UNITED STATES
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 six month period ended on June 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 August 17, 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 six-month period ended on June 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 SIX MONTH PERIOD ENDED JUNE 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 June 30, 2004 and 2003
and for the years ended June 30, 2004 and 2003
(A translation of the original in Spanish- see note 2 (a))
Contents
Consolidated Financial Statements	 	
 	 	
Consolidated Balance Sheets	3	
Consolidated Statements of Income	5	
Consolidated Statements of Cash Flows	6	
Notes to the Consolidated Financial Statements	7	
 	 	 	
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.	
2

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Consolidated Statements of Income
(A translation of the original in Spanish- see note 2 (a))
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	As of June 30,	 	
 	 	 	Note	 	 	 	 	 	2004	 	 	 	 	 	2003	 	
																	
 	 	 	 	 	 	 	 	 	ThUS$	 	 	 	 	 	ThUS$	 	
ASSETS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash	 	 	 	 	 	 	 	 	12,946	 	 	 	 	 	14,800	 	
Time deposits	 	 	 	 	 	 	 	 	28,126	 	 	 	 	 	8,806 	 	
Marketable securities	 	 	4	 	 	 	 	 	31,425	 	 	 	 	 	51,489 	 	
Accounts receivable, net 	 	 	5	 	 	 	 	 	142,515	 	 	 	 	 	119,667 	 	
Other accounts receivable, net	 	 	5	 	 	 	 	 	10,609	 	 	 	 	 	8,547	 	
Accounts receivable from related companies	 	 	6	 	 	 	 	 	35,041	 	 	 	 	 	34,931 	 	
Inventories, net	 	 	7	 	 	 	 	 	255,705	 	 	 	 	 	227,789 	 	
Recoverable taxes 	 	 	 	 	 	 	 	 	15,595	 	 	 	 	 	11,589 	 	
Prepaid expenses	 	 	 	 	 	 	 	 	4,206	 	 	 	 	 	3,578 	 	
Other current assets 	 	 	 	 	 	 	 	 	15,776	 	 	 	 	 	11,198 	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
Total current assets	 	 	 	 	 	 	 	 	551,944	 	 	 	 	 	492,394 	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
Property, plant and equipment, net	 	 	8	 	 	 	 	 	647,733	 	 	 	 	 	683,717	 	

Other Assets 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investments in related companies	 	 	9	 	 	 	 	 	83,000	 	 	 	 	 	76,755 	 	
Goodwill, net	 	 	10	 	 	 	 	 	12,329	 	 	 	 	 	12,962 	 	
Negative goodwill, net	 	 	10	 	 	 	 	 	(373	)	 	 	 	 	(646	)	
Intangible assets, net	 	 	 	 	 	 	 	 	4,588	 	 	 	 	 	4,847	 	
Long-term accounts receivable, net	 	 	5	 	 	 	 	 	7,222	 	 	 	 	 	8,094 	 	
Long-term accounts receivable from related companies	 	 	6	 	 	 	 	 	340	 	 	 	 	 	380 	 	
Other long-term assets	 	 	11	 	 	 	 	 	53,773	 	 	 	 	 	58,105 	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
Total Other Assets	 	 	 	 	 	 	 	 	160,879	 	 	 	 	 	160,497	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
     Total assets	 	 	 	 	 	 	 	 	1,360,556	 	 	 	 	 	1,336,608 	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
3

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Consolidated Statements of Income
(A translation of the original in Spanish- see note 2 (a))
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	As of June 30,	 	
 	 	 	Note	 	 	 	 	 	2004	 	 	 	 	 	2003	 	
																	
 	 	 	 	 	 	 	 	 	ThUS$	 	 	 	 	 	ThUS$	 	
LIABILITIES AND SHAREHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Short-term bank debt	 	 	12	 	 	 	 	 	102,635	 	 	 	 	 	520	 	
Current portion of long-term debt	 	 	12	 	 	 	 	 	4,577	 	 	 	 	 	36,749	 	
Dividends payable	 	 	 	 	 	 	 	 	189	 	 	 	 	 	253	 	
Accounts payable	 	 	 	 	 	 	 	 	51,697	 	 	 	 	 	49,346	 	
Other accounts payable	 	 	 	 	 	 	 	 	1,571	 	 	 	 	 	1,558	 	
Notes and accounts payable to related companies	 	 	6	 	 	 	 	 	11,301	 	 	 	 	 	8,444	 	
Accrued liabilities	 	 	13	 	 	 	 	 	15,604	 	 	 	 	 	12,407	 	
Withholdings	 	 	 	 	 	 	 	 	2,399	 	 	 	 	 	2,292	 	
Income taxes	 	 	 	 	 	 	 	 	2,852	 	 	 	 	 	814	 	
Deferred income taxes	 	 	14	 	 	 	 	 	6,093	 	 	 	 	 	2,176	 	
Deferred income 	 	 	 	 	 	 	 	 	1,279	 	 	 	 	 	4.299	 	
Other current liabilities	 	 	 	 	 	 	 	 	173	 	 	 	 	 	161	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
Total current liabilities	 	 	 	 	 	 	 	 	200,370	 	 	 	 	 	119,019	 	

Long-term liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Long-term bank debt	 	 	12	 	 	 	 	 	200,000	 	 	 	 	 	308,000	 	
Other accounts payable	 	 	 	 	 	 	 	 	1,954	 	 	 	 	 	2,847	 	
Deferred income taxes	 	 	14	 	 	 	 	 	31,444	 	 	 	 	 	19,999	 	
Staff severance indemnities	 	 	15	 	 	 	 	 	9,883	 	 	 	 	 	9,376	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
Total long-term liabilities	 	 	 	 	 	 	 	 	243,281	 	 	 	 	 	340,222	 	

Minority interest	 	 	16	 	 	 	 	 	27,643	 	 	 	 	 	23,178	 	

Shareholders’ equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Paid-in capital	 	 	17	 	 	 	 	 	477,386	 	 	 	 	 	477,386	 	
Other reserves	 	 	17	 	 	 	 	 	135,891	 	 	 	 	 	127,760	 	
Retained earnings	 	 	17	 	 	 	 	 	275,985	 	 	 	 	 	249,043	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
Total shareholders’ equity	 	 	 	 	 	 	 	 	889,262	 	 	 	 	 	854,189	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
Total liabilities and shareholders’ equity	 	 	 	 	 	 	 	 	1,360,556	 	 	 	 	 	1,336,608	 	
 	 	 	 	 	 	 	 	 		 	 	 	 	 		 	
4

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	
 	 	 	 	 	 	June 30,	
 	 	 	 	 	 	2004	 	 	 	 	 	2003	 	
					 						 			
 	 	 	 	 	 	ThUS$	 	 	 	 	 	ThUS$	 	
Operating results	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sales	 	 	 	 	 	379,859	 	 	 	 	 	324,999	 	
Cost of sales	 	 	 	 	 	(298,720	)	 	 	 	 	(260,439	)	
 	 	 	 	 	 		 	 	 	 	 		 	
Gross margin	 	 	 	 	 	81,139	 	 	 	 	 	64,560	 	
Selling and administrative expenses	 	 	 	 	 	(27,326	)	 	 	 	 	(23,966	)	
 	 	 	 	 	 		 	 	 	 	 		 	
Operating income	 	 	 	 	 	53,813	 	 	 	 	 	40,594	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-operating results	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-operating income	 	 	19	 	 	7,877	 	 	 	 	 	10,475	 	
Non-operating expenses	 	 	19	 	 	(18,761	)	 	 	 	 	(19,803	)	
 	 	 	 	 	 		 	 	 	 	 		 	
Non-operating loss	 	 	 	 	 	(10,884	)	 	 	 	 	(9,328	)	
Income before income taxes	 	 	 	 	 	42,929	 	 	 	 	 	31,266	 	
Income tax expense	 	 	14	 	 	(11,380	)	 	 	 	 	(7,762	)	
 	 	 	 	 	 		 	 	 	 	 		 	
Income before minority interest	 	 	 	 	 	31,549	 	 	 	 	 	23,504	 	
Minority interest	 	 	16	 	 	(1,789	)	 	 	 	 	(982	)	
 	 	 	 	 	 		 	 	 	 	 		 	
Net income before negative goodwill	 	 	 	 	 	29,760	 	 	 	 	 	22,522	 	
Amortization of negative goodwill	 	 	10	 	 	102	 	 	 	 	 	314	 	
 	 	 	 	 	 		 	 	 	 	 		 	
Net income for the year	 	 	 	 	 	29,862	 	 	 	 	 	22,836	 	
 	 	 	 	 	 		 	 	 	 	 		 	
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 June 30	 	
 	 	 	 	 	 	2004	 	 	 	 	 	2003	 	
		 	 					 	 	 	 			
 	 	 	 	 	 	ThUS$	 	 	 	 	 	ThUS$	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income for the year	 	 	 	 	 	29,862	 	 	 	 	 	22,836	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Charges (credits) to income not representing cash flows	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation expense	 	 	8	 	 	29,578	 	 	 	 	 	30,065	 	
Amortization of intangible assets	 	 	 	 	 	119	 	 	 	 	 	144	 	
Write-offs and accruals	 	 	 	 	 	17,955	 	 	 	 	 	10,106	 	
Gain on equity investments in related companies	 	 	 	 	 	(4,248	)	 	 	 	 	(3,742	)	
Loss on equity investments in related companies	 	 	 	 	 	12	 	 	 	 	 	—	 	
Amortization of goodwill	 	 	10	 	 	619	 	 	 	 	 	529	 	
Amortization of negative goodwill	 	 	10	 	 	(102	)	 	 	 	 	(314	)	
(Profit) loss on sales of assets	 	 	 	 	 	12	 	 	 	 	 	(16	)	
Other credits to income not representing cash flows	 	 	 	 	 	(657	)	 	 	 	 	(963	)	
Other charges to income not representing cash flows	 	 	 	 	 	27,778	 	 	 	 	 	15,712	 	
Foreign exchange difference, net	 	 	 	 	 	1,969	 	 	 	 	 	(3,220	)	
Net changes in operating assets and liabilities (Increase) decrease:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Trade accounts receivable	 	 	 	 	 	(4,717	)	 	 	 	 	(6,837	)	
Inventories	 	 	 	 	 	(15,278	)	 	 	 	 	11,748	 	
Other assets	 	 	 	 	 	(7,979	)	 	 	 	 	5,357	 	
Accounts payable	 	 	 	 	 	(3,064	)	 	 	 	 	(7,982	)	
Interest payable	 	 	 	 	 	151	 	 	 	 	 	(1,849	)	
Net income taxes payable	 	 	 	 	 	852	 	 	 	 	 	(1,481	)	
Other accounts payable	 	 	 	 	 	(2,020	)	 	 	 	 	(802	)	
VAT and taxes payable	 	 	 	 	 	(2,007	)	 	 	 	 	4,105	 	
Minority interest	 	 	16	 	 	1,789	 	 	 	 	 	982	 	
 	 	 	 	 	 		 	 	 	 	 		 	
Net cash provided from operating activities	 	 	 	 	 	70,624	 	 	 	 	 	74,378	 	
 	 	 	 	 	 		 	 	 	 	 		 	
Cash flows from financing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from short term bank financing	 	 	 	 	 	82,998	 	 	 	 	 	—	 	
Payment of dividends	 	 	 	 	 	(25,275	)	 	 	 	 	(21,288	)	
Repayment of bank financing	 	 	 	 	 	(97,813	)	 	 	 	 	(3.886	)	
Payment relation chip enter praise	 	 	 	 	 	—	 	 	 	 	 	(5.274	)	
 	 	 	 	 	 		 	 	 	 	 		 	
Net cash used in financing activities	 	 	 	 	 	(40,090	)	 	 	 	 	(30,448	)	
 	 	 	 	 	 		 	 	 	 	 		 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sales of property, plant and equipment	 	 	 	 	 	606	 	 	 	 	 	180	 	
Sales of investments	 	 	 	 	 	203	 	 	 	 	 	532	 	
Other investing income	 	 	22	 	 	121	 	 	 	 	 	7,293	 	
Additions to property, plant and equipment	 	 	 	 	 	(17,056	)	 	 	 	 	(31,187	)	
Capitalized interest	 	 	 	 	 	(748	)	 	 	 	 	(1,371	)	
Purchase of permanent investments	 	 	 	 	 	(902	)	 	 	 	 	(6,117	)	
Other disbursements	 	 	 	 	 	—	 	 	 	 	 	(31	)	
 	 	 	 	 	 		 	 	 	 	 		 	
Net cash used in investing activities	 	 	 	 	 	(17,776	)	 	 	 	 	(30,701	)	

Effect of inflation on cash and cash equivalents	 	 	 	 	 	1	 	 	 	 	 	(100	)	
Net change in cash and cash equivalents	 	 	 	 	 	12,758	 	 	 	 	 	13,229	 	
Beginning balance of cash and cash equivalents	 	 	 	 	 	69,273	 	 	 	 	 	65,204	 	
 	 	 	 	 	 		 	 	 	 	 		 	
Ending balance of cash and cash equivalents	 	 	 	 	 	82,032	 	 	 	 	 	78,333	 	
 	 	 	 	 	 		 	 	 	 	 		 	
6

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:	
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 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	 	 	 	 	 	—	 	
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	 	
											
 	 	 	%	 	 	 	 	 	%	 	
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.	 	 	99.99	 	 	 	 	 	99.99 	 	
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 June 30, 2004 and 2003.
At June 30, 2004 and 2003, the subsidiary Lithium Specialties LLP was in the development stage and therefore was not included in the consolidation.
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)
b)	Period 	
 	 	
 	     These consolidated financial statements have been prepared as of June 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 (0.8% and 1.1% 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.	
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)
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$636.30 per US$1 at June 30, 2004 and Ch$699.12 per US$1 at June 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.	
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)
 	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.	
 	 	
d)	Foreign currency (continued)	
 	 	
 	Foreign exchange differences for the period ended June 30, 2004 and 2003 generated net earnings (loss) of ThUS$ (1,969) and ThUS$ 3,220, 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 June 30, as follows:	
 	 	 	 	 	 	 		
 	 	 	2004	 	 	2003	 	

 	Brazilian Real	 	3.12	 	 	2.88	 	
 	New Peruvian Sol	 	3.47	 	 	3.47	 	
 	Argentine Peso	 	2.96	 	 	2.80	 	
 	Japanese Yen	 	108.43	 	 	119.80	 	
 	Euro	 	0.82	 	 	0.88	 	
 	Mexican Peso	 	11.53	 	 	10.42	 	
 	Indonesian Rupee	 	9,415.00	 	 	8,940.00	 	
 	Australian Dollar	 	1.40	 	 	1.54	 	
 	Colombian Peso	 	—	 	 	2,812.31	 	
 	Ecuadoran Sucre	 	1.00	 	 	1.00	 	
 	Pound Sterling	 	0.58	 	 	0.61	 	
 	Sudafrican Rand	 	6.85	 	 	7.57	 	
 	 	
 	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.	
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)
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. 	
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)	
 	 	
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 June, 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. 	
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)
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.	
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)
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. 	
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))
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
There were no changes in the accounting principles used by the Company during 2004.
Note 4 – Marketable Securities
As of June 30 marketable securities are detailed as follows:
 	 	 	2004	 	 	 	 	 	2003	 	
											
 	 	 	ThUS$	 	 	 	 	 	ThUS$	 	
 	 	 	 	 	 	 	 	 	 	 	
Mutual funds	 	 	31,425	 	 	 	 	 	51,489	 	
 	 	 		 	 	 	 	 		 	
Total 	 	 	31,425	 	 	 	 	 	51,489	 	
 	 	 	 	 	 	 	 	 	 	 	
Mutual funds consist of investments with Citibank in highly liquid funds invested in fixed-rate debt in the United States.
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))
Note 5 – Short-term and long-term Accounts Receivable
a)	Short term and long-term accounts receivable and other accounts receivable as of June 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		115,517		98,938		12,590		9,971		128,107		128,107		 	108,909	 	
Allowance for doubtful accounts												(7,187	)	 	(6,200	)	
Notes receivable		19,238		15,800		5,902		3,450		25,140		25,140		 	19,250	 	
Allowance for doubtful accounts												(3,545	)	 	(2,292	)	
 														 		 	
Accounts receivable, net												142,515		 	119,667	 	

Other accounts receivable		8,501		8,399		2,589		928		11,090		11,090		 	9,327	 	
Allowance for doubtful accounts												(481)		 	(780)	 	
 	 	 	 	 	 	 	 	 	 	 	 		 	 		 	
Other accounts receivable, net	 	 	 	 	 	 	 	 	 	 	 	10,609		 	8,547	 	

Long-term receivables	 	 	 	 	 	 	 	 	 	 	 	7,222		 	8,094	 	

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 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	26,381	 	23,201	 	27,962	 	29,308	 	4,423	 	2,806	 	35,488	 	29,157	 	26,666	 	18,237	 	120,920	 	102,709	 	
% of total	21.82	%	22.59	%	23.12	%	28.53	%	3.66	%	2.73	%	29.35	%	28.39	%	22.05	%	17.76	%	100.00	%	100.00	%	
 		 		 		 		 		 		 		 		 		 		 		 		 	
Net short-term notes receivable		 		 		 		 		 		 		 		 		 		 		 		 	
Balance	16,635	 	14,622	 	1,813	 	537	 	187	 	13	 	477	 	361	 	2,483	 	1,425	 	21,595	 	16,958	 	
% of total	77.03	%	86.22	%	8.40	%	3.17	%	0.87	%	0.08	%	2.20	%	2.13	%	11.50	%	8.40	%	100.00	%	100.00	%	
 		 		 		 		 		 		 		 		 		 		 		 		 	
Net short-term other accounts receivable		 		 		 		 		 		 		 		 		 		 		 		 	
Balance	3,714	 	5,274	 	783	 	1,089	 	8	 	3	 	5,856	 	1,838	 	248	 	343	 	10,609	 	8,547	 	
% of total	35.01	%	61.71	%	7.38	%	12.74	%	0.08	%	0.04	%	55.19	%	21.50	%	2.34	%	4.01	%	100.00	%	100.00	%	

Subtotal short-term accounts receivable, net		 		 		 		 		 		 		 		 		 		 		 		 	
Balance	46,730	 	43,097	 	30,558	 	30,934	 	4,618	 	2,822	 	41,821	 	31,356	 	29,397	 	20,005	 	153,124	 	128,214	 	
% of total	30.52	%	33.61	%	19.96	%	24.13	%	3.02	%	2.20	%	27.30	%	24.46	%	19.20	%	15.60	%	100.00	%	100.00	%	
 		 		 		 		 		 		 		 		 		 		 		 		 	
Long-term accounts receivable, net		 		 		 		 		 		 		 		 		 		 		 		 	
Balance	7,139	 	6,982	 	68	 	68	 	—	 	—	 	—	 	—	 	15	 	1,044	 	7,222	 	8,094	 	
% of total	98.85	%	86.26	%	0.94	%	0.84	%	—	 	—	 	—	 	—	 	0.21	%	12.90	%	100.00	%	100.00	%	

Total short and long-term accounts receivable, net	 	 		 		 		 		 		 		 		 		 		 		 		 	
Balance	53,869	 	50,079	 	30,626	 	31,002	 	4,618	 	2,822	 	41,821	 	31,356	 	29,412	 	21,049	 	160,346	 	136,308	 	
% of total	33.60	%	36.74	%	19.10	%	22.74	%	2.88	%	2.07	%	26.08	%	23.01	%	18.34	%	15.44	%	100.00	%	100.00	%	

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 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 June 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.	 	2,409	 	 	4,357	 	 	—	 	 	—	 	
Nutrisi Holding N.V. 	 	1,584	 	 	2,228	 	 	—	 	 	—	 	
Generale de Nutrition Vegetale S.A.	 	173	 	 	171	 	 	—	 	 	—	 	
Abu Dhabi Fertilizer Ind. WLL	 	4,012	 	 	4,602	 	 	—	 	 	—	 	
NU3 N.V.	 	39	 	 	1,137	 	 	—	 	 	—	 	
Doktor Tarsa –SQM Turkey	 	3,854	 	 	856	 	 	—	 	 	—	 	
Yara North America	 	370	 	 	—	 	 	—	 	 	—	 	
Yara Iberian S.A.	 	1,956	 	 	—	 	 	—	 	 	—	 	
SQM Lithium Specialties Limited	 	2,550	 	 	665	 	 	—	 	 	—	 	
Empresas Melón S.A. 	 	—	 	 	—	 	 	340	 	 	380	 	
Sales de Magnesio S.A. 	 	66	 	 	11	 	 	—	 	 	—	 	
Ajay North America LLC	 	138	 	 	1,644	 	 	—	 	 	—	 	
Yara Internacional ASA	 	—	 	 	69	 	 	—	 	 	—	 	
Yara France	 	2,560	 	 	1,367	 	 	—	 	 	—	 	
Yara International Asia Trade Pte Ltd	 	1,080	 	 	484	 	 	—	 	 	—	 	
Yara France S.A.	 	—	 	 	2,097	 	 	—	 	 	—	 	
Yara Poland SP	 	903	 	 	388	 	 	—	 	 	—	 	
Yara Benelux B.V	 	619	 	 	585	 	 	—	 	 	—	 	
Yara Hellas S.A.	 	795	 	 	1,182	 	 	—	 	 	—	 	
Yara International Australia PTY.	 	400	 	 	396	 	 	—	 	 	—	 	
Yara UK Ltd.	 	398	 	 	204	 	 	—	 	 	—	 	
Yara GMBH & CO KG	 	433	 	 	258	 	 	—	 	 	—	 	
Yara AB	 	102	 	 	51	 	 	—	 	 	—	 	
Yara Colombia Ltda..	 	1,408	 	 	1,304	 	 	—	 	 	—	 	
Yara Specialties	 	—	 	 	6	 	 	—	 	 	—	 	
Yara México S.A. de C.V.	 	—	 	 	1	 	 	 	 	 	 	 	
Nutrichem Benelux	 	—	 	 	29	 	 	 	 	 	 	 	
Yara Agri CZECH Republic SRO	 	11	 	 	8	 	 	 	 	 	 	 	
Yara France BU Africa	 	72	 	 	—	 	 	 	 	 	 	 	
Rotem Amfert Negev LTD.	 	—	 	 	31	 	 	 	 	 	 	 	
NU3 B.V.	 	835	 	 	1,164	 	 	—	 	 	—	 	
Yara Argentina S.A.	 	334	 	 	4.150	 	 	—	 	 	—	 	
Adubo Trevo S.A.	 	16	 	 	900	 	 	—	 	 	—	 	
Yara Italia SPA	 	63	 	 	—	 	 	—	 	 	—	 	
Yara Planta Nutr. Oslo	 	—	 	 	38	 	 	 	 	 	 	 	
Impronta SRL	 	7,861	 	 	4,548	 	 	—	 	 	 	 	
 	 		 	 		 	 		 	 		 	
Total	 	35,041	 	 	34,931	 	 	340	 	 	380	 	
 	 		 	 		 	 		 	 		 	
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 6 – Balances and Transactions with Related Parties (continued)
a)	Amounts included in balances with related parties as of June 30, 2004 and 2003, continued:	
 	 	
 		Short-term		
 		2004			2003		
							
Accounts payable		ThUS$			ThUS$		

Ajay Europe S.A.R.L.	 	—	 	 	432	 	
Abu Dhabi Fertilizer Ind. WLL	 	—	 	 	94	 	
NU3 N.V.	 	—	 	 	1,544	 	
Rotem Amfert Negev Limited	 	1,094	 	 	1,162	 	
Yara Porsgrunn	 	—	 	 	27	 	
Yara Internacional ASA	 	103	 	 	—	 	
Yara Australia LTD	 	—	 	 	11	 	
Yara North America	 	—	 	 	134	 	
Yara México S.A de C.V.	 	—	 	 	11	 	
Yara Fertilizantes Ltda.	 	1,412	 	 	1,261	 	
Yara France S.A.	 	369	 	 	—	 	
NU3 B.V.	 	—	 	 	57	 	
Adm. y Servicios Santiago S.A. de C.V.	 	—	 	 	81	 	
Yara Benelux B.V.	 	—	 	 	23	 	
Yara France	 	—	 	 	3,556	 	
PCS Yumbes SCM	 	8,323	 	 	51	 	
 	 		 	 		 	
	 	11,301	 	 	8,444	 	

 	     There were no outstanding long-term accounts payable with related parties as of June 30, 2004 and 2003	
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 (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. (Belgica)	Indirect	 	Sales of products	 	3,161		1,022		2,447		628	 	
 	Doktor Tarsa	Indirect	 	Sales of products	 	3,484		952		783		205	 	
 	Abu Dhabi Fertilizer WLL	Indirect	 	Sales of products	 	244		14		1,068		188	 	
 	Ajay Europe S.A.R.L.	Indirect	 	Sales of products	 	2,806		1,236		3,763		1,221	 	
 	NU3 B.V.	Indirect	 	Sales of products	 	2,931		1,387		2,177		814	 	
 	Ajay North America LLC	Indirect	 	Sales of products	 	3,859		1,719		3,656		537	 	
 	Yara UK Ltd.	Shareholder	 	Sales of products	 	696		255		569		152	 	
 	HydrYara International Asia Trade	Shareholder	 	Sales of products	 	2,789		656		2,451		485	 	
 	Pte Ltd..	 	 	 	 								 	
 	Yara France S.A.	Shareholder	 	Sales of products	 	—		—		4,137		876	 	
 	Yara Benelux B.V.	Shareholder	 	Sales of products	 	3,900		967		4,179		703	 	
 	Yara AB Sweden	Shareholder	 	Sales of products	 	548		172		—		—	 	
 	Yara International Australia Pty	Shareholder	 	Sales of products	 	701		179		644		170	 	
 	Ltd.	 	 	 	 								 	
 	Yara Iberian S.A.	Shareholder	 	Sales of products	 	2,663		615		2,045		407	 	
 	Yara Colombia Ltda.	Shareholder	 	Sales of products	 	1,525		290		1,381		246	 	
 	Yara Poland SP	Shareholder	 	Sales of products	 	1,146		403		697		265	 	
 	Yara GMBH & Co Kg	Shareholder	 	Sales of products	 	900		306		641		167	 	
 	Yara France	Shareholder	 	Sales of products	 	5,444		1,389		1,739		379	 	
 	Yara Hellas S.A.	Shareholder	 	Sales of products	 	803		202		1,119		243	 	
 	Yara Argentina S.A.	Shareholder	 	Sales of products	 	5,607		1,381		4,470		308	 	
 	Adubo Trevo S.A.	Shareholder	 	Sales of products	 	5,303		1,502		3,487		1,179	 	
 	PCS Yumbes SCM	Shareholder	 	Sales of products	 	4,776		2,173		2,867		1,941	 	
 	 	 	 	Purchases of products	 	15,114		—		8,580		—	 	
 
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 7 – Inventories
Net inventories are summarized as follows:
 	 	2004	 		2003	 	
							
 	 	ThUS$	 		ThUS$	 	
 	 	 	 	 	 	 	
Finished products	 	149,856	 	 	126,147	 	
Work in process 	 	93,633	 	 	89,262	 	
Supplies	 	12,216	 	 	12,380	 	
 	 		 	 		 	
Total	 	255,705	 	 	227,789	 	
 	 		 	 		 	
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 8 – Property, Plant and Equipment 
Property, plant and equipment are summarized as follows:
 	 	2004			2003	 	
							
 	 	ThUS$			ThUS$	 	
Land	 	 	 	 	 	 	
Land	 	20,003	 	 	13,453	 	
Mining Concessions	 	42,210	 	 	49,505	 	
 	 		 	 		 	
Total	 	62,213	 	 	62,958	 	

Buildings and infrastructure	 	 	 	 	 	 	
Buildings	 	150,420	 	 	157,049	 	
Installations	 	310,050	 	 	286,915	 	
Construction-in-progress	 	28,945	 	 	37,570	 	
Other	 	4,492	 	 	919	 	
 	 		 	 		 	
Total	 	493,907	 	 	482,453	 	

Machinery and Equipment	 	 	 	 	 	 	
Machinery	 	396,601	 	 	389,830	 	
Equipment	 	107,729	 	 	102,873	 	
Project-in-progress	 	11,464	 	 	14,603	 	
Other	 	18,239	 	 	14,435	 	
 	 		 	 		 	
Total	 	534,033	 	 	521,741	 	

Other fixed assets	 	 	 	 	 	 	
Tools	 	7,743	 	 	11,583	 	
Furniture and office equipment	 	14,262	 	 	15,933	 	
Project-in-progress	 	10,001	 	 	15,095	 	
Other	 	7,019	 	 	675	 	
 	 		 	 		 	
Total	 	39,025	 	 	43,286	 	
 	 		 	 		 	
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 8 – Property, Plant and Equipment (continued)
 	 	2004			2003	 	
							
 	 	ThUS$			ThUS$	 	
Amounts relating to technical revaluation of fixed assets	 	 	 	 	 	 	
Land	 	8,651	 	 	8,651 	 	
Buildings and infrastructure	 	40,627	 	 	40,627 	 	
Machinery and equipment	 	12,091	 	 	12,109 	 	
Other assets	 	53	 	 	53 	 	
 	 		 	 		 	
 	 	61,422	 	 	61,440 	 	
 	 		 	 		 	
Total property, plant and equipment	 	1,190,600	 	 	1,171,878 	 	

Less: Accumulated depreciation	 	 	 	 	 	 	
Buildings and infrastructure	 	(198,520	)	 	(173,161	)	
Machinery and equipment	 	(283,093	)	 	(257,271	)	
Other fixed assets	 	(27,556	)	 	(25,529	)	
Technical appraisal	 	(33,698	)	 	(32,200	)	
 	 		 	 		 	
Total accumulated depreciation	 	(542,867	)	 	(488,161	)	
 	 		 	 		 	
Net property, plant and equipment 	 	647,733	 	 	683,717 	 	

 		2004			2003	 	
							
Depreciation for the year ended June 30:		ThUS$			ThUS$	 	
 	 	 	 	 	 	 	
Buildings and infrastructure	 	(12,989	)	 	(12,468	)	
Machinery and equipment	 	(15,138	)	 	(15.929	)	
Other fixed assets	 	(806	)	 	(797	)	
Technical revaluation	 	(645	)	 	(871	)	
 	 		 	 		 	
Total depreciation 	 	(29,578	)	 	(30.065	)	
 	 		 	 		 	
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	 	 	2,081	 	
Accumulated depreciation	 	(443	)	 	(401	)	
 	 		 	 		 	
Total assets in leasing	 	1,672	 	 	1,680	 	
 	 		 	 		 	
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 9 – Investments in and Receivables from Related Parties
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 their 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.	
 	 	
 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 165,500 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%.	
 
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))
 	 	
 	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$ 1,429.	
 	 	
 	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.	
 	 	
 	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%. 	
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 and Receivables from Related Parties (continued)	
 	 	
 	c) Subsidiaries in the development stage	
 	 	
 	At June 30, 2004 and 2003, the subsidiary SQM Lithium Specialties was in the development stage and therefore was not included in the consolidation.	
 	 	
 	The equity value of these investments is included in investments in related companies and the proportional share of the accumulated deficit during the development stage is included in a separate reserve within equity.	
 	 	
 	Balances in these subsidiaries are summarized as follows:	
 	 	SQM Lithium Specialties Limited	 	
 	 	2004			2003	 	
				 			
 	 	ThUS$	 	 	ThUS$	 	
 	 	 	 	 	 	 	
Current assets	 	928	 	 	1,380	 	
Fixed assets	 	25,967	 	 	25,193	 	
Other assets	 	674	 	 	822	 	
 	 		 	 		 	
Total assets	 	27,569	 	 	27,395	 	

Current liabilities	 	2,716	 	 	870	 	
Shareholders’ equity	 	24,853	 	 	26,525	 	
 	 		 	 		 	
Total liabilities and shareholders’ equity	 	27,569	 	 	27,395	 	
 	 		 	 		 	
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))
Note 9 – Investments in and Receivables from Related Companies (continued)
  d)	Detail of investments in related companies 	

Tax Registration		 		Country of		Controlling		Number 		Ownership interest		Equity of companies		Book value of investment		Net income (loss) 		Equity participation in net income (loss)	
Number		Company		origin		currency		of shares		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 	 	290,648	 	281,140	 	40,836	 	39,500	 	20,673	 	16,345	 	2,905	 	2,296	
0-E	 	SQM Lithium Specialties Limited*	 	USA	 	US$	 	—	 	100.00 	 	100.00 	 	24,853	 	26,525	 	24,852	 	26,525	 	(1,851	)	(1,064	)	—	 	—	
0-E	 	Ajay North America LLC	 	USA	 	US$	 	—	 	49.00 	 	49.00 	 	11,373	 	13,931	 	5,573	 	6,826	 	207	 	599	 	190	 	294	
99551480-K	 	Inmobiliaria San Patricio S.A.	 	Chile	 	—	 	—	 	14.05	 	—	 	19,599	 	—	 	2,753	 	—	 	(85	)	—	 	(12	)	—	
0-E	 	Nutrisi Holding N.V.	 	Belgium	 	US$	 	—	 	50.00	 	50.00 	 	4,904	 	2,591	 	2,329	 	1,296	 	1,264	 	1,304	 	610	 	652	
0-E	 	Ajay Europe S.A.R.L.	 	France	 	US$	 	36,700	 	50.00	 	50.00 	 	4,120	 	650	 	2,060	 	325	 	—	 	—	 	—	 	—	
0-E	 	Misr Specialty Fertilizers 	 	Egipto	 	US$	 	—	 	47.00	 	25 	 	3,287	 	—	 	1,561	 	—	 	—	 	—	 	—	 	—	
0-E	 	Abu Dhabi Fertilizer 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Industries WLL	 	UAE	 	US$	 	1,961	 	37.00	 	37.00 	 	3,227	 	3,175	 	1,194	 	1,175	 	84	 	174	 	31	 	64	
0-E	 	Doktor Tarsa	 	Turkey	 	Euros	 	—	 	50.00	 	50.00 	 	2,170	 	560	 	1,085	 	280	 	590	 	123	 	295	 	61	
0-E	 	Impronta SRL	 	Italia 	 	Euros	 	—	 	50.00	 	50.00 	 	877	 	1,109	 	439	 	555	 	276	 	683	 	138	 	341	
77557430-5	 	Sales de Magnesio Ltda.	 	Chile	 	—	 	—	 	50.00	 	50.00 	 	346	 	261	 	173	 	131	 	158	 	66	 	79	 	33	
O-E	 	Rui Xin Packaging 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Materials Sanhe Co.Ltd	 	China	 	US$	 	—	 	25.00	 	25.00 	 	482	 	480	 	121	 	120	 	—	 	—	 	—	 	—	
81767200-0	 	Asoc. Garantizadora Pensiones	 	Chile	 	—	 	—	 	3.31	 	3.31 	 	732	 	665	 	24	 	22	 	—	 	—	 	—	 	—	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 		 	 	 	 	 	 	 	 	
Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	83,000	 	76,755	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 		 	 	 	 	 	 	 	 	
*      In development stage
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))
Note 10 – Goodwill and Negative Goodwill
Goodwill and negative goodwill and the related amortization is summarized as follows:
a) 	Goodwill	
 	 	 	 	June 30, 2004	 	June 30, 2003	 	
Tax Registration 
        Number	 	Company	 	Amount amortized
during the period	 	Goodwill
balance	 	Amount amortized
during the period	 	Goodwill
balance	 	
 	 	 	 	ThUS$	 	ThUS$	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	 	 	 	 	 	 	
0-E	 	Doktor Tarsa	 	37	 	58	 	34	 	123	 	
79768170-9	 	Soquimich Comercial S.A.	 	75	 	197	 	75	 	347	 	
93390000-2	 	Empresas Melón S.A.	 	279	 	7,656	 	238	 	7,456	 	
79626800-K	 	SQM Salar S.A.	 	22	 	61	 	22	 	104	 	
0-E	 	SQM México S.A. de C.V.	 	28	 	975	 	28	 	1,031	 	
96864750-4	 	SQM Potassium S.A.	 	72	 	1,807	 	72	 	1,952	 	
0-E	 	Comercial Caiman Internacional S.A.	 	11	 	188	 	11	 	211	 	
0-E	 	Fertilizantes Olmeca	 	28	 	195	 	28	 	251	 	
0-E	 	PTM SQM Iberica S.A.	 	—	 	—	 	10	 	69	 	
0-E	 	Impronta Italia S.R.L.	 	—	 	—	 	—	 	138	 	
96801610-5	 	Comercial Hydro S.A.	 	67	 	1,192	 	11	 	1,280	 	
 	 	 	 		 		 		 		 	
Total	 	 	 	619	 	12,329	 	529	 	12,962	 	
 	 	 	 		 		 		 		 	
b)  Negative Goodwill	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	June 30, 2004  	 	June 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.	 	—	 	—	 	105	 	70	 	
96575300-1	 	Minera Mapocho S.A.	 	102	 	373	 	102	 	576	 	
0-E	 	Mineag SQM Africa Limited	 	—	 	—	 	107	 	—	 	
 	 	 	 		 		 		 		 	
Total	 	 	 	102	 	373	 	314	 	646	 	
 	 	 	 		 		 		 		 	
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 11 – Other Long-term Assets
Other long-term assets are summarized as follows:
 	 	2004	 	2003	 	
						
 	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	
Engine and equipment spare-parts, net	 	28,260	 	31,960	 	
Mine development costs 	 	20,071	 	19,019	 	
Pension plan	 	1,137	 	1,137	 	
Construction of Salar-Baquedano road	 	1,710	 	1,830	 	
Deferred loan issuance costs	 	1,444	 	3,029	 	
Other	 	1,151	 	1,130	 	
						
Total	 	53,773	 	58,105	 	
						
Note 12 – Bank Debt
a)      Short-term bank debt is detailed as follows:
 	 	2004	 	2003	 	
						
Bank or financial institution	 	ThUS$	 	ThUS$	 	
 	 	 	 	 	 	
SCH Overseas Bank	 	40,016	 	—	 	
Scotiabank	 	13,073	 	—	 	
Citibank	 	11,014	 	—	 	
HSBC Banc Chile	 	10,003	 	 	 	
Banco de Chile	 	26,020	 	 	 	
Other banks	 	2,509	 	520	 	
						
Total	 	102,635	 	520	 	

Annual average interest rate	 	1.59	%	3.29	%	
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 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)	 	204,577	 	 	204,541 	 	
 	Royal Bank of Canada (2)	 	—	 	 	60,013 	 	
 	Bank of America (3)	 	—	 	 	80,195 	 	
								
 	Total	 	204,577	 	 	344,749	 	

 	Less: Current portion	 	(4,577	)	 	(36,749	)	

 	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 2004 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	 	4,577	 	36,749	 	
 	1 to 2 years	 	—	 	32,000	 	
 	2 to 3 years	 	200,000	 	46,000	 	
 	4 to 5 years	 	—	 	230,000	 	
							
 	Total	 	204,577	 	344,749	 	

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 13 – Accrued Liabilities 
As of June 30, 2004 and 2003, accrued liabilities are summarized as follows:
 	 	 	 	 	 	
 	2004	 	 	2003	 	
						
 	ThUS$	 	 	ThUS$	 	
 	 	 	 	 	 	
Provision for royalties	1,208	 	 	1,018	 	
Quarterly bonus	209	 	 	471	 	
Provision for employee compensation and legal costs	1,491	 	 	800	 	
Taxes and monthly income tax installment payments	752	 	 	748	 	
Vacation accrual	5,522	 	 	4,866	 	
Accrued employee benefits	1,841	 	 	483	 	
Marketing expenses	1,950	 	 	800	 	
Other accruals	2,631	 	 	3,221	 	
						
Total current liabilities	15,604	 	 	12,407	 	
						
Note 14 – Income and Deferred Taxes
a)	At June 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	15,169	 	 	16,468	 	
Accumulated tax basis retained earnings without tax credit	2,724	 	 	1,041	 	
Tax loss carry-forwards (1)	38,241	 	 	90,120	 	
Credit for shareholders	2,723	 	 	3,061	 	
 	 	
(1)	Income tax losses in Chile can be carried forward indefinitely.	
 
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 14 – Income and Deferred Taxes (continued)	
 	 	
 	The deferred taxes as of June 30, 2004 and 2003 represented a net liability of ThUS$ 37,537 and ThUS$ 22,175. 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	 	1,215	 	 	392	 	 	—	 	 	—	 	
 	Vacation accrual	 	901	 	 	—	 	 	—	 	 	—	 	
 	Unrealized gain on sale of products	 	5,892	 	 	—	 	 	—	 	 	—	 	
 	Provision for obsolescence 	 	—	 	 	1,587	 	 	—	 	 	—	 	
 	Production expenses	 	—	 	 	—	 	 	19,240	 	 	—	 	
 	Accelerated depreciation	 	—	 	 	—	 	 	—	 	 	58,861	 	
 	Exploration expenses	 	—	 	 	—	 	 	—	 	 	4,373	 	
 	Capitalized interest	 	—	 	 	—	 	 	—	 	 	5,957	 	
 	Staff severance indemnities	 	—	 	 	476	 	 	—	 	 	1,822	 	
 	Accrued expenses	 	—	 	 	—	 	 	—	 	 	425	 	
 	Capitalized expenses	 	—	 	 	—	 	 	—	 	 	442	 	
 	Tax loss carry-forwards	 	616	 	 	8,281	 	 	—	 	 	—	 	
 	Losses from derivative transactions 	 	—	 	 	—	 	 	—	 	 	—	 	
 	Accrued interest	 	112	 	 	—	 	 	—	 	 	—	 	
 	Other	 	1,338	 	 	1.619	 	 	59	 	 	138	 	
 	 			 			 			 			 	
 	Total gross deferred taxes	 	10,074	 	 	12,355	 	 	19,299	 	 	72,018	 	
 	Total complementary accounts 	 	—	 	 	(1,190	)	 	(3,132	)	 	(29,948	)	
 	Valuation allowance	 	—	 	 	(539	)	 	—	 	 	—	 	
 														
 	Total deferred taxes	 	10,074	 	 	10,626	 	 	16,167	 	 	42,070	 	

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 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	 	1,025	 	263	 	 	—	 	 	—	 	
 	Vacation accrual	 	759	 	—	 	 	—	 	 	—	 	
 	Unrealized gain on sale of products	 	5,285	 	—	 	 	—	 	 	—	 	
 	Provision for obsolescence 	 	—	 	1,748	 	 	—	 	 	—	 	
 	Production expenses	 	—	 	—	 	 	14,154	 	 	—	 	
 	Accelerated depreciation	 	—	 	—	 	 	—	 	 	59,732	 	
 	Exploration expenses	 	—	 	—	 	 	—	 	 	4,161	 	
 	Capitalized interest	 	—	 	—	 	 	—	 	 	6,420	 	
 	Staff severance indemnities	 	—	 	—	 	 	—	 	 	1,739	 	
 	Accrued expenses	 	—	 	—	 	 	—	 	 	425	 	
 	Capitalized expenses	 	—	 	—	 	 	—	 	 	719	 	
 	Tax loss carry-forwards	 	—	 	17,185	 	 	—	 	 	—	 	
 	Losses from derivative transactions 	 	5	 	—	 	 	—	 	 	—	 	
 	Accrued interest	 	77	 	—	 	 	—	 	 	—	 	
 	Other	 	965	 	736	 	 	140	 	 	718	 	
 	 			 		 			 			 	
 	Total gross deferred taxes	 	8,116	 	19,932	 	 	14,294	 	 	73,914	 	
 	Total complementary accounts 	 	—	 	(773	)	 	(4,002	)	 	(34,756	)	
 	Valuation allowance	 	—	 	—	 	 	—	 	 	—	 	
 	 			 		 			 			 	
 	Total deferred taxes	 	8,116	 	19,159	 	 	10,292	 	 	39,158	 	

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)
c)	Income tax expense is summarized as follows: 	
 	 	 	 	 	 	 	
 	 	2004	 	 	2003	 	
							
 	 	ThUS$	 	 	ThUS$	 	
 	 	 	 	 	 	 	
Tax expense adjustment ( prior year) 	 	(114	)	 	—	 	
Provision for current income tax 	 	(3,321	)	 	(1,091	)	
Effect of deferred tax assets and liabilities	 	(5,313	)	 	(4,290	)	
Effect of amortization of complementary accounts	 	(2,975	)	 	(2,643	)	
Other tax charges and credits	 	343	 	 	262 	 	
							
Total income tax expense	 	(11,380	)	 	(7,762	)	
							
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	 	1,854	 	 	1,658 	 	
Payments	 	(1,506	)	 	(1,614	)	
Exchange difference	 	(592	)	 	189	 	
	 						
Balance as of June 30	 	9,883	 	 	9,376 	 	
	 						
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 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.	24,056	 	19,654 	 	(1,393	)	 	(507	)	
Ajay SQM Chile S.A.	3,246	 	3,128 	 	(246	)	 	(118	)	
Cape Fear Bulk LLC	132	 	128 	 	(81	)	 	(73	) 	
Fenasa	246	 	256 	 	(44	)	 	(66	)	
SQM Nitratos México S.A. de C.V.	(48	)	—	 	(35	)	 	—	 	
SQM Italia S.R.L	21	 	12 	 	—	 	 	7 	 	
Mineag SQM Africa Ltda.	—	 	—	 	—	 	 	(225	)	
SQM Indonesia S.A.	(10	)	—	 	10	 	 	—	 	
										
Total	27,643	 	23,178 	 	(1,789	)	 	(982	)	
										
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 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)	—	 	—	 	—	 	(1,064	)	—	 	—	 	(1,064	)	
Other comprehensive income (2)	—	 	—	 	2,649	 	—	 	—	 	—	 	2,649	 	
Net income for the year	—	 	—	 	—	 	—	 	—	 	22,836 	 	22,836	 	
 		 		 		 		 		 		 		 	
Balance as of June 30, 2003	263,196,524 	 	477,386 	 	127,760 	 	(4,725	)	230,932 	 	22,836	 	854,189	 	
 		 		 		 		 		 		 		 	
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)	—	 	—	 	(5,529	)	—	 	—	 	—	 	(5,529	)	
Net income for the year	—	 	—	 	—	 	—	 	—	 	29,862 	 	29,862	 	
 		 		 		 		 		 		 		 	
Balance as of June 30, 2004	263,196,524 	 	477,386 	 	135,891 	 	(8,370	)	254,493 	 	29,862	 	889,262	 	

(1) 	The only subsidiary currently 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 June 30, 2003 and 2004.	
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 17 – Shareholders’ Equity (continued)	
b) The composition of other comprehensive income as of June 30, 2004 is as follows:
 	 	 	For the year ended June 30,
2004 	 	 	As of
June 30, 2004	 	
				 	 			
Detail 	 	 	ThUS$	 	 	ThUS$	 	
 	 	 	 	 	 	 	 	
Technical appraisal 	 	 	—	 	 	151,345	 	
Changes to other comprehensive income from equity method investments:	 	 	 	 	 	 	 	
Soquimich Comercial S.A.	(1	)	(2,360	)	 	(4,856	)	
Isapre Note Grande Ltda.	(1	)	(9	)	 	(107	)	
Inversiones Augusta S.A.	(1	)	—	 	 	(761	)	
SQM Ecuador S.A.	(3	)	—	 	 	(270	)	
Almacenes y Depósitos Ltda.	(1	)	(22	)	 	(113	)	
Asociación Garantizadora de Pensiones	(1	)	(2	)	 	(16	)	
Empresas Melón S.A.	(1	)	(3,076	)	 	(9,265	)	
Sales de Magnesio Ltda.	(1	)	(9	)	 	43	 	
SQM North America Corp.	(2	)	—	 	 	(777	)	
San Patricio S.A.	(1	)	(51	)	 	(51	)	
Other Companies	(1	)	—	 	 	719	 	
				 	 			
Total other comprehensive income	 	 	(5,529	)	 	135,891	 	
				 	 			
	(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.	
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 18 – Derivatives 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 June 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	 	12,603 	 	3st quarter of 2004	 	Exchange rate	 	P	 	187	 	 	187	 	
US dollar Forward	 	17,861 	 	3st quarter of 2004	 	Exchange rate	 	P	 	275	 	 	(275	)	
US dollar Forward	 	1,079 	 	4st quarter of 2004	 	Exchange rate	 	P	 	48	 	 	(48	)	
US dollar Forward	 	1,657 	 	3st quarter of 2004	 	Exchange rate	 	P	 	67	 	 	67	 	
US dollar Forward	 	20,115 	 	3st quarter of 2004	 	Exchange rate	 	S	 	1,191	 	 	(1,191	)	
US dollar Forward	 	2,502 	 	4st quarter of 2004	 	Exchange rate	 	P	 	97	 	 	97	 	
US dollar Forward	 	24,534 	 	4nd quarter of 2004	 	Exchange rate	 	S	 	1,444	 	 	(1,444	)	
US dollar Put Option	 	9,764 	 	3nd quarter of 2004	 	Exchange rate	 	P	 	45	 	 	—	 	
 	 		 	 	 	 	 	 	 	 	 	 		 	
 	 	90,115	 	 	 	 	 	 	 	 	 	 	(2,607	)	

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 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	 	1,627	 	 	1,398	 	 	
Reversal of allowance for doubtful accounts	 	267	 	 	500	 	 	
Net foreign exchange gains	 	—	 	 	3,220	 	 	
Insurance recoveries	 	590	 	 	116	 	 	
Sales of materials and services	 	58	 	 	527	 	 	
Equity participation in net income of unconsolidated subsidiaries	 	4,248	 	 	3,742	 	 	
Other income	 	1,087	 	 	972	 	 	
								
Total	 	7,877	 	 	10,475	 	 	
								
a)	Non-operating expenses	
 	 	 	 	 	 	 	
 	 	2004	 	 	2003	 	
							
 	 	ThUS$	 	 	ThUS$	 	
 	 	 	 	 	 	 	
Write-off of investments	 	3,002	 	 	4,119	 	
Interest expense	 	9,956	 	 	11,216	 	
Equity participation in net losses of unconsolidated subsidiaries	 	12	 	 	—	 	
Amortization of goodwill	 	619	 	 	529	 	
Net foreign exchange losses	 	1,969	 	 	—	 	
Work disruption expenses	 	312	 	 	1,282	 	
Increase in provision for employee compensation and legal costs	 	573	 	 	1,020	 	
Other expenses	 	1,518	 	 	1,637	 	
Provision for sales of materials, spare-parts and supplies	 	800	 	 	—	 	
							
Total	 	18,761	 	 	19,803	 	
							
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 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	 	51	 	 	36	 	
Other assets and liabilities	 	6	 	 	89	 	
Shareholders’ equity	 	(449	)	 	(573	)	
							
Subtotal price-level restatement	 	(392	)	 	(448	)	
							
Net readjustment of assets and liabilities denominated in UF	 	84	 	 	227	 	
							
Net price-level restatement	 	(308	)	 	(221	)	
							
Note 21 – Assets and Liabilities Denominated in Foreign Currency
 	 	 	 	2004	 	2003	 	
					 		 	
 	Assets	 	ThUS$	 	ThUS$	 	
 	 	Chilean pesos	 	101,127	 	107,672	 	
 	 	US dollars	 	1,166,305	 	1,153,035	 	
 	 	Euros	 	33,432	 	37,748	 	
 	 	Japanese Yen	 	687	 	3,310	 	
 	 	Brazilian Real	 	432	 	1,711	 	
 	 	Mexican pesos	 	8,392	 	11,051	 	
 	 	UF	 	44,113	 	10,366	 	
 	 	South African Rand	 	4,431	 	4,953	 	
 	 	Other currencies	 	1,637	 	6,762	 	
 	 	 	 	 	 	 	 	
 	Current liabilities	 	 	 	 	 	
 	 	Chilean pesos	 	47,070	 	41,203	 	
 	 	US dollars	 	132,680	 	59,092	 	
 	 	Euros	 	11,644	 	10,222	 	
 	 	Japanese Yen	 	75	 	275	 	
 	 	Brazilian Real	 	565	 	671	 	
 	 	Mexican pesos	 	5,849	 	4,578	 	
 	 	UF	 	135	 	923	 	
 	 	South African Rand	 	1,921	 	—	 	
 	 	Other currencies	 	431	 	2,055	 	
 	 	 	 	 	 	 	 	
 	Long-term liabilities	 	 	 	 	 	
 	 	Chilean pesos	 	60	 	5,664	 	
 	 	US dollars	 	233,575	 	331,393	 	
 	 	Japanese Yen	 	73	 	67	 	
 	 	UF	 	9,571	 	3,097	 	
 	 	Other currencies	 	2	 	1	 	
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 22 – Cash Flow Statement
Amounts included in other investing income are summarized as follows:
 	 	 	2004	 	 	2003	 	
								
 	 	 	ThUS$	 	 	ThUS$	 	
Sale of mining concessions	 	 	—	 	 	—	 	
Repayment of employee loans	 	 	121	 	 	2,944	 	
Cash balance in new subsidiaries 	(1	)	—	 	 	2,815	 	
								
Total	 	 	121	 	 	5,759	 	
								
(1) Corresponds to the consolidation of the new subsidiaries Mineag SQM Africa Limited, Fertilizantes Olmeca and SQM S.A. de C.V. during 2003.
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 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	
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 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.	
 	 	 	
 	 	SQM will adopt the corresponding actions in the event of any decrease in the natural gas supply affecting the company and which allows the company to continue “generating the heat” necessary for the operation of its industrial plants in region II of Chile.	
 	 	 	
 	 	The diverse industrial equipment of SQM, which uses natural gas can also use diesel and, some equipment, subsequent to making certain investments, may also use fuel oil. The value of diesel is higher than that of natural gas value and the fuel value of oil is lower than the value of diesel and higher than the value of natural gas.	
 	 	 	
 	 	The greater costs which SQM should incur as a result of a possible decrease in the natural gas supply, which to date, is provided by Distrinor, will mostly depend on the volume of such a decrease and on the extension of the period which this decrease will last. 	
 	 	 	
 	 	Consequently, SQM cannot currently estimate the economic effects that will cause a possible decrease on the natural gas supply.	
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 (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$2,176 in 2004 (ThUS$ 1,920 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.	
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 24 – Third Party Guarantees 
As of June 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	 	1,894	 	2,739	 	
Bank of America N.A.	 	RS Agro-Chemical Trading A.V.V.	 	Subsidiary	 	—	 	80,195	 	
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 June 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	 	278	 	 	279	 	
Boratos sewage treatment plant	 	229	 	 	65	 	
Tocopilla project	 	611	 	 	2	 	
Engineering and building of María Elena piles	 	2,702	 	 	637	 	
Treatment plant MOP	 	208	 	 	—	 	
Other	 	804	 	 	315	 	
							
Total	 	4,832	 	 	1,298	 	
							
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.
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 26 – Environmental Projects (continued)
As part of the conversion project to natural gas, the supplier will in turn make an investment of ThUS$ 5,500 to be paid by the Company on a monthly basis for the duration of the contract (10 years).
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.
48

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 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.
49

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 28 – Significant Events
On March 19, 2003, 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’ meeting 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 months.	
Note 29 – Subsequent Events
Company management are not aware of any significant subsequent events occurred between June 30, 2004 and the date of issuance of these consolidated financial statement (August 9, 2004), which may affect the presentation of these financial statements.
50

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: September 10, 2004.