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 September, 2020.

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.

Santiago, Chile. September 10, 2020.- Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reports the translation of its financial statements for the six months ended June 30, 2020, the Spanish version of which was filed with the Chilean Commission for the Financial Market (Comisión para el Mercado Financiero or “CMF”) on August 19, 2020.

 

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the period ended

June 30, 2020

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

In Thousands of United States Dollars

This document includes:

- Independent Auditor’s Report

- Consolidated Interim Classified Statements of Financial Position

- Consolidated Interim Statements of Income

- Consolidated Interim Statements of Comprehensive Income

- Consolidated Interim Statements of Cash Flows

- Consolidated Interim Statements of Changes in Equity

- Notes to the Consolidated Interim Financial Statements

Table of Contents –Consolidated Financial Statements

Consolidated Interim Classified Statements of Financial Position	1
Consolidated Interim Classified Statements of Financial Position	2
Consolidated Interim Statements of Comprehensive Income (Unaudited)	4
Consolidated Interim Statements of Cash Flows (Unaudited)	5
Consolidated Interim Statements of Changes in Equity (Unaudited)	7

Note 1	Identification and Activities of the Company and Subsidiaries	10
1.1	Historical background	10
1.2	Main domicile where the Company performs its production activities	10
1.3	Codes of main activities	10
1.4	Description of the nature of operations and main activities	10
1.5	Other background	12
1.6	Covid-19	14
Note 2	Basis of presentation for the consolidated financial statements	16
2.1	Accounting period	16
2.2	Consolidated financial statements	16
2.3	Basis of measurement	17
2.4	Accounting pronouncements	17
2.5	Basis of consolidation	19
2.6	Investments in associates and joint ventures	22
Note 3	Significant accounting policies	23
3.1	Classification of balances as current and non-current	23
3.2	Functional and presentation currency	23
3.3	Foreign currency translation	23
3.4	Consolidated statement of cash flows	25
3.5	Financial assets	25
3.6	Financial liabilities	27
3.7	Reclassification of financial instruments	27
3.8	Financial instrument derecognition	27
3.9	Derivative and hedging financial instruments	27
3.10	Derivative financial instruments not considered as hedges	29
3.11	Deferred acquisition costs from insurance contracts	29
3.12	Leases	29
3.13	Inventory measurement	30
3.14	Transactions with non-controlling interests	31
3.15	Related party transactions	31
3.16	Property, plant and equipment	31
3.17	Depreciation of property, plant and equipment	32
3.18	Goodwill	32
3.19	Intangible assets other than goodwill	33

3.20	Research and development expenses	34
3.21	Exploration and evaluation expenses	34
3.22	Impairment of non-financial assets	34
3.23	Minimum dividend	35
3.24	Earnings per share	35
3.25	Capitalization of interest expenses	35
3.26	Other provisions	36
3.27	Obligations related to employee termination benefits and pension commitments	36
3.28	Compensation plans	36
3.29	Revenue recognition	37
3.30	Finance income and finance costs	37
3.31	Current income tax and deferred	37
3.32	Operating segment reporting	38
3.33	Primary accounting criteria, estimates and assumptions	38
3.34	Environment	39
Note 4	Changes in accounting estimates and policies	40
4.1	Changes in accounting estimates	40
4.2	Changes in accounting policies	40
Note 5	Financial risk management	41
5.1	Financial risk management policy	41
5.2	Risk Factors	41
5.3	Risk measurement	44
Note 6	Separate information on the main office, parent entity and joint action agreements	45
6.1	Parent’s stand-alone assets and liabilities	45
6.2	Parent entity	45
Note 7	Board of Directors, Senior Management and Key management personnel	46
7.1	Remuneration of the Board of Directors and Senior Management	46
7.2	Key management personnel compensation	48
Note 8	Background on companies included in consolidation and non-controlling interests	49
8.1	Background on companies included in consolidation	49
8.2	Assets, liabilities, results of consolidated subsidiaries as of June 30, 2020 and for the period then ended.	52
8.3	Background on non-controlling interests	56
Note 9	Equity-accounted investees	57
9.1	Investments in associates recognized according to the equity method of accounting	57
9.2	Assets, liabilities, revenue and expenses of associates	59
9.3	Other information	60
9.4	Disclosures on interest in associates	60
Note 10	Joint Ventures	61
10.1	Policy for the accounting of equity accounted investment in joint ventures	61
10.2	Disclosures of interest in joint ventures	61
10.3	Investment in joint ventures accounted for under the equity method of accounting	62
10.4	Assets, liabilities, revenue and expenses from joint ventures	64
10.5	Other Joint Venture disclosures	65

10.6	Joint Ventures	66
Note 11	Cash and cash equivalents	67
11.1	Types of cash and cash equivalents	67
11.2	Short-term investments, classified as cash equivalents	67
11.3	Information on cash and cash equivalents by currency	68
11.4	Amount restricted (unavailable) cash balances	68
11.5	Short-term deposits, classified as cash equivalents	69
11.6	Net Debt reconciliation	71
Note 12	Inventories	72
Note 13	Related party disclosures	74
13.1	Related party disclosures	74
13.2	Relationships between the parent and the entity	74
13.3	Detailed identification of related parties and subsidiaries	75
13.4	Detail of related parties and related party transactions	78
13.5	Trade receivables due from related parties, current:	79
13.6	Trade payables due to related parties, current:	79
Note 14	Financial instruments	80
14.1	Types of other financial assets	80
14.2	Trade and other receivables	81
14.3	Hedging assets and liabilities	84
14.4	Financial liabilities	85
14.5	Trade and other payables	96
14.6	Financial asset and liability categories	97
14.7	Fair value measurement of assets and liabilities	99
14.8	Estimated fair value of financial instruments	102
Nota 15	Right-of-use assets and Lease liabilities	103
15.1	Right-of-use assets	103
15.2	Lease liabilities	104
Note 16	Intangible assets and goodwill	110
16.1	Balances	110
16.2	Disclosures on intangible assets and goodwill	110
Note 17	Property, plant and equipment	119
17.1	Types of property, plant and equipment	119
17.2	Conciliation of changes in property, plant and equipment by type:	121
17.3	Detail of property, plant and equipment pledged as guarantee	125
17.4	Impairment of assets	125
17.5	Additional Information	125
Note 18	Other current and non-current non-financial assets	126
Note 19	Employee benefits	127
19.1	Provisions for employee benefits	127
19.2	Policies on defined benefit plan	127
19.3	Other long-term benefits	128
19.4	Post-employment benefit obligations	128
19.5	Staff severance indemnities	129

19.6	Executive compensation plan	130
Note 20	Provisions and other non-financial liabilities	131
20.1	Types of provisions	131
20.2	Description of other provisions	132
20.3	Other non-financial liabilities, Current	133
20.4	Changes in provisions	134
Note 21	Disclosures on equity	135
21.1	Capital management	135
21.2	Disclosures on preferred share capital	136
21.3	Disclosures on reserves in Equity	137
21.4	Dividend policies	139
21.5	Interim and provisional dividends	141
21.6	Potential and provisional dividends	141
Note 22	Earnings per share	142
Note 23	Contingencies and restrictions	143
23.1	Lawsuits and other relevant events	143
23.2	Restrictions to management or financial limits	147
23.3	Environmental contingencies	148
23.4	Tax Contingencies	148
23.5	Contingencies regarding the Changes to the Contracts with Corfo:	149
23.6	Contingencies related to the Class Action lawsuit	149
23.7	Contingencies associated with conflicts between shareholders of the Abu Dhabi Fertilizer Industries Company	150
23.8	Restricted or pledged cash	150
23.9	Securities obtained from third parties	150
23.10	Indirect guarantees	150
Note 24	Lawsuits and complaints	151
Note 25	Environment	152
25.1	Disclosures of disbursements related to the environment	152
25.2	Detailed information on disbursements related to the environment	152
25.3	Description of each project, indicating whether these are in process or have been finished	157
Note 26	Mineral resource exploration and evaluation expenditure	161
Note 27	Gains (losses) from operating activities in the statement of income of expenses, included according to their nature	162
27.1	Revenue from operating activities customer activities	162
27.2	Cost of sales	164
27.3	Other income	165
27.4	Administrative expenses	165
27.5	Other expenses, by function	166
27.6	Other gains (losses)	166
27.7	Impairment of gains and reversal of impairment losses	167
27.8	Summary of expenses by nature	167
27.9	Finance expenses	168

Note 28	Reportable segments	169
28.1	Reportable segments	169
28.2	Reportable segment disclosures:	171
28.3	Statement of comprehensive income classified by reportable segments based on groups of products	173
28.4	Disclosures on geographical areas	175
28.5	Disclosures on main customers	175
28.6	Segments by geographical areas	176
28.7	Property, plant and equipment classified by geographical areas	177
Note 29	Borrowing costs	178
Note 30	Effect of fluctuations in foreign currency exchange rates	179
Note 31	Disclosures on the effects of fluctuations in foreign currency exchange rates	181
Note 32	Income tax and deferred taxes	187
32.1	Current and non-current tax assets	187
32.2	Current tax liabilities	188
32.3	Income tax and deferred taxes	189
Note 33	Assets held for sale and detail of assets sold	198
Note 34	Events occurred after the reporting date	199
34.1	Authorization of the financial statements	199
34.2	Disclosures on events occurring after the reporting date	199

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Consolidated Interim Classified Statements of Financial Position

ASSETS	Note N°		As of June 30, 2020 (Unaudited)		As of December 31, 2019 (Audited)
			ThUS$		ThUS$
Current Assets
Cash and cash equivalents		11.1		581,631		588,530
Other current financial assets		14.1		493,579		505,490
Other current non-financial assets		18		37,463		50,552
Trade and other receivables, current		14.2		329,193		399,142
Trade receivables due from related parties, current		13.5		60,100		61,227
Current inventories		12		1,075,428		983,338
Current tax assets		32.1		111,724		91,433
Total current assets other than those classified as held for sale or disposal				2,689,118		2,679,712
Non-current assets or groups of assets classified as held for sale		33		32,107		2,454
Total non-current assets held for sale				32,107		2,454
Total current assets				2,721,225		2,682,166
Non-current assets
Other non-current financial assets		14.1		8,845		8,778
Other non-current non-financial assets		18		19,179		19,729
Trade receivables, non-current		14.2		5,110		1,710
Investments classified using the equity method of accounting		9.1-10.3		71,561		109,435
Intangible assets other than goodwill		16.1		187,025		188,358
Goodwill		16.1		34,596		34,726
Property, plant and equipment		17.1		1,629,651		1,569,906
Right-of-use assets		15.1		33,032		37,164
Tax assets, non-current		32.1		32,179		32,179
Total non-current assets				2,021,178		2,001,985
Total assets				4,742,403		4,684,151

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

1 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Consolidated Interim Classified Statements of Financial Position

Liabilities and Equity	Note N°		As of June 30, 2020 (Unaudited)			As of December 31, 2019 (Audited)
			ThUS$			ThUS$
Current liabilities
Other current financial liabilities		14.4		215,967			291,128
Lease liabilities, current		15.2		6,632			7,694
Trade and other payables, current		14.5		193,450			205,790
Trade payables due to related parties, current		13.6		1,425			475
Other current provisions		20.1		85,592			110,565
Current tax liabilities		32.2		20,661			17,874
Provisions for employee benefits, current		19.1		14,334			16,387
Other current non-financial liabilities		20.3		97,344			126,899
Total current liabilities				635,405			776,812
Non-current liabilities
Other non-current financial liabilities		14.4		1,715,416			1,488,723
Lease liabilities, non-current		15.2		27,261			30,203
Trade and other payables, non-current		14.5		9,777			-
Other non-current provisions		20.1		34,882			34,690
Deferred tax liabilities		32.3		172,373			183,411
Provisions for employee benefits, non-current		19.1		27,623			35,840
Total non-current liabilities				1,987,332			1,772,867
Total liabilities				2,622,737			2,549,679
Equity
Equity attributable to owners of the Parent		21
Share capital				477,386			477,386
Retained earnings				1,623,104			1,623,104
Other reserves				(25,196	)		(14,223	)
Equity attributable to owners of the Parent				2,075,294			2,086,267
Non-controlling interests				44,372			48,205
Total equity				2,119,666			2,134,472
Total liabilities and equity				4,742,403			4,684,151

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

2 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Consolidated Interim Statements of Income (Unaudited)

Consolidated Interim Statements of Income	Note N°		For the period from January to June of the year						For the period from April to June of the Year
			2020			2019			2020			2019
			ThUS$			ThUS$			ThUS$			ThUS$
Revenue		27.1		850,510			998,370			458,473			494,132
Cost of sales		27.2		(614,918	)		(710,345	)		(330,626	)		(351,604	)
Gross profit				235,592			288,025			127,847			142,528
Other income		27.3		6,472			9,111			4,229			2,798
Administrative expenses		27.4		(48,918	)		(55,539	)		(24,384	)		(29,034	)
Other expenses by function		27.5		(12,068	)		(13,300	)		(7,540	)		(5,326	)
Impairment of income and reversal of impairment losses (impairment losses)		27.7		1,889			(2,679	)		119			(3,233	)
Other gains (losses)		27.6		(5,820	)		(724	)		(6,520	)		(848	)
Profit (loss) from operating activities				177,147			224,894			93,751			106,885
Finance income				10,319			12,418			3,558			6,493
Finance costs		27.9-29		(44,357	)		(38,565	)		(21,291	)		(20,235	)
Share of profit of associates and joint ventures accounted for using the equity method		9.1-10.3		6,393			6,822			4,775			3,416
Foreign currency translation differences		30		(6,747	)		4,118			(4,085	)		273
Profit (loss) before taxes				142,755			209,687			76,708			96,832
Income tax expense, continuing operations		32.3		(46,066	)		(58,487	)		(25,473	)		(26,616	)
Profit (loss) from continuing operations				96,689			151,200			51,235			70,216
Profit attributable to:				96,689			151,200			51,235			70,216
Profit (loss) attributable to Owners of the Parent				95,821			150,724			50,835			70,191
Profit (loss) attributable to Non-controlling interests				868			476			400			25
				96,689			151,200			51,235			70,216

Earnings per share	Note N°		For the period from January to June of the year				For the period from April to June of the Year
			2020		2019		2020		2019
			ThUS$		ThUS$		ThUS$		ThUS$
Common shares
Basic earnings per share (US$ per share)		22		0,3641		0,5727		0,1931		0,2667
Diluted common shares
Basic earnings per share (US$ per share)		22		0,3641		0,5727		0,1931		0,2667

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

3 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Consolidated Interim Statements of Comprehensive Income (Unaudited)

Consolidated Interim Statements of Comprehensive Income	For the period from January to June of the year						For the period from April to June of the year
	2020			2019			2020			2019
	ThUS$			ThUS$			ThUS$			ThUS$
Profit (loss) for the year		96,689			151,200			51,235			70,216
Items of other comprehensive income that will not be reclassified to profit for the year, before taxes
Other comprehensive income, gains (losses) from new measurements of defined benefit plans		143			(2,865	)		423			(2,208	)
Gains (losses) from financial assets measured irrevocably at fair value through other comprehensive income		816			194			2,810			-
Total other comprehensive income that will not be reclassified to profit for the year, before taxes		959			(2,671	)		3,233			(2,208	)
Items of other comprehensive income that will be reclassified to profit for the year, before taxes
Foreign currency exchange gains I(losses)		(1,087	)		1,682			5,367			1,075
Gain (loss) from cash flow hedges		(15,946	)		3,938			2,494			1,606
Total other comprehensive income that will be reclassified to profit for the year		(17,033	)		5,620			7,861			2,681
Other items of other comprehensive income before taxes		(16,074	)		2,949			11,094			473
Income taxes related to items of other comprehensive income that will not be reclassified to profit for the year
Income tax (benefit) expense related to financial assets measured irrevocably at fair value through other comprehensive income		(220	)		(53	)		(758	)		(8	)
Income tax expense related to measurements of defined benefit plans through other comprehensive income		(18	)		777			(96	)		606
Total income tax relating to components of other comprehensive income that will be not reclassified to profit (loss) for the year		(238	)		724			(854	)		598
Income tax relating to components of other comprehensive income (loss) that will be reclassified to profit for the year
Income tax benefit related to cash flow hedges		4,305			-			(674	)		1
Total income tax relating to components of other comprehensive income that will be reclassified to profit (loss) for the year		4,305			-			(674	)		1
Total other comprehensive income		(12,007	)		3,673			9,566			1,072
Total comprehensive income		84,682			154,873			60,801			71,288
Comprehensive income attributable to
Comprehensive income attributable to owners of the parent		83,480			154,431			60,507			71,248
Comprehensive income attributable to non-controlling interest		1,202			442			294			40
		84,682			154,873			60,801			71,288

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

4 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Consolidated Interim Statements of Cash Flows (Unaudited)

Consolidated Interim Statements of Cash Flows	Note N°	For the period from January to June of the year
		2020			2019
			ThUS$			ThUS$
Cash flows from (used in) operating activities
Classes of revenue from operating activities
Cash receipts from sales of goods and rendering of services			957,104			1,053,253
Cash receipts from premiums and benefits, annuities and other benefits from policies entered			1,051			244
Proceeds from leases and subsequent sale of assets			105			167
Classes of Payments
Cash payments to suppliers for the provision of goods and services			(781,212	)		(775,448	)
Payment for variable leases			(578	)		(508	)
Other payments related to operating activities			(15,056	)		(11,842	)
Net cash generated from operating activities			161,414			265,866
Dividends received			4,310			2,467
Interest paid			(36,466	)		(30,897	)
Interest paid on lease liability			(572	)		(666	)
Interest received			12,043			13,252
Income taxes paid			(80,601	)		(101,069	)
Other incomes (outflows) of cash (1)			66,858			61,960
Net cash generated from (used in) operating activities			126,986			210,913
Cash flows from (used in) investing activities
Cash flows arising from the loss of control of subsidiaries and other businesses			1,148			994
Proceeds from the sale of property, plant and equipment			25			433
Other payments to acquire interest in joint ventures			(562	)		(53	)
Acquisition of property, plant and equipment			(156,931	)		(147,345	)
Proceeds from sales of intangible assets			3,925			20,454
Payments related to futures, forward options and swap contracts			(243	)		192
Purchases of intangible assets			(287	)		(466	)
Proceeds from related parties			(3,500	)		-
Other inflows (outflows) of cash (2)			492			(98,747	)
Net cash generated from (used in) investing activities			(155,933	)		(224,538	)

(1) Other inflows (outflows) of cash from operating activities include increases (decreases) net of value added tax, banking expenses, expenses associated with obtaining loans and taxes associated with interest payments.

(2) Other inflows (outflows) of cash include investments and redemptions of time deposits and other financial instruments that do not qualify as cash and cash equivalent in accordance with IAS 7, paragraph 7, since they mature in more than 90 days from the original investment date.

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

5 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Consolidated Interim Statements of Cash Flows (Unaudited)

Consolidated Interim Statements of Cash Flows	Note N°		For the period from January to June of the year
			2020			2019
			ThUS$			ThUS$
Cash flows generated from (used in) financing activities
Repayment of lease liabilities				(3,467	)		(2,758	)
Proceeds from long-term loans				400,000			450,000
Repayment of borrowings				(257,506	)		(52	)
Dividends paid				(116,121	)		(194,579	)
Net cash generated from (used in) financing activities				22,906			252,611
Net increase (decrease) in cash and cash equivalents before the effect of changes in the exchange rate				(6,041	)		238,986
Effects of exchange rate fluctuations on cash and cash equivalents				(858	)		4,738
Net (decrease) increase in cash and cash equivalents				(6,899	)		243,724
Cash and cash equivalents at beginning of period				588,530			556,066
Cash and cash equivalents at end of period		11		581,631			799,790

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

6 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Consolidated Interim Statements of Changes in Equity (Unaudited)

Consolidated Interim Statements of Changes in Equity	Share capital		Foreign currency translation difference reserves			Hedge reserves			Reserve for gains and losses from financial assets measured			Actuarial gains losses from defined benefit plans			Other miscellaneous reserves		Total Other reserves			Retained earnings			Equity attributable to owners of the Parent			Non- controlling interests			Total Equity
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Equity at January 1, 2020		477,386		(25,745	)		7,196			(270	)		(9,490	)		14,086		(14,223	)		1,623,104			2,086,267			48,205			2,134,472
Profit for the year		-		-			-			-			-			-		-			95,821			95,821			868			96,689
Other comprehensive income		-		(1,406	)		(11,641	)		595			111			-		(12,341	)		-			(12,341	)		334			(12,007	)
Comprehensive income		-		(1,406	)		(11,641	)		595			111			-		(12,341	)		95,821			83,480			1,202			84,682
Dividends (1)		-		-			-			-			-			-		-			(95,821	)		(95,821	)		(2,756	)		(98,577	)
Other increases (decreases) in equity		-		-			-			-			-			1,368		1,368			-			1,368			(2,279	)		(911	)
Total changes in equity		-		(1,406	)		(11,641	)		595			111			1,368		(10,973	)		-			(10,973	)		(3,833	)		(14,806	)
Equity as of June 30, 2020		477,386		(27,151	)		(4,445	)		325			(9,379	)		15,454		(25,196	)		1,623,104			2,075,294			44,372			2,119,666

Consolidated Interim Statements of Changes in Equity	Share capital		Foreign currency translation difference reserves			Hedge reserves		Reserve for gains and losses from financial assets measured			Actuarial gains losses from defined benefit plans			Other miscellaneous reserves		Total Other reserves			Retained earnings			Equity attributable to owners of the Parent			Non- controlling interests			Total Equity
	ThUS$		ThUS$			ThUS$		ThUS$			ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Equity at January 1, 2019		477,386		(26,307	)		7,971		(1,111	)		(6,884	)		11,332		(14,999	)		1,623,104			2,085,491			52,311			2,137,802
Profit for the year		-		-			-		-			-			-		-			150,724			150,724			476			151,200
Other comprehensive income		-		1,712			3,938		141			(2,084	)		-		3,707			-			3,707			(34	)		3,673
Comprehensive income		-		1,712			3,938		141			(2,084	)		-		3,707			150,724			154,431			442			154,873
Dividends (1)		-		-			-		-			-			-		-			(150,724	)		(150,724	)		(4,557	)		(155,281	)
Other increases (decreases) in equity		-		-			-		-			-			2,945		2,945			(2,987	)		(42	)		-			(42	)
Total changes in equity		-		1,712			3,938		141			(2,084	)		2,945		6,652			(2,987	)		3,665			(4,115	)		(450	)
Equity as of June 30, 2019		477,386		(24,595	)		11,909		(970	)		(8,968	)		14,277		(8,347	)		1,620,117			2,089,156			48,196			2,137,352

(1) See Note 21.6

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

7 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

Glossary

The Following capitalized terms un these notes will have the following meaning:

“ADS’’ American Depositary Shares;

“CAM’’ Arbitration and Mediation Center of the Santiago Chamber of Commerce;

“CCHEN’’ Chilean Nuclear Energy Commission;

“CCS’’ cross currency swap;

“CINIIF’’ International Financial Reporting Interpretations Committee;

“CMF’’ Financial Market Commission;

“Directors’ Committee” The Company’s Directors’ Committee;

“Corporate Governance Committee’’ The Company’s Corporate Governance Committee;

“Health, Safety and Environment Committee’’ The Company’s Health, Safety and Environment Committee;

“Lease Agreement’’ the mining concessions lease agreement signed by SQM Salar and Corfo in 1993, as subsequently amended;

“Project Contract” project contract for Salar de Atacama undersigned by Corfo and SQM Salar in 1993, as subsequently amended”;

“Corfo” Chilean Economic Development Agency;

“DCV’’ Central Securities Depository;

“DGA’’ General Directorate of Water Resources;

“Board” The Company’s Board of Directors;

“DOJ’’ United States Department of Justice;

“Dollar’’ o “US$’’ Dollars of the United States of America;

“DPA’’ Deferred Prosecution Agreement;

“EIEP’’ Passive foreign investment company;

“United States” United States of America;

“FCPA’’ Foreign Corrupt Practices Act of the USA;

“FNE Chilean National Economic Prosecutor's Office;

“Management’’ the Company’s management;

"SQM Group’’ The corporate group composed of the Company and its subsidiaries

“Pampa Group’’ Jointly the Sociedad de Inversiones Pampa Calichera S.A., Potasios de Chile S.A. and Inversiones Global Mining (Chile) Limitada;

“IASB’’ International Accounting Standards Board;

“SSI’’ Staff severance indemnities;

8 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

“IFRIC’’ International Financial Reporting Interpretations Committee;

“IPC” Consumer Price Index;

“IRS” interest rate swap;

“Securities Market Law” Securities Market Law No. 18,045;

“Corporate Law'' Ley 18,046 on corporations;

“ThUS$'' thousands of Dollars;

“MUS$'' millions of Dollars;

“IAS” International Accounting Standard;

“IFRS” International Financial Reporting Standard;

“ILO” International Labour Organization;

“WHO” World Health Organization;

“Pesos’’ o “Ch$” Chilean pesos, legal tender in Chile;

“SEC’’ Securities and Exchange Commission;

“Sernageomin’’ National Geology and Mining Service;

“SIC’’ Standard Interpretations Committee;

“SII” Chilean Internal Revenue Service;

“SMA” Environmental Superintendent’s Office;

“Company” Sociedad Química y Minera de Chile S.A.;

“SQM Industrial’’ SQM Industrial S.A.;

“SQM NA’’ SQM North America Corporation;

“SQM Nitratos’’ SQM Nitratos S.A.;

“SQM Potasio’’ SQM Potasio S.A.;

“SQM Salar’’ SQM Salar S.A.;

“Tianqi’’ Tianqi Lithium Corporation; and

“UF’’ Unidad de Fomento (a Chilean Peso based inflation indexed currency unit).

9 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

Note 1 Identification and Activities of the Company and Subsidiaries

1.1 Historical background

Sociedad Química y Minera de Chile S.A. is an open stock corporation founded under the laws of the Republic of Chile and its Chilean Tax Identification Number is 93.007.000-9.

The Company was incorporated through a public deed dated June 17, 1968 by the public notary of Santiago Mr. Sergio Rodríguez Garcés. Its existence was approved by Decree No. 1,164 of June 22, 1968 of the Ministry of Finance, and it was registered on June 29, 1968 in the Registry of Commerce of Santiago, on page 4,537 No. 1,992, SQM’s headquarters are located at El Trovador 4285, Floor 6, Las Condes, Santiago, Chile, The Company's telephone number is +(56 2) 2425-2000.

The Company is registered in the CMF under number 184 of March 18, 1983 and is therefore subject to oversight by that entity.

1.2 Main domicile where the Company performs its production activities

The Company’s main domiciles are: Calle Dos Sur plot No. 5 - Antofagasta; Arturo Prat 1060 - Tocopilla; Administration Building w/n - Maria Elena; Administration Building w/n Pedro de Valdivia - María Elena, Anibal Pinto 3228 - Antofagasta, Kilometer 1378 Ruta 5 Norte Highway - Antofagasta, Coya Sur Plant w/n - Maria Elena, kilometer 1760 Ruta 5 Norte Highway - Pozo Almonte, Salar de Atacama (Atacama Saltpeter deposit) potassium chloride plant w/n - San Pedro de Atacama, potassium sulfate plant at Salar de Atacama w/n – San Pedro de Atacama, Minsal Mining Camp w/n CL Plant CL, Potassium– San Pedro de Atacama, formerly the Iris Saltpeter office w/n, Commune of Pozo Almonte, Iquique.

1.3 Codes of main activities

The codes of the main activities as established by the CMF, as follows:

-        1700 (Mining)

-        2200 (Chemical products)

-        1300 (Investment)

1.4 Description of the nature of operations and main activities

The products of the Company are mainly derived from mineral deposits found in northern Chile where mining takes place and caliche and brine deposits are processed.

(a) Specialty plant nutrition: Four main types of specialty plant nutrients are produced: potassium nitrate, sodium nitrate, sodium potassium nitrate and specialty blends. In addition, other specialty fertilizers are sold including third party products.

(b) Iodine: The Company produce iodine and iodine derivatives, which are used in a wide range of medical, pharmaceutical, agricultural and industrial applications, including x-ray contrast media, polarizing films for LCD and LED, antiseptics, biocides and disinfectants, in the synthesis of pharmaceuticals, electronics, pigments and dye components.

(c) Lithium: The Company produces of lithium carbonate, which is used in a variety of applications, including electrochemical materials for batteries, frits for the ceramic and enamel industries, heat-resistant glass (ceramic glass), air conditioning chemicals, continuous casting powder for steel extrusion, primary aluminum smelting process, pharmaceuticals and lithium derivatives, We are also a leading supplier of lithium hydroxide, which is primarily used as an input for the lubricating greases industry and for certain cathodes for batteries.

10 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

(d) Industrial chemicals: The Company produce three industrial chemicals: sodium nitrate, potassium nitrate and potassium chloride. Sodium nitrate is used primarily in the production of glass, explosives, and metal treatment. Potassium nitrate is used in the manufacturing of specialty glass, and it is also an important raw material to produce of frits for the ceramics and enamel industries. Solar salts, a combination of potassium nitrate and sodium nitrate, are used as a thermal storage medium in concentrated solar power plants. Potassium chloride is a basic chemical used to produce potassium hydroxide, and it is also used as an additive in oil drilling as well as in food processing.

(e) Potassium: The Company produce potassium chloride and potassium sulfate from brines extracted from the Salar de Atacama. Potassium chloride is a commodity fertilizer used to fertilize a variety of crops including corn, rice, sugar, soybean and wheat. Potassium sulfate is a specialty fertilizer used mainly in crops such as vegetables, fruits and industrial crops.

(f) Other products and services: The Company also sell other fertilizers and blends, some of which we do not produce. Mainly potassium nitrate, potassium sulfate and potassium chloride. This business line also includes revenue from commodities, services, interests, royalties and dividends.

Our subsidiary SQM Salar holds exclusive rights to exploit the mineral resources in an area covering approximately 140,000 hectares of land in the Salar de Atacama in northern Chile, of which SQM Salar is only entitled to exploit the mineral resources in 81,920 hectares. These rights are owned by Corfo and leased to SQM Salar pursuant to the Lease Agreement. Corfo cannot unilaterally amend the Lease Agreement and the Project Agreement, and the rights to exploit the resources cannot be transferred. The Lease Agreement establishes that SQM Salar is responsible for making quarterly lease payments to Corfo according to specified percentages of the value of production of minerals extracted from the Salar de Atacama brines, maintaining Corfo’s rights over the Mining Exploitation Concessions and making annual payments to the Chilean government for such concession rights. The Lease Agreement was entered into in 1993 and expires on December 31, 2030. On January 17, 2018, SQM and CORFO reached an agreement to end an arbitration process directed by the arbitrator, Mr. Héctor Humeres Noguer, in case 1954-2014 of the Arbitration and Mediation Center of Santiago Chamber of Commerce (Centro de Arbitrajes y Mediación de la Cámara de Comercio de Santiago) and other cases related to it.

The agreement signed in January 2018, includes Important amendments to the lease agreement and project agreement signed between CORFO and SQM in 1993. The main modifications became effective on April 10, 2018 and requires an increase in the lease payments by increasing the lease rates associated with the sale of the different products produced in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride. Lithium carbonate payment structure was changed to the following structure of progressive rates based on the final sale price:

Price US$/MT Li2CO3	Lease payment rate
$0 - $4,000		6.80	%
$4,000 - $5,000		8.00	%
$5,000 - $6,000		10.00	%
$6,000 - $7,000		17.00	%
$7,000 - $10,000		25.00	%
> $10,000		40.00	%

See Note 27.2 for the disclosure of lease payments made to CORFO for all periods presented.

11 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

Potassium chloride payment structure was changed to the following structure of progressive rates based on the final sale price:

Price US$/MT KCL	Lease payment rate
$0 - $300		3.00	%
$300 - $400		7.00	%
$400 - $500		10.00	%
$500 - $600		15.00	%
> $600		20.00	%

Similarly, the lease rates associated with the other products (lithium hydroxide, potassium sulfate and others) shall have similar changes to those described in the previous products.

SQM Salar commits to contribute between US$10.8 million and US$18.9 million per year to research and development efforts, between US$10 to US$15 million per year to the communities in close proximity to the Salar de Atacama, and 1.7% of total annual sales of SQM Salar to regional development.

1.5 Other background

(a) Staff

As of June 30, 2020, and December 31, 2019, the workforce was as follows:

	As of June 30, 2020						As of December 31, 2019
Employees	SQM S.A.		other subsidiaries		Total		SQM S.A.		other subsidiaries		Total
Executives		31		91		122		30		91		121
Professionals		109		1,216		1,325		110		1,170		1,280
Technicians and operators		283		3,546		3,829		282		3,481		3,763
Foreign employees		16		545		561		17		560		577
Overall total		439		5,398		5,837		439		5,302		5,741

12 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

(b) Main shareholders

As of June 30, 2020, there were 1,433 shareholders.

following table shows information about the main shareholders of the Company’s Series A or Series B shares in circulation as of June 30, 2020 and December 31, 2019, in line with information provided by the DCV. The following table presents the information about the beneficial ownership of Series A and Series B shares of the Company as of June 30, 2020 and December 31, 2019, with respect to each shareholder that, to our knowledge, owns more than 5% of the outstanding Series A or Series B shares. The following information is derived from our registry and reports managed by the DCV and informed to the CMF and the Chilean Stock Exchanges. whose main shareholders are the following:

Shareholder as of June 30, 2020	No. of Series A with ownership		% of Series A shares			No. of Series B with ownership		% of Series B shares			% of total shares
Inversiones TLC SpA (1)		62,556,568		43.80	%		-		-			23.77	%
Sociedad de Inversiones Pampa Calichera S.A. (2)		44,894,152		31.43	%		922,971		0.77	%		17.41	%
The Bank of New York Mellon, ADRs		-		-			42,193,831		35.05	%		16.03	%
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 Santander via foreign investor accounts		-		-			7,517,201		6.24	%		2.86	%
Banco Itaú via foreign investor accounts		-		-			7,436,546		6.18	%		2.83	%
Banco de Chile non-resident third party accounts		2		-			6,270,167		5.21	%		2.38	%
Euroamerica C de B S. A.		1,418		0.001	%		5,011,126		4.16	%		1.90	%
Banchile C de B S. A.		450,474		0.32	%		3,980,195		3.31	%		1.68	%
Inversiones la Esperanza de Chile Limitada		4,147,263		2.90	%		46,500		0.04	%		1.59	%
EuroAmerica seguros de Vida S.A.		-		-			2,934,130		2.44	%		1.11	%

(1) As reported by DCV, which records the Company's shareholders' register as of June 30, 2020 and December 31, 2019, Inversiones TLC SpA, a subsidiary of Tianqi, is the direct owner of 62,556,568 shares of SQM equivalent to 23.77% of SQM’s shares'' According to information provided to the CMF by Inversiones TLC SpA dated December 5, 2018, Inversiones TLC SpA owns 25.86% of SQM’s shares.

(2) Total Sociedad de Inversiones Pampa Calichera S.A. 57,235,201 Series A and B shares; 11,418,078 Series B shares are held by different brokers.

13 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Shareholder as of December 31, 2019	No. of Series A with ownership		% of Series A shares			No. of Series B with ownership		% of Series B shares			% of total shares
Inversiones TLC SpA (1)		62,556,568		43.80	%		-		-			23.77	%
Sociedad de Inversiones Pampa Calichera S.A. (2)		44,894,152		31.43	%		3,793,154		3.15	%		18.50	%
The Bank of New York Mellon, ADRs		-		-			38,311,788		31.83	%		14.56	%
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 Itaú via foreign investor accounts		-		-			7,373,216		6.13	%		2.80	%
Banco de Chile non-resident third party accounts		109		-			6,842,746		5.68	%		2.60	%
Banco Santander via foreign investor accounts		-		-			6,618,416		5.50	%		2.51	%
Euroamerica C de B S. A.		3,056		-			4,863,467		4.04	%		1.85	%
Banchile C de B S. A.		491,729		0.34	%		4,285,696		3.56	%		1.82	%
Inversiones la Esperanza de Chile Limitada		4,147,263		2.90	%		46,500		0.04	%		1.59	%
Bolsa de comercio de Santiago Bolsa de valores		30,590		0.02	%		3,077,930		2.56	%		1.18	%

(1) As reported by DCV, which records the Company's shareholders' register as of June 30, 2020 and December 31, 2019, Inversiones TLC SpA, a subsidiary of Tianqi, is the direct owner of 62,556,568 shares of SQM equivalent to 23.77% of SQM’s shares'' According to information provided to the CMF by Inversiones TLC SpA dated December 5, 2018, Inversiones TLC SpA owns 25.86% of SQM’s shares.

(2) Total Sociedad de Inversiones Pampa Calichera S.A. 57,235,201 Series A and B shares; 8,547,895 Series B shares are held by different brokers

1.6 Covid-19

In January 2020 the World Health Organization deemed COVID-19 a global pandemic. In March 2020, the Chilean Ministry of Health (Ministerio de Salud) declared a nationwide State of Emergency. As a precaution, our management has implemented several measures to help reduce the speed at which the coronavirus spreads, including measures to mitigate the spread in the workplace, significant reductions in employee travel and a mandatory quarantine for people who have arrived from high risk destinations, in consultation with governmental and international health organization guidelines, and will continue to implement measures consistent with evolving coronavirus situation.

On March 16, the Company reported on various points in relation to the outbreak of the COVID-19 virus and its being declared to be a global pandemic by the World Health Organization.

(1) Regarding the financial and operational effects that this situation could mean for the Company, it is worth noting that the Company sells its products worldwide, with Asia, Europe and North America being its main markets. Border closures, decrease in commercial activity and difficulties and disruptions in the supply chains in the markets in which we sell have impacted our ability to fulfill our previous sales volume estimates, the impact on our sales volumes and average prices will depend on the duration of the Virus in different markets, the efficiency of the measures implemented to contain the spread of the Virus in each country and fiscal incentives that may be implemented in different jurisdictions to promote economic recovery.

For now, our operations have not seen any material impacts related to the outbreak of COVID-19 virus. We have taken measures to mitigate the impacts of this health emergency on our employees and limit the impact it could have on our operations (described below in point 2)

14 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

(2) Regarding the measures that management has adopted or intends to adopt to mitigate possible financial and/or operational effects, we inform that the Company has implemented a series of measures in its operations in Chile and abroad that seek to protect its workers and reduce the speed at which the Virus spreads. The measures adopted by the Company are:

(a) The flexibility of the working day, arrival and departure times, together with the incentive to work from home in those cases where this is possible.

(b) Avoidance of crowds, seminars and large meetings in the Company´s offices and operating facilities.

(c) Strengthening personal hygiene protocols (use of alcohol-based gel, masks, etc.) and sanitation in plants, cafeterias and offices.

(d) Significant reduction in domestic and international travel, along with obligatory quarantine for people who have arrived from high risk destinations.

(3) Regarding the existence of committed insurance and its level of coverage, we inform that as of today, we have not identified any events which would trigger coverage from the insurance policies that the Company has contracted.

(4) Finally, we hereby inform that we do not currently have any other information that management believes is relevant to provide.

As of June 30, 2020, there have been no significant changes in the impacts associated with COVID-19 reported previously.

15 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Note 2 Basis of presentation for the consolidated financial statements

2.1 Accounting period

These consolidated financial statements cover the following periods:

(a) Consolidated Interim Statements of Financial Position as of June 30, 2020 and December 31, 2019

(b) Consolidated Interim Statements of Income for the three- and six-month periods ended June 30, 2020 and 2019.

(c) Consolidated Interim Statements of Comprehensive Income for periods the three- and six-month periods ended June 30, 2020 and 2019.

(d) Consolidated Interim Statements of Changes in Equity for the periods ended June 30, 2020 and 2019.

(e) Consolidated Interim Statements of Direct-Method Cash Flows for the periods ended June 30, 2020 and 2019.

2.2 Consolidated financial statements

The consolidated interim financial statements of Sociedad Química y Minera de Chile S.A. and its subsidiaries were prepared in accordance with la IAS 34 “Interim Financial Reporting”.

These consolidated interim financial statements fairly reflect the Company’s financial position, as of June 30, 2020 and, the comprehensive results of operations, changes in equity and cash flows occurring for the periods ended June 30, 2020 and, 2019.

The consolidated interim financial statements should be read in conjunction with the annual financial statements as of December 31, 2019.

IFRS establish certain alternatives for their application, those applied by the Company are detailed in this Note and Note 3.

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

Pursuant to CMF requirements, on June 30, 2020 the effects related to the application of IFRS 16 “Leases” are presented in separate items and the following reclassifications have been made with respect to the information reported on December 31, 2019 to ensure a consistent presentation between periods, which are considered not significant for the previously issued financial statements. See Note 4.

Items	Original balances reported as of December 31, 2019		Reclassification			Balances reclassified as of December 31, 2019
	ThUS$		ThUS$			ThUS$
Property, plant and equipment (net)		1,607,070		(37,164	)		1,569,906
Right-of-use assets		-		37,164			37,164
Other current financial liabilities		298,822		(7,694	)		291,128
Lease liabilities, current		-		7,694			7,694
Other non-current financial liabilities		1,518,926		(30,203	)		1,488,723
Lease liabilities, non-current		-		30,203			30,203

16 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

2.3 Basis of measurement

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

(a) Inventories are recorded at the lower of cost and net realizable value.

(b) Financial derivatives at fair value.

(c) Certain financial investments classified as available for sale measured at fair value with an offsetting entry in other comprehensive income.

2.4 Accounting pronouncements

New accounting pronouncements

(a) The following standards, interpretations and amendments are mandatory for the first time for annual periods beginning on January 1, 2020:

Standards and Interpretations	Description	Mandatory for annual periods beginning on or after
Amendment to IAS 1 “Presentation of Financial Statements” and “IAS 8” Accounting Policies, Changes in Accounting Estimates and Errors - Published in October 2018.	This amendment establishes a consistent definition of materiality in all the IFRCs and the Conceptual Framework for Financial Information; it clarifies the explanation of the definition of material; and it incorporates some of the guidelines in IAS 1 on immaterial information.	01-01-2020
Amendment to IFRS 3 “Definition of a Business” - Published in October 2018.	This amendment revises the definition of a business. Based on the feedback received by the IASB, the application of the current guidance is frequently seen as too complex, and results in too many transactions that qualify as business combinations.	01-01-2020
Amendments to IFRS 9, IAS 39 and IFRS 7 “Reform to the referential interest rate” Published in September 2019.	These amendments provide certain simplifications in relation to the reform to the referential interest rates. These simplifications relate to hedge accounting and affect the IBOR reform, which generally shouldn’t result in the finalization of hedge accounting. However, any hedge ineffectiveness should continue to be recorded in the results.	01-01-2020
Amendment to IFRS 16 “Lease Concessions” - Published in May 2020.	This amendment provides lessees with an optional exemption regarding the assessment of whether a lease concession associated with COVID-19 is a lease modification. Lessees may opt to account for lease concessions as they would if there were no lease modifications. In many cases, this would give rise to the accounting for a concession as a variable lease payment.	01-01-2020

Management considers that the adoption of the aforementioned standards, amendments and interpretations did not significantly impact the company’s consolidated financial statements.

17 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

(b) Standards, interpretations and amendments issued that had not become effective for financial statements beginning on January 1, 2020 and which the Company has not adopted early are as follows:

Standards and Interpretations	Description	Mandatory for annual periods beginning on or after
Amendment to IAS 1 “Presentation of financial statements” on classification of liabilities.	These limited scope amendments of IAS 1 “Presentation of financial statements” clarify that the liabilities will be classified as current or non-current depending on the rights that exist at the close of the reporting period. The classification is not affected by the expectations of the entity or the events subsequent to the report date (for example, the receipt of a waiver or noncompliance with the pact). The amendment also clarifies what IAS 1 means when referring to “liquidation” of a liability.  The amendment must be applied retroactively in accordance with IAS 8. In May 2020, the IASB issued an “Exposure Draft” proposing deferral of the effective application date to January 1, 2023.	01-01-2022
Reference to the Conceptual Framework - Amendments to IFRS 3.	Minor modifications were made to IFRS 3 “Definition of a Business” to update references to the conceptual framework for financial reporting and to add an exception to the recognition of contingent liabilities and contingent assets within the scope of IAS 37 “Provisions, contingent liabilities and contingent assets” and Interpretation 21 “Levies.” The modifications also confirm that contingent assets should not be recognized in the date of acquisition.	01-01-2022
Amendment to IAS 16 “Property, plant and equipment”	This prohibits companies from deducting from the cost of the property any revenue received from the sale of articles produced while the company is preparing the asset for its anticipated use. The company must recognize this sales revenue and associated costs in the profit or loss for the fiscal year.	01-01-2022
Amendment to IAS 37, “Provisions, contingent liabilities and contingent assets.”	This clarifies for onerous contracts which inevitable costs a company must include to assess whether a contract will result in a loss.	01-01-2022
IFRS 9 Financial Instruments.	This clarifies which fees must be included in the 10% test for the derecognition of financial liabilities.	01-01-2022
IFRS 16 Leases.	Modification of illustrative example 13 to eliminate the illustration of lessor payments in relation to improvements to rental properties, to eliminate any confusion as to the treatment of lease incentives.	01-01-2022
IFRS 1 First-time Adoption of International Financial Reporting Standards.	This enables entities that have measured their assets and liabilities against book values in their head office books to also measure the accumulated translation differences using the amounts notified by the head office. This amendment will also apply to associates and joint ventures that have taken the same IFRS 1 exemption.	01-01-2022
Amendment to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”, Published in September 2014.	These amendments address an inconsistency between the requirements in IFRS 10 and those in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not), A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary.	undetermined

Management believes that the adoption of the above standards, amendments and interpretations will not have a significant impact on the Company’s financial statements.

18 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

2.5 Basis of consolidation

(a)            Subsidiaries

The Company established control as the basis of consolidation of its financial statements. The Company controls a subsidiary when it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary.

The consolidation of a subsidiary starts when the Group controls it and it is no longer included in the consolidation when this control is lost.

Subsidiaries are consolidated through a line by line method, adding items that represent assets, liabilities, income and expenses with a similar content, and eliminating operations between companies within the SQM Group.

Results for dependent companies acquired or disposed of during the period are included in the consolidated accounts from the date on which control is transferred to the SQM Group or until the date when this control ends, as relevant.

To account for an acquisition, of a business the Company uses the acquisition method. Under this method the acquisition cost is the fair value of assets delivered, equity securities issued, and incurred or assumed liabilities at the date of exchange. Assets, liabilities and contingencies identifiable assumed in a business combination are measured initially at fair value at the acquisition date. For each business combination, the Company will measure the non-controlling interest of the acquiree either at fair value or as proportional share of net identifiable assets of the acquire.

19 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Companies included in consolidation:

					Ownership interest
		Country of	Functional		As of June 30, 2020					As of December 31, 2019
TAX ID No.	Foreign subsidiaries	origin	currency		Direct	Indirect		Total		Total
Foreign	Nitratos Naturais Do Chile Ltda.	Brazil		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	Nitrate Corporation Of Chile Ltd.	United Kingdom		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM North America Corp.	USA		Dollar	40.0000		60.0000		100.0000	100.0000
Foreign	SQM Europe N.V.	Belgium		Dollar	0.5800		99.4200		100.0000	100.0000
Foreign	Soquimich S.R.L. Argentina	Argentina		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	Soquimich European Holding B.V.	Netherlands		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Corporation N.V.	Curacao		Dollar	0.0002		99.99980		100.0000	100.0000
Foreign	SQI Corporation N.V.	Curacao		Dollar	0.0159		99.98413		100.0000	100.0000
Foreign	SQM Comercial De México S.A. de C.V.	Mexico		Dollar	0.0100		99.9900		100.0000	100.0000
Foreign	North American Trading Company	USA		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	Administración Y Servicios Santiago S.A. de C.V.	Mexico		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Perú S.A.	Peru		Dollar	0.0091		99.99093		100.0000	100.0000
Foreign	SQM Ecuador S.A.	Ecuador		Dollar	0.0040		99.99600		100.0000	100.0000
Foreign	SQM Nitratos México S.A. de C.V.	Mexico		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQMC Holding Corporation L.L.P.	USA		Dollar	0.1000		99.90000		100.0000	100.0000
Foreign	SQM Investment Corporation N.V.	Curacao		Dollar	1.0000		99.00000		100.0000	100.0000
Foreign	SQM Brasil Limitada	Brazil		Dollar	0.7100		99.29000		100.0000	100.0000
Foreign	SQM France S.A.	France		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Japan Co. Ltd.	Japan		Dollar	0.1597		99.84030		100.0000	100.0000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba		Dollar	1.6700		98.33000		100.0000	100.0000
Foreign	SQM Oceania Pty Limited	Australia		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	Rs Agro-Chemical Trading A.V.V.	Aruba		Dollar	98.3333		1.66670		100.0000	100.0000
Foreign	SQM Colombia SAS	Colombia		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Australia PTY	Australia		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Indonesia S.A.	Indonesia		Dollar	0.0000		80.0000		80.0000	80.0000
Foreign	SQM Virginia L.L.C.	USA		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Italia SRL	Italy		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	Comercial Caimán Internacional S.A.	Panama		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Africa Pty.	South Africa		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Lithium Specialties LLC	USA		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Iberian S.A.	Spain		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Beijing Commercial Co. Ltd.	China		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Thailand Limited.	Thailand		Dollar	0.0000		99.9960		99.9960	99.9960
Foreign	SQM International N.V.	Belgium		Dollar	0.5800		99.4200		100.0000	100.0000
Foreign	SQM (Shanghai) Chemicals Co. Ltd.	China		Dollar	0.0000		100.0000		100.0000	100.0000
Foreign	SQM Holland B.V. (3)	Netherlands		Dollar	0.0000		100.0000		100.0000	0.0000

20 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

				Ownership interest
		Country of	Functional	As of June 30, 2020			As of December 31, 2019
TAX ID No.	Domestic subsidiaries	origin	currency	Direct	Indirect	Total	Total
96.801.610-5	Comercial Hydro S.A.	Chile	Dollar	0.0000	60.6383	60.6383	60.6383
96.651.060-9	SQM Potasio S.A.	Chile	Dollar	99.9999	0.0000	99.9999	99.9999
96.592.190-7	SQM Nitratos S.A.	Chile	Dollar	99.9999	0.0001	100.0000	100.0000
96.592.180-K	Ajay SQM Chile S.A.	Chile	Dollar	51.0000	0.0000	51.0000	51.0000
79.947.100-0	SQM Industrial S.A.	Chile	Dollar	99.0470	0.9530	100.0000	100.0000
79.906.120-1	Isapre Norte Grande Ltda.	Chile	Peso	1.0000	99.0000	100.0000	100.0000
79.876.080-7	Almacenes y Depósitos Ltda.	Chile	Peso	1.0000	99.0000	100.0000	100.0000
79.770.780-5	Servicios Integrales de Tránsitos y Transferencias S.A.	Chile	Dollar	0.0003	99.9997	100.0000	100.0000
79.768.170-9	Soquimich Comercial S.A.	Chile	Dollar	0.0000	60.6383	60.6383	60.6383
79.626.800-K	SQM Salar S.A.	Chile	Dollar	18.1800	81.8200	100.0000	100.0000
76.534.490-5	Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	Chile	Peso	0.0000	100.0000	100.0000	100.0000
76.425.380-9	Exploraciones Mineras S.A.	Chile	Dollar	0.2691	99.7309	100.0000	100.0000
76.064.419-6	Comercial Agrorama Ltda. (1)	Chile	Peso	0.0000	42.4468	42.4468	42.4468
76.145.229-0	Agrorama S.A.	Chile	Peso	0.0000	60.6387	60.6387	60.6387
76.359.919-1	Orcoma Estudios SPA (2)	Chile	Dollar	100.000	0.0000	100.0000	100.0000
76.360.575-2	Orcoma SPA	Chile	Dollar	100.000	0.0000	100.0000	100.0000
76.686.311-9	SQM MaG SpA	Chile	Dollar	0.0000	100.0000	100.0000	100.0000
77.114.779-8	Sociedad Contractual Minera Búfalo	Chile	Dollar	99.9900	0.10000	100.0000	0.0000

(1) Comercial Agrorama Ltda was consolidated as it is controlled through the subsidiary Soquimich Comercial S.A

(2) As of March 6, 2020, SQM S.A. has acquired 100% shares in this.

(3) As of June 30, 2020, SQM S.A. has acquired 100% shares in this.

21 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

2.6 Investments in associates and joint ventures

(a) Joint ventures

Investments in joint arrangements are classified as joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.

With respect to joint operations, the Company recognizes its direct right to the assets, liabilities, income and expenses of the joint.

(b) Joint ventures and investments in associates

Interests in companies over which joint control is exercised (joint ventures) or where an entity has significant influence (associates) are recognized using the equity accounting method. Significant influence is presumed when the investor owns over 20% of the investee’s share capital. The investment is recognized using this method in the statement of financial position at cost plus changes subsequent to acquisition and includes the proportional share of the associate’s equity. For these purposes, the percentage interest in the associate is used. The associated acquired goodwill is included in the investee’s book value and is not amortized. The debit or credit to the income statement reflects the proportional share of the profit or loss of the associate.

Unrealized gains from transactions with subsidiaries or associates are eliminated in accordance with the Company's percentage interest in such entities. Any unrealized losses are also eliminated, unless that transaction provides evidence that the transferred asset is impaired.

Changes in associate’s equity are recognized proportionally with a charge or credit to "Other Reserves" and are classified according to their origin. The reporting dates of the associate, the Company and related policies are similar for equivalent transactions and events in similar circumstances. In the event that significant influence is lost, or the investment is sold, or held for sale, the equity method is suspended, until the proportional part of the gain or loss is recognized. If the resulting value under the equity method is negative, the share of profit or loss is reflected as zero in the consolidated financial statements, unless there is a commitment by the Company to restore the capital position of the Company, in which case the related risk provision and expense are recorded.

Dividends received by these companies are recorded by reducing the value of the investment, and the proportional part of the gain or loss recognized in accordance with the equity method is included in the consolidated income statement under "Share of Gains (Losses) of Associates and Joint Ventures Accounted for Using the Equity Method''.

22 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 3 Significant accounting policies

3.1 Classification of balances as current and non-current

In the consolidated statement of financial position, balances are classified in consideration of their recovery (maturity) dates; i.e., those maturing within a period equal to or less than 12 months are classified as current counted from the closing date of the consolidated financial statements and those with maturity dates exceeding the aforementioned period are classified as non-current.

The exception to the foregoing relates to deferred taxes, which are classified as non-current, regardless of the maturity they have.

3.2 Functional and presentation currency

The Company’s consolidated financial statements are presented in United States dollars, which is the Company’s functional and presentation currency and is the currency of the main economic environment in which it operates. Consequently, the term foreign currency is defined as any currency other than the U.S. dollar.

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

3.3 Foreign currency translation

(a)                SQM group entities:

The revenue, expenses, assets and liabilities of all entities that have a functional currency other than the presentation currency are converted to the presentation currency as follows:

- Assets and liabilities are converted at the closing exchange rate prevailing on the reporting date.

- Revenues and expenses of each profit or loss account are converted at monthly average exchange rates.

- All resulting foreign currency translation gains and losses are recognized as a separate component in translation reserves.

In consolidation, foreign currency differences arising from the translation of a net investment in foreign entities are recorded in equity “other reserves”, At the date of disposal, such foreign currency translation differences are recognized in the statement of income as part of the gain or loss from the sale.

23 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

The main exchange rates and UF used to translate monetary assets and liabilities, expressed in foreign currency at the end and average of each period in respect to U.S. dollars, are as follows:

	Closing exchange rates				Average exchange rates
Currencies	As of June 30, 2020		As of December 31, 2019		As of June 30 2020		As of December 31, 2019
	ThUS$		ThUS$		ThUS$		ThUS$
Brazilian real		5.41		4.02		5.17		4.11
New Peruvian sol		3.54		3.31		3.47		3.35
Argentine peso		70.43		59.83		69.49		59.86
Japanese yen		107.91		108.90		107.60		109.12
Euro		0.89		0.89		0.89		0.90
Mexican peso		22.94		18.89		22.26		19.11
Australian dollar		1.45		1.43		1.45		1.45
Pound Sterling		0.81		0.76		0.80		0.76
South African rand		17.35		14.06		17.11		14.42
Chilean peso		821.23		748.74		794.43		767.22
Chinese yuan		7.07		6.98		7.08		7.01
Indian rupee		75.48		71.31		75.75		71.16
Thai Baht		30.86		29.97		31.15		30.22
Turkish lira		6.85		5.94		6.81		5.85
UF (*)		34.94		37.81		36.14		36.90

(*) US$ per UF

(b)            Transactions and balances

Non-monetary transactions in currencies other than the functional currency (Dollar) are translated to the respective functional currencies of Group entities at the exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. All differences are recorded in the statement of income except for all monetary items that provide an effective hedge for a net investment in a foreign operation. These items are recognized in other comprehensive income on the divestment, when they are recognized in the statement of income. Charges and credits attributable to foreign currency translation differences on those hedge monetary items are also recognized in other comprehensive income.

Non-monetary assets and liabilities that are measured at historical cost in a foreign currency are retranslated to the functional currency at the historical exchange rate of the transaction. Non-monetary items that are measured based on fair value in a foreign currency are translated using the exchange rate at the date on which the fair value is determined.

24 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

3.4 Consolidated statement of cash flows

Cash equivalents correspond to highly liquid short-term investments that are easily convertible into known amounts of cash. and subject to insignificant risk of changes in their value and mature in less than three months from the date of acquisition of the instrument.

For the purposes of the statement of cash flows, cash and cash equivalents comprise cash and cash equivalents as defined above.

The statement of cash flows present cash transactions performed during the year, determined using the direct method.

3.5 Financial assets

Management determines the classification of its financial assets, in accordance with the provisions of IFRS 9, at fair value (either through other comprehensive income, or through profits or losses), and at amortized cost. The classification depends on the business model of the entity to manage the financial assets and the contractual terms of the cash flows.

In the initial recognition, the Company measures its financial assets at fair value more or less, in the case of a financial asset that is not accounted for at fair value through profit or loss, the transaction costs that are directly attributable to the acquisition of the financial asset on the date when the Company commits to the purchase or sale of an asset. In the case account receivables and other accounts receivables, the transaction price at the initial recognition is measured in accordance with the provisions of IFRS 15.

After initial recognition, the Company measures its financial assets according to the Company's business model for managing its financial assets and the contractual terms of its cash flows:

(a) Financial instruments measured at amortized cost, Financial assets that meet the following conditions are included in this category (i) the business model that supports it aims to maintain the financial assets to obtain the contractual cash flows and (ii) the Contractual conditions of the financial asset give place, on specified dates, to cash flows that are only payments of the principal and interest on the outstanding principal amount. The Company’s financial assets that meet these conditions are: (iii) cash equivalents; (iv) related entity receivables; (v) trade debtors; (vi) other receivables.

25 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(b) Financial instruments at fair value A financial asset should be measured at fair value through profit or loss or fair value through other comprehensive income, depending on the following:

(i) "Fair Value Through Other Comprehensive Income": Assets held to collect contractual cash flows and to be sold, where the asset cash flows are only capital and interest payments, are measured at fair value through other comprehensive income. Changes in book values are through other comprehensive income, except for the recognition of impairment losses, interest income and exchange gains and losses, which are recognized in the income statement. When a financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to the income statement. Interest income from these financial assets is included in financial income using the effective interest method. Exchange gains and losses are presented in the income statement and impairment losses are separately presented in the income statement.

(ii) "Fair Value Through Profit and Loss": Assets that do not meet the amortized cost or "Fair Value Through Other Comprehensive Income" criteria are valued at "Fair Value Through Profit and Loss".

(c) Financial equity assets at fair value through other comprehensive income. Equity instruments that are not classified as held for trading and which the Group has irrevocably chosen to recognize in this category

The Company evaluates expected credit losses associated with its debt instruments carried at amortized cost and fair value through other comprehensive income. The impairment method used depends on whether there has been a significant increase in credit risk.

The Company applies the IFRS 9 simplified approach to measure expected credit losses using the lifetime expected loss on all trade receivables. Expected credit losses are measured by grouping receivables by their shared credit risk characteristics and days overdue.

Therefore, the Company has concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for these assets. Expected loss rates are based on sales payment profiles and historical credit losses within this period. Historical loss rates are adjusted to reflect current and expected information regarding macroeconomic factors that affect the ability of customers to meet their commitments.

26 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

3.6 Financial liabilities

Management determines the classification of its financial liabilities, in accordance with the provisions of IFRS 9, at fair value or at amortized cost. The classification depends on the business model of the entity to manage the financial assets and the contractual terms of the cash flows.

At the initial recognition, the Company measures its financial liabilities by their fair value more or less, in the case of a financial liability that is not accounted for at fair value through profit or loss, the transaction costs that are directly attributable to the acquisition of the financial liability. After initial recognition, the Company measures its financial liabilities at amortized cost unless the Company, at the initial moment, irrevocably designates the financial liability as measured at fair value through profit or loss.

Financial liabilities measured at amortized cost are commercial accounts payable and other accounts payable and other financial liabilities.

Valuation at amortized cost is made using the effective interest rate method. Amortized cost is calculated by considering any premium or discount on the acquisition and includes transaction costs that are an integral part of the effective interest rate.

Financial liabilities are recorded as not current when they mature in more than 12 months and as current when they mature in less than 12 months. Interest expenses are recorded in the period in which they are accrued, according to a financial criterion.

3.7 Reclassification of financial instruments

When the Company changes its business model for managing financial assets, it will reclassify all its financial assets affected by the new business model. Financial liabilities cannot be reclassified.

3.8 Financial instrument derecognition

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

The Company derecognizes a financial liability when its contractual obligations or a part of these are discharged, paid to the creditor or legally extinguished.

3.9 Derivative and hedging financial instruments

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

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

b) Hedging of a single risk associated with an asset or liability recognized or a highly probable forecast transaction (cash flow hedge).

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

27 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

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

The fair value of derivative instruments used for hedging purposes is shown in Note 14.3. Changes in the cash flow hedge reserve are classified as a non-current asset or liability if the remaining expiration period of the hedged item is more than 12 months, and as a current asset or liability if the remaining expiration period of the entry is less than 12 months.

Derivatives that are not designated or do not qualify as hedging derivatives are classified as current assets or liabilities, and changes in the fair value are directly recognized through profit or loss.

a) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the effective portion of interest rate swaps that hedge fixed rate borrowings is recognized in profit or loss within finance costs, together with changes in the fair value of the hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is recognized in profit or loss within other income or other expenses. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity using a recalculated effective interest rate.

b) Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is initially recognized with a debit or credit to other comprehensive income, while any ineffective portion is immediately recognized with a debit or credit to income, as appropriate depending on the nature of the hedged risk. The amounts accumulated in net equity are carried over to results when the hedged items are settled or when these have an impact on results.

When a hedging instrument no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs.

When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.

28 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

3.10 Derivative financial instruments not considered as hedges

Derivative financial instruments not considered as hedges are recognized at fair value with the effect in the results of the year. The Company has derivative financial instruments to hedge foreign currency risk exposure.

The Company continually evaluates the existence of embedded derivatives in both its contracts and in its financial instruments. As of June 30, 2020, and December 31, 2019, the Company does not have any embedded derivatives.

3.11 Deferred acquisition costs from insurance contracts

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

3.12 Leases

(a) Right-of-use assets

The Company recognizes right-of-use assets on the initial lease date (i.e., the date on which the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, adjusted by any new measurement of the lease liability. The cost of right-of-use assets includes the amount of recognized lease liabilities, direct initial costs incurred and lease payments made on the start date or sooner, less the lease incentives received. Unless the Company is reasonably sure it will take ownership of the leased asset at the end of the lease period, the assets recognized through right-of-use are depreciated in a straight line during the shortest period of their estimated useful life and lease period. Right-of-use assets are subject to impairment as per “IAS 36 Impairment of Assets”.

(b) Lease liabilities

On the lease start date, the Company recognizes lease liabilities measured at present value of lease payments that will be made during the lease period. Lease payments include fixed payments (including payments that are essentially fixed), less incentives for lease receivables, variable lease payments that are dependent on an index or rate and amounts that are expected to be paid as guaranteed residual value. Lease payments also include the exercise price of a purchase option if the Company is reasonably sure it will exercise this and penalty payments for terminating a lease, if the lease period reflects that the Company will exercise the option to terminate. Variable lease payments that are not dependent on an index or rate are recognized as expenses in the period that produces the event or condition that triggers payment.

When calculating the present value of lease payments, the Company uses the incremental borrowing rate on the initial lease date if the interest rate implicit in the lease cannot be determined easily. After the start date, the lease liability balance will increase to reflect the accumulation of interest and will diminish as lease payments are made. Furthermore, the book value of lease liabilities is remeasured in the event of an amendment, a change in the lease period, a change in the fixed lease payments in substance or a change in the assessment to buy the underlying asset.

(c) Short-term leases and low-value asset leases

The Company applies the short-term lease recognition exemption to leases with a lease term of 12 months or less starting on the start date and that don’t have a purchase option. It also applies the low-value asset lease recognition exemptions. Lease payments in short-term leases and low-value asset leases are recognized as lineal expenses during the lease term.

29 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(d)  Significant judgments in the determination of the lease term for contracts with renewal options

The Company determines the lease term as the non-cancellable period of the lease, together with periods covered by an option to extend the lease if it is reasonably certain that this will be exercised, or any period covered by an option to terminate the lease, if it is reasonably certain that this will not be exercised.

The Company has the option, under some of its leases, to lease assets for additional terms. The Company applies its judgment when assessing whether it is reasonably certain that it will exercise the option to renovate. In other words, it considers all the relevant factors that create an economic incentive for it to exercise the option to renovate. After the start date, the Company reevaluates the lease term if there is a significant event or change in the circumstances that are under its control and affect its capacity to exercise (or not exercise) the option to renovate.

3.13 Inventory measurement

The method used to determine the cost of inventories is the weighted average monthly cost of warehouse storage. In determining production costs for own products, the company includes the costs of labor, raw materials, materials and supplies used in production, depreciation and maintenance of the goods that participate in the production process, the costs of product movement necessary to maintain stock on location and in the condition in which they are found, and also includes the indirect costs of each task such as laboratories, process and planning areas, and personnel expenses related to production, among others.

For finished and in-process products, the company has four types of provisions, which are reviewed quarterly:

(a) Provision associated with the lower value of stock: The provision is directly identified with the product that generates it and involves three types: (i) provision of lower realizable value, which corresponds to the difference between the inventory cost of intermediary or finished products, and the sale price minus the necessary costs to bring them to the same conditions and location as the product with which they are compared; (ii) provision for future uncertain use that corresponds to the value of those products in process that are likely not going to be used in sales based on the company’s long-term plans; (iii) reprocessing costs of products that are unfeasible for sale due to current specifications.

(b) Provision associated with physical differences in inventory: A provision is made for differences that exceed the tolerance considered in the respective inventory process (production units in Chile and the port of Tocopilla carry out at least two inventories a year, the business subsidiaries depend on the last zero ground obtained, but in general it is at least once a year), these differences are recognized immediately.

(c) Potential errors in the determination of stock: The company has an algorithm that is reviewed at least once a year and corresponds to diverse percentages assigned to each inventory based on the product, location, complexity involved in the associated measurement, rotation and control mechanisms.

(d) Provisions undertaken by business subsidiaries: these are historical percentages that are adjusted as zero ground is attained based on normal inventory management.

Inventories of raw materials, materials and supplies for production are recorded at acquisition cost. Cyclical inventories are performed in warehouses, as well as general inventories every three years, Differences are recognized at the moment they are detected. The company has a provision that makes quarterly calculations from percentages associated with each type of material (classification by warehouse and rotation), these percentages use the lower value resulting from deterioration or obsolescence as well as potential losses. This provision is reviewed at least annually, and considers the historical profit and loss obtained in the inventory processes.

30 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

3.14 Transactions with non-controlling interests

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

3.15 Related party transactions

Transactions between the Company and its subsidiaries are part of the Company’s normal operations within its scope of business activities. Conditions for such transactions are those normally effective for those types of operations with regard to terms and market prices. he maturity conditions vary according to the originating transaction.

3.16 Property, plant and equipment

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

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

(a) Accrued interest expenses during the construction period that are directly attributable to the acquisition, construction or production of qualifying assets, which are those that require a substantial period prior to being ready for use. The interest rate used is that related to the project’s specific financing or, should this not exist, the average financing rate of the investor company.

(b) The future costs that the Company will have to experience, related to the closure of its facilities at the end of their useful life, are included at the present value of disbursements expected to be required to settle the and its subsequent variation is recorded directly in results.

Having initially recognized provisions for closure and refurbishment, the corresponding cost is capitalized as an asset in “Property, plant and equipment” and amortized in line with the amortization criteria for the associated assets.

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

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

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

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

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

31 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

3.17 Depreciation of property, plant and equipment

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

Fixed assets associated with the Salar de Atacama consider useful life to be the lesser value between the technical useful life and the years remaining until 2030.

In the case of certain mobile equipment, depreciation is performed depending on the hours of operation.

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

Classes of property, plant and equipment	Minimum life or rate (years)	Maximum life or rate (years)	life or average rate in years
Mining assets	3	5	4
Energy generating assets	5	10	6
Buildings	3	15	9
Supplies and accessories	2	10	3
Office equipment	5	5	5
Transport equipment	2	4	3
Network and communication equipment	2	10	5
IT equipment	2	8	5
Machinery, plant and equipment	2	12	7
Other property, plant and equipment	2	10	4

3.18 Goodwill

Goodwill acquired represents the excess in acquisition cost on the fair value of the Company's ownership of the net identifiable assets of the subsidiary on the acquisition date. Goodwill acquired related to the acquisition of subsidiaries is included in goodwill, which is subject to impairment tests annually or more frequently if events or changes in circumstances indicate that it might be impaired and is stated at cost less accumulated impairment losses. Gains and losses related to the sale of an entity include the carrying value of goodwill related to the entity sold.

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

32 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

3.19 Intangible assets other than goodwill

Intangible assets other than goodwill mainly relate to water rights, emission rights, commercial brands, costs for rights of way for electricity lines, license costs and the development of computer software and mining property and concession rights, client portfolio and commercial agent.

(a) Water rights

Water rights acquired by the Company relate to water from natural sources and are recorded at acquisition cost. Given that these assets represent legal rights granted in perpetuity to the Company, they are not amortized, but are subject to annual impairment tests.

(b) Rights of way for electric lines

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

(c) Computer software

Licenses for IT programs acquired are capitalized based on their acquisition and customization costs. These costs are amortized over their estimated useful lives.

Expenses related to the development or maintenance of IT programs are recognized as an expense as and when incurred. Costs directly related to the production of unique and identifiable IT programs controlled by the Group, and which will probably generate economic benefits that are higher than its costs during more than a year, are recognized as intangible assets. Direct costs include the expenses of employees who develop information technology software and general expenses in accordance with corporate charges received.

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

(d) Mining property and concession rights

The Company holds mining property and concession rights from the Chilean and Western Australian Governments. Property rights from the State of Chile are usually obtained at no initial cost (other than the payment of mining patents and minor recording expenses) and once the rights on these concessions have been obtained, they are retained by the Company while annual patents are paid. Such patents, which are paid annually, are recorded as prepaid assets and amortized over the following twelve months. Amounts attributable to mining concessions acquired from third parties that are not from the Chilean Government are recorded at acquisition cost within intangible assets.

33 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

3.20 Research and development expenses

Research and development expenses are charged to profit or loss in the period in which the expenditure was incurred.

3.21 Exploration and evaluation expenses

The Company holds mining concessions for exploration and exploitation of ore, the Company gives the following treatment to expenses associated with exploration and assessment of these resources:

(a) Caliche

Once the rights have been obtained, the Company records the disbursements directly associated with the exploration and assessment of the deposit as an at cost asset. These disbursements include the following items: Geological surveys, drilling, borehole extraction and sampling, activities related to the technical assessment and commercial viability of the extraction, and in general, any disbursement directly related to specific projects where the objective is to find ore resources.

If the technical studies determine that the ore grade is not economically viable, the asset is directly charged to profit and loss. If determined otherwise, the asset described above is associated with the extractable ore tonnage which is amortized as it is used. These assets are presented in the “other non-current assets category”, reclassifying the portion related to the area to by extracted that year as inventories.

(b) Metal exploration

Expenses related to metal exploration are charged to profit or loss in the period in which they are recognized if the project assessed doesn't qualify for consideration as advanced exploration. Otherwise, these are amortized during the development stage.

(c) Salar de Atacama exploration

Salar de Atacama exploration expenses are presented as non-current assets as the property, plant and equipment category and correspond mainly to wells that can also be used in the extraction of the deposit and/or monitoring, these are amortized over 10 years otherwise, they are amortized during the development stage.

(d) Mount Holland exploration

Mount Holland exploration expenses are presented into “Property, Plant and Equipment”, specifically in Constructions in progress and primarily consider exploration boreholes and complementary studies for the lithium ore study of the area. These expenses will begin to be amortized in the development stage.

3.22 Impairment of non-financial assets

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

For assets other than purchased goodwill, the Group annually assesses whether there is any indication that a previously recognized impairment loss may no longer exist or may have decreased. Should such indications exist, the recoverable amount is estimated.

34 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

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

In evaluating value in use, estimated future cash flows are discounted using a pre-tax discount rate that reflects current market assessment, the value of money over time and the specific asset risks.

Impairment losses from continuing operations are recognized with a debit to profit or loss in the categories of expenses associated with the impaired asset function.

A previously recognized impairment loss is only reversed if there have been changes in the estimates used to determine the asset’s recoverable amount since the last time an impairment loss was recognized. If this is the case, the carrying value of the asset is increased to its recoverable amount. This increased amount cannot exceed the carrying value that would have been determined, net of depreciation, if an asset impairment loss had not been recognized in prior years. This reversal is recognized with a credit to profit or loss.

Assets with indefinite lives are assessed for impairment annually.

3.23 Minimum dividend

As required by Chilean law and regulations, our dividend policy is decided upon from time to time by our Board of Directors and is announced at the Annual Ordinary Shareholders’ Meeting, which is generally held in April of each year. Shareholder approval of the dividend policy is not required. However, each year the Board must submit the declaration of the final dividend or dividends in respect of the preceding year, consistent with the then-established dividend policy, to the Annual Ordinary Shareholders’ Meeting for approval. As required by the Chilean Companies Act, unless otherwise decided by unanimous vote of the holders of issued shares, we must distribute a cash dividend in an amount equal to at least 30% of our consolidated net income for that year (determined in accordance with CMF regulations), unless and to the extent the Company has a deficit in retained earnings. (See Note 21.4).

3.24 Earnings per share

The basic earnings per share amounts are calculated by dividing the profit for the year attributable to the ordinary owners of the parent by the weighted average number of ordinary shares outstanding during the year. (See Note 22).

The Company has not conducted any type of operation of potential dilutive effect that would entail the disclosure of diluted earnings per share.

3.25 Capitalization of interest expenses

The cost of interest is recognized as an expense in the year in which it is incurred, except for interest that is directly related to the acquisition and construction of tangible property, plant and equipment assets and that complies with the requirements of IAS 23.

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

The financial expenses accrued during the construction period that are directly attributable to the acquisition, construction or production of assets that qualify for this, use the corresponding interest rate for the financing specific to the project; where this does not exist, the mean financing rate of the subsidiary that makes the investment is used.

35 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

3.26 Other provisions

Provisions are recognized when:

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

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

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

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

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

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

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

3.27 Obligations related to employee termination benefits and pension commitments

Obligations towards the Company’s employees comply with the provisions of the collective bargaining agreements in force, which are formalized through collective employment agreements and individual employment contracts, except for the United States, which is regulated in accordance with employment plans in force up to 2002. (See more details in Note 19.4).

These obligations are valued using actuarial calculations, according to the projected unit credit method which considers such assumptions as the mortality rate, employee turnover, interest rates, retirement dates, effects related to increases in employees’ salaries, as well as the effects on variations in services derived from variations in the inflation rate. The criteria in force contained in the revised IAS 19 are also considered.

Actuarial gains and losses that may be generated by variations in defined, pre-established obligations are directly recorded in “Other Comprehensive Income”.

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

The Company’s subsidiary SQM North America has established pension plans for its retired employees that are calculated by measuring the projected obligation using a net salary progressive rate net of adjustments for inflation, mortality and turnover assumptions, deducting the resulting amounts at present value. The net balance of this obligation is presented under the non-current provisions for employee benefits (refer to Note 19.4).

3.28 Compensation plans

Compensation plans implemented through benefits provided in share-based payments settled in cash are recognized in the financial statements at their fair value, in accordance with International Financial Reporting Standards No. 2. Changes in the fair value of options granted are recognized with a charge to payroll in the results for the period (see Note 19.6).

36 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

3.29 Revenue recognition

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

Revenues are recognized when the specific conditions for each income stream are met, as follows:

(a)            Sale of goods

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

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

(b)            Sale of services

Revenue associated with the rendering of services is recognized considering the degree of completion of the service as of the date of presentation of the consolidated classified statement of financial position, provided that the result from the transaction can be estimated reliably.

(c)            Income from dividends

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

3.30 Finance income and finance costs

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

Finance costs are mainly composed of interest on bank borrowing expenses, interest on bonds issued and interest capitalized for borrowing costs for the acquisition, construction or production or qualifying assets. Borrowing costs and bonds issued are also recognized in profit or loss using the effective interest rate method.

3.31 Current income tax and deferred

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

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

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

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

37 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

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

At each reporting period, the carrying amount of deferred tax assets has been reviewed and reduced to the extent where there will not be sufficient taxable income to allow the recovery of all or a portion of the deferred tax assets.

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

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

3.32 Operating segment reporting

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

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

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

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

3.33 Primary accounting criteria, estimates and assumptions

Management is responsible for the information contained in these consolidated financial statements, which expressly indicate that all the principles and criteria included in IFRS, as issued by the (IASB), have been applied in full.

In preparing the consolidated financial statements of Sociedad Química y Minera de Chile S.A. and its subsidiaries, Management has made judgments and estimates to quantify certain assets, liabilities, revenues, expenses and commitments included therein, Basically, these estimates refer to:

• Estimated useful lives are determined based on current facts and past experience and take into consideration the expected physical life of the asset, the potential for technological obsolescence, and regulations. (See Notes 3.22, 16 and 17). Impairment losses of certain assets Goodwill and intangible assets that have an indefinite shelf life are not amortized and are assessed for impairment on an annual basis, or more frequently if the events or changes in circumstances indicate that these may have deteriorated Other assets, including property, plant and equipment, exploration assets, goodwill and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts exceed their recoverable amounts. If an impairment assessment is required, the assessment of value in use often requires estimates and assumptions such as discount rates, exchange rates, commodity prices, future capital requirements and future operating performance. Changes in such estimates could impact the recoverable values of these assets. Estimates are reviewed regularly by management (See Notes 16 and 17).

38 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

• Assumptions used in calculating the actuarial amount of pension-related and severance indemnity payment benefit commitments (See Note 19) and determination of long-term provisions.

• Contingencies – The amount recognized as a provision, including legal, contractual, constructive and other exposures or obligations, is the best estimate of the consideration required to settle the related liability, including any related interest charges, considering the risks and uncertainties surrounding the obligation. In addition, contingencies will only be resolved when one or more future events occur or fail to occur. Therefore, the assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. The Company assesses its liabilities and contingencies based upon the best information available, relevant tax laws and other appropriate requirements (See Notes 20 and 23).

• Volume determination for certain in-process and finished products is based on topographical measurements and technical studies that cover the different variables affecting products in stock (density and moisture, among others), and related allowance.

• Obsolescence to ensure that the carrying value of inventory is not in excess of the net realizable Inventory valuation. (See Note 12).

Despite the fact that these estimates have been made on the basis of the best information available on the date of preparation of these consolidated financial statements, certain events may occur in the future and oblige their amendment (upwards or downwards) over the next few years, which would be made prospectively.

3.34 Environment

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

39 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 4 Changes in accounting estimates and policies

4.1 Changes in accounting estimates

There have been no changes in the methodologies used to determine such estimates in the periods presented.

4.2 Changes in accounting policies

The accounting principles and criteria were applied coherently in both periods, except for the new instructions established by the CMF for the taxonomy of the financial statements in 2020. The presentation of right-of-use assets and lease liabilities recognized under IFRS 16 has been modified. This change has been made as of January 01, 2020 and retroactively as of December 31, 2019.

40 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 5 Financial risk management

5.1 Financial risk management policy

The Company’s financial risk management policy is focused on safeguarding the stability and sustainability of the Company and its subsidiaries with regard to all such relevant financial uncertainty components.

The Company’s operations are subject to certain financial risk factors that may affect its financial position or results. The most significant risk exposures are market risk, liquidity risk, currency risk, doubtful accounts risk, and interest rate risk, among others.

There could also be additional risks, which are either unknown or known but not currently deemed to be significant, which could also affect the Company’s business operations, its business, financial position, or profit or loss.

The financial risk management structure includes identifying, determining, analyzing, quantifying, measuring and controlling these events. Management and in particular, Finance Management, is responsible for constantly assessing the financial risk.

5.2 Risk Factors

(a) Credit risk

A global economic contraction may have potentially negative effects on the financial assets of the Company, which are primarily made up of financial investments and trade receivables, and the impact on of our customers could extend the payment terms of the Company's receivables by increasing its exposure to credit risk. Although measures are taken to minimize the risk, this global economic situation could mean losses with adverse material effects on the business, financial position or profit and loss of the Company's operations.

Trade receivables: To mitigate credit risk, the Company maintains active control of collection and requires the use of credit insurance. Credit insurance covers the risk of insolvency and unpaid invoices corresponding to 83% of all receivables. For the uncovered portion, the Company uses other instruments such as letters of credit and prepayments. The credit risk associated with receivables is analyzed in Note 14.2 b) and the associated accounting policy can be found in Note 3.5.

The concentration of credit risk with respect to sales debtors is reduced, due to the large number of companies that comprise the Company's customer base and their distribution throughout the world.

No significant modifications have been made during the period to risk models or parameters used in comparison to December 31, 2019, and no modifications have been made to contractual cash flows that have been significant during this period.

Financial investments: correspond to time deposits whose maturity date is greater than 90 days and less than 360 days from the date of investment, so they are not exposed to excessive market risks. The counterparty risk in implementation of financial operations is assessed on an ongoing basis for all financial institutions in which the Company holds financial investments.
 

41 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

The credit quality of financial assets that are not past due or impaired can be evaluated by reference to external credit ratings (if they are available) or historical information on counterparty late payment rates:

Financial institution	Financial assets	Rating				As of June 30, 2020
			Moody´s	S&P	Fitch		ThUS$
Banco de Crédito e Inversiones	Time deposits		P-1	A-1	-		19,925
Banco de Chile	Time deposits		P-1	A-1	-		8,502
Banco Estado	Time deposits		P-1	A-1			4,002
Banco Itau Corpbanca	Time deposits		P-2	A-2	-		22,027
Banco Santander – Santiago	Time deposits		P-1	A-1	-		8,801
Scotiabank Sud Americano	Time deposits		-	-	F1+		7,006
JP Morgan US dollar Liquidity Fund Institutional	Investment fund deposits		Aaa-mf	AAAm	AAAmmf		166,622
Legg Mason - Western Asset Institutional cash reserves	Investment fund deposits		-	AAAm	AAAmmf		171,546
Other banks with lower balances	Time deposits		-	-	-		205
Total							408,636

Financial institution	Financial assets	Rating				As of June 30, 2020
			Moody´s	S&P	Fitch		ThUS$
Banco de Crédito e Inversiones (*)	90 days to 1 year		P-2	-	-		112,310
Banco Itau Chile	90 days to 1 year		P-1	A-1	-		76,032
Banco Santander - Santiago	90 days to 1 year		P-1	A-1	-		109,601
Banco Scotiabank Sud Americano	90 days to 1 year		-	-	F1+		191,529
Total							489,472

(*) This includes ThUS$ 7,160 associated with collateral in guarantee used to reduce the liquidity risk.

Financial institution	Financial assets	Rating Institution				As of December 31, 2019
			Moody´s	S&P	Fitch		ThUS$
Banco de Chile	Time deposits		P-1	A-1	-		50,221
Banco de Crédito e Inversiones	Time deposits		P-1	A-1	-		42,096
Banco Itau Corpbanca	Time deposits		P-2	A-2	-		39,093
Banco Santander	Time deposits		P-1	A-1	-		2,708
Scotiabank Sud Americano	Time deposits		-	-	F1+		14,428
Banco Estado	Time deposits		P-1	A-1	-		500
BBVA Banco Francés	Time deposits		-	-	-		53
JP Morgan US dollar Liquidity Fund Institutional	Investment fund deposits		Aaa-mf	AAAm	AAAmmf		181,155
Legg Mason - Western Asset Institutional cash reserves	Investment fund deposits		-	AAAm	AAAmmf		146,078
Total							476,332

42 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Financial institution	Financial assets	Rating Institution				As of December 31, 2019
			Moody´s	S&P	Fitch		ThUS$
Banco Scotiabank Sud Americano	90 days to 1 year		P-2	-	-		54,180
Banco de Crédito e Inversiones (*)	90 days to 1 year		P-1	A-1	-		178,448
Banco Santander	90 days to 1 year		P-1	A-1	-		74,365
Banco Itau Corpbanca	90 days to 1 year		P-2	A-2	-		127,579
Banco Security	90 days to 1 year		-	A-2	F2		17,965
Banco de Chile	90 days to 1 year		-	-	-		18,026
Banco Estado	90 days to 1 year		P-1	A-1	-		15,126
Total							485,689

(*) This includes ThUS$ 1,870 associated with collateral in guarantee used to reduce the liquidity risk.

(b) Currency risk

The functional currency of the company is the US dollar, due to its influence on the determination of price levels, its relation to the cost of sales and considering that a significant part of the Company’s business is conducted in this currency. However, the global nature of the Company's business generates an exposure to exchange rate variations of several currencies with the US Dollar. Therefore, the Company maintains hedge contracts to mitigate the exposure generated by its main mismatches (net between assets and liabilities) in currencies other than the US dollar against the exchange rate variation, updating these contracts periodically depending on the amount of mismatching to be covered in these currencies. Occasionally, subject to the approval of the Board, the Company ensures short-term cash flows from certain specific line items in currencies other than the US Dollar.

A significant portion of the Company’s costs, especially salary payments, is associated with the Peso. Therefore, an increase or decrease in its exchange rate with the US Dollar would affect the Company's profit and loss. By the second quarter of 2020, approximately US$ 218 million accumulated in expenses are associated with the Peso.

As of June 30, 2020, the Company held derivative instruments classified as hedges of foreign exchange risks associated with 100% of all of the bond liabilities denominated in UF, for a fair value of US$ 59.3 million in favor of the Company. As of December 31, 2019, this value amounted to US$ 18.9 million against the company.

As of June 30, 2020, the exchange rate value for equivalent Pesos to US Dollars was Ch$ 821.23 per US Dollar, as of December 31, 2019, it was Ch$ 748.74 per Dollar.

(c) Interest rate risk

Interest rate fluctuations, primarily due to the uncertain future behavior of markets, may have a material impact on the financial results of the Company. Significant increases in the rate could make it difficult to access financing at attractive rates for the Company's investment projects.

The Company maintains current and non-current financial debt at fixed rates and LIBOR rate plus spread.

As of June 30, 2020, the Company has around 4% of its financial liabilities linked to variations in the LIBOR rate. Therefore, significant rate increases could impact its financial position. A change of 100 basis points in this rate could result in changes to financial expenses of close to US$ 0.06 million. Nevertheless, significant rate increases could make it difficult to access financing at attractive rates for the Company's investment projects.

43 

  Notes to the Consolidated Interim Financial Statement  June 30, 2020  

(d) Liquidity risk

Liquidity risk relates to the funds needed to comply with payment obligations. The Company’s objective is to maintain financial flexibility through a comfortable balance between fund requirements and cash flows from regular business operations, bank borrowings, bonds, short term investments, and marketable securities, among others. For this purpose, the Company keeps a high liquidity ratio¹, which enables it to cover current obligations with clearance. (On June 30, 2020, this was 4.29).

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

On the other hand, world financial markets go through periods of contraction and expansion that are unforeseeable in the long-term and may affect SQM’s access to financial resources. Such factors may have a material adverse impact on the Company’s business, financial position and results of operations.

The Company constantly monitors the matching of its obligations with its investments, taking due care of maturities of both, from a conservative perspective, as part of this financial risk management strategy. As of June 30, 2020, the Company had unused, available revolving credit facilities with banks, for a total of US$ 474 million.

The position in other cash and cash equivalents are invested in highly liquid mutual funds with an AAA risk rating.

	Nature of undiscounted cash flows
As of June 30, 2020	Carrying amount		Less than 1 year		1 to 5 years		Over 5 years		Total
Bank borrowings		70.10		1.09		71.99		-		73.08
Unsecured obligations (1)		1,812.31		298.81		783.29		1,614.07		2,696.17
Sub total		1,882.41		299.9		855.28		1,614.07		2,769.25
Hedging liabilities		65.40		10.78		48.05		53.86		112.69
Derivative financial instruments		3.34		3.34		-		-		3.34
Sub total		68.74		14.12		48.05		53.86		116.03
Current and non-current lease liabilities		33.89		7.60		21.40		8.93		37.93
Trade accounts payable and other accounts payable		193.45		193.45		-		-		193.45
Total		2,178.49		515.07		924.73		1,676.86		3,116.66

(1) Unsecured obligations are presented on a contractual basis and have no effects related to anticipated redemptions.

	Nature of undiscounted cash flows
As of December 31, 2019	Carrying amount		Less than 1 year		1 to 5 years		Over 5 years		Total
Bank borrowings		70.19		2.17		74.87		-		77.04
Unsecured obligations		1,697.11		326.34		614.29		1,184.38		2,125.01
Sub total		1,767.30		328.51		689.16		1,184.38		2,202.05
Hedging liabilities		23.66		6.57		24.33		32.37		63.27
Derivative financial instruments		3.17		3.17		-		-		3.17
Sub total		26.83		9.74		24.33		32.37		66.44
Current and non-current lease liabilities		37.90		8.90		23.01		10.27		42.18
Trade accounts payable and other accounts payable		205.79		205.79		-		-		205.79
Total		2,037.82		552.94		736.50		1,227.02		2,516.46

5.3 Risk measurement

The Company has methods to measure the effectiveness and efficiency of financial risk hedging strategies, both prospectively and retrospectively. These methods are consistent with the risk management profile of the SQM Group. See Note 14.8

¹ All current assets divided by all current liabilities

44 

  Notes to the Consolidated Interim Financial Statement June 30, 2020

Note 6     Separate information on the main office, parent entity and joint action agreements

6.1 Parent’s stand-alone assets and liabilities

	As of June 30, 2020			As of December 31, 2019
Parent’s stand-alone assets and liabilities	ThUS$			ThUS$
Assets		4,253,215			4,069,649
Liabilities		(2,177,921	)		(1,983,382	)
Equity		2,075,294			2,086,267

6.2 Parent entity

Pursuant to Article 99 of Law No. 18,045 of the Securities Market, the CMF may determine that a company does not have a controlling entity in accordance with the distribution and dispersion of its ownership. On November 30, 2018, the CMF issued the ordinary letter No. 32,131 whereby it determined that the Pampa Group, do not exert decisive power over the management of the Company since it does not have a predominance in the ownership that allows it to make management decisions. Therefore, the CMF has determined not to consider Pampa Group the controlling entity of the Company and that the Company does not have a controlling entity given its current ownership structure.

45 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

Note 7     Board of Directors, Senior Management and Key management personnel

7.1 Remuneration of the Board of Directors and Senior Management

(a)            Board of directors

SQM S.A. is managed by a Board of Directors which is composed of 8 regular directors, who are elected for a three-year period. The Board of Directors was elected during the ordinary shareholders’ meeting held on April 25, 2019, which included the election of 2 independent directors.

As of June 30, 2020, the Company included the following committees and committee members:

- Directors’ Committee: This committee is comprised by Georges de Bourguignon, Laurence Golborne Riveros y Alberto Salas Muñoz, and fulfills the functions established in Article 50 bis of Chilean Law on publicly-held corporations. This committee takes on the role of the audit committee in accordance with the US-based Sarbanes Oxley law.

- The Company’s Health, Safety and Environment Committee: This committee is comprised of Gonzalo Guerrero Yamamoto, Patricio Contesse Fica y Robert J. Zatta.

- Corporate Governance Committee: This committee is comprised of Hernán Büchi Buc, Patricio Contesse Fica y Francisco Ugarte Larrain.

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

(b) Board of Directors’ Compensation

Directors’ compensation differs according to the period during the corresponding year. Thus, from April 25, 2019 to April 22, 2020 (Period 2019-2020), Directors’ compensation was determined by the annual general shareholders' meeting held on April 25, 2019. While for the following period (Period 2020-2021), Directors’ compensation was determined by the annual general shareholders' meeting held on April 23, 2020. For each of these periods, Directors’ compensation is detailed as follows:

Period 2019-2020

(i) The payment of a fixed, gross and monthly amount of UF 800 in favor of the Chairman of the Board of Directors, of UF 700 in favor of the vice-president of the board of directors and of UF 600 in favor of the remaining six directors and regardless of the number of Board of Directors’ Meetings held or not held during the related month.

(ii) A variable gross amount payable in national currency to the Chairman and Vice President of the Company equivalent to 0.12% of the net liquid income earned by the Company in 2019;

(iii) A variable gross amount payable in local currency to each Company director, excluding the Chairman and Vice President of the Company, equivalent to 0.06% of the net liquid income earned by the Company in 2019.

Period 2020-2021:

(i) The payment of a fixed, gross and monthly amount of UF 800 in favor of the Chairman of the Board of Directors, of UF 700 in favor of the vice-president of the board of directors and of UF 600 in favor of the remaining six directors and regardless of the number of Board of Directors’ Meetings held or not held during the related month.

(ii) A variable gross amount payable in national currency to the Chairman and Vice President of the Company equivalent to 0.09% of the net liquid income that the Company effectively obtains during the 2020;

(iii) A variable gross amount payable in local currency to each Company director, excluding the Chairman and Vice President of the Company, equivalent to 0.045% of the net liquid income that the Company effectively obtains during the 2020.

46 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

These fixed and variable amounts for both periods shall not be challenged and those expressed in percentage terms shall be paid immediately after the respective annual general shareholders meeting approves the financial statements, the annual report, the account inspectors report and the external auditors report for the respective year. All amounts expressed in UF shall be paid in Chilean pesos at its value on the last day of the respective calendar month, as determined by the CMF (formerly Superintendence of Banks and Financial Institutions) the Chilean Central Bank or any other relevant institution that replaces them.

Accordingly, the compensation and profit sharing paid to members of the Directors' Committee and the directors as of June 30, 2020 amounted to ThUS$ 3,398 and as of June 30, 2019 to ThUS$ 3,404.

(c)            Directors’ Committee compensation

Directors' Committee compensation differs according to the period during the corresponding year. Thus, for the Period 2019-2020, Directors’ Committee compensation was determined by the annual general shareholders' meeting held on April 25, 2019. While for the Period 2020-2021, Directors’ Committee compensation was determined by the annual general shareholders' meeting held on April 23, 2020. For each of these periods the compensation of the Directors Committee comprises:

Period 2019-2020

(i) The payment of a fixed, gross and monthly amount of UF 200 in favor of each of the 3 directors who were members of the Directors’ Committee, regardless of the number of meetings of the Directors’ Committee that have or have not been held during the month concerned.

(ii) The payment in domestic currency and in favor of each of the 3 directors of a variable and gross amount equivalent to 0.02% of total net profit that the Company effectively obtains during the 2019 fiscal year.

Period 2020-2021

(i) The payment of a fixed, gross and monthly amount of UF 200 in favor of each of the 3 directors who were members of the Directors’ Committee, regardless of the number of meetings of the Directors’ Committee that have or have not been held during the month concerned.

(ii) The payment in domestic currency and in favor of each of the 3 directors of a variable and gross amount equivalent to 0.015% of total net profit that the Company effectively obtains during the 2020 fiscal year.

These fixed and variable amounts for both periods shall not be challenged and those expressed in percentage terms shall be paid immediately after the respective annual general shareholders meeting approves the financial statements, the annual report, the account inspectors report and the external auditors report for the respective year. All amounts expressed in UF shall be paid in Chilean pesos at its value on the last day of the respective calendar month, as determined by the CMF (formerly Superintendence of Banks and Financial Institutions) the Chilean Central Bank or any other relevant institution that replaces them.

(d) Health, Safety and Environmental Matters Committee:

The remuneration of this committee for the 2019–2020 period was composed of the payment of a fixed, gross, monthly amount of UF 100 for each of the 3 directors on the committee regardless of the number of meetings it has held. For the 2020-2021 period, this remuneration remains unchanged.

(e) Corporate Governance Committee

The remuneration for this committee for the 2019–2020 period was composed of the payment of a fixed, gross, monthly amount of UF 100 for each of the 3 directors on the committees regardless of the number of meetings it has held. For the 2020-2021 period, this remuneration remains unchanged.

(f) Guarantees constituted in favor of the directors

No guarantees have been constituted in favor of the directors.

47 

Notes to the Consolidated Interim Financial Statement  June 30, 2020

(g) Senior management compensation:

(i) This includes monthly fixed salary and variable performance bonuses. (See Note 7.2)

(ii) The Company has an annual bonus plan based on goal achievement and individual contribution to the Company’s results. These incentives are structured as a minimum and maximum number of gross monthly salaries and are paid once a year.

(iii) The Company also has retention bonuses for its executives, the value of these bonuses is linked to the Company's stock price and is payable in cash during the first quarter of 2021 (see Note 19.6)

(h) Guarantees pledged in favor of the Company’s management

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

(i)            Pensions, life insurance, paid leave, shares in earnings, incentives, disability loans, other than those mentioned in the above points.

The Company’s Management and Directors do not receive or have not received any benefit during the ended June 30, 2020 and the year ended December 31, 2019 or compensation for the concept of pensions, life insurance, paid time off, profit sharing, incentives, or benefits due to disability other than those mentioned in the preceding points.

7.2 Key management personnel compensation

As of June 30, 2020, there are 128 people occupying key management positions and 114 as of June 30, 2019.

	For the year ended June 30, 2020		For the year ended June 30, 2019
Key management personnel compensation	ThUS$		ThUS$
Key management personnel compensation		15,432		17,815

48 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

Note 8 Background on companies included in consolidation and non-controlling interests

8.1 Background on companies included in consolidation

The following tables detail general information as of June 30, 2020 and, December 31, 2019, on the companies in which the group exercises control and significant influence:

			Country of	Functional	Ownership Interest
Subsidiaries	TAX ID No.	Address	Incorporation	Currency	Direct		Indirect		Total
SQM Nitratos S.A.	96.592.190-7	El Trovador 4285 Las Condes	Chile	Dollar		99.9999		0.0001		100.000
SQM Potasio S.A.	96.651.060-9	El Trovador 4285 Las Condes	Chile	Dollar		99.9999		-		100.000
Serv. Integrales de Tránsito y Transf. S.A.	79.770.780-5	Arturo Prat 1060, Tocopilla	Chile	Dollar		0.0003		99.9997		100.000
Isapre Norte Grande Ltda.	79.906.120-1	Anibal Pinto 3228, Antofagasta	Chile	Peso		1.000		99.000		100.000
Ajay SQM Chile S.A.	96.592.180-K	Av. Pdte. Eduardo Frei 4900, Santiago	Chile	Dollar		51.000		-		51.000
Almacenes y Depósitos Ltda.	79.876.080-7	El Trovador 4285 Las Condes	Chile	Peso		1.000		99.000		100.000
SQM Salar S.A.	79.626.800-K	El Trovador 4285 Las Condes	Chile	Dollar		18.18		81.820		100.000
SQM Industrial S.A.	79.947.100-0	El Trovador 4285 Las Condes	Chile	Dollar		99.047		0.9530		100.000
Exploraciones Mineras S.A.	76.425.380-9	El Trovador 4285 Las Condes	Chile	Dollar		0.2691		99.7309		100.000
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	76.534.490-5	Anibal Pinto 3228, Antofagasta	Chile	Peso		-		100.000		100.000
Soquimich Comercial S.A.	79.768.170-9	El Trovador 4285 Las Condes	Chile	Dollar		-		60.6383		60.638
Comercial Agrorama Ltda. (1)	76.064.419-6	El Trovador 4285 Las Condes	Chile	Peso		-		42.4468		42.447
Comercial Hydro S.A.	96.801.610-5	El Trovador 4285 Las Condes	Chile	Dollar		-		60.6383		60.638
Agrorama S.A.	76.145.229-0	El Trovador 4285 Las Condes	Chile	Peso		-		60.6377		60.6387
Orcoma Estudios SPA (2)	76.359.919-1	Apoquindo 3721 OF 131 Las Condes	Chile	Dollar		100.000		-		100.000
Orcoma SPA	76.360.575-2	Apoquindo 3721 OF 131 Las Condes	Chile	Dollar		100.000		-		100.000
SQM MaG SpA	76.686.311-9	Los Militares 4290, Las Condes	Chile	Dollar		-		100.000		100.000
Sociedad Contractual Minera Búfalo	77.114.779-8	Los Militares 4290, Las Condes	Chile	Dollar		99,900		0.100		100.000
SQM Holland B.V. (3)	Foreign	Herikerbergweg 238, 1101 CM Amsterdam Zuidoost	Netherlands	Dollar		-		100.000		100.000
SQM North America Corp.	foreign	2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA	USA	Dollar		40.000		60.000		100.000
RS Agro Chemical Trading Corporation A.V.V.	foreign	Caya Ernesto O. Petronia 17, Orangestad	Aruba	Dollar		98.3333		1.6667		100.000
Nitratos Naturais do Chile Ltda.	foreign	Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo	Brazil	Dollar		-		100.000		100.000
Nitrate Corporation of Chile Ltd.	foreign	1 More London Place London SE1 2AF	United Kingdom	Dollar		-		100.000		100.000

(1) SQM controls Soquimich Comercial, which in turn controls Comercial Agrorama Ltda, SQM has management control over Comercial Agrorama Ltda

(2) In January 2020, SQM S.A. acquired 49% of Orcoma Estudio SPA, taking ownership of 100% of the company.

(3) On January 30, 2020, SQM S.A. acquired the remaining 50% of SQM Holland B.V., taking ownership of 100% of the company.

49 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

			Country of	Functional	Ownership Interest
Subsidiaries	TAX ID No.	Address	Incorporation	Currency	Direct		Indirect		Total
SQM Corporation N.V.	foreign	Pietermaai 123, P.O. Box 897, Willemstad, Curacao	Curacao	Dollar		0.0002		99.9998		100.000
SQM Perú S.A.	foreign	Avenida Camino Real N° 348 of. 702, San Isidro, Lima	Peru	Dollar		0.0091		99.9909		100.000
SQM Ecuador S.A.	foreign	Av. José Orrantia y Av. Juan Tanca Marengo Edificio Executive Center Piso 2 Oficina 211	Ecuador	Dollar		0.004		99.996		100.000
SQM Brasil Ltda.	foreign	Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo	Brazil	Dollar		0.710		99.290		100.000
SQI Corporation N.V.	foreign	Pietermaai 123, P.O. Box 897, Willemstad, Curacao	Curacao	Dollar		0.0159		99.9841		100.000
SQMC Holding Corporation.	foreign	2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta	USA	Dollar		0.100		99.900		100.000
SQM Japan Co. Ltd.	foreign	From 1st Bldg 207, 5-3-10 Minami- Aoyama, Minato-ku, Tokio	Japan	Dollar		0.1597		99.8403		100.000
SQM Europe N.V.	foreign	Houtdok-Noordkaai 25a B-2030 Amberes	Belgium	Dollar		0.580		99.420		100.000
SQM Italia SRL	foreign	Via A. Meucci, 5 500 15 Grassina Firenze	Italy	Dollar		-		100.000		100.000
SQM Indonesia S.A.	foreign	Perumahan Bumi Dirgantara Permai, Jl Suryadarma Blok Aw No 15 Rt 01/09 17436 Jatisari Pondok Gede	Indonesia	Dollar		-		80.000		80.000
North American Trading Company	foreign	2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA	USA	Dollar		-		100.000		100.000
SQM Virginia LLC	foreign	2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA	USA	Dollar		-		100.000		100.000
SQM Comercial de México S.A. de C.V.	foreign	Av. Moctezuma 144-4 Ciudad del Sol. CP 45050, Zapopan, Jalisco México	Mexico	Dollar		0.01		99.990		100.000
SQM Investment Corporation N.V.	foreign	Pietermaai 123, P.O. Box 897, Willemstad, Curacao	Curacao	Dollar		1.000		99.000		100.000
Royal Seed Trading Corporation A.V.V.	foreign	Caya Ernesto O. Petronia 17, Orangestad	Aruba	Dollar		1.670		98.330		100.000
SQM Lithium Specialties Limited Partnership	foreign	2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA	USA	Dollar		-		100.000		100.000
Soquimich SRL Argentina	foreign	Espejo 65 Oficina 6 – 5500 Mendoza	Argentina	Dollar		-		100.000		100.000
Comercial Caimán Internacional S.A.	foreign	Edificio Plaza Bancomer	Panama	Dollar		-		100.000		100.000
SQM France S.A.	foreign	ZAC des Pommiers 27930 FAUVILLE	France	Dollar		-		100.000		100.000
Administración y Servicios Santiago S.A. de C.V.	foreign	Av. Moctezuma 144-4 Ciudad del Sol. CP 45050, Zapopan, Jalisco México	Mexico	Dollar		-		100.000		100.000
SQM Nitratos México S.A. de C.V.	foreign	Av. Moctezuma 144-4 Ciudad del Sol. CP 45050, Zapopan, Jalisco México	Mexico	Dollar		-		100.000		100.000
SQM Australia PTY	foreign	Level 16, 201 Elizabeth Street Sydney	Australia	Dollar		-		100.000		100.000

50 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

			Country of	Functional	Ownership Interest
Subsidiaries	TAX ID No.	Address	Incorporation	Currency	Direct		Indirect		Total
Soquimich European Holding B.V.	foreign	Loacalellikade 1 Parnassustoren 1076 AZ Amsterdan	Holland	Dollar		-		100.000		100.000
SQM Iberian S.A.	foreign	Provenza 251 Principal 1a CP 08008, Barcelona	Spain	Dollar		-		100.000		100.000
SQM Africa Pty Ltd.	foreign	Tramore House, 3 Wterford Office Park, Waterford Drive, 2191 Fourways, Johannesburg	South Africa	Dollar		-		100.000		100.000
SQM Oceanía Pty Ltd.	foreign	Level 9, 50 Park Street, Sydney NSW 2000, Sydney	Australia	Dollar		-		100.000		100.000
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	Dollar		-		100.000		100.000
SQM Thailand Limited	foreign	Unit 2962, Level 29, N° 388, Exchange Tower Sukhumvit Road, Klongtoey Bangkok	Thailand	Dollar		-		99.996		99.996
SQM Colombia SAS	foreign	Cra 7 No 32 – 33 piso 29 Pbx: (571) 3384904 Fax: (571) 3384905 Bogotá D.C. – Colombia.	Colombia	Dollar		-		100.000		100.000
SQM International N.V.	foreign	Houtdok-Noordkaai 25a B-2030 Amberes	Belgium	Dollar		0.580		99.420		100.000
SQM (Shanghai) Chemicals Co. Ltd.	foreign	Room 4703-33, 47F, No.300 Middle Huaihai Road, Huangpu district, Shanghai	China	Dollar		-		100.000		100.000

51 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

8.2 Assets, liabilities, results of consolidated subsidiaries as of June 30, 2020 and for the period then ended.

	Assets				Liabilities				Revenue		Profit (loss)			Comprehensive income (loss)
Subsidiaries	Currents		Non-currents		Currents		Non-currents
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
SQM Nitratos S.A.		481,691		60,102		401,596		3,522		93,568		32,282			32,254
SQM Potasio S.A.		23,932		1,005,727		127,054		23,064		1,356		26,095			26,064
Serv. Integrales de Tránsito y Transf. S.A.		37,549		34,456		62,228		3,067		17,683		3,664			3,671
Isapre Norte Grande Ltda.		583		689		552		148		1,476		48			30
Ajay SQM Chile S.A.		19,830		1,343		3,273		354		18,685		730			730
Almacenes y Depósitos Ltda.		222		44		-		-		-		(1	)		(93	)
SQM Salar S.A.		856,006		915,604		675,523		204,069		283,692		31,602			31,561
SQM Industrial S.A.		1,014,753		763,631		613,811		118,965		433,304		65,972			66,174
Exploraciones Mineras S.A.		3,048		31,127		6,405		-		-		(114	)		(114	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		226		534		287		348		1,064		35			22
Soquimich Comercial S.A.		135,627		13,875		45,895		11,118		35,367		1,296			1,332
Comercial Agrorama Ltda.		437		1,102		3,627		19		607		-			(2	)
Comercial Hydro S.A.		4,818		18		1		5		14		12			12
Agrorama S.A.		136		-		4,968		8		152		149			149
Orcoma SpA		13		2,362		35		-		-		(5	)		(5	)
Orcoma Estudio SpA		129		4,199		2		-		-		(322	)		(322	)
SQM MaG SPA		2,060		712		2,034		3		959		55			55
Sociedad Contractual Minera Búfalo		13		88		76		-		-		2			2
SQM Holland B.V.		2,595		-		6		-		-		(26	)		(26	)
SQM North America Corp.		136,634		19,342		118,904		2,613		123,630		(37	)		(37	)
RS Agro Chemical Trading Corporation A.V.V.		5,155		-		76		-		-		(12	)		(12	)
Nitratos Naturais do Chile Ltda.		1		129		3,076		-		-		230			230
Nitrate Corporation of Chile Ltd.		5,076		-		-		-		-		-			-
SQM Corporation N.V.		7,696		163,824		3,604		-		-		3,678			3,678
SQM Perú S.A.		26		-		76		-		-		-			-
SQM Ecuador S.A.		24,060		832		21,606		70		16,833		(527	)		(527	)
SQM Brasil Ltda.		310		-		497		2,086		-		111			111
Subtotal		2,762,626		3,019,740		2,095,212		369,459		1,028,390		164,917			164,937

52 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

	Assets				Liabilities				Revenue		Profit (loss)			Comprehensive income (loss)
Subsidiaries	Currents		Non-currents		Currents		Non-currents							Currents
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
SQI Corporation N.V.		89		-		81		-		-		(4	)		(4	)
SQMC Holding Corporation L.L.P.		30,022		16,729		2,147		-		-		1,212			1,212
SQM Japan Co. Ltd.		34,546		233		31,490		205		38,876		268			268
SQM Europe N.V.		488,642		4,217		424,010		2,652		331,012		(4,453	)		(4,453	)
SQM Italia SRL		1,158		-		15		-		-		(2	)		(2	)
SQM Indonesia S.A.		3		-		1		-		-		-			-
North American Trading Company		156		145		-		-		-		38			38
SQM Virginia LLC		14,801		14,343		14,801		-		-		(3	)		(3	)
SQM Comercial de México S.A. de C.V.		108,448		7,497		76,425		2,180		107,292		2,084			2,084
SQM Investment Corporation N.V.		13,777		31,365		5,512		976		-		438			438
Royal Seed Trading Corporation A.V.V.		29		-		18,840		-		-		(21	)		(21	)
SQM Lithium Specialties LLP		15,749		3		1,264		-		-		(3	)		(3	)
Soquimich SRL Argentina		41		-		163		-		-		(13	)		(13	)
Comercial Caimán Internacional S.A.		256		-		1,122		-		-		-			-
SQM France S.A.		345		6		114		-		-		-			-
Administración y Servicios Santiago S.A. de C.V.		243		71		483		75		1,322		63			63
SQM Nitratos México S.A. de C.V.		109		9		65		14		487		(5	)		(5	)
Soquimich European Holding B.V.		5,099		179,809		1,312		31,279		-		3,843			3,843
SQM Iberian S.A.		48,988		2,547		37,027		4		53,708		1,087			1,087
SQM Africa Pty Ltd.		48,545		2,025		37,310		-		23,232		1,488			1,488
SQM Oceania Pty Ltd.		5,807		-		3,665		-		1,690		106			106
SQM Beijing Commercial Co. Ltd.		7,504		16		5,422		-		10,258		49			49
SQM Thailand Limited		5,556		11		1,511		-		1,669		212			212
SQM Colombia SAS		9,091		127		9,640		-		5,785		(38	)		(38	)
SQM International NV		36,917		899		18,547		9,777		61,571		559			559
SQM Shanghai Chemicals Co. Ltd.		36,445		804		36,376		-		17,508		(1,147	)		(1,147	)
SQM Australia Pty Ltd.		3,726		121,857		3,755		80		-		(546	)		(546	)
Subtotal		916,092		382,713		731,098		47,242		654,410		5,212			5,212
Total		3,678,718		3,402,453		2,826,310		416,701		1,682,800		170,129			170,149

53 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

8.2 Assets, liabilities, results of consolidated subsidiaries as of December 31, 2019 and for the period ended as June 30, 2019.

	Assets				Liabilities				Revenue		Profit (loss)			Comprehensive income (loss)
Subsidiary	Current		Non-current		Current		Non-current
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
SQM Nitratos S.A.		368,474		41,688		292,535		3,521		77,299		19,546			19,451
Proinsa Ltda.		-		-		-		-		-		-			-
SQM Potasio S.A.		14,983		978,525		116,734		23,317		1,578		81,766			81,210
Serv. Integrales de Tránsito y Transf. S.A.		19,317		36,025		50,229		2,075		15,660		(868	)		(894	)
Isapre Norte Grande Ltda.		809		604		684		153		1,913		16			15
Ajay SQM Chile S.A.		17,780		1,259		1,284		374		13,737		748			748
Almacenes y Depósitos Ltda.		243		45		-		-		-		-			25
SQM Salar S.A.		734,837		886,099		549,726		201,273		424,510		100,217			99,542
SQM Industrial S.A.		833,283		766,097		497,377		120,741		375,154		35,500			34,660
Exploraciones Mineras S.A.		3,099		31,081		6,296		-		-		(84	)		(84	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		184		570		305		338		1,267		25			(4	)
Soquimich Comercial S.A.		134,808		15,448		41,104		12,349		37,376		457			446
Comercial Agrorama Ltda.		862		1,313		4,467		19		2,010		(232	)		(232	)
Comercial Hydro S.A.		4,791		21		12		6		14		36			36
Agrorama S.A.		669		-		6,133		9		2,344		(666	)		(646	)
Orcoma SpA		-		2,360		14		-		-		-			-
Orcoma Estudio SpA		156		4,522		29		-		-		(1	)		(1	)
SQM MaG SPA		1,955		615		1,888		2		1,248		316			316
SQM North America Corp.		115,924		19,656		98,332		2,751		138,497		1,050			1,050
RS Agro Chemical Trading Corporation A.V.V.		5,155		-		64		-		-		(13	)		(13	)
Nitratos Naturais do Chile Ltda.		2		135		3,314		-		-		(23	)		(23	)
Nitrate Corporation of Chile Ltd.		5,076		-		-		-		-		-			-
SQM Corporation N.V.		7,696		160,381		3,594		-		-		1,982			1,982
SQM Perú S.A.		29		-		80		-		-		(134	)		(134	)
SQM Ecuador S.A.		31,603		712		28,508		70		16,569		715			715
SQM Brasil Ltda.		194		-		598		2,250		-		(143	)		(143	)
SQI Corporation N.V.		56		34		77		-		-		(2	)		(2	)
SQMC Holding Corporation L.L.P.		28,889		16,190		1,687		-		-		1,375			1,375
Subtotal		2,330,874		2,963,380		1,705,071		369,248		1,109,176		241,583			239,395

54 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

	Assets		Liabilities					Comprehensive
Subsidiaries	Currents	Non-currents	Currents	Non-currents	Revenue	Profit (loss)		income (loss) Currents
	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$		ThUS$
SQM Japan Co. Ltd.	68,805	228	66,015	201	111,140	283		283
SQM Europe N.V.	429,926	4,608	361,059	2,824	401,479	832		832
SQM Italia SRL	1,158	-	15	-	-	4		4
SQM Indonesia S.A.	3	-	1	-	-	-		-
North American Trading Company	157	145	39	-	-	-		-
SQM Virginia LLC	14,804	14,345	14,804	-	-	-		-
SQM Comercial de México S.A. de C.V.	102,068	7,597	72,023	2,387	110,518	1,801		1,801
SQM Investment Corporation N.V.	13,811	30,888	5,518	975	-	90		90
Royal Seed Trading Corporation A.V.V.	44	-	18,834	-	-	(22	)	(22	)
SQM Lithium Specialties LLP	15,752	3	1,264	-	-	-		-
Soquimich SRL Argentina	57	-	165	-	-	(6	)	(6	)
Comercial Caimán Internacional S.A.	256	-	1,122	-	-	-		-
SQM France S.A.	345	6	114	-	-	-		-
Administración y Servicios Santiago S.A. de C.V.	235	72	402	211	1,586	(16	)	(16	)
SQM Nitratos México S.A. de C.V.	140	18	97	18	413	7		7
Soquimich European Holding B.V.	5,851	174,968	1,299	30,802	-	1,594		1,594
SQM Iberian S.A.	52,750	2,350	41,680	4	60,479	(2,325	)	(2,325	)
SQM Africa Pty Ltd.	57,639	1,728	47,594	-	21,475	(2,397	)	(2,397	)
SQM Oceania Pty Ltd.	5,440	-	3,459	-	798	316		316
SQM Beijing Commercial Co. Ltd.	11,723	20	9,695	-	4,851	(343	)	(343	)
SQM Thailand Limited	4,912	11	1,081	-	2,712	404		404
SQM Colombia SAS	9,505	151	10,089	37	3,137	(188	)	(188	)
SQM International	40,652	831	32,549	-	39,371	668		668
SQM Shanghai Chemicals Co. Ltd.	36,250	133	34,367	-	35,264	335		335
SQM Australia Pty Ltd.	12,113	108,068	5,661	228	-	(1,298	)	(1,298	)
Subtotal	884,396	346,170	728,946	37,687	793,223	(261	)	(261	)
Total	3,215,270	3,309,550	2,434,017	406,935	1,902,399	241,322		239,134

55 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

8.3 Background on non-controlling interests

	% of interests in the ownership		Profit (loss) attributable to non-controlling interests for the period ended			Equity, non-controlling interests for the period ended				Dividends paid to non-controlling interests for the period ended
Subsidiary	held by non- controlling interests		As of June 30, 2020	As of June 30, 2019		As of June 30, 2020		As of June 30, 2019		As of June 30, 2020	As of June 30, 2019
			ThUS$	ThUS$		ThUS$		ThUS$		ThUS$	ThUS$
SQM Potasio S.A.	0.00001	%	-	-		-		-		-	-
Ajay SQM Chile S.A.	49.00000	%	357	366		8,598		8,585		277	441
Soquimich Comercial S.A.	39.36168	%	510	180		36,405		37,890		2,478	4,116
Comercial Agrorama Ltda.	30.00000	%	1	(70	)	(632	)	(557	)	-	-
Agrorama S.A.	0.00100	%	-	-		-		-		-	-
Orcoma Estudios SPA	0.00000	%	-	-		-		2,277		-	-
SQM Indonesia S.A.	20.00000	%	-	-		1		1		-	-
Total			868	476		44,372		48,196		2,755	4,557

56 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Note 9       Equity-accounted investees

9.1 Investments in associates recognized according to the equity method of accounting

As of June 30, 2020, and December 31, 2019, in accordance with criteria established in Note 2:

	Equity-accounted investees				Share in profit (loss) of associates and joint ventures accounted for using the equity method for the period ended					Share in other comprehensive income of associates accounted for using the equity method for the period ended						Share in total other comprehensive income of associates accounted for using the equity method for the period ended
Associates	As of June 30, 2020		As of December 31, 2019		As of June 30, 2020			As of June 30, 2019		As of June 30, 2020			As of June 30, 2019			As of June 30, 2020			As of June 30, 2019
	ThUS$		ThUS$		ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$
Abu Dhabi Fertilizer Industries WWL		11,504		11,609		(156	)		389		-			-			(156	)		389
Doktor Tarsa Tarim Sanayi AS (*)		-		26,001		4,031			2,397		(254	)		651			3,777			3,048
Ajay North America		13,774		14,669		1,430			1,733		-			-			1,430			1,733
Ajay Europe SARL		6,463		7,451		731			709		18			(56	)		749			653
SQM Eastmed Turkey (*)		-		623		247			401		(79	)		(34	)		168			367
Kore Potash PLC		24,073		24,739		218			80		(129	)		(54	)		89			26
Total		55,814		85,092		6,501			5,709		(444	)		507			6,057			6,216
Total		55,814		85,092		6,501			5,709		(444	)		507			6,057			6,216

(*) As of June 30, 2020, these investments were reclassified as “Non-current assets or groups of assets classified as held for sale.”

57 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

							Dividends received for the period ending
Associate	Description of the nature of the relationship	Address	Country of incorporation	Share of ownership in associates			As of June 30, 2020		As of June 30, 2019
							ThUS$		ThUS$
Abu Dhabi Fertilizer Industries WWL	Distribution and commercialization of specialty plant nutrients in the Middle East.	PO Box 71871, Abu Dhabi	United Arab Emirates		37	%		-		-
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 distribution of iodine derivatives.	1400 Industry RD Power Springs GA 30129	United States		49	%		890		1,398
Ajay Europe SARL	Production and distribution of iodine derivatives.	Z.I. du Grand Verger BP 227 53602 Evron Cedex	France		50	%		1,197		1,069
SQM Eastmed Turkey	Production and commercialization of specialty products.	Organize Sanayi Bolgesi, Ikinci Kisim, 22 cadde TR07100 Antalya	Turkey		50	%		-		-
Kore Potash PLC	Prospecting, exploration and mining development.	L 3 88 William ST Perth, was 6000	United Kingdom		19.07	%		-		-
Total								2,087		2,467

The companies described in the table below are related parties of the following associates:

(1) Doktor Tarsa Tarim Sanayi AS

(2) Terra Tarsa B.V.

(3) Abu Dhabi Fertilizer Industries WWL

				Share of			Dividends received for the period ending
Associate	Description of the nature of the relationship	Domicile	Country of incorporation	ownership in associates (*)			As of June 30, 2020		As of June 30, 2019
							ThUS$		ThUS$
Terra Tarsa Ukraine LLC (2)	Distribution and trading of specialty plant nutrients.	74800 Ukraine, Kakhovka, 4 Yuzhnaya Str.	Ukraine		100	%		-		-
Terra Tarsa BV (1)	Distribution and trading of specialty plant nutrients.	Herikerbergweg 238, Luna Arena, 1101CM Amsterdam PO Box 23393, 1100DW Amsterdam Zuidoost	Holland		50	%		-		-
Plantacote NV (1)	Sale of CRF and production and sales of WSNPK	Houtdok-Noordkaai 25a, 2030 Antwerpen, Belgium	Belgium		100	%		-		-
Doctochem Tarim Sanayai Ticaret LTD (1)	Production, distribution and trading of specialty plant nutrition.	Eski Büyükdere Cad No: 7 GIZ 2000 Plaza K:17 D:67-68 Maslak Sariyer Ístambul.	Turkey		100	%		-		-
Terra Tarsa Don LLC (2)	Distribution and sale of specialty fertilizers	Zorge Street, house 17, 344090, Rostov-on-Don	Russian Federation		100	%		-		-
Doktolab Tarim Arastirma San. (1)	Laboratory services.	27. Cd. No:2, 07190 Aosb 2. Kısım/Döşemealtı, Antalya, Turkey	Turkey		100	%		-		-
International Technical and Trading Agencies Co WLL (3)	Distribution and trading of specialty plant nutrients, in the Middle East.	P.O Box: 950918 Amman 11195	Jordan		50	%		-		-
Total								-		-

(*) This percentage does not consider the shareholdings of the holders of these subsidiaries.

58 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
   
 
 

9.2 Assets, liabilities, revenue and expenses of associates

	As of June 30, 2020								for the period ended as of June 30, 2020
	Assets				Liabilities
Associate	Current		Non-current		Current		Non-current		Revenue		Gain (loss) from continuing operations			Other comprehensive income			Comprehensive income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$			ThUS$
Abu Dhabi Fertilizer Industries WWL		29,312		8,586		6,706		101		6,641		(420	)		-			(420	)
Doktor Tarsa Tarim Sanayi AS		94,039		14,239		34,131		13,880		56,385		8,063			(508	)		7,555
Ajay North America		18,830		15,949		6,670		-		23,920		2,917			-			2,917
Ajay Europe SARL		20,008		1,385		8,466		-		23,507		1,462			37			1,499
SQM Eastmed Turkey		815		1,593		647		177		1,546		495			(158	)		337
Kore Potash PLC		7,938		120,763		3,025		-		-		-			(676	)		(676	)
Total		170,942		162,515		59,645		14,158		111,999		12,517			(1,305	)		11,212

	As of December 31, 2019								for the period ended as of December 31, 2019
	Assets				Liabilities
Associate	Current		Non-current		Current		Non-current		Revenue		Gain (loss)		Other comprehensive income			Comprehensive income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
Abu Dhabi Fertilizer Industries WWL		28,543		9,971		7,133		-		15,246		1,051		-			1,051
Doktor Tarsa Tarim Sanayi AS		97,797		15,196		22,420		38,522		59,850		4,795		1,303			6,098
Ajay North America		19,748		13,250		3,061		-		20,630		3,537		-			3,537
Ajay Europe SARL		19,589		1,456		6,144		-		16,275		1,418		(112	)		1,306
SQM Eastmed Turkey		2,718		1,833		2,600		704		2,440		803		(67	)		736
Kore Potash PLC		7,938		119,362		2,214		-		-		-		(308	)		(308	)
Total		176,333		161,068		43,572		39,226		114,441		11,604		816			12,420

59 

Notes to the Consolidated Interim Financial Statement March 31, 2020  

9.3 Other information

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

The Company has no investments that are not accounted for according to the equity method.

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

9.4 Disclosures on interest in associates

(a) Transactions conducted in 2020:

· Kore Potash PLC made a share payment to its non-executive board members, which resulted in a 0.60% share reduction for the company, finalizing with a share percentage of 19.07% at the close of the second quarter of 2020. This resulted in a transfer in equity of non-controlling interest to other reserves in an amount of ThUS$ 754.

· During the second quarter of 2020, Soquimich European Holding made a prepayment of ThUS$ 562 in favor of the agreement to purchase the plant that processes the WNSPK product. This is presented in Other Financial Assets, Non-Current.

(b) Transactions conducted in 2019:

· During the first quarter of 2019 the company did not perform any operations

60 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 10      Joint Ventures

10.1 Policy for the accounting of equity accounted investment in joint ventures

The method for recognizing joint ventures is that 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 that correspond to the investor. Profit or loss for the period will include the portion of the entity’s entire profit or loss that correspond to the investor. For these joint ventures there is no quoted market price to measure these investments. (See Note 2.6)

At the date of issuance of these financial statements, SQM is not aware of the existence of any significant contingent liabilities associated with the partnerships in joint ventures.

10.2 Disclosures of interest in joint ventures

a) Operations conducted in 2020

· In the second quarter of 2020, the Company has taken 100% ownership of SQM Vitas BV through the subsidiary Soquimich European Holdings with a cost of ThUS$ 1,276 and its name has been changed to SQM Holland.

· In the second quarter of 2020, shares held in Arpa Speciali S.R.L. were sold through SQM Pavoni & C., SpA. At a value of ThUS$ 56, which brought about a loss of ThUS$ 125. An initial installment of ThUS$ 17 was charged, leaving two pending installments of ThUS$ 20 maturing June 30, 2021 and June 30, 2022. The pending installments are classified as other accounts receivable.

b) Operations conducted in 2019

· On January 01, 2019, SQM Vitas Perú changed its functional currency from the Peruvian sol to Dollar.

61 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

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

							Dividends received for the period ending
Joint venture	Description of the nature of the relationship	Domicile	Country of incorporation	Share of interest in ownership			As of June 30, 2020		As of June 30, 2019
							ThUS$		ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltd.	Production and distribution of soluble fertilizers.	Huangjing Road, Dawan Town, Qingbaijiang Dristrict, Chengdu Municipality, Sichuan Province	China		50	%		-		-
Coromandel SQM India	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 Qingdao Star Corp Nutrition Co. Ltd.	Production and distribution of nutrient plant solutions with specialties NPK soluble.	Longquan Town, Jimo City, Qingdao Municipality, Shangdong Province	China		50	%		2,223		-
Pavoni & C. Spa	Production of specialty fertilizers and others for distribution in Italy and other countries.	Corso Italia 172, 95129 Catania (CT), Sicilia	Italy		50	%		-		-
Covalent Lithium Pty Ltd.	Development and operation of the Mt Holland Lithium project, which will include the construction of a lithium extraction and refining mine.	L18, 109 St Georges Tce Perth WA 6000 |PO Box Z5200 St Georges Tce Perth WA 6831	Australia		50	%		-		-
Total								2,223		-

The companies described in the following table are related to the following joint ventures:

(1) SQM Vitas Fzco.

(2) Pavoni & C Spa

							Dividends received for the period ending
Joint venture	Description of the nature of the relationship	Domicile	Country of incorporation	Share of interest in ownership (*)			As of June 30, 2020		As of June 30, 2019
							ThUS$		ThUS$
SQM Vitas Brasil Agroindustria (1)	Production and trading of specialty vegetable and animal nutrition and industrial hygiene.	Via Cndeias, Km. 01 Sem Numero, Lote 4, Bairro Cia Norte, Candeias, Bahia.	Brazil		49.99	%		-		-
SQM Vitas Perú S.A.C. (1)	Production and trading of specialty vegetable and animal nutrition and industrial hygiene	Av. Juan de Arona 187, Torre B, Oficina 301-II, San Isidro, Lima	Peru		50	%		-		-
Total								-		-

(*) The percentages presented correspond to the ownership used in the consolidation of the company.

62 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

	Equity-accounted investees				Share in profit (loss) of associates and joint ventures accounted for using the equity method, for the period ended						Share on other comprehensive income of associates and joint ventures accounted for using the equity method, for the period ended						Share on total other comprehensive income of associates and joint ventures accounted for using the equity method for the period ended
Joint Venture	As of June 30, 2020		As of December 31, 2019		As of June 30, 2020			As of June 30, 2019			As of June 30, 2020			As of June 30, 2019			As of June 30, 2020			As of June 30, 2019
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltd.		1,992		1,992		(608	)		(305	)		-			-			(609	)		(305	)
Coromandel SQM India (*)		-		1,568		-			(4	)		-			-			-			(4	)
SQM Vitas Fzco.		6,394		9,111		8			1,015			(1,689	)		-			(1,681	)		1,015
SQM Qingdao Star Corp Nutrition Co. Ltd. (*)		-		3,464		82			206			-			-			83			206
SQM Vitas Holland		-		1,304		-			(9	)		-			-			-			(9	)
Pavoni & C. Spa		7,066		6,864		194			219			7			(36	)		201			183
Covalent Lithium Pty Ltd.		295		40		216			(9	)		39			-			255			(9	)
Total		15,747		24,343		(108	)		1,113			(1,643	)		(36	)		(1,751	)		1,077

The amounts described in the following box represent numbers used in the consolidation of the company:

	Equity-accounted investees				Share in profit (loss) of associates and joint ventures accounted for using the equity method, for the period ended					Share on other comprehensive income of associates and joint ventures accounted for using the equity method, for the period ended					Share on total other comprehensive income of associates and joint ventures accounted for using the equity method for the period ended
Joint Venture	As of June 30, 2020		As of December 31, 2019		As of June 30, 2020			As of June 30, 2019		As of June 30, 2020			As of June 30, 2019		As of June 30, 2020			As of June 30, 2019
	ThUS$		ThUS$		ThUS$			ThUS$		ThUS$			ThUS$		ThUS$			ThUS$
SQM Vitas Brasil Agroindustria (1) (*)		-		5,347		(392	)		547		(1,689	)		32		(2,081	)		579
SQM Vitas Perú S.A.C. (1)		1,848		1,955		134			32		-			-		134			32
Arpa Speciali S.R.L. (2)		-		92		-			-		-			-		-			-
Total		1,848		7,394		(258	)		579		(1,689	)		32		(1,947	)		611

The following companies are subsidiaries of:

(1) SQM Vitas Fzco.

(2) Pavoni & C. Spa

(*) As of June 30, 2020, these joint ventures were reclassified as “Non-current assets or groups of assets classified as held for sale.”

63 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

10.4 Assets, liabilities, revenue and expenses from joint ventures

	As of June 30, 2020								For the period ended June 30, 2020
	Assets				Liabilities						Gain (loss) from			Other
Joint Venture	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 Ltd.		28,581		4,278		13,751		-		-		(1,217	)		-			(1,217	)
Coromandel SQM India		4,505		633		1,704		-		-		-			-			-
SQM Vitas Fzco.		2,517		1		605		-		-		15			-			15
SQM Qingdao Star Corp Nutrition Co. Ltd.		2,839		8		201		-		2,770		166			-			166
SQM Vitas Brasil Agroindustria		40,273		5,435		36,788		-		35,709		(784	)		(3,379	)		(4,163	)
SQM Vitas Perú S.A.C.		26,095		8,038		20,943		5,992		17,244		267			-			267
Pavoni & C. Spa		13,718		6,861		12,171		688		10,048		387			15			402
Covalent Lithium Pty Ltd.		1,532		1,176		1,582		535		-		432			79			511
Total		120,060		26,430		87,745		7,215		65,771		(734	)		(3,285	)		(4,019	)

	As of December 31, 2019								For the period ended June 30, 2019
	Assets				Liabilities						Gain (loss) from			Other
Joint Venture	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 Ltd.		28,668		5,129		13,472		-		7		(609	)		-			(609	)
Coromandel SQM India		4,504		633		1,704		-		2,173		(9	)		-			(9	)
SQM Vitas Fzco.		9,695		1		1,136		-		36		2,030			-			2,030
SQM Qingdao Star Corp Nutrition Co. Ltd.		7,534		26		632		-		6,443		412			-			412
SQM Vitas Holland		2,609		-		2		-		-		(18	)		-			(18	)
SQM Vitas Brasil Agroindustria		46,118		7,299		40,334		-		38,617		1,093			64			1,157
SQM Vitas Perú S.A.C.		29,452		8,378		24,855		6,044		12,106		64			-			64
Pavoni & C. Spa		9,444		7,074		8,466		735		8,815		437			(72	)		365
Covalent Lithium Pty Ltd.		1,616		958		2,111		383		-		(18	)		-			(18	)
Total		139,640		29,498		92,712		7,162		68,197		3,382			(8	)		3,374

64 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

10.5 Other Joint Venture disclosures

	Cash and cash equivalents				Other current financial liabilities				Other non-current financial liabilities
Joint Venture	As of June 30, 2020		As of June 30, 2019		As of June 30, 2020		As of June 30, 2019		As of June 30, 2020		As of June 30, 2019
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltd.		27		29		-		-		-		-
Coromandel SQM India		2,240		154		-		-		-		-
SQM Vitas Fzco.		2,956		23,611		-		-		-		-
SQM Qingdao Star Corp Nutrition Co. Ltd.		283		4,066		-		-		-		-
SQM Vitas Holland		-		2,656		-		-		-		-
SQM Vitas Brasil Agroindustria		3,007		4,034		7,443		9,549		-		-
SQM Vitas Perú S.A.C.		451		160		239		3,807		668		1,089
Pavoni & C. Spa		1,135		687		6,385		6,149		-		-
Covalent Lithium Pty Ltd.		652		341		256		704		-		-
Total		10,751		35,738		14,323		20,209		668		1,089

	Depreciation and amortization expense for the period ending						Interest expense for the period ending						Income tax benefit (expense) for the period ending
Joint Venture	As of June 30, 2020			As of June 30, 2019			As of June 30, 2020			As of June 30, 2019			As of June 30, 2020			As of June 30, 2019
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Sichuan SQM Migao Chemical Fertilizers Co Ltd.		(366	)		(371	)		-			-			82			87
Coromandel SQM India		-			-			-			-			-			(30	)
SQM Vitas Fzco.		-			-			(1	)		(3	)		-			-
SQM Qingdao Star Corp Nutrition Co. Ltd.		(18	)		(34	)		-			-			(10	)		(138	)
SQM Vitas Holland		-			-			-			(1	)		-			-
SQM Vitas Brasil Agroindustria		(148	)		(111	)		(359	)		(609	)		-			(119	)
SQM Vitas Perú S.A.C.		(170	)		(173	)		(164	)		(223	)		(107	)		(48	)
Pavoni & C. Spa		(117	)		(64	)		(188	)		(82	)		(267	)		-
Covalent Lithium Pty Ltd.		(85	)		(42	)		(13	)		(18	)		432			(61	)
Total		(904	)		(795	)		(725	)		(936	)		130			(309	)

65 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

10.6 Joint Ventures

In 2017, together with our subsidiary SQM Australia Pty, we entered into an agreement to acquire 50% of the assets of the Mount Holland lithium project in Western Australia. The Mt Holland Lithium Project consist, to design, construct and operate a mine, concentrator and refinery to produce approximately 45,000 metric tons of lithium hydroxide per year. SQM Australia paid US$ 75 million for this purchase.

This business meets the conditions stipulated in IFRS 11 to be considered a "joint operation", since management has agreed that the rights of the related assets and liabilities relate to a joint arrangement, which states that the joint operators share all interests in the related assets and liabilities in specific proportions.

On January 23, 2020, after finalizing the definitive feasibility study, the Company and its project partner Wesfarmers Limited, have decided to postpone the final investment decision to the first quarter of 2021.

In addition, the Company will finance the activities of MT Holland for a year in an amount of US$ 30 million. Wesfarmers must reimburse the Company 50% of this amount if the Company approves the investment decision in January 2021. As of June 30, 2020, the Company has made payments in the amount of US$ 7 million.

66 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Note 11 Cash and cash equivalents

11.1 Types of cash and cash equivalents

As of June 30, 2020, and December 31, 2019, cash and cash equivalents are detailed as follows:

Cash	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Cash on hand		49		71
Cash in banks		167,383		105,141
Other demand deposits		5,563		6,986
Total Cash		172,995		112,198

Cash equivalents	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Short-term deposits, classified as cash equivalents		70,468		149,099
Short-term investments, classified as cash equivalents		338,168		327,233
Total cash equivalents		408,636		476,332
Total cash and cash equivalents		581,631		588,530

11.2 Short-term investments, classified as cash equivalents

As of June 30, 2020, and December 31, 2019, the short-term investments classified as cash and cash equivalents relate to mutual funds (investment liquidity funds) for investments in:

Institution	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Legg Mason - Western Asset Institutional Cash Reserves		171,546		181,155
JP Morgan US dollar Liquidity Fund Institutional		166,622		146,078
Total		338,168		327,233

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

67 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

11.3 Information on cash and cash equivalents by currency

As of June 30, 2020, and December 31, 2019, information on cash and cash equivalents by currency is detailed as follows:

Currency	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Peso (*)		18,948		8,240
Dollar		527,872		558,572
Euro		15,104		3,131
Mexican Peso		1,382		2,103
South African Rand		5,838		3,929
Japanese Yen		1,673		1,559
Peruvian Sol		4		4
Indian rupee		6		6
Chinese Yuan		7,623		2,484
Indonesian rupee		3		3
Argentine Peso		-		3
Pound Sterling		11		3
Australian Dollar		3,129		8,492
South Korean won		36		-
Dirham United Arab Emirates		2		-
Polish Zloty		-		1
Total		581,631		588,530

(*) The Company maintains financial derivative instruments policies which allow management to convert term deposits denominated in pesos and UF to Dollars.

11.4 Amount restricted (unavailable) cash balances

Cash on hand and cash in banks are available resources, and their carrying value is equal to their fair value.

As of June 30, 2020 and December 31, 2019, cash balances are presented with some form of restriction (see note 23.7).

Financial assets pledged as collateral

On November 4, 2004, Isapre Norte Grande has a guarantee equivalent to the total amount owed to its subsidiaries and medical suppliers, which is administered and maintained by Banco de Chile.

As of June 30, 2020, and, December 31, 2019 pledged assets are as follows

Restricted cash balances	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Isapre Norte Grande Ltda.		614		551
Total		614		551

68 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

11.5            Short-term deposits, classified as cash equivalents

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

Receiver of the deposit	Type of deposit	Original Currency	Interest Rate			Placement date	Expiration date	Principal		Interest accrued to-date		As of June 30, 2019
									ThUS$		ThUS$		ThUS$
Banco crédito e inversiones	Fixed term	Peso		0.04	%	06-30-2020	07-08-2020		12,420		-		12,420
Banco Itau Chile	Fixed term	Dollar		1.08	%	05-11-2020	08-05-2020		15,000		23		15,023
Banco crédito e inversiones	Fixed term	Dollar		0.34	%	05-19-2020	07-02-2020		1,000		1		1,001
Banco Santander - Santiago	Fixed term	Dollar		0.20	%	05-29-2020	07-07-2020		1,800		-		1,800
Corpbanca	Fixed term	Dollar		1.08	%	05-08-2020	07-31-2020		2,000		3		2,003
Banco crédito e inversiones	Fixed term	Dollar		1.12	%	05-08-2020	07-31-2020		2,000		3		2,003
Scotiabank Sud Americano	Fixed term	Dollar		0.70	%	05-12-2020	07-20-2020		2,000		2		2,002
Banco de Chile	Fixed term	Dollar		0.30	%	05-26-2020	07-31-2020		2,000		1		2,001
Scotiabank Sud Americano	Fixed term	Dollar		0.95	%	05-08-2020	07-31-2020		3,000		4		3,004
Banco Estado	Fixed term	Dollar		0.40	%	05-12-2020	07-20-2020		4,000		2		4,002
Banco de Chile	Fixed term	Dollar		0.20	%	05-15-2020	07-09-2020		5,000		1		5,001
Banco Santander - Santiago	Fixed term	Dollar		0.30	%	06-12-2020	07-07-2020		1,000		-		1,000
Banco Santander - Santiago	Fixed term	Dollar		0.40	%	06-22-2020	07-31-2020		1,000		-		1,000
Banco de Chile	Fixed term	Dollar		0.40	%	06-16-2020	08-07-2020		1,500		-		1,500
Scotiabank Sud Americano	Fixed term	Dollar		0.60	%	06-26-2020	07-30-2020		2,000		-		2,000
Banco crédito e inversiones	Fixed term	Dollar		0.82	%	06-30-2020	07-29-2020		2,000		-		2,000
Banco crédito e inversiones	Fixed term	Dollar		0.43	%	06-03-2020	08-14-2020		2,500		1		2,501
Corpbanca	Fixed term	Dollar		0.30	%	06-10-2020	07-07-2020		5,000		1		5,001
Banco Santander - Santiago	Fixed term	Dollar		0.40	%	06-22-2020	07-31-2020		5,000		1		5,001
BBVA Banco Francés	Fixed term	Dollar		39	%	06-03-2020	07-03-2020		39		1		40
Banco Itaú S.A.	On demand	Dollar		2.30	%	06-16-2020	07-30-2020		165		-		165
Total									70,424		44		70,468

69 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Receiver of the deposit	Type of deposit	Original Currency	Interest Rate			Placement date	Expiration date	Principal		Interest accrued to-date		As of December 31, 2019
									ThUS$		ThUS$		ThUS$
Banco crédito e inversiones	Fixed term	Dollar		3.45	%	11-18-2019	02-13-2020		18,000		74		18,074
Banco crédito e inversiones	Fixed term	Dollar		2.85	%	12-26-2019	02-20-2020		20,000		8		20,008
Banco de Chile	Fixed term	Dollar		3.45	%	11-15-2019	01-23-2020		14,000		62		14,062
Banco de Chile	Fixed term	Dollar		3.50	%	11-15-2019	01-09-2020		18,000		80		18,080
Banco de Chile	Fixed term	Dollar		3.45	%	11-15-2019	01-16-2020		18,000		79		18,079
Banco Itau Chile	Fixed term	Dollar		2.90	%	12-26-2019	02-20-2020		33,000		13		33,013
Scotiabank Sud Americano	Fixed term	Peso		2.16	%	12-30-2019	08-08-2020		6,812		-		6,812
Banco crédito e inversiones	Fixed term	Dollar		3.51	%	11-21-2019	01-28-2020		1,000		4		1,004
Banco crédito e inversiones	Fixed term	Dollar		3.75	%	12-02-2019	02-27-2020		2,000		6		2,006
Banco crédito e inversiones	Fixed term	Dollar		3.60	%	11-25-2019	01-28-2020		1,000		4		1,004
Banco Estado	Fixed term	Dollar		2.15	%	12-16-2019	01-06-2020		500		-		500
Banco Santander - Santiago	Fixed term	Dollar		2.55	%	12-09-2019	02-04-2020		1,700		3		1,703
Corpbanca	Fixed term	Dollar		2.55	%	12-16-2019	01-06-2020		2,500		3		2,503
Corpbanca	Fixed term	Dollar		3.64	%	11-29-2019	02-13-2020		1,500		5		1,505
Corpbanca	Fixed term	Dollar		2.80	%	11-12-2019	01-28-2020		2,000		8		2,008
Banco Santander - Santiago	Fixed term	Dollar		2.33	%	10-16-2019	01-12-2020		1,000		5		1,005
Scotiabank Sud Americano	Fixed term	Dollar		2.45	%	12-17-2019	01-13-2020		3,600		3		3,603
Scotiabank Sud Americano	Fixed term	Dollar		3.20	%	11-13-2019	01-30-2020		500		2		502
Scotiabank Sud Americano	Fixed term	Dollar		3.40	%	12-02-2019	02-27-2020		2,000		5		2,005
Scotiabank Sud Americano	Fixed term	Dollar		3.45	%	11-18-2019	01-30-2020		1,500		6		1,506
BBVA Banco Francés	Fixed term	Dollar		39	%	12-26-2019	01-27-2020		52		1		53
Banco Itaú S.A.	On demand	Dollar		8	%	10-17-2019	12-31-2019		64		-		64
Total									148,728		371		149,099

70 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

11.6            Net Debt reconciliation

This section sets out an analysis of net debt and the movements in net debt for each of the periods presented. The definition of the net debt is described in Note 21.1.

Net debt	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
Cash and cash equivalents		581,631			588,530
Other current financial assets		493,579			505,490
Other non-current financial hedge assets		2,605			3,918
Other current financial liabilities		(215,967	)		(291,128	)
Lease liabilities, current		(6,632	)		(7,694	)
Other non-current financial hedge liabilities		(1,715,416	)		(1,488,723	)
Lease liabilities, non-current		(27,261	)		(30,203	)
Total		(887,461	)		(719,810	)

Cash and cash equivalents	As of December 31, 2019			Monetary									Non-monetary									As of June 30, 2020
				Amounts from loans			Amounts from interests			Other cash income/ expenses			Hedging and non-hedging instruments			Exchange rate differences				Others
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$				ThUS$
Obligations with the public and bank loans		(1,753,028	)		(143,201	)		36,466			7,055			-			32,014			(41,946	)		(1,862,640	)
Current and non-current lease liabilities		(37,897	)		3,515			572			-			-			-			(83	)		(33,893	)
Financial instruments derived from hedging		(23,655	)		707			3,348			-			(30,832	)		-			(14,972	)		(65,404	)
Financial instruments derived from non-hedging		(3,169	)		-			-			-			(171	)		-			-			(3,340	)
Current and non-current financial liabilities		(1,817,749	)		(138,979	)		40,386			7,055			(31,003	)		32,014			(57,001	)		(1,965,277	)
Cash and cash equivalents		588,530			-			-			(6,041	)		-			(858	)		-			581,631
Deposits that do not qualify as cash and cash equivalents		485,689			-			(12,043	)		51,278			-			(45,772	)		10,319			489,471
Derivatives from hedge assets		21,188			-			-			(51,770	)		37,035			-			(974	)		5,479
Derivatives from other financial non-hedge assets		2,532			-			-			243			(1,540	)		-			-			1,235
Total		(719,810	)		(138,979	)		28,343			765			4,492			(14,616	)		(47,656	)		(887,461	)

The definition of debt is described in Note 14.

71 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 12    Inventories

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

Type of inventory	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Raw material		8,450		7,287
Production supplies		31,542		26,064
Products-in-progress		457,958		457,563
Finished product		577,478		492,424
Total		1,075,428		983,338

As of June 30, 2020, and December 31, 2019, the Company held caliche stockpiles, solutions in solar ponds and intermediary salts amounting ThUS$ 399,074 and ThUS$ 393,600, respectively (including products in progress).

As of June 30, 2020, and December 31, 2019, inventory allowances recognized, amounted to ThUS$ 87,219 and ThUS$ 88,174, respectively. For finished and in-process products, recognized allowances include the provision associated with the lower value of stock (considers lower realizable value, uncertain future use, reprocessing costs of off-specification products, etc.), provision for inventory differences and the provision for potential errors in the determination of inventories (e.g., errors in topography, grade, porosity, etc.), (see Note 3.13).

For raw materials, supplies, materials and parts, the lower value provision was associated to the proportion of obsolete, defective or slow-moving materials and potential differences.

The breakdown of inventory allowances is detailed as follows:

Type of inventory	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Raw material and supplies for production		5,089		2,488
Products-in-progress		65,488		71,468
Finished product		16,642		14,218
Total		87,219		88,174

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

72 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

As of June 30, 2020, and December 31, 2019, movements in provisions are detailed as follows:

Conciliation	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
Beginning balance		88,174			105,282
Increase in Lower Value (1)		(3,233	)		(6,987	)
Additional Provision Differences of Inventory (2)		(527	)		(123	)
Increase / Decrease eventual differences and others (3)		3,885			(6,262	)
Provision Used		(1,080	)		(3,736	)
Total changes		(955	)		(17,108	)
Final balance		87,219			88,174

(1) There are three types of Lower Value Provisions: (a) Economic Realizable Lower Value, (b) Potential Inventory with Uncertain Future Use and (c) Reprocessing Costs of Off-Specification Products.

(2) Provisions for Inventory Differences generated when physical differences are detected when taking inventory, which exceed the tolerance levels for this process.

(3) This algorithm corresponds to the provision of diverse percentages based on the complexity in the measurement and rotation of stock, as well as standard differences based on previous results, as is the case with provisions relating to Commercial Offices.

73 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 13    Related party disclosures

13.1 Related party disclosures

Balances pending at period-end are not guaranteed, accrue no interest and are settled in cash, no guarantees have been delivered or received for trade and other receivables due from related parties or trade and other payables due to related parties.

13.2 Relationships between the parent and the entity

Pursuant to Article 99 of Law of the Securities Market Law, the CMF may determine that a company does not have a controlling entity in accordance with the distribution and dispersion of its ownership. On November 30, 2018, the CMF issued the ordinary letter No. 32,131 whereby it determined that Pampa Group, do not exert decisive power over the management of the Company since it does not have a predominance in the ownership that allows it to make management decisions. Therefore, the CMF has determined not to consider Pampa Group as the controlling entity of the Company and that the Company does not have a controlling entity given its current ownership structure.

74 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

13.3 Detailed identification of related parties and subsidiaries

As of June 30, 2020, and December 31, 2019, the detail of entities that are identified as subsidiaries or related parties of the SQM Group is as follows:

Tax ID No	Name	Country of origin	Functional currency	Nature
foreign	Nitratos Naturais Do Chile Ltda.	Brazil	Dollar	Subsidiary
foreign	Nitrate Corporation Of Chile Ltd.	United Kingdom	Dollar	Subsidiary
foreign	SQM North America Corp.	United States	Dollar	Subsidiary
foreign	SQM Europe N.V.	Belgium	Dollar	Subsidiary
foreign	Soquimich S.R.L. Argentina	Argentina	Dollar	Subsidiary
foreign	Soquimich European Holding B.V.	Netherlands	Dollar	Subsidiary
foreign	SQM Corporation N.V.	Netherlands	Dollar	Subsidiary
foreign	SQI Corporation N.V.	Netherlands	Dollar	Subsidiary
foreign	SQM Comercial De México S.A. de C.V.	Mexico	Dollar	Subsidiary
foreign	North American Trading Company	United States	Dollar	Subsidiary
foreign	Administración y Servicios Santiago S.A. de C.V.	Mexico	Dollar	Subsidiary
foreign	SQM Perú S.A.	Peru	Dollar	Subsidiary
foreign	SQM Ecuador S.A.	Ecuador	Dollar	Subsidiary
foreign	SQM Nitratos Mexico S.A. de C.V.	Mexico	Dollar	Subsidiary
foreign	SQMC Holding Corporation L.L.P.	United States	Dollar	Subsidiary
foreign	SQM Investment Corporation N.V.	Netherlands	Dollar	Subsidiary
foreign	SQM Brasil Limitada	Brazil	Dollar	Subsidiary
foreign	SQM France S.A.	France	Dollar	Subsidiary
foreign	SQM Japan Co. Ltd.	Japan	Dollar	Subsidiary
foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Dollar	Subsidiary
foreign	SQM Oceania Pty Limited	Australia	Dollar	Subsidiary
foreign	Rs Agro-Chemical Trading Corporation A.V.V.	Aruba	Dollar	Subsidiary
foreign	SQM Indonesia S.A.	Indonesia	Dollar	Subsidiary
foreign	SQM Virginia L.L.C.	United States	Dollar	Subsidiary
foreign	SQM Italia SRL	Italy	Dollar	Subsidiary
foreign	Comercial Caimán Internacional S.A.	Panama	Dollar	Subsidiary
foreign	SQM África Pty. Ltd.	South Africa	Dollar	Subsidiary
foreign	SQM Colombia SAS	Colombia	Dollar	Subsidiary
foreign	SQM Internacional N.V.	Belgium	Dollar	Subsidiary
foreign	SQM (Shanghai) Chemicals Co. Ltd.	China	Dollar	Subsidiary
foreign	SQM Lithium Specialties LLC	United States	Dollar	Subsidiary
foreign	SQM Iberian S.A.	Spain	Dollar	Subsidiary
foreign	SQM Beijing Commercial Co. Ltd.	China	Dollar	Subsidiary
foreign	SQM Thailand Limited	Thailand	Dollar	Subsidiary
foreign	SQM Australia PTY	Australia	Dollar	Subsidiary
foreign	SQM Holland B.V.	Netherlands	Dollar	Subsidiary
96.801.610-5	Comercial Hydro S.A.	Chile	Dollar	Subsidiary
96.651.060-9	SQM Potasio S.A.	Chile	Dollar	Subsidiary
96.592.190-7	SQM Nitratos S.A.	Chile	Dollar	Subsidiary
96.592.180-K	Ajay SQM Chile S.A.	Chile	Dollar	Subsidiary
79.947.100-0	SQM Industrial S.A.	Chile	Dollar	Subsidiary
79.906.120-1	Isapre Norte Grande Ltda.	Chile	Peso	Subsidiary
79.876.080-7	Almacenes y Depósitos Ltda.	Chile	Peso	Subsidiary
79.770.780-5	Servicios Integrales de Tránsitos y Transferencias S.A.	Chile	Dollar	Subsidiary
76.425.380-9	Exploraciones Mineras S.A.	Chile	Dollar	Subsidiary

75 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Tax ID No	Name	Country of origin	Functional currency	Nature
79.768.170-9	Soquimich Comercial S.A.	Chile	Dollar	Subsidiary
79.626.800-K	SQM Salar S.A.	Chile	Dollar	Subsidiary
76.534.490-5	Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	Chile	Ch$	Subsidiary
76.064.419-6	Comercial Agrorama Ltda.	Chile	Peso	Subsidiary
76.145.229-0	Agrorama S.A.	Chile	Peso	Subsidiary
76.359.919-1	Orcoma Estudios SPA	Chile	Dollar	Subsidiary
76.360.575-2	Orcoma SPA	Chile	Dollar	Subsidiary
76.686.311-9	SQM MaG SpA	Chile	Dollar	Subsidiary
77.114.779-8	Sociedad Contractual Minera Búfalo	Chile	Dollar	Subsidiary
foreign	Abu Dhabi Fertilizer Industries WWL	Arab Emirates	Arab Emirates dirham	Associate
foreign	Doktor Tarsa Tarim Sanayi AS	Turkey	Dollar	Associate
foreign	Ajay North America	United States	Dollar	Associate
foreign	Ajay Europe SARL	France	Euro	Associate
foreign	SQM Eastmed Turkey	Turkey	Euro	Associate
foreign	Kore Potash PLC	United Kingdom	Dollar	Associate
foreign	Sichuan SQM Migao Chemical Fertilizers Co Ltda.	China	Dollar	Joint venture
foreign	Coromandel SQM India	India	Indian rupee	Joint venture
foreign	SQM Vitas Fzco.	Arab Emirates	Arab Emirates dirham	Joint venture
foreign	SQM Star Qingdao Corp Nutrition Co., Ltd.	China	Dollar	Joint venture
foreign	Covalent Lithium Pty Ltd.	Australia	Dollar	Joint venture
foreign	Pavoni & C, SPA	Italy	Euro	Joint venture
96.511.530-7	Sociedad de Inversiones Pampa Calichera	Chile	Dolar	Other related parties
96.529.340-K	Norte Grande S.A.	Chile	Ch$	Other related parties
79.049.778-9	Callegari Agrícola S.A.	Chile	Ch$	Other related parties
foreign	SQM Vitas Brasil Agroindustria (1)	Brazil	real brazilian	Other related parties
foreign	SQM Vitas Perú S.A.C. (1)	Peru	Dollar	Other related parties
foreign	Terra Tarsa B.V. (2)	Holland	Euro	Other related parties
foreign	Plantacote N.V. (2)	Belgium	Euro	Other related parties
foreign	Doktolab Tarim Arastima San. Tic As (2)	Turkey	Turkish Lira	Other related parties
foreign	Doctochem Tarim Sanayai Ticaret LTD (2)	Turkey	Turkish Lira	Other related parties
foreign	Terra Tarsa Ukraine LLC (2)	Ukraine	Ukrainian Grivna	Other related parties
foreign	Terra Tarsa Don LLC (2)	Russian Federation	Russian ruble	Other related parties
foreign	Abu Dhabi Fertilizer Industries WWL (3)	Oman	United Arab Emirates dirham	Other related parties
foreign	International Technical and Trading Agencies CO WLL (3)	Jordan	United Arab Emirates dirham	Other related parties

(1) These Companies are subsidiaries of the joint venture SQM Vitas Fzco.

(2) These Companies are subsidiaries of the associate Doktor Tarsa Tarim Sanayi AS.

(3) These Companies are subsidiaries of the joint venture Abu Dhabi Fertilizer Industries WWL and therefore it absorbs these and takes responsibility of all of their assets and liabilities.

76 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

The following other related parties correspond to mining contractual corporations.

Tax ID No.	Name	Country of origin	Functional currency	Relationship
N/A	Ara Dos Primera del Salar de Pampa Blanca, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Ara Tres Primera del Salar de Pampa Blanca, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Ara Cuatro Primera del Salar de Pampa Blanca, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Ara Cinco Primera del Salar de Pampa Blanca, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Curicó Dos Primera del Salar de Pampa Alta, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Curicó Tres Primera del Sector de Pampa Alta, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Evelyn Veinticuatro Primera de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Filomena Tres Primera de Oficina Filomena, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Filomena Cuatro Primera de Oficina Filomena, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Francis Cuatro Primera de Pampa Blanca, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Francis Cuatro Segunda del Salar de Pampa Blanca, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Francis Cuatro Tercera de Pampa Blanca, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Francis Cuatro Cuarta de Pampa Blanca, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Francis Cuatro Quinta de Pampa Blanca, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Francis Primera del Salar de Pampa Blanca de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Francis Segunda del Salar de Pampa Blanca de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Francis Tercera del Salar de Pampa Blanca de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Ivon Primera de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Ivon Décima Segunda de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Ivon Sexta de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Julia Primera de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Lorena Trigésimo Quinta de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Perseverancia Primera de Sierra Gorda	Chile	Ch$	Other related parties
N/A	Tamara 40 Primera del Sector S.E. OF. Concepción, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Tamara Tercera de Oficina Concepción, Sierra Gorda	Chile	Ch$	Other related parties
N/A	Tamara 40 Segunda del Sector S.E. OF Concepción, Sierra Gorda	Chile	Ch$	Other related parties

77 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
    

13.4 Detail of related parties and related party transactions

Transactions between the Parent and its subsidiaries, associated businesses, joint ventures and other related parties are part of the Company's common transactions. Their conditions are those customary for this type of transactions in respect of terms and market prices. Maturity terms for each case vary by virtue of the transaction giving rise to them.

As of June 30, 2020, and December 31, 2019, the detail of significant transactions with related parties is as follows

Tax ID No	Name	Nature	Country of origin	Transaction	As of June 30, 2020		As of June 30, 2019
					ThUS$		ThUS$
Foreign	Doktor Tarsa Tarim Sanayi AS	Associate	Turkey	Sale of products		3,944		7,343
Foreign	Ajay Europe S.A.R.L.	Associate	France	Sale of products		16,457		11,626
Foreign	Ajay Europe S.A.R.L.	Associate	France	Dividends		1,197		1,069
Foreign	Ajay North America LL.C.	Associate	USA	Sale of products		15,248		9,602
Foreign	Ajay North America LL.C.	Associate	USA	Dividends		890		1,398
Foreign	Abu Dhabi Fertilizer Industries WWL	Associate	United Arab Emirates	Sale of products		-		2,934
Foreign	SQM Vitas Brasil Agroindustria	Other related parties	Brazil	Sale of products		14,177		27,343
Foreign	SQM Vitas Perú S.A.C.	Other related parties	Peru	Sale of products		5,619		11,015
Foreign	Coromandel SQM India	Joint venture	India	Sale of products		410		2,098
Foreign	SQM Star Qingdao Corp Nutrition Co., Ltd.	Joint venture	China	Dividends		2,223		-
Foreign	Terra Tarsa Ukraine LLC	Other related parties	Ukraine	Sale of products		641		1,265
Foreign	Plantacote NV	Other related parties	Belgium	Sale of products		2,823		2,568
Foreign	Pavoni & CPA	Joint venture	Italy	Sale of products		1,125		2,484
Foreign	Arpa Speciali S.R.L.	Other related parties	Italy	Sale of products		-		1,899
Foreign	SQM Eastmed Turkey	Associate	Turkey	Sale of products		81		-

78 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
    

13.5 Trade receivables due from related parties, current:

					As of June 30, 2020			As of December 31, 2019
Tax ID No	Name	Nature	Country of origin	Currency	ThUS$			ThUS$
Foreign	Doktor Tarsa Tarim Sanayi AS	Associate	Turkey	Dollar		-			110
Foreign	Ajay Europe S.A. R.L.	Associate	France	Euro		8,558			3,712
Foreign	Ajay North America LLC.	Associate	United States of America	Dollar		4,759			2,290
Foreign	Abu Dhabi Ferilizer Industries WWL	Associate	United Arab Emirates	United Arab Emirates Dirham		595			803
96.511.530-7	Soc. de Inversiones Pampa Calichera	Other related parties	Chile	Dollar		5			6
Foreign	SQM Vitas Brasil Agroindustria	Other related parties	Brazil	Dollar		23,935			27,275
Foreign	SQM Vitas Perú S.A.C.	Other related parties	Peru	Dollar		17,938			23,475
Foreign	Coromandel SQM India	Joint venture	India	Indian Rupee		392			1,792
Foreign	SQM Vitas Fzco.	Joint venture	United Arab Emirates	United Arab Emirates Dirham		253			234
Foreign	Terra Tarsa Ukraine LLC	Other related parties	Ukraine	Ukrainian hryvnia		325			7
Foreign	Terra Tarsa Don LLC	Other related parties	Federation of Russia	Russian Ruble		8			13
Foreign	Plantacote NV	Other related parties	Belgium	Euro		1,145			657
Foreign	SQM Eastmed Turkey	Associate	Turkey	Euro		113			47
Foreign	Pavoni & C SpA	Joint venture	Italy	Euro		2,861			1,028
Foreign	Arpa Speciali S.R.L.	Other related parties	Italy	Euro		-			134
	Allowance					(787	)		(356	)
Total						60,100			61,227

he receivables for Sichuan SQM Migao Chemical Fertilizers Co Ltda. are presented net of provisions (provisions as of June 30, 2020 ThUS$ 10,965 and December 31, 2019 ThUS$ 10,965).

13.6 Trade payables due to related parties, current:

					As of June 30, 2020		As of December 31, 2019
Tax ID No	Company	Nature	Country of origin	Currency	ThUS$		ThUS$
Foreign	Doktor Tarsa Tarim Sanayi AS	Associate	Turkey	Dollar		7		-
Foreign	SQM Star Qingdao Corp Nutrition Co., Ltd.	Joint venture	China	Dollar		1,204		243
Foreign	Covalent Lithium Pty Ltd	Joint venture	Australia	Australian dollar		214		232
Total						1,425		475

79 

Notes to the Consolidated Interim Financial Statement
June 30, 2020
    

Note 14 Financial instruments

14.1 Types of other financial assets

Description of other financial assets	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Financial assets at amortized cost (1)		489,472		485,689
Derivative financial instruments
- For hedging		2,873		17,270
- Non-hedging (2)		1,234		2,531
Total other current financial assets		493,579		505,490
Financial assets at fair value through other comprehensive income		5,601		4,785
Derivative financial instruments
- For hedging		2,605		3,918
Other Financial assets at amortized cost		639		75
Total other non-current financial assets		8,845		8,778

Institution	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Banco de Crédito e Inversiones		112,310		185,400
Banco Santander (3)		109,601		74,365
Banco Itau Corpbanca		76,032		120,628
Banco Security		-		17,964
Banco de Chile		-		18,026
Banco Estado		-		15,126
Scotiabank Sud Americano		191,529		54,180
Total		489,472		485,689

(1) Corresponds to term deposits whose maturity date is greater than 90 days and less than 360 days from the investment date constituted in the aforementioned financial institutions:

(2) Correspond to forwards and options that were not classified as hedging instruments (See detail in Note 14.3).

(3) As of June 30, 2020, of the total amount, ThUS$ 7,160 corresponds to margin calls and as of December 31, 2019, this value was ThUS$ 1,870.

80 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

14.2 Trade and other receivables

	As of June 30, 2020						As of December 31, 2019
Trade and other receivables	Current		Non-current		Total		Current		Non-current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Trade receivables, current		284,277		-		284,277		367,583		-		367,583
Prepayments, current		34,919		-		34,919		20,309		-		20,309
Other receivables, current		9,997		5,110		15,107		11,250		1,710		12,960
Total trade and other receivables		329,193		5,110		334,303		399,142		1,710		400,852

	As of June 30, 2020							As of December 31, 2019
Trade and other receivables	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		297,824		(13,547	)		284,277		383,775		(16,192	)		367,583
Trade receivables, current		297,824		(13,547	)		284,277		383,775		(16,192	)		367,583
Prepayments, current		35,703		(784	)		34,919		21,092		(783	)		20,309
Other receivables, current		14,026		(4,029	)		9,997		15,659		(4,409	)		11,250
Current trade and other receivables		49,729		(4,813	)		44,916		36,751		(5,192	)		31,559
Other receivables, non-current		5,110		-			5,110		1,710		-			1,710
Non-current receivables		5,110		-			5,110		1,710		-			1,710
Total trade and other receivables		352,663		(18,360	)		334,303		422,236		(21,384	)		400,852

81 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

(a) Portfolio analysis

As of June 30, 2020, and December 31, 2019 the detail of the renegotiated portfolio is as follows:

As of June 30, 2020
Portfolio analysis
Past due segments	Number of customers with non-renegotiated portfolio		Gross non-renegotiated portfolio		Number of customers with renegotiated portfolio		Gross renegotiated portfolio
			ThUS$				ThUS$
Current		1,205		268,586		38		372
1 - 30 days		139		13,710		14		45
31 - 60 days		27		3,886		15		487
61 - 90 days		6		283		7		75
91 - 120 days		6		224		11		143
121 - 150 days		4		177		9		48
151 - 180 days		3		1,484		5		12
181 - 210 days		3		1,136		48		286
211 - 250 days		3		378		2		38
>250 days		146		5,521		132		933
Total		1,542		295,385		281		2,439

As of December 31, 2019
Portfolio analysis
Past due segments	Number of customers non-renegotiated portfolio		Gross non-renegotiated portfolio		Number of customers renegotiated portfolio		Gross renegotiated portfolio
			ThUS$				ThUS$
Current		1,486		351,931		69		892
1 - 30 days		166		20,195		72		526
31 - 60 days		26		1,279		4		10
61 - 90 days		12		519		3		54
91 - 120 days		5		1,026		2		66
121 - 150 days		5		361		7		49
151 - 180 days		7		190		2		33
181 - 210 days		4		51		-		-
211 - 250 days		6		48		8		11
>250 days		144		5,449		137		1,085
Total		1,861		381,049		304		2,726

82 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

(b) Estimate for doubtful accounts

As of June 30, 2020
	Trade accounts receivable days past due
Trade and other receivables	Current			1 to 30 days			31 to 60 days			61 to 90 days			Over 90 days			Trade		Trade receivables due from related parties
																ThUS$		ThUS$
Expected Loss Rate on		1	%		13	%		35	%		44	%		67	%		-		-
Total Gross Book Value		268,958			13,755			4,372			358			10,381			297,824		71,853
Deterioration Estimate		3,087			1,825			1,548			158			6,929			13,547		11,753

As of December 31, 2019
	Trade accounts receivable days past due
Trade and other receivables	Current			1 to 30 days			31 to 60 days			61 to 90 days			Over 90 days			Trade		Trade receivables due from related parties
																ThUS$		ThUS$
Expected Loss Rate on		1	%		18	%		34	%		44	%		78	%		-		-
Total Gross Book Value		352,823			20,721			1,288			573			8,370			383,775		72,550
Deterioration Estimate		5,285			3,664			440			251			6,552			16,192		11,323

As of June 30, 2020, and December 31, 2019, movements in provisions are as follows:

Provisions	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
Provision Impairment Accounts receivable at the beginning of the Period		32,707			32,634
Increase / (decrease) impairment of accounts receivable for the period to profit and loss		(1,889	)		1,057
Use of Provision Applied to Accounts Receivable		(705	)		(984	)
Impairment of Accounts Receivable Provision at the Star of the Period		30,113			32,707
(1) Trade and Other Receivables Provision		13,547			16,192
(2) Current other Receivables Provision		4,813			5,192
(3) Provision Trade payables due to related parties, current		11,753			11,323
Recovery of Insurance		96			320
Impairment of Accounts Receivable Provision		30,113			32,707
Renegotiated Provision		1,739			1,905
Non-renegotiated Provision		28,374			30,802

83 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

14.3 Hedging assets and liabilities

The balance represents derivative financial instruments measured at fair value which have been classified as hedges for exchange and interest rate risks relating to the total obligations with the public associated with bonds in UF and investments in Chilean pesos. As of June 30, 2020, the notional amount of cash flows agreed upon in US dollars of the cross-currency swap contracts amounted to ThUS$ 584,560 (As of December 31, 2019 ThUS$ 435,167).

Expressed in ThUS$	Assets / (Liabilities) Derivative Instrument			Total Realized			Hedging Reserve in Gross Equity
Hedging with debt as underlying as of June 30, 2020
Hedging Assets		2,605			(2,284	)		4,889
Hedging Liabilities		(59,903	)		(53,019	)		(6,884	)
Underlying Debt Coverage		(57,298	)		(55,303	)		(1,995	)
Underlying Investment Coverage as of June 30, 2020
Hedging Assets		2,873			3,115			(242	)
Hedging Liabilities		(3,228	)		(1,730	)		(1,498	)
Coverage with Underlying Investments		(355	)		1,385			(1,740	)

Expressed in ThUS$	Assets / (Liabilities) Derivative Instrument			Total Realized			Hedging Reserve in Gross Equity
Hedging with debt as underlying as of December 31, 2019
Hedging Assets		3,918			(4,194	)		8,112
Hedging Liabilities		(22,771	)		(25,363	)		2,592
Underlying Debt Coverage		(18,853	)		(29,557	)		10,704
Underlying Investment Coverage as of December 31, 2019
Hedging Assets		17,270			17,857			(587	)
Hedging Liabilities		(889	)		(711	)		(178	)
Coverage with Underlying Investments		16,381			17,146			(765	)

Effect of Coverage in Profit and Equity for the period as of June 30, 2020	Variation Total			Result			Coverage Reserve Due to Variation Gross Coverage
Analysis Effect by Type of Coverage
Underlying Debt Coverage		(38,445	)		(25,746	)		(12,699	)
Coverage with Underlying Investments		(16,736	)		(15,761	)		(975	)
Total hedging effect on profit or loss and equity in the period		(55,181	)		(41,507	)		(13,674	)
Analysis Effect by type of asset
Hedging in Current and Non-Current Assets		(15,710	)		(12,832	)		(2,878	)
Hedging in Current and Non-Current Liabilities		(39,471	)		(28,675	)		(10,796	)
Total Effect of Coverage in Profit or Loss and Shareholders' Equity for the period		(55,181	)		(41,507	)		(13,674	)

84 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

The balances in the “total realized” column consider the intermediate effects of the contracts in force from January 1 to June 30, 2020 and from January 1 to December 31, 2019.

Derivative contract maturities are detailed as follows:

Series	Contract amount		Currency		Maturity date
	ThUS$
H		141,104		UF	01/04/2023
O		58,748		UF	02/01/2022
P		134,228		UF	01/15/2028
Q		106,933		UF	06/01/2030

Effectiveness

The Company uses cross currency swap derivative instruments to hedge the possible financial risk associated with the volatility of the exchange rate associated with Chilean pesos and UF. The objective is to hedge the exchange rate 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 UF. Likewise, hedging contracts are denominated in the same currencies and have the same maturity dates of bond principal and interest payments.

Effectiveness tests have verified that hedges are effective as of the reporting date.

14.4 Financial liabilities

Other current and non-current financial liabilities

As of June 30, 2020, and December 31, 2019, the detail is as follows:

Other current and non-current financial	As of June 30, 2020						As of December 31, 2019
liabilities	Currents		Non-Current		Total		Currents		Non-Current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Liabilities at amortized cost
Bank borrowings		103		69,257		69,360		199		69,138		69,337
Obligations with the public		198,501		1,594,780		1,793,281		280,578		1,403,108		1,683,686
Derivative financial instruments
For hedging		14,024		51,379		65,403		7,183		16,477		23,660
Non-Hedging		3,339		-		3,339		3,168		-		3,168
Total		215,967		1,715,416		1,931,383		291,128		1,488,723		1,779,851

Current and non-current bank borrowings

As of June 30, 2020, and December 31, 2019, the detail is as follows:

Current and non-current bank borrowings	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Current loans		103		69,138
Non-current loans		69,257		199
Short-term borrowings and current portion of long-term borrowings		69,360		69,337

85 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

a)            Bank borrowings, current:

As of June 30, 2020, and December 31, 2019, the detail of this caption is as follows:

Debtor

Creditor

Tax ID No.

Company

Country

Tax ID No.

Financial institution

Country

Currency or adjustment index

Repayment

Repayment

Effective rate

Nominal rate

93.007.000-9

SQM S.A.

Chile

O-E

Scotiabank Cayman

USA

USD

Upon maturity

05/29/2023

1.21

%

3.01

%

Debtor

Creditor

Nominal amounts as of June 30, 2020

Current amounts as of June 30, 2020

Company

Financial institution

Up to 90 days

90 days to 1 year

Total

Up to 90 days

90 days to 1 year

Subtotal

Borrowing costs

Total

ThUS$

ThUS$

ThUS$

ThUS$

ThUS$

ThUS$

ThUS$

ThUS$

SQM S.A.

Scotiabank Cayman

-

-

-

-

103

103

-

103

Total

-

-

-

-

103

103

-

103

Debtor

Creditor

Tax ID No

Company

Country

Tax ID No

Financial institution

Country

Currency or adjustment index

Repayment

maturity

Effective rate

Nominal rate

93.007.000-9

SQM S.A.

Chile

Foreign

Scotiabank Cayman

USA

US$

Upon maturity

05/29/2023

2.11

%

3.01

%

Foreign

Nitratos Naturais do Chile Lim

Brazil

Foreign

Banco ITAU Brasil

Brazil

BRL

Upon maturity

12/31/2019

13.57

%

4.25

%

Debtor	Creditor	Nominal amounts as of December 31, 2019						Current amounts as of December 31, 2019
Company	Financial institution	Up to 90 days		90 days to 1 year		Total		Up to 90 days		90 days to 1 year		Subtotal		Borrowing costs		Total
		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
SQM S.A.	Scotiabank Cayman		-		-		-		-		187		187		-		187
Nitratos Naturais do Chile Lim	Banco ITAU Brasil		-		-		-		12		-		12		-		12
Total			-		-		-		12		187		199		-		199

86 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

b) Unsecured obligations, current:

As of June 30, 2020, and December 31, 2019, the detail of current unsecured interest-bearing obligations is composed of promissory notes and bonds, as follows:

Debtor							Periodicity
Tax ID No.	Company	Country	Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Payment of interest	Repayment	Effective rate		Nominal rate
93.007.000-9	SQM S.A.	Chile	-	MUS$250	07-28-2020	US$	Semiannual	Upon maturity	2.15	%	4.38%
93.007.000-9	SQM S.A.	Chile	-	MUS$300	10-03-2020	US$	Semiannual	Upon maturity	1.25	%	3.63%
93.007.000-9	SQM S.A.	Chile	-	MUS$450	11-07-2020	US$	Semiannual	Upon maturity	3.83	%	4.25%
93.007.000-9	SQM S.A.	Chile	-	MUS$400	07-22-2020	US$	Semiannual	Upon maturity	4.30	%	4.25%
93.007.000-9	SQM S.A.	Chile	564	H (*)	07-05-2020	UF	Semiannual	Semiannual	0.96	%	4.90%
93.007.000-9	SQM S.A.	Chile	699	O (*)	08-01-2020	UF	Semiannual	Upon maturity	2.32	%	3.80%
93.007.000-9	SQM S.A.	Chile	563	P	07-15-2020	UF	Semiannual	Upon maturity	2.54	%	3.25%
93.007.000-9	SQM S.A.	Chile	700	Q	12-01-2020	UF	Semiannual	Upon maturity	3.01	%	3.45%

(*) The maturity of these Bonds is after 1 year, however on June 30, 2020, an early par redemption option was triggered.

			Nominal amounts as of June 30, 2020						Current maturities as of June 30, 2020
			Up to 90 days		90 days to 1 year		Total		Up to 90 days		90 days to 1 year		Subtotal		Borrowing costs			Total
Company	Country	Series	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
SQM S.A.	Chile	MUS$250		4,618		-		4,618		4,618		-		4,618		(433	)		4,185
SQM S.A.	Chile	MUS$300		-		2,628		2,628		-		2,628		2,628		(614	)		2,014
SQM S.A.	Chile	MUS$450		-		2,816		2,816		-		2,816		2,816		(679	)		2,137
SQM S.A.	Chile	MUS$400		7,461		-		7,461		7,461		-		7,461		(237	)		7,224
SQM S.A.	Chile	H		130,057		-		130,057		130,057		-		130,057		(1,323	)		128,734
SQM S.A.	Chile	O		53,231		-		53,231		53,231		-		53,231		(844	)		52,387
SQM S.A.	Chile	P		1,549		-		1,549		1,549		-		1,549		(12	)		1,537
SQM S.A.	Chile	Q		-		289		289		-		289		289		(6	)		283
Total				196,916		5,733		202,649		196,916		5,733		202,649		(4,148	)		198,501

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.

87 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

Debtor							Periodicity
Tax I No.	Company	Country	Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Payment of interest	Repayment	Effective rate			Nominal rate
93.007.000-9	SQM S.A.	Chile	-	MUS$250	04-21-2020	US$	Semiannual	Upon maturity		0.43	%		5.50	%
93.007.000-9	SQM S.A.	Chile	-	MUS$250	01-28-2020	US$	Semiannual	Upon maturity		2.35	%		4.38	%
93.007.000-9	SQM S.A.	Chile	-	MUS$300	04-03-2020	US$	Semiannual	Upon maturity		1.42	%		3.63	%
93.007.000-9	SQM S.A.	Chile	-	MUS$450	05-07-2020	US$	Semiannual	Upon maturity		4.07	%		4.25	%
93.007.000-9	SQM S.A.	Chile	564	H	01-05-2020	UF	Semiannual	Semiannual		1.36	%		4.90	%
93.007.000-9	SQM S.A.	Chile	699	O	02-01-2020	UF	Semiannual	Upon maturity		2.41	%		3.80	%
93.007.000-9	SQM S.A.	Chile	563	P	01-15-2020	UF	Semiannual	Upon maturity		2.71	%		3.25	%
93.007.000-9	SQM S.A.	Chile	700	Q	06-01-2020	UF	Semiannual	Upon maturity		3.11	%		3.45	%

			Nominal amounts as of December 31, 2019						Current maturities as of December 31, 2019
			Up to 90 days		90 days to 1 year		Total		Up to 90 days		90 days to 1 year		Subtotal		Borrowing costs			Total
Company	Country	Series	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
SQM S.A.	Chile	MUS$250		-		252,674		252,674		-		252,674		252,674		(386	)		252,288
SQM S.A.	Chile	MUS$250		4,648		-		4,648		4,648		-		4,648		(433	)		4,215
SQM S.A.	Chile	MUS$300		-		2,658		2,658		-		2,658		2,658		(614	)		2,044
SQM S.A.	Chile	MUS$450		-		2,869		2,869		-		2,869		2,869		(679	)		2,190
SQM S.A.	Chile	H		17,166		-		17,166		17,166		-		17,166		(139	)		17,027
SQM S.A.	Chile	O		890		-		890		890		-		890		(67	)		823
SQM S.A.	Chile	P		1,686		-		1,686		1,686		-		1,686		(12	)		1,674
SQM S.A.	Chile	Q		-		323		323		-		323		323		(6	)		317
Total				24,390		258,524		282,914		24,390		258,524		282,914		(2,336	)		280,578

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.

88 

Notes to the Consolidated Interim Financial Statement
June 30, 2020    

c)             Classes of interest-bearing loans, non-current

The following table shows the details of bank loans as of June 30, 2020 and December 31, 2019:

Debtor

Creditor

Tax ID No.

Company

Country

Tax ID No.

Financial institution

Country

Currency or adjustment index

Type of amortization

Effective rate

Nominal rate

93.007.000-9

SQM S.A.

Chile

Foreign

Scotiabank Cayman

USA

USD

Maturity

2.02

%

1.65

%

Debtor	Creditor	Nominal non-current maturities as of June 30, 2020				Non-current maturities as of June 30, 2020
Company	Financial institution	Between 1 and 2	Between 2 and 3	Between 3 and 4	Total	Between 1 and 2	Between 2 and 3	Between 3 and 4	Subtotal	Costs of obtaining loans		Total
		ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$		ThUS$
SQM S.A.	Scotiabank Cayman	-	-	70,000	70,000	-	-	70,000	70,000	(743	)	69,257
Total		-	-	70,000	70,000	-	-	70,000	70,000	(743	)	69,257

Debtor

Creditor

Tax ID No.

Company

Country

Tax ID No.

Financial institution

Country

Currency or adjustment index

Type of amortization

Effective rate

Nominal rate

93.007.000-9

SQM S.A.

Chile

Foreign

Scotiabank Cayman

USA

USD

Maturity

2.84

%

3.01

%

Debtor	Creditor	Nominal non-current maturities as of December 31, 2019				Non-current maturities as of December 31, 2019
Company	Financial institution	Over 1 year to 2	Over 2 years to 3	Over 3 Years to 4	Over 4 Years to 5	Over 5 years	Total	Over 1 year to 2	Over 2 years to 3	Costs of obtaining loans		Total
		ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$		ThUS$
SQM S.A.	Scotiabank Cayman	-	-	70,000	70,000	-	-	70,000	70,000	(862	)	69,138
Total		-	-	70,000	70,000	-	-	70,000	70,000	(862	)	69,138

89 

Notes to the Consolidated Interim Financial Statement
June 30, 2020    

d)            Non-current unsecured interest-bearing bonds

The following table shows the details of “unsecured debentures that accrue non-current interest” as of June 30, 2020, and December 31, 2019:

Debtor							Periodicity
Tax ID No.	Company	Country	Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Payment of interest	Repayment	Effective rate		Nominal rate
93.007.000-9	SQM S.A.	Chile	-	MUS$250	01-28-2025	US$	Semiannual	Upon maturity	4.08	%	4.38	%
93.007.000-9	SQM S.A.	Chile	-	MUS$300	04-03-2023	US$	Semiannual	Upon maturity	3.43	%	3.63	%
93.007.000-9	SQM S.A.	Chile	-	MUS$450	05-07-2029	US$	Semiannual	Upon maturity	4.18	%	4.25	%
93.007.000-9	SQM S.A.	Chile	-	MUS$400	01-22-2050	US$	Semiannual	Upon maturity	4.22	%	4.25	%
93.007.000-9	SQM S.A.	Chile	563	P	01-15-2028	UF	Semiannual	Upon maturity	3.24	%	3.25	%
93.007.000-9	SQM S.A.	Chile	700	Q	06-01-2038	UF	Semiannual	Upon maturity	3.45	%	3.45	%

	Nominal non-current maturities as of June 30, 2020												Non-current maturities as of June 30, 2020
	Over 1 year to 2		Over 2 years to 3		Over 3 Years to 4		Over 4 Years to 5		Over 5 years		Total		Over 1 year to 2		Over 2 years to 3		Over 3 Years to 4		Over 4 Years to 5		Over 5 years		Subtotal		Bond issuance costs			Total
Series	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
MUS$250		-		-		-		-		250,000		250,000		-		-		-		-		250,000		250,000		(1,553	)		248,447
MUS$300		-		-		300,000		-		-		300,000		-		-		300,000		-		-		300,000		(1,087	)		298,913
MUS$450		-		-		-		-		450,000		450,000		-		-		-		-		450,000		450,000		(5,359	)		444,641
MUS$400		-		-		-		-		400,000		400,000		-		-		-		-		400,000		400,000		(6,700	)		393,300
P		-		-		-		-		104,830		104,830		-		-		-		-		104,830		104,830		(83	)		104,747
Q		-		-		-		-		104,830		104,830		-		-		-		-		104,830		104,830		(98	)		104,732
		-		-		300,000		-		1,309,660		1,609,660		-		-		300,000		-		1,309,660		1,609,660		(14,880	)		1,594,780

90 

Notes to the Consolidated Interim Financial Statement
June 30, 2020    

Debtor							Periodicity
Tax ID No.	Company	Country	Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Payment of interest	Repayment	Effective rate		Nominal rate
93.007.000-9	SQM S.A.	Chile	-	MUS$250	01-28-2025	US$	Semiannual	Upon maturity	4.08	%	4.38	%
93.007.000-9	SQM S.A.	Chile	-	MUS$300	04-03-2023	US$	Semiannual	Upon maturity	3.43	%	3.63	%
93.007.000-9	SQM S.A.	Chile	-	MUS$450	05-07-2029	US$	Semiannual	Upon maturity	4.19	%	4.25	%
93.007.000-9	SQM S.A.	Chile	564	H	01-05-2030	UF	Semiannual	Semiannual	4.78	%	4.90	%
93.007.000-9	SQM S.A.	Chile	699	O	02-01-2033	UF	Semiannual	Upon maturity	3.70	%	5.50	%
93.007.000-9	SQM S.A.	Chile	563	P	01-15-2028	UF	Semiannual	Upon maturity	3.24	%	3.25	%
93.007.000-9	SQM S.A.	Chile	700	Q	06-01-2038	UF	Semiannual	Upon maturity	3.45	%	3.45	%

	Nominal non-current maturities as of December 31, 2019						Non-current maturities as of December 31, 2019
	Over 1 year to 2	Over 2 years to 3	Over 3 Years to 4	Over 4 Years to 5	Over 5 years	Total	Over 1 year to 2	Over 2 years to 3	Over 3 Years to 4	Over 4 Years to 5	Over 5 years	Subtotal	Bond issuance costs		Total
Series	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$		ThUS$
MUS$250	-	-	-	-	250,000	250,000	-	-	-	-	250,000	250,000	(1,514	)	248,486
MUS$300	-	-	300,000	-	-	300,000	-	-	300,000	-	-	300,000	(1,393	)	298,607
MUS$450	-	-	-	-	450,000	450,000	-	-	-	-	450,000	450,000	(5,923	)	444,077
H	13,749	13,749	13,749	13,749	75,621	130,617	13,749	13,749	13,749	13,749	75,621	130,617	(1,253	)	129,364
O	-	-	-	-	56,715	56,715	-	-	-	-	56,715	56,715	(811	)	55,904
P	-	-	-	-	113,430	113,430	-	-	-	-	113,430	113,430	(89	)	113,341
Q	-	-	-	-	113,430	113,430	-	-	-	-	113,430	113,430	(101	)	113,329
Total	13,749	13,749	313,749	13,749	1,059,196	1,414,192	13,749	13,749	313,749	13,749	1,059,196	1,414,192	(11,084	)	1,403,108

91 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

e) Additional information

Bonds

As of June 30, 2020, and, December 31, 2019, the details of each issuance are as follows:

(i) Series “H” bonds

On January 13, 2009, the Company placed the Series H bond for UF 4,000,000 (ThUS$ 139,216) at an annual interest rate of 4.9%, with a term of 21 years and amortizations of principal beginning in 2019.

On July 5, 2019, amortization of principal amounted to UF 181,818.18. (ThUS$ 7,494) with an associated cross currency swap hedge income of ThUS$ 439.

The H Bond is subject to the early redemption option pursuant to the leverage ratio. See Note 21.1

On January 5, 2020, amortization of principal amounted to UF 181,818.18. (ThUS$ 6,787) with an associated cross currency swap hedge income of ThUS$ 707.

As of June 30, 2020, and December 31, 2019, the Company has made the following payments with a charge to the Series H bonds and their associated CCS hedging:

Payments made	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Payments of interest, Series H bonds		3,450		7,868
CCS Coverage		1,275		1,952

(ii) Single series bonds, second issue MUS$ 250

On April 21, 2010, the Company informed the CMF of its placement in international markets of an unsecured bond of ThUS$ 250,000, pursuant to Rule 144 -A and Regulation S of the Securities and Exchange Commission with a maturity of 10 years beginning on the aforementioned date with an annual interest rate of 5.5%.

The Company paid the principal on April 21, 2020.

As of June 30, 2020, and December 31, 2019, the detail of payments charged to the line of single series bonds, second issue is as follows

Payments made	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Interest payment		6,875		13,750

92 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(iii) Series “O” bonds

On April 4, 2012, the Company issued “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%.

The O Bond is subject to the early redemption option pursuant to the leverage ratio. See Note 21.1

As of June 30, 2020, and December 31, 2019, the Company has made the following payments with a charge to Series O bonds and their associated CCS hedging:

Payments made	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Payment of interest, Series O bonds		1,001		2,308
CCS Coverage		340		354

(iv) Single series bonds, third issue MUS$ 300

On April 3, 2013, the Company issued a non-secured bond in the United States with a value of US$ 300 million. pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission. The bond is for a 10-year term with an annual coupon rate of 3.625%.

As of June 30, 2020, and December 31, 2019, the following payments have been made with a debit to the line of single-series bonds, third issue:

Payments made	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Payment of interest		5,438		10,875

93 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(v) Single series bonds, fourth issuance MUS $250

On October 23, 2014, the Company informed the CMF the issuance and placement of unsecured bonds amounting ThUS$ 250,000 in international markets, pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission. These bonds mature in 2025 and have annual interest rate of 4.375%.

For the periods ended on June 30, 2020, and December 31, 2019, the following payments have been made.

Payments made	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Payment of interest		5,469		10,938

(vi) Series “P” bonds

The Company informed the CMF that on March 31, 2018, it was authorized the placement on the stock market of the Series “P” bond with a value of UF 3,000,000, with a charge to the 10 year Bonds Line registered in the CMF Securities Registry under number 563.

The bonds Series P (i) mature on January 15, 2028; (ii) will accrue on the unpaid principal, expressed in UF, at an annual interest rate of 3.25% from January 15, 2018; and (iii) can be early redeemed by the Company starting from the date of placement, that was, as of April 5, 2018.

For the periods ended on June 30, 2020 and December 31, 2019, the following payments and their associated CCS have been made:

Payments made	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Payment of interest series P		1,774		3,960
CCS Coverage		1,732		2,995

94 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(vii) Series Q bonds

On October 31, 2018, the issuance of Series Q bonds (the "Bonds Series Q”) was authorized in the general stock market for the amount of UF 3,000,000, which were registered in the Securities Registry of your Commission on February 14, 2012 under number 700.

The bonds Series Q (i) mature on the first day of June 2038; (ii) will earn an interest rate of 3.45% per annum on the outstanding capital, expressed in Unidades de Fomento, from June 1, 2018 thereon; and (iii) may be early redeemed by the Company starting from the placement date, that was, as of November 8, 2018.

On November 8, 2018, all the Series Q Bonds have been placed and sold to Euroamerica S.A. for a total amount of $ 83,567,623,842, which was paid in full and in cash by Euroamerica S.A. to the Company.

For the years ended June 30, 2020 and December 31, 2019, the following payments have been made:

Payments made	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Payment of interest series Q		1,827		3,791

(viii) Single series fifth issue bonds ThUS$ 450,000

On May 7, 2019 the CMF was informed that the Company issued and placed unsecured bonds for ThUS$ 450,000 pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission on international markets. These bonds will mature in 2029, carry an interest rate of 4.25% per annum.

For the periods ended on June 30, 2020 and December 31, 2019, the following payments:

Payments made	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Payment of interest		9,563		9,563

(ix) Single series sixth issue bonds MUS$ 400

On January 22, 2020, the Company has placed unsecured bonds in international markets for US$ 400 million, pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission, at an annual interest rate of 4.250% and a maturity in the year 2050. As of June 30, 2020, no interest payments have been made.

95 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

14.5 Trade and other payables

a) Details trade and other payables

	As of June 30, 2020						As of December 31, 2019
Details trade and other payables	Current		Non-current		Total		Current		Non-current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Accounts payable		192,935		-		192,935		205,414		-		205,414
Other accounts payable		515		-		515		376		-		376
Prepayments		-		9,777		9,777		-		-		-
Total		193,450		9,777		203,227		205,790		-		205,790

As of June 30, 2020, and December 31, 2019, the balance of current and past due accounts payable is made up as follows:

Suppliers current on all payments

	Amounts according to payment periods as of June 30, 2020
Type of Supplier	Up to 30		31 - 60		61 - 90		91 - 120		121 - 365		366 and more		Total
	Days		days		Days		days		days		days		ThUS$
Goods		94,796		2,311		1,510		324		15,715		9,777		124,433
Services		42,742		519		95		51		122		-		43,529
Others		20,017		708		-		-		257		-		20,982
Total		157,555		3,538		1,605		375		16,094		9,777		188,944

	Amounts according to payment periods as of December 31, 2019
	Up to 30		31 - 60		61 - 90		91 - 120		121 - 365		366 and more		Total
Type of Supplier	Days		days		Days		days		days		days		ThUS$
Goods		126,577		4,655		128		116		2,019		-		133,495
Services		51,785		168		-		-		87		-		52,040
Others		8,741		146		-		-				-		8,887
Total		187,103		4,969		128		116		2,106		-		194,422

Suppliers past due on payments

	Amounts according to payment periods as of June 30, 2020
	Up to 30		31 - 60		61 - 90		91 - 120		121 - 365		366 and more		Total
Type of Supplier	Days		days		Days		days		days		days		ThUS$
Goods		1,436		181		53		220		714		-		2,604
Services		3,300		506		348		787		284		-		5,225
Others		3,258		415		35		508		1,723		-		5,939
Total		7,994		1,102		436		1,515		2,721		-		13,768

	Amounts according to payment periods as of December 31 2019
Type of Supplier	Up to 30		31 - 60		61 - 90		91 - 120		121 - 365		366 and more		Total
	Days		days		Days		days		days		days		ThUS$
Goods		2,086		264		35		65		1,060		-		3,510
Services		3,073		329		116		387		580		-		4,485
Others		1,918		45		311		215		508		-		2,997
Total		7,077		638		462		667		2,148		-		10,992

Purchase commitments held by the Company are recognized as liabilities when the goods and services are received by the Company. As of June 30, 2020, the Company has purchase orders amounting to ThUS$ 68,961 and ThUS$ 101,280 as of December 31, 2019.

96 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

14.6 Financial asset and liability categories

a)            Financial Assets

	As of June 30, 2020						As of December 31, 2019
Description of financial assets	Current		Non-current		Total		Current		Non-current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalent		581,631		-		581,631		588,530		-		588,530
Trade receivables due from related parties at amortized cost		60,100		-		60,100		61,227		-		61,227
Financial assets measured at amortized cost		489,472		639		490,111		485,689		75		485,764
Loans and receivables measured at amortized cost		329,193		5,110		334,303		399,142		1,710		400,852
Total financial assets measured at amortized cost		1,460,396		5,749		1,466,145		1,534,588		1,785		1,536,373
Financial instruments for hedging purposes through equity		2,873		-		2,873		17,270		3,918		21,188
Financial instruments held for trading at through profit or loss		1,234		-		1,234		2,531		-		2,531
Financial assets classified as available for sale at fair value through equity		-		5,601		5,601		-		4,785		4,785
Total financial assets at fair value		4,107		5,601		9,708		19,801		8,703		28,504
Total financial assets		1,464,503		11,350		1,475,853		1,554,389		10,488		1,564,877

97 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

b)            Financial Liabilities

	As of June 30, 2020						As of December 31, 2019
Description of financial liabilities	Current		Non-current		Total		Current		Non-current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
For hedging purposes through equity		14,024		51,379		65,403		7,183		16,477		23,660
Held for trading at fair value through profit or loss		3,339		-		3,339		3,168		-		3,168
Financial liabilities at fair value through profit or loss		17,363		51,379		68,742		10,351		16,477		26,828
Bank loans		103		69,257		69,360		199		69,138		69,337
Obligations to the public		198,501		1,594,780		1,793,281		280,578		1,403,108		1,683,686
Lease Liabilities		6,632		27,261		33,893		7,694		30,203		37,897
Trade and other payables		193,450		9,777		203,227		205,790		-		205,790
Trade payables due to related parties		1,425		-		1,425		475		-		475
Total financial liabilities at amortized cost		400,111		1,701,075		2,101,186		494,736		1,502,449		1,997,185
Total financial liabilities		417,474		1,752,454		2,169,928		505,087		1,518,926		2,024,013

98 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

14.7 Fair value measurement of assets and liabilities

The fair value hierarchy is detailed as follows:

(a) Level 1: using quoted prices (unadjusted) only in active markets.

(b) Level 2: when in any phase in the valuation process inputs other than quoted prices have been used in Level 1 that are observable directly in markets.

(c) Level 3: inputs for the asset or liability that are not based on observable market data.

99 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

	As of June 30, 2020						Measurement Methodology
Fair value measurement of assets and liabilities	Carrying Amount at Amortized Cost		Fair value (informative)		Book Value Fair value		Level 1		Level 2		Level 3
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Financial Assets
Cash and cash equivalents		581,631		581,631		-		-		581,631		-
Other current financial assets
- Time deposits		489,472		489,472		-		-		489,472		-
- Derivative financial instruments
- Forwards		-		-		939		-		939		-
- Options		-		-		295		-		295		-
- Investment hedge swaps		-		-		2,873		-		2,873		-
Non-current accounts receivable		5,110		5,110		-		-		-		-
Other non-current financial assets:
- Other		659		659		-		-		659		-
- Actions		-		-		5,581		5,581		-		-
- Hedging assets – Swaps		-		-		2,605		-		2,605		-
Other current financial liabilities												-
- Bank loans		103		103		-		-		103		-
- Derivative instruments		-		-		-		-		-		-
- Forwards		-		-		2,585		-		2,585		-
- Options		-		-		755		-		755		-
- Hedging liabilities - Swaps		-		-		10,796		-		10,796		-
- Inversions -Swaps		-		-		3,228		-		3,228		-
- Unsecured obligations		198,501		198,501		-		-		198,501		-
- Current lease liabilities		6,632		6,632		-		-		6,632		-
Other non-current financial liabilities
- Bank loans		69,257		71,528		-		-		71,528		-
- Unsecured obligations		1,594,780		2,065,956		-		-		2,065,956		-
- Non-current hedging liabilities		-		-		51,379		-		51,379		-
- Non-current lease liabilities		27,261		27,127		-		-		27,127		-

100 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

	As of December 31, 2019						Measurement methodology
Fair value measurement of assets and liabilities	Carrying Amount at Amortized Cost		Fair value (informative)		Book Value Fair value		Level 1		Level 2		Level 3
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Financial Assets
Cash and cash equivalents		588,530		588,530		-		-		588,530		-
Other current financial assets:
- Time deposits		485,689		485,689		-		-		485,689		-
-Derivative financial instruments		-		-		-		-		-		-
- Forwards		-				2,420		-		2,420		-
- Options		-		-		111		-		111		-
- Investment hedge swaps		-		-		17,270		-		17,270		-
Non-current accounts receivable		1,710		1,710		-		-		-		-
Other non-current financial assets
- Other		94		94		-		-		94		-
- Actions		-		-		4,785		4,785		-		-
- Hedging assets – Swaps		-		-		3,918		-		3,918		-
Other current financial liabilities
- Bank loans		199		199		-		-		199		-
-Derivative instruments		-		-		-		-		-		-
- Forwards		-		-		2,837		-		2,837		-
- Options		-		-		289		-		289		-
- Hedging liabilities – Swaps		-		-		7,183		-		7,183		-
- Unsecured obligations		280,578		280,578		-		-		280,578		-
-Current lease liabilities		7,694		7,694		-		-		7,694		-
Other non-current financial liabilities:
- Bank loans		69,138		71,033		-		-		71,033		-
- Unsecured obligations		1,403,108		1,658,506		-		-		1,658,506		-
- Non-current hedging liabilities		-		-		16,477		-		16,477		-
- Non-current lease liabilities		30,203		33,187		-		-		33,187		-

101 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

14.8 Estimated fair value of financial instruments

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

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

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

Estimate of fair value for the record

Financial assets and liabilities measured at fair value consist of forwards hedging the mismatch in the balance sheet and cash flows, options hedging the mismatch in the balance sheet and cross currency swaps to hedge bonds issued in local currency (Peso/UF).

The value of the Company’s assets and liabilities recognized by cross currency swaps contracts is calculated as the difference between the present value of discounted cash flows of the asset (Ch/UF) and liability (US$) parts of the derivative. In the case of the interest rate swaps, the asset value recognized is calculated as the difference between the discounted cash flows of the asset (variable rate) and liability (fixed rate) parts of the derivative. Forwards are calculated as the difference between the strike price of the contract and the spot price plus the forwards points at the date of the contract. Financial options: the value recognized is calculated using the Black-Scholes method.

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

The effects on profit or loss of movements in these amounts is recognized in the caption finance costs, foreign currency translation gain (loss) or cash flow hedges in the statement of comprehensive income, depending on each particular case.

Estimate of fair value for reporting purposes

· Cash equivalent approximates fair value due to the short-term maturities of these instruments.

· The fair value of trade receivables, current is considered to be equal to the carrying amount due to the maturity of such accounts at short-term.

· Payables, current lease liabilities and other current financial liabilities are considered fair value equal to book value due to the short-term maturity of these accounts.

· The fair value of the debt (long-term secured and unsecured debentures; bonds denominated in local currency (Chilean peso/UF) and foreign currency (US dollar), loans denominated in foreign currency (US dollar) and lease liabilities of the Company are calculated at current value of cash flows subtracted from market rates upon valuation, considering the terms of maturity and exchange rates. The UF and Chilean peso rate curves are used as inputs for the valuation model. This information is obtained through from the renowned financial software company, Bloomberg, and the Chilean Association of Banks and Financial Institutions.

102 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Nota 15    Right-of-use assets and Lease liabilities

15.1 Right-of-use assets

Reconciliation of changes in right-of-use assets as of June  30, 2020, net value	Land		Buildings			Other property, plant and equipment		Transport equipment			Supplies and accessories		Office equipment		Network and communication equipment		Mining assets		IT equipment		Energy generating assets		Constructions in progress		Machinery, plant and equipment			Buildings, plant and equipment
	ThUS$		ThUS$			ThUS$		ThUS$			ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
Opening Balance		-		25,742			-		3,356			-		-		-		-		-		-		-		8,066			37,164
Additions		-		-			-		-			-		-		-		-		-		-		-		5			5
Depreciation expenses		-		(1,775	)		-		(438	)		-		-		-		-		-		-		-		(1,871	)		(4,084	)
Other increases / decreases		-		-			-		-			-		-		-		-		-		-		-		(53	)		(53	)
Total changes		-		(1,775	)		-		(438	)		-		-		-		-		-		-		-		(1,919	))		(4,132	)
Closing balance		-		23,967			-		2,918			-		-		-		-		-		-		-		6,147			33,032

Reconciliation of changes in right-of-use assets as of June  30, 2020, net value	Land		Buildings			Other property, plant and equipment		Transport equipment			Supplies and accessories		Office equipment		Network and communication equipment		Mining assets		IT equipment		Energy generating assets		Constructions in progress		Machinery, plant and equipment			Buildings, plant and equipment
	ThUS$		ThUS$			ThUS$		ThUS$			ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
Opening Balance		-		-			-		-			-		-		-		-		-		-		-		-			-
Initial recognition of IFRS 16		-		29,289			-		3,893			-		-		-		-		-		-		-		11,933			45,115
Balance recognized in IFRS 16		-		29,289			-		3,893			-		-		-		-		-		-		-		11,933			45,115
Depreciation expenses		-		(3,547	)		-		(537	)		-		-		-		-		-		-		-		(3,867	)		(7,951	)
Total changes		-		(3,547	)		-		(537	)		-		-		-		-		-		-		-		(3,867	)		(7,951	)
Closing balance		-		25,742			-		3,356			-		-		-		-		-		-		-		8,066			37,164

The Company’s lease activities included the following aspects:

(a) The nature of the Company’s lease activities is related to contracts focused primarily on business operations, notably rights-of-use to equipment and real estate,

(b) The Company does not estimate any significant future cash outflows that would potentially expose the Company, and these are likewise not reflected in the measurement of lease liabilities, related to concepts such as: (i) Variable lease payments, (ii) Expansion options and termination options, (iii) Guaranteed residual value and (iv) Leases not yet undertaken but committed by the Company.

(c) These are not subject to restrictions or agreements imposed by contracts.

There were no sales transactions with leases later in the period.

103 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

15.2 Lease liabilities

	As of June 30, 2020				As of December 31, 2019
Lease liabilities	Current		Non-Current		Current		Non-Current
	ThUS$		ThUS$		ThUS$		ThUS$
Lease liabilities		6,632		27,261		7,694		30,203
Total		6,632		27,261		7,694		30,203

+

ii)            Current and non-current lease liabilities

(d) As of June 30, 2020 and December 31, 2019, the current lease liabilities is as follow:

Debtor			Creditor			Contract	Type of
Tax ID No.	Company	Country	TAX ID No.	Supplier	Country	indexation unit	amortization	Maturity date	Effective rate
79.626.800-K	SQM Salar S.A.	Chile	83.776.000-3	Empresa Constructora Contex Ltda	Chile	UF	Monthly	03-31-2021		0	%
79.626.800-K	SQM Salar S.A.	Chile	76.146.110-9	Transportes, Construcción y Servicios Cribach Ltda	Chile	Peso	Monthly	09-01-2020		8.93	%
79.626.800-K	SQM Salar S.A.	Chile	76.065.017-K	SKM Industrial Ltda.	Chile	Peso	Monthly	06-01-2022		8.93	%
79.626.800-K	SQM Salar S.A.	Chile	96.862.140-8	Ameco Chile S.A.	Chile	Peso	Monthly	04-24-2021		4.07	%
79.947.100-0	SQM Industrial S.A.	Chile	96.856.400-5	El Trovador S.A.	Chile	UF	Monthly	02-08-2030		3.10	%
79.947.100-0	SQM Industrial S.A.	Chile	76.976.580-8	Sociedad Comercial Grandleasing Chile Ltda	Chile	UF	Monthly	08-26-2024		2.72	%
79.768.170-9	Soquimich Comercial S.A.	Chile	76.729.932-K	SAAM Logistics S.A.	Chile	UF	Monthly	08-01-2020		6.18	%
79.768.170-9	Soquimich Comercial S.A.	Chile	91.577.000-2	Muelles de Penco S.A.	Chile	UF	Monthly	07-06-2020		6.18	%
79.768.170-9	Soquimich Comercial S.A.	Chile	91.577.000-2	Muelles de Penco S.A.	Chile	UF	Monthly	07-06-2020		6.18	%
79.768.170-9	Soquimich Comercial S.A.	Chile	76.722.280-7	Inmobiliaria Chincui SPA	Chile	UF	Monthly	05-01-2028		3.38	%
79.768.170-9	Soquimich Comercial S.A.	Chile	96.565.580-8	Compañía de Leasing Tattersall S.A.	Chile	UF	Monthly	05-24-2021		6.18	%
Foreign	SQM North America Corp.	USA	Foreign	Paces West LL.	USA	Dollar	Monthly	12-31-2027		3.36	%
Foreign	SQM North America Corp.	USA	Foreign	Hawkins Nunmber One, LLC	USA	Dollar	Monthly	08-31-2024		3.33	%
Foreign	SQM Comercial de México S.A. de C.V.	Mexico	Foreign	Onni Ensenada S.A. de C.V.	Mexico	Dollar	Monthly	12-03-2026		3.45	%
Foreign	SQM Comercial de México S.A. de C.V.	Mexico	Foreign	Madol Inmobiliaria S.A. de C.V.	Mexico	Mexican Peso	Monthly	10-31-2023		7.84	%
Foreign	SQM Comercial de México S.A. de C.V.	Mexico	Foreign	Madol Inmobiliaria S.A. de C.V.	Mexico	Mexican Peso	Monthly	10-31-2023		7.84	%
Foreign	SQM Europe N.V.	Belgium	Foreign	Straatsburgdok N.V.	Belgium	Euro	Monthly	03-31-2027		1.30	%
Foreign	SQM Australia PTY	Australia	Foreign	The trust Company (Australia) Pty Ltd	Australia	Australian dollar	Monthly	01-31-2021		3.60	%

104 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Debtor	Creditor	Nominal amounts as of June 30,2020						Amounts at amortized cost as of June 30, 2020
Company	Supplier	Up to 90 days		90 days to 1 year		Total		Up to 90 days		90 days to 1 year		Total
		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
SQM Salar S.A.	Empresa Constructora Contex Ltda		536		1,071		1,607		536		1,071		1,607
SQM Salar S.A.	Transportes, Construcción y Servicios Cribach Ltda		49		-		49		49		-		49
SQM Salar S.A.	SKM Industrial Ltda.		202		607		809		173		542		715
SQM Salar S.A.	Ameco Chile S.A.		135		270		405		131		266		397
SQM Industrial S.A.	El Trovador S.A.		466		1,399		1,865		348		1,060		1,408
SQM Industrial S.A.	Sociedad Comercial Grandleasing Chile Ltda		180		540		720		162		491		653
Soquimich Comercial S.A.	SAAM Logistics S.A.		35		-		35		35		-		35
Soquimich Comercial S.A.	Muelles de Penco S.A.		15		-		15		15		-		15
Soquimich Comercial S.A.	Muelles de Penco S.A.		16		-		16		16		-		16
Soquimich Comercial S.A.	Inmobiliaria Chincui SPA		157		471		628		121		370		491
Soquimich Comercial S.A.	Compañía de Leasing Tattersall S.A.		55		128		183		52		125		177
SQM North America Corp.	Paces West LL.		53		160		213		40		123		163
SQM North America Corp.	Hawkins Nunmber One, LLC		31		94		125		27		83		110
SQM Comercial de México S.A. de C.V.	Onni Ensenada S.A. de C.V.		99		296		395		79		243		322
SQM Comercial de México S.A. de C.V.	Madol Inmobiliaria S.A. de C.V.		20		59		79		15		48		63
SQM Comercial de México S.A. de C.V.	Madol Inmobiliaria S.A. de C.V.		7		21		28		5		17		22
SQM Europe N.V.	Straatsburgdok N.V.		91		281		372		82		256		338
SQM Australia PTY	The trust Company (Australia) Pty Ltd		11		40		51		11		40		51
Total			2,158		5,437		7,595		1,897		5,735		6,632

105 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Debtor	Creditor	Nominal amounts as of December 31,2019			Amounts at amortized cost as of December 31, 2019
Company	Supplier	Up to 90 days	90 days to 1 year	Total	Up to 90 days	90 days to 1 year	Total
		ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$
SQM Salar S.A.	Empresa Constructora Contex Ltda	554	1,662	2,216	506	1,578	2,084
SQM Salar S.A.	Transportes, Construcción y Servicios Cribach Ltda	74	124	198	71	121	192
SQM Salar S.A.	SKM Industrial Ltda.	202	607	809	166	519	685
SQM Salar S.A.	Ameco Chile S.A.	135	404	539	129	394	523
SQM Industrial S.A.	El Trovador S.A.	466	1,399	1,865	343	1,044	1,387
SQM Industrial S.A.	Sociedad Comercial Grandleasing Chile Ltda	180	540	720	159	485	644
Soquimich Comercial S.A.	SAAM Logistics S.A.	106	142	248	103	140	243
Soquimich Comercial S.A.	Muelles de Penco S.A.	45	60	105	44	59	103
Soquimich Comercial S.A.	Muelles de Penco S.A.	48	64	112	47	64	111
Soquimich Comercial S.A.	Inmobiliaria Chincui SPA	157	471	628	119	363	482
Soquimich Comercial S.A.	Compañía de Leasing Tattersall S.A.	55	164	219	51	157	208
SQM North America Corp.	Paces West LL.	49	156	205	34	116	150
SQM North America Corp.	Hawkins Nunmber One, LLC	31	93	124	26	81	107
SQM Comercial de México S.A. de C.V.	Onni Ensenada S.A. de C.V.	99	296	395	78	238	316
SQM Comercial de México S.A. de C.V.	Madol Inmobiliaria S.A. de C.V.	20	59	79	15	46	61
SQM Comercial de México S.A. de C.V.	Madol Inmobiliaria S.A. de C.V.	7	21	28	5	16	21
SQM Europe N.V.	Straatsburgdok N.V.	91	273	364	82	247	329
SQM Australia PTY	The trust Company (Australia) Pty Ltd	16	32	48	16	32	48
Total		2,335	6,567	8,902	1,994	5,700	7,694

106 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

As of June 30, 2020 and December 31, 2019, the Non-current lease liabilities is as follow:

Debtor	Creditor	Nominal amounts as of June 30,2020								Amounts at amortized cost as of June 30, 2020
Company	Supplier	1-2 Years		2-3 Years		3-4 Years		Total		1-2 Years		2-3 Years		3-4 Years		Total
		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
SQM Salar S.A.	Empresa Constructora Contex Ltda	-		-		-		-		-		-		-		-
SQM Salar S.A.	Transportes, Construcción y Servicios Cribach Ltda	-		-		-		-		-		-		-		-
SQM Salar S.A.	SKM Industrial Ltda.		742		-		-		742		712		-		-		712
SQM Salar S.A.	Ameco Chile S.A.		-		-		-		-		-		-		-		-
SQM Industrial S.A.	El Trovador S.A.		3,730		5,594		6,838		16,162		2,948		4,774		6,461		14,183
SQM Industrial S.A.	Sociedad Comercial Grandleasing Chile Ltda		1,441		781		-		2,222		1,360		768		-		2,128
Soquimich Comercial S.A.	SAAM Logistics S.A.		-		-		-		-		-		-		-		-
Soquimich Comercial S.A.	Muelles de Penco S.A.		-		-		-		-		-		-		-		-
Soquimich Comercial S.A.	Muelles de Penco S.A.		-		-		-		-		-		-		-		-
Soquimich Comercial S.A.	Inmobiliaria Chincui SPA		1,255		1,883		1,203		4,341		1,030		1,679		1,163		3,872
Soquimich Comercial S.A.	Compañía de Leasing Tattersall S.A.		-		-		-		-		-		-		-		-
SQM North America Corp.	Paces West LL.		445		719		385		1,549		364		647		375		1,386
SQM North America Corp.	Hawkins Nunmber One, LLC		260		157		-		417		241		154		-		395
SQM Comercial de México S.A. de C.V.	Onni Ensenada S.A. de C.V.		789		1,184		164		2,137		677		1,107		163		1,947
SQM Comercial de México S.A. de C.V.	Madol Inmobiliaria S.A. de C.V.		157		26		-		183		141		26		-		167
SQM Comercial de México S.A. de C.V.	Madol Inmobiliaria S.A. de C.V.		57		9		-		66		51		9		-		60
SQM Europe N.V.	Straatsburgdok N.V.		816		1,317		338		2,471		763		1,278		336		2,377
SQM Australia PTY	The trust Company (Australia) Pty Ltd		34		-		-		34		34		-		-		34
Total			9,726		11,670		8,928		30,324		8,321		10,442		8,498		27,261

107 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Debtor	Creditor	Nominal amounts as of December 31,2019								Amounts at amortized cost as of December 31, 2019
Company	Supplier	1-2 Years		2-3 Years		3-4 Years		Total		1-2 Years		2-3 Years		3-4 Years		Total
		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
SQM Salar S.A.	Empresa Constructora Contex Ltda		554		-		-		554		547		-		-		547
SQM Salar S.A.	Transportes, Construcción y Servicios Cribach Ltda		-		-		-		-		-		-		-		-
SQM Salar S.A.	SKM Industrial Ltda.		1,147		-		-		1,147		1,077		-		-		1,077
SQM Salar S.A.	Ameco Chile S.A.		135		-		-		135		134		-		-		134
SQM Industrial S.A.	El Trovador S.A.		3,730		5,594		7,373		16,697		2,903		4,701		7,287		14,891
SQM Industrial S.A.	Sociedad Comercial Grandleasing Chile Ltda		1,441		1,141		-		2,582		1,342		1,115		-		2,457
Soquimich Comercial S.A.	SAAM Logistics S.A.		-		-		-		-		-		-		-		-
Soquimich Comercial S.A.	Muelles de Penco S.A.		-		-		-		-		-		-		-		-
Soquimich Comercial S.A.	Muelles de Penco S.A.		-		-		-		-		-		-		-		-
Soquimich Comercial S.A.	Inmobiliaria Chincui SPA		1,255		1,883		1,464		4,602		1,013		1,651		1,455		4,119
Soquimich Comercial S.A.	Compañía de Leasing Tattersall S.A.		73		-		-		73		72		-		-		72
SQM North America Corp.	Paces West LL.		439		709		508		1,656		351		627		492		1,470
SQM North America Corp.	Hawkins Nunmber One, LLC		257		224		-		481		234		217		-		451
SQM Comercial de México S.A. de C.V.	Onni Ensenada S.A. de C.V.		789		1,184		362		2,335		665		1,088		356		2,109
SQM Comercial de México S.A. de C.V.	Madol Inmobiliaria S.A. de C.V.		157		65		-		222		135		63		-		198
SQM Comercial de México S.A. de C.V.	Madol Inmobiliaria S.A. de C.V.		57		24		-		81		49		23		-		72
SQM Europe N.V.	Straatsburgdok N.V.		801		1,295		564		2,660		744		1,248		559		2,551
SQM Australia PTY	The trust Company (Australia) Pty Ltd		55		-		-		55		55		-		-		55
Total			10,890		12,119		10,271		33,280		9,321		10,733		10,149		30,203

108 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Other lease disclosures

Total lease expenses related to lease payments under one year, leases of low-value assets and variable payments were ThUS$ 29,661 and ThUS$ 20,716 for the periods ended June 30, 2020 and 2019. See Note 27.8.

Income from subleases on right-of-use assets were ThUS$ 106 and ThUS$ 141 as of June 30, 2020 and 2019, respectively.

Payments for contractual operating leases are disclosed in Note 5.2 Liquidity Risk.

109 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Note 16 Intangible assets and goodwill

16.1 Balances

Balances	As of June 30, 2020		As of December 31, 2019
		ThUS$		ThUS$
Intangible assets other than goodwill		187,025		188,358
Goodwill		34,596		34,726
Total		221,621		223,084

16.2 Disclosures on intangible assets and goodwill

Balances and movements in the main classes of intangible assets as of June 30, 2020 and December 31, 2019 are detailed as follows:

				As of June 30, 2020
Intangible assets and goodwill	Useful life	Gross Value		Accumulated amortization			Accumulated impairment			Net Value
		ThUS$		ThUS$			ThUS$			ThUS$
IT programs	Finite		34,692		(29,376	)		-			5,316
Intellectual property rights, patents and other industrial property rights, service.	Finite		1,267		(1,149	)		(7	)		111
Mining claims, water rights and rights of way.	Indefinite		182,324		-			(2,644	)		179,680
Mining claims	Finite		1,500		(265	)		-			1,235
Customer-related intangible assets	Finite		1,778		(655	)		(523	)		600
Other intangible assets	Finite		979		(896	)		-			83
Intangible assets other than goodwill			222,540		(32,341	)		(3,174	)		187,025
Goodwill	Indefinite		38,130		-			(3,534	)		34,596
Total Intangible Assets			260,670		(32,341	)		(6,708	)		221,621

		As of December 31, 2019
Intangible assets and goodwill	Useful life	Gross Value		Accumulated amortization			Accumulated impairment			Net value
		ThUS$		ThUS$			ThUS$			ThUS$
IT programs	Finite		34,471		(28,460	)		-			6,011
Intellectual property rights, patents and other industrial property rights, service.	Finite		1,259		(1,131	)		(7	)		121
Mining property, water rights and rights of way	Indefinite		182,260		-			(2,642	)		179,618
Mining property	Finite		1,500		(206	)		-			1,294
Customer-related intangible assets	Finite		1,778		(505	)		-			1,273
Other intangible assets.	Finite		929		(888	)		-			41
Intangible assets other than goodwill			222,197		(31,190	)		(2,649	)		188,358
Goodwill	Indefinite		38,120		-			(3,394	)		34,726
Total Intangible Assets			260,317		(31,190	)		(6,043	)		223,084

110 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

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

Finite useful life measures the length of, or number of production or similar units constituting that useful life.

The estimated useful life for software which they are amortized corresponds to the periods defined by the contracts or rights from which they originate.

Intellectual property rights, patents and other industrial property, service and exploitation rights, mainly relate to water rights and have a finite useful life to the extent to which they are subject to a fixed-term contract or otherwise they are considered to be indefinite.

The company owns mining claims granted by Corfo, which correspond to assets subject to restitution. For this reason they are considered assets with a finite useful life and their useful life is assigned until the year 2030 when the contract ends.

b) Method used to assess identifiable intangible assets with indefinite useful life

The recoverable value of the cash-generating unit has been determined based on a calculation of value-in-use using cash flow projections for a period of 5 years, plus perpetuity annually on December 31.

The current value of future cash flows generated by these assets has been estimated given the variation in sales volumes, market prices and costs, discounted at a weighted average cost of capital (WACC) rate of 9.16% as of June 30, 2020.

This group of intangible assets includes water rights acquired in Chile, and mining concessions held by the company in Chile and Australia, and these rights are recorded at acquisition cost.

111 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

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

Estimated useful life or amortization rate	Minimum Life or Rate	Maximum Life or Rate
Mining property, water rights and rights of way	Indefinite	Indefinite
Mining claims	1 year	11 years
Intellectual property rights, patents and other industrial property rights, service	1 year	16 years
Commercial trademarks	1 year	5 years
IT programs	2 years	6 years

The following table shows the movements in goodwill as of June 30, 2020:

Company	Gross Value Balances as of January 1, 2020		Additional recognition		Accumulated impairment losses			Net Value As of June 30, 2020
	ThUS$		ThUS$		ThUS$			ThUS$
SQM Industrial S.A.	-		-		-			-
SQM S.A.		22,255		-		-			22,255
SQM Iberian S.A.		148		-		-			148
SQM Investment Corporation		86		-		-			86
Soquimich Comercial S.A.		140		-		(140	)		-
Soquimich European Holding		11,373		10		-			11,383
SQM Potasio S.A.		724		-		-			724
Total		34,726		10		(140	)		34,596

d) Information to be disclosed on assets generated internally

The Company has no intangible assets generated internally.

Impairment of goodwill and intangible value

As of June 30, 2020, and December 31, 2019, impairment of intangible assets was recognized at ThUS$ 523 and ThUS$ 913, respectively and impairment of goodwill at ThUS$ 140 and ThUS$ 140, respectively.

112 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

e) Movements in identifiable intangible assets as of June 30, 2020:

Gross Value Movements in identifiable intangible assets	IT programs			Intellectual property rights, patents and other industrial property rights, service, Finite		Mining claims property, water rights, and rights of way, Indefinite			Mining claims Finite		Customer-related intangible assets		Other intangible assets		Goodwill		Identifiable intangible assets
	ThUS$			ThUS$		ThUS$			ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
Opening Balance		34,471			1,259		182,260			1,500		1,778		929		38,120		260,317
Additions		173			8		66			-		-		39		-		286
Other increases / decreases for foreign currency exchange rates		(8	)		-		(2	)		-		-		-		-		(10	)
Decreases through sale		-			-		-			-		-		-		-		-
Other increases (decreases)		56			-		-			-		-		11		10		77
Total increases (decreases)		221			8		64			-		-		50		10		353
Closing balance		34,692			1,267		182,324			1,500		1,778		979		38,130		260,670

Accumulated amortization and impairment Movements in identifiable intangible assets	IT programs			Intellectual property rights, patents and other industrial property rights, service, Finite			Mining claims property, water rights, and rights of way, Indefinite			Mining claims Finite			Customer-related intangible assets			Other intangible assets			Goodwill			Identifiable intangible assets
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Opening Balance		(28,460	)		(1,138	)		(2,642	)		(206	)		(505	)		(888	)		(3,394	)		(37,233	)
Other increases / decreases for foreign currency exchange rates		-			-			-			-			-			-			-			-
Other increases (decreases)		-			-			-			-			-			-			-			-
Impairment losses recognized in profit or loss for the year		-			-			-			-			(523	)					(140	)		(663	)
Amortization		(916	)		(18	)		(2	)		(59	)		(150	)		(8	)		-			(1,153	)
Total increases (decreases)		(916	)		(18	)		(2	)		(59	)		(673	)		(8	)		(140	)		(1,816	)
Closing balance		(29,376	)		(1,156	)		(2,644	)		(265	)		(1,178	)		(896	)		(3,534	)		(39,049	)

113 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Net value Movements in Identifiable intangible assets	IT programs			Intellectual property rights, patents and other industrial property rights, service, Finite			Mining claims property, water rights, and rights of way, Indefinite			Mining claims Finite			Customer-related intangible assets			Other intangible assets			Goodwill			Identifiable intangible assets
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$				ThUS$
Opening Balance		6,011			121			179,618			1,294			1,273			41			34,726			223,084
Additions		173			8			66						-			39			-			286
Amortization		(916	)		(18	)		(2	)		(59	)		(150	)		(8	)		-			(1,153	)
Impairment losses recognized in profit or loss for the year		-			-			-			-			(523	)		-			(140	)		(663	)
Other increases / decreases for foreign currency exchange rates		(8	)		-			(2	)		-			-			-			-			(10	)
Decreases through sale		-			-			-			-			-			-			-			-
Other increases (decreases)		56			-			-						-			11			10			77
Total increases (decreases)		(695	)		(10	)		62			(59	)		(673	)		42			(130	)		(1,463	)
Closing balance		5,316			111			179,680			1,235			600			83			34,596			221,621

Movements in identifiable intangible assets as of December 31, 2019:

Gross Value Movements in identifiable intangible assets	IT programs			Intellectual property rights, patents and other industrial property rights, service, Finite		Mining property, water rights, and rights of way,  Indefinite			Mining property finite		Customer-related intangible assets		Other intangible assets		Goodwill		Identifiable intangible assets
	ThUS$			ThUS$		ThUS$			ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
Opening Balance		29,137			1,254		183,349			1,500		1,778		911		38,120		256,049
Additions		2,606			5		227			-		-		18		-		2,856
Other increases / decreases of foreign currency		(7	)		-		(2	)		-		-		-		-		(9	)
Decreases through sale		-			-		(1,314	)		-		-		-		-		(1,314	)
Other increases (decreases)		2,735			-		-			-		-		-		-		2,735
Total increases (decreases)		5,334			5		(1,089	)		-		-		18		-		4,268
Closing balance		34,471			1,259		182,260			1,500		1,778		929		38,120		260,317

114 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Accumulated amortization and impairment Movements in identifiable intangible assets	IT programs			Intellectual property rights, patents and other industrial property rights, service, Finite			Mining property, water rights, and rights of way, Indefinite			Mining property finite			Customer-related intangible assets			Other intangible assets			Goodwill			Identifiable intangible assets
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$				ThUS$
Opening Balance		(24,569	)		(1,103	)		(1,729	)		(88	)		(205	)		(885	)		(3,254	)		(31,833	)
Other increases / decreases of foreign currency		3			-			-			-			-			-			-			3
Other increases (decreases)		(256	)		-			-			-			-			-			-			(256	)
Impairment losses recognized in profit or loss for the year		-			-			(913	)		-			-			-			(140	)		(1,053	)
Amortization		(3,638	)		(35	)		-			(118	)		(300	)		(3	)		-			(4,094	)
Total increases (decreases)		(3,891	)		(35	)		(913	)		(118	)		(300	)		(3	)		(140	)		(5,400	)
Closing balance		(28,460	)		(1,138	)		(2,642	)		(206	)		(505	)		(888	)		(3,394	)		(37,233	)

Net value Movements in Identifiable intangible assets	IT programs			Intellectual property rights, patents and other industrial property rights, service, Finite			Mining property, water rights, and rights of way,  Indefinite			Mining property finite			Customer-related intangible assets			Other intangible assets			Goodwill			Identifiable intangible assets
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$				ThUS$
Opening Balance		4,568			151			181,620			1,412			1,573			26			34,866			224,216
Additions		2,606			5			227			-			-			18			-			2,856
Amortization		(3,638	)		(35	)		-			(118	)		(300	)		(3	)		-			(4,094	)
Impairment losses recognized in profit or loss for the year		-			-			(913	)		-			-			-			(140	)		(1,053	)
Other increases / decreases of foreign currency		(4	)		-			(2	)		-			-			-			-			(6	)
Decreases through sale		-			-			(1,314	)		-			-			-			-			(1,314	)
Other increases (decreases)		2,479			-			-			-			-			-			-			2,479
Total increases (decreases)		1,443			(30	)		(2,002	)		(118	)		(300	)		15			(140	)		(1,132	)
Closing balance		6,011			121			179,618			1,294			1,273			41			34,726			223,084

115 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

f) Movements in identifiable goodwill as of June 30, 2020:

Gross Value Movements in identifiable goodwill	Goodwill at the start of the period January 01, 2020		Additional recognition		Recognition subsequent to deferred tax assets (-)		Decreases for classification as held for sale (-)		Goodwill write-off without having been included previously in disposal groups classified as held for sale (-)		Impairment losses recognized in profit or loss for the year (-)		Increase (decrease) for net exchange differences		Increase (decrease) due to other changes		Total increase (decrease)		Goodwill at end of period
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
SQM Industrial S.A.		3,214		-		-		-		-		-		-		-		-		3,214
SQM S.A.		22,255		-		-		-		-		-		-		-		-		22,255
SQM Iberian S.A.		148		-		-		-		-		-		-		-		-		148
SQM Investment Corporation		86		-		-		-		-		-		-		-		-		86
Soquimich Comercial S.A.		320		-		-		-		-		-		-		-		-		320
Soquimich European Holding B.V.		11,373		10		-		-		-		-		-		-		10		11,383
SQM Potasio S.A.		724		-		-		-		-		-		-		-		-		724
Total increases (decreases)		38,120		10		-		-		-		-		-		-		10		38,130
Closing balance		38,120		10		-		-		-		-		-		-		10		38,130

Accumulated impairment Movements in identifiable goodwill	Goodwill at the start of the period January 01, 2020			Additional recognition		Recognition subsequent to deferred tax assets (-)		Decreases for classification as held for sale (-)		Goodwill write-off without having been included previously in disposal groups classified as held for sale (-)		Impairment losses recognized in profit or loss for the year (-)			Increase (decrease) for net exchange differences		Increase (decrease) due to other changes		Total increase (decrease)			Goodwill at end of period
	ThUS$			ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$
SQM Industrial S.A.		(3,214	)		-		-		-		-		-			-		-		-			(3,214	)
SQM S.A.		-			-		-		-		-		-			-		-		-			-
SQM Iberian S.A.		-			-		-		-		-		-			-		-		-			-
SQM Investment Corporation		-			-		-		-		-		-			-		-		-			-
Soquimich Comercial S.A.		(180	)		-		-		-		-		(140	)		-		-		(140	)		(320	)
Soquimich European Holding B.V.		-			-		-		-		-		-			-		-		-			-
SQM Potasio S.A.		-			-		-		-		-		-			-		-		-			-
Total increases (decreases)		(3,394	)		-		-		-		-		(140	)		-		-		(140	)		(3,534	)
Closing balance		(3,394	)		-		-		-		-		(140	)		-		-		(140	)		(3,534	)

116 

Notes to the Consolidated Interim Financial Statement June 30, 2020

Net Value Movements in identifiable goodwill	Goodwill at the start of the period January 01, 2020		Additional recognition		Recognition subsequent to deferred tax assets (-)		Decreases for classification as held for sale (-)		Goodwill write-off without having been included previously in disposal groups classified as held for sale (-)		Impairment losses recognized in profit or loss for the year (-)			Increase (decrease) for net exchange differences		Increase (decrease) due to other changes		Total increase (decrease)			Goodwill at end of period
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$
SQM Industrial S.A.	-		-		-		-		-		-			-		-		-			-
SQM S.A.		22,255		-		-		-		-		-			-		-		-			22,255
SQM Iberian S.A.		148		-		-		-		-		-			-		-		-			148
SQM Investment Corporation		86		-		-		-		-		-			-		-		-			86
Soquimich Comercial S.A.		140		-		-		-		-		(140	)		-		-		(140	)		-
Soquimich European Holding B.V.		11,373		10		-		-		-		-			-		-		10			11,383
SQM Potasio S.A.		724		-		-		-		-		-			-		-		-			724
Total increases (decreases)		34,726		10		-		-		-		(140	)		-		-		(130	)		34,596
Closing balance		34,726		10		-		-		-		(140	)		-		-		(130	)		34,596

g) Movements in identifiable goodwill as of December 31, 2019

Gross Value Movements in identifiable goodwill	Goodwill at the start of the period January 01, 2019		Additional recognition		Recognition subsequent to deferred tax assets (-)		Decreases for classification as held for sale (-)		Goodwill write-off without having been included previously in disposal groups classified as held for sale (-)		Impairment losses recognized in profit or loss for the year (-)		Increase (decrease) for net exchange differences		Increase (decrease) due to other changes		Total increase (decrease)		Goodwill at end of period
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
SQM Industrial S.A.		3,214		-		-		-		-		-		-		-		-		3,214
SQM S.A.		22,255		-		-		-		-		-		-		-		-		22,255
SQM Iberian S.A.		148		-		-		-		-		-		-		-		-		148
SQM Investment Corporation		86		-		-		-		-		-		-		-		-		86
Soquimich Comercial S.A.		320		-		-		-		-		-		-		-		-		320
Soquimich European Holding B.V.		11,373		-		-		-		-		-		-		-		-		11,373
SQM Potasio S.A.		724		-		-		-		-		-		-		-		-		724
Total increases (decreases)		38,120		-		-		-		-		-		-		-		-		38,120
Closing balance		38,120		-		-		-		-		-		-		-		-		38,120

117 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Accumulated impairment Movements in identifiable goodwill	Goodwill at the start of the period January 01, 2019			Additional recognition		Recognition subsequent to deferred tax assets (-)		Decreases for classification as held for sale (-)		Goodwill write-off without having been included previously in disposal groups classified as held for sale (-)		Impairment losses recognized in profit or loss for the year (-)			Increase (decrease) for net exchange differences		Increase (decrease) due to other changes		Total increase (decrease)			Goodwill at end of period
	ThUS$			ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$
SQM Industrial S.A.		(3,214	)		-		-		-		-		-			-		-		-			(3,214	)
SQM S.A.		-			-		-		-		-		-			-		-		-			-
SQM Iberian S.A.		-			-		-		-		-		-			-		-		-			-
SQM Investment Corporation		-			-		-		-		-		-			-		-		-			-
Soquimich Comercial S.A.		(40	)		-		-		-		-		(140	)		-		-		(140	)		(180	)
Soquimich European Holding B.V.		-			-		-		-		-		-			-		-		-			-
SQM Potasio S.A.		-			-		-		-		-		-			-		-		-			-
Total increases (decreases)		(3,254	)		-		-		-		-		(140	)		-		-		(140	)		(3,394	)
Closing balance		(3,254	)		-		-		-		-		(140	)		-		-		(140	)		(3,394	)

Net Value Movements in identifiable goodwill	Goodwill at the start of the period January 01, 2019		Additional recognition		Recognition subsequent to deferred tax assets (-)		Decreases for classification as held for sale (-)		Goodwill write-off without having been included previously in disposal groups classified as held for sale (-)		Impairment losses recognized in profit or loss for the year (-)			Increase (decrease) for net exchange differences		Increase (decrease) due to other changes		Total increase (decrease)			Goodwill at end of period
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$
SQM Industrial S.A.	-		-		-		-		-		-			-		-		-			-
SQM S.A.		22,255		-		-		-		-		-			-		-		-			22,255
SQM Iberian S.A.		148		-		-		-		-		-			-		-		-			148
SQM Investment Corporation		86		-		-		-		-		-			-		-		-			86
Soquimich Comercial S.A.		280		-		-		-		-		(140	)		-		-		(140	)		140
Soquimich European Holding B.V.		11,373		-		-		-		-		-			-		-		-			11,373
SQM Potasio S.A.		724		-		-		-		-		-			-		-		-			724
Total increases (decreases)		34,866		-		-		-		-		(140	)		-		-		(140	)		34,726
Closing balance		34,866		-		-		-		-		(140	)		-		-		(140	)		34,726

118 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Note 17 Property, plant and equipment

As of June 30, 2020, and December 31, 2019, the detail of property, plant and equipment is as follows:

17.1 Types of property, plant and equipment

Description of types of property, plant and equipment	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
Property, plant and equipment, net
Land		23,544			23,620
Buildings		223,178			227,227
Other property, plant and equipment		30,437			32,604
Transport equipment		2,395			2,686
Supplies and accessories		4,292			4,579
Office equipment		365			420
Network and communication equipment		763			663
Mining assets		19,006			23,174
IT equipment		4,035			4,359
Energy generating assets		5,306			5,998
Constructions in progress		492,210			375,316
Machinery, plant and equipment		824,120			869,260
Total		1,629,651			1,569,906
Property, plant and equipment, gross
Land		23,544			23,620
Buildings		675,822			666,027
Other property, plant and equipment		250,461			257,206
Transport equipment		12,176			12,143
Supplies and accessories		25,697			25,531
Office equipment		11,446			11,441
Network and communication equipment		8,243			8,009
Mining assets		161,619			161,619
IT equipment		28,979			28,693
Energy generating assets		38,495			38,495
Constructions in progress		491,403			375,316
Machinery, plant and equipment		3,167,943			3,142,502
Total		4,895,828			4,750,602
Accumulated depreciation and value impairment of property, plant and equipment, total
Accumulated depreciation and impairment of buildings		(452,644	)		(438,800	)
Accumulated depreciation and impairment of other property, plant and equipment		(220,024	)		(224,602	)
Accumulated depreciation and impairment of transport equipment		(9,781	)		(9,457	)
Accumulated depreciation and impairment of supplies and accessories		(21,405	)		(20,952	)
Accumulated depreciation and impairment of office equipment		(11,081	)		(11,021	)
Accumulated depreciation and impairment of network and communication equipment		(7,480	)		(7,346	)
Accumulated depreciation and impairment of mining assets		(142,613	)		(138,445	)
Accumulated depreciation and impairment of IT equipment		(24,944	)		(24,334	)
Accumulated depreciation and impairment of energy generating assets		(33,189	)		(32,497	)
Accumulated depreciation and impairment of machinery, plant and equipment		(2,343,823	)		(2,273,242	)
Total		(3,266,984	)		(3,180,696	)

119 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Description of classes of property, plant and equipment	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Property, plant and equipment, net
Pumps		29,133		32,525
Conveyor Belt		20,139		21,911
Crystallizer		22,572		24,102
Plant Equipment		160,268		170,263
Tanks		13,935		14,159
Filter		25,355		27,080
Electrical equipment/facilities		87,420		92,090
Other Property, Plant & Equipment		43,731		53,396
Site Closure		11,601		12,056
Piping		89,768		96,402
Well		228,251		238,670
Pond		46,027		41,319
Spare Parts		45,920		45,287
Total		824,120		869,260

120 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

17.2 Conciliation of changes in property, plant and equipment by type:

Conciliation of changes in property, plant and equipment by class as of June 30, 2020 and December 31, 2019:

Conciliation of changes in property, plant and equipment by class as of June 30, 2020, gross amount	Land			Buildings			Other property, plant and equipment			Transport equipment			Supplies and accessories			Equipment office			Network and communication equipment		Mining assets		IT equipment			Energy generating assets		Assets under construction			Machinery, plant and equipment			Property, plant and equipment
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$		ThUS$			ThUS$		ThUS$			ThUS$			ThUS$
Opening balance		23,620			666,027			257,206			12,143			25,531			11,441			8,009		161,619		28,693			38,495		375,316			3,142,502			4,750,602
Additions		-			838			213			-			77			7			183		-		222			-		155,020			372			156,932
Disposals		-			-			(7,958	)		-			(1	)		-			-		-		-			-		-			(152	)		(8,111	)
Increase (decrease) in foreign currency translation difference		(40	)		(79	)		(4	)		(2	)		(8	)		(2	)		-		-		(6	)		-		-			(85	)		(226	)
Reclassifications		-			7,397			1,126			35			98			-			51		-		64			-		(32,292	)		23,521			-
Other increases (decreases)		-			1,639			(122	)		-			-			-			-		-		6			-		(5,834	)		1,785			(2,526	)
Decreases for classification as held for sale		(36	)		-			-			-			-			-			-		-		-			-		-			-			(36	)
Total changes		(76	)		9,795			(6,745	)		33			166			5			234		-		286			-		116,894			25,441			146,033
Closing balance		23,544			675,822			250,461			12,176			25,697			11,446			8,243		161,619		28,979			38,495		492,210			3,167,943			4,896,635

Conciliation of changes in property, plant and equipment by class as of June 30, 2020, accumulated depreciation	Land		Buildings			Other property, plant and equipment			Transport equipment			Supplies and accessories			Equipment office			Network and communication equipment			Mining assets			IT equipment			Energy generating assets			Assets under construction		Machinery, plant and equipment			Property, plant and equipment
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$			ThUS$
Opening balance		-		(438,800	)		(224,602	)		(9,457	)		(20,952	)		(11,021	)		(7,346	)		(138,445	)		(24,334	)		(32,497	)		-		(2,273,242	)		(3,180,696	)
Changes
Disposals		-		-			7,958			-			1			-			-			-			-			-			-		148			8,107
Depreciation expense		-		(13,878	)		(3,482	)		(326	)		(461	)		(61	)		(134	)		(4,168	)		(618	)		(692	)		-		(70,573	)		(94,393	)
Impairment		-		-			-			-			-			-			-			-			-			-			-		-			-
Increase (decrease) in foreign currency translation difference		-		33			4			2			7			1			-			-			5			-			-		46			98
Reclassifications		-		-			-			-			-			-			-			-			-			-			-		-			-
Other increases (decreases) (1)		-		1			98			-			-			-			-			-			3			-			-		(202	)		(100	)
Decreases for classification as held for sale		-		-			-			-			-			-			-			-			-			-			-		-			-
Total changes		-		(13,844	)		4,578			(324	)		(453	)		(60	)		(134	)		(4,168	)		(610	)		(692	)		-		(70,581	)		(86,288	)
Closing balance		-		(452,644	)		(220,024	)		(9,781	)		(21,405	)		(11,081	)		(7,480	)		(142,613	)		(24,944	)		(33,189	)		-		(2,343,823	)		(3,266,984	)

121 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Conciliation of changes in property, plant and equipment by class as of June 30, 2020, net amount	Land			Buildings			Other property, plant and equipment			Transport equipment			Supplies and accessories			Equipment office			Network and communication equipment			Mining assets			IT equipment			Energy generating assets			Assets under construction			Machinery, plant and equipment			Property, plant and equipment
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Opening balance		23,620			227,227			32,604			2,686			4,579			420			663			23,174			4,359			5,998			375,316			869,260			1,569,906
Additions		-			838			213			-			77			7			183			-			222			-			155,020			372			156,932
Disposals		-			-			-			-			-			-			-			-			-			-			-			(4	)		(4	)
Depreciation expense		-			(13,878	)		(3,482	)		(326	)		(461	)		(61	)		(134	)		(4,168	)		(618	)		(692	)		-			(70,573	)		(94,393	)
Deterioration		-			-			-			-			-			-			-			-			-			-			-			-			-
Increase (decrease) in foreign currency translation difference		(40	)		(46	)		-			-			(1	)		(1	)		-			-			(1	)		-			-			(39	)		(128	)
Reclassifications		-			7,397			1,126			35			98			-			51			-			64			-			(32,292	)		23,521			-
Other increases (decreases) (1)		-			1,640			(24	)		-			-			-			-			-			9			-			(5,834	)		1,583			(2,626	)
Decreases for classification as held for sale (2)		(36	)		-			-			-			-			-			-			-			-			-			-			-			(36	)
Total changes		(76	)		(4,049	)		(2,167	)		(291	)		(287	)		(55	)		100			(4,168	)		(324	)		(692	)		116,894			(45,140	)		59,745
Closing balance		23,544			223,178			30,437			2,395			4,292			365			763			19,006			4,035			5,306			492,210			824,120			1,629,651

(1) The net balance of “Other Increases (Decreases)” corresponds to all those items that are reclassified to or from “Property, Plant and Equipment”, They can have the following origin: (i) work in progress which is expensed to profit or loss, forming part of operating costs or other expenses per function, as appropriate; (ii) the variation representing the purchase and use of materials and spare parts; (iii) projects corresponding mainly to exploration expenditures and ground studies that are reclassified to the item other non-current financial assets; (iv) software that is reclassified to “Intangibles”.

(2) The Company classifies as non-current held for sale property, plant and equipment (disposal group) that, at the closing date of the financial statements, is subject to a commitment for sale or where the sales process has been initiated and where the sale is expected to occur within twelve months of that date, is classified by the Company as non-current assets held for sale.

These assets or disposal groups are valued at the lower of carrying amount or the estimated sales value less the costs to sell and stop being amortized from the moment they are classified as non-current assets held for sale.

122 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Conciliation of changes in property, plant and equipment by class as of December 31, 2019, gross amount	Land			Buildings			Other property, plant and equipment			Transport equipment			Supplies and accessories			Equipment office			Network and communication equipment		Mining assets		IT equipment			Energy generating assets		Assets under construction			Machinery, plant and equipment			Property, plant and equipment
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$$			ThUS$			ThUS$		ThUS$		ThUS$			ThUS$		ThUS$			ThUS$			ThUS$
Opening balance		24,695			648,719			245,731			11,668			24,456			11,377			7,505		132,309		29,955			36,930		207,830			3,068,862			4,450,037
Additions		-			290			332			-			37			43			159		-		492			-		314,236			6,077			321,666
Disposals		-			-			(858	)		-			-			-			-		-		(3	)		-		-			(17	)		(878	)
Increase (decrease) in foreign currency translation difference		(35	)		(72	)		(4	)		(2	)		(9	)		(3	)		-		-		(6	)		-		-			(72	)		(203	)
Reclassifications		132			18,526			12,456			477			745			-			89		16,901		1,289			1,565		(140,104	)		88,088			164
Other increases (decreases)		-			-			(451	)		-			302			24			256		12,409		(3,034	)		-		(6,646	)		(20,436	)		(17,576	)
Decreases for classification as held for sale		(1,172	)		(1,436	)		-			-			-			-			-		-		-			-		-			-			(2,608	)
Total changes		(1,075	)		17,308			11,475			475			1,075			64			504		29,310		(1,262	)		1,565		167,486			73,640			300,565
Closing balance		23,620			666,027			257,206			12,143			25,531			11,441			8,009		161,619		28,693			38,495		375,316			3,142,502			4,750,602

Conciliation of changes in property, plant and equipment by class as of December 31, 2019, accumulated depreciation	Land		Buildings			Other property, plant and equipment			Transport equipment			Supplies and accessories			Equipment office			Network and communication equipment			Mining assets			IT equipment			Energy generating assets			Assets under construction		Machinery, plant and equipment			Property, plant and equipment
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$			ThUS$
Opening balance		-		(409,911	)		(217,556	)		(8,776	)		(19,734	)		(10,864	)		(6,813	)		(120,808	)		(24,975	)		(30,813	)		-		(2,144,964	)		(2,995,214	)
Changes
Disposals		-		-			858			-			-			-			-			-			1			-			-		-			859
Depreciation expense		-		(29,000	)		(8,013	)		(683	)		(1,144	)		(161	)		(426	)		(7,033	)		(1,158	)		(1,676	)		-		(138,999	)		(188,293	)
Impairment		-		(49	)		-			-			-			-			-			-			-			-			-		-			(49	)
Increase (decrease) in foreign currency translation difference		-		28			3			1			7			1			-			-			5			-			-		34			79
Reclassifications		-		7			(6	)		1			6			-			1			-			(5	)		-			-		(207	)		(203	)
Other increases (decreases) (*)		-		(155	)		112			-			(87	)		3			(108	)		(10,604	)		1,798			(8	)		-		10,894			1,845
Decreases for classification as held for sale		-		280			-			-			-			-			-			-			-			-			-		-			280
Total changes		-		(28,889	)		(7,046	)		(681	)		(1,218	)		(157	)		(533	)		(17,637	)		641			(1,684	)		-		(128,278	)		(185,482	)
Closing balance		-		(438,800	)		(224,602	)		(9,457	)		(20,952	)		(11,021	)		(7,346	)		(138,445	)		(24,334	)		(32,497	)		-		(2,273,242	)		(3,180,696	)

123 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Conciliation of changes in property, plant and equipment by class as of December 31, 2019, net amount	Land			Buildings			Other property, plant and equipment			Transport equipment			Supplies and accessories			Equipment office			Network and communication equipment			Mining assets			IT equipment			Energy generating assets			Assets under construction			Machinery, plant and equipment			Property, plant and equipment
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Opening balance		24,695			238,808			28,175			2,892			4,722			513			692			11,501			4,980			6,117			207,830			923,898			1,454,823
Additions		-			290			332			-			37			43			159			-			492			-			314,236			6,077			321,666
Disposals		-			-			-			-			-			-			-			-			(2	)		-			-			(17	)		(19	)
Depreciation expense		-			(29,000	)		(8,013	)		(683	)		(1,144	)		(161	)		(426	)		(7,033	)		(1,158	)		(1,676	)		-			(138,999	)		(188,293	)
Impairment		-			(49	)		-			-			-			-			-			-			-			-			-			-			(49	)
Increase (decrease) in foreign currency translation difference		(35	)		(44	)		(1	)		(1	)		(2	)		(2	)		-			-			(1	)		-			-			(38	)		(124	)
Reclassifications		132			18,533			12,450			478			751			-			90			16,901			1,284			1,565			(140,104	)		87,881			(39	)
Other increases (decreases) (1)		-			(155	)		(339	)		-			215			27			148			1,805			(1,236	)		(8	)		(6,646	)		(9,542	)		(15,731	)
Decreases for classification as held for sale (2)		(1,172	)		(1,156	)		-			-			-			-			-			-			-			-			-			-			(2,328	)
Total changes		(1,075	)		(11,581	)		4,429			(206	)		(143	)		(93	)		(29	)		11,673			(621	)		(119	)		167,486			(54,638	)		115,083
Closing balance		23,620			227,227			32,604			2,686			4,579			420			663			23,174			4,359			5,998			375,316			869,260			1,569,906

(1) The net balance of “Other increases (Decreases)” corresponds to all those items that are reclassified to or from property, plant and equipment, They can have the following origin: (i) work in progress which is expensed to profit or loss, forming part of operating costs or other expenses per function, as appropriate;, (ii) the variation representing the purchase and use of materials and spare parts; (iii) projects corresponding mainly to exploration expenditures and ground studies that are reclassified to the item other non-current financial assets; (iv) assets for retirement obligations and (v) software that is reclassified to Intangibles.

(2) The Company classifies as non-current held for sale property, plant and equipment (disposal group) that, at the closing date of the financial statements, is subject to a commitment for sale or where the sales process has been initiated and where the sale is expected to occur within twelve months of that date, is classified by the Company as non-current assets held for sale.

These assets or disposal groups are valued at the lower of carrying amount or the estimated sales value less the costs to sell and stop being amortized from the moment they are classified as non-current assets held for sale.

124 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

17.3     Detail of property, plant and equipment pledged as guarantee

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

17.4     Impairment of assets

As indicated in Note 3.16 to the financial statements, the recoverable amount of property, plant and equipment is measured provided that there is an indication that the asset could be impaired. There were no impairment effects for the period ended June 30, 2020 and 2019.

17.5     Additional Information

As of June 30, 2020, interests were activated in the constructions underway as presented in Note 28.

125 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Note 18   Other current and non-current non-financial assets

As of June 30, 2020 and December 31, 2019, the detail of “Other Current and Non-current Assets” is as follows:

Other non-financial assets, current	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Domestic Value Added Tax		15,578		17,807
Foreign Value Added Tax		5,039		8,566
Prepaid mining licenses		4,188		1,244
Prepaid insurance		4,994		7,135
Other prepayments		1,190		1,423
Refund of Value Added Tax to exporters		3,344		10,560
Other taxes		2,660		3,213
Other assets		470		604
Total		37,463		50,552

Other non-financial assets, non-current	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Stain development expenses and prospecting expenses (1)		18,105		18,654
Guarantee deposits		614		551
Other assets		460		524
Total		19,179		19,729

(1) Conciliation 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 June 30, 2020, and December 31, 2019:

Conciliation	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
Opening balance		18,654			26,189
Change in assets for exploration and evaluation of mineral resources
Additions		-			-
Reclassifications		(225	)		(1,311	)
Increase (decrease) due to transfers and other charges		(324	)		(6,224	)
Total changes		(549	)		(7,535	)
Total		18,105			18,654

As of the presentation date, no reevaluations of assets for exploration and assessment of mineral resources have been conducted.

126 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Note 19   Employee benefits

19.1 Provisions for employee benefits

Classes of benefits and expenses by employee	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Current
Profit sharing and bonuses		8,518		-
Performance bonds and operational targets		5,816		16,387
Total		14,334		16,387
Non-current
Profit sharing and bonuses		-		8,026
Severance indemnity payments		27,623		27,814
Total		27,623		35,840

19.2     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 and other types of leave, profit sharing and incentives and non-monetary benefits; e.g., healthcare service, housing, subsidized or free goods or services. These will be paid in a term which does not exceed twelve months.

The Company maintains incentive programs for its employees based on their personal performance, the Company’s performance and other short-term and long-term indicators.

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 each employee’s appraisal process.

Employee benefits include retention bonuses for the Company’s executives, which are linked to the Company’s share price and are paid in cash.

Staff severance indemnities are agreed and payable based on the final salary, calculated in accordance with each year of service to the Company, with certain maximum limits in respect of either the number of years or in monetary terms. In general, this benefit is payable when the employee or worker ceases to provide his/her services to the Company and there are a number of different circumstances through which a person can be eligible for it, as indicated in the respective agreements; e.g. retirement, dismissal, voluntary retirement, incapacity or disability, death, etc.

Law No. 19,728 published on May 14, 2001 which became effective on October 1, 2002 required Compulsory Unemployment Insurance in favor of all dependent employees regulated by the Chilean Labor Code, Article 5 of this law established that this insurance is paid through monthly contribution payments by both the employee and the employer.

127 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

19.3 Other long-term benefits

The other long-term benefits relate to staff severance indemnities and are recorded at their actuarial value, and an executive compensation plan (see Note 19.6).

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

Under this benefit plan, the Company retains the obligation to pay staff severance indemnities related to retirement, without establishing a separate fund with specific assets, which is referred to as not funded. The discount interest rate of expected flows to be used was 3.67%.

(a) Benefit payment conditions

The staff severance indemnity benefit relates to remuneration days for years worked for the Company without a limit being imposed in regard of amount of salary or years of service. It applies when employees cease to work for the Company because they are made redundant or in the event of their death. This benefit is applicable up to a maximum age of 65 for men and 60 for women, which are the usual retirement ages according to the Chilean pensions system as established in Decree Law 3,500 of 1980.

(b) Methodology

The Company’s benefits obligation under IAS 19, Projected Benefit Obligation (PBO) is determined as follows:

To determine the Company's total liability, we used computer software to develop a mathematical simulation model using the data for each individual employee.

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. This information on each person was simulated from the beginning of his/her employment contract or when he/she started earning benefits up to the month in which he/she reaches 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 a retirement indemnity.

The methodology followed to determine the accrual for all the employees covered by agreements took account of the turnover rates and the mortality rate RV-2014 established by the CMF 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”.

19.4 Post-employment benefit obligations

Our subsidiary SQM NA, together with its employees established a pension plan until 2002 called the “SQM North America Retirement Income Plan”. This obligation is calculated measuring the expected future forecast staff severance indemnity obligation using a net salary gradual rate of restatements for inflation, mortality and turnover assumptions, discounting the resulting amounts at present value using the interest rate defined by the authorities.

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

128 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

19.5 Staff severance indemnities

As of June 30, 2020, and December 31, 2019, severance indemnities calculated at the actuarial value are as follows:

Staff severance indemnities	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
Opening balance		(27,814	)		(28,233	)
Current cost of Service		(1,891	)		(2,880	)
Interest cost		(643	)		(1,661	)
Actuarial gain/loss		164			(2,514	)
Exchange rate difference		2,273			2,475
Benefits paid during the year		288			4,999
Total		(27,623	)		(27,814	)

(a) Actuarial assumptions

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

Actuarial assumptions	As of June 31, 2020			As of December 31, 2019			Annual/Years
Mortality rate	RV - 2014			RV - 2014
Actual annual interest rate		3.67	%		3.68	%
Voluntary retirement rate:
Men		6.49	%		6.49	%		Annual
Women		6.49	%		6.49	%		Annual
Salary increase		3.00	%		3.00	%		Annual
Retirement age:
Men		65			65			Years
Women		60			60			Years

(b) Sensitivity analysis of assumptions

As of June 30, 2020, and December 31, 2019, the Company has conducted a sensitivity analysis of the main assumptions of the actuarial calculation, determining the following:

	Effect + 100 basis points			Effect - 100 basis points
Sensitivity analysis as of June 30, 2020	ThUS$			ThUS$
Discount rate		(1,669	)		1,878
Employee turnover rate		(219	)		245

	Effect + 100 basis points			Effect - 100 basis points
Sensitivity analysis as of December 31, 2019	ThUS$			ThUS$
Discount rate		(1,796	)		2,021
Employee turnover rate		(236	)		263

Sensitivity relates to an increase/decrease of 100 basis points.

129 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

19.6 Executive compensation plan

The Company currently has a compensation plan with the purpose of motivating the Company’s executives and encouraging them to remain with the Company, by granting payments based on the change in the price of SQM’s shares. There is a partial payment of the share benefit program in the event of termination of the contract for causes other than the resignation and application of Article 160 of the Labor Code.

(a) Plan characteristics

This compensation plan is related to the Company’s performance through the SQM Series B share price (Santiago Stock Exchange).

(b) Plan participants

A total of 29 Company executives are entitled to this plan, provided that they continue to work for the Company through to the end of 2020. The payment dates, if applicable, will be during the first quarter of 2021.

(c) Compensation

The compensation payable to each executive is calculated by multiplying:

a) The average price of Series B shares on the Santiago Stock Exchange during the fourth quarter of 2020, at its equivalent amount in dollars (with a maximum amount or limit amount of US$ 54 per share), multiplied

b) By a number equal to the quantity of shares that have been individually assigned to each executive included in the plan.

This compensation plan was approved by the Company’s Board of Directors and its application started on January 1, 2017.

As of June 30, 2020, the effect of the plan considers 379,965 shares reflected as a cost of ThUS$ 1,623 in the results for the period ending June 30, 2020. As of December 31, 2019, the effect of the plan was 427,652 shares, equal to ThUS$ 806 recognized as a provision reflected against profit or loss for 2019.

Executed shares during 2020 were 47,687.

130 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 20 Provisions and other non-financial liabilities

20.1 Types of provisions

	As of June 30, 2020						As of December 31, 2019
Types of provisions	Current		Non-current		Total		Current		Non-current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Provision for legal complaints (1)		8,483		1,229		9,712		13,472		1,452		14,924
Provision for dismantling, restoration and rehabilitation cost (2)		-		33,653		33,653		-		33,238		33,238
Other provisions (3)		77,109		-		77,109		97,093		-		97,093
Total		85,592		34,882		120,474		110,565		34,690		145,255

(1) These provisions correspond to legal processes that are pending resolution or that have not yet been disbursed, these provisions are mainly related to litigation involving the subsidiaries located in Chile, Brazil and the United States (see note 23.1).

(2) The commitments related to Sernageomin have been incorporated through the issuance of the guarantee for the restoration of the place where the production sites are located.

(3) See Note 20.2

131 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

20.2 Description of other provisions

Current provisions, other short-term provisions	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Rent under Lease contract		74,198		90,320
Provision for additional tax related to foreign loans		734		543
End of agreement bonus		1,291		3,641
Directors’ per diem allowance		458		1,802
Miscellaneous provisions		428		787
Total		77,109		97,093

(1) Payment Obligations for the lease contract with CORFO: These correspond to obligations assumed in the Lease Agreement. Our subsidiary SQM Salar holds exclusive rights to exploit the mineral resources in an area covering approximately 140,000 hectares of land in the Salar de Atacama in northern Chile, of which SQM Salar is only entitled to exploit the mineral resources in 81,920 hectares. These rights are owned by Corfo and leased to SQM Salar pursuant to the Lease Agreement. Corfo cannot unilaterally amend the Lease Agreement and the Project Agreement, and the rights to exploit the resources cannot be transferred. The Lease Agreement establishes that SQM Salar is responsible for making quarterly lease payments to Corfo according to specified percentages of the value of production of minerals extracted from the Salar de Atacama brines, maintaining Corfo’s rights over the Mining Exploitation Concessions and making annual payments to the Chilean government for such concession rights. The Lease Agreement was entered into in 1993 and expires on December 31, 2030. On January 17, 2018, SQM and CORFO reached an agreement to end an arbitration process directed by the arbitrator, Mr. Héctor Humeres Noguer, in case 1954-2014 of the Arbitration and Mediation Center of Santiago Chamber of Commerce (Centro de Arbitrajes y Mediación de la Cámara de Comercio de Santiago) and other cases related to it.

The agreement signed in January 2018, includes important amendments to the lease agreement and project agreement signed between CORFO and SQM in 1993. The main modifications became effective on April 10, 2018 and requires an increase in the lease payments by increasing the lease rates associated with the sale of the different products produced in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride.

SQM Salar commits to contribute to research and development efforts, as well as to the communities in close proximity to the Salar de Atacama and provide a percentage of total annual sales of SQM Salar to regional development.

132 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

20.3 Other non-financial liabilities, Current

Description of other liabilities	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Tax withholdings		2,487		3,345
VAT payable		1,342		3,465
Guarantees received		2,641		2,641
Accrual for dividend		51,345		68,890
Monthly tax provisional payments		5,186		16,659
Deferred income		6,224		3,033
Withholdings from employees and salaries payable		4,302		4,575
Accrued vacations		20,822		21,686
Other current liabilities		2,995		2,605
Total		97,344		126,899

(1) Vacation benefit (short-term benefits to employees, current) is in line with the provisions established in Chile’s Labor Code, which indicates that employees with more than a year of service will be entitled to annual vacation for a period of at least fifteen paid business days. The Company provides the benefit of two additional vacation days.

133 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

20.4 Changes in provisions

Description of items that gave rise to variations  as of June 30, 2020	Legal complaints			Provision for dismantling, restoration and rehabilitation cost		Others provisions			Total
	ThUS$			ThUS$		ThUS$			ThUS$
Total provisions, initial balance		14,924			33,238		97,093			145,255
Changes
Additional provisions		-			415		44,018			44,433
Provision used		(5,186	)		-		(64,002	)		(69,188	)
Increase(decrease) in foreign currency exchange		(26	)		-		-			(26	)
Others		-			-		-			-
Total Increase (decreases)		(5,212	)		415		(19,984	)		(24,781	)
Total		9,712			33,653		77,109			120,474

Description of items that gave rise to variations as of December 31, 2019	Legal complaints			Provision for dismantling, restoration and rehabilitation cost		Others provisions			Total
	ThUS$			ThUS$		ThUS$			ThUS$
Total provisions, initial balance		14,862			28,822		94,335			138,019
Changes
Additional provisions		4,111			4,416		150,314			158,841
Provision used		(4,049	)		-		(147,532	)		(151,581	)
Increase(decrease) in foreign currency exchange		-			-		(24	)		(24	)
Others		-			-		-			-
Total Increase (decreases)		62			4,416		2,758			7,236
Total		14,924			33,238		97,093			145,255

134 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Note 21 Disclosures on equity

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

21.1 Capital management

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

Capital management must comply with, among others, the limits contemplated in the Financing Policy approved by the Shareholders’ Meeting, which establish a maximum consolidated indebtedness level of 1.5 times the debt to equity ratio. This limit can be exceeded only if the Company’s management has first obtained express approval at an Extraordinary Shareholders’ Meeting.

In addition, capital management should consider that with respect to Series H and Series O Bonds, if the Indebtedness Level (as this term is defined in the respective issuance contracts) exceeds 1.2 times (provided that this does not exceed 1.44 times), the Company must offer bondholders of these series the voluntary and individual option for early redemption of these bonds at par value. The Indebtedness ratio for the first quarter of 2020 reached a proportion of 1.24 and the aforementioned early redemption option will be issued for bondholders. The exercise of this option will be subject to its communication by bondholders to the Bondholder Representative in the terms and the form pre-established in the documents of the respective emissions.

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

Capital Management	As of June 30, 2020			As of December 31, 2019			Description (1)	Calculation (1)
Net Financial Debt (ThUS$)		887,461			719,809		Financial Debt – Financial Resources	Other current Financial Liabilities + Other Non-Current Financial Liabilities + Current lease liabilities – Cash and Cash Equivalents – Other Current Financial Assets – Hedging Assets, non-current
Liquidity		4.28			3.45		Current Assets divided by Current Liabilities	Total Current Assets / Total Current Liabilities
Net Debt / Capitalization		0.30			0.25		Net Financial Debt divided by Total Equity	Net financial debt / Total Equity
ROE		10.67	%		13.154	%	Profit for the year divided by Total Equity	LTM(2) Profit for the year / Equity
Adjusted EBITDA (ThUS$)		286,481			645,142		Adjusted EBITDA	Profit for the year + Depreciation and Amortization Expenses + Finance Costs + Income Tax – Other income and Share of profit of associates and joint ventures + Other expenses – Finance income – Currency differences
EBITDA (ThUS$)		286,919			669,831		EBITDA	Profit for the year + Depreciation and Amortization Expenses + Finance Costs + Income Tax
ROA		11.071	%		12.76	%	Adjusted EBITDA – Depreciation divided by Total Assets net of financial resources less related parties’ investments	(LTM Gross Profit – Administrative Expenses)/ (Total Assets – Cash and Cash Equivalents – Other Current Financial Assets – Other Non-Current Financial Assets – Equity-accounted Investments)
Indebtedness		1.24			1.19		Total Liabilities on Equity	Total Liabilities / Total Equity

(1) Assumes the absolute value of the accounting records with the exception of exchange differences.

135 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

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

There have been no changes in the capital management objectives or policy within the years reported in this document, no breaches of external requirements of capital imposed have been recorded. There are no contractual capital investment commitments.

21.2 Disclosures on preferred share capital

Issued share capital is divided into 142,819,552 Series “A” shares and 120,376,972 Series “B” shares. All such shares are nominative, have no par value and are fully issued, subscribed and paid.

Series B shares may not exceed 50% of the total issued, subscribed and paid-in shares of the Company and have a limited voting right, in that all of them can only elect one director of the Company, regardless of their equity interest and preferences:

(a) require the calling of an Ordinary or Extraordinary Shareholders' Meeting when so requested by Series B shareholders representing at least 5% of the issued shares thereof; and

(b) require the calling of an extraordinary meeting of the board of directors, without the president being able to qualify the need for such a request, when so requested by the director who has been elected by the shareholders of said Series B.

The limitation and preferences of Series B shares have a duration of 50 consecutive and continuous years as of June 3, 1993.

The Series A shares have the preference of being able to exclude the director elected by the Series B shareholders in the voting process in which the president of the board of directors and of the Company must be elected and which follows the one in which the tie that allows such exclusion resulted.

The preference of the Series A shares will have a term of 50 consecutive and continuous years as of June 3, 1993. The form of the titles of the shares, their issuance, exchange, disablement, loss, replacement, assignment and other circumstances thereof shall be governed by the provisions of Law No, 18,046 and its regulations.

At June 30, 2020 and December 31, 2019, the Group does not hold shares of the Parent Company either directly or through its investees.

136 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Detail of capital classes in shares:

As of June 30, 2020, and December 31, 2019, the Company has not placed any new shares issues on the market

	As of June 30, 2020				As of December 31, 2019
Type of capital in preferred shares	Series A		Series B		Series A		Series B
Description of type of capital in preferred shares
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 US$		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		142,819,552		120,376,972		142,819,552		120,376,972

21.3 Disclosures on reserves in Equity

As of June 30, 2020, and December 31, 2019, this caption comprises the following:

Disclosures on reserves in equity	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
Reserve for currency exchange conversion		(27,151	)		(25,745	)
Reserve for cash flow hedges		(4,445	)		7,196
Reserve for gains and losses from financial assets measured at fair value through other comprehensive income		325			(270	)
Reserve for actuarial gains or losses in defined benefit plans		(9,379	)		(9,490	)
Other reserves		15,454			14,086
Total		(25,196	)		(14,223	)

Reserves for foreign currency translation differences

This balance reflects retained earnings for changes in the exchange rate when converting the financial statements of subsidiaries whose functional currency is different from the US dollar.

Reserve for cash flow hedges

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

Reserve for gains and losses from financial assets measured at fair value through other comprehensive income

This caption includes the variable equity values that are not held for trading and that the group has irrevocably opted to recognize in this category upon initial recognition. In the event that such equity instruments are fully or partially disposed of, the proportional accumulated effect of accumulated fair value will be transferred to profit or loss.

Reserve for actuarial gains or losses in defined benefit plans

For domestic subsidiaries the effects of changes in assumptions are considered, mainly changes in the discount rate.

137 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Movements in other reserves and changes in interest were as follows:

Movements	Foreign currency translation difference			Reserve for cash flow hedges						Reserve for actuarial gains and losses from defined benefit plans						Reserve for gains (losses) from financial assets measured at fair value through other comprehensive income						Other reserves			Total reserves
	Before taxes			Before taxes			Tax			Before taxes			Deferred taxes			Before taxes			Deferred taxes			Before taxes			Reserves			Deferred taxes			Total reserves
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Balances as of January 1 2019		(26,307	)		7,971			-			(8,176	)		1,292			(760	)		(351	)		11,332			(15,940	)		941			(14,999	)
Increase		1,824			8,628			(2,683	)		-			-			1,570			(424	)		3,093			15,115			(3,107	)		12,008
Decrease		(1,262	)		(6,720	)		-			(3,306	)		700			(418	)		113			(339	)		(12,045	)		813			(11,232	)
As of December 31, 2019		(25,745	)		9,879			(2,683	)		(11,482	)		1,992			392			(662	)		14,086			(12,870	)		(1,353	)		(14,223	)
Increase		594			-			-			277			(68	)		2,809			(758	)		2,121			5,801			(826	)		4,975
Decrease		(2,000	)		(15,946	)		4,305			(148	)		50			(1,994	)		538			(753	)		(20,841	)		4,893			(15,948	)
Balances as of June 30, 2020		(27,151	)		(6,067	)		1,622			(11,353	)		1,974			1,207			(882	)		15,454			(27,910	)		2,714			(25,196	)

138 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Other reserves

This caption corresponds to the legal reserves reported in the individual financial statements of the subsidiaries and Associates that are mentioned below and that have been recognized in SQM’s equity through the application of the equity method.

Subsidiary - Associate	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
SQM Iberian S.A. (1)		9,464			9,464
SQM Europe NV		1,957			1,957
Soquimich European holding B.V.		828			828
Abu Dhabi Fertilizer Industries WWL		455			455
Doktor Tarsa Tarim Sanayi AS		305			305
Kore Potash PLC		1,999			2,754
Total		15,008			15,763
Corresponds to the acquisition of subsidiaries, which was already under Company ownership at the acquisition date (IAS 27R)
SQM Iberian S.A.		(1,677	)		(1,677	)
Orcoma Estudios SPA		2,123			-
Total Other reserves		15,454			14,086

(1) In the case of SQM Iberian S.A., the balance corresponds to the results obtained in the previous financial year which are presented as forming part of other reserves because of local regulations

21.4            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, a publicly traded corporation must distribute dividends in accordance with the policy determined in the shareholder's meeting held each year, with at least 30% of our consolidated profit for the 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).

139 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Dividend policy for commercial year 2020

The Company has defined the following dividend policy:

(a) Distribute and pay, as a final dividend and in favor of the respective shareholders, a percentage of the net income that shall be determined per the following financial parameters:

(I) 100% of the profit for 2020 if all the following financial parameters are met: (a) “all current assets” divided by “all current liabilities” is equal to or greater than 2.5 times, and (b) the sum of “all current liabilities” and “all non-current liabilities”, less “cash equivalents”, less “other current financial assets”, all of the above divided by “total equity” in equal or less than 0.8 times.

(II) 80% of the profit for 2020 if all the following financial parameters are met: (a) “all current assets” divided by “all current liabilities” is equal to or greater than 2.0 times, and (b) the sum of “all current liabilities” and “all non-current liabilities”, less “cash equivalents”, less “other current financial assets”, all of the above divided by “total equity” in equal or less than 0.9 times.

(III) 60% of the profit for 2020 if all the following financial parameters are met: (a) “all current assets” divided by “all current liabilities” is equal to or greater than 1.5 times, and (b) the sum of “all current liabilities” and “all non-current liabilities”, less “cash equivalents”, less “other current financial assets”, all of the above divided by “total equity” in equal or less than 1.0 times.

If none of the foregoing financial parameters are met, the Company shall distribute and pay, as a final dividend, and in favor of the respective shareholders, 50% of the 2020 net income.

(b) Distribute and pay, if possible and during 2020, three interim dividends that will be charged against the aforementioned final dividend. These interim dividends shall likely be paid during the month following the approval of the March, June, and September 2020 interim financial statements, respectively, its amounts shall be calculated as follows:

(i) For the interim dividends that will be charged to the accumulated net income reflected in the March 2020 interim financial statements, the percentage distributed shall be determined per the financial parameters expressed in letter a) above.

(ii) For the interim dividends that will be charged to the accumulated net income reflected in the June 2020 interim financial statements, the percentage distributed shall be determined per the financial parameters expressed in letter a) above, discounting the total amount of interim dividends previously distributed during 2020.

(iii) For the interim dividends that will be charged to the accumulated net income reflected in the September 2020 interim financial statements, the percentage distributed shall be determined per the financial parameters expressed in letter a) above, discounting the total amount of interim dividends previously distributed during 2020.

(c) The amount of the interim dividends mentioned above may vary, pursuant to the information available to the Board of Directors on the date on which it agrees to the distribution of said dividends given that the dividend will not materially or negatively affect SQM’s capacity to impact its investments, fulfill its liabilities, or in general, comply with the investment and finance policy approved at the ordinary shareholders’ meeting.

(d) At the ordinary shareholders meeting that will be held in 2021, the Board of Directors shall propose a final dividend pursuant to the financial parameters expressed in letter a) above, discounting the total amount of the interim dividends previously distributed during 2020.

140 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

(e) If there is an excess of net income in 2020, this may be retained and assigned or allocated for financing its own operations, to one or more investment projects of the Company, notwithstanding a future distribution of special dividends charged to the accumulated net income previously approved at the shareholders’ meeting, or the possible and future capitalization of all or part of the latter.

(f) The payment of additional dividends is not considered.

The dividend policy described above corresponds to the intention of the Board of Directors, and the compliance of it shall depend on the net income that the Company ultimately obtains, as well as the results of periodic projections that could impact the Company, or to the existence of determined conditions that may affect it, as applicable. If the dividend policy exposed by the Board of Directors suffers a substantial change, the Company must communicate it as an essential fact.

21.5 Interim and provisional dividends

The ordinary shareholders’ meeting held on April 23, 2020 agreed to distribute and pay 100% of the distributable net profit obtained by the Company during the 2019 fiscal year as final dividend. In consequence, in May 2020 the Company paid a final dividend of US$ 1.05668 per share from the distributable net profit obtained during the 2019 fiscal year, and the sum of US$ 0.80254 per share was discounted from this, as this was already paid as a provisional dividend in 2019.

On May 19, 2020, the Board agreed to pay a provisional dividend equivalent to US$ 0.17092 per share with a charge to earnings for 2020. This amount was paid in its equivalent in Chilean pesos, according to the observed U.S. dollar exchange rate published in the Official Gazette on May 29, 2020.

21.6  Potential and provisional dividends

Dividends discounted from equity from January to June 2020 and January to December 2019 were the following:

Dividends	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Ajay SQM Chile S.A. Dividends		277		882
Soquimich Comercial S.A. Potential Dividend		1,968		3,936
Soquimich Comercial S.A. Payable Dividend		511		1,999
Non-controlling interests		2,756		6,817
Interim dividend		44,987		211,224
Dividends payable		50,834		66,891
Owners of the Parent		95,821		278,115
Dividends discounted from equity for the period		98,577		284,932

141 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Note 22 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	For the period ending on June 30, 2020		For the period ending on June 30, 2019
	ThUS$		ThUS$
Profit (Loss) Attributable to net equity holders of the parent		95,821		150,724

Basic earnings per share	For the period ending on June 30, 2020		For the period ending on June 30, 2019
	Units		Units
Number of common shares in circulation		263,196,524		263,196,524
Basic earnings per share (US$ per share)		0.3641		0.5727

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

142 

Notes to the Consolidated Interim Financial Statement  June 30, 2020

Note 23      Contingencies and restrictions

In accordance with note 20.1, the Company has only registered a provision for those lawsuits in which there is a probability that the judgments will be unfavorable to the Company. The Company is party to the following lawsuits and other relevant legal actions:

23.1 Lawsuits and other relevant events

(a)	Plaintiff	:	City of Pomona California, USA.
	Defendants	:	SQM NA.
	Date	:	December 2010
	Court	:	United States District Court Central District of California.
	Reason	:	Payment of expenses and other amounts related to the treatment of groundwater to allow for its consumption by removing the existing perchlorate in such groundwater that allegedly comes from Chilean fertilizers.
	Status	:	On May 17, 2018, district judge Gary Klausner sentenced in favor of SQM NA following the verdict of the jury. On February 6, 2020, the court of appeals of the 9th circuit of United States ordered a retrial before the District Court.
	Nominal value	:	~ ThUS$ 32,000

(b)	Plaintiff	:	City of Lindsay, California, USA.
	Defendants	:	SQM NA and the Company (still not noticed).
	Date	:	December 2010
	Court	:	United States District Court Eastern District of California.
	Reason	:	Payment of expenses and other amounts related to the treatment of groundwater to allow for its consumption by removing the existing perchlorate in such groundwater that allegedly comes from Chilean fertilizers.
	Status	:	Filing of the case, processing suspended.
	Nominal value	:	Not possible to determine.

(c)	Plaintiff	:	H&V Van Mele N.V.
	Defendants	:	NV Euroports, SQM Europe N.V. y and its insurance companies.
	Date	:	July 2013
	Court	:	Commercial Court.
	Reason	:	Alleged indirect responsibility for the absence of adequate specifications for the SOP–WS by the Belgian distributor.
	Status	:	Sentencing against NV Euroports and subsidy SQM Europe N.V., for €206,675.91, Appeal presented in November 2017.
	Nominal value	:	~ ThUS$ 430

143 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

(d)	Plaintiff	:	Carlos Aravena Carrizo et al.
	Defendants	:	SQM Nitratos S.A. and its insurers.
	Date	:	May 2014
	Court	:	18th Civil Court Santiago
	Reason	:	Lawsuit seeking compensation for damages for alleged civil liability under tort as a result of an explosion that occurred during 2010 near Baquedano, causing the death of 6 employees.
	Status	:	On May 7, 2019, the 18th Civil Court of Santiago rejected the lawsuit. The case is before the Santiago Court of Appeals, which will hear the plaintiffs' appeal.
	Nominal value	:	~ ThUS$ 1,235
(e)	Plaintiff	:	Tyne and Wear Pension Fund represented by the Council of the Borough of South Tyneside acting as Lead Plaintiff.
	Defendants	:	The Company.
	Date	:	January 2016
	Court	:	United States District Court – Southern District of New York
	Reason	:	Alleged damage to ADS holders of the Company resulting from alleged non-compliance with the securities regulations in the United States by the Company.
	Status	:	The early disclosure stage is closed and the parties have presented their motions for the stage of summary judgement.
	Nominal value	:	Not determined

(f)	Plaintiff	:	Ernesto Saldaña González et al.
	Defendants	:	SQM Salar S.A., SQM Industrial S.A. and their insurance companies.
	Date	:	May 2016
	Court	:	13th Civil Court of Santiago.
	Reason	:	Lawsuit seeking compensation for damages for alleged civil liability under tort law arising from the accident that occurred in July, 2014 in the María Elena location.
	Status	:	On March 6, 2019, the ruling in first instance was passed, dismissing the claim. The case is currently before the Santiago Court of Appeals, which will hear the plaintiffs' appeal.
	Nominal value	:	~ ThUS$ 515

144 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

(g)	Plaintiff	:	Transportes Buen Destino S.A.
	Defendants	:	SQM Salar.
	Date	:	January 24, 2018
	Court	:	Arbitration award in accordance with the arbitration rules established by the CAM.
	Reason	:	Discrepancies generated in the implementation of the following contracts entered into between TBD and SQM Salar: (i) lithium brine transportation; and (ii) salt transportation.
	Status	:	Evidentiary stage.
	Nominal value	:	~ ThUS$ 3,019
(h)	Plaintiff	:	Atacameña de Peine Indigenous Community, Atacameña de Camar Indigenous Community and the Consejo de Pueblos Atacameños.
	Defendants	:	SMA. SQM Salar has intervened as an independent third party.
	Date	:	January 30, 2019
	Court	:	1st Environmental Court
	Reason	:	Declare the SMA's decision illegal, which approved the PdC submitted by SQM Salar.
	Status	:	On December 26, 2019, the First Environmental Court of Antofagasta rendered null and void the SMA ruling that approved the program and the SMA and SQM Salar presented motions for cassation against this verdict. On August 12, 2020, the SMA and SQM Salar dropped these motions. SQM Salar continues to comply with the measures it committed to as part of the first compliance program.
	Nominal value	:	Not determined

(i)	Plaintiff	:	Quillagua Aymara Indigenous Community and Quechua de Huatacondo Indigenous Community.
	Defendants	:	SMA.
	Date	:	March 22, 2019
	Court	:	First Environmental Court of Santiago.
	Reason	:	Declare the SMA's decision illegal, which approved the PdC submitted by the Company.
	Status	:	Pending court ruling.
	Nominal value	:	Not determined

(j)	Plaintiff	:	Congresspersons Claudia Nathalie Mix Jiménez, Gael Fernanda Yeomans Araya, Camila Ruslay Rojas Valderrama et al.
	Defendants	:	CORFO, the entity has intervened as an independent third party.
	Date	:	September 6,2018
	Court	:	Special Magistrate, Mr. Alejandro Madrid Crohare.
	Reason	:	To render null and void the contract for the Salar de Atacama Project signed between CORFO and SQM Salar.
	Status	:	Discussion stage.
	Nominal value	:	Not determined.

(k)	Plaintiff	:	Danilo Andrés Araya Rojas et al.
	Defendants	:	FPC Ingeniería y Construcción SpA, SQM S.A. and its insurers.
	Date	:	May, 2019
	Court	:	19° Civil Court of Santiago
	Reason	:	Claim seeking compensation for damages, for extracontractual liability resulting from the traffic accident occurring on March 5, 2018, involving an overturned pick-up truck owned by FPC resulting in the death of its two occupants, both employees of FPC, one of which was father of the four claimants. At the time the accident occurred, the employees were heading towards their homes on the SQM site in Nueva Victoria (commuting accident). The four children of one of the deceased employees are the claimants in this case, compensation for moral damages.
	Status	:	Discussion stage
	Nominal value	:	~ ThUS$ 1,194

145 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

(l)	Plaintiff	:	Servicios Logísticos Integrales Inversol SpA
	Defendants	:	SQM Salar.
	Date	:	June 24, 2019.
	Court	:	Arbitration in accordance with the rules established by CAM.
	Reason	:	Controversies originating in the implementation of the salt transportation contract.
	Status	:	Evidentiary stage.
	Nominal value	:	~ ThUS$ 7,029

(m)	Plaintiff	:	Fennix Industrial SpA.
	Defendants	:	SQM Salar.
	Date	:	April 17, 2019
	Court	:	First Civil Court of Concepción.
	Reason	:	Disputes arising from the execution of civil works and electromechanical assembly contracts.
	Status	:	Pending ruling on motion to dismiss based on lack of jurisdiction.
	Nominal value	:	~ ThUS$ 770

(n)	Plaintiff	:	Fennix Industrial SpA.
	Defendants	:	SQM Salar and other.
	Date	:	May 8, 2019
	Court	:	Criminal Court of San Pedro de la Paz.
	Reason	:	Alleged misappropriation of funds - controversies originating from contract execution for civil works and electromechanical assembly.
	Status	:	Research stage.
	Nominal value	:	~ThUS$ 436

(o)	Plaintiff	:	Arrigoni Ingeniería y construcción S.A.
	Defendants	:	SQM Salar.
	Date	:	November 21, 2019
	Court	:	Arbitration award in accordance with the arbitration rules established by the CAM.
	Reason	:	Request to declare the end of Works Contract No. SC 9500002949, named “Expansion of Lithium Carbonate Plant Phase II” dated April 2, 2018.
	Status	:	Evidentiary stage.
	Nominal value	:	ThUS$ 13,054

(p)	Plaintiff	:	The Company.
	Defendants	:	Sierra Gorda S.C.M.
	Date	:	Arbitration request entered on January 17, 2020- answer to complaint and countersuit dated August 13, 2020.
	Court	:	Arbitration award in accordance with the arbitration rules established by the CAM.
	Reason	:	Controversies originating from the Purchase-Sale Contract for Mining Concessions, Royalties, and others dated December 16, 2011.
	Status	:	Discussion stage.
	Nominal value	:	Not determined.

146 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

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

Soquimich Comercial S.A. has been involved and will probably continue being involved either as plaintiff or defendant in certain judicial proceedings through which it intends to collect and receive the amounts owed, the total nominal value of which is approximately US$ 1.2 million.

The Company and its subsidiaries have made efforts and continues making efforts to obtain payment of certain amounts that are still owed to the Company due to its activities. Such amounts will continue to be required using 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 received no legal notice on lawsuits other than those indicated above, which exceed US$ 0.2 million.

23.2            Restrictions to management or financial limits

Contracts that subscribed the issuance of bonds in the local and international market require the Company to comply with the following level of consolidated financial indicators, calculated for the last 12-month period:

Maintain a borrowing ratio less than 1.44 for the Series H bond and Series O bond.

Furthermore, both bonds establish that if the borrowing ratio (as this term is defined in the respective issuance contracts) exceeds 1.2, (provided that this does not exceed than 1.44 times), the bondholders can voluntarily and individually choose to redeem these bonds early at par value. The Indebtedness ratio for the second quarter of 2020 reached a proportion of 1.24, and the aforementioned early redemption option will be issued for bondholders.

The exercise of this option will be subject to its communication by bondholders to the Bondholder Representative in the terms and the form pre-established in the documents of the respective emissions.

As of June 30, 2020, the above-mentioned financial indicator has the following values:

Indicator	As of June 30, 2020		As of December 31, 2019
Leverage		1.24		1.19

Bond issue agreements issued abroad require the Company to neither merge nor dispose of the whole or a substantial part of its assets, unless all the following conditions are met: (i) the legal successor company is an entity subject to either Chilean or United States law, and assumes SQM S.A.’s obligations under a complimentary contract, (ii) the Issuer does not fail to comply immediately after the merger or disposal, and (iii) the Issuer delivers a legal opinion stating that the merger or disposal and the complimentary contract meet the requirements described in the original contract.

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

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

147 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

23.3 Environmental contingencies

On June 6, 2016, the “SMA” filed charges against the Company with respect to the Pampa Hermosa project for possible noncompliance with RCA 890/2010. In the operation affected by the charges, Pampa Hermosa uses approximately 15% of the total water used by SQM in its operations in Chile’s Region I.

This relates to charges related to certain variables of the follow-up plan and the implementation of a mitigation measure included in the respective environmental impact assessment. The Company has presented for the approval of SMA a compliance program detailing the actions and commitments it will carry out to address the SMA's objections.

On June 29, 2017, the SMA rejected the compliance program presented by the Company, On July 10, 2017, the Company presented its rebuttals to the charges made by the SMA, On August 21, 2018, the Second Environmental Court accepted the Company’s claim, ordering the SMA to take the procedure back to the stage prior to their resolution rejecting the compliance program presented by the Company.

The SMA approved SQM’s proposed compliance program in its resolution dated January 26, 2019, and this program is currently being executed. On March 22, 2019, the indigenous communities of Quillagua and Huatacondo filed a complaint against the resolution that approved the compliance program before the First Environmental Court of Antofagasta (R-21-2019). On April 22, 2020, there was a case hearing, which remained in study by the Court and is currently awaiting ruling. If the compliance program is rendered null and void by the Chilean courts, the sanctions process against SQM could be reinstated, which could result in the application of fines up to US$ 9 million, temporary or permanent closure of facilities, and in extreme circumstances, revocation of the respective environmental permit.

The SMA issued a resolution dated November 28, 2016, rectified by a resolution dated December 23, 2016, which filed charges against SQM Salar for brine extraction in excess of authorized amounts, progressive impairment of the vitality of carob trees, providing incomplete information, amending variables, and other charges.

SQM Salar S.A. presented a compliance program that was accepted by the SMA. On December 26, 2019, the Environmental Court of Antofagasta rendered null and void the SMA ruling that approved the program and the SMA and SQM Salar presented motions for cassation against this verdict. On August 12, 2020, the SMA and SQM Salar dropped these motions. SQM Salar continues to comply with the measures it agreed to under this program. Currently, the SMA is in the assessment stage of the compliance program, to review the possible incorporation of improvements in line with the ruling of the Antofagasta Environmental Court, to then make a determination regarding approval or rejection. If a new compliance program is not approved by the SMA, or if approved and legally challenged and rendered null and void by the Chilean courts. This latter event may consider the application of fines up to US$9 million, temporary or permanent closure of facilities and in extreme circumstances, revocation of the respective environmental permit.

23.4 Tax Contingencies

On August 26, 2016, SQM Salar filed a tax claim before the Third Tax and Customs Court of the Metropolitan Region against settlements 169, 170, 171 and 172, which extend the application of specific mining tax to lithium exploitation. The disputed amount is approximately US$17.8 million. On November 28, 2018, the Third Tax and Customs Court rejected the claim, and the case was transferred to the Santiago Court of Appeals, following an appeal filed by SQM Salar.

On March 24, 2017, SQM Salar filed with the Third Tax and Customs Court of the Metropolitan Region a tax claim against tax assessment No. 207 of 2016 and ruling No. 156 of 2016, both issued by the Chilean IRS, which seek to expand application of the specific tax on mining activities to include lithium exploitation for tax years 2015 and 2016. The amount involved is approximately US$14.4 million, On November 28, 2018, the Third Tax and Customs Court accepted SQM Salar’s claim for US$ 7.0 million corresponding to the overcharge made by the SII and rejected the remainder of the claim, the case is in the Santiago Court of Appeals, based on the appeal filed by SQM Salar.

SQM Salar filed inapplicability requirements with the Constitutional Court in the grounds of unconstitutionality with respect to article 64 bis of the Income Tax Law, with relation to two groups of previous tax claims. On June 18, 2020, the Constitutional Court rejected the requirements after reaching a tie vote among the members of this court, corresponding to its knowledge from the Santiago Court of Appeals.

148 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

These amounts are classified as taxes for current assets, non-current, as of June 30, 2020 and the same as of December 31, 2019.

The amount in dispute is US$ 32.2 million, and approximately US$ 25.2 million of this sum is the potential specific mining tax associated with lithium, whereas US$7.0 million is an excess charge by the SII regarding this latter value, the internal revenue service (SII) has acknowledged the excessive charge of US$5.8 million, and a request has been made on October 17, 2019 for it to be returned, The difference of US$ 1.2 million for the lower first category tax rate plus interests and fines will be reinstated at the end of the trial.

The SII has not settled differences with respect to specific mining taxes for 2016, 2017, 2018 and 2019. the current business year. As of the date of these financial statements, the Company has not made provisions for these potential differences.

If the Chilean IRS uses criteria similar to that used in previous years, it may issue an assessment in the future for the 2016, 2017, 2018 y 2019 financial years. It is reasonable to expect that should these assessments for the period 2016 through the second quarter of 2020 be issued, the value would be approximately US$ 72 million (without considering potential interest and fines and considering the benefit in the first category tax).

The company continues to undertake all legal efforts to actively and decidedly defend its interests.

23.5 Contingencies regarding the Changes to the Contracts with Corfo:

On September 6, 2018, representatives Claudia Nathalie Mix Jiménez, Gael Fernanda Yeomans Araya and Camila Ruslay Rojas Valderrama and the Poder Ciudadano political party filed an annulment suit against Corfo, which requested that the Contract for the Salar de Atacama Project between Corfo and the Companies, SQM Potasio and SQM Salar be annulled. The Companies have taken part of the process as interested third parties.

In the event that the annulment claim is approved for the Salar de Atacama Project Contract, SQM Salar may be prevented from exploit the mining claims in the Salar de Atacama that it has leased from Corfo.

23.6 Contingencies related to the Class Action lawsuit

Since October 2015, a consolidated class action lawsuit has been pending against the Company before the District Court for the Southern District of New York of the United States. The consolidated lawsuit alleges that certain statements made by the Company between June 30, 2010, and June 18, 2015, mainly in documents filed with the SEC and in Company press releases, were materially false and this constitutes a violation of Section 10 (b) of the Securities Exchange Act and of the correlative Standard 10b-5. Specifically, the consolidated lawsuit challenges certain statements issued by the Company associated with its compliance with or implementation of the laws and regulations that regulate it, the effectiveness of its internal controls, the adoption of a code of ethics consistent with SEC requirements, of its income or revenue and taxes paid, and of the applicable accounting standards. The primary plaintiff seeks compensation for the class in a yet undetermined amount for economic losses occurring as a result of the questioned statements. The early information disclosure stage is closed and the parties have presented their motions for the stage of summary judgment.

Although the Company expects to actively and decisively defend its position, the outcome of this litigation cannot be predicted.

149 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

23.7 Contingencies associated with conflicts between shareholders of the Abu Dhabi Fertilizer Industries Company

Due to differences between shareholders of the company Abu Dhabi Fertilizer Industries Company, diverse lawsuits have arisen that may result in claims against SQM Corporation N.V. and by this company against the other shareholders. At this time, it is not possible to quantify the amounts of these claims.

23.8 Restricted or pledged cash

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

This guarantee, according to the regulations issued by the Chilean Superintendence of Healthcare is equivalent to the total amount owed to its members and medical providers, Banco de Chile reports the present value of the guarantee to the Chilean Superintendence of Healthcare and Isapre Norte Grande Ltda on a daily basis. As of June 30, 2020, the guarantee amounts to ThUS$ 614.

23.9 Securities obtained from third parties

The main security received (exceeding ThUS$ 100) from third parties to guarantee Soquimich Comercial S.A. their compliance with obligations in contracts of commercial mandates for the distribution and sale of fertilizers amounted to ThUS$ 9,012 and ThUS$ 9,611 on June 30, 2020 and December 31, 2019 respectively; which is detailed as follows:

Grantor	Relationship	As of June 30, 2020	As of December 31, 2019
		ThUS$	ThUS$
Ferosor Agrícola S.A.	Unrelated Third party	4,871		5,372
Tattersall Agroinsumos S.A.	Unrelated Third party	2,000		2,000
Covepa SPA	Unrelated Third party	609		671
Johannes Epple Davanzo	Unrelated Third party	272		300
Hortofrutícola La Serena	Unrelated Third party	259		282
Com. Serv Johannes Epple Davanz	Unrelated Third party	347		269
Juan Luis Gaete Chesta	Unrelated Third party	165		182
Arena Fertilizantes y Semillas	Unrelated Third party	183		201
Vicente Oyarce Castro	Unrelated Third party	195		213
Bernardo Guzmán Schmidt	Unrelated Third party	111		121
Total		9,012		9,611

23.10 Indirect guarantees

Guarantees without pending balance indirectly reflect that the respective guarantees are in force and approved by the Company’s Board of Directors and have not been used by the respective subsidiary.

As of June 30, 2020, there are no indirect guarantees.

150 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

Note 24    Lawsuits and complaints

Investigation by the Department of Justice and the Securities Exchange Commission and Agreements

On January 13, 2017, the Company signed agreements with the DOJ and the SEC relating to their investigations into Company payments to suppliers and organizations that may have had links with politically exposed persons during the period from 2008 to 2015. As a result, the Company conducted its own internal investigation through an ad-hoc Board committee. The Company’s securities are traded in the USA, so the Company is subject to US law. The Company has voluntarily submitted the results of its internal investigation and supporting documents to the DOJ, the SEC and the relevant Chilean authorities.

In accordance with the terms Agreement with the DOJ, denominated DPA the Company has accepted that the DOJ formulates (i) a charge for infractions for the lack of implementation of effective internal accounting systems and internal accounting controls and (ii) a charge for infractions for failure to adequately maintain books, records and accounting sections in relation to the events investigated, Under the DPA, the DOJ has agreed not to pursue such charges against the Company for a period of 3 years and release the Company from liability after such period, inasmuch as within that period the Company complies with the terms of the DPA, These include payment of a fine of US$15,487,500 and acceptance of an external monitor for a period of 24 months that will assess the Company’s compliance program, and continue to report on the Company independently for an additional year.

The three-year term of the DPA ended on April 30, 2020, and on June 1, 2020, the Company’s CEO and CFO submitted the certification regarding the Company’s disclosure obligations, as required under the DPA. The Company expects that the DOJ will file a motion to dismiss the criminal information against the Company with the U.S. District Court for the District of Columbia by October 30, 2020, the end of the 6-month period provided by the DPA. Subject to the court’s approval of the motion, all charges against the Company will be dismissed with prejudice.

In relation to the agreement with the SEC, the Company has agreed to (i) pay a fine of 15 million dollars and (ii) maintain the Monitor for the aforementioned period. The SEC has issued a Cease and Desist Order that does not identify other breaches of United States regulations.

The aforementioned amounts, approximately US$30.5 million, were reflected in the Company’s profit and loss during the fourth quarter of 2016 in the “Other expenses by function” line.

151 

Notes to the Consolidated Interim Financial Statement  June 30, 2020  

Note 25   Environment

25.1 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.

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

The Company carries out environmental follow-up and monitoring plans based on specialized scientific studies. Follow-up on relevant variables defined for each project enables the Company to verify the status, for example, of vegetation, flora, fauna and aquatic life in the ecosystems to protect. Follow-up plans are supported by a broad control network that includes monitoring points such as meteorological stations and wells, satellite images, plots for recording the status of vegetation and fauna, etc. The activities comprised in these plans are reported regularly to authorities based on the Company’s commitments made through resolutions that approve different SQM projects.

The Company maintains environmental monitoring across the systems where it operates, which is supported by numerous studies that integrate diverse scientific efforts from prestigious research centers on a national and international level, such as the Spanish National Research Council (CSIC) and the Universidad Católica del Norte.

Furthermore, within the framework of the environmental studies which the Company is conducting, the Company performs significant activities in relation to the recording of Pre-Columbian and historical cultural heritage, as well as the protection of heritage sites, in accordance with current Chilean laws. These activities have been especially performed in the areas surrounding Maria Elena and the Nueva Victoria plant. 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. In order to do so, it acts both individually and in conjunction with private and public entities.

25.2 Detailed information on disbursements related to the environment

The cumulative disbursements which the Company had incurred as of June 30, 2020 for the concept of investments in production processes, verification and control of compliance with ordinances and laws related to industrial processes and facilities amounted to ThUS$ 6,205 and are detailed as follows:

152 

Notes to the Consolidated Interim Financial Statement June 30, 2020

Accumulated expenses as of June 30, 2020

Parent Company or			Asset /	Disbursement		Exact or Estimated Date
Subsidiary	Project Name Associated with Disbursement	Reason for Disbursement	Expense	ThUS$		of Disbursement
Miscellaneous	Environment - Operating Area	Not classified	Expense		4,077	06-30-2020
SQM Industrial S.A.	04-I017700 - Basic Engineering and EIA for TEA industrial area and seawater impulsion N.V.	Sustainability: Environment and Risk Prevention	Assets		128	05-25-2020
SQM Industrial S.A.	04-I025000 - Re-perforation Pozo 2PL-2 y Ma	Sustainability: Environment and Risk Prevention	Expense		1	02-29-2020
SQM Industrial S.A.	04-J015200 - Implementation Economizers	Sustainability: Environment and Risk Prevention	Assets		13	04-13-2020
SQM Industrial S.A.	04-J015700 - Update of Closure Plans	Sustainability: Environment and Risk Prevention	Expense		14	02-20-2020
SQM Industrial S.A.	04-J015800 - Other Sector Regulatory Measures	Sustainability: Environment and Risk Prevention	Expense		35	06-26-2020
SQM Industrial S.A.	04-J017200 - Guarantee availability S	Sustainability: Environment and Risk Prevention	Assets		97	05-20-2020
SQM S.A.	01-I017200 - CEDAM at Puquíos (ponds) at Llamara	Sustainability: Environment and Risk Prevention	Expense		3	04-24-2020
SQM S.A.	01-I017600 - Regularization of Hazardous Substances Decree	Environmental processing	Expense		51	05-15-2020
SQM S.A.	01-I019400 - EIA Expansion of TEA and Seawater Impulsion	Environmental processing	Assets		207	06-30-2020
SQM S.A.	01-I028200 - EIA Llamara	Environmental processing	Expense		100	06-19-2020
SQM S.A.	01-I028300 - Implementation PDC 2019 -Proce	Sustainability: Environment and Risk Prevention	Expense		247	05-12-2020
SQM S.A.	01-I030700 - EIA Project Sector Permits	Environmental processing	Expense		201	06-26-2020
SQM S.A.	01-I031300 - DIA Update RCA TEA	Environmental processing	Expense		52	05-05-2020
SQM Salar S.A.	19-L014700 - Industrial Waste Management	Sustainability: Environment and Risk Prevention	Expense		20	04-30-2020
SQM Salar S.A.	19-L018800 - UPC Consulting for NW and Others	Sustainability: Environment and Risk Prevention	Expense		51	06-24-2020
SQM Salar S.A.	19-L018900 - Evaporation 2018-2019	Sustainability: Environment and Risk Prevention	Assets		1	06-02-2020
SQM Salar S.A.	19-L021400 - Environmental Monitoring 2019	Environmental processing	Expense		876	06-26-2020
SQM Salar S.A.	19-L021700 - Upgrade RH y MA 2019	Environmental processing	Expense		6	06-23-2020
SQM Salar S.A.	19-L023200 - Topographic Equipment 2019	Sustainability: Environment and Risk Prevention	Assets		2	03-18-2020
SQM Salar S.A.	19-S013400- Online Monitoring	Sustainability: Environment and Risk Prevention	Expense		18	06-22-2020
SQM Salar S.A.	19-S016300 - Consulting 2020	Sustainability: Environment and Risk Prevention	Assets		5	06-08-2020
Total					6,205

153 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Committed expenses for future periods as of June 30, 2020

Parent Company or			Asset /		Disbursement		Exact or Estimated Date
Subsidiary	Project Name Associated with Disbursement	Reason for Disbursement	Expense		ThUS$		of Disbursement
Miscellaneous	Environment - Operating Area	Not classified		Expense		6,008	12-31-2020
SQM Industrial S.A.	04-I025000 - Re-perforation Pozo 2PL-2 y Ma	Sustainability: Environment and Risk Prevention		Expense		127	12-31-2020
SQM Industrial S.A.	04-I032600 - Well Water Efficiency – Rec	Sustainability: Environment and Risk Prevention		Assets		150	12-31-2020
SQM Industrial S.A.	04-J015200 - Implementation Economizers	Sustainability: Environment and Risk Prevention		Assets		10	12-31-2020
SQM Industrial S.A.	04-J015700 - Update of Closure Plans	Sustainability: Environment and Risk Prevention		Expense		86	12-31-2020
SQM Industrial S.A.	04-J015800 - Other Sector Regulatory Measures	Sustainability: Environment and Risk Prevention		Expense		65	12-31-2020
SQM Industrial S.A.	04-J017200 - Assurance Availability S	Sustainability: Environment and Risk Prevention		Assets		44	12-31-2020
SQM Industrial S.A.	04-J019900 - Provisional Access to Cerro Domina	Sustainability: Environment and Risk Prevention		Expense		4	12-31-2020
SQM S.A.	01-I017200 - CEDAM at Puquíos (ponds) at Llamara	Sustainability: Environment and Risk Prevention		Expense		42	12-31-2020
SQM S.A.	01-I017400 - Development of Pintados and deposit	Sustainability: Environment and Risk Prevention		Expense		108	12-31-2020
SQM S.A.	01-I017600 - Regularization of Substances Decree	Environmental processing		Expense		61	12-31-2020
SQM S.A.	01-I019400 - EIA Expansion of TEA and Seawater Impulsion	Environmental processing		Assets		273	12-31-2020
SQM S.A.	01-I028200 - EIA Llamara	Environmental processing		Expense		600	12-31-2020
SQM S.A.	01-I028300 - Implementation PDC 2019 -Proceso	Sustainability: Environment and Risk Prevention		Expense		677	12-31-2020
SQM S.A.	01-I030700 - EIA Project Sector Permits	Environmental processing		Expense		145	12-31-2020
SQM S.A.	01-I031300 - DIA Update RCA TEA	Environmental processing		Expense		243	12-31-2020
SQM S.A.	01-I035800 - Sustainability DS43 Phase 2	Sustainability: Environment and Risk Prevention		Assets		59	12-31-2020
SQM Salar S.A.	19-C006800 - Renovation lighting towers	Sustainability: Environment and Risk Prevention		Assets		21	12-31-2020
SQM Salar S.A.	19-L014700 - Industrial Waste Management	Sustainability: Environment and Risk Prevention		Expense		115	12-31-2020
SQM Salar S.A.	19-L018800 - UPC Consulting for NW and Others	Sustainability: Environment and Risk Prevention		Expense		21	12-31-2020
SQM Salar S.A.	19-L018900 - Evaporation 2018-2019	Sustainability: Environment and Risk Prevention		Assets		42	12-31-2020
SQM Salar S.A.	19-L019800 - Paleoclimate Study Iberia	Sustainability: Environment and Risk Prevention		Expense		49	12-31-2020
SQM Salar S.A.	19-L020000 - Improvement of Operational Monitoring Network	Sustainability: Environment and Risk Prevention		Assets		95	12-31-2020
SQM Salar S.A.	19-L021700 - Update RH y MA 2019	Environmental processing		Expense		126	12-31-2020
SQM Salar S.A.	19-L024200 - Environmental Risk Analysis Study	Sustainability: Environment and Risk Prevention		Expense		8	12-31-2020
SQM Salar S.A.	19-S013400- Online Monitoring	Sustainability: Environment and Risk Prevention		Expense		112	12-31-2020
SQM Salar S.A.	19-S016200 - Acquisition of Hardware- Software	Sustainability: Environment and Risk Prevention		Assets		9	12-31-2020
SQM Salar S.A.	19-S016300 - Consulting 2020	Sustainability: Environment and Risk Prevention		Assets		67	12-31-2020
SQM Salar S.A.	19-S016400 - Implementation Acquiere BD Amb	Sustainability: Environment and Risk Prevention		Assets		8	12-31-2020
SQM Salar S.A.	19-S016500 - Incorporation of test models	Sustainability: Environment and Risk Prevention		Assets		12	12-31-2020
SQM Salar S.A.	19-S016700 – Improvements to recharge understanding	Sustainability: Environment and Risk Prevention		Assets		130	12-31-2020
SQM Salar S.A.	19-S016900 - Water dynamics monitoring	Sustainability: Environment and Risk Prevention		Assets		35	12-31-2020
Minera Búfalo	20-A008200 - Búfalo Project	Environmental processing		Expense		250	12-31-2020
Total						9,802

154 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Accumulated expenses as of December 31, 2019

Parent Company or			Asset /		Disbursement		Exact or Estimated Date
Subsidiary	Project Name	Reason for Disbursement	Expense		ThUS$		of Disbursement
Miscellaneous	Environment - Operating Area	Not classified		Expense		8,054	12-31-2019
SQM S.A.	01-I013800 - Increase height of Absorber Tower	Sustainability: Environment and Risk Prevention		Assets		15	12-31-2019
SQM S.A.	01-I017200 - CEDAM at Puquíos (ponds) at Llamara	Sustainability: Environment and Risk Prevention		Expense		3	12-31-2019
SQM S.A.	01-I017400 - Value Added Paints and Deposits	Sustainability: Environment and Risk Prevention		Expense		2	12-31-2019
SQM S.A.	01-I017600 - Regularization of Substances Decree	Environmental processing		Expense		63	12-31-2019
SQM S.A.	01-I018700 - Penalization Process for Salar de Llamara	Environmental processing		Assets		522	12-31-2019
SQM S.A.	01-I019400 - EIA Expansion of TEA and Seawater Impulsion	Environmental processing		Assets		898	12-31-2019
SQM S.A.	01-I028200 - EIA Llamara	Environmental processing		Expense		253	12-31-2019
SQM S.A.	01-I028300 - Implementation of PDC 2019	Sustainability: Environment and Risk Prevention		Expense		1,057	12-31-2019
SQM S.A.	01-I030700 - Sector Permits EIA Tente en el Aire Project	Environmental processing		Expense		131	12-31-2019
SQM Industrial S.A.	04-I017700 - Basic Engineering and EIA for TEA industrial area and seawater impulsion N.V.	Sustainability: Environment and Risk Prevention		Assets		318	12-31-2019
SQM Industrial S.A.	04-I025000 - Re-perforación Pozo 2PL-2 y Ma	Sustainability: Environment and Risk Prevention		Expense		7	12-31-2019
SQM Industrial S.A.	04-J007000 - Environmental impact statement	Environmental processing		Expense		7	12-31-2019
SQM Industrial S.A.	04-J010700 - Recovery Water Intake from Rivers	Sustainability: Environment and Risk Prevention		Assets		119	12-31-2019
SQM Industrial S.A.	04-J012200 - Environmental Impact Statement and Regularization of CS Ponds	Environmental processing		Assets		19	12-31-2019
SQM Industrial S.A.	04-J013500 - Handling of Equipment associated with PCBs	Sustainability: Environment and Risk Prevention		Expense		251	12-31-2019
SQM Industrial S.A.	04-J015200 - Implement Economizers	Sustainability: Environment and Risk Prevention		Assets		195	12-31-2019
SQM Industrial S.A.	04-J015700 - Update closure plans	Sustainability: Environment and Risk Prevention		Expense		52	12-31-2019
SQM Industrial S.A.	04-J017200 - Guarantee availability S	Sustainability: Environment and Risk Prevention		Assets		253	12-31-2019
SQM Industrial S.A.	04-J019900 - Provisional Access to Cerro Domina	Sustainability: Environment and Risk Prevention		Expense		141	12-31-2019
SQM Industrial S.A.	04-M002000 - Recovery of Potable Water at María Elena	Sustainability: Environment and Risk Prevention		Assets		225	12-31-2019
SQM Salar S.A.	19-C005700 - Solar Electric Recharge Point Project-	Sustainability: Environment and Risk Prevention		Assets		53	12-31-2019
SQM Salar S.A.	19-L012100 - Upgrade to weather stations	Sustainability: Environment and Risk Prevention		Assets		17	12-31-2019
SQM Salar S.A.	19-L018000 - Upgrade TT illumination	Sustainability: Environment and Risk Prevention		Assets		40	12-31-2019
SQM Salar S.A.	19-L018700 - 5th Update of environmental modeling	Environmental processing		Expense		10	12-31-2019
SQM Salar S.A.	19-L018800 - UPC Consulting for NW and others	Sustainability: Environment and Risk Prevention		Expense		166	12-31-2019
SQM Salar S.A.	19-L018900 - Evaporation 2018-2019	Sustainability: Environment and Risk Prevention		Assets		8	12-31-2019
SQM Salar S.A.	19-L019800 - Paleoclimate Study (Iberia)	Sustainability: Environment and Risk Prevention		Expense		1	12-31-2019
SQM Salar S.A.	19-L020000 - Improvement of Operations Monitoring Network	Sustainability: Environment and Risk Prevention		Assets		5	12-31-2019
SQM Salar S.A.	19-L020300 - Telemetry boreholes	Sustainability: Environment and Risk Prevention		Assets		821	12-31-2019
SQM Salar S.A.	19-L021400 - Environmental Monitoring 2019	Environmental processing		Expense		2,767	12-31-2019
SQM Salar S.A.	19-L021700 - Improvement of RH and MA 2019	Environmental processing		Expense		80	12-31-2019
SQM Salar S.A.	19- S013400- Online Monitoring	Sustainability: Environment and Risk Prevention		Expense		430	12-31-2019
Total						16,983

155 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Future expenses as of December 31, 2019

Parent Company or			Asset /	Disbursement		Exact or Estimated Date
Subsidiary	Project Name	Reason for Disbursement	Expense	ThUS$		of Disbursement
Miscellaneous	Environment - Operating Area	Not classified	Expense		10,085	12-31-2020
SQM S.A.	01-I017200 - CEDAM at Puquíos (ponds) at Llamara	Sustainability: Environment and Risk Prevention	Expense		28	12-31-2020
SQM S.A.	01-I017400 - Development of Pintados and surrounding area.	Sustainability: Environment and Risk Prevention	Expense		108	12-31-2020
SQM S.A.	01-I017600 - Regularization of Substances Decree	Environmental processing	Expense		75	12-31-2020
SQM S.A.	01-I019400 - EIA Expansion of TEA and Seawater Impulsion	Environmental processing	Assets		426	12-31-2020
SQM S.A.	01-I028200 - EIA Llamara	Environmental processing	Expense		1,527	12-31-2020
SQM S.A.	01-I028300 - Implementation of PDC 2019	Sustainability: Environment and Risk Prevention	Expense		1,231	12-31-2020
SQM S.A.	01-I030700 - Sectorial Permits EIA Project Tente en el Aire	Environmental processing	Expense		284	12-31-2020
SQM Industrial S.A.	04-I025000 - Re-perforación Pozo 2PL-2 y Ma	Sustainability: Environment and Risk Prevention	Expense		128	12-31-2020
SQM Industrial S.A.	04-J012200 - DIA and Regularization of CS Ponds	Environmental processing	Assets		35	12-31-2020
SQM Industrial S.A.	04-J013500 - Handling of Equipment associated with PCBs	Sustainability: Environment and Risk Prevention	Expense		303	12-31-2020
SQM Industrial S.A.	04-J015200 - Implementation Economizers	Sustainability: Environment and Risk Prevention	Assets		59	12-31-2020
SQM Industrial S.A.	04-J015700 - Update of Closure Plans	Sustainability: Environment and Risk Prevention	Expense		127	12-31-2020
SQM Industrial S.A.	04-J015800 - Other Sector Regulatory Measures	Sustainability: Environment and Risk Prevention	Expense		237	12-31-2020
SQM Industrial S.A.	04-J017200 - Guarantee availability S	Sustainability: Environment and Risk Prevention	Assets		104	12-31-2020
SQM Industrial S.A.	04-J019900 - Provisional Access to Cerro Domina	Sustainability: Environment and Risk Prevention	Expense		95	12-31-2020
SQM Industrial S.A.	04-M003900 - Revocation of PDME	Sustainability: Environment and Risk Prevention	Expense		47	12-31-2020
SQM Salar S.A.	19-L014700 - Industrial Waste Management	Sustainability: Environment and Risk Prevention	Expense		135	12-31-2020
SQM Salar S.A.	19-L018800 - UPC Consulting for NW and others	Sustainability: Environment and Risk Prevention	Expense		238	12-31-2020
SQM Salar S.A.	19-L018900 - Evaporation 2018-2019	Sustainability: Environment and Risk Prevention	Assets		172	12-31-2020
SQM Salar S.A.	19-L019800 - Paleoclimate Study (Iberia)	Sustainability: Environment and Risk Prevention	Expense		49	12-31-2020
SQM Salar S.A.	19-L020000 - Improvement of Operations Monitoring Network	Sustainability: Environment and Risk Prevention	Assets		95	12-31-2020
SQM Salar S.A.	19-L021400 - Environmental Monitoring 2019	Environmental processing	Expense		33	12-31-2020
SQM Salar S.A.	19-L021700 - Improvement of RH and MA 2019	Environmental processing	Expense		132	12-31-2020
SQM Salar S.A.	19- S013400- Online Monitoring	Sustainability: Environment and Risk Prevention	Expense		300	12-31-2020
Total					16,053

156 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

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

Sociedad Quimca y Minera de Chile S.A.

Environmental Commitments Implementation Projects

I0172: The project includes the commitments the Tamarugos Environmental Management Plan (PMAT), which contemplates an Environmental Education Program that includes the design, construction and start-up of an Environmental Education Center (CEDAM) at Puquios de Llamara.

I0174: The commitments within the Pampa Hermosa project include implementing "Value Added" at the former Pintados station. and a storage facility in Humberstone to store archaeological material, committed to in environmental assessments.

I0187: The project involves the implementation of measures that were committed to during the penalty process, including urgent and transitory measures and the compliance program approved by SMA.

I0283: The project involves the implementation of actions committed in the PDC. The implementation considers consulting with consultants (legal, hydrogeological and in processing with PDC), studies and additional follow-up.

I0307: The project involves the preparation and processing of sectoral and environmental permits with the DGA and SERNAGEOMIN for the “Tente en el Aire” Project.

Environmental Improvement Initiatives and Projects

I0138: The project considers increasing the height of every SO2 absorption tower (regular and stand-by towers) to increase the SO2 absorption efficiency.

I0176: The project involves diagnosis of works for their adaptation to the recently enacted Regulation of Hazardous Substances.

Projects for the Studies and Presentations to the Environmental Assessment System

I0194: The project consists of the preparation and processing of the Environmental Impact Study for Expansion of TEA and Impulsion.

I0282: The project consists of the preparation and processing of the Environmental Impact Study for Llamara.

I0313: The project involves a preliminary environmental characterization (terrestrial biota, archeology and paleontology) of 4 alternative sites. Once the alternative to use has been defined based on technical and environmental criteria, a DIA/EIA will be implemented.

157 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

SQM Industrial S.A.

Environmental Commitments Implementation Projects

J0158: The project will prepare and process sectorial permits for favorable reports to construct in Coya Sur (CS), and permits for hydraulic works defined in Article 294 of the Water Code (evaporation wells) at CS and NV.

Environmental Improvement Initiatives and Projects

I0250: The project consists of re-drilling well 2Pl-2, with the relevant development work and pump tests.

J0107: The project looks to renovate and automate the operation of pump stations at the three water intakes, by incorporating automatic valves and smart controls for pumps.

J0135: This project consists of dealing with all the oils and components that contain 50ppm or more of Policlorobife PCB by 2025 at the latest.

J0152: The project will install exhaust gas heat recovery equipment in boilers and implement associated structural improvements.

J0157: The project will update the closure plans in accordance with the normal regime established by current legislation. These requirements include an initial external audit, detailed risks analysis and their control, and other requirements.

J0172: The project will ensure the availability of water resources in "CS, ME, VE and CV" adductions.

J0199: The project considers obtaining a provisional roadway approval from the Ministry of Public Works to prepare and use the intersection access to Cerro Dominador.

M0020: The project consists of concluding the system of the drinking water network in Maria Elena. It intends to acquire equipment to better address water seepage in town and problems in the sewage chambers. Sewage water management requires a single backfill for final sludge disposal, in keeping with current legislation.

M0039: The project considers requesting the revocation of the saturated zone and the PDME with the Ministry of the Environment.

I0326: The project considers installation of floating covers to reduce evaporation of water collection wells in NV.

Projects for the Studies and Presentations to the Environmental Assessment System

I0177: The project will complete the basic engineering, execute the EIA Tente en el Aire, obtain the legal and sectorial permits for a second stage to secure the execution of the project.

J0070: This is preparing and processing the Environmental Impact Statement (DIA) for the CS pads.

J0122: The project consists of entering the Coya Sur wells into the “environmental impact assessment system” and processing the permits for these wells with the General Directorate of Water Resources (DGA).

158 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

SQM Salar S.A.

Environmental Commitments Implementation Projects

L0121: Change of the weather station equipment to comply with the standard.

L0187: The project involves this 5th update to numeric modeling, which would provide compliance with the commitments undertaken during the environmental qualification process for the project “Changes and Improvements to Mining Operations in the Salar de Atacama

L0198: The project will date sediment in the depositional environments of the last 50,000 years to complement the facies sedimentological model provided by the consultant. The project will try to reconstruct the variability history of the lagoon system with absolute ages.

L0200: The project will identify an appropriate device. Field testing of sensors. Purchase of sensors for all points. Installation of sensors. Analyze remote data transmission (future project).

L0203: The project will install a remote telemetry system in boreholes.

L0214: The project consists of implementing a 2019 environmental monitoring plan to monitor an optimum compliance of current environmental regulations.

L0217: The project involves quoting new equipment. Purchase of new equipment. Reparation of old equipment for use as backup in the event of unexpected failure of new equipment.

S0134: The project involves showing information online regarding extractions and reinjections from the Salar. Additionally, it includes biotic and hydrogeological information to show authorities and the community the actions implemented by SQM for the environmental variable it has committed to.

Environmental Improvement Initiatives and Projects

C0057: The project is focused on developing and promoting electro-mobility in our company. The project aims to build and maintain operational 1 off-grid electrolinera in Salar del Carmen (charging points of electric vehicles), which will be supplied 100% with solar energy and which will have a bank of lithium batteries which will increase the efficiency of the system, storing the energy not consumed.

C0068: The project consists of the renovation of 11 Maxi light towers, eliminating fuel consumption.

L0147: This project contemplates the reduction of these industrial waste storage points and packaging of different industrial waste according to the RCA and legislation in force.

L0180: Standardization of lighting and electrical circuits for ground transport operations in Salar de Atacama.

L0188: The project involves the participation of an external consulting team to narrow down the sources of the risks identified, propose operational optimization plans, improvements to control systems (monitoring networks) and support in modeling this deposit with a view to a better evolution of short- and medium-term projections (5 years).

L0189: It includes improving the current lysimeter stations and implementing new stations in important sectors that are not currently measured, with the ability to remotely transmit information. This will improve the spatial coverage of the stations that measure evaporation within the basin. This considers consulting with an expert to propose methodological improvements.

L0232: This considers purchase of GPS and a Full Station for measuring stockpiles, salt height. Pursuant to CORFO requests, equipment is needed to provide information.

L0242: This contemplates consulting to study the large-scale behavior of lagoon systems through the development of analytic or semi-analytic solutions.

159 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

S0162: This contemplates the acquisition of technology for optimization and traceability of GHS data.

S0163: The project contains measurement methodology for different terrain parameters and subsequent conceptual modeling.

S0164: This contemplates the unification of proprietary and third-party databases.

S0165: This project takes responsibility for an opportunity to improve the speed of data analysis and efficiency in decision-making.

S0167: This contemplates a series of measures in the conceptualization of the Salar de Atacama basin, as well as updating data sets, which must be implemented to strengthen the model and which will be the management tool model for the basin.

S0169: The project aims to improve the understanding of dynamics between the vegetation and water bodies in the Aguas de Quelana sector.

Sociedad Contractual Minera Búfalo

Environmental Improvement Initiatives and Projects

A0082: The project contemplates the characterization of a potential copper deposit, through the execution of a 3D geophysics program, drilling and sample studies, decreasing the uncertainty of the geological model, as well as processing environmental and sectoral permits that enable the development of activities in the area.

160 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Note 26 Mineral resource exploration and evaluation expenditure

Given the nature of operations of the SQM Group and the type of exploration it undertakes, disbursements for exploration can be found in 4 stages: Execution, economically feasible, not economically feasible and in exploitation:

(a)            Execution: Disbursements for prospecting under implementation and therefore prior to determination of economic feasibility, are classified in accordance with Note 3.23

Chile: ThUS$ 7,517 and ThUS$ 12,841 corresponds to exploration relating caliche and brine exploration as of June 30, 2020 and December 31, 2019, respectively Both are in the Property, Plant and Equipment caption as construction in progress.

For Mt Holland, total disbursements corresponding to construction in progress (which includes exploration disbursements) amount to ThUS$ 39,515 as of June 30, 2020, and ThUS$ 30,475 as of December 31, 2019.

(b)            Economically feasible: Prospecting disbursements corresponding to caliche exploration, wherein the study concluded that its economic feasibility is viable, are classified under “Non-Current Assets in Other Non-current Non-Financial Assets”, The balance as of June 30, 2020, is ThUS$ 6,576 and as of December 31, 2019, it is ThUS$ 6,576.

At June 30, 2020, ThUS$ 3,995 corresponding to advanced metallic exploration are also presented under the heading "Other Non-Current Non-Financial Assets", and as of December 31, 2019, it is ThUS$ 3,433.

For the exploration of the Salar de Atacama, the associated assets correspond to wells that can be used both in monitoring and exploitation of the Salar, Therefore, once the studies are concluded, these are classified as “Non-current Assets” in “Properties, Plants and Equipment”, assigning them a technical useful life of 10 years.

(c)            Not economically feasible: Prospecting disbursements, once finalized and concluded to be not economically feasible, will be charged to profit and loss. As of June 30, 2020, there were no disbursements for this concept and as of December 31, 2019, there was a total of ThUS$ 165 for this concept.

(d)            In Exploitation: Caliche exploration disbursements that are found in this area are amortized based on the material exploited, the portion that is exploited in the following 12 months is presented as “Current Assets” in the “Process Inventories”, the remaining portion is classified as “Other Non-current Non-Financial Assets”.

As of June 30, 2020, the amount in “Process Inventories”, is ThUS$ 1,591 and the balance as of December 31, 2019 for this concept is ThUS$ 1,367, while in the item “Other Non-current Non-Financial Asset” as of June 30, 2020 is ThUS$ 7,534 and as of December 31, 2019 is ThUS$ 8,645.

161 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

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

27.1 Revenue from operating activities customer activities

The Group derives revenues from the sale of goods (which are recognized at one point in time) and from the provision of services (which are recognized over time) and are distributed among the following geographical areas and main product and service lines.

(a) Geographic areas:

For the period ended June 30, 2020
Geographic areas	Specialty plant nutrition		Iodine and derivatives		Lithium and derivatives		Potassium		Industrial chemicals		Other		Total ThUS$
Chile		30,933		675		200		10,063		1,689		9,668		53,228
Latin America and the Caribbean		30,835		5,249		802		14,290		2,185		192		53,553
Europe		85,358		77,978		25,854		17,610		5,761		522		213,083
North America		135,673		51,039		12,827		19,321		11,821		785		231,466
Asia and Others		64,997		53,679		111,532		16,201		52,249		522		299,180
Total		347,796		188,620		151,215		77,485		73,705		11,689		850,510

For the period ended as of June 30, 2019
Geographic areas	Specialty plant nutrition		Iodine and derivatives		Lithium and derivatives		Potassium		Industrial chemicals		Other		Total ThUS$
Chile		31,300		602		296		14,139		2,450		13,909		62,696
Latin America and the Caribbean		47,048		4,254		1,875		18,752		2,939		128		74,996
Europa		93,803		59,342		39,568		17,248		7,643		333		217,937
North America		142,906		43,687		24,470		21,660		14,403		591		247,717
Asia and Others		68,763		78,235		227,343		16,746		3,429		508		395,024
Total		383,820		186,120		293,552		88,545		30,864		15,469		998,370

162 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

(b) Main product and service lines:

	For the period from January to June of the year				For the period from April to June of the year
	2020		2019		2020		2019
Products and Services	ThUS$		ThUS$		ThUS$		ThUS$
Specialty plant nutrition		347,796		383,820		182,719	199,304
- Sodium Nitrates		9,898		10,780		4,814	4,521
-Potassium nitrate and sodium potassium nitrate		219,929		258,962		115,776	137,250
- Specialty Blends		69,384		66,977		37,992	33,641
- Other specialty fertilizers		48,585		47,101		24,137	23,892
Iodine and derivatives		188,620		186,120		90,869	90,305
Lithium and derivatives		151,215		293,552		85,871	138,522
Potassium		77,485		88,545		34,154	44,441
Industrial chemicals		73,705		30,864		59,057	13,902
Other		11,689		15,469		5,803	7,658
- Services		1,529		1,641		753	832
- Income from property leases		766		716		393	348
- Income from subleases on right-of-use assets		106		141		51	64
- Commodities		4,698		4,677		2,814	2,981
-Other ordinary income of Commercial Offices		4,590		8,294		1,792	3,433
Total		850,510		998,370		458,473	494,132

163 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

27.2 Cost of sales

Cost of sales broken down by nature of expense

	For the period from January to June of the year						For the period from April to June of the year
	2020			2019			2020			2019
Nature of expense	ThUS$			ThUS$			ThUS$			ThUS$
Raw materials and consumables used		(140,679	)		(134,009	)		(72,276	)	(65,800	)
Classes of employee benefit expenses		(76,696	)		(85,752	)		(38,177	)	(41,986	)
Depreciation expense		(94,610	)		(94,601	)		(48,226	)	(47,103	)
Depreciation of Right-of-use Assets (contracts under IFRS 16)		(2,414	)		(2,262	)		(923	)	(1,151	)
Amortization expense		(1,999	)		(2,402	)		(808	)	(1,226	)
Investment plan expenses		(8,827	)		(7,869	)		(3,193	)	(6,829	)
Provision for site closure		(455	)		(455	)		(228	)	(227	)
Provision for materials, spare parts and supplies		(2,350	)		(6,557	)		(3,488	)	(1,721	)
Contractors		(62,625	)		(57,306	)		(34,855	)	(31,077	)
Operating leases		(28,751	)		(18,612	)		(15,634	)	(6,833	)
Mining concessions		(3,484	)		(3,979	)		(1,440	)	(1,995	)
Operations transport		(29,290	)		(25,892	)		(16,185	)	(13,983	)
Freight and product transport costs		(24,276	)		(21,234	)		(13,401	)	(10,092	)
Purchase of products from third parties		(112,633	)		(117,432	)		(59,730	)	(64,144	)
Insurance		(7,194	)		(9,758	)		(3,338	)	(3,707	)
CORFO rights and other agreements		(41,036	)		(84,955	)		(17,850	)	(39,448	)
Export costs		(65,769	)		(64,350	)		(41,835	)	(39,046	)
Expenses related to Variable Parts Leases (contracts under IFRS 16))		(548	)		(548	)		(274	)	(274	)
Variation in inventory		91,135			32,098			33,076		18,159
Variation in inventory provision		955			7,050			965		1,311
Other		(3,372	)		(11,520	)		7,194		5,568
Total		(614,918	)		(710,345	)		(330,626	)	(351,604	)

164 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

27.3 Other income

	For the period from January to June of the year				For the period from April to June of the year
	2020		2019		2020			2019
Other income	ThUS$		ThUS$		ThUS$			ThUS$
Discounts obtained from suppliers		319		322		145		160
Fines charged to suppliers		223		200		101		44
Taxes recovered		-		134		-		(1	)
Amounts recovered from insurance		1,037		82		37		25
Overestimate of provisions for third-party obligations		42		34		(351	)	25
Sale of assets classified as properties, plant and equipment		88		-		76		-
Other operating income		824		1,405		360		716
Options on mining claims		3,907		1,284		3,847		1,179
Easements, pipelines and roads		18		5,463		-		463
Mining licenses and notary costs reimbursed		14		187		14		187
Total		6,472		9,111		4,229		2,798

27.4 Administrative expenses

	For the period from January to June of the year						For the period from April to June of the year
	2020			2019			2020			2019
Administrative expenses	ThUS$			ThUS$			ThUS$			ThUS$
Employee benefit expenses		(25,823	)		(28,336	)		(13,144	)	(14,633	)
Marketing costs		(1,191	)		(2,343	)		(487	)	(970	)
Amortization expenses		(38	)		(1	)		(25	)	(1	)
Entertainment expenses		(1,256	)		(3,070	)		(393	)	(1,796	)
Advisory services		(7,793	)		(9,378	)		(3,151	)	(5,066	)
Lease of buildings and facilities		(910	)		(2,104	)		(568	)	(1,422	)
Insurance		(1,574	)		(1,250	)		(967	)	(713	)
Office expenses		(3,039	)		(3,043	)		(1,928	)	(1,627	)
Contractors		-			-			-		-
Depreciation of Right-of-use Assets (contracts under IFRS 16)		(722	)		(788	)		(131	)	(394	)
Other expenses, by nature		(6,572	)		(5,226	)		(3,590	)	(2,412	)
Total		(48,918	)		(55,539	)		(24,384	)	(29,034	)

165 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

27.5 Other expenses, by function

	For the period from January to June of the year						For the period from April to June of the year
	2020			2019			2020			2019
Other expenses by function	ThUS$			ThUS$			ThUS$			ThUS$
Depreciation and amortization expense
Depreciation of assets not in use		(24	)		(15	)		(13	)		(8	)
Subtotal		(24	)		(15	)		(13	)		(8	)
Impairment losses (reversals of impairment losses) recognized in profit (loss) for the year
Property, plant and equipment		-			-			-			-
Intangible assets other than goodwill		(523	)		-			(523	)		-
Goodwill		(140	)		-			(140	)		-
Non-current assets and disowned groups held for sale		(106	)		-			(106	)		-
Subtotal		(769	)		-			(769	)		-
Other expenses, by nature
Legal expenses		(3,274	)		(3,938	)		(2,333	)		515
VAT and other unrecoverable taxes		(67	)		(699	)		148			(398	)
Fines paid		(210	)		(68	)		(51	)		(20	)
Investment plan expenses		(478	)		(1,927	)		(100	)		(1,175	)
Non-metallic exploration expenses		(2,277	)		(2,573	)		(1,170	)		(1,488	)
Donations		(3,987	)		(3,260	)		(2,946	)		(2,536	)
Other operating expenses		(982	)		(820	)		(306	)		(216	)
Subtotal		(11,275	)		(13,285	)		(6,758	)		(5,318	)
Total		(12,068	)		(13,300	)		(7,540	)		(5,326	)

27.6 Other gains (losses)

	For the period from January to June of the year						For the period from April to June of the year
	2020			2019			2020			2019
Other income (expenses)	ThUS$			ThUS$			ThUS$			ThUS$
Adjust previous year application method of participation		(25	)		(694	)		(240	)		(824	)
Impairment of interests in joint ventures		(5,624	)		-			(6,085	)		-
Others		(171	)		(30	)		(195	)		(24	)
Total		(5,820	)		(724	)		(6,520	)		(848	)

166 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

27.7 Impairment of gains and reversal of impairment losses

	For the period from January to June of the year					For the period from April to June of the year
	2020		2019			2020		2019
Description	ThUS$		ThUS$			ThUS$		ThUS$
(Impairment) /reversion of value of financial assets impairment losses		1,889		(2,679	)		119		(3,233	)
Totals		1,889		(2,679	)		119		(3,233	)

27.8 Summary of expenses by nature

The following summary considers notes 27.2, 27.4 and 27.5

	For the period from January to June of the year						For the period from April to June of the year
	2020			2019			2020			2019
Expenses by nature	ThUS$			ThUS$			ThUS$			ThUS$
Raw materials and consumables		(140,679	)		(134,009	)		(72,276	)		(65,800	)
Classes of Employee Benefit Expenses		(102,519	)		(114,088	)		(51,321	)		(56,619	)
Depreciation and amortization expense
Depreciation expense		(94,634	)		(94,616	)		(48,239	)		(47,111	)
Depreciation of Right-of-use Assets		(3,136	)		(3,050	)		(1,054	)		(1,545	)
Amortization expense		(2,037	)		(2,403	)		(833	)		(1,227	)
Legal expenses		(3,274	)		(3,938	)		(2,333	)		515
Investment plan expenses		(9,305	)		(9,796	)		(3,293	)		(8,004	)
Non-metallic exploration expenses		(2,277	)		(2,573	)		(1,170	)		(1,488	)
Provision for site closure		(455	)		(455	)		(228	)		(227	)
Provision for materials, spare parts and supplies		(2,350	)		(6,557	)		(3,488	)		(1,721	)
Contractors		(62,625	)		(57,306	)		(34,825	)		(31,077	)
Leases		(29,661	)		(20,716	)		(16,202	)		(8,255	)
Mining concessions		(3,484	)		(3,979	)		(1,440	)		(1,995	)
Operation transport		(29,290	)		(25,892	)		(16,185	)		(13,983	)
Freight and product transport costs		(24,276	)		(21,234	)		(13,401	)		(10,092	)
Purchase of products from third parties		(112,633	)		(117,432	)		(59,730	)		(64,144	)
CORFO rights		(41,036	)		(84,955	)		(17,850	)		(39,448	)
Export costs		(65,769	)		(64,350	)		(41,835	)		(39,046	)
Expenses related to Variable Parts Leases (IFRS 16)		(548	)		(548	)		(274	)		(274	)
Insurance		(8,768	)		(11,008	)		(4,305	)		(4,420	)
Consultant and advisor services		(7,793	)		(9,378	)		(3,151	)		(5,066	)
Variation in inventory		91,135			32,098			33,076			18,159
Variation in provision on product inventory		955			7,050			965			1,311
Other expenses		(21,445	)		(30,049	)		(3,128	)		(4,407	)
Total expenses by nature		(675,904	)		(779,184	)		(362,550	)		(385,964	)

167 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

27.9 Finance expenses

	For the period from January to June of the year						For the period from April to June of the year
	2020			2019			2020			2019
Finance expenses	ThUS$			ThUS$			ThUS$			ThUS$
Interest expense from bank borrowings and overdrafts		(1,567	)		(1,044	)		(640	)		(571	)
Interest expense from bonds		(44,578	)		(34,323	)		(21,624	)		(17,886	)
Interest expense from loans		(1,020	)		(1,366	)		(466	)		(702	)
Capitalized interest expenses		4,323			2,973			2,094			1,512
Financial expenses for site closure		(481	)		(3,727	)		(165	)		(2,247	)
Interest on lease agreement		(618	)		(578	)		(277	)		(234	)
Other finance costs		(416	)		(500	)		(213	)		(107	)
Total		(44,357	)		(38,565	)		(21,291	)		(20,235	)

168 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

Note 28     Reportable segments

28.1 Reportable segments

(a) General information:

The amount of each item presented in each operating segment is equal to that reported to the highest authority that makes decisions regarding the operation, in order to decide on the allocation of resources to the defined segments and to assess its performance.

These operating segments mentioned are consistent with the way the Company is managed and how results will be reported by the Company. These segments reflect separate operating results that are regularly reviewed by the executive responsible for operational decisions in order to make decisions about the resources to be allocated to the segment and assess its performance (See Note 28.2).

The performance of each segment is measured based on net income and revenues. Inter-segment sales are made using terms and conditions at current market rates.

(b) Factors used to identify segments on which a report should be presented:

The segments covered in the report are strategic business units that offer different products and services. These are managed separately because each business requires different technology and marketing strategies.

(c) Description of the types of products and services from which each reportable segment obtains its income from ordinary activities

The operating segments, which obtain income from ordinary activities, generate expenses and have its operating results reviewed on a regular basis by the highest authority who makes decisions regarding operations, relate to the following groups of products:

1. Specialty plant nutrients

2. Iodine and its derivatives

3. Lithium and its derivatives

4. Industrial chemicals

5. Potassium

6. Other products and services

(d) Description of income sources for all the other segments

Information regarding assets, liabilities, profits and expenses that cannot be assigned to the segments indicated above, due to the nature of production processes, is included under the "Unallocated amounts” category of the disclosed information.

169 

Notes to the Consolidated Interim Financial Statement
June 30, 2020  

(e) Basis of accounting for transactions between reportable segments

Inter-segment sales are made under the same conditions as sales to third parties and are measured consistently as presented in the statement of income.

(f) Description of the nature of the differences between measurements of results of reportable segments and the result of the entity before the expense or income tax expense of incomes and discontinued operations

The information reported in the segments is extracted from the Company’s consolidated financial statements and therefore there is no need to prepare reconciliations between the data mentioned above and those reported in the respective segments, according to what is stated in paragraph 28 of IFRS 8, "Operating Segments".

For the allocation of inventory valuation costs, we identify the direct expenses (can be directly allocated to products) and the common expenses (belong to coproduction processes, for example common leaching expenses for production of Iodine and Nitrates), Direct costs are directly allocated to the product and the common costs are distributed according to percentages that consider different variables in their determination, such as margins, rotation of inventories, revenue, production and etc.

The allocation of other common costs that are not included in the inventory valuation process, but go straight to the cost of sales, use similar criteria: the costs associated with a product or sales in particular are assigned to that particular product or sales, and the common costs associated with different products or business lines are allocated according to the sales.

(g) Description of the nature of the differences between measurements of assets of reportable segments and the Company´s assets

Assets are not shown classified by segments, as this information is not readily available, some of these assets are not separable by the type of activity by which they are affected since this information is not used by management in decision-making with respect to resources to be allocated to each defined segment. All assets are disclosed in the "unallocated amounts" category.

(h) Description of the nature of the differences between measurements of liabilities of reportable segments and the Company’s liabilities

Liabilities are not shown classified by segments, as this information is not readily available, some of these liabilities are not separable by the type of activity by which they are affected, since this information is not used by management in decision-making regarding resources to be allocated to each defined segment. All liabilities are disclosed in the "unallocated amounts" category. 

170 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

28.2 Reportable segment disclosures:

Operating segment items as of June 30, 2020	Specialty plant nutrients			Iodine and its derivatives			Lithium and its derivatives			Industrial chemicals			Potassium			Other products and services			Reportable segments			Operating segments			Unallocated amounts			Total as of June 30, 2020
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Revenue		347,796			188,620			151,215			73,705			77,485			11,689			850,510			850,510			-			850,510
Revenues from transactions with other operating segments of the same entity		-			-			-			-			-			-			-			-			-			-
Revenues from external customers and transactions with other operating segments of the same entity		347,796			188,620			151,215			73,705			77,485			11,689			850,510			850,510			-			850,510
Costs of sales		(267,766	)		(97,080	)		(114,173	)		(53,184	)		(72,076	)		(10,639	)		(614,918	)		(614,918	)		-			(614,918	)
Administrative expenses		-			-			-			-			-			-			-			-			(48,918	)		(48,918	)
Interest expense		-			-			-			-			-			-			-			-			(44,357	)		(44,357	)
Depreciation and amortization expense		(26,064	)		(17,654	)		(26,199	)		(7,244	)		(16,784	)		(5,230	)		(99,175	)		(99,175	)		(632	)		(99,807	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			-			-			6,393			6,393
Income (loss) before taxes		80,078			91,554			36,194			20,597			6,109			1,059			235,591			235,591			(92,836	)		142,755
Income tax expense		-			-			-			-			-			-			-			-			(46,066	)		(46,066	)
Net income (loss)		80,078			91,554			36,194			20,597			6,109			1,059			235,591			235,591			(138,902	)		96,689
Assets		-			-			-			-			-			-			-			-			4,742,403			4,742,403
Equity-accounted investees		-			-			-			-			-			-			-			-			71,561			71,561
Incorporation of non-current assets other than financial instruments, deferred tax assets, net defined benefit assets and rights arising from insurance contracts		-			-			-			-			-			-			-			-			27,555			27,555
Increase of non-current assets		-			-			-			-			-			-			-			-			-			-
Liabilities		-			-			-			-			-			-			-			-			2,622,737			2,622,737
Impairment loss recognized in profit or loss		-			-			-			-			-			-			-			-			1,889			1,889
Reversal of impairment losses recognized in profit or loss for the period		-			-			-			-			-			-			-			-			-			-
Cash flows from (used in) operating activities		-			-			-			-			-			-			-			-			126,986			126,986
Cash flows from (used in) investing activities		-			-			-			-			-			-			-			-			(155,933	)		(155,933	)
Cash flows from (used in) financing activities		-			-			-			-			-			-			-			-			22,906			22,906

171 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Operating segment items as of June 30, 2019	Specialty plant nutrients			Iodine and its derivatives			Lithium and its derivatives			Industrial chemicals			Potassium			Other products and services			Reportable segments			Operating segments			Unallocated amounts			Total as of June 30, 2020
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Revenue		383,820			186,120			293,552			30,864			88,545			15,469			998,370			998,370			-			998,370
Revenues from transactions with other operating segments of the same entity		-			-			-			-			-			-			-			-			-			-
Revenues from external customers and transactions with other operating segments of the same entity		383,820			186,120			293,552			30,864			88,545			15,469			998,370			998,370			-			998,370
Costs of sales		(308,845	)		(115,972	)		(173,081	)		(21,343	)		(77,003	)		(14,101	)		(710,345	)		(710,345	)		-			(710,345	)
Administrative expenses		-			-			-			-			-			-			-			-			(55,539	)		(55,539	)
Interest expense		-			-			-			-			-			-			-			-			(38,565	)		(38,565	)
Depreciation and amortization expense		(33,354	)		(19,956	)		(24,898	)		(3,135	)		(12,363	)		(4,710	)		(98,416	)		(98,416	)		(1,653	)		(100,069	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			-			-			6,822			6,822
Income (loss) before taxes		74,975			70,148			120,471			9,521			11,542			1,368			288,025			288,025			(78,338	)		209,687
Income tax expense, continuing operations		-			-			-			-			-			-			-			-			(58,487	)		(58,487	)
Net income (loss)		74,975			70,148			120,471			9,521			11,542			1,368			288,025			288,025			(136,825	)		151,200
Assets		-			-			-			-			-			-			-			-			4,716,013			4,716,013
Equity-accounted investees		-			-			-			-			-			-			-			-			114,344			114,344
Incorporation of non-current assets other than financial instruments, deferred tax assets, net defined benefit assets and rights arising from insurance contracts		-			-			-			-			-			-			-			-			87,211			87,211
Increase of non-current assets		-			-			-			-			-			-			-			-						-
Liabilities		-			-			-			-			-			-			-			-			2,578,661			2,578,661
Impairment loss recognized in profit or loss		-			-			-			-			-			-			-			-			(2,679	)		(2,679	)
Reversal of impairment losses recognized in profit or loss for the period		-			-			-			-			-			-			-			-			-			-
Cash flows from (used in) operating activities		-			-			-			-			-			-			-			-			210,913			210,913
Cash flows from (used in) investing activities		-			-			-			-			-			-			-			-			(224,538	)		(224,538	)
Cash flows from (used in) financing activities		-			-			-			-			-			-			-			-			252,611			252,611

172 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

28.3 Statement of comprehensive income classified by reportable segments based on groups of products

Items in the statement of comprehensive income as of June 30, 2020	Specialty plant nutrients			Iodine and its derivatives			Lithium and its derivatives			Industrial chemicals			Potassium			Other products and services			Corporate Unit			Total segments and Corporate unit
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Revenue		347,797			188,619			151,215			73,705			77,485			11,689			-			850,510
Costs of sales		(267,719	)		(97,064	)		(115,021	)		(53,108	)		(71,376	)		(10,630	)		-			(614,918	)
Gross profit		80,078			91,555			36,194			20,597			6,109			1,059			-			235,592
Other incomes		-			-			-			-			-			-			6,472			6,472
Administrative expenses		-			-			-			-			-			-			(48,918	)		(48,918	)
Other expenses by function		-			-			-			-			-			-			(12,068	)		(12,068	)
Impairment of gains and review of impairment losses (impairment losses)		-			-			-			-			-			-			1,889			1,889
Other gains (losses)		-			-			-			-			-			-			(5,820	)		(5,820	)
Financial income		-			-			-			-			-			-			10,319			10,319
Financial costs		-			-			-			-			-			-			(44,357	)		(44,357	)
interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			6,393			6,393
Exchange differences		-			-			-			-			-			-			(6,747	)		(6,747	)
Profit (loss) before taxes		80,078			91,555			36,194			20,597			6,109			1,059			(92,837	)		142,755
Income tax expense		-			-			-			-			-			-			(46,066	)		(46,066	)
Profit (loss) from continuing operations		80,078			91,555			36,194			20,597			6,109			1,059			(138,903	)		96,689
Profit (loss) from discontinued operations		-			-			-			-			-			-			-			-
Profit (loss)		80,078			91,555			36,194			20,597			6,109			1,059			(138,903	)		96,689
Profit (loss), attributable to
Profit (loss) attributable to the controller´s owners		-			-			-			-			-			-			95,821			95,821
Profit (loss) attributable to the non-controllers		-			-			-			-			-			-			868			868
Profit (loss)		-			-			-			-			-			-			96,689			96,689

173 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Items in the statement of comprehensive income as of June 30, 2019	Specialty plant nutrients			Iodine and its derivatives			Lithium and its derivatives			Industrial chemicals			Potassium			Other products and services			Corporate Unit			Total segments and Corporate unit
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Revenue		383,820			186,120			293,552			30,864			88,545			15,469			-			998,370
Cost of sales		(308,845	)		(115,972	)		(173,081	)		(21,343	)		(77,003	)		(14,101	)		-			(710,345	)
Gross profit		74,975			70,148			120,471			9,521			11,542			1,368			-			288,025
Other incomes by function		-			-			-			-			-			-			9,111			9,111
Administrative expenses		-			-			-			-			-			-			(55,539	)		(55,539	)
Other expenses by function		-			-			-			-			-			-			(13,300	)		(13,300	)
Impairment of gains and review of impairment losses (impairment losses) determined in accordance with IFRS 9		-			-			-			-			-			-			(2,679	)		(2,679	)
Other gains (losses)		-			-			-			-			-			-			(724	)		(724	)
Financial income		-			-			-			-			-			-			12,418			12,418
Financial costs		-			-			-			-			-			-			(38,565	)		(38,565	)
interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			6,822			6,822
Exchange differences		-			-			-			-			-			-			4,118			4,118
Profit (loss) before taxes		74,975			70,148			120,471			9,521			11,542			1,368			(78,338	)		209,687
Income tax expense		-			-			-			-			-			-			(58,487	)		(58,487	)
Profit (loss) from continuing operations		74,975			70,148			120,471			9,521			11,542			1,368			(136,825	)		151,200
Profit (loss) from discontinued operations		-			-			-			-			-			-			-			-
Profit (loss)		74,975			70,148			120,471			9,521			11,542			1,368			(136,825	)		151,200
Profit (loss), attributable to
Profit (loss) attributable to the controller´s owners		-			-			-			-			-			-			150,724			150,724
Profit (loss) attributable to the non-controllers		-			-			-			-			-			-			476			476
Profit (loss)		-			-			-			-			-			-			151,200			151,200

174 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

28.4 Disclosures on geographical areas

As indicated in paragraph 33 of IFRS 8, the entity discloses geographical information on its revenue from operating activities with external customers and from non-current assets that are not financial instruments, deferred income tax assets, assets related to post-employment benefits or rights derived from insurance contracts.

28.5 Disclosures on main customers

With respect to the degree of dependency of the Company on its customers, in accordance with paragraph 34 of IFRS 8, the Company has no external customers who individually represent 10% or more of its revenue. 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.

175 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

28.6 Segments by geographical areas

Items as of June 30, 2020	Chile		Latin America and the Caribbean		Europe		North America		Asia and others		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Revenue	53,228		53,553		213,083		231,466		299,180		850,510
Investment accounted for under the equity method		-		-		55,555		485		15,521		71,561
Intangible assets other than goodwill		105,877		540		1,133		2,461		77,014		187,025
Goodwill		22,255		86		11,531		724		-		34,596
Property, plant and equipment, net		1,579,258		524		3,750		3,418		42,701		1,629,651
Right-of-use assets		25,878		-		2,623		4,446		85		33,032
Other non-current assets		19,148		25		6		-		-		19,179
Non-current assets		1,752,416		1,175		74,598		11,534		135,321		1,975,044

Items as of June 30, 2019	Chile		Latin America and the Caribbean		Europe		North America		Asia and others		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Revenue	62,696		74,996		217,937		247,717		395,024		998,370
Investment accounted for under the equity method		-		-		61,753		15,156		37,435		114,344
Intangible assets other than goodwill		109,369		-		-		3,313		77,446		190,128
Goodwill		22,535		86		11,511		724		-		34,856
Property, plant and equipment, net		1,476,427		337		4,222		3,455		21,601		1,506,042
Right-of-use assets		28,568		-		-		-		-		28,568
Other non-current assets		15,203		23		4		-		111		15,341
Non-current assets		1,652,102		446		77,490		22,648		136,593		1,889,279

176 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

28.7 Property, plant and equipment classified by geographical areas

The company's main production facilities are located near their mines and extraction facilities in northern Chile. The following table presents the main production facilities as of June 30, 2020 and December 31, 2019:

	Location		Products
-	Pedro de Valdivia	:	Production of iodine and nitrate salts
-	María Elena	:	Production of iodine and nitrate salts
-	Coya Sur	:	Production of nitrate
-	Nueva Victoria	:	Production of iodine and nitrate salts
-	Salar de Atacama	:	Potassium chloride, lithium chloride, boric acid and potassium sulfate
-	Salar del Carmen	:	Production of lithium carbonate and lithium hydroxide
-	Tocopilla	:	Port facilities

177 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Note 29 Borrowing costs

The cost of interest is recognized as an expense in the year in which it is incurred, except for interest that is directly related to the acquisition and construction of tangible property, plant and equipment assets and that complies with the requirements of IAS 23.

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

(a) 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.

Financing costs are not activated for periods that exceed the normal term for acquisition, construction or installation of the property; such is the case for delays, interruptions or temporary suspension of the project due to technical, financial or other problems that make it impossible to leave the property in usable conditions.

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

	As of June 30, 2020			As of June 30, 2019
Costs of capitalized interest	ThUS$			ThUS$
Capitalization rate of costs for capitalized interest		4	%		4	%
Amount of costs for interest capitalized in ThUS$		4,323			2,973

178 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Note 30 Effect of fluctuations in foreign currency exchange rates

a) Foreign currency exchange differences recognized in profit or loss and other comprehensive income:

Foreign currency exchange differences recognized in profit or loss and	As of June 30, 2020			As of June 30, 2019
other comprehensive income	ThUS$			ThUS$
Conversion foreign exchange gains (losses) recognized in the result of the year		(6,747	)		4,118
Conversion foreign exchange reserves
Conversion foreign exchange reserves attributable to the owners of the controlling entity.		(1,406	)		1,712
Conversion foreign exchange reserves attributable to the non-controlling entity.		319			(30	)
Total		(1,087	)		1,682

b) Reserves for foreign currency exchange differences:

As of June 30, 2020, and 2019, foreign currency exchange differences are detailed as follows:

	As of June 30, 2020			As of June 30, 2019
Details	ThUS$			ThUS$
Changes in equity generated by the equity method value through conversion:
Comercial Hydro S.A.		1,004			1,004
SQMC Internacional Ltda.		(9	)		(17	)
Proinsa Ltda.		(10	)		(10	)
Comercial Agrorama Ltda.		121			(37	)
Isapre Norte Grande Ltda.		(95	)		13
Almacenes y Depósitos Ltda.		120			121
Sacal S.A.		(3	)		(3	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		(29	)		(7	)
Agrorama S.A.		534			96
Doktor Tarsa		(13,811	)		(13,811	)
SQM Vitas Fzco		(3,721	)		(1,971	)
Ajay Europe		(1,431	)		(1,326	)
SQM Eastmed Turkey		(234	)		(147	)
Doctochem		(5	)		-
Coromandel SQM India		(431	)		(369	)
SQM Italia SRL		(234	)		(220	)
SQM Oceanía Pty Ltd.		(579	)		(634	)
SQM Indonesia S.A.		(124	)		(124	)
Abu Dhabi Fertillizers Industries WWL.		372			371
SQM Vitas Holland		(192	)		(178	)
SQM Thailand Limited		(68	)		(68	)
SQM Europe		(1,983	)		(1,983	)
SQM Australia Pty Ltd.		(4,006	)		(4,657	)
Pavoni & C. Spa		(178	)		46
Terra Tarsa BV		(96	)		58
Plantacote NV		(15	)		467
Doktolab Tarim Arastirma San.		(85	)		(18	)
Kore Potash PLC (a)		(1,883	)		(1,260	)
SQM Colombia SAS		(80	)		69
Total		(27,151	)		(24,595	)

179 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

c) Functional and presentation currency

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

d) Reasons to use one presentation currency and a different functional currency

-      A relevant portion of the revenues of these subsidiaries are associated with the local currency.

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

180 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Note 31 Disclosures on the effects of fluctuations in foreign currency exchange rates

a) Assets held in foreign currency subject to fluctuations in exchange rates are detailed as follows:

Class of Asset	Currency	As of June 30, 2020 ThUS$		As of December 31, 2019 ThUS$
Cash and cash equivalents	USD		527,872		558,572
Cash and cash equivalents	ARS		-		3
Cash and cash equivalents	CLP		18,948		8,240
Cash and cash equivalents	CNY		7,623		2,484
Cash and cash equivalents	EUR		15,104		3,131
Cash and cash equivalents	GBP		11		3
Cash and cash equivalents	AUD		3,129		8,492
Cash and cash equivalents	INR		6		6
Cash and cash equivalents	MXN		1,382		2,103
Cash and cash equivalents	PEN		4		4
Cash and cash equivalents	AED		2		-
Cash and cash equivalents	JPY		1,673		1,559
Cash and cash equivalents	ZAR		5,838		3,929
Cash and cash equivalents	KRW		36		-
Cash and cash equivalents	IDR		3		3
Cash and cash equivalents	PLN		-		1
Subtotal cash and cash equivalents			581,631		588,530
Other current financial assets	USD		252,415		127,889
Other current financial assets	CLF		-		36,896
Other current financial assets	CLP		241,164		340,705
Subtotal other current financial assets			493,579		505,490
Other current non-financial assets	USD		11,424		16,535
Other current non-financial assets	ARS		-		-
Other current non-financial assets	AUD		147		285
Other current non-financial assets	BRL		-		2
Other current non-financial assets	CLF		15		31
Other current non-financial assets	CLP		19,933		24,374
Other current non-financial assets	CNY		1,964		326
Other current non-financial assets	EUR		629		3,055
Other current non-financial assets	MXN		2,985		2,629
Other current non-financial assets	THB		99		22
Other current non-financial assets	JPY		242		174
Other current non-financial assets	ZAR		25		3,119
Subtotal other non-financial current assets			37,463		50,552
Trade and other receivables	USD		209,989		225,554
Trade and other receivables	PEN		1		6
Trade and other receivables	BRL		14		19
Trade and other receivables	CLF		715		504
Trade and other receivables	CLP		34,400		56,023
Trade and other receivables	CNY		3,373		3,340
Trade and other receivables	EUR		35,499		24,925
Trade and other receivables	GBP		644		148
Trade and other receivables	MXN		740		211
Trade and other receivables	AED		1,372		1,193
Trade and other receivables	THB		1,384		1,695
Trade and other receivables	JPY		32,397		66,266
Trade and other receivables	AUD		794		801
Trade and other receivables	ZAR		4,343		15,900
Trade and other receivables	COP		3,528		2,557
Subtotal trade and other receivables			329,193		399,142
Receivables from related parties	USD		58,240		60,135
Receivables from related parties	EUR		1,860		1,092
Receivables from related parties	AUD		-		-
Subtotal receivables from related parties			60,100		61,227

181 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

Assets held in foreign currency subject to fluctuations in exchange rates are detailed as follows:

Class of assets	Currency	As of June 30, 2020 ThUS$		As of December 31, 2019 ThUS$
Current inventories	USD		1,075,428		983,338
Subtotal Current Inventories			1,075,428		983,338
Current tax assets	USD		105,391		87,509
Current tax assets	ARS		1		1
Current tax assets	CLP		942		1,623
Current tax assets	CNY		3		-
Current tax assets	EUR		3,947		61
Current tax assets	MXN		1,296		1,806
Current tax assets	PEN		3		-
Current tax assets	ZAR		140		139
Current tax assets	COP		-		294
Current tax assets	THB		1		-
Subtotal current tax assets			111,724		91,433
Non-current assets or groups of assets classified as held for sale	USD		32,107		2,454
Subtotal Non-current assets or groups of assets classified as held for sale			32,107		2,454
Total current assets			2,721,225		2,682,166
Non-current assets
Other non-current financial assets	USD		8,189		8,687
Other non-current financial assets	CLP		20		20
Other non-current financial assets	EUR		562		-
Other non-current financial assets	JPY		74		71
Subtotal Other non-current financial assets			8,845		8,778
Other non-current non-financial assets	USD		18,492		19,101
Other non-current non-financial assets	BRL		16		22
Other non-current non-financial assets	COP		8		6
Other non-current non-financial assets	EUR		6		4
Other non-current non-financial assets	CLP		657		596
Subtotal Other non-current non-financial assets			19,179		19,729
Other receivables, non-current	USD		4,017		522
Other receivables, non-current	CLF		122		165
Other receivables, non-current	MXN		124		43
Other receivables, non-current	COP		4		-
Other receivables, non-current	CLP		843		980
Subtotal Other receivables, non-current			5,110		1,710
Investments classified using the equity method of accounting	USD		48,949		57,777
Investments classified using the equity method of accounting	TRY		-		26,624
Investments classified using the equity method of accounting	AED		11,504		9,111
Investments classified using the equity method of accounting	EUR		9,669		14,315
Investments classified using the equity method of accounting	INR		1,144		1,568
Investments classified using the equity method of accounting	THB		295		40
Subtotal Investments classified using the equity method of accounting			71,561		109,435
Intangible assets other than goodwill	USD		184,861		185,951
Intangible assets other than goodwill	MXN		1,082		1,137
Intangible assets other than goodwill	CLP		147		136
Intangible assets other than goodwill	EUR		935		1,134
Subtotal intangible assets other than goodwill			187,025		188,358
Purchases goodwill, gross	USD		34,438		34,438
Purchases goodwill, gross	CLP		-		140
Purchases goodwill, gross	EUR		158		148
Subtotal Purchases goodwill, gross			34,596		34,726
Property, plant and equipment	USD		1,613,915		1,556,160
Property, plant and equipment	CLP		4,169		3,294
Property, plant and equipment	EUR		4,806		4,756
Property, plant and equipment	AED		1,009		-
Property, plant and equipment	BRL		113		-
Property, plant and equipment	MXN		5,429		5,588
Property, plant and equipment	COP		103		108
Property, plant and equipment	ZAR		107		-
Subtotal property, plant and equipment			1,629,651		1,569,906
Right-of-use assets	USD		33,032		37,164
Subtotal Right-of-use assets			33,032		37,164
Current tax assets, non-current	USD		32,179		32,179
Subtotal Current tax assets, non-current			32,179		32,179
Total non-current assets			2,021,178		2,001,985
Total assets			4,742,403		4,684,151

182 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

		As of June 30, 2020						As of December 31, 2019
Class of liability	Currency	Up to 90 days ThUS$		More than 90 days to 1 year ThUS$		Total ThUS$		Up to 90 days ThUS$		More than 90 days to 1 year ThUS$		Total ThUS$
Current liabilities
Other current financial liabilities	USD		28,772		4,254		33,026		20,582		250,694		271,276
Other current financial liabilities	CLF		130,554		52,387		182,941		19,518		323		19,841
Other current financial liabilities	BRL		-		-		-		11		-		11
Subtotal other current financial liabilities			159,326		56,641		215,967		40,111		251,017		291,128
Lease liabilities, current	USD		1,803		4,829		6,632		-		7,694		7,694
Subtotal Lease liabilities, current			1,803		4,829		6,632		-		7,694		7,694
Trade and other payables	USD		72,588		13,483		86,071		44,146		-		44,146
Trade and other payables	BRL		8		-		8		10		-		10
Trade and other payables	THB		10		-		10		53		-		53
Trade and other payables	CLP		76,226		3		76,229		73,703		17,108		90,811
Trade and other payables	CNY		1,613		-		1,613		-		-		-
Trade and other payables	EUR		23,937		1,321		25,258		58,538		5		58,543
Trade and other payables	GBP		18		-		18		17		-		17
Trade and other payables	INR		1		-		1		1		-		1
Trade and other payables	MXN		955		-		955		5,122		-		5,122
Trade and other payables	PEN		4		-		4		5		-		5
Trade and other payables	AUD		2,544		-		2,544		4,442		-		4,442
Trade and other payables	ZAR		637		-		637		2,260		-		2,260
Trade and other payables	AED		-		-		-		188		-		188
Trade and other payables	COP		102		-		102		192		-		192
Subtotal trade and other payables			178,643		14,807		193,450		188,677		17,113		205,790
Trade payables due to related parties, current	USD		215		-		215		475		-		475
Trade payables due to related parties, current	EUR		-		6		6		-		-		-
Trade payables due to related parties, current	JPY		1,204		-		1,204		-		-		-
Subtotal Trade payables due to related parties, current			1,419		6		1,425		475		-		475
Other current provisions	USD		83,691		1,749		85,440		109,650		820		110,470
Other current provisions	ARS		-		-		-		7		-		7
Other current provisions	CLP		146		-		146		82		-		82
Other current provisions	EUR		6		-		6		6		-		6
Other current provisions	JPY		-		-		-		-		-		-
Subtotal other current provisions			83,843		1,749		85,592		109,745		820		110,565

183 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

		As of June 30, 2020						As of December 31, 2019
Class of liability	Currency	Up to 90 days ThUS$		91 days to 1 year ThUS$		Total ThUS$		Up to 90 days ThUS$		91 days to 1 year ThUS$		Total ThUS$
Current tax liabilities	USD		-		20,661		20,661		2,863		14,994		17,857
Current tax liabilities	CLP		-		-		-		-		17		17
Subtotal current tax liabilities			-		20,661		20,661		2,863		15,011		17,874
Provisions for employee benefits, current	USD		11,401		2,933		14,334		12,486		3,901		16,387
Subtotal Provisions for employee benefits, current			11,401		2,933		14,334		12,486		3,901		16,387
Other current non-financial liabilities	USD		90.236		254		90,490		117,136		154		117,290
Other current non-financial liabilities	THB		-		-		-		30		-		30
Other current non-financial liabilities	BRL		2		-		2		3		-		3
Other current non-financial liabilities	CLP		5,058		583		5,641		5,969		2,439		8,408
Other current non-financial liabilities	CNY		35		-		35		-		-		-
Other current non-financial liabilities	EUR		633		112		745		842		-		842
Other current non-financial liabilities	MXN		68		31		99		129		64		193
Other current non-financial liabilities	JPY		41		31		72		21		12		33
Other current non-financial liabilities	PEN		70		-		70		70		-		70
Other current non-financial liabilities	ZAR		176		-		176		10		-		10
Other current non-financial liabilities	COP		-		14		14		20		-		20
Subtotal other current non-financial liabilities			96,319		1,025		97,344		124,230		2,669		126,899
Total current liabilities			532,754		102,651		635,405		478,587		298,225		776,812

184 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

		As of June 30, 2020
Class of liability	Currency	1 to 2 years ThUS$		2 to 3 years ThUS$		3 to 4 years ThUS$		4 to 5 years ThUS$		Over 5 years ThUS$		Total ThUS$
Non-current liabilities
Other non-current financial liabilities	USD		-		51,379		368,170		-		1,086,389		1,505,938
Other non-current financial liabilities	CLF		-		-		-		-		209,478		209,478
Subtotal Other non-current financial liabilities			-		51,379		368,170		-		1,295,867		1,715,416
Non-current lease liabilities	USD		-		-		-		-		27,261		27,261
Subtotal non-current lease liabilities			-		-		-		-		27,261		27,261
Non-current Trade and other payables	USD		9,777		-		-		-		-		9,777
Subtotal Non-current Trade and other payables			9,777		-		-		-		-		9,777
Other non-current provisions	USD		23,280		186		-		1,229		10,187		34,882
Subtotal Other non-current provisions			23,280		186		-		1,229		10,187		34,882
Deferred tax liabilities	USD		66,682		36,206		54,348		15,133		4		172,373
Subtotal Deferred tax liabilities			66,682		36,206		54,348		15,133		4		172,373
Provisions for employee benefits, non-current	USD		26,788		13		-		-		-		26,801
Provisions for employee benefits, non-current	CLP		522		-		-		-		-		522
Provisions for employee benefits, non-current	MXN		95		-		-		-		-		95
Provisions for employee benefits, non-current	JPY		205		-		-		-		-		205
Subtotal Provisions for employee benefits, non-current			27,610		13		-		-		-		27,623
Total non-current liabilities			127,349		87,784		422,518		16,362		1,333,319		1,987,332
Total liabilities													2,622,737

185 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

		As of December 31, 2019
Class of liability	Currency	1 to 2 years		2 to 3 years		3 to 4 years		4 to 5 years		Over 5 years		Total
		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Non-current liabilities
Other non-current financial liabilities	USD		89,896		42,336		313,749		13,749		617,055		1,076,785
Other non-current financial liabilities	CLF		-		-		-		-		411,938		411,938
Subtotal Other non-current financial liabilities			89,896		42,336		313,749		13,749		1,028,993		1,488,723
Non-current lease liabilities	USD		-		-		-		-		30,203		30,203
Subtotal non-current lease liabilities			-		-		-		-		30,203		30,203
Non-current Trade and other payables	USD		-		-		-		-		-		-
Subtotal Non-current Trade and other payables			-		-		-		-		-		-
Other non-current provisions	USD		23,014		167		-		1,452		10,057		34,690
Subtotal Other non-current provisions			23,014		167		-		1,452		10,057		34,690
Deferred tax liabilities	USD		69,048		-		-		114,353		10		183,411
Subtotal Deferred tax liabilities			69,048		-		-		114,353		10		183,411
Provisions for employee benefits, non-current	USD		34,884		-		-		-		-		34,884
Provisions for employee benefits, non-current	CLP		519		-		-		-		-		519
Provisions for employee benefits, non-current	MXN		236		-		-		-		-		236
Provisions for employee benefits, non-current	JPY		201		-		-		-		-		201
Subtotal Provisions for employee benefits, non-current			35,840		-		-		-		-		35,840
Total non-current liabilities			217,798		42,503		313,749		129,554		1,069,263		1,772,867
Total liabilities													2,549,679

b) Effect of exchange rate changes on the statement of income

	For the period from January to June of the year
Foreign currency exchange rate changes	2020			2019
	ThUS$			ThUS$
Profit (loss) in foreign currency		(6,747	)		4,118
Net profit in foreign currency		-			-
Net loss in foreign currency		-			-
Foreign currency translation reserve		(1,406	)		1,712
Total		(8,153	)		5,830

The average and closing exchange rate for foreign currency is revealed in Note 3.3

186 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 32    Income tax and deferred taxes

Accounts receivable from taxes as of June 30, 2020 and December 31, 2019, are as follows:

32.1 Current and non-current tax assets

a)      Current

Current tax assets	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
Monthly provisional income tax payments, Chilean companies		23,540			47,283
Monthly provisional income tax payments, foreign companies		6,204			124
Corporate tax credits (1)		(3,096	)		1,262
1st category tax absorbed by tax loss (2)		-			916
Taxes in recovery process		85,076			41,848
Total		111,724			91,433

b) Non-current

Non-current tax assets	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Monthly provisional income tax payments, Chilean companies compensated by the specific tax on mining activity (Lithium)		6,398		6,398
Specific tax on mining activities (IEAM) paid by Lithium (on consignment)		25,781		25,781
Total		32,179		32,179

(1) These credits are available for Companies and are related to corporate tax payments in April of the following year, these credits include, among others, credits for training expenses (SENCE), credits for acquisition of fixed assets, donations and credits in Chile for taxes paid abroad.

(2) This concept corresponds to the absorption of the tax losses determined by the company at the end of the year, which must be attributed to the dividends received during the year.

187 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

32.2 Current tax liabilities

Current tax liabilities	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
1st Category income tax		7,534		7,863
Foreign company income tax		13,084		9,944
Article 21 single tax		43		67
Total		20,661		17,874

Income tax is calculated based on the profit or loss for tax purposes that is applied to the effective tax rate applicable in Chile. As established by Law No. 20,780 is 27%.

The royalty is determined by applying the taxable rate to the net operating income obtained, according to the chart in force, the Company currently provisioned 5% for mining royalties that involve operations in the Salar de Atacama and 6.07% for caliche extraction operations.

The income tax rate for the main countries where the Company operates is presented below:

Country	Income tax			Income tax
	2020			2019
Spain		25	%		25	%
Belgium		29.58	%		29.58	%
Mexico		30	%		30	%
United States		21% + 6%			21% + 6%
South Africa		28	%		28	%

188 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

32.3 Income tax and deferred taxes

Assets and liabilities recognized in the statement of financial position are offset if and only if:

(a) The Company has recognized legally before the tax authority the right to offset the amounts recognized in these entries; and

(b) 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 exercise tax 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.

Recognized deferred income tax assets are the income taxes that are to be recovered in future periods, related to:

a)            deductible temporary differences.

b)            the offsetting of losses obtained in prior periods and not yet subject to tax deduction; and

c)            the offsetting 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 these losses or unused fiscal credits.

Recognized deferred tax liabilities refer to the amounts of income taxes payable in future periods related to taxable temporary differences.

189 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(a) Deferred tax assets and liabilities as of June 30, 2020

Description of deferred tax assets and liabilities as of June 30, 2020	Net liability position
	Assets		Liabilities
	ThUS$		ThUS$
Unrealized loss		95,413		-
Property, plant and equipment and capitalized interest		-		(190,697	)
Facility closure provision		7,448		-
Manufacturing expenses		-		(116,872	)
Staff severance indemnities, unemployment insurance		-		(5,463	)
Vacation accrual		5,330		-
Inventory provision		22,946		-
Materials provision		8,622		-
Forward		2,525		-
Research and development expenses		-		(3,604	)
Accounts receivable		2,587		-
Provision for legal complaints and expenses		2,144		-
Loan approval expenses		-		(5,338	)
Financial instruments recorded at market value		-		(1,507	)
Specific tax on mining activity		-		(1,395	)
Tax loss benefit		5,136		-
Other		-		(578	)
Foreign items (other)		930		-
Balances to date		153,081		(325,454	)
Net balance				(172,373	)

190 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(b)
Deferred tax assets and liabilities as of December 31, 2019

Description of deferred tax assets and liabilities	Net liability position
	Assets		Liabilities
	ThUS$		ThUS$
Unrealized loss		82,075		-
Property, plant and equipment and capitalized interest		-		(197,167	)
Facility closure provision		7,313		-
Manufacturing expenses		-		(106,420	)
Staff severance indemnities, unemployment insurance		-		(6,000	)
Vacation		5,591		-
Inventory provision		23,885		-
Materials provision		7,982		-
Employee benefits		2,689		-
Research and development expenses		-		(3,533	)
bad debt provision		3,542		-
Provision for legal complaints and expenses		2,546		-
Loan approval expenses		-		(3,856	)
Financial instruments recorded at market value		-		(1,287	)
specific tax on mining activity		-		(1,357	)
Tax loss benefit		2,296		-
Other		-		(2,021	)
Foreign items (other)		311		-
Balances to date		138,230		(321,641	)
Net balance				(183,411	)

191 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(c) Reconciliation of changes in deferred tax liabilities (assets) as of June 30, 2020

Reconciliation of changes in deferred tax liabilities (assets)	Deferred tax liability (asset) at beginning of period			Deferred tax expense (benefit) recognized in profit (loss) for the year			Deferred taxes related to items credited (charged) directly to equity			Total increases (decreases) in deferred tax liabilities (assets)			Deferred tax liability (asset) at end of period
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Unrealized loss		(82,076	)		(13,337	)		-			(13,337	)		(95,413	)
Property, plant and equipment and capitalized interest		197,167			(6,470	)		-			(6,470	)		190,697
Facility closure provision		(7,312	)		(136	)		-			(136	)		(7,448	)
Manufacturing expenses		106,420			10,452			-			10,452			116,872
Staff severance indemnities, unemployment insurance		6,000			(557	)		20			(537	)		5,463
Vacation accrual		(5,591	)		261			-			261			(5,330	)
Inventory provision		(23,885	)		939			-			939			(22,946	)
Materials provision		(7,982	)		(640	)		-			(640	)		(8,622	)
Forward		-			4,305			(4,305	)		-			-
Employee benefits		(2,689	)		164			-			164			(2,525	)
Research and development expenses		3,534			70			-			70			3,604
Accounts receivable		(3,542	)		955			-			955			(2,587	)
Provision for legal complaints and expenses		(2,546	)		402			-			402			(2,144	)
Loan approval expenses		3,856			1,482			-			1,482			5,338
Junior mining companies (valued based on stock price)		1,287			-			220			220			1,507
specific tax on mining activity		1,356			41			(2	)		39			1,395
Tax loss benefit		(2,296	)		(2,840	)		-			(2,840	)		(5,136	)
Other		2,021			(1,443	)		-			(1,443	)		578
Foreign items (other)		(311	)		(619	)		-			(619	)		(930	)
Total temporary differences, unused losses and unused tax credits		183,411			(6,971	)		(4,067	)		(11,038	)		172,373

192 

Notes to the Consolidated Interim Financial Statement June 30, 2020

(d)           Reconciliation of changes in deferred tax liabilities (assets) as of December 31, 2019

Reconciliation of changes in deferred tax liabilities (assets)	Deferred tax liability (asset) at beginning of period			Deferred tax expense (benefit) recognized in profit (loss) for the year			Deferred taxes related to items credited (charged) directly to equity			Total increases (decreases) in deferred tax liabilities (assets)			Deferred tax liability (asset) at end of period
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Unrealized loss		(75,832	)		(6,243	)		-			(6,243	)		(82,075	)
Property, plant and equipment and capitalized interest		196,843			324			-			324			197,167
Facility closure provision		(4,280	)		(3,033	)		-			(3,033	)		(7,313	)
Manufacturing expenses		103,760			2,660			-			2,660			106,420
Staff severance indemnities, unemployment insurance		5,679			1,007			(686	)		321			6,000
Vacation accrual		(5,155	)		(436	)		-			(436	)		(5,591	)
Inventory provision		(28,155	)		4,270			-			4,270			(23,885	)
Materials provision		(6,239	)		(1,743	)		-			(1,743	)		(7,982	)
Forward		(2,169	)		(514	)		2,683			2,169			-
Employee benefits		(3,309	)		620			-			620			(2,689	)
Research and development expenses		2,216			1,317			-			1,317			3,533
bad debt provisions		(4,188	)		646			-			646			(3,542	)
Provision for legal complaints and expenses		(4,013	)		1,467			-			1,467			(2,546	)
Loan approval expenses		2,337			1,519			-			1,519			3,856
Financial instruments recorded at market value		976			-			311			311			1,287
specific tax on mining activity		3,278			(1,905	)		(16	)		(1,921	)		1,357
Tax loss benefit		(1,124	)		(1,172	)		-			(1,172	)		(2,296	)
Other		(5,005	)		7,026			-			7,026			2,021
Foreign items (other)		(259	)		(52	)		-			(52	)		(311	)
Total temporary differences, unused losses and unused tax credits		175,361			5,758			2,292			8,050			183,411

(e)           Deferred taxes related to benefits for tax losses

The Company’s tax loss carryforwards were mainly generated by losses in Chile, which in accordance with current Chilean tax regulations have no expiration date.

As of June 30, 2020, and December 31, 2019, tax loss carryforwards are detailed as follows:

Deferred taxes related to benefits for tax losses	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Chile		4,748		2,296
Foreign		388		-
Total		5,136		2,296

The tax losses as of June 30, 2020 that form the basis of these deferred taxes correspond mainly to SQM S.A., SQM Potasio S.A., SIT S.A., Exploraciones Mineras S.A., Comercial Agrorama Ltda., Orcoma SpA. and Orcoma Estudio SpA.

The tax losses from foreign companies correspond mainly to SQM Africa Pty Ltd.

193 

Notes to the Consolidated Interim Financial Statement June 30, 2020

(f)            Movements in deferred tax assets and liabilities

Movements in deferred tax assets and liabilities as of June 30, 2020 and December 31, 2019 are detailed as follows:

	Assets (liabilities)
Movements in deferred tax assets and liabilities	As of June 30, 2020			As of December 31, 2019
	ThUS$			ThUS$
Deferred tax assets and liabilities, net opening balance		(183,411	)		(175,361	)
Increase (decrease) in deferred taxes in profit or loss		6,971			(5,758	)
Increase (decrease) in deferred taxes in equity		4,067			(2,292	)
Total		(172,373	)		(183,411	)

(g)            Disclosures on income tax (expenses) income

The Company recognizes current and deferred taxes as income or expenses, and they are included in profit or loss, unless they arise from:

(i) 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

(ii) a business combination

Current and deferred tax (expenses) income are detailed as follows:

	(Expense) Income
Disclosures on income tax expense (benefit)	As of June 30, 2020			As of June 30, 2019
	ThUS$			ThUS$
Current income tax expense
Current tax expense		(51,261	)		(63,913	)
Adjustments to prior year current income tax		(1,776	)		11,433
Current income tax expense, net, total		(53,037	)		(52,480	)
Deferred tax expense
Deferred tax expense (income) relating to the creation and reversal of temporary differences		4,093			2,735
Tax adjustments related to the creation and reversal of temporary differences from the previous year		2,878			(8,742	)
Deferred tax expense, net, total		6,971			(6,007	)
Income tax expense		(46,066	)		(58,487	)

194 

Notes to the Consolidated Interim Financial Statement June 30, 2020  

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

	(Expense) Income
Income tax (expense) benefit	As of June 30, 2020			As of June 30, 2019
	ThUS$			ThUS$
Current income tax benefit (expense) by foreign and domestic parties, net
Current income tax benefit (expense), foreign parties, net		(3,886	)		(3,953	)
Current income tax benefit (expense), domestic, net		(49,151	)		(48,527	)
Current income tax expense, net, total		(53,037	)		(52,480	)
Deferred tax benefit (expense) by foreign and domestic parties, net
Current income tax benefit (expense), foreign parties, net		224			717
Current income tax benefit (expense), domestic, net		6,747			(6,724	)
Deferred tax expense, net, total		6,971			(6,007	)
Income tax expense		(46,066	)		(58,487	)

(h) Equity interest in taxation attributable to equity-accounted investees

The Company does not recognize any deferred tax liability in all cases of taxable temporary differences associated with investments in subsidiaries, branches and associated companies or interest in joint ventures, because as indicated in the standard, the following two conditions are jointly met:

(i) the parent, investor or interest holder is able to control the time for reversal of the temporary difference; and

(ii) It is more likely than not that the temporary difference will not be reversed in the foreseeable future.

In addition, the Company does not recognize deferred income tax assets for all deductible temporary differences from investments in subsidiaries, branches and associated companies or interests in joint ventures because it is unlikely that they will meet the following requirements:

(i) Temporary differences are reversed in a foreseeable future; and

(ii) The Company has tax earnings, against which temporary differences can be used.

195 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(i)            Disclosures on the tax effects of other comprehensive income components:

	As of June 30, 2020
Income tax related to other income and expense components with a charge or credit to net equity	Amount before taxes (expense) gain			(Expense) income for income taxes			Amount after taxes
	ThUS$			ThUS$			ThUS$
Gain (loss) from defined benefit plans		143			(18	)		125
Cash flow hedge		(17,033	)		4,305			(12,728	)
Reserve for gains (losses) from financial assets measured at fair value through other comprehensive income		816			(220	)		596
Total		(16,074	)		4,067			(12,007	)

	As of June 30, 2019
Income tax related to other income and expense components with a charge or credit to net equity	Amount before taxes (expense) gain			(Expense) income for income taxes			Amount after taxes
	ThUS$			ThUS$			ThUS$
Gain (loss) from defined benefit plans		(2,865	)		777			(2,089	)
Cash flow hedge		3,938			-			3,939
Reserve for gains (losses) from financial assets measured at fair value through other comprehensive income		195			(53	)		142
Total		1,268			724			1,992

(j)            Explanation of the relationship between expense (income) for tax purposes and accounting income.

Based on IAS 12, paragraph 81, letter “c”, the company has estimated that the method that reveals the most significant information for users of the financial statements is the numeric conciliation between the tax expense (income) and the result of multiplying the accounting profit by the current rate in Chile. The aforementioned choice is based on the fact that the Company and subsidiaries established in Chile generate a large part of the Company’s tax expense (income). The amounts provided by subsidiaries established outside Chile have no relative importance in the overall context.

Conciliation of numbers in income tax expenses (income) and the result of multiplying financial gain by the rate prevailing in Chile.

	Expense (Benefits)
Income Tax Expense (Benefit)	As of June 30, 2020			As of June 30, 2019
	ThUS$			ThUS$
Consolidated income before taxes		142,755			209,687
Income tax rate in force in Chile		27	%		27	%
Tax expense using the legal rate		(38,544	)		(56,615	)
Effect of royalty tax payments		(2,601	)		(2,628	)
Tax effect of revenue from regular activities exempt from taxation		76			1,655
Tax rate effect of non-tax-deductible expenses for determining taxable profit (loss)		(935	)		(1,083	)
Tax effect of tax rates supported abroad		(3,255	)		48
Other tax effects from reconciliation between accounting gains and tax expenses		(807	)		136
Tax expense using the effective rate		(46,066	)		(58,487	)

196 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

(k)            Tax periods potentially subject to verification:

The Group’s Companies are potentially subject to income tax audits by tax authorities in each country These audits are limited to a number of interim tax periods, which, in general, when they elapse, give rise to the expiration of these inspections.

Tax audits, due to their nature, are often complex and may require several years. Below, we provide a summary of tax periods that are potentially subject to verification, in accordance with the tax regulations in force in the country of origin:

(i) Chile

According to article 200 of Decree Law No 830, the taxes will be reviewed for any deficiencies in terms of payment and to generate any taxes that might arise. There is a 3-year prescriptive period for such review, dating from the expiration of the legal deadline when payment should have been made. This prescriptive period can be extended to 6 years for the revision of taxes subject to declaration, when such declaration has not been filed or has been presented with maliciously false information.

(ii) United States

In the United States, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return. In the event that an omission or error is detected in the tax return of sales or cost of sales, the review can be extended for a period of up to 6 years.

(iii) Mexico:

In Mexico, the tax authority can review tax returns up to 5 years from the expiration date of the tax return.

(iv) Spain:

In Spain, the tax authority can review tax returns up to 4 years from the expiration date of the tax return.

(v) Belgium:

In Belgium, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return if no tax losses exist. In the event of detecting an omission or error in the tax return, the review can be extended for a period of up to 5 years.

On December 31, 2019, a current tax of ThUS$ 1,068 was applied, which corresponds to a difference in taxes in SQM Europe N.V. determined at the end of an audit of transfer prices in the 2017 trade year.

(vi) South Africa:

In South Africa, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return. In the event that an omission or error in the tax return is detected, the review can be extended for a period of up to 5 years.

197 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 33    Assets held for sale and detail of assets sold

The non-current assets held for sale and the components of the disposal groups classified as held for sale are presented in the Consolidated Statement of Financial Position under the item “Non-current assets or groups of assets classified as held for sale”.

The following table shows the movements in assets held for sale:

Assets held for sale	As of June 30, 2020		As of December 31, 2019
	ThUS$		ThUS$
Land owned by Soquimich Comercial S.A.		1,605		2,254
Investments in associates and joint ventures (1)		30,502		-
Total assets held for sale		32,107		2,254

(1) An impairment corresponding to assets held for sale of associates and joint ventures was registered in an amount of US$ 6,085 million, which is reflected in the income statement in the line “Share of profits of associates and joint ventures accounted for using equity method.”

198 

Notes to the Consolidated Interim Financial Statement
June 30, 2020

Note 34    Events occurred after the reporting date

34.1 Authorization of the financial statements

The consolidated financial statements of Sociedad Química y Minera de Chile S.A. and subsidiaries, prepared in accordance with IFRS for the period ended June 30, 2020, were approved and authorized for issuance by the Company´s Board of Directors on August 19, 2020.

34.2 Disclosures on events occurring after the reporting date

The total financial impact of COVID-19 cannot be reasonably estimated at this time, due to uncertainty as to its severity and duration. It was anticipated that average sales volumes and prices will depend on the duration of the coronavirus in different markets, the efficiency of the measures implemented to contain the spread of the virus in each country, and the fiscal and national incentives that can be implemented in different jurisdictions to promote economic recovery. The Company continues to monitor and evaluate the spread of the coronavirus and its impact on our operations, business, financial condition and results of operations.

On August 12, 2020, the SMA and SQM Salar dropped the motion for cassation filed in the environmental process reported in Note 23.3. For more details, please refer to this note.

Management has no knowledge of other significant events occurring between June 30, 2020 and the date of issue of these consolidated financial statements, which could have a significant effect on these.

199 

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: September 10, 2020	/s/ Gerardo Illanes
		By: Gerardo Illanes

CFO

Persons who are to respond to the collection of information contained SEC 1815 (04-09) in this form are not required to respond unless the form displays currently valid OMB control number.

200