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 financial statements and their related notes for the nine-month period ended
September 30, 2010 filed by Sociedad Química y Minera de Chile S.A. before the
Superintendencia de Valores y Seguros de Chile on November 23, 2010.

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 registrant's 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.

Form 20-F  x
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.

Yes ¨
No x.          

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82_________

 
 

 

On November 23, 2010, the Registrant filed with the Superintendencia de Valores y Seguros of Chile (the "SVS") a report that included information as to the Registrant's consolidated financial condition and results of operations for the nine-month period ended September 30, 2010. Attached is a summary of such consolidated financial information included in the summary and in the report filed with the Superintendencia de Valores y Seguros of Chile. This financial information was prepared on the basis of International Financial Reporting Standards (“IFRS”).
 
THIS REPORT IS AN ENGLISH TRANSLATION OF, AND AN INTERNATIONAL FINANCIAL REPORTING STANDARDS PRESENTATION OF, THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2010 REPORT FILED WITH THE SUPERINTENDENCIA DE VALORES Y SEGUROS (SVS) IN CHILE, AND UNLESS OTHERWISE INDICATED, FIGURES ARE IN US DOLLARS.
 
 
 
 

 


 
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
For the period ended
 
As of September 30, 2010
 
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. and SUBSIDIARIES
 
Thousands of U.S. dollars
 

 
This document is composed of:
 
 
-
Consolidated Classified Statement of Financial Position
 
 
-
Interim Consolidated Statement of Comprehensive Income by function.
 
 
-
Interim Consolidated Statement of Comprehensive Income
 
 
-
Interim Consolidated Statement of Cash Flows
 
 
-
Interim Statements of Changes in Net Shareholders’ Equity
 
 
-
Explanatory Notes to the Interim Consolidated Financial Statements
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
 

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries

CONSOLIDATED CLASSIFIED STATEMENT OF FINANCIAL POSITION
 


ASSETS
 
Note
   
As of
September 30
2010
ThUS$
   
As of
December 
31 2009
ThUS$
   
As of January 1
2009
ThUS$
 
Current assets
                       
Cash and cash equivalents
 
6.0
      615,847       530,394       303,799  
Other current financial assets
 
9.1
      77,655       75,537       21,720  
Other non-financial current assets
 
25
      25,393       34,375       41,971  
Trade and other receivables, current
 
9.2
      430,840       325,823       334,791  
Trade and other receivables due from related parties, current
 
8.6
      40,027       68,656       51,027  
Inventories
 
7.0
      639,539       630,763       540,877  
Current tax assets
 
28.1
      26,627       41,825       1,695  
Total current assets
          1,855,928       1,707,373       1,295,880  
                               
Non-Current Assets
                             
Other non-current financial assets
 
9.1
      115       113       101  
Other non-financial assets, non-current
 
25
      28,935       30,880       26,444  
Non-current rights receivable
 
9.2
      3,873       4,208       766  
Trade and other receivables due from related parties, non-current
 
8.7
      -       -       2,000  
Investments accounted for using the equity method
 
11.0
      61,926       55,185       36,934  
Intangible assets other than goodwill
 
13.1
      3,064       2,836       3,525  
Goodwill
 
13.1
      38,388       38,388       38,388  
Property, plant and equipment
 
14.1
      1,394,089       1,300,546       1,076,531  
Investment property
 
14.4
      1,381       1,405       1,436  
Deferred tax assets
 
28
      628       870       1,969  
Total Non-Current Assets
          1,532,399       1,434,431       1,188,094  
Total Assets
          3,388,327       3,141,804       2,483,974  

The accompanying notes form an integral part of these interim consolidated financial statements.

 
1

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries

CONSOLIDATED CLASSIFIED STATEMENT OF FINANCIAL POSITION, continued

Liabilities and Equity
 
Note
   
As of
September 
30 2010
ThUS$
   
As of
December 31
2009
ThUS$
   
As of
January 1
2009
ThUS$
 
Liabilities
                       
Current Liabilities
                       
Other current financial liabilities
 
9.4
      140,697       268,855       159,120  
Trade and other payables
 
9.5
      162,328       184,195       110,802  
Trade payables due to related parties. current
 
8.8
      4,332       3,892       178  
Other current provisions
 
18.1
      13,535       18,222       9,551  
Current tax liabilities
 
28.2
      8,386       1,298       89,142  
Current provision for employee benefits
 
16.1
      34,732       16,375       22,112  
Other non-financial liabilities. current
 
18.3
      84,606       52,205       115,682  
Total current liabilities
          448,616       545,042       506,587  
                               
Non-current liabilities
                             
Other non-current financial liabilities
 
9.4
      1,154,703       1,024,350       511,342  
Other non-current accounts payable
 
9.5
      -       187       398  
Other long-term provisions
 
18.2
      3,500       3,500       3,181  
Deferred tax liabilities
 
28.4
      79,557       53,802       27,188  
Non-current provisions for employee benefits
 
16.1
      27,372       50,473       35,059  
Total non-current liabilities
          1,265,132       1,132,312       577,168  
Total Liabilities
          1,713,748       1,677,354       1,083,755  
                               
Equity
                             
Issued capital
          477,386       477,386       477,386  
Retained earnings
          1,163,970       951,173       888,369  
Other reserves
          (14,178 )     (9,806 )     (12,077 )
Equity attributable to the owners of the controlling entity
          1,627,178       1,418,753       1,353,678  
Non-controlling interest
          47,401       45,697       46,541  
Total Equity
          1,674,579       1,464,450       1,400,219  
Total liabilities and equity
          3,388,327       3,141,804       2,483,974  

The accompanying notes form an integral part of these interim consolidated financial statements.

 
2

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME BY FUNCTION
 


         
From January to September
   
From July to September
 
   
Note 
   
2010
ThUS$
   
2009
ThUS$
   
2010
ThUS$
   
2009
ThUS$
 
Revenue
 
20
      1,324,736       1,052,169       459,468       383,781  
Cost of sales
          (870,364 )     (644,672 )     (308,297 )     (252,646 )
Gross profit
          454,372       407,497       151,171       131,135  
                                       
Other income by function
 
27
      5,617       5,405       1,957       2,923  
Administrative expenses
          (55,455 )     (53,436 )     (19,389 )     (18,232 )
Other expenses by function
 
27
      (16,255 )     (18,936 )     (6,344 )     (2,944 )
Other gains (losses)
 
27
      (5,870 )     (1,652 )     698       (1,709 )
Finance income
          6,501       10,093       3,647       2,233  
Finance expenses
 
22
      (26,534 )     (23,141 )     (8,626 )     (7,391 )
Equity in gains (losses) of associates and joint ventures accounted for using the equity method
          8,299       1,712       3,301       190  
Foreign currency translation differences
 
23
      (6,875 )     (8,528 )     (1,523 )     (2,259 )
Profit (loss) before income tax
          363,800       319,014       124,892       103,946  
Income tax expense
 
28.4
      (84,359 )     (60,198 )     (28,330 )     (18,004 )
Profit (loss) from continuing operations
          279,441       258,816       96,562       85,942  
                                       
Profit (loss)
          279,441       258,816       96,562       85,942  
Gain (loss) attributable to
                                     
Gain (loss) attributable to the owners of the parent
          276,325       259,414       94,803       85,215  
Gain (loss) attributable to non-controlling interest
          3,116       (598 )     1,759       727  
Profit (loss) for the period
          279,441       258,816       96,562       85,942  

The accompanying notes form an integral part of these interim consolidated financial statements.

 
3

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME BY FUNCTION, continued
 


   
From January to
September
   
From July to
September
 
   
2010
   
2009
   
2010
   
2009
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Earnings per share
                       
Common shares
                       
Basic earnings per share (US$ per share)
    1.0499       0.9856       0.3602       0.3238  
                                 
Basic earnings per share (US$ per share) from continuing operations
    1.0499       0.9856       0.3602       0.3238  
                                 
Diluted common shares
                               
Diluted earnings per share (US$ per share)
    1.0499       0.9856       0.3602       0.3238  
                                 
Diluted earnings per share (US$ per share) from continuing operations
    1.0499       0.9856       0.3602       0.3238  

The accompanying notes form an integral part of these interim consolidated financial statements.

 
4

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

   
January to September
   
July to September
 
   
2010
   
2009
   
2010
   
2009
 
Statement of comprehensive income
 
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                         
Profit (loss) for the period
    279,441       258,816       96,562       85,942  
Other comprehensive income components before foreign currency translation difference
                               
Gains (losses) from foreign currency translation differences. before tax
    588       878       943       (155 )
Other comprehensive income before taxes and foreign currency translation differences
    588       878       943       (155 )
Cash flow hedges
                               
Gains (losses) from cash flow hedges before tax
    (5,683 )     12,872       (10,240 )     1,647  
Other comprehensive income before tax and cash flow hedges
    (5,683 )     12,872       (10,240 )     1,647  
                                 
Other comprehensive income components. net of tax
    (5,095 )     13,750       (9,297 )     1,492  
                                 
Income tax related to components of other comprehensive income
                               
Income tax related to other comprehensive income cash flow hedges
    966       (2,188 )     1,740       (280 )
Addition of income tax related to other comprehensive income components
    966       (2,188 )     1,740       (280 )
                                 
Other comprehensive income
    (4,129 )     11,562       (7,557 )     1,212  
                                 
Total comprehensive income
    275,312       270,378       89,005       87,154  
                                 
Comprehensive income attributable to
                               
Comprehensive income attributable to the parent’s owners
    271,953       270,939       87,246       86,391  
Comprehensive income attributable to non-controlling interest
    3,359       (561 )     1,759       763  
Total comprehensive income
    275,312       270,378       89,005       87,154  

The accompanying notes form an integral part of these interim consolidated financial statements.

 
5

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
 


Statement of cash flows
 
9/30/2010
ThUS$
   
9/30/2009
ThUS$
 
             
Cash flows provided by (used in) operating activities
           
             
Profit (loss)
    279,441       258,816  
Adjustment due to reconciliation of profit (loss)
               
                 
Adjustment for decreases (increases) in inventories
    (5,926 )     (111,738 )
Adjustment for decreases (increases) in trade receivables
    (48,459 )     5,215  
Adjustment for decreases (increases) in other receivables from operating activities
    2,841       (15,328 )
Adjustment for decreases (increases) in trade payables
    (63,772 )     (45,718 )
Adjustment for decreases (increases) in other payables related to operating activities
    (21,413 )     (106,683 )
Adjustment for depreciation and amortization
    103,293       101,448  
Adjustment for provisions
    6,705       38,034  
Adjustments for unrealized gains (losses) in foreign translation
    6,875       8,528  
Adjustment for undistributed gains from equity-accounted associates
    (8,299 )     (1,714 )
Other adjustments for entries other than cash
    155,304       109,933  
Other adjustments for which the effects on cash are cash flows from investing or financial activities
    (430 )     (196 )
                 
Total gains (losses) reconciling adjustments
    126,719       (18,219 )
                 
Interest paid
    (7,160 )     (34,236 )
                 
Net cash flows provided by (used in) operating activities
    399,000       206,361  
                 
Cash flows provided by (used in) investing activities
               
                 
Other payments to acquire interest in joint ventures
    (3,500 )     -  
Proceeds from the sale of property, plant and equipment
    1,333       3,850  
Purchases of property, plant and equipment
    (235,552 )     (270,236 )
Cash advances and loans granted to third parties
    983       (1,662 )
Proceeds from future. forward. option and swap financial contracts
    15,043       -  
                 
Net cash flows provided by (used in) investing activities
    (221,693 )     (268,048 )
 
The accompanying notes form an integral part of these interim consolidated financial statements.

 
6

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS, continued
 

 
Cash flows provided by(used in) financing activities
           
             
Amounts received from the issuance of other equity instruments
    250,000       372,347  
Amounts received from long-term loans
    224,000       270,809  
Amounts received from short-term loans
    -       -  
Total amounts received from loans
    224,000       270,809  
Payments of loans
    (528,040 )     (160,000 )
Dividends paid
    (64,882 )     (243,976 )
Other cash inflows (outflows)
    (6,753 )     (7,234 )
                 
Net cash flows provided by (used in) financing activities
    (125,675 )     231,946  
                 
Net increase (decrease) in cash and cash equivalents before the effect of changes in exchange rates
    51,632       170,259  
                 
Effects of variation in exchange rate on cash and cash equivalents
    33,821       14,614  
Net increase (decrease) in cash and cash equivalents
    85,453       184,873  
                 
Cash and cash equivalents at beginning of the period
    530,394       303,799  
                 
Cash and cash equivalents at the end of the period
    615,847       488,672  
 
The accompanying notes form an integral part of these interim consolidated financial statements.

 
7

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
INTERIM STATEMENTS OF CHANGES IN NET SHAREHOLDERS’ EQUITY
 
   
Issued
capital
   
Foreign
currency
translation
difference
reserves
   
Cash flow
hedge
reserves
   
Other
reserves
   
Subtotal
Other
reserves
   
Retained
earnings
   
Equity attributable
to the Parent
Company's owners
   
Non-controlling
interest
   
Total equity
 
Beginning balance, current period: January 1, 2010
    477,386       1,234       (7,984 )     (3,056 )     (9,806 )     951,173       1,418,753       45,697       1,464,450  
                                                                         
Reconfirmed Beginning balance
    477,386       1,234       (7,984 )     (3,056 )     (9,806 )     951,173       1,418,753       45,697       1,464,450  
                                                                         
Profit (loss) for the period
    -       -       -       -       -       276,325       276,325       3,116       279,441  
Other comprehensive income
    -       345       (4,717 )     -       (4,372 )     -       (4,372 )     243       (4,129 )
                                                                         
Comprehensive income
    -       345       (4,717 )     -       (4,372 )     276,325       271,953       3,359       275,312  
Dividends
    -       -       -       -       -       (63,528 )     (63,528 )     -       (63,528 )
                                                                         
Increase (decrease) for transfers and other changes
    -       -       -       -       -       -       -       (1,655 )     (1,655 )
Changes in equity
    -       345       (4,717 )     -       (4,372 )     212,797       208,425       1,704       210,129  
Ending balance, current period: September 30, 2010
    477,386       1,579       (12,701 )     (3,056 )     (14,178 )     1,163,970       1,627,178       47,401       1,674,579  
 
The accompanying notes form an integral part of these interim consolidated financial statements.

 
8

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
INTERIM STATEMENTS OF CHANGES IN NET SHAREHOLDERS’ EQUITY, continued
 
   
Issued
capital
   
Foreign
currency
translation
difference
reserves
   
Cash flow
hedge
reserves
   
Other
reserves
   
Subtotal
Other
reserves
   
Retained
earnings
   
Equity attributable
to the Parent
Company's owners
   
Non-controlling
interest
   
Total equity
 
Beginning balance, current period: January 1, 2009
    477,386       -       (7,891 )     (4,186 )     (12,077 )     888,369       1,353,678       46,541       1,400,219  
                                                                         
Reconfirmed Beginning balance
    477,386       -       (7,891 )     (4,186 )     (12,077 )     888,369       1,353,678       46,541       1,400,219  
                                                                         
Profit (loss) for the period
    -       -       -       -       -       259,414       259,414       (598 )     258,816  
Other comprehensive income
    -       842       10,684       -       11,526       -       11,526       36       11,562  
                                                                         
Comprehensive income
    -       842       10,684       -       11,526       259,414       270,940       (562 )     270,378  
Dividends
    -       -       -       -       -       (175,493 )     (175,493 )     -       (175,493 )
                                                                         
Increase (decrease) for transfers and other changes
    -       -       -       -       -       -       -       (2,626 )     (2,626 )
Changes in equity
    -       842       10,684       -       11,526       83,921       95,447       (3,188 )     92,259  
Ending balance, current period: September 30, 2009
    477,386       842       2,793       (4,186 )     (551 )     972,290       1,449,125       43,353       1,492,478  
 
The accompanying notes form an integral part of these interim consolidated financial statements.

 
9

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries

Index of Interim Consolidated Financial Statements
 
Note No.
   
Page
       
 
Interim Consolidated Classified Statements of Financial Position
1
 
Interim Consolidated Statement of Comprehensive Income by function
3
 
Interim Consolidated Statement of Comprehensive Income
5
 
Interim Consolidated Statements of Cash Flows
6
 
Interim Statements of Changes in Net Equity
8
     
 
Notes  to the Interim Consolidated Financial Statements
 
1
Company’s Identification and Activity
16
2
Bases of presentation of the Interim Consolidated  Financial Statements  and accounting criteria applied
 
 
2.1
Accounting period
19
 
2.2
Basis of preparation
20
 
2.3
Transactions in foreign currency
22
 
2.4
Basis of consolidation
23
 
2.5
Basis of conversion.
27
 
2.6
Responsibility for the information and estimates made
29
 
2.7
Financial information by operating segment
30
 
2.8
Property, plant and equipment
30
 
2.9
Investment properties
32
 
2.10
Inventories.
33
 
2.11
Trade and other receivables
34
 
2.12
Revenue recognition
35
 
2.13
Investments recognized using the equity method
36
 
2.14
Corporate taxes
37
 
2.15
Earnings per share
38
 
2.16
Impairment in the value of non-financial assets
39
 
2.17
Financial assets
40
 
2.18
Financial liabilities
41
 
2.19
The environment
43
 
2.20
Minimum dividend
43
 
2.21
Financial debt obligations
43
 
2.22
Trade payables
44
 
2.23
Statement of cash flows
44
 
2.24
Staff severance indemnity liabilities
45
 
2.25
Financial derivatives and hedging operations
46
 
2.26
Lease
48
 
2.27
Prospecting expenses
49
 
2.28
Other provisions
49
 
2.29
Compensation plans
50

 
10

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries

Index of Interim Consolidated Financial Statements, continued
 
Note No.
   
Page
       
 
2.30
Good and service insurance expenses
51
 
2.31
Intangibles assets
51
 
2.32
Research and development
52
 
2.33
Classification of balances under current and non-current
53
       
3
First adoption of International Financial Reporting Standards
 
 
Application of  IFRS
54
 
Reconciliation of net equity from Generally Accepted Accounting Principles in Chile to International Financial Reporting Standards as of January 1, 2009
56
 
Reconciliation of net equity from Generally Accepted Accounting Principles in Chile to International Financial Reporting Standards as of December 31,2009
56
 
Reconciliation of profit for the period from Generally Accepted Accounting Principles in Chile to Information reporting Financial Standards as of December 31, 2009
57
 
Explanation of the transition to IFRS
58
       
4
Financial risk management
 
 
4.1
Risk management policy
62
 
4.2
Risk factors
63
 
4.3
Risk measurement
66
       
5
Changes in estimates and accounting policies (uniformity).
67
     
6
Cash and cash equivalents
 
 
6.1
Classes of cash and cash equivalent
68
 
6.2
Other cash and cash equivalents
68
 
6.3
Information on cash and cash equivalents by currency
69
 
6.4
Amount of significant cash balances not available
70
 
6.5
Detail of time deposits
71
       
7
Inventories
72
       
8
Related parties: disclosures
 
 
8.1
Information for disclosure on related parties
73
 
8.2
Relationships between the parent company and the entity
73
 
8.3
Intermediate parent company and companies controlled by SQM S.A. which publicly issue financial statements
74
 
8.4
Detailed identification of the link between the parent company and the subsidiary
74
 
8.5
Detail of related parties and transactions with related parties
75
 
8.6
Trade and other receivables due from related parties, current
77
 
8.7
Trade and other receivables due from related parties, non-current
77
 
8.8
Trade and other payables due to related parties, current
78
 
8.9
Board of Directors and senior management
78

 
11

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Index of Interim Consolidated Financial Statements, continued
 
Note No.
   
Page
9
Financial instruments
 
 
9.1
Classes of other financial assets
82
 
9.2
Trade and other receivables
82
 
9.3
Current hedging assets
85
 
9.4
Financial liabilities
86
 
9.5
Trade and other payables
98
 
9.6
Financial liabilities at fair value through profit or loss
99
 
9.7
Financial asset and liability categories
100
 
9.8
Financial assets pledged as guarantee
101
 
9.9
Estimated fair value of financial instruments and derivative financial instruments
101
 
9.10
Nature and scope of risks arising from financial instruments
103
       
10
Investments and information for disclosure  on investments in subsidiaries
103
       
11
Investments in associated companies
 
 
11.1
Investments in associates recognized using the equity method of accounting ...
110
 
11.2
Assets, liabilities, revenues and ordinary expenses of associates
111
 
11.3
Detail of investments in associates
112
       
12
Joint ventures
 
 
12.1
Policy for the accounting for joint ventures in a Parent Company’s separate financial statements
113
 
12.2
Disclosures on interest in joint ventures
113
 
12.3
Detail of assets. liabilities and profit or loss of significant investments in joint ventures by company
114
 
12.4
Detail of the amount of gain (loss) net of investments in significant joint ventures by company
115
       
13
Intangible assets and goodwill
 
 
13.1
Balances
116
 
13.2
Disclosures on intangible assets and goodwill
116
       
14
Property, plant and equipment
 
 
14.1
Classes of property, plant and equipment
120
 
14.2
Reconciliation of changes in property. plant and equipment by class
121
 
14.3
Detail of property. plant and equipment pledged as guarantees
123
 
14.4
Additional information
123
       
15
Leases
 
 
15.1
Disclosures on finance leases, lessee
125
 
15.2
Investment property in finance leases
125
 
15.3
Reconciliation of finance lease minimum payments, lessee
125

 
12

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Index of Interim Consolidated Financial Statements, continued
 
Note No.
   
Page
       
16
Employee Benefits
 
 
16.1
Provisions for employee benefits
126
 
16.2
Policies on defined benefit classes
127
 
16.3
Other long-term benefits
128
 
16.4
Employee post-retirement obligations
130
       
17
Disclosures on net equity
 
 
17.1
Disclosures on issued capital
132
 
17.2
Disclosures on preferred share capital
132
 
17.3
Dividend policy
134
 
17.4
Provisional dividends
135
       
18
Provisions and other non-financial liabilities
 
 
18.1
Classes of provisions
135
 
18.2
Description of other provisions
136
 
18.3
Other liabilities
136
 
18.4
Movements in provisions
137
 
18.5
Detail of main classes of provisions
139
       
19
Contingencies and restrictions
 
 
19.1
Lawsuits or other relevant events
140
 
19.2
Restrictions
143
 
19.3
Commitments
143
 
19.4
Restricted or pledged cash
143
 
19.5
Sureties obtained from third parties
144
 
19.6
Indirect guarantees
145
       
20
Revenue
146
     
21
Earnings per share
146
     
22
Loan costs
147
     
23
Effect of variations in foreign currency exchange rates
148
     
24
The Environment
 
 
24.1
Disclosures on disbursements related to the environment
149
 
24.2
Detail of information on disbursements related to the environment
150
 
24.3
Description of each project indicating whether these are in process or have been finished
161
       
25
Other current and non-current non-financial assets
166
 
 
13

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Index of Interim Consolidated Financial Statements, continued
 
Note No.
   
Page
       
26
Operating segments
 
 
26.1
Operating segments
168
 
26.2
Statements of comprehensive income classified by operating segment based on product groups
169
 
26.3
Assets and liabilities by operating segment based on product groups
171
 
26.4
Disbursements of the segment’s non-cash assets
173
 
26.5
Information on products and services for external customers
174
 
26.6
Information on geographical areas
176
 
26.7
Revenue from external customers, classified by geographical area
176
 
26.8
Non-current assets classified by geographical area
177
 
26.9
Information on the main customers
178
 
26.10
Property,  plant and equipment classified by geographical areas
179
       
27
Other revenue. other expenses by function and other gains or losses
181
     
28
Income and deferred taxes
 
 
28.1
Current tax receivables
182
 
28.2
Current tax payables
182
 
28.3
Tax earnings
182
 
28.4
Income and deferred taxes
183
       
29
Disclosures on the effects of variations in foreign currency exchange rates
194
30
Asset value impairment
200
31
Events occurred subsequent to the reporting date
201
 
 
14

 

    Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Notes to the Interim Consolidated Financial
Statements
 
As of September 30, 2010
 
Sociedad Química y Minera de Chile S.A.
 
And Subsidiaries

 
15

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 1 - Identification and business of Sociedad Química y Minera de Chile S.A. and Subsidiaries

Historic Background
Sociedad Química y Minera de Chile S.A. (the “Company”) is an open stock corporation organized under the laws in the Republic of Chile. The Company was constituted by public deed issued on June 17, 1968 by the Notary Public of Santiago Mr. Sergio Rodríguez Garcés. Its existence was approved by Decree No. 1.164 of June 22, 1968 of the Ministry of Finance, and it was registered on June 29, 1968 in the Business Registry of Santiago, on page 4,537 Nº 1,992. The Parent Company is located at El Trovador 4285, 6th Floor, Las Condes, Santiago, Chile. Its phone No. is (56-2) 425-2000.
The Company is registered with the Securities Registry of the Chilean Superintendence of Securities and Insurance (SVS) under No. 0184 dated March 18. 1983 and is subject to the inspection of the SVS.
 
Our products are divided into five main categories, as follows:
 
Specialty Plant Nutrition: Products in this business line are niche fertilizers used in specialty crops. This business is characterized by being closely related to its customers to which it has specialized staff who provide expert advisory in best practices for fertilization according to each type of crop, soil and climate. Potassium derived fertilizers, and in particular potassium nitrate, play an important in crop development, and they also improve post-harvest shelf-life, quality, flavor and fruit color. Products in this business line include potassium nitrate, which is sold in multiple grades and as a part of other specialty mixtures, sodium nitrate and sodium potassium nitrate, and more than 200 specialty blends.
 
Iodine: SQM is the largest producer of iodine, a product widely used in a variety of industries such as the pharmaceutical, technological and health/nutrition. During  the 8 years prior to the economic crisis, demand for iodine grew between 6% and 7% per year mainly due to its use in x ray contrast media and polarizing film for LCD displays. This trend should return to the industry in the short-term.
 
Lithium: SQM’s Lithium is widely used in rechargeable batteries for cell phones, cameras and notebooks. The lithium sale has grown between an annual average of 7% to 8% in the last 10 years, not considering the recent world crisis, in which the overall consumption was significantly reduced. SQM is the worldwide leader in the production and sale of lithium, which is forecasted with interesting growth in their demand which should be similar to the last decade. Through the preparation of products based on lithium, SQM provides significant raw material to face great challenges such as the efficient use of energy and raw material.  Lithium is not only used for rechargeable batteries and in new technologies for vehicles propelled by electricity, but is also used in industrial applications to lower melting temperature and to help saving costs and energy

 
16

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 1 - Identification and business of Sociedad Química y Minera de Chile S.A. and Subsidiaries, continued

Industrial Chemicals: Industrial chemicals are products used as supplies for a number of production processes. SQM participates in this line of business during more than 30 years producing sodium nitrate, potassium nitrate, boric acid and potassium chloride, Industrial nitrates have increased their importance over the last few years due to their use as storage means for thermal energy at solar energy plants, which are widely used in countries as Spain and the United States in their search for decreasing CO2 emissions

Potassium: The potassium is a primary essential macro-nutrient, and even though does not form part of the plant’s structure, has a significant role for the developing of its basic functions, validating the quality of a crop, increasing post-crop life, improving the crop flavor, its amount in vitamins and its physical appearance. Within this business line, SQM has also potassium chlorate and potassium sulfate, both extracted from the salt layer located under the Atacama Salar (the Atacama Saltpeter Deposit.) In this business line SQM has focused a significant part of it investments plan, allowing a significantly increase in the Company’s production levels in the last 2 years.

Employees
 
As of September 30, 2010 and December 31, 2009 we had employees as detailed below:

   
9/30/2010
   
12/31/2009
 
             
Employees in Chile
    3,931       4,161  
Employees elsewhere
    207       226  
Permanent employees
    4,138       4,387  
 
 
17

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 1-
Identification and business of Sociedad Química y Minera de Chile S.A. and Subsidiaries, continued
Majority shareholders

The table below establishes certain information about the beneficial property of Series A and Series B shares of SQM as of September 30, 2010 and as of December 31, 2009.  In respect to each shareholder which has interest of more than 5% of outstanding Series A or B shares.  The information below is taken from our records and reports registered by the individuals indicated below with the Superintendence of Securities and Insurance (SVS) and the Chilean Stock Exchange.

Shareholder as of  9/30/2010
 
Number of
Series A shares
with ownership
   
% of Series A
shares
   
Number of
Series B
shares with
ownership
   
% of Series
B shares
   
Total % of
shares
 
Sociedad de Inversiones Pampa Calichera S.A.(*)
    57,934,256       40.56 %     8,493,774       7.06 %     25.24 %
Inversiones El Boldo Limitada
    44,679,453       31.28 %     17,643,419       14.66 %     23.68 %
The Bank of New York
    -       0.00 %     48,055,973       39.92 %     18.26 %
Inversiones RAC Chile Limitada
    19,200,242       13.44 %     2,699,773       2.24 %     8.32 %
Inversiones Global Mining (Chile) Limitada (*)
    13,798,539       9.66 %     -       0.00 %     5.24 %
Banchile Corredores de Bolsa S.A.
    131,158       0.09 %     4,478,744       3.72 %     1.75 %
Inversiones La Esperanza Limitada
    3,693,977       2.59 %     -       0.00 %     1.40 %
Banco Itau on behalf of investors
    -       0.00 %     2,849,076       2.37 %     1.08 %
AFP Provida S.A.
    -       0.00 %     2,616,702       2.17 %     0.99 %
Larrain Vial S.A. Corredora de Bolsa
    48,191       0.03 %     2,366,698       1.97 %     0.92 %
 
(*) Total Pampa Group  30.48%

Shareholder as of 12/31/2009
 
Number of
Series A shares
with ownership
   
% of Series A
shares
   
Number of
Series B
shares with
ownership
   
% of Series
B shares
   
Total % of
shares
 
Sociedad de Inversiones Pampa Calichera S.A. (*)
    57,934,256       40.56 %     7,544,215       6.27 %     24.88 %
Inversiones El Boldo Limitada
    44,679,453       31.28 %     17,643,419       14.66 %     23.68 %
The Bank of New York
    -       -       55,734,253       46.30 %     21.18 %
Inversiones RAC Chile Limitada
    19,200,242       13.44 %     2,699,773       2.24 %     8.32 %
Inversiones Global Mining (Chile) Limitada (*)
    9,993,168       7.00 %     -       -       3.80 %
Banchile Corredores de Bolsa S.A.
    123,318       0.09 %     5,326,662       4.42 %     2.07 %
Bolsa de Comercio de Santiago (the Santiago Stock Exchange)
    3,805,371       2.66 %     729,421       0.61 %     1.72 %
Inversiones La Esperanza Limitada
    3,693,977       2.59 %     -       -       1.40 %
AFP Provida S.A.
    -       -       2,900,035       2.41 %     1.10 %
Banco Itau on behalf of investors
    -       -       2,242,292       1.86 %     0.85 %
 
(*) Total Pampa Group  28.68%

 
18

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied

2.1 
Accounting period

These interim consolidated financial statements cover the following period:
 
-
Interim Consolidated Statements of financial position for the period ended as of September 30, 2010 and the year ended as of December 31, 2009.

 
-
Interim consolidated statements of changes in net equity for the period ended as of September 30, 2010 and 2009.

 
-
Interim consolidated statements of comprehensive income for the period between January 1 and September 30, 2010 y 2009, respectively

 
-
Interim consolidated statements of cash flows, indirect method for the period ended as of September 30, 2010 and 2009.

 
19

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.2 
Basis of preparation of interim consolidated financial statements

Interim and annual consolidated financial statements of Sociedad Química y Minera de Chile S.A. and Subsidiaries, have been prepared in accordance with International Financial Reporting Standards (hereinafter “IFRS”) and requirements of the Superintendence of Securities and Insurance.

These interim and annual consolidated financial statements reflect fairly the Company’s equity and financial position and the results of its operations, changes in the statement of recognized revenue and expenses and cash flows, which have occurred during the periods then ended.

IFRS establish certain alternatives for their application. Those applied by the Company and its subsidiaries are included in detail in this Note.

The accounting policies used in the preparation of these consolidated interim and annual accounts comply with each IFRS in force at their date of presentation.

For comparative purposes, the Company’s statement of financial position as of 12/31/2009 and the Company’s Income statement as of 9/30/2009 haven been converged from Chilean GAAP to IFRS.
 

 
20

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

 
a)
Accounting pronouncements

At the date of these interim consolidated financial statements, the following accounting pronouncements had been issued by the IASB but their application was not compulsory:

 
New standards
Mandatory
application
beginning on
IFRS 9
Financial instruments
January 1, 2013

 
Improvements and amendments
Mandatory
application
beginning on
IFRS 3
Business Combinations
January 1, 2011
IFRS 7
Financial Instruments: Disclosures
January 1, 2011
IAS 1
Presentation of Financial Statements
January 1, 2011
IAS 24
Related parties
January 1, 2011
IAS 27
Consolidated and Separate Financial Statements
January 1, 2011
IAS 32
Financial Instruments: Presentation
January 1, 2011
IAS 34
Interim financial information
January 1, 2011

The Company’s management believes the adoption of these standards, amendments and interpretations described above will not have any significant impact on the Company’s interim consolidated financial statements in their first-application period.

 
21

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

 
2.3
Transactions in foreign currency

(a)
Functional and presentation currency

The Company’s interim consolidated financial statements are presented in United States dollars, which is the Company’s functional and presentation currency and is the currency of the main economic environment in which it operates.
Consequently, the term foreign currency is defined as any currency other than U.S. dollar.
The interim consolidated financial statements are presented in thousands of U.S. dollars with no decimals.

(b)
Transactions and balances

Transaction balances denominated in a currency other than the functional currency (U.S. dollar) are converted using the exchange rate in force of the functional currency at the trade date. Monetary assets and liabilities denominated in a foreign currency are converted at the exchange rate of the functional currency prevailing at the closing date of the consolidated statement of financial position. All differences are recorded with a charge or credit to profit for the period, except if they are deferred in net equity.

Changes in the fair value of monetary titles denominated in foreign currency classified as available-for-sale are analyzed between translation differences resulting from changes in the amortized cost of the title and other changes in the amount of the title in the accounting records. Translation differences are recognized in profit or loss for the year or period, as applicable and other changes in the amount in the accounting records are recognized in net equity.

Foreign currency translation differences on non-monetary entries such as equity instruments held at fair value through profit or loss are presented as part of the gain or loss in fair value. Foreign currency translation differences on non-monetary entries are included in net equity in the revaluation reserve.

 
22

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

(c)
Group entities

The profit or loss, assets and liabilities of all those entities with a currency other than the presentation currency are converted to the presentation currency as follows:

 
-
Assets and liabilities are converted at the closing date exchange rate on the date of the statement of financial position.
 
-
Revenue and expenses in each profit or loss account are converted at average exchange rates.
 
-
All resulting foreign currency exchange differences are recognized as a component separate from net equity.

In consolidation, foreign currency exchange differences which arise from the conversion of a net investment in foreign entities and of loans and other instruments denominated in foreign currency designated as hedging for those investments are taken to net equity.  At the disposal date, these exchange differences are recognized in the statement of comprehensive income as part of the loss or gain from the sale.

 
2.4
Basis of Consolidation

 
(a)
Subsidiaries

Subsidiaries are all those entities on which Sociedad Química y Minera de Chile S.A. has the control to lead the financial and operating policies, which, in general, is accompanied by participation greater than half the voting rights. Subsidiaries are consolidated from the date in which control is transferred to the Company and are excluded from consolidation on the date in which this control ceases to exist.

In order to recognize the acquisition of an investment, the Company uses the acquisition method. Under this method, the acquisition cost is the fair value of assets delivered, of equity instruments issued and of liabilities incurred or assumed at the exchange date plus costs directly attributable to acquisition. Identifiable assets acquired and identifiable liabilities and contingencies assumed in a business combination are initially stated at their fair value at the acquisition date regardless of the scope of minority interest. The excess in acquisition cost over the fair value of the participation in identifiable net assets acquired is recognized as goodwill.

 
23

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

Companies included in consolidation:

                  
Ownership interest
 
         
Country of
 
Functional
 
9/30/2010
   
9/30/2009
 
TAX ID No.
 
Foreign subsidiaries
 
origin
 
currency
 
Direct
   
Indirect
   
Total
   
Total
 
Foreign
 
Nitratos Naturais Do Chile Ltda.
 
Brazil
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Nitrate Corporation Of Chile Ltd.
 
United Kingdom
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM North America Corp.
 
USA
 
US$
    40.0000       60.0000       100.0000       100.0000  
Foreign
 
SQM Europe N.V.
 
Belgium
 
US$
    0.8600       99.1400       100.0000       100.0000  
Foreign
 
Soquimich S.R.L. Argentina
 
Argentina
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Soquimich European Holding B.V.
 
The Netherlands
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Corporation N.V.
 
Dutch Antilles
 
US$
    0.0001       99.9999       100.0000       100.0000  
Foreign
 
SQI Corporation N.V.
 
Dutch Antilles
 
US$
    0.0159       99.9841       100.0000       100.0000  
Foreign
 
SQM Comercial De Mexico S.A. De C.V.
 
Mexico
 
US$
    1.0000       99.0000       100.0000       100.0000  
Foreign
 
North American Trading Company
 
USA
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Administración Y Servicios Santiago S.A. De C.V.
 
Mexico
 
US$
    0.0200       99.9800       100.0000       100.0000  
Foreign
 
SQM Peru S.A.
 
Peru
 
US$
    0.9800       99.0200       100.0000       100.0000  
Foreign
 
SQM Ecuador S.A.
 
Ecuador
 
US$
    0.0040       99.9960       100.0000       100.0000  
Foreign
 
SQM Nitratos Mexico S.A. De C.V.
 
Mexico
 
US$
    0.0000       51.0000       51.0000       51.0000  
Foreign
 
SQMC Holding Corporation L.L.P.
 
USA.
 
US$
    0.1000       99.9000       100.0000       100.0000  
Foreign
 
SQM Investment Corporation N.V.
 
Dutch Antilles
 
US$
    1.0000       99.0000       100.0000       100.0000  
Foreign
 
SQM Brasil Limitada
 
Brazil
 
US$
    3.0100       96.9900       100.0000       100.0000  
Foreign
 
SQM France S.A.
 
France
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Japan Co. Ltd.
 
Japan
 
US$
    1.0000       99.0000       100.0000       100.0000  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
US$
    1.6700       98.3300       100.0000       100.0000  
Foreign
 
SQM Oceania Pty Limited
 
Australia
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Rs Agro-Chemical Trading A.V.V.
 
Aruba
 
US$
    98.3300       1.6700       100.0000       100.0000  
Foreign
 
SQM Indonesia
 
Indonesia
 
US$
    0.0000       80.0000       80.0000       80.0000  
Foreign
 
SQM Virginia L.L.C.
 
USA
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Venezuela S.A.
 
Venezuela
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Italia SRL
 
Italy
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Comercial Caiman Internacional S.A.
 
Cayman Islands
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Africa Pty.
 
South Africa
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Lithium Specialties LLC
 
USA
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Fertilizantes Naturales S.A.
 
Spain
 
US$
    0.0000       66.6700       66.6700       66.6700  
Foreign
 
Iodine Minera B.V.
 
The Netherlands
 
US$
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Agro India Pvt. Ltd.
 
India
 
US$
    0.0000       100.0000       100.0000       0.00000  
Foreign
 
SQM Beijin Comercial Ltd.
 
China
 
US$
    0.0000       100.0000       100.0000       0.00000  
 
 
24

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

Companies included in consolidation:

               
Ownership interest
 
       
Country of
 
Functional
 
9/30/2010
   
9/30/2009
 
TAX ID No.
 
Domestic subsidiaries
 
origin
 
currency
 
Direct
   
Indirect
   
Total
   
Total
 
96.801.610-5
 
Comercial Hydro  S.A.
 
Chile
 
Chilean peso
    0.0000       60.6382       60.6382       60.6382  
96.651.060-9
 
SQM Potasio S.A.
 
Chile
 
US$
    99.9974       0.0000       99.9974       99.9974  
96.592.190-7
 
SQM Nitratos S.A.
 
Chile
 
US$
    99.9999       0.0001       100.0000       100.0000  
96.592180-K
 
Ajay SQM Chile S.A.
 
Chile
 
US$
    51.0000       0.0000       51.0000       51.0000  
86630200-6
 
SQMC Internacional  Ltda.
 
Chile
 
Chilean peso
    0.0000       60.6382       60.6382       60.6382  
79947100-0
 
SQM Industrial S.A.
 
Chile
 
US$
    99.9954       0.0046       100.0000       100.0000  
79906120-1
 
Isapre Norte Grande Ltda.
 
Chile
 
Chilean peso
    1.0000       99.0000       100.0000       100.0000  
79876080-7
 
Almacenes y Depósitos Ltda.
 
Chile
 
Chilean peso
    1.0000       99.0000       100.0000       100.0000  
79770780-5
 
Servicios Integrales de Tránsitos y Transferencias S.A.
 
Chile
 
US$
    0.0003       99.9997       100.0000       100.0000  
79768170-9
 
Soquimich Comercial S.A.
 
Chile
 
US$
    0.0000       60.6383       60.6383       60.6383  
79626800-K
 
SQM Salar S.A.
 
Chile
 
US$
    18.1800       81.8200       100.0000       100.0000  
78602530-3
 
Minera Nueva Victoria S.A.
 
Chile
 
US$
    99.0000       1.0000       100.0000       100.0000  
78053910-0
 
Proinsa Ltda.
 
Chile
 
Chilean peso
    0.0000       60.5800       60.5800       60.5800  
76534490-5
 
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
 
Chile
 
Chilean peso
    0.0000       100.0000       100.0000       100.0000  
76425380-9
 
Exploraciones Mineras S.A.
 
Chile
 
US$
    0.0100       99.9900       100.0000       100.0000  
76064419-6
 
Agrorama Callegari Ltda. (*)
 
Chile
 
Chilean peso
    0.0000       42.4468       42.4468       0.0000  

(*) Agrorama Callegari Ltda. was consolidated given that the Company has the control through the subsidiary Soquimich Comercial S.A

Subsidiaries are consolidated using the global integration method, including in the interim financial statements all their assets, liabilities, revenue, expenses and cash flows upon making the respective adjustments and eliminations of intragroup operations.

The results from dependant companies acquired or disposed of during the year are included in consolidated income statement accounts from the effective date of acquisition or up to the effective date of disposal, as applicable.

Interest of minority partners or shareholders represents the part which can be assigned to them of own funds and of results as of September 30 ,2010 and December 31, 2009 of those companies which are consolidated using the global integration method and are presented as “Net equity from minority shareholders” in total net shareholders’ equity of the attached interim consolidated statement of financial position and in line “Profit or loss from minority shareholders” in the attached consolidated statement of comprehensive income.

 
25

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

The conversion of the financial statements of foreign companies with functional currency other than U.S. dollars is performed as follows:
 
-
Assets and liabilities using the exchange rate prevailing on the closing date of the interim consolidated financial statements.
 
-
Profit or loss account entries using the average exchange rate for the year.
 
-
Net equity is stated at the historical exchange rate prevailing at acquisition date (or at the average exchange rate for the period in which it was generated both for the case of retained earnings and for contributions made), as applicable.

Foreign currency translation differences which arise from the conversion of financial statements are recorded in the account “Foreign currency translation differences" within net equity.

Foreign currency translation differences generated prior to January 1, 2009 have been transferred to the account “Reserves” in equity when the Company at the date of the first application of IFRS has invoked the exception included in IFRS 1 for the convergence of the financial statements prepared in accordance with generally accepted accounting principles in Chile to IFRS.

All balances and transactions between companies consolidated using the global integration method have been eliminated during the consolidation process.

 
(b)
Affiliated or associated companies

The affiliated or associated companies are all those entities on which significant influence is exercised but which are not controlled by the Company, which is, in general, accompanied by participation between 20% and 50% of voting rights. Investments in affiliated or associated companies are recognized in accounting using the equity method and are initially recognized at cost. The Group’s investment in affiliated or associated companies includes goodwill (net of any loss from accumulated impairment) identified in acquisition.

 
26

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

The equity in losses or gains subsequent to the acquisition of its affiliated or associated companies is recognized in profit or loss on an accrual basis and its participation in movements subsequent to the acquisition in reserves is recognized under Other reserves within Equity. When the equity in losses of an affiliated or associated company is equal to or greater than its equity in this affiliated or associated company no additional losses are recognized unless the company has incurred obligations or made payments in the name of the affiliated or associated company.

Unrealized gains from transactions with affiliated or associated companies are eliminated in consideration of the ownership percentage which the Company has on these. Unrealized losses are also eliminated except if the transaction provides evidence of loss from the impairment of the asset which is transferred.

 
(c)
Joint ventures

Joint ventures are contractual agreements by virtue of which the Company has agreed with other companies, outside the SQM Group, the performance of economic activities which are subject to joint control. As established in IAS 31 paragraph 38 the Company has adopted the equity method to recognize interest in those entities jointly controlled.

 
2.5
Basis of conversion

Domestic subsidiaries:

Assets and liabilities denominated in Chilean pesos and other currencies other than the functional currency (U.S. dollar) as of September 30, 2010, January 1 and as of December 31, 2009, have been converted to U.S. dollars at the exchange rates prevailing at those dates (the corresponding Chilean pesos were converted to Ch$483.65 per US$1.00 as of September 30, 2010, Ch$507.10 per US$1.00 as of December 31, 2009 and $636.45 per US$1.00 as of January 1, 2009.)

The values of UF (a Chilean peso-denominated, inflation-indexed monetary unit) used to convert to Chilean pesos (United States dollars) the assets and liabilities expressed in this adjustable unit as of September 30, 2010 amounted to Ch$21,339.99 (US$44.12) as of December 31, 2009 amounted to $20,942.88 (US$41.30) and as of January 1, 2009 amounted to $21,452.57 (US$33.71.)

 
27

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

Foreign subsidiaries:

The exchange rates used to convert the monetary assets and liabilities expressed in foreign currency at the closing date of each period in respect to U.S. dollar are detailed as follows:

   
9/30/2010
   
12/31/2009
   
1/1/2009
 
   
US$
   
US$
   
US$
 
                   
Brazilian Real
    1.69       1.74       2.34  
New Peruvian Sol
    2.83       2.88       3.14  
Argentinean Peso
    3.94       3.83       3.47  
Japanese Yen
    83.82       92.10       91.03  
Euro
    0.73       0.69       0.72  
Mexican Peso
    12.48       13.04       13.77  
Australian Dollar
    1.03       1.12       1.45  
Pound Sterling
    0.64       0.62       0.67  
South African Rand
    6.99       7.40       9.28  
Ecuadorian Dollar
    1.00       1.00       1.00  
 
 
28

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

 
2.6
Responsibility for the information and estimates made

The information contained in these interim consolidated financial statements is the responsibility of the Company’s management who expressly indicate that it has applied all the principles and criteria included in IFRS issued by the International Accounting Standard Board (IASB.)

In the Company’s interim consolidated financial statements judgments and estimates have been made by management to quantify certain assets, liabilities. Income, expenses and commitments recorded therein. Basically these estimates refer to the following:

 
-
The useful lives of material and intangible assets and their residual values.
 
-
Impairment losses of certain assets, including trade receivables.
 
-
Hypotheses used for the actuarial calculation of commitments related to pensions and staff severance indemnities.
 
-
Provisions for commitments acquired with third parties and contingent liabilities.
 
-
Accrued expenses based on technical studies which cover the different variables which affect products in stock (density. humidity. among others) and allowances on slow-moving spare parts in inventories.
 
-
Future costs for the closure of mining facilities.
 
-
The determination of fair value of certain financial and non-financial assets and derivative instruments.
 
-
The determination and allocation of fair values in business combinations.

Although these estimates have been made considering the best possible information available on the date of preparation of these interim financial statements it is possible that events which may occur in the future obligate their modification (increases or decreases) in the next few years, which would be performed prospectively, recognizing the effects of change in estimates on the respective future consolidated financial statements.

 
29

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

 
2.7
Financial information by operating segment

IFRS 8 requires that companies adopt “the management approach” to disclose information on the result of its operating segments. In general, this is the information that management uses internally for the evaluation of segment performance and making the decision on how to allocate resources for this purpose.
A business segment is a group of assets and operations responsible for providing products or services subject to risks and performance different that those of other business segments. A geographical segment is responsible for providing products or services in a given economic environment subject to risks and performance different that those of other segments which operate in other economic environments.

Accordingly, the following business segments have been identified for the Company:

 
-
Specialty plant nutrients
 
-
Industrial chemicals
 
-
Iodine and derivatives
 
-
Lithium and derivatives
 
-
Potassium
 
-
Other products and services

 
2.8
Property, plant and equipment

Tangible fixed assets are stated at acquisition cost, net of the related accumulated amortization and impairment losses which they have experienced.

In addition to the price paid for the acquisition of tangible fixed assets, the Company has considered the following concepts as part of the acquisition cost, as applicable:

 
1.
Accrued financial expenses during the construction period which are directly attributable to the acquisition, construction or production of qualifying assets, which are those that require a substantial period prior to being ready for use.  The interest rate used is that related to the project’s specific financing or, should this not exist, the average financing rate of the investor company. The amount capitalized for this concept was ThUS$19,547 as of September 30, 2010 and ThUS$13,089 as of September 30, 2009.

 
30

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2
The present value of future costs to which the Company will have to experience related to the closure of its facilities, are included in the asset's value at restated cost.

Work-in-progress is transferred to property, plant and equipment in operation once they are available for use beginning the related amortization on that date.

Extension, modernization or improvement costs which represent an increase in productivity, ability or efficiency or an extension of the useful lives of property, plant and equipment are capitalized as a higher cost of the related assets. All the remaining maintenance, preservation and repair expenses are charged to income as cost of the year in which they are incurred.

The replacement of full assets which increase the asset’s useful life or its economic capacity, are recorded as a higher value of property, plant and equipment with the related derecognition of replaced or renewed elements.

Based on the impairment analysis conducted by the Company’s management has been considered that the carrying value of assets do not exceed the net recoverable value of these assets.

Property, plant and equipment, net in the case of their residual value, are amortized through the straight-line distribution of cost among the estimated technical useful lives which constitute the period in which the Company expects to use them. When portions of a property, plant and equipment item have different useful lives, these are recorded as separate items. The useful life is reviewed on a regular basis.

 
31

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

The useful lives used for the depreciation of assets included in property, plant and equipment are presented below.

Classes of property. plant and
equipment
 
Life or
minimum
rate
   
Life or
maximum
rate
 
              
Life or rate for buildings
    3       80  
Life or rate for plant and equipment
    3       35  
Life or rate for information technology equipment
    3       10  
Life or rate for fixed facilities and accessories
    3       35  
Life or rate for motor vehicles
    5       10  
Life or rate for other property. plant and equipment
    2       30  

The gains or losses which are generated in the sale or disposal of property, plant and equipment are recognized as income for the period and calculated as the difference between the asset’s sales value and its net carrying value.

The Company obtains property rights and mining concessions from the Chilean State. Property rights are obtained usually without any initial cost (other than the payment of mining licenses and minor registration expenses) and when rights are obtained on these concessions, the Company retains them while it pays the related annual licenses. Such license fees, which are paid annually, are recorded as prepaid assets and amortized over the following twelve months. Amounts attributable to mining concessions acquired from third parties, which are not from the Chilean State are recorded at their acquisition cost in property, plant and equipment.

 
2.9 
Investment properties

The Company recognizes as investment properties the net values of land, buildings and other constructions which are held to exploit them under lease agreements or to obtain proceeds from their sale as a result of those increases which are generated in the future in the respective market prices. These assets are not used in the activities and are not destined for own use.

They are initially stated at their acquisition cost, which includes the acquisition price or production cost plus directly assignable expenses. Subsequently, investment properties are stated at their acquisition cost less accumulated depreciation and the possible accumulated provisions for value impairment.

 
32

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.10 Inventories

The Company states inventories for the lower of cost and net realizable value. The cost price of finished products and products in progress includes direct costs of materials and; as applicable, labor costs, indirect costs incurred to transform raw materials into finished products and general expenses incurred in carrying inventories to their current location and conditions. The method used to determine the cost of inventories is weighted average cost.

The net realizable value represents the estimate of the sales price less all finishing estimated costs and costs which will be incurred in commercialization, sales and distribution processes.

Commercial discounts, rebates obtained and other similar entries are deducted in the determination of the acquisition price.

The Company conducts an evaluation of the net realizable value of inventories at the end of each year recording an estimate with a charge to income when these are overstated. When the circumstances, which previously caused the rebate ceased to exist, or when there is clear evidence of an increase in the net realizable value due to a change in the economic circumstances or prices of main raw materials, the estimate made previously is modified.

The valuation of obsolete, impaired or slow-moving products relates to their net estimated net realizable value.

Provisions on the Company's inventories have been made based on a technical study which covers the different variables which affect products in stock (density, humidity, among others.)

Raw materials, supplies and materials are recorded at the lower of acquisition cost or market value. Acquisition cost is calculated according to the annual average price method.

 
33

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.11 Trade and other receivables

Trade and other receivables relate to non-derivative financial assets with fixed payments which can be determined and are not quoted in any active market.  These arise from sales operations involving the products and/or services which the Company commercializes directly to its customers with no intention of negotiating the account receivable and are not within the following categories:

•      Those which the Company has the intention of selling immediately in the near future and which are held-for-sale.

•      Those designated at their initial recognition as available-for-sale..

•      Those through which the holder does not intend to partially recover substantially its entire investment for reasons other than credit impairment and. therefore. must be classified as available-for-sale.

These assets are initially recognized at their fair value (which is equivalent to their face value, discounting implicit interest for installment sales) and subsequently at amortized cost according to the effective interest rate method less a provision for impairment loss.   When the face value of the receivables does not significantly differ from its fair value, it is recognized at face value. An allowance for impairment loss is established for trade receivables when there is objective evidence that the Company will not be able to collect all the amounts which are owed to it according to the original terms of receivables.

Implicit interest in installment sales is recognized as financial income when interest is accrued over the term of the operation.

 
34

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.12 Revenue recognition

Revenue includes the fair value of considerations received or receivable or the sale of goods and services during performance of the Company's activities. Revenue is presented net of value added tax, returns, rebates and discounts and after the elimination of sales among subsidiaries.

Revenue is recognized when its amount can be stated reliably, it is possible that the future economic rewards flow to the entity and the specific conditions for each type of activity -related revenue are complied with, as follows:

 
(a)
Sale of goods

Sales of goods are recognized when the Company has delivered products to the customer, the customer has total discretion on the distribution channel and the price at which products are sold and there is no obligation pending compliance which may affect the acceptance of products by the customer. The delivery does not occur until products have been shipped to the customer or confirmed as received by customers when the related risks of obsolescence and loss have been transferred to the customer and the customer has accepted products in accordance with the conditions established in the sale, the acceptance period has ended or there is objective evidence that those criteria required for acceptance have been met.

Sales are recognized in consideration of the price set in the sales agreement, net of volume discounts and estimated returns at the date of the sale. Volume discounts are evaluated in consideration of annual foreseen purchases and in accordance with the criteria defined in agreements.

 
(b)
Sales of services

Revenue associated with the provision of services is recognized considering the degree of completion of the service at the date of presentation of the Statement of financial position provided that the result from the transaction can be estimated reliably.

 
35

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

 
(c)
Interest income

Income is recognized as and when interest is accrued in consideration of the principal which is pending payment using the effective interest rate method.

 
(d)
Income from royalties

Income from royalties is recognized based on the accrual in accordance with the economic substance of the related agreements.

 
(e)
Income from dividends

Income from dividends is recognized when the right to receive the payment is established.

2.13 Investments recognized using the equity method

Interest in companies in which control is exercised together with another company (joint venture) or in which the Company has significant influence (associated companies) are recorded using the equity method. Significant influence is assumed to exist when the Company has interest exceeding 20% of the investee's equity.

Under this method, the investment is recognized in the statement of financial position at cost plus changes subsequent to the acquisition in an amount proportional to the net associated company’s equity using the ownership interest in the associate.  The associated goodwill is included at the carrying value of the investee and it is not subject to amortization. The debit or credit to profit or loss reflects the proportional amount in the associated company's results.

Changes in equity of the associates are recognized proportionally with a debit or credit to “Other reserves” and classified according to their origin and, if applicable, these are disclosed in the Statement of changes in equity.

The associated company’s and the Company’s reporting dates and policies are similar for equivalent transactions and events under similar circumstances.

In the event that significant influence is lost or the investment is sold or is available-for-sale, the equity value method is discontinued suspending the recognition of proportional results.

 
36

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

If the resulting amount according to the equity method were negative, interest is reflected as zero in the Consolidated Financial Statements unless the Company commits to resolve its equity position.  In this case, the respective provision for risks and expenses is recorded.

Dividends received in these companies are recorded reducing the equity value and proportional profit or loss recognized in conformity with their interest, are included in the consolidated profit or loss under the caption “Equity gain (loss) in companies using the equity method.”

2.14 Corporate tax

Corporate income tax for the year is determined as the addition of current tax from the different companies which is the result of the application of the type of tax on the taxable income for the year upon application of deductions which can be admitted for tax purposes plus the variation in deferred tax assets and liabilities and fiscal credits both for negative tax bases and deductions. Differences between the book value of assets and liabilities and their tax basis generate the balance of deferred tax assets or liabilities which are calculated using the tax rates which are expected to be applicable when assets and liabilities are realized.

In conformity with current Chilean tax regulations, the provision for corporate income tax and taxes for the mining activity is recognized on an accrual basis presenting the net balances of accumulated monthly tax provisional payments for the fiscal period and credits associated with it. The balances of these accounts are presented in Current income taxes recoverable or Current taxes payable, as applicable.

Tax on companies and variations on deferred tax assets or liabilities which are not the result of business combinations are recorded in profit or loss statement accounts or net equity accounts in the Consolidated Statement of Position considering the origin of the gains or losses which have generated them.

At the date of these statements of financial position, the carrying value of deferred tax assets is reviewed and reduced as long as it is possible that there is no sufficient taxable income to allow the recovery of all or a portion of the deferred tax asset.  Likewise, at the date of the statement of financial position deferred tax assets not recognized are revalued and recognized as long as it has become possible that future taxable income will allow the recovery of the deferred tax asset.

 
37

 
 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

With respect to temporary differences deductible associated with investments in subsidiaries, associated companies and interest in joint ventures, deferred tax assets are recognized solely provided that there is a possibility that temporary differences are reversed in the near future and that there will be taxable income with which they may be used.

The deferred income tax related to entries directly recognized in equity is recognized with an effect on equity and not with an effect on profit or loss.

Deferred tax assets and liabilities are offset if there is a right legally receivable of offsetting tax assets against tax liabilities and the deferred tax is related to the same tax entity and authority.

2.15
Earnings per share

The net benefit per share is calculated as the ratio between the net benefit for the period attributable to the Parent Company and the weighted average number of common shares of the Parent Company in circulation during this period.

The Company has not conducted any type of operation of potential diluted effect which assumes a diluted benefit per share other than the basic benefit per share.

 
38

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
   
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.16
Non-financial asset value impairment

Assets subject to amortization are subject to test for impairment provided that an event or change in the circumstances indicates that the amounts in the accounting records may not be recoverable. An impairment loss is recognized for the excess of amount in books of the asset over its recoverable amount.

The recoverable amount of an asset is the higher between the fair value of an asset or cash generating unit (“CGU”) less costs of sales and its value in use and is determined for an individual asset unless the asset does not generate any cash inflows which are clearly independent from other assets or groups of assets.

When the carrying value of an asset exceeds its recoverable amount the asset is considered an impaired asset and is reduced to its net recoverable amount.

In evaluating value in use, estimated future cash flows are discounted using a discount rate before taxes which reflects current market evaluation on the time value of money and specific asset risks.

An appropriate valuation model is used to determine the fair value less selling costs.  These calculations are confirmed by valuation multiples, quoted share prices for subsidiaries quoted publicly or other available fair value indicators.

Impairment losses from continuing operations are recognized with a debit to profit or loss in the categories of expenses associated with the impaired asset function, except for properties reevaluated previously where the revaluation was taken to equity. In this case impairment is also recognized with a debit to equity up to the amount of any previous revaluation.

 
39

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

For assets other than the goodwill acquired, an annual evaluation is conducted of whether there are impairment loss indicators recognized previously which might have already ceased to exist or decreased. The recoverable amount is estimated if such indicators exist.  An impairment loss previously recognized is reversed only if there have been changes in estimates used to determine the asset’s recoverable amount from the last time in which an impairment loss was recognized. If this is the case, the carrying value of the asset is increased to its recoverable amount. This increased amount cannot exceed the carrying value which would have been determined net of depreciation if an asset impairment loss would have not been recognized in prior years. This reversal is recognized with a credit to profit or loss unless an asset is recorded at the revaluated amount.  Should this be the case, the reversal is treated as an increase in revaluation.

2.17
Financial assets

SQM S.A. and subsidiaries classify their financial statements under the following categories: at fair value through profit or loss, loans and receivables, financial assets held-to-maturity and financial assets available-for-sale. The classification depends on the purpose with which financial assets were acquired. Management determines the classification of its financial assets at the time of initial recognition.

(a)
Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it is acquired mainly with the purpose of being sold in the short-term. Derivatives are also classified as acquired for trading unless they are designated as hedge accounting. Assets under this category are classified as current assets and variations generated in fair value are directly recognized in profit or loss.

 
40

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

(b)
Loans and receivables

Loans and accounts receivable are non-derivative financial assets with fixed payments or payments which can be determined and are not quoted in any active market. These are included in current assets, except for those with expiration dates which exceed 12 months from the closing date which are classified as non-current assets. Loans and receivables are included under the caption “Trade and other receivables” in the Statement of financial position and are stated at amortized cost.

(c)
Financial assets held-to-maturity

Financial assets held-to-maturity are non-derivative financial assets with fixed payments or payments which can be determined and fixed expiration dates which management has the positive intention and ability of holding to maturity. If an amount which was not insignificant of financial assets held to maturity was sold, the full category would be reclassified as available for sale. Assets in this category are stated at amortized cost.

(d)
Financial assets available for sale

Financial assets available for sale are non-derivative instruments which are designated in this category or are not classified in any of the other categories. They are included in non-current assets unless the Company intends to dispose of the investment in the 12 months following the closing date. These assets are stated at fair value recognizing in equity those variations in fair value.

At each reporting date, the Company evaluates whether there is objective evidence that a financial asset or a group of assets may have experienced impairment losses.

2.18
Financial liabilities

The Company classifies its financial liabilities under the following categories: at fair value through profit or loss, trade payables, interest-bearing loans or derivatives designated as hedging instruments.

The Company’s management determines the classification of its financial liabilities at the time of initial recognition.

 
41

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

Financial liabilities are derecognized when the obligation is repaid, settled or it expires.

 
(a)
Financial liabilities at fair value through profit or loss

Financial liabilities are classified at fair value when these are held for trading or designated in their initial recognition at fair value through profit or loss. This category includes derivative instruments not designated for hedge accounting.

 
(b)
Trade payables

Trade payables to suppliers are subsequently stated at their amortized cost using the effective interest rate method.

 
(c)
Interest-bearing loans

Loans are subsequently stated at amortized cost using the effective interest rate method. Amortized cost is calculated considering any premium or discount from the acquisition and includes costs of transactions which are an integral part of the effective interest rate.

 
42

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.19
The Environment

In general, the Group companies follow the criterion of considering amounts destined to environmental protection and improvement as environmental expenses. However, amounts of elements included in facilities, machinery and equipment destined to the same purpose are considered property, plant and equipment.

2.20
Minimum Dividend

As required by the Shareholders’ Company Act unless otherwise decided by the shareholders through unanimous vote of the holders of those shares issued and subscribed, a public shareholders’ company must distribute a minimum dividend of 30% of its profit for the period, except in the event that the Company has losses not absorbed in prior years.

2.21
Financial debt obligations

Financial debt obligations are recognized at their face value as non-current when their expiration date exceeds twelve months and as current when the expiration occurs in a period lower than that indicated above. Interest expense is calculated in the year in which it is accrued following a financial criterion.

In accordance with IAS 32 and 39, expenses incurred in the assumption of debt are recognized in the attached Consolidated Statement of Financial Position discounting the associated debt and are charged to profit for the period over the term of the debt using the effective interest rate method.

 
43

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.22
Trade payables

Trade payables are initially recognized at their fair value and are subsequently stated at amortized cost using the effective interest rate method. When the face value of the balance payable does not significantly differ from its fair value, it is recognized at face value.

2.23
Consolidated statement of cash flows

Cash equivalents relate to short-term highly liquid investments which are readily convertible into known amounts of cash are subject to low risk of change in their value and expire in less than three months.

For the purposes of the preparation of the statement of cash flows, cash and cash equivalents have been defined as cash and cash equivalents net of pending bank overdrafts.

The statement of cash flows includes cash movements performed during the year determined by the indirect method.

In these statements of cash flows, the following expressions are used in the sense which is shown as follows:

 
-
Cash flows: cash and financial asset equivalent inflows and outflows understanding as such those short-term highly-liquid investments with low risk of change in their value.

 
-
Operating activities: common activities related to the operation of the Group’s business as well as other activities which cannot be classified as investing or financing activities.

 
-
Investing activities: investing activities relate to the acquisition, disposition or disposal related to other long-term assets and other investments not included in cash and cash equivalents.

 
-
Financing activities: activities which generate changes in the size and composition of net equity and of liabilities which are not part of operating activities.

 
44

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
   
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

 
2.24
Obligations related to staff severance indemnities and pension commitments

Obligations with the Company’s employees are in accordance with that established in the collective bargaining agreements in force formalized through collective employment agreements and individual employment contracts. For the case of the United States, this is performed in accordance with the related pensions plan.

These obligations are valued using the actuarial calculation, which considers such hypotheses as the mortality rate, employee turnover, interest rates, retirement dates, effects related to increases in employees‘ salaries, as well as the effects on variations in services derived from variations in the inflation rate.

Actuarial losses and gains which may be generated by variations in previously defined obligations are directly recorded in profit or loss.

Actuarial losses and gains have their origin in deviations between the estimate and the actual behavior of actuarial hypotheses or in the reformulation of those actuarial hypotheses established.

The discount rate used by the Company for the calculation of the obligation was 6% for the periods ended as of September 30, 2010 and as of December 31, 2009.

 
45

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.25
Financial derivatives and hedging transactions

Derivatives are recognized initially at fair value at the date in which the derivatives contract has been signed and subsequently they are valued again at fair value.  The method for recognizing the resulting loss or gain depends on whether the derivative has been designated as an accounting hedging instrument and. if so. it depends on the type of hedging, which may be as follows:

 
(a)
Fair value hedge of assets and liabilities recognized (fair value hedges);

 
(b)
Hedging of a single risk associated with an asset or liability recognized or a highly possible foreseen transaction (cash flow hedge);

At the beginning of the transaction, the Company documents the relationship existing between hedging instruments and those entries hedged, as well as their objectives for risk management purposes and the strategy to conduct different hedging operations.

The Company also documents its evaluation both at the beginning and the end of each period of whether derivatives which are used in hedging transactions are highly effective to offset changes in the fair value or in cash flows of hedged entries.

The fair value of derivative instruments used for hedging purposes is shown in Note 9.3 (Hedging assets.) Movements in the hedging operation reserve are classified as a non-current asset or liability if the remaining expiration period of the hedged entry is higher than 12 months and as a current asset or liability if the remaining expiration period of the entry is lower than 12 months.

Investment derivatives are classified as a current asset or liability and the change in their fair value is recognized directly in profit or loss.

(a)
Fair value hedge

The change in the fair value of a derivative is recognized with a debit or credit to profit or loss, as applicable. The change in the fair value of the hedged entry attributable to hedged risk is recognized as part of the carrying value of the hedged entry and is also recognized with a debit or credit to profit or loss.

 
46

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

For fair value hedging related to items recorded at amortized cost, the adjustment of the fair value is amortized against income on the remaining year to its expiration. Any adjustment to the carrying value of a hedged financial instrument for which effective rate is used is amortized with a debit or credit to profit or loss at its fair value attributable to the risk being covered.

If the hedged entry is derecognized, the fair value not amortized is immediately recognized with a debit or credit to profit or loss.

(b)
Cash flow hedge

The cash portion of gains or losses from the hedging instrument is initially recognized with a debit or credit to equity whereas any non-cash portion is immediately recognized with a debit or credit to profit or loss. as applicable.

Amounts taken to equity are transferred to profit or loss when the hedged transaction affects profit for the period as when the hedged finance income or expense is recognized when a forecasted sale occurs. When the hedged entry is the cost of a non-financial asset or liability, amounts taken to equity are transferred to the initial carrying value of the non-financial asset or liability.

Should the expected firm transaction or commitment not longer be expected to occur, the amounts previously recognized in equity are transferred to profit or loss. If a hedging instrument expires is sold, finished, and exercised without any replacement or a rollover is performed or if its designation as hedging is revoked. Amounts previously recognized in equity are maintained in equity until the expected firm transaction or commitment occurs.

 
47

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
    
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.26
Lease

(a)
Leases  - Finance lease

Leases are classified as finance leases when the Company has substantially all the risks and rewards derived from the ownership. Finance leases are capitalized at the beginning of the lease at the lower of the fair value of the leased asset or the present value of minimum lease payments.

Each lease payment is distributed between the liability and financial debt to obtain ongoing interest type on the debt pending balance.  The respective lease obligations, net of financial debt, are included in other non-current liabilities. The interest element of finance cost is debited in the statement of comprehensive income during the lease period so that a regular ongoing interest rate is obtained on the remaining balance of the liability for each year. The asset acquired through a finance lease is subject to depreciation over the lower of its useful life or the life of the agreement.

(b)
Lessee – Operating lease

Leases in which the lesser maintains a significant part of risks and rewards derived from the ownership are classified as operating leases. Operating lease payments (net of any incentive received from the lesser) are debited to the statement of comprehensive income or capitalized (as applicable) on a straight-line basis over the lease period.

The Company does not maintain any significant agreement which meets the conditions established in IAS 17 to be considered as finance leases and therefore. all the current agreements are considered operating leases.

 
48

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.27
Prospecting expenses

Those prospecting expenses associated with mineral reserves which are being exploited are included under Inventories and amortized according to the estimated mineral content reserves. Expenses associated with future reserves are presented under Intangible assets as and when minerals included in the future reserve have ore-grade which makes the mining property economically exploitable.

Those expenses incurred on properties in which the product has low ore-grade which is not economically exploitable, are directly debited to profit or loss.

2.28
Other provisions

Provisions are recognized when:

The Company has a present obligation as a result of a past event.

*
It is possible that certain resources are used, including benefits, to settle the obligation.

A reliable estimate can be made of the obligation amount.

In the event that the provision or a portion of it is reimbursed, the reimbursement is recognized as a separate asset solely if there is certainty of income.

In the statement of comprehensive income, the expense for any provision is presented net of any reimbursement.

Should the effect of the time value of money be significant, provisions are discounted using a discount rate before taxes which reflects the liability’s specific risks.  When a discount rate is used, the increase in the provision over time is recognized as a finance cost.

The Company’s policy is maintaining accruals to cover risks and expenses based on a better estimate to deal with possible or certain and quantifiable responsibilities from litigation in force, compensations or obligations, pending expenses the amount of which has not been determined, collaterals and other similar guarantees for which the Company is responsible. These are recorded at the time in which the responsibility or the obligation which determines the compensation or payment is generated.

 
49

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
    
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

The Company determines and recognizes the cost related to employee vacation on an accrual basis.

As a result of this policy, the Company has recorded accruals for:

 
-
Employee vacation: The Company determines and recognizes the cost related to employee vacation on an accrual basis.

 
-
Employee benefits agreed with employees other than staff severance indemnities and option plan, which the Company and its subsidiaries will have to pay to its employees by virtue of the agreements entered have been recognized on an accrual basis.

 
-
Legal expenses related to the estimate of future payments for lawsuits maintained with third parties.

2.29
Compensation Plans

Compensation plans implemented through benefits in share-based payments settled in cash, which have been provided are recognized in the financial statements at their fair value, in accordance with International Financial Reporting Standard No. 2 “Share-based payments.” Variations in the fair value of options granted are recognized with a charge to remuneration on a straight-line basis during the period between the date in which these options are granted and the payment date.

 
50

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
    
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.30
Good and service insurance expenses

Payments for the different insurance policies which the Company contracts are recognized in expenses considering the proportional amount related to the time that they cover, regardless of payment terms. Amounts paid and not consumed are recognized as prepaid expenses within Current assets.
Costs of claims are recognized in profit or loss immediately after being known, net of the recoverable amounts from insurance companies. Recoverable amounts are recorded as an asset reimbursable from the insurance company under “Trade and other receivables", calculated as established in the respective insurance policies.

2.31
Intangible Assets

Intangible assets mainly relate to goodwill acquired, water rights, broadcasting rights, trademarks, and rights of way related to electric lines and development expenses, and computer software licenses.

(a)
Goodwill acquired

Goodwill acquired represents the excess in acquisition cost on the fair value of them Company's ownership on the net identifiable assets of the subsidiary on the acquisition date. Goodwill acquired related to acquisitions of subsidiaries is included in intangible assets, which is subject to value impairment tests every time that the Company issues consolidated financial statements and is stated at cost plus accumulated impairment losses.  Gains and losses related to the sale of an entity include the carrying value of goodwill related to the entity sold.
This intangible asset is assigned to cash generating units with the purpose of testing impairment losses. It is allocated based on cash generating units which are expected to obtain benefits from the business combination from which the aforementioned goodwill acquired arose.

 
51

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

(b)
Water rights

Water rights acquired by the Company relate to the water from natural sources and are recorded at acquisition cost. Given that these assets represent rights granted on a perpetual basis to the Company, these are not amortized.  However, they are subject to an impairment assessment on an annual basis.

(c)
Right of way for electric lines

As required for the operation of industrial plants, the Company has paid rights of way in order to install wires for the different electric lines in third party land. These rights are presented under Intangible assets. Amounts paid are capitalized at the date of the agreement and charged to income according to the life of the right of way.

(d)
Computer software

Licenses for IT programs acquired are capitalized based on costs which have been incurred to acquire them and prepare them to use the specific program. These costs are amortized over their estimated useful lives.

Expenses related to the development or maintenance of IT programs are recognized as an expense as and when incurred. Costs directly related to the production of unique and identifiable IT programs controlled by the Group and which probably will generate economic benefits which are higher than costs during more than a year, are recognized as intangible assets. Direct costs include expenses incurred for employees who develop IT programs and an adequate percentage of general expenses.

The costs of development of IT programs recognized as assets are amortized over their estimated useful lives.

2.32
Research and development expenses

Research and development expenses are debited to profit or loss in the period in which the disbursement is made except for property, plant and equipment acquired to be used in research and development, which are recognized in accounting under the respective item within property, plant and equipment.

 
52

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied, continued

2.33
Classification of balances as current and non-current

In the attached statement of financial position, balances are classified in consideration of their remaining expiration dates; i.e., those expiring on a date equal to or lower than twelve months as current and those with expiration dates which exceed the aforementioned period as non-current.

 
53

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 3 – First-time application of International Financial Reporting Standards (IFRS)

Application IFRS 1

The annual consolidated financial statements for the Group as of December 31, 2010 will be the first consolidated financial statements prepared according to IFRS. The Company has applied IFRS 1 when preparing its interim consolidated financial statements.

The transition date is January 1, 2009, to which management has prepared its opening balance under IFRS to that date. The IFRS effective date is January 1, 2010 as indicated by the Chilean Superintendence of Securities and Insurance (SVS)

According to IFRS 1, in order to prepare the aforementioned consolidated financial statements, all mandatory exemptions have been applied by the Company, and some of the non-mandatory exemptions to the retroactive application of IFRS.

Exceptions established on IFRS 1 that the Company has decided to apply on its IFRS first-time adoption process, are as follows:

i)
Business combinations

The Company has applied the exemption included in IFRS 1 for business combinations conducted from 2004 and thereafter. For these purposes, the Company reversed the amortization of goodwill recognized in accordance with the previous accounting standards.

ii)
Fair value or revaluation as deemed cost

 
The Company has chosen to measure certain property, plant and equipment items at their fair value at the transition date of January 1, 2009.  The fair value of property, plant and equipment was measured through a business appraisal conducted by independent external experts, who determined the new historical initial values, useful lives and residual values of these assets.

 
54

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 3 – First-time application of International Financial Reporting Standards (IFRS), continued

iii)
Employee benefits

The Company has opted for recognizing all the actuarial gains and losses accumulated as of January 1, 2009.

iv)
Financial Instruments

The Company has defined the application of hedge accounting for financial derivative instruments associated with obligations with the public (bonds payable) denominated in UF and Chilean pesos issued by the Company.

v)
Cumulative translation differences and technical revaluation

If the adopter uses this exemption: i) cumulative translation differences of all businesses abroad will be considered to be voided on the date of transition to IFRS; and ii) the gain or loss for the subsequent sale or disposal using another method of a business abroad will exclude translation differences which have arisen prior to the date of transition to IFRS and will include translation differences which have arisen subsequent to it.

The Company has opted to transfer cumulative translation differences and technical revaluation from other reserves to retained earnings. This exemption has been applied to all dependent companies in accordance with IFRS 1.

IFRS first-time adoption effects are recognized in retained earnings or other reserve accounts in the Company’s equity, depending on whether these adjustments represent realized or unrealized gains or losses at the transition date.

The following is a detailed description of the main differences between Generally Accepted Accounting Principles in Chile (Chilean GAAP) and International Financial Reporting Standards (IFRS) applied by the Company and the impact on shareholders’ equity as of September 30, 2009, and January 1, 2009 and on profit or loss as of September 30, 2010.

 
55

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
    
Note 3 – First-time application of International Financial Reporting Standards (IFRS), continued

a)
Reconciliation of net shareholders’ equity from Generally Accepted Accounting Principles (Chilean GAAP) to International Financial Reporting Standards (IFRS) as of January 1, 2009 and December 31, 2009.
As  of January 1, 2009
 
Equity of
majority
shareholders
   
Equity of
minority
shareholders
   
Total
equity
 
   
ThUS$
   
ThUS$
   
ThUS$
 
RECONCILIATION                  
                       
Net equity under Chilean GAAP
    1,463,108             1,463,108  
                       
Incorporation of minority shareholders
            47,069       47,069  
                         
Reversal of amortization of goodwill
    6,487       -       6,487  
Negative goodwill
    1,279       -       1,279  
Reversal of deferred tax complementary accounts
    (13,515 )     -       (13,515 )
Recognition of obligation for the minimum compulsory distribution of dividends of 30% of profit for the period
    (50,422 )     -       (50,422 )
Fair value of property, plant and equipment
    (53,732 )     (634 )     (54,366 )
Recognition of actuarial calculation of provision for staff severance indemnities
    (928 )     (2 )     (930 )
Fair value of bonds denominated in UF
    (9,507 )     -       (9,507 )
Deferred taxes on IFRS adjustments
    10,908       108       11,016  
                         
Effect of transition to IFRS
    (109,430 )     (528 )     (109,958 )
                         
Net equity under IFRS
    1,353,678       46,541       1,400,219  

As of December 31, 2009
 
Equity of
majority
shareholders
   
Equity of
minority
shareholders
   
Total
equity
 
  
 
ThUS$
   
ThUS$
   
ThUS$
 
RECONCILIATION
                 
                   
Net equity under Chilean GAAP
    1,466,613             1,466,613  
                       
Incorporation of minority shareholders
            46,093       46,093  
                         
Reversal of amortization of goodwill
    8,663       -       8,663  
Negative goodwill
    1,072       -       1,072  
Reversal of deferred tax complementary accounts
    (11,365 )     -       (11,365 )
Recognition of obligation for the minimum compulsory distribution of dividends of 30% of profit for the period
    -               -  
Fair value of property, plant and equipment
    (45,132 )     (503 )     (45,635 )
Recognition of actuarial calculation of provision for staff severance indemnities
    (947 )     26       (921 )
Fair value of bonds denominated in UF
    (9,619 )     -       (9,619 )
Deferred taxes on IFRS adjustments
    9,468       81       9,549  
                         
Effect of transition to IFRS
    (47,860 )     (396 )     (48,256 )
                         
Net equity under IFRS
    1,418,753       45,697       1,464,450  
 
56

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
    
b)
 
Note 3 –First-time application of International Financial Reporting Standards (IFRS), continued

 
a)
Reconciliation of profit for the period from Chilean GAAP to IFRS as of December 31, 2009

As of December 31, 2009
 
Profit (loss) of
majority
shareholders
   
Profit (loss) of
minority
shareholders
   
Total profit
or loss
 
    
ThUS$
   
ThUS$
   
ThUS$
 
RECONCILIATION                  
                   
Profit for the period under Chilean GAAP
    327,056       1,334       328,390  
                         
Amortization of goodwill
    2,176       -       2,176  
Amortization of negative goodwill
    (206 )     -       (206 )
Amortization of deferred tax complementary accounts
    2,151       -       2,151  
Depreciation
    8,601       131       8,732  
Recognition of actuarial calculation of provision for staff severance indemnities
    (19 )     28       9  
Deferred taxes under NIIF
    (1,459 )     (27 )     (1,486 )
                         
Effect of transition to IFRS at the date of the most  recent annual financial statements
    11,244       132       11,376  
                         
Profit for the period under IFRS
    338,300       1,466       339,766  
                         
Other income and expenses with a debit or credit in net equity:
                       
                         
Cash flow hedge
    (112 )     -       (112 )
Income tax related to other income and expenses with a debit to net equity
    19       -       19  
Comprehensive income for the period under IFRS
    338,207       1,466       339,673  

 
b)
Reconciliation of profit for the period from Chilean GAAP to IFRS as of September 30, 2009

As of September 30, 2009
 
Profit (loss) of
majority
shareholders
   
Profit (loss) of
minority
shareholders
   
Total profit
or loss
 
    
ThUS$
   
ThUS$
   
ThUS$
 
CONCILIACION
                 
                   
Profit for the period under Chilean GAAP
    251,697       (758 )     250,939  
                         
Amortization of goodwill
    1,632       -       1,632  
Amortization of negative goodwill
    (205 )     -       (205 )
Amortization of deferred tax complementary accounts
    1,312       -       1,312  
Depreciation
    6,012       170       6,182  
Recognition of actuarial calculation of provision for staff severance indemnities
    (14 )     23       9  
Deferred taxes under NIIF
    (1,020 )     (33 )     (1,053 )
                         
Effect of transition to IFRS at the date of the most  recent annual financial statements
    7,717       160       7,877  
                         
Profit for the period under IFRS
    259,414       (598 )     258,816  
                         
Other income and expenses with a debit or credit in net equity:
                       
                         
Foreign currency translation gains (losses) before tax
    842       -       842  
Cash flow hedge
    12,872       -       12,872  
Income tax related to other income and expense components with a debit to net equity
    (2,188 )     -       (2,188 )
Comprehensive income for the period under IFRS
    270,940       (598 )     270,342  

 
57

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 3 – First-time application of International Financial Reporting Standards (IFRS), continued

Explanation of adjustments for the effects of transition to IFRS

The detail of the explanation of the different concepts enumerated in the reconciliation included in the preceding point is detailed as follows:

(a)
Deferred income taxes

As described in Note 2.14, under IFRS the Company has to recognize the effects of deferred income taxes for all temporary differences existing between the tax and book balance based on the liability method.

Although the method established in IAS 12 is similar to Chilean GAAP, the Company made the following adjustments in accordance with IFRS requirements:

i)
The elimination of "deferred tax complementary accounts” in which the Company deferred the effects on equity of the first-time application of Technical Bulletin No. 60 issued by the Chilean Association of Accountants amortized with a debit/credit to profit for the period in the foreseen term for the reversal of the difference (or consumption of the related tax loss. if this is the case.)

ii)
The determination of deferred taxes on entries not subject to the calculation  under Chilean GAAP but which qualify as temporary differences under IFRS and the calculation of the tax effect of transition adjustments to IFRS.

(b)
Revaluation of property, plant and equipment at fair value as deemed cost

Chilean GAAP establish the valuation of property, plant and equipment at acquisition cost restated for inflation less accumulated depreciation and accumulated impairment losses and do not allow property. plant and equipment revaluation (revaluations were only and extraordinarily authorized by the Chilean SVS in accordance with Circulars Nos. 550 and 566 of 1985 issued by the Chilean Superintendence of Securities and Insurance.) Except for that indicated in the next paragraph, the Company has considered the values of assets determined in accordance with the aforementioned accounting standards, as its property, plant and equipment deemed cost.
 
 
58

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 3 –  First-time application of International Financial Reporting Standards (IFRS), continued

For the adoption of IFRS, the Company valued certain property, plant and equipment items (mainly machinery and equipment) at their fair value in conformity with the exemption contained in IFRS 1.  The revaluation was performed only once in accordance with IFRS 1.  The new value determined relates to the initial cost of the asset beginning on the transition date. This fair value of assets amounted to ThUS$60,458 as of January 1, 2009 and represented an adjustment to equity (decrease) of ThUS$54,366 at that date.

(c)
Minimum Dividend

In accordance with Chilean GAAP, dividends for distribution are recorded in the Company’s financial statements at the time of the agreement at the Shareholders’ or Board of Directors’ Meeting. Law No. 18,046 on Shareholders' Companies establishes in its article No. 79 that public shareholders' companies will have to distribute as dividends to its shareholders, at least, 30% of profit for the period, unless the shareholders of shares issued with voting right at the Shareholders' Meeting unanimously agree otherwise. Under IFRS, the Company has recorded the obligation on an accrual basis, net of provisional dividends which would have been agreed at the closing date for 30% of profit for the period, which is the legal minimum percentage. As of December 31, 2009, the provisional dividend distributed during November covers this minimum dividend and therefore, no provision was required.

(d)
Minority interest

Chilean GAAP, applied for the preparation of the consolidated financial statements recognized the interest of minority shareholders in the equity of subsidiaries as a separate account between liabilities and net equity of the Company’s consolidated financial statements. Likewise, the consolidated financial statements for the year under Chilean GAAP excluded through a specific line minority interest in net profit or loss of subsidiaries. Under IFRS, minority shareholders are a part of the economic conglomerate or Group and; therefore, their interest is considered part of the statement of changes in net equity and the statement of comprehensive income.
 
 
59

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 3 – First-time application of International Financial Reporting Standards (IFRS), continued

(e)
Derivative hedging

The Company maintains as hedging instruments those financial derivatives associated with obligations with the public (bonds payable) issued in UF and in Chilean pesos. Under IFRS, changes generated in the fair value of derivatives which are designated and qualified as hedging, for their cash component, are recognized in net equity. The gain or loss relative to the non-cash part of the hedging is immediately recognized in the statement of comprehensive income under "Other gains / losses." This represents a change with respect to Chilean GAAP where realized gains or losses for this concept were recognized in non-operating income whereas unrealized gains or losses related to changes in fair values of derivative instruments in cash flow hedging were deferred in asset and liability accounts without affecting income up to the settlement of hedged and hedging entries.

(f)
Actuarial staff severance indemnities

IFRS require that the benefits of services defined delivered to employees at long-term are determined in consideration of the application of an actuarial calculation model generating differences with respect to the methodology applied previously which considered present values.

 
60

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 3 – First-time application of International Financial Reporting Standards (IFRS), continued

(g)
Negative goodwill

IFRS do not contemplate the recognition in the statement of financial position of negative goodwill at the date of a business combination recognizing this difference directly on profit or loss (under Chilean GAAP this was presented as a deduction of assets.) Accordingly, the existing balance for this concept was transferred to the Reserve for Retained Earnings account within Equity.

(h)
Goodwill

Under IFRS, the Company has considered goodwill as an intangible asset of indefinite useful life. At least, once a year, the cash generating unit which gave rise to goodwill is assessed for possible impairment. If there is any evidence of impairment, goodwill is initially adjusted with a charge to income. For first-time adoption purposes, the Company opted to reverse the amortization of goodwill which was generated by acquisitions of companies recorded using the business combination method conducted beginning in 2004.

(i)
Reconciliation of the cash flows for the year ended December 31, 2009

The main differences between Chilean GAAP and IFRS in the preparation of the statement of cash flows relate to the classification of finance lease installments, which are included as investing activities in accordance with Chilean GAAP and as financing activities under IFRS.


 
61

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 4 – Financial Risk Management

4.1 Risk Management Policy

The Company’s Risk Management Strategy is focused on safeguarding the Company and its subsidiaries’ stability and sustainability with respect to those relevant financial uncertainty components.

The Company’s operations are subject to certain risk factors which may affect its financial position or results.  The most significant among these are market, liquidity, exchange rate, uncollectible and interest rate risks.

There may be additional risks affecting the Company’s trading operations, its business, financial position or results, which are not significant through the present date.

The financial risk management structure includes the identification, determination, analysis, quantification, measurement and control of these events. The Company’s management and, in particular, the Finance Management is responsible for the ongoing evaluation of financial risk.  The Company uses derivatives to hedge a significant portion of these risks.
 
 
62

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 4 – Financial Risk Management, continued
 
4.2 Risk Factors

4.2.1 Market risk

Market risks relate to those uncertainties associated with variations in market variables affecting the Company's assets and liabilities among which we may highlight the following:

a)  
Country Risk: The economic condition of countries where the Company operates may affect its financial position.  For instance, sales by the Company to emerging markets expose it to risks related to economic conditions and trends in those countries.  In addition, inventory levels may also be affected by the economic condition in these countries and/or the global economy, among other possible economic impacts.

b)  
Price volatility risk: The Company’s product prices are affected by variations in international prices of fertilizers and chemicals and changes in production capacities or in the demand for these might affect our business, financial condition and results from operations.

c)  
Commodity price risk: The Company is exposed to changes in prices of raw materials and energy which may have an impact on its production costs and generate unstable results.
Currently, the Company incurs annual expenses of approximately US$ 90 million for fuels and approximately US$60 million for electric energy.  Variations of 10% in the prices of energy required for the Company’s activities may give rise to variations of US$15 million in costs.

4.2.2 Uncollectibility Risk

The current economic downturn level and its potentially negative effects on the financial position of our customers may extend the terms for the payment of accounts receivable. may increase our bad debt exposure.  Although we take steps to minimize risk, this global economic situation may result in losses which might have a material adverse effect on our business, financial condition or results of operations.

In order to mitigate these risks, the Company uses such actions as the use of credit insurance, letters of credit and advance payments for a portion of trade receivables.
 
 
63

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 4 – Financial Risk Management, continued
 
4.2.3
Exchange rate risk
 
As a result of the influence in the determination of price levels, its relationship to selling costs and given that a significant portion of the Company’s business is traded in that currency, the Company has defined U.S. dollar as its functional currency. However, the global nature of the Company’s business generates exposure to exchange rates of different currencies with respect to U.S. dollars. Accordingly, the Company maintains hedging agreements to cover its main uncovered positions (net assets from liabilities) in currencies other than U.S. dollar against the variation in the exchange rate and regularly updates these agreements depending on the uncovered position to be hedged in those currencies.

A significant portion of the Company’s costs relates to Chilean peso.  In line with this, an increase or decrease in the exchange rate between Chilean peso and U.S. dollar would affect its costs.  Currently, close to US$ 300 million of the Company’s costs, particularly payroll, are denominated in Chilean pesos and therefore, if no derivatives are used, a variation of 10% in the exchange rate might result in fluctuations of approximately US$30 million.

As of December 31, 2009, the Company had derivative instruments classified as exchange and interest rate hedges associated with all the Company’s obligations related to bonds payable denominated in Chilean pesos and UF, for a fair value of US$51.3 million.  As of September 30, 2010, this amounts to US$74.5 millions both in favor of SQM.
 
As of September 30, 2010, the exchange rate for U.S. dollars was Ch$483.65 per US$1.00 (Ch$507.10 per US$1.00 as of December 31, 2009.)

 
64

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 4 – Financial Risk Management, continued
 
4.2.4
Interest rate risk
 
Interest rate fluctuations, mainly due to the uncertainty related to the future market behavior may have a material impact on the Company’s financial statements.
 
The Company has short and long-term debt obligations valued at LIBOR + a spread. As the Company does not currently have any derivative instruments to hedge variations in the LIBOR rate, the Company is subject to exchange rate fluctuations.
 
As of September 30, 2010, the Company has approximately 20% of its long-term financial obligations valued at LIBOR rate and therefore, significant increases in this rate may have an impact on its financial condition.  A 100 base point variation on this rate may result in variations in finance costs close to an annual amount of US$ 2 million, which is actually significantly offset by the returns from the Company’s investments which are also highly related to the LIBOR rate.
 
Additionally, as of September 30, 2010, a percentage lower than 10% of the Company’s total financial debt obligations expires at short-term, which decreases its exposure to interest rate variations.
 
 
65

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 4 – Financial Risk Management, continued

4.2.5
Liquidity risk

Liquidity risk is related to the needs for funds to deal with payment obligations. The Company’s objective is maintaining financial flexibility through a comfortable balance between fund requirements and cash flows from normal operating activities, bank loans, public bonds payable, short-term investments and marketable securities, among others.
 
The Company maintains a significant capital expenditure program which is subject to risks and uncertainties.  Mainly the exploration and exploitation of reserves, mining and processing costs and compliance with applicable standards, require significant capital which are subject to variations throughout time.
 
In addition, world financial markets are subject to downturn and expansion periods, which cannot be foreseen at long-term and may affect access to financial resources by the Company.
 
These factors may have a material adverse impact on our business, financial condition and the Company’s results of operations.
 
Accordingly, conducts an ongoing follow-up of the reconciliation of its investments and as part of its risk management strategy, looks after the expiration dates of both from a conservative perspective.  As of September 30, 2010, the Company had unused credit facilities for a total of US$450.5 million and credit facilities used for US$40 million, available should it require any additional fund.
 
The other cash and cash equivalents position generated by the Company is invested in highly liquid mutual fund units with AAA risk rating.

4.3 
Risk Measurement

The Company has methods to measure the effectiveness and efficiency of risk strategies both in prospective and retrospective manner. These methods are consistent with the Group’s risk management profile.
 
 
66

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 5 - Changes in Accounting Estimates and Policies (Uniformity)

5.1 
Changes in accounting estimates
There are no changes in accounting estimates at the closing date of the financial statements.
 
5.2 
Changes in Accounting Policies

As of September 30, 2010, the Company’s interim consolidated financial statements presented no changes in accounting policies or estimates compared to the prior period or the transaction date, except for the application, beginning on January 1, 2010 of International Financial Reporting Standards (IFRS.)

Changes in policies and accounting estimates compared to local accounting principles and their effects were described in Note 3 Transition to International Financial Reporting Standards (IFRS.)

The interim consolidated statement of financial position as of September 30, 2010 and as of December 31, 2009 and as of January 1, 2009 and the statements of comprehensive income, equity and cash flows for the period ended as of September 30, 2010 have been prepared in accordance with IFRS and accounting principles and criteria have been applied consistently.

 
67

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 6 - Cash and Cash Equivalents

6.1 Classes of Cash and Cash Equivalents

As of September 30, 2010 and as of December 31, 2009 and as of January 1, 2009, the detail of cash and cash equivalents is as follows:

   
9/30/2010
   
12/31/2009
   
1/1/2009
 
Cash and cash equivalents
 
ThUS$
   
ThUS$
   
ThUS$
 
                   
Cash on hand
    78       96       2,845  
Bank balances
    18,748       19,121       18,773  
Short-term time deposits
    472,653       336,435       116,492  
Other cash and cash equivalents
    124,368       174,742       165,689  
                         
Cash and cash equivalents
    615,847       530,394       303,799  

At the date of these financial statements, there are no differences between the amount of cash and cash equivalents recorded in the statement of financial position and the statement of cash flows.

6.2 Other cash and cash equivalents

As of September 30, 2010, December 1, 2009 and January 1, 2009, other cash and cash equivalents relate to mutual fund units for investments made in:
 
Institution
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
Legg Mason Western Asset Management Co.
    40,329       59,224       56,384  
BlackRock Cash Management Plc
    41,696       59,070       55,760  
JP Morgan Asset Management
    42,343       56,334       53,545  
Citibank
    -       114       -  
Total
    124,368       174,742       165,689  

These institutions are highly liquid funds which are basically engaged in investments in fixed income commercial paper in the U.S. market.
 
 
68

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 6 - Cash and Cash Equivalents, continued

6.3 
Information on cash and cash equivalents by currency

As of September 30, 2010, December 31, 2009 and January 1, 2009, cash and cash equivalents in balances of cash on hand, in banks and financial instruments, classified by currency are detailed as follows:
 
   
9/30/2010
   
12/31/2009
   
1/1/2009
 
Original currency
 
ThUS$
   
ThUS$
   
ThUS$
 
Chilean Peso
    437,251       259,680       99  
US Dollar
    168,377       263,207       291,177  
Euro
    1,493       3,813       7,676  
Mexican Peso
    99       218       809  
South African Rand
    7,199       2,586       2,574  
Japanese Yen
    1,090       823       1,096  
Dirham
    -       -       176  
Peruvian Sol
    159       26       175  
Argentinean Peso
    13       1       3  
Brazilian Real
    43       33       4  
Chinese Yuan
    113       -       -  
Indonesian rupee
    5       5       4  
Pound sterling
    5       2       6  
Total
    615,847       530,394       303,799  
 
 
69

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 6 - Cash and Cash Equivalents, continued
 
6.4 
Amount of significant restricted (unavailable) cash balances
 
Cash on hand and in bank current accounts are resources available and their carrying value is equal to their fair value.

As of September 30, 2010, December 31, 2009 and January 1, 2009, the Company has no significant cash balances with any type of restriction.

 
70

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 6 - Cash and Cash Equivalents, continued
 
6.5 Detail of time deposits

The detail of cash and cash equivalents in time deposits at each period-end is as follows:

Receiver of the deposit
 
Type of  de
Deposit
 
Original Currency
 
Interest
rate
   
Placement date
   
Expiration date
   
Principal
ThUS$
   
Interest
accrued to-
date ThUS$
   
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
Banco Crédito e Inversiones
 
Fixed term
 
Chilean pesos
    0.20    
6-29-2010
   
11-3-2010
      27,808       172       27,980       71,846       11,015  
Banco Crédito e Inversiones
 
Fixed term
 
Chilean pesos
    0.21    
7-23-2010
   
11-10-2010
      32,159       155       32,314       -       -  
Banco Crédito e Inversiones
 
Fixed term
 
Chilean pesos
    0.30  
 
9-22-2010
 
 
11-22-2010
      8,915       7       8,922       -       -  
Banco Crédito e Inversiones
 
Fixed term
 
Chilean pesos
    0.31    
9-2-2010
   
12-1-2010
      13,889       40       13,929       -       -  
Banco Crédito e Inversiones
 
Fixed term
 
Chilean pesos
    0.30    
8-31-2010
   
12-2-2010
      9,825       29       9,854       -       -  
Banco Crédito e Inversiones
 
Fixed term
 
Chilean pesos
    0.32    
9-3-2010
   
12-6-2010
      6,654       19       6,673       -       -  
Banco Crédito e Inversiones
 
Fixed term
 
Chilean pesos
    0.33    
9-30-2010
   
12-29-2010
      12,018       0       12,018       -       -  
Banco de Chile
 
Fixed term
 
Chilean pesos
    0.17    
7-9-2010
   
10-7-2010
      17,032       80       17,112       107,862       10,022  
Banco de Chile
 
Fixed term
 
Chilean pesos
    0.26    
9-22-2010
   
10-22-2010
      10,261       7       10,268       -       -  
Banco de Chile
 
Fixed term
 
Chilean pesos
    0.28    
9-28-2010
   
10-28-2010
      15,176       3       15,179       -       -  
Banco de Chile
 
Fixed term
 
Chilean pesos
    0.30    
8-24-2010
   
11-24-2010
      20,927       77       21,004       -       -  
Banco de Chile
 
Fixed term
 
Chilean pesos
    0.30    
8-26-2010
   
11-27-2010
      21,117       74       21,191       -       -  
Banco de Chile
 
Fixed term
 
Chilean pesos
    0.30    
9-3-2010
   
12-6-2010
      3,742       10       3,752       -       -  
Banco Santander-Santiago
 
Fixed term
 
Chilean pesos
    0.16    
6-29-2010
   
10-5-2010
      28,001       139       28,140       89,137       44,452  
Banco Santander-Santiago
 
Fixed term
 
Chilean pesos
    0.17    
6-29-2010
   
12-12-2010
      27,808       146       27,954       -       -  
Banco Santander-Santiago
 
Fixed term
 
Chilean pesos
    0.17    
6-23-2010
   
10-26-2010
      55,210       309       55,519       -       -  
Banco Santander-Santiago
 
Fixed term
 
Chilean pesos
    0.31    
9-28-2010
   
12-27-2010
      20,196       4       20,200       -       -  
Citibank New York Inversiones
 
Overnight
 
US Dollar
    0.03    
9-28-2010
   
10-1-2010
      3,287       -       3,287       2,122       824  
Corpbanca
 
Fixed term
 
Chilean pesos
    0.31    
8-24-2010
   
12-14-2010
      10,773       41       10,814       50,468       20,045  
Corpbanca
 
Fixed term
 
Chilean pesos
    0.31    
8-23-2010
   
12-20-2010
      15,327       60       15,387       -       -  
Banco BBVA Chile
 
Fixed term
 
Chilean pesos
    0.26    
9-30-2010
   
10-25-2010
      21,835       -       21,835       -       -  
Banco BBVA Chile
 
Fixed term
 
Chilean pesos
    0.28    
8-20-2010
   
11-15-2010
      21,008       80       21,088       -       16,103  
Banco BBVA Chile
 
Fixed term
 
Chilean pesos
    0.30    
9-7-2010
   
12-16-2010
      10,275       24       10,299       -       -  
Banco BBVA Chile
 
Fixed term
 
Chilean pesos
    0.31    
9-8-2010
   
1217-2010
      8,852       20       8,872       -       -  
Banco Estado
 
Fixed term
 
US Dollar
    1.30    
9-27-2010
   
10-4-2010
      20,000       2       20,002       -       -  
Banco ITAU Chile
 
Fixed term
 
Chilean pesos
    0.19    
7-22-2010
   
10-20-2010
      16,379       72       16,451       -       9,018  
IDBI Bank
 
Fixed term
 
Rupee
    -    
12-31-2009
   
12-31-2010
      9       -       9       -       -  
HSBC Bank Chile
 
Fixed term
 
US Dollar
    2.50    
9-30-2010
   
12-29-2010
      12,600       -       12,600       -       5,013  
Deutsche Bank Chile
 
-
 
-
    -    
-
   
-
      -       -       -       15,000       -  
Total
                                                472,653       336,435       116,492  
 
 
71

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 7 - Inventories

The composition of inventories at each period-end is as follows:

Class of inventories
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Raw materials
    4,614       6,491       11,144  
Supplies for production
    20,221       15,617       19,275  
Products-in-progress
    285,096       287,712       189,555  
Finished products
    329,608       320,943       320,903  
Total
    639,539       630,763       540,877  

Inventory provisions recognized as of September 30, 2010 amount to ThUS$62,499 as of December 31, 2009 amounted to ThUS$65,298, and as of January 1, 2009 amounted to ThUS$43,686. Provisions have been made based on a technical study which covers the different variables which affect products in stock (density, humidity, among others.) Additionally, provisions have been recognized for goodwill in the sale of products and inventory difference.

The breakdown of these provisions is as follows:

Class of inventories
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Raw materials
    1,093       93       93  
Supplies for production
    802       1,580       1,900  
Products-in-progress
    42,579       46,228       27,599  
Finished products
    18,025       18,027       14,094  
Total
    62,499       65,928       43,686  

The Company has not delivered inventories as collateral for the periods indicated above.
 
 
72

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note  8 -  Information for disclosure on related parties

8.1 
Information for disclosure on related parties

Balances pending at year-end are not guaranteed, accrue no interest and are settled in cash. No guarantees have been delivered or received for trade and other receivables due from related parties or trade and other payables due to related parties. For the period ended September 30, 2010, the Group has not recorded any impairment in receivables related to amounts owed by related parties. This evaluation is conducted every year through an examination of the financial position of the related party in the market in which it operates.

8.2 
Relationships between the parent company and the entity

According to that provided in the by-laws of SQM S.A., no shareholder can concentrate more than 32% of the Company’s voting right capital.

Sociedad de Inversiones Pampa Calichera S.A. and Global Mining Investments (Chile) S.A. and collectively, the Pampa Group, are the owners of a number of shares which is equivalent to 30.48% of the current total amount of shares issued, subscribed and paid of SQM S.A. In addition, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A. and La Esperanza Delaware Corporation, collectively Kowa Group, are the owners of a number of shares equivalent to 2.08% of the total amount of shares issued, subscribed and paid of SQM S.A.

The Pampa Group and the Kowa Group have informed SQM S.A., the Chilean SVS and the pertinent stock exchanges in Chile and abroad that they are not and have never been related parties between them. In addition, this is regardless of the fact that both Groups on December 21, 2006 have subscribed a joint venture agreement with respect to those shares. Consequently, the Pampa Group, by itself, does not concentrate more than 32% of voting right capital of SQM S.A. and the Kowa Group does not concentrate by itself more than 32% of voting right capital of SQM S.A.

Likewise, the joint venture agreement has not transformed the Pampa Group and the Kowa Group in related companies between them. The joint venture agreement has only transformed the current controller of SQM S.A. composed of the Pampa Group and the Kowa Group into related parties of SQM S.A.
 
 
73

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 8 - Information for disclosure on related parties, continued

Detail of effective concentration
 
Taxpayer ID
 
Company name
 
Ownership
percentage %
 
96.511.530-7
 
Sociedad de Inversiones Pampa Calichera S.A.
    25.24  
96.863.960-9
 
Global Mining Investments (Chile) S.A.
    5.24  
Total Pampa Group
        30.48  
             
79.798.650-k
 
Inversiones la Esperanza (Chile)  Ltda.
    1.40  
59.046.730-8
 
Kowa Co Ltd.
    0.30  
96.518.570-4
 
Kochi S.A.
    0.29  
59.023.690-k
 
La Esperanza Delaware Corporation
    0.09  
Total Kowa Group
        2.08  
 
8.3 
Intermediate parent company and companies controlled by SQM S.A. which publicly issue financial statements

The following intermediate parent companies prepare public financial statements:

Soquimich Comercial S.A.

8.4 
Detailed identification of the link between the parent company and the subsidiary as of September 30, 2010 and December 31, 2009

   
Participation percentage in subsidiary
As of September 30, 2010
 
Subsidiary
 
Direct
%
   
Indirect
%
   
Total
%
 
Comercial Hydro S.A.
    0.0000       60.3820       60.3820  
SQM Potasio S.A.
    99.9974       0.0000       99.9974  
SQM Nitratos S.A.
    99.9999       0.0001       100.0000  
Ajay SQM Chile S.A.
    51.0000       0.0000       51.0000  
SQMC Internacional Ltda.
    0.0000       60.6382       60.6382  
SQM Industrial S.A.
    99.9954       0.0046       100 .0000  
Isapre Norte Grande Ltda.
    1.0000       99.0000       100.0000  
Almacenes y Depósitos Ltda.
    1.0000       99.0000       100.0000  
Serv. Integrales de Tránsitos y Transferencias S.A.
    0.0003       99.9997       100.0000  
Soquimich Comercial S.A.
    0.0000       60.6383       60.6383  
SQM Salar S.A.
    18.1800       81.8200       100.0000  
Minera Nueva Victoria S.A.
    99.0000       1.0000       100.0000  
Proinsa Ltda.
    0.0000       60.5800       60.5800  
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
    0.0000       100.0000       100.0000  
Exploraciones Mineras S.A.
    0.2691       99.7309       100.0000  
Nitratos Naturais Do Chile Ltda.
    0.0000       100.0000       100.0000  
Nitrate Corporation of Chile Ltd.
    0.0000       100.0000       100.0000  
SQM North America Corporation.
    40.0000       60.0000       100.0000  
SQM Europe N.V.
    0.8600       99.1400       100.0000  
Soquimich SRL Argentina
    0.0000       100.0000       100.0000  
Soquimich European Holding B.V.
    0.0000       100.0000       100.0000  
SQM Corporation N.V.
    0.0001       99.9999       100.0000  
 
74

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 8 - Information for disclosure on related parties, continued

8.4 
Detailed identification of the link between the parent company and the subsidiary as of September 30, 2010 and December 31, 2009, continued
 
   
Participation percentage in subsidiary
As of September 30, 2010
 
Subsidiary
 
Direct
%
   
Indirect
%
   
Total
%
 
SQI Corporation N.V.
    0.0159       99.9841       100.0000  
SQM Comercial de México S.A. de C.V.
    1.0000       99.0000       100.0000  
North American Trading Co.
    0.0000       100.0000       100.0000  
Administración y Servicios Santiago S.A. de C.V.
    0.0200       99.9800       100.0000  
SQM Peru S.A.
    0.9800       99.0200       100.0000  
SQM Ecuador S.A.
    0.0040       99.9960       100.0000  
SQM Nitratos México S.A.
    0.0000       51.0000       51.0000  
SQMC Holding Corporation L.L.P.
    0.1000       99.9000       100.0000  
SQM Investment Corporation N.V.
    1.0000       99.0000       100.0000  
SQM Brasil Limitada.
    2.7900       97.2100       100.0000  
SQM France S.A.
    0.0000       100.0000       100.0000  
SQM Japan Co Ltd.
    1.0000       99.0000       100.0000  
Royal Seed Trading A.V.V.
    1.6700       98.3300       100.0000  
SQM Oceania Pty Limited.
    0.0000       100.0000       100.0000  
Rs Agro Chemical Trading A.V.V.
    98.3300       1.6700       100.0000  
SQM Indonesia S.A.
    0.0000       80.0000       80 .0000  
SQM Virginia L.L.C.
    0.0000       100.0000       100.0000  
SQM Venezuela S.A.
    0.0000       100.0000       100.0000  
SQM Italia SRL
    0.0000       100.0000       100.0000  
Comercial Caiman Internacional S.A.
    0.0000       100.0000       100.0000  
SQM Africa Pty. Ltd.
    0.0000       100.0000       100.0000  
SQM Lithium Specialties LLP.
    0.0000       100.0000       100.0000  
Fertilizantes Naturales S.A.
    0.0000       66.6700       66.6700  
Iodine Minera B.V.
    0.0000       100.0000       100.0000  
SQM Agro India Pvt. Ltd.
    0.0000       100.0000       100.0000  
SQM Beijin Comercial Co. Ltd.
    0.0000       100.0000       100.0000  
 
8.5 
Detail of related parties and transactions with related parties
 
Transactions between the Company and its subsidiaries are part of the Company's common transactions. Their conditions are customary to this type of operations in respect to terms and market price. In addition, these have been eliminated in consolidation and are not detailed in this note.

Expiration conditions for each case vary by virtue of the transaction which generated them.

 
75

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 8 - Information for disclosure on related parties, continued
 
8.6 
Detail of related parties and transactions with related parties
 
Taxpayer ID
 
Company
 
Relationship
 
Original country
 
Transaction
description
 
9/30/2010
ThUS$
 
9/30/2009
ThUS$
Foreign
 
Doktor Tarsa Tarim Sanayi As
 
Associate
 
Turkey
 
Sale of products
 
9,939
 
5,895
Foreign
 
Ajay Europe S.A.R.L.
 
Associate
 
France
 
Sale of products
 
16,827
 
6,065
Foreign
 
Ajay Europe S.A.R.L.
 
Associate
 
France
 
Finance income
 
-
 
                           7
Foreign
 
Ajay Europe S.A.R.L.
 
Associate
 
France
 
Dividends
 
118
 
                           -
Foreign
 
Ajay North America LLC.
 
Associate
 
United States
 
Sale of products
 
27,130
 
8,021
Foreign
 
Ajay North America LLC.
 
Associate
 
United States
 
Dividends
 
701
 
453
Foreign
 
Ajay North America LLC.
 
Associate
 
United States
 
Sale of fixed asset
 
-
 
20
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
Associate
 
United Arab Emirates
 
Sale of products
 
9,202
 
4,783
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
Associate
 
United Arab Emirates
 
Finance income
 
-
 
54
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
Associate
 
United Arab Emirates
 
Dividends
 
525
 
-
Foreign
 
Kowa Company Ltd.    
 
Entity with joint control
 
Japan
 
Sale of products
 
67,529
 
42,772
Foreign
 
Kowa Company Ltd.
 
Entity with joint control
 
Japan
 
Sale of services
 
-
 
92
Foreign
 
NU3 B.V.
 
Associate
 
The Netherlands
 
Sale of products
 
10,323
 
7,629
Foreign
 
NU3 B.V.
 
Associate
 
The Netherlands
 
Sale of services
 
76
 
79
Foreign
 
NU3 N.V.
 
Associate
 
Belgium
 
Sale of products
 
10,283
 
7,847
Foreign
 
SQM Agro India PYT Ltd.
 
Associate
     
Sale of products
 
-
 
77
Foreign
 
SQM Thailand Co.Ltd.
 
Associate
     
Sale of products
 
1,583
 
1,175
Foreign
 
SQM Thailand Co.Ltd.
 
Associate
     
Dividends
 
309
 
-
77.557.430-5
 
Sales de Magnesio Ltda
 
Associate
 
Chile
 
Sale of products
 
567
 
734
77.557.430-5
 
Sales de Magnesio Ltda
 
Associate
 
Chile
 
Dividends
 
-
 
385
77.557.430-5
 
Sales de Magnesio Ltda
 
Associate
 
Chile
 
Sale of services
 
347
 
270
78.062.420-5
 
Minera Saskatchewan Ltda ( PCS )
 
Other related party
 
Chile
 
Sale of products
 
-
 
44,791
78.062.420-5
  
Minera Saskatchewan Ltda ( PCS )
  
Other related party
  
Chile
  
Sale of services
  
423
  
154
 
 
76

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 8 - Information for disclosure on related parties, continued

8.7 
Trade and other receivables due from related parties, current:

           
9/30/2010
   
12/31/2009
   
1/1/2009
 
Taxpayer ID
 
Company
 
Currency
 
ThUS$
   
ThUS$
   
ThUS$
 
                           
77.557.430-5
 
Sales de Magnesio Ltda.
 
US Dollar
    260       292       143  
96.511.530-7
 
Soc.de Inversiones Pampa Calichera
 
US Dollar
    8       8       8  
78.062.420-5
 
Minera Saskatchewan  Ltda.
 
US Dollar
    -       32,588       -  
Foreign
 
Doktor Tarsa Tarim Sanayi AS
 
US Dollar
    538       7,304       13.641  
Foreign
 
Nutrisi Holding N.V.
 
Euro
    1,645       1,741       1.702  
Foreign
 
Ajay Europe S.A.R. L.
 
US Dollar
    2,823       1,492       4.061  
Foreign
 
Ajay North America LLC.
 
US Dollar
    4,875       2,914       2.520  
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
US Dollar
    3,530       3,546       6.579  
Foreign
 
NU3 B.V.
 
Euro
    1,457       1,883       772  
Foreign
 
Misr Speciality Fertilizers
 
US Dollar
    332       289       632  
Foreign
 
Kowa Company Ltd.
 
US Dollar
    23,418       15,764       18.170  
Foreign
 
SQM Thailand Co. Ltd.
 
US Dollar
    1,141       835       -  
Foreign
 
SQM Agro India
 
US Dollar
    -       -       595  
Foreign
 
SQM East Med Turkey
 
US Dollar
    -       -       1.075  
Foreign
 
NU3 N.V.
 
Euro
    -       -       1.129  
Total to the present date
        40,027       68,656       51,027  

8.8 
Trade and other receivables due from related parties, non-current:

           
9/30/2010
   
12/31/2009
   
1/1/2009
 
Taxpayer ID
 
Company
 
Currency
 
ThUS$
   
ThUS$
   
ThUS$
 
                           
Foreign
 
 Abu Dhabi Fertilizer Industries WWL a.
 
US Dollar
    -       -       2,000  
Total to the present date
        -       -       2,000  

 
77

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 8 - Information for disclosure on related parties, continued

   8.9  Trade and other payables due to related parties, current:

           
9/30/2010
   
12/31/2009
   
1/1/2009
 
Taxpayer ID
 
Company
 
Currency
 
ThUS$
   
ThUS$
   
ThUS$
 
                                 
79.049.778-9
 
Callegari Agrícola S.A.
 
Chilean peso
    3       234       -  
Foreign
 
NU3 N.V.
 
US Dollar
    1,232       94       -  
Foreign
 
SQM Vitas
 
United Arab Emirates Dirham
    2,504       2,883       -  
Foreign
 
Coromandel Fertilizers Limited
 
Indian Rupee
    593       681       -  
Foreign
 
SQM Thailand Co. Ltd.
 
Euro
    -       -       178  
Total to the present date
        4.332       3,892       178  

    8.10   Board of Directors and Senior Management
 
1)
Board of Directors

SQM S.A. is managed by a Board of Directors which is composed of eight regular directors who are elected for a four-year period. The present Board of Directors was elected by the shareholders at the Ordinary Shareholders' Meeting of April 30, 2008.

As of September 30, 2010, the Company has an Audit Committee which is composed of three members of the Board of Directors. This Committee performs those duties provided in Article 50 bis of Law No. 18,046.

During the periods covered by these financial statements, there are no pending balances receivable and payable between the Company, its directors or members of Senior Management other than those related to remuneration, fee allowances and profit participation. In addition, there were no transactions conducted between the Company, its directors or members of Senior Management.

 
78

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 8 - Information for disclosure on related parties, continued

2)
Directors’ Compensation

2.1       2010

2.1.1 Board of Directors
 
Director’s compensation is detailed as follows:
 
a)
A payment of a monthly fixed gross amount of UF 300 in favor of SQM Chairman and UF 50 in favor of the seven remaining board members regardless of their attendance to Board meetings or the number of meetings to which they attend.
 
b)
A payment in domestic currency and in favor of the Chairman of the Board of Directors consisting in variable and gross amount equivalent to 0.35% of total profit for the period which SQM S.A. effectively obtains during fiscal year 2010.
 
c)
A payment in domestic currency in favor of each Company’s directors excluding the Chairman of the Board, consisting of variable and gross amount equivalent to 0.04% of the total profit for the period which SQM S.A. effectively obtain during fiscal year 2010.
 
d)
Fixed and variable amounts indicated will not be subject to any charge between them and those expressed in percentage will be paid immediately after the shareholders at the respective Annual General Shareholders’ Meeting of SQM approve the statement of financial position (balance sheet), the financial statements, the annual report, the report by the account inspectors and the report of external auditors for the commercial year ending December 31, 2010.
 
2.1.2 Audit Committee
 
The remuneration of the Audit Committee is detailed as follows:
 
a)
A payment of a monthly, fixed and gross amount of UF 17 in favor of each of the 3 Directors who are a part of the Company’s Audit Committee regardless of the number of meetings which are conducted during the respective month.
 
b)
A payment in domestic currency and in favor of each of the 3 Directors of a variable and gross amount equivalent to 0.013% of the Company’s total profit for the period,  which SQM S.A. effectively obtains during fiscal year 2010.
 
 
79

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 8 - Information for disclosure on related parties, continued
 
2.2   2009

2.2.1 Directors’ Compensation and Committee

During 2009, the Company has paid to its directors an annual amount of UF 300 to the Chairman and UF 50 to each of the seven remaining board members regardless of attendance to Board meetings or the number of meetings to which they attended.

In addition, the directors have received variable remuneration consistent in 0.5% of net revenue of 2008 for the Chairman and 0.5% of net revenue for 2008 divided in equal parts for each of the seven remaining board members.

Therefore, remuneration and profit share paid to the members of the Audit Committee and the directors during 2009 amounted to ThUS$6,507. As of September 30, 2010, the amount of ThUS$ 2,340 has been paid.
 
In April 2009, at the General Ordinary Shareholders’ Meeting of SQM S.A. the shareholders agreed to change the percentages of variable benefit for 2009; i.e., to 0.35% of net income for 2009 for the Chairman and 0.04% of net revenue for 2009 to each of the remaining seven directors.

 
80

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 8 - Information for disclosure on related parties, continued

3) No guarantees have been constituted in favor of directors.

4) Senior Management remuneration

As of September 30, 2010, the overall remuneration paid to the 107 main executives amounts to ThUS$15,419. (ThUS$14,760 as of September 30, 2009.)  This includes monthly fixed remuneration and variable performance bonuses.

SQM S.A. for its executives has defined annual bonus plans related to goal achievement and level of individual contribution to the Company’s income. These incentives are structured in a minimum and maximum of gross remuneration which are paid once a year or every two years.

Additionally, the Company has retention bonuses for the Company’s executives. The amount of these bonuses is linked to the price of the Company’s share and is payable in cash between 2010 and 2011.

5) No guarantees have been constituted in favor of the Company’s management.

6) The Company’s Managers and Directors do not receive or have not received any benefit during the second quarter ended as of September 30, 2010 or retribution for the concept of pensions, life insurance, paid time off, profit sharing, incentives, benefits due to disability other than those mentioned in the preceding numbers.

7) In accordance with IAS No. 24 paragraph 9, letter f) we must inform that our Director Wolf Von Appen B. is a part of the Ultramar Group. As of September 30, 2010, the amount of operations with this Group is approximately ThUS$7,935.

 
81

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments

In accordance with IAS 39, financial assets are detailed as follows:

9.1   Classes of other financial assets

Classes of other financial assets
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Other current financial assets (1)
    -       15,045       20,121  
Derivative instruments (2)
    3,181       9,153       1,599  
Hedging assets, current
    74,474       51,339       -  
                         
Total other current financial assets
    77,655       75,537       21,720  
                         
Other non-current financial assets (3)
    115       113       101  

 
(1)
Relates to a time deposit with Banco Santander and Banco BCI which expires in more than 90 days.
 
 
(2)
Relate to forwards and options which were not classified as hedging instruments.
 
 
(3)
Relate to guarantees delivered for the lease of offices and investments in Sociedad Garantizadora de Pensiones (ownership of 3%.)

9.2   Trade and other receivables

a)
 Trade and other receivables, net:

Description of the class of trade and other
receivables. net:
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Trade and other receivables current, net
    430,840       325,823       334,791  
Trade receivables
    403,374       309,765       328,044  
Other receivables
    27,466       16,058       6,747  
                         
Trade and other receivables non-current, net
    3,873       4,208       766  
Other receivables
    3,873       4,208       766  
                         
Total
    434,713       330,031       335,557  
 
 
82

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued

b)
Trade and other receivables, gross:

Classes of trade and other receivables, gross
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Trade and other receivables current, gross
    450,036       342,906       348,066  
                         
Trade receivables
    420,534       326,192       339,932  
Other receivables
    29,502       16,714       8,134  
                         
Trade and other receivables non-current, gross
    3,873       4,208       766  
                         
Other receivables
    3,873       4,208       766  
                         
Total to the present date
    453,909       347,114       348,832  

c)
Detail of financial assets past due and not paid but not impaired

Financial assets past due. not paid but not impaired are composed of the following: Trade and other receivables as of September 30, 2010 and December 31, 2009.

                     
Balances as of
9/30/2010
 
Financial assets
 
Expiring in
less than
three
months
   
Expiring
between
three and
six months
   
Expiring
between six
and twelve
months
   
Expiring in
more than
twelve
months
   
Total
ThUS$
 
                               
Trade and other receivables
    18,699       16,750       12,333       3,932       51,714  
Total
    18,699       16,750       12,333       3,932       51,714  

                     
Balances as of
12/31/2009
 
Financial assets
 
Expiring in
less than
three months
   
Expiring
between three
and six
months
   
Expiring
between six
and twelve
months
   
Expiring in
more than
twelve
months
   
Total
ThUS$
 
                               
Trade and other receivables
    36,956       7,107       713       6,370       51,146  
Total
    36,956       7,107       713       6,370       51,146  

 
83

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued
 
d)
Detail of impaired financial assets

At the end of each period, the financial assets included in trade and other receivables have been subject to value impairment tests and there are indications of impairment in the value of these.
The Company and its subsidiaries record an allowance for doubtful accounts when in the Company’s management’s opinion, all collection means have been depleted or there are certain doubts as to the recovery of trade and other receivables.

Financial assets
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
Trade and other receivables
    (19,196 )     (17,083 )     (13,279 )
 Balance
    (19,196 )     (17,083 )     (13,279 )

Reconciliation of variations in the allowance for impairment of trade and other receivables.

   
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Opening balance
    17,083       13,279       10,649  
Impairment for the period
    2,028       3,716       4,700  
Write-offs
    (118 )     (199 )     (1,042 )
Exchange difference
    203       1,214       (855 )
Other
    -       (927 )     (173 )
                         
Total
    19,196       17,083       13,279  

 
84

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued
 
9.3
Current hedging assets

The balance relates to derivative financial instruments measured at fair value, which have been classified as foreign currency translation hedging and interest rate hedges associated with all the Company’s obligations related to bonds payable in Chilean pesos and in UF.  As of September 30, 2010, the face value of cross currency swap contracts amounted to ThUS$413,183, as of December 31, 2009 amounted to ThUS$415,749, as of September 30, 2009 amounted to ThUS$357,894 and as of January 1, 2009 amounted to ThUS$ 113,025.

Hedging assets.
current
 
Derivative
instruments
(CCS)
   
Effect on profit or
loss for the
period, derivative
Instruments
   
Hedging reserve
in equity. gross
   
Deferred
income
Hedging
reserve in
equity
   
Hedging
reserve in
equity
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                               
September 30, 2010
    74,474       29,059       (15,302 )     2,601       (12,701 )
                                         
September 30, 2009
    28,511       25,146       3,365       (572 )     2,793  

Hedging assets.
current
 
Derivative
instruments
(CCS)
   
Effect on profit or
loss for the
period, derivative
Instruments
   
Hedging reserve
in equity. gross
   
Deferred
income
Hedging
reserve in
equity
   
Hedging
reserve in
equity
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                               
December 31, 2009
    51,339       68,533       9,619       (1,635 )     7,984  

Balances in the column, Effects on profit or loss consider the annual affects of contracts which were in force as of September 30, 2010, December 31, 2009, September 30, 2009 and January 1, 2009.

 
85

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued
 
The Company uses cross currency swap derivative instruments to hedge the possible financial risk associated with the volatility of the exchange rate associated with Chilean pesos and UF. The objective is hedging the exchange rate financial risks associated with bonds payable. Hedges are documented and tested to measure its effectiveness.

Based on a comparison of critical terms, hedging is highly effective given that the hedged amount is consistent with obligations maintained for bonds denominated in Chilean pesos and UF. Likewise, hedging contracts are denominated in the same currencies and have the same expiration dates of bond principal payments.

9.4
Financial liabilities
 
As of September 30, 2010, December 31, 2009 and January 1, 2009, financial liabilities are detailed as follows:
 
Classes of interest-bearing (accruing) loans
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Current interest-bearing loans
                 
                   
Bank loans (a)
    86,335       220,756       133,587  
Derivative instruments (9.6)
    33,978       4,232       7,158  
Current hedging liabilities
    -       -       11,031  
Unsecured obligations (b)
    20,384       43,867       7,344  
Total
    140,697       268,855       159,120  
                         
Non-current interest-bearing loans
                       
                         
Bank loans (c)
    219,987       363,808       229,680  
Unsecured obligations (d)
    934,716       660,542       281,662  
Total
    1,154,703       1,024,350       511,342  
 
 
86

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued
 
a)
Current bank loans:

As of September 30, 2010, December 31, 2009 and January 1, 2009, the breakdown of this caption is as follows:

Debtor
 
Creditor
 
Type of
                 
9/30/2010
Current maturities
 
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer ID
 
Financial institution
 
Country
 
currency
or
adjustment
index
 
Type of
repayment
 
Effective
rate
   
Nominal
rate
   
Up to 90
days
ThUS$
   
Between 91
days and 1
year
ThUS$
   
Total
ThUS$
 
                                                           
79.947.100-0
 
SQM Industrial S.A.
 
Chile
 
97.951.000-4
 
HSBC Bank Chile
 
Chile
 
USD
 
Expiration date
  0.87 %   0.87 %     14,513       -       14,513  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
  3.93 %   3.77 %     -       20,021       20,021  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
  3.93 %   3.77 %     -       10,007       10,007  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
  2.71 %   2.61 %     1,561       -       1,561  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
BBVA Banco Bilbao Vizcaya Argentaria
 
Chile
 
USD
 
Expiration date
  0.74 %   0.74 %     20,001       -       20,001  
79.626.800-K
 
SQM Salar S.A.
 
Chile
 
97.018.000-1
 
Scotiabank Sud Americano
 
Chile
 
USD
 
Expiration date
  0.74 %   0.74       20,,000               20,000  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
ING Capital LLC
 
United States
 
USD
 
Expiration date
  1.31 %   1.11 %     309       -       309  
Total
                                            56,384       30,028       86,412  
Borrowing costs
                                        -       (77 )     (77 )
Total
                                            56,384       29,951       86,335  

 
87

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued
Debtor
 
Creditor
 
Type of
                 
12/31/2009
Current maturities
 
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer ID
 
Financial institution
 
Country
 
Currency
or
adjustment
index
 
Type of
repayment
 
Effective
rate
   
Nominal
rate
   
Up to 90
days
ThUS$
   
Between 91
days and 1
year 
ThUS$
   
Total
ThUS$
 
                                                           
79.947.100-0
 
SQM Industrial S.A.
 
Chile
 
97.951.000-4
 
HSBC Bank Chile
 
Chile
 
USD
 
Expiration date
  4.74 %   4.74 %     15,090       -       15,090  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
  2.68 %   2.68 %     -       656       656  
93.007.000-9
 
SQM S.A.
 
Chile
 
97.030.000-7
 
Banco Estado
 
Chile
 
USD
 
Expiration date
  4.66 %   4.66 %     20,813       -       20,813  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
  3.98 %   3.98 %     223       -       223  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
  3.98 %   3.98 %     109       -       109  
93.007.000-9
 
SQM S.A.
 
Chile
 
97.032.000-8
 
BBVA Chile
 
Chile
 
USD
 
Expiration date
  4.51 %   4.51 %     20,762       -       20,762  
93.007.000-9
 
SQM S.A.
 
Chile
 
97.032.000-8
 
BBVA Chile
 
Chile
 
USD
 
Expiration date
  4.46 %   4.46 %     10,376       -       10,376  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Caja de Ahorro y Monte de Piedad
 
United States
 
USD
 
Expiration date
  3.08 %   2.56 %     43       -       43  
Foreign
 
Royal Seed Trading Corporation A.V.V..
 
Aruba
 
Foreign
 
BBVA Banco Bilbao Vizcaya Argentaria
 
United States
 
USD
 
Expiration date
  1.22 %   0.69 %     100,053       -       100,053  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
ING Capital LLC
 
United States
 
USD
 
Expiration date
  0.95 %   0.80 %     -       55       55  
Foreign
 
SQM Investment Corporation N.V.
 
Dutch Antilles
 
Foreign
 
Export Development Canada
 
United States
 
USD
 
Expiration date
  2.47 %   1.93 %     -       50,019       50,019  
Foreign
 
Fertilizantes Naturales S.A.
 
Spain
 
Foreign
 
Other banks
 
Spain
 
Euro
 
Expiration date
  -     -       -       3,327       3,327  
Total
                                            167,469       54,057       221,526  
Borrowing costs
                                        (653 )     (117 )     (770 )
Total
                                            166,816       53,940       220,756  

 
88

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued
 
Debtor
 
Creditor
 
Type of
                 
1/1/2009
Current maturities
 
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer ID
 
Financial institution
 
Country
 
currency
or
adjustment
index
 
Type of
repayment
 
Effective
rate
   
Nominal rate
   
Up to 90
days
ThUS$
   
Between
91 days
and 1 year
ThUS$
   
Total
ThUS$
 
                                                           
79.947.100-0
 
SQM Industrial S.A.
 
Chile
 
97.006.000-6
 
Banco Crédito e Inversiones
 
Chile
 
USD
 
Expiration date
  10.12 %   10.12 %     15,346       -       15,346  
93.007.000-9
 
SQM S.A.
 
Chile
 
97.006.000-6
 
Banco Crédito e Inversiones
 
Chile
 
USD
 
Expiration date
  6.00 %   6.00 %     -       10,085       10,085  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
JP Morgan Chase Bank
 
United States
 
USD
 
Expiration date
  6.63 %   6.63 %     -       20,317       20,317  
93.007.000-9
 
SQM S.A.
 
Chile
 
97.006.000-6
 
Banco Crédito e Inversiones
 
Chile
 
USD
 
Expiration date
  6.12 %   6.12 %     -       10,087       10,087  
93.007.000-9
 
SQM S.A.
 
Chile
 
97.032000-8
 
BBVA Chile
 
Chile
 
USD
 
Expiration date
  4.62 %   4.62 %     10,021       -       10,021  
93.007.000-9
 
SQM S.A.
 
Chile
 
97.032000-8
 
BBVA Chile
 
Chile
 
USD
 
Expiration date
  7.87 %   7.87 %     10,166       -       10,166  
93.007.000-9
 
SQM S.A.
 
Chile
 
97.032000-8
 
BBVA Chile
 
Chile
 
USD
 
Expiration date
  8.00 %   8.00 %     20,338       -       20,338  
79.626.800-K
 
SQM Salar S.A.
 
Chile
 
97.036.000-K
 
Banco Santander Santiago
 
Chile
 
USD
 
Expiration date
  6.25 %   6.25 %     -       10,038       10,038  
79.626.800-K
 
SQM Salar S.A.
 
Chile
 
97.036.000-K
 
Banco Santander Santiago
 
Chile
 
USD
 
Expiration date
  6.02 %   6.02 %     10,037       -       10,037  
79.626.800-K
 
SQM Salar S.A.
 
Chile
 
97.951.000-4
 
HSBC Bank Chile
 
Chile
 
USD
 
Expiration date
  7.80 %   7.80 %     -       15,267       15,267  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
Banco Bilbao Vizcaya Argentaria
 
United States
 
USD
 
Expiration date
  3.01 %   2.63 %     204       -       204  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
ING Capital LLC
 
United States
 
USD
 
Expiration date
  3.19 %   2.93 %     -       215       215  
Foreign
 
SQM Investment Corporation N.V.
 
Dutch Antilles
 
Foreign
 
Export Development Canada
 
United States
 
USD
 
Expiration date
  3.73 %   3.33 %     -       32       32  
Foreign
 
SQM Dubai - Fzco
 
United Arab Emirates
 
Foreign
 
HSBC Bank Middle East Ltd.
 
United Arab Emirates
 
Dirham
 
Expiration date
  -     -       21       -       21  
Foreign
 
Fertilizantes Naturales S.A.
 
Spain
 
Foreign
 
Other banks
 
Spain
 
Euro
 
Expiration date
  -     -       -       1,632       1,632  
Total
                                            66,133       67,673       133,806  
Borrowing costs
                                        (102 )     (117 )     (219 )
Total
                                            66,031       67,556       133,587  
 
 
89

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued

b)
Unsecured obligations, current:

As of September 30, 2010, December 31, 2009 and January 1, 2009, the breakdown of the caption Unsecured current interest-bearing obligations is as follows:

Promissory notes

ID or registration
No. of the
         
Adjustment
         
Expiration
date of the
note of line of
   
Interest
   
Carrying value
ThUS$
 
instrument
   
Series
   
unit
   
Face value
   
Credit
   
rate
   
9/30/2010
   
12/31/2009
   
1/1/2009
 
47
   
1-B
    $             15,000,000,000    
3-17-2010
      3.6 %     -       29,363       -  
                                                               
Total
                                          -       29,363       -  

On March 17, 2010, was paid the promissory note No. 47 series 1-B Capital amounting to ThUS$29,040
 
 
90

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued
 
Bonds
 
Debtor
                             
Periodicity
 
9/30/2010
Current maturities
 
Taxpayer ID
 
Subsidiary
 
Country
 
Placement in
Chile or abroad
 
No. of
registration or
ID of the
instrument
 
Series
 
Placed
face
outstanding
value
 
Adjustment
unit
 
Effective
rate
 
Nominal rate
 
Payment of
interest
 
Amortization
 
Up to 90
days 
ThUS$
   
Between 91
days and 1
year
ThUS$
   
Total
ThUS$
 
                                                               
93.007.000-9
 
SQM S.A
 
Chile
 
Abroad
     
single
    -  
US$
    6.79 %   6.13 %
Semi-annual
 
Expiration date
    5,623       -       5,623  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446  
C
    150.000  
UF
    6.63 %   4.00 %
Semi-annual
 
Semi-annual
    4,740       3,310       8,050  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    564  
H
    -  
UF
    6.43 %   4.90 %
Semi-annual
 
Semi-annual
    -       2,020       2,020  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
G
    -  
$
    6.19 %   7.00 %
Semi-annual
 
Expiration date
            706       706  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
I
    -  
UF
    5.88 %   3.00 %
Semi-annual
 
Expiration date
    -       -       -  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
J
    -  
$
    5.37 %   5.50 %
Semi-annual
 
Expiration date
    -       -       -  
93.007.000-9
 
SQM S.A.
 
Chile
 
Abroad
       
Single
    -  
US$
    5.92 %   5.50 %
Semi-annual
 
Expiration date
    6,086       -       6,086  
               
Total
            16,449       6,036       22,485  
               
Bond issuance costs
            (931 )     (1,170 )     (2,101 )
               
Total
            15,518       4,866       20,384  
Effective rates of bonds in Chilean pesos and UF are expressed and calculated in U.S. dollars based on the flows expected in Cross Currency Swap Agreements.
 
 
91

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued

Debtor
                             
Periodicity
 
12/31/2009
Current maturities
 
Taxpayer ID
 
Subsidiary
 
Country
 
Placement in
Chile or abroad
 
No. of
registration or
ID of the
instrument
 
Series
 
Placed
face
outstanding
value
 
Adjustment
unit
 
Effective
rate
 
Nominal rate
 
Payment
of
interest
 
Amortization
 
Up to 90
days 
ThUS$
   
Between 91
days and 1
year
ThUS$
   
Total
ThUS$
 
                                                               
93.007.000-9
 
SQM S.A
 
Chile
 
Abroad
     
single
    -  
US$
    6.79 %   6.13 %
Semi-annual
 
Expiration date
    -       2.577       2.577  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446  
C
    150.000  
UF
    6.63 %   4.00 %
Semi-annual
 
Semi-annual
    -       6.537       6.537  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    564  
H
    -  
UF
    6.43 %   4.9 %
Semi-annual
 
Semi-annual
    3,891       -       3.891  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
G
    -  
$
    6.19 %   7.00 %
Semi-annual
 
Expiration date
    1,386       -       1.386  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
I
    -  
UF
    5.88 %   3.00 %
Semi-annual
 
Expiration date
    461       -       461  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
J
    -  
$
    5.37 %   5.50 %
Semi-annual
 
Expiration date
    1,391       -       1.391  
               
Total
            7,129       9,114       16,243  
               
Bond issuance costs
            (1,169 )     (570 )     (1,739 )
               
Total
            5,960       8,544       14,504  

Debtor
                             
Periodicity
 
1/1/2009
Current maturities
 
Taxpayer ID
 
Subsidiary
 
Country
 
Placement in
Chile or abroad
 
No. of
registration or
ID of the
instrument
 
Series
 
Placed
face
outstanding
value
 
Adjustment
unit
 
Effective
rate
 
Nominal rate
 
Payment of
interest
 
Amortization
 
Up to 90
days 
ThUS$
   
Between 91
days and 1
year
ThUS$
   
Total
ThUS$
 
                                                               
93.007.000-9
 
SQM S.A
 
Chile
 
Abroad
     
single
    -  
US$
    6.79 %   6.13 %
Semi-annual
 
Expiration date
    -       2.577       2.577  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446  
C
    150.000  
UF
    6.63 %   4.00 %
Semi-annual
 
Semi-annual
    -       5.353       5.353  
               
Total
            -       7.930       7.930  
               
Bond issuance costs
            -       (586 )     (586 )
               
Total
            -       7.344       7.344  
 
 
92

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial Instruments, continued
c)
Classes of non-current interest-bearing loans

The detail of non-current interest-bearing loans as of September 30, 2010, December 31, 2009 and January 1, 2009 is as follows:
Non-current interest-bearing bank loans

Debtor
 
Creditor
                     
9/30/2010
Years to maturity
       
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer
ID
 
Financial
institution
 
Country
 
Currency
or
adjustment
unit
 
Amortization
period
 
Effective
rate
   
Nominal
rate
   
1 to 3
years
ThUS$
   
3 to 5
years
ThUS$
   
More than
5 years
ThUS$
   
Total
ThUS$
 
                                                                 
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    2.71 %     2.61 %     -       140,000       -       140,000  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
ING Capital LLC
 
United States
 
USD
 
Expiration date
    1.31 %     1.11 %     80,000       -       -       80,000  
Total
                                                80,000       140,000-       -       220,000  
Borrowing costs
                                            (13 )     -       -       (13 )
Total
                                                79,987       140,000-       -       219,987  

Debtor
 
Creditor
                     
12/31/2009
Years to maturity
       
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer
ID
 
Financial
institution
 
Country
 
Currency
or
Adjustment
unit
 
Amortization
period
 
Effective
rate
   
Nominal
rate
   
1 to 3
years
ThUS$
   
3 to 5
years
ThUS$
   
More
than 5
years
ThUS$
   
Total
ThUS$
 
                                                                 
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    2.68 %     2.68 %     -       140,000       -       140,000  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Caja de Ahorro y Monte de Piedad
 
United States
 
USD
 
Expiration date
    3.08 %     2.56 %     40,000       -       -       40,000  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    3.98 %     3.98 %     10,000       -       -       10,000  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    3.98 %     3.98 %     20,000       -       -       20,000  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
BBVA Bancomer
 
United States
 
USD
 
Expiration date
    4.07 %     3.25 %     75,000       -       -       75,000  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
ING Capital LLC
 
United States
 
USD
 
Expiration date
    0.95 %     0.80 %     80,000       -       -       80,000  
Total
                                                225,000       140,000       -       365,000  
Borrowing costs
                                            (1.192 )     -       -       (1,192 )
Total
                                                223,808       140,000       -       363,808  

 
93

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 – Financial instruments, continued
Debtor
 
Creditor
                     
1/1/2009
Years to maturity
       
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer
ID
 
Financial
institution
 
Country
 
Currency
or
adjustment
unit
 
Amortization
period
 
Effective
rate
   
Nominal
rate
   
1 to 3
years
ThUS$
   
3 to 5
years
ThUS$
   
More
than 5
years
ThUS$
   
Total
ThUS$
 
                                                                 
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
BBVA Banco Bilbao Vizcaya Argentaria
 
United States
 
USD
 
Expiration date
    3.01 %     2.63 %     100,000       -       -       100,000  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
ING Capital LLC
 
United States
 
USD
 
Expiration date
    3.19 %     2.93 %     80,000       -       -       80,000  
Foreign
 
SQM Investment Corporation N.V.
 
Dutch Antilles
 
Foreign
 
Export Development Canada
 
United States
 
USD
 
Expiration date
    3.73 %     3.33 %     50,000       -       -       50,000  
Total
                                                230,000       -       -       230,000  
Borrowing costs
                                            (320 )                     (320 )
Total
                                                229,680       -       -       229,680  

d)
Non-current unsecured interest-bearing obligations
The breakdown of non-current unsecured interest-bearing obligations as of September 30, 2010, December 31, 2009 and January 1, 2009 is as follows:
Debtor
                               
Periodicity
 
9/30/2010
Non- Current maturities
 
Taxpayer ID
 
Subsidiary
 
Country
 
Placement
in Chile or
abroad
 
No. of
registration
or ID of the
instrument
 
Series
 
Placed face
outstanding
value
 
Bond
adjustment
unit
 
Effective
rate
   
Nominal
rate
 
Payment
of
interest
 
Amortization
 
1 to 3
years
ThUS$
 
3 to 5
years
ThUS$
 
More
than 5
years
ThUS$
 
Total
ThUS$
 
                                                                 
93.007.000-9
 
SQM S.A
 
Chile
 
Abroad
     
single
    200.000.000  
US$
    6.79 %     6.13 %
Semi-annual
 
Expiration date
    -     -     200,000     200,000  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446  
C
    2.325.000  
UF
    6.63 %     4.00 %
Semi-annual
 
Semi-annual
    13,239     13,239     76,127     102,605  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    564  
H
    4.000.000  
UF
    6.43 %     4.9 %
Semi-annual
 
Semi-annual
    -     -     176,524     176,524  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
G
    21.000.000.000  
$
    6.19 %     7.00 %
Semi-annual
 
Expiration date
    -     43,428     -     43,428  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
I
    1.500.000  
UF
    5.88 %     3.00 %
Semi-annual
 
Expiration date
    -     66,197     -     66,197  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
J
    52.000.000.000  
$
    5.37 %     5.50 %
Semi-annual
 
Expiration date
          107,536     -     107,536  
93.007.000-9
 
SQM S.A.
 
Chile
 
Abroad
       
single
    250.000.000  
US$
    5.92 %     5.50 %
Semi-annual
 
Expiration date
    -     -     250,000     250,000  
               
Total
            13,239     230,400     702,651     946,290  
               
Bond issuance costs
            -     (2,556 )   (9,018 )   (11,574 )
               
Total
            13,239     227,844     693,633     934,716  
 
 
94

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial instruments (continued)

Debtor
                             
Periodicity
 
12/31/2009
Non- Current maturities
 
Taxpayer ID
 
Subsidiary
 
Country
 
Placement
in Chile or
abroad
 
No. of
registration
or ID of the
instrument
 
Series
 
Placed face
outstanding
value
 
Bond
Adjustment
unit
 
Effective
rate
 
Nominal
rate
 
Payment
of
interest
 
Amortization
 
1 to 3
years
ThUS$
 
3 to 5
years
ThUS$
 
More
than 5
years
ThUS$
 
Total
ThUS$
 
                                                               
93.007.000-9
 
SQM S.A
 
Chile
 
Abroad
     
single
    200.000.000  
US$
    6.79 %   6.13 %
Semi-annual
 
Expiration date
    -     -     200,000     200,000  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446  
C
    2.400.000  
UF
    6.63 %   4.00 %
Semi-annual
 
Semi-annual
    6,195     6,195     86,729     99,119  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    564  
H
    4.000.000  
UF
    6.43 %   4.9 %
Semi-annual
 
Semi-annual
    -     -     165,197     165,197  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
G
    21.000.000.000  
$
    6.19 %   7.00 %
Semi-annual
 
Expiration date
    -     41,412     -     41,412  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
I
    1.500.000  
UF
    5.88 %   3.00 %
Semi-annual
 
Expiration date
    -     61,949     -     61,949  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563  
J
    52.000.000.000  
$
    5.37 %   5.50 %
Semi-annual
 
Expiration date
          102,544     -     102,544  
               
Total
            6,195     212,100     451,926     670,221  
               
Bond issuance costs
            (731 )   (3,739 )   (5,209 )   (9,679 )
               
Total
            5,464     208,361     446,717     660,542  

Debtor
                             
Periodicity
 
01/01/2009
Non- Current maturities
 
Taxpayer ID
 
Subsidiary
 
Country
 
Placement
in Chile or
abroad
 
No. of
registration
or ID of the
instrument
 
Series
 
Placed face
outstanding
value
 
Bond
adjustment
unit
 
Effective
rate
 
Nominal
rate
 
Payment
of
interest
 
Amortization
 
1 to 3
years
ThUS$
 
3 to 5
years
ThUS$
 
More
than 5
years
ThUS$
 
Total
ThUS$
 
                                                               
93.007.000-9
 
SQM S.A
 
Chile
 
abroad
     
single
    200.000.000  
US$
    6.79 %   6.13 %
Semi-annual
 
Expiration date
    -     -     200,000     200,000  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446  
C
    2.550.000  
UF
    6.63 %   4.00 %
Semi-annual
 
Semi-annual
    5,056     5,056     75,828     85,940  
               
Total
            5,056     5,056     275,828     285,940  
               
Bond issuance costs
            (781 )   (438 )   (3,059 )   (4,278 )
               
Total
            4,275     4,618     272,769     281,662  
 
 
95

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial instruments, continued

e)
Additional Information

-           Bonds

As of September 30, 2010, December 31, 2009 and January 1, 2009, ThUS$22,485,  ThUS$16,243 and ThUS$7,930, respectively are presented at short-term related to principal, short-term portion plus interest accrued at that date, not including borrowing costs and bonds issuance costs . In the long-term, non-current, the Company presented ThUS$946,290 as of September 30, 2010, ThUS$670,221 as of December 31, 2009 and ThUS$285,940 as of January 1, 2009 related to principal installments of Series C bonds, unique Series bonds, Series G bonds, Series H bonds, Series J bonds, Series I bonds and single series second issuance bonds.

As of September 30, 2010, December 31, 2009 and January 1, 2009 the detail of each issuance is as follows:

Series “C” bonds

On January 25, 2006, the Company placed Series C bonds for UF 3,000,000 (ThUS$101,918) at an annual rate of 4.00%

As of September 30, 2010, September 30, 2009, the following cash payments have been made with a debit to Series C bonds:

Payments made
 
9/30/2010
   
9/30/2009
 
   
UF
   
ThUS$
   
UF
   
ThUS$
 
Principal
    75,000,00       2,993       75,000,00       2,787  
Interest
    50,500,20       2,576       53,470,80       1,987  

Single Series Bonds

On April 5, 2006, the Company placed Single Series bonds for ThUS$200,000 at an annual rate of 6.125%  under "Rule 144 and regulation S of the U.S. Securities Act of 1933."

As of September 30, 2010 and September 30, 2009, the following cash payments have been made with a debit to Single Series bonds:

   
9/30/2010
ThUS$
   
9/30/2009
ThUS$
 
Payments of interest
          6,125             6,125  
 
 
96

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial instruments, continued
Series “G” and “H” bonds

On January 13, 2009, the Company placed two bond series in the domestic market. Series H for UF 4,000,000 (ThUS$139,216) at an annual interest rate of 4.9% at a term of 21 years with payment of principal beginning in 2019 and Series G for ThCh$ 21,000,000 (ThUS$34,146) which was placed at a term of 5 years with single payment at the expiration of the term and annual interest rate of 7%.

As of September 30, 2010 and September 30, 2009, the following cash payments have been made with a charge to the Series G and H bonds line:

   
9/30/2010
ThUS$
   
9/30/2009
ThUS$
 
Payment of interest for Series “G” bonds
    2,750       1,330  
Payment of interest for Series “H” bonds
    7,763       3,727  

Series “J” and “I” Bonds

On May 8, 2009, the Company placed two bond series in the domestic market. Series J for ThCh$52,000,000 (ThUS$92,456) which was placed at a term of 5 years with single payment at the expiration date of the term and annual interest rate of 5.5% and Series I for UF 1,500,000 (ThUS$56,051) which was placed at a term of 5 years with single payment at the expiration of the term and annual interest rate of 3.00%.

As of September 30, 2010 and September 30, 2009 the following cash payments have been made with a debit to Series J and I bonds:

   
9/30/2010
ThUS$
   
9/30/2009
ThUS$
 
Payment of interest for Series “J” bonds
    5,588       2,583  
Payment of interest for Series “I” bonds
    1,873       852  
 
 
97

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 9 - Financial instruments, continued
 
Single Series bonds

On April 21, 2010, the Company informed the Chilean Superintendence of Securities and Insurance of its placement in international markets of an unsecured bond of ThUS$250,000 expiring beginning on the aforementioned date with annual interest rate of 5.5% and destined to refinance long-term liabilities.

As of September 30, 2010, there are no payments of interest or principal associated with this bond

-
Commercial papers (promissory notes)

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 Series 2-A.

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.

Payments made
 
2010
   
2009
 
   
ThCh$
   
ThUS$
   
ThCh$
   
ThUS$
 
Principal, Series 2-A
    -       -       15,000,000       30,270  
Principal, Series 1-B
    15,000,000       29,040       -       -  

9.5
Trade and other payables
 
Class of trade and other payables
 
09/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Current trade and other payables
                 
                   
Trade payables
    161,294       182,718       109,465  
Rentals
    282       300       226  
Other payables
    752       1,177       1,111  
Total
    162,328       184,195       110,802  
                         
Non-current trade and other payables
                       
                         
Trade payables
    -       -       -  
Rentals
    -       187       398  
Total
    -       187       398  

 
98

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 9 - Financial instruments, continued

9.6
Financial liabilities at fair value through profit or loss

This balance relates to derivative instruments measured at their fair value, which has generated balances against the Company. The detail by type of instrument is as follows:
 
Financial liabilities at fair value
through profit or loss
 
9/30/2010
   
Effect on
profit or loss
as of
9/30/2010
   
12/31/2009
   
Effect on
profit or loss
as of
12/31/2009
   
1/1/2009
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                               
Current
                             
Derivative instruments (forwards)
    28,230       (28,230 )     3,993       (3,993 )     5,029  
Derivative instruments  (options)
    5,748       (5,748 )     239       (239 )     2,129  
      33,978       (33,978 )     4,232       (4,232 )     7,158  
 
Balances in the column effect on profit or loss consider the annual affects of agreements which were in force as of September 30, 2010.
 
 
99

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 9 - Financial instruments, continued
 
9.7
Financial asset and liability categories
 
Description of financial assets
 
9/30/2010
Amount
ThUS$
   
12/31/2009
Amount
ThUS$
   
1/1/2009
Amount
ThUS$
 
Financial assets at fair value through profit or loss
    -       -       -  
Financial assets held for trading
    -       -       -  
Investments held to maturity
    77,770       75,650       21,821  
Loans and receivables
    434,713       330,031       335,557  
 Financial assets available for sale
    -       -       -  
Total financial assets
    512,483       405,681       357,378  
 
Description of financial liabilities 
 
9/30/2010
Amount
ThUS$
   
12/31/2009
Amount
ThUS$
   
1/1/2009
Amount
ThUS$
 
Financial liabilities at fair value through profit or loss
    -       -       -  
Total financial liabilities held for trading
    -       -       -  
Financial liabilities measured at amortized cost
    1,457,728       1,477,587       781,662  
Total financial liabilities
    1,457,728       1,477,587       781,662  
 
 
100

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 9 - Financial instruments, continued

9.8
Financial assets pledged as guarantee

On November 4, 2004, Isapre Norte Grande maintains a guarantee equivalent to the total amount owed to its members and healthcare providers, which is managed and maintained by Banco de Chile.

On October 15, 2009, SQM Brazil directly provided a guarantee to governmental entities related to legal processes under development which note has been issued by BBVA Bancomer S.A.

As of September 30, 2010 and December 31, 2009, assets pledged as guarantees are as follows:

Restricted cash
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
 
Isapre Norte Grande Ltda.
    492       446  
SQM Brasil Limitada
    -       21  
Total
    492       467  
 
9.9          Estimated fair value of financial instruments and derivative financial instruments
 
As required by IFRS, the following information is presented for the disclosure of the estimated fair value of financial assets and liabilities.
 
Although inputs represent Management's best estimate, they are subjective and involve significant estimates related to the current economic and market conditions, as well as risk features.
 
Methodologies and assumptions used depend on the risk terms and characteristics of instruments and include the following as a summary:
 
 
-
Cash equivalent approximates fair value due to the short-term maturities of these instruments.
 
-
Other current financial liabilities are considered at fair value equal to their carrying values.
 
-
For interest-bearing liabilities with original maturity of more than a year, fair values are calculated at discounting contractual cash flows at their original current market with similar terms.
 
-
For forward and swap contracts, fair value is determined using quoted market prices of financial instruments with similar characteristics.

 
101

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 9 - Financial instruments, continued

The detail of the Company’s instruments at carrying value and estimated fair value is as follows:
 
   
9/30/2010
   
12/31/2009
   
1/1/2009
 
   
Carrying
value
ThUS$
   
Fair 
value
ThUS$
   
Carrying
value
ThUS$
   
Fair 
value
ThUS$
   
Carrying
value
ThUS$
   
Fair 
value
ThUS$
 
Cash and cash equivalents
    615,847       615,847       530,394       530,394       303,799       303,799  
Current trade and other receivables
    430,840       430,840       325,823       325,823       334,791       334,791  
Other current financial assets:
                                               
- Time deposits
    -       -       15,045       15,045       20,121       20,121  
- Derivative instruments
    3,181       3,181       9,153       9,153       1,599       1,599  
 -  Current hedging assets
    74,474       74,474       51,339       51,339       -       -  
 Total other current financial assets
    77,655       77,655       75,537       75,537       21,720       21,720  
Other non-current financial assets:
    115       115       113       113       101       101  
Other current financial liabilities
                                               
- Bank loans
    86,335       86,335       220,756       220,756       133,587       133,587  
- Derivative instruments
    33,978       33,978       4,232       4,232       7,158       7,158  
 -  Hedging liabilities
    -       -       -       -       11,031       11,031  
 -  Unsecured obligations
    20,384       20,384       43,867       43,867       7,344       7,344  
 Total other current financial liabilities
    140,697       140,697       268,855       268,855       159,120       159,120  
Trade payables
    162,328       162,328       184,195       184,195       110,802       110,802  
Other non-current financial liabilities:
                                               
- Bank loans
    219,987       223,988       363,808       365,489       229,680       229,585  
 -  Unsecured obligations
    934,716       1,103,491       660,542       734,618       281,662       346,739  
 Total other non-current financial liabilities
    1,154,703       1,327,479       1,024,350       1,100,107       511,342       576,324  

Fair value hierarchy

In accordance with IFRS 7 paragraph 27 a and b provides the obligation of disclosing the hierarchy level used to determine the value measurement techniques. Fair value hierarchies correspond to:
 
 
-
Level 1: when only quoted (unadjusted) prices have been used in active markets.
 
 
-
Level 2: when in a phase in the valuation process variable other than prices quoted in Level 1 have been used which are directly observable in markets.
 
 
-
Level 3: when in a phase in the valuation process variable which are not based in observable market data have been used.

The valuation techniques used to determine the fair value of our hedging instruments are those indicated in levels 1 and 2.
 
 
102

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 9 – Financial instruments, continued

9.10
Nature and scope of risks arising from financing instruments
As indicated in paragraphs 33 to 42 of IFRS 7 the disclosure of information associated with the nature and scope of risks arising from financial instruments is presented in Note 4 - Financial Risk Management.

Note 10 - Investments and disclosures on Investments in subsidiaries

10.1
Disclosures on investments in subsidiaries

 
a)
Operations executed in 2010

On February 2, 2010, the subsidiary SQM Beijin Comercial was formed, to which Soquimich Industrial S.A. contributed capital of ThUS$100 obtaining equity interest of 100% in that entity.

 
b)
Operations executed in 2009

On July 14, 2009, the subsidiary Comercial Agrorama Callegari Limitada was formed, to which Soquimich Comercial S.A. contributed capital of ThUS$1,021 thereby obtaining equity interest of 70% in that entity

On December 17, 2009, Soquimich European Holdings B.V. acquired 51% of SQM Agro India Private Ltda. for ThUS$50. Through this acquisition, it now holds equity interest of 100% of this entity.  The Company conducted the valuation considering the carrying value of equity of SQM Agro India Private Ltda., which does not significantly differ from its fair value determined at that date.

The Parent Company controls all the subsidiaries in which it has more than 50% direct or indirect voting rights.

 
103

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 10 - Investments and disclosures on investments in subsidiaries, continued

Below, we detail the financial information as of September 30, 2010 of those companies on which the Group exerts significant influence.

9/30/2010
 
                 
Asset
   
Liability
         
Net profit
 
Subsidiary
 
Country of
incorporation
 
Functional
currency
 
Equity interest
%
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
(loss) for
the period
ThUS$
 
SQM Nitratos S.A.
 
Chile
 
US$
    100       572,005       57,675       629,680       553,704       10,701       564,405       80,195       2,462  
Proinsa Ltda.
 
Chile
 
Ch$
    60.58       218       1       219       -       -       -       -       (1 )
SQMC Internacional Ltda.
 
Chile
 
Ch$
    60.6382       290       -       290       -       -       -       -       (4 )
SQM Potasio S.A.
 
Chile
 
US$
    99.9974       105,790       608,742       714,532       1       216,714       216,715       -       97,764  
Serv. Integrales de Tránsito y Transf. S.A.
 
Chile
 
US$
    100       133,572       57,831       191,403       166,660       4,020       170,680       33,329       8,399  
Isapre Norte Grande Ltda.
 
Chile
 
Ch$
    100       435       568       1,003       453       142       595       2,952       15  
Ajay SQM Chile S.A.
 
Chile
 
US$
    51       15,584       2,735       18,319       7,512       764       8,276       40,742       1,283  
Almacenes y Depósitos Ltda.
 
Chile
 
Ch$
    100       400       50       450       1       -       1       -       (10 )
SQM Salar S.A.
 
Chile
 
US$
    100       448,560       615,499       1,064,059       312,998       91,244       404,242       448,862       133,189  
Comercial Hydro S.A.
 
Chile
 
Ch$
    60.6382       6,552       335       6,887       22       71       93       138       127  
SQM Industrial S.A.
 
Chile
 
US$
    100       1,038,940       572,475       1,611,415       843,084       47,054       890,138       522,266       97,852  
Minera Nueva Victoria S.A.
 
Chile
 
US$
    100       72,634       53,709       126,343       1,159       2,365       3,524       1,225       3,157  
Exploraciones Mineras S.A.
 
Chile
 
US$
    100       427       31,371       31,798       3,750       -       3,750       -       (134 )
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
 
Chile
 
Ch$
    100       594       101       695       201       341       542       1,450       8  
Soquimich Comercial S.A.
 
Chile
 
US$
    60.6383       208,650       16,834       225,484       118,620       1,270       119,890       100,831       5,770  
Agrorama Callegari Ltda.
 
Chile
 
Ch$
    42.4468       4,148       1,315       5,463       4,008       26       4,034       4,774       (210 )
SQM North America Corp.
 
United States
 
US$
    100       114,984       15,485       130,469       95,483       3,650       99,133       176,070       8,282  
RS Agro Chemical Trading A.V.V.
 
Aruba
 
US$
    100       5,229       -       5,229       -       -       -       -       (3 )
Nitratos Naturais do Chile Ltda.
 
Brazil
 
US$
    100       5       286       291       4,939       -       4,939       -       (45 )
 
 
104

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 10 - Investments and disclosures on investments in subsidiaries, continued

9/30/2010
 
                 
Asset
   
Liability
         
Net profit
 
Subsidiary
 
Country of
incorporation
 
Functional
currency
 
Equity interest
%
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
(loss) for
the period
ThUS$
 
Nitrate  Corporation of Chile Ltd.
 
United Kingdom
 
US$
    100       5,076       -       5,076       -       -       -       -       -  
SQM Corporation N.V.
 
Dutch Antilles
 
US$
    100       669       37,931       38,600       3,712       -       3,712       -       (1,431 )
SQM Peru S.A.
 
Peru
 
US$
    100       22,245       844       23,089       24,893       -       24,893       17,418       (1,183 )
SQM Ecuador S.A.
 
Ecuador
 
US$
    100       6,656       73       6,729       6,157       -       6,157       11,856       260  
SQM Brasil Ltda.
 
Brazil
 
US$
    100       212       89       301       1,196       -       1196       504       (67 )
SQI Corporation NV.
 
Dutch Antilles
 
US$
    100       -       7       7       33       -       33       -       (2 )
SQMC Holding Corporation L.L.P.
 
United States
 
US$
    100       1,659       7,846       9,505       589       -       589       -       29  
SQM Japan Co. Ltd.
 
Japan
 
US$
    100       1,342       561       1,903       143       360       503       1,220       245  
SQM Europe N.V.
 
Belgium
 
US$
    100       339,302       410       339,712       335,934       -       335,934       623,579       (6,068 )
SQM Italia SRL
 
Italy
 
US$
    100       1,407       -       1,407       18       -       18       -       -  
SQM Indonesia S.A.
 
Indonesia
 
US$
    80       5       -       5       1       -       1       -       -  
North American Trading Company
 
United States
 
US$
    100       162       145       307       39       -       39       -       -  
SQM Virginia LLC
 
United States
 
US$
    100       14,834       14,380       29,214       14,834       -       14,834       -       (1 )
SQM Comercial de Mexico S.A. de C.V.
 
Mexico
 
US$
    100       52,021       1,378       53,399       53,193       596       53,789       93,229       (1,009 )
 
 
105

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 10 - Investments and disclosures on investments in subsidiaries, continued

9/30/2010
 
                 
Asset
   
Liability
         
Net profit
 
Subsidiary
 
Country of
incorporation
 
Functional
currency
 
Equity
interest %
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
(loss) for
the period
ThUS$
 
SQM investment Corporation N.V.
 
Dutch Antilles
 
US$
    100       71,856       618       72,474       51,440       708       52,148       9,591       (482 )
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
US$
    100       73,195       13       73,208       324       80,000       80,324       -       (8,113 )
SQM Lithium Specialties LLP
 
United States
 
US$
    100       15,786       3       15,789       1,264       -       1,264       -       (1 )
Soquimich SRL Argentina
 
Argentina
 
US$
    100       484       -       484       71       -       71       -       (33 )
Comercial Caimán Internacional S.A.
 
Panama
 
US$
    100       386       -       386       1,093       -       1,093       -       (140 )
SQM France S.A.
 
France
 
US$
    100       345       6       351       114       -       114       -       -  
Administración y Servicios Santiago S.A. de C.V.
 
Mexico
 
US$
    100       115       124       239       856       273       1,129       1,871       (62 )
SQM Nitratos Mexico S.A. de C.V.
 
Mexico
 
US$
    51       20       1       21       11       -       11       90       4  
Soquimich European Holding B.V.
 
The Netherlands
 
US$
    100       36,564       56,987       93,551       62,533       51       62,584       -       (2,320 )
Fertilizantes Naturales S.A.
 
Spain
 
US$
    66.67       21,529       (7 )     21,522       20,116       -       20,116       50,561       824  
Iodine Minera B.V.
 
The Netherlands
 
US$
    100       9,674       -       9,674       1       -       1       1,024       727  
SQM Africa Pty Ltd.
 
South Africa
 
US$
    100       54,608       159       54,767       53,932       -       53,932       68,040       (772 )
SQM Venezuela S.A.
 
Venezuela
 
US$
    100       80       -       80       401       -       401       -       (159 )
SQM Oceania Pty Ltd.
 
Australia
 
US$
    100       1,994       -       1,994       1,159       -       1,159       1,524       34  
SQM  Agro India Pvt. Ltd.
 
India
 
US$
    100       97       4       101       152       -       152       -       (152 )
SQM Beijin Commercial Co. Ltd.
 
China
 
US$
    100       182       46       228       76       -       76       1,093       52  
Total
                    3,461,522       2,156,630       5,618,152       2,746,880       460,350       3,207,230       2,294,434       338,081  
 
 
106

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 10 - Investments and disclosures on investments in subsidiaries, continued

Below, we detail the financial information as of December 31, 2009 of those companies on which the Group exerts significant influence.
 
12/31/2009
 
                 
Asset
   
Liability
         
Net profit
 
Subsidiary
 
Country of
incorporation
 
Functional
currency
 
Equity interest
%
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
(loss) for
the period
ThUS$
 
SQM Nitratos S.A.
 
Chile
 
US$
    100.00       455,452       66,564       522,116       447,246       11,956       459,202       167,562       45,972  
Proinsa Ltda.
 
Chile
 
Ch$
    60.58       209       1       210       -       -       -       -       4  
SQMC Internacional Ltda.
 
Chile
 
Ch$
    60.6382       281       -       281       -       -       -       -       5  
SQM Potasio S.A.
 
Chile
 
US$
    99.9974       100,257       498,631       598,888       1       198,902       198,903       -       101,711  
Serv. Integrales de Tránsito y Transf. S.A.
 
Chile
 
US$
    100.00       93,505       56,361       149,866       135,104       2,439       137,543       28,066       385  
Isapre Norte Grande Ltda.
 
Chile
 
Ch$
    100.00       439       521       960       466       119       585       3,780       17  
Ajay SQM Chile S.A.
 
Chile
 
US$
    51.00       12,816       3,829       16,645       6,221       1,662       7,883       35,752       722  
Almacenes y Depósitos Ltda.
 
Chile
 
Ch$
    100.00       383       46       429       1       -       1       -       7  
SQM Salar S.A.
 
Chile
 
US$
    100.00       388,082       526,431       914,513       301,143       86,784       387,927       477,878       161,346  
Comercial Hydro S.A.
 
Chile
 
Ch$
    60.6382       6,105       365       6,470       44       66       110       69       256  
SQM Industrial S.A.
 
Chile
 
US$
    100.00       844,030       537,981       1,382,011       728,276       30,582       758,858       628,703       28,891  
Minera Nueva Victoria S.A.
 
Chile
 
US$
    100.00       68,861       55,213       124,074       1,928       2,484       4,412       1,895       3,812  
Exploraciones Mineras S.A.
 
Chile
 
US$
    100.00       403       31,344       31,747       3,565       -       3,565       -       (183 )
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
 
Chile
 
Ch$
    100.00       549       110       659       216       305       521       1,658       (33 )
Soquimich Comercial S.A.
 
Chile
 
US$
    60.6383       144,525       15,133       159,658       54,876       1,145       56,021       188,072       3,503  
Agrorama Callegari Ltda.
 
Chile
 
Ch$
    42.4468       2,130       173       2,303       740       -       740       1,211       (7 )
SQM North America Corp.
 
United States
 
US$
    100.00       137,329       15,540       152,869       126,097       3,644       129,741       191,520       (761 )
RS Agro Chemical Trading A.V.V.
 
Aruba
 
US$
    100.00       5,232       -       5,232       -       -       -       -       (4 )
Nitratos Naturais do Chile Ltda.
 
Brazil
 
US$
    100.00       6       287       293       4,896       -       4,896       -       (572 )
 
 
107

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 10 - Investments and disclosures on investments in subsidiaries, continued
 
12/31/2009
 
                 
Asset
   
Liability
         
Net profit
 
Subsidiary
 
Country of
incorporation
 
Functional
currency
 
Equity interest
%
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
 (loss) for
the period
ThUS$
 
Nitrate  Corporation of Chile Ltd.
 
United Kingdom
 
US$
    100.00       5,076       -       5,076       -       -       -       -       -  
SQM Corporation N.V.
 
Dutch Antilles
 
US$
    100.00       669       39,365       40,034       3,688       -       3,688       -       1,523  
SQM Peru S.A.
 
Peru
 
US$
    100.00       29,200       144       29,344       29,965       -       29,965       17,791       (2,583 )
SQM Ecuador S.A.
 
Ecuador
 
US$
    100.00       6,218       81       6,299       5,992       -       5,992       12,960       (183 )
SQM Brasil Ltda.
 
Brazil
 
US$
    100.00       245       77       322       1,149       -       1,149       844       (131 )
SQI Corporation NV.
 
Dutch Antilles
 
US$
    100.00       -       7       7       31       -       31       -       (2 )
SQM Japan Co. Ltd.
 
Japan
 
US$
    100.00       1,075       509       1,584       103       326       429       1,395       10  
SQMC Holding Corporation L.L.P.
 
United States
 
US$
    100.00       1,443       7,678       9,121       358       -       358       -       1,632  
SQM Europe N.V.
 
Belgium
 
US$
    100.00       274,514       502       275,016       265,171       -       265,171       510,837       6,755  
SQM Italia SRL
 
Italy
 
US$
    100.00       1,485       -       1,485       19       -       19       -       0  
SQM Indonesia S.A.
 
Indonesia
 
US$
    80.00       5       -       5       1       -       1       -       181  
North American Trading Company
 
United States
 
US$
    100.00       162       145       307       39       -       39       -       (1 )
SQM Virginia LLC
 
United States
 
US$
    100.00       14,834       14,380       29,214       14,834       -       14,834       -       (99 )
SQM Comercial de Mexico S.A. de C.V.
 
Mexico
 
US$
    100.00       60,370       2,128       62,498       61,880       -       61,880       129,083       (10,090 )
 
 
108

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 10 - Investments and disclosures on investments in subsidiaries, continued

12/31/2009
 
                 
Asset
   
Liability
         
Net profit
 
Subsidiary
 
Country of
incorporation
 
Functional
currency
 
Equity
interest %
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
(loss) for
the period
ThUS$
 
SQM investment Corporation N.V.
 
Dutch Antilles
 
US$
    100.00       136,349       847       137,196       115,793       572       116,365       14,746       (21,843 )
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
US$
    100.00       255,328       793       256,121       100,123       155,000       255,123       -       1,777  
SQM Lithium Specialties LLP
 
United States
 
US$
    100.00       15,787       3       15,790       1,264       -       1,264       -       (100 )
Soquimich SRL Argentina
 
Argentina
 
US$
    100.00       564       -       564       118       -       118       -       (14 )
Comercial Caimán Internacional S.A.
 
Panama
 
US$
    100.00       1,345       -       1,345       1,912       -       1,912       1,092       220  
SQM France S.A.
 
France
 
US$
    100.00       345       6       351       114       -       114       -       -  
Administración y Servicios Santiago S.A. de C.V.
 
Mexico
 
US$
    100.00       20       -       20       664       185       849       2,830       (55 )
SQM Nitratos México S.A. de C.V.
 
Mexico
 
US$
    51.00       19       1       20       13       -       13       110       (14 )
SQM Dubai Fzco.
 
United Arab Emirates
 
US$
    -       -       -       -       -       -       -       5,198       -  
Soquimich European Holding B.V.
 
Dutch Antilles
 
US$
    100.00       97,854       60,645       158,499       125,168       38       125,206       -       1,137  
Fertilizantes Naturales S.A.
 
Spain
 
US$
    66.67       16,872       3       16,875       16,293       -       16,293       52,872       (689 )
Iodine Minera B.V.
 
Dutch Antilles
 
US$
    100.00       8,959       -       8,959       14       -       14       1,330       1,864  
SQM Africa Pty Ltd.
 
South Africa
 
US$
    100.00       61,289       153       61,442       59,834       -       59,834       75,438       (1,181 )
SQM Venezuela S.A.
 
Venezuela
 
US$
    100.00       91       -       91       399       -       399       -       -  
SQM Oceania Pty Ltd.
 
Australia
 
US$
    100.00       2,509       -       2,509       1,934       -       1,934       1,679       429  
SQM  Agro India Pvt. Ltd.
 
India
 
US$
    100.00       242       3       245       284       -       284       -       (213 )
Total
                    3,253,463       1,936,000       5,189,463       2,617,977       496,209       3,114,186       2,554,371       323,401  
 
 
109

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 11 – Equity method accounted investments in associated companies

11.1        Investment in associated companies recognized using the equity method of accounting

As of September 30, 2010, December 31, 2009 and as of January 1, 2009, in accordance with criteria established in Note 2.5 and Note 2.13, investments in associated companies accounted for using the equity method and investments in joint ventures are as follows:

 
Note
 
9/30/2010
ThUS$
   
12/31/ 2009
ThUS$
   
1/1/2009
 ThUS$
 
                     
Investments in associates
11.1 to 11.3
    38,084       35,163       36,934  
Joint ventures
12.0  to 12.4
    23,842       20,022       -  
                           
Total
      61,926       55,185       36,934  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
110

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 11 – Equity method accounted investments in associated companies, continued
11.2            Assets, liabilities, revenue and expenses of associates

9/30/2010
 
               
Asset
   
Liability
         
Net profit
 
Tax ID No.
 
Associate
 
Country of
incorporation
 
Functional currency
 
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
Current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
(loss) for
the period
ThUS$
 
77.557.430-5
 
Sales de Magnesio Ltda.
 
Chile
 
Ch$
    2,977       5       2,982       851       -       851       3,767       906  
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
Arabia
 
Arab Emirates dirham
    15,451       3,279       18,730       4,802       -       4,802       24,426       1,757  
Foreign
 
Doktor Tarsa Tarim Sanayi AS
 
Turkey
 
Turkish lira
    43,727       7,786       51,513       27,993       -       27,993       46,292       7,596  
Foreign
 
Nutrisi Holding N.V.
 
Belgium
 
Euro
    298       11,370       11,668       1,380       -       1,380       -       1,970  
Foreign
 
Ajay North America
 
United States
 
US$
    17,176       7,109       24,285       8,273       -       8,273       39,961       2,747  
Foreign
 
Nutrichem Benelux
 
Belgium
 
Euro
    -       -       -       -       -       -       -       -  
Foreign
 
NU3 N.V.
 
Belgium
 
Euro
    15,324       9,164       24,488       6,124       -       6,124       32,959       5,153  
Foreign
 
Ajay Europe SARL
 
France
 
Euro
    16,390       2,201       18,591       8,107       -       8,107       31,717       1,165  
Foreign
 
NU3 B.V.
 
The Netherlands
 
Euro
    17,442       2,696       20,138       16,249       -       16,249       53,087       3,558  
Foreign
 
Generale De Nutrition
 
Belgium
 
Euro
    -       -       -       -       -       -       -       -  
Foreign
 
Mirs Specialty Fertilizers
 
Egypt
 
Egyptian pound
    3,347       3,383       6,730       3,220       265       3,485       3,247       (365 )
Foreign
 
SQM Eastmed Turkey
 
Turkey
 
Euro
    102       591       692       314       -       310       250       21  
Foreign
 
SQM Thailand Co. Ltd.
 
Thailand
 
Thai bath
    8,136       593       8,729       5,337       -       5,337       6,778       247  
   
Total
            140,370       48,177       188,546       82,650       265       82,911       242,484       24,755  
 
31/12/2009
 
               
Asset
   
Liability
         
Net profit
 
Tax ID No.
 
Associate
 
Country of
incorporation
 
Functional currency
 
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
Current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
(loss) for
the period
ThUS$
 
77.557.430-5
 
Sales de Magnesio Ltda.
 
Chile
 
Ch$
    1,850       2       1,852       1,195       -       1,195       2,362       354  
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
Arabia
 
Arab Emirates dirham
    14,559       2,746       17,305       5,163       -       5,163       26,173       1,547  
Foreign
 
Doktor Tarsa Tarim Sanayi AS
 
Turkey
 
Turkish lira
    36,022       6,032       42,054       22,545       2,525       25,070       58,850       3,678  
Foreign
 
Nutrisi Holding N.V.
 
Belgium
 
Euro
    (552 )     14,913       14,361       1,494       -       1,494       -       (2,120 )
Foreign
 
Ajay North America
 
United States
 
US$
    12,471       7,046       19,517       3,848       -       3,848       28,594       4,097  
Foreign
 
Nutrichem Benelux
 
Belgium
 
Euro
    -       -       -       -       -       -       -       -  
Foreign
 
NU3 N.V.
 
Belgium
 
Euro
    22,282       10,178       32,460       4,707       -       4,707       31,965       (1,425 )
Foreign
 
Ajay Europe SARL
 
France
 
Euro
    12,830       2,325       15,155       4,181       -       4,181       20,788       1,449  
Foreign
 
NU3 B.V.
 
The Netherlands
 
Euro
    15,889       5,300       21,189       16,773       -       16,773       64,921       23  
Foreign
 
Generale De Nutrition
 
Belgium
 
Euro
    -       -       -       -       -       -       -       -  
Foreign
 
Mirs Specialty Fertilizers
 
Egypt
 
Egyptian pound
    2,708       3,858       6,566       2,542       275       2,817       5,400       882  
Foreign
 
SQM Eastmed Turkey
 
Turkey
 
Euro
    764       636       1,400       998       -       998       793       (11 )
Foreign
 
SQM Thailand Co. Ltd.
 
Thailand
 
Thai bath
    6,119       574       6,693       2,999       -       2,999       9,691       430  
   
Total
            124,942       53,610       178,552       66,445       2,800       69,245       249,537       8,904  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
111

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 11 – Equity method accounted investments in associated companies
11.3        Detail of investments in associates

The Company’s equity interest in its associated companies is detailed as follows:

Associated company
 
Main associate’s activities 
 
Equity
interest %
   
Investment
9/30/2010
ThUS$
   
Investment
12/31/2009
ThUS$
   
Investment
1/1/2009
ThUS$
 
Sales de Magnesio Ltda.
 
Commercialization of magnesium salts.
    50 %     1,065       328       473  
Abu Dhabi Fertilizer Industries Co. W.W.L.
 
Distribution and commercialization of specialty plant nutrients in the Middle East.
    50 %     6,964       6,072       5,278  
Ajay North America L.L.C
 
Production and commercialization of iodine derivatives.
    49 %     6,686       6,653       4,892  
NU3 N.V.
 
Production of liquid and solid fertilizers
    50 %     -       -       -  
Doktor Tarsa Tarim Sanayi AS
 
Distribution and commercialization of specialty plant nutrients in Turkey.
    50 %     11,760       8,492       11,212  
Nutrisi Holding N.V.
 
Holding company
    50 %     4,676       6,239       6,823  
Ajay Europe SARL
 
Production and distribution of iodine and iodine derivatives
    50 %     3,894       3,920       4,282  
NU3 B.V.
 
Production of liquid and solid fertilizers
    100 %     -       -       -  
Mirs Specialty Fertilizers S.A.E.
 
Production and commercialization of liquid specialty plant nutrients for Egypt.
    47.4857 %     1,541       1,780       2,247  
SQM Agro India PVT Ltda.
 
Agent and distributor of specialty plant nutrients.
    49 %     -       -       94  
SQM Eastmed Turkey
 
Production and commercialization of specialty products.
    50 %     141       201       219  
SQM Thailand Co. Ltd.
 
Distribution and commercialization of specialty plant nutrients.
    40 %     1,357       1,478       1,414  
Total
                38,084       35,163       36,934  

The Company has no participation in unrecognized losses in investments in associated companies.

The Company has no associated companies not recognized using the equity method,

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
112

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 12 - Joint Ventures

12.1
Policy for accounting for joint ventures in a Parent Company’s separate financial statements

The method for the recognition of joint ventures in which equity interest is initially recorded at cost and subsequently adjusted considering changes after the acquisition in the portion of the entity’s net assets of the entity which correspond to the investor.  Profit for the period of the investor will receive the portion which belongs to it in profit or loss of the entity under joint control.

12.2
Disclosures on interest in joint ventures

 
a)
Operations conducted in 2010

On March 4, 2010, SQM Industrial entered an agreement with Qingdao Star Plant Protection Technology Co., Ltd., through which the companies formed a joint venture, SQM Qingdao-Star Co, Ltd. Each party made a capital contribution of ThUS$2,000 for interest of 50%.

On June 24, 2010, SQM Industrial S.A. made a contribution of ThUS$2,500 in SQM Migao Sichuan.

 
b)
Operations conducted in 2009

On October 9, 2009, the subsidiary Soquimich European Holdings formed a joint venture with Coromandel Fertilizers Limited, Coromandel SQM. Each party made capital contributions of ThUS$2,200 for interest of 50%.

On March 18, 2009, a shareholder agreement was entered to incorporate Sichuan SQM-Migao Chemical Fertilizer Co. Ltda. and the process for the registration of and obtaining licenses ended on September 1, 2009.

SQM Industrial S.A. made its first capital contribution of ThUS$3,000 on November 6, 2009 from total contribution of ThUS$10,000 by each party. Contributions will be paid in 2010.
On December 29, 2009, a joint venture agreement was entered with the Roullier Group for the SQM Dubai-FZCO, thereby decreasing our interest from 100% to 50%. On the same date, the company changed its name to SQM Vitas.
 
This transaction resulted in an effect on profit of ThUS$3,019, which is presented under Other gains (losses).
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
113

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 12 - Joint Ventures
 
12.3
Detail of assets, liabilities and profit or loss on investments in significant joint ventures by company as of September 30, 2010 and as of December 31, 2009, respectively:

9/30/2010
 
               
Asset
   
Liability
               
Profit (loss)
 
Tax ID No.
 
Associated 
 
Country of
incorporation
 
Functional currency
 
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
Current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
Expenses
ThUS$
   
for the
period 
ThUS$
 
Foreign
 
Sichuan SQM Migao Chemical Fertilizers Co Ltda.
 
China
 
US$
    3,835       8,120       11,955       1,031       -       1,031       -       (43 )     (43 )
Foreign
 
Coromandel SQM
 
India
 
Indian rupee
    32       919       951       109       -       109       -       (26 )     (26 )
Foreign
 
SQM Vitas
 
United Arab Emirates
 
U.A.E. dirham
    25,642       9,498       35,140       1,218       -       1,218       14,407       (13,495 )     915  
Foreign
 
SQM Qindao-Star Co. Ltda.
 
China
 
US$
    1,805       342       2,147       149       -       149       1,125       (1,127 )     (2 )
   
Total
            31,314       18,879       50,193       2,507       -       2,507       15,532       (14,691 )     844  

12/31/2009
 
               
Asset
   
Liability
               
Profit (loss)
 
Tax ID No.
 
Associated
 
Country of
incorporation
 
Functional currency
 
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
Current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
Expenses
ThUS$
   
for the
period 
ThUS$
 
Foreign
 
Sichuan SQM Migao Chemical Fertilizers Co Ltda.
 
China
 
US$
    6,414       2,146       8,560       92       -       92       -       (33 )     (33 )
Foreign
 
Coromandel SQM
 
India
 
Indian rupee
    -       1,060       1,060       -       -       -       -       -       -  
Foreign
 
SQM Vitas
 
United Arab Emirates
 
U.A.E. dirham
    25,913       5,543       31,456       (1,551 )     -       (1,551 )     1,893       (1,821 )     72  
   
Total
            32,327       8,749       41,076       (1,459 )     -       (1,459 )     1,893       (1,854 )     39  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
114

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
12.4
Detail of the amount of profit (loss) net of investments in joint ventures by company:

Associate
 
Main associate’s activities
 
Equity interest
%
   
Investment
9/30/2010
ThUS$
   
Investment
12/31/2009
ThUS$
   
Investment
1/1/2009
ThUS$
 
Coromandel SQM
 
Production and distribution of potassium nitrate.
    50 %     421       530       -  
Sichuan SQM Migao Chemical Fertilizer Co. Ltda.
 
Production and distribution of soluble fertilizers.
    50 %     5,462       2,988       -  
SQM Vitas
 
Production and commercialization of specialty plant and animal nutrition and industrial hygiene.
    50 %     16,960       16,504       -  
SQM Quindao-Star Co. Ltda.
 
Production and distribution of nutrient plant solutions with soluble NPK specialties.
    50 %     999       -       -  
Total
                23,842       20,022       -  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
115

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 13 - Intangible assets and goodwill

13.1 Balances

   
9/30/2010
   
12/31/2009
   
1/1/2009
 
Balances
 
ThUS$
   
ThUS$
   
ThUS$
 
                   
Intangible assets other than goodwill
    3,064       2,836       3,525  
Goodwill
    38,388       38,388       38,388  
                         
Total
    41,452       41,224       41,913  

13.2 Disclosures on intangible assets and goodwill

Intangible assets relate to goodwill, water rights, trademarks, industrial patents, rights of way and IT programs.

Balances and movements in the main classes of intangible assets as of September 30, 2010,    December 31, 2009 and January 1, 2009 are detailed as follows:

       
9/30/2010
 
Description of classes of
intangible assets
 
Useful life
 
Gross
amount
ThUS$
   
Accumulated
amortization
ThUS$
   
Net amount
ThUS$
 
                       
Goodwill
 
Indefinite
    39,961       (1,573 )     38,388  
Water rights
 
Indefinite
    3,631       (2,084 )     1,547  
Rights of way
 
Indefinite
    548       (153 )     395  
Industrial patents
 
Finite
    1,197       (680 )     517  
Trademarks
 
Finite
    3,817       (3,805 )     12  
IT programs
 
Finite
    1,316       (723 )     593  
                             
Total
        50,470       (9,018 )     41,452  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
116

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 13 - Intangible assets and goodwill, continued
 
13.2 Disclosures on intangible assets and goodwill, continued

       
12/31/2009
 
Description of classes of
intangible assets
 
Useful life
 
Gross amount
ThUS$
   
Accumulated
amortization
ThUS$
   
Net amount
ThUS$
 
                       
Goodwill
 
Indefinite
    39,961       (1,573 )     38,388  
Water rights
 
Indefinite
    3,539       (1,990 )     1,549  
Rights of way
 
Indefinite
    547       (152 )     395  
Industrial patents
 
Finite
    1,204       (634 )     570  
Trademarks
 
Finite
    3,989       (3,989 )     -  
IT programs
 
Finite
    825       (503 )     322  
                             
Total
        50,065       (8,841 )     41,224  

       
1/1/2009
 
Description of classes of
intangible assets
 
Useful life
 
Gross
amount
ThUS$
   
Accumulated
amortization
ThUS$
   
Net amount
ThUS$
 
                       
Goodwill
 
Indefinite
    39,961       (1,573 )     38,388  
Water rights
 
Indefinite
    3,488       (1,591 )     1,897  
Rights of way
 
Indefinite
    547       (138 )     409  
Industrial patents
 
Finite
    1,204       (554 )     650  
Trademarks
 
Finite
    3,989       (3,830 )     159  
IT programs
 
Finite
    701       (291 )     410  
                             
Total
        49,890       (7,977 )     41,913  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
117

 
 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 13 - Intangible assets and Goodwill, continued

a)
Estimated useful lives or amortization rates used for finite identifiable intangible assets

Finite useful life, measures the lifetime or the number of productive units or other similar which constitute its useful life.

The estimated useful life for software is 3 years for other finite useful life assets, the period in which they are amortized relate to periods defined by contracts or rights which generate them.

Indefinite useful life intangible assets mainly relate to water rights and rights of way, which were obtained as indefinite.

b)
Method used to express the amortization of identifiable intangible assets (life or rate)

The method used to express the amortization is useful life.

c)
Minimum and maximum amortization lives or rates of intangible assets:

Estimated useful lives or amortization rate
Minimum life or rate
Maximum life or rate
     
Water rights
Indefinite
Indefinite
Rights of way
1 year
20 years
Industrial patents
1 year
16 years
Trademarks
1 year
5 years
IT programs
2 years
3 years

d)
Disclosure on internally-generated assets

The Company has no internally-generated intangible assets.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
118

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 13 - Intangible assets and Goodwill, continued

e)
Movements in identifiable intangible assets as of September 30, 2010
 
Movements in identifiable intangible assets
 
Net goodwill
ThUS$
   
Water rights,
net
ThUS$
   
Rights of way,
net
ThUS$
   
Industrial
patents, net
ThUS$
   
Trademarks,
net
ThUS$
   
Computer
software, net
ThUS$
   
Identifiable 
intangible
assets, net
ThUS$
 
                                           
Opening balance
    38,388       1,549       395       570       -       322       41,224  
                                                         
Additions
    -       92       -       -       -       491       583  
Amortization
    -       (94 )     -       (53 )     (360 )     (220 )     (727 )
Other increases (decreases)
    -       -       -       -       372       -       372  
                                                         
Ending balance
    38,388       1,547       395       517       12       593       41,452  
 
f)
Movements in identifiable intangible assets as of December 31, 2009
 
Movements in identifiable intangible assets
 
Net goodwill
ThUS$
   
Water rights,
net
ThUS$
   
Rights of way,
net
ThUS$
   
Industrial
patents, net
ThUS$
   
Trademarks,
net
ThUS$
   
Computer
software, net
ThUS$
   
Identifiable 
intangible
assets, net
ThUS$
 
                                           
Opening balance
    38,388       1,897       409       650       159       410       41,913  
                                                         
Additions
    -       51       -       -       -       124       175  
Amortization
    -       (399 )     (14 )     (80 )     (159 )     (212 )     (864 )
                                                         
Ending balance
    38,388       1,549       395       570       -       322       41,224  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
119

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 14 - Property, plant and equipment
As of September 30, 2010, December 31, 2009 and January 1, 2009, the detail of property, plant and equipment is as follows:

14.1
Classes of property, plant and equipment
 
Description of classes of property, plant and equipment
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
Property, plant and equipment, net
                 
                   
Construction-in-progress
    536,642       379,416       234,757  
Land
    108,145       108,356       106,800  
Buildings
    79,919       86,252       66,813  
Plant and equipment
    410,556       453,859       461,277  
IT equipment
    3,407       3,853       3,526  
Fixed facilities and accessories
    186,150       193,893       152,176  
Motor vehicles
    48,229       55,341       41,309  
Other property, plant and equipment
    21,041       19,576       9,873  
Total
    1,394,089       1,300,546       1,076,531  
Property, plant and equipment, gross
                       
                         
Construction-in-progress
    536,642       379,416       234,757  
Land
    108,145       108,356       106,800  
Buildings
    211,050       212,751       184,061  
Plant and equipment
    1,079,946       1,090,769       1,012,711  
IT equipment
    21,814       21,573       19,540  
Fixed facilities and accessories
    385,244       368,419       304,360  
Motor vehicles
    149,166       154,887       130,154  
Other property, plant and equipment
    41,084       37,962       32,410  
Total
    2,533,091       2,374,133       2,024,793  
                         
Accumulated depreciation and value impairment of property, plant and equipment
                       
Accumulated depreciation and value impairment  of buildings
    131,131       126,499       117,248  
Accumulated depreciation and value impairment of plant and equipment
    669,390       636,910       551,434  
Accumulated depreciation and value impairment of  IT equipment
    18,407       17,720       16,014  
Accumulated depreciation and value impairment of fixed facilities and accessories
    199,094       174,526       152,184  
Accumulated depreciation and value impairment of motor vehicles
    100,937       99,546       88,845  
Accumulated depreciation and value impairment  of other
    20,043       18,386       22,537  
Total
    1,139,002       1,073,587       948,262  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
120

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 14 - Property, plant and equipment, continued

14.2
Reconciliation of changes in property, plant and equipment by class as of September 30, 2010 and December 31, 2009:


Reconciliation entries of
changes in property, plant
and equipment by class as
of September 30, 2010
 
Construction
in-progress
   
Land
   
Buildings,
net
   
Plant and
equipment,
net
   
IT equipment,
net
   
Fixed facilities
and
accessories,
net
   
Motor
vehicles,
net
   
Improvement
of lease fixed
assets, net
   
Other property,
plant and
equipment, net
   
Property,
plant and
equipment,
net
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                                             
Opening balance
    379,416       108,356       86,252       453,859       3,853       193,893       55,341       -       19,576       1,300,546  
                                                                                 
Changes
                                                                               
Additions
    245,707       386       112       182       86       2       89       -       54       246,618  
Divestitures
    -       (26 )     (15 )     (1,521 )     (25 )     -       -,       -       (14 )     (1,601 )
Depreciation expense
    -       -       (6,644 )     (58,710 )     (1,074 )     (24,524 )     (8,493 )     -       (3,825 )     (103,270 )
Increase(decrease) in foreign currency exchange
    -       -       1       40       -       14       7       -       2       64  
Other increases (decreases)
    (88,481 )     (571 )     213       16,706       567       16,765       1,285       -       5,248       (48,268 )
                                                                                 
Total changes
    157,226       (211 )     (6,333 )     (43,303 )     (446 )     (7,743 )     (7,112 )     -       1,465       93,543  
                                                                                 
Ending balance
    536,642       108,145       79,919       410,556       3,407       186,150       48,229       -       21,041       1,394,089  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
121


    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 14 - Property, plant and equipment, continued

14.3
Reconciliation of changes in property, plant and equipment by class as of September 30, 2010 and December 31, 2009, continued:
 
Reconciliation entries of changes in
property, plant and equipment by
class as of December 31, 2009
 
Construction
in-progress
   
Land
   
Buildings,
net
   
Plant and
equipment,
net
   
IT equipment,
net
   
Fixed
facilities and
accessories,
net
   
Motor
vehicles,
net
   
Improvement
of lease
fixed assets,
net
   
Other
property,
plant and
equipment,
net
   
Property, plant
and equipment,
net
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                                             
Opening balance
    234,757       106,800       66,813       461,277       3,526       152,176       41,309       -       9,873       1,076,531  
                                                                                 
Changes
                                                                               
Additions
    394,180       1,560       -       306       148       9       233       -       128       396,564  
Divestitures
    (4,405 )     -       (324 )     (1,172 )     (9 )     (108 )     (6 )     -       (134 )     (6,158 )
Depreciation expense
    -       -       (8,459 )     (90,446 )     (1,585 )     (22,426 )     (10,480 )     -       (3,014 )     (136,410 )
Increase(decrease) in foreign currency exchange
    -       -       3       54       -       -       1       -       3       61  
Other increases (decreases)
    (245,116 )     (4 )     28,219       83,840       1,773       64,242       24,284       -       12,720       (30,042 )
                                                                                 
Total changes
    144,659       1,556       19,439       (7,418 )     327       41,717       14,032       -       9,703       224,015  
                                                                                 
Ending balance
    379,416       108,356       86,252       453,859       3,853       193,893       55,341       -       19,576       1,300,546  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
122

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 14. Property, plant and equipment, continued

14.4
Detail of property, plant and equipment pledged as guarantee

There are no restrictions in title or guarantees for the compliance with obligations which affect property, plant and equipment.

14.2
Additional Information

 
1)
Assets recognized at fair value

As part of the process for the first-time adoption of IFRS, the Company opted to measure certain assets at fair value as deemed cost at the transition date of January 1, 2009.  These amounts were determined by an external specialist. The revaluation of assets implied an adjustment against retained earnings as of January 1, 2009 of ThUS$52,755. The adjusted balance of property, plant and equipment assets is detailed as follows:

   
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
Land
    1,332       1,332       1,332  
Buildings, net
    2,210       2,241       2,426  
Plant and equipment, net
    38,746       42,335       53,576  
IT equipment, net
    1       1       1  
Fixed facilities and accessories, net
    1,799       1,840       2,031  
Other property, plant and equipment, gross
    882       918       1,091  
Total
    44,970       48,667       60,457  

 
2)
Lease fixed assets

Investment properties include lease assets.  The detail is as follows:
 
 
 
9/30/2010
   
12/31/2009
   
1/1/2009
 
Description of assets
 
ThUS$
   
ThUS$
   
ThUS$
 
                   
2 floors of the Las Americas Building, net
    1,381       1,405       1,436  
Total (net)
    1,381       1,405       1,436  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
123

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 14 - Property, plant and equipment, continued

 
3)
Interest capitalized in construction-in-progress

The amount capitalized for this concept amounted to ThUS$ 19,547 as of September 30, 2010 (ThUS$13,088 as of September 30, 2009) and ThUS$ 19,231 as of December 31, 2009

Financing costs are not capitalized for periods which exceed the normal term of acquisition, construction or installation of the asset, such as the case of delays, interruptions or temporary suspension of the project due to technical, financial or other issues, which prevent that the asset is maintained in good conditions for its use.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
124

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 15 - Leases

15.1
Disclosures on finance leases, lessee

The asset acquired under the financial lease agreement method relates to a contract which SQM S.A. has with Inversiones La Esperanza S.A. which began in June 1992 and ends on June 31, 2011. The agreement entered indicates 230 installments with a sum of UF 663.75 each with an annual interest rate of 8.5%.

The Company maintains financial lease arrangements as lessee for which there are no contingent installments or restrictions which should be reported.

The net carrying amount as of September 30, 2010 amounted to ThUS$1,381 and as of December 31, 2009 and January 1, 2009 amounted to ThUS$ 1,405 and ThUS$ 1,436, respectively.

15.2
Investment property under finance lease:
 
 
 
9/30/2010
   
12/31/2009
   
1/1/2009
 
Description of total investment property under finance lease, net:
 
ThUS$
   
ThUS$
   
ThUS$
 
                   
Financial lease, Las Americas Building
    1,381       1,405       1,436  
                         
Total
    1,381       1,405       1,436  

15.3
Reconciliation of minimum finance lease payments , lessee:

The reconciliation between the total gross investment and the present value is as follows:

Minimum payments
to be
made
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
 
Gross
investment
   
Deferred
interest
   
Present
value
   
Gross
investment
   
Deferred
interest
   
Present
value
   
Gross
investment
   
Deferred
interest
   
Present
value
 
Not exceeding one year
    293       (11 )     282       329       (29 )     300       268       (43 )     225  
Between 1 and 5 years
    -       -       -       192       (5 )     187       425       (28 )     397  
Total
    293       (11 )     282       521       (34 )     487       693       (71 )     622  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
125

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 16 - Employee benefits

16.1
Provisions for employee benefits

Classes of benefits and expenses by employee
 
9/30/2010
   
12/31/2009
   
1/1/2009
 
   
ThUS$
   
ThUS$
   
ThUS$
 
Current
                 
Profit sharing and bonuses
    34,732       16,375       22,112  
Total
    34,732       16,375       22,112  
                         
Non- current
                       
Profit sharing and bonuses
    430       20,082       12,000  
Severance indemnities
    25,233       28,682       20,186  
Pension Plan
    1,709       1,709       2,873  
Total
    27,372       50,473       35,059  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
126

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 16 - Employee benefits, continued

16.2
Policies on defined benefit plan

This policy is applied to all benefits received for services provided by the Company's employees.

Short-term benefits for active employees are represented by salaries, social welfare benefits, paid time-off, sickness leaves and other leaves, profit sharing and incentives and non-monetary benefits; e.g., healthcare service, housing, subsidized or free goods or services.  These will be paid over a term not exceeding twelve months.

Staff severance indemnities

The Company only provides compensation and benefits to active employees.

For each incentive bonus delivered to the Company’s employees, there will be a disbursement in the first quarter of the following year and this will be calculated based on Profit for the period at the end of each period applying a factor obtained subsequent to the employee appraisal process.

The bonus provided to the Company’s directors is calculated based on Profit for the period at each year-end and will consider the application of a percentage factor.

The benefit relates to vacations (short-term benefits to employees), which is provided in the Labor Code which indicates that employees with more than a year of service will be entitled to annual holidays for a period not lower than fifteen paid business days. The Company provides the benefit of two additional vacation days.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
127

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 16 - Employee benefits, continued

Staff severance indemnities are agreed and payable based on the last salary for each year of service for the Company or with certain maximum limits in respect to the number of years to be considered or in respect to monetary terms. In general, this benefit is payable when the employee or worker ceases to provide his/her services to the Company and the right for its collection can be acquired because of different causes, as indicated in the respective agreements; e.g., retirement, dismissal, voluntary retirement, incapacity or disability, death, etc.

Law No. 19,728 published on May 14, 2001 which became effective on October 14, 2002 required “Compulsory Unemployment Insurance” in favor of all depending employees regulated by the Chilean Labor Code.  Article 5 of this law provided the financing of this insurance through monthly contribution payments by both the employee and the employer.

All benefits provided by the company are current. Certain benefits such as vacation and severance indemnities are long-term benefits which are accumulative. These relate to services provided in which there are future disbursements which will be subsequent to twelve months

16.3
Other long-term benefits

The other long-term benefits relate to staff severance indemnities and are recorded at their actuarial value.

 
 
6/30/2010
   
12/31/2009
   
1/1/2009
 
Staff severance indemnities at actuarial value
 
ThUS$
   
ThUS$
   
ThUS$
 
Staff severance indemnities, Chile
    24,602       28,170       19,478  
Other obligations in companies elsewhere
    631       512       708  
Total other non-current liabilities
    25,233       28,682       20,186  
                         
SQM North America’s pensions plan
    1,709       1,709       2,873  
Total post employment obligations
    1,709       1,709       2,873  

Staff severance indemnities have been calculated under the actuarial assessment method of the Company’s obligations with respect to staff severance indemnities, which relate to defined benefit plans which consist of days of remuneration per year served at the time of retirement under conditions agreed in the respective agreements established between the Company and its employees.

The methodology followed to determine the accrual for all the employees adhered to agreements considers turnover and salary increase rates according to the valuation method referred to as Accumulated Benefit Valuation or Accrued Cost of the Benefit Method. This methodology is established in IAS 19.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
128

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 16 - Employee benefits, continued

About the characteristics of the indemnity fund

Under this benefit plan, the Company retains the obligation for the payment of staff severance indemnities related to retirements without establishing a separate fund with specific assets, which is referred to as not funded. The discount interest rate of expected flows to be used was 6%.

Benefit payment conditions

The staff severance indemnity benefit relates to remuneration days for year worked for the Company with no limit of salary or years of services for the Company, when employees cease to work for the Company due to turnover or death.  In this case, the maximum age for men is 65 years and 60 years old for women, which are the usual ages for retirement due to achieving the senior citizen age according to the Chilean pensions system provided in Decree Law 3,500 of 1980.

Methodology

The determination of the obligation for benefits under IAS 19, Projected Benefit Obligation (PBO) is described as follows:

To determine the Company's total liability, we used a mathematical simulation model which was programmed using a computer and which processed the situation of each employee on an individual basis.

This model considered months as discrete time; i.e., the Company determined the age of each person and his/her salary on a monthly basis according to the growth rate. Thus, information on each person was simulated from the beginning of the life of his/her employment contract or when he/she started earning benefits up to the month in which it reaches the normal retirement age, generating in each period the possible retirement according to the Company’s turnover rate and the mortality rate according to the age reached. When he/she reaches the retirement age, the employee finishes his/her service for the Company and receives indemnity related to retirement due to old age.

The methodology followed to determine the accrual for all the employees adhered to agreements has considered turnover rates and the mortality rate RV-2004 established by the Chilean Superintendence of Securities and Insurance to calculate pension-related life insurance reserves in Chile according to the Accumulated Benefit Valuation or Accrued Cost of Benefit Method. This methodology is established in IAS 19 Retirement Benefit Costs.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
129

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 16 - Employee benefits, continued

16.4
Employee post retirement obligations

Our subsidiary, SQM North America has established with its employees certain pension plans for retired employees, which are calculated measuring the expected future forecasted staff severance indemnity obligation using a net salary gradual rate of restatements for inflation, mortality and turnover assumptions discounting the resulting amounts at present value using an interest rate of 6.5%. The net balance of this liability is presented under Non-current provisions for benefits to employees.

The table below establishes the status of the plan financing and the amounts recognized in the consolidated balance sheet:

   
2010
   
2009
 
   
ThUS$
   
ThUS$
 
Variation in the benefit liability:
           
Benefit liability at the beginning of year
    6,631       6,631  
Cost of service
    1       1  
Interest cost
    423       423  
Actuarial loss
    33       33  
Benefits paid
    (297 )     (297 )
Benefit liability at year-end
    6,791       6,791  
                 
Change in the plan’s assets:
               
Fair value of the plan’s assets at beginning of year
    3,758       3,758  
Contributions by the employer
    448       448  
Actual return (loss) on plan assets
    1,173       1,173  
Benefits paid
    (297 )     (297 )
Fair value of the plan assets’ at year-end
    5,082       5,082  
                 
Status of financing
    (1,709 )     (1,709 )
Items not yet recognized as net regular pension-related cost elements:
               
Net actuarial loss at the beginning of year
    (4,186 )     (4,186 )
Amortization during the period
    198       198  
Net gain or loss during the period
    857       857  
Adjustment made to recognize the minimum pension-related liability
    (3,131 )     (3,131 )
Accrued pension-related (liability) / prepaid pension-related cost
    (1,709 )     (1,709 )

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
130

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 16 - Employee benefits, continued

16.4
Employee post retirement obligations, continued

As of September 30, 2010, the net regular pension-related expense was composed of the following elements:

   
2010
 
   
ThUS$
 
       
Costs or benefits of services earned during the period
    1  
Cost of interest in benefit liability
    423  
Actual return in plan’s assets
    (1,173 )
Amortization of loss from prior periods
    198  
Net gain for the period
    889  
Net regular pension-related expense
    338  

As of September 30, 2010, distributions of the plan assets by category are detailed as follows:

   
2010
 
       
Growth amounts
    59 %
International amounts
    25 %
Growth and income amounts
    -  
Taxable bonus
    14 %
Treasury amounts
    0 %
Money market funds
    2 %
      100 %

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
131

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 17 - Disclosures on net equity

The detail and movements in the funds of net equity accounts are shown in the Consolidated statement of changes in net equity.

17.1
Disclosures on issued capital

Issued share capital is divided into 263,196,524 fully paid and subscribed shares with no par value composed of a Series "A" with142,819,552 shares and Series “B” shares with 120,376,972 shares, where both series are preferred shares.

17.2
Disclosures on preference share capital

The preferential voting rights of each series are as follows:

Series “A”:
If the election of the President of the Company results in a tied vote, the Company's directors may vote once again, without the vote of the director elected by the Series B shareholders.

Series “B”:
 
1)
A general or extraordinary shareholders' meeting may be called at the request of shareholders representing 5% of the Company's Series B shares.
 
2)
An extraordinary meeting of the Board of Directors may be called with or without the agreement of the Company's President, at the request of the director elected by Series B shareholders.

As of September 30, 2010, December 31, 2009 and January 1, 2009, the Group does not maintain any dominant company's shares either directly or through investees.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
132

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 17 - Disclosures on net equity, continued

Detail of classes of capital in preference shares:

Class of capital in preferred shares
 
9/30/2010
   
31/12/2009
   
01/01/2009
 
Description of class of capital in preferred shares
 
Series A
   
Series B
   
Series A
   
Series B
   
Series A
   
Series B
 
Number of authorized shares
    142,819,552       120,376,972       142,819,552       120,376,972       142,819,552       120,376,972  
Par value of shares in ThUS$
    -       -       -       -       -       -  
Capital amount in shares ThUS$
    134,750       342,636       134,750       342,636       134,750       342,636  
Amount of premium issuance ThUS$
    -       -       -       -       -       -  
Amount of reserves ThUS$
    -       -       -       -       -       -  
Number of fully subscribed and paid shares
    142,819,552       120,376,972       142,819,552       120,376,972       142,819,552       120,376,972  
Number of subscribed, partially paid shares
    -       -       -       -       -       -  
Total number of subscribed shares
    142,819,552       120,376,972       142,819,552       120,376,972       142,819,552       120,376,972  

As of September 30, 2010, December 31, 2009 and January 1, 2009, the Company has not placed any new issuances of shares in the market.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
133

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 17 - Disclosures on net equity, continued

17.3
Dividend policy

As required by Article 19 of the Chilean Shareholders’ Company Act, unless otherwise decided by unanimous vote of the holders of issued and subscribed shares, we must distribute a cash dividend in an amount equal to at least 30% of our consolidated Profit for the period ended as of December 31, 2009 unless and except to the extent it has a deficit in retained earnings (losses not absorbed in prior years.)

The Company’s dividend policy for 2010 is as follows:

 
-
Distribution and payment in favor of each shareholder of a final dividend which will be equivalent to 50% of Profit for the period obtained in 2010.

 
-
Distribution and payment, if possible during 2010, of a provisional dividend which will be recorded against the aforementioned final dividend. This provisional dividend will be paid probably during the last quarter of 2010 and its amount could not exceed 50% of the retained earnings for distribution obtained during 2010, which are reflected in the Company’s financial statements as of September 30, 2010.

 
-
The distribution and payment by the Company of the remaining balance of the final dividend related to Profit for the period for the 2010 commercial year in up to two installments, which will have to be effectively paid and distributed prior to June 30, 2011.

 
-
An amount equivalent to the remaining 50% of the Company’s profit for the period for 2010 will be retained and destined to the financing of operations of one or more of the Company’s investment projects with no prejudice of the possible future capitalization of the entirety or a portion of this.

-
The Board of Directors does not consider the payment of any additional or interim dividends.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
134

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 17 - Disclosures on net equity, continued

17.4
Provisional Dividends

At a Board of Directors meeting held on April 29, 2010, the Directors unanimously agreed to reduce the dividend distribution which implies to pay a final dividend of US$ 0.62131 per share as a result of such profit for the period. Notwithstanding the above, a deduction amounting to US$ 0.37994 per share should be applied to this final dividend, which was already paid as a provisional dividend. In line with this, the balance amounting to US$ 0,24137 per share, will be paid and distributed in favor of those Company’s shareholders registered with the respective shareholders ‘ registry as of   the fifth business day prior to the day in which this dividend will be paid.

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. This dividend totals approximately ThUS$100,000 and is equivalent to 40% of distributable 2009 profit for the period, accumulated as of September 30, 2009. This dividend is payable with a charge to profit for the period for that commercial year to SQM shareholders registered in the respective shareholders’ registry as of the fifth business day prior to December 16, 2009, in its equivalent in Chilean pesos, based on the observed dollar exchange rate as published in the Official Gazette prevailing on December 10, 2009.

Note 18 - Provisions and other non-financial liabilities

18.1
Classes of Provisions

Description of classes of provisions
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Other current provisions
                 
                   
Provision for legal complaints
    590       590       715  
Other provisions
    12,945       17,632       8,836  
Total
    13,535       18,222       9,551  
                         
Other non-current provisions
                       
                         
Other provisions
    3,500       3,500       3,181  
Total
    3,500       3,500       3,181  

Provisions for legal complaints relate to legal expenses the resolution of which is pending in the lawsuit to make the disbursement for expenses incurred for this purpose.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
135

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 18 - Provisions and other non-financial liabilities, continued

18.2   Description of other provisions

Description of other provisions
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
Current provisions, other provisions
                 
Provision for tax loss in fiscal litigation
    1,607       1,564       1,284  
royalties, agreement with CORFO (the Chilean Economic Development Agency)
    4,578       3,752       5,256  
Current provisions, other provisions
    3,479       6,500       -  
Retirement plan
    907       2,500       -  
Miscellaneous provisions
    2,374       3,316       2,296  
Total
    12,945       17,632       8,836  
Other long-term provisions
                       
Mine closure
    3,500       3,500       3,181  
Total
    3,500       3,500       3,181  

18.2
Other non-financial liabilities, current

Description of other liabilities
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Tax withholdings
    8,036       6,043       594  
VAT payable
    3,184       4,733       5,322  
Guarantees received
    1,026       1,016       2,511  
Provision for minimum dividend
    -       -       50,422  
Monthly Tax Provisional Payments
    5,309       5,071       10,345  
Deferred income
    49,213       16,537       31,722  
Withholdings from employees and salaries payable
    4,925       4,858       4,199  
Vacation provision
    12,842       13,897       10,518  
Other current liabilities
    71       50       49  
Total
    84,606       52,205       115,682  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
136

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 18 - Provisions and other non-financial liabilities, continued

18.3
Movements in provisions as of September 30, 2010

Description of items which gave rise to
variations
 
Guarantee
   
Restructuring
   
Legal complaints
   
Onerous
contracts
   
Dismantling,
rehabilitation and
site restoration
costs
   
Other
provisions
   
Total
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Total provisions, initial balance
    -       -       590       -       -       21,132       21,722  
Changes in provisions:
    -       -       -       -       -       -       -  
Additional provisions
    -       -       -       -       -       14,024       14,024  
Increase (decrease) in existing provisions
    -       -       -       -       -       -       -  
Acquisition through business combinations
    -       -       -       -       -       -       -  
Divestitures through business disposals
    -       -       -       -       -       -       -  
Provision used
    -       -       -       -       -       (18,753 )     (18,753 )
Reversal of unused provision
    -       -       -       -       -       -       -  
Increase due to adjustment in value of money throughout time
    -       -       -       -       -       -       -  
Increase (decrease) in discount rate
    -       -       -       -       -       -       -  
Increase (decrease) in foreign currency translation
    -       -       -       -       -       42       42  
Other increases (decreases)
    -       -       -       -       -       -       -  
      -       -       -       -       -       -       -  
Total provisions, final balance
    -       -       590       -       -       16,445       17,035  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
137

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
18.4
Movements in provisions as of December 31, 2009

Description of items which gave rise to
variations
 
Guarantee
   
Restructuring
   
Legal complaints
   
Onerous
contracts
   
Dismantling,
rehabilitation and
site restoration
costs
   
Other
provisions
   
Total
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Total provisions, initial balance
    -       -       715       -       -       12,017       12,732  
Changes in provisions:
                                                       
Additional provisions
    -       -       200       -       -       16,384       16,584  
Increase (decrease) in existing provisions
    -       -       -       -       -       -       -  
Acquisition through business combinations
    -       -       -       -       -       -       -  
Divestitures through business disposals
    -       -       -       -       -       -       -  
Provision used
    -       -       (325 )     -       -       (6,898 )     (7,223 )
Reversal of unused provision
    -       -       -       -       -       -       -  
Increase due to adjustment in value of money throughout time
    -       -       -       -       -       -       -  
Increase (decrease) in discount rate
    -       -       -       -       -       -       -  
Increase (decrease) in foreign currency translation
    -       -       -       -       -       (371 )     (371 )
Other increases (decreases)
    -       -       -       -       -       -       -  
                                                         
Total provisions, final balance
    -       -       590       -       -       21,132       21,722  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
138

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 18 - Provisions and other non-financial liabilities, continued

18.4
Detail of main classes of provisions

Legal expenses: this provision depends on the pending resolution of a lawsuit to conduct the disbursement for expenses associated with and incurred for this purpose.

Tax accrual in tax litigation: this accrual relates to lawsuits pending resolution related to taxes in Brazil for two of our subsidiaries, SQM Brazil and NNC.

Royalties CORFO (Economic Development Agency) agreement: relates to the exploitation of mining properties which SQM Salar S.A. pays on a quarterly basis to the Economic Development Agency.  The amount of the lease payable is calculated based on sales of products extracted from the Atacama Saltpeter deposit.

The settlement of these will be performed on a quarterly basis.

Temporary closure of El Toco operation: The Company’s Board of Directors unanimously agreed to approve the temporary closure of Toco and Pampa Blanca mining sectors.  The Company accrued the legal severance indemnity for the employees subject to this closure. Additional benefits which will be paid to employees will correspond to 2010 expenses.

Retirement plan: corresponds to a benefit agreed with employees to retire from the Company.  Those employees who invoked the agreed plan signed their consent as of December 31, 2009 and the effective retirement date will be the second quarter of 2010.

Through the present date, SQM and its subsidiaries do not present any uncertainty on the timing and amount of a class of accrual.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
139

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 19 - Contingencies and restrictions

The Company maintains lawsuits or other relevant legal actions which are detailed as follows:

19.1
Lawsuits or other relevant events

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
: Sociedad Química y Minera de Chile S.A
 
Date of lawsuit
: November 1999
 
Court
: Civil Court of Pozo Almonte
 
Cause
: Partial annulment of mining property, Paz II1 to 25
 
Instance
: Evidence provided
 
Nominal amount
: ThUS$162
     
3.
Plaintiff
: Compañía Productora de Yodo y Sales S.A.
 
Defendant
: Sociedad Química y Minera de Chile 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

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
140

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 19 - Contingencies and restrictions, continued
 
19.1
Lawsuits or other relevant events, continued

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
 
     
6.
Plaintiff
: Agraria Santa Aldina Limitada
 
Defendant
: SQM Peru S.A.
 
Date of lawsuit
: June 2009
 
Court
: Civil Court of Pisco - Peru
 
Cause
: Seeks compensation for damages for alleged breach of the terms
   
  and conditions of product distribution contract
 
Instance
: Appeal
 
Nominal amount
: ThUS$6,000
     
7.
Plaintiff
: Eduardo Fajardo Núñez, Ana María Canales Poblete, Raquel Beltrán
 
 
Parra, Eduardo Fajardo Beltrán and Martina Fajardo Beltrán
 
Defendant
: SQM Salar S.A. and its insurance companies.
 
Date of lawsuit
: November 2009
 
Court
: 20th Civil Court of Santiago
 
Cause
: Work accident
 
Instance
: Evidentiary stage
 
Nominal amount
: ThUS$1,880
     
8.
Plaintiff
: María Elena Dorantes and their daughters 
 
Defendant
: SQM North America Corp. (SQM)
 
Date of lawsuit
: October-November 2009
 
Court
: High Court of Justice of San Francisco, California, USA
 
Cause
: Indemnity claim presented against SQM and other
   
17 companies as a result of the alleged responsibility for the death of Mr. Victorino Dorantes which, in the opinion of the plaintiff, would have occurred after inhaling, ingesting or absorbing certain products, which the defendants provided to the employers of Mr. Dorantes for commercialization
 
Instance
: Defense plea
 
Nominal amount
: Undetermined amount
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
141

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 19 - Contingencies and restrictions, continued

19.1 Lawsuits or other relevant events, continued

9.
Plaintiff
: Poli Instalaciones Limitada
 
Defendant 
: SQM Industrial S.A.
 
Date of lawsuit 
: August 2010
 
Court 
: Arbitrage procedure
 
Cause 
: Seeks compensation for damages for the application of a contract clause which allows early agreement termination.
 
Instance
: Demand response
 
Nominal amount
: ThUS$ 484
     
10.
Plaintiff
: Newland S.A.
 
Defendant
: SQM Industrial S.A.
 
Date of lawsuit
: August 2010
 
Court
: Arbitrage procedure
 
Cause
: Compensation for damages for alleged non-compliance with obligations.
 
Nominal amount
: ThUS$480
     
11.
Plaintiff 
: María Loreto Lorca Morales, Nathan Guerrero Lorca, Maryori Guerrero
   
Lorca, Abraham Guerrero Lorca, Esteban Guerrero Lorca and María Sol
   
Osorio Tapia et al
 
Defendant
: Gonzalo Daved Valenzuela, Julio Zamorano Avendaño, Comercial
   
Transportes y Servicios Generales Julio Zamorano Avendaño
   
E.I.R.L. and jointly and severally, SQM S.A. and its insurance companies
 
Date of lawsuit
: August 2010
 
Court
: 2nd Court of Iquique
 
Cause
: Lawsuit for compensation for damages related to the collision between two
   
trucks in July 2008 in the area surrounding to Pozo Almonte resulting in the
   
deaths of Messrs. Alberto Galleguillos Monardes and Fernando
   
Guerrero Tapia
 
Cause
: Lawsuit
 
Nominal amount
: ThUS$3,500

SQM S.A. and its subsidiaries have been involved and probably will continue to be involved as plaintiffs or defendants in several legal cases, which have been filed and will be subject to the decisions provided by Ordinary Courts of Justice. Those cases, which are regulated by legal provisions currently effective, mainly seek to enforce or file certain opposing 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.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
142

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 19 - Contingencies and restrictions, continued

Soquimich Comercial S.A. has been participating and probably will continue to participate habitually as a plaintiff in several legal cases through which it seeks mainly to collect and receive the amounts owed to it, which in the nominal, total and approximate amount of ThUS $900.

SQM S.A. and its subsidiaries have tried and currently continue to make efforts to receive payment of certain amounts still owed to them related to their normal business activities. Those amounts will continue to be legally and non-judicially demanded by the plaintiffs and the actions exercised in relation to them are currently in full force.

SQM S.A. and its subsidiaries have not been legally notified of other complaints other than those referred to in paragraph l) above and pursue the voidance of certain mining properties acquired 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$1 50.

19.2
Restrictions:

Bank loans of SQM S.A. and its subsidiaries contain restrictions similar to those of other comparable loans existing at the dates when those debt agreements were entered into. These restrictions involve maximum indebtedness and minimum equity. 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.

19.3
Commitments:

The subsidiary SQM Salar S.A. has signed a rental contract with the Economic Development Agency (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 reflecting in profit or loss an amount of ThUS$ 13,518 as of September 30, 2010 (ThUS$ 14,077 as of September 30, 2009).

19.4
Restricted or pledged cash

The subsidiary Isapre Norte Grande S.A. in compliance with that established by the Chilean Superintendence of Healthcare, which regulates the running of pension-related health institutions, maintains a guarantee in financial instruments, delivered in deposits, custody and administration to Banco de Chile.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
143

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 19 - Contingencies and restrictions, continued

This guarantee, according to the regulations issued by the Chilean Superintendence of Healthcare is equivalent to the total sum owed to its members and medical providers. Banco de Chile on a daily basis reports the present value of the guarantee to the Chilean Superintendence of Healthcare and Isapre Norte Grande Ltda. As of September 30, 2010, the guarantee amounts to ThUS$ 492.

19.5
Sureties obtained from third parties

The main sureties received from third parties (distributors) to guarantee Soquimich Comercial S.A. the compliance with obligations in contracts of commercial mandates for the distribution and sale of fertilizers amounted to ThUS$6,976 as of September 30, 2010; as of December 31, 2009 amounted to ThUS$6,523 and as of January 1, 2009 amounted to ThUS$5,302 which are detailed as follows:

Entity name
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
                   
Llanos y Wammes Soc. Com. Ltda
    2,272       2,037       1,727  
Fertglobal Chile Ltda.
    3,515       3,352       2,671  
Tattersall Agroinsumos S.A.
    1,189       1,134       904  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
144

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 19. Contingencies and restrictions, continued

19.6
Indirect guarantees

Guarantees in which there is no pending balance indirectly reflect that the respective guarantees are in force and approved by the Company's Board of Directors and have not been used by the respective subsidiary.
 
       
Pending balances as of the closing date
of the financial statements
 
   
Debtor
 
Type of
   9/30/2010    
12/31/2009
   
1/1/2009
 
Creditor of the guarantee
 
Name
 
Relationship
 
guarantee
 
ThUS$
   
ThUS$
   
ThUS$
 
Australian and New Zealand Bank
 
SQM North America  Corp
 
Subsidiary
 
Bond
    -       -       -  
Australian and New Zealand Bank
 
SQM Europe N.V.
 
Subsidiary
 
Bond
    -       -       -  
Generale Bank
 
SQM North America  Corp
 
Subsidiary
 
Bond
    -       -       -  
Generale Bank
 
SQM Europe N.V.
 
Subsidiary
 
Bond
    -       -       -  
Kredietbank
 
SQM North America  Corp
 
Subsidiary
 
Bond
    -       -       -  
Kredietbank
 
SQM Europe N.V.
 
Subsidiary
 
Bond
    -       -       -  
Banks and financial institutions
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -       -  
Banks and financial institutions
 
SQM Europe N.V.
 
Subsidiary
 
Bond
    -       -       -  
Banks and financial institutions
 
SQM North America  Corp
 
Subsidiary
 
Bond
    -       -       -  
Banks and financial institutions
 
Nitratos Naturais do Chile Ltda.
 
Subsidiary
 
Bond
    -       -       -  
Banks and financial institutions
 
SQM México S.A. de C.V.
 
Subsidiary
 
Bond
    -       -       -  
Banks and financial institutions
 
SQM Brasil Ltda.
 
Subsidiary
 
Bond
    -       -       -  
Banque Nationale de Paris
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -       -  
San Francisco Branch
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -       -  
Sociedad Nacional de Mineria A.G.
 
SQM Potasio S.A.
 
Subsidiary
 
Bond
    -       -       -  
Royal Bank of Canada
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -       -  
Citibank N.Y
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -       -  
BBVA Banco Bilbao Vizcaya Argentaria
 
Royal Seed Trading A..V.V.
 
Subsidiary
 
Bond
    -       100,053       100,204  
ING Capital LLC
 
Royal Seed Trading A..V.V.
 
Subsidiary
 
Bond
    80,309       80,055       80,215  
JP Morgan Chase Bank
 
SQM Industrial S.A.
 
Subsidiary
 
Bond
    -       -       -  
Export Development Canada
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       50,019       50,032  
BBVA Bancomer S.A.
 
Royal Seed Trading
 
Subsidiary
 
Bond
    -       75,000       -  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
145

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 20 - Revenue

As of September 30, 2010 and 2009, revenue is detailed as follows:

   
9/30/2010
   
9/31/2009
 
Type of revenue
 
ThUS$
   
ThUS$
 
             
Sales of goods
    1,319,751       1,046,929  
Provision of services
    4,985       5,240  
Interest income
    -       -  
Income from royalties
    -       -  
Income from dividends
    -       -  
Total
    1,324,736       1,052,169  
 
Note 21 - Earnings per Share
 
Basic earnings per share will be calculated dividing profit for the period for the period attributable to the Company’s shareholders by the weighted average of the number of shares in circulation during that period.

As expressed, basic earnings per share is as follows:

Basic earnings per share
 
9/30/2010
ThUS$
   
9/30/2009
ThUS$
 
             
Earnings (loss) attributable to the holders of instruments in the net equity of the controlling entity
    276,325       259,414  

   
9/30/2010
Units
   
9/30/2009
Units
 
Number of common shares in circulation
    263,196,524       263,196,524  

   
9/30/2010
   
9/30/2009
 
             
Basic earnings per share
    1.0499       0.9856  

The Company has not made any operation with a potential diluted effect which assumes a diluted benefit per share different from the basic benefit per share.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
146

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 22 - Loan costs

The costs of interest are recognized as expenses in the year in which they are incurred except for those which are directly related to the acquisition and construction of tangible fixed assets and which comply with the requirements of IAS 23. As of September 30, 2010, total financial expenses incurred amount to ThUS$26,534 (ThUS$23,141 as of September 30, 2009.)

The Company capitalizes all interest costs which directly relate to the construction or the acquisition of property, plant and equipment, which require a substantial time to be suitable for use.

Costs of capitalized interest, property, plant and equipment

The cost of capitalized interest is determined applying weighted average or weighted average of all financing costs incurred by the Company to the monthly end balances of work-in-progress meeting the requirements of IAS 23.

The rates and costs for capitalized interest of property, plant and equipment are detailed as follows:

   
9/30/2010
   
12/31/2009
   
9/30/2009
 
                   
Capitalization rate of costs for interest capitalized, property, plant and equipment
    7 %     7 %     7 %
Amount of costs for interest capitalized in ThUS$
    19,547       19,231       13,089  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
147

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 23 - Effect of variations in the foreign currency exchange rates

a)             Foreign currency exchange differences recognized in profit or loss except for financial instruments measured at fair value through profit or loss:

   
9/30/2010
ThUS$
   
9/30/2009
ThUS$
 
             
Foreign currency exchange difference recognized in profit or loss for the period
    (6,875 )     (8,528 )
                 
Reserves for foreign currency exchange differences
    345       842  

b)
Reserves for foreign currency exchange differences:

As of September 30, 2010 and December 31, 2009, the detail is as follows:

Detail
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
 
             
Changes in equity generated through the proportional equity method  for conversion:
           
Comercial Hydro S.A.
    1,033       946  
SQMC Internacional Ltda.
    46       43  
Proinsa Ltda.
    34       32  
Agrorama Callegari Ltda.
    177       66  
Isapre Cruz del Norte Ltda.
    86       37  
Almacenes y Depósitos Ltda.
    72       42  
Sales de Magnesio Ltda.
    96       53  
Sociedad de Servicios de Salud S.A.
    35       15  
Total
    1,579       1,234  

The functional currency of these subsidiaries is Chilean peso.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
148

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The Environment
 
24.1
Disclosures on disbursements related to the environment

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 Company’s Sustainable Development Policy.  SQM is currently operating under an Environmental Management System (EMS) which has allowed strengthening its environmental performance through the effective application of the Company’s Sustainable Development Policy

Operations that use caliche as a raw material are carried out in desert areas with climatic conditions that are favorable for drying solids and evaporating liquids using solar energy. Operations involving the open-pit extraction of minerals, due to their low waste-to-mineral ratio, generate remaining deposits that slightly alter the environment. A portion of the ore extracted is crashed, a process in which particle emissions occur; currently this operation is conducted only in the worksite of Pedro de Valdivia. In the María Elena location, crushing units used to operate which affected the air quality. The Company has implemented a range of mitigating actions  that have shown notable improvement in air quality at Maria Elena and beginning on March 2010, no ore crushing process is conducted in the Maria Elena sector.

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 (Atacama Saltpeter Deposit) 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, within the framework of the environmental studies which the Company is conducting, 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 Maria 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.

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
149

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued

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.

24.2
Detail of information on disbursements related to the environment

The accumulated disbursements in which SQM and its subsidiaries have incurred as of September 30, 2010 for the concept of investments in production processes, verification and control of compliance with ordinances and laws relative to industrial processes and facilities, including prior years disbursements related to this projects amounted to ThUS$ 10,269 and their detail is as follows:

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
150

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
Accumulated expenses as of September 30, 2010
Identification of the
Parent Company or
subsidiary
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was made
or will be made
 
Asset / Expense
 
Description of the
asset or expense
Item
 
Amount of
disbursement
for the Period
ThUS$
 
Certain or
estimated date in
which
disbursements
were or will be
made
SQM Industrial S.A.
 
MCLX – Cleaning of rescue yard
 
Cost reduction
 
Expense
 
Development
 
604
 
9-30-2010
SQM Industrial S.A.
 
ANMI – Consulting in infrastructure to store hazardous chemicals
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
46
 
9-30-2010
SQM Industrial S.A.
 
MNH8 – Lightning improvement
 
Sustentation
 
Asset
 
Development
 
228
 
12-31-2010
SQM Industrial S.A.
 
SCCY – Hazardous waste garbage dump
 
Sustentation
 
Expense
 
Development
 
165
 
9-30-2010
SQM Industrial S.A.
 
JNTU – San Isidro water assessment
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Not classified
 
556
 
12-31-2010
SQM Industrial S.A.
 
JNNX – Several environment nitrate
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
51
 
9-30-2010
SQM Industrial S.A.
 
MNTE – industrial hygiene equipment
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
19
 
12-31-2010
SQM Industrial S.A.
 
INST – Acquisition of used lubricant quick discharge. NV-ME-PB
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
46
 
7-1-2010
SQM Industrial S.A.
 
MP17 – Normalization of drinking water chlorination ME/CS/PV
 
Sustentation
 
Expense
 
Not classified
 
7
 
12-31-2010
SQM Industrial S.A.
 
MP5W – Normalization of TK Fuel
 
Sustentation
 
Asset
 
Not classified
 
392
 
12-31-2010
SQM Industrial S.A.
 
FNWR - DIA Pampa Blanca discard yard
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
30
 
9-30-2010
SQM Industrial S.A.
 
MNYS – Actions for the dissemination of cultural heritage , technology change Maria Elena
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
21
 
12-31-2010
SQM Industrial S.A.
 
MP8Z – Automation of water volume inlet pipe ME, CS and Vergara
 
Sustentation
 
Asset
 
Development
 
261
 
9-30-2010
SQM Industrial S.A.
 
MPL5 – Repair of sanitary and electric facilities
 
Sustentation
 
Asset - Expense
 
Development
 
184
 
9-30-2010
SQM Industrial S.A.
 
MPIS – Stabilization of streets and suppression of dust at sidewalks
 
Sustentation
 
Asset
 
Development
 
735
 
9-30-2010
SQM Industrial S.A.
 
PPNK – Handling of PV Ammoniac in plant detention
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
22
 
12-31-2010
SQM Industrial S.A.
 
MPGF – Improve sealing and pressurization room 031
 
Sustentation
 
Asset
 
Not classified
 
48
 
12-31-2010
SQM Industrial S.A.
 
TPO4 – Indigenous camping
 
Sustentation
 
Asset - Expense
 
Not classified
 
87
 
6-11-2010
SQM Industrial S.A.
 
MPLS – Automated alarms and information of Hospital Monitoring Station
 
Not  Classified
 
Asset
 
Not classified
 
8
 
9-30-2010
SQM Industrial S.A.
 
ACI9 – PCI II (Considers solely environmental expense)
 
Sustentation: research and development
 
Expense
 
Research
 
7
 
12-31-2010
SQM Industrial S.A.
 
PPC1 – Eliminate OCB switches in substations 3 and 1/12 Pedro de Valdivia
 
Sustentation: equipment replacement
 
Asset
 
Not classified
 
101
 
12-1--2010
SQM Industrial S.A.
 
FP55 - Agua de Mar Pampa Blanca(Consider environment expense only
 
Sustentation
 
Asset
 
Development
 
880
 
12-31-2010
SQM Industrial S.A.
  
Management on environment (2010 only)
  
Not classified
  
Expense
  
Not classified
  
796
  
12-31-2010

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
151

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
Accumulated expenses as of September 30, 2010, continued
Identification of the
Parent Company or
subsidiary
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was made
or will be made
 
Asset / Expense
 
Description of the
asset or expense
Item
 
Amount of
disbursement
for the Period
ThUS$
 
Certain or
estimated date in
which
disbursements
were or will be
made
Minera Nueva Victoria S.A.
 
IPNW – Improvements in pavilions C/D/B in Iris
 
Sustentation
 
Asset
 
Not classified
 
39
 
12-31-2010
Minera Nueva Victoria S.A.
 
IPMN – Sanitary capacity enlargement Iris
 
Capacity extension
 
Asset
 
Development
 
85
 
9-30-2010
SQM Nitratos S.A.
 
PNH2 –Waste water treatment plant, wash yards PV-NV-PB
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Development
 
42
 
6-29-2010
SQM Nitratos S.A.
 
PP0V – Environmental projects maintenance ME-PV-NV-PB
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Development
 
82
 
12-31-2010
SQM Nitratos S.A.
 
IP6W - Waste water treatment plant,
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Not classified
 
95
 
9-30-2010
SQM Nitratos S.A.
 
PPAT – Risks prevention projects Sem II 2008
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
141
 
12-31-2010
SQM Salar S.A.
 
LP5K – Environmental evaluation extension production capacity MOP
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Not classified
 
4
 
9-30-2010
SQM Salar S.A.
 
LNNT – Renewal of meteorological station Salar Chaxa
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
98
 
9-30-2010
SQM Salar S.A.
 
LP5J – Water research study Atacama Salar
 
Sustentation: Risk prevention and the environment
 
Expense
 
Research
 
83
 
12-31-2010
SQM Salar S.A.
 
LP82 – Project to foster the agricultural activities in Salar locations
 
Sustentation
 
Asset - Expense
 
Development
 
280
 
12-31-2010
SQM Salar S.A.
 
LPGA – Pit construction to infiltrate user water Toconao camp
 
Capacity extension
 
Asset
 
Not classified
 
105
 
9-30-2010
SQM Salar S.A.
 
LPK2 – Implementation of foreign currency exchange facility
 
Not classified
 
Asset
 
Not classified
 
102
 
9-30-2010
SQM Salar S.A.
 
CPTP – Installation drinking water and emergency showers
 
Sustentation
 
Asset
 
Not classified
 
13
 
4-1-2011
SQM Salar S.A.
 
LPPJ – Dual Plant Phase II (considers solely the environment expense)
 
Capacity extension
 
Expense
 
Not classified
 
6
 
12-1-2011
SQM Salar S.A.
 
LPN3 – Compacting and prilling engineering (Consider environmental expense only)
 
Sustentation: Research and development
 
Expense
 
Research
 
16
 
7-31-2011
SQM Salar S.A.
 
LPTF – Environmental essay and prospecting 2010
 
Sustentation
 
Asset
 
Not classified
 
149
 
12-31-2010
SQM Salar S.A.
 
LPTJ – Sanitary work improvements
 
Sustentation
 
Asset
 
Not classified
 
92
 
5-1-2011
SIT S.A.
 
TNLA – Pavement on roads from work site to port
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
81
 
9-30-2010
SIT S.A.
 
PNOT – Lightning improvement in area FFCC
 
Sustentation
 
Asset
 
Development
 
369
 
12-31-2010
SIT S.A.
 
TPR8 – Elimination of waste water generation through vacuum
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
54
 
12-31-2010
SIT S.A.
  
TPLR – Implementation of pump system for used water to waste
  
Sustentation: Risk prevention and the environment
  
Asset - Expense
  
Not classified
  
68
  
9-30-2010
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
152

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
Accumulated expenses as of September 30, 2010, continued
 
Identification of the
Parent Company or
subsidiary
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was made
or will be made
 
Asset / Expense
 
Description of the
asset or expense
Item
 
Amount of
disbursement
for the Period
ThUS$
 
Certain or
estimated date in
which
disbursements
were or will be
made
SIT S.A.
 
TPM7-Environmental meshes in fields 3 and 4
 
Not classified
 
Asset
 
Not classified
 
524
 
9-30-2010
SQM S.A.
 
SCI6 – Environmental essays – Project Region  I
 
Not classified
 
Asset – Expense
 
Not classified
 
2.333
 
12-31-2010
SQM S.A.
 
IPXE – Environmental follow-up plan – Llamara Saltpeter Deposit
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
4
 
12-1-2012
SQM S.A.
 
IPFT – Cultural heritage Region I of Chile
 
Sustentation: Risk prevention and the environment
 
Asset – Expense
 
Not classified
 
110
 
12-31-2010
 
  
Total
  
 
  
 
  
 
  
10,269
  
 

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
153

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
Future expenses
Identification of the
Parent Company or
subsidiary
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was made or
will be made
 
Asset / Expense
 
Description of the
asset or expense
Item
 
Amount of
disbursement
for the Period
ThUS$
 
Certain or
estimated date in
which
disbursements
were or will be
made
SQM Industrial S.A.
 
ANMI – Consulting infrastructure to the storage of  Hazardous chemicals  products
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
4
 
11-1-2010
SQM Industrial S.A.
 
MNH8 - Lightning improvement
 
Sustentation
 
Asset
 
Development
 
20
 
12-31-2010
SQM Industrial S.A.
 
MP5W – Normalization of TK fuels
 
Sustentation
 
Asset
 
Not classified
 
516
 
12-31-2010
SQM Industrial S.A.
 
MNYS - Actions for the dissemination of cultural heritage , technology change Maria Elena
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
12
 
12-31-2010
SQM Industrial S.A.
 
PPC1 – Eliminate OCB switches in sub stations 3 and1/12 Pedro de Valdivia
 
Sustentation: Replacement of equipment
 
Asset
 
Not classified
 
171
 
12-1-2010
SQM Industrial S.A.
 
PPNK – Handling of Ammoniac PV in plant detention
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
210
 
12-31-2010
SQM Industrial S.A.
 
IPNX – Improvement NV Supervisor’s room
 
Sustentation
 
Asset - Expense
 
Not classified
 
10
 
12-1-2010
SQM Industrial S.A.
 
MPLS – Automated alarms and information of Hospital monitoring station
 
Not classified
 
Asset
 
Not classified
 
2
 
7-31-2010
SQM Industrial S.A.
 
PPZU – Normalize and certify plant fuel tanks
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
3.500
 
7-1-2011
SQM Industrial S.A.
 
MPQU – Construction of warehouse of hazardous chemical supplies
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
450
 
12-15-2010
SQM Industrial S.A.
 
FP55 – Pampa Blanca sea water (considers environmental expense)
 
Sustentation
 
Asset
 
Development
 
373
 
12-31-2010
SQM Industrial S.A.
 
ACI9 - PCI II Study (considers environmental expense)
 
Sustentation: Research and development
 
Asset
 
Research
 
16
 
12-1-2010
SQM Industrial S.A.
 
Environmental Management (solely 2010)
 
Not classified
 
Expense
 
Not classified
 
598
 
12-1-2010
Minera Nueva
 
IPNW – Improvement in C/D/B pavilions at Iris
 
Sustentation
 
Asset
 
Not classified
 
5
 
12-31-2010
SQM Nitratos S.A.
 
PP0V – Maintenance of environmental projects ME-PV-NV-PB
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Development
 
4
 
12-31-2010
SQM Nitratos S.A.
 
PPAT – Risk prevention projects Sem II 2008
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
14
 
12-31-2010
SQM Salar S.A.
 
LP5J – Water study Water Recharge Atacama Saltpeter deposit
 
Sustentation: Risk prevention and the environment
 
Expense
 
Research
 
29
 
12-31-2010
SQM Salar S.A
 
Nuevo – Study – Improvements in fuel facilities
 
Sustentation
 
Asset - Expense
 
Research
 
50
 
12-1-2011
SQM Salar S.A
 
LP82 – Project to foster agricultural activities in Salar Locations
 
Sustentation
 
Asset - Expense
 
Development
 
438
 
12-31-2010
SQM Salar S.A
 
CPTP – Installation of drinking water emergency showers
 
Sustentation
 
Expense
 
Not classified
 
13
 
4-1-2011
SQM Salar S.A.
  
LPTF – 2010 environmental study and prospecting
  
Sustentation
  
 Expense
  
Not classified
  
246
  
12-31-2010
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
154

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
Future expenses, continued
Identification of the
Parent Company or
subsidiary
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was made or
will be made
 
Asset / Expense
 
Description of the
asset or expense
Item
 
Amount of
disbursement
for the Period
ThUS$
 
Certain or
estimated date in
which
disbursements
were or will be
made
SQM Salar S.A.
 
CPZH – Handling of hydroxide press filter waste
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
41
 
3-30-2011
SQM Salar S.A
 
LPTJ – Sanitary work improvements
 
Sustentation
 
Asset
 
Not classified
 
107
 
5-1-2011
SQM Salar S.A
 
LPPJ – Dual Plant Phase II (considers solely the environment expense)
 
Capacity extension
 
Asset
 
Not classified
 
11
 
12-1-2011
SQM Salar S.A
 
LPN3 – Compacting and prilling engineering (Consider environmental expense only)
 
Sustentation: Research and development
 
Asset
 
Research
 
2
 
11-1-2010
SIT S.A.
 
PNOT – Lightning improvement in area FFCC
 
Sustentation
 
Asset
 
Development
 
65
 
12-1-2010
SIT S.A.
 
TPR8 – Elimination of waste water generation through vacuum
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
96
 
12-31-2010
SIT S.A.
 
TPYX – Enablement of dust collector for dust in the Tocopilla 3 yard rocker and stamp
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
50
 
12-31-2010
SQM S.A.
 
SCI6 – Environmental studies – I Region of Chile Project
 
Not classified
 
Asset - Expense
 
Not classified
 
52
 
12-31-2010
SQM S.A.
 
IPFT - I Region of Chile Cultural heritage
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Not classified
 
33
 
12-31-2010
SQM S.A.
 
IQ08 – PSA Llamara & Tamarugal Meadows
 
Sustentation: natural resources
 
Expense
 
Development
 
1.761
 
2-28-2011
SQM S.A.
 
IPXF- Environmental follow-up plan at Tamarugal Meadows
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
710
 
12-31-2012
SQM S.A.
 
IQ0C – Restoration of value NV Mine Zone
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
159
 
12-31-2011
SQM S.A.
 
IPXE – Environmental follow-up plan – Llamara Saltpeter deposit
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
838
 
12-31-2012
Total
  
 
  
 
  
 
  
 
  
10.606
  
 

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
155

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
Accumulated expenses as of December 31, 2009
 
Identification of the
Parent Company or
subsidiary
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was
made or will be made
 
Asset / Expense
 
Description of
the asset or
expense Item
 
Amount of
disbursement for
the Period ThUS$
 
Certain or estimated date
in which disbursements
were or will be made
SQM Industrial S.A.
 
Cleaning of rescue yard
 
Cost reduction
 
Expense
 
Development
 
569
 
12-31-2009
SQM Industrial S.A.
 
Implementation of sewage to ME treatment plant line
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
32
 
3-31-2009
SQM Industrial S.A.
 
Environmental study  - New ME crushing plant
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
5
 
4-30-2009
SQM Industrial S.A.
 
Consulting for infrastructure for the storage of hazardous chemicals
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
46
 
12-31-2009
SQM Industrial S.A.
 
Improvement in lighting
 
Sustentation
 
Asset
 
Development
 
221
 
12-31-2009
SQM Industrial S.A.
 
Sanitary facility ME prilling plant
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
44
 
9-30-2009
SQM Industrial S.A.
 
Hazardous waste garbage dump
 
Sustentation
 
Asset
 
Development
 
165
 
12-31-2009
SQM Industrial S.A.
 
San Isidro water assessment
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Not classified
 
505
 
12-31-2009
SQM Industrial S.A.
 
Improvement in NH3 level measurement
 
Sustentation
 
Expense
 
Not classified
 
64
 
12-30-2009
SQM Industrial S.A.
 
PV sanitary regulations traffic facilities
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
82
 
8-30-2009
SQM Industrial S.A.
 
Industrial hygiene equipment
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
31
 
12-31-2009
SQM Industrial S.A.
 
Replacement of starters and transformers with  PCB
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
4
 
12-31-2009
SQM Industrial S.A.
 
Acquisition for quick evacuation for used lubricants. NV-ME-PB
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
45
 
12-31-2009
SQM Industrial S.A.
 
Handling of waste at Antofagasta
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
17
 
12-31-2009
SQM Industrial S.A.
 
Normalization drinking water chloride ME/CS/PV
 
Sustentation
 
Expense
 
Not classified
 
7
 
2-28-2009
SQM Industrial S.A.
 
Normalization of TK fuels
 
Sustentation
 
Asset
 
Not classified
 
160
 
12-31-2009
SQM Industrial S.A.
 
DIA Discard field Pampa Blanca
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
30
 
12-31-2009
SQM Industrial S.A.
 
Actions for the dissemination of cultural heritage, technology change Maria Elena
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
20
 
12-31-2009
SQM Industrial S.A.
 
Chamber to detect gas leaking
 
Sustentation: Risk prevention and the environment
 
Expense
 
Research
 
5
 
1-31-2009
SQM Industrial S.A.
 
Automation of water volume inlet pipe ME, CS and Vergara
 
Sustentation
 
Asset
 
Development
 
261
 
12-31-2009
SQM Industrial S.A.
  
Repair of sanitary and electric facilities
  
Sustentation
  
Asset-Expense
  
Development
  
165
  
12-31-2009

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
156

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
Accumulated expenses as of December 31, 2009, continued

Identification of the
Parent Company or
subsidiary
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was
made or will be made
 
Asset / Expense
 
Description of
the asset or
expense Item
 
Amount of
disbursement for
the Period ThUS$
 
Certain or
estimated date in
which
disbursements
were or will be
made
SQM Industrial S.A.
 
MPIS – Stabilization of streets and suppression of dust at sidewalks
 
Sustentation
 
Asset
 
Development
 
689
 
6-30-2009
SQM Industrial S.A.
 
Improve sealing and pressurization room 031
 
Sustentation
 
Asset
 
Not classified
 
42
 
11-1-2009
SQM Industrial S.A.
 
Nitrate miscellaneous project
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
51
 
12-31-2009
SQM Industrial S.A.
 
Automated alarms and information of monitoring station Hospital
 
Not classified
 
Asset
 
Not classified
 
8
 
12-30-2009
SQM Industrial S.A.
 
Handling of PV ammonia in Detention of plant
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
1
 
12-1-2009
SQM Industrial S.A.
 
Indigenous camp
 
Sustentation
 
Asset-Expense
 
Not classified
 
83
 
12-31-2009
SQM Industrial S.A.
 
Pampa Blanca sea water (DIA Mine Zone PB and DIA extension PB)
 
Sustentation
 
Asset
 
Development
 
461
 
12-30-2009
SQM Industrial S.A.
 
Environmental Management
 
Operations
 
Expense
 
Not classified
 
1.235
 
12-31-2009
Minera Nueva Victoria
 
Extension in sanitary capacity for Iris
 
Capacity extension
 
Asset
 
Development
 
85
 
12-31-2009
SQM Nitratos S.A.
 
Waste water treatment plant washing surfaces PV-NV-PB
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Development
 
42
 
12-31-2009
SQM Nitratos S.A.
 
Maintenance of Environmental projects ME-PV-NV-PB
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Development
 
82
 
12-31-2009
SQM Nitratos S.A.
 
Waste water treatment plant
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Not classified
 
95
 
12-31-2009
SQM Nitratos S.A.
  
Risk prevention projects Sem II 2008
  
Sustentation: Risk prevention and the environment
  
Asset
  
Development
  
117
  
12-31-2009
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
157

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 24 - The environment, continued
Accumulated expenses as of December 31, 2009, continued

Identification of the
Parent Company or
subsidiary 
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was
made or will be made
 
Asset / Expense
 
Description of the
asset or expense
Item
 
Amount of
disbursement
for the Period
ThUS$
 
Certain or
estimated date in
which
disbursements
were or will be
made 
SQM Salar S.A.
 
Environmental evaluation extension of production capacity MOP
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Not classified
 
38
 
12-31-2009
SQM Salar S.A.
 
Detailed engineering and implementation of a dust collector
 
Sustentation
 
Expense
 
Not classified
 
81
 
8-30-2009
SQM Salar S.A.
 
Renewal of meteorological station Chaxa saltpeter deposit
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
98
 
12-31-2009
SQM Salar S.A.
 
Study for water recharge at Atacama saltpeter
 
Sustentation: Risk prevention and the environment
 
Expense
 
Research
 
42
 
8-31-2009
SQM Salar S.A.
 
Construction of pit  for used water infiltration, Toconao camp
 
Capacity extension
 
Asset
 
Not classified
 
106
 
12-31-2009
SQM Salar S.A.
 
Project to foster the agricultural activity in saltpeter locations
 
Sustentation
 
Asset-Expense
 
Development
 
131
 
12-31-2009
SQM Salar S.A.
 
Implementation of currency Exchange facility
 
Not classified
 
Asset
 
Not classified
 
105
 
2-28-2010
SQM Salar S.A.
 
Dual MOP-SOP (DIA Plant Modification SOP)
 
Capacity extension
 
Asset
 
Development
 
14
 
12-31-2009
SQM Salar S.A.
 
Dryer MOP (DIA Potassium chloride dryer plant)
 
Capacity extension
 
Asset
 
Development
 
19
 
12-31-2009
SIT S.A.
 
Pavement of Work location- port road
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
82
 
12-31-2009
SIT S.A.
 
Risk prevention plan Port
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Development
 
101
 
12-31-2009
SIT S.A.
 
Lightning improvement, railroad area
 
Sustentation
 
Asset
 
Development
 
365
 
12-31-2009
SIT S.A.
 
Implementation of a system to pump sewage to dump
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Not classified
 
68
 
12-31-2009
SIT S.A.
 
Environmental meshes for fields 3 and 4
 
Not classified
 
Asset
 
Not classified
 
164
 
12-30-2009
SQM S.A.
 
Environmental study -  Region I  project
 
Not classified
 
Asset-Expense
 
Not classified
 
2.091
 
6-30-2010
SQM S.A.
 
Environmental commitments Nueva Victoria mine Zone
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
275
 
3-30-2009
SQM S.A.
 
Cultural heritage Region I
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Not classified
 
75
 
12-30-2009
 
  
 
  
 
  
 
  
Total
  
9,324
  
 
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
158

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
Future expenses as of December 31, 2009
Identification of the
Parent Company or
subsidiary 
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was
made or will be made
 
Asset / Expense
 
Description of the
asset or expense
Item
 
Amount of
disbursement
for the Period
ThUS$
 
Certain or
estimated date in
which
disbursements
were or will be
made 
SQM Industrial S.A.
 
Consulting in infrastructure to store hazardous chemicals
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
4
 
12-31-2010
SQM Industrial S.A.
 
Improvement in lighting
 
Sustentation
 
Asset
 
Development
 
27
 
12-31-2010
SQM Industrial S.A.
 
San Isidro water assessment
 
Sustentation: Risk prevention and the environment
 
Asset/Expense
 
Not classified
 
352
 
12-31-2010
SQM Industrial S.A.
 
Normalization of drinking water chlorination, ME/CS/PV
 
Sustentation
 
Expense
 
Not classified
 
88
 
12-31-2010
SQM Industrial S.A.
 
Normalization of TK´s fuel
 
Sustentation
 
Asset
 
Not classified
 
748
 
12-31-2010
SQM Industrial S.A.
 
Cultural heritage dissemination actions, Technological change at Maria Elena
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
13
 
12-31-2010
SQM Industrial S.A.
 
Elimination of OCB switches at 3 and 1/12 Pedro de Valdivia sub stations
 
Sustentation: Replacement of equipment
 
Asset
 
Not classified
 
171
 
12-31-2010
SQM Industrial S.A.
 
Improve sealing and pressurization of 031 room
 
Sustentation
 
Asset
 
Not classified
 
28
 
12-31-2010
SQM Industrial S.A.
 
Improve the NV supervisors’ hall
 
Sustentation
 
Asset/Expense
 
Not classified
 
10
 
12-31-2010
SQM Industrial S.A.
 
Automation of alarms and information on Hospital Monitoring station
 
Not classified
 
Asset
 
Not classified
 
2
 
12-31-2010
SQM Industrial S.A.
 
Handling of PV ammonia at plant stoppage
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
134
 
12-31-2010
SQM Industrial S.A.
 
Pampa Blanca sea water (DIA PB mine zone and DIA PB extension)
 
Sustentation
 
Asset
 
Development
 
30
 
12-31-2010
SQM Industrial S.A.
 
Environmental management
 
Sustentation
 
Expense
 
Not classified
 
1,239
 
12-31-2010
Minera Nueva Victoria
 
Improvements in Iris C/D/B halls
 
Sustentation
 
Asset
 
Not classified
 
44
 
12-31-2010
SQM Nitratos S.A.
 
ME-PV-NV-PB environmental maintenance projects
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Development
 
4
 
12-31-2010
SQM Nitratos S.A.
 
Risk prevention projects Sem II 2008
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
38
 
12-31-2010
SQM Nitratos S.A.
 
Construction of sewerage system at  Lagarto.
 
Capacity extension
 
Asset-Expense
 
Development
 
100
 
12-31-2010
SQM Salar S.A.
 
Renewal of Chaxa saltpeter deposit meteorological station
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
1
 
12-31-2010
SQM Salar S.A
 
Water recharge study, Atacama saltpeter deposit
 
Sustentation: Risk prevention and the environment
 
Expense
 
Research
 
70
 
12-31-2010
SQM Salar S.A
 
Project to foster the agricultural activity in the saltpeter deposit locations
 
Sustentation
 
Asset-Expense
 
Development
 
212
 
12-31-2010
SQM Salar S.A
 
Fuel facility improvement study
 
Sustentation
 
Asset-Expense
 
Research
 
50
 
12-31-2011
SIT S.A.
 
Improvement in lighting in the railroad area
 
Sustentation
 
Asset
 
Development
 
64
 
12-31-2010
SIT S.A.
  
Environmental meshes for fields 3 and 4
  
Not classified
  
Asset
  
Not classified
  
66
  
12-31-2010
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
159

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
Future expenses as of December 31, 2009, continued

Identification of the
Parent Company or
subsidiary 
 
Name of the project to which the
disbursement is associated
 
Concept by which the disbursement was
made or will be made
 
Asset / Expense
 
Description of the
asset or expense
Item
 
Amount of
disbursement
for the Period
ThUS$
 
Certain or
estimated date in
which
disbursements
were or will be
made 
SIT S.A.
 
Elimination of waste water generation through vacuum
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not classified
 
150
 
6-30-2010
SQM S.A.
 
Environmental studies  – Region I project
 
Not classified
 
Asset-Expense
 
Not classified
 
184
 
6-30-2010
SQM S.A.
 
Cultural Heritage Region  I
 
Sustentation: Risk prevention and the environment
 
Asset-Expense
 
Not classified
 
440
 
12-31-2010
 
  
 
  
 
  
 
  
Total
  
4,269
  
 
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
160

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued
 
24.3
Description of each project indicating whether these are in process or have been finished
 
SQM Industrial S.A.

MCLX: Cleaning of all rescue yards at all SQM’s plants (25 yards.) This project consists of cleaning and/or sorting rescue yards, selecting and selling all waste products which can be commercialized in these yards.  Identify and destine household waste to authorized garbage dumps. This process is in the closure period.

ANMI: Compliance with technical, legal aspects and specific standards required with respect to warehousing, signaling, safety and main factors associated with materials, products and supplies which are handled in the mine site. In addition, the Company will implement an improvement in the warehouse infrastructure for the storage of hazardous chemicals.  This project is being executed.

MNH8: Improvement in the lighting in the Maria Elena location given that there are certain areas, which have no lighting, wires without channeling and timeworn wiring.  This project is being executed.

SCCY: Conceptual engineering and environmental study for the construction of a storage facility for hazardous waste generated at the Company’s facilities due to the performance of different processes.  The project is in the closure process.

JNTU: Assessment of the environmental impact of San Isidro water. This project is being executed.

JNNX: Incorporation of UV sensor at the Coya Sur meteorological station, perimeter closure of the Nueva Victoria meteorological station and geo-reference of new emission sources at Toco and Coya Sur.  This project is in the closure process.

MNTE: Acquisition of stationary equipment for the quantitative measurement of harmful agents at the Company’s facilities.  This project is being executed.

INST: Implementation of a circuit for the drainage of oil directly from the equipment which moves the earth to the ALU storage tanks.  This project is at the closure stage.

MP17: A study and identification will be conducted in respect to the current water chlorination system at Maria Elena, Coya Sur and Pedro de Valdivia facilities for the subsequent implementation and start-up of water chlorination in accordance with standards in force.  This project is being executed.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
161

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued

MP5W: Normalization of the system for the storage and distribution of fuel at the Company’s facilities.  This project is being executed.

FNWR: Preparation and processing of DIA for the Pampa Blanca discard yard. This project is in the process of closure.

MNYS: Preparation and execution of the geoglyphs preservation project.  Edition and publishing of a book in addition to implementing a dissemination center. Construction and habilitation of a collection deposit. All offsetting steps for the Technological Change at Maria Elena project. This project is being executed.

MP8Z: Implement a control system at inlet pipes at rivers at ME, CS and Vergara, which allow automating the control of these flows. In addition, this project requires the complementation of the satellite extraction control system recently implemented at inlet pipes to ensure full compliance with rights authorized by the (General Water Directorate) DGA and, therefore, also ensure the usual water supply required by SQM. This process is in the closure process.

MPL5: Improvement of a portion of the water network infrastructure and sewage system at Maria Elena. This project is being executed.

MPIS: Improve the urban situation at Maria Elena, placing a stabilization layer with product at the streets and anti-dust treatment with product in sidewalks.  This project is being executed.

PPNK: Project to ensure the control of ammonia gas in crystal plant stoppage. This project is being executed.

MPGF: Eliminate pollution in substation 031 due to the inefficient sealing system.  This project is being executed.

TPO4: Project to change the drinking water system and sewage system in the indigenous camp to improve living conditions.  This project is being executed.

MPLS: Implement alarms via emails as to peak concentration of particle materials and change in the recording of information from text files to database for the implementation of reports. This project is being executed.

PPC1: The project consists in purchase of modern switches in order to replace equipments using PCB. This project is being executed.

FP55: This project consists of the installation of the 87 kilometer sea water adductor system from the Mejillones zone to the Company’s facilities in Pampa Blanca. Expenses considered relate solely to environmental processing.  This project is being executed.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
162

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued

MPIS: Improve the urban situation at Maria Elena, placing a stabilization layer with product at the streets and anti-dust treatment with product in sidewalks.  This project is being executed.

MPGF: Eliminate pollution in substation 031 due to the inefficient sealing system.  This project is being executed.

JNNX: Incorporation of UV sensor at the Coya Sur meteorological station, perimeter closure of the Nueva Victoria meteorological station and geo-reference of new emission sources at Toco and Coya Sur.  This project is in the closure process.

MPLS: Implement alarms via emails as to peak concentration of particle materials and change in the recording of information from text files to database for the implementation of reports. This project is being executed.

PPNK: Project to ensure the control of ammonia gas in crystal plant stoppage. This project is being executed.

TPO4: Project to change the drinking water system and sewage system in the indigenous camp to improve living conditions.  This project is being executed.

FP55: This project consists of the installation of the 87 kilometer sea water adductor system from the Mejillones zone to the Company’s facilities in Pampa Blanca. Expenses considered relate solely to environmental processing.  This project is being executed.

Minera Nueva Victoria S.A.

IPNW: Relates to the replacement or impaired sanitary in order to improve the hygiene conditions. This project is being executed.

IPMN: Extend the sanitary capacity of the IRIS camp through the construction of 3 wells. This project is being executed.

SQM Nitratos S.A.

PNH2: Design and construct pouring off tanks for mud, water, oil and a pool with a pump to re-use poured off water, metallic pools to remove mud.  This project is being executed.

PP0V: Installation of a container for hazardous waste at workshops for maintenance and removal of liquid industrial waste from hydraulic filters, workshop for mine maintenance at Maria Elena, Pedro de Valdivia, Nueva Victoria and Pampa Blanca.  This project is being executed.

IP6W: Design and construct pouring off tanks for mud, water, oil and a pool with a pump to re-use poured off water, metallic pools to remove mud.  This project is in the closure process.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
163

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued

PPAT: Through this project the Company intends to comply with the current sanitary standards with respect to water treatment and waste infiltration at certain sectors in Pedro de Valdivia and Maria Elena. This project is being executed.

SQM Salar S.A.

LP5K: Environmental assessment through DIA of the project for the extension of the MOP production capacity. This project is in the closure process.

LNNT: Through this project, the Company intends to have reliable measurements of the climatologic seasonal variation in the saltpeter deposit, timely measurements for the preparation of reports and programs and deliver actual information to the environmental authority.  This project is in the closure process.

LP5J: Conduct analyses to define the hydrological units in the basin, quantify the reload to the aquifer through environmental isotopic techniques. This project is being executed.

LP82: Support for the development of demonstration estate, technical support for the application of improvements in watering and agricultural practices. This project is being executed.

LPGA: Improvement in the discharge of sewage already treated. This project is in the closure process.

LPK2: Improve sanitary facilities in the current money exchange, MOP sector to comply with all requirements of the mine’s different users. This project is in the closure process.

LPTF: Perform semiannual reports which are necessary to present improvements and optimizations to the environmental control points. An improvement should be made to the environmental, geological and hydro geological variables in the Atacama saltpeter deposit. This project is being executed.

LPTJ: The project relates to the acquisition of stand equipment in order to ensure the operating continuity of plants TAS and OR, change in the current level control system in drinking water accumulation at TKs, used water and used water lifting chambers, among others. This project is being executed.

SIT S.A.

TNLA: Paving of yard 2 roads and Southern access to the Tocopilla port given that these are the source of dust and emissions and risk of accidents in the operation of machinery.  This project is in the closure process.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
164

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 24 - The environment, continued

PNOT: Improve night lighting in sectors with high number of movements, installing sodium bulbs more continuously with an angle of 45°. This will allow complying with Safety and Lighting Regulation Standards.  This project is in the closure process.

TPR8: This project is intended to decrease waste water generation by means of using non-wash and vacuum technologies, through the implementation of a vacuum system which avoid the use of water and therefore, the generation of waste water. This project is being executed.

TPLR: The objective of the process is being able to discharge waste water generated in the Tocopilla port to the public sewage system.  This project is being executed.

TPM7: Meshes will be acquired which will be installed in yards 3 and 4 to control dust emissions in sieving operations and protect product from emissions generated by the power plant. This project is being executed.

SQM S.A.

SCI6: This project is intended to obtain environmental licenses for the Development projects in Region I of Chile including all pieces of work related to initial environmental requirements which allow that Operations execute the project’s construction and operation. The environmental evaluation to obtain the related license would be conducted through EIS, which contemplates the preparation and processing of the document and also includes specific environmental study activities (the study of tamarugos in Llamara and Tamarugal M., archeological mitigation steps, environmental study of Loa river, hydro geological studies.) This project is being executed.

IPFT: This project contemplates the implementation of heritage steps committed in the projects referred to as Nueva Victoria Mine Zone, Nueva Victoria Operation Updates, Iris Duct and Evaporation Pools. This project is being executed.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
165

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 25 - Other current and non-current non financial assets

As of September 30, 2010, December 31, 2009 and January 1, 2009, the composition of the other current and non-current assets is detailed as follows:

Other non-financial assets, current
 
9/30/2010
   
12/31/2009
   
1/1/2009
 
   
ThUS$
   
ThUS$
   
ThUS$
 
Agreement termination bonus
    2,166       2,191       990  
Domestic Value Added Tax
    14,171       23,246       24,650  
Foreign Value Added Tax
    3,112       3,080       10,666  
Prepaid mining licenses
    3,221       1,104       1,183  
Prepaid insurance
    1,037       4,062       4,085  
Commercial and industrial patents
    746       -       -  
Prepaid leases
    32       29       145  
Marine concessions
    14       39       30  
Other prepaid expenses
    218       42       46  
Other assets
    676       582       176  
Total
    25,393       34,375       41,971  
 
Other non-financial assets, non-current
 
9/30/2010
   
12/31/2009
   
1/1/2009
 
   
ThUS$
   
ThUS$
   
ThUS$
 
End of collective negotiation bonus
    2,051       2,842       454  
Stain development expenses and prospecting expenses (1)
    25,672       26,832       24,892  
Income taxes recoverable
    599       567       454  
Guarantee deposits
    492       467       308  
Other assets
    121       172       336  
Total
    28,935       30,880       26,444  
 
(1)
Assets for the exploration and evaluation of mineral resources are amortized when the explored or evaluated sector is exploited. For this purpose, a variable rate is applied to extracted tons, which is determined based on the measured initial reserve and evaluation cost.  The Company presents expenses associated with Exploration and Evaluation of Mineral Resources.  Of these expenses those that are under exploitation are included under Inventories and are amortized according to the estimated contained ore reserves and expenses associated with future reserves are presented under Other non-current assets.  Those expenses incurred on properties with low ore grade which are not economically exploitable are directly charged to profit or loss. As of September 30, 2010, balances associated with the exploration and assessment of mineral resources are presented under Inventories for ThUS$ 1,893.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
166

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 25 - Other current and non-current non financial assets, continued

Reconciliation of changes in assets for exploration and mineral resource evaluation, by classes

Movements in assets for the exploration and evaluation of mineral resources as of September 31, 2010 and December 31, 2009:

Reconciliation 
 
9/30/2010
   
12/31/2009
 
   
ThUS$
   
ThUS$
 
             
Assets for the exploration and evaluation of mineral resources, net, beginning balance
    26,832       24,892  
Changes in assets for exploration and assessment of mineral resources:
               
Additions, different from business combinations
    -       5,446  
Depreciation and amortization
    (1,553 )     ( 2,641 )
Increase (decrease) for transfers and other charges
    393       (865 )
Assets for exploration and assessment of mineral resources, net, final balance
    25,672       26,832  
 
At the date of presentation, no reevaluations of assets for exploration and assessment of mineral resources have been conducted.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
167

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments

26.1     Operating segments

In accordance with IFRS 8 "Operating segments", the Company provides financial and descriptions about the segments it has defined in consideration of available annual separate financial information, which is regularly evaluated by the maximum authority in making operating decisions with the purpose of deciding how to assign resources and assess performance.

Operating segments relate to the following groups of products which provide revenue and for which the Company incurs expenses and the result of which is regularly reviewed by the Company's maximum authority in the decision-making process:

1. Specialty plant nutrients
2. Iodine and its derivatives
3. Lithium and its derivatives
4. Industrial chemicals
5. Potassium
6. Other products and services

Information relative to assets, liabilities and profit and expenses which cannot be assigned to the segments indicated above, due to the nature of production processes, is included under the "Corporate Unit" category of disclosures.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
168

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued
26.2           Statement of comprehensive income classified by operating segment based on product groups as of September 30, 2010

Items in the statement of comprehensive income
 
Specialty
plant nutrients
   
Iodine and
its
derivatives
   
Lithium and
its
derivatives
   
Industrial
chemicals
   
Potassium
   
Other
products
and
services
   
Corporate
unit
   
Total
segments
and
Corporate
unit
 
                                                 
Revenue
    452,474       241,826       114,329       109,543       356,794       49,770       -       1,324,736  
Cost of sales
    (318,929 )     (135,838 )     (64,997 )     (61,419 )     (242,715 )     (46,466 )     -       (870,364 )
                                                                 
Gross profit
    133,545       105,988       49,332       48,124       114,079       3,304       -       454,372  
                                                                 
Other income by function
    -       -       -       -       -       -       5,617       5,617  
Administrative expenses
    -       -       -       -       -       -       (55,455 )     (55,455 )
Other expenses by function
    -       -       -       -       -       -       (16,255 )     (16,255 )
Other losses (gains)
    -       -       -       -       -       -       (5,870 )     (5,870 )
Finance income
    -       -       -       -       -       -       6,501       6,501  
Finance expenses
    -       -       -       -       -       -       (26,534 )     (26,534 )
Interest in gains (losses) from associates and joint ventures accounted for using the equity method
    -       -       -       -       -       -       8,299       8,299  
Foreign currency exchange differences
    -       -       -       -       -       -       (6,875 )     (6,875 )
Profit (loss) before taxes
    133,545       105,988       49,332       48,124       114,079       3,304       (90,572 )     363,800  
Income tax expense
    -       -       -       -       -       -       (84,359 )     (84,359 )
Gain (loss) from continuing operations
    133,545       105,988       49,332       48,124       114,079       3,304       (174,931 )     279,441  
Gain (loss) from discontinued operations
    -       -       -       -       -       -       -       -  
Profit (loss)
    133,545       105,988       49,332       48,124       114,079       3,304       (174,931 )     279,441  
Profit (loss) attributable to:
                                                               
Parent company’s owners
    -       -       -       -       -       -       -       276,325  
Non-controlling interest
    -       -       -       -       -       -       -       3,116  
Net profit (loss) for the period
    -       -       -       -       -       -       -       279,441  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
169

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued
26.2       Statement of comprehensive income classified by operating segment based on product groups as of September 30, 2009, continued

Items in the statement of comprehensive income
 
Specialty
plant nutrients
   
Iodine and
its
derivatives
   
Lithium and
its
derivatives
   
Industrial
chemicals
   
Potassium
   
Other
products
and
services
   
Corporate
unit
   
Total
segments
and
Corporate
unit
 
                                                 
Revenue
    400,314       140,290       84,428       80,942       287,104       59,091       -       1,052,169  
Cost of sales
    (276,161 )     (47,282 )     (41,526 )     (41,808 )     (181,887 )     (56,008 )     -       (644,672 )
                                                                 
Gross profit
    124,153       93,008       42,902       39,134       105,217       3,083       -       407,497  
                                                                 
Other income by function
    -       -       -       -       -       -       5,405       5,405  
Administrative expenses
    -       -       -       -       -       -       (53,436 )     (53,436 )
Other expenses by function
    -       -       -       -       -       -       (18,936 )     (18,936 )
Other gains (losses)
    -       -       -       -       -       -       (1,652 )     (1,652 )
Finance income
    -       -       -       -       -       -       10,093       10,093  
Finance expenses
    -       -       -       -       -       -       (23,141 )     (23,141 )
Interest in gains (losses) from associates and joint ventures accounted for using the equity method
    -       -       -       -       -       -       1,712       1,712  
Foreign currency exchange differences
    -       -       -       -       -       -       (8,528 )     (8,528 )
Profit (loss) before taxes
    124,153       93,008       42,902       39,134       105,217       3,083       (88,483 )     319,014  
Income tax expense
    -       -       -       -       -       -       (60,198 )     (60,198 )
Gain (loss) from continuing operations
    124,153       93,008       42,902       39,134       105,217       3,083       (148,681 )     258,816  
Gain (loss) from discontinued operations
    -       -       -       -       -       -       -       -  
Profit (loss)
    124,153       93,008       42,902       39,134       105,217       3,083       (148,681 )     258,816  
Profit (loss) attributable to:
                                                               
Parent company’s owners
    -       -       -       -       -       -       -       259,414  
Non-controlling interest
    -       -       -       -       -       -               -598  
Net profit (loss) for the period
    -       -       -       -       -       -       -       258,816  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
170

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued

26.3       Assets and liabilities by operating segment based on product groups as of September 30, 2010
 
Items in the statement of comprehensive
income
 
Specialty plant
nutrients
   
Iodine and
its
derivatives
   
Lithium and
its
derivatives
   
Industrial
chemicals
   
Potassium
   
Other
products
and services
   
Corporate
unit
   
Total segments
and Corporate
unit
   
Items in the
statement of
comprehensive
income
 
                                                       
Current assets
    -       -       -       -       -       -       5,050,856       (3,194,928 )     1,855,928  
Non-current assets
    -       -       -       -       -       -       3,903,550       (2,371,151 )     1,532,399  
                                                                         
Total assets
    -       -       -       -       -       -       8,954,406       (5,566,079 )     3,388,327  
                                                                         
Current liabilities
    -       -       -       -       -       -       3,362,497       (2,913,881 )     448,616  
Non-current liabilities
    -       -       -       -       -       -       1,553,809       (288,677 )     1,265,132  
Total equity
    -       -       -       -       -       -       4,038,100       (2,363,521 )     1,674,579  
                                                                         
Profit (loss)
    -       -       -       -       -       -       8,954,406       (5,566,079 )     3,388,327  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
171

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued

26.3       Assets and liabilities by operating segment based on product groups as of December 31, 2009
 
Items in the statement of comprehensive
income
 
Specialty plant
nutrients
   
Iodine and
its
derivatives
   
Lithium and
its
derivatives
   
Industrial
chemicals
   
Potassium
   
Other
products
and services
   
Corporate
unit
   
Total segments
and Corporate
unit
   
Items in the
statement of
comprehensive
income
 
                                                       
Current assets
    -       -       -       -       -       -       4,579,653       (2,872,280 )     1,707,373  
Non-current assets
    -       -       -       -       -       -       3,437,853       (2,003,422 )     1,434,431  
                                                                         
Total assets
    -       -       -       -       -       -       8,017,506       (4,875,702 )     3,141,804  
                                                                         
Current liabilities
    -       -       -       -       -       -       3,096,924       (2,551,882 )     545,042  
Non-current liabilities
    -       -       -       -       -       -       1,404,841       (272,529 )     1,132,312  
Total equity
    -       -       -       -       -       -       3,515,741       (2,051,291 )     1,464,450  
                                                                         
Profit (loss)
    -       -       -       -       -       -       8,017,506       (4,875,702 )     3,141,804  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
172

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued

26.4       Disbursements of segment’s non-cash assets as of September 30, 2010

Identification of disbursements of non-monetary assets
 
Chile
   
Latin America
and the
Caribbean
   
Europe
   
North America
   
Asia and
others
   
Balances
according to the
Statement of
Financial
Position
 
                                     
Investments in joint ventures
    -       -       -       -       3,500       3,500  
SQM Quindao - Star
    -       -       -       -       1,000       1,000  
SQM Migao Sichuan
                                    2,500       2,500  
Amounts in additions of non-current assets
    235,553       -       -       -       -       235,553  
- Property, plant and equipment
    235,289       -       -       -       -       235,289  
- Intangible assets
    264       -       -       -       -       264  
Total segments
    235,553       -       -       -       3,500       239,053  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
173

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued

26.4       Disbursements of segment’s non-cash assets as of December 31, 2009

Identification of disbursements of non-monetary assets
 
Chile
   
Latin America
and the
Caribbean
   
Europe
   
North America
   
Asia and
others
   
Balances
according to the
Statement of
Financial
Position
 
                                     
Investments in joint ventures
    -       -       -       -       3,530       3,530  
SQM Migao Sichuan
    -       -       -       -       3,000       3,000  
Coromandel SQM India
    -       -       -       -       530       530  
Amounts in additions of non-current assets
    376,515       -       -       -       -       376,515  
- Property, plant and equipment
    376,186       -       -       -       -       376,186  
- Intangible assets
    329       -       -       -       -       329  
Total segments
    376,515       -       -       -       3,530       380,045  
 
26.5       Information on products and services for external customers

Revenue from external customers by product and service groups as of September 30, 2010 is detailed as follows:
Items in the statement of comprehensive
income
 
Specialty plant
nutrients
   
Iodine and
its
derivatives
   
Lithium and
its
derivatives
   
Industrial
chemicals
   
Potassium
   
Other
products
and services
   
Total
segments and
Corporate Unit
 
                                           
Revenue
    452,474       241,826       114,329       109,543       356,794       49,770       1,324,736  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
174

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued
 
26.5       Information on products and services for external customers, continued

Revenue from external customers by product and service groups as of September 30, 2009 is detailed as follows:

Items in the statement of comprehensive
income
 
Specialty plant
nutrients
   
Iodine and
its
derivatives
   
Lithium and
its
derivatives
   
Industrial
chemicals
   
Potassium
   
Other
products
and services
   
Total
segments and
Corporate Unit
 
                                           
Revenue
    400,314       140,290       84,428       80,942       287,104       59,091       1,052,169  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
175

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued

26.6       Information on geographical areas

As indicated in paragraph 33 of IFRS 8, the entity discloses geographical information on its profit from ordinary activities from external customers and from non-current assets which are not financial instruments, deferred income tax assets, assets related to post-employment benefits and rights derived from insurance contracts.
 
26.7       Revenue from external customers, classified by geographical areas as of September 30, 2010:

Identification of revenue from external customers
 
Chile
   
Latin America
and the
Caribbean
   
Europe
   
North America
   
Asia and
others
   
Balances
according to the
Statement of
comprehensive
income
 
                                     
Revenue
    136,045       132,109       578,412       273,877       204,293       1,324,736  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
176

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued

26.7       Revenue from external customers, classified by geographical areas as of September 30, 2009:
Identification of revenue from external customers
 
Chile
   
Latin America
and the
Caribbean
   
Europe
   
North America
   
Asia and
others
   
Balances
according to
the Statement
of
comprehensive
income
 
                                     
Revenue
    186,086       123,912       320,367       247,029       174,775       1,052,169  

26.8       Non-current assets classified by geographical area as of September 30, 2010:
Identification of revenue from external customers
 
Chile
   
Latin
America and
the
Caribbean
   
Europe
   
North America
   
Asia and
others
   
Balances
according to
the Statement
of financial
position
 
                                     
Investments in associates recognized using the equity method of accounting
    1,065       -       20,472       6,685       33,704       61,926  
Intangible assets other than goodwill
    2,536       -       12       516       -       3,064  
Goodwill
    24,147       86       11,373       724       2,058       38,388  
Property, plant and equipment, net
    1,391,553       1,931       365       46       194       1,394,089  
Investment property
    1,381       -       -       -       -       1,381  
Other non-current assets
    28,266       343       -       -       326       28,935  
Balance to date
    1,448,948       2,360       32,222       7,971       36,282       1,527,783  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
177

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010

Note 26 - Operating segments, continued

26.8      Non-current assets classified by geographical area as of December 31, 2009:
Non-current asset item, adjusted  (IFRS 8,33,b,1/11/2006)
 
Chile
   
Latin 
America and 
the 
Caribbean
   
Europe
   
North America
   
Asia and 
others
   
Balances 
according to 
the Statement 
of Financial 
Position
 
                                     
Investments in associates recognized using the equity method of accounting
    328       -       18,853       6,653       29,351       55,185  
Intangible assets other than goodwill
    2,267       -       -       569       -       2,836  
Goodwill
    24,248       86       11,373       724       1,957       38,388  
Property, plant and equipment, net
    1,297,830       293       474       1,766       183       1,300,546  
Investment property
    1,405       -       -       -       -       1,405  
Other non-current assets
    28,529       1,017       -       1,037       297       30,880  
Balance to date
    1,354,607       1,396       30,700       10,749       31,788       1,429,240  

26.9      Information on the main customers
In respect to the degree of dependency of the Company on its customers, in accordance with paragraph 34 of IFRS 8, the Company has no external customers which individually represent 10% or more of its profit from ordinary activities.  Credit risk concentrations with respect to trade and other receivables are limited due to the significant number of entities which compose the Company’s portfolio and its worldwide distribution. The Company’s policy is requiring guarantees (such as letters of credit, guarantee clauses and others) and/or maintaining insurance policies for certain accounts as deemed necessary by the Company's Management.
 
SQM Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
178

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
         
Note 26 - Operating segments, continued
    
26.10    Property, plant and equipment classified by geographical areas as of September 30, 2010:
Property, plant and equipment
 
Chile
   
Latin America
and the
Caribbean
   
Europe
   
North America
   
Asia and
others
   
Total
 
   
9/30/2010
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Production facilities:
                                   
Coya Sur
    252,304       -       -       -       -       252,304  
María Elena
    133,067       -       -       -       -       133,067  
Nueva Victoria
    199,815       -       -       -       -       199,815  
Pampa Blanca
    23,684       -       -       -       -       23,684  
Pedro de Valdivia
    85,061       -       -       -       -       85,061  
Atacama saltpeter deposit
    397,337       -       -       -       -       397,337  
Carmen saltpeter deposit
    215,164       -       -       -       -       215,164  
Tocopilla (port facilities)
    61,028       -       -       -       -       61,028  
Subtotal production facilities
    1,367,460       -       -       -       -       1,367,460  
Corporate facilities:
                                               
Santiago
    14,584       -       -       -       -       14,584  
Antofagasta
    7,462       -       -       -       -       7,462  
Subtotal corporate facilities
    22,046       -       -       -       -       22,046  
Subtotal business offices
    2,047       1,931       365       46       194       4,583  
Total segments
    1,391,553       1,931       365       46       194       1,394,089  
 
SQM Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
 
179

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 26 - Operating segments, continued

26.10    Property, plant and equipment classified by geographical areas as of December 31, 2009
Property, plant and equipment
 
Chile
   
Latin America 
and the 
Caribbean
   
Europe
   
North America
   
Asia and 
others
   
Total
 
    
12/31/2009
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Production  facilities:
                                   
Coya Sur
    252,138       -       -       -       -       252,138  
María Elena
    142,442       -       -       -       -       142,442  
Nueva Victoria
    202,037       -       -       -       -       202,037  
Pampa Blanca
    25,271       -       -       -       -       25,271  
Pedro de Valdivia
    73,203       -       -       -       -       73,203  
Atacama saltpeter deposit
    302,840       -       -       -       -       302,840  
Carmen saltpeter deposit
    222,093       -       -       -       -       222,093  
Tocopilla (port facilities)
    59,132       -       -       -       -       59,132  
Subtotal production facilities
    1,279,156       -       -       -       -       1,279,156  
Corporate facilities:
                                               
Santiago
    12,233       -       -       -       -       12,233  
Antofagasta
    5,808       -       -       -       -       5,808  
Subtotal corporate facilities
    18,041       -       -       -       -       18,041  
Subtotal business offices
    633       293       474       1,766       183       3,349  
Total segments
    1,297,830       293       474       1,766       183       1,300,546  
 
SQM Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
180

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 27 - Other income, other expenses by function and other gains or losses

The detail of other income and other expenses is as follows:

a)     Other income by function
 
9/30/2010
ThUS$
   
9/30/2009
ThUS$
 
             
Discounts obtained from suppliers
    683       798  
Indemnities received
    -       60  
Insurance recovery
    201       208  
Overestimate of provision for obligation with third parties
    406       620  
Bad debt overestimate
    53       45  
Sale of mine concessions
    866       2,121  
Sale of materials, spare parts and supplies
    580       256  
Sale of property, plant and equipment
    430       194  
Other operating income
    1,250       509  
Miscellaneous services
    468       594  
Indemnities at Minera Esperanza
    680       -  
                 
Total
    5,617       5,405  
 
b)     Other expenses by function
 
9/30/2010
ThUS$
   
9/30/2009
ThUS$
 
             
Bad debt impairment
    (1,045 )     (5,328 )
V.A.T. and other non-recoverable taxes
    (410 )     (477 )
Fines paid
    (252 )     (110 )
Expenses related to investment plan
    (9,437 )     (4,578 )
Grants not accepted as credit
    (1,576 )     (841 )
Adjustment to realization value on property, plant and equipment
    (1,000 )     (2,404 )
property, plant and equipment impairment
    -       (1,001 )
Losses in auctions
    (500 )     (2,000 )
Other operating expenses
    (2,035 )     (2,197 )
                 
Total
    (16,255 )     (18,936 )
 
c)     Other gains or losses
 
9/30/2010
ThUS$
   
9/30/2009
ThUS$
 
             
Provision for retirement program
    (100 )     -  
Accrual for temporary closure of operations at El Toco
    (6,900 )     -  
Prior year equity value adjustment
    1,132       (23 )
Costs of dismissal process
    -       (1,655 )
Other
    (2 )     26  
                 
Total
    (5,870 )     (1,652 )
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
181

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes
 
As of September 30, 2010, December 31, 2009 and January 1, 2009, current income taxes recoverable are detailed as follows:

28.1
Current tax receivables:

   
9/30/2010
   
12/31/2009
   
1/1/2009
 
   
ThUS$
   
ThUS$
   
ThUS$
 
Monthly tax provisional payments, Chilean companies
    54,626       71,720       54,787  
Monthly tax provisional payments, foreign companies
    903       1,606       1,126  
Royalty monthly tax provisional payments
    16,395       9,149       1,107  
First category tax credits
    732       1,085       1,044  
First category tax absorbed by tax losses
    9,486       8,563       77  
Transfer from and to income tax
    (55,515 )     (50,298 )     (56,446 )
Total
    26,627       41,825       1,695  

28.2
Current tax payables:

Taxes payable
 
9/30/2010
   
12/31/2009
   
1/1/2009
 
   
ThUS$
   
ThUS$
   
ThUS$
 
First category tax
    45,457       42,082       124,626  
Royalty
    18,191       8,539       20,148  
Foreign company income tax
    250       592       762  
Article 21 unique tax
    3       383       52  
Transfer from and to income tax
    (55,515 )     (50,298 )     (56,446 )
Total
    8,386       1,298       89,142  
 
28.3
Retained taxable earnings registry

As of September 30, 2010, December 31, 2009 and January 1, 2009, the Company and its subsidiaries have recorded the following consolidated balances for retained taxable earnings registry, income which do not constitute revenue subject to income tax, accumulated tax losses and credit for shareholders:

   
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
Tax earnings with credit
    744,846       668,670       813,716  
Tax earnings with no credit
    78,204       107,832       132,773  
Tax losses
    19,930       99,333       16,949  
Credit for shareholders
    152,473       136,874       166,554  
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
182

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued

28.4
Income and deferred taxes

Assets and liabilities recognized in the Statement of Financial Position are offset when and only if:

1
The Company has legally recognized before the tax authority the right to offset the amounts recognized in these entries; and

2
Deferred income tax assets and liabilities are derived from income tax related to the same tax authority on:

(i)
the same entity of tax subject; or

(ii)
different entities or subjects to tax effects who intend either to settle current fiscal assets and liabilities for their net amount, either realize assets and pay liabilities simultaneously in each of the future periods in which the Company expects to settle or recover significant amounts of deferred tax assets or liabilities.

Deferred income tax assets recognized are those income taxes to be recovered in future periods, related to:

(a) deductible temporary differences;

(b) the offset of losses obtained in prior periods, which have not yet been subject to tax deduction; and

(c) the offset of unused credits from prior periods.

The Company recognizes a deferred tax asset when there is certainty that these can be offset with fiscal income from subsequent periods, losses or credits fiscal amounts not yet used but solely as long as it is possible that there will be tax earnings in the future to charge to these losses or unused fiscal credits against them.

Deferred tax liabilities recognized refer to the amounts of income taxes payable in future periods related to taxable temporary differences.
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
183

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued

No deferred income taxes have been recognized between the tax and carrying value of investments in related companies, in accordance with the criteria indicated in IAS 12. Therefore, there is no recognition of deferred taxes for translation adjustments and adjustments of associated companies recorded directly in net equity, shown in the Statement of Other Comprehensive Income.

d.1         Income tax assets and liabilities as of September 30, 2010 are detailed as follows:

   
Assets
   
Liabilities
 
Description of deferred income tax assets and liabilities
 
ThUS$
   
ThUS$
 
Depreciation
    -       81,499  
Bad debt impairment
    31       (4,190 )
Vacation provision
    11       (2,113 )
Production expenses
    -       41,163  
Unrealized gains (losses) from sales of products
    -       (43,357 )
Bonds fair value
    -       (2,601 )
Staff severance indemnities
    -       3,030  
Hedging
    -       13,011  
Inventory of products, spare parts and supplies
    -       (12,831 )
Research and development expenses
    -       4,983  
Tax losses
    454       (1,885 )
Capitalized interest
    -       14,032  
Expenses in assumption of bank loans
    -       1,706  
Unaccrued interest
    -       (447 )
Fair value of property, plant and equipment
    -       (9,556 )
Employee benefits
    -       (7,524 )
Royalty deferred income taxes
    -       9,322  
Other
    132       (4,685 )
Balances to date
    628       79,557  
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
  
 
184

 

    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued
 
d.2         Income tax assets and liabilities as of December 31, 2009 are detailed as follows:

   
Assets
   
Liabilities
 
Description of deferred income tax assets and liabilities
 
ThUS$
   
ThUS$
 
Depreciation
    -       81,055  
Bad debt impairment
    -       (3,708 )
Vacation provision
    -       (2,309 )
Production expenses
    -       39,660  
Unrealized gains (losses) from sales of products
    -       (48,644 )
Bonds fair value
    -       (1,635 )
Staff severance indemnities
    -       2,593  
Hedging
    -       10,948  
Inventory of products, spare parts and supplies
    -       (14,229 )
Research and development expenses
    -       5,263  
Tax losses
    1,733       (16,473 )
Capitalized interest
    -       11,222  
Expenses in assumption of bank loans
    -       2,015  
Unaccrued interest
    -       (393 )
Fair value of property, plant and equipment
    -       (10,524 )
Employee benefits
    -       (6,180 )
Royalty deferred income taxes
    -       7,677  
Other
    (863 )     (2,536 )
Balances to date
    870       53,802  
  
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
  
 
185

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued
 
d.3 Income tax assets and liabilities as of January 1, 2009 are detailed as follows:

 
Assets
   
Liabilities
 
Description of deferred income tax assets and liabilities
 
ThUS$
   
ThUS$
 
Depreciation
    -       72,192  
Bad debt impairment
    -       (1,926 )
Vacation provision
    -       (1,734 )
Production expenses
    -       29,774  
Unrealized gains (losses) from sales of products
    -       (55,827 )
Bonds fair value
    -       (1,616 )
Staff severance indemnities
    -       1,777  
Hedging
    -       (629 )
Inventory of products, spare parts and supplies
    -       (13,613 )
Research and development expenses
    -       4,702  
Tax losses
    2,828       (1,534 )
Capitalized interest
    -       9,252  
Expenses in assumption of bank loans
    -       826  
Unaccrued interest
    -       (504 )
Fair value of property, plant and equipment
    -       (12,287 )
Employee benefits
    -       (2,915 )
Royalty deferred income taxes
    -       5,544  
Other
    (859 )     (4,294 )
Balances to date
    1,969       27,188  
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
186

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued

d.4 Deferred income taxes related to benefits for tax losses

The Company’s tax loss carryforwards were mainly generated by losses in Chile, which, in accordance with current Chilean tax regulations have no expiration date.  During 2009, the Company applied no significant lax losses.

As of September 30, 2010, December 31, 2009 and January 1, 2009, tax loss carryforwards were detailed as follows:

   
9/30/2010
   
12/31/2009
   
1/1/2009
 
   
ThUS$
   
ThUS$
   
ThUS$
 
                   
Chile
    1,597       16,473       1,534  
Other countries
    742       1,733       2,828  
                         
Balances to date
    2,339       18,206       4,362  
 
d.5 Unrecognized deferred income tax assets and liabilities

As of September 30, 2010, December 31, 2009 and January 1, 2009, unrecognized assets and liabilities are detailed as follows:

   
9/30/2010
   
12/31/2009
   
1/1/2009
 
   
ThUS$
   
ThUS$
   
ThUS$
 
   
Assets (liabilities)
   
Assets (liabilities)
   
Assets (liabilities)
 
                   
Tax losses
    489       489       1,544  
Bad debt impairment
    98       98       98  
Inventory impairment
    1,176       1,176       748  
Pensions plan
    648       648       1,091  
Vacation provision
    29       29       29  
Depreciation
    (44 )     (44 )     (20 )
Other
    (15 )     (15 )     (12 )
                         
Balances to date
    2,381       2,381       3,478  

Tax losses mainly relate to the United States, which prescribe in 20 years.
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
187

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued

d.6
Movements in deferred tax liabilities

Movements in deferred tax liabilities as of September 30, 2010 and December 31, 2009 are as follows:

   
9/30/2010
   
12/31/2009
 
   
ThUS$
   
ThUS$
 
   
Liabilities
(assets)
   
Liabilities
(assets)
 
             
Beginning balance of deferred income tax liabilities
    53,802       27,188  
Increase (decrease) in deferred income taxes in profit or loss
    26,721       26,633  
Increase (decrease) in deferred income taxes in equity
    (966 )     (19 )
                 
Balances to date
    79,557       53,802  

d.7
Disclosures on profit or loss tax expense (profit)

The Company recognizes current and deferred income taxes as income or expenses and are included in profit or loss, except if they arise from:

 
(a)
a transaction or event which is recognized in the same period or in a different period, outside profit or loss either in other comprehensive income or directly in equity; or

(b)
a business combination
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
188

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued

Current and deferred income tax expenses (income) are detailed as follows
   
9/30/2010
   
9/30/2009
 
   
ThUS$
   
ThUS$
 
   
Income
(expenses)
   
Income
(expenses)
 
             
Expense for current income tax
           
Expense for current income taxes
    (59,522 )     (63,647 )
Adjustments to prior period current income tax
    2,552       (4,413 )
                 
Total expense for current income tax, net
    (56,970 )     (68,060 )
                 
Expense for deferred income taxes
               
Deferred tax expense (income) related to the creation and reversal of temporary differences
    (27,389 )     7,862  
                 
Total expense for deferred income taxes, net
    -       -  
                 
Expense (income) for income taxes
    (84,359 )     (60,198 )

Expenses (income) for income taxes for foreign and domestic parties are as follows:

   
9/30/2010
   
9/30/2009
 
   
ThUS$
   
ThUS$
 
   
Profit (losses)
   
Profit (losses)
 
             
Current income tax expense by domestic and foreign parties, net
           
Current income tax expense, foreign parties, net
    (1,319 )     (747 )
Current income tax expense, domestic, net
    (55,651 )     (67,313 )
                 
Total current income tax expense, net
    (56,970 )     (68,060 )
                 
Deferred income taxes by foreign and domestic parties, net
               
Deferred income tax expense, foreign parties, net
    (1,098 )     389  
Deferred income tax expense, domestic, net
    (26,291 )     7,473  
                 
Total deferred income tax expense, net
    (27,389 )     7,862  
                 
Expense (income) for income taxes
    (84,359 )     (60,198 )
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
189

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued

d.8
Participation in taxation attributable to investments recognized according to the equity method:

The Company does not recognize any deferred income tax liability in all cases of taxable temporary differences associated with investments in subsidiaries, branches and associated companies or interest in joint ventures, because as indicated in the standard, the following two conditions are jointly met:
 
 
(a)
the parent company, investor or interest holder is able to control the time for reversal of the temporary difference; and

 
(b)
it is possible that the temporary difference is not reversed in the foreseeable future.

In addition, the Company does not recognize deferred income tax assets for all deductible temporary differences from investments in subsidiaries, branches and associated companies or participations in joint ventures because it is not possible that the following requirements are met:

(a) temporary differences are reversed in a foreseeable future; and

(b) the Company has tax earnings against which temporary differences can be used.
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
190

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued
 
d.9
Information to be disclosed on the tax effects of other comprehensive income components:
 
   
9/30/2010
 
    
ThUS$
 
Income tax related to components of other income and expense with a charge or credit to net equity
 
Amount 
before taxes
   
Expense 
(income) for 
income 
taxes
   
Amount 
after taxes
 
                   
Cash flow hedges
    (5,683 )     966       4,718  
                         
Total
    (5,683 )     966       4,718  
 
   
9/30/2010
 
   
ThUS$
 
Income tax related to components of other income and expense with a charge or credit to net equity
 
Amount
before taxes
   
Expense 
(income) for 
income 
taxes
   
Amount 
after taxes
 
                   
Cash flow hedges
    12,872       (2,188 )     10,684  
                         
Total
    12,872       (2,188     10,684  
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
191

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued

d.10
Explanation of the relationship between expense (income) for taxes and accounting income

In accordance with paragraph No. 81, letter c) of IAS 12, the Company has estimated that the method which discloses more significant information for the users of its financial statements is the reconciliation of tax expense (income) to the result of multiplying income for accounting purposes by the rate in force in Chile.  This option is based on the fact that the Parent Company and its subsidiaries incorporated in Chile generate almost the total amount of tax expense (income) and the fact that amounts of subsidiaries incorporated in foreign countries have no relevant significance within the context of the total amount of tax expense (income.)
 
Reconciliation of numbers in income tax expenses (income) and the result of multiplying financial gain by the rate prevailing in Chile.

   
9/30/2010
   
9/30/2009
 
    
ThUS$
   
ThUS$
 
    
Profit (loss)
   
Profit (loss)
 
             
Consolidated income before taxes
    363,800       319,014  
Income tax rate in force in Chile
    17 %     17 %
                 
Tax expense using the legal rate
    (61,846 )     (54,232 )
Tax effect of rates in other jurisdictions
    (776 )     3,912  
Tax effect of not deductible (rejected) expenses
    -       -  
Other increases (decreases) in charge for legal taxes
    (21,737 )     (9,878 )
                 
Tax expense using the effective rate
    (84,359 )     (60,198 )
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
192

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 28 - Income and deferred taxes, continued

d.11
Tax periods potentially subject to verification:

The Group companies are potentially subject to tax audits for income taxes by tax authorities in each country.  These audits are limited to a number of annual tax periods, which, in general, when they elapse, give rise to the expiration of these inspections.

Tax audits, due to their nature, are often complex and may require several years.  Below, we provide a summary of tax periods which are potentially subject to verification, in accordance with tax regulations in force in the country of origin:

 
a)
Chile
In Chile, the tax authority may review tax returns of up to 3 years old from the expiration date of the legal term in which the payment should have been made.  In the event that there is an administrative or legal notice, the review can be extended to a period of 6 years.

 
b)
United States
In the United States the tax authority may review tax returns of up to 3 years old from the expiration date of the tax return. In the event of detecting an omission or error in the tax return of revenue or cost of sales, the review can be extended up to a period of 6 years.

 
c)
Mexico:
In Mexico, the tax authority can review tax returns up to 5 years old from the expiration date of the tax return.

 
d)
Spain:
In Spain, the tax authority can review tax returns up to 4 years old from the expiration date of the tax return.

 
e)
Belgium:
In Belgium, the tax authority may review tax returns of up to 3 years old, from the expiration date of the tax return if no tax losses exist. In the event of detecting an omission or error in the tax return, the review can be extended up to a period of 5 years.

 
f)
South Africa:
In South Africa, the tax authority may review tax returns of up to 3 years old, from the expiration date of the tax return. In the event of detecting an omission or error in the tax return, the review can be extended up to a period of 5 years.
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
193

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 29 - Disclosures on the effects of variations in foreign currency exchange rates

Assets in foreign currency impacted for variations in exchange rates are as follows:
Class of assets
 
Currency
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
Current assets:
                     
Cash and cash equivalents
 
CLP
    439,025       216,081       99  
Cash and cash equivalents
 
CLF
    -       43,599       -  
Cash and cash equivalents
 
EUR
    1,493       3,813       7,676  
Cash and cash equivalents
 
ZAR
    7,199       2,586       2,574  
Cash and cash equivalents
 
AED
    -       -       176  
Cash and cash equivalents
 
BRL
    43       33       4  
Cash and cash equivalents
 
YEN
    1,090       823       1,096  
Cash and cash equivalents
 
CNY
    113       -       -  
Cash and cash equivalents
 
PEN
    159       26       175  
Cash and cash equivalents
 
ARS
    13       1       3  
Cash and cash equivalents
 
IDR
    -       5       4  
Cash and cash equivalents
 
INR
    9       -       -  
Cash and cash equivalents
 
GBP
    5       2       6  
Cash and cash equivalents
 
MXN
    99       218       809  
Subtotal cash and cash equivalents
        449,248       267,187       12,622  
Other current financial assets
 
CLP
    -       15,043       -  
Subtotal other current financial assets
        -       15,043       -  
Other current non- financial assets
 
CLP
    14,460       24,442       24,607  
Other current non- financial assets
 
CLF
    -       758       294  
Other current non- financial assets
 
EUR
    2,835       2,656       10,197  
Other current non- financial assets
 
ZAR
    201       17       135  
Other current non- financial assets
 
ARS
    42       -       -  
Other current non- financial assets
 
AED
    -       -       135  
Other current non- financial assets
 
BRL
    3       3       9  
Other current non- financial assets
 
YEN
    14       -       -  
Other current non- financial assets
 
CNY
    15       -       -  
Other current non- financial assets
 
PEN
    259       -       -  
Other current non- financial assets
 
MXN
    141       442       338  
Subtotal other current non-financial assets
        17,970       28,318       35,715  
Trade and other receivables
 
CLP
    143,713       103,877       100,825  
Trade and other receivables
 
CLF
    959       1,735       1,512  
Trade and other receivables
 
EUR
    102,628       62,934       43,096  
Trade and other receivables
 
ZAR
    20,593       30,977       8,524  
Trade and other receivables
 
AED
    -       -       236  
Trade and other receivables
 
BRL
    1,175       20       2  
Trade and other receivables
 
ARS
    193       -       -  
Trade and other receivables
 
YEN
    2       -       -  
Trade and other receivables
 
CNY
    53       -       -  
Trade and other receivables
 
PEN
    6       -       -  
Trade and other receivables
 
GBP
    285       -       -  
Trade and other receivables
 
MXN
    251       7       119  
Subtotal trade and other receivables
        269,858       199,550       154,314  
Trade receivables due from related parties
 
CLP
    248       299       150  
Trade receivables due from related parties
 
EUR
    3,043       1,935       3,637  
Trade receivables due from related parties
 
AED
    -       -       39  
Subtotal trade receivables due from related parties
        3,291       2,234       3,826  
Current tax assets
 
CLP
    8,586       7,954       -  
Current tax assets
 
EUR
    267       208       232  
Current tax assets
 
ZAR
    2       2       195  
Current tax assets
 
YEN
    -       32       721  
Current tax assets
 
PEN
    318       -       -  
Current tax assets
 
MXN
    52       469       -  
Subtotal current tax assets
        9,225       8,665       1,148  
Total current assets
        749,592       520,997       207,625  
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
    
 
194

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 29 - Disclosures on the effects of variations in foreign currency exchange rates

Class of assets
 
Currency
 
9/30/2010
ThUS$
   
12/31/2009
ThUS$
   
1/1/2009
ThUS$
 
Non-current assets:
                     
Other non-current financial assets
 
CLP
    22       20       -  
Other non-current financial assets
 
EUR
    3       10       10  
Other non-current financial assets
 
BRL
    30       28       19  
Other non-current financial assets
 
YEN
    57       52       51  
Subtotal other non-current financial assets
        112       110       80  
Other non-current non-financial assets
 
CLP
    582       2,757       353  
Other non-current non-financial assets
 
CLF
    -       5,939       2,449  
Other non-current non-financial assets
 
BRL
    223       245       160  
Other non-current non-financial assets
 
YEN
    326       297       256  
Subtotal other non-current non-financial assets
        1,131       9,238       3,218  
Non- current rights receivable
 
CLP
    529       883       327  
Non- current rights receivable
 
CLF
    634       787       439  
Subtotal non- current rights receivable
        1,163       1,670       766  
Investments recognized using the equity method of accounting
 
CLP
    1,065       328       473  
Investments recognized using the equity method of accounting
 
EUR
    10,386       12,121       12,483  
Investments recognized using the equity method of accounting
 
AED
    23,925       22,575       5,277  
Investments recognized using the equity method of accounting
 
INR
    421       -       -  
Investments recognized using the equity method of accounting
 
TRY
    11,902       -       -  
Investments recognized using the equity method of accounting
 
EGP
    1,541       -       -  
Investments recognized using the equity method of accounting
 
THB
    1,357       -       -  
Subtotal investments recognized using the equity method of accounting
        50,597       35,024       18,233  
Goodwill
 
CLP
    735       -       -  
Subtotal goodwill
        735       -       -  
Property, plant and equipment
 
CLP
    1,291       577       290  
Subtotal property, plant and equipment
        1,291       577       290  
Total non-current assets
        55,029       46,619       22,587  
Total assets
        804,621       567,616       230,212  

SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
195

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
   
Note 29 - Disclosures on the effects of variations in foreign currency exchange rates, continued
Liabilities in foreign currency impacted by variations in exchange rates are as follows:
       
9/30/2010
   
12/31/2009
 
Class of liability
 
Currency
 
Up to 90 days
ThUS$
   
More than 90 
days to 1 
year
ThUS$
   
Total
ThUS$
   
Up to 90 days
ThUS$
   
More than 90 
days to 1 
year
ThUS$
   
Total
ThUS$
 
Current liabilities
                                       
Other current financial liabilities
 
CLF
    10,070       -       10,070       3,649       6,541       10,190  
Other current financial liabilities
 
CLP
    707       -       707       30,647       1,268       31,915  
Other current financial liabilities
 
EUR
    -       -       -       -       3,327       3,327  
Subtotal other current financial liabilities
        10,777       -       10,777       34,296       11,136       45,432  
Trade and other payables
 
CLP
    37,953       38,992       76,945       72,888       66       72,954  
Trade and other payables
 
CLF
    83       199       282       -       -       -  
Trade and other payables
 
EUR
    32,099       1,123       33,222       65,031       -       65,031  
Trade and other payables
 
INR
    1       -       1       -       -       -  
Trade and other payables
 
BRL
    18       352       370       -       -       -  
Trade and other payables
 
PEN
    52       293       345       -       -       -  
Trade and other payables
 
MXN
    1,350       -       1,350       570       19       589  
Trade and other payables
 
GBP
    29       -       29       -       -       -  
Trade and other payables
 
CNY
    -       39       39       -       -       -  
Trade and other payables
 
ZAR
    4,459       500       4,959       3,840       -       3,840  
Subtotal Trade and other payables
        76,044       41,498       117,542       142,329       85       142,414  
Trade payables due to related parties
 
EUR
    -       597       597       -       23       23  
Trade payables due to related parties
 
CLP
    -       -       -       -       233       233  
Subtotal trade payables due to related parties
        -       597       597       -       256       256  
Other short-term provisions
 
CLP
    369       -       369       -       418       418  
Other short-term provisions
 
EUR
    7    
­-
      7       -       118       118  
Other short-term provisions
 
BRL
    -       1,607       1,607       -       1579       1579  
Subtotal Other short-term provisions
        376       1,607       1,983       -       2,115       2,115  
Current tax liabilities
 
CLP
    -       -       -       -       27       27  
Current tax liabilities
 
EUR
    -       -       -       -       422       422  
Current tax liabilities
 
MXN
    -       -       -       -       2       2  
Total current tax liabilities
        -       -       -       -       451       451  
Current provisions for benefits to employees
 
MXN
    -       275       275       -       -       -  
Current provisions for benefits to employees
 
CLP
    20,561       12,896       33,457       -       16,375       16,375  
Subtotal Current provisions for benefits to employees
        20,561       13,171       33,732       -       16,375       16,375  
Other current non-financial liabilities
 
CLP
    12,559       3,314       15,873       14,187       13,530       27,717  
Other current non-financial liabilities
 
EUR
    39       4       43       128       299       427  
Other current non-financial liabilities
 
BRL
    -       19       19       -       -       -  
Other current non-financial liabilities
 
BRL
    9       53       62       -       48       48  
Other current non-financial liabilities
 
MXN
    388       136       524       162       -       162  
Other current non-financial liabilities
 
PEN
    70       10       80       -       -       -  
Other current non-financial liabilities
 
ZAR
    -       660       660       856       -       856  
Subtotal other current non-financial liabilities
        13,065       4,196       17,261       15,333       13,877       29,210  
Total current liabilities
        120,823       61,069       181,892       191,958       44,295       236,253  
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
196

 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 29 - Disclosures on the effects of variations in foreign currency exchange rates, continued

       
1/1/2009
 
Class of liability
 
Currency
 
Up to 90
days
ThUS$
   
More than
90 days to
1 year
ThUS$
   
Total
ThUS$
 
Current liabilities
                     
Other current financial liabilities
 
CLF
    -       5,352       5,352  
Other current financial liabilities
 
EUR
    1,633       -       1,633  
Subtotal other current financial liabilities
        1,633       5,352       6,985  
Trade and other payables
 
CLP
    68,914       -       68,914  
Trade and other payables
 
CFL
    55       171       226  
Trade and other payables
 
EUR
    9,962       -       9,962  
Trade and other payables
 
BRL
    249       -       249  
Trade and other payables
 
AED
    169       -       169  
Trade and other payables
 
MXN
    643       -       643  
Trade and other payables
 
ZAR
    599       -       599  
Subtotal trade and other payables
        80,591       171       80,762  
Other short-term provisions
 
CLP
    138       -       138  
Other short-term provisions
 
EUR
    7       291       298  
Other short-term provisions
 
BRL
    -       1,295       1,295  
Other short-term provisions
 
AED
    11               11  
Subtotal other short-term provisions
        156       1,586       1,742  
Current provisions due to benefits to employees
 
CLP
    -       22,112       22,112  
Subtotal current provisions due to benefits to employees
                22,112       22,112  
Other current non-financial liabilities
 
CLP
    9,303       10,042       19,345  
Other current non-financial liabilities
 
EUR
    74       375       449  
Other current non-financial liabilities
 
BRL
    3       18       21  
Other current non-financial liabilities
 
MXN
    255       -       255  
Subtotal Other current non-financial liabilities
        9,635       10,435       20,070  
Total current liabilities
        92,015       39,656       131,671  
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
197

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 29 - Disclosures on the effects of variations in foreign currency exchange rates, continued
 
        
9/30/2010
   
12/31/2009
 
Class of liability
 
Currency
 
More than 
1 up to 3 
years
ThUS$
   
More than 
3 up to 5 
years
ThUS$
   
More than 
5 years
ThUS$
   
Total
ThUS$
   
More 
than 1 up 
to 3 years
ThUS$
   
More than 
3 up to 5 
years
ThUS$
   
More than 
5 years
ThUS$
   
Total
ThUS$
 
Non-current liabilities
                                                   
Other non-current financial liabilities
 
CLF
    -       63,640       279,129       342,769       6,195       68,144       251,926       326,265  
Other non-current financial liabilities
 
CLP
    -       150,964       -       150,964       -       143,956       -       143,956  
Subtotal other non-current financial liabilities
        -       214,604       279,129       493,733       6,195       212,100       251,926       470,221  
Non-current liabilities
 
CLF
    -       -       -       -       187       -       -       187  
Non-current liabilities
        -       -       -       -       -       -       -       -  
Subtotal non-current liabilities
        -       -       -       -       187       -       -       187  
Tax liabilities
 
CLP
    143       -       15       158       -       -       -       -  
Subtotal tax liabilities
        143       -       15       158       -       -       -       -  
Non-current provisions for benefits to employees
 
CLP
    -       -       1,606       1,606       -       -       28,171       28,171  
Non-current provisions for benefits to employees
 
MXN
    -       -       -       -       -       -       185       185  
Non-current provisions for benefits to employees
 
JPY
    -       -       -       -       -       -       326       326  
Subtotal Non-current provisions due to benefits to employees
        -       -       1,606       1,606       -       -       28,682       28,682  
Total non-current liabilities
        143       214,604       280,750       495,497       6,382       212,100       280,608       499,090  
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com

 
198

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 29 - Disclosures on the effects of variations in foreign currency exchange rates, continued
 
       
1/1/2009
 
Class of liability
 
Currency
 
More than
1 up to 3
years
ThUS$
   
More than
3 up to 5
years
ThUS$
   
More than
5 years
ThUS$
   
Total
ThUS$
 
Non-current liabilities
                           
Other non-current financial liabilities
 
CLF
    5,056       5,056       75,828       85,940  
Subtotal other non-current financial liabilities
        5,056       5,056       75,828       85,940  
Non-current liabilities
 
CLF
    398       -       -       398  
Subtotal Non-current liabilities
        398       -       -       398  
Tax liabilities
 
CLP
    18       -       -       18  
Subtotal tax liabilities
        18       -       -       18  
Non-current provisions for benefits to employees
 
CLP
    -       -       19,489       19,489  
Non-current provisions for benefits to employees
 
MXN
    -       -       403       403  
Non-current provisions for benefits to employees
 
JPY
    -       -       294       294  
Subtotal Non-current provisions due to benefits to employees
        -       -       20,186       20,186  
Total non-current liabilities
        5,472       5,056       96,014       106,542  
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
199

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
 
Note 30 - Asset value impairment

Assets value impairment

The Company assesses on an annual basis any impairment on the amount of Buildings, plant and equipment, intangible assets, goodwill and investments accounted for using the equity method of accounting in accordance with IAS 36. Assets to which this method applies are as follows:

 
-
Investments recognized using the equity method of accounting
 
-
Property, plant and equipment
 
-
Intangible assets
 
-
Goodwill
 
a)
Impairment of investments recognized using the equity method of accounting, property, plant and equipment, intangible assets and goodwill.
 
Assets are reviewed for impairment as to the existence of any indication that the carrying value is lower than the recoverable amount. If such an indication exists, the asset recoverable amount is calculated in order to determine the extent of this impairment, if any. In the event that asset does not generate any cash flows independent from other assets, the Company determines the recoverable amount of the cash generating unit to which this asset belongs according to the business segment (specialty plant nutrient, iodine and derivatives, lithium and derivatives, industrial chemicals, potassium and other products and services.)
 
The Company conducts impairment tests to intangible assets and goodwill with indefinite useful lives on an annual basis and every time there is indication of impairment.
 
If the recoverable value of an asset is estimated in an amount lower than its carrying value, the latter decreases to its recoverable amount.
 
b)
Impairment of financial assets: For the case of financial assets with a trading origin, the Company has defined a policy for the recognition of provision for impairment in consideration of the age of the past due balance.
 
An allowance is made for impairment losses related to trade receivables when there is objective evidence that the Company will be not able to collect all the amounts owed in accordance with the original terms of receivables.
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
200

 
 
    Notes to the Interim Consolidated Financial Statements as of September 30, 2010
  
Note 30 - Asset value impairment, continued
 
In accordance with the information presented and evaluating the indication of value impairment of any asset related to the cash flow generating unit, we may conclude that there is no evidence of indication which supports any impairment in the value of assets. Depending on value impairment indication, for the entity:
 
 
-
There are no indications of value impairment in each of intangible assets with an indefinite useful life, as well as intangible assets which are not yet available for their use, comparing their carrying amounts to their recoverable amounts.
 
 
-
There are no indications of value impairment on goodwill acquired in a business combination
 
Note 31 - Events occurred subsequent to the reporting date

31.1 
Authorization of the financial statements

The interim consolidated financial statements of Sociedad Química y Minera S.A. and subsidiaries prepared in accordance with International Financial Reporting Standards for the period ended September 30, 2010 were approved and authorized for issuance by the Board of Directors at their meeting held on November 23, 2010.

31.2 
Disclosures of events occurred subsequent to the reporting date

On November 23, 2010, the Company’s Board of Directors agreed to pay a provisional dividend of ThUS$110,000, payable beginning on December 15, 2010.

Management is not aware of any significant events occurred between September 30, 2010 and the date of issuance of these interim consolidated financial statements which may significantly affect them.

31.3 
Detail of dividends declared after the reporting date

As of the closing date of these financial statements, there are no dividends declared after the reporting date.
 
SQM 
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000  
www.sqm.com
 
 
201

 

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: January 10, 2011