e6vk
UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 6-K
REPORT OF FOREIGN
ISSUER
PURSUANT TO
RULE 13A-16
OR 15D-16
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Includes
SQMs consolidated financial statements as of
December 31, 2009, 2008 and
2007 and for each of the three years in the period ended
December 31, 2009 (a translation
of the original in Spanish), together with managements
discussion and analysis of
financial condition and results of operations and a
discussion of its business.
SOCIEDAD QUIMICA Y MINERA DE
CHILE S.A.
(Exact name of registrant as
specified in its charter)
CHEMICAL AND MINING COMPANY
OF CHILE INC.
(Translation of
registrants name into English)
El Trovador 4285, Santiago, Chile
(562) 425-2000
(Address and phone number of
principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover of
Form 20-F
or
Form 40-F.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing
the information to the Commission pursuant to
Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
If Yes is marked, indicate below the file number
assigned to the registrant in connection with
Rule 12g3-2(b):
82 o
Managements
discussion and analysis of financial condition and results of
operations
Overview of our
results of operations
We divide our operations into the production and sale of the
following product lines:
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specialty plant nutrients;
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iodine and its derivatives;
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lithium and its derivatives;
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industrial chemicals, principally industrial nitrates and boric
acid;
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potassium chloride; and
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the purchase and sale of other commodity fertilizers for use
primarily in Chile.
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In 2009, our sale of potassium chloride had an important impact
on our results of operations, and we expect this trend to
continue in line with our plans to increase our potassium
chloride production capacity and sales in the near term.
We sell our products through three primary channels: our own
sales offices; a network of distributors; and, in the case of
our fertilizer products, through Yara International ASA
(formerly Norsk Hydro ASA) (Yara) pursuant to a
commercial agreement.
Factors affecting
our results of operations
Our results of operations substantially depend on:
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trends in demand for and supply of our products, including
global economic conditions, which impact prices and volumes;
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efficient operations of our facilities, particularly as some of
them run at production capacity;
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our ability to accomplish our capital expenditures program in a
timely manner;
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the levels of our inventories;
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trends in the exchange rate between the U.S. dollar and
peso, as a significant portion of the cost of sales is in
Chilean pesos, and trends in the exchange rate between the
U.S. dollar and the Euro, as a significant portion of our
sales is denominated in Euros; and
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energy, logistics, raw materials and maintenance costs.
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In 2009, prices and sales volumes for our specialty plant
nutrients products were negatively impacted by global economic
conditions and, in particular, by price uncertainty in the
potassium chloride market. Potassium chloride is an important
raw material in the production of potassium nitrate, a specialty
fertilizer, and, as a result, prices of the two products are
related.
Our iodine volumes fell in 2009 mainly as a result of lower
demand for economically sensitive applications (such as biocides
for paints and nylon used in the automotive industry). During
the first three quarters of 2009, volumes were lower than 2008
and relatively unchanged from
2
quarter to quarter. However, volumes were higher during the
fourth quarter of 2009. Prices in this sector increased as
compared to 2008, which helped to partially offset lower volumes.
Lithium sales volumes were impacted negatively by inventory
optimization and lower consumption. However, we observed a
positive trend throughout 2009 with higher sales volumes each
quarter. Prices in this sector also declined compared to 2008.
The following table sets forth our revenues (in millions of
U.S. dollars) and the percentage accounted for by each of
our product lines for each of the years indicated:
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Year ended December 31,
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2009
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2008
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2007
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US$
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%
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US$
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%
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US$
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%
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Specialty plant nutrients
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648.7
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45
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978.9
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55
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580.8
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49
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Iodine and its derivatives
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190.3
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13
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246.9
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14
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215.1
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18
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Lithium and its derivatives
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117.8
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8
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172.3
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10
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179.8
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15
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Industrial chemicals
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115.4
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8
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123.6
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7
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81.2
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7
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Potassium chloride
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284.8
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20
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140.0
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8
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51.3
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4
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Other commodity fertilizers(1)
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79.8
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6
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112.3
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6
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79.4
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7
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Total
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1,436.9
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100
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1,774.1
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100
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1,187.5
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100
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(1)
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Primarily consists of imported
fertilizers distributed in Chile.
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The following table sets forth certain of our financial
information under Chilean GAAP (in millions of
U.S. dollars) for each of the years indicated, as a
percentage of our revenues:
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Year ended December 31,
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2009
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2008
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2007
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US$
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%
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US$
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%
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US$
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%
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Total revenues
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1,436.9
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100.0
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1,774.1
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100.0
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1,187.5
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100.0
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Cost of goods sold
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(916.1
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(63.8
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(1,056.2
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(59.5
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(857.8
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(72.2
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Gross margin
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520.8
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36.2
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717.9
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40.5
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329.8
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27.8
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Selling and administrative expenses
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(78.9
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(5.5
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(85.7
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(4.8
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(70.3
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(5.9
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Operating income
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441.9
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30.8
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632.2
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35.6
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259.5
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21.9
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Non-operating income
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40.5
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2.8
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40.6
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2.3
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25.9
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2.2
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Non-operating expenses
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(77.5
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(5.4
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(59.9
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(3.8
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(53.0
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(4.5
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Income before income taxes
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404.9
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28.2
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612.9
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34.5
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232.4
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19.6
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Income tax
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(76.5
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(5.3
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(108.0
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(6.1
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(48.6
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(4.1
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Minority interest
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(1.3
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(0.1
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(3.5
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(0.2
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(3.8
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(0.3
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Net income
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327.1
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22.8
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501.4
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28.3
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180.0
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15.2
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3
Results of
operationsyear ended December 31, 2009 compared to
year ended December 31, 2008
During 2009, we generated total revenues of
US$1,436.9 million, which is 19.0% lower than the
US$1,774.1 million recorded for 2008.
The main factors causing the decrease in revenues and the
variations in the different product lines are described below:
Specialty plant
nutrients
Specialty plant nutrients revenues for 2009 totaled
US$648.7 million, 33.7% lower than the
US$978.9 million recorded for 2008. Set forth below are
sales volume data for the specified years by product category in
this product line.
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(in Th. MT)
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2009
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2008
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% change
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Sodium nitrate
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16.5
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22.8
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(27%
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Potassium nitrate and sodium potassium nitrate
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392.1
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538.2
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(27%
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Blended and other specialty fertilizers
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184.5
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205.9
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(10%
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Other non-SQM specialty plant nutrients(1)
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90.3
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103.1
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(12%
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Potassium sulfate
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133.4
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138.3
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(4%
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(1)
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Consists of certain specialty plant
nutrients products that were not produced by us which we resell
primarily in Chile.
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Average prices for our specialty plant nutrients decreased
approximately 18% compared to 2008. Sales volume for our
specialty plant nutrients decreased approximately 19%. These
declines in 2009 were due to general adverse market conditions
during 2009.
Much of 2009 was characterized by general market uncertainty and
the global economic slowdown. During the first half of 2009,
specialty fertilizer markets lagged behind 2008 market highs.
Most distributors and end users preferred to buy only minimum
quantities or to postpone purchases until market prices settled.
Compared to the fourth quarter of 2008 when markets began to
decline significantly, the last quarter of 2009 reflected in our
view a shift in market conditions and market sentiment. The
extreme caution observed at the end of 2008 and during the first
three quarters of 2009 has led to a more optimistic outlook for
demand across all of our fertilizer businesses. The important
conclusion of contract negotiations between China and India and
several important potassium chloride producers has reduced the
lack of price visibility that was keeping buyers on the
sidelines of potassium-based markets for much of 2009. As a
result, during the end of 2009 and the beginning of 2010, we
have observed demand recovery in potassium chloride markets.
Potassium chloride is an important raw material in the
production of potassium nitrate; and as a result, prices of the
two products are related.
Although volumes were lower
year-over-year,
we observed a positive trend in volume recovery in this product
line as the year progressed.
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Iodine and its
derivatives
Revenues for iodine and its derivatives during 2009 totaled
US$190.3 million, a 22.9% decrease compared to the
US$246.9 million reported for 2008. Set forth below are
sales volume data for the specified years.
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(in Th. MT)
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2009
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2008
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% change
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Iodine and its derivatives
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7.2
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10.5
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(32%
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In October 2008, we announced a price increase as a result of
increasing global demand, mainly driven by X-ray contrast media
and LCD polarizing film applications, combined with
lower-than-
expected supply from other players in the industry.
As a result of economic conditions in 2009, together with our
increased prices, volumes for our iodine and its derivative
products decreased approximately 32%. Average prices in 2009 for
iodine and its derivatives increased approximately 13% as
compared to 2008.
The decrease in sales volumes for iodine and its derivatives
reflects the general decrease in the use of applications that
are sensitive to economic growth, such as biocides used in
paints for construction and nylon used in the automotive
industry, which were negatively affected by global economic
conditions. Our iodine sales were also negatively affected by
inventory optimization throughout the iodine supply chain. These
declines, however, were partially offset by stable demand for
principal uses of iodine, such as human and animal health and
nutrition applications. Consistent with our leading position in
this industry, we reduced our sales volumes, helping to
stabilize the market.
Sales volumes for the fourth quarter of 2009 were, however,
higher than sales during each of the first three quarters of the
year, suggesting a positive trend in demand in this market.
Lithium and its
derivatives
Revenues for lithium and its derivatives totaled
US$117.8 million during 2009, a decrease of 31.6% with
respect to the US$172.3 million recorded for 2008. Set
forth below are sales volume data for the specified years.
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(in Th. MT)
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2009
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2008
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% change
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Lithium and its derivatives
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21.3
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27.9
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(24%
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Average prices for lithium and its derivatives decreased
approximately 10% and sales volumes decreased approximately 24%.
These declines were due to general market conditions observed
during 2009.
To a large extent, lithium consumption is connected to the
automotive and construction industries, which shrank as a result
of the global financial crisis and economic slowdown.
Additionally, many companies throughout the lithium supply chain
optimized their inventory levels. As a result, after more than a
decade of sustained growth, global demand for lithium in 2009
declined.
In September 2009, we reduced prices of lithium carbonate and
lithium hydroxide 20% in order to accelerate demand recovery, to
create incentives for research of new lithium uses, and to
contribute to the sustainable long-term development of the
lithium market.
Average prices for lithium and its derivatives will be lower in
2010 as a result of our 20% price reduction announced in
September 2009.
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Despite these declines in 2009, sales volumes were higher
quarter-over-quarter
throughout the year. Consistent with this tendency we have
continued to observe positive signs of recovery during the first
quarter of 2010 in the lithium market. A strong rebound in
demand for traditional, rechargeable batteries has driven
volumes during the first months of 2010.
Industrial
chemicals
Industrial chemicals revenues for 2009 totaled
US$115.4 million, 6.6% lower than the US$123.6 million
recorded in 2008. Set forth below are sales volume data for the
specified years by product category.
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(in Th. MT)
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2009
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2008
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% change
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Industrial nitrates
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149.2
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161.9
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(8%
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Boric acid
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3.4
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7.2
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(53%
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Average prices for industrial chemicals increased approximately
3%, while sales volume decreased approximately 10%. Higher
average prices were due to an increase in sales of nitrates used
for thermal storage for solar electricity generation which have
higher prices on average than traditional markets for industrial
chemicals. Volumes decreased as demand declined for traditional
applications of industrial chemicals, which are closely tied to
economic conditions.
While demand for traditional applications of industrial
chemicals was weak during much of 2009, we experienced growth in
demand for nitrates used in thermal storage for solar
electricity generation. We expect this trend to continue in the
short- to medium- term as new projects continue to be developed.
In addition, we believe volumes for traditional industrial
applications, especially explosives for infrastructure and civil
works, are also beginning to show positive signs of recovery.
Potassium
chloride
Potassium chloride revenues for 2009 totaled
US$284.8 million, an increase of 103.4% compared to 2008,
when revenues amounted to US$140.0 million. Set forth below
are sales volume data for the specified years.
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(in Th. MT)
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2009
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2008
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% change
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Potassium chloride
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556.5
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185.6
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200%
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As a result of market conditions, average prices for potassium
chloride significantly decreased during 2009. Our sales volumes,
however, increased approximately 200%. Although global demand
for potassium chloride declined during 2009, we were able to
increase our sales significantly as we were successful in
further penetrating this market and gaining market share.
Much of 2009 was characterized by uncertainty in the potassium
chloride market, and many buyers were reluctant to make
purchases due to a lack of price visibility. During the fourth
quarter of 2009 and the first three months of 2010, however,
China and India settled strategic contracts which established a
floor in pricing, encouraging other important buyers to return
to the market for the purchase of potassium chloride. This newly
established price has stirred recent demand at the distributor
and farmer levels worldwide. As a result, we believe there are
signs that demand has begun to increase.
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Despite the difficult market conditions in 2009, demand
fundamentalssuch as population growth and changing
dietsfor this sector remain intact. Compounding the
effects of these long-term fundamentals are short-term demand
drivers, such as the need to refill distributor inventories and
to replenish soil nutrients.
We are well-positioned as a small player in the potassium
chloride market to capture future growth. Our expansion plans in
this business line have progressed as anticipated, and we expect
2010 production of potassium related products from the Salar de
Atacama to be higher than production recorded in 2009.
Other commodity
fertilizers
Revenues from sales of other commodity fertilizers and other
products totaled US$79.8 during 2009, a 29% decline compared to
US$112.3 million in 2008. Revenues were impacted by lower
demand for commodity fertilizers and lower average prices.
Costs of
sales
During 2009, costs of sales fell 13% from
US$1,056.3 million (64% of revenues) in 2008 to
US$916.1 million in 2009 (60% of revenues). This decrease
was mainly due to a different product mix and to lower unit
costs as a result of lower energy costs and a more favorable
U.S. dollar/Chilean peso exchange rate.
Gross
profit
Gross profit decreased 28% from US$717.9 million in 2008 to
US$520.8 million in 2009. The decrease in gross profit, as
described above, was mainly due to lower prices and lower
volumes in most of our product lines.
Selling and
administrative expenses
Selling and administrative expenses totaled US$78.9 million
(5.5% of revenues) for 2009, compared to the
US$85.7 million (4.8% of revenues) recorded for 2008.
Operating
income
As a result of the factors described above, operating income
decreased 30% to US$441.9 million in 2009 from
US$632.2 million in 2008.
Non-operating
income and expenses
We recorded a non-operating loss of US$37.0 million for
2009, which is higher than the US$19.3 million loss
recorded in 2008, primarily due to the following:
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in the fourth quarter of 2009, we made provisions for
US$15 million related to the suspension of operations at
the El Toco and Pampa Blanca mining facilities. In March 2010,
operations at the El Toco and Pampa Blanca mines were
temporarily suspended due to decreased global demand for
nitrates and iodine during the preceding 15 months coupled
with high inventory levels of these products;
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we have increased our financial debt, as well as our cash
position, since the fourth quarter of 2008, which has led to
higher interest expenses due to the negative carry of
debt; and
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we have obtained lower earnings from investments in related
companies which also affected non-operating results, as the
fertilizer business activities of our offshore affiliates were
affected by lower global fertilizer prices.
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Income
taxes
In 2009, income taxes were US$76.5 million, resulting in an
effective consolidated tax rate of 18.9% compared to income
taxes of US$108.0 million in 2008 and an effective
consolidated tax rate of 17.6%. In accordance with Chilean law,
SQM and each of its Chilean subsidiaries compute and pay taxes
on an individual basis, not on a consolidated basis.
The corporate income tax rate in Chile was 17% for 2009 and
2008. Our effective tax rate is higher than the Chilean rate
primarily because our foreign operations are subject to higher
tax rates.
Results of
operationsyear ended December 31, 2008 compared to
year ended December 31, 2007
During 2008, we generated total revenues of
US$1,774.1 million, which was 49.4% higher than the
US$1,187.5 million recorded for 2007.
The main factors that explain the increase in revenues and the
variations in the different product lines are as discussed below:
Specialty plant
nutrients
Revenues from sales of specialty plant nutrients products
increased 68.6% from US$580.8 million in 2007 to
US$978.9 million in 2008. Set forth below are sales volume
data in the specified year by product category.
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(in Th. MT)
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2008
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2007
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% change
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Sodium nitrate
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22.8
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45.9
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(50%
|
)
|
Potassium nitrate and sodium potassium nitrate
|
|
|
538.2
|
|
|
|
695.3
|
|
|
|
(23%
|
)
|
Potassium sulphate
|
|
|
138.3
|
|
|
|
172.0
|
|
|
|
(20%
|
)
|
Blended and other specialty fertilizers
|
|
|
205.9
|
|
|
|
261.5
|
|
|
|
(21%
|
)
|
Other non-SQM specialty plant nutrients(1)
|
|
|
103.1
|
|
|
|
117.1
|
|
|
|
(12%
|
)
|
|
|
|
|
|
(1)
|
|
Consists of certain specialty plant
nutrients products that were not produced by us which we resell
primarily in Chile.
|
The
year-over-year
growth in revenues was due to substantially higher prices, which
more than offset a decline in sales volumes. On average,
specialty plant nutrients prices increased 116% compared to
2007. This increase is a result of an increase in prices for
potassium-related fertilizers reflecting the long-term scarcity
of production capacity. Furthermore, the specialized nature of
this product line continued to command higher prices for our
specialty plant nutrients products.
8
Sales volume for specialty plant nutrients across our main
markets fell
year-over-year
as farmers were mainly affected by tight credit conditions
generated by global financial crisis and economic slowdown.
Iodine and its
derivatives
Revenues for iodine and its derivatives amounted to
US$246.9 million, 14.8% higher than the
US$215.1 million recorded for 2007. Set forth below are
sales volume data for the specified years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Th. MT)
|
|
2008
|
|
|
2007
|
|
|
% change
|
|
|
|
|
Iodine and its derivatives
|
|
|
10.5
|
|
|
|
9.1
|
|
|
|
15%
|
|
|
|
Our results from iodine and its derivatives for 2008 were driven
by an increase in volumes. The increase in our volumes resulted
from both market growth and our ability to capture market share.
The tightness in the market prompted SQM to announce in the
fourth quarter of 2008 a price increase of approximately 25%.
During the first half of 2008, demand growth in the iodine
market was sustained by demand for polarizing film in LCDs,
x-ray contrast media for diagnostic imaging and animal feed and
human nutrition applications. In the second half of 2008, demand
for iodine salts used in LCDs and nylon applications for the
automotive industry began to decline. However, as mentioned
above, the overall results remain positive.
Lithium and its
derivatives
Revenues for lithium and its derivatives decreased 4% to
US$172.3 million in 2008 from US$179.8 million in
2007. Set forth below are sales volume data for the specified
years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Th. MT)
|
|
2008
|
|
|
2007
|
|
|
% change
|
|
|
|
|
Lithium and its derivatives
|
|
|
27.9
|
|
|
|
28.6
|
|
|
|
(2%
|
)
|
|
|
Our results for lithium and its derivatives products for 2008
were a result of lower volumes and slightly lower prices due to
the global economic slowdown. Many applications for lithium are
related to the construction industry, which contracted
significantly during 2008 affecting sales volumes in the last
part of 2008.
Industrial
chemicals
Revenues for industrial chemicals increased 52.2% to
US$123.6 million in 2008 from US$81.2 million in 2007.
Set forth below are sales volume data for the specified years by
product category.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Th. MT)
|
|
2008
|
|
|
2007
|
|
|
% change
|
|
|
|
|
Industrial nitrates
|
|
|
161.9
|
|
|
|
175.2
|
|
|
|
(8%
|
)
|
Boric acid
|
|
|
7.2
|
|
|
|
9.2
|
|
|
|
(22%
|
)
|
|
|
Revenues from industrial chemicals increased in 2008 largely as
a result of rising prices. Prices of industrial nitrates and
prices of specialty plant nutrients are indirectly related, and
on average prices for this product line were approximately 66%
higher than they were in 2007. With the
9
global economic slowdown, sales volumes for industrial nitrates
declined approximately 8% in 2008 as compared to 2007, with a
pronounced drop in the fourth quarter.
Potassium
chloride
Revenues from potassium chloride increased 173% from
US$51.3 million in 2007 to US$140.0 million in 2008.
Set forth below are sales volume data for the specified years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Th. MT)
|
|
2008
|
|
|
2007
|
|
|
% change
|
|
|
|
|
Potassium chloride
|
|
|
185.6
|
|
|
|
179.0
|
|
|
|
4%
|
|
|
|
The increase in
year-over-year
potassium chloride revenues was a result of a substantial
increase in prices due to growing demand and tight supply in the
market. Despite lower demand in the fourth quarter of 2008, we
were able to sell our potassium chloride given our relatively
small size in this market.
In 2008, global potassium chloride prices experienced a
sustained increase in recent periods, due to the combined effect
of tight supply and growing demand.
Other commodity
fertilizers
Revenues from sales of other commodity fertilizers increased
from US$79.4 million in 2007 to US$112.3 million in
2008 as a result of better pricing conditions. We recorded
losses during the fourth quarter of 2008 for inventories of
nitrogen and phosphate fertilizers related to trading
activities; these inventories were acquired in previous periods
but were negatively impacted by the declining prices in the
latter part of 2008.
Costs of
sales
During the first nine months of 2008, costs of sales increased
due to the appreciation of the peso and higher costs of oil and
raw materials. However, in the fourth quarter of 2008, the
U.S. dollar began to strengthen against the peso,
alleviating peso-denominated costs and reversing the rising cost
trend that had prevailed in previous years. Furthermore, freight
rates, oil prices and the cost of raw materials began to fall
during the second half of 2008.
Gross
profit
Gross profit increased 118% from US$329.8 million in 2007
to US$717.9 million in 2008. The increase in the gross
profit, as explained above, was primarily a result of higher
prices in our main businesses and higher volumes in iodine which
helped us to offset lower sales volumes in the specialty plant
nutrients business line, and slightly higher costs.
Selling and
administrative expenses
Selling and administrative expenses totaled US$85.7 million
(4.8% of revenues) for 2008, compared to US$70.3 million
(5.9% of revenues) recorded during 2007. These higher expenses
were mainly the result of increased sales commissions in the
specialty plant nutrients business line.
10
Operating
income
As a result of the factors described above, operating income
increased 144% to US$632.2 million in 2008 from
US$259.5 million in 2007.
Non-operating
income and expenses
We recorded a non-operating loss of US$19.3 million for
2008 which is lower than the US$27.1 million loss recorded
for 2007. The decrease in the non-operating loss was primarily a
result of higher interest income, which increased from
US$9.3 million in 2007 to US$13.9 million in 2008, and
relatively stable interest expenses.
Income
taxes
In 2008, income taxes were US$108.0 million, resulting in
an effective consolidated tax rate of 17.6%, compared to income
taxes of US$48.6 million and an effective consolidated tax
rate of 20.9% in 2007. In accordance with Chilean law, SQM and
each of its Chilean subsidiaries compute and pay taxes on an
individual basis, not on a consolidated basis. We had tax loss
carry-forwards of US$16.9 million as of December 31,
2008, the majority of which have no expiration dates and are
expected to be utilized in the future.
The corporate income tax rate in Chile was 17% for 2008 and
2007. Sociedad Química y Minera de Chile S.A.s (the
Company) effective tax rate is higher than the
Chilean rate mainly because its foreign operations are subject
to higher tax rates.
The 122% increase in income taxes was mainly due to the increase
in our taxable income.
Liquidity and
capital resources
As of December 31, 2009, we had US$545.4 million of
cash and cash equivalents and time deposits. In addition, as of
December 31, 2009, we had unused uncommitted credit lines
amounting to US$470.5 million and unused committed credit
lines amounting to US$40 million. We renewed part of these
committed lines during 2009 for a period of 3 years.
Shareholders equity remained relatively unchanged from
US$1,463.1 million in 2008 to US$1,466.6 million in
2009. Our ratio of total liabilities to equity plus minority
interest on a consolidated basis increased from 0.70 as of
December 31, 2008 to 1.12 as of December 31, 2009.
We evaluate from time to time our cash requirements to fund
capital expenditures, dividend payouts and increases in working
capital. If we consider that our internally generated cash flows
will not be sufficient we evaluate and choose the best financial
alternative available to us. As debt requirements also depend on
the level of accounts receivables and inventories, we cannot
accurately determine the amount of debt we will require.
However, we believe that our cash flow generated by operations,
cash balances and available credit lines will enable us to meet
our working capital, capital expenditure and debt service
requirements for 2010, 2011 and 2012.
11
The table below sets forth SQMs cash flows for 2009, 2008,
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S.
dollars)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Cash generated by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
371.4
|
|
|
|
457.3
|
|
|
|
311.3
|
|
Financing activities
|
|
|
202.5
|
|
|
|
(38.4
|
)
|
|
|
(157.1
|
)
|
Investing activities
|
|
|
(373.0
|
)
|
|
|
(278.8
|
)
|
|
|
(174.2
|
)
|
Increase (decrease) in cash and cash equivalents
|
|
|
226.6
|
|
|
|
139.6
|
|
|
|
(19.7
|
)
|
|
|
We operate a capital-intensive business that requires
significant investments in revenue-generating assets. Our growth
strategy has included the purchase of production facilities and
equipment and has also included the improvement and expansion of
existing facilities. Funds for capital expenditures and working
capital requirements have been obtained from net cash provided
by operating activities, corporate borrowing under credit
facilities and issuance of debt securities.
Our capital expenditures, not considering capitalized interest,
amounted to US$357.0 million in 2009.
For 2010, we expect total capital expenditures of approximately
US$370 million, and we expect total capital expenditures of
approximately US$280 million in 2011, which can be
increased or decreased depending on market conditions.
Our other major use of funds is the payment of dividends. We
declared US$325.9 million, US$217.0 million and
US$91.8 million in dividends during the years 2009, 2008
and 2007 respectively. On March 16, 2010, our Board of
Directors agreed to propose a modification to our 2009 dividend
policy that would lower the dividend rate from 65% to 50% of net
income. This modification is subject to shareholder approval at
the next annual shareholders meeting to be held on
April 29, 2010. Under Chilean law, the minimum dividend
payout is 30% of net income for each fiscal year.
Financing
activities
Our current ratio (current assets divided by current
liabilities) increased from 3.0x as of December 31, 2008 to
3.2x as of December 31, 2009. The following table sets
forth key information about our outstanding debt as of
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
Financial instruments
|
|
Interest rate
|
|
Issue date
|
|
Maturity date
|
|
Amortization
|
|
|
BondCH$ 21,000 million(1)
|
|
7.00%
|
|
Jan. 13, 2009
|
|
Jan. 5, 2014
|
|
Bullet
|
BondUF 1.50 million(1)
|
|
3.00%
|
|
May 8, 2009
|
|
Apr. 1, 2014
|
|
Bullet
|
BondCH$ 52,000 million(1)
|
|
5.50%
|
|
May 8, 2009
|
|
Apr. 1, 2014
|
|
Bullet
|
BondUS$200 million
|
|
6.125%
|
|
Apr. 5, 2006
|
|
Apr. 15, 2016
|
|
Bullet
|
BondUF 2.55 million(1)
|
|
4.00%
|
|
Jan. 24, 2006
|
|
Dec. 1, 2026
|
|
Semiannual partial
amortization
beginning in 2007
|
BondUF 4.00 million(1)
|
|
4.90%
|
|
Jan. 13, 2009
|
|
Jan. 5, 2030
|
|
Semiannual,
beginning in 2019
|
12
|
|
|
|
|
|
|
|
|
|
Financial instruments
|
|
Interest rate
|
|
Issue date
|
|
Maturity date
|
|
Amortization
|
|
|
Syndicated loanUS$100 million
|
|
3M LIBOR + 0.375%
|
|
Mar. 3, 2005
|
|
Feb. 25, 2010
|
|
Bullet
|
Bilateral loanUS$50 million
|
|
6M LIBOR + 1.50%
|
|
Dec. 24, 2008
|
|
Dec. 24, 2010
|
|
Bullet
|
Bilateral loanUS$20 million
|
|
6M LIBOR + 3.30%
|
|
Mar. 20, 2009
|
|
Mar. 20, 2011
|
|
Bullet
|
Bilateral loanUS$10 million
|
|
6M LIBOR + 3.30%
|
|
Mar. 23, 2009
|
|
Mar. 23, 2011
|
|
Bullet
|
Syndicated loanUS$80 million
|
|
6M LIBOR + 0.30%
|
|
Nov. 28, 2006
|
|
Nov. 28, 2011
|
|
Bullet
|
Syndicated loanUS$75 million
|
|
3M LIBOR + 3.00%
|
|
Jun. 30, 2009
|
|
Jun. 24, 2012
|
|
Bullet
|
Bilateral loanUS$40 million
|
|
3M LIBOR + 2.25%
|
|
Sep. 11, 2009
|
|
Sep. 11, 2012
|
|
Bullet
|
Bilateral loanUS$140 million
|
|
6M LIBOR + 2.10%
|
|
Oct. 29, 2009
|
|
Oct. 29, 2014
|
|
Bullet
|
|
|
|
|
|
(1)
|
|
UF- and Ch$- denominated bonds are
fully hedged to U.S. dollars with cross-currency swaps.
|
As of December 31, 2009, we had total debt of
US$1,302.3 million, compared to total debt of
US$657.7 million as of December 31, 2008. Taking in
account the effects of financial derivatives, total debt
amounted to US$1,238.6 million as of December 31, 2009
and US$659.1 million as of December 31, 2008. Of the
total debt as of December 31, 2009, US$267.1 million
was short-term debt. All of our long-term debt (including the
current portion) as of December 31, 2009 was denominated in
U.S. dollars, and all our UF and Ch$ local bonds were
hedged with cross-currency swaps to the U.S. dollar.
From December 31, 2009 to the date hereof, we repaid or
renewed the following debt:
|
|
|
on January 26, 2010, we paid short-term bank debt, in an
amount of US$10 million with a term of 11 months and
an annual interest rate of approximately Libor + 2.4%.
|
|
|
on February 12, 2010, we paid short-term bank debt, dated
as of February 20, 2009, in an amount of US$20 million
with a term of 1 year and an annual interest rate of
approximately Libor + 2.585%.
|
|
|
on February 22, 2010, we renewed a short-term bank debt, in
an amount of US$14.5 million with a term of 6 months
and an annual interest rate of approximately Libor + 0.557%.
|
|
|
on February 25, 2010, we renewed a short-term bank debt, in
an amount of US$20 million with a term of 3 months and
an annual interest rate of approximately Libor + 0.6%.
|
|
|
on February 25, 2010, we paid a US$100 million credit
agreement, dated as of February 25, 2005, with a term of
5 years and an annual interest rate of approximately Libor
+ 0.375%.
|
|
|
On March 17, 2010, we paid commercial papers, dated as of
March 24, 2009, in an amount of Th Ch$15,000,000
(US$29 million) with a term of 9 months and an annual
interest rate of approximately 3.3% in pesos.
|
The financial covenants related to our debt instruments include:
(i) limitations on the ratio of total liabilities to equity
(including minority interest) on a consolidated basis,
(ii) limitations on the ratio of total liabilities to
equity (including minority interest) on an unconsolidated basis,
(iii) minimum net worth requirements, (iv) limitations
on net financial debt to EBITDA (operating income plus
amortization expense plus depreciation plus dividends received
from investment in relate companies) ratio on a consolidated
basis, (v) limitations on interest indebtedness of
operating subsidiaries and (vi) minimum production assets.
We believe that the terms and conditions of our debt agreements
are standard and customary and that we are in compliance in all
material respects with such terms and conditions.
13
The following table sets forth the maturities of our long-term
debt by year December 31, 2009:
|
|
|
|
|
|
|
Maturity(1)
|
|
|
|
(in millions of US$)
|
|
Amount
|
|
|
|
|
2011
|
|
|
115.13
|
|
2012
|
|
|
120.13
|
|
2013
|
|
|
5.13
|
|
2014
|
|
|
327.28
|
|
2015
|
|
|
5.13
|
|
2016 and thereafter
|
|
|
402.81
|
|
|
|
|
|
|
Total
|
|
|
975.62
|
|
|
|
|
|
|
(1)
|
|
Only the capital has been included.
For the UF and Ch$ local bonds, the amounts presented reflect
the real U.S. dollar obligation resulting from the effects of
the cross currency swaps that hedge these bonds to the U.S.
dollar.
|
Derivative
financial instruments and hedging
Occasionally, SQM uses derivative financial instruments,
including foreign currency forwards and options contracts as
well as cross currency swaps, to mitigate the risks associated
with fluctuations in interest and exchange rates. Such
derivative financial instruments are initially recognized at
fair value as of the date of the derivative contract and are
subsequently remeasured at fair value quarterly. Derivatives are
recorded as assets when fair value is positive and as
liabilities when fair value is negative. Any gain or loss that
arises from the changes of the fair value of derivatives during
the year that do not qualify for hedge accounting is recorded
directly to the income statement. The fair value of cross
currency swaps is calculated per review of the current forward
exchange rates for contracts with similar maturity profiles. The
fair value of swap contracts on interest rate is calculated per
review of the market values of similar instruments.
Off-balance sheet
arrangements
We have not entered into any transactions with unconsolidated
entities whereby we have financial guarantees, retained or
contingent interests in transferred assets, derivative
instruments or other contingent arrangements that would expose
us to material continuing risks, contingent liabilities, or any
other obligation arising out of a variable interest in an
unconsolidated entity that provides financing, liquidity, market
risk or credit risk support to us or that engages in leasing,
hedging or research and development services with us.
Market risk
analysis
We are exposed to market risk from changes in currency exchange
rates and interest rates. Through various arrangements described
below, we seek to hedge our foreign currency exposures.
As of December 31, 2009, the
mark-to-market
value of our derivative financial instruments amounted to an
asset of US$68.0 million reflected in other current assets.
Foreign currency
risk
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 and our
functional currency for financial statement reporting purposes.
A significant portion of our operating costs is related to the
peso. Therefore, an increase or decrease in the exchange rate
between the peso and the U.S. dollar affects our costs of
production. Additionally, as an international company operating
14
in Chile and in several other countries, we transact a portion
of our business and have assets and liabilities in pesos and
other
non-U.S. dollar
currencies, such as the Euro, the South African rand and the
Mexican peso. As a result, fluctuations in the exchange rate of
such currencies to the U.S. dollar affect our financial
condition and results of operations.
Interest rate
risk
Interest rate risk exists principally with respect to SQMs
floating rate indebtedness, substantially all of which is
determined by reference to three- or six-month LIBOR. On
December 31, 2009, SQM had US$1,302.3 million
principal aggregate amount of indebtedness, 45.0% of which bore
interest at floating interest rates and 55.0% of which bore
interest at fixed rates. While the Company hedges against
foreign currency risk by entering into cross currency swaps, it
does not hedge against changes in interest rate.
Critical
accounting policies
Critical accounting policies are defined as those that are
reflective of significant judgments and uncertainties, which
would potentially result in materially different results under
different assumptions and conditions.
We believe that our critical accounting policies applied in the
preparation of our Chilean GAAP consolidated financial
statements are limited to those described below. It should be
noted that in many cases, Chilean GAAP specifically dictates the
accounting treatment of a particular transaction, with limited
managements judgment in their application. There are also
areas in which managements judgment in selecting available
alternatives would not produce materially different results.
Allowance for
doubtful accounts
We maintain allowances for doubtful accounts for estimated
losses resulting from a
case-by-case
analysis of the probability of our customers being unable to
make required payments. If the financial condition of our
customers were to deteriorate unexpectedly, impacting their
ability to make payments, additional allowances might be
required. We routinely review the financial condition of our
customers and make assessments of collectability.
Deferred income
tax asset valuation allowance
We and each of our subsidiaries compute and pay income tax on a
separate basis, except for our U.S. subsidiaries. We
estimate our tax exposure and assess temporary differences
resulting from differing treatment of various items for tax and
accounting purposes. These differences result in deferred tax
assets and liabilities, which are reflected in our consolidated
balance sheet.
We record a valuation allowance to reduce deferred tax assets to
the amount that we believe is more likely than not to be
realized. The valuation of the deferred tax asset is dependent
on, among other things, our ability to generate a sufficient
level of future taxable income.
Inventories
Inventories of finished products and work in process are valued
at average production cost. Raw materials and goods for resale
acquired from third parties are stated at average acquisition
cost and
materials-in-transit
are valued at cost. These values do not exceed net realizable
values.
15
Inventories of non-critical spare parts and supplies are
classified as other current assets, except for those items for
which we estimate a turnover period in excess of one year, which
are classified as other long-term assets.
Inventories are stated net of allowances for items that cannot
be sold and obsolete items determined based on technical studies
of inventory conditions and usefulness.
Staff severance
indemnities
We have significant staff severance indemnity liabilities, which
are recognized on an accrual basis. Inherent in the valuations
of these obligations are key assumptions, including discount
rates. We are required to consider current market conditions,
including changes in interest rates, in selecting these
assumptions. Changes in the related benefit plan liabilities may
occur in the future due to changes resulting from fluctuations
in our related headcount or to changes in the assumptions.
Mining
development costs
Mine exploration costs and stripping costs to maintain
production of mineral resources extracted from operating mines
are considered variable production costs and are included in the
cost of inventory produced during the period. Mine development
costs at new mines, and major development costs at operating
mines outside existing areas under extraction that are expected
to benefit future production, are capitalized under other
long-term assets and amortized using a
units-of-production
method over the associated proven and probable reserves. We
determine our proven and probable reserves based on drilling,
brine sampling and geostatistic reservoir modeling in order to
estimate mineral volume and composition.
All other mine exploration costs, including expenses related to
low grade mineral resources rendering reserves that are not
economically exploitable, are charged to the results of
operations in the period in which they are incurred.
Long-lived assets
and their impairment
We estimate the useful lives of property, plant and equipment in
order to determine the amount of depreciation expense to be
recorded during any reporting period. The estimated useful lives
are based on historical experience with similar assets, taking
into account anticipated technological or other changes. If
technological changes are expected to occur more rapidly or in a
different way than previously anticipated, the useful lives
assigned to these assets may need to be reduced, resulting in
the recognition of increased depreciation expense in future
periods.
We evaluate the recoverability of our long-lived assets (other
than intangibles and deferred tax assets) in accordance with
Technical Bulletin No. 33, Accounting treatment
of Property, Plant and Equipment, issued by the Chilean
Association of Accountants. Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The
rules require recognition of impairment of long-lived assets in
the event that the net book value of such assets exceeds the
future undiscounted net cash flows attributable to such assets.
Impairment, if any, is recognized in the period of
identification to the extent the carrying amount of an asset
exceeds the fair value of such asset. We believe that the
accounting estimate related to asset impairment is critical
because it requires us to make assumptions about future cash
flows generated from the use of the assets over their estimated
useful lives.
16
Impairment of
goodwill
We have recorded goodwill related to business acquisitions.
Under Chilean GAAP, goodwill should be reviewed for impairment
when events or circumstances, such as recurrent losses for two
or more periods, indicate a possible inability to realize the
carrying amount.
The impairment analysis requires management to make subjective
judgments concerning estimates of how the assets will perform in
the future using a discounted cash flow analysis. Additionally,
estimated cash flows may extend beyond ten years and, by their
nature, are difficult to determine. Events and factors that may
significantly affect the estimates include, among others,
competitive forces, customer behavior and attrition, changes in
revenue growth trends, cost structures and technology, and
changes in interest rates and specific industry or market sector
conditions.
Revenue
recognition
Operating revenues are recognized on the date of physical
delivery of the products, in accordance with the conditions of
the respective sales arrangements, in conformity with Technical
Bulletin No. 70 of the Chilean Association of Accountants.
Sales invoices issued for goods not delivered to the customers
prior to balance sheet date are recorded in deferred income.
Derivatives
The Companys financial derivative instruments are
primarily foreign currency forwards and options as well as cross
currency swaps. The Company records these financial derivative
contracts at fair value. Estimates of fair values of financial
instruments for which no quoted prices on active markets exist
are made using valuation techniques such as forward pricing
models, present value of estimated future cash flows, and other
modeling techniques. These estimates of fair value include
assumptions made by the Company about market variables that may
change in the future.
Adoption of
International Financial Reporting Standards
In conformity with regulations of SVS, on January 1, 2010
we effectively adopted IFRS as issued by the IASB. As a result,
balances of our assets, liabilities and equity as of
January 1, 2010 were impacted. The adoption will also have
an impact on the results of our operation in future years. Our
first annual financial statements under IFRS will be prepared as
of and for the year ended December 31, 2010 and will
include comparative financial information for the year 2009
which will differ from our 2009 financial statements.
17
Business
Business
overview
We believe that we are the worlds largest integrated
producer of potassium nitrate, iodine and lithium carbonate. We
also produce other specialty plant nutrients, iodine and lithium
derivatives, potassium chloride and certain industrial chemicals
(including industrial nitrates). Our products are sold in over
100 countries through our worldwide distribution network, with
86% of our sales derived from countries outside Chile in 2009.
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
worlds largest commercially exploited source of natural
nitrates. The brine deposits of the Salar de Atacama, a
salt-encrusted depression within 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, boric
acid and bischofite (magnesium chloride). We produce lithium
carbonate and lithium hydroxide at a 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.
Our products are divided into six main categories: specialty
plant nutrients; iodine and its derivatives; lithium and its
derivatives; industrial chemicals; potassium chloride; and other
commodity fertilizers. Specialty plant nutrients are fertilizers
that enable farmers to improve yields and quality of certain
crops. Iodine, lithium and their derivatives are used in human
nutrition, pharmaceuticals and other industrial applications.
Specifically, iodine and its derivatives are mainly used in the
x-ray contrast media and biocides industries, and a growing
application is in the production of polarizing film, which is an
important component in liquid crystal display (LCD)
screens. Lithium and its derivatives are mainly used in
batteries, greases and frits for production of ceramics.
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 solar energy plants as a means for energy
storage. Potassium chloride is a commodity fertilizer that is
produced and sold by the Company worldwide. During 2009,
potassium chloride has begun to contribute significantly to our
operations, and we expect this trend to continue in the near
future. In addition, we complement our portfolio of plant
nutrients through the buying and selling of other fertilizers
mainly for use in Chile.
For the year ended December 31, 2009, we had sales of
US$1,436.9 million, operating income of
US$441.9 million and net income of US$327.1 million.
Our market capitalization as of December 31, 2009 was
approximately US$9.89 billion.
Our Series A and Series B common shares are listed on
the Santiago Stock Exchange. Our Series B ADSs have been
listed on the NYSE since 1993. Our ticker symbols on the
Santiago Stock Exchange for our Series A and Series B
shares are SQM-A and SQM-B,
respectively, and our ticker symbol on the NYSE for the
Series B ADSs is SQM.
18
The following table sets forth the percentage breakdown of our
revenues during the years 2005 through 2009 according to our
product lines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
Specialty plant nutrients
|
|
|
45%
|
|
|
|
55%
|
|
|
|
49%
|
|
|
|
48%
|
|
|
|
54%
|
|
Iodine and its derivatives
|
|
|
13%
|
|
|
|
14%
|
|
|
|
18%
|
|
|
|
21%
|
|
|
|
17%
|
|
Lithium and its derivatives
|
|
|
8%
|
|
|
|
10%
|
|
|
|
15%
|
|
|
|
12%
|
|
|
|
9%
|
|
Industrial chemicals
|
|
|
8%
|
|
|
|
7%
|
|
|
|
7%
|
|
|
|
7%
|
|
|
|
8%
|
|
Potassium chloride
|
|
|
20%
|
|
|
|
8%
|
|
|
|
4%
|
|
|
|
3%
|
|
|
|
4%
|
|
Other commodity fertilizers
|
|
|
6%
|
|
|
|
6%
|
|
|
|
7%
|
|
|
|
9%
|
|
|
|
8%
|
|
|
|
|
|
|
|
Total
|
|
|
100%
|
|
|
|
100%
|
|
|
|
100%
|
|
|
|
100%
|
|
|
|
100%
|
|
|
|
History
We were formed in 1968 through a joint venture between
Compañía Salitrera Anglo Lautaro S.A. (Anglo
Lautaro) and Corporación de Fomento de la
Producción (Corfo), a Chilean state-owned
development corporation. 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 been traded on the NYSE under the
ticker symbol SQM since 1993.
Since 2005, we have strengthened our leadership in our main
businesses by increasing our capital expenditure program and
making appropriate acquisitions and divestitures. During this
period, we acquired Kemira Emirates Fertilizers Company
(Kefco) in Dubai and the iodine business of the DSM
Group, a Netherlands based economic group while selling
(i) Fertilizantes Olmeca, our Mexican subsidiary,
(ii) our butyllithium plant located in Houston, Texas and
(iii) our stake in Impronta S.R.L., our Italian subsidiary.
These sales have allowed us to concentrate our efforts on our
core products. In 2007, we completed the construction of a new
prilling and granulating plant. In 2008, we completed our
lithium carbonate production capacity expansion and began work
on the engineering stage of a new potassium nitrate plant. In
2009, we began work to increase production capacity of potassium
chloride. Production capacity expansion of this product will
continue until 2012. In March 2010, we temporarily suspended
operations at our El Toco and Pampa Blanca mines as a result of
decreased global demand for nitrates and iodine during the
proceeding 15 months coupled with our current high
inventory of these products.
Our market capitalization as of December 31, 2009 was
US$9.89 billion.
Business
strategy
Our general business strategy is to:
|
|
|
maintain leadership in specialty plant nutrients, iodine,
lithium and industrial nitrates, in terms of production
capacity, costs, production, pricing and development of new
products;
|
|
|
increase our production capacity of potassium-related
fertilizers from the Salar de Atacama;
|
19
|
|
|
continually increase the efficiency of our production processes
and reduce costs;
|
|
|
evaluate acquisitions, joint ventures and commercial alliances
in each of our core businesses; and
|
|
|
maintain a solid, conservative financial position and investment
grade ratings for our debt securities.
|
We have identified market demand in each of our major product
lines, both within our existing customer base and in new
markets, for existing products and for additional products that
can be produced from our natural resources. In order to take
advantage of these opportunities, we have developed specific
strategies for each of our product lines.
Specialty plant
nutrients
Our strategy in our specialty plant nutrients business is to:
(i) continue expanding our sales of natural nitrates by
continuing to leverage the advantages of our specialty products
over commodity-type fertilizers; (ii) increase our sales of
higher margin specialty plant nutrients based on potassium and
natural nitrates, particularly soluble potassium nitrate and NPK
blends; (iii) pursue investment opportunities in
complementary businesses to increase production, reduce costs,
and add value to and improve 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 for 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;
and (vii) reduce our production costs through improved
processes and higher labor productivity so as to compete more
effectively.
Iodine and its
derivatives
Our strategy in our iodine business is to (i) maintain our
leadership in the iodine market by encouraging demand growth and
expanding our production capacity in line with such demand
growth; (ii) develop new iodine derivatives and participate
in iodine recycling projects; and (iii) reduce our
production costs through improved processes and higher labor
productivity in order to compete more effectively.
Lithium and its
derivatives
Our strategy in our lithium business is to (i) maintain our
leadership in the lithium industry as the largest producer and
distributor of lithium carbonate and lithium hydroxide;
(ii) selectively pursue opportunities in the lithium
derivatives business by creating new lithium compounds; and
(iii) reduce our production costs through improved
processes and higher labor productivity in order to compete more
effectively.
Industrial
chemicals
Our strategy in our industrial chemical business is to
(i) maintain our leadership position in sodium nitrate and
potassium nitrate; (ii) maintain our leadership position in
the industrial nitrates for thermal storage market and become a
long-term, reliable source for the industry;
20
and (iii) reduce our production costs through improved
processes and higher labor productivity in order to compete more
effectively.
Potassium
chloride
Our strategy is to increase significantly our production
capacity of potassium chloride. Our distribution strategy is
(i) to offer a portfolio or package of products including
potassium sulfate, potassium nitrate and other fertilizers to
our traditional markets; and (ii) to focus in markets where
we have logistical advantages.
New business
ventures
From time to time we evaluate opportunities to expand our
business in our current core businesses or within new businesses
in which we believe we may have sustainable competitive
advantages, both within and outside Chile, and we expect to
continue to do so in the future. We are currently exploring
concessions for certain metallic minerals. If found, we may
decide to exploit, sell or enter into a joint venture to extract
these resources. We may decide to acquire part or all of the
equity of, or undertake joint ventures or other transactions
with, other companies involved in our businesses or in other
businesses.
Capital
expenditure program
We are constantly reviewing different opportunities to improve
our production methods, 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 during
the past five years were mainly related to the acquisition of
new assets, construction of new facilities and renewal of plant
and equipment.
We have developed a capital expenditure program calling for
investments totaling US$370 million for 2010 and a total of
US$280 million during 2011. The main purpose of our capital
expenditure program is to increase the production capacities of
several of our products, including expansions in natural
nitrates and potassium-based products from the Salar de Atacama.
In addition, part of this investment plan is intended to
modernize production processes in order to improve our operating
efficiency.
During 2009, we had total capital expenditures of
US$357 million (not including capitalized interest of
US$19.2 million), primarily due to:
|
|
|
continued construction of a new potassium nitrate production
facility at Coya Sur;
|
|
|
investments related to increase production capacity of
potassium-based products at the Salar de Atacama;
|
|
|
upgrade of our railroad system to handle expanded production
capacity; and
|
|
|
various projects designed to maintain production capacity,
increase yields and reduce costs.
|
We have budgeted for 2010 and 2011 total capital expenditures of
approximately US$650 million, primarily relating to:
|
|
|
completion of potassium nitrate expansion at Coya Sur;
|
21
|
|
|
investments related to increase production capacity of
potassium-based products at the Salar de Atacama;
|
|
|
upgrade of our railroad system to handle expanded production
capacity; and
|
|
|
various projects designed to maintain production capacity,
increase yields and reduce costs.
|
Our
products
Specialty plant
nutrients
We believe we are the worlds largest producer of potassium
nitrate. We estimate that our sales accounted for approximately
50% of world potassium nitrate sales by volume in 2009. We also
produce the following specialty plant nutrients: sodium nitrate,
sodium potassium nitrate, potassium sulfate, urea phosphate and
specialty blends (containing various combinations of nitrogen,
phosphate and potassium and generally known as NPK
blends).
These specialty plant nutrients have specific characteristics
that increase productivity and enhance quality when used on
certain crops and soils. Additionally, these plant nutrients are
well suited for high-yield agricultural techniques such as
hydroponics, fertigation, greenhousing and foliar applications.
High-value crop farmers are prompted to invest in specialty
plant nutrients due to their technical advantages over commodity
fertilizers (such as urea and potassium chloride). These
advantages translate into products and crops with higher yields
and added quality. Our specialty plant nutrients have
significant advantages for certain applications over commodity
fertilizers based on nitrogen and potassium, such as the
aforementioned urea and potassium chloride.
In particular, our specialty plant nutrients:
|
|
|
are fully water soluble, allowing their use in hydroponics,
fertigation, foliar applications and other advanced agricultural
techniques;
|
|
|
are absorbed more rapidly by plants because they do not require
nitrification, unlike ammonia-based fertilizers;
|
|
|
are free of chlorine content, reducing the risk of scorching
roots and other problems caused by chlorine;
|
|
|
do not release hydrogen after application, thereby avoiding
increased soil acidity;
|
|
|
possess trace elements, which promote disease resistance in
plants and have other beneficial effects;
|
|
|
are more attractive to customers who prefer products of natural
origin; and
|
|
|
are more efficient than commodity fertilizers because they
deliver more nutrients per unit of product applied.
|
In 2009, our sales from specialty plant nutrients were
US$648.7 million, representing 45% of our total sales for
that year. Decreased sales in 2009, compared to a peak in 2008,
were due to lower demand and a decrease in prices as a result of
global economic conditions.
22
Specialty
plant nutrients market
The target market for our specialty plant nutrients is
high-value crops such as fruits, vegetables, and crops grown
using modern agricultural techniques. 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 increasing use of green houses; (ii) the
increase in the cost of land, which has forced farmers to
improve their yields; (iii) the scarcity of water;
(iv) the increase of consumption of fresh fruits and
vegetables per capita; and (v) the increasing demand for
higher quality crops.
Worldwide scarcity of water and weather changes forces farmers
to develop new agricultural techniques, such as fertigation,
that minimize water requirements. These applications require
fully water-soluble plant nutrients.
Increasing land costs near urban centers also force farmers to
maximize their yield per surface area. Specialty plant
nutrients, when applied to certain crops, help to increase
productivity for various reasons. In particular, since our
nitrate-based specialty plant nutrients provide nitrogen in
nitric form, crops absorb them faster than they absorb urea- or
ammonium-based fertilizers, which provide nitrogen in ammonium
form. This is because crops absorb nitrogen in nitric form; thus
nitrogen in ammonium form has to be converted into nitric form
in the soil first. This process does not occur immediately as it
takes time and requires special soil conditions, and it releases
hydrogen into the soil, increasing soil acidity, which in most
cases is harmful to the soil and the crop. Nitric nitrogen
application facilitates a more efficient application of
nutrients to the plant, thereby increasing the crops yield
and improving its quality.
Our potassium-based specialty plant nutrients are chlorine free,
unlike potassium chloride, which is the most commonly used
potassium-based commodity fertilizer. In certain crops, chlorine
has negative effects that translate into lower yield and quality.
The most important agricultural applications of sodium nitrate,
potassium nitrate, potassium sulfate and sodium potassium
nitrate plant nutrients are: industrial crops, vegetables,
fruits, sugar beet, cotton and other high-value crops.
Specialty
plant nutrients products
Potassium nitrate, sodium potassium nitrate and specialty blends
are higher margin products derived from, or consisting of,
sodium nitrate, and they are all produced in crystallized or
prilled form. Specialty blends are produced using our own
specialty plant nutrients and other components at blending
plants operated by the Company or its affiliates and related
companies in Chile, the United States, Mexico, United Arab
Emirates, Belgium, The Netherlands, South Africa, Turkey and
Egypt.
23
The following table shows our sales volumes of and revenues from
specialty plant nutrients during the years 2005 through 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Th. MT)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
Sales Volume
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sodium nitrate
|
|
|
16,500
|
|
|
|
22,800
|
|
|
|
45,900
|
|
|
|
43,300
|
|
|
|
63,300
|
|
Potassium nitrate and sodium potassium nitrate
|
|
|
392,100
|
|
|
|
538,200
|
|
|
|
695,300
|
|
|
|
615,000
|
|
|
|
690,200
|
|
Potassium sulfate
|
|
|
133,400
|
|
|
|
138,300
|
|
|
|
172,000
|
|
|
|
172,400
|
|
|
|
178,600
|
|
Blended and other specialty plant nutrients(1)
|
|
|
274,800
|
|
|
|
309,000
|
|
|
|
378,600
|
|
|
|
393,800
|
|
|
|
350,700
|
|
Revenues (in US$ millions)
|
|
|
648.7
|
|
|
|
978.9
|
|
|
|
580.8
|
|
|
|
503.1
|
|
|
|
487.8
|
|
|
|
|
|
|
(1)
|
|
Includes blended and other
specialty plant nutrients. It also includes Yaras products
sold pursuant to our commercial agreement.
|
Specialty
plant nutrients marketing and customers
In 2009, we sold our specialty plant nutrients in close to 90
countries. During the same year, sales of the Companys
specialty plant nutrients sales were exported: 24% were sold to
customers in Central and South America (not including Chile), 7%
to customers in Chile, 26% to customers in North America, 25% to
customers in Europe and 18% to customers in other regions. No
single customer represented more than 7% of SQMs specialty
plant nutrient sales during 2009, and our 10 largest customers
accounted in the aggregate for 38% of sales during that period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales breakdown
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
Central and South America
|
|
|
24%
|
|
|
|
34%
|
|
|
|
28%
|
|
|
|
29%
|
|
|
|
29%
|
|
North America
|
|
|
26%
|
|
|
|
19%
|
|
|
|
23%
|
|
|
|
22%
|
|
|
|
22%
|
|
Europe
|
|
|
25%
|
|
|
|
20%
|
|
|
|
19%
|
|
|
|
19%
|
|
|
|
20%
|
|
Chile
|
|
|
7%
|
|
|
|
7%
|
|
|
|
10%
|
|
|
|
9%
|
|
|
|
9%
|
|
Others
|
|
|
18%
|
|
|
|
20%
|
|
|
|
20%
|
|
|
|
21%
|
|
|
|
20%
|
|
|
|
The amounts set forth in the table above reflect sales of
SQMs specialty plant nutrients products and do not include
sales by SQM of third-party specialty plant nutrients products.
We sell our specialty plant nutrients products outside Chile
mainly through our own worldwide network of representative
offices and through our distribution affiliates.
In November 2001, we signed an agreement with Yara. This
agreement allows us to make use of Yaras distribution
network in countries where its presence and commercial
infrastructure are larger than ours. Similarly, in those markets
where our presence is larger, both our specialty plant nutrients
and Yaras are marketed through our offices. Both parties,
however, maintain an active control over the marketing of their
own products.
We also signed a joint venture agreement with Yara and Israel
Chemicals Limited at the end of 2001. Under this joint venture
agreement, SQM, Yara, and Israel Chemicals Limited are
developing the liquid and soluble plant nutrient blends business
through their participation in a Belgian company called NU3 N.V.
(NU3), to which SQM and Israel Chemicals Limited
contributed their blending facility in Belgium, and Yara
contributed its blending facility in the Netherlands. With
24
this joint venture agreement, important synergies have been
achieved, particularly in production costs, administration and
the marketing of soluble blends, strengthening the development
of new products and improving customer service.
In 2005, SQM and Yara formed a joint venture called MISR
Specialty Fertilizers (MSF), for the production of
tailor-made liquid NPK (nitrogen-phosphate-potassium)
fertilizers. The plant is located in Egypt and has a production
capacity of 80,000 metric tons per year.
In 2005, SQM also acquired 100% of the shares of Kefco, which
has a urea phosphate plant located in Dubai. Urea phosphate is a
specialty plant nutrient that is used primarily in drip
irrigation systems. The plant has an annual production capacity
of 30,000 metric tons.
In May 2008, we signed a commitment letter for a joint venture
with Migao Corporation (Migao) for the production
and distribution of specialty plant nutrients in China. In 2009,
we signed a shareholders agreement in connection with this joint
venture. Through the joint venture, we will construct a
potassium nitrate plant with a production capacity of 40,000
metric tons per year. We expect this plant to be ready during
the fourth quarter of 2010. In addition, the joint venture will
distribute the potassium nitrate produced by Migao in China and
imports of SQMs specialty plant nutrients to China, and it
will also handle any exports of potassium nitrate produced by
the joint venture or by Migao. This joint venture will enable us
to increase our presence in China, which represents one of the
most important and fastest-growing markets for the fertilizer
industry.
In May 2009, SQMs subsidiary Soquimich European Holdings,
entered into an agreement with Coromandel Fertilizers Ltd. to
create a joint venture for the production and distribution of
water soluble fertilizers in India. The agreement established a
50/50
contribution to the joint venture. As part of the agreement, a
new 15,000 metric ton facility will be constructed in the city
of Kakinada to produce water soluble fertilizers (NPK grades).
This new facility will require a total investment of
approximately US$2.2 million and should be operational by
the second half of 2010.
In October 2009, SQM S.A. signed an agreement with Qingdao Star
Plant Protection Technology Co., Ltd., resulting in the creation
of the joint venture SQM Qingdao, for the production,
distribution and sale of soluble NPK specialty plant nutrients
in China. The agreement, a
50/50
joint venture, entails a total investment of US$2 million.
The plant, located in the city of Jimo, province of Shangdong,
is currently operational and will have an annual production
capacity of 15,000 metric tons.
In December 2009, SQM signed an agreement with the French
Roullier Group to form the joint venture SQM VITAS.
This agreement joins two of the largest companies in the
businesses of specialty plant nutrients, specialty animal
nutrition and professional hygiene. Peru, Brazil and Dubai will
be the main focus of this joint venture. As part of the
agreement, the SQM mixing plant located in Dubai becomes part of
this joint venture.
We maintain stocks of our specialty plant nutrients 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.
In connection with our marketing efforts, we provide technical
and agronomical assistance and support to our customers. By
working closely with our customers, we are able to identify new,
higher-value-added products and markets. Our specialty plant
nutrients products are used on a
25
wide variety of crops, particularly value-added crops, where the
use of our products enables our customers to increase yield and
command a premium price.
Our customers are located in both the northern and southern
hemispheres. Consequently, there are no material seasonal or
cyclical factors that can materially affect the sales of our
specialty plant nutrient products.
Specialty
plant nutrients competition
We believe we are the worlds largest producer of sodium
and potassium nitrate for agricultural use. Our sodium nitrate
products compete indirectly with specialty and commodity-type
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 38% of total world sales during 2009 (excluding
sales by Chinese producers who generally sell to the domestic
Chinese market).
S.C.M. Virginia, a Chilean iodine producer, ultimately
controlled by Inverraz S.A., also produces potassium nitrate
from caliche ore and potassium chloride. ACF, another Chilean
producer, mainly oriented to iodine production, began production
of potassium nitrate from caliche ore and potassium chloride
during 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 are several potassium
nitrate producers in China, the largest of which are Wentong and
Migao. Most of the Chinese production is consumed by the Chinese
domestic market.
The principal means of competition in the sale of potassium
nitrate are product quality, customer service, location,
logistics, agronomic expertise and price.
In the potassium sulfate market, we have several competitors of
which the most important are K+S KALI GmbH (Germany),
Tessenderlo Chemie (Belgium) and Great Salt Lake Minerals Corp.
(United States). We believe that those three producers account
for a majority of the world production of potassium sulfate.
Through a partially owned facility, NU3, we also produce soluble
and liquid fertilizers using our potassium nitrate as a raw
material. Through this activity, we have acquired production
technology and marketing know-how, which we believe will be
useful for selling our products to greenhouse growers and for
use in certain high-technology processes such as fertigation and
hydroponics.
We believe we are the largest Chilean producer of bulk specialty
blends. 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.
26
Iodine and its
derivatives
We believe we are the worlds largest producer of iodine.
In 2009, our revenues from iodine and iodine derivatives
amounted to US$190.3 million, representing 13% of our total
revenues in that year. We estimate that our sales accounted for
25% of world iodine sales by volume in 2009.
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 LCDs, chemicals, herbicides, 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.
Iodine
products
We produce iodine, and through a joint venture with Ajay North
America L.L.C., (Ajay), a
U.S.-based
Company, we produce organic and inorganic iodine derivatives.
Ajay-SQM Group (ASG), established in the mid 1990s,
has production plants in the United States, Chile and France.
ASG is the worlds 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-9001:2008
program, providing third party certification of the quality
management system and international quality control standards
that we have implemented.
The following table sets forth our total sales and revenues from
iodine and iodine derivatives in the years 2005 through 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Th. MT)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
Sales Volume
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Iodine and its derivatives
|
|
|
7.2
|
|
|
|
10.5
|
|
|
|
9.1
|
|
|
|
9.8
|
|
|
|
8.1
|
|
Revenues (in US$ millions)
|
|
|
190.3
|
|
|
|
246.9
|
|
|
|
215.1
|
|
|
|
217.7
|
|
|
|
149.1
|
|
|
|
Our sales revenues in 2009 dropped from US$246.9 million to
US$190.3 million mainly due to significantly lower sales
volumes as a consequence of the global economic slowdown,
partially offset by higher prices.
Iodine
marketing and customers
In 2009, we sold our iodine products to over 300 customers in
more than 70 countries. During the same year, most of our sales
were exported: 31% was sold to customers in Europe, 36% to
customers in North America, 3% to customers in Central and South
America and 30% to customers in Asia, Oceania and other regions.
No single customer accounted for more than 6%
27
of the Companys iodine sales in 2009, and our ten largest
customers accounted in the aggregate for 43% of sales.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales breakdown
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
Europe
|
|
|
31%
|
|
|
|
30%
|
|
|
|
31%
|
|
|
|
34%
|
|
|
|
30%
|
|
North America
|
|
|
36%
|
|
|
|
40%
|
|
|
|
38%
|
|
|
|
40%
|
|
|
|
37%
|
|
Central and South America
|
|
|
3%
|
|
|
|
2%
|
|
|
|
5%
|
|
|
|
5%
|
|
|
|
13%
|
|
Others
|
|
|
30%
|
|
|
|
28%
|
|
|
|
26%
|
|
|
|
21%
|
|
|
|
20%
|
|
|
|
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 and short, medium and long-term contracts. Sales
agreements generally specify annual minimum and maximum purchase
commitments, and prices are adjusted periodically, according to
prevailing market prices.
Iodine
competition
SQM and several producers in Chile, Japan and the United States
are the worlds main iodine producers. There is also
production of iodine in Russia, Turkmenistan, Indonesia and
China.
Iodine production in Chile starts from minerals, whereas in
Japan, the United States, Russia, Turkmenistan and Indonesia
producers extract iodine from underground brines which are
mainly obtained together with the extraction of natural gas. In
China, iodine is extracted from seaweed.
We estimate that eight Japanese iodine producers accounted for
approximately 25% of world iodine sales in 2009. We estimate
that the largest Japanese producer, Ise Chemicals Ltd.,
accounted for approximately 10% of the world iodine sales
(excluding recycling).
We estimate that iodine producers in the United States (one of
which is owned by Ise Chemicals Ltd.) accounted for almost 5% of
world iodine sales in 2009, while four Chilean companies,
including SQM, accounted for approximately 53% of such sales
(25% by SQM and 28% by the other Chilean producers). Other
Chilean producers include ACF Minera S.A. and Atacama Chemical
S.A., which is controlled by Inverraz S.A. Additionally, Atacama
Minerals Corp., a Canadian company, has its iodine operations in
Chile. In 2009, a new
U.S.-based
player, Iofina, entered the iodine market. We believe that
Iofina could become a relevant player in coming years.
Iodine recycling is an increasing trend worldwide. Several
Japanese producers have recycling facilities where they recover
iodine and iodine derivatives from iodine waste streams. Iodine
recycling, mainly related to LCD consumption, has increased over
the past few years and currently represents approximately 15% of
world iodine sales. It is estimated that around 70% to 75% of
the world recycling was done by Japanese iodine producers.
SQM, through ASG or alone, is also actively participating in the
iodine recycling business using iodinated side-streams from a
variety of chemical processes in Europe, the United States and
Asia.
We estimate that worldwide sales of iodine amounted to
approximately 25,500 metric tons in 2009.
28
The prices of our iodine and iodine derivative products are
determined by world iodine prices, which are subject to market
conditions. World iodine prices vary depending upon, among other
things, the relationship between supply and demand at any given
time. The supply of iodine varies principally depending upon the
production of the few major iodine producers (including us) and
their respective business strategies. As a result of a steady
growing demand, iodine prices have been increasing since the end
of 2003. While prices were around US$13 per kilogram in 2003,
they reached an average of approximately US$28 per kilogram in
2009.
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. Prices for
iodine and iodine-derivative products in the future are expected
to be influenced by similar supply and demand factors and the
business strategies of major producers, a few of whom either
have or can acquire additional production capacity. The largest
spare production capacity is currently held by us.
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 of our mining reserves and the
production capacity. We believe our iodine is competitive with
that produced by other manufacturers in certain advanced
industrial processes. We also believe we have benefited
competitively from the long-term relationships we have
established with our larger customers. While there are
substitutes for iodine available for certain applications, such
as antiseptics and disinfectants, there are no cost-effective
substitutes currently available for the main nutritional,
pharmaceutical, animal feed, and main chemical uses of iodine,
which together account for most iodine sales.
We have a total production capacity of approximately 11,000
metric tons of iodine per year which exceeds our current
production levels. Due to the decline in iodine demand during
the year 2009, our sales decreased, and our inventories
increased. We are planning to adjust inventory levels during
2010.
Lithium and its
derivatives
We believe we are the worlds largest producer of lithium
carbonate and one of the worlds largest producers of
lithium hydroxide. In 2009, our revenues from lithium sales
amounted to US$117.8 million, representing 8% of our total
revenues. We estimate that our sales accounted for approximately
31% of the worlds demand of lithium chemicals in volume.
Lithium
market
Lithium carbonate is used in a variety of applications,
including batteries, ceramic and enamel frits, heat resistant
glass (ceramic glass), primary aluminum, air conditioning
chemicals, continuous casting powder for steel extrusion,
synthesis of pharmaceuticals and lithium derivatives.
Lithium hydroxide is primarily used as a raw material in the
lubricating grease industry, as well as in the dyes and battery
industries.
Lithium
products
We produce lithium carbonate at the Salar del Carmen facilities,
near Antofagasta, Chile, from solutions with high concentrations
of lithium coming from the potassium chloride production at
29
the Salar de Atacama. The annual production capacity of such
lithium carbonate plant is 40,000 MT per year. We believe that
the technologies we use, together with the high concentrations
of lithium we obtain from the Salar de Atacama, allow us to be
one of the lowest cost producers worldwide.
We also produce lithium hydroxide at our facilities at the Salar
del Carmen next to the lithium carbonate operation. The lithium
hydroxide facility has a production capacity of 6,000 MT per
year and is one of the largest plants in the world.
The following table sets forth our total sales and revenues from
lithium carbonate and its derivatives during the years 2005
through 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Th. MT)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
Sales Volume
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lithium and its derivatives
|
|
|
21.3
|
|
|
|
27.9
|
|
|
|
28.6
|
|
|
|
30.4
|
|
|
|
27.8
|
|
Revenues (in US$ millions)
|
|
|
117.8
|
|
|
|
172.3
|
|
|
|
179.8
|
|
|
|
128.9
|
|
|
|
81.4
|
|
|
|
Our sales revenues in 2009 reached US$117.8 million, a
decline from US$172.3 million in 2008, mainly due to
significantly lower sales volumes and lower prices, resulting
from the global economic slowdown.
Lithium
marketing and customers
In 2009, we sold our lithium products to approximately 270
customers in approximately 50 countries. Virtually all of our
lithium products were sold overseas: 31% to customers in Europe,
14% to customers in North America, 53% to customers in Asia and
Oceania and 2% to customers in other regions. No single customer
accounted for more than 13% of the Companys sales in 2009,
and our ten largest customers accounted in the aggregate for 52%
of sales.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales breakdown
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
Europe
|
|
|
31%
|
|
|
|
31%
|
|
|
|
34%
|
|
|
|
32%
|
|
|
|
33%
|
|
North America
|
|
|
14%
|
|
|
|
18%
|
|
|
|
21%
|
|
|
|
24%
|
|
|
|
25%
|
|
Asia and Oceania
|
|
|
53%
|
|
|
|
48%
|
|
|
|
38%
|
|
|
|
36%
|
|
|
|
31%
|
|
Others
|
|
|
2%
|
|
|
|
2%
|
|
|
|
7%
|
|
|
|
8%
|
|
|
|
11%
|
|
|
|
Lithium
competition
Our main competitors in the lithium carbonate and lithium
hydroxide businesses are Chemetall GmbH (Chemetall,
a subsidiary of Rockwood Specialties Group Inc.) and FMC
Corporation (FMC). In addition, a number of Chinese
producers together accounted for approximately 29% of the world
market in 2009 in volume. Chemetall produces lithium carbonate
in its operations located in Chile through Sociedad Chilena del
Litio Limitada and in Nevada, United States. Its production of
downstream lithium products is mostly performed in the United
States, Germany and Taiwan. FMC has production facilities in
Argentina through Minera del Altiplano S.A., where they produce
lithium chloride and lithium carbonate. Production of its
downstream lithium products is mostly performed in the United
States and the United Kingdom.
Lithium carbonate is being produced in China and we believe this
production will increase in the near future. Other new projects
to develop lithium deposits worldwide have been
30
announced recently. We believe that some of these projects could
develop into significant market players in the long term.
We estimate that worldwide sales of lithium chemicals expressed
as lithium carbonate equivalent (excluding direct use for
lithium minerals) amounted to approximately 68,500 metric tons
in 2009.
Industrial
chemicals
In addition to producing sodium and potassium nitrate for
agricultural applications, we produce three grades of sodium and
potassium nitrate for industrial applications: industrial,
technical and refined grades. The three grades differ mainly in
their chemical purity. Our industrial grades of sodium and
potassium nitrate also differ from agricultural grade in the
degree of purity. We enjoy certain operational flexibility when
producing industrial sodium and potassium nitrate 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 as well as to reduce
commercial risk. In addition to producing industrial nitrates,
we produce and commercialize other industrial chemicals such as
boric acida by-product of the production of potassium
sulfateand industrial-grade potassium chloride, both sold
into industrial markets in crystalline form. In 2009, our
revenues from industrial chemicals were US$115.4 million,
representing 8% of our total revenues for that year.
Industrial
chemicals market
Industrial sodium and potassium nitrates are used in a wide
range of industrial applications, including the production of
glass, ceramics, explosives, charcoal briquettes and various
chemical processes and metal treatments. In addition, the most
significant growth potential comes from industrial nitrates for
thermal storage in solar energy projects.
Boric acid is mainly used as raw material in the manufacturing
of glass, fiberglass, ceramic and enamel frits, and LCD flat
panel displays.
Industrial potassium chloride is mainly used as an additive in
oil and gas drilling fluids as well as in the production of
carragenine.
Industrial
chemicals products
The following table sets forth our sales volumes of industrial
chemicals and total revenues during the years 2005 through 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in Th. MT)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
Sales Volume
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial nitrates
|
|
|
149.2
|
|
|
|
161.9
|
|
|
|
175.2
|
|
|
|
162.0
|
|
|
|
176.3
|
|
Boric Acid
|
|
|
3.4
|
|
|
|
7.2
|
|
|
|
9.2
|
|
|
|
9.7
|
|
|
|
6.3
|
|
Revenues (in US$ millions)
|
|
|
115.4
|
|
|
|
123.6
|
|
|
|
81.2
|
|
|
|
71.3
|
|
|
|
70.5
|
|
|
|
Sales of industrial chemicals dropped from US$123.6 million
in 2008 to US$115.4 million, mainly due to lower sales
volumes as consequence of the global economic slowdown.
31
Our aggregate nitrate production capacity, including potassium
nitrate, sodium nitrate and sodium potassium nitrate, is
approximately 1.2 million metric tons, including production
capacity at the new potassium nitrate plant that will be
finished by the second half of 2010 and the idle production
capacity at existing nitrate plants.
Industrial
chemicals marketing and customers
We sold our industrial nitrate products in more than 50
countries in 2009. Thirty percent of our sales of industrial
chemicals were made to customers in North America, 45% to
customers in Europe, 18% to customers in Central and South
America and 7% to customers in Asia, Oceania and other regions.
No single customer accounted for more than 6% of the
Companys sales of industrial chemicals in 2009, and our
ten largest customers accounted in the aggregate for 26% of such
sales.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Breakdown
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
North America
|
|
|
30%
|
|
|
|
34%
|
|
|
|
40%
|
|
|
|
41%
|
|
|
|
42%
|
|
Europe
|
|
|
45%
|
|
|
|
38%
|
|
|
|
34%
|
|
|
|
29%
|
|
|
|
28%
|
|
Central & South America
|
|
|
18%
|
|
|
|
18%
|
|
|
|
17%
|
|
|
|
17%
|
|
|
|
17%
|
|
Others
|
|
|
7%
|
|
|
|
10%
|
|
|
|
9%
|
|
|
|
13%
|
|
|
|
13%
|
|
|
|
We sell our industrial chemical products mainly through our own
worldwide network of representative offices and through our
sales and distribution affiliates. We maintain inventories of
our industrial sodium nitrate and potassium nitrate products at
our facilities in Europe, North America, South Africa and South
America to achieve prompt deliveries to customers. Industrial
sodium and potassium nitrate sales are made pursuant to spot
purchase orders. Our Research and Development department,
together with our foreign affiliates, provide technical support
to our customers and continuously work with them to develop new
products or applications for our products.
Industrial
chemicals competition
We believe we are the worlds largest producer of
industrial sodium and potassium nitrate. In the case of
industrial sodium nitrate, we estimate that our sales
represented 49% of world demand in 2009 (excluding China and
India internal demand, for which reliable estimates are not
available). Our competitors are mainly 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 Japan (the largest of which
is Mitsubishi & Co. Ltd.) and Eastern Europe are
highly competitive in the European and Asian markets. Our
industrial sodium nitrate products also compete indirectly with
substitute chemicals, including sodium carbonate, sodium
hydroxide, 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.
Our main competitor in the industrial potassium nitrate market
is Haifa Chemicals Ltd., which we estimate has a 34% market
share in the industrial sector. We estimate our market share at
approximately 39% for 2009.
32
Producers compete in the market for industrial sodium and
potassium nitrate based on reliability, product quality, price
and customer service. We believe that we are a low cost producer
of both products and are able to produce high quality products.
In the boric acid market, we are a relatively small producer
mainly supplying regional needs.
In the industrial potassium chloride market, we intend to
increase our current minor presence.
Potassium
chloride
In 2009, our potassium chloride revenues amounted to
US$284.8 million, representing 20% of our total revenues in
2009. We are currently making investments in potassium chloride
that will enable us to increase our production and sales of this
product. We expect this trend to continue in the future.
We produce potassium chloride by extracting brines from the
Salar de Atacama that are rich in potassium chloride and other
salts.
Potassium chloride is the most common source of potassium found
in fertilizers. Because of its high chloride content, potassium
chloride is used in crops such as wheat, corn, soy and rice
among others. Potassium is one of the three macronutrients that
a plant needs to develop. Although potassium does not form part
of a plants structure, it is essential to the development
of its basic functions.
Potassium chloride is also an important component for our
specialty plant nutrients business line. It is used as a raw
material to produce potassium nitrate.
Potassium
chloride market
During the last decade, the potassium chloride market has
experienced rapid growth due to several key factors such as a
growing world population, higher demand for protein-based diets
and less arable land. All of these factors have contributed to
growing demand for fertilizers, and in particular potassium
chloride, as efforts are being made to maximize crop yields and
use resources efficiently. During this same period, major
players in this industry on the supply side have produced
potassium chloride according to market demand. Historically
production levels have been below market production capacity.
However, market demand and production are being pushed towards
existing levels of production capacity. For much of 2008, demand
outpaced production, which led to substantial increases in
potassium chloride prices. During the latter part of 2008,
however, demand for potassium chloride began to fall as a result
of the global economic slowdown.
During 2009, demand was estimated to be approximately 40% lower
than in 2008. Major producers continued their strategy of
matching production to demand. These producers, however, still
ended 2009 with historically high inventories. During the last
quarter of 2009, important contract negotiations between major
potassium chloride producers and buyers concluded, which in turn
helped to stabilize prices. As a result, demand has slowly begun
to recover since the fourth quarter of 2009.
33
Potassium
chloride products
Potassium chloride differs from our other specialty plant
nutrient products because it is a commodity fertilizer and
contains chloride. SQM offers potassium chloride in two grades:
standard and granular.
The following table shows our sales volumes of and revenues from
potassium chloride during the years 2005 through 2009.
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(in Th. MT)
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2009
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2008
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2007
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2006
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2005
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Sales Volume
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Potassium Chloride
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556.5
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185.6
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179.0
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126.4
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128.8
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Revenues (in US$ millions)
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284.8
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140.0
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51.3
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32.1
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32.4
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Potassium
chloride marketing and customers
In 2009, we sold potassium chloride in approximately 44
countries. Eight percent of our sales were sold to customers in
Chile, 26% to customers in Latin America and 66% to customers in
other regions.
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Sales breakdown
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2009
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2008
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2007
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2006
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2005
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Chile
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8%
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58%
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63%
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62%
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82%
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Latin America
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26%
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23%
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18%
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17%
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18%
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Others
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66%
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19%
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19%
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21%
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0%
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In April of 2009, SQM announced that it had signed a supply
contract with Potash Corporation of Saskatchewan
(PCS). The agreement establishes that SQM Salar
S.A., an affiliate of SQM, will sell to PCS Sales (USA) Inc., an
affiliate of PCS, between 150,000 and 250,000 tons annually of
potassium chloride to be sold by PCS in Japan, India and China.
The negotiated period of the contract will be from May 1,
2009 to May 1, 2012. Sales for this contract will be made
at market prices.
Potassium
chloride competition
We estimate that SQM accounted for approximately 2% of global
sales in 2009. We also believe that the largest producers of
potassium chloride are PCS, accounting for approximately 12% of
the global sales, and the companies Urakali Group and BPC
Limited, which together account for 27% of global sales.
Production
process
Our integrated production process can be classified according to
our natural resources:
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caliche ore deposits, which contain nitrates and iodine; and
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salar brines, which contain potassium, lithium, sulfate and
boron.
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34
Caliche ore
deposits
Caliche deposits are located in northern Chile, where during
2009 we operated four mines: Pedro de Valdivia, María Elena
(El Toco), Pampa Blanca and Nueva Victoria. In March 2010,
operations at the El Toco (mining site of Maria Elena production
facilities) and Pampa Blanca mines were temporarily suspended
due to decreased global demand for nitrates and iodine during
the proceeding 15 months. These operations were also
suspended in an effort to optimize inventory of these products.
Caliche ore is found under a layer of barren overburden in seams
with variable thickness from twenty centimeters to five meters,
and with the overburden varying in thickness from half a meter
to one and a half meters.
Before proper mining begins, a full exploration stage is carried
out, including full geological reconnaissance, sampling and
drilling caliche ore to determine the features of each deposit
and its quality. Drill-hole samples properly identified are
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 purpose.
Mine planning is done on a long-term basis (10 years),
medium-term basis (three years) and short-term basis (one year).
A mine production plan is a dynamic tool that details daily,
weekly and monthly production plans. After drill holes are made,
information is updated to offer the most accurate ore supply
schedule to the processing plants.
Generally, bulldozers first rip and remove the overburden in the
mining area. This process is followed by production drilling and
blasting to break the caliche seams. Front-end loaders load the
ore on off-road trucks. In the Pedro de Valdivia mine, trucks
deliver the ore to stockpiles next to rail loading stations. The
stockpiled ore is later loaded on to railcars that take the
mineral to the processing facilities. Until the suspension of
the mining operations at El Toco, trucks hauled the ore and
dumped it directly at a crushing installation, after which a
14-kilometer-long
overland conveyor belt system delivered the ore to the
processing facilities.
At the Pedro de Valdivia facility, the ore is crushed and
leached to produce concentrated solutions carrying the nitrate,
iodine and sodium sulfate. The crushing of the ore produces a
coarse fraction that is leached in a vat system and a fine
fraction that is leached by agitation. These are followed by
liquid-solid separation, where solids precipitate as sediment
and liquids containing nitrate and iodine are sent to be
processed. This same process was followed at the El Toco mining
operation until operations were suspended in March 2010.
In Nueva Victoria, the run of mine ore is loaded in heaps and
leached to produce concentrated solutions. This process was also
used at Pampa Blanca operations until mining operations were
suspended.
Caliche ore-derived products are: sodium nitrate, potassium
nitrate, sodium potassium nitrate, iodine and iodine derivatives.
Sodium
nitrate
During 2009, sodium nitrate for both agricultural and industrial
applications was produced at the María Elena and Pedro de
Valdivia facilities using the Guggenheim method, which was
originally patented in 1921. This closed circuit method involves
adding a heated leaching solution to the crushed caliche in the
vats to selectively dissolve the contents. The concentrated
solution is then cooled, causing the sodium nitrate to
crystallize. Part of the unloaded solution
35
is then recycled to the leaching vats. The other part of the
solution is stripped of its iodine content at the treatment
plants. The crystallized sodium nitrate is separated from the
remaining solution by centrifuging. The residue resulting from
the crushing of the caliche ore is leached at ambient
temperature with water, producing a weak solution that is pumped
to solar evaporation ponds at our Coya Sur facilities, near
María Elena, for concentration. While the process of
extracting sodium nitrate from caliche ore is well established,
variations in chemical content of the ore, temperature of the
leaching solutions and other operational features require a high
degree of know-how to manage the process effectively and
efficiently.
The remaining materials from the sodium nitrate crystallization
process are vat leach tailings and a weak solution. The ore
tailings are unloaded from the leaching vats and deposited at
sites near the production facilities. The weak solution is
re-cycled for further leaching and for the extraction of iodine.
Our total current crystallized sodium nitrate production
capacity at Pedro de Valdivia facility is approximately 430,000
metric tons per year. Crystallized sodium nitrate is processed
further at Coya Sur and María Elena production plants to
produce prilled sodium nitrate, which is transported to our port
facilities in Tocopilla for shipping to customers and
distributors worldwide. A significant part of the sodium nitrate
produced at María Elena, until its temporary suspension in
March 2010, and Pedro de Valdivia was used in the production of
potassium nitrate at Coya Sur, sodium potassium nitrate at
María Elena and a highly refined industrial grade sodium
nitrate at Coya Sur.
Potassium
nitrate
Potassium nitrate is produced at our Coya Sur facility using
production methods we have developed. The solutions from the
leaching of the fine fraction of the ore, once the iodine is
extracted, are pumped to the Coya Sur facilities. These
solutions loaded with nitrate are concentrated in solar
evaporation ponds. Once an adequate level of concentration is
reached, the solution is combined with potassium chloride to
produce potassium nitrate and discard sodium chloride. The
resulting solution, which is rich in potassium nitrate, is
crystallized using a cooling and centrifuging process. The
crystallized potassium nitrate is either processed further to
produce prilled potassium nitrate or used for the production of
sodium potassium nitrate. The weak solution of the process is
re-used for further production of potassium nitrate. A portion
of the potassium nitrate is used in the production of a high
purity technical grade potassium nitrate.
Concentrated nitrate salts were produced at Pampa Blanca up to
March 2010, and are currently produced at Nueva Victoria by
leaching caliche ore in heaps in order to extract solutions that
are rich in iodine and nitrate. These solutions are sent to
plants where iodine is extracted and subsequently the solutions
are sent to solar evaporation ponds where the solutions are
evaporated and rich nitrate salt is produced. These concentrated
nitrate salts are sent to Coya Sur or another of our salt
processing facilities where they are leached and the resulting
rich nitrate solution is used in the production of potassium
nitrate.
Our current potassium nitrate production capacity at Coya Sur is
approximately 650,000 metric tons per year, including 260,000
metric tons per year of technical grade potassium nitrate. We
expect to increase that production capacity by approximately
300,000 metric tons per year by mid 2010. The effective
production of the new facility will depend on the availability
of nitrate salts to feed the facility.
36
The nitrates produced in crystallized or prilled form at Coya
Sur have been certified by TÜV-Rheiland under the quality
standard ISO 9001:2008. Potassium nitrate produced at Coya Sur
and María Elena is transported to Tocopilla for shipping to
customers and distributors.
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 María Elena facilities using
standard, non-patented production methods we have developed.
Crystallized sodium nitrate is mixed with the crystallized
potassium nitrate to make sodium potassium nitrate, which is
then 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.
Iodine and
Iodine derivatives
We produce iodine at our Pedro de Valdivia and Nueva Victoria
facilities. We also produced iodine at our Iris facility from
December 2008 until July 2009. During 2009, Iodine was produced
by extracting it from the solutions resulting from the leaching
of caliche ore at the Pedro de Valdivia, María Elena, Nueva
Victoria and Pampa Blanca facilities. As of March 2010, mining
operations at Maria Elena and Pampa Blanca were temporarily
suspended. As a result of these suspensions, we expect that
iodine production in 2010 will be approximately 20% lower
compared to 2009. We also expect that nitrate production should
decline slightly.
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
operational parameters require a high level of know-how to
manage the process effectively and efficiently.
The solutions from the leaching of caliche 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. The solid iodine is
then refined through a smelting process and prilled. We have
obtained patents in the United States for our iodine prilling
process.
Prilled iodine is tested for quality control purposes, using
international standard procedures that we have implemented, then
packed in
20-50
kilogram drums or
350-700
kilogram maxibags and transported by truck to Antofagasta or
Iquique for export. Our iodine and iodine derivatives production
facilities have qualified under the new ISO-9001:2008 program,
providing third-party certificationby TÜV
Rheinlandof the quality management system.
Our total iodine production in 2009 was approximately 10.1
thousand metric tons: approximately 2.6 thousand metric tons
from Pedro de Valdivia, 1.2 thousand metric tons from María
Elena, 1.2 thousand metric tons from Pampa Blanca, and 5.1
thousand metric tons from Nueva Victoria and Iris. The Nueva
Victoria facility is also used for recycling iodine from the
potassium iodide contained in the LCD waste solutions imported
mainly from Korea. Nueva Victoria is also
37
equipped to toll iodine from iodide delivered from other SQM
facilities. We have the flexibility to adjust our production
according to market conditions. Our total current production
capacity at our iodine production plants is approximately 11,000
MT.
We use a portion of the produced iodine to manufacture inorganic
iodine derivatives, which are intermediate products used for
manufacturing agricultural and nutritional applications, at
facilities located near Santiago, Chile, and also produce
inorganic and organic iodine derivative products together with
Ajay that purchases iodine from us. We have in the past
primarily marketed 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.
Salar de Atacama
Brine deposits
The Salar de Atacama, located approximately 250 kilometers east
of Antofagasta, is a salt-encrusted depression within the
Atacama desert, within which lies an underground deposit of
brines contained in porous sodium chloride rock fed by an
underground inflow of water from the Andes mountains. 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 such
Salar. Our production rights to the Salar de Atacama are
pursuant to a lease contract with the Chilean government,
expiring in 2030.
Brines are pumped from depths between 1.5 and 60 meters below
surface, through a field of wells that are located in areas of
the Salar de Atacama that contain relatively high concentrations
of potassium, lithium, sulfate, boron and other minerals.
We process these brines to produce potassium chloride, lithium
carbonate, lithium hydroxide, lithium chloride, potassium
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.
In order to produce potassium chloride, brines from the Salar de
Atacama are pumped to solar evaporation ponds. Evaporation of
the brines results in a complex crystallized mixture of salts of
potassium chloride and sodium chloride. One portion of this
mixture is harvested and stored, and the other portion is
reprocessed and the remaining salts are transferred by truck to
a processing facility where the potassium chloride is separated
by a grinding, flotation, and filtering process. Potassium
chloride is sent approximately 300 kilometers to our Coya Sur
facilities via a dedicated truck transport system, where it is
used in the production of potassium nitrate. We sell potassium
chloride produced at the Salar de Atacama in excess of our needs
to third parties. All of our potassium-related production
facilities in the Salar de Atacama currently have a production
capacity in excess of up to 1.5 million metric tons per
year. Actual production capacity will depend on volumes and
quality of the mining resources pumped from the Salar de
Atacama. During 2009 actual production was higher than in 2008
and we expect that 2010 production will be higher than in 2009.
During 2009, we increased production capacity of our potassium
chloride facility to approximately 1,050,000 metric tons per
year. In addition, we converted our potassium sulfate facility
to a dual plant, with the production capacity to produce only
potassium chloride or to produce
38
both potassium sulfate and potassium chloride. If the facility
produces only potassium chloride, we have an additional 460,000
metric tons per year of production capacity of potassium
chloride.
The by-products of the potassium chloride production process are
(i) brines remaining after removal of the potassium
chloride, which are used to produce lithium carbonate as
described below, and the amount in excess of our needs is
reinjected into the Salar de Atacama; (ii) sodium chloride,
which is similar to the surface material of the Salar de Atacama
and is deposited at sites near the production facility; and
(iii) other salts containing magnesium chloride.
Lithium
carbonate and lithium chloride
A portion of the brines remaining after the production of
potassium chloride is sent to additional solar concentration
ponds adjacent to the potassium chloride production facility.
Following additional evaporation, the remaining concentrated
solution of lithium chloride is transported by truck to a
production facility located near Antofagasta, approximately 230
kilometers from the Salar de Atacama. At the production
facility, the solution is purified and treated with sodium
carbonate to produce lithium carbonate, which is dried and then,
if necessary, compacted and finally packaged for shipment. A
portion of this purified lithium chloride solution is packaged
and shipped to customers. The production capacity of our lithium
carbonate facility is approximately 40,000 metric tons per year.
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.
Lithium carbonate production quality assurance program has been
certified by TÜV-Rheiland under ISO 9001:2000 since 2005,
and under ISO 9001:2008 since October 2009.
Lithium
hydroxide
Lithium carbonate is sold to customers, and we also use it as a
raw material for our lithium hydroxide monohydrate facility,
which started operations at the end of 2005. This facility has a
production capacity of 6,000 metric tons per year and is 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 brine is evaporated in a multiple effect
evaporator and crystallized to produce the lithium hydroxide
monohydrate, which is dried and packaged for shipment to
customers.
Lithium hydroxide production quality assurance program has been
certified by TUV-Rheiland under ISO 9001:2000 since 2007, and
under ISO 9001:2008 since October 2009.
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 potassium sulfate process) and
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. Brines are pumped to preconcentration solar
evaporation ponds where waste sodium chloride salts are removed
by precipitation. After further evaporation, the sulfate and
potassium salts are harvested and sent for treatment at the
potassium sulfate plant. Potassium sulfate is
39
produced using flotation, concentration and reaction processes,
after which it is crystallized, dried and packaged for shipment.
Production capacity for potassium sulfate is approximately
300,000 MT per year . During the next three years, this
dual-plant will be used principally to produce potassium
chloride. After 2012, this plant will be used to produce both
potassium chloride and potassium sulfate.
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 reinjected 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), sulfur, 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, and diesel and fuel oil in heat generation. We use
diesel and fuel oil as the main energy source in heat
generation. Our raw material costs (excluding caliche ore, salar
brines and including energy) represented 24.1% of our cost of
sales in 2009.
In 1998, we entered into a long-term
(15-year)
electricity supply agreement with Norgener S.A., a major Chilean
electricity producer. In 1999, we entered into a long-term
electricity supply agreement with Electroandina S.A., also a
major Chilean electricity producer. The agreement has a
10-year
term, extending to 2009, with two, three-year renewal options
exercisable by us. In 2009, we exercised our first extension
option. Since April 2000, we have been connected to the northern
power grid, which currently supplies electricity to most cities
and industrial facilities in northern Chile. During 2006 and
2007, Norgener and Electroandina asked to change their contracts
due to the gas restrictions from Argentina that modified their
costs. Under both contracts, the price was finally adjusted
upwards and the readjustment clauses were modified.
In May 2001, we entered into a
10-year gas
supply contract with Distrinor S.A., which would supply a
maximum of 3,850,000 million Btu per year. This gas supply
was sufficient to satisfy the requirements for the facilities
that are connected to a natural gas supply. However, beginning
in 2004, the Argentinean government has imposed restrictions on
the supply of natural gas and, in 2009, we only received from
Argentina, in a non-continuous basis, approximately 25% of the
gas received in a normal year. Consequently, we have had to use
other higher-cost fuels as substitutes for natural gas.
We obtain ammonium nitrate, sulfur, 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. In addition to the potassium chloride
produced by us, we acquire potassium chloride from
40
Sociedad Chilena del Litio Limitada, a local Chilean supplier.
Diesel fuel is obtained under contracts that provide for sales
of fuel at international market prices.
We believe that all of the contracts and agreements between SQM
and third-party suppliers with respect to our main raw materials
contain standard and customary commercial terms and conditions.
Chilean
government regulations
We are subject to the full range of government laws, regulations
and supervision generally applicable to companies engaged in
business in Chile, including labor laws, social security laws,
public health laws, consumer protection laws, environmental
laws, tax laws, securities laws and anti-trust laws. These
include regulations to ensure sanitary and safety conditions in
manufacturing plants.
We conduct our mining operations pursuant to exploration
concessions and exploitation concessions granted pursuant to
applicable Chilean law. Exploitation concessions essentially
grant a perpetual right to conduct mining operations in the
areas covered by the concessions, provided that annual
concession fees are paid (with the exception of the Salar de
Atacama rights, which have been leased to us until 2030).
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.
We also hold water rights obtained from the Chilean water
regulatory authority for a supply of water from rivers or wells
near our production facilities sufficient to meet our current
and anticipated operating requirements. We operate port
facilities at Tocopilla for shipment of products and delivery of
certain raw materials pursuant to maritime concessions, under
applicable Chilean laws, which are normally renewable on
application, provided that such facilities are used as
authorized and annual concession fees are paid.
Under Law No. 16,319, the Company has an agreement with the
Chilean Commission of Nuclear Energy (CCHEN)
regarding the exploitation and sale of lithium from the Salar de
Atacama. The agreement sets yearly, accumulated limits for the
tonnage of lithium authorized to be sold. As such, any future
increase of volume of exploitation and sale of lithium under the
current agreement with CCHEN as well as any future exploitation,
benefit and sale of lithium not covered by the existing
agreement shall require an express authorization given by the
CCHEN.
We hold water rights that are key to our business development.
These rights were obtained from the Chilean water authority for
a supply of water from rivers and wells near our production
facilities, which we believe are sufficient to meet current
operating requirements. However, the Water Code and related laws
are subject to changes, which could have a material adverse
impact on our business, financial condition and results of
operations. For instance, an amendment published on
June 16, 2005 modified the Water Code allowing, under
certain conditions, the granting of permanent water rights of up
to 2 liters per second for each well built prior to
June 30, 2004, in the locations where we conduct our mining
operations without considering the availability of water, or how
the new rights may affect holders of existing rights. Therefore,
the amount of water we can effectively extract based on our
existing rights could be reduced if these additional rights are
exercised. These and other potential future changes to the Water
Code could have a material adverse impact on our business,
financial condition and results of operations.
41
In 2005, the Chilean Congress approved the Royalty Law
establishing a royalty tax to be applied to mining activities
developed in Chile. The Chilean government may decide to levy
additional taxes on mining companies or other entities in Chile,
and such taxes could have a material adverse impact on our
business, financial condition and results of operations.
The new Law on Subcontracting establishes a new requirement that
applies in the event of accidents in the workplace. The law
states that when a serious accident occurs, the company must
halt work at the site where the accident took place until
authorities from the National Geology and Mining Service inspect
the site and prescribe the measures the company must take to
prevent future risks. Work may not be resumed until the company
has taken the prescribed measures, and the period of time before
work may be resumed may last for a number of hours, days, or
longer. The effects of this new law could have a material
adverse effect on our business, financial condition and results
of operations.
On December 2, 2009, Law No. 20,393 went into effect,
establishing a system of criminal liability for legal entities.
The aim of this new law is to allow legal entities to be
prosecuted for the crimes of (a) asset laundering,
(b) financing terrorism, and (c) bribery, where such
crimes are committed by people who hold relevant positions
within a legal entity, in order to benefit that legal entity.
The law establishes a prevention model that includes, among
other things, the designation of a person in charge of
prevention and the establishment of special programs and
policies. The implementation of this model can exempt the
company from liability.
On January 1, 2010, Law No. 20,382 amending Law
No. 18,045 (relating to the Securities Market) and Law
No. 18,046 (relating to Corporations, the Chilean
Corporations Act) went into effect. The new law relates to
corporate governance and in general seeks to improve such
matters as the professionalization of senior management at
corporations, the transparency of information, and the
assessment and resolution of possible conflicts of interest. The
law establishes the requirement of at least an independent
director for corporations, meeting certain requirements, which
we meet. Such director has a preferential right to be a member
of the Directors Committee, which position, in turn,
grants the director further powers. The new independent director
may be elected by any shareholder with an ownership interest
greater than 1% in the company, but he or she must satisfy
several independence requirements with respect to the company
and the companys competitors, suppliers, customers and
majority shareholders. This law also refines the regulations
regarding the information that companies must provide to the
general public and to the SVS, 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.
In 2010, the Chilean Congress amended the environmental law
establishing the new Ministry of Environment (Ministerio del
Medio Ambiente), the Environmental Assessment Service
(Servicio de Evaluación Ambiental) and the
Superintendency of the Environment (Superintendencia del
Medio Ambiente) and changing important environmental
regulations in terms of setting up new agencies and introducing
new provisions in procedures applicable to projects whose
operations impact the environment. The new Ministry shall design
and implement environmental policies relating to environmental
conservation, sustainable growth and the protection of
Chiles renewable energy resources. In addition, it will be
responsible for enacting emission and quality standard
regulations as well as recovery and decontamination plans. The
Environmental Assessment Service will pursue procedures at the
Environmental Impact System where projects are environmentally
approved or rejected. In procedures for obtaining the
environmental license, any person, including legal entities and
companies, will be allowed to file oppositions
42
and comments. Moreover, summary procedures, such as
Environmental Impact Statements, will allow such oppositions and
comments under certain circumstances. Technical reports from
governmental agencies would be considered bound for final
decision. The Superintendency of the Environment will be an
independent agency in charge of coordinating other governmental
agencies in their environmental obligations. Likewise, it will
receive, investigate and decide complaints concerning the
infringement of environmental regulations and sanction violators
deliver injunction orders or levy relevant fines.
There are currently no material legal or administrative
proceedings pending against the Company with respect to any
regulatory matter, except as discussed under Safety,
health and environmental regulations below, and we believe
that we are in compliance in all material respects with all
applicable statutory and administrative regulations with respect
to our business.
Safety, health
and environmental regulations
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 SQM are the Code on Safety in Mining Operations,
the Health Code, the Law on Subcontracting, and the
Environmental Framework Law. The latter was subjected to several
important modifications that entered into effect in January
2010, including the creation of the Ministry of the Environment,
the National Service of Environmental Impact Assessment, and the
Environmental Enforcement Superintendence. The Environmental
Enforcement Superintendence will begin operations once the
complementary legislation and regulation is enacted, which is
expected to occur between 2010 and 2011.
Health and safety at work are fundamental aspects in the
management of mining operations, which is why SQM has made
constant efforts to maintain good health and safety conditions
for the people working at its mining sites. In addition to the
role played by the Company in this important matter, the
government has a regulatory role, enacting and enforcing
regulations in order to protect and ensure the health and safety
of workers. The State, acting through the Ministry of Health and
the National Service for Geology and Mining
(Sernageomin), performs health and safety
inspections 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 of 1989 (Ministry of Mining, Code
on Safety in Mining Operations or Reglamento de
Seguridad Minera, Supreme Decree DS No. 72,
amended by DS No. 132/2002) protects workers and nearby
communities against health and safety hazards, and it provides
for enforcement of the law where compliance has not been
achieved. SQMs Internal Mining Standards
(Reglamentos Internos Mineros) establish our
obligation to maintain a workplace that is safe and free of
health risks, inasmuch as this is reasonably practicable. We
must comply with the general provisions of the Health and Safety
Act 1999 (Ministry of Health, Standards on Basic Sanitary and
Environmental Conditions in the Workplace, or
Reglamento sobre Condiciones Sanitarias y Ambientales
Básicas en los Lugares de Trabajo DS
No. 594, amended by DS No. 57/2003), our own internal
standards, and the provisions of the Mine Health and Safety Act
of 1989. In the event of non-compliance, the Ministry of Health
and particularly
43
the National Service for Geology and Mining are entitled to use
their enforcement powers to ensure compliance with the law.
The new and modified Environmental Framework Law replaced the
National Commission of the Environment (Comisión
Nacional de Medio Ambiente or CONAMA) with
the Ministry of the Environment, which now is the governmental
agency responsible for coordinating and supervising
environmental issues. Under the new Environmental Framework Law,
we will continue to be required to conduct environmental impact
studies of any future projects or activities (or their
significant modifications) that may affect the environment. Now,
with the above mentioned modifications to the Environmental
Framework Law, the National Service of Environmental Impact
Assessment, together with other public institutions with
mandates related to the environment, evaluates environmental
impact studies submitted for its approval, and also audits the
environmental performance during the construction and operation
of the projects. The Environmental Framework Law also promotes
citizen participation in project evaluation and implementation.
On August 10, 1993, the Ministry of Health published in the
Official Gazette a resolution establishing that atmospheric
particulate levels at our production facilities in María
Elena and Pedro de Valdivia exceeded air quality standards,
affecting the nearby towns. The high particulate matter levels
came principally from dust produced during the processing of
caliche ore, particularly the crushing of the ore before
leaching. Residents of the town of Pedro de Valdivia were
relocated to the town of María Elena, practically removing
Pedro de Valdivia from the scope of the determination of the
Ministry of Health. In 1998, CONAMA approved a plan to reduce
the atmospheric particulate levels below permissible levels by
July of the same year, with certain amendments, by Decree
No. 164/1999. Although we followed the plan, and reduced
substantially the atmospheric particulate concentration levels
at our production facilities at Maria Elena, as a result of the
investments and processes implemented, we were not able to fully
comply with the July 2000 timetable. A new plan was published by
Decree No. 37/2004 on March 2004, and it called for an 80%
reduction of the emissions of atmospheric particulate material
in two years. We designed a new project to modify the milling
and screening systems used in the processing of the caliche ore
at María Elena facilities, in order to achieve the
necessary reduction of particulate material emissions. An
environmental impact study for this project was approved by
CONAMA through Resolution No. 270 in October 2005. Upon
issuing the approval for the environmental impact study, CONAMA
issued the Decree No. 53975, authorizing this project as
the one through which we would comply with the emission
reductions required by Decree No. 37/2004. Construction of
this project was completed in December of 2008, and currently
the new plant is operating in good condition, which has allowed
for the permanent closure of the old milling and screening
facility at Maria Elena, reduced particulate material emissions,
and consequently improved air quality in the area. Compliance of
air quality standards required by law has to be assessed upon
gathering air quality monitoring data for 3 consecutive years
(2009 through 2011).
On March 16, 2007, the Ministry of Health published in the
Official Gazette a resolution establishing that atmospheric
particulate levels exceeded air quality standards in the
coast-town of Tocopilla, where we have our port operations. The
high particulate matter levels are caused mainly by two
thermoelectric power plants that use coal and fuel oil and are
located next to our port operations. Our participation in
particulate matter emissions is very small (less than 0.50% of
the total). However, a decontamination plan was developed by
CONAMA, and its formal approval is expected during 2010. During
2008 and 2009, SQM implemented control
44
measures for particulate emissions in our port operations
according to the requirements of this plan.
We continuously monitor the impact of our operations on the
environment and have made, from time to time, 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 for full compliance. We
anticipate that additional laws and regulations will be enacted
over time with respect to environmental matters. While we
believe that we will continue to be in compliance with all
applicable environmental regulations of which we are now aware,
there can be no assurance that future legislative or regulatory
developments will not impose new restrictions on our operations.
We are committed to both complying with all applicable
environmental regulations and applying an Environmental
Management System (EMS) to continuously improve our
environmental performance.
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.
Organizational
structure
All of our principal operating subsidiaries are essentially
wholly-owned, except for Soquimich Comercial S.A., which is 61%
owned by SQM and whose shares are listed and traded on the
Chilean Stock Exchanges, and Ajay SQM Chile S.A., which is 51%
owned by SQM. The following is a summary of our main
subsidiaries.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM beneficial
|
|
|
|
|
|
Country of
|
|
ownership interest
|
|
Main subsidiaries
|
|
Activity
|
|
incorporation
|
|
(direct/indirect)
|
|
|
|
|
SQM Nitratos S.A.
|
|
Extracts and sells caliche ore to subsidiaries and affiliates of
SQM.
|
|
Chile
|
|
|
100%
|
|
SQM Industrial S.A.
|
|
Produces and markets the Companys products directly and
through other subsidiaries and affiliates of SQM.
|
|
Chile
|
|
|
100%
|
|
SQM Salar S.A.
|
|
Exploits the Salar de Atacama to produce and market the
Companys products directly and through other subsidiaries
and affiliates of SQM.
|
|
Chile
|
|
|
100%
|
|
Minera Nueva Victoria S.A.
|
|
Produces and markets the Companys products directly and
through other subsidiaries and affiliates of SQM.
|
|
Chile
|
|
|
100%
|
|
Servicios Integrales de Tránsitos y Transferencias S.A.
(SIT)
|
|
Owns and operates a rail transport system and also owns and
operates the Tocopilla port facilities.
|
|
Chile
|
|
|
100%
|
|
Soquimich Comercial S.A.
|
|
Markets the Companys specialty plant nutrients products
domestically and imports fertilizers for resale in Chile.
|
|
Chile
|
|
|
61%
|
|
Ajay-SQM Chile S.A.
|
|
Produces and markets the Companys iodine derivatives.
|
|
Chile
|
|
|
51%
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM beneficial
|
|
|
|
|
|
Country of
|
|
ownership interest
|
|
Main subsidiaries
|
|
Activity
|
|
incorporation
|
|
(direct/indirect)
|
|
|
|
|
Sales and distribution subsidiaries in the United States,
Belgium, Brazil, Venezuela, Ecuador, Peru, Argentina, Mexico,
South Africa and other locations.
|
|
Market the Companys products throughout the world.
|
|
Various
|
|
|
|
|
|
|
Concessions,
extraction yields and reserves for the caliche ore mines and
salar brines
Concessions for
the caliche ore mines and salar brines
Approximately 67% of our total mining concessions are held
pursuant to exploitation concessions and 33% pursuant to
exploration concessions, not including areas within the Salar de
Atacama. Of the exploitation concessions, approximately 85% have
been already granted pursuant to applicable Chilean law, and
approximately 15% are in the process of being granted. Of the
exploration concessions, approximately 90% have been already
granted pursuant to applicable Chilean law, and approximately
10% are in the process of being granted. The Chilean government
owns a significant part of the surface land covering our
exploration and exploitation concessions.
We made payments to the Chilean government for our exploration
and exploitation concessions of US$7.7 million in 2009.
Additional mining
operations leased in the Salar De Atacama region
SQM Salar S.A. holds exclusive rights to exploit the mineral
resources in an area covering approximately 228,270 hectares of
land in the Salar de Atacama in northern Chile. These rights
include 147,000 hectares that are owned by Corfo and leased to
SQM Salar S.A. pursuant to a lease agreement between Corfo and
SQM Salar S.A. (the Lease Agreement). Corfo may not
unilaterally amend the Lease Agreement, and the rights to
exploit the resources cannot be transferred. In addition, Corfo
may not unilaterally terminate the Lease Agreement, except in
the event SQM Salar S.A. is converted into another type of
company, the insolvency of SQM Salar S.A., or in the event of
non-payment of certain amounts due under the Lease Agreement.
The Lease Agreement provides that SQM Salar S.A. is responsible
for the maintenance of Corfos exploitation rights and for
annual payments to the Chilean government, and it expires on
December 31, 2030. SQM Salar S.A. is required to make
lease-royalty payments to Corfo according to specified
percentages of the value of production of minerals extracted
from the Salar de Atacama brines. In the years 2009, 2008 and
2007, royalty payments amounted to US$17.5 million,
US$17.7 million and US$13.9 million.
In addition to the mining rights leased to SQM Salar S.A.
described above, Corfo has exclusive mining rights covering a
total area of approximately 65,200 additional hectares in the
Salar de Atacama. Under the terms of the Salar de Atacama
project agreement between Corfo and SQM Salar S.A. (the
Project Agreement), Corfo has agreed that it will
not permit any other person to explore, exploit or mine any
mineral resources in those 65,200 hectares of the Salar de
Atacama. The Project Agreement expires on December 31, 2030.
46
The following table sets forth our exploitation and exploration
concessions, both granted and in process of being granted, as of
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploitation concessions
|
|
|
Exploration concessions
|
|
|
Total
|
|
Mines
|
|
Total number
|
|
|
Hectares
|
|
|
Total number
|
|
|
Hectares
|
|
|
Total number
|
|
|
Hectares
|
|
|
|
|
Pedro de Valdivia
|
|
|
584
|
|
|
|
148,802
|
|
|
|
1
|
|
|
|
300
|
|
|
|
585
|
|
|
|
149,102
|
|
El Toco(1)
|
|
|
615
|
|
|
|
182,804
|
|
|
|
25
|
|
|
|
4,900
|
|
|
|
640
|
|
|
|
187,704
|
|
Pampa Blanca(1)
|
|
|
464
|
|
|
|
137,112
|
|
|
|
1
|
|
|
|
200
|
|
|
|
465
|
|
|
|
137,312
|
|
Nueva Victoria
|
|
|
342
|
|
|
|
89,157
|
|
|
|
18
|
|
|
|
11,300
|
|
|
|
360
|
|
|
|
100,457
|
|
Salar de Atacama
|
|
|
447
|
|
|
|
277,075
|
|
|
|
2,502
|
|
|
|
996,900
|
|
|
|
2,949
|
|
|
|
1,273,975
|
|
|
|
|
|
|
|
Subtotal mines
|
|
|
2,452
|
|
|
|
834,950
|
|
|
|
2,547
|
|
|
|
1,013,600
|
|
|
|
4,999
|
|
|
|
1,848,550
|
|
Other caliche areas
|
|
|
7,777
|
|
|
|
1,720,000
|
|
|
|
733
|
|
|
|
253,300
|
|
|
|
8,510
|
|
|
|
1,973,300
|
|
Other salars and other areas
|
|
|
585
|
|
|
|
116,933
|
|
|
|
210
|
|
|
|
53,500
|
|
|
|
795
|
|
|
|
170,433
|
|
|
|
|
|
|
|
Subtotal other areas
|
|
|
8,362
|
|
|
|
1,836,933
|
|
|
|
943
|
|
|
|
306,800
|
|
|
|
9,305
|
|
|
|
2,143,733
|
|
|
|
|
|
|
|
Total
|
|
|
10,814
|
|
|
|
2,671,883
|
|
|
|
3,490
|
|
|
|
1,320,400
|
|
|
|
14,304
|
|
|
|
3,992,283
|
|
|
|
|
|
|
(1)
|
|
Operations at the El Toco and Pampa
Blanca mines were temporarily suspended in March 2010.
|
47
Extraction
yields
The following table sets forth certain operating data relating
to each of our mines:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, unless otherwise
stated)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
Pedro de Valdivia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric tons of ore mined
|
|
|
11,631
|
|
|
|
11,003
|
|
|
|
10,670
|
|
|
|
|
|
Average grade nitrate (% by weight)
|
|
|
7.3
|
|
|
|
7.1
|
|
|
|
7.5
|
|
|
|
|
|
Iodine (parts per million (ppm))
|
|
|
363
|
|
|
|
345
|
|
|
|
354
|
|
|
|
|
|
Metric tons of crystallized nitrate produced
|
|
|
434
|
|
|
|
407
|
|
|
|
422
|
|
|
|
|
|
Metric tons of iodine produced
|
|
|
2.6
|
|
|
|
2.2
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
María Elena(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric tons of ore mined
|
|
|
5,443
|
|
|
|
4,683
|
|
|
|
4,651
|
|
|
|
|
|
Average grade nitrate (% by weight)
|
|
|
6.8
|
|
|
|
7.1
|
|
|
|
7.4
|
|
|
|
|
|
Iodine (ppm)
|
|
|
375
|
|
|
|
358
|
|
|
|
363
|
|
|
|
|
|
Metric tons of crystallized nitrate produced
|
|
|
155
|
|
|
|
151
|
|
|
|
167
|
|
|
|
|
|
Metric tons of iodine produced
|
|
|
1.2
|
|
|
|
1.0
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
Coya Sur(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric tons of crystallized nitrate produced
|
|
|
193
|
|
|
|
302
|
|
|
|
257
|
|
|
|
|
|
|
|
|
|
|
|
Pampa Blanca(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric tons of ore mined
|
|
|
3,785
|
|
|
|
3,811
|
|
|
|
3,108
|
|
|
|
|
|
Iodine (ppm)
|
|
|
645
|
|
|
|
533
|
|
|
|
527
|
|
|
|
|
|
Metric tons of iodine produced
|
|
|
1.2
|
|
|
|
1.1
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
Nueva Victoria
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric tons of ore mined
|
|
|
17,326
|
|
|
|
15,760
|
|
|
|
12,285
|
|
|
|
|
|
Iodine (ppm)
|
|
|
463
|
|
|
|
475
|
|
|
|
495
|
|
|
|
|
|
Metric tons of iodine produced
|
|
|
5.1
|
|
|
|
4.0
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
Salar de Atacama
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric tons of lithium carbonate produced(3)
|
|
|
14
|
|
|
|
30
|
|
|
|
30
|
|
|
|
|
|
Metric tons of potassium chloride produced
|
|
|
886
|
|
|
|
700
|
|
|
|
611
|
|
|
|
|
|
Metric tons of potassium sulfate produced
|
|
|
189
|
|
|
|
163
|
|
|
|
157
|
|
|
|
|
|
Metric tons of boric acid produced
|
|
|
5
|
|
|
|
8
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Operations at the El Toco and Pampa
Blanca mines were temporarily suspended in March 2010.
|
|
(2)
|
|
Includes production at Coya Sur
from treatment of fines from María Elena and Pedro de
Valdivia, nitrates from pile treatment at Pampa Blanca and net
production from NPT, or technical (grade) potassium
nitrate, plants.
|
|
(3)
|
|
Lithium carbonate is extracted at
the Salar de Atacama and processed at our facilities at the
Salar del Carmen.
|
Reserves for
the caliche ore deposits
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 no
48
assurance can be given that the indicated levels of recovery of
nitrates and iodine will be realized.
We estimate ore reserves based on engineering evaluations 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 mineral 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. Mining resources can be calculated using the
information from the drill-hole sampling.
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 evaluating polygons and have an
uncertainty or error margin greater than that of proven
reserves. However, the degree of certainty of probable reserves
is high enough to assume continuity between points of
observation.
Probable reserves are the economically mineable part of an
indicated mineral resource and, in some
circumstances, a measured mineral resource. An
indicated mineral resource is that 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 calculation is based on exploration,
sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits,
workings, and drill holes. A measured 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 high level of confidence. The estimate is based
on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings, and drill
holes.
Proven reserves are the economically mineable part of a measured
mineral resource. The calculation of the reserves includes
diluting materials and allowances for losses which may occur
when the material is mined. Appropriate assessments, which may
include feasibility studies, have been carried out and include
consideration of and modification by realistically assumed
mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors. These
assessments demonstrate at the time of reporting that extraction
is reasonably justified.
The calculation of the reserves includes diluting of materials
and allowances for losses which may occur when the material is
mined. Appropriate assessments, which may include feasibility
studies, have been carried out and include consideration of and
modification by realistically assumed mining, metallurgical,
economic, marketing, legal, environmental, social and
governmental factors.
49
Proven and probable reserves are determined using extensive
drilling, sampling and mine modeling, in order to estimate
potential restrictions on production yields, including cut-off
grades, ore type, dilution,
waste-to-ore
ratio and ore depth. Economic feasibility is determined on the
basis of this information.
Our estimates of our proven reserves of caliche ore at each of
our mines as of December 31, 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proven reserves(1)
|
|
|
Nitrate average grade
|
|
|
Iodine average grade
|
|
Mine
|
|
(millions of metric tons)
|
|
|
(percentage by weight)
|
|
|
(parts per million)
|
|
|
|
|
Pedro de Valdivia
|
|
|
166.6
|
|
|
|
7.1%
|
|
|
|
368
|
|
El Toco(3)
|
|
|
137.9
|
|
|
|
7.3%
|
|
|
|
412
|
|
Pampa Blanca(1)(3)
|
|
|
71.7
|
|
|
|
5.6%
|
|
|
|
544
|
|
Nueva Victoria
|
|
|
305.0
|
|
|
|
5.9%
|
|
|
|
458
|
|
|
|
In addition, our estimates of our probable reserves of caliche
ore at each of our principal mines as of December 31, 2009,
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Probable
reserves(1)(2)
|
|
|
Nitrate average grade
|
|
|
Iodine average grade
|
|
Mine
|
|
(millions of metric tons)
|
|
|
(percentage by weight)
|
|
|
(parts per million)
|
|
|
|
|
Pedro de Valdivia
|
|
|
85.2
|
|
|
|
6.9%
|
|
|
|
482
|
|
El Toco(3)
|
|
|
97.8
|
|
|
|
7.3%
|
|
|
|
380
|
|
Pampa Blanca(3)
|
|
|
447.8
|
|
|
|
5.8%
|
|
|
|
538
|
|
Nueva Victoria(2)
|
|
|
102.4
|
|
|
|
5.8%
|
|
|
|
396
|
|
|
|
|
|
|
(1)
|
|
The proven and probable reserves
set forth in the tables above are shown before losses related to
exploitation and mineral treatment. Proven and probable 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 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 55% and 65%.
|
|
(2)
|
|
Probable reserves can be expressed
as proven reserves using a conversion factor. On average, this
conversion factor is higher than 60%. This factor depends on
geological conditions and caliche ore continuity, which vary
from mine to mine. The difference between the probable reserve
amounts and the converted probable reserve amounts is the result
of the lower degree of certainty pertaining to probable reserves
compared with proven reserves.
|
|
(3)
|
|
Operations at El Toco and Pampa
Blanca mines were temporarily suspended in March 2010.
|
The proven and probable reserves shown above are the result of
exploration and evaluation of approximately 16% of the total
caliche-related mining property of our Company. However, we have
explored those areas in which we believe there is a higher
potential of finding high-grade caliche ore minerals. The
remaining 84% of this area has not been explored yet or has
limited reconnaissance as inferred or hypothetical resources.
Reserves shown in these tables are calculated based on mining
properties that are not involved in any legal disputes between
SQM and other parties.
We maintain an ongoing program of exploration and resource
evaluation on the land surrounding the mines at Nueva Victoria,
Pedro de Valdivia, María Elena and Pampa Blanca and at
other sites for which we have the appropriate concessions. In
2009, we continued a basic reconnaissance program on new mining
properties including a geological mapping of the surface and
spaced drill-hole campaign covering approximately 7,992
hectares. Additionally, we conducted general explorations based
on a closer grid pattern of drill-holes over a total area of
approximately 296 hectares and, in addition, carried out
in-depth sampling of approximately 2,384
50
hectares (674 hectares at Pedro de Valdivia, 33 hectares at
María Elena and 1,677 hectares at Nueva Victoria). The
exploration and development program in 2010 calls for a basic
reconnaissance program over a total area of 2,471 hectares,
general exploration over a total area of about 86 hectares and,
in addition, in-depth sampling of approximately 1,642 hectares.
Reserves for
the Salar de Atacama brines
Our in-house staff of hydro-geologists and mining engineers
prepares our estimates of potassium, sulfate, lithium and boron
reserves at the Salar de Atacama. We have exploration
concessions of approximately 819.2 square kilometers where
we have carried out brine sampling and geostastical analysis. We
estimate that proven and probable reserves, based on economic
restrictions, geostatistical analysis and brine sampling up to a
depth of 30 and 50 meters in some areas and up to a depth of 200
meters in approximately 5% of our total exploration concessions,
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proven reserves(1)
|
|
|
Probable reserves(1)
|
|
|
|
(millions of metric tons)
|
|
|
(millions of metric tons)
|
|
|
|
|
Potassium (K
+)(2)
|
|
|
50.4
|
|
|
|
11.3
|
|
Sulfate
(SO4
2−)(3)
|
|
|
37.2
|
|
|
|
2.2
|
|
Lithium (Li
+)(4)
|
|
|
2.7
|
|
|
|
2.7
|
|
Boron (B
3+)(5)
|
|
|
1.1
|
|
|
|
0.2
|
|
|
|
|
|
|
(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, which changes over time, and the process
applied to produce the desired commercial products.
|
|
(2)
|
|
Recoveries for potassium vary from
approximately 47% to 77%.
|
|
(3)
|
|
Recoveries for sulfate vary from
approximately 27% to 45%.
|
|
(4)
|
|
Recoveries for lithium vary from
approximately 28% to 37%.
|
|
(5)
|
|
Recoveries for boron vary from
approximately 28% to 32%.
|
The proven and probable reserves are based on drilling, brine
sampling and geo-statistic reservoir modeling in order to
estimate brine volumes and their composition. To evaluate
reserves, we conduct a geostatistical study using the Kriging
Method in 2D. We calculate the quality of brine effectively
drainable or exploitable in each evaluation unit. We consider
chemical parameters to determine the process to be applied to
the brines. Based on the chemical characteristics, the volume of
brine and drainable percentage, we determine the number of
metric tons for each of the chemical ions. Proven reserves are
defined as those geographical blocks that comply with a Kriging
method estimation error of up to 15%. In the case of probable
reserves, the selected blocks must comply with an estimation
error between 15% and 35%. Blocks with an error greater than 35%
are not considered in the evaluation of reserves. This procedure
is 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.
Ports and water
rights
We operate port facilities at Tocopilla in the North of Chile
for shipment of products and delivery of certain raw materials
pursuant to renewable concessions granted by Chilean regulatory
authorities, provided that such facilities are used as
authorized and annual concession fees
51
are paid by us. We also hold water rights for a supply of water
from rivers and wells near our production facilities sufficient
to meet our current operational requirements.
Transportation
and storage facilities
We own and operate railway lines and equipment, as well as port
and storage facilities, for the transport and handling of
finished products and consumable materials.
The main center for our production and storage of raw materials
is the hub composed of the facilities in Coya Sur, Pedro de
Valdivia and María Elena. Our Salar de Atacama facilities
constitute the second largest concentration of plants and raw
material storage. Other facilities include Nueva Victoria, Pampa
Blanca, and the lithium carbonate and lithium hydroxide
finishing plants. The Tocopilla port terminal (Tocopilla
Port Terminal), which we own, is the main facility for
storage and shipment of our products.
Nitrate raw materials are produced and first stored at our Pedro
de Valdivia mine, and then transported by rail to the plants
described in the next paragraph, for further processing. Nitrate
raw material was also produced at our El Toco and Pampa Blanca
mining facilities until operations were temporarily suspended in
March 2010 at these locations. Nitrate raw material produced at
these two facilities were transported by conveyor belt (El Toco)
and trucks (Pampa Blanca) to plants for further processing.
Nitrate finished products are produced at our facilities in
María Elena and Coya Sur and then transported by our rail
system to Tocopilla Port Terminal, where they are stored and
shipped, either bagged or in bulk.
Potassium chloride is produced at our facilities in the Salar de
Atacama and transported either to Tocopilla Port Terminal or
Coya Sur by truck owned by a third-party dedicated contractor.
Product transported to Coya Sur is used as a raw material for
the production of potassium nitrate or for potassium chloride
finished product.
Potassium sulfate and boric acid are both produced at our
facilities in the Salar de Atacama and are then transported by
truck to the Tocopilla Port Terminal.
Lithium solutions, produced at our facilities in the Salar de
Atacama, are transported to the lithium carbonate facility in
the Salar del Carmen area, where finished lithium carbonate is
produced. Part of the lithium carbonate is fed to the adjacent
lithium hydroxide plant, where finished lithium hydroxide is
produced. These two products are bagged and stored on the
premises and are subsequently transported by truck to Tocopilla
Port Terminal or to the Antofagasta terminal for shipment on
charter vessels or container vessels.
Iodine raw material, obtained in the same mines as the nitrates,
is processed, bagged and stored exclusively in the facilities of
Pedro de Valdivia and Nueva Victoria, and then shipped by truck
to Antofagasta or Iquique for vessel container transport or by
truck to Santiago, where iodine derivatives are produced.
The facilities at Tocopilla Port Terminal are located
approximately 186 kilometers north of Antofagasta and
approximately 124 kilometers west of Pedro de Valdivia, 84
kilometers west of María Elena and Coya Sur and 372
kilometers west of the Salar de Atacama. Our subsidiary,
Servicios Integrales de Tránsitos y Transferencias S.A.
(SIT) operates the facilities under maritime concessions granted
pursuant to applicable Chilean laws. The port also complies with
ISPS (International Ship and Port Facility Security Code)
regulation. The Tocopilla Port Terminal
52
facilities include a railcar dumper to transfer bulk product
into the conveyor belt system used to store and ship bulk
product.
Storage facilities consist of a six silo system, with a total
production capacity of 55,000 metric tons, and an open storage
area for approximately 230,000 metric tons. Additionally, to
meet future storage needs, the Company will continue to make
investments in accordance with the investment plan outlined by
management. Products are also bagged at port facilities in
Tocopilla, where the bagging capacity is approximately 300,000
metric tons per year.
For shipping bulk product, the conveyor belt system extends over
the coast line to deliver product directly inside bulk carrier
hatches. Using this system, the loading capacity is 1,200 tons
per hour. Bags are loaded to bulk vessels using barges that are
loaded in Tocopilla Port Terminal dock and unloaded by vessel
cranes into the hatches. Both bulk and bagged trucks are loaded
in Tocopilla Port Terminal for transferring product directly to
customers or for container vessels shipping from other ports,
mainly Antofagasta, Mejillones and Iquique.
Bulk carrier loading in the Tocopilla Port Terminal is mostly
contracted to transfer product to our hubs around the world or
for shipping to customers, which in limited cases use their own
contracted vessels for delivery. Trucking is provided by a mix
of spot, contracted and customer-owned equipment.
Tocopilla processes related to the reception, handling, storage,
and shipment of bulk/packaged nitrates produced in Coya Sur are
certified by third party organization TÜV-Rheiland under
the quality standard ISO 9001:2008.
Research and
development, patents and licenses
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. The
areas of research cover topics such as chemical process design,
phase chemistry, chemical analysis methodologies and physical
properties of finished products.
There are four units that perform this function each of which
reports to one of the Senior VP of Nitrate and Iodine
Operations, to the Senior VP of Nueva Victoria Operations, to
the Senior VP of Salar Operations, and to the Senior VP of
Safety, Health and Environment.
Our research and development policy emphasizes the following:
(i) optimization of current processes in order to decrease
costs and improve product quality through the implementation of
new technology, and (ii) development of higher-margin
products from current products through vertical integration or
different product specifications.
Our research and development activities have been instrumental
in improving our production processes and developing new
value-added products. As a result of research and development
activities, new methods of extraction, crystallization and
finishing have been developed. Technological advances in recent
years have enabled us to improve process efficiency for the
nitrate, potassium and lithium operations, to improve the
physical quality of our prilled products and to reduce dust
emissions and caking by applying specially-designed additives
for our products handled in bulk.
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.
53
For the years ended December 31, 2009, 2008, and 2007, we
spent US$4.6 million, US$2.6 million, and
US$2.8 million, respectively, on research and development
activities.
Employees
As of December 31, 2009, we had 4,387 employees, of
whom 226 were employed outside of Chile. The average tenure of
our full-time employees is approximately 8.4 years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
Employees in Chile
|
|
|
4,161
|
|
|
|
4,332
|
|
|
|
3,515
|
|
|
|
3,415
|
|
|
|
3,350
|
|
Employees outside of Chile
|
|
|
226
|
|
|
|
229
|
|
|
|
231
|
|
|
|
330
|
|
|
|
322
|
|
|
|
|
|
|
|
Total employees
|
|
|
4,387
|
|
|
|
4,561
|
|
|
|
3,746
|
|
|
|
3,745
|
|
|
|
3,672
|
|
|
|
Of our permanent employees in Chile, 70% are represented by 28
labor unions, which represent their members in collective
negotiations with the Company. Compensation for unionized
personnel is established in accordance with the relevant
collective bargaining agreements. The terms of most such
agreements currently in effect are three years, and expiration
dates of such agreements vary from contract to contract. Under
these agreements, employees receive a salary according to a
scale that depends upon job function, seniority and
productivity. Unionized employees also receive certain benefits
provided for by law and certain benefits, which vary depending
upon the terms of the collective agreement, such as housing
allowances and additional death and disability benefits.
In addition, the Company owns all of the equity of
Institución de Salud Previsional Norte Grande Limitada
(Isapre Norte Grande), which is a health care
organization that provides medical services primarily to our
employees and Sociedad Prestadora de Servicios de Salud Cruz de
Norte S.A. (Prestadora), which is a hospital in
María Elena. We make contributions to Isapre Norte Grande
and to Prestadora in accordance with Chilean laws and the
provisions of our various collective bargaining agreements, but
we are not otherwise responsible for its liabilities.
Non-unionized employees receive individually negotiated
salaries, benefits provided for by law and certain additional
benefits provided by the Company.
We provide housing and other facilities and services for
employees and their families at the María Elena site.
We do not maintain any pension or retirement programs for our
Chilean employees. Most workers in Chile are subject to a
national pension law, adopted in 1980, which establishes a
system of independent pension plans that are administered by the
corresponding Sociedad Administradora de Fondos de Pensiones
(AFP). We have no liability for the performance of
any of these pension plans or any pension payments to be made to
our employees. We, however, sponsor staff severance indemnities
plans for employees in SQM and our Chilean subsidiaries whereby
we commit to provide a lump sum payment to each employee at the
end of
his/her
employment, whether due to death, termination, resignation or
retirement.
We have experienced no strikes or significant work stoppages in
the last 15 years and consider the relationship with our
employees to be good.
54
At the end of 2008, we offered the unions the possibility to
negotiate in advance their collective labor contracts. To date,
we have concluded negotiations with 24 labor unions,
representing 87% our total unionized workers, signing new
agreements which will last for three years. We expect to finish
negotiations with the remaining unions during the first half of
2010.
Legal
proceedings
The Company is party to various lawsuits arising in the ordinary
course of business. We believe it is unlikely that any losses
associated with such lawsuits will significantly affect the
Companys results of operations, financial position, and
cash flows.
55
Report of
independent auditors
(Translation of a report
originally issued in Spanish)
To the Shareholders and Directors of
Sociedad Química y Minera de Chile S.A.:
1. We have audited the accompanying consolidated balance
sheets of Sociedad Química y Minera de Chile S.A. and
subsidiaries as of December 31, 2009, 2008 and 2007, and
the related consolidated statements of income and cash flows for
each of the three years in the period ended December 31,
2009. These financial statements (that include corresponding
notes) are the responsibility of the management of Sociedad
Química y Minera de Chile S.A. Our responsibility is to
express an opinion on these financial statements based on our
audits.
2. We conducted our audits in accordance with generally
accepted auditing standards in Chile. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
3. In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of Sociedad Química y Minera de Chile S.A. and
subsidiaries as of December 31, 2009, 2008 and 2007 and the
results of their operations and their cash flows for the years
then ended, in accordance with accounting principles generally
accepted in Chile.
4. As indicated in the Note 29 to the consolidated
financial statements, effective January 1, 2010 Sociedad
Química y Minera de Chile S.A. will adopt International
Financial Reporting Standards (IFRS).
ERNST & YOUNG LTDA.
Santiago, Chile
February 25, 2010
F-2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
Notes
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalent
|
|
|
2y
|
|
|
|
530,394
|
|
|
|
303,799
|
|
|
|
164,212
|
|
Time deposits
|
|
|
|
|
|
|
15,043
|
|
|
|
20,121
|
|
|
|
|
|
Accounts receivable, net
|
|
|
4
|
|
|
|
309,765
|
|
|
|
328,041
|
|
|
|
249,718
|
|
Other accounts receivable, net
|
|
|
4
|
|
|
|
16,058
|
|
|
|
6,743
|
|
|
|
6,249
|
|
Accounts receivable from related companies
|
|
|
5
|
|
|
|
68,656
|
|
|
|
51,027
|
|
|
|
35,767
|
|
Inventories, net
|
|
|
6
|
|
|
|
637,689
|
|
|
|
540,727
|
|
|
|
387,768
|
|
Recoverable taxes
|
|
|
|
|
|
|
68,903
|
|
|
|
37,081
|
|
|
|
31,322
|
|
Prepaid expenses
|
|
|
|
|
|
|
5,275
|
|
|
|
5,490
|
|
|
|
4,197
|
|
Deferred income taxes
|
|
|
7
|
|
|
|
5,377
|
|
|
|
34,802
|
|
|
|
|
|
Other current assets
|
|
|
|
|
|
|
87,971
|
|
|
|
11,583
|
|
|
|
24,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
1,745,131
|
|
|
|
1,339,414
|
|
|
|
903,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
8
|
|
|
|
1,324,405
|
|
|
|
1,119,920
|
|
|
|
983,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in related companies
|
|
|
9
|
|
|
|
55,205
|
|
|
|
36,951
|
|
|
|
23,935
|
|
Goodwill, net
|
|
|
10
|
|
|
|
29,725
|
|
|
|
31,901
|
|
|
|
34,236
|
|
Negative goodwill, net
|
|
|
10
|
|
|
|
(1,073
|
)
|
|
|
(1,279
|
)
|
|
|
(1,291
|
)
|
Long-term accounts receivable, net
|
|
|
4
|
|
|
|
4,209
|
|
|
|
767
|
|
|
|
604
|
|
Long-term accounts receivable from related companies
|
|
|
5
|
|
|
|
|
|
|
|
2,000
|
|
|
|
2,000
|
|
Intangible assets, net
|
|
|
|
|
|
|
2,514
|
|
|
|
3,115
|
|
|
|
3,814
|
|
Other long-term assets
|
|
|
11
|
|
|
|
43,018
|
|
|
|
34,426
|
|
|
|
35,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
|
|
|
|
133,598
|
|
|
|
107,881
|
|
|
|
98,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
3,203,134
|
|
|
|
2,567,215
|
|
|
|
1,986,319
|
|
|
|
The accompanying notes form an
integral part of these consolidated financial
statements
F-3
Sociedad Quimica
y Minera de Chile S.A.
Consolidated balance sheets
(A translation of the original in
Spanishsee note 2 (b))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
Notes
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term bank debt
|
|
|
12
|
|
|
|
70,368
|
|
|
|
133,355
|
|
|
|
1,807
|
|
Current portion of the long-term bank debt
|
|
|
12
|
|
|
|
151,158
|
|
|
|
451
|
|
|
|
801
|
|
Promissory notes
|
|
|
13
|
|
|
|
29,363
|
|
|
|
|
|
|
|
|
|
Current portion of bonds payable
|
|
|
13
|
|
|
|
16,243
|
|
|
|
7,929
|
|
|
|
8,868
|
|
Dividends payable
|
|
|
|
|
|
|
831
|
|
|
|
656
|
|
|
|
531
|
|
Accounts payable
|
|
|
|
|
|
|
182,958
|
|
|
|
109,763
|
|
|
|
103,922
|
|
Other accounts payable
|
|
|
|
|
|
|
350
|
|
|
|
357
|
|
|
|
1,820
|
|
Notes and accounts payable to related companies
|
|
|
5
|
|
|
|
3,892
|
|
|
|
178
|
|
|
|
1,987
|
|
Accrued liabilities
|
|
|
14
|
|
|
|
37,191
|
|
|
|
30,414
|
|
|
|
22,314
|
|
Withholdings
|
|
|
|
|
|
|
32,066
|
|
|
|
32,252
|
|
|
|
22,931
|
|
Income taxes
|
|
|
|
|
|
|
1,298
|
|
|
|
89,186
|
|
|
|
9,514
|
|
Deferred income
|
|
|
30
|
|
|
|
16,536
|
|
|
|
31,722
|
|
|
|
10,858
|
|
Deferred income taxes
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
6,214
|
|
Other current liabilities
|
|
|
|
|
|
|
3,220
|
|
|
|
9,643
|
|
|
|
855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
545,474
|
|
|
|
445,906
|
|
|
|
192,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term bank debt
|
|
|
13
|
|
|
|
365,000
|
|
|
|
230,000
|
|
|
|
180,000
|
|
Bonds payable
|
|
|
13
|
|
|
|
670,221
|
|
|
|
285,940
|
|
|
|
306,651
|
|
Other accounts payable
|
|
|
|
|
|
|
187
|
|
|
|
397
|
|
|
|
731
|
|
Deferred income taxes
|
|
|
7
|
|
|
|
56,520
|
|
|
|
57,485
|
|
|
|
55,409
|
|
Long-term accrued liabilities
|
|
|
14
|
|
|
|
53,026
|
|
|
|
37,310
|
|
|
|
22,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
|
|
|
|
1,144,954
|
|
|
|
611,132
|
|
|
|
565,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest
|
|
|
16
|
|
|
|
46,093
|
|
|
|
47,069
|
|
|
|
45,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in capital
|
|
|
|
|
|
|
477,386
|
|
|
|
477,386
|
|
|
|
477,386
|
|
Other reserves
|
|
|
|
|
|
|
162,084
|
|
|
|
159,721
|
|
|
|
163,442
|
|
Retained earnings
|
|
|
|
|
|
|
827,143
|
|
|
|
826,001
|
|
|
|
541,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
|
|
|
|
1,466,613
|
|
|
|
1,463,108
|
|
|
|
1,182,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
|
|
|
|
|
3,203,134
|
|
|
|
2,567,215
|
|
|
|
1,986,319
|
|
|
|
The accompanying notes form an
integral part of these consolidated financial
statements
F-4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
Notes
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
Operating results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
1,436,891
|
|
|
|
1,774,119
|
|
|
|
1,187,527
|
|
Cost of sales
|
|
|
|
|
|
|
(916,088
|
)
|
|
|
(1,056,254
|
)
|
|
|
(857,765
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
|
|
|
|
520,803
|
|
|
|
717,865
|
|
|
|
329,762
|
|
Selling and administrative expenses
|
|
|
|
|
|
|
(78,895
|
)
|
|
|
(85,709
|
)
|
|
|
(70,273
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
441,908
|
|
|
|
632,156
|
|
|
|
259,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income
|
|
|
18
|
|
|
|
40,472
|
|
|
|
40,590
|
|
|
|
25,948
|
|
Non-operating expenses
|
|
|
18
|
|
|
|
(77,458
|
)
|
|
|
(59,896
|
)
|
|
|
(53,032
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating loss
|
|
|
|
|
|
|
(36,986
|
)
|
|
|
(19,306
|
)
|
|
|
(27,084
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and minority interest
|
|
|
|
|
|
|
404,922
|
|
|
|
612,850
|
|
|
|
232,405
|
|
Income tax expense
|
|
|
7
|
|
|
|
(76,532
|
)
|
|
|
(107,951
|
)
|
|
|
(48,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before minority interest
|
|
|
|
|
|
|
328,390
|
|
|
|
504,899
|
|
|
|
183,813
|
|
Minority interest
|
|
|
16
|
|
|
|
(1,334
|
)
|
|
|
(3,492
|
)
|
|
|
(3,792
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year
|
|
|
|
|
|
|
327,056
|
|
|
|
501,407
|
|
|
|
180,021
|
|
|
|
The accompanying notes form an
integral part of these consolidated financial
statements
F-5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
Notes
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year
|
|
|
|
|
|
|
327,056
|
|
|
|
501,407
|
|
|
|
180,021
|
|
Charges (credits) to income not representing cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
8
|
|
|
|
151,721
|
|
|
|
110,575
|
|
|
|
97,826
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
652
|
|
|
|
698
|
|
|
|
712
|
|
Write-offs and accruals
|
|
|
|
|
|
|
42,036
|
|
|
|
44,710
|
|
|
|
34,063
|
|
Gain on equity investments in related companies
|
|
|
|
|
|
|
(5,717
|
)
|
|
|
(14,358
|
)
|
|
|
(3,643
|
)
|
Loss on equity investments in related companies
|
|
|
|
|
|
|
1,256
|
|
|
|
|
|
|
|
77
|
|
Amortization of goodwill
|
|
|
10
|
|
|
|
2,176
|
|
|
|
2,215
|
|
|
|
2,252
|
|
Gain on sale of property, plant and equipment
|
|
|
|
|
|
|
(228
|
)
|
|
|
(2,793
|
)
|
|
|
87
|
|
Gain on sale of investments
|
|
|
|
|
|
|
|
|
|
|
(1,387
|
)
|
|
|
(1,316
|
)
|
Other credits to income not representing cash flows
|
|
|
22
|
|
|
|
(12,269
|
)
|
|
|
(4,979
|
)
|
|
|
(1,745
|
)
|
Other charges to income not representing cash flows
|
|
|
22
|
|
|
|
155,575
|
|
|
|
205,986
|
|
|
|
108,075
|
|
Foreign exchange difference, net
|
|
|
|
|
|
|
7,576
|
|
|
|
15,897
|
|
|
|
(2,212
|
)
|
Net changes in perating assets and liabilities (increase)
decrease:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
|
|
|
|
23,320
|
|
|
|
(184,713
|
)
|
|
|
(25,830
|
)
|
Inventories
|
|
|
|
|
|
|
(119,865
|
)
|
|
|
(193,469
|
)
|
|
|
(34,983
|
)
|
Other assets
|
|
|
|
|
|
|
(33,109
|
)
|
|
|
1,976
|
|
|
|
(6,437
|
)
|
Accounts payable
|
|
|
|
|
|
|
435
|
|
|
|
61,156
|
|
|
|
(4,000
|
)
|
Interest payable
|
|
|
|
|
|
|
11,434
|
|
|
|
1,729
|
|
|
|
582
|
|
Net income taxes payable
|
|
|
|
|
|
|
(174,452
|
)
|
|
|
(42,073
|
)
|
|
|
(23,541
|
)
|
Other accounts payable
|
|
|
|
|
|
|
(17,221
|
)
|
|
|
(15,147
|
)
|
|
|
(2,760
|
)
|
VAT and taxes payable
|
|
|
|
|
|
|
9,644
|
|
|
|
(33,608
|
)
|
|
|
(9,726
|
)
|
Minority interest
|
|
|
16
|
|
|
|
1,334
|
|
|
|
3,492
|
|
|
|
3,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided from operating activities
|
|
|
|
|
|
|
371,354
|
|
|
|
457,314
|
|
|
|
311,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from short term bank financing
|
|
|
|
|
|
|
411,527
|
|
|
|
280,000
|
|
|
|
|
|
Proceeds from issuance of bonds
|
|
|
|
|
|
|
372,347
|
|
|
|
|
|
|
|
|
|
Payment of dividends
|
|
|
|
|
|
|
(345,647
|
)
|
|
|
(212,831
|
)
|
|
|
(94,910
|
)
|
Repayment of bank financing
|
|
|
|
|
|
|
(190,333
|
)
|
|
|
(100,000
|
)
|
|
|
(57,089
|
)
|
Payment of bonds payable
|
|
|
|
|
|
|
(35,402
|
)
|
|
|
(5,573
|
)
|
|
|
(5,131
|
)
|
Payment of bond issuance and placement expenses
|
|
|
|
|
|
|
(8,093
|
)
|
|
|
|
|
|
|
|
|
Other financing disbursements
|
|
|
|
|
|
|
(1,908
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
|
|
202,491
|
|
|
|
(38,404
|
)
|
|
|
(157,130
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of property, plant and equipment
|
|
|
|
|
|
|
1,810
|
|
|
|
25,969
|
|
|
|
2,498
|
|
Sales of investments in related companies
|
|
|
|
|
|
|
|
|
|
|
1,688
|
|
|
|
1,478
|
|
Sales of other investments
|
|
|
|
|
|
|
20,121
|
|
|
|
|
|
|
|
|
|
Other investing income
|
|
|
|
|
|
|
2,170
|
|
|
|
721
|
|
|
|
399
|
|
Additions to property, plant and equipment
|
|
|
|
|
|
|
(357,007
|
)
|
|
|
(275,893
|
)
|
|
|
(165,640
|
)
|
Capitalized interest
|
|
|
|
|
|
|
(19,231
|
)
|
|
|
(10,723
|
)
|
|
|
(12,388
|
)
|
Investments in related companies
|
|
|
|
|
|
|
(3,580
|
)
|
|
|
|
|
|
|
|
|
Time deposits
|
|
|
|
|
|
|
(15,043
|
)
|
|
|
(20,121
|
)
|
|
|
|
|
Other disbursements
|
|
|
|
|
|
|
(2,200
|
)
|
|
|
(448
|
)
|
|
|
(513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(372,960
|
)
|
|
|
(278,807
|
)
|
|
|
(174,166
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of inflation on cash and cash equivalents
|
|
|
|
|
|
|
25,710
|
|
|
|
(516
|
)
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
|
|
|
|
226,595
|
|
|
|
139,587
|
|
|
|
(19,730
|
)
|
Beginning balance of cash and cash equivalents
|
|
|
|
|
|
|
303,799
|
|
|
|
164,212
|
|
|
|
183,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance of cash and cash equivalents
|
|
|
|
|
|
|
530,394
|
|
|
|
303,799
|
|
|
|
164,212
|
|
|
|
The accompanying notes form an
integral part of these consolidated financial
statements
F-6
|
|
Note 1
|
Company
background
|
Sociedad Química y Minera de Chile S.A. (the
Company) was registered with the Chilean
Superintendency of Securities and Insurance (SVS) on
March 18, 1983.
Subsidiary Soquimich Comercial S.A. was registered with the SVS
on January 11, 1993 under the registration number 0436.
References herein to Parent Company are to Sociedad
Química y Minera de Chile S.A. and references herein to the
Company or SQM are to Sociedad
Química y Minera de Chile S.A. together with its
consolidated subsidiaries and the companies in which Sociedad
Química y Minera de Chile S.A. holds significant equity
interest.
|
|
Note 2
|
Summary of
significant accounting policies
|
These consolidated financial statements have been prepared as of
December 31, 2009, 2008 and 2007 and for the years then
ended.
|
|
b)
|
Basis for the
preparation of the consolidated financial statements
|
The accompanying consolidated financial statements have been
prepared in U.S. dollars in accordance with accounting
principles generally accepted in Chile (Chilean
GAAP) and the regulations of the SVS. Certain accounting
practices applied by the Company that conform to Chilean GAAP
may not conform to generally accepted accounting principles in
the United States (US GAAP). For the convenience of
the reader, the consolidated financial statements and their
accompanying notes have been translated from Spanish into
English.
The consolidated financial statements include the accounts of
Sociedad Química y Minera de Chile S.A. (the Parent
Company) and subsidiaries (companies in which the Parent
Company holds a controlling participation, generally equal to
direct or indirect ownership of more than 50%). The Parent
Company and its subsidiaries are referred to collectively as the
Company.
The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosures of contingent assets and
liabilities as of the date of the financial statements and the
reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
The consolidated financial statements of the Company are
prepared in U.S. dollars. As a significant portion of the
Companys operations are transacted in U.S. dollars,
the U.S. dollar is considered the currency of the primary
economic environment in which the Company operates.
F-7
Notes to
consolidated financial statementsContinued
For comparison purposes, certain reclassifications have been
made to the 2008 and 2007 consolidated financial statements.
|
|
e)
|
Basis for
consolidation
|
In accordance with SVS Circular No. 1,697 and Technical
Bulletins No. 64 and 72 from the Chilean Association of
Accountants, the Company has prepared consolidated financial
statements that include the assets, liabilities, income and cash
flows of the subsidiaries indicated in the tables below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct or indirect ownership as of December 31,
|
|
Foreign subsidiaries
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
|
|
Nitratos Naturais Do Chile Ltda.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Nitrate Corporation of Chile Ltd.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM North America Corporation.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Europe N.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Soquimich S.R.L. Argentina
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Soquimich European Holding B.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Corporation N.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQI Corporation N.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Comercial de Mexico S.A. de C.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
North American Trading Co.
|
|
|
100.00
|
|
|
|
100,00
|
|
|
|
100.00
|
|
Administración y Servicios Santiago S.A. de C.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Peru S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Ecuador S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Nitratos Mexico S.A.
|
|
|
51.00
|
|
|
|
51.00
|
|
|
|
51.00
|
|
SQMC Holding Corporation L.L.P.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Investmet Corporation N.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Brasil Ltda.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM France S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Japan Co. Ltda.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Royal Seed Trading A.V.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Oceania PTY
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
RS Agro-Chemical Trading A.V.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Indonesia
|
|
|
80.00
|
|
|
|
80.00
|
|
|
|
80.00
|
|
SQM Virginia L.L.C.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Agricolima S.A. de C.V.
|
|
|
|
|
|
|
|
|
|
|
100.00
|
|
SQM Venezuela S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Italia SRL
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Comercial Caiman Internacional S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Africa PTY.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Lithium Specialties LLP
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM DubaiFzco(*)
|
|
|
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Fertilizantes Naturales S.A.
|
|
|
66.67
|
|
|
|
66.67
|
|
|
|
66.67
|
|
Iodine Minera B.V.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Agro India PVT. Ltd.
|
|
|
100.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
|
|
As a result of the joint venture
agreement signed with the Roullier Group for SQM Dubai Fzco.,
our share in that entity decreased to 50% and, therefore this
entity is not consolidated as of December 31, 2009.
|
F-8
Notes to
consolidated financial statementsContinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct or indirect ownership as of December 31,
|
|
Domestic subsidiaries
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
|
|
Comercial Hydro S.A.
|
|
|
60.64
|
|
|
|
60.64
|
|
|
|
60.64
|
|
SQM Potasio S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
SQM Nitratos S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Ajay SQM Chile S.A.
|
|
|
51.00
|
|
|
|
51.00
|
|
|
|
51.00
|
|
SQMC Internacional Ltda.
|
|
|
60.64
|
|
|
|
60.64
|
|
|
|
60.64
|
|
SQM Industrial S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Isapre Norte Grande Ltda.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Almacenes y Depositos Ltda.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Servicios Integrales de Transito y Transferencia S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Soquimich Comercial S.A.
|
|
|
60.64
|
|
|
|
60.64
|
|
|
|
60.64
|
|
SQM Salar S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Minera Nueva Victoria S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Proinsa Ltda.
|
|
|
60.58
|
|
|
|
60.58
|
|
|
|
60.58
|
|
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Exploraciones Mineras S.A.
|
|
|
100.00
|
|
|
|
100.00
|
|
|
|
100.00
|
|
Agrorama Callegari Ltda.(*)
|
|
|
42.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
|
|
Agrorama Callegari Ltda. was
consolidated because the Company has control through its
subsidiary Soquimich Comercial S.A.
|
All significant inter-company balances, transactions and
unrealized gains and losses arising from transactions between
these companies have been eliminated in consolidation. In
addition, the share of minority investors has been recognized
under minority interest.
|
|
f)
|
Price-level restatement
|
In accordance with Chilean GAAP the financial statements of
domestic subsidiaries that maintain their accounting records in
Chilean pesos have been restated to reflect the effects of
variations in the purchasing power of Chilean pesos during the
year. For this purpose, and in accordance with Chilean
regulations, non-monetary assets and liabilities, equity and
income statement accounts have been restated in terms of
year-end constant pesos based on the change in the consumer
price index during the year of (2.3%), 8.9% and 7.4% in 2009,
2008 and 2007, respectively). The resulting net charge or credit
to income arises as a result of the gain or loss in purchasing
power from the holding of non-US dollar denominated monetary
assets and liabilities exposed to the effects of inflation.
F-9
Notes to
consolidated financial statementsContinued
|
|
i)
|
Foreign
currency transactions
|
Monetary assets and liabilities denominated in Chilean pesos and
other currencies have been translated to U.S. dollars at
the observed exchange rates determined by the Central Bank of
Chile in effect at each year-end of Ch$507.10 per US$1 at
December 31, 2009, Ch$636.45 per US$1 at December 31,
2008, and Ch$496.89 per US$1 at December 31, 2007.
The values of the Unidad de Fomento (UF) used to convert
UF-denominated assets and liabilities to pesos (dollars) as of
December 31, 2009, 2008 and 2007 were Ch$20,942.88
(US$41.30), Ch$21,452.57 (US$33.71), and Ch$19,622.66 (US$39.49)
respectively.
|
|
ii)
|
Translation of
non-U.S.
dollar financial statements
|
a) For those subsidiaries and affiliates located in Chile
and which keep their accounting records in price-level adjusted
Chilean pesos:
|
|
|
Balance sheet accounts are translated to U.S. dollars at
the year-end exchange rate without eliminating the effects of
price-level adjustment.
|
|
|
Income statement accounts are translated to U.S. dollars at
the average exchange rate each month. The monetary correction
account in the income statement, which is generated by the
inclusion of price-level restatement on the non-monetary assets
and liabilities and shareholders equity, is translated to
U.S. dollars at the average exchange rate for each month.
|
|
|
Translation gains and losses, as well as the price-level
restatement to the balance sheet mentioned above, are included
as an adjustment in shareholders equity, in conformity
with Circular No. 1,697 of the SVS.
|
b) The financial statements of those foreign subsidiaries
that keep their accounting records in currencies other than the
U.S. dollar have been translated at historical exchange
rates as follows:
|
|
|
Monetary assets and liabilities are translated at year-end
exchange rates between the US dollar and the local currency.
|
|
|
All non-monetary assets and liabilities and shareholders
equity are translated at historical exchange rates between the
US dollar and the local currency.
|
|
|
Income and expense accounts are translated at average exchange
rates between the US dollar and the local currency.
|
|
|
Any exchange differences are included in the results of
operations for the period.
|
Foreign exchange differences for the years ended
December 31, 2009, 2008 and 2007 generated net earnings
(loss) of ThUS$ (7,576), ThUS$ (15,897), and ThUS$ (2,212)
respectively, which have been charged to the consolidated
statements of income in each respective period.
F-10
Notes to
consolidated financial statementsContinued
The monetary assets and liabilities of foreign subsidiaries were
translated into US dollars at the exchange rates per US dollar
prevailing at December 31, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
|
|
Brazilian real
|
|
|
1.74
|
|
|
|
2.34
|
|
|
|
1.77
|
|
New Peruvian sol
|
|
|
2.88
|
|
|
|
3.14
|
|
|
|
2.99
|
|
Argentine peso
|
|
|
3.83
|
|
|
|
3.47
|
|
|
|
3.15
|
|
Japanese yen
|
|
|
92.10
|
|
|
|
91.03
|
|
|
|
114.15
|
|
Euro
|
|
|
0.69
|
|
|
|
0.72
|
|
|
|
0.68
|
|
Mexican peso
|
|
|
13.04
|
|
|
|
13.77
|
|
|
|
10.90
|
|
Australian dollar
|
|
|
1.12
|
|
|
|
1.45
|
|
|
|
1.15
|
|
Pound sterling
|
|
|
0.62
|
|
|
|
0.67
|
|
|
|
0.49
|
|
Ecuadorian sucre
|
|
|
1.00
|
|
|
|
1.00
|
|
|
|
1.00
|
|
South African rand
|
|
|
7.40
|
|
|
|
9.28
|
|
|
|
6.81
|
|
|
|
Time deposits are recorded at cost plus accrued interest.
Inventories of finished products and products in process are
stated at production cost determined using weighted average
method, which is presented net of provisions. Provisions have
been made based on technical studies which cover different
variances affecting our products (density, humidity, and others).
Materials and supplies are stated at acquisition cost.
The cost of inventories does not exceed their net realizable
value.
|
|
j)
|
Allowance for
doubtful accounts
|
The Company records an allowance for doubtful accounts based on
estimated probability of unrecoverability of accounts receivable
determined on the basis of a
case-by-case
analysis of the situations of customers.
This allowance is presented as a deduction from Trade accounts
receivable, Notes receivable and Other accounts receivable.
|
|
k)
|
Property, plant
and equipment
|
Property, plant, equipment (PP&E) and property
rights are recorded at acquisition cost, considering in general
an average residual value of 5%, except for certain assets that
were revalued in accordance with a technical appraisal performed
in 1988.
F-11
Notes to
consolidated financial statementsContinued
In conformity with Technical Bulletin No. 31 and 33 of
the Chilean Association of Accountants, the Company capitalizes
interest cost associated with the financing of new assets during
the construction period of such assets.
Maintenance costs of plant and equipment are charged to expense
as incurred.
The Company obtains property rights and mining concessions from
the Chilean State. Other than minor filing fees, the property
rights are usually obtained without initial cost, and once
obtained, are retained by the Company as long as the annual fees
are paid. Such fees, which are paid annually in March, are
recorded as prepaid assets and are amortized over the following
twelve months. Values attributable to these original mining
concessions are recorded in property, plant and equipment.
|
|
l)
|
Depreciation of
property, plant and equipment
|
Depreciation for the period is calculated according to the
straight-line method based on the remaining technical useful
lives of assets, estimated by Management.
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
years of
|
|
|
|
useful life
|
|
|
|
|
Mining concessions
|
|
|
713
|
|
Building and infrastructure
|
|
|
380
|
|
Machinery and equipment
|
|
|
335
|
|
Other
|
|
|
230
|
|
|
|
|
|
m)
|
Assets acquired
through financial lease
|
Property, plant and equipment acquired through financial lease
agreements are accounted for at the present value of the minimum
lease payments plus the purchase option based on the interest
rate included in each contract. The Company does not legally own
these assets and therefore cannot freely dispose of them.
Intangible assets are stated at cost plus acquisition expenses
and are amortized over a maximum period of 40 years, in
accordance with Technical Bulletin No. 55 of the
Chilean Association of Accountants.
|
|
o)
|
Mining
development cost
|
Mine exploration costs and stripping costs to maintain
production of mineral resources extracted from operating mines
are considered variable production costs and are included in the
cost of inventory produced during the period. Mine development
costs at new mines, and major development costs at operating
mines outside existing areas under extraction that are expected
to benefit future production are capitalized under Other
long-term assets and amortized using a
units-of-production
method over the associated proven and probable reserves
estimations. The
F-12
Notes to
consolidated financial statementsContinued
Company determines its proven and probable reserves based on
drilling, brine sampling and geo-statistic reservoir modeling in
order to estimate mineral volumes and composition.
All other mine exploration costs, including expenses related to
low grade mineral resources rendering the reserves not
economically exploitable, are charged to the results of
operations in the period in which they are incurred.
|
|
p)
|
Investments in
related companies
|
Investments in related companies over which the Company has
significant influence, are included in Other Assets and are
recorded using the equity method of accounting, in accordance
with SVS Circulars Nos. 368 and 1,697 and Technical Bulletins
Nos. 64 and 72 issued by the Chilean
Association of Accountants. Accordingly, the
Companys proportional share in the net income or loss of
each investee is recognized in the non-operating income and
expense in the consolidated statements of income on an accrual
basis, after eliminating any unrealized profits from
transactions with the related companies.
The translation adjustment to U.S. dollars of investments
in domestic subsidiaries that maintain their accounting records
and are controlled in Chilean pesos is recognized in other
reserves within shareholders equity. Direct and indirect
investments in foreign subsidiaries or affiliates are controlled
in U.S. dollars.
Investments in which the Company has less than 20% participation
and the capacity to exert significant influence or control over
the investment, because SQM forms part of the investees
Board of Directors, have been valued using the equity method.
|
|
q)
|
Goodwill and
negative goodwill
|
Until December 31, 2003, goodwill was calculated as the
excess of the purchase price of companies acquired over their
net book value, whereas negative goodwill arose when the net
book value exceeds the purchase price of companies acquired.
Beginning January 1, 2004, the Company adopted Technical
Bulletin No. 72 of the Chilean Association of
Accountants that changed the basis for accounting for goodwill
and negative goodwill, introducing the fair value of the
acquired net assets as the basis to be compared with purchase
price in a business combination in order to determine goodwill
or negative goodwill.
Goodwill and negative goodwill resulting from equity method
investments are maintained in the same currency in which the
investment is measured.
Both goodwill and negative goodwill are amortized based on the
estimated period of investment return, which is generally 20 and
10 years for goodwill and negative goodwill, respectively.
Negative goodwill recognized on the acquisition of Minera Nueva
Victoria S.A. in 2006 relates to the mining concessions held by
this company. This negative goodwill will be amortized in the
same period as the underlying concessions once the Company
starts to extract minerals from the Minera Nueva Victorias
deposits.
F-13
Notes to
consolidated financial statementsContinued
|
|
r)
|
Reverse purchase
agreements
|
These operations are recorded in Other current assets at the
amount of the purchase. Starting at the purchase date, the
respective interest is recorded in accordance with SVS Circular
768.
|
|
s)
|
Current and
deferred income taxes
|
In conformity with current Chilean tax regulations, the Company
recognizes the provision for corporate income tax expense and
the income tax for the mining activity (also referred to as
mining royalty) on an accrual basis.
The Company records deferred income taxes in accordance with
Technical Bulletin Nos. 60, 69, 71 and 73 of the Chilean
Association of Accountants, and with Circular No. 1,466
issued on January 27, 2000 by the SVS, recognizing the
deferred tax effects of temporary differences between the
financial and tax values of assets and liabilities, using the
liability method. As a transitional provision at the date of
adoption of those regulations, a contra asset or liability (also
referred to as complementary) has been recorded
offsetting the effects of the deferred tax assets and
liabilities not recorded prior to January 1, 2000. Such
contra asset or liability must be amortized to income over the
estimated average reversal periods corresponding to the
underlying temporary differences to which the deferred tax asset
or liability relates calculated using the tax rates that will be
in effect at the time of reversal.
Deferred tax assets are further reduced by a valuation
allowance, if based on the weight of available evidence it is
more-likely-than-not that some portion of the deferred tax
assets will not be realized.
|
|
t)
|
Staff severance
indemnities
|
The Company calculates the liability for staff severance
indemnities in accordance with the Technical
Bulletin No. 8 of the Chilean Association of
Accountants. The liability is determined based on the present
value of the accrued benefits for the actual years of service
worked assuming average employee tenure of 24 years and a
real annual discount rate of 8%.
Operating revenues are recognized on the date of physical
delivery of the products, in accordance with the conditions of
the respective sales arrangements, in conformity with Technical
Bulletin No. 70 of the Chilean Association of
Accountants. Sales invoices issued for goods not delivered to
the customers prior to balance sheet date are recorded in
deferred income.
The Company maintains derivative contracts to hedge against
movements in foreign currencies, which are recorded in
conformity with Technical Bulletin No. 57 of the
Chilean Association of Accountants. Such contracts are recorded
at fair value with net losses recognized in income on the
accrual basis and gains recognized when realized.
F-14
Notes to
consolidated financial statementsContinued
Computational systems developed internally using the
Companys personnel and materials are charged to income
during the year in which the expenses are incurred. In
accordance with Circular No. 1,819 dated November 14,
2006 of the SVS, computer systems acquired by the Company are
recorded at cost.
|
|
x)
|
Research and
development expenses
|
Research and development cost are charged to the income
statement in the period in which they are incurred. Property,
plant and equipment that are acquired for use in research and
development activities and determined to provide additional
benefits to the Company are recorded in property, plant and
equipment.
|
|
y)
|
Cash and cash
equivalents
|
Included in cash and cash equivalents are cash and bank
balances, time deposits, financial instruments classified as
marketable securities and other short-term investments maturing
within 90 days, in compliance with Technical
Bulletin No. 50 issued by the Chilean Association of
Accountants.
The Company defines cash flows from operating activities as all
inflows and outflows of cash that are directly related to its
operations and, in general, all cash flows not defined as being
from investing or financing activities.
The detail of cash and cash equivalents as of each balance sheet
date is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Cash
|
|
|
19,217
|
|
|
|
21,618
|
|
|
|
18,236
|
|
Time deposits
|
|
|
174,742
|
|
|
|
116,492
|
|
|
|
85,523
|
|
Mutual funds
|
|
|
336,435
|
|
|
|
165,689
|
|
|
|
60,453
|
|
|
|
|
|
|
|
Total
|
|
|
530,394
|
|
|
|
303,799
|
|
|
|
164,212
|
|
|
|
The cost of employee vacations is recognized in the financial
statements on an accrual basis.
Bonds are stated at the principal amount plus interest accrued.
The difference between the carrying value and the placement
value is capitalized and amortized over the life of the related
bonds.
F-15
Notes to
consolidated financial statementsContinued
Promissory notes are valued at nominal amounts plus accrued
interest.
|
|
ac)
|
Provisions for
mine closure costs
|
The Company recognizes provisions to cover those costs
associated with closure of mining facilities and mitigation of
environmental damage at present value of the estimated future
expenses. The amount determined is presented under accrued
expenses in long-term liabilities.
Deferred income relate to the recognition of documented sales
the delivery of which occurs subsequent to the balance sheet
date.
Benefits agreed other than staff severance indemnities which the
Company and its subsidiaries will have to pay to its employees
by virtue of agreements entered are recognized on an accrual
basis.
|
|
Note 3
|
Changes in
accounting principles
|
During the period ended December 31, 2009, there were no
changes in the application of Chilean GAAP compared to the prior
year, which could significantly affect the interpretation of
these consolidated financial statements.
Beginning January 1, 2008, the Company recognized the
change in the functional currency (from Chilean pesos to US
dollars) in which its consolidated subsidiary Soquimich
Comercial S.A. was controlled for the purpose of reflecting the
currency which represents better underlying transactions in the
subsidiary and the control of the value of the investment hold
by the Parent Company.
F-16
Notes to
consolidated financial statementsContinued
|
|
Note 4
|
Short-term and
long-term accounts receivable
|
a) Short term and long-term accounts receivable and other
accounts receivable as of December 31, 2009, 2008 and 2007
are detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Up to 90 days
|
|
|
Between 90 days and 1 year
|
|
|
Short-term (net)
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Short-term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade Accounts Receivable
|
|
|
205,516
|
|
|
|
190,398
|
|
|
|
143,503
|
|
|
|
51,257
|
|
|
|
88,698
|
|
|
|
52,444
|
|
|
|
256,773
|
|
|
|
279,096
|
|
|
|
195,947
|
|
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,055
|
)
|
|
|
(8,935
|
)
|
|
|
(6,203
|
)
|
Notes Receivable
|
|
|
53,319
|
|
|
|
43,060
|
|
|
|
43,784
|
|
|
|
16,100
|
|
|
|
17,773
|
|
|
|
19,459
|
|
|
|
69,419
|
|
|
|
60,833
|
|
|
|
63,243
|
|
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,372
|
)
|
|
|
(2,953
|
)
|
|
|
(3,269
|
)
|
|
|
|
|
|
|
Accounts Receivable, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
309,765
|
|
|
|
328,041
|
|
|
|
249,718
|
|
|
|
|
|
|
|
Other Accounts Receivable
|
|
|
14,127
|
|
|
|
7,822
|
|
|
|
7,355
|
|
|
|
2,587
|
|
|
|
312
|
|
|
|
71
|
|
|
|
16,714
|
|
|
|
8,134
|
|
|
|
7,426
|
|
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(656
|
)
|
|
|
(1,391
|
)
|
|
|
(1,177
|
)
|
|
|
|
|
|
|
Other Accounts Receivable, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,058
|
|
|
|
6,743
|
|
|
|
6,249
|
|
|
|
|
|
|
|
Long-term Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,209
|
|
|
|
767
|
|
|
|
604
|
|
|
|
F-17
Notes to
consolidated financial statementsContinued
b) Consolidated Short-term and Long-Term
Receivablesby Geographic Location
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America and the Caribbean
|
|
|
Asia and Oceania
|
|
|
Chile
|
|
|
Europe
|
|
|
North America, Mexico and Canada
|
|
|
Total
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Short and Long-Term Accounts Receivable, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
28,616
|
|
|
|
77,530
|
|
|
|
21,194
|
|
|
|
4,730
|
|
|
|
23,751
|
|
|
|
10,481
|
|
|
|
128,470
|
|
|
|
108,416
|
|
|
|
127,114
|
|
|
|
137,853
|
|
|
|
84,637
|
|
|
|
68,637
|
|
|
|
30,363
|
|
|
|
41,217
|
|
|
|
29,145
|
|
|
|
330,032
|
|
|
|
335,551
|
|
|
|
256,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total
|
|
|
8.67%
|
|
|
|
23.11%
|
|
|
|
8.26%
|
|
|
|
1.43%
|
|
|
|
7.08%
|
|
|
|
4.09%
|
|
|
|
38.93%
|
|
|
|
32.31%
|
|
|
|
49.54%
|
|
|
|
41.77%
|
|
|
|
25.22%
|
|
|
|
26.75%
|
|
|
|
9.20%
|
|
|
|
12.28%
|
|
|
|
11.39%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term Accounts Receivable, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub Total Short-Term
|
|
|
28,616
|
|
|
|
77,530
|
|
|
|
21,194
|
|
|
|
4,730
|
|
|
|
23,751
|
|
|
|
10,481
|
|
|
|
124,261
|
|
|
|
107,649
|
|
|
|
126,510
|
|
|
|
137,853
|
|
|
|
84,637
|
|
|
|
68,637
|
|
|
|
30,363
|
|
|
|
41,217
|
|
|
|
29,145
|
|
|
|
325,823
|
|
|
|
334,784
|
|
|
|
255,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total
|
|
|
8.78%
|
|
|
|
23.16%
|
|
|
|
8.28%
|
|
|
|
1.45%
|
|
|
|
7.09%
|
|
|
|
4.09%
|
|
|
|
38.14%
|
|
|
|
32.15%
|
|
|
|
49.42%
|
|
|
|
42.31%
|
|
|
|
25.28%
|
|
|
|
26.82%
|
|
|
|
9.32%
|
|
|
|
12.32%
|
|
|
|
11.39%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Short-Term Trade Accounts Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
22,318
|
|
|
|
75,653
|
|
|
|
15,596
|
|
|
|
4,709
|
|
|
|
23,602
|
|
|
|
9,832
|
|
|
|
61,830
|
|
|
|
48,848
|
|
|
|
69,421
|
|
|
|
124,767
|
|
|
|
84,375
|
|
|
|
66,599
|
|
|
|
30,094
|
|
|
|
37,683
|
|
|
|
28,296
|
|
|
|
243,718
|
|
|
|
270,161
|
|
|
|
189,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total
|
|
|
9.16%
|
|
|
|
28.00%
|
|
|
|
8.22%
|
|
|
|
1.93%
|
|
|
|
8.74%
|
|
|
|
5.18%
|
|
|
|
25.37%
|
|
|
|
18.08%
|
|
|
|
36.59%
|
|
|
|
51.19%
|
|
|
|
31.23%
|
|
|
|
35.10%
|
|
|
|
12.35%
|
|
|
|
13.95%
|
|
|
|
14.91%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Short-Term Notes Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
5,461
|
|
|
|
1,706
|
|
|
|
4,950
|
|
|
|
|
|
|
|
|
|
|
|
490
|
|
|
|
48,096
|
|
|
|
56,174
|
|
|
|
53,713
|
|
|
|
12,490
|
|
|
|
|
|
|
|
429
|
|
|
|
|
|
|
|
|
|
|
|
392
|
|
|
|
66,047
|
|
|
|
57,880
|
|
|
|
59,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total
|
|
|
8.27%
|
|
|
|
2.95%
|
|
|
|
8.25%
|
|
|
|
|
|
|
|
|
|
|
|
0.82%
|
|
|
|
72.82%
|
|
|
|
97.05%
|
|
|
|
89.56%
|
|
|
|
18.91%
|
|
|
|
|
|
|
|
0.72%
|
|
|
|
|
|
|
|
|
|
|
|
0.65%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Short-Term Other Accounts Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
837
|
|
|
|
171
|
|
|
|
648
|
|
|
|
21
|
|
|
|
149
|
|
|
|
159
|
|
|
|
14,335
|
|
|
|
2,627
|
|
|
|
3,376
|
|
|
|
596
|
|
|
|
262
|
|
|
|
1,609
|
|
|
|
269
|
|
|
|
3,534
|
|
|
|
457
|
|
|
|
16,058
|
|
|
|
6,743
|
|
|
|
6,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total
|
|
|
5.21%
|
|
|
|
2.53%
|
|
|
|
10.37%
|
|
|
|
0.13%
|
|
|
|
2.21%
|
|
|
|
2.54%
|
|
|
|
89.27%
|
|
|
|
38.96%
|
|
|
|
54.03%
|
|
|
|
3.71%
|
|
|
|
3.89%
|
|
|
|
25.75%
|
|
|
|
1.68%
|
|
|
|
52.41%
|
|
|
|
7.31%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Accounts Receivable, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,209
|
|
|
|
767
|
|
|
|
604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,209
|
|
|
|
767
|
|
|
|
604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
100.00%
|
|
|
|
F-18
Notes to
consolidated financial statementsContinued
|
|
Note 5
|
Balances and
transactions with related parties
|
Balances with related companies are generated by commercial
transactions which accrue no interest under normal conditions in
force for these type of operations in respect to term and market
price.
Expiration conditions for each case vary depending on the
underlying transaction.
On April 21, 2008, Inversiones SQ S.A. and SQH S.A. the
entities which indirectly hold significant interest in the
Company have acquired from Yara Netherland B.V. remaining 49% of
shares of Inversiones SQYA S.A., which they did not posses prior
to that transaction. Effective since that date Yara Group
entities do not hold any interest in the Company and as such
they are not related parties.
a) Amounts included in balances with related parties as of
December 31, 2009, 2008 and 2007 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
|
|
|
Long-term
|
|
Accounts receivable
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Sales de Magnesio Ltda.
|
|
|
292
|
|
|
|
143
|
|
|
|
103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sociedad Inversiones Pampa Calichera S.A.
|
|
|
8
|
|
|
|
8
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inversiones PCS Chile S.A.
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doktor Tarsa Tarim Sanayi AS
|
|
|
7,304
|
|
|
|
13,641
|
|
|
|
4,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nutrisi Holding N.V.
|
|
|
1,741
|
|
|
|
1,702
|
|
|
|
1,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ajay Europe S.A.R.L.
|
|
|
1,492
|
|
|
|
4,061
|
|
|
|
6,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ajay North America LLC
|
|
|
2,914
|
|
|
|
2,520
|
|
|
|
2,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abu Dhabi Fertilizer Industries WWL
|
|
|
3,546
|
|
|
|
6,579
|
|
|
|
3,622
|
|
|
|
|
|
|
|
2,000
|
|
|
|
2,000
|
|
NU3 B.V.
|
|
|
1,883
|
|
|
|
772
|
|
|
|
720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM Agro India
|
|
|
|
|
|
|
595
|
|
|
|
363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM East Med Turkey
|
|
|
|
|
|
|
1,075
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Misr Specialty Fertilizers (MSF)
|
|
|
289
|
|
|
|
632
|
|
|
|
616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kowa Company Ltd.
|
|
|
15,764
|
|
|
|
18,170
|
|
|
|
14,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minera Saskatchewan Ltda. (PCS)
|
|
|
32,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NU3 N.V. (Belgium)
|
|
|
|
|
|
|
1,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM Thailand Co. Ltd.
|
|
|
835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
68,656
|
|
|
|
51,027
|
|
|
|
35,767
|
|
|
|
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
F-19
Notes to
consolidated financial statementsContinued
b) Amounts included in balances with related parties as of
December 31, 2009, 2008 and 2007 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
|
|
Accounts payable
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
SQM Thailand Co. Ltd.
|
|
|
|
|
|
|
178
|
|
|
|
110
|
|
NU3 B.V. (Belgium)
|
|
|
94
|
|
|
|
|
|
|
|
1,877
|
|
SQM Vitas
|
|
|
2,883
|
|
|
|
|
|
|
|
|
|
Callegari Agricola S.A.
|
|
|
234
|
|
|
|
|
|
|
|
|
|
Coromandel Fertilizers Limited
|
|
|
681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,892
|
|
|
|
178
|
|
|
|
1,987
|
|
|
|
There were no outstanding long-term accounts payable with
related parties as of December 31, 2009, 2008 and 2007.
F-20
Notes to
consolidated financial statementsContinued
c) During 2009, 2008 and 2007 principal transactions with
related parties were as follows (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nature of
|
|
Amount of transaction
|
|
|
Effect on income - credit
|
|
Company
|
|
Relationship
|
|
transaction
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Abu Dhabi Fertilizer Ind. WWL
|
|
Investee
|
|
Sales of Products
|
|
|
7,385
|
|
|
|
9,302
|
|
|
|
5,434
|
|
|
|
2,053
|
|
|
|
2,849
|
|
|
|
1,123
|
|
|
|
Investee
|
|
Financial Income
|
|
|
54
|
|
|
|
127
|
|
|
|
117
|
|
|
|
54
|
|
|
|
127
|
|
|
|
117
|
|
Ajay Europe SARL
|
|
Investee
|
|
Sales of Products
|
|
|
11,899
|
|
|
|
19,561
|
|
|
|
24,965
|
|
|
|
695
|
|
|
|
2,667
|
|
|
|
9,250
|
|
|
|
Investee
|
|
Financial Income
|
|
|
|
|
|
|
10
|
|
|
|
10
|
|
|
|
|
|
|
|
10
|
|
|
|
10
|
|
|
|
Investee
|
|
Dividends
|
|
|
|
|
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ajay North America LLC
|
|
Investee
|
|
Sales of Products
|
|
|
13,839
|
|
|
|
28,676
|
|
|
|
17,281
|
|
|
|
610
|
|
|
|
9,970
|
|
|
|
8,060
|
|
|
|
Investee
|
|
Dividends
|
|
|
453
|
|
|
|
760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kowa Company Ltd.
|
|
Shareholder
|
|
Sales of Products
|
|
|
59,233
|
|
|
|
100,633
|
|
|
|
84,701
|
|
|
|
15,321
|
|
|
|
41,066
|
|
|
|
50,770
|
|
|
|
Shareholder
|
|
Sales of Services
|
|
|
185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nu3 B.V.
|
|
Investee
|
|
Sales of Products
|
|
|
|
|
|
|
14,384
|
|
|
|
9,025
|
|
|
|
|
|
|
|
2,425
|
|
|
|
279
|
|
|
|
Investee
|
|
Sales of Services
|
|
|
|
|
|
|
109
|
|
|
|
|
|
|
|
|
|
|
|
109
|
|
|
|
|
|
Nu3 N.V.
|
|
Investee
|
|
Sales of Products
|
|
|
|
|
|
|
18,166
|
|
|
|
6,545
|
|
|
|
|
|
|
|
5,716
|
|
|
|
2,026
|
|
Doktor Tarsa Tarim Sanayi AS
|
|
Investee
|
|
Sales of Products
|
|
|
11,030
|
|
|
|
15,590
|
|
|
|
7,577
|
|
|
|
1,134
|
|
|
|
6,492
|
|
|
|
2,159
|
|
SQM Agro India PVT LTD
|
|
Investee
|
|
Sales of Products
|
|
|
|
|
|
|
598
|
|
|
|
|
|
|
|
|
|
|
|
210
|
|
|
|
|
|
MISR Speciality
|
|
Investee
|
|
Sales of Products
|
|
|
170
|
|
|
|
733
|
|
|
|
|
|
|
|
9
|
|
|
|
320
|
|
|
|
|
|
|
|
Investee
|
|
Financial Income
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
Nutrisi Holding N.V.
|
|
Investee
|
|
Financial Income
|
|
|
10,825
|
|
|
|
104
|
|
|
|
|
|
|
|
1,865
|
|
|
|
104
|
|
|
|
|
|
Sales de Magnesio Ltda.
|
|
Investee
|
|
Sales of Products
|
|
|
908
|
|
|
|
920
|
|
|
|
|
|
|
|
828
|
|
|
|
334
|
|
|
|
|
|
|
|
Investee
|
|
Dividends
|
|
|
385
|
|
|
|
491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investee
|
|
Sales of Services
|
|
|
270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM Eastemed Turkey
|
|
Investee
|
|
Sales of Products
|
|
|
|
|
|
|
397
|
|
|
|
|
|
|
|
|
|
|
|
240
|
|
|
|
|
|
SQM Thailand Co. Ltd.
|
|
Investee
|
|
Sales of Products
|
|
|
1,716
|
|
|
|
83
|
|
|
|
|
|
|
|
351
|
|
|
|
69
|
|
|
|
|
|
Minera Saskatchewan Ltda. (PCS)
|
|
Shareholder
|
|
Sales of Products
|
|
|
34,949
|
|
|
|
|
|
|
|
|
|
|
|
16,839
|
|
|
|
|
|
|
|
|
|
|
|
Shareholder
|
|
Sales of Services
|
|
|
540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nutrisi Holding B.V.
|
|
Investee
|
|
Sales of Products
|
|
|
10,223
|
|
|
|
|
|
|
|
|
|
|
|
1,316
|
|
|
|
|
|
|
|
|
|
|
|
Investee
|
|
Sales of Services
|
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Transactions with related parties
involving acquisitions and disposals of participations in other
entities are discussed in Note 9.
|
F-21
Notes to
consolidated financial statementsContinued
As of December 31, 2009, 2008 and 2007 the net balance of
inventories is detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
|
|
Accounts payable
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Finished products
|
|
|
313,903
|
|
|
|
320,489
|
|
|
|
218,073
|
|
Work in process
|
|
|
300,161
|
|
|
|
188,069
|
|
|
|
145,209
|
|
Supplies
|
|
|
23,625
|
|
|
|
32,169
|
|
|
|
24,486
|
|
|
|
|
|
|
|
Total
|
|
|
637,689
|
|
|
|
540,727
|
|
|
|
387,768
|
|
|
|
|
|
Note 7
|
Current and
deferred income taxes
|
a) As of December 31, 2009, 2008 and 2007 the Company
has the following consolidated balances for retained tax
earnings, income not subject to taxes, tax loss carry-forwards
and credit for shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Accumulated tax basis retained earnings with tax credit
|
|
|
668,670
|
|
|
|
813,716
|
|
|
|
381,272
|
|
Accumulated tax basis retained earnings without tax credit
|
|
|
107,832
|
|
|
|
132,773
|
|
|
|
56,332
|
|
Tax loss carry-forwards(1)
|
|
|
99,333
|
|
|
|
16,949
|
|
|
|
142,236
|
|
Credit for shareholders(2)
|
|
|
136,874
|
|
|
|
166,554
|
|
|
|
77,904
|
|
|
|
|
|
|
(1)
|
|
Tax losses in Chile can be carried
forward indefinitely.
|
|
(2)
|
|
Corresponds to credit to income
taxes that shareholders have in relation to distribution of
dividends.
|
The Company has recognized deferred income taxes for tax losses
and the related valuation allowance, where applicable, in
accordance with Technical Bulletin No. 60 issued by
the Chilean Association of Accountants.
F-22
Notes to
consolidated financial statementsContinued
b) The deferred taxes as of December 31, 2009, 2008
and 2007 represented a net liability of ThUS$51,143, ThUS$22,683
and ThUS$61,623 respectively, and consisted of the following
concepts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax asset
|
|
|
Deferred tax liability
|
|
As of December 31,
2009
|
|
Short-term
|
|
|
Long-term
|
|
|
Short-term
|
|
|
Long-term
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
1,976
|
|
|
|
1,732
|
|
|
|
|
|
|
|
|
|
Prepaid income
|
|
|
166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation accrual
|
|
|
2,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on sale of products
|
|
|
53,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for obsolescence of non-current assets
|
|
|
|
|
|
|
3,433
|
|
|
|
|
|
|
|
|
|
Production expenses
|
|
|
|
|
|
|
|
|
|
|
39,660
|
|
|
|
|
|
Accelerated depreciation of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,099
|
|
Exploration expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,263
|
|
Capitalized interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,222
|
|
Staff severance indemnities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,756
|
|
Fair value of property, plant and equipment
|
|
|
|
|
|
|
2,852
|
|
|
|
|
|
|
|
|
|
Capitalized expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,015
|
|
Tax losses carry-forwards
|
|
|
|
|
|
|
18,206
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
10,948
|
|
|
|
|
|
Employee benefits
|
|
|
1,105
|
|
|
|
5,075
|
|
|
|
|
|
|
|
|
|
Deferred mining activity royalty taxes
|
|
|
886
|
|
|
|
|
|
|
|
4,017
|
|
|
|
4,546
|
|
Accrued interest
|
|
|
393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
4,538
|
|
|
|
13,237
|
|
|
|
1
|
|
|
|
1,485
|
|
|
|
|
|
|
|
Total gross deferred taxes
|
|
|
64,633
|
|
|
|
44,535
|
|
|
|
54,626
|
|
|
|
108,386
|
|
Total complementary accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,364
|
)
|
Valuation allowance
|
|
|
(4,630
|
)
|
|
|
(4,033
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred taxes
|
|
|
60,003
|
|
|
|
40,502
|
|
|
|
54,626
|
|
|
|
97,022
|
|
|
|
|
|
|
|
Deferred tax asset/liability, net
|
|
|
5,377
|
|
|
|
|
|
|
|
|
|
|
|
56,250
|
|
|
|
F-23
Notes to
consolidated financial statementsContinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax asset
|
|
|
Deferred tax liability
|
|
As of December 31,
2008
|
|
Short-term
|
|
|
Long-term
|
|
|
Short-term
|
|
|
Long-term
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
1,029
|
|
|
|
897
|
|
|
|
|
|
|
|
|
|
Prepaid income
|
|
|
1,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation accrual
|
|
|
1,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on sale of products
|
|
|
76,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for obsolescence of non-current assets
|
|
|
|
|
|
|
3,940
|
|
|
|
|
|
|
|
|
|
Production expenses
|
|
|
|
|
|
|
|
|
|
|
29,774
|
|
|
|
|
|
Accelerated depreciation of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,211
|
|
Exploration expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,702
|
|
Capitalized interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,252
|
|
Staff Severance indemnities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,935
|
|
Fair value of property, plant and equipment
|
|
|
|
|
|
|
3,153
|
|
|
|
|
|
|
|
|
|
Capitalized expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
826
|
|
Tax losses carry-forwards
|
|
|
|
|
|
|
4,362
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee benefits
|
|
|
11
|
|
|
|
2,904
|
|
|
|
|
|
|
|
|
|
Deferred mining activity royalty taxes
|
|
|
971
|
|
|
|
494
|
|
|
|
2,625
|
|
|
|
4,384
|
|
Accrued interest
|
|
|
504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
4,785
|
|
|
|
11,623
|
|
|
|
|
|
|
|
370
|
|
|
|
|
|
|
|
Total gross deferred taxes
|
|
|
88,007
|
|
|
|
27,373
|
|
|
|
32,399
|
|
|
|
93,680
|
|
Total complementary accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,515
|
)
|
Valuation allowance
|
|
|
(20,806
|
)
|
|
|
(4,693
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred taxes
|
|
|
67,201
|
|
|
|
22,680
|
|
|
|
32,399
|
|
|
|
80,165
|
|
|
|
|
|
|
|
Deferred tax asset/liability, net
|
|
|
34,802
|
|
|
|
|
|
|
|
|
|
|
|
57,485
|
|
|
|
F-24
Notes to
consolidated financial statementsContinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax asset
|
|
|
Deferred tax liability
|
|
As of December 31,
2007
|
|
Short-term
|
|
|
Long-term
|
|
|
Short-term
|
|
|
Long-term
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
1,335
|
|
|
|
605
|
|
|
|
|
|
|
|
|
|
Prepaid income
|
|
|
188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation accrual
|
|
|
1,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on sale of products
|
|
|
17,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for obsolescence of non-current assets
|
|
|
|
|
|
|
3,779
|
|
|
|
|
|
|
|
|
|
Production expenses
|
|
|
|
|
|
|
|
|
|
|
20,535
|
|
|
|
|
|
Accelerated depreciation of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,190
|
|
Exploration expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,327
|
|
Capitalized interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,384
|
|
Staff severance indemnities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,733
|
|
Fair value of property, plant and equipment
|
|
|
|
|
|
|
2,119
|
|
|
|
|
|
|
|
|
|
Leased assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
Capitalized expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
929
|
|
Tax losses carry-forwards
|
|
|
|
|
|
|
25,883
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
2,545
|
|
|
|
|
|
Provision for energy tariff difference
|
|
|
2,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Interest
|
|
|
233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
1,215
|
|
|
|
5,427
|
|
|
|
140
|
|
|
|
596
|
|
|
|
|
|
|
|
Total gross deferred taxes
|
|
|
24,539
|
|
|
|
37,813
|
|
|
|
23,220
|
|
|
|
78,171
|
|
Total complementary accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,633
|
)
|
Valuation allowance
|
|
|
(7,533
|
)
|
|
|
(30,684
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred taxes
|
|
|
17,006
|
|
|
|
7,129
|
|
|
|
23,220
|
|
|
|
62,538
|
|
|
|
|
|
|
|
Deferred tax asset/liability, net
|
|
|
|
|
|
|
|
|
|
|
6,214
|
|
|
|
55,409
|
|
|
|
F-25
Notes to
consolidated financial statementsContinued
c) Income tax expense in the years ended December 31,
2009, 2008 and 2007 is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Tax expense adjustment (prior year)
|
|
|
(4,433
|
)
|
|
|
576
|
|
|
|
132
|
|
Provision for current income tax
|
|
|
(52,563
|
)
|
|
|
(147,694
|
)
|
|
|
(38,218
|
)
|
Effect of deferred tax assets and liabilities
|
|
|
(56,198
|
)
|
|
|
45,786
|
|
|
|
3,380
|
|
Tax benefit for tax losses
|
|
|
13,803
|
|
|
|
(20,652
|
)
|
|
|
(6,213
|
)
|
Effect of amortization of complementary accounts
|
|
|
(2,151
|
)
|
|
|
(2,111
|
)
|
|
|
(5,508
|
)
|
Effect on deferred tax assets and liabilities due to changes in
valuation allowance
|
|
|
16,452
|
|
|
|
13,230
|
|
|
|
(2,182
|
)
|
Other tax charges and credits
|
|
|
8,558
|
|
|
|
2,914
|
|
|
|
17
|
|
|
|
|
|
|
|
Total Income Tax Expense
|
|
|
(76,532
|
)
|
|
|
(107,951
|
)
|
|
|
(48,592
|
)
|
|
|
Note 8Property,
plant and equipment
Property, plant and equipment are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Land
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
82,081
|
|
|
|
80,529
|
|
|
|
82,727
|
|
Mining concessions
|
|
|
30,086
|
|
|
|
30,086
|
|
|
|
30,086
|
|
|
|
|
|
|
|
Subtotal
|
|
|
112,167
|
|
|
|
110,615
|
|
|
|
112,813
|
|
|
|
|
|
|
|
Buildings and Infrastructure
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings
|
|
|
185,356
|
|
|
|
176,136
|
|
|
|
163,412
|
|
Installations
|
|
|
445,972
|
|
|
|
389,353
|
|
|
|
305,925
|
|
Construction-in-progress
|
|
|
278,559
|
|
|
|
181,730
|
|
|
|
165,648
|
|
Other
|
|
|
294,268
|
|
|
|
230,135
|
|
|
|
206,651
|
|
|
|
|
|
|
|
Subtotal
|
|
|
1,204,155
|
|
|
|
977,545
|
|
|
|
841,827
|
|
|
|
|
|
|
|
Machinery and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
Machinery
|
|
|
636,335
|
|
|
|
602,490
|
|
|
|
556,466
|
|
Equipment
|
|
|
176,919
|
|
|
|
149,907
|
|
|
|
131,898
|
|
Project-in-progress
|
|
|
71,137
|
|
|
|
30,682
|
|
|
|
23,060
|
|
Other
|
|
|
49,954
|
|
|
|
41,030
|
|
|
|
19,729
|
|
|
|
|
|
|
|
Subtotal
|
|
|
934,345
|
|
|
|
824,109
|
|
|
|
731,153
|
|
|
|
|
|
|
|
F-26
Notes to
consolidated financial statementsContinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Other Fixed Assets
|
|
|
11,615
|
|
|
|
10,808
|
|
|
|
9,390
|
|
Tools
|
|
|
15,910
|
|
|
|
16,009
|
|
|
|
15,100
|
|
Furniture and office equipment
|
|
|
29,720
|
|
|
|
22,345
|
|
|
|
11,275
|
|
Project-in-progress
|
|
|
12,270
|
|
|
|
12,673
|
|
|
|
14,264
|
|
Other
|
|
|
69,515
|
|
|
|
61,835
|
|
|
|
50,029
|
|
|
|
|
|
|
|
Subtotal
|
|
|
11,615
|
|
|
|
10,808
|
|
|
|
9,390
|
|
|
|
|
|
|
|
Amounts related to technical appraisal
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
7,839
|
|
|
|
7,839
|
|
|
|
7,839
|
|
Buildings and infrastructure
|
|
|
41,439
|
|
|
|
41,439
|
|
|
|
41,439
|
|
Machinery and equipment
|
|
|
12,048
|
|
|
|
12,048
|
|
|
|
12,048
|
|
Other assets
|
|
|
53
|
|
|
|
53
|
|
|
|
53
|
|
|
|
|
|
|
|
Subtotal
|
|
|
61,379
|
|
|
|
61,379
|
|
|
|
61,379
|
|
|
|
|
|
|
|
Total property, plant and equipment (cost)
|
|
|
2,381,561
|
|
|
|
2,035,483
|
|
|
|
1,797,201
|
|
|
|
|
|
|
|
Less: Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and infrastructure
|
|
|
(472,950
|
)
|
|
|
(391,487
|
)
|
|
|
(339,623
|
)
|
Machinery and equipment
|
|
|
(513,192
|
)
|
|
|
(449,558
|
)
|
|
|
(404,573
|
)
|
Other fixed assets
|
|
|
(30,826
|
)
|
|
|
(35,264
|
)
|
|
|
(31,441
|
)
|
Technical appraisal
|
|
|
(40,188
|
)
|
|
|
(39,254
|
)
|
|
|
(38,115
|
)
|
|
|
|
|
|
|
Total accumulated depreciation
|
|
|
(1,057,156
|
)
|
|
|
(915,563
|
)
|
|
|
(813,752
|
)
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
|
1,324,405
|
|
|
|
1,119,920
|
|
|
|
983,449
|
|
|
|
The Company has capitalized assets obtained through financial
lease arrangements, which are included in Other property, plant
and equipment and are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Administrative office buildings
|
|
|
1,988
|
|
|
|
1,988
|
|
|
|
1,988
|
|
Accumulated depreciation
|
|
|
(583
|
)
|
|
|
(552
|
)
|
|
|
(521
|
)
|
|
|
|
|
|
|
Total assets in leasing
|
|
|
1,405
|
|
|
|
1,436
|
|
|
|
1,467
|
|
|
|
The administrative office buildings were acquired for 230
installments of UF 663.75 each and an annual, contractually
established interest rate of 8.5%.
F-27
Notes to
consolidated financial statementsContinued
Note 9Investments
in related parties
|
|
a)
|
Information on
Foreign Investments
|
There are no plans for the foreign investments to pay dividends,
as it is the Companys policy to reinvest those earnings.
The Company has not designated their foreign investments as net
investment hedges.
|
|
b)
|
Significant
transactions involving related parties
|
Transactions
executed in 2009
|
|
|
On April 30, 2009, the SQMs Directors agreed to
authorize signing of a supply agreement by which SQM Salar S.A.,
subsidiary will sell PCS Sales (USA) Inc. (PCS), a subsidiary of
Potash Corporation of Saskatchewan Inc. (SQMs shareholder)
between 25,000 and 150,000 tons of potassium chloride per year
that will be sold by PCS in Japan, India and China. These sales
may occur from May 1, 2009 to May 1, 2010, under terms
and conditions identical to those observed in the market at that
time.
|
|
|
On July 14, 2009, the subsidiary Comercial Agrorama
Callegari Limitada was formed, to which Soquimich Comercial S.A.
contributed capital of ThUS$1,021 obtaining 70% participation in
the capital of that entity.
|
|
|
On October 9, 2009, the subsidiary Soquimich European
Holdings formed a joint venture with Coromandel Fertilizars
Limited called Coromandel SQM; each party contributed capital of
ThUS$2,200 for a 50% share.
|
|
|
On March 18, 2009, a shareholder agreement between SQM
Industrial S.A. and Migao Corporation was signed to
form Sichuan SQM-Migao Chemical Fertilizer Co. Ltd. SQM
Industrial S.A. made its first capital contribution of
ThUS$3,000 on November 6, 2009 from a total committed of
ThUS$10,000 that each party will contribute. These additional
contributions will be made during 2010.
|
|
|
On December 17, 2009, Soquimich European Holdings B.V.
acquired 51% of SQM Agro India Pvt. Ltd. for ThUS$50. With this
acquisition, it now holds 100% of this entity.
|
|
|
On December 29, 2009, a joint venture agreement was signed
with the Roullier Group for the company SQM Dubai-Fzco.,
decreasing our share from 100% to 50%. On the same date, the
company changed its name to SQM Vitas. We recorded a gain from
that transaction of ThUS$3,019, which is presented in Other
non-operating income.
|
Transactions
executed in 2008
|
|
|
On April 24, 2008, the subsidiary Agricolima S.A. was sold
to Mr. Carlos Federico Valenzuela Cadena, Mr. Diego
Valenzuela Cadena and Mr. Jesús Angel Morelos
Montfort, creating a gain on sale of investment of ThUS$1,387.
|
F-28
Notes to
consolidated financial statementsContinued
Transactions
executed in 2007
|
|
|
On January 12, 2007, the subsidiary PTM SQM Ibérica
S.A. was liquidated and extinguished. This operation gave rise
to a loss of ThUS$41 in the subsidiary Soquimich European
Holding B.V.
|
|
|
On December 7, 2007, SQM North America Corp. sold to
Nautilus International Holding Corporation all the rights which
SQM North America Corp had in Cape Fear Bulk LLC for ThUS$1,478,
and recorded a gain from the sale of investments of ThUS$1,316.
|
|
|
c)
|
Investments with
less than 20% ownership
|
Investments in which the Company has less than 20% ownership and
the capacity to exert significant influence or control over the
investment, because SQM forms part of its Board of Directors,
have been valued using the equity method.
F-29
Notes to
consolidated financial statementsContinued
|
|
d)
|
Detail of
investments in related companies
|
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|
|
Equity participation
|
|
|
|
Country
|
|
Currency
|
|
Ownership interest
|
|
|
Equity of investment
|
|
|
Carrying value
|
|
|
Net income (loss)
|
|
|
in net income (loss)
|
|
Company
|
|
of origin
|
|
of origin
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doktor Tarsa Tarim Sanayi AS
|
|
Turkey
|
|
Euros
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
16,894
|
|
|
|
22,424
|
|
|
|
8,472
|
|
|
|
8,492
|
|
|
|
11,212
|
|
|
|
4,236
|
|
|
|
3,678
|
|
|
|
12,669
|
|
|
|
2,027
|
|
|
|
1,839
|
|
|
|
6,335
|
|
|
|
1,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nutrisi Holding N.V.
|
|
Belgium
|
|
Euros
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
12,866
|
|
|
|
14,494
|
|
|
|
10,429
|
|
|
|
6,239
|
|
|
|
6,823
|
|
|
|
5,092
|
|
|
|
(2,120
|
)
|
|
|
4,634
|
|
|
|
1,163
|
|
|
|
(831
|
)
|
|
|
2,017
|
|
|
|
581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abu Dhabi Fertilizer Industries WWL
|
|
U.A.E.
|
|
US$
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
12,143
|
|
|
|
10,555
|
|
|
|
4,713
|
|
|
|
6,072
|
|
|
|
5,277
|
|
|
|
2,356
|
|
|
|
1,547
|
|
|
|
5,842
|
|
|
|
794
|
|
|
|
773
|
|
|
|
2,921
|
|
|
|
397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ajay North America LLC
|
|
USA
|
|
US$
|
|
|
49.00
|
|
|
|
49.00
|
|
|
|
49.00
|
|
|
|
15,669
|
|
|
|
12,482
|
|
|
|
11,996
|
|
|
|
6,653
|
|
|
|
4,892
|
|
|
|
4,657
|
|
|
|
4,097
|
|
|
|
2,067
|
|
|
|
1,284
|
|
|
|
2,008
|
|
|
|
1,013
|
|
|
|
629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ajay Europe S.A.R.L.
|
|
France
|
|
Euros
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
10,974
|
|
|
|
10,033
|
|
|
|
9,467
|
|
|
|
3,921
|
|
|
|
4,282
|
|
|
|
3,703
|
|
|
|
1,449
|
|
|
|
1,625
|
|
|
|
1,474
|
|
|
|
725
|
|
|
|
813
|
|
|
|
737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Misr Speciality Fertilizers
|
|
Egypt
|
|
US$
|
|
|
47.49
|
|
|
|
47.49
|
|
|
|
47.49
|
|
|
|
3,749
|
|
|
|
4,733
|
|
|
|
4,529
|
|
|
|
1,780
|
|
|
|
2,247
|
|
|
|
2,151
|
|
|
|
(882
|
)
|
|
|
622
|
|
|
|
(140
|
)
|
|
|
(419
|
)
|
|
|
295
|
|
|
|
(67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charlee SQM Thailand Co Ltd.
|
|
Thailand
|
|
US$
|
|
|
40.00
|
|
|
|
40.00
|
|
|
|
40.00
|
|
|
|
3,694
|
|
|
|
3,535
|
|
|
|
2,401
|
|
|
|
1,478
|
|
|
|
1,414
|
|
|
|
960
|
|
|
|
430
|
|
|
|
1,016
|
|
|
|
77
|
|
|
|
172
|
|
|
|
407
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales de Magnesio Ltda.
|
|
Chile
|
|
Ch$
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
656
|
|
|
|
946
|
|
|
|
1,290
|
|
|
|
328
|
|
|
|
473
|
|
|
|
645
|
|
|
|
354
|
|
|
|
697
|
|
|
|
509
|
|
|
|
177
|
|
|
|
349
|
|
|
|
254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM Eastmed Turkey
|
|
Turkey
|
|
Euros
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
50.00
|
|
|
|
402
|
|
|
|
437
|
|
|
|
196
|
|
|
|
201
|
|
|
|
219
|
|
|
|
98
|
|
|
|
(11
|
)
|
|
|
270
|
|
|
|
(7
|
)
|
|
|
(5
|
)
|
|
|
135
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM Agro India Pvt. Ltd.
|
|
India
|
|
US$
|
|
|
|
|
|
|
49.00
|
|
|
|
49.00
|
|
|
|
38
|
|
|
|
191
|
|
|
|
27
|
|
|
|
|
|
|
|
94
|
|
|
|
13
|
|
|
|
(213
|
)
|
|
|
153
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
75
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asociciación Garantizadora de Pensiones
|
|
Chile
|
|
Ch$
|
|
|
3.31
|
|
|
|
3.31
|
|
|
|
3.31
|
|
|
|
610
|
|
|
|
536
|
|
|
|
728
|
|
|
|
20
|
|
|
|
18
|
|
|
|
24
|
|
|
|
(45
|
)
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM Vitas
|
|
U.E.A.
|
|
Dirham
|
|
|
50.00
|
|
|
|
|
|
|
|
|
|
|
|
33,007
|
|
|
|
|
|
|
|
|
|
|
|
16,503
|
|
|
|
|
|
|
|
|
|
|
|
(4,598
|
)
|
|
|
|
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SQM Migao Chemical Fertilized Co Ltda.
|
|
China
|
|
US$
|
|
|
50.00
|
|
|
|
|
|
|
|
|
|
|
|
8,467
|
|
|
|
|
|
|
|
|
|
|
|
2,988
|
|
|
|
|
|
|
|
|
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coromandel SQM India
|
|
India
|
|
US$
|
|
|
50.00
|
|
|
|
|
|
|
|
|
|
|
|
1,060
|
|
|
|
|
|
|
|
|
|
|
|
530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,205
|
|
|
|
36,951
|
|
|
|
23,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,463
|
|
|
|
14,360
|
|
|
|
3,566
|
|
|
|
F-30
Notes to
consolidated financial statementsContinued
Note 10Goodwill
and negative goodwill
Goodwill and negative goodwill and the related amortizations are
summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization for the year
|
|
|
|
Balance as of December 31,
|
|
|
ended December 31,
|
|
Company
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
SQM Potassium S.A.
|
|
|
1,012
|
|
|
|
1,157
|
|
|
|
1,302
|
|
|
|
144
|
|
|
|
145
|
|
|
|
145
|
|
Comercial Hydro S.A.
|
|
|
565
|
|
|
|
737
|
|
|
|
1,065
|
|
|
|
170
|
|
|
|
208
|
|
|
|
245
|
|
SQM Industrial S.A.
|
|
|
16,691
|
|
|
|
17,803
|
|
|
|
18,916
|
|
|
|
1,113
|
|
|
|
1,113
|
|
|
|
1,113
|
|
SQM México S.A. de C.V.
|
|
|
669
|
|
|
|
723
|
|
|
|
779
|
|
|
|
56
|
|
|
|
56
|
|
|
|
56
|
|
Comercial Caiman Internacional S.A.
|
|
|
63
|
|
|
|
85
|
|
|
|
108
|
|
|
|
23
|
|
|
|
23
|
|
|
|
23
|
|
SQM Dubai Fzco
|
|
|
1,579
|
|
|
|
1,682
|
|
|
|
1,783
|
|
|
|
101
|
|
|
|
101
|
|
|
|
101
|
|
Iodine Minera B.V.
|
|
|
9,146
|
|
|
|
9,714
|
|
|
|
10,283
|
|
|
|
569
|
|
|
|
569
|
|
|
|
569
|
|
|
|
|
|
|
|
Total
|
|
|
29,725
|
|
|
|
31,901
|
|
|
|
34,236
|
|
|
|
2,176
|
|
|
|
2,215
|
|
|
|
2,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization for the year
|
|
|
|
Balance as of December 31,
|
|
|
ended December 31,
|
|
Company
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Minera Nueva Victoria S.A.
|
|
|
(1,073
|
)
|
|
|
(1,279
|
)
|
|
|
(1,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(1,073
|
)
|
|
|
(1,279
|
)
|
|
|
(1,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-31
Notes to
consolidated financial statementsContinued
Note 11Other
longterm assets
Other long-term assets are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
Description
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Engine and equipment spare-parts, net(1)
|
|
|
335
|
|
|
|
2,306
|
|
|
|
2,987
|
|
Mine development costs
|
|
|
26,832
|
|
|
|
24,892
|
|
|
|
23,944
|
|
Construction of Salar-Baquedano Road
|
|
|
930
|
|
|
|
1,050
|
|
|
|
1,170
|
|
Deferred loan issuance Costs(2)
|
|
|
1,192
|
|
|
|
320
|
|
|
|
342
|
|
Cost of issuance and placement of bonds(3)
|
|
|
9,679
|
|
|
|
4,278
|
|
|
|
4,864
|
|
Other
|
|
|
4,050
|
|
|
|
1,580
|
|
|
|
2,311
|
|
|
|
|
|
|
|
Total
|
|
|
43,018
|
|
|
|
34,426
|
|
|
|
35,618
|
|
|
|
|
|
|
(1)
|
|
This item includes non-current
spare parts and materials. An allowance for obsolescence of
those assets has been made and is included in this item.
|
|
(2)
|
|
Relates to costs incurred in
relation to negotiation and issuance of long-term loans.
|
|
(3)
|
|
Refer to the explanation of these
costs contained in the Note 21.
|
Note 12Bank
debt
a) Short-term bank debt as of December 31, 2009, 2008
and 2007 is detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
Bank or financial
institution
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
BBVA Chile
|
|
|
31,138
|
|
|
|
|
|
|
|
|
|
HSBC Bank Chile
|
|
|
15,090
|
|
|
|
15,266
|
|
|
|
|
|
Banco Estado
|
|
|
20,813
|
|
|
|
|
|
|
|
|
|
JP Morgan Chase Bank
|
|
|
|
|
|
|
20,317
|
|
|
|
|
|
BBVA Banco Bilbao Vizcaya Argentaria
|
|
|
|
|
|
|
40,524
|
|
|
|
180
|
|
Banco Santander Santiago
|
|
|
|
|
|
|
20,075
|
|
|
|
|
|
Banco de Crédito e Inversiones
|
|
|
|
|
|
|
35,518
|
|
|
|
|
|
Fortis Bank
|
|
|
1,618
|
|
|
|
641
|
|
|
|
685
|
|
Banesto
|
|
|
1,234
|
|
|
|
390
|
|
|
|
432
|
|
Deustsche Bank España S.A.
|
|
|
288
|
|
|
|
408
|
|
|
|
345
|
|
Caixa Penedes de España
|
|
|
187
|
|
|
|
194
|
|
|
|
131
|
|
HSBC Bank Middle East Ltd.
|
|
|
|
|
|
|
22
|
|
|
|
34
|
|
|
|
|
|
|
|
Total
|
|
|
70,368
|
|
|
|
133,355
|
|
|
|
1,807
|
|
|
|
|
|
|
|
Annual average interest rate
|
|
|
4.60%
|
|
|
|
7.16%
|
|
|
|
4.31%
|
|
|
|
F-32
Notes to
consolidated financial statementsContinued
b) Long-term Bank Debt is detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
Bank or financial
institution
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
BBVA Banco Bilbao Vizcaya Argentaria(1)
|
|
|
100,053
|
|
|
|
100,204
|
|
|
|
100,433
|
|
Export Development Canada(2)
|
|
|
50,019
|
|
|
|
50,032
|
|
|
|
|
|
ING Capital LLC(3)
|
|
|
80,055
|
|
|
|
80,215
|
|
|
|
80,368
|
|
Caja de Ahorro y Monte de Piedra Madrid(4)
|
|
|
40,043
|
|
|
|
|
|
|
|
|
|
Banco Estado NY Branch(5)
|
|
|
170,988
|
|
|
|
|
|
|
|
|
|
BBVA Bancomer(6)
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
516,158
|
|
|
|
230,451
|
|
|
|
180,801
|
|
|
|
|
|
|
|
Including: Current portion
|
|
|
151,158
|
|
|
|
451
|
|
|
|
801
|
|
|
|
|
|
|
|
Long-term portion
|
|
|
365,000
|
|
|
|
230,000
|
|
|
|
180,000
|
|
|
|
|
|
|
(1)
|
|
U.S. dollar-denominated loan
without guarantee, interest rate of Libor + 2.22% per annum
payable quarterly. The principal is due on March 3, 2010.
|
|
(2)
|
|
U.S. dollar denominated loan
without guarantee, interest rate of Libor + 1.5% per annum
payable quarterly. The principal is due on November 30,
2010.
|
|
(3)
|
|
U.S. dollar-denominated loan
without guarantee, interest rate of Libor + 2.62% per annum
payable semiannually. The principal is due on November 28,
2011.
|
|
(4)
|
|
U.S. dollar-denominated loan,
variable interest rate currently at 0.43125% per annum payable
semiannually. The principal is due on December 22, 2010.
|
|
(5)
|
|
U.S. dollar-denominated loan,
variable interest rate currently at 2.5625% per annum payable
semiannually. The principal is due on September 11, 2012.
|
|
(6)
|
|
U.S. dollar-denominated loan,
variable interest rate currently at 3.25063% per annum payable
quarterly. The principal is due on June 24, 2012.
|
c) The maturity of long-term debt since December 31,
2009, 2008 and 2007, respectively is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
Years to Maturity
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Current Portion (less than 1 year)
|
|
|
151,158
|
|
|
|
451
|
|
|
|
801
|
|
1 to 2 years
|
|
|
110,000
|
|
|
|
150,000
|
|
|
|
|
|
2 to 3 years
|
|
|
115,000
|
|
|
|
80,000
|
|
|
|
100,000
|
|
3 to 5 years
|
|
|
140,000
|
|
|
|
|
|
|
|
80,000
|
|
|
|
|
|
|
|
Total
|
|
|
516,158
|
|
|
|
230,451
|
|
|
|
180,801
|
|
|
|
F-33
Notes to
consolidated financial statementsContinued
Note 13Bonds
payable and promissory notes
The following is description of principal terms of outstanding
bonds payable:
Series
C Bonds:
Series C bonds totaling UF 3,000,000 (ThUS$100,991) with an
interest rate of 4.00% per annum were placed on January 25,
2006. During the years ended December 31, 2009, 2008 and
2007 the following payments with regards to the principal amount
and interest of those bonds were made:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
UF
|
|
|
ThUS$
|
|
|
UF
|
|
|
ThUS$
|
|
|
UF
|
|
|
ThUS$
|
|
|
|
|
Principal
|
|
|
150,000
|
|
|
|
5,967
|
|
|
|
150,000
|
|
|
|
5,572
|
|
|
|
150,000
|
|
|
|
5,510
|
|
Interest
|
|
|
105,456
|
|
|
|
4,191
|
|
|
|
111,398
|
|
|
|
4,145
|
|
|
|
117,339
|
|
|
|
4,308
|
|
|
|
Single
Series US$ Bonds:
Single series bonds totaling ThUS$200,000 with an interest rate
of 6.125% per annum were placed on April 5, 2006. This
placement was carried out under Rule 144 and
regulation S of the U.S. Securities Act of 1933.
During the years ended December 31, 2009, 2008 and 2007 the
following interest payments on those bonds were made:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Interest
|
|
|
12,250
|
|
|
|
12,250
|
|
|
|
12,250
|
|
|
|
Series
G and H Bonds:
On January 13, 2009, the Company placed two series of bonds
on the Chilean market: Series H bonds for UF 4,000,000
(ThUS$139,216) at a rate of 4.9% per annum, maturing in
21 years, with principal payments beginning in 2019 and
series G bonds for ThUS$21,000,000 (ThUS$34,146) maturing
in 5 years with a single principal payment upon maturity
and interest of 7% per annum. During the year ended
December 31, 2009 the following interest payments on those
bonds were made:
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
ThUS$
|
|
|
|
|
Interestseries G
|
|
|
1,329
|
|
Interestseries H
|
|
|
3,727
|
|
|
|
Series
J and I Bonds:
On May 8, 2009, the Company placed two series of bonds on
the Chilean market: Series J bonds for ThCh$52,000,000
(ThUS$92,456) maturing in 5 years, with a single principal
payment upon
F-34
Notes to
consolidated financial statementsContinued
maturity and interest of 5.5% per annum, and series I bonds
for UF 1,500,000 (ThUS$56,051) maturing in 5 years with a
single principal payment upon maturity and interest of 3.00% per
annum. During the year ended December 31, 2009 the
following interest payments on those bonds were made:
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
ThUS$
|
|
|
|
|
Interestseries J
|
|
|
2,583
|
|
Interestseries I
|
|
|
851
|
|
|
|
Summary of the bonds payable is presented in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Currency or
|
|
|
|
|
|
|
|
|
|
|
Balance as
|
|
|
Balance as
|
|
|
|
|
registration of
|
|
|
|
Nominal
|
|
|
indexation
|
|
Interest
|
|
|
|
|
Payment of
|
|
Repayment of
|
|
of Dec 31,
|
|
|
of Dec 31,
|
|
|
|
|
the instrument
|
|
Series
|
|
amount
|
|
|
unit
|
|
rate
|
|
|
Matures on
|
|
interest
|
|
principal
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
|
|
|
Current portion of long-term bonds payable:
|
446
|
|
C
|
|
|
150,000
|
|
|
UF
|
|
|
4.0%
|
|
|
Apr 15, 2010
|
|
Semi-annual
|
|
Semi-annual
|
|
|
6,537
|
|
|
|
5,352
|
|
|
|
6,291
|
|
184
|
|
Single
|
|
|
|
|
|
ThUS$
|
|
|
6.125%
|
|
|
Jun 1, 2010
|
|
Semi-annual
|
|
Bullet
|
|
|
2,577
|
|
|
|
2,577
|
|
|
|
2,577
|
|
564
|
|
H
|
|
|
|
|
|
UF
|
|
|
4.9%
|
|
|
Jan 5, 2010
|
|
Semi-annual
|
|
Semi-annual
|
|
|
3,891
|
|
|
|
|
|
|
|
|
|
563
|
|
G
|
|
|
|
|
|
ThCh$
|
|
|
7.0%
|
|
|
Jan 5, 2010
|
|
Semi-annual
|
|
Bullet
|
|
|
1,386
|
|
|
|
|
|
|
|
|
|
563
|
|
I
|
|
|
|
|
|
UF
|
|
|
3.0%
|
|
|
Apr 1, 2010
|
|
Semi-annual
|
|
Bullet
|
|
|
461
|
|
|
|
|
|
|
|
|
|
563
|
|
J
|
|
|
|
|
|
ThCh$
|
|
|
5.5%
|
|
|
Apr 1, 2010
|
|
Semi-annual
|
|
Bullet
|
|
|
1,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,243
|
|
|
|
7,929
|
|
|
|
8,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term bonds payable:
|
446
|
|
C
|
|
|
2,400,000
|
|
|
UF
|
|
|
4.00%
|
|
|
Dec 1, 2026
|
|
Semi-annual
|
|
Semi-annual
|
|
|
99,119
|
|
|
|
85,940
|
|
|
|
106,651
|
|
184
|
|
Single
|
|
|
200,000
|
|
|
ThUS$
|
|
|
6.125%
|
|
|
Apr 15, 2016
|
|
Semi-annual
|
|
Bullet
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
200,000
|
|
564
|
|
H
|
|
|
4,000,000
|
|
|
UF
|
|
|
4.9%
|
|
|
Jan 5, 2014
|
|
Semi-annual
|
|
Semi-annual
|
|
|
41,412
|
|
|
|
|
|
|
|
|
|
563
|
|
G
|
|
|
21,000,000
|
|
|
ThCh$
|
|
|
7.0%
|
|
|
Jan 5, 2030
|
|
Semi-annual
|
|
Bullet
|
|
|
165,197
|
|
|
|
|
|
|
|
|
|
563
|
|
I
|
|
|
1,500,000
|
|
|
UF
|
|
|
3.0%
|
|
|
Apr 1, 2014
|
|
Semi-annual
|
|
Bullet
|
|
|
61,949
|
|
|
|
|
|
|
|
|
|
563
|
|
J
|
|
|
52,000,000
|
|
|
ThCh$
|
|
|
5.5%
|
|
|
Apr 1, 2014
|
|
Semi-annual
|
|
Bullet
|
|
|
102,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
670,221
|
|
|
|
285,940
|
|
|
|
306,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On March 24, 2009, the Company placed promissory notes
totaling ThCh$15,000,000 (ThUS$25,875) in the Chilean market.
These notes are denominated
series 2-A,
line 46 and mature in 10 years. The maximum amount that can
be issued is UF 1,500,000. On December 15, 2009, the
Company repaid full amount of those notes outstanding.
On April 2, 2009, the Company placed promissory notes
totaling ThCh$15,000,000 (ThUS$25,770) in the Chilean market.
These notes are denominated
series 1-B,
line 47 and mature in 10 years. The maximum amount that can
be issued is UF 1,500,000. The notes bear 3.6% interest rate and
outstanding balance payable as of December 31, 2009 was
ThUS$29,363.
F-35
Notes to
consolidated financial statementsContinued
Note 14Accrued
liabilities
As of December 31, 2009, 2008 and 2007 accrued liabilities
are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
Description
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Provision for royalties corfo
|
|
|
3,752
|
|
|
|
5,256
|
|
|
|
3,643
|
|
Provision for employee compensation and legal costs
|
|
|
590
|
|
|
|
715
|
|
|
|
925
|
|
Taxes and monthly income tax installment payments
|
|
|
6,654
|
|
|
|
11,659
|
|
|
|
3,496
|
|
Vacation accrual
|
|
|
13,897
|
|
|
|
10,518
|
|
|
|
11,919
|
|
Marketing expenses
|
|
|
150
|
|
|
|
107
|
|
|
|
107
|
|
Professional fees
|
|
|
1,347
|
|
|
|
477
|
|
|
|
400
|
|
Provision for plant suspension
|
|
|
6,500
|
|
|
|
|
|
|
|
|
|
Provision for employees termination plan
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
Other accruals
|
|
|
1,801
|
|
|
|
1,682
|
|
|
|
1,824
|
|
|
|
|
|
|
|
Total short-term accrued liabilities
|
|
|
37,191
|
|
|
|
30,414
|
|
|
|
22,314
|
|
|
|
|
|
|
|
Staff severance indemnities
|
|
|
29,444
|
|
|
|
22,129
|
|
|
|
20,679
|
|
Incentive bonus provision(1)
|
|
|
20,082
|
|
|
|
12,000
|
|
|
|
|
|
Closure of mining sites and environmental expenses
|
|
|
3,500
|
|
|
|
3,181
|
|
|
|
1,992
|
|
|
|
|
|
|
|
Total long-term accrued liabilities
|
|
|
53,026
|
|
|
|
37,310
|
|
|
|
22,671
|
|
|
|
|
|
|
(1)
|
|
This provision corresponds to
benefit plan granted to certain Companys executives. The
benefit is linked to the price of the Companys stock and
is to be paid in cash between 2010 and 2011. In accordance with
Note 2 af), these benefits have been recognized on an
accrual basis.
|
|
|
Note 15
|
Staff severance
indemnities
|
Changes in the staff severance indemnities are summarized as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Opening balance
|
|
|
22,129
|
|
|
|
20,679
|
|
|
|
17,472
|
|
Increases in obligation
|
|
|
5,897
|
|
|
|
8,332
|
|
|
|
4,190
|
|
Payments
|
|
|
(2,774
|
)
|
|
|
(2,227
|
)
|
|
|
(2,245
|
)
|
Exchange differences
|
|
|
5,554
|
|
|
|
(4,796
|
)
|
|
|
1,336
|
|
Other difference
|
|
|
(1,362
|
)
|
|
|
141
|
|
|
|
(74
|
)
|
|
|
|
|
|
|
Balance as of December 31
|
|
|
29,444
|
|
|
|
22,129
|
|
|
|
20,679
|
|
|
|
F-36
Notes to
consolidated financial statementsContinued
Note 16Minority
interest
Minority interest is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Participation in equity
|
|
|
Participation in (income) loss for the years
|
|
|
|
as of December 31,
|
|
|
ended December 31,
|
|
Company
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Soquimich Comercial S.A.
|
|
|
41,123
|
|
|
|
42,498
|
|
|
|
42,347
|
|
|
|
(1,180
|
)
|
|
|
(2,669
|
)
|
|
|
(3,886
|
)
|
Ajay SQM Chile S.A.
|
|
|
4,292
|
|
|
|
4,159
|
|
|
|
3,541
|
|
|
|
(354
|
)
|
|
|
(532
|
)
|
|
|
166
|
|
Cape Fear Bulk LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(99
|
)
|
SQM Nitratos México S.A. de C.V.
|
|
|
3
|
|
|
|
10
|
|
|
|
13
|
|
|
|
7
|
|
|
|
3
|
|
|
|
31
|
|
Fertilizantes Naturales S.A.
|
|
|
194
|
|
|
|
423
|
|
|
|
123
|
|
|
|
230
|
|
|
|
(300
|
)
|
|
|
|
|
SQM Indonesia S.A.
|
|
|
1
|
|
|
|
(30
|
)
|
|
|
(30
|
)
|
|
|
(36
|
)
|
|
|
13
|
|
|
|
(1
|
)
|
SQM Potasio S.A.
|
|
|
11
|
|
|
|
9
|
|
|
|
5
|
|
|
|
(3
|
)
|
|
|
(7
|
)
|
|
|
(3
|
)
|
Agrorama Callegari Ltda.
|
|
|
469
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
46,093
|
|
|
|
47,069
|
|
|
|
45,999
|
|
|
|
(1,334
|
)
|
|
|
(3,492
|
)
|
|
|
(3,792
|
)
|
|
|
Note 17Shareholders
equity
a) Paid-in capital
(i) Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of shares with
|
|
Series
|
|
No. of shares
subscribed
|
|
|
No. of shares
subscribed
|
|
|
preferrential voting
rights
|
|
|
|
|
A
|
|
|
142,819,552
|
|
|
|
142,819,552
|
|
|
|
142,819,552
|
|
B
|
|
|
120,376,972
|
|
|
|
120,376,972
|
|
|
|
120,376,972
|
|
|
|
(ii) Capital subscribed and paid
|
|
|
|
|
|
|
|
|
|
|
Series
|
|
Capital subscribed
|
|
|
Capital paid
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
A
|
|
|
134,750
|
|
|
|
134,750
|
|
B
|
|
|
342,636
|
|
|
|
342,636
|
|
|
|
F-37
Notes to
consolidated financial statementsContinued
b) Other reserves
The detail of Other Reserves is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect in income (loss) for
|
|
|
|
|
|
|
the year ended December 31,
|
|
|
Balance as of December 31,
|
|
Company
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Technical appraisal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,345
|
|
|
|
151,345
|
|
|
|
151,345
|
|
Changes in other reserves related to investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Soquimich Comercial S.A.(1)
|
|
|
|
|
|
|
|
|
|
|
7,888
|
|
|
|
13,286
|
|
|
|
13,286
|
|
|
|
13,286
|
|
Comercial Hydro S.A.
|
|
|
946
|
|
|
|
(725
|
)
|
|
|
|
|
|
|
221
|
|
|
|
(725
|
)
|
|
|
|
|
SQMC Internacional Ltda
|
|
|
43
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
8
|
|
|
|
(35
|
)
|
|
|
|
|
Proinsa Ltda
|
|
|
32
|
|
|
|
(26
|
)
|
|
|
|
|
|
|
6
|
|
|
|
(26
|
)
|
|
|
|
|
Agrorama Callegari Ltda.
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
|
|
|
|
|
|
|
Isapre Norte Grande Limitada(1)
|
|
|
37
|
|
|
|
(1
|
)
|
|
|
39
|
|
|
|
(8
|
)
|
|
|
(45
|
)
|
|
|
(44
|
)
|
Inversiones Augusta S.A.(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(761
|
)
|
|
|
(761
|
)
|
|
|
(761
|
)
|
SQM Ecuador S.A.(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(271
|
)
|
|
|
(271
|
)
|
|
|
(271
|
)
|
Almacenes y Depósitos Limitada(1)
|
|
|
42
|
|
|
|
|
|
|
|
66
|
|
|
|
130
|
|
|
|
88
|
|
|
|
88
|
|
Asociación Garantizadora de Pensiones(1)
|
|
|
|
|
|
|
(6
|
)
|
|
|
(5
|
)
|
|
|
(23
|
)
|
|
|
(23
|
)
|
|
|
(17
|
)
|
Sales de Magnesio Ltda.(1)
|
|
|
53
|
|
|
|
(101
|
)
|
|
|
59
|
|
|
|
63
|
|
|
|
10
|
|
|
|
111
|
|
Sociedad de Servicios de Salud
|
|
|
15
|
|
|
|
|
|
|
|
14
|
|
|
|
29
|
|
|
|
14
|
|
|
|
14
|
|
SQM North America Corp.(3)
|
|
|
1,129
|
|
|
|
(2,827
|
)
|
|
|
(141
|
)
|
|
|
(3,057
|
)
|
|
|
(4,186
|
)
|
|
|
(1,359
|
)
|
SQM Dubai Fzco.(1)
|
|
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(11
|
)
|
Ajay Europe SARL(1)
|
|
|
|
|
|
|
|
|
|
|
343
|
|
|
|
343
|
|
|
|
343
|
|
|
|
343
|
|
Other entities(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
718
|
|
|
|
718
|
|
|
|
718
|
|
|
|
|
|
|
|
Total
|
|
|
2,363
|
|
|
|
(3,721
|
)
|
|
|
8,252
|
|
|
|
162,084
|
|
|
|
159,721
|
|
|
|
163,442
|
|
|
|
|
|
|
(1)
|
|
Corresponds to translation
adjustments and effects of the price-level restatement. In
accordance with SVS Circulars No. 368 and 1,697, this
adjustment is based on equity variations of the subsidiaries and
affiliates that apply price-level restatement to paid-in capital
and to the effect generated by these items expressed in foreign
currency.
|
|
(2)
|
|
Corresponds to the translation
adjustment produced by the application of a law implemented by
the Ecuadorian Government.
|
|
(3)
|
|
Corresponds to differences in
valuation of the pension plan of subsidiary SQM North America
Corp.
|
c) Interim dividends
At a Board of Directors meeting held on November 17, 2009,
the Directors agreed to pay and distribute an interim dividend
of US$0.37994 per share beginning December 16, 2009. This
dividend totals approximately ThUS$100,000 and is equivalent to
40% of distributable net income for 2009, accumulated as of
September 30, 2009. This dividend is payable to SQM
shareholders registered in the respective shareholders
registry as of the fifth business day prior
F-38
Notes to
consolidated financial statementsContinued
to December 16, 2009, in its equivalent in Chilean pesos,
based on the observed dollar exchange rate.
At a Board of Directors Meeting held on October 28, 2008
the directors agreed to distribute an interim dividend of
US$0.37994 per share as of November 21, 2008 for a total
amount of ThUS$100,000 and lower than 30% of distributable net
income for commercial year 2008, accrued as of
September 30, 2008. This dividend was payable to the
shareholders of SQM registered in the respective registry on the
fifth business day prior to November 21, 2008, in its
equivalent in Chilean pesos based on the value of the observed
dollar exchange rate.
d) Final dividends
In an Ordinary General Shareholders Meeting held
April 29, 2009, shareholders agreed to pay and distribute,
in accordance with the respective dividend policy, an annual
dividend of ThUS$325,915, equivalent to 65% of distributable net
income for 2008. The amount of ThUS$100,000 (US$0.37994 per
share), which was already paid as an interim dividend (see
b) above), was deducted from the final dividend amount.
Therefore, the balance of ThUS$225,915 (US$0.85835 per share)
was paid and distributed to shareholders registered on the fifth
business day prior to payment.
F-39
Notes to
consolidated financial statementsContinued
e) Changes in shareholders equity in the years ended
December 31, 2009, 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Paid-in
|
|
|
Other
|
|
|
Interim
|
|
|
Retained
|
|
|
Net
|
|
|
|
|
|
|
of shares
|
|
|
capital
|
|
|
reserves
|
|
|
dividends
|
|
|
earnings
|
|
|
income
|
|
|
Total
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Balance as of January 1, 2007
|
|
|
263,196,524
|
|
|
|
477,386
|
|
|
|
155,190
|
|
|
|
|
|
|
|
312,096
|
|
|
|
141,277
|
|
|
|
1,085,949
|
|
Transfer of the 2006 net income to retained earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141,277
|
|
|
|
(141,277
|
)
|
|
|
|
|
Declared dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(91,786
|
)
|
|
|
|
|
|
|
(91,786
|
)
|
Changes in other reserves
|
|
|
|
|
|
|
|
|
|
|
8,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,252
|
|
Net income for the year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,021
|
|
|
|
180,021
|
|
|
|
|
|
|
|
Balance as of December 31, 2007
|
|
|
263,196,524
|
|
|
|
477,386
|
|
|
|
163,442
|
|
|
|
|
|
|
|
361,587
|
|
|
|
180,021
|
|
|
|
1,182,436
|
|
|
|
|
|
|
|
Balance as of January 1, 2008
|
|
|
263,196,524
|
|
|
|
477,386
|
|
|
|
163,442
|
|
|
|
|
|
|
|
361,587
|
|
|
|
180,021
|
|
|
|
1,182,436
|
|
Transfer of the 2007 net income to retained earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,021
|
|
|
|
(180,021
|
)
|
|
|
|
|
Declared dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(117,014
|
)
|
|
|
|
|
|
|
(117,014
|
)
|
Interim dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(100,000
|
)
|
Changes in other reserves
|
|
|
|
|
|
|
|
|
|
|
(3,721
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,721
|
)
|
Net income for the year 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
501,407
|
|
|
|
501,407
|
|
|
|
|
|
|
|
Balance as of December 31, 2008
|
|
|
263,196,524
|
|
|
|
477,386
|
|
|
|
159,721
|
|
|
|
(100,000
|
)
|
|
|
424,594
|
|
|
|
501,407
|
|
|
|
1,463,108
|
|
|
|
|
|
|
|
Balance January 1,2009
|
|
|
263,196,524
|
|
|
|
477,386
|
|
|
|
159,721
|
|
|
|
(100,000
|
)
|
|
|
424,594
|
|
|
|
501,407
|
|
|
|
1,463,108
|
|
Transfer of the 2008 net income to retained earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
501,407
|
|
|
|
(501,407
|
)
|
|
|
|
|
Declared dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
(325,914
|
)
|
|
|
|
|
|
|
(225,914
|
)
|
Changes in other reserves
|
|
|
|
|
|
|
|
|
|
|
2,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,363
|
|
Interim dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(100,000
|
)
|
Net income for the year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
327,056
|
|
|
|
327,056
|
|
|
|
|
|
|
|
Balance as of December 31, 2009
|
|
|
263,196,524
|
|
|
|
477,386
|
|
|
|
162,084
|
|
|
|
(100,000
|
)
|
|
|
600,087
|
|
|
|
327,056
|
|
|
|
1,466,613
|
|
|
|
F-40
Notes to
consolidated financial statementsContinued
|
|
Note 18
|
Non-operating
income and expenses
|
Amount included in non-operating income and expenses are
summarized as follows:
a) Other
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Interest income
|
|
|
13,525
|
|
|
|
13,858
|
|
|
|
9,347
|
|
Equity participation in income of unconsolidated investees
|
|
|
5,717
|
|
|
|
14,360
|
|
|
|
3,643
|
|
Sale of cross currency swap
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
Amounts recovered from insurance
|
|
|
285
|
|
|
|
581
|
|
|
|
275
|
|
Payment discounts obtained from suppliers
|
|
|
921
|
|
|
|
815
|
|
|
|
458
|
|
Reversal of allowance for doubtful accounts
|
|
|
670
|
|
|
|
2,623
|
|
|
|
229
|
|
Income from rental of property, plant and equipment
|
|
|
1,133
|
|
|
|
1,092
|
|
|
|
958
|
|
Recovery of doubtful accounts
|
|
|
41
|
|
|
|
424
|
|
|
|
861
|
|
Sale of mining concessions
|
|
|
2,170
|
|
|
|
721
|
|
|
|
399
|
|
Sale of property, plant and equipment, materials and scrap metal
|
|
|
710
|
|
|
|
1,064
|
|
|
|
|
|
Fines collected from third parties
|
|
|
288
|
|
|
|
77
|
|
|
|
192
|
|
Sale of investments in related companies
|
|
|
|
|
|
|
1,387
|
|
|
|
1,316
|
|
Services provided
|
|
|
100
|
|
|
|
156
|
|
|
|
369
|
|
Indemnities received
|
|
|
60
|
|
|
|
146
|
|
|
|
523
|
|
Gain on sale of assets of SQM Lithium
|
|
|
|
|
|
|
2,342
|
|
|
|
|
|
Gain from loss of control SQM Dubai-Fzco
|
|
|
3,019
|
|
|
|
|
|
|
|
|
|
Gain from sales of easments
|
|
|
10,356
|
|
|
|
|
|
|
|
|
|
Overestimate on staff severance indemnity provision
|
|
|
245
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
1,232
|
|
|
|
944
|
|
|
|
1,166
|
|
Net foreign exchange gain
|
|
|
|
|
|
|
|
|
|
|
2,212
|
|
|
|
|
|
|
|
Total
|
|
|
40,472
|
|
|
|
40,590
|
|
|
|
25,948
|
|
|
|
F-41
Notes to
consolidated financial statementsContinued
b) Other
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Equity participation in loss of unconsolidated investees
|
|
|
(1,256
|
)
|
|
|
|
|
|
|
(77
|
)
|
Amortization of goodwill
|
|
|
(2,176
|
)
|
|
|
(2,215
|
)
|
|
|
(2,252
|
)
|
Interest expenses
|
|
|
(30,979
|
)
|
|
|
(19,957
|
)
|
|
|
(19,949
|
)
|
Net foreign exchange loss
|
|
|
(7,576
|
)
|
|
|
(15,897
|
)
|
|
|
|
|
Work disruption expenses
|
|
|
(416
|
)
|
|
|
(1,256
|
)
|
|
|
(844
|
)
|
Training expenses and donations
|
|
|
(2,431
|
)
|
|
|
(2,152
|
)
|
|
|
(520
|
)
|
Non-capitalizable exploration project expenses and provisions
for damages and liquidation of assets
|
|
|
(12,348
|
)
|
|
|
(9,261
|
)
|
|
|
(16,528
|
)
|
Amortization of intangible assets
|
|
|
(403
|
)
|
|
|
(403
|
)
|
|
|
(413
|
)
|
Allowance for materials, spare parts and supplies
|
|
|
|
|
|
|
(4,200
|
)
|
|
|
(4,925
|
)
|
Provision for legal expenses and third-party indemnities
|
|
|
(451
|
)
|
|
|
(975
|
)
|
|
|
(523
|
)
|
Indemnities paid to suppliers
|
|
|
(90
|
)
|
|
|
(237
|
)
|
|
|
(1,575
|
)
|
Provision for plant suspension
|
|
|
(12,847
|
)
|
|
|
(1,189
|
)
|
|
|
|
|
Non-recoverable taxes
|
|
|
(612
|
)
|
|
|
(424
|
)
|
|
|
(669
|
)
|
Expenses related to energy tariff adjustments
|
|
|
|
|
|
|
|
|
|
|
(2,066
|
)
|
Fines paid
|
|
|
(262
|
)
|
|
|
(42
|
)
|
|
|
|
|
Advisory services
|
|
|
(49
|
)
|
|
|
(84
|
)
|
|
|
|
|
Provision for employees termination plan
|
|
|
(2,500
|
)
|
|
|
|
|
|
|
|
|
Cost of dismissal process
|
|
|
(1,696
|
)
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
(1,366
|
)
|
|
|
(1,604
|
)
|
|
|
(2,691
|
)
|
|
|
|
|
|
|
Total
|
|
|
(77,458
|
)
|
|
|
(59,896
|
)
|
|
|
(53,032
|
)
|
|
|
F-42
Notes to
consolidated financial statementsContinued
|
|
Note 19
|
Price-level restatement
|
Amounts charged or credited to income relating to price-level
restatement are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Charge) credit to income
|
|
|
|
for the year ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Inventory
|
|
|
45
|
|
|
|
|
|
|
|
1,450
|
|
Property, plant and equipment
|
|
|
(7
|
)
|
|
|
44
|
|
|
|
517
|
|
Other assets and liabilities
|
|
|
(10
|
)
|
|
|
707
|
|
|
|
677
|
|
Shareholders equity
|
|
|
166
|
|
|
|
(602
|
)
|
|
|
(7,016
|
)
|
Net adjustment of assets and liabilities denominated in UF
|
|
|
|
|
|
|
|
|
|
|
(484
|
)
|
|
|
|
|
|
|
Net price-level restatement
|
|
|
194
|
|
|
|
149
|
|
|
|
(4,856
|
)
|
|
|
F-43
Notes to
consolidated financial statementsContinued
|
|
Note 20
|
Assets and
liabilities denominated in foreign currency
|
Detail of assets and liabilities by currency of denomination as
of December 31, 2009, 2008 and 2007 is presented in the
following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Chilean peso
|
|
|
339,755
|
|
|
|
105,280
|
|
|
|
198,254
|
|
US dollar
|
|
|
2,632,877
|
|
|
|
2,307,684
|
|
|
|
1,637,379
|
|
Euro
|
|
|
83,184
|
|
|
|
76,679
|
|
|
|
44,809
|
|
Japanese yen
|
|
|
1,204
|
|
|
|
1,404
|
|
|
|
971
|
|
Brazilian real
|
|
|
329
|
|
|
|
195
|
|
|
|
400
|
|
Mexican peso
|
|
|
1,790
|
|
|
|
3,525
|
|
|
|
1,705
|
|
UF
|
|
|
70,829
|
|
|
|
27,586
|
|
|
|
73,354
|
|
South African rand
|
|
|
33,565
|
|
|
|
12,298
|
|
|
|
9,366
|
|
Dirham
|
|
|
22,575
|
|
|
|
15,744
|
|
|
|
10,942
|
|
Other currencies
|
|
|
17,026
|
|
|
|
16,820
|
|
|
|
9,139
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Chilean peso
|
|
|
150,473
|
|
|
|
121,664
|
|
|
|
98,456
|
|
US dollar
|
|
|
306,855
|
|
|
|
295,843
|
|
|
|
63,460
|
|
Euro
|
|
|
69,363
|
|
|
|
12,052
|
|
|
|
13,034
|
|
Japanese yen
|
|
|
46
|
|
|
|
77
|
|
|
|
92
|
|
Brazilian real
|
|
|
1,632
|
|
|
|
1,562
|
|
|
|
1,681
|
|
Mexican peso
|
|
|
938
|
|
|
|
934
|
|
|
|
4,605
|
|
UF
|
|
|
11,412
|
|
|
|
10,830
|
|
|
|
8,599
|
|
South African rand
|
|
|
4,697
|
|
|
|
714
|
|
|
|
1,020
|
|
Dirham
|
|
|
|
|
|
|
391
|
|
|
|
930
|
|
Other currencies
|
|
|
58
|
|
|
|
1,839
|
|
|
|
545
|
|
Long-term liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Chilean peso
|
|
|
193,760
|
|
|
|
18,640
|
|
|
|
20,196
|
|
US dollar
|
|
|
624,231
|
|
|
|
505,448
|
|
|
|
437,687
|
|
Japanese yen
|
|
|
326
|
|
|
|
294
|
|
|
|
187
|
|
UF
|
|
|
326,452
|
|
|
|
86,337
|
|
|
|
107,382
|
|
Mexican peso
|
|
|
185
|
|
|
|
403
|
|
|
|
|
|
Other currencies
|
|
|
|
|
|
|
10
|
|
|
|
10
|
|
|
|
F-44
Notes to
consolidated financial statementsContinued
|
|
Note 21
|
Share and debt
issuance and placement expenses
|
Bond issuance and placement expenses are recorded within other
long-term assets, except for the portion to be amortized within
a year, which is presented in other current assets. These
expenses are amortized using the straight-line over the period
of maturity of the related debt. Amortization is presented
within interest expense.
As of December 31, 2009, 2008 and 2007 and in the years
then ended, the deferred expenses and their amortization are
detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization in the year
|
|
|
|
Other assets as of December 31,
|
|
|
ended December 31,
|
|
|
|
Short-
|
|
|
Long-
|
|
|
Short-
|
|
|
Long-
|
|
|
Short-
|
|
|
Long-
|
|
|
|
|
|
|
|
|
|
|
|
|
term
|
|
|
term
|
|
|
term
|
|
|
term
|
|
|
term
|
|
|
term
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Single series bonds
|
|
|
293
|
|
|
|
1,536
|
|
|
|
293
|
|
|
|
1,829
|
|
|
|
293
|
|
|
|
2,122
|
|
|
|
293
|
|
|
|
293
|
|
|
|
295
|
|
Series C bonds
|
|
|
277
|
|
|
|
2,172
|
|
|
|
294
|
|
|
|
2,449
|
|
|
|
310
|
|
|
|
2,742
|
|
|
|
294
|
|
|
|
310
|
|
|
|
479
|
|
Series G bonds
|
|
|
136
|
|
|
|
409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136
|
|
|
|
|
|
|
|
|
|
Series H bonds
|
|
|
133
|
|
|
|
2,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
Series J bonds
|
|
|
552
|
|
|
|
1,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
415
|
|
|
|
|
|
|
|
|
|
Series I bonds
|
|
|
348
|
|
|
|
1,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,739
|
|
|
|
9,679
|
|
|
|
587
|
|
|
|
4,278
|
|
|
|
603
|
|
|
|
4,864
|
|
|
|
1,539
|
|
|
|
603
|
|
|
|
774
|
|
|
|
|
|
Note 22
|
Cash flow
statement
|
a) Amounts included in other credits to income not
representing cash flows are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
|
Description
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Adjustment of provision included in other financial income
|
|
|
(670
|
)
|
|
|
(2,656
|
)
|
|
|
(229
|
)
|
Discounts obtained from suppliers
|
|
|
(921
|
)
|
|
|
(815
|
)
|
|
|
(458
|
)
|
Gain from sales of easments
|
|
|
(5,088
|
)
|
|
|
|
|
|
|
|
|
Gain from loss of control in SQM Dubai-Fzco
|
|
|
(3,018
|
)
|
|
|
|
|
|
|
|
|
Other minor credits to income not representing cash flows
|
|
|
(2,572
|
)
|
|
|
(1,508
|
)
|
|
|
(1,058
|
)
|
|
|
|
|
|
|
Total
|
|
|
(12,269
|
)
|
|
|
(4,979
|
)
|
|
|
(1,745
|
)
|
|
|
F-45
Notes to
consolidated financial statementsContinued
b) Amounts included in other charges to income not
representing cash flows are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
|
Description
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Provision for Corfo royalty payments
|
|
|
3,752
|
|
|
|
5,256
|
|
|
|
3,643
|
|
Deferred income taxes benefit for tax loss
|
|
|
23,969
|
|
|
|
(39,493
|
)
|
|
|
10,174
|
|
Provision for marketing expenses
|
|
|
5,554
|
|
|
|
4,584
|
|
|
|
4,317
|
|
Provision for employee incentive plans
|
|
|
20,867
|
|
|
|
28,208
|
|
|
|
13,495
|
|
Adjustment of provision for severance indemnities
|
|
|
14,458
|
|
|
|
9,234
|
|
|
|
4,736
|
|
Provision for income taxes
|
|
|
52,563
|
|
|
|
147,694
|
|
|
|
38,218
|
|
Adjustment of provision for vacation
|
|
|
8,389
|
|
|
|
6,975
|
|
|
|
8,300
|
|
Non-capitalizable exploration project expense and provisions for
damages and liquidation assets
|
|
|
4,226
|
|
|
|
13,158
|
|
|
|
8,806
|
|
Accrued expenses related to energy tariff adjustments
|
|
|
|
|
|
|
|
|
|
|
4,023
|
|
Amortization of prepaid insurance expenses
|
|
|
4,333
|
|
|
|
9,313
|
|
|
|
7,553
|
|
Remuneration of Board of Directors
|
|
|
2,190
|
|
|
|
5,000
|
|
|
|
1,820
|
|
Provision for mine closure
|
|
|
|
|
|
|
1,190
|
|
|
|
|
|
Adjustment and other expenses of inventories
|
|
|
|
|
|
|
3,545
|
|
|
|
|
|
Other charges to income not representing cash flows
|
|
|
15,274
|
|
|
|
11,322
|
|
|
|
2,990
|
|
|
|
|
|
|
|
Total
|
|
|
155,575
|
|
|
|
205,986
|
|
|
|
108,075
|
|
|
|
|
|
Note 23
|
Derivatives
instruments
|
Derivative instruments are recorded at their fair value at
year-end. Changes in fair value are recognized in income with
the liability recorded in other current liabilities. Losses from
options
F-46
Notes to
consolidated financial statementsContinued
relate to fees paid by the Company to enter into such contracts.
As of December 31, 2009, 2008 and 2007 the Companys
derivative instruments are as follows:
December 31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional or
|
|
|
|
|
|
|
(Liability)
|
|
|
Income
|
|
Type of
|
|
covered
|
|
|
|
|
|
|
asset
|
|
|
(loss)
|
|
derivative
|
|
amount
|
|
|
Expiration
|
|
Risk type
|
|
amount
|
|
|
effect
|
|
|
|
ThUS$
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
CCS Swap(1)
|
|
|
87,236
|
|
|
4th Quarter 2026
|
|
Interest Rate
|
|
|
17,997
|
|
|
|
16,830
|
|
CCS Swap(1)
|
|
|
33,673
|
|
|
1st Quarter 2014
|
|
Interest Rate
|
|
|
8,243
|
|
|
|
7,875
|
|
CCS Swap(1)
|
|
|
42,822
|
|
|
1st Quarter 2013
|
|
Interest Rate
|
|
|
8,763
|
|
|
|
9,090
|
|
CCS Swap(1)
|
|
|
43,116
|
|
|
1st Quarter 2013
|
|
Interest Rate
|
|
|
8,483
|
|
|
|
8,227
|
|
CCS Swap(1)
|
|
|
60,422
|
|
|
1st Quarter 2013
|
|
Interest Rate
|
|
|
1,334
|
|
|
|
593
|
|
CCS Swap(1)
|
|
|
56,041
|
|
|
1st Quarter 2014
|
|
Interest Rate
|
|
|
5,690
|
|
|
|
2,991
|
|
CCS Swap(1)
|
|
|
46,220
|
|
|
1st Quarter 2014
|
|
Interest Rate
|
|
|
5,223
|
|
|
|
2,845
|
|
CCS Swap(1)
|
|
|
46,220
|
|
|
1st Quarter 2014
|
|
Interest Rate
|
|
|
5,226
|
|
|
|
2,887
|
|
FX forward
|
|
|
4,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(118
|
)
|
|
|
(118
|
)
|
FX forward
|
|
|
5,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(147
|
)
|
|
|
(147
|
)
|
FX forward
|
|
|
3,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(59
|
)
|
|
|
(59
|
)
|
FX forward
|
|
|
10,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(118
|
)
|
|
|
(118
|
)
|
FX forward
|
|
|
4,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(111
|
)
|
|
|
(111
|
)
|
FX forward
|
|
|
6,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
7
|
|
|
|
7
|
|
FX forward
|
|
|
4,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(113
|
)
|
|
|
(113
|
)
|
FX forward
|
|
|
2,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(17
|
)
|
|
|
(17
|
)
|
FX forward
|
|
|
4,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(11
|
)
|
|
|
(11
|
)
|
FX forward
|
|
|
8,000
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(25
|
)
|
|
|
(25
|
)
|
FX forward
|
|
|
6,944
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
746
|
|
|
|
746
|
|
FX forward
|
|
|
2,870
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
285
|
|
|
|
285
|
|
FX forward
|
|
|
16,918
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
1,816
|
|
|
|
1,816
|
|
FX option
|
|
|
8,879
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
160
|
|
|
|
160
|
|
FX option
|
|
|
5,216
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
131
|
|
|
|
131
|
|
FX option
|
|
|
7,265
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
1
|
|
|
|
1
|
|
FX option
|
|
|
8,599
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
0
|
|
|
|
0
|
|
FX option
|
|
|
8,500
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(1
|
)
|
|
|
(1
|
)
|
FX option
|
|
|
5,352
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
0
|
|
|
|
0
|
|
FX option
|
|
|
9,157
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(98
|
)
|
|
|
(98
|
)
|
FX option
|
|
|
1,987
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(41
|
)
|
|
|
(41
|
)
|
FX option
|
|
|
5,287
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(98
|
)
|
|
|
(98
|
)
|
FX forward
|
|
|
6,879
|
|
|
2nd Quarter 2010
|
|
Exchange Rate
|
|
|
420
|
|
|
|
420
|
|
FX option
|
|
|
59,571
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
0
|
|
|
|
0
|
|
F-47
Notes to
consolidated financial statementsContinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional or
|
|
|
|
|
|
|
(Liability)
|
|
|
Income
|
|
Type of
|
|
covered
|
|
|
|
|
|
|
asset
|
|
|
(loss)
|
|
derivative
|
|
amount
|
|
|
Expiration
|
|
Risk type
|
|
amount
|
|
|
effect
|
|
|
|
ThUS$
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
FX forward
|
|
|
10,108
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(379
|
)
|
|
|
(379
|
)
|
FX forward
|
|
|
15,198
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(433
|
)
|
|
|
(433
|
)
|
FX forward
|
|
|
8,585
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(203
|
)
|
|
|
(203
|
)
|
FX forward
|
|
|
10,048
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
293
|
|
|
|
293
|
|
FX forward
|
|
|
10,101
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(104
|
)
|
|
|
(104
|
)
|
FX forward
|
|
|
20,139
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
501
|
|
|
|
501
|
|
FX forward
|
|
|
15,168
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
310
|
|
|
|
310
|
|
FX forward
|
|
|
5,059
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
82
|
|
|
|
82
|
|
FX forward
|
|
|
5,062
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
140
|
|
|
|
140
|
|
FX forward
|
|
|
20,179
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
637
|
|
|
|
637
|
|
FX forward
|
|
|
10,266
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
352
|
|
|
|
352
|
|
FX forward
|
|
|
4,577
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
167
|
|
|
|
167
|
|
FX forward
|
|
|
10,206
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
379
|
|
|
|
379
|
|
FX forward
|
|
|
5,064
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
184
|
|
|
|
184
|
|
FX forward
|
|
|
6,077
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
250
|
|
|
|
250
|
|
FX forward
|
|
|
10,114
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
301
|
|
|
|
301
|
|
FX forward
|
|
|
20,254
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
723
|
|
|
|
723
|
|
FX forward
|
|
|
10,130
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
302
|
|
|
|
302
|
|
FX forward
|
|
|
10,235
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
351
|
|
|
|
351
|
|
FX forward
|
|
|
10,148
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
348
|
|
|
|
348
|
|
FX forward
|
|
|
7,053
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
27
|
|
|
|
27
|
|
FX forward
|
|
|
10,070
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
39
|
|
|
|
39
|
|
FX forward
|
|
|
10,070
|
|
|
1st Quarter of 2010
|
|
Exchange Rate
|
|
|
59
|
|
|
|
59
|
|
FX forward
|
|
|
10,070
|
|
|
1st Quarter of 2010
|
|
Exchange Rate
|
|
|
59
|
|
|
|
59
|
|
FX forward
|
|
|
15,172
|
|
|
2nd Quarter 2010
|
|
Exchange Rate
|
|
|
85
|
|
|
|
85
|
|
FX forward
|
|
|
36,300
|
|
|
1st Quarter 2010
|
|
Exchange Rate
|
|
|
(1,189
|
)
|
|
|
(1,189
|
)
|
FX forward
|
|
|
13,900
|
|
|
2nd Quarter 2010
|
|
Exchange Rate
|
|
|
(919
|
)
|
|
|
(919
|
)
|
FX forward
|
|
|
500
|
|
|
3rd Quarter 2010
|
|
Exchange Rate
|
|
|
(47
|
)
|
|
|
(47
|
)
|
|
|
|
|
|
|
Total
|
|
|
939,027
|
|
|
|
|
|
|
|
65,883
|
|
|
|
56,262
|
|
|
|
F-48
Notes to
consolidated financial statementsContinued
December 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional or
|
|
|
|
|
|
|
(Liability)
|
|
|
Income
|
|
|
|
covered
|
|
|
|
|
|
|
asset
|
|
|
(loss)
|
|
Type of
|
|
amount
|
|
|
|
|
|
|
amount
|
|
|
effect
|
|
derivative
|
|
ThUS$
|
|
|
Expiration
|
|
Risk type
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
FX forward
|
|
|
42,000
|
|
|
1st quarter 2009
|
|
Exchange rate
|
|
|
(1,273
|
)
|
|
|
(1,273
|
)
|
CCS Swap(1)
|
|
|
113,025
|
|
|
4th quarter 2026
|
|
Interest rate
|
|
|
(11,031
|
)
|
|
|
(1,524
|
)
|
FX option
|
|
|
8,478
|
|
|
1st quarter 2009
|
|
Exchange rate
|
|
|
(843
|
)
|
|
|
(843
|
)
|
FX option
|
|
|
11,316
|
|
|
2st quarter 2009
|
|
Exchange rate
|
|
|
(1,125
|
)
|
|
|
(1,125
|
)
|
FX option
|
|
|
1,617
|
|
|
3st quarter 2009
|
|
Exchange rate
|
|
|
(161
|
)
|
|
|
(161
|
)
|
FX forward
|
|
|
1,489
|
|
|
1st quarter 2009
|
|
Exchange rate
|
|
|
(86
|
)
|
|
|
(86
|
)
|
FX forward
|
|
|
24,154
|
|
|
1st quarter 2009
|
|
Exchange rate
|
|
|
(2,390
|
)
|
|
|
(2,390
|
)
|
FX option
|
|
|
40,378
|
|
|
1st quarter 2009
|
|
Exchange rate
|
|
|
1,225
|
|
|
|
1,225
|
|
FX forward
|
|
|
298
|
|
|
1st quarter 2009
|
|
Exchange rate
|
|
|
(90
|
)
|
|
|
(90
|
)
|
FX forward
|
|
|
1,289
|
|
|
1st quarter 2009
|
|
Exchange rate
|
|
|
357
|
|
|
|
357
|
|
FX forward
|
|
|
4,311
|
|
|
2st quarter 2009
|
|
Exchange rate
|
|
|
(1,169
|
)
|
|
|
(1,169
|
)
|
FX forward
|
|
|
77
|
|
|
2st quarter 2009
|
|
Exchange rate
|
|
|
17
|
|
|
|
17
|
|
FX forward
|
|
|
112
|
|
|
3st quarter 2009
|
|
Exchange rate
|
|
|
(21
|
)
|
|
|
(21
|
)
|
FX option
|
|
|
27,818
|
|
|
1st quarter 2009
|
|
Exchange rate
|
|
|
124
|
|
|
|
|
|
FX forward
|
|
|
30,000
|
|
|
1st quarter 2009
|
|
Exchange rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
306,362
|
|
|
|
|
|
|
|
(16,466
|
)
|
|
|
(7,083
|
)
|
|
|
December 31,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional or
|
|
|
|
|
|
|
|
|
|
Income
|
|
Type of
|
|
covered
|
|
|
|
|
|
|
(Liability)Asset
|
|
|
(loss)
|
|
derivative
|
|
amount
|
|
|
Expiration
|
|
Risk type
|
|
amount
|
|
|
effect
|
|
|
|
ThUS$
|
|
|
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
FX forward
|
|
|
13,916
|
|
|
1st quarter 2008
|
|
Exchange rate
|
|
|
(130
|
)
|
|
|
(130
|
)
|
FX option
|
|
|
4,696
|
|
|
1st quarter 2008
|
|
Exchange rate
|
|
|
(1
|
)
|
|
|
(1
|
)
|
CCS Swap(1)
|
|
|
102,630
|
|
|
1st quarter 2026
|
|
Interest rate
|
|
|
14,968
|
|
|
|
14,968
|
|
FX option
|
|
|
368
|
|
|
1st quarter 2008
|
|
Exchange rate
|
|
|
(368
|
)
|
|
|
(368
|
)
|
|
|
|
|
|
|
Total
|
|
|
121,610
|
|
|
|
|
|
|
|
14,469
|
|
|
|
14,469
|
|
|
|
F-49
Notes to
consolidated financial statementsContinued
|
|
Note 24
|
Commitments and
contingencies
|
I. Contingencies:
Material lawsuits or other legal actions of which the Company is
party to:
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
|
Plaintiff
|
|
|
:
|
|
|
Compañía de Salitre y Yodo Soledad S.A.
|
|
|
|
|
Defendant
|
|
|
:
|
|
|
Sociedad Química y Minera de Chile S.A.
|
|
|
|
|
Date of lawsuit
|
|
|
:
|
|
|
December 1994
|
|
|
|
|
Court
|
|
|
:
|
|
|
Civil Court of Pozo Almonte
|
|
|
|
|
Cause
|
|
|
:
|
|
|
Partial annulment of mining property, Cesard 1 to 29
|
|
|
|
|
Instance
|
|
|
:
|
|
|
Evidence provided
|
|
|
|
|
Nominal amount
|
|
|
:
|
|
|
ThUS$211
|
|
2.
|
|
|
Plaintiff
|
|
|
:
|
|
|
Compañía Productora de Yodo y Sales S.A.
|
|
|
|
|
Defendant
|
|
|
:
|
|
|
SQM S.A.
|
|
|
|
|
Date of lawsuit
|
|
|
:
|
|
|
November 1999
|
|
|
|
|
Court
|
|
|
:
|
|
|
Civil Court of Pozo Almonte
|
|
|
|
|
Cause
|
|
|
:
|
|
|
Partial annulment of mining property, Paz II 1 to 25
|
|
|
|
|
Instance
|
|
|
:
|
|
|
Evidence provided
|
|
|
|
|
Nominal amount
|
|
|
:
|
|
|
ThUS$162
|
|
3.
|
|
|
Plaintiff
|
|
|
:
|
|
|
Compañía Productora de Yodo y Sales S.A.
|
|
|
|
|
Defendant
|
|
|
:
|
|
|
SQM S.A.
|
|
|
|
|
Date of lawsuit
|
|
|
:
|
|
|
November 1999
|
|
|
|
|
Court
|
|
|
:
|
|
|
Civil Court of Pozo Almonte
|
|
|
|
|
Cause
|
|
|
:
|
|
|
Partial annulment of mining property, Paz III 1 to 25
|
|
|
|
|
Instance
|
|
|
:
|
|
|
Evidence provided
|
|
|
|
|
Nominal amount
|
|
|
:
|
|
|
ThUS$204
|
|
4.
|
|
|
Plaintiff
|
|
|
:
|
|
|
Angélica Allende and their sons Iván Molina and
Cristóbal Molina
|
|
|
|
|
Defendant
|
|
|
:
|
|
|
Ingeniería, Construcción y Servicios SMR Limitada and
jointly and severally SQM Nitratos S.A. and its insurance
companies.
|
|
|
|
|
Date of lawsuit
|
|
|
:
|
|
|
May 2008
|
|
|
|
|
Court
|
|
|
:
|
|
|
Arbitration Court of Antofagasta
|
|
|
|
|
Cause
|
|
|
:
|
|
|
Work accident
|
|
|
|
|
Instance
|
|
|
:
|
|
|
Evidence
|
|
|
|
|
Nominal amount
|
|
|
:
|
|
|
ThUS$670
|
|
5.
|
|
|
Plaintiff
|
|
|
:
|
|
|
Nancy Erika Urra Muñoz
|
|
|
|
|
Defendant
|
|
|
:
|
|
|
Fresia Flores Zamorano, Duratec-Vinilit S.A. and SQM S.A. and
Its insurance companies.
|
|
|
|
|
Date of lawsuit
|
|
|
:
|
|
|
December 2008
|
|
|
|
|
Court
|
|
|
:
|
|
|
1st
Civil Court of Santiago
|
|
|
|
|
Cause
|
|
|
:
|
|
|
Work accident
|
|
|
|
|
Instance
|
|
|
:
|
|
|
Response
|
|
|
|
|
Nominal amount
|
|
|
:
|
|
|
ThUS$550
|
F-50
Notes to
consolidated financial statementsContinued
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
|
|
Plaintiff
|
|
|
:
|
|
|
Agraria Santa Aldina Limitada
|
|
|
|
|
Defendant
|
|
|
:
|
|
|
SQM Perú S.A.
|
|
|
|
|
Date of lawsuit
|
|
|
:
|
|
|
June 2009
|
|
|
|
|
Court
|
|
|
:
|
|
|
Civil Court of Pisco - Perú
|
|
|
|
|
Cause
|
|
|
:
|
|
|
Seek compensation for damages for alleged breach of the terms
and conditions of product distribution contract
|
|
|
|
|
Instance
|
|
|
:
|
|
|
Response
|
|
|
|
|
Nominal amount
|
|
|
:
|
|
|
ThUS$6,000
|
|
7.
|
|
|
Plaintiff
|
|
|
:
|
|
|
Eduardo Fajardo Núñez, Ana María Canales Poblete,
Raquel Beltrán Parra, Eduardo Fajardo Beltrán y
Martina Fajardo Beltrán
|
|
|
|
|
Defendant
|
|
|
:
|
|
|
SQM Salar S.A. and us insurers.
|
|
|
|
|
Date of lawsuit
|
|
|
:
|
|
|
November 2009
|
|
|
|
|
Court
|
|
|
:
|
|
|
20th
Civil Court of Santiago
|
|
|
|
|
Cause
|
|
|
:
|
|
|
Work accident
|
|
|
|
|
Instance
|
|
|
:
|
|
|
Demand response.
|
|
|
|
|
Nominal amount
|
|
|
:
|
|
|
ThUS$1,880
|
SQM S.A. and its subsidiaries have not been legally notified of
other complaints other than those listed above and which pursue
the voidance of certain mining properties purchased by SQM S.A.
and its subsidiaries and whose proportional purchase price, in
respect to the part affected by the respective overlap, exceeds
the nominal and approximate amount of ThUS$150 or which seek to
obtain payment of certain amounts allegedly owed from exercising
their own activities and which exceed the nominal individual
amount of approximately ThUS$150.
SQM S.A. and its subsidiaries have been participating and
probably will continue to participate habitually as plaintiffs
or defendants in various judicial proceedings that have been and
will be filed and are subject to the decisions of the Ordinary
Courts of Justice. Those proceedings, which are regulated by the
applicable legal provision, mainly seek to exercise or oppose
certain actions or exceptions related to certain mining
concessions constituted or in the process of being constituted
and do not and will not essentially affect the development of
SQM S.A. and its subsidiaries.
Soquimich Comercial S.A. has been participating and probably
will continue to participate habitually as a plaintiff in
various judicial proceedings through which it seeks mainly to
collect and receive the amounts owed to it. As of
December 31, 2009 in the total amount claimed in such
proceedings is approximately ThUS $900.
SQM S.A. and its subsidiaries have tried and currently continue
to try to obtain payment of certain amounts still owed to them
for their normal business activities. Those amounts will
continue to be judicially and non-judicially demanded by the
plaintiffs and the actions exercised in relation to them are
currently in full force.
Bank loans, bonds payable and promissory notes issued by, SQM
S.A. and its subsidiaries contain restrictions similar to those
of other comparable loans and obligations existing at the dates
F-51
Notes to
consolidated financial statementsContinued
when those debt agreements were entered into. These restrictions
involve maximum indebtedness, minimum equity, ratios of net
financial debt to EBITDA and obligations to maintain certain
assets that guarantee a particular minimum production capacity
per business line. Other than these restrictions, SQM S.A. is
not exposed to any other management restrictions or limits to
financial ratios in contracts or agreements with creditors.
Subsidiary SQM Salar S.A. has signed a rental contract with
CORFO which establishes that such subsidiary, will pay to CORFO,
for the concept of exploitation of certain mining properties
owned by CORFO and for the products resulting from such
exploitation, the annual rent stated in the aforementioned
contract, the amount of which is calculated on the basis of the
sales of each type of product. The contract is in force until
2030 and rent began being paid in 1996. For the years ended
December 31, 2009, 2008 and 2007 rental payments
charged to income amounted to ThUS$17,747,ThUS$17,712 and
ThUS$13,865, respectively.
|
|
Note 25
|
Guarantees
obtained from third parties
|
The main pledges provided by certain customers to guarantee to
Soquimich Comercial S.A. fulfillment of the obligations in the
commercial mandate agreements for distribution and sale of
fertilizers are as follows as of December 31, 2009:
|
|
|
|
|
|
|
Company Name
|
|
ThUS$
|
|
|
|
|
Llanos y Wammes Soc. Com. Ltda.
|
|
|
2,037
|
|
Fertglobal Chile Ltda. y Bramelli
|
|
|
3,352
|
|
Tattersall S.A.
|
|
|
1,134
|
|
|
|
During 2009, 2008 and 2007, the SVS and others did not apply
sanctions to the Company, its Directors or managers.
|
|
Note 27
|
Environmental
projects
|
The Company is continuously concerned with protecting the
environment both in its production processes and with respect to
products manufactured. This commitment is supported by the
principles indicated in the Companys Sustainable
Development Policy.
SQM is currently operating under an Environmental Management
System (EMS) based on the ISO 14000 standard, which has allowed
strengthening its environmental performance through the
effective application of the Companys Sustainable
Development Policy.
Disbursements made by the Company and its subsidiaries as of
December 31, 2009, 2008 and 2007 related to investments in
production processes, verification and control of compliance
with
F-52
Notes to
consolidated financial statementsContinued
ordinances and laws relative to industrial processes and
facilities amount to ThUS$9,324, ThUS$10,035 and ThUS$10,180
respectively and are detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
ThUS$
|
|
|
|
|
Project
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental department
|
|
|
|
|
|
|
1,022
|
|
|
|
1,040
|
|
Improvements in María Elena Campstreets
|
|
|
689
|
|
|
|
435
|
|
|
|
436
|
|
Dust emission control
|
|
|
|
|
|
|
|
|
|
|
76
|
|
Light normalization
|
|
|
|
|
|
|
|
|
|
|
921
|
|
Environmental studiesRegion I of Chile project
|
|
|
42
|
|
|
|
|
|
|
|
|
|
María Elena environmental studies
|
|
|
|
|
|
|
|
|
|
|
1,007
|
|
Normalization of lighting at FFCC yard, PV Mill
|
|
|
|
|
|
|
|
|
|
|
164
|
|
Equipment washing system
|
|
|
|
|
|
|
|
|
|
|
|
|
The Environment MOP/SOP 2
|
|
|
|
|
|
|
|
|
|
|
294
|
|
Construction of facilities for workers
|
|
|
|
|
|
|
168
|
|
|
|
292
|
|
Environmental commitments in Region I of Chile
|
|
|
|
|
|
|
|
|
|
|
169
|
|
Waste pools R&R Lithium C. Plant
|
|
|
|
|
|
|
|
|
|
|
2,073
|
|
Salar (Salt deposit) environmental
follow-up
plan
|
|
|
|
|
|
|
|
|
|
|
2,272
|
|
Handling of household and industrial waste
|
|
|
983
|
|
|
|
736
|
|
|
|
917
|
|
Environmental evaluation
|
|
|
3,163
|
|
|
|
1,251
|
|
|
|
194
|
|
Handling of dangerous substances
|
|
|
444
|
|
|
|
579
|
|
|
|
|
|
Salar (salt deposit) environmental
follow-up
plan
|
|
|
|
|
|
|
3,045
|
|
|
|
|
|
PV environmental improvements
|
|
|
1,029
|
|
|
|
555
|
|
|
|
|
|
Waste pools R&R lithium plant
|
|
|
|
|
|
|
2,150
|
|
|
|
|
|
Enablement of Camp and Bathrooms
|
|
|
1,369
|
|
|
|
|
|
|
|
|
|
Salar (Salt deposit) Environmental
follow-up
Plan
|
|
|
370
|
|
|
|
|
|
|
|
|
|
Environmental Management
|
|
|
1,235
|
|
|
|
|
|
|
|
|
|
Others
|
|
|
|
|
|
|
94
|
|
|
|
325
|
|
|
|
|
|
|
|
Total
|
|
|
9,324
|
|
|
|
10,035
|
|
|
|
10,180
|
|
|
|
The Companys operations in which it uses 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, due to their low
waste-to-mineral
ratio, generate remaining deposits that slightly alter the
environment. During the extraction process and subsequent
crushing of ore, particle emissions occur, which is normal for
this type of operation.
On August 10, 1993, the Ministry of Health published a
resolution under the Sanitary Code that established that the
levels of breathable particles present at the María Elena
facility exceeded the level allowed for air quality and,
consequently, affected the nearby city of María Elena.
F-53
Notes to
consolidated financial statementsContinued
These particles mainly come from the dust that results from
caliche processing, particularly during the crushing processes
prior to leaching. Within the framework of a decontamination
plan for this city and in accordance with its Sustainable
Development Policy, the Company has implemented a series of
measures that have shown notable improvement in air quality at
María Elena. In October 2005, the company obtained approval
from the environmental authorities for a project titled
Technological Change at María Elena. The
operation of this project will facilitate the reduction of
particle emissions, as required by the new environmental
standard, started during the second half of 2008. The new
María Elena crushing plant was finally put out of service
as of July 5, 2008, with the consequent improvement in air
quality, which will be able to be evaluated after three years of
operation as required by the regulation for MP10.
In addition, for all its operations, the Company carries out
environmental
follow-up
and monitoring plans based on specialized scientific studies,
and it also provides an annual training program in environmental
matters to both its direct employees and its contractors
employees. Within this context, SQM entered into a contract with
the National Forestry Corporation (CONAF) aimed at researching
the activities of flamingo groups that live in the Salar de
Atacama lagoons. Such research includes a population count of
the birds, as well as breeding research. Environmental
monitoring activities carried out by the Company at the Salar de
Atacama and other systems in which it operates are supported by
a number of studies that have integrated diverse scientific
efforts from prestigious research centers, including Dictuc from
Pontificia Universidad Católica in Santiago and the School
of Agricultural Science of Universidad de Chile.
Furthermore, the Company is performing 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 María
Elena and the Nueva Victoria plants. This effort is being
accompanied by cultural initiatives within the community and the
organization of exhibits in local and regional museums.
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, and in order to do so, it acts
both individually and in conjunction with private and public
entities.
As of December 31, 2009, 2008 and 2007, the amounts of the
deferred income recognized on the balance sheet and related to
billed deliveries of goods which were not received by customers
prior to those dates amounted to ThUS$16,536, ThUS$31,722 and
ThUS$10,858, respectively.
|
|
Note 29
|
Adoption of
International Financial Reporting Standards
|
In conformity with regulations of SVS the Company and its
subsidiaries will adopteffective January 1,
2010International Financial Reporting Standards (IFRS)
issued by the International
F-54
Notes to
consolidated financial statementsContinued
Accounting Standards Board (IASB). As a result, balances of
assets, liabilities and equity as of January 1, 2010 will
be impacted, as well as results of the operations in future
years. Also, the Companys first annual financial
statements under IFRS as of and for the year ended
December 31, 2010, will include comparative 2009 financial
information that will differ from these consolidated financial
statements.
|
|
Note 30
|
Subsequent
events
|
On February 23, 2010, the Company informed the SVS that its
Board of Directors held an extraordinary meeting on
February 22, 2010 and agreed by unanimous vote of Directors
in attendance to cease production at the facilities El Toco and
Pampa Blanca. The Board of Directors decided to suspend
operations based on the fact that worldwide demand for nitrates
and iodine had been strongly impacted by the global financial
crisis that began during the fourth quarter of 2008, thus
decreasing sales volumes over the last 15 months and
increasing SQMs inventory of nitrates and iodine. As a
result of this suspension, SQMs total nitrate production
for 2010 should decrease slightly as compared with 2009. Due to
the suspension of the El Toco mine, sodium nitrate production
will decrease. This reduction will be partially compensated by a
new sodium nitrate plant located in Coya Sur set to begin
operations during the second half of 2010. Regarding iodine, we
estimate that 2010 production should fall approximately 20%
compared to the previous year. As a result, production volumes
for 2010 should be similar to those recorded in 2008. The Board
of Directors considered that even if demand for nitrates and
iodine were to exceed currently forecasted figures, the
Companys existing inventory levels and available installed
production capacity, including the mines at Pampa Blanca and El
Toco, would allow it to respond quickly and efficiently to this
increased demand. Property, plant and equipment in the El Toco
and Pampa Blanca facilities have a net carrying value of
ThUS$82,204 as of December 31, 2009. Based on an analysis
of future cash flows the Company estimates that these assets are
not impaired as a result of temporary suspension of the
operations.
Management is not aware of any other significant events that
occurred between December 31, 2009 and the date of issuance
of these consolidated financial statements (February 25,
2010) that may significantly affect them.
F-55
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
|
|
|
|
Conf:
|
/s/ Ricardo
Ramos R.
|
Ricardo Ramos R.
Chief Financial Officer
Date: April 7, 2010