Santiago,
Chile, April 26, 2012 - Sociedad Química y Minera de Chile S.A. (SQM)
(NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) informs that on May 30, 2013
it held its first quarter 2013 earnings conference call. The following items were discussed as part of
the conference call:
Specialty Plant
Nutrition
It is anticipated the
average prices for the SPN business line will be about $US50 less in 2013 than
prices seen during 2012.
Iodine and Derivative
As a leading producer
in this market, our strategy is to optimize margins as a result of the
significant price increase over the past two years. The company expects that
volumes will be down 5-7% between 2012 and 2013. SQM does its own market analysis
on iodine to estimate different producers’ costs. Based on our estimates, and
very little public information, we believe that we are in the first quartile on
the cost curve.
Lithium and
Derivatives
The Company reported
weak volumes in the first quarter of 2013. Some of the volumes will be
recovered during the remainder of 2013, but we expect volumes for the full year
to be down around 5% for 2013, when compared to 2012. Positively, the price for lithium carbonate
is up around 8% when compared to the fourth quarter of 2012. Public information is limited in terms of the
competitions’ costs for this business line, but the company believes that it is
in the first quartile on the cost curve.
Lithium capacity is currently approximately 48,000 metric tons. The Company is working
on engineering to increase to 60,000 metric tons, but a final decision to move
forward has not been made yet. This
expansion will mainly decrease bottlenecking in the plant.
Potassium Chloride & Potassium Sulfate (MOP
& SOP)
The Company saw strong volumes in this business
line during the first quarter of 2013, but was impacted by lower prices when
compared to 2012. It is believed that this price impact has been seen, and that
prices should remain relatively stable with the first quarter throughout the
remainder of 2013. Current production of MOP and SOP is around 1.9 – 2.0
million metric tons per year. The company plans to expand its operation to approximately
2.3 million by the end of 2014. Most of the increases in MOP volumes will
likely be sold in the Potassium Chloride and Potassium Sulfate Business line
rather than the SPN business line, but it will depend on the SPN market. The
Company remains limited to expansions beyond this mainly as a result of
environmental approvals and permits, but according to our current permit, we
may continue increasing capacity in the future. Estimated costs for this
expansion are outline below under “Capital Expenditure Plan”.
Industrial Chemicals
The Company estimates that solar salt sales within
this business line will decrease from approximately 165,000 metric tons in 2012
to around 70,000 metric tons in 2013.
Capital Expenditure Plan
The
Company plans to spend approximately US$500 million on its annual capital
expenditure plan in 2013. Maintenance Capital Expenditures will be
approximately US$180 million, and about US$240 million will be used for the
expansion of potassium based products in the Salar de Atacama. The Company is
investing in preparing water supply for the next 2,500 ton expansion of iodine in
the first region of Chile. The final decision to go forward with this iodine
expansion has not been finalized, and the decision will depend on market
conditions. There is no foreseeable dilution of costs resulting of this
potential expansion.
A
capital expenditure plan for 2014 has not been determined, but we expect it
will be lower than 2013.
Cost Outlook 2013
In general there continues to be pressure on
labor costs resulting from minimal unemployment in Chile, particularly the
mining industry as a result of a boom in copper and as a result of the exchange
rate. A significant portion of the company’s labor costs are in Chilean Pesos.
It is estimated the inflation for costs during 2013 will be around 5%.
General Outlook 2013
It is anticipated that gross margin for 2013
will be less than 2012.