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 December 31, 2012 filed by Sociedad Química y Minera de Chile S.A. before the Chilean Securities and Insurance Commission (Superintendencia de Valores y Seguros) on March 5, 2012.

 

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) 2425-2000

(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_________

 

 

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

 

 

 

CONSOLIDATED FINANCIAL STATEMENTS

For the year ended

December 31, 2012

 

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. AND SUBSIDIARIES

In Thousands of United States Dollars

 

 

This document includes:

 

	-	Independent Auditor’s Report
	-	Consolidated Classified Statements of Financial Position
	-	Consolidated Statements of Income by Function
	-	Consolidated Statements of Comprehensive Income
	-	Consolidated Statements of Cash Flows
	-	Statements of Changes in Equity
	-	Notes to the Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Table of Contents – Consolidated Financial Statements

 

Note		Page
	Consolidated Classified Statements of Financial Position	7
	Consolidated Statements of Income by function	9
	Consolidated Statements of Comprehensive Income	11
	Consolidated Statements of Cash Flows	12
	Statements of Changes in Equity	14
	Notes  to the consolidated financial statements
1	Identification and Activities of the Company and Subsidiaries
	1.1   Historical background	17
	1.2   Main domicile where the Company performs its production activities	17
	1.3   Codes of main activities	17
	1.4   Description of the nature of operations and main activities	17
	1.5   Other background	19
2	Basis of presentation for the consolidated financial statements
	2.1    Accounting period	21
	2.2    Financial statements	22
	2.3    Basis of measurement	22
	2.4    Accounting pronouncements	23
	2.5    Foreign currency transactions	26
	2.6    Basis of consolidation	28
	2.7   Significant accounting judgments, estimates and assumptions	31
3	Significant accounting policies
	3.1    Inventories	32
	3.2    Trade and other receivables	33
	3.3    Equity-accounted investees	33
	3.4    Property, plant and equipment	34
	3.5    Segment reporting	36
	3.6    Revenue recognition	37
	3.7    Income tax and deferred taxes	39
	3.8    Earnings per share	40
	3.9    Impairment of non-financial assets	41
	3.10  Financial assets	42
	3.11  Financial liabilities	43
	3.12  Environment	45
	3.13  Minimum dividend	45
	3.14  Consolidated statement of cash flows	45

 

 

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

 

Table of Contents – Consolidated Financial Statements (continued)

 

Note		Page
	3.15  Obligations related to employee termination benefits and pension Commitments	45
	3.16  Financial derivatives and hedging transactions	47
	3.17  Leases	49
	3.18  Prospecting expenses	50
	3.19  Other provisions	50
	3.20  Compensation plans	51
	3.21  Good and service insurance expenses	51
	3.22  Intangible assets	51
	3.23  Research and development expenses	53
	3.24  Classification of balances as current and non-current	53
4	Financial risk management
	4.1   Financial risk management policy	54
	4.2   Risk factors	55
	4.3   Risk measurement	58
5	Changes in estimates and accounting policies (consistent presentation)
	5.1   Changes in accounting estimates	59
	5.2   Changes in accounting policies	59
6	Background of companies included in consolidation
	6.1   Parent’s stand-alone assets and liabilities	60
	6.2   Parent entity	60
	6.3   Jointly arrangements of controlling interest	60
	6.4   Information on consolidated subsidiaries	62
	6.5   Detail of transactions between consolidated companies	68
7	Cash and cash equivalents
	7.1  Types of cash and cash equivalents	69
	7.2   Short-term investments, classified as cash equivalents	70
	7.3   Information on cash and cash equivalents by currency	70
	7.4   Amount of significant restricted (unavailable) cash balances	71
	7.5   Short-term deposits, classified as cash equivalents	72
8	Inventories	73
9	Related party: disclosures
	9.1   Related party disclosures	74
	9.2   Relationship between the Parent and the entity	74
	9.3   Intermediate parent that publicly issues financial statements	75
	9.4   Detailed identification of the relationship between the Parent and subsidiary	75

 

 

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

 

Table of Contents – Consolidated Financial Statements (continued)
Note		Page
	9.5   Detail of related parties and related party transactions	77
	9.6   Trade receivables due from related parties, current	79
	9.7   Trade payables due to related parties, current	80
	9.8   Board of Directors and Senior Management	81
	9.9   Key Management Personnel Compensation	83
10	Financial instruments
	10.1   Types of other financial assets	84
	10.2   Trade and other receivables, current and non-current	84
	10.3   Hedging assets and liabilities	88
	10.4   Financial liabilities	90
	10.5   Trade and other payables	100
	10.6   Financial liabilities at fair value through profit or loss	100
	10.7   Financial asset and liability categories	101
	10.8   Financial assets pledged as guarantee	103
	10.9   Estimated fair value of financial instruments and financial derivatives	103
	10.10 Nature and scope of risks arising from financial instruments	105
11	Equity-accounted investees
	11.1   Investments in associates recognized according to the equity method of accounting	105
	11.2   Assets, liabilities, revenue and expenses of associates	106
	11.3   Detail of investments in associates	107
12	Joint ventures
	12.1   Policy for accounting for joint ventures in a Parent’s separate financial statements	108
	12.2   Disclosures of interest in joint ventures	108
	12.3   Detail of assets, liabilities and profit or loss of significant investments in joint ventures by company	109
	12.4   Detail of investments in joint ventures	110
13	Intangible assets and goodwill
	13.1  Balances	111
	13.2  Disclosures on intangible assets and goodwill	111

 

 

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

 

Table of Contents – Consolidated Financial Statements (continued)
Note		Page
14	Property, plant and equipment
	14.1   Types of property, plant and equipment	115
	14.2   Reconciliation of changes in property, plant and equipment by type	117
	14.3   Detail of property, plant and equipment pledged as guarantee	119
	14.4   Additional information	119
15	Employee benefits
	15.1   Provisions for employee benefits	120
	15.2   Policies on defined benefit plans	121
	15.3   Other long-term benefits	122
	15.4   Post-employment benefit obligations	123
	15.5   Staff severance indemnities	125
16	Executive compensation plan	125
17	Disclosures on equity
	17.1   Capital management	127
	17.2   Disclosures on preferred share capital	128
	17.3   Disclosures on reserves in equity	130
	17.4   Dividend policies	131
	17.5   Provisional dividends	132
18	Provisions and other non-financial liabilities
	18.1   Types of provisions	134
	18.2   Description of other provisions	135
	18.3   Other non-financial liabilities, current	135
	18.4   Changes in provisions	136
	18.5   Detail of main types of provisions	138
19	Contingencies and restrictions
	19.1   Lawsuits or other relevant events	139
	19.2   Restrictions to management or financial limits	142
	19.3   Commitments	144
	19.4   Restricted or pledged cash	144
	19.5   Sureties obtained from third parties	144
	19.6   Indirect guarantees	145

 

 

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

 

Table of Contents – Consolidated Financial Statements (continued)
Note		Page
20	Revenue	147
21	Earnings per share	147
22	Borrowing costs	148
23	Effect of fluctuations on foreign currency exchange rates	149
24	Environment
	24.1   Disclosures on disbursements related to the environment	150
	24.2   Detail of information on disbursements related to the environment	151
	24.3   Description of each project indicating whether these are in process or have been finished	168
25	Other current and non-current non-financial assets	175
26	Operating segments
	26.1   Operating segments	177
	26.2   Operating segments disclosures	179
	26.3   Statement of comprehensive income classified by operating segments based on groups of products	181
	26.4   Revenue from transactions with other company operating segments	183
	26.5   Disclosures on geographical areas	184
	26.6   Disclosures on main customers	184
	26.7   Segments by geographical areas	185
	26.8   Property, plant and equipment classified by geographical areas	186
27	Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature
	27.1   Revenue	187
	27.2   Cost of sales	187
	27.3   Other income	188
	27.4   Administrative expenses	188
	27.5   Other expenses by function	189
	27.6   Other income (expenses)	189
	27.7   Summary of expenses by nature	190

 

 

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

 

Table of Contents – Consolidated Financial Statements (continued)
Note		Page
28	Income tax and deferred taxes
	28.1   Current tax assets	191
	28.2   Current tax liabilities	192
	28.3   Tax earnings	192
	28.4   Income tax and deferred taxes	193
29	Disclosures on the effects of fluctuations in foreign currency exchange rates	202
30	3.14  Consolidated statement of cash flows	207
31	Subsequent events
	31.1   Authorization of the financial statements	208
	31.2   Disclosures on events occurring after the reporting date	209
	31.3   Detail of dividends declared after the reporting date	209

 

 

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

 

CONSOLIDATED CLASSIFIED STATEMENTS OF FINANCIAL POSITION

 

ASSETS		Note No.				As of December  31, 2012				As of December 31, 2011
						ThUS$				ThUS$
Current assets
Cash and cash equivalents			7.1				324,353				444,992
Other current financial assets			10.1				316,103				169,261
Other current non-financial assets			25				67,820				63,792
Trade and other receivables, current			10.2				510,616				412,062
Trade receivables due from related parties, current			9.6				101,372				117,139
Current inventories			8				896,236				744,402
Current tax assets			28.1				30,234				4,765
Total current assets							2,246,734				1,956,413
Non-current assets
Other non-current financial assets			10.1				29,492				30,488
Other non-current non-financial assets			25				17,682				24,651
Trade receivables, non-current			10.2				1,311				1,070
Investments in equity-accounted investees			11.1				70,298				60,694
Intangible assets other than goodwill			13.1				24,013				4,316
Goodwill			13.1				38,388				38,605
Property, plant and equipment			14.1				1,988,290				1,755,042
Deferred tax assets			28.4				223				304
Total non-current assets							2,169,697				1,915,170
Total assets							4,416,431				3,871,583

 

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

 

 

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

 

CONSOLIDATED CLASSIFIED STATEMENTS OF FINANCIAL POSITION, (continued)

 

Liabilities and Equity		Note No.				As of December 31, 2012				As of December 31, 2011
						ThUS$				ThUS$
Liabilities
Current liabilities
Other current financial liabilities			10.4				152,843				161,008
Trade and other payables, current			10.5				207,944				183,032
Trade payables due to related parties, current			9.7				19				873
Other current provisions			18.1				18,489				16,937
Current tax liabilities			28.2				23,624				75,418
Provisions for employee benefits, current			15.1				33,974				30,074
Other current non-financial liabilities			18.3				172,200				161,961
Total current liabilities							609,093				629,303
Non-current liabilities
Other non-current financial liabilities			10.4				1,446,194				1,237,027
Other non-current provisions			18.1				7,357				8,595
Deferred tax liabilities			28.4				125,445				98,594
Provisions for employee benefits, non-current			15.1				40,896				33,684
Total non-current liabilities							1,619,892				1,377,900
Total liabilities							2,228,985				2,007,203
Equity			17
Share capital							477,386				477,386
Retained earnings							1,676,169				1,351,560
Other reserves							(20,772	)			(16,112	)
Equity attributable to owners of the Parent							2,132,783				1,812,834
Non-controlling interests							54,663				51,546
Total equity							2,187,446				1,864,380
Total liabilities and equity							4,416,431				3,871,583

 

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

 

 

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

 

CONSOLIDATED STATEMENTS OF INCOME BY FUNCTION

 

						Between January and December
		Note				2012				2011
		No.				ThUS$				ThUS$
Revenue			20				2,429,160				2,145,286
Cost of sales			27.2				(1,400,567	)			(1,290,494	)
Gross profit							1,028,593				854,792
Other income			27.3				12,702				47,681
Administrative expenses			27.4				(106,442	)			(91,760	)
Other expenses by function			27.5				(34,628	)			(63,047	)
Other gains (losses)			27.6				683				5,787
Profit (loss) from operating activities							900,908				753,453
Finance income							29,068				23,210
Finance costs			22				(54,095	)			(39,335	)
Share of profit of associates and joint ventures accounted for using the equity method							24,357				21,808
Foreign currency translation differences			23				(26,787	)			(25,307	)
Profit (loss) before taxes							873,451				733,829
Income tax expense, continuing operations			28.4				(216,082	)			(179,710	)
Profit (loss) from continuing operations							657,369				554,119
Profit for the year							657,369				554,119
Profit attributable to
Owners of the Parent							649,167				545,758
Non-controlling interests							8,202				8,361
Profit for the year							657,369				554,119

 

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

 

 

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

 

CONSOLIDATED STATEMENTS OF INCOME BY FUNCTION (continued)

 

						Between January and December
		Note				2012				2011
		No.				US$				US$
Earnings per share
Common shares
Basic earnings per share (US$ per share)			21				2.4665				2.0736
Basic earnings per share (US$ per share) from continuing operations							2.4665				2.0736
Diluted common shares
Diluted earnings per share (US$ per share)			21				2.4665				2.0736
Diluted earnings per share (US$ per share) from continuing operations							2.4665				2.0736

 

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

 

 

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

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

		Between January and December
		2012				2011
Statements of comprehensive income		ThUS$				ThUS$
Profit for the year			657,369				554,119
Components of other comprehensive income before taxes and foreign currency translation differences
Gain (loss) from foreign currency translation differences, before taxes			982				(2,890	)
Other comprehensive income before taxes and foreign currency translation differences			982				(2,890	)
Cash flow hedges
(Gain) loss from cash flow hedges before taxes			(7,872	)			(1,241	)
Other comprehensive income before taxes and cash flow hedges			(7,872	)			(1,241	)
Other comprehensive income before taxes and actuarial gains (losses) from defined benefit plans			711				(918	)
Other miscellaneous reserves			-				(1,677	)
Other components of other comprehensive income before taxes			(6,179	)			(6,726	)
Income taxes associated with components of other comprehensive income
Income taxes associated with cash flow hedges in other comprehensive income			1,580				218
Income taxes associated with components of other comprehensive income			1,580				218
Other comprehensive income			(4,599	)			(6,508	)
Total comprehensive income			652,770				547,611
Comprehensive income attributable to
Owners of the Parent			644,507				539,359
Non-controlling interests			8,263				8,252
Total comprehensive income			652,770				547,611

 

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

 

 

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

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Statement of Cash Flows		Note No.		12/31/2012 ThUS$				12/31/2011 ThUS$
Cash flows from (used in) operating activities
Profit for the year					657,369				554,119
Adjustment to reconcile profit for the year
Adjustment for decreases (increases) in inventories					(167,826	)			(147,238	)
Adjustment for decreases (increases) in trade receivables					(52,993	)			(135,401	)
Adjustment for decreases (increases) in other receivables from operating activities					(57,300	)			(37,393	)
Adjustment for decreases (increases) in trade payables					(49,025	)			(44,566	)
Adjustment for decreases (increases) in other payables from operating activities					(204,067	)			(72,976	)
Adjustment for depreciation and amortization					196,158				195,897
Adjustment for provisions					33,657				23,055
Income tax expense					216,082				179,710
Adjustment for unrealized foreign currency translation loss (gain)					26,787				25,307
Adjustment for undistributed profit from associates					(24,357	)			(21,808	)
Other adjustments for items other than cash					67,244				54,369
Other adjustments for the effects on cash from investing or financing activities					(200	)			(3,680	)
Reconciling adjustments					(15,840	)			15,276
Cash flows from (used in) operating activities					641,529				569,395
Dividends received					15,126				4,299
Interest paid					(6,449	)			(2,349	)
income taxes paid					-				-
Net cash from (used in) operating activities					650,206				571,345
Cash flows from (used in) investing activities
Cash flows from loss of control of subsidiaries or other businesses					961				5,736
Payments to acquire interests in joint ventures					(197	)			(4,909	)
Loans granted to related parties					(4,000	)			-
Proceeds from the sale of property, plant and equipment					2,050				43,231
Acquisition of property, plant and equipment					(445,984	)			(501,118	)
Cash advances and loans granted to third parties					(623	)			83
Payment of loans granted to third parties					-				-
Other cash inflows (outflows)					(115,092	)			(59,251	)
Net cash from (used in) investing activities					(562,885	)			(516,228	)

 

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

 

 

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

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

 

		Note No.				12/31/2012 ThUS$				12/31/2011 ThUS$
Cash flows from (used in) financing activities
Proceeds from long-term loans							366,502				550,000
Repayment of loans							(220,000	)			(370,000	)
Dividends paid							(334,762	)			(277,334	)
Other cash inflows (outflows)							(9,437	)			(7,862	)
Net cash from (used in) financing activities							(197,697	)			(105,196	)
Net increase (decrease) in cash and cash equivalents before the effect of changes in the exchange rate							(110,376	)			(50,079	)
Effects of exchange rate fluctuations on cash held							(10,263	)			(29,581	)
Net increase (decrease) in cash and cash equivalents							(120,639	)			(79,660	)
Cash and cash equivalents at beginning of year							444,992				524,652
Cash and cash equivalents at end of year			7				324,353				444,992

 

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

 

 

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

 

STATEMENTS OF CHANGES IN EQUITY

 

		Share capital				Foreign currency translation difference reserves				Cash flow hedge reserves				Actuarial gains  (losses) from  defined benefit  plans				Other miscellaneous reserves				Other reserves				Retained earnings				Equity attributable  to owners of  the Parent				Non-controlling interests				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Equity at beginning of the year			477,386				(1,251	)			(10,230	)			(2,954	)			(1,677	)			(16,112	)			1,351,560				1,812,834				51,546				1,864,380
Restated opening balance of equity			477,386				(1,251	)			(10,230	)			(2,954	)			(1,677	)			(16,112	)			1,351,560				1,812,834				51,546				1,864,380
Profit for the year																											649,167				649,167				8,202				657,369
Other comprehensive income							921				(6,292	)			711								(4,660	)							(4,660	)			61				(4,599	)
Comprehensive income							921				(6,292	)			711				-				(4,660	)			649,167				644,507				8,263				652,770
Dividends																											(324,558	)			(324,558	)			(5,146	)			(329,704	)
Increase (decrease) in transfers and other changes																											-				-				-				-
Increase (decrease) in equity			-				921				(6,292	)			711				-				(4,660	)			324,609				319,949				3,117				323,066
Equity as of December 31, 2012			477,386				(330	)			(16,522	)			(2,243	)			(1,677	)			(20,772	)			1,676,169				2,132,783				54,663				2,187,446

 

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

 

 

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

 

STATEMENTS OF CHANGES IN EQUITY

 

		Share capital				Foreign currency translation difference reserves				Cash flow hedge reserves				Actuarial gains  (losses) from  defined benefit  plans				Other miscellaneous reserves				Other reserves				Retained earnings				Equity attributable  to owners of  the Parent				Non-controlling interests				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Equity at beginning of the year			477,386				1,530				(9,207	)			(2,036	)			-				(9,713	)			1,155,131				1,622,804				48,016				1,670,820
Restated opening balance of equity			477,386				1,530				(9,207	)			(2,036	)			-				(9,713	)			1,155,131				1,622,804				48,016				1,670,820
Profit for the year																											545,758				545,758				8,361				554,119
Other comprehensive income							(2,781	)			(1,023	)			(918	)			(1,677	)			(6,399	)							(6,399	)			(109	)			(6,508	)
Comprehensive income							(2,781	)			(1,023	)			(918	)			(1,677	)			(6,399	)			545,758				539,359				8,252				547,611
Dividends																											(349,329	)			(349,329	)			(3,706	)			(353,035	)
Increase (decrease) in transfers and other changes																											-				-				(1,016	)			(1,016	)
Increase (decrease) in equity			-				(2,781	)			(1,023	)			(918	)			(1,677	)			(6,399	)			196,429				190,030				3,530				193,560
Equity as of December 31, 2011			477,386				(1,251	)			(10,230	)			(2,954	)			(1,677	)			(16,112	)			1,351,560				1,812,834				51,546				1,864,380

 

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

 

 

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

 

Notes to the Consolidated Financial
Statements as of December 31, 2012

Sociedad Química y Minera de Chile S.A.

and Subsidiaries

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 1 – Identification and Activities of the Company and Subsidiaries

 

1.1

Historical background

 

Sociedad Química y Minera de Chile S.A. "SQM" is an open stock corporation organized under the laws of the Republic of Chile, Tax Identification No.93.007.000-9.

The Company was incorporated through a public deed dated 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 Registry of Commerce of Santiago, on page 4,537 No. 1,992. SQM's headquarters are located at El Trovador 4285, Fl. 6, Las Condes, Santiago, Chile. The Company's telephone number 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.

 

1.2

Main domicile where the Company performs its production activities

 

The Company’s main domiciles are: Calle Dos Sur plot No. 5 - Antofagasta; Arturo Prat 1060 - Tocopilla; Administración Building w/n - Maria Elena; Administración Building w/n Pedro de Valdivia - María Elena, Former Florencia office w/n - Sierra Gorda, Anibal Pinto 3228 - Antofagasta, Kilometer 1378 Ruta 5 Norte Highway - Antofagasta, Coya Sur Plant w/n - Maria Elena, kilometer 1760 Ruta 5 Norte Highway - Pozo Almonte, Pampa Yumbes w/n - Tal-tal.

 

1.3

Codes of main activities

 

The codes of the main activities as established by the Chilean Superintendence of Securities and Insurance are as follows:

 

-

1700 (Mining)

-

2200 (Chemical products)

-

1300 (Investment)

 

1.4

Description of the nature of operations and main activities

 

Our products are mainly derived from mineral deposits found in northern Chile. We mine and process caliche ore and brine deposits. The caliche ore in northern Chile contains the only known nitrate and iodine deposits in the world and is the world’s largest commercially exploited source of natural nitrates. The brine deposits of the Salar de Atacama, a salt-encrusted depression within the Atacama desert in northern Chile, contain high concentrations of lithium and potassium as well as significant concentrations of sulfate and boron.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 1 – Identification and Activities of the Company and Subsidiaries (continued)

 

1.4

Description of the nature of operations and main activities, continued

 

From our caliche ore deposits, we produce a wide range of nitrate-based products used for specialty plant nutrients and industrial applications, as well as iodine and iodine derivatives. At the Salar de Atacama, we extract brines rich in potassium, lithium, sulfate and boron in order to produce potassium chloride, potassium sulfate, lithium solutions, boric acid and bischofite (magnesium chloride). We produce lithium carbonate and lithium hydroxide at our plant near the city of Antofagasta, Chile, from the solutions brought from the Salar de Atacama. We market all of these products through an established worldwide distribution network.

 

We sell our products in over 100 countries worldwide through our global distribution network and generate our revenue mainly from abroad.

 

Our products are divided into six categories: specialty plant nutrition, iodine and its derivatives, lithium and its derivatives, industrial chemicals, potassium and other products and services, described as follows:

 

Specialty plant nutrients: This business is characterized by being closely related to its customers for which it has specialized staff who provide expert advisory in best practices for fertilization according to each type of crop, soil and climate. Within this type of business, potassium derivative products and specially potassium nitrate have had a leading role given the contribution they make to develop crops insuring an improvement in post-crop life in addition to improving quality, flavor and fruit color. The potassium nitrate, which is sold in multiple formats and as a part of other specialty mixtures, is complemented by sodium nitrate, potassium sodium nitrate, and more than 200 fertilizing mixtures.

 

Iodine: The Company is a major producer of iodine at worldwide level. Iodine is widely used in the pharmaceutical industry, technology and nutrition. Additionally, iodine is used as X ray contrast media and polarizing film for LCD displays.

 

Lithium: the Company’s lithium is mainly used for manufacturing rechargeable batteries for cell phones, cameras and notebooks. Through the manufacturing of lithium-based products, SQM provides significant materials to face great challenges such as the efficient use of energy and raw materials. 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

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 1 – Identification and Activities of the Company and Subsidiaries (continued)

 

1.4

Description of the nature of operations and main activities, 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 Salar de Atacama (the Atacama Saltpeter Deposit.)

 

Other products and services: This business line includes revenue from commodities, services, interests, royalties and dividends.

 

1.5

Other background:

 

Staff

 

As of December 31, 2012 and 2011, staff was detailed as follows:

 

		31/12/2012				31/12/2011
Permanent staff			5,643				4,902

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 1 – Identification and Activities of the Company and

               subsidiaries (continued)

 

1.5

Other background, continued

 

Main shareholders

 

The table below establishes certain information about the beneficial property of Series A and Series B shares of SQM as of December 31, 2012 and 2011. 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 controlled in the Central Securities Depository and reported to the Superintendence of Securities and Insurance (SVS) and the Chilean Stock Exchange, whose main shareholders are as follows:

 

Shareholders as of December 31, 2012		No. of Series A with ownership				% of Series A shares				No. O0f Series B with ownership				% of Series B shares				% of total shares
Inversiones El Boldo Limitada			44,751,196				31.33	%			17,571,676				14.60	%			23.68	%
Sociedad de Inversiones Pampa Calichera S.A.(*)			44,558,830				31.20	%			9,003,799				7.48	%			20.35	%
The Bank of New York			-				-				46,559,106				38.68	%			17.69	%
Inversiones RAC Chile Limitada			19,200,242				13.44	%			2,699,773				2.24	%			8.32	%
Potasios de Chile S.A.(*)			17,919,147				12.55	%			-				-				6.81	%
Inversiones Global Mining (Chile) Limitada (*)			8,798,539				6.16	%			-				-				3.34	%
Banco Itau on behalf of investors			-				-				4,579,293				3.80	%			1.74	%
Inversiones La Esperanza Limitada			3,693,977				2.59	%			-				-				1.40	%
Banco Santander on behalf of foreign investors			-				-				3,238,105				2.69	%			1.23	%
Banco de Chile on behalf of non-resident third parties			-				-				3,082,612				2.56	%			1.17	%

 

(*) Total Pampa Group 30,50%

 

Shareholders as of December 31, 2011		No. Of series A with ownership				% of Series A shares				No. of Series B with ownership				% of Series B shares				% of total shares
Inversiones El Boldo Limitada			44,751,196				31.33	%			17,571,676				14.60	%			23.68	%
Sociedad de Inversiones Pampa Calichera S.A.(*)			44,758,830				31.34	%			12,241,799				10.17	%			21.66	%
The Bank of New York			-				-				42,036,912				34.92	%			15.97	%
Inversiones RAC Chile Limitada			19,200,242				13.44	%			2,699,773				2.24	%			8.32	%
Potasios de Chile S.A.(*)			18,179,147				12.73	%			156,780				0.13	%			6.97	%
Inversiones Global Mining (Chile) Limitada (*)			8,798,539				6.16	%			-				-				3.34	%
Banchile Corredores de Bolsa S.A.			136,919				0.10	%			4,890,193				4.06	%			1.91	%
Corpbanca Corredores de Bolsa  S.A.			11,189				0.01	%			4,264,250				3.54	%			1.62	%
Inversiones La Esperanza Limitada			3,693,977				2.59	%			-				-				1.40	%
Banco Itau on behalf of investors			-				-				3,693,080				3.07	%			1.40	%

 

(*) Total Pampa Group 31,97%

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements

 

2.1

Accounting period

 

These consolidated financial statements cover the following periods

 

-

Consolidated Statements of Financial Position for the years ended December 31, 2012 and 2011

 

-

Consolidated Statements of Changes in Equity for the years ended December 31, 2012 and 2011.

 

-

Consolidated Statements of Comprehensive Income for the years between January and December 31, 2012 and 2011.

 

-

Statements of Cash Flows – Indirect method for the years ended December 31, 2012 and 2011.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.2

Financial statements

 

The consolidated annual 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 represent the full, explicit and unreserved application of the aforementioned international standards issued by the International Accounting Oversight Board (IASB).

 

These 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 and annual accounts comply with each IFRS in force at their date of presentation.

 

2.3

Basis of measurement

 

The annual consolidated financial statements have been prepared on the historical cost basis except for the following material items:

 

-

inventories are recorded at the lower of cost and net realizable value;

-

other current and non-current financial liabilities at amortized cost;

-

financial derivatives at fair value; and

-

staff severance indemnities and pension commitments at actuarial value.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.4

Accounting pronouncements

 

Accounting pronouncements

 

At the date of these consolidated financial statements, the following accounting pronouncements had been issued by the IASB but its application date is not effective.

 

Standards and interpretations		Mandatory for the years beginning on
IAS 19 Revised “Employee Benefits”		01/01/2013
Issued in June 2011, supersedes IAS 19 (1998). This revised standard amends the recognition and measurement of defined benefit plan expenses and termination benefits. Additionally, it includes amendments to disclosures of all employee benefits.
IAS 27 “Separate Financial Statements”		01/01/2013
Issued in May 2011, supersedes IAS 27 (2008). The scope of this standard is restricted from this change solely to separate financial statements, given that the aspects linked to the definition of control and consolidation were removed and included in IFRS 10.  Its early adoption is allowed together with IFRS 10, IFRS 11 and IFRS 12 and the amendment to IAS 28.
IFRS 9 “Financial Instruments”		01/01/2015
Issued in December 2009, amends the classification and measurement of financial assets.
Subsequently, this standard was amended in November 2010 to include the treatment and classification of financial liabilities. Its early adoption is permitted.
IFRS  10 “Consolidated Financial Statements”		01/01/2013
Issued in May 2011, supersedes SIC 12 “Consolidation – Special Purpose Entities” and the focus on the control and consolidation of IAS 27 “Consolidated Financial Statements”. It establishes clarifications and new parameters for the definition of control, as well as the preparation of consolidated financial statements. Its early adoption is permitted together with IFRS 11, IFRS 12 and amendments to IAS 27 and IAS 28.
NIIF 11 “Joint Arrangements”		01/01/2013
Issued in May 2011, supersedes IAS 31 “Interests in Joint Ventures” and SIC 13 “Joint Controlled Entities”. Provides a more realistic reflection of joint agreements focusing on the rights and obligations arising from agreements ore than their legal form. Its amendments include the elimination of the concept of jointly-controlled assets and the possibility of proportional consolidation of entities under common control. Its early adoption is permitted together with IFRS 10, IFRS 12 and amendments to IAS 27 and IAS 28.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.4

Accounting pronouncements, continued

 

Standards and interpretations		Mandatory for the years beginning on
		01/01/2013
IFRS 12 “Disclosure of Interests in Other Entities”
Issued in May 2011, gathers in solely one standard all the disclosure requirements in the financial statements related to interests in other entities, Esther classified as subsidiaries, associates or joint operations. It is applicable to all entities with investments in subsidiaries, joint ventures and associates. Its early adoption is permitted together with IFRS 10, IFRS 11 and amendments to IAS 27 and IAS 28
IFRS 13 “Fair Value Measurement”		01/01/2013
Issued in May 2011, gathers in one single standard the method for measuring fair value of assets and liabilities and disclosures required for this purpose and incorporates new concepts and clarifications for measurement.

 

Amendments and improvements		Mandatory for the years beginning on
IAS 1 “Presentation of Financial Statements”		01/07/2012
Issued in June 2011, the main amendment is that it requires that items in Other Comprehensive Income must be classified and grouped by assessing whether they will be reclassified to profit or loss in subsequent periods. Its early adoption is permitted.
IFRS 7 “Financial Instruments” Disclosures”		01/01/2013
Issued in December 2011, requires improving the current disclosures of offsetting financial assets and financial liabilities with the aim of increasing convergence between IFRS and US GAAP. These disclosures are focused on quantitative information on financial instruments recognized which are offset in the Statement of Financial Position. Its early adoption is permitted.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.4

Accounting pronouncements, continued

 

Amendments and improvements		Mandatory for the years beginning on
IAS 32 “Financial Instruments” Presentation””		01/01/2014
Issued in December 2011. It clarifies the requirements for offsetting financial assets and financial liabilities in the Statement of Financial Position. Particularly, it indicates that the offsetting right should be available at the financial statement date and not depending on a future development. It also indicates that it must be legally binding for the counterparties both during the normal course of the business operations, as well as in the event of default, insolvency o bankruptcy. Its early adoption is permitted.
Improvements to International Financial Reporting Standards issued in May 2012.		01/01/2013
IAS 16 “Property, Plant and Equipment” – This clarifies that spare-parts and service equipment will be classified as Property, plant and equipment more than as inventories when it meets the Property, plant and equipment definition.
IAS 32 “Financial Instruments: Presentation” – This clarifies the treatment of income taxes related to distributions and transaction costs.
IAS 34 “Interim Financial Reporting” – This clarifies the asset and liability exposure requirements by segments in interim periods, ratifying the same requirements applicable to the annual financial statements.
IFRS 10“Consolidated Financial Statements”, IFRS 11 “Joint Arrangements” and IFRS 12 “Disclosures of Interests in Other Entities.”		01/01/2013
Issued in June 2012. This clarifies the transitional provisions for IFRS 10, indicating that their application is required on the first day of the period in which the Standard is adopted. Accordingly, it might be necessary that amendments be made to comparatives presented in that period, if the assessment of the control on investments differs from that recognized in accordance with IAS 27/SIC 12.

 

The Company's management estimates that the adoption of standards, amendments and interpretations described above are under evaluation and it is expected that they will not have a significant impact on the Consolidated Financial Statements of the Company.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.5

Transactions in foreign currency

 

(a)

Functional and presentation currency

 

The Company’s annual consolidated financial statements are presented in United States dollars (“U.S. dollars” or “USD”), 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 annual consolidated financial statements are presented in thousands of United States dollars without decimals.

 

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 consolidated financial statements.
-	Statement of income account items using the average exchange rate for the year.
-	Equity accounts are stated at the historical exchange rate prevailing at acquisition date.

 

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

 

(b)

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 December 31, 2012 and 2011 have been translated to U.S. dollars at the exchange rates prevailing at those dates. The corresponding Chilean pesos were converted at Ch$479.96 per US$1.00 as of December 31, 2012, and Ch$519.20 per US$1.00 as of December 31, 2011.

 

The values of the UF (a Chilean peso-denominated, inflation-indexed monetary unit) used to convert the UF denominated assets and liabilities as of December 31, 2012 amounted to Ch$22,840.75 (US$47.59), and as of December 31, 2011 amounted to Ch$22,294.03 (US$42.94).

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.5

Transactions in foreign currency, continued

 

Foreign subsidiaries:

 

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

 

		31/12/2012				31/12/2011
		US$				US$
Brazilian real			2.04				1.88
New Peruvian sol			2.75				2.77
Argentinean peso			4.92				4.30
Japanese yen			86.58				77.74
Euro			0.76				0.77
Mexican peso			12.99				13.98
Australian dollar			1.05				1.03
Pound Sterling			0.62				0.64
South African rand			8.47				8.10
Ecuadorian dollar			1.00				1.00
Chilean peso			479.96				519.20
UF			47.59				42.94

 

(c)

Transactions and balances

 

Non-monetary transaction balances denominated in a currency other than the functional currency (U.S. dollar) are translated using the exchange rate in force for the functional currency at the transaction date. Monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate of the functional currency prevailing at the closing date of the consolidated statement of financial position. All differences are taken to the statement of income with the exception of all monetary items that provide an effective hedge for a net investment in a foreign operation. These items are recognized in other comprehensive income upon the disposal of the investment, at which time they are recognized in the statement of income. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

 

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.5

Transactions in foreign currency, continued

 

(d)

Group entities

 

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

 

-

Assets and liabilities are translated at the closing date exchange rate as of the date of the consolidated statement of financial position.

-

Revenue and expenses in each profit or loss account are translated at average exchange rates for the year.

-

All resulting foreign currency exchange differences are recognized as a component separate in the foreign currency translation difference reserve

 

In consolidation, foreign currency exchange differences which arise from the conversion of a net investment in foreign entities are taken to net equity (other reserves). 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.

 

2.6

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. Subsidiaries apply the same accounting policies that its Parent.

 

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. For each business combination, the acquirer measures the non-controlling interests in the acquiree at fair value or as a proportional part of the acquiree’s net identifiable assets.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.6 Basis of consolidation, continued

 

Companies included in consolidation:

 

								Ownership interest
				Country of				31/12/2012												31/12/2011
TAX ID No.		Foreign subsidiaries		origin		Functional 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$			0.0002				99.9998				100.0000				100.0000
Foreign		SQI Corporation N.V.		Dutch Antilles		US$			0.0159				99.9841				100.0000				100.0000
Foreign		SQM Comercial De México S.A. De C.V.		Mexico		US$			0.0013				99.9987				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$			0.0000				100.0000				100.0000				100.0000
Foreign		SQM Perú 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$			2.7900				97.2100				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$			98.3333				1.6667				100.0000				100.0000
Foreign		SQM Indonesia S.A.		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 Italia SRL		Italy		US$			0.0000				100.0000				100.0000				100.0000
Foreign		Comercial Caimán 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		SQM Iberian S.A.(c)		Spain		US$			0.0000				100.0000				100.0000				100.0000
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				100.0000
Foreign		SQM Beijing Commercial Co. Ltd.		China		US$			0.0000				100.0000				100.0000				100.0000

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.6

Basis of consolidation, continued

 

Companies included in consolidation:

 

								Ownership interest
				Country of				31/12/2012												31/12/2011
TAX ID No.		Domestic subsidiaries		origin		Functional currency		Direct				Indirect				Total				Total
96.801.610-5		Comercial Hydro  S.A.		Chile		US$			0.0000				60.6383				60.6383				60.6383
96.651.060-9		SQM Potasio S.A.		Chile		US$			99.9999				0.0000				99.9974				99.9974
96.592.190-7		SQM Nitratos S.A.		Chile		US$			99.9999				0.0001				100.0000				100.0000
96.592.180-K		Ajay SQM Chile S.A.		Chile		US$			51.0000				0.0000				51.0000				51.0000
86.630.200-6		SQMC Internacional  Ltda.		Chile		Chilean peso			0.0000				60.6381				60.6381				60.6381
79.947.100-0		SQM Industrial S.A.		Chile		US$			99.0470				0.9530				100.0000				100.0000
79.906.120-1		Isapre Norte Grande Ltda.		Chile		Chilean peso			1.0000				99.0000				100.0000				100.0000
79.876.080-7		Almacenes y Depósitos Ltda.		Chile		Chilean peso			1.0000				99.0000				100.0000				100.0000
79.770.780-5		Servicios Integrales de Tránsitos y Transferencias S.A.		Chile		US$			0.0003				99.9997				100.0000				100.0000
79.768.170-9		Soquimich Comercial S.A.		Chile		US$			0.0000				60.6383				60.6383				60.6383
79.626.800-K		SQM Salar S.A.		Chile		US$			18.1800				81.8200				100.0000				100.0000
78.602.530-3		Minera Nueva Victoria Ltda.(d)		Chile		US$			0.0000				0.0000				0.0000				100.0000
78.053.910-0		Proinsa Ltda.		Chile		Chilean peso			0.0000				60.5800				60.5800				60.5800
76.534.490-5		Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		Chile		Chilean peso			0.0000				100.0000				100.0000				100.0000
76.425.380-9		Exploraciones Mineras S.A.		Chile		US$			0.2691				99.7309				100.0000				100.0000
76.064.419-6		Comercial Agrorama Ltda. (a)		Chile		Chilean peso			0.0000				42.4468				42.4468				42.4468
76.145.229-0		Agrorama S.A. (b)		Chile		Chilean peso			0.0000				60.6377				60.6377				60.6377

 

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

 

(b) This subsidiary was incorporated on April 7, 2011.

 

(c) On December 14, 2011, Fertilizantes Naturales S.A. changed its company name to SQM Iberian S.A.

 

(d) On November 30, 2012, Minera Nueva Victoria Ltda. merged with SQM Potasio S.A. and was absorbed by it.

 

Subsidiaries are consolidated on a line by line basis by including in the consolidated financial statements all of their assets, liabilities, revenues, expenses and cash flows upon making the respective adjustments and eliminations of intragroup operations.

 

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

 

Non-controlling interests represent the portion of subsidiary net assets and operating results not owned directly or indirectly by the parent.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 2 - Basis of presentation for the consolidated financial statements (continued)

 

2.7

Significant accounting judgments, estimates and assumptions

 

The information contained in these consolidated financial statements is the responsibility of the Company’s management, who expressly indicate that they have applied all the principles and criteria included in IFRS, issued by the IASB.

 

In the accompanying consolidated financial statements, judgments and estimates have been made by management to quantify certain assets, liabilities, revenues, expenses and commitments recorded and or disclosed therein. Basically, these estimates refer to the following:

 

-

The useful lives of tangible and intangible assets and their residual values.

-

Impairment evaluations of certain assets, including trade receivables.

-

Assumptions used for the actuarial calculation of commitments for employee pensions and staff severance indemnities.

-

Provisions for commitments assumed with third parties and contingent liabilities.

-

Inventory provisions based on technical studies which cover the different variables affecting products in stock (density. humidity. among others) and allowances on slow-moving spare parts in inventory.

-

Future costs for the closure of mining facilities.

-

The determination of the 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 information available as of the date of preparation of these consolidated financial statements, it is possible that events that may occur in the future could make their modification necessary in future years. Changes would be recorded prospectively, recognizing the effects of the change in estimates in the respective future consolidated financial statements.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 - Significant accounting policies

 

3.1

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.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 - Significant accounting policies (continued)

 

3.2

Trade and other receivables

 

Trade and other receivables relate to non-derivative financial assets with fixed and determinable payments 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

 

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. 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 interest income when interest is accrued over the term of the operation.

 

3.3

Investments recognized using the equity method

 

Interests in companies in which control is exercised together with another company (joint ventures) 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 consolidated classified 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 companies’ results for the reporting period.

 

Unrealized profit on transactions with associates and subsidiaries are eliminated in consolidation of the ownership percentage that the Company has on these entities. Unrealized losses are also eliminated unless the transaction provided evidence of loss from impairment of the assets transferred.

 

Changes in equity of the associates are recognized proportionally with a debit or credit to “Other reserves” and classified according to their origin.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 - Significant accounting policies (continued)

 

3.3

Investments recognized using the equity method, continued

 

The associated companies 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 income.

 

If the resulting amount according to the equity method is negative, the Company’s equity interest is reduced to zero in the consolidated financial statements, unless the Company has a contractual commitment to resolve the equity position. In this case, the respective provision for risks and expenses is recorded.

 

Dividends received in these companies are recorded by reducing the equity value and proportional profit or loss recognized in conformity with their interest, and are included in the consolidated statement of income under the caption “Equity in income (losses) of associates and joint ventures accounted for using the equity method”.

 

3.4

Property, plant and equipment

 

Tangible property, plant and equipment assets are stated at acquisition cost, net of the related accumulated depreciation, amortization and impairment losses that they might have experienced.

 

In addition to the price paid for the acquisition of tangible property, plant and equipment, the Company has considered the following concepts as part of the acquisition cost, as applicable:

 

1.    Accrued interest 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 is ThUS$14,156 as of December 31, 2012 and ThUS$22,249 as of December 31, 2011.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 - Significant accounting policies (continued)

 

3.4

Property, plant and equipment, continued

 

2.     The future costs that the Company will have to experience related to the closure of its facilities at the end of their useful life are included at the present value of disbursements expected to be required to settle the obligation.

Construction-in-progress is transferred to property, plant and equipment in operation once the assets are available for use and the related depreciation and amortization begins on that date.

 

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

 

Property, plant and equipment, net in the case of their residual values are depreciated using thee straight-line method over its estimated useful lives. When portions of a property, plant and equipment item have different useful lives, these portions are recorded as separate items.

 

The useful life is reviewed annually, and revised if necessary. The useful lives used for the depreciation and amortization of assets included in property, plant and equipment are presented below.

 

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 it has been considered that the carrying value of assets does not exceed the net recoverable value of such assets. When portions of a property, plant and equipment item have different useful lives, these portions are recorded as separate items.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 - Significant accounting policies (continued)

 

3.4

Property, plant and equipment, continued

 

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

 

Types of property, plant and equipment		Minimum life or rate				maximum life or rate
Buildings			3				60
Plant and equipment			3				35
Information technology equipment			3				10
Fixtures and fittings			3				35
Motor vehicles			5				10
Other property, plant and equipment			2				30

 

 

Gains or losses which are generated from the sale or disposal of property, plant and equipment are recognized as income (or loss) in the period and calculated as the difference between the asset’s sales value and its net carrying value.

 

The Company obtains property rights and mining concessions from the Chilean State Government. Property rights are usually obtained 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 license fees. Such license fees, which are paid annually, are recorded as prepaid expenses and amortized over the following twelve month period. 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.

 

Costs derived from daily maintenance of property, plant and equipment are recognized when incurred.

 

3.5

Financial information by operating segments

 

IFRS 8 requires that companies adopt a “management approach” to disclose information on the operations generated by its operating segments. In general, this is the information that management uses internally for the evaluation of segment performance and making the decision on how to allocate resources for this purpose.

 

An operating segment is a group of assets and operations responsible for providing products or services subject to risks and performance different from those of other business segments. A geographical segment is responsible for providing products or services in a given economic environment subject to risks and performance different from those of other segments that operate in other economic environments.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 - Significant accounting policies (continued)

 

3.6

Financial information by operating segments, continued

 

For assets and liabilities the allocation to each segment is not possible given that these are associated with more than one segment, except for depreciation, amortization and impairment of assets, which are directly allocated to the applicable segments, in accordance with the criteria established in the costing process for product inventories.

 

The following operating segments have been identified by the Company:

 

-         Specialty plant nutrients

-         Industrial chemicals

-         Iodine and derivatives

-         Lithium and derivatives

-         Potassium

-         Other products and services

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 - Significant accounting policies (continued)

 

3.6

Revenue recognition

 

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

 

Revenue is recognized when its amount can be stated reliably, it is possible that the future economic rewards will 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 that could affect the acceptance of products by the customer. The delivery does not occur until products have been shipped to the customer or confirmed as received by 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 rendering of services is recognized considering the degree of completion of the service as of the date of presentation of the consolidated classified statement of financial position, provided that the result from the transaction can be estimated reliably.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.6

Revenue recognition, continued

 

(c)   Interest income

 

Interest income is recognized when interest is accrued in consideration of the principal pending payment using the effective interest rate method.

 

(d)   Income from dividends

 

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

 

3.7

Income tax and deferred taxes

 

Corporate income tax for the year is determined as the sum of current taxes from the different consolidated companies.

Current taxes are based on the application of the various types of taxes attributable to taxable income for the year.

 

Differences between the book value of assets and liabilities and their tax basis generate the balance of deferred tax assets or liabilities, which are calculated using the tax rates expected to be applicable when the assets and liabilities are realized.

 

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

 

Tax on companies and variations in deferred tax assets or liabilities that are not the result of business combinations are recorded in statement of income accounts or equity accounts in the consolidated statement of financial position, considering the origin of the gains or losses which have generated them.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.7

Income tax and deferred taxes, continued

 

As of the date of these consolidated financial statements, the carrying amount of deferred tax assets has been reviewed and reduced to the extent there will not be sufficient taxable income to allow the recovery of all or a portion of the deferred tax assets. Likewise, as of the date of the consolidated financial statements, deferred tax assets that are not recognized were evaluated and not recognized as it was not more likely than not that future taxable income will allow for recovery of the deferred tax asset.

 

With respect to deductible temporary differences associated with investments in subsidiaries, associated companies and interest in joint ventures, deferred tax assets are recognized solely provided that it is more likely than not that the temporary differences will be reversed in the near future and that there will be taxable income with which they may be used.

 

The deferred 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 legally receivable right of offsetting tax assets against tax liabilities and the deferred tax is related to the same tax entity and authority.

 

3.8

Earnings per share

 

The basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary owners of the parent by the weighted average number of ordinary shares outstanding during the year.

 

The Company has not conducted any type of operation of potential dilutive effect that assumes diluted earnings per share other than the basic earnings per share.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.9

Impairment of non-financial assets

 

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

 

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 that 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.

 

As of December 31, 2012 and 2011, the Company is unaware of any indication of impairment with regard to its assets.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.9

Impairment of non-financial assets, continued

 

For assets other than acquired goodwill, an annual evaluation is conducted of whether there is impairment loss indicators recognized previously that 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 that 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 revalued amount. Should this be the case, the reversal is treated as an increase in revaluation

 

3.10

Financial assets

 

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

 

The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of assets is deemed to be impaired if and only if there is objective evidence of impairment as a result of one or more events occurring after the initial recognition of the asset or group of assets. For the recognition o fan impairment loss, the loss event should have an impact on the estimate of future flows of the asset or group of financial assets.

 

(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 for the purpose of being sold in the short-term. Derivatives are also classified as acquired for trading unless they are designated as hedge accounts. Assets under this category are classified as current assets and variations generated in fair value are directly recognized in profit or loss.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.10

Financial assets, continued

 

(b)    Loans and trade receivables

 

Loans and trade receivables are non-derivative financial assets with fixed o determinable payments not quoted in any active market. These are included in current assets, except for those with maturities exceeding 12 months from the closing date, which are classified as non-current assets. Loans and trade receivables are included under the caption “Trade and other receivables” in the consolidated classified statement of financial position and are stated at amortized cost. The subsequent measurement at amortized cost is calculated using the effective interest rate method less impairment.

 

(c)   Financial assets held-to-maturity

 

Financial assets held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities which management has the positive intention and ability of holding to maturity. If a significant amount of financial assets held to maturity were to be 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 that have been 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 other comprehensive income those variations in fair value, if any.

 

3.11

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.

 

Financial debt obligations are recorded at face value and as non-current when maturity is over twelve months and as current when maturity is less than twelve months. Interest expenses are recorded the year in which they are accrued under a financial approach.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.11

Financial liabilities, continued

 

In accordance with IAS 32 and 39, debt-related expenses are accounted for in the accompanying consolidated statement of financial position, deducting the associated debt and are imputed to the results of the year within the life of the debt using the effective interest rate method.

 

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.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.12

Environment

 

In general, the Company follows the criteria of considering amounts used in environmental protection and improvement as environmental expenses. However, the cost of facilities, machinery and equipment used for the same purpose are considered property, plant and equipment

 

3.13

Minimum dividend

 

According to the Corporations Act, a publicly traded corporation must pay dividends according to the policy decided at the General Shareholders' Meeting of each year, with a minimum of 30% of the profit for the year ended December 31, 2012 if the corporation does not have unabsorbed accumulated deficit from prior years, unless it is otherwise decided with the unanimous vote of the issued and subscribed shares.

 

3.14

Consolidated statements of cash flows

 

Cash equivalents relate to short-term, highly liquid investments that are readily convertible into known amounts of cash and are subject to low risk of change in value, and expire in less than three months from the date of acquisition of the instrument

 

For the purposes of the consolidated statements of cash flows, cash and cash equivalents comprise the balance of cash and cash equivalents as defined previously.

 

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

 

3.15

Obligations related to employee termination benefits 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, except for the United States that is regulated in accordance with employment plans in force up to 2002.

 

These obligations are valued using actuarial calculations, according to the projected unit credit method which considers such assumptions as the mortality rate, employee turnover, interest rates, retirement dates, effects related to increases in employees’ salaries, as well as the effects on variations in services derived from variations in the inflation rate.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.15

Obligations related to employee termination benefits and pension commitments, continued

 

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

 

Actuarial losses and gains have their origin in departures between the estimate and the actual behavior of actuarial assumptions or in the reformulation of established actuarial assumptions.

 

The discount rate used by the Company for calculating the obligation was 6% for the periods ended December 31, 2012 and 2011.

 

The Company’s subsidiary SQM North America has established pension plans for its retired employees that are calculated by measuring the projected obligation using a net salary progressive rate net of adjustments for inflation, mortality and turnover assumptions, deducting the resulting amounts at present value using a 6.5% interest rate. The net balance of this obligation is presented under the non-current provisions for employee benefits.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.16

Financial derivatives and hedge transactions

 

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

 

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

 

(b)   Hedging of a single risk associated with 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 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 10.3 (hedging assets and liabilities). Changes in the cash flow hedge reserve are classified as a non-current asset or liability if the remaining expiration period of the hedged item is higher than 12 months and as a current asset or liability if the remaining expiration period of the entry is lower than 12 months.

 

Investing 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.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.16

Financial derivatives and hedging transactions, continued

 

For fair value hedges related to items recorded at amortized cost, the adjustment of the fair value is amortized against profit or loss during the period through maturity. Any adjustment to the carrying value of a hedged financial instrument for which the 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 hedges

 

The effective portion of gains or losses from the hedge instrument is initially recognized with a debit or credit to other reserves, whereas any ineffective 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 or loss, as when the hedged interest income or expense is recognized when a projected sale occurs. When the hedged entry is the cost of a non-financial asset or liability, amounts taken to other reserves are transferred to the initial carrying value of the non-financial asset or liability.

 

Should the expected firm transaction or commitment no longer be expected to occur, the amounts previously recognized in equity are transferred to profit or loss. If a hedge instrument expires, is sold, finished, and exercised without any replacement, or if a rollover is performed or if its designation as hedging is revoked, the amounts previously recognized in other reserves are maintained in equity until the expected firm transaction or commitment occurs.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.17

Leases

 

(a)   Lease – Finance lease

 

Leases are classified as finance leases when the Company holds substantially all the risks and rewards derived from the ownership of the asset. 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 the interest expenses to obtain ongoing interest on the pending balance of the debt. The respective lease obligations, net of interest expense, are included in other non-current liabilities. The interest element of finance cost is debited in the consolidated statement of 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)   Lease – Operating lease

 

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

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.18

Prospecting expenses

 

Those prospecting expenses associated with mineral reserves being exploited are included under Inventory and amortized according to the estimated mineral content reserves. Prospecting expenses associated with future mineral reserves are presented under other non-financial assets as and when minerals included in the future reserve have caliche ore-grade, which makes the mining property economically commercializable.

 

Those expenses incurred on mining properties in which the product has a low caliche ore-grade that is not economically commercializable, are directly charged to profit or loss.

 

3.19

Other provisions

 

Provisions are recognized when:

 

-

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

 

-

It is more likely than not that certain resources must be used, including benefits, to settle the obligation.

 

-

A reliable estimate can be made of the amount of the obligation.

 

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

 

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

 

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

 

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

 

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

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.20

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.” Changes in the fair value of options granted are recognized with a charge to payroll on a straight-line basis during the period between the date on which these options are granted and the payment date. (See Note No.16).

 

3.21

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 prepayments within current assets.

 

Costs of claims are recognized in profit or loss immediately after they become known, net of recoverable amounts from insurance companies. Recoverable amounts are recorded as a reimbursable asset from the insurance company under “Trade and other receivables", calculated as established in the respective insurance policies.

 

3.22

Intangible assets

 

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

 

(a)   Goodwill acquired

 

Goodwill acquired represents the excess in acquisition cost on the fair value of the Company's ownership of the net identifiable assets of the subsidiary on the acquisition date. Goodwill acquired related to acquisitions of subsidiaries is included in goodwill, which is subject to impairment tests every time consolidated financial statements are issued and is stated at cost less accumulated impairment losses. Gains and losses related to the sale of an entity include the carrying value of goodwill related to the entity sold.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.22

Intangible assets, continued

 

This intangible asset is assigned to cash-generating units with the purpose of testing impairment losses. It is allocated based on cash-generating units expected to obtain benefits from the business combination from which the aforementioned goodwill acquired arose.

 

(b)

Water rights

 

Water rights acquired by the Company relate to water from natural sources and are recorded at acquisition cost. Given that these assets represent legal rights granted to the Company for a given period, these are amortized during its useful life.

 

(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 that 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 that 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 for IT programs recognized as assets are amortized over their estimated useful lives.

 

No impairment of intangible assets exists as of December 31, 2012 and December 31, 2011.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 3 -    Significant accounting policies (continued)

 

3.23

Research and development expenses

 

Research and development expenses are expensed in the period in which the disbursement is made, with the exception of property, plant and equipment acquired for use in research and development, which are recognized in the accounting under the respective item within property, plant and equipment.

 

3.24

Classification of balances as current and non-current

 

In the attached consolidated statement of financial position, balances are classified in consideration of their remaining recovery (maturity) dates; i.e., those maturing on a date equal to or lower than twelve months are classified as current and those with maturity dates exceeding the aforementioned period are classified as non-current.

 

The exception to the foregoing relates to deferred taxes, which are classified as non-current, regardless of the anticipated recovery date

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 4 -    Financial risk management

 

4.1

Financial risk management policy

 

The Financial Risk Management Policy of the Company is oriented towards safeguarding the stability and sustainability of Sociedad Química y Minera de Chile S.A. and Subsidiaries in relation to all such relevant financial uncertainty components.

 

The operations of the Company are subject to certain financial risk factors that may affect the financial position or results of the same. Among these risks, the most relevant are market risk, liquidity risk, currency risk, bad debt risk, and interest rate risk

 

There may be additional risks that are currently unknown to us or other known risks but that we currently believe are not significant, which could also affect the commercial operations, the business, the financial position or the results of the Company.

The financial risk management structure includes identifying, determining, analyzing, quantifying, measuring and controlling these events. The Management, in particular the Finance Management, is responsible for constantly assessing the financial risk. The Company uses derivatives to cover a significant portion of these risks.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 4 -    Financial risk management (continued)

 

4.2

Risk factors

 

4.2.1

Market risk

 

Market risks are those uncertainties associated with fluctuations in market variables that affect the assets and liabilities of the Company, such as:

 

a)

Country risk: The economic position of the countries where the Company has a presence may affect its financial position. For example, the sales carried out in emerging markets expose SQM to risks related to economic conditions and trends in those countries. On the other hand, inventories may also be affected by the economic situation of these countries and/ or the global economy, amongst other probable economic impacts.

 

b)

Price volatility risk: The prices of the products of the Company are affected by the fluctuations of international prices of fertilizers and chemical products and changes in productive capacities or market demand, all of which might affect the Company’s business, financial condition and operational results.

 

c)

Commodity Price risk: The Company is exposed to changes in the prices of raw materials and energy which may have an impact on its production costs, thus giving rise to instability in the results.

 

At present, the Company has a direct annual expense close to US$130 million on account of petrol, gas and equivalents and close to US$ 60 million on account of electricity. Variations of 10% in the prices of energy the Company required to operate, may involve in the short-term movements in costs of approximately US$17 million.

 

4.2.2

Doubtful accounts risk

 

A contraction of the global economy and the potentially negative effects in the financial position of our clients may extend the receivables collection time for SQM, increasing the bad debt exposure. While measures have been taken in order to minimize risk, the global economy may trigger losses that might have a material adverse effect on the business, financial position or the results of the Company’s operations.

 

As a way to mitigate these risks, SQM actively controls debt collection and uses measures such as, loan insurance, letters of credit, and prepayments with regard to some receivables.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 4 -    Financial risk management (continued)

 

4.2.3

Currency risk

 

As a result of the influence in the price determination, of its relationship with sales costs and since a significant part of the business of the Company is carried out in that foreign currency, the functional currency of SQM is the United States dollar. However, the global business activities of the Company expose the same to the foreign exchange fluctuations of several currencies with respect to the US dollar. Therefore, SQM has hedge contracts to mitigate the exposure generated by its main mismatches (assets net of liabilities) in currencies other than the US dollar against the foreign exchange fluctuation. Those contracts are periodically up-dated depending upon the mismatch amount to be covered in these currencies. Occasionally and subject to the Board of Directors’ approval, the Company insures cash flows from certain specific items in currency other tan U.S. dollar at short-term.

 

A significant portion of the costs of the Company, particularly payroll, is related to the Chilean peso. Therefore, an increase or decrease in the exchange rate against the dollar would affect the net income of SQM. Approximately US$ 440 million cost of the Company are related to the Chilean peso. A significant part of the effect of such obligations in the statement of financial position is covered by operations of derivative instruments that hedge the mismatch of balance in this currency.

 

As of December 31, 2011, the Company had derivative instruments classified as hedging currency and interest rate associated with all the obligations denominated bonds both in Chilean pesos and UF, with a fair value of US$ 56.1 million. As of December 2012, this value amounts to US$ 100.6 million, both for SQM.

 

As of December 31, 2012, the Chilean peso to US dollar Exchange rate was Ch$ 479.96 per US$ 1.00, and as of December 31, 2011 it was Ch$ 519.20 per US$ 1.00.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 4 -    Financial risk management (continued)

 

4.2.4

Interest rate risk

 

Interest rate fluctuations, due to the uncertain future behavior of markets, may have a material impact on the financial results of the Company.

 

The Company has short and long-term debts valued at LIBOR plus a spread. The Company is partially exposed to fluctuations of said rate, as SQM currently holds hedging derivative instruments to hedge a portion of its liabilities subject to the LIBOR rate fluctuations.

 

As of December 31, 2012, approximately 21% of the Company’s financial obligations are valued at LIBOR; therefore significant increases in the rate may impact its financial position. A 100 point variation in this rate may trigger variations in the financial expenses close to US$ 3.1 million. Notwithstanding, this effect is significantly counterbalanced by the returns of the Company’s investments that also relate to LIBOR.

 

In addition, as of December 31, 2012, the Company's financial debt is mainly in the long-term, with 8% with maturities under 12 months which decreases the exposure to changes in the interest rates.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 4 -    Financial risk management (continued)

 

4.2.5

Liquidity risk

 

Liquidity risk is related to the fund requirements to comply with payment obligations. The object of the Company is to keep financial flexibility by comfortably balancing the fund requirements and the flows from the regular business conduct, bank loans, public bonds, short term investments, and negotiable instruments, amongst other.

 

The company has an important capital expense program which is subject to change over time.

 

On the other hand, world financial markets go through contraction and expansion periods that are not foreseeable in the long-term and may affect SQM’s access to financial resources. These factors may have a material adverse impact on the business, financial position, and operational results of the Company.

 

SQM constantly monitors that its obligations and investments match, taking care as part of its financial risk management strategy of the obligations and investments maturities from a conservative perspective. As of December 31, 2012, the Company had non-committed and available bank credit lines for working capital for a total of approximately US$ 530 million.

 

The position in other cash and cash equivalents so generated by the Company is invested in highly liquid mutual funds which have an AAA risk rating.

 

4.3

Risk measurement

 

The Company has methods to measure the effectiveness and efficiency of financial risk hedging strategies, both prospectively and retrospectively. Those methods are consistent with the risk management profile of the Group.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 5 - Changes in accounting estimates and policies (consistent presentation)

 

5.1

Changes in accounting estimates

 

There are no changes in accounting estimates as of the closing date of the consolidated financial statements.

 

5.2

Changes in accounting policies

 

As of December 31, 2012, the Company’s consolidated financial statements present no changes in accounting policies or estimates compared to the prior period.

 

The consolidated classified statements of financial position as of December 31, 2012 and December 31, 2011 and the statements of comprehensive income, equity and cash flows for the periods ended December 31, 2012 and December 31, 2011, have been prepared in accordance with IFRS, and accounting principles and criteria have been applied consistently.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 6 - Background of companies included in consolidation

 

6.1

Parent’s stand-alone assets and liabilities

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Assets			3,908,259				3,626,748
Liabilities			(1,775,476	)			(1,813,914	)
Assets (liabilities)			2,132,783				1,812,834

 

6.2

Parent entity

 

As provided in the Company’s by-laws, no shareholder can concentrate more than 32% of the Company’s voting right shares and therefore there is no controlling entity.

 

6.3

Joint arrangements of controlling interest

 

Sociedad de Inversiones Pampa Calichera S.A., Potasios de Chile S.A., and Inversiones Global Mining (Chile) Limitada, collectively the Pampa Group, are the owners of a number of shares that are equivalent to 30.50% as of December 31, 2012 of the current total amount of shares issued, subscribed and fully-paid of the Company. In addition, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A. and La Esperanza Delaware Corporation, collectively the Kowa Group, are the owners of a number of shares equivalent to 2.08% of the total amount of shares of SQM S.A. issued, subscribed and fully-paid.

 

The Pampa Group and the Kowa Group have informed SQM S.A., the Chilean SVS and the relevant 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 entered into a Joint Action Agreement (JAA) related to those shares. Consequently, the Pampa Group, by itself, does not concentrate more than 32% of the voting right capital of SQM S.A., and the Kowa Group does not concentrate by itself more than 32% of the voting right capital of SQM S.A.

 

Likewise, the Joint Action Agreement has not transformed the Pampa and Kowa Groups into related parties between them. The Joint Action 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.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 6 - Background of companies included in consolidation (continued)

 

6.3

Joint arrangements of controlling interest, continued

 

Detail of effective concentration

 

Tax ID No.		Name		Ownership interest %
96.511.530-7		Sociedad de Inversiones Pampa Calichera S.A.			20.35
96.863.960-9		Inversiones Global Mining (Chile) Limitada			3.34
76.165.311-5		Potasios de Chile S.A.			6.81
Total Pampa Group					30.50
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

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 6 - Background of companies included in consolidation (continued)

 

6.4

Information on consolidated subsidiaries

 

Financial information as of December 31, 2012 of the companies in which the group exerts control and significant influence is as follows:

 

12/31/2012
				Country of				Ownership interest												Assets				Liabilities				Total equity				Net profit (loss)
Subsidiary		Tax ID No.		incorporation		Functional currency		Direct				Indirect				Total				ThUS$				ThUS$				ThUS$				ThUS$
SQM Nitratos S.A.		96.592.190-7		Chile		US$			99.9999				0.0001				100.0000				735,546				534,869				200,677				148,768
Proinsa Ltda.		78.053.910-0		Chile		Chilean peso			-				60.5800				60.5800				221				-				221				-
SQMC Internacional  Ltda.		86.630.200-6		Chile		Chilean peso			-				60.6381				60.6381				292				-				292				2
SQM Potasio S.A.		96.651.060-9		Chile		US$			99.9974				-				99.9999				1,149,717				14,306				1,135,411				259,578
Serv. Integrales de Tránsito y Transf. S.A.		79.770.780-5		Chile		US$			0.0003				99.9997				100.0000				357,590				326,522				31,068				4,330
Isapre Norte Grande Ltda.		79.906.120-1		Chile		Chilean peso			1.0000				99.0000				100.0000				1,527				872				655				263
Ajay SQM Chile S.A.		96,592,180-K		Chile		US$			51.0000				-				51.0000				26,262				6,226				20,036				9,980
Almacenes y Depósitos Ltda.		79.876.080-7		Chile		Chilean peso			1.0000				99.0000				100.0000				451				-				451				(11	)
SQM Salar S.A.		79.626.800-K		Chile		US$			18.1800				81.8200				100.0000				1,611,208				464,669				1,146,539				318,275
SQM Industrial S.A.		79.947.100-0		Chile		US$			99.0470				0.9530				100.0000				1,988,068				1,070,450				917,618				93,488
Exploraciones Mineras S.A.		76.425.380-9		Chile		US$			0.2691				99.7309				100.0000				31,944				4,383				27,561				(236	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		76.534.490-5		Chile		Chilean peso			-				100.0000				100.0000				1,037				902				135				17
Soquimich Comercial S.A.		79.768.170-9		Chile		US$			-				60.6383				60.6383				186,462				73,470				112,992				8,555
Comercial Agrorama Ltda.		76.064.419-6		Chile		Chilean peso			-				42.4468				42.4468				17,208				15,996				1,212				(185	)
Comercial Hydro  S.A.		96.801.610-5		Chile		Chilean peso			-				60.6383				60.6383				8,100				230				7,870				430
Agrorama S.A.		76.145.229-0		Chile		Chilean peso			-				60.6377				60.6377				14,250				14,093				157				47
SQM North America Corp.		Foreign		United States		US$			40.0000				60.0000				100.0000				319,812				284,290				35,522				23,737

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 6 - Background of companies included in consolidation (continued)

 

6.4

Information on consolidated subsidiaries, continued

 

12/31/2012
				Country of				Ownership interest												Assets				Liabilities				Total equity				Net profit (loss)
Subsidiary		Tax ID No.		incorporation		Functional currency		Direct				Indirect				Total				ThUS$				ThUS$				ThUS$				ThUS$
RS Agro Chemical Trading A.V.V.		Foreign		Aruba		US$			98.3333				1.6667				100.0000				5,214				-				5,214				(10	)
Nitratos Naturais do Chile Ltda.		Foreign		Brazil		US$			-				100.0000				100.0000				290				5,005				(4,715	)			(284	)
Nitrate Corporation of Chile Ltd.		Foreign		United Kingdom		US$			-				100.0000				100.0000				5,076				-				5,076				-
SQM Corporation N.V.		Foreign		Dutch Antilles		US$			0.0002				99.9998				100.0000				86,953				3,724				83,229				(3,314	)
SQM Perú S.A.		Foreign		Peru		US$			0.9800				99.0200				100.0000				904				1,214				(310	)			(165	)
SQM Ecuador S.A.		Foreign		Ecuador		US$			0.0040				99.9960				100.0000				19,419				18,065				1,354				244
SQM Brasil Ltda.		Foreign		Brazil		US$			2.7900				97.2100				100.0000				723				942				(219	)			78
SQI Corporation N.V.		Foreign		Dutch Antilles		US$			0.0159				99.9841				100.0000				17				43				(26	)			(8	)
SQMC Holding Corporation L.L.P.		Foreign		Aruba		US$			0.1000				99.9000				100.0000				24,597				1,657				22,940				2,422
SQM Japan Co.  Ltd.		Foreign		Japan		US$			1.0000				99.0000				100.0000				2,476				711				1,765				(125	)
SQM Europe N.V.		Foreign		Belgium		US$			0.8600				99.1400				100.0000				391,590				356,719				34,871				(14,928	)
SQM Italia SRL		Foreign		Italy		US$			-				100.0000				100.0000				1,360				18				1,342				-
SQM Indonesia S.A.		Foreign		Indonesia		US$			-				80.0000				80.0000				5				1				4				-
North American Trading Company		Foreign		United States		US$			-				100.0000				100.0000				305				39				266				-
SQM Virginia LLC		Foreign		United States		US$			-				100.0000				100.0000				29,204				14,829				14,375				(1	)
SQM Comercial de México S.A. de C.V.		Foreign		Mexico		US$			0.0013				99.9987				100.0000				79,092				55,672				23,420				3,254

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 6 - Background of companies included in consolidation (continued)

 

6.4

Information on consolidated subsidiaries, continued

 

12/31/2012
				Country of				Ownership interest												Assets				Liabilities				Total equity				Net profit (loss)
Subsidiary		Tax ID No.		incorporation		Functional currency		Direct				Indirect				Total				ThUS$				ThUS$				ThUS$				ThUS$
SQM Investment Corporation N.V.		Foreign		Dutch Antilles		US$			1.0000				99.0000				100.0000				64,264				40,239				24,025				743
Royal Seed Trading Corporation A.V.V.		Foreign		Aruba		US$			1.6700				98.3300				100.0000				242,707				253,736				(11,029	)			(2,435	)
SQM Lithium Specialties LLP		Foreign		United States		US$			-				100.0000				100.0000				15,785				1,265				14,520				(1	)
Soquimich SRL Argentina		Foreign		Argentina		US$			-				100.0000				100.0000				422				176				246				(39	)
Comercial Caimán Internacional S.A.		Foreign		Panama		US$			-				100.0000				100.0000				333				1,146				(813	)			(58	)
SQM France S.A.		Foreign		France		US$			-				100.0000				100.0000				351				114				237				-
Administración y Servicios Santiago S.A. de C.V.		Foreign		Mexico		US$			-				100.0000				100.0000				50				811				(761	)			127
SQM Nitratos México S.A. de C.V.		Foreign		Mexico		US$			-				51.0000				51.0000				33				23				10				-
Soquimich European Holding B.V.		Foreign		The Netherlands		US$			-				100.0000				100.0000				179,048				102,950				76,098				(4,932	)
SQM Iberian S.A		Foreign		Spain		US$			-				100.0000				100.0000				81,429				81,883				(454	)			(2,135	)
Iodine Minera B.V.		Foreign		The Netherlands		US$			-				100.0000				100.0000				16,929				-				16,929				3,708
SQM Africa Pty Ltd.		Foreign		South Africa		US$			-				100.0000				100.0000				98,127				91,370				6,757				(2,921	)
SQM Oceania Pty Ltd.		Foreign		Australia		US$			-				100.0000				100.0000				5,621				1,613				4,008				755
SQM Agro India Pvt. Ltd.		Foreign		India		US$			-				100.0000				100.0000				18				11				7				(38	)
SQM Beijing Commercial Co. Ltd.		Foreign		China		US$			-				100.0000				100.0000				3,637				1,779				1,858				1,621
Total																					7,805,674				3,847,033				3,958,641				848,596

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 6 - Background of companies included in consolidation (continued)

 

6.4

Information on consolidated subsidiaries, continued

 

12/31/2011
				Country of				Ownership interest												Assets				Liabilities				Total equity				Net profit (loss)
Subsidiary		Tax ID No.		incorporation		Functional currency		Direct				Indirect				Total				ThUS$				ThUS$				ThUS$				ThUS$
SQM Nitratos S.A.		96.592.190-7		Chile		US$			99.9999				0.0001				100.0000				819,424				665,515				153,909				106,473
Proinsa Ltda.		78.053.910-0		Chile		Chilean peso			-				60.5800				60.5800				204				-				204				(1	)
SQMC Internacional  Ltda.		86.630.200-6		Chile		Chilean peso			-				60.6381				60.6381				268				-				268				(4	)
SQM Potasio S.A.		96.651.060-9		Chile		US$			99.9974				-				99.9974				771,112				120,138				650,974				246,439
Serv. Integrales de Tránsito y Transf. S.A.		79.770.780-5		Chile		US$			0.0003				99.9997				100.0000				277,296				250,558				26,738				4,302
Isapre Norte Grande Ltda.		79.906.120-1		Chile		Chilean peso			1.0000				99.0000				100.0000				1,127				716				411				28
Ajay SQM Chile S.A.		96,592,180-K		Chile		US$			51.0000				-				51.0000				26,977				9,855				17,122				10,066
Almacenes y Depósitos Ltda.		79.876.080-7		Chile		Chilean peso			1.0000				99.0000				100.0000				419				1				418				(17	)
SQM Salar S.A.		79.626.800-K		Chile		US$			18.1800				81.8200				100.0000				1,438,672				610,538				828,134				286,239
SQM Industrial S.A.		79.947.100-0		Chile		US$			99.0470				0.9530				100.0000				1,889,981				1,066,598				823,383				93,062
Minera Nueva Victoria S.A.		78.602.530-3		Chile		US$			99.000				1.0000				100.0000				112,628				4,527				108,101				4,069
Exploraciones Mineras S.A.		76.425.380-9		Chile		US$			0.2691				99.7309				100.0000				31,878				4,082				27,796				(207	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		76.534.490-5		Chile		Chilean peso			-				100.0000				100.0000				757				648				109				(23	)
Soquimich Comercial S.A.		79.768.170-9		Chile		US$			-				60.6383				60.6383				191,346				82,750				108,596				7,220
Comercial Agrorama Ltda.		76.064.419-6		Chile		Chilean peso			-				42.4468				42.4468				11,555				10,264				1,291				29
Comercial Hydro  S.A.		96.801.610-5		Chile		Chilean peso			-				60.6383				60.6383				7,681				241				7,440				334
Agrorama S.A.		76.145.229-0		Chile		Chilean peso			-				60.6377				60.6377				328				226				102				(91	)
SQM North America Corp.		Foreign		United States		US$			40.0000				60.0000				100.0000				188,554				176,816				11,738				(19,702	)

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 6 - Background of companies included in consolidation (continued)

 

6.4

Information on consolidated subsidiaries, continued

 

12/31/2011
				Country of				Ownership interest												Assets				Liabilities				Total equity				Net profit (loss)
Subsidiary		Tax ID No.		incorporation		Functional currency		Direct				Indirect				Total				ThUS$				ThUS$				ThUS$				ThUS$
RS Agro Chemical Trading A.V.V.		Foreign		Aruba		US$			98.3333				1.6667				100.0000				5,224				-				5,224				(4	)
Nitratos Naturais do Chile Ltda.		Foreign		Brazil		US$			-				100.0000				100.0000				2,349				6,804				(4,455	)			271
Nitrate Corporation of Chile Ltd.		Foreign		United Kingdom		US$			-				100.0000				100.0000				5,076				-				5,076				-
SQM Corporation N.V.		Foreign		Dutch Antilles		US$			0.0002				99.9998				100.0000				89,469				3,715				85,754				40,340
SQM Perú S.A.		Foreign		Peru		US$			0.9800				99.0200				100.0000				6,466				6,611				(145	)			(759	)
SQM Ecuador S.A.		Foreign		Ecuador		US$			0.0040				99.9960				100.0000				9,724				9,176				548				(83	)
SQM Brasil Ltda.		Foreign		Brazil		US$			2.7900				97.2100				100.0000				354				1,050				(696	)			113
SQI Corporation N.V.		Foreign		Dutch Antilles		US$			0.0159				99.9841				100.0000				17				36				(19	)			6
SQMC Holding Corporation L.L.P.		Foreign		Aruba		US$			0.1000				99.9000				100.0000				21,131				614				20,517				10,926
SQM Japan Co.  Ltd.		Foreign		Japan		US$			1.0000				99.0000				100.0000				2,968				1,078				1,890				518
SQM Europe N.V.		Foreign		Belgium		US$			0.8600				99.1400				100.0000				430,994				393,419				37,575				20,135
SQM Italia SRL		Foreign		Italy		US$			-				100.0000				100.0000				1,333				17				1,316				-
SQM Indonesia S.A.		Foreign		Indonesia		US$			-				80.0000				80.0000				5				1				4				(1	)
North American Trading Company		Foreign		United States		US$			-				100.0000				100.0000				306				39				267				-
SQM Virginia LLC		Foreign		United States		US$			-				100.0000				100.0000				29,207				14,830				14,377				(3	)
SQM Comercial de México S.A. de C.V.		Foreign		Mexico		US$			0.0013				99.9987				100.0000				68,572				48,406				20,166				(1,061	)

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 6 - Background of companies included in consolidation (continued)

 

6.4

Information on consolidated subsidiaries, continued

 

12/31/2011
				Country of				Ownership interest												Assets				Liabilities				Total equity				Net profit (loss)
Subsidiary		Tax ID No.		incorporation		Functional currency		Direct				Indirect				Total				ThUS$				ThUS$				ThUS$				ThUS$
SQM investment Corporation N.V.		Foreign		Dutch Antilles		US$			1.0000				99.0000				100.0000				65,123				41,991				23,132				1,887
Royal Seed Trading Corporation A.V.V.		Foreign		Aruba		US$			1.6700				98.3300				100.0000				196,735				203,543				(6,808	)			1,251
SQM Lithium Specialties LLP		Foreign		United States		US$			-				100.0000				100.0000				15,785				1,264				14,521				(3	)
Soquimich SRL Argentina		Foreign		Argentina		US$			-				100.0000				100.0000				429				144				285				(78	)
Comercial Caimán Internacional S.A.		Foreign		Panama		US$			-				100.0000				100.0000				477				1,232				(755	)			(14	)
SQM France S.A.		Foreign		France		US$			-				100.0000				100.0000				351				114				237				-
Administración y Servicios Santiago S.A. de C.V.		Foreign		Mexico		US$			-				100.0000				100.0000				13				915				(902	)			100
SQM Nitratos México S.A. de C.V.		Foreign		Mexico		US$			-				51.0000				51.0000				27				17				10				-
Soquimich European Holding B.V.		Foreign		The Netherlands		US$			-				100.0000				100.0000				153,211				72,969				80,242				38,850
SQM Iberian S.A		Foreign		Spain		US$			-				100.0000				100.0000				27,225				25,638				1,587				258
Iodine Minera B.V.		Foreign		The Netherlands		US$			-				100.0000				100.0000				13,228				7				13,221				3,100
SQM Africa Pty Ltd.		Foreign		South Africa		US$			-				100.0000				100.0000				62,335				52,657				9,678				7,821
SQM Venezuela S.A.		Foreign		Venezuela		US$			-				100.0000				100.0000				5				328				(323	)			(157	)
SQM Oceania Pty Ltd.		Foreign		Australia		US$			-				100.0000				100.0000				4,349				1,042				3,307				2,372
SQM Agro India Pvt. Ltd.		Foreign		India		US$			-				100.0000				100.0000				63				18				45				(27	)
SQM Beijing Commercial Co. Ltd.		Foreign		China		US$			-				100.0000				100.0000				2,147				1,910				237				140
Total																					6,984,905				3,893,058				3,091,847				864,114

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 6 - Background of companies included in consolidation (continued)

 

6.5

Detail of transactions between consolidated companies

 

a)

Transactions conducted in 2012

 

On November 30, 2012, SQM S.A. transferred and made a capital contribution of the 99% of the ownership interest in Minera Nueva Victoria Limitada to SQM Potasio S.A.; therefore, SQM Potasio S.A. obtains 100% of the ownership. As a result of the above, Minera Nueva Victoria Limitada merged into SQM Potasio S.A., which generates the dissolution of Minera Nueva Victoria Limitada.

 

Transactions conducted in 2011

 

On April 7, 2011, Agrorama S.A. was incorporated with ownership interest by Soquimich Comercial S.A. of 99.999% and by Sociedad Productora de Insumos Agrícolas Ltda. of 0.001%.  This new company will have share capital of ThCh$100,000 (ThUS$ 211), its lifespan will be indefinite and its line of business will be the trading and distribution of fertilizers, pesticides and agricultural products or supplies. 

 

On August 30, 2011, SQM Industrial S.A. made a capital contribution of ThUS$8,000 in its subsidiary SQMC Mexico S.A. de CV.

 

During September 2011, SQM Industrial S.A. made a capital contribution of ThUS$14,017 to its subsidiary, SQMC México S.A. de CV, increasing its ownership interest to 99.8739%.

 

During September 2011, the subsidiary, Soquimich European Holding B.V., acquires from its associate, Nutrisi Holding N.V. ownership interest of 66.6% which it maintained in the subsidiary, Fertilizantes Naturales S.A. for ThUS$3,179.

 

On December 12, 2011, the subsidiary, Comercial Agrorama Callegari Ltda. changed its name to “Comercial Agrorama Limitada”.

On December 14, 2011, Fertilizantes Naturales S.A. changed its name to SQM Iberian S.A.

 

During December 2011, the subsidiary, Soquimich European Holding B.V. sells its ownership interest of 50% in Nutrisi Holding N.V. for ThUS$5.736.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 7 - Cash and cash equivalents

 

7.1

Types of cash and cash equivalents

 

As of December 31, 2012 and 2011, cash and cash equivalents are detailed as follows:

 

a)

Cash

 

		12/31/2012				12/31/20111
		ThUS$				ThUS$
Cash on hand			90				73
Cash in banks			41,541				34,659
Other demand deposits			833				3,291
Total cash			42,464				38,023

 

b)

Cash equivalents

 

		12/31/2012				12/31/20111
		ThUS$				ThUS$
Short-term deposits, classified as cash equivalents			139,943				263,396
Short-term investments, classified as cash equivalents			141,946				143,573
Total cash equivalents			281,889				406,969
Total cash and cash equivalents			324,353				444,992

  

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 7 - Cash and cash equivalents (continued)

 

7.2

Short-term investments, classified as cash equivalents

 

As of December 31, 2012 and December 31, 2011, short-term investments, classified as cash and cash equivalents relate to mutual funds (investment liquidity funds) for investments in:

 

Institution		12/31/2012 ThUS$				12/31/2011 ThUS$
Legg Mason - Western Asset Institutional Cash Reserves			47,408				47,162
BlackRock - Institutional US Dollar Liquidity Fund			47,490				48,025
JP Morgan US dollar Liquidity Fund Institutional			47,048				48,386
Total			141,946				143,573

 

Short-term investments are highly liquid fund manager accounts that are basically invested in short-term fixed rate notes in the U.S. market.

 

7.3

Information on cash and cash equivalents by currency

 

As of December 31, 2012 and December 31, 2011, information on cash and cash equivalents by currency is detailed as follows:

 

		12/31/2012				12/31/2011
Original currency		ThUS$				ThUS$
Chilean Peso (*)			76,712				125,118
US$			234,166				308,631
Euro			3,601				3,070
Mexican Peso			720				29
South African Rand			7,421				5,450
Japanese Yen			1,369				2,292
Peruvian Sol			75				16
Brazilian Real			20				22
Chinese Yuan			181				300
Indonesian rupee			5				5
Indian rupee			13				45
Pound sterling			70				14
Total			324,353				444,992

 

(*) The Company maintains financial derivative policies which allow dollarizing these term deposits in Chilean pesos.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 7 - Cash and cash equivalents (continued)

 

7.4

Amount of significant restricted (unavailable) cash balances

 

Cash on hand and in current bank accounts are available resources, and their carrying value is equal to their fair value.

 

As of December 31, 2012 and December 31, 2011, the Company has no significant cash balances with any type of restriction.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 7 - Cash and cash equivalents (continued)

 

7.5

Short-term deposits, classified as cash equivalents

 

The detail at the end of each period is as follows:

 

Receiver of the deposit		Type of deposit		Original Currency		Interest rate				Placement date				Expiration date				Principal ThUS$				Interest accrued to-date				12/31/2012				12/31/2011
																		ThUS$				ThUS$				ThUS$				ThUS$
Banco Crédito e Inversiones		Fixed term		Chilean peso			0.49				12/10/2012				01/17/2013				25,290				87				25,377				9,677
Banco Crédito e Inversiones		Fixed term		Chilean peso			0.50				12/07/2012				02/07/2013				12,299				49				12,348				9,676
Banco Crédito e Inversiones		-		-			-				-				-				-				-				-				25,209
Banco Crédito e Inversiones		-		-			-				-				-				-				-				-				20,010
Banco Crédito e Inversiones		-		-			-				-				-				-				-				-				20,531
Banco Crédito e Inversiones		-		-			-				-				-				-				-				-				20,011
Banco Crédito e Inversiones		-		-			-				-				-				-				-				-				20,014
Banco Santander-Santiago		Fixed term		Chilean peso			0.49				12/06/2012				01/03/2013				11,609				47				11,656				12,093
Banco Santander-Santiago		Fixed term		Chilean peso			0.49				12/06/2012				01/03/2013				7,493				30				7,523				20,110
Banco Santander-Santiago		Fixed term		Chilean peso			0.45				12/28/2012				01/10/2013				6,252				3				6,255				20,110
Banco Santander-Santiago		Fixed term		US$			1.12				12/07/2012				02/07/2013				8,005				6				8,011				20,110
Banco Santander-Santiago		Fixed term		US$			0.70				12/21/2012				01/07/2013				3,500				1				3,501				3,001
Banco Santander Santiago		Fixed term		US$			0.70				12/21/2012				01/07/2013				3,500				1				3,501				-
Citibank New – York		Overnight		US$			0.01				12/31/2012				01/01/2013				20,146				-				20,146				115
Citibank New – York		Overnight		US$			0.01				12/31/2012				01/01/2013				1,181				-				1,181				1,586
Citibank New – York		Overnight		US$			0.01				12/31/2012				01/01/2013				17,256				-				17,256				-
Citibank New – York		Overnight		US$			0.01				12/31/2012				01/03/2013				10,605				-				10,605				-
Citibank New – York		Overnight		US$			0.01				12/31/2012				01/02/2013				2,582				-				2,582				-
Corpbanca		Fixed term		Chilean peso			0.53				12/26/2012				02/01/2013				9,990				-				9,999				16,043
Corpbanca		-		-			-				-				-				-				-				-				20,016
Corpbanca		-		-			-				-				-				-				-				-				10,032
Corpbanca		-		-			-				-				-				-				-				-				10,008
IDBI Bank		-		-			-				-				-				-				-				-				2
Banco BBVA Chile		Fixed term		Indian rupee			-				12/31/2012				01/31/2013				2				-				2				5,042
Total																											139,943				263,396

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 8 - Inventories

 

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

 

Type of inventory		12/31/2012 ThUS$				12/31/2011 ThUS$
Raw material reserves			8,675				10,111
Supplies for production reserves			37,919				31,602
Products-in-progress reserves			411,039				356,038
Finished product reserves			438,603				346,651
Total			896,236				744,402

 

Inventory reserves recognized as of December 31, 2012 amount to ThUS$72,687, and as of December 31, 2011 amounted to ThUS$58,220. Inventory reserves have been made based on a technical study that covers the different variables affecting products in stock (density, humidity, among others). Additionally, reserves are recognized if goods are sold cheaper than the related cost, and for differences that arise from inventory counts.

 

As of December 31, 2012, the sum registered as cost of sale related to inventory in the statement of income amounts to ThUS$1,093,075 and as of December 31, 2011 to ThUS$1,016,119.

 

The breakdown of inventory reserves is detailed as follows:

 

Type of inventory		12/31/2012 ThUS$				12/31/2011 ThUS$
Raw material reserves			93				593
Supplies for production reserves			500				500
Products-in-progress reserves			46,635				33,811
Finished product reserves			25,459				23,316
Total			72,687				58,220

 

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

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 9 - Related party disclosures

 

9.1

Related party disclosures

 

Balances pending at period-end are not guaranteed, accrue no interest and are settled in cash. No guarantees have been delivered or received for trade and other receivables due from related parties or trade and other payables due to related parties. For the period ended December 31, 2012, the Company has not recorded any impairment in accounts receivable 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.

 

9.2

Relationships between the parent and the entity

 

According to the Company’s by-laws, no shareholder can own more than 32% of the Company’s voting right shares.

 

Sociedad de Inversiones Pampa Calichera S.A., Potasios de Chile S.A., and Global Mining Investments (Chile) S.A., collectively the Pampa Group, are the owners of a number of shares that are equivalent to 30.50% as of December 31, 2012 of the current total amount of shares issued, subscribed and fully-paid of the Company. In addition, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A. and La Esperanza Delaware Corporation, collectively the Kowa Group, are the owners of a number of shares equivalent to 2.08% of the total amount of shares of SQM S.A. issued, subscribed and fully-paid.

 

The Pampa Group and the Kowa Group have informed SQM S.A., the Chilean SVS and the relevant 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 entered into a Joint Action Agreement (JAA) related to those shares. Consequently, the Pampa Group, by itself, does not concentrate more than 32% of the voting right capital of SQM S.A., and the Kowa Group does not concentrate by itself more than 32% of the voting right capital of SQM S.A.

 

Likewise, the Joint Action Agreement has not transformed the Pampa and Kowa Groups into related parties between them. The Joint Action 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.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 9 - Related party disclosures (continued)

 

9.2

Relationship between the Parent and the entity

 

Detail of effective concentration

 

Tax ID No.		Name		Ownership interest %
96.511.530-7		Sociedad de Inversiones Pampa Calichera S.A.			20.35
96.863.960-9		Global Mining Investments (Chile) S.A.			3.34
76.165.311-5		Potasios de Chile S.A.			6.81
Total Pampa Group					30.50
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

 

9.3

Intermediate parent that publicly issues financial statements

 

The following intermediate parent of Sociedad Química y Minera de Chile S.A. publicly issues financial statements:

 

Soquimich Comercial S.A.

 

9.4

Detailed identification of the link between the Parent and subsidiary

 

As of December 31, 2012 and December 31, 2011, the detail is as follows:

 

Tax ID No.		Name		Country of origin		Functional currency		Nature
Foreign		Nitratos Naturais Do Chile Ltda.		Brazil		US$		Subsidiary
Foreign		Nitrate Corporation Of Chile Ltd.		United Kingdom		US$		Subsidiary
Foreign		SQM North America Corp.		United States		US$		Subsidiary
Foreign		SQM Europe N.V.		Belgium		US$		Subsidiary
Foreign		Soquimich S.R.L. Argentina		Argentina		US$		Subsidiary
Foreign		Soquimich European Holding B.V.		The Netherlands		US$		Subsidiary
Foreign		SQM Corporation N.V.		Dutch Antilles		US$		Subsidiary
Foreign		SQI Corporation N.V.		Dutch Antilles		US$		Subsidiary
Foreign		SQM Comercial De México S.A. de C.V.		Mexico		US$		Subsidiary
Foreign		North American Trading Company		United States		US$		Subsidiary
Foreign		Administración y Servicios Santiago S.A. de C.V.		Mexico		US$		Subsidiary
Foreign		SQM Perú S.A.		Peru		US$		Subsidiary
Foreign		SQM Ecuador S.A.		Ecuador		US$		Subsidiary
Foreign		SQM Nitratos Mexico S.A. de C.V.		Mexico		US$		Subsidiary
Foreign		SQMC Holding Corporation L.L.P.		United States		US$		Subsidiary
Foreign		SQM Investment Corporation N.V.		Dutch Antilles		US$		Subsidiary
Foreign		SQM Brasil Limitada		Brazil		US$		Subsidiary
Foreign		SQM France S.A.		France		US$		Subsidiary
Foreign		SQM Japan Co.  Ltd.		Japan		US$		Subsidiary
Foreign		Royal Seed Trading Corporation A.V.V.		Aruba		US$		Subsidiary
Foreign		SQM Oceania Pty Limited		Australia		US$		Subsidiary
Foreign		Rs Agro-Chemical Trading A.V.V.		Aruba		US$		Subsidiary
Foreign		SQM Indonesia S.A.		Indonesia		US$		Subsidiary
Foreign		SQM Virginia L.L.C.		United States		US$		Subsidiary
Foreign		SQM Venezuela S.A.		Venezuela		US$		Subsidiary

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 9 - Related party disclosures (continued)

 

9.4

Detailed identification of the link between the Parent and subsidiary, continued

 

As of December 31, 2012 and December 31, 2011, the detail is as follows:

 

Tax ID No.		Name		Country of origin		Functional currency		Nature
Foreign		SQM Italia SRL		Italy		US$		Subsidiary
Foreign		Comercial Caiman Internacional S.A.		Cayman Islands		US$		Subsidiary
Foreign		SQM Africa Pty. Ltd.		South Africa		US$		Subsidiary
Foreign		SQM Lithium Specialties LLC		United States		US$		Subsidiary
Foreign		SQM Iberian S.A.		Spain		US$		Subsidiary
Foreign		Iodine Minera B.V.		The Netherlands		US$		Subsidiary
Foreign		SQM Agro India Pvt. Ltd.		India		US$		Subsidiary
Foreign		SQM Beijing Commercial Co. Ltd.		China		US$		Subsidiary
96.801.610-5		Comercial Hydro  S.A.		Chile		US$		Subsidiary
96.651.060-9		SQM Potasio S.A.		Chile		US$		Subsidiary
96.592.190-7		SQM Nitratos S.A.		Chile		US$		Subsidiary
96,592,180-K		Ajay SQM Chile S.A.		Chile		US$		Subsidiary
86.630.200-6		SQMC Internacional  Ltda.		Chile		Chilean peso		Subsidiary
79.947.100-0		SQM Industrial S.A.		Chile		US$		Subsidiary
79.906.120-1		Isapre Norte Grande Ltda.		Chile		Chilean peso		Subsidiary
79.876.080-7		Almacenes y Depósitos Ltda.		Chile		Chilean peso		Subsidiary
79.770.780-5		Servicios Integrales de Tránsitos y Transferencias S.A.		Chile		US$		Subsidiary
79.768.170-9		Soquimich Comercial S.A.		Chile		US$		Subsidiary
79.626.800-K		SQM Salar S.A.		Chile		US$		Subsidiary
78.602.530-3		Minera Nueva Victoria Ltda.(b)		Chile		US$		Subsidiary
78.053.910-0		Proinsa Ltda.		Chile		Chilean peso		Subsidiary
76.534.490-5		Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		Chile		Chilean peso		Subsidiary
76.425.380-9		Exploraciones Mineras S.A.		Chile		US$		Subsidiary
76.064.419-6		Comercial Agrorama Ltda.		Chile		Chilean peso		Subsidiary
76.145.229-0		Agrorama S.A.		Chile		Chilean peso		Subsidiary
77.557.430-5		Sales de Magnesio Ltda.		Chile		Chilean peso		Associate
Foreign		Abu Dhabi Fertilizer Industries WWL		Arabia		Arab Emirates dirham		Associate
Foreign		Doktor Tarsa Tarim Sanayi AS		Turkey		Turkish lira		Associate
Foreign		Ajay North America		United States		US$		Associate
Foreign		Ajay Europe SARL		France		Euro		Associate
Foreign		SQM Eastmed Turkey		Turkey		Euro		Associate
Foreign		SQM Thailand Co. Ltd.		Thailand		Thai baht		Associate
Foreign		Sichuan SQM Migao Chemical Fertilizers Co Ltda.		China		US$		Joint venture
Foreign		Coromandel SQM		India		Indian rupee		Joint venture
Foreign		SQM Vitas Fzco.		Arab Emirates		Arab Emirates dirham		Joint venture
Foreign		SQM Star Qingdao Crop Nutrition Co., Ltd.		China		US$		Joint venture
Foreign		Kowa Company Ltd.		Japan		US$		Other related parties
96.511.530-7		Sociedad de Inversiones Pampa Calichera		Chile		US$		Other related parties
79.049.778-9		Callegari Agricola S.A.		Chile		Chilean peso		Other related parties
Foreign		Coromandel Internacional		India		Indian rupee		Other related parties
Foreign		Vitas Roullier SAS		France		Euro		Other related parties
Foreign		SQM Vitas Brasil Agroindustria		Brazil		US$		Joint control or significant influence
Foreign		SQM Vitas Perú S.A.C.		Peru		US$		Joint control or significant influence

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 9 - Related party disclosures (continued)

 

9.4

Detailed identification of the link between the Parent and subsidiary, continued

 

Tax ID No.		Name		Country of origin		Functional currency		Nature
Foreign		SQM Vitas Southern Africa Pty.		South Africa		US$		Joint control or significant influence
Foreign		Misr Speciality Fertilizers (a)		Egypt		Egyptian pound		Associate
Foreign		NU3 N.V. (a)		Belgium		Euro		Associate
Foreign		NU3 B.V. (a)		The Netherlands		Euro		Associate

 

(a)

Ownership relationship up to 2011.

 

(b)

On November 30, 2012 Minera Nueva Victoria Ltda. merged with SQM Potasio S.A., being absorbed by the latter.

 

9.5

Detail of related parties and related party transactions

 

Transactions between the Parent and its subsidiaries are part of the Company's common transactions. Their conditions are those customary for this type of transactions in respect of terms and market prices. In addition, these have been eliminated in consolidation and are not detailed in this note.

 

Maturity terms for each case vary by virtue of the transaction giving rise to them.

 

As of December 31, 2012 and December 31, 2011, there are no allowances for doubtful accounts related to balances pending of transactions with related parties as there is no impairment in them.

 

As of December 31, 2012 and 2011, the detail of transactions with related parties is as follows:

 

Tax ID No.

Company

Nature

Country of origin

Transaction

12/31/2012 ThUS$

12/31/2011 ThUS$

Foreign

Doktor Tarsa Tarim Sanayi As

Associate

Turkey

Sale of products

9,587

26,748

Foreign

Ajay Europe S.A.R.L.

Associate

France

Sale of products

37,232

27,743

Foreign

Ajay Europe S.A.R.L.

Associate

France

Dividends

3,564

824

Foreign

Ajay North America LLC.

Associate

United States

Sale of products

42,081

47,501

Foreign

Ajay North America LLC.

Associate

United States

Dividends

10,175

1,499

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

Sale of products

6,285

8,234

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

Dividends

525

-

Foreign

NU3 B.V.

Associate

The Netherlands

Sale of products

-

15,708

Foreign

NU3 N.V.

Associate

Belgium

Sale of products

-

9,993

Foreign

SQM Thailand Co. Ltd.

Associate

Thailand

Sale of products

10,203

7,355

Foreign

SQM Thailand Co. Ltd.

Associate

Thailand

Dividends

11

-

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Sale of products

1,472

-

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 9 - Related party disclosures (continued)

 

9.5

Detail of related parties and related party transactions, continued

 

Tax ID No.

Company

Nature

Country of origin

Transaction

12/31/2012 ThUS$

12/31/2011 ThUS$

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Dividends

1,052

491

Foreign

Kowa Company Ltd.

Other related parties

Japan

Sale of products

123,581

138,818

Foreign

SQM Vitas Brasil Agroindustria

Joint control or significant influence

Brazil

Sale of products

40,518

34,514

Foreign

SQM Vitas Perú S.A.C.

Joint control or significant influence

Peru

Sale of products

26,123

13,608

Foreign

SQM Vitas Southern Africa Pty.

Joint control or significant influence

South Africa

Sale of products

10,930

2,287

Foreign

SQM Vitas Fzco.

Joint venture

United Arab Emirates

Sale of products

120

1,562

Foreign

Sichuan SQM Migao Chemical Fertilizers Co Ltda.

Joint venture

China

Sale of services

62

-

Foreign

Coromandel SQM

Joint venture

India

Sale of products

2,300

-

 

  

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 9 - Related party disclosures (continued)

 

9.6

Trade receivables due from related parties, current:

 

Tax ID No.

Name

Nature

Country of origin

Currency

12/31/2012 ThUS$

12/31/2011 ThUS$

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Chilean peso

303

685

Foreign

SQM Thailand Co. Ltd.

Associate

Thailand

US$

6,098

5,521

Foreign

Doktor Tarsa Tarim Sanayi AS

Associate

Turkey

US$

-

3,899

Foreign

Ajay Europe S.A.R.L.

Associate

France

US$

4,775

4,603

Foreign

Ajay North America LLC.

Associate

United States

US$

4,633

7,387

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

US$

1,805

4,587

Foreign

Misr Speciality Fertilizers

Associate

Egypt

US$

-

199

Foreign

Kowa Company Ltd.

Jointly controlled entity

Japan

US$

29,929

44,188

96.511.530-7

Soc.de Inversiones Pampa Calichera

Jointly controlled entity

Chile

US$

8

8

Foreign

SQM  Star Qingdao Crop Nutrition Co., Ltd

Joint venture

China

US$

27

71

Foreign

SQM Vitas Brasil Agroindustria

Joint venture

Brazil

US$

27,903

27,523

Foreign

SQM Vitas Perú S.A.C.

Joint venture

Peru

US$

18,143

17,534

Foreign

SQM Vitas Southern Africa PTY

Joint venture

South Africa

US$

1,478

597

Foreign

SQM Vitas Fzco.

Joint venture

United Arab Emirates

Arab Emirates dirham

-

-

Foreign

Coromandel SQM

Joint venture

India

Indian rupee

756

23

Foreign

Sichuan SQM Migao Chemical Fertilizers Co Ltda.

Joint venture

China

US$

4,000

-

79.049.778-9

Callegari Agrícola S.A.

Other related parties

Chile

Chilean peso

844

314

Foreign

Coromandel Internacional

Other related parties

India

Indian rupee

670

-

Total to-date

101,372

117,139

 

  

Notes to the Consolidated Financial Statements as of December 31, 2012

  

Note 9 - Related party disclosures (continued)

 

9.7

Trade payables due to related parties, current:

 

Tax ID No.

Name

Nature

Country of origin

Currency

12/31/2012

12/31/2011

ThUS$

ThUS$

Foreign

SQM Vitas Fzco.

Joint venture

United Arab Emirates

Arab Emirates dirham

19

873

Total to-date

19

873

 

  

Notes to the Consolidated Financial Statements as of December 31, 2012

  

Note 9 - Related party disclosures (continued)

 

9.8

Board of Directors and Senior Management

 

1)

Board of directors

 

The Company is managed by a Board of Directors which is composed of eight regular directors who are elected for a three-year period. The present Board of Directors was elected by the shareholders at the Ordinary Shareholders' Meeting of April 28, 2011.

 

As of December 31, 2012, the Company has an Audit Committee made up of three members of the Board of Directors. This Committee performs those duties provided in Article 50 bis of Law No. 18,046 on Shareholders Company, the Shareholders’ Company Act.

 

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-sharing. In addition, there were no transactions conducted between the Company, its directors or members of Senior Management.

 

2)

Directors’ Compensation

 

2.1

 

2.1.1

Board of Directors

 

Directors’ compensation is detailed as follows:

 

a)

A payment of a monthly fixed gross amount of UF 300 in favor of the Chairman of the Company’s Board of Directors and UF 50 in favor of the seven remaining board members regardless of their attendance at Board meetings or the number of meetings attended during the respective month.

 

b)

A payment in domestic currency in favor of the Chairman of the Company’s Board of Directors consisting of a variable and gross amount equivalent to 0.35% of profit for the period effectively earned by the Company during fiscal year 2012.

 

c)

A payment in domestic currency in favor of each Company’s directors excluding the Chairman of the Board, consisting of a variable and gross amount equivalent to 0.04% of profit for the period effectively earned by the Company during fiscal years 2012 and 2011.

 

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 9 - Related party disclosures (continued)

 

9.9

Board of Directors and Senior Management, continued

 

d)

The fixed and variable amounts indicated above will not be subject to any charge between them, and those expressed as a percentage will be paid immediately after the shareholders at the respective Annual General Shareholders’ Meeting of the Company 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 fiscal years ending December 31, 2012 and 2011.

 

e)

Therefore, the remunerations and profit sharing paid to members of the Board of Directors and Audit Committee during 2012 amount to ThUS$3,973 (ThUS$ 3,030 as of December 31, 2011).

 

2.1.2 Audit Committee

 

The remuneration of Directors Committee is composed of:

 

a)

A payment of a monthly, fixed and gross amount of UF 17 in favor of each of the three Directors who are a part of the Company’s Audit Committee regardless of the number of meetings conducted during the respective month.

 

b)

A payment in domestic currency and in favor of each of the three Directors of a variable and gross amount equivalent to 0.013% of the Company’s profit for the period effectively earned by the Company during fiscal years 2012 and 2011.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 9 - Related party disclosures (continued) 

 

9.8

Board of Directors and Senior Management, continued

  

3)

No guarantees have been constituted in favor of the directors.

 

4)

Senior management compensation

 

As of December 31, 2012, the global compensation paid to the 120 main executives amounts to ThUS$32,888 (ThUS$ 22,509 as of December 31, 2011). This includes monthly fixed salary and variable performance bonuses.

 

The Company has a bonuses intermediate and bi-intermediate plan for compliance target and level of individual contribution to the Company’s profit or loss. These benefits are structured in a minimum and maximum of gross remunerations which are paid once a year or every two years.

 

5)

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 2012 and 2016 (See Note 16).

 

6)

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

 

7)

The Company’s Managers and Directors do not receive or have not received any benefit during the period ended December 31, 2012 and the year ended December 31, 2011 or compensation for the concept of pensions, life insurance, paid time off, profit sharing, incentives, or benefits due to disability other than those mentioned in the preceding points.

 

8)

In accordance with IAS 24, we should report that the Company's Director Mr. Wolf Von Appen B. is member of the Ultramar Group. During the period ended December 31, 2012, the amount of operations with this Group is approximately ThUS$22,577 (ThUS$13,751 as of December 31, 2011).

 

9.9

Key management personnel compensation

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Key management personnel compensation			32,888				22,509

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 – Financial instruments

 

Financial assets in conformity with IAS 39 are detailed as follows:

 

10.1

Types of other financial assets

 

Types of other financial assets		12/31/2012 ThUS$				12/31/2011 ThUS$
Other current financial assets (1)			244,161				129,069
Derivatives (2)			680				14,455
Hedging assets, current			71,262				25,737
Total other current financial assets			316,103				169,261
Other non-current financial assets			107				117
Hedging assets, non-current			29,385				30,371
Total other non-current financial assets			29,492				30,488

 

(1)

Relates to term deposits with maturities exceeding 90 days from the investment date.

 

(2)

Relate to forwards and options that were not classified as hedging instruments (see detail in Note 10.3).

 

Detail of other current financial assets

 

Institution		12/31/2012 ThUS$				12/31/2011 ThUS$
Banco Santander			41,691				13,753
BBVA			31,579				33,528
Banco de Crédito e Inversiones			82,145				17,739
Banco de Chile			42,992				44,849
Corpbanca			10,499				19,200
Banco Scotiabank			25,141				-
Banco Itaú			10,114				-
Total			244,161				129,069

 

10.2

Trade and other receivables, current and non-current

 

		12/31/2012												12/31/2011
		Current				Non- current				Total				Current				Non- current				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Trade receivables			490,770				-				490,770				387,607				-				387,607
Prepayments			14,046				-				14,046				10,706				-				10,706
Other receivables			5,800				1,311				7,111				13,749				1,070				14,819
Total trade and other receivables			510,616				1,311				511,927				412,062				1,070				413,132

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 – Financial instruments (continued)

 

10.2

Trade and other receivables, continued

 

		12/31/2012												12/31/2011
		Assets before allowances				Allowance for doubtful trade receivables				Assets for trade receivables, net				Assets before allowances				Allowance for doubtful trade receivables				Assets for trade receivables, net
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Receivables related to credit operations, current			507,562				(16,792	)			490,770				404,320				(16,713	)			387,607
Trade receivables, current			507,562				(16,792	)			490,770				404,320				(16,713	)			387,607
Prepayments, current			14,046				-				14,046				10,706				-				10,706
Other receivables, current			7,801				(2,001	)			5,800				15,709				(1,960	)			13,749
Current trade and other receivables			529,409				(18,793	)			510,616				430,735				(18,673	)			412,062
Other receivables, non-current			1,311				-				1,311				1,070				-				1,070
Non-current receivables			1,311				-				1,311				1,070				-				1,070
Total trade and other receivables			530,720				(18,793	)			511,927				431,805				(18,673	)			413,132

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 – Financial instruments (continued)

 

10.2

Trade and other receivables, continued

 

Portfolio stratification, continued

 

The Company’s policy is to require guarantees (such as letters of credit, guarantee clauses and others) and/or maintaining insurance policies for certain accounts as deemed necessary by management.

 

Unsecuritized portfolio

 

As of December 31, 2012 and December 31, 2011, the detail of the unsecuritized portfolio is as follows:

 

12/31/2012
		Not overdue				1 - 30 days				31 - 60 days				61 - 90 days				91 - 120 days				121 - 150 days				151 - 180 days				181 - 210 days				211 - 250 days				Over 250 days				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Number of customers, non-renegotiated portfolio			2,666				2,241				545				409				367				308				325				279				311				33,724				41,041
Non-renegotiated portfolio, gross			412,557				20,121				1,259				46,268				38				129				395				10,140				794				15,862				507,562
Number of customers, renegotiated portfolio			-				-				-				-				-				-				-				-				-				-				-
Renegotiated portfolio, gross			-				-				-				-				-				-				-				-				-				-				-
Total portfolio, gross			412,557				20,121				1,259				46,268				38				129				395				10,140				794				15,862				507,562

 

12/31/2011
		Not overdue				1 - 30 days				31 - 60 days				61 - 90 days				91 - 120 days				121 - 150 days				151 - 180 days				181 - 210 days				211 - 250 days				Over 250 days				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Number of customers, non-renegotiated portfolio			5,369				1,701				640				401				340				340				332				335				340				2,147				11,945
Non-renegotiated portfolio, gross			348,299				27,945				4,778				12,058				817				87				407				103				299				8,673				403,466
Number of customers, renegotiated portfolio			1				2				-				-				-				-				-				-				-				-				3
Renegotiated portfolio, gross			504				350				-				-				-				-				-				-				-				-				854
Total portfolio, gross			348,803				28,295				4,778				12,058				817				87				407				103				299				8,673				404,320

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 – Financial instruments (continued)

 

10.2

Trade and other receivables, continued

 

The detail of allowance is as follows:

 

Allowance and write-offs		12/31/2012 ThUS$				12/31/2011 ThUS$
Allowance for non-renegotiated portfolio			20,191				21,961
Write-offs for the period			(1,398	)			(3,288	)
Total			18,793				18,673

 

a)

Credit risk concentration

 

Credit risk concentrations with respect to trade receivables are reduced due to the great number of entities included in the Company’s client database and their distribution throughout the world.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.3

Hedging assets and liabilities

 

The balance represents derivative instruments measured at fair value which have been classified as hedges from exchange and interest rate risks related to the total obligations relating to bonds of the Company in Chilean pesos and UF (and the exchange risk in Chilean pesos of the Company’s investment plans). As of December 31, 2012, the face value of cash flows in Cross Currency Swap contracts agreed upon in US dollars amounted to ThUS$515,156 and as of December 31, 2011 such contracts amounted to ThUS$ 405,486.

 

Hedging assets		Derivative instruments (CCS)				Effect on profit or loss for the period Derivative instruments				Hedging reserve in gross equity				Deferred tax hedging reserve in equity				Hedging reserve in equity
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
December 31, 2012			100,647				49,853				(18,419	)			3,684				(14,735	)
December 31, 2011			56,108				(39,719	)			(12,184	)			2,104				(10,080	)

 

Hedging liabilities		Derivative instruments (IRS)				Effect on profit or loss for the period Derivative instruments				Hedging reserve in gross equity				Deferred tax hedging reserve in equity				Hedging reserve in equity
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
December 31, 2012			1,879				27				(1,786	)			-				(1,786	)
December 31, 2011			270				(120	)			(150	)			-				(150	)

 

The balances in the effect on profit or loss column consider the interim effects of the contracts in force as of December 31, 2012 and December 31, 2011.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.3

Hedging assets and liabilities, continued

 

Derivative contract maturities are detailed as follows:

 

Series		Contract amount ThUS$		Currency		Maturity date
C		71,841		UF		12/01/2026
G		33,673		Chilean peso		01/05/2014
H*		146,360		UF		01/05/2018
I		56,041		UF		04/01/2014
J		92,440		Chilean peso		04/01/2014
M		46,463		UF		02/01/2017
O		68,338		UF		02/01/2017

 

(*) Forward starting CCS for hedging series H bonds since 01/05/2012 to 01/05/2018

 

The Company uses cross currency swap derivative instruments to hedge the possible financial risk associated with the volatility of the exchange rate associated with Chilean pesos and UF. The objective is to hedge the exchange rate financial risks associated with bonds payable. Hedges are documented and tested to measure their effectiveness.

 

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

 

Hedge Accounting

 

The Company classifies derivative instruments as hedging that may include derivative or embedded derivatives either as fair value hedge derivative instruments, cash flow hedge derivative instruments, or hedge derivative instruments for net investment in a business abroad.

 

a) Fair value hedge

 

Changes in fair values of derivative instruments classified as fair value hedge derivative instruments are accounted for in gains and losses immediately along with any change in the fair value of the hedged item that is attributable to the risk being hedged.

 

The Company documents the relationship between hedge instruments and the hedged item along with the objectives of its risk management and strategy to carry out different hedging transactions. In addition, upon commencement of the period hedged and then on a quarterly basis the Company documents whether hedge instruments have been efficient and met the objective of hedging market fluctuations for the purpose of which we use the effectiveness test. A hedge instrument is deemed effective if the effectiveness test result is between 80 to 120%.

 

The hedge instruments are classified as effective or not effective on the basis of the effectiveness test results. As of to date, hedges are classified as effective on the basis of the effectiveness tests. This note includes the detail of fair values of derivatives classified as hedging instruments.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.3

Hedging assets and liabilities, continued

 

b) Cash flow hedges

 

Cash flow hedges cover exposure to the cash flow variations attributable to a risk associated with a specific transaction that is very likely to be executed, that may have material effects on the results of the Company.

 

10.4

Financial liabilities

 

Other current and non-current financial liabilities

 

As of December 31, 2012 and December 31, 2011, the detail is as follows:

 

		12/31/2012												12/31/2011
		Current				Non- current				Total				Current				Non- current				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Bank loans			122,373				379,119				501,492				141,436				329,150				470,586
Obligations with the public (bonds payable)			20,135				1,067,075				1,087,210				17,129				907,877				925,006
Other financial liabilities			10,335				-				10,335				2,443				-				2,443
Total			152,843				1,446,194				1,599,037				161,008				1,237,027				1,398,035

 

Current and non-current loans

 

As of December 31, 2012 and December 31, 2011, the detail is as follows:

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Long-term loans			379,119				329,150
Short-term loans			120,921				140,538
Current portion of long-term loans			1,452				898
Short-term loans and current portion of long-term loans			122,373				141,436
Total loans assumed			501,492				470,586

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

a)

Bank loans, current:

 

As of December 31, 2012 and December 31, 2011, the detail of this caption is as follows:

 

Debtor								Creditor						Currency												12/31/2012 Current maturities
Tax ID No.		Subsidiary		Country				Tax ID No.		Financial institution		Country		or adjustment index		Repayment		Effective rate				Nominal rate				Up to 90 days  ThUS$				91 days to 1 year ThUS$				Total ThUS$
93.007.000-9		SQM.S.A.			Chile			97.030.000-7		Banco Estado		Chile		US$		Upon maturity			1.70	%			1.70	%			-				20,175				20,175
93.007.000-9		SQM.S.A.			Chile			97.030.000-7		Banco Estado		Chile		US$		Upon maturity			1.09	%			1.09	%			-				20,017				20,017
93.007.000-9		SQM S.A.			Chile			Foreign		Banco Estado NY Branch		United States		US$		Upon maturity			3.01	%			2.69	%			1,139				-				1,139
79.626.800-K		SQM Salar S.A.			Chile			97.032.000-8		Banco BBVA Chile		Chile		US$		Upon maturity			1.90	%			1.90	%			-				20,243				20,243
79.626.800-K		SQM Salar S.A.			Chile			97.018.000-1		Scotiabank Sud Americano		Chile		US$		Upon maturity			1.03	%			1.03	%			20,153				-				20,153
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Bank of America		United States		US$		Upon maturity			1.83	%			1.52	%			-				141				141
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Export Development Canada		Canada		US$		Upon maturity			1.81	%			1.46	%			-				20				20
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Scotiabank & Trust (Cayman) Ltd.		Cayman Islands		US$		Upon maturity			1.60	%			1.54	%			-				235				235
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Scotiabank & Trust (Cayman) Ltd.		Cayman Islands		US$		Upon maturity			1.92	%			1.62	%			-				164				164
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		The Bank of Tokyo-Mitsubishi UFJ, Ltd. (New York)		United States		US$		Upon maturity			1.49	%			1.26	%			-				140				140
79.947.100-0		SQM Industrial S.A.			Chile			97.030.000-7		Banco Estado		Chile		US$		Upon maturity			1.64	%			1.64	%			-				20,172				20,172
79.947.100-0		SQM Industrial S.A.			Chile			97.018.000-1		Scotiabank Sud Americano		Chile		US$		Upon maturity			1.04	%			1.04	%			20,162				-				20,162
Total																											41,454				81,307				122,761
Borrowing costs																											(26	)			(362	)			(388	)
Total																											41,428				80,945				122,373

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

Debtor								Creditor						Currency												12/31/2011 Current maturities
Tax ID No.		Subsidiary		Country				Tax ID No.		Financial institution		Country		or adjustment index		Repayment		Effective rate				Nominal rate				Up to 90 days  ThUS$				91 days to 1 year ThUS$				Total ThUS$
93.007.000-9		SQM.S.A.			Chile			97.032.000-8		Banco BBVA Chile		United States		US$		Upon maturity			1.00	%			1.00	%			20,094				-				20,094
93.007.000-9		SQM.S.A.			Chile			97.030.000-7		Banco Estado		United States		US$		Upon maturity			0.95	%			0.95	%			20,089				-				20,089
93.007.000-9		SQM S.A.			Chile			Foreign		Banco Estado NY Branch		United States		US$		Upon maturity			3.02	%			2.72	%			-				645				645
79.626.800-K		SQM Salar S.A.			Chile			97.030.000-7		Banco Estado		Chile		US$		Upon maturity			1.24	%			1.24	%			-				20,114				20,114
79.626.800-K		SQM Salar S.A.			Chile			97.004.000-5		Banco de Chile		Chile		US$		Upon maturity			1.03	%			1.03	%			20,085				-				20,085
79.626.800-K		SQM Salar S.A.			Chile			97.018.000-1		Scotiabank Sud Americano		Chile		US$		Upon maturity			0.75	%			0.75	%			48				20,000				20,048
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Bank of America		United States		US$		Upon maturity			2.56	%			1.47	%			-				140				140
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Export Development Canada		Canada		US$		Upon maturity			2.36	%			1.75	%			-				24				24
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Scotiabank & Trust (Cayman) Ltd.		Cayman Islands		US$		Upon maturity			1.74	%			1.35	%			207				-				207
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		The Bank of Tokyo-Mitsubishi UFJ, Ltd. (New York)		United States		US$		Upon maturity			2.17	%			1.23	%			-				137				137
79.947.100-0		SQM Industrial S.A.			Chile			97.004.000-5		Banco de Chile		Chile		US$		Upon maturity			1.58	%			1.58	%			-				20,057				20,057
79.947.100-0		SQM Industrial S.A.			Chile			97.018.000-1		Scotiabank Sud Americano		Chile		US$		Upon maturity			0.70	%			0.70	%			51				20,000				20,051
Total																											60,574				81,117				141,691
Borrowing costs																											(61	)			(194	)			(255	)
Total																											60,513				80,923				141,436

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

b)

Unsecured obligations, current:

 

As of December 31, 2012 and December 31, 2011, the detail of current unsecured interest-bearing obligations is composed of promissory notes and bonds, as follows:

 

Bonds

 

Debtor								Number of										Currency		Periodicity														12/31/2012 Current maturities
Tax ID No.		Subsidiary		Country				registration or ID of the instrument				Series				Maturity date		or adjustment index		Payment of interest				Repayment		Effective rate				Nominal rate				Up to 90 days  ThUS$				91 days to 1 year ThUS$				Total ThUS$
93.007.000-9		SQM S.A			Chile				-				Single			04/15/2013		US$			Semi-annual			Upon maturity			6.32	%			6.13	%			-				2,577				2,577
93.007.000-9		SQM S.A			Chile				-				Single			04/21/2013		US$			Semi-annual			Upon maturity			5.70	%			5.50	%			-				2,667				2.667
93.007.000-9		SQM S.A			Chile				446				C			06/01/2013		UF			Semi-annual			Semi-annual			4.44	%			4.00	%			-				7,464				7,464
93.007.000-9		SQM S.A			Chile				563				G			01/05/2013		Ch$			Semi-annual			Upon maturity			7.50	%			7.00	%			1,465				-				1,465
93.007.000-9		SQM S.A			Chile				564				H			01/05/2013		UF			Semi-annual			Semi-annual			5.10	%			4.90	%			4,484				-				4,484
93.007.000-9		SQM S.A			Chile				563				I			04/01/2013		UF			Semi-annual			Upon maturity			3.35	%			3.00	%			-				532				532
93.007.000-9		SQM S.A			Chile				563				J			04/01/2013		Ch$			Semi-annual			Upon maturity			6.23	%			5.50	%			-				1,470				1,470
93.007.000-9		SQM S.A			Chile				700				M			02/01/2013		UF			Semi-annual			Upon maturity			3.62	%			3.30	%			644				-				644
93.007.000-9		SQM S.A			Chile				699				O			02/01/2013		UF			Semi-annual			Upon maturity			3.95	%			3.80	%			1,110				-				1,110
									Total																										7,703				14,710				22,413
									Bond issue costs																										(473	)			(1,805	)			(2,278	)
									Total																										7,230				12,905				20,135

  

Effective rates of bonds in Chilean pesos and UF are expressed and calculated in U.S. dollars based on the flows agreed in Cross Currency Swap Agreements.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

Debtor								Number of												Periodicity														12/31/2011 Current maturities
Tax ID No.		Subsidiary		Country				registration or ID of the instrument				Series				Maturity date		Currency or adjustment index		Payment of interest				Repayment		Effective rate				Nominal rate				Up to 90 days  ThUS$				91 days to 1 year ThUS$				Total ThUS$
93.007.000-9		SQM S.A			Chile				-				Single			04/15/2012		US$			Semi-annual			Upon maturity			6.32	%			6.13	%			-				2,577				2,577
93.007.000-9		SQM S.A			Chile				-				Single			04/21/2012		US$			Semi-annual			Upon maturity			5.70	%			5.50	%			-				2,667				2,667
93.007.000-9		SQM S.A			Chile				446				C			06/01/2012		UF			Semi-annual			Semi-annual			4.44	%			4.00	%			-				6,754				6,754
93.007.000-9		SQM S.A			Chile				563				G			01/05/2012		Ch$			Semi-annual			Upon maturity			7.50	%			7.00	%			1,354				-				1,354
93.007.000-9		SQM S.A			Chile				564				H			01/05/2012		UF			Semi-annual			Semi-annual			5.10	%			4.90	%			4,045				-				4,045
93.007.000-9		SQM S.A			Chile				563				I			04/01/2012		UF			Semi-annual			Upon maturity			3.35	%			3.00	%			-				477				477
93.007.000-9		SQM S.A			Chile				563				J			04/01/2012		Ch$			Semi-annual			Upon maturity			6.23	%			5.50	%			-				1,351				1,351
									Total																										5,399				13,826				19,225
									Bond issue costs																										(276	)			(1,820	)			(2,096	)
									Total																										5,123				12,006				17,129

 

c)

Types of non-current interest-bearing loans

 

Non-current interest-bearing loans as of December 31, 2012 and December 31, 2011 are detailed as follows:

 

Non-current interest-bearing bank loans

 

Debtor								Creditor																		12/31/2012 Years to maturity
Tax ID No.		Subsidiary		Country				Tax ID No.		Financial institution		Country		Currency or adjustment index		Repayment		Effective rate				Nominal rate				Over 1 years to 3 ThUS$				Over 3 to 5 ThUS$				Over 5 years ThUS$				Total ThUS$
93.007.000-9		SQM S.A.			Chile			Foreign		Banco Estado NY Branch		United States		US$		Upon maturity			3.01	%			2.69	%			-				140,000				-				140,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Scotiabank & Trust (Cayman) Ltd.		Cayman Islands		US$		Upon maturity			1.60	%			1.54	%			50,000				-				-				50,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Scotiabank & Trust (Cayman) Ltd.		Cayman Islands		US$		Upon maturity			1.92	%			1.62	%			50,000				-				-				50,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Bank of America		United States		US$		Upon maturity			1.83	%			1.52	%			-				40,000				-				40,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Export Development Canada		Canada		US$		Upon maturity			1.81	%			1.46	%			-				50,000				-				50,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		The Bank of Tokyo-Mitsubishi UFJ, Ltd (New York)		United States		US$		Upon maturity			1.49	%			1,26	%			-				50,000				-				50,000
Total																											100,000				280,000				-				380,000
Borrowing costs																											(235	)			(646	)			-				(881	)
Total																											99,765				279,354				-				379,119

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

Debtor								Creditor																		12/31/2011 Years to maturity
Tax ID No.		Subsidiary		Country				Tax ID No.		Financial institution		Country		Currency or adjustment index		Repayment		Effective rate				Nominal rate				Over 1 years to 3 ThUS$				Over 3 to 5 ThUS$				Over 5 years ThUS$				Total ThUS$
93.007.000-9		SQM S.A.			Chile			Foreign		Banco Estado NY Branch		United States		US$		Upon maturity			3.02	%			2.72	%			140,000				-				-				140,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Scotiabank & Trust (Cayman) Ltd.		Cayman Islands		US$		Upon maturity			1.74	%			1.35	%			50,000				-				-				50,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Bank of America		United States		US$		Upon maturity			2.56	%			1.47	%			-				40,000				-				40,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Export Development Canada		Canada		US$		Upon maturity			2.36	%			1.74	%			-				50,000				-				50,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		The Bank of Tokyo-Mitsubishi UFJ, Ltd (New York)		United States		US$		Upon maturity			2.17	%			1.23	%			-				50,000				-				50,000
Total																											190,000				140,000				-				330,000
		Borrowing costs																									(104	)			(746	)			-				(850	)
Total																											189,896				139,254				-				329,150

 

d)

Non-current unsecured interest-bearing bonds

 

The breakdown of non-current unsecured interest-bearing bonds as of December 31, 2012 and December 31, 2011 is detailed as follows:

 

Debtor																		Currency		Periodicity																		12/31/2012 Current maturities
Tax ID No.		Subsidiary		Country				Number of registration or ID of the instrument				Series				Maturity date		or adjustment index		Payment of interest				Repayment		Effective rate				Nominal rate				Over 1 years to 3 ThUS$				Over 3 to 5 ThUS$				Over 5 years ThUS$				Total ThUS$
93.007.000-9		SQM S.A			Chile				-				Single			15/04/2016		US$			Semi-annual			Upon maturity			6.32	%			6.13	%			-				200,000				-				200,000
93.007.000-9		SQM S.A			Chile				-				Single			04/21/2020		US$			Semi-annual			Upon maturity			5.70	%			5.50	%			-				-				250,000				250,000
93.007.000-9		SQM S.A			Chile				446				C			12/01/2026		UF			Semi-annual			Semi-annual			4.44	%			4.00	%			14,280				14,280				64,260				92,820
93.007.000-9		SQM S.A			Chile				564				H			01/05/2030		UF			Semi-annual			Semi-annual			7.5	%			4.90	%			-				-				190,401				190,401
93.007.000-9		SQM S.A			Chile				563				G			01/05/2014		Ch$			Semi-annual			Upon maturity			5.10	%			7.00	%			43,764				-				-				43,764
93.007.000-9		SQM S.A			Chile				563				I			04/01/2014		UF			Semi-annual			Upon maturity			3.35	%			3.00	%			71,400				-				-				71,400
93.007.000-9		SQM S.A			Chile				563				J			04/01/2014		Ch$			Semi-annual			Upon maturity			6.23	%			5.50	%			108,368				-				-				108,368
93.007.000-9		SQM S.A			Chile				700				M			02/01/2017		UF			Semi-annual			Upon maturity			3.62	%			3.30	%			-				47,600				-				47,600
93.007.000-9		SQM S.A			Chile				699				O			02/01/2033		UF			Semi-annual			Upon maturity			3.95	%			3.80	%			-				-				71,400				71,400
									Total																										237,812				261,880				576,061				1,075,753
									Bond issue costs																										(631	)			(1,420	)			(6,627	)			(8,678	)
									Total																										237,181				260,460				569,434				1,067,075

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

Debtor																Periodicity																12/31/2011 Current maturities
Tax ID No.		Subsidiary		Country		Number of registration or ID of the instrument				Series		Maturity date		Currency or adjustment index		Payment of interest		Repayment		Effective rate				Nominal rate				Over 1 years to 3 ThUS$				Over 3 to 5 ThUS$				Over 5 years ThUS$				Total ThUS$
93.007.000-9		SQM S.A		Chile			-			Single		04/15/2016		US$		Semi-annual		Upon maturity			6.32	%			6.13	%			-				200,000				-				200,000
93.007.000-9		SQM S.A		Chile			-			Single		04/21/2020		US$		Semi-annual		Upon maturity			5.70	%			5.50	%			-				-				250,000				250,000
93.007.000-9		SQM S.A		Chile			446			C		12/01/2026		UF		Semi-annual		Semi-annual			4.44	%			4.00	%			12,881				12,881				64,408				90,170
93.007.000-9		SQM S.A		Chile			564			H		0105//2030		UF		Semi-annual		Semi-annual			7.5	%			4.90	%			-				-				171,753				171,753
93.007.000-9		SQM S.A		Chile			563			G		01/05/2014		Ch$		Semi-annual		Upon maturity			5.10	%			7.00	%			40,446				-				-				40,446
93.007.000-9		SQM S.A		Chile			563			I		04/01/2014		UF		Semi-annual		Upon maturity			3.35	%			3.00	%			64,408				-				-				64,408
93.007.000-9		SQM S.A		Chile			563			J		04/01/2014		Ch$		Semi-annual		Upon maturity			6.23	%			5.50	%			100,152				-				-				100,152
							Total																						217,887				212,881				486,161				916,929
							Bond issue costs																						(1,700	)			(1,322	)			(6,030	)			(9,052	)
							Total																						216,187				211,559				480,131				907,877

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

e)

Additional information

 

Bonds

 

As of December 31, 2012 and December 31, 2011, ThUS$20,135 and ThUS$17,129, respectively are presented at short-term related to principal, current portion plus interest accrued at that date, not including bond issue costs. At the non-current portion, the Company presented ThUS$1,067,075 as of December 31, 2012 and ThUS$907,877 as of December 31, 2011 related to principal installments of Series C bonds, single Series bonds, Series G bonds, Series H bonds, Series I bonds, Series J bonds, single series second issue bonds, Series M bonds and Series O bonds.

 

As of December 31, 2012 and December 31, 2011, the details of each issue are as follows

 

Series “C” bonds

 

On January 24, 2006, the Company placed Series C bonds for UF 3,000,000 (ThUS$101,918) at an annual rate of 4.00%.

 

As of December 31, 2012 and December 31, 2011, the Company has made the following payments with a charge to the Series C bonds:

 

Payments made		12/31/2012				12/31/2011
		ThUS$				ThUS$
Principal			6,858				6,678
Interest payment			4,004				4,169

 

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 December 31, 2012 and December 31, 2011, the Company has made the following payments with a charge to the Single Series bonds:

 

		12/31/2012 ThUS$				12/31/2011 ThUS$
Payments of interest			12,250				12,250

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, 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 a single payment at the maturity of the term and an annual interest rate of 7%.

 

As of December 31, 2012 and December 31, 2011, the Company has made the following payments with a charge to the Series G and H bonds:

 

		12/31/2012 ThUS$				12/31/2011 ThUS$
Payment of interest, Series G bonds			2,845				3,094
Payment of interest, Series H bonds			8,565				8,989

 

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 maturity of the term and annual interest rate of 3.00%.

 

As of December 31, 2012 and December 31, 2011, the Company has made the following payments with a charge to the Series J and I bonds:

 

		12/31/2012 ThUS$				12/31/2011 ThUS$
Payment of interest, Series J bonds			5,879				5,665
Payment of interest, Series I bonds			2,100				1,954

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

Single series bonds, second issue

 

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 with a maturity of 10 years beginning on the aforementioned date with annual interest rate of 5.5% and destined to refinance long-term liabilities

 

As of December 31, 2012 and December 31, 2011, the detail of payments charged to the line of single series bonds, second issue is as follows:

 

		12/31/2012 ThUS$				12/31/2011 ThUS$
Interest payment			13,750				13,750

 

Series “M” and “O” bonds

 

On April 4, 2012, the Company placed two bond series in the domestic market. Series M for UF 1,000,000 (ThUS$46,601) was placed at a term of 5 years with a single payment at the maturity of the term and an annual interest rate of 3.3%, and Series O for UF 1,500,000 (ThUS$69,901) was placed at a term of 21 years with a single payment at the maturity of the term and an annual interest rate of 3.80%

 

As of December 31, 2012, the Company has made the following payments with a charge to the Series M and O bonds:

 

		12/31/2012 ThUS$				12/31/2011 ThUS$
Payment of interest, Series M bonds			765				-
Payment of interest, Series O bonds			1,320				-

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.5

Trade and other payables

 

		12/31/2012												12/31/2011
		Current				Non- current				Total				Current				Non- current				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Accounts payable			207,429				-				207,429				182,552				-				182,552
Deferred income			-				-				-				-				-				-
Retained  (or accrued)			515				-				515				480				-				480
Total			207,944				-				207,944				183,032				-				183,032

 

Purchase commitments held by the Company are recognized as liabilities when the goods and services are received by the Company. As of December 31, 2012, the Company has purchase orders amounting to ThUS$127,484 (ThUS$79,045 as of December 31, 2011).

 

10.6

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 of this type of instrument is as follows:

 

Financial liabilities at fair value through profit or loss		12/31/2012				Effect on profit or loss as of 12/31/2012				12/31/2011				Effect on profit or loss as of 12/31/2011
		ThUS$				ThUS$				ThUS$				ThUS$
Current
Derivative instruments (forward)			5,612				(4,559	)			1,053				(1,053	)
Derivative instruments (options)			2,492				(1,456	)			1,036				(1,036	)
Derivative instruments (IRS)			2,231				(240	)			354				(150	)
			10,335				(6,255	)			2,443				(2,239	)

 

Balances in the column effect on profit or loss consider the annual affects of agreements which were in force as of December 31, 2012.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.7

Financial asset and liability categories

 

a)

Financial Assets

 

		12/31/2012												12/31/2011
		Current				Non-current				Total				Current				Non-current				Total
Description of financial assets		Amount ThUS$				Amount ThUS$				Amount ThUS$				Amount ThUS$				Amount ThUS$				Amount ThUS$
Financial assets at fair value through profit or loss, classified as held-for-trading			244,161				-				244,161				129,069				-				129,069
Financial assets at fair value through profit or loss, mandatorily measured at fair value			680				-				680				14,455				-				14,455
Financial assets at fair value through profit or loss			244,841				-				244,841				143,524				-				143,524
Investments held to maturity			-				107				107				-				117				117
Loans and receivables			510,616				1,311				511,927				412,062				1,070				413,132
Financial assets at fair value through other comprehensive income			71,261				29,385				100,646				25,737				30,371				56,108
Total financial assets			826,718				30,803				857,521				581,323				31,558				612,881

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.7

Financial asset and liability categories (continued)

 

b)

Financial liabilities

 

		12/31/2012												12/31/2011
		Current				Non-current				Total				Current				Non-current				Total
Description of financial liabilities at fair value through profit or loss		Amount ThUS$				Amount ThUS$				Amount ThUS$				Amount ThUS$				Amount ThUS$				Amount ThUS$
Financial liabilities at fair value through profit or loss, designed as such at initial recognition			10,335				-				10,335				2,443				-				2,443
Financial liabilities at fair value through profit or loss			10,335				-				10,335				2,443				-				2,443
Financial liabilities measured at amortized cost			350,452				1,446,194				1,796,646				341,597				1,237,027				1,578,624
Total financial liabilities			360,787				1,446,194				1,806,981				344,040				1,237,027				1,581,067

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.8

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.

 

As of December 31, 2012 and December 31, 2011, assets pledged as guarantees are as follows:

 

Restricted cash		12/31/2012 ThUS$				12/31/2011 ThUS$
Isapre Norte Grande Ltda.			571				428
Total			571				428

 

10.9

Estimated fair value of financial instruments and financial derivatives

 

As required by IFRS 7, the following information is presented for the disclosure of the estimated fair value of financial assets and liabilities.

 

Although inputs represent Management's best estimate, they are subjective and involve significant estimates related to the current economic and market conditions, as well as risk features.

 

Methodologies and assumptions used depend on the risk terms and characteristics of instruments and include the following as a summary:

 

-

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.

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.9

Estimated fair value of financial instruments and financial derivatives, continued

 

The detail of the Company’s instruments at carrying value and estimated fair value is as follows:

 

		12/31/2012								12/31/2011
		Carrying value				(*) Fair value				Carrying value				(*) Fair value
		ThUS$				ThUS$				ThUS$				ThUS$
Cash and cash equivalents			324,353				324,353				444,992				444,992
Current trade and other receivables			510,616				510,616				412,062				412,062
Other financial assets, current:
- Time deposits			244,161				244,161				129,069				129,069
- Derivative instruments			680				680				14,455				14,455
- Current hedging assets			71,262				71,262				25,737				25,737
Total other current financial assets			316,103				316,103				169,261				169,261
Other non-current financial assets:			107				107				117				117
Non-current hedging assets			29,385				29,385				30,371				30,371
Other non-current financial assets:			29,492				29,492				30,488				30,488
Other financial liabilities, current:
- Bank loans			122,373				122,373				141,436				141,436
- Derivative instruments			8,456				8,456				2,174				2,174
- Hedging liabilities			1,879				1,879				269				269
- Unsecured obligations			20,135				20,135				17,129				17,129
Other financial liabilities, current			152,843				152,843				161,008				161,008
Current and non-current accounts payable			207,944				207,944				183,032				183,032
Other non-current financial liabilities:
- Bank loans			379,119				401,065				329,150				348,218
- Unsecured obligations			1,067,075				1,137,363				907,877				1,074,907
Other non-current financial liabilities:			1,446,194				1,538,428				1,237,027				1,423,125

 

Fair value hierarchy

 

Fair value hierarchies are as follows:

 

-

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 level 2.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 10 - Financial instruments (continued)

 

10.10

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 11 – Equity-accounted investees

 

11.1

Equity-accounted investees

 

As of December 31, 2012 and 2011, in accordance with criteria established in Note 2.6 and Note 3.3, investment in associates recognized according to the equity method of accounting and joint ventures are as follows:

 

				Investment								Share on profit (loss) of equity-accounted investees
		Note No.		12/31/2012 ThUS$				12/31/2011 ThUS$				12/31/2012 ThUS$				12/31/2011 ThUS$
Equity-accounted investees		11.1 to 11.3			50,955				43,057				24,104				22,157
Joint ventures		12 to 12.4			19,343				17,637				253				(349	)
Total					70,298				60,694				24,357				21,808

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 11 – Equity-accounted investees (continued)

 

11.2

Assets, liabilities, revenue and expenses of associates

 

12/31/2012
TAX ID NUMBER		Associate		Country of incorporation		Functional currency		Assets   ThUS$				Liabilities ThUS$				Revenue ThUS$				Net profit (loss) ThUS$
77.557.430-5		Sales de Magnesio Ltda.		Chile		Chilean Peso			5,026				1,713				14,436				2,177
Foreign		Abu Dhabi Fertilizer Industries WWL		Arabia		Arab Emirates dirham			24,662				4,291				42,899				3,255
Foreign		Doktor Tarsa Tarim Sanayi AS		Turkey		Turkish lira			77,084				44,635				77,839				8,267
Foreign		Ajay North America		United States		US Dollar			44,889				6,292				83,340				22,300
Foreign		Ajay Europe SARL		France		Euro			36,106				12,688				84,203				12,591
Foreign		SQM Eastmed Turkey		Turkey		Euro			428				258				-				-
Foreign		SQM Thailand Co. Ltd.		Thailand		Thai baht			17,068				13,048				13,536				81
		Total							205,263				82,925				316,253				48,671

 

12/31/2011
TAX ID NUMBER		Associate		Country of incorporation		Functional currency		Assets   ThUS$				Liabilities ThUS$				Revenue ThUS$				Net profit (loss) ThUS$
77.557.430-5		Sales de Magnesio Ltda.		Chile		Chilean Peso			4,484				1,595				8,652				1,335
Foreign		Abu Dhabi Fertilizer Industries WWL		Arabia		Arab Emirates dirham			22,964				5,849				38,024				2,985
Foreign		Doktor Tarsa Tarim Sanayi AS		Turkey		Turkish lira			78,090				53,752				67,205				5,160
Foreign		Ajay North America		United States		US Dollar			47,866				9,876				80,923				23,689
Foreign		Ajay Europe SARL		France		Euro			32,332				14,600				59,189				8,384
Foreign		Misr Specialty Fertilizers		Egypt		Egyptian pound			5,476				2,802				-				(266	)
Foreign		SQM Eastmed Turkey		Turkey		Euro			438				264				29				(94	)
Foreign		SQM Thailand Co. Ltd.		Thailand		Thai baht			8,130				4,227				10,895				175
		Total							199,780				92,965				264,917				41,368

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 11 – Investment in Associates (continued)

 

11.3

Detail of investments in associates

 

The Company’s ownership in its associates is detailed as follows:

 

Associate		Main activities of the associate		Ownership %				Investment				Investment				Share on profit (loss) of equity- accounted investees
								12/31/2012				12/31/2011				12/31/2012				12/31/2011
								ThUS$				ThUS$				ThUS$				ThUS$
Sales de Magnesio Ltda.		Commercialization of magnesium salts.			50	%			1,656				1,444				1,088				667
Abu Dhabi Fertilizer Industries Co. W.W.L.		Distribution and commercialization of specialty plant nutrients in the Middle East.			50	%			9,890				8,558				1,628				1,492
Ajay North America L.L.C		Production and commercialization of iodine derivatives.			49	%			15,357				14,866				10,927				11,608
Doktor Tarsa Tarim Sanayi AS		Distribution and commercialization of specialty plant nutrients in Turkey.			50	%			15,346				12,169				4,134				2,580
Nutrisi Holding N.V.		Holding company			50	%			-				-				-				1,720
Ajay Europe SARL		Production and distribution of iodine and iodine derivatives.			50	%			8,495				3,102				6,295				4,192
Misr Specialty Fertilizers S.A.E.		Production and commercialization of liquid specialty plant nutrients for Egypt.			47.4857	%			-				1,270				-				(126	)
SQM Eastmed Turkey		Production and commercialization of specialty products.			50	%			85				87				-				(46	)
SQM Thailand Co. Ltd.		Distribution and commercialization of specialty plant nutrients.			40	%			126				1,561				32				70
Total									50,955				43,057				24,104				22,157

 

The Company has no participation in unrecognized losses in investments in associates.

 

The Company presents no investments not accounted for according to the equity method of accounting.

 

The equity method was applied to the Statement of Financial Position as of December 31, 2012 and 2011.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 12 - Joint Ventures

 

12.1

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

 

The method for the recognition of joint ventures in which participation 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 or loss for the period of the investor will collect the portion which belongs to it in the results of the controlled entity as a whole

 

12.2

Disclosures of interest in joint ventures

 

a)

Operations conducted in 2012

 

On March 2012, the Company Coromandel SQM increased its capital by ThUS$394. This Company has an ownership of 50% in Soquimich European Holding B.V.

 

b)

Operations conducted in 2011

 

On January 27, 2011, the subsidiary SQM Industrial S.A. conducted a contribution amounting to ThUS$2,500 in Sichuan SQM Migao Chemical Fertilizer Co.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 12 - Policy for accounting for joint ventures in a Parent’s separate financial statements (continued)

 

12.3

Detail of assets, liabilities and profit or loss of significant investments in joint ventures by company as of December 31, 2012 and 2011, respectively:

 

12/31/2012
								Asset												Liability																Ownership-
TAX ID NUMBER		Joint ventures		Country of incorporation		Functional currency		Current ThUS$				Non-current   ThUS$				Total  ThUS$				Current ThUS$				Non-current ThUS$				Total ThUS$				Revenue ThUS$				related expenses ThUS$				Profit or loss ThUS$
Foreign		Sichuan SQM Migao Chemical Fertilizers Co Ltda.		China		US Dollar			21,843				9,984				31,827				6,899				4,072				10,971				29,980				(29,407	)			573
Foreign		Coromandel SQM		India		Indian rupee			5,059				1,397				6,456				4,419				-				4,419				5,633				(5,264	)			369
Foreign		(1,059)		Arab Emirates		Arab Emirates dirham			22,536				10,522				33,058				785				-				785				19,643				(20,175	)			(532	)
Foreign		SQM  Star Qingdao Crop Nutrition Co., Ltd.		China		US Dollar			1,986				304				2,290				132				-				132				5,028				(4,933	)			95
		Total							51,424				22,207				73,631				12,235				4,072				16,307				60,284				(59,779	)			505

 

12/31/2011
								Asset												Liability																Ownership-
TAX ID NUMBER		Joint ventures		Country of incorporation		Functional currency		Current ThUS$				Non-current   ThUS$				Total  ThUS$				Current ThUS$				Non-current ThUS$				Total ThUS$				Revenue ThUS$				related expenses ThUS$				Profit or loss ThUS$
Foreign		Sichuan SQM Migao Chemical Fertilizers Co Ltda.		China		US Dollar			18,014				10,576				28,590				8,306				-				8,306				23,818				(23,455	)			363
Foreign		Coromandel SQM		India		Indian rupee			559				1,074				1,633				62				-				62				23				(60	)			(37	)
Foreign		SQM Vitas Fzco.		Arab Emirates		Arab Emirates dirham			24,887				8,920				33,807				1,005				-				1,005				25,207				(26,266	)			(1,059	)
Foreign		SQM  Star Qingdao Crop Nutrition Co., Ltd.		China		US Dollar			1,974				403				2,377				314				-				314				5,065				(5,028	)			37
		Total							45,434				20,973				66,407				9,687				-				9,687				54,113				(54,809	)			(696	)

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 12 - Policy for accounting for joint ventures in a Parent’s separate financial statements (continued)

 

12.4

Detail of investments in joint ventures:

 

Joint venture		Main activities of the joint venture		Ownership %		Investment 12/31/2012 ThUS$				Investment 12/31/2011 ThUS$
Coromandel SQM		Production and distribution of potassium nitrate.		50%			683				786
Sichuan SQM Migao Chemical Fertilizers Co Ltda. Ltda.		Production and distribution of soluble fertilizers.		50%			10,428				10,142
SQM Vitas Fzco.		Production and commercialization of specialty plant and animal nutrition and industrial hygiene.		50%			7,153				5,677
SQM Quindao-Star Co. Ltda.		Production and distribution of nutrient plant solutions with specialties NPK soluble		50%			1,079				1,032
Total							19,343				17,637

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 13 - Intangible assets and goodwill

 

13.1

Balances

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Intangible assets other than goodwill			24,013				4,316
Goodwill			38,388				38,605
Total			62,401				42,921

 

13.2

Disclosures on intangible assets and goodwill

 

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

 

Balances and movements in the main classes of intangible assets as of December 31, 2012 and 2011 are detailed as follows:

 

				12/31/2012
Intangible assets and goodwill		Useful life		Gross amount ThUS$				Accumulated Amortization ThUS$				Net Value ThUS$
Trademarks		Finite			3,821				(3,821	)			-
Software		Finite			3,765				(2,115	)			1,650
Intellectual property rights, patents and other industrial property rights, service and exploitation rights		Finite			1,198				(820	)			378
Intellectual property rights, patents and other industrial property rights, service and exploitation rights		Finite			22,612				(1,987	)			20,625
Intangible assets other than goodwill		Indefinite			1,512				(152	)			1,360
Intangible assets other than goodwill					32,908				(8,895	)			24,013
Goodwill		Indefinite			40,178				(1,790	)			38,388
Total intangible assets and goodwill					73,086				(10,685	)			62,401

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 13 - Intangible assets and goodwill (continued)

 

13.2

Disclosures on intangible assets and goodwill, continued

 

				12/31/2011
Intangible assets and goodwill		Useful life		Gross amount ThUS$				Accumulated Amortization ThUS$				Net Value ThUS$
Trademarks		Finite			3,821				(3,821	)			-
Software		Finite			3,476				(1,538	)			1,938
Intellectual property rights, patents and other industrial property rights, service and exploitation rights		Finite			1,198				(758	)			440
Intellectual property rights, patents and other industrial property rights, service and exploitation rights		Finite			3,536				(1,994	)			1,542
Intangible assets other than goodwill		Indefinite			548				(152	)			396
Intangible assets other than goodwill					12,579				(8,263	)			4,316
Goodwill		Indefinite			40,178				(1,573	)			38,605
Total intangible assets and goodwill					52,757				(9,836	)			42,921

 

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.

 

Intellectual property rights, patents and other industrial property rights, service and exploitation rights, mainly relate to water rights and are 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.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 13 - Intangible assets and goodwill (continued)

 

13.2

Disclosures on intangible assets and goodwill, continued

 

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
Intellectual property rights, patents and other industrial property rights, service and exploitation rights	Finite	Finite
Intangible assets other than goodwill	Indefinite	Indefinite
Intellectual property rights, patents and other industrial property rights, service and exploitation rights	1 year	16 years
Trademarks	1 year	5 years
Software	2 years	3 years

 

d)

Information to be disclosed on assets generated internally

 

The Company has no intangible assets generated internally.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 13 - Intangible assets and goodwill (continued)

 

13.2

Disclosures on intangible assets and goodwill, continued

 

e)

Movements in identifiable intangible assets as of December 31, 2012:

 

Movements in identifiable intangible assets		Trademarks Net ThUS$				Software Net ThUS$				Intellectual property rights, patents and other industrial property rights, service and exploitation right, rights of way, Net ThUS$				Intellectual property rights, patents and other industrial property rights, service and exploitation right, rights of way, Net ThUS$				Other intangible assets, Net ThUS$				Goodwill, Net ThUS$				Identifiable intangible assets, Net  ThUS$
Opening balance			-				1,938				440				1,542				396				38,605				42,921
Additions							501				-				19,080				964				-				20,545
Amortization							(789	)			(62	)			-				-				-				(851	)
Other increases (decreases)							-				-				3				-				(217	)			(214	)
Final balance			-				1,650				378				20,625				1,360				38,388				62,401

 

f)

Movements in identifiable intangible assets as of December 31, 2011:

 

Movements in identifiable intangible assets		Trademarks Net ThUS$				Software Net ThUS$				Intellectual property rights, patents and other industrial property rights, service and exploitation right, rights of way, Net ThUS$				Intellectual property rights, patents and other industrial property rights, service and exploitation right, rights of way, Net ThUS$				Other intangible assets, Net ThUS$				Goodwill, Net ThUS$				Identifiable intangible assets, Net  ThUS$
Opening balance			4				823				501				1,546				396				38,388				41,658
Additions			-				1,812				-				-				-				217				2,029
Amortization			(4	)			(697	)			(61	)			-				-				-				(762	)
Other increases (decreases)			-				-				-				(4	)			-				-				(4	)
Final balance			-				1,938				440				1,542				396				38,605				42,921

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 14 - Property, plant and equipment

 

As of December 31, 2012 and 2011, the detail of property, plant and equipment is as follows:

 

14.1

Types of property, plant and equipment

 

Description of types of property, plant and equipment		12/31/2012 ThUS$				12/31/2011 ThUS$
Property, plant and equipment, net
Land			109,060				108,992
Buildings			169,731				146,532
Machinery			438,331				424,460
Transport equipment			88,954				82,822
Furniture and fixtures			6,736				5,015
Office equipment			5,249				5,312
Constructions in progress			423,184				297,996
Other property, plant and equipment			747,045				683,913
Total			1,988,290				1,755,042
Property, plant and equipment, gross
Land			109,060				108,992
Buildings			329,397				291,401
Machinery			1,065,641				972,179
Transport equipment			224,462				199,998
Furniture and fixtures			22,667				19,090
Office equipment			36,215				34,480
Constructions in progress			423,184				297,996
Other property, plant and equipment			1,336,991				1,194,765
Total			3,547,617				3,118,901

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 14 - Property, plant and equipment (continued)

 

14.1

Types of property, plant and equipment, continued

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Accumulated depreciation and value impairment of property, plant and equipment, total
Accumulated depreciation and value impairment of buildings			159,666				144,869
Accumulated depreciation and value impairment of machinery			627,310				547,719
Accumulated depreciation and value impairment of transport equipment			135,508				117,176
Accumulated depreciation and value impairment of furniture and fixtures			15,931				14,075
Accumulated depreciation and value impairment of office equipment			30,966				29,168
Accumulated depreciation and value impairment of other property, plant and equipment			589,946				510,852
Total			1,559,327				1,363,859

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 14 - Property, plant and equipment (continued)

 

14.2

Reconciliation of changes in property, plant and equipment by type as of December 31, 2012 and 2011:

 

Reconciliation entries of changes in property, plant and equipment by type as of December 31, 2012		Land				Buildings, net				Machinery, net				Transport equipment, net				Furniture and fixtures, net				Office equipment, net				Constructions in progress				Other property, plant and equipment, net				Property, plant and equipment, net
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Opening balance			108,992				146,532				424,460				82,822				5,015				5,312				297,996				683,913				1,755,042
Changes
Additions			36				-				1,092				34				70				323				443,349				972				445,876
Divestitures			-				-				(115	)			-				(67	)			(12	)			(2,936	)			(78	)			(3,208	)
Depreciation expense			-				(14,800	)			(79,534	)			(18,400	)			(1,858	)			(1,857	)			-				(79,709	)			(196,158	)
Increase(decrease) in foreign currency exchange			32				(1	)			5				15				-				(13	)			-				68				106
Reclassification			-				37,916				92,441				24,535				3,576				1,478				(287,291	)			127,345				-
Other increases (decreases) (*)			-				84				(18	)			(52	)			-				18				(27,934	)			14,534				(13,368	)
Total changes			68				23,199				13,871				6,132				1,721				(63	)			125,188				63,132				233,248
Final balance			109,060				169,731				438,331				88,954				6,736				5,249				423,184				747,045				1,988,290

 

(*) The net balance of Other increases (decreases) corresponds to: 1) investment plan expenses which are expensed to profit or loss (forming part of cost of sales and other expenses per function, as appropriate), 2) the variation representing the purchase and use of materials and spare parts and 3) projects corresponding mainly to exploration expenditures and stain development.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 14 - Property, plant and equipment (continued)

 

14.2

Reconciliation of changes in property, plant and equipment by type as of December 31, 2012 and 2011, continued:

 

Reconciliation entries of changes in property, plant and equipment by type as of December 31, 2011		Land				Buildings, net				Machinery, net				Transport equipment, net				Furniture and fixtures, net				Office equipment, net				Constructions in progress				Other property, plant and equipment, net				Property, plant and equipment, net
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Opening balance			107,869				88,320				295,467				48,936				4,450				5,705				356,551				546,674				1,453,972
Changes
Additions			1,251				178				424				558				39				302				474,042				1,054				477,848
Divestitures			(85	)			(1,371	)			(64	)			(451	)			-				-				-				-				(1,971	)
Depreciation expense			-				(11,477	)			(97,046	)			(14,902	)			(1,281	)			(2,053	)			-				(69,137	)			(195,896	)
Increase(decrease) in foreign currency exchange			(42	)			-				1				(23	)			-				122				-				(24	)			34
Reclassification							69,410				228,116				48,717				1,805				1,442				(546,769	)			197,279				-
Other increases (decreases) (*)			(1	)			1,472				(2,438	)			(13	)			2				(206	)			14,172				8,067				21,055
Total changes			1,123				58,212				128,993				33,886				565				(393	)			(58,555	)			137,239				301,070
Final balance			108,992				146,532				424,460				82,822				5,015				5,312				297,996				683,913				1,755,042

 

(*) The net balance of Other increases (decreases) corresponds to: 1) investment plan expenses which are expensed to profit or loss (forming part of cost of sales and other expenses per function, as appropriate), 2) the variation representing the purchase and use of materials and spare parts and 3) projects corresponding mainly to exploration expenditures and stain development.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 14 - Property, plant and equipment (continued)

 

14.3

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.

 

14.4

Additional information

 

Interest capitalized in construction-in-progress:

 

The amount capitalized for this concept amounted to ThUS$14,156 as of December 31, 2012 and ThUS$ 22,249 as of December 31, 2011.

 

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.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 15 - Employee benefits

 

15.1

Provisions for employee benefits

 

		12/31/2012				12/31/2011
Classes of benefits and expenses by employee		ThUS$				ThUS$
Current
Profit sharing and bonuses			33,974				30,074
Total			33,974				30,074
Non-current
Profit sharing and bonuses			6,056				4,083
Severance indemnity payments			34,431				28,188
Pension Plan			409				1,413
Total			40,896				33,684

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 15 Employee benefits (continued)

 

15.2

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 in a term which does not exceed twelve months.

 

The Company only provides compensation and benefits to active employees, with the exemption of SQM North America which applies the definitions under 15.4 below.

 

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.

 

Employee benefits include retention bonuses for the Company’s executives, which are linked to the Company’s share price and it is paid in cash. The short-term portion is presented as provision for current employee benefits and the long-term portion as non-current.

 

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 related to vacations (short-term benefits to employees, current), 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.

 

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 1, 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.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 15 - Employee benefits (continued)

 

15.3

Other long-term benefits

 

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

 

		12/31/2012				12/31/2011
Staff severance indemnities at actuarial value		ThUS$				ThUS$
Staff severance indemnities, Chile			33,731				27,574
Other obligations in companies elsewhere			700				614
Total other non-current liabilities			34,431				28,188
SQM North America’s pensions plan			409				1,413
Total post-employment obligations			409				1,413

 

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.

 

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.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 15 - Employee benefits (continued)

 

15.3

Other long-term benefits, continued

 

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-2010 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 on Retirement Benefit Costs.

 

15.4

Post-employment benefit obligations

 

Our subsidiary SQM North America, has established with its employees a pension plan until 2002 called “SQM North America Retirement Income Plan”, which obligation is 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 the interest rate defined by the authorities for 2012 and 2011.

 

Since 2003, SQM North America offers to its employee’s benefits related to pension plans based on the 401-K system, which do not generate obligations for the Company.

 

The following table represents the plan financing status and the amounts recognized in the consolidated classified statements of financial position.

 

Reconciling table		2012				2011
		ThUS$				ThUS$
Changes in benefit obligation
Benefit obligation at the beginning of the year			6,620				6,548
Service costs			1				1
Interest costs			406				413
Actuarial loss			(236	)			(46	)
Other benefits			(309	)			(297	)
Benefit obligation at the year-end			6,482				6,619

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 15 - Employee benefits (continued)

 

15.4

Post-employment benefit obligations, continued

 

Fluctuations in the plan assets:
Plan assets fair value at the beginning of the year			5,206				5,847
Employer’s contributions			436				189
Plan assets actual return (losses)			740				(533	)
Benefits paid			(309	)			(297	)
Plan assets fair value at the year-end			6,073				5,206
Statement of Income			(409	)			1,413
Items not recognized yet as regular social security payment expenses, net:
Actuarial loss net at the beginning of the year			(2,954	)			(2,111	)
Amortization during the year			131				84
Net profit or loss estimated for the year			580				(927	)
Adjustment to recognize the minimal social security payment obligation			(2,243	)			(2,954	)

 

As of December 31, 2012 and 2011, net regular social security payment expense was comprised as follows:

 

		2012				2011
Reconciliation		ThUS$				ThUS$
Service cost or benefit earned during the year			2				1
Interest cost in benefit obligation			406				413
Plan assets actual return			739				(532	)
Loss amortization for prior periods			131				84
Net profit during the year			(344	)			973
Regular social security payment expenses, net			142				57

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 15 - Employee benefits (continued)

 

15.5

Staff Severance indemnities

 

As of December 31, 2012 and 2011, severance indemnities calculated at the actuarial value are as follows:

 

		2012 ThUS$				2011 ThUS$
Opening balance			(28,188	)			(27,208	)
Current cost of service			(8,087	)			(7,871	)
Interest cost			(1,037	)			(1,106	)
Actuarial gain/loss			40				(151	)
Exchange rate difference			(2,237	)			2,693
Contributions paid			5,078				5,455
Balance			(34,431	)			(28,188	)

 

The liability recorded for staff severance indemnity is valued at the actuarial value method, using the following actuarial assumptions:

 

		12/31/2012				12/31/2011
Mortality rate			RV - 2011				RV - 2010
Actual annual interest rate			6	%			6	%
Voluntary retirement rotation rate:
Men			0.9	%			0.9	%			annual
Women			1.53	%			1.53	%			annual
Salary increase			3.0	%			3.0	%			annual
Retirement age:
Men			65				65				years
Women			60				60				years

 

Note 16 - Executive compensation plan

 

The Company counts on a compensation plan for its executives, by means of the granting of payments based on the SQM share price change, paid in cash, and the executives may exercise their rights until the year 2016.

 

Characteristics of the plan

 

This compensation plan is related with the company performance through the price of the Series B SQM share (Santiago Stock Exchange).

 

Participants in this plan

 

This compensation plan includes 40 executives of the Company, who are entitled to this benefit, provided they stay with the Company during the dates these options are executed. The dates for exercising the options will be the first 7 calendar days of May following to the fiscal year.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 16 - Executive compensation plan (continued)

 

Compensation

 

The compensation for each executive is the differential between the average prices of the share during April of each year compared to the base price established by Company’s management. The base price fixed by the Company for this compensation plan amounts to US$ 50 per share. The Company reserves the right to exchange that benefit by shares or share options.

 

The movement of the options in effect for the period, the average prices for the fiscal year of the options and the average contractual life of the options in effect as of December 31, 2012 and 2011 are the following:

 

Movement for the period		2012				2011
In effect as of January 1			2,340,000				3,370,025
Granted during the fiscal year			103,500
Redundant workers			103,500
Exercised during the fiscal year			139,500				1,030,025
In circulation as of December 31			2,200,500				2,340,000
Average contractual life			40 months				48 months

 

The amounts accrued by the plan, as of December 31, 2012 and 2011, amount to:

 

Effect on profit or loss		2012 ThUS$				2011 ThUS$
Amount accrued during the year			3,142				11,200

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 17 - Disclosures on equity

 

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

 

17.1

Capital Management

 

The main object of capital management relative to the administration of the Company’s financial debt and equity is to ensure the regular conduct of operations and business continuity in the long term, with the constant intention of maintaining an adequate level of liquidity and in compliance with the financial safeguards established in the debt contracts in force. Within this framework, decisions are made in order to maximize the value of SQM.

 

Capital management must comply with, among others, the limits contemplated in the Financing Policy approved Board of Directors, which establish a maximum consolidated indebtedness level of 1.5 times the debt/equity. This limit can only be exceeded only if the Company’s management has a written and previously granted authorization issued at the Extraordinary Shareholders’ Meeting.

 

In addition, capital management must comply with the external capital requirements imposed (or covenants) in its financial obligations, which regulate the indebtedness level in 1.4 times, in its more strict level.

 

In conjunction with the level of indebtedness, it is also important for the Company to maintain a comfortable profile of maturities for its financial obligations, to oversight the relation between its short-term financial obligations and the long-term maturities, and the relation they have with the Company’s asset distribution. Consequently, the Company has maintained a liquidity level of 3 times during the last periods.

 

The Company’s management controls capital management based on the following ratios:

 

CAPITAL MANAGEMENT		12/31/2012	12/31/2011		Description (1)	Calculation (1)
Net Financial Debt		929,197	753,410		Financial Debt – Financial Resources	Other current Financial Liabilities + Other Non-Current Financial Liabilities – Cash and Cash Equivalents – Other Current Financial Assets – Hedging Assets, non-current
Liquidity		3.69	3.11		Current Asset divided by Current Liability	Total Current Assets / Total Current Liabilities
Net Debt / Capitalization		0.30	0.29		Net Financial Debt divided by Total Equity	Net financial debt / ( Net financial debt + Total Equity)
ROE		30.1%	29.7%		Income divided by Total Equity	Total Income / Equity (UH 12 months)
ROA		25.1%	24.1%		EBITDA – Depreciation divided by Net Total Assets of financial resources less  related parties investments	(Gross Income – Administrative Expenses)/ (Total Assets – Cash and Cash Equivalents – Other Current Financial Assets  Other Non-Current Financial Assets – Equity-accounted Investees) (UH 12 months)
Indebtedness		1.02	1.08		Total Liability on Equity	Total Liabilities / Total Equity
					(1) Assumes the absolute value of the accounting records

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 17 - Disclosures on equity (continued)

 

17.1

17.1 Capital management, continued

 

The Company’s capital requirements change depending on variables such as: work capital requirements, of new investment financing and dividends, among others. The Company manages its capital structure and makes adjustments on the basis of the predominant economic conditions so as to mitigate the risks associated with adverse market conditions and take advantage of the opportunities there may be to improve the liquidity position.

 

There have been no changes in the capital management objectives or policy within the years reported in this document. No breaches of external requirements of capital imposed (or covenants) have been recorded.

 

17.2

17.2 Disclosures on preferred share capital

 

Issued share capital is divided into 263,196,524 fully paid and subscribed shares with no par value composed of 142,819,552 Series "A" shares and 120,376,972 Series “B” shares, where both series are preferred shares.

 

The preferential voting rights for each series are detailed as follows:

 

Series “A”:

 

If the election of the Company’s President results in a tie 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 December 31, 2012 and 2011, the Group does not maintain shares in the parent either directly or through its companies in which it has investments.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 17 - Disclosures on equity (continued)

 

17.2

Disclosures on preferred share capital, continued

 

Detail of types of capital in preference shares:

 

Type of capital in preferred shares		12/31/2012								12/31/2011
Description of type of capital in preferred shares		Series A				Series B				Series A				Series B
Number of authorized shares			142,819,552				120,376,972				142,819,552				120,376,972
Number of fully subscribed and paid shares			142,819,552				120,376,972				142,819,552				120,376,972
Number of subscribed, partially paid shares			-				-				-				-
Par value of shares in ThUS$			0.9435				2.8464				0.9435				2.8464
Increase (decrease) in the number of current shares			-				-				-				-
Number of current shares			142,819,552				120,376,972				142,819,552				120,376,972
Number of shares owned by the entity or its subsidiaries or associates			-				-				-				-
Number of shares whose issuance is reserved due to the existence of options or agreements to dispose shares			-				-				-				-
Capital amount in shares ThUS$			134,750				342,636				134,750				342,636
Amount of premium issuance ThUS$			-				-				-				-
Amount of reserves ThUS$			-				-				-				-
Total number of subscribed shares, total			142,819,552				120,376,972				142,819,552				120,376,972

 

As of December 31, 2012 and 2011, the Company has not placed any new issuances of shares on the market.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 17 - Disclosures on equity (continued)

 

17.3

Disclosures on reserves in equity

 

Reserves for currency exchange conversion

 

This balance reflects retained earnings for changes in the exchange rate, when converting financial statements of subsidiaries whose functional currency is from each company’s origin country and the presentation currency is the US dollar.

 

Reserve for cash flow hedges

 

The Company maintains as hedge instruments, financial derivatives related to obligations with the public issued in Unidades de Fomento and Chilean pesos. Changes from the fair value of derivatives designated and classified as hedges are recognized under this classification.

 

Reserve for actuarial gains or losses in defined benefit plans

 

Our subsidiary SQM North America has established pension plans for its retired employees that are calculated by measuring the projected obligation of IAS using a net salary progressive rate net of adjustments to inflation, mortality and turnover assumptions, deducting the resulting amounts at present value using a 6.5% interest rate for 2012 and 2011.

 

Other reserves

 

Corresponds to the acquisition of the subsidiary SQM Iberian S.A., which was already under ownership of the Company at the acquisition date (IAS 27 R).

 

		12/31/2012 ThUS$				12/31/2011 ThUS$
Revaluation surplus
Reserve for currency exchange conversion			(330	)			(1,251	)
Reserve for cash flow hedges			(16,522	)			(10,230	)
Reserve for actuarial gains or losses in defined benefit plans			(2,243	)			(2,954	)
Reserve of gains and losses for new measurement of available-for-sale financial assets			-				-
Other reserves			(1,677	)			(1,677	)
Total other reserves			(20,772	)			(16,112	)

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 17 - Disclosures on equity (continued)

 

17.4

Dividend policies

 

As required by Article 79 of the Chilean Companies 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 for year ended as of December 31, 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 2012 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 2012.

 

-

Distribution and payment, if possible during 2012, 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 2012 and its amount could not exceed 50% of the retained earnings for distribution obtained during 2012, which are reflected in the Company’s financial statements as of September 30, 2012.

 

-

The distribution and payment by the Company of the remaining balance of the final dividend related to Profit for the period for the 2012 commercial year in up to two installments, which will have to be effectively paid and distributed prior to June 30, 2013.

 

-

An amount equivalent to the remaining 50% of the Company’s Profit for the period for 2012 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 and interim dividends.

 

-

The Board of Directors considers as necessary to indicate that the aforementioned Dividends Policy correspond to the intention or expectation of the Board regarding this matter. Consequently, the enforcement of such Policy Dividends is necessarily conditioned to net incomes finally obtained, to the results indicating the Company’s regular forecasts or the existence of certain conditions that could affect them. Notwithstanding the above and to the extent that such policy dividend does not suffer a significant change, SQM S.A. will timely communicate its shareholders on this matter.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 17 - Disclosures on equity (continued)

 

17.5

Provisional dividends

 

On November 20, 2012, the Board of Directors of Sociedad Química y Minera de Chile S.A, agreed to pay and distribute to the Company’s shareholders a provisional of US$0.94986 per share. The above, since December 12, 2012, is charged against the income accrued during the first 9 months of said fiscal year, in favor of the Shareholders who appeared registered in SQM’s Shareholders Registry by the 5th working day prior to the date the dividend will be paid, and in its equivalent in Chilean pesos according to the value of the “Observed dollar” or “USA dollar” that appears published in the Official Gazette on December 5, 2012.

 

On April 26, 2012, at the 36th General Shareholders' meeting it was agreed to pay a final dividend of US$1.03679 per share in relation to net profit for the commercial year 2011. US$0.73329 per share was already paid as an interim dividend, and this amount should be subtracted from the dividend detailed above. In line with this, the balance, amounting to US$0.30350 per share, will be paid and distributed among shareholders of the Company who are registered with their respective shareholders registry as of the fifth business day prior to the day in which this dividend will be paid. Such amount, if appropriate, will be paid in its equivalent in Chilean pesos according to the value of the “Observed dollar” or “USA dollar” that appears published in the Official Gazette on April 26, 2012.

 

The Company’s Board of Directors (SQM), in its meeting on November 22, 2011, unanimously agreed to pay and distribute the provisional dividend referred to in SQM’s current “2011 Dividends Policy” which was informed to SQM’s General Annual Ordinary Shareholders Meeting that was held on April 28 of this year. This, for the essential purpose of being able to pay and distribute as of December 19, 2011, a provisional dividend of US$0.73329 per share –and which is approximately equivalent to the total amount of US$193 million and the latter corresponds to 50% of the distributable net income of the fiscal year 2011 that has been accrued at September 30, 2011. The above, is charged against the net income of said fiscal year, in favor of the Shareholders who appeared registered in SQM’s Shareholders Registry by the 5th working day prior to December 19th, 2011, and in its equivalent in Chilean pesos according to the value of the “Observed dollar” or “USA dollar” that appears published in the Official Gazette on December 13, 2011.

 

At the Annual Board of Directors meeting held on April 28, 2011, the Directors unanimously agreed to pay a final dividend of US$0.7259 per share in relation to net profit for the year. Notwithstanding the above, US$0.41794 per share was already paid as an interim dividend, and this amount should be subtracted from the final dividend detailed above, In line with this, the balance, amounting to US$0.30798 per share, will be paid and distributed among shareholders of the Company who are registered with their respective shareholders registry as of the fifth business day prior to the day in which this dividend will be paid.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 17 - Disclosures on equity (continued)

 

17.5

Provisional dividends, continued

 

Dividends presented deducted from equity are:

 

		12/31/2012 ThUS$				12/31/2011 ThUS$
Dividends attributable to owners of the parent			253,438				270,915
Dividends payable			76,267				82,120

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 18 - Provisions and other non-financial liabilities

 

18.1

Types of provisions

 

		12/31/2012												12/31/2011
		Current				Non-current				Total				Current				Non-current				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Provision for legal complaints (*)			5,567				3,000				8,567				4,571				3,000				7,571
Provision for dismantling, restoration and rehabilitation cost			-				4,357				4,357				-				3,724				3,724
Other provisions			12,922				-				12,922				12,366				1,871				14,237
Total			18,489				7,357				25,846				16,937				8,595				25,532

 

(*) Provisions for legal complaints relate to legal expenses for lawsuits whose resolution are pending, and correspond to funds estimated necessary to make the disbursement of expenses incurred for this purpose. This provision relates mainly to the litigation of its subsidiary located in Brazil and United States (see note 19.1) and other minor litigations.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 18 - Provisions and other non-financial liabilities (continued)

 

18.2

Description of other provisions

 

Description of other provisions		12/31/2012 ThUS$				12/31/2011 ThUS$
Current provisions, other short-term provisions
Provision for tax loss in fiscal litigation			1,606				1,441
Royalties, agreement with CORFO (the Chilean Economic Development Agency)			7,712				6,800
Fine to Brazil			2,500				2,500
Indemnity Yara South Africa			-				624
Miscellaneous provisions			1,104				1,001
Total			12,922				12,366
Other long-term provisions
Mine closure			4,357				3,724
Indemnity Yara South Africa			-				1,871
Total			4,357				5,595

 

18.3

Other non-financial liabilities, current

 

Description of other liabilities		12/31/2012 ThUS$				12/31/2011 ThUS$
Tax withholdings			11,887				9,837
VAT payable			16,481				21,087
Guarantees received			872				920
Accrual for dividend			76,267				81,325
Monthly tax provisional payments			22,073				11,239
Deferred income			16,291				15,284
Withholdings from employees and salaries payable			7,546				5,554
Accrued vacations			20,710				15,874
Other current liabilities			73				841
Total			172,200				161,961

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 18 - Provisions and other non-financial liabilities (continued)

 

18.4

Changes in provisions as 12/31/2012

 

Description of items that gave rise to variations		Guarantee				Restructuring				Legal complaints				Onerous contracts				Provision for dismantling, restoration and rehabilitation cost				Other  provisions				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Total provisions, initial balance			-				-				7,571				-				3,724				14,237				25,532
Changes in provisions:
Additional provisions			-				-				1,000				-				633				8,863				10,496
Provision used			-				-				(4	)			-				-				(10,061	)			(10,065	)
Increase(decrease) in foreign currency exchange			-				-				-				-				-				(117	)			(117	)
Total provisions, final balance			-				-				8,567				-				4,357				12,922				25,846

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 18 - Provisions and other non-financial liabilities (continued)

 

18.4

Changes in provisions as 12/31/2011

 

Description of items that gave rise to variations		Guarantee				Restructuring				Legal complaints				Onerous contracts				Provision for dismantling, restoration and rehabilitation cost				Other provisions				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Total provisions, initial balance			-				-				4,590				-				3,500				12,424				20,514
Changes in provisions:
Additional provisions			-				-				3,000				-				224				13,076				16,300
Provision used			-				-				(19	)			-				-				(11,080	)			(11,099	)
Increase (decrease) in foreign currency exchange			-				-				-				-				-				(183	)			(183	)
Total provisions, final balance			-				-				7,571				-				3,724				14,237				25,532

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 18 - Provisions and other non-financial liabilities (continued)

 

18.5

Detail of main types of provisions

 

Legal expenses: This provision depends on the pending resolution of a legal lawsuit, to pay the expenses associated to and incurred during such lawsuit (incurred mainly in Brazil and U.S.A.).

 

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.

 

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

 

The settlement of the aforementioned amounts is performed on a quarterly basis.

 

To date, the Company and its subsidiaries have no significant uncertainties about the timing and amount of one class of provision.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 19 - Contingencies and restrictions

 

According to note 18.1 the Company has only registered a provision for those lawsuits in which the probability to lose is “more likely than not”. The Company is party to lawsuits and other relevant legal actions that are detailed as follows:

 

19.1

Lawsuits and other relevant events

 

1.	Plaintiff	:	JB Comércio de Fertilizantes and Defensivos Agrícolas Ltda. (JB)
	Defendant	:	Nitratos Naturais do Chile Ltda. (NNC)
	Date	:	December 1995
	Court	:	MM 1ª, Vara Civel de Comarca de Barueri, Brazil.
	Reason	:	Compensation claim filed by JB against NNC for having appointed a distributor in a territory of Brazil for which JB had an exclusive contract.
	Status	:	Lower court ruling against Nitratos Naturais do Chile Ltda. and recourse of appeal pending resolution.
	Nominal value	:	ThUS$ 1,880

 

2.	Plaintiff	:	Nancy Erika Urra Muñoz
	Defendants	:	Fresia Flores Zamorano, Duratec-Vinilit S.A. and SQM S.A. and their insurers
	Date	:	December 2008
	Court	:	1st Civil Court of Santiago
	Reason	:	Labor Accident
	Status	:	Evidence
	Nominal value	:	ThUS$550

 

3.	Plaintiffs	:	Eduardo Fajardo Nuñez, Ana Maria Canales Poblete, Raquel Beltran Parra, Eduardo Fajardo Beltran and Martina Fajardo Beltran.
	Defendants	:	SQM Salar S.A. and its insurers
	Date	:	November 2009
	Court	:	20th Civil Court in Santiago
	Reason	:	Labor Accident
	Status	:	Summon to hear the sentence
	Nominal value	:	ThUS$1,880

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 19 - Contingencies and restrictions (continued)

 

19.1

Lawsuits and other relevant events, continued

 

4.	Plaintiff	:	City of Pomona, California USA
	Defendant	:	SQM North America Corporation
	Date	:	December 2010
	Court	:	United States District Court Central District of California
	Reason	:	Payment of expenses and other amount related to the treatment of groundwater to allow for consumption by removing the existing perchlorate in such groundwater and that supposedly come from Chilean fertilizer.
	Status	:	Pending of the appeal
	Nominal value	:	Not possible to determine

 

5.	Plaintiff	:	City of Lindsay, California USA
	Defendant	:	SQM North America Corporation
			The lawsuit also was filed against Sociedad Química y
			Minera de Chile S.A. this lawsuit has not yet been notified to the Company
	Date	:	December 2010
	Court	:	United States District Court Eastern District of California
	Reason	:	Payment of expenses and other amount related to the treatment of groundwater to allow for consumption by removing the existing perchlorate in such groundwater and that supposedly come from Chilean fertilizer.
	Status	:	Claim. Suspended procedure
	Nominal value	:	Not possible to determine

 

6.	Plaintiff	:	Metalúrgica FAT Limitada
	Defendant	:	SQM Salar S.A.
	Date	:	August 2011
	Court	:	9th Civil Court in Santiago
	Reason	:	Compensation for early termination of supply contract and installation of metal structures
	Status	:	Evidence
	Nominal value	:	ThUS$200

 

7.	Plaintiff	:	Angelina Castillo Figueroa and others
	Defendant	:	SQM Nitratos S.A. and its insurers
	Date	:	June 2012
	Court	:	2nd Civil Court in Santiago
	Reason	:	Compensation claim for alleged civil liability under tort derived from explosion occurred on September 6, 2010 near Baquedano causing the death of 6 workers
	Status	:	Replay to claim.
	Nominal value	:	ThUS$9,400

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 19 - Contingencies and restrictions (continued)

 

19.1

Lawsuits and other relevant events, continued

 

8.	Plaintiff	:	Nilda Ester Muñoz Muñoz and others
	Defendants	:	Alejandro Reyes R., Transportes Transerik Limitada, Constructora Excon SQM Salar S.A. and its insurers
	Date	:	July 2012
	Court	:	15th Civil Court in Santiago
	Reason	:	Compensation claim for alleged civil liability under tort derived from accident occurred on October 22, 2010 at the Salar de Atacama causing the death of Mr. Daniel Opazo Muñoz
	Status	:	Replay to claim.
	Nominal value	:	ThUS$2,400

 

9.	Plaintiff	:	Sociedad Industrial Seguel and Ortíz Limitada
	Defendant	:	SQM Salar S.A.
	Date	:	August 2012
	Court	:	Arbitral
	Reason	:	Compensation for early termination of service rendering contract
	Status	:	Replay to claim.
	Nominal value	:	ThUS$3,500

 

10.	Plaintiff	:	María Angélica Alday Fuentes
	Defendant	:	Vladimir Roco Alvarez, Compass Catering S.A. and SQM S.A.
	Date	:	August 2012
	Court	:	1st Civil Court in Antofagasta
	Reason	:	Compensation for moral damages for attempt to sexual abuse.
	Status	:	Replay to claim.
	Nominal value	:	ThUS$200

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 19 - Contingencies and restrictions (continued)

 

19.2

Lawsuits and other relevant events, continued

 

The Company and its subsidiaries have been involved and will probably continue being involved either as plaintiffs or defendants in certain judicial proceedings that have been and will be heard by the Arbitral or Ordinary Courts of Justice that will make the final decision. Those proceedings that are regulated by the appropriate legal regulations are intended to exercise or oppose certain actions or exceptions related to certain mining claims either granted or to be granted and that do not or will not affect in an essential manner the development of the Company and its subsidiaries.

 

Soquimich Comercial S.A. has been involved and will probably continue being involved either as plaintiff or defendant in certain judicial proceedings through which it intends to collect and receive the amounts owed, the total nominal value of which is approximately ThUS$700.

 

The Company has made efforts and continues making efforts to obtain payment of certain amounts that are still owed it on occasion of their activities. Such amounts will continue to be required using judicial or non-judicial means by the plaintiffs, and the actions and exercise related to these are currently in full force and effect.

 

The Company and its subsidiaries have not received legal notice of any claims other than those mentioned in paragraph I above. The claims detailed above seek to annul certain mining claims that were purchased by SQM S.A. and Subsidiaries, the proportional purchase value of which, with respect to the portion affected by the superimposition, exceeds the nominal and approximate amount of ThUS$150. The claims seek payment of certain amounts allegedly owed by the Company due to its own activities, which exceed the approximate, nominal and individual amount of ThUS$150.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 19 - Contingencies and restrictions (continued)

 

19.2

Restrictions to management or financial limits

 

Credit contracts subscribed by the Company and its subsidiaries with domestic and foreign banks and for issuance of bonuses in the local and international market, requires the Company complies with the following level of consolidated financial indicators, calculated for a moving period which considers the last twelve months:

 

-

To maintain a minimum equity of ThUS$900,000.

-

To maintain a Net Financial Debt and EBITDA ratio not higher than 3 times.

-

To maintain a Total Indebtedness Ratio not higher than 1.4 times Total Indebtedness level defined as the Total Liabilities ratio divided by Total Equity.

-

To maintain a ratio between the operating subsidiaries SQM Industrial S.A. and SQM Salar S.A., or their respective legal successor’ financial debt and the total Issuer’s consolidated current assets not higher than 0.3 times.

 

As of December 31, 2012, the aforementioned financial indicators are as follows:

 

Indicator		12/31/2012				12/31/2011
Equity ThUS$			2,187,446				1,864,380
Net Financial Debt/ EBITDA			0.83				0.79
Indebtedness			1.02				1.08
SQM Industrial and SQM Salar debt / Current assets			0.04				0.05

 

Issuance contracts for bonuses issued abroad require the Company does not merge or dispose at any title the asset as a whole or as a substantial part of it, unless the following copulative conditions are met: (i) the legal successor company is an entity subject to Chilean or United States’ laws, and assumes under a complimentary contract the Company’s obligations, (ii) the Issuer does not fail to comply immediately after the merge or disposal, and (iii) The Issuer delivers a legal opinion stating the merge or disposal and the complimentary contract meet the requirements described in the original contract.

 

In addition, SQM S.A. is committed to disclose financial information on quarterly basis.

 

The Company and its subsidiaries have complied and are fully complying with all aforementioned limitations, restrictions and obligations.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 19 - Contingencies and restrictions (continued)

 

19.3

Commitments

 

The subsidiary SQM Salar S.A. has signed a rental contract with the Economic Development Agency (CORFO), which establishes that this subsidiary will pay rent to CORFO for the concept of commercialization of certain mining properties owned by CORFO and for the products resulting from this commercialization. The annual rent stated in the aforementioned contract is calculated on the basis of sales of each type of product. The contract is in force until 2030, and rent began being paid in 1996 reflecting an expense amount of ThUS$27,193 as of December 31, 2012 (ThUS$ 23,951 as of December 31, 2011).

 

19.4

Restricted or pledged cash

 

The subsidiary Isapre Norte Grande Ltda. 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.

 

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 reports the present value of the guarantee to the Chilean Superintendence of Healthcare and Isapre Norte Grande Ltda. on a daily basis. As of December 31, 2012, the guarantee amounts to ThUS$571.

 

19.5

Securities obtained from third parties

 

The main security received from third parties (distributors) to guarantee Soquimich Comercial S.A.’s compliance with obligations in contracts of commercial mandates for the distribution and sale of fertilizers amounted to ThUS$4,126 as of December 31, 2012; as of December 31, 2011 these amounted to ThUS $4,467 which is detailed as follows:

 

 

Entity name		12/31/2012 ThUS$				12/31/2011 ThUS$
Llanos y Wammes Soc. Com. Ltda			2,084				1,926
Fertglobal Chile Ltda.			1,042				1,541
Tattersall Agroinsumos S.A.			1,000				1,000

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

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.

 

Debtor

Pending balances as of the closing date of the financial statements

Creditor of the guarantee

Name

Relationship

Type of guarantee

12/31/2012 ThUS$

12/31/2011 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

-

-

“BNP”

SQM Investment Corp. N.V.

Subsidiary

Bond

-

-

Sociedad Nacional de Mineria A.G.

SQM Potasio S.A.

Subsidiary

Bond

-

-

Scotiabank & Trust (Cayman) Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,235

50,207

Scotiabank & Trust (Cayman) Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,164

-

Bank of America

Royal Seed Trading A.V.V.

Subsidiary

Bond

40,141

40,140

Export Development Canada

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,020

50,024

The Bank of Tokyo-Mitsubishi UFJ Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,140

50,137

JP Morgan Chase Bank

SQM Industrial S.A.

Subsidiary

Bond

-

-

The Bank of Nova Scotia

SQM Investment Corp. N.V.

Subsidiary

Bond

-

-

Morgan Stanley Capital Services

SQM Investment Corp. N.V.

Subsidiary

Bond

-

-

The Bank of Tokyo-Mitsubishi UFJ Ltd.

SQM Investment Corp. N.V.

Subsidiary

Bond

-

-

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 19 - Contingencies and restrictions (continued)

 

19.6

Indirect guarantees, continued

 

Debtor

Pending balances as of the closing date of the financial statements

Creditor of the guarantee

Name

Relationship

Type of guarantee

12/31/2012 ThUS$

12/31/2011 ThUS$

HSBC

SQM Investment Corp. N.V.

Subsidiary

Bond

-

-

Deutsche Bank AG

SQM Investment Corp. N.V.

Subsidiary

Bond

-

-

Credit Suisse International

SQM Investment Corp. N.V.

Subsidiary

Bond

-

-

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 20 - Revenue

 

As of December 31, 2012 and 2011, revenue is detailed as follows:

 

		December
		2012				2011
Types of revenue		ThUS$				ThUS$
Sales of goods			2,420,357				2,138,165
Provision of services			8,803				7,121
Total			2,429,160				2,145,286

 

Note 21 - Earnings per Share

 

Basic earnings per share are calculated by dividing net income attributable to the Company’s shareholders by the weighted average of the number of shares in circulation during that period.

 

As expressed, earnings per share are detailed as follows:

 

Basic earnings per share		12/31/2012 ThUS$				12/31/2011 ThUS$
Earnings (losses) attributable to owners of the parent			649,167				545,758

 

		12/31/2012 Units				12/31/2011 Units
Number of common shares in circulation			263,196,524				263,196,524

 

		12/31/2012				12/31/2011
Basic earnings per share (US$ per share)			2.4665				2.074

 

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

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 22 - Borrowing costs

 

The cost of interest is recognized as expenses in the year in which it is incurred, except for interest that is directly related to the acquisition and construction of tangible property, plant and equipment assets and that complies with the requirements of IAS 23. As of December 31, 2012, total interest expenses incurred amount to ThUS$54,095 (ThUS$39,335 as of December 31, 2011).

 

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

 

Costs of capitalized interest, property, plant and equipment

 

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

 

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

 

 

		12/31/2012				12/31/2011
Capitalization rate of costs for capitalized interest, property, plant and equipment			7	%			7	%
Amount of costs for interest capitalized in ThUS$			14,156				22,249

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 23 - Effect of fluctuations on the foreign currency exchange rates (continued)

 

a)

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

 

		12/31/2012 ThUS$				12/31/2011 ThUS$
Conversion foreign exchange gains (losses) recognized in the result of the year.			(26,787	)			(25,307	)
Conversion foreign exchange reserves attributable to the owners of the controlling entity			921				(2,781	)
Conversion foreign exchange reserves attributable to the non-controlling entity			61				(109	)

 

b)

Reserves for foreign currency exchange differences:

 

As of December 31, 2012, and 2011, foreign currency exchange differences are detailed as follows:

 

Detail		12/31/2012 ThUS$				12/31/2011 ThUS$
Changes in equity generated through the equity method:
Comercial Hydro S.A.			937				937
SQMC Internacional Ltda.			36				23
Proinsa Ltda.			27				17
Agrorama Callegari Ltda.			152				102
Isapre Cruz del Norte Ltda.			89				55
Almacenes y Depósitos Ltda.			103				57
Sales de Magnesio Ltda.			177				48
Sociedad de Servicios de Salud S.A.			33				24
Agrorama S.A.			(11	)			(11	)
Doktor Tarsa			(1,035	)			(1,964	)
Nutrisi Holding			(42	)			(42	)
SQM Vitas Fzco			(318	)			(159	)
Ajay Europe			(275	)			(176	)
Misr Specialty Ferti			(39	)			(39	)
SQM Eastmed Turkey			(42	)			(40	)
SQM Thailand Co. Lta.			(32	)			(52	)
Coromandel SQM India			(118	)			(31	)
SQM Italia SRL			28				-
Total			(330	)			(1,251	)

 

c)

Functional and presentation currency

 

The functional currency in these companies corresponds to the currency of the country of origin of each entity, and its presentation currency is the US dollar.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 23 - Effect of fluctuations on the foreign currency exchange rates (continued)

 

d)

Reasons to use one presentation currency and a different functional currency

 

-

The total revenues of these subsidiaries are associated with the local currency.

-

The commercialization cost structure of these companies is affected by the local currency.

-

The equities of these companies are expressed in local currency (Chilean peso).

 

Note 24 - Environment

 

24.1

Disclosures of 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. The Company is currently operating under an Environmental Management System (EMS) that has allowed it to strengthen its environmental performance through the effective application of the Company’s Sustainable Development Policy.

 

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 crushed, a process in which particle emissions occur. Currently this operation is conducted only at the Pedro de Valdivia worksite and no ore crushing process is conducted in the Maria Elena sector.

 

Many of the Company’s products are shipped in bulk at the Port of Tocopilla. In 2007 the city of Tocopilla was declared a zone Saturated with MP10 Particles mainly due to the emissions from the electric power plants that operate in that city. In October 2010 the Decontamination Plan for Tocopilla was put in place. Accordingly, the Company has committed to taking several measures to mitigate the effects derived from bulk product movements in the port. These measures have been successfully implemented since 2007.

 

The Company carries out environmental follow-up and monitoring plans based on specialized scientific studies. Within this context, the Company 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 the Pontificia Universidad Católica in Santiago and the School of Agricultural Science of the Universidad de Chile.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.1

Disclosures of disbursements related to the environment, continued

 

Furthermore, within the framework of the environmental studies which the Company is conducting, the Company performs significant activities in relation to the recording of Pre-Columbian and historical cultural heritage, as well as the protection of heritage sites, in accordance with current Chilean laws. These activities have been especially performed in the areas surrounding Maria Elena and the Nueva Victoria plants. This effort is being accompanied by cultural initiatives within the community and the organization of exhibits in local and regional museums.

 

As emphasized in its Sustainable Development Policy, the Company strives to maintain positive relationships with the communities surrounding the locations in which it carries out its operations, as well as to participate in communities’ development by supporting joint projects and activities which help to improve the quality of life for residents. For this purpose, the Company has focused its efforts on activities involving the rescue of historical heritage, education and culture, as well as development, and in order to do so, it acts both individually and in conjunction with private and public entities.

 

24.2

Detail of information on disbursements related to the environment

 

The accumulated disbursements in which the Company incurred as of December 31, 2012 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 year disbursements related to these projects amounted to ThUS$23,207 and are detailed as follows:

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of 12/31/2012

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for which the disbursement was made or will be made

Asset / Expense

Description of the asset or expense Item

Amount of disbursement for the Period

Actual or estimated date on which disbursements were or will be made

SQM Industrial S.A.

Environmental and Community Management (Expense as the fourth quarter of 2012)

Not classified

Expense

Not classified

1,808

12-31-2012

SQM Industrial S.A.

IQ8G – Improvement of Bureau of Exchange, offices and facilities

Medium projects (between ThUS$300 and ThUS$999)

Asset

Not classified

72

12-31-2012

SQM Industrial S.A.

JQEZ – Change of Bertrams Prilling Boiler CS

Sustainability: Replacement of equipment

Asset

Development

235

12-31-2012

SQM Industrial S.A.

JQH9 – Purchase of Bertrams Boiler

Sustainability: Environment and Risk prevention

Asset

Development

600

12-31-2012

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Environmental processing

Expense

Not classified

37

12-31-2012

SQM Industrial S.A.

MP5W - Normalization TK´s Combustibles

Sustainability: Environment and Risk prevention

Asset

Not classified

841

12-31-2012

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

211

12-31-2012

SQM Industrial S.A.

MQ8M - Reconditioning monitoring station ME

Sustainability: Natural Resources

Expense

Not classified

8

12-31-2012

SQM Industrial S.A.

MQA8- Normalization gas system, external cafeterias (Stage 1: projects)

Sustainability: Environment and Risk prevention

Expense

Not classified

106

12-31-2012

SQM Industrial S.A.

MQAJ - Improvements to Camp Water and Sewage (P Contesse commitment to DDSS)

Sustainability: Natural Resources

Expense

Not classified

8

12-31-2012

SQM Industrial S.A.

MQHF -Sustaining of batteries ME

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

161

12-31-2012

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of 12/31/2012, continued

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for which the disbursement was made or will be made

Asset / Expense

Description of the asset or expense Item

Amount of disbursement for the Period

Actual or estimated date on which disbursements were or will be made

SQM Industrial S.A.

PPC1-Remove switches park OCB sub 3 and 1/12 Pedro de Valdivia

Sustainability: Environment and Risk prevention

Expense

Not classified

147

12-31-2012

SQM Industrial S.A.

PPNK-Management of Ammonia PV stoppage plant

Sustainability: Environment and Risk prevention

Asset / Expense

Not classified

193

12-31-2012

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Environmental processing

Asset

Not classified

1,763

12-31-2012

SQM Industrial S.A.

SQ7X-Reach 2011-2013

Sustainability: Environment and Risk prevention

Expense

Not classified

199

12-31-2012

SQM Industrial S.A.

TQA2 - Drainage Improvement Villa Prat

Sustainability: Environment and Risk prevention

Expense

Not classified

16

12-31-2012

SQM Industrial S.A.

CQLX- SCarmen and Lagarto hazardous waste yard

Sustainability:

Expense

Not classified

47

12-31-2012

SQM Industrial S.A.

MQBM - Archaeological Digging Deployment Maria Elena - Toco

Sustainability: Environment and Risk prevention

Expense

Not classified

7

12-31-2012

SQM Industrial S.A.

MQK2 – Elimination of PCBs I

Sustainability: Environment and Risk prevention

Expense

Not classified

16

12-31-2012

SQM Industrial S.A.

JQ8K – DIA Line 4 Floor Drying, Coya Sur

Environmental processing

Asset

Not classified

32

12-31-2012

SQM Industrial S.A.

FP55 - FPXA-EIA Pampa Blanca Expansion

Environmental processing

Asset

Not classified

1,425

12-31-2012

SQM Industrial S.A.

JQB6 - DIA Plant NPT4, Coya Sur

Environmental processing

Asset

Not classified

65

12-31-2012

SQM Industrial S.A.

PQLV-DIA Pedro de Valdivia Mine

Environmental processing

Asset

Not classified

131

12-31-2012

SQM S.A.

AQ0A - Well Drilling 4 Uptake Change Point Tamarugal Pampa

Capacity Expansion

Asset

Development

534

12-31-2012

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of 12/31/2012, continued

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for which the disbursement was made or will be made

Asset / Expense

Description of the asset or expense Item

Amount of disbursement for the Period

Actual or estimated date on which disbursements were or will be made

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability:

Expense

Not classified

166

12-31-2012

SQM S.A.

IPXE - Environmental Monitoring Plan Llamara Salt flat

Cost reduction

Expense

Not classified

872

12-31-2012

SQM S.A.

IPXF - Environmental Monitoring Plan Pampa del Tamarugal

Sustainability: Environment and Risk prevention

Expense

Not classified

881

12-31-2012

SQM S.A.

IQ08 - PSA Llamara & Pampa del Tamarugal

Sustainability: Environment and Risk prevention

Asset

Development

1,759

12-31-2012

SQM S.A.

IQ0C - Mine Area Enhancement NV

Sustainability: Environment and Risk prevention

Expense

Not classified

66

12-31-2012

SQM S.A.

IQ1K - Construction of 3 observation wells in Sur Viejo

Capacity Expansion

Asset

Development

195

12-31-2012

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Sustainability: Environment and Risk prevention

Asset

Not classified

1,653

12-31-2012

SQM S.A.

IQ3S- Hazardous Materials Management Standardization

Sustainability:

Asset - Expense

Not classified

251

12-31-2012

SQM S.A.

IQ52 - New Victoria Environment Office

Minor projects (between ThUS$50 and ThUS$299)

Expense

Not classified

29

12-31-2012

SQM S.A.

IQ53 - Cultural heritage route Soronal adduction (Pampa Hermosa)

General projects (< ThUS$50)

Expense

Not classified

24

12-31-2012

SQM S.A.

IQ54 - Cultural heritage Pampa Hermosa

Minor projects (between ThUS$50 and ThUS$299)

Asset

Not classified

500

12-31-2012

SQM S.A.

IQ9V – Quillagua Project

Minor projects (between ThUS$50 and ThUS$299)

Expense

Not classified

788

12-31-2012

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of 12/31/2012, continued

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for which the disbursement was made or will be made

Asset / Expense

Description of the asset or expense Item

Amount of disbursement for the Period

Actual or estimated date on which disbursements were or will be made

SQM S.A.

PQB9-PQB9 - Change of exhaust extractor SO2 gas

Not classified

Asset

Not classified

178

12-31-2012

SQM S.A.

MQLQ- Gas scrubbing system

Not classified

Asset

Development

324

12-31-2012

SQM S.A.

IQOW- Deposit authorization for Humberstone heritage

Sustainability: Environment and Risk prevention

Expense

Not classified

1

12-31-2012

SQM S.A.

IQPJ- Mine Area equity measures Stage I

Sustainability:

Expense

Not classified

61

12-31-2012

SQM S.A.

IQ6M -IQ6N-DIA  Nueva Victoria Sur Mine Expansion

Environmental processing

Asset

Not classified

115

12-31-2012

SQM S.A.

IP83 - DIA Expansion TLN-15

Environmental processing

Asset

Not classified

23

12-31-2012

SQM Salar S.A.

CQ4M – Regularization of Contractor facilities

Sustainability: Environment and Risk prevention

Asset

Not classified

17

12-31-2012

SQM Salar S.A.

CQ8U - New Changing Room CL - HL

Sustainability: Environment and Risk prevention

Asset

Not classified

242

12-31-2012

SQM Salar S.A.

LP82 - Project for the Promotion of Agricultural Activity in Communities of the Salt deposit

Sustainability: Environment and Risk prevention

Expense

Development

1,126

12-31-2012

SQM Salar S.A.

LPTF – Environmental study and exploration 2010

Environmental processing

Expense

Not classified

398

12-31-2012

SQM Salar S.A.

LPTJ - Improvements Sanitary Works

Sustainability:

Asset

Not classified

206

12-31-2012

SQM Salar S.A.

LQDM – Certification of tanks

Sustainability: Replacement of equipment

Asset

Not classified

146

12-31-2012

SQM Salar S.A.

LQI6-EIA Operating maintenance at Salar de Atacama

Environmental processing

Asset

Not classified

358

12-31-2012

SQM Salar S.A.

LQNI-DIA KCI Floor Drying and compacting expansion

Environmental processing

Asset

Not classified

19

12-31-2012

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of 12/31/2012, continued

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for which the disbursement was made or will be made

Asset / Expense

Description of the asset or expense Item

Amount of disbursement for the Period

Actual or estimated date on which disbursements were or will be made

SIT S.A.

MQ6Y-MQ6Y - Maintenance and repair of ME and Tocopilla bureau of exchange

Sustainability: Environment and Risk prevention

Expense

Not classified

20

12-31-2012

SIT S.A.

TPR8 - Disposal of liquid waste generation by aspiration

Sustainability:

Expense

Not classified

64

12-31-2012

SIT S.A.

TPYX - Enabling the dust collector of the crib and court seal 3 Tocopilla

Sustainability: Environment and Risk prevention

Asset / Expense

Development

1,658

12-31-2012

SIT S.A.

TQAP - Paving Field No. 3 and No. 4

Capacity Expansion

Expense

Not classified

13

12-31-2012

SIT S.A.

TQAV - Paving paths IV

Sustainability:

Asset

Development

3

12-31-2012

SIT S.A.

TQM2- Unloading/loading encapsulation project/Field 1 and 8

Sustainability:

Asset

Not classified

8

12-31-2012

SIT S.A.

TQLY- Dust extractor packing machine No. 1

Environmental processing

Asset

Not classified

25

12-31-2012

SIT S.A.

TQNA- Tocopilla weather station (Tocopilla Decontamination Plan Network)

Sustainability: Environment and Risk prevention

Asset

Not classified

15

12-31-2012

SIT S.A.

TQQ5- Environmental curtains Field No. 8

Sustainability: Environment and Risk prevention

Expense

Not classified

22

12-31-2012

SQM Nitratos S.A

IQDN - Storage Rises – Maintenance of Mine NV

Not classified

Asset

Not classified

26

12-31-2012

Minera Nueva Victoria S.A.

IQ4C - Development Camp (Osmosis and Others)

Minor projects (between ThUS$50 and ThUS$299)

Asset

Not classified

1,987

12-31-2012

SQM Nitratos S.A

PQI9 – Mine waste water treatment plant

Sustainability: Environment and Risk prevention

Asset

Not classified

47

12-31-2012

SQM Nitratos S.A

IQMH - Normalization Mine NV area operation

Sustainability: Environment and Risk prevention

Asset

Not classified

99

12-31-2012

SQM Salar S.A.

LQFD – Bureaus of exchange

Not classified

Asset

Not classified

160

12-31-2012

23,207

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Future expenses as of 12/31/2012

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for which the disbursement was made or will be made

Asset / Expense

Description of the asset or expense Item

Amount of disbursement for the Period

Actual or estimated date on which disbursements were or will be made

SQM Industrial S.A.

Environmental and Community Management (Budget available for the second quarter of 2012)

Not classified

Expense

Not classified

2,027

12-31-2013

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Environmental processing

Expense

Not classified

68

12-31-2013

SQM Industrial S.A.

MP5W - Normalization TK´s Combustibles

Sustainability: Environment and Risk prevention

Asset

Not classified

1,600

12-31-2013

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

152

30-062013.

SQM Industrial S.A.

MQHF -Sustaining of batteries ME

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

16

08-01-2013

SQM Industrial S.A.

PPC1-Remove switches park OCB sub 3 and 1/12 Pedro de Valdivia

Sustainability: Environment and Risk prevention

Expense

Not classified

44

12-31-2013

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Environmental processing

Asset

Not classified

1,315

12-31-2013

SQM Industrial S.A.

SQ7X-Reach 2011-2013

Sustainability: Environment and Risk prevention

Expense

Not classified

20

01-31-2014

SQM Industrial S.A.

TQA2 - Drainage Improvement Villa Prat

Sustainability: Environment and Risk prevention

Expense

Not classified

104

06-30-2013

SQM Industrial S.A.

CQLX- SCarmen and Lagarto hazardous waste yard

Sustainability:

Asset

Not classified

53

03-31-2013

SQM Industrial S.A.

JQL7- KNO3 prilled dust collection and drying engineering and project

Sustainability:

Asset

Research

200

08-01-2013

SQM Industrial S.A.

MQBM - Archaeological Digging Deployment Maria Elena - Toco

Sustainability: Environment and Risk prevention

Expense

Not classified

49

03-31-2013

SQM Industrial S.A.

MQK2 – Elimination of PCBs I

Sustainability: Environment and Risk prevention

Expense

Not classified

554

03-31-2014

SQM Industrial S.A.

FP55 - FPXA-EIA Pampa Blanca Expansion

Environmental processing

Asset

Not classified

135

08-31-2013

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Future expenses as of 12/31/2012

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for which the disbursement was made or will be made

Asset / Expense

Description of the asset or expense Item

Amount of disbursement for the Period

Actual or estimated date on which disbursements were or will be made

SQM Industrial S.A.

JQB6 - DIA Planta NPT4, Coya Sur

Environmental processing

Asset

Not classified

5

11-30-2013

SQM Industrial S.A.

PQLV-DIA Pedro de Valdivia Mine

Environmental processing

Asset

Not classified

243

09-30-2013

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability:

Expense

Not classified

17

03-31-2013

SQM S.A.

IPXE - Environmental Monitoring Plan Llamara Salt flat

Cost reduction

Expense

Not classified

87

03-31-2013

SQM S.A.

IPXF - Environmental Monitoring Plan Pampa del Tamarugal

Sustainability: Environment and Risk prevention

Expense

Not classified

168

06-30-2013

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Sustainability: Environment and Risk prevention

Asset

Not classified

441

12-31-2013

SQM S.A.

IQ3S- Hazardous Materials Management Standardization

Sustainability:

Asset - Expense

Not classified

148

12-31-2013

SQM S.A.

IQ54 - Cultural heritage Pampa Hermosa

Minor projects (between ThUS$50 and ThUS$299)

Asset

Not classified

219

12-31-2013

SQM S.A.

MQLQ- Gas scrubbing system

Not classified

Asset

Development

288

06-30-2013

SQM S.A.

IQOW- Deposit authorization for Humberstone heritage

Sustainability: Environment and Risk prevention

Expense

Not classified

38

03-31-2013

SQM S.A.

IQ6M -IQ6N-DIA Nueva Victoria Sur Mine Expansion

Environmental processing

Asset

Not classified

2

03-31-2013

SQM Salar S.A.

LQDM – Certification of tanks

Sustainability: Replacement of equipment

Asset

Not classified

600

12-31-2013

SQM Salar S.A.

LQI6-EIA Operating maintenance at Salar de Atacama

Environmental processing

Asset

Not classified

265

06-30-2013

SQM Salar S.A.

LQNI-DIA KCI Floor Drying and compacting expansion

Environmental processing

Asset

Not classified

16

08-31-2013

SIT S.A.

TPYX - Enabling the dust collector of the crib and court seal 3 Tocopilla

Sustainability: Environment and Risk prevention

Asset / Expense

Development

40

12-31-2013

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Future expenses as of 12/31/2012

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for which the disbursement was made or will be made

Asset / Expense

Description of the asset or expense Item

Amount of disbursement for the Period

Actual or estimated date on which disbursements were or will be made

SIT S.A.

TQAV - Paving paths IV

Sustainability:

Asset

Development

162

12-31-2013

SIT S.A.

TQQ5- Environmental curtains Field No. 8

Sustainability: Environment and Risk prevention

Expense

Not classified

30

04-27-2013

SQM Nitratos S.A

IQMH - Normalization Mine NV area operation

Sustainability: Environment and Risk prevention

Asset

Not classified

157

03-31-2013

SQM Salar S.A.

LQG8 – Waste room  Toconao Campsite

Sustainability: Natural Resources

Expense

Not classified

16

03-31-2012

Total

9,279

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of 12/31/2011

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for 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$

Actual or estimated date on which disbursements were or will be made

SQM Industrial S.A.

Environment management (Expense 2011 to December)

Not classified

Expense

Not classified

1,868

12-31-2011

SQM Industrial S.A.

SQ7X - Reach 2011-2013

Sustainability

Expense

Not classified

59

1-31-2014

SQM Industrial S.A.

ANMI -  Infrastructure consulting for the storage of dangerous chemical substances

Sustainability: Environment and Risk prevention

Asset

Development

46

6-30-2011

SQM Industrial S.A.

FNWR EID Discard field Pampa Blanca

Sustainability: Environment and Risk prevention

Expense

Development

30

12-31-2011

SQM Industrial S.A.

FP55 - FPXA - Mine Area EIS PB - PB Expansion EIS (Projects: Pampa Blanca Saltwater - Saltwater Stage I

Sustainability

Asset

Development

945

12-31-2012

SQM Industrial S.A.

JNTU - Assessment of waters at San Isidro

Sustainability: Environment and Risk prevention

Asset

Not classified

556

12-31-2011

SQM Industrial S.A.

JPX9 - Enhanced Ground Granulated EID-Prilado Coya Sur (Project: Pilot Plant TD and Pilot Testing of Resin)

Sustainability: Research and Development

Asset

Research

11

6-30-2011

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Sustainability: Environment and Risk prevention

Asset

Not classified

29

12-1-2011

SQM Industrial S.A.

MP17 - Standardization Water Chlorination ME / CS / PV

Sustainability

Asset

Not classified

7

6-30-2011

SQM Industrial S.A.

MP5W - TK's Fuel Standards

Sustainability

Asset

Not classified

613

12-31-2011

SQM Industrial S.A.

MPIS - Stabilization of streets and sidewalks dust suppression

Sustainability

Asset

Development

736

6-30-2011

SQM Industrial S.A.

MPL5 - Repair sanitary and electrical services

Sustainability

Asset

Development

184

6-30-2011

SQM Industrial S.A.

Automation and Alarm Monitoring Station Hospital information

Not classified

Asset

Not classified

10

6-30-2011

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Nota 24 - Environment (continued)

 

24.2

Detail of information on disbursements related to the environment (continued)

 

Accumulated expenses, as of December 31, 2011

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for 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$

Actual or estimated date on which disbursements were or will be made

SQM Industrial S.A.

MQ51 - Terms of Reference Project ME equity measures

Sustainability: Environment and Risk prevention

Expense

Not classified

2

12-31-2011

SQM Industrial S.A.

PPNK - Management of Ammonia PV stoppage plant

Sustainability: Environment and Risk prevention

Asset

Not classified

22

12-31-2011

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

785

12-1-2011

SQM Industrial S.A.

JQ8K – DIA Line 4  Floor Drying , Coya Sur (Project: Drying Line 4)

Capacity Upgrade

Asset

Development

17

9-1-2012

SQM Industrial S.A.

IQ8G – Improvement of Bureau of Exchange, offices and facilities

Sustainability

Asset

Not classified

45

12-31-2011

SQM Industrial S.A.

MQ7P - ME Village sewer lids change

Sustainability

Expense

Not classified

19

12-31-2011

SQM Industrial S.A.

JQB6 - EID Ground NPT4, Coya Sur (Project: NPTIV)

Capacity Upgrade

Asset

Development

5

4-30-2012

SQM Industrial S.A.

TQ78 - motorized sweepers

Sustainability: Equipment Replacement

Asset

Development

206

12-31-2011

Minera Nueva Victoria Ltda.

IPMN - Capacity Expansion Sanitary Iris

Capacity Upgrade

Asset

Development

85

6-30-2011

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

199

12-31-2011

SQM Industrial S.A.

PPC1 - Remove switches park OCB sub 3 and 1/12 Pedro de Valdivia

Sustainability: Equipment Replacement

Asset – Expense

Not classified

68

12-31-2012

SQM Industrial S.A.

MQ8M - Reconditioning monitoring station ME

Sustainability: Repair

Asset

Not classified

7

12-31-2011

SQM Industrial S.A.

MQAJ - Improvements to Camp Water and Sewage (P Contesse commitment to DDSS)

Not classified

Asset

Not classified

3

12-31-2011

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 - Environment (continued)

 

24.2

Detail of information on disbursements related to the environment (continued)

 

Accumulated expenses as of December 31, 2011, continued

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for 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$

Actual or estimated date on which disbursements were or will be made

Minera Nueva Victoria Ltda.

IPNW - Improvements Halls C / D / B Iris

Sustainability

Asset

Not classified

44

8-31-2011

Minera Nueva Victoria Ltda.

IQ4C - Development Camp (Osmosis and Others)

Capacity Upgrade

Asset

Not classified

1,630

12-31-2012

SIT S.A.

TPLR - Implementation sewage pumping system to sewer

Sustainability: Environment and Risk prevention

Asset

Not classified

68

6-30-2011

SIT S.A.

TPM7 – Environmental nets field 3 and 4

Not classified

Asset - Expense

Not classified

524

6-30-2011

SIT S.A.

TPR8 - Disposal of liquid waste generation by aspiration

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

64

12-31-2011

SIT S.A.

TPYX - Enabling the dust collector of the crib and court seal 3 Tocopilla

Sustainability: Environment and Risk prevention

Asset

Development

1,496

12-31-2011

SIT S.A.

TQAV - Paving paths IV

Sustainability: Environment and Risk prevention

Expense

Development

3

12-1-2011

SIT S.A.

TQAP - Paving Field No. 3 and No. 4

Capacity Upgrade

Expense

Not classified

4

10-30-2012

SQM Nitratos S.A

IP6W - Treatment Plant Riles

Sustainability: Environment and Risk prevention

Asset

Not classified

39

6-30-2011

SQM Nitratos S.A

PP0V - Environmental Projects Maintenance ME-PV-NV-PB

Sustainability: Environment and Risk prevention

Asset - Expense

Development

82

6-30-2011

SQM S.A.

AQ0A - Well Drilling 4 Uptake Change Point Tamarugal Pampa

Sustainability: Natural Resources

Asset

Development

534

12-31-2011

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability: Environment and Risk prevention

Expense

Not classified

127

12-31-2011

SQM S.A.

IPXE - Environmental Monitoring Plan Llamara Salt flat

Sustainability: Environment and Risk prevention

Expense

Not classified

465

12-31-2012

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 – Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of December 31, 2011, continued

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for 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$

Actual or estimated date on which disbursements were or will be made

SQM S.A.

IPXF - Environmental Monitoring Plan Tamarugal Pampa

Sustainability: Environment and Risk prevention

Expense

Not classified

230

12-31-2012

SQM S.A.

IQ08 - PSA Llamara & Pampa Tamarugal

Sustainability: Environment and Risk prevention

Expense

Development

1,740

12-31-2011

SQM S.A.

IQ0C - Mine Area Enhancement NV

Sustainability: Environment and Risk prevention

Expense

Not classified

65

12-31-2011

SQM S.A.

IQ1K - Construction of 3 observation wells in Sur Viejo

Sustainability: Natural Resources

Asset

Development

195

12-31-2011

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Not classified

Asset

Not classified

962

12-31-2011

SQM S.A.

IQ3S - Hazardous Materials Management Standardization

Sustainability: Environment and Risk prevention

Asset

Not classified

100

12-31-2012

SQM S.A.

IQ52 - New Victoria Environment Office

Not classified

Asset

Not classified

29

12-31-2011

SQM S.A.

IQ53 - Cultural heritage route Soronal adduction (Pampa Hermosa)

Sustainability: Environment and Risk prevention

Asset

Not classified

9

12-31-2011

SQM S.A.

IQ54 - Cultural heritage Pampa Hermosa

Sustainability: Environment and Risk prevention

Asset

Not classified

188

12-31-2012

SQM S.A.

SCI6 - Environmental Studies - Project Region I

Not classified

Asset

Not classified

2,376

12-31-2011

SQM S.A.

IQ6M - DIA Expansion Nueva Victoria Sur Mine

Sustainability: Natural Resources

Asset

Not classified

262

1-31-2012

SQM S.A.

IQ9V – Quillagua Project

Not classified

Asset

Not classified

323

12-31-2014

SQM Salar S.A

CPTP - Installing emergency showers drinking water

Sustainability

Asset

Not classified

26

12-31-2011

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Nota 24 – Environment (continued)

 

24.2

Detail of information on disbursements related to environment, continued

 

Accumulated expenses as of December 31, 2011, continued

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for 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$

Actual or estimated date on which disbursements were or will be made

SQM Salar S.A

CPZH - Management of Descartes Filter Presses Hydroxide

Sustainability: Environment and Risk prevention

Expense

Not classified

39

12-31-2011

SQM Salar S.A

LP5J - Water Recharge Study Atacama Salt flat

Sustainability: Environment and Risk prevention

Expense

Research

105

12-31-2011

SQM Salar S.A

LP82 - Project for the Promotion of Agricultural Activity in Communities of the Salt deposit

Sustainability

Expense

Development

761

12-31-2014

SQM Salar S.A

LPTF – Environmental study and exploration 2010

Sustainability

Expense

Not classified

370

12-31-2011

SQM Salar S.A

LPTJ - Improvements Sanitary Works

Sustainability

Asset

Not classified

206

12-31-2011

SQM Salar S.A

LQ38 - Field Drying Sludge

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

26

12-31-2011

SQM Salar S.A

CQ8U - New Changing Room CL - HL

Capacity Upgrade

Asset

Not classified

238

12-31-2011

SQM Salar S.A

LQAK - garbage rooms MOP and  SOP

Sustainability

Expense

Not classified

25

12-31-2011

Total

19,912

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 – Environment (continued)

 

24.2

Detail of information on disbursements related to environment, continued

 

Future Expenses

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for 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$

Actual or estimated date on which disbursements were or will be made

SQM Industrial S.A.

Environment management (Budget 2011- expenses as of December 2011)

Not classified

Expense

Not classified

2,243

12-31-2011

SQM Industrial S.A.

SQ7X - Reach 2011-2013

Sustainability

Expense

Not classified

551

1-31-2014

SQM Industrial S.A.

FP55 - FPXA - Mine Area EIS PB - PB Expansion EIS (Projects: Pampa Blanca Saltwater - Saltwater Stage I)

Sustainability

Asset

Development

800

12-31-2012

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Sustainability: Environment and Risk prevention

Asset

Not classified

107

12-1-2011

SQM Industrial S.A.

MP5W - TK's Fuel Standards

Sustainability

Asset

Not classified

487

12-31-2011

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

264

12-31-2011

SQM Industrial S.A.

PPC1 - Remove switches park OCB sub 3 and 1/12 Pedro de Valdivia

Sustainability: Equipment Replacement

Asset - Expense

Not classified

122

12-31-2012

SQM Industrial S.A.

PPNK - Management of Ammonia PV stoppage plant

Sustainability: Environment and Risk prevention

Asset

Not classified

178

12-31-2011

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

2,715

12-1-2011

SQM Industrial S.A.

JQ8K – DIA Line 4  Floor Drying , Coya Sur (Project: Drying Line 4)

Capacity Upgrade

Asset

Development

13

9-1-2012

SQM Industrial S.A.

IQ8G – Improvement of Bureau of Exchange, offices and facilities

Sustainability

Asset

Not classified

30

12-31-2011

SQM Industrial S.A.

JQB6 - EID Ground NPT4, Coya Sur (Project: NPTIV)

Capacity Upgrade

Asset

Development

50

4-30-20122

SQM Industrial S.A.

TQA2 - Drainage Improvement Villa Prat

Not classified

Asset

Not classified

170

12-31-2011

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 – Environment (continued)

 

24.2

Detail of information on disbursements related to environment, continued

 

Future expenses (continued)

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for 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$

Actual or estimated date on which disbursements were or will be made

SQM Industrial S.A.

MQAJ - Improvements to Camp Water and Sewage (P Contesse commitment to DDSS)

Not classified

Asset

Not classified

297

12-31-2011

SQM Industrial S.A.

MQA8 - Normalization gas system, external cafeterias (Stage 1: projects)

Not classified

Asset

Not classified

150

12-30-20111

SQM Industrial S.A.

MQBM - Archaeological Digging Deployment Maria Elena - Toco

Sustainability: Environment and Risk prevention

Expense

Not classified

56

12-31-2011

Minera Nueva Victoria Ltda.

IQ4C - Camp Development (Osmosis and Others)

Capacity Upgrade

Asset

Not classified

1,370

12-31-2012

SIT S.A.

TPR8 - Disposal of liquid waste generation by aspiration

Sustainability: Environment and Risk prevention

Asset- expense

Not classified

86

12-31-2011

SIT S.A.

TPYX - Enabling the dust collector of the crib and court seal 3 Tocopilla

Sustainability: Environment and Risk prevention

Asset

Development

204

12-31-2011

SIT S.A.

MQ6Y - Maintenance and repair and bureau of exchange Tocopilla ME

Sustainability: Environment and Risk prevention

Asset

Not classified

20

12-30-2011

SIT S.A.

TQAV - Paving paths IV

Sustainability: Environment and Risk prevention

Expense

Development

297

12-1-2011

SQM Nitratos S.A

IQDN - Storage Rises – Maintenance of Mine NV

Sustainability: Environment and Risk prevention

Asset

Not classified

40

7-30-2012

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability: Environment and Risk prevention

Expense

Not classified

96

12-31-2011

SQM S.A.

IPXE - Environmental Monitoring Plan Llamara Salt flat

Sustainability: Environment and Risk prevention

Expense

Not classified

1,276

12-31-2012

SQM S.A.

IPXF - Environmental Monitoring Plan Tamarugal Pampa

Sustainability: Environment and Risk prevention

Expense

Not classified

1,836

31-12-2012

SQM S.A.

IQ08 - PSA Llamara & Pampa Tamarugal

Sustainability: Natural Resources

Expense

Development

27

12-31-2011

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 – Environment (continued)

 

24.2

Detail of information on disbursements related to environment, continued

 

Future expenses (continued)

 

Identification of the Parent or subsidiary

Name of the project with which the disbursement is associated

Concept for 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$

Actual or estimated date on which disbursements were or will be made

SQM S.A.

IQ0C - Mine Area Enhancement NV

Sustainability: Environment and Risk prevention

Expense

Not classified

11

12-31-2011

SQM S.A.

IQ1K - Construction of 3 observation wells in Sur Viejo

Sustainability: Natural Resources

Asset

Development

2

12-31-2011

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Not classified

Asset

Not classified

783

12-31-2011

SQM S.A.

IQ3S - Hazardous Materials Management Standardization

Sustainability: Environment and Risk prevention

Asset

Not classified

300

12-31-2012

SQM S.A.

IQ52 - New Victoria Environment Office

Not classified

Asset

Not classified

1

12-31-2011

SQM S.A.

IQ53 - Cultural heritage route Soronal adduction (Pampa Hermosa)

Sustainability: Environment and Risk prevention

Asset

Not classified

15

12-31-2011

SQM S.A.

IQ54 - Cultural heritage Pampa Hermosa

Sustainability: Environment and Risk prevention

Asset

Not classified

764

12-31-2012

SQM S.A.

IQ9V – Quillagua Project

Not classified

Asset- expense

Not classified

849

12-31-2014

SQM S.A.

PQB9 - Change of exhaust SO2 gas

Sustainability

Asset

Not classified

178

12-1-2011

SQM Salar S.A

CQ4M – Regularization of Contractor facilities

Sustainability: Environment and Risk prevention

Asset

Not classified

26

12-31-2012

SQM Salar S.A

LP82 - Project for the Promotion of Agricultural Activity in Communities of the Salt deposit

Sustainability

Expense

Development

822

12-31-2014

SQM Salar S.A

CQ8U - New Changing Room CL - HL

Capacity Upgrade

Asset

Not classified

102

12-31-2011

Total

17,338

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Nota 24 – Environment (continued)

 

24.3

Description of each project, indicating whether they are in process or have been finished

 

SQM Industrial S.A.

 

IQ8G: This project contemplates the improvement of restrooms and the expansion of their capacity. In addition to water storage sector would be improved. The project is closing process.

 

JQEZ: This Project includes purchasing and installing Bertrams Boilers in Coya Sur Prill, in order to improve the level of combustion, decreasing and controlling the emission of fumes to the environment. The project is finished.

 

JQH9: The purpose of this project is to purchase Bertram’s boilers in order to improve the combustion levels, decreasing and controlling the emission of fumes to the environment. The project is in process.

 

MNYS: Preparation and execution of a project of geoglyphs conservation; editing and publishing a book and implementing a diffusion center. Construction of a collection deposit. All these are compensation measures of the project Technological Change Maria Elena. The project is in process.

 

MP5W: Normalization of the fuel storage and distribution system in SQM installations. The project is in process.

 

MPQU: Construction of warehouses for dangerous chemicals supplies in order to decrease the chance of accidents and pollution. The project is in process.

 

MQ8M: Performing maintenance to structures and closing monitoring stations in Maria Elena. The project is finished.

 

MQA8: Normalization of gas networks of periferical casinos (stage 1: projects): CS, Lagarto, Iodum, PV, Toco and Rancho 6. The Project is in process.

 

MQAJ: Improve the water and sewerage network in Maria Elena for better operations. The project is finished.

 

MQBM: Implementing archeological measures in Maria Elena – Toco site, such as the archeological registry, analysis of lithic materials, and generation of reports. The project is in process.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 – Environment (continued)

 

24.3

Description of each project indicating whether they are in process or have been finished (continued)

 

MQHF: Enable a wastewater plant in Toco according to SD 594, a change room for operators and contractors, among other things. The project is in process.

 

MQK2: The project involves the decontamination of equipment and items contaminated with PCBs and / or final disposal in accordance with applicable regulations. The project is in process.

 

PPC1: Purchase and replacement of equipment contaminated with PCB and obsolete equipment without spare parts. The project is in process.

 

PPNK: Project to ensure the control of the ammonia gas in the crystal plant stoppage. The project is finished.

 

PPZU: The necessary actions to normalize and certify certified fuel tanks in the plants in María Elena, Coya Sur and Pedro de Valdivia were performed. The project is in process.

 

SQ7X: The purpose of this project is obtaining and recording information of components and finished products of SQM in the ECHA database to comply with the requirements set forth by the REACH regulation of the European Union. The project is in process.

 

TQA2: This project aims to improve the sewerage system of Villa Prat. The project is in process.

 

CQLX: The project includes the construction at each location a courtyard of 145 m2 approx. The project is in process.

 

JQL7: This project aims to improve product recovery, and control emissions. The project is in process.

 

JQ8K: This project has the purpose of building a new drying plant in Coya Sur. The projected expenses correspond only to the environmental filing. The project is in process

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 - Environment (continued)

 

24.3

Description of each Project indicating whether they are in process or have been finished (continued)

 

FP55 – FPXA: These 2 projects have a final objective consisting in the installation of a sea water sucking system of 87 km from the Mejillones area to the SQM facilities located in Pampa Blanca. The projected expenses correspond only to the filing of the EIA of the PB mine zone and the EIA of the PB expansion. Both projects are in process.

 

JQB6: Preparation and filing of the EID of project NPT4 of Coya Sur, which increases the salt production capacity. The project is in process.

 

PQLV: Preparation and filing of EID Pedro de Valdivia. The project is in process.

 

SQM S.A.

 

AQ0A: To enable the use of water rights that have been granted in several pits of the Conaf reservation Pampa del Tamarugal and to take them outside of the tamarugo forest and of the reservation, reducing the environmental impact of its exploitation. The project is in process.

 

IPFT: The project contemplates the implementation of measures committed in projects in the area of the Nueva Victoria mine, update of operations in Nueva Victoria, evaporation ducts and pits in Iris. The project is in process.

 

IPXE: To implement the plan of environment follow-up of Project Pampa Hermosa in Salar de Llamara. The project is in process.

 

IPXF: To implement the environment plan follow-up of the project Pampa Hermosa in Pampa del Tamarugal. The project is in process.

 

IQ08: The project considers the following works for the water reservoirs in Pampa del Tamarugal and Salar de Llamara: constructing and enabling observation and monitoring pits, pumping tests, construction of roads over hard sand terrain and Salar crust. The project is finished.

 

IQ0C: This project consists in implementing a program of adding value and area adjacent to route 5, which will enable the development of a self-guided tour of the area called Cantón de Lagunas in the context of the saltpeter history. The project is finished.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 - Environment (continued)

 

24.4

Description of each project indicating whether they are in process or have been finished (continued)

 

IQ1K: Construction of 3 observation pits in Sur Viejo to comply with the environmental commitments proposed in the EIS of Pampa Hermosa and to be able to monitor the water reservoir near said pits. The project is finished.

 

IQ1M: To implement environmental commitments included in the EIS of project “Pampa Hermosa” to safeguard the puquíos zone that is in the Salar de Llamara water reservoir. The project is in process.

 

IQ3S: Improvements in the storage installations of dangerous raw materials in Nueva Victoria. The project is in process.

 

IQ52: This project includes the enabling and expansion of the environment offices in Nueva Victoria. The project is finished.

 

IQ53: To perform equity assay to the new location of the Soronal abduction trace Project Pampa Hermosa approved through N° 890/2010. The project is in process.

 

IQ54: This corresponds to the implementation of environmental commitments acquired through the environment assessment of the project Pampa Hermosa (RCA N°890/2010). The project is in process.

 

IQ9V: To support the development of agriculture and tourist industry in the location of Quillagua, in order to enhance the activity through productive measures, technical assistance and marketing. The project is in process.

 

PQB9: installation of two larger SO2 extractors at the end of the process. The project is in process.

 

IQLR: The scope of this stage includes the updating of the Design, Implementation and Operation of the mitigation measure of puquios in Salar de Llamara. The project is finished.

 

MQLQ: Design and implement a system to scrub gases allowing mitigating SO2 emissions, this system should be aligned to SQM´s Sustainable Development Policy. The project is in process

 

IQ6M – IQ6N: Preparation and filing of the EID of the Project “Expansion of Mina Nueva Victoria”. The projected expenses only include the environment document filing. The project is in process.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 - Environment (continued)

 

24.3

Description of each Project indicating whether they are in process or have been finished (continued)

 

IP83: Preparation and filing of the EID of the Project “Extension TLN-15”. The projected expenses only include the environment document filing. The project is in process.

 

IQOW: Enable a deposit in Humberstone Saltpeter to store material of heritage interest recovered in land campaigns of Project ZMNV. The Project is in process.

 

IQPJ: The project consists of the implementation of heritage measures involved in the Environmental Assessment for the mine areas. The measures will be implemented according to the requirements of the mining operation VPONV. The Project is in process.

 

SQM Salar S.A.

 

LQFD: The project includes the construction of currency exchange offices in order to comply with the rules and comfort to our workers. The project is finished.

 

LQG8: Increase the capacity of the waste room of Toconao Camp, in order to avoid accumulation problems and waste handling. The project is in process.

 

LQ38: This project has the purpose to comply with the current regulations and with observations raised by the SEREMI of Health. The project is in process.

 

LQAK: The project considers the construction of garbage rooms in lunchrooms in MOP and SOP, in order to increase the waste storage capacity. The project is finished.

 

LQNI:. Preparation and processing of EID of project "Expansion of Drying and KCI Compacting Plant". The expenses considered include environmental processing only. The project is in process.

 

CQ4M: The project contemplates the regularization of the electric facilities, change of cables, electric and illumination control panels. It also contemplates the installation of enough restroom with showers for the contractor’s permanent personnel. The project is finished.

 

CQ8U: To improve the condition and capacity of the exchange rooms in Salar del Carmen. The project is finished.

 

LP82: To support the development of demonstration lots, provide technical assistance for the improvement of agriculture practices such as watering. The project is in process.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 - Environment (continued)

 

24.3

Description of each Project indicating whether they are in process or have been finished (continued)

 

LPTF: To perform semi-annual reports, given that it is necessary to present improvements and optimizations at environmental control points, and the knowledge on geologic and hydrogeologic variables must be improved near Salar de Atacama. The project is finished.

 

LPTJ: The plan considers the acquisition of stand equipment to ensure the operating continuity of the TAS and OR plants, the change in the current control system of TK's regarding the accumulation of drinking water, wastewater, and wastewater elevation chambers, among others. The project is finished.

 

LQDM: Certification of the liquid fuel storage tanks. The project is in process.

 

LQI6: Preparation and processing of the EIA Update Operations in the Salar de Atacama. The project is in process.

 

SIT S.A.

 

TQNA: Installation of a meteorological station to measure wind speed and direction in the Southern Sector of Tocopilla in order to fulfill the commitment with the authority. The project is in process.

 

MQ6Y: To maintain and repair the bureau of exchange in María Elena and Tocopilla, in order to comply with Decree No.594. The project is finished.

 

TPR8: This project pretends to increase the generation of industrial waste through the use of vacuum and no-washing technologies, through the implementation of a vacuum system that avoids the use of water and therefore the generation of liquid industrial waste. The project is finished.

 

TPYX: To comply with the commitment of decreasing the emission of particulate material towards the city of Tocopilla. The project is in process.

 

TQAP: to decrease the environmental pollution and losses produced by the product’s storage. The project is finished.

 

TQAV: Paving and maintenance of internal roads of the port of Tocopilla, to decrease pollution and to comply with the Supreme Decree related to the saturated zone. The project is in process.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 24 - Environment (continued)

 

24.3

Description of each Project indicating whether they are in process or have been finished (continued)

 

TQM2: The project involves recovering operating conditions by changing the pitch pipe No.1 thus reducing the environmental pollution. The project is in process.

 

TQLY: This project aims at eliminating environmental contamination that may exist in the areas of work of operators. The project is in process.

 

TQQ5: This project aims to contain emissions of particulate material to prevent contamination to adjacent communities. The project is in process.

 

SQM POTASIO S.A.

 

IQ4C: Supply, construction and assembly of the osmosis and septic pits plant required to enable the camp in plant Iris and other. The project is finished.

 

SQM Nitratos S.A.

 

IQDN: Construction of a parapet forming a square pool (or rectangular) with an impermeable membrane that covers its entire length, to serve as a reservoir of sludge (Rises). The project is in process.

 

PQI9: Construction of a new pit replacing the current with a new waste water treatment technology. The project is in process.

 

IQMH: Creation of an area allowing to store hazardous substances. The project is in process.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 25 - Other current and non-current non-financial assets

 

As of December 31, 2012, and December 31, 2011, the detail of other current and non-current assets is as follows:

 

Other non-financial  assets, current		12/31/2012				12/31/2011
		ThUS$				ThUS$
Domestic Value Added Tax			42,136				46,243
Foreign Value Added Tax			9,306				5,879
Prepaid mining licenses			1,512				1,228
Prepaid insurance			8,278				6,979
Other prepayments			494				308
Other assets			6,095				3,155
Total			67,821				63,792

 

Other non-financial  assets, non-current		12/31/2012				12/31/2011
		ThUS$				ThUS$
Stain development expenses and prospecting expenses (1)			16,839				21,395
Guarantee deposits			571				428
Other assets			272				2,829
Total			17,682				24,652

 

(1)

Assets for the exploration or evaluation of mineral resources are amortized to the extent that the explored or evaluated area has been 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 Inventory and are amortized according to the estimated ore reserves contained, and expenses associated with future reserves are presented under Other non-current assets. Those expenses incurred on properties with low ore grade that are not economically exploitable are directly charged to income. As of December 31, 2012 balances associated with the exploration and assessment of mineral resources is presented under Inventory for ThUS$ 6,174 (ThUS$ 3,699 as of December 31, 2011).

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 25 - Other current and non-current non-financial assets (continued)

 

Reconciliation of changes in assets for exploration and mineral resource evaluation, by type

 

Movements in assets for the exploration and evaluation of mineral resources as of December 31, 2012 and December 31, 2011:

 

Reconciliation		12/31/2012				12/31/2011
		ThUS$				ThUS$
Assets for the exploration and evaluation of mineral resources, net, opening balance			21,395				21,350
Changes in assets for exploration and assessment of mineral resources:
Additions, other than business combinations			843				3,777
Depreciation and amortization			(2,080	)			(1,883	)
Increase (Decrease) due to transfers and other charges			(3,319	)			(1,849	)
Assets for exploration and assessment of mineral resources, net, closing balance			16,839				21,395

 

As of the presentation date, no reevaluations of assets for exploration and assessment of mineral resources have been conducted.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments

 

26.1

Operating segments

 

General information:

 

The amount of each item presented in each operating segment is equal to that reported to the maximum authority who makes decisions regarding the operation, in order to decide on the allocation of resources to the defined segments and to assess its performance.

 

Factors used to identify segments on which a report should be presented:

 

Segments reported are strategic business units that offer different products and services. These are managed separately because each business requires different technology and marketing strategies.

 

Description of the types of products and services on which each reportable segment obtain its income from ordinary activities

 

The operating segments, through which incomes of ordinary activities are obtained, that generate expenses and whose operating results are reviewed on a regular basis by the maximum authority who makes decisions regarding operations, relate to the following groups of products:

 

1.- Specialty plant nutrients

2.- Iodine and its derivatives

3.- Lithium and its derivatives

4.- Industrial chemicals

5.- Potassium

6.- Other products and services

 

Description of income sources for all the other segments

 

Information relative to assets, liabilities and profit and expenses that cannot be assigned to the segments indicated above, due to the nature of production processes, is included under "Unassigned amounts” category of the disclosed information.

 

Basis of accounting for transactions between reportable segments

 

Sales between segments are made in the same conditions as those made to third parties, and are consistently measures as presented in the income statement.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments (continued)

 

26.1

Operating segments, continued

 

Description of the nature of the differences between measurements of results of reportable segments and the result of the entity before the expense or income tax expense of incomes and discontinued operations.

 

The information reported in the segments is extracted from the Company´s consolidated financial statements and therefore is not required to prepare reconciliations between the data mentioned above and those reported in the respective segments, according to what is stated in paragraph 28 of IFRS 8, "Operating Segments".

 

Description of the nature of the differences between measurements of assets of reportable segments and the Company´s assets

 

Assets are not shown classified by segments, as this information is not readily available, some of these assets are not separable by the type of activity to which these are affect and since this information is not used by management in decisions making with respect to resources to be allocated to each defined segment. All assets are disclosed in the "unallocated amounts" category.

 

Description of the nature of the differences between measurements of liabilities of reportable segments and the Company´s liabilities

 

Liabilities are not shown classified by segments, as this information is not readily available, some of these liabilities are not separable by the type of activity to which these are affected and since this information is not used by management in decisions making regarding resources to be allocated to each defined segment. All liabilities are disclosed in the "unallocated amounts" category.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments (continued)

 

26.2

Operating segment disclosures as of December 31, 2012 and December 31, 2011:

 

12/31/2012
Operating segment items		Specialty plant nutrients				Iodine and its derivatives				Lithium and its derivatives				Industrial chemicals				Potassium				Other products and services				Reportable segments				Operating segments				Elimination of inter- segments amounts				Unallocated amounts				Significant reconciliation entries				Total 12/31/2012
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Revenue			675,350				578,091				222,238				245,208				605,059				103,214				2,429,160				2,429,160				-				-				-				2,429,160
Revenues from transactions with other operating segments of the same entity			265,814				848,243				154,248				348,667				569,219				493,884				2,680,075				2,680,075				(2,680,075	)			-				-				-
Revenues from external customers and transactions with other operating segments of the same entity			941,164				1,426,334				376,486				593,875				1,174,278				597,098				5,109,235				5,109,235				(2,680,075	)			-				-				2,429,160
Interest revenue			-				-				-				-				-				-				-				-				-				-				-				-
Interest expense			-				-				-				-				-				-				-				-				225,396				(279,491	)			-				(54,095	)
depreciation and amortization expense			(54,383	)			(47,100	)			(17,896	)			(19,745	)			(48,723	)			(8,311	)			(196,158	)			(196,158	)			-				-				-				(196,158	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method			-				-				-				-				-				-				-				-				-				24,357				-				24,357
income tax expense, continuing operations			-				-				-				-				-				-				-				-				-				(216,082	)			-				(216,082	)
Other items other tan significant cash			-				-				-				-				-				-				-				-				-								-				-
Income (loss) before taxes			217,880				362,518				110,695				83,055				246,027				8,419				1,028,594				1,028,594				(786,634	)			631,491				-				873,451
Net income (loss) from continuing operations			217,880				362,518				110,695				83,055				246,027				8,419				1,028,594				1,028,594				(786,634	)			415,409				-				657,369
Net income (loss) from discontinued operations
Net income (loss)			217,880				362,518				110,695				83,055				246,027				8,419				1,028,594				1,028,594				(786,634	)			415,409				-				657,369
Assets			-				-				-				-				-				-				-				-				(7,296,791	)			11,713,222				-				4,416,431
Equity-accounted investees			-				-				-				-				-				-				-				-				(3,423,758	)			3,494,056				-				70,298
Increase of non-current assets			-				-				-				-				-				-				-				-								255,363				-				255,363
Liabilities			-				-				-				-				-				-				-				-				(3,393,525	)			5,622,510				-				2,228,985
Equity																																															2,187,446
Equity and liability																																															4,416,431
Impairment loss recognized in profit or loss			(10,281	)			(2,081	)			(162	)			(3,043	)			(2,471	)			(120	)			(18,158	)			(18,158	)			-				(2,900	)			-				(21,058	)
Cash flows from (used in) operating activities			-				-				-				-				-				-				-				-				-				650,206				-				650,206
Cash flows from (used in) investing activities			-				-				-				-				-				-				-				-				-				(562,885	)			-				(562,885	)
Cash flows from (used in) financing activities			-				-				-				-				-				-				-				-				-				(197,697	)			-				(197,697	)

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments (continued)

 

26.2

Operating segment disclosures as of December 31, 2012 and December 31, 2011:

 

12/31/2011
Operating segment items		Specialty plant nutrients				Iodine and its derivatives				Lithium and its derivatives				Industrial chemicals				Potassium				Other products and services				Reportable segments				Operating segments				Elimination of inter- segments amounts				Unallocated amounts				Significant reconciliation entries				Total 12/31/2011
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Revenue			721,696				454,468				183,403				139,508				555,742				90,469				2,145,286				2,145,286				-				-				-				2,145,286
Revenues from transactions with other operating segments of the same entity			268,628				620,516				136,894				265,298				568,393				365,225				2,224,954				2,224,954				(2,224,954	)			-				-				-
Revenues from external customers and transactions with other operating segments of the same entity			990,324				1,074,984				320,297				404,806				1,124,135				455,694				4,370,240				4,370,240				(2,224,954	)			-				-				2,145,286
Interest revenue			-				-				-				-				-				-				-				-				-				-				-				-
Interest expense			-				-				-				-				-				-				-				-				196,461				(235,796	)			-				(39,335	)
depreciation and amortization expense			(65,902	)			(41,500	)			(16,747	)			(12,739	)			(50,748	)			(8,261	)			(195,897	)			(195,897	)			-				-				-				(195,897	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method			-				-				-				-				-				-				-				-				-				21,808				-				21,808
income tax expense, continuing operations			-				-				-				-				-				-				-				-				-				179,710				-				179,710
Other items other tan significant cash			-				-				-				-				-				-				-				-				-								-				-
Income (loss) before taxes			227,476				262,361				85,230				56,005				218,264				5,456				854,792				854,792				(757,832	)			636,869				-				733,829
Net income (loss) from continuing operations			227,476				262,361				85,230				56,005				218,264				5,456				854,792				854,792				(757,832	)			457,159				-				554,119
Net income (loss) from discontinued operations
Net income (loss)			227,476				262,361				85,230				56,005				218,264				5,456				854,792				854,792				(757,832	)			457,159				-				554,119
Assets			-				-				-				-				-				-				-				-				(6,740,071	)			10,611,654				-				3,871,583
Equity-accounted investees			-				-				-				-				-				-				-				-				(2,595,886	)			2,656,580				-				60,694
Increase of non-current assets			-				-				-				-				-				-				-				-								207,320				-				207,320
Liabilities			-				-				-				-				-				-				-				-				(3,699,768	)			5,706,971				-				2,007,203
Equity																																															1,864,380
Equity and liability																																															3,871,583
Reversal of impairment losses recognized in profit and loss for the year																			1,543								1,543				1,543								179								1,722
Impairment loss recognized in profit or loss			(3,379	)			(596	)			(420	)			(3,085	)			-				(207	)			(7,687	)			(7,687	)			-				(5,364	)			-				(13,051	)
Cash flows from (used in) operating activities			-				-				-				-				-				-				-				-				-				571,345				-				571,345
Cash flows from (used in) investing activities			-				-				-				-				-				-				-				-				-				(516,228	)			-				(516,228	)
Cash flows from (used in) financing activities			-				-				-				-				-				-				-				-				-				(105,196	)			-				(105,196	)

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments (continued)

 

26.3

Statement of comprehensive income classified by operating segments based on groups of products as of December 31, 2012:

 

Items in the statement of comprehensive income		Specialty plant nutrients ThUS$				Iodine and its derivatives ThUS$				Lithium and its derivatives ThUS$				Industrial chemicals ThUS$				Potassium ThUS$				Other products and services ThUS$				Corporate Unit ThUS$				Total segments and Corporate unit ThUS$
Revenue			675,350				578,091				222,238				245,208				605,059				103,214				-				2,429,160
Cost of sales			(457,470	)			(215,573	)			(111,543	)			(162,153	)			(359,032	)			(94,796	)			-				(1,400,567	)
Gross profit			217,880				362,518				110,695				83,055				246,027				8,418				-				1,028,593
Other incomes by function			-				-				-				-				-				-				12,702				12,702
Administrative expenses			-				-				-				-				-				-				(106,442	)			(106,442	)
Other expenses y function			-				-				-				-				-				-				(34,628	)			(34,628	)
Other gains (losses)			-				-				-				-				-				-				683				683
Financial income			-				-				-				-				-				-				29,068				29,068
Financial costs			-				-				-				-				-				-				(54,095	)			(54,095	)
interest in the profit or loss of associates and joint ventures accounted for by the equity method			-				-				-				-				-				-				24,357				24,357
Exchange differences			-				-				-				-				-				-				(26,787	)			(26,787	)
Profit (loss )before taxes			217,880				362,518				110,695				83,055				246,027				8,418				(155,142	)			873,451
Income tax expense			-				-				-				-				-				-				(216,082	)			(216,082	)
Profit (loss )from continued operations			217,880				362,518				110,695				83,055				246,027				8,418				(371,224	)			657,369
Profit (loss ) from discontinued operations			-				-				-				-				-				-				-				-
Profit (loss)			217,880				362,518				110,695				83,055				246,027				8,418				(371,224	)			657,369
Profit (loss, attributable to
Profit (loss ) attributable to the controller´s owners			-				-				-				-				-				-				-				649,167
Profit (loss ) attributable to the non controllers			-				-				-				-				-				-				-				8,202
Profit (loss)			-				-				-				-				-				-				-				657,369

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments (continued)

 

26.3

Statement of comprehensive income classified by operating segments based on groups of products as of December 31, 2011:

 

Items in the statement of comprehensive income		Specialty plant nutrients ThUS$				Iodine and its derivatives ThUS$				Lithium and its derivatives ThUS$				Industrial chemicals ThUS$				Potassium ThUS$				Other products and services ThUS$				Corporate Unit ThUS$				Total segments and Corporate unit ThUS$
Revenue			721,696				454,468				183,403				139,508				555,742				90,469				-				2,145,286
Cost of sales			(494,220	)			(192,107	)			(98,173	)			(83,503	)			(337,478	)			(85,013	)			-				(1,290,494	)
Gross profit			227,476				262,361				85,230				56,005				218,264				5,456				-				854,792
Other incomes by function			-				-				-				-				-				-				47,681				47,681
Administrative expenses			-				-				-				-				-				-				(91,760	)			(91,760	)
Other expenses y function			-				-				-				-				-				-				(63,047	)			(63,047	)
Other gains (losses)			-				-				-				-				-				-				5,787				5,787
Financial income			-				-				-				-				-				-				23,210				23,210
Financial costs			-				-				-				-				-				-				(39,335	)			(39,335	)
interest in the profit or loss of associates and joint ventures accounted for by the equity method			-				-				-				-				-				-				21,808				21,808
Exchange differences			-				-				-				-				-				-				(25,307	)			(25,307	)
Profit (loss )before taxes			227,476				262,361				85,230				56,005				218,264				5,456				(120,963	)			733,829
Income tax expense			-				-				-				-				-				-				(179,710	)			(179,710	)
Profit (loss )from continued operations			227,476				262,361				85,230				56,005				218,264				5,456				(300,673	)			554,119
Profit (loss ) from discontinued operations			-				-				-				-				-				-				-				-
Profit (loss)			227,476				262,361				85,230				56,005				218,264				5,456				(300,673	)			554,119
Profit (loss, attributable to
Profit (loss ) attributable to the controller´s owners			-				-				-				-				-				-				-				545,758
Profit (loss ) attributable to the non controllers			-				-				-				-				-				-				-				8,361
Profit (loss)			-				-				-				-				-				-				-				554,119

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments (continued)

 

26.4

Revenue from transactions with other operating segments of the Company as of December 31, 2012

 

Items in the statement of comprehensive income		Specialty plant nutrients ThUS$				Iodine and its derivatives ThUS$				Lithium and its derivatives ThUS$				Industrial chemicals ThUS$				Potassium ThUS$				Other products and services ThUS$				Total segments and Corporate unit ThUS$
Revenue			675,350				578,091				222,238				245,208				605,059				103,214				2,429,160

 

26.4

Revenue from transactions with other operating segments of the Company as of December 31, 2011

 

Items in the statement of comprehensive income		Specialty plant nutrients ThUS$				Iodine and its derivatives ThUS$				Lithium and its derivatives ThUS$				Industrial chemicals ThUS$				Potassium ThUS$				Other products and services ThUS$				Total segments and Corporate unit ThUS$
Revenue			721,696				454,468				183,403				139,508				555,742				90,469				2,145,286

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments (continued)

 

26.5

Disclosures on geographical areas

 

As indicated in paragraph 33 of IFRS 8, the entity discloses geographical information on its revenue from operating activities with external customers and from non-current assets that are not financial instruments, deferred income tax assets, assets related to post-employment benefits or rights derived from insurance contracts.

 

26.6

Disclosures on main customers

 

With respect to the degree of dependency of the Company on its customers, in accordance with paragraph N° 34 of IFRS N° 8, the Company has no external customers who individually represent 10% or more of its revenue. Credit risk concentrations with respect to trade and other accounts receivable are limited due to the significant number of entities in the Company’s portfolio and its worldwide distribution. The Company’s policy requires guarantees (such as letters of credit, guarantee clauses and others) and/or to maintain insurance policies for certain accounts as deemed necessary by the Company's Management.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments (continued)

 

26.7

Segments by geographical areas as of December 31, 2012 and 2011

 

Items		Chile				Latin America and the Caribbean				Europe				North America				Asia and others				12/31/2012
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Revenue			269,421				416,089				558,245				619,667				565,738				2,429,160
Non-current assets:			2,054,806				488				35,709				18,066				29,602				2,138,671
Equity-accounted investees			1,656				-				24,051				15,357				29,234				70,298
Intangible assets other than goodwill			23,630				-				-				378				5				24,013
Goodwill			26,929				86				11,373				-				-				38,388
Property, plant and equipment, net			1,985,128				183				285				2,331				363				1,988,290
Investment property			-				-				-				-				-				-
Other non-current assets			17,463				219				-				-				—				17,682

 

Items		Chile				Latin America and the Caribbean				Europe				North America				Asia and others				12/31/2011
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Revenue			247,510				284,605				837,126				445,048				330,997				2,145,286
Non-current assets:			1,809,871				1,757				28,681				15,335				27,664				1,883,308
Equity-accounted investees			1,444				-				16,919				14,867				27,464				60,694
Intangible assets other than goodwill			3,877				-				-				439				-				4,316
Goodwill			27,146				86				11,373				-				-				38,605
Property, plant and equipment, net			1,752,991				1,433				389				29				200				1,755,042
Investment property			-				-				-				-				-				-
Other non-current assets			24,413				238				-				-				-				24,651

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 26 - Operating segments (continued)

 

26.8

Property, plant and equipment classified by geographical areas

 

The company's main productive facilities are located near their mines and extraction facilities in northern Chile. The following table presents the main production facilities as of March 31, 2012 and December 31, 2012 and December 31, 2011:

 

Location		Products:
Pedro de Valdivia		Production of nitrite, sulfate, and iodine
María Elena		Production of nitrite, sulfate, and iodine
Coya Sur		Production of nitrite, sulfate, and iodine
Nueva Victoria		Production of iodine and nitrate salts
Salar de Atacama		Potassium chloride, Lithium chloride and boric acid
Salar del Carmen		Production of Lithium carbonate and lithium hydroxide, production of boron
Tocopilla		Port facilities

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Nota 27 - Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature

 

27.1

Revenue

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Products			2,420,357				2,138,264
Services			8,803				7,022
Total			2,429,160				2,145,286

 

27.2

Cost of sales

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Raw material and supplies			(1,066,803	)			(762,350	)
Types of employee benefits expenses
Salaries and wages			(134,400	)			(104,757	)
Other short-term employee benefits			(66,370	)			(52,804	)
Termination benefit expenses			(4,325	)			(4,646	)
Total employee benefits expenses			(205.095	)			(162,207	)
Depreciation and amortization expenses			(190,509	)			(163,438	)
Impairment loss (review of impairment losses) recognized in profit or loss for the year			(18,158	)			(6,144	)
Other expenses, by nature (*)			79,998				(196,355	)
Total			(1,400,567	)			(1,290,494	)

 

(*)

Include the variation of finished and products in-process

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 27 - Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature (continued)

 

27.3

Other income

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Discounts obtained from suppliers			648				777
Compensation received			53				876
Penalties charged to suppliers			312				453
Taxes recovered			15				12
Insurance recovered			5,187				395
Excess in the provision of liabilities with 3rd parties			669				630
Excess in allowance for doubtful accounts			154				178
Sale of Property, plant and equipment			281				2,213
Sale of materials, spare parts and supplies			1,388				959
Sale of mining concessions			1,578				613
Sale of scrap			176				141
Indemnity Minera Esperanza			28				192
Excess indemnity provision Yara South Africa			335				-
Excess inventory provision			-				559
Other services			2				84
Other operating results			1,876				1,920
Sale of mining concessions Sierra Gorda SCM			-				37,679
Total			12,702				47,681

 

27.4

Administrative expenses

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Employee benefit expenses by nature
Salaries and wages			(44,429	)			(42,609	)
Other short-term benefits to employees			(2,868	)			(3,884	)
Total employee benefit expenses			(47.297	)			(46,493	)
Other expenses, by nature			(59,145	)			(45,267	)
Total			(106,442	)			(91,760	)

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Nota 27 - Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature (continued)

 

27.5

Other expenses by function

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Employee benefit expenses by nature
Other short-term benefits to employees			(24	)			(16	)
Depreciation and amortization expenses
Depreciation of stopped assets			(5,649	)			(32,459	)
Impairment loss (review of impairment losses) recognized in profit or loss for the year
Impairment of allowance for doubtful accounts			(1,054	)			(3,364	)
Provision for loss in auction of materials and spare parts			(2,000	)			(2,000	)
Subtotal to date			(3,054	)			(5,364	)
Other expenses, by nature
Legal Expenses			(1,984	)			(2,422	)
VAT and other unrecoverable tax			(1,182	)			(685	)
Investment plan expenses			(13,578	)			(11,462	)
Donations rejected as expense			(5,517	)			(2,557	)
Provision for work closing			(634	)			(224	)
Trial in Brazil			-				(3,500	)
Indemnities paid			(281	)			(3,495	)
Other operating expenses			(2,725	)			(863	)
Subtotal to date			(25,901	)			(25,208	)
Total			(34,628	)			(63,047	)

 

27.6

Other income (expenses)

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Adjustment of Equity Method, prior year			736				422
Sale of investment in associates			(404	)			1,467
Provision for retirement plan			-				880
Adjustment of prior year equity value			-				-
Provision for closure in El Toco			-				3,016
Other			351				2
Total			683				5,787

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 27 - Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature

 

27.7

Summary of expenses by nature :

 

		January to December								September to December
		2012				2011				2012				2011
		ThUS$				ThUS$				ThUS$				ThUS$
Raw material and supplies used			(1,066,803	)			(762,350	)			(305,380	)			(242,713	)
Types of employee benefits expenses
Salaries and wages			(178,829	)			(147,366	)			(51,350	)			(40,092	)
Other short-term employee benefits			(69,262	)			(56,704	)			(15,566	)			(16,744	)
Termination benefit expenses			(4,325	)			(4,646	)			(2,034	)			(1,238	)
Total employee benefit expenses			(252,416	)			(208,716	)			(68,950	)			(58,074	)
Depreciation and amortization expenses
Depreciation expense			(196,158	)			(195,897	)			(50,181	)			(56,695	)
Impairment loss (reversal of impairment losses) recognized in profit or loss for the year			(21,212	)			(11,508	)			4,230				(3,982	)
Other expenses, by nature			(5,048	)			(266,830	)			11,697				(8,641	)
Total expenses, by nature			(1,541,637	)			(1,445,301	)			(408,584	)			(370,105	)

 

This table corresponds to the summary from Note 27.2 to 27.6 required by the Chilean Superintendence of Securities and Insurance

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Nota 28 - Income Tax and Deferred Taxes

 

Accounts receivable from taxes as of December 31, 2012 and December 31, 2011, are as follows:

 

28.1

Current tax assets:

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Monthly provisional income tax payments, Chilean companies current year			23,713				1,758
Monthly provisional payment Royalty			2,430				-
Monthly provisional income tax payments, foreign companies			1,979				857
Corporate tax credits (1)			144				394
Corporate tax absorbed by tax losses (2)			1,968				1,756
Total			30,234				4,765

 

(1)

These credits are available to companies and relate to the corporate tax payment in April of the following year. These credits include, amongst others, training expense credits (SENCE) and property, plant and equipment acquisition credits that are equivalent to 4% of the property, plant and equipment purchases made during the year. In addition, some credits relate to the donations the Group has made during 2012 and 2011.

 

(2)

This concept corresponds to the absorption of non-operating losses (NOL’s) determined by the company at year end, which must be imputed or recorded in the Retained Taxable Profits Registry (FUT).

 

In accordance with the laws in force and as provided by article 31, No. 3 of the Income Tax Law, when profits recorded in the FUT that have not been withdrawn or distributed are totally or partially absorbed by NOL’s, the corporate tax paid on such profits (20%, 17%, 16.5%, 16%, 15%, 10% depending on the year in which profits were generated) will be considered to be a provisional payment with respect to the portion representing the absorbed accumulated tax profits.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.1

Current tax assets, continued

 

Taxpayers are entitled to apply for a refund of this monthly provisional income tax payments on the absorbed profits recorded in the FUT registry via their tax returns (Form 22).

 

Therefore, the provisional payment for absorbed profits (PPAP) recorded in the FUT is in effect a recoverable tax, and as such the Company records it as an asset.

 

28.2

Current tax liabilities:

 

Current tax liabilities		12/31/2012				12/31/2011
		ThUS$				ThUS$
Companies incorporated in Chile			13,408				67,543
Companies incorporated abroad			10,206				7,868
Tax under article 21			10				7
Total			23,624				75,418

 

Income tax is determined on the basis of the determination of tax result to which the tax rate currently in force in Chile is applied. As established by Law 20.630, beginning on 2012 and after this tax rate is 20%.

 

The provision for royalty is determined by applying the tax rate determined for the Net operating income (NOI).

In conclusion, both concepts represent the estimated amount the Company will have to pay for income tax and specific tax on mining.

 

28.3

Tax earnings

 

As of December 31, 2012, and December 31, 2011, the Company and its subsidiaries have recorded the following consolidated balances for retained tax earnings, income not constituting revenue subject to income tax, accumulated tax losses and credit for shareholders:

 

		12/31/2012 ThUS$				12/31/2011 ThUS$
Taxable profits with credit rights (1)			1,262,201				1,053,651
Taxable profits without credit right(1)			138,535				150,234
Taxable loss			9,931				15,069
Credit for shareholders			294,146				242,143

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.3

Tax earnings, continued

 

The Retained Taxable Profits Registry (FUT) is a chronological registry where the profits generated and distributed by the company are recorded. The object of the FUT is to control the accumulated tax profits of the company that may be distributed, withdrawn or remitted to the owners, shareholders or partners, and the final taxes that must be imposed, called in Chile Global Aggregate Tax (that levies persons resident or domiciled in Chile), or Withholding Tax (that levies persons “Not” resident or domiciled in Chile).

 

The FUT Register contains profits with credit rights and profits without credit rights, which arise out of the inclusion of the net taxable income determined by the company or the profits received by the company that may be dividends received or withdrawals made during the period.

 

Profits without credit rights represent the tax payable by the company within the year and filed the following year, therefore they will be deducted from the FUT Registry the following year.

 

Profits with credit rights may be used to reduce the final tax burden of owners, shareholders or partners, which upon withdrawal are entitled to use the credits associated with the relevant profits.

 

In summary, companies use the FUT Registry to maintain control over the profits they generate that have not been distributed to the owners and the relevant credits associated with such profits.

 

28.4

Income tax and deferred taxes

 

Assets and liabilities recognized in the Statement of financial position are offset if 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 or tax subject; or

 

(ii)

different entities or tax subjects who intend either to settle current fiscal assets and liabilities for their net amount, or to 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.

 

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

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 and not yet 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 tax income from subsequent periods, losses or fiscal credits not yet used, but solely as long as it is more likely than not that there will be tax earnings in the future against which to charge to these losses or unused fiscal credits.

 

Deferred tax liabilities recognized refer to the amounts of income taxes payable in future periods related to taxable temporary differences

 

d.1

Income tax assets and liabilities as of December 31, 2012 are detailed as follows:

 

		Net position, assets								Net position, liabilities
Description of deferred income tax assets and		Assets				Liabilities				Assets				Liabilities
liabilities		ThUS$				ThUS$				ThUS$				ThUS$
Depreciation			-				-				-				145,251
Doubtful accounts impairment			-				-				5,807				-
Accrued vacations			-				-				3,971				-
Manufacturing expenses			-				-				-				60,160
Unrealized gains (losses) from sales of products			-				-				105,879				-
Fair value of bonds			-				-				3,684				-
Severance indemnity			-				-				-				4,483
Hedging			-				-				-				22,890
Inventory of products, spare parts and supplies			37				-				14,990				-
Research and development expenses			-				-				-				4,917
Tax losses			-				-				1,509				-
Capitalized interest			-				-				-				20,449
Expenses in assumption of bank loans			-				-				-				2,243
Unaccrued interest			-				-				215				-
Fair value of property, plant and equipment			-				-				-				2,743
Employee benefits			-				-				2,027				-
Royalty deferred income taxes			-				-				-				8,430
Other			186				-				8,039				-
Balance to date			223				-				146,121				271,566
Net balance			223				-				-				125,445

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.2

Income tax assets and liabilities as of December 31, 2012 are detailed as follows

 

		Net position, assets								Net position, liabilities
Description of deferred income tax assets		Assets				Liabilities				Assets				Liabilities
and liabilities		ThUS$				ThUS$				ThUS$				ThUS$
Depreciation			-				-				-				114,151
Doubtful accounts impairment			16								4,045				-
Vacation accrual			9				-				2,633				-
Production expenses			-				-				-				54,747
Unrealized gains (losses) from sales of products			-				-				97,441				-
Bonds fair value			-				-				2,104				-
Employee termination benefits			-				-				-				3,036
Hedging			-				-				-				16,636
Inventory of products, spare parts and supplies			85				-				7,781				-
Research and development expenses			-				-				-				4,598
Tax losses			-				-				1,046				-
Capitalized interest			-				-				-				17,461
Expenses in assumption of bank loans			-				-				-				1,855
Unaccrued interest			-				-				386				-
Fair value of property, plant and equipment			-				-				1,539				-
Employee benefits			-				-				1,177				-
Royalty deferred income taxes			-				-				-				10,035
Other			194				-				5,773				-
Balance to date			304				-				123,925				222,519
Net balance			304				-				-				98,594

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.3

Deferred taxes related to benefits for tax losses

 

The Company’s tax loss carryforwards (NOL carryforwards) were mainly generated by losses in Chile, which in accordance with current Chilean tax regulations have no expiration date.

 

As of December 31, 2012 and December 31, 2011, tax loss carryforwards (NOL carryforwards) are detailed as follows:

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
Chile			1,509				1,046
Other countries			-				-
Other countries			1,509				1,046

 

Tax losses as of December 31 correspond mainly to Servicios Integrales de Tránsitos y Transferencias S.A., Exploraciones Mineras e Isapre Norte Grande Ltda.

 

d.4

Unrecognized deferred income tax assets and liabilities

 

Unrecognized deferred tax assets and liabilities as of December 31, 2012 and December 31, 2011 are as follows:

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
		Assets (liabilities)				Assets (liabilities)
Tax losses (NOL’s)			139				139
Doubtful accounts impairment			81				81
Inventory impairment			1,020				1,020
Pensions plan			(536	)			(536	)
Accrued vacations			29				29
Depreciation			(57	)			(57	)
Depreciation			(19	)			(19	)
Balances to date			657				657

 

Tax losses mainly relate to the United States, and they expire in 20 years.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.5

Movements in deferred tax assets and liabilities

 

Movements in deferred tax assets and liabilities as of December 31, 2012 and December 31, 2011 are detailed as follows:

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
		Liabilities (assets)				Liabilities (assets)
Deferred tax assets and liabilities, net opening balance			98,290				100,416
Increase (decrease) in deferred taxes in profit or loss			28,512				(3,664	)
Tax Recovery of first category credit absorbed by tax losses			-				1,756
Increase (decrease) in deferred taxes in equity			(1,580	)			(218	)
Balances to date			125,222				98,290

 

d.6

Disclosures on income tax expense (income)

 

The Company recognizes current tax and deferred taxes as income or expenses, and they are included in profit or loss, unless they arise from:

 

(a)

a transaction or event 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

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

Current and deferred tax expenses (income) are detailed as follows:

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
		Income (expenses)				Income (expenses)
Current income tax expense
Current income tax expense			(187,715	)			(181,424	)
Adjustments to prior year current income tax			145				(1,950	)
Current income tax expense, net, total			(187,570	)			(183,374	)
Deferred tax expense
Deferred tax expense (income) relating to the creation and reversal of temporary differences			(28,512	)			3,664
Deferred tax expense (income) relating changes in tax rates or the application of new taxes			-				-
Deferred tax expense, net, total			(28,512	)			3,664
Tax expense (income)			(216,082	)			(179,710	)

 

Tax expenses (income) for foreign and domestic parties are detailed as follows:

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
		Income (expenses)				Income (expenses)
Current income tax expense by foreign and domestic parties, net
Current income tax expense, foreign parties, net			(14,790	)			(5,231	)
Current income tax expense, domestic, net			(172,780	)			(178,143	)
Current income tax expense, net, total			(187,570	)			(183,374	)
Deferred tax expense by foreign and domestic parties, net
Deferred tax expense, foreign parties, net			474				(651	)
Deferred tax expense, domestic, net			(28,986	)			4,315
Deferred tax expense, net, total			(28,512	)			3,664
Income tax expense			(216,082	)			(179,710	)

 

  

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.7

Equity interest in taxation attributable to equity-accounted investees

 

The Company does not recognize any deferred tax liability in all cases of taxable temporary differences associated with investments in subsidiaries, branches and associated companies or interest in joint ventures, because as indicated in the standard, the following two conditions are jointly met

 

(a)

the parent, investor or interest holder is able to control the time for reversal of the temporary difference; and

 

(b)

It is more likely than not 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 interests in joint ventures because it is not possible to meet for the following requirements:

 

(a)

Temporary differences are reversed in a foreseeable future; and

 

(b)

The Company has tax earnings, against which temporary differences can be used.

 

d.8

Disclosures on the tax effects of other comprehensive income components:

 

						12/31/2012
						ThUS$
Income tax related to components of other		Amount before				(Expense)
income and expense with a charge or credit to		taxes				income for				Amount
net equity		(expense) gain				income taxes				after taxes
Cash flow hedge			(6,236	)			1,580				(4,656	)
Total			(6,236	)			1,580				(4,656	)

 

						12/31/2011
						ThUS$
Income tax related to components of other		Amount before				(Expense)
income and expense with a charge or credit to		taxes				income for				Amount
net equity		(expense) gain				income taxes				after taxes
Cash flow hedge			(1,091	)			218				(873	)
Total			(1,091	)			218				(873	)

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.9

Explanation of the relationship between expense (income) for tax purposes and accounting income.

 

In accordance with paragraph No. 81, letter c) of IAS 12, the Company has estimated that the method that 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 tax rate in force in Chile. This option is based on the fact that the Parent 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

 

		12/31/2012				12/31/2011
		ThUS$				ThUS$
		Income (expense)				Income (expense)
Consolidated income before taxes			873,451				733,829
Income tax rate in force in Chile			20	%			20	%
Tax expense using the legal rate			(174,690	)			(146,766	)
Effect of royalty tax expense			(25,486	)			(24,487	)
Tax effect of non-taxable revenue			7,419				6,865
Effect of taxable rate of non-deductible expenses for determination of taxable income (loss)			(3,091	)			(2,548	)
Tax effect of tax rates supported abroad			(5,265	)			(3,173	)
Effect on the tax rate arising from changes in the tax rate			-				-
Other tax effects from the reconciliation between the accounting income and tax expense (income)			(14,969	)			(9,601	)
Tax expense using the effective rate			(216,082	)			(179,710	)

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 28 - Income Tax and Deferred Taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.10

Tax periods potentially subject to verification:

 

The Group’s Companies are potentially subject to income tax audits by tax authorities in each country. These audits are limited to a number of interim tax periods, which, in general, when they elapse, give rise to the expiration of these inspections.

 

Tax audits, due to their nature, are often complex and may require several years. Below, we provide a summary of tax periods that are potentially subject to verification, in accordance with tax regulations in force in the country of origin:

 

a)

Chile:

 

According to article 200 of Decree Law No. 830, the tax authority shall review for any deficiencies in its settlement and taxes turn giving rise, by applying a requirement of 3 years term from the expiration of the legal deadline when payment should have been made. Besides, this requirement was extended to 6 years term for the revision of taxes subject to declaration, when such declaration was not been filed or has been presented maliciously false.

 

b)

United States

 

In the United States, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return. In the event that an omission or error is detected in the tax return of sales or cost of sales, the review can be extended for a period of up to 6 years.

 

c)

Mexico:

 

In Mexico, the tax authority can review tax returns up to 5 years from the expiration date of the tax return.

 

d)

Spain:

 

In Spain, the tax authority can review tax returns up to 4 years from the expiration date of the tax return.

 

e)

Belgium:

 

In Belgium, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return if no tax losses exist. In the event of detecting an omission or error in the tax return, the review can be extended for a period of up to 5 years.

 

f)

South Africa:

 

In South Africa, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return. In the event an omission or error in the tax return is detected, the review can be extended for a period of up to 5 years.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 29 - Disclosures on the effects of fluctuations in foreign currency exchange rates

 

Assets held in foreign currency subject to fluctuations in exchange rates are detailed as follows:

 

Class of asset		Currency				12/31/2012 ThUS$				12/31/2011 ThUS$
Current assets:
Cash and cash equivalents			BRL				20				22
Cash and cash equivalents			CLP				76,712				125,118
Cash and cash equivalents			CNY				181				300
Cash and cash equivalents			EUR				3,601				3,070
Cash and cash equivalents			GBP				70				14
Cash and cash equivalents			IDR				5				5
Cash and cash equivalents			INR				13				45
Cash and cash equivalents			MXN				720				29
Cash and cash equivalents			PEN				75				16
Cash and cash equivalents			YEN				1,369				2,292
Cash and cash equivalents			ZAR				7,421				5,450
Subtotal cash and cash equivalents							90,187				136,361
Other current financial assets			CLP				182,427				129,069
Subtotal other current financial assets							182,427				129,069
Other current non-financial assets			ARS				29				35
Other current non-financial assets			AUD				-				91
Other current non-financial assets			BRL				5				4
Other current non-financial assets			CLF				23				22
Other current non-financial assets			CLP				42,378				46,366
Other current non-financial assets			CNY				29				16
Other current non-financial assets			EUR				8,534				4,504
Other current non-financial assets			INR				-				17
Other current non-financial assets			MXN				736				606
Other current non-financial assets			PEN				55				37
Other current non-financial assets			YEN				15				-
Other current non-financial assets			ZAR				702				1,443
Subtotal other current non-financial assets							52,506				53,141
Trade and other receivables			AUD				14				-
Trade and other receivables			BRL				58				41
Trade and other receivables			CLF				826				1,172
Trade and other receivables			CLP				78,112				107,973
Trade and other receivables			CNY				2,014				1,811
Trade and other receivables			EUR				47,962				60,382
Trade and other receivables			GBP				399				488
Trade and other receivables			MXN				200				141
Trade and other receivables			PEN				114				211
Trade and other receivables			ZAR				16,004				16,004
Subtotal trade and other receivables							145,703				188,223
Receivables from related parties			AED				-				379
Receivables from related parties			CLP				1,154				999
Receivables from related parties			EUR				34				150
Receivables from related parties			YEN				28				93
Receivables from related parties			ZAR				3,312				-
Subtotal receivables from related parties							4,528				1,621
Current tax assets			AUD				452				-
Current tax assets			CLP				457				590
Current tax assets			EUR				72				70
Current tax assets			INR				5				-
Current tax assets			MXN				698				6
Current tax assets			PEN				363				239
Current tax assets			YEN				135				34
Subtotal current tax assets							2,182				939
Total current assets							477,533				509,354

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 29 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

 

Class of asset		Currency		12/31/2012 ThUS$				12/31/2011 ThUS$
Non-current assets:
Other non-current financial assets		BRL			30				30
Other non-current financial assets		CLP			20				20
Other non-current financial assets		EUR			-				3
Other non-current financial assets		YEN			54				61
Subtotal other non-current financial assets					104				114
Other non-current non-financial assets		BRL			219				238
Other non-current non-financial assets		CLP			624				477
Subtotal other non-current non-financial assets					843				715
Non-current rights receivable		CLF			602				362
Non-current rights receivable		CLP			709				709
Subtotal non-current rights receivable					1,311				1,071
Equity-accounted investees		AED			17,044				14,236
Equity-accounted investees		CLP			1,656				1,444
Equity-accounted investees		EGP			-				1,270
Equity-accounted investees		EUR			8,495				3,102
Equity-accounted investees		INR			683				785
Equity-accounted investees		THB			1,608				1,561
Equity-accounted investees		TRY			15,431				12,256
Subtotal equity-accounted investees					44,917				34,654
Intangible assets other than goodwill		CLP			170				42
Intangible assets other than goodwill		CNY			6				-
Subtotal intangible assets other than goodwill					176				42
Property, plant and equipment		CLP			3,639				3,264
Subtotal property, plant and equipment					3,639				3,264
Total non-current assets					50,990				39,860
Total assets					528,523				549,214

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 29 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

Liabilities held in foreign currencies are detailed as follows:

 

				12/31/2012												12/31/2011
Class of liability		Currency		Up to 90 days ThUS$				Over 90 days up to 1 year ThUS$				Total ThUS$				Up to 90  days ThUS$				Over 90 days  up to 1 year ThUS$				Total ThUS$
Current liabilities
Other current financial liabilities		CLF			5,967				7,465				13,432				3,906				6,640				10,546
Other current financial liabilities		CLP			1,265				1,470				2,735				1,217				799				2,016
Subtotal other current financial liabilities					7,232				8,935				16,167				5,123				7,439				12,562
Trade and other payables		ARS			1				-				1				3				-				3
Trade and other payables		BRL			71				-				71				320				-				320
Trade and other payables		CHF			155				-				155				221				-				221
Trade and other payables		CLP			132,037				35				132,072				115,694				236				115,930
Trade and other payables		CNY			1,642				-				1,642				1,821				-				1,821
Trade and other payables		EUR			18,983				279				19,262				12,265				181				12,446
Trade and other payables		GBP			142				-				142				24				-				24
Trade and other payables		INR			4				-				4				1				-				1
Trade and other payables		MXN			808				2				810				426				-				426
Trade and other payables		PEN			36				-				36				31				-				31
Trade and other payables		YEN			66				49				115				124				-				124
Trade and other payables		ZAR			1,810				-				1,810				2,831				108				2,939
Subtotal trade and other payables					155,755				365				156,120				133,761				525				134,286
Other short-term provisions		ARS			-				-				-				62				-				62
Other short-term provisions		BRL			17				1,606				1,623				-				1,459				1,459
Other short-term provisions		CLP			28				-				28				29				-				29
Other short-term provisions		EUR			248				-				248				140				-				140
Other short-term provisions		MXN			-				-				-				-				250				250
Subtotal other short-term provisions					293				1,606				1,899				231				1,709				1,940
Current tax liabilities		INR			5				-				5				-				-				-
Current tax liabilities		BRL			-				3				3				-				-				-
Current tax liabilities		CLP			-				2,660				2,660				-				2,129				2,129
Current tax liabilities		CNY			-				22				22				49				-				49
Current tax liabilities		EUR			-				2,742				2,742				-				2,011				2,011
Current tax liabilities		MXN			36				-				36				140				-				140
Current tax liabilities		YEN			-				-				-				-				386				386
Current tax liabilities		ZAR			-				55				55				-				109				109
Subtotal current tax liabilities					41				5,482				5,523				189				4,635				4,824
Current provisions for employee benefits		CLP			7,557				14,760				22,317				6,915				22,807				29,722
Current provisions for employee benefits		MXN			-				212				212				-				334				334
Subtotal current provisions for employee benefits					7,557				14,972				22,529				6,915				23,141				30,056

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 29 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

 

				12/31/2012												12/31/2011
Class of liabilities		Currency		Up to 90 days ThUS$				Over 90 days up to 1 year ThUS$				Total ThUS$				Up to 90 days ThUS$				Over 90 days up to 1 year ThUS$				Total ThUS$
Other current non-financial liabilities		ARS			,				,				,				-				-				-
Other current non-financial liabilities		BRL			12				44				56				12				44				56
Other current non-financial liabilities		CLP			9,561				26,714				36,275				7,464				36,006				43,470
Other current non-financial liabilities		CNY			26				-				26				12				-				12
Other current non-financial liabilities		EUR			637				-				637				631				-				631
Other current non-financial liabilities		MXN			250				103				353				1,331				53				1,384
Other current non-financial liabilities		PEN			70				-				70				118				-				118
Other current non-financial liabilities		YEN			-				-				-				-				-				-
Other current non-financial liabilities		ZAR			9				-				9				-				-				-
Subtotal other current non-financial liabilities					10,565				26,861				37,426				9,568				36,103				45,671
Total current liabilities					181,443				58,221				239,664				155,787				73,552				229,339

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 29 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

 

				12/31/2012																12/31/2011
Class of liabilities		Currency		Over 1  year up to  3 years ThUS$				Over 3 years up to 5 years ThUS$				Over 5 years ThUS$				Total ThUS$				Over 1 year up to 3 years ThUS$				Over 3 years up to 5 years ThUS$				Over 5 years ThUS$				Total ThUS$
Non-current liabilities
Other non-current financial liabilities		CLF			85,681				61,119				321,857				468,657				76,417				12,510				232,938				321,865
Other non-current financial liabilities		CLP			151,500				-				-				151,500				139,770				-				-				139,770
Subtotal other non-current financial liabilities					237,181				61,119				321,857				620,157				216,187				12,510				232,938				461,635
Deferred tax liabilities		CLP			-				-				43				43				57				-				56				113
Deferred tax liabilities		MXN			159				-				-				159				590				-				-				590
Subtotal deferred tax liabilities					159				-				43				202				647				-				56				703
Non-current provisions for employee benefits		CLP			-				-				33,766				33,766				-				-				27,573				27,573
Non-current provisions for employee benefits		MXN			-				-				132				132				-				-				520				520
Non-current provisions for employee benefits		YEN			-				-				532				532				-				-				94				94
Subtotal non-current provisions for employee benefits					-				-				34,430				34,430				-				-				28,187				28,187
Total non-current liabilities					237,340				61,119				356,330				654,789				216,834				12,510				261,181				490,525

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 30 – Consolidated Statement of Cash Flows

 

As established in Circular N°2058 of the Superintendence of Securities and Insurance, the statement of cash flow as of December 31, 2012, using the direct method, is presented as follows:

 

Direct Statement of Cash Flow
		12/31/2012 ThUS$
Cash flows from (used in) operating activities
Classes of flows by operating activities
Flows from sales of goods and provision of services			2,387,979
Other flows from operating activities			-
Classes of payments
Payments to suppliers for the supply of goods and services			(1,492,399	)
Other payments for operating activities			(8,396	)
Dividends paid			-
Dividends received			15,126
Interests paid			(59,509	)
Interests received			24,368
Reimbursed (paid) income taxes			(250,201	)
Other incomes (outflows) of cash			33,238
Net Cash Flows from (used in) operating activities			650,206
Cash Flows from (used in) investing activities
Cash flows from the loss of control of subsidiaries or other businesses			961
Other payments to acquire stakes in joint ventures			(197	)
Loans to related entities			(4,000	)
Amounts from the sale of property, plant and equipment			2,050
Acquisition of Property, plant and equipment			(445,984	)
Advances of cash and loans granted to third parties			(623	)
Other incomes (outflows) of cash			(115,092	)
Net Cash Flows from (used in) investing activities			(562,885	)

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 30 - Consolidated Statement of Cash Flows (continued)

 

Direct Statement of Cash Flow
Statement of Cash Flow		12/31/2012 ThUS$
Cash Flows from (used in) financing activities
Amounts from the issuance of other capital instruments			-
Amounts from long-term loans			366,502
Amounts from short-term loans
Total amounts from loans			366,502
Payments of loans			(220,000	)
Dividends paid			(334,762	)
Other incomes (outflows) of cash			(9,437	)
Net Cash Flows from (used in) financing activities			(197,697	)
Net increase (decrease) in cash and cash equivalent before the effect of changes in exchange rate			(110,376	)
Effects of variation  in exchange rate on cash and cash equivalent			(10,263	)
Net increase (decrease) of cash and cash equivalent			(120,640	)
Initial balance of Cash and cash equivalent			444,992
Final balance of Cash and cash equivalent			324,353

 

Note 31 – Subsequent events

 

31.1

Authorization of the financial statements

 

The consolidated financial statements of Sociedad Química y Minera de Chile S.A. and subsidiaries prepared in accordance with International Financial Reporting Standards for the period ended December 31, 2012 were approved and authorized for issuance by the Board of Directors at their meeting held on March 5, 2013.

 

 

Notes to the Consolidated Financial Statements as of December 31, 2012

 

Note 31 - Subsequent events (continued)

 

31.2

Disclosures on events occurring after the reporting date

 

Management is not aware of any other significant events that occurred between December 31, 2012 and the date of issuance of these consolidated financial statements that 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.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

 

	Conf:	/s/ Ricardo Ramos R.
	Ricardo Ramos R.
	Chief Financial Officer

 

Date: April 11, 2013.