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.

 

 

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.

 

 

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.

 

 

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.

 

 

 

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.

 

 

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.

 

 

 

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.

 

 

 

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;

 

 

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).

 

 

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.

 

 

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.

 

 

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

 

 

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.

 

 

 

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)

 

 

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.

 

 

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

 

 

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.

 

 

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.

 

  

 

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.

 

 

 

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

 

 

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.

 

 

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''.

 

 

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.

 

 

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.

 

 

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.

 

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

 

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).

 

 

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.

 

 

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).

 

 

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.

 

 

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.

 

 

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.
 

 

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

 

 

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.

 

 

 

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

 

 

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.

 

 

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.

 

 

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.

 

 

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

 

 

 

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.

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

 

 

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.”

 

 

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.

 

 

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

 

 

 

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

 

 

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.

 

 

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.

 

 

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.”

 

 

 

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

 

 

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	)

 

 

 

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.

 

 

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.

 

 

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

 

 

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

 

 

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

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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

 

 

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.

 

 

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

 

 

 

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

-

  

 

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

 

 

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.

 

 

 

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

 

 

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

 

 

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

 

 

 

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	)

 

 

 

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

 

 

 

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

 

 

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.

 

 

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.

 

 

 

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

 

 

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

 

 

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

 

 

 

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

 

 

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

 

 

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

 

 

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.

 

 

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.

 

 

 

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

 

 

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

 

 

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.

 

 

 

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				-

 

 

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				-

 

 

 

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.

 

 

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.

 

 

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

%

 

 

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

 

 

 

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

 

 

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

 

 

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

 

 

 

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.

 

 

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

 

 

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.

 

 

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.

 

 

 

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	)

 

 

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

 

 

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

 

 

 

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	)

 

 

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

 

 

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

 

 

 

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	)

 

 

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

 

 

 

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	)

 

 

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.

 

 

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	)

 

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

 

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.

 

 

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.

 

 

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.

 

 

 

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

 

 

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.

 

 

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.

 

 

 

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

 

 

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.

 

 

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.

 

 

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.

 

 

 

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	)

 

 

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).

 

 

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.

 

 

 

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

 

 

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.

 

 

 

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

 

 

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

 

 

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

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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:

 

 

 

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

 

 

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

 

 

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

 

 

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

 

 

 

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.

 

 

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).

 

 

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.

 

 

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.

 

 

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.

 

 

 

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

 

 

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

 

 

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	)

 

 

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	)

 

 

 

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	)

  

 

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	)

 

 

 

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	)

 

  

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.

 

 

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. 

 

 

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

 

 

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

 

 

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

 

 

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

  

 

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.

 

 

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

 

 

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

 

 

 

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

 

 

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	)

 

 

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.

 

 

 

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

 

 

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

 

 

 

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

 

 

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

 

 

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

 

 

 

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

 

 

 

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.

 

 

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	%

 

 

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.

 

 

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	)

 

 

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	)

 

 

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

 

 

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.

 

 

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	)

 

 

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.

 

 

 

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	)

 

 

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.

 

 

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.”

 

 

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.

 

 

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

 

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