hedging Liabilities
Underlying Investments Hedge
3,918
(22,771)
(18,853)
17,270
(889)
16,381
(4,194)
(25,363)
(29,557)
17,857
(711)
17,146
8,112
2,592
10,704
(587)
(178)
(765)
Hedging Effect in Profit and Equity for the period as of December
31, 2020
Variation Total
Result
Hedge Reserve Variation
Analysis Effect by Type of Coverage
Underlying Debt Hedge
Underlying Investments Hedge
Total hedging effect on profit or loss and equity in the period
Analysis Effect by type of asset
Hedging in Current and Non-Current Assets
Hedging in Current and Non-Current Liabilities
Total Hedge Effect in Profit or Loss and Equity for the period
36,935
(37,385)
(450)
16,088
(16,538)
(450)
41,029
(37,772)
3,257
10,765
(7,508)
3,257
(4,094)
387
(3,707)
5,323
(9,030)
(3,707)
205
The balances in the “total realized” column consider the intermediate effects of the contracts in force from January
1 to December 31, 2020 and from January 1 to December 31, 2019.
Derivative contract maturities are detailed as follows:
10) FINANCIAL REPORTS
Contract amount
ThUS$
134,049
58,748
134,228
106,933
Currency
Maturity date
UF
UF
UF
UF
01/04/2023
02/01/2022
01/15/2028
06/01/2030
Series
H
O
P
Q
Effectiveness
The Company uses cross currency swap derivative instruments to hedge the possible financial risk associated with
the volatility of the exchange rate associated with Chilean pesos and UF. The objective is to hedge the exchange
rate and inflation financial risks associated with bonds payable. Hedges are documented and tested to measure their
effectiveness.
Based on a comparison of critical terms, hedging is highly effective, given that the hedged amount is consistent
with obligations maintained for bonds denominated in Pesos and UF. Likewise, hedging contracts are denominated
in the same currencies and have the same maturity dates of bond principal and interest payments.
Effectiveness tests have verified that hedges are effective as of the reporting date.
14.4
Financial liabilities
Other current and non-current financial liabilities
As of December 31, 2020, and December 31, 2019, the detail is as follows:
Other current and non-current financial
liabilities
As of December 31, 2020
As of December 31, 2019
Currents
Non-Current
ThUS$
ThUS$
Total
ThUS$
Currents
Non-Current
ThUS$
ThUS$
Total
ThUS$
Liabilities at amortized cost
Bank borrowings
Obligations with the public
Derivative financial instruments
For hedging
Non-Hedging
Total
82
36,781
26,699
5,393
68,955
69,376
1,816,626
69,458
1,853,407
199
69,138
69,337
280,578
1,403,108
1,683,686
13,511
-
40,210
5,393
7,183
3,168
16,477
-
23,660
3,168
1,899,513
1,968,468
291,128
1,488,723
1,779,851
Current and non-current bank borrowings
As of December 31, 2020, and 2019, the detail is as follows:
Current and non-current bank borrowings
Current loans
Non-current loans
Current and non-current loans
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
82
69,376
69,458
199
69,138
69,337
206
10) FINANCIAL REPORTS
a)
Bank borrowings, current:
As of December 31, 2020, and December 31, 2019, the detail of this caption is as follows:
Debtor
Tax ID No.
Company
Country
Tax ID No.
Creditor
Financial
institution
Country
Currency or
adjustment
index
Payment of
interest
Repayment
Effective rate
Nominal rate
93.007.000-9
SQM S.A.
Chile
O-E
Scotiabank Cayman
USA
USD
Upon maturity
05/30/2023
1.00%
1.36%
Debtor
Company
Creditor
Nominal amounts as of December 31, 2020
Current amounts as of December 31, 2020
Financial institution
Up to 90 days
90 days to 1 year
Total
Up to 90 days
90 days to 1
year
Subtotal
Borrowing
costs
Total
SQM S.A.
Total
Scotiabank Cayman
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
-
-
-
-
-
-
-
-
82
82
82
82
-
-
82
82
Debtor
Creditor
Tax ID No
Company
Country
Tax ID No
Financial institution
Country
Currency or
adjustment
index
Repayment
maturity
Effective rate
Nominal rate
93.007.000-9 SQM S.A.
Foreign
Nitratos Naturais do Chile Lim.
Chile
Brazil
Foreign
Foreign
Scotiabank Cayman
Banco ITAU Brasil
USA
Brazil
US$
BRL
Upon maturity
Upon maturity
05/29/2023
12/31/2019
2.11%
13.57%
3.01%
4.25%
Debtor
Company
SQM S.A.
Nitratos Naturais do Chile
Total
Creditor
Nominal amounts as of December 31, 2019
Current amounts as of December 31, 2019
Financial institution
Scotiabank Cayman
Banco ITAU Brasil
Up to 90 days
90 days to 1
year
Total
Up to 90 days
90 days to 1
year
Subtotal
Borrowing
costs
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
-
-
-
-
-
-
-
-
-
-
12
12
187
-
187
187
12
199
-
-
-
187
12
199
207
10) FINANCIAL REPORTS
b)
Unsecured obligations, current:
As of December 31, 2020, and December 31, 2019, the detail of current unsecured interest-bearing obligations is composed of promissory notes and bonds, as
follows:
Debtor
Tax ID No.
Company
Country
Number of
registration or ID of
the instrument
Series
Maturity date
Currency or
adjustment index
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
-
-
-
-
564
699
563
700
MUS$250
MUS$300
MUS$450
MUS$400
H
O
P
Q
01/28/2021
04/03/2021
05/07/2021
01/22/2021
01/05/2021
02/01/2021
01/15/2021
06/01/2021
US$
US$
US$
US$
UF
UF
UF
UF
Periodicity
Payment of
interest
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Repayment
Upon maturity
Upon maturity
Upon maturity
Upon maturity
Semiannual
Upon maturity
Upon maturity
Upon maturity
Effective rate
Nominal rate
1.95%
1.08%
3.59%
4.17%
0.58%
2.24%
2.37%
2.92%
4.38%
3.63%
4.25%
4.25%
4.90%
3.80%
3.25%
3.45%
Effective rates of bonds in Pesos and UF are expressed and calculated in Dollars based on the flows agreed in Cross Currency Swap Agreements.
Company
Country
Series
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
Total
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
MUS$250
MUS$300
MUS$450
MUS$400
H
O
P
Q
Nominal amounts as of December 31, 2020
Carrying amounts of maturities as of December 31, 2020
Up to 90
days
90 days to 1
year
Total
Up to 90 days
90 days to 1
year
Subtotal
Borrowing
costs
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
4,648
-
7,508
-
18,212
962
1,824
-
33,154
-
2,658
-
2,869
-
-
-
350
5,877
4,648
2,658
7,508
2,869
18,212
962
1,824
350
39,031
4,648
-
7,508
-
18,212
962
1,824
-
33,154
-
2,658
-
2,869
-
-
-
350
5,877
4,648
2,658
7,508
2,869
18,212
962
1,824
350
39,031
(433)
(614)
(679)
(237)
(172)
(82)
(12)
(21)
(2,250)
4,215
2,044
6,829
2,632
18,040
880
1,812
329
36,781
208
10) FINANCIAL REPORTS
Debtor
Tax I No.
Company
Country
Number of
registration or ID of
the instrument
Series
Maturity date
Currency or
adjustment index
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
-
-
-
-
564
699
563
700
MUS$250
MUS$250
MUS$300
MUS$450
H
O
P
Q
04/21/2020
01/28/2020
04/03/2020
05/07/2020
01/05/2020
02/01/2020
01/15/2020
06/01/2020
US$
US$
US$
US$
UF
UF
UF
UF
Periodicity
Payment of
interest
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Repayment
Upon maturity
Upon maturity
Upon maturity
Upon maturity
Semiannual
Upon maturity
Upon maturity
Upon maturity
Effective rate
Nominal rate
0.43%
2.35%
1.42%
4.07%
1.36%
2.41%
2.71%
3.11%
5.50%
4.38%
3.63%
4.25%
4.90%
3.80%
3.25%
3.45%
Company
Country
Series
Up to 90
days
90 days to 1
year
Total
Up to 90 days
90 days to 1
year
Subtotal
Borrowing
costs
Total
Nominal amounts as of December 31, 2019
Carrying amounts of maturities as of December 31, 2019
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
Total
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
MUS$250
MUS$250
MUS$300
MUS$450
H
O
P
Q
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
-
252,674
252,674
-
252,674
252,674
4,648
-
-
17,166
890
1,686
-
24,390
-
2,658
2,869
-
-
-
323
258,524
4,648
2,658
2,869
17,166
890
1,686
323
282,914
4,648
-
-
17,166
890
1,686
-
24,390
-
2,658
2,869
-
-
-
323
258,524
4,648
2,658
2,869
17,166
890
1,686
323
282,914
(386)
(433)
(614)
(679)
(139)
(67)
(12)
(6)
(2,336)
252,288
4,215
2,044
2,190
17,027
823
1,674
317
280,578
Effective rates of bonds in Pesos and UF are expressed and calculated in Dollars based on the flows agreed in Cross Currency Swap Agreements.
209
10) FINANCIAL REPORTS
c)
Classes of interest-bearing loans, non-current
The following table shows the details of bank loans as of December 31, 2020 and 2019:
Tax ID No.
93.007.000-9
Debtor
Company
SQM S.A.
Country
Chile
Creditor
Tax ID No.
Financial institution
Country
Currency or
adjustment index
Type of
amortization
Effective rate
Nominal rate
Foreign
Scotiabank Cayman
USA
USD
Maturity
1.98%
1.36%
Debtor
Creditor
Nominal non-current maturities as of December 31, 2020
Carrying amounts of maturities as of December 31, 2020
Company
Financial institution
Between 1 and 2
Between 2
and 3
Between 3
and 4
Total
Between 1
and 2
Between 2
and 3
Between 3
and 4
Subtotal
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Costs of
obtaining
loans
ThUS$
Total
ThUS$
SQM S.A.
Total
Scotiabank Cayman
-
-
70,000
70,000
-
-
70,000
70,000
-
-
70,000
70,000
-
-
70,000
70,000
(624)
(624)
69,376
69,376
Tax ID No.
93.007.000-9
Debtor
Company
SQM S.A.
Country
Chile
Creditor
Tax ID No.
Financial institution
Country
Currency or
adjustment index
Type of
amortization
Effective rate
Nominal rate
Foreign
Scotiabank Cayman
USA
USD
Maturity
2.84%
3.01%
Debtor
Creditor
Nominal non-current maturities as of December 31, 2019
Carrying amounts of maturities as of December 31, 2019
Company
Financial institution
Over 1 year
to 2
Over 2
years to 3
Over 3
Years to 4
Over 4
Years to 5
ThUS$
ThUS$
ThUS$
ThUS$
Over 5
years
ThUS$
Total
Over 1 year
to 2
Over 2
years to 3
ThUS$
ThUS$
ThUS$
Costs of
obtaining
loans
ThUS$
Total
ThUS$
SQM S.A.
Total
Scotiabank Cayman
-
-
-
-
70,000
70,000
70,000
70,000
-
-
-
-
70,000
70,000
70,000
70,000
(862)
(862)
69,138
69,138
210
10) FINANCIAL REPORTS
d)
Non-current unsecured interest-bearing bonds
The following table shows the details of “unsecured debentures that accrue non-current interest” as of December 31, 2020, and 2019:
Debtor
Tax ID No.
Company
Country
Number of
registration or ID of
the instrument
Series
Maturity date
Currency or
adjustment index
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
-
-
-
-
564
699
563
700
MUS$250
MUS$300
MUS$450
MUS$400
H
O
P
Q
01/28/2025
04/03/2023
05/07/2029
01/22/2050
01/05/2030
02/01/2033
01/15/2028
06/01/2038
US$
US$
US$
US$
UF
UF
UF
UF
Periodicity
Payment of
interest
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Repayment
Upon maturity
Upon maturity
Upon maturity
Upon maturity
Semiannual
Upon maturity
Upon maturity
Upon maturity
Effective rate
Nominal rate
4.08%
3.43%
4.18%
4.22%
4.76%
3.68%
3.24%
3.43%
4.38%
3.63%
4.25%
4.25%
4.90%
3.80%
3.25%
3.45%
Series
MUS$250
MUS$300
MUS$450
MUS$400
H
O
P
Q
Total
Nominal non-current maturities as of December 31, 2020
Carrying amounts of maturities as of December 31, 2020
Over 1
year to 2
Over 2
years to 3
Over 3
Years to 4
Over 4
Years to 5
Over 5
years
Total
Over 1
year to 2
Over 2
years to 3
Over 3
Years to 4
Over 4
Years to 5
Over 5
years
Subtotal
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Bond
issuance
costs
ThUS$
Total
ThUS$
-
-
-
-
-
-
-
-
-
-
300,000
-
-
-
-
-
-
300,000
-
-
-
-
-
-
-
-
-
250,000
-
-
-
-
-
-
-
-
-
450,000
400,000
126,386
250,000
300,000
450,000
400,000
126,386
61,334
61,334
122,668
122,668
122,668
122,668
250,000
1,283,056
1,833,056
-
-
-
-
-
-
-
-
-
-
300,000
-
-
-
-
-
-
300,000
-
-
-
-
-
-
-
-
-
250,000
-
-
-
-
-
-
-
250,000
-
-
250,000
300,000
(1,336)
248,664
(781)
299,219
450,000
450,000
400,000
126,386
400,000
126,386
61,334
61,334
122,668
122,668
122,668
122,668
(5,020)
(6,582)
(1,378)
(904)
(77)
(352)
444,980
393,418
125,008
60,430
122,591
122,316
1,283,056
1,833,056
(16,430)
1,816,626
211
10) FINANCIAL REPORTS
Debtor
Tax ID No.
Company
Country
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Number of
registration or ID of
the instrument
Series
Maturity date
Currency or
adjustment index
-
-
-
564
699
563
700
MUS$250
MUS$300
MUS$450
H
O
P
Q
01/28/2025
04/03/2023
05/07/2029
01/05/2030
02/01/2033
01/15/2028
06/01/2038
US$
US$
US$
UF
UF
UF
UF
Periodicity
Payment of
interest
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Semiannual
Repayment
Upon maturity
Upon maturity
Upon maturity
Semiannual
Upon maturity
Upon maturity
Upon maturity
Effective rate
Nominal rate
4.08%
3.43%
4.19%
4.78%
3.70%
3.24%
3.45%
4.38%
3.63%
4.25%
4.90%
5.50%
3.25%
3.45%
Series
MUS$250
MUS$300
MUS$450
H
O
P
Q
Total
Nominal non-current maturities as of December 31, 2019
Carrying amounts of maturities as of December 31, 2019
Over 1
year to 2
Over 2
years to 3
Over 3
Years to 4
Over 4
Years to 5
Over 5
years
Total
Over 1
year to 2
Over 2
years to 3
Over 3
Years to 4
Over 4
Years to 5
Over 5
years
Subtotal
Bond
issuance
costs
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
-
-
-
-
-
-
-
300,000
-
-
-
-
250,000
250,000
-
300,000
450,000
450,000
-
-
-
-
-
-
-
300,000
-
-
-
-
13,749
13,749
13,749
13,749
-
-
-
-
-
-
-
-
-
-
-
-
75,621
56,715
56,715
113,430
113,430
113,430
113,430
130,617
13,749
13,749
13,749
13,749
-
-
-
-
-
-
-
-
-
-
-
-
250,000
250,000
-
300,000
450,000
450,000
75,621
56,715
130,617
56,715
113,430
113,430
113,430
113,430
(1,514)
(1,393)
(5,923)
(1,253)
(811)
(89)
(101)
248,486
298,607
444,077
129,364
55,904
113,341
113,329
13,749
13,749
313,749
13,749
1,059,196
1,414,192
13,749
13,749
313,749
13,749
1,059,196
1,414,192
(11,084)
1,403,108
212
10) FINANCIAL REPORTS
e)
Additional information
Bonds
As of December 31, 2020 and December 31, 2019, the details of each issuance are as follows:
(i) Series “H” bonds
On January 13, 2009, the Company placed the Series H bond for UF 4,000,000 (ThUS$ 139,216) at an annual
interest rate of 4.9%, with a term of 21 years and amortizations of principal beginning in July, 2019.
On July 5, 2019, amortization of principal amounted to UF 181,818.18, (ThUS$ 7,494) with an associated cross
currency swap hedge income of ThUS$ 439.
On January 5, 2020, amortization of principal amounted to UF 181,818.18. (ThUS$ 6,787) with an associated cross
currency swap hedge loss of ThUS$ 268.
On July 5, 2020, amortization of principal amounted to UF 181,818.18. (ThUS$ 6,509) with an associated cross
currency swap hedge loss of ThUS$ 546.
See more details in Note 21.1
For the periods ended December 31, 2020, and December 31, 2019, the Company has made the following payments
with a charge to the Series H bonds and their associated CCS hedging:
Payments made
Payments of interest, Series H bonds
CCS Coverage
December 31,
2020
December 31,
2019
ThUS$
ThUS$
6,601
2,575
7,868
1,952
(ii) Single series bonds, second issue MUS$ 250
On April 21, 2010, the Company informed the CMF of its placement in international markets of an unsecured bond
of ThUS$ 250,000, pursuant to Rule 144 -A and Regulation S of the Securities and Exchange Commission with a
maturity of 10 years with an annual interest rate of 5.5%.
The Company paid the principal on April 21, 2020.
For the periods ended December 31, 2020 and December 31, 2019, the detail of payments charged to the line of
single series bonds, second issue is as follows
Payments made
Interest payment
December 31,
2020
December 31,
2019
ThUS$
ThUS$
6,875
13,750
213
10) FINANCIAL REPORTS
(iii) Series “O” bonds
On April 4, 2012, the Company issued “Series O” for UF 1,500,000 (ThUS$ 69,901) at a term of 21 years with a
single payment at the maturity of the term and an annual interest rate of 3.80%.
See more details in Note 21.1
For the periods ended December 31, 2020, and December 31, 2019, the Company has made the following payments
with a charge to Series O bonds and their associated CCS hedging:
Payments made
Payment of interest, Series O bonds
CCS Coverage
December 31,
2020
December 31,
2019
ThUS$
ThUS$
2,070
599
2,308
354
(iv) Single series bonds, third issue MUS$ 300
On April 3, 2013, the Company issued a non-secured bond in the United States with a value of US$ 300 million.
pursuant to Rule 144-A and Regulation S of the SEC. The bond is for a 10-year term with an annual coupon rate
of 3.625%.
For the periods ended 31, 2020, and December 31, 2019, the following payments have been made with a debit to
the line of single-series bonds, third issue:
Payments made
Payment of interest
December 31,
2020
December 31,
2019
ThUS$
ThUS$
10,875
10,875
214
10) FINANCIAL REPORTS
(v) Single series bonds, fourth issuance MUS $250
On October 23, 2014, the Company issued unsecured bonds amounting ThUS$ 250,000 in international markets,
pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission. These bonds mature in 2025
and have annual interest rate of 4.375%.
For the periods ended on December 31, 2020 and December 31, 2019, the following payments have been made.
Payments made
Payment of interest
(vi) Series “P” bonds
December 31,
2020
December 31,
2019
ThUS$
ThUS$
10,938
10,938
The Company on March 31, 2018 issued the placement on the stock market of the Series “P” bond (the "Bonds”
Series P) with a value of UF 3,000,000, with a charge to the 10 year Bonds Line registered in the CMF Securities
Registry under number 563.
The bonds Series P (i) mature on January 15, 2028; (ii) will accrue on the unpaid principal, expressed in UF, at an
annual interest rate of 3.25% from January 15, 2018; and (iii) can be early redeemed by the Company starting from
the date of placement, that was, as of April 5, 2018.
For the periods ended on December 31, 2020 and December 31, 2019, the following payments and their associated
CCS have been made:
Payments made
December 31,
2020
December 31,
2019
Payment of interest series P
CCS Coverage
ThUS$
ThUS$
3,534
3,439
3,960
2,995
215
10) FINANCIAL REPORTS
(vii) Series Q bonds
On October 31, 2018, the issuance of Series Q bonds was authorized in the general stock market for the amount of
UF 3,000,000, which were registered in the Securities Registry of your Commission on February 14, 2012 under
number 700.
The bonds Series Q (i) mature on the first day of June 2038; (ii) will earn an interest rate of 3.45% per annum on
the outstanding capital, expressed in Unidades de Fomento, from June 1, 2018 thereon; and (iii) may be early
redeemed by the Company starting from the placement date, that was, as of November 8, 2018.
On November 8, 2018, all the Series Q Bonds have been placed and sold to Euroamerica S.A. for a total amount
of $ 83,567,623,842, which was paid in full and in cash by Euroamerica S.A. to the Company.
See more details in Note 21.1
For the years ended December 31, 2020 and December 31, 2019, the following payments have been made:
Payments made
Payment of interest series Q
CCS Coverage
December 31,
2020
ThUS$
December 31,
2019
ThUS$
3,769
1,021
3,791
-
(viii) Single series fifth issue bonds ThUS$ 450,000
On May 7, 2019, the CMF was informed that the Company issued and placed unsecured bonds for ThUS$ 450,000
pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission on international markets.
These bonds will mature in 2029 and carry an interest rate of 4.25% per annum.
For the periods ended on December 31, 2020 and December 31, 2019, the following payments have been made:
Payments made
Payment of interest
December 31,
2020
December 31,
2019
ThUS$
ThUS$
19,125
9,563
(ix) Single series sixth issue bonds MUS$ 400
On January 22, 2020, the Company has placed unsecured bonds in international markets for US$ 400 million,
pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission, at an annual interest rate of
4.250% and a maturity in the year 2050.
Payments made
Payment of interest
December 31,
2020
December 31,
2019
ThUS$
ThUS$
8,500
-
216
10) FINANCIAL REPORTS
14.5
Trade and other payables
a) Details trade and other payables
As of December 31, 2020
As of December 31, 2019
Details trade and other payables
Current
Non-current
ThUS$
ThUS$
Total
ThUS$
Current
Non-current
ThUS$
ThUS$
Total
ThUS$
Accounts payable
Other accounts payable
Prepayments from customers
Total
203,346
587
-
203,933
-
-
4,027
4,027
203,346
205,414
587
4,027
376
-
207,960
205,790
-
-
-
-
205,414
376
-
205,790
As of December 31, 2020, and December 31, 2019, the balance of current and past due accounts payable is made
up as follows:
Suppliers current on all payments
Amounts according to payment periods as of December 31, 2020
Type of Supplier
Up to 30
Days
31 - 60
days
61 - 90
Days
91 - 120
days
121 - 365
days
111,323
46,187
29,325
186,835
1,947
1,380
7
3,334
123
16
-
139
31
757
-
788
5
86
-
91
366 and
more
days
4,027
-
-
4,027
Total
ThUS$
117,456
48,426
29,332
195,214
Type of Supplier
Up to 30
Days
31 - 60
days
61 - 90
Days
91 - 120
days
121 - 365
days
366 and
more
days
Total
ThUS$
Amounts according to payment periods as of December 31, 2019
126,577
51,785
8,741
187,103
4,655
168
146
4,969
128
-
-
128
116
-
-
2,019
87
116
2,106
Goods
Services
Others
Total
Goods
Services
Others
Total
Suppliers past due on payments
Type of Supplier
Up to 30
Days
31 - 60
days
61 - 90
Days
91 - 120
days
121 - 365
days
366 and
more
days
Amounts according to payment periods as of December 31, 2020
1,305
2,298
3,258
6,861
59
764
150
973
47
-
371
418
39
453
118
610
517
505
2,275
3,297
Type of Supplier
Up to 30
Days
31 - 60
days
61 - 90
Days
91 - 120
days
121 - 365
days
366 and
more
days
Amounts according to payment periods as of December 31 2019
2,086
3,073
1,918
7,077
264
329
45
638
35
116
311
462
65
387
215
667
1,060
580
508
2,148
Goods
Services
Others
Total
Goods
Services
Others
Total
Purchase commitments held by the Company are recognized as liabilities when the goods and services are received by the Company. As of
December 31, 2020, the Company has purchase orders amounting to ThUS$ 55,516 and ThUS$ 89,391 as of December 31, 2019.
217
-
-
-
-
-
-
-
-
-
-
-
-
133,495
52,040
8,887
194,422
Total
ThUS$
1,967
4,020
6,172
12,159
Total
ThUS$
3,510
4,485
2,997
10,992
10) FINANCIAL REPORTS
14.6 Financial asset and liability categories
a)
Financial Assets
m
Description of financial assets
Current
ThUS$
Non-current
ThUS$
Total
ThUS$
Current
ThUS$
Non-current
ThUS$
Total
ThUS$
As of December 31, 2020
As of December 31, 2019
Cash and cash equivalent
Trade receivables due from related parties at amortized cost
Financial assets measured at amortized cost
Loans and receivables measured at amortized cost
Total financial assets measured at amortized cost
Financial instruments for hedging purposes through equity
Financial instruments held for trading at through profit or loss
Financial assets classified as available for sale at fair value through equity
Total financial assets at fair value
Total financial assets
509,102
62,601
345,459
365,206
1,282,368
-
2,610
-
2,610
1,284,978
-
-
80
11,165
11,245
37,276
-
14,569
51,845
63,090
509,102
62,601
345,539
376,371
588,530
61,227
485,689
399,142
1,293,613
1,534,588
37,276
2,610
14,569
54,455
17,270
2,531
-
19,801
-
-
75
1,710
1,785
3,918
-
4,785
8,703
588,530
61,227
485,764
400,852
1,536,373
21,188
2,531
4,785
28,504
1,348,068
1,554,389
10,488
1,564,877
218
10) FINANCIAL REPORTS
b)
Financial Liabilities
Description of financial liabilities
Current
ThUS$
Non-current
ThUS$
Total
ThUS$
Current
ThUS$
Non-current
ThUS$
Total
ThUS$
As of December 31, 2020
As of December 31, 2019
For hedging purposes through equity
Held for trading at fair value through profit or loss
Financial liabilities at fair value through profit or loss
Bank loans
Obligations to the public
Lease Liabilities
Trade and other payables
Trade payables due to related parties
Total financial liabilities at amortized cost
Total financial liabilities
26,699
5,393
32,092
82
36,781
5,528
203,933
606
246,930
279,022
13,511
-
13,511
69,376
40,210
5,393
45,603
69,458
1,816,626
1,853,407
25,546
4,027
-
1,915,575
1,929,086
31,074
207,960
606
2,162,505
2,208,108
7,183
3,168
10,351
199
280,578
7,694
205,790
475
494,736
505,087
16,477
-
16,477
69,138
23,660
3,168
26,828
69,337
1,403,108
1,683,686
30,203
-
-
1,502,449
1,518,926
37,897
205,790
475
1,997,185
2,024,013
219
10) FINANCIAL REPORTS
14.7 Fair value measurement of finance assets and liabilities
The fair value hierarchy is detailed as follows:
a) Level 1: using quoted prices (unadjusted) only in active markets.
b) Level 2: when in any phase in the valuation process inputs other than quoted prices have been used
in Level 1 that are observable directly in markets.
c) Level 3: inputs for the asset or liability that are not based on observable market data.
220
Fair value measurement of assets and liabilities
Carrying Amount
at Amortized Cost
Fair value
(informative)
Book Value Fair
value
Level 1
Level 2
Level 3
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
As of December 31, 2020
Measurement Methodology
10) FINANCIAL REPORTS
Financial Assets
Cash and cash equivalents
Other current financial assets
- Time deposits
- Derivative financial instruments
- Forwards
- Options
Non-current accounts receivable
Other non-current financial assets:
- Other
- Actions
- Hedging assets – Swaps
Other current financial liabilities
- Bank loans
- Derivative instruments
- Forwards
- Options
-Hedging liabilities – Swaps
-Inversions -Swaps
- Unsecured obligations
- Current lease liabilities
Other non-current financial liabilities
- Bank loans
- Unsecured obligations
- Non-current hedging liabilities
- Non-current lease liabilities
509,102
509,102
345,459
345,459
-
-
-
-
11,165
11,165
99
-
-
82
-
-
-
-
-
99
-
-
82
-
-
-
-
-
36,781
5,528
36,781
5,528
69,376
71,029
1,816,626
2,355,943
-
25,546
-
26,027
-
-
2,263
347
-
-
14,549
37,276
-
-
4,614
780
5,695
21,004
-
-
-
-
13,511
-
-
-
-
-
-
-
14,549
-
-
-
-
-
-
-
-
-
-
-
-
-
509,102
345,459
2,263
347
-
99
-
37,276
82
-
4,614
780
5,695
21,004
36,781
5,528
71,029
2,355,943
13,511
26,027
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Fair value measurement of assets and liabilities
As of December 31, 2019
Measurement methodology
221
Financial Assets
Cash and cash equivalents
Other current financial assets:
- Time deposits
-Derivative financial instruments
- Forwards
- Options
-Investment hedge swaps
Non-current accounts receivable
Other non-current financial assets
- Other
- Actions
- Hedging assets – Swaps
Other current financial liabilities
- Bank loans
-Derivative instruments
- Forwards
- Options
- Hedging liabilities – Swaps
- Unsecured obligations
-Current lease liabilities
Other non-current financial liabilities:
- Bank loans
- Unsecured obligations
- Non-current hedging liabilities
- Non-current lease liabilities
10) FINANCIAL REPORTS
Carrying Amount at
Amortized Cost
Fair value
(informative)
Book Value Fair
value
ThUS$
ThUS$
ThUS$
Level 1
ThUS$
Level 2
ThUS$
Level 3
ThUS$
588,530
588,530
-
485,689
-
-
-
-
1,710
94
-
-
199
-
-
-
-
280,578
7,694
69,138
1,403,108
-
30,203
485,689
-
-
-
1,710
94
-
-
199
-
-
-
-
280,578
7,694
71,033
1,658,506
-
33,187
-
-
2,420
111
17,270
-
-
4,785
3,918
-
-
2,837
289
7,183
-
-
-
-
16,477
-
-
-
-
-
-
-
-
-
4,785
-
-
-
-
-
-
-
-
-
-
-
-
588,530
485,689
-
2,420
111
17,270
-
94
-
3,918
199
-
2,837
289
7,183
280,578
7,694
71,033
1,658,506
16,477
33,187
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
222
10) FINANCIAL REPORTS
14.8 Estimated fair value of financial instruments
As required by IFRS 7, the following information is presented for the disclosure of the estimated fair value of
financial assets and liabilities.
Although inputs represent Management's best estimate, they are subjective and involve significant estimates related
to the current economic and market conditions, as well as risk features.
Methodologies and assumptions used depend on the risk terms and characteristics of instruments and include the
following as a summary:
Estimate of fair value for the record
Financial assets and liabilities measured at fair value consist of forwards hedging the mismatch in the balance sheet
and cash flows, options hedging the mismatch in the balance sheet and cross currency swaps to hedge bonds issued
in local currency (Peso/UF).
The fair value of the Company’s assets and liabilities recognized by cross currency swaps contracts is calculated
as the difference between the present value of discounted cash flows of the asset (Ch/UF) and liability (US$) parts
of the derivative. In the case of the IRS, the asset value recognized is calculated as the difference between the
discounted cash flows of the asset (variable rate) and liability (fixed rate) parts of the derivative. Forwards are
calculated as the difference between the strike price of the contract and the spot price plus the forwards points at
the date of the contract. Financial options: the value recognized is calculated using the Black-Scholes method.
In the case of CCS, the entry data used for the valuation models are UF, Peso, Dollar and basis swap rates. In the
case of fair value calculations for interest rate swaps, the Forward Rate Agreement rate and ICVS 23 Curve
(Bloomberg: cash/deposits rates, futures, swaps). In the case of forwards, the forwards curve for the currency in
question is used. Finally, for options, the spot price, risk-free rate and volatility of exchange rate are used, all in
accordance with the currencies used in each valuation. The financial information used as entry data for the
Company’s valuation models is obtained from Bloomberg, the well-known financial software company.
Conversely, the fair value provided by the counterparties of derivatives contracts is used only as a control and not
for valuation.
The effects on profit or loss of movements in these amounts is recognized in the caption finance costs, foreign
currency translation gain (loss) or cash flow hedge reserve in the statement of comprehensive income, depending
on each particular case.
Estimate of fair value for reporting purposes
• Cash equivalent approximates fair value due to the short-term maturities of these instruments.
• The fair value of trade receivables, current is considered to be equal to the carrying amount due to the
maturity of such accounts at short-term.
• Payables, current lease liabilities and other current financial liabilities are considered fair value equal to
book value due to the short-term maturity of these accounts.
• The fair value of the debt (long-term secured and unsecured debentures; bonds denominated in local
currency (Peso/UF) and foreign currency (Dollar), loans denominated in foreign currency (Dollar) and
lease liabilities of the Company are calculated at current value of cash flows subtracted from market rates
upon valuation, considering the terms of maturity and exchange rates. The UF and Peso rate curves are
used as inputs for the valuation model. This information is obtained through from the renowned financial
software company, Bloomberg, and the Chilean Association of Banks and Financial Institutions.
223
10) FINANCIAL REPORTS
Nota 15 Right-of-use assets and Lease liabilities
15.1 Right-of-use assets
Reconciliation of changes in
right-of-use assets as of
December 31, 2020, net value
Land
Buildings
Other
property,
plant and
equipment
Transport
equipment
Supplies
and
accessories
Office
equipment
Network and
communication
equipment
Mining
assets
IT
equipment
Energy
generating
assets
Constructions
in progress
Machinery,
plant and
equipment
Buildings,
plant and
equipment
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Opening Balance
Additions
Depreciation expenses
Other increases / decreases
Total changes
Closing balance
-
-
-
-
-
-
25,742
1,782
(3,535)
(612)
(2,365)
23,377
-
-
-
-
-
-
3,356
-
(877)
-
(877)
2,479
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,066
37,164
121
1,903
(4,019)
(8,431)
-
(612)
(3,898)
(7,140)
4,168
30,024
Reconciliation of changes in
right-of-use assets as of
December 31, 2019, net value
Land
Buildings
Other
property,
plant and
equipment
Transport
equipment
Supplies
and
accessories
Office
equipment
Network and
communication
equipment
Mining
assets
IT
equipment
Energy
generating
assets
Constructions
in progress
Machinery,
plant and
equipment
Buildings,
plant and
equipment
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Opening Balance
Initial recognition of IFRS 16
Balance recognized in IFRS 16
Depreciation expenses
Total changes
Closing balance
-
-
-
-
-
-
-
29,289
29,289
(3,547)
(3,547)
25,742
-
-
-
-
-
-
-
3,893
3,893
(537)
(537)
3,356
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,933
11,933
-
45,115
45,115
(3,867)
(7,951)
(3,867)
(7,951)
8,066
37,164
The Company’s lease activities included the following aspects:
(a) The nature of the Company’s lease activities is related to contracts focused primarily on business operations, mainly rights-of-use to equipment and real estate,
(b) The Company does not estimate any significant future cash outflows that would potentially expose the Company, and these are likewise not reflected in the
measurement of lease liabilities, related to concepts such as: (i) Variable lease payments, (ii) Expansion options and termination options, (iii) Guaranteed residual
value and (iv) Leases not yet undertaken but committed by the Company.
(c) These are not subject to restrictions or agreements imposed by contracts.
There were no sales transactions with leases later in the period.
224
10) FINANCIAL REPORTS
15.2 Lease liabilities
Lease liabilities
Current
Non-Current
Current
Non-Current
As of December 31, 2020
As of December 31, 2019
Lease liabilities
Total
ThUS$
ThUS$
ThUS$
ThUS$
5,528
5,528
25,546
25,546
7,694
7,694
30,203
30,203
i) Current and non-current lease liabilities
Country
TAX ID No.
Creditor
Supplier
Contract
indexation unit
Type of
amortization
Maturity
date
Effective rate
Country
83.776.000-3
Empresa Constructora Contex Ltda
Chile
76.146.110-9
Transportes, Construcción y Servicios Cribach Ltda Chile
Tax ID No.
Debtor
Company
79.626.800-K
SQM Salar S.A.
79.626.800-K
SQM Salar S.A.
79.626.800-K
SQM Salar S.A.
79.626.800-K
SQM Salar S.A.
79.947.100-0
SQM Industrial S.A.
79.947.100-0
SQM Industrial S.A.
79.768.170-9
Soquimich Comercial S.A.
79.768.170-9
Soquimich Comercial S.A.
79.768.170-9
Soquimich Comercial S.A.
79.768.170-9
Soquimich Comercial S.A.
79.768.170-9
Soquimich Comercial S.A.
SQM North America Corp.
SQM North America Corp.
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
USA
USA
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
SQM Comercial de México S.A. de C.V. Mexico
SQM Comercial de México S.A. de C.V. Mexico
SQM Comercial de México S.A. de C.V. Mexico
SQM Europe N.V.
SQM Australia PTY
Belgium
Australia
76.065.017-K
SKM Industrial Ltda.
96.862.140-8 Ameco Chile S.A.
96.856.400-5
El Trovador S.A.
76.976.580-8
Sociedad Comercial Grandleasing Chile Ltda
76.729.932-K
SAAM Logistics S.A.
91.577.000-2 Muelles de Penco S.A.
91.577.000-2 Muelles de Penco S.A.
76.722.280-7
Inmobiliaria Chincui SPA
96.565.580-8 Compañía de Leasing Tattersall S.A.
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Paces West LL.
Hawkins Nunmber One, LLC
Onni Ensenada S.A. de C.V.
Madol Inmobiliaria S.A. de C.V.
Madol Inmobiliaria S.A. de C.V.
Straatsburgdok N.V.
The trust Company (Australia) Pty Ltd
225
UF
Peso
Peso
Peso
UF
UF
UF
UF
UF
UF
UF
Dollar
Dollar
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
USA
USA
Mexico
Mexico
Mexico
Belgium
Australia
Dollar
Mexican Peso
Mexican Peso
Euro
Australian dollar
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
Monthly
03-31-2021
09-01-2020
06-01-2022
04-24-2021
02-08-2030
08-26-2024
08-01-2022
07-06-2023
07-06-2023
05-01-2028
05-24-2021
12-31-2027
08-31-2024
12-03-2026
10-31-2023
10-31-2023
03-31-2027
01-31-2021
0%
8.93%
8.93%
4.07%
3.10%
2.72%
0.81%
1.30%
1.30%
3.38%
6.18%
3.36%
3.33%
3.45%
7.84%
7.84%
1.30%
3.60%
(a) As of December 31, 2020 and December 31, 2019, current lease liabilities are analyzed as follows:
10) FINANCIAL REPORTS
Creditor
Supplier
Nominal amounts as of December 31,2020
Amounts at amortized cost as of December 31, 2020
Up to 90 days
90 days to 1 year
ThUS$
ThUS$
Total
ThUS$
Up to 90 days
90 days to 1 year
ThUS$
ThUS$
Total
ThUS$
Debtor
Company
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Industrial S.A.
SQM Industrial S.A.
Empresa Constructora Contex Ltda
Transportes, Construcción y Servicios Cribach Ltda
SKM Industrial Ltda.
Ameco Chile S.A.
El Trovador S.A.
Sociedad Comercial Grandleasing Chile Ltda
Soquimich Comercial S.A.
SAAM Logistics S.A.
Soquimich Comercial S.A.
Muelles de Penco S.A.
Soquimich Comercial S.A.
Muelles de Penco S.A.
Soquimich Comercial S.A.
Inmobiliaria Chincui SPA
Soquimich Comercial S.A.
Compañía de Leasing Tattersall S.A.
SQM North America Corp.
Paces West LL.
SQM North America Corp.
SQM Comercial de México S.A.
de C.V.
SQM Comercial de México S.A.
de C.V.
SQM Comercial de México S.A.
de C.V.
SQM Europe N.V.
SQM Australia PTY
Total
Hawkins Nunmber One, LLC
Onni Ensenada S.A. de C.V.
Madol Inmobiliaria S.A. de C.V.
Madol Inmobiliaria S.A. de C.V.
Straatsburgdok N.V.
The trust Company (Australia) Pty Ltd
-
-
607
-
1,399
540
-
124
133
471
18
163
96
296
59
21
302
42
4,271
536
-
809
135
1,865
720
-
165
177
628
73
216
127
395
79
28
393
56
6,402
536
-
181
134
353
164
-
54
57
123
54
41
28
81
16
6
83
14
1,925
-
-
566
-
1,076
498
-
107
115
376
18
128
85
246
49
18
279
42
3,603
536
-
747
134
1,429
662
-
161
172
499
72
169
113
327
65
24
362
56
5,528
536
-
202
135
466
180
-
41
44
157
55
53
31
99
20
7
91
14
2,131
226
Debtor
Company
Creditor
Supplier
Nominal amounts as of December 31,2019
Amounts at amortized cost as of December 31, 2019
Up to 90 days
90 days to 1 year
ThUS$
ThUS$
Total
ThUS$
Up to 90 days
90 days to 1 year
ThUS$
ThUS$
Total
ThUS$
10) FINANCIAL REPORTS
SQM Salar S.A.
SQM Salar S.A.
Empresa Constructora Contex Ltda
Transportes, Construcción y Servicios
Cribach Ltda
SKM Industrial Ltda.
SQM Salar S.A.
Ameco Chile S.A.
SQM Salar S.A.
El Trovador S.A.
SQM Industrial S.A.
Sociedad Comercial Grandleasing Chile Ltda
SQM Industrial S.A.
SAAM Logistics S.A.
Soquimich Comercial S.A.
Muelles de Penco S.A.
Soquimich Comercial S.A.
Muelles de Penco S.A.
Soquimich Comercial S.A.
Inmobiliaria Chincui SPA
Soquimich Comercial S.A.
Compañía de Leasing Tattersall S.A.
Soquimich Comercial S.A.
Paces West LL.
SQM North America Corp.
SQM North America Corp.
Hawkins Nunmber One, LLC
SQM Comercial de México S.A. de C.V. Onni Ensenada S.A. de C.V.
SQM Comercial de México S.A. de C.V. Madol Inmobiliaria S.A. de C.V.
SQM Comercial de México S.A. de C.V. Madol Inmobiliaria S.A. de C.V.
SQM Europe N.V.
SQM Australia PTY
Total
Straatsburgdok N.V.
The trust Company (Australia) Pty Ltd
554
74
202
135
466
180
106
45
48
157
55
49
31
99
20
7
91
16
2,335
1,662
124
607
404
1,399
540
142
60
64
471
164
156
93
296
59
21
273
32
6,567
2,216
198
809
539
1,865
720
248
105
112
628
219
205
124
395
79
28
364
48
8,902
506
71
166
129
343
159
103
44
47
119
51
34
26
78
15
5
82
16
1,994
1,578
121
519
394
1,044
485
140
59
64
363
157
116
81
238
46
16
247
32
5,700
2,084
192
685
523
1,387
644
243
103
111
482
208
150
107
316
61
21
329
48
7,694
227
As of December 31, 2020 and December 31, 2019, the Non-current lease liabilities are analyzed as follows:
10) FINANCIAL REPORTS
Creditor
Supplier
Nominal amounts as of December 31,2020
Amounts at amortized cost as of December 31, 2020
1-2 Years
2-3 Years
3-4 Years
Total
1-2 Years
2-3 Years
3-4 Years
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Debtor
Company
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Industrial S.A.
SQM Industrial S.A.
Empresa Constructora Contex Ltda
Transportes, Construcción y Servicios Cribach Ltda
SKM Industrial Ltda.
Ameco Chile S.A.
El Trovador S.A.
Sociedad Comercial Grandleasing Chile Ltda
Soquimich Comercial S.A.
SAAM Logistics S.A.
Soquimich Comercial S.A.
Muelles de Penco S.A.
Soquimich Comercial S.A.
Muelles de Penco S.A.
Soquimich Comercial S.A.
Inmobiliaria Chincui SPA
Soquimich Comercial S.A.
Compañía de Leasing Tattersall S.A.
SQM North America Corp.
Paces West LL.
SQM North America Corp.
Hawkins Nunmber One, LLC
SQM Comercial de México S.A. de
C.V.
SQM Comercial de México S.A. de
C.V.
SQM Comercial de México S.A. de
C.V.
Onni Ensenada S.A. de C.V.
Madol Inmobiliaria S.A. de C.V.
Madol Inmobiliaria S.A. de C.V.
SQM Europe N.V.
SQM Australia PTY
Total
Straatsburgdok N.V.
The trust Company (Australia) Pty Ltd
-
-
337
-
3,730
1,441
-
262
281
-
-
-
-
5,594
420
-
-
-
1,255
1,883
-
452
263
789
144
52
816
11
9,833
-
730
90
1,151
-
-
1,339
-
11,207
-
-
-
-
5,905
-
-
-
-
889
-
258
-
-
-
-
113
-
7,165
-
-
337
-
15,229
1,861
-
262
281
4,027
-
1,440
353
1,940
144
52
2,268
11
28,205
-
-
330
-
2,993
1,379
-
163
175
1,047
-
377
249
689
133
48
768
11
8,362
-
-
-
-
4,847
417
-
96
103
1,707
-
668
89
1,094
-
-
1,308
-
10,329
-
-
-
-
5,622
-
-
-
-
867
-
253
-
-
-
-
113
-
6,855
-
-
330
-
13,462
1,796
-
259
278
3,621
-
1,298
338
1,783
133
48
2,189
11
25,546
228
Creditor
Supplier
Nominal amounts as of December 31,2019
Amounts at amortized cost as of December 31, 2019
1-2 Years
2-3 Years
3-4 Years
Total
1-2 Years
2-3 Years
3-4 Years
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
10) FINANCIAL REPORTS
554
-
1,147
135
16,697
2,582
-
-
-
4,602
73
1,656
481
2,335
222
81
2,660
55
33,280
547
-
1,077
134
2,903
1,342
-
-
-
-
-
-
-
4,701
1,115
-
-
-
-
-
-
-
7,287
-
-
-
-
1,013
1,651
1,455
72
351
234
665
135
49
744
55
9,321
-
627
217
1,088
63
23
1,248
-
10,733
-
492
-
356
-
-
559
-
10,149
547
-
1,077
134
14,891
2,457
-
-
-
4,119
72
1,470
451
2,109
198
72
2,551
55
30,203
Debtor
Company
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Industrial S.A.
SQM Industrial S.A.
Empresa Constructora Contex Ltda
Transportes, Construcción y Servicios Cribach Ltda
SKM Industrial Ltda.
Ameco Chile S.A.
El Trovador S.A.
Sociedad Comercial Grandleasing Chile Ltda
554
-
1,147
135
3,730
1,441
-
-
-
-
-
-
-
5,594
1,141
-
-
-
-
-
-
-
7,373
-
-
-
-
Soquimich Comercial S.A.
SAAM Logistics S.A.
Soquimich Comercial S.A.
Muelles de Penco S.A.
Soquimich Comercial S.A.
Muelles de Penco S.A.
Soquimich Comercial S.A.
Inmobiliaria Chincui SPA
1,255
1,883
1,464
Soquimich Comercial S.A.
Compañía de Leasing Tattersall S.A.
SQM North America Corp.
Paces West LL.
SQM North America Corp.
Hawkins Nunmber One, LLC
SQM Comercial de México S.A. de
C.V.
SQM Comercial de México S.A. de
C.V.
SQM Comercial de México S.A. de
C.V.
Onni Ensenada S.A. de C.V.
Madol Inmobiliaria S.A. de C.V.
Madol Inmobiliaria S.A. de C.V.
SQM Europe N.V.
SQM Australia PTY
Total
Straatsburgdok N.V.
The trust Company (Australia) Pty Ltd
73
439
257
789
157
57
801
55
10,890
-
709
224
1,184
65
24
1,295
-
12,119
-
508
-
362
-
-
564
-
10,271
229
10) FINANCIAL REPORTS
Other lease disclosures
Total lease expenses related to lease payments were ThUS$ 61,705 and ThUS$ 56,051 for the periods ended
December 31, 2020 and 2019. See Note 25.8.
Expenses related to variable payments not included in lease liabilities were MUS$ 1,133 and MUS$ 1,096 for the
periods ending December 31, 2020 and 2019.
Income from subleases on right-of-use assets were ThUS$ 176 and ThUS$ 261 as of December 31, 2020 and 2019,
respectively.
Payments for contractual operating leases are disclosed in Note 5.2 Liquidity Risk.
230
10) FINANCIAL REPORTS
Note 16 Intangible assets and goodwill
16.1 Balances
As of December 31, 2020
Intangible assets and goodwill
Useful life
IT programs
Mining rights
Water rights and rights of way.
Customer-related intangible assets
Other intangible assets
Intangible assets other than goodwill
Goodwill
Total Intangible Asset
Finite
Finite
Indefinite
Finite
Finite
Indefinite
As of December 31, 2019
Intangible assets and goodwill
Useful life
IT programs
Mining rights
Water rights and rights of way.
Customer-related intangible assets
Other intangible assets.
Intangible assets other than goodwill
Goodwill
Total Intangible Assets
Finite
Finite
Indefinite
Finite
Finite
Indefinite
Net Value
ThUS$
4,826
150,046
23,343
-
192
178,407
41,966
220,373
Net value
ThUS$
6,011
157,570
23,342
1,273
162
188,358
34,726
223,084
231
10) FINANCIAL REPORTS
a) Movements in identifiable intangible assets as of December 31, 2020:
Gross Value
Movements in identifiable intangible assets
IT programs
Mining rights,
Finite
Water rights, and
rights of way,
Indefinite
Customer-related
intangible assets
Other intangible
assets
Goodwill
Identifiable
intangible assets
Opening Balance
Additions
Other increases / decreases for foreign currency
exchange rates
Decreases through sale
Other increases (decreases)
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
34,471
508
5
-
297
810
35,281
158,337
2,295
-
(136)
-
2,159
160,496
25,423
1,778
-
1
-
-
1
-
-
-
-
-
2,188
72
-
-
14
86
25,424
1,778
2,274
38,120
7,380
-
-
-
7,380
45,500
260,317
10,255
6
(136)
311
10,436
270,753
Accumulated amortization and impairment
Movements in identifiable intangible assets
IT programs
Mining rights,
Finite
Water rights, and
rights of way,
Indefinite
Customer-related
intangible assets
Other intangible
assets
Goodwill
Identifiable
intangible assets
Opening Balance
Other increases / decreases for foreign currency
exchange rates
Other increases (decreases)
Impairment losses recognized in profit for the year
Amortization
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
(28,460)
-
-
(14)
(1,981)
(1,995)
(30,455)
(767)
-
(2)
(654)
(9,027)
(9,683)
(10,450)
(2,081)
(505)
(2,026)
(3,394)
(37,233)
-
-
-
-
-
(2,081)
-
-
(990)
(283)
(1,273)
(1,778)
-
-
-
(56)
(56)
(2,082)
-
-
(140)
-
(140)
(3,534)
-
(2)
(1,798)
(11,347)
(13,147)
(50,380)
232
10) FINANCIAL REPORTS
Net value
Movements in Identifiable intangible assets
IT programs
Mining rights,
Finite
Water rights, and
rights of way,
Indefinite
Customer-related
intangible assets
Other intangible
assets
Goodwill
Identifiable
intangible assets
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Opening Balance
Additions
Amortization
Impairment losses recognized in profit for the year
Other increases / decreases for foreign currency
exchange rates
Decreases through sale
Other increases (decreases)
Total increases (decreases)
Closing balance
6,011
508
(1,981)
(14)
5
-
297
(1,185)
4,826
157,570
2,295
(9,027)
(654)
-
(136)
(2)
(7,524)
150,046
23,342
-
-
-
1
-
-
1
23,343
1,273
-
(283)
(990)
-
-
-
(1,273)
-
162
72
(56)
-
-
-
14
30
192
34,726
7,380
-
(140)
-
-
-
7,240
41,966
223,084
10,255
(11,347)
(1,798)
6
(136)
309
(2,711)
220,373
Gross Value
Movements in identifiable intangible assets
IT programs
Mining rights,
Finite
Water rights, and
rights of way,
Indefinite
Customer-related
intangible assets
Other intangible
assets
Goodwill
Identifiable
intangible assets
Opening Balance
Additions
Other increases / decreases of foreign currency
Decreases through sale
Other increases (decreases)
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
29,137
2,606
(7)
-
2,735
5,334
34,471
159,424
227
-
(1,314)
-
(1,087)
158,337
25,425
-
(2)
-
-
(2)
25,423
1,778
-
-
-
-
-
1,778
2,165
23
-
-
-
23
2,188
38,120
-
-
-
-
-
38,120
256,049
2,856
(9)
(1,314)
2,735
4,268
260,317
233
Movements in identifiable intangible assets as of December 31, 2019:
10) FINANCIAL REPORTS
Accumulated amortization and impairment
Movements in identifiable intangible assets
IT programs
Mining rights,
Finite
Water rights, and
rights of way,
Indefinite
Customer-related
intangible assets
Other intangible
assets
Goodwill
Identifiable
intangible assets
Opening Balance
Other increases / decreases of foreign currency
Other increases (decreases)
Impairment losses recognized in profit for the year
Amortization
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
(24,569)
3
(256)
-
(3,638)
(3,891)
(28,460)
(168)
-
-
(481)
(118)
(599)
(767)
(1,649)
-
-
(432)
-
(432)
(2,081)
(205)
-
-
-
(300)
(300)
(505)
(1,988)
-
-
-
(38)
(38)
(2,026)
(3,254)
-
-
(140)
-
(140)
(3,394)
(31,833)
3
(256)
(1,053)
(4,094)
(5,400)
(37,233)
Net value
Movements in Identifiable intangible assets
IT programs
Mining rights,
Finite
Water rights, and
rights of way,
Indefinite
Customer-related
intangible assets
Other intangible
assets
Goodwill
Identifiable
intangible assets
Opening Balance
Additions
Amortization
Impairment losses recognized in profit or loss for the
year
Other increases / decreases of foreign currency
Decreases through sale
Other increases (decreases)
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
4,568
2,606
(3,638)
-
(4)
-
2,479
1,443
6,011
159,256
227
(118)
(481)
-
(1,314)
-
(1,686)
157,570
23,776
-
-
(432)
(2)
-
(434)
23,342
1,573
-
(300)
-
-
-
-
(300)
1,273
177
23
(38)
-
-
-
-
(15)
162
34,866
-
-
(140)
-
-
-
(140)
34,726
224,216
2,856
(4,094)
(1,053)
(6)
(1,314)
2,479
(1,132)
223,084
234
10) FINANCIAL REPORTS
(b)
Movements in identifiable goodwill as of December 31, 2020:
Gross Value
Movements in identifiable goodwill
Goodwill at the start of
the period January 01,
2020
Additional
recognition
Impairment losses recognized
in profit or loss for the year (-)
Total increase (decrease)
Goodwill at end of period
SQM Industrial S.A.
SQM S.A.
SQM Iberian S.A.
SQM Investment Corporation
Soquimich Comercial S.A.
Soquimich European Holding B.V.
SQM Holland B.V.
SQM Potasio S.A.
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
3,214
22,255
148
86
320
11,373
-
724
38,120
38,120
-
-
-
-
-
10
7,370
-
7,380
7,380
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
7,370
-
7,380
7,380
3,214
22,255
148
86
320
11,383
7,370
724
45,500
45,500
Accumulated impairment
Movements in identifiable goodwill
Goodwill at the start of
the period January 01,
2020
Additional
recognition
Impairment losses recognized
in profit or loss for the year (-)
Total increase (decrease)
Goodwill at end of period
SQM Industrial S.A.
SQM S.A.
SQM Iberian S.A.
SQM Investment Corporation
Soquimich Comercial S.A.
Soquimich European Holding B.V.
SQM Holland B.V.
SQM Potasio S.A.
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
(3,214)
-
-
-
(180)
-
-
-
(3,394)
(3,394)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(140)
-
-
-
(140)
(140)
-
-
-
-
(140)
-
-
-
(140)
(140)
(3,214)
-
-
-
(320)
-
-
-
(3,534)
(3,534)
235
10) FINANCIAL REPORTS
Net Value
Movements in identifiable goodwill
Goodwill at the start of
the period January 01,
2020
Additional
recognition
Impairment losses recognized
in profit or loss for the year (-)
Total increase (decrease)
Goodwill at end of period
SQM Industrial S.A.
SQM S.A.
SQM Iberian S.A.
SQM Investment Corporation
Soquimich Comercial S.A.
Soquimich European Holding B.V.
SQM Holland B.V.
SQM Potasio S.A.
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
-
22,255
148
86
140
11,373
-
724
34,726
34,726
-
-
-
-
-
10
7,370
-
7,380
7,380
-
-
-
-
(140)
-
-
-
(140)
(140)
-
-
-
-
(140)
10
7,370
-
7,240
7,240
-
22,255
148
86
-
11,383
7,370
724
41,966
41,966
Movements in identifiable goodwill as of December 31, 2019
Gross Value
Movements in identifiable goodwill
Goodwill at the start of
the period January 01,
2019
Additional
recognition
Impairment losses recognized
in profit or loss for the year (-)
Total increase (decrease)
Goodwill at end of period
SQM Industrial S.A.
SQM S.A.
SQM Iberian S.A.
SQM Investment Corporation
Soquimich Comercial S.A.
Soquimich European Holding B.V.
SQM Potasio S.A.
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
3,214
22,255
148
86
320
11,373
724
38,120
38,120
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,214
22,255
148
86
320
11,373
724
38,120
38,120
236
10) FINANCIAL REPORTS
Accumulated impairment
Movements in identifiable goodwill
Goodwill at the start of
the period January 01,
2019
Additional
recognition
Impairment losses recognized
in profit or loss for the year (-)
Total increase (decrease)
Goodwill at end of period
SQM Industrial S.A.
SQM S.A.
SQM Iberian S.A.
SQM Investment Corporation
Soquimich Comercial S.A.
Soquimich European Holding B.V.
SQM Potasio S.A.
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
(3,214)
-
-
-
(40)
-
-
(3,254)
(3,254)
-
-
-
-
-
-
-
-
-
-
-
-
-
(140)
-
-
(140)
(140)
-
-
-
-
(140)
-
-
(140)
(140)
(3,214)
-
-
-
(180)
-
-
(3,394)
(3,394)
Net Value
Movements in identifiable goodwill
Goodwill at the start of
the period January 01,
2019
Additional
recognition
Impairment losses recognized
in profit or loss for the year (-)
Total increase (decrease)
Goodwill at end of period
SQM Industrial S.A.
SQM S.A.
SQM Iberian S.A.
SQM Investment Corporation
Soquimich Comercial S.A.
Soquimich European Holding B.V.
SQM Potasio S.A.
Total increases (decreases)
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
-
22,255
148
86
280
11,373
724
34,866
34,866
-
-
-
-
-
-
-
-
-
-
-
-
-
(140)
-
-
(140)
(140)
-
-
-
-
(140)
-
-
(140)
(140)
-
22,255
148
86
140
11,373
724
34,726
34,726
237
10) FINANCIAL REPORTS
Note 17 Property, plant and equipment
As of December 31, 2020, and December 31, 2019, the detail of property, plant and equipment is as follows:
17.1 Types of property, plant and equipment
Description of types of property, plant and equipment
Property, plant and equipment, net
Land
Buildings
Other property, plant and equipment
Transport equipment
Supplies and accessories
Office equipment
Network and communication equipment
Mining assets
IT equipment
Energy generating assets
Constructions in progress
Machinery, plant and equipment
Total
Property, plant and equipment, gross
Land
Buildings
Other property, plant and equipment
Transport equipment
Supplies and accessories
Office equipment
Network and communication equipment
Mining assets
IT equipment
Energy generating assets
Constructions in progress
Machinery, plant and equipment
Total
Accumulated depreciation and value impairment of property, plant and equipment, total
Accumulated depreciation and impairment of buildings
Accumulated depreciation and impairment of other property, plant and equipment
Accumulated depreciation and impairment of transport equipment
Accumulated depreciation and impairment of supplies and accessories
Accumulated depreciation and impairment of office equipment
Accumulated depreciation and impairment of network and communication equipment
Accumulated depreciation and impairment of mining assets
Accumulated depreciation and impairment of IT equipment
Accumulated depreciation and impairment of energy generating assets
Accumulated depreciation and impairment of machinery, plant and equipment
Total
238
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
23,579
239,666
35,418
2,880
4,183
459
1,272
47,052
4,083
4,878
486,345
887,504
23,620
227,173
32,645
2,686
4,579
420
663
23,174
4,359
5,998
375,316
869,273
1,737,319
1,569,906
23,579
705,089
234,238
13,030
26,101
11,607
8,951
194,562
29,629
38,540
486,345
3,304,061
5,075,732
(465,423)
(198,820)
(10,150)
(21,918)
(11,148)
(7,679)
(147,510)
(25,546)
(33,662)
23,620
666,027
257,247
12,143
25,531
11,441
8,009
161,619
28,693
38,495
375,316
3,142,461
4,750,602
(438,854)
(224,602)
(9,457)
(20,952)
(11,021)
(7,346)
(138,445)
(24,334)
(32,497)
(2,416,557)
(3,338,413)
(2,273,188)
(3,180,696)
Description of classes of property, plant and equipment
Property, plant and equipment, net
Pumps
Conveyor Belt
Crystallizer
Plant Equipment
Tanks
Filter
Electrical equipment/facilities
Other Property, Plant & Equipment
Site Closure
Piping
Well
Pond
Spare Parts (1)
Total
10) FINANCIAL REPORTS
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
28,184
20,117
22,145
173,335
15,367
35,553
93,937
49,930
36,828
102,578
226,347
41,906
41,277
887.504
32,525
21,911
24,102
170,263
14,159
27,080
92,090
53,409
12,056
96,402
238,670
41,319
45,287
869,273
(1) Spare parts is presented net of provision. The reconciliation of the spare parts provision as of December 31,
2020 and 2019 is as follows:
Reconciliation
Opening balance
Increase in provisions
Closing balance
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
39,265
3,616
42,881
32,414
6,851
39,265
239
17.2 Conciliation of changes in property, plant and equipment by type:
Reconciliation of changes in property, plant and equipment by class as of December 31, 2020 and December 31, 2019:
Reconciliation of changes in property,
plant and equipment by class as of
December 31, 2020, gross amount
Land
Buildings
Other
property,
plant and
equipment
Transport
equipment
Supplies
and
accessories
Equipment
office
Network and
communication
equipment
Mining
assets
IT
equipment
Energy
generating
assets
Assets
under
construction
Machinery,
plant and
equipment
Property,
plant and
equipment
10) FINANCIAL REPORTS
Opening balance
Additions
Disposals
Increase (decrease) in foreign currency
translation difference
Reclassifications
Other increases (decreases)
Decreases for classification as held for sale
Total changes
Closing balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
23,620
666,027
257,247
12,143
25,531
11,441
8,009
161,619
28,693
38,495
375,316
3,142,461
4,750,602
-
-
22
-
(27)
(36)
(41)
838
278
-
(33,048)
49
32,179
5,996
-
2
9,940
(181)
-
-
-
1
886
-
-
39,062
(23,009)
887
82
(1)
5
488
(4)
-
570
33
-
-
133
-
-
166
386
-
-
558
(2)
-
-
-
-
32,943
-
-
942
32,943
429
-
12
548
(53)
-
936
-
-
-
319,192
987
322,225
-
-
(149)
(33,198)
53
144
-
45
(203,412)
125,692
-
-
(4,751)
35,017
35,995
-
-
(36)
45
111,029
161,600
325,130
23,579
705,089
234,238
13,030
26,101
11,607
8,951
194,562
29,629
38,540
486,345
3,304,061
5,075,732
Reconciliation of changes in property,
plant and equipment by class as of
December 31, 2020, accumulated
depreciation
Land
Buildings
Other
property,
plant and
equipment
Transport
equipment
Supplies
and
accessories
Equipment
office
Network and
communication
equipment
Mining
assets
IT
equipment
Energy
generating
assets
Assets
under
construction
Machinery,
plant and
equipment
Property,
plant and
equipment
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Opening balance
Changes
Disposals
Depreciation expense
Impairment
Increase (decrease) in foreign currency
translation difference
Reclassifications
Other increases (decreases) (1)
Decreases for classification as held for sale
Total changes
Closing balance
-
-
-
-
-
-
-
-
-
-
(438,854)
(224,602)
(9,457)
(20,952)
(11,021)
(7,346)
(138,445)
(24,334)
(32,497)
-
(2,273,188)
(3,180,696)
-
(26,779)
(23)
(20)
-
253
-
33,048
(7,284)
(21)
(2)
-
41
-
-
1
-
-
-
-
-
(692)
(966)
(126)
(335)
(9,065)
(1,242)
(1,165)
-
(1)
-
-
-
-
(4)
-
3
-
-
(1)
-
-
-
-
-
-
2
-
-
-
-
-
-
(12)
(10)
-
52
-
-
-
-
-
-
(26,569)
25,782
(693)
(966)
(127)
(333)
(9,065)
(1,212)
(1,165)
(465,423)
(198,820)
(10,150)
(21,918)
(11,148)
(7,679)
(147,510)
(25,546)
(33,662)
-
-
-
-
-
-
-
-
-
148
33,197
(134,230)
(181,884)
(9,507)
(9,563)
(28)
-
248
-
(66)
-
599
-
(143,369)
(157,717)
(2,416,557)
(3,338,413)
240
Reconciliation of changes in property,
plant and equipment by class as of
December 31, 2020, net amount
Land
Buildings
Other
property,
plant and
equipment
Transport
equipment
Supplies
and
accessories
Equipment
office
Network and
communication
equipment
Mining
assets
IT
equipment
Energy
generating
assets
Assets
under
construction
Machinery,
plant and
equipment
Property,
plant and
equipment
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
10) FINANCIAL REPORTS
Opening balance
23,620
227,173
32,645
2,686
4,579
5,998
375,316
869,273
1,569,906
838
-
278
-
-
-
82
-
420
33
-
663
386
-
23,174
-
-
4,359
429
-
(26,779)
(7,284)
(692)
(966)
(126)
(335)
(9,065)
(1,242)
(1,165)
Additions
Disposals
Depreciation expense
Deterioration
Increase (decrease) in foreign currency
translation difference
Reclassifications
Other increases (decreases) (1)
Decreases for classification as held for sale
(2)
Total changes
Closing balance
-
-
-
-
22
-
(27)
(36)
(41)
(23)
29
32,179
6,249
-
(21)
-
9,940
(140)
-
12,493
2,773
-
-
886
-
-
-
1
488
(1)
-
194
2,880
(396)
4,183
-
(1)
133
-
-
39
459
23,579
239,666
35,418
-
-
-
-
558
32,943
-
-
-
-
(12)
2
548
(1)
-
-
-
-
-
319,192
-
-
-
-
987
(1)
322,225
(1)
(134,230)
(181,884)
(9,507)
(9,563)
25
78
-
45
(203,412)
125,692
-
-
(4,751)
35,265
36,594
-
-
(36)
609
23,878
(276)
(1,120)
111,029
18,231
167,413
1,272
47,052
4,083
4,878
486,345
887,504
1,737,319
(1) The net balance of “Other Increases (Decreases)” corresponds to all those items that are reclassified to or from “Property, Plant and Equipment”, They can have
the following origin: (i) work in progress which is expensed to profit or loss, forming part of operating costs or other expenses per function, as appropriate; (ii) the
variation representing the purchase and use of materials and spare parts; (iii) projects corresponding mainly to exploration expenditures and ground studies that are
reclassified to the item other non-current financial assets; (iv) software that is reclassified to “Intangibles (v) Provisions related to the investment plan and assets
related to closing the site.
(2) The Company classifies as non-current held for sale property, plant and equipment (disposal group) that, at the closing date of the financial statements, is subject
to a commitment for sale or where the sales process has been initiated and where the sale is expected to occur within twelve months of that date, is classified by the
Company as non-current assets held for sale. These assets or disposal groups are valued at the lower of carrying amount or the estimated sales value less the costs
to sell and stop being amortized from the moment they are classified as non-current assets held for sale.
241
Closing balance
23,620
666,027
257,247
12,143
11,441
8,009
161,619
Reconciliation of changes in
property, plant and equipment by
class as of December 31, 2019,
gross amount
Opening balance
Additions
Disposals
Increase (decrease) in foreign
currency translation difference
Reclassifications
Other increases (decreases)
Decreases for classification as held
for sale
Total changes
Reconciliation of changes in
property, plant and equipment by
class as of December 31, 2019,
accumulated depreciation
Opening balance
Changes
Disposals
Depreciation expense
Impairment
Increase (decrease) in foreign
currency translation difference
Reclassifications
Other increases (decreases) (1)
Decreases for classification as held
for sale
Total changes
Closing balance
10) FINANCIAL REPORTS
Land
Buildings
Other
property,
plant and
equipment
Transport
equipment
Supplies
and
accessories
Equipment
office
Network and
communication
equipment
Mining
assets
IT
equipment
Energy
generating
assets
Assets under
construction
Machinery,
plant and
equipment
Property,
plant and
equipment
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
24,695
-
-
648,719
290
-
245,731
332
(858)
11,668
-
-
24,456
37
-
11,377
43
-
(35)
132
-
(72)
(4)
18,526
-
12,456
(410)
(1,172)
(1,436)
-
(1,075)
17,308
11,516
(2)
477
-
-
475
(9)
745
302
-
1,075
25,531
(3)
-
24
-
64
7,505
159
-
-
89
256
-
132,309
-
-
-
16,901
12,409
-
504
29,310
29,955
492
(3)
(6)
1,289
(3,034)
-
(1,262)
28,693
36,930
-
-
-
1,565
-
-
1,565
38,495
207,830
314,236
-
3,068,862
6,077
(17)
4,450,037
321,666
(878)
-
(72)
(203)
(140,104)
(6,646)
88,088
(20,477)
164
(17,576)
-
-
(2,608)
167,486
73,599
300,565
375,316
3,142,461
4,750,602
Land
Buildings
Other
property,
plant and
equipment
Transport
equipment
Supplies and
accessories
Equipment
office
Network and
communication
equipment
Mining
assets
IT
equipment
Energy
generating
assets
Assets under
construction
Machinery,
plant and
equipment
Property,
plant and
equipment
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
-
(409,911)
(217,556)
(8,776)
(19,734)
(10,864)
(6,813)
(120,808)
(24,975)
(30,813)
-
(2,144,964)
(2,995,214)
-
-
-
-
-
-
-
-
-
-
858
(29,000)
(8,013)
-
(683)
-
(1,144)
-
(161)
-
-
1
-
(426)
(7,033)
(1,158)
(1,676)
(49)
28
7
(209)
280
-
3
(6)
112
-
-
1
1
-
-
-
7
6
(87)
-
-
1
-
3
-
-
-
1
-
-
-
(108)
(10,604)
-
-
-
5
(5)
1,798
-
641
-
-
-
(8)
-
(1,684)
(28,943)
(7,046)
(438,854)
(224,602)
(681)
(9,457)
(1,218)
(157)
(533)
(17,637)
(20,952)
(11,021)
(7,346)
(138,445)
(24,334)
(32,497)
242
-
-
-
-
-
-
-
-
-
-
859
(138,999)
(188,293)
-
34
(207)
10,948
-
(49)
79
(203)
1,845
280
(128,224)
(185,482)
(2,273,188)
(3,180,696)
Reconciliation of changes in
property, plant and equipment by
class as of December 31, 2019, net
amount
Land
Buildings
Other
property,
plant and
equipment
Transport
equipment
Supplies
and
accessories
Equipment
office
Network and
communication
equipment
Mining
assets
IT
equipment
Energy
generating
assets
Assets under
construction
Machinery,
plant and
equipment
Property,
plant and
equipment
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
10) FINANCIAL REPORTS
Opening balance
24,695
238,808
28,175
2,892
4,722
Additions
Disposals
Depreciation expense
Impairment
Increase (decrease) in foreign
currency translation difference
Reclassifications
Other increases (decreases) (1)
Decreases for classification as held
for sale (2)
Total changes
Closing balance
-
-
-
-
(35)
132
-
290
-
332
-
-
-
37
-
513
43
-
692
159
-
11,501
-
-
4,980
492
(2)
6,117
-
-
(29,000)
(8,013)
(683)
(1,144)
(161)
(426)
(7,033)
(1,158)
(1,676)
(49)
(44)
18,533
(209)
-
(1)
12,450
(298)
-
(1)
478
-
-
-
(2)
751
215
-
(1,172)
(1,156)
-
(1,075)
23,620
(11,635)
227,173
4,470
32,645
(206)
2,686
(143)
4,579
-
(2)
-
27
-
(93)
420
-
-
90
148
-
(29)
663
-
-
16,901
1,805
-
11,673
23,174
-
(1)
1,284
(1,236)
-
(621)
4,359
-
-
(8)
-
(119)
5,998
207,830
314,236
-
-
-
-
(6,646)
923,898
1,454,823
6,077
(17)
321,666
(19)
(138,999)
(188,293)
-
(38)
87,881
(9,529)
(49)
(124)
(39)
(15,731)
-
-
(2,328)
167,486
(54,625)
115,083
375,316
869,273
1,569,906
1,565
(140,104)
(1) The net balance of “Other increases (Decreases)” corresponds to all those items that are reclassified to or from property, plant and equipment, They can have
the following origin: (i) work in progress which is expensed to profit or loss, forming part of operating costs or other expenses per function, as appropriate;, (ii) the
variation representing the purchase and use of materials and spare parts; (iii) projects corresponding mainly to exploration expenditures and ground studies that are
reclassified to the item other non-current financial assets; (iv) software that is reclassified to “Intangibles”, (v) Provisions related to the investment plan and assets
associated to closing the site.
(2) The Company classifies as non-current held for sale property, plant and equipment (disposal group) that, at the closing date of the financial statements, is subject
to a commitment for sale or where the sales process has been initiated and where the sale is expected to occur within twelve months of that date, is classified by the
Company as non-current assets held for sale.
These assets or disposal groups are valued at the lower of carrying amount or the estimated sales value less the costs to sell and stop being amortized from the
moment they are classified as non-current assets held for sale.
243
10) FINANCIAL REPORTS
17.3 Detail of property, plant and equipment pledged as guarantee
There are no restrictions in title or guarantees for compliance with obligations that affect property, plant and
equipment.
17.4 Impairment of assets
As indicated in Note 3.16, the recoverable amounts of property, plant and equipment are evaluated when there
is evidence that the asset may be impaired. The impairment effects for the periods ended December 31, 2020 and
2019 is ThUS$ 9,563 and ThUS$ 49 respectively.
17.5 Cost of capitalized interest, property, plant and equipment
The cost of interest is recognized by applying an average or average weighted interest rate for all financing costs
incurred by the Company to the final monthly balances for works underway and complies with the requirements
of IAS 23.
Financing costs are not activated for periods that exceed the normal term for acquisition, construction or
installation of the property; such is the case for delays, interruptions or temporary suspension of the project due
to technical, financial or other problems that make it impossible to leave the property in usable conditions.
The rates and costs for capitalized interest of property, plant and equipment are detailed as follows:
Costs of capitalized interest
Capitalized interest rate
Amount of costs for interest capitalized in ThUS$
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
4%
8,462
4%
7,841
244
10) FINANCIAL REPORTS
Note 18 Other current and non-current non-financial assets
As of December 31, 2020, and December 31, 2019, the detail of “Other Current and Non-current Assets” is as
follows:
Other non-financial assets, current
Domestic Value Added Tax
Foreign Value Added Tax
Prepaid mining licenses
Prepaid insurance
Other prepayments
Refund of Value Added Tax to exporters
Other taxes
Other assets
Total
Other non-financial assets, non-current
Exploration and evaluation expenses (1)
Guarantee deposits
Other assets
Total
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
18,107
7,785
1,025
10,307
946
14,316
4,499
414
57,399
17,807
8,566
1,244
7,135
1,423
10,560
3,213
604
50,552
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
17,883
731
3,428
22,042
18,654
551
524
19,729
(1) Reconciliation of changes in assets for exploration and mineral resource evaluation, by type.
Movements in assets for the exploration and evaluation of mineral resources as of December 31, 2020, and
December 31, 2019:
Conciliation
Opening balance
Change in assets for exploration and evaluation of mineral resources
Additions
Short term reclassifications
Increase (decrease) due to transfers and other charges
Total changes
Total
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
18,654
26,189
-
(526)
(245)
(771)
17,883
-
(1,311)
(6,224)
(7,535)
18,654
As of the presentation date, no reevaluations of assets for exploration and assessment of mineral resources have
been conducted.
245
10) FINANCIAL REPORTS
Mineral resource exploration and evaluation expenditure
Given the nature of operations of the SQM Group and the type of exploration it undertakes, disbursements for
exploration can be found in 4 stages: Execution, economically feasible, not economically feasible and in
exploitation:
(a)
determination of economic feasibility, are classified in accordance with Note 3.23.
Execution: Disbursements for exploration and evaluation under implementation and therefore prior to
For exploration purposes in Chile relating to caliche and brine exploration are ThUS$ 14,265 and ThUS$ 12,841
as of December 31, 2020 and December 31, 2019, respectively both are in the Property, Plant and Equipment
caption as construction in progress.
For Australia (Mt Holland), total disbursements corresponding to construction in progress (which includes
exploration disbursements) amount to ThUS$ 50,127 as of December 31, 2020, and ThUS$ 30,475 as of
December 31, 2019.
(b)
Economically feasible: Disbursements corresponding to caliche exploration, wherein the study
concluded that its economic feasibility is viable, are classified under “Non-Current Assets in Other Non-current
Non-Financial Assets”, The balance as of December 31, 2020, is ThUS$ 6,576 and as of December 31, 2019, it
is ThUS$ 6,576.
At December 31, 2020, ThUS$ 4,296 corresponding to advanced metallic exploration are also presented under
the heading "Other Non-Current Non-Financial Assets", and as of December 31, 2019, it is ThUS$ 3,433.
For the exploration of the Salar de Atacama, the associated assets correspond to wells that can be used both in
monitoring and exploitation of the Salar, Therefore, once the studies are concluded, these are classified as “Non-
current Assets” in “Properties, Plants and Equipment”, assigning them a technical useful life of 10 years.
(c)
Not economically feasible: Exploration and evaluation disbursements, once finalized and concluded to
be not economically feasible, will be charged to profit and loss. As of December 31, 2020, there were no
disbursements for this concept and for the year ended December 31, 2019, there was a total of ThUS$ 165 for
this concept.
(d)
In Exploitation: Caliche exploration disbursements that are found in this area are amortized based on
the material exploited, the portion that is exploited in the following 12 months is presented as “Current Assets”
in the “Process Inventories”, the remaining portion is classified as “Other Non-current Non-Financial Assets”.
As of December 31, 2020, the amount in “Process Inventories”, is ThUS$ 1,318 and the balance as of December
31, 2019 for this concept is ThUS$ 1,367, while in the item “Other Non-current Non-Financial Asset” as of
December 31, 2020 is ThUS$ 7,011 and as of December 31, 2019 is ThUS$ 8,645.
246
Note 19 Employee benefits
19.1 Provisions for employee benefits
Classes of benefits and expenses by employee
Current
Profit sharing and bonuses
Performance bonds and operational targets
Total
Non-current
Profit sharing and bonuses
Severance indemnity payments
Total
19.2 Policies on defined benefit plan
10) FINANCIAL REPORTS
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
7,770
1,326
9,096
-
32,199
32,199
-
16,387
16,387
8,026
27,814
35,840
This policy is applied to all benefits received for services provided by the Company's employees. This is divided
as follows:
a) Short-term benefits for active employees are represented by salaries, social welfare benefits, paid time
off, sickness and other types of leave, profit sharing and incentives and non-monetary benefits; e.g.,
healthcare service, housing, subsidized or free goods or services. These will be paid in a term which
does not exceed twelve months. The Company maintains incentive programs for its employees, which
are calculated based on the net result at the close of each period by applying a factor obtained from an
evaluation based on their personal performance, the Company’s performance and other short-term and
long-term indicators.
b) Staff severance indemnities are agreed and payable based on the final salary, calculated in accordance
with each year of service to the Company, with certain maximum limits in respect of either the number
of years or in monetary terms. In general, this benefit is payable when the employee or worker ceases
to provide his/her services to the Company and there are a number of different circumstances through
which a person can be eligible for it, as indicated in the respective agreements; e.g. retirement, dismissal,
voluntary retirement, incapacity or disability, death, etc. See Note 19.3.
c) Obligations after employee retirement, described in Note 19.4.
d) Retention bonuses for a group of Company executives, described in Note 19.6.
247
10) FINANCIAL REPORTS
19.3 Other long-term benefits
The actuarial assessment method has been used to calculate the Company’s obligations with respect to staff
severance indemnities, which relate to defined benefit plans consisting of days of remuneration per year served
at the time of retirement under conditions agreed in the respective agreements established between the Company
and its employees.
Under this benefit plan, the Company retains the obligation to pay staff severance indemnities related to
retirement, without establishing a separate fund with specific assets, which is referred to as not funded.
Benefit payment conditions
The staff severance indemnity benefit relates to remuneration days for years worked for the Company without a
limit being imposed in regard of amount of salary or years of service. It applies when employees cease to work
for the Company because they are made redundant or in the event of their death. This benefit is applicable up to
a maximum age of 65 for men and 60 for women, which are the usual retirement ages according to the Chilean
pensions system as established in Decree Law 3,500 of 1980.
(a) Methodology
The determination of the defined benefit obligation is made under the requirements of IAS 19 “Employee
benefits”.
19.4 Post-employment benefit obligations
Our subsidiary SQM NA, together with its employees established a pension plan until 2002 called the “SQM
North America Retirement Income Plan”. This obligation is calculated measuring the expected future forecast
staff severance indemnity obligation using a net salary gradual rate of restatements for inflation, mortality and
turnover assumptions, discounting the resulting amounts at present value using the interest rate defined by the
authorities.
Since 2003, SQM NA offers to its employees benefits related to pension plans based on the 401-K system, which
do not generate obligations for the Company.
Reconciliation
Changes in the benefit obligation
Benefit obligation at the beginning of the year
Service cost
Interest cost
Actuarial loss
Benefits paid
Total
As of December
31, 2020
ThUS$
As of December
31, 2019
ThUS$
9,586
-
280
506
(508)
9,864
8,657
-
336
984
(391)
9,586
248
10) FINANCIAL REPORTS
Reconciliation
Changes in the plan assets
Fair value of plan assets at the beginning of the year
Actual return (loss) in plan assets
Benefits paid
Fair value of plan assets at the end of the year
Financing status
Items not yet recognized as net periodic pension cost
components:
Net actuarial loss at the beginning of the year
Amortization during the year
Net estimated gain or loss occurred during the year
Adjustment to recognize the minimum pension obligation
As of December
31, 2020
ThUS$
As of December
31, 2019
ThUS$
8,754
4,642
(508)
12,888
3,025
(3,634)
326
3,500
192
8,404
741
(391)
8,754
(832)
(3,022)
242
(854)
(3,634)
Service cost or benefits received during the year
Service cost or benefits received during the year
Interest cost in benefit obligation
Actual return in plan assets
Amortization of prior year losses
Net gain during the year
Net periodic pension expense
As of December
31, 2020
ThUS$
As of December
31, 2019
ThUS$
-
280
4,642
326
3,500
(31)
-
336
741
242
(854)
(33)
249
10) FINANCIAL REPORTS
19.5
Staff severance indemnities
As of December 31, 2020, and 2019, severance indemnities calculated at the actuarial value are as follows:
Staff severance indemnities
Opening balance
Current cost of Service
Interest cost
Actuarial gain/loss
Exchange rate difference
Benefits paid during the year
Total
(a)
Actuarial assumptions
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
(27,814)
(3,804)
(1,486)
(2,826)
(1,513)
5,244
(32,199)
(28,233)
(2,880)
(1,661)
(2,514)
2,475
4,999
(27,814)
The liability recorded for staff severance indemnity is valued at the actuarial value method, using the following
actuarial assumptions:
Actuarial assumptions
Mortality rate
Actual annual interest rate
Voluntary retirement rate:
Men
Women
Salary increase
Retirement age:
Men
Women
As of
December 31,
2020
As of
December 31,
2019
RV - 2014
3.65%
RV - 2014
3.68%
Annual/Years
6.49%
6.49%
3.00%
65
60
6.49%
6.49%
3.00%
65
60
Annual
Annual
Annual
Years
Years
(b)
Sensitivity analysis of assumptions
As of December 31, 2020, and 2019, the Company has conducted a sensitivity analysis of the main assumptions
of the actuarial calculation, determining the following:
Sensitivity analysis as of December 31, 2020
Sensitivity analysis as of December 31, 2019
Discount rate
Employee turnover rate
Discount rate
Employee turnover rate
Sensitivity relates to an increase/decrease of 100 basis points.
250
Effect + 100 basis
points
Effect - 100 basis
points
ThUS$
ThUS$
(1,985)
(261)
2,234
291
Effect + 100 basis
points
Effect - 100 basis
points
ThUS$
ThUS$
(1,796)
(236)
2,021
263
10) FINANCIAL REPORTS
19.6
Executive compensation plan
The Company currently has a compensation plan with the purpose of motivating the Company’s executives and
encouraging them to remain with the Company, by granting payments based on the change in the price of SQM’s
shares. There is a partial payment of the share benefit program in the event of termination of the contract for
causes other than the resignation and application of Article 160 of the Labor Code.
(a)
Plan characteristics
This compensation plan is related to the Company’s performance through the SQM Series B share price
(Santiago Stock Exchange).
(b)
Plan participants
A total of 29 Company executives are entitled to this compensation plan, as long as they remain a part of the
Company until a given date. This includes a 2020 bonus equivalent to 177,905 shares, which is effective for
those people still with the Company through the end of 2020, and a 2021 bonus for US$ 8.5 million, which will
go into effect in equal parts for those who remain with the Company at the end of each of the four quarters in
2021. The payment dates, where relevant, will be during the quarter following the quarter when the benefit is
made effective.
(c)
Compensation
The compensation payable to each executive is calculated by multiplying:
a)
the average price of the series B shares on the Santiago Stock Exchange during the fourth quarter
of 2020, in its US dollar equivalent (with a value of US$ 41.93 per share).
b) By a number equal to the quantity of shares that have been individually assigned to each executive
included in the plan.
This compensation plan was approved by the Company’s Board of Directors and its application started on
September 30, 2020.
The plan that was in place on December 31, 2019 considered 427,652 shares. The effects on the income statement
are equivalent to an expense of ThUS$ 875 and ThUS$ 117 in the income statement for the years ending
December 31, 2020 and 2019
Executed shares during 2020 were 47,687.
251
10) FINANCIAL REPORTS
Note 20 Provisions and other non-financial liabilities
20.1 Types of provisions
Types of provisions
Provision for legal complaints (1)
Provision for dismantling, restoration and rehabilitation cost (2)
Other provisions (3)
Total
As of December 31, 2020
As of December 31, 2019
Current
ThUS$
Non-current
ThUS$
Total
ThUS$
Current
ThUS$
Non-current
ThUS$
Total
ThUS$
8,905
-
95,261
104,166
1,260
61,265
92
62,617
10,165
61,265
95,353
166,783
13,472
-
97,093
110,565
1,452
33,238
-
34,690
14,924
33,238
97,093
145,255
(1) These provisions correspond to legal processes that are pending resolution or that have not yet been disbursed, these provisions are mainly related to litigation involving the
subsidiaries located in Chile, Brazil and the United States (see note 22.1).
(2) The commitments related to Sernageomin have been incorporated through the issuance of the guarantee for the restoration of the place where the production sites are located.
(3) See Note 20.2
252
20.2
Description of other provisions
Current provisions, other short-term provisions
Rent under Lease contract (1)
Provision for additional tax related to foreign loans
End of agreement bonus
Directors’ per diem allowance
Miscellaneous provisions
Total
10) FINANCIAL REPORTS
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
85,167
740
8,159
698
497
95,261
90,320
543
3,641
1,802
787
97,093
(1) Payment Obligations for the lease contract with CORFO: These correspond to obligations assumed in the Lease
Agreement. Our subsidiary SQM Salar holds exclusive rights to exploit the mineral resources in an area covering
approximately 140,000 hectares of land in the Salar de Atacama in northern Chile, of which SQM Salar is only
entitled to exploit the mineral resources in 81,920 hectares. These rights are owned by Corfo and leased to SQM
Salar pursuant to the Lease Agreement. Corfo cannot unilaterally amend the Lease Agreement and the Project
Agreement, and the rights to exploit the resources cannot be transferred. The Lease Agreement establishes that
SQM Salar is responsible for making quarterly lease payments to Corfo according to specified percentages of the
value of production of minerals extracted from the Salar de Atacama brines, maintaining Corfo’s rights over the
Mining Exploitation Concessions and making annual payments to the Chilean government for such concession
rights. The Lease Agreement was entered into in 1993 and expires on December 31, 2030. On January 17, 2018,
SQM and CORFO reached an agreement to end an arbitration process directed by the arbitrator, Mr. Héctor
Humeres Noguer, in case 1954-2014 of the Arbitration and Mediation Center of Santiago Chamber of Commerce
and other cases related to it.
The agreement signed in January 2018, includes important amendments to the lease agreement and project
agreement signed between CORFO and SQM in 1993. The main modifications became effective on April 10, 2018
and requires an increase in the lease payments by increasing the lease rates associated with the sale of the different
products produced in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride.
This agreement has been amended since it was signed and it is reasonable to expect that it will continue to be
amended as mutually agreed by the parties.
Additionally, SQM Salar commits to contribute to research and development efforts, as well as to the communities
in close proximity to the Salar de Atacama and provide a percentage of total annual sales of SQM Salar to regional
development.
SQM Salar commits to contribute between US$10.8 million and US$18.9 million per year to research and
development efforts, between US$10 to US$15 million per year to the communities in close proximity to the Salar
de Atacama, and 1.7% of total annual sales of SQM Salar to regional development.
253
20.3 Other non-financial liabilities, Current
Description of other liabilities
Tax withholdings
VAT payable
Guarantees received
Accrual for dividend
Monthly tax provisional payments
Deferred income
Withholdings from employees and salaries payable
Accrued vacations (1)
Other current liabilities
Total
10) FINANCIAL REPORTS
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
1,208
1,642
2,636
8,027
8,407
6,435
5,017
24,003
3,580
60,955
3,345
3,465
2,641
68,890
16,659
3,033
4,575
21,686
2,605
126,899
(1) Vacation benefit (short-term benefits to employees, current) is in line with the provisions established in Chile’s
Labor Code, which indicates that employees with more than a year of service will be entitled to annual vacation
for a period of at least fifteen paid business days. The Company provides the benefit of two additional vacation
days.
254
10) FINANCIAL REPORTS
20.4 Changes in provisions
Description of items that gave rise to variations
as of December 31, 2020
Legal complaints
Provision for
dismantling,
restoration and
rehabilitation cost
Others provisions
Total
Total provisions, initial balance
14,924
33,238
97,093
145,255
ThUS$
ThUS$
ThUS$
ThUS$
Changes
Additional provisions
Provision used
Increase(decrease) in foreign currency exchange
Others
Total Increase (decreases)
Total
62,922
(67,685)
4
-
(4,759)
10,165
30,974
-
-
(2,947)
28,027
61,265
60,685
(59,939)
(2,486)
-
(1,740)
95,353
154,581
(127,624)
(2,482)
(2,947)
21,528
166,783
Description of items that gave rise to variations
as of December 31, 2019
Legal complaints
Provision for
dismantling,
restoration and
rehabilitation cost
Others provisions
Total
Total provisions, initial balance
14,862
28,822
94,335
138,019
ThUS$
ThUS$
ThUS$
ThUS$
Changes
Additional provisions
Provision used
Increase(decrease) in foreign currency exchange
Others
Total Increase (decreases)
Total
4,111
(4,049)
-
-
62
14,924
-
-
-
4,416
4,416
33,238
150,314
(147,532)
(24)
-
2,758
97,093
154,425
(151,581)
(24)
4,416
7,236
145,255
255
10) FINANCIAL REPORTS
Note 21 Disclosures on equity
The detail and movements in the funds of equity accounts are shown in the consolidated statement of changes in
equity.
21.1 Capital management
The main object of capital management relative to the administration of the Company’s financial debt and equity is
to ensure the regular conduct of operations and business continuity in the long term, with the constant intention of
maintaining an adequate level of liquidity and in compliance with the financial safeguards established in the debt
contracts in force. Within this framework, decisions are made in order to maximize the value of the company.
Capital management must comply with, among others, the limits contemplated in the Financing Policy approved by
the Shareholders’ Meeting, which establish a maximum consolidated indebtedness level of 1.5 times the debt to equity
ratio. This limit can be exceeded only if the Company’s management has first obtained express approval at an
Extraordinary Shareholders’ Meeting.
Capital management must also comply with a debt ratio of less than 1.0, with respect to the series H, series O and
series Q bonds. This ratio was redefined at the Bondholders' Meetings held in September 2020, as net financial debt
divided by the company's total equity. Previously, it was defined as total liabilities divided by equity, and the limit
for this ratio was 1.44, with a prepayment option for bondholders if this ratio was above 1.2. As of December 31,
2020, this ratio was 0.50.
The Company’s management controls capital management based on the following ratios:
Capital Management
As of
December 31,
2020
As of
December 31,
2019
Description (1)
Calculation (1)
Net Financial Debt
(ThUS$)
Liquidity
ROE
Adjusted EBITDA
(ThUS$)
1,074,020
681,912 Financial Debt – Financial Resources
5.40
3.45
7.79%
13.15%
Current Assets divided by Current
Liabilities
Profit for the year divided by Total
Equity
579,765
644,223 Adjusted EBITDA
EBITDA (ThUS$)
524,650
668,912 EBITDA
ROA
9.83%
12.76%
Adjusted EBITDA – Depreciation divided
by Total Assets net of financial
resources less related parties’
investments
Other current Financial Liabilities + Other Non-Current
Financial Liabilities– Cash and Cash Equivalents – Other
Current Financial Assets – Hedging Assets, non-current
Total Current Assets / Total Current Liabilities
LTM(2) Profit for the year / Equity
Profit for the year + Depreciation and Amortization
Expenses + Finance Costs + Income Tax – Other income
and Share of profit of associates and joint ventures +
Other expenses – Finance income – Currency differences
Profit for the year + Depreciation and Amortization
Expenses + Finance Costs + Income Tax
(LTM Gross Profit – Administrative Expenses)/ (Total
Assets – Cash and Cash Equivalents – Other Current
Financial Assets – Other Non-Current Financial Assets –
Equity-accounted Investments)
Indebtedness
0.50
0.32 Total Liabilities on Equity
Total Liabilities / Total Equity
(1) Assumes the absolute value of the accounting records with the exception of exchange differences.
256
10) FINANCIAL REPORTS
The Company’s capital requirements change according to variables such as: working capital needs, new investment
financing and dividends, among others. The SQM Group manages its capital structure and makes adjustments bases
on the predominant economic conditions so as to mitigate the risks associated with adverse market conditions and
take advantage of the opportunities there may be to improve the liquidity position of the SQM Group.
There have been no changes in the capital management objectives or policy within the years reported in this document,
no breaches of external requirements of capital imposed have been recorded. There are no contractual capital
investment commitments.
21.2
Disclosures on preferred share capital
Issued share capital is divided into 142,819,552 Series A shares and 120,376,972 Series B shares. All such shares are
nominative, have no par value and are fully issued, subscribed and paid.
Series B shares may not exceed 50% of the total issued, subscribed and paid-in shares of the Company and have a
limited voting right, in that all of them can only elect one director of the Company, regardless of their equity interest
and preferences:
(a)
(b)
require the calling of an Ordinary or Extraordinary Shareholders' Meeting when so requested by Series B
shareholders representing at least 5% of the issued shares thereof; and
require the calling of an extraordinary meeting of the board of directors, without the president being able to
qualify the need for such a request, when so requested by the director who has been elected by the
shareholders of said Series B.
The limitation and preferences of Series B shares have a duration of 50 consecutive and continuous years as of June
3, 1993.
The Series A shares have the preference of being able to exclude the director elected by the Series B shareholders in
the voting process in which the president of the board of directors and of the Company must be elected and which
follows the one in which the tie that allows such exclusion resulted.
The preference of the Series A shares will have a term of 50 consecutive and continuous years as of June 3, 1993.
The form of the titles of the shares, their issuance, exchange, disablement, loss, replacement, assignment and other
circumstances thereof shall be governed by the provisions of Law No, 18,046 and its regulations.
At December 31, 2020 and December 31, 2019, the Group does not hold shares of the Parent Company either directly
or through its investees.
257
10) FINANCIAL REPORTS
Detail of capital classes in shares:
As of December 31, 2020, and December 31, 2019, the Company has not placed any new shares issues on the
market
Type of capital in preferred shares
As of December 31, 2020
As of December 31, 2019
Series A
Series B
Series A
Series B
Description of type of capital in shares
Number of authorized shares
Number of fully subscribed and paid shares
Number of subscribed, partially paid shares
Par value of shares in US$
Increase (decrease) in the number of current shares
Number of current shares
Number of shares owned by the entity or its subsidiaries or
associates
Number of shares whose issuance is reserved due to the existence
of options or agreements to dispose shares
Capital amount in shares ThUS$
Amount of premium issuance ThUS$
Amount of reserves ThUS$
Total number of subscribed shares
21.3 Disclosures on reserves in Equity
142,819,552
142,819,552
-
0.9435
-
120,376,972
120,376,972
-
2.8464
-
142,819,552
142,819,552
-
0.9435
-
120,376,972
120,376,972
-
2.8464
-
142,819,552
120,376,972
142,819,552
120,376,972
-
-
-
-
-
-
-
-
134,750
-
-
142,819,552
342,636
-
-
120,376,972
134,750
-
-
142,819,552
342,636
-
-
120,376,972
As of December 31, 2020, and December 31, 2019, this caption comprises the following:
Disclosures on reserves in equity
Reserve for currency exchange conversion (1)
Reserve for cash flow hedges (2)
Reserve for gains and losses from financial assets measured at fair value through other
comprehensive income (3)
Reserve for actuarial gains or losses in defined benefit plans (4)
Other reserves
Total
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
(11,569)
4,491
6,872
(8,680)
16,318
7,432
(25,745)
7,196
(270)
(9,490)
14,086
(14,223)
(1) This balance reflects retained earnings for changes in the exchange rate when converting the financial statements of subsidiaries
whose functional currency is different from the US dollar.
(2) The Company maintains, as hedge instruments, financial derivatives related to obligations with the public issued in UF and
Chilean pesos, Changes from the fair value of derivatives designated and classified as hedges are recognized under this
classification.
(3) This caption includes the fair value of equity investments that are not held for trading and that the group has irrevocably opted
to recognize in this category upon initial recognition. In the event that such equity instruments are fully or partially disposed of,
the proportional accumulated effect of accumulated fair value will be transferred to retained earnings.
(4) This caption reflects the effects of changes in actuarial assumptions, mainly changes in the discount rate.
258
Movements in other reserves and changes in interest were as follows:
10) FINANCIAL REPORTS
Movements
Balances as of January 1, 2019
Increase
Decrease
As of December 31, 2019
Increase
Decrease
Balances as of December 31, 2020
Foreign
currency
translation
difference
(1)
Before
taxes
ThUS$
(26,307)
1,824
(1,262)
(25,745)
15,732
(1,556)
(11,569)
Reserve for cash flow
hedges
Reserve for actuarial gains
and losses from defined
benefit plans
Before
taxes
ThUS$
Tax
ThUS$
Before
taxes
ThUS$
Deferred
taxes
ThUS$
Reserve for gains (losses)
from financial assets
measured at fair value
through other
comprehensive income
Before
taxes
ThUS$
Deferred
taxes
ThUS$
Other
reserves
Before
taxes
ThUS$
Total reserves
Reserves
ThUS$
Deferred
taxes
ThUS$
Total
reserves
ThUS$
7,971
8,628
(6,720)
9,879
-
(3,706)
6,173
-
(8,176)
(2,683)
-
-
(3,306)
(2,683)
(11,482)
-
1,001
3,858
(2,903)
(1,682)
(10,527)
1,292
-
700
1,992
430
(575)
1,847
(760)
1,570
(418)
392
11,885
(2,101)
10,176
(351)
(424)
113
(662)
(3,180)
538
11,332
(15,940)
941
(14,999)
3,093
(339)
14,086
2,121
111
15,115
(12,045)
(12,870)
33,596
(10,155)
10,571
(3,107)
813
(1,353)
(2,750)
964
(3,139)
12,008
(11,232)
(14,223)
30,846
(9,191)
7,432
(3,304)
16,318
(1) See details on reserves for foreign currency translation differences on conversion in Note 27, letter b).
259
10) FINANCIAL REPORTS
Other reserves
This caption corresponds to the legal reserves reported in the individual financial statements of the subsidiaries and
associates that are mentioned below and that have been recognized in SQM’s equity through the application of the
equity method.
Subsidiary – Associate
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
SQM Iberian S.A.
SQM Europe NV
Soquimich European holding B.V.
Abu Dhabi Fertilizer Industries WWL
Doktor Tarsa Tarim Sanayi AS
Kore Potash PLC
Total
Other derivative reserves of the acquisition of subsidiaries, which was already under Company
ownership at the acquisition date (IAS 27R)
SQM Iberian S.A.
Orcoma Estudios SPA
Total Other reserves
21.4
Dividend policies
9,464
1,957
828
455
-
3,170
15,874
(1,677)
2,121
16,318
9,464
1,957
828
455
305
2,754
15,763
(1,677)
-
14,086
As required by Article 79 of the Chilean Companies Act, unless otherwise decided by unanimous vote of the holders
of issued and subscribed shares, a publicly traded corporation must distribute dividends in accordance with the policy
determined in the shareholder's meeting held each year, with at least 30% of our consolidated profit for each year.
260
10) FINANCIAL REPORTS
Dividend policy for commercial year 2020
Company’s dividend policy for the 2020 business year was agreed upon by the Board of Directors on March 25, 2020
and later modified after the extraordinary shareholders’ meeting held on September 29, 2020. The current dividend
policy establishes the following:
a)
Distribute and pay to the corresponding shareholders, a percentage of the net income that shall be determined
per the following financial parameters as a final dividend:
(I)
(II)
(III)
(IV)
100% of the profit for 2020 if all the following financial parameters are met: (a) “all current assets”
divided by “all current liabilities” is equal to or greater than 2.5 times, and (b) the sum of “all current
liabilities” and “all non-current liabilities”, less “cash equivalents”, less “other current financial
assets”, all of the above divided by “total equity” in equal or less than 0.8 times.
80% of the profit for 2020 if all the following financial parameters are met: (a) “all current assets”
divided by “all current liabilities” is equal to or greater than 2.0 times, and (b) the sum of “all current
liabilities” and “all non-current liabilities”, less “cash equivalents”, less “other current financial
assets”, all of the above divided by “total equity” in equal or less than 0.9 times.
60% of the profit for 2020 if all the following financial parameters are met: (a) “all current assets”
divided by “all current liabilities” is equal to or greater than 1.5 times, and (b) the sum of “all current
liabilities” and “all non-current liabilities”, less “cash equivalents”, less “other current financial
assets”, all of the above divided by “total equity” in equal or less than 1.0 times.
If none of the foregoing financial parameters are met, the Company shall distribute and pay, as a final
dividend, and in favor of the respective shareholders, 50% of the 2020 net income.
Distribute and pay only one interim dividend during 2020, which will be charged against the aforementioned
final dividend and that will be charged to the retained earnings reflected in the consolidated financial
statements as of March 31, 2020, the percentage distributed shall be determined per the financial parameters
expressed in letter a) above. It is recorded that on May 19, 2020 the Company's Board of Directors agreed to
distribute and pay an interim dividend equivalent to US$ 0.17092 per share, charged to the Company's 2020
retained earnings. Said amount was paid in its equivalent in Chilean pesos according to the official exchange
rate on May 29, 2020 (the “Interim Dividend”).
The Board of Directors will not approve the payment of other interim dividends charged against the 2020 net
income.
At the ordinary general shareholders’ meeting that will be held in 2021, the Board of Directors shall propose
a final dividend pursuant to the percentages in financial parameters described in in letter a) above discounting
the Special Dividend and Interim Dividend. If the amount is equal to or less than the amount of the sum of the
Special Dividend (see more details in Note 21.5) and the Interim Dividend, If the amount equivalent to the
percentage of the 2020 fiscal year profits to be distributed in accordance with (a) above is equal to or less than
the sum of the Special Dividend and the Interim Dividend, then no additional amount will be distributed and
the Interim Dividend will be understood to be paid as a definitive dividend. In any case, the final dividend
may not be less than the mandatory minimum dividend that corresponds in accordance with Chilean law or
the Company bylaws.
If there is an excess of net income in 2020, this may be retained and assigned or allocated for financing its
own operations, to one or more investment projects of the Company, notwithstanding a future distribution of
special dividends charged to the retained earnings previously approved at the shareholders’ meeting, or the
possible and future capitalization of all or part of the latter.
b)
c)
d)
e)
f)
The payment of additional dividends is not considered.
261
10) FINANCIAL REPORTS
It is expressly stated that the dividend policy described above corresponds to the intention of the Board of Directors,
and the compliance of it shall depend on the net income that the Company ultimately obtains, as well as the results
of projections that could periodically impact the Company, or to the existence of determined conditions that may
affect it, as applicable. If the dividend policy exposed by the Board of Directors suffers a substantial change, the
Company must communicate it as an essential fact.
21.5 Interim and provisional dividends
The ordinary shareholders’ meeting held on April 23, 2020 agreed to distribute and pay 100% of the distributable net
profit obtained by the Company during the 2019 fiscal year as final dividend. In consequence, in May 2020 the
Company paid a final dividend of US$ 1.05668 per share from the distributable net profit obtained during the 2019
fiscal year, and the sum of US$ 0.80254 per share was discounted from this, as this was already paid as a provisional
dividend in 2019.
On May 19, 2020, the Board agreed to pay a provisional dividend equivalent to US$ 0.17092 per share with a charge
to earnings for 2020. This amount was paid in its equivalent in Chilean pesos, according to the observed U.S. dollar
exchange rate published in the Official Gazette on May 29, 2020.
On September 29, 2020, Company shareholders met in an extraordinary shareholders’ meeting to approve the
distribution and payment of a special dividend equivalent to US$ 0.37994 per share, to be paid out of the Company’s
retained earnings.
21.6
Potential and provisional dividends
Dividends discounted from equity from January to December 2020 and 2019 were the following:
Dividends
Ajay SQM Chile S.A. Dividends
Ajay SQM Chile S.A Payable Dividend
Soquimich Comercial S.A. Potential Dividend
Soquimich Comercial S.A. Payable Dividend
Non-controlling interests
Interim dividend
Potential dividend
Dividends payable
Owners of the Parent
Dividends discounted from equity for the period
December 31,
2020
December 31,
2019
ThUS$
ThUS$
556
682
5,904
2,976
10,118
44,986
100,000
4,369
149,355
159,473
882
-
3,936
1,999
6,817
211,224
-
66,891
278,115
284,932
262
10) FINANCIAL REPORTS
Note 22 Contingencies and restrictions
In accordance with note 20.1, the Company has only registered a provision for those lawsuits in which there is a
probability that the judgments will be unfavorable to the Company. The Company is party to the following lawsuits
and other relevant legal actions:
22.1 Lawsuits and other relevant events
(a)
(b)
(c)
(d)
(e)
(f)
(g)
In August 1996, Nitratos Naturais do Chile Ltda. was fined by Fazenda do Estado de Sao Paulo for
concluding activities without attaching the necessary documentation for submission to the competent
authorities. The treasury of the State of Sao Paulo initiated legal actions to collect close to ThUS$ 492.
Nitratos Naturais do Chile has presented a case to the federal court of Brazil to request a reduction in the
fine, which is currently pending.
In August 2004, Nitratos Naturais do Chile Ltda. was fined by Fazenda do Estado de Sao Paulo for failing
to report trade activities. The treasury of the State of Sao Paulo initiated legal actions to collect close to
ThUS$ 265. In 2018, the Court of Appeals agreed to a reduction in the fine and the Fazenda do Estado de
Sao Paulo appealed to the Court of Brazil, and this appeal is still pending.
In December 2010, the city of Pomona in the state of California, United States, filed a claim against SQM
NA, which was heard before the US District Court for the Central District of California. The plaintiff
requested the payment of expenses and other values related to treatment of groundwater to make it apt for
consumption, which involved the extraction of perchlorate in this water, which allegedly came from Chilean
fertilizers, for an approximate amount of US$ 36 million. On May 17, 2018, district judge Gary Klausner
ruled in favor of SQM NA following the jury verdict. On February 6, 2020, the United States Court of
Appeals for the Ninth Circuit demanded a retrial before the District Court, which has been postponed until
the second quarter of 2021.
In December 2010, the city of Lindsay in California, United States, filed a claim against SQM NA, which
was heard before the US District Court for the Central District of California. The plaintiff requested the
payment of expenses and other values related to treatment of groundwater to make it apt for consumption,
which involved the extraction of perchlorate in this water, which allegedly came from Chilean fertilizers,
the trial is currently suspended.
In May 2014, a claim of compensation for damages was filed against SQM Nitratos for its alleged
extracontractual liability derived from an explosion occurring in 2010 in the vicinity of the town of
Baquedano, which caused the death of six workers. The portion of the claim that has not been settled in court
is approximately US$ 1.2 million. On May 7, 2019, the 18th Civil Court of Santiago dismissed the claim.
The case currently is in the Santiago Court of Appeals, which will make a determination on the motion for
appeal and cassation brought about on behalf of the plaintiff.
On October 2015, Tyne and Wear Pension Fund represented by the Council of the Borough of South
Tyneside acting as lead plaintiff presented a claim against the Company with the US Federal Court of the
Southern District of New York for potential damages to ADS Holders in the Company due to alleged
noncompliance with the securities regulation in the United States. For more information, see Note 22.6.
In May 2016, a claim for close to ThUS$ 515 was filed against SQM Salar and SQM Industrial for the
alleged extracontractual liability derived from the accident occurring in July 2014 in the town of María
Elena. On March 6, 2019, the 13th Civil Court of Santiago dismissed the claim. The case is currently in the
Santiago Court of Appeals, which will decide on the motion for appeal brought about by the plaintiffs.
(h)
In January 2018, the company Transportes Buen Destino S.A. filed an arbitration claim under CAM
(arbitration and mediation center) rules against SQM Salar for controversies resulting from the execution of
263
10) FINANCIAL REPORTS
(i)
(j)
(k)
(l)
(m)
(n)
(o)
transport contracts for lithium brine and transport of salts. The amount of the claim is close to US$ 3 million.
The arbitration is currently in the evidence stage.
In September 2018, representatives Claudia Nathalie Mix Jiménez, Gael Fernanda Yeomans Araya, Camila
Ruslay Rojas Valderrama filed a public right annulment suit against Corfo regarding the Salar de Atacama
Project Contract signed between Corfo and SQM Salar. The Company has intervened as an independent
third party. This discussion stage has concluded. For more information, see Note 22.5.
The Company and FPC Ingeniería y Construcción SpA were sued in May 2019 for compensation for
damages resulting from alleged extracontractual liability derived from the traffic accident occurring on
March 5, 2018, involving the overturn of a truck owned by FPC and the subsequent death of its two
occupants, both employees of FPC. The four children of one of the deceased workers are the plaintiffs in
this case and are seeking compensation for moral damages. The case is in the 19th Civil Court of Santiago
and is in the evidence stage. The amount of the claim is close to US$ 1.2 million.
On June 24, 2019, the company Servicios Logísticos Integrales Inversol SpA filed an arbitration claim under
CAM rules against SQM Salar for controversies resulting from the execution of the salt transport contract.
The trial is currently in the evidence stage. The amount of the claim is close to US$ 7 million.
In April 2019, the company Fennix Industrial SpA filed a claim against SQM Salar with the First Civil Court
of Concepción for controversies resulting from the execution of a civil works and electromechanical
assembly contract. The trial is currently in the discussion stage. The amount of the claim is approximately
ThUS$ 770. On December 18, 2020, the parties mutually agreed to terminate this lawsuit.
The company Arrigoni Ingeniería y Construcción S.A. filed a claim in November 2019 against SQM Salar
in arbitration court under CAM rules, requesting the conclusion of the Works Contract known as “Expansion
of Lithium Carbonate Plant Phase II.” The trial is currently in the evidence stage. The amount of the claim
is close to US$ 14,6 million.
The Company has initiated an arbitration process against the company Sierra Gorda S.C.M. due to
controversies originating from the Mining, Royalties and Other Sales Contract dated December 16, 2011.
Sierra Gorda S.C.M. has filed counterclaims against the Company. The process has concluded its discussion
stage. It is not possible to make an adequate determination of the amount involved.
The Company has been sued in arbitration court under CAM rules by the company Rotto S.A. due to
controversies occurring in relation to a contract for disarming and removing ferrous material. The case was
presented in September 2020. The amount of the claim is approximately ThUS$ 713. On January 28, 2021,
the parties mutually agreed to terminate this lawsuit.
The Company and its subsidiaries have been involved and will probably continue to be involved either as plaintiffs
or defendants in certain judicial proceedings that have been and will be heard by the arbitration or ordinary courts of
justice that will make the final decision. Those proceedings that are regulated by the appropriate legal regulations are
intended to exercise or oppose certain actions or exceptions related to certain mining claims either granted or to be
granted and that do not or will not affect in an essential manner the development of the Company and its subsidiaries.
Soquimich Comercial S.A. has been involved and will probably continue being involved either as plaintiff or
defendant in certain judicial proceedings through which it intends to collect and receive the amounts owed, the total
nominal value of which is approximately US$ 1.2 million.
The Company and its subsidiaries have made efforts and continues making efforts to obtain payment of certain
amounts that are still owed to the Company due to its activities. Such amounts will continue to be required using
264
10) FINANCIAL REPORTS
judicial or non-judicial means by the plaintiffs, and the actions and exercise related to these are currently in full force
and effect.
22.2
Restrictions to management or financial limits
Bond issuance contracts in the local market require the Company to maintain a Total Indebtedness Level rate no
higher than 1 for Series H, Series O and Series Q bonds, calculated for a mobile period that considers the last 12
months. For more information, see Note 21.1.
As of December 31, 2020, the above-mentioned financial indicator has the following values:
Indicator
Leverage
As of
December 31,
2020
As of
December 31,
2019
0.50
0.32
Bond issue agreements issued abroad require the Company to neither merge nor dispose of the whole or a substantial
part of its assets, unless all the following conditions are met: (i) the legal successor company is an entity subject to
either Chilean or United States law, and assumes SQM S.A.’s obligations under a complimentary contract, (ii) the
Issuer does not fail to comply immediately after the merger or disposal, and (iii) the Issuer delivers a legal opinion
stating that the merger or disposal and the complimentary contract meet the requirements described in the original
contract.
In addition, SQM S.A. is committed to disclosing financial information on quarterly basis.
The Company and its subsidiaries have complied and are fully complying with all the aforementioned limitations,
restrictions and obligations.
265
10) FINANCIAL REPORTS
22.3
Environmental contingencies
The SMA issued a resolution dated November 28, 2016, rectified by a resolution dated December 23, 2016, which
filed charges against SQM Salar for brine extraction in excess of authorized amounts, progressive impairment of the
vitality of carob trees, providing incomplete information modification of follow-up plan variables, and other charges.
SQM Salar S.A. presented a compliance program that was accepted by the SMA. On December 2019, the
Environmental Court of Antofagasta rendered null. In October 2020, the SMA formulated new observations for the
compliance program, which will enable the incorporation of improvements in line with the ruling of the Antofagasta
Environmental Court, to then make a determination regarding approval or rejection. If a new compliance program is
not approved by the SMA, or if approved and legally challenged and rendered null and void by the Chilean courts.
This latter event may consider the application of fines up to US$9 million, temporary or permanent closure of facilities
and in extreme circumstances, revocation of the respective environmental permit.
22.4
Tax Contingencies
On August 26, 2016, SQM Salar filed a tax claim before the Third Tax and Customs Court of the Metropolitan Region
against settlements 169, 170, 171 and 172 by the Chilean IRS, which extend the application of specific mining tax to
lithium exploitation for the 2012, 2013 and 2014 tax years. The disputed amount is approximately US$17.8 million.
On November 28, 2018, the Third Tax and Customs Court rejected the claim, and the case was transferred to the
Santiago Court of Appeals, following an appeal filed by SQM Salar.
On March 24, 2017, SQM Salar filed with the Third Tax and Customs Court of the Metropolitan Region a tax claim
against tax assessment No. 207 and ruling No. 156, both issued by the Chilean IRS, which seek to expand application
of the specific tax on mining activities to include lithium exploitation for tax years 2015 and 2016. The amount
involved is approximately US$14.4 million, of this, US$ 7.0 million corresponding to the overcharge. On November
28, 2018, the Third Tax and Customs Court accepted SQM Salar's claim against the overcharge by the IRS and
rejected the claim for the remaining part. The case is now with the Santiago Court of Appeals due to the appeal filed
by SQM Salar.
On October 17, 2019, the IRS recognized the overcharge of US$ 5.8 million, while the difference of US$ 1.2 million,
is for corporate income tax plus associated interest and will be reimbursed at the end of the trial.
SQM Salar filed inapplicability requirements with the Constitutional Court in the grounds of unconstitutionality with
respect to article 64 bis of the Income Tax Law, with relation to two groups of previous tax claims. On June 18, 2020,
the Constitutional Court rejected the requirements after reaching a tie vote among the members of this court,
corresponding to its knowledge from the Santiago Court of Appeals.
On September 30, 2020, the SII notified SQM Salar of liquidations No. 65 and 66 for the 2017 and 2018 business
years, due to differences in the determination of the specific mining tax, totaling close to US$ 19.5 million and US$
22.1 million, respectively plus interest for both periods of US$ 22.3 million. On October 30, 2020, SQM Salar paid
these liquidations for a total of US$ 63.9 million (this amount includes an overcharge estimated at US$ 18 million,
including interest). SQM Salar will reclaim these liquidations in the upcoming months.
As of December 2020, the Company had non-current tax assets of US$ 90.3 million for tax settlements for 2012 to
2018 (including an overcollection of US$ 19.5 million) and US$ 5.8 million in recoverable taxes. As of December
2019, the Company the Company had non-current tax assets of US$ 32.2, (which included US$ 7 million for an
overcollection by the IRS).
As of December 31, 2020 and 2019, there was no effect on the income statement in this respect.
The IRS has not settled differences with respect to specific mining tax for 2018 onwards. If the IRS uses a similar
criterion to that used in previous years, it is possible that settlements will be issued in the future for those periods.
This tax for 2018 to 2020 (commercial years) is estimated at US$ 43 million, (without interest or penalties, and net
of corporate income tax).
The company continues to undertake all legal efforts to actively and decidedly defend its interests.
266
10) FINANCIAL REPORTS
22.5 Contingencies regarding to the Contracts with Corfo:
On September 6, 2018, representatives Claudia Nathalie Mix Jiménez, Gael Fernanda Yeomans Araya and Camila
Ruslay Rojas Valderrama and the Poder Ciudadano political party filed an annulment suit against Corfo, which
requested that the Contract for the Salar de Atacama Project between Corfo and the Company, SQM Potasio and
SQM Salar be annulled. The Companies have taken part of the process as interested third parties.
In the event that the annulment claim is approved for the Salar de Atacama Project Contract, SQM Salar may be
prevented from exploit the mining claims in the Salar de Atacama that it has leased from Corfo.
22.6 Contingencies related to the Class Action lawsuit
Since October 2015, a consolidated class action lawsuit has been pending against the Company before the District
Court for the Southern District of New York of the United States, plenary case Villella v.Chemical and Mining
Company of Chile, Inc., 1: 15-cv-02106 -ER (SDNY). The consolidated lawsuit alleges that certain statements made
by the Company between September 30, 2010, and June 18, 2015, mainly in documents filed with the SEC and in
Company press releases, were materially false and this constitutes a violation of Section 10 (b) of the Securities
Exchange Act and of the correlative Standard 10b-5. Specifically, the consolidated lawsuit challenges certain
statements issued by the Company associated with its compliance with or implementation of the laws and regulations
that regulate it, the effectiveness of its internal controls, the adoption of a code of ethics consistent with SEC
requirements, of its income or revenue and taxes paid, and of the applicable accounting standards On November 11,
2020, the Company reached an agreement that contains a summary of binding terms for concluding the trial. The
agreement will conclude the action of the plaintiffs and under this, the Company agreed to pay the amount of US$
62.5 million. The parties must negotiate in good faith the definitive documents of the transaction and the other related
documents, which will be presented for their approval from the New York court that is hearing the trial.
22.7 Contingencies associated with conflicts between shareholders of the Abu Dhabi Fertilizer Industries
Company
Due to differences between shareholders of the company Abu Dhabi Fertilizer Industries Company, diverse lawsuits
have arisen that may result in claims against SQM Corporation N.V. and by this company against the other
shareholders. These disputes may materially affect the value of the investment of the Company in Abu Dhabi
Fertilizer Industries Company. At this time, it is not possible to quantify the amounts of these claims.
22.8 Restricted or pledged cash
The subsidiary Isapre Norte Grande Ltda., in compliance with the provisions established by the Chilean
Superintendence of Healthcare, which regulates the running of pension-related health institutions, maintains a
guarantee in financial instruments delivered in deposits, custody and administration to Banco de Chile.
This guarantee, according to the regulations issued by the Chilean Superintendence of Healthcare is equivalent to the
total amount owed to its members and medical providers, Banco de Chile reports the present value of the guarantee
to the Chilean Superintendence of Healthcare and Isapre Norte Grande Ltda on a daily basis. As of December 31,
2020, the guarantee amounts to ThUS$ 731.
267
10) FINANCIAL REPORTS
22.9
Securities obtained from third parties
The main security received (exceeding ThUS$ 100) from third parties to guarantee Soquimich Comercial S.A. their
compliance with obligations in contracts of commercial mandates for the distribution and sale of fertilizers amounted
to ThUS$ 10,114 and ThUS$ 9,611 on December 31, 2020 and December 31, 2019 respectively; which is detailed as
follows:
Grantor
Relationship
Ferosor Agrícola S.A.
Tattersall Agroinsumos S.A.
Covepa SPA
Johannes Epple Davanzo
Hortofrutícola La Serena
Com. Serv Johannes Epple Davanz
Juan Luis Gaete Chesta
Arena Fertilizantes y Semillas
Vicente Oyarce Castro
Bernardo Guzmán Schmidt
Total
Unrelated Third party
Unrelated Third party
Unrelated Third party
Unrelated Third party
Unrelated Third party
Unrelated Third party
Unrelated Third party
Unrelated Third party
Unrelated Third party
Unrelated Third party
22.10
Indirect guarantees
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
5,626
2,000
703
314
303
408
190
211
229
130
5,372
2,000
671
300
282
269
182
201
213
121
10,114
9,611
Guarantees without pending balance indirectly reflect that the respective guarantees are in force and approved by
the Company’s Board of Directors and have not been used by the respective subsidiary.
As of December 31, 2020, there are no indirect guarantees.
268
10) FINANCIAL REPORTS
Note 23 Lawsuits and complaints
Investigation by the Department of Justice and the Securities Exchange Commission and Agreements
On January 13, 2017, the Company signed agreements with the DOJ and the SEC relating to their investigations into
Company payments to suppliers and organizations that may have had links with politically exposed persons during
the period from 2008 to 2015. As a result, the Company conducted its own internal investigation through an ad-hoc
Board committee (The Company’s securities are traded in the USA, so the Company is subject to US law). The
Company has voluntarily submitted the results of its internal investigation and supporting documents to the DOJ, the
SEC and the relevant Chilean authorities.
In accordance with the terms Agreement with the DOJ, (the “DPA”) the Company has accepted that the DOJ
formulates a charge for infractions (i) for the lack of implementation of effective internal accounting systems and
internal accounting controls and (ii) a charge for infractions for failure to adequately maintain books, records and
accounting sections in relation to the events investigated, Under the DPA, the DOJ has agreed not to pursue such
charges against the Company for a period of 3 years and release the Company from liability after such period,
inasmuch as within that period the Company complies with the terms of the DPA, These include payment of a fine
of US$15,487,500 and acceptance of an external monitor (the “Monitor”) for a period of 24 months that will assess
the Company’s compliance program, and continue to report on the Company independently for an additional year.
The three-year term of the DPA ended on April 30, 2020, and on June 1, 2020, the Company’s CEO and CFO
submitted the certification regarding the Company’s disclosure obligations, as required under the DPA. On November
11, 2020, the DOJ presented a motion to dismiss the criminal information against the Company, which is subject to
approval by the United States District Court of the District of Columbia. Following this approval, all charges against
the Company will be dropped.
Other Lawsuits and complaints
In May 2019, the company Fennix Industrial SpA filed a claim against SQM Salar and employees for the alleged
misappropriation of funds - controversies originating from contract execution for civil works and electromechanical
assembly. The case is being tried before the Criminal Court of San Pedro de la Paz and is in the investigation stage.
The amount of the alleged misappropriation of funds is close to US$ 436 million On December 18, 2020, the criminal
proceedings, together with other civil disputes, were terminated through a settlement agreement.
269
10) FINANCIAL REPORTS
Note 24 Environment
24.1 Disclosures of disbursements related to the environment
Environmental protection, respect for human rights and overall impact on sustainability are ongoing concerns of the
Company, both in its productive processes and throughout the supply chain. This commitment is supported by the
principles indicated in the Company’s Sustainable Development Policy and human rights policy. The Company is
currently operating under an Environmental Management System (EMS) that has allowed it to strengthen its
environmental performance through the effective application of the Company’s Sustainable Development Policy. In
2020, the company announced an ambitious Sustainable Development Plan, which establishes specific measurable
goals that seek to make SQM a leader in sustainability around the world. The main goals proposed are:
i)
ii)
iii)
iv)
A 65% reduction in the use of fresh water by the year 2040 and 40% by 2030.
A 50% reduction in brine extraction from the Salar de Atacama by 2030, starting with 20% by
November 2020.
Ensure that all our products are carbon neutral by 2040 and in the case of lithium, iodine and potassium
chloride, this goal is for 2030.
Stimulate more and better instances for dialog with the communities near the operations.
Operations that use caliche as a raw material are carried out in desert areas with climatic conditions that are favorable
for drying solids and evaporating liquids using solar energy. Operations involving the open-pit extraction of minerals.
Many of the Company’s products are shipped in bulk at the Port of Tocopilla. In 2007, the city of Tocopilla was
declared a “zone saturated with MP10 Particles” mainly due to the emissions from the electric power plants that
operate in that city. In October 2010, the “Decontamination Plan for Tocopilla” was put in place. Accordingly, the
Company has committed to taking several measures to mitigate the effects derived from bulk product movements in
the port, these measures have been timely implemented since 2007.
The Company carries out environmental follow-up and monitoring plans based on specialized scientific studies.
Follow-up on relevant variables defined for each project enables the Company to verify the status, for example, of
vegetation, flora, fauna and aquatic life in the ecosystems to protect. Follow-up plans are supported by a broad control
network that includes monitoring points such as meteorological stations and wells, satellite images, plots for recording
the status of vegetation and fauna, etc. The activities comprised in these plans are reported regularly to authorities
based on the Company’s commitments made through resolutions that approve different SQM projects. For the specific
case of the Salar de Atacama, the Company has implemented an online platform (www.sqmsenlinea.com), which
enables any person to access all the environmental information compiled by the Company in keeping with its
commitments.
In this context, the Company maintains environmental monitoring across the systems where it operates, which is
supported by numerous studies that integrate diverse scientific efforts from prestigious research centers on a national
and international level, such as the Spanish National Research Council (CSIC) and the Universidad Católica del
Norte.
Furthermore, within the framework of the environmental studies which the Company is conducting, the Company
performs significant activities in relation to the recording of Pre-Columbian and historical cultural heritage, as well
as the protection of heritage sites, in accordance with current Chilean laws. These activities have been especially
performed in the areas surrounding Maria Elena (ME) and the Nueva Victoria plant (NV). This effort is being
accompanied by outreach activities for the community and development of sites of interest.
As emphasized in its Sustainable Development Policy, the Company strives to maintain positive relationships with
the communities surrounding the locations in which it carries out its operations, as well as to participate in
communities’ development by supporting joint projects and activities which help to improve the quality of life for
residents. For this purpose, the Company has focused its efforts on activities involving the rescue of historical
heritage, education and culture, as well as development. In order to do so, it acts both individually and in conjunction
with private and public entities.
270
10) FINANCIAL REPORTS
24.2
Detailed information on disbursements related to the environment
The cumulative disbursements which the Company had incurred as of December 31, 2020 for the concept of
investments in production processes, verification and control of compliance with ordinances and laws related to
industrial processes and facilities amounted to ThUS$ 16,497 and are detailed as follows:
271
Accumulated expenses as of December 31, 2020
10) FINANCIAL REPORTS
Parent Company
or Subsidiary
Miscellaneous
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
Subtotal
Total
Project Name Associated with Disbursement
Reason for Disbursement
Asset /
Expense
Disbursement
ThUS$
Environment - Operating Area
01-I017200 - CEDAM at Puquíos at Llamara
01-I017600 - Regularization of Hazardous Substances Decree
01-I018700 – Penalization process for Salar de Llamara
01-I019400 - EIA Expansion of TEA and Seawater Impulsion
01-I028200 - EIA Llamara
01-I028300 - Implementation PDC 2019
01-I030700 - Permisos Sectoriales EIA Proye
01-I035800 – Sustainability DS43 Phase 2
01-I038400 – Update hydrogeological model
01-I039600 - New Warehouse Iodine Stock NV
01-P010400 - Adaptation of dispatch warehouse PV
01-S014200 – Projections
01-S015900 – SQM Sustainability
04-I017700 - Basic Engineering and EIA for TEA industrial area and seawater impulsion N.V.
04-I025000 - Re-perforation Pozo 2PL-2 y Ma
04-I032600 - Well Water Efficiency - Rec.
04-I038200 - Well water efficiency 2
04-I038600 - Monitoring extractions NV
04-J012200 - DIA and Regularization of CS Ponds
04-J015200 - Implementation Economizers
04-J015700 - Update of Closure Plans
04-J015800 - Other Sector Regulatory Measures
04-J017200 - Guarantee availability S
04-J022700 - DIA integration of Coya Sur site
04-J022800 - Adaptation light pollution
04-J023700 - Regularization Hazardous Substances Decree SQM Industrial
04-M004300 - Reduction of Industrial Waste
04-P010200 - Heap project PV(DAY)+ Analysis
19-C006800 - Renovation of lighting tower park
19-C008600 - Asphalting plants Salar del Carmen
19-L014700 - Industrial Waste Management
19-L018800 - UPC Consulting for NW and Others
19-L018900 - Evaporation 2018-2019
19-L019800 - Paleoclimate Study (Iberia)
19-L021400 - Environmental Monitoring 2019
19-L021700 - Upgrade RH y MA 2019
Expense
Expense
Assets
Assets
Expense
Expense
Expense
Expense
Expense
Assets
Assets
Expense
Expense
Expense
Not classified
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Environmental processing
Environmental processing
Sustainability: Environment and Risk Prevention
Environmental processing
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Environmental processing
Environmental processing
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention Assets
Assets
Environmental processing
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention Assets
Environmental processing
Sustainability: Environment and Risk Prevention Assets
Assets
Environmental processing
Expense
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Expense
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Expense
Expense
Expense
Expense
Expense
Expense
Expense
Expense
6.205
Total
272
10,376
4
121
-
791
722
593
280
20
76
54
16
63
975
133
1
123
79
15
-
-
83
42
109
87
48
35
77
57
19
432
45
26
1
14
11
40
15,568
6.205
Exact or
Estimated Date
of
Disbursement
06-30-2020
11-12-2020
10-22-2020
03-31-2020
12-31-2020
12-30-2020
12-31-2020
11-20-2020
11-03-2020
12-31-2020
12-31-2020
12-06-2020
10-01-2020
10-26-2020
07-10-2020
02-29-2020
07-30-2020
12-31-2020
12-24-2020
02-25-2020
09-25-2020
12-31-2020
09-24-2020
07-02-2020
12-31-2020
11-30-2020
11-20-2020
12-31-2020
11-24-2020
09-07-2020
12-30-2020
09-30-2020
11-13-2020
12-31-2020
07-16-2020
12-31-2020
12-30-2020
Parent Company or
Subsidiary
Project Name Associated with Disbursement
Reason for Disbursement
10) FINANCIAL REPORTS
Asset /
Expense
Disbursemen
ThUS$
Exact or
Estimated Date
of
Disbursement
19-L023200 - Topographic Equipment 2019
19-L025300 - Compliance with Sanitary Resolution
19-L025600 - Purchase of Generators, Variators
19-L025800 - Normalization of Administration System
19-L026800 - - Removal of old dryers in Plant MOP G III
19-S013400- Online Monitoring
19-S016200 - Acquisiton of Hardware - Software
19-S016300 - Consulting 2020
19-S016400 - Implementation Acquiere Environmental DB
19-S016700 - Improvements understanding reload
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
Orcoma Estudios Spa 15-I039100 - Sector Permits and environmental compliance
Minera Búfalo
SQM Potasio S.A.
Subtotal
Total
20-A008200 – Búfalo proyect
14-I039800 - Sector Permits and environmental compliance
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention Assets
Assets
Environmental processing
Sustainability: Environment and Risk Prevention
Expense
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention Assets
Sustainability: Environment and Risk Prevention Assets
Environmental processing
Environmental processing
Environmental processing
Expense
Expense
Assets
03-18-2020
12-13-2020
12-31-2020
12-31-2020
12-22-2020
12-15-2020
11-30-2020
11-30-2020
12-31-2020
12-31-2020
12-31-2020
11-19-2020
12-06-2020
3
51
62
14
20
363
8
33
4
49
252
61
9
929
16,497
273
10) FINANCIAL REPORTS
Committed expenses for future periods as of December 31, 2020
Parent Company or
Subsidiary
Project Name Associated with Disbursement
Reason for Disbursement
Asset /
Expense
Disbursement
ThUS$
Exact or
Estimated Date
of Disbursement
Miscellaneous
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SIT S.A.
SIT S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
Subtotal
Environment - Operating Area
01-I017200 - CEDAM at Puquíos at Llamara
01-I017400 - Development of Pintados and deposit
01-I018700 - Penalization Process for Salar de Llamara
01-I019400 - EIA Expansion of TEA and Seawater Impulsion
01-I028300 - Implementation PDC 2019
01-I030700 - EIA Project Sector Permits
01-I031300 - DIA Update RCA TEA
01-I035800 - Sustainability DS43 Phase 2
01-I038400 - Update hydrogeological model
01-I039600 - New Warehouse Iodine Stock NV
01-I039700 - Adapting Pond Substances
01-P010300 - Adapting pond substances
01-P010400 - Adapting dispatch warehouse PV
01-S014200 - Proyecta
01-S015900 - SQM Sustainability
04-I025000 - Re-perforation Pozo 2PL-2 y Ma
04-I032600 - Well Water Efficiency – Rec
04-I038200 - Well Water Efficiency 2
04-I038600 - Monitoreo Extracciones N.V.
04-J015200 - Implementation Economizers
04-J015700 - Update of Closure Plans
04-J015800 - Other Sector Regulatory Measures
04-J017200 - Assurance Availability S
04-J019900 - Provisional Access to Cerro Dominador
04-J022700 - DIA Integración Faena Coya Sur
04-J022800 - Adaptation light pollution
04-J023700 - Regularization Hazardous Substances Decree SQM Industrial
04-M004300 - Reduction of Industrial Waste
04-P010200 - PV Heap Project (DIA)+ Studies
03-T009900 - Air quality monitoring system Tocopilla
03-T010500 - Hydrocarbon Detection System Tocopilla Port
19-C006800 - Renovation lighting towers
19-L014700 - Industrial Waste Management
19-L018800 - UPC Consulting for NW and Others
19-L018900 - Evaporation 2018-2019
19-L019800 - Paleoclimate Study Iberia
19-L020000 - Improvement of Operational Monitoring Network
19-L021400 - Environmental monitoring 2019
Not classified
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Environmental processing
Environmental processing
Environmental processing
Environmental processing
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Environmental processing
Sustainability: Environment and Risk Prevention
Environmental processing
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Environmental processing
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Expense
Expense
Expense
Assets
Assets
Expense
Expense
Expense
Assets
Expense
Assets
Assets
Assets
Assets
Expense
Expense
Expense
Assets
Assets
Assets
Assets
Expense
Expense
Assets
Expense
Expense
Assets
Assets
Expense
Expense
Assets
Assets
Assets
Assets
Expense
Assets
Expense
Assets
Assets
12,276
42
108
-
5
332
66
369
39
124
606
380
355
294
7
155
127
27
551
240
30
17
120
32
4
296
321
615
173
275
82
75
2
89
46
41
35
95
21
18,472
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
274
10) FINANCIAL REPORTS
Committed expenses for future periods as of December 31, 2020
Parent Company or
Subsidiary
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Nitratos S.A.
Orcoma Estudios Spa
Minera Búfalo
SQM Potasio S.A.
SQM Potasio S.A.
Subtotal
Total
Project Name Associated with Disbursement
Reason for Disbursement
Asset /
Expense
Disbursement
ThUS$
Exact or
Estimated Date
of Disbursement
19-L021700 - Update RH y MA 2019
19-L024200 - Environmental Risk Analysis Study
19-L025300 - Compliance with Sanitary Resolution
19-L025600 - Purchase of Generators, Variators
19-L025800 - Normalization of Admin. System
19-L026800 - Removal of old dryers at Plant MOP G III
19-L026900 - Cameras and Lighting Products
19-S013400- Online Monitoring
19-S016200 - Acquisition of Hardware- Software
19-S016300 - Consulting 2020
19-S016400 - Implementation Acquiere BD Amb
19-S016500 - Incorporation of test models
19-S016700 – Improvements to recharge understanding
19-S016900 - Water dynamics monitoring
12-I039000 - Adaptation of hazardous waste warehouse
15-I039100 - Sectoral Permits and compliance
20-A008200 - Búfalo Project
14-I039400 - Adapting Pond Iris
14-I039800 - Adapting hazardous substances warehouse IRIS
Environmental processing
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Environmental processing
Environmental processing
Environmental processing
Expense
Expense
Assets
Assets
Assets
Assets
Assets
Expense
Assets
Assets
Assets
Assets
Assets
Assets
Assets
Expense
Expense
Assets
Assets
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
12-31-2021
92
58
161
46
8
20
17
187
14
39
4
12
81
35
80
235
189
370
261
1,909
20,381
275
10) FINANCIAL REPORTS
Accumulated expenses as of December 31, 2019
Parent Company or
Subsidiary
Miscellaneous
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
Total
Project Name
Reason for Disbursement
A Asset /
Expense
Disbursement
Exact or Estimated Date
of Disbursement
ThUS$
Not classified
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Environmental processing
Environmental processing
Sustainability: Environment and Risk Prevention
Environmental processing
Environment - Operating Area
01-I013800 - Increase height of Absorber Tower
01-I017200 - CEDAM at Puquíos (ponds) at Llamara
01-I017400 - Value Added Paints and Deposits
01-I017600 - Regularization of Substances Decree
01-I018700 - Penalization Process for Salar de Llamara
01-I019400 - EIA Expansion of TEA and Seawater Impulsion
01-I028200 - EIA Llamara
01-I028300 - Implementation of PDC 2019
01-I030700 - Sector Permits EIA Tente en el Aire Project
04-I017700 - Basic Engineering and EIA for TEA industrial area and seawater impulsion N.V. Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
04-I025000 - Re-perforación Pozo 2PL-2 y Ma
Environmental processing
04-J007000 - Environmental impact statement
Sustainability: Environment and Risk Prevention
04-J010700 - Recovery Water Intake from Rivers
Environmental processing
04-J012200 - Environmental Impact Statement and Regularization of CS Ponds
Sustainability: Environment and Risk Prevention
04-J013500 - Handling of Equipment associated with PCBs
Sustainability: Environment and Risk Prevention
04-J015200 - Implement Economizers
Sustainability: Environment and Risk Prevention
04-J015700 - Update closure plans
Sustainability: Environment and Risk Prevention
04-J017200 - Guarantee availability S
Sustainability: Environment and Risk Prevention
04-J019900 - Provisional Access to Cerro Domina
Sustainability: Environment and Risk Prevention
04-M002000 - Recovery of Potable Water at María Elena
Sustainability: Environment and Risk Prevention
19-C005700 - Solar Electric Recharge Point Project-
Sustainability: Environment and Risk Prevention
19-L012100 - Upgrade to weather stations
Sustainability: Environment and Risk Prevention
19-L018000 - Upgrade TT illumination
Environmental processing
19-L018700 - 5th Update of environmental modeling
Sustainability: Environment and Risk Prevention
19-L018800 - UPC Consulting for NW and others
Sustainability: Environment and Risk Prevention
19-L018900 - Evaporation 2018-2019
Sustainability: Environment and Risk Prevention
19-L019800 - Paleoclimate Study (Iberia)
Sustainability: Environment and Risk Prevention
19-L020000 - Improvement of Operations Monitoring Network
Sustainability: Environment and Risk Prevention
19-L020300 - Telemetry boreholes
Environmental processing
19-L021400 - Environmental Monitoring 2019
Environmental processing
19-L021700 - Improvement of RH and MA 2019
Sustainability: Environment and Risk Prevention
19- S013400- Online Monitoring
Expense
Assets
Expense
Expense
Expense
Assets
Assets
Expense
Expense
Expense
Assets
Expense
Expense
Assets
Assets
Expense
Assets
Expense
Assets
Expense
Assets
Assets
Assets
Assets
Expense
Expense
Assets
Expense
Assets
Assets
Expense
Expense
Expense
8,054
15
3
2
63
522
898
253
1,057
131
318
7
7
119
19
251
195
52
253
141
225
53
17
40
10
166
8
1
5
821
2,767
80
430
16,983
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
12-31-2019
276
10) FINANCIAL REPORTS
Future expenses as of December 31, 2019
Parent Company or
Subsidiary
Miscellaneous
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
SQM Salar S.A.
Total
Project Name
Reason for Disbursement
A Asset /
Expense
Disbursement
Exact or Estimated Date of
Disbursement
ThUS$
Environment - Operating Area
01-I017200 - CEDAM at Puquíos (ponds) at Llamara
01-I017400 - Development of Pintados and surrounding area.
01-I017600 - Regularization of Substances Decree
01-I019400 - EIA Expansion of TEA and Seawater Impulsion
01-I028200 - EIA Llamara
01-I028300 - Implementation of PDC 2019
01-I030700 - Sectorial Permits EIA Project Tente en el Aire
04-I025000 - Re-perforación Pozo 2PL-2 y Ma
04-J012200 - DIA and Regularization of CS Ponds
04-J013500 - Handling of Equipment associated with PCBs
04-J015200 - Implementation Economizers
04-J015700 - Update of Closure Plans
04-J015800 - Other Sector Regulatory Measures
04-J017200 - Guarantee availability S
04-J019900 - Provisional Access to Cerro Domina
04-M003900 - Revocation of PDME
19-L014700 - Industrial Waste Management
19-L018800 - UPC Consulting for NW and others
19-L018900 - Evaporation 2018-2019
19-L019800 - Paleoclimate Study (Iberia)
19-L020000 - Improvement of Operations Monitoring Network
19-L021400 - Environmental Monitoring 2019
19-L021700 - Improvement of RH and MA 2019
19- S013400- Online Monitoring
Not classified
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Environmental processing
Sustainability: Environment and Risk Prevention
Environmental processing
Sustainability: Environment and Risk Prevention
Environmental processing
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Sustainability: Environment and Risk Prevention
Environmental processing
Environmental processing
Sustainability: Environment and Risk Prevention
Expense
Expense
Expense
Expense
Assets
Expense
Expense
Expense
Expense
Assets
Expense
Assets
Expense
Expense
Assets
Expense
Expense
Expense
Expense
Assets
Expense
Assets
Expense
Expense
Expense
10,085
28
108
75
426
1,527
1,231
284
128
35
303
59
127
237
104
95
47
135
238
172
49
95
33
132
300
16,053
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
12-31-2020
277
10) FINANCIAL REPORTS
24.3
Description of each project, indicating whether these are in process or have been finished
Sociedad Quimca y Minera de Chile S.A.
Environmental Commitments Implementation Projects
I0172: The project includes the commitments the Tamarugos Environmental Management Plan, which contemplates
an Environmental Education Program that includes the design, construction and start-up of an Environmental
Education Center (CEDAM) at Puquios de Llamara.
I0174: The Project include implementing "Value Added" at the former Pintados station. and a storage facility in
Humberstone to store archaeological material, committed to in environmental assessments.
I0187: The project involves the implementation of measures that were committed to during the penalty process,
including urgent and transitory measures and the compliance program approved by SMA.
I0283: The project involves the implementation of actions committed in the PDC. The implementation considers
consulting with consultants (legal, hydrogeological and in processing with PDC), studies and additional follow-up.
I0307: The project involves the preparation and processing of sectoral and environmental permits with the DGA and
SERNAGEOMIN for the “Tente en el Aire” Project.
I0384: The project contemplates updating the Conceptual and Numerical Hydrogeological Model for the Pampa del
Tamarugal Aquifer.”
Environmental Improvement Initiatives and Projects
I0138: The project considers increasing the height of every SO2 absorption tower (regular and stand-by towers) to
increase the SO2 absorption efficiency.
I0176: The project involves diagnosis of works for their adaptation to the recently enacted Regulation of Hazardous
Substances.
I0396: The project involves improving NV's hazardous substances pond facilities, in accordance with the Adaptation
Plan for Hazardous Substances Regulation DS 43.
I0397: The project involves constructing a new NV warehouse, in accordance with the Hazardous Substances
Regulation DS 43.
P0103: The project involves improving the hazardous substances pond facilities at PV, in accordance with the
Adaptation Plan for Hazardous Substances Regulation DS 43.
P0104: The project involves adapting the PV warehouse, in accordance with the Hazardous Substances Regulation
DS 43.
Projects for the Studies and Presentations to the Environmental Assessment System
I0194: The project consists of the preparation and processing of the Environmental Impact Study for Expansion of
TEA and Impulsion.
I0282: The project consists of the preparation and processing of the Environmental Impact Study for Llamara.
I0313: The project involves a preliminary environmental characterization (terrestrial biota, archeology and
paleontology) of 4 alternative sites. Once the alternative to use has been defined based on technical and environmental
criteria, a DIA/EIA will be implemented.
278
10) FINANCIAL REPORTS
I0358: The project contemplates standardizing facilities in accordance with standard DS43, Hazardous Substances
regulation.
S0142: The project considers SQM baseline survey in terms of ESG, we will compare ourselves to the industry and
best practices to later plan how to reduce the gaps in the future with concrete initiatives.
S0159: The project considers surveying all the company’s sustainability initiatives, integrating the different practices
in the areas of the company, identifying its strengths and opportunities to strengthen the management of its
sustainability, aligning the strategy with the SDGs for all SQM operations in Chile. Support in completing the DJSI
survey.
SQM Industrial S.A.
Environmental Commitments Implementation Projects
J0158: The project will prepare and process sectorial permits for favorable reports to construct in Coya Sur (CS) and
permits for hydraulic works defined in Article 294 of the Water Code (evaporation wells) at CS and NV.
Environmental Improvement Initiatives and Projects
I0250: The project consists of re-drilling well 2Pl-2, with the relevant development work and pump tests.
I0326: The project considers installation of floating covers to reduce evaporation in water collection wells in NV.
I0382: The project consists of acquisition of floating covers to decrease evaporation, reducing the loss of water
resources for the productive phase of iodine.
I0386 The project considers a monitoring and transmission system for effective extractions and dynamic levels in
extraction wells owned by SQM, which supply the Nueva Victoria site.
J0107: The project looks to renovate and automate the operation of pump stations at the three water intakes, by
incorporating automatic valves and smart controls for pumps.
J0135: This project consists of dealing with all the oils and components that contain 50ppm or more of Policlorobife
PCB by 2025 at the latest.
J0152: The project will install exhaust gas heat recovery equipment in boilers and implement associated structural
improvements.
J0157: The project will update the closure plans in accordance with the normal regime established by current
legislation. These requirements include an initial external audit, detailed risks analysis and their control, and other
requirements.
J0172: The project will ensure the availability of water resources in "CS, ME, VE and CV" adductions.
J0199: The project considers obtaining a provisional roadway approval from the Ministry of Public Works to prepare
and use the intersection access to Cerro Dominador.
J0228: The project considers the installation and normalization of lighting in Coya Sur and María Elena.
J0237: The project involves improving the hazardous substance pond facilities at CS and improvements to the
hazardous substance storage facilities at CS and ME, in accordance with the Adaptation Plan for Hazardous
Substances Regulation DS 43.
279
10) FINANCIAL REPORTS
M0043: The project considers the removal of industrial waste to free up the sites defined for this purpose.
Projects for the Studies and Presentations to the Environmental Assessment System
I0177: The project will complete the basic engineering, execute the EIA Tente en el Aire, obtain the legal and sectorial
permits for a second stage to secure the execution of the project.
J0122: The project consists of entering the Coya Sur wells into the “environmental impact assessment system” and
processing the permits for the Coya Sur wells with the General Directorate of Water Resources (DGA).
J0227: The project consists of the preparation and processing of an Environmental Impact Declaration (DIA) to
extend the useful life of the NPT2 plant and incorporate fuel with KNO3. Prepare and process a DIA for the expansion
and updating of Coya Sur.
P0102: The project considers developing the preliminary identification studies of the mine and PV heap area,
identification of intake points and layouts for the sea water impulsion line.
SIT S.A.
Environmental Improvement Initiatives and Projects
T0099: The project involves preparing a detailed emissions inventory, particulate matter dispersion model and
protocol development. Measurement of fugitive emissions from Tocopilla Port operations and Air Quality
Monitoring.
T0105: The purpose of the project is to install a system that detects and issues early warnings of hydrocarbons in the
sea near the facilities at Tocopilla Port.
SQM Salar S.A.
Environmental Commitments Implementation Projects
L0198: The project will date sediment in the depositional environments of the last 50,000 years to complement the
facies sedimentological model provided by the consultant. The project will try to reconstruct the variability history
of the lagoon system with absolute ages.
L0200: The project will identify an appropriate device. Field testing of sensors. Purchase of sensors for all points.
Installation of sensors. Analyze remote data transmission (future project).
L0214: The project consists of implementing a 2019 environmental monitoring plan to monitor an optimum
compliance of current environmental regulations.
L0217: The project involves quoting new equipment. Purchase of new equipment. Reparation of old equipment for
use as backup in the event of unexpected failure of new equipment.
S0134: The project involves showing information online regarding extractions and reinjections from the Salar.
Additionally, it includes biotic and hydrogeological information to show authorities and the community the actions
implemented by SQM for the environmental variable it has committed to.
Environmental Improvement Initiatives and Projects
C0068: The project consists of the renovation of 11 Maxi light towers, eliminating fuel consumption.
280
10) FINANCIAL REPORTS
C0086: The project involves asphalting the Salar de Carmen plants to reduce the dust particles in suspension raised
during the movement of trucks.
L0147: This project contemplates the reduction of these industrial waste storage points and packaging of different
industrial waste according to the RCA and legislation in force.
L0188: The project involves the participation of an external consulting team to narrow down the sources of the risks
identified, propose operational optimization plans, improvements to control systems (monitoring networks) and
support in modeling this deposit with a view to a better evolution of short- and medium-term projections (5 years).
L0189: It includes improving the current lysimeter stations and implementing new stations in important sectors that
are not currently measured, with the ability to remotely transmit information. This will improve the spatial coverage
of the stations that measure evaporation within the basin. This considers consulting with an expert to propose
methodological improvements.
L0232: This considers purchase of GPS and a Full Station for measuring stockpiles, salt height. Pursuant to CORFO
requests, equipment is needed to provide information.
L0242: This contemplates consulting to study the large-scale behavior of lagoon systems through the development
of analytic or semi-analytic solutions.
L0253: This considers the regularization of the potable water system and the disposal of sewage waters from
management.
L0256: This contemplates the renovation of generators in SQM Salar to extend their useful life and purchase variators
and transformers in different strengths to have stock in the event of failures and thereby ensure ongoing operations.
L0258: This considers the normalization of the Electricity System for maintaining and operating the transformer
substations.
L0268: This considers the removal of old dryers and their final disposal at authorized facilities.
L0269: This considers improving controls over plant equipment and feed mixtures to keep products within
specifications, to comply with current regulations regarding lighting and mitigate substandard conditions at the plant.
S0162: This contemplates the acquisition of technology for optimization and traceability of GHS data.
S0163: The project contains measurement methodology for different terrain parameters and subsequent conceptual
modeling.
S0164: This contemplates the unification of proprietary and third-party databases.
S0165: This project takes responsibility for an opportunity to improve the speed of data analysis and efficiency in
decision-making.
S0167: This contemplates a series of measures in the conceptualization of the Salar de Atacama basin, as well as
updating data sets, which must be implemented to strengthen the model and which will be the management tool model
for the basin.
S0169: The project aims to improve the understanding of dynamics between the vegetation and water bodies in the
Aguas de Quelana sector.
SQM Nitratos S.A.
Environmental Improvement Initiatives and Projects
281
10) FINANCIAL REPORTS
I0390: The project contemplates making improvements to the common warehouse in Mina Oeste based on the
commitments defined in the adaptation plan presented to the Health SEREMI, thereby complying with DS43.
Sociedad Contractual Minera Bufalo
Environmental Improvement Initiatives and Projects
A0082: The project contemplates the characterization of a potential copper deposit, through the execution of a 3D
geophysics program, drilling and sample studies, decreasing the uncertainty of the geological model, as well as
processing environmental and sectoral permits that enable the development of activities in the area.
Orcoma Estudios Spa
Environmental Commitments Implementation Projects
I0391: The project consists of obtaining sectoral and environmental sectoral permits for the Orcoma Project.
SQM Potasio S.A.
Environmental Improvement Initiatives and Projects
I0394: The project involves improving Iris's hazardous substances pond facilities, in accordance with the Adaptation
Plan for Hazardous Substances Regulation DS 43.
I0398: The project involves adapting the hazardous substances warehouse at the NV Iodine Plant, in accordance with
Hazardous Substances Regulation DS 43.
282
10) FINANCIAL REPORTS
Note 25 Gains (losses) from operating activities in the statement of income of expenses,
included according to their nature
25.1 Revenue from operating activities customer activities
The Group derives revenues from the sale of goods (which are recognized at one point in time) and from the provision
of services (which are recognized over time) and are distributed among the following geographical areas and main
product and service lines.
(a) Geographic areas:
Geographic areas
Chile
Latin America and the Caribbean
Europe
North America
Asia and Others
Total
Geographic areas
Chile
Latin America and the Caribbean
Europa
North America
Asia and Others
Total
For the period ended December 31, 2020
Specialty
plant
nutrition
100,353
69,535
145,896
246,737
139,167
701,688
Iodine and
derivatives
Lithium and
derivatives
Potassium
Industrial
chemicals
Other
Total
ThUS$
1,234
10,843
142,161
90,292
90,127
334,657
399
1,597
49,719
25,558
306,100
383,373
23,963
72,697
30,029
39,432
43,173
209,294
4,059
4,951
11,585
23,963
116,050
160,608
23,737
367
735
1,588
1,144
27,571
153,745
159,990
380,125
427,570
695,761
1,817,191
For the period ended as of December 31, 2019
Specialty
plant
nutrition
109,975
78,872
149,992
243,399
141,682
723,920
Iodine and
derivatives
Lithium and
derivatives
Potassium
Industrial
chemicals
Other
Total
ThUS$
1,064
7,972
123,525
90,070
148,389
371,020
599
3,593
76,250
45,810
379,462
505,714
27,371
64,868
27,973
43,312
48,627
212,151
39,512
6,354
15,289
27,798
5,922
94,875
33,336
269
735
883
752
211,857
161,928
393,764
451,272
724,834
35,975
1,943,655
283
(b) Main product and service lines:
Products and Services
Specialty plant nutrition
- Sodium Nitrates
-Potassium nitrate and sodium potassium nitrate
- Specialty Blends
- Other specialty fertilizers
Iodine and derivatives
Lithium and derivatives
Potassium
Industrial chemicals
Other
- Services
- Income from property leases
- Income from subleases on right-of-use assets
- Commodities
-Other ordinary income of Commercial Offices
Total
10) FINANCIAL REPORTS
For the period from January
to December of the year
2020
ThUS$
2019
ThUS$
701,688
18,291
424,041
163,033
96,323
334,657
383,373
209,294
160,608
27,571
3,241
1,457
176
11,938
10,759
723,920
20,679
457,477
153,739
92,025
371,020
505,714
212,151
94,875
35,975
3,410
1,438
261
16,176
14,690
1,817,191
1,943,655
284
25.2 Cost of sales
Cost of sales broken down by nature of expense
Nature of expense
Raw materials and consumables used
Classes of employee benefit expenses
Depreciation expense
Depreciation of Right-of-use Assets (contracts under IFRS 16)
Amortization expense
Investment plan expenses
Provision for site closure
Provision for materials, spare parts and supplies
Contractors
Operating leases
Mining concessions
Operations transport
Freight / product transport costs
Purchase of products from third parties
Insurance
CORFO rights and other agreements
Export costs
Expenses related to Variable Parts Leases (contracts under IFRS 16)
Variation in inventory
Variation in inventory provision
Other
Total
10) FINANCIAL REPORTS
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(287,877)
(178,956)
(182,410)
(5,814)
(12,655)
(14,286)
(911)
640
(142,001)
(57,461)
(6,645)
(68,730)
(52,156)
(224,115)
(17,657)
(74,418)
(71,718)
(1,133)
97,467
7,244
(271,912)
(178,493)
(188,157)
(5,450)
(5,102)
(18,367)
(911)
(7,500)
(120,793)
(47,708)
(7,856)
(56,376)
(46,264)
(210,583)
(16,968)
(143,861)
(75,908)
(1,037)
52,557
17,107
(40,729)
(1,334,321)
(50,021)
(1,383,603)
285
25.3 Other income
Other income
Discounts obtained from suppliers
Fines charged to suppliers
Taxes recovered
Amounts recovered from insurance
Overestimate of provisions for third-party obligations
Sale of assets classified as properties, plant and equipment
Options on mining rights
Easements, pipelines and roads
Mining licenses and notary costs reimbursed
Total
25.4 Administrative expenses
Administrative expenses
Employee benefit expenses
Marketing costs
Amortization expenses
Entertainment expenses
Advisory services
Lease of buildings and facilities
Insurance
Office expenses
Contractors
Depreciation of Right-of-use Assets (contracts under IFRS 16)
Other expenses, by nature
Total
10) FINANCIAL REPORTS
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
665
267
346
14,719
118
3,222
5,852
1,619
85
26,893
676
483
457
492
983
2,422
5,298
7,204
203
18,218
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(55,152)
(2,377)
(91)
(4,858)
(13,880)
(3,111)
(3,478)
(6,204)
(5,079)
(2,617)
(10,170)
(107,017)
(60,255)
(3,911)
(5)
(5,783)
(13,862)
(3,653)
(2,553)
(7,327)
(4,874)
(2,501)
(12,456)
(117,180)
286
10) FINANCIAL REPORTS
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(42)
(42)
(9,563)
(1,658)
(140)
(283)
(11,644)
(69,965)
(626)
(314)
(864)
(5,262)
(8,793)
(2,102)
(87,926)
(99,612)
(136)
(136)
(49)
(913)
(140)
-
(1,102)
(9,277)
(613)
(145)
(1,693)
(5,537)
(5,026)
(2,466)
(24,757)
(25,995)
(985)
-
631
-
(29)
(383)
25.5 Other expenses
Other expenses
Depreciation and amortization expense
Depreciation of assets not in use
Subtotal
Impairment losses (reversals of impairment losses) recognized in profit for the year
Properties, plant and equipment
Intangible assets other than goodwill
Goodwill
Amortization of intangible assets
Subtotal
Other expenses, by nature
Legal expenses
VAT and other unrecoverable taxes
Fines paid
Investment plan expenses
Exploration expenses
Donations
Other operating expenses
Subtotal
Total
25.6 Other gains (losses)
Other income (expenses)
Adjust previous year application method of participation
Losses in the sale of investments in associates
Impairment of interests in associates
Losses in the sale of investments in joint Ventures
Others
Total
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(49)
(11,830)
7,235
(481)
(188)
(5,313)
287
10) FINANCIAL REPORTS
25.7
(Impairment) /reversion of value of financial assets impairment losses
Description
(Impairment) /reversion of value of financial assets impairment losses (See Note 14.2)
Totals
25.8 Summary of expenses by nature
The following summary considers notes 25.2, 25.4 and 25.5
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
4,684
4,684
(1,057)
(1,057)
Expenses by nature
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(287,877)
(234,108)
(182,452)
(8,431)
(1,658)
(9,563)
(140)
(13,029)
(69,965)
(15,150)
(5,262)
(911)
640
(147,080)
(60,572)
(6,645)
(68,730)
(52,156)
(224,115)
(74,418)
(71,718)
(1,133)
(21,135)
(13,880)
97,467
7,244
(76,173)
(271,912)
(238,748)
(188,293)
(7,951)
(913)
(49)
(140)
(5,107)
(9,277)
(20,060)
(5,537)
(911)
(7,500)
(125,667)
(51,361)
(7,856)
(56,376)
(46,264)
(210,583)
(143,861)
(75,908)
(1,037)
(19,521)
(13,862)
52,557
17,107
(87,748)
(1,540,950)
(1,526,778)
Raw materials and consumables
Classes of Employee Benefit Expenses
Depreciation and amortization expense
Depreciation expense
Depreciation of Right-of-use Assets
Impairment of Value
Properties, plant and equipment
Goodwill
Amortization expense
Legal expenses
Investment plan expenses
Exploration expenses
Provision for site closure
Provision for materials, spare parts and supplies
Contractors
Operation leases
Mining concessions
Operation transport
Freight and product transport costs
Purchase of products from third parties
CORFO rights y other agreements
Export costs
Expenses related to Variable Parts Leases (IFRS 16)
Insurance
Consultant and advisor services
Variation in gross inventory
Variation in provision on product inventory
Other expenses
Total expenses by nature
288
25.9 Finance expenses
Finance expenses
Interest expense from bank borrowings and overdrafts
Interest expense from bonds
Interest expense from loans
Capitalized interest expenses
Financial expenses for restoration and rehabilitation provisions
Interest on lease agreement
Other finance costs
Total
25.10 Finance income
Finance income
Interest from term deposits
Interest from marketable securities
Interest from maintenance of minimum bank balance in current account
Other finance income
Other finance interest
Total
10) FINANCIAL REPORTS
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(2,797)
(87,030)
(1,598)
8,462
2,947
(1,133)
(1,050)
(82,199)
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
10,260
2,147
18
1,031
259
13,715
(2,133)
(72,984)
(2,682)
7,841
(4,417)
(1,535)
(1,029)
(76,939)
15,345
6,765
-
4,130
49
26,289
289
10) FINANCIAL REPORTS
Note 26 Reportable segments
26.1 Reportable segments
(a)
General information:
The amount of each item presented in each operating segment is equal to that reported to the highest authority that
makes decisions regarding the operation, in order to decide on the allocation of resources to the defined segments and
to assess its performance.
These operating segments mentioned are consistent with the way the Company is managed and how results will be
reported by the Company. These segments reflect separate operating results that are regularly reviewed by the
executive responsible for operational decisions in order to make decisions about the resources to be allocated to the
segment and assess its performance (See Note 26.2).
The performance of each segment is measured based on net income and revenues. Inter-segment sales are made using
terms and conditions at current market rates.
(b)
Factors used to identify segments on which a report should be presented:
The segments covered in the report are strategic business units that offer different products and services. These are
managed separately because each business requires different technology and marketing strategies.
(c)
Description of the types of products and services from which each reportable segment obtains its
income from ordinary activities
The operating segments, which obtain income from ordinary activities, generate expenses and have its operating
results reviewed on a regular basis by the highest authority who makes decisions regarding operations, relate to the
following groups of products:
1.
2.
3.
4.
5.
6.
Specialty plant nutrients
Iodine and its derivatives
Lithium and its derivatives
Industrial chemicals
Potassium
Other products and services
(d)
Description of income sources for all the other segments
Information regarding assets, liabilities, profits and expenses that cannot be assigned to the segments indicated above,
due to the nature of production processes, is included under the "Unallocated amounts” category of the disclosed
information.
290
10) FINANCIAL REPORTS
(e)
Description of the nature of the differences between measurements of results of reportable
segments and the result of the entity before the expense or income tax expense of incomes and
discontinued operations
The information reported in the segments is extracted from the Company’s consolidated financial statements and
therefore there is no need to prepare reconciliations between the data mentioned above and those reported in the
respective segments, according to what is stated in paragraph 28 of IFRS 8, "Operating Segments".
For the allocation of inventory valuation costs, we identify the direct expenses (can be directly allocated to products)
and the common expenses (belong to coproduction processes, for example common leaching expenses for production
of Iodine and Nitrates), Direct costs are directly allocated to the product and the common costs are distributed
according to percentages that consider different variables in their determination, such as margins, rotation of
inventories, revenue, production and etc.
The allocation of other common costs that are not included in the inventory valuation process, but go straight to the
cost of sales, use similar criteria: the costs associated with a product or sales in particular are assigned to that particular
product or sales, and the common costs associated with different products or business lines are allocated according
to the sales.
(f)
Description of the nature of the differences between measurements of assets of reportable
segments and the Company´s assets
Assets are not shown classified by segments, as this information is not readily available, some of these assets are not
separable by the type of activity by which they are affected since this information is not used by management in
decision-making with respect to resources to be allocated to each defined segment. All assets are disclosed in the
"unallocated amounts" category.
(g)
Description of the nature of the differences between measurements of liabilities of reportable
segments and the Company’s liabilities
Liabilities are not shown classified by segments, as this information is not readily available, some of these liabilities
are not separable by the type of activity by which they are affected, since this information is not used by management
in decision-making regarding resources to be allocated to each defined segment. All liabilities are disclosed in the
"unallocated amounts" category.
291
26.2 Reportable segment disclosures:
Operating segment items as of December 31, 2020
Specialty
plant
nutrients
Iodine and its
derivatives
Lithium and
its derivatives
Industrial
chemicals
Potassium
Other
products and
services
Reportable
segments
Operating
segments
Unallocated
amounts
Total as of
December 31,
2020
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
10) FINANCIAL REPORTS
Revenue
701,688
334,657
383,373
160,608
209,294
27,571
1,817,191
1,817,191
-
-
-
-
-
-
-
-
701,688
334,657
383,373
160,608
209,294
27,571
1,817,191
1,817,191
-
-
-
1,817,191
-
1,817,191
(537,801)
(168,499)
(297,048)
(119,092)
(187,019)
(24,862)
(1,334,321)
(1,334,321)
-
(1,334,321)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(107,017)
(107,017)
(82,199)
(82,199)
(55,335)
(40,687)
(56,092)
(14,136)
(34,570)
(3,092)
(203,912)
(203,912)
-
(203,912)
-
-
-
-
-
-
-
-
8,940
8,940
Revenues from transactions with other operating
segments of the same entity
Revenues from external customers and
transactions with other operating segments of the
same entity
Costs of sales
Administrative expenses
Finance expense
Depreciation and amortization expense
The entity’s interest in the profit or loss of
associates and joint ventures accounted for by the
equity method
Income (loss) before taxes
163,887
166,158
86,325
41,516
22,275
2,709
482,870
482,870
(244,332)
238,538
Income tax expense
Net income (loss)
Assets
Equity-accounted investees
Incorporation of non-current assets other than
financial instruments, deferred tax assets, net
defined benefit assets and rights arising from
insurance contracts
Liabilities
Impairment loss recognized in profit or loss
Reversal of impairment losses recognized in profit or
loss for the period
Cash flows from (used in) operating activities
Cash flows from (used in) investing activities
Cash flows from (used in) financing activities
-
-
-
-
-
-
-
-
(70,179)
163,887
166,158
86,325
41,516
22,275
2,709
482,870
482,870
(314,511)
(70,179)
168,359
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,818,463
4,818,463
85,993
85,993
358,009
358,009
2,655,885
4,684
2,655,885
4,684
(11,644)
(11,644)
182,234
182,234
(167,091)
(167,091)
(94,132)
(94,132)
-
-
-
-
-
-
-
292
Operating segment items as of December 31, 2019
Specialty
plant
nutrients
Iodine and its
derivatives
Lithium and
its derivatives
Industrial
chemicals
Potassium
Other
products and
services
Reportable
segments
Operating
segments
Unallocated
amounts
Total as of
December 31,
2019
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
10) FINANCIAL REPORTS
Revenue
723,920
371,020
505,714
94,875
212,151
35,975
1,943,655
1,943,655
Revenues from transactions with other operating
segments of the same entity
Revenues from external customers and
transactions with other operating segments of the
same entity
Costs of sales
Administrative expenses
Finance expense
Depreciation and amortization expense
The entity’s interest in the profit or loss of
associates and joint ventures accounted for by the
equity method
-
-
-
-
-
-
-
-
723,920
371,020
505,714
94,875
212,151
35,975
1,943,655
1,943,655
(573,808)
(230,468)
(306,250)
(63,590)
(176,199)
(33,288)
(1,383,603)
(1,383,603)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(117,180)
(117,180)
(76,939)
(76,939)
(67,700)
(43,336)
(45,238)
(6,854)
(37,691)
(532)
(201,351)
(201,351)
-
(201,351)
-
-
-
-
-
-
-
-
9,786
9,786
-
-
-
-
1,943,655
-
1,943,655
(1,383,603)
Income tax expense, continuing operations
150,112
140,552
199,464
31,285
35,952
2,687
560,052
560,052
(169,430)
390,622
Income tax expense
Net income (loss)
Assets
Equity-accounted investees
Incorporation of non-current assets other than
financial instruments, deferred tax assets, net
defined benefit assets and rights arising from
insurance contracts
Liabilities
Impairment loss recognized in profit or loss
Reversal of impairment losses recognized in profit or
loss for the period
Cash flows from (used in) operating activities
Cash flows from (used in) investing activities
Cash flows from (used in) financing activities
-
-
-
-
-
-
-
-
(110,019)
(110,019)
150,112
140,552
199,464
31,285
35,952
2,687
560,052
560,052
(279,449)
280,603
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,684,151
4,684,151
109,435
109,435
110,021
110,021
2,549,679
2,549,679
(1,057)
(1,102)
(1,057)
(1,102)
426,971
426,971
(485,471)
(485,471)
105,896
105,896
293
10) FINANCIAL REPORTS
26.3 Statement of comprehensive income classified by reportable segments based on groups of products
Items in the statement of comprehensive income
as of December 31, 2020
Specialty plant
nutrients
Iodine and its
derivatives
Lithium and its
derivatives
Industrial
chemicals
Potassium
Other products
and services
Corporate Unit
Total segments
and Corporate
unit
Revenue
Costs of sales
Gross profit
Other incomes by function
Administrative expenses
Other expenses by function
Impairment of gains and review of impairment losses
(impairment losses) determined in accordance with IFRS 9
Other gains (losses)
Financial income
Financial costs
interest in the profit or loss of associates and joint ventures
accounted for by the equity method
Exchange differences
Profit (loss) before taxes
Income tax expense
Profit (loss) from continuing operations
Profit (loss) from discontinued operations
Profit (loss)
Profit, attributable to
Profit (loss) attributable to the controller´s owners
Profit (loss) attributable to the non-controllers
Profit
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
701,688
(537,801)
163,887
334,657
(168,499)
166,158
383,373
(297,048)
86,325
160,608
(119,092)
41,516
209,294
(187,019)
22,275
27,571
(24,862)
2,709
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
163,887
166,158
-
-
163,887
166,158
-
-
163,887
166,158
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
86,325
-
86,325
-
86,325
-
-
-
-
-
-
-
-
-
-
-
-
41,516
-
41,516
-
41,516
-
-
-
-
-
-
-
-
-
-
-
-
22,275
-
22,275
-
22,275
-
-
-
-
-
-
-
-
-
-
-
-
2,709
-
2,709
-
2,709
-
-
-
-
-
-
26,893
(107,017)
(99,612)
4,684
(5,313)
13,715
(82,199)
8,940
(4,423)
(244,332)
(70,179)
(314,511)
-
1,817,191
(1,334,321)
482,870
26,893
(107,017)
(99,612)
4,684
(5,313)
13,715
(82,199)
8,940
(4,423)
238,538
(70,179)
168,359
-
(314,511)
168,359
164,518
3,841
168,359
164,518
3,841
168,359
294
10) FINANCIAL REPORTS
Items in the statement of comprehensive income as of
December 31, 2019
Specialty plant
nutrients
Iodine and its
derivatives
Lithium and its
derivatives
Industrial
chemicals
Potassium
Other products
and services
Corporate Unit
Total segments
and Corporate
unit
Revenue
Cost of sales
Gross profit
Other incomes by function
Administrative expenses
Other expenses by function
Impairment of gains and review of impairment losses
(impairment losses) determined in accordance with IFRS 9
Other gains (losses)
Financial income
Financial costs
interest in the profit or loss of associates and joint ventures
accounted for by the equity method
Exchange differences
Profit (loss) before taxes
Income tax expense
Profit (loss) from continuing operations
Profit (loss) from discontinued operations
Profit (loss)
Profit (loss), attributable to
Profit (loss) attributable to the controller´s owners
Profit (loss) attributable to the non-controllers
Profit (loss)
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
723,920
(573,808)
150,112
371,020
(230,468)
140,552
505,714
(306,250)
199,464
94,875
(63,590)
31,285
212,151
(176,199)
35,952
35,975
(33,288)
2,687
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,112
140,552
199,464
-
-
-
150,112
140,552
199,464
-
-
-
150,112
140,552
199,464
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,285
-
31,285
-
31,285
-
-
-
-
-
-
-
-
-
-
-
-
35,952
-
35,952
-
35,952
-
-
-
-
-
-
-
-
-
-
-
-
2,687
-
2,687
-
2,687
-
-
-
-
-
-
18,218
(117,180)
(25,995)
(1,057)
(383)
26,289
1,943,655
(1,383,603)
560,052
18,218
(117,180)
(25,995)
(1,057)
(383)
26,289
(76,939)
(76,939)
9,786
9,786
(2,169)
(169,430)
(110,019)
(279,449)
-
(2,169)
390,622
(110,019)
280,603
-
(279,449)
280,603
278,115
2,488
280,603
278,115
2,488
280,603
295
10) FINANCIAL REPORTS
26.4 Disclosures on geographical areas
As indicated in paragraph 33 of IFRS 8, the entity discloses geographical information on its revenue from operating
activities with external customers and from non-current assets that are not financial instruments, deferred income tax
assets, assets related to post-employment benefits or rights derived from insurance contracts.
26.5 Disclosures on main customers
With respect to the degree of dependency of the Company on its customers, in accordance with paragraph 34 of IFRS
8, the Company has no external customers who individually represent 10% or more of its revenue.
296
10) FINANCIAL REPORTS
26.6 Segments by geographical areas
Items as of December 31, 2020
Chile
Latin America and the
Caribbean
Europe
North America
Asia and others
Total
Revenue
Investment accounted for under the equity method
Intangible assets other than goodwill
Goodwill
Property, plant and equipment, net
Right-of-use assets
Other non-current assets
Non-current assets
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
153,745
-
95,934
23,065
1,667,824
23,461
19,377
1,829,661
159,990
-
565
-
642
2,298
17
3,522
380,126
41,273
825
18,901
12,592
2,428
7
76,026
427,572
14,468
2,274
-
3,494
1,776
2,641
24,653
695,758
30,252
78,809
-
52,767
61
-
161,889
1,817,191
85,993
178,407
41,966
1,737,319
30,024
22,042
2,095,751
Items as of December 31, 2019
Chile
Latin America and the
Caribbean
Europe
North America
Asia and others
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Revenue
Investment accounted for under the equity method
Intangible assets other than goodwill
Goodwill
Property, plant and equipment, net
Right-of-use assets
Other non-current assets
Non-current assets
211,857
-
106,910
23,205
1,526,919
29,427
20,321
1,706,782
393,764
42,243
1,397
11,521
3,424
2,817
4
61,406
451,272
14,669
2,683
-
6,250
2,083
(624)
25,061
724,834
52,523
76,948
-
32,800
103
-
1,943,655
109,435
188,358
34,726
1,569,906
37,164
19,729
162,374
1,959,318
161,928
-
420
-
513
2,734
28
3,695
297
26.7 Property, plant and equipment classified by geographical areas
The company's main production facilities are located near their mines and extraction facilities in northern Chile. The following table presents the main production
facilities as of December 31, 2020 and 2019:
Location
10) FINANCIAL REPORTS
Pedro de Valdivia
-
- María Elena
- Coya Sur
- Nueva Victoria
-
-
- Tocopilla
Salar de Atacama
Salar del Carmen
298
10) FINANCIAL REPORTS
Note 27 Effect of fluctuations in foreign currency exchange rates
a)
Foreign currency exchange differences recognized in profit or loss and other comprehensive income:
Foreign currency exchange differences recognized in profit or loss and other comprehensive
income
Conversion foreign exchange gains (losses) recognized in the result of the year
Conversion foreign exchange reserves
Conversion foreign exchange reserves attributable to the owners of the controlling entity
Conversion foreign exchange reserves attributable to the non-controlling entity
Total
b)
Reserves for foreign currency exchange differences:
As of December 31, 2020, and 2019, are detailed as follows:
Details
Changes in equity generated by the equity method value through conversion:
Comercial Hydro S.A.
SQMC Internacional Ltda.
Proinsa Ltda.
Comercial Agrorama Ltda.
Isapre Norte Grande Ltda.
Almacenes y Depósitos Ltda.
Sacal S.A.
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
Agrorama S.A.
Doktor Tarsa
SQM Vitas Fzco
Ajay Europe
SQM Eastmed Turkey
Doctochem
Coromandel SQM India
SQM Italia SRL
SQM Oceanía Pty Ltd.
SQM Indonesia S.A.
Abu Dhabi Fertillizers Industries WWL.
SQM Vitas Holland
SQM Thailand Limited
SQM Europe
SQM Australia Pty Ltd.
Pavoni & C. Spa
Terra Tarsa BV
Plantacote NV
Doktolab Tarim Arastirma San.
Kore Potash PLC (a)
SQM Colombia SAS
Total
299
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
(4,423)
14,176
(176)
14,000
(2,169)
562
225
787
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
1,004
1,004
(9)
(10)
(19)
(14)
211
(3)
(13)
92
-
(3,736)
(693)
-
-
-
-
(579)
(124)
372
99
(68)
(1,983)
(4,052)
164
-
-
-
(1,128)
(80)
(11,569)
(9)
(10)
33
(44)
142
(3)
(19)
231
(13,811)
(2,267)
(1,449)
(155)
7
(431)
(236)
(634)
(124)
372
(197)
(68)
(1,983)
(4,035)
(185)
116
(16)
(54)
(1,754)
(166)
(25,745)
10) FINANCIAL REPORTS
c)
Functional and presentation currency
The functional currency of these companies corresponds to the currency of the country of origin of each entity, and
its presentation currency is the dollar.
d)
Reasons to use one presentation currency and a different functional currency
- A relevant portion of the revenues of these subsidiaries are associated with the local currency.
- The cost structure of these companies is affected by the local currency.
300
10) FINANCIAL REPORTS
Note 28 Disclosures on the effects of fluctuations in foreign currency exchange rates
a) Assets held in foreign currency subject to fluctuations in exchange rates are detailed as follows:
Class of Asset
Currency
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Subtotal cash and cash equivalents
Other current financial assets
Other current financial assets
Other current financial assets
Subtotal other current financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Other current non-financial assets
Subtotal other non-financial current assets
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Trade and other receivables
Subtotal trade and other receivables
Receivables from related parties
Receivables from related parties
Subtotal receivables from related parties
454,402
-
7,190
11,597
17,144
19
1,411
6
1,378
3
-
1,646
14,286
16
3
1
509,102
145,893
-
202,176
348,069
20,645
224
-
53
27,837
1,661
1,531
70
4,488
70
157
646
17
57,399
230,214
1
23
545
47,133
22,882
22,868
682
355
533
1,167
23,010
589
12,504
2,675
25
365,206
61,379
1,222
62,601
558,572
3
8,240
2,484
3,131
3
8,492
6
2,103
4
-
1,559
3,929
-
3
1
588,530
127,889
36,896
340,705
505,490
16,535
285
2
31
24,374
326
3,055
-
2,629
22
174
3,119
-
50,552
225,554
6
19
504
56,023
3,340
24,925
148
211
1,193
1,695
66,266
801
15,900
2,557
-
399,142
60,135
1,092
61,227
USD
ARS
CLP
CNY
EUR
GBP
AUD
INR
MXN
PEN
AED
JPY
ZAR
KRW
IDR
PLN
USD
CLF
CLP
USD
AUD
BRL
CLF
CLP
CNY
EUR
COP
MXN
THB
JPY
ZAR
SEK
USD
PEN
BRL
CLF
CLP
CNY
EUR
GBP
MXN
AED
THB
JPY
AUD
ZAR
COP
SEK
USD
EUR
301
Class of assets
Currency
10) FINANCIAL REPORTS
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
Current inventories
Subtotal Current Inventories
Current tax assets
Current tax assets
Current tax assets
Current tax assets
Current tax assets
Current tax assets
Current tax assets
Current tax assets
Current tax assets
Subtotal current tax assets
Non-current assets or groups of assets classified as held for sale
Subtotal Non-current assets or groups of assets classified as held for sale
Total current assets
Other non-current financial assets
Other non-current financial assets
Other non-current financial assets
Subtotal Other non-current financial assets
Other non-current non-financial assets
Other non-current non-financial assets
Other non-current non-financial assets
Other non-current non-financial assets
Other non-current non-financial assets
Subtotal Other non-current non-financial assets
Other receivables, non-current
Other receivables, non-current
Other receivables, non-current
Other receivables, non-current
Subtotal Other receivables, non-current
Investments classified using the equity method of accounting
Investments classified using the equity method of accounting
Investments classified using the equity method of accounting
Investments classified using the equity method of accounting
Investments classified using the equity method of accounting
Investments classified using the equity method of accounting
Subtotal Investments classified using the equity method of accounting
Intangible assets other than goodwill
Intangible assets other than goodwill
Intangible assets other than goodwill
Intangible assets other than goodwill
Intangible assets other than goodwill
Subtotal intangible assets other than goodwill
Purchases goodwill, gross
Purchases goodwill, gross
Purchases goodwill, gross
Subtotal Purchases goodwill, gross
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment
Subtotal property, plant and equipment
Right-of-use assets
Right-of-use assets
Right-of-use assets
Right-of-use assets
Subtotal Right-of-use assets
Current tax assets, non-current
Subtotal Current tax assets, non-current
Total non-current assets
Total assets
302
USD
USD
ARS
CLP
EUR
MXN
PEN
ZAR
COP
THB
USD
USD
CLP
JPY
USD
BRL
COP
EUR
CLP
USD
CLF
MXN
CLP
USD
TRY
AED
EUR
INR
THB
USD
MXN
CLP
EUR
CNY
USD
CLP
EUR
USD
CLP
EUR
AED
BRL
MXN
COP
KRW
USD
EUR
AED
MXN
USD
1,093,028
1,093,028
128,529
-
3,015
218
-
4
26
417
15
132,224
1,629
1,629
2,569,258
51,828
20
77
51,925
21,236
17
-
7
782
22,042
10,061
152
102
850
11,165
23,417
792
47,774
11,082
1,304
1,624
85,993
176,282
1,025
182
696
222
178,407
34,438
-
7,528
41,966
1,719,358
3,237
10,954
923
111
2,494
120
122
1,737,319
25,238
2,428
60
2,298
30,024
90,364
90,364
2,249,205
4,818,463
983,338
983,338
87,509
1
1,623
61
1,806
-
139
294
-
91,433
2,454
2,454
2,682,166
8,687
20
71
8,778
19,101
22
6
4
596
19,729
522
165
43
980
1,710
57,777
26,624
9,111
14,315
1,568
40
109,435
185,951
1,137
136
1,134
-
188,358
34,438
140
148
34,726
1,556,160
3,294
4,756
-
-
5,588
108
-
1,569,906
37,164
-
-
-
37,164
32,179
32,179
2,001,985
4,684,151
10) FINANCIAL REPORTS
Class of liability
Currency
Up to 90 days
As of December 31, 2020
As of December 31, 2019
More than 90
days to 1 year
Total
Up to 90 days
More than 90
days to 1 year
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Current liabilities
Other current financial liabilities
Other current financial liabilities
Other current financial liabilities
Subtotal other current financial liabilities
Lease liabilities, current
Lease liabilities, current
Lease liabilities, current
Subtotal Lease liabilities, current
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Trade and other payables
Subtotal trade and other payables
Trade payables due to related parties, current
Trade payables due to related parties, current
Subtotal Trade payables due to related parties, current
Other current provisions
Other current provisions
Other current provisions
Other current provisions
Subtotal other current provisions
USD
CLF
BRL
USD
MXN
EUR
USD
CLF
BRL
THB
CLP
CNY
EUR
GBP
INR
MXN
PEN
AUD
ZAR
AED
COP
USD
AUD
USD
ARS
CLP
EUR
4,676
329
-
5,005
4,750
416
362
5,528
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
282
-
282
698
-
-
-
698
47,894
21,061
-
68,955
4,750
416
362
5,528
83,425
123
9
30
73,857
1,323
40,280
18
1
584
5
2,935
1,168
-
175
203,933
282
324
606
103,950
-
216
-
104,166
20,582
19,518
11
40,111
-
-
-
-
44,146
-
10
53
73,703
-
58,538
17
1
5,122
5
4,442
2,260
188
192
188,677
475
-
475
109,650
7
82
6
109,745
250,694
323
-
251,017
7,694
-
-
7,694
-
-
-
-
17,108
-
5
-
-
-
-
-
-
-
-
17,113
-
-
-
820
-
-
-
820
43,218
20,732
-
63,950
-
-
-
-
83,425
123
9
30
73,857
1,323
40,280
18
1
584
5
2,935
1,168
-
175
203,933
-
324
324
103,252
-
216
-
103,468
303
Total
ThUS$
271,276
19,841
11
291,128
7,694
-
-
7,694
44,146
-
10
53
90,811
-
58,543
17
1
5,122
5
4,442
2,260
188
192
205,790
475
-
475
110,470
7
82
6
110,565
Class of liability
Currency
Up to90 days
91 days to 1 year
Total
Up to90 days
91 days to 1 year
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
As of December 31, 2020
As of December 31, 2019
10) FINANCIAL REPORTS
Current tax liabilities
Current tax liabilities
Current tax liabilities
Current tax liabilities
Subtotal current tax liabilities
Provisions for employee benefits, current
Provisions for employee benefits, current
Provisions for employee benefits, current
Provisions for employee benefits, current
Provisions for employee benefits, current
Subtotal Provisions for employee benefits, current
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Other current non-financial liabilities
Subtotal other current non-financial liabilities
Total current liabilities
USD
CLP
EUR
MXN
USD
AUD
CLP
THB
MXN
USD
THB
BRL
CLP
CNY
EUR
MXN
JPY
PEN
ZAR
COP
ARS
20,981
61
642
959
22,643
6,011
-
-
-
-
6,011
397
-
-
792
-
119
53
-
-
-
-
117
1,478
41,645
20,981
61
642
959
22,643
8,992
58
3
-
43
9,096
52,392
-
2
7,056
60
1,032
174
52
70
-
-
117
60,955
475,882
2,863
-
-
-
2,863
12,486
-
-
-
-
12,486
117,136
30
3
5,969
-
842
129
21
70
10
-
20
124,230
478,587
14,994
17
-
-
15,011
3,901
-
-
-
-
3,901
154
-
-
2,439
-
-
64
12
-
-
-
-
2,669
298,225
17,857
17
-
-
17,874
16,387
-
-
-
-
16,387
117,290
30
3
8,408
-
842
193
33
70
10
-
20
126,899
776,812
-
-
-
-
-
2,981
58
3
-
43
3,085
51,995
-
2
6,264
60
913
121
52
70
-
-
-
59,477
434,237
304
10) FINANCIAL REPORTS
Class of liability
Currency
Over 1 year to 2
years
Over 2 years to 3
years
Over 3 years to 4
years
Over 4 years to 5
years
Over 5 years
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
As of December 31, 2020
Non-current liabilities
Other non-current financial liabilities
Other non-current financial liabilities
Subtotal Other non-current financial liabilities
Non-current lease liabilities
Non-current lease liabilities
Non-current lease liabilities
Non-current lease liabilities
Subtotal non-current lease liabilities
Non-current Trade and other payables
Subtotal Non-current Trade and other payables
Other non-current provisions
Subtotal Other non-current provisions
Deferred tax liabilities
Subtotal Deferred tax liabilities
Provisions for employee benefits, non-current
Provisions for employee benefits, non-current
Provisions for employee benefits, non-current
Provisions for employee benefits, non-current
Subtotal Provisions for employee benefits, non-current
Total non-current liabilities
Total liabilities
USD
CLF
USD
UF
MXN
JPY
USD
USD
USD
USD
CLP
MXN
JPY
-
-
-
1,977
15,258
2,189
1,964
21,388
-
-
-
-
-
-
31,585
610
-
4
32,199
53,587
312,730
-
312,730
-
-
-
-
-
4,027
4,027
36,391
36,391
919
919
-
-
-
-
-
354,067
69,376
-
69,376
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
69,376
248,664
-
248,664
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
248,664
838,399
430,344
1,268,743
4,158
-
-
-
4,158
-
-
26,226
26,226
155,182
155,182
-
-
-
-
-
1,454,309
1,469,169
430,344
1,899,513
6,135
15,258
2,189
1,964
25,546
4,027
4,027
62,617
62,617
156,101
156,101
31,585
610
-
4
32,199
2,180,003
2,655,885
305
10) FINANCIAL REPORTS
Class of liability
Currency
Over 1 year to 2
years
Over 2 years to 3
years
Over 3 years to 4
years
Over 4 years to 5
years
Over 5 years
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
As of December 31, 2019
Non-current liabilities
Other non-current financial liabilities
Other non-current financial liabilities
Subtotal Other non-current financial liabilities
Non-current lease liabilities
Subtotal non-current lease liabilities
Non-current Trade and other payables
Subtotal Non-current Trade and other payables
Other non-current provisions
Subtotal Other non-current provisions
Deferred tax liabilities
Subtotal Deferred tax liabilities
Provisions for employee benefits, non-current
Provisions for employee benefits, non-current
Provisions for employee benefits, non-current
Provisions for employee benefits, non-current
Subtotal Provisions for employee benefits, non-current
Total non-current liabilities
Total liabilities
USD
CLF
USD
USD
USD
USD
USD
CLP
MXN
JPY
89,896
-
89,896
-
-
-
-
23,014
23,014
-
-
-
-
-
-
-
112,910
42,336
-
42,336
-
-
-
-
167
167
-
-
-
-
-
-
-
42,503
313,749
-
313,749
-
-
-
-
-
-
-
-
-
-
-
-
-
313,749
13,749
-
13,749
-
-
-
-
1,452
1,452
-
-
-
-
-
-
-
15,201
617,055
411,938
1,028,993
30,203
30,203
-
-
10,057
10,057
183,411
183,411
34,884
519
236
201
35,840
1,288,504
1,076,785
411,938
1,488,723
30,203
30,203
-
-
34,690
34,690
183,411
183,411
34,884
519
236
201
35,840
1,772,867
2,549,679
b) Effect of exchange rate changes on the statement of income
Foreign currency exchange rate changes
Profit (loss) in foreign currency
Foreign currency translation reserve (*)
Total
For the period from January to December of the year
2020
ThUS$
2019
ThUS$
(4,423)
14,176
9,753
(2,169)
562
(1,607)
(*) includes MUS$ 14,580, which were transferred through sale of Grupo Tarsa, SQM Eastmed and other smaller companies.
The average and closing exchange rate for foreign currency is revealed in Note 3.3
306
Note 29 Income tax and deferred taxes
Accounts receivable from taxes as of December 31, 2020 and December 31, 2019, are as follows:
10) FINANCIAL REPORTS
29.1
Current and non-current tax assets
(a) Current
Current tax assets
Monthly provisional income tax payments, Chilean companies
Monthly provisional income tax payments, foreign companies
Corporate tax credits (1)
1st category tax absorbed by tax loss (2)
Taxes in recovery process
Total
(b) Non-current
Non-current tax assets
Monthly provisional income tax payments, Chilean companies compensated by the specific tax on
mining activity (Lithium)
Specific tax on mining activities (IEAM) paid by Lithium (on consignment)
Total
(1)
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
37,123
1,265
1,566
2,322
89,948
132,224
47,283
124
1,262
916
41,848
91,433
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
6,398
83,966
90,364
6,398
25,781
32,179
These credits are available for Companies and are related to corporate tax payments in April of the following
year. These credits include, among others, credits for training expenses (SENCE), credits for acquisition of
fixed assets, donations and credits in Chile for taxes paid abroad.
(2)
This concept corresponds to the absorption of the tax losses determined by the company at the end of the
year, which must be attributed to the dividends received during the year.
307
29.2 Current tax liabilities
Current tax liabilities
1st Category income tax
Foreign company income tax
Article 21 single tax
Total
10) FINANCIAL REPORTS
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
14,736
7,838
69
22,643
7,863
9,944
67
17,874
Income tax is calculated based on the profit or loss for tax purposes that is applied to the effective tax rate applicable
in Chile. As established by Law No. 20,780 is 27%.
The royalty is determined by applying the taxable rate to the net operating income obtained, according to the chart
in force, the Company currently provisioned 5% for mining royalties that involve operations in the Salar de Atacama
and 5.38% for caliche extraction operations.
The income tax rate for the main countries where the Company operates is presented below:
Country
Income tax
Income tax
Spain
Belgium
Mexico
United States
South Africa
2020
2019
25%
25%
30%
25%
29.58%
30%
21% + 3,36%
21% + 3,25%
28%
28%
308
10) FINANCIAL REPORTS
29.3 Income tax and deferred taxes
(a)
Deferred tax assets and liabilities as of December 31, 2020
Description of deferred tax assets and liabilities as of December 31, 2020
Net liability position
Assets
ThUS$
Liabilities
ThUS$
Unrealized loss
Property, plant and equipment and capitalized interest
Restoration and rehabilitation provision
Manufacturing expenses
Staff severance indemnities, unemployment insurance
Vacation accrual
Inventory provision
Materials provision
Forward
Employee benefits
Research and development expenses
Bad debt provision
Provision for legal complaints and expenses
Loan acquisition expenses
Financial instruments recorded at market value
Specific tax on mining activity
Tax loss benefit
Other
Foreign items (other)
Balances to date
Net balance
90,585
-
6,598
-
-
6,138
22,200
8,812
-
-
-
5,072
19,637
-
-
-
844
1,454
-
161,340
-
(187,168)
-
(107,215)
(6,669)
-
-
-
-
-
(3,580)
-
-
(5,212)
(3,929)
(3,014)
-
-
(654)
(317,441)
(156,101)
309
(b) Deferred tax assets and liabilities as of December 31, 2019
Description of deferred tax assets and liabilities
Unrealized loss
Property, plant and equipment and capitalized interest
Facility closure provision
Manufacturing expenses
Staff severance indemnities, unemployment insurance
Vacation
Inventory provision
Materials provision
Employee benefits
Research and development expenses
Bad debt provision
Provision for legal complaints and expenses
Loan acquisition expenses
Financial instruments recorded at market value
Specific tax on mining activity
Tax loss benefit
Other
Foreign items (other)
Balances to date
Net balance
10) FINANCIAL REPORTS
Net liability position
Assets
ThUS$
Liabilities
ThUS$
82,075
-
7,313
-
-
5,591
23,885
7,982
2,689
-
3,542
2,546
-
-
-
2,296
-
311
138,230
-
(197,167)
-
(106,420)
(6,000)
-
-
-
-
(3,533)
-
-
(3,856)
(1,287)
(1,357)
-
(2,021)
-
(321,641)
(183,411)
310
10) FINANCIAL REPORTS
(c)
Reconciliation of changes in deferred tax liabilities (assets) as of December 31, 2020
Reconciliation of changes in deferred tax liabilities (assets)
Unrealized loss
Property, plant and equipment and capitalized interest
Facility closure provision
Manufacturing expenses
Staff severance indemnities, unemployment insurance
Vacation accrual
Inventory provision
Materials provision
Forward
Employee benefits
Research and development expenses
bad debt provision
Provision for legal complaints and expenses
Loan approval expenses
Junior mining companies (valued based on stock price)
specific tax on mining activity
Tax loss benefit
Other
Foreign items (other)
Total temporary differences, unused losses and unused tax
credits
Deferred tax
liability (asset)
at beginning of
period
Deferred tax
(expense)
benefit
recognized in
profit (loss) for
the year
Deferred taxes
related to items
credited
(charged)
directly to equity
Total increases
(decreases) in
deferred tax
liabilities (assets)
Deferred tax
liability (asset)
at end of
period
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
(82,076)
197,167
(7,312)
106,420
6,000
(5,591)
(23,885)
(7,982)
-
(2,689)
3,534
(3,542)
(2,546)
3,856
1,287
1,356
(2,296)
2,021
(311)
(8,509)
(9,999)
714
795
514
(547)
1,685
(830)
1,001
2,689
46
(1,530)
(17,091)
1,356
-
1,668
1,452
(3,475)
965
-
-
-
-
155
-
-
-
(1,001)
-
-
-
-
-
2,642
(10)
-
-
-
(8,509)
(9,999)
714
795
669
(547)
1,685
(830)
-
2,689
46
(1,530)
(17,091)
1,356
2,642
1,658
1,452
(3,475)
965
(90,585)
187,168
(6,598)
107,215
6,669
(6,138)
(22,200)
(8,812)
-
-
3,580
(5,072)
(19,637)
5,212
3,929
3,014
(844)
(1,454)
654
183,411
(29,096)
1,786
(27,310)
156,101
311
10) FINANCIAL REPORTS
(d)
Reconciliation of changes in deferred tax liabilities (assets) as of December 31, 2019
Reconciliation of changes in deferred tax liabilities (assets)
Unrealized loss
Property, plant and equipment and capitalized interest
Facility closure provision
Manufacturing expenses
Staff severance indemnities, unemployment insurance
Vacation accrual
Inventory provision
Materials provision
Forward
Employee benefits
Research and development expenses
bad debt provisions
Provision for legal complaints and expenses
Loan approval expenses
Financial instruments recorded at market value
specific tax on mining activity
Tax loss benefit
Other
Foreign items (other)
Total temporary differences, unused losses and unused tax
credits
Deferred tax
liability (asset)
at beginning of
period
Deferred tax
(expense)
benefit
recognized in
profit (loss) for
the year
Deferred taxes
related to items
credited
(charged)
directly to equity
Total increases
(decreases) in
deferred tax
liabilities (assets)
Deferred tax
liability (asset)
at end of
period
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
(75,832)
196,843
(4,280)
103,760
5,679
(5,155)
(28,155)
(6,239)
(2,169)
(3,309)
2,216
(4,188)
(4,013)
2,337
976
3,278
(1,124)
(5,005)
(259)
175,361
(6,243)
324
(3,033)
2,660
1,007
(436)
4,270
(1,743)
(514)
620
1,317
646
1,467
1,519
-
(1,905)
(1,172)
7,026
(52)
5,758
-
-
-
-
(686)
-
-
-
2,683
-
-
-
-
-
311
(16)
-
-
-
2,292
(6,243)
324
(3,033)
2,660
321
(436)
4,270
(1,743)
2,169
620
1,317
646
1,467
1,519
311
(1,921)
(1,172)
7,026
(52)
8,050
(82,075)
197,167
(7,313)
106,420
6,000
(5,591)
(23,885)
(7,982)
-
(2,689)
3,533
(3,542)
(2,546)
3,856
1,287
1,357
(2,296)
2,021
(311)
183,411
(e) Deferred taxes related to benefits for tax losses
The Company’s tax loss carryforwards were mainly generated by losses in Chile, which in accordance with current
Chilean tax regulations have no expiration date.
As of December 31, 2020, and December 31, 2019, tax loss carryforwards are detailed as follows:
Deferred taxes related to benefits for tax losses
Chile
Foreign
Total
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
818
26
844
2,296
-
2,296
The tax losses as of December 31, 2020 correspond mainly to SQM S.A., SQM Potasio S.A., SIT S.A., Orcoma
SpA., and Orcoma Estudio SpA.
The tax losses from foreign companies correspond mainly to SQM Africa Pty Ltd. And SQM (Shanghai)
Chemicals.
312
10) FINANCIAL REPORTS
(f)
Movements in deferred tax assets and liabilities
Movements in deferred tax assets and liabilities as of December 31, 2020 and December 31, 2019 are detailed as
follows:
Movements in deferred tax assets and liabilities
Deferred tax assets and liabilities, net opening balance
Increase (decrease) in deferred taxes in profit or loss
Decrease in deferred taxes in equity
Total
(g)
Disclosures on income tax (expenses) benefit
Current and deferred tax (expenses) benefit are detailed as follows:
Disclosures on income tax expense (benefit)
Current income tax (expense) income
Current tax expense
Adjustments to prior year current income tax (expense) benefit
Current income tax expense, net, total
Deferred tax expense
Deferred tax expense relating to the creation and reversal of temporary differences
Tax adjustments related to the creation and reversal of temporary differences from the previous
year
Deferred tax expense, net, total
Income tax expense
Assets (liabilities)
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
(183,411)
29,096
(1,786)
(156,101)
(175,361)
(5,758)
(2,292)
(183,411)
(Expense) Income
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
(97,374)
(1,901)
(99,275)
26,219
2,877
29,096
(70,179)
(116,483)
12,222
(104,261)
2,551
(8,309)
(5,758)
(110,019)
313
10) FINANCIAL REPORTS
Tax (expenses) benefit for foreign and domestic parties are detailed as follows:
Income tax (expense) benefit
Current income tax benefit (expense) by foreign and domestic parties, net
Current income tax expense, foreign parties, net
Current income tax expense, domestic, net
Current income tax expense, net, total
Deferred tax benefit (expense) by foreign and domestic parties, net
Current income tax benefit, foreign parties, net
Current income tax benefit (expense), domestic, net
Deferred tax expense, net, total
Income tax expense
(Expense) Income
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
(9,782)
(89,493)
(99,275)
10,284
18,812
29,096
(70,179)
(7,394)
(96,867)
(104,261)
2,370
(8,128)
(5,758)
(110,019)
(h) Equity interest in taxation attributable to equity-accounted investees
The Company does not recognize any deferred tax liability in all cases of taxable temporary differences associated
with investments in subsidiaries, branches and associated companies or interest in joint ventures, because as
indicated in the standard, the following two conditions are jointly met:
(i)
the parent, investor or interest holder is able to control the time for reversal of the temporary difference;
and
(ii)
It is more likely than not that the temporary difference will not be reversed in the foreseeable future.
In addition, the Company does not recognize deferred income tax assets for all deductible temporary differences
from investments in subsidiaries, branches and associated companies or interests in joint ventures because it is
unlikely that they will meet the following requirements:
(i)
(ii)
Temporary differences are reversed in a foreseeable future; and
The Company has tax earnings, against which temporary differences can be used.
314
10) FINANCIAL REPORTS
(i) Disclosures on the tax effects of other comprehensive income components:
As of December 31, 2020
Income tax related to other income and expense components with a charge or
credit to net equity
Amount before taxes
(expense) gain
(Expense) income for
income taxes
Amount after taxes
Gain (loss) from defined benefit plans
Cash flow hedge
Reserve for gains (losses) from financial assets measured at fair value through
other comprehensive income
Total
ThUS$
ThUS$
ThUS$
974
(3,706)
9,785
7,053
(145)
1,001
(2,642)
(1,786)
829
(2,705)
7,143
5,267
As of December 31, 2019
Income tax related to other income and expense components with a charge or
credit to net equity
Amount before taxes
(expense) gain
(Expense) income for
income taxes
Amount after taxes
Gain (loss) from defined benefit plans
Cash flow hedge
Reserve for gains (losses) from financial assets measured at fair value through
other comprehensive income
Total
ThUS$
ThUS$
ThUS$
(3,310)
1,908
1,152
(250)
702
(2,683)
(311)
(2,292)
(2,608)
(775)
841
(2,542)
(j)
Explanation of the relationship between (expense) benefit for tax purposes and accounting income.
Based on IAS 12, paragraph 81, letter “c”, the company has estimated that the method that discloses the most
significant information for users of the financial statements is the numeric conciliation between the tax expense
(income) and the result of multiplying the accounting profit by the current rate in Chile. The aforementioned choice
is based on the fact that the Company and subsidiaries established in Chile generate a large part of the Company’s
tax expense (benefit). The amounts provided by subsidiaries established outside Chile have no relative importance
in the overall context.
Reconciliation between the tax income (expense) and the tax calculated by multiplying accounting income by the
Chilean corporate income tax rate.
Income Tax Expense (Benefit)
Consolidated income before taxes
Income tax rate in force in Chile
Tax expense using the statutory tax rate
Net effect of royalty tax payments
Effect of fines affected by article 21 and passive income
Tax effect of revenue from regular activities exempt from taxation
Tax rate effect of non-tax-deductible expenses for determining taxable profit (loss)
Tax effect of tax rates supported abroad
Effects of changes resulting from classifying a permanent item as a temporary one
Other tax effects from reconciliation between accounting gains and tax expenses
(Expense) Benefit
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
238,538
27%
(64,405)
(4,659)
(1,804)
1,786
(2,987)
(2,077)
4,826
(859)
390,622
27%
(105,468)
(4,314)
(724)
2,376
(2,128)
(252)
-
491
Tax expense using the effective tax rate
(70,179)
(110,019)
315
10) FINANCIAL REPORTS
(k)
Tax periods potentially subject to verification:
The Group’s Companies are potentially subject to income tax audits by tax authorities in each country These audits
are limited to a number of interim tax periods, which, in general, when they elapse, give rise to the expiration of
these inspections.
Tax audits, due to their nature, are often complex and may require several years. Below, we provide a summary of
tax periods that are potentially subject to verification, in accordance with the tax regulations in force in the country
of origin:
(i)
Chile
According to article 200 of Decree Law No 830, the taxes will be reviewed for any deficiencies in terms of payment
and to generate any taxes that might arise. There is a 3-year prescriptive period for such review, dating from the
expiration of the legal deadline when payment should have been made. This prescriptive period can be extended to
6 years for the revision of taxes subject to declaration, when such declaration has not been filed or has been presented
with maliciously false information.
(ii)
United States
In the United States, the tax authority may review tax returns for up to 3 years from the expiration date of the tax
return. In the event that an omission or error is detected in the tax return of sales or cost of sales, the review can be
extended for a period of up to 6 years.
(iii) Mexico:
In Mexico, the tax authority can review tax returns up to 5 years from the expiration date of the tax return.
(iv)
Spain:
In Spain, the tax authority can review tax returns up to 4 years from the expiration date of the tax return.
A subsidiary of the Company, SQM Iberian S.A., is being reviewed by the Spanish Tax Authority. This audit could
involve adjustments to tax returns filed in Spain.
(v)
Belgium:
In Belgium, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return if no
tax losses exist. In the event of detecting an omission or error in the tax return, the review can be extended for a
period of up to 5 years.
On December 31, 2019, a current tax of ThUS$ 1,068 was recognized, which corresponds to a difference in taxes in
SQM Europe N.V. determined at the end of an audit of transfer prices in the 2017 trade year.
(vi)
South Africa:
In South Africa, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return.
In the event that an omission or error in the tax return is detected, the review can be extended for a period of up to 5
years.
A subsidiary of the Company, SQM Africa Pty., is being reviewed by the South African Tax Authority. This audit
could involve adjustments to tax returns filed in South Africa.
316
10) FINANCIAL REPORTS
Note 30 Assets held for sale
The non-current assets held for sale and the components of the disposal groups classified as held for sale are
presented in the Consolidated Statement of Financial Position under the item “Non-current assets or groups of assets
classified as held for sale”.
The following table shows the movements in assets held for sale:
Assets held for sale
Land
Mining rights
Total assets held for sale
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
1,493
136
1,629
2,454
-
2,454
317
10) FINANCIAL REPORTS
Note 31 Events occurred after the reporting date
31.1 Authorization of the financial statements
The consolidated financial statements of the Company and its subsidiaries, prepared for the period ended December
31, 2020, were approved and authorized for issuance by the Company´s Board of Directors on March 3, 2021.
31.2 Disclosures on events occurring after the reporting date
The total financial impact of COVID-19 cannot be reasonably estimated at this time, due to uncertainty as to its
severity and duration. It was anticipated that average sales volumes and prices will depend on the duration of the
coronavirus in different markets, the efficiency of the measures implemented to contain the spread of the virus in
each country, and the fiscal and national incentives that can be implemented in different jurisdictions to promote
economic recovery. The Company continues to monitor and evaluate the spread of the coronavirus and its impact
on our operations, business, financial condition and results of operations.
On November 11, 2020, the DOJ presented a motion to dismiss the criminal information against the Company
notified in Note 23. This motion was granted by the United States District Court for the District of Columbia on
January 19, 2021. Note 23 contains further details.
An extraordinary shareholders' meeting held on January 22, 2021 resolved, among other matters, to approve an
increase in the Company’s capital of US$ 1,100,000,000 by issuing 22,442,580 Series B shares, to be offered
preferentially and under the same conditions only to Series B shareholders. Pursuant to Article 69 N° 5 of Law
18,046 on Corporations, the approval of this resolution grants the dissenting Series A shareholders the right to
withdraw from the Company, upon payment by the Company of the value of their shares. A dissenting shareholder
will be considered to be a Series A shareholder who at the meeting has opposed the resolution giving the right to
withdraw, or who did not attend the meeting, but expressed their dissent in writing to the Company within 30 days
of the date of the extraordinary shareholders' meeting, which is by February 21, 2021.
On January 7, 2021, Ocaña y Vega Limitada filed for arbitration against the Company to claim damages associated
with the early termination of two construction contracts. The arbitration claim is valued at approximately ThUS$
377.
On January 25, 2020, a sub-contractor´s employee sued the Company for compensation for a work-related accident
in the sum of approximately ThUS$718.
On February 9, 2021, two of the Company´s subsidiaries signed an agreement to conclude a dispute related to sales
contracts and share of the joint venture with Sichuan SQM Migao Chemical Fertilizers Co Ltd.The Company
received US$ 11.5 million as a result of this settlement.
On February 17, 2021, the Company reported that the Board of Directors approved the investment in the Mount
Holland lithium project in Australia. This project is a joint venture with Wesfarmers Limited. The Company's share
of the investment in the project is expected to reach approximately US$700 million between 2021 and 2025,
according to information provided in the final feasibility study.
On February 23, 2021, the Company informed the CMF that the declaratory public deed referred to in the
extraordinary shareholders' meeting of the Company held on January 22, 2021, where it was agreed, among other
matters, to increase the share capital by US$1,100,000,000, through the issuance of 22,442,580 Series B shares, to
be issued, subscribed and paid within the term expiring on January 22, 2024, and which will be offered preferentially
and under the same conditions to Series B assignees of the options and/or third parties, which was subject to the
Resolutory Condition requiring the exercise of the aforementioned right to withdraw of more than 0.5% of the total
Series A shares of the Company, all under the terms and conditions agreed at the Shareholders' Meeting.
318
10) FINANCIAL REPORTS
The Declaratory Deed:
(a)
(b)
(c)
establishes the waiver by the Company's board of directors, at an extraordinary meeting held on February
20, 2021, of the Resolutory Condition;
establishes that the legal term of 30 days for the exercise of the right to withdraw from the Capital Increase
expired on February 21, 2021, and only one shareholder expressed their intention to exercise this right, for
a total of 648 Series A shares, representing approximately 0.0004% of the total Series A shares. Therefore,
the Resolutory Condition, had it not been for the waiver indicated above, would not have been fulfilled and
would have deemed to have failed; and
establishes that pursuant to the provisions of the Meeting: (i) the Capital Increase and related matters have
become effective as of February 1, 2021, the date on which the minutes of the Meeting were legalized in a
public deed; (ii) the Capital Increase and related matters have become final, since the Resolutory Condition
was waived by the Company's board of directors and would have failed, in any case, as the right to withdraw
was exercised for less than 0.5% of the total Series A shares within the legal term; and (iii) with the
execution of the Declaratory Deed, the requirements and formalities contemplated in the Meeting were
fully met.
On March 3, 2021, the Board of Directors agreed to amend the general policy on regular transactions with related
parties, approved at the meeting held on November 21, 2018, and it also approved a revised text of the policy, which
is transcribed below:
1.
Regular transactions between the Company and Soquimich Comercial S.A., Ajay SQM Chile S.A., Ajay
North America, Ajay Europe SARL, SQM Vitas Fzco, SQM Vitas Holland, SQM Vitas Brasil
Agroindustria, SQM Vitas Perú S.A.C., Abu Dhabi Fertilizer Industries WWL, Plantacote NV and Pavoni
& C. SpA. are as follows:
(a)
(b)
(c)
(d)
Any sale, marketing, distribution and supply of raw materials, by-products and products extracted,
processed or marketed by the Company in any capacity by the aforementioned subsidiaries and
affiliated companies.
Any advisory services provided by the Company related to the activities referred to in (a) above,
and the procurement of such services by the aforementioned subsidiaries and affiliated companies;
legal,
Any advisory services covering financial, accounting, administrative,
infrastructure, advertising, IT, management, insurance, personnel selection, hiring, training and
any general back office services provided by the Company, and the procurement of such services
by the aforementioned subsidiaries and affiliated companies.
taxation,
Any working capital finance provided by the Company to the aforementioned subsidiaries and
affiliated companies not exceeding US$ 5 million in a 12 consecutive month period, based on these
subsidiaries as a whole.
2.
3.
Any engineering, environmental and other specialized studies provided by the Company to study, develop
and construct mines related to the Mt. Holland project, and all ancillary activities required to complete those
studies are regular transactions between the Company and Covalent Lithium Pty Ltd.
The following transactions with related parties may be performed without complying with the requirements
and procedures of Article 147 of Corporation Law, if they are regular, ordinary and required for the
Company's normal business:
(a)
Any procurement from Empresa Nacional de Telecomunicaciones S.A. and Entel PCS
Telecomunicaciones S.A. of telecommunications, computer and technology services in general,
including the purchase, sale, lease and supply of equipment and goods required to operate and
maintain these services, for amounts not exceeding US$ 5 million over a 12 consecutive month
period, and
(b)
Any procurement from Banco de Chile of any kind of financial or brokerage transactions,
purchases and sales of foreign currencies and other usual treasury transactions.
319
10) FINANCIAL REPORTS
4.
The Board of Directors also unanimously agreed to expressly adopt a generally applicable authorization
that allows the Company to procure the following transactions (i) those that are not a material amount, and
(ii) those between legal entities in which the Company directly or indirectly owns at least 95% of the
counterparty, all without the need to comply with the requirements and procedures in paragraphs 1) to 7)
of Article 147 of Corporation Law. The Board of Directors has defined transactions with related parties that
are a material amount as (a) those that total over 3,000 UF over a 12 consecutive month period for directors,
principal executives, their related persons, their spouses or relatives up to the second degree of
consanguinity, and any entity controlled directly or indirectly by any of them, and (b) the threshold
determined in accordance with paragraph a) of Article 147 of Corporation Law for all other counterparties.
On March 3, 2021, the Board of Directors agreed to call an ordinary general shareholders' meeting for April 23,
2021.
Management has no knowledge of other significant events occurring between December 31, 2020 and the date of
issue of these consolidated financial statements, which could have a significant effect on these.
320
Report of Accounting Inspectors
10) FINANCIAL REPORTS
321
10) FINANCIAL REPORTS
Reasoned Analysis of the Financial Situation
1 Analysis of the Consolidated Statements of Financial Position
Consolidated Statements of Financial Position
(in millions of US$)
December 31, 2020
December 31, 2019
Total current assets
Cash and cash equivalents
Other current financial assets
Accounts receivable (1)
Current inventories
Other current assets
Total non-current assets
Other non-current financial assets
Investments in related companies
Property, plant and equipment
Right-of-use assets
Other non-current assets
Total assets
Total current liabilities
Other current financial liabilities
Current lease liabilities
Other liabilities
Total non-current liabilities
Other non-current financial liabilities
Non-current lease liabilities
Other non-current liabilities
Total equity
Equity attributable to the owners of the parent company
Minority interests
Total liabilities and equity
Liquidity (2)
2,569.3
509.1
348.1
427.8
1,093.0
191.3
2,249.2
51.9
86.0
1,737.3
30.1
343.9
4,818.5
475.9
69.0
5.5
401.4
2,180.0
1,899.5
25.5
255.0
2,162.6
2,123.1
39.5
4,818.5
5.4
2,682.2
588.5
505.5
460.4
983.3
144.4
2,002.0
8.8
109.4
1,569.9
37.2
276.7
4,684.2
776.9
291.1
7.7
478.1
1,772.8
1,488.7
30.2
253.9
2,134.5
2,086.30
48.2
4,684.20
3.5
(1) Trade and other accounts receivable, current + Accounts receivable from related companies, current
(2) Current assets / Current liabilities
322
10) FINANCIAL REPORTS
1.1 Analysis of Consolidated Statement of Financial Position
As of December 31, 2020, the company’s total assets were MUS$ 4,818.5, which represents an increase of
approximately 3% in comparison to MUS$ 4,684.2 as of December 31, 2019. This difference between the two periods
is primarily due to the variation in the following items:
Current assets decreased by approximately 4%, from MUS$ 2,682.2 registered at the close of the prior year to MUS$
2,569.3 for the current period.
• Cash and cash equivalents decreased by MUS$ 79.4 (13%), closing at MUS$ 509.1 on December 31. The
account details can be found in Note No. 11.
• Other current financial assets decreased by MUS$ 157.4 (31%), closing at MUS$ 348.1 on December 31. The
account details can be found in Note No. 14.
• Accounts receivable decreased by MUS$ 32.6 (7%), closing at MUS$ 427.8 on December 31. The account
details can be found in Notes No. 13 and 14.
• Current inventories increased by MUS$ 109.7 (11%), closing at MUS$ 1,093.0 on December 31. The account
details can be found in Note No. 12.
Non-current assets increased by approximately 12%, from MUS$ 2,002.0 registered at the close of the prior year to
MUS$ 2,249.2 for the current quarter.
• Other non-current financial assets increased by MUS$ 43.1 (492%), closing at MUS$ 51.9 on December 31.
The account details can be found in Note No. 14.
• Property, plant and equipment increased by MUS$ 167.4 (11%), closing at MUS$ 1,737.3 on December 31.
The account details can be found in Note No. 17.
As of December 31, 2020, the company’s total liabilities were MUS$ 2,655.9, which represents an increase of
approximately 4% in comparison to MUS$ 2,549.7 as of December 31, 2019. This difference between periods is
primarily due to the variation in the following items:
Current liabilities decreased by approximately 39%, from MUS$ 776.8 registered at the close of December last year
to MUS$ 475.9 for the current quarter.
• Other current financial liabilities decreased by MUS$ 222.2 (76%), closing at MUS$ 69.0 on December 31.
The account details can be found in Note No. 14.
• Current lease liabilities decreased by MUS$ 2.2 (28%), closing at MUS$ 5.5 on December 31. The account
details can be found in Note No. 15.
• Other current liabilities decreased by MUS$ 76.6 (16%), closing at MUS$ 401.4 on December 31. The
account details can be found in Notes No. 13, 14, 19, 20 and 29.
Non-current liabilities increased by approximately 23%, from MUS$ 1,772.9 registered at the close of the prior year
to MUS$ 2,180.0 for the current quarter.
• Other non-current financial liabilities increased by MUS$ 410.8 (28%), closing at MUS$ 1,899.5 on
December 31. The account details can be found in Note No. 14.
• Non-current lease liabilities decreased by MUS$ 4.7 (15%), closing at MUS$ 25.5 on December 31. The
account details can be found in Note No. 15.
The consolidated financial statements of Sociedad Química y Minera de Chile S.A. and its subsidiaries have been
prepared in accordance with the International Financial Reporting Standards (herein IFRS) and represent the
comprehensive and explicit application without reserve of the cited international standards issued by the International
323
10) FINANCIAL REPORTS
Accounting Standards Board (IASB). Should any discrepancies arise between IFRS and CMF instructions, the latter
will prevail.
These consolidated financial statements are a true reflection of the equity and financial situation of the company and
the results of its operations, changes in the recognized income and expense statement and in the cash flow, which have
arisen during the period ended on these dates.
The main assets and liabilities have been valued in accordance with the following:
Inventories: The Company measures inventories at the lower of the cost and net realizable value. The value of finished
products and work in progress includes the direct cost of materials and, when applicable, labor costs, the indirect costs
incurred in transforming raw materials into finished products, and general expenses incurred in carrying inventories to
their current location and conditions. The method used to determine the cost of inventories is the weighted average
cost.
Commercial discounts, rebates obtained, and other similar entries are deducted in the determination of the acquisition
value.
The net realizable value represents the estimate of the sales price, less all the estimated costs involved in making the
finished product and the costs that will be incurred in the commercialization, sales, and distribution processes.
The Company conducts an evaluation of the net realizable value of inventories at the end of each year, recording an
estimate with a charge to profit or loss when these are overvalued. When the circumstances that previously caused a
decrease have ceased to exist, or when there is clear evidence of an increase in net realizable value due to a change in
the economic circumstances or prices of primary raw materials, the previous estimate undergoes a modification.
The valuation of obsolete, defective or slow-moving products has been reduced to its estimated realizable value.
The provisions on company inventories have been constituted based on a technical study that covers the different
variables that affect the products in stock (density, humidity, etc.).
Raw materials, supplies and materials are recorded at the lower value between acquisition cost or market value. The
acquisition cost is calculated according to the average annual price method.
Property, plant and equipment: Tangible assets are valued at acquisition cost, net of accumulated depreciation and
any impairment losses it may have experienced.
324
10) FINANCIAL REPORTS
1.1
Consolidated Income Statements
Consolidated Income Statements
(in millions of US$)
Fourth quarter
Accumulated as of
December 31
2020
2019
2020
2019
Income
513.8
472.2
1,817.2
1,943.7
Lithium and Derivatives
Specialty Plant Nutrition (1)
Iodine and Derivatives
Potassium Chloride and Potassium Sulfate
Industrial Chemicals
Other Income
Cost of Sales
Depreciation and Amortization
Gross Profit
Administrative Expenses
Finance Costs
Finance Income
Exchange Differences
Others
136.9
179.1
71.9
66.3
53.1
6.5
(335.3
(46.0)
(338.1)
99.7
172.8
93.6
49.9
47.0
9.2
(282.7)
(51.6)
(338.9)
383.4
701.7
334.7
209.3
160.6
27.5
505.7
723.9
371.0
212.2
94.9
36.0
(1,130.4)
(203.9)
(1,182.3)
(201.4)
(953.0)
(1,049.2)
132.5
137.8
482.9
560.1
(32.4)
(17.1)
1.2
2.6
(0.7)
(33.4)
(18.0)
7.0
(1.1)
1.9
(107.0)
(82.2)
13.7
(4.4)
(64.4)
(117.2)
(76.9)
26.3
(2.2)
0.6
Profit (loss) before tax
86.1
94.1
238.5
390.6
Income tax expense
(17.8)
(26.0)
(70.2)
(110.0)
Profit for the year
68.3
68.2
168.4
280.6
Profit attributable to non-controlling interest
1.3
1.3
3.8
2.5
Profit attributable to owners of the parent
Earnings per share (US$)
67.0
0.25
66.9
0.25
164.5
0.63
278.1
1.06
(1) Includes other specialty plant nutrients
325
10) FINANCIAL REPORTS
1.2.1 Analysis based on business areas and market variations
Lithium and its Derivatives
Income from lithium and derivatives totaled US$ 383.4 million during the twelve months ended on December 31,
2020, a decrease of 24.2% over the US$ 505.7 million reported for the same period in 2019.
Income from lithium and derivatives during the fourth quarter of 2020 increased by 37.3% over the fourth quarter of
2019. Total income was US$ 136.9 million during the fourth quarter of 2020 in comparison to the US$ 99.7 million
during the fourth quarter of 2019.
In 2020, we believe that the total market demand for lithium was approximately 330,000 metric tonnes, a growth of
6% over 2019, while our volumes in this market grew more than 40% over the same period. It is important to note that
the growth in sales of electric vehicles in 2020 represented a 40% increase over 2019, and this increase in the fourth
quarter of 2020 was approximately 120% higher than the same period the previous year. We hope that this growth
continues in 2021 and we believe that the growth in demand for lithium will be almost 25% this year and will ultimately
reach between 900,000 and 1 million metric tonnes in 2025.
Given these strong market growth indicators, our installed capacity and the quality of our production, we believe that
our sales volumes in 2021 will increase, reaching over 80,000 metric tonnes for the year.
Our sales volumes grew almost 50% in the fourth quarter of 2020 in comparison to the third quarter of the same year,
while our average price during this period was stable at around US$ 5,300 per metric tonne. We believe that this may
be the end of the low-price trend and that we may see higher prices during the first half of 2021.
Given these trends, we are still particularly optimistic about the long-term growth of the lithium market. For this reason,
the Board of Directors recently approved the investment in the Mt. Holland lithium project in Western Australia, a
50/50 joint venture with our partner Wesfarmers Limited. Based on information provided in the Updated Definitive
Feasibility Study (UDFS), it is expected that the participation of SQM in the investment of the project will reach
approximately US$ 700 million between 2021-2025. The UDFS confirms an initial expected production of 50,000
metric tonnes of battery-grade lithium hydroxide with the first in line production during the second half of 2024 if all
the necessary permits are received as anticipated. We plan to purchase the main equipment and start construction in
the seco0nd half of 2021. We believe that we are one of the lower-cost lithium producers and we anticipate that the
project will also be positioned competitively in terms of costs in comparison to other competitors.
The gross margin of the lithium and derivatives segment(3) represented approximately 18% of the consolidated gross
margin of SQM for the twelve months that ended on December 31, 2020.
Specialty Plant Nutrition (SPN)
Income from our second line of business, Specialty Plant Nutrition, for the twelve months ending on December 31,
2020 totaled US$ 701.7 million, a reduction of 3.1% compared to the US$ 723.9 million reported for the twelve months
ending December 31, 2019.
During the fourth quarter of 2020, income reached US$ 179.1 million, an increase of 3.6% compared to the US$ 172.8
million reported during the fourth quarter of 2019.
326
10) FINANCIAL REPORTS
The specialty plant nutrition line of business continues to be an important segment within our diverse portfolio and we
believe that the growth in demand in this market was approximately 5% in 2020 and we hope to see the same growth
in demand in 2021. Our sales volumes in 2020 were more or less the same as the previous year, decreasing by 0.5%.
Prices in the fourth quarter of 2020 increased more than 4% in comparison to the third quarter of the same year.
As an integrated potassium chloride and potassium nitrate producer, the higher prices for potassium chloride that we
are seeing in the market should not have a significant impact on our production cost, and at the same time, our
consolidated distribution network could enable us to reduce part of the impact of the higher transportation costs that
we are seeing in the market. In consequence, although we believe that we are the lowest-cost producer in this market,
we believe that our competitive market position should be stronger in 2021.
The gross margin of the SPN segment represents approximately 34% of the consolidated gross margin of SQM for
the twelve months that ended on December 31, 2020.
Iodine and its derivatives
Income from the sale of iodine and its derivatives during the twelve months ending on December 31, 2020 were US$
334.7 million, a decrease of 9.8% compared with the US$ 371.0 million generated during the twelve months ending
on December 31, 2019.
Sales revenue from iodine and its derivatives for the fourth quarter of 2020 was US$ 71.9 million, showing a decrease
of 23.2% in comparison with the US$ 93.6 million reached during the fourth quarter of 2019.
The iodine market was affected by the COVID-19 pandemic during 2020 and as a result the total market demand
decreased by approximately 9% last year. We believe that we will see a significant recovery during 2021 as the impact
of the pandemic dissipates, primarily led by the X ray contrast media, LCD and the pharmaceutical markets, and we
hope to increase our market share during the year. We have announced plans to increase our capacity in this business
line to ensure that we have adequate capacity to meet the future demand.
During the last quarter of 2020, our sales volumes were still affected by a lower consumption throughout the iodine
supply chain. The demand has shown a positive trend during the first months of 2021 and we anticipate that our sales
volumes during the first quarter may be higher than those reported for the fourth quarter of 2020. The average prices
in the iodine and derivatives business line were stable on a quarterly basis throughout the year.
The gross margin of the iodine and its derivatives segment represents approximately 34% of the consolidated gross
margin of SQM for the twelve months that ended on December 31, 2020.
Potassium Chloride and Potassium Sulfate (MOP & SOP)
Revenue from potassium chloride and potassium sulfate for the twelve-month period ending December 31, 2020
totaled US$ 209.3 million, a decrease of 1.3% from the same period in 2019, when revenue was US$ 212.2 million.
Revenue from potassium chloride and potassium sulfate increased by 32.9% in the fourth quarter of 2020, reaching
US$ 66.3 million, in comparison to US$ 49.9 million registered during the fourth quarter of 2019.
We believe that the potassium chloride market exceeded 67 metric tonnes in 2020, an increase of approximately 3
million metric tonnes in comparison to 2019. The average potassium chloride prices during the fourth quarter were
around US$ 244/metric tonne, with no changes over the third quarter. During the first months of 2021, we have seen
327
10) FINANCIAL REPORTS
higher prices, which leads us to believe that we will see higher prices during the rest of the year, given the expected
growth in demand in 2021.
Our sales volumes for potassium chloride and potassium sulfate for the twelve months ending on December 31, 2020
totaled approximately 730,000 metric tonnes, exceeding our expectations. We believe that our sales volumes in 2021
will be similar to the sales volumes reported for 2020.
The gross margin of the potassium chloride and potassium sulfate segment represented approximately 5% of the
consolidated gross margin of SQM for the twelve months that ended on December 31, 2020.
Industrial Chemicals
Sales revenue for industrial chemicals for the twelve months ending on December 31, 2020 reached US$ 160.6 million,
a 69.3% increase over the US$ 94.9 million registered for the same period in 2019.
Revenue for the fourth quarter of 2020 totaled US$ 53.1 million, with an increase of 13.0% over the revenue numbers
for the fourth quarter of 2019, which reached US$ 47.0 million.
Revenue from industrial chemical products for the twelve months ending on December 31, 2020 increased significantly
over the revenue reported for the same period the previous year. This was the result of the anticipated sales volumes
of solar salts, which reached 160,000 metric tons. We believe that in 2021, our sales volumes related to solar salts will
reach approximately 200,000 metric tonnes in addition to the sales volumes associated with the traditional uses of this
business line.
The gross margin of the industrial chemicals business represents approximately 9% of the consolidated gross margin
of SQM for the twelve months that ended on December 31, 2020.
Other Commodity Fertilizers and Other Revenue
Sales revenue for other commodity fertilizers and other revenue reached US$ 27.5 million for the twelve months ending
on December 31, 2020, a number below the US$ 36.0 million registered for the same period in 2019.
Financial Reporting
Cost of sales
The cost of sales, excluding total expenses for depreciation and amortization, reached US$ 1,130.4 million for the
twelve months ending on December 31, 2020, a decrease of 4.4% in comparison to the US$ 1,182.3 million for the
same period in 2019.
Administrative expenses
Administrative expenses totaled US$ 107.0 million (5.9% of revenue) for the twelve months ending on December 31,
2020, in comparison to the US$ 117.2 million (6.0% of revenue) registered for the twelve months ending on December
31, 2019.
Finance costs, net
328
10) FINANCIAL REPORTS
The net finance costs for the twelve months ending on December 31, 2020 were US$ 68.5 million in comparison to
the US$ 50.6 million registered for the twelve months ending on December 31, 2019.
Income Tax Expenses
Income tax expenses reached US$ 70.2 million for the twelve months ending on December 31, 2020, which represents
an effective tax rate of 29.4%, in comparison to an income tax expense of US$ 110.0 million during the twelve months
ending on December 31, 2019. The Chilean corporate tax rate was 27.0% for the 2020 and 2019 period.
Others
The adjusted EBITDA(3) for the twelve months ending on December 31, 2020 was US$ 579.8 million, less than the
US$ 644.2 million registered for the twelve months ending on December 31, 2019. The adjusted EBITDA margin was
31.9% for the twelve months ending on December 31, 2020, compared to the adjusted EBITDA of 33.1% for same
period in 2019. The adjusted EBITDA margin for the fourth quarter of 2020 was approximately 28.4%.
Notes:
1. A significant portion of the cost of sales for SQM corresponds to costs associated with shared production processes (mining, leaching,
etc.), which are distributed between different final products. To estimate the gross margin per business line for both periods covered by
this report, the Company used similar criteria to assign the shared costs between the different business areas. This distribution of the
gross margin must be used only as reference as a general approximation of the margins per business line.
2. Adjusted EBITDA = EBITDA - Other revenue - Other profit (loss) - Proportion of profit from associates and joint ventures accounted
for using the equity method + Other expenses by function + Net profit due to impairment in the reversion (loss) of financial assets -
Financial revenue - Currency differences. EBITDA = Net income + Depreciation and amortization expenses + Finance expenses +
Income taxes. Adjusted EBITDA margin = Adjusted EBITDA/Revenue. We have included the adjusted EBITDA to provide investors
with a complementary measure to our operating performance. We believe that the adjusted EBITDA is an important complementary
measure to our operating performance because it eliminates elements that have less influence on our operating performance and therefore
highlights the trends in our main business, which would otherwise not be evident if we solely relied on the IFRS financial measures. As
an analytical tool, the adjusted EBITDA has significant limitations. For example, the adjusted EBITDA does not reflect (a) our cash
expenses or future requirements for capital expenses or contractual commitments; (b) cash changes or requirements for our working
capital needs; (c) significant interest expenses, or cash requirements needed to pay interest or capital payment of our debt; and (d)
payment of taxes or distributions to our main office to make payments on tax that is attributable to us and represents a reduction in the
cash available to us. Even if we consider that the elements excluded in the calculation of non-IFRS measures are less relevant to
evaluating our performance, some of these elements may continue to appear and in consequence, may reduce our available cash.
329
10) FINANCIAL REPORTS
Revenue as per geographical distribution
Latin America and
the Caribbean
9%
Europe
21%
Asia and Others
38%
Chile
8%
North America
24%
330
2. Financial Ratios
Liquidity
December
31, 2020
December
31, 2019
Current liquidity
Times
5.40
Acid Test Ratio
Times
3.10
3.45
2.19
Leverage
Debt ratio
Short-term debt proportion
Long-term debt proportion
December
31, 2020
December
31, 2019
122.8
119.5
17.9
82.1
30.5
69.5
%
%
%
Activity
Total assets
December
31, 2020
December
31, 2019
MUS$
4,818
4,684
Inventory turnover
Inventory permanence
%
%
1.22
295
1.41
256
10) FINANCIAL REPORTS
Current assets
Current liabilities
(Current Assets - Inventories)
Current Liabilities
Current liabilities
Total equity
Current liabilities
Total Debt
Current Liabilities
Total debt
LTM Cost of sales
Inventories
360 days
Inventory turnover
Profitability
December
31, 2020
December
31, 2019
Earnings (loss) per share
Times
0.64
Results of equity
Return on assets
%
%
7.8
9.8
1.07
13.1
12.8
LTM net profit (loss)
Subscribed shares
LTM net profit (loss)
Equity
(Gross Earnings - Admin. Expenses) LTM
Assets (1)
(1) Assets = Total Assets - (Cash and cash equivalents + Financial assets + Investments in related companies)
331
10) FINANCIAL REPORTS
2.1 Analysis of Financial Ratios
Liquidity:
• Current Liquidity Ratio: This increase in the ratio can be explained as the result of a decrease in the Current
Assets (CA) (-112.9 million, 4.2%), and a greater decrease in both the amount and the proportion in the
Current Liabilities (CL) (-300.9 million), resulting in a higher ratio. The main variation in assets was seen in
the increase of 110 million in Inventories, the decrease of 79 million in Cash and Cash Equivalents and the
decrease in Other Current Financial Assets of 157 million, more precisely 140 million of the time deposits
greater than 90 days and 17 million of the hedging instruments covered by these. The greatest change in
liabilities was seen in Other Current Financial Liabilities, which decreased by 222 million, an amount
explained primarily by the payment of a US$ 250 million bond in April 2020, which as of December 2019
was in the account and the increase of almost 20 million of the hedging liabilities that cover debt; and the
decrease of 77 million in Other Current Liabilities, explained in large part by the decrease of 66 million in
Other Current Non-Financial Liabilities.
• Acid-Test Ratio: As mentioned in the previous ratio, there was an increase of 110 million in Current
inventories. If we take this amount out of the equation, we can see that the CA decreased by 223 million (-
13.1%), which is still lower in both the amount and proportion than the drop suffered by the CL, which leads
this ratio to increase.
Leverage:
• Leverage ratio: As seen, this ratio increased. While the CL decreased as mentioned above, the Non-Current
Liabilities (NCL) increased by 407 million (23.0%), making Total Liabilities increase by 106.2 million
(4.2%), and Equity increase by 28 million (1.3%), which means a direct increase in the ratio. The increase in
NCL is primarily explained by the increase of 411 million in Other Non-current Financial Liabilities, as a
result of the inclusion of the new bond of US$ 400 million, which was issued this year and will reach maturity
in 2050.
• Debt proportion: Given the aforementioned movements in the liability accounts, by decreasing the CL and
increasing the NCL, we can conclude that there is a direct effect meaning a decrease in the short-term debt
proportion and an increase in the long-term proportion.
Activity:
•
Inventory Turnover and Permanence: A decrease in the inventory turnover can be seen, due to the fact that
inventory increased by 110 million, close to 11.2%, while the LTM cost of sales decreased by 49.3 million, a
proportion close to 3.6%, primarily due to a decrease in sales for the year. Either of the recently mentioned
movements on its own causes the ratio to decrease, which means that when both effects are combined, it is
evident that the ratio will decrease, Due to this decrease, there is also an increase in the permanence of
inventory at 39 days, as both ratios are inversely proportional.
Return:
• Earnings (loss) per share: With the same number of shares, as there is a decrease of 112.2 million (40.0%) in
profit obtained in 2020, when compared to profit obtained in 2019, there is a decrease in this ratio. For further
details, see income statement.
• ROE: The decrease in this ratio was due to the decrease in LTM net profit (loss) in the amount and proportion
mentioned above, whereas equity increased in a smaller proportion, as mentioned below (28 million, 1.3%).
332
10) FINANCIAL REPORTS
• ROA: The decrease in this ratio was affected by both the decrease of 67.0 million (around 15.1%) in the
dividend and the increase in assets that affect this ratio, which increased by 351.5 million (approximately
10.1%).
3. Cash Flow Statement Analysis
The constitution of the main components of the flow of cash and cash equivalents as of December 31, 2020 and 2019
is as follows:
Flow Statement of Cash and Cash Equivalents
Net cash flows provided by operating activities
Net cash flows used in investing activities
Net cash flows provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalent at beginning of period
Cash and cash equivalent at end of period
4. Market Risk Analysis
December 31, 2020
December 31, 2019
MUS$
MUS$
182,234
(167,091)
(94,132)
(439)
588,530
509,102
426,971
(485,471)
105,896
(14,932)
556,066
588,530
Interest rate: As of December 31, 2020, the Company’s current and non-current financial liabilities that accrue interest
are US$ 1,922.9 million. These primarily include the following types of financing:
i.
Unsecured debentures that accrue current and non-current interest (considering only capital): a US dollar bond
of US$ 300 million with a fixed interest rate of 3.625%; a US dollar bond of US$ 250 million with a fixed
interest rate of 4.375%; a US dollar bond of US$ 450 million with a fixed interest rate of 4.25%; a US dollar
bond of US$ 400 million with a fixed interest rate of 4.25%; a UF bond for the equivalent of US$ 134.0
million with a fixed dollar rate, through a Cross Currency Swap, of 6.24%; a UF bond for the equivalent of
US$ 58.7 million with a fixed dollar rate, through a Cross Currency Swap, of 4.47%; a UF bond for the
equivalent of US$ 134.2 million with a fixed dollar rate, through a Cross Currency Swap, of 5.11%; a UF
bond for the equivalent of US$ 106.9 million with a fixed dollar rate, through a Cross Currency Swap, of
5.45%.
ii.
A US dollar credit for US$ 70 million at a variable rate of LIBOR6M+1.1%.
As of December 31, 2020, the Company registers US$ 69.0 million as other current financial liabilities and US$ 1,899.5
million as other non-current financial liabilities.
333
10) FINANCIAL REPORTS
Exchange rate: The primary economic environment of SQM is United States dollars. However, given the
internationalization of the Company, it has operations in different countries that generate an exposure to exchange rate
variations in different currencies to the US dollar. Therefore, SQM maintains hedge contracts to mitigate the exposure
generated by its main mismatches (net assets of liabilities) in currencies other than the US dollar against the exchange
rate variation, updating these contracts weekly depending on the amount of assets and liabilities necessary to be covered
in currencies other than US dollar.
To ensure the difference between its assets and liabilities, as of December 31, 2020, the Company maintains the
following derivative instruments (as absolute value of the sum of its notional values): US$ 61.25 million in Chilean
peso/US dollar derivative instruments, US$ 55.8 million in Euro/US dollar derivative instruments, US$ 27.11 million
in South African rand/US dollar derivative instruments, US$ 58.0 million in Chinese renminbi/US dollar derivative
instruments and US$ 9.14 million in other currencies.
In addition, the Company maintained US$ 181.38 million in derivative instruments to cover their term deposit
investments in Chilean pesos.
To cover its expected net cash flows in Chilean pesos associated with the fertilizer trading business in Chile, as of
December 31, 2020, the Company did not maintain Chilean peso/US dollar derivative instruments. To cover its
expected net cash flows in Euros, as of December 31, 2020, the Company did not maintain Euro/US dollar derivative
instruments.
Commodities prices: The main commodities consumed by the Company are petroleum in all of its forms. The
Company currently has no hedge contracts that cover international price variations, but it does have long-term contracts
for energy supply.
As presented in the Company’s Annual Report, the markets where the Company operates are unpredictable, they are
exposed to significant variations in supply and demand and their prices are highly volatile. In addition, the supply of
certain fertilizers or chemical products, including certain products that the Company commercializes, varies primarily
based on production from the most important producers and their respective business strategies. Due to this, the
Company cannot predict with certainty the movements of demand, the competitor responses, or the fluctuations in
final prices of products. The aforementioned can generate significant impacts on the sales volumes of its products, on
the Company’s financial situation and on the price of its shares.
The report for the Consolidated Financial Statements as of December 31, 2020 provides a detailed analysis of the
risks associated with the Company’s business.
334
10) FINANCIAL REPORTS
10) B) SUMMARY FINANCIAL STATEMENTS
The summary consolidated or individual financial statements of all companies reported as required
by the CMF (ex)SVS General Rule No. 346, Section I, No. 2.1, Letter a. 4.2 are provided below, the
complete financial statements of such companies are available to the public in our offices and at the
offices of the CMF (ex)SVS.
335
SQM Potasio S.A. and Subsidiaries
Summary Consolidated Classified Statements of Financial Position
10) FINANCIAL REPORTS
Assets
Currents assets
Cash and cash equivalents
Trade receivables due from related parties, current
Current inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Other non-current assets
Total non-current assets
Total assets
Liabilities and Equity
Current liabilities
Other current financial liabilities
Trade payables due to related parties, current
Other current liabilities
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity
Equity attributable to owners of the Parent
Non-controlling interest
Total equity
Total liabilities and equity
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
154,643
191,623
84,010
351,069
636,963
245,229
375,613
1,358,842
1,016,487
293,425
1,309,912
2,668,754
104,929
785,237
887,737
227,105
1,114,842
1,900,079
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
1,835
1,086,514
205,366
1,293,715
191,736
33,708
225,444
1,519,159
946,557
203,038
1,149,595
2,668,754
3,532
509,616
169,456
682,604
191,056
14,619
205,675
888,279
853,456
158,344
1,011,800
1,900,079
336
SQM Potasio S.A. and Subsidiaries
Summary Consolidated Statements of Income
Consolidated Statements of Income
Revenue
Cost of sales
Gross profit
Profit from operating activities
Profit before taxes
Income tax expense
Profit for the year
10) FINANCIAL REPORTS
For the period from January to December of
the year
2020
ThUS$
1,290,815
(1,185,360)
105,455
75,224
63,372
(29,479)
33,893
29,791
4,102
33,893
2019
ThUS$
780,312
(556,296)
224,016
214,856
208,797
(54,906)
153,891
125,975
27,916
153,891
Profit attributable to Owners of the Parent
Profit (loss) attributable to Non-controlling interests
Profit for the year
Summary Consolidated Statements of Comprehensive Income
Summary Consolidated Statements of Comprehensive Income
Profit for the year
Changes in other comprehensive income
Total comprehensive income
Comprehensive income attributable to
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interest
For the period from January to December of
the year
2020
ThUS$
2019
ThUS$
33,893
163,953
197,846
142,193
55,653
197,846
153,891
(721)
153,170
125,394
27,776
153,170
337
10) FINANCIAL REPORTS
SQM Potasio S.A. and Subsidiaries
Summary Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows
For the period from January to December of the
year
2020
ThUS$
2019
ThUS$
Net cash generated from operating activities
349,989
259,551
Net cash generated used in investing activities
(213,920)
(150,299)
Net cash generated used in financing activities
(63,869)
(112,300)
Net decrease in cash and cash equivalents before the effect of
changes in the exchange rate
72,200
(3,048)
Effects of exchange rate fluctuations on cash held
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
(1,567)
70,633
84,010
154,643
(1,210)
(4,258)
88,268
84,010
338
SQM Potasio S.A. y Subsidiarias
Summary Consolidated Statements of Changes in Equity
10) FINANCIAL REPORTS
Statements of Changes in Equity
Share capital
Foreign
currency
translation
reserves
Reserve for
(losses) gains
from of
defined
benefit plans
Other
miscellaneous
reserves
Total Other
reserves
Retained
earnings
Equity
attributable to
owners of the
Parent
Non-
controlling
interests
Total equity
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Equity as of January 1, 2020
257,010
(3,923)
(1,145)
11,289
Net profit
Other comprehensive income
Comprehensive income
Dividends
Increase (decrease) in equity
Equity as of December 31, 2020
-
-
-
-
-
257,010
-
112,699
112,699
-
112,699
108,776
-
(69)
(69)
-
(69)
(1,214)
-
(228)
(228)
-
(228)
11,061
6,221
-
112,402
112,402
-
112,402
118,623
590,225
29,791
-
29,791
(49,092)
(19,301)
570,924
853,456
29,791
112,402
142,193
(49,092)
93,101
946,557
158,344
1,011,800
4,102
51,551
55,653
(10,959)
44,694
33,893
163,953
197,846
(60,051)
137,795
203,038
1,149,595
Statements of Changes in Equity
Share capital
Foreign
currency
translation
reserves
Reserve for
(losses) gains
from of
defined
benefit plans
Other
miscellaneous
reserves
Total Other
reserves
Retained
earnings
Equity
attributable to
owners of the
Parent
Non-controlling
interests
Total equity
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Equity as of January 1, 2019
257,010
(3,983)
Net profit
Other comprehensive income
Comprehensive income
Dividends
Increase (decrease) in equity
Equity as of December 31, 2019
-
-
-
-
-
-
60
60
-
60
257,010
(3,923)
(504)
-
(641)
(641)
-
(641)
(1,145)
339
11,289
-
-
-
-
-
11,289
6,802
-
(581)
(581)
-
(581)
6,221
562,434
125,975
-
125,975
(98,184)
27,791
590,225
826,246
125,975
(581)
125,394
(98,184)
27,210
853,456
148,944
27,916
(140)
27,776
975,190
153,891
(721)
153,170
(18,376)
(116,560)
9,400
36,610
158,344
1,011,800
10) FINANCIAL REPORTS
SQM Potasio S.A. and Subsidiaries
Detail of related parties and related party transactions
As of December 31, 2020, and 2019, the detail of transactions with related parties is as follows:
340
10) FINANCIAL REPORTS
SQM Potasio S.A. and Subsidiaries
Tax ID No
Company
Nature
Country of origin
Transaction
96.592.180-K Ajay SQM Chile
Other related parties Chile
96.592.180-K Ajay SQM Chile
Other related parties Chile
Sale of products
Services provided
79.770.780-5 SIT S.A.
79.770.780-5 SIT S.A.
Other related parties Chile
Current account interest
Other related parties Chile
Current account interest
79.768.170-9 Soquimich Comercial S.A.
Other related parties Chile
79.947.100-0 SQM Industrial S.A.
79.947.100-0 SQM Industrial S.A.
79.947.100-0 SQM Industrial S.A.
79.947.100-0 SQM Industrial S.A.
79.947.100-0 SQM Industrial S.A.
79.947.100-0 SQM Industrial S.A.
Associate
Associate
Associate
Associate
Associate
Associate
Chile
Chile
Chile
Chile
Chile
Chile
Sale of products
Sale of products
Dividends
Services provided
Current account interest
Current account interest
Purchase of property, plant and equipment
76.686.311-9 SQM Mag SPA
Common controller Chile
Purchase of property, plant and equipment
96.592.190-7 SQM Nitratos S.A.
96.592.190-7 SQM Nitratos S.A.
96.592.190-7 SQM Nitratos S.A.
93.007.000-9 SQM S.A.
93.007.000-9 SQM S.A.
93.007.000-9 SQM S.A.
Ajay Europe SARL
Ajay Europe SARL
Ajay North América
Soquimich European Holding
B.V.
Associate
Associate
Associate
Parent
Parent
Parent
Associate
Associate
Associate
Chile
Chile
Chile
Chile
Chile
Chile
France
France
Sale of products
Services provided
Current account interest
Current account interest
Sale of products
Services provided
Sale of products
Dividends
United States of America Dividends
Other related parties Netherlands
Current account interest
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
SQM (Shanghai) Chemicals Co.
Other related parties China
Sale of products
SQM Africa Pty. Ltd.
Other related parties South Africa
Sale of products
SQM Colombia S.A.S.
Subsidiary
Colombia
Sale of products
SQM Comercial de México S.A.
de C.V.
Associate
Mexico
SQM Ecuador S.A.
Other related parties Ecuador
SQM Europe N.V.
Other related parties Belgium
SQM Iberian S.A.
Other related parties Spain
SQM Internacional S.A.
Other related parties Belgium
SQM Japan Co. Ltd.
Associate
Japan
Sale of products
Sale of products
Sale of products
Sale of products
Sale of products
Sale of products
SQM North América Corp.
Other related parties United States of America Sale of products
SQM North América Corp.
Other related parties United States of America Current account interest
SQM Pavoni & C., SpA
Other related parties
Italy
SQM Vitas Brasil Agroindustria
Other related parties Brazil
SQM Vitas Perú S.A.C.
Other related parties Peru
Sale of products
Sale of products
Sale of products
341
As of
December
31, 2020
As of
Decembe
r 31, 2019
MUS$ MUS$
142
1
453
-
-
1
470
2
9,059
7,790
74,089
83,854
1,429
1,334
702
133
71
9
74
14,392
879
40
886
97
306
-
322
-
1,098
151
24,826
17,559
917
883
23,162
1,197
1,967
-
101,629
-
1,365
-
-
2,796
509
-
-
26,928
7,210
4,787
23,459
25,502
10,958
15,006
-
-
-
-
322,666
4,575
4,664
156,471
20,560
44,370
485
1,125
407
-
19,981
17,303
1,689
6,941
10) FINANCIAL REPORTS
SQM Potasio S.A. and Subsidiaries
Trade receivables due from related parties, current:
Tax ID No
Name
Nature
Country of origin Currency
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
2,358
-
7,037
3,607
11,123
-
-
-
14,154
32,911
3,229
12,355
25
4,420
12,668
70
4,027
41
77,391
37
1,491
4,463
216
2,358
21,341
4,787
3,594
14,668
157,303
3,044
65,335
1,185
41,558
-
16,611
25
-
12,227
65
6,968
-
-
-
-
-
-
191,623
351,069
Japan
Chile
United States of
America
United States of
America
France
Brazil
United Arab
Emirates
Peru
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Nitratos Naturais Do Chile Ltda.
Other related parties Brazil
SQM Africa Pty Ltd.
SQM Colombia SAS
Other related parties South Africa
Other related parties Colombia
SQM Corporation N.V.
Associate
Curacao
SQM Ecuador S.A.
SQM Europe N.V.
SQM Iberian S.A.
SQM Japan
96.592.190-7
SQM Nitratos S.A.
Other related parties Ecuador
Other related parties Belgium
Other related parties Spain
Associate
Associate
Foreign
SQM North America Corp.
Other related parties
79.768.170-9
Soquimich Comercial S.A.
Other related parties Chile
Foreign
SQM Comercial de México S.A. de C.V.
Associate
Mexico
Ajay North America
Ajay Europe SARL
Associate
Associate
SQM Vitas Brasil Agroindustria
Joint venture
SQM Vitas Fzco
SQM Vitas Perú S.A.C
SQM Korea LLC
Joint venture
Joint venture
Other related parties Korea
SQM (Shanghai) Chemicals Co.
Other related parties China
SQM Beijing Commercial Co. Ltd.
Other related parties China
SQM Pavoni & C., SpA
Joint venture
Italy
Foreign
SQM Migao (Sichuan) Fertil. (JV)
Joint venture
Foreign
Total
Abu Dhabi Fertilizer Industrie
Associate
China
Omán
342
SQM Potasio S.A. and Subsidiaries
Trade payables due to related parties, current:
Tax ID No
Name
Nature
10) FINANCIAL REPORTS
Country of
origin
Currency
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
Foreign
RS Agro Chemical Trading Corporation A.V.V.
Associate
Aruba
79.770.780-5
Serv. Integrales de Tránsito y Transf. S.A.
Other related parties
Chile
79.947.100-0
SQM Industrial S.A.
93.007.000-9
SQM S.A.
Associate
Matriz
Chile
Chile
Foreign
Covalent Lithium Pty Ltd.
Joint venture
Australia
79.768.170-9
Soquimich Comercial S.A.
Other related parties
Chile
77.114.779-8
SCM Búfalo
Associate
Chile
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
5,140
17,609
120,092
943,431
241
-
1
5,140
6,044
12,294
485,587
232
319
-
Total
1,086,514
509,616
343
SQM Industrial S.A. and Subsidiaries
Summary Consolidated Classified Statements of Financial Position
10) FINANCIAL REPORTS
Assets
Currents assets
Cash and cash equivalents
Trade receivables due from related parties, current
Current inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment (net)
Other non-current assets
Total non-current assets
Total assets
Liabilities and Equity
Current liabilities
Other current financial liabilities
Trade payables due to related parties, current
Other current liabilities
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity
Equity attributable to owners of the Parent
Non-controlling interests
Total equity
Total liabilities and equity
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
205,344
128,970
707,290
189,414
1,231,018
529,291
111,204
640,495
1,871,513
136,973
54,088
961,378
423,140
1,575,579
517,476
126,395
643,871
2,219,450
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
2,965
662,029
153,765
818,759
41,040
81,357
122,397
941,156
882,067
48,290
930,357
1,871,513
1,692
841,117
191,495
1,034,304
50,170
101,555
151,725
1,186,029
981,261
52,160
1,033,421
2,219,450
344
10) FINANCIAL REPORTS
SQM Industrial S.A. and Subsidiaries
Summary Consolidated Statements of Income
Consolidated Statements of Income
Revenue
Cost of sales
Gross profit
Profit from operating activities
Profit before taxes
Income tax expence
Profit for the year
Profit attributable to Owners of the Parent
Profit attributable to Non-controlling interests
Profit for the year
For the period from January to December of the
year
2020
ThUS$
2019
ThUS$
1,354,559
(1,095,890)
2,105,365
(1,874,158)
258,669
204,549
195,674
(42,535)
153,139
150,594
2,545
153,139
231,207
150,627
147,687
(40,444)
107,243
105,198
2,045
107,243
Summary Consolidated Statements of Comprehensive Income
Summary Consolidated Statements of Comprehensive Income
Profit for the year
Changes in other comprehensive income
Total comprehensive income
Comprehensive income attributable to
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interest
Total comprehensive income
For the period from January to December of the
year
2020
ThUS$
2019
ThUS$
153,139
(97,310)
55,829
50,819
5,010
55,829
107,243
(1,434)
105,809
103,822
1,987
105,809
345
SQM Industrial S.A. and Subsidiaries
Summary Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows
10) FINANCIAL REPORTS
For the period from January to December of
the year
2020
ThUS$
2019
ThUS$
Net cash flows generated from (used in) operating activities
153,716
(33,325)
Net cash flows generated from (used in) investing activities
Net cash flows generated from (used in) financing activities
Net decrease in cash and cash equivalents before the effect of changes in
the exchange rate
Effects of exchange rate fluctuations on cash held
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
(68,646)
(17,188)
67,882
489
68,371
136,973
205,344
(117,435)
142,468
(8,292)
180
(8,112)
145,085
136,973
346
SQM Industrial S.A. and Subsidiaries
Summary Consolidated Statements of Changes in Equity
10) FINANCIAL REPORTS
Statements of Changes in Equity
Share capital
Foreign
currency
translation
reserves
Reserve for
(losses) gains
from of
defined
benefit plans
Other
miscellaneous
reserves
Total Other
reserves
Retained
earnings
Equity
attributable to
owners of the
Parent
Non-controlling
interests
Total equity
Equity as of January 1, 2020
Net profit
Other comprehensive income
Comprehensive income
Dividends
Increase in Equity
Increase (decrease) in equity
Equity as of December 31, 2020
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
715,066
(12,022)
(4,505)
6,390
(10,137)
-
-
-
-
-
-
715,066
-
(100,623)
(100,623)
-
-
(100,623)
(112,645)
-
848
848
-
-
848
(3,657)
-
-
-
-
(13)
(13)
6,377
-
(99,775)
(99,775)
-
(13)
(99,788)
(109,925)
276,332
150,594
-
150,594
(150,000)
-
594
276,926
981,261
150,594
(99,775)
50,819
(150,000)
(13)
(99,194)
882,067
52,160
2,545
2,465
5,010
(8,880)
-
(3,870)
48,290
1,033,421
153,139
(97,310)
55,829
(158,880)
(13)
(103,064)
930,357
Statements of Changes in Equity
Share capital
Foreign
currency
translation
reserves
Reserve for
(losses) gains
from of
defined
benefit plans
Other
miscellaneous
reserves
Total Other
reserves
Retained
earnings
Equity
attributable to
owners of the
Parent
Non-controlling
interests
Total equity
Equity as of January 1, 2019
Net profit
Other comprehensive income
Comprehensive income
Dividends
Increase (decrease) due to transfers and other changes
Increase (decrease) in equity
Equity as of December 31, 2019
MUS$
MUS$
MUS$
MUS$
715,066
(11,950)
-
-
-
-
-
-
715,066
-
(72)
(72)
-
-
(72)
(12,022)
(3,201)
-
(1,304)
(1,304)
-
-
(1,304)
(4,505)
6,383
-
-
-
-
7
7
6,390
(8,768)
-
(1,376)
(1,376)
-
7
(1,368)
(10,137)
311,134
105,198
-
105,198
(140,000)
-
(34,802)
276,332
1,017,432
105,198
(1,376)
103,822
(140,000)
7
(36,171)
981,261
56,109
2,045
(58)
1,987
(5,936)
-
(3,949)
52,160
MUS$
1,073,541
107,243
(1,434)
105,809
(145,936)
7
(40,120)
1,033,421
347
10) FINANCIAL REPORTS
SQM Industrial S.A. and Subsidiaries
Balances and transactions with related parties
Detailed identification of the link between the Parent and subsidiary
As of December 31, 2020, and 2019, the detail of transactions with related parties is as follows:
348
SQM Industrial S.A. and Subsidiaries
10) FINANCIAL REPORTS
Tax ID No.
Company
Nature
Country of
origin
Transaction
As of December
31, 2020
As of December
31, 2019
ThUS$
ThUS$
Purchase products
Sale of fixed assets
-
-
Current account interest
17,720
167,481
1,019
13,537
66
-
-
-
1
1
290,466
237,617
2,436
3,386
542
-
-
13,828
13,619
92
522
2
41
-
609
2
70
26
130
183
1
183
-
21,360
16,034
-
-
-
-
-
-
-
2,486
3,446
573
1,509
83,854
272
9,963
72
774
2
27
886
-
-
-
-
-
-
-
-
3,955
29,573
17,197
4,096
1,280
40
2,359
47
3,152
1,929
96.592.190-7 SQM Nitratos S.A.
96.592.190-7 SQM Nitratos S.A.
96.592.190-7 SQM Nitratos S.A.
96.592.190-7 SQM Nitratos S.A.
96.592.190-7 SQM Nitratos S.A.
96.592.190-7 SQM Nitratos S.A.
93.007.000-9 SQM S.A.
93.007.000-9 SQM S.A.
93.007.000-9 SQM S.A.
93.007.000-9 SQM S.A.
93.007.000-9 SQM S.A.
79.626.800-K SQM Salar S.A.
79.626.800-K SQM Salar S.A.
79.626.800-K SQM Salar S.A.
79.626.800-K SQM Salar S.A.
79.626.800-K SQM Salar S.A.
Common parent
Common parent
Common parent
Common parent
Common parent
Common parent
Parent
Parent
Parent
Parent
Parent
Common parent
Common parent
Common parent
Common parent
Common parent
76.425.380-9 Exploraciones Mineras
Other related parties
96.651.060-9 SQM Potasio S.A.
96.651.060-9 SQM Potasio S.A.
79.768.170-9 Soquimich Comercial S.A.
79.768.170-9 Soquimich Comercial S.A.
79.768.170-9 Soquimich Comercial S.A.
79.768.170-9 Soquimich Comercial S.A.
79.768.170-9 Soquimich Comercial S.A.
79.947.100-0 SQM Industrial S.A.
Common parent
Common parent
Common parent
Common parent
Common parent
Common parent
Common parent
Other related parties
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Current account interest
Sale of product
Sale of services
Sale of services
Current account interest
Current account interest
Sale of services
Sale of fixed assets
Purchase products
Sale of product
Sale of services
Current account interest
Current account interest
Current account interest
Current account interest
Services received
Sale of product
Sale of services
Current account interest
Current account interest
Purchase of fixed assets
Sale of product
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
SQM Brasil Ltda.
Other related parties
Brasil
Purchase of fixed assets
Charlee SQM Thailand Co. Ltd.
Associate
Thailand
Sale of product
Coromandel SQM (*)
Joint venture
SQM Vitas Brasil Agroindustria (1)
Joint venture
SQM Vitas Perú S.A.C. (1)
Joint venture
Plantacote NV (*)
Terra Tarsa Ukraine LLC (*)
Terra Tarsa Don LLC
Associate
Associate
Associate
India
Brazil
Perú
Belgium
Ukraine
Sale of product
Sale of product
Sale of product
Sale of product
Sale of product
Federation Rusa
Sale of product
Arpa Speciali S.R.L. (*)
Other related parties
Italy
SQM Eastmed Turkey (*)
Associate
Pavoni & C., Spa
SQM Star Qingdao Corp Nutrition
Co., Ltd.
Joint venture
Joint venture
Turkey
Italy
China
Sale of product
Sale of product
Sale of product
Sale of product
349
SQM Industrial S.A. and Subsidiaries
10) FINANCIAL REPORTS
Tax ID No.
Company
Nature
Country of
origin
Transaction
As of December
31, 2020
As of December
31, 2019
ThUS$
ThUS$
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
SQM Europe N.V.
Other related parties
Belgium
Sale of product
SQM International N.V.
Other related parties
Belgium
Sale of product
SQM Iberian S.A.
Other related parties
Spain
Sale of product
Ajay North America LLC
Other related parties
United States
Sale of product
SQM África Pty. Ltd.
Other related parties
South Africa
Sale of product
SQM Japan Co. Ltd.
Other related parties
SQM Investment Corporation N.V. Other related parties
Ajay Europe SARL
SQMC Holding Corporation L.L.P. Other related parties
Associate
Abu Dhabi Fertilizer Industries
WWL.
Associate
Japan
Netherlands
Antilles
France
United States
United Arab
Emirates
Ajay North America LLC
Doktor Tarsa Tarim Sanayi AS (*)
Other related parties
Associate
United States
Turkey
Sale of product
Current account interest
Sale of product
Current account interest
Sale of product
Sale of product
Sale of product
113,897
106,210
45,614
20,259
18,833
1,263
-
-
485
-
-
-
-
-
-
-
-
-
509
21,348
407
3,749
16,932
14,767
(3)
These Companies are subsidiaries of the joint venture SQM Vitas Fzco.
(*) The following entities were considered related parties as of December 31, 2019 (see Note 9.4 letter a and Note 10.2): SQI Corporation N.V.,
SQM Italia SRL, Doktor Tarsa Tarim, SQM Eastmed Turkey, Terra Tarsa Ukraine LLC, Terra Tarsa B.V., Plantacote N.V., Terra Tarsa Don LLC,
Doktolab Tarim Arastirma San., Doctochem Tarim Sanayi Ticaret Ltd. STI, Coromandel SQM India Sichuan SQM Migao Chemical Fertilizers Co
Ltd. and Arpa Speciali S.R.L.
350
10) FINANCIAL REPORTS
SQM Industrial S.A. and Subsidiaries
Trade receivables due from related parties, current:
Tax ID No.
Company
Nature
Country of origin
Currency
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
Foreign
Foreign
76.686.311-9
76.425.380-9
96.592.180-K
Foreign
Foreign
96.511.530-7
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Total
Arpa Speciali S.R.L
Comercial Caiman Int. S.A.
SQM Mag SPA
Exploraciones Mineras S.A.
Ajay SQM Chile S.A.
Soquimich SRL Argentina
Terra Tarsa Ukraine LLC
Soc. Inv P. Calichera S.A.
Abu Dhabi Fertilizer Ind
Ajay Europe SARL
Ajay North América llc
Terra Tarsa Don LLC
Coromandel SQM India
Plantacote N.V.
SQM Vitas Brasil Agroindustria
SQM Vitas Fzco.
SQM Vitas Perú S.A.C
Royal Seed Trading Corporation V.V.V.
Doktor Tarsa Tarim Sanayi AS
SQM Eastmed Turkey
Pavoni & C., Spa
SQM Europe N.V.
SQM Iberian S.A.
SQM Africa Ltd.
SQM Japan
Provision
Other related parties
Other related parties
Other related parties
Other related parties
Other related parties
Subsidiary
Associate
Jointly controlled entity
Other related parties
Other related parties
Other related parties
Other related parties
Joint venture
Joint venture
Joint venture
Joint venture
Joint venture
Other related parties
Other related parties
Other related parties
Joint venture
Other related parties
Other related parties
Other related parties
Other related parties
Italy
Panama
Chile
Chile
Chile
Argentina
Ukraine
Chile
United Arab Emirates
France
United States
Federation rusa
India
Belgium
Brazil
United Arab Emirates
Perú
Aruba
Turkey
Turkey
Italy
Belgium
Spain
South Africa
Japan
Euro
Dollar
Dollar
Dollar
Dollar
Dollar
Ukrainian hryvnia
Dollar
Dollar
Dollar
Dollar
Russian Ruble
Indian rupee
Euro
Dollar
Dollar
Dollar
Dollar
Dollar
Euro
Euro
Dollar
Dollar
Dollar
Dollar
Dollar
-
805
6
42
-
-
-
6
379
-
3,141
-
-
-
11,904
167
20,336
11,275
-
-
-
47,098
15,331
19,373
153
(1,046)
128,970
134
805
4
40
35
158
7
5
803
3,489
2,318
13
1,792
657
15,049
169
16,507
11,275
110
47
1,028
-
-
-
-
(357)
54,088
The receivables for Sichuan SQM Migao Chemical Fertilizers Co Ltda. are presented net of provisions (allowance for bad debts as of December 31, 2020 ThUS$ 1,048 and
december 31, 2019 ThUS$ 1,048).
351
SQM Industrial S.A. and Subsidiaries
Trade payables due to related parties, current:
Tax ID No.
Company
Nature
Country of origin
Currency
Foreign
SQM Investment Co.
96.592.190-7
79.626.800-k
SQM Nitratos S.A.
SQM Salar S.A.
96.651.060-9
SQM Potasio S.A.
Other related parties
Other related parties
Other related parties
Common parent
Dutch Antilles
Chile
Chile
Chile
Foreign
SQMC Holding Corporation L.L.P.
Other related parties
United States
Foreign
93.007.000-9
SQM Star Qingdao Corp Nutrition Co., Ltd.
SQM S.A.
Joint venture
Parent
96.592.180-K
Ajay SQM Chile S.A.
Foreign
Foreign
Foreign
Foreign
Total
SQM Europe N.V.
SQM International N.V.
SQM (Thailand) Limited
Ajay Europe SARL
Other related parties
Other related parties
Other related parties
Associate
Associate
China
Chile
Chile
Belgium
Belgium
Thailand
France
Dollar
Dollar
Dollar
Peso
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
Dollar
10) FINANCIAL REPORTS
As of December 31,
2020
As of December
31, 2019
ThUS$
ThUS$
5,563
465,908
52,699
1,370
28,525
-
89,617
9
38
18,185
65
50
5,550
356,516
291,794
571
26,307
243
160,136
-
-
-
-
-
662,029
841,117
352
SQM Nitratos S.A.
Summary Classified Statements of Financial Position
10) FINANCIAL REPORTS
Assets
Currents assets
Cash and cash equivalents
Trade receivables due from related parties, current
Current inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Other non-current assets
Total non-current assets
Total assets
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
96
465,908
5,981
3,147
475,132
57,191
6,658
63,849
538,981
285
356,532
11,030
627
368,474
34,049
7,639
41,688
410,162
Liabilities and Equity
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
Current liabilities
Trade payables due to related parties, current
Other current liabilities
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions for employee benefits, non-current
Total non-current liabilities
Total liabilities
Equity
Equity attributable to owners of the Parent
Total equity
Total liabilities and equity
386,422
9,492
395,914
4,118
929
5,047
400,961
138,020
138,020
538,981
274,647
17,888
292,535
2,874
647
3,521
296,056
114,106
114,106
410,162
353
SQM Nitratos S.A.
Summary Statements of Income
Statements of Income
Revenue
Cost of sales
Gross profit
Profit (loss) from operating activities
Profit (loss) before taxes
Income tax expense
Profit for the year
10) FINANCIAL REPORTS
For the period from January to December of the year
2020
ThUS$
2019
ThUS$
188,973
(135,849)
53,124
54,525
59,746
(19,177)
40,569
167,481
(112,896)
54,585
54,271
57,866
(18,336)
39,530
Summary Statements of Comprehensive Income
Statements of Comprehensive Income
Profit for the year
(Losses) gains from measurements of defined benefit plans
Total comprehensive income
For the period from January to December of the year
2020
ThUS$
2019
ThUS$
40,569
(81)
40,488
39,530
(90)
39,440
354
10) FINANCIAL REPORTS
SQM Nitratos S.A.
Summary Statements of Cash Flows
Statements of Cash Flows
Net cash generated from (used in) operating activities
Net cash generated used in investing activities
Net cash generated from financing activities
Net increase (decrease) in cash and cash equivalents before the
effect of changes in the exchange rate
Effects of exchange rate fluctuations on cash held
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
For the period from January to December of the year
2020
ThUS$
2019
ThUS$
(13,775)
(35,011)
48,599
(187)
(2)
(189)
285
96
1,605
(19,661)
18,322
266
5
271
14
285
Note: All cash flows related to the operation of SQM Nitratos are made by SQM S.A.
355
10) FINANCIAL REPORTS
SQM Nitratos S.A.
Summary Statements of Changes in Equity
Statements of Changes in Equity
Equity as of January 1, 2020
Net profit
Other comprehensive income
Comprehensive income
Dividends
Increase (decrease) in equity
Equity as of December 31, 2020
Statements of Changes in Equity
Equity as of January 1, 2019
Net profit
Other comprehensive income
Comprehensive income
Dividends
Increase (decrease) in equity
Equity as of December 31, 2019
Share capital
Reserve for (losses)
gains from of
defined benefit
plans
Retained earnings
Total equity
ThUS$
ThUS$
ThUS$
ThUS$
30,350
-
-
-
-
-
30,350
(76)
-
(81)
(81)
-
(81)
(157)
83,832
40,569
-
40,569
(16,574)
23,995
107,827
114,106
40,569
(81)
40,488
(16,574)
23,914
138,020
Share capital
Reserve for (losses)
gains from of
defined benefit
plans
Retained earnings
Total equity
ThUS$
ThUS$
ThUS$
ThUS$
30,350
-
-
-
-
-
30,350
14
-
(90)
(90)
-
(90)
(76)
56,160
39,530
-
39,530
(11,858)
27,672
83,832
86,524
39,530
(90)
39,440
(11,858)
27,582
114,106
356
10) FINANCIAL REPORTS
SQM Nitratos S.A.
Related party disclosures
As of December 31, 2020, and December 31, 2019, the detail of transactions with related parties is as follows:
Tax ID No.
Company
Nature
Country
of origin
Transaction
79.947.100-0
79.947.100-0
79.947.100-0
79.947.100-0
79.947.100-0
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
93.007.000-9
79.770.780-5
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM Industrial S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
SQM S.A.
Common parent
Common parent
Common parent
Common parent
Common parent
Parent
Parent
Parent
Parent
Parent
Parent
Parent
Serv. Integrales de Tránsito y
Transferencias S.A.
Other related parties
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Sale of products
Current account interest
Purchase of materials and supplies
Purchase fixed asset
Miscellaneos services
Current account interest
Mining concession rental service
Payment of value added tax
Services received
Miscellaneos services
Provisional monthly payment
Dividends
Current account interest
79.626.800-K
SQM Salar S.A.
Other related parties
Chile
Current account interest
96.651.060-9
96.651.060-9
76.425.380-9
SQM Potasio S.A.
SQM Potasio S.A.
Common parent
Common parent
Exploraciones Mineras S.A.
Other related parties
Chile
Chile
Chile
Current account interest
Camp Service
Mining concession
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
188,973
17,720
13,677
8
5,513
12,589
16,087
18,308
7
1,290
20,432
17,190
-
-
40
879
13,513
167,481
13,537
12,615
1,019
5,461
9,423
19,999
14,490
8
1,176
14,623
11,859
66
5
146
1,098
-
357
SQM Nitratos S.A.
Trade receivables due from related parties, current
Tax ID No.
Company
Nature
Country of origin
Currency
79.947.100-0
Total
SQM Industrial S.A.
Common parent
Chile
Dollar
Trade payables due to related parties, current
Tax ID No.
Company
Nature
Country of origin
Currency
93.007.000-9
96.651.060-9
79.770.780-5
79.626.800-K
76.425.380-9
Total
SQM S.A.
SQM Potasio S.A.
Serv. Integrales de Tránsito y Transferencias
S.A.
SQM Salar S.A.
Exploraciones Mineras S.A.
Parent
Other related parties
Other related parties
Other related parties
Other related parties
Chile
Chile
Chile
Chile
Chile
Dollar
Dollar
Dollar
Dollar
Dollar
10) FINANCIAL REPORTS
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
465,908
465,908
356,532
356,532
As of
December 31,
2020
As of
December 31,
2019
MUS$
MUS$
372,268
277
-
-
13,877
386,422
273,446
820
16
1
364
274,647
358
Orcoma SPA
Summary Classified Statements of Financial Position
10) FINANCIAL REPORTS
Assets
Current assets
Other current non-financial assets
Total current assets
Non-current assets
Intangible assets other than goodwill
Deferred tax assets
Total non-current assets
Total assets
Liabilities and Equity
Current liabilities
Trade payables due to related parties, current
Total current liabilities
Total liabilities
Equity
Share capital
Retained earnings
Total equity
Total liabilities and equity
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
3
3
2,357
9
2,366
2,369
-
-
2,357
4
2,361
2,361
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
35
35
35
2,358
(24)
2,334
2,369
14
14
14
2,358
(11)
2,347
2,361
359
Orcoma SPA
Summary Statements of Income
Statements of Income
Administrative expenses
Profit from operating activities
Profit before taxes
Income tax benefit
Profit net
10) FINANCIAL REPORTS
For the period from January to
December of the year
2020
2019
ThUS$
ThUS$
(17)
(17)
(17)
4
(13)
-
-
-
-
-
360
Orcoma SPA
Summary Statements of Changes in Equity
10) FINANCIAL REPORTS
Statements of Changes in Equity
Share capital
Retained earnings
Equity
attributable to
owners of the
Parent
Total equity
Equity as of January 1, 2020
Net profit
Comprehensive income
Increase (decrease) in equity
Equity as of December 31, 2020
MUS$
MUS$
2,358
-
-
-
2,358
(11)
(13)
(13)
(13)
(24)
2,347
(13)
(13)
(13)
2,334
2,347
(13)
(13)
(13)
2,334
Statements of Changes in Equity
Share capital
Retained earnings
Equity
attributable to
owners of the
Parent
Total equity
Equity as of January 1, 2019
Net profit
Comprehensive income
Increase (decrease) in equity
Equity as of December 31, 2019
MUS$
2,358
-
-
-
2,358
(11)
-
-
-
(11)
2,347
-
-
-
MUS$
2,347
-
-
-
2,347
2,347
Transactions with related parties
As of December 31, 2020, and 2019, there were no transactions with related entities.
361
10) FINANCIAL REPORTS
As of December
31, 2020
As of December
31, 2019
ThUS$
ThUS$
6
5,149
5,155
5,155
6
5,149
5,155
5,155
As of December
31, 2020
As of December
31, 2019
ThUS$
ThUS$
-
88
88
88
6
5,061
5,067
5,155
2
62
64
64
6
5,085
5,091
5,155
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(24)
(24)
-
(24)
(24)
(25)
(25)
-
(25)
(25)
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(24)
(24)
(25
(25)
Rs Agro Chemical Trading Corporation A.V.V.
Summary Classified Statements of Financial Position
Assets
Currents assets
Cash and cash equivalents
Trade receivables due from related parties, current
Total current assets
Total assets
Liabilities and Equity
Current liabilities
Trade and other payables, current
Trade payables due to related parties, current
Total current liabilities
Total liabilities
Equity
Share capital
Retained earnings
Total equity
Total liabilities and equity
Summary Statements of income
Statements of comprehensive Income
Other expenses per function
Loss from operating activities
Finance Costs
Loss before taxes
Total comprehensive loss
Summary Statements of Comprehensive Income
Statements of Comprehensive Income
Other comprehensive income
Total comprehensive income
362
Rs Agro Chemical Trading Corporation A.V.V.
Summary Statements of Cash Flows
Statements of Cash Flows
Net cash generated from operating activities
Net cash generated from operating activities
Net increase (decrease) in cash and cash equivalents before
the effect of changes in the exchange rate
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Summary Statements of Changes in Equity
10) FINANCIAL REPORTS
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
-
-
6
6
-
-
6
6
Statements of Changes in Equity
Share capital
Retained earnings
Total equity
Equity as of January 1, 2020
Net loss
Comprehensive loss
Decrease in equity
Equity as of December 31, 2020
ThUS$
ThUS$
ThUS$
6
-
-
-
6
5,085
(24)
(24)
(24)
5,061
5,091
(24)
(24)
(24)
5,067
Statements of Changes in Equity
Share capital
Retained earnings
Total equity
Equity as of January 1, 2019
Net loss
Comprehensive loss
Decrease in equity
Equity as of December 31, 2019
ThUS$
ThUS$
ThUS$
6
-
-
-
6
5,110
(25)
(25)
(25)
5,085
5,116
(25)
(25)
(25)
5,091
363
10) FINANCIAL REPORTS
Rs Agro Chemical Trading Corporation A.V.V.
Transactions with related parties
Trade receivables due from related parties, current:
Tax ID N°
Company
Nature
Country of origin
Currency
Foreign
SQM Investment Corporation
Associate
Aruba
Dollar
Total
Trade payables due to related parties, current:
Tax ID N°
Company
Nature
Country of origin
Currency
93.007.000-9
Foreign
Total
SQM S.A.
Royal Seed Trading Co.
Parent
Chile
Other related parties Aruba
Dollar
Dollar
As of
December
31, 2020
As of
December
31, 2019
ThUS$
ThUS$
5,149
5,149
5,149
5,149
As of
December
31, 2020
ThUS$
As of
December
31, 2019
ThUS$
79
9
88
53
9
62
364
Orcoma Estudios SPA
Summary Classified Statements of Financial Position
Assets
Currents assets
Cash and cash equivalents
Other non financial assets, current
Total current assets
Non-current assets
Other non-current financial assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
Liabilities and Equity
Current liabilities
Trade and other payables, current
Trade payables due to related parties, current
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Equity
Share capital
Retained earnings
Total equity
Total liabilities and equity
10) FINANCIAL REPORTS
As of December
31, 2020
As of December
31, 2019
ThUS$
ThUS$
1
2
3
1,240
3,136
183
4,559
4,562
154
2
156
1,240
3,281
-
4,521
4,677
As of December
31, 2020
As of December
31, 2019
ThUS$
ThUS$
156
253
409
-
-
409
4,632
(479)
4,153
4,562
1
27
28
-
-
28
4,632
17
4,649
4,677
365
10) FINANCIAL REPORTS
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
1
(678)
(677)
(2)
(679)
183
(496)
(496)
-
-
-
1
1
(1)
-
-
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
(496)
(496)
-
-
For the period from January to
December of the year
2020
2019
ThUS$
ThUS$
-
(145)
(8)
(35)
(105)
-
(153)
(140)
154
1
294
154
Orcoma Estudios SPA
Summary Statements of Income
Statements of Income
Revenue
Cost of sales
Profit (loss) from operating activities
Foreign currency translation differences
Profit before taxes
Income tax expense
Profit for the year
Profit for the year
Summary Statements of Comprehensive Income
Statements of Comprehensive Income
Other comprehensive income
Total comprehensive income
Summary Statements of Cash Flows
Statements of Cash Flows
Net cash generated (used in) from operating activities
Net cash generated used in investing activities
Net cash generated from financing activities
Net increase (decrease) in cash and cash equivalents before the effect of changes in the
exchange rate
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
366
Orcoma Estudios SPA
Summary Statements of Changes in Equity
10) FINANCIAL REPORTS
Statements of Changes in Equity
Share capital
Retained earnings
Total equity
Equity as of January 1, 2020
Net profit
Comprehensive income
Increase (decrease) in equity
Equity as of December 31, 2020
ThUS$
ThUS$
ThUS$
4,632
-
-
-
4,632
17
(496)
(496)
(496)
(479)
4,649
(496)
(496)
(496)
4,153
Statements of Changes in Equity
Share capital
Retained earnings
Total equity
Equity as of January 1, 2019
Net profit
Comprehensive income
Increase (decrease) in equity
Equity as of December 31, 2019
ThUS$
ThUS$
ThUS$
4,632
-
-
-
4,632
17
-
-
-
17
4,649
-
-
-
4,649
367
10) FINANCIAL REPORTS
Orcoma Estudios SPA
Related party disclosures
As of December 31, 2020, and December 31, 2019, there are no transactions with related entities.
Relationships between the parent and the entity
Orcoma Estudios SPA is controlled by Sociedad Química y Minera de Chile S.A., with 100% ownership.
Sociedad Química y Minera de Chile S.A., is registered with the Securities Registry of the Chilean Commission
for Financial Markets (CMF) ex Superintendence of Securities and Insurance under No. 0184 of March 18, 1983
and accordingly, is subject to the oversight of such regulating authority,
Detailed identification of the link between Orcoma Estudios SPA and subsidiary
As of December 31, 2020, and December 31, 2019, the detail of entities that are related parties is as follows:
Tax ID N°
Company
Nature
Country of
origin
Currency
93.007.000-9
Total
SQM S.A.
Parent
Chile
Dollar
As of
December
31, 2020
ThUS$
As of
December
31, 2019
ThUS$
253
253
27
27
368
Ajay SQM Chile
Summary Classified Statements of Financial Position
Assets
Currents assets
Cash and cash equivalents
Trade receivables due from related parties, current
Current inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Other non-current assets
Total non-current assets
Total assets
10) FINANCIAL REPORTS
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
5,360
257
12,680
7,144
25,441
1,204
345
1,549
26,990
77
2,512
9,506
5,685
17,780
1,115
145
1,260
19,040
Liabilities and Equity
As of December 31,
2020
As of December 31,
2019
ThUS$
ThUS$
Current liabilities
Trade payables due to related parties, current
Other current liabilities
Total current liabilities
Non-current liabilities
Provisions for employee benefits, non-current
Total non-current liabilities
Total liabilities
Equity
Equity attributable to owners of the Parent
Total equity
Total liabilities and equity
7,304
2,260
9,564
713
713
10,277
16,713
16,713
26,990
731
553
1,284
374
374
1,658
17,382
17,382
19,040
369
10) FINANCIAL REPORTS
Ajay SQM Chile
Summary Statements of Income
Statement of Income
For the period from January to December of the year
2020
ThUS$
2019
ThUS$
Revenue
Cost of sales
Gross profit
Profit from operating activities
Profit before taxes
Income tax expence
Profit attributable to Owners of the Parent
Profit for the year
38,193
(34,618)
3,575
2,069
2,460
(603)
1,857
1,857
24,882
(21,463)
3,419
2,162
2,098
(588)
1,510
1,510
Summary Statements of Comprehensive Income
Statements of Comprehensive Income
Profit for the year
Total comprehensive income
For the period from January to December of the year
2020
ThUS$
2019
ThUS$
1,857
1,857
1,510
1,510
370
10) FINANCIAL REPORTS
Ajay SQM Chile
Summary Statements of Cash Flows
Statements of Cash Flows
Net cash generated from (used in) operating activities
Net cash generated from (used in) investing activities
Net cash generated from (used in) financing activities
Net increase (decrease) in cash and cash equivalents before the
effect of changes in the exchange rate
Effects of exchange rate fluctuations on cash held
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
For the period from January to December of the year
2020
ThUS$
2019
ThUS$
7,022
(200)
(1,133)
5,689
(406)
5,283
77
5,360
(706)
(50)
(1,800)
(2,556)
-
(2,556)
2,633
77
371
Ajay SQM Chile
Summary Statements of Changes in Equity
10) FINANCIAL REPORTS
Statements of Changes in Equity
Share capital
Retained earnings
Total equity
Equity as of January 1, 2020
Net profit
Comprehensive income
Dividends
Increase (decrease) in equity
Equity as of December 31, 2020
ThUS$
ThUS$
ThUS$
5,314
-
-
-
-
5,314
12,068
1,857
1,857
(2,526)
(669)
11,399
17,382
1,857
1,857
(2,526)
(669)
16,713
Statements of Changes in Equity
Share capital
Retained earnings
Total equity
Equity as of January 1, 2019
Net profit
Comprehensive income
Dividends
Increase (decrease) in equity
Equity as of December 31, 2019
ThUS$
ThUS$
ThUS$
5,314
-
-
-
-
5,314
12,358
1,510
1,510
(1,800)
(290)
12,068
17,672
1,510
1,510
(1,800)
(290)
17,382
372
10) FINANCIAL REPORTS
Ajay SQM Chile
Related party disclosures
Detailed identification of the link between Ajay-SQM Chile S.A. and subsidiary
As of December 31, 2020 and December 31, 2019, the detail of entities that are related parties is as follows:
Tax ID No.
Company
Nature
Country of origin
Functional
Currency
93.007.000-9
SQM S.A.
Parent
79.768.170-9
Soquimich Comercial S.A.
Other related parties
Foreign
Foreign
Foreign
Total
SQM (Shangai) Chemicals Co. Ltd.
Other related parties
Ajay North America
Ajay Europe SARL
Other related parties
Other related parties
Chile
Chile
China
United States
France
Dollar
Dollar
Dollar
Dollar
Euro
Trade receivables due from related parties, current:
Tax ID No.
Company
Country of origin
Currency
Nature
93.007.000-9
SQM S.A.
Parent
79.768.170-9
Soquimich Comercial S.A.
Other related parties
Chile
Chile
Foreign
Total
Ajay Europe SARL
Other related parties
France
Peso
Dollar
Euro
Trade payables due to related parties, current:
Tax ID No.
Company
Country of origin
Currency
Nature
93.007.000
SQM S.A.
Parent
Chile
Foreign
SQM (Shangai) Chemicals Co. Ltd.
Other related parties
Foreign
Ajay North America
Other related parties
China
United States of
America
Foreign
Total
Ajay Europe SARL
Other related parties
France
Peso
Dollar
Dollar
Euro
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
-
9
248
257
2,237
17
258
2,512
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
7,072
-
232
-
7,304
591
52
53
35
731
373
SCM Búfalo
Summary Classified Statements of Financial Position
10) FINANCIAL REPORTS
Assets
Currents assets
Other current non-financial assets
Trade receivables due from related parties, current
Total current assets
Non-current assets
Other non-current non-financial assets
Intangible assets other than goodwill
Total non-current assets
Total assets
Liabilities and Equity
Current liabilities
Trade and other payables, current
Trade payables due to related parties, current
Current tax liabilities
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Equity
Share capital
Retained earnings
Total equity
Total liabilities and equity
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
49
1
50
301
22
323
373
-
-
-
-
-
-
-
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
33
316
1
350
-
-
350
23
-
23
373
-
-
-
-
-
-
-
-
-
-
374
10) FINANCIAL REPORTS
SCM Búfalo
Summary Statements of Income
Statements of Income
Other income
Profit from operating activities
Foreign currency translation differences
Profit before taxes
Income tax expense
Profit net
Summary Statements of Comprehensive Income
Statements of Comprehensive Income
Other comprehensive income
Total comprehensive income
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
4
4
(3)
1
(1)
-
-
-
-
-
-
-
For the period from January to
December of the year
2020
ThUS$
2019
ThUS$
-
-
-
-
375
SCM Búfalo
Summary Statements of Changes in Equity
10) FINANCIAL REPORTS
Statements of Changes in Equity
Share capital
Retained
earnings
Total equity
Equity as of January 1, 2020
Issuance of shares
Net profit
Comprehensive income
Increase (decrease) in equity
Equity as of December 31, 2020
ThUS$
ThUS$
ThUS$
-
23
-
23
23
23
-
-
-
-
-
-
-
23
-
23
23
23
Statements of Changes in Equity
Share capital
Retained
earnings
Total equity
Equity as of January 1, 2019
Net profit
Comprehensive income
Increase (decrease) in equity
Equity as of December 31, 2019
ThUS$
ThUS$
ThUS$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Transactions with related parties
As of December 31, 2020, and 2019, there were no transactions with related entities.
Relationships between the parent and the entity
SCM Búfalo, is controlled by Sociedad Química y Minera de Chile S.A., with 100% ownership.
Sociedad Química y Minera de Chile S,A., is registered with the Securities Registry of the Chilean Commission for Financial
Markets (CMF) ex Superintendence of Securities and Insurance under No. 0184 of March 18, 1983 and accordingly, is subject
to the oversight of such regulating authority.
376
10) FINANCIAL REPORTS
SCM Búfalo
Related party disclosures
As of December 31, 2020, and December 31, 2019, the detail of transactions with related parties is as follows:
Trade receivables due from related parties, current
Tax ID No.
Company
Nature
Country of origin
Currency
96.651.060-9
Total
SQM Potasio S.A.
Common parent
Chile
Dollar
Trade payables due to related parties, current
Tax ID No.
Company
Nature
Country of origin
Currency
93.007.000-9
Total
SQM S.A.
Parent
Chile
Dollar
As of
December
31, 2020
As of
December
31, 2019
MUS$
MUS$
1
1
-
-
As of
December
31, 2020
As of
December
31, 2019
MUS$
MUS$
316
316
-
-
377
11) RESPONSIBILITY STATEMENT
11) RESPONSIBILITY STATEMENT
The Directors and Chief Executive Officer of SQM S.A. declare that we have exercised our respective
functions as administrators and chief executive of the Company in conformity with the practices that are
customarily used for such purposes in Chile and, in accordance with these practices, we swear under oath that
the information in this 2020 Annual Report is true and that we accept any liability that may arise from this
statement.
378