Unassociated Document
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

Includes financial statements and their related notes for the three-month period ended March 31, 2011 filed by Sociedad Química y Minera de Chile S.A. before the Superintendencia de Valores y Seguros de Chile on May 24, 2011.

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, 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  x                                                       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 x

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82_________

 
 

 

On May 24,  2011, 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 three-month period ended March 31, 2011. 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 International Financial Reporting Standards (“IFRS”).
 
THIS REPORT IS AN ENGLISH TRANSLATION OF, AND AN INTERNATIONAL FINANCIAL REPORTING STANDARDS PRESENTATION OF, THE THREE-MONTH PERIOD ENDED MARCH 31, 2011 REPORT FILED WITH THE SUPERINTENDENCIA DE VALORES Y SEGUROS (SVS) IN CHILE, AND UNLESS OTHERWISE INDICATED, FIGURES ARE IN US DOLLARS.

 
 

 
 
 
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
For the period ended
 
As of March 31, 2011
 
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A. and SUBSIDIARIES
 
Thousands of U.S. dollars
  

 
This document is composed of:
 
 
-
Consolidated Classified Statement of Financial Position
 
-
Interim Consolidated Statement of Comprehensive Income by function.
 
-
Interim Consolidated Statement of Comprehensive Income
 
-
Interim Consolidated Statement of Cash Flows
 
-
Interim Statements of Changes in Net Shareholders’ Equity
 
-
Explanatory Notes to the Interim Consolidated Financial Statements

 
 

 

Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Index of Interim Consolidated Financial Statements
 
Note No.
 
Page
     
 
Interim Consolidated Classified Statements of Financial Position
6
 
Interim Consolidated Statement of Comprehensive Income by function
8
 
Interim Consolidated Statement of Comprehensive Income
10
 
Interim Consolidated Statements of Cash Flows
11
 
Interim Statements of Changes in Net Equity
13
     
 
Notes  to the Interim Consolidated Financial Statements
 
1
Company’s Identification and Activity
16
2
Bases of presentation of the Interim Consolidated  Financial Statements  and accounting criteria applied
 
 
2.1    Accounting period
19
 
2.2    Basis of preparation
20
 
2.3    Transactions in foreign currency
22
 
2.4    Basis of consolidation
24
 
2.5    Responsibility for the information and estimates made
27
 
2.6    Financial information by operating segment
28
 
2.7    Property, plant and equipment
28
 
2.8    Investment properties
30
 
2.9    Inventories
31
 
2.10  Trade and other receivables
32
 
2.11  Revenue recognition
33
 
2.12  Investments recognized using the equity method
34
 
2.13  Income and deferred taxes
35
 
2.14  Earnings per share
36
 
2.15  Impairment of non-financial assets
37
 
2.16  Financial assets
38
 
2.17  Financial liabilities
39
 
2.18  The environment
41
 
2.19  Minimum dividend
41
 
2.20  Statement of cash flows
41
 
2.21 Obligations for severance indemnities and pension commitments
42
 
2.22  Financial derivatives and hedging operations
43
 
2.23  Lease
45
 
2.24  Exploration and assessment expenses
46
 
2.25  Other provisions
46
 
2.26  Compensation plans
47

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
1

 

Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Index of Interim Consolidated Financial Statements (continued)

Note No.
 
Page
     
 
2.27  Good and service insurance expenses
48
 
2.28  Intangibles assets
48
 
2.29  Research and development
49
 
2.30  Classification of balances under current and non-current
50
     
3
Financial risk management
 
 
3.1   Risk management policy
51
 
3.2   Risk factors
52
 
3.3   Risk measurement
55
     
4
Changes in estimates and accounting policies (uniformity)
56
     
5
Cash and cash equivalents
 
 
5.1   Classes of cash and cash equivalent
57
 
5.2   Other cash and cash equivalents
57
 
5.3   Information on cash and cash equivalents by currency
58
 
5.4   Amount of significant cash balances not available
58
 
5.5   Detail of time deposits
59
     
6
Inventories
61
     
7
Related parties: disclosures
 
 
7.1   Disclosures on related parties
62
 
7.2   Relationships between the parent company and the entity
62
 
7.3   Intermediate parent company and companies controlled by SQM S.A. which publicly issue financial statements
63
 
7.4   Detailed identification of the link between the parent company and the subsidiary
63
 
7.5   Detail of related parties and transactions with related parties
65
 
7.6   Trade and other receivables due from related parties, current
66
 
7.7   Trade and other payables due from related parties, current
67
 
7.8   Board of Directors and senior management
68
8
Financial instruments
 
 
8.1   Classes of other financial assets
72
 
8.2   Trade and other receivables
72
 
8.3   Hedging assets
75
 
8.4   Financial liabilities
77
 
8.5   Trade and other payables
86
 
8.6   Financial liabilities at fair value through profit or loss
87
 
8.7   Financial asset and liability categories
88
 
8.8   Financial assets pledged as guarantee
89

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
2

 

Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Index of Interim Consolidated Financial Statements (continued)
Note No.
 
Page
     
 
8.9   Estimated fair value of financial instruments and derivative financial instruments
89
 
8.10 Nature and scope of risks arising from financial instruments
91
     
9
Investments and disclosures on companies included in consolidation
91
     
10
Investments in associated companies recorded under the equity method
 
 
10.1   Investments in associates recognized using the equity method of accounting
98
 
10.2   Assets, liabilities, revenues and ordinary expenses of associates
99
 
10.3   Detail of investments in associates
100
     
11
Joint ventures
 
 
11.1   Policy for the accounting for joint ventures in a Parent Company’s separate financial statements
101
 
11.2   Disclosures on interest in joint ventures
101
 
11.3   Detail of assets. liabilities and profit or loss of significant investments in joint ventures by company
102
 
11.4   Detail of the amount of gain (loss) net of investments in significant joint ventures by company
103
     
12
Intangible assets and goodwill
 
 
12.1  Balances
104
 
12.2  Disclosures on intangible assets and goodwill
104
     
13
Property, plant and equipment
 
 
13.1   Classes of property, plant and equipment
108
 
13.2   Reconciliation of changes in property. plant and equipment by class
110
 
13.3   Detail of property. plant and equipment pledged as guarantees
111
 
13.4   Additional information
111
     
14
Leases
 
 
14.1   Disclosures on finance leases, lessee
113
 
14.2   Investment property in finance leases
113
 
14.3   Reconciliation of finance lease minimum payments, lessee
113
     
15
Employee Benefits
 
 
15.1   Provisions for employee benefits
114
 
15.2   Policies on defined benefit plans
115
 
15.3   Other long-term benefits
116
 
15.4   Employee post-retirement liabilities
118
 
15.5   Severance indemnities
119
     
16
Executive compensation plan
121

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
3

 

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

Index of Interim Consolidated Financial Statements (continued)
Note No.
 
Page
     
17
Disclosures on net equity
 
 
17.1   Disclosures on capital management
123
 
17.2   Disclosures on preferred share capital
124
 
17.3   Dividend policy
126
 
17.4   Provisional dividends
127
     
18
Provisions and other non-financial liabilities
 
 
18.1   Classes of provisions
128
 
18.2   Description of other provisions
128
 
18.3   Other non-financial liabilities, current
129
 
18.4   Movements in provisions
130
 
18.5   Detail of main classes of provisions
132
     
19
Contingencies and restrictions
 
 
19.1   Lawsuits or other relevant events
133
 
19.2   Restrictions
137
 
19.3   Commitments
138
 
19.4   Restricted or pledged cash
138
 
19.5   Sureties obtained from third parties
138
 
19.6   Indirect guarantees
139
     
20
Revenue
140
     
21
Earnings per share
140
     
22
Borrowing costs
141
     
23
Effect of variations in foreign currency exchange rates
142
     
24
The Environment
 
 
24.1   Disclosures on disbursements related to the environment
143
 
24.2   Detail of information on disbursements related to the environment
144
 
24.3   Description of each project indicating whether these are in process or have been finished
151
     
25
Other current and non-current non-financial assets
156
     
26
Operating segments
 
 
26.1     Operating segments
158
 
26.2     Statements of comprehensive income classified by operating segment based on product groups
159

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
4

 

Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Index of Interim Consolidated Financial Statements (continued)
Note No.
 
Page
     
 
26.3     Assets and liabilities by operating segment based on product groups
161
 
26.4     Disbursements of the segment’s non-cash assets
164
 
26.5     Information on products and services for external customers
165
 
26.6     Information on geographical areas
166
 
26.7     Revenue from external customers, classified by geographical area
167
 
26.8     Non-current assets classified by geographical area
168
 
26.9     Information on the main customers
168
 
26.10   Property, plant and equipment classified by geographical areas
169
     
27
Other revenue, other expenses by function and other gains or losses
171
     
28
Income and deferred taxes
 
 
28.1   Current tax receivables
172
 
28.2   Current tax payables
172
 
28.3   Tax earnings
172
 
28.4   Income and deferred taxes
173
 
28.5   Amendments to the Income Tax Law and Specific Tax on Mining (Royalty) in Chile
183
     
29
Disclosures on the effects of variations in foreign currency exchange rates
184
30
Impairment of assets
188
31
Events occurred subsequent to the reporting date
189
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
5

 
 
Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
CONSOLIDATED CLASSIFIED STATEMENT OF FINANCIAL POSITION


ASSETS
 
Note
No.
   
As of March
31, 2011
ThUS$
   
As of
December 31,
2010
ThUS$
 
Current assets
                 
Cash and cash equivalents
  5.1       563,815       524,652  
Other current financial assets
  8.1       54,394       76,178  
Other current non-financial assets
  25       40,427       44,442  
Trade and other receivables, current
  8.2       397,911       375,945  
Receivables due from related parties, current
  7.6       48,281       36,172  
Inventories
  6.0       625,339       605,101  
Current tax assets
  28.1       25,448       32,773  
Total current assets
          1,755,615       1,695,263  
                       
Non-Current Assets
                     
Other non-current financial assets
  8.1       79,746       92,674  
Other non-financial assets, non-current
  25       21,236       24,157  
Non-current rights receivable
  8.2       973       1,102  
Receivables due from related parties, non-current
  7.7       -       -  
Investments accounted for using the equity method
  10.0       67,044       62,271  
Intangible assets other than goodwill
  12.1       4,260       3,270  
Goodwill
  12.1       38,388       38,388  
Property, plant and equipment
  13.1       1,515,350       1,453,973  
Investment property
  13.4       1,365       1,373  
Deferred tax assets
  28       280       365  
Total Non-Current Assets
          1,728,642       1,677,573  
Total Assets
          3,484,257       3,372,836  

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

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
6

 

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

CONSOLIDATED CLASSIFIED STATEMENT OF FINANCIAL POSITION (continued)

Liabilities and Equity
 
Note
No.
   
As of
March 31,
2011
ThUS$
   
As of
December 31,
2010
ThUS$
 
Liabilities
                 
Current Liabilities
                 
Other current financial liabilities
  8.4       178,424       187,555  
Trade and other payables, current
  8.5       149,412       152,147  
Payables due to related parties, current
  7.8       4,369       3,538  
Other current provisions
  18.1       17,670       15,014  
Current tax liabilities
  28.2       23,341       7,113  
Current provision for employee benefits
  15.1       42,666       44,011  
Other non-financial liabilities, current
  18.3       71,473       67,459  
Total current liabilities
          487,355       476,837  
                       
Non-current liabilities
                     
Other non-current financial liabilities
  8.4       1,080,499       1,090,188  
Other non-current accounts payable
  8.5       135       -  
Other non-current provisions
  18.2       5,500       5,500  
Deferred tax liability
  28.4       100,060       100,781  
Non-current provisions for employee benefits
  15.1       30,177       28,710  
Total non-current liabilities
          1,216,371       1,225,179  
Total Liabilities
          1,703,726       1,702,016  
                       
Equity
  17                  
Issued capital
          477,386       477,386  
Retained earnings
          1,266,526       1,155,131  
Other reserves
          (12,110 )     (9,713 )
Equity attributable to the owners of the controlling entity
          1,731,802       1,622,804  
Non-controlling interest
          48,729       48,016  
Total Equity
          1,780,531       1,670,820  
Total liabilities and equity
          3,484,257       3,372,836  

The accompanying notes form an integral part of these interim consolidated financial statements.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
7

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

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME BY FUNCTION
 

 
         
From January to March
 
   
Note
   
2011
   
2010
 
   
No.
   
ThUS$
   
ThUS$
 
Revenue
  20       480,035       388,523  
Cost of sales
          (292,430 )     (257,025 )
Gross profit
          187,605       131,498  
                       
Other income by function
  27       3,336       1,625  
Administrative expenses
          (20,568 )     (17,774 )
Other expenses by function
  27       (14,965 )     (5,044 )
Other gains (losses)
  27       (109 )     (7,146 )
Finance income
          5,657       2,294  
Finance costs
  22       (10,627 )     (7,812 )
Equity in gains (losses) of associates and joint ventures accounted for using the equity method
          3,657       3,059  
Foreign currency translation differences
  23       (2,899 )     (3,133 )
Profit (loss) before income tax
          151,087       97,567  
Income tax expense
  28.4       (38,956 )     (20,696 )
Profit (loss) from continuing operations
          112,131       76,871  
                       
Profit (loss)
          112,131       76,871  
Gain (loss) attributable to
                     
Gain (loss) attributable to the owners of the parent
          111,395       76,493  
Gain (loss) attributable to non-controlling interest
          736       378  
Profit (loss) for the period
          112,131       76,871  

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

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
8

 

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

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME BY FUNCTION
 

 
         
From January to March
 
   
Note
   
2011
   
2010
 
   
   
ThUS$
   
ThUS$
 
Earnings per share
                 
Common shares
                 
Basic earnings per share (US$ per share)
  21       0.4232       0.2906  
                       
Basic earnings per share (US$ per share) from continuing operations
          0.4232       0.2906  
                       
Diluted common shares
                     
Diluted earnings per share (US$ per share)
  21       0.4232       0.2906  
                       
Diluted earnings per share (US$ per share) from continuing operations
          0.4232       0.2906  

The accompanying notes form an integral part of these interim consolidated financial statements.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
9

 
 
Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

   
From January to March
 
   
2011
   
2010
 
Statement of comprehensive income
 
ThUS$
   
ThUS$
 
             
Profit (loss) for the period
    112,131       76,871  
Other comprehensive income components before foreign currency translation difference
               
Gains (losses) from foreign currency translation differences, before tax
    (100 )     (230 )
Other comprehensive income before taxes and foreign currency translation differences
    (100 )     (230 )
Cash flow hedges
               
Gains (losses) from cash flow hedges before tax
    (2,900 )     10,799  
Other comprehensive income before tax and cash flow hedges
    (2,900 )     10,799  
Other comprehensive income before taxes, actuarial gains (losses) by defined benefit plans
    -       -  
Other comprehensive income components. before tax
    (3,000 )     10,569  
                 
Income tax related to components of other comprehensive income
               
Income tax related to other comprehensive income cash flow hedges
    580       (1,836 )
Addition of income tax related to other comprehensive income components
    580       (1,836 )
                 
Other comprehensive income
    (2,420 )     8,733  
                 
Total comprehensive income
    109,711       85,604  
                 
Comprehensive income attributable to
               
Comprehensive income attributable to the parent’s owners
    108,998       85,277  
Comprehensive income attributable to non-controlling interest
    713       327  
Total comprehensive income
    109,711       85,604  

The accompanying notes form an integral part of these interim consolidated financial statements.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
10

 
 
Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
  

 
Statement of cash flows
 
Note
No.
   
03/31/2011
ThUS$
   
03/31//2010
ThUS$
 
                   
Cash flows provided by (used in) operating activities
                 
                   
Profit (loss)
          112,131       76,871  
Adjustment due to reconciliation of profit (loss)
                     
                       
Adjustment for decreases (increases) in inventories
          (14,114 )     (2,339 )
Adjustment for decreases (increases) in trade receivables
          (17,986 )     (9,625 )
Adjustment for decreases (increases) in other receivables from operating activities
          (9,988 )     33,808  
Adjustment for decreases (increases) in trade payables
          (29,276 )     (48,869 )
Adjustment for decreases (increases) in other payables related to operating activities
          (4,452 )     (55,387 )
Adjustment for depreciation and amortization
          42,138       32,374  
Adjustment for provisions
          (599 )     5,572  
Adjustments for unrealized gains (losses) in foreign translation
          2,899       3,133  
Adjustment for undistributed gains from equity-accounted associates
          (3,657 )     (3,059 )
Other adjustments for entries other than cash
          76,827       44,671  
Other adjustments for which the effects on cash are cash flows from investing or financial activities
          (99 )     -  
                       
Total gains (losses) reconciling adjustments
          41,693       279  
                       
Dividends received
          454       -  
Interest paid
          (4,472 )     (1,988 )
                       
Net cash flows provided by (used in) operating activities
          149,806       75,162  
                       
Cash flows provided by (used in) investing activities
                     
                       
Other payments to acquire interest in joint ventures
          (2,500 )     (1,000 )
Proceeds from the sale of property, plant and equipment
          794       -  
Additions to property, plant and equipment
          (112,431 )     (73,126 )
Cash advances and loans granted to third parties
          278       198  
Other cash inflows (outflows)
          28,362       (22,700 )
                       
Net cash flows provided by (used in) investing activities
          (85,497 )     (96,628 )
 
The accompanying notes form an integral part of these interim consolidated financial statements.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
11

 
 
Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Cash flows provided by(used in) financing activities
 
Note
No.
   
03/31/2011
ThUS$
   
03/31//2010
ThUS$
 
                       
Amounts received from long-term loans
          100,000       39,500  
Amounts received from short-term loans
                  -  
Total amounts received from loans
          100,000       39,500  
Payments of loans
          (110,000 )     (193,540 )
Dividends paid
          -       -  
Other cash inflows (outflows)
          (9 )     -  
                       
Net cash flows provided by (used in) financing activities
          (10,009 )     (154,040 )
                       
Net increase (decrease) in cash and cash equivalents before the effect of changes in exchange rates
          54,300       (175,506 )
                       
Effects of variation in exchange rate on cash and cash equivalents
          (15,137 )     4,368  
Net increase (decrease) in cash and cash equivalents
          39,163       (171,138 )
                       
Cash and cash equivalents at beginning of the period
          524,652       530,394  
                       
Cash and cash equivalents at the end of the period
  5       563,815       359,256  
 
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
 
The accompanying notes form an integral part of these interim consolidated financial statements.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
12

 
 
Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
NTERIM STATEMENTS OF CHANGES IN NET SHAREHOLDERS’ EQUITY
 
   
Issued
capital
ThUS$
   
Foreign
currency
translation
difference
reserves
ThUS$
   
Cash flow
hedge
reserves
ThUS$
   
Reserves
for defined
benefit
plan gains
(losses)
ThUS$
   
Other
reserves
ThUS$
   
Retained
earnings
ThUS$
   
Equity attributable
to the Parent’s
owners
ThUS$
   
Non-controlling
interest
ThUS$
   
Total
equity
ThUS$
 
                                                       
Beginning balance, current period: January 1, 2011
    477,386       1,530       (9,207 )     (2,036 )     (9,713 )     1,155,131       1,622,804       48,016       1,670,820  
                                                                         
Restated beginning balance
    477,386       1,530       (9,207 )     (2,036 )     (9,713 )     1,155,131       1,622,804       48,016       1,670,820  
                                                                         
Profit (loss) for the period
    -       -       -       -       -       111,395       111,395       736       112,131  
                                                                         
Other comprehensive income
    -       (77 )     (2,320 )     -       (2,397 )     -       (2,397 )     (23 )     (2,420 )
                              -                                          
Comprehensive income
    -       (77 )     (2,320 )     -       (2,397 )     111,395       108,998       713       109,711  
                                                                         
Changes in equity
    -       (77 )     (2,320 )     -       (2,397 )     111,395       108,998       713       109,711  
                                                                         
Ending balance, current period: March 31, 2011
    477,386       1,453       (11,527 )     (2,036 )     (12,110 )     1,266,526       1,731,802       48,729       1,780,531  
 
The accompanying notes form an integral part of these interim consolidated financial statements.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
13

 
 
Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
INTERIM STATEMENTS OF CHANGES IN NET SHAREHOLDERS’ EQUITY
 
   
Issued
capital
ThUS$
   
Foreign
currency
translation
difference
reserves
ThUS$
   
Cash flow
hedge
reserves
ThUS$
   
Reserves
for defined
benefit
plan gains
(losses)
ThUS$
   
Other
reserves
ThUS$
   
Retained
earnings
ThUS$
   
Equity attributable
to the Parent’s
owners
ThUS$
   
Non-controlling
interest
ThUS$
   
Total
equity
ThUS$
 
                                                       
Beginning balance, current period: January 1, 2010
    477,386       1,234       (7,984 )     (3,056 )     (9,806 )     951,173       1,418,753       45,697       1,464,450  
                                                                         
Restated beginning balance
    477,386       1,234       (7,984 )     (3,056 )     (9,806 )     951,173       1,418,753       45,697       1,464,450  
                                                                         
Profit (loss) for the period
    -       -       -       -       -       76,493       76,493       378       76,871  
                                                                         
Other comprehensive income
    -       (179 )     8,963       -       8,784       -       8,784       (51 )     8,733  
                                                                         
Comprehensive income
    -       (179 )     8,963       -       8,784       76,493       85,277       327       85,604  
                                                                         
Dividends
    -       -       -       -       -       -       -       -       -  
                                                                         
Increase (decrease) for transfers and other changes
    -       -       -       -       -       -       -       (1,105 )     (1,105 )
                                                                         
Changes in equity
    -       (179 )     8,963       -       8,784       76,493       85,277       (778 )     84,499  
                                                                         
Ending balance, current period: March 31, 2010
    477,386       1,055       979       (3,056 )     (1,022 )     1,027,666       1,504,030       44,919       1,548,949  
 
The accompanying notes form an integral part of these interim consolidated financial statements.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
14

 
 
Sociedad Química y Minera de Chile S.A. and Subsidiaries
 
Notes to the Interim Consolidated Financial Statements
 
as of March 31, 2011
 
Sociedad Química y Minera de Chile S.A.
 
and Subsidiaries
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
15

 

Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 1 - Identification and business of Sociedad Química y Minera de Chile S.A. and Subsidiaries

Historical Background
Sociedad Química y Minera de Chile S.A. (the “Company”) is a shareholders’ company organized in accordance with the laws in the Republic of Chile., Taxpayer ID 93.007.000-9. The Company was constituted by public deed issued on June 17, 1968 by the Notary Public of Santiago Mr. Sergio Rodríguez Garcés. Its existence was approved by Decree No. 1.164 of June 22, 1968 of the Ministry of Finance, and it was registered on June 29, 1968 in the Business Registry of Santiago, on page 4,537 Nº 1,992. The Parent Company is located at El Trovador 4285, 6th Floor, Las Condes, Santiago, Chile. Its phone No. is (56-2) 425-2000.

The Company is registered with the Securities Registry of the Chilean Superintendence of Securities and Insurance (SVS) under No. 0184 dated March 18. 1983 and is subject to the inspection of the SVS.
 
Our products are divided into five main categories, as follows:
 
Specialty plant nutrients: Specialty plant nutrients include potassium nitrate, sodium potassium nitrate, sodium nitrate and specialty mixtures.  These products have particular features which increase productivity and improve quality when used in certain crops and soils and are suitable for high level agricultural techniques such as hydroponics, fertigation, greenhouses and foliar applications.  Farmers dedicated to high-value crops invest in this type of specialty plant nutrients, such as, potassium nitrate, because of its technical advantages over commodity fertilizers, in particular because of being a soluble fertilizer free of chlorine.
 
Iodine: SQM is an important producer of iodine at a worldwide level, which is a product widely used in the pharmaceutical industry, technology and nutrition. Over the last 8 years, before the world crisis, the demand for iodine grew mainly due to its use in X-ray contrast media and polarizing film for LCD displays.
 
Lithium: SQM’s lithium is widely used in rechargeable batteries for cell phones, cameras and notebooks and other portable electronic devices. Through the preparation of products based on lithium, SQM provides significant raw material to face great challenges such as the efficient use of energy and raw material.  Lithium is not only used for rechargeable batteries and in new technologies for vehicles propelled by electricity, but is also used in industrial applications to lower melting temperature and to help saving energy and costs.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
16

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 1 - Identification and business of Sociedad Química y Minera de Chile S.A. and Subsidiaries (continued)
 
Industrial Chemicals: Industrial chemicals are products used as supplies for a number of production processes. SQM participates in this line of business producing sodium nitrate, potassium nitrate, boric acid and potassium chloride, Industrial nitrates have increased their importance over the last few years due to their use as storage means for thermal energy at solar energy plants, which are widely used in countries as Spain and the United States in their search for decreasing CO2 emissions

Potassium: The potassium is a primary essential macro-nutrient, and even though does not form part of the plant’s structure, has a significant role for the developing of its basic functions, validating the quality of a crop, increasing post-crop life, improving the crop flavor, its amount in vitamins and its physical appearance. Within this business line, SQM has also potassium chlorate and potassium sulfate, both extracted from the salt layer located under the Atacama Salar (the Atacama Saltpeter Deposit.) In this business line SQM has focused a significant part of it investments plan, allowing a significantly increase in the Company’s production levels..

Employees

As of March 31, 2011 and December 31, 2010, we had employees as detailed below:

   
03/31/2011
   
12/31/2010
 
             
Permanent employees
    4,415       4,327  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
17

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 1 -
Identification and business of Sociedad Química y Minera de Chile S.A. and Subsidiaries (continued)
 
Majority shareholders

The table below establishes certain information about the beneficial property of Series A and Series B shares of SQM as of March 31, 2011 and as of December 31, 2010.  In respect to each shareholder which has interest of more than 5% of outstanding Series A or B shares.  The information below is taken from our records and reports registered by the individuals indicated below with the Superintendence of Securities and Insurance (SVS) and the Chilean Stock Exchange.
 
Shareholder as of 03/31/2011
 
No. of Series A
with ownership
   
% of Series A
shares
   
No. of Series B
with ownership
   
% of Series
B  shares
   
Total % of
shares
 
Sociedad de Inversiones Pampa Calichera S.A.(*)
    57,937,977       40.57 %     10,768,928       8.95 %     26.10 %
Inversiones El Boldo Limitada
    44,751,196       31.33 %     17,571,676       14.60 %     23.68 %
The Bank of New York
    -       0.00 %     43,920,706       36.49 %     16.69 %
Inversiones RAC Chile Limitada
    19,200,242       13.44 %     2,699,773       2.24 %     8.32 %
Banchile Corredores de Bolsa S.A.
    5,137,864       3.60 %     4,232,174       3.52 %     3.56 %
Inversiones Global Mining (Chile) Limitada (*)
    8,798,539       6.16 %     -       -       3.34 %
Inversiones La Esperanza Limitada
    3,693,977       2.59 %     -       -       1.40 %
AFP Provida S.A.
    -       -       3,148,543       2.62 %     1.20 %
Banco Itau por Cuenta de Inversionistas
    -       -       2,672,406       2.22 %     1.02 %
Larrain Vial S.A. Corredora de Bolsa
    49,830       0.03       2,172,293       1.80 %     0.83 %
 
(*) Total Pampa Group 29.44%
 
Shareholder as of 12/31/2010
 
No. of Series A
with ownership
   
% of Series A
shares
   
No. of Series B
with ownership
   
% of Series
B  shares
   
Total % of
shares
 
Sociedad de Inversiones Pampa Calichera S.A.(*)
    55,437,977       38.82 %     8,903,774       7.40 %     24.45 %
Inversiones El Boldo Limitada
    44,746,513       31.33 %     17,576,359       14.60 %     23.68 %
The Bank of New York
    -       0.00 %     45,345,530       37.67 %     17.23 %
Inversiones RAC Chile Limitada
    19,200,242       13.44 %     2,699,773       2.24 %     8.32 %
Inversiones Global Mining (Chile) Limitada (*)
    13,798,539       9.66 %     -       0.00 %     5.24 %
Banchile Corredores de Bolsa S.A.
    131,914       0.09 %     5,178,641       4.30 %     2.02 %
Larrain Vial S.A. Corredora de Bolsa
    2,549,382       1.79 %     2,369,576       1.97 %     1.87 %
Inversiones La Esperanza Limitada
    3,693,977       2.59 %     -       0.00 %     1.40 %
AFP Provida S.A.
    -       0.00 %     3,109,256       2.58 %     1.18 %
Banco Itau por Cuenta de Inversionistas
    -       0.00 %     2,874,819       2.39 %     1.09 %
 
(*) Total Pampa Group 29.69%

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
18

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied

2.1
Accounting period
 
These interim consolidated financial statements cover the following periods:

 
-
Statements of financial position for the period ended as of March 31, 2011 and the year ended as of December 31, 2010.

 
-
Interim statements of changes in net equity for the period ended as of March 31, 2010 and 2009.

 
-
Interim statements of comprehensive income for the periods between January 1 and March 31, 2011 and 2010, respectively

 
-
Interim statements of cash flows, indirect method for the periods ended as of March 31, 2011 and 2010, respectively.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
19

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

2.2           Basis of preparation of interim consolidated financial statements

Interim and annual consolidated financial statements of Sociedad Química y Minera de Chile S.A. and Subsidiaries, have been prepared in accordance with International Financial Reporting Standards (hereinafter “IFRS”) and represent the comprehensive, explicit and unqualified adoption of these international standards as issued by the International Accounting Standards Board (IASB).

These interim and annual consolidated financial statements reflect fairly the Company’s equity and financial position and the results of its operations, changes in the statement of recognized revenue and expenses and cash flows, which have occurred during the periods then ended.

IFRS establish certain alternatives for their application. Those applied by the Company and its subsidiaries are included in detail in this Note.

The accounting policies used in the preparation of these consolidated interim and annual accounts comply with each IFRS in force at their date of presentation.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
20

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
a)
Accounting pronouncements

As of the date of these interim consolidated financial statements, the following accounting pronouncements have been issued by the IASB but their application was not mandatory and were not used by the Company:

 
New standard
Mandatory
application by:
IFRS 9
Financial instruments
January 1, 2013

IFRS 9 “Financial instruments”
This standard introduces new requirements for the classification and measurement of financial assets, allowing its early adoption. It requires that all financial assets be classified in their entirety based on the entity’s business model for the management of financial assets and the characteristics of financial assets contractual cash flows.  The financial assets under this standard are measured wither at amortized cost or at fair value. Solely those financial assets which are classified as measured at amortized cost should be tested for impairment. Its application is effective for the interim periods beginning on or after January 1, 2013; early adoption is allowed for 2010 financial statements.

 
Improvements and Amendments
Compulsory
application by:
IFRS 7
Financial Instruments: Disclosures
July 1, 2011
IAS 12
Income Taxes
January 1, 2012

IFRS 7 “Financial Instruments: Disclosures”

Amendments to IFRS 7 issued in October 2010 by the IASB include certain clarifications to disclosures in the financial statements, mainly with respect to the nature and scope of risks arising from the financial statements, as well as in respect to the interaction between quantitative and qualitative disclosures. Its application is mandatory beginning on January 1, 2011.

IAS 12 – Income Taxes

On December 20, 2010, the IASB issued the document “Income tax_ recovery of Underlying Assets (amendment to IAS 12)” which regulates the determination of deferred tax of entities using the fair value as valuation model for Investment property in accordance with IAS 40 Investment Property. In addition, the new regulation includes SIC-21 “Income Taxes – Non-depreciable Assets” in the body of IAS 12. Entities are obliged to apply the amendments in the interim years which begin on January 1, 2012.

The Company’s Management believes the adoption of standards, amendments and interpretations referred to above, are under assessment and it is believed that they will have no significant impact on the Company’s interim consolidated financial statements.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
21

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

2.3 Transactions in foreign currency

(a)
Functional and presentation currency

The Company’s interim and annual consolidated financial statements are presented in United States dollars, which is the Company’s functional and presentation currency and is the currency of the main economic environment in which it operates.

Consequently, the term foreign currency is defined as any currency other than U.S. dollar.

The interim and annual consolidated financial statements are presented in thousands of U.S. dollars with no decimals.

The conversion of the financial statements of foreign companies with functional currency other than U.S. dollar is performed as follows:

 
-
Assets and liabilities using the exchange rate in force at the closing date of the interim consolidated financial statements.
 
-
Profit or loss account items using the average exchange rate for the period.
 
-
Net equity is maintained at the historical exchange rate at the acquisition date.

Foreign currency translation differences which are generated in the conversion of the financial statements are recorded under “Translation differences” in Net equity.

(b)
Basis of translation

Domestic subsidiaries:

Assets and liabilities in Chilean pesos and other currencies other than the functional currency (U.S. dollars) as of March 31, 2011 and December 31, 2010 have been converted to U.S. dollars at the exchange rates prevailing at those dates (the related amounts in Chilean pesos were translated at the exchange rate of Ch$ 479.46 per US$1.00 as of March 31, 2011 and Ch$468.01 per US$1.00 as of December 31, 2010.

Amounts denominated in UF – a peso-denominated, inflation-indexed monetary unit) used to convert to Chilean pesos (U.S. dollars) the assets and liabilities expressed at that inflation-linked unit as of March 31, 2011 amounted to Ch$21,578.26 (US$45.01) per UF 1.00 and Ch$21,455.55 (US$45.84) per UF 1.00 as of December 31, 2010.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
22

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

Foreign subsidiaries:

The exchange rates used to translate monetary asset and liabilities, expressed in foreign currency as of the closing date of each period in respect of U.S. dollars, were as follows:

   
03/31/2011
   
12/31/2010
 
   
US$
   
US$
 
             
Brazilian real
    1.63       1.66  
New Peruvian sol
    2.80       2.81  
Argentine peso
    4.07       3.98  
Japanese yen
    83.15       81.49  
Euro
    0.70       0.75  
Mexican peso
    11.92       12.38  
Australian dollar
    1.03       1.01  
Pound sterling
    0.62       0.64  
South African rand
    6.79       6.63  
Dollar (Ecuador)
    1.00       1.00  
Chilean peso
    479.46       468.01  
UF
    45.01       45.84  

(c)
Transactions and balances

All differences are recorded with a charge or credit to profit loss for the period except for all the monetary items from an effective hedge of an investment abroad.  These differences are recognized in comprehensive income (Equity) up to the disposal of the net investment, a time at which the effects accumulated in equity are recognized in profit or loss for the period. Deferred taxes associated with foreign currency translation differences resulting from these items are also recorded in comprehensive income (Equity) as applicable.

Non-monetary items which are stated at historical cost are translated using the historical exchange rate of the initial transaction.  Non-monetary items are converted using the exchange rate as of the current date when fair value is determined.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
23

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

(d)
Group entities

The profit or loss, assets and liabilities of all those entities with a currency other than the presentation currency are converted to the presentation currency as follows:

 
-
Assets and liabilities are converted at the closing date exchange rate on the date of the statement of financial position.
 
-
Revenue and expenses in each profit or loss account are converted at average exchange rates.
 
-
All resulting foreign currency exchange differences are recognized as a component separate in foreign currency translation difference reserves.

In consolidation, foreign currency exchange differences which arise from the conversion of a net investment in foreign entities are recorded in net equity (other reserves). At the disposal date, these exchange differences are recognized in the statement of comprehensive income as part of the loss or gain from the sale.

2.4  Basis of Consolidation

 
(a)
Subsidiaries

Subsidiaries are all those entities on which Sociedad Química y Minera de Chile S.A. has the control to lead the financial and operating policies, which, in general, is accompanied by participation greater than half the voting rights. Subsidiaries are consolidated from the date in which control is transferred to the Company and are excluded from consolidation on the date in which this control ceases to exist.  The subsidiaries apply the same policies applied by its Parent.

In order to recognize the acquisition of an investment, the Company uses the acquisition method. Under this method, the acquisition cost is the fair value of assets delivered, of equity instruments issued and of liabilities incurred or assumed at the exchange date plus costs directly attributable to acquisition. Identifiable assets acquired and identifiable liabilities and contingencies assumed in a business combination are initially stated at their fair value at the acquisition date.  For each business combination the Company will measure non-controlling of the acquiree either at its fair value or as a proportional amount of the acquiree’s identifiable net assets.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
24

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

Companies included in consolidation:
 
                
Ownership interest
 
Taxpayer
ID
 
Foreign subsidiaries
 
Country of
origin
 
Functional
currency
 
Direct
   
03/31/2011
Indirect
   
Total
   
12/31/2010
Total
 
Foreign
 
Nitratos Naturais Do Chile Ltda.
 
Brazil
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Nitrate Corporation Of Chile Ltd.
 
United Kingdom
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM North America Corp.
 
USA
 
USD
    40.0000       60.0000       100.0000       100.0000  
Foreign
 
SQM Europe N.V.
 
Belgium
 
USD
    0.8600       99.1400       100.0000       100.0000  
Foreign
 
Soquimich S.R.L. Argentina
 
Argentina
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Soquimich European Holding B.V.
 
The Netherlands
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Corporation N.V.
 
Dutch Antilles
 
USD
    0.0002       99.9998       100.0000       100.0000  
Foreign
 
SQI Corporation N.V.
 
Dutch Antilles
 
USD
    0.0159       99.9841       100.0000       100.0000  
Foreign
 
SQM Comercial De Mexico S.A. De C.V.
 
Mexico
 
USD
    1.0000       99.0000       100.0000       100.0000  
Foreign
 
North American Trading Company
 
USA
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Administración Y Servicios Santiago S.A. De C.V.
 
Mexico
 
USD
    0.0200       99.9800       100.0000       100.0000  
Foreign
 
SQM Peru S.A.
 
Peru
 
USD
    0.9800       99.0200       100.0000       100.0000  
Foreign
 
SQM Ecuador S.A.
 
Ecuador
 
USD
    0.0040       99.9960       100.0000       100.0000  
Foreign
 
SQM Nitratos Mexico S.A. De C.V.
 
Mexico
 
USD
    0.0000       51.0000       51.0000       51.0000  
Foreign
 
SQMC Holding Corporation L.L.P.
 
USA.
 
USD
    0.1000       99.9000       100.0000       100.0000  
Foreign
 
SQM Investment Corporation N.V.
 
Dutch Antilles
 
USD
    1.0000       99.0000       100.0000       100.0000  
Foreign
 
SQM Brasil Limitada
 
Brazil
 
USD
    3.0100       96.9900       100.0000       100.0000  
Foreign
 
SQM France S.A.
 
France
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Japan Co. Ltd.
 
Japan
 
USD
    1.0000       99.0000       100.0000       100.0000  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
USD
    1.6700       98.3300       100.0000       100.0000  
Foreign
 
SQM Oceania Pty Limited
 
Australia
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Rs Agro-Chemical Trading A.V.V.
 
Aruba
 
USD
    98.3300       1.6700       100.0000       100.0000  
Foreign
 
SQM Indonesia
 
Indonesia
 
USD
    0.0000       80.0000       80.0000       80.0000  
Foreign
 
SQM Virginia L.L.C.
 
USA
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Venezuela S.A.
 
Venezuela
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Italia SRL
 
Italy
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Comercial Caiman Internacional S.A.
 
Cayman Islands
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Africa Pty.
 
South Africa
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Lithium Specialties LLC
 
USA
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
Fertilizantes Naturales S.A.
 
Spain
 
USD
    0.0000       66.6700       66.6700       66.6700  
Foreign
 
Iodine Minera B.V.
 
The Netherlands
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Agro India Pvt. Ltd.
 
India
 
USD
    0.0000       100.0000       100.0000       100.0000  
Foreign
 
SQM Beijin Comercial Ltd.
 
China
 
USD
    0.0000       100.0000       100.0000       100.0000  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
25

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

Companies included in consolidation:
 
               
Ownership interest
 
Taxpayer ID
 
Domestic subsidiaries
 
Country of
origin
 
Functional
currency
 
Direct
   
03/31/2010
Indirect
   
Total
   
12/31/2010
Total
 
96.801.610-5  
Comercial Hydro  S.A.
 
Chile
 
Ch$
    0.0000       60.6382       60.6382       60.6382  
96.651.060-9  
SQM Potasio S.A.
 
Chile
 
USD
    99.9974       0.0000       99.9974       99.9974  
96.592.190-7  
SQM Nitratos S.A.
 
Chile
 
USD
    99.9999       0.0001       100.0000       100.0000  
96.592180-K  
Ajay SQM Chile S.A.
 
Chile
 
USD
    51.0000       0.0000       51.0000       51.0000  
86.630.200-6  
SQMC Internacional  Ltda.
 
Chile
 
Ch$
    0.0000       60.6382       60.6382       60.6382  
79.947.100-0  
SQM Industrial S.A.
 
Chile
 
USD
    99.9954       0.0046       100.0000       100.0000  
79.906.120-1  
Isapre Norte Grande Ltda.
 
Chile
 
Ch$
    1.0000       99.0000       100.0000       100.0000  
79.876.080-7  
Almacenes y Depósitos Ltda.
 
Chile
 
Ch$
    1.0000       99.0000       100.0000       100.0000  
79.770.780-5  
Servicios Integrales de Tránsitos y Transferencias S.A.
 
Chile
 
USD
    0.0003       99.9997       100.0000       100.0000  
79.768.170-9  
Soquimich Comercial S.A.
 
Chile
 
USD
    0.0000       60.6383       60.6383       60.6383  
79.626.800-K  
SQM Salar S.A.
 
Chile
 
USD
    18.1800       81.8200       100.0000       100.0000  
78.602.530-3  
Minera Nueva Victoria S.A.
 
Chile
 
USD
    99.0000       1.0000       100.0000       100.0000  
78.053.910-0  
Proinsa Ltda.
 
Chile
 
Ch$
    0.0000       60.5800       60.5800       60.5800  
76.534.490-5  
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
 
Chile
 
Ch$
    0.0000       100.0000       100.0000       100.0000  
76.425.380-9  
Exploraciones Mineras S.A.
 
Chile
 
USD
    0.0100       99.9900       100.0000       100.0000  
76.064.419-6  
Agrorama Callegari Ltda. (*)
 
Chile
 
Ch$
    0.0000       42.4468       42.4468       42.4468  

(*) Agrorama Callegari Ltda. was consolidated given that the Company has the control through the subsidiary Soquimich Comercial S.A
 
Subsidiaries are consolidated using the line-by-line method adding the items that represent assets, liabilities, revenue and expenses with similar content eliminating the related intragroup transactions.

The results from dependant companies acquired or disposed of during the year are included in consolidated income statement accounts from the effective date of acquisition or up to the effective date of disposal, as applicable.

Interest of minority partners or shareholders (non-controlling interest) represents the part which can be assigned to them of own funds and results as of March 31, 2011 and December 31, 2010 of those companies which are consolidated using the line-by-line method and are presented as “non-controlling interest” in net equity in the attached consolidated statement of financial position and under the line “Gain (loss) attributable to non-controlling interest in the Group’s attached consolidated statement of income.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
26

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
2.5
Responsibility for the information and estimates made

The information contained in these interim consolidated financial statements is the responsibility of the Company’s management who expressly indicate that it has applied all the principles and criteria included in IFRS issued by the International Accounting Standard Board (IASB.)

In the Company’s interim consolidated financial statements judgments and estimates have been made by management to quantify certain assets, liabilities. Income, expenses and commitments recorded therein. Basically these estimates refer to the following:

 
-
The useful lives of material and intangible assets and their residual values.
 
-
Impairment losses of certain assets, including trade receivables.
 
-
Hypotheses used for the actuarial calculation of commitments related to pensions and staff severance indemnities.
 
-
Provisions for commitments acquired with third parties and contingent liabilities.
 
-
Accrued expenses based on technical studies which cover the different variables which affect products in stock (density. humidity. among others) and allowances on slow-moving spare parts in inventories.
 
-
Future costs for the closure of mining facilities.
 
-
The determination of fair value of certain financial and non-financial assets and derivative instruments.
 
-
The determination and allocation of fair values in business combinations.
 
Although these estimates have been made considering the best possible information available on the date of preparation of these interim financial statements it is possible that events which may occur in the future obligate their modification (increases or decreases) in the next few years, which would be performed prospectively, recognizing the effects of change in estimates on the respective future interim consolidated financial statements.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
27

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
2.6
Financial information by operating segment

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

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

For assets and liabilities the assignment to each segment is not possible given that these are associated to more than one segment.

Accordingly, the following business segments have been identified for the Company:

 
-
Specialty plant nutrients
 
-
Industrial chemicals
 
-
Iodine and derivatives
 
-
Lithium and derivatives
 
-
Potassium
 
-
Other products and services

 
2.7
Property, plant and equipment

Tangible fixed assets are stated at acquisition cost, net of the related accumulated amortization and impairment losses which they have experienced.

In addition to the price paid for the acquisition of tangible fixed assets, the Company has considered the following concepts as part of the acquisition cost, as applicable:

 
1.
Accrued financial expenses during the construction period which are directly attributable to the acquisition, construction or production of qualifying assets, which are those that require a substantial period prior to being ready for use.  The interest rate used is that related to the project’s specific financing or, should this not exist, the average financing rate of the investor company. The amount capitalized for this concept was ThUS$5,233 as of March 31, 2011 and ThUS$25,947 as of December 31, 2010.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
28

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

2
The present value of future costs to which the Company will have to experience related to the closure of its facilities, are included in the asset's value at restated cost.

Work-in-progress is transferred to property, plant and equipment in operation once they are available for use beginning the related amortization on that date.

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

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

Based on the impairment analysis conducted by the Company’s management has been considered that the carrying value of assets do not exceed the net recoverable value of these assets.

Property, plant and equipment, net in the case of their residual value, are amortized through the straight-line distribution of cost among the estimated technical useful lives which constitute the period in which the Company expects to use them. When portions of a property, plant and equipment item have different useful lives, these are recorded as separate items. The useful life is reviewed on a regular basis (annually).

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
29

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

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

Classes of property, plant and equipment
 
Life or
Minimum
rate
   
Life or
Maximum
rate
 
             
Life or rate for buildings
    3       60  
Life or rate for plant and equipment
    3       35  
Life or rate for information technology equipment
    3       10  
Life or rate for fixtures and accessories
    3       35  
Life or rate for motor vehicles
    5       10  
Life or rate for other property, plant and equipment
    2       30  

The gains or losses which are generated in the sale or disposal of property, plant and equipment are recognized as income for the period and calculated as the difference between the asset’s sales value and its net carrying value.

The Company obtains property rights and mining concessions from the Chilean State. Property rights are obtained usually without any initial cost (other than the payment of mining licenses and minor registration expenses) and when rights are obtained on these concessions, the Company retains them while it pays the related interim licenses. Such license fees, which are paid on an annually, are recorded as prepaid assets and amortized over the following twelve months. Amounts attributable to mining concessions acquired from third parties, which are not from the Chilean State are recorded at their acquisition cost in property, plant and equipment.

Costs arising from daily maintenance activities of property, plant and equipment are recognized in profit or loss as and when incurred.

 
2.8
Investment properties

The Company recognizes as investment properties the net values of land, buildings and other constructions which are held to exploit them under lease agreements or to obtain proceeds from their sale as a result of those increases which are generated in the future in the respective market prices. These assets are not used in the activities and are not destined for own use.

They are initially stated at their acquisition cost, which includes the acquisition price or production cost plus directly assignable expenses. Subsequently, investment properties are stated at their acquisition cost less accumulated depreciation and the possible accumulated provisions for value impairment.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
30

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
2.9
Inventories

The Company states inventories for the lower of cost and net realizable value. The cost price of finished products and products in progress includes direct costs of materials and; as applicable, labor costs, indirect costs incurred to transform raw materials into finished products and general expenses incurred in carrying inventories to their current location and conditions. The method used to determine the cost of inventories is weighted average cost.

The net realizable value represents the estimate of the sales price less all finishing estimated costs and costs which will be incurred in commercialization, sales and distribution processes.

Commercial discounts, rebates obtained and other similar entries are deducted in the determination of the acquisition price.

The Company conducts an evaluation of the net realizable value of inventories at the end of each year recording an estimate with a charge to income when these are overstated. When the circumstances, which previously caused the rebate ceased to exist, or when there is clear evidence of an increase in the net realizable value due to a change in the economic circumstances or prices of main raw materials, the estimate made previously is modified.

The valuation of obsolete, impaired or slow-moving products relates to their net estimated net realizable value.

Provisions on the Company's inventories have been made based on a technical study which covers the different variables which affect products in stock (density, humidity, among others.)

Raw materials, supplies and materials are recorded at the lower of acquisition cost or market value. Acquisition cost is calculated according to the annual average price method.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
31

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
2.10
Trade and other receivables

Trade and other receivables relate to non-derivative financial assets with fixed payments which can be determined and are not quoted in any active market.  These arise from sales operations involving the products and/or services which the Company commercializes directly to its customers with no intention of negotiating the account receivable and are not within the following categories:

•      Those which the Company has the intention of selling immediately in the near future and which are held-for-sale.

•      Those designated at their initial recognition as available-for-sale..

•      Those which do not allow that the holder recovers substantially all its initial investment due to circumstances other than credit impairment, which will be classified as available-for-sale.

These assets are initially recognized at their fair value (which is equivalent to their face value, discounting implicit interest for installment sales) and subsequently at amortized cost according to the effective interest rate method less a provision for impairment loss.   An allowance for impairment loss is established for trade receivables when there is objective evidence that the Company will not be able to collect all the amounts which are owed to it according to the original terms of receivables.

Embedded interest in installment sales is recognized as financial income when interest is accrued over the term of the operation.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
32

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
2.11
Revenue recognition

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

Revenue is recognized when its amount can be stated reliably, it is possible that the future economic rewards flow to the entity and the specific conditions for each type of activity -related revenue are complied with, as follows:

 
(a)
Sale of goods

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

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

 
(b)
Sales of services

Revenue associated with the provision of services is recognized considering the degree of completion of the service at the date of presentation of the Statement of financial position provided that the result from the transaction can be estimated reliably.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
33

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
(c)
Interest income

Income is recognized as and when interest is accrued in consideration of the principal which is pending payment using the effective interest rate method.

 
(d)
Income from royalties

Income from royalties is recognized based on the accrual in accordance with the economic substance of the related agreements.

 
(e)
Income from dividends

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

 
2.12
Investments recognized using the equity method

Interest in companies in which control is exercised together with another company (joint venture) or in which the Company has significant influence (associated companies) are recorded using the equity method. Significant influence is assumed to exist when the Company has interest exceeding 20% of the investee's equity.

Under this method, the investment is recognized in the statement of financial position at cost plus changes subsequent to the acquisition in an amount proportional to the net associated company’s equity using the ownership interest in the associate.  The associated goodwill is included at the carrying value of the investee and it is not subject to amortization. The debit or credit to profit or loss reflects the proportional amount in the associated company's results.

Unrealized gains for transactions with affiliates or associates are eliminated considering the equity interest by the Company in them.  Unrealized losses are also eliminated except if the transaction provides evidence of impairment loss of the asset transferred.

Changes in equity of the associates are recognized proportionally with a debit or credit to “Other reserves” and classified according to their origin.

The associate’s and the Company’s reporting dates and policies are similar for equivalent transactions and events under similar circumstances.

In the event that significant influence is lost or the investment is sold or is available-for-sale, the equity value method is discontinued suspending the recognition of proportional results.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
34

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

If the resulting amount according to the equity method were negative, interest is reflected as zero in the interim consolidated financial statements unless the Company commits to resolve its equity position.  In this case, the respective provision for risks and expenses is recorded.

Dividends received in these companies are recorded reducing the equity value and proportional profit or loss recognized in conformity with their interest, are included in the consolidated profit or loss under the caption “Equity gain (loss) in companies and joint ventures using the equity method.”

 
2.13
Income tax and deferred taxes

Income tax expense for the year is determined as the addition of current tax from the different companies resulting from the application of the type of local tax on the taxable income for each of them. Differences between the book value of assets and liabilities and their tax basis generate the balance of deferred tax assets or liabilities which are calculated using the tax rates which are expected to be applicable when assets and liabilities are realized.

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

Tax on companies and variations on deferred tax assets or liabilities which are not the result of business combinations are recorded in profit or loss statement accounts or net equity accounts in the Consolidated Statement of Financial Position considering the origin of the gains or losses which have generated them.

At the end of each reporting period, the carrying value of deferred tax assets is reviewed and reduced as long as it is possible that there is no sufficient taxable income to allow the recovery of all or a portion of the deferred tax asset.  Likewise, at the date of the statement of financial position deferred tax assets not recognized are revalued and recognized as long as it has become possible that future taxable income will allow the recovery of the deferred tax asset.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
35

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

With respect to temporary differences deductible associated with investments in subsidiaries, associated companies and interest in joint ventures, deferred tax assets are recognized solely provided that there is a possibility that temporary differences are reversed in the near future and that there will be taxable income with which they may be used.

The deferred income tax related to entries directly recognized in equity is recognized with an effect on equity and not with an effect on profit or loss.

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

 
2.14
Earnings per share

The net benefit per share is calculated as the ratio between the net benefit for the period attributable to the Parent Company and the weighted average number of common shares of the Parent Company in circulation during this period.

The Company has not conducted any type of operation of potential diluted effect which assumes a diluted benefit per share other than the basic benefit per share.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
36

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
2.15
Non-financial asset value impairment

Assets subject to amortization are subject to test for impairment provided that an event or change in the circumstances indicates that the amounts in the accounting records may not be recoverable. An impairment loss is recognized for the excess of amount in books of the asset over its recoverable amount.

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

When the carrying value of an asset exceeds its recoverable amount the asset is considered an impaired asset and is reduced to its net recoverable amount.

In evaluating value in use, estimated future cash flows are discounted using a discount rate before taxes which reflects current market evaluation on the time value of money and specific asset risks.

An appropriate valuation model is used to determine the fair value less selling costs.  These calculations are confirmed by valuation multiples, quoted share prices for subsidiaries quoted publicly or other available fair value indicators.

Impairment losses from continuing operations are recognized with a debit to profit or loss in the categories of expenses associated with the impaired asset function, except for properties reevaluated previously where the revaluation was taken to equity. In this case impairment is also recognized with a debit to equity up to the amount of any previous revaluation.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
37

 

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

For assets other than the goodwill acquired, an annual evaluation is conducted of whether there are impairment loss indicators recognized previously which might have already ceased to exist or decreased. The recoverable amount is estimated if such indicators exist.  An impairment loss previously recognized is reversed only if there have been changes in estimates used to determine the asset’s recoverable amount from the last time in which an impairment loss was recognized. If this is the case, the carrying value of the asset is increased to its recoverable amount. This increased amount cannot exceed the carrying value which would have been determined net of depreciation if an asset impairment loss would have not been recognized in prior years. This reversal is recognized with a credit to profit or loss unless an asset is recorded at the revaluated amount.  Should this be the case, the reversal is treated as an increase in revaluation.

2.16 Financial assets

SQM S.A. and subsidiaries classify their financial statements under the following categories: at fair value through profit or loss, loans and receivables, financial assets held-to-maturity and financial assets available-for-sale. The classification depends on the purpose with which financial assets were acquired. Management determines the classification of its financial assets at the time of initial recognition.

At each reporting date, the Company assesses whether there is objective evidence that an asset or group of financial assets is impaired or has been impaired.  An asset or group of financial assets is impaired if and only if, there is objective evidence of impairment as a result of one or more events occurred after the initial recognition of the asset or group of assets.  The recognition of impairment necessitates that the loss event has an impact on the estimate of the future cash flows from the asset or group of financial assets.

 
(a)
Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it is acquired mainly with the purpose of being sold in the short-term. Derivatives are also classified as acquired for trading unless they are designated as hedge accounting. Assets under this category are classified as current assets and variations generated in fair value are directly recognized in profit or loss.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
38

 

Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
(b)
Loans and receivables

Loans and accounts receivable are non-derivative financial assets with fixed payments or payments which can be determined and are not quoted in any active market. These are included in current assets, except for those with expiration dates which exceed 12 months from the closing date which are classified as non-current assets. Loans and receivables are included under the caption “Trade and other receivables” in the Statement of financial position and are stated at amortized cost.  The subsequent measurement at amortized cost I used for its calculation the effective interest rate less impairment.

 
(c)
Financial assets held-to-maturity

Financial assets held-to-maturity are non-derivative financial assets with fixed payments or payments which can be determined and fixed expiration dates which management has the positive intention and ability of holding to maturity. If an amount which was not insignificant of financial assets held to maturity was sold, the full category would be reclassified as available for sale. Assets in this category are stated at amortized cost.

 
(d)
Financial assets available for sale

Financial assets available for sale are non-derivative instruments which are designated in this category or are not classified in any of the other categories. They are included in non-current assets unless the Company intends to dispose of the investment in the 12 months following the closing date. These assets are stated at fair value recognizing under other reserves those variations in fair value, if any.

2.17 Financial liabilities

The Company classifies its financial liabilities under the following categories: at fair value through profit or loss, trade payables, interest-bearing loans or derivatives designated as hedging instruments.

The Company’s management determines the classification of its financial liabilities at the time of initial recognition.

Financial debt obligations are recorded at nominal amount as non-current when its expiration term exceeds twelve months and as current when it is lower than that term.  Interest expenses are computed in the year in which they are accrued following a financial criterion.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
39

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

In conformity with IAS 32 and IAS 39, borrowing costs are recorded in the attached Consolidated Statement of Financial Position discounting the associated debt and are debited to profit or loss for the year in the same term that the debt using the effective interest rate method.

Financial liabilities are derecognized when the obligation is repaid, settled or it expires.

 
(a)
Financial liabilities at fair value through profit or loss

Financial liabilities are classified at fair value when these are held for trading or designated in their initial recognition at fair value through profit or loss. This category includes derivative instruments not designated for hedge accounting.

 
(b)
Trade payables

Trade payables to suppliers are subsequently stated at their amortized cost using the effective interest rate method.

 
(c)
Interest-bearing loans

Loans are subsequently stated at amortized cost using the effective interest rate method. Amortized cost is calculated considering any premium or discount from the acquisition and includes costs of transactions which are an integral part of the effective interest rate.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
   
 
40

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

2.18 The Environment

In general, the Group companies follow the criterion of considering amounts destined to environmental protection and improvement as environmental expenses. However, amounts of elements included in facilities, machinery and equipment destined to the same purpose are considered property, plant and equipment as the case may be.

2.19 Minimum Dividend

As required by the Shareholders’ Company Act unless otherwise decided by the shareholders through unanimous vote of the holders of those shares issued and subscribed, a public shareholders’ company must distribute a minimum dividend of 30% of its profit for the period, except in the event that the Company has losses not absorbed in prior years.

2.20 Consolidated statement of cash flows

Cash equivalents relate to short-term highly liquid investments which are readily convertible into known amounts of cash are subject to low risk of change in their value and expire in less than three months from the date of acquisition of the instrument.

For the purposes of the preparation of the statement of cash flows, cash has been defined as cash and cash equivalents as defined above.

The statement of cash flows includes cash movements performed during the year determined by the indirect method.

In these statements of cash flows, the following expressions are used in the sense which is shown as follows:

 
-
Cash flows: cash and financial asset equivalent inflows and outflows understanding as such those short-term highly-liquid investments with low risk of change in their value.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
41

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
-
Operating activities: common activities related to the operation of the Group’s business as well as other activities which cannot be classified as investing or financing activities.

 
-
Investing activities: investing activities relate to the acquisition, disposition or disposal related to other long-term assets and other investments not included in cash and cash equivalents.

 
-
Financing activities: activities which generate changes in the size and composition of net equity and of liabilities which are not part of operating activities.

 
2.21
Obligations related to staff severance indemnities and pension commitments

Obligations with the Company’s employees are in accordance with that established in the collective bargaining agreements in force formalized through collective employment agreements and individual employment contracts, except for the United States, which is regulated by employment pensions plans.

These obligations are valued using the actuarial calculation, which considers such hypotheses as the mortality rate, employee turnover, interest rates, retirement dates, effects related to increases in employees‘ salaries, as well as the effects on variations in services derived from variations in the inflation rate.

Actuarial losses and gains which may be generated by variations in previously defined obligations are directly recorded in profit or loss.

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

The discount rate used by the Company for the calculation of the obligation was 6% for the periods ended as of March 31, 2011 and December 31, 2010.

Our subsidiary SQM North America has established with its employees pensions plans for retired employees, which are calculated measuring the forecasted liability for expected future severance indemnities using the salary progression rate net of adjustments for inflation, mortality and turnover assumptions discounting the amount resulting at the present value using an interest rate of 6.5% for 2010 and 2009.  The net balance of this liability is presented under non-current provisions for employee benefits.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
42

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

2.22 Financial derivatives and hedging transactions

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

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

 
(b)
Hedging of a single risk associated with an asset or liability recognized or a highly possible foreseen transaction (cash flow hedge);

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

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

The fair value of derivative instruments used for hedging purposes is shown in Note 8.3 (Hedging assets.) Movements in the hedging operation reserve are classified as a non-current asset or liability if the remaining expiration period of the hedged entry is higher than 12 months and as a current asset or liability if the remaining expiration period of the entry is lower than 12 months.

Investment derivatives are classified as a current asset or liability and the change in their fair value is recognized directly in profit or loss.

 
(a)
Fair value hedge

The change in the fair value of a derivative is recognized with a debit or credit to profit or loss, as applicable. The change in the fair value of the hedged entry attributable to hedged risk is recognized as part of the carrying value of the hedged entry and is also recognized with a debit or credit to profit or loss.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
43

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

For fair value hedging related to items recorded at amortized cost, the adjustment of the fair value is amortized against income on the remaining year to its expiration. Any adjustment to the carrying value of a hedged financial instrument for which effective rate is used is amortized with a debit or credit to profit or loss at its fair value attributable to the risk being covered.

If the hedged entry is derecognized, the fair value not amortized is immediately recognized with a debit or credit to profit or loss.

 
(b)
Cash flow hedge

The cash portion of gains or losses from the hedging instrument is initially recognized with a debit or credit to other reserves whereas any non-cash portion is immediately recognized with a debit or credit to profit or loss. as applicable.

Amounts taken to equity are transferred to profit or loss when the hedged transaction affects profit for the period as when the hedged finance income or expense is recognized when a forecasted sale occurs. When the hedged entry is the cost of a non-financial asset or liability, amounts recorded in other reserves are transferred to the initial carrying value of the non-financial asset or liability.

Should the expected firm transaction or commitment not longer be expected to occur, the amounts previously recognized in equity are transferred to profit or loss. If a hedging instrument expires is sold, finished, and exercised without any replacement or a rollover is performed or if its designation as hedging is revoked. Amounts previously recognized in other reserves are maintained in equity until the expected firm transaction or commitment occurs.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
44

 
 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

2.23 Lease

 
(a)
Leases  - Finance lease

Leases are classified as finance leases when the Company has substantially all the risks and rewards derived from the ownership. Finance leases are capitalized at the beginning of the lease at the lower of the fair value of the leased asset or the present value of minimum lease payments.

Each lease payment is distributed between the liability and financial debt to obtain ongoing interest type on the debt pending balance.  The respective lease obligations, net of financial debt, are included in other non-current liabilities. The interest element of finance cost is debited in the statement of comprehensive income during the lease period so that a regular ongoing interest rate is obtained on the remaining balance of the liability for each year. The asset acquired through a finance lease is subject to depreciation over the lower of its useful life or the life of the agreement.

 
(b)
Lessee – Operating lease

Leases in which the lesser maintains a significant part of risks and rewards derived from the ownership are classified as operating leases. Operating lease payments (net of any incentive received from the lesser) are debited to the statement of comprehensive income or capitalized (as applicable) on a straight-line basis over the lease period.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
45

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
2.24
Exploration and assessment expenses

Those exploration and assessment expenses associated with mineral reserves which are being exploited are included under Inventories and amortized according to the estimated mineral content reserves. Expenses associated with future reserves are presented under Other non-current non-financial assets as and when minerals included in the future reserve have ore-grade which makes the mining property economically exploitable.

Those expenses incurred on properties in which the product has low ore-grade which is not economically exploitable, are directly debited to profit or loss.

2.25 Other provisions

Provisions are recognized when:
 
*
The Company has a present obligation as a result of a past event.

 
*
It is possible that certain resources are used, including benefits, to settle the obligation.

 
A reliable estimate can be made of the obligation amount.

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

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

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

The Company’s policy is maintaining accruals to cover risks and expenses based on a better estimate to deal with possible or certain and quantifiable responsibilities from litigation in force, compensations or obligations, pending expenses the amount of which has not been determined, collaterals and other similar guarantees for which the Company is responsible. These are recorded at the time in which the responsibility or the obligation which determines the compensation or payment is generated.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
 
46

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

The Company determines and recognizes the cost related to employee vacation on an accrual basis.

As a result of this policy, the Company has recorded accruals for:

 
-
Employee vacation: The Company determines and recognizes the cost related to employee vacation on an accrual basis.

 
-
Employee benefits agreed with employees other than staff severance indemnities and option plan, which the Company and its subsidiaries will have to pay to its employees by virtue of the agreements entered have been recognized on an accrual basis.

 
-
Legal expenses related to the estimate of future payments for lawsuits maintained with third parties.

 
2.26
Compensation Plans

Compensation plans implemented through benefits in share-based payments settled in cash, which have been provided are recognized in the financial statements at their fair value, in accordance with International Financial Reporting Standard No. 2 “Share-based payments.” Variations in the fair value of options granted are recognized with a charge to remuneration on a straight-line basis during the period between the date in which these options are granted and the payment date.  (See Note 16).
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
47

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
2.27
Good and service insurance expenses

Payments for the different insurance policies which the Company contracts are recognized in expenses considering the proportional amount related to the time that they cover, regardless of payment terms. Amounts paid and not consumed are recognized as prepaid expenses within Current assets.

Costs of claims are recognized in profit or loss immediately after being known, net of the recoverable amounts from Insurance Companies. Recoverable amounts are recorded as an asset reimbursable from the Insurance Company under “Trade and other receivables", calculated as established in the respective insurance policies.

 
2.28
Intangible Assets

Intangible assets mainly relate to goodwill acquired, water rights, broadcasting rights, trademarks, and rights of way related to electric lines and development expenses, and computer software licenses.

 
(a)
Goodwill acquired

Goodwill acquired represents the excess in acquisition cost on the fair value of them Company's ownership on the net identifiable assets of the subsidiary on the acquisition date. Goodwill acquired related to acquisitions of subsidiaries is included in intangible assets, which is subject to value impairment tests every time that the Company issues interim consolidated financial statements and is stated at cost plus accumulated impairment losses.  Gains and losses related to the sale of an entity include the carrying value of goodwill related to the entity sold.

This intangible asset is assigned to cash generating units with the purpose of testing impairment losses. It is allocated based on cash generating units which are expected to obtain benefits from the business combination from which the aforementioned goodwill acquired arose.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
48

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
(b)
 Water rights

Water rights acquired by the Company relate to the water from natural sources and are recorded at acquisition cost. Given that these assets represent rights granted on a perpetual basis to the Company, these are not amortized.  However, they are subject to an impairment assessment on an annual basis.

 
(c)
 Right of way for electric lines

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

 
(d)
 Computer software

Licenses for IT programs acquired are capitalized based on costs which have been incurred to acquire them and prepare them to use the specific program. These costs are amortized over their estimated useful lives.

Expenses related to the development or maintenance of IT programs are recognized as an expense as and when incurred. Costs directly related to the production of unique and identifiable IT programs controlled by the Group and which probably will generate economic benefits which are higher than costs during more than a year, are recognized as intangible assets. Direct costs include expenses incurred for employees who develop IT programs and an adequate percentage of general expenses.

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

 
2.29
Research and development expenses

Research and development expenses are debited to profit or loss in the period in which the disbursement is made except for property, plant and equipment acquired to be used in research and development, which are recognized in accounting under the respective item within property, plant and equipment.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
49

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 2 - Bases of presentation of interim consolidated financial statements and accounting criteria applied (continued)

 
2.30
Classification of balances as current and non-current

In the attached Statement of Financial Position balances are classified in consideration of their remaining expiration dates; i.e., those expiring on a date equal to or lower than twelve months as current and those with expiration dates which exceed the aforementioned period as non-current.

The exception to this relates to deferred taxes as these are classified as non-current regardless of their expiration dates.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
50

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 3 – Financial Risk Management

3.1 Risk Management Policy

The Company’s Risk Management Strategy is focused on safeguarding the Company and its subsidiaries’ stability and sustainability with respect to those relevant financial uncertainty components.

The Company’s operations are subject to certain risk factors which may affect its financial position or results.  The most significant among these are market, liquidity, exchange rate, uncollectible and interest rate risks.

There may be additional risks affecting the Company’s trading operations, its business, financial position or results, which are not significant through the present date.

The financial risk management structure includes the identification, determination, analysis, quantification, measurement and control of these events. The Company’s management and, in particular, the Finance Management is responsible for the ongoing evaluation of financial risk.  The Company uses derivatives to hedge a significant portion of these risks.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
51

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
  
Note 3 – Financial Risk Management (continued)
 
3.2 Risk Factors

3.2.1 Market risk

Market risks relate to those uncertainties associated with variations in market variables affecting the Company's assets and liabilities among which we may highlight the following:

 
a)
Country Risk: The economic condition of countries where the Company operates may affect its financial position.  For instance, sales by the Company to emerging markets expose it to risks related to economic conditions and trends in those countries.  In addition, inventory levels may also be affected by the economic condition in these countries and/or the global economy, among other possible economic impacts.

 
b)
Price volatility risk: The Company’s product prices are affected by variations in international prices of fertilizers and chemicals and changes in production capacities or in the demand for these might affect our business, financial condition and results from operations.

 
c)
Commodity price risk: The Company is exposed to changes in prices of raw materials and energy which may have an impact on its production costs and generate unstable results.

 
Currently, the Company incurs annual direct expenses of approximately US$ 70 million for fuels, gas and equivalents and approximately US$50 million for direct use of electric energy.  Variations of 10% in the prices of energy required for the Company’s activities may give rise to variations of US$12 million in costs.

3.2.2 Uncollectibility Risk

As evidenced by the last financial crisis, the global economic downturn and its potential negative effects on the financial position of our customers may extend the terms for the payment of accounts receivable. may increase our bad debt exposure.  Although we take steps to minimize risk, this global economic situation may result in losses which might have a material adverse effect on our business, financial condition or results of operations.

 
In order to mitigate these risks, the Company uses such actions as the use of credit insurance, letters of credit and advance payments for a portion of trade receivables.
   
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
52

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 3 – Financial Risk Management (continued)
 
 
3.2.3
Exchange rate risk
 
As a result of the influence in the determination of price levels, its relationship to selling costs and given that a significant portion of the Company’s business is traded in that currency, the Company has defined U.S. dollar as its functional currency. However, the global nature of the Company’s business generates exposure to exchange rates of different currencies with respect to U.S. dollars. Accordingly, the Company maintains hedging agreements to cover its main uncovered positions (net assets from liabilities) in currencies other than U.S. dollar against the variation in the exchange rate and regularly updates these agreements depending on the uncovered position to be hedged in those currencies.

A significant portion of the Company’s costs, especially payroll, relates to Chilean peso.  Accordingly, an increase or decrease in the exchange rate for U.S. dollar would affect the Company’s profit o loss.  Approximately between US$ 350 million and US$370 million of the Company’s costs relate to Chilean pesos which are hedged by operations in derivative instruments covering the unhedged position of balance in this currency.

As of December 31, 2010, the Company had derivative instruments classified as exchange and interest rate hedges associated with all the Company’s obligations related to bonds payable denominated in Chilean pesos and UF, for a fair value of US$97.5 million.  As of March 31, 2011, this balance amounts to US$83.4 millions both in favor of SQM.

As of March 31, 2011, the exchange rate for U.S. dollar was Ch$ 479.46 per US$1.00 and Ch$ 468.01 per US$1.00 as of December 31, 2010.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
53

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 3 – Financial Risk Management (continued)
 
3.2.4  Interest rate risk
 
Interest rate fluctuations, mainly due to the uncertainty related to the future market behavior may have a material impact on the Company’s financial statements.
 
The Company has short and current and non-current financial debt valued at LIBOR + a spread. The Company is subject to fluctuations in such a rate as it does not currently have any derivative instruments to hedge variations in the LIBOR rate.
 
As of March 31, 2011, the Company has approximately 19% of its financial obligations valued at LIBOR rate and therefore, significant increases in this rate might have an impact on its financial condition.  A 100 base point variation on this rate may result in variations in finance costs close to an annual amount of US$ 2.2 million.  However, it is actually significantly offset by the returns from the Company’s investments which are also highly related to the LIBOR rate.
 
Additionally, as of March 31, 2011, on total financial debt principal, the Company maintains a percentage near 12% expiring in less than 12 months, decreasing its exposure to interest rate variations.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
 
54

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 3 – Financial Risk Management (continued)

3.2.5 Liquidity risk

Liquidity risk is related to the needs for funds to deal with payment obligations. The Company’s objective is maintaining financial flexibility through a comfortable balance between fund requirements and cash flows from normal operating activities, bank loans, public bonds payable, short-term investments and marketable securities, among others.
 
The Company maintains a significant capital expenditure program which is subject to risks and uncertainties.  Mainly the exploration and exploitation of reserves, mining and processing costs and compliance with applicable standards, require significant capital which are subject to variations throughout time.
 
In addition, world financial markets are subject to downturn and expansion periods, which cannot be foreseen at long-term and may affect access to financial resources by the Company.
 
These factors may have a material adverse impact on our business, financial condition and the Company’s results of operations.
 
Accordingly, conducts an ongoing follow-up of the reconciliation of its investments and as part of its risk management strategy, looks after the expiration dates of both from a conservative perspective.  As of March 31, 2011, the Company had unused credit facilities available for a total of US$637 million and additional credit facilities committed of US$40 million, available should it require any additional fund.
 
The other cash and cash equivalents position generated by the Company is invested in highly liquid mutual fund units with AAA risk rating.

3.3        Risk Measurement

The Company has methods to measure the effectiveness and efficiency of risk strategies both in prospective and retrospective manner.  These methods are consistent with the Group’s risk management profile.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
55

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 4 - Changes in Accounting Estimates and Policies (Uniformity)

4.1       Changes in accounting estimates

There are no changes in accounting estimates at the closing date of the interim consolidated financial statements.

4.2       Changes in Accounting Policies

As of March 31, 2011, the Company’s interim consolidated financial statements presented no changes in accounting policies or estimates compared to the prior period or the transaction date.

The interim consolidated statements of financial position as of March 31, 2011 and December 31, 2010 and the statements of comprehensive income, changes in net equity and cash flows for the period ended as of March 31, 2011 and March 31, 2010 have been prepared in accordance with IFRS and accounting principles and criteria have been applied consistently.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
 
56

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 5 - Cash and Cash Equivalents

5.1        Classes of Cash and Cash Equivalents

As of March 32, 2011 and December 31, 2010, the detail of cash and cash equivalents is as follows:

Cash and cash equivalents
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Cash on hand
    74       83  
Bank balances
    20,756       24,267  
Short-term time deposits
    386,850       375,057  
Other cash and cash equivalents
    156,135       125,245  
Cash and cash equivalents
    563,815       524,652  

5.2 Other cash and cash equivalents

As of March 31, 2010 and December 31, 2010, other cash and cash equivalents relate to mutual fund units (Investment Liquidity Funds) for investments made in:

Institution
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Legg Mason - Western Asset Institutional Liquid Reserves
    60,618       52,576  
BlackRock - Institutional cash series PLC
    53,002       36,712  
JP Morgan US dollar Liquidity Fund Institutional
    42,515       35,957  
Total
    156,135       125,245  

 
Highly liquid mutual fund units that mainly investment in securities with risk rating equivalent to AAA.
  
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
57

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 5 - Cash and Cash Equivalents (continued)

5.3 Information on cash and cash equivalents by currency

As of March 31, 2011 and December 31, 2010, cash and cash equivalents in balances of cash on hand, in banks and financial instruments, classified by currency are detailed as follows:

   
03/31/2011
   
12/31/2010
 
Original currency
 
ThUS$
   
ThUS$
 
Chilean peso (*)
    310,385       331,011  
U.S. dollar
    243,019       176,703  
Euro
    5,463       6,784  
Mexican peso
    186       102  
South African rand
    3,472       8,776  
Japanese yen
    1,131       1,192  
Peruvian sol
    51       13  
Argentine peso
    1       -  
Brazilian real
    2       21  
Chinese yuan
    96       40  
Indonesian rupiah
    5       5  
Pound sterling
    4       5  
Total
    563,815       524,652  

(*) The Company maintains finance derivative policies which allows it dollarizing these time deposits in Chilean pesos.

5.4 Amount of significant restricted (unavailable) cash balances

Cash on hand and in bank current accounts are resources available and their carrying value is equal to their fair value.

As of March 31, 2011 and December 31, 2010, the Company has no significant cash balances with any type of restriction.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
58

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 5 - Cash and Cash Equivalents (continued)
 
5.5 Detail of time deposits

The detail of cash and cash equivalents in time deposits at each period-end is as follows:

Receiver of the deposit
 
Type of de
Deposit
   
Original Currency
   
Interest rate
   
Placement date
   
Expiration date
   
Principal 
ThUS$
   
Interest
accrued to-date
ThUS$
   
03/31/2011 
ThUS$
   
12/31/2010
ThUS$
 
Banco Crédito e Inversiones
 
Fixed term
   
Ch$
      0.36    
02/02/2011
   
05/03/2011
      10,070       68       10,138       26,401  
Banco Crédito e Inversiones
 
Fixed term
   
Ch$
      0.40    
03/03/2011
   
06/01/2011
      15,074       56       15,130       4,168  
Banco Crédito e Inversiones
 
Fixed term
   
Ch$
      0.40    
03/04/2011
   
06/02/2011
      15,100       53       15,153       6,738  
Banco Crédito e Inversiones
 
Fixed term
   
Ch$
      0.41    
03/09/2011
   
06/07/2011
      19,796       60       19,856       10,574  
Banco Crédito e Inversiones
 
Fixed term
   
Ch$
      0.43    
03/16/2011
   
06/14/2011
      14,380       30       14,410       10,150  
Banco Crédito e Inversiones
 
Fixed term
   
Ch$
      0.44    
03/17/2011
   
06/15/2011
      8,802       18       8,820       10,355  
Banco Crédito e Inversiones
 
Fixed term
   
Ch$
      0.44    
03/21/2011
   
06/16/2011
      14,913       21       14,934       -  
Banco Crédito e Inversiones
 
Fixed term
   
Ch$
      0.44    
03/31/2011
   
06/29/2011
      35,585       -       35,585       -  
Banco de Chile
 
Fixed term
   
Ch$
      0.36    
01/18/2011
   
04/18/2011
      15,725       133       15,858       20,781  
Banco de Chile
 
Fixed term
   
Ch$
      0.35    
01/19/2011
   
04/19/2011
      7,187       60       7,247       16,056  
Banco de Chile
 
Fixed term
   
Ch$
      0.34    
01/25/2011
   
04/25/2011
      20,812       153       20,965       15,832  
Banco de Chile
 
Fixed term
   
Ch$
      0.34    
01/26/2011
   
04/26/2011
      15,577       113       15,690       20,962  
Banco de Chile
 
Fixed term
   
Ch$
      0.35    
01/26/2011
   
04/26/2011
      20,715       155       20,870       7,271  
Banco de Chile
 
Fixed term
   
Ch$
      0.36    
02/17/2011
   
05/18/2011
      9,945       50       9,995       20,306  
Banco de Chile
  -     -       -     -     -       -       -       -       1,667  
Banco Estado
  -     -       -     -     -       -       -       -       17,001  
Banco Santander-Santiago
 
Fixed term
   
Ch$
      0.44    
03/30/2011
   
06/28/2011
      10,054       1       10,055       10,499  
Banco Santander-Santiago
 
Fixed term
   
USD
      0.30    
03/30/2011
   
04/08/2011
      10,203       -       10,203       15,528  
Banco Santander-Santiago
 
Fixed term
   
USD
      1.20    
03/28/2011
   
06/22/2011
      20,100       2       20,102       20,897  
Banco Santander-Santiago
  -     -       -     -     -       -       -       -       31,752  
Banco Santander-Santiago
  -     -       -     -     -       -       -       -       6,251  
Banco Santander-Santiago
  -     -       -     -     -       -       -       -       3,200  
Banco Santander-Santiago
  -     -       -     -     -       -       -       -       20,009  
Banco Security
 
Fixed term
   
USD
      1.40    
01/27/2011
   
04/27/2011
      15,061       37       15,098       16,014  
Banco Security
  -     -       -     -     -       -       -       -       7,017  
Citibank New - York
 
Overnight
   
USD
      0.03    
03/31/2011
   
04/01/2011
      310       -       310       557  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
59

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 5 - Cash and Cash Equivalents (continued)
 
5.5 Detail of time deposits (continued)

The detail of cash and cash equivalents in time deposits at each period-end is as follows:

Receiver of the deposit
 
Type of de
Deposit
   
Original Currency
   
Interest rate
   
Placement
date
   
Expiration date
   
Principal 
ThUS$
   
Interest
accrued to-date
ThUS$
   
03/31/2011 
ThUS$
   
12/31/2010
ThUS$
 
Citibank New - York
 
Overnight
   
USD
      0.03    
03/31/2011
   
04/01/2011
      563       -       563       -  
Corpbanca
 
Fixed term
   
Ch$
      0.36    
02/08/2011
   
05/09/2011
      3,019       18       3,037       15,556  
Corpbanca
 
Fixed term
   
Ch$
      0.43    
03/25/2011
   
06/23/2011
      10,048       9       10,057       5,786  
Corpbanca
  -     -       -     -     -       -       -       -       4,060  
Corpbanca
  -     -       -     -     -       -       -       -       8,786  
IDBI Bank
 
Fixed term
   
Indian rupee
      -    
03/31/2011
   
04/30/2011
      3       -       3       3  
Scotiabank Sud Americano
 
Fixed term
   
Ch$
      0.34    
01/24/2011
   
04/21/2011
      31,327       234       31,561       20,880  
Scotiabank Sud Americano
 
Fixed term
   
Ch$
      0.36    
02/01/2011
   
04/28/2011
      25,488       177       25,665       -  
Scotiabank Sud Americano
 
Fixed term
   
Ch$
      0.40    
03/31/2011
   
05/26/2011
      5,022       -       5,022       -  
Banco BBVA Chile
 
Fixed term
   
USD
      1.20    
03/29/2011
   
06/24/2011
      20,417       1       20,418       -  
Banco Itau Chile
 
Fixed term
   
USD
      1.68    
01/20/2011
   
04/20/2011
      10,072       33       10,105       -  
Total
                                                    386,850       375,057  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
60

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 6 - Inventories

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

Class of inventories
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Raw materials
    7,027       7,120  
Supplies for production
    23,886       21,398  
Products-in-progress
    303,425       291,536  
Finished products
    291,001       285,047  
Total
    625,339       605,101  

Inventory provisions recognized as of March 31, 2011 amount to ThUS$60,899 and as of December 31, 2010 amounted to ThUS$63,597. Provisions have been made based on a technical study which covers the different variables which affect products in stock (density, humidity, among others.) Additionally, provisions have been recognized for goodwill in the sale of products and inventory difference.

As of March 31, 2011, the amount recognized as expense in the statement of comprehensive income is ThUS$223,417 and as of March 31, 2010 is ThUS$200,943.

The breakdown of these provisions is as follows:

Class of inventories
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Raw materials
    1,093       1,093  
Supplies for production
    -       -  
Products-in-progress
    37,519       43,115  
Finished products
    22,287       19,389  
Total
    60,899       63,597  

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

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
61

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 7 – Related Parties: Disclosures

7.1 Disclosures on related parties

Balances pending at year-end are not guaranteed, accrue no interest and are settled in cash. No guarantees have been delivered or received for trade and other receivables due from related parties or trade and other payables due to related parties. For the period ended March 31, 2011, the Group has not recorded any impairment in receivables related to amounts owed by related parties. This evaluation is conducted every year through an examination of the financial position of the related party in the market in which it operates.

7.2  Relationships between the parent company and the entity

According to that provided in the by-laws of SQM S.A., no shareholder can concentrate more than 32% of the Company’s voting right capital.

Sociedad de Inversiones Pampa Calichera S.A. and Global Mining Investments (Chile) S.A. and collectively, the Pampa Group, are the owners of a number of shares which is equivalent to 29.44% as of March 31, 2011 of the current total amount of shares issued, subscribed and paid of SQM S.A. In addition, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A. and La Esperanza Delaware Corporation, collectively Kowa Group, are the owners of a number of shares equivalent to 2.08% of the total amount of shares issued, subscribed and paid of SQM S.A.
  
The Pampa Group and the Kowa Group have informed SQM S.A., the Chilean SVS and the pertinent stock exchanges in Chile and abroad that they are not and have never been related parties between them. In addition, this is regardless of the fact that both Groups on December 21, 2006 have subscribed a joint venture agreement with respect to those shares. Consequently, the Pampa Group, by itself, does not concentrate more than 32% of voting right capital of SQM S.A. and the Kowa Group does not concentrate by itself more than 32% of voting right capital of SQM S.A.

Likewise, the joint venture agreement has not transformed the Pampa Group and the Kowa Group in related companies between them. The joint venture agreement has only transformed the current controller of SQM S.A. composed of the Pampa Group and the Kowa Group into related parties of SQM S.A.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
62

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 7 – Related Parties: Disclosures (continued)

Detail of effective concentration

Taxpayer ID
 
Company name
 
Ownership
interest %
 
96.511.530-7  
Sociedad de Inversiones Pampa Calichera S.A.
    26.10  
96.863.960-9  
Global Mining Investments (Chile) S.A.
    3.34  
Total Pampa Group
        29.44  
             
79.798.650-k  
Inversiones la Esperanza (Chile)  Ltda.
    1.40  
59.046.730-8  
Kowa Co Ltd.
    0.30  
96.518.570-4  
Kochi S.A.
    0.29  
59.023.690-k  
La Esperanza Delaware Corporation
    0.09  
Total Kowa Group
        2.08  

7.3
Intermediate parent company and companies controlled by SQM S.A. which publicly issue financial statements

The following intermediate parent companies prepare public financial statements:

Soquimich Comercial S.A.

7.4  Detailed identification of the link between the parent company and the subsidiary as of March 31, 2011 and December 31, 2010

   
Participation percentage in subsidiary
as of March 31, 2011 and December 31, 2010
 
Subsidiary
 
Direct
%
   
Indirect
%
   
Total
%
 
Comercial Hydro S.A.
    0.0000       60.3820       60.3820  
SQM Potasio S.A.
    99.9974       0.0000       99.9974  
SQM Nitratos S.A.
    99.9999       0.0001       100.0000  
Ajay SQM Chile S.A.
    51.0000       0.0000       51.0000  
SQMC Internacional Ltda.
    0.0000       60.6382       60.6382  
SQM Industrial S.A.
    99.9954       0.0046       100.0000  
Isapre Norte Grande Ltda.
    1.0000       99.0000       100.0000  
Almacenes y Depósitos Ltda.
    1.0000       99.0000       100.0000  
Serv. Integrales de Tránsitos y Transferencias S.A.
    0.0003       99.9997       100.0000  
Soquimich Comercial S.A.
    0.0000       60.6383       60.6383  
SQM Salar S.A.
    18.1800       81.8200       100.0000  
Minera Nueva Victoria S.A.
    99.0000       1.0000       100.0000  
Proinsa Ltda.
    0.0000       60.5800       60.5800  
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
    0.0000       100.0000       100.0000  
Exploraciones Mineras S.A.
    0.2691       99.7309       100.0000  
Nitratos Naturais Do Chile Ltda.
    0.0000       100.0000       100.0000  
Nitrate Corporation of Chile Ltd.
    0.0000       100.0000       100.0000  
SQM North America Corporation.
    40.0000       60.0000       100.0000  
SQM Europe N.V.
    0.8600       99.1400       100.0000  
Soquimich SRL Argentina
    0.0000       100.0000       100.0000  
Soquimich European Holding B.V.
    0.0000       100.0000       100.0000  
SQM Corporation N.V.
    0.0001       99.9999       100.0000  
Agrorama Callegari Ltda.
    0.0000       42.4468       42.4468  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
63

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
  
Note 7 – Related Parties: Disclosures (continued)

7.4  Detailed identification of the link between the parent company and the subsidiary as of March 31, 2011 and December 31, 2010 (continued)
 
   
Participation percentage in subsidiary
as of March 31, 2011 and December 31, 2010
 
Subsidiary
 
Direct
%
   
Indirect
%
   
Total
%
 
SQI Corporation N.V.
    0.0159       99.9841       100.0000  
SQM Comercial de Mexico S.A. de C.V.
    1.0000       99.0000       100.0000  
North American Trading Co.
    0.0000       100.0000       100.0000  
Administración y Servicios Santiago S.A. de C.V.
    0.0200       99.9800       100.0000  
SQM Peru S.A.
    0.9800       99.0200       100.0000  
SQM Ecuador S.A.
    0.0040       99.9960       100.0000  
SQM Nitratos Mexico S.A.
    0.0000       51.0000       51.0000  
SQMC Holding Corporation L.L.P.
    0.1000       99.9000       100.0000  
SQM Investment Corporation N.V.
    1.0000       99.0000       100.0000  
SQM Brasil Limitada.
    2.7900       97.2100       100.0000  
SQM France S.A.
    0.0000       100.0000       100.0000  
SQM Japan Co Ltd.
    1.0000       99.0000       100.0000  
Royal Seed Trading A.V.V.
    1.6700       98.3300       100.0000  
SQM Oceania Pty Limited.
    0.0000       100.0000       100.0000  
Rs Agro Chemical Trading A.V.V.
    98.3300       1.6700       100.0000  
SQM Indonesia S.A.
    0.0000       80.0000       80 .0000  
SQM Virginia L.L.C.
    0.0000       100.0000       100.0000  
SQM Venezuela S.A.
    0.0000       100.0000       100.0000  
SQM Italia SRL
    0.0000       100.0000       100.0000  
Comercial Caiman Internacional S.A.
    0.0000       100.0000       100.0000  
SQM Africa Pty. Ltd.
    0.0000       100.0000       100.0000  
SQM Lithium Specialties LLP.
    0.0000       100.0000       100.0000  
Fertilizantes Naturales S.A.
    0.0000       66.6700       66.6700  
Iodine Minera B.V.
    0.0000       100.0000       100.0000  
SQM Agro India Pvt. Ltd.
    0.0000       100.0000       100.0000  
SQM Beijin Comercial Co. Ltd.
    0.0000       100.0000       100.0000  

7.5 Detail of related parties and transactions with related parties

Transactions between the Company and its subsidiaries are part of the Company's common transactions. Their conditions are customary to this type of operations in respect to terms and market price. In addition, these have been eliminated in consolidation and are not detailed in this note.

Expiration conditions for each case vary by virtue of the transaction which generated them.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
64

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 7 – Related Parties: Disclosures (continued)

7.5 Detail of related parties and transactions with related parties (continued)

Taxpayer ID
 
Company
 
Relationship
 
Country of
origin
 
Transaction
description
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Foreign
 
Doktor Tarsa Tarim Sanayi As
 
Associate
 
Turkey
 
Sale of products
    11,413       12,460  
Foreign
 
Ajay Europe S.A.R.L.
 
Associate
 
France
 
Sale of products
    6,350       22,150  
Foreign
 
Ajay Europe S.A.R.L.
 
Associate
 
France
 
Dividends
    -       628  
Foreign
 
Ajay North America LLC.
 
Associate
 
United States
 
Sale of products
    9,642       35,502  
Foreign
 
Ajay North America LLC.
 
Associate
 
United States
 
Dividends
    454       -  
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
Associate
 
United Arab Emirates
 
Sale of products
    1,966       12,384  
Foreign
 
Kowa Company Ltd.
 
Entity with joint control
 
Japan
 
Sale of products
    24,183       94,611  
Foreign
 
NU3 B.V.
 
Associate
 
The Netherlands
 
Sale of products
    5,174       12,921  
Foreign
 
NU3 B.V.
 
Associate
 
The Netherlands
 
Sale of services
    26       102  
Foreign
 
NU3 N.V.
 
Associate
 
Belgium
 
Sale of products
    3,821       12,590  
Foreign
 
SQM Thailand Co. Ltd.
 
Associate
 
Thailand
 
Sale of products
    -       1,613  
Foreign
 
Misr Speciality Fertilizers
 
Associate
 
Egypt
 
Sale of products
    -       502  
77.557.430-5
 
Sales de Magnesio Ltda
 
Associate
 
Chile
 
Sale of products
    -       834  
77.557.430-5
 
Sales de Magnesio Ltda
 
Associate
 
Chile
 
Sale of services
    -       353  
78.062.420-5
 
Minera Saskatchewan Ltda      ( PCS )
 
Other related party
 
Chile
 
Sale of services
    -       423  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
65

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 7 – Related Parties: Disclosures (continued)

7.6 Trade and other receivables due from related parties, current:

Taxpayer ID
 
Company
 
Relationship
 
Country of origin
 
Currency
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
77.557.430-5  
Sales de Magnesio Ltda.
 
Associate
 
Chile
 
Chilean peso
    77       106  
96.511.530-7  
Soc.de Inversiones Pampa Calichera
 
Entity with joint control
 
Chile
 
U.S. dollar
    8       8  
79.049.778-9  
Callegari Agrícola S.A.
 
Other related party
 
Chile
 
Chilean peso
    74       6  
Foreign
 
Doktor Tarsa Tarim Sanayi AS
 
Associate
 
Turkey
 
U.S. dollar
    3,754       -  
Foreign
 
Nutrisi Holding N.V.
 
Associate
 
Belgium
 
Euro
    1,729       1.618  
Foreign
 
Ajay Europe S.A.R. L.
 
Associate
 
France
 
U.S. dollar
    3,341       2.043  
Foreign
 
Ajay North America LLC.
 
Associate
 
United States
 
U.S. dollar
    6,084       2.666  
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
Associate
 
United Arab Emirates
 
U.S. dollar
    4,162       4.517  
Foreign
 
NU3 B.V.
 
Associate
 
The Netherlands
 
Euro
    2,694       1.083  
Foreign
 
Misr Speciality Fertilizers
 
Associate
 
Egypt
 
U.S. dollar
    -       335  
Foreign
 
Kowa Company Ltd.
 
Entity with joint control
 
Japan
 
U.S. dollar
    21,146       23.134  
Foreign
 
SQM Thailand Co. Ltd.
 
Associate
 
Thailand
 
U.S. dollar
    709       656  
Foreign
 
Qingdao SQM-Star Corp
 
Entity with joint control
 
China
 
U.S. dollar
    223       -  
Foreign
 
SQM Vitas Brasil Agroindustria
 
Entity with joint control
 
Brazil
 
U.S. dollar
    4,280       -  
Total to the present date
                48,281       36,172  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
66

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 7 – Related Parties: Disclosures (continued)

7.7 Trade and other payables due to related parties, current:

Taxpayer ID
 
Company
 
Relationship
 
Country of origin
 
Currency
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Foreign
 
Doktor Tarsa Tarim Sanayi AS
 
Associate
 
Turkey
 
U.S. dollar
    -       73  
Foreign
 
NU3 N.V.
 
Associate
 
Belgium
 
U.S. dollar
    1,153       270  
Foreign
 
SQM Vitas
 
Joint venture
 
United Arab Emirates
 
UAE dirham
    2,599       2.614  
Foreign
 
Coromandel Fertilizers Limited
 
Joint venture
 
India
 
Indian rupee
    617       581  
Total to the present date
                4,369       3,538  

As of March 31, 2011 and March 31, 2010 , there are no provisions for doubtful debts relative to balances pending for transactions with related parties given that there is no impairment in them.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
67

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 7 – Related Parties: Disclosures (continued)

7.8 Board of directors and senior management
 
1)
Board of Directors

SQM S.A. is managed by a Board of Directors which is composed of eight regular directors who are elected for a four-year period. The present Board of Directors was elected by the shareholders at the Ordinary Shareholders' Meeting of April 30, 2008.

As of March 31, 2011, the Company has an Audit Committee which is composed of three members of the Board of Directors. This Committee performs those duties provided in Article 50 bis of Law No. 18,046, the Public Company Act.

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

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
68

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 7 – Related Parties: Disclosures (continued)

2)
Directors’ Compensation

2.1  2010

2.1.1 Board of Directors
 
Director’s compensation is detailed as follows:
 
a)
A payment of a monthly fixed gross amount of UF 300 in favor of SQM Chairman and UF 50 in favor of the seven remaining board members regardless of their attendance to Board meetings or the number of meetings to which they attend.
 
b)
A payment in domestic currency and in favor of the Chairman of the Board of Directors consisting in variable and gross amount equivalent to 0.35% of total profit for the period which SQM S.A. effectively obtains during fiscal year 2011.
 
c)
A payment in domestic currency in favor of each Company’s directors excluding the Chairman of the Board, consisting of variable and gross amount equivalent to 0.04% of the total profit for the period which SQM S.A. effectively obtain during fiscal year 2011.
 
d)
Fixed and variable amounts indicated will not be subject to any charge between them and those expressed in percentage will be paid immediately after the shareholders at the respective Annual General Shareholders’ Meeting of SQM approve the balance, financial statements, annual report, report by the account inspectors and report of external auditors for the commercial year ending December 31, 2011.
 
e)
Accordingly, remuneration and profit-sharing paid to the members of the Board of Directors during 2011 amount to ThUS$ 76.
 
2.1.2 Audit Committee
 
The remuneration of the Audit Committee is detailed as follows:
 
a)
A payment of a monthly, fixed and gross amount of UF 17 in favor of each of the 3 Directors who are a part of the Company’s Audit Committee regardless of the number of meetings which are conducted during the respective month.
 
b)
A payment in domestic currency and in favor of each of the 3 Directors of a variable and gross amount equivalent to 0.0013% of the Company’s total profit for the period,  which SQM S.A. effectively obtains during fiscal year 2011.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
69

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 7 – Related Parties: Disclosures (continued)

2010

2.2.1 Board of Directors
 
Director’s compensation is detailed as follows:
 
a)
A payment of a monthly fixed gross amount of UF 300 in favor of SQM Chairman and UF 50 in favor of the seven remaining board members regardless of their attendance to Board meetings or the number of meetings to which they attend.
 
b)
A payment in domestic currency and in favor of the Chairman of the Board of Directors consisting in variable and gross amount equivalent to 0.35% of total profit for the period which SQM S.A. effectively obtains during fiscal year 2010.
 
c)
A payment in domestic currency in favor of each Company’s directors excluding the Chairman of the Board, consisting of variable and gross amount equivalent to 0.04% of the total profit for the period which SQM S.A. effectively obtain during fiscal year 2010.
 
d)
Fixed and variable amounts indicated will not be subject to any charge between them and those expressed in percentage will be paid immediately after the shareholders at the respective Annual General Shareholders’ Meeting of SQM approve the balance, financial statements, annual report, report by the account inspectors and report of external auditors for the commercial year ending December 31, 2010.
 
e)
Accordingly, remuneration and profit-sharing paid to the members of the Board of Directors during 2010 amount to ThUS$ 2,869.
 
2.2.2 Audit Committee
 
The remuneration of the Audit Committee is detailed as follows:
 
a)
A payment of a monthly, fixed and gross amount of UF 17 in favor of each of the 3 Directors who are a part of the Company’s Audit Committee regardless of the number of meetings which are conducted during the respective month.
 
b)
A payment in domestic currency and in favor of each of the 3 Directors of a variable and gross amount equivalent to 0.0013% of the Company’s total profit for the period,  which SQM S.A. effectively obtains during fiscal year 2010.

 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
70

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
  
Note 7 – Related Parties: Disclosures (continued)

3) No guarantees have been constituted in favor of directors.

4) Senior Management remuneration

As of March 31, 2011, the overall remuneration paid to the 112 main executives amounts to ThUS$9,236. (ThUS$21,809 as of December 31,. 2010.) This includes monthly fixed remuneration and variable performance bonuses.

SQM S.A. for its executives has defined interim and bi-interim bonus plan related to goal achievement and level of individual contribution to the Company’s income. These incentives are structured in a minimum and maximum of gross remuneration which are paid once a year or every two years.

5) Additionally, the Company has retention bonuses for the Company’s executives. The amount of these bonuses is linked to the price of the Company’s share and is payable in cash between 2011 and 2016 (see Note 16).

6) No guarantees have been constituted in favor of the Company’s management.

7) The Company’s Managers and Directors do not receive or have not received any benefit during the 4th quarter ended as of March 31, 2011 or retribution for the concept of pensions, life insurance, paid time off, profit sharing, incentives, benefits due to disability other than those mentioned in the preceding numbers.

8) In accordance with IAS 24  we must inform that our Director Wolf Von Appen B. is a part of the Ultramar Group. As of March 31, 2011, the amount of operations with this Group is approximately ThUS$1,119 (ThUS$11,532 as of December 31, 2010).

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
71

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 - Financial Instruments

In accordance with IAS 39, financial assets are detailed as follows:

8.1
Classes of other financial assets

Classes of other financial assets
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Other current financial assets (1)
    41,455       69,818  
Derivative instruments (2)
    9,126       1,363  
Hedging assets, current
    3,813       4,997  
Total other financial assets, current
    54,394       76,178  
                 
Other non-current financial assets(3)
    116       118  
Hedging assets, non-current
    79,630       92,556  
Total other financial assets, non-current
    79,746       92,674  

 
(1)
Relates to time deposits which expire in more than 90 days from the investment date.

 
(2)
Relate to forwards and options which were not classified as hedging instruments (see Note 8.3).

 
(3)
Relate to guarantees delivered for the lease of offices and investments in Sociedad Garantizadora de Pensiones (ownership of 3%).

Detail of other current financial assets

Bank
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Banco Santander
    20,932       -  
Banco BBVA
    20,523       -  
Banco de Crédito e Inversiones
    -       36,251  
Banco de Chile
    -       10,333  
Corpbanca
    -       18,031  
Banco Itau Chile
    -       5,203  
Total
    41,455       69,818  

8.2
Trade and other receivables

a)
Trade and other receivables, net:

Description of the class of trade and other
receivables. net:
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Trade and other receivables current, net
    397,911       375,945  
Trade receivables
    373,291       350,720  
Other receivables
    24,620       25,225  
Trade and other receivables non-current, net
    973       1,102  
Other receivables
    973       1,102  
Total
    398,884       377,047  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
72

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 - Financial Instruments (continued)
 
8.2
Trade and other receivables (continued)

b)
Trade and other receivables, gross:

Classes of trade and other receivables, gross
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Trade and other receivables current, gross
    417,075       394,827  
                 
Trade receivables
    390,411       367,545  
Other receivables
    26,664       27,282  
                 
Trade and other receivables non-current, gross
    973       1,102  
                 
Other receivables
    973       1,102  
                 
Total to the present date
    418,048       395,929  

c)
Detail of financial assets past due and not paid but not impaired

Financial assets past due. not paid but not impaired are composed of the following: Trade and other receivables as of March 31, 2011 and December 31, 2010.
 
                     
Balances as of
03/312011
 
Financial assets
 
Expiring in
less than
three
months
ThUS$
   
Expiring
between
three and
six months
ThUS$
   
Expiring
between six
and twelve
months
ThUS$
   
Expiring in
more than
twelve
months
ThUS$
   
Total
ThUS$
 
                               
Trade and other receivables
    48,592       3,078       2,269       17,300       71,239  
Total
    48,592       3,078       2,269       17,300       71,239  
 
                     
Balances as of
12/312011
 
Financial assets
 
Expiring in
less than
three months
ThUS$
   
Expiring
between three
and six
months
ThUS$
   
Expiring
between six
and twelve
months
ThUS$
   
Expiring in
more than
twelve
months
ThUS$
   
Total
ThUS$
 
                               
Trade and other receivables
    54,203       1,911       28,689       4,108       88,911  
Total
    54, 203       1,911       28,689       4,108       88,911  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
73

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 - Financial Instruments (continued)
 
8.2 Trade and other receivables (continued)
 
d)
Detail of impaired financial assets

At the end of each period, the financial assets included in trade and other receivables have been subject to value impairment tests and there are indications of impairment in the value of these.
The Company and its subsidiaries record an allowance for doubtful accounts when in the Company’s management’s opinion, all collection means have been depleted or there are certain doubts as to the recovery of trade and other receivables.
 
Financial assets
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Trade and other receivables
    (19,164 )     (18,882 )
Balance
    (19,164 )     (18,882 )

Reconciliation of variations in the provision for impairment of trade and other receivables.

   
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Opening balance
    18.882       17.083  
Impairment for the period
    557       2.028  
Write-offs
    (173 )     (118 )
Exchange difference
    (102 )     (111 )
                 
Total
    19.164       18.882  

e)
Credit risk concentration

Credit risk concentrations related to trade receivables is reduced due to the significant number of entities composing the Company’s customer base and its distribution worldwide.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
74

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
  
Note 8 - Financial Instruments (continued)
 
8.2 Trade and other receivables (continued)
 
The Company’s policy is to require guarantee (such as bank drafts, guarantee clauses and others) and/or maintaining insurance policies for certain accounts as deemed necessary by the Company’s Management. Renegotiated debts are immaterial and are limited to debtors in Chile.

Trade receivables
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Gross debt receivables
    418,048       395,929  
Past due debt
    (71,239 )     (88,911 )
Impaired debt
    (19,164 )     (18,882 )
                 
Debt pending expiration and free of impairment
    327,645       288,136  
 
8.2
Hedging assets

The balance relates to derivative financial instruments measured at fair value, which have been classified as foreign currency translation hedging and interest rate hedges associated with all the Company’s obligations related to bonds payable in Chilean pesos and in UF. As of March 31, 2011, the face value of cross currency swap contracts amounted to ThUS$410,618, as of December 31, 2010 amounted to ThUS$410,618.

Hedging assets.
current 
 
Derivative
instruments 
(CCS)
   
Effect on profit or
loss for the
period, derivative
Instruments
   
Hedging reserve
in equity, gross
   
Deferred
income
Hedging
reserve in
equity
   
Hedging
reserve in
equity
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                               
March 31, 2011
    83,443       (10,346 )     (13,993 )     2,466       (11,527 )
                                         
December 31, 2010
    97,553       46,936       (11,093 )     1,886       (9,207 )

Balances in the column, Effects on profit or loss consider the interim effects of contracts which were in force as of March 31, 2011 and December 31, 2010.

The detail of expiration dates of hedges by bond series is as follows:

Series
   
Agreement
amount 
ThUS$
 
Currency
 
Expiration date
C       82,104  
UF
 
12/01//2026
G       33,673  
Ch$
 
01/05/2014
H       146,360  
UF
 
01/05/2013
I       56,041  
UF
 
04/01/2014
J       92,440  
Ch$
 
04/01/2014

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
75

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 - Financial Instruments (continued)
 
8.3
Hedging assets (continued)

The Company uses cross currency swap derivative instruments to hedge the possible financial risk associated with the volatility of the exchange rate associated with Chilean pesos and UF. The objective is hedging the exchange rate financial risks associated with bonds payable. Hedges are documented and tested to measure its effectiveness.

Based on a comparison of critical terms, hedging is highly effective given that the hedged amount is consistent with obligations maintained for bonds denominated in Chilean pesos and UF. Likewise, hedging contracts are denominated in the same currencies and have the same expiration dates of bond principal payments.

Hedge accounting

SQM classifies derivative instruments as hedges which may include derivatives or embedded derivatives, either as fair value hedging derivative instruments, cash flow derivative instruments or net hedging derivative instruments in business abroad.

a) Fair value hedges

The change in the derivative instruments denominated at fair values which qualify as fair value hedging instruments are recorded immediately in profit or loss together with any change in the fair value of the hedged item attributable to the hedged risk.

The Company documents the relationship between hedging instruments and the hedged item together with the objectives of its risk management and its strategy to perform different hedging transactions. In addition, at the beginning of the hedge and then quarterly the Company documents whether the hedge has been efficient in its objective of hedging market variations for which we use an effectiveness test. Cash is considered the hedging instrument in the event that the test obtains an effectiveness result between 80% and 120%.

Effectiveness tests show results which make consider hedge as effective or ineffective. To-date, effectiveness tests have defined hedges as effective. This note presents the detail of fair values of derivative instruments qualified as hedges.

b) Cash flow hedges

These hedge the variation of cash flows attributed to a risk associated, in particular, to a transaction with high probability of execution, which may have material effects on the Company’s profit or loss. To-date, the Company has not classified any such hedges.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
76

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 - Financial Instruments (continued)
 
8.3
Hedging assets (continued)
 
c) Net investment hedge in a business abroad
 
To the present date, the Company has not classified any amount hedges related to the interest by the entity presenting its financial statements in the business net assets.

8.4
Financial liabilities
 
As of March 31, 2011 and December 31, 2010, financial liabilities are detailed as follows:
 
Classes of interest-bearing loans
 
03/31//2011
ThUS$
   
12/31//2010
ThUS$
 
             
Current interest-bearing loans
           
             
Bank loans (a)
    143,133       150,958  
Derivative instruments (8.6)
    14,781       18,353  
Current hedging liabilities
    -       -  
Unsecured obligations (b)
    20,510       18,244  
Total
    178,424       187,555  
                 
Non-current interest-bearing loans
               
                 
Bank loans (c)
    140,000       140,000  
Non-current hedging liabilities
    -       -  
Unsecured obligations (d)
    940,499       950,188  
Total
    1,080,499       1,090,188  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
77

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 8 - Financial Instruments (continued)
8.4
Financial liabilities (continued)

a)
Current bank loans:

As of March 31, 2011 and 2010, the breakdown is as follows:

                                                
03/31/2011
 
                       
Type of
                 
Current maturities
 
                       
currency
                  
 
   
Between 91
       
                       
or
                 
Up to 90
   
days and 1
       
Debtor
 
Creditor
 
adjustment
 
Type of
 
Effective
   
Nominal
    days    
year
   
Total
 
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer ID
 
Financial institution
 
Country
 
index
 
repayment
 
rate
   
rate
   
ThUS$
   
ThUS$
   
ThUS$
 
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
JP Morgan Chase Bank
 
United States
 
USD
 
Expiration date
    0.60 %     0.60 %     20,007       -       20,007  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    2.55 %     2.55 %     1,517       -       1,517  
79.626.800-K
 
SQM  Salar S.A.
 
Chile
  97.018.000-1  
Scotiabank Sud Americano
 
Chile
 
USD
 
Expiration date
    0.75 %     0.75 %     20,033       -       20,033  
79.947.100-0
 
SQM  Industrial S.A.
 
Chile
  97.004.000-5  
Banco de Chile
 
Chile
 
USD
 
Expiration date
    0.73 %     0.73 %     20,034       -       20,034  
Foreign
 
Royal Seed Trading
Corporation A.V.V.
 
Aruba
 
Foreign
 
ING Capital LLC
 
United States
 
USD
 
Expiration date
    1.37 %     0.80 %     215       80,000       80,215  
Foreign
 
Fenasa
 
Spain
 
Foreign
 
Other banks
 
Spain
 
Euro
 
Expiration date
    3.01 %     3.01 %     -       1,377       1,377  
Total
                                                61,806       81,377       143,183  
Borrowing costs
                                            -       (50 )     (50 )
Total
                                                    61,806       81,327       143,133  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
78

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 - Financial Instruments (continued)
8.4
Financial liabilities (continued)
 
                        
 
                 
12/31/2010
 
                       
Type of
                 
Current maturities
 
                       
currency
                 
 
   
Between 91
       
                       
or
                 
Up to 90
   
days and 1
       
Debtor
 
Creditor
 
adjustment
 
Type of
 
Effective
   
Nominal
    days    
year
   
Total
 
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer ID
 
Financial institution
 
Country
 
index
 
repayment
 
rate
   
rate
   
ThUS$
   
ThUS$
   
ThUS$
 
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    3.93 %     3.77 %     20,214       -       20,214  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    3.93 %     3.77 %     10,104       -       10,104  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    2.55 %     2.55 %     -       625       625  
93.007.000-9
 
SQM S.A.
 
Chile
  97.032.000-8  
BBVA Banco Bilbao Vizcaya Argentaria
 
Chile
 
USD
 
Expiration date
    0.64 %     0.64 %     20,030       -       20,030  
93.007.000-9
 
SQM S.A.
 
Chile
  97.032.000-8  
BBVA Banco Bilbao Vizcaya Argentaria
 
Chile
 
USD
 
Expiration date
    0.26 %     0.26 %     20,000       -       20,000  
Foreign
 
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
Foreign
 
ING Capital LLC
 
United States
 
USD
 
Expiration date
    1.00 %     0.80 %     -       80,055       80,055  
Total
                                                70,348       80,680       151,028  
Borrowing costs
                                            -       (70 )     (70 )
Total
                                                70,348       80,610       150,958  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
79

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 8 -  Financial Instruments (continued)
8.4
Financial liabilities (continued)

b)
Unsecured obligations, current:

As of March 31, 2011 and December 31, 2010, current unsecured interest-bearing obligations detailed by promissory notes and bonds, is as follows:

Bonds
 
                   
 
           
 
           
 
 
03/31/2011
Current maturities
 
   
   
 
No. of
     
Placed
 
Currency
           
Periodicity
       
Between 91
       
Debtor
 
Placement in
 
registration or
 ID of the
 
 
 
face
outstanding
 
or
adjustment
 
Effective
   
 
 
Payment of
     
Up to 90
days
   
days and 1
year
   
Total
 
Taxpayer ID
 
Subsidiary
 
Country
 
Chile or abroad
 
instrument
 
Series
 
value
 
unit
 
rate
   
Nominal rate
 
interest
 
Amortization
 
ThUS$
   
ThUS$
   
ThUS$
 
93.007.000-9
 
SQM S.A
 
Chile
 
Foreign
     
Single
    -  
US$
    6.79 %     6.13 %
Semi-annual
 
Expiration date
    5,620       -       5,620  
93.007.000-9
 
SQM S.A
 
Chile
 
Foreign
     
Single
    -  
US$
    5.92 %     5.50 %
Semi-annual
 
Expiration date
    6,082       -       6,082  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446   C     150,000  
UF
    6.63 %     4.00 %
Semi-annual
 
Semi-annual
    4,786       3,376       8,162  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    564   H     -  
UF
    6.43 %     4.90 %
Semi-annual
 
Semi-annual
    -       2,047       2,047  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563   G     -  
Ch$
    6.19 %     7.00 %
Semi-annual
 
Expiration date
    -       708       708  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563   I     -  
UF
    5.88 %     3.00 %
Semi-annual
 
Expiration date
    -       -       -  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563   J     -  
Ch$
    5.37 %     5.50 %
Semi-annual
 
Expiration date
    -       -       -  
               
Total
            16.488       6,131       22,619  
               
Bond issuance costs
            (1,834 )     (275 )     (2,109 )
               
Total
            14,654       5,856       20,510  

The effective rates for bonds in Chilean pesos and UFs are expressed and calculated in USD based on agreed flows under Cross Currency Swaps.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
80

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 8 -  Financial Instruments (continued)
8.4
Financial liabilities (continued)

                                         
03/31/2011
 
         
   
          
   
 
  
                 
Current maturities
 
                 
No. of
          
Placed
 
Currency
             
  
 
  
   
Between 91
       
       
registration or
         
face
 
or
           
Periodicity
 
Up to 90
    days and 1        
Debtor
 
Placement in
 
 ID of the
         
outstanding
 
adjustment
 
Effective
   
   
 
Payment of
       
days
   
year
   
Total
 
Taxpayer ID
 
Subsidiary
 
Country
 
Chile or abroad
 
instrument
   
Series
   
value
 
unit
 
rate
   
Nominal rate
 
interest
 
Amortization
 
ThUS$
   
ThUS$
   
ThUS$
 
93.007.000-9
 
SQM S.A
 
Chile
 
Foreign
       
Single
      -  
US$
    6.79 %     6.13 %
Semi-annual
 
Expiration date
    -       2,591       2,591  
93.007.000-9
 
SQM S.A
 
Chile
 
Foreign
       
Single
      -  
US$
    5.92 %     5.50 %
Semi-annual
 
Expiration date
    -       2,682       2,682  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446     C       150,000  
UF
    6.63 %     4.00 %
Semi-annual
 
Semi-annual
    -       7,237       7,237  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    564     H       -  
UF
    6.43 %     4.90 %
Semi-annual
 
Semi-annual
    4,319       -       4,319  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563     G       -  
Ch$
    6.19 %     7.00 %
Semi-annual
 
Expiration date
    1,502       -       1,502  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563     I       -  
UF
    5.88 %     3.00 %
Semi-annual
 
Expiration date
    -       512       512  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563     J       -  
Ch$
    5.37 %     5.50 %
Semi-annual
 
Expiration date
    -       1,508       1,508  
               
Total
            5,821       14,530       20.351  
               
Bond issue costs
            (270 )     (1,837 )     (2,107 )
                    
Total
            5,551       12,693       18,244  

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

As of March 31, 2011 and December 31, 2010, the detail is as follows:

Interest-bearing bank loans, non-current

                                    
03/31/2011
       
    
 
 
 
Currency
                 
Years to maturity
       
Debtor
 
Creditor
 
 or
 
 
                     
      
   
     
   
Over 5
   
 
 
               
Financial
     
adjustment
 
Type of
  Effective     Nominal    
1-3 years
   
3-5 years
    years    
Total
 
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer ID
 
institution
 
Country
 
unit
 
repayment
 
rate
   
rate
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                                                 
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    2.55 %     2.55 %     -       140,000       -       140,000  
Total
                                                -       140,000       -       140,000  
Borrowing costs
                                            -       -       -       -  
Total
                                                -       140,000       -       140,000
 

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
81

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 8 -  Financial Instruments (continued)
8.4
Financial liabilities (continued)

                           
03/31/2011
       
    
 
   
 
Currency
                 
Years to maturity
       
Debtor
  Creditor  
 of 
 
     
             
    
   
  
   
Over 5
   
    
 
                Financial       adjustment   Type of   Effective     Nominal     1-3 years     3-5 years     years    
Total
 
Taxpayer ID
 
Subsidiary
 
Country
 
Taxpayer ID
 
institution
 
Country
 
unit
 
repayment
 
rate
   
rate
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                                                             
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
 
Banco Estado NY Branch
 
United States
 
USD
 
Expiration date
    2.55 %     2.55 %     -       140,000       -       140,000  
Total
                                                -       140,000       -       140,000  
Borrowing costs
                                            -       -       -       -  
Total
                                                -       140,000       -       140,000
 

d)
Unsecured interest-bearing obligations, non-current

As of March 31, 2011 and December 3, 2010, the breakdown of these obligations is as follows:
 
                                                 
03/31/2011
 
               
No. of
             
Currency
           
Periodicity
 
Non-current maturities
 
   
Placement
 
registration
         
Placed face
 
or
           
Payment
                 
Over 5
       
Debtor
 
in Chile or
 
or ID of the
         
outstanding
 
adjustment
 
Effective
   
Nominal
 
of
     
1-3 years
   
3-5 years
   
years
   
Total
 
Taxpayer ID
 
Subsidiary
 
Country
 
abroad
 
instrument
   
Series
   
value
 
unit
 
rate
   
rate
 
interest
 
Amortization
 
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                                                           
93.007.000-9
 
SQM S.A
 
Chile
 
Foreign
       
Single
      200,000,000  
US$
    6.79 %     6.13 %
Semi-annual
 
Expiration date
    -       -       200,000       200,000  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
       
Single
      250,000,000  
US$
    5.92 %     5.50 %
Semi-annual
 
Expiration date
    -       -       250,000       250,000  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446     C       2,250,000  
UF
    6.63 %     4.00 %
Semi-annual
 
Semi-annual
    13,504       13,504       74,270       101,278  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    564     H       4,000,000  
UF
    6.43 %     4.90 %
Semi-annual
 
Semi-annual
    -       -       180,049       180,049  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563     G       21,000,000,000  
Ch$
    6.19 %     7.00 %
Semi-annual
 
Expiration date
    43,806               -       43,806  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563     I       1,500,000  
UF
    5.88 %     3.00 %
Semi-annual
 
Expiration date
    -       67,518       -       67,518  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563     J       52,000,000,000  
Ch$
    5.37 %     5.50 %
Semi-annual
 
Expiration date
    -       108,472       -       108,472  
               
Total
    57,310       189,494       704,319       951,123  
               
Bond issue costs
    (238 )     (1,801 )     (8,585 )     (10,624 )
               
Total
    57,072       187,693       695,734       940,499  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
82

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 8 -  Financial Instruments (continued)
8.4
Financial liabilities (continued)

                                                 
03/31/2011
 
               
No. of
             
Currency
           
Periodicity
 
Non-current maturities
 
   
Placement
 
registration
         
Placed face
 
or
           
Payment
                 
Over 5
       
Debtor
 
in Chile or
 
or ID of the
         
outstanding
 
adjustment
 
Effective
   
Nominal
 
of
     
1-3 years
   
3-5 years
   
years
   
Total
 
Taxpayer ID
 
Subsidiary
 
Country
 
abroad
 
instrument
   
Series
   
value
 
unit
 
rate
   
rate
 
interest
 
Amortization
 
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                                                                         
93.007.000-9
 
SQM S.A
 
Chile
 
Foreign
       
Single
      200,000,000  
US$
    6.79 %     6.13 %
Semi-annual
 
Expiration date
    -       -       200,000       200,000  
93.007.000-9
 
SQM S.A.
 
Chile
 
Foreign
       
Single
      250,000,000  
US$
    5.92 %     5.50 %
Semi-annual
 
Expiration date
    -       -       250,000       250,000  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    446     C       2,325,000  
UF
    6.63 %     4.00 %
Semi-annual
 
Semi-annual
    13,755       13,755       75,654       103,164  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    564     H       4,000,000  
UF
    6.43 %     4.90 %
Semi-annual
 
Semi-annual
    -       -       183,402       183,402  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563     G       21,000,000,000  
Ch$
    6.19 %     7.00 %
Semi-annual
 
Expiration date
    -       44,877       -       44,877  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563     I       1,500,000  
UF
    5.88 %     3.00 %
Semi-annual
 
Expiration date
    -       68,776       -       68,776  
93.007.000-9
 
SQM S.A
 
Chile
 
Chile
    563     J       52,000,000,000  
Ch$
    5.37 %     5.50 %
Semi-annual
 
Expiration date
            111,124       -       111,124  
               
Total
            13,755       238,532       709,056       961,343  
               
Bond issue costs
            (682 )     (2,670 )     (7,803 )     (11,155 )
               
Total
            13,073       235,862       701,253       950,188  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
83

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 8 -  Financial Instruments (continued)
8.4
Financial liabilities (continued)

e)
Additional Information

-
Bonds

As of March 31, 2011 and December 31, 2010, ThUS$20,510 and  ThUS$18,244, respectively are presented at short-term related to principal, short-term portion plus interest accrued at that date, not including  bonds issuance costs. In the non-current period, the Company presented ThUS$940,499 as of March 31, 2011 and ThUS$950,188 as of December 31, 2010 related to principal installments of Series C bonds, unique Series bonds, Series G bonds, Series I bonds, Series J bonds, and single series second issue bonds.

As of March 31, 2011 and December 31, 2010, the detail of each issue is as follows:

Series “C” bonds

On January 25, 2006, the Company placed Series C bonds for UF 3,000,000 (ThUS$101,918) at an annual rate of 4.00%

As of March 31, 2011 and December 31, 2010, the following cash payments have been made with a debit to Series C bonds:

Payments made
 
03/31/2011
   
12/31/2010
 
   
ThUS$
   
ThUS$
 
Payments of principal
    -       6,298  
Payments of interest
    -       4,175  

Single Series Bonds

On April 5, 2006, the Company placed Single Series bonds for ThUS$200,000 at an annual rate of 6.125%  under "Rule 144 and regulation S of the U.S. Securities Act of 1933."

As of March 31, 2011 and December 31, 2010, the following cash payments have been made with a debit to Single Series bonds:

   
03/31/2011
ThUS$
   
12/31/02010
ThUS$
 
Payments of interest
    -       12,250  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
84

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 8 -  Financial Instruments (continued)
8.4
Financial liabilities (continued)

Series “G” and “H” bonds

On January 13, 2009, the Company placed two bond series in the domestic market. Series H for UF 4,000,000 (ThUS$139,216) at an annual interest rate of 4.9% at a term of 21 years with payment of principal beginning in 2019 and Series G for ThCh$ 21,000,000 (ThUS$34,146) which was placed at a term of 5 years with single payment at the expiration of the term and annual interest rate of 7%.

As of March 31, 2011 and December 31, 2010, the following cash payments have been made with a charge to the Series G and H bonds line:

   
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Payments of interest, Series  G
    1,551       2,750  
Payments of interest, Series  H
    4,459       7,763  

Series “J” and “I” Bonds

On May 8, 2009, the Company placed two bond series in the domestic market. Series J for ThCh$52,00,000 (ThUS$92,456) which was placed at a term of 5 years with single payment at the expiration date of the term and annual interest rate of 5.5% and Series I for UF 1,500,000 (ThUS$56,051) which was placed at a term of 5 years with single payment at the expiration of the term and annual interest rate of 3.00%.

As of March 31, 2011 and December 31, 2010, the following cash payments have been made with a debit to Series J and I bonds:

   
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Payments of interest, Series  J
    2,926       5,588  
Payments of interest, Series  I
    1,000       1,873  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
85

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 -  Financial Instruments (continued)
8.4
Financial liabilities (continued)

Single Series second issue bonds

On April 21, 2010, the Company informed the Chilean Superintendence of Securities and Insurance of its placement in international markets of an unsecured bond of ThUS$250,000 expiring in 10 years beginning on the aforementioned date with annual interest rate of 5.5% and destined to refinance long-term liabilities.

As of March 31, 2011 and December 31, 2010, the following payments have been made with a debit to the single Series second issue bonds:

   
03/310/2011
ThUS$
   
12/31/2010
ThUS$
 
Payments of interest
    -       6,875  

-
Commercial papers (promissory notes)

On March 24, 2009, the Company placed promissory notes totaling ThCh$15,000,000 (ThUS$25,875) in the Chilean market. These notes are denominated Series 2-A, line 46 and mature in 10 years. The maximum amount that can be issued is UF 1,500,000.

On December 15, 2009, the Company repaid Series 2-A.

On April 2, 2009, the Company placed promissory notes totaling ThCh$15,000,000 (ThUS$25,770) in the Chilean market. These notes are denominated Series 1-B, line 47 and mature in 10 years. The maximum amount that can be issued is UF 1,500,000.

Payments made
 
2011
   
2010
 
   
ThCh$
   
ThUS$
   
ThCh$
   
ThUS$
 
Payments of principal, Series 1-B
    -       -       15,000,000       29,040  

8.5
Trade and other payables

Class of trade and other payables
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Class of trade and other payables, current
           
             
Trade payables
    148,739       151,516  
Rentals
    118       207  
Other payables
    555       424  
Total
    149,412       152,147  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
86

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 -  Financial Instruments (continued)
 
8.5
Trade and other payable (continued)

Class of trade and other payables, non-current
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Trade payables
    135       -  
Total
    135       -  

8.6
Financial liabilities at fair value through profit or loss

This balance relates to derivative instruments measured at their fair value, which has generated balances against the Company. The detail by type of instrument is as follows:

Financial liabilities at fair value
through profit or loss
 
03/31/2011
   
Effect on
profit or loss
as of
03/31/2011
   
12/31/2010
   
Effect on
profit or loss
as of
12/31/2010
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                         
Current
                       
Derivative instruments (forwards)
    10,583       (10,583 )     15,818       (15,818 )
Derivative instruments  (options)
    4,197       (4,197 )     2,535       (2,535 )
      14,780       (14,780 )     18,353       (18,353 )

Balances in the column effect on profit or loss consider the annual affects of agreements which were in force as of March 31, 2011.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
87

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 -  Financial Instruments (continued)
 
8.7
Financial asset and liability categories 
 
Description of financial assets
 
03/31/2011
Amount
ThUS$
   
12/31/2010
Amount
ThUS$
 
Financial assets designated at fair value through profit or loss
    92,569       98,916  
Financial assets held for trading
    41,455       69,818  
Investments held to maturity
    116       118  
Loans and receivables
    398,884       377,047  
 Financial assets available for sale
    -       -  
Total financial assets
    533,024       545,899  
 
Description of financial liabilities 
 
03/31/2011
Amount
ThUS$
   
12/31/2010
Amount
ThUS$
 
Financial liabilities designated at fair value through profit or loss
    14,781       18,353  
Total financial liabilities held for trading
    -       -  
Financial liabilities measured at amortized cost
    1,393,689       1,411,537  
Total financial liabilities
    1,408,470       1,429,890  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
88

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 -  Financial Instruments (continued)

8.8
Financial assets pledged as guarantee

On November 4, 2004, Isapre Norte Grande maintains a guarantee equivalent to the total amount owed to its members and healthcare providers, which is managed and maintained by Banco de Chile.
 
On October 15, 2009, SQM Brazil directly provided a guarantee to governmental entities related to legal processes under development which note has been issued by BBVA Bancomer S.A.

As of March 31, 2011 and December 31, 2010, assets pledged as guarantees are as follows:
 
Restricted cash
 
03/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Isapre Norte Grande Ltda.
    505       514  
SQM Brasil Limitada
    -       -  
Total
    505       514  
 
8.9
Estimated fair value of financial instruments and derivative financial instruments
 
As required by IFRS, the following information is presented for the disclosure of the estimated fair value of financial assets and liabilities.
 
Although inputs represent Management's best estimate, they are subjective and involve significant estimates related to the current economic and market conditions, as well as risk features.
 
Methodologies and assumptions used depend on the risk terms and characteristics of instruments and include the following as a summary:
 
 
-
Cash equivalent approximates fair value due to the short-term maturities of these instruments.
 
-
Other current financial liabilities are considered at fair value equal to their carrying values.
 
-
For interest-bearing liabilities with original maturity of more than a year, fair values are calculated at discounting contractual cash flows at their original current market rates with similar terms.
 
-
For forward and swap contracts, fair value is determined using quoted market prices of financial instruments with similar characteristics.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
89

 
   
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 -  Financial Instruments (continued)

8.9
Estimated fair value of financial instruments and derivative financial instruments (continued)

The detail of the Company’s instruments at carrying value and estimated fair value is as follows:
 
   
03/31/2011
   
12/31/2010
 
   
Carrying
amount
   
(*) Fair
value
   
Carrying
amount
   
(*) Fair
value
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Cash and cash equivalents
    563,815       563,815       524,652       524,652  
Current trade and other receivables
    397,911       397,911       375,945       375,945  
Other current financial assets:
                               
- Time deposits
    41,455       41,455       69,818       69,818  
- Derivative instruments
    9,126       9,126       1,363       1,363  
- Current hedging assets
    3,813       3,813       4,997       4,997  
Total other current financial assets
    54,394       54,394       76,178       76,178  
Other non-current financial assets:
    116       116       118       118  
Non-current hedging assets
    79,630       79,630       92,556       92,556  
Total other non-current financial assets
    79,746       79,746       92,674       92,674  
Other current financial liabilities:
                               
- Bank loans
    143,133       143,133       150,958       150,958  
- Derivative instruments
    14,781       14,781       18,353       18,353  
- Hedging liabilities
    -       -       -       -  
- Unsecured liabilities
    20,510       20,510       18,244       18,244  
Total other current financial liabilities
    178,424       178,424       187,555       187,555  
Trade payables, current and non-current
    149,547       149,547       152,147       152,147  
Other non-current financial liabilities:
                               
- Bank loans
    140,000       138,640       140,000       143,174  
- Unsecured liabilities
    940,499       1,059,512       950,188       1,092,026  
Total other non-current financial liabilities
    1,080,499       1,198,152       1,090,188       1,235,200  

Fair value hierarchy

In accordance with IFRS 7 paragraph 27 a and b provides the obligation of disclosing the hierarchy level used to determine the value measurement techniques. Fair value hierarchies correspond to:
 
 
-
Level 1: when only quoted (unadjusted) prices have been used in active markets.
 
 
-
Level 2: when in a phase in the valuation process variable other than prices quoted in Level 1 have been used which are directly observable in markets.
 
 
-
Level 3: when in a phase in the valuation process variable which are not based in observable market data have been used.
 
The valuation technique used to determine the fair value of our hedging instruments are those indicated in level  2.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
90

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 8 -  Financial Instruments (continued)

8.10
Nature and scope of risks arising from financing instruments

As indicated in paragraphs 33 to 42 of IFRS 7 the disclosure of information associated with the nature and scope of risks arising from financial instruments is presented in Note 3 - Financial Risk Management.

Note 9 -  Investments and disclosures on companies included in consolidation

9.1
Disclosures on investments in subsidiaries

 
a)
Operations executed in 2011

As of March 31, 2011, there are no investments in subsidiaries.
 
 
b)
Operations executed in 2010

On February 2, 2010, the subsidiary SQM Beijin Comercial was formed to which Soquimich Industrial S.A. contributed capital of ThUS$100 obtaining equity interest of 100% in that entity
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
91

 
  
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 9 -  Investments and disclosures on companies included in consolidation (continued)

Below, we detail the financial information as of March 31, 2011 of those companies on which the Group has significant influence.

03/31/2011
 
                 
Asset
   
Liability
          Net profit  
Subsidiary
 
Country of
incorporation
 
Functional
currency
 
Equity interest
%
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
(loss) for
the period
ThUS$
 
SQM Nitratos S.A.
 
 Chile
 
USD
    100       723,417       64,656       788,073       665,529       11,331       676,860       52,365       18,777  
Proinsa Ltda.
 
 Chile
 
Ch$
    60.58       220       1       221       -       -       -       -       (1 )
SQMC Internacional Ltda.
 
 Chile
 
Ch$
    60.6382       291       -       291       -       -       -       -       (3 )
SQM Potasio S.A.
 
 Chile
 
USD
    99.9974       59,390       657,075       716,465       2       175,385       175,387       -       50,262  
Serv. Integrales de Tránsito y Transf. S.A.
 
 Chile
 
USD
    100       161,962       62,836       224,798       195,921       4,870       200,791       9,975       1,571  
Isapre Norte Grande Ltda.
 
 Chile
 
Ch$
    100       516       577       1,093       517       155       672       850       6  
Ajay SQM Chile S.A.
 
 Chile
 
USD
    51       15,103       1,898       17,001       5,116       894       6,010       13,680       894  
Almacenes y Depósitos Ltda.
 
 Chile
 
Ch$
    100       402       51       453       1       -       1       -       (3 )
SQM Salar S.A.
 
Chile
 
USD
    100       424,396       713,262       1,137,658       312,802       105,145       417,947       166,225       67,763  
SQM Industrial S.A.
 
Chile
 
USD
    100       1,180,980       616,721       1,797,701       966,260       50,088       1,016,348       174,083       27,227  
Minera Nueva Victoria S.A.
 
Chile
 
USD
    100       74,420       53,746       128,166       958       2,289       3,247       342       888  
Exploraciones Mineras S.A.
 
Chile
 
USD
    100       440       31,393       31,833       3,879       -       3,879       -       (51 )
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
 
Chile
 
Ch$
    100       621       84       705       199       367       566       448       (3 )
Soquimich Comercial S.A.
 
Chile
 
USD
    60.6383       146,764       15,585       162,349       53,740       1,165       54,905       21,109       304  
Agrorama Callegari Ltda.
 
Chile
 
Ch$
    42.4468       5,477       1,465       6,942       5,354       251       5,605       2,080       (30 )
Comercial Hydro S.A.
 
Chile
 
Ch$
    60.6382       6,823       315       7,138       24       78       102       26       (70 )
SQM North America Corp.
 
United States
 
USD
    100       125,100       15,410       140,510       104,782       2,644       107,426       67,261       800  
RS Agro Chemical Trading A.V.V.
 
Aruba
 
USD
    100       5,227       -       5,227       -       -       -       -       -  
Nitratos Naturais do Chile Ltda.
 
Brazil
 
USD
    100       2,047       295       2,342       7,130       -       7,130       -       (62 )
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
92

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 9 -  Investments and disclosures on companies included in consolidation (continued)

03/31/2011
 
                 
Asset
   
Liability
          Net profit  
Subsidiary
 
Country of
incorporation
 
Functional
currency
 
 
Equity interest
%
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Revenue
ThUS$
   
(loss) for
the period
ThUS$
 
Nitrate  Corporation of Chile Ltd.
 
United Kingdom
 
USD
    100       5,076       -       5,076       -       -       -       -       -  
SQM Corporation N.V.
 
Dutch Antilles
 
USD
    100       669       60,298       60,967       3,714       -       3,714       -       7,690  
SQM Peru S.A.
 
Peru
 
USD
    100       10,178       197       10,375       10,155       -       10,155       5,015       (394 )
SQM Ecuador S.A.
 
Ecuador
 
USD
    100       9,101       75       9,176       8,191       -       8,191       7,015       347  
SQM Brasil Ltda.
 
Brazil
 
USD
    100       270       69       339       1,183       -       1,183       156       (33 )
SQI Corporation NV.
 
Dutch Antilles
 
USD
    100       -       12       12       36       -       36       -       (1 )
SQMC Holding Corporation L.L.P.
 
United States
 
USD
    100       1,760       9,016       10,776       540       -       540       -       1,163  
SQM Japan Co. Ltd.
 
Japan
 
USD
    100       1,353       616       1,969       158       427       585       476       12  
SQM Europe N.V.
 
Belgium
 
USD
    100       364,970       300       365,270       345,542       -       345,542       242,847       2,488  
SQM Italia SRL
 
Italy
 
USD
    100       1,464       -       1,464       19       -       19       -       -  
SQM Indonesia S.A.
 
Indonesia
 
USD
    80       5       -       5       1       -       1       -       (1 )
North American Trading Company
 
United States
 
USD
    100       161       145       306       39       -       39       -       -  
SQM Virginia LLC
 
United States
 
USD
    100       14,834       14,379       29,213       14,834       -       14,834       -       -  
SQM Comercial de Mexico S.A. de C.V.
 
Mexico
 
USD
    100       65,694       1,314       67,008       70,369       321       70,690       43,803       (2,891 )
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
93

 
  
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 9 - Investments and disclosures on companies included in consolidation (continued)

3/31/2011
 
                 
Asset
   
Liability
             
Subsidiaries
 
Country of
Incorporation 
 
Functional 
Currency
 
Ownership %
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Ordinary
profit
ThUS$
   
Net Profit
(loss)
ThUS$
 
SQM investment Corporation N.V.
 
Netherlands Antilles
 
USD
    100       67,632       524       68,156       51,140       772       51,912       1,950       (5,151 )
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
USD
    100       90,775       -       90,775       96,289       -       96,289       -       2,547  
SQM Lithium Specialties LLP
 
United States
 
USD
    100       15,786       3       15,789       1,264       -       1,264       -       -  
Soquimich SRL Argentina
 
Argentina
 
USD
    100       459       -       459       106       -       106       -       (10 )
Comercial Caimán Internacional S.A.
 
Panama
 
USD
    100       419       -       419       1,192       -       1,192       -       (31 )
SQM France S.A.
 
France
 
USD
    100       345       6       351       114       -       114       -       -  
Administración y Servicios Santiago S.A. de C.V.
 
Mexico
 
USD
    100       145       -       145       1,085       203       1,288       845       (141 )
SQM Nitratos México S.A. de C.V.
 
Mexico
 
USD
    51       25       2       27       16       -       16       37       -  
Soquimich European Holding B.V.
 
The Netherlands
 
USD
    100       73,051       80,279       153,330       100,435       -       100,435       -       7,353  
Fertilizantes Naturales S.A.
 
Spain
 
USD
    66.67       23,376       (11 )     23,365       21,476       -       21,476       18,968       559  
Iodine Minera B.V.
 
The Netherlands
 
USD
    100       10,971       -       10,971       4       -       4       66       846  
SQM Africa Pty Ltd.
 
South Africa
 
USD
    100       37,473       161       37,634       32,664       -       32,664       22,393       3,112  
SQM Venezuela S.A.
 
Venezuela
 
USD
    100       80       -       80       403       -       403       -       (157 )
SQM Oceania Pty Ltd.
 
Australia
 
USD
    100       2,080       -       2,080       934       -       934       684       208  
SQM  Agro India Pvt. Ltd.
 
India
 
USD
    100       231       4       235       149       -       149       -       2  
SQM Beijin Commercial Co. Ltd.
 
China
 
USD
    100       183       35       218       103       -       103       500       16  
Total
                    3,732,162       2,402,794       6,134,956       3,084,369       356,385       3,440,754       853,199       185,802  
  
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
94

 
  
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 9 - Investments and disclosures on companies included in consolidation (continued)
 
Below, we detail the financial information as of December 31, 2010 of those companies on which the Group exerts significant influence
 
12/31/2010
 
                 
Asset
   
Liability
             
Subsidiaries
 
Country of
incorporation
 
Functional
currency
 
Ownership %
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Ordinary
profit
ThUS$
   
Net profit
(loss)
ThUS$
 
SQM Nitratos S.A.
 
 Chile
 
USD
    100       652,776       61,542       714,318       610,283       11,599       621,882       134,842       29,622  
Proinsa Ltda.
 
 Chile
 
Ch$
    60.58       227       1       228       -       -       -       -       -  
SQMC Internacional Ltda.
 
 Chile
 
Ch$
    60.6382       302       -       302       -       -       -       -       (2 )
SQM Potasio S.A.
 
 Chile
 
USD
    99.9974       58,331       604,872       663,203       2       172,351       172,353       -       139,838  
Serv. Integrales de Tránsito y Transf. S.A.
 
 Chile
 
USD
    100       149,255       60,290       209,545       182,671       4,437       187,108       45,446       10,113  
Isapre Norte Grande Ltda.
 
 Chile
 
Ch$
    100       570       591       1,161       581       154       735       4,018       20  
Ajay SQM Chile S.A.
 
 Chile
 
USD
    51       15,299       2,378       17,677       6,833       747       7,580       54,948       2,049  
Almacenes y Depósitos Ltda.
 
 Chile
 
Ch$
    100       413       52       465       1       -       1       -       (13 )
SQM Salar S.A.
 
Chile
 
USD
    100       365,830       658,793       1,024,623       273,758       98,885       372,643       631,151       185,315  
Comercial Hydro S.A.
 
Chile
 
Ch$
    60.6382       6,890       329       7,219       40       73       113       185       217  
SQM Industrial S.A.
 
Chile
 
USD
    100       1,063,080       596,723       1,659,803       854,130       51,512       905,642       690,541       130,230  
Minera Nueva Victoria S.A.
 
Chile
 
USD
    100       73,217       53,754       126,971       445       2,495       2,940       1,578       4,369  
Exploraciones Mineras S.A.
 
Chile
 
USD
    100       438       31,380       31,818       3,814       -       3,814       -       (178 )
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.
 
Chile
 
Ch$
    100       645       93       738       224       367       591       1,897       (3 )
Soquimich Comercial S.A.
 
Chile
 
USD
    60.6383       140,678       15,875       156,553       48,195       1,181       49,376       171,181       10,107  
Agrorama Callegari Ltda.
 
Chile
 
Ch$
    42.4468       5,024       1,492       6,516       4,998       117       5,115       6,910       (293 )
SQM North America Corp.
 
United States
 
USD
    100       109,944       15,448       125,392       90,533       2,644       93,177       226,249       8,143  
RS Agro Chemical Trading A.V.V.
 
Aruba
 
USD
    100       5,227       -       5,227       -       -       -       -       (5 )
Nitratos Naturais do Chile Ltda.
 
Brazil
 
USD
    100       5       290       295       5,022       -       5,022       -       (124 )
  
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
95

 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 9 - Investments and Disclosures on companies included in consolidation (continued)
 
12/31/2010
 
                 
Asset
   
Liability
             
Subsidiaries
 
Country of
incorporation
 
Functional
currency
 
Ownership %
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Ordinary
profit
ThUS$
   
Net profit
(loss)
ThUS$
 
Nitrate  Corporation of Chile Ltd.
 
England
 
USD
    100       5,076       -       5,076       -       -       -       -       -  
SQM Corporation N.V.
 
Netherlands Antilles
 
USD
    100       669       52,607       53,276       3,712       -       3,712       -       13,472  
SQM Peru S.A.
 
Peru
 
USD
    100       15,159       483       15,642       15,027       -       15,027       24,536       1,236  
SQM Ecuador S.A.
 
Ecuador
 
USD
    100       8,716       71       8,787       8,149       -       8,149       16,808       298  
SQM Brazil Ltda.
 
Brazil
 
USD
    100       295       75       370       1,180       -       1,180       771       17  
SQI Corporation NV.
 
Netherlands Antilles
 
USD
    100       -       10       10       33       -       33       -       -  
SQMC Holding Corporation L.L.P.
 
United States
 
USD
    100       1,501       8,498       9,999       619       -       619       -       492  
SQM Japan Co. Ltd.
 
Japan
 
USD
    100       1,440       633       2,073       263       436       699       1,855       218  
SQM Europe N.V.
 
Belgium
 
USD
    100       358,214       454       358,668       341,425       -       341,425       861,596       7,107  
SQM Italia SRL
 
Italy
 
USD
    100       1,377       -       1,377       17       -       17       -       -  
SQM Indonesia S.A.
 
Indonesia
 
USD
    80       5       -       5       1       -       1       -       -  
North American Trading Company
 
United States
 
USD
    100       161       145       306       39       -       39       -       -  
SQM Virginia LLC
 
United States
 
USD
    100       14,834       14,379       29,213       14,834       -       14,834       -       (1 )
SQM Comercial de México S.A. de C.V.
 
Mexico
 
USD
    100       58,332       1,410       59,742       60,646       -       60,646       130,861       (1,523 )
  
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
96

 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 9 - Investments and Disclosures on companies included in consolidation (continued)
 
12/31/2010
 
                 
Asset
   
Liability
             
Subsidiaries
 
Country of
incorporation
 
Functional
currency
 
Ownership %
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Ordinary
profit
ThUS$
   
Net profit
(loss)
ThUS$
 
SQM investment Corporation N.V.
 
Netherlands Antilles
 
USD
    100       71,100       551       71,651       49,515       742       50,257       14,255       587  
Royal Seed Trading Corporation A.V.V.
 
Aruba
 
USD
    100       88,567       -       88,567       96,627       -       96,627       -       (9,058 )
SQM Lithium Specialties LLP
 
United States
 
USD
    100       15,786       3       15,789       1,264       -       1,264       -       (1 )
Soquimich SRL Argentina
 
Argentina
 
USD
    100       472       -       472       109       -       109       -       (83 )
Comercial Caimán Internacional S.A.
 
Panama
 
USD
    100       339       -       339       1,080       -       1,080       -       (174 )
SQM France S.A.
 
France
 
USD
    100       345       6       351       114       -       114       -       -  
Administración y Servicios Santiago S.A. de C.V.
 
Mexico
 
USD
    100       47       -       47       854       195       1,049       2,597       (173 )
SQM Nitratos México S.A. de C.V.
 
Mexico
 
USD
    51       27       1       28       17       -       17       128       4  
Soquimich European Holding B.V.
 
The Netherlands
 
USD
    100       68,722       71,384       140,106       94,565       -       94,565       -       12,481  
Fertilizantes Naturales S.A.
 
Spain
 
USD
    66.67       16,515       (10 )     16,505       15,175       -       15,175       64,748       749  
Iodine Minera B.V.
 
The Netherlands
 
USD
    100       10,122       -       10,122       1       -       1       1,467       1,175  
SQM Africa Pty Ltd.
 
South Africa
 
USD
    100       38,463       147       38,610       36,736       -       36,736       94,111       149  
SQM Venezuela S.A.
 
Venezuela
 
USD
    100       80       -       80       402       -       402       -       (161 )
SQM Oceania Pty Ltd.
 
Australia
 
USD
    100       1,466       -       1,466       533       -       533       2,207       120  
SQM  Agro India Pvt. Ltd.
 
India
 
USD
    100       231       4       235       149       -       149       -       (14 )
SQM Beijin Commercial Co. Ltd.
 
China
 
USD
    100       131       42       173       77       -       77       1,462       (4 )
Total
                    3,426,343       2,254,796       5,681,139       2,824,693       347,935       3,172,628       3,186,348       546,318  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
97

 
 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 10 - Investment in associated companies recognized using the equity method of accounting

10.1            Investment in associated companies recognized using the equity method of accounting

As of March 31, 2011 and December 31, 2010 in accordance with criteria established in Note 2.4 and Note 2.12, investment in associated companies accounted for using the equity method and investments in business combinations are as follows:

 
Note
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
               
Investments in associated companies
11.1 to 11.3
    40,908       38,262  
Business combination
12.0  to 12.4
    26,136       24,009  
                   
Total
      67,044       62,271  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
98

 

Notes to the interim consolidated financial statements as of March 31, 2011

10.2            Assets, liabilities, revenue and ordinary expenses of associates

                     
3/31/2011
                                     
                     
Asset
               
Liability
                   
TAX ID No.
 
Associated company 
 
Country of
incorporation
 
Functional currency
 
Current 
ThUS$
   
Non-
current
ThUS$$
   
Total
ThUS$
   
Current 
ThUS$
   
Non-
current 
ThUS$
   
Total
ThUS$
   
Ordinary
income
ThUS$
   
Net Income
(loss)
ThUS$
 
 77.557.430-5  
Sales de Magnesio Ltda.
 
Chile
 
Chilean Peso
    3,893       3       3,896       885       -       885       1,730       371  
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
Arabia
 
United Arab Emirates
Dirham
    20,053       2,159       22,212       7,404       -       7,404       8,746       677  
Foreign
 
Doktor Tarsa Tarim Sanayi AS
 
Turkey
 
Turkish Lira
    51,010       7,845       58,855       34,558       13       34,571       12,312       1,510  
Foreign
 
Nutrisi Holding N.V.
 
Belgium
 
Euro
    542       12,835       13,377       268       3,414       3,682       -       1,202  
Foreign
 
Ajay North America
 
United States
 
US $ Dollar
    20,185       7,580       27,765       9,366       -       9,366       16,458       1,982  
Foreign
 
Nutrichem Benelux
 
Belgium
 
Euro
    -       -       -       -       -       -       -       -  
Foreign
 
Ajay Europe SARL
 
France
 
Euro
    19,151       2,459       21,610       8,951       -       8,951       -       711  
Foreign
 
Generale De Nutrition
 
Belgium
 
Euro
    -       -       -       -       -       -       -       -  
Foreign
 
Mirs Specialty Fertilizers
 
Egypt
 
Egyptian pound
    3,014       3,214       6,228       2,980       226       3,206       -       -  
Foreign
 
SQM Eastmed Turkey
 
Turkey
 
Euro
    22       542       564       244       -       244       607       (36 )
Foreign
 
SQM Thailand Co. Ltd.
 
Thailand
 
Thai Bath
    6,491       570       7,061       3,202       -       3,202       1,873       59  
   
Total
            124,361       37,207       161,568       67,858       3,653       71,511       41,726       6,476  
 
                     
12/31/2010
                                     
                     
Asset
               
Liability
         
Ordinary
   
Net Income
 
TAX ID No.
 
Associated company 
 
Country of
incorporation
 
Functional currency
 
Current 
ThUS$
   
Non-
current
ThUS$$
   
Total
ThUS$
   
Current
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$$
   
income 
ThUS$
Total
ThUS$
   
(loss)
ThUS$
Current
ThUS$
 
77.557.430-5  
 Sales de Magnesio Ltda.
 
Chile
 
Chilean Peso
    3,844       3       3,847       1,143       -       1,143       6,494       1,408  
Foreign
 
Abu Dhabi Fertilizer Industries WWL
 
Arabia
 
United Arab Emirates
Dirham
    19,909       2,092       22,001       7,869       -       7,869       35,506       1,960  
Foreign
 
Doktor Tarsa Tarim Sanayi AS
 
Turkey
 
Turkish Lira
    49,013       7,840       56,853       33,229       27       33,256       64,540       8,003  
Foreign
 
Nutrisi Holding N.V.
 
Belgium
 
Euro
    449       10,768       11,217       3,228       -       3,228       -       3,056  
Foreign
 
Ajay North America
 
United States
 
US $ Dollar
    15,585       6,926       22,511       5,168       -       5,168       52,237       4,143  
Foreign
 
Nutrichem Benelux
 
Belgium
 
Euro
    -       -       -       -       -       -       -       -  
Foreign
 
Ajay Europe SARL
 
France
 
Euro
    15,428       2,223       17,651       6,519       -       6,519       41,992       2,212  
Foreign
 
Generale De Nutrition
 
Belgium
 
Euro
    -       -       -       -       -       -       -       -  
Foreign
 
Mirs Specialty Fertilizers
 
Egypt
 
Egyptian pound
    3,013       3,214       6,227       2,980       226       3,206       4,231       (521 )
Foreign
 
SQM Eastmed Turkey
 
Turkey
 
Euro
    34       592       626       247       -       247       646       -  
Foreign
 
SQM Thailand Co. Ltd.
 
Thailand
 
Thai Bath
    5,307       587       5,894       2,035       -       2,035       11,149       594  
   
Total
            112,582       34,245       146,827       62,418       253       62,671       216,795       20,855  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
99

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 10 - Investment in associated companies recognized using the equity method of accounting (continued)

10.3           Detail of investments in associates

    The Company’s ownership in its associated companies is detailed as follows:

Associated company
Main activities of the associated company
 
Ownership %
   
Investment
3/31/2011
ThUS$
   
Investment
12/31/2010
ThUS$
 
Sales de Magnesio Ltda.
 Commercialization of magnesium salts.
    50 %     1,505       1,352  
Abu Dhabi Fertilizer Industries Co. W.W.L.
 Distribution and commercialization of specialty plant nutrients in the Middle East.
    50 %     7,404       7,066  
Ajay North America L.L.C
 Production and commercialization of iodine derivatives.
    49 %     7,660       7,251  
Doktor Tarsa Tarim Sanayi AS
 Distribution and commercialization of specialty plant nutrients in Turkey.
    50 %     12,142       11,799  
Nutrisi Holding N.V.
Holding company
    50 %     4,218       3,551  
Ajay Europe SARL
Production and distribution of iodine and iodine derivatives
    50 %     4,840       4,076  
NU3 B.V.
Production of liquid and solid fertilizers
    100 %     -       -  
NU3 N.V.
Production of liquid and solid fertilizers
    50 %     -       -  
Mirs Specialty Fertilizers S.A.E.
Production and commercialization of specialty liquid fertilizers for Egypt.
    47.4857 %     1,435       1,435  
SQM Eastmed Turkey
 Production and commercialization of specialty products.
    50 %     160       189  
SQM Thailand Co. Ltd.
 Distribution and commercialization of specialty plant nutrients.
    40 %     1,544       1,543  
Total
              40,908       38,262  

The Company has no participation in unrecognized losses in investments in associated companies.

The Company has no associated companies not recognized using the equity method

The equity method was applied on balance sheets as of March 31, 2011.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
100

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 11- Joint Ventures

11.1
Policy for the accounting for joint ventures in a Parent Company’s separate financial statements

The method for the recognition of joint ventures in which participation initially is recorded at cost and subsequently adjusted considering changes after the acquisition in the portion of the entity’s net assets of the entity which correspond to the investor. Profit for the period investor will collect the portion which belongs to it in the results of the controlled entity as a whole.

11.2
Disclosures on interest in joint ventures

 
a)
Operations conducted in 2011

On January 27, 2011, the subsidiary SQM Industrial S.A. increased its capital in ThUS$2,500, in Sichuan SQM Migao Chemical Fertilizer Co.

 
b)
Operations conducted in 2010

On March 4, 2010, SQM Industrial signed an agreement with Qingdao Star Plant Protection Technology Co., Ltd., through which the companies formed a joint venture SQM Qingdao-Star Co, Ltd. Each party contributed capital amounting of ThUS$2,000 for share of 50%.

On June 24, 2010, SQM Industrial S.A. conducted a contribution amounting to ThUS$2,500 in SQM Migao Sichuan.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
101

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 11 - Policy and information to be disclosed on ownerships in Joint Ventures (continued)

11.3
Detail of assets, liabilities and profit or loss on significant investments in joint ventures by company as of March 31, 2011 and as of December 31, 2010, respectively:

         
3/31/2011
                                           
               
Asset
               
Liability
                     
Profit (loss)
 
TAX ID No.
Associated
 
Country of
incorporation
Functional currency
 
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Profits
ThUS$
   
Expenses
ThUS$
   
for the
period
ThUS$
 
Foreign
Sichuan SQM Migao Chemical Fertilizers Co Ltda.
China
US $ Dollar
    7,397       11,096       18,493       5,264       -       5,264       94       (286 )     (192 )
Foreign
Coromandel SQM
India
Indian Rupee
    438       433       871       11       -       11       27       (37 )     (10 )
Foreign
SQM Vitas
U.A.Emirates
U.A.E. Dirham
    27,155       9,377       36,532       895       -       895       7,447       (5,987 )     1,460  
Foreign
SQM Qindao-Star Co. Ltda.
China
US $ Dollar
    3,198       371       3,569       1,502       -       1,502       960       (920 )     40  
 
Total
        38,188       21,277       59,465       7,672       -       7,672       8,528       (7,230 )     1,298  

         
12/31/2010
                                           
               
Asset
               
Liability
                     
Profit (loss)
 
TAX ID No.
Associated
Country of
incorporation
Functional currency
 
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Current
ThUS$
   
Non-
current
ThUS$
   
Total
ThUS$
   
Profits
ThUS$
   
Expenses
ThUS$
   
for the
period
ThUS$
 
Foreign
Sichuan SQM Migao Chemical Fertilizers Co Ltda.
China
US $ Dollar
    2,987       11,677       14,664       3,744       -       3,744       -       (46 )     (46 )
Foreign
Coromandel SQM
India
Indian Rupee
    10       862       872       7       -       7       3       -       3  
Foreign
SQM Vitas
U.A.Emirates
U.A.E. Dirham
    27,534       9,499       37,033       2,828       -       2,828       19,954       (18,756 )     1,198  
Foreign
SQM Qindao-Star Co. Ltda.
China
US $ Dollar
    2,448       387       2,835       808       -       808       2,900       (2,873 )     27  
 
Total
        32,979       22,425       55,404       7,387       -       7,387       22,857       (21,675 )     1,182  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
102

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Nota 11 -  Policy and information to be disclosed on ownerships in Joint Ventures (continued)
 
11.4
Detail of the amount of gain (loss) net of investments in significant joint ventures by company:

Associated company name
Main activities of the associated
 
Ownership %
   
Investment
3/31/2011
ThUS$
   
Investment
12/31/2010
ThUS$
 
                     
Coromandel SQM
Production and distribution of potassium nitrate.
    50 %     430       432  
Sichuan SQM Migao Chemical Fertilizer Co. Ltda.
Production and distribution of soluble fertilizers.
    50 %     7,839       5,461  
SQM Vitas
Production and commercialization of specialty plant and animal nutrition and industrial hygiene.
    50 %     16,833       17,102  
SQM Quindao-Star Co. Ltda.
Production and distribution of nutrient plant solutions with specialties NPK soluble.
    50 %     1,034       1,014  
Total
              26,136       24,009  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
103

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 12 -  Intangible assets and goodwill
 
12.1 Balances

   
3/31/2011
   
12/31/2010
 
Balances
 
ThUS$
   
ThUS$
 
             
Intangible assets other than goodwill
    4,260       3,270  
Goodwill
    38,388       38,388  
                 
Total
    42,648       41,658  

12.2  Disclosures on intangible assets and goodwill

Intangible assets relate to goodwill, water rights, trademarks, industrial patents, rights of way and IT programs.

Balances and movements in the main classes of intangible assets as of March 31, 2011 and   December 31, 2010 are detailed as follows:

           
3/31/2011
       
Description of classes of
intangible assets
Useful life
 
Gross 
amount
ThUS$
   
Accumulated
amortization
ThUS$
   
Net amount
ThUS$
 
                     
Goodwill
Indefinite
    39,961       (1,573 )     38,388  
Water rights
Indefinite
    3,536       (1,993 )     1,543  
Rights of way
Finite
    548       (153 )     395  
Industrial patents
Finite
    1,197       (711 )     486  
Trademarks
Finite
    3,817       (3,814 )     3  
IT programs
Finite
    2,804       (971 )     1,833  
                           
Total
      51,863       (9,215 )     42,648  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
104

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 12 -  Intangible assets and goodwill (continued)

12.2  Disclosures on intangible assets and goodwill (continued)

           
12/31/2010
       
Description of classes of
intangible assets
Useful life
 
Gross 
amount
ThUS$
   
Accumulated
amortization
ThUS$
   
Net amount 
ThUS$
 
                     
Goodwill
Indefinite
    39,961       (1,573 )     38,388  
Water rights
Indefinite
    3,536       (1,990 )     1,546  
Rights of way
Finite
    548       (152 )     396  
Industrial patents
Finite
    1,197       (696 )     501  
Trademarks
Finite
    3,817       (3,813 )     4  
IT programs
Finite
    1,664       (841 )     823  
                           
Total
      50,723       (9,065 )     41,658  

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

Finite useful life, measures the lifetime or the number of productive units or other similar which constitute its useful life.

The estimated useful life for software is 3 years for other finite useful life assets, the period in which they are amortized relate to periods defined by contracts or rights which generate them.

Indefinite useful life intangible assets mainly relate to water rights and rights of way, which were obtained as indefinite.

b)
Method used to express the amortization of identifiable intangible assets (life or rate)

The method used to express the amortization is useful life.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
105

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 12 -  Intangible assets and goodwill (continued)
 
c)
Minimum and maximum amortization lives or rates of intangible assets:
 
Estimated useful lives or amortization rate
 
Minimum life or rate
 
Maximum life or rate
         
Water rights
 
Indefinite
 
Indefinite
Rights of way
 
1 year
 
20 years
Industrial patents
 
1 year
 
16 years
Trademarks
 
1 year
 
5 years
IT programs
 
2 years
 
3 years
 
  
 
  
 
 
d)
Information to be disclosed on assets generated internally
 
Company has no intangible assets generated internally
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
106

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 12 -  Intangible assets and goodwill (continued)

e)
Movements in identifiable intangible assets as of March 31, 2011

Movements in identifiable intangible assets 
 
Net Goodwill
ThUS$
   
Water rights, 
Net ThUS$
   
Rights of way,
Net
ThUS$
   
Industrial
patents, Net
ThUS$
   
Trademarks,
Net
ThUS$
   
Computer
Software, Net
ThUS$
   
Identifiable
intangible
assets, Net
ThUS$
 
                                           
Opening  balance
    38,388       1,546       396       501       4       823       41,658  
                                                         
Additions
    -       -       -       -       -       1,200       1,200  
Amortization
    -       (3 )     (1 )     (15 )     (1 )     (190 )     (210 )
Other increases (decreases)
    -       -       -       -       -       -       -  
                                                         
Ending balance
    38,388       1,543       395       486       3       1,833       42,648  
 
f)
Movements in identifiable intangible assets as of December 31, 2010
 
Movements in identifiable intangible assets 
 
Net Goodwill
ThUS$
   
Water rights,
Net ThUS$
   
Rights of way,
Net
ThUS$
   
Industrial
patents, Net
ThUS$
   
Trademarks,
Net
ThUS$
   
Computer
Software, Net
ThUS$
   
Identifiable
intangible
assets, Net
ThUS$
 
                                           
Opening  balance
    38,388       1,549       395       570       -       322       41,224  
                                                         
Additions
    -       91       -       -       -       839       930  
Amortization
    -       (94 )     -       (69 )     (368 )     (338 )     (869 )
Other increases (decreases)
    -       -       1       -       372       -       373  
                                                         
Ending balance
    38,388       1,546       396       501       4       823       41,658  

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
107

 
 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 13 -  Property, plant and equipment

Property, plant and equipment as of March 31, 2011 and December 31, 2010 are detailed as follows:

13.1
Classes of property, plant and equipment

Description of classes of property, plant and equipment 
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Property, plants and equipment, net
           
             
Construction-in-progress
    436,194       356,551  
Land
    107,859       107,869  
Buildings
    88,674       88,320  
Plant and equipment
    479,062       492,525  
IT equipment
    3,693       3,897  
Fixed facilities and accessories
    321,971       327,511  
Motor vehicles
    48,016       48,936  
Other property, plant and equipment
    29,881       28,364  
Total
    1,515,350       1,453,973  
Property, plant and equipment, gross
               
                 
Construction-in-progress
    436,194       356,551  
Land
    107,859       107,869  
Buildings
    224,315       221,715  
Plant and equipment
    1,198,160       1,184,270  
IT equipment
    22,996       22,759  
Fixed facilities and accessories
    534,298       531,423  
Motor vehicles
    153,239       151,544  
Other property, plant and equipment
    50,083       47,910  
Total
    2,727,144       2,624,041  
                 
Accumulated depreciation and value impairment of property, plant and equipment
               
Accumulated depreciation and value impairment  of buildings
    135,641       133,395  
Accumulated depreciation and value impairment of plant and equipment
    719,098       691,745  
Accumulated depreciation and value impairment of  IT equipment
    19,303       18,862  
Accumulated depreciation and value impairment of fixed facilities and accessories
    212,327       203,912  
Accumulated depreciation and value impairment of motor vehicles
    105,223       102,608  
Accumulated depreciation and value impairment  of other
    20,202       19,546  
Total
    1,211,794       1,170,068  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
108

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 13 -  Property, plant and equipment (continued)
 
13.2
Reconciliation of changes in property, plant and equipment by class as of March 31, 2011 and as of December 31, 2010:

Reconciliation entries of
changes in property, plant
and equipment by class as
of March 31, 2011
 
Construction
in-progress
   
Land
   
Buildings,
net
   
Plant and
equipment,
net
   
IT equipment,
net
   
Fixed facilities
and
accessories,
net
   
Motor
vehicles,
net
   
Improvement
of lease fixed
assets, net
   
Other property,
plant and
equipment, net
   
Property,
plant and
equipment,
net
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                                             
Opening balance
    356,551       107,869       88,320       492,525       3,897       327,511       48,936       -       28,364       1,453,973  
                                                                                 
Changes
                                                                               
Additions
    114,993       -       -       32       12       -       59       -       4       115,100  
Divestitures
    -       -       (7 )     (36 )     (68 )     (7 )     (461 )     -       (115 )     (694 )
Depreciation expense
    -       -       (2,239 )     (27,334 )     (483 )     (8,390 )     (2,691 )     -       (992 )     (42,129 )
Increase(decrease) in foreign currency exchange
    -       (10 )     -       7       114       (11 )     (6 )     -       44       138  
Other increases (decreases)(*)
    (35,350 )     -       2,600       13,868       221       2,868       2,179       -       2,576       (11,038 )
                                                                                 
Total changes
    79,643       (10 )     354       (13,463 )     (204 )     (5,540 )     (920 )     -       1,517       61,377  
                                                                                 
Ending balance
    436,194       107,859       88,674       479,062       3,693       321,971       48,016       -       29,881       1,515,350  

(*) Net balance of other increases (decreases) corresponds to:1) expenses related to investments plan which are charged to income (forming part of operating costs or from other expenses by function, as applicable), 2) the variation represented by the acquisition and use of materials and spare-parts and 3) projects mainly related to prospecting expenditures and stain development.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
109

 

Notes to the interim consolidated financial statements as of March 31, 2011

Nota 13 -  Property, plant and equipment (continued)
 
13.2
Reconciliation of changes in property, plant and equipment by class as of March 31, 2011 and as of December 31, 2010:
(continued):

Reconciliation entries of changes in
property, plant and equipment by
class as of December 31, 2010
 
Construction
in-progress
   
Land
   
Buildings,
net
   
Plant and
equipment,
net
   
IT equipment,
net
   
Fixed
facilities and
accessories,
net
   
Motor
vehicles,
net
   
Improvement
of lease
fixed assets,
net
   
Other
property,
plant and
equipment,
net
   
Property, plant
and equipment,
net
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                                             
Opening balance
    379,416       108,356       86,252       453,859       3,853       193,893       55,341       -       19,576       1,300,546  
                                                                                 
Changes
                                                                               
Additions
    351,792       386       1,021       512       123       41       450       -       126       354,451  
Divestitures
    -       (26 )     (114 )     (3,391 )     (26 )     -       -,       -       (116 )     (3,673 )
Depreciation expense
    -       -       (9,226 )     (88,640 )     (1,537 )     (29,342 )     (11,837 )     -       (3,326 )     (143,908 )
Increase(decrease) in foreign currency exchange
    -       -       2       55       -       14       13       -       2       86  
Other increases (decreases) (*)
    (374,657 )     (847 )     10,385       130,130       1,484       162,905       4,969       -       12,102       (53,529 )
                                                                                 
Total changes
    (22,865 )     (487 )     2,068       38,666       44       133,618       (6,405 )     -       8,788       153,427  
                                                                                 
Ending balance
    356,551       107,869       88,320       492,525       3,897       327,511       48,936       -       28,364       1,453,973  

(*) Net balance of other increases (decreases) corresponds to:1) expenses related to investments plan which are charged to income (forming part of operating costs or from other expenses by function, as applicable), 2) the variation represented by the acquisition and use of materials and spare-parts and 3) projects mainly related to prospecting expenditures and stain development.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
110

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 13 -  Property, plant and equipment (continued)

 
13.3
Detail of property, plant and equipment pledged as guarantee

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

 
13.4
Additional information

Lease fixed assets
 
Investment properties include lease assets.  The detail is as follows:
 
Description of assets  
3/31/2011
   
12/31/2010
 
 
 
ThUS$
   
ThUS$
 
             
2 floors of the Las Americas Building, net
    1,365       1,373  
Total (net)
    1,365       1,373  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
111

 
 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 13 -  Property, plant and equipment (continued)
 
 
1)
Interest capitalized in construction-in-progress

The amount capitalized for this concept amounted to ThUS$ 5,232 as of March 31, 2011 and ThUS$25,947 as of December 31, 2010

Financing costs are not capitalized for periods which exceed the normal term of acquisition, construction or installation of the asset, such as the case of delays, interruptions or temporary suspension of the project due to technical, financial or other issues, which prevent that the asset is maintained in good conditions for its use.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
112

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note  14 -  Leases

14.1
Disclosure on finance lease: Lessee

The asset acquired under the financial lease agreement method relates to a contract which SQM S.A. has with Inversiones La Esperanza S.A. which began in June 1992 and ends on June 31, 2011. The agreement entered indicates 230 installments with a sum of UF 663.75 each with an annual interest rate of 8.5%.

The Company maintains financial lease arrangements as lessee for which there are no contingent installments or restrictions which should be reported.

The net amount in book value as of March 31, 2011 and December 31, 2010 amounted to ThUS$1,365 and ThUS$ 1,373, respectively.

14.2
Investment property in finance leases:
 
Description of total investment property under finance lease,   
3/31/2011
   
12/31/2010
 
net:  
ThUS$
   
ThUS$
 
             
Financial lease, Las Americas Building
    1,365       1,373  
                 
Total
    1,365       1,373  
 
14.3
Reconciliation of finance lease minimum payments , lessee:
 
The reconciliation between the total gross investment and the present value is as follows:
 
         
3/31/2011
ThUS$
               
12/31/2010
ThUS$
       
Minimum payments to be made
 
Gross
investment
   
Deferred
interest
   
Present
value
   
Gross
investment
   
Deferred
interest
   
Present
value
 
                                                 
Not exceeding one year
    120       (2 )     118       213       (6 )     207  
Subsequent to 1 year but less than 5 years
                            -       -       -  
Total
    120       (2 )     118       213       (6 )     207  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
113

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note  15  Employee benefits
 
15.1 Provisions for employee benefits

   
3/31/2011
   
12/31/2010
 
Classes of benefits and expenses by employee 
 
ThUS$
   
ThUS$
 
Currents
           
Profit sharing and bonuses
    42,666       44,011  
Total
    42,666       44,011  
                 
Non- currents
               
Profit sharing and bonuses
    2,350       800  
Severance indemnities
    27,125       27,208  
Pension Plan
    702       702  
Total
    30,177       28,710  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
114

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note  15  Employee benefits (continued)
 
 
15.2
Policies on defined benefit plan

This policy is applied to all benefits recognized received for services provided by the Company's employees.

Short-term benefits for active employees are represented by salaries, social welfare benefits, paid time-off, sickness leaves and other leaves, profit sharing and incentives and non-monetary benefits; e.g., healthcare service, housing, subsidized or free goods or services. These will be paid in a term which does not exceed twelve months.

The Company only provides compensation and benefits to active employees, except for SQM North America which is explained in 16.4.
 
For each incentive bonus delivered to the Company’s employees, there will be a disbursement in the first quarter of the following year and this will be calculated based on Profit for the period at the end of each period applying a factor obtained subsequent to the employee appraisal process.

The personnel benefits includes withholding bonds for the Company’s executives which relates to the Company’s share prices that is payable in cash, the short-term portion is expressed as current provision for employee benefits and the long-term as non-current provision for employee benefits.

The personnel benefits include a bonus provided to the Company’s directors is calculated based on Profit for the period at each year-end and will consider the application of a percentage factor.

The benefit relates to vacations (short-term (current) benefits to employees), which is provided in the Labor Code which indicates that employees with more than a year of service will be entitled to annual holidays for a period not lower than fifteen paid business days. The Company provides the benefit of two additional vacation days.

Staff severance indemnities are agreed and payable based on the last salary for each year of service for the Company or with certain maximum limits in respect to the number of years to be considered or in respect to monetary terms. In general, this benefit is payable when the employee or worker ceases to provide his/her services to the Company and the right for its collection can be acquired because of different causes, as indicated in the respective agreements; e.g., retirement, dismissal, voluntary retirement, incapacity or disability, death, etc.

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

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
115

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note  15   Employee benefits (continued)

15.3  Other long-term benefits

The other long-term benefits relate to staff severance indemnities and are recorded at their actuarial value.

   
3/31/2011
   
12/31/2010
 
Staff severance indemnities at actuarial value
 
ThUS$
   
ThUS$
 
Staff severance indemnities, Chile
    26,495       26,577  
Other obligations in companies elsewhere
    630       631  
Total other non-current liabilities
    27,125       27,208  
                 
SQM North America’s pensions plan
    702       702  
Total post employment obligations
    702       702  

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

The methodology followed to determine the accrual for all the employees adhered to agreements considers turnover and salary increase rates according to the valuation method referred to as Accumulated Benefit Valuation or Accrued Cost of the Benefit Method. This methodology is established in IAS 19.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
116

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note  15  - Employee benefits (continued)
 
About the characteristics of the indemnity fund

Under this benefit plan, the Company retains the obligation for the payment of staff severance indemnities related to retirements without establishing a separate fund with specific assets, which is referred to as not funded. The discount interest rate of expected flows to be used was 6%.

Benefit payment conditions

The staff severance indemnity benefit relates to remuneration days for year worked for the Company with no limit of salary or years of services for the Company, when employees cease to work for the Company due to turnover or death.  In this case, the maximum age for men is 65 years and 60 years old for women, which are the usual ages for retirement due to achieving the senior citizen age according to the Chilean pensions system provided in Decree Law 3,500 of 1980.

Methodology

The determination of the obligation for benefits under IAS 19, Projected Benefit Obligation (PBO) is described as follows:

To determine the Company's total liability, we used a mathematical simulation model which was programmed using a computer and which processed the situation of each employee on an individual basis.

This model considered months as discrete time; i.e., the Company determined the age of each person and his/her salary on a monthly basis according to the growth rate. Thus, information on each person was simulated from the beginning of the life of his/her employment contract or when he/she started earning benefits up to the month in which it reaches the normal retirement age, generating in each period the possible retirement according to the Company’s turnover rate and the mortality rate according to the age reached. When he/she reaches the retirement age, the employee finishes his/her service for the Company and receives indemnity related to retirement due to old age.

The methodology followed to determine the accrual for all the employees adhered to agreements has considered turnover rates and the mortality rate RV-2010 established by the Chilean Superintendence of Securities and Insurance to calculate pension-related life insurance reserves in Chile according to the Accumulated Benefit Valuation or Accrued Cost of Benefit Method. This methodology is established in IAS 19 Retirement Benefit Costs.

SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
117

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note  15  -Employee benefits (continued)

 
15.4
Employee post-retirement liabilities

Our subsidiary, SQM North America has established with its employees certain pension plans for retired employees, which are calculated measuring the expected future forecasted staff severance indemnity obligation using a net salary gradual rate of restatements for inflation, mortality and turnover assumptions discounting the resulting amounts at present value using an interest rate of 6.5%. for 2011 and 2010. The net balance of this liability is presented under non-current provisions for employee benefits.
 
The table below establishes the status of the plan financing and the amounts recognized in the consolidated balance sheet:

Reconciliation table
 
2011
   
2010
 
   
ThUS$
   
ThUS$
 
Variation in the benefit liability:
           
Benefit liability at the beginning of year
    6,792       6,792  
Cost of service
    1       1  
Interest cost
    427       427  
Actuarial loss
    (374 )     (374 )
Benefits paid
    (297 )     (297 )
Benefit liability at year-end
    6,549       6,549  
                 
Change in the plan’s assets:
               
Fair value of the plan’s assets at beginning of year
    5,082       5,082  
Contributions by the employer
    192       192  
Actual return (loss) on plan assets
    869       869  
Benefits paid
    (296 )     (296 )
Fair value of the plan assets’ at year-end
    5,847       5,847  
                 
Status of financing
    (702 )     (702 )
Items not yet recognized as net regular provisional cost elements:
               
Net actuarial loss at the beginning of year
    (3,130 )     (3,130 )
Amortization during the period
    154       154  
Net gain or loss estimated during the period
    865       865  
Adjustment made to recognize the minimum pension-related liability
    (2,111 )     (2,111 )
Accrued pension-related (liability) / prepaid pension-related cost
    (702 )     (702 )

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
118

 

 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note  15  - Employee benefits (continued)

 
15.4
Employee post-retirement liabilities
 
As of March 31, 2011 and as of December 31, 2010, the net regular pension-related expense was composed of the following elements:

   
2011
   
2010
 
Reconciliation
 
ThUS$
   
ThUS$
 
             
Costs or benefits of services earned during the period
    1       1  
Cost of interest in benefit liability
    427       423  
Actual return in plan’s assets
    (869 )     (1,173 )
Amortization of loss from prior periods
    154       198  
Net gain for the period
    492       889  
Net regular pension-related expense
    205       338  
 
As of March 31, 2011 and December 31, 2010, distributions of the plan assets by category are detailed as follows:
 
   
2011
   
2010
 
             
Growth amounts
    59 %     59 %
International amounts
    25 %     25 %
Growth and income amounts
    -       -  
Taxable bonus
    14 %     14 %
Treasury amounts
    0 %     0 %
Money market funds
    2 %     2 %
      100 %     100 %
 
 
15.5
Severance indemnities
 
Severance indemnities obligation calculated at actuarial value present the following movements:
 
   
2011
ThUS$
   
2010
ThUS$
 
Opening balance
    (27,208 )     (28,682 )
Cost of current service
    (1,228 )     (3,583 )
Cost of interest
    (424 )     (1,889 )
Actuarial gains / losses
    9       88  
Contributions paid
    1,726       6,858  
Balance as of December 31
    (27,125 )     (27,208 )
  
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
119

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note  15  - Employee benefits (continued)
 
15.5
Severance indemnities (continued)
 
The recorded liability regarding to severance indemnity is valued based on the actuarial value method, to which the following actuarial hypothesis are used:
 
   
3/31/2011
   
12/31/2010
       
Mortality table
 
RV - 2009
   
RV - 2009
       
Actual annual interest rate
    6 %     6 %      
Voluntary retirement turnover rate:
                     
Men
    0.9 %     0.9 %  
annual
 
Women
    1.53 %     1.53 %  
annual
 
Wage increase
    3.0 %     3.0 %  
annual
 
Retirement age:
                     
Men
    65       65    
years
 
Women
    60       60    
years
 
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
120

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 16 – Executive compensation plan

In order to retain the Company’s executives, SQM implemented a compensation plan. This plan operates through granting payments based on changes in the price of SQM’s shares, settled in cash, allowing these executives to exercise their right up to 2016.

Plan features
This compensation plan is linked to the Company’s performance through SQM’ Series B shares (The Santiago Stock Exchange)

Executives included in this plan:
This compensation plan considers 42 Company’s executives, which are entitled to this benefit, provided that they stay working for the Company during the implementation dates related to these options. The exercise dates of these options will be the first 7 calendar days of May of the current fiscal year.

Compensation:
The compensation of each executive corresponds to the difference between the share’s average price during April of each year compared to the base price appointed by Company’s’ management. The base price established by the Company for this compensation plan is US$ 50 per share, for those granted in 2010 and US$ 9.30 for those granted in 2005.

Method and valuation model for this compensation plan:

In order to determine the weighted average fair value of these options, the Company used the following variables:

Variables and sensitivities of
the model
 
2011
   
2010
 
Expected volatility (%)
           
Annualized for SQM (*)
    2.,51 %     21.51 %
Annualized for CLP/USD (*)
    10.00 %     10.00 %
Free interest rate risk (%)
    2.40 %     2.40 %
Option expected life (years)
 
3.3 years
   
3.3 years
 
Weighted average price of the share (US$)
    57       57  
Dividend rate (%)
    1.61 %     1.61 %
Period covered
 
60 months
   
60 months
 
Model used
 
Binomial
   
Binomial
 
  
(*) calculated based on 252 trading days.
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
121

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 16 – Executive compensation plan (continued)

Movements for the period on options in force, the weighted average price of options for the period and average contractual life on options in force as of March 31, 2011 and as of December 31 are as follows:

Movements for the period
 
2011
   
2010
 
In force as of January 1
    3,430,000       1,210,000  
During the period
            2,370,000  
Payments made
            -  
Exercised during the period
            150,000  
Overdue during the period
            -  
In circulation as of December 31
    3,430,000       3,430,000  
Can be exercised as of December 31
            -  
Weighted average contractual life
 
57 months
   
60 months
 

As of March 31, 2011 and December 31, 2010, the amounts accrued by the plan are detailed as follows
Effect on income (loss)
 
2011
ThUS$
   
2010
ThUS$
 
Accrued amount during the year
    7,000       22,782  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
122

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 17. Disclosures on net equity

The detail and movements in the funds of net shareholders’ equity accounts are shown in the Consolidated statement of changes in net shareholders’ equity.

17.1
Disclosures on capital management

The main objective of capital management, related to the management of the Company’s equity is as follows

 
-
Ensuring its regular operation and the business continuity in the long-term.
 
-
Ensuring the financing of new investments in order to maintain sustainable growth throughout time.
 
-
Maintaining proper capital structure in accordance with the economic cycles impacting the business and to  the nature of the industry.
 
-
Maximizing the value of SQM Group in the medium and long-term.

In line with that indicated above, the capital requirements are included based on the Group’s financing needs, to maintain a proper liquidity level and comply with the financial safeguards established in the debt covenants in force. SQM Group manages its capital structure and makes adjustments based on the economic conditions currently prevailing, in order to mitigate the risks associated with adverse market conditions and to take advantage of the opportunities which could be generated to improve the Company’s liquidity position.

The management of SQM Group controls capital management based on the ratios indicated as follows:

CAPITAL
MANAGEMENT
   
3/31/2011
   
12/31/2010
   
Description (1)
   
Calculation (1)
                         
Net  financial debt
      561,083       584,357    
Financial Debt  - Financial Resources
   
Other current financial liabilities + Other non-current financial liabilities – Cash and cash equivalents – Other current financial assets
Liquidity
      3.60       3.55    
Current Asset Divided by Current Liability
   
Total Current Assets /Total Current Liabilities
Net debt / Capitalization
      0.24       0.26    
Net  Financial Debt Divided by Total Equity
   
Net financial debt / (Net financial debt  + Total Equity)
ROE
      23.7 %     23.2 %  
Profit Divided by Total Equity
   
Profit / Total  Equity
ROA
      22.1 %     20.9 %  
EBITDA – Depreciation Divided by Total Assets net of financial resources less investments in related companies
   
(Gross profit – Administrative expenses)/ (Total assets – Cash and cash equivalents – Other current financial assets – investments accounted for using the equity method)
DFN/ EBITDA
      0.74       0.85          
EBITDA = Gross Profit + Depreciation – Administrative expenses
                       
                     
(1) Assumes absolute value of the different accounts
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
123

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 17. Disclosures on net equity (continued)

The consolidated maximum indebtedness level of SQM S.A. will relate to the Debt/Equity ratio of “one point five”. This limit can only be exceeded provided that the Management of SQM S.A. has an authorization previously granted by the shareholders at the respective General Extraordinary Meeting of Shareholders.

No changes have been recorded in the objectives or capital management policies within the reported periods.
 
17.2
Disclosures on preferred share  capital

Issued share capital is divided into 263,196,524 fully paid and subscribed shares with no par value composed of a Series "A" with142,819,552 shares and Series “B” shares with 120,376,972 shares, where both series are preferred 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 the director elected by Series B shareholders.

As of March 31, 2011 and as of December 31, 2010, the Group does not maintain any dominant company's shares either directly or through investees.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
124

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Nota 17. Disclosures on net equity (continued)

Detail of classes of capital in preferred shares:

Class of capital in preferred shares
 
3/31/2011
   
12/31/2010
 
Description of class of capital in preferred shares
 
Series A
   
Series B
   
Series A
   
Series B
 
Number of authorized shares
    142,819,552       120,376,972       142,819,552       120,376,972  
Par value of shares in ThUS$
    -       -       -       -  
Capital amount in shares ThUS$
    134,750       342,636       134,750       342,636  
Amount of premium issuance ThUS$
    -       -       -       -  
Amount of reserves ThUS$
    -       -       -       -  
Number of fully subscribed and paid shares
    142,819,552       120,376,972       142,819,552       120,376,972  
Number of subscribed, partially paid shares
    -       -       -       -  
Total number of subscribed shares
    142,819,552       120,376,972       142,819,552       120,376,972  

As of March 31, 2011, and as of December 31, 2010, the Company has not placed any new issuances of shares in the market.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
125

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 17. Disclosures on net equity (continued)

17.3
Dividend policy

As required by the Chilean Companies Act, unless otherwise decided by unanimous vote of the holders of issued and subscribed shares, we must distribute a cash dividend in an amount equal to at least 30% of our consolidated Profit for the period for year ended as of December 31, 2009 unless and except to the extent it has a deficit in retained earnings (losses not absorbed in prior years.)

The Company’s dividend policy for 2010 is as follows:

 
-
Distribution and payment in favor of each shareholder of a final dividend which will be equivalent to 50% of Profit for the period obtained in 2010.
 
 
-
Distribution and payment, if possible during 2010, of a provisional dividend which will be recorded against the aforementioned final dividend. This provisional dividend will be paid probably during the last quarter of 2010 and its amount could not exceed 50% of the retained earnings for distribution obtained during 2010, which are reflected in the Company’s financial statements as of September 30, 2010.
 
 
-
The distribution and payment by the Company of the remaining balance of the final dividend related to Profit for the period for the 2010 commercial year in up to two installments, which will have to be effectively paid and distributed prior to June 30, 2011.
 
 
-
An amount equivalent to the remaining 50% of the Company’s Profit for the period for 2010 will be retained and destined to the financing of operations of one or more of the Company’s investment projects with no prejudice of the possible future capitalization of the entirety or a portion of this
  
 
-
The Board of Directors does not consider the payment of any additional or interim dividends.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
126

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 17. Disclosures on net equity (continued)

17.4
Provisional Dividends

On November 23, 2010, the Company’s Board agreed to  pay a provisional dividend amounting to ThUS$ 110,000, payable beginning on December 15, 2010.

At a Board of Directors meeting held on April 29, 2010, the Directors unanimously agreed to reduce the dividend distribution which implies to pay a final dividend of US$ 0.62131 per share as a result of such profit for the period. Notwithstanding the above, a deduction amounting to US$ 0.37994 per share should be applied to this final dividend, which was already paid as a provisional dividend. In line with this, the balance amounting to US$ 0.24137 per share, will be paid and distributed in favor of those Company’s shareholders registered with the respective shareholders ‘ registry as of   the fifth business day prior to the day in which this dividend will be paid.
 
At a Board of Directors meeting held on November 17, 2009, the Directors agreed to pay and distribute an interim dividend of US$0.37994 per share. This dividend totals approximately ThUS$100,000 and is equivalent to 40% of distributable Profit for the period for 2009, accumulated as of December 31, 2010. This dividend is payable with a charge to Profit for the period for that commercial year to SQM shareholders registered in the respective shareholders’ registry as of the fifth business day prior to December 16, 2009, in its equivalent in Chilean pesos, based on the observed dollar exchange rate as published in the Official Gazette of December 10, 2009.

 
The dividends which are presented deducted from equity are:

   
2011
ThUS$
   
2010
ThUS$
 
Final Dividend
    -       63,527  
Provisional Dividend
    -       110,000  
Provision for minimum dividend
    -       4,637  
Reversal of prior year minimum dividend
    -       -  
Total
    -       178,164  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
127

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 18 – Provisions and other non-financial liabilities

18.1
Classes of provisions

Description of classes of
Provisions
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Other current provisions
           
             
Provision for legal complaints
    4,590       2,590  
Other provisions
    13,080       12,424  
Total
    17,670       15,014  
                 
Other non-currents provisions
               
                 
Provision for legal complaints
    2,000       2,000  
Other provisions
    3,500       3,500  
Total
    5,500       5,500  
 
Provisions for legal complaints relate to legal expenses the resolution of which is pending in the lawsuit to make the disbursement for expenses incurred for this purpose.
 
18.2
Description of other provisions:
Description of other provisions
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Current provisions, other short-term provisions
           
Provision for tax loss in fiscal litigation
    1,659       1,634  
Royalties, agreement with CORFO (the Chilean Economic Development Agency)
    5,024       5,182  
Temporary closure of El Toco operation
    3,107       3,264  
Retirement plan
    880       880  
Miscellaneous provisions
    2,410       1,464  
Total
    13,080       12,424  
Other long-term provisions
               
Mine closures
    3,500       3,500  
Total
    3,500       3,500  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
128

 
 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 18 – Provisions and other non-financial liabilities (continued)
 
18.3
Other non-financial liabilities, current

Description of other liabilities
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Tax withholdings
    3,196       5,529  
VAT payable
    2,668       12,416  
Guarantees received
    1,066       1,028  
Provision for minimum dividend
    5,830       4,637  
Monthly Tax Provisional Payments
    10,003       8,171  
Deferred income
    30,108       14,350  
Withholdings from employees and salaries payable
    6,002       4,936  
Vacation accrual
    12,526       14,854  
Other currents liabilities
    74       1,538  
Total
    71,473       67,459  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
129

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 18 – Provisions and other non-financial liabilities (continued)

18.4
Movements in provisions as of 3/31/2011

Description of items which gave rise to
variations
 
Guarantee
   
Restructuring
   
Legal complaints
   
Expensive
contracts
   
Restoration and
rehabilitation
dismantling costs
   
Other
provisions
   
Total
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Total provisions, initial balance
    -       -       4,590       -       -       15,924       20,514  
Changes in provisions:
    -       -       -       -       -       -       -  
Additional provisions
    -       -       2,000       -       -       6,240       8,240  
Increase (decrease) in existing provisions
    -       -       -       -       -       -       -  
Acquisition through business combinations
    -       -       -       -       -       -       -  
Divestitures through business disposals
    -       -       -       -       -       -       -  
Provision used
    -       -       -       -       -       (5,622 )     (5,622 )
Reversal of unused provision
    -       -       -       -       -       -       -  
Increase due to adjustment in value of money throughout time
    -       -       -       -       -       -       -  
Increase (decrease) in discount rate
    -       -       -       -       -       -       -  
Increase (decrease) in foreign currency translation
    -       -       -       -       -       38       38  
Other increases (decreases)
    -       -       -       -       -       -       -  
      -       -       -       -       -       -       -  
Total provisions, final balance
    -       -       6,590       -       -       16,580       23,170  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
130

 
 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 18 – Provisions and other non-financial liabilities (continued)

18.4
Movements in provisions as of 12-31-2010
 
Description of items which gave rise to
variations
 
Guarantee
   
Restructuring
   
Legal complaints
   
Expensive
contracts
   
Restoration and
rehabilitation
dismantling costs
   
Other
provisions
   
Total
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Total provisions, initial balance
    -       -       590       -       -       19,352       19,942  
Changes in provisions:
    -       -       -       -       -       -       -  
Additional provisions
    -       -       4,000       -       -       14,301       18,301  
Increase (decrease) in existing provisions
    -       -       -       -       -       -       -  
Acquisition through business combinations
    -       -       -       -       -       -       -  
Divestitures through business disposals
    -       -       -       -       -       -       -  
Provision used
    -       -       -       -       -       (17,803 )     (17,803 )
Reversal of unused provision
    -       -       -       -       -       -       -  
Increase due to adjustment in value of money throughout time
    -       -       -       -       -       -       -  
Increase (decrease) in discount rate
    -       -       -       -       -       -       -  
Increase (decrease) in foreign currency translation
    -       -       -       -       -       74       74  
Other increases (decreases)
    -       -       -       -       -       -       -  
      -       -       -       -       -       -       -  
Total provisions, final balance
    -       -       4,590       -       -       15,924       20,514  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
131

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 18 – Provisions and other non-financial liabilities (continued)

 
18.5
Detail of main classes of provisions

Legal expenses: this provision depends on the pending resolution of a lawsuit to conduct the disbursement for expenses associated with and incurred for this purpose.

Tax accrual in tax litigation: this accrual relates to lawsuits pending resolution related to taxes in Brazil for two of our subsidiaries, SQM Brazil and NNC.

Royalties CORFO (Economic Development Agency) agreement: relates to the exploitation of mining properties which SQM Salar S.A. pays on a quarterly basis to the Economic Development Agency.  The amount of the lease payable is calculated based on sales of products extracted from the Atacama Saltpeter deposit.

The settlement of these will be performed on a quarterly basis.

Temporary closure of El Toco operation: The Company’s Board of Directors unanimously agreed to approve the temporary closure of Toco and Pampa Blanca mining sectors.  The Company accrued the legal severance indemnity for the employees subject to this closure.

Retirement plan: corresponds to a benefit agreed with employees to retire from the Company.  Those employees who invoked the agreed plan signed their consent as of December 31, 2010 and a portion of the effective retirement date took place during 2010 and the remaining portion will take place during 2011.

Through the present date, SQM and its subsidiaries do not present any uncertainty on the timing and amount of a class of accrual.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
132

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 19 – Contingencies and restrictions

The Company maintains lawsuits or other relevant legal actions which are detailed as follows:

19.1
Lawsuits or other relevant events.

1.
Plaintiff
:
Compañía de Salitre y Yodo Soledad S.A.
 
Defendant
:
Sociedad Química y Minera de Chile S.A.
 
Date of lawsuit
:
December 1994
 
Court
:
Civil Court of Pozo Almonte
 
Cause
:
Partial annulment of mining property, Cesard 1 to 29
 
Instance
:
Evidence provided
 
Nominal amount
:
ThUS$211
       
2.
Plaintiff
:
JB Comércio de Fertilizantes e Defensivos Agrícolas Ltda. (JB)
 
Defendant
:
Nitratos Naturais do Chile Ltda. (NNC)
 
Date of lawsuit
:
December 1995
 
Court
:
1st Civil Court of Comarca de Barueri, Brazil.
 
Cause
:
Seeks compensation claim on alleged damages as a result of the appointment of a new distributor within a territory subject to exclusivity.
 
Instance
:
1st instance verdict against Nitratos Naturais do Chile Ltda. And appealed by the latter.
 
Nominal amount
:
ThUS$1,800
       
3.
Plaintiff
:
Compañía Productora de Yodo y Sales S.A.
 
Defendant
:
Sociedad Química y Minera de Chile S.A
 
Date of lawsuit
:
November 1999
 
Court
:
Civil Court of Pozo Almonte
 
Cause
:
Partial annulment of mining property, Paz II1 to 25
 
Instance
:
Evidence provided
 
Nominal amount
:
ThUS$162
       
4.
Plaintiff
:
Compañía Productora de Yodo y Sales S.A.
 
Defendant
:
Sociedad Química y Minera de Chile S.A.
 
Date of lawsuit
:
November 1999
 
Court
:
Civil Court of Pozo Almonte
 
Cause
:
Partial annulment of mining property, Paz III 1 to 25
 
Instance
:
Evidence provided
 
Nominal amount
:
ThUS$204
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
133

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 19- Contingencies and restrictions (continued)
 
19.1
Lawsuits and other relevant events (continued).
 
5.
Plaintiff
:
Nancy Erika Urra Muñoz
 
Defendant
:
Fresia Flores Zamorano, Duratec-Vinilit S.A. and SQM S.A. and Its insurance companies.
 
Date of lawsuit
:
December 2008
 
Court
:
1st Civil Court of Santiago
 
Cause
:
Work accident
 
Instance
:
Response
 
Nominal amount
:
ThUS$550
       
6.
Plaintiff
:
Eduardo Fajardo Núñez, Ana María Canales Poblete, Raquel Beltrán Parra, Eduardo Fajardo Beltrán y Martina Fajardo Beltrán
 
Defendant
:
SQM Salar S.A. and its insurers.
 
Date of lawsuit
:
November 2009
 
Court
:
20th Civil Court of Santiago
 
Cause
:
Work accident
 
Instance
:
Demand response.
 
Nominal amount
:
ThUS$1,880
       
7.
Plaintiff
:
Poli Instalaciones Limitada
 
Defendant
:
SQM Industrial S.A.
 
Date of lawsuit
:
August 2010
 
Court
:
Arbitrage procedure
 
Cause
:
Seeks compensation for damages for the application of a contract clause which allows early agreement termination.
 
Instance
:
Demand response
 
Nominal amount
:
ThUS$ 484
       
8.
Plaintiff
:
Newland S.A.
 
Defendant
:
SQM Industrial S.A.
 
Date of lawsuit
:
August 2010
 
Court
:
Arbitrage procedure
 
Cause
:
Compensation for damages on alleged non-compliance  of contractual obligations
 
Instance
:
Evidence provided
 
Nominal amount
:
ThUS$480
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
134

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 19 – Contingencies and restrictions (continued)

19.1
Lawsuits and other relevant events (continued).

9.
Plaintiff
:
María Loreto Lorca Morales, Nathan Guerrero Lorca, Maryori Guerrero Lorca, Abraham Guerrero Lorca, Esteban Guerrero Lorca and María Sol Osorio Tapia and Other
 
Defendant
:
Gonzalo Daved Valenzuela, Julio Zamorano Avendaño, Comercial Transportes y Servicios Generales Julio Zamorano Avendaño E.I.R.L. and, severally, SQM S.A. and its insurance companies
 
Date of lawsuit
:
August 2010
 
Court
:
2nd First instance Court of  Iquique
 
Cause
:
Claim for damages by the collision of two trucks which belonged to third parties occurred in July  2008 near Pozo Almonte. As a result of this accident two workers were killed (Alberto Galleguillos Monardes and Fernando Guerrero Tapia)
 
Instance
:
Demand response
 
Nominal amount
:
ThUS$3,500
       
10.
Plaintiff
:
Sociedad Chilena del Litio Ltda.
 
Defendant
:
SQM Salar S.A.
 
Date of lawsuit
:
December 2010
 
Court
:
Arbitrage procedure
 
Cause
:
Product purchase Price
 
Instance
:
Demand response. Counterclaim demand
 
Nominal amount
:
ThUS$2,000
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
135

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 19 – Contingencies and restrictions (continued)

19.1
Lawsuits and other relevant events (continued).

11.
Plaintiff
:
City of Pomona California USA
 
Defendant
:
SQM North America Corporation
 
Date of lawsuit
:
December 2010
 
Court
:
United States District Court Central District of California
 
Cause
:
Payment of expenses and other amounts related to groundwater treatments in order to allow its consumption through the extraction of perchlorate existing within the water which presumably comes from Chilean fertilizers
 
Instance
:
Demand.
 
Nominal amount
:
Undetermined amount
       
12.
Plaintiff
:
City of Lindsay, California USA
 
Defendant
:
SQM North America Corporation
 
Date of lawsuit
:
December 2010
 
Court
:
United States District Court Eastern District of California
 
Cause
:
Payment of expenses and other amounts related to groundwater treatments in order to allow its consumption through the extraction of perchlorate existing within the water which presumably comes from Chilean fertilizers
 
Instance
:
Demand
 
Nominal amount
:
Undetermined amount
       
13
Plaintiff
:
Alejandro Tapia Moyano
 
Defendant
:
SQM Nitratos S.A.
 
Date of lawsuit
:
February 2011
 
Court
:
Labor Court of Antofagasta
 
Cause
:
Compensation for moral damage due to a disease allegedly contracted as a result of works performed
 
Instance
:
Counterclaim reply .
 
Nominal amounts
:
ThUS$200
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
136

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 19 – Contingencies and restrictions (continued)

19.1
Lawsuits and other relevant events (continued).

SQM S.A. and its subsidiaries have been participating and probably will continue to participate habitually as plaintiffs or defendants in various judicial proceedings that have been and will be filed and are subject to the decisions of the Ordinary Courts of Justice. Those proceedings, which are regulated by the applicable legal provision, mainly seek to exercise or oppose certain actions or exceptions related to certain mining concessions constituted or in the process of being constituted and do not and will not essentially affect the development of SQM S.A. and its subsidiaries.

Soquimich Comercial S.A. has been participating and probably will continue to participate habitually as a plaintiff in various judicial proceedings through which it seeks mainly to collect and receive the amounts owed to it. As of March 31, 2011 the total estimated nominal amount claimed in such proceedings is approximately ThUS $700.

SQM S.A. and its subsidiaries have tried and currently continue to try to obtain payment of certain amounts still owed to them for their normal business activities. Those amounts will continue to be judicially and non-judicially demanded by the plaintiffs and the actions exercised in relation to them are currently in full force.
 
SQM S.A. and its subsidiaries have not been legally notified of other complaints other than those listed above and which pursue the voidance of certain mining properties purchased by SQM S.A. and its subsidiaries and whose proportional purchase price, in respect to the part affected by the respective overlap, exceeds the nominal and approximate amount of ThUS$150 or which seek to obtain payment of certain amounts allegedly owed from exercising their own activities and which exceed the nominal individual amount of approximately ThUS$150.

19.2
Restrictions:

Bank loans of SQM S.A. and its subsidiaries contain restrictions similar to those of other comparable loans existing at the dates when those debt agreements were entered into. These restrictions involve maximum indebtedness and minimum equity. Other than these restrictions, SQM S.A. is not exposed to any other management restrictions or limits to financial ratios in contracts or agreements with creditors.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
137

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Nota 19 – Contingencies and restrictions (continued)

19.3
Commitments:

The subsidiary SQM Salar S.A. has signed a rental contract with the Economic Development Agency (CORFO) which establishes that such subsidiary, will pay to CORFO, for the concept of exploitation of certain mining properties owned by CORFO and for the products resulting from such exploitation, the annual rent stated in the aforementioned contract, the amount of which is calculated on the basis of the sales of each type of product. The contract is in force until 2030 and rent began being paid in 1996 reflecting in profit or loss an amount of ThUS$ 5,024 as of March 31, 2011 (ThUS$ 18,717 as of December 31, 2010).

19.4
Restricted or pledged cash
  
The subsidiary Isapre Norte Grande S.A. in compliance with that established by the Chilean Superintendence of Healthcare, which regulates the running of pension-related health institutions, maintains a guarantee in financial instruments, delivered in deposits, custody and administration to Banco de Chile.

This guarantee, according to the regulations issued by the Chilean Superintendence of Healthcare is equivalent to the total sum owed to its members and medical providers. Banco de Chile on a daily basis reports the present value of the guarantee to the Chilean Superintendence of Healthcare and Isapre Norte Grande Ltda. As of March 31, 2011, the guarantee amounts to ThUS$ 505.

19.5
Sureties obtained from third parties

The main sureties received from third parties (distributors) to guarantee Soquimich Comercial S.A. the compliance with obligations in contracts of commercial mandates for the distribution and sale of fertilizers amounted to ThUS$4,129 as of March 31, 2011; as of December 31, 2010 amounted to ThUS$6,389 which are detailed as follows:

Entity name
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Llanos y Wammes Soc. Com. Ltda
    2,086       2,037  
Fertglobal Chile Ltda.
    1,043       3,352  
Tattersall Agroinsumos S.A.
    1,000       1,000  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
138

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 19 – Contingencies and restrictions (continued)

19.6
Indirect guarantees

Guarantees in which there is no pending balance indirectly reflect that the respective guarantees are in force and approved by the Company's Board of Directors and have not been used by the respective subsidiary.
 
   
Debtor
 
 
 
Pending balances as of
the closing date of the
financial statements
 
Creditor of the guarantee
 
Name
 
Relationship
 
Type of 
guarantee
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Australian and New Zealand Bank
 
SQM North America  Corp
 
Subsidiary
 
Bond
    -       -  
Australian and New Zealand Bank
 
SQM Europe N.V.
 
Subsidiary
 
Bond
    -       -  
Generale Bank
 
SQM North America  Corp
 
Subsidiary
 
Bond
    -       -  
Generale Bank
 
SQM Europe N.V.
 
Subsidiary
 
Bond
    -       -  
Kredietbank
 
SQM North America  Corp
 
Subsidiary
 
Bond
    -       -  
Kredietbank
 
SQM Europe N.V.
 
Subsidiary
 
Bond
    -       -  
Banks and financial institutions
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -  
Banks and financial institutions
 
SQM Europe N.V.
 
Subsidiary
 
Bond
    -       -  
Banks and financial institutions
 
SQM North America  Corp
 
Subsidiary
 
Bond
    -       -  
Banks and financial institutions
 
Nitratos Naturais do Chile Ltda.
 
Subsidiary
 
Bond
    -       -  
Banks and financial institutions
 
SQM México S.A. de C.V.
 
Subsidiary
 
Bond
    -       -  
Banks and financial institutions
 
SQM Brazil Ltda.
 
Subsidiary
 
Bond
    -       -  
Banque Nationale de Paris
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -  
San Francisco Branch
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -  
Sociedad Nacional de Mineria A.G.
 
SQM Potasio S.A.
 
Subsidiary
 
Bond
    -       -  
Royal Bank of Canada
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -  
Citibank N.Y
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -  
BBVA Banco Bilbao Vizcaya Argentaria
 
Royal Seed Trading A..V.V.
 
Subsidiary
 
Bond
    -       -  
ING Capital LLC
 
Royal Seed Trading A..V.V.
 
Subsidiary
 
Bond
    80,215       80,055  
JP Morgan Chase Bank
 
SQM Industrial S.A.
 
Subsidiary
 
Bond
    -       -  
Export Development Canada
 
SQM Investment Corp. N.V.
 
Subsidiary
 
Bond
    -       -  
BBVA Bancomer S.A.
 
Royal Seed Trading
 
Subsidiary
 
Bond
    -       -  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
139

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 20 -  Revenue

As of March 31, 2011 and 2010, ordinary profit is detailed as follows:

   
3/31/2011
   
3/31/2010
 
Classes of ordinary profits
 
ThUS$
   
ThUS$
 
             
Sale of goods
    478,584       387,110  
Provision of services
    1,451       1,413  
Interest income
    -       -  
Income from royalties
    -       -  
Income from dividends
    -       -  
Total
    480,035       388,523  
 
Note 21 – Earnings per share
 
Basic earnings per share will be calculated dividing Profit for the period for the period attributable to the Company’s shareholders by the weighted average of the number of shares in circulation during that period.

As expressed, basic earnings per share is as follows:

Basic earnings per share
 
3/31/2011
ThUS$
   
3/31/2010
ThUS$
 
                 
Earnings (loss) attributable to the holders of instruments in the net equity of the controlling entity
    111,395       76,493  

   
3/31/2011
Units
   
3/31/2010
Units
 
Number of common shares in circulation
    263,196,524       263,196,524  

   
3/31/2011
   
3/31/2010
 
             
Basic earnings per share
    0.4232       0.2906  

The Company has not made any operation with a potential diluted effect which assumes a diluted benefit per share different from the basic benefit per share.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
140

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note  22 – Borrowing costs
 
The costs of interest are recognized as expenses in the year in which they are incurred except for those which are directly related to the acquisition and construction of tangible fixed assets and which comply with the requirements in IAS 23. As of March 31, 2011, total financial expenses incurred amount to ThUS$10,627 (ThUS$7,812 as of March 31, 2010)

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

Costs of capitalized interest, property, plant and equipment

The cost of capitalized interest is determined applying weighted average or mean of all financing incurred by the Company to the final monthly balances of work-in-progress and which meet the requirements of IAS 23.

The rates and costs for capitalized interest of property, plant and equipment are detailed as follows:

   
3/31/2011
   
3/31/2010
 
             
Capitalization rate of costs for interest capitalized, property, plant and equipment
    7 %     7 %
Amount of costs for interest capitalized in ThUS$
    5,232       5,756  
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
141

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 23 -  Effect of variations in foreign currency Exchange rates

a)           Foreign currency translation differences recognized in profit or loss except for financial instruments measured at fair value through income:

   
3/31/2011
ThUS$
   
3/31/2010
ThUS$
 
             
Profits (losses) on foreign currency translation difference recognized in profit for the period
    (2,899 )     (3,133 )
                 
Reserves for translation differences attributable to the Parent’s owners
    (77 )     (179 )
                 
Reserves for translation differences attributable to entities other than the Parent’s owners
    (23 )     (51 )

b)           Translation reserves:

As of March 31, 2011 and as of December 31, 2010, translations reserves are detailed as follows:

Detail
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
             
Changes in equity generated through the proportional equity method  for conversion:
           
Comercial Hydro S.A.
    937       937  
SQMC Internacional Ltda.
    37       41  
Proinsa Ltda.
    28       31  
Agrorama Callegari Ltda.
    147       161  
Isapre Cruz del Norte Ltda.
    88       99  
Almacenes y Depósitos Ltda.
    81       90  
Sales de Magnesio Ltda.
    100       132  
Sociedad de Servicios de Salud S.A.
    35       39  
Total
    1,453       1,530  

c)
Functional and presentation currency

The functional currency of these subsidiaries is Chilean peso and its presentation currency is United States Dollar.

d)
Reasons which explain the use of a presentation currency other than the functional currency

-
All income from these subsidiaries are associated to Chilean peso.
-
These companies’ structure of operating costs is impacted by local currency.
-
Equities of these Companies are expressed in local currency (Chilean peso).
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
142

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24 – The Environment

24.1
Disclosures on disbursements related to the environment
The Company is continuously concerned with protecting the environment both in its production processes and with respect to products manufactured. This commitment is supported by the principles indicated in the Company’s Sustainable Development Policy.
SQM is currently operating under an Environmental Management System (EMS) which has allowed strengthening its environmental performance through the effective application of the Company’s Sustainable Development Policy

Operations that use caliche as a raw material are carried out in desert areas with climatic conditions that are favorable for drying solids and evaporating liquids using solar energy. Operations involving the open-pit extraction of minerals, due to their low waste-to-mineral ratio, generate remaining deposits that slightly alter the environment. During the extraction process and subsequent crushing of ore, particle emissions occur, which is normal for this type of operation. Caliche extractive operations are performed at an open-sky.
A portion of the ore extracted is crashed, a process in which particle emissions occur; currently this operation is conducted only in the worksite of Pedro de Valdivia. Nearby María Elena, crushing units used to operate which affected the air quality. The Company has implemented a series of measures that have shown notable improvement in air quality at Maria Elena and beginning on March 2010, no ore crushing process is conducted in the aforementioned location.

A large part of our products are shipped in bulk at the Tocopilla Port. In 2007, Tocopilla was declared as a Zone Saturated by Breathable Particulate Matter (MP10), mainly caused by the emissions by electric power plants operating in areas nearby. In October 2010, a plan referred to as “Decontamination Plan of Tocopilla” became effective, to which SQM has committed to apply several measures in order to mitigate this particulate matter that may generate the movement of products in bulk in our port. These measures have been successfully implemented from 2007 to the present date.

The Company carries out environmental follow-up and monitoring plans based on specialized scientific studies, and it also provides an annual training program in environmental matters to both its direct employees and its contractors’ employees. Within this context, SQM entered into a contract with the National Forestry Corporation (CONAF) aimed at researching the activities of flamingo groups that live in the Salar de Atacama (Atacama Saltpeter Deposit) lagoons. Such research includes a population count of the birds, as well as breeding research. Environmental monitoring activities carried out by the Company at the Salar de Atacama and other systems in which it operates are supported by a number of studies that have integrated diverse scientific efforts from prestigious research centers, including Dictuc from Pontificia Universidad Católica in Santiago and the School of Agricultural Science of Universidad de Chile.
Furthermore, within the framework of the environmental studies which the Company is conducting, the Company is performing significant activities in relation to the recording of Pre-Columbian and historical cultural heritage, as well as the protection of heritage sites, in accordance with current Chilean laws. These activities have been especially performed in the areas surrounding María Elena and the Nueva Victoria plants. This effort is being accompanied by cultural initiatives within the community and the organization of exhibits in local and regional museums.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
143

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24 – The Environment (continued)
 
24.1
Disclosures on disbursements related to the environment (continued)

As emphasized in its Sustainable Development Policy, the Company strives to maintain positive relationships with the communities surrounding the locations in which it carries out its operations, as well as to participate in communities’ development by supporting joint projects and activities which help to improve the quality of life for residents. For this purpose, the Company has focused its efforts on activities involving the rescue of historical heritage, education and culture, as well as development, and in order to do so, it acts both individually and in conjunction with private and public entities.

24.2
Detail of information on disbursements related to the environment.

The accumulated disbursements associated to environmental matters which SQM and its subsidiaries have incurred as of March 31, 2011 for the concept of investments in production processes, verification and control of compliance with ordinances and laws relative to industrial processes and facilities, including prior years disbursements related to this projects amounted to ThUS$ 10,278 and their detail is as follows:
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
144

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24- The Environment (continued)

Accumulated expenses as of 3/31/2011
 
Identification of the
Parent Company or
subsidiary 
 
Name of the project to which the disbursement is
associated
 
Concept by which the disbursement was made or
will be made
 
Asset / Expense
 
Description of the
Asset or Expense
Item
 
Amount of
Disbursement for
the Period ThUS$
 
Certain or estimated date in
which disbursements were or
will be made 
SQM Industrial S.A.
 
Management of environment (Expense 2011)
 
Not Classified
 
Expense
 
Not Classified
 
203
 
12-1-2011
SQM Industrial S.A.
 
ANMI – Consulting in infrastructure to store hazardous chemicals
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
46
 
6-1-2011
SQM Industrial S.A.
 
FNWR - EID  Pampa Blanca discard yard
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
30
 
6-1-2011
SQM Industrial S.A.
 
FP55 - FPXA - EIS Zone Mine PB - EIS Enlargement PB (Project: Agua de Mar Pampa Blanca - Agua de Mar Phase I)
 
Sustentation
 
Asset
 
Development
 
1,210
 
12-1-2012
SQM Industrial S.A.
 
JNTU –San Isidro water assessment
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
556
 
6-1-2011
SQM Industrial S.A.
 
JPX9 – EID Improvement of Prilled Granular Plant Coya Sur (Project: Pilot Plant DT and Resin Pilot Tests)
 
Sustentation: Research and Development
 
Asset
 
Research
 
11
 
12-1-2011
SQM Industrial S.A.
 
MNYS – Action for the dissemination of cultural heritage Technology change María Elena
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
29
 
12-1-2012
SQM Industrial S.A.
 
MP17 – Normalization of drinking water ME/CS/PV
 
Sustentation
 
Asset
 
Not Classified
 
7
 
6-1-2011
SQM Industrial S.A.
 
MP5W – Normalization of TK Fuel
 
Sustentation
 
Asset
 
Not Classified
 
407
 
12-1-2011
SQM Industrial S.A.
 
MPIS –Stabilization of streets and suppression of dust at sidewalks
 
Sustentation
 
Asset
 
Development
 
736
 
6-1-2011
SQM Industrial S.A.
 
MPL5 – Repair of sanitary and electric facilities
 
Sustentation
 
Asset
 
Development
 
184
 
6-1-2011
SQM Industrial S.A.
 
MPLS – Automated alarms and information of Hospital Monitoring Station
 
Not Classified
 
Asset
 
Not Classified
 
10
 
6-1-2011
SQM Industrial S.A.
 
MQ51 – Reference terms heritage actions Project ME
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
2
 
12-31-2011
SQM Industrial S.A.
 
PPNK – Handling of PV Ammoniac in Plant detention
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
22
 
12-1-2011
SQM Industrial S.A.
 
PPZU – Normalize and  Certify Fuel Tanks in Plants
 
Sustentation: Risk prevention and the environment
 
Asset/Expense
 
Not Classified
 
446
 
12-1-2011
Minera Nueva Victoria S.A.
 
IPMN – Enlargement of Sanitary capacity in Iris
 
Capacity enlargement
 
Asset
 
Development
 
85
 
6-1-2011
Minera Nueva Victoria S.A.
 
IPNW – Improvements in pavilions C/D/B in Iris
 
Sustentation
 
Asset
 
Not Classified
 
44
 
6-1-2011
SIT S.A.
 
TPLR - Implementation of pump system for used water to waste
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
68
 
6-1-2011
SIT S.A.
 
TPM7 - Environmental nets in field 3 and 4
 
Not Classified
 
Asset/Expense
 
Not Classified
 
524
 
6-1-2011
SIT S.A.
  
TPR8 – Elimination of riles generation through vacuum
  
Sustentation: Risk prevention and the environment
  
Asset/Expense
  
Not Classified
  
54
  
12-1-2011
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
145

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24- The Environment (continued)

Accumulated expenses as of 3/31/2011 (continued)

Identification of the
Parent Company or
subsidiary 
 
Name of the project to which the disbursement is associated
 
Concept by which the disbursement was made or
will be made
 
Asset /
Expense
 
Description of the
Asset or Expense
Item
 
Amount of
Disbursement for
the Period ThUS$
 
Certain or estimated date in
which disbursements were or
will be made 
SQM S.A.
 
AQ0A – Drilling of 4 wells Change Collection Point in Pampa del Tamarugal
 
Sustentation: Natural Resources
 
Asset
 
Development
 
115
 
12-1-2011
SQM S.A.
 
IPFT – Cultural heritage Region I
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
127
 
12-1-2011
SQM S.A.
 
IPXE – Environmental monitoring plan Salar de Llamara
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
186
 
12-1-2012
SQM S.A.
 
IPXF - Environmental monitoring plan Pampa del Tamarugal
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
20
 
12-1-2012
SQM S.A.
 
IQ08 - PSA Llamara & Pampa del Tamarugal
 
Sustentation: Natural Resources
 
Expense
 
Development
 
1,187
 
12-1-2011
SQM S.A.
 
IQ0C – Enhancement Mine Zone NV
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
21
 
12-1-2011
SQM S.A.
 
IQ1M - PSA Water re-injection to Puquíos Llamara
 
Not Classified
 
Asset
 
Not Classified
 
509
 
12-1-2011
SQM S.A.
 
IQ54 – Cultural heritage  Pampa Hermosa
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
3
 
12-1-2011
SQM S.A.
 
SCI6 – Environmental arrays – Project Region I
 
Not Classified
 
Asset
 
Not Classified
 
2,376
 
6-1-2011
SQM Nitratos S.A
 
IP6W – Riles Treatment Plant
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
39
 
12-1-2010
SQM Nitratos S.A
 
PP0V – Environmental projects Maintenance ME-PV-NV-PB
 
Sustentation: Risk prevention and the environment
 
Asset-expense
 
Development
 
82
 
6-1-2011
SQM Salar S.A
 
CPTP - Installation of emergency showers drinking water
 
Sustentation
 
Asset
 
Not Classified
 
14
 
12-1-2011
SQM Salar S.A
 
CPZH – Handling of Discards Hydroxide Press Machine Filters
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
8
 
12-1-2011
SQM Salar S.A
 
LP5J – Water recharge study  Salar de Atacama
 
Sustentation: Risk prevention and the environment
 
Expense
 
Research
 
83
 
12-1-2011
SQM Salar S.A
 
LP82 – Project to foster agricultural activities in Salar Locations
 
Sustentation
 
Expense
 
Development
 
380
 
12-1-2012
SQM Salar S.A
 
LPIK - EIS Dryer Plant  Potassium Chloride (Dryer Project:  MOP)
 
Capacity enlargement
 
Asset
 
Development
 
19
 
6-1-2011
SQM Salar S.A
 
LPN3 - EID New Dryer and Compacted Plant (Project: Granulated and Compaction MOP)
 
Sustentation: Research and development
 
Asset
 
Research
 
19
 
12-1-2012
SQM Salar S.A
 
LPPJ – EID Enlargement SOP (Project: Dual Plant  Phase II)
 
Capacity enlargement
 
Asset
 
Not Classified
 
14
 
12-1-2012
SQM Salar S.A
 
LPTF – Study and environmental prospection 2010
 
Sustentation
 
Asset
 
Not Classified
 
255
 
12-1-2011
SQM Salar S.A
 
LPTJ – Sanitary Water improvement works
 
Sustentation
 
Asset
 
Not Classified
 
147
 
6-1-2011
 
  
 
  
 
  
 
  
Total
  
10,278
   
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
146

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
  
Note 24 – The Environment (continued)
Future expenses

Identification of the
Parent Company or
subsidiary 
 
Name of the project to which the disbursement is
associated
 
Concept by which the disbursement was made or will
be made
 
Asset / Expense
 
Description of the
Asset or Expense
Item
 
Amount of
Disbursement
for the Period
ThUS$
 
Certain or estimated
date in which
disbursements were
or will be made 
SQM Industrial S.A.
 
Management of environment (Budget 2011- Expense 2011)
 
Not Classified
 
Expense
 
Not Classified
 
1,628
 
12-1-2011
SQM Industrial S.A.
 
ANMI – Consulting in infrastructure to store hazardous chemicals
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
4
 
6-1-2011
SQM Industrial S.A.
 
FP55 - FPXA - EIS Zone Mine PB - EIS Enlargement PB (Projects: Agua de Mar Pampa Blanca - Agua de Mar Phase I)
 
Sustentation
 
Asset
 
Development
 
284
 
12-1-2012
SQM Industrial S.A.
 
IQ5B – Making of paving Stone for transfer pumps
 
Capacity enlargement
 
Asset
 
Not Classified
 
110
 
12-1-2011
SQM Industrial S.A.
 
MNYS – Action for the dissemination of cultural heritage technology change Maria Elena
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
77
 
12-1-2012
SQM Industrial S.A.
 
MP5W – Normalization  of TK Fuels
 
Sustentation
 
Asset
 
Not Classified
 
693
 
12-1-2011
SQM Industrial S.A.
 
MPQU – Warehouse construction  for hazardous chemical supplies
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
450
 
12-1-2011
SQM Industrial S.A.
 
MQ51 – Reference terms heritage actions Project ME
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
8
 
12-31-2011
SQM Industrial S.A.
 
PPC1 – Elimination of PCB switches In sub stations 3 and 1/12 Pedro de Valdivia
 
Sustentation: Replacement of equipment
 
Asset - Expense
 
Not Classified
 
171
 
12-1-2011
SQM Industrial S.A.
 
PPNK – Handling of PV  Ammoniac in plant detention
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
177
 
12-1-2011
SQM Industrial S.A.
 
PPZU – Normalize and Certify Fuel Tanks in Plants
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
,.054
 
12-1-2011
Minera Nueva Victoria S.A.
 
IQ4C – Camp Development (Osmosis and other)
 
Capacity enlargement
 
Asset
 
Not Classified
 
3,000
 
12-31-2012
SIT S.A.
 
TPLR – Implementation of pump system for used water to waste
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
10
 
6-1-2011
SIT S.A.
 
TPM7 – Environmental nets in field 3 and 4
 
Not Classified
 
Asset - Expense
 
Not Classified
 
15
 
6-1-2011
SIT S.A.
 
TPR8 – Elimination of riles generation through vacuum
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Not Classified
 
96
 
12-1-2011
SIT S.A.
 
TPYX – Enabling the dust collector in the crib and sealed of field 3  Tocopilla
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
200
 
12-1-2011
SQM S.A.
 
AQ0A - Drilling of 4 wells Change Collection Point in Pampa del Tamarugal
 
Sustentation: Natural Resources
 
Asset
 
Development
 
485
 
12-1-2011
SQM S.A.
 
IPFT – Cultural heritage Region I
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
32
 
12-1-2011
SQM S.A.
  
IPXE - Environmental monitoring plan Salar de Llamara
  
Sustentation: Risk prevention and the environment
  
Expense
  
Not Classified
  
663
 
12-1-2012
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
147

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24 – The Environment (continued)
Future expenses (continued)

Identification of the
Parent Company or
subsidiary 
 
Name of the project to which the disbursement is
associated
 
Concept by which the disbursement was made or will be
made
 
Asset / Expense
 
Description of the
Asset or Expense
Item
 
Amount of
Disbursement for
the Period ThUS$
 
Certain or estimated
date in which
disbursements were
or will be made 
SQM S.A.
 
IPXF - Environmental monitoring plan Pampa del Tamarugal
 
Sustentation: Risk prevention and the environment
 
 Expense
 
Not Classified
 
884
 
12-1-2012
SQM S.A.
 
IQ08 - PSA Llamara & Pampa del Tamarugal
 
Sustentation: Natural Resources
 
 Expense
 
Development
 
774
 
12-1-2011
SQM S.A.
 
IQ0C – Enhancement Mine Zone NV
 
Sustentation: Risk prevention and the environment
 
 Expense
 
Not Classified
 
131
 
12-1-2011
SQM S.A.
 
IQ1K – Construction of 3 observation wells in Sur Viejo
 
Sustentation: Natural Resources
 
Asset
 
Development
 
200
 
12-1-2011
SQM S.A.
 
IQ1M - PSA Water re-injection to Puquíos Llamara
 
Not Classified
 
Asset
 
Not Classified
 
1,140
 
12-1-2011
SQM S.A.
 
IQ3S – Standardization of handling hazardous supplies
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
400
 
12-30-2012
SQM S.A.
 
IQ52 – Environment office in Nueva Victoria
 
Not Classified
 
Asset
 
Not Classified
 
30
 
12-31-2011
SQM S.A.
 
IQ53 – Cultural heritage  adduction path  Soronal (Pampa Hermosa)
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
20
 
12-1-2011
SQM S.A.
 
IQ54 – Cultural heritage Pampa Hermosa
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
337
 
12-1-2011
SQM S.A.
 
SCI6 – Environmental Arrays – Project Region I
 
Not Classified
 
 Expense
 
Not Classified
 
1
 
6-1-2011
SQM Nitratos S.A
 
IP6W –Riles treatment plant
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
56
 
12-1-2010
SQM Nitratos S.A
 
PP0V – Environmental projects maintenance ME-PV-NV-PB
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Development
 
4
 
6-1-2011
SQM Salar S.A
 
CPTP - Installation of emergency showers drinking water
 
Sustentation
 
Asset
 
Not Classified
 
12
 
12-1-2011
SQM Salar S.A
 
CPZH – Handling of discards Hydroxide press machine filters
 
Sustentation: Risk prevention and the environment
 
 Expense
 
Not Classified
 
33
 
12-1-2011
SQM Salar S.A
 
CQ4M – Regularization of Facilities for Contractors
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
18
 
12-31-2011
SQM Salar S.A
 
LP5J – Water recharge study Salar de Atacama
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Research
 
29
 
12-1-2011
SQM Salar S.A
 
LP82 – Project to foster agricultural activities in locations of Salar
 
Sustentation
 
 Expense
 
Development
 
479
 
12-1-2012
SQM Salar S.A
 
LPTF –Study and environmental prospection 2010
 
Sustentation
 
Asset - Expense
 
Not Classified
 
140
 
12-1-2011
SQM Salar S.A
 
LPTJ – Improvements in sanitary Works
 
Sustentation
 
Asset
 
Not Classified
 
52
 
6-1-2011
SQM Salar S.A
 
LQ33 – Regularizations in Salar
 
Not Classified
 
Asset - Expense
 
Not Classified
 
300
 
12-1-2011
SQM Salar S.A
 
LQ38 – Sludge drying court
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Not Classified
 
154
 
12-1-2011
 
  
 
  
 
  
 
  
Total
  
16,351
   
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
148

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24 – The Environment (continued)
Accumulated expenses performed as of 12/31/2010
Identification of the
Parent Company or
subsidiary 
 
Name of the project to which the disbursement is
associated
 
Concept by which the disbursement was made or will
be made
 
Asset / Expense
 
Description of the
Asset or Expense
Item
 
Amount of
Disbursement 
for the
Period
ThUS$
 
Certain or estimated
date in which
disbursements were
or will be made 
SQM Industrial S.A
 
Management on environment (Expense2010)
 
Operations
 
Expense
 
Not classified
 
1,270
 
12-1-2011
 SQM Industrial S.A
 
MCLX – Yards cleaning
 
Costs reduction
 
Expense
 
Development
 
604
 
10-1-2010
SQM Industrial S.A
 
ANMI – Consulting in infrastructure to store hazardous chemicals
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
46
 
12-1-2010
SQM Industrial S.A
 
MNH8 – Improvements in lightning
 
Sustentation
 
Expense
 
Development
 
228
 
12-1-2010
SQM Industrial S.A
 
SCCY – Hazardous waste landfill
 
Sustentation
 
Asset - Expense
 
Development
 
165
 
12-1-2010
SQM Industrial S.A
 
JNTU – Water assessment  San Isidro
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
556
 
12-31-2010
SQM Industrial S.A
 
JNNX – Environment miscellaneous Nitrate
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
51
 
12-1-2010
SQM Industrial S.A
 
MNTE – Industrial Hygiene equipment
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
19
 
12-1-2010
SQM Industrial S.A
 
INST – Acquisition of used lubricant quick discharge. NV-ME-PB
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
46
 
7-1-2010
SQM Industrial S.A
 
MP17 - Normalization  of drinking water chlorination ME/CS/PV
 
Sustentation
 
Asset
 
Not classified
 
7
 
12-1-2010
SQM Industrial S.A
 
MP5W – Normalization of TK Fuel
 
Sustentation
 
Asset
 
Not classified
 
397
 
12-1-2010
SQM Industrial S.A
 
FNWR - EID Pampa Blanca discard yard
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
30
 
12-1-2010
SQM Industrial S.A
 
MNYS – Actions for the dissemination of cultural heritage, technology changes Maria Elena
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
21
 
12-31-2010
SQM Industrial S.A
 
FP55 - FPXA - EIS Mine Zone PB - EIA Enlargement PB (Projects: Agua de Mar Pampa Blanca - Agua de Mar Phase I)
 
Sustentation
 
Asset
 
Development
 
1,106
 
12-31-2010
SQM Industrial S.A
 
MP8Z – Automation of water volume inlet pipe ME, CS and Vergara
 
Sustentation
 
Asset
 
Development
 
523
 
12-1-2010
SQM Industrial S.A
 
MPL5 – Repair of sanitary and electric facilities
 
Sustentation
 
Asset
 
Development
 
184
 
10-1-2010
SQM Industrial S.A
 
MPIS - Stabilization of streets and suppression of dust at sidewalks
 
Sustentation
 
Asset
 
Development
 
736
 
10-1-2010
SQM Industrial S.A
 
PPNK – Handling of PV ammoniac in plant Detention
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not classified
 
22
 
12-1-2010
SQM Industrial S.A
 
MPGF – Improvement of the sealing and pressurization  room 031
 
Sustentation
 
Asset - Expense
 
Not classified
 
48
 
12-1-2010
SQM Industrial S.A
 
TPO4 – Indigenous camping
 
Sustentation
 
Asset
 
Not classified
 
88
 
6-11-2010
SQM Industrial S.A
 
MPLS – Automated alarms and information of Hospital Monitoring Station
 
Not classified
 
Asset
 
Not classified
 
10
 
12-1-2010
Minera Nueva Victoria S.A.
 
IPNW – Improvements in pavilions C/D/B in Iris
 
Sustentation
 
Asset
 
Not classified
 
44
 
12-1-2010
Minera Nueva Victoria S.A.
 
IPMN – Enlargement of Sanitary capacity Iris
 
Capacity enlargement
 
Asset
 
Development
 
85
 
12-1-2010
SQM Nitratos S.A
  
PNH2 – Riles treatment plant, washer pavement PV-NV-PB
  
Sustentation: Risk prevention and the environment
  
Asset - Expense
  
Development
  
48
 
6-29-2010
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
149

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Nota 24 – The Environment (continued)
Accumulated expenses performed as of 12/31/2010 (continued)
Identification of the
Parent Company or
subsidiary 
 
Name of the project to which the disbursement is associated
 
Concept by which the disbursement was made or will
be made
 
Asset / Expense
 
Description of the
Asset or Expense
Item
 
Amount of
Disbursement 
for the
Period
ThUS$
 
Certain or estimated
date in which
disbursements were
or will be made 
SQM Nitratos S.A
 
PP0V -  Environmental projects maintenance ME-PV-NV-PB
 
Sustentation: Risk prevention and the environment
 
Asset - Expense
 
Development
 
82
 
12-1-2010
SQM Nitratos S.A
 
IP6W – Riles treatment plant
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
95
 
12-1-2010
SQM Nitratos S.A
 
PPAT –Risk prevention projects Sem II 2008
 
Sustentation: Risk prevention and the environment
 
Expense
 
Development
 
157
 
12-1-2010
SQM Salar S.A
 
LP5K – Environmental evaluation Extension in production capacity MOP
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
4
 
12-1-2010
SQM Salar S.A
 
LNNT - Renewal of Chaxa meteorological station
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
98
 
12-1-2010
SQM Salar S.A
 
LP5J – Water recharge study Salar de Atacama
 
Sustentation: Risk prevention and the environment
 
Expense
 
Research
 
83
 
12-31-2010
SQM Salar S.A
 
LPIL - EID Modification Plant SOP (Project: Dual  Plant MOP-SOP)
 
Capacity enlargement
 
Asset
 
Development
 
17
 
12-1-2010
SQM Salar S.A
 
LPIK - EID Drying plant Potassium Chloride (Drying Project MOP)
 
Capacity enlargement
 
Asset
 
Development
 
19
 
12-1-2010
SQM Salar S.A
 
LP82 – Project to Foster the agricultural activities in locations of Salar
 
Sustentation
 
Expense
 
Development
 
331
 
12-31-2012
SQM Salar S.A
 
LPGA – Construction of  a pit to perform  waste water infiltrations Toconao camp
 
Capacity enlargement
 
Asset
 
Not Classified
 
109
 
9-30-2010
SQM Salar S.A
 
LPK2 - Currency Exchange facility – set up
 
Not Classified
 
Asset
 
Not Classified
 
102
 
12-1-2010
SQM Salar S.A
 
LPN3 - EID New plant for dried and compacted (Project: Granulation and Compaction MOP)
 
Sustentation: Research and development
 
Asset
 
Research
 
19
 
12-31-2011
SQM Salar S.A
 
CPTP – Implementation  of emergency showers drinking water
 
Sustentation
 
Asset
 
Not Classified
 
14
 
4-1-2011
SQM Salar S.A
 
LPTF – Study and Environmental prospection 2010
 
Sustentation
 
Asset/Expense
 
Not Classified
 
169
 
12-31-2010
SQM Salar S.A
 
LPTJ – Improving in sanitary Works
 
Sustentation
 
Asset
 
Not Classified
 
95
 
5-1-2011
SQM Salar S.A
 
LPPJ – EID Extension SOP (Project: Dual Plant Phase II)
 
Capacity enlargement
 
Asset
 
Not Classified
 
14
 
12-31-2011
SIT S.A.
 
TNLA – Road paving Port – Worksite
 
Sustentation: Risk prevention and the environment
 
Asset
 
Development
 
82
 
12-1-2010
SIT S.A.
 
PNOT – Improving of lightning in FFCC area
 
Sustentation
 
Asset
 
Development
 
369
 
12-1-2010
SIT S.A.
 
TPR8 – Elimination of riles generation through vacuum
 
Sustentation: Risk prevention and the environment
 
Asset – Expense
 
Not Classified
 
54
 
12-1-2010
SIT S.A.
 
TPLR – Implementation of pump system for used water to waste
 
Sustentation: Risk prevention and the environment
 
Asset
 
Not Classified
 
68
 
12-1-2010
SIT S.A.
 
TPM7 – Environmental nets for fields 3 and 4
 
Not Classified
 
Asset – Expense
 
Not Classified
 
524
 
6-30-2011
SQM S.A.
 
SCI6 – Environmental arrays – Project Region I
 
Not Classified
 
Expense
 
Not Classified
 
2,376
 
10-1-2010
SQM S.A.
 
AQ0A – Drilling of 4 pits Change Collection Point Pampa del Tamarugal
 
Sustentation: Natural Resources
 
Asset
 
Development
 
5
 
3-30-2011
SQM S.A.
 
IPFT –Cultural heritage Region I
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
111
 
12-31-2011
SQM S.A.
 
IPXE – Environmental monitoring plan  Salar de Llamara
 
Sustentation: Risk prevention and the environment
 
Expense
 
Not Classified
 
4
 
12-31-2012
 
  
 
  
 
  
 
  
 
  
11,335
   
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
150

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24 – The Environment (continued)

24.3
Description of each project indicating whether these are in process or have been finished.

SQM Industrial S.A.

ANMI: Compliance with technical, legal aspects and specific standards required with respect to warehousing, signaling, safety and main factors associated with materials, products and supplies which are handled in the mine site. In addition, the Company will implement an improvement in the warehouse infrastructure for the storage of hazardous chemicals.  This project is  in the process of closure.

FNWR: Preparation and processing of EIP (Environmental Impact Performance) for the Pampa Blanca discard yard. This project is in the process of closure.

FP55 – FPXA: These two projects have a common final objective which relate to the installation of the 87 kilometer sea water adductor system from the Mejillones zone to the Company’s facilities in Pampa Blanca. Expenses considered relate solely to environmental processing in EIA (Environmental Impact Assessment) PB Mine Zone and EIA PB Extension. These projects are being executed.
 
JNTU: Assessment of the environmental impact of San Isidro water. This project is in the process of closure.
  
JPX9: The final objective of this project is to perform testing on two processes in order to eliminate the perchlorate from certain products. However, the related expenses solely relate to the processing of EIP (Environmental Impact Performance), Improvement in the granulation prilling plant in Coya Sur. The project is being executed.

MNYS: Preparation and execution of the geoglyphs preservation project.  Edition and publishing of a book in addition to implementing a dissemination center. Construction and habilitation of a collection deposit. All offsetting steps for the Technological Change at Maria Elena project. This project is being executed.

MP17: A study and identification will be conducted in respect to the current water chlorination system at Maria Elena, Coya Sur and Pedro de Valdivia facilities for the subsequent implementation and start-up of water chlorination in accordance with standards in force.  This project is in the process of  closure.

MP5W: Normalization of the system for the storage and distribution of fuel at the Company’s facilities.  This project is being executed.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
151

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24 – The Environment (continued)

24.3
Description of each Project indicating whether these are in process or have been finished (continued)

MPIS: Improve the urban situation at Maria Elena, placing a stabilization layer with product at the streets and anti-dust treatment with product in sidewalks.  This project is  in the process of closure.

MPL5: Improvement of a portion of the water network infrastructure and sewage system at Maria Elena. This project is  in the process of closure.

MPLS: Implement alarms via emails as to peak concentration of particle materials and change in the recording of information from text files to database for the implementation of reports. This project is being executed. This project is  in the process of closure.

MQ51: The objective of this project is to generate the reference terms to implement the equity measure established in RCA N°0076/2000 which environmentally approves the EID of María Elena’s project. This project is being executed.

PPNK: Project to ensure the control of ammonia gas in crystal plant stoppage. This project is in the process of closure.

PPZU: Will be conducted all actions required to standardize and certify the fuel tanks in plants located in María Elena, Coya Sur and Pedro de Valdivia. This project is being executed.

Minera Nueva Victoria S.A.

IPMN: Extend the sanitary capacity of the IRIS camp through the construction of 3 wells. This project is in the process of closure.

IPNW: Relates to the replacement or impaired sanitary in order to improve the hygiene conditions. This project is in the process of closure.

SIT S.A.

TPLR: The objective of the process is being able to discharge waste water generated in the Tocopilla port to the public sewage system.  This project is in the process of closure.

TPM7: Meshes will be acquired which will be installed in yards 3 and 4 to control dust emissions in sieving operations and protect product from emissions generated by the power plant. This project is in the process of closure.

TPR8: This project is intended to decrease riles generation by means of using non-wash and vacuum technologies, through the implementation of a vacuum system which avoid the use of water and therefore, the generation of riles. This project is being executed.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
152

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24 – The Environment (continued)

24.3
Description of each project indicating whether these are in process or have been finished (continued)

SQM S.A.

AQ0A: Being able to use the water rights which were granted in several pits within the reserve of Conaf Pampa del Tamarugal and take them out of both, the tamarugal forests and the reserve, mitigating the environmental impact of its exploitation. This project is being executed.

IPFT: This project contemplates the implementation of heritage steps committed in the projects referred to as Nueva Victoria Mine Zone, Nueva Victoria Operation Updates, Iris Duct and Evaporation Pools. This project is being executed.

IPXE: This Project contemplates the implementation of an environmental monitoring plan referred to as Project Pampa Hermosa in Salar de Llamara. This project is being executed.

IPXF: Implement the environmental monitoring plan of the Project referred to as Pampa Hermosa in Pampa del Tamarugal. This project is being executed.

IQ08: The Project considers the following work for aquifers of Pampa del Tamarugal and Salar de Llamara: Construction and Preparation of observation and monitoring wells, pumping tests, construction of roads on terrain referred to as chusca and crust Salar. This project is being executed.

IQ0C: This Project contemplates implementing an improvement program for an area which is  adjacent to Route 5, which will allow developing a self-guided path of the area referred to as Cantón de Lagunas within the historical saltpeter context. This project is being executed.

IQ1M: Implementing the environmental commitment included in the EIS of the Project referred to as  “Pampa Hermosa” in order to protect the area of springs existing in the Aquifer Salar de Llamara. This project is being executed.

IQ54: This project contemplates the implementation of the environmental heritage commitment obtained through the environmental evaluation on Project Pampa Hermosa (RCA N°890/2010). This project is being executed.

SCI6: This project is intended to obtain environmental licenses for the Development projects in Region I of Chile including all pieces of work related to initial environmental requirements which allow that Operations execute the project’s construction and operation. The environmental evaluation to obtain the related license would be conducted through EIA, which contemplates the preparation and processing of the document and also includes specific environmental study activities (the study of tamarugos in Llamara and P. Tamarugal, archeological mitigation steps, environmental study of Loa river, hydro geological studies.) This project is in the process of closure.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
153

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24 – The Environment (continued)

24.3   Description of each project indicating whether these are in process or have been finished (continued)

SQM Nitratos S.A.

IP6W: Design and construct pouring off tanks for mud, water, oil and a pool with a pump to re-use poured off water, metallic pools to remove mud.  This project is in the closure process.

PP0V: Installation of a container for hazardous waste at workshops for maintenance and removal of liquid industrial waste from hydraulic filters, workshop for mine maintenance at Maria Elena, Pedro de Valdivia, Nueva Victoria and Pampa Blanca.  This project is in the process of closure.

SQM Salar S.A.

CPTP: This Project contemplates changing the current industrial water supply into drinking water in order to comply with the regulation in force of DS 72. This project is being executed.

CPZH: The objective of this Project is the safe and fast recover of the LiOH cake and discard, not discharging it to the ground, avoiding splashing it to surrounding areas which would expose the operators working nearby to harm. This project is being executed.

LP5J: Conduct analyses to define the hydrological units in the basin, quantify the reload to the aquifer through environmental isotopic techniques. This project is being executed.

LP82: Support for the development of demonstration estate, technical support for the application of improvements in watering and agricultural practices. This project is being executed.

LPIK: The final Project contemplates the construction of a new MOP dryer. Due to the fact that in the Salar de Atacama location, the current plant of Drying Compacted will be used for other purposes. The expenses considered only correspond to the processing of the EID Dryer Plant Potassium Chloride. This project is in the closure process.

LPN3: Perform conceptual engineering and construction of a new plant of granulated –compacting in Salar de Atacama. The expenses considered only correspond to the processing of the EIP New Dryer and Compacting Plant. This project is being executed.

LPPJ: This Project is intended to enlarge the dual plant of Salar de Atacama. This will allow the plant to produce simultaneously MOP and SOP, thus, increasing its capacity. The expenses considered only correspond to the processing of the EIP Enlargement SOP. This project is being executed.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
154

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 24 – The Environment (continued)

24.3    Description of each project indicating whether these are in process or have been finished (continued)
 
LPTF: Perform semiannual reports which are necessary to present improvements and optimizations to the environmental control points. An improvement should be made to the environmental geological and hydro geological variables in Atacama Salar. This project is being executed.

LPTJ: The project relates to the acquisition of stand equipment in order to ensure the operating continuity of plants TAS and OR, change in the current level control system in drinking water accumulation TKs, used water and used water lifting chambers, among others. This project is in the process of closure.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
155

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 25 -  Other current and non-current non- financial assets

As of March 31, 2011 and as of December 31, 2010, the composition of the other current and non-current assets is detailed as follows:

Other current assets  
3/31/2011
   
12/31/2010
 
   
ThUS$
   
ThUS$
 
Agreement termination bonus
    2,072       2,108  
Domestic Value Added Tax
    19,581       30,795  
Foreign Value Added Tax
    5,562       4,167  
Mine licenses prepaid
    6,854       1,281  
Prepaid insurances
    4,353       4,575  
Prepaid leases
    30       30  
Sea concessions
    -       48  
Other prepaid
    1,000       86  
Other assets
    975       1,352  
Total
    40,427       44,442  

Other non-current assets  
3/31/2011
   
12/31/2010
 
 
 
ThUS$
   
ThUS$
 
Agreement termination bonus
    1,070       1,538  
Stain development expenses and prospecting expenses (1)
    18,928       21,350  
Income taxes recoverable
    648       651  
Deposits held in guarantee
    505       514  
Other assets
    85       104  
Total
    21,236       24,157  
 
 
(1)
Assets for the exploration and evaluation of mineral resources are amortized when the explored or evaluated sector is exploited. For this purpose, a variable rate is applied to extracted tons, which is determined based on the measured initial reserve and evaluation cost.  The Company presents expenses associated with Exploration and Evaluation of Mineral Resources.  Of these expenses those that are under exploitation are included under Inventories and are amortized according to the estimated contained ore reserves and expenses associated with future reserves are presented under Other non-current assets.  Those expenses incurred on properties with low ore grade which is not economically exploitable are directly charged to income. As of March 31, 2011, balances associated with the exploration and evaluation of mineral resources are presented under Inventories for ThUS$ 5.178 (ThUS$ 1,723 as of December 31, 2010)
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
156

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Nota 25 -  Other current and non-current non-financial assets (continued)

Reconciliation of changes in assets for exploration and mineral resource evaluation, by classes

Movements in assets for the exploration and evaluation of mineral resources as of March 31, 2011 and December 31, 2010:

Reconciliation  
3/31/2011
   
12/31/2010
 
 
 
ThUS$
   
ThUS$
 
             
Assets for the exploration and evaluation of mineral resources, net, beginning balance
    21,350       26,832  
Changes in assets for exploration and evaluation of mineral resources:
               
Additions, different from business combinations
    1,452       -  
Depreciation and amortization
    (449 )     (2,044 )
Increase (decrease) for transfers and other charges
    (3,425 )     (3,438 )
Assets for exploration and evaluation of mineral resources, net, final balance
    18,928       21,350  

At the date of presentation, no reevaluations of assets for exploration and evaluation of mineral resources have been conducted.
 
SQM
Los Militares 4290
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
157

 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 26 – Operating segments

26.1
Operating segments

In accordance with IFRS 8 "Operating segments", the Company provides financial and descriptive information about the segments it has defined in consideration of available annual separate financial information, which is regularly evaluated by the maximum authority in making operating decisions with the purpose of deciding how to assign resources and evaluate performance.

Operating segments relate to the following groups of products which provide profit from the performance of ordinary activities, for which the Company incurs expenses and the result of which is regularly reviewed by the Company's maximum authority in the decision-making process:

1.- Specialty plant nutrients
2.- Iodine and its derivatives
3.- Lithium and its derivatives
4.- Industrial chemicals
5.- Potassium chloride
6.- Other products and services

Information relative to assets, liabilities and profit and expenses which cannot be assigned to the segments indicated above, due to the nature of production processes, is included under the "Corporate Unit" category of information disclosed.
  
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com

 
158

 

Notes to the interim consolidated financial statements as of March 31, 2011

Note 26 – Operating segments (continued)

26.2
Statements of comprehensive income classified by operating segment based on product groups, as of March 31, 2011

Items in the statement of comprehensive profit
 
Specialty
plant nutrients
ThUS$
   
Iodine and
its
derivatives
ThUS$
   
Lithium and
its
derivatives
ThUS$
   
Industrial
chemicals
ThUS$
   
Potassium
chloride
ThUS$
   
Other
products
and
services
ThUS$
   
Corporate
unit 
ThUS$
   
Total
segments
and
Corporate
unit 
ThUS$
 
                                                 
Ordinary profit
    170,999       93,866       42,327       34,267       125,324       13,252       -       480,035  
Cost of sales of Ordinary profit
    (116,130 )     (47,653 )     (24,608 )     (19,989 )     (71,688 )     (12,362 )     -       (292,430 )
Gross margin
    54,869       46,213       17,719       14,278       53,636       890       -       187,605  
Other incomes, by function
    -       -       -       -       -       -       3,336       3,336  
Administrative expenses
    -       -       -       -       -       -       (20,568 )     (20,568 )
Other expenses, by function
    -       -       -       -       -       -       (14,965 )     (14,965 )
Other profit (loss)
    -       -       -       -       -       -       (109 )     (109 )
Financial interest
    -       -       -       -       -       -       5,657       5,657  
Financial costs
    -       -       -       -       -       -       (10,627 )     (10,627 )
Participation in profit (loss) of associated and business combination through the equity method
    -       -       -       -       -       -       3,657       3,657  
Exchange differences
    -       -       -       -       -       -       (2,899 )     (2,899 )
Profit (loss ) before income tax
    54,869       46,213       17,719       14,278       53,636       890       (36,518 )     151,087  
Income  tax expense
    -       -       -       -       -       -       (38,956 )     (38,956 )
Profit (loss ) prom continued operations
    54,869       46,213       17,719       14,278       53,636       890       (75,474 )     112,131  
Profit (loss ) from discontinued operations
    -       -       -       -       -       -       -       -  
Profit (loss)
    54,869       46,213       17,719       14,278       53,636       890       (75,474 )     112,131  
Profit  (loss ) attributable to:
                                                               
Profit  (loss ) attributable to the controlling ownership
    -       -       -       -       -       -       -       111,395  
Profit (loss ) attributable to participations non-controlling
    -       -       -       -       -       -       -       736  
Profit (loss)
    -       -       -       -       -       -       -       112,131  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
159

 
 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 26 – Operating segments (continued)

26.2
Statements of comprehensive income classified by operating segment based on product groups, as of March 31, 2010

Items in the statement of comprehensive profit
 
Specialty
plant nutrients
ThUS$
   
Iodine and
its
derivatives
ThUS$
   
Lithium and
its
derivatives
ThUS$
   
Industrial
chemicals
ThUS$
   
Potassium
chloride
ThUS$
   
Other
products
and
services
ThUS$
   
Corporate
unit 
ThUS$
   
Total
segments
and
Corporate
unit 
ThUS$
 
                                                 
Ordinary profit
    128,165       62,919       33,914       27,414       124,673       11,438       -       388,523  
Cost of sales of Ordinary profit
    (87,332 )     (36,651 )     (18,432 )     (16,729 )     (87,037 )     (10,844 )     -       (257,025 )
Gross margin
    40,833       26,268       15,482       10,685       37,636       594       -       131,498  
Other incomes, by function
    -       -       -       -       -       -       1,625       1,625  
Administrative expenses
    -       -       -       -       -       -       (17,774 )     (17,774 )
Other expenses, by function
    -       -       -       -       -       -       (5,044 )     (5,044 )
Other profit (loss)
    -       -       -       -       -       -       (7,146 )     (7,146 )
Financial interest
    -       -       -       -       -       -       2,294       2,294  
Financial costs
    -       -       -       -       -       -       (7,812 )     (7,812 )
Participation in profit (loss) of associated and business combination through the equity method
    -       -       -       -       -       -       3,059       3,059  
Exchange differences
    -       -       -       -       -       -       (3,133 )     (3,133 )
Profit (loss ) before income tax
    40,833       26,268       15,482       10,685       37,636       594       (33,931 )     97,567  
Income  tax expense
    -       -       -       -       -       -       (20,696 )     (20,696 )
Profit (loss ) prom continued operations
    40,833       26,268       15,482       10,685       37,636       594       (54,627 )     76,871  
Profit (loss ) from discontinued operations
    -       -       -       -       -       -       -       -  
Profit (loss)
    40,833       26,268       15,482       10,685       37,636       594       (54,627 )     76,871  
Profit  (loss ) attributable to:
                                                               
Profit  (loss ) attributable to the controlling ownership
    -       -       -       -       -       -       -       76,493  
Profit (loss ) attributable to participations non-controlling
    -       -       -       -       -       -               378  
Profit (loss)
    -       -       -       -       -       -       -       76,871  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
160

 
 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 26 – Operating segments (continued)

26.3
Assets and liabilities by operating segment based on product groups as of March 31, 2011:
 
Items in the statement of
comprehensive income
 
Specialty plant
nutrients
ThUS$
   
Iodine and
its
derivatives
ThUS$
   
Lithium
and its
derivatives
ThUS$
   
Industrial
chemicals
ThUS$
   
Potassium
chloride
ThUS$
   
Other
products
and
services
ThUS$
   
Corporate
unit 
ThUS$
   
Eliminations
consolidation
process
associated
with operating
segments
ThUS$
   
Total
segments
and
Corporate
Unit 
ThUS$
 
                                                       
Current assets
    -       -       -       -       -       -       5,338,749       (3,583,134 )     1,755,615  
Non-current assets
    -       -       -       -       -       -       4,319,994       (2,591,352 )     1,728,642  
                                                                         
Total assets
    -       -       -       -       -       -       9,658,743       (6,174,486 )     3,484,257  
                                                                         
Current liabilities
    -       -       -       -       -       -       3,775,309       (3,287,954 )     487,355  
Non-current liabilities
    -       -       -       -       -       -       1,457,430       (241,059 )     1,216,371  
Total shareholders’ equity
    -       -       -       -       -       -       4,426,004       (2,645,473 )     1,780,531  
                                                                         
Total Liability and shareholders’ equity
    -       -       -       -       -       -       9,658,743       (6,174,486 )     3,484,257  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
161

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 26 – Operating segments (continued)

26.3
Assets and liabilities by operating segment based on product groups as of December 31, 2010:
 
Items in the statement of
comprehensive income
 
Specialty plant
nutrients
ThUS$
   
Iodine and
its
derivatives
ThUS$
   
Lithium
and its
derivatives
ThUS$
   
Industrial
chemicals
ThUS$
   
Potassium
chloride
ThUS$
   
Other
products
and
services
ThUS$
   
Corporate
unit 
ThUS$
   
Eliminations
consolidation
process
associated
with operating
segments
ThUS$
   
Total
segments
and
Corporate
Unit 
ThUS$
 
                                                       
Current assets
    -       -       -       -       -       -       4,938,010       (3,242,747 )     1,695,263  
Non-current assets
    -       -       -       -       -       -       4,081,722       (2,404,149 )     1,677,573  
                                                                         
Total assets
    -       -       -       -       -       -       9,019,732       (5,646,896 )     3,372,836  
                                                                         
Current liabilities
    -       -       -       -       -       -       3,430,952       (2,954,115 )     476,837  
Non-current liabilities
    -       -       -       -       -       -       1,457,467       (232,288 )     1,225,179  
Total shareholders’ equity
    -       -       -       -       -       -       4,131,313       (2,460,493 )     1,670,820  
                                                                         
Total Liability and shareholders’ equity
    -       -       -       -       -       -       9,019,732       (5,646,896 )     3,372,836  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
162

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 26 – Operating segments (continued)
26.4
Disbursements of the segment’s non-cash assets as of March 31, 2011:

Identification of disbursements of non-monetary assets
 
Chile 
ThUS$
   
Latin America
and the
Caribbean
ThUS$
   
Europe 
ThUS$
   
North America
ThUS$
   
Asia and
others 
ThUS$
   
Balances
according to the
Statement of
Financial
Position 
ThUS$
 
                                     
Investments in joint ventures
    -       -       -       -       2,500       2,500  
SQM Quindao - Star
    -       -       -       -       -       -  
SQM Migao Sichuan
                                    2,500       2,500  
Amounts in additions of non-current assets
    112,431       -       -       -       -       112,431  
- Property, plant and equipment
    112,341       -       -       -       -       112,341  
- Intangible assets
    90       -       -       -       -       90  
Total segments
    112,431       -       -       -       2,500       114,931  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
163

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
  
Note 26 – Operating segments (continued)

26.4
Disbursements of the segment’s non-cash assets as of December 31, 2010:

Identification of disbursements of non-monetary assets
 
Chile 
ThUS$
   
Latin America
and the
Caribbean
ThUS$
   
Europe 
ThUS$
   
North America
ThUS$
   
Asia and
others 
ThUS$
   
Balances
according to the
Statement of
Financial
Position 
ThUS$
 
                                     
Investments in joint ventures
    -       -       -       -       3,500       3,500  
SQM Quindao - Star
    -       -       -       -       1,000       1,000  
SQM Migao Sichuan
                                    2,500       2,500  
Amounts in additions of non-current assets
    335,997       -       -       -       -       335,997  
- Property, plant and equipment
    335,632       -       -       -       -       335,632  
- Intangible assets
    365       -       -       -       -       365  
Total segments
    335,997       -       -       -       3,500       339,497  
 
26.5
Information on products and services for external customers

Revenues of ordinary activities from external customers by product and service groups as of March 31, 2011 are detailed as follows:

Items in the statement of comprehensive
income
 
Specialty plant
nutrients
ThUS$
   
Iodine and
its
derivatives
ThUS$
   
Lithium and
its
derivatives
ThUS$
   
Industrial
chemicals
ThUS$
   
Potassium
chloride
ThUS$
   
Other
products
and services
ThUS$
   
Total
segments and
Corporate Unit
ThUS$
 
                                           
Revenue
    170,999       93,866       42,327       34,267       125,324       13,252       480,035  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
164

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 26 – Operating segments (continued)
 
26.5
Information on products and services for external customers (continued)

Revenues of ordinary activities from external customers by product and service groups as of March 31, 2010 are detailed as follows:

Items in the statement of comprehensive
income
 
Specialty plant
nutrients
ThUS$
   
Iodine and
its
derivatives
ThUS$
   
Lithium and
its
derivatives
ThUS$
   
Industrial
chemicals
ThUS$
   
Potassium
chloride
ThUS$
   
Other
products
and services
ThUS$
   
Total
segments and
Corporate Unit
ThUS$
 
                                           
Revenue
    128,165       62,919       33,914       27,414       124,673       11,438       388,523  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
165

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 26 – Operating segments (continued)

26.6
Information on geographical areas

As indicated in paragraph 33 of IFRS 8, the entity discloses geographical information on its profit from ordinary activities from external customers and from non-current assets which are not financial instruments, deferred income tax assets, assets related to post employment benefits and rights derived from insurance contracts.

26.7
Revenue from external customers, classified by geographical areas as of March 31, 2011:

Identification of revenue from external customers
 
Chile 
ThUS$
   
Latin America and
the Caribbean
ThUS$
   
Europe 
ThUS$
   
North America
ThUS$
   
Asia and others 
ThUS$
   
Balances
according to the
Statement of
comprehensive
income 
ThUS$
 
                                     
Revenue
    32,332       46,975       220,719       112,264       67,745       480,035  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
166

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 26 – Operating segments (continued)
 
26.7
Revenue from external customers, classified by geographical areas of March  31, 2010:

Identification of revenue from external customers
 
Chile 
ThUS$
   
Latin America
and the
Caribbean
ThUS$
   
Europe 
ThUS$
   
North America
ThUS$
   
Asia and others 
ThUS$
   
Balances
according to
the Statement
of
comprehensive
income 
ThUS$
 
                                     
Revenue
    17,889       44,045       153,585       100,276       72,728       388,523  

26.8
Non-current assets classified by geographical area as of March 31, 2011:

Non-current asset item, adjusted  (IFRS 8,33,b,1/11/2006)
 
Chile 
ThUS$
   
Latin America
and the
Caribbean
ThUS$
   
Europe 
ThUS$
   
North America
ThUS$
   
Asia and others 
ThUS$
   
Balances
according to
the Statement
of Financial
Position
ThUS$
 
                                     
Investments in associates recognized using the equity method of accounting
    1,505       -       21,360       7,660       36,519       67,044  
Intangible assets other than goodwill
    3,771       -       3       486       -       4,260  
Goodwill
    26,929       86       11,373       -       -       38,388  
Property, plant and equipment, net
    1,513,290       1,553       288       37       182       1,515,350  
Investment property
    1,365       -       -       -       -       1,365  
Other non-current assets
    20,553       317       -       -       366       21,236  
Balance to date
    1,567,413       1,956       33,024       8,183       37,067       1,647,643  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
167

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 26 – Operating segments (continued)

26.8
Non-current assets classified by geographical area, as of December 31, 2010:

Non-current asset item, adjusted  (IFRS 8,33,b,1/11/2006)
 
Chile 
ThUS$
   
Latin America
and the
Caribbean
ThUS$
   
Europe 
ThUS$
   
North America
ThUS$
   
Asia and others 
ThUS$
   
Balances
according to
the Statement
of Financial
Position
ThUS$
 
                                     
Investments in associates recognized using the equity method of accounting
    1,352       -       19,615       7,251       34,053       62,271  
Intangible assets other than goodwill
    2,765       -       4       501       -       3,270  
Goodwill
    24,147       86       11,373       724       2,058       38,388  
Property, plant and equipment, net
    1,451,576       1,858       331       40       168       1,453,973  
Investment property
    1,373       -       -       -       -       1,373  
Other non-current assets
    112,820       227       -       3,293       373       116,713  
Balance to date
    1,594,033       2,171       31,323       11,809       36,652       1,675,988  
 
26.9
Information on the main customers
In respect to the degree of dependency of the Company on its customers, in accordance with paragraph 34 of IFRS 8, the Company has no external customers which individually represent 10% or more of its profit from ordinary activities.  Credit risk concentrations with respect to trade and other receivables are limited due to the significant number of entities which compose the Company’s portfolio and its worldwide distribution. The Company’s policy is requiring guarantees (such as letters of credit, guarantee clauses and others) and/or maintaining insurance policies for certain accounts as deemed necessary by the Company's Management.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
168

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
  
Note 26 – Operating segments (continued)

26.10
Property, plant and equipment classified by geographical areas as of March 31, 2011:

Property, plant and equipment 
 
Chile
   
Latin America
and the
Caribbean
   
Europe
   
North America
   
Asia and others
   
Total
 
   
3/31/2011
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                     
Production facilities:
                                   
Coya Sur
    261,613       -       -       -       -       261,613  
María Elena
    139,125       -       -       -       -       139,125  
Nueva Victoria
    201,858       -       -       -       -       201,858  
Pampa Blanca
    19,963       -       -       -       -       19,963  
Pedro de Valdivia
    92,519       -       -       -       -       92,519  
Salar de Atacama
    497,055       -       -       -       -       497,055  
Salar del Carmen
    213,065       -       -       -       -       213,065  
Tocopilla (port facilities)
    66,069       -       -       -       -       66,069  
Subtotal production facilities
    1,491,267       -       -       -       -       1,491,267  
Corporate facilities:
                                               
Santiago
    14,933       -       -       -       -       14,933  
Antofagasta
    5,692       -       -       -       -       5,692  
Subtotal corporate facilities
    20,625       -       -       -       -       20,625  
Subtotal business offices
    1,398       1,553       288       37       182       3,458  
Total segments
    1,513,290       1,553       288       37       182       1,515,350  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
169

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 26 – Operating segments (continued)

26.10
Property, plant and equipment classified by geographical areas as of December 31, 2010:

Property, plant and equipment 
 
Chile
   
Latin America
and the
Caribbean
   
Europe
   
North America
   
Asia and others
   
Total
 
   
12/31/2010
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                                     
Production facilities:
                                   
Coya Sur
    256,570       -       -       -       -       256,570  
María Elena
    144,233       -       -       -       -       144,233  
Nueva Victoria
    202,134       -       -       -       -       202,134  
Pampa Blanca
    20,381       -       -       -       -       20,381  
Pedro de Valdivia
    84,992       -       -       -       -       84,992  
Salar de Atacama
    442,281       -       -       -       -       442,281  
Salar del Carmen
    213,488       -       -       -       -       213,488  
Tocopilla (port facilities)
    63,521       -       -       -       -       63,521  
Subtotal production facilities
    1,427,600       -       -       -       -       1,427,600  
Corporate facilities:
                                               
Santiago
    14,506       -       -       -       -       14,506  
Antofagasta
    6,831       -       -       -       -       6,831  
Subtotal corporate facilities
    21,337       -       -       -       -       21,337  
Subtotal business offices
    2,639       1,858       331       40       168       5,036  
Total segments
    1,451,576       1,858       331       40       168       1,453,973  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
170

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 27 – Other revenue, other expenses by function and other gains or losses

The breakdown of other revenue and other expenses is as follows:

a)   Other operating income
 
3/31/2011
ThUS$
   
3/31/2010
ThUS$
 
Discounts obtained from suppliers
    135       122  
Indemnities received
    285       -  
Fines charged to suppliers
    38       12  
Insurance recovery
    333       7  
Overestimate of provision for obligation with third parties
    556       479  
Bad debt overestimate
    104       -  
Sale of fixed assets
    99       1  
Sale of materials, spare parts and supplies
    302       227  
Other operating income
    818       29  
Miscellaneous services
    26       328  
Indemnities at Minera Esperanza
    57       420  
Overestimate of provision on inventories
    583       -  
Total
    3,336       1,625  

b)   Other expenses by function 
 
3/31/2011
ThUS$
   
3/31/2010
ThUS$
 
Bad debt impairment
    563       309  
V.A.T. and other non-recoverable taxes
    147       104  
Fines paid
    35       100  
Expenses related to investment plan
    2,363       2,900  
Grants not accepted as credit
    386       857  
Indemnities paid
    871       -  
Legal expenses
    2,049       5  
Depreciation of paralyzed assets
    7,096       -  
Other operating expenses
    1,455       769  
Total
    14,965       5,044  
 
c)   Other gains or losses 
 
3/31/2011
ThUS$
   
3/31/2010
ThUS$
 
Provision for retirement program
    -       1,200  
Prior year equity value adjustment
    109       34  
Accrual for temporary closure of operations at El Toco
    -       5,900  
Other
    -       12  
Total
    (109 )     (7,146 )
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
171

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes

As of March 31, 2011 and as of  December 31, 2010, current income taxes recoverable are detailed as follows:

28.1
Current tax receivables:

   
3/31/2011
   
12/31/2010
 
   
ThUS$
   
ThUS$
 
Monthly tax provisional payments, Chilean companies, current year, net
    555       19,614  
Monthly tax provisional payments, Chilean companies, prior year
    21,421       2,158  
Monthly tax provisional payments, foreign companies
    853       562  
First category tax credits
    1,112       1,111  
First category tax absorbed by tax losses
    1,507       9,328  
Total
    25,448       32,773  

28.2
Current tax payables:
 
   
3/31/2011
   
12/31/2010
 
Taxes payable
 
ThUS$
   
ThUS$
 
First category tax and royalty
    20,454       5,915  
Foreign company income tax
    2,869       1,174  
Article 21 unique tax
    18       24  
Total
    23,341       7,113  
 
28.3
Tax earnings

As of March 31, 2011 and as of December 31, 2010, the Company and its subsidiaries have recorded the following consolidated balances for retained taxable earnings registry, income which do not constitute revenue subject to income tax, accumulated tax losses and credit for shareholders:
 
   
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Tax earnings with credit
    783,081       602,536  
Tax earnings with no credit
    125,587       86,920  
Tax losses
    13,796       21,630  
Credit for shareholders
    165,851       123,322  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
172

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes (continued)

28.4
Income and deferred taxes

Assets and liabilities recognized in the Statement of Financial Position are offset when and only if:

 
1
The Company has legally recognized before the tax authority the right to offset the amounts recognized in these entries; and

 
2
Deferred income tax assets and liabilities are derived from income tax related to the same tax authority on:
 
 
(i)
the same entity of tax subject; or

 
(ii)
different entities or subjects to tax effects who intend either to settle current fiscal assets and liabilities for their net amount, either realize assets or pay liabilities simultaneously in each of the future periods in which the Company expects to settle or recover significant amounts of deferred tax assets or liabilities.

Deferred income tax assets recognized are those income taxes to be recovered in future periods, related to:

(a) deductible temporary differences;

(b) the compensation of losses obtained in prior periods, which have not yet been subject to tax deduction; and

(c) the compensation of unused credits from prior periods.

The Company recognizes a deferred tax asset when there is certainty that these can be offset with fiscal income from subsequent periods, losses or credits.

Fiscal amounts not yet used but solely as long as it is possible that there will be tax earnings in the future to charge to these losses or unused fiscal credits against them.

Deferred tax liabilities recognized are the amounts of income taxes payable in future periods related to taxable temporary differences.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
173

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes (continued)
28.4
Income and deferred taxes (continued)
 
No deferred income taxes have been recognized between the tax and book value of investments in related companies, in accordance with the criteria indicated in IAS 12. Therefore, there is no recognition of deferred taxes for translation adjustments and adjustments of associated companies recorded directly in net equity, shown in the Statement of Other Comprehensive Income.

d.1
Income tax assets and liabilities as of March 31, 2011 are detailed as follows:
 
   
Asset net position
   
Liability net position
 
Description of deferred income tax 
 
Assets
   
Liabilities
   
Assets
   
Liabilities
 
assets and liabilities
 
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Depreciation
    -       -       -       89,444  
Bad debt impairment
    16               3,565       -  
Vacation provision
    9       -       1,981       -  
Production expenses
    -       -       -       48,255  
Unrealized gains (losses) from sales of products
    -       -       50,517       -  
Bonds fair value
    -       -       2,466       -  
Staff severance indemnities
    -       -       -       2,999  
Hedging
    -       -       -       20,867  
Inventory of products, spare parts and supplies
    80       -       8,028       -  
Research and development expenses
    -       -       -       4,125  
Tax losses
    -       -       3,097       -  
Capitalized interest
    -       -       -       15,485  
Expenses in assumption of bank loans
    -       -       -       2,171  
Unaccrued interest
    -       -       165       -  
Fair value of property, plant and equipment
    -       -       9,627       -  
Employee benefits
    -       -       8,592       -  
Royalty deferred income taxes
    -       -       -       9,380  
Others
    175       -       4,627       -  
Balances to date
    280       -       92,665       192,726  
Net balance
    280       -       -       100,061  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
174

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes (continued)
 
d.2
Income tax assets and liabilities as of December 31, 2010 are detailed as follows:
 
   
Asset net position
   
Liability net position
 
Description of deferred income tax 
 
Assets
   
Liabilities
   
Assets
   
Liabilities
 
assets and liabilities
 
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
Depreciation
    -       -       -       88,785  
Bad debt impairment
    139       -       3,452       -  
Vacation provision
    9       -       2,382       -  
Production expenses
    -       -       -       47,442  
Unrealized gains (losses) from sales of products
    -       -       49,181       -  
Bonds fair value
    -       -       1,886       -  
Staff severance indemnities
    -       -       -       2,984  
Hedging
    -       -       -       20,739  
Inventory of products, spare parts and supplies
    -       1,050       8,950       -  
Research and development expenses
    -       -       -       4,215  
Tax losses
    796       -       2,748       -  
Capitalized interest
    -       -       -       14,784  
Expenses in assumption of bank loans
    -       -       -       2,278  
Unaccrued interest
    -       -       261       -  
Fair value of property, plant and equipment
    -       -       9,634       -  
Employee benefits
    -       -       6,052       -  
Royalty deferred income taxes
    -       -       -       7,462  
Other
    471       -       3,362       -  
Balances to date
    1,415       1,050       87,908       188,689  
Net balance
    365       -       -       100,781  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
175

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes (continued)

d.3 Deferred income taxes related to benefits for tax losses

The Company’s tax loss carryforwards were mainly generated by losses in Chile, which, in accordance with current Chilean tax regulations have no expiration date.  During 2009, the Company applied no significant lax losses.

As of March 31, 2011and as of  December 31, 2010, tax loss carryforwards were detailed as follows:

   
3/31/2011
   
3/31/2010
 
   
ThUS$
   
ThUS$
 
             
Chile
    2,647       18,440  
Other countries
    450       1,063  
                 
Balances to date
    3,097       19,503  

Tax losses mainly relate to México, which prescribe on December 31, 2011.

d.4 Unrecognized deferred income tax assets and liabilities

As of March 31, 2011 and December 31, 2010, unrecognized assets and liabilities are detailed as follows:
 
   
3/31/2011
   
3/31/2010
 
   
ThUS$
   
ThUS$
 
   
Assets (liabilities)
   
Assets (liabilities)
 
             
Tax losses
    251       251  
Bad debt impairment
    98       98  
Inventory impairment
    704       704  
Pensions plan
    266       266  
Vacation provision
    29       29  
Depreciation
    (67 )     (67 )
other
    (17 )     (17 )
                 
Balances to date
    1,264       1,264  

Tax losses mainly relate to the United States, which prescribe in 20 years.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
176

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
  
Note 28 – Income and deferred taxes (continued)

d.5
Movements in deferred tax liabilities

Movements in deferred tax liabilities as of March 31, 2011 and as of December 31, 2010are as follows:

   
3/31/2011
   
12/31/2010
 
   
ThUS$
   
ThUS$
 
   
Liabilities 
(assets)
   
Liabilities 
(assets)
 
             
Beginning balance of deferred income tax liabilities
    100,781       53,802  
Increase (decrease) in deferred income taxes in profit or loss
    (140 )     47,230  
Increase (decrease) in deferred income taxes in equity
    (580 )     (251 )
                 
Balances to date
    100,061       100,781  

d.6
Information to be disclosed on profit or loss tax expense (profit)
 
The Company recognizes current and deferred income taxes as income or expenses and are included in profit, except if they arise from:
 
 
(a)
a transaction or event which is recognized in the same period or in a different period, off-income either in other comprehensive income or directly in equity; or
 
 
(b)
a business combination
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2)  425 2000
www.sqm.com
 
 
177

 
 
Notes to the interim consolidated financial statements as of March 31, 2011

Note 28 – Income and deferred taxes (continued)

Current and deferred income tax expenses (income) are detailed as follows

   
3/31/2011
ThUS$
   
3/31/2010
ThUS$
 
   
Income
(expenses)
   
Income
(expenses)
 
             
Expense for current income tax
           
Expense for current income taxes
    (39,012 )     (13,770 )
Adjustments to prior period current income tax
    -       53  
                 
Total expense for current income tax, net
    (39,012 )     (13,717 )
                 
Expense for deferred income taxes
               
Deferred tax expense (income) related to the creation and reversal of temporary differences
    56       (6,979 )
Deferred tax expense (income) related to changes in tax rates or after the application of new taxes
    -       -  
Total expense for deferred income taxes, net
    56       (6,979 )
                 
Expense (income) for income taxes
    (38,956 )     (20,696 )

Expenses (income) for income taxes by foreign and domestic parties are as follows:

   
3/31/2011
ThUS$
Profit (losses)
   
3/31/2010
ThUS$
Profit (losses)
 
             
Current income tax expense by domestic and foreign parties, net
           
Current income tax expense, foreign parties, net
    388       (1,022 )
Current income tax expense, domestic, net
    (39,400 )     (12,695 )
                 
Total current income tax expense, net
    (39,012 )     (13,717 )
                 
Deferred income taxes by foreign and domestic parties, net
               
Deferred income tax expense, foreign parties, net
    (404 )     (615 )
Deferred income tax expense, domestic, net
    460       (6,364 )
                 
Total deferred income tax expense, net
    56       (6,979 )
                 
Expense (income) for income taxes
    (38,956 )     (20,696 )
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
178

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes (continued)

d.7
Participation in taxation attributable to investments recognized according to the equity method:

The Company does not recognize any deferred income tax liability in all cases of taxable temporary differences associated with investments in subsidiaries, branches and associated companies or participations in joint ventures, because as indicated in the standard, the following two conditions are jointly met:

 
(a)
the controller, investor or participant is able to control the time for reversal of the temporary difference; and

 
(b)
it is possible that the temporary difference is not reversed in the foreseeable future.
 
In addition, the Company does not recognize deferred income tax assets for all deductible temporary differences from investments in subsidiaries, branches and associated companies or participations in joint ventures because it is not possible that the following requirements are met:

(a) temporary differences are reversed in a foreseeable future; and

(b) the Company has tax earnings against which temporary differences can be used.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
179

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes (continued)

d.8
Information to be disclosed on the tax effects of other comprehensive income components:
 
   
3/31/2011
 
Income tax related to components of other
income and expense with a charge or
credit to net equity
 
Amount
before taxes
   
ThUS$
Expense
(income) for
income
taxes
   
Amount
after taxes
 
                   
Cash flow hedging
    (2,900 )     580       (2,320 )
                         
Total
    (2,900 )     580       (2,320 )
 
   
3/31/2010
 
Income tax related to components of other
income and expense with a charge or credit to
net equity
 
Amount
before
taxes
   
ThUS$
Expense
(income) for
income
taxes
   
Amount
after taxes
 
                   
Cash flow hedging
    10,799       (1,836 )     8,963  
                         
Total
    10,799       (1,836 )     8,963  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
180

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes (continued)

d.9
Explanation of the relationship between expense (income) for taxes and accounting income

In accordance with paragraph No. 81, letter c) of IAS 12, the Company has estimated that the method which discloses more significant information for the users of its financial statements is the reconciliation of tax expense (income) to the result of multiplying income for accounting purposes by the rate in force in Chile.  This option is based on the fact that the Parent Company and its subsidiaries incorporated in Chile generate almost the total amount of tax expense (income) and the fact that amounts of subsidiaries incorporated in foreign countries have no relevant significance within the context of the total amount of tax expense (income.)
 
Reconciliation of tax expense (income) on tax and the result of multiplying income for accounting purposes by the rate in force in Chile

   
3/31/2011
   
3/31/2010
 
   
ThUS$
   
ThUS$
 
   
Profit
(losses)
   
Profit
(losses)
 
             
Consolidated income before taxes
    151,087       97,567  
Income tax rate in force in Chile
    20 %     17 %
                 
Tax expense using the legal rate
    (30,217 )     (16,586 )
Effect of payment of specific tax on mining activities (royalty)
    (6,582 )     (2,847 )
Tax effect of tax exempt revenue
    990       735  
Tax effect of rates on non-deductible expenses to determine taxable profit (loss)
    (852 )     (308 )
Tax effect on rates supported abroad
    (718 )     (3,360 )
Other tax effects due to reconciliation between profit for accounting purposes and tax expense (income)
    (1,577 )     1,670  
Tax expense using the effective rate
    (38,956 )     (20,696 )
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
181

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes (continued)

d.10
Tax periods potentially subject to verification:

The Group companies are potentially subject to tax audits for income taxes by tax authorities in each country.  These audits are limited to a number of annual tax periods, which, in general, when they elapse, give rise to the expiration of these inspections.

Tax audits, due to their nature, are often complex and may require several years.  Below, we provide a summary of tax periods which are potentially subject to verification, in accordance with tax regulations in force in the country of origin:

 
a)
Chile

According to article 200 of Decree Law No.830 in Chile, the tax authority may review any tax returns and perform verifications on deficiencies on its settlement and taxes applicable of up to 3 years from the expiration date of the legal term in which the payment should have been made.  Additionally, this prescription will be extended to 6 years for tax reviews subject to tax returns, when this was not presented or if file presenting maliciously false information.

 
b)
United States of America

In the United States the tax authority may review tax returns of up to 3 years old from the expiration date of the tax return. In the event of detecting an omission or error in the tax return of revenue or cost of sales, the review can be extended up to a period of 6 years.

 
c)
Mexico:

In Mexico, the tax authority can review tax returns up to 5 years old from the expiration date of the tax return.

 
d)
Spain:

In Spain, the tax authority can review tax returns up to 4 years old from the expiration date of the tax return.

 
e)
Belgium:

In Belgium, the tax authority may review tax returns of up to 3 years old, from the expiration date of the tax return if no tax losses exist. In the event of detecting an omission or error in the tax return, the review can be extended up to a period of 5 years.

 
f)
South Africa:

In South Africa, the tax authority may review tax returns of up to 3 years old, from the expiration date of the tax return. In the event of detecting an omission or error in the tax return, the review can be extended up to a period of 5 years.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
182

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 28 – Income and deferred taxes (continued)

28.5
Amendments to the Income Tax Law and Specific Tax on Mining (Royalty) in Chile

 
a)
Amendment on first category income tax

Law No. 20,455 was published in the Official Gazette dated July 31, 2010 through its article No. 1., temporarily increases the First Category Income Tax established in article 20, of the Income Tax Law, for income received or accrued during 2011 and 2012.

According to the aforementioned temporary increase, the referred rate increases from 17% to 20% for income received or accrued 2011 (taxable year 2012); and to 18.5% for income received or accrued during 2012 (taxable year 2013).
 
For this purpose the Company identified all those temporary that would be affected as a result from this change in the tax rate, generating a charge to profit or loss for deferred taxes amounting to ThUS$11,385
 
 
b)
Amendment of the specific tax on mining activities  (tax royalty)

Law No. 20,469 was published in the Official Gazette of October 21, 2010 related to the following matters:

a.   Superseded article 64 bis of Income Tax Law, which provides a specific tax to the revenue from mining activities obtained by a mining operator; and
b.  Included a new article 64 ter to the legal document referred to above related to how to determine the taxable profit for mining operations that, prior to the date of this amendment was dealt with in the article 64 bis replaced by the aforementioned law;

c.   Amendment of article 11 ter of Decree Law 600, of 1974, and

d.  Established temporary and optional standards, which investors may invoke provided that they are subject to articles 7, 11 bis and 11 ter of Decree Law 600, of 1974; transitional article 5 of Law 20,026, and can also be invoked by companies that do not receive contributions from foreign investors and are regulated by transitional article 4.
 
The subsidiaries SQM Salar S.A. and SQM Nitratos S.A. requested the approval to be entitled to invoke the transitional article 4 from the Ministry of Economy in order to opt beginning in 2013 and up to 5 years, to an non-variable rate of 5% as specific tax on mine. As of the date of these financial statements, the approval process is in process.
 
Consequently, for 2010, 2011 and 2012, there is a change in the method to determine the tax applicable to the mining activity, paying based on the mining operating margin obtained by these Companies. As of March 31, 2011, for this purpose, the Company made a provision with a charge to profit or loss of ThUS$13,565.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
183

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 29 – Disclosures on the effects of variations in foreign currency exchange rates

Assets in foreign currency impacted for variations in exchange rates are as follows:

Class of asset
 
Currency
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Current assets:
               
Cash and cash equivalents
 
CLP
    315,153       332,624  
Cash and cash equivalents
 
EUR
    5,463       6,709  
Cash and cash equivalents
 
ZAR
    3,472       1,523  
Cash and cash equivalents
 
BRL
    2       22  
Cash and cash equivalents
 
YEN
    1,131       1,193  
Cash and cash equivalents
 
CNY
    96       104  
Cash and cash equivalents
 
PEN
    51       13  
Cash and cash equivalents
 
ARS
    1       -  
Cash and cash equivalents
 
INR
    5       16  
Cash and cash equivalents
 
GBP
    4       5  
Cash and cash equivalents
 
MXN
    186       102  
Subtotal cash and cash equivalents
        325,564       342,311  
Other current financial assets
 
CLP
    41,455       69,818  
Subtotal other current financial assets
        41,455       69,818  
Other non- financial current assets
 
CLP
    19,915       30,966  
Other non- financial current assets
 
CLF
    12       21  
Other non- financial current assets
 
EUR
    4,334       4,303  
Other non- financial current assets
 
ZAR
    690       167  
Other non- financial current assets
 
ARS
    42       42  
Other non- financial current assets
 
BRL
    5       2  
Other non- financial current assets
 
YEN
    15       -  
Other non- financial current assets
 
CNY
    19       23  
Other non- financial current assets
 
PEN
    260       331  
Other non- financial current assets
 
AUD
    57       -  
Other non- financial current assets
 
MXN
    886       552  
Subtotal other non-financial current assets
        26,235       36,407  
Trade and other receivables
 
CLP
    93,820       114,108  
Trade and other receivables
 
CLF
    969       1,015  
Trade and other receivables
 
EUR
    109,131       97,193  
Trade and other receivables
 
ZAR
    11,754       7,292  
Trade and other receivables
 
AUD
    396       -  
Trade and other receivables
 
BRL
    47       64  
Trade and other receivables
 
ARS
    5       5  
Trade and other receivables
 
YEN
    -       2  
Trade and other receivables
 
CNY
    52       48  
Trade and other receivables
 
PEN
    -       2  
Trade and other receivables
 
GBP
    1,230       409  
Trade and other receivables
 
MXN
    167       58  
Subtotal trade and other receivables
        217,571       220,196  
Trade receivables due from related parties
 
CLP
    151       111  
Trade receivables due from related parties
 
EUR
    4,484       2,651  
Subtotal trade receivables due from related parties
        4,635       2,762  
Current tax assets
 
CLP
    1,780       9,098  
Current tax assets
 
EUR
    175       140  
Current tax assets
 
ZAR
    -       123  
Current tax assets
 
YEN
    4       16  
Current tax assets
 
CNY
    16       20  
Current tax assets
 
AUD
    165       -  
Current tax assets
 
PEN
    109       61  
Current tax assets
 
MXN
    24       39  
Subtotal current tax assets
        2,273       9,497  
Total current taxes
        617,733       680,991  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
184

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 29 – Disclosures on the effects of variations in foreign currency exchange rates (continued)

Class of asset
 
Currency
 
3/31/2011
ThUS$
   
12/31/2010
ThUS$
 
Non-current assets:
               
Other non-current financial assets
 
CLP
    20       20  
Other non-current financial assets
 
EUR
    3       3  
Other non-current financial assets
 
BRL
    32       34  
Other non-current financial assets
 
YEN
    57       58  
Subtotal other non-current financial assets
        112       115  
Other non-financial and non-current assets
 
CLP
    580       599  
Other non-financial and non-current assets
 
CLF
    -       -  
Other non-financial and non-current assets
 
BRL
    232       227  
Other non-financial and non-current assets
 
YEN
    366       373  
Subtotal other non-financial and non- current assets
        1,178       1,199  
Non- current rights receivable
 
CLP
    394       469  
Non- current rights receivable
 
CLF
    579       633  
Subtotal non-current rights receivable
        973       1,102  
Investments recorded using participation method
 
CLP
    1,505       1,352  
Investments recorded using participation method
 
EUR
    11,177       9,560  
Investments recorded using participation method
 
AED
    25,222       24,168  
Investments recorded using participation method
 
INR
    430       432  
Investments recorded using participation method
 
TRY
    12,302       11,988  
Investments recorded using participation method
 
EGP
    1,435       1,435  
Investments recorded using participation method
 
THB
    1,544       1,543  
Subtotal investments recorded using participation method
        53,615       50,478  
Intangible assets other than goodwill
 
CLP
    41       -  
Subtotal Intangible assets other than goodwill
 
 
    41       -  
Goodwill
 
CLP
    735       735  
Subtotal Goodwill
        735       735  
Property, plant and equipment
 
CLP
    3,375       1,762  
Subtotal Property, plant and equipment
        3,375       1,762  
Total non-current assets
        60,029       55,391  
Total assets
        677,762       736,382  

SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
185

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Nota 29 – Disclosures on the effects of variations in foreign currency exchange rates (continued)
Liabilities in foreign currency impacted for variations in exchange rates are as follows:

             
3/31/2011
               
12/31/2010
       
Class of liability
 
Currency
 
Up to 90 days
ThUS$
   
More than 90
days to 1
year
ThUS$
   
Total
ThUS$
   
Up to 90
days ThUS$
   
More than 90
days to 1
year
ThUS$
   
Total
ThUS$
 
Current liabilities
                                       
Other current financial liabilities
 
CLF
    4,182       5,284       9,466       3,577       7,749       11,326  
Other current financial liabilities
 
CLP
    -       -       -       814       1,508       2,322  
Other current financial liabilities
 
EUR
    -       1,377       1,377       -       -       -  
Subtotal other current  financial liabilities
        4,182       6,661       10,843       4,391       9,257       13,648  
Trade and other payables
 
CLP
    62,659       22,990       85,649       85,403       -       85,403  
Trade and other payables
 
CLF
    -       118       118       -       -       -  
Trade and other payables
 
EUR
    19,218       1,361       20,579       22,356       1,535       23,891  
Trade and other payables
 
INR
    1       -       1       1       -       1  
Trade and other payables
 
ARS
    3       -       3       1       -       1  
Trade and other payables
 
BRL
    360       -       360       341       -       341  
Trade and other payables
 
PEN
    38       2       40       43       -       43  
Trade and other payables
 
MXN
    2,415       219       2,634       1,020       140       1,160  
Trade and other payables
 
GBP
    1       -       1       40       -       40  
Trade and other payables
 
CHF
    151       -       151       -       -       -  
Trade and other payables
 
CNY
    95       -       95       57       -       57  
Trade and other payables
 
YEN
    74       -       74       -       -       -  
Trade and other payables
 
ZAR
    2,374       -       2,374       1,280       1,062       2,342  
Subtotal trade and other payables
        87,389       24,690       112,079       110,542       2,737       113,279  
Trade payables due to related parties
 
EUR
    -       681       681       -       997       997  
Subtotal trade payables due to related parties
        -       681       681       -       997       997  
Other short-term provisions
 
CLP
    39       40       79       20       -       20  
Other short-term provisions
 
EUR
    7       -       7       323       -       323  
Other short-term provisions
 
ARS
    36       -       36       -       -       -  
Other short-term provisions
 
PEN
    11       -       11       -       -       -  
Other short-term provisions
 
MXN
    -       19       19       -       -       -  
Other short-term provisions
 
BRL
    -       -       -       -       1,634       1,634  
Subtotal other short-term provisions
        93       59       152       343       1,634       1,977  
Current tax liabilities
 
CLP
    -       262       262       -       -       -  
Current tax liabilities
 
EUR
    -       77       77       -       335       335  
Current tax liabilities
 
ARS
    -       5       5       -       -       -  
Current tax liabilities
 
ZAR
    -       392       392       -       -       -  
Current tax liabilities
 
MXN
    6       -       6       -       -       -  
Subtotal current  tax liabilities
        6       736       742       -       335       335  
Current provisions for benefits to employees
 
MXN
    -       374       374       -       292       292  
Current provisions for benefits to employees
 
CLP
    31,781       7,734       39,515       34,211       9,455       43,666  
Subtotal current provisions for benefits to employees
        31,781       8,108       39,889       34,211       9,747       43,958  
Other non-financial current liabilities
 
CLP
    9,037       3,114       12,151       6,299       12,557       18,856  
Other non-financial current liabilities
 
EUR
    25       4       29       29       84       113  
Other non-financial current liabilities
 
BRL
    11       8       19       12       -       12  
Other non-financial current liabilities
 
MXN
    262       58       320       710       54       764  
Other non-financial current liabilities
 
PEN
    102       27       129       79       -       79  
Other non-financial current liabilities
 
AUD
    -       -       -       -       4       4  
Other non-financial current liabilities
 
CNY
    -       -       -       18       -       18  
Subtotal other non-financial current liabilities
        9,437       3,211       12,648       7,147       12,699       19,846  
Total current liabilities
        132,888       44,146       177,034       156,634       37,406       194,040  
   
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
186

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Nota 29 – Disclosures on the effects of variations in foreign currency exchange rates (continued)

       
3/31/2011
   
12/31/2010
 
Class of liability
 
Currency
 
More than
1 up to 3
years
ThUS$
   
More than
3 up to 5
years
ThUS$
   
More than
5 years
ThUS$
   
Total
ThUS$
   
More
than 1 up
to 3 years
ThUS$
   
More than
3 up to 5
years
ThUS$
   
More than
5 years
ThUS$
   
Total
ThUS$
 
Non-current liabilities
                                                   
Other non-current  financial liabilities
 
CLF
    13,504       80,326       250,000       343,830       -       66,081       284,056       350,137  
Other non-current  financial liabilities
 
CLP
    43,806       107,128       -       150,934       -       154,485       -       154,485  
Subtotal other non-current financial liabilities
        57,310       187,454       250,000       494,764       -       220,566       284,056       504,622  
Other non-current liabilities
 
CLP
    -       135       -       135       -       -       -       -  
Subtotal Other non-current liabilities
        -       135       -       135       -       -       -       -  
Liabilities due to taxes
 
CLP
    124       -       61       185       56       -       36       92  
Liabilities due to taxes
 
MXN
    319       -       -       319       -       -       -       -  
Subtotal liabilities due to taxes
        443       -       61       504       56       -       36       92  
Non-current provisions for benefits to employees
 
CLP
    -       -       1,217       1,217       -       -       1,805       1,805  
Non-current provisions for benefits to employees
 
MXN
    -       -       203       203       -       -       -       -  
Non-current provisions for benefits to employees
 
JPY
    -       -       -       -       -       -       -       -  
Non-current provisions for benefits to employees
 
YEN
    -       -       427       427       -       -       -       -  
Subtotal non-current provisions for benefits to employees
        -       -       1,847       1,847       -       -       1,805       1,805  
Total non-current liabilities
        57,753       187,589       251,908       497,250       56       220,566       285,897       506,519  
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
187

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
Note 30 – Impairment of assets

Assets value impairment

The Company assesses on an annual basis any impairment on the amount of Buildings, plant and equipment, intangible assets, goodwill and investments accounted for using the equity method of accounting, in accordance with IAS 36. Assets to which this methodology applies are as follows:

 
-
Investments recognized using the equity method of accounting
 
-
Property, plant and equipment
 
-
Intangible assets
 
-
Goodwill
 
a)
Impairment of investments recognized using the equity method of accounting, property, plant and equipment, intangible assets and goodwill.
 
Assets are reviewed for impairment as to the existence of any indication that the carrying value is lower than the recoverable amount. If such an indication exists, the asset recoverable amount is calculated in order to determine the extent of this impairment, if any. In the event that asset does not generate any cash flows independent from other assets, the Company determines the recoverable amount of the cash generating unit to which this asset belongs according to the business segment (specialty plant nutrient, iodine and derivatives, lithium and derivatives, industrial chemicals, potassium and other products and services.)
 
The Company conducts impairment tests to intangible assets and goodwill with indefinite useful life on an annual basis and every time there is indication of impairment.
 
If the recoverable value of an asset is estimated in an amount lower than its carrying value, the latter decreases to its recoverable amount.
 
Note 30 – Impairment of assets (continued)
 
b)
Impairment of financial assets: For the case of financial assets with a trading origin, the Company has defined a policy for the recognition of provision for impairment in consideration of the age of the past due balance.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
188

 
 
Notes to the interim consolidated financial statements as of March 31, 2011
 
An allowance is made for impairment losses related to trade receivables when there is objective evidence that the Company will be not able to collect all the amounts owed in accordance with the original terms of receivables.
 
In accordance with the information presented and evaluating the indication of value impairment of any asset related to the cash flow generating unit, we may conclude that there is no evidence of indication which supports any impairment in the value of assets. Depending on value impairment indication, for the entity:
 
 
-
There are no indications of value impairment in each of intangible assets with an indefinite useful life, as well as intangible assets which are not yet available for their use, comparing their carrying amounts to their recoverable amounts.
 
 
-
There are no indications of value impairment on goodwill acquired in a business combination
 
Note 31 - Events occurred subsequent to the reporting date

31.1        Authorization of the financial statements

The interim consolidated financial statements of Sociedad Química y Minera S.A. and subsidiaries, prepared in accordance with IFRS for the period ended as of March 31, 2011 were approved and authorized for issuance by the Board of Directors at their meeting held on May 24, 2011
 
31.2        Disclosures of events occurred subsequent to the reporting date
 
Management is not aware of any significant events occurred between March 31, 2011 and the date of issuance of these interim consolidated financial statements which may significantly affect them.

31.3        Detail of dividends declared after the reporting date

As of the closing date of these interim consolidated financial statements, there are no dividends declared after the reporting sheet date.
 
SQM
Los Militares 4290,
Las Condes, Santiago, Chile
Tel: (56 2) 425 2000
www.sqm.com
 
 
189

 
 
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 R.

Ricardo Ramos R.

Chief Financial Officer

Date: July 28, 2011