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

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

For the month of December, 2013.

Commission File Number 33-65728

 

CHEMICAL AND MINING COMPANY OF CHILE INC.

(Translation of registrant’s name into English)

 

El Trovador 4285, Santiago, Chile (562) 2425-2000

(Address of principal executive office)

 

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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

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

 

 

CONSOLIDATED FINANCIAL STATEMENTS

For the period ended

September 30, 2013

 

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

In Thousands of United States Dollars

 

This document includes:

 

-	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	8
	Consolidated Statements of Income by function	10
	Consolidated Statements of Comprehensive Income	12
	Consolidated Statements of Cash Flows	13
	Statements of Changes in Equity	15
	Notes  to the consolidated financial statements
1	Identification and Activities of the Company and Subsidiaries
	1.1   Historical background	18
	1.2   Main domicile where the Company performs its production activities	18
	1.3   Codes of main activities	18
	1.4   Description of the nature of operations and main activities	18
	1.5   Other background	20
2	Basis of presentation for the consolidated financial statements
	2.1    Accounting period	22
	2.2    Financial statements	23
	2.3    Basis of measurement	23
	2.4    Accounting pronouncements	24
	2.5    Basis of consolidation	26
	2.6   Significant accounting judgments, estimates and assumptions	29
3	Significant accounting policies
	3.1    Classification of balances as current and non-current	30
	3.2    Functional and presentation currency	30
	3.3    Foreign currency translation	30
	3.4    Subsidiaries	33
	3.5    Consolidated statement of cash flows	33
	3.6    Financial assets	33
	3.7    Financial liabilities	34
	3.8    Financial instruments at fair value through profit or loss	34
	3.9    Financial instruments offsetting	34
	3.10  Reclassification of financial instruments	35
	3.11  Derivative and hedging financial instruments	35
	3.12  Derecognition of financial instruments	37
	3.13  Derivative financial instruments	37
	3.14  Fair value measurements	37

 

 

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

 

Table of Contents – Consolidated Financial Statements (continued)

 

Note		Page
	3.15  Leases	37
	3.16  Deferred acquisition costs from insurance contracts	38
	3.17  Trade and other receivables	38
	3.18  Inventory measurement	39
	3.19  Investments in associates and joint ventures	40
	3.20  Transactions with non non-controlling interests	41
	3.21  Related party transactions	41
	3.22  Property, plant and equipment	41
	3.23  Depreciation of property, plant and equipment	43
	3.24  Intangible assets	43
	3.25  Intangible assets other than goodwill	44
	3.26  Research and development expenses	45
	3.27  Prospecting expenses	45
	3.28  Impairment of non-financial assets	45
	3.29  Minimum dividend	46
	3.30  Earnings per share	46
	3.31  Trade and other payables	47
	3.32  Interest-bearing borrowings	47
	3.33  Other provisions	47
	3.34  Obligations related to employee termination benefits and pension commitments	48
	3.35  Compensation plans	49
	3.36  Revenue recognition	49
	3.37  Finance income and finance costs	50
	3.38  Income tax and deferred taxes	51
	3.39  Segment reporting	52
	3.40  Environment	52
4	Financial risk management
	4.1   Financial risk management policy	53
	4.2   Risk factors	54
	4.3   Risk measurement	57
5	Changes in estimates and accounting policies (consistent presentation)
	5.1   Changes in accounting estimates	58
	5.2   Changes in accounting policies	58

 

 

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

 

Table of Contents – Consolidated Financial Statements (continued)

 

Note		Page
6	Background of companies included in consolidation
	6.1   Parent’s stand-alone assets and liabilities	59
	6.2   Parent entity	59
	6.3   Jointly arrangements of controlling interest	59
	6.4   General information on consolidated subsidiaries	61
	6.5   Information attributable to non-controlling interests	64
	6.6   Information on consolidated subsidiaries	65
	6.7  Detail of transactions between consolidated companies	69
7	Cash and cash equivalents
	7.1  Types of cash and cash equivalents	70
	7.2   Short-term investments, classified as cash equivalents	71
	7.3   Information on cash and cash equivalents by currency	71
	7.4   Amount of significant restricted (unavailable) cash balances	72
	7.5   Short-term deposits, classified as cash equivalents	73
8	Inventories	74
9	Related party: disclosures
	9.1   Related party disclosures	75
	9.2   Relationship between the Parent and the entity	75
	9.3   Detailed identification of the relationship between the Parent and subsidiary	76
	9.4    Detail of related parties and related party transactions	78
	9.5    Trade receivables due from related parties, current	80
	9.6    Trade payables due to related parties, current	81
	9.7    Board of directors and senior management	82
	9.8   Key Management Personnel Compensation	84
10	Financial instruments
	10.1   Types of other financial assets	85
	10.2   Trade and other receivables, current and non-current	85
	10.3   Hedging assets and liabilities	89
	10.4   Financial liabilities	91
	10.5   Trade and other payables	101
	10.6   Financial liabilities at fair value through profit or loss	101
	10.7   Financial asset and liability categories	102
	10.8   Medición valor razonable de activos y pasivos	105
	10.9   Financial assets pledged as guarantee	105
	10.10 Estimated fair value of financial instruments and financial Derivatives	106
	10.11 Nature and scope of risks arising from financial instruments	107

 

 

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

 

Table of Contents – Consolidated Financial Statements (continued)

 

Note		Page
11	Equity-accounted investees
	11.1   Investments in associates recognized according to the equity method of accounting	108
	11.2   Assets, liabilities, revenue and expenses of associates	109
	11.3   Other information	110
12	Joint ventures
	12.1   Policy for accounting for joint ventures in a Parent’s separate financial statements	111
	12.2   Disclosures of interest in joint ventures .	111
	12.3   Investments in joint ventures accounted for using the equity method of accounting	112
	12.4   Assets, liabilities, revenue and expenses from joint ventures	113
	12.5   Other joint venture disclosures	115
13	Intangible assets and goodwill
	13.1  Balances	116
	13.2  Disclosures on intangible assets and goodwill	116
14	Property, plant and equipment
	14.1   Types of property, plant and equipment	120
	14.2   Reconciliation of changes in property, plant and equipment by type	122
	14.3   Detail of property, plant and equipment pledged as guarantee	124
	14.4   Additional information	124
15	Employee benefits
	15.1   Provisions for employee benefits	125
	15.2   Policies on defined benefit plans	126
	15.3   Other long-term benefits	127
	15.4   Post-employment benefit obligations	128
	15.5   Staff severance indemnities	128
16	Executive compensation plan	129
17	Disclosures on equity
	17.1   Capital management	132
	17.2   Disclosures on preferred share capital	132
	17.3   Disclosures on reserves in equity	134
	17.4   Dividend policies	135
	17.5   Provisional dividends	136

  

 

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

 

Table of Contents – Consolidated Financial Statements (continued)

 

Note		Page
18	Provisions and other non-financial liabilities
	18.1   Types of provisions	138
	18.2   Description of other provisions	139
	18.3   Other non-financial liabilities, current	139
	18.4   Changes in provisions	140
	18.5   Detail of main types of provisions	142
19	Contingencies and restrictions
	19.1   Lawsuits or other relevant events	143
	19.2   Restrictions to management or financial limits	148
	19.3   Commitments	149
	19.4   Restricted or pledged cash	149
	19.5   Sureties obtained from third parties	150
	19.6   Indirect guarantees	151
20	Revenue	153
21	Earnings per share	153
22	Borrowing costs	154
23	Effect of fluctuations on foreign currency exchange rates	155
24	Environment
	24.1   Disclosures on disbursements related to the environment	156
	24.2   Detail of information on disbursements related to the environment	157
	24.3   Description of each project indicating whether these are in process or have been finished	171
25	Other current and non-current non-financial assets	176
26	Operating segments
	26.1     Operating segments	178
	26.2     Operating segments disclosures	180
	26.3     Statement of comprehensive income classified by operating segments based on groups of products	182
	26.4    Revenue from transactions with other company operating segments	184

  

Table of Contents – Consolidated Financial Statements (continued)

 

Note		Page
	26.5    Disclosures on geographical areas	185
	26.6    Disclosures on main customers	185
	26.7    Segments by geographical areas	186

 

 

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

 

	26.8    Property, plant and equipment classified by geographical areas	187
27	Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature
	27.1   Revenue	188
	27.2   Cost of sales	188
	27.3   Other income	188
	27.4   Administrative expenses	189
	27.5   Other expenses by function	190
	27.6   Other income (expenses)	190
	27.7   Summary of expenses by nature	191
28	Income tax and deferred taxes
	28.1   Current tax assets	192
	28.2   Current tax liabilities	193
	28.3   Tax earnings	193
	28.4   Income tax and deferred taxes	194
29	Disclosures on the effects of fluctuations in foreign currency exchange rates	205
30	Subsequent events
	30.1   Authorization of the financial statements	210
	30.2   Disclosures on events occurring after the reporting date	210
	30.3   Detail of dividends declared after the reporting date	210

 

 

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

  

CONSOLIDATED CLASSIFIED STATEMENTS OF FINANCIAL POSITION

 

ASSETS		Note		As of September 30, 2013				As of December 31, 2012
				ThUS$				ThUS$
Current assets
Cash and cash equivalents		7.1			444,593				324,353
Other current financial assets		10.1			624,899				316,103
Other current non-financial assets		25			33,495				67,820
Trade and other receivables, current		10.2			428,537				510,616
Trade receivables due from related parties, current		9.6			134,939				101,372
Current inventories		8			956,787				896,236
Current tax assets		28.1			42,778				30,234
Total current assets					2,666,028				2,246,734
Non-current assets
Other non-current financial assets		10.1			7,042				29,492
Other non-current non-financial assets		25			19,970				17,682
Trade receivables, non-current		10.2			1,117				1,311
Investments in associates		11			50,083				50,955
Investments in joint ventures		12			27,103				19,343
Intangible assets other than goodwill		13.1			28,809				24,013
Goodwill		13.1			38,388				38,388
Property, plant and equipment		14.1			2,136,276				1,988,290
Deferred tax assets		28.4			448				223
Total non-current assets					2,309,236				2,169,697
Total assets					4,975,264				4,416,431

  

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		As of September 30, 2013				As of December 31, 2012
				ThUS$				ThUS$
Liabilities
Current liabilities
Other current financial liabilities		10.4			395,171				152,843
Trade and other payables, current		10.5			190,877				207,944
Trade payables due to related parties, current		9.6			-				19
Other current provisions		18.1			32,140				18,489
Current tax liabilities		28.2			32,113				23,624
Provisions for employee benefits, current		15.1			13,952				33,974
Other current non-financial liabilities		18.3			286,818				172,200
Total current liabilities					951,071				609,093
Non-current liabilities
Other non-current financial liabilities		10.4			1,450,358				1,446,194
Other non-current provisions		18.1			7,535				7,357
Deferred tax liabilities		28.4			134,817				125,445
Provisions for employee benefits, non-current		15.1			36,791				40,896
Total non-current liabilities					1,629,501				1,619,892
Total liabilities					2,580,572				2,228,985
Equity		17
Share capital					477,386				477,386
Retained earnings					1,857,238				1,676,169
Other reserves					(14,710	)			(20,772	)
Equity attributable to owners of the Parent					2,337,914				2,132,783
Non-controlling interests					56,778				54,663
Total equity					2,394,692				2,187,446
Total liabilities and equity					4,975,264				4,416,431

 

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

 

				January to September								July to September
		Note		2013				2012				2013				2012
				ThUS$				ThUS$				ThUS$				ThUS$
Revenue		20			1,710,930				1,828,208				521,074				615,252
Cost of sales		27.2			(1,135,747	)			(1,033,951	)			(372,594	)			(352,924	)
Gross profit					575,183				794,257				148,480				262,328
Other income		27.3			95,978				10,578				87,016				1,126
Administrative expenses		27.4			(76,070	)			(74,328	)			(25,392	)			(26,041	)
Other expenses by function		27.5			(32,101	)			(24,774	)			(7,497	)			(9,251	)
Other gains (losses)		27.6			(12,275	)			145				(12,566	)			124
Profit (loss) from operating activities					550,715				705,878				190,041				228,286
Finance income					9,749				20,235				2,355				7,451
Finance costs		22			(44,082	)			(41,520	)			(16,651	)			(15,062	)
Share of profit of associates and joint ventures accounted for using the equity method					14,531				20,031				4,539				6,731
Foreign currency translation differences		23			(11,343	)			(17,689	)			(2,501	)			(2,384	)
Profit (loss) before taxes					519,570				686,935				177,783				225,022
Income tax expense, continuing operations		28.4			(117,068	)			(173,920	)			(36,921	)			(57,632	)
Profit (loss) from continuing operations					402,502				513,015				140,862				167,390
Profit for the year					402,502				513,015				140,862				167,390
Profit attributable to
Owners of the Parent					389,139				507,417				138,907				165,180
Non-controlling interests					4,363				5,598				1,955				2,210
Profit for the year					402,502				513,015				140,862				167,390

  

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)

 

				January to September								July to September
		Note		2013				2012				2013				2012
				US$				US$				US$				US$
Earnings per share
Common shares
Basic earnings per share (US$ per share)		21			1,5127				1,9279				0,5278				0,6276
Basic earnings per share (US$ per share) from continuing operations					1,5127				1,9279				0,5278				0,6276
Diluted common shares
Diluted earnings per share (US$ per share)		21			1,5127				1,9279				0,5278				0,6276
Diluted earnings per share (US$ per share) from continuing operations					1,5127				1,9279				0,5278				0,6276

 

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

 

		January to September								July to September
Statements of comprehensive income		2013				2012				2013				2012
		ThUS$				ThUS$				ThUS$				ThUS$
Profit for the year			402,502				513,015				140,862				167,390
Components of other comprehensive income before taxes and foreign currency translation differences
Gain (loss) from foreign currency translation differences, before taxes			(2,920	)			793				(267	)			117
Other comprehensive income before taxes and foreign currency translation differences			(2,920	)			793				(267	)			117
Cash flow hedges
(Gain) loss from cash flow hedges before taxes			11,018				(7,297	)			(1,965	)			(5,477	)
Other comprehensive income before taxes and cash flow hedges			11,018				(7,297	)			(1,965	)			(5,477	)
Other comprehensive income before taxes and actuarial gains (losses) from defined benefit plans			-				-				-				-
Other miscellaneous reserves			-				-				-				-
Other components of other comprehensive income before taxes			8,098				(6,504	)			(2,232	)			(5,360	)
Income taxes associated with components of other comprehensive income
Income taxes associated with cash flow hedges in other comprehensive income			(2,084	)			1,425				306				1,232
Income taxes associated with components of other comprehensive income			(2,084	)			1,425				306				1,232
Other comprehensive income			6,014				(5,079	)			(1,926	)			(4,128	)
Total comprehensive income			408,516				507,936				138,936				163,262
Comprehensive income attributable to
Owners of the Parent			404,201				502,247				136,976				160,994
Non-controlling interests			4,315				5,689				1,960				2,268
Total comprehensive income			408,516				507,936				138,936				163,262

 

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

 

 

Statements of cash flows		Note		9/30/2013				9/30/2012
				ThUS$				ThUS$
Cash flows from (used in) operating activities
Types of receipts from operating activities
Cash receipts from sales of goods and rendering of services					1,775,224				1,786,969
Other cash receipts from operating activities					-				-
Types of payments
Cash payments to suppliers for the provision of goods and services					(1,060,512	)			(1,077,090	)
Cash payments to and on behalf of employees					(52,929	)			-
Other payments related to operating activities					-				(5,938	)
Dividends received					-				13,411
Interest paid					(64,309	)			(43,051	)
Interest received					-				17,151
Reimbursed (paid) income taxes					(124,334	)			(189,885	)
Other income or payments in cash					30,958				-
Net cash generated from (used in) operating activities					504,098				501,567
Cash flows from (used in) investing activities
Cash receipts from the loss of control of subsidiaries and other businesses					-				961
Other cash payments made to acquire interests in joint ventures					(4,034	)			(4,197	)
Proceeds from the sale of property, plant and equipment					-				1,787
Proceeds from sales of intangible assets					86,006				-
Purchaces of intangible assets					(4,796	)			-
Acquisition of property, plant and equipment					(321,927	)			(291,002	)
Cash advances and loans granted to third parties					-				(606	)
Dividendos recibidos					14,683				-
Other cash receipts (payments)					(353,077	)			(324,045	)
Net cash generated from (used in) investing activities					(583,145	)			(617,102	)

 

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		9/30/2013				9/30/2012
				ThUS$				ThUS$
Cash flows from (used in) financing activities
Proceeds from  issue of capital instruments					-				-
Proceeds from long-term borrowings					300,000				296,502
Proceeds from short-term borrowings					140,000				-
Total proceeds from borrowings					440,000				296,502
Repayment of borrowings					(164,023	)			(180,000	)
Dividends paid					(76,784	)			(83,064	)
Interest received					9,749				-
Other cash receipts (payments)					(3,569	)			(5,511	)
Net cash generated from (used in) financing activities					205,373				27,927
Net increase (decrease) in cash and cash equivalents before the effect of changes in the exchange rate					126,326				(87,608	)
Effects of exchange rate fluctuations on cash held					(6,086	)			6,868
Net (decrease) increase in cash and cash equivalents					120,240				(80,740	)
Cash and cash equivalents at beginning of period					324,353				444,992
Cash and cash equivalents at end of period					444,593				364,252

 

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

 

2013		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				(330	)			(16,522	)			(2,243	)			(1,677	)			(20,772	)			1,676,169				2,132,783				54,663				2,187,446
Restated opening balance of equity			477,386				(330	)			(16,522	)			(2,243	)			(1,677	)			(20,772	)			1,676,169				2,132,783				54,663				2,187,446
Profit for the year			-				-				-				-				-				-				398,139				398,139				4,363				402,502
Other comprehensive income			-				(2,873	)			8,935				-				-				6,062				-				6,062				(48	)			6,014
Comprehensive income			-				(2,873	)			8,935				-				-				6,062				398,139				404,201				4,315				408,516
Dividends			-				-				-				-				-				-				(199,070	)			(199,070	)			(2,200	)			(201,270	)
Increase (decrease) in transfers and other changes			-				-				-				-				-				-				-				-				-				-
Increase (decrease) in equity			-				(2,873	)			8,935				-				-				6,062				199,069				205,131				2,115				207,246
Equity as of September 30, 2013 (Unaudited)			477,386				(3,203	)			(7,587	)			(2,243	)			(1,677	)			(14,710	)			1,875,238				2,337,914				56,778				2,394,692

 

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

 

2012		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																											507,417				507,417				5,598				513,015
Other comprehensive income			-				702				(5,872	)			-				-				(5,170	)			-				(5,170	)			91				(5,079	)
Comprehensive income			-				702				(5,872	)			-				-				(5,170	)			507,417				502,247				5,689				507,936
Dividends			-				-				-				-				-				-				25				25				-				25
Increase (decrease) in transfers and other changes			-				-				-				-				-				-				-				-				(1,764	)			(1,764	)
Increase (decrease) in equity			-				702				(5,872	)			-				-				(5,170	)			507,442				502,272				3,925				506,197
Equity as of September 30, 2012 (Unaudited)			477,386				(549	)			(16,102	)			(2,954	)			(1,677	)			(21,282	)			1,859,002				2,315,106				55,471				2,370,577

 

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 September 30, 2013

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

 

 

Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 2425-2000.

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; Administration Building w/n - Maria Elena; Administration 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, Potassium Chloride (Potash) Plant, Salar de Atacama s/n - San Pedro de Atacama, Potassoium Sulfate Plant, Salar de Atacama s/n – San Pedro de Atacama, Mining Works, Salar de Ascotán II Región, Campamento Minsal s/n, Potassium Chloride Plant – San Pedro de Atacama.

 

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 June 30, 2013 (Unaudited)

 

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 located in the north of Chile, 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 nutrition:.SQM produces and sells four types of specialty plant nutrition in this line of business: potassium nitrate, sodium nitrate, sodium potassium nitrate, and specialty mixes. 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 June 30, 2013

 

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 September 30, 2013 and December 31, 2012, staff was detailed as follows:

 

		9/30/2013				12/31/2012
Permanent staff			4,911				5,643

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 September 30, 2013 and december 31, 2012. 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:

  

Shareholder as of September 30, 2013		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	%
The Bank of New York Mellon, ADRs			-				-				52,460,936				43.58	%			19.93	%
Sociedad de Inversiones Pampa Calichera S.A.(*)			44,758,830				31.34	%			7,241,799				6.02	%			19.76	%
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	%			-				-				6.91	%
Inversiones Global Mining (Chile) Limitada (*)			8,798,539				6.16	%			-				-				3.34	%
Banco Itau on behalf of investors			20,950				0.01	%			5,469,660				4.54	%			2.09	%
Banco de Chile on behalf of non-resident third parties			-				-				4,759,497				3.95	%			1.81	%
Inversiones La Esperanza Limitada			3,693,977				2.59	%			-				-				1.40	%
Banco Santander on behalf of foreign investors			-				-				3,406,459				2.83	%			1.29	%

 

(*) Total Pampa Group 30.01%

 

Shareholder as of December 31, 2012		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.(*)			44,558,830				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%

 

On the 30th of September 2013 the total number of shareholders had risen to 1,357.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 periods ended September 30, 2013 and December 31, 2012.

 

-

Consolidated Statements of Changes in Equity for the periods ended September 30, 2013 and 2012.

 

-

Consolidated Statements of Comprehensive Income for the periods between January and September 30, 2013 and 2012.

 

-

Statements of Cash Flows –Direct method for the periods ended September 30, 2013 and 2012.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

2.2

Financial statements

 

The consolidated interim 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 Consolidated Interim Financial Statements are presented in accordance with IAS 34, Interim Financial Reporting.

 

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

 

2.3

Basis of measurement

 

The interim 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 June 30, 2013

 

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
IFRS 9 “Financial Instruments” 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.		01/01/2015
CINIIF 21 “Levies” Issued in May 2013. A tax is defined as an output of resources that leads to economic benefits that is imposed by the government on entities in accordance with the current legislation. This legislation indicates the accounting treatment of a tax liability if said liability is within the scope of IAS 37, which concerns the recognition of a liability for taxes imposed by a public authority for operating in a specific market. It states that a liability must be recognised when a a taxable event has occurred and that payment cannot be avoided. The taxable event leading to the obligation can occur on a predetermined date or progressively in time. Its early adoption is permitted.		01/01/2014
IAS 32 “Financial Instruments” Presentation” 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.		01/01/2014

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 27 ‘Separate Financial Statements’ and IFRS 10 ‘Consolidated Financial Statements’ and IFRS 12 ‘Disclosures of Interests in Other Entities’ Issued October 2012. The modifications include the definition of an investment entity and introduces an exception for consolidating certain subsidies belonging to investment entities. This modification requires that an investment entity values its subsidiaries at fair value in line with changes in the results of their consolidated and individual financial statements in accordance with IFRS 9 ‘Financial Instruments’. The modification also introduces new requirements for disclosing information related to investment entities in the IFRS 12 and the IAS 27.		01/01/2014
IAS 36 ‘Impairment of Assets Issued May 2013. Modifies relevant information regarding the recoverable tax of non-financial assets, in line with the requirements of IFRS 13. The standard requires the disclosure of additional information regarding the recoverability of tax of assets that show a reduction in value if the tax is based on fair value less the cost of sale. Additionally, it requires among other things, the disclosure of the discount rates used for the measure of recoverable tax, and the present value technique used. Early adoption is permitted.		01/01/2014
IAS 39 "Financial Instruments: Recognition and Measurement" Issued in June 2013. Sets certain conditions to be met by the novation of derivatives, in order to continue with hedge accounting; this is for the purpose of preventing innovations resulting from laws and regulations affecting the financial statements. To this effect, it indicates that the changes will not lead to the expiration or termination of the hedging instrument if: (a) as a result of laws or regulations, the parties in the hedging instrument agree that a central counterparty, or an entity (or entities), acts as a counterparty in order to centrally compensate by replacing the original counterparty; (b) other changes, if any, to the hedging instruments, which are limited to those necessary for performing such replacement of the counterparty.These changes include changes in the requirements of contractual guaranties, compensation rights for receivables and payables, taxes and levies. Early application is permitted.		01/01/2014

 

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 June 30, 2013

 

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

 

2.5

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 June 30, 2013

 

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

 

2.5

Basis of consolidation, continued

 

Companies included in consolidation:

 

				Country of				Ownership interest
TAX ID No.		Foreign subsidiaries		Origin		Functional currency		9/30/2013												12/31/2012
								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.		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 Peru S.A.		Peru		US$			0.9800				99.0200				100.0000				100.0000
Foreign		SQM Ecuador S.A.		Ecuador		US$			0.0040				99.9960				100.0000				100.0000
Foreign		SQM Nitratos Mexico S.A. de C.V.		Mexico		US$			0.0000				51.0000				51.0000				51.0000
Foreign		SQMC Holding Corporation L.L.P.		USA.		US$			0.1000				99.9000				100.0000				100.0000
Foreign		SQM Investment Corporation N.V.		Dutch Antilles		US$			1.0000				99.0000				100.0000				100.0000
Foreign		SQM Brasil Limitada		Brazil		US$			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.		Panama		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.		Spain		US$			0.0000				100.0000				100.0000				100.0000
Foreign		Iodine Minera B.V. (d)		Netherlands		US$			0.0000				0.0000				0.0000				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
Foreign		SQM Thailand Limited (c)		Thailand		US$			0.0000				99.996				99.996				-

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

2.5

Basis of consolidation, continued

 

Companies included in consolidation:

				Country of				Ownership interest
TAX ID No.		Domestic subsidiaries		Origin		Functional currency		9/30/2013												12/31/2012
								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				99.9999				99.9999
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		Ch$			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		Ch$			1.0000				99.0000				100.0000				100.0000
79.876.080-7		Almacenes y Depósitos Ltda.		Chile		Ch$			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.(b)		Chile		US$			0.0000				0.0000				0.0000				100.0000
78.053.910-0		Proinsa Ltda.		Chile		Ch$			0.0000				60.5800				60.5800				60.5800
76.534.490-5		Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		Chile		Ch$			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		Ch$			0.0000				42.4468				42.4468				42.4468
76.145.229-0		Agrorama S.A.		Chile		Ch$			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)

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

 

(c)

During the first half of 2013 Soquimich European Holdings BV purchased shares of SQM Thailand Limited, acquiring 99.996% of this company.

 

(d)

During the first half of the year, Iodine Minera was absorbed into Soquimich European Holdings.

 

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 June 30, 2013

 

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

 

2.6

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 June 30, 2013

 

Note 3 - Significant accounting policies

 

3.1

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 maturity they have.

 

3.2

Functional and presentation currency

 

The Company’s interim consolidated financial statements are presented in United States dollars (“U.S. dollars” or “US$”), which is the Company’s functional and presentation currency and is the currency of the main economic environment in which it operates.

 

Consequently, the term foreign currency is defined as any currency other than U.S. dollar.

 

The interim consolidated financial statements are presented in thousands of United States dollars without decimals.

 

3.3

Foreign currency translation

 

(a)

Domestic entities:

 

Assets and liabilities denominated in Chilean pesos and other currencies other than the functional currency (U.S. dollar) as of September 30, 2013 and December 31, 2012 have been translated to U.S. dollars at the exchange rates prevailing at those dates. The corresponding Chilean pesos were converted at Ch$504.2 per US$1.00 as of September 30, 2013, and Ch$479.96 per US$1.00 as of December 31, 2012.

 

The values of the UF (a Chilean peso-denominated, inflation-indexed monetary unit) used to convert the UF denominated assets and liabilities as of September 30, 2013 amounted to Ch$23,091.03 (US$45.80), and as of December 31, 2012 amounted to Ch$22,840.75 (US$47.59).

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.3

Foreign currency translation, continued

 

(b)

Foreign entities:

 

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.

 

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:

 

		9/30/2013				12/31/2012
		US$				US$
Brazilian real			2.23				2.04
New Peruvian sol			2.78				2.75
Argentine peso			5.74				4.92
Japanese yen			97.75				86.58
Euro			0.74				0.76
Mexican peso			13.45				12.99
Australian dollar			1.07				1.05
Pound Sterling			0.62				0.62
South African rand			10.07				8.47
Ecuadorian dollar			1.00				1.00
Chilean peso			504.2				479.96
UF			45.80				47.59

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.3

Foreign currency translation, continued

 

(c)

Transactions an d 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.

 

(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.

-

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.4

Subsidiaries

 

SQM S.A. establishes as basis the control exercised on subsidiaries to determine interest on these in the consolidated financial statements. The control consists of in the Company’s ability to exercise power over the investee; exposure or rights, to validate returns for the involvement from involvement with the investee; and the ability to use power over the investee to affect the amount of the investor’s returns.

 

The Company prepares its consolidated financial statements using uniform accounting policies for the entire Group, the consolidation of a subsidiary starts when the Company has control over such subsidiary and stops being included in consolidation when such control is lost.

 

3.5

Consolidated statement 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 direct method.

 

3.6

Financial assets

 

The Company determines the classification of its financial assets at the time of initial recognition, on the basis of the business model for the management of financial assets and the characteristics of contractual cash flows from the financial assets. As provided by IFRS 9, the Company and measure their financial assets initially at fair value plus transaction costs incurred and which are directly attributable to the acquisition of the underlying financial asset- Subsequently financial assets are measured at amortized cost or fair value.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.6

Financial assets, continued

 

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.

 

3.7

Financial liabilities

 

The Company determines the classification of its financial liabilities at the time of initial recognition. As provided by IFRS 9, the Company and measure their financial liabilities initially at fair value less transaction costs incurred and which are directly attributable to the issuance of the financial liability. Subsequently, financial liabilities are measured at fair value through profit or loss.

 

3.8

Financial instruments at fair value through profit or loss

 

The management will irrevocably determine at initial recognition, the designation of a financial instrument at fair value through profit or loss if doing so eliminates or significantly reduces an incoherence in the measurement or recognition, which would otherwise arise from the measurement of assets and liabilities or the recognition of gains and losses from such assets or liabilities on different bases.

 

3.9

Financial instrument offsetting

 

The Company offsets an asset and liability if and only if it currently has the legally enforceable right to set off amounts recognized and intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.10

Reclassification of financial instruments

 

At the time where the Company changes its business model for managing financial assets, it will reclassify the financial assets affected by the new business model.

 

For financial liabilities these could not be reclassified.

 

3.11

Derivative and hedging financial instruments

 

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 items 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 items.

 

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.11

Derivative and hedging financial instruments, continued

 

(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.

 

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 comprehensive income, 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 June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.12

Derecognition of financial instruments

 

In accordance with IFRS 9, the Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred; and the control of the financial assets has not been retained.

 

The Company derecognizes a financial liability when its contractual obligations or a part of these are discharged, paying to the creditor or the main liability contained has been legally extinguished.

 

3.13

Derivative financial instruments

 

The Company maintains derivative financial instruments to hedge its exposure in foreign currency. Derivative financial instruments are recognized initially at fair value; attributable transaction costs are recognized when incurred. Subsequent to initial recognition, changes in fair value of such derivatives are recognized in profit or loss as part of gains and losses.

 

The Company permanently assesses the existence of embedded derivatives both in its contracts and financial instruments. As of September 30, 2013 and 2012, there are no embedded derivatives.

 

3.14

Fair value measurements

 

At the initial recognition, the Company measures its assets and liabilities at fair value plus or minus transaction costs incurred that are directly attributable to the acquisition of a financial asset or issuance of a financial liability.

 

3.15

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.15

Lease, continued

 

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 lesser 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 lesser) are debited to the statement of income or capitalized (as applicable) on a straight-line basis over the lease period.

 

3.16

Deferred acquisition costs from insurance contracts

 

Acquisition costs from insurance contracts are classified as prepayments and correspond to insurance contracts in force, recognized using the straight-line method and on an accrual basis, and are recognized under Other non-financial assets.

 

These are expensed considering the proportional period of time they cover, regardless of the related payment dates.

 

3.17

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 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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.18

Inventory measurement

 

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 June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.19

Investments in associates and joint ventures

 

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.

 

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”.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 – Significant accounting policies (continued)

 

3.20

Transactions with non-controlling interests

 

Non-controlling interests are recorded in the consolidated statement of financial position within equity separate from equity attributable to the owners of the Parent.

 

3.21

Related party transactions

 

Transactions between the Company and its subsidiaries are part of the Company’s normal operations within its scope of business activities. Conditions for such transactions are those normally effective for those types of operations in regard to terms and market prices. Also, these transactions have been eliminated in consolidation. Expiration conditions for each case vary by virtue of the originating transaction.

 

3.22

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 – Significant accounting policies (continued)

 

3.22

Property, plant 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.

 

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.

 

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 maintains 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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.23

Depreciation of property, plant and equipment

 

Property, plant and equipment are depreciated through the straight-line distribution of cost over the estimated technical useful life of the asset which is the period in which the Company expects to use the asset. When components of one item of property, plant and equipment have different useful lives, they are recorded as separate assets. Useful lives are reviewed on an annual basis.

 

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

 

3.24

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 June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.24

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.

 

3.25

Intangible assets other than goodwill

 

(a)

Water rights

 

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

 

(b)

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.

 

(c)

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 September 30, 2013 and December 31, 2012.

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.26

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.

 

3.27

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.

 

3.28

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.28

Impairment of non-financial assets, continued

 

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 September 30, 2013 and December 31, 2012, the Company is unaware of any indication of impairment with regard to its assets.

 

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

 

3.29

Minimum dividend

 

As required by the Shareholders’ Corporations Act, unless decided otherwise by the unanimous vote by the shareholders of subscribed and paid shares, a public company must distribute dividends as agreed by the shareholders at the General Shareholders’ Meeting held each year with a minimum of 30% of its profit for the year ended December 31, 2013, except when the Company records unabsorbed losses from prior years.

 

3.30

Earnings per share

 

The net 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 June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.31

Trade and other payables

 

Trade and other payables are measured at fair value plus all costs associated with the transaction. Subsequently, these are carried at amortized cost using the effective interest rate method.

 

3.32

Interest-bearing borrowings

 

At initial recognition interest-bearing borrowings are measured at fair value. Subsequently, they are measured 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.

 

These are recorded as non-current when their expiration period exceeds twelve months and as current when the term is lower than such term. Interest expense is calculated in the year in which they are accrued following a financial criterion.

 

3.33

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.33

Other provisions, continued

 

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.

 

3.34

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.

 

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 September 30, 2013 and December 31, 2012.

 

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 for 2012 and 2011. The net balance of this obligation is presented under the non-current provisions for employee benefits.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.35

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).

 

3.36

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.36

Revenue recognition, continued

 

(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.

 

(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.

 

3.37

Finance income and finance costs

 

Finance income is mainly composed of interest income in financial instruments such as term deposits and mutual fund deposits. Interest income is recognized in profit or loss at amortized cost, using the effective interest rate method

 

Finance costs are mainly composed of interest expense in bank borrowings, interest on bonds issued and interest capitalized for borrowing costs for the acquisition, construction or production or qualifying assets.

 

Borrowing costs and bonds issued are recognized in profit or loss using the effective interest rate method.

 

Finance costs accrued during the construction period that are directly attributable to the acquisition, construction or production of qualifying assets using the effective interest rate related to the project’s specific financing; if none exists, the average financing rate of the subsidiary that makes the investment.

 

Borrowing and financing costs that are directly attributable to the acquisition, construction or production o fan asset are capitalized as part of that asset’s cost.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

  

3.38

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.

 

At each reporting period, 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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 3 - Significant accounting policies (continued)

 

3.39

Segment reporting

 

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

 

An operating segment is a group of assets and operations responsible for providing products or services subject to risks and performance 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.

 

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

 

3.40

Environment

 

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

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 June 30, 2013

 

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.

 

Currently, 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$19 million.

 

As expressed in the Company’s annual report, the markets in which the Company operates are unpredictable, are exposed to significant variations in supply and demand, and have volatile prices. Additionally, the supply of certain fertilizers or chemical products, including certain products which the Company trades, vary mainly depending on the production of the top producers and their respective business strategies. Therefore, the Company cannot predict with certainty changes in demand, the responses of the competition, and the fluctuations in the final price of its products. These factors can lead to significant impacts on sale volumes of its products, the financial situation of the Company and its share price.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 4 - Financial risk management (continued)

 

4.2.1

Market risk, continued

 

d)

Estándares de calidad: En los mercados en los que operamos, los clientes podrían imponer estándares de calidad a nuestros productos y/o los gobiernos podrían promulgar normas más estrictas para la distribución y/o uso de nuestros productos. Como consecuencia, podríamos no ser capaces de vender nuestros productos si no podemos cumplir con dichos nuevos estándares. Además, nuestros costos de producción podrían aumentar para cumplir con las nuevas normas. No poder vender nuestros productos en uno o más mercados o a clientes importantes podría afectar de manera material nuestro negocio, nuestra posición financiera o los resultados de nuestras operaciones.

 

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.

 

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

 

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$ 475 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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 4 - Financial risk management (continued)

 

4.2.3

Currency risk, continued

 

As of December 31, 2012, 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$ 100.6 million. As of September 30, 2013, this value amounts to US$ 38.3 million, both in favor of SQM.

 

As of September 30, 2013, the Chilean peso to US dollar Exchange rate was Ch$ 504.2 per US$1.00, and as of December 31, 2012 it was Ch$ 479.96 per US$ 1.00.

 

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 September 30, 2013, approximately 16% of the Company’s financial obligations are valued at LIBOR; therefore significant increases in the rate may impact its financial position. A 100 base 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 September 30, 2013, the Company's financial debt is mainly in the long-term, with 19% with maturities of less than 12 months which decreases the exposure to changes in the interest rates.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 results of operations 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 September 30, 2013, 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 June 30, 2013

 

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 September 30, 2013, 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 September 30, 2013 and December 31, 2012 and the statements of comprehensive income, equity and cash flows for the periods ended September 30, 2013 and September 30, 2012, have been prepared in accordance with IFRS, and accounting principles and criteria have been applied consistently.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 6 - Background of companies included in consolidation

 

6.1 Parent’s stand-alone assets and liabilities

 

		9/30/2013				12/31/2012
		ThUS$				ThUS$
Assets			4,735,946				3,908,259
Liabilities			(2,398,032	)			(1,775,476	)
Assets (liabilities)			2,337,914				2,132,783

  

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 30.01% as of September 30, 2013 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 2.09% of the total amount of issued, subscribed and fully-paid shares of SQM S.A.

 

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 June 30, 2013

 

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.			19.76
96.863.960-9		Inversiones Global Mining (Chile) Limitada			3.34
76.165.311-5		Potasios de Chile S.A.			6.91
Total Pampa Group					30.01
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.			0.30
59.023.690-k		La Esperanza Delaware Corporation			0.09
Total Kowa Group					2.09

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

6.4

General information on consolidated subsidiaries

 

As of September 30, 2013 and December 31, 2012 the general information of the companies on which the Company exercises control and significant influence is as follows:

 

						Country of				Ownership interest
Subsidiary		Tax ID		Address		incorporation		Functional currency		Direct				Indirect				Total
SQM Nitratos S.A.		96.592.190-7		El Trovador 4285 Las Condes		Chile		US$			99.9999				0.0001				100.0000
Proinsa Ltda.		78.053.910-0		El Trovador 4285 Las Condes		Chile		Ch$			-				60.5800				60.5800
SQMC Internacional Ltda.		86.630.200-6		El Trovador 4285 Las Condes		Chile		Ch$			-				60.6381				60.6381
SQM Potasio S.A.		96.651.060-9		El Trovador 4285 Las Condes		Chile		US$			99.9999				-				99.9999
Serv. Integrales de Tránsito y Transf. S.A.		79.770.780-5		Arturo Prat 1060, Tocopilla		Chile		US$			0.0003				99.9997				100.0000
Isapre Norte Grande Ltda.		79.906.120-1		Anibal Pinto 3228, Antofagasta		Chile		Ch$			1.0000				99.0000				100.0000
Ajay SQM Chile S.A.		96.592.180-K		Av. Pdte. Eduardo Frei 4900, Santiago		Chile		US$			51.0000				-				51.0000
Almacenes y Depósitos Ltda.		79.876.080-7		El Trovador 4285 Las Condes		Chile		Ch$			1.0000				99.0000				100.0000
SQM Salar S.A.		79.626.800-K		El Trovador 4285 Las Condes		Chile		US$			18.1800				81.8200				100.0000
SQM Industrial S.A.		79.947.100-0		El Trovador 4285 Las Condes		Chile		US$			99.0470				0.9530				100.0000
Exploraciones Mineras S.A.		76.425.380-9		Los Militares 4290 Las Condes		Chile		US$			0.2691				99.7309				100.0000
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		76.534.490-5		Anibal Pinto 3228, Antofagasta		Chile		Ch$			-				100.0000				100.0000
Soquimich Comercial S.A.		79.768.170-9		El Trovador 4285 Las Condes		Chile		US$			-				60.6383				60.6383
Comercial Agrorama Ltda.		76.064.419-6		El Trovador 4285 Las Condes		Chile		Ch$			-				42.4468				42.4468
Comercial Hydro S.A.		96.801.610-5		El Trovador 4285 Las Condes		Chile		Ch$			-				60.6383				60.6383
Agrorama S.A.		76.145.229-0		El Trovador 4285 Las Condes		Chile		Ch$			-				60.6377				60.6377
SQM North América Corp.		Foreign		2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA		United States		US$			40.0000				60.0000				100.0000
RS Agro Chemical.Trading A.V.V.		Foreign		Caya Ernesto O. Petronia 17, Orangestad		Aruba		US$			98.3333				1.6667				100.0000
Nitratos Naturais do Chile Ltda.		Foreign		Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo		Brazil		US$			-				100.0000				100.0000
Nitrate Corporation of Chile Ltd.		Foreign		1 More London Place London SE1 2AF		United Kingdom		US$			-				100.0000				100.0000
SQM Corporation N.V.		Foreign		Pietermaai 123, P.O. Box 897, Willemstad, Curacao		Dutch Antilles		US$			0.0002				99.9998				100.0000
SQM Peru S.A.		Foreign		Avenida Camino Real N° 348 of. 702, San Isidro, Lima		Peru		US$			0.9800				99.0200				100.0000
SQM Ecuador S.A.		Foreign		Av. José Orrantia y Av. Juan Tanca Marengo Edificio Executive Center Piso 2 Oficina 211		Ecuador		US$			0.0040				99.9960				100.0000
SQM Brasil Ltda.		Foreign		Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo		Brazil		US$			2.7900				97.2100				100.0000

  

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

6.4

General information on consolidated subsidiaries

 

Country of

Ownership interest

Subsidiary

Tax ID

Address

incorporation

Functional currency

Direct

Indirect

Total

SQI Corporation N.V.

Foreign

Pietermaai 123, P.O. Box 897, Willemstad, Curacao

Dutch Antilles

US$

0.0159

99.9841

100.0000

SQMC Holding Corporation L.L.P.

Foreign

Aruba

US$

0.1000

99.9000

100.0000

SQM Japan Co. Ltd.

Foreign

From 1st Bldg 207, 5-3-10 Minami- Aoyama, Minato-ku, Tokio

Japan

US$

1.0000

99.0000

100.0000

SQM Europe N.V.

Foreign

Sint Pietersvliet 7 bus 8, 2000. Antwerp

Belgium

US$

0.8600

99.1400

100.0000

SQM Italia SRL

Foreign

Via A. Meucci, 5 500 15 Grassina Firenze

Italy

US$

-

100.0000

100.0000

SQM Indonesia S.A.

Foreign

Perumahan Bumi Dirgantara Permai, Jl Suryadarma Blok Aw No 15 Rt 01/09 17436 Jatisari Pondok Gede

Indonesia

US$

-

80.0000

80.0000

North American Trading Company

Foreign

2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA

United States

US$

-

100.0000

100.0000

SQM Virginia LLC

Foreign

2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA

United States

US$

-

100.0000

100.0000

SQM Comercial de México S.A. de C.V.

Foreign

Calle Industria Eléctrica s/n Lote 30, Manzana A Parque Industrial Bugambilias CP 45645, Trajomulco de Zuñiga, Jalisco

Mexico

US$

0.0013

99.9987

100.0000

SQM Investment Corporation N.V.

Foreign

Pietermaai 123, P.O. Box 897, Willemstad, Curacao

Dutch Antilles

US$

1.0000

99.0000

100.0000

Royal Seed Trading Corporation A.V.V.

Foreign

Caya Ernesto O. Petronia 17, Orangestad

Aruba

US$

1.6700

98.3300

100.0000

SQM Lithium Specialties LLP

Foreign

2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA

United States

US$

-

100.0000

100.0000

Soquimich SRL Argentina

Foreign

Espejo 65 Oficina 6 – 5500 Mendoza

Argentina

US$

-

100.0000

100.0000

Comercial Caimán Internacional S.A.

Foreign

Edificio Plaza Bancomer Calle 50

Panama

US$

-

100.0000

100.0000

SQM France S.A.

Foreign

ZAC des Pommiers  27930   FAUVILLE

France

US$

-

100.0000

100.0000

Administración y Servicios Santiago S.A. de C.V.

Foreign

Calle Industria Eléctrica s/n Lote 30, Manzana A Parque Industrial Bugambilias CP 45645, Trajomulco de Zuñiga, Jalisco

Mexico

US$

-

100.0000

100.0000

SQM Nitratos México S.A. de C.V.

Foreign

Calle Industria Eléctrica s/n Lote 30, Manzana A Parque Industrial Bugambilias CP 45645, Trajomulco de Zuñiga, Jalisco

Mexico

US$

-

51.0000

51.0000

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

6.4

General information on consolidated subsidiaries

 

Country of

Ownership interest

Subsidiary

Tax ID

Address

incorporation

Functional currency

Direct

Indirect

Total

Soquimich European Holding B.V.

Foreign

Loacalellikade 1 Parnassustoren 1076 AZ Amsterdan

Netherlands

US$

-

100,0000

100,0000

SQM Iberian S.A

Foreign

Provenza 251 Principal 1a CP 08008, Barcelona

Spain

US$

-

100,0000

100,0000

Iodine Minera B.V.

Foreign

Loacalellikade 1 Parnassustoren 1076 AZ Amsterdan

Netherlands

US$

-

100,0000

100,0000

SQM Africa Pty Ltd.

Foreign

Tramore House, 3 Wterford Office Park, Waterford Drive, 2191 Fourways, Johannesburg

South Africa

US$

-

100,0000

100,0000

SQM Oceania Pty Ltd.

Foreign

Level 9, 50 Park Streer, Sydney NSW 2000, Sydney

Australia

US$

-

100,0000

100,0000

SQM  Agro India Pvt. Ltd.

Foreign

C 30 Chiragh Enclave New Dehli, 110048

India

US$

-

100,0000

100,0000

SQM Beijing Commercial Co. Ltd.

Foreign

Room 1001C, CBD International Mansion N| 16 Yong An Dong Li, Jian Wai Ave Beijing 100022, P.R.

China

US$

-

100,0000

100,0000

SQM Thailand Limited

Foreign

Bangkapi, 10240 Bangkok

Thailand

US$

-

99,996

99,996

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

6.5

Information attributable to non-controlling interests

 

Subsidiary		% of interests in  the ownership held by non-controlling interests				Profit (loss) attributable to non- controlling interests								Equity, non-controlling interests								Dividends paid to non-controlling interests
						9/30/2013				9/30/2012				9/30/2013				9/30/2012				9/30/2013				9/30/2012
						ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Proinsa Ltda.			0.1	%			-				-				-				-				-				-
SQM Potasio S.A.			0.0000001	%			-				(5	)			-				22				-				-
Ajay SQM Chile S.A.			49	%			(2,572	)			(4,057	)			10,189				10,682				2,200				1,764
SQM Indonesia S.A.			20	%			-				-				-				-				-				-
SQM Nitratos México S.A. de C.V.			49	%			-				(3	)			6				9				-				-
Soquimich Comercial S.A.			39.3616784	%			(1,919	)			(1,602	)			46,365				44,402				-				-
Comercial Agrorama Ltda.			30	%			128				69				218				356				-				-
Agrorama S.A.			0.001	%			-				-				-				-				-				-
Total							(4,363	)			(5,598	)			56,778				55,471				2,200				1,764

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

6.6

Information on consolidated subsidiaries

 

9/30/2013
		Assets								Liabilities																Comprehensive
Subsidiary		Current				Non-current				Current				Non-current				Revenue				Profit (loss)				income (loss)
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
SQM Nitratos S.A.			836,750				124,163				720,568				15,833				157,782				34,049				34,049
Proinsa Ltda.			208				1				-				-				-				(2	)			(8	)
SQMC Internacional Ltda.			276				-				-				-				-				(2	)			(10	)
SQM Potasio S.A.			28,969				1,299,793				3,825				15,350				1,462				173,692				173,692
Serv. Integrales de Tránsito y Transf. S.A.			326,884				86,056				372,584				7,773				34,750				1,515				1,515
Isapre Norte Grande Ltda			681				870				678				218				2,657				31				(1	)
Ajay SQM Chile S.A.			26,007				1,247				5,704				757				50,036				5,248				5,248
Almacenes y Depósitos Ltda.			377				53				1				-				-				(5	)			(27	)
SQM Salar S.A.			931,884				997,412				436,763				206,127				656,739				199,923				199,844
SQM Industrial S.A.			1,463,604				822,712				1,295,789				75,762				688,488				(506	)			(772	)
Exploraciones Mineras S.A.			486				31,522				4,664				-				-				(217	)			(217	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.			695				243				309				528				1,573				(27	)			(33	)
Soquimich Comercial S.A.			199,808				23,167				104,201				981				148,577				4,875				4,875
Comercial Agrorama Ltda.			15,225				1,631				16,009				122				10,386				(428	)			(453	)
Comercial Hydro S.A.			8,148				148				80				71				82				275				275
Agrorama S.A.			19,818				580				20,356				100				9,637				(207	)			(212	)
SQM North América Corp.			197,450				16,136				160,597				2,103				298,410				14,575				14,575
RS Agro Chemical.Trading A.V.V.			5,207				-				-				-				-				(6	)			(6	)
Nitratos Naturais do Chile Ltda.			2				265				4,804				-				-				177				177
Nitrate Corporation of Chile Ltd.			5,076				-				-				-				-				-				-
SQM Corporation N.V.			669				91,758				3,728				-				-				7,912				7,912
SQM Perú S.A.			606				6				1,204				-				-				(173	)			(173	)
SQM Ecuador S.A.			13,845				86				14,757				34				19,539				(2,214	)			(2,214	)
SQM Brasil Ltda.			678				43				965				-				503				(25	)			(25	)
SQI Corporation N.V.			-				18				62				-				-				(2	)			(2	)
SQMC Holding Corporation L.L.P.			11,742				16,171				1,720				-				-				4,088				4,088
SQM Japan Co. Ltd.			1976				256				100				471				1,831				(104	)			(104	)

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

6.6

Information on consolidated subsidiaries, continued

 

9/30/2013
		Assets								Liabilities																Comprehensive
Subsidiary		Current				Non-current				Current				Non-current				Revenue				Profit (loss)				income (loss)
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
SQM Europe N.V.			375,482				290				341,970				-				530,847				(1,069	)			(1,069	)
SQM Italia SRL			1,392				-				18				-				-				-				32
SQM Indonesia S.A.			4				-				1				-				-				-				12
North American Trading Company			160				145				39				-				-				-				-
SQM Virginia LLC			14,829				14,374				14,829				-				-				-				-
SQM Comercial de México S.A. de C.V.			90,477				1,030				67,117				(274	)			137,179				1,244				1,244
SQM Investment Corporation N.V.			64,142				305				38,719				852				50				852				852
Royal Seed Trading Corporation A.V.V.			241,078				517				64,115				190,000				-				(2,090	)			(2,090	)
SQM Lithium Specialties LLP			15,781				3				1,264				-				-				-				-
Soquimich SRL Argentina			419				-				199				-				-				(26	)			(26	)
Comercial Caimán Internacional S.A.			271				-				1,122				-				-				(38	)			(38	)
SQM France S.A.			345				7				114				-				-				-				-
Administración y Servicios Santiago S.A. de C.V.			243				-				848				130				2,341				26				26
SQM Nitratos México S.A. de C.V.			26				3				12				5				134				2				2
Soquimich European Holding B.V.			78,747				95,932				91,331				2,798				-				6,894				5,006
SQM Iberian S.A			88,970				71				91,652				-				140,171				(2,157	)			(2,157	)
SQM Africa Pty Ltd.			87,023				511				78,702				-				75,206				2,010				2,010
SQM Oceanía Pty Ltd.			4,214				-				984				-				2,674				171				(409	)
SQM  Agro India Pvt. Ltd.			7				-				2				-				-				(3	)			(3	)
SQM Beijing Commercial Co. Ltd.			3,820				90				204				-				9,151				348				348
SQM Thailand Limited			3,276				9				244				-				1,831				(323	)			(323	)
Total			5,167,777				3,627,624				3,962,954				519,741				2,982,036				448,283				445,410

 

 

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

6.6

Information on consolidated subsidiaries, continued

 

		12/31/2012																9/30/2012
		Assets								Liabilities																Comprehensive
Subsidiary		Current				Non-current				Current				Non-current				Revenue				Profit (loss)				income (loss)
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
SQM Nitratos S.A.			610,140				125,407				519,148				15,721				277,350				126,103				126,103
Proinsa Ltda.			220				1				-				-				-				-				12
SQMC Internacional Ltda.			292				-				-				-				-				2				18
SQM Potasio S.A.			19,134				1,130,587				1,013				13,293				-				189,025				189,025
Serv. Integrales de Tránsito y Transf. S.A.			272,955				84,635				319,214				7,308				31,806				1,561				1,561
Isapre Norte Grande Ltda.			786				742				672				201				3,058				13				53
Ajay SQM Chile S.A.			25,125				1,137				5,454				772				50,628				8,279				8,279
Almacenes y Depósitos Ltda.			398				54				1				-				-				(7	)			39
SQM Salar S.A.			700,153				911,055				315,982				148,687				672,543				230,437				230,573
SQM Industrial S.A.			1,273,599				714,896				997,339				73,112				733,561				44,414				44,258
Minera Nueva Victoria Ltda.			-				-				-				-				7,987				2,744				2,744
Exploraciones Mineras S.A.			469				31,475				4,383				-				-				(168	)			(168	)-
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.			890				148				362				540				1,751				(20	)			(10	)
Soquimich Comercial S.A.			167,089				19,373				72,651				819				162,821				4,070				4,070
Comercial Agrorama Ltda.			15,515				1,693				15,868				128				9,072				(230	)			(178	)
Comercial Hydro S.A.			7,882				218				135				95				83				315				315-
Agrorama S.A.			14,086				164				14,039				54				8,809				(129	)			(123	)
SQM North America Corp.			303,666				16,070				281,313				2,190				326,515				22,411				22,411
RS Agro Chemical.Trading A.V.V.			5,214				-				-				-				-				(9	)			(9	)
Nitratos Naturais do Chile Ltda.			8				282				5,005				-				-				149				149
Nitrate Corporation of Chile Ltd.			5,076				-				-				-				-				-				-
SQM Corporation N.V.			669				86,348				3,724				-				-				3,454				3,454
SQM Peru S.A.			867				37				1,215				-				273				(162	)			(162	)
SQM Ecuador S.A.			19,321				99				18,029				35				16,390				39				39
SQM Brasil Ltda.			672				51				942				-				756				66				66
SQI Corporation N.V.			-				17				43				-				-				(6	)			(6	)
SQMC Holding Corporation L.L.P.			5,685				18,912				1,657				-				-				417				417

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

6.6

Information on consolidated subsidiaries, continued

 

		12/31/2012																9/30/2012
		Assets								Liabilities																Comprehensive
Subsidiary		Current				Non-current				Current				Non-current				Revenue				Profit (loss)				income (loss)
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
SQM Japan Co. Ltd.			2,190				286				166				544				1,581				(200	)			(200	)
SQM Europe N.V.			391,321				269				356,718				-				664,028				(8,683	)			(8,683	)
SQM Italia SRL			1,360				-				17				-				-				-				-
SQM Indonesia S.A.			5				-				1				-				-				-				-
North American Trading Company			160				145				39				-				-				-				-
SQM Virginia LLC			14,829				14,375				14,829				-				-				-				-
SQM Comercial de México S.A. de C.V.			77,811				1,280				55,509				163				130,604				1,535				1,535
SQM Investment Corporation N.V.			63,933				331				39,426				813				4,551				5,073				5,073
Royal Seed Trading Corporation A.V.V.			241,921				786				13,736				240,000				-				(2,158	)			(2,158	)
SQM Lithium Specialties LLP			15,782				3				1,264				-				-				-				-
Soquimich SRL Argentina			422				-				176				-				-				(30	)			(30	)
Comercial Caimán Internacional S.A.			333				-				1,147				-				-				(35	)			(35	)
SQM France S.A.			345				6				114				-				-				-				-
Administración y Servicios Santiago S.A. de C.V.			50				-				683				128				1,677				(8	)			(8	)
SQM Nitratos México S.A. de C.V.			29				4				19				4				113				7				7
Soquimich European Holding B.V.			70,432				108,680				102,950				-				-				2,152				2,692
SQM Iberian S.A			81,420				9				81,883				-				136,447				(1,086	)			(1,086	)
Iodine Minera B.V.			16,929				-				1				-				1,972				2,455				2,455
SQM Africa Pty Ltd.			97,915				212				91,369				-				67,308				(769	)			(769	)
SQM Oceania Pty Ltd.			5,621				-				1,613				-				3,246				614				614
SQM  Agro India Pvt. Ltd.			17				-				11				-				-				(25	)			(25	)
SQM Beijing Commercial Co. Ltd.			3,512				123				1,779				-				7,803				1,134				1,134
Total			4,536,248				3,269,910				3,341,639				504,607				3,319,533				632,744				633,446

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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

 

6.7

Detail of transactions between consolidated companies

 

a)

Transactions conducted in 2013

 

On March 25, 2013, SQM Industrial increased by ThUS$ 1,500 the capital of its subsidiary SQM Beijing Commercial Co. Ltd.

 

During the first half of the year Iodine Minera was absorbed into Soquimich European Holdings.

 

During the first half of 2013 Soquimich European Holdings BV purchased shares of SQM Thailand Limited, acquiring 99.996% of this company.

 

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.

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 7 - Cash and cash equivalents

 

7.1

Types of cash and cash equivalents

 

As of September 30, 2013 and December 31, 2012, cash and cash equivalents are detailed as follows:

 

 

		9/30/2013				12/31/20121
a)      Cash		ThUS$				ThUS$
Cash on hand			137				90
Cash in banks			44,258				41,541
Other demand deposits			3,699				833
Total cash			48,094				42,464

 

		9/30/2013				12/31/2012
b)      Cash equivalents		ThUS$				ThUS$
Short-term deposits, classified as cash equivalents			3,723				139,943
Short-term investments, classified as cash equivalents			392,776				141,946
Total cash equivalents			396,499				281,889
Total cash and cash equivalents			444,593				324,353

 

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 7 - Cash and cash equivalents (continued)

 

7.2

Short-term investments, classified as cash equivalents

 

As of September 30, 2013 and December 31, 2012, short-term investments, classified as cash and cash equivalents relate to mutual funds (investment liquidity funds) for investments in:

 

Institution		9/30/2013 ThUS$				12/31/2012 ThUS$
Legg Mason - Western Asset Institutional Cash Reserves			132,038				47,408
BlackRock - Institutional US Dollar Liquidity Fund			130,716				47,490
JP Morgan US dollar Liquidity Fund Institutional			130,022				47,048
Total			392,776				141,946

 

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 September 30, 2013 and December 31, 2012, information on cash and cash equivalents by currency is detailed as follows:

 

		9/30/2013				12/31/2012
Original currency		ThUS$				ThUS$
Chilean Peso (*)			5,408				76,712
U.S. dollar			408,577				234,181
Euro			15,269				3,601
Mexican Peso			480				720
South African Rand			12,256				7,421
Japanese Yen			1,460				1,369
Peruvian Sol			4				75
Brazilian Real			59				20
Chinese Yuan			128				181
Indonesian Rupiah			4				5
Indian rupee			14				-
Bath Tailandes			882				-
Pound sterling			52				68
Total			444,593				324,353

 

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

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 September 30, 2013 and December 31, 2012, the Company has no significant cash balances with any type of restriction.

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 ThUS$				9/30/2013 ThUS$				12/31/2012 MUS$
Citibank New – York		Overnight		US$			0.01				9/30/2013				10/01/2013				2,940				-				2,940				51,770
Citibank New – York		Overnight		US$			0.01				9/30/2013				10/01/2013				119				-				119				-
Citibank New – York		Overnight		US$			0.01				9/30/2013				10/01/2013				354				-				354				-
Citibank New – York		Overnight		US$			0.01				9/30/2013				10/01/2013				206				-				206				-
Citibank New – York		Overnight		US$			0.01				9/30/2013				10/01/2013				102				-				102				-
IDBI Bank		Fixed term		Indian rupee			-				3/31/2012				6/28/2013				2				-				2				2
Banco Santander-Santiago		Fixed term		US$			-				-				-				-				-				-				36,946
Banco Crédito e Inversiones		Fixed term		Ch$			-				-				-				-				-				-				37,725
Banco Security		Fixed term		US$			-				-				-				-				-				-				3,501
Corpbanca		Fixed term		US$			-				-				-				-				-				-				9,999
Total																			3,723								3,723				139,943

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 8 - Inventories

 

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

 

Type of inventory		9/30/2013 ThUS$				12/31/2012 ThUS$
Raw material reserves			9,911				8,675
Supplies for production reserves			43,893				37,919
Products-in-progress reserves			398,835				411,039
Finished product reserves			504,148				438,603
Total			956,787				896,236

 

Inventory reserves recognized as of September 30, 2013 amount to ThUS$98,956, and ThUS$72,687 as of December 31, 2012. 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 September 30, 2013, the sum registered as cost of sale related to inventory in the statement of income amounts to ThUS$1,001,630 and to ThUS$522,356 as of September 30, 2012.

 

The breakdown of inventory reserves is detailed as follows:

 

Type of inventory		9/30/2013 ThUS$				12/31/2012 ThUS$
Raw material reserves			93				93
Supplies for production reserves			500				500
Products-in-progress reserves			65,582				46,635
Finished product reserves			32,781				25,459
Total			98,956				72,687

 

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

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 September 30, 2013, 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 Inversiones Global Mining (Chile) Ltda., collectively the Pampa Group, are the owners of a number of shares that are equivalent to 30,01% as of September 30, 2013 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 2.09% 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 June 30, 2013

 

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.			19,76
96.863.960-9		Inversiones Global Mining (Chile) Ltda.			3.34
76.165.311-5		Potasios de Chile S.A.			6.91
Total Pampa Group					30.01
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.			0.30
59.023.690-k		La Esperanza Delaware Corporation			0.09
Total Kowa Group					2.09

 

9.3

Detailed identification of the link between the Parent and subsidiary

 

As of September 30, 2013 and December 31, 2012, the detail of entities that are a related parties of the SQM S.A: Group 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 Peru 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

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 9 - Related party disclosures (continued)

 

9.3

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

 

As of September 30, 2013 and December 31, 2012, the detail of entities that are a related parties of the SQM S.A: Group 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. (b)		The Netherlands		US$		Subsidiary
Foreign		SQM Agro India Pvt. Ltd.		India		US$		Subsidiary
Foreign		SQM Beijing Commercial Co. Ltd.		China		US$		Subsidiary
Foreign		SQM Thailand Limited (c)		Thailand		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.(a)		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		Charlee 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		SQM Vitas Spain		Spain		Euro		Joint venture
Foreign		Kowa Company Ltd.		Japan		US$		Parent
96.511.530-7		Sociedad de Inversiones Pampa Calichera		Chile		US$		Parent
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 Peru S.A.C.		Peru		US$		Joint control or significant influence

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 9 - Related party disclosures (continued)

 

9.3

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

  

(a)

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

 

(b)

During the first half of the year Iodine Minera was absorbed into Soquimich European Holdings.

 

(c)

During the first half of 2013 Soquimich European Holdings BV purchased shares of SQM Thailand Limited, acquiring 99.996% of the company.

 

9.4

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 September 30, 2013 and December 31, 2012, 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 September 30, 2013 and December 31, 2012, the detail of transactions with related parties is as follows:

 

Tax ID No.

Company

Nature

Country of origin

Transaction

9/30/2013 ThUS$

12/31/2012 ThUS$

Foreign

Doktor Tarsa Tarim Sanayi As

Associate

Turkey

Sale of products

13,573

9,587

Foreign

Ajay Europe S.A.R.L.

Associate

France

Sale of products

27,113

37,232

Foreign

Ajay Europe S.A.R.L.

Associate

France

Dividends

5,093

3,564

Foreign

Ajay North America LLC.

Associate

United States

Sale of products

31,608

42,081

Foreign

Ajay North America LLC.

Associate

United States

Dividends

8,698

10,175

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

Sale of products

5,920

6,285

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

Dividends

-

525

Foreign

Charlee SQM Thailand Co.Ltd.

Associate

Thailand

Sale of products

5,504

10,203

Foreign

Charlee SQM Thailand Co.Ltd.

Associate

Thailand

Dividends

-

11

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Sale of products

831

1,472

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 9 - Related party disclosures (continued)

 

9.4

Detail of related parties and transactions with related parties, continued

 

Tax ID No.

Company

Nature

Country of origin

Transaction

9/30/2013 ThUS$

12/31/2012 ThUS$

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Dividends

892

1,052

Foreign

Kowa Company Ltd.

Other related parties

Japan

Sale of products

55,866

123,581

Foreign

SQM Vitas Brasil Agroindustria

Joint control or significant influence

Brazil

Sale of products

36,016

40,518

Foreign

SQM Vitas Peru S.A.C.

Joint control or significant influence

Peru

Sale of products

21,672

26,123

Foreign

SQM Vitas Southern Africa Pty.

Joint control or significant influence

South Africa

Sale of products

9,339

10,930

Foreign

SQM Vitas Fzco.

Joint venture

United Arab Emirates

Sale of products

358

120

Foreign

SQM Vitas Fzco.

Joint venture

United Arab Emirates

Sale of services

69

-

Foreign

Sichuan SQM Migao Chemical Fertilizers Co Ltda.

Joint venture

China

Sale of products

43,250

-

Foreign

Sichuan SQM Migao Chemical Fertilizers Co Ltda.

Joint venture

China

Sale of services

46

62

Foreign

Coromandel SQM

Joint venture

India

Sale of products

4,341

2,300

Foreign

SQM  Star Qingdao Crop Nutrition Co., Ltd.

Joint venture

China

Sale of services

44

-

 

 

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 9 - Related party disclosures (continued)

 

9.5

Trade receivables due from related parties, current:

 

Tax ID No.

Company

Nature

Country of origin

Currency

9/30/2013 ThUS$

12/31/2012 ThUS$

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Ch$

108

303

Foreign

Charlee SQM Thailand Co. Ltd.

Associate

Thailand

US$

1,578

6,098

Foreign

Doktor Tarsa Tarim Sanayi AS

Associate

Turkey

US$

24

-

Foreign

Ajay Europe S.A.R.L.

Associate

France

Euro

4,144

4,775

Foreign

Ajay North America LLC.

Associate

United States

US$

7,002

4,633

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

Arab Emirates dirham

2,698

1,805

Foreign

Kowa Company Ltd.

Jointly controlled entity

Japan

US$

24,954

29,929

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

Foreign

SQM Vitas Brasil Agroindustria

Joint venture

Brazil

US$

25,401

27,903

Foreign

SQM Vitas Peru S.A.C.

Joint venture

Peru

US$

23,859

18,143

Foreign

SQM Vitas Southern Africa PTY

Joint venture

South Africa

US$

3,680

1,478

Foreign

Coromandel SQM

Joint venture

India

Indian rupee

3,351

756

Foreign

Sichuan SQM Migao Chemical Fertilizers Co Ltda.

Joint venture

China

US$

35,430

4,000

79.049.778-9

Callegari Agrícola S.A.

Other related parties

Chile

Ch$

635

844

Foreign

Coromandel Internacional

Other related parties

India

Indian rupee

-

670

Foreign

Vitas Roullier SAS

Other related parties

France

Euro

775

-

Foreign

SQM Vitas Fzco.

Joint venture

United Arab Emirates

Arab Emirates dirham

184

-

Foreign

SQM Vitas Spain

Joint venture

Spain

Euro

1,108

-

Total to-date

134,939

101,372

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 9 - Related party disclosures (continued)

 

9.6

Trade payables due to related parties, current:

 

Tax ID No.

Company

Nature

Country of origin

Currency

9/30/2013 ThUS$

12/31/2012 ThUS$

Foreign

SQM Vitas Fzco.

Joint ventures

United Arab Emirates

Arab Emirates dirham

-

19

Total as of to-date

-

19

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 9 - Related party disclosures (continued)

 

9.7

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 25, 2013.

 

As of September 30, 2013, 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’ Corporations 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

 

2.1.1

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 2013.

 

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 2013.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 9 - Related party disclosures (continued)

 

9.7

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, 2013.

 

e)

Therefore, the remunerations and profit sharing paid to members of the Board of Directors and Audit Committee during 2013 amount to ThUS$4,705 (ThUS$ 3,973 as of December 31, 2012).

 

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 2013.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 9 - Related party disclosures (continued)

 

9.7

Board of Directors and Senior Management, continued

 

3)

No guarantees have been constituted in favor of the directors.

 

4)

Senior management compensation

 

As of September 30, 2013, the global compensation paid to the 120 main executives amounts to ThUS$19,749 (ThUS$32,888 as of December 31, 2012). 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 September 30, 2013 and the year ended December 31, 2012 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 September 30, 2013, the amount of operations with this Group is approximately ThUS$4,826 (ThUS$22,577 as of December 31, 2012).

 

9.8

Key management personnel compensation

 

		9/30/2013				12/31/2012
		ThUS$				ThUS$
Key management personnel compensation			19,749				32,888

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 10 – Financial instruments

 

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

 

10.1

Types of other financial assets

 

Descrtiption of other financial assets		9/30/2013 ThUS$				12/31/2012 ThUS$
Other current financial assets (1)			591,076				244,161
Derivatives (2)			2,468				680
Hedging assets, current			31,355				71,262
Total other current financial assets			624,899				316,103
Other non-current financial assets			99				107
Hedging assets, non-current			6,943				29,385
Total other non-current financial assets			7,042				29,492

 

(1)

Relates to term deposits with maturities exceeding 90 days and less than 360 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		9/30/2013 ThUS$				12/31/2012 ThUS$
Banco Santander			155,001				41,691
BBVA			110,745				31,579
Banco de Crédito e Inversiones			70,566				82,145
Banco de Chile			61,283				42,992
Corpbanca			146,217				10,499
Banco Scotiabank			-				25,141
Banco Itaú			40,220				10,114
Banco Security			7,044				-
Total			591,076				244,161

 

10.2

Trade and other receivables, current and non-current

 

		9/30/2013												12/31/2012
		Current				Non- current				Total				Current				Non- current				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Trade receivables			403,934				-				403,934				490,873				-				490,873
Prepayments			19,860				-				19,860				14,046				-				14,046
Other receivables			4,743				1,117				5,860				5,697				1,311				7,008
Total trade and other receivables			428,537				1,117				429,654				510,616				1,311				511,927

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 10 – Financial instruments, (continued)

 

10.2

Trade and other receivables, continued

 

		9/30/2013												12/31/2012
		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			421,170				(17,236	)			403,934				507,665				(16,792	)			490,873
Trade receivables, current			421,170				(17,236	)			403,934				507,665				(16,792	)			490,873
Prepayments, current			22,660				(2,800	)			19,860				14,046				-				14,046
Other receivables, current			6,707				(1,964	)			4,743				7,698				(2,001	)			5,697
Current trade and other receivables			450,537				(22,000	)			428,537				529,409				(18,793	)			510,616
Other receivables, non-current			1,117				-				1,117				1,311				-				1,311
Non-current receivables			1,117				-				1,117				1,311				-				1,311
Total trade and other receivables			451,654				(22,000	)			429,654				530,720				(18,793	)			511,927

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 September 30, 2013 and December 31, 2012, the detail of the unsecuritized portfolio is as follows:

 

09/30/2013
		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, portfolio under no renegotiated terms			3,261				1,008				549				403				357				331				324				287				280				1,809				8,609
Portfolio under no renegotiated terms			326,201				31,643				18,516				1,865				11,161				13,659				434				232				1,079				8,129				412,919
Number of customers under renegotiated terms portfolio			48				7				3				6				8				7				13				3				6				164				265
Portfolio under renegotiated terms, gross			3,546				270				109				225				323				593				280				104				46				2,755				8,251
Total gross portfolio			329,747				31,913				18,625				2,090				11,484				14,252				714				336				1,125				10,884				421,170

 

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, portfolio under no renegotiated terms			3,176				1,305				584				406				399				409				302				348				378				2,344				9,651
Portfolio under no renegotiated terms			412,659				20,121				1,259				46,268				38				129				395				10,140				794				15,861				507.665
Number of customers under renegotiated terms portfolio			-				-				-				-				-				-				-				-				-				-				-
Portfolio under renegotiated terms, gross			-				-				-				-				-				-				-				-				-				-				-
Total gross portfolio			412,659				20,121				1,259				46,268				38				129				395				10,140				794				15,861				507.665

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 10 – Financial instruments, (continued)

 

10.2

Trade and other receivables, continued

 

The detail of allowances is as follows:

 

Allowance and write-offs		9/30/2013 ThUS$				12/31/2012 ThUS$
Allowance for portfolio under no renegotiated terms			22,315				20,191
Write-offs for the period			(315	)			(1,398	)
Total			22,000				18,793

 

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 June 30, 2013

 

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 September 30, 2013, the face value of cash flows in Cross Currency Swap contracts agreed upon in US dollars amounted to ThUS$557,868 and as of December 31, 2012 such contracts amounted to ThUS$515,156.

 

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$
September 30, 2013			38,298				(25,330	)			(8,000	)			1,600				(6,400	)
December 31, 2012			100,646				49,853				(18,419	)			3,684				(14,735	)

 

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$
September 30, 2013			1,508				(228	)			(1,187	)			-				(1,187	)
December 31, 2012			1,879				27				(1,786	)			-				(1,786	)

 

The balances in the effect on profit or loss column consider the interim effects of the contracts in force as of September 30, 2013 and December 31, 2012.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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			69,275			UF		12/1/2026
G			33,673			Chilean peso		1/5/2014
H			191,638			UF		1/5/2018
I			56,041			UF		4/1/2014
J			92,440			Chilean peso		4/1/2014
M			46,463			UF		2/1/2017
O			68,338			UF		2/1/2017

 

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 June 30, 2013

 

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 September 30, 2013 and December 31, 2012, the detail is as follows:

  

		9/30/2013												12/31/2012
		Current				Non- current				Total				Current				Non- current				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Bank borrowings			150,917				329,407				480,324				122,373				379,119				501,492
Obligations with the public (bonds payable)			239,722				1,120,951				1,360,673				20,135				1,067,075				1,087,210
Other financial liabilities			4,532				-				4,532				10,335				-				10,335
Total			395,171				1,450,358				1,845,529				152,843				1,446,194				1,599,037

 

Current and non-current borrowings

 

As of September 30, 2013 and December 31, 2012, the detail is as follows:

 

		9/30/2013				12/31/2012
		ThUS$				ThUS$
Long-term borrowings			329,407				379,119
Short-term borrowings			150,065				120,921
Current portion of long-term borrowings			852				1,452
Short-term loans and current portion of long-term borrowings			150,917				122,373
Total borrowings assumed			480,324				501,492

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

a)

Bank loans, current:

 

As of September 30, 2013 and December 31, 2012, the detail of this caption is as follows:

 

		Debtor								Creditor				Currency												9/30/2013 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			97.018.000-1		Scotiabank Sud Americano		Chile		US$		Upon maturity			0.49	%			0.49	%			7				20,000				20,007
93.007.000-9		SQM.S.A.			Chile			97.018.000-1		Scotiabank Sud Americano		Chile		US$		Upon maturity			0.65	%			0.65	%			2				20,000				20,002
93.007.000-9		SQM S.A.			Chile			Foreign		Banco Estado NY Branch		United States		US$		Upon maturity			3.27	%			2.39	%			-				158				158
79.626.800-K		SQM Salar S.A.			Chile			97.030.000-7		Banco Estado		Chile		US$		Upon maturity			0.61	%			0.61	%			-				20,002				20,002
79.626.800-K		SQM Salar S.A.			Chile			97.018.000-1		Scotiabank Sud Americano		Chile		US$		Upon maturity			0.60	%			0.60	%			20,011				-				20,011
Extranjero		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Bank of America		United States		US$		Upon maturity			1.89	%			1.34	%			261				-				261
Extranjero		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Export Development Canada		Canada		US$		Upon maturity			1.83	%			1.36	%			191				-				191
Extranjero		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Scotiabank & Trust (Cayman) Ltd.		Cayman Islands		US$		Upon maturity			1.41	%			1.24	%			-				50,031				50,031
Extranjero		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Scotiabank & Trust (Cayman) Ltd.		Cayman Islands		US$		Upon maturity			1.84	%			1.48	%			338				-				338
Extranjero		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		The Bank of Tokyo-Mitsubishi UFJ, Lda. (New York)		United States		US$		Upon maturity			1.49	%			1.09	%			259				-				259
79.947.100-0		SQM Industrial S.A.			Chile			97.030.000-7		Banco Estado		Chile		US$		Upon maturity			0.75	%			0.75	%			-				20,043				20,043
																											21,069				130,234				151,303
Borrowing costs																											(360	)			(26	)			(386	)
Total																											20,709				130,208				150,917

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

		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, Lda. (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 June 30, 2013

 

Note 10 – Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

b)

Unsecured obligations, current:

 

As of September 30, 2013 and December 31, 2012, the detail of current unsecured interest-bearing obligations is composed of promissory notes and bonds, as follows:

 

Bonds

 

		Debtor						Number of										Currency		Periodicity														9/30/2013 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								MThUS$200								Semiannual			Upon maturity											5,623				-				5,623
93.007.000-9		SQM S.A			Chile				-				MThUS$250			21/10/2013		US$			Semiannual			Upon maturity			5.70	%			5.50	%			6,086				-				6,086
93.007.000-9		SQM S.A			Chile				-				MThUS$300			03/10/2013		US$			Semiannual			Upon maturity			3.87	%			3.63	%			5,348				-				5,348
93.007.000-9		SQM S.A			Chile				446				C			01/12/2013		UF			Semiannual			Semiannual			4.44	%			4.00	%			8,083				-				8,083
93.007.000-9		SQM S.A			Chile				563				G			05/01/2014		$			Semiannual			Upon maturity			7.50	%			7.00	%			678				41,642				42,320
93.007.000-9		SQM S.A			Chile				564				H			05/01/2014		UF			Semiannual			Semiannual			5.10	%			4.90	%			-				2,096				2,096
93.007.000-9		SQM S.A			Chile				563				I			01/04/2014		UF			Semiannual			Upon maturity			3.35	%			3.00	%			-				68,684				68,684
93.007.000-9		SQM S.A			Chile				563				J			01/04/2014		$			Semiannual			Upon maturity			6.23	%			5.50	%			-				103,116				103,116
93.007.000-9		SQM S.A			Chile				700				M			01/02/2014		UF			Semiannual			Upon maturity			3.62	%			3.30	%			-				244				244
93.007.000-9		SQM S.A			Chile				699				O			01/02/2014		UF			Semiannual			Upon maturity			3.95	%			3.80	%			-				422				422
									Total																										25,818				216,204				242,022
									Bond issuance costs																										(1,480	)			(820	)			(2,300	)
									Total																										24,338				215,384				239,722

 

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 June 30, 2013

 

Note 10 – Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

		Debtor						Number of										Currency		Periodicity														12/31/2012 Current maturities
Tax ID No.		Subsidiary		Country				registration or ID of the instrument				Series				Maturity date Payment of interest		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								Semiannual			Upon expiration											-				2,577				2,577
93.007.000-9		SQM S.A			Chile				-				Single			4/21/2013		US$			Semiannual			Upon expiration			5.70	%			5.50	%			-				2,667				2,667
93.007.000-9		SQM S.A			Chile				446				C			6/1/2013		UF			Semiannual			Semiannual			4.44	%			4.00	%			-				7,464				7,464
93.007.000-9		SQM S.A			Chile				563				G			7/5/2013		Ch$			Semiannual			Upon expiration			7.50	%			7.00	%			1,465				-				1,465
93.007.000-9		SQM S.A			Chile				564				H			7/5/2013		UF			Semiannual			Semiannual			5.10	%			4.90	%			4,484				-				4,484
93.007.000-9		SQM S.A			Chile				563				I			4/1/2013		UF			Semiannual			Upon expiration			3.35	%			3.00	%			-				532				532
93.007.000-9		SQM S.A			Chile				563				J			4/1/2013		Ch$			Semiannual			Upon expiration			6.23	%			5.50	%			-				1,470				1,470
93.007.000-9		SQM S.A			Chile				700				M			8/1/2013		UF			Semiannual			Upon expiration			3.62	%			3.30	%			644				-				644
93.007.000-9		SQM S.A			Chile				699				O			8/1/2013		UF			Semiannual			Upon expiration			3.95	%			3.80	%			1,110				-				1,110
									Total																										7,703				14,710				22,413
									Bond issuance costs																										(473	)			(1,805	)			(2,278	)
									Total																										7,230				12,905				20,135

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 10 – Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

c)

Types of interest-bearing borrowings, non current

 

Non-current interest-bearing borrowings as of September 30, 2013 and December 31, 2012 are detailed as follows:

 

		Debtor								Creditor																9/30/2013 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			3.27	%			2.45	%			-				140,000				-				140,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Scotiabank & Trust (Cayman) Ltd.		Cayman Islands		US$		Upon maturity			1.84	%			1.48	%			50,000				-				-				50,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Bank of America		United States		US$		Upon maturity			1.89	%			1.34	%			-				40,000				-				40,000
Foreign		Royal Seed Trading Corporation A.V.V.			Aruba			Foreign		Export Development Canada		Canada		US$		Upon maturity			1.83	%			1.36	%			-				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	%			1.09	%			-				50,000				-				50,000
Total																											50,000				280,000				-				330,000
		Borrowings costs																									(112	)			(481	)			-				(593	)
Total																											49,888				279,519				-				329,407

 

																										12/31/2012
		Debtor								Creditor																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
		Borrowings costs																									(235	)			(646	)			-				(881	)
Total																											99,765				279,354				-				379,119

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

Note 10 – Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

d)

Non-current unsecured interest-bearing bonds

 

The breakdown of non-current unsecured interest-bearing bonds as of September 30, 2013 and December 31, 2012 is detailed as follows:

 

		Debtor																		Periodicity														Over 1				9/30/2013  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				years to 3 ThUS$				Over 3 to 5 ThUS$				Over 5 years ThUS$				Total ThUS$
93.007.000-9		SQM S.A			Chile				-				MThUS$200			4/15/2016		US$			Semiannual			Upon maturity			6.32	%			6.13	%			200,000				-				-				200,000
93.007.000-9		SQM S.A			Chile				-				MThUS$250			4/21/2020		US$			Semiannual			Upon maturity			5.70	%			5.50	%			-				-				250,000				250,000
93.007.000-9		SQM S.A			Chile				-				MThUS$300			4/03/2013		US$			Semiannual			Upon maturity			3.87	%			3.63	%			-				-				300,000				300,000
93.007.000-9		SQM S.A			Chile				446				C			12/1/2026		UF			Semiannual			Semiannual			4.44	%			4.00	%			13,737				13,737				58,381				85,855
93.007.000-9		SQM S.A			Chile				564				H			1/5/2030		UF			Semiannual			Semiannual			5.10	%			4.90	%			-				-				183,158				183,158
93.007.000-9		SQM S.A			Chile				700				M			2/1/2017		UF			Semiannual			Upon maturity			3.62	%			3.30	%			-				45,790				-				45,790
93.007.000-9		SQM S.A			Chile				699				O			2/1/2033		UF			Semiannual			Upon maturity			3.95	%			3.80	%			-				-				68,684				68,684
									Total																										213,737				59,527				860,223				1,133,487
									Bond issuance costs																										(819	)			(635	)			(11,082	)			(12,536	)
									Total																										212,918				58,892				849,141				1,120,951

 

		Debtor																		Periodicity														Over 1				12/31/2012 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				years to 3 ThUS$				Over 3 to 5 ThUS$				Over 5 years ThUS$				Total ThUS$
93.007.000-9		SQM S.A			Chile				-				Single								Semiannual			Upon maturity			6.32	%			6.13	%			-				200,000				-				200,000
93.007.000-9		SQM S.A			Chile				-				Single			4/21/2020		US$			Semiannual			Upon maturity			5.70	%			5.50	%			-				-				250,000				250,000
93.007.000-9		SQM S.A			Chile				446				C			12/1/2026		UF			Semiannual			Semiannual			4.44	%			4.00	%			14,280				14,280				64,260				92,820
93.007.000-9		SQM S.A			Chile				564				H			1/5/2030		UF			Semiannual			Semiannual			7.5	%			4.90	%			-				-				190,401				190,401
93.007.000-9		SQM S.A			Chile				563				G			1/5/2014		Ch$			Semiannual			Upon maturity			5.10	%			7.00	%			43,764				-				-				43,764
93.007.000-9		SQM S.A			Chile				563				I			4/1/2014		UF			Semiannual			Upon maturity			3.35	%			3.00	%			71,400				-				-				71,400
93.007.000-9		SQM S.A			Chile				563				J			4/1/2014		Ch$			Semiannual			Upon maturity			6.23	%			5.50	%			108,368				-				-				108,368
93.007.000-9		SQM S.A			Chile				700				M			2/1/2017		UF			Semiannual			Upon maturity			3.62	%			3.30	%			-				47,600				-				47,600
93.007.000-9		SQM S.A			Chile				699				O			2/1/2033		UF			Semiannual			Upon maturity			3.95	%			3.80	%			-				-				71,400				71,400
									Total																										237,812				261,880				576,061				1,075,753
									Bond issuance 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 June 30, 2013

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

e)

Additional information

 

Bonds

 

On the 30th of September and the 31st of December 2012, short term bonds of MUS$ 239,722 and MUS$ 20,135 respectively were classified as short-term, consisting of the current portion due plus accrued interest todate, excluding bond issue costs. The non-current portion consisted of MUS$1,120,951 on the 30^th September 2013 and MUS$1,067,075 on the 31^st December 2012, corresponding to the issuance of series C bonds, Single series bonds (MThUS$ 200), series G bonds, series H bonds, series I bonds, series J bonds, second issue single series bonds (MThU$ 250), series M bonds, series O bonds and third issue single series bonds (MThUS$ 300), excluding debt issue costs.

 

As of September 30, 2013 and December 31, 2012, the details of each issuance 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 September 30, 2013 and December 31, 2012, the Company has made the following payments with a charge to the Series C bonds:

 

		9/30/2013				12/31/2012
Payments made		ThUS$				ThUS$
Principal		3,481				6,858
Interest payment			1,930				4,004

 

Single series first issue MMUS$200

 

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

 

As of September 30, 2013 and December 31, 2012, the Company has made the following payments with a charge to the Single Series bonds:

 

Payments made		9/30/2013 ThUS$				12/31/2012 ThUS$
Payments of interest			6,125				12,250

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013

 

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 September 30, 2013 and December 31, 2012, the Company has made the following payments with a charge to the Series G and H bonds:

 

Payments made		9/30/2013 ThUS$				12/31/2012 ThUS$
Payments of interest, Series G bonds			2,962				2,845
Payments of interest, Series H bonds			9,062				8,565

 

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 September 30, 2013 and December 31, 2012, the Company has made the following payments with a charge to the Series J and I bonds:

 

Payments made		9/30/2013 ThUS$				12/31/2012 ThUS$
Payment of interest, Series J bonds			5,790				5,879
Payment of interest, Series I bonds			2,106				2,100

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 10 - Financial instruments (continued)

 

10.4

Financial liabilities, continued

 

Single series bonds, second issue MMUS$250

 

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 September 30, 2013 and December 31, 2012, the detail of payments charged to the line of single series bonds, second issue is as follows:

 

Payments made		9/30/2013  ThUS$				12/31/2012 ThUS$
Interest payment			6,875				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 September 30, 2013, and December 31, 2012 the Company has made the following payments with a charge to the Series M and O bonds:

 

Payments made		9/30/2013  ThUS$				12/31/2012 ThUS$
Payment of interest, Series M bonds			1,522				765
Payment of interest, Series O bonds			2,626				1,320

 

Single series bonds, third issue MMUS$300

On April 3, 2013, the Company issued in the United States a non-guaranteed bond with a value of US$ 300 million. The bond is for a 10 year term with an annual coupon rate of 3.625% and an annual yield of 3.716%. This rate equates to a difference of 180 basis points to comparable US Treasury bonds. The funds raised will be used to refinance long term liabilities and finance general corporate objectives.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 10 - Financial instruments (continued)

 

10.5

Trade and other payables

 

		9/30/2013												12/31/2012
		Current				Non- current				Total				Current				Non- current				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Accounts payable			190,326				-				190,326				207,429				-				207,429
Deferred income			-				-				-				-				-				-
Retained  (or accrued)			551				-				551				515				-				515
Total			190,877				-				190,877				207,944				-				207,944

 

Purchase commitments held by the Company are recognized as liabilities when the goods and services are received by the Company. As of September 30, 2013, the Company has purchase orders amounting to ThUS$63,761 (ThUS$127,484 as of December 31, 2012).

 

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		9/30/2013				Effect on profit or loss as of 6/30/2013				12/31/2012				Effect on profit or loss as of 12/31/2012
profit or loss		ThUS$				ThUS$				ThUS$				ThUS$
Current
Derivative instruments (forward)			2,288				(3,324	)			5,612				(4,559	)
Derivative instruments (options)			736				(1,756	)			2,492				(1,456	)
Derivative instruments (IRS)			1,508				124				2,231				(240	)
			4,532				(4,956	)			10,335				(6,255	)

 

Balances in the column effect on profit or loss consider the annual effects of agreements which were in force as of September 30, 2013.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 10 - Financial instruments (continued)

 

10.7

Financial asset and liability categories

 

a)

Financial Assets

 

		9/30/2013												12/31/2012
		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 measured at amortized cost			591,076				-				591,076				244,161				-				244,161
Investments held-to-maturity measured at amortized cost			-				99				99				-				107				107
Loans and receivables measured at amortized cost			428,537				1,117				429,654				510,616				1,311				511,927
Total financial assets measured at amortized cost			1,019,613				1,216				1,020,829				754,777				1,418				756,195
Financial assets at fair value through profit or loss			2,468				-				2,468				680				-				680
Financial assets at fair value through other comprehensive income			31,355				6,943				38,298				71,261				29,385				100,646
Total financial assets at fair value			33,823				6,943				40,766				71,941				29,385				101,326
Total financial assets			1,053,436				8,159				1,061,595				826,718				30,803				857,521

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 10 - Financial instruments (continued)

 

10.7

Financial asset and liability categories (continued)

 

b)

Financial liabilities

 

		9/30/2013												12/31/2012
		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			4,532				-				4,532				10,335				-				10,335
Financial liabilities at fair value through profit or loss			4,532				-				4,532				10,335				-				10,335
Financial liabilities measured at amortized cost			581,516				1,450,358				2,031,874				350,452				1,446,194				1,796,646
Total financial liabilities measured at amortized cost			581,516				1,450,358				2,031,874				350,452				1,446,194				1,796,646
Total financial liabilities			586,048				1,450,358				2,036,406				360,787				1,446,194				1,806,981

  

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 10 - Financial instruments (continued) 

 

Fair Value Measurement of Assets and Liabilities

 

Financial assets measured at fair value consist of Options and Forwards hedging the mismatch in the balance sheet and cash flows, Cross Currency Swaps (CCS) to hedge bonds issued in local currency ($/UF), and Interest Rate Swaps (IRS) to hedge LIBOR rate debt issued.

 

The value of the Company’s assetsrecognised by CCS contracts is calculated as the difference between the present value of discounted cash flows of the asset (pesos/UF) and liability (USD) parts of the derivative. In the case of the IRS, the asset value recognised is calculated as the difference between the discounted cash flows of the asset (variable rate) and liability (fixed rate) parts of the derivative. Forwards: Are calculated as the difference between the strike price of the contract and the spot price plus the forwards points at the date of the contract. Options: The value recognised is calculated using the Black-Scholes method.

 

In the case of CCS, the entry data used for the valuation models are UF, peso, and basis swap rates. In the case of fair value calculations for IRS, the FRA (Forward Rate Agreement) rate and ICVS 23 Curve (Bloomberg: cash/deposits rates, futures, swaps). In the case of forwards, the forwards curve for the currency in question is used. Finally, with options, the spot price, risk-free rate and volatility of exchange rate are used, all in accordance with the currencies used in each valuation. The financial information used as entry data for the Company’s valuation models is obtained from Bloomberg, the well-known financial software company. Conversely, the fair value provided by the counterparties of derivatives contracts is used only as a control and not for valuation.

 

The effects produced by movements of these values can be recognised in Finance Costs, Foreign Exchange or Other Equity Reserves, depending o

The fair value measurement of debt is only performed to determine the actual market value of guaranteed and non-guaranteed long-term obligations; bonds denominated in local currency ($/UF) and foreign currency (USD), credits denominated in foreign currency (USD).

The value of the Company’s reported liabilities is calculated as the present value of discounted cash flows at market rates at the time of valuation, taking into account the maturatity date and exchange rate. The entry data used for the model includes the UF and peso rates, which are obtained using Bloomberg, the well known financial software company and the ‘Asociación de Bancos e Instituciones Financieras’ (ABIF) (Association of Banks and Financial Institutions’).

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 September 30, 2013 and December 31, 2012, assets pledged as guarantees are as follows:

 

Restricted cash		9/30/2013 ThUS$				12/31/2012 ThUS$
Isapre Norte Grande Ltda.			723				571
Total			723				571

 

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 June 30, 2013 (Unaudited)

 

Note 10 - Financial instruments (continued)

 

10.10

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:

 

		9/30/2013								12/31/2012
		Carrying value				Fair  value				Carrying value				Fair value
		ThUS$				ThUS$				ThUS$				ThUS$
Cash and cash equivalents			444,593				444,593				324,353				324,353
Current trade and other receivables			428,537				428,537				510,616				510,616
Other financial assets, current:
- Time deposits			591,076				591,076				244,161				244,161
- Derivative instruments			2,468				2,468				680				680
- Current hedging assets			31,355				31,355				71,262				71,262
Total other current financial assets			624,899				624,899				316,103				316,103
Non-Current Trade Receivables			1,117				1,117				1,311				1,311
Other non-current financial assets:			99				99				107				107
Non-current hedging assets			6,943				6,943				29,385				29,385
Other non-current financial assets:			7,042				7,042				29,492				29,492
Other financial liabilities, current:
- Bank loans			150,917				150,917				122,373				122,373
- Derivative instruments			3,024				3,024				8,456				8,456
- Hedging liabilities			1,508				1,508				1,879				1,879
- Unsecured obligations			239,722				239,722				20,135				20,135
Other financial liabilities, current			395,171				395,171				152,843				152,843
Current and non-current accounts payable			190,877				190,566				207,944				207,944
Other non-current financial liabilities:
- Bank loans			329,407				346,073				379,119				401,465
- Unsecured obligations			1,120,951				1,120735				1,067,075				1,137,363
Other non-current financial liabilities:			1,450,358				1,466,808				1,446,194				1,538,828

 

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 June 30, 2013 (Unaudited)

 

Note 10 - Financial instruments (continued)

 

10.11

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 11 – Equity-accounted investees

 

11.1

Investments in associates recognized according to the equity method of accounting

 

As of September 30, 2013 and December 31, 2012, in accordance with criteria established in Note 2.6 and Note 3.19, investment in associates recognized according to the equity method of accounting and joint ventures are as follows:

 

Associates		Equity-accounted investees								Share on profit (loss) of associates and joint ventures accounted for using the equity method								Share on other comprehensive income of associates and joint ventures accounted for using the equity method, net of tax								Share on total other comprehensive income of associates and joint ventures accounted for using the equity method
		9/30/2013				12/31/2012				9/30/2013				12/31/2012				9/30/2013				12/31/2012				9/30/2013				12/31/2012
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Sales de Magnesio Ltda.			1,312				1,656				641				1,088				-				-				641				1,088
Abu Dhabi Fertilizer Industries WWL			10,965				9,890				1,021				1,628				-				-				1,021				1,628
Doktor Tarsa Tarim Sanayi AS			15,622				15,346				2,475				4,134				-				-				2,475				4,134
Ajay North America			13,211				15,357				5,957				10,927				-				-				5,957				10,927
Ajay Europe SARL			7,033				8,495				2,988				6,295				-				-				2,988				6,295
SQM Eastmed Turkey			139				85				130				-				-				-				130				-
Charlee SQM Thailand Co. Ltd.			1,801				126				215				32				-				-				215				32
Total			50,083				50,955				13,427				24,104				-				-				13,427				24,104

 

		Description of the nature of the				Country of		Share of ownership in				Dividends received
Associate		relationship		Domicile		incorporation		associates				9/30/2013				12/31/2012
												ThUS$				ThUS$
Sales de Magnesio Ltda.		Commercialization of magnesium salts.		El Trovador 4285, Las Condes		Chile			50	%			892				1,052
Abu Dhabi Fertilizer Industries WWL		Distribution and commercialization of specialty plant nutrients in the Middle East.		PO Box 71871, Abu Dhabi		United Arab Emirates			50	%			-				-
Doktor Tarsa Tarim Sanayi AS		Distribution and commercialization of specialty plant nutrients in Turkey.		Organize Sanayi Bolgesi, Ikinci Kisim, 22 cadde TR07100 Antalya		Turkey			50	%			-				-
Ajay North America		Production and commercialization of iodine derivatives.		1400 Industry RD Power Springs GA 30129		United States			49	%			8,698				10,628
Ajay Europe SARL		Production and commercialization of iodine derivatives.		Z.I. du Grand Verger BP 227 53602 Evron Cedex		France			50	%			5,093				3,446
SQM Eastmed Turkey		Production and commercialization of specialty products.		Organize Sanayi Bolgesi, Ikinci Kisim, 22 cadde TR07100 Antalya		Turkey			50	%			-				-
Charlee SQM Thailand Co. Ltd.		Distribution and commercialization of specialty plant nutrients.		31 Soi 138 (Meesuk) LLapdrawrd, Bangkapi, 10240 Bangkok		Thailand			40	%			-				-

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 11 – Equity-accounted investees (continued)

 

11.2

Assets, liabilities, revenue and expenses of associates

 

		9/30/2013																9/30/2013
		Assets								Liabilities												Gain (loss) from				Other
		Current				Non- current				Current				Non- current				Revenue				continuing operations				comprehensive income				Comprehensive income
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Sales de Magnesio Ltda.			3,818				299				1,494				-				10,225				1,283				-				1,283
Abu Dhabi Fertilizer Industries WWL			25,275				2,327				5,672				-				31,173				2,042				-				2,042
Doktor Tarsa Tarim Sanayi AS			72,454				6,735				47,943				-				64,899				4,950				-				4,950
Ajay North America			27,591				9,236				9,865				-				57,727				12,157				-				12,157
Ajay Europe SARL			19,961				1,890				7,786				-				52,052				5,976				-				5,976
SQM Eastmed Turkey			146				299				165				-				139				259				-				259
Charlee SQM Thailand Co. Ltd.			8,505				511				4,513				-				17,041				538				-				538
Total			157,750				21,297				77,438				-				233,256				27,205				-				27,205

 

		12/31/2012																12/31/2012
		Assets								Liabilities												Gain (loss) from				Other
		Current				Non- current				Current				Non- current				Revenue				continuing operations				comprehensive income				Comprehensive income
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Sales de Magnesio Ltda.			4,662				364				1,713				-				14,259				2,177				-				2,177
Abu Dhabi Fertilizer Industries WWL			21,885				2,187				4,291				-				42,899				3,255				-				3,255
Doktor Tarsa Tarim Sanayi AS			67,345				7,982				36,332				8,304				77,839				8,267				-				8,267
Ajay North America			28,914				8,719				6,292				-				83,340				22,300				-				22,300
Ajay Europe SARL			27,587				2,091				12,688				-				84,203				12,591				-				12,591
SQM Eastmed Turkey			16				412				258				-				-				-				-				-
Charlee SQM Thailand Co. Ltd.			12,898				462				13,048				-				13,536				81				-				81
Total			163,307				22,217				74,622				8,304				316,076				48,671				-				48,671

  

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 11 – Investment in Associates (continued)

 

11.3

Other information

 

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 September 30, 2013 and December 31, 2012.

 

The basis of preparation of the financial information of associates corresponds to the amounts included in the financial statements in conformity with the entity’s IFRS.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 2013

 

As of September 30, there are no changes in the composition of the interest in joint ventures.

 

b)

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 12 - Joint Ventures (continued)

 

12.3

Investment in joint ventures accounted for under the equity method of accounting:

 

Joint venture		Description of the nature of the relationship		Domicile		Country of incorporation		Share of interest in ownership				Dividends received
												9/30/2013				12/31/2012
												ThUS$				ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltda.		Production and distribution of soluble fertilizers.		Huangjing Road, Dawan Town, Qingbaijiang District, Chengdu Municipality, Sichuan Province		China			50	%			-				-
Coromandel SQM		Production and distribution of potassium nitrate.		1-2-10,  Sardar Patel Road, Secunderabad – 500003 Andhra Pradesh		India			50	%			-				-
SQM Vitas Fzco.		Production and commercialization of specialty plant and animal nutrition and industrial hygiene.		Jebel ALI Free Zone P.O. Box 18222, Dubai		United Arab Emirates			50	%			-				-
SQM Star Qingdao Crop Nutrition Co., Ltd.		Production and distribution of nutrient plant solutions with specialties NPK soluble		Longquan Town, Jimo City, Qingdao Municipality, Shangdong Province		China			50	%			-				-
SQM Vitas Brazil		Without information		Via Cndeias, Km. 01 Sem Numero, Lote 4, Bairro Cia Norte, Candeias, Bahia.		Brazil			99,99	%			-				-
SQM Vitas Peru		Without information		Av. Juan de Arona 187, Torre B, Oficina 301-II, San Isidro, Lima		Peru			99,63	%			-				-
SQM Vitas Southern Africa		Without information		33 Waterford Office Park Waterford Drive Fourways, 2055 South Africa		South Africa			100	%			-				-
SQM Vitas Spain		Without information		Without information		Spain			100	%
SQM Vitas Holland		Without information		Without information		Dutch Antilles s			50	%			-				-
SQM Vitas PlantacoteB.V.		Without information		Herikerbergweg 238, 1101 CM Amsterdam Zuidoost		Dutch Antilles			50	%			-				-

 

Joint Venture		Equity-accounted investees								Share on profit (loss) of associates and joint ventures accounted for using the equity method								Share on other comprehensive income of associates and joint ventures accounted for using the equity method, net of tax								Share on total other comprehensive income of associates and joint ventures accounted for using the equity method
		9/30/2013				12/31/2012				9/30/2013				12/31/2012				9/30/2013				12/31/2012				9/30/2013				12/31/2012
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltda.			13,259				10,428				295				287				11				-				306				287
Coromandel SQM			761				683				57				184				-				(87	)			57				98
SQM Vitas Fzco.			11,912				7,153				694				(266	)			(266	)			(159	)			428				(425	)
SQM Star Qingdao Crop Nutrition Co., Ltd.			1,358				1,079				279				48				-				-				279				48
SQM Vitas Holland			(187	)			-				(221	)			-				-				-				(221	)			-
			27,103				19,343				1,104				253				(255	)			(246	)			849				8

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 12 - Joint Ventures (continued)

 

12.3

Investment in joint ventures accounted for under the equity method of accounting:

 

The following companies are subsidiaries of SQM Vitas Fzco.

 

		Equity-accounted investees								Share on profit (loss) of associates and joint ventures accounted for using the equity method								Share on other comprehensive income of associates and joint ventures accounted for using the equity method, net of tax								Share on total other comprehensive income of associates and joint ventures accounted for using the equity method
		9/30/2013				12/31/2012				9/30/2013				12/31/2012				9/30/2013				12/31/2012				9/30/2013				12/31/2012
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
SQM Vitas Brazil			3,893				2,799				1,561				(621	)			-				(306	)			664				(927	)
SQM Vitas Peru			3,739				2,525				(808	)			(28	)			-				(26	)			(199	)			(54	)
SQM Vitas Southern Africa			384				506				(370	)			(238	)			-				14				(110	)			(224	)
SQM Vitas Spain			-				248				-				-				-				-				(139	)			-
SQM Vitas PlantacoteB.V.			-				-				-				-				-				-				-				-
Total			8,016				6,078				383				(887	)			-				(318	)			(216	)			(1,205	)

 

12.4

Assets, liabilities, revenue and expenses from Joint Ventures:

 

9/30/2013
		Assets								Liabilities												Gain (loss) from				Other
		Current				Non- current				Current				Non- current				Revenue				continuing operations				comprehensive income				Comprehensive income
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltda,			41,003				9,584				24,069				-				19,657				590				22				612
Coromandel SQM			4,687				1,158				4,324				-				6,910				114				-				114
SQM Vitas Fzco,			12,927				11,864				817				151				14,417				1,388				(532	)			856
SQM  Star Qingdao Crop Nutrition Co,, Ltd,			3,238				239				605				156				5,974				558				-				558
SQM Vitas Brazil			37,441				6,874				31,822				8,600				62,491				1,328				-				1,328
SQM Vitas Peru			27,644				1,682				25,587				-				26,351				(397	)			-				(397	)
SQM Vitas Southern Africa			6,133				867				6,617				-				11,323				(220	)			-				(220	)
SQM Vitas Spain			2,427				947				3,525				-				1,125				(278	)			-				(278	)
SQM Vitas Holland			43				-				-				418				-				(442	)			-				(442	)
SQM Vitas PlantacoteB,V,			966				6,581				7,965				-				1,083				(436	)			-				(436	)
Total			136,509				39,796				105,331				9,325				149,331				2,205				(510	)			1,695

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 12 - Joint Ventures (continued)

 

12.4

Assets, liabilities, revenue and expenses from Joint Ventures, continued

 

		12/31/2012																12/31/2012
		Assets								Liabilities												Gain (loss) from				Other
		Current				Non-current				Current				Non-current				Revenue				continuing operations				comprehensive income				Comprehensive income
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltda.			21,843				9,984				6,899				4,072				29,980				573				-				573
Coromandel SQM			4,388				1,397				4,419				-				5,633				369				(174	)			195
SQM Vitas Fzco.			4,568				10,522				785				-				19,643				(532	)			(318	)			(850	)
SQM  Star Qingdao Crop Nutrition Co., Ltd.			1,986				304				132				-				5,028				95				-				95
SQM Vitas Brazil			36,874				6,865				32,331				8,609				53,955				(621	)			(306	)			(927	)
SQM Vitas Peru			23,308				1,512				20,149				2,145				32,376				(28	)			(26	)			(54	)
SQM Vitas Southern Africa			2,730				101				2,325				-				12,850				(238	)			14				(224	)
SQM Vitas Spain			-				-				-				-				-				-								-
Total			95,697				30,685				67,040				14,826				159,465				(382	)			(810	)			(1,192	)

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 12 - Joint Ventures (continued)

 

12.5

Other Joint Venture disclosures:

 

		Cash and cash equivalents								Other current financial liabilities								Other non-current financial liabilities
		9/30/2013				12/31/2012				9/30/2013				12/31/2012				9/30/2013				12/31/2012
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltda.			649				485				-				-				-				-
Coromandel SQM			153				248				96				1,289				-				-
SQM Vitas Fzco.			9,197				7,977				-				-				-				-
SQM  Star Qingdao Crop Nutrition Co., Ltd.			1,513				524				-				-				-				-
SQM Vitas Brazil			933				549				237				66				8,600				8,609
SQM Vitas Peru			843				286				-				-				-				-
SQM Vitas Southern Africa			174				179				-				-				-				-
SQM Vitas Spain			662				-				-				-								-
SQM Vitas Holland			43				-				-				-				-				-
SQM Vitas Plantacote B.V.			131				-				5,398				-				-				-
Total			14,298				10,248				5,731				1,355				8,600				8,609

 

		Depreciation and amortization expense								Interest expense								Income tax expense, continuing operations
		9/30/2013				12/31/2012				9/30/2013				12/31/2012				9/30/2013				12/31/2012
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltda.			(570	)			(702	)			(578	)			-				(40	)			(97	)
Coromandel SQM			(70	)			(91	)			(101	)			(75	)			(49	)			(56	)
SQM Vitas Fzco.			(734	)			(982	)			(11	)			(15	)			-				-
SQM  Star Qingdao Crop Nutrition Co., Ltd.			(50	)			(74	)			-				-				(168	)			(27	)
SQM Vitas Brazil			(257	)			(247	)			(697	)			(463	)			(33	)			-
SQM Vitas Peru			(24	)			(32	)			(102	)			(102	)			58				-
SQM Vitas Southern Africa			(49	)			(29	)			(7	)			(37	)			-				-
SQM Vitas Spain			-				-				(1	)			-				-				-
SQM Vitas Holland			-								-								-
SQM Vitas Plantacote B.V.			(377	)							(107	)							-
Total			(2,131	)			(2,157	)			(1,604	)			(692	)			(232	)			(180	)

 

The basis of preparation of the financial information of joint ventures corresponds to the amounts included in the financial statements in conformity with the entity’s IFRS.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 13 - Intangible assets and goodwill

 

13.1

Balances

 

		9/30/2013				12/31/2012
		ThUS$				ThUS$
Intangible assets other than goodwill			28,809				24,013
Goodwill			38,388				38,388
Total			67,197				62,401

 

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 September 30, 2013 and December 31, 2012 are detailed as follows:

 

				9/30/2013
Intangible assets and goodwill		Useful life		Gross amount ThUS$				Accumulated Amortization ThUS$				Net Value ThUS$
Trademarks		Finite			3,821				(3,821	)			-
Software		Finite			5,342				(2,813	)			2,529
Intellectual property rights, patents and other industrial property rights, service and exploitation rights		Finite			1,508				(866	)			642
Intellectual property rights, patents and other industrial property rights, service and exploitation rights		Indefinite			23,650				(1,994	)			21,656
Other intangible assets		Indefinite			4,134				(152	)			3,982
Intangible assets other than goodwill					38,455				(9,646	)			28,809
Goodwill		Indefinite			40,178				(1,790	)			38,388
Total intangible assets and goodwill					78,633				(11,436	)			67,197

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 13 - Intangible assets and goodwill (continued)

 

13.2

Disclosures on intangible assets and goodwill, continued

 

				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
Other intangible assets		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

 

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 June 30, 2013 (Unaudited)

 

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 June 30, 2013 (Unaudited)

 

Note 13 - Intangible assets and goodwill (continued)

 

13.2

Disclosures on intangible assets and goodwill, continued

 

e)

Movements in identifiable intangible assets as of September 30, 2013:

 

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			-				1,650				378				20,625				1,360				38,388				62,401
Additions							1,577				310				1,038				2,622				-				5,547
Amortization							(698	)			(46	)			(7	)			-				-				(751	)
Other increases (decreases)							-				-				-				-				-				-
Final balance			-				2,529				642				21,656				3,982				38,388				67,197

 

f)

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

 

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 14 - Property, plant and equipment

 

As of September 30, 2013 and December 31, 2012, 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		9/30/2013				12/31/2012
		ThUS$				ThUS$
Property, plant and equipment, net
Land			109,301				109,060
Buildings			161,860				169,731
Machinery			403,165				438,331
Transport equipment			99,240				88,954
Furniture and fixtures			8,115				6,736
Office equipment			5,642				5,249
Constructions in progress			608,065				423,184
Other property, plant and equipment			740,888				747,045
Total			2,136,276				1,988,290
Property, plant and equipment, gross
Land			109,301				109,060
Buildings			332,984				329,397
Machinery			1,092,700				1,065,641
Transport equipment			250,149				224,462
Furniture and fixtures			25,394				22,667
Office equipment			38,158				36,215
Constructions in progress			608,065				423,184
Other property, plant and equipment			1,398,704				1,336,991
Total			3,855,455				3,547,617

 

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 14 - Property, plant and equipment (continued)

 

14.1

Types of property, plant and equipment, continued

 

		9/30/2013				12/31/2012
		ThUS$				ThUS$
Accumulated depreciation and value impairment of property, plant and equipment, total
Accumulated depreciation and value impairment of buildings			171,124				159,666
Accumulated depreciation and value impairment of machinery			689,535				627,310
Accumulated depreciation and value impairment of transport equipment			150,909				135,508
Accumulated depreciation and value impairment of furniture and fixtures			17,279				15,931
Accumulated depreciation and value impairment of office equipment			32,516				30,966
Accumulated depreciation and value impairment of other property, plant and equipment			657,816				589,946
Total			1,719,179				1,559,327

  

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 14 - Property, plant and equipment (continued)

 

14.2

Reconciliation of changes in property, plant and equipment by type as of September 30, 2013 and December 31, 2012:

 

Reconciliation entries of changes in property, plant and equipment by type as of September 30, 2013		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			109,060				169,731				438,331				88,954				6,736				5,249				423,184				747,045				1,988,290
Changes
Additions			511				42				1,856				3				59				377				333,973				2,785				339,606
Divestitures			-				3				(49	)			(6	)			1				6				(4,596	)			(23	)			(4,664	)
Depreciation expense			-				(11,484	)			(62,930	)			(15,398	)			(1,347	)			(1,471	)			-				(66,722	)			(159,352	)
Increase(decrease) in foreign currency exchange			(20	)			(8	)			(7	)			(8	)			-				(19	)			-				(50	)			(112	)
Reclassification			-				3,484				25,848				25,695				2,666				1,597				(115,580	)			56,290				-
Other increases (decreases) (*)			(250	)			92				116				-				-				(97	)			(28,916	)			1,563				(27,492	)
Total changes			241				(7,871	)			(35,166	)			10,286				1,379				393				184,881				(6,157	)			147,986
Final balance			109,301				161,860				403,165				99,240				8,115				5,642				608,065				740,888				2,136,276

 

(*) 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 June 30, 2013 (Unaudited)

 

Note 14 - Property, plant and equipment (continued)

 

14.2

Reconciliation of changes in property, plant and equipment by type as of September 30, 2013 and December 31, 2012, continued:

 

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 June 30, 2013 (Unaudited)

 

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$13,015 as of September 30, 2013 and ThUS$ 14,156 as of December 31, 2012.

 

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 June 30, 2013 (Unaudited)

 

Note 15 - Employee benefits

 

15.1

Provisions for employee benefits

 

Classes of benefits and expenses by employee		9/30/2013				12/31/2012
		ThUS$				ThUS$
Current
Profit sharing and bonuses			13,952				33,974
Total			13,952				33,974
Non-current
Profit sharing and bonuses			2,477				6,056
Severance indemnity payments			33,992				34,431
Pension Plan			322				409
Total			36,791				40,896

  

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 June 30, 2013 (Unaudited)

 

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.

 

Staff severance indemnities at actuarial value		9/30/2013				12/31/2012
		ThUS$				ThUS$
Staff severance indemnities, Chile			33,351				33,731
Other obligations in companies elsewhere			641				700
Total other non-current liabilities			33,992				34,431
SQM North America’s pensions plan			322				409
Total post-employment obligations			322				409

 

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 June 30, 2013 (Unaudited)

 

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.

 

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.

 

15.5

Staff severance indemnities

 

As of September 30, 2013 and December 31, 2012, severance indemnities calculated at the actuarial value are as follows:

 

		2013 ThUS$				2012 ThUS$
Opening balance			(34,431	)			(28,188	)
Current cost of service			(5,991	)			(8,087	)
Interest cost			(1,023	)			(1,037	)
Actuarial gain/loss			40				40
Exchange rate difference			1,710				(2,237	)
Contributions paid			5,703				5,078
Balance			(33,992	)			(34,431	)

 

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 15 - Employee benefits (continued)

 

15.5

Staff severance indemnities, continued

 

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

 

		9/30/2013				12/31/2012
Mortality rate			RV - 2012				RV - 2011
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 41 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 June 30, 2013 (Unaudited)

 

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 September 30, 2013 and December 31, 2012 are the following:

 

Movement for the period		2013				2012
In effect as of January 1			2,200,500				2,340,000
Granted during the fiscal year			45,000				103,500
Redundant workers			(145,500	)			103,500
Exercised during the fiscal year			-				139,500
In circulation as of December 31			2,100,000				2,200,500
Average contractual life			36 months				40 months

 

The amounts accrued by the plan, as of September 30, 2013 and December 31, 2012, amount to:

 

Effect on profit or loss		2013 ThUS$				2012 ThUS$
Effect on profit or loss			(6,000	)			3,142

 

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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		9/30/2013				12/31/2012				Description (1)		Calculation (1)
Net Financial Debt MUS$			769,094				929,197			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			2,80				3.69			Current Asset divided by Current Liability		Total Current Assets / Total Current Liabilities
Net Debt / Capitalization			0.24				0.30			Net Financial Debt divided by Total Equity		Net financial debt / ( Net financial debt + Total Equity)
ROE			22.8	%			30.1	%		Income divided by Total Equity		Total Income / Equity (UH 12 months)
ROA			18.4	%			25.1	%		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			1.08				1.02			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 June 30, 2013 (Unaudited)

 

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 September 30, 2013 and December 31, 2012, 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 June 30, 2013 (Unaudited)

 

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		9/30/2013								12/31/2012
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 September 30, 2013 and December 31, 2012, the Company has not placed any new issuances of shares on the market.

 

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 2013 and 2012.

 

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).

 

		9/30/2013 ThUS$				12/31/2012 ThUS$
Revaluation surplus
Reserve for currency exchange conversion			(3,203	)			(330	)
Reserve for cash flow hedges			(7,587	)			(16,522	)
Reserve for actuarial gains or losses in defined benefit plans			(2,243	)			(2,243	)
Other reserves			(1,677	)			(1,677	)
Total other reserves			(14,710	)			(20,772	)

 

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 2013 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 2013.

 

-

Distribution and payment, if possible during 2013, 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 2013 and its amount could not exceed 50% of the retained earnings for distribution obtained during 2013, which are reflected in the Company’s financial statements as of September 30, 2013.

 

-

The distribution and payment by the Company of the remaining balance of the final dividend related to Profit for the period for the 2013 commercial year in up to two installments, which will have to be effectively paid and distributed prior to June 30, 2014.

 

-

An amount equivalent to the remaining 50% of the Company’s Profit for the period for 2013 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 June 30, 2013 (Unaudited)

 

Note 17 - Disclosures on equity (continued)

 

17.5

Provisional dividends

 

 

On April 25th, 2013 in the 38th ordinary shareholders meeting, a dividend payment of US$1.23323 per share was approved, based on the net income earned through normal business activities in 2012. Taking into account the interim dividend already paid of US$0.94986 per share, a final dividend of 0.28337 per share was paid and distributed to shareholders of SQM and was recorded in the respective register as of the fifth business day prior to the day of payment. This dividend was paid in the equivalent amount in Chilean pesos in accordance with the value of the ‘Observed Dollar’ or ‘US Dollar’ that appeared in the Official Gazette on April 25, 2013.

 

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 37th 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.

 

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 17 - Disclosures on equity (continued)

 

17.5

Provisional dividends, continued

 

Dividends presented deducted from equity are:

 

		9/30/2013 ThUS$				12/31/2012 ThUS$
Dividends attributable to owners of the parent			2,200				253,438
Dividends payable			199,070				76,267

 

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 18 - Provisions and other non-financial liabilities

 

18.1

Types of provisions

 

		9/30/2013												12/31/2012
		Current				Non- current				Total				Current				Non- current				Total
		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Provision for legal complaints (*)			8,567				3,000				11,567				5,567				3,000				8,567
Reestructuración			12,000				-				12,000				-				-				-
Provision for dismantling, restoration and rehabilitation cost			-				4,535				4,535				-				4,357				4,357
Other provisions			11,573				-				11,573				12,922				-				12,922
Total			32,140				7,535				39,675				18,489				7,357				25,846

  

(*) 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 litigations.

 

 

    Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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

 

18.2

Description of other provisions

 

Description of other provisions		9/30/2013 ThUS$				12/31/2012 ThUS$
Current provisions, other short-term provisions
Provision for tax loss in fiscal litigation			1,471				1,606
Royalties, agreement with CORFO (the Chilean Economic Development Agency)			6,249				7,712
Fine to Brazil			2,500				2,500
Miscellaneous provisions			1,353				1,104
Total			11,573				12,922
Other long-term provisions
Mine closure			4,535				4,357
Total			4,535				4,357

 

18.3

Other non-financial liabilities, current

 

Description of other liabilities		9/30/2013 ThUS$				12/31/2012 ThUS$
Tax withholdings			1,064				11,887
VAT payable			1,823				16,481
Guarantees received			1,001				872
Accrual for dividend			199,070				76,267
Monthly tax provisional payments			11,796				22,073
Deferred income			46,538				16,291
Withholdings from employees and salaries payable			6,515				7,546
Accrued vacations			18,866				20,710
Other current liabilities			145				73
Total			286,818				172,200

  

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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

 

18.4

Changes in provisions as of 9/30/2013

 

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			-				-				8,567				-				4,357				12,922				25,846
Changes in provisions:
Additional provisions			-				12,000				3,000				-				178				7,715				22,893
Provision used			-				-				-				-				-				(8,927	)			(8,927	)
Increase(decrease) in foreign currency exchange			-				-				-				-				-				(137	)			(137	)
Total provisions, final balance			-				12,000				11,567				-				4,535				11,573				39,675

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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

 

18.4

Changes in provisions as of 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 June 30, 2013 (Unaudited)

 

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 June 30, 2013 (Unaudited)

 

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$ 1,800
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	:	.Ruled in favor of plaintiff for damages of $600m. Appeal pending.
	Nominal value	:	ThUS$1,880
4.	Plaintiffs	:	Compañía Productora de Yodo y Sales S.A.
	Defendants	:	SQM Químicos S.A. (SQM)
	Date	:	November 1999
	Court	:	Civil Court of Pozo Almonte
	Reason	:	Partial voidance of mining property Paz II 1 to 25
	Status	:	First instance ruling in favor of SQM.  Appeal pending resolution
	Nominal value	:	Approximately ThUS$162

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 19 - Contingencies and restrictions (continued)

 

19.1

Lawsuits and other relevant events, continued

 

5.	Plaintiff	:	Compañía Productora de Yodo y Sales S.A.
	Defendant	:	SQM Químicos S.A. (SQM)
	Date	:	November 1999
	Court	:	Civil Court of Pozo Almonte
	Reason	:	Partial voidance of mining property Paz III 1 to 25
	Status	:	First instance ruling in favor of SQM.  Appeal pending resolution
	Nominal value	:	Approximately ThUS$204
6.	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	:	Conditional waiver as a result of pending appeal. Appeal will be reviewed in a hearing in October of 2013. Awaiting decision.
	Nominal value	:	Not possible to determine
7.	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
8.	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	:	.Verdict of $40m in damages. Appeal pending.
	Nominal value	:	ThUS$175

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 19 - Contingencies and restrictions (continued)

 

19.1

Lawsuits and other relevant events, continued

 

9.	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	:	Evidence.
	Nominal value	:	ThUS$9,400
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
11.	Plantiff	:	Workers Union of the Sociedad Industrial Minera Nueva Victoria
	Defendant	:	SQM S.A. and SQM Industrial S.A.
	Date	:	May 2013
	Court	:	Iquique Labor Court of First Instance
	Reason	:	Charging of benefits allegedly owed due to possible
			application of bonus for meeting goals
	Status	:	Trial Preparation Hearings (2)
	Nominal Value	:	ThS$400
12.	Plantiff	:	Sergio Herrera Contreras and others
	Defendant	:	SQM Salar S.A.
	Date	:	August 2013
	Court	:	Antofagasta Labor Court of First Instance
	Reason	:	Charging of benefits allegedly owed due to possible   application of bonus for meeting goals
	Status	:	Response to law suit
	Nominal Value	:	ThUS$160

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 19 - Contingencies and restrictions (continued)

 

19.1

Lawsuits and other relevant events, continued

 

13.	Plantiff	:	Cristián Plaza Portilla and others
	Defendant	:	SQM Salar S.A.
	Date	:	August 2013
	Court	:	Antofagasta Labor Court of First Instance
	Reason	:	Charging of benefits allegedly owed due to possible application of bonus for meeting goals
	Status	:	Response to law suit
	Nominal Value	:	ThUS$160
14.	Plantiff	:	Ramón Sandoval García
	Defendant	:	EICC Limitada y, subsidiariamente, Skanska Chile S.A. and SQM S.A.
	Date	:	August 2013
	Court	:	Antofagasta Labor Court of First Instance
	Reason	:	Charge for undue dismissal and other benefits
	Status	:	Response to law suit
	Nominal Value	:	ThUS$480
15.	Plantiff	:	Workers Union of the Sociedad Industrial Minera Nueva Victoria
	Defendant	:	SQM S.A. and  SQM Industrial S.A.
	Date	:	October 2013
	Court	:	Iquique Labor Court of First Instance
	Reason	:	Charging of benefits allegedly owed due to possible application of bonus for meeting goals
	Status	:	Response to law suits (2)
	Nominal Value	:	ThUS$400

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 19 - Contingencies and restrictions (continued)

 

19.1

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 June 30, 2013 (Unaudited)

 

Note 19 - Contingencies and restrictions (continued)

 

19.2

Restrictions to management or financial limits

 

Credit contracts subscribed by the SQM Group 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 September 30, 2013, the aforementioned financial indicators are as follows:

 

Indicator		9/30/2013				12/31/2012
Equity ThUS$			2,394,692				2,187,446
Net Financial Debt/ EBITDA			0.84				0.83
Indebtedness			1.08				1.02
SQM Industrial and SQM Salar debt / Current assets			0.02				0.04

 

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 June 30, 2013 (Unaudited)

 

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$17,931 as of September 30, 2013 (ThUS$ 27,193 as of December 31, 2012).

 

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 September 30, 2013, the guarantee amounts to ThUS$723.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 19 - Contingencies and restrictions (continued)

 

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$15,440 as of September 30, 2013, as of December 31, 2012 these amounted to ThUS $4,126 which is detailed as follows:

 

Entity name		9/30/2013 ThUS$				12/31/2012 ThUS$
Agrícola Dallaserra Eirl			263				-
Agrícola Lobert Ltda.			1,322				-
Agrícola Los Angeles S.A.			249				-
Agroc Patricio Bornand L. Eirl			408				-
Agrocomercial Bornand Ltda.			358				-
Agroindustrial Orzonaga Ltda.			139				-
Arena Fertilizantes Y Semillas Dist			298				-
Bernardo Guzman Schmidt			144				-
Bioleche Comercial Ltda			3,570				-
Comercial Agrosal Ltda.			121				-
Contador Frutos S.A.			1,506				-
Dante Hauri Gomez			131				-
Fertglobal Chile Ltda.			992				1,042
Gilberto Rivas Y Cia. Ltda.			141				-
Hortofruticola La Serena			336				-
Johannes Epple Davanzo			973				-
Juan Luis Gaete Chesta			442				-
Lemp Martin Julian			129				-
Llanos Y Wammes Soc.Com.Ltda.			992				2,084
Neyib Farran Y Cia. Ltda.			139				-
Sebastian Urrutia Araya			121				-
Soc.Agr. Huifquenco Cia Ltda.			122				-
Soc. Agrocom. Julio Polanco			137				-
Tattersall Agroinsumos S.A.			1,861				1,000
Vicente Oyarce Castro			546				-
Total			15,440				4,126

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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

9/30/2013 ThUS$

12/31/2012 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

50,031

50,235

Scotiabank & Trust (Cayman) Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,338

50,164

Bank of America

Royal Seed Trading A.V.V.

Subsidiary

Bond

40,261

40,141

Export Development Canada

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,190

50,020

The Bank of Tokyo-Mitsubishi UFJ Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,259

50,140

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 June 30, 2013 (Unaudited)

 

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

9/30/2013 ThUS$

12/31/2012 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 June 30, 2013 (Unaudited)

 

Note 20 - Revenue

 

As of September 30, 2013 and 2012, revenue is detailed as follows:

 

		January to September								July to September
		2013				2012				2013				2012
Types of revenue		ThUS$				ThUS$				ThUS$				ThUS$
Sales of goods			1,702,923				1,822,355				518,288				612,939
Provision of services			8,007				5,853				2,786				2,313
Total			1,710,930				1,828,208				521,074				615,252

 

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		9/30/2013 ThUS$				9/30/2012 ThUS$
Earnings (losses) attributable to owners of the parent			398,139				507,417

 

		9/30/2013 Units				12/31/2012 Units
Number of common shares in circulation			263,196,524				263,196,524

 

		9/30/2013				9/30/2012
Basic earnings per share (US$ per share)			1.5127				1.9279

 

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 June 30, 2013 (Unaudited)

 

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 September 30, 2013, total interest expenses incurred amount to ThUS$44,082 (ThUS$41,520 as of September 30, 2012).

 

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:

 

		9/30/2013				9/30/2012
Capitalization rate of costs for capitalized interest, property, plant and equipment			7	%			7	%
Amount of costs for interest capitalized in ThUS$			13,015				10,244

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 23 - Effect of fluctuations on foreign currency exchange rates

 

a)

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

 

		9/30/2013 ThUS$				9/30/2012 ThUS$
Conversion foreign exchange gains (losses) recognized in the result of the year.			(11,343	)			(17,689	)
Conversion foreign exchange reserves attributable to the owners of the controlling entity			(2,873	)			702
Conversion foreign exchange reserves attributable to the non-controlling entity			(52	)			91

 

b)

Reserves for foreign currency exchange differences:

 

As of September 30, 2013, and December 31, 2012, foreign currency exchange differences are detailed as follows:

 

Detail		9/30/2013 ThUS$				12/31/2012 ThUS$
Changes in equity generated through the equity method:
Comercial Hydro S.A.			1,004				1,004
SQMC Internacional Ltda.			31				39
Proinsa Ltda.			23				29
Comercial Agrorama Ltda.			62				87
Isapre Norte Grande Ltda.			27				59
Almacenes y Depósitos Ltda.			77				99
Sales de Magnesio Ltda.			130				209
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.			14				20
Agrorama S.A.			(11	)			(6	)
Doktor Tarsa			(3,080	)			(1,074	)
SQM Vitas Fzco			(584	)			(318	)
Ajay Europe			-				(275	)
SQM Eastmed Turkey			(44	)			(42	)
Charlee SQM (Thailand) Co. Lta.			(61	)			(32	)
Coromandel SQM India			(244	)			(118	)
SQM Italia SRL			60				28
SQM Oceania Pty Limited			(619	)			(39	)
SQM Indonesia S.A.			12				-
Total			(3,203	)			(330	)

 

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 June 30, 2013 (Unaudited)

 

Note 23 - Effect of fluctuations on 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 June 30, 2013 (Unaudited)

 

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 September 30, 2013 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$18,382 and are detailed as follows:

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of 9/30/2013

 

Identification of 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 ítem

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 first quarter of 2013)

Not classified

Expense

Not classified

1,106

12-31-2013

SQM Industrial S.A.

CQLX-SCarmen and Lagarto hazardous waste yard

Sustainability

Asset / Expense

Not classified

98

12-31-2013

SQM Industrial S.A.

JQH9 – Purchase of Bertrams Boiler

Sustainability: Environment and Risk prevention

Asset

Development

612

12-31-2013

SQM Industrial S.A.

A. MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Environmental processing

Expense

Not classified

37

12-31-2013

SQM Industrial S.A.

MP5W - Normalization TK´s Combustibles

Sustainability: Environment and Risk prevention

Asset

Not classified

1,923

12-31-2013

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

223

12-31-2013

SQM Industrial S.A.

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

Sustainability: Environment and Risk prevention

Asset / Expense

Not classified

139

12-31-2013

Sqm Industrial S.A.

MQ8M - Reconditioning monitoring station ME

Sustainability: Environment and Risk prevention

Expense

Not classified

7

12-31-2013

SQM Industrial S.A.

MQHF -Sustaining of batteries ME

Sustainability: Environment and Risk prevention

Asset / Expense

Not classified

310

12-31-2013

Sqm Industrial S.A.

MQK2-Elimination of PCBs I

Sustainability: Environment and Risk prevention

Expense

Not classified

17

03-31-2015

SQM Industrial S.A.

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

Sustainability: Environment and Risk prevention

Expense

Not classified

147

12-31-2013

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Environmental processing

Asset

Not classified

2,467

12-31-2013

SQM Industrial S.A.

SQ7X-Reach 2011-2013

Sustainability: Environment and Risk prevention

Expense

Not classified

341

12-31-2013

SQM Industrial S.A.

TQA2 - Drainage Improvement Villa Prat

Sustainability: Environment and Risk prevention

Expense

Not classified

17

12-31.2013

Sqm Industrial S.A.

IQWZ – NORMALIZATION TK LIQUID FUELS NV

Sustainability: Environment and Risk prevention

Asset

Not classified

1

04-012014

SQM Industrial S.A.

JQ8K – DIA Line 4 Floor Drying, Coya Sur

Environmental processing

Asset

Not classified

32

12-31-2013

SQM Industrial S.A.

FP55 - FPXA-EIA Pampa Blanca Expansion

Environmental processing

Asset

Not classified

1,488

12-31-2013

SQM Industrial S.A.

JQB6 - DIA Plant NPT4, Coya Sur

Environmental processing

Asset

Not classified

80

12-31-2013

SQM Industrial S.A.

PQLV-DIA Pedro de Valdivia Mine

Environmental processing

Asset

Not classified

258

12-31-2013

SQM S.A.

IPFT-Cultural Heritage Region I

Sustainability

Expense

Not classified

174

12-31-2013

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of 9/30/2013, continued

 

Identification of 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 ítem

Amount of disbursement for the period

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

SQM S.A.

IPXE-Environmental monitoring plan Llamara Salt Flat

Cost reduction

Expense

Not classified

969

12-31-2013

SQM S.A.

IPXF-Environmental monitoring plan Pampa del Tamarugal

Sustainability: Environment and Risk prevention

Expense

Not classified

1,009

12-31-2013

SQM S.A.

IQ1M-PSA Re-injection of water to Puquíos Llamara

Sustainability: Environment and Risk prevention

Asset

Not classified

2,060

12-31-2013

SQM S.A.

IQ3S-Hazardous Materials Management Standardization

Sustainability

Asset / Expense

Not classified

359

12-31-2013

SQM S.A.

IQ53-Cultural heritage route Soronal adduction (Pampa Hermosa)

General Projects (ThUS$ < 50)

Expense

Not classified

24

12-31-2013

SQM S.A.

IQ54-Cultural heritage Pampa Hermosa

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

Asset

Not classified

506

12-31-2013

SQM S.A.

IQOW-Deposit authorization for Humberstone heritage

Sustainability: Environment and Risk prevention

Expense

Not classified

1

12-31-2013

SQM S.A.

IQPJ-Mine Area equity measures Stage I

Sustainability

Expense

Not classified

98

03-31-2015

SQM S.A.

MQLQ-Gas scrubbing system

Not Classified

Asset

Development

430

12-31-2013

SQM S.A.

IQ6M - IQ6N-DIA Nueva Victoria Sur mine expansion

Environmental Processing

Asset

Not classified

116

12-31-2013

SQM S.A.

IP83-DIA Expansion TLN-15

Environmental Processing

Asset

Not classified

23

12-31-2013

SQM S.A.

IQX6 – Environmental Management Plan for Tamarugos Pampa del Tamarugal 2013-2014

Sustainability: Environment and Risk prevention

Asset

Not classified

130

04-01-2015

SQM S.A.

IQXB – Environmental Management Plan for Tamarugos Salar de Llamara 2013-2014

Sustainability: Environment and Risk prevention

Asset

Not classified

8

04-01-2015

SQM Salar S.A.

LQDM-Certification of tanks

Sustainability: Environment and Risk prevention

Asset

Not classified

427

12-31-2013

SQM Salar S.A.

LQI6-EIA Operating Maintenance at Salar de Atacama

Environmental Processing

Asset

Not classified

466

12-31-2013

SQM Salar S.A.

LQNI-DIA KCl floor drying and compacting expansion

Environmental Processing

Asset

Not classified

59

12-31-2013

SIT S.A.

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

Sustainability: Environment and Risk prevention

Asset / Expense

Development

1,700

12-31-2013

SIT S.A.

TQAV-Paving paths IV

Sustainability

Asset

Development

3

12-31-2013

 

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 24- Environment (continued)

  

24.2

Detail of information on disbursements related to the environment, continued

 

Accumulated expenses as of 9/30/2013, continued

 

Identification of 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 ítem

Amount of disbursement for the period

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

SIT S.A.

TQQ5- Environmental curtains Field No. 8

Sustainability: Environment and Risk prevention

Expense

Not classified

181

12-31-2013

SQM S.A.

IQWS – Equity measures of  Stage II Mining Areas

Sustainability: Environment and Risk prevention

Expense

Not classified

47

04-01-2015

SQM Nitratos S.A.

IQMH - Normalization Mine NV area operation

Sustainability: Environment and Risk prevention

Asset

Not classified

197

12-31-2013

SQM Nitratos S.A.

PQI9 – Mine waste water treatment plant

Sustainability: Environment and Risk prevention

Asset

Not classified

51

12-31-2013

SQM Salar S.A.

LQ38-Field Drying Sludge

Sustainability

Asset

Not classified

26

12-31-2013

SQM Salar S.A.

LQG8 – Waste room Toconao Campsite

Sustainability: Natural Resources

Expense

Not classified

15

12-31-2013

Total

18,382

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Future expenses as of 9/30/2013

 

Identification of 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 ítem

Amount of disbursement for the period

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

SQM Industrial S.A.

Envionmental Operations

Not Classified

Expense

Not classified

952

12-31-2013

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Environmental processing

Expense

Not classified

69

12-31-2013

SQM Industrial S.A.

MP5W - Normalization TK´s Combustibles

Sustainability: Environment and Risk prevention

Asset

Not classified

819

12-31-2013

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

50

12-31-2013

SQM Industrial S.A.

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

Sustainability: Environment and Risk prevention

Asset / Expense

Not classified

200

12-31-2013

SQM Industrial S.A.

MQ8M - Reconditioning monitoring station ME

Sustainability: Environment and Risk prevention

Expense

Not classified

69

12-31-2013

Sqm Industrial S.A.

MQK2-Elimination of PCBs I

Sustainability: Environment and Risk prevention

Expense

Not classified

23

03-31-2015

SQM Industrial S.A.

PPC1-Remove switches park PCB 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

300

12-31-2013

SQM Industrial S.A.

IQWZ - Normalization TK liquid fuels NV

Sustainability: Environment and Risk prevention

Asset

Not classified

1.302

04-01-2015

SQM Industrial S.A.

FP55 - FPXA – EIA Pampa Blanca Expansion

Environmental Processing

Asset

Not classified

72

12-31-2013

SQM Industrial S.A.

PQLV – EIS Pedro de Valdivia Mine

Environmental Processing

Asset

Not classified

116

12-31-2013

SQM Industrial S.A.

PQXM – EIS Operation with Heaps  in PV

Environmental Processing

Asset

Not classified

300

12-31-2013

SQM S.A.

IPFT-Cultural Heritage Region I

Sustainability

Expense

Not classified

10

12-31-2013

SQM S.A.

IPXE-Environmental monitoring plan Llamara Salt Flat

Cost reduction

Expense

Not classified

20

12-31-2013

SQM S.A.

IQ1M-PSA Re-injection of water to Puquíos Llamara

Sustainability: Environment and Risk prevention

Asset

Not classified

681

12-31-2013

SQM S.A.

IQ3S-Hazardous Materials Management Standardization

Sustainability

Asset / Expense

Not classified

41

12-31-2013

SQM S.A.

IQ54-Cultural heritage Pampa Hermosa

Minor projects (between ThUS$50 and ThUS$299

Asset

Not classified

43

12-31-2013

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 24- Environment (continued)

 

24.2

Detail of information on disbursements related to the environment, continued

 

Future expenses as of 9/30/2013

 

Identification of 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 ítem

Amount of disbursement for the period

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

SQM S.A.

IQPJ-Mine Area equity measures Stage I

Sustainability

Expense

Not classified

11

03-31-2015

SQM S.A.

MQLQ-Gas scrubbing system

Not Classified

Asset

Development

44

31-12-2013

SQM S.A.

IQX6 – Environmental management Plan for Tamarugos Pampa del Tamarugal 2013-2014

Sustainability: Environment and Risk prevention

Asset

Not classified

1,060

04-01-2015

SQM S.A.

IQXB – Environmental management Plan for Tamarugos Salar de Llamara 2013-2014

Sustainability: Environment and Risk prevention

Asset

Not classified

1,339

04-01-2015

SQM Salar S.A.

LQDM-Certification of tanks

Susteinability: Replacement of Equipment

Asset

Not classified

30

12-31-2013

SQM Salar S.A.

LQSZ-Gas Certification for Casino Andino

Sustainability: Environment and Risk prevention

Expense

Not classified

63

12-31-2013

SQM Salar S.A.

LQI6-EIA Operating Maintenance at Salar de Atacama

Environmental Processing

Asset

Not classified

59

12-31-2013

SQM Salar S.A.

LQG8 – Waste room Toconao Campsite

Sustainability: Natural Resources

Expense

Not classified

1

12-31-2013

SIT S.A.

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

Sustainability: Environment and Risk prevention

Asset / Expense

Development

6

12-31-2013

SIT S.A.

TQLY-Dust extractor packing machine No 1.

Environmental Processing

Asset

Not classified

26

12-31-2013

SIT S.A.

TQQ5-Environmental Curtains Field No. 8

Sustainability: Environment and Risk prevention

Expense

Not classified

71

12-31-2013

SQM S.A.

IQWS - Equity measures of  Stage II Mining Areas

Sustainability: Environment and Risk prevention

Expense

Not classified

73

04-30-2014

SQM Nitratos S.A.

IQMH-Normalization Mine NV area operation

Sustainability: Environment and Risk prevention

Asset

Not classified

63

12-31-2013

TOTAL

7,957

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 ThUS$

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

SQM Industrial S.A.

Environmental Management (Expense as of December 2012)

Not classified

Expense

Not classified

1,808

12-31-2012

SQM Industrial S.A.

IQ8G – Improvement of Bureau of Exchange, offices and facilities

Sustainability

Asset

Not classified

72

12-31-2012

SQM Industrial S.A.

JQEZ – Change of Berrtrams Prilling Boiler CS

Sustainability: Replacement of equipment

Asset

Development

235

12-31-2012

SQM Industrial S.A.

JQH9 – Purchase of Bertrams Boiler

Sustainability: Replacement of equipment

Asset

Development

600

12-31-2012

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Sustainability: Environment and Risk prevention

Expense

Not classified

37

12-31-2012

SQM Industrial S.A.

MP5W - TK's Fuel Standards

Sustainability

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: Renovation

Expense

Not classified

8

12-31-2012

SQM Industrial S.A.

MQA8 – Normalization gas systems peripheral casinos  (stage 1 of project)

Not classified

Expense

Not classified

106

12-31-2012

SQM Industrial S.A.

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

Not classified

Expense

Not classified

8

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.

MQHF-  Pilas ME Maintenance

Sustainability

Asset

Not classified

161

12-31-2012

SQM Industrial S.A.

MQK2- Elimination of PCBs I

Not classified

Expense

Not classified

16

12-31-2012

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 ThUS$

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: Replacement of equipment

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

Sustainability: Environment and Risk prevention

Asset

Not classified

1,763

12-31-2012

SQM Industrial S.A.

SQ7X - Reach 2011-2013

Sustainability

Expense

Not classified

199

12-31-2012

SQM Industrial S.A.

TQA2 – Improvement sewage Villa Prat

Not classified

Expense

Not classified

16

12-31-2012

SQM Industrial S.A.

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

Environmental procedure

Asset

Not classified

32

12-31-2012

SQM Industrial S.A.

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

Environmental procedure

Asset

Not classified

1,425

12-31-2012

SQM Industrial S.A.

JQB6 - NPTIV (DIA Planta  NPT4, Coya Sur)

Environmental procedure

Asset

No Clasificado

65

12-31-2012

SQM Industrial S.A.

PQLV- Mine PV New Area (DIA Pedro de Valdivia Mine)

Ambient procedure

Expense

Not classified

131

12-31-2012

SQM Industrial S.A.

CQLX-Yard for Hazrdous Waste – S. del Carmen and Lagarto

Sustainability

Expense

Not classified

47

12-31-2012

SQM S.A.

MQLQ- Gas Washing System

Sustainability: Risk Prevention and Environment

Asset

Development

324

12-31-2012

SQM S.A.

AQ0A - Well Drilling 4 Uptake Change Point Tamarugal Pampa

Sustainability: Natural Resources

Asset

Development

534

12-31-2012

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 June 30, 2013 (Unaudited)

 

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 June 30, 2013 (Unaudited)

 

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

TOTAL

23,207

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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

06-30-2013

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 June 30, 2013 (Unaudited)

 

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 Plant 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 June 30, 2013 (Unaudited)

 

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 June 30, 2013 (Unaudited)

 

Nota 24 – Environment (continued)

 

24.3

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

 

SQM Industrial S.A.

 

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

 

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.

 

IQWZ: Perform Survey of Tank facilities (certified, mechanical, piping, electrical and instrumentation) by a specialist company in the area of liquid fuels and with the capacity as a certifying body. Perform the Detail Engineering and then perform the implementation of the changes required to normalize the TKs facilities and leave them in conditions to be declared and registered with the SEC. The budget of MUS$ 123 only covers the costs associated to the survey and Detail Engineering. Project underway.

 

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.

 

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

 

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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 24 – Environment (continued)

 

24.3

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

 

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

 

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.

 

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.

 

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.

 

JQL7: Conduct a study to optimize future dust collection and product lost in KNO3 Drying and Prilling plants in CS. Achieve an exact estimate of product loss in dust format.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 24 - Environment (continued)

 

24.3

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

 

SQM S.A.

 

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.

 

IQ1M: To implement environmental commitments included in the EIS of project “Pampa Hermosa” to safeguard the puquios 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.

 

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.

 

IQOW: Enable a deposit in Humberstone Saltpeter to store material of heritage interest recovered in land campaigns of Project ZMNV (performed and to be performed).

 

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.

 

IQWS: Implementation of patrimonial environmental commitments for releasing Mining Areas in 2013, necessary for the performance of Mining exploitation of the VPONV, while complying with the commitments acquired through the Envorinmental Assessment System (EAS). Project underway.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 24 - Environment (continued)

 

24.3

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

 

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

 

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.

 

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.

 

SQM Salar S.A.

 

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.

 

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.

 

LQSZ: To perform certifications to comply with the SEC regulations.

 

LQI6: Preparation and processing of the EIA Update Operations in the Salar de Atacama. The project is in process.

 

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

 

LQDM: Certification of the liquid fuel storage tanks. The project is in process.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 24 - Environment (continued)

 

24.3

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

 

SIT S.A.

 

TPYX: To comply with the commitment of decreasing the emission of particulate material towards the city of Tocopilla. The project is in process.

 

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.

 

TQLY: This project aims at eliminating environmental contamination that may exist in the areas of work of operators. The project is in process.

 

TQM2: The project involves recovering operating conditions by changing the pitch pipe No.1 thus reducing the environmental pollution. 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 Nitratos S.A.

 

IQMH: Creation of an area allowing to store hazardous substances. 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.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 25 - Other current and non-current non-financial assets

 

As of September 30, 2013, and December 31, 2012, the detail of other current and non-current assets is as follows:

 

		9/30/2013				12/31/2012
Other non-financial  assets, current		ThUS$				ThUS$
Domestic Value Added Tax			16,466				42,136
Foreign Value Added Tax			8,402				9,306
Prepaid mining licenses			3,850				1,512
Prepaid insurance			2,246				8,278
Other prepayments			1,594				494
Other assets			937				6,094
Total			33,495				67,820

 

		9/30/2013				12/31/2012
Other non-financial  assets, non-current		ThUS$				ThUS$
Stain development expenses and prospecting expenses (1)			18,995				16,839
Guarantee deposits			723				571
Other assets			252				272
Total			19,970				17,682

 

(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 September 30, 2013 balances associated with the exploration and assessment of mineral resources is presented under Inventory for ThUS$ 6,482 (ThUS$ 6,174 as of December 31, 2012).

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 September 30, 2013, and December 31, 2012:

 

		9/30/2013				12/31/2012
Reconciliation		ThUS$				ThUS$
Assets for the exploration and evaluation of mineral resources, net, opening balance			16,839				21,395
Changes in assets for exploration and assessment of mineral resources:
Additions, other than business combinations			4,030				843
Depreciation and amortization			(1,567	)			(2,080	)
Increase (Decrease) due to transfers and other charges			(307	)			(3,319	)
Assets for exploration and assessment of mineral resources, net, closing balance			18,995				16,839

 

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 June 30, 2013 (Unaudited)

 

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 that 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 June 30, 2013 (Unaudited)

 

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 June 30, 2013 (Unaudited)

 

Note 26 - Operating segments (continued)

 

26.2

Operating segment disclosures as of September 30, 2013 and September 30, 2012:

 

9/30/2013
		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 9/30/2013
Operating segment items		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Revenue			533,310				358,445				148,372				129,342				472,267				69,194				1,710,930				1,710,930				-				-				-				1,710,930
Revenues from transactions with other operating segments of the same entity			94,989				556,280				105,942				189,275				399,608				275,558				1,621,652				1,621,652				(1,621,652	)			-				-				-
Revenues from external customers and transactions with other operating segments of the same entity			628,299				914,725				254,314				318,617				871,875				344,752				3,332,582				3,332,582				(1,621,652	)			-				-				1,710,930
Interest revenue			-				-				-				-				-				-				-				-				-				-				-				-
Interest expense			-				-				-				-				-				-				-				-				145,643				(189,725	)			-				(44,082	)
depreciation and amortization expense			(49,671	)			(33,385	)			(13,819	)			(12,047	)			(43,986	)			(6,445	)			(159,353	)			(159,353	)			-				-				-				(159,353	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method			-				-				-				-				-				-				-				-				-				14,531				-				14,531
income tax expense, continuing operations			-				-				-				-				-				-				-				-				(2,377	)			(114,691	)			-				(117,068	)
Other items other tan significant cash			-				-				-				-				-				-				-				-				-								-				-
Income (loss) before taxes			124,489				203,619				71,000				35,906				134,671				89,498				659,183				659,183				(479,596	)			339,983				-				519,570
Net income (loss) from continuing operations			124,489				203,619				71,000				35,906				134,671				89,498				659,183				659,183				(481,973	)			225,292				-				402,502
Net income (loss) from discontinued operations
Net income (loss)			124,489				203,619				71,000				35,906				134,671				89,498				659,183				659,183				(481,973	)			225,292				-				402,502
Assets			-				-				-				-				-				-				-				-				(8,556,082	)			13,531,346				-				4,975,264
Equity-accounted investees			-				-				-				-				-				-				-				-				(3,865,894	)			3,943,080				-				77,186
Increase of non-current assets			-				-				-				-				-				-				-				-								161,958				-				161,958
Liabilities			-				-				-				-				-				-				-				-				(4,300,156	)			6,880,728				-				2,580,572
Equity																																															2,394,692
Equity and liability																																															4,975,264
Impairment loss recognized in profit or loss			(16,008	)			(1,864	)			(771	)			(3,854	)			(6,575	)			(400	)			(29,472	)			(29,472	)			-				(6,301	)			-				(35,773	)
Cash flows from (used in) operating activities			-				-				-				-				-				-				-				-				-				504,098				-				504,098
Cash flows from (used in) investing activities			-				-				-				-				-				-				-				-				-				(583,145	)			-				(583,145	)
Cash flows from (used in) financing activities			-				-				-				-				-				-				-				-				-				205,373				-				205,373

 

 

Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 26 - Operating segments (continued)

 

26.2

Operating segment disclosures as of September 30, 2013 and September 30, 2012:

 

9/30/2012
		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 9/30/2012
Operating segment items		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Revenue			515,896				449,063				164,871				169,294				456,608				72,476				1,828,208				1,828,208				-				-				-				1,828,208
Revenues from transactions with other operating segments of the same entity			192,807				639,310				111,896				229,463				421,970				349,792				1,945,238				1,945,238				(1,945,238	)			-				-				-
Revenues from external customers and transactions with other operating segments of the same entity			708,703				1,088,373				276,767				398,757				878,578				422,268				3,773,446				3,773,446				(1,945,238	)			-				-				1,828,208
Interest revenue			-				-				-				-				-				-				-				-				-				-				-				-
Interest expense			-				-				-				-				-				-				-				-				170,104				(211,624	)			-				(41,520	)
depreciation and amortization expense			(41,193	)			(35.856	)			(13.164	)			(13,518	)			(36,459	)			(5,787	)			(145,977	)			(145,977	)			-				-				-				(145,977	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method			-				-				-				-				-				-				-				-				-				20,031				-				20,031
income tax expense, continuing operations			-				-				-				-				-				-				-				-				-				(173,920	)			-				(173,920	)
Other items other tan significant cash			-				-				-				-				-				-				-				-				-								-				-
Income (loss) before taxes			171,456				285,683				81,272				60,398				190,751				4,697				794,257				794,257				(568,363	)			461,041				-				686,935
Net income (loss) from continuing operations			171,456				285,683				81,272				60,398				190,751				4,697				794,257				794,257				(568,363	)			287,121				-				513,015
Net income (loss) from discontinued operations
Net income (loss)			171,456				285,683				81,272				60,398				190,751				4,697				794,257				794,257				(568,363	)			287,121				-				513,015
Assets			-				-				-				-				-				-				-				-				(8.439.594	)			12.938.231				-				4.498.637
Equity-accounted investees			-				-				-				-				-				-				-				-				(3.211.445	)			3.284.991				-				73.546
Increase of non-current assets			-				-				-				-				-				-				-				-								149,780				-				149,780
Liabilities			-				-				-				-				-				-				-				-				(4.774.855	)			6.902.915				-				2.128.060
Equity																																															2,370,577
Equity and liability																																															4,498,637
Reversal of impairment losses recognized in profit and loss for the year																			-								-				-								-								-
Impairment loss recognized in profit or loss			(10,416	)			(3,068	)			(568	)			(3,384	)			(4,002	)			(271	)			(21,709	)			(21,709	)			-				(3,580	)			-				(25,289	)
Cash flows from (used in) operating activities			-				-				-				-				-				-				-				-				-				501,567				-				501,567
Cash flows from (used in) investing activities			-				-				-				-				-				-				-				-				-				(617,102	)			-				(617.102	)
Cash flows from (used in) financing activities			-				-				-				-				-				-				-				-				-				27,927				-				27,927

 

 

Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 26 - Operating segments (continued)

 

26.3

Statement of comprehensive income classified by operating segments based on groups of products as of September 30, 2013:

 

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			533,310				358,445				148,372				129,342				472,267				69,194				-				1,710,930
Cost of sales			(408,821	)			(154,826	)			(77,372	)			(93,436	)			(337,596	)			(63,696	)			-				(1,135,747	)
Gross profit			124,489				203,619				71,000				35,906				134,671				5,498				-				575,183
Other incomes by function			-				-				-				-				-				84,000				11,978				95,978
Administrative expenses			-				-				-				-				-				-				(76,070	)			(76,070	)
Other expenses by function			-				-				-				-				-				-				(32,101	)			(32,101	)
Other gains (losses)			-				-				-				-				-				-				(12,275	)			(12,275	)
Financial income			-				-				-				-				-				-				9,749				9,749
Financial costs			-				-				-				-				-				-				(44,082	)			(44,082	)
interest in the profit or loss of associates and joint ventures accounted for by the equity method			-				-				-				-				-				-				14,531				14,531
Exchange differences			-				-				-				-				-				-				(11,343	)			(11,343	)
Profit (loss )before taxes			124,489				203,619				71,000				35,906				134,671				89,498				(139,613	)			519,570
Income tax expense			-				-				-				-				-				-				(117,068	)			(117,068	)
Profit (loss )from continuing operations			124,489				203,619				71,000				35,906				134,671				89,498				(256,681	)			402,502
Profit (loss ) from discontinued operations			-				-				-				-				-				-				-				-
Profit (loss)			124,489				203,619				71,000				35,906				134,671				89,498				(256,681	)			402,502
Profit (loss, attributable to
Profit (loss ) attributable to the controller´s owners			-				-				-				-				-				-				-				398,139
Profit (loss ) attributable to the non controllers			-				-				-				-				-				-				-				4,363
Profit (loss)			-				-				-				-				-				-				-				402,502

 

 

Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 26 - Operating segments (continued)

 

26.3

Statement of comprehensive income classified by operating segments based on groups of products as of September 30, 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			515,896				449,063				164,871				169,294				456,608				72,476				-				1,828,208
Cost of sales			(344,440	)			(163,380	)			(83,599	)			(108,896	)			(265,857	)			(67,779	)			-				(1,033,951	)
Gross profit			171,456				285,683				81,272				60,398				190,751				4,697				-				794,257
Other incomes by function			-				-				-				-				-				-				10,578				10,578
Administrative expenses			-				-				-				-				-				-				(74,328	)			(74,328	)
Other expenses by function			-				-				-				-				-				-				(24,774	)			(24,774	)
Other gains (losses)			-				-				-				-				-				-				145				145
Financial income			-				-				-				-				-				-				20,235				20,235
Financial costs			-				-				-				-				-				-				(41,520	)			(41,520	)
interest in the profit or loss of associates and joint ventures accounted for by the equity method			-				-				-				-				-				-				20,031				20,031
Exchange differences			-				-				-				-				-				-				(17,689	)			(17,689	)
Profit (loss )before taxes			171,456				285,683				81,272				60,398				190,751				4,697				(107,322	)			686,935
Income tax expense			-				-				-				-				-				-				(173,920	)			(173,920	)
Profit (loss )from continuing operations			171,456				285,683				81,272				60,398				190,751				4,697				(281,242	)			513,015
Profit (loss ) from discontinued operations			-				-				-				-				-				-				-				-
Profit (loss)			171,456				285,683				81,272				60,398				190,751				4,697				(281,242	)			513,015
Profit (loss, attributable to
Profit (loss ) attributable to the controller´s owners			-				-				-				-				-				-				-				507,417
Profit (loss ) attributable to the non controllers			-				-				-				-				-				-				-				5,598
Profit (loss)			-				-				-				-				-				-				-				513,015

 

 

Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 26 - Operating segments (continued)

 

26.4

Revenue from transactions with other Company operating segments as of September 30, 2013

 

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			533,310				358,445				148,372				129,342				472,267				69,194				1,710,930

 

 

26.4

Revenue from transactions with other Company operating segments as of September 30, 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			515,896				449,063				164,871				169,294				456,608				72,476				1,828,208

 

 

Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 June 30, 2013 (Unaudited)

 

Note 26 - Operating segments (continued)

 

26.7

Segments by geographical areas as of September 30, 2013 and September 30, 2012

 

		Chile				Latin America and the Caribbean				Europe				North America				Asia and others				9/30/2013
Items		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Revenue			167,657				300,337				417,130				436,557				389,249				1,710,930
Non-current assets:			2,209,382				452				36,336				15,737				38,722				2,300,629
Equity-accounted investees			1,312				-				24,595				13,211				38,068				77,186
Intangible assets other than goodwill			28,473				-				-				332				4				28,809
Goodwill			26,929				86				11,373				-				-				38,388
Property, plant and equipment, net			2,132,899				165				368				2,194				650				2,136,276
Investment property			-				-				-				-				-				-
Other non-current assets			19,769				201				-				-				--				19,970

 

		Chile				Latin America and the Caribbean				Europe				North America				Asia and others				9/30/2012
Items		ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Revenue			182,481				319,562				456,191				462,558				407,416				1,828,208
Non-current assets:			1,945,713				530				34,449				17,333				35,063				2,033,088
Equity-accounted investees			728				-				22,780				15,299				34,739				73,546
Intangible assets other than goodwill			3,649				-				-				393				6				4,048
Goodwill			27,146				86				11,373				-				-				38,605
Property, plant and equipment, net			1,894,618				224				296				1,641				318				1,897,097
Investment property			-				-				-				-				-				-
Other non-current assets			19,572				220				-				-				-				19,792

 

 

  Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 September 30, 2013 and December 31, 2012:

 

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 June 30, 2013 (Unaudited)

 

Nota 27 - Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature

 

					9/30/2013				9/30/2012
					ThUS$				ThUS$
27.1		Revenue
		Products			1,702,923				1,822,355
		Services			8,007				5,853
		Total			1,710,930				1,828,208

 

					9/30/2013				9/30/2012
					ThUS$				ThUS$
27.2		Cost of sales
		Raw material and supplies			(618,470	)			(761,423	)
		Types of employee benefits expenses
		Salaries and wages			(107,293	)			(97,031	)
		Other short-term employee benefits			(26,781	)			(50,764	)
		Termination benefit expenses			(6,934	)			(2,291	)
		Total employee benefits expenses			(141,008	)			(150,086	)
		Depreciation expense			(158,997	)			(141,603	)
		Amortization expense			-				-
		Impairment loss (review of impairment losses) recognized in profit or loss for the year			(29,472	)			(21,709	)
		Other expenses, by nature (*)			(187,800	)			40,870
		Total			(1,135,747	)			(1,033,951	)

 

(*)         Include the variation of finished and products in-process

 

 

  Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 27 - Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature (continued)

 

					9/30/2013				9/30/2012
					ThUS$				ThUS$
27.3		Other income
		Discounts obtained from suppliers			991				711
		Compensation received			3,890				53
		Penalties charged to suppliers			312				255
		Insurance recovered			1,134				4,126
		Excess in the provision of liabilities with 3rd parties			580				654
		Excess in allowance for doubtful accounts			-				154
		Sale of Property, plant and equipment			98				245
		Sale of materials, spare parts and supplies			1,217				1,070
		Sale of mining concessions			86,006				1,472
		Sale of scrap			22				133
		Excess indemnity provision Yara South Africa			247				335
		Lowest Price paid in portfolio purchase			716				-
		Lowest Price in goodwill purchases			227				-
		Other operating results			538				1,370
		Total			95,978				10,578

 

					9/30/2013				9/30/2012
					ThUS$				ThUS$
27.4		Administrative expenses
		Employee benefit expenses by nature
		Salaries and wages			(34,873	)			(30,448	)
		Other short-term benefits to employees			(2,651	)			(2,913	)
		Total employee benefit expenses			(37,524	)			(33,361	)
		Other expenses, by nature			(38,546	)			(40,967	)
		Total			(76,070	)			(74,328	)

 

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Nota 27 - Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature (continued)

 

				9/30/2013				9/30/2012
				ThUS$				ThUS$
27.5		Other expenses by function
		Clases de gasto de beneficios a los empleados
		Otros beneficios a los empleados a corto plazo			(6	)			(19	)
		Depreciation and amortization expenses
		Depreciation of stopped assets			(356	)			(4,374	)
		Impairment loss (review of impairment losses) recognized in profit or loss for the year
		Impairment of allowance for doubtful accounts			(1,301	)			(733	)
		Provision for loss in auction of materials and spare parts			-				(3,000	)
		Subtotal to date			(1.301	)			(3,733	)
		Other expenses, by nature
		Legal Expenses			(3,384	)			(455	)
		Worksite stoppage expenses			(60	)			(57	)
		VAT and other unrecoverable tax			(3,075	)			(851	)
		Fines paid			(322	)			(367	)
		Consultancy services			(6	)			(19	)
		Investment Plan Expenses			(15,543	)			(9,439	)
		Donations rejected as expense			(3,784	)			(3,275	)
		Provision for work closing			(177	)			(137	)
		Indemnities paid			(146	)			-
		Claims (Loss) expenses			(2,038	)			-
		Other operating expenses			(1,903	)			(2,048	)
		Subtotal to date			(30,438	)			(16,648	)
		Total			(32,101	)			(24,774	)

 

				9/30/2013				9/30/2012
				ThUS$				ThUS$
27.6		Other income (expenses)
		Provision for re-structuring			(12,000	)			-
		Adjustment of Equity Method, prior year			(364	)			196
		Sale of investment in associates			-				(404	)
		Other			89				353
		Total			(12,275	)			145

 

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 27 - Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature (continued)

 

27.7		Summary of expenses by nature :		January to September								July to September
				2013				2012				2013				2012
				ThUS$				ThUS$				ThUS$				ThUS$
		Raw material and supplies used			(618,470	)			(761,423	)			(185,112	)			(250,342	)
		Types of employee benefits expenses
		Salaries and wages			(142,166	)			(127,479	)			(45,370	)			(45,948	)
		Other short-term employee benefits			(29,438	)			(53,696	)			(12,799	)			(20,022	)
		Termination benefit expenses			(6,934	)			(2,291	)			(3,720	)			(1,122	)
		Total employee benefit expenses			(178,538	)			(183,466	)			(61,889	)			(67,092	)
		Depreciation and amortization expenses
		Depreciation expense			(159,353	)			(145,977	)			(55,047	)			(51,736	)
		Amortization expense			-				-				-				-
		Impairment loss (reversal of impairment losses) recognized in profit or loss for the year			(30,773	)			(25,442	)			(7,462	)			(9,517	)
		Other expenses, by nature			(269,059	)			(16,745	)			(108,248	)			(9,529	)
		Total expenses, by nature			(1,256,193	)			(1,133,053	)			(417,758	)			(388,216	)

 

This table corresponds to the summary from Note 27.2 to 27.6 required by the Chilean Superintendence of Securities and Insurance

 

27.8		Financial Expenses		January to September								July to September
				2013				2012				2013				2012
				MUS$				MUS$				MUS$				MUS$
		Interest on bank loans and overdrafts			(2.367	)			(1.945	)			(833	)			(650	)
		Interest on bonds			(47.431	)			(41.100	)			(17.348	)			(14.699	)
		Interest on loans			(6.612	)			(7.457	)			(2.160	)			(2.688	)
		Capitalized interest costs			13.015				10.244				3.871				3.167
		Other financial costs			(687	)			(1.262	)			(181	)			(192	)
		Total			(44.082	)			(41.520	)			(16.651	)			(15.062	)

  

  

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Nota 28 - Income tax and deferred taxes

 

Accounts receivable from taxes as of September 30, 2013 and December 31, 2012, are as follows:

 

28.1

Current tax assets:

 

		9/30/2013				12/31/2012
		ThUS$				ThUS$
Monthly provisional income tax payments, Chilean companies current year			24,948				23,713
Monthly provisional payment Royalty			6,770				2,430
Monthly provisional income tax payments, foreign companies			2,671				1,979
Corporate tax credits (1)			818				144
Corporate tax absorbed by tax losses (2)			7,571				1,968
Total			42,778				30,234

 

(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 2013 and 2012.

 

(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 June 30, 2013 (Unaudited)

 

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		9/30/2013				12/31/2012
		ThUS$				ThUS$
1st Category income tax			22,476				9,811
Royalty tax on mining activity			-				3,597
Foreign company income tax			9,637				10,206
Article 21 Single Tax			-				10
Total			32,113				23,624

 

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 September 30, 2013, and December 31, 2012, 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:

 

		9/30/2013 ThUS$				12/31/2012 ThUS$
Taxable profits with credit rights (1)			1,508,636				1,262,201
Taxable profits without credit right(1)			95,326				138,535
Taxable loss			10,564				9,931
Credit for shareholders			361,022				294,146

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 June 30, 2013 (Unaudited)

 

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 September 30, 2013 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			-				-				-				155,967
Doubtful accounts impairment			-				-				7,308				-
Accrued vacations			-				-				3,612				-
Manufacturing expenses			-				-				-				63,624
Unrealized gains (losses) from sales of products			-				-				88,962				-
Fair value of bonds			-				-				1,600				-
Severance indemnity			-				-				-				4,816
Hedging			-				-				-				8,745
Inventory of products, spare parts and supplies			6				-				21,795				-
Research and development expenses			-				-				-				5,377
Tax losses			-				-				1,276				-
Capitalized interest			-				-				-				21,500
Expenses in assumption of bank loans			-				-				-				3,015
Unaccrued interest			-				-				184				-
Fair value of property, plant and equipment			-				-				3				-
Employee benefits			-				-				1,234				-
Royalty deferred income taxes			-				-				-				7,721
Other			442				-				9,974				-
Balance to date			448				-				135,948				270,765
Net balance			448				-				-				134,817

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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 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 June 30, 2013 (Unaudited)

 

Note 28 - Income tax and deferred taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.3

Reconciliation of changes in deferred tax liabilities (assets) as of September 30, 2013

 

		Deferred tax liabilities (assets) at the beginning of the period				Deferred tax expense (income) recognized in profit or loss				Deferred tax related to items credited (debited) directly to equity				Total increase (decrease) of deferred tax liabilities (assets)				Deferred tax liabilities (assets) at the end of the period
Depreciation			145,251				10,716				-				10,716				155,967
Doubtful accounts impairment			(5,807	)			(1,501	)			-				(1,501	)			(7,308	)
Accrued vacations			(3,971	)			359				-				359				(3,612	)
Manufacturing expenses			60,160				3,464				-				3,464				63,624
Unrealized gains (losses) from sales of products			(105,879	)			16,917				-				16,917				(88,962	)
Fair value of bonds			(3,684	)			-				2,084				2,084				(1,600	)
Severance indemnity			4,483				333				-				333				4,816
Hedging			22,890				(14,145	)			-				(14,145	)			8,745
Inventory of products, spare parts and supplies			(15,027	)			(6,774	)			-				(6,774	)			(21,801	)
Research and development expenses			4,917				460				-				460				5,377
Capitalized interest			20,449				1,051				-				1,051				21,500
Expenses in assumption of bank loans			2,243				772				-				772				3,015
Unaccrued interest			(215	)			31				-				31				(184	)
Fair value of property, plant and equipment			2,743				(2,746	)			-				(2,746	)			(3	)
Employee benefits			(2,027	)			793				-				793				(1,234	)
Royalty deferred income taxes			8,430				(709	)			-				(709	)			7,721
Other			(8,225	)			(2,191	)			-				(2,191	)			(10,416	)
Unused tax losses			(1,509	)			233				-				233				(1,276	)
Total temporary differences, losses and unused fiscal credits			125,222				7,063				2,084				9,147				134,369

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 28 - Income tax and deferred taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.3

Reconciliation of changes in deferred tax liabilities (assets) as of December 31, 2012

 

		Deferred tax liabilities (assets) at the beginning of the period				Deferred tax expense (income) recognized in profit or loss				Deferred tax related to items credited (debited) directly to equity				Total increase (decrease) of deferred tax liabilities (assets)				Deferred tax liabilities (assets) at the end of the period
Depreciation			114,151				31,100				-				31,100				145,251
Doubtful accounts impairment			(4,061	)			(1,746	)			-				(1,746	)			(5,807	)
Accrued vacations			(2,642	)			(1,329	)			-				(1,329	)			(3,971	)
Manufacturing expenses			54,747				5,413				-				5,413				60,160
Unrealized gains (losses) from sales of products			(97,441	)			(8,438	)			-				(8,438	)			(105,879	)
Fair value of bonds			(2,104	)			-				(1,580	)			(1,580	)			(3,684	)
Severance indemnity			3,036				1,447				-				1,447				4,483
Hedging			16,636				6,254				-				6,254				22,890
Inventory of products, spare parts and supplies			(7,866	)			(7,161	)			-				(7,161	)			(15,027	)
Research and development expenses			4,598				319				-				319				4,917
Capitalized interest			17,461				2,988				-				2,988				20,449
Expenses in assumption of bank loans			1,855				388				-				388				2,243
Unaccrued interest			(386	)			171				-				171				(215	)
Fair value of property, plant and equipment			(1,539	)			4,282				-				4,282				2,743
Employee benefits			(1,177	)			(850	)			-				(850	)			(2,027	)
Royalty deferred income taxes			10,035				(1,605	)			-				(1,605	)			8,430
Other			(5,967	)			(2,258	)			-				(2,258	)			(8,225	)
Unused tax losses			(1,046	)			(463	)			-				(463	)			(1,509	)
Total temporary differences, losses and unused fiscal credits			98,290				28,512				(1,580	)			26,932				125,222

 

  

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 28 - Income tax and deferred taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.4

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 September 30, 2013 and December 31, 2012, tax loss carryforwards (NOL carryforwards) are detailed as follows:

 

		9/30/2013				12/31/2012
		ThUS$				ThUS$
Chile			1,276				1,509
Other countries			-				-
Other countries			1,276				1,509

 

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.5

Unrecognized deferred income tax assets and liabilities

 

Unrecognized deferred tax assets and liabilities as of September 30, 2013 and December 31, 2012 are as follows:

 

		9/30/2013				12/31/2012
		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	)
Other			(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 June 30, 2013 (Unaudited)

 

Note 28 - Income tax and deferred taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.6

Movements in deferred tax assets and liabilities

 

Movements in deferred tax assets and liabilities as of September 30, 2013 and December 31, 2012 are detailed as follows:

 

		9/30/2013				12/31/2012
		ThUS$				ThUS$
		Liabilities (assets)				Liabilities (assets)
Deferred tax assets and liabilities, net opening balance			125,222				98,290
Increase (decrease) in deferred taxes in profit or loss			7,063				28,512
Tax Recovery of first category credit absorbed by tax losses			-				-
Increase (decrease) in deferred taxes in equity			2,084				(1,580	)
Balances to date			134,369				125,222

 

d.7

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 June 30, 2013 (Unaudited)

 

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:

 

		9/30/2013				9/30/2012
		ThUS$				ThUS$
		Income (expenses)				Income (expenses)
Current income tax expense
Current income tax expense			(113,342	)			(165,920	)
Adjustments to prior year current income tax			3,337				26
Current income tax expense, net, total			(110,005	)			(165,894	)
Deferred tax expense
Deferred tax expense (income) relating to the creation and reversal of temporary differences			(7,063	)			(8,026	)
Deferred tax expense (income) relating changes in tax rates or the application of new taxes			-				-
Deferred tax expense, net, total			(7,063	)			(8,026	)
Tax expense (income)			(117,068	)			(173,920	)

 

Tax expenses (income) for foreign and domestic parties are detailed as follows:

 

		9/30/2013				9/30/2012
		ThUS$				ThUS$
		Income (expenses)				Income (expenses)
Current income tax expense by foreign and domestic parties, net
Current income tax expense, foreign parties, net			(2,995	)			(10,720	)
Current income tax expense, domestic, net			(107,010	)			(155,174	)
Current income tax expense, net, total			(110,005	)			(165,894	)
Deferred tax expense by foreign and domestic parties, net
Deferred tax expense, foreign parties, net			430				423
Deferred tax expense, domestic, net			(7,493	)			(8,449	)
Deferred tax expense, net, total			(7,063	)			(8,026	)
Income tax expense			(117,068	)			(173,920	)

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 28 - Income tax and deferred taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.8

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.9

Disclosures on the tax effects of other comprehensive income components:

 

		9/30/2013
						ThUS$
Income tax related to components of other income and expense with a charge or credit to net equity		Amount before taxes (expense) gain				(Expense) income for income taxes				Amount after taxes
Cash flow hedge			10,419				(2,084	)			8,335
Total			10,419				(2,084	)			8,335

 

		9/30/2012
						ThUS$
Income tax related to components of other income and expense with a charge or credit to net equity		Amount before taxes (expense) gain				(Expense) income for income taxes				Amount after taxes
Cash flow hedge			(7,297	)			1,425				(5,872	)
Total			(7,297	)			1,425				(5,872	)

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 28 - Income tax and deferred taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.10

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

  

		9/30/2013				9/30/2012
		ThUS$				ThUS$
		Income (expense)				Income (expense)
Consolidated income before taxes			519,570				686,935
Income tax rate in force in Chile			20	%			20	%
Tax expense using the legal rate			(103,914	)			(137,387	)
Effect of royalty tax expense			(10,154	)			(24,096	)
Tax effect of non-taxable revenue			4,287				6,134
Effect of taxable rate of non-deductible expenses for determination of taxable income (loss)			(1,639	)			(2,059	)
Tax effect of tax rates supported abroad			(5,504	)			(5,157	)
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)			(144	)			(11,355	)
Tax expense using the effective rate			(117,068	)			(173,920	)

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 28 - Income tax and deferred taxes (continued)

 

28.4

Income tax and deferred taxes, continued

 

d.11

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 June 30, 2013 (Unaudited)

 

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		9/30/2013 ThUS$				12/31/2012 ThUS$
Current assets:
Cash and cash equivalents		BRL			59				20
Cash and cash equivalents		CLP			5,408				76,712
Cash and cash equivalents		CNY			128				181
Cash and cash equivalents		EUR			15,269				3,601
Cash and cash equivalents		GBP			52				70
Cash and cash equivalents		IDR			4				5
Cash and cash equivalents		INR			14				13
Cash and cash equivalents		MXN			480				720
Cash and cash equivalents		PEN			4				75
Cash and cash equivalents		THB			882				-
Cash and cash equivalents		YEN			1,460				1,369
Cash and cash equivalents		ZAR			12,256				7,421
Subtotal cash and cash equivalents					36,016				90,187
Other current financial assets		CLP			89,063				182,427
Subtotal other current financial assets					89,063				182,427
Other current non-financial assets		ARS			26				29
Other current non-financial assets		AUD			-				-
Other current non-financial assets		BRL			1				5
Other current non-financial assets		CLF			48				23
Other current non-financial assets		CLP			17,065				42,378
Other current non-financial assets		CNY			18				29
Other current non-financial assets		EUR			8,595				8,534
Other current non-financial assets		MXN			765				736
Other current non-financial assets		PEN			5				55
Other current non-financial assets		THB			4				-
Other current non-financial assets		YEN			1				15
Other current non-financial assets		ZAR			459				702
Subtotal other current non-financial assets					26,987				52,506
Trade and other receivables		AUD			-				14
Trade and other receivables		BRL			34				58
Trade and other receivables		CLF			580				826
Trade and other receivables		CLP			91,783				78,112
Trade and other receivables		CNY			18				2,014
Trade and other receivables		EUR			45,973				47,962
Trade and other receivables		GBP			1,440				399
Trade and other receivables		MXN			218				200
Trade and other receivables		PEN			89				114
Trade and other receivables		THB			1,125				-
Trade and other receivables		YEN			1				-
Trade and other receivables		ZAR			14,804				16,004
Subtotal trade and other receivables					156,065				145,703
Receivables from related parties		AED			379				-
Receivables from related parties		CLP			749				1,154
Receivables from related parties		EUR			1,934				34
Receivables from related parties		YEN			190				28
Receivables from related parties		ZAR			5,649				3,312
Subtotal receivables from related parties					8,901				4,528
Current tax assets		AUD			-				452
Current tax assets		CLP			1,613				457
Current tax assets		EUR			73				72
Current tax assets		INR			-				5
Current tax assets		MXN			1,358				698
Current tax assets		PEN			267				363
Current tax assets		YEN			-				135
Subtotal current tax assets					3,311				2,182
Total current assets					320,343				477,533

 

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 29 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

 

Class of asset		Currency		9/30/2013				12/31/2012
				ThUS$				ThUS$
Non-current assets:
Other non-current financial assets		BRL			28				30
Other non-current financial assets		CLP			20				20
Other non-current financial assets		YEN			48				54
Subtotal other non-current financial assets					96				104
Other non-current non-financial assets		BRL			200				219
Other non-current non-financial assets		CLP			775				624
Subtotal other non-current non-financial assets					975				843
Non-current rights receivable		CLF			505				602
Non-current rights receivable		CLP			612				709
Subtotal non-current rights receivable					1,117				1,311
Equity-accounted investees		AED			22,877				17,044
Equity-accounted investees		CLP			1,312				1,656
Equity-accounted investees		EGP			-				-
Equity-accounted investees		EUR			7,032				8,495
Equity-accounted investees		INR			761				683
Equity-accounted investees		THB			1,927				1,608
Equity-accounted investees		TRY			15,762				15,431
Subtotal equity-accounted investees					49,671				44,917
Intangible assets other than goodwill		CLP			542				170
Intangible assets other than goodwill		CNY			4				6
Subtotal intangible assets other than goodwill					546				176
Property, plant and equipment		CLP			3,727				3,639
Subtotal property, plant and equipment					3,727				3,639
Total non-current assets					56,132				50,990
Total assets					376,475				528,523

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 29 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

 

Liabilities held in foreign currencies are detailed as follows:

 

				9/30/2013												12/31/2012
Class of liability		Currency		Up to 90 days				Over 90 days up to 1 year				Total				Up to 90 days				Over 90 days up to 1 year				Total
				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Current liabilities
Other current financial liabilities		CLF			7,868				70,937				78,805				5,967				7,465				13,432
Other current financial liabilities		CLP			678				144,447				145,125				1,265				1,470				2,735
Subtotal other current financial liabilities					8,546				215,384				223,930				7,232				8,935				16,167
Trade and other payables		ARS			1				-				1				1				-				1
Trade and other payables		BRL			66				-				66				71				-				71
Trade and other payables		CHF			1				-				1				155				-				155
Trade and other payables		CLP			54,617				31,136				85,753				132,037				35				132,072
Trade and other payables		CNY			138				-				138				1,642				-				1,642
Trade and other payables		EUR			21,536				1,269				22,805				18,983				279				19,262
Trade and other payables		GBP			100				-				100				142				-				142
Trade and other payables		INR			1				-				1				4				-				4
Trade and other payables		MXN			2,103				-				2,103				808				2				810
Trade and other payables		PEN			7				-				7				36				-				36
Trade and other payables		YEN			-				-				-				66				49				115
Trade and other payables		ZAR			1,881				1,253				3,134				1,810				-				1,810
Subtotal trade and other payables					80,451				33,658				114,109				155,755				365				156,120
Other current provisions		ARS			55				-				55				-				-				-
Other current provisions		BRL			862				625				1,487				17				1,606				1,623
Other current provisions		CLP			6				-				6				28				-				28
Other current provisions		EUR			7				-				7				248				-				248
Other current provisions		INR			-				1				1				-				-				-
Subtotal other current provisions					930				626				1,556				293				1,606				1,899
Current tax liabilities		INR			-				-				-				5				-				5
Current tax liabilities		BRL			-				-				-				-				3				3
Current tax liabilities		CLP			-				8				8				-				2,660				2,660
Current tax liabilities		CNY			-				-				-				-				22				22
Current tax liabilities		EUR			-				5,094				5,094				-				2,742				2,742
Current tax liabilities		MXN			-				-				-				36				-				36
Current tax liabilities		ZAR			-				-				-				-				55				55
Subtotal current tax liabilities					-				5,102				5,102				41				5,482				5,523
Current provisions for employee benefits		CLP			6,942				-				6,942				7,557				14,760				22,317
Current provisions for employee benefits		MXN			114				1				115				-				212				212
Subtotal current provisions for employee benefits					7,056				1				7,057				7,557				14,972				22,529

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 29 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

 

				9/30/2013												12/31/2012
Class of liabilities		Currency		Up to 90 days				Over 90 days up to 1 year				Total				Up to 90 days				Over 90 days up to 1 year				Total
				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Other current non-financial liabilities		BRL			40				19				59				12				44				56
Other current non-financial liabilities		CLP			8,977				22,423				31,400				9,561				26,714				36,275
Other current non-financial liabilities		CNY			28				-				28				26				-				26
Other current non-financial liabilities		EUR			37				606				643				637				-				637
Other current non-financial liabilities		MXN			460				189				649				250				103				353
Other current non-financial liabilities		AUD			-				12				12				-				-				-
Other current non-financial liabilities		PEN			70				-				70				70				-				70
Other current non-financial liabilities		THD			171				-				171				-				-				-
Other current non-financial liabilities		ZAR			7				-				7				9				-				9
Subtotal other current non-financial liabilities					9,790				23,249				33,039				10,565				26,861				37,426
Total current liabilities					106,773				278,020				384,793				181,443				58,221				239,664

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 29 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

 

				9/30/2013																12/31/2012
Class of liabilities		Currency		Over 1 year up to 3 years				Over 3 years up to 5 years				Over 5  years				Total				Over 1 year up to 3 years				Over 3 years up to 5 years				Over 5 years				Total
				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$				ThUS$
Non-current liabilities
Other non-current financial liabilities		CLF			-				45,467				333,065				378,532				85,681				61,119				321,857				468,657
Other non-current financial liabilities		CLP			-				-				-				-				151,500				-				-				151,500
Subtotal other non-current financial liabilities					-				45,467				333,065				378,532				237,181				61,119				321,857				620,157
Deferred tax liabilities		CLP			-				-				-				-				-				-				43				43
Deferred tax liabilities		MXN			-				-				-				-				159				-				-				159
Subtotal deferred tax liabilities					-				-				-				-				159				-				43				202
Non-current provisions for employee benefits		CLP			-				1,411				31,940				33,351				-				-				33,766				33,766
Non-current provisions for employee benefits		MXN			-				135				-				135				-				-				132				132
Non-current provisions for employee benefits		YEN			-				-				471				471				-				-				532				532
Subtotal non-current provisions for employee benefits					-				1,546				32,411				33,957				-				-				34,430				34,430
Total non-current liabilities					-				47,013				365,476				412,489				237,340				61,119				356,330				654,789

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

Note 30 – Subsequent events

 

30.1

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 September 30, 2013 were approved and authorized for issuance by the Board of Directors at their meeting held on November 19, 2013.

 

30.2

Disclosures on events occurring after the reporting date

 

Management is not aware of any significant events that occurred between September 30, 2013 and the date of issuance of these consolidated financial statements that may significantly affect them.

 

30.3

Detail of dividends declared after the reporting date

 

The Directors of Sociedad Química y Minera de Chile S.A. (SQM), who met in an Ordinary Board of Director Meeting today, unanimously agreed to pay and distribute a provisional dividend referred to in the current “SQM’s 2013 Dividend Policy " which was reported to the SQM Annual General Shareholders Meeting held on April 25th of this year. Therefore, SQM shall pay and distribute, as of December 12, 2013, a provisional dividend of US$ 0.75609 per share, which is approximately equivalent to the total amount of US$ 199 million and, the latter, to 49.9% of the distributable net income of the fiscal year 2013, accumulated to date at September 30 of this year. This shall be charged against the net income of said fiscal year, in favor of the Shareholders who appear in SQM’s Registry of Shareholders on the fifth business day prior to December 12, 2013, and in its equivalent in national currency (Chilean pesos) according to the value of the "Observed Dollar" or "United States of America Dollar" as published in the Official Gazette on December 6, 2013.

 

 

   Notes to the Consolidated Financial Statements as of June 30, 2013 (Unaudited)

 

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.

 

CHEMICAL AND MINING COMPANY OF CHILE INC.
(Registrant)
Date: December 06, 2013
By:	/s/ Ricardo Ramos

 

Chief Financial Officer & Business Development SVP

 

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