UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the nine month period ended on September 30, 2004.
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
(Exact name of registrant as specified in its charter)
CHEMICAL AND MINING COMPANY OF CHILE INC.
(Translation of registrant’s name into English)
El Trovador 4285, 6th Floor, Santiago, Chile (562) 425-2000
(Address and phone number of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F             Form 40-F    
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes            No    
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82___________
On November 9, 2004, the Registrant filed with the Superintendencia de Valores y Seguros of Chile (the "SVS") a report that included information as to the Registrant’s consolidated financial condition and results of operations for the nine-month period ended on September 30, 2004. Attached is a summary of such consolidated financial information included in the summary and in the report filed with the Superintendencia de Valores y Seguros of Chile. This financial information was prepared on the basis of accounting principles generally accepted in Chile and does not include a reconciliation of such information to accounting principles generally accepted in the United States of America.
THIS REPORT IS AN ENGLISH TRANSLATION OF, AND A CHILEAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES PRESENTATION OF, A NINE MONTH PERIOD ENDED SEPTEMBER 30, 2004 REPORT FILED WITH THE SUPERINTENDENCIA DE VALORES Y SEGUROS (SVS) IN CHILE, AND UNLESS OTHERWISE INDICATED, FIGURES ARE IN US DOLLARS.	

Consolidated Financial Statements
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
As of September 30, 2004 and 2003
and for the years ended September 30, 2004 and 2003
(A translation of the original in Spanish- see note 2 (a))
Contents
Consolidated Financial Statements	 	
 	 	
Consolidated Balance Sheets	4	
Consolidated Statements of Income	6	
Consolidated Statements of Cash Flows	7	
Notes to the Consolidated Financial Statements	8	
 	 	 	
Ch$	—	Chilean pesos	
ThCh $	—	Thousands of Chilean pesos	
US$	—	United States dollars	
ThUS$	—	Thousands of United States dollars	
UF	—	The UF is an inflation-indexed, Chilean peso-denominated monetary unit. The UF rate is set daily in advance, based on the change in the Consumer Price Index of the previous month.	

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
Consolidated Balance Sheets 
(A translation of the original in Spanish- see note 2 (a))
 	 	 	As of September 30,	 	
 	Note	 	2004	 	2003	 	
 	 	 		 		 	
 	 	 	ThUS$	 	ThUS$	 	
ASSETS	 	 	 	 	 	 	

Current assets	 	 	 	 	 	 	
Cash	 	 	17,117	 	14,070	 	
Time deposits	 	 	40,552	 	10,849	 	
Marketable securities	4	 	57,192	 	49,811	 	
Accounts receivable, net	5	 	169,633	 	159,069	 	
Other accounts receivable, net	5	 	11,360	 	8,658	 	
Accounts receivable from related companies	6	 	29,113	 	24,724	 	
Inventories, net	7	 	260,601	 	227,843	 	
Recoverable taxes	 	 	16,240	 	13,865	 	
Prepaid expenses	 	 	5,300	 	3,147	 	
Other current assets	 	 	6,924	 	9,949	 	
 	 	 		 		 	
Total current assets	 	 	614,032	 	521,985	 	

Property, plant and equipment, net	8	 	671,622	 	705,535	 	
 	 	 		 		 	
Other Assets	 	 	 	 	 	 	
Investments in related companies	9	 	15,208	 	54,207	 	
Goodwill, net	10	 	4,569	 	13,085	 	
Negative goodwill, net	10	 	(322	)	(543	)	
Intangible assets, net	 	 	4,571	 	4,781	 	
Long-term accounts receivable, net	5	 	277	 	3,820	 	
Long-term accounts receivable from related companies	6	 	—	 	380	 	
Other long-term assets	11	 	53,461	 	58,673	 	
 	 	 		 		 	
Total Other Assets	 	 	77,764	 	134,403	 	
 	 	 		 		 	
Total assets	 	 	1,363,418	 	1,361,923	 	
 	 	 		 		 	
The accompanying notes form an integral part of these consolidated financial statements.
4

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
Consolidated Balance Sheets 
(A translation of the original in Spanish- see note 2 (a))
 	 	 	As of September 30,	 	
 	Note	 	2004	 	2003	 	
 	 	 		 		 	
 	 	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	 	
LIABILITIES AND SHAREHOLDERS’ EQUITY	 	 	 	 	 	 	
 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	
Short-term bank debt	12	 	54,334	 	1,274	 	
Current portion of long-term debt	12	 	642	 	33,683	 	
Dividends payable	 	 	166	 	238	 	
Accounts payable	 	 	51,113	 	50,958	 	
Other accounts payable	 	 	1,780	 	1,857	 	
Notes and accounts payable to related companies	6	 	11,894	 	5,867	 	
Accrued liabilities	13	 	19,351	 	16,053	 	
Withholdings	 	 	3,225	 	3,048	 	
Income taxes	 	 	9,157	 	2,747	 	
Deferred income taxes	14	 	6,410	 	1,865	 	
Deferred income	 	 	945	 	3,436	 	
Other current liabilities	 	 	837	 	669	 	
 	 	 		 		 	
Total current liabilities	 	 	159,854	 	121,695	 	

 	 	 	 	 	 	 	
Long-term liabilities	 	 	 	 	 	 	
Long-term bank debt	12	 	200,000	 	308,000	 	
Other accounts payable	 	 	1,976	 	2,878	 	
Deferred income taxes	14	 	33,618	 	22,100	 	
Staff severance indemnities	15	 	10,562	 	9,878	 	
 	 	 		 		 	
Total long-term liabilities	 	 	246,156	 	342,856	 	

Minority interest	16	 	31,109	 	26,036	 	

Shareholders’ equity	 	 	 	 	 	 	
Paid-in capital	17	 	477,386	 	477,386	 	
Other reserves	17	 	147,188	 	132,136	 	
Retained earnings	17	 	301,725	 	261,814	 	
 	 	 		 		 	
Total shareholders’ equity	 	 	926,299	 	871,336	 	
 	 	 		 		 	
Total liabilities and shareholders’ equity	 	 	1,363,418	 	1,361,923	 	
 	 	 		 		 	
The accompanying notes form an integral part of these consolidated financial statements.
5

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
Consolidated Statements of Income 
(A translation of the original in Spanish- see note 2 (a))
 	 	 	For the years ended	 	
 	 	 	September 30,	 	
 	Note	 	2004	 	2003	 	
 	 	 		 		 	
 	 	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	 	
Operating results	 	 	 	 	 	 	
 	 	 	 	 	 	 	
Sales	 	 	603,574	 	528,176	 	
Cost of sales	 	 	(470,567	)	(424,706	)	
 	 	 		 		 	
Gross margin	 	 	133,007	 	103,470	 	
Selling and administrative expenses	 	 	(39,571	)	(36,321	)	
 	 	 		 		 	
Operating income	 	 	93,436	 	67,149	 	

 	 	 	 	 	 	 	
 	 	 	 	 	 	 	
Non-operating results	 	 	 	 	 	 	
Non-operating income	19	 	18,336	 	12,701	 	
Non-operating expenses	19	 	(32,401	)	(29,406	)	
 	 	 		 		 	
Non-operating loss	 	 	(14,065	)	(16,705	)	
Income before income taxes	 	 	79,371	 	50,444	 	
Income tax expense	14	 	(19,827	)	(12,304	)	
 	 	 		 		 	
Income before minority interest	 	 	59,544	 	38,140	 	
Minority interest	16	 	(4,095	)	(2,453	)	
 	 	 		 		 	
Net income before negative goodwill	 	 	55,449	 	35,687	 	
Amortization of negative goodwill	10	 	153	 	420	 	
 	 	 		 		 	
 	 	 	55,602	 	36,107	 	
 	 	 		 		 	
The accompanying notes form an integral part of these consolidated financial statements.
6

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Consolidated Statements of Cash Flows
(A translation of the original in Spanish- see note 2 (a))
 	 	For the years ended September 30,	 	
 	 	2004	 	2003	 	
 	 		 		 	
 	 	ThUS$	 	ThUS$	 	
Cash flows from operating activities	 	 	 	 	 	
Net income for the year	 	55,602	 	36,107	 	
 	 	 	 	 	 	
Charges (credits) to income not representing cash flows	 	 	 	 	 	
Depreciation expense	8	45,455	 	45,124	 	
Amortization of intangible assets	 	143	 	220	 	
Write-offs and accruals	 	31,342	 	12,711	 	
Gain on equity investments in related companies	 	(4,439	)	(4,794	)	
Loss on equity investments in related companies	 	12	 	—	 	
Amortization of goodwill	10	841	 	844	 	
Amortization of negative goodwill	10	(153	)	(420	)	
(Profit) loss on sales of assets	 	228	 	(57	)	
Income from sales of Investments (less)	 	(8,820	)	—	 	
Other credits to income not representing cash flows	 	(1,967	)	(2,299	)	
Other charges to income not representing cash flows	 	40,518	 	21,492	 	
Foreign exchange difference, net	 	2,460	 	(2,845	)	
Net changes in operating assets and liabilities (Increase) decrease:	 	 	 	 	 	
Trade accounts receivable	 	(23,293	)	(26,510	)	
Inventories	 	(23,839	)	10,583	 	
Other assets	 	(7,582	)	16,264	 	
Accounts payable	 	(7,635	)	(18,254	)	
Interest payable	 	(4,044	)	(1,961	)	
Net income taxes payable	 	(113	)	(734	)	
Other accounts payable	 	129	 	(1,501	)	
VAT and taxes payable	 	(506	)	1,942	 	
Minority interest	16	4,095	 	2,453	 	
 	 		 		 	
Net cash provided from operating activities	 	98,434	 	88,365	 	

Cash flows from financing activities	 	 	 	 	 	
Proceeds from short term bank financing	 	83,045	 	—	 	
Payment of dividends	 	(25,484	)	(21,302	)	
Repayment of bank financing	 	(146,179	)	(3.886	)	
Payment relation chip enter praise	 	—	 	(5.275	)	
 	 		 		 	
Net cash used in financing activities	 	(88,618	)	(30,463	)	

Cash flows from investing activities	 	 	 	 	 	
Sales of property, plant and equipment	 	474	 	129	 	
Sale of permanent investments	 	69,337	 	—	 	
Sales of investments	 	213	 	532	 	
Other investing income	22	656	 	7,320	 	
Additions to property, plant and equipment	 	(31,356	)	(42,307	)	
Capitalized interest	 	(1,180	)	(1,827	)	
Purchase of permanent investments	 	(1,401	)	(8,049	)	
Other disbursements	 	(12	)	(31	)	
 	 		 		 	
Net cash used in investing activities	 	36,731	 	(44,233	)	

Effect of inflation on cash and cash equivalents	 	(478	)	(352	)	
 	 		 		 	
Net change in cash and cash equivalents	 	46,069	 	13,317	 	
Beginning balance of cash and cash equivalents	 	69,273	 	65,204	 	
 	 		 		 	
Ending balance of cash and cash equivalents	 	115,342	 	78,521	 	
 	 		 		 	
The accompanying notes form an integral part of these consolidated financial statements.
7

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 1 – Company Background
Sociedad Química y Minera de Chile S.A. (the “Company”) was registered with the Chilean Superintendency of Securities and Insurance (“SVS”) on March 18, 1983.
Note 2 – Summary of Significant Accounting Policies
a)	Basis for the preparation of the consolidated financial statements	
 	The accompanying consolidated financial statements have been prepared in U.S. dollars in accordance with accounting principles generally accepted in Chile (“Chilean GAAP”) and the regulations of the SVS. For the convenience of the reader, the consolidated financial statements and their accompanying notes have been translated from Spanish into English. Certain accounting practices applied by the Company that conform with Chilean GAAP may not conform with generally accepted accounting principles in the United States (“US GAAP”)	
 	 	
 	The consolidated financial statements include the accounts of Sociedad Química y Minera de Chile S.A. (the “Parent Company”) and subsidiaries (companies in which the Parent Company holds a controlling participation, generally equal to direct or indirect ownership of more than 50%). The Parent Company and its subsidiaries are referred to as the “Company”.	
 	 	
 	The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.	
 	 	
 	In accordance with regulations set forth by the SVS in its Circular No. 1.697 and Technical Bulletins Nos. 64 and 72 of the Chilean Association of Accountants, the consolidated financial statements include the following subsidiaries:	
8

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
a)	Basis for the preparation of the consolidated financial statements (continued)	
 	Direct or indirect ownership	 	
 	2004	 	2003	 	
 		 		 	
 	%	 	%	 	
Foreign subsidiaries:	 	 	 	 	
Nitrate Corp. of Chile Limited (United Kingdom)	100.00	 	100.00	 	
Soquimich SRL – Argentina	100.00	 	100.00	 	
Nitratos Naturais do Chile Ltda. (Brazil)	100.00	 	100.00	 	
SQM Europe NV (Belgium)	100.00	 	100.00	 	
SQM North America Corp. (USA)	100.00	 	100.00	 	
North American Trading Company (USA)	100.00	 	100.00	 	
SQM Peru S.A.	100.00	 	100.00	 	
SQM Corporation NV (Dutch Antilles)	100.00	 	100.00	 	
S.Q.I. Corporation NV (Dutch Antilles)	100.00	 	100.00	 	
Soquimich European Holding BV (Holland)	100.00	 	100.00	 	
PTM - SQM Ibérica S.A. (Spain)	100.00	 	100.00	 	
SQMC Holding Corporation LLP (USA)	100.00	 	100.00	 	
SQM Ecuador S.A.	100.00	 	100.00	 	
Cape Fear Bulk LLC (USA)	51.00	 	51.00	 	
SQM Colombia Ltda.	—	 	100.00	 	
SQM Investment Corporation NV (Holland)	100.00	 	100.00	 	
SQM Brasil Ltda.	100.00	 	100.00	 	
Royal Seed Trading Corporation AVV (Aruba)	100.00	 	100.00	 	
SQM Japan K.K.	100.00	 	100.00	 	
SQM Oceanía PTY Limited (Australia)	100.00	 	100.00	 	
SQM France S.A.	100.00	 	100.00	 	
Fertilizantes Naturales S.A. (Spain)	50.00	 	50.00	 	
Rs Agro-Chemical Trading AVV (Aruba)	100.00	 	100.00	 	
SQM Comercial de México S.A. de C.V.	100.00	 	100.00	 	
SQM Indonesia	80.00	 	80.00	 	
SQM Virginia LLC (USA)	100.00	 	100.00	 	
Agricolima S.A. de C.V. (Mexico)	100.00	 	100.00	 	
SQM Venezuela S.A.	100.00	 	100.00	 	
SQM Italia SRL (Italy)	95.00	 	95.00	 	
Comercial Caiman Internacional S.A. (Cayman Islands)	100.00	 	100.00	 	
Mineag SQM Africa Limited (South Africa)	100.00	 	100.00	 	
Fertilizantes Olmeca y SQM S.A. de CV (Mexico)	100.00	 	100.00	 	
Administración y Servicios Santiago S.A. de C.V.	100.00	 	—	 	
SQM Nitratos México S.A. de C.V.	51.00	 	—	 	
SQM Lithium Specialties LLP	100.00	 	—	 	
9

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
a)	Basis for the preparation of the consolidated financial statements (continued)	
 	Direct or indirect ownership	 	
 	2004	 	2003	 	
 		 		 	
 	%	 	%	 	
Domestic subsidiaries:	 	 	 	 	
Servicios Integrales de Tránsitos y Transferencias S.A.	100.00	 	100.00	 	
Soquimich Comercial S.A.	60.64	 	60.64	 	
Isapre Norte Grande Ltda.	100.00	 	100.00	 	
Almacenes y Depósitos Ltda.	100.00	 	100.00	 	
Ajay SQM Chile S.A.	51.00	 	51.00	 	
SQM Nitratos S.A.	100.00	 	100.00	 	
Proinsa Ltda.	60.58	 	60.58	 	
SQM Potasio S.A.	100.00	 	100.00	 	
SQMC International Limitada	60.64	 	60.64	 	
SQM Salar S.A.	100.00	 	100.00	 	
Comercial Hydro S.A.	60.84	 	60,84	 	
All significant inter-company balances, transactions and unrealized gains and losses arising from transactions between these companies have been eliminated in consolidation.
As the Company exerts control over the subsidiary Fertilizantes Naturales S.A. it has been included in the consolidation for the period ended September 30, 2004 and 2003.
10

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
b)	Period	
 	 	
 	These consolidated financial statements have been prepared as of September 30, 2004 and 2003 and for the years then ended.	
 	 	
c)	Reporting currency and monetary correction	
 	 	
 	The financial statements of the Company are prepared in U.S. dollars. As a significant portion of the Company’s operations are transacted in U.S. dollars, the U.S. dollar is considered the currency of the primary economic environment in which the Company operates.	
 	 	
 	The Parent Company and those subsidiaries which maintain their accounting records in U.S. dollars are not required, or permitted, to restate the historical dollar amounts for the effects of inflation.	
 	 	
 	The financial statements of domestic subsidiaries, which maintain their accounting records in Chilean pesos have been restated to reflect the effects of variations in the purchasing power of Chilean pesos during the year. For this purpose, and in accordance with Chilean regulations, non-monetary assets and liabilities, equity and income statement accounts have been restated in terms of year-end constant pesos based on the change in the consumer price index during the year (1.9% and 1.2% in 2004 and 2003, respectively). The resulting net charge or credit to income arises as a result of the gain or loss in purchasing power from the holding of non-U.S. dollar denominated monetary assets and liabilities exposed to the effects of inflation.	
 	 	
 	Prior period financial statements presented for comparative purposes have not been restated to reflect the change in the purchasing power of the Chilean pesos during the most recent year-end. In accordance with Chilean GAAP, amounts expressed in U.S. dollars, including amounts included in the consolidated financial statements as determined in prior years from the translation of financial statements of those Chilean subsidiaries which maintain their accounting records in Chilean pesos, are not adjusted for price-level changes.	
11

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
d)	Foreign currency	
 	 	 	 	
 	i)	Foreign currency transactions	
 	 	 	 	
 	 	Monetary assets and liabilities denominated in Chilean pesos and other currencies have been translated to U.S. dollars at the observed exchange rates determined by the Central Bank of Chile in effect at each year-end of Ch$608.90 per US$1 at September 30, 2004 and Ch$660.97 per US$1 at September 30, 2003.	
 	 	 	 	
 	ii)	Translation of non-U.S. dollar financial statements	
 	 	 	 	
 	 	In accordance with Chilean GAAP, the financial statements of foreign and domestic subsidiaries that do not maintain their accounting records in U.S. dollars are translated from the respective local currencies to U.S. dollars in accordance with Technical Bulletin No. 64 and No. 72 of the Chilean Association of Accountants (“BT 64”) as follows:	
 	 	 	 	
 	a)	For those subsidiaries and affiliates located in Chile which keep their accounting records in price-level adjusted Chilean pesos:	
 	 	 	 	
 	 	—	Balance sheet accounts are translated to U.S. dollars at the year-end exchange rate without eliminating the effects of price-level restatement.	
 	 	—	Income statement accounts are translated to U.S. dollars at the average exchange rate each month. The monetary correction account on the income statement, which is generated by the inclusion of price-level restatement on the non-monetary assets and liabilities and shareholders’ equity, is translated to U.S. dollars at the average exchange rate for each month.	
 	 	—	Translation gains and losses, as well as the price-level restatement to the balance sheet mentioned above, are included as an adjustment in shareholders’ equity, in conformity with Circular No. 1.697 of the SVS.	
12

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements 
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
d)	Foreign currency (continued)	
 	 	 	 	
 	b)	The financial statements of those foreign subsidiaries that keep their accounting records in currencies other than the U.S. dollar have been translated at historical exchange rates as follows:	
 	 	 	 	
 	 	—	Monetary assets and liabilities are translated at year-end exchange rates between the US dollar and the local currency.	
 	 	—	All non-monetary assets and liabilities and shareholders’ equity are translated at historical exchange rates between the US dollar and the local currency.	
 	 	—	Income and expense accounts are translated at average exchange rates between the US dollar and the local currency.	
 	 	—	Any exchange differences are included in the results of operations for the period.	
 	 	 	 	
 	Foreign exchange differences for the period ended September 30, 2004 and 2003 generated net earnings (loss) of ThUS$ (2,460) and ThUS$ 2,845, respectively, which have been charged to the consolidated statements of income in each respective period.	
 	 	 	 	
 	The monetary assets and liabilities of foreign subsidiaries were translated into US dollars at the exchange rates per US dollar prevailing at September 30, as follows:	
 	 	 	 	
 	 	2004	 	2003	 	

 	Brazilian Real	2.86	 	2.94	 	
 	New Peruvian Sol	3.47	 	3.48	 	
 	Argentine Peso	2.98	 	2.93	 	
 	Japanese Yen	110.00	 	111.25	 	
 	Euro	0.81	 	0.85	 	
 	Mexican Peso	11.43	 	11.04	 	
 	Indonesian Rupee	9,415.00	 	8,399.00	 	
 	Australian Dollar	1.37	 	1.52	 	
 	Colombian Peso	—	 	2,850.30	 	
 	Ecuadoran Sucre	1.00	 	1.00	 	
 	Pound Sterling	0.58	 	0.60	 	
 	Sudafrican Rand	6.68	 	7.22	 	
 	 	 	 	 	 	
 	The Company uses the “observed exchange rate”, which is the rate determined daily by the Chilean Central Bank based on the average exchange rates at which bankers conduct authorized transactions. 	
13

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements 
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
e)	Cash and cash equivalents 	
 	 	
 	The Company considers all highly liquid investments with a remaining maturity of less than 90 days as of the closing date of the financial statements to be cash equivalents.	
 	 	
f)	Time Deposits	
 	 	
 	Time deposits are recorded at cost plus accrued interest.	
 	 	
g)	Marketable securities	
 	 	
 	Marketable securities are recorded at the lower of cost plus accrued interest or market value.	
 	 	
h)	Allowance for doubtful accounts	
 	 	
 	The Company records an allowance for doubtful accounts based on estimated probable losses.	
 	 	
i)	Inventories and materials	
 	 	
 	Inventories of finished products and work in process are valued at average production cost. Raw materials and products acquired from third parties are stated at average cost and materials-in-transit are valued at cost. All such values do not exceed net realizable values.	
 	 	
 	Inventories of non-critical spare parts and supplies are classified as other current assets, except for those items which the Company estimates to have a turnover period of one year or more, which are classified as other long-term assets.	
 	 	
j)	Income taxes and deferred income taxes	
 	 	
 	Prior to 2000, income taxes were charged to results in the same period in which the income and expenses were recorded and were calculated in accordance with the enacted tax laws in Chile and the other jurisdictions in which the Company operated.	
 	 	
14

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
j)	Income and deferred taxes (continued) 	
 	 	
 	Under Chilean law, the Parent Company and its subsidiaries are required to file separate tax declarations.	
 	Beginning January 1, 2000, the Company records deferred income taxes in accordance with Technical Bulletin Nos. 60, 69, 71 and 73 of the Chilean Association of Accountants, and with Circular No. 1466 issued on January 27, 2000 by the SVS, recognizing the deferred tax effects of temporary differences between the financial and tax values of assets and liabilities, using the liability method. The effect of the temporary differences at December 31, 1999 were recorded in complementary asset and liability accounts, which are recognized in the statement of operations over the estimated period in which they reverse.	
 	 	
k)	Property, plant and equipment	
 	 	
 	Property, plant, equipment and property rights are recorded at cost, except for certain assets that were restated according to a technical appraisal in 1988. Depreciation expense has been calculated using the straight-line method based upon the estimated useful lives of the assets and is charged directly to expense.	
 	 	
 	Fixed assets acquired through financing lease agreements are accounted for at the present value of the minimum lease payments plus the purchase option based on the interest rate included in each contract. The Company does not legally own these assets and therefore cannot freely dispose of them.	
 	 	
 	In conformity with Technical Bulletin No. 31 and No. 33 of the Chilean Association of Accountants, the Company capitalizes interest cost associated with the financing of new assets during the construction period of such assets.	
 	 	
 	Maintenance costs of plant and equipment are charged to expenses as incurred.	
 	 	
 	The Company obtains property rights and mining concessions from the Chilean state. Other than minor filing fees, the property rights are usually obtained without initial cost, and once obtained, are retained perpetually by the Company as long as the annual fees are paid. Such fees, which are paid annually in September, are recorded as prepaid assets to be amortized over the following twelve months. Values attributable to these original mining concessions are recorded in property, plant and equipment and are being amortized on a straight-line basis over 50 years.	
15

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
l)	Investments in related companies	
 	 	
 	Investments in related companies over which the Company has significant influence, are included in other assets and are recorded using the equity method of accounting. Accordingly, the Company’s proportional share in the net income or loss of each investee is recognized in the non-operating income and expense classification in the consolidated statements of income on an accrual basis, after eliminating any unrealized profits from transactions with the related companies.	
 	 	
 	The translation adjustment to U.S. dollars of investments in domestic subsidiaries, which maintain their accounting records and are controlled in Chilean pesos is recognized in the other reserves component of stockholders’ equity. Direct and indirect investments in foreign subsidiaries or affiliates are controlled in U.S. dollars.	
 	 	
m)	Goodwill and negative goodwill	
 	 	
 	Goodwill is calculated as the excess of the purchase price of companies acquired over their net book value, whereas negative goodwill occurs when the net book value exceeds the purchase price of companies acquired. Goodwill and negative goodwill resulting from equity method investments are maintained in the same currency in which the investment was made and are amortized based on the estimated period of investment return, generally 20 years for goodwill and negative goodwill, respectively.	
 	 	
n)	Intangible assets	
 	 	
 	Intangible assets are stated at cost plus acquisition expenses and are amortized over a period of up to a maximum of 40 years, in accordance with Technical Bulletin No. 55 of the Chilean Association of Accountants.	
 	 	
o)	Mining development cost	
 	 	
 	Mining development costs are recorded in other long-term assets and are amortized utilizing the unit of production basis.	
16

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
p)	Accrued employee severance	
 	 	
 	The Company calculates the liability for staff severance indemnities based on the present value of the accrued benefits for the actual years of service worked assuming an average employee tenure of 24 years and a real annual discount rate of 9%.	
 	 	
q)	Vacations	
 	 	
 	The cost of employee vacations is recognized in the financial statements on an accrual basis.	
 	 	
r)	Dividends	
 	 	
 	Dividends are generally declared in U.S. dollars but are paid in Chilean pesos.	
 	 	
s)	Derivative Contracts	
 	 	
 	The Company maintains derivative contracts to hedge against movements in foreign currencies, which are recorded in conformity with Technical Bulletin No. 57 of the Chilean Association of Accountants. Such contracts are recorded at fair value with net losses recognized on the accrual basis and gains recognized when realized.	
 	 	
t)	Reclassifications	
 	 	
 	Certain reclassifications have been made in the 2003 numbers to conform to the current period presentation.	
 	 	
u)	Revenue recognition	
 	 	
 	Revenue is recognized on the date goods are physically delivered or when they are considered delivered according to the terms of the contract.	
 	 	
v)	Computer software	
 	 	
 	In accordance with Circular No. 981 dated December 28, 1990 of the SVS, computer systems acquired by the Company are recorded at cost.	
 	 	
w)	Research and development expenses	
 	 	
 	Research and development cost are charged to the income statement in the period in which they are incurred. Fixed assets which are acquired for their use in research and development activities and are determined to provide additional benefits to the Company are recorded in property, plant and equipment.	
17

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
x)	Transactions with buyback agreement	
 	 	
 	These transactions are recognized under Other Current Assets for the amount paid in the purchase. Beginning on the purchase date the respective interest is recorded in accordance with Circular No. 768 issued by the Chilean Superintendency of Securities and Insurance.	
Note 3 – Changes in Accounting Principles
a)	Accounting changes:	
 	 	
 	Until June 30, 2004 the financial statements of subsidiary SQM Lithium Specialities LLP were excluded from the consolidation due to this subsidiary being at the development stage. As of July 1, 2004 SQM Lithium Specialities LLP initiated its productive stage, therefore, as of September 30, 2004 its financial statements are included in the consolidation of SQM S.A.	
 	 	
 	During the period ended as of September 30, 2004, there were no other accounting changes in the application of generally accepted accounting principles compared to the previous period.	
 	 	
b)	Restatement of 2003 Financial Statements	
 	 	
 	For comparison purposes only, the financial statements as of September 30, 2003 have been restated including assets and liabilities of SQM Lithium Specialties LLP. The assets and liabilities included are:	
 
 	SQM Lithium
Specialties LLP	 	
 		 	
 	ThUS$	 	
Current Assets	949	 	
Property, plant and equipment	25.518	 	
Other Assets	786	 	
Current Liabilities	861	 	
18

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
Notes to the Consolidated Financial Statements 
(A translation of the original in Spanish- see note 2 (a))
Note 4 – Marketable Securities
As of September 30, marketable securities are detailed as follows:
 	 	2004	   	 	2003	   	
							
	 	ThUS$		 	ThUS$		
 	 	 	 	 	 	 	
Mutual funds	 	57,192	 	 	49,811	 	
 			 			 	
Total	 	57,192	 	 	49,811	 	
 			 			 	
Mutual funds consist of investments with Citifunds Institutional Liquid Reserve Limited in highly liquid funds invested in fixed-rate debt in the United States.
19

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
Notes to the Consolidated Financial Statements 
(A translation of the original in Spanish- see note 2 (a))
Note 5 – Short-term and long-term Accounts Receivable
a)	Short term and long-term accounts receivable and other accounts receivable as of September 30 are detailed as follows:	
 	 	
     	 	 	 	     	Between 90 days	     	 	     	Total	     	
	Up to 90 days		and 1 year		2004		Short-term (net)		
	2004	   	2003		2004	 	2003		Subtotal		2004	   	2003		
						 									
	ThUS$		ThUS$		ThUS$	 	ThUS$		ThUS$		ThUS$		ThUS$		
Short-term	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Trade accounts receivable	119,538	 	108,444	 	20,264	 	24,399	 	139,802	 	139,802	 	132,843	 	
Allowance for doubtful accounts	 	 	 	 	 	 	 	 	 	 	(6,150	)	(6,608	)	
Notes receivable	23,245	 	20,424	 	16,658	 	15,500	 	39,903	 	39,903	 	35,924	 	
Allowance for doubtful accounts	 	 	 	 	 	 	 	 	 	 	(3,922	)	(3,090	)	
 	 	 	 	 	 	 	 	 	 	 		 		 	
Accounts receivable, net	 	 	 	 	 	 	 	 	 	 	169,633	 	159,069	 	

Other accounts receivable	8,306	 	6,113	 	3,911	 	3,103	 	12,217	 	12,217	 	9,216	 	
Allowance for doubtful accounts	 	 	 	 	 	 	 	 	 	 	(857	)	(558	)	
 	 	 	 	 	 	 	 	 	 	 		 		 	
Other accounts receivable, net	 	 	 	 	 	 	 	 	 	 	11,360	 	8,658	 	

Long-term receivables	 	 	 	 	 	 	 	 	 	 	277	 	3,820	 	
 	 	 	 	 	 	 	 	 	 	 		 		 	
20

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
Notes to the Consolidated Financial Statements 
(A translation of the original in Spanish- see note 2 (a))
Note 5 – Short-term and Long-term Accounts Receivable (continued)
Consolidated Short-term and Long-term Receivables – by Geographic Location

 

 

 	Europe, Africa and	 

 
 	Asia and	 

 
 	USA, Mexico	 

 
 	Latin America	 

 
 	 	 	 	 	
	Chile		the Middle East		Oceania		and Canada		and the Caribbean		Total		
	2004	 
 
 	2003		2004	 
 
 	2003		2004	 
 
 	2003		2004	 	2003		2004	 
 
 	2003		2004	 
 
 	2003		
														 											
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$	 	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		
	 		 		 		 		 		 		 	 	 		 		 		 		 		
Net short-term trade accounts receivable	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance	46,494	 	46,196	 	32,379	 	33,729	 	4,069	 	3,309	 	32,775	 	29,143	 	17,935	 	13,858	 	133,652	 	126,235	 	
% of total	34.79	%	36.59	%	24.23	%	26.72	%	3.04	%	2.62	%	24.52	%	23.09	%	13.42	%	10.98	%	100.00	%	100.00	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net short-term notes receivable	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance	32,664	 	29,237	 	298	 	1,145	 	189	 	20	 	196	 	481	 	2,634	 	1,951	 	35,981	 	32,834	 	
% of total	90.78	%	89.05	%	0.83	%	3.49	%	0.53	%	0.06	%	0.54	%	1.46	%	7.32	%	5.94	%	100.00	%	100.00	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net short-term other accounts receivable	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance	3,526	 	4,699	 	2,057	 	1,281	 	9	 	3	 	5,575	 	2,451	 	193	 	224	 	11,360	 	8,658	 	
% of total	31.04	%	54.27	%	18.11	%	14.80	%	0.08	%	0.03	%	49.07	%	28.31	%	1.70	%	2.59	%	100.00	%	100.00	%	
 		 		 		 		 		 		 		 		 		 		 		 		 	
Subtotal short-term accounts receivable, net
Balance	82,684	 	80,132	 	34,734	 	36,155	 	4,267	 	3,332	 	38,546	 	32,075	 	20,762	 	16,033	 	180,993	 	167,727	 	
% of total	45.68	%	47.78	%	19.19	%	21.56	%	2.36	%	1.98	%	21.30	%	19.12	%	11.47	%	9.56	%	100.00	%	100.00	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Long-term accounts receivable, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance	192	 	2,957	 	70	 	69	 	—	 	—	 	—	 	779	 	15	 	15	 	277	 	3,820	 	
% of total	69.31	%	77.41	%	25.27	%	1.81	%	—	 	—	 	—	 	20.39	%	5.42	%	0.39	%	100.00	%	100.00	%	
 		 		 		 		 		 		 		 		 		 		 		 		 	
Total short and long-term accounts receivable, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance	82,876	 	83,089	 	34,804	 	36,224	 	4,267	 	3,332	 	38,546	 	32,854	 	20,777	 	16,048	 	181,270	 	171,547	 	
% of total	45.72	%	48.44	%	19.20	%	21.12	%	2.35	%	1.94	%	21.27	%	19.15	%	11.46	%	9.35	%	100.00	%	100.00	%	
 		 		 		 		 		 		 		 		 		 		 		 		 	
21

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
 Notes to the Consolidated Financial Statements
(A translation of the original in Spanish— see note 2 (a)) 
Note 6 – Balances and Transactions with Related Parties 
Accounts receivable from and payable to related companies are stated in US dollars and accrue no interest.
Transactions are made under terms and conditions which are similar to those offered to unrelated third parties.
a)	Amounts included in balances with related parties as of September 30, 2004 and 2003 are as follows:	
  	  	Short-term	 	Long-term	  	
		2004	 	2003	 	2004	 	2003		
			 		 		 			
Accounts receivable	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	

Ajay Europe S.A.R.L.	 	3,478	 	4,176	 	—	 	—	 	
Nutrisi Holding N.V.	 	1,446	 	1,959	 	—	 	—	 	
Generale de Nutrition Vegetale S.A.	 	174	 	171	 	—	 	—	 	
Abu Dhabi Fertilizer Ind. WLL	 	3,925	 	4,367	 	—	 	—	 	
Doktor Tarsa –SQM Turkey	 	3,030	 	2,481	 	—	 	—	 	
Yara North America	 	237	 	7	 	—	 	—	 	
Yara Iberian S.A.	 	2,291	 	1,627	 	—	 	—	 	
PCS Yumbes	 	—	 	224	 	—	 	—	 	
Empresas Melón S.A.	 	—	 	—	 	—	 	380	 	
Sales de Magnesio S.A.	 	68	 	114	 	—	 	—	 	
Ajay North America LLC	 	782	 	259	 	—	 	—	 	
Yara Internacional ASA	 	—	 	27	 	—	 	—	 	
Yara France BU America Latina	 	1,430	 	1,141	 	—	 	—	 	
Yara International Asia Trade Pte Ltd	 	1,676	 	893	 	—	 	—	 	
Yara Poland SP	 	257	 	95	 	—	 	—	 	
Yara Benelux B.V	 	161	 	129	 	—	 	—	 	
Yara Hellas S.A.	 	408	 	61	 	—	 	—	 	
Yara International Australia PTY.	 	1,250	 	465	 	—	 	—	 	
Yara UK Ltd.	 	320	 	104	 	—	 	—	 	
Yara GMBH & CO KG	 	293	 	167	 	—	 	—	 	
Yara AB	 	26	 	44	 	—	 	—	 	
Yara Colombia Ltda..	 	567	 	981	 	—	 	—	 	
Yara Agri CZECH Republic SRO	 	—	 	2	 	 	 	 	 	
Yara France BU Africa	 	904	 	—	 	 	 	 	 	
NU3 B.V.	 	877	 	530	 	—	 	—	 	
Yara Argentina S.A.	 	729	 	54	 	—	 	—	 	
Adubo Trevo S.A.	 	16	 	16	 	—	 	—	 	
Yara Italia SPA	 	65	 	—	 	—	 	—	 	
Impronta SRL	 	4,703	 	4,630	 	—	 	 	 	
 	 		 		 		 		 	
Total	 	29,113	 	24,724	 	—	 	380	 	

22

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
 Notes to the Consolidated Financial Statements 
(A translation of the original in Spanish— see note 2 (a))
Note 6 – Balances and Transactions with Related Parties (continued)
a)	Amounts included in balances with related parties as of September 30, 2004 and 2003, continued:	
 
 	Short-term	 	
 	2004	 	2003	 	
 		 		 	
 	ThUS$	 	ThUS$	 	
Accounts payable	 	 	 	 	
 	 	 	 	 	
NU3 N.V.	1,294	 	707	 	
Rotem Amfert Negev Limited	1,097	 	1,527	 	
Yara Internacional ASA	646	 	—	 	
Yara Norge AS	—	 	146	 	
Yara Fertilizantes Ltda.	1,273	 	1,023	 	
Yara France S.A.	465	 	2,406	 	
Adm. y Servicios Santiago S.A. de C.V.	—	 	58	 	
PCS Yumbes SCM	7,119	 	—	 	
 		 		 	
 	11,894	 	5,867	 	
Total	 	 	 	 	

 	There were no outstanding long-term accounts payable with related parties as of September 30, 2004 and 2003	
 
23

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
 Notes to the Consolidated Financial Statements
(A translation of the original in Spanish— see note 2 (a))

Note 6 – Balances and Transactions with Related Parties (continued) 
b)	During 2004 and 2003, principal transactions with related parties were as follows:	
	 	 	 	 	 	 	 	
  	 	 	 	Amount of	 	Impact on income	 	
Company	Relationship	 	Type of transaction	Transaction	 	(charge) credit	 	
		 		 		 		 		 	
  	 	 	 	 	2004	 	2003	 	2004	 	2003	 	
 	 	 	 	 		 		 		 		 	
 	 	 	 	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	

NU3 N.V. (Belgium) 	Indirect	 	Sales of products	 	4,368	 	3,376	 	818	 	912	 	
Doktor Tarsa 	Indirect	 	Sales of products	 	4,351	 	1,679	 	1,034	 	471	 	
Abu Dhabi Fertilizer WLL 	Indirect	 	Sales of products	 	1,389	 	1,523	 	205	 	298	 	
Ajay Europe S.A.R.L. 	Indirect	 	Sales of products	 	4,565	 	4,804	 	2,166	 	1,659	 	
NU3 B.V. 	Indirect	 	Sales of products	 	4,327	 	3,380	 	394	 	1,329	 	
Ajay North America LLC 	Indirect	 	Sales of products	 	6,160	 	5,468	 	2,783	 	1,730	 	
Yara UK Ltd. 	Shareholder	 	Sales of products	 	922	 	723	 	89	 	216	 	
Yara International Asia Trade Pte 	Shareholder	 	Sales of products	 	4,363	 	3,516	 	775	 	781	 	
Ltd.. 	 	 	 	 	 	 	 	 	 	 	 	 	
Yara France S.A. 	Shareholder	 	Sales of products	 	1,282	 	5,214	 	355	 	1,202	 	
Yara Benelux B.V.	Shareholder	 	Sales of products	 	4,885	 	4,849	 	824	 	983	 	
Yara AB Sweden 	Shareholder	 	Sales of products	 	659	 	—	 	51	 	—	 	
Yara International Australia Pty 	Shareholder	 	Sales of products	 	2,022	 	1,195	 	274	 	317	 	
Ltd. 	 	 	 	 	 	 	 	 	 	 	 	 	
Yara Iberian S.A.	Shareholder	 	Sales of products	 	4,810	 	—	 	1,101	 	—	 	
Yara Colombia Ltda. 	Shareholder	 	Sales of products	 	2,811	 	1,815	 	821	 	586	 	
Yara Poland SP 	Shareholder	 	Sales of products	 	1,483	 	1,156	 	249	 	464	 	
Yara GMBH & Co Kg 	Shareholder	 	Sales of products	 	1,212	 	936	 	163	 	265	 	
Yara France	Shareholder	 	Sales of products	 	6,316	 	—	 	1,236	 	—	 	
Yara Hellas S.A. 	Shareholder	 	Sales of products	 	949	 	1,129	 	199	 	253	 	
Yara Argentina S.A.	Shareholder	 	Sales of products	 	7,135	 	6,076	 	1,703	 	1,526	 	
Adubo Trevo S.A.	Shareholder	 	Sales of products	 	5,564	 	5,148	 	1,753	 	1,220	 	
PCS Yumbes SCM 	Shareholder	 	Sales of products	 	6,120	 	8,755	 	2,942	 	5,562	 	
	 	 	Purchases of products	 	21,574	 	14,815	 	—	 	—	 	
Impronta SRL 	Indirect	 	Sales of products	 	4,010	 	—	 	949	 	—	 	
Yara France BU Africa 	Shareholder	 	Sales of products	 	577	 	—	 	60	 	—	 	
Yara France BU Latino America	Shareholder	 	Sales of products	 	2,180	 	—	 	613	 	—	 	
Yara North America 	Shareholder	 	Sales of products	 	28,933	 	—	 	6,878	 	—	 	
24

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
 
Note 7 – Inventories
Net inventories are summarized as follows:
 	 	2004	 	 	2003	 	
 	 		 	 		 	
 	 	ThUS$	 	 	ThUS$	 	
 	 	 	 	 	 	 	
Finished products	 	145,405	 	 	127,543	 	
Work in process	 	105,495	 	 	88,983	 	
Supplies	 	9,701	 	 	11,317	 	
 	 		 	 		 	
   Total	 	260,601	 	 	227,843	 	
 	 		 	 		 	
25

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
  (A translation of the original in Spanish- see note 2 (a))
Note 8 – Property, Plant and Equipment
Property, plant and equipment are summarized as follows:
 	 	2004	 	 	2003	 	
 	 		 	 		 	
 	 	ThUS$	 	 	ThUS$	 	
Land	 	 	 	 	 	 	
Land	 	20,003	 	 	20,003	 	
Mining Concessions	 	42,798	 	 	43,467	 	
 	 		 	 		 	
Total	 	62,801	 	 	63,470	 	

Buildings and infrastructure	 	 	 	 	 	 	
Buildings	 	161,509	 	 	160,246	 	
Installations	 	311,203	 	 	294,080	 	
Construction-in-progress	 	35,960	 	 	37,746	 	
Other	 	4,870	 	 	4,320	 	
 	 		 	 		 	
Total	 	513,542	 	 	496,392	 	

Machinery and Equipment	 	 	 	 	 	 	
Machinery	 	412,901	 	 	401,297	 	
Equipment	 	106,978	 	 	104,692	 	
Project-in-progress	 	14,019	 	 	16,939	 	
Other	 	18,440	 	 	18,048	 	
 	 		 	 		 	
Total	 	552,338	 	 	540,976	 	

Other fixed assets	 	 	 	 	 	 	
Tools	 	7,930	 	 	7,631	 	
Furniture and office equipment	 	14,322	 	 	13,582	 	
Project-in-progress	 	5,335	 	 	13,987	 	
Other	 	11,315	 	 	9,896	 	
 	 		 	 		 	
Total	 	38,902	 	 	45,096	 	
 	 		 	 		 	
26

   SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
Notes to the Consolidated Financial Statements
  (A translation of the original in Spanish- see note 2 (a))
Note 8 – Property, Plant and Equipment (continued)
 	 	2004	 	 	2003	 	
 	 		 	 		 	
 	 	ThUS$	 	 	ThUS$	 	
Amounts relating to technical revaluation of fixed assets	 	 	 	 	 	 	
Land	 	9,143	 	 	8,651	 	
Buildings and infrastructure	 	40,627	 	 	40,627	 	
Machinery and equipment	 	12,091	 	 	12,109	 	
Other assets	 	53	 	 	53	 	
 	 		 	 		 	
 	 	61,914	 	 	61,440	 	
 	 		 	 		 	
   Total property, plant and equipment	 	1,229,497	 	 	1,207,374	 	

Less: Accumulated depreciation	 	 	 	 	 	 	
Buildings and infrastructure	 	(205,148	)	 	(178,049	)	
Machinery and equipment	 	(290,791	)	 	(265,129	)	
Other fixed assets	 	(27,915	)	 	(26,025	)	
Technical appraisal	 	(34,021	)	 	(32,636	)	
 	 		 	 		 	
   Total accumulated depreciation	 	(557,875	)	 	(501,839	)	
 	 		 	 		 	
      Net property, plant and equipment	 	671,622	 	 	705,535	 	

 	 	2004	 	 	2003	 	
 	 		 	 		 	
Depreciation for the year ended September 30:	 	ThUS$	 	 	ThUS$	 	
 	 	 	 	 	 	 	
Buildings and infrastructure	 	(19,608	)	 	(18,768	)	
Machinery and equipment	 	(23,662	)	 	(23,810	)	
Other fixed assets	 	(1,216	)	 	(1,239	)	
Technical revaluation	 	(969	)	 	(1,307	)	
 	 		 	 		 	
   Total depreciation	 	(45,455	)	 	(45,124	)	
 	 		 	 		 	
The Company has capitalized assets obtained through leasing, which are included in other fixed assets and are as follows:
 	 	2004	 	 	2003	 	
 	 		 	 		 	
 	 	ThUS$	 	 	ThUS$	 	
 	 	 	 	 	 	 	
Administrative office buildings	 	2,115	 	 	2,086	 	
Accumulated depreciation	 	(457	)	 	(401	)	
 	 		 	 		 	
   Total assets in leasing	 	1,658	 	 	1,685	 	
 	 		 	 		 	
27

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
 Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a)) 
Note 9 – Investments in related companies	
 	 	 	
 	a)	Information on foreign investments	
 	 	 	
 	 	There are no plans for the foreign investments to pay dividends, as it is the Company’s policy to reinvest those earnings.	
 	 	 	
 	 	The Company has not designated its foreign investments as net investment hedges.	
 	 	 	
 	b)	Transactions executed in 2004	
 	 	 	
 	 	In January 2004, the subsidiary Soquimich European Holding B.V. made a capital contribution of ThUS$ 475 on its affiliate Misr Specialty Fertilizers.	
 	 	 	
 	 	At the meeting of the shareholders of Empresas Melón S.A. held on February 25, 2004, the shareholders agreed its spin-off in 2 companies, Empresas Melón S.A. and Inmobiliaria San Patricio S.A. As a result, SQM S.A. maintained its ownership of 14.05% in Empresas Melón S.A. and a same ownership percentage was assigned to this entity in the new company.	
 	 	 	
 	 	In April 2004, the subsidiary Soquimich European Holding B.V. increased capital by ThUS$ 475 in its affiliate Misr Specialty Fertilizers.	
 	 	 	
 	 	On August 13, 2004, SQM S.A. transferred, 653,748,837 shares from Inmobiliaria San Patricio to Blue Circle South American Holding S.A. equivalent to all the shares held by SQM S.A. which represent 14.05% participation in this company. This transfer was carried out in accordance with the contract signed for the acquisition of Empresas Melón shares during 1998. The effect on income is shown forming part of the net income recognized in the sale of Empresas Melón.	
 	 	 	
 	 	On August 18, 2004 653,748,837 shares of Empresas Melón S.A. equivalent to all the shares held by SQM S.A., representing 14.05% participation in this company, were sold at a public auction held at the Santiago Stock Exchange, for ThUS$69,337. The agreed price was paid in cash on the same date. As a result of this sale, as of September 30, 2004 income before income tax amounted to ThUS$8,179.	
 	 	 	
 	 	On August 20, 2004, SQM Potasio S.A. decreased its capital in RS Agro Chemical Trading A.V.V., by ThUS$ 25,000 leaving its participation at 99.98% and that of SQM S.A. at 0.02%. In this operation no goodwill or negative goodwill was produced.	
28

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
 Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a)) 
 	c)	Transactions executed in 2003	
 	 	 	
 	 	On January 27, 2003, SQM Comercial de México S.A. de C.V. and SQM Nitratos S.A. acquired 8,750 shares of the related company Fertilizantes Olmeca y SQM S.A. de C.V. which represented 50% of its share capital. Consequently, Fertilizantes Olmeca y SQM S.A. de C.V. became a subsidiary of SQM S.A. This transaction generated goodwill of ThUS$279.	
 	 	 	
 	 	Subsequently, SQM Nitratos S.A. acquired from SQM Comercial de México S.A. de C.V. 8,749 shares in Fertilizantes Olmeca y SQM S.A. de C.V. This transaction did not produce goodwill.	
 	 	 	
 	 	On January 31, 2003, SQM S.A. acquired shares owned by SQM Nitratos S.A. in Sociedad Contractual Minera Antucoya for an amount of ThUS$ 100. This united all the shares of SCM Antucoya in one shareholder and consequently SCM Antucoya was liquidated and SQM S.A. assumed of all this company’s assets and liabilities.	
 	 	 	
 	 	On March 30, 2003, Fertilizantes Olmeca y SQM S.A. de C.V. increased its capital by ThUS$2,000 through the issuance of 431.200 shares, which were subscribed in full by SQM Nitratos S.A. As a result, SQM Nitratos S.A. had an ownership interest of 78.29% and SQM Comercial de Mexico had an ownership interest of 21.71%.	
 	 	 	
 	 	On March 30, 2003, Soquimich European Holding acquired 50% of the ownership interest of Mineag SQM Africa Ltd. from Ravlin Investment Limited for an amount of ThUS$990. Consequently, Mineag SQM Africa Ltd. became a subsidiary of SQM S.A. This transaction did not produce goodwill.	
 	 	 	
 	 	On April 28, 2003, SQM Comercial S.A. acquired from Norsk Hydro ASA, 819,999 shares in Norsk Hydro Chile S.A. and SQM Comercial Internacional Ltda., a subsidiary company of SQMC, acquired the one remaining share consequently, SQMC became the sole owner and controlled 100% of Norsk Hydro Chile S.A. This transaction generated goodwill of ThUS$ 1,282.	
 	 	 	
 	 	On June 30, 2003, SQM Nitratos S.A. acquired the shares owned by SQM S.A. in Sociedad Energía y Servicios S.A. The shares amounted to ThUS$2,422. This transaction resulted in the consolidation of all the shares of Energía y Servicios S.A. to one shareolder, SQM Nitratos S.A. Consequently under Chilean Corporations Law Energía y Servicios S.A. was dissolved and SQM Nitratos S.A. assumed all its assets and liabilities.	
 	 	 	
 	 	On June 30, 2003, the subsidiaries SQM Virginia LLC and North American Trading Company, made a capital contribution to the subsidiary SQM Lithium Specialties LLP. This capital contribution amounted to ThUS$ 1,678, in a proportion of 99% and 1% respectively.	
 	 	 	
 	 	On July 16, 2003, the subsidiary Norsk Hydro Chile changed its name to “Comercial Hydro S.A.”.	
 	 	 	
 	 	On September 30, 2003, the subsidiaries SQM Virginia LLC and North American Trading Company, made a capital contribution to the subsidiary SQM Lithium Specialties LLP. This capital contribution amounted to ThUS$ 367, in a proportion of 99% and 1%, respectively.	
29

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
 Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
 	 	On September 30, 2003, SQM Corporation N.V. participated in a capital increase of Ajay Europe SARL in equal parts with Ajay Chemicals INC., both therefore maintaining the same ownership percentages.	
 	 	 	
 	 	On November 10, 2003, SQM Nitratos S.A. and SQM S.A. liquidated the subsidiary SQM Colombia Limitada.	
 	 	 	
 	 	On November 18, 2003, the subsidiary Soquimich European Holding BV, provided ThUS$ 676 of capital to initiate a joint venture with the company Misr Specialty Fertilizer in Egypt.	
 	 	 	
 	 	On November 20, 2003, SQM Potasio S.A. made capital contribution of ThUS$ 55,000 to RS Agro Chemical Trading AVV, increasing its participation in this subsidiary to 99.99%.SQM S.A. did not participate and therefore reduced its participation by 0.01%.	
 	 	 	
 	d)	Investments with less than 20% participation	
 	 	 	
 	 	Companies with less than 20% participation which SQM has the capacity to significantly influence or control, since it is part of their Board of Directors, have been valued using the equity method.	
30

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements 
(A translation of the original in Spanish- see note 2 (a))
Note 9 – Investments in and Receivables from Related Companies (continued)
d)	Detail of investments in related companies	
									 										 	
Tax Registration
Number	 	 	 	Country of origin	 	Controlling
currency	 	Number 
of shares	 	Ownership interest	 	Equity of companies	 	Book value of investment	 	Net income (loss) 	 	Equity participation in net income (loss)	 	
	 	 	 		 		 		 		 		 		 		 		 	
	 	Company	 		 		 		 	2004	 	2003	 	2004	 	2003	 	2004	 	2003	 	2004	 	2003	 	2004	 	2003	 	
									 																				 	
 	 	 	 	 	 	 	 	 	 	%	 	%	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
93390000-2	 	Empresas Melón S.A..	 	Chile	 	—	 	653,748,837	 	14.05	 	14.05	 	—	 	302,335	 	—	 	42,478	 	—	 	21,893	 	2,905	 	3,076	 	
0-E	 	Ajay North America LLC	 	USA	 	US$	 	—	 	49.00	 	49.00	 	11,373	 	11,416	 	5,449	 	5,594	 	207	 	924	 	164	 	453	 	
0-E	 	Nutrisi Holding N.V.	 	Belgium	 	US$	 	—	 	50.00	 	50.00	 	4,904	 	3,296	 	2,532	 	1,648	 	1,264	 	1,511	 	778	 	756	 	
0-E	 	Ajay Europe S.A.R.L.	 	France	 	US$	 	—	 	50.00	 	50.00	 	4,120	 	3,350	 	2,060	 	1,675	 	—	 	—	 	—	 	—	 	
0-E	 	Misr Specialty Fertilizers	 	Egipto	 	US$	 	—	 	47.00	 	25.00	 	3,287	 	—	 	2,075	 	—	 	—	 	—	 	—	 	—	 	
0-E	 	Abu Dhabi Fertilizer	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	    Industries WLL	 	UAE	 	US$	 	—	 	37.00	 	37.00	 	3,227	 	3,177	 	1,194	 	1,175	 	84	 	174	 	31	 	64	 	
0-E	 	Doktor Tarsa	 	Turkey	 	Euros	 	—	 	50.00	 	50.00	 	2,170	 	1,588	 	1,085	 	794	 	590	 	123	 	295	 	61	 	
0-E	 	Impronta SRL	 	Italia	 	Euros	 	—	 	50.00	 	50.00	 	877	 	1,131	 	448	 	566	 	276	 	696	 	141	 	348	 	
77557430-5	 	Sales de Magnesio Ltda.	 	Chile	 	—	 	—	 	50.00	 	50.00	 	346	 	266	 	219	 	133	 	158	 	72	 	125	 	36	 	
O-E	 	Rui Xin Packaging	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	    Materials Sanhe Co.Ltd	 	China	 	US$	 	—	 	25.00	 	25.00	 	482	 	482	 	121	 	121	 	—	 	—	 	—	 	—	 	
81767200-0	 	Asoc. Garantizadora Pensiones	 	Chile	 	—	 	—	 	3.31	 	3.31	 	732	 	704	 	25	 	23	 	—	 	—	 	—	 	—	 	
O-E	 	Mineag SQM Africa Limited	 	South África	 	US$	 	—	 	—	 	100.00	 	—	 	(217	) 	—	 	—	 	—	 	(309	) 	—	 	—	 	
99551480-K	 	Inmobiliaria San Patricio S.A.	 	Chile	 	—	 	653,748,837	 	14.05	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	(12	) 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 		 	 	 	 	 	 	 	 	 	
Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	15,208	 	54,207	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 		 	 	 	 	 	 	 	 	 	
31

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements 
(A translation of the original in Spanish- see note 2 (a))
Note 10 – Goodwill and Negative Goodwill
Goodwill and negative goodwill and the related amortization is summarized as follows:
a)	Goodwill	
 	 	 	 	September 30, 2004 	 	September 30, 2003	 	
Tax RegistrationNumber	 	Company	 	Amount amortized during the period	  	Goodwill balance	 	Amount amortized  during the period	 	Goodwill balance	 	
 	 	 	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	 	 	 	 	 	 	
0-E	 	Doktor Tarsa	 	56	 	41	 	62	 	90	 	
79768170-9	 	Soquimich Comercial S.A.	 	113	 	159	 	113	 	310	 	
93390000-2	 	Empresas Melón S.A.	 	324	 	—	 	363	 	7,759	 	
79626800-K	 	SQM Salar S.A.	 	32	 	50	 	32	 	93	 	
0-E	 	SQM México S.A. de C.V.	 	42	 	961	 	42	 	1,017	 	
96864750-4	 	SQM Potassium S.A.	 	108	 	1,771	 	108	 	1,916	 	
0-E	 	Comercial Caiman Internacional S.A.	 	17	 	183	 	17	 	205	 	
0-E	 	Fertilizantes Olmeca	 	42	 	181	 	42	 	237	 	
0-E	 	PTM SQM Iberica S.A.	 	—	 	—	 	—	 	88	 	
0-E	 	Impronta Italia S.R.L.	 	—	 	—	 	—	 	141	 	
96801610-5	 	Comercial Hydro S.A.	 	107	 	1,223	 	65	 	1,229	 	
 	 	 	 		 		 		 		 	
Total	 	 	 	841	 	4,569	 	844	 	13,085	 	
 	 	 	 		 		 		 		 	
b)  Negative Goodwill	
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	September 30, 2004 	 	September 30, 2003	 	
 Tax Registration 
           Number	 	  Company	 	 Amount amortized during the period	   	Negative goodwill balance	   	 Amount amortized during the period	   	Negative goodwill balance	   	
 	 	 	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	 	 	 	 	 	 	
79626800-K	 	SQM Salar S.A.	 	—	 	—	 	157	 	18	 	
96575300-1	 	Minera Mapocho S.A.	 	153	 	322	 	153	 	525	 	
0-E	 	Mineag SQM Africa Limited	 	—	 	—	 	110	 	—	 	
 	 	 	 		 		 		 		 	
Total	 	 	 	153	 	322	 	420	 	543	 	
 	 	 	 		 		 		 		 	
32

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 11 – Other Long-term Assets
Other long-term assets are summarized as follows:
 	 	2004	 	2003	 	
 	 		 		 	
 	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	
Engine and equipment spare-parts, net	 	25,678	 	31,929	 	
Mine development costs	 	22,621	 	19,313	 	
Pension plan	 	1,137	 	1,137	 	
Construction of Salar-Baquedano road	 	1,680	 	1,800	 	
Deferred loan issuance costs	 	1,155	 	2,669	 	
Other	 	1,190	 	1,825	 	
 	 		 		 	
Total	 	53,461	 	58,673	 	
 	 		 		 	
Note 12 – Bank Debt 
a)     Short-term bank debt is detailed as follows:
 	 	2004	 	2003	 	
 	 		 		 	
Bank or financial institution	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	
SCH Overseas Bank	 	12,026	 	—	 	
Scotiabank	 	13,032	 	—	 	
Citibank	 	6,039	 	—	 	
HSBC Banc Chile	 	5,003	 	 	 	
Banco de Chile	 	16,045	 	 	 	
Other banks	 	2,189	 	1,274	 	
 	 		 		 	
Total	 	54,334	 	1,274	 	

Annual average interest rate	 	1.78	%	3.04	%	
33

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
 Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a)) 
Note 12 – Bank Debt (continued)
b)      Long-term bank debt is detailed as follows:
 	2004	 	2003	 	
 		 		 	
     Bank or financial institution	ThUS$	 	ThUS$	 	
 	 	 	 	 	
     Union Bank of Switzerland (1)	200,642	 	200,642	 	
     Royal Bank of Canada (2)	—	 	60,318	 	
     Bank of America (3)	—	 	80,723	 	
 		 		 	
Total	200,642	 	341,683	 	

     Less: Current portion	(642	)	(33,683	)	
 		 		 	
            Long-term portion	200,000	 	308,000	 	

 	(1) 	U.S. dollar-denominated loan without guarantee, interest rate of 7.7% per annum, paid semi-annually. The principal is due on September 15, 2006. 	
 	 	 	
 	(2) 	U.S. dollar-denominated loan without guarantee, interest rate of 2.23% per annum, paid semi-annually. The principal is divided into five equal semi-annual partial installments, beginning in November 2003 with the final installment ending in November 2005 	
 	 	 	
 	(3) 	U.S. dollar-denominated loan without guarantee, repaid in full on November 28, 2003 	
 
c)	The maturity of long-term debt is as follows:	
 
 	 	2004	 	2003	 	
 			 		 	
 	 	ThUS$	 	ThUS$	 	
 	Years to maturity	 	 	 	 	
 	Current portion	642	 	33,683	 	
 	1 to 2 years	—	 	32,000	 	
 	2 to 3 years	200,000	 	276,000	 	
 	4 to 5 years	—	 	—	 	
 	 		 		 	
 	Total	200,642	 	341,683	 	
 	 		 		 	
34

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
 Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a)) 
Note 13 – Accrued Liabilities
As of September 30, 2004 and 2003, accrued liabilities are summarized as follows:
 	2004	 	2003	 	
		 			
	ThUS$	 	ThUS$		
 	 	 	 	 	
Provision for royalties	1,369	 	1,494	 	
Quarterly bonus	240	 	372	 	
Provision for employee compensation and legal costs	1,556	 	1,100	 	
Taxes and monthly income tax installment payments	949	 	579	 	
Vacation accrual	5,897	 	5,492	 	
Accrued employee benefits	2,888	 	1,248	 	
Marketing expenses	3,400	 	2,100	 	
Other accruals	3,052	 	3,668	 	
 		 		 	
Total current liabilities	19,351	 	16,053	 	
 		 		 	
Note 14 – Income and Deferred Taxes
a)	At September 30, 2004 and 2003 the Company has the following consolidated balances for retained tax earnings, income not subject to taxes, tax loss carry-forwards and credit for shareholders:	
 
 	2004	 	2003	 	
		 		 	
 	ThUS$	 	ThUS$	 	
 	 	 	 	 	
Accumulated tax basis retained earnings	 	 	 	 	
   with tax credit	54,132	 	23,997	 	
Accumulated tax basis retained earnings	 	 	 	 	
   without tax credit	54	 	—	 	
Tax loss carry-forwards (1)	21,960	 	92,099	 	
Credit for shareholders	7,844	 	4,539	 	
 	 	 	 	 	
(1)	Income tax losses in Chile can be carried forward indefinitely.	
35

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
 Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a)) 
Note – 14 Income and Deferred Taxes (continued)
 	The deferred taxes as of September 30, 2004 and 2003 represented a net liability of ThUS$ 40,028 and ThUS$ 23,965. respectively, and consisted of:	
 	 	
 	2004	Deferred tax asset	 	Deferred tax liability	 	
 	 	Short-term	 	Long-term	 	Short-term	 	Long-term	 	
 	 		 		 		 		 	
 	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	
 	Temporary differences	 	 	 	 	 	 	 	 	
 	Allowance for doubtful accounts	1,320	 	397	 	—	 	—	 	
 	Vacation accrual	964	 	—	 	—	 	—	 	
 	Unrealized gain on sale of products	6,070	 	—	 	—	 	—	 	
 	Provision for obsolescence	—	 	1,947	 	—	 	—	 	
 	Production expenses	—	 	—	 	20,043	 	—	 	
 	Accelerated depreciation	—	 	—	 	—	 	58,482	 	
 	Exploration expenses	1,530	 	—	 	—	 	4,288	 	
 	Capitalized interest	—	 	—	 	—	 	5,883	 	
 	Staff severance indemnities	—	 	476	 	—	 	1,916	 	
 	Capitalized expenses	—	 	—	 	—	 	393	 	
 	Tax loss carry-forwards	—	 	5,594	 	—	 	—	 	
 	Losses from derivative transactions	120	 	—	 	—	 	—	 	
 	Accrued interest	164	 	—	 	—	 	—	 	
 	Other	693	 	2,028	 	86	 	138	 	
 	 		 		 		 		 	
 	Total gross deferred taxes	10,861	 	10,442	 	20,129	 	71,100	 	
 	Total complementary accounts	—	 	(1,212	)	(2,858	)	(28,791	)	
 	Valuation allowance	—	 	(539	)	—	 	—	 	
 	 		 		 		 		 	
 	Total deferred taxes	10,861	 	8,691	 	17,271	 	42,309	 	
 	 		 		 		 		 	
36

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements 
(A translation of the original in Spanish- see note 2 (a))
 
Note 14 – Income and Deferred Taxes (continued)	 	 	 	 	
 	 	 	 	 	 	
 	2003	Deferred tax asset	 	Deferred tax liability	 	
 	 	Short-term	 	Long-term	 	Short-term	 	Long-term	 	
 	 		 		 		 		 	
 	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	
 	Temporary differences	 	 	 	 	 	 	 	 	
 	Allowance for doubtful accounts	901	 	308	 	—	 	—	 	
 	Unearned income	204	 	 	 	 	 	 	 	
 	Vacation accrual	338	 	—	 	—	 	—	 	
 	Unrealized gain on sale of products	5,065	 	—	 	—	 	—	 	
 	Provision for obsolescence	—	 	1,988	 	—	 	—	 	
 	Production expenses	—	 	—	 	11,317	 	—	 	
 	Accelerated depreciation	—	 	—	 	—	 	60,049	 	
 	Exploration expenses	—	 	—	 	—	 	4,321	 	
 	Capitalized interest	—	 	—	 	—	 	6,260	 	
 	Staff severance indemnities	—	 	—	 	—	 	1,077	 	
 	Accrued expenses	—	 	—	 	—	 	425	 	
 	Capitalized expenses	—	 	—	 	—	 	665	 	
 	Tax loss carry-forwards	—	 	15,634	 	—	 	—	 	
 	Losses from derivative transactions	45	 	—	 	—	 	73	 	
 	Accrued interest	111	 	—	 	—	 	—	 	
 	Other	286	 	 	 	28	 	130	 	
 	 		 		 		 		 	
 	Total gross deferred taxes	6,950	 	17,930	 	11,345	 	73,000	 	
 	Total complementary accounts	—	 	(701	)	(2,530	)	(33,671	)	
 	Valuation allowance	—	 	—	 	—	 	—	 	
 	 		 		 		 		 	
 	Total deferred taxes	6,950	 	17,229	 	8,815	 	39,329	 	
 	 		 		 		 		 	
37

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 14 – Income and Deferred Taxes (continued)
c)	Income tax expense is summarized as follows:	
    	 	 	 	 	
 	2004	 	2003	 	
 		 		 	
 	ThUS$	 	ThUS$	 	
 	 	 	 	 	
Tax expense adjustment ( prior year)	(118	)	—	 	
Provision for current income tax	(9,218	)	(2,978	)	
Effect of deferred tax assets and liabilities	(6,354	)	(5,011	)	
Effect of amortization of complementary accounts	(4,378	)	(4,066	)	
Other tax charges and credits	241	 	(249	)	
 		 		 	
Total income tax expense	(19,827	)	(12,304	)	
 		 		 	
Note 15 – Staff Severance Indemnities
Staff severance indemnities are summarized as follows:
 	2004	 	2003	 	
 		 		 	
 	ThUS$	 	ThUS$	 	
 	 	 	 	 	
Opening balance	10,127	 	9,143	 	
Increases in obligation	2,571	 	2,411	 	
Payments	(1,929	)	(2,355	)	
Exchange difference	(207	)	679	 	
 		 		 	
Balance as of September 30	10,562	 	9,878	 	
 		 		 	
38

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. 
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 16 – Minority Interest
Minority interest is summarized as follows:
 	Equity  	 	Net Income/(Loss)	 	
 	2004	 	2003	 	2004	 	2003	 	
 		 		 		 		 	
 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	 	 	 	
Soquimich Comercial S.A.	27,541	 	22,433	 	(3,611	)	(2,154	)	
Ajay SQM Chile S.A.	3,219	 	3,084	 	(331	)	(144	)	
Cape Fear Bulk LLC	134	 	109	 	(83	)	(54	)	
Fenasa	269	 	409	 	(62	)	(119	)	
SQM Nitratos México S.A. de	(61	)	—	 	(22	)	—	 	
C.V.	 	 	 	 	 	 	 	 	
SQM Italia S.R.L	17	 	12	 	4	 	7	 	
SQM Indonesia S.A.	(10	)	(11	)	10	 	11	 	
 		 		 		 		 	
Total	31,109	 	26,036	 	(4,095	)	(2,453	)	
 		 		 		 		 	
39

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 17 – Shareholders’ Equity	
 	 	
a)	Changes to shareholders’ equity consisted of:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
       	 Number
of shares	       	 Paid-in
capital
ThUS$	       	 Other
reserves
ThUS$	       	Accumulated
deficit
of subsidiaries
in
development
stage
ThUS $	       	 Retained
earnings
ThUS$	       	 Net
income
ThUS$	       	 Total
ThUS$	       	
 		 		 		 		 		 		 		 	
Balance as of January 1, 2003	263,196,524	 	477,386	 	125,111	 	(3,661	)	210,624	 	40,202	 	849,662	 	
Transfer 2002 net income to retained earnings	—	 	—	 	—	 	—	 	40,202	 	(40,202	)	—	 	
Declared dividends 2003	—	 	—	 	—	 	—	 	(19,894	)	—	 	(19,894	)	
Accumulated deficit from subsidiaries in development stage (1)	—	 	—	 	—	 	(1,564	)	—	 	—	 	(1,564	)	
Other comprehensive income (2)	—	 	—	 	7,025	 	—	 	—	 	—	 	7,025	 	
Net income for the year	—	 	—	 	—	 	—	 	—	 	36,107	 	36,107	 	
 		 		 		 		 		 		 		 	
Balance as of September 30, 2003	263,196,524	 	477,386	 	132,136	 	(5,225	)	230,932	 	36,107	 	871,336	 	
 		 		 		 		 		 		 		 	
Balance January 1,2004	263,196,524	 	477,386	 	141,420	 	(6,519	)	230,932	 	46,753	 	889,972	 	
Transfer 2003 net income to retained earnings	—	 	—	 	—	 	—	 	46,753	 	(46,753	)	—	 	
Declared dividends 2004	—	 	—	 	—	 	—	 	(23,192	)	—	 	(23,192	)	
Accumulated deficit from subsidiaries in development stage (1)	—	 	—	 	—	 	(1,851	)	—	 	—	 	(1,851	)	
Other comprehensive income (2)	—	 	—	 	5,768	 	—	 	—	 	—	 	5,768	 	
Net income for the year	—	 	—	 	—	 	—	 	—	 	55,602	 	55,602	 	
 		 		 		 		 		 		 		 	
Balance as of September 30, 2004	263,196,524	 	477,386	 	147,188	 	(8,370	)	254,493	 	55,602	 	926,299	 	

(1)	Until June 30, 2004 the only subsidiary in a development stage is SQM Lithium Specialties Limited.	
(2)	Other comprehensive income includes translation adjustments and the effect of changes in the valuation of the Company’s under-funded pension as of September 30, 2003 and 2004.	
40

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 17 – Shareholders’ Equity (continued)	
 	 	
b)	The composition of other comprehensive income as of September 30, 2004 is as follows:	
 	 	 	 	 	 	 	
 	 	 	For the year ended
September 30, 2004	 	As of
September 30, 2004	 	
 	 	 		 		 	
Detail	 	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	 	
Technical appraisal	 	 	—	 	151,345	 	
Changes to other comprehensive income from equitymethod investments:	 	 	 	 	 	 	
Soquimich Comercial S.A.	(1	)	(408	)	(2,905	)	
Isapre Note Grande Ltda.	(1	)	(1	)	(98	)	
Inversiones Augusta S.A.	(1	)	—	 	(761	)	
SQM Ecuador S.A.	(3	)	—	 	(271	)	
Almacenes y Depósitos Ltda.	(1	)	(10	)	(100	)	
Asociación Garantizadora de Pensiones	(1	)	(1	)	(15	)	
Empresas Melón S.A.	(1	)	6,109	 	—	 	
Sales de Magnesio Ltda.	(1	)	(2	)	51	 	
SQM North America Corp.	(2	)	—	 	(777	)	
Other Companies	(1	)	—	 	719	 	
 	 	 		 		 	
Total other comprehensive income	 	 	5,687	 	147,188	 	
 	 	 		 		 	
  	(1)	Corresponds to translation adjustments and monetary correction	
  	(2)	Corresponds to a change in the valuation of the Company’s under-funded pension scheme	
  	(3)	Corresponds to the translation adjustment produced by the application of a new law implemented by the Ecuadorian Government 	
 	 	 	
c)	Capital consists of 263,196,524 fully authorized, subscribed and paid shares with no par value, divided into 142,819,552 Series A shares and 120,376,972 Series B shares. 	
 	 	 	
 	The preferential voting rights of each series are as follows: 	
 	 	 	
 	Series A:	 	If the election of the president of the Company results in a tied vote, the Company’s directors may vote once again, without the vote of the director elected by the Series B shareholders.	
 	 	 	 	
 	Series B:	1)	A general or extraordinary shareholders’ meeting may be called at the request of shareholders representing 5% of the Company’s Series B shares.	
 	 	 	 	
 	 	2)	An extraordinary meeting of the Board of Directors may be called with or without the agreement of the Company’s president, at the request of a director elected by Series B shareholders.	
41

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 18 – Derivative Instruments
Derivative instruments are recorded at their fair value at year-end. Changes in fair value are recognized in income with the liability recorded in other current liabilities. Losses from options relate to fees paid by the Company to enter into such contracts. As of September 30, 2004 the Company’s derivative instruments are as follows:
      2004
   Type of
derivative	Notional or
covered
amount	 	Expiration	 	Description
of the contract
type	 	Position
purchase/sale	 	(Liability)
Asset amount	 	Income
(loss)
recorded	 	
 	ThUS$	 	 	 	 	 	 	 	ThUS$	 	ThUS$	 	
US dollar Forward	214	 	1st quarter of 2005	 	Exchange rate	 	S	 	9	 	9	 	
US dollar Forward	361	 	2st quarter of 2005	 	Exchange rate	 	P	 	6	 	(6	)	
US dollar Forward	361	 	2st quarter of 2005	 	Exchange rate	 	S	 	6	 	6	 	
US dollar Forward	24,166	 	4nd quarter of 2004	 	Exchange rate	 	P	 	1,075	 	(1,075	)	
US dollar Forward	8,201	 	4nd quarter of 2004	 	Exchange rate	 	S	 	369	 	369	 	
US dollar Forward	13,505	 	4nd quarter of 2004	 	Exchange rate	 	S	 	171	 	(171	)	
US dollar Forward	9,186	 	4nd quarter of 2004	 	Exchange rate	 	P	 	68	 	68	 	
Option	17,222	 	4nd quarter of 2004	 	Exchange rate	 	P	 	—	 	—	 	
Option	17,222	 	4nd quarter of 2004	 	Exchange rate	 	S	 	—	 	—	 	
US dollar Forward	214	 	1st quarter of 2005	 	Exchange rate	 	P	 	9	 	(9	)	
 		 	 	 	 	 	 	 	 	 		 	
 	90,652	 	 	 	 	 	 	 	 	 	(809	)	
 		 	 	 	 	 	 	 	 	 		 	
42

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 19 – Non-Operating Income and Expenses
Amounts included in non-operating income and expenses are summarized as follows:
a)	Non-operating income	
 	 	
	2004	 	2003	 	
 		 		 	
	ThUS$	 	ThUS$	 	
	 	 	 	 	
Interest income	2,597	 	2,450	 	
Reversal of allowance for doubtful accounts	391	 	426	 	
Net foreign exchange gains	—	 	2,845	 	
Insurance recoveries	546	 	154	 	
Sales of materials and services	114	 	833	 	
Equity participation in net income of unconsolidated subsidiaries	4,439	 	4,794	 	
Income from sale of investments in related comp.	8,179	 	—	 	
Other income	2,070	 	1,199	 	
 		 		 	
Total	18,336	 	12,701	 	

a)	Non-operating expenses	
 	 	
	2004	 	2003	 	
 		 		 	
	ThUS$	 	ThUS$	 	
	 	 	 	 	
Write-off of investments	6,996	 	6,014	 	
Interest expense	14,441	 	16,392	 	
Equity participation in net losses of unconsolidated subsidiaries	12	 	—	 	
Amortization of goodwill	841	 	844	 	
Net foreign exchange losses	2,460	 	—	 	
Work disruption expenses	421	 	1,476	 	
Increase in provision for employee compensation and legal costs	622	 	1,375	 	
Allowance for doubtful accounts	2,500	 	632	 	
Other expenses	2,808	 	2,673	 	
Provision for sales of materials, spare-parts and supplies	1,300	 	—	 	
 		 		 	
Total	32,401	 	29,406	 	
 		 		 	
43

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 20 – Price-level Restatement
Amounts charged or credited to income relating to price-level restatement are summarized as follows:
 	(Charge) credit to income
from operations	 	
 	2004	 	2003	 	
 		 		 	
 	ThUS$ 	 	ThUS$	 	
 	 	 	 	 	
Property, plant and equipment	127	 	83	 	
Other assets and liabilities	50	 	(16	)	
Shareholders’ equity	(1,091	)	(608	)	
 		 		 	
Subtotal price-level restatement	(914	)	(541	)	
 		 		 	
   Net readjustment of assets and liabilities denominated in UF	49	 	213	 	
 		 		 	
Net price-level restatement	(865	)	(328	)	
 		 		 	
Note 21 – Assets and Liabilities Denominated in Foreign Currency
 	 	 	2004	 	2003	 	
 	 	 		 		 	
 	 	ThUS$	 	ThUS$	 	
 	Assets	 	 	 	 	
 	 	Chilean pesos	115,989	 	161,269	 	
 	 	US dollars	1,185,802	 	1,098,684	 	
 	 	Euros	22,596	 	60,584	 	
 	 	Japanese Yen	4,351	 	2,995	 	
 	 	Brazilian Real	365	 	1,115	 	
 	 	Mexican pesos	5,385	 	17,098	 	
 	 	UF	18,330	 	7,481	 	
 	 	South African Rand	8,991	 	6,249	 	
 	 	Other currencies	1,609	 	5,662	 	
 	 	 	 	 	 	 	
 	Current liabilities	 	 	 	 	
 	 	Chilean pesos	48,832	 	55,480	 	
 	 	US dollars	87,828	 	48,245	 	
 	 	Euros	12,025	 	10,814	 	
 	 	Japanese Yen	194	 	361	 	
 	 	Brazilian Real	707	 	719	 	
 	 	Mexican pesos	8,175	 	4,721	 	
 	 	UF	155	 	235	 	
 	 	South African Rand	1,899	 	120	 	
 	 	Other currencies	328	 	711	 	
 	 	 	 	 	 	 	
 	Long-term liabilities	 	 	 	 	
 	 	Chilean pesos	56	 	5,189	 	
 	 	US dollars	235,753	 	334,520	 	
 	 	Japanese Yen	72	 	72	 	
 	 	UF	10,274	 	3,075	 	
 	 	Other currencies	1	 	—	 	
 44

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 22 – Cash Flow Statement
Amounts included in other investing income are summarized as follows:
 	 	 	2004	 	2003	 	
 	 	 		 		 	
 	 	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	 	
Sale of mining concessions	 	 	600	 	—	 	
Repayment of employee loans	 	 	48	 	2,977	 	
Cash balance in new subsidiaries	(1	)	8	 	4,343	 	
 	 	 		 		 	
Total	 	 	656	 	7,320	 	
 	 	 		 		 	
(1) Corresponds to the consolidation of the new subsidiaries Mineag SQM Africa Limited, Fertilizantes Olmeca and SQM S.A. de C.V. during 2003, and SQM Lithium Specialities LLP in 2004.
45

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 23 – Commitments and Contingencies
I.	Contingencies:	
 	 	 	
 	(a)	Material lawsuits or other legal actions of which the Company is party to:	
 	 	 	 	 	 	
 	 	1	Plaintiff	:	SQM Salar S.A.	
 	 	 	Defendants	:	ACE Seguros S.A. (formerly – Cigna Compañía de	
 	 	 	 	 	Seguros (Chile) S.A.) and Chubb de Chile	
 	 	 	 	 	Compañía de Seguros Generales S.A.	
 	 	 	Date of lawsuit	:	April 2001	
 	 	 	Matter	:	Arbitration	
 	 	 	Status	:	Collection of compensation for insured claim	
 	 	 	Instance	:	Evidence verification	
 	 	 	Nominative value	:	ThUS$ 36,316	
 	 	 	 	 	 	
 	 	2	Plaintiffs	:	Compagnie Du Guano de Poisson Angibaud S.A. and Generale	
 	 	 	 	 	de Nutrition Vegetale SAS	
 	 	 	Defendants	:	Soquimich European Holdings B.V., NU3 N.V. and SQM	
 	 	 	 	 	France S.A.	
 	 	 	Date of lawsuit	:	December 2002	
 	 	 	Court	:	Court of Arbitration in France	
 	 	 	Matter	:	Termination of the company relationship and	
 	 	 	 	 	liquidation of the company Generale de Nutrition	
 	 	 	 	 	Vegetale SAS	
 	 	 	Status	:	The lawsuit is being contested	
 	 	 	Nominative value	:	ThEuro$ 30,295	
 	 	 	 	 	 	
 	 	3	Plaintiffs	:	SQM S.A.	
 	 	 	Defendants	:	Empresa Minera de Mantos Blancos S.A.	
 	 	 	Date of lawsuit	:	June 2004	
 	 	 	Court	:	Arbitration Court	
 	 	 	Cause	:	Noncompliance with promise agreement	
 	 	 	Instance	:	Reply	
 	 	 	Nominative value	:	ThUS$ 7,000	
46

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 23 – Commitments and Contingencies (continued)
I.	Contingencies (continued):	
 	 	 	
 	(b)	Models for the Production of the María Elena site	
 	 	 	
 	 	The Company is currently reviewing the “Models for the Production of the María Elena site” which may be implemented as a result of the Decontamination Plan (see note 26). The different alternatives for production and technology development for the Maria Elena site, which are a part of the above-mentioned “Production Models” do not proactively generate significant changes in the present ore reserves or forecasted sales volumes. These options include possibilities to use new production methods and are related to the “leaching piles” and implementing a mixed system, which would be comprised of the use of the aforementioned technology and the current production methods. Advantages and disadvantages of the different options relate to the extension of the transition periods of new technology, the investments that will be required, production costs, changes in technologies and in productive processes and the effects on certain of the Company’s assets and their value. The possible effects on the valuation of assets are not yet determinable.	
47

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 23 – Commitments and Contingencies (continued)
 	(c)	Other 	
 	 	 	
 	 	The Company and its subsidiaries are involved in litigation in the ordinary course of business. Based on the advice of counsel, management believes the litigation will not have a material effect on the consolidated financial statements.	
 	 	 	
II.	Commitments:	
 	 	 	
 	(a) 	The subsidiary SQM Salar S.A. maintains an agreement with a government agency, whereby the Company must make annual payments until 2030 based on the Company’s annual sales. This amount, which has been paid since the beginning of the agreement in 1996, amounted to ThUS$ 3,548 in 2004 (ThUS$ 3,419 in 2003).	
 	 	 	
 	(b)	The Company has certain indirect guarantees, which relate to agreements with no remaining payments pending. These guarantees are still in effect and have been approved by the Company’s Board of Directors; however, they have not been used by the subsidiaries.	
 	 	 	
 	(c)	Bank debt of SQM S.A. and its subsidiaries has no restrictions or terms other than those that might usually be found in identical debt in the financial markets, such as maximum indebtedness and minimum equity among others.	
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Note 24 – Third Party Guarantees
As of September 30, 2004 and 2003 the Company has the following indirect guarantees outstanding:
 	 	Debtor	 	Balances outstanding	 	
 	 		 		 	
Beneficiary	 	Name	 	Relationship	 	2004	 	2003	 	
 	 	 	 	 	 	ThUS$	 	ThUS$	 	
Phelps Dodge Corporation	 	SQM Potasio S.A.	 	Subsidiary	 	1,926	 	2,784	 	
Bank of America N.A.	 	RS Agro-Chemical Trading A.V.V.	 	Subsidiary	 	—	 	80,723	 	
Note 25 – Sanctions
During 2004 and 2003, the SVS did not apply sanctions to the Company, its directors or managers.
Note 26 – Environmental Projects
Disbursements incurred by the Company as of September 30, 2004 relating to its investments in production processes and compliance with regulations related to industrial processes and facilities are as follows:
 	 	 	 	 	
 	2004	 	Future
Disbursements	 	
 		 		 	
 	ThUS$	 	ThUS$	 	
Project	 	 	 	 	
Environmental department	365	 	196	 	
Boratos sewage treatment plant	256	 	38	 	
Tocopilla project	615	 	—	 	
Engineering and building of María Elena piles	2,425	 	914	 	
Treatment plant MOP	208	 	—	 	
Other	873	 	708	 	
 		 		 	
Total	4,742	 	1,856	 	
 		 		 	
Protecting the environment is a constant concern for SQM, regarding both the Company’s productive processes and the manufactured goods.
SQM is currently implementing an Environmental Management System, which is based on the ISO 14000 standard, with which, the Company’s environmental performance will be improved through the effective application of the Environmental Policy of SQM. The implementation program stipulates that late in 2004, all the operations maintained by the Company in Regions I and II of Chile, will have a fully implemented Environmental Management System.
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Note 26 – Environmental Projects (continued)
Technological processes are intended to be environmentally friendly in order to reduce residual materials and improve technical conditions to ensure effective protection of the environment. An example of this is ongoing conversion of oil to natural gas used in the Company’s plants.
Processes where sodium nitrate is used as a raw material are carried out in geographical areas such as the desert with favorable weather conditions for the drying of solid materials and the evaporation of liquids used in solar energy. The extraction of minerals in open pit mines, given their low waste-to-mineral ratio, gives rise to waste deposits that have little impact on the environment. The extraction process and ore crushing produce particles that are consistent with the industry of operation.
On August 10, 1993, the Ministry of Health published a resolution under the Sanitary Code that established that the levels of breathable particles present at Maria Elena Plant exceeded the level allowed for the quality of air and, which affected the nearby city of Maria Elena. Particles mainly come from dust that results from processing the sodium nitrate, particularly at the crushing process prior to leaching. The decontamination plan presented by the Company to reduce the level of particles was approved with certain modifications by means of Decree No. 164. As a result of the investments and processes implemented according to the approved plan, the Company has substantially reduced the levels of particles in the air. Resolution No. 384, made public on May 16, 2000, authorized the review and a new draw up of the decontamination plan for the city of Maria Elena. The Supreme Decree containing the final Decontamination Plan should be made public within months. It is not possible to assure that within such period the Company will be free from warnings, fines or even eventual temporary closing of the crushing plant in Maria Elena. The Company is continuously researching techniques, processes and systems relating to the processing of sodium nitrate that could even further reduce the level of particles in the city of Maria Elena.
Ore treatment operations, as they are controlled processes, produce solid residual materials that are the non-soluble by product and a certain degree of moisture.
Productive operations based on brine, are carried out at the Atacama Salt Mine and almost 95% of the energy used is solar energy and the remaining 5% comes from natural gas, electricity and fossil fuels. Residual brine left after the production processes are again injected to the Atacama Salt Mine in order to minimize the possible environmental impact.
SQM entered into a contract with the National Forestry Corporation (CONAF) aimed at researching the activities of flamingo groups that live in the Atacama Salt Mine lagoons. Such research includes a population count of the birds and wildlife, breeding research, additional behavior research and the climate phenomena of the area.
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Note 26 – Environmental Projects (continued)
Consistent with the Company’s ongoing commitment with the environmental authorities, the Company actively participates in the Joint Monitoring Research project for the Atacama Salt Mine watershed along with other mining companies that make use of the water resources that supply the Atacama Salt Mine watershed.
Note 27 – Share purchase PCS Yumbes S.C.M.
On October 24, 2003 the Company’s Board of Directors authorized SQM S.A.’s management to begin negotiations to acquire all the shares of the Chilean Company PCS Yumbes S.C.M., a subsidiary of Potash Corporation of Saskatchewan Inc. 
On November 20, 2003, SQM S.A. and its subsidiary SQM Nitratos S.A., subscribed to a share purchase agreement under which they are committed to purchase all of the outstanding shares of the company PCS Yumbes from Inversiones PCS Chile Limitada and 628550 Saskatchewan Ltd., both subsidiaries of Potash Corporation of Saskatchewan Inc.. The final price of the share purchase will be ThUS$35,000, subject to certain adjustments at the date the final agreement is signed. The purchase will comprise all of the fixed assets, mining concessions, water rights and other assets of PCS Yumbes S.C.M. and will exclude all liabilities and contractual obligations.
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Note 28 – Significant Events
On march 19, 2004, the company informed the Superintendency of Securities and Insurance that the Board of Directors of SQM, at its meeting dated march 16, 2003 unanimously agreed to propose the payment of final dividend of US$ 0.08811 per share in favor of those SQM’s shareholders which were registered in the respective registry during the fifth working day prior to the payment of this dividend.
This proposal, upon approval by the next company’s shareholders’ meting which will be held on April 30, 2004, will allow the company to pay and distribute, as stated in the respective Dividend Policy, and annual dividend equivalents to 50% of the net profits which can be distributed and are obtained during 2003.
On April 30, 2004, the company held its shareholders’ meeting. At this meeting, the majority of the company’s shareholders, among others agreed the following:
 	a)	The shareholders approved the distribution and payment of a final and total dividend of ch$ 55.05465 per share. The payment of this dividend was agreed in one single installment, beginning on may 12, 2004 and with a charge to 2003 income.	
 	 	 	
 	b)	The shareholders approved the payment of UF 50 (fifty UF) in favor of each member of the Directors Committee, regardless of the number of meetings that this Committee holds during the respective month. In addition, they approved the implementation of an annual budget for the operating expenses of this Committee and of their advisors for an amount of UF 1,800 (one thousand and eight hundred UF).	
 	 	 	
 	c)	The shareholders approved remuneration to be paid to the Company’s directors during the next twelve month.	
Note 29 – Subsequent Events
Company management are not aware of any significant subsequent events occurred between September 30, 2004 and the date of issuance of these consolidated financial statement (November 02, 2004), which may affect the presentation of these financial statements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Conf: /s/ Ricardo Ramos
Ricardo Ramos
Chief Financial Officer

Date: November 30, 2004.