6-K 1 tm218869d1_6k.htm FORM 6-K

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE

SECURITIES EXCHANGE ACT OF 1934

For the month of March, 2021.

Commission File Number 33-65728

 

CHEMICAL AND MINING COMPANY OF CHILE INC.

(Translation of registrant’s name into English)

 

El Trovador 4285, Santiago, Chile (562) 2425-2000

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F: x   Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 

 

 

Santiago, Chile. March 5, 2021.- Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reports the translation of its financial statements for the twelve months ended December 31, 2020, the Spanish version of which was filed with the Chilean Commission for the Financial Market (Comisión para el Mercado Financiero or “CMF”) on March 3, 2021.

 

 

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

As of and for the periods ended

December 31, 2020 and 2019

 

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

 

In Thousands of United States Dollars

 

 

 

This document includes:

 

-Report of Independent Register Public Accounting Firm

-Consolidated Classified Statements of Financial Position

-Consolidated Statements of Income

-Consolidated Statements of Comprehensive Income

-Consolidated Statements of Cash Flows

-Consolidated Statements of Changes in Equity

-Notes to the Consolidated Financial Statements

 

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Table of Contents –Consolidated Financial Statements

 

Consolidated Classified Statements of Financial Position 1
Consolidated Classified Statements of Financial Position 2
Consolidated Statements of Income 3
Consolidated Statements of Comprehensive Income 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Changes in Equity 7
Note 1 Identification and Activities of the Company and Subsidiaries 10
1.1 Historical background 10
1.2 Main domicile where the Company performs its production activities 10
1.3 Codes of main activities 10
1.4 Description of the nature of operations and main activities 10
1.5 Other background 12
1.6 Covid-19 13
Note 2 Basis of presentation for the consolidated financial statements 15
2.1 Accounting period 15
2.2 Consolidated financial statements 15
2.3 Basis of measurement 16
2.4 Accounting pronouncements 16
2.5 Basis of consolidation 18
2.6 Investments in associates and joint ventures 19
Note 3 Significant accounting policies 20
3.1 Classification of balances as current and non-current 20
3.2 Functional and presentation currency 20
3.3 Accounting policy for foreign currency translation 20
3.4 Consolidated statement of cash flows 22
3.5 Accounting policy for Financial assets 22
3.6 Financial liabilities 24
3.7 Reclassification of financial instruments 24
3.8 Financial instrument derecognition 24
3.9 Derivative and hedging financial instruments 24
3.10 Derivative financial instruments not considered as hedges 26
3.11 Deferred acquisition costs from insurance contracts 26
3.12 Leases 26
3.13 Inventory measurement 27
3.14 Transactions with non-controlling interests 28
3.15 Related party transactions 28
3.16 Property, plant and equipment 28
3.17 Depreciation of property, plant and equipment 29
3.18 Goodwill 29

 

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.19 Intangible assets other than goodwill 30
3.20 Research and development expenses 31
3.21 Exploration and evaluation expenses 31
3.22 Impairment of non-financial assets 32
3.23 Minimum dividend 32
3.24 Earnings per share 32
3.25 Capitalization of interest expenses 33
3.26 Other provisions 33
3.27 Obligations related to employee termination benefits and pension commitments 33
3.28 Compensation plans 34
3.29 Revenue recognition 34
3.30 Finance income and finance costs 34
3.31 Current income tax and deferred 34
3.32 Operating segment reporting 35
3.33 Primary accounting criteria, estimates and assumptions 36
3.34 Environment 36
Note 4 Changes in accounting estimates and policies 37
4.1 Changes in accounting estimates 37
4.2 Changes in accounting policies 37
Note 5 Financial risk management 38
5.1 Financial risk management policy 38
5.2 Risk Factors 38
5.3 Risk measurement 42
Note 6 Separate information on the main office, parent entity and joint action agreements 43
6.1 Parent’s stand-alone assets and liabilities 43
6.2 Parent entity 43
Note 7 Board of Directors, Senior Management and Key management personnel 44
7.1 Remuneration of the Board of Directors and Senior Management 44
7.2 Key management personnel compensation 46
Note 8 Background on companies included in consolidation and non-controlling interests 47
8.1 Background on companies included in consolidation 47
8.2 Assets, liabilities, results of consolidated subsidiaries as of December 31, 2020. 50
8.3 Background on non-controlling interests 54
Note 9 Equity-accounted investees 55
9.1 Investments in associates recognized according to the equity method of accounting 55
9.2 Assets, liabilities, revenue and expenses of associates 57
9.3 Other information 58
9.4 Disclosures on interest in associates 58
Note 10 Joint Ventures 59
10.1 Policy for the accounting of equity accounted investment in joint ventures 59
10.2 Disclosures of interest in joint ventures 59
10.3 Investment in joint ventures accounted for under the equity method of accounting 60
10.4 Assets, liabilities, revenue and expenses from joint ventures 62

 

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

10.5 Other Joint Venture disclosures 63
10.6 Joint Ventures 64
Note 11 Cash and cash equivalents 65
11.1 Types of cash and cash equivalents 65
11.2 Short-term investments, classified as cash equivalents 65
11.3 Information on cash and cash equivalents by currency 66
11.4 Amount restricted cash balances 66
11.5 Short-term deposits, classified as cash equivalents 67
11.6 Net Debt reconciliation 69
Note 12 Inventories 70
Note 13 Related party disclosures 72
13.1 Related party disclosures 72
13.2 Relationships between the parent and the entity 72
13.3 Detailed identification of related parties and subsidiaries 73
13.4 Detail of related parties and related party transactions 76
13.5 Trade receivables due from related parties, current: 77
13.6 Trade payables due to related parties, current: 77
13.7 Other disclosures: 77
Note 14 Financial instruments 78
14.1 Types of other current and non-current financial assets 78
14.2 Trade and other receivables 79
14.3 Hedging assets and liabilities 82
14.4 Financial liabilities 83
14.5 Trade and other payables 94
14.6 Financial asset and liability categories 95
14.7 Fair value measurement of finance assets and liabilities 97
14.8 Estimated fair value of financial instruments 100
Note 15 Right-of-use assets and Lease liabilities 101
15.1 Right-of-use assets 101
15.2 Lease liabilities 102
Note 16 Intangible assets and goodwill 108
16.1 Balances 108
Note 17 Property, plant and equipment 115
17.1 Types of property, plant and equipment 115
17.2 Conciliation of changes in property, plant and equipment by type: 117
17.3 Detail of property, plant and equipment pledged as guarantee 121
17.4 Impairment of assets 121
17.5 Cost of capitalized interest, property, plant and equipment 121
Note 18 Other current and non-current non-financial assets 122
Mineral resource exploration and evaluation expenditure 123
Note 19 Employee benefits 124
19.1 Provisions for employee benefits 124
19.2 Policies on defined benefit plan 124

 

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

19.3 Other long-term benefits 125
19.4 Post-employment benefit obligations 125
19.5 Staff severance indemnities 127
19.6 Executive compensation plan 128
Note 20 Provisions and other non-financial liabilities 129
20.1 Types of provisions 129
20.2 Description of other provisions 130
20.3 Other non-financial liabilities, Current 131
20.4 Changes in provisions 132
Note 21 Disclosures on equity 133
21.1 Capital management 133
21.2 Disclosures on preferred share capital 134
21.3 Disclosures on reserves in Equity 135
21.4 Dividend policies 137
21.5 Interim and provisional dividends 139
21.6 Potential and provisional dividends 139
Note 22 Contingencies and restrictions 140
22.1 Lawsuits and other relevant events 140
22.2 Restrictions to management or financial limits 142
22.3 Environmental contingencies 143
22.4 Tax Contingencies 143
22.5 Contingencies regarding to the Contracts with Corfo: 144
22.6 Contingencies related to the Class Action lawsuit 144
22.7 Contingencies associated with conflicts between shareholders of the Abu Dhabi Fertilizer Industries Company 144
22.8 Restricted or pledged cash 144
22.9 Securities obtained from third parties 145
22.10 Indirect guarantees 145
Note 23 Lawsuits and complaints 146
Note 24 Environment 147
24.1 Disclosures of disbursements related to the environment 147
24.2 Detailed information on disbursements related to the environment 148
24.3 Description of each project, indicating whether these are in process or have been finished 155
Note 25 Gains (losses) from operating activities in the statement of income of expenses, included according to their nature 160
25.1 Revenue from operating activities customer activities 160
25.2 Cost of sales 162
25.3 Other income 163
25.4 Administrative expenses 163
25.5 Other expenses 164
25.6 Other gains (losses) 164
25.7 (Impairment) /reversion of value of financial assets impairment losses 165
25.8 Summary of expenses by nature 165

 

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

25.9 Finance expenses 166
25.10 Finance income 166
Note 26 Reportable segments 167
26.1 Reportable segments 167
26.2 Reportable segment disclosures: 169
26.3 Statement of comprehensive income classified by reportable segments based on groups of products 171
26.4 Disclosures on geographical areas 173
26.5 Disclosures on main customers 173
26.6 Segments by geographical areas 174
26.7 Property, plant and equipment classified by geographical areas 175
Note 27 Effect of fluctuations in foreign currency exchange rates 176
Note 28 Disclosures on the effects of fluctuations in foreign currency exchange rates 178
Note 29 Income tax and deferred taxes 184
29.1 Current and non-current tax assets 184
29.2 Current tax liabilities 185
29.3 Income tax and deferred taxes 186
Note 30 Assets held for sale 194
Note 31 Events occurred after the reporting date 195
31.1 Authorization of the financial statements 195
31.2 Disclosures on events occurring after the reporting date 195

 

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

Consolidated Classified Statements of Financial Position

 

ASSETS  Note N°  

As of

December 31,

2020

   As of December 31, 2019 
       ThUS$   ThUS$ 
Current Assets            
Cash and cash equivalents  11.1    509,102    588,530 
Other current financial assets  14.1    348,069    505,490 
Other current non-financial assets  18    57,399    50,552 
Trade and other receivables, current  14.2    365,206    399,142 
Trade receivables due from related parties, current  13.5    62,601    61,227 
Current inventories  12    1,093,028    983,338 
Current tax assets  29.1    132,224    91,433 
Total current assets other than those classified as held for sale or disposal       2,567,629    2,679,712 
Non-current assets or groups of assets classified as held for sale  30    1,629    2,454 
Total non-current assets held for sale       1,629    2,454 
Total current assets       2,569,258    2,682,166 
Non-current assets              
Other non-current financial assets  14.1    51,925    8,778 
Other non-current non-financial assets  18    22,042    19,729 
Trade receivables, non-current  14.2    11,165    1,710 
Investments classified using the equity method of accounting  9.1-10.3    85,993    109,435 
Intangible assets other than goodwill  16.1    178,407    188,358 
Goodwill  16.1    41,966    34,726 
Property, plant and equipment net  17.1    1,737,319    1,569,906 
Right-of-use assets  15.1    30,024    37,164 
Tax assets, non-current  29.1    90,364    32,179 
Total non-current assets       2,249,205    2,001,985 
Total assets       4,818,463    4,684,151 

 

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

 

1

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

Consolidated Classified Statements of Financial Position

 

Liabilities and Equity  Note N°  

As of

December 31,

2020

   As of December 31, 2019 
       ThUS$   ThUS$ 
Current liabilities            
Other current financial liabilities  14.4    68,955    291,128 
Lease liabilities, current  15.2    5,528    7,694 
Trade and other payables, current  14.5    203,933    205,790 
Trade payables due to related parties, current  13.6    606    475 
Other current provisions  20.1    104,166    110,565 
Current tax liabilities  29.2    22,643    17,874 
Provisions for employee benefits, current  19.1    9,096    16,387 
Other current non-financial liabilities  20.3    60,955    126,899 
Total current liabilities       475,882    776,812 
Non-current liabilities              
Other non-current financial liabilities  14.4    1,899,513    1,488,723 
Lease liabilities, non-current  15.2    25,546    30,203 
Trade and other payables, non-current  14.5    4,027    - 
Other non-current provisions  20.1    62,617    34,690 
Deferred tax liabilities  29.3    156,101    183,411 
Provisions for employee benefits, non-current  19.1    32,199    35,840 
Total non-current liabilities       2,180,003    1,772,867 
Total liabilities       2,655,885    2,549,679 
               
Equity              
Equity attributable to owners of the Parent  21           
Share capital       477,386    477,386 
Retained earnings       1,638,267    1,623,104 
Other reserves       7,432    (14,223)
Equity attributable to owners of the Parent       2,123,085    2,086,267 
Non-controlling interests       39,493    48,205 
Total equity       2,162,578    2,134,472 
Total liabilities and equity       4,818,463    4,684,151 

 

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

 

2

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

Consolidated Statements of Income

  

     For the period from January to December of the year 
Consolidated Statements of Income  Note N°   2020   2019 
       ThUS$   ThUS$ 
Revenue  25.1    1,817,191    1,943,655 
Cost of sales  25.2    (1,334,321)   (1,383,603)
Gross profit       482,870    560,052 
Other income  25.3    26,893    18,218 
Administrative expenses  25.4    (107,017)   (117,180)
Other expenses  25.5    (99,612)   (25,995)
Impairment of financial assets and reversal of impairment losses  25.7    4,684    (1,057)
Other losses  25.6    (5,313)   (383)
Profit from operating activities       302,505    433,655 
Finance income  25.10    13,715    26,289 
Finance costs  17-25.9    (82,199)   (76,939)
Share of profit of associates and joint ventures accounted for using the equity method  9.1-10.3    8,940    9,786 
Foreign currency translation differences  27    (4,423)   (2,169)
Profit before taxes       238,538    390,622 
Income tax expense  29.3    (70,179)   (110,019)
Profit net       168,359    280,603 
Profit attributable to:              
Profit attributable to Owners of the Parent       164,518    278,115 
Profit attributable to Non-controlling interests       3,841    2,488 
        168,359    280,603 

 

      For the period from January to December of the year 
Earnings per share Note N°     2020   2019 
        ThUS$   ThUS$ 
Common shares 
Basic earnings per share (US$ per share)        0.6251    1.0567 
Diluted common shares               
Basic earnings per share (US$ per share)        0.6251    1.0567 

 

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

 

3

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

Consolidated Statements of Comprehensive Income

 

  For the period from
January to December of
the year
 
Consolidated Statements of Comprehensive Income  2020   2019 
   ThUS$   ThUS$ 
Profit net   168,359    280,603 
Items of other comprehensive income that will not be reclassified to profit for the year, before taxes          
Gains (losses) from measurements of defined benefit plans   974    (3,310)
Gains (losses) from financial assets measured irrevocably at fair value through other comprehensive income   9,784    1,152 
Total other comprehensive income (loss) that will not be reclassified to profit for the year, before taxes   10,758    (2,158)
Items of other comprehensive income that will be reclassified to profit for the year, before taxes          
Foreign currency exchange gains (losses)   14,000    787 
(Losses) gains from cash flow hedges   (3,706)   1,908 
Total other comprehensive income that will be reclassified to profit for the year   10,294    2,695 
Other items of other comprehensive income, before taxes   21,052    537 
Income taxes related to items of other comprehensive income that will not be reclassified to profit for the year          
Income taxes relating to measurement of defined benefit pension plans through other comprehensive income   (145)   702 
Benefit (income tax) relating to (losses) gains on financial assets measured irrevocably at fair value through other comprehensive income   (2,642)   (311)
Total income tax relating to components of other comprehensive income that will be not reclassified to profit for the year   (2,787)   391 
Income taxes relating to components of other comprehensive income that will be reclassified to profit for the year          
Income tax benefit (expense) related to (losses) gains from cash flow hedges   1,001    (2,683)
Total income tax relating to components of other comprehensive income that will be reclassified to profit for the year   1,001    (2,683)
           
Total other comprehensive income   19,266    (1,755)
Total comprehensive income   187,625    278,848 
Comprehensive income attributable to          
Comprehensive income attributable to owners of the parent   183,941    276,137 
Comprehensive income attributable to non-controlling interest   3,684    2,711 
    187,625    278,848 

  

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

 

4

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

Consolidated Statements of Cash Flows

 

      For the period from January to December of the year 
Consolidated Statements of Cash Flows  Note N°     2020   2019 
         ThUS$   ThUS$ 
Cash flows from (used in) operating activities                
Classes of cash receipts from operating activities                
Cash receipts from sales of goods and rendering of services         1,940,720    2,044,746 
Cash receipts from premiums and benefits, annuities and other benefits from policies entered         14,763    2,925 
Cash receipts derived from sub-leases         188    361 
Classes of Payments                
Cash payments to suppliers for the provision of goods and services         (1,358,347)   (1,284,204)
Cash payments to and on behalf of employees         (161,862)   (195,782)
Cash payments relating to variable leases         (1,117)   (1,037)
Other payments related to operating activities         (87,278)   (25,218)
Net cash generated from operating activities         347,067    541,791 
Dividends received         5,387    14,449 
Interest paid         (81,567)   (70,963)
Interest received         17,046    25,809 
Interest paid on lease liabilities         (1,133)   (1,537)
Income taxes paid         (200,624)   (173,319)
Other cash inflows (1)         96,058    90,741 
Net cash generated from operating activities         182,234    426,971 
                 
Cash flows from (used in) investing activities                
Cash flows arising from the loss/gain of control of subsidiaries and other businesses         20,996    994 
Proceeds from the sale of property, plant and equipment         1,680    487 
Other payments to acquire interest in joint ventures         (16,949)   (2,600)
Acquisition of property, plant and equipment         (322,242)   (321,324)
Proceeds from sales of intangible assets         8,203    28,126 
Proceeds (payments) related to futures, forward options and swap contracts         (6,902)   1,403 
Purchases of intangible assets         (579)   (2,492)
Loans to related parties         (15,000)   - 
Other cash inflows (outflows) (2)         163,702    (190,065)
Net cash generated used in investing activities         (167,091)   (485,471)

 

(1) Other inflows of cash from operating activities include net increases (decreases) of value added tax, banking expenses, expenses associated with obtaining loans and taxes associated with interest payments.

 

(2) Other inflows (outflows) of cash include investments and redemptions of time deposits and other financial instruments that do not qualify as cash and cash equivalent in accordance with IAS 7, paragraph 7, since they mature in more than 90 days from the original investment date.

 

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

 

5

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Consolidated Statements of Cash Flows

 

       For the period from January to
December of the year
 
       2020   2019 
Consolidated Statements of Cash Flows  Note N°   ThUS$   ThUS$ 
Cash flows generated from (used in) financing activities               
Repayment of lease liabilities        (8,015)   (7,221)
Proceeds from long-term loans        400,000    450,000 
Repayment of borrowings        (264,122)   (7,096)
Dividends paid        (221,995)   (329,787)
Net cash generated (used in) from financing activities        (94,132)   105,896 
                
Net (decrease) increase in cash and cash equivalents before the effect of changes in the exchange rate        (78,989)   47,396 
Effects of exchange rate fluctuations on cash and cash equivalents        (439)   (14,932)
(Decrease) increase in cash and cash equivalents        (79,428)   32,464 
Cash and cash equivalents at beginning of period        588,530    556,066 
Cash and cash equivalents at end of period   11    509,102    588,530 

 

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

 

6

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Consolidated Statements of Changes in Equity

 

Consolidated Statements of Changes in Equity  Share capital   Foreign
currency
 translation
reserves
   Hedge reserves   Gains and
losses from
 financial
assets
reserve
   Actuarial
gains and
losses from
defined
benefit plans
 reserve
   Other
miscellaneous
reserves
   Total  
reserves
   Retained
earnings
   Equity
 attributable
to owners of
the Parent
   Non-controlling
interests
   Total Equity 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Equity at January 1, 2020   477,386    (25,745)   7,196    (270)   (9,490)   14,086    (14,223)   1,623,104    2,086,267    48,205    2,134,472 
Net profit   -    -    -    -    -    -    -    164,518    164,518    3,841    168,359 
Other comprehensive income   -    14,176    (2,705)   7,142    810    -    19,423    -    19,423    (157)   19,266 
Comprehensive income   -    14,176    (2,705)   7,142    810    -    19,423    164,518    183,941    3,684    187,625 
Dividends (1)   -    -    -    -    -    -    -    (149,355)   (149,355)   (10,118)   (159,473)
Other increases (decreases) in equity   -    -    -    -    -    2,232    2,232    -    2,232    (2,278)   (46)
Total changes in equity   -    14,176    (2,705)   7,142    810    2,232    21,655    15,163    36,818    (8,712)   28,106 
Equity as of December 31, 2020   477,386    (11,569)   4,491    6,872    (8,680)   16,318    7,432    1,638,267    2,123,085    39,493    2,162,578 

 

Consolidated Statements of Changes in Equity  Share capital   Foreign
 currency
 translation
 reserves
   Hedge
reserves
   Gains and
losses from
financial
assets reserve
   Actuarial
 gains and
 losses from
defined
benefit plans
reserve
   Other
miscellaneous
 reserves
   Total reserves   Retained
earnings
   Equity
 attributable
 to owners of
the Parent
   Non-
controlling
interests
   Total Equity 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Equity at January 1, 2019   477,386    (26,307)   7,971    (1,111)   (6,884)   11,332    (14,999)   1,623,104    2,085,491    52,311    2,137,802 
Net Profit   -    -    -    -    -    -    -    278,115    278,115    2,488    280,603 
Other comprehensive income   -    562    (775)   841    (2,606)   -    (1,978)   -    (1,978)   223    (1,755)
Comprehensive income   -    562    (775)   841    (2,606)   -    (1,978)   278,115    276,137    2,711    278,848 
Dividends (1)   -    -    -    -    -    -    -    (278,115)   (278,115)   (6,817)   (284,932)
Other increases (decreases) in equity   -    -    -    -    -    2,754    2,754    -    2,754    -    2,754 
Total changes in equity   -    562    (775)   841    (2,606)   2,754    776    -    776    (4,106)   (3,330)
Equity as of December 31, 2019   477,386    (25,745)   7,196    (270)   (9,490)   14,086    (14,223)   1,623,104    2,086,267    48,205    2,134,472 

 

(1)See Note 21.6

 

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

 

7

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Glossary

 

The Following capitalized terms un these notes will have the following meaning:

 

ADS’’ American Depositary Shares;

 

CAM’’ Arbitration and Mediation Center of the Santiago Chamber of Commerce;

 

CCHEN’’ Chilean Nuclear Energy Commission;

 

CCS’’ cross currency swap;

 

CINIIF’’ International Financial Reporting Interpretations Committee;

 

CMF’’ Financial Market Commission;

 

Directors’ Committee” The Company’s Directors’ Committee;

 

Corporate Governance Committee’’ The Company’s Corporate Governance Committee;

 

Health, Safety and Environment Committee’’ The Company’s Health, Safety and Environment Committee;

 

Lease Agreement’’ the mining concessions lease agreement signed by SQM Salar and Corfo in 1993, as subsequently amended;

 

Project Contract” project contract for Salar de Atacama undersigned by Corfo and SQM Salar in 1993, as subsequently amended”;

 

Corfo” Chilean Economic Development Agency;

 

DCV’’ Central Securities Depository;

 

DGA’’ General Directorate of Water Resources;

 

Board” The Company’s Board of Directors;

 

DOJ’’ United States Department of Justice;

 

Dollar’’ o “US$’’ Dollars of the United States of America;

 

DPA’’ Deferred Prosecution Agreement;

 

EIEP’’ Passive foreign investment company;

 

United States” United States of America;

 

FCPA’’ Foreign Corrupt Practices Act of the USA;

 

FNE’’ Chilean National Economic Prosecutor's Office;

 

Management’’ the Company’s management;

 

"SQM Group’’ The corporate group composed of the Company and its subsidiaries

 

Pampa Group’’ Jointly the Sociedad de Inversiones Pampa Calichera S.A., Potasios de Chile S.A. and Inversiones Global Mining (Chile) Limitada;

 

IASB’’ International Accounting Standards Board;

 

SSI’’ Staff severance indemnities;

 

8

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

IFRIC’’ International Financial Reporting Interpretations Committee;

 

IPC” Consumer Price Index;

 

IRSinterest rate swap;

 

Securities Market Law” Securities Market Law No. 18,045;

 

Corporate Law'' Ley 18,046 on corporations;

 

ThUS$'' thousands of Dollars;

 

MUS$'' millions of Dollars;

 

IAS” International Accounting Standard;

 

IFRS” International Financial Reporting Standard;

 

ILOInternational Labour Organization;

 

WHO World Health Organization;

 

Pesos’’ or “Ch$” Chilean pesos, legal tender in Chile;

 

SEC’’ Securities and Exchange Commission;

 

Sernageomin’’ National Geology and Mining Service;

 

SIC’’ Standard Interpretations Committee;

 

SII” Chilean Internal Revenue Service;

 

SMA” Environmental Superintendent’s Office;

 

Company” Sociedad Química y Minera de Chile S.A.;

 

SQM Industrial’’ SQM Industrial S.A.;

 

SQM NA’’ SQM North America Corporation;

 

SQM Nitratos’’ SQM Nitratos S.A.;

 

SQM Potasio’’ SQM Potasio S.A.;

 

SQM Salar’’ SQM Salar S.A.;

 

Tianqi’’ Tianqi Lithium Corporation; and

 

UF’’ Unidad de Fomento (a Chilean Peso based inflation indexed currency unit);

 

WACC’’ Weighted Average Cost of Capital.

 

9

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 1Identification and Activities of the Company and Subsidiaries

 

1.1Historical background

 

Sociedad Química y Minera de Chile S.A. is an open stock corporation founded under the laws of the Republic of Chile and its Chilean Tax Identification Number is 93.007.000-9.

 

The Company was incorporated through a public deed dated June 17, 1968 by the public notary of Santiago Mr. Sergio Rodríguez Garcés. Its existence was approved by Decree No. 1,164 of June 22, 1968 of the Ministry of Finance, and it was registered on June 29, 1968 in the Registry of Commerce of Santiago, on page 4,537 No. 1,992. SQM’s headquarters are located at El Trovador 4285, Floor 6, Las Condes, Santiago, Chile, The Company's telephone number is +(56 2) 2425-2000.

 

The Company is registered in the CMF under number 184 of March 18, 1983 and is therefore subject to oversight by that entity.

 

1.2Main domicile where the Company performs its production activities

 

The Company’s main domiciles are: Calle Dos Sur plot No. 5 - Antofagasta; Arturo Prat 1060 - Tocopilla; Administration Building w/n - Maria Elena; Administration Building w/n Pedro de Valdivia - María Elena, Anibal Pinto 3228 - Antofagasta, Kilometer 1378 Ruta 5 Norte Highway - Antofagasta, Coya Sur Plant w/n - Maria Elena, kilometer 1760 Ruta 5 Norte Highway - Pozo Almonte, Salar de Atacama (Atacama Saltpeter deposit) potassium chloride plant w/n - San Pedro de Atacama, potassium sulfate plant at Salar de Atacama w/n – San Pedro de Atacama, Minsal Mining Camp w/n CL Plant CL, Potassium– San Pedro de Atacama, formerly the Iris Saltpeter office w/n, Commune of Pozo Almonte, Iquique.

 

1.3Codes of main activities

 

The codes of the main activities as established by the CMF, as follows:

 

  - 1700 (Mining)
     
  - 2200 (Chemical products)
     
  - 1300 (Investment)

 

1.4Description of the nature of operations and main activities

 

The products of the Company are mainly derived from mineral deposits found in northern Chile where mining takes place and caliche and brine deposits are processed.

 

(a)Specialty plant nutrition: Four main types of specialty plant nutrients are produced: potassium nitrate, sodium nitrate, sodium potassium nitrate and specialty blends. In addition, other specialty fertilizers are sold including third party products.

 

(b)Iodine: The Company produces iodine and iodine derivatives, which are used in a wide range of medical, pharmaceutical, agricultural and industrial applications, including x-ray contrast media, polarizing films for LCD and LED, antiseptics, biocides and disinfectants, in the synthesis of pharmaceuticals, electronics, pigments and dye components.

 

(c)Lithium: The Company produces lithium carbonate, which is used in a variety of applications, including electrochemical materials for batteries, frits for the ceramic and enamel industries, heat-resistant glass (ceramic glass), air conditioning chemicals, continuous casting powder for steel extrusion, primary aluminum smelting process, pharmaceuticals and lithium derivatives. We are also a leading supplier of lithium hydroxide, which is primarily used as an input for the lubricating greases industry and for certain cathodes for batteries.

 

10

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(d)Industrial chemicals: The Company produces three industrial chemicals: sodium nitrate, potassium nitrate and potassium chloride. Sodium nitrate is used primarily in the production of glass, explosives, and metal treatment. Potassium nitrate is used in the manufacturing of specialty glass, and it is also an important raw material to produce of frits for the ceramics and enamel industries. Solar salts, a combination of potassium nitrate and sodium nitrate, are used as a thermal storage medium in concentrated solar power plants. Potassium chloride is a basic chemical used to produce potassium hydroxide, and it is also used as an additive in oil drilling as well as in food processing.

 

(e)Potassium: The Company produces potassium chloride and potassium sulfate from brines extracted from the Salar de Atacama. Potassium chloride is a commodity fertilizer used to fertilize a variety of crops including corn, rice, sugar, soybean and wheat. Potassium sulfate is a specialty fertilizer used mainly in crops such as vegetables, fruits and industrial crops.

 

(f)Other products and services: The Company also sells other fertilizers and blends, some of which we do not produce. Mainly potassium nitrate, potassium sulfate and potassium chloride. This business line also includes revenue from commodities, services, interests, royalties and dividends.

 

11

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

1.5Other background

 

(a)Employees

 

As of December 31, 2020, and 2019, the workforce was as follows:

 

   As of December 31, 2020       As of December 31, 2019 
Employees  SQM S.A.   other subsidiaries   Total   SQM S.A.   other subsidiaries   Total 
Executives   30    85    115    30    91    121 
Professionals   94    1,156    1,250    110    1,170    1,280 
Technicians and operators   267    3,310    3,577    282    3,481    3,763 
Foreign employees   17    548    565    17    560    577 
Overall total   408    5,099    5,507    439    5,302    5,741 

 

(b)Main shareholders

 

As of December 31, 2020, there were 1,358 shareholders.

 

Following table shows information about the main shareholders of the Company’s Series A or Series B shares in circulation as of December 31, 2020 and 2019, in line with information provided by the DCV, with respect to each shareholder that, to our knowledge, owns more than 5% of the outstanding Series A or Series B shares. The following information is derived from our registry and reports managed by the DCV and informed to the CMF and the Chilean Stock Exchange:

 

Shareholders as of December 31, 2020  No. of Series A    % of Series A
shares
   No. of Series B    % of Series B
shares
   % of total
shares
 
Inversiones TLC SpA (1)   62,556,568    43.80%   -    -    23.77%
The Bank of New York Mellon, ADRs   -    -    50,792,452    42.19%   19.30%
Sociedad de Inversiones Pampa Calichera S.A. (2)   44,894,152    31.43%   922,971    0.77%   17.41%
Potasios de Chile S.A.   18,179,147    12.73%   -    -    6.91%
Inversiones Global Mining (Chile) Limitada   8,798,539    6.16%   -    -    3.34%
Euroamerica C de B S. A.   1,418    -    8,788,517    7.30%   3.34%
Banco Santander via foreign investor accounts   -    -    7,294,827    6.06%   2.77%
Banco de Chile via State Street   -    -    6,971,782    5.79%   2.65%
Banco de Chile non-resident third party accounts   -    -    6,129,339    5.09%   2.33%
Inversiones la Esperanza de Chile Limitada   4,147,263    2.90%   46,500    0.04%   1.59%
Banchile Corredora de Bolsa S. A.   459,202    0.32%   2,426,758    2.02%   1.10%
Banco de Chile on behalf of Citibank NA New York customers   177,463    0.12%   1,732,249    1.44%   0.73%

 

12

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Shareholders as of December 31, 2019  No. of Series A    % of Series A
shares
   No. of Series B    % of Series B
shares
   % of total
shares
 
Inversiones TLC SpA (1)   62,556,568    43.80%   -    -    23.77%
Sociedad de Inversiones Pampa Calichera S.A. (2)   44,894,152    31.43%   3,793,154    3.15%   18.50%
The Bank of New York Mellon, ADRs   -    -    38,311,788    31.83%   14.56%
Potasios de Chile S.A.   18,179,147    12.73%   -    -    6.91%
Inversiones Global Mining (Chile) Limitada   8,798,539    6.16%   -    -    3.34%
Banco Itaú via foreign investor accounts   -    -    7,373,216    6.13%   2.80%
Banco de Chile non-resident third party accounts   109    -    6,842,746    5.68%   2.60%
Banco Santander via foreign investor accounts   -    -    6,618,416    5.50%   2.51%
Euroamerica C de B S. A.   3,056    -    4,863,467    4.04%   1.85%
Banchile C de B S. A.   491,729    0.34%   4,285,696    3.56%   1.82%
Inversiones la Esperanza de Chile Limitada   4,147,263    2.90%   46,500    0.04%   1.59%
Bolsa de comercio de Santiago Bolsa de valores   30,590    0.02%   3,077,930    2.56%   1.18%

 

(1) As reported by DCV, which records the Company's shareholders' register as of December 31, 2020 and December 31, 2019, Inversiones TLC SpA, a subsidiary of Tianqi, is the direct owner of 62,556,568 shares of SQM equivalent to 23.77% of SQM’s shares. Through Tianqi’s subsidiaries it owns 5,516,772 Series B SQM shares as reported by Inversiones TLC Spa. So as of December 31, 2020, Tianqi owns 25.86% of SQM's total Series A and B shares.

 

(2) Total Sociedad de Inversiones Pampa Calichera S.A. 57,235,201 Series A and B shares; 11,418,078 Series B shares are held by different brokers.

 

1.6Covid-19

 

In January 2020, the WHO deemed COVID-19 a global pandemic. In March 2020, the Chilean Ministry of Health declared a nationwide State of Emergency. As a precaution, our management has implemented several measures to help reduce the speed at which the coronavirus spreads, including measures to mitigate the spread in the workplace, significant reductions in employee travel and a mandatory quarantine for people who have arrived from high risk destinations, in consultation with governmental and international health organization guidelines, and will continue to implement measures consistent with evolving coronavirus situation.

 

On March 16, 2020, the Company reported on various points in relation to the outbreak of the COVID-19 virus and its being declared to be a global pandemic by the WHO.

 

(1)Regarding the financial and operational effects that this situation could mean for the Company, it is worth noting that the Company sells its products worldwide, with Asia, Europe and North America being its main markets. Border closures, decrease in commercial activity and difficulties and disruptions in the supply chains in the markets in which we sell have impacted our ability to fulfill our previous sales volume estimates, the impact on our sales volumes and average prices will depend on the duration of the virus in different markets, the efficiency of the measures implemented to contain the spread of the virus in each country and fiscal incentives that may be implemented in different jurisdictions to promote economic recovery.

 

For now, our operations have not seen any material impacts related to the outbreak of COVID-19 virus.

 

We have taken measures to mitigate the impacts of this health emergency on our employees and limit the impact it could have on our operations (described below in point 2).

 

13

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(2)Regarding the measures that management has adopted or intends to adopt to mitigate possible financial and/or operational effects, we inform that the Company has implemented a series of measures in its operations in Chile and abroad that seek to protect its workers and reduce the speed at which the virus spreads. The measures adopted by the Company are:

 

(a)The flexibility of the working day, arrival and departure times, together with the incentive to work from home in those cases where this is possible.

 

(b)Avoidance of crowds, seminars and large meetings in the Company´s offices and operating facilities.

 

(c)Strengthening personal hygiene protocols (use of alcohol-based gel, masks, etc.) and sanitation in plants, cafeterias and offices.

 

(d)Significant reduction in domestic and international travel, along with obligatory quarantine for people who have arrived from high risk destinations.

 

(e)The costs associated with the measures implemented by the company correspond primarily to increased expenses in transportation, supplies, room and board, among others.

 

(3)Regarding the existence of committed insurance and its level of coverage, we inform that as of today, we have not identified any events which would trigger coverage from the insurance policies that the Company has contracted.

 

(4)Finally, we hereby inform that we do not currently have any other information that management believes is relevant to provide.

 

As of December 31, 2020, there have been no significant changes in the impacts associated with COVID-19 reported to the CMF.

 

14

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 2Basis of presentation for the consolidated financial statements

 

2.1Accounting period

 

These consolidated financial statements cover the following periods:

 

(a)Consolidated Statements of Financial Position as of December 31, 2020 and 2019

(b)Consolidated Statements of Income for the periods from January 1 to December 31, 2020 and 2019.

(c)Consolidated Statements of Comprehensive Income from January 1 to December 31, 2020 and 2019.

(d)Consolidated Statements of Changes in Equity for the periods ended December 31, 2020 and 2019.

(e)Consolidated Statements of Cash Flows for the periods ended December 31, 2020 and 2019.

 

2.2Consolidated financial statements

 

The consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with IFRS and represent the full, explicit and unreserved adoption of IFRS.

 

These consolidated financial statements fairly reflect the Company’s financial position, as of December 31, 2020 and 2019, the comprehensive results of operations, changes in equity and cash flows occurring for the years then ended.

 

IFRS establish certain alternatives for their application, those applied by the Company are detailed in this Note and Note 3.

 

The accounting policies used in the preparation of these consolidated annual accounts comply with each IFRS in force at their date of presentation.

 

Pursuant to CMF requirements, on December 31, 2020 the effects related to the application of IFRS 16 “Leases” are presented in separate items and the following reclassifications have been made with respect to the information reported on December 31, 2019 to ensure a consistent presentation between periods, which are considered not significant for the previously issued financial statements. See Note 4.

 

Items  Original balances
reported as of
December 31, 2019
   Reclassification   Balances reclassified
as of December 31,
2019
 
   ThUS$   ThUS$   ThUS$ 
Property, plant and equipment, (net)   1,607,070    (37,164)   1,569,906 
Right-of-use assets   -    37,164    37,164 
Other current financial liabilities   298,822    (7,694)   291,128 
Lease liabilities, current   -    7,694    7,694 
Other non-current financial liabilities   1,518,926    (30,203)   1,488,723 
Lease liabilities, non-current   -    30,203    30,203 

 

15

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

2.3Basis of measurement

 

The consolidated financial statements have been prepared on the historical cost basis except for the following:

 

(a)Inventories are recorded at the lower of cost and net realizable value.

(b)Financial derivatives measured at fair value.

(c)Certain financial investments measured at fair value with an offsetting entry in other comprehensive income.

 

2.4Accounting pronouncements

 

New accounting pronouncements

 

(a)The following standards, interpretations and amendments are mandatory for the first time for annual periods beginning on January 1, 2020:

 

Amendments and improvements  Description  Mandatory for annual periods
beginning on or after
Amendment to IAS 1 “Presentation of Financial Statements” and “IAS 8” Accounting Policies, Changes in Accounting Estimates and Errors - Published in October 2018.  This amendment establishes a consistent definition of materiality in all the IFRCs and the Conceptual Framework for Financial Information; it clarifies the explanation of the definition of material; and it incorporates some of the guidelines in IAS 1 on immaterial information.  01-01-2020
       
Amendment to IFRS 3 “Definition of a Business” - Published in October 2018.  This amendment revises the definition of a business. Based on the feedback received by the IASB, the application of the current guidance is frequently seen as too complex, and results in too many transactions that qualify as business combinations.  01-01-2020
       
Amendments to IFRS 9, IAS 39 and IFRS 7 “Reform to the referential interest rate” Published in September 2019.  These amendments provide certain simplifications in relation to the reform to the referential interest rates. These simplifications relate to hedge accounting and affect the IBOR reform, which generally shouldn’t result in the finalization of hedge accounting. However, any hedge ineffectiveness should continue to be recorded in the results.  01-01-2020
       
Amendment to IFRS 16 “Lease Concessions” - Published in May 2020.  This amendment provides lessees with an optional exemption regarding the assessment of whether a lease concession associated with COVID-19 is a lease modification. Lessees may opt to account for lease concessions as they would if there were no lease modifications. In many cases, this would give rise to the accounting for a concession as a variable lease payment.  01-01-2020

 

Management confirm that the adoption of the aforementioned standards, amendments and interpretations did not significantly impact the company’s consolidated financial statements.

 

16

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(b)Standards, interpretations and amendments issued that had not become effective for financial statements beginning on January 1, 2020 and which the Company has not adopted early are as follows:

 

Standards and Interpretations  Description  Mandatory for annual periods
beginning on or after
Amendment to IAS 1 “Presentation of financial statements” on classification of liabilities.  These limited scope amendments of IAS 1 “Presentation of financial statements” clarify that the liabilities will be classified as current or non-current depending on the rights that exist at the close of the reporting period. The classification is not affected by the expectations of the entity or the events subsequent to the report date (for example, the receipt of a waiver or noncompliance with the pact). The amendment also clarifies what IAS 1 means when referring to “liquidation” of a liability.  The amendment must be applied retroactively in accordance with IAS 8. In May 2020, the IASB issued an “Exposure Draft” proposing deferral of the effective application date to January 1, 2023.  01-01-2022
       
Reference to the Conceptual Framework - Amendments to IFRS 3.  Minor modifications were made to IFRS 3 “Definition of a Business” to update references to the conceptual framework for financial reporting and to add an exception to the recognition of contingent liabilities and contingent assets within the scope of IAS 37 “Provisions, contingent liabilities and contingent assets” and Interpretation 21 “Levies.” The modifications also confirm that contingent assets should not be recognized in the date of acquisition.  01-01-2022
       
Amendment to IAS 16 “Property, plant and equipment”  This prohibits companies from deducting from the cost of the property any revenue received from the sale of articles produced while the company is preparing the asset for its anticipated use. The company must recognize this sales revenue and associated costs in the profit or loss for the fiscal year.  01-01-2022
       
Amendment to IAS 37, “Provisions, contingent liabilities and contingent assets.”  This clarifies for onerous contracts which inevitable costs a company must include to assess whether a contract will result in a loss.  01-01-2022
       
IFRS 9 Financial Instruments.  This clarifies which fees must be included in the 10% test for the derecognition of financial liabilities.  01-01-2022
       
IFRS 16 Leases.  Modification of illustrative example 13 to eliminate the illustration of lessor payments in relation to improvements to rental properties, to eliminate any confusion as to the treatment of lease incentives.  01-01-2022
       
IFRS 1 First-time Adoption of International Financial Reporting Standards.  This enables entities that have measured their assets and liabilities against book values in their head office books to also measure the accumulated translation differences using the amounts notified by the head office. This amendment will also apply to associates and joint ventures that have taken the same IFRS 1 exemption.  01-01-2022
       
Amendment to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”, Published in September 2014.  These amendments address an inconsistency between the requirements in IFRS 10 and those in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not), A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary.  undetermined

 

Management believes that the adoption of the above standards, amendments and interpretations will not have a significant impact on the Company’s financial statements.

 

17

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

2.5Basis of consolidation

 

(a)Subsidiaries

 

The Company established control as the basis of consolidation of its financial statements. The Company controls a subsidiary when it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary.

 

The consolidation of a subsidiary starts when the Group controls it and it is no longer included in the consolidation when this control is lost.

 

Subsidiaries are consolidated through a line by line method, adding items that represent assets, liabilities, income and expenses with a similar content, and eliminating operations between companies within the SQM Group.

 

Results for dependent companies acquired or disposed of during the period are included in the consolidated accounts from the date on which control is transferred to the SQM Group or until the date when this control ends, as relevant.

 

To account for an acquisition of a business, the Company uses the acquisition method. Under this method, the acquisition cost is the fair value of assets delivered, equity securities issued, and incurred or assumed liabilities at the date of exchange. Assets, liabilities and contingencies identifiable assumed in a business combination are measured initially at fair value at the acquisition date. For each business combination, the Company will measure the non-controlling interest of the acquiree either at fair value or as proportional share of net identifiable assets of the acquire.

 

The details of the consolidated companies can be found in Note 8.

 

18

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

2.6Investments in associates and joint ventures

 

(a)Joint ventures

 

Investments in joint arrangements are classified as joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.

 

With respect to joint operations, the Company recognizes its direct right to the assets, liabilities, income and expenses of the joint arrangement.

 

(b)Joint ventures and investments in associates

 

Interests in companies over which joint control is exercised (joint ventures) or where an entity has significant influence (associates) are recognized using the equity accounting method. Significant influence is presumed when the investor owns over 20% of the investee’s share capital. The investment is recognized using this method in the statement of financial position at cost plus changes subsequent to acquisition and includes the proportional share of the associate’s equity. For these purposes, the percentage interest in the associate is used. The associated acquired goodwill is included in the investee’s book value and is not amortized. The debit or credit to the income statement reflects the proportional share of the profit or loss of the associate or joint venture.

 

Unrealized gains from transactions with joint ventures or associates are eliminated in accordance with the Company's percentage interest in such entities. Any unrealized losses are also eliminated, unless that transaction provides evidence that the transferred asset is impaired.

 

Changes in associate’s or joint ventures equity are recognized proportionally with a charge or credit to "Other Reserves" and are classified according to their origin. The reporting dates of the associate or joint ventures, the Company and related policies are similar for equivalent transactions and events in similar circumstances. In the event that significant influence is lost, or the investment is sold, or held for sale, the equity method is suspended, not recognizing the proportional share of the gain or loss. If the resulting value under the equity method is negative, the share of profit or loss is reflected as zero in the consolidated financial statements, unless there is a commitment by the Company to restore the capital position of the Company, in which case the related risk provision and expense are recorded.

 

Dividends received by these companies are recorded by reducing the value of the investment and are shown in cash flows from operating activities, and the proportional share of the gain or loss recognized in accordance with the equity method is included in the consolidated income statement under "Share of Gains (Losses) of Associates and Joint Ventures Accounted for Using the Equity Method''.

 

19

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 3Significant accounting policies

 

3.1Classification of balances as current and non-current

 

In the consolidated statement of financial position, balances are classified in consideration of their recovery (maturity) dates; i.e., those maturing within a period equal to or less than 12 months are classified as current counted from the closing date of the consolidated financial statements and those with maturity dates exceeding the aforementioned period are classified as non-current.

 

The exception to the foregoing relates to deferred taxes, which are classified as non-current, regardless of the maturity they have.

 

3.2Functional and presentation currency

 

The Company’s consolidated financial statements are presented in United States dollars, without decimal places, which is the Company’s functional and presentation currency and is the currency of the main economic environment in which it operates. Consequently, the term foreign currency is defined as any currency other than the U.S. dollar.

 

3.3Accounting policy for foreign currency translation

 

(a)SQM group entities:

 

The revenue, expenses, assets and liabilities of all entities that have a functional currency other than the presentation currency are converted to the presentation currency as follows:

 

-Assets and liabilities are converted at the closing exchange rate prevailing on the reporting date.

 

-Revenues and expenses of each profit or loss account are converted at monthly average exchange rates.

 

-All resulting foreign currency translation gains and losses are recognized as a separate component in translation reserves.

 

In consolidation, foreign currency differences arising from the translation of a net investment in foreign entities are recorded in shareholder’s equity (“other reserves”), At the date of disposal, such foreign currency translation differences are recognized in the statement of income as part of the gain or loss from the sale.

 

20

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

The main exchange rates and UF used to translate monetary assets and liabilities, expressed in foreign currency at the end and average of each period in respect to U.S. dollars, are as follows:

 

   Closing exchange rates   Average exchange rates 
Currencies  As of December 31, 2020   As of December 31, 2019   As of December 31, 2020   As of December 31, 2019 
   ThUS$   ThUS$   ThUS$   ThUS$ 
Brazilian real   5.18    4.02    5.14    4.11 
New Peruvian sol   3.62    3.31    3.60    3.35 
Argentine peso   84.14    59.83    82.62    59.86 
Japanese yen   105.56    108.90    103.81    109.12 
Euro   0.81    0.89    0.82    0.90 
Mexican peso   19.93    18.89    19.97    19.11 
Australian dollar   1.30    1.43    1.33    1.45 
Pound Sterling   0.74    0.76    0.74    0.76 
South African rand   14.61    14.06    14.88    14.42 
Chilean peso   710.95    748.74    731.92    767.22 
Chinese yuan   6.51    6.98    6.53    7.01 
Indian rupee   73.30    71.31    73.65    71.16 
Thai Baht   29.94    29.97    30.08    30.22 
Turkish lira   7.36    5.94    7.70    5.85 
UF (*)   40.89    37.81    39.73    36.90 

 

(*) US$ per UF

 

(b)            Transactions and balances

 

The Company’s non-monetary transactions in currencies other than the functional currency (Dollar) are translated to the respective functional currencies of Group entities at the exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. All differences are recorded in the statement of income except for all monetary items that provide an effective hedge for a net investment in a foreign operation. These items are recognized in other comprehensive income until disposal of the investment, when they are recognized in the statement of income. Charges and credits attributable to foreign currency translation differences on those hedge monetary items are also recognized in other comprehensive income.

 

Non-monetary assets and liabilities that are measured at historical cost in a foreign currency are retranslated to the functional currency at the historical exchange rate of the transaction. Non-monetary items that are measured based on fair value in a foreign currency are translated using the exchange rate at the date on which the fair value is determined.

 

21

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.4Consolidated statement of cash flows

 

Cash equivalents correspond to highly liquid short-term investments that are easily convertible into known amounts of cash and subject to insignificant risk of changes in their value and mature in less than three months from the date of acquisition of the instrument.

 

For the purposes of the statement of cash flows, cash and cash equivalents comprise cash and cash equivalents as defined above.

 

The statement of cash flows present cash transactions performed during the year, determined using the direct method.

 

3.5Accounting policy for Financial assets

 

Management determines the classification of its financial assets, in accordance with the provisions of IFRS 9, at fair value (either through other comprehensive income, or through profit or loss), and at amortized cost. The classification depends on the business model of the entity to manage the financial assets and the contractual terms of the cash flows.

 

In the initial recognition, the Company measures its financial assets at fair value more or less, in the case of a financial asset that is not accounted for at fair value through profit or loss, the transaction costs that are directly attributable to the acquisition of the financial asset on the date when the Company commits to the purchase or sale of an asset. In the case of account receivables and other accounts receivables, the transaction price at the initial recognition is measured in accordance with the provisions of IFRS 15.

 

After initial recognition, the Company measures its financial assets according to the Company's business model for managing its financial assets and the contractual terms of its cash flows:

 

(a)Financial instruments measured at amortized cost. Financial assets that meet the following conditions are included in this category (i) the business model that supports it aims to maintain the financial assets to obtain the contractual cash flows and the contractual conditions of the financial asset give place, on specified dates, to cash flows that are only payments of the principal and interest on the outstanding principal amount. The Company’s financial assets that meet these conditions are: (ii) cash equivalents; (iii) related party receivables; (iv) trade debtors; (v) other receivables.

 

(b)Financial instruments at fair value. A financial asset should be measured at fair value through profit or loss or fair value through other comprehensive income, depending on the following:

 

(i)"Fair Value Through Other Comprehensive Income": Assets held to collect contractual cash flows and to be sold, where the asset cash flows are only capital and interest payments, are measured at fair value through other comprehensive income. Changes in book values are through other comprehensive income, except for the recognition of impairment losses, interest income and exchange gains and losses, which are recognized in the income statement. When a financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to the income statement. Interest income from these financial assets is included in financial income using the effective interest method. Exchange gains and losses are presented in the income statement and impairment losses are separately presented in the income statement.

 

(ii)"Fair Value Through Profit and Loss": Assets that do not meet the amortized cost or "Fair Value Through Other Comprehensive Income" criteria are valued at "Fair Value Through Profit and Loss".

 

(c)Financial equity assets at fair value through other comprehensive income. Equity instruments that are not classified as held for trading and which the Group has irrevocably chosen to recognize in this category.

 

22

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Financial asset impairment

 

The Company evaluates expected credit losses associated with its debt instruments carried at amortized cost and fair value through other comprehensive income. The impairment method used depends on whether there has been a significant increase in credit risk.

 

The Company applies the IFRS 9 simplified approach to measure expected credit losses using the lifetime expected loss on all trade receivables. Expected credit losses are measured by grouping receivables by their shared credit risk characteristics and days overdue.

 

The Company has concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for these assets. Expected loss rates are based on sales payment profiles and historical credit losses within this period. Historical loss rates are adjusted to reflect current and expected information regarding macroeconomic factors that affect the ability of customers to meet their commitments.

 

Impairment losses from receivables and contract assets are shown as net impairment losses in the line “Impairment of financial assets and reversal of impairment losses”, see Note 25.7. The subsequent recovery of previously canceled amounts is accredited in the same line.

 

23

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.6Financial liabilities

 

Management determines the classification of its financial liabilities in accordance with the provisions of IFRS 9, at fair value or at amortized cost. The classification depends on the business model of the entity to manage the financial assets and the contractual terms of the cash flows.

 

At the initial recognition, the Company measures its financial liabilities by their fair value more or less, in the case of a financial liability that is not accounted for at fair value through profit or loss, the transaction costs that are directly attributable to the acquisition of the financial liability. After initial recognition, the Company measures its financial liabilities at amortized cost unless the Company, at the initial moment, irrevocably designates the financial liability as measured at fair value through profit or loss.

 

Financial liabilities measured at amortized cost are commercial accounts payable and other accounts payable and other financial liabilities.

 

Valuation at amortized cost is made using the effective interest rate method. Amortized cost is calculated by considering any premium or discount on the acquisition and includes transaction costs that are an integral part of the effective interest rate.

 

Financial liabilities are recorded as not current when they mature in more than 12 months and as current when they mature in less than 12 months.

 

3.7Reclassification of financial instruments

 

When the Company changes its business model for managing financial assets, it will reclassify all its financial assets affected by the new business model. Financial liabilities cannot be reclassified.

 

3.8Financial instrument derecognition

 

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred; and the control of the financial assets has not been retained.

 

The Company derecognizes a financial liability when its contractual obligations or a part of these are discharged, paid to the creditor or legally extinguished from the principle responsibility contained in the liability.

 

3.9Derivative and hedging financial instruments

 

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

 

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

 

b)Hedging of a single risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).

 

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

 

24

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

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

 

The fair value of derivative instruments used for hedging purposes is shown in Note 14.3. Changes in the cash flow hedge reserve are classified as a non-current asset or liability if the remaining expiration period of the hedged item is more than 12 months, and as a current asset or liability if the remaining expiration period of the hedged item is less than 12 months.

 

Derivatives that are not designated or do not qualify as hedging derivatives are classified as current assets or liabilities, and changes in the fair value are directly recognized through profit or loss.

 

a)Fair value hedge

 

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the effective portion of interest rate swaps that hedge fixed rate borrowings is recognized in profit or loss within finance costs, together with changes in the fair value of the hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is recognized in profit or loss within other income or other expenses. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity using a recalculated effective interest rate.

 

b)Cash flow hedges

 

The effective portion of the gain or loss on the hedging instrument is initially recognized with a debit or credit to other comprehensive income, while any ineffective portion is immediately recognized with a debit or credit to income, as appropriate depending on the nature of the hedged risk. The amounts accumulated in net equity are carried over to results when the hedged items are settled or when these have an impact on results.

 

When a hedging instrument no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs.

 

When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.

 

25

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.10Derivative financial instruments not considered as hedges

 

Derivative financial instruments not considered as hedges are recognized at fair value with the effect in the results of the year. The Company has derivative financial instruments to hedge foreign currency risk exposure.

 

The Company continually evaluates the existence of embedded derivatives in both its contracts and in its financial instruments. As of December 31, 2020, and December 31, 2019, the Company does not have any embedded derivatives.

 

3.11Deferred acquisition costs from insurance contracts

 

Acquisition costs from insurance contracts are classified as prepayments and correspond to insurance contracts in force, recognized using the straight-line method and on an accrual basis independent of payment date. These are recognized under other non-financial assets.

 

3.12Leases

 

(a)Right-of-use assets

 

The Company recognizes right-of-use assets on the initial lease date (i.e., the date on which the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, adjusted by any new measurement of the lease liability. The cost of right-of-use assets includes the amount of recognized lease liabilities, direct initial costs incurred and lease payments made on the start date or sooner, less the lease incentives received. Unless the Company is reasonably sure it will take ownership of the leased asset at the end of the lease period, the assets recognized through right-of-use are depreciated in a straight line during the shortest period of their estimated useful life and lease period. Right-of-use assets are subject to impairment as per “IAS 36 Impairment of Assets”.

 

(b)Lease liabilities

 

On the lease start date, the Company recognizes lease liabilities measured at present value of lease payments that will be made during the lease period. Lease payments include fixed payments (including payments that are essentially fixed), less incentives for lease receivables, variable lease payments that are dependent on an index or rate and amounts that are expected to be paid as guaranteed residual value. Lease payments also include the exercise price of a purchase option if the Company is reasonably sure it will exercise this and penalty payments for terminating a lease, if the lease period reflects that the Company will exercise the option to terminate. Variable lease payments that are not dependent on an index or rate are recognized as expenses in the period that produces the event or condition that triggers payment.

 

When calculating the present value of lease payments, the Company uses the incremental borrowing rate on the initial lease date if the interest rate implicit in the lease cannot be determined easily. After the start date, the lease liability balance will increase to reflect the accumulation of interest and will diminish as lease payments are made. Furthermore, the book value of lease liabilities is remeasured in the event of an amendment, a change in the lease period, a change in the fixed lease payments in substance or a change in the assessment to buy the underlying asset.

 

Payments made that affect lease liabilities are presented as part of the financing activities in the cash flow statement.

 

(c)Short-term leases and low-value asset leases

 

The Company applies the short-term lease recognition exemption to leases with a lease term of 12 months or less starting on the start date and that don’t have a purchase option. It also applies the low-value asset lease recognition exemptions. Lease payments in short-term leases and low-value asset leases are recognized as lineal expenses during the lease term.

 

26

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(d)  Significant judgments in the determination of the lease term for contracts with renewal options

 

The Company determines the lease term as the non-cancellable period of the lease, together with periods covered by an option to extend the lease if it is reasonably certain that this will be exercised, or any period covered by an option to terminate the lease, if it is reasonably certain that this will not be exercised.

 

The Company has the option, under some of its leases, to lease assets for additional terms. The Company applies its judgment when assessing whether it is reasonably certain that it will exercise the option to renovate. In other words, it considers all the relevant factors that create an economic incentive for it to exercise the option to renovate. After the start date, the Company reevaluates the lease term if there is a significant event or change in the circumstances that are under its control and affect its capacity to exercise (or not exercise) the option to renovate.

 

3.13Inventory measurement

 

The method used to determine the cost of inventories is the weighted average monthly cost of warehouse storage. In determining production costs for own products, the company includes the costs of labor, raw materials, materials and supplies used in production, depreciation and maintenance of the goods that participate in the production process, the costs of product movement necessary to maintain stock on location and in the condition in which they are found, and also includes the indirect costs of each task such as laboratories, process and planning areas, and personnel expenses related to production, among others.

 

For finished and in-process products, the company has four types of provisions, which are reviewed quarterly:

 

(a)Provision associated with the lower value of stock: The provision is directly identified with the product that generates it and involves three types: (i) provision of lower realizable value, which corresponds to the difference between the inventory cost of intermediary or finished products, and the sale price minus the necessary costs to bring them to the same conditions and location as the product with which they are compared; (ii) provision for future uncertain use that corresponds to the value of those products in process that are likely not going to be used in sales based on the company’s long-term plans; (iii) reprocessing costs of products that are unfeasible for sale due to current specifications.

 

(b)Provision associated with physical differences in inventory: A provision is made for differences that exceed the tolerance considered in the respective inventory process (physical and annual inventories are taken for the productive units in Chile and the port of Tocopilla, the business subsidiaries depend on the last zero ground obtained, but in general it is at least once a year), these differences are recognized immediately.

 

(c)Potential errors in the determination of stock: The company has an algorithm that is reviewed at least once a year and corresponds to diverse percentages assigned to each inventory based on the product, location, complexity involved in the associated measurement, rotation and control mechanisms.

 

(d)Provisions undertaken by business subsidiaries: these are historical percentages that are adjusted as zero ground is attained based on normal inventory management.

 

Inventories of raw materials, materials and supplies for production are recorded at acquisition cost. Cyclical inventories are performed in warehouses, as well as general inventories every three years. Differences are recognized at the moment they are detected. The company has a provision that makes quarterly calculations from percentages associated with each type of material (classification by warehouse and rotation), these percentages use the lower value resulting from deterioration or obsolescence as well as potential losses. This provision is reviewed at least annually, and considers the historical profit and loss obtained in the inventory processes.

 

27

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.14Transactions with non-controlling interests

 

Non-controlling interests are recorded in the consolidated statement of financial position within equity but separate from equity attributable to the owners of the Parent.

 

3.15Related party transactions

 

Transactions between the Company and its subsidiaries are part of the Company’s normal operations within its scope of business activities. Conditions for such transactions are those normally effective for those types of operations with regard to terms and market prices. The maturity conditions vary according to the originating transaction.

 

3.16Property, plant and equipment

 

Property, plant and equipment assets are stated at acquisition cost, net of the related accumulated depreciation, amortization and impairment losses that they might have experienced.

 

In addition to the price paid for the acquisition of tangible property, plant and equipment, the Company has considered the following concepts as part of the acquisition cost, as applicable:

 

(a)Accrued interest expenses during the construction period that are directly attributable to the acquisition, construction or production of qualifying assets, which are those that require a substantial period prior to being ready for use. The interest rate used is that related to the project’s specific financing or, should this not exist, the average financing rate of the investor company.

 

(b)The future costs that the Company will have to experience, related to the closure of its facilities at the end of their useful life, are included at the present value of disbursements expected to be required to settle the and its subsequent variation is recorded directly in results.

 

Having initially recognized provisions for closure and refurbishment, the corresponding cost is capitalized as an asset in “Property, plant and equipment” and amortized in line with the amortization criteria for the associated assets.

 

Construction-in-progress is transferred to property, plant and equipment in operation once the assets are available for use and the related depreciation and amortization begins on that date.

 

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

 

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

 

Gains or losses which are generated from the sale or disposal of property, plant and equipment are recognized as income (or loss) in the period and calculated as the difference between the asset’s sales value and its net carrying value.

 

Costs derived from the daily maintenance of property, plant and equipment are recognized when incurred.

 

28

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.17Depreciation of property, plant and equipment

 

Property, plant and equipment are depreciated through the straight-line distribution of cost over the estimated technical useful life of the asset, which is the period in which the Company expects to use the asset. When components of one item of property, plant and equipment have different useful lives, they are recorded as separate assets. Useful lives are reviewed on an annual basis.

 

Fixed assets located in Salar de Atacama consider useful life to be the lesser value between the technical useful life and the years remaining until 2030.

 

In the case of certain mobile equipment, depreciation is performed depending on the hours of operation.

 

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

 

Classes of property, plant and equipment  Minimum life or rate
(years)
   Maximum life or rate
(years)
   life or average rate
in years
 
Mining assets   3    7    6 
Energy generating assets   3    16    9 
Buildings   3    25    13 
Supplies and accessories   2    10    7 
Office equipment   5    5    5 
Transport equipment   5    8    6 
Network and communication equipment   4    10    8 
IT equipment   5    11    7 
Machinery, plant and equipment   5    25    13 
Other property, plant and equipment   3    15    10 

 

3.18Goodwill

 

Goodwill acquired represents the excess in acquisition cost on the fair value of the Company's ownership of the net identifiable assets of the subsidiary on the acquisition date. Goodwill acquired related to the acquisition of subsidiaries is included in the line item goodwill, which is subject to impairment tests annually or more frequently if events or changes in circumstances indicate that it might be impaired and is stated at cost less accumulated impairment losses. Gains and losses related to the sale of an entity include the carrying value of goodwill related to the entity sold.

 

This intangible asset is assigned to cash-generating units with the purpose of testing impairment losses. It is allocated based on cash-generating units expected to obtain benefits from the business combination from which the aforementioned goodwill acquired arose.

 

29

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.19Intangible assets other than goodwill

 

Intangible assets other than goodwill mainly relate to water rights, emission rights, commercial brands, costs for rights of way for electricity lines, license costs and the development of computer software and mining property and concession rights, client portfolio and commercial agent.

 

(a)Water rights

 

Water rights acquired by the Company relate to water from natural sources and are recorded at acquisition cost. Given that these assets represent legal rights granted in perpetuity to the Company, they are not amortized, but are subject to annual impairment tests.

 

(b)Rights of way for electric lines

 

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

 

(c)Computer software

 

Licenses for IT programs acquired are capitalized based on their acquisition and customization costs. These costs are amortized over their estimated useful lives.

 

Expenses related to the development or maintenance of IT programs are recognized as an expense as and when incurred. Costs directly related to the production of unique and identifiable IT programs controlled by the Group, and which will probably generate economic benefits that are higher than its costs during more than a year, are recognized as intangible assets. Direct costs include the expenses of employees who develop information technology software and general expenses in accordance with corporate charges received.

 

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

 

(d)Mining property and concession rights

 

The Company holds mining property and concession rights from the Chilean and Western Australian Governments. Property rights from the State of Chile are usually obtained at no initial cost (other than the payment of mining patents and minor recording expenses) and once the rights on these concessions have been obtained, they are retained by the Company while annual patents are paid. Such patents, which are paid annually, are recorded as prepaid assets and amortized over the following twelve months. Amounts attributable to mining concessions acquired from third parties that are not from the Chilean Government are recorded at acquisition cost within intangible assets.

 

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

 

Finite useful life measures the length of, or number of production or similar units constituting that useful life., except for the mining claims granted by Corfo, which correspond to assets subject to restitution. For this reason they are considered assets with a finite useful life and their useful life is assigned until the year 2030 when the contract ends.

 

The estimated useful life for software which they are amortized corresponds to the periods defined by the contracts or rights from which they originate.

 

30

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

f)Minimum and maximum amortization lives or rates of intangible assets:

 

Estimated useful life or amortization rate  Minimum Life or
Rate
  Maximum Life or
Rate
Water rights and rights of way  Indefinite  Indefinite
Mining rights granted by Corfo  10 years  10 years
Mining rights  Unit-production method
IT programs  2 years  8 years

 

3.20            Research and development expenses

 

Research and development expenses are charged to profit or loss in the period in which the expenditure was incurred.

 

3.21            Exploration and evaluation expenses

 

The Company holds mining concessions for exploration and exploitation of ore, the Company gives the following treatment to expenses associated with exploration and assessment of these resources:

 

(a)Caliche

 

Once the rights have been obtained, the Company records the disbursements directly associated with the exploration and assessment of the deposit as an at cost asset. These disbursements include the following items: geological surveys, drilling, borehole extraction and sampling, activities related to the technical assessment and commercial viability of the extraction, and in general, any disbursement directly related to specific projects where the objective is to find ore resources.

 

If the technical studies determine that the ore grade is not economically viable, the asset is directly charged to profit and loss. If determined otherwise, the asset described above is associated with the extractable ore tonnage which is amortized as it is used. These assets are presented in the “other non-current non-financial assets” category, reclassifying the portion related to the area to be extracted that year as inventories.

 

(b)Metal exploration

 

Expenses related to metal exploration are charged to profit or loss in the period in which they are recognized if the project assessed doesn't qualify for consideration as advanced exploration, otherwise these are amortized during the development stage.

 

(c)Salar de Atacama exploration

 

Salar de Atacama exploration expenses are presented as non-current assets as the property, plant and equipment category and correspond mainly to wells that can also be used in the extraction of the deposit and/or monitoring, these are amortized over 10 years.

 

(d)Mount Holland exploration

 

Mount Holland exploration expenses are presented into “Property, Plant and Equipment”, specifically in Constructions in progress and primarily consider exploration boreholes and complementary studies for the lithium ore study of the area of Western Australia, Australia. These expenses will begin to be amortized in the development stage.

 

31

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.22            Impairment of non-financial assets

 

Assets subject to depreciation and amortization are also subject to impairment testing, provided that an event or change in the circumstances indicates that the amounts in the accounting records may not be recoverable, an impairment loss is recognized for the excess of the book value of the asset over its recoverable amount.

 

For assets other than goodwill, the Group annually assesses whether there is any indication that a previously recognized impairment loss may no longer exist or may have decreased. Should such indications exist, the recoverable amount is estimated.

 

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

 

In evaluating value in use, estimated future cash flows are discounted using a pre-tax discount rate that reflects current market assessment, the value of money over time and the specific asset risks.

 

Impairment losses from continuing operations are recognized with a debit to profit or loss in the categories of expenses associated with the impaired asset function.

 

A previously recognized impairment loss is only reversed if there have been changes in the estimates used to determine the asset’s recoverable amount since the last time an impairment loss was recognized. If this is the case, the carrying value of the asset is increased to its recoverable amount. This increased amount cannot exceed the carrying value that would have been determined, net of depreciation, if an asset impairment loss had not been recognized in prior years. This reversal is recognized with a credit to profit or loss.

 

Assets with indefinite lives are assessed for impairment annually.

 

The current value of future cash flows generated by these assets has been estimated given the variation in sales volumes, market prices and costs, discounted with a WACC rate. For December 31, 2020, the WACC rate was 9.73%.

 

3.23            Minimum dividend

 

As required by Chilean law and regulations, our dividend policy is decided upon from time to time by our Board of Directors and is announced at the Annual Ordinary Shareholders’ Meeting, which is generally held in April of each year. Shareholder approval of the dividend policy is not required. However, each year the Board must submit the declaration of the final dividend or dividends in respect of the preceding year, consistent with the then-established dividend policy, to the Annual Ordinary Shareholders’ Meeting for approval. As required by the Chilean Companies Act, unless otherwise decided by unanimous vote of the holders of issued shares, we must distribute a cash dividend in an amount equal to at least 30% of our consolidated net income for that year (determined in accordance with CMF regulations), unless and to the extent the Company has a deficit in retained earnings. (See Note 21.4).

 

3.24           Earnings per share

 

The basic earnings per share amounts are calculated by dividing the profit for the year attributable to the ordinary owners of the parent by the weighted average number of ordinary shares outstanding during the year.

 

The Company has not conducted any type of operation of potential dilutive effect that would entail the disclosure of diluted earnings per share.

 

32

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.25           Capitalization of interest expenses 

 

The cost of interest is recognized as an expense in the year in which it is incurred, except for interest that is directly related to the acquisition and construction of tangible property, plant and equipment assets and that complies with the requirements of IAS 23.

 

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

 

The financial expenses accrued during the construction period that are directly attributable to the acquisition, construction or production of assets that qualify for this, use the corresponding interest rate for the financing specific to the project; where this does not exist, the mean financing rate of the subsidiary that makes the investment is used.

 

3.26           Other provisions

 

Provisions are recognized when:

 

·The Company has a present,legal or constructive obligation as the result of a past event.
·It is more likely than not that certain resources must be used, to settle the obligation.
·A reliable estimate can be made of the amount of the obligation.

 

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

 

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

 

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

 

The Company’s policy is to maintain provisions to cover risks and expenses based on a better estimate to deal with possible or certain and quantifiable responsibilities from current litigation, compensations or obligations, pending expenses for which the amount has not yet been determined, collaterals and other similar guarantees for which the Company is responsible. These are recorded at the time the responsibility or the obligation that determines the compensation or payment is generated.

 

3.27           Obligations related to employee termination benefits and pension commitments

 

Obligations towards the Company’s employees comply with the provisions of the collective bargaining agreements in force, which are formalized through collective employment agreements and individual employment contracts, except for the United States, which is regulated in accordance with employment plans in force up to 2002. (See more details in Note 19.4).

 

These obligations are valued using actuarial calculations, according to the projected unit credit method which considers such assumptions as the mortality rate, employee turnover, interest rates, retirement dates, effects related to increases in employees’ salaries, as well as the effects on variations in services derived from variations in the inflation rate. The criteria in force contained in the revised IAS 19 are also considered.

 

Actuarial gains and losses that may be generated by variations in defined, pre-established obligations are directly recorded in “Other Comprehensive Income”.

 

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

 

The Company’s subsidiary SQM North America has established pension plans for its retired employees that are calculated by measuring the projected obligation using a net salary progressive rate net of adjustments for inflation, mortality and turnover assumptions, deducting the resulting amounts at present value. The net balance of this obligation is presented under the “Non-Current Provisions for Employee Benefits” (refer to Note 19.4).

 

33

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.28           Compensation plans

 

Compensation plans implemented through benefits provided in share-based payments settled in cash are recognized in the financial statements at their fair value, in accordance with IFRS 2. Changes in the fair value of options granted are recognized with a charge to payroll in the results for the period (see Note 19.6).

 

3.29            Revenue recognition

 

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

 

Revenues are recognized when the specific conditions for each income stream are met, as follows:

 

(a)       Sale of goods

 

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

 

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

 

(b)       Sale of services

 

Revenue associated with the rendering of services is recognized considering the degree of completion of the service as of the date of presentation of the consolidated classified statement of financial position, provided that the result from the transaction can be estimated reliably.

 

(c)       Income from dividends

 

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

 

3.30            Finance income and finance costs

 

Finance income is mainly composed of interest income from financial instruments such as term deposits and mutual fund deposits. Interest income is recognized in profit or loss at amortized cost, using the effective interest rate method.

 

Finance costs are mainly composed of interest on bank borrowing expenses, interest on bonds issued and interest capitalized for borrowing costs for the acquisition, construction or production or qualifying assets. Borrowing costs and bonds issued are also recognized in profit or loss using the effective interest rate method.

 

3.31           Current income tax and deferred

 

Corporate income tax for the year is determined as the sum of current and deferred income taxes from the different consolidated companies.

 

Current taxes are based on the application of the various types of taxes attributable to taxable income for the period.

 

Differences between the book value of assets and liabilities and their tax basis generate the balance of deferred tax assets or liabilities, which are calculated using the tax rates expected to be applicable when the assets and liabilities are realized.

 

34

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

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

 

The income tax and variations in deferred tax assets or liabilities that are not the result of business combinations are recorded in the statement of income accounts or equity accounts in the consolidated statement of financial position, considering the origin of the gains or losses which have generated them.

 

At each reporting period, the carrying amount of deferred tax assets is reviewed and recognized only if it is probable that future taxable amounts will be available to allow the recovery of all or a portion of the deferred tax assets.

 

With respect to deductible temporary differences associated with investments in subsidiaries, associated companies and interest in joint ventures, deferred tax assets are recognized solely provided that it is more likely than not that the temporary differences will be reversed in the near future and that there will be taxable income with which they may be used. The deferred taxes related to items directly recognized in equity is registered with effect on other comprehensive income and not with effect on income.

 

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

 

The recognized deferred tax assets refer to the amount of income tax to recover in future periods, related to:

 

a)deductible temporary differences;
b)compensation for losses obtained in prior periods, which have not yet been subject to tax deduction; and
c)compensation for unused credits from prior periods.

 

The Company recognizes deferred tax assets when it has the certainty that they can be offset with tax income from subsequent periods, unused tax losses or credits to date, but only when this availability of future tax income is probable and can be used for offsetting these unused tax losses or credits.

 

The recognized deferred tax liabilities refer to the amount of income tax to pay in a future period, related to taxable temporary differences.

 

3.32           Operating segment reporting

 

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

 

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

 

Allocation of assets and liabilities, to each segment is not possible given that these are associated with more than one segment, except for depreciation, amortization and impairment of assets, which are directly allocated in accordance with the criteria established in the costing process for product inventories to the corresponding segments.

 

35

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

3.33            Primary accounting criteria, estimates and assumptions

 

Management is responsible for the information contained in these consolidated financial statements, which expressly indicate that all the principles and criteria included in IFRS, as issued by the IASB, have been applied in full.

 

In preparing the consolidated financial statements of Sociedad Química y Minera de Chile S.A. and its subsidiaries, management has made judgments and estimates to quantify certain assets, liabilities, revenues, expenses and commitments included therein. Basically, these estimates refer to:

 

·Estimated useful lives are determined based on current facts and past experience and take into consideration the expected physical life of the asset, the potential for technological obsolescence, and regulations. (See Notes 3.22, 16 and 17).

 

·Impairment losses of certain assets - Goodwill and intangible assets that have an indefinite useful life are not amortized and are assessed for impairment on an annual basis, or more frequently if the events or changes in circumstances indicate that these may have deteriorated Other assets, including property, plant and equipment, exploration assets, goodwill and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts exceed their recoverable amounts. If an impairment assessment is required, the assessment of value in use often requires estimates and assumptions such as discount rates, exchange rates, commodity prices, future capital requirements and future operating performance. Changes in such estimates could impact the recoverable values of these assets. Estimates are reviewed regularly by management (See Notes 16 and 17).

 

·Assumptions used in calculating the actuarial amount of pension-related and severance indemnity payment benefit commitments (See Note 19) and determination of long-term provisions.

 

·Contingencies – The amount recognized as a provision, including legal, contractual, constructive and other exposures or obligations, is the best estimate of the consideration required to settle the related liability, including any related interest charges, considering the risks and uncertainties surrounding the obligation. In addition, contingencies will only be resolved when one or more future events occur or fail to occur. Therefore, the assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. The Company assesses its liabilities and contingencies based upon the best information available, relevant tax laws and other appropriate requirements (See Notes 22).

 

·Volume determination for certain in-process and finished products is based on topographical measurements and technical studies that cover the different variables affecting products in stock (density and moisture, among others), and related allowance.

 

·Estimates for obsolescence provisions to ensure that the carrying value of inventory is not in excess of the net realizable Inventory valuation. (See Note 12).

 

Despite the fact that these estimates have been made on the basis of the best information available on the date of preparation of these consolidated financial statements, certain events may occur in the future and oblige their amendment (upwards or downwards) over the next few years, which would be made prospectively.

 

3.34            Environment

 

In general, the Company follows the criteria of considering amounts used in environmental protection and improvement as environmental expenses. However, the cost of facilities, machinery and equipment used for the same purpose are considered property, plant and equipment, as the case may be.

 

36

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 4        Changes in accounting estimates and policies

 

4.1              Changes in accounting estimates

 

There have been no changes in the methodologies used to determine such estimates in the periods presented.

 

4.2              Changes in accounting policies

 

The accounting principles and criteria were consistently applied in both periods, except for the new instructions established by the CMF for the taxonomy of the financial statements in 2020. The presentation of right-of-use assets and lease liabilities recognized under IFRS 16 has been modified. This change has been made as of January 01, 2020 and retroactively as of December 31, 2019.

 

37

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 5        Financial risk management

 

5.1              Financial risk management policy

 

The Company’s financial risk management policy is focused on safeguarding the stability and sustainability of the Company and its subsidiaries with regard to all such relevant financial uncertainty components.

 

The Company’s operations are subject to certain financial risk factors that may affect its financial position or results. The most significant risk exposures are market risk, liquidity risk, currency risk, credit risk, and interest rate risk, among others.

 

There could also be additional risks, which are either unknown or known but not currently deemed to be significant, which could also affect the Company’s business operations, its business, financial position, or profit or loss.

 

The financial risk management structure includes identifying, determining, analyzing, quantifying, measuring and controlling these events. Management and in particular, Finance Management, is responsible for constantly assessing the financial risk.

 

5.2              Risk Factors

 

(a)Credit risk

 

A global economic contraction may have potentially negative effects on the financial assets of the Company, which are primarily made up of financial investments and trade receivables, and the impact on of our customers could extend the payment terms of the Company's receivables by increasing its exposure to credit risk. Although measures are taken to minimize the risk, this global economic situation could mean losses with adverse material effects on the business, financial position or profit and loss of the Company's operations.

 

Trade receivables: to mitigate credit risk, the Company maintains active control of collection and requires the use of credit insurance. Credit insurance covers the risk of insolvency and unpaid invoices corresponding to 80% of all receivables with third parties. For the uncovered portion, the Company uses other instruments such as letters of credit and prepayments. The credit risk associated with receivables is analyzed in Note 14.2 b) and the associated accounting policy can be found in Note 3.5.

 

The concentration of credit risk with respect to sales debtors is reduced, due to the large number of companies that comprise the Company's customer base and their distribution throughout the world.

 

No significant modifications have been made during the period to risk models or parameters used in comparison to December 31, 2019, and no modifications have been made to contractual cash flows that have been significant during this period.

 

Financial investments: correspond to time deposits whose maturity date is greater than 90 days and less than 360 days from the date of investment, so they are not exposed to excessive market risks. The counterparty risk in implementation of financial operations is assessed on an ongoing basis for all financial institutions in which the Company holds financial investments.

 

38

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

The credit quality of financial assets that are not past due or impaired can be evaluated by reference to external credit ratings (if they are available) or historical information on counterparty late payment rates:

 

      Rating  As of
December 31,
2020
 
Financial institution  Financial assets  Moody´s  S&P  Fitch  ThUS$ 
Banco de Crédito e Inversiones  Time deposits  P-1  A-1  -   9,002 
Banco de Chile  Time deposits  P-1  A-1  -   10,503 
Banco Estado  Time deposits  P-1  A-1  -   1,001 
Banco Itau Corpbanca  Time deposits  P-2  A-2  -   7,299 
Banco Santander – Santiago  Time deposits  P-1  A-1  -   16,702 
Scotiabank Sud Americano  Time deposits  -  -  F1+   7,002 
JP Morgan US dollar Liquidity Fund Institutional  Investment fund  Aaa-mf  AAAm  AAAmmf   102,753 
Legg Mason - Western Asset Institutional cash reserves  Investment fund  -  AAAm  AAAmmf   107,625 
Other banks with lower balances  Time deposits  -  -  -   86 
Total               261,973 

 

      Rating  As of
December 31,
2020
 
Financial institution  Financial assets  Moody´s  S&P  Fitch  ThUS$ 
Banco de Crédito e Inversiones  90 days to 1 year  P-1  A-1  -   185,589 
Banco Itaú Corpbanca  90 days to 1 year  P-2  A-2  -   49,006 
Banco Santander – Santiago  90 days to 1 year  P-1  A-1  -   45,168 
Banco Scotiabank Sud Americano  90 days to 1 year  -  -  F1+   31,668 
JP Morgan Asset Management  90 days to 1 year  P-1  A-1  N1+   34,028 
Total               345,459 

 

      Rating  As of
December 31,
2019
 
Financial institution  Financial assets  Moody´s  S&P  Fitch  ThUS$ 
Banco de Chile  Time deposits  P-1  A-1  -   50,221 
Banco de Crédito e Inversiones  Time deposits  P-1  A-1  -   42,096 
Banco Itaú Corpbanca  Time deposits  P-2  A-2  -   39,093 
Banco Santander  Time deposits  P-1  A-1  -   2,708 
Scotiabank Sud Americano  Time deposits  -  -  F1+   14,428 
Banco Estado  Time deposits  P-1  A-1  -   500 
BBVA Banco Francés  Time deposits  -  -  -   53 
JP Morgan US dollar Liquidity Fund Institutional  Investment fund  Aaa-mf  AAAm  AAAmmf   181,155 
Legg Mason - Western Asset Institutional cash reserves  Investment fund  -  AAAm  AAAmmf   146,078 
Total               476,332 

 

39

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

    Rating  As of
December 31,
2019
 
Financial institution  Financial assets  Moody´s  S&P   Fitch  ThUS$ 
Banco Scotiabank Sud Americano  90 days to 1 year  P-2   -    -   54,180 
Banco de Crédito e Inversiones  90 days to 1 year  P-1   A-1    -   178,448 
Banco Santander (*)  90 days to 1 year  P-1   A-1    -   74,365 
Banco Itau Corpbanca  90 days to 1 year  P-2   A-2    -   127,579 
Banco Security  90 days to 1 year  -   A-2    F2   17,965 
Banco de Chile  90 days to 1 year  -   -    -   18,026 
Banco Estado  90 days to 1 year  P-1   A-1    -   15,126 
Total                  485,689 

 

(*) This includes ThUS$ 1,870 associated with collateral in guarantee used to reduce the liquidity risk.

 

(b)Currency risk

 

The functional currency of the company is the US dollar, due to its influence on the determination of price levels, its relation to the cost of sales and considering that a significant part of the Company’s business is conducted in this currency. However, the global nature of the Company's business generates an exposure to exchange rate variations of several currencies with the US dollar. Therefore, the Company maintains hedge contracts to mitigate the exposure generated by its main mismatches (net between assets and liabilities) in currencies other than the US dollar against the exchange rate variation, updating these contracts periodically depending on the amount of mismatching to be covered in these currencies. Occasionally, subject to the approval of the Board, the Company ensures short-term cash flows from certain specific line items in currencies other than the US dollar.

 

A significant portion of the Company’s costs, especially salary payments, is associated with the Peso. Therefore, an increase or decrease in its exchange rate with the US dollar would affect the Company's profit and loss. By the fourth quarter of 2020, approximately US$ 473 million accumulated in expenses are associated with the Peso.

 

As of December 31, 2020, the Company held derivative instruments classified as hedges of foreign exchange risks associated with 100% of all of the bond liabilities denominated in UF, for an asset at fair value of US$ 18.41 million. As of December 31, 2019, a liability was recognized amounting to US$ 18.9 million.

 

Furthermore, on December 31, 2020, the Company held derivative instruments classified as hedges of foreign exchange risks associated with 100% of all nominative term deposits in UF and in pesos, at a fair value of US$ 21 million in liabilities. On December 31, 2019, an asset was recognized for an amount of US$ 16.4 million.

 

(c)Interest rate risk

 

Interest rate fluctuations, primarily due to the uncertain future behavior of markets, may have a material impact on the financial results of the Company. Significant increases in the rate could make it difficult to access financing at attractive rates for the Company's investment projects.

 

The Company maintains current and non-current financial debt at fixed rates and LIBOR rate plus spread.

 

As of December 31, 2020, the Company has around 4% of its financial liabilities linked to variations in the LIBOR rate. 100% of these obligations are covered by derivative instruments classified as interest rate hedging; therefore, a significant rate increase would not impact our financial condition.

 

40

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(d)Liquidity risk

 

Liquidity risk relates to the funds needed to comply with payment obligations. The Company’s objective is to maintain financial flexibility through a comfortable balance between fund requirements and cash flows from regular business operations, bank borrowings, bonds, short term investments, and marketable securities, among others. For this purpose, the Company keeps a high liquidity ratio1, which enables it to cover current obligations with clearance. (On December 31, 2020, this was 5.40).

 

The Company has an important capital expense program which is subject to change over time.

 

On the other hand, world financial markets go through periods of contraction and expansion that are unforeseeable in the long-term and may affect SQM’s access to financial resources. Such factors may have a material adverse impact on the Company’s business, financial position and results of operations.

 

The Company constantly monitors the matching of its obligations with its investments, taking due care of maturities of both, from a conservative perspective, as part of this financial risk management strategy. As of December 31, 2020, the Company had unused, available revolving credit facilities with banks, for a total of US$ 478 million.

 

The position in other cash and cash equivalents are invested in highly liquid mutual funds with an AAA risk rating.

 

(1)Unsecured obligations are presented on a contractual basis and have no effects related to anticipated redemptions.

 

  Nature of undiscounted cash flows  

As of December 31, 2020

(figures expressed in millions of US dollars)

  Carrying
amount
    Less than 1
year
    1 to 5 years     Over 5 years     Total  
Bank borrowings     70.08       0.94       71.40       -       72.34  
Unsecured obligations (1)   1,872.09     88.22     927.17     1,727.14     2,742.53  
Sub total     1,942.17       89.16       998.57       1,727.14       2,814.87  
Hedging liabilities     40.21       6.06       12.34       11.07       29.47  
Derivative financial instruments     5.39       5.39       -       -       5.39  
Sub total     45.60       11.45       12.34       11.07       34.86  
Current and non-current lease liabilities     31.07       6.40       21.04       7.17       34.61  
Trade accounts payable and other accounts payable     203.93       203.93       -       -       203.93  
Total     2,222.77       310.94       1,031.95       1,745.38       3,088.27  

 

    Nature of undiscounted cash flows  
As of December 31, 2019
(figures expressed in millions of US dollars)
  Carrying
amount
    Less than 1
year
    1 to 5 years     Over 5 years     Total  
Bank borrowings     70.19       2.17       74.87       -       77.04  
Unsecured obligations   1,697.11     326.34     614.29     1,184.38     2,125.01  
Sub total     1,767.30       328.51       689.16       1,184.38       2,202.05  
Hedging liabilities     23.66       6.57       24.33       32.37       63.27  
Derivative financial instruments     3.17       3.17       -       -       3.17  
Sub total     26.83       9.74       24.33       32.37       66.44  
Current and non-current lease liabilities     37.90       8.90       23.01       10.27       42.18  
Trade accounts payable and other accounts payable     205.79       205.79       -       -       205.79  
Total     2,037.82       552.94       736.50       1,227.02       2,516.46  

 

 

1 All current assets divided by all current liabilities.

 

41

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

5.3Risk measurement

 

The Company has methods to measure the effectiveness and efficiency of financial risk hedging strategies, both prospectively and retrospectively. These methods are consistent with the risk management profile of the SQM Group. See Note 14.8

 

42

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 6Separate information on the main office, parent entity and joint action agreements

 

6.1Parent’s stand-alone assets and liabilities

 

Parent’s stand-alone assets and liabilities   As of
December 31,
2020
    As of
December 31,
2019
 
  ThUS$     ThUS$  
Assets     4,173,308       4,069,649  
Liabilities     (2,050,223 )     (1,983,382 )
Equity     2,123,085       2,086,267  

 

6.2Parent entity

 

Pursuant to Article 99 of the Securities Market Law, the CMF may determine that a company does not have a controlling entity in accordance with the distribution and dispersion of its ownership. On November 30, 2018, the CMF issued the ordinary letter No. 32,131 whereby it determined that the Pampa Group do not exert decisive power over the management of the Company since it does not have a predominance in the ownership that allows it to make management decisions. Therefore, the CMF has determined not to consider Pampa Group the controlling entity of the Company and that the Company does not have a controlling entity given its current ownership structure.

 

43

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 7Board of Directors, Senior Management and Key management personnel

 

7.1Remuneration of the Board of Directors and Senior Management

 

(a)Board of directors

 

SQM S.A. is managed by a Board of Directors which is composed of 8 regular directors, who are elected for a three-year period. The Board of Directors was elected during the ordinary shareholders’ meeting held on April 25, 2019, which included the election of 2 independent directors.

 

As of December 31, 2020, the Company included the following committees and committee members:

 

-Directors’ Committee: This committee is comprised by Georges de Bourguignon, Laurence Golborne Riveros y Alberto Salas Muñoz, and fulfills the functions established in Article 50 bis of Chilean Law on publicly-held corporations. This committee takes on the role of the audit committee in accordance with the US-based Sarbanes Oxley law.

-The Company’s Health, Safety and Environment Committee: This committee is comprised of Gonzalo Guerrero Yamamoto, Patricio Contesse Fica y Robert J. Zatta.

-Corporate Governance Committee: This committee is comprised of Hernán Büchi Buc, Patricio Contesse Fica y Francisco Ugarte Larrain.

 

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

 

(b)Board of Directors’ Compensation

 

Directors’ compensation differs according to the period during the corresponding year. Thus, from April 25, 2019 to April 22, 2020 (Period 2019-2020), Directors’ compensation was determined by the annual general shareholders' meeting held on April 25, 2019. While for the following period (Period 2020-2021), Directors’ compensation was determined by the annual general shareholders' meeting held on April 23, 2020. For each of these periods, Directors’ compensation is detailed as follows:

 

Period 2019-2020

 

(i)The payment of a fixed, gross and monthly amount of UF 800 in favor of the Chairman of the Board of Directors, of UF 700 in favor of the vice-president of the board of directors and of UF 600 in favor of the remaining six directors and regardless of the number of Board of Directors’ Meetings held or not held during the related month.

(ii)A variable gross amount payable in national currency to the Chairman and Vice President of the Company equivalent to 0.12% of the net liquid income earned by the Company in 2019;

(iii)A variable gross amount payable in local currency to each Company director, excluding the Chairman and Vice President of the Company, equivalent to 0.06% of the net liquid income earned by the Company in 2019.

 

Period 2020-2021:

 

(i)The payment of a fixed, gross and monthly amount of UF 800 in favor of the Chairman of the Board of Directors, of UF 700 in favor of the vice-president of the board of directors and of UF 600 in favor of the remaining six directors and regardless of the number of Board of Directors’ Meetings held or not held during the related month.

(ii)A variable gross amount payable in national currency to the Chairman and Vice President of the Company equivalent to 0.09% of the net liquid income that the Company effectively obtains during the 2020;

(iii)A variable gross amount payable in local currency to each Company director, excluding the Chairman and Vice President of the Company, equivalent to 0.045% of the net liquid income that the Company effectively obtains during the 2020.

 

44

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

These fixed and variable amounts for both periods shall not be challenged and those expressed in percentage terms shall be paid immediately after the respective annual general shareholders meeting approves the financial statements, the annual report, the account inspectors report and the external auditors report for the respective year. All amounts expressed in UF shall be paid in Chilean pesos at its value on the last day of the respective calendar month, as determined by the CMF (formerly Superintendence of Banks and Financial Institutions) the Chilean Central Bank or any other relevant institution that replaces them.

 

Accordingly, the compensation and profit sharing paid to members of the Directors' Committee and the directors as of December 31, 2020 amounted to ThUS$ 4,582 and as of December 31, 2019 to ThUS$ 5,168.

 

(c)Directors’ Committee compensation

 

Directors' Committee compensation differs according to the period during the corresponding year. Thus, for the Period 2019-2020, Directors’ Committee compensation was determined by the annual general shareholders' meeting held on April 25, 2019. While for the Period 2020-2021, Directors’ Committee compensation was determined by the annual general shareholders' meeting held on April 23, 2020. For each of these periods the compensation of the Directors Committee comprises:

 

Period 2019-2020

 

(i)The payment of a fixed, gross and monthly amount of UF 200 in favor of each of the 3 directors who were members of the Directors’ Committee, regardless of the number of meetings of the Directors’ Committee that have or have not been held during the month concerned.

(ii)The payment in domestic currency and in favor of each of the 3 directors of a variable and gross amount equivalent to 0.02% of total net profit that the Company effectively obtains during the 2019 fiscal year.

 

Period 2020-2021

 

(i)The payment of a fixed, gross and monthly amount of UF 200 in favor of each of the 3 directors who were members of the Directors’ Committee, regardless of the number of meetings of the Directors’ Committee that have or have not been held during the month concerned.

(ii)The payment in domestic currency and in favor of each of the 3 directors of a variable and gross amount equivalent to 0.015% of total net profit that the Company effectively obtains during the 2020 fiscal year.

 

These fixed and variable amounts for both periods shall not be challenged and those expressed in percentage terms shall be paid immediately after the respective annual general shareholders meeting approves the financial statements, the annual report, the account inspectors report and the external auditors report for the respective year. All amounts expressed in UF shall be paid in Chilean pesos at its value on the last day of the respective calendar month, as determined by the CMF (formerly Superintendence of Banks and Financial Institutions) the Chilean Central Bank or any other relevant institution that replaces them.

 

(d)Health, Safety and Environmental Matters Committee:

 

The remuneration of this committee for the 2019–2020 period was composed of the payment of a fixed, gross, monthly amount of UF 100 for each of the 3 directors on the committee regardless of the number of meetings it has held. For the 2020-2021 period, this remuneration remains unchanged.

 

(e)Corporate Governance Committee

 

The remuneration for this committee for the 2019–2020 period was composed of the payment of a fixed, gross, monthly amount of UF 100 for each of the 3 directors on the committees regardless of the number of meetings it has held. For the 2020-2021 period, this remuneration remains unchanged.

 

(f)Guarantees constituted in favor of the directors

 

No guarantees have been constituted in favor of the directors.

 

45

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(g)Senior management compensation:

 

(i)This includes monthly fixed salary and variable performance bonuses. (See Note 7.2)

(ii)The Company has an annual bonus plan based on goal achievement and individual contribution to the Company’s results. These incentives are structured as a minimum and maximum number of gross monthly salaries and are paid once a year.

(iii)In addition, there are retention bonuses for its executives (see Note 19.6)

 

(h)Guarantees pledged in favor of the Company’s management

 

No guarantees have been pledged in favor of the Company’s management.

 

(i)            Pensions, life insurance, paid leave, shares in earnings, incentives, disability loans, other than those mentioned in the above points.

 

The Company’s Management and Directors do not receive or have not received any benefit during the ended December 31, 2020 and the year ended December 31, 2019 or compensation for the concept of pensions, life insurance, paid time off, profit sharing, incentives, or benefits due to disability other than those mentioned in the preceding points.

 

7.2Key management personnel compensation

 

As of December 31, 2020 and 2019, the number of the key management personnel is 126 and 124, respectively.

 

Key management personnel compensation 

For the year ended
December 31,
2020

  

For the year ended
December 31,
2019

 
   ThUS$   ThUS$ 
Key management personnel compensation   22,858    22,598 

 

Please also see the description of the compensation plan for executives in Note 19.6.

 

46

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 8      Background on companies included in consolidation and non-controlling interests

 

8.1Background on companies included in consolidation

 

The following tables detail general information as of December 31, 2020 and, December 31, 2019, on the companies in which the group exercises control and significant influence:

 

         Country of  Functional  Ownership Interest 
Subsidiaries  TAX ID No.  Address  Incorporation  Currency  Direct   Indirect   Total 
SQM Nitratos S.A.  96.592.190-7  El Trovador 4285, Las Condes  Chile  Dollar  99.9999   0.0001   100.0000 
SQM Potasio S.A.  96.651.060-9  El Trovador 4285, Las Condes  Chile  Dollar  99.9999   -   100.0000 
Serv. Integrales de Tránsito y Transf. S.A.  79.770.780-5  Arturo Prat 1060, Tocopilla  Chile  Dollar  0.0003   99.9997   100.0000 
Isapre Norte Grande Ltda.  79.906.120-1  Anibal Pinto 3228, Antofagasta  Chile  Peso  1.0000   99.0000   100.0000 
Ajay SQM Chile S.A.  96.592.180-K  Av. Pdte. Eduardo Frei 4900, Santiago  Chile  Dollar  51.0000   -   51.0000 
Almacenes y Depósitos Ltda.  79.876.080-7  El Trovador 4285, Las Condes  Chile  Peso  1.0000   99.0000   100.0000 
SQM Salar S.A.  79.626.800-K  El Trovador 4285, Las Condes  Chile  Dollar  18.1800   81.8200   100.0000 
SQM Industrial S.A.  79.947.100-0  El Trovador 4285, Las Condes  Chile  Dollar  99.0470   0.9530   100.0000 
Exploraciones Mineras S.A.  76.425.380-9  El Trovador 4285, Las Condes  Chile  Dollar  0.2691   99.7309   100.0000 
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.  76.534.490-5  Anibal Pinto 3228, Antofagasta  Chile  Peso  -   100.0000   100.0000 
Soquimich Comercial S.A.  79.768.170-9  El Trovador 4285, Las Condes  Chile  Dollar  -   60.6383   60.6383 
Comercial Agrorama Ltda. (1)  76.064.419-6  El Trovador 4285, Las Condes  Chile  Peso  -   70.0000   70.0000 
Comercial Hydro S.A.  96.801.610-5  El Trovador 4285, Las Condes  Chile  Dollar  -   100.0000   100.0000 
Agrorama S.A.  76.145.229-0  El Trovador 4285, Las Condes  Chile  Peso  -   100.0000   100.0000 
Orcoma Estudios SPA (2)  76.359.919-1  Apoquindo 3721 OF 131, Las Condes  Chile  Dollar  100.0000   -   100.0000 
Orcoma SPA  76.360.575-2  Apoquindo 3721 OF 131, Las Condes  Chile  Dollar  100.0000   -   100.0000 
SQM MaG SpA  76.686.311-9  Los Militares 4290, Las Condes  Chile  Dollar  -   100.000   100.0000 
Sociedad Contractual Minera Búfalo  77.114.779-8  Los Militares 4290, Las Condes  Chile  Dollar  99.9000   0.1000   100.0000 
SQM Holland B.V. (3)  Foreign  Herikerbergweg 238, 1101 CM Amsterdam Zuidoost  Netherlands  Dollar  -   100.0000   100.0000 
SQM North America Corp.  foreign  2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA  USA  Dollar  40.0000   60.0000   100.0000 
RS Agro Chemical Trading Corporation A.V.V.  foreign  Caya Ernesto O. Petronia 17, Orangestad  Aruba  Dollar  98.3333   1.6667   100.0000 
Nitratos Naturais do Chile Ltda.  foreign  Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo  Brazil  Dollar  -   100.0000   100.0000 
Nitrate Corporation of Chile Ltd.  foreign  1 More London Place London SE1 2AF  United Kingdom  Dollar  -   100.0000   100.0000 
SQM Corporation N.V.  foreign  Pietermaai 123, P.O. Box 897, Willemstad, Curacao  Curacao  Dollar  0.0002   99.9998   100.0000 

 

(1) SQM controls Soquimich Comercial, which in turn controls Comercial Agrorama Ltda, SQM has management control over Comercial Agrorama Ltda

(2) In January 2020, SQM S.A. acquired 49% of Orcoma Estudio SPA, taking ownership of 100% of the company.

(3) In June, 2020, SQM S.A. acquired the remaining 50% of SQM Holland B.V., taking ownership of 100% of the company. See Note 10.2 (a) 

 

47

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

         Country of  Functional  Ownership Interest 
Subsidiaries  TAX ID No.  Address  Incorporation  Currency  Direct   Indirect   Total 
SQM Perú S.A.  foreign  Avenida Camino Real N° 348 of. 702, San Isidro, Lima  Peru  Dollar  0.0091   99.9909   100.0000 
SQM Ecuador S.A.  foreign  Av. José Orrantia y Av. Juan Tanca Marengo Edificio Executive Center Piso 2 Oficina 211  Ecuador  Dollar  0.00401   99.9960   100.0000 
SQM Brasil Ltda.  foreign  Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo  Brazil  Dollar  0.7100   99.2900   100.0000 
SQI Corporation N.V. (4)  foreign  Pietermaai 123, P.O. Box 897, Willemstad, Curacao  Curacao  Dollar  -   -   - 
SQMC Holding Corporation.  foreign  2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta  USA  Dollar  0.1000   99.9000   100.0000 
SQM Japan Co. Ltd.  foreign  From 1st Bldg 207, 5-3-10 Minami- Aoyama, Minato-ku, Tokio  Japan  Dollar  0.1597   99.8403   100.0000 
SQM Europe N.V.  foreign  Houtdok-Noordkaai 25a B-2030 Amberes  Belgium  Dollar  0.5800   99.4200   100.0000 
SQM Italia SRL (5)  foreign  Via A. Meucci, 5 500 15 Grassina Firenze  Italy  Dollar  -   -   - 
SQM Indonesia S.A.  foreign  Perumahan Bumi Dirgantara Permai, Jl Suryadarma Blok Aw No 15 Rt 01/09 17436 Jatisari Pondok Gede  Indonesia  Dollar  -   80.0000   80.0000 
North American Trading Company  foreign  2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA  USA  Dollar  -   100.0000   100.0000 
SQM Virginia LLC  foreign  2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA  USA  Dollar  -   100.0000   100.0000 
SQM Comercial de México S.A. de C.V.  foreign  Av. Moctezuma 144-4 Ciudad del Sol CP 45050, Zapopan, Jalisco México  Mexico  Dollar  0.0100   99.9900   100.0000 
SQM Investment Corporation N.V.  foreign  Pietermaai 123, P.O. Box 897, Willemstad, Curacao  Curacao  Dollar  1.0000   99.0000   100.0000 
Royal Seed Trading Corporation A.V.V.  foreign  Caya Ernesto O. Petronia 17, Orangestad  Aruba  Dollar  1.6700   98.3300   100.0000 
SQM Lithium Specialties Limited Partnership  foreign  2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA  USA  Dollar  -   100.0000   100.0000 
Soquimich SRL Argentina (6)  foreign  Espejo 65 Oficina 6 – 5500, Mendoza  Argentina  Dollar  -   -   - 
Comercial Caimán Internacional S.A.  foreign  Edificio Plaza Bancomer  Panama  Dollar  -   100.0000   100.0000 
SQM France S.A.  foreign  ZAC des Pommiers 27930, FAUVILLE  France  Dollar  -   100.0000   100.0000 
Administración y Servicios Santiago S.A. de C.V.  foreign  Av. Moctezuma 144-4 Ciudad del Sol CP 45050, Zapopan, Jalisco México  Mexico  Dollar  -   100.0000   100.0000 
SQM Nitratos México S.A. de C.V.  foreign  Av. Moctezuma 144-4 Ciudad del Sol CP 45050, Zapopan, Jalisco México  Mexico  Dollar  -   100.0000   100.0000 
SQM Australia PTY  foreign  Level 16, 201 Elizabeth Street Sydney  Australia  Dollar  -   100.0000   100.0000 

  

(4) In July 2020, this Company was liquidated.

(5) In July 2020, Soquimich European Holdings liquidated SQM Italia SRL. 

(6) In December 2020, this Company was Liquited.

 

48

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

         Country of  Functional  Ownership Interest 
Subsidiaries  TAX ID No.  Address  Incorporation  Currency  Direct   Indirect   Total 
Soquimich European Holding B.V.  foreign  Loacalellikade 1 Parnassustoren 1076 AZ Amsterdan  Holland  Dollar  -   100.0000   100.0000 
SQM Iberian S.A.  foreign  Provenza 251 Principal 1a CP 08008, Barcelona  Spain  Dollar  -   100.0000   100.0000 
SQM Africa Pty Ltd.  foreign  Tramore House, 3 Wterford Office Park, Waterford Drive, 2191 Fourways, Johannesburg  South Africa  Dollar  -   100.0000   100.0000 
SQM Oceanía Pty Ltd.  foreign  Level 9, 50 Park Street, Sydney NSW 2000, Sydney  Australia  Dollar  -   100.0000   100.0000 
SQM Beijing Commercial Co. Ltd.  foreign  Room 1001C, CBD International Mansion N 16 Yong An Dong Li, Jian Wai Ave Beijing 100022, P.R.  China  Dollar  -   100.0000   100.0000 
SQM Thailand Limited  foreign  Unit 2962, Level 29, N° 388, Exchange Tower Sukhumvit Road, Klongtoey Bangkok  Thailand  Dollar  -   99.9960   99.9960 
SQM Colombia SAS  foreign  Cra 7 No 32 – 33 piso 29 Pbx: (571) 3384904 Fax: (571) 3384905 Bogotá D.C. – Colombia.  Colombia  Dollar  -   100.0000   100.0000 
SQM International N.V.  foreign  Houtdok-Noordkaai 25a B-2030 Amberes  Belgium  Dollar  0.5800   99.4200   100.0000 
SQM (Shanghai) Chemicals Co. Ltd.  foreign  Room 4703-33, 47F, No.300 Middle Huaihai Road, Huangpu district, Shanghai  China  Dollar  -   100.0000   100.0000 
SQM Korea LLC (7)  foreign  Suite 22, Kyobo Building, 15th Floor, 1 Jongno Jongno-gu, Seoul, 03154 South Korea  Korea  Dollar  -   100.0000   100.0000 

 

(7) This Company was formed in October 2020.

 

49

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

8.2Assets, liabilities, results of consolidated subsidiaries as of December 31, 2020.

 

  Assets   Liabilities        Comprehensive 
Subsidiaries  Currents   Non-currents   Currents   Non-currents   Revenue   Profit (loss)   income (loss) 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM Nitratos S.A.   475,132    63,848    395,914    5,047    188,973    40,570    40,489 
SQM Potasio S.A.   16,680    1,108,579    155,379    23,323    2,465    29,791    29,722 
Serv. Integrales de Tránsito y Transf. S.A.   55,142    36,291    75,848    6,485    36,383    6,067    6,060 
Isapre Norte Grande Ltda.   812    839    795    181    3,224    71    79 
Ajay SQM Chile S.A.   25,441    1,549    9,563    713    38,193    1,857    1,857 
Almacenes y Depósitos Ltda.   256    51    -    -    -    (5)   50 
SQM Salar S.A.   855,683    1,035,088    814,686    214,914    581,494    51,849    51,517 
SQM Industrial S.A.   950,058    679,345    634,105    113,230    853,550    150,594    151,442 
Exploraciones Mineras S.A.   16,572    22,293    9,010    -    13,513    1,972    1,972 
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.   279    571    305    396    2,390    55    32 
Soquimich Comercial S.A.   136,623    13,796    56,293    12,630    117,982    7,560    7,606 
Comercial Agrorama Ltda.   683    970    4,215    23    1,432    (149)   (148)
Comercial Hydro S.A.   4,834    15    14    4    28    12    12 
Agrorama S.A.   55    -    5,631    10    244    175    179 
Orcoma SpA   3    2,365    35    -    -    (13)   (13)
Orcoma Estudio SpA   4    4,559    411    -    -    (496)   (496)
SQM MaG SPA   1,491    521    1,129    6    2,559    197    197 
Sociedad Contractual Minera Búfalo   50    323    350    -    -    -    - 
SQM Holland B.V.   3,767    16,248    460    4    1,227    (505)   (505)
SQM North America Corp.   124,679    21,085    107,801    1,638    212,410    (1,059)   1,828 
RS Agro Chemical Trading Corporation A.V.V.   5,155    -    88    -    -    (24)   (24)
Nitratos Naturais do Chile Ltda.   -    128    3,109    -    -    195    195 
Nitrate Corporation of Chile Ltd.   5,076    -    -    -    -    -    - 
SQM Corporation N.V.   7,696    56,356    3,607    -    -    (5,318)   (5,252)
SQM Perú S.A.   25    -    83    -    -    (8)   (8)
SQM Ecuador S.A.   26,490    918    23,074    59    33,730    471    471 
SQM Brasil Ltda.   217    1    508    2,111    -    (16)   (16)
Subtotal   2,712,903    3,065,739    2,302,413    380,774    2,089,797    283,843    287,246 

 

50

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

  Assets   Liabilities           Comprehensive
income (loss)
 
Subsidiaries  Currents   Non-currents   Currents   Non-currents   Revenue   Profit (loss)   Current 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQMC Holding Corporation L.L.P.   30,777    16,414    1,687    -    -    2,113    2,113 
SQM Japan Co. Ltd.   25,122    243    21,926    255    66,685    367    367 
SQM Europe N.V.   456,357    3,844    399,930    2,411    669,693    (12,791)   (12,791)
SQM Indonesia S.A.   3    -    1    -    -    -    - 
North American Trading Company   156    145    -    -    -    38    38 
SQM Virginia LLC   14,798    14,340    14,798    -    -    (5)   (5)
SQM Comercial de México S.A. de C.V.   107,803    7,574    76,721    1,972    213,154    1,429    1,429 
SQM Investment Corporation N.V.   13,965    132,994    5,434    864    -    (12,265)   (12,071)
Royal Seed Trading Corporation A.V.V.   21    -    18,851    -    -    (40)   (40)
SQM Lithium Specialties LLP   15,746    3    1,264    -    -    (5)   (5)
Comercial Caimán Internacional S.A.   258    -    1,122    -    -    3    3 
SQM France S.A.   345    6    114    -    -    -    - 
Administración y Servicios Santiago S.A. de C.V.   221    47    350    188    2,857    36    36 
SQM Nitratos México S.A. de C.V.   141    13    77    20    993    12    12 
Soquimich European Holding B.V.   5,046    172,956    245    -    -    (20,411)   (20,151)
SQM Iberian S.A.   41,485    2,359    20,118    4    108,156    504    504 
SQM Africa Pty Ltd.   47,069    1,420    37,636    -    60,994    (920)   (920)
SQM Oceania Pty Ltd.   3,951    -    1,516    -    3,130    400    400 
SQM Beijing Commercial Co. Ltd.   12,086    30    9,942    -    18,755    126    126 
SQM Thailand Limited   3,539    -    83    -    3,033    (387)   (387)
SQM Colombia SAS   11,621    176    11,653    -    13,439    528    528 
SQM International NV   31,998    923    17,374    4,027    135,386    2,587    2,587 
SQM Shanghai Chemicals Co. Ltd.   84,318    379    79,482    -    82,398    3,195    3,195 
SQM Australia Pty Ltd.   21,749    130,152    4,306    158    -    (2,641)   (2,641)
SQM Korea LLC   587    122    42    -    -    (33)   (33)
Subtotal   929,162    484,140    724,672    9,899    1,378,673    (38,160)   (37,706)
Total   3,642,065    3,549,879    3,027,085    390,673    3,468,470    245,683    249,540 

 

51

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

8.2 Assets, liabilities, results of consolidated subsidiaries as of December 31, 2019.

 

   Assets   Liabilities           Comprehensive 
Subsidiary  Current   Non-current   Current   Non-current   Revenue   Profit (loss)   income (loss) 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM Nitratos S.A.   368,474    41,688    292,535    3,521    167,481    39,530    39,440 
Proinsa Ltda.   -    -    -    -    -    -    - 
SQM Potasio S.A.   14,983    978,525    116,734    23,317    3,350    125,975    125,334 
Serv. Integrales de Tránsito y Transf. S.A.   19,317    36,025    50,229    2,075    30,061    (2,650)   (2,703)
Isapre Norte Grande Ltda.   809    604    684    153    3,816    25    (2)
Ajay SQM Chile S.A.   17,780    1,259    1,284    374    24,883    1,510    1,510 
Almacenes y Depósitos Ltda.   243    45    -    -    -    (8)   (85)
SQM Salar S.A.   734,837    886,099    549,726    201,273    775,010    153,550    152,781 
SQM Industrial S.A.   833,283    766,097    497,377    120,741    752,107    105,198    103,894 
Exploraciones Mineras S.A.   3,099    31,081    6,296    -    -    (213)   (213)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.   184    570    305    338    2,341    17    (14)
Soquimich Comercial S.A.   134,808    15,448    41,104    12,349    124,787    5,079    5,072 
Comercial Agrorama Ltda.   862    1,313    4,467    19    2,755    (836)   (837)
Comercial Hydro S.A.   4,791    21    12    6    28    18    18 
Agrorama S.A.   669    -    6,133    9    3,146    (1,407)   (1,376)
Orcoma SpA   -    2,360    14    -    -    -    - 
Orcoma Estudio SpA   156    4,522    29    -    -    -    - 
SQM MaG SPA   1,955    615    1,888    2    2,888    412    412 
SQM North America Corp.   115,924    19,656    98,332    2,751    241,102    537    (214)
RS Agro Chemical Trading Corporation A.V.V.   5,155    -    64    -    -    (25)   (25)
Nitratos Naturais do Chile Ltda.   2    135    3,314    -    -    7    7 
Nitrate Corporation of Chile Ltd.   5,076    -    -    -    -    -    - 
SQM Corporation N.V.   7,696    160,381    3,594    -    -    12,376    12,308 
SQM Perú S.A.   29    -    80    -    -    (141)   (141)
SQM Ecuador S.A.   31,603    712    28,508    70    38,131    818    818 
SQM Brasil Ltda.   194    -    598    2,250    -    (231)   (231)
SQI Corporation N.V.   56    34    77    -    -    (3)   (3)
Subtotal   2,301,985    2,947,190    1,703,384    369,248    2,171,886    439,538    435,750 

 

52

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

   Assets   Liabilities           Comprehensive
income (loss)
 
Subsidiaries  Currents   Non-currents   Currents   Non-currents   Revenue   Profit (loss)   Currents 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQMC Holding Corporation L.L.P.   28,889    16,190    1,687    -    -    2,585    2,585 
SQM Japan Co. Ltd.   68,805    228    66,015    201    168,557    270    270 
SQM Europe N.V.   429,926    4,608    361,059    2,824    729,730    5,387    5,387 
SQM Italia SRL   1,158    -    15    -    -    5    5 
SQM Indonesia S.A.   3    -    1    -    -    -    - 
North American Trading Company   157    145    39    -    -    -    - 
SQM Virginia LLC   14,804    14,345    14,804    -    -    (1)   (1)
SQM Comercial de México S.A. de C.V.   102,068    7,597    72,023    2,387    216,185    2,983    2,983 
SQM Investment Corporation N.V.   13,811    30,888    5,518    975    -    (74)   (74)
Royal Seed Trading Corporation A.V.V.   44    -    18,834    -    -    (42)   (42)
SQM Lithium Specialties LLP   15,752    3    1,264    -    -    (1)   (1)
Soquimich SRL Argentina   57    -    165    -    -    (24)   (24)
Comercial Caimán Internacional S.A.   256    -    1,122    -    -    (5)   (5)
SQM France S.A.   345    6    114    -    -    -    - 
Administración y Servicios Santiago S.A. de C.V.   235    72    402    211    3,463    21    21 
SQM Nitratos México S.A. de C.V.   140    18    97    18    1,008    13    13 
Soquimich European Holding B.V.   5,851    174,968    1,299    30,802    -    11,750    11,682 
SQM Iberian S.A.   52,750    2,350    41,680    4    105,634    361    361 
SQM Africa Pty Ltd.   57,639    1,728    47,594    -    63,567    (939)   (939)
SQM Oceania Pty Ltd.   5,440    -    3,459    -    2,085    444    444 
SQM Beijing Commercial Co. Ltd.   11,723    20    9,695    -    14,487    (148)   (148)
SQM Thailand Limited   4,912    11    1,081    -    5,354    369    369 
SQM Colombia SAS   9,505    151    10,089    37    7,574    (439)   (439)
Sacal S.A.   -    -    -    -    -    -    - 
SQM International   40,652    831    32,549    -    75,229    800    800 
SQM Shanghai Chemicals Co. Ltd.   36,250    133    34,367    -    77,599    (73)   (74)
SQM Australia Pty Ltd.   12,113    108,068    5,661    56    -    (2,030)   (2,030)
Subtotal   913,285    362,360    730,633    37,515    1,470,472    21,212    21,143 
Total   3,215,270    3,309,550    2,434,017    406,763    3,642,358    460,750    456,893 

 

53

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

8.3 Background on non-controlling interests

 

 Subsidiary   % of interests in the ownership
held by
non-controlling
interests
    Profit (loss) attributable to
non-controlling
interests for the period ended
    Equity,
non-controlling interests
for the period ended
    Dividends paid to
non-controlling interests
for the period ended
 
   

As of

December 31,

2020

   

As of

December 31,

2019

   

As of

December 31,

2020

   

As of

December 31,

2019

   

As of

December 31,

2020

   

As of

December 31,

2019

 
          ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$  
SQM Potasio S.A.     0.0000001 %     -       -       -       -       -       -  
Ajay SQM Chile S.A.     49.00000 %     910       740       8,189       8,517       1,238       882  
Soquimich Comercial S.A.     39.36168 %     2,976       1,999       32,078       38,103       8,880       5,935  
Comercial Agrorama Ltda.     30.00000 %     (45 )     (251 )     (775 )     (693 )     -       -  
Agrorama S.A.     0.00000 %     -       -       -       -       -       -  
Orcoma Estudios SPA     0.00000 %     -       -       -       2,277       -       -  
SQM Indonesia S.A.     20.00000 %     -       -       1       1       -       -  
Total             3,841       2,488       39,493       48,205       10,118       6,817  

 

54

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 9 Equity-accounted investees

 

9.1Investments in associates recognized according to the equity method of accounting

 

As of December 31, 2020, and December 31, 2019, in accordance with criteria established in Note 2:

 

   Equity-accounted investees   Share in profit (loss) of associates
and joint ventures accounted for
using the equity method for the
period ended
   Share in other comprehensive
income of associates accounted for
using the equity method for the
period ended
   Share in total other
comprehensive income of
associates accounted for using the
equity method for the period
ended
 
Associates 

As of

December 31,

2020 (**)

  

As of

December 31,

2019 (**)

  

As of

December 31,

2020

  

As of

December 31,

2019

  

As of

December 31,

2020

  

As of

December 31,

2019

  

As of

December 31,

2020

  

As of

December 31,

2019

 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Abu Dhabi Fertilizer Industries WWL   11,505    11,609    (156)   634    -    1    (156)   635 
Doktor Tarsa Tarim Sanayi AS (*)   -    26,001    4,031    3,912    -    198    4,031    4,110 
Ajay North America   14,468    14,669    2,191    2,871    -    -    2,191    2,871 
Ajay Europe SARL   7,875    7,451    1,029    1,165    756    (179)   1,785    986 
SQM Eastmed Turkey (*)   -    623    247    354    -    (42)   247    312 
Kore Potash PLC   26,175    24,739    (224)   (534)   (374)   (549)   (598)   (1,083)
Total   60,023    85,092    7,118    8,402    382    (571)   7,500    7,831 

 

(*) As of December 31, 2020, these investments no longer form part of the group. See Note 9.4 (a).

 

(**) These investments include adjustments for unrealized results.

 

55

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

            Share of   Dividends received for the period ending 
Associate  Description of the nature of the relationship  Address  Country of
incorporation
  ownership in
associates
   As of December
31, 2020
  

As of December

31, 2019

 
            ThUS$   ThUS$ 
Abu Dhabi Fertilizer Industries WWL  Distribution and commercialization of specialty plant nutrients in the Middle East.  PO Box 71871, Abu Dhabi  United Arab Emirates   37%   -    - 
Ajay North America  Production and distribution of iodine and iodine derivatives.  1400 Industry RD Power Springs GA 30129  United States   49%   1,967    2,796 
Ajay Europe SARL  Production and distribution of iodine and iodine derivatives.  Z.I. du Grand Verger BP 227 53602 Evron Cedex  France   50%   1,197    1,055 
Kore Potash PLC  Prospecting, exploration and mining development.   L 3 88 William ST Perth, was 6000  United Kingdom   20.20%   -    - 
Total                 3,164    3,851 

 

The companies described in the table below are related parties of the following associates:

 

(1) Doktor Tarsa Tarim Sanayi AS

(2) Terra Tarsa B.V.

(3) Abu Dhabi Fertilizer Industries WWL

 

            Share of
ownership in
   Dividends received for the period ending 
Associate  Description of the nature of the relationship  Domicile  Country of
incorporation
  associates
(*)
   As of December
31, 2020
   As of December
31, 2019
 
             ThUS$   ThUS$ 
Terra Tarsa Ukraine LLC (2)  Distribution and trading of specialty plant nutrients.  74800 Ukraine, Kakhovka, 4 Yuzhnaya Str.  Ukraine   100%   -    - 
Terra Tarsa BV (1)  Distribution and trading of specialty plant nutrients in the Middle East.  Herikerbergweg 238, Luna Arena, 1101CM Amsterdam PO Box 23393, 1100DW Amsterdam Zuidoost  Holland   50%   -    - 
Plantacote NV (1)  Sale of CRF and production and sales of WSNPK.  Houtdok-Noordkaai 25a, 2030 Antwerpen, Belgium  Belgium   100%   -    - 
Doctochem Tarim Sanayai Ticaret LTD (1)  Production, distribution and trading of specialty plant nutrition.  Eski Büyükdere Cad No: 7 GIZ 2000 Plaza K:17 D:67-68 Maslak Sariyer Ístambul.  Turkey   100%   -    - 
Terra Tarsa Don LLC (2)  Distribution and sale of specialty fertilizers.  Zorge Street, house 17, 344090, Rostov-on-Don  Russian Federation   100%   -    - 
Doktolab Tarim Arastirma San. (1)  Laboratory services.  27. Cd. No:2, 07190 Aosb 2. Kısım/Döşemealtı, Antalya, Turkey  Turkey   100%   -    - 
International Technical and Trading Agencies Co WLL (3)  Distribution and trading of specialty plant nutrients, in the Middle East.  P.O Box: 950918 Amman 11195  Jordan   50%        -            - 
Total                 -    - 

 

(*) This percentage does not consider the shareholdings of the holders of these subsidiaries.

 

56

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

9.2Assets, liabilities, revenue and expenses of associates

 

   As of December 31, 2020   For the period ended as of December 31, 2020 
   Assets   Liabilities       Gain (loss) from
continuing
   Other
comprehensive
   Comprehensive 
Associate  Current   Non-current   Current   Non-current   Revenue   operations   income   income 
  ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Abu Dhabi Fertilizer Industries WWL   29,313    8,586    6,706    101    6,641    (420)   -    (420)
Ajay North America   18,513    15,749    4,737    -    42,920    4,471    -    4,471 
Ajay Europe SARL   22,032    1,493    7,773    -    41,950    2,058    1,736    3,794 
Kore Potash PLC   5,691    124,112    786    -    -    (3,233)   486    (2,747)
Total   75,549    149,940    20,002    101    91,511    2,876    2,222    5,098 

 

   As of December 31, 2019   For the period ended as of December 31, 2019 
   Assets   Liabilities           Other
comprehensive
   Comprehensive 
Associate  Current   Non-current   Current   Non-current   Revenue   Gain (loss)   income   income 
  ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Abu Dhabi Fertilizer Industries WWL   28,543    9,971    7,133    -    31,588    1,713    4    1,717 
Doktor Tarsa Tarim Sanayi AS   97,797    15,196    22,420    38,522    93,768    7,824    396    8,220 
Ajay North America   19,748    13,250    3,061    -    38,833    5,860    -    5,860 
Ajay Europe SARL   19,589    1,456    6,144    -    35,709    2,329    (358)   1,971 
SQM Eastmed Turkey   2,718    1,833    2,600    704    3,086    709    (84)   625 
Kore Potash PLC   7,938    119,362    2,214    -    -    (2,716)   (2,791)   (5,507)
Total   176,333    161,068    43,572    39,226    202,984    15,719    (2,833)   12,886 

 

57

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

9.3Other information

 

The Company has no participation in unrecognized losses in investments in associates.

 

The Company has no investments that are not accounted for according to the equity method.

 

The basis of preparation of the financial information of associates corresponds to the amounts included in the financial statements in conformity with IFRS.

 

9.4Disclosures on interest in associates

 

(a)Transactions conducted in 2020:

 

·During the second quarter, Kore Potash PLC made a share payment to its non-executive board members which resulted in a 0.60% share reduction for the company. This resulted in a transfer in equity of non-controlling interest to other reserves in an amount of ThUS$ 754.

·During the third quarter of 2020 SQM S.A. increased its shares in Kore Potash PLC to 20.26% as a result of the acquisition of 260,598,591 shares out of 584,753,846 shares issued for a capital increase corresponding to ThUS$ 1,679.

·During the third quarter of 2020, its interest in Doktor Tarsa Tarim and its subsidiaries were sold through Soquimich European Holdings B.V. at a value of ThUS$ 33,066, which brought about a loss of ThUS$ 11,408. As of the end of the fourth quarter of 2020, there was a balance of ThUS$ 4,745 in other current receivables and ThUS$ 9,491 in non-current receivables.

·During the fourth quarter of 2020, SQM Holland B.V. acquired a WSNPK business from Plantacote N.V. at a value of ThUS$ 16,757, which generated goodwill of ThUS$7,380.

·During the third quarter of 2020, shares held in SQM Eastmed Turkey were sold through Soquimich European Holdings B.V. at a value of ThUS$ 618, which brought about a loss of ThUS$ 408.

·During the fourth quarter of 2020, Kore Potash PLC made a share-based payment to its non-executive board members, which resulted in a 0.06% share reduction for the company, finalizing with a share percentage of 20.20%. This resulted in a decrease in consolidated equity of non-controlling interests in other reserves of ThUS$ 79.

 

(b)Transactions conducted in 2019:

 

·SQM S.A. increased the capital of Kore Potash Ltd by ThUS$ 2,600 in July 2019, which increased its interest to 19.67% of the shareholder’s investment.

·On December 11, 2019, Doktor Tarsa Tarim Sanayi AS acquired 100% of the shares in Doctochem Tarim Sanayi Ticaret LTD.

 

58

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 10 Joint Ventures

 

10.1Policy for the accounting of equity accounted investment in joint ventures

 

This accounting policy is described in Note 2.6. For these joint ventures there is no quoted market price to measure these investments.

 

At the date of issuance of these financial statements, the Company is not aware of the existence of any significant contingent liabilities associated with the partnerships in joint ventures.

 

10.2Disclosures of interest in joint ventures

 

a)Operations conducted in 2020

 

·In the second quarter of 2020, the Company has taken 100% ownership of SQM Vitas BV through the subsidiary Soquimich European Holdings with a cost of ThUS$ 1,276 and its name has been changed to SQM Holland. (See Note 8.1)

 

·In the second quarter of 2020, shares held in Arpa Speciali S.R.L. were sold through SQM Pavoni & C., SpA. at a value of ThUS$ 56, which brought about a loss of ThUS$ 125. An initial installment of ThUS$ 17 was charged, leaving two pending installments of ThUS$ 20 maturing June 30, 2021 and June 30, 2022. The pending installments are classified as other accounts receivable.

 

·In the third quarter of 2020, shares held in Coromandel SQM India were sold through Soquimich European Holdings B.V. at a value of ThUS$ 1,505, which brought about a loss of ThUS$ 643.

 

·During fourth quarter of 2020, the shares in SQM Qingdao-Star Co, Ltd. were sold through SQM Industrial S.A. for ThUS$ 1,303, which brought about a gain of ThUS$ 62. As of December 31, 2020, the sale proceeds were recorded in other receivables.

 

·A subsequent event associated with the joint venture with Sichuan SQM Migao Chemical Fertilizers Co Ltd. is reported in Note 31.2. Accordingly, the effect on the statement of income for the fourth quarter of 2020 under "Other gains (losses)" is a gain of ThUS$7,036 on the reversal of the impairment associated with this investment.

 

b)Operations conducted in 2019

 

·On January 01, 2019, SQM Vitas Perú changed its functional currency from the Peruvian sol to Dollar.

 

59

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

10.3Investment in joint ventures accounted for under the equity method of accounting

 

                Dividends received for the period
ending
 
Joint venture  Description of the nature of the relationship  Domicile  Country of
incorporation
 

Share of interest

in ownership

  

As of

December 31,
2020

  

As of

December 31,
2019

 
                ThUS$   ThUS$ 
Sichuan SQM Migao Chemical Fertilizers Co Ltd.  Production and distribution of soluble fertilizers.  Huangjing Road, Dawan Town, Qingbaijiang Dristrict, Chengdu Municipality, Sichuan Province  China           50%            -         - 
Coromandel SQM India  Production and distribution of potassium nitrate.  1-2-10, Sardar Patel Road, Secunderabad – 500003 Andhra Pradesh  India   50%   -    - 
SQM Vitas Fzco.  Production and commercialization of specialty plant, animal nutrition and industrial hygiene.  Jebel ALI Free Zone P.O. Box 18222, Dubai  United Arab Emirates   50%   -    10,598 
SQM Qingdao Star Corp Nutrition Co. Ltd.  Production and distribution of nutrient plant solutions with specialties NPK soluble.  Longquan Town, Jimo City, Qingdao Municipality, Shangdong Province  China   50%   2,223    - 
Pavoni & C. Spa  Production of specialty fertilizers and others for distribution in Italy and other countries.  Corso Italia 172, 95129 Catania (CT), Sicilia  Italy   50%   -    - 
Covalent Lithium Pty Ltd.  Development and operation of the Mt Holland Lithium project, which will include the construction of a lithium extraction and refining mine.  L18, 109 St Georges Tce Perth WA 6000 |PO Box Z5200 St Georges Tce Perth WA 6831  Australia   50%   -    - 
Total                 2,223    10,598 

 

The companies described in the following table are related to the following joint ventures:

 

(1)SQM Vitas Fzco.

(2)Pavoni & C. Spa.

 

                Dividends received for the period
ending
 
Joint venture  Description of the nature of the relationship  Domicile  Country of
incorporation
  Share of interest
in ownership (*)
  

As of

December 31,

2020

  

As of

December 31,
2019

 
                ThUS$   ThUS$ 
SQM Vitas Brasil Agroindustria (1)  Production and trading of specialty vegetable and animal nutrition and industrial hygiene.  Via Cndeias, Km. 01 Sem Numero, Lote 4, Bairro Cia Norte, Candeias, Bahia.  Brazil   49.99%               -                 - 
SQM Vitas Perú S.A.C. (1)  Production and trading of specialty vegetable and animal nutrition and industrial hygiene  Av. Juan de Arona 187, Torre B, Oficina 301-II, San Isidro, Lima  Peru   50%   -    - 
Arpa Speciali S.R.L. (2)  Production of specialty fertilizers and others for distribution in Italy and other countries.  Mantova (MN) Via Cremona 27 Int. 25  Italy   50,48%   -    - 
Total                 -    - 

 

(*) The percentages presented correspond to the ownership used in the consolidation of the company.

 

60

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

   Equity-accounted investees   Share in profit (loss) of associates and
joint ventures accounted for using the
equity method, for the period ended
   Share on other comprehensive income
of associates and joint ventures
accounted for using the equity method,
for the period ended
   Share on total other comprehensive
income of associates and joint ventures
accounted for using the equity method
for the period ended
 
Joint Venture 

As of

December 31,
2020 (****)

  

As of

December 31,
2019 (****)

  

As of

December 31,
2020

  

As of

December 31,
2019

  

As of

December 31,
2020

  

As of

December 31, 2019

  

As of

December 31,
2020

  

As of

December 31,
2019

 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Coromandel SQM India (*)   -    1,568    -    (98)   -    (38)   -    (136)
SQM Vitas Fzco.   9,720    9,111    2,010    1,797    (1,469)   437    541    2,234 
SQM Qingdao Star Corp Nutrition Co. Ltd. (*)   -    3,464    83    296    -    -    83    296 
SQM Vitas B.V.   -    1,304    -    (15)   -    (27)   -    (42)
Pavoni & C. Spa   7,222    6,864    9    36    349    (255)   358    (219)
Covalent Lithium Pty Ltd. (**)   -    40    -    -    16    (13)   16    (13)
Sichuan SQM Migao Chemical Fertilizers Co Ltd.(***)   9,028    1,992    (280)   (632)   -    -    (280)   (632)
Total   25,970    24,343    1,822    1,384    (1,104)   104    718    1,488 

 

(*) As of December 31, 2020, these investments were no longer part of the group, see note 10.2 (a).

(**) As of December 31, 2020, this joint venture has a negative value of ThUS$ (92), which is presented in Other non-current provisions.

(***) See subsequent events in Notes 10.2 and 31.2.

(****) These investments include adjustments for unrealized gains.

 

The amounts described in the following box represent numbers used in the consolidation of the company:

 

   Equity-accounted investees   Share in profit (loss) of associates and
joint ventures accounted for using the
equity method, for the period ended
   Share on other comprehensive income
of associates and joint ventures
accounted for using the equity method,
for the period ended
   Share on total other comprehensive
income of associates and joint ventures
accounted for using the equity method
for the period ended
 
Associates 

As of

December 31,

2020

  

As of

December 31,

2019

  

As of

December 31,

2020

  

As of

December 31,

2019

  

As of

December 31,

2020

  

As of

December 31,

2019

  

As of

December 31,

2020

  

As of

December 31,

2019

 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM Vitas Brasil Agroindustria (1)   3,511    5,347    1,018    564    (1,469)   (225)   (451)   339 
SQM Vitas Perú S.A.C. (1)   1,659    1,955    660    211    -    661    660    872 
Arpa Speciali S.R.L. (2)(*)   -    92    -    31    -    (1)   -    30 
Total   5,170    7,394    1,678    806    (1,469)   435    209    1,241 

 

The following companies are subsidiaries of:

 

(1)SQM Vitas Fzco.

(2)Pavoni & C. Spa

 

61

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

10.4Assets, liabilities, revenue and expenses from joint ventures

 

   As of December 31, 2020   For the period ended December 31, 2020 
               Gain (loss)   Other     
   Assets   Liabilities       from continuing   comprehensive   Comprehensive 
Joint Venture  Current   Non-current   Current   Non-current   Revenue   operations   income   income 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Sichuan SQM Migao Chemical Fertilizers Co Ltd.   29,507    4,412    14,156    -    9    (562)   -    (562)
Coromandel SQM India   -    -    -    -    -    -    -    - 
SQM Vitas Fzco.   (496)   20,431    496    -    -    4,019    -    4,019 
SQM Qingdao Star Corp Nutrition Co. Ltd.   -    -    -    -    -    -    -    - 
SQM Vitas Brasil Agroindustria   40,064    5,527    33,410    -    78,960    2,036    (2,938)   (902)
SQM Vitas Perú S.A.C.   34,548    7,928    33,145    1,080    37,591    1,319    -    1,319 
Pavoni & C. Spa   10,645    7,493    9,270    836    15,958    16    698    714 
Covalent Lithium Pty Ltd.   1,418    2,131    2,823    910    -    (232)   33    (199)
Total   115,686    47,922    93,300    2,826    132,518    6,596    (2,207)   4,389 

 

   As of December 31, 2019   For the period ended December 31, 2019 
               Gain (loss)   Other     
   Assets   Liabilities       from continuing   comprehensive   Comprehensive 
 Joint Venture  Current   Non-current   Current   Non-current   Revenue   operations   income   income 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Sichuan SQM Migao Chemical Fertilizers Co Ltd.   28,668    5,129    13,472    -    7    (1,262)   -    (1,262)
Coromandel SQM India   4,504    633    1,704    -    8,197    (197)   (77)   (274)
SQM Vitas Fzco.   9,695    1    1,136    -    36    3,595    (876)   2,719 
SQM Qingdao Star Corp Nutrition Co. Ltd.   7,534    26    632    -    12,003    592    -    592 
SQM Vitas B.V.   2,609    -    2    -    -    (30)   (53)   (83)
SQM Vitas Brasil Agroindustria   46,118    7,299    40,334    -    87,901    1,128    (451)   677 
SQM Vitas Perú S.A.C.   29,452    8,378    24,855    6,044    28,590    421    1,322    1,743 
Pavoni & C. Spa   9,444    7,074    8,466    735    14,296    71    (510)   (439)
Covalent Lithium Pty Ltd.   1,616    958    2,111    383    -    -    (25)   (25)
Total   139,640    29,498    92,712    7,162    151,030    4,318    (670)   3,648 

 

62

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

10.5Other Joint Venture disclosures

 

   Cash and cash equivalents   Other current financial liabilities   Other non-current financial liabilities 
Joint Venture 

As of

December 31,

2020

  

As of

December 31,

2019

  

As of

December 31,

2020

  

As of

December 31,

2019

  

As of

December 31,

2020

  

As of

December 31,

2019

 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Sichuan SQM Migao Chemical Fertilizers Co Ltd.   30    33    -    -    -    - 
Coromandel SQM India   -    2,240    -    -    -    - 
SQM Vitas Fzco.   4,251    3,071    -    -    -    - 
SQM Qingdao Star Corp Nutrition Co. Ltd.   -    4,640    -    -    -    - 
SQM Vitas B.V.   -    2,609    -    -    -    - 
SQM Vitas Brasil Agroindustria   4,065    2,101    6,820    9,106    -    - 
SQM Vitas Perú S.A.C.   1,043    225    227    258    691    895 
Pavoni & C. Spa   767    314    5,573    5,509    -    - 
Covalent Lithium Pty Ltd.   653    693    953    472    -    - 
Total   10,809    15,926    13,573    15,345    691    895 

 

   Depreciation and amortization expense for the
period ending
   Interest expense for the period ending   Income tax benefit (expense) for the period
ending
 
Joint Venture 

As of

December 31,

2020

  

As of

December 31,

2019

  

As of

December 31,

2020

  

As of

December 31,

2019

  

As of

December 31,

2020

  

As of

December 31,

2019

 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Sichuan SQM Migao Chemical Fertilizers Co Ltd.   (394)   (743)   -    -    244    153 
Coromandel SQM India   -    (291)   -    (4)   -    (27)
SQM Vitas Fzco.   (1)   -    (2)   (7)   -    - 
SQM Qingdao Star Corp Nutrition Co. Ltd.   -    (62)   -    -    -    (241)
SQM Vitas B.V.   -    -    -    (1)   -    - 
SQM Vitas Brasil Agroindustria   (355)   (33)   (656)   (1,176)   (34)   181 
SQM Vitas Perú S.A.C.   (257)   (287)   (326)   (435)   (197)   (316)
Pavoni & C. Spa   (263)   (149)   (410)   -    (120)   (214)
Covalent Lithium Pty Ltd.   (213)   (126)   (18)   (32)   714    - 
Total   (1,483)   (1,691)   (1,412)   (1,655)   607    (464)

 

63

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

10.6Joint Ventures

 

In 2017, together with our subsidiary SQM Australia Pty, we entered into an agreement to acquire 50% of the assets of the Mt Holland lithium project in Western Australia. The Mt Holland Lithium Project consist, to design, construct and operate a mine, concentrator and refinery to produce approximately 50,000 metric tons of lithium hydroxide per year.

 

On January 23, 2020, after finalizing the definitive feasibility study, the Company and its project partner Wesfarmers Limited, have decided to postpone the final investment decision to the first quarter of 2021.

 

In addition, the Company will finance the activities of Mt Holland for a year in an amount of US$ 30 million. As of December 31, 2020, the Company had made contributions in the amount of US$ 30 million, of which, US$ 15 million was paid in favor of the partner in the project and presented as other receivables. If the Company does not approve the investment decision, Wesfarmers Limited does not have an obligation to pay the joint venture an amount equal to the amount contributed by the Company.

 

See subsequent events in Note 31.2.

 

64

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 11Cash and cash equivalents

 

11.1Types of cash and cash equivalents

 

As of December 31, 2020, and December 31, 2019, cash and cash equivalents are detailed as follows:

 

   As of   As of 
Cash  December 31,
2020
   December 31,
2019
 
   ThUS$   ThUS$ 
Cash on hand   54    71 
Cash in banks   244,848    105,141 
Other demand deposits   2,227    6,986 
Total Cash   247,129    112,198 

 

   As of   As of 
Cash equivalents 

December 31,
2020

   December 31,
2019
 
   ThUS$   ThUS$ 
Short-term deposits, classified as cash equivalents   51,595    149,099 
Short-term investments, classified as cash equivalents   210,378    327,233 
Total cash equivalents   261,973    476,332 
Total cash and cash equivalents   509,102    588,530 

 

11.2Short-term investments, classified as cash equivalents

 

As of December 31, 2020, and December 31, 2019, the short-term investments classified as cash and cash equivalents relate to mutual funds (investment liquidity funds) for investments in:

 

   As of   As of 
Institution 

December 31,
2020

   December 31,
2019
 
   ThUS$   ThUS$ 
Legg Mason - Western Asset Institutional Cash Reserves   107,625    181,155 
JP Morgan US dollar Liquidity Fund Institutional   102,753    146,078 
Total   210,378    327,233 

 

Short-term investments are highly liquid mutual funds that are basically invested in short-term fixed rate notes in the U.S. market.

 

65

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

11.3Information on cash and cash equivalents by currency

 

As of December 31, 2020, and December 31, 2019, information on cash and cash equivalents by currency is detailed as follows:

 

   As of   As of 
Currency 

December 31,
2020

  

December 31,
2019

 
   ThUS$   ThUS$ 
Peso (*)   7,190    8,240 
Dollar   454,402    558,572 
Euro   17,144    3,131 
Mexican Peso   1,378    2,103 
South African Rand   14,286    3,929 
Japanese Yen   1,646    1,559 
Peruvian Sol   3    4 
Indian rupee   6    6 
Chinese Yuan   11,597    2,484 
Indonesian rupee   3    3 
Argentine Peso   -    3 
Pound Sterling   19    3 
Australian Dollar   1,411    8,492 
South Korean won   16    - 
Dirham United Arab Emirates   -    - 
Polish Zloty   1    1 
Total   509,102    588,530 

 

(*) The Company maintains financial derivative instruments policies which allow management to convert term deposits denominated in pesos and UF to Dollars.

 

11.4Amount restricted cash balances

 

As of December 31, 2020, and December 31, 2019, cash balances are presented with some form of restriction (see note 22.7).

 

Financial assets pledged as collateral

 

On November 4, 2004, Isapre Norte Grande has a guarantee equivalent to the total amount owed to its subsidiaries and medical suppliers, which is administered and maintained by Banco de Chile.

 

As of December 31, 2020, and, December 31, 2019 pledged assets are as follows

 

   As of   As of 
Restricted cash balances  December 31,
2020
  

December 31,
2019

 
   ThUS$   ThUS$ 
Isapre Norte Grande Ltda.   731    551 
Total   731    551 

 

66

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

11.5Short-term deposits, classified as cash equivalents

 

The detail at the end of each period is as follows:

 

Receiver of the deposit  Type of deposit  Original
Currency
  Interest Rate   Placement date  Expiration date  Principal   Interest accrued
to-date
  

As of
December 31,
2020

 
                   ThUS$   ThUS$   ThUS$ 
Banco Santander - Santiago  Fixed term  Dollar   0.35%  12-30-2020  03-30-2021   7,000    -    7,000 
Scotiabank Sud Americano  Fixed term  Dollar   0.35%  11-30-2020  01-08-2021   1,500    1    1,501 
Banco de Chile  Fixed term  Dollar   0.61%  11-30-2020  01-08-2021   2,000    1    2,001 
Banco de Chile  Fixed term  Dollar   0.61%  11-30-2020  01-08-2021   3,500    1    3,501 
Banco crédito e inversiones  Fixed term  Dollar   0.46%  12-01-2020  01-15-2021   500    -    500 
Scotiabank Sud Americano  Fixed term  Dollar   0.4%  12-01-2020  01-15-2021   500    -    500 
Scotiabank Sud Americano  Fixed term  Dollar   0.4%  12-02-2020  01-20-2021   2,500    1    2,501 
Banco Santander - Santiago  Fixed term  Dollar   0.5%  12-09-2020  01-25-2021   500    -    500 
Scotiabank Sud Americano  Fixed term  Dollar   0.5%  12-09-2020  01-25-2021   1,000    -    1,000 
Banco Santander - Santiago  Fixed term  Dollar   0.5%  12-09-2020  01-25-2021   6,000    1    6,001 
Banco crédito e inversiones  Fixed term  Dollar   0.51%  12-09-2020  01-25-2021   6,000    1    6,001 
Banco crédito e inversiones  Fixed term  Dollar   0.26%  12-14-2020  01-29-2021   500    -    500 
Banco Estado  Fixed term  Dollar   0.14%  12-14-2020  01-29-2021   1,000    1    1,001 
Scotiabank Sud Americano  Fixed term  Dollar   0.4%  12-14-2020  01-29-2021   1,500    -    1,500 
Banco de Chile  Fixed term  Dollar   0.56%  12-14-2020  01-29-2021   5,000    1    5,001 
Banco Itaú Corpbanca  Fixed term  Dollar   0.68%  12-18-2020  01-01-2021   500    -    500 
Banco Itaú Corpbanca  Fixed term  Dollar   0.68%  12-18-2020  02-01-2021   2,000    1    2,001 
Banco crédito e inversiones  Fixed term  Dollar   0.2%  12-23-2020  02-05-2021   2,000    1    2,001 
Banco Itaú Corpbanca  Fixed term  Dollar   0.4%  12-24-2020  02-08-2021   1,000    -    1,000 
Banco Santander - Santiago  Fixed term  Dollar   0.26%  12-29-2020  01-08-2021   2,500    1    2,501 
Banco Santander - Santiago  Fixed term  Dollar   0.15%  12-30-2020  02-12-2021   700    -    700 
Banco Itaú Corpbanca  Fixed term  Peso   0.35%  12-29-2020  01-05-2021   3,798    -    3,798 
BBVA Banco Francés  Fixed term  Dollar   1.8%  12-31-2020  03-06-2021   86    -    86 
Total                    51,584    11    51,595 

 

67

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Receiver of the deposit  Type of deposit  Original
Currency
  Interest Rate   Placement date  Expiration date  Principal   Interest accrued
to-date
  

As of
December 31,
2019

 
                   ThUS$   ThUS$   ThUS$ 
Banco crédito e inversiones  Fixed term  Dollar   3.45%  11-18-2019  02-13-2020   18,000    74    18,074 
Banco crédito e inversiones  Fixed term  Dollar   2.85%  12-26-2019  02-20-2020   20,000    8    20,008 
Banco de Chile  Fixed term  Dollar   3.45%  11-15-2019  01-23-2020   14,000    62    14,062 
Banco de Chile  Fixed term  Dollar   3.50%  11-15-2019  01-09-2020   18,000    80    18,080 
Banco de Chile  Fixed term  Dollar   3.45%  11-15-2019  01-16-2020   18,000    79    18,079 
Banco Itaú Corpbanca  Fixed term  Dollar   2.90%  12-26-2019  02-20-2020   33,000    13    33,013 
Scotiabank Sud Americano  Fixed term  Peso   2.16%  12-30-2019  01-08-2020   6,812    -    6,812 
Banco crédito e inversiones  Fixed term  Dollar   3.51%  11-21-2019  01-28-2020   1,000    4    1,004 
Banco crédito e inversiones  Fixed term  Dollar   3.75%  12-02-2019  02-27-2020   2,000    6    2,006 
Banco crédito e inversiones  Fixed term  Dollar   3.60%  11-25-2019  01-28-2020   1,000    4    1,004 
Banco Estado  Fixed term  Dollar   2.15%  12-16-2019  01-06-2020   500    -    500 
Banco Santander - Santiago  Fixed term  Dollar   2.55%  12-09-2019  02-04-2020   1,700    3    1,703 
Banco Itaú Corpbanca  Fixed term  Dollar   2.55%  12-16-2019  01-06-2020   2,500    3    2,503 
Banco Itaú Corpbanca  Fixed term  Dollar   3.64%  11-29-2019  02-13-2020   1,500    5    1,505 
Banco Itaú Corpbanca  Fixed term  Dollar   2.80%  11-12-2019  01-28-2020   2,000    8    2,008 
Banco Santander - Santiago  Fixed term  Dollar   2.33%  10-16-2019  01-12-2020   1,000    5    1,005 
Scotiabank Sud Americano  Fixed term  Dollar   2.45%  12-17-2019  01-13-2020   3,600    3    3,603 
Scotiabank Sud Americano  Fixed term  Dollar   3.20%  11-13-2019  01-30-2020   500    2    502 
Scotiabank Sud Americano  Fixed term  Dollar   3.40%  12-02-2019  02-27-2020   2,000    5    2,005 
Scotiabank Sud Americano  Fixed term  Dollar   3.45%  11-18-2019  01-30-2020   1,500    6    1,506 
BBVA Banco Francés  Fixed term  Dollar   39%  12-26-2019  01-27-2020   52    1    53 
Banco Itaú S.A.  On demand  Dollar   8%  10-17-2019  01-17-2020   64    -    64 
Total                    148,728    371    149,099 

 

68

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

11.6Net Debt reconciliation

 

This section sets out an analysis of net debt and relating movements for each of the periods presented. The definition of the net debt is described in Note 21.1.

 

   As of   As of 
Net debt 

December 31,
2020

   December 31,
2019
 
   ThUS$   ThUS$ 
Cash and cash equivalents   509,102    588,530 
Other current financial assets   348,069    505,490 
Other non-current financial hedge assets   37,276    3,918 
Other current financial liabilities   (68,955)   (291,128)
Lease liabilities, current   (5,528)   (7,694)
Other non-current financial liabilities   (1,899,513)   (1,488,723)
Lease liabilities, non-current   (25,546)   (30,203)
Total   (1,105,095)   (719,810)

 

 

       From cash flow   Not from cash flow     
Cash and cash equivalents 

As of
December 31,
2019

   Amounts from
loans
   Amounts from
interests
   Other cash
income/expenses
   Hedging and non-
hedging instruments
   Exchange rate
differences
   Others  

As of
December 31,
2020

 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Obligations with the public and bank loans   (1,753,028)   (136,692)   73,933    7,819    -    (33,280)   (81,616)   (1,922,864)
Current and non-current lease liabilities   (37,897)   8,015    1,133    -    -    -    (2,325)   (31,074)
Financial instruments derived from hedging   (23,655)   814    7,634    -    (20,909)   -    (4,094)   (40,210)
Financial instruments derived from non-hedging   (3,169)   -    -    -    (2,226)   -    -    (5,395)
Current and non-current financial liabilities   (1,817,749)   (127,863)   82,700    7,819    (23,135)   (33,280)   (88,035)   (1,999,543)
Cash and cash equivalents   588,530    -    -    (78,988)   -    (440)   -    509,102 
Deposits that do not qualify as cash and cash equivalents   485,689    -    -    (123,196)   -    (14,032)   (3,002)   345,459 
Derivatives from hedge assets   21,188    -    (1,216)   (39,290)   56,207    -    388    37,277 
Derivatives from other financial non-hedge assets   2,532    -    -    6,902    (6,824)   -    -    2,610 
Total   (719,810)   (127,863)   81,484    (226,753)   26,248    (47,752)   (90,649)   (1,105,095)

 

The definition of debt is described in Note 14.

 

69

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 12Inventories

 

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

 

   As of   As of 
  December 31,   December 31, 
Type of inventory  2020   2019 
   ThUS$   ThUS$ 
Raw material   10,694    7,287 
Production supplies   31,007    26,064 
Products-in-progress   487,830    457,563 
Finished product   563,497    492,424 
Total   1,093,028    983,338 

 

As of December 31, 2020, and December 31, 2019, the Company held caliche stockpiles, solutions in solar ponds and intermediary salts amounting ThUS$ 422,535 and ThUS$ 393,600, respectively (including products in progress).

 

As of December 31, 2020, bulk inventories recognized within work in progress and finished goods were ThUS$ 108,909 and ThUS$ 176,561, respectively. As of December 31, 2019, bulk inventories recognized within work in progress and finished goods were ThUS$ 104,295 and ThUS$ 204,686, respectively. Bulk products in progress do not include ponds or stockpiles, but they do include intermediary salts on pads.

 

As of December 31, 2020, and 2019, inventory allowances recognized, amounted to ThUS$ 80,930 and ThUS$ 88,174, respectively. For finished and in-process products, recognized allowances include the provision associated with the lower value of stock (considers lower realizable value, uncertain future use, reprocessing costs of off-specification products, etc.), provision for inventory differences and the provision for potential errors in the determination of inventories (e.g., errors in topography, grade, moisture, etc.), (see Note 3.13).

 

For raw materials, supplies, materials and parts, the lower value provision was associated to the proportion of defective materials and potential differences.

 

The breakdown of inventory allowances is detailed as follows:

  

As of

  

As of

 
  

December 31,

  

December 31,

 
Type of inventory  2020   2019 
   ThUS$   ThUS$ 
Raw material and supplies for production   1,934    2,488 
Products-in-progress   66,122    71,468 
Finished product   12,874    14,218 
Total   80,930    88,174 

 

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

 

70

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

As of December 31, 2020, and December 31, 2019, movements in provisions are detailed as follows:

 

  

As of

  

As of

 
  

December 31,

  

December 31,

 
Conciliation  2020   2019 
   ThUS$   ThUS$ 
Beginning balance   88,174    105,282 
Increase in Lower Value (1)   (5,404)   (6,987)
Additional Provision Differences of Inventory (2)   (704)   (123)
Increase / Decrease eventual differences and others (3)   1,244    (6,262)
Provision Used   (2,380)   (3,736)
Total changes   (7,244)   (17,108)
Final balance   80,930    88,174 

 

(1)There are three types of Lower Value Provisions: (a) Economic Realizable Lower Value, (b) Potential Inventory with Uncertain Future Use and (c) Reprocessing Costs of Off-Specification Products.
(2)Provisions for Inventory Differences generated when physical differences are detected when taking inventory, which exceed the tolerance levels for this process.
(3)This algorithm corresponds to the provision of diverse percentages based on the complexity in the measurement and rotation of stock, as well as standard differences based on previous results, as is the case with provisions relating to Commercial Offices.

 

71

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 13 Related party disclosures

 

13.1Related party disclosures

 

Balances pending at period-end are not guaranteed, accrue no interest and are settled in cash, no guarantees have been delivered or received for trade and other receivables due from related parties or trade and other payables due to related parties.

 

13.2Relationships between the parent and the entity

 

Pursuant to Article 99 of Law of the Securities Market Law, the CMF may determine that a company does not have a controlling entity in accordance with the distribution and dispersion of its ownership. On November 30, 2018, the CMF issued the ordinary letter No. 32,131 whereby it determined that Pampa Group, do not exert decisive power over the management of the Company since it does not have a predominance in the ownership that allows it to make management decisions. Therefore, the CMF has determined not to consider Pampa Group as the controlling entity of the Company and that the Company does not have a controlling entity given its current ownership structure.

 

72

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

13.3Detailed identification of related parties and subsidiaries

 

 

As of December 31, 2020 and December 31, 2019, the detail of entities that are identified as subsidiaries or related parties of the SQM Group is as follows:

 

Tax ID No  Name  Country of origin  Functional currency  Nature
foreign  Nitratos Naturais Do Chile Ltda.  Brazil  Dollar  Subsidiary
foreign  Nitrate Corporation of Chile Ltd.  United Kingdom  Dollar  Subsidiary
foreign  SQM North America Corp.  United States  Dollar  Subsidiary
foreign  SQM Europe N.V.  Belgium  Dollar  Subsidiary
foreign  Soquimich European Holding B.V.  Netherlands  Dollar  Subsidiary
foreign  SQM Corporation N.V.  Curacao  Dollar  Subsidiary
foreign  SQM Comercial De México S.A. de C.V.  Mexico  Dollar  Subsidiary
foreign  North American Trading Company  United States  Dollar  Subsidiary
foreign  Administración y Servicios Santiago S.A. de C.V.  Mexico  Dollar  Subsidiary
foreign  SQM Perú S.A.  Peru  Dollar  Subsidiary
foreign  SQM Ecuador S.A.  Ecuador  Dollar  Subsidiary
foreign  SQM Nitratos Mexico S.A. de C.V.  Mexico  Dollar  Subsidiary
foreign  SQMC Holding Corporation L.L.P.  United States  Dollar  Subsidiary
foreign  SQM Investment Corporation N.V.  Curacao  Dollar  Subsidiary
foreign  SQM Brasil Limitada  Brazil  Dollar  Subsidiary
foreign  SQM France S.A.  France  Dollar  Subsidiary
foreign  SQM Japan Co. Ltd.  Japan  Dollar  Subsidiary
foreign  Royal Seed Trading Corporation A.V.V.  Aruba  Dollar  Subsidiary
foreign  SQM Oceania Pty Limited  Australia  Dollar  Subsidiary
foreign  Rs Agro-Chemical Trading Corporation A.V.V.  Aruba  Dollar  Subsidiary
foreign  SQM Indonesia S.A.  Indonesia  Dollar  Subsidiary
foreign  SQM Virginia L.L.C.  United States  Dollar  Subsidiary
foreign  Comercial Caimán Internacional S.A.  Panama  Dollar  Subsidiary
foreign  SQM África Pty. Ltd.  South Africa  Dollar  Subsidiary
foreign  SQM Colombia SAS  Colombia  Dollar  Subsidiary
foreign  SQM Internacional N.V.  Belgium  Dollar  Subsidiary
foreign  SQM (Shanghai) Chemicals Co. Ltd.  China  Dollar  Subsidiary
foreign  SQM Lithium Specialties LLC  United States  Dollar  Subsidiary
foreign  SQM Iberian S.A.  Spain  Dollar  Subsidiary
foreign  SQM Beijing Commercial Co. Ltd.  China  Dollar  Subsidiary
foreign  SQM Thailand Limited  Thailand  Dollar  Subsidiary
foreign  SQM Australia PTY  Australia  Dollar  Subsidiary
foreign  SQM Holland B.V.  Netherlands  Dollar  Subsidiary
foreign  SQM Korea LLC  Korea  Dollar  Subsidiary
96.801.610-5  Comercial Hydro S.A.  Chile  Dollar  Subsidiary
96.651.060-9  SQM Potasio S.A.  Chile  Dollar  Subsidiary
96.592.190-7  SQM Nitratos S.A.  Chile  Dollar  Subsidiary
96.592.180-K  Ajay SQM Chile S.A.  Chile  Dollar  Subsidiary
79.947.100-0  SQM Industrial S.A.  Chile  Dollar  Subsidiary
79.906.120-1  Isapre Norte Grande Ltda.  Chile  Peso  Subsidiary
79.876.080-7  Almacenes y Depósitos Ltda.  Chile  Peso  Subsidiary

 

73

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Tax ID No  Name  Country of origin  Functional currency  Nature
79.770.780-5  Servicios Integrales de Tránsitos y Transferencias S.A.  Chile  Dollar  Subsidiary
79.768.170-9  Soquimich Comercial S.A.  Chile  Dollar  Subsidiary
79.626.800-K  SQM Salar S.A.  Chile  Dollar  Subsidiary
76.534.490-5  Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.  Chile  Peso  Subsidiary
76.425.380-9  Exploraciones Mineras S.A.  Chile  Dollar  Subsidiary
76.064.419-6  Comercial Agrorama Ltda.  Chile  Peso  Subsidiary
76.145.229-0  Agrorama S.A.  Chile  Peso  Subsidiary
76.359.919-1  Orcoma Estudios SPA  Chile  Dollar  Subsidiary
76.360.575-2  Orcoma SPA  Chile  Dollar  Subsidiary
76.686.311-9  SQM MaG SpA  Chile  Dollar  Subsidiary
77.114.779-8  Sociedad Contractual Minera Búfalo  Chile  Dollar  Subsidiary
foreign  Abu Dhabi Fertilizer Industries WWL  Arab Emirates  Arab Emirates dirham  Associate
foreign  Ajay North America  United States  Dollar  Associate
foreign  Ajay Europe SARL  France  Euro  Associate
foreign  Kore Potash PLC  United Kingdom  Dollar  Associate
foreign  Sichuan SQM Migao Chemical Fertilizers Co Ltda.  China  Dollar  Joint venture
foreign  SQM Vitas Fzco.  Arab Emirates  Arab Emirates dirham  Joint venture
foreign  SQM Star Qingdao Corp Nutrition Co., Ltd.  China  Dollar  Joint venture
foreign  Covalent Lithium Pty Ltd.  Australia  Dollar  Joint venture
foreign  Pavoni & C, SPA  Italy  Euro  Joint venture
96.511.530-7  Sociedad de Inversiones Pampa Calichera  Chile  Dollar  Other related parties
96.529.340-K  Norte Grande S.A.  Chile  Peso  Other related parties
79.049.778-9  Callegari Agrícola S.A.  Chile  Peso  Other related parties
foreign  SQM Vitas Brasil Agroindustria (1)  Brazil  Real brazilian  Other related parties
foreign  SQM Vitas Perú S.A.C. (1)  Peru  Dollar  Other related parties
foreign  Abu Dhabi Fertilizer Industries WWL (2)  Oman  United Arab Emirates dirham  Other related parties
foreign  International Technical and Trading Agencies CO WLL (2)  Jordan  United Arab Emirates dirham  Other related parties

 

(1)These Companies are subsidiaries of the joint venture SQM Vitas Fzco.
(2)These Companies are subsidiaries of the joint venture Abu Dhabi Fertilizer Industries WWL Ltda. and therefore it absorbs these and takes responsibility of all of their assets and liabilities.

 

* The following entities were considered related parties as of December 31, 2019 (see Note 9.4 letter a and Note 10.2): SQI Corporation N.V., SQM Italia SRL, Doktor Tarsa Tarim, SQM Eastmed Turkey, Terra Tarsa Ukraine LLC, Terra Tarsa B.V., Plantacote N.V., Terra Tarsa Don LLC, Doktolab Tarim Arastirma San., Doctochem Tarim Sanayi Ticaret Ltd. STI, Coromandel SQM India Sichuan SQM Migao Chemical Fertilizers Co Ltd. and Arpa Speciali S.R.L.

 

74

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

The following other related parties correspond to mining contractual corporations.

 

Tax ID No.  Name  Country of origin  Functional
currency
  Relationship
N/A  Ara Dos Primera del Salar de Pampa Blanca, Sierra Gorda  Chile  Peso  Other related parties
N/A  Ara Tres Primera del Salar de Pampa Blanca, Sierra Gorda  Chile  Peso  Other related parties
N/A  Ara Cuatro Primera del Salar de Pampa Blanca, Sierra Gorda  Chile  Peso  Other related parties
N/A  Ara Cinco Primera del Salar de Pampa Blanca, Sierra Gorda  Chile  Peso  Other related parties
N/A  Curicó Dos Primera del Salar de Pampa Alta, Sierra Gorda  Chile  Peso  Other related parties
N/A  Curicó Tres Primera del Sector de Pampa Alta, Sierra Gorda  Chile  Peso  Other related parties
N/A  Evelyn Veinticuatro Primera de Sierra Gorda  Chile  Peso  Other related parties
N/A  Filomena Tres Primera de Oficina Filomena, Sierra Gorda  Chile  Peso  Other related parties
N/A  Filomena Cuatro Primera de Oficina Filomena, Sierra Gorda  Chile  Peso  Other related parties
N/A  Francis Cuatro Primera de Pampa Blanca, Sierra Gorda  Chile  Peso  Other related parties
N/A  Francis Cuatro Segunda del Salar de Pampa Blanca, Sierra Gorda  Chile  Peso  Other related parties
N/A  Francis Cuatro Tercera de Pampa Blanca, Sierra Gorda  Chile  Peso  Other related parties
N/A  Francis Cuatro Cuarta de Pampa Blanca, Sierra Gorda  Chile  Peso  Other related parties
N/A  Francis Cuatro Quinta de Pampa Blanca, Sierra Gorda  Chile  Peso  Other related parties
N/A  Francis Primera del Salar de Pampa Blanca de Sierra Gorda  Chile  Peso  Other related parties
N/A  Francis Segunda del Salar de Pampa Blanca de Sierra Gorda  Chile  Peso  Other related parties
N/A  Francis Tercera del Salar de Pampa Blanca de Sierra Gorda  Chile  Peso  Other related parties
N/A  Ivon Primera de Sierra Gorda  Chile  Peso  Other related parties
N/A  Ivon Décima Segunda de Sierra Gorda  Chile  Peso  Other related parties
N/A  Ivon Sexta de Sierra Gorda  Chile  Peso  Other related parties
N/A  Julia Primera de Sierra Gorda  Chile  Peso  Other related parties
N/A  Lorena Trigésimo Quinta de Sierra Gorda  Chile  Peso  Other related parties
N/A  Perseverancia Primera de Sierra Gorda  Chile  Peso  Other related parties
N/A  Tamara 40 Primera del Sector S.E. OF. Concepción, Sierra Gorda  Chile  Peso  Other related parties
N/A  Tamara Tercera de Oficina Concepción, Sierra Gorda  Chile  Peso  Other related parties
N/A  Tamara 40 Segunda del Sector S.E. OF Concepción, Sierra Gorda  Chile  Peso  Other related parties

 

75

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

13.4Detail of related parties and related party transactions

 

Transactions between the Company and its subsidiaries, associated businesses, joint ventures and other related parties are part of the Company's common transactions. Their conditions are those customary for this type of transactions in respect of terms and market prices. Maturity terms for each case vary by virtue of the transaction giving rise to them.

 

As of December 31, 2020 and 2019, the detail of significant transactions with related parties is as follows

 

Tax ID No  Name  Nature  Country of origin  Transaction  As of
December 31,
2020
  As of
December 30,
2019
 
               ThUS$  ThUS$ 
Foreign  Doktor Tarsa Tarim Sanayi AS  Associate  Turkey  Sale of products  1,053   14,767 
Foreign  Ajay Europe S.A.R.L.  Associate  France  Sale of products  23,162   21,348 
Foreign  Ajay Europe S.A.R.L.  Associate  France  Dividends  1,197   1,055 
Foreign  Ajay North America LL.C.  Associate  USA  Sale of products  20,259   16,932 
Foreign  Ajay North America LL.C.  Associate  USA  Dividends  1,967   2,796 
Foreign  Abu Dhabi Fertilizer Industries WWL  Associate  United Arab Emirates  Sale of products  -   3,749 
Foreign  SQM Vitas Brasil Agroindustria  Other related parties  Brazil  Sale of products  41,341   46,876 
Foreign  SQM Vitas Perú S.A.C.  Other related parties  Peru  Sale of products  17,723   24,138 
Foreign  SQM Vitas Fzco  Joint venture  United Arab Emirates  Dividends  -   10,598 
Foreign  Coromandel SQM India  Joint venture  India  Sale of products  1,510   3,955 
Foreign  SQM Star Qingdao Corp Nutrition Co., Ltd.  Joint venture  China  Sale of products  -   1,929 
Foreign  Terra Tarsa Ukraine LLC  Other related parties  Ukraine  Sale of products  737   1,280 
Foreign  Plantacote NV  Other related parties  Belgium  Sale of products  -   4,096 
Foreign  Pavoni & CPA  Joint venture  Italy  Sale of products  1,125   3,152 
Foreign  Arpa Speciali S.R.L.  Other related parties  Italy  Sale of products  -   2,359 
Foreign  SQM Star Qingdao Corp Nutrition Co., Ltd.  Joint venture  China  Dividends  2,223   - 
Foreign  Terra Tarsa Don LLC  Other related parties  Russian Federation  Sale of products  -   40 
Foreign  SQM Eastmed Turkey  Associate  Turkey  Sale of products  -   47 

 

Below is a list of transactions with clients and suppliers with whom a relationship with key Company personnel was identified:

 

Tax ID No  Name  Nature  Country of origin  Transaction  As of
December 31,
2020
 
               ThUS$ 
10.581.580-8  Gonzalo Guerrero Yamamoto  Chairman / director  Chile  Services – Supplier  20 
71.644.300-0  Universidad del Desarrollo  Chairman / director  Chile  Services – Supplier  125 
72.012.000-3  Universidad Tecnológica de Chile  Chairman / director  Chile  Services – Supplier  41 
76.389.727-3  Sociedad Periodística El Libero  Shareholders  Chile  Services – Supplier  - 
76.825.265-3  Link Capital Partners SpA  Family of director  Chile  Services – Supplier  224 
76.839.170-k  Proveedora Industrial Arrigoni  Director in common  Chile  Services – Supplier  5 
90.193.000-7  El Mercurio S.A.P.  Family of director  Chile  Services – Supplier  36 
92.580.000-7  Emp. Nac. Telecomunicaciones S.A.  Family of director  Chile  Services – Supplier  1,847 
96.806.980-2  Entel PCS Telecomunicaciones S.A.  Family of director  Chile  Services – Supplier  264 
97.004.000-5  Banco de Chile  Director in common  Chile  Services – Supplier  44,696 
99.012.000-5  Cia. de Seg. de Vida Consorcio Nacional  Family of director  Chile  Services – Supplier  71 
90.266.000-3  Enaex S.A.  Director in common  Chile  Servicies – Client  19 
92.580.000-7  Emp. Nac. Telecomunicaciones S.A.  Family of director  Chile  Servicies – Client  43 
96.529.340-K  Norte Grande S.A.  Director in common  Chile  Lease  135 

 

76

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

13.5Trade receivables due from related parties, current:

 

Tax ID No  Name  Nature  Country of origin  Currency  As of
December 31,
2020
  As of
December 31,
2019
 
               ThUS$  ThUS$ 
Foreign  Doktor Tarsa Tarim Sanayi AS  Associate  Turkey  Dollar  -  110 
Foreign  Ajay Europe S.A. R.L.  Associate  France  Euro  4,625  3,712 
Foreign  Ajay North America LLC.  Associate  United States of America  Dollar  2,956  2,290 
Foreign  Abu Dhabi Fertilizer Industries WWL  Associate  United Arab Emirates  United Arab Emirates Dirham  595  803 
96.511.530-7  Soc. de Inversiones Pampa Calichera  Other related parties  Chile  Dollar  6  6 
Foreign  SQM Vitas Brasil Agroindustria  Other related parties  Brazil  Dollar  24,335  27,275 
Foreign  SQM Vitas Perú S.A.C.  Other related parties  Peru  Dollar  24,205  23,475 
Foreign  Coromandel SQM India  Joint venture  India  Indian Rupee  -  1,792 
Foreign  SQM Vitas Fzco.  Joint venture  United Arab Emirates  United Arab Emirates Dirham  236  234 
Foreign  Terra Tarsa Ukraine LLC  Other related parties  Ukraine  Ukrainian hryvnia  -  7 
Foreign  Terra Tarsa Don LLC  Other related parties  Federation of Russia  Russian Ruble  -  13 
Foreign  Plantacote NV  Other related parties  Belgium  Euro  -  657 
Foreign  SQM Eastmed Turkey  Associate  Turkey  Euro  -  47 
Foreign  Pavoni & C SpA  Joint venture  Italy  Euro  1,095  1,028 
Foreign  Arpa Speciali S.R.L.  Other related parties  Italy  Euro  -  134 
Foreign  Covalent Lithium Pty Ltd.  Joint venture  Australia  Australia  84  - 
Foreign  Sichuan SQM Migao Chemical Fertilizers Co Ltd.  Joint venture  China  Dollar  4,464  - 
   Allowance           -  (356)
Total              62,601  61,227 

 

The receivables for Sichuan SQM Migao Chemical Fertilizers Co Ltda. are presented net of provisions (provisions as of December 31, 2020 ThUS$ 6,502 and December 31, 2019 ThUS$ 10,965).

 

13.6Trade payables due to related parties, current:

 

Tax ID No  Company  Nature  Country of origin  Currency  As of
December
31, 2020
   As of
December
31, 2019
 
               ThUS$   ThUS$ 
Foreign  Ajay Europe S.A.R.L.  Associate  France  Euro  50   - 
Foreign  Ajay North America LL.C.  Associate  United States of America  Dollar  232   - 
Foreign  SQM Star Qingdao Corp Nutrition Co., Ltd.  Joint venture  China  Dollar  -   243 
Foreign  Covalent Lithium Pty Ltd  Joint venture  Australia  Australian dollar  324   232 
Total              606   475 

 

13.7Other disclosures:

 

As of December 31, 2020, the Company has made contributions to Mt Holland in favor of Wesfarmers in the amount of US$ 15 million. This value is presented in the financial statements in the line “Trade and other accounts receivable.” For more details, see Note 10.6.

 

Note 7 describes the remuneration of the Board of Directors, administration and key management personnel.

 

77

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 14 Financial instruments

 

14.1Types of other current and non-current financial assets

 

Description of other financial assets  As of
December 31,
2020
   As of
December 31,
2019
 
   ThUS$   ThUS$ 
Financial assets at amortized cost (1)   345,459    485,689 
Derivative financial instruments          
   - For hedging   -    17,270 
   - Non-hedging (2)   2,610    2,531 
Total other current financial assets   348,069    505,490 
Financial assets at fair value through other comprehensive income   14,569    4,785 
Derivative financial instruments          
   - For hedging   37,276    3,918 
Other financial assets at amortized cost   80    75 
Total other non-current financial assets   51,925    8,778 

 

Institution  As of
December 31,
2020
   As of
December 31,
2019
 
   ThUS$   ThUS$ 
Banco de Crédito e Inversiones   185,589    185,400 
Banco Santander (3)   45,168    74,365 
Banco Itau Corpbanca   49,006    120,628 
Banco Security   -    17,964 
Banco de Chile   -    18,026 
Banco Estado   -    15,126 
Scotiabank Sud Americano   31,668    54,180 
JP Morgan Asset Management   34,028    - 
Total   345,459    485,689 

 

(1)Corresponds to term deposits whose maturity date is greater than 90 days and less than 360 days from the investment date constituted in the aforementioned financial institutions:

 

(2)Correspond to forwards and options that were not classified as hedging instruments (See detail in Note 14.3).

 

(3)As of December 31, 2020, there were no margin calls and as of December 31, 2019, this value was ThUS$ 1,870.

 

78

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

14.2Trade and other receivables

 

   As of December 31, 2020  As of December 31, 2019 
Trade and other receivables  Current  Non-current  Total  Current  Non-current  Total 
   ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Trade receivables, current  313,265  -  313,265  367,583  -  367,583 
Prepayments, current  19,900  -  19,900  20,309  -  20,309 
Other receivables, current  32,041  11,165  43,206  11,250  1,710  12,960 
Total trade and other receivables  365,206  11,165  376,371  399,142  1,710  400,852 

 

See discussion about credit risk in Note 5.2.

 

   As of December 31, 2020  As of December 31, 2019 
Trade and other receivables   Assets before
allowances
  Allowance for
doubtful trade
receivables
  Assets for trade
receivables, net
  Assets before
allowances
  Allowance for
doubtful trade
receivables
  Assets for trade
receivables, net
 
   ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Receivables related to credit operations, current  327,586  (14,321) 313,265  383,775  (16,192) 367,583 
Trade receivables, current  327,586  (14,321) 313,265  383,775  (16,192) 367,583 
Prepayments, current  20,684  (784) 19,900  21,092  (783) 20,309 
Other receivables, current  36,664  (4,623) 32,041  15,659  (4,409) 11,250 
Current trade and other receivables  57,348  (5,407) 51,941  36,751  (5,192) 31,559 
Other receivables, non-current  11,165  -  11,165  1,710  -  1,710 
Non-current receivables  11,165  -  11,165  1,710  -  1,710 
Total trade and other receivables  396,099  (19,728) 376,371  422,236  (21,384) 400,852 

 

79

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(a)Portfolio analysis

 

As of December 31, 2020, and December 31, 2019 the detail of the renegotiated portfolio is as follows:

 

As of December 31, 2020
Portfolio analysis
Past due segments   Number of customers with
non-renegotiated portfolio
   Gross non-renegotiated
portfolio ThUS$
   Number of customers with
renegotiated portfolio
   Gross renegotiated
portfolio ThUS$
 
Current   1,281   301,939   23   179 
1 - 30 days   119   12,140   8   60 
31 - 60 days   12   1,226   -   - 
61 - 90 days   5   159   -   - 
91 - 120 days   5   1,448   1   41 
121 - 150 days   2   2,384   2   2 
151 - 180 days   3   1,398   4   12 
181 - 210 days   1   -   2   5 
211 - 250 days   3   2   6   114 
>250 days   156   5,030   64   1,447 
Total   1,587   325,726   110   1,860 

 

As of December 31, 2019
Portfolio analysis
Past due segments   Number of customers
non-renegotiated portfolio
   Gross non-renegotiated
portfolio
ThUS$
   Number of customers
renegotiated portfolio
   Gross renegotiated
portfolio
ThUS$
 
Current   1,486   351,931   69   892 
1 - 30 days   166   20,195   72   526 
31 - 60 days   26   1,279   4   10 
61 - 90 days   12   519   3   54 
91 - 120 days   5   1,026   2   66 
121 - 150 days   5   361   7   49 
151 - 180 days   7   190   2   33 
181 - 210 days   4   51   -   - 
211 - 250 days   6   48   8   11 
>250 days   144   5,449   137   1,085 
Total   1,861   381,049   304   2,726 

 

80

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(b)Estimate for doubtful accounts

 

As of December 31, 2020
   Trade accounts receivable days past due       
Trade and other receivables  Current    1 to 30
days 
   31 to 60
days 
   61 to 90
days 
   Over 90
days 
   Trade   Trade
receivables
due from
related
parties
 
             

   ThUS$   ThUS$ 
Expected Loss Rate on   1%   10%   39%   52%   79%   -    - 
Total Gross Book Value   302,118    12,200    1,226    159    11,883    327,586    70,145 
Deterioration Estimate   3,187    1,207    477    83    9,367    14,321    7,545 

 

As of December 31, 2019
    Trade accounts receivable days past due      
Trade and other receivables  Current   1 to 30
days
   31 to 60
days
   61 to 90
days
   Over 90
days
   Trade   Trade
receivables
due from
related
parties
 
                 ThUS$   ThUS$ 
Expected Loss Rate on   1%   18%   34%   44%   78%   -    - 
Total Gross Book Value   352,823    20,721    1,288    573    8,370    383,775    72,550 
Deterioration Estimate   5,285    3,664    440    251    6,552    16,192    11,323 

 

As of December 31, 2020, and December 31, 2019, movements in provisions are as follows:

 

Provisions   As of
December 31,
2020
    As of
December 31,
2019
 
    ThUS$    ThUS$ 
Provision Impairment Accounts receivable at the beginning of the Period   32,707    32,634 
(Decrease) increase impairment of accounts receivable   (4,684)   1,057 
Use of Provision Applied to Accounts Receivable   (750)   (984)
Impairment of Accounts Receivable Provision at the end of the Period   27,273    32,707 
(1) Trade and Other Receivables Provision   14,321    16,192 
(2) Current other Receivables Provision   5,407    5,192 
(3) Provision Trade payables due to related parties, current   7,545    11,323 
Recovery of Insurance   347    320 
           
Impairment of Accounts Receivable Provision   27,273    32,707 
Renegotiated Provision   1,728    1,905 
Non-renegotiated Provision   25,545    30,802 

 

81

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

14.3 Hedging assets and liabilities

 

The balance represents derivative financial instruments measured at fair value which have been classified as hedges for exchange and interest rate risks relating to the total obligations with the public associated with bonds in UF and investments in Chilean pesos. As of December 31, 2020, the notional amount of cash flows agreed upon in US dollars of the cross-currency swap contracts amounted to ThUS$ 565,295 (As of December 31, 2019 amounted to ThUS$ 435,167).

 

Expressed in ThUS$  Assets / (Liabilities)
Derivative Instrument
   Total Realized   Hedging Reserve in Gross
Equity
 
Hedging with debt as underlying as of December 31, 2020            
Hedging Assets  37,276   24,428   12,848 
Hedging Liabilities  (19,195)  (12,956)  (6,239)
Underlying Debt Hedge  18,081   11,472   6,609 
Underlying Investment Coverage as of December 31, 2020            
Hedging Assets  -   -   - 
Hedging Liabilities  (21,004)  (20,626)  (378)
Underlying Investments Hedge  (21,004)  (20,626)  (378)

 

Expressed in ThUS$  Assets / (Liabilities)
Derivative Instrument
   Total Realized   Hedging Reserve in Gross
Equity
 
Hedging with debt as underlying as of December 31, 2019            
Hedging Assets  3,918   (4,194)  8,112 
Hedging Liabilities  (22,771)  (25,363)  2,592 
Underlying Debt Hedge  (18,853)  (29,557)  10,704 
Underlying Investment Coverage as of December 31, 2019            
Hedging Assets  17,270   17,857   (587)
Hedging Liabilities  (889)  (711)  (178)
Underlying Investments Hedge  16,381   17,146   (765)

 

Hedging Effect in Profit and Equity for the period as of December
31, 2020
  Variation Total   Result   Hedge Reserve Variation 
Analysis Effect by Type of Coverage            
Underlying Debt Hedge  36,935   41,029   (4,094)
Underlying Investments Hedge  (37,385)  (37,772)  387 
Total hedging effect on profit or loss and equity in the period  (450)  3,257   (3,707)
Analysis Effect by type of asset            
Hedging in Current and Non-Current Assets  16,088   10,765   5,323 
Hedging in Current and Non-Current Liabilities  (16,538)  (7,508)  (9,030)
Total Hedge Effect in Profit or Loss and Equity for the period  (450)  3,257   (3,707)

 

82

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

The balances in the “total realized” column consider the intermediate effects of the contracts in force from January 1 to December 31, 2020 and from January 1 to December 31, 2019.

 

Derivative contract maturities are detailed as follows:

 

Series     Contract amount       Currency   Maturity date
      ThUS$           
H     134,049     UF   01/04/2023
O     58,748     UF   02/01/2022
P     134,228     UF   01/15/2028
Q     106,933     UF   06/01/2030

 

Effectiveness

 

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

 

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

 

Effectiveness tests have verified that hedges are effective as of the reporting date.

 

14.4Financial liabilities

 

Other current and non-current financial liabilities

 

As of December 31, 2020, and December 31, 2019, the detail is as follows:

 

Other current and non-current financial
liabilities
  As of December 31, 2020     As of December 31, 2019  
  Currents     Non-Current     Total     Currents     Non-Current     Total  
    ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$  
Liabilities at amortized cost                                    
Bank borrowings   82     69,376     69,458     199     69,138     69,337  
Obligations with the public   36,781     1,816,626     1,853,407     280,578     1,403,108     1,683,686  
Derivative financial instruments                                    
For hedging   26,699     13,511     40,210     7,183     16,477     23,660  
Non-Hedging   5,393     -     5,393     3,168     -     3,168  
Total   68,955     1,899,513     1,968,468     291,128     1,488,723     1,779,851  

 

Current and non-current bank borrowings

 

As of December 31, 2020, and 2019, the detail is as follows:

 

Current and non-current bank borrowings  As of
December 31,

2020
   As of
December 31,
2019
 
   ThUS$   ThUS$ 
Current loans   82    199 
Non-current loans   69,376    69,138 
Current and non-current loans   69,458    69,337 

 

83

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

a)Bank borrowings, current:

 

As of December 31, 2020, and December 31, 2019, the detail of this caption is as follows:

 

Debtor  Creditor                  
Tax ID No.  Company  Country   Tax ID No.  Financial
institution
  Country   Currency or
adjustment
index
  Payment of
interest
  Repayment   Effective rate   Nominal
rate
 
93.007.000-9  SQM S.A.   Chile   O-E  Scotiabank Cayman   USA   USD  Upon maturity   05/30/2023    1.00%   1.36%

 

Debtor  Creditor  Nominal amounts as of December 31, 2020   Current amounts as of December 31, 2020 
Company  Financial institution  Up to 90 days   90 days to 1 year   Total   Up to 90 days   90 days to 1
year
   Subtotal   Borrowing
costs
   Total 
      ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM S.A.  Scotiabank Cayman               -              -          -         -    82    82                  -    82 
Total      -    -    -    -    82    82    -    82 

 

Debtor  Creditor                 
Tax ID No  Company  Country  Tax ID No  Financial institution  Country  Currency or
adjustment
index
  Repayment  maturity  Effective rate   Nominal rate 
93.007.000-9  SQM S.A.  Chile  Foreign  Scotiabank Cayman  USA  US$  Upon maturity  05/29/2023   2.11%   3.01%
Foreign  Nitratos Naturais do Chile Lim.  Brazil  Foreign  Banco ITAU Brasil  Brazil  BRL  Upon maturity  12/31/2019   13.57%   4.25%

 

Debtor  Creditor  Nominal amounts as of December 31, 2019   Current amounts as of December 31, 2019 
Company  Financial institution  Up to 90 days   90 days
 to 1 year
   Total   Up to 90 days   90 days to 1
year
   Subtotal   Borrowing
costs
   Total 
    ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM S.A.  Scotiabank Cayman    -     -     -    -    187    187       -    187 
Nitratos Naturais do Chile  Banco ITAU Brasil      -    -    -    12    -    12    -    12 
Total      -    -    -    12    187    199    -    199 

 

84

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

b)Unsecured obligations, current:

 

As of December 31, 2020, and December 31, 2019, the detail of current unsecured interest-bearing obligations is composed of promissory notes and bonds, as follows:

 

Debtor  Number of           Periodicity        
Tax ID No.  Company  Country  registration or ID of
the instrument
   Series  Maturity date  Currency or
adjustment index
  Payment of
interest
  Repayment  Effective rate   Nominal rate 
93.007.000-9  SQM S.A.  Chile   -   MUS$250  01/28/2021  US$  Semiannual  Upon maturity   1.95%   4.38%
93.007.000-9  SQM S.A.  Chile   -   MUS$300  04/03/2021  US$  Semiannual  Upon maturity   1.08%   3.63%
93.007.000-9  SQM S.A.  Chile   -   MUS$450  05/07/2021  US$  Semiannual  Upon maturity   3.59%   4.25%
93.007.000-9  SQM S.A.  Chile   -   MUS$400  01/22/2021  US$  Semiannual  Upon maturity   4.17%   4.25%
93.007.000-9  SQM S.A.  Chile   564   H  01/05/2021  UF  Semiannual  Semiannual   0.58%   4.90%
93.007.000-9  SQM S.A.  Chile   699   O  02/01/2021  UF  Semiannual  Upon maturity   2.24%   3.80%
93.007.000-9  SQM S.A.  Chile   563   P  01/15/2021  UF  Semiannual  Upon maturity   2.37%   3.25%
93.007.000-9  SQM S.A.  Chile   700   Q  06/01/2021  UF  Semiannual  Upon maturity   2.92%   3.45%

 

Effective rates of bonds in Pesos and UF are expressed and calculated in Dollars based on the flows agreed in Cross Currency Swap Agreements.

 

         Nominal amounts as of December 31, 2020   Carrying amounts of maturities as of December 31, 2020 
Company  Country  Series  Up to 90
days
   90 days to 1
year
   Total   Up to 90 days   90 days to 1
year
   Subtotal   Borrowing
costs
   Total 
         ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM S.A.  Chile  MUS$250   4,648    -    4,648    4,648    -    4,648    (433)   4,215 
SQM S.A.  Chile  MUS$300   -    2,658    2,658    -    2,658    2,658    (614)   2,044 
SQM S.A.  Chile  MUS$450   7,508    -    7,508    7,508    -    7,508    (679)   6,829 
SQM S.A.  Chile  MUS$400   -    2,869    2,869    -    2,869    2,869    (237)   2,632 
SQM S.A.  Chile  H   18,212    -    18,212    18,212    -    18,212    (172)   18,040 
SQM S.A.  Chile  O   962    -    962    962    -    962    (82)   880 
SQM S.A.  Chile  P   1,824    -    1,824    1,824    -    1,824    (12)   1,812 
SQM S.A.  Chile  Q   -    350    350    -    350    350    (21)   329 
Total         33,154    5,877    39,031    33,154    5,877    39,031    (2,250)   36,781 

 

85

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Debtor  Number of            Periodicity        
Tax I No.  Company  Country  registration or ID of
the instrument
   Series  Maturity date  Currency or
adjustment index
  Payment of
interest
  Repayment  Effective rate   Nominal rate 
93.007.000-9  SQM S.A.  Chile   -   MUS$250  04/21/2020  US$  Semiannual  Upon maturity   0.43%   5.50%
93.007.000-9  SQM S.A.  Chile   -   MUS$250  01/28/2020  US$  Semiannual  Upon maturity   2.35%   4.38%
93.007.000-9  SQM S.A.  Chile   -   MUS$300  04/03/2020  US$  Semiannual  Upon maturity   1.42%   3.63%
93.007.000-9  SQM S.A.  Chile   -   MUS$450  05/07/2020  US$  Semiannual  Upon maturity   4.07%   4.25%
93.007.000-9  SQM S.A.  Chile   564   H  01/05/2020  UF  Semiannual  Semiannual   1.36%   4.90%
93.007.000-9  SQM S.A.  Chile   699   O  02/01/2020  UF  Semiannual  Upon maturity   2.41%   3.80%
93.007.000-9  SQM S.A.  Chile   563   P  01/15/2020  UF  Semiannual  Upon maturity   2.71%   3.25%
93.007.000-9  SQM S.A.  Chile   700   Q  06/01/2020  UF  Semiannual  Upon maturity   3.11%   3.45%

 

         Nominal amounts as of December 31, 2019   Carrying amounts of maturities as of December 31, 2019 
Company  Country  Series  Up to 90
days
   90 days to 1
year
   Total   Up to 90 days   90 days to 1
year
   Subtotal   Borrowing
costs
   Total 
         ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM S.A.  Chile  MUS$250   -    252,674    252,674    -    252,674    252,674    (386)   252,288 
SQM S.A.  Chile  MUS$250   4,648    -    4,648    4,648    -    4,648    (433)   4,215 
SQM S.A.  Chile  MUS$300   -    2,658    2,658    -    2,658    2,658    (614)   2,044 
SQM S.A.  Chile  MUS$450   -    2,869    2,869    -    2,869    2,869    (679)   2,190 
SQM S.A.  Chile  H   17,166    -    17,166    17,166    -    17,166    (139)   17,027 
SQM S.A.  Chile  O   890    -    890    890    -    890    (67)   823 
SQM S.A.  Chile  P   1,686    -    1,686    1,686    -    1,686    (12)   1,674 
SQM S.A.  Chile  Q   -    323    323    -    323    323    (6)   317 
Total         24,390    258,524    282,914    24,390    258,524    282,914    (2,336)   280,578 

 

Effective rates of bonds in Pesos and UF are expressed and calculated in Dollars based on the flows agreed in Cross Currency Swap Agreements.

 

86

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

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

 

The following table shows the details of bank loans as of December 31, 2020 and 2019:

 

Debtor  Creditor  Currency or  Type of        
Tax ID No.  Company  Country  Tax ID No.  Financial institution  Country  adjustment index  amortization  Effective rate   Nominal rate 
93.007.000-9  SQM S.A.  Chile  Foreign  Scotiabank Cayman  USA  USD  Maturity   1.98%   1.36%

 

Debtor  Creditor  Nominal non-current maturities as of December 31, 2020   Carrying amounts of maturities as of December 31, 2020 
Company  Financial institution  Between
1 and 2
   Between
2 and 3
   Between
3 and 4
   Total   Between
1 and 2
   Between
2 and 3
   Between
3 and 4
   Subtotal   Costs of
obtaining
loans
   Total 
      ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM S.A.  Scotiabank Cayman   -    70,000    -    70,000    -    70,000    -    70,000    (624)   69,376 
Total      -    70,000    -    70,000    -    70,000    -    70,000    (624)   69,376 

 

Debtor  Creditor  Currency or  Type of        
Tax ID No.  Company  Country  Tax ID No.  Financial institution  Country  adjustment index  amortization  Effective rate   Nominal rate 
93.007.000-9  SQM S.A.  Chile  Foreign  Scotiabank Cayman  USA  USD  Maturity   2.84%   3.01%

 

Debtor  Creditor  Nominal non-current maturities as of December 31, 2019   Carrying amounts of maturities as of December 31, 2019 
Company  Financial institution  Over 1 year
to 2
   Over 2 years
to 3
   Over 3 Years
to 4
   Over 4 Years
to 5
   Over 5
years
   Total   Over 1 year to 2   Over 2 years to 3   Costs of
obtaining
loans
   Total 
      ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM S.A.  Scotiabank Cayman   -    -    70,000    70,000    -    -    70,000    70,000    (862)   69,138 
Total      -    -    70,000    70,000    -    -    70,000    70,000    (862)   69,138 

 

87

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

d)            Non-current unsecured interest-bearing bonds

 

The following table shows the details of “unsecured debentures that accrue non-current interest” as of December 31, 2020, and 2019:

 

Debtor  Number of            Periodicity        
Tax ID No.  Company  Country  registration or ID of
the instrument
   Series  Maturity date  Currency or
adjustment index
  Payment of
interest
  Repayment  Effective rate   Nominal rate 
93.007.000-9  SQM S.A.  Chile   -   MUS$250  01/28/2025  US$  Semiannual  Upon maturity   4.08%   4.38%
93.007.000-9  SQM S.A.  Chile   -   MUS$300  04/03/2023  US$  Semiannual  Upon maturity   3.43%   3.63%
93.007.000-9  SQM S.A.  Chile   -   MUS$450  05/07/2029  US$  Semiannual  Upon maturity   4.18%   4.25%
93.007.000-9  SQM S.A.  Chile   -   MUS$400  01/22/2050  US$  Semiannual  Upon maturity   4.22%   4.25%
93.007.000-9  SQM S.A.  Chile   564   H  01/05/2030  UF  Semiannual  Semiannual   4.76%   4.90%
93.007.000-9  SQM S.A.  Chile   699   O  02/01/2033  UF  Semiannual  Upon maturity   3.68%   3.80%
93.007.000-9  SQM S.A.  Chile   563   P  01/15/2028  UF  Semiannual  Upon maturity   3.24%   3.25%
93.007.000-9  SQM S.A.  Chile   700   Q  06/01/2038  UF  Semiannual  Upon maturity   3.43%   3.45%

 

   Nominal non-current maturities as of December 31, 2020   Carrying amounts of maturities as of December 31, 2020 
Series  Over 1
year to 2
   Over 2
years to 3
   Over 3
Years to 4
   Over 4
Years to 5
   Over 5
years
   Total   Over 1
year to 2
   Over 2
years to 3
   Over 3
Years to 4
   Over 4
Years to 5
   Over 5
years
   Subtotal   Bond
issuance
costs
   Total 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
MUS$250   -    -    -    250,000    -    250,000    -    -    -    250,000    -    250,000    (1,336)   248,664 
MUS$300   -    300,000    -    -    -    300,000    -    300,000    -    -    -    300,000    (781)   299,219 
MUS$450   -    -    -    -    450,000    450,000    -    -    -    -    450,000    450,000    (5,020)   444,980 
MUS$400   -    -    -    -    400,000    400,000    -    -    -    -    400,000    400,000    (6,582)   393,418 
H   -    -    -    -    126,386    126,386    -    -    -    -    126,386    126,386    (1,378)   125,008 
O   -    -    -    -    61,334    61,334    -    -    -    -    61,334    61,334    (904)   60,430 
P   -    -    -    -    122,668    122,668    -    -    -    -    122,668    122,668    (77)   122,591 
Q   -    -    -    -    122,668    122,668    -    -    -    -    122,668    122,668    (352)   122,316 
Total   -    300,000    -    250,000    1,283,056    1,833,056    -    300,000    -    250,000    1,283,056    1,833,056    (16,430)   1,816,626 

 

88

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Debtor  Number of            Periodicity        
Tax ID No.  Company  Country  registration or ID of
the instrument
   Series  Maturity date  Currency or
adjustment index
  Payment of
interest
  Repayment  Effective rate   Nominal rate 
93.007.000-9  SQM S.A.  Chile   -   MUS$250  01/28/2025  US$  Semiannual  Upon maturity   4.08%   4.38%
93.007.000-9  SQM S.A.  Chile   -   MUS$300  04/03/2023  US$  Semiannual  Upon maturity   3.43%   3.63%
93.007.000-9  SQM S.A.  Chile   -   MUS$450  05/07/2029  US$  Semiannual  Upon maturity   4.19%   4.25%
93.007.000-9  SQM S.A.  Chile   564   H  01/05/2030  UF  Semiannual  Semiannual   4.78%   4.90%
93.007.000-9  SQM S.A.  Chile   699   O  02/01/2033  UF  Semiannual  Upon maturity   3.70%   5.50%
93.007.000-9  SQM S.A.  Chile   563   P  01/15/2028  UF  Semiannual  Upon maturity   3.24%   3.25%
93.007.000-9  SQM S.A.  Chile   700   Q  06/01/2038  UF  Semiannual  Upon maturity   3.45%   3.45%

 

   Nominal non-current maturities as of December 31, 2019   Carrying amounts of maturities as of December 31, 2019 
Series  Over 1
year to 2
   Over 2
years to 3
   Over 3
Years to 4
   Over 4
Years to 5
   Over 5 years   Total   Over 1
year to 2
   Over 2
years to 3
   Over 3
Years to 4
   Over 4
Years to 5
   Over 5
years
   Subtotal   Bond
issuance
costs
   Total 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
MUS$250   -    -    -    -    250,000    250,000    -    -    -    -    250,000    250,000    (1,514)   248,486 
MUS$300   -    -    300,000    -    -    300,000    -    -    300,000    -    -    300,000    (1,393)   298,607 
MUS$450   -    -    -    -    450,000    450,000    -    -    -    -    450,000    450,000    (5,923)   444,077 
H   13,749    13,749    13,749    13,749    75,621    130,617    13,749    13,749    13,749    13,749    75,621    130,617    (1,253)   129,364 
O   -    -    -    -    56,715    56,715    -    -    -    -    56,715    56,715    (811)   55,904 
P   -    -    -    -    113,430    113,430    -    -    -    -    113,430    113,430    (89)   113,341 
Q   -    -    -    -    113,430    113,430    -    -    -    -    113,430    113,430    (101)   113,329 
Total   13,749    13,749    313,749    13,749    1,059,196    1,414,192    13,749    13,749    313,749    13,749    1,059,196    1,414,192    (11,084)   1,403,108 

 

89

 

 

Notes to the Consolidated Financial Statements
December 31, 2020

 

e)Additional information

 

Bonds

 

As of December 31, 2020 and December 31, 2019, the details of each issuance are as follows:

 

(i)Series “H” bonds

 

On January 13, 2009, the Company placed the Series H bond for UF 4,000,000 (ThUS$ 139,216) at an annual interest rate of 4.9%, with a term of 21 years and amortizations of principal beginning in July, 2019.

 

On July 5, 2019, amortization of principal amounted to UF 181,818.18, (ThUS$ 7,494) with an associated cross currency swap hedge income of ThUS$ 439.

 

On January 5, 2020, amortization of principal amounted to UF 181,818.18. (ThUS$ 6,787) with an associated cross currency swap hedge loss of ThUS$ 268.

 

On July 5, 2020, amortization of principal amounted to UF 181,818.18. (ThUS$ 6,509) with an associated cross currency swap hedge loss of ThUS$ 546.

 

See more details in Note 21.1

 

For the periods ended December 31, 2020, and December 31, 2019, the Company has made the following payments with a charge to the Series H bonds and their associated CCS hedging:

 

Payments made  

December 31,

2020

   

December 31,

2019

 
  ThUS$       ThUS$  
Payments of interest, Series H bonds     6,601       7,868  
CCS Coverage     2,575       1,952  

 

(ii)Single series bonds, second issue MUS$ 250

 

On April 21, 2010, the Company informed the CMF of its placement in international markets of an unsecured bond of ThUS$ 250,000, pursuant to Rule 144 -A and Regulation S of the Securities and Exchange Commission with a maturity of 10 years with an annual interest rate of 5.5%.

 

The Company paid the principal on April 21, 2020.

 

For the periods ended December 31, 2020 and December 31, 2019, the detail of payments charged to the line of single series bonds, second issue is as follows

 

Payments made  

December 31,

2020

   

December 31,

2019

 
  ThUS$       ThUS$  
Interest payment     6,875       13,750  

 

90

 

Notes to the Consolidated Financial Statements
December 31, 2020

 

(iii)Series “O” bonds

 

On April 4, 2012, the Company issued “Series O” for UF 1,500,000 (ThUS$ 69,901) at a term of 21 years with a single payment at the maturity of the term and an annual interest rate of 3.80%.

 

See more details in Note 21.1

 

For the periods ended December 31, 2020, and December 31, 2019, the Company has made the following payments with a charge to Series O bonds and their associated CCS hedging:

 

Payments made  

December 31,

2020

   

December 31,

2019

 
  ThUS$       ThUS$  
Payment of interest, Series O bonds     2,070       2,308  
CCS Coverage     599       354  

 

(iv)Single series bonds, third issue MUS$ 300

 

On April 3, 2013, the Company issued a non-secured bond in the United States with a value of US$ 300 million. pursuant to Rule 144-A and Regulation S of the SEC. The bond is for a 10-year term with an annual coupon rate of 3.625%.

 

For the periods ended 31, 2020, and December 31, 2019, the following payments have been made with a debit to the line of single-series bonds, third issue:

 

Payments made  

December 31,

2020

   

December 31,

2019

 
  ThUS$       ThUS$  
Payment of interest     10,875       10,875  

 

91

 

Notes to the Consolidated Financial Statements
December 31, 2020

 

(v)Single series bonds, fourth issuance MUS $250

 

On October 23, 2014, the Company issued unsecured bonds amounting ThUS$ 250,000 in international markets, pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission. These bonds mature in 2025 and have annual interest rate of 4.375%.

 

For the periods ended on December 31, 2020 and December 31, 2019, the following payments have been made.

 

Payments made  

December 31,

2020

   

December 31,

2019

 
  ThUS$       ThUS$  
Payment of interest     10,938       10,938  

 

(vi)Series “P” bonds

 

The Company on March 31, 2018 issued the placement on the stock market of the Series “P” bond (the "Bonds” Series P) with a value of UF 3,000,000, with a charge to the 10 year Bonds Line registered in the CMF Securities Registry under number 563.

 

The bonds Series P (i) mature on January 15, 2028; (ii) will accrue on the unpaid principal, expressed in UF, at an annual interest rate of 3.25% from January 15, 2018; and (iii) can be early redeemed by the Company starting from the date of placement, that was, as of April 5, 2018.

 

For the periods ended on December 31, 2020 and December 31, 2019, the following payments and their associated CCS have been made:

 

Payments made  

December 31,

2020

   

December 31,

2019

 
  ThUS$       ThUS$  
Payment of interest series P     3,534       3,960  
CCS Coverage     3,439       2,995  

 

92

 

Notes to the Consolidated Financial Statements
December 31, 2020

 

(vii)Series Q bonds

 

On October 31, 2018, the issuance of Series Q bonds was authorized in the general stock market for the amount of UF 3,000,000, which were registered in the Securities Registry of your Commission on February 14, 2012 under number 700.

 

The bonds Series Q (i) mature on the first day of June 2038; (ii) will earn an interest rate of 3.45% per annum on the outstanding capital, expressed in Unidades de Fomento, from June 1, 2018 thereon; and (iii) may be early redeemed by the Company starting from the placement date, that was, as of November 8, 2018.

 

On November 8, 2018, all the Series Q Bonds have been placed and sold to Euroamerica S.A. for a total amount of $ 83,567,623,842, which was paid in full and in cash by Euroamerica S.A. to the Company.

 

See more details in Note 21.1

 

For the years ended December 31, 2020 and December 31, 2019, the following payments have been made:

 

Payments made  

December 31,

2020

   

December 31,

2019

 
  ThUS$       ThUS$  
Payment of interest series Q     3,769       3,791  
CCS Coverage     1,021       -  

 

(viii)Single series fifth issue bonds ThUS$ 450,000

 

On May 7, 2019, the CMF was informed that the Company issued and placed unsecured bonds for ThUS$ 450,000 pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission on international markets. These bonds will mature in 2029 and carry an interest rate of 4.25% per annum.

 

For the periods ended on December 31, 2020 and December 31, 2019, the following payments have been made:

 

Payments made  

December 31,

2020

   

December 31,

2019

 
  ThUS$       ThUS$  
Payment of interest     19,125       9,563  

 

(ix)Single series sixth issue bonds MUS$ 400

 

On January 22, 2020, the Company has placed unsecured bonds in international markets for US$ 400 million, pursuant to Rule 144-A and Regulation S of the Securities and Exchange Commission, at an annual interest rate of 4.250% and a maturity in the year 2050.

 

Payments made  

December 31,

2020

   

December 31,

2019

 
  ThUS$       ThUS$  
Payment of interest     8,500       -  

 

93

 

Notes to the Consolidated Financial Statements
December 31, 2020

 

14.5Trade and other payables

 

a)Details trade and other payables

 

      As of December 31, 2020       As of December 31, 2019  
Details trade and other payables     Current       Non-Current       Total       Current       Non-current       Total  
    ThUS$       ThUS$       ThUS$       ThUS$       ThUS$       ThUS$  
Accounts payable     203,346       -       203,346       205,414       -       205,414  
Other accounts payable     587       -       587       376       -       376  
Prepayments from customers     -       4,027       4,027       -       -       -  
Total     203,933       4,027       207,960       205,790       -       205,790  

 

As of December 31, 2020, and December 31, 2019, the balance of current and past due accounts payable is made up as follows:

 

Suppliers current on all payments

 

      Amounts according to payment periods as of December 31, 2020  
      Up to 30       31 - 60       61 - 90       91 - 120       121 - 365       366 and
more
       
Type of Supplier     Days       days       Days       days       days       days       Total  
                                                      ThUS$  
Goods     111,323       1,947       123       31       5       4,027       117,456  
Services     46,187       1,380       16       757       86       -       48,426  
Others     29,325       7       -       -       -       -       29,332  
Total     186,835       3,334       139       788       91       4,027       195,214  

 

      Amounts according to payment periods as of December 31, 2019  
    Up to 30       31 - 60       61 - 90       91 - 120       121 - 365       366 and
more
       
Type of Supplier     Days       days       Days       days       days       days       Total  
                                                      ThUS$  
Goods     126,577       4,655       128       116       2,019       -       133,495  
Services     51,785       168       -       -       87       -       52,040  
Others     8,741       146       -       -             -       8,887  
Total     187,103       4,969       128       116       2,106       -       194,422  

 

Suppliers past due on payments

 

      Amounts according to payment periods as of December 31, 2020  
    Up to 30       31 - 60       61 - 90       91 - 120       121 - 365       366 and
more
       
Type of Supplier     Days       days       Days       days       days       days       Total  
                                                      ThUS$  
Goods     1,305       59       47       39       517       -       1,967  
Services     2,298       764       -       453       505       -       4,020  
Others     3,258       150       371       118       2,275       -       6,172  
Total     6,861       973       418       610       3,297       -       12,159  

 

      Amounts according to payment periods as of December 31, 2019  
    Up to 30       31 - 60       61 - 90       91 - 120       121 - 365       366 and
more
       
Type of Supplier     Days       days       Days       days       days       days       Total  
                                                      ThUS$  
Goods     2,086       264       35       65       1,060       -       3,510  
Services     3,073       329       116       387       580       -       4,485  
Others     1,918       45       311       215       508       -       2,997  
Total     7,077       638       462       667       2,148       -       10,992  

 

Purchase commitments held by the Company are recognized as liabilities when the goods and services are received by the Company. As of December 31, 2020, the Company has purchase orders amounting to ThUS$ 55,516 and ThUS$ 89,391 as of December 31, 2019.

 

94

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

14.6 Financial asset and liability categories

 

a)            Financial Assets

 

   As of December 31, 2020   As of December 31, 2019 
Description of financial assets  Current   Non-current   Total   Current   Non-current   Total 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Cash and cash equivalent   509,102    -    509,102    588,530    -    588,530 
Trade receivables due from related parties at amortized cost   62,601    -    62,601    61,227    -    61,227 
Financial assets measured at amortized cost   345,459    80    345,539    485,689    75    485,764 
Loans and receivables measured at amortized cost   365,206    11,165    376,371    399,142    1,710    400,852 
Total financial assets measured at amortized cost   1,282,368    11,245    1,293,613    1,534,588    1,785    1,536,373 
Financial instruments for hedging purposes through equity   -    37,276    37,276    17,270    3,918    21,188 
Financial instruments held for trading at through profit or loss   2,610    -    2,610    2,531    -    2,531 
Financial assets classified as available for sale at fair value through equity   -    14,569    14,569    -    4,785    4,785 
Total financial assets at fair value   2,610    51,845    54,455    19,801    8,703    28,504 
Total financial assets   1,284,978    63,090    1,348,068    1,554,389    10,488    1,564,877 

 

95

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

b)            Financial Liabilities

 

   As of December 31, 2020   As of December 31, 2019 
Description of financial assets  Current   Non-current   Total   Current   Non-current   Total 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
For hedging purposes through equity   26,699    13,511    40,210    7,183    16,477    23,660 
Held for trading at fair value through profit or loss   5,393    -    5,393    3,168    -    3,168 
Financial liabilities at fair value through profit or loss   32,092    13,511    45,603    10,351    16,477    26,828 
Bank loans   82    69,376    69,458    199    69,138    69,337 
Obligations to the public   36,781    1,816,626    1,853,407    280,578    1,403,108    1,683,686 
Lease Liabilities   5,528    25,546    31,074    7,694    30,203    37,897 
Trade and other payables   203,933    4,027    207,960    205,790    -    205,790 
Trade payables due to related parties   606    -    606    475    -    475 
Total financial liabilities at amortized cost   246,930    1,915,575    2,162,505    494,736    1,502,449    1,997,185 
Total financial liabilities   279,022    1,929,086    2,208,108    505,087    1,518,926    2,024,013 

 

96

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

14.7Fair value measurement of finance assets and liabilities

 

The fair value hierarchy is detailed as follows:

 

(a)Level 1: using quoted prices (unadjusted) only in active markets.

 

(b)Level 2: when in any phase in the valuation process inputs other than quoted prices have been used in Level 1 that are observable directly in markets.

 

(c)Level 3: inputs for the asset or liability that are not based on observable market data.

 

97

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

   As of December 31, 2020   Measurement Methodology 
Fair value measurement of assets and liabilities  Carrying Amount
at Amortized Cost
   Fair value
(informative)
   Book Value Fair
value
   Level 1   Level 2   Level 3 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Financial Assets                        
Cash and cash equivalents   509,102    509,102    -    -    509,102    - 
Other current financial assets                              
- Time deposits   345,459    345,459    -    -    345,459    - 
- Derivative financial instruments                              
- Forwards   -    -    2,263    -    2,263    - 
- Options   -    -    347    -    347    - 
Non-current accounts receivable   11,165    11,165    -    -    -    - 
Other non-current financial assets:                              
- Other   99    99    -    -    99    - 
- Actions   -    -    14,549    14,549    -    - 
- Hedging assets – Swaps   -    -    37,276    -    37,276    - 
Other current financial liabilities                              
- Bank loans   82    82    -    -    82    - 
- Derivative instruments   -    -    -    -    -    - 
- Forwards   -    -    4,614    -    4,614    - 
- Options   -    -    780    -    780    - 
-Hedging liabilities – Swaps   -    -    5,695    -    5,695    - 
-Inversions -Swaps   -    -    21,004    -    21,004    - 
- Unsecured obligations   36,781    36,781    -    -    36,781    - 
- Current lease liabilities   5,528    5,528    -    -    5,528    - 
Other non-current financial liabilities                              
- Bank loans   69,376    71,029    -    -    71,029    - 
- Unsecured obligations   1,816,626    2,355,943    -    -    2,355,943    - 
- Non-current hedging liabilities   -    -    13,511    -    13,511    - 
- Non-current lease liabilities   25,546    26,027    -    -    26,027    - 

 

98

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

   As of December 31, 2019   Measurement Methodology 
Fair value measurement of assets and liabilities  Carrying Amount
at Amortized Cost
   Fair value
(informative)
   Book Value Fair
value
   Level 1   Level 2   Level 3 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Financial Assets                        
Cash and cash equivalents   588,530    588,530    -    -    588,530    - 
Other current financial assets:                              
- Time deposits   485,689    485,689    -    -    485,689    - 
-Derivative financial instruments   -    -    -    -    -    - 
- Forwards   -         2,420    -    2,420    - 
- Options   -    -    111    -    111    - 
-Investment hedge swaps   -    -    17,270    -    17,270    - 
Non-current accounts receivable   1,710    1,710    -    -    -    - 
Other non-current financial assets                              
- Other   94    94    -    -    94    - 
- Actions   -    -    4,785    4,785    -    - 
- Hedging assets – Swaps   -    -    3,918    -    3,918    - 
Other current financial liabilities                              
- Bank loans   199    199    -    -    199    - 
-Derivative instruments   -    -    -    -    -    - 
- Forwards   -    -    2,837    -    2,837    - 
- Options   -    -    289    -    289    - 
- Hedging liabilities – Swaps   -    -    7,183    -    7,183    - 
- Unsecured obligations   280,578    280,578    -    -    280,578    - 
-Current lease liabilities   7,694    7,694    -    -    7,694    - 
Other non-current financial liabilities:                              
- Bank loans   69,138    71,033    -    -    71,033    - 
- Unsecured obligations   1,403,108    1,658,506    -    -    1,658,506    - 
- Non-current hedging liabilities   -    -    16,477    -    16,477    - 
- Non-current lease liabilities   30,203    33,187    -    -    33,187    - 

 

99

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

14.8 Estimated fair value of financial instruments

 

As required by IFRS 7, the following information is presented for the disclosure of the estimated fair value of financial assets and liabilities.

 

Although inputs represent Management's best estimate, they are subjective and involve significant estimates related to the current economic and market conditions, as well as risk features.

 

Methodologies and assumptions used depend on the risk terms and characteristics of instruments and include the following as a summary:

 

Estimate of fair value for the record

 

Financial assets and liabilities measured at fair value consist of forwards hedging the mismatch in the balance sheet and cash flows, options hedging the mismatch in the balance sheet and cross currency swaps to hedge bonds issued in local currency (Peso/UF).

 

The fair value of the Company’s assets and liabilities recognized by cross currency swaps contracts is calculated as the difference between the present value of discounted cash flows of the asset (Ch/UF) and liability (US$) parts of the derivative. In the case of the IRS, the asset value recognized is calculated as the difference between the discounted cash flows of the asset (variable rate) and liability (fixed rate) parts of the derivative. Forwards are calculated as the difference between the strike price of the contract and the spot price plus the forwards points at the date of the contract. Financial options: the value recognized is calculated using the Black-Scholes method.

 

In the case of CCS, the entry data used for the valuation models are UF, Peso, Dollar and basis swap rates. In the case of fair value calculations for interest rate swaps, the Forward Rate Agreement rate and ICVS 23 Curve (Bloomberg: cash/deposits rates, futures, swaps). In the case of forwards, the forwards curve for the currency in question is used. Finally, for options, the spot price, risk-free rate and volatility of exchange rate are used, all in accordance with the currencies used in each valuation. The financial information used as entry data for the Company’s valuation models is obtained from Bloomberg, the well-known financial software company. Conversely, the fair value provided by the counterparties of derivatives contracts is used only as a control and not for valuation.

 

The effects on profit or loss of movements in these amounts is recognized in the caption finance costs, foreign currency translation gain (loss) or cash flow hedge reserve in the statement of comprehensive income, depending on each particular case.

 

Estimate of fair value for reporting purposes

 

  · Cash equivalent approximates fair value due to the short-term maturities of these instruments.

 

  · The fair value of trade receivables, current is considered to be equal to the carrying amount due to the maturity of such accounts at short-term.

 

  · Payables, current lease liabilities and other current financial liabilities are considered fair value equal to book value due to the short-term maturity of these accounts.

 

  · The fair value of the debt (long-term secured and unsecured debentures; bonds denominated in local currency (Peso/UF) and foreign currency (Dollar), loans denominated in foreign currency (Dollar) and lease liabilities of the Company are calculated at current value of cash flows subtracted from market rates upon valuation, considering the terms of maturity and exchange rates. The UF and Peso rate curves are used as inputs for the valuation model. This information is obtained through from the renowned financial software company, Bloomberg, and the Chilean Association of Banks and Financial Institutions.

  

100

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

  

Nota 15 Right-of-use assets and Lease liabilities

 

15.1 Right-of-use assets

 

Reconciliation of changes in
right-of-use assets as of
December 31, 2020, net value
  Land   Buildings   Other
property,
plant and
equipment
   Transport
equipment
   Supplies
and
accessories
   Office
equipment
   Network and
communication
equipment
   Mining
assets
   IT
equipment
   Energy
generating
assets
   Constructions
in progress
   Machinery,
plant and
equipment
   Buildings,
plant and
equipment
 
    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$ 
Opening Balance   -    25,742    -    3,356    -    -    -    -    -    -    -    8,066    37,164 
Additions   -    1,782    -    -    -    -    -    -    -    -    -    121    1,903 
Depreciation expenses   -    (3,535)   -    (877)   -    -    -    -    -    -    -    (4,019)   (8,431)
Other increases / decreases   -    (612)   -    -    -    -    -    -    -    -    -    -    (612)
Total changes   -    (2,365)   -    (877)   -    -    -    -    -    -    -    (3,898)   (7,140)
Closing balance   -    23,377    -    2,479    -    -    -    -    -    -    -    4,168    30,024 

 

Reconciliation of changes in
right-of-use assets as of
December 31, 2019, net value
  Land     Buildings     Other
property,
plant and
equipment
    Transport
equipment
    Supplies and
accessories
    Office
equipment
    Network and
communication
equipment
    Mining
assets
    IT
equipment
    Energy
generating
assets
    Constructions
in progress
    Machinery,
plant and
equipment
    Buildings,
plant and
equipment
 
  ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$  
Opening Balance   -     -     -     -     -     -     -     -     -     -     -     -     -  
Initial recognition of IFRS 16   -     29,289     -     3,893     -     -     -     -     -     -     -     11,933     45,115  
Balance recognized in IFRS 16   -     29,289     -     3,893     -     -     -     -     -     -     -     11,933     45,115  
Depreciation expenses   -     (3,547 )   -     (537 )   -     -     -     -     -     -     -     (3,867 )   (7,951 )
Total changes   -     (3,547 )   -     (537 )   -     -     -     -     -     -     -     (3,867 )   (7,951 )
Closing balance   -     25,742     -     3,356     -     -     -     -     -     -     -     8,066     37,164  

  

The Company’s lease activities included the following aspects:

  
(a)The nature of the Company’s lease activities is related to contracts focused primarily on business operations, mainly rights-of-use to equipment and real estate,
(b)The Company does not estimate any significant future cash outflows that would potentially expose the Company, and these are likewise not reflected in the measurement of lease liabilities, related to concepts such as: (i) Variable lease payments, (ii) Expansion options and termination options, (iii) Guaranteed residual value and (iv) Leases not yet undertaken but committed by the Company.
(c)These are not subject to restrictions or agreements imposed by contracts.
  

There were no sales transactions with leases later in the period.

 

101

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

  

15.2 Lease liabilities

 

  As of December 31, 2020   As of December 31, 2019 
Lease liabilities  Current   Non-Current   Current   Non-Current 
  ThUS$   ThUS$   ThUS$   ThUS$ 
Lease liabilities   5,528    25,546    7,694    30,203 
Total   5,528    25,546    7,694    30,203 

 

i) Current and non-current lease liabilities

 

Debtor    Creditor    Contract  Type of   Maturity     
Tax ID No.  Company  Country   TAX ID No.  Supplier  Country   indexation unit  amortization   date   Effective rate 
79.626.800-K  SQM Salar S.A.  Chile   83.776.000-3  Empresa Constructora Contex Ltda  Chile   UF  Monthly   03-31-2021   0%
79.626.800-K  SQM Salar S.A.  Chile   76.146.110-9  Transportes, Construcción y Servicios Cribach Ltda  Chile   Peso  Monthly   09-01-2020   8.93%
79.626.800-K  SQM Salar S.A.  Chile   76.065.017-K  SKM Industrial Ltda.  Chile   Peso  Monthly   06-01-2022   8.93%
79.626.800-K  SQM Salar S.A.  Chile   96.862.140-8  Ameco Chile S.A.  Chile   Peso  Monthly   04-24-2021   4.07%
79.947.100-0  SQM Industrial S.A.  Chile   96.856.400-5  El Trovador S.A.  Chile   UF  Monthly   02-08-2030   3.10%
79.947.100-0  SQM Industrial S.A.  Chile   76.976.580-8  Sociedad Comercial Grandleasing Chile Ltda  Chile   UF  Monthly   08-26-2024   2.72%
79.768.170-9  Soquimich Comercial S.A.  Chile   76.729.932-K  SAAM Logistics S.A.  Chile   UF  Monthly   08-01-2022   0.81%
79.768.170-9  Soquimich Comercial S.A.  Chile   91.577.000-2  Muelles de Penco S.A.  Chile   UF  Monthly   07-06-2023   1.30%
79.768.170-9  Soquimich Comercial S.A.  Chile   91.577.000-2  Muelles de Penco S.A.  Chile   UF  Monthly   07-06-2023   1.30%
79.768.170-9  Soquimich Comercial S.A.  Chile   76.722.280-7  Inmobiliaria Chincui SPA  Chile   UF  Monthly   05-01-2028   3.38%
79.768.170-9  Soquimich Comercial S.A.  Chile   96.565.580-8  Compañía de Leasing Tattersall S.A.  Chile   UF  Monthly   05-24-2021   6.18%
Foreign  SQM North America Corp.  USA   Foreign  Paces West LL.  USA   Dollar  Monthly   12-31-2027   3.36%
Foreign  SQM North America Corp.  USA   Foreign  Hawkins Nunmber One, LLC  USA   Dollar  Monthly   08-31-2024   3.33%
Foreign  SQM Comercial de México S.A. de C.V.  Mexico   Foreign  Onni Ensenada S.A. de C.V.  Mexico   Dollar  Monthly   12-03-2026   3.45%
Foreign  SQM Comercial de México S.A. de C.V.  Mexico   Foreign  Madol Inmobiliaria S.A. de C.V.  Mexico   Mexican Peso  Monthly   10-31-2023   7.84%
Foreign  SQM Comercial de México S.A. de C.V.  Mexico   Foreign  Madol Inmobiliaria S.A. de C.V.  Mexico   Mexican Peso  Monthly   10-31-2023   7.84%
Foreign  SQM Europe N.V.  Belgium   Foreign  Straatsburgdok N.V.  Belgium   Euro  Monthly   03-31-2027   1.30%
Foreign  SQM Australia PTY  Australia   Foreign  The trust Company (Australia) Pty Ltd  Australia   Australian dollar  Monthly   01-31-2021   3.60%

 

102

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

  

(a) As of December 31, 2020 and December 31, 2019, current lease liabilities are analyzed as follows:

 

Debtor   Creditor   Nominal amounts as of December 31,2020     Amounts at amortized cost as of December 31, 2020  
Company   Supplier   Up to 90 days     90 days to 1 year     Total     Up to 90 days     90 days to 1 year     Total  
      ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$   
SQM Salar S.A.   Empresa Constructora Contex Ltda     536       -       536       536       -       536  
SQM Salar S.A.   Transportes, Construcción y Servicios Cribach Ltda     -       -       -       -       -       -  
SQM Salar S.A.   SKM Industrial Ltda.     202       607       809       181       566       747  
SQM Salar S.A.   Ameco Chile S.A.     135       -       135       134       -       134  
SQM Industrial S.A.   El Trovador S.A.     466       1,399       1,865       353       1,076       1,429  
SQM Industrial S.A.   Sociedad Comercial Grandleasing Chile Ltda     180       540       720       164       498       662  
Soquimich Comercial S.A.   SAAM Logistics S.A.     -       -       -       -       -       -  
Soquimich Comercial S.A.   Muelles de Penco S.A.     41       124       165       54       107       161  
Soquimich Comercial S.A.   Muelles de Penco S.A.     44       133       177       57       115       172  
Soquimich Comercial S.A.   Inmobiliaria Chincui SPA     157       471       628       123       376       499  
Soquimich Comercial S.A.   Compañía de Leasing Tattersall S.A.     55       18       73       54       18       72  
SQM North America Corp.   Paces West LL.     53       163       216       41       128       169  
SQM North America Corp.   Hawkins Nunmber One, LLC     31       96       127       28       85       113  
SQM Comercial de México S.A. de C.V.   Onni Ensenada S.A. de C.V.     99       296       395       81       246       327  
SQM Comercial de México S.A. de C.V.   Madol Inmobiliaria S.A. de C.V.     20       59       79       16       49       65  
SQM Comercial de México S.A. de C.V.   Madol Inmobiliaria S.A. de C.V.     7       21       28       6       18       24  
SQM Europe N.V.   Straatsburgdok N.V.     91       302       393       83       279       362  
SQM Australia PTY   The trust Company (Australia) Pty Ltd     14       42       56       14       42       56  
Total         2,131       4,271       6,402       1,925       3,603       5,528  

 

103

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

  

 

Debtor   Creditor   Nominal amounts as of December 31,2019     Amounts at amortized cost as of December 31, 2019  
Company   Supplier   Up to 90 days     90 days to 1 year     Total     Up to 90 days     90 days to 1 year     Total  
        ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$  
SQM Salar S.A.   Empresa Constructora Contex Ltda     554       1,662       2,216       506       1,578       2,084  
SQM Salar S.A.   Transportes, Construcción y Servicios Cribach Ltda     74       124       198       71       121       192  
SQM Salar S.A.   SKM Industrial Ltda.     202       607       809       166       519       685  
SQM Salar S.A.   Ameco Chile S.A.     135       404       539       129       394       523  
SQM Industrial S.A.   El Trovador S.A.     466       1,399       1,865       343       1,044       1,387  
SQM Industrial S.A.   Sociedad Comercial Grandleasing Chile Ltda     180       540       720       159       485       644  
Soquimich Comercial S.A.   SAAM Logistics S.A.     106       142       248       103       140       243  
Soquimich Comercial S.A.   Muelles de Penco S.A.     45       60       105       44       59       103  
Soquimich Comercial S.A.   Muelles de Penco S.A.     48       64       112       47       64       111  
Soquimich Comercial S.A.   Inmobiliaria Chincui SPA     157       471       628       119       363       482  
Soquimich Comercial S.A.   Compañía de Leasing Tattersall S.A.     55       164       219       51       157       208  
SQM North America Corp.   Paces West LL.     49       156       205       34       116       150  
SQM North America Corp.   Hawkins Nunmber One, LLC     31       93       124       26       81       107  
SQM Comercial de México S.A. de C.V.   Onni Ensenada S.A. de C.V.     99       296       395       78       238       316  
SQM Comercial de México S.A. de C.V.   Madol Inmobiliaria S.A. de C.V.     20       59       79       15       46       61  
SQM Comercial de México S.A. de C.V.   Madol Inmobiliaria S.A. de C.V.     7       21       28       5       16       21  
SQM Europe N.V.   Straatsburgdok N.V.     91       273       364       82       247       329  
SQM Australia PTY   The trust Company (Australia) Pty Ltd     16       32       48       16       32       48  
Total         2,335       6,567       8,902       1,994       5,700       7,694  

 

104

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

As of December 31, 2020 and December 31, 2019, the Non-current lease liabilities are analyzed as follows:

 

Debtor  Creditor  Nominal amounts as of December 31,2020   Amounts at amortized cost as of December 31, 2020 
Company  Supplier  1-2 Years   2-3 Years   3-4 Years   Total   1-2 Years   2-3 Years   3-4 Years   Total 
      ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM Salar S.A.  Empresa Constructora Contex Ltda  -   -   -   -   -   -   -   - 
SQM Salar S.A.  Transportes, Construcción y Servicios Cribach Ltda  -   -   -   -   -   -   -   - 
SQM Salar S.A.  SKM Industrial Ltda.   337    -    -    337    330    -    -    330 
SQM Salar S.A.  Ameco Chile S.A.   -    -    -    -    -    -    -    - 
SQM Industrial S.A.  El Trovador S.A.   3,730    5,594    5,905    15,229    2,993    4,847    5,622    13,462 
SQM Industrial S.A.  Sociedad Comercial Grandleasing Chile Ltda   1,441    420    -    1,861    1,379    417    -    1,796 
Soquimich Comercial S.A.  SAAM Logistics S.A.   -    -    -    -    -    -    -    - 
Soquimich Comercial S.A.  Muelles de Penco S.A.   262    -    -    262    163    96    -    259 
Soquimich Comercial S.A.  Muelles de Penco S.A.   281    -    -    281    175    103    -    278 
Soquimich Comercial S.A.  Inmobiliaria Chincui SPA   1,255    1,883    889    4,027    1,047    1,707    867    3,621 
Soquimich Comercial S.A.  Compañía de Leasing Tattersall S.A.   -    -    -    -    -    -    -    - 
SQM North America Corp.  Paces West LL.   452    730    258    1,440    377    668    253    1,298 
SQM North America Corp.  Hawkins Nunmber One, LLC   263    90    -    353    249    89    -    338 
SQM Comercial de México S.A. de C.V.  Onni Ensenada S.A. de C.V.   789    1,151    -    1,940    689    1,094    -    1,783 
SQM Comercial de México S.A. de C.V.  Madol Inmobiliaria S.A. de C.V.   144    -    -    144    133    -    -    133 
SQM Comercial de México S.A. de C.V.  Madol Inmobiliaria S.A. de C.V.   52    -    -    52    48    -    -    48 
SQM Europe N.V.  Straatsburgdok N.V.   816    1,339    113    2,268    768    1,308    113    2,189 
SQM Australia PTY  The trust Company (Australia) Pty Ltd   11    -    -    11    11    -    -    11 
Total      9,833    11,207    7,165    28,205    8,362    10,329    6,855    25,546 

 

105

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Debtor  Creditor  Nominal amounts as of December 31,2019   Amounts at amortized cost as of December 31, 2019 
Company  Supplier  1-2 Years   2-3 Years   3-4 Years   Total   1-2 Years   2-3 Years   3-4 Years   Total 
      ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
SQM Salar S.A.  Empresa Constructora Contex Ltda   554    -    -    554    547    -    -    547 
SQM Salar S.A.  Transportes, Construcción y Servicios Cribach Ltda   -    -    -    -    -    -    -    - 
SQM Salar S.A.  SKM Industrial Ltda.   1,147    -    -    1,147    1,077    -    -    1,077 
SQM Salar S.A.  Ameco Chile S.A.   135    -    -    135    134    -    -    134 
SQM Industrial S.A.  El Trovador S.A.   3,730    5,594    7,373    16,697    2,903    4,701    7,287    14,891 
SQM Industrial S.A.  Sociedad Comercial Grandleasing Chile Ltda   1,441    1,141    -    2,582    1,342    1,115    -    2,457 
Soquimich Comercial S.A.  SAAM Logistics S.A.   -    -    -    -    -    -    -    - 
Soquimich Comercial S.A.  Muelles de Penco S.A.   -    -    -    -    -    -    -    - 
Soquimich Comercial S.A.  Muelles de Penco S.A.   -    -    -    -    -    -    -    - 
Soquimich Comercial S.A.  Inmobiliaria Chincui SPA   1,255    1,883    1,464    4,602    1,013    1,651    1,455    4,119 
Soquimich Comercial S.A.  Compañía de Leasing Tattersall S.A.   73    -    -    73    72    -    -    72 
SQM North America Corp.  Paces West LL.   439    709    508    1,656    351    627    492    1,470 
SQM North America Corp.  Hawkins Nunmber One, LLC   257    224    -    481    234    217    -    451 
SQM Comercial de México S.A. de C.V.  Onni Ensenada S.A. de C.V.   789    1,184    362    2,335    665    1,088    356    2,109 
SQM Comercial de México S.A. de C.V.  Madol Inmobiliaria S.A. de C.V.   157    65    -    222    135    63    -    198 
SQM Comercial de México S.A. de C.V.  Madol Inmobiliaria S.A. de C.V.   57    24    -    81    49    23    -    72 
SQM Europe N.V.  Straatsburgdok N.V.   801    1,295    564    2,660    744    1,248    559    2,551 
SQM Australia PTY  The trust Company (Australia) Pty Ltd   55    -    -    55    55    -    -    55 
Total      10,890    12,119    10,271    33,280    9,321    10,733    10,149    30,203 

 

106

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Other lease disclosures

 

Total lease expenses related to lease payments were ThUS$ 61,705 and ThUS$ 56,051 for the periods ended December 31, 2020 and 2019. See Note 25.8.

 

Expenses related to variable payments not included in lease liabilities were MUS$ 1,133 and MUS$ 1,096 for the periods ending December 31, 2020 and 2019.

 

Income from subleases on right-of-use assets were ThUS$ 176 and ThUS$ 261 as of December 31, 2020 and 2019, respectively.

 

Payments for contractual operating leases are disclosed in Note 5.2 Liquidity Risk.

 

107

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 16Intangible assets and goodwill

 

16.1Balances

 

As of December 31, 2020 
Intangible assets and goodwill  Useful life  Net Value 
      ThUS$ 
IT programs  Finite   4,826 
Mining rights  Finite   150,046 
Water rights and rights of way.  Indefinite   23,343 
Customer-related intangible assets  Finite   - 
Other intangible assets  Finite   192 
Intangible assets other than goodwill      178,407 
Goodwill  Indefinite   41,966 
Total Intangible Asset      220,373 

 

As of December 31, 2019 
Intangible assets and goodwill  Useful life  Net value 
      ThUS$ 
IT programs  Finite   6,011 
Mining rights  Finite   157,570 
Water rights and rights of way.  Indefinite   23,342 
Customer-related intangible assets  Finite   1,273 
Other intangible assets.  Finite   162 
Intangible assets other than goodwill      188,358 
Goodwill  Indefinite   34,726 
Total Intangible Assets      223,084 

 

108

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

a)Movements in identifiable intangible assets as of December 31, 2020:

 

Gross Value
Movements in identifiable intangible assets
  IT programs   Mining rights, Finite   Water rights, and
rights of way,
 Indefinite
   Customer-related
intangible assets
   Other intangible
assets
   Goodwill   Identifiable
intangible assets
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Opening Balance   34,471    158,337    25,423    1,778    2,188    38,120    260,317 
Additions   508    2,295    -    -    72    7,380    10,255 
Other increases / decreases for foreign currency exchange rates   5    -    1    -    -    -    6 
Decreases through sale   -    (136)   -    -    -    -    (136)
Other increases (decreases)   297    -    -    -    14    -    311 
Total increases (decreases)   810    2,159    1    -    86    7,380    10,436 
Closing balance   35,281    160,496    25,424    1,778    2,274    45,500    270,753 

  

Accumulated amortization and impairment
Movements in identifiable intangible assets
  IT programs   Mining rights, Finite   Water rights, and
rights of way,
 Indefinite
   Customer-related
intangible assets
   Other intangible
assets
   Goodwill   Identifiable
intangible assets
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Opening Balance   (28,460)  (767)  (2,081)  (505)  (2,026)  (3,394)  (37,233)
Other increases / decreases for foreign currency exchange rates   -   -   -   -   -   -   - 
Other increases (decreases)   -   (2)  -   -   -   -   (2)
Impairment losses recognized in profit for the year   (14)  (654)  -   (990)  -   (140)  (1,798)
Amortization   (1,981)  (9,027)  -   (283)  (56)  -   (11,347)
Total increases (decreases)   (1,995)  (9,683)  -   (1,273)  (56)  (140)  (13,147)
Closing balance   (30,455)  (10,450)  (2,081)  (1,778)  (2,082)  (3,534)  (50,380)

 

109

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Net value
Movements in Identifiable intangible assets
  IT programs   Mining rights,
Finite
   Water rights, and
rights of way,
Indefinite
   Customer-related
intangible assets
   Other intangible
assets
   Goodwill   Identifiable
intangible assets
 

   ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$ 
Opening Balance   6,011    157,570    23,342    1,273    162    34,726    223,084 
Additions   508    2,295    -    -    72    7,380    10,255 
Amortization   (1,981)   (9,027)   -    (283)   (56)   -    (11,347)
Impairment losses recognized in profit for the year   (14)   (654)   -    (990)   -    (140)   (1,798)
Other increases / decreases for foreign currency exchange rates   5    -    1    -    -    -    6 
Decreases through sale   -    (136)   -    -    -    -    (136)
Other increases (decreases)   297    (2)   -    -    14    -    309 
Total increases (decreases)   (1,185)   (7,524)   1    (1,273)   30    7,240    (2,711)
Closing balance   4,826    150,046    23,343    -    192    41,966    220,373 

 

Movements in identifiable intangible assets as of December 31, 2019:

 

Gross Value
Movements in identifiable intangible assets
  IT programs   Mining rights,
Finite
   Water rights, and
rights of way,
Indefinite
   Customer-related
intangible assets
   Other intangible
assets
   Goodwill   Identifiable
intangible assets
 

   ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$ 
Opening Balance   29,137    159,424    25,425    1,778    2,165    38,120    256,049 
Additions   2,606    227    -    -    23    -    2,856 
Other increases / decreases of foreign currency   (7)   -    (2)   -    -    -    (9)
Decreases through sale   -    (1,314)   -    -    -    -    (1,314)
Other increases (decreases)   2,735    -    -    -    -    -    2,735 
Total increases (decreases)   5,334    (1,087)   (2)   -    23    -    4,268 
Closing balance   34,471    158,337    25,423    1,778    2,188    38,120    260,317 

 

110

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Accumulated amortization and impairment
Movements in identifiable intangible assets
  IT programs   Mining rights,
Finite
   Water rights, and
rights of way,
Indefinite
   Customer-related
intangible assets
   Other intangible
assets
   Goodwill   Identifiable
intangible assets
 

   ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$ 
Opening Balance   (24,569)   (168)   (1,649)   (205)   (1,988)   (3,254)   (31,833)
Other increases / decreases of foreign currency   3    -    -    -    -    -    3 
Other increases (decreases)   (256)   -    -    -    -    -    (256)
Impairment losses recognized in profit for the year   -    (481)   (432)   -    -    (140)   (1,053)
Amortization   (3,638)   (118)   -    (300)   (38)   -    (4,094)
Total increases (decreases)   (3,891)   (599)   (432)   (300)   (38)   (140)   (5,400)
Closing balance   (28,460)   (767)   (2,081)   (505)   (2,026)   (3,394)   (37,233)

 

Net value
Movements in Identifiable intangible assets
  IT programs   Mining rights,
Finite
   Water rights, and
rights of way,
Indefinite
   Customer-related
intangible assets
   Other intangible
assets
   Goodwill   Identifiable
intangible assets
 

   ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$    ThUS$ 
Opening Balance   4,568    159,256    23,776    1,573    177    34,866    224,216 
Additions   2,606    227    -    -    23    -    2,856 
Amortization   (3,638)   (118)   -    (300)   (38)   -    (4,094)
Impairment losses recognized in profit or loss for the year   -    (481)   (432)   -    -    (140)   (1,053)
Other increases / decreases of foreign currency   (4)   -    (2)   -    -    -    (6)
Decreases through sale   -    (1,314)        -    -    -    (1,314)
Other increases (decreases)   2,479    -    -    -    -    -    2,479 
Total increases (decreases)   1,443    (1,686)   (434)   (300)   (15)   (140)   (1,132)
Closing balance   6,011    157,570    23,342    1,273    162    34,726    223,084 

 

111

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(b)Movements in identifiable goodwill as of December 31, 2020:

 

Gross Value
Movements in identifiable goodwill
  Goodwill at the start of
the period January 01,
2020
   Additional
recognition
   Impairment losses recognized
in profit or loss for the year (-)
   Total increase (decrease)   Goodwill at end of period 
    ThUS$     ThUS$    ThUS$     ThUS$    ThUS$  
SQM Industrial S.A.   3,214    -    -    -    3,214 
SQM S.A.   22,255    -    -    -    22,255 
SQM Iberian S.A.   148    -    -    -    148 
SQM Investment Corporation   86    -    -    -    86 
Soquimich Comercial S.A.   320    -    -    -    320 
Soquimich European Holding B.V.   11,373    10    -    10    11,383 
SQM Holland B.V.   -    7,370    -    7,370    7,370 
SQM Potasio S.A.   724    -    -    -    724 
Total increases (decreases)   38,120    7,380    -    7,380    45,500 
Closing balance   38,120    7,380    -    7,380    45,500 

 

Accumulated impairment
Movements in identifiable goodwill
  Goodwill at the start of
the period January 01,
2020
   Additional
recognition
   Impairment losses recognized
in profit or loss for the year (-)
   Total increase (decrease)   Goodwill at end of period 
    ThUS$     ThUS$    ThUS$     ThUS$    ThUS$  
SQM Industrial S.A.   (3,214)   -    -    -    (3,214)
SQM S.A.   -    -    -    -    - 
SQM Iberian S.A.   -    -    -    -    - 
SQM Investment Corporation   -    -    -    -    - 
Soquimich Comercial S.A.   (180)   -    (140)   (140)   (320)
Soquimich European Holding B.V.   -    -    -    -    - 
SQM Holland B.V.   -    -    -    -    - 
SQM Potasio S.A.   -    -    -    -    - 
Total increases (decreases)   (3,394)   -    (140)   (140)   (3,534)
Closing balance   (3,394)   -    (140)   (140)   (3,534)

 

112

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Net Value
Movements in identifiable goodwill
  Goodwill at the start of
the period January 01,
2020
   Additional
recognition
   Impairment losses recognized
in profit or loss for the year (-)
   Total increase (decrease)   Goodwill at end of period 
    ThUS$     ThUS$    ThUS$     ThUS$    ThUS$  
SQM Industrial S.A.   -    -    -    -    - 
SQM S.A.   22,255    -    -    -    22,255 
SQM Iberian S.A.   148    -    -    -    148 
SQM Investment Corporation   86    -    -    -    86 
Soquimich Comercial S.A.   140    -    (140)   (140)   - 
Soquimich European Holding B.V.   11,373    10    -    10    11,383 
SQM Holland B.V.   -    7,370    -    7,370    7,370 
SQM Potasio S.A.   724    -    -    -    724 
Total increases (decreases)   34,726    7,380    (140)   7,240    41,966 
Closing balance   34,726    7,380    (140)   7,240    41,966 

 

Movements in identifiable goodwill as of December 31, 2019

 

Gross Value
Movements in identifiable goodwill
  Goodwill at the start of
the period January 01,
2019
   Additional
recognition
   Impairment losses recognized
in profit or loss for the year (-)
   Total increase (decrease)   Goodwill at end of period 
    ThUS$     ThUS$    ThUS$     ThUS$    ThUS$  
SQM Industrial S.A.   3,214    -    -    -    3,214 
SQM S.A.   22,255    -    -    -    22,255 
SQM Iberian S.A.   148    -    -    -    148 
SQM Investment Corporation   86    -    -    -    86 
Soquimich Comercial S.A.   320    -    -    -    320 
Soquimich European Holding B.V.   11,373    -    -    -    11,373 
SQM Potasio S.A.   724    -    -    -    724 
Total increases (decreases)   38,120    -    -    -    38,120 
Closing balance   38,120    -    -    -    38,120 

 

113

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Accumulated impairment
Movements in identifiable goodwill
  Goodwill at the start of
the period January 01,
2019
   Additional
recognition
   Impairment losses recognized
in profit or loss for the year (-)
   Total increase (decrease)   Goodwill at end of period 
    ThUS$     ThUS$    ThUS$     ThUS$    ThUS$  
SQM Industrial S.A.   (3,214)   -    -    -    (3,214)
SQM S.A.   -    -    -    -    - 
SQM Iberian S.A.   -    -    -    -    - 
SQM Investment Corporation   -    -    -    -    - 
Soquimich Comercial S.A.   (40)   -    (140)   (140)   (180)
Soquimich European Holding B.V.   -    -    -    -    - 
SQM Potasio S.A.   -    -    -    -    - 
Total increases (decreases)   (3,254)   -    (140)   (140)   (3,394)
Closing balance   (3,254)   -    (140)   (140)   (3,394)

 

Net Value
Movements in identifiable goodwill
  Goodwill at the start of
the period January 01,
2019
   Additional
recognition
   Impairment losses recognized
in profit or loss for the year (-)
   Total increase (decrease)   Goodwill at end of period 
    ThUS$     ThUS$    ThUS$     ThUS$    ThUS$  
SQM Industrial S.A.   -    -    -    -    - 
SQM S.A.   22,255    -    -    -    22,255 
SQM Iberian S.A.   148    -    -    -    148 
SQM Investment Corporation   86    -    -    -    86 
Soquimich Comercial S.A.   280    -    (140)   (140)   140 
Soquimich European Holding B.V.   11,373    -    -    -    11,373 
SQM Potasio S.A.   724    -    -    -    724 
Total increases (decreases)   34,866    -    (140)   (140)   34,726 
Closing balance   34,866    -    (140)   (140)   34,726 

 

114

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 17      Property, plant and equipment

 

As of December 31, 2020, and December 31, 2019, the detail of property, plant and equipment is as follows:

 

17.1Types of property, plant and equipment

 

Description of types of property, plant and equipment 

As of

December 31,
2020

  

As of

December 31,
2019

 
   ThUS$   ThUS$ 
Property, plant and equipment, net          
Land   23,579    23,620 
Buildings   239,666    227,173 
Other property, plant and equipment   35,418    32,645 
Transport equipment   2,880    2,686 
Supplies and accessories   4,183    4,579 
Office equipment   459    420 
Network and communication equipment   1,272    663 
Mining assets   47,052    23,174 
IT equipment   4,083    4,359 
Energy generating assets   4,878    5,998 
Constructions in progress   486,345    375,316 
Machinery, plant and equipment   887,504    869,273 
Total   1,737,319    1,569,906 
Property, plant and equipment, gross          
Land   23,579    23,620 
Buildings   705,089    666,027 
Other property, plant and equipment   234,238    257,247 
Transport equipment   13,030    12,143 
Supplies and accessories   26,101    25,531 
Office equipment   11,607    11,441 
Network and communication equipment   8,951    8,009 
Mining assets   194,562    161,619 
IT equipment   29,629    28,693 
Energy generating assets   38,540    38,495 
Constructions in progress   486,345    375,316 
Machinery, plant and equipment   3,304,061    3,142,461 
Total   5,075,732    4,750,602 
Accumulated depreciation and value impairment of property, plant and equipment, total          
Accumulated depreciation and impairment of buildings   (465,423)   (438,854)
Accumulated depreciation and impairment of other property, plant and equipment   (198,820)   (224,602)
Accumulated depreciation and impairment of transport equipment   (10,150)   (9,457)
Accumulated depreciation and impairment of supplies and accessories   (21,918)   (20,952)
Accumulated depreciation and impairment of office equipment   (11,148)   (11,021)
Accumulated depreciation and impairment of network and communication equipment   (7,679)   (7,346)
Accumulated depreciation and impairment of mining assets   (147,510)   (138,445)
Accumulated depreciation and impairment of IT equipment   (25,546)   (24,334)
Accumulated depreciation and impairment of energy generating assets   (33,662)   (32,497)
Accumulated depreciation and impairment of machinery, plant and equipment   (2,416,557)   (2,273,188)
Total   (3,338,413)   (3,180,696)

 

115

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Description of classes of property, plant and equipment 

As of

December 31,
2020

  

As of

December 31,
2019

 
   ThUS$   ThUS$ 
Property, plant and equipment, net          
Pumps   28,184    32,525 
Conveyor Belt   20,117    21,911 
Crystallizer   22,145    24,102 
Plant Equipment   173,335    170,263 
Tanks   15,367    14,159 
Filter   35,553    27,080 
Electrical equipment/facilities   93,937    92,090 
Other Property, Plant & Equipment   49,930    53,409 
Site Closure   36,828    12,056 
Piping   102,578    96,402 
Well   226,347    238,670 
Pond   41,906    41,319 
Spare Parts (1)   41,277    45,287 
Total   887.504    869,273 

 

(1)Spare parts is presented net of provision. The reconciliation of the spare parts provision as of December 31, 2020 and 2019 is as follows:

 

Reconciliation 

As of

December 31,
2020

  

As of

December 31,
2019

 
   ThUS$   ThUS$ 
Opening balance   39,265    32,414 
Increase in provisions   3,616    6,851 
Closing balance   42,881    39,265 

 

116

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

17.2   Conciliation of changes in property, plant and equipment by type:

 

Reconciliation of changes in property, plant and equipment by class as of December 31, 2020 and December 31, 2019:

 

Reconciliation of changes in property,
plant and equipment by class as of
December 31, 2020,
gross amount
  Land   Buildings   Other
property,
plant and
equipment
   Transport
equipment
   Supplies
and
accessories
   Equipment
office
   Network and
communication
equipment
   Mining
assets
   IT
equipment
   Energy
generating
assets
   Assets
under
construction
   Machinery,
plant and
equipment
   Property,
plant and
equipment
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Opening balance   23,620    666,027    257,247    12,143    25,531    11,441    8,009    161,619    28,693    38,495    375,316    3,142,461    4,750,602 
Additions   -    838    278    -    82    33    386    -    429    -    319,192    987    322,225 
Disposals   -    -    (33,048)   -    (1)   -    -    -    -    -    -    (149)   (33,198)
Increase (decrease) in foreign currency translation difference   22    49    2    1    5    -    -    -    12    -    -    53    144 
Reclassifications   -    32,179    9,940    886    488    133    558    32,943    548    45    (203,412)   125,692    - 
Other increases (decreases)   (27)   5,996    (181)   -    (4)   -    (2)   -    (53)   -    (4,751)   35,017    35,995 
Decreases for classification as held for sale   (36)   -    -    -    -    -    -    -    -    -    -    -    (36)
Total changes   (41)   39,062    (23,009)   887    570    166    942    32,943    936    45    111,029    161,600    325,130 
Closing balance   23,579    705,089    234,238    13,030    26,101    11,607    8,951    194,562    29,629    38,540    486,345    3,304,061    5,075,732 

 

Reconciliation of changes in property,
plant and equipment by class as of
December 31, 2020, accumulated
depreciation
  Land   Buildings   Other
property,
plant and
equipment
   Transport
equipment
   Supplies
and
accessories
   Equipment
office
   Network and
communication
equipment
   Mining
assets
   IT
equipment
   Energy
generating
assets
   Assets
under
construction
   Machinery,
plant and
equipment
   Property,
plant and
equipment
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Opening balance   -    (438,854)   (224,602)   (9,457)   (20,952)   (11,021)   (7,346)   (138,445)   (24,334)   (32,497)   -    (2,273,188)   (3,180,696)
Changes                                                                 
Disposals   -    -    33,048    -    1    -    -    -    -    -    -    148    33,197 
Depreciation expense   -    (26,779)   (7,284)   (692)   (966)   (126)   (335)   (9,065)   (1,242)   (1,165)   -    (134,230)   (181,884)
Impairment   -    (23)   (21)   -    -    -    -    -    (12)   -    -    (9,507)   (9,563)
Increase (decrease) in foreign currency translation difference   -    (20)   (2)   (1)   (4)   (1)   -    -    (10)   -    -    (28)   (66)
Reclassifications   -    -    -    -    -    -    -    -    -    -    -    -    - 
Other increases (decreases) (1)   -    253    41    -    3    -    2    -    52    -    -    248    599 
Decreases for classification as held for sale   -    -    -    -    -    -    -    -    -    -    -    -    - 
Total changes   -    (26,569)   25,782    (693)   (966)   (127)   (333)   (9,065)   (1,212)   (1,165)   -    (143,369)   (157,717)
Closing balance   -    (465,423)   (198,820)   (10,150)   (21,918)   (11,148)   (7,679)   (147,510)   (25,546)   (33,662)   -    (2,416,557)   (3,338,413)

 

117

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Reconciliation of changes in property,
plant and equipment by class as of
December 31, 2020, net amount
  Land   Buildings   Other
property,
plant and
equipment
   Transport
equipment
   Supplies
and
accessories
   Equipment
office
   Network and
communication
equipment
   Mining
assets
   IT
equipment
   Energy
generating
assets
   Assets
under
construction
   Machinery,
plant and
equipment
   Property,
plant and
equipment
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Opening balance   23,620    227,173    32,645    2,686    4,579    420    663    23,174    4,359    5,998    375,316    869,273    1,569,906 
Additions   -    838    278    -    82    33    386    -    429    -    319,192    987    322,225 
Disposals   -    -    -    -    -    -    -    -    -    -    -    (1)   (1)
Depreciation expense   -    (26,779)   (7,284)   (692)   (966)   (126)   (335)   (9,065)   (1,242)   (1,165)   -    (134,230)   (181,884)
Deterioration   -    (23)   (21)   -    -    -    -    -    (12)   -    -    (9,507)   (9,563)
Increase (decrease) in foreign currency translation difference   22    29    -    -    1    (1)   -    -    2    -    -    25    78 
Reclassifications   -    32,179    9,940    886    488    133    558    32,943    548    45    (203,412)   125,692    - 
Other increases (decreases) (1)   (27)   6,249    (140)   -    (1)   -    -    -    (1)   -    (4,751)   35,265    36,594 
Decreases for classification as held for sale (2)   (36)   -    -    -    -    -    -    -    -    -    -    -    (36)
Total changes   (41)   12,493    2,773    194    (396)   39    609    23,878    (276)   (1,120)   111,029    18,231    167,413 
Closing balance   23,579    239,666    35,418    2,880    4,183    459    1,272    47,052    4,083    4,878    486,345    887,504    1,737,319 

 

(1) The net balance of “Other Increases (Decreases)” corresponds to all those items that are reclassified to or from “Property, Plant and Equipment”, They can have the following origin: (i) work in progress which is expensed to profit or loss, forming part of operating costs or other expenses per function, as appropriate; (ii) the variation representing the purchase and use of materials and spare parts; (iii) projects corresponding mainly to exploration expenditures and ground studies that are reclassified to the item other non-current financial assets; (iv) software that is reclassified to “Intangibles (v) Provisions related to the investment plan and assets related to closing the site.

 

(2) The Company classifies as non-current held for sale property, plant and equipment (disposal group) that, at the closing date of the financial statements, is subject to a commitment for sale or where the sales process has been initiated and where the sale is expected to occur within twelve months of that date, is classified by the Company as non-current assets held for sale. These assets or disposal groups are valued at the lower of carrying amount or the estimated sales value less the costs to sell and stop being amortized from the moment they are classified as non-current assets held for sale.

 

118

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Reconciliation of changes in
property, plant and equipment by
class as of December 31, 2019,
gross amount
  Land   Buildings   Other
property,
plant and
equipment
   Transport
equipment
   Supplies
and
accessories
   Equipment
office
   Network and
communication
equipment
   Mining
assets
   IT
equipment
   Energy
generating
assets
   Assets under
construction
   Machinery,
plant and
equipment
   Property,
plant and
equipment
 
  ThUS$   ThUS$   ThUS$   ThUS$$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Opening balance   24,695    648,719    245,731    11,668    24,456    11,377    7,505    132,309    29,955    36,930    207,830    3,068,862    4,450,037 
Additions   -    290    332    -    37    43    159    -    492    -    314,236    6,077    321,666 
Disposals   -    -    (858)   -    -    -    -    -    (3)   -    -    (17)   (878)
Increase (decrease) in foreign currency translation difference   (35)   (72)   (4)   (2)   (9)   (3)   -    -    (6)   -    -    (72)   (203)
Reclassifications   132    18,526    12,456    477    745    -    89    16,901    1,289    1,565    (140,104)   88,088    164 
Other increases (decreases)   -    -    (410)   -    302    24    256    12,409    (3,034)   -    (6,646)   (20,477)   (17,576)
Decreases for classification as held for sale   (1,172)   (1,436)   -    -    -    -    -    -    -    -    -    -    (2,608)
Total changes   (1,075)   17,308    11,516    475    1,075    64    504    29,310    (1,262)   1,565    167,486    73,599    300,565 
Closing balance   23,620    666,027    257,247    12,143    25,531    11,441    8,009    161,619    28,693    38,495    375,316    3,142,461    4,750,602 

 

Reconciliation of changes in
property, plant and equipment by
class as of December 31, 2019,
accumulated depreciation
  Land   Buildings   Other
property,
plant and
equipment
   Transport
equipment
   Supplies and
accessories
   Equipment
office
   Network and
communication
equipment
   Mining
assets
   IT
equipment
   Energy
generating
assets
   Assets under
construction
   Machinery,
plant and
equipment
   Property,
plant and
equipment
 
  ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Opening balance   -    (409,911)   (217,556)   (8,776)   (19,734)   (10,864)   (6,813)   (120,808)   (24,975)   (30,813)   -    (2,144,964)   (2,995,214)
Changes                                                                 
Disposals   -    -    858    -    -    -    -    -    1    -    -    -    859 
Depreciation expense   -    (29,000)   (8,013)   (683)   (1,144)   (161)   (426)   (7,033)   (1,158)   (1,676)   -    (138,999)   (188,293)
Impairment   -    (49)   -    -    -    -    -    -    -    -    -    -    (49)
Increase (decrease) in foreign currency translation difference   -    28    3    1    7    1    -    -    5    -    -    34    79 
Reclassifications   -    7    (6)   1    6    -    1    -    (5)   -    -    (207)   (203)
Other increases (decreases) (1)   -    (209)   112    -    (87)   3    (108)   (10,604)   1,798    (8)   -    10,948    1,845 
Decreases for classification as held for sale   -    280    -    -    -    -    -    -    -    -    -    -    280 
Total changes   -    (28,943)   (7,046)   (681)   (1,218)   (157)   (533)   (17,637)   641    (1,684)   -    (128,224)   (185,482)
Closing balance   -    (438,854)   (224,602)   (9,457)   (20,952)   (11,021)   (7,346)   (138,445)   (24,334)   (32,497)   -    (2,273,188)   (3,180,696)

 

119

 

  

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Reconciliation of changes in
property, plant and equipment by
class as of December 31, 2019, net
amount
  Land   Buildings   Other property, plant and equipment   Transport equipment   Supplies and accessories   Equipment office   Network and communication equipment   Mining assets   IT equipment   Energy generating assets   Assets under construction   Machinery, plant and equipment   Property, plant and equipment 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Opening balance  24,695   238,808   28,175   2,892   4,722   513   692   11,501   4,980   6,117   207,830   923,898   1,454,823 
Additions  -   290   332   -   37   43   159   -   492   -   314,236   6,077   321,666 
Disposals  -   -   -   -   -   -   -   -   (2)  -   -   (17)  (19)
Depreciation expense  -   (29,000)  (8,013)  (683)  (1,144)  (161)  (426)  (7,033)  (1,158)  (1,676)  -   (138,999)  (188,293)
Impairment  -   (49)  -   -   -   -   -   -   -   -   -   -   (49)
Increase (decrease) in foreign currency translation difference  (35)  (44)  (1)  (1)  (2)  (2)  -   -   (1)  -   -   (38)  (124)
Reclassifications  132   18,533   12,450   478   751   -   90   16,901   1,284   1,565   (140,104)  87,881   (39)
Other increases (decreases) (1)  -   (209)  (298)  -   215   27   148   1,805   (1,236)  (8)  (6,646)  (9,529)  (15,731)
Decreases for classification as held for sale (2)  (1,172)  (1,156)  -   -   -   -   -   -   -   -   -   -   (2,328)
Total changes  (1,075)  (11,635)  4,470   (206)  (143)  (93)  (29)  11,673   (621)  (119)  167,486   (54,625)  115,083 
Closing balance  23,620   227,173   32,645   2,686   4,579   420   663   23,174   4,359   5,998   375,316   869,273   1,569,906 

 

(1) The net balance of “Other increases (Decreases)” corresponds to all those items that are reclassified to or from property, plant and equipment, They can have the following origin: (i) work in progress which is expensed to profit or loss, forming part of operating costs or other expenses per function, as appropriate;, (ii) the variation representing the purchase and use of materials and spare parts; (iii) projects corresponding mainly to exploration expenditures and ground studies that are reclassified to the item other non-current financial assets; (iv) software that is reclassified to “Intangibles”, (v) Provisions related to the investment plan and assets associated to closing the site.

 

(2) The Company classifies as non-current held for sale property, plant and equipment (disposal group) that, at the closing date of the financial statements, is subject to a commitment for sale or where the sales process has been initiated and where the sale is expected to occur within twelve months of that date, is classified by the Company as non-current assets held for sale.

 

These assets or disposal groups are valued at the lower of carrying amount or the estimated sales value less the costs to sell and stop being amortized from the moment they are classified as non-current assets held for sale.

 

120

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

17.3Detail of property, plant and equipment pledged as guarantee

 

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

 

17.4Impairment of assets

 

As indicated in Note 3.16, the recoverable amounts of property, plant and equipment are evaluated when there is evidence that the asset may be impaired. The impairment effects for the periods ended December 31, 2020 and 2019 is ThUS$ 9,563 and ThUS$ 49 respectively.

 

17.5Cost of capitalized interest, property, plant and equipment

 

The cost of interest is recognized by applying an average or average weighted interest rate for all financing costs incurred by the Company to the final monthly balances for works underway and complies with the requirements of IAS 23.

 

Financing costs are not activated for periods that exceed the normal term for acquisition, construction or installation of the property; such is the case for delays, interruptions or temporary suspension of the project due to technical, financial or other problems that make it impossible to leave the property in usable conditions.

 

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

 

Costs of capitalized interest 

As of

December 31, 2020

  

As of

December 31,

2019

 
   ThUS$   ThUS$ 
Capitalized interest rate   4%   4%
Amount of costs for interest capitalized in ThUS$   8,462    7,841 

 

121

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 18Other current and non-current non-financial assets

 

As of December 31, 2020, and December 31, 2019, the detail of “Other Current and Non-current Assets” is as follows:

 

Other non-financial assets, current 

As of

December 31,

2020

  

As of

December 31,

2019

 
   ThUS$   ThUS$ 
Domestic Value Added Tax   18,107    17,807 
Foreign Value Added Tax   7,785    8,566 
Prepaid mining licenses   1,025    1,244 
Prepaid insurance   10,307    7,135 
Other prepayments   946    1,423 
Refund of Value Added Tax to exporters   14,316    10,560 
Other taxes   4,499    3,213 
Other assets   414    604 
Total   57,399    50,552 

 

Other non-financial assets, non-current 

As of

December 31,

2020

  

As of

December 31,

2019

 
   ThUS$   ThUS$ 
Exploration and evaluation expenses (1)   17,883    18,654 
Guarantee deposits   731    551 
Other assets   3,428    524 
Total   22,042    19,729 

 

(1)Reconciliation of changes in assets for exploration and mineral resource evaluation, by type.

 

Movements in assets for the exploration and evaluation of mineral resources as of December 31, 2020, and December 31, 2019:

 

Conciliation 

As of

December 31,

2020

  

As of

December 31,

2019

 
   ThUS$   ThUS$ 
Opening balance   18,654    26,189 
Change in assets for exploration and evaluation of mineral resources          
Additions   -    - 
Short term reclassifications   (526)   (1,311)
Increase (decrease) due to transfers and other charges   (245)   (6,224)
Total changes   (771)   (7,535)
Total   17,883    18,654 

  

As of the presentation date, no reevaluations of assets for exploration and assessment of mineral resources have been conducted.

 

122

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Mineral resource exploration and evaluation expenditure

 

Given the nature of operations of the SQM Group and the type of exploration it undertakes, disbursements for exploration can be found in 4 stages: Execution, economically feasible, not economically feasible and in exploitation:

 

(a)             Execution: Disbursements for exploration and evaluation under implementation and therefore prior to determination of economic feasibility, are classified in accordance with Note 3.23.

 

For exploration purposes in Chile relating to caliche and brine exploration are ThUS$ 14,265 and ThUS$ 12,841 as of December 31, 2020 and December 31, 2019, respectively both are in the Property, Plant and Equipment caption as construction in progress.

 

For Australia (Mt Holland), total disbursements corresponding to construction in progress (which includes exploration disbursements) amount to ThUS$ 50,127 as of December 31, 2020, and ThUS$ 30,475 as of December 31, 2019.

 

(b)            Economically feasible: Disbursements corresponding to caliche exploration, wherein the study concluded that its economic feasibility is viable, are classified under “Non-Current Assets in Other Non-current Non-Financial Assets”, The balance as of December 31, 2020, is ThUS$ 6,576 and as of December 31, 2019, it is ThUS$ 6,576.

 

At December 31, 2020, ThUS$ 4,296 corresponding to advanced metallic exploration are also presented under the heading "Other Non-Current Non-Financial Assets", and as of December 31, 2019, it is ThUS$ 3,433.

 

For the exploration of the Salar de Atacama, the associated assets correspond to wells that can be used both in monitoring and exploitation of the Salar, Therefore, once the studies are concluded, these are classified as “Non-current Assets” in “Properties, Plants and Equipment”, assigning them a technical useful life of 10 years.

 

(c)             Not economically feasible: Exploration and evaluation disbursements, once finalized and concluded to be not economically feasible, will be charged to profit and loss. As of December 31, 2020, there were no disbursements for this concept and for the year ended December 31, 2019, there was a total of ThUS$ 165 for this concept.

 

(d)            In Exploitation: Caliche exploration disbursements that are found in this area are amortized based on the material exploited, the portion that is exploited in the following 12 months is presented as “Current Assets” in the “Process Inventories”, the remaining portion is classified as “Other Non-current Non-Financial Assets”.

 

As of December 31, 2020, the amount in “Process Inventories”, is ThUS$ 1,318 and the balance as of December 31, 2019 for this concept is ThUS$ 1,367, while in the item “Other Non-current Non-Financial Asset” as of December 31, 2020 is ThUS$ 7,011 and as of December 31, 2019 is ThUS$ 8,645.

 

123

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 19 Employee benefits

 

19.1Provisions for employee benefits

 

Classes of benefits and expenses by employee 

As of

December 31,

2020

  

As of

December 31,

2019

 
   ThUS$   ThUS$ 
Current        
Profit sharing and bonuses   7,770    - 
Performance bonds and operational targets   1,326    16,387 
Total   9,096    16,387 
Non-current          
Profit sharing and bonuses   -    8,026 
Severance indemnity payments   32,199    27,814 
Total   32,199    35,840 

 

19.2Policies on defined benefit plan

 

This policy is applied to all benefits received for services provided by the Company's employees. This is divided as follows:

 

a)Short-term benefits for active employees are represented by salaries, social welfare benefits, paid time off, sickness and other types of leave, profit sharing and incentives and non-monetary benefits; e.g., healthcare service, housing, subsidized or free goods or services. These will be paid in a term which does not exceed twelve months. The Company maintains incentive programs for its employees, which are calculated based on the net result at the close of each period by applying a factor obtained from an evaluation based on their personal performance, the Company’s performance and other short-term and long-term indicators.

 

b)Staff severance indemnities are agreed and payable based on the final salary, calculated in accordance with each year of service to the Company, with certain maximum limits in respect of either the number of years or in monetary terms. In general, this benefit is payable when the employee or worker ceases to provide his/her services to the Company and there are a number of different circumstances through which a person can be eligible for it, as indicated in the respective agreements; e.g. retirement, dismissal, voluntary retirement, incapacity or disability, death, etc. See Note 19.3.

 

c)Obligations after employee retirement, described in Note 19.4.

 

d)Retention bonuses for a group of Company executives, described in Note 19.6.

 

124

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

19.3Other long-term benefits

 

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

 

Under this benefit plan, the Company retains the obligation to pay staff severance indemnities related to retirement, without establishing a separate fund with specific assets, which is referred to as not funded.

 

Benefit payment conditions

 

The staff severance indemnity benefit relates to remuneration days for years worked for the Company without a limit being imposed in regard of amount of salary or years of service. It applies when employees cease to work for the Company because they are made redundant or in the event of their death. This benefit is applicable up to a maximum age of 65 for men and 60 for women, which are the usual retirement ages according to the Chilean pensions system as established in Decree Law 3,500 of 1980.

 

(a)Methodology

 

The determination of the defined benefit obligation is made under the requirements of IAS 19 “Employee benefits”.

 

19.4Post-employment benefit obligations

 

Our subsidiary SQM NA, together with its employees established a pension plan until 2002 called the “SQM North America Retirement Income Plan”. This obligation is calculated measuring the expected future forecast staff severance indemnity obligation using a net salary gradual rate of restatements for inflation, mortality and turnover assumptions, discounting the resulting amounts at present value using the interest rate defined by the authorities.

 

Since 2003, SQM NA offers to its employees benefits related to pension plans based on the 401-K system, which do not generate obligations for the Company.

 

Reconciliation  As of December 
31, 2020
   As of December 
31, 2019
 
Changes in the benefit obligation  ThUS$   ThUS$ 
Benefit obligation at the beginning of the year   9,586    8,657 
Service cost   -    - 
Interest cost   280    336 
Actuarial loss   506    984 
Benefits paid   (508)   (391)
Total   9,864    9,586 

 

125

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Reconciliation  As of December 
31, 2020
   As of December
 31, 2019
 
Changes in the plan assets  ThUS$   ThUS$ 
Fair value of plan assets at the beginning of the year   8,754    8,404 
Actual return (loss) in plan assets   4,642    741 
Benefits paid   (508)   (391)
Fair value of plan assets at the end of the year   12,888    8,754 
Financing status   3,025    (832)
           
Items not yet recognized as net periodic pension cost components:          
Net actuarial loss at the beginning of the year   (3,634)   (3,022)
Amortization during the year   326    242 
Net estimated gain or loss occurred during the year   3,500    (854)
Adjustment to recognize the minimum pension obligation   192    (3,634)

 

Service cost or benefits received during the year  As of December
 31, 2020
   As of December
 31, 2019
 
   ThUS$   ThUS$ 
Service cost or benefits received during the year   -    - 
Interest cost in benefit obligation   280    336 
Actual return in plan assets   4,642    741 
Amortization of prior year losses   326    242 
Net gain during the year   3,500    (854)
Net periodic pension expense   (31)   (33)

 

126

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

19.5Staff severance indemnities

 

As of December 31, 2020, and 2019, severance indemnities calculated at the actuarial value are as follows:

 

Staff severance indemnities  As of
December 31,
2020
   As of
December 31,
2019
 
   ThUS$   ThUS$ 
Opening balance   (27,814)   (28,233)
Current cost of Service   (3,804)   (2,880)
Interest cost   (1,486)   (1,661)
Actuarial gain/loss   (2,826)   (2,514)
Exchange rate difference   (1,513)   2,475 
Benefits paid during the year   5,244    4,999 
Total   (32,199)   (27,814)

 

(a)Actuarial assumptions

 

The liability recorded for staff severance indemnity is valued at the actuarial value method, using the following actuarial assumptions:

 

Actuarial assumptions  As of
December 31,
2020
   As of
December 31,
2019
   Annual/Years 
Mortality rate  RV - 2014   RV - 2014     
Actual annual interest rate   3.65%   3.68%     
Voluntary retirement rate:               
Men   6.49%   6.49%   Annual 
Women   6.49%   6.49%   Annual 
Salary increase   3.00%   3.00%   Annual 
Retirement age:               
Men   65    65    Years 
Women   60    60    Years 

 

(b)Sensitivity analysis of assumptions

 

As of December 31, 2020, and 2019, the Company has conducted a sensitivity analysis of the main assumptions of the actuarial calculation, determining the following:

 

 

Sensitivity analysis as of December 31, 2020  Effect + 100 basis
points
   Effect - 100 basis
points
 
   ThUS$   ThUS$ 
Discount rate   (1,985)   2,234 
Employee turnover rate   (261)   291 

 

Sensitivity analysis as of December 31, 2019  Effect + 100 basis points   Effect - 100 basis points 
   ThUS$   ThUS$ 
Discount rate   (1,796)   2,021 
Employee turnover rate   (236)   263 

 

Sensitivity relates to an increase/decrease of 100 basis points.

 

127

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

19.6Executive compensation plan

 

The Company currently has a compensation plan with the purpose of motivating the Company’s executives and encouraging them to remain with the Company, by granting payments based on the change in the price of SQM’s shares. There is a partial payment of the share benefit program in the event of termination of the contract for causes other than the resignation and application of Article 160 of the Labor Code.

 

(a)Plan characteristics

 

This compensation plan is related to the Company’s performance through the SQM Series B share price (Santiago Stock Exchange).

 

(b)Plan participants

 

A total of 29 Company executives are entitled to this compensation plan, as long as they remain a part of the Company until a given date. This includes a 2020 bonus equivalent to 177,905 shares, which is effective for those people still with the Company through the end of 2020, and a 2021 bonus for US$ 8.5 million, which will go into effect in equal parts for those who remain with the Company at the end of each of the four quarters in 2021. The payment dates, where relevant, will be during the quarter following the quarter when the benefit is made effective.

 

(c)Compensation

 

The compensation payable to each executive is calculated by multiplying:

 

i)the average price of the series B shares on the Santiago Stock Exchange during the fourth quarter of 2020, in its US dollar equivalent (with a value of US$ 41.93 per share).

 

ii)By a number equal to the quantity of shares that have been individually assigned to each executive included in the plan.

 

This compensation plan was approved by the Company’s Board of Directors and its application started on September 30, 2020.

 

The plan that was in place on December 31, 2019 considered 427,652 shares. The effects on the income statement are equivalent to an expense of ThUS$ 875 and ThUS$ 117 in the income statement for the years ending December 31, 2020 and 2019

 

Executed shares during 2020 were 47,687.

 

128

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 20Provisions and other non-financial liabilities

 

20.1Types of provisions

 

   As of December 31, 2020   As of December 31, 2019 
Types of provisions  Current   Non-current   Total   Current   Non-current   Total 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Provision for legal complaints (1)   8,905    1,260    10,165    13,472    1,452    14,924 
Provision for dismantling, restoration and rehabilitation cost (2)   -    61,265    61,265    -    33,238    33,238 
Other provisions (3)   95,261    92    95,353    97,093    -    97,093 
Total   104,166    62,617    166,783    110,565    34,690    145,255 

 

(1) These provisions correspond to legal processes that are pending resolution or that have not yet been disbursed, these provisions are mainly related to litigation involving the subsidiaries located in Chile, Brazil and the United States (see note 22.1).

(2) The commitments related to Sernageomin have been incorporated through the issuance of the guarantee for the restoration of the place where the production sites are located.

(3) See Note 20.2

 

129

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

20.2Description of other provisions

 

Current provisions, other short-term provisions  As of
December 31,
2020
   As of
December 31,
2019
 
   ThUS$   ThUS$ 
Rent under Lease contract (1)   85,167    90,320 
Provision for additional tax related to foreign loans   740    543 
End of agreement bonus   8,159    3,641 
Directors’ per diem allowance   698    1,802 
Miscellaneous provisions   497    787 
Total   95,261    97,093 

 

(1) Payment Obligations for the lease contract with CORFO: These correspond to obligations assumed in the Lease Agreement. Our subsidiary SQM Salar holds exclusive rights to exploit the mineral resources in an area covering approximately 140,000 hectares of land in the Salar de Atacama in northern Chile, of which SQM Salar is only entitled to exploit the mineral resources in 81,920 hectares. These rights are owned by Corfo and leased to SQM Salar pursuant to the Lease Agreement. Corfo cannot unilaterally amend the Lease Agreement and the Project Agreement, and the rights to exploit the resources cannot be transferred. The Lease Agreement establishes that SQM Salar is responsible for making quarterly lease payments to Corfo according to specified percentages of the value of production of minerals extracted from the Salar de Atacama brines, maintaining Corfo’s rights over the Mining Exploitation Concessions and making annual payments to the Chilean government for such concession rights. The Lease Agreement was entered into in 1993 and expires on December 31, 2030. On January 17, 2018, SQM and CORFO reached an agreement to end an arbitration process directed by the arbitrator, Mr. Héctor Humeres Noguer, in case 1954-2014 of the Arbitration and Mediation Center of Santiago Chamber of Commerce and other cases related to it.

 

The agreement signed in January 2018, includes important amendments to the lease agreement and project agreement signed between CORFO and SQM in 1993. The main modifications became effective on April 10, 2018 and requires an increase in the lease payments by increasing the lease rates associated with the sale of the different products produced in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride. This agreement has been amended since it was signed and it is reasonable to expect that it will continue to be amended as mutually agreed by the parties.

 

Additionally, SQM Salar commits to contribute to research and development efforts, as well as to the communities in close proximity to the Salar de Atacama and provide a percentage of total annual sales of SQM Salar to regional development.

 

SQM Salar commits to contribute between US$10.8 million and US$18.9 million per year to research and development efforts, between US$10 to US$15 million per year to the communities in close proximity to the Salar de Atacama, and 1.7% of total annual sales of SQM Salar to regional development.

 

130

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

20.3Other non-financial liabilities, Current

 

Description of other liabilities  As of
December 31,
2020
   As of
December 31,
2019
 
   ThUS$   ThUS$ 
Tax withholdings   1,208    3,345 
VAT payable   1,642    3,465 
Guarantees received   2,636    2,641 
Accrual for dividend   8,027    68,890 
Monthly tax provisional payments   8,407    16,659 
Deferred income   6,435    3,033 
Withholdings from employees and salaries payable   5,017    4,575 
Accrued vacations (1)   24,003    21,686 
Other current liabilities   3,580    2,605 
Total   60,955    126,899 

 

(1) Vacation benefit (short-term benefits to employees, current) is in line with the provisions established in Chile’s Labor Code, which indicates that employees with more than a year of service will be entitled to annual vacation for a period of at least fifteen paid business days. The Company provides the benefit of two additional vacation days.

 

131

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

20.4Changes in provisions

 

Description of items that gave rise to variations
as of December 31, 2020
  Legal complaints   Provision for
dismantling,
restoration and
rehabilitation cost
   Others provisions   Total 
   ThUS$   ThUS$   ThUS$   ThUS$ 
Total provisions, initial balance   14,924    33,238    97,093    145,255 
Changes                    
Additional provisions   62,922    30,974    60,685    154,581 
Provision used   (67,685)   -    (59,939)   (127,624)
Increase(decrease) in foreign currency exchange   4    -    (2,486)   (2,482)
Others   -    (2,947)   -    (2,947)
Total Increase (decreases)   (4,759)   28,027    (1,740)   21,528 
Total   10,165    61,265    95,353    166,783 

 

Description of items that gave rise to variations
as of December 31, 2019
  Legal complaints   Provision for
dismantling,
restoration and
rehabilitation cost
   Others provisions   Total 
   ThUS$   ThUS$   ThUS$   ThUS$ 
Total provisions, initial balance   14,862    28,822    94,335    138,019 
Changes                    
Additional provisions   4,111    -    150,314    154,425 
Provision used   (4,049)   -    (147,532)   (151,581)
Increase(decrease) in foreign currency exchange   -    -    (24)   (24)
Others   -    4,416    -    4,416 
Total Increase (decreases)   62    4,416    2,758    7,236 
Total   14,924    33,238    97,093    145,255 

 

132

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 21Disclosures on equity

 

The detail and movements in the funds of equity accounts are shown in the consolidated statement of changes in equity.

 

21.1Capital management

 

The main object of capital management relative to the administration of the Company’s financial debt and equity is to ensure the regular conduct of operations and business continuity in the long term, with the constant intention of maintaining an adequate level of liquidity and in compliance with the financial safeguards established in the debt contracts in force. Within this framework, decisions are made in order to maximize the value of the company.

 

Capital management must comply with, among others, the limits contemplated in the Financing Policy approved by the Shareholders’ Meeting, which establish a maximum consolidated indebtedness level of 1.5 times the debt to equity ratio. This limit can be exceeded only if the Company’s management has first obtained express approval at an Extraordinary Shareholders’ Meeting.

 

Capital management must also comply with a debt ratio of less than 1.0, with respect to the series H, series O and series Q bonds. This ratio was redefined at the Bondholders' Meetings held in September 2020, as net financial debt divided by the company's total equity. Previously, it was defined as total liabilities divided by equity, and the limit for this ratio was 1.44, with a prepayment option for bondholders if this ratio was above 1.2. As of December 31, 2020, this ratio was 0.50.

 

The Company’s management controls capital management based on the following ratios:

 

Capital Management 

As of

December 31,
2020

   As of
December 31,
2019
   Description (1)  Calculation (1)
Net Financial Debt (ThUS$)   1,074,020    681,912   Financial Debt – Financial Resources  Other current Financial Liabilities + Other Non-Current Financial Liabilities– Cash and Cash Equivalents – Other Current Financial Assets – Hedging Assets, non-current
Liquidity   5.40    3.45   Current Assets divided by Current Liabilities  Total Current Assets / Total Current Liabilities
ROE   7.79%   13.15%  Profit for the year divided by Total Equity  LTM(2) Profit for the year / Equity
Adjusted EBITDA (ThUS$)   579,765    644,223   Adjusted EBITDA  Profit for the year + Depreciation and Amortization Expenses + Finance Costs + Income Tax – Other income and Share of profit of associates and joint ventures + Other expenses – Finance income – Currency differences
EBITDA (ThUS$)   524,650    668,912   EBITDA  Profit for the year + Depreciation and Amortization Expenses + Finance Costs + Income Tax
ROA   9.83%   12.76%  Adjusted EBITDA – Depreciation divided by Total Assets net of financial resources less related parties’ investments  (LTM Gross Profit – Administrative Expenses)/ (Total Assets – Cash and Cash Equivalents – Other Current Financial Assets – Other Non-Current Financial Assets – Equity-accounted Investments)
Indebtedness   0.50    0.32   Total Liabilities on Equity  Total Liabilities / Total Equity

 

(1) Assumes the absolute value of the accounting records with the exception of exchange differences.

 

133

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

The Company’s capital requirements change according to variables such as: working capital needs, new investment financing and dividends, among others. The SQM Group manages its capital structure and makes adjustments bases on the predominant economic conditions so as to mitigate the risks associated with adverse market conditions and take advantage of the opportunities there may be to improve the liquidity position of the SQM Group.

 

There have been no changes in the capital management objectives or policy within the years reported in this document, no breaches of external requirements of capital imposed have been recorded. There are no contractual capital investment commitments.

 

21.2Disclosures on preferred share capital

 

Issued share capital is divided into 142,819,552 Series A shares and 120,376,972 Series B shares. All such shares are nominative, have no par value and are fully issued, subscribed and paid.

 

Series B shares may not exceed 50% of the total issued, subscribed and paid-in shares of the Company and have a limited voting right, in that all of them can only elect one director of the Company, regardless of their equity interest and preferences:

 

(a)require the calling of an Ordinary or Extraordinary Shareholders' Meeting when so requested by Series B shareholders representing at least 5% of the issued shares thereof; and

 

(b)require the calling of an extraordinary meeting of the board of directors, without the president being able to qualify the need for such a request, when so requested by the director who has been elected by the shareholders of said Series B.

 

The limitation and preferences of Series B shares have a duration of 50 consecutive and continuous years as of June 3, 1993.

 

The Series A shares have the preference of being able to exclude the director elected by the Series B shareholders in the voting process in which the president of the board of directors and of the Company must be elected and which follows the one in which the tie that allows such exclusion resulted.

 

The preference of the Series A shares will have a term of 50 consecutive and continuous years as of June 3, 1993. The form of the titles of the shares, their issuance, exchange, disablement, loss, replacement, assignment and other circumstances thereof shall be governed by the provisions of Law No, 18,046 and its regulations.

 

At December 31, 2020 and December 31, 2019, the Group does not hold shares of the Parent Company either directly or through its investees.

 

134

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Detail of capital classes in shares:

 

As of December 31, 2020, and December 31, 2019, the Company has not placed any new shares issues on the market

 

    As of December 31, 2020     As of December 31, 2019  
             
Type of capital in preferred shares   Series A     Series B     Series A     Series B  
                         
Description of type of capital in shares
Number of authorized shares     142,819,552       120,376,972       142,819,552       120,376,972  
Number of fully subscribed and paid shares     142,819,552       120,376,972       142,819,552       120,376,972  
Number of subscribed, partially paid shares     -       -       -       -  
Par value of shares in US$     0.9435       2.8464       0.9435       2.8464  
Increase (decrease) in the number of current shares     -       -       -       -  
Number of current shares     142,819,552       120,376,972       142,819,552       120,376,972  
Number of shares owned by the entity or its subsidiaries or associates     -       -       -       -  
Number of shares whose issuance is reserved due to the existence of options or agreements to dispose shares     -       -       -       -  
Capital amount in shares ThUS$     134,750       342,636       134,750       342,636  
Amount of premium issuance ThUS$     -       -       -       -  
Amount of reserves ThUS$     -       -       -       -  
Total number of subscribed shares     142,819,552       120,376,972       142,819,552       120,376,972  

 

21.3Disclosures on reserves in Equity

 

As of December 31, 2020, and December 31, 2019, this caption comprises the following:

 

Disclosures on reserves in equity  

As of

December 31,

2020

   

As of

December 31,

2019

 
    ThUS$     ThUS$  
Reserve for currency exchange conversion (1)     (11,569 )     (25,745 )
Reserve for cash flow hedges (2)     4,491       7,196  
Reserve for gains and losses from financial assets measured at fair value through other comprehensive income (3)     6,872       (270 )
Reserve for actuarial gains or losses in defined benefit plans (4)     (8,680 )     (9,490 )
Other reserves     16,318       14,086  
Total     7,432       (14,223 )

 

(1) This balance reflects retained earnings for changes in the exchange rate when converting the financial statements of subsidiaries whose functional currency is different from the US dollar.

 

(2) The Company maintains, as hedge instruments, financial derivatives related to obligations with the public issued in UF and Chilean pesos, Changes from the fair value of derivatives designated and classified as hedges are recognized under this classification.

 

(3) This caption includes the fair value of equity investments that are not held for trading and that the group has irrevocably opted to recognize in this category upon initial recognition. In the event that such equity instruments are fully or partially disposed of, the proportional accumulated effect of accumulated fair value will be transferred to retained earnings.

 

(4) This caption reflects the effects of changes in actuarial assumptions, mainly changes in the discount rate.

 

135

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Movements in other reserves and changes in interest were as follows:

 

      Foreign
currency
translation
difference (1)
    Reserve for cash flow
hedges
    Reserve for actuarial gains
and losses from defined
benefit plans
    Reserve for gains (losses)
from financial assets
measured at fair value
through other
comprehensive income
    Other
reserves
    Total reserves  
Movements     Before
taxes
    Before
taxes
    Tax     Before
taxes
    Deferred
taxes
    Before
taxes
    Deferred
taxes
    Before
taxes
    Reserves     Deferred
taxes
    Total
reserves
 
      ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$     ThUS$  
Balances as of January 1, 2019       (26,307 )     7,971       -       (8,176 )     1,292       (760 )     (351 )     11,332       (15,940 )     941       (14,999 )
Increase       1,824       8,628       (2,683 )     -       -       1,570       (424 )     3,093       15,115       (3,107 )     12,008  
Decrease       (1,262 )     (6,720 )     -       (3,306 )     700       (418 )     113       (339 )     (12,045 )     813       (11,232 )
As of December 31, 2019       (25,745 )     9,879       (2,683 )     (11,482 )     1,992       392       (662 )     14,086       (12,870 )     (1,353 )     (14,223 )
Increase       15,732       -       -       3,858       430       11,885       (3,180 )     2,121       33,596       (2,750 )     30,846  
Decrease       (1,556 )     (3,706 )     1,001       (2,903 )     (575 )     (2,101 )     538       111       (10,155 )     964       (9,191 )
Balances as of December 31, 2020       (11,569 )     6,173       (1,682 )     (10,527 )     1,847       10,176       (3,304 )     16,318       10,571       (3,139 )     7,432  

 

(1) See details on reserves for foreign currency translation differences on conversion in Note 27, letter b).

 

136

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Other reserves

 

This caption corresponds to the legal reserves reported in the individual financial statements of the subsidiaries and associates that are mentioned below and that have been recognized in SQM’s equity through the application of the equity method.

 

Subsidiary – Associate 

As of
December 31,
2020

  

As of
December 31,
2019

 
   ThUS$   ThUS$ 
SQM Iberian S.A.   9,464    9,464 
SQM Europe NV   1,957    1,957 
Soquimich European holding B.V.   828    828 
Abu Dhabi Fertilizer Industries WWL   455    455 
Doktor Tarsa Tarim Sanayi AS   -    305 
Kore Potash PLC   3,170    2,754 
Total   15,874    15,763 
Other derivative reserves of the acquisition of subsidiaries, which was already under Company ownership at the acquisition date (IAS 27R)          
SQM Iberian S.A.   (1,677)   (1,677)
Orcoma Estudios SPA   2,121    - 
Total Other reserves   16,318    14,086 

 

21.4Dividend policies

 

As required by Article 79 of the Chilean Companies Act, unless otherwise decided by unanimous vote of the holders of issued and subscribed shares, a publicly traded corporation must distribute dividends in accordance with the policy determined in the shareholder's meeting held each year, with at least 30% of our consolidated profit for each year.

 

137

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Dividend policy for commercial year 2020

 

Company’s dividend policy for the 2020 business year was agreed upon by the Board of Directors on March 25, 2020 and later modified after the extraordinary shareholders’ meeting held on September 29, 2020. The current dividend policy establishes the following:

 

(a)Distribute and pay to the corresponding shareholders, a percentage of the net income that shall be determined per the following financial parameters as a final dividend:

 

(i)100% of the profit for 2020 if all the following financial parameters are met: (a) “all current assets” divided by “all current liabilities” is equal to or greater than 2.5 times, and (b) the sum of “all current liabilities” and “all non-current liabilities”, less “cash equivalents”, less “other current financial assets”, all of the above divided by “total equity” in equal or less than 0.8 times.
(ii)80% of the profit for 2020 if all the following financial parameters are met: (a) “all current assets” divided by “all current liabilities” is equal to or greater than 2.0 times, and (b) the sum of “all current liabilities” and “all non-current liabilities”, less “cash equivalents”, less “other current financial assets”, all of the above divided by “total equity” in equal or less than 0.9 times.
(iii)60% of the profit for 2020 if all the following financial parameters are met: (a) “all current assets” divided by “all current liabilities” is equal to or greater than 1.5 times, and (b) the sum of “all current liabilities” and “all non-current liabilities”, less “cash equivalents”, less “other current financial assets”, all of the above divided by “total equity” in equal or less than 1.0 times.
(iv)If none of the foregoing financial parameters are met, the Company shall distribute and pay, as a final dividend, and in favor of the respective shareholders, 50% of the 2020 net income.

 

(b)Distribute and pay only one interim dividend during 2020, which will be charged against the aforementioned final dividend and that will be charged to the retained earnings reflected in the consolidated financial statements as of March 31, 2020, the percentage distributed shall be determined per the financial parameters expressed in letter a) above. It is recorded that on May 19, 2020 the Company's Board of Directors agreed to distribute and pay an interim dividend equivalent to US$ 0.17092 per share, charged to the Company's 2020 retained earnings. Said amount was paid in its equivalent in Chilean pesos according to the official exchange rate on May 29, 2020 (the “Interim Dividend”).

 

(c)The Board of Directors will not approve the payment of other interim dividends charged against the 2020 net income.

 

(d)At the ordinary general shareholders’ meeting that will be held in 2021, the Board of Directors shall propose a final dividend pursuant to the percentages in financial parameters described in in letter a) above discounting the Special Dividend and Interim Dividend. If the amount is equal to or less than the amount of the sum of the Special Dividend (see more details in Note 21.5) and the Interim Dividend, If the amount equivalent to the percentage of the 2020 fiscal year profits to be distributed in accordance with (a) above is equal to or less than the sum of the Special Dividend and the Interim Dividend, then no additional amount will be distributed and the Interim Dividend will be understood to be paid as a definitive dividend. In any case, the final dividend may not be less than the mandatory minimum dividend that corresponds in accordance with Chilean law or the Company bylaws.

 

(e)If there is an excess of net income in 2020, this may be retained and assigned or allocated for financing its own operations, to one or more investment projects of the Company, notwithstanding a future distribution of special dividends charged to the retained earnings previously approved at the shareholders’ meeting, or the possible and future capitalization of all or part of the latter.

 

(f)The payment of additional dividends is not considered.

 

138

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

It is expressly stated that the dividend policy described above corresponds to the intention of the Board of Directors, and the compliance of it shall depend on the net income that the Company ultimately obtains, as well as the results of projections that could periodically impact the Company, or to the existence of determined conditions that may affect it, as applicable. If the dividend policy exposed by the Board of Directors suffers a substantial change, the Company must communicate it as an essential fact.

 

21.5            Interim and provisional dividends

 

The ordinary shareholders’ meeting held on April 23, 2020 agreed to distribute and pay 100% of the distributable net profit obtained by the Company during the 2019 fiscal year as final dividend. In consequence, in May 2020 the Company paid a final dividend of US$ 1.05668 per share from the distributable net profit obtained during the 2019 fiscal year, and the sum of US$ 0.80254 per share was discounted from this, as this was already paid as a provisional dividend in 2019.

 

On May 19, 2020, the Board agreed to pay a provisional dividend equivalent to US$ 0.17092 per share with a charge to earnings for 2020. This amount was paid in its equivalent in Chilean pesos, according to the observed U.S. dollar exchange rate published in the Official Gazette on May 29, 2020.

 

On September 29, 2020, Company shareholders met in an extraordinary shareholders’ meeting to approve the distribution and payment of a special dividend equivalent to US$ 0.37994 per share, to be paid out of the Company’s retained earnings.

 

21.6            Potential and provisional dividends

 

Dividends discounted from equity from January to December 2020 and 2019 were the following:

 

Dividends   December 31,
2020
    December 31,
2019
 
    ThUS$     ThUS$  
Ajay SQM Chile S.A. Dividends     556       882  
Ajay SQM Chile S.A Payable Dividend     682       -  
Soquimich Comercial S.A. Potential Dividend     5,904       3,936  
Soquimich Comercial S.A. Payable Dividend     2,976       1,999  
Non-controlling interests     10,118       6,817  
Interim dividend     44,986       211,224  
Potential dividend     100,000       -  
Dividends payable     4,369       66,891  
Owners of the Parent     149,355       278,115  
Dividends discounted from equity for the period     159,473       284,932  

 

139

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 22      Contingencies and restrictions

 

In accordance with note 20.1, the Company has only registered a provision for those lawsuits in which there is a probability that the judgments will be unfavorable to the Company. The Company is party to the following lawsuits and other relevant legal actions:

 

22.1             Lawsuits and other relevant events

 

(a)In August 1996, Nitratos Naturais do Chile Ltda. was fined by Fazenda do Estado de Sao Paulo for concluding activities without attaching the necessary documentation for submission to the competent authorities. The treasury of the State of Sao Paulo initiated legal actions to collect close to ThUS$ 492. Nitratos Naturais do Chile has presented a case to the federal court of Brazil to request a reduction in the fine, which is currently pending.

 

(b)In August 2004, Nitratos Naturais do Chile Ltda. was fined by Fazenda do Estado de Sao Paulo for failing to report trade activities. The treasury of the State of Sao Paulo initiated legal actions to collect close to ThUS$ 265. In 2018, the Court of Appeals agreed to a reduction in the fine and the Fazenda do Estado de Sao Paulo appealed to the Court of Brazil, and this appeal is still pending.

 

(c)In December 2010, the city of Pomona in the state of California, United States, filed a claim against SQM NA, which was heard before the US District Court for the Central District of California. The plaintiff requested the payment of expenses and other values related to treatment of groundwater to make it apt for consumption, which involved the extraction of perchlorate in this water, which allegedly came from Chilean fertilizers, for an approximate amount of US$ 36 million. On May 17, 2018, district judge Gary Klausner ruled in favor of SQM NA following the jury verdict. On February 6, 2020, the United States Court of Appeals for the Ninth Circuit demanded a retrial before the District Court, which has been postponed until the second quarter of 2021.

 

(d)In December 2010, the city of Lindsay in California, United States, filed a claim against SQM NA, which was heard before the US District Court for the Central District of California. The plaintiff requested the payment of expenses and other values related to treatment of groundwater to make it apt for consumption, which involved the extraction of perchlorate in this water, which allegedly came from Chilean fertilizers, the trial is currently suspended.

 

(e)In May 2014, a claim of compensation for damages was filed against SQM Nitratos for its alleged extracontractual liability derived from an explosion occurring in 2010 in the vicinity of the town of Baquedano, which caused the death of six workers. The portion of the claim that has not been settled in court is approximately US$ 1.2 million. On May 7, 2019, the 18th Civil Court of Santiago dismissed the claim. The case currently is in the Santiago Court of Appeals, which will make a determination on the motion for appeal and cassation brought about on behalf of the plaintiff.

 

(f)On October 2015, Tyne and Wear Pension Fund represented by the Council of the Borough of South Tyneside acting as lead plaintiff presented a claim against the Company with the US Federal Court of the Southern District of New York for potential damages to ADS Holders in the Company due to alleged noncompliance with the securities regulation in the United States. For more information, see Note 22.6.

 

(g)In May 2016, a claim for close to ThUS$ 515 was filed against SQM Salar and SQM Industrial for the alleged extracontractual liability derived from the accident occurring in July 2014 in the town of María Elena. On March 6, 2019, the 13th Civil Court of Santiago dismissed the claim. The case is currently in the Santiago Court of Appeals, which will decide on the motion for appeal brought about by the plaintiffs.

 

140

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(h)In January 2018, the company Transportes Buen Destino S.A. filed an arbitration claim under CAM (arbitration and mediation center) rules against SQM Salar for controversies resulting from the execution of transport contracts for lithium brine and transport of salts. The amount of the claim is close to US$ 3 million. The arbitration is currently in the evidence stage.

 

(i)In September 2018, representatives Claudia Nathalie Mix Jiménez, Gael Fernanda Yeomans Araya, Camila Ruslay Rojas Valderrama filed a public right annulment suit against Corfo regarding the Salar de Atacama Project Contract signed between Corfo and SQM Salar. The Company has intervened as an independent third party. This discussion stage has concluded. For more information, see Note 22.5.

 

(j)The Company and FPC Ingeniería y Construcción SpA were sued in May 2019 for compensation for damages resulting from alleged extracontractual liability derived from the traffic accident occurring on March 5, 2018, involving the overturn of a truck owned by FPC and the subsequent death of its two occupants, both employees of FPC. The four children of one of the deceased workers are the plaintiffs in this case and are seeking compensation for moral damages. The case is in the 19th Civil Court of Santiago and is in the evidence stage. The amount of the claim is close to US$ 1.2 million.

 

(k)On June 24, 2019, the company Servicios Logísticos Integrales Inversol SpA filed an arbitration claim under CAM rules against SQM Salar for controversies resulting from the execution of the salt transport contract. The trial is currently in the evidence stage. The amount of the claim is close to US$ 7 million.

 

(l)In April 2019, the company Fennix Industrial SpA filed a claim against SQM Salar with the First Civil Court of Concepción for controversies resulting from the execution of a civil works and electromechanical assembly contract. The trial is currently in the discussion stage. The amount of the claim is approximately ThUS$ 770. On December 18, 2020, the parties mutually agreed to terminate this lawsuit.

 

(m)The company Arrigoni Ingeniería y Construcción S.A. filed a claim in November 2019 against SQM Salar in arbitration court under CAM rules, requesting the conclusion of the Works Contract known as “Expansion of Lithium Carbonate Plant Phase II.” The trial is currently in the evidence stage. The amount of the claim is close to US$ 14,6 million.

 

(n)The Company has initiated an arbitration process against the company Sierra Gorda S.C.M. due to controversies originating from the Mining, Royalties and Other Sales Contract dated December 16, 2011. Sierra Gorda S.C.M. has filed counterclaims against the Company. The process has concluded its discussion stage. It is not possible to make an adequate determination of the amount involved.

 

(o)The Company has been sued in arbitration court under CAM rules by the company Rotto S.A. due to controversies occurring in relation to a contract for disarming and removing ferrous material. The case was presented in September 2020. The amount of the claim is approximately ThUS$ 713. On January 28, 2021, the parties mutually agreed to terminate this lawsuit.

 

The Company and its subsidiaries have been involved and will probably continue to be involved either as plaintiffs or defendants in certain judicial proceedings that have been and will be heard by the arbitration or ordinary courts of justice that will make the final decision. Those proceedings that are regulated by the appropriate legal regulations are intended to exercise or oppose certain actions or exceptions related to certain mining claims either granted or to be granted and that do not or will not affect in an essential manner the development of the Company and its subsidiaries.

 

Soquimich Comercial S.A. has been involved and will probably continue being involved either as plaintiff or defendant in certain judicial proceedings through which it intends to collect and receive the amounts owed, the total nominal value of which is approximately US$ 1.2 million.

 

141

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

The Company and its subsidiaries have made efforts and continues making efforts to obtain payment of certain amounts that are still owed to the Company due to its activities. Such amounts will continue to be required using judicial or non-judicial means by the plaintiffs, and the actions and exercise related to these are currently in full force and effect.

 

22.2            Restrictions to management or financial limits

 

Bond issuance contracts in the local market require the Company to maintain a Total Indebtedness Level rate no higher than 1 for Series H, Series O and Series Q bonds, calculated for a mobile period that considers the last 12 months. For more information, see Note 21.1.

 

As of December 31, 2020, the above-mentioned financial indicator has the following values:

 

Indicator   As of
December 31,
2020
    As of
December 31,
2019
 
Leverage     0.50       0.32  

 

Bond issue agreements issued abroad require the Company to neither merge nor dispose of the whole or a substantial part of its assets, unless all the following conditions are met: (i) the legal successor company is an entity subject to either Chilean or United States law, and assumes SQM S.A.’s obligations under a complimentary contract, (ii) the Issuer does not fail to comply immediately after the merger or disposal, and (iii) the Issuer delivers a legal opinion stating that the merger or disposal and the complimentary contract meet the requirements described in the original contract.

 

In addition, SQM S.A. is committed to disclosing financial information on quarterly basis.

 

The Company and its subsidiaries have complied and are fully complying with all the aforementioned limitations, restrictions and obligations.

 

 

142

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

22.3            Environmental contingencies

 

The SMA issued a resolution dated November 28, 2016, rectified by a resolution dated December 23, 2016, which filed charges against SQM Salar for brine extraction in excess of authorized amounts, progressive impairment of the vitality of carob trees, providing incomplete information modification of follow-up plan variables, and other charges. SQM Salar S.A. presented a compliance program that was accepted by the SMA. On December 2019, the Environmental Court of Antofagasta rendered null. In October 2020, the SMA formulated new observations for the compliance program, which will enable the incorporation of improvements in line with the ruling of the Antofagasta Environmental Court, to then make a determination regarding approval or rejection. If a new compliance program is not approved by the SMA, or if approved and legally challenged and rendered null and void by the Chilean courts. This latter event may consider the application of fines up to US$9 million, temporary or permanent closure of facilities and in extreme circumstances, revocation of the respective environmental permit.

 

22.4            Tax Contingencies

 

On August 26, 2016, SQM Salar filed a tax claim before the Third Tax and Customs Court of the Metropolitan Region against settlements 169, 170, 171 and 172 by the Chilean IRS, which extend the application of specific mining tax to lithium exploitation for the 2012, 2013 and 2014 tax years. The disputed amount is approximately US$17.8 million. On November 28, 2018, the Third Tax and Customs Court rejected the claim, and the case was transferred to the Santiago Court of Appeals, following an appeal filed by SQM Salar.

 

On March 24, 2017, SQM Salar filed with the Third Tax and Customs Court of the Metropolitan Region a tax claim against tax assessment No. 207 and ruling No. 156, both issued by the Chilean IRS, which seek to expand application of the specific tax on mining activities to include lithium exploitation for tax years 2015 and 2016. The amount involved is approximately US$14.4 million, of this, US$ 7.0 million corresponding to the overcharge. On November 28, 2018, the Third Tax and Customs Court accepted SQM Salar's claim against the overcharge by the IRS and rejected the claim for the remaining part. The case is now with the Santiago Court of Appeals due to the appeal filed by SQM Salar.

 

On October 17, 2019, the IRS recognized the overcharge of US$ 5.8 million, while the difference of US$ 1.2 million, is for corporate income tax plus associated interest and will be reimbursed at the end of the trial.

 

SQM Salar filed inapplicability requirements with the Constitutional Court in the grounds of unconstitutionality with respect to article 64 bis of the Income Tax Law, with relation to two groups of previous tax claims. On June 18, 2020, the Constitutional Court rejected the requirements after reaching a tie vote among the members of this court, corresponding to its knowledge from the Santiago Court of Appeals.

 

On September 30, 2020, the SII notified SQM Salar of liquidations No. 65 and 66 for the 2017 and 2018 business years, due to differences in the determination of the specific mining tax, totaling close to US$ 19.5 million and US$ 22.1 million, respectively plus interest for both periods of US$ 22.3 million. On October 30, 2020, SQM Salar paid these liquidations for a total of US$ 63.9 million (this amount includes an overcharge estimated at US$ 18 million, including interest). SQM Salar will reclaim these liquidations in the upcoming months.

 

As of December 2020, the Company had non-current tax assets of US$ 90.3 million for tax settlements for 2012 to 2018 (including an overcollection of US$ 19.5 million) and US$ 5.8 million in recoverable taxes. As of December 2019, the Company the Company had non-current tax assets of US$ 32.2, (which included US$ 7 million for an overcollection by the IRS).

 

As of December 31, 2020 and 2019, there was no effect on the income statement in this respect.

 

The IRS has not settled differences with respect to specific mining tax for 2018 onwards. If the IRS uses a similar criterion to that used in previous years, it is possible that settlements will be issued in the future for those periods. This tax for 2018 to 2020 (commercial years) is estimated at US$ 43 million, (without interest or penalties, and net of corporate income tax).

 

The company continues to undertake all legal efforts to actively and decidedly defend its interests.

 

143

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

22.5            Contingencies regarding to the Contracts with Corfo:

 

On September 6, 2018, representatives Claudia Nathalie Mix Jiménez, Gael Fernanda Yeomans Araya and Camila Ruslay Rojas Valderrama and the Poder Ciudadano political party filed an annulment suit against Corfo, which requested that the Contract for the Salar de Atacama Project between Corfo and the Company, SQM Potasio and SQM Salar be annulled. The Companies have taken part of the process as interested third parties.

 

In the event that the annulment claim is approved for the Salar de Atacama Project Contract, SQM Salar may be prevented from exploit the mining claims in the Salar de Atacama that it has leased from Corfo.

 

22.6            Contingencies related to the Class Action lawsuit

 

Since October 2015, a consolidated class action lawsuit has been pending against the Company before the District Court for the Southern District of New York of the United States, plenary case Villella v.Chemical and Mining Company of Chile, Inc., 1: 15-cv-02106 -ER (SDNY). The consolidated lawsuit alleges that certain statements made by the Company between September 30, 2010, and June 18, 2015, mainly in documents filed with the SEC and in Company press releases, were materially false and this constitutes a violation of Section 10 (b) of the Securities Exchange Act and of the correlative Standard 10b-5. Specifically, the consolidated lawsuit challenges certain statements issued by the Company associated with its compliance with or implementation of the laws and regulations that regulate it, the effectiveness of its internal controls, the adoption of a code of ethics consistent with SEC requirements, of its income or revenue and taxes paid, and of the applicable accounting standards On November 11, 2020, the Company reached an agreement that contains a summary of binding terms for concluding the trial. The agreement will conclude the action of the plaintiffs and under this, the Company agreed to pay the amount of US$ 62.5 million. The parties must negotiate in good faith the definitive documents of the transaction and the other related documents, which will be presented for their approval from the New York court that is hearing the trial.

 

22.7            Contingencies associated with conflicts between shareholders of the Abu Dhabi Fertilizer Industries Company

 

Due to differences between shareholders of the company Abu Dhabi Fertilizer Industries Company, diverse lawsuits have arisen that may result in claims against SQM Corporation N.V. and by this company against the other shareholders. These disputes may materially affect the value of the investment of the Company in Abu Dhabi Fertilizer Industries Company. At this time, it is not possible to quantify the amounts of these claims.

 

22.8            Restricted or pledged cash

 

The subsidiary Isapre Norte Grande Ltda., in compliance with the provisions established by the Chilean Superintendence of Healthcare, which regulates the running of pension-related health institutions, maintains a guarantee in financial instruments delivered in deposits, custody and administration to Banco de Chile.

 

This guarantee, according to the regulations issued by the Chilean Superintendence of Healthcare is equivalent to the total amount owed to its members and medical providers, Banco de Chile reports the present value of the guarantee to the Chilean Superintendence of Healthcare and Isapre Norte Grande Ltda on a daily basis. As of December 31, 2020, the guarantee amounts to ThUS$ 731.

 

144

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

22.9            Securities obtained from third parties

 

The main security received (exceeding ThUS$ 100) from third parties to guarantee Soquimich Comercial S.A. their compliance with obligations in contracts of commercial mandates for the distribution and sale of fertilizers amounted to ThUS$ 10,114 and ThUS$ 9,611 on December 31, 2020 and December 31, 2019 respectively; which is detailed as follows:

 

Grantor   Relationship   As of
December 31,
2020
    As of
December 31,
2019
 
        ThUS$     ThUS$  
Ferosor Agrícola S.A.   Unrelated Third party     5,626       5,372  
Tattersall Agroinsumos S.A.   Unrelated Third party     2,000       2,000  
Covepa SPA   Unrelated Third party     703       671  
Johannes Epple Davanzo   Unrelated Third party     314       300  
Hortofrutícola La Serena   Unrelated Third party     303       282  
Com. Serv Johannes Epple Davanz   Unrelated Third party     408       269  
Juan Luis Gaete Chesta   Unrelated Third party     190       182  
Arena Fertilizantes y Semillas   Unrelated Third party     211       201  
Vicente Oyarce Castro   Unrelated Third party     229       213  
Bernardo Guzmán Schmidt   Unrelated Third party     130       121  
Total         10,114       9,611  

 

22.10          Indirect guarantees

 

Guarantees without pending balance indirectly reflect that the respective guarantees are in force and approved by the Company’s Board of Directors and have not been used by the respective subsidiary.

 

As of December 31, 2020, there are no indirect guarantees.

 

145

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 23      Lawsuits and complaints

 

Investigation by the Department of Justice and the Securities Exchange Commission and Agreements

 

On January 13, 2017, the Company signed agreements with the DOJ and the SEC relating to their investigations into Company payments to suppliers and organizations that may have had links with politically exposed persons during the period from 2008 to 2015. As a result, the Company conducted its own internal investigation through an ad-hoc Board committee (The Company’s securities are traded in the USA, so the Company is subject to US law). The Company has voluntarily submitted the results of its internal investigation and supporting documents to the DOJ, the SEC and the relevant Chilean authorities.

 

In accordance with the terms Agreement with the DOJ, (the “DPA”) the Company has accepted that the DOJ formulates a charge for infractions (i) for the lack of implementation of effective internal accounting systems and internal accounting controls and (ii) a charge for infractions for failure to adequately maintain books, records and accounting sections in relation to the events investigated, Under the DPA, the DOJ has agreed not to pursue such charges against the Company for a period of 3 years and release the Company from liability after such period, inasmuch as within that period the Company complies with the terms of the DPA, These include payment of a fine of US$15,487,500 and acceptance of an external monitor (the “Monitor”) for a period of 24 months that will assess the Company’s compliance program, and continue to report on the Company independently for an additional year.

 

The three-year term of the DPA ended on April 30, 2020, and on June 1, 2020, the Company’s CEO and CFO submitted the certification regarding the Company’s disclosure obligations, as required under the DPA. On November 11, 2020, the DOJ presented a motion to dismiss the criminal information against the Company, which is subject to approval by the United States District Court of the District of Columbia. Following this approval, all charges against the Company will be dropped.

 

Other Lawsuits and complaints

 

In May 2019, the company Fennix Industrial SpA filed a claim against SQM Salar and employees for the alleged misappropriation of funds - controversies originating from contract execution for civil works and electromechanical assembly. The case is being tried before the Criminal Court of San Pedro de la Paz and is in the investigation stage. The amount of the alleged misappropriation of funds is close to US$ 436 million On December 18, 2020, the criminal proceedings, together with other civil disputes, were terminated through a settlement agreement.

 

146

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 24      Environment

 

24.1            Disclosures of disbursements related to the environment

 

Environmental protection, respect for human rights and overall impact on sustainability are ongoing concerns of the Company, both in its productive processes and throughout the supply chain. This commitment is supported by the principles indicated in the Company’s Sustainable Development Policy and human rights policy. The Company is currently operating under an Environmental Management System (EMS) that has allowed it to strengthen its environmental performance through the effective application of the Company’s Sustainable Development Policy. In 2020, the company announced an ambitious Sustainable Development Plan, which establishes specific measurable goals that seek to make SQM a leader in sustainability around the world. The main goals proposed are:

 

i)A 65% reduction in the use of fresh water by the year 2040 and 40% by 2030.
ii)A 50% reduction in brine extraction from the Salar de Atacama by 2030, starting with 20% by November 2020.
iii)Ensure that all our products are carbon neutral by 2040 and in the case of lithium, iodine and potassium chloride, this goal is for 2030.
iv)Stimulate more and better instances for dialog with the communities near the operations.

 

Operations that use caliche as a raw material are carried out in desert areas with climatic conditions that are favorable for drying solids and evaporating liquids using solar energy. Operations involving the open-pit extraction of minerals.

 

Many of the Company’s products are shipped in bulk at the Port of Tocopilla. In 2007, the city of Tocopilla was declared a “zone saturated with MP10 Particles” mainly due to the emissions from the electric power plants that operate in that city. In October 2010, the “Decontamination Plan for Tocopilla” was put in place. Accordingly, the Company has committed to taking several measures to mitigate the effects derived from bulk product movements in the port, these measures have been timely implemented since 2007.

 

The Company carries out environmental follow-up and monitoring plans based on specialized scientific studies. Follow-up on relevant variables defined for each project enables the Company to verify the status, for example, of vegetation, flora, fauna and aquatic life in the ecosystems to protect. Follow-up plans are supported by a broad control network that includes monitoring points such as meteorological stations and wells, satellite images, plots for recording the status of vegetation and fauna, etc. The activities comprised in these plans are reported regularly to authorities based on the Company’s commitments made through resolutions that approve different SQM projects. For the specific case of the Salar de Atacama, the Company has implemented an online platform (www.sqmsenlinea.com), which enables any person to access all the environmental information compiled by the Company in keeping with its commitments.

 

In this context, the Company maintains environmental monitoring across the systems where it operates, which is supported by numerous studies that integrate diverse scientific efforts from prestigious research centers on a national and international level, such as the Spanish National Research Council (CSIC) and the Universidad Católica del Norte.

 

Furthermore, within the framework of the environmental studies which the Company is conducting, the Company performs significant activities in relation to the recording of Pre-Columbian and historical cultural heritage, as well as the protection of heritage sites, in accordance with current Chilean laws. These activities have been especially performed in the areas surrounding Maria Elena (ME) and the Nueva Victoria plant (NV). This effort is being accompanied by outreach activities for the community and development of sites of interest.

 

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

 

147

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

24.2            Detailed information on disbursements related to the environment

 

The cumulative disbursements which the Company had incurred as of December 31, 2020 for the concept of investments in production processes, verification and control of compliance with ordinances and laws related to industrial processes and facilities amounted to ThUS$ 16,497 and are detailed as follows:

 

 

148

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Accumulated expenses as of December 31, 2020

 

Parent Company
or Subsidiary
  Project Name Associated with Disbursement  Reason for Disbursement  Asset /
Expense
  Disbursement   Exact or
Estimated Date
of
Disbursement
            ThUS$  
Miscellaneous  Environment - Operating Area  Not classified  Expense   10,376   06-30-2020
SQM S.A.  01-I017200 - CEDAM at Puquíos at Llamara  Sustainability: Environment and Risk Prevention  Expense   4   11-12-2020
SQM S.A.  01-I017600 - Regularization of Hazardous Substances Decree  Environmental processing  Expense   121   10-22-2020
SQM S.A.  01-I018700 – Penalization process for Salar de Llamara  Environmental processing  Assets   -   03-31-2020
SQM S.A.  01-I019400 - EIA Expansion of TEA and Seawater Impulsion  Environmental processing  Assets   791   12-31-2020
SQM S.A.  01-I028200 - EIA Llamara  Environmental processing  Expense   722   12-30-2020
SQM S.A.  01-I028300 - Implementation PDC 2019  Sustainability: Environment and Risk Prevention  Expense   593   12-31-2020
SQM S.A.  01-I030700 - Permisos Sectoriales EIA Proye  Environmental processing  Expense   280   11-20-2020
SQM S.A.  01-I035800 – Sustainability DS43 Phase 2  Sustainability: Environment and Risk Prevention  Assets   20   11-03-2020
SQM S.A.  01-I038400 – Update hydrogeological model  Sustainability: Environment and Risk Prevention  Expense   76   12-31-2020
SQM S.A.  01-I039600 - New Warehouse Iodine Stock NV  Environmental processing  Assets   54   12-31-2020
SQM S.A.  01-P010400 - Adaptation of dispatch warehouse PV  Environmental processing  Assets   16   12-06-2020
SQM S.A.  01-S014200 – Projections  Environmental processing  Expense   63   10-01-2020
SQM S.A.  01-S015900 – SQM Sustainability  Environmental processing  Expense   975   10-26-2020
SQM Industrial S.A.  04-I017700 - Basic Engineering and EIA for TEA industrial area and seawater impulsion N.V.  Sustainability: Environment and Risk Prevention  Assets   133   07-10-2020
SQM Industrial S.A.  04-I025000 - Re-perforation Pozo 2PL-2 y Ma  Sustainability: Environment and Risk Prevention  Expense   1   02-29-2020
SQM Industrial S.A.  04-I032600 - Well Water Efficiency - Rec.  Sustainability: Environment and Risk Prevention  Assets   123   07-30-2020
SQM Industrial S.A.  04-I038200 - Well water efficiency 2  Sustainability: Environment and Risk Prevention  Assets   79   12-31-2020
SQM Industrial S.A.  04-I038600 - Monitoring extractions NV  Sustainability: Environment and Risk Prevention  Assets   15   12-24-2020
SQM Industrial S.A.  04-J012200 - DIA and Regularization of CS Ponds  Environmental processing  Assets   -   02-25-2020
SQM Industrial S.A.  04-J015200 - Implementation Economizers  Sustainability: Environment and Risk Prevention  Assets   -   09-25-2020
SQM Industrial S.A.  04-J015700 - Update of Closure Plans  Sustainability: Environment and Risk Prevention  Expense   83   12-31-2020
SQM Industrial S.A.  04-J015800 - Other Sector Regulatory Measures  Sustainability: Environment and Risk Prevention  Expense   42   09-24-2020
SQM Industrial S.A.  04-J017200 - Guarantee availability S  Sustainability: Environment and Risk Prevention  Assets   109   07-02-2020
SQM Industrial S.A.  04-J022700 - DIA integration of Coya Sur site  Environmental processing  Expense   87   12-31-2020
SQM Industrial S.A.  04-J022800 - Adaptation light pollution  Sustainability: Environment and Risk Prevention  Assets   48   11-30-2020
SQM Industrial S.A.  04-J023700 - Regularization Hazardous Substances Decree SQM Industrial  Environmental processing  Assets   35   11-20-2020
SQM Industrial S.A.  04-M004300 - Reduction of Industrial Waste  Sustainability: Environment and Risk Prevention  Expense   77   12-31-2020
SQM Industrial S.A.  04-P010200 - Heap project PV(DAY)+ Analysis  Sustainability: Environment and Risk Prevention  Expense   57   11-24-2020
SQM Salar S.A.  19-C006800 - Renovation of lighting tower park  Sustainability: Environment and Risk Prevention  Assets   19   09-07-2020
SQM Salar S.A.  19-C008600 - Asphalting plants Salar del Carmen  Sustainability: Environment and Risk Prevention  Assets   432   12-30-2020
SQM Salar S.A.  19-L014700 - Industrial Waste Management  Sustainability: Environment and Risk Prevention  Expense   45   09-30-2020
SQM Salar S.A.  19-L018800 - UPC Consulting for NW and Others  Sustainability: Environment and Risk Prevention  Expense   26   11-13-2020
SQM Salar S.A.  19-L018900 - Evaporation 2018-2019  Sustainability: Environment and Risk Prevention  Assets   1   12-31-2020
SQM Salar S.A.  19-L019800 - Paleoclimate Study  (Iberia)  Sustainability: Environment and Risk Prevention  Expense   14   07-16-2020
SQM Salar S.A.  19-L021400 - Environmental Monitoring 2019  Environmental processing  Expense   11   12-31-2020
SQM Salar S.A.  19-L021700 - Upgrade RH y MA 2019  Environmental processing  Expense   40   12-30-2020
                  
Subtotal            15,568    

 

149

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Parent Company
or Subsidiary
  Project Name Associated with Disbursement  Reason for Disbursement  Asset /
Expense
  Disbursement   Exact or
Estimated Date
of
Disbursement
            ThUS$    
SQM Salar S.A.  19-L023200 - Topographic Equipment 2019  Sustainability: Environment and Risk Prevention  Assets   3   03-18-2020
SQM Salar S.A.  19-L025300 - Compliance with Sanitary Resolution  Sustainability: Environment and Risk Prevention  Assets   51   12-13-2020
SQM Salar S.A.  19-L025600 - Purchase of Generators, Variators  Sustainability: Environment and Risk Prevention  Assets   62   12-31-2020
SQM Salar S.A.  19-L025800 - Normalization of Administration System  Sustainability: Environment and Risk Prevention  Assets   14   12-31-2020
SQM Salar S.A.  19-L026800 - - Removal of old dryers in Plant MOP G III  Environmental processing  Assets   20   12-22-2020
SQM Salar S.A.  19-S013400- Online Monitoring  Sustainability: Environment and Risk Prevention  Expense   363   12-15-2020
SQM Salar S.A.  19-S016200 - Acquisiton of Hardware - Software  Sustainability: Environment and Risk Prevention  Assets   8   11-30-2020
SQM Salar S.A.  19-S016300 - Consulting 2020  Sustainability: Environment and Risk Prevention  Assets   33   11-30-2020
SQM Salar S.A.  19-S016400 - Implementation Acquiere Environmental DB  Sustainability: Environment and Risk Prevention  Assets   4   12-31-2020
SQM Salar S.A.  19-S016700 - Improvements understanding reload  Sustainability: Environment and Risk Prevention  Assets   49   12-31-2020
Orcoma Estudios Spa  15-I039100 - Sector Permits and environmental compliance  Environmental processing  Expense   252   12-31-2020
Minera Búfalo  20-A008200 – Búfalo proyect  Environmental processing  Expense   61   11-19-2020
SQM Potasio S.A.  14-I039800 - Sector Permits and environmental compliance  Environmental processing  Assets   9   12-06-2020
Subtotal            929    
Total            16,497    

 

150

 

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Committed expenses for future periods as of December 31, 2020

 

Parent Company
or Subsidiary
  Project Name Associated with Disbursement  Reason for Disbursement  Asset /
Expense
  Disbursement   Exact or
Estimated Date
of Disbursement
            ThUS$    
Miscellaneous  Environment - Operating Area  Not classified  Expense   12,276   12-31-2021
SQM S.A.  01-I017200 - CEDAM at Puquíos at Llamara  Sustainability: Environment and Risk Prevention  Expense   42   12-31-2021
SQM S.A.  01-I017400 - Development of Pintados and deposit  Sustainability: Environment and Risk Prevention  Expense   108   12-31-2021
SQM S.A.  01-I018700 - Penalization Process for Salar de Llamara  Environmental processing  Assets   -   12-31-2021
SQM S.A.  01-I019400 - EIA Expansion of TEA and Seawater Impulsion  Environmental processing  Assets   5   12-31-2021
SQM S.A.  01-I028300 - Implementation PDC 2019  Sustainability: Environment and Risk Prevention  Expense   332   12-31-2021
SQM S.A.  01-I030700 - EIA Project Sector Permits  Environmental processing  Expense   66   12-31-2021
SQM S.A.  01-I031300 - DIA Update RCA TEA  Environmental processing  Expense   369   12-31-2021
SQM S.A.  01-I035800 - Sustainability DS43 Phase 2  Sustainability: Environment and Risk Prevention  Assets   39   12-31-2021
SQM S.A.  01-I038400 - Update hydrogeological model  Sustainability: Environment and Risk Prevention  Expense   124   12-31-2021
SQM S.A.  01-I039600 - New Warehouse Iodine Stock NV  Environmental processing  Assets   606   12-31-2021
SQM S.A.  01-I039700 - Adapting Pond Substances  Environmental processing  Assets   380   12-31-2021
SQM S.A.  01-P010300 - Adapting pond substances  Environmental processing  Assets   355   12-31-2021
SQM S.A.  01-P010400 - Adapting dispatch warehouse PV  Environmental processing  Assets   294   12-31-2021
SQM S.A.  01-S014200 - Proyecta  Environmental processing  Expense   7   12-31-2021
SQM S.A.  01-S015900 - SQM Sustainability  Environmental processing  Expense   155   12-31-2021
SQM Industrial S.A.  04-I025000 - Re-perforation Pozo 2PL-2 y Ma  Sustainability: Environment and Risk Prevention  Expense   127   12-31-2021
SQM Industrial S.A.  04-I032600 - Well Water Efficiency – Rec  Sustainability: Environment and Risk Prevention  Assets   27   12-31-2021
SQM Industrial S.A.  04-I038200 - Well Water Efficiency 2  Sustainability: Environment and Risk Prevention  Assets   551   12-31-2021
SQM Industrial S.A.  04-I038600 - Monitoreo Extracciones N.V.  Sustainability: Environment and Risk Prevention  Assets   240   12-31-2021
SQM Industrial S.A.  04-J015200 - Implementation Economizers  Sustainability: Environment and Risk Prevention  Assets   30   12-31-2021
SQM Industrial S.A.  04-J015700 - Update of Closure Plans  Sustainability: Environment and Risk Prevention  Expense   17   12-31-2021
SQM Industrial S.A.  04-J015800 - Other Sector Regulatory Measures  Sustainability: Environment and Risk Prevention  Expense   120   12-31-2021
SQM Industrial S.A.  04-J017200 - Assurance Availability S  Sustainability: Environment and Risk Prevention  Assets   32   12-31-2021
SQM Industrial S.A.  04-J019900 - Provisional Access to Cerro Dominador  Sustainability: Environment and Risk Prevention  Expense   4   12-31-2021
SQM Industrial S.A.  04-J022700 - DIA Integración Faena Coya Sur  Environmental processing  Expense   296   12-31-2021
SQM Industrial S.A.  04-J022800 - Adaptation light pollution  Sustainability: Environment and Risk Prevention  Assets   321   12-31-2021
SQM Industrial S.A.  04-J023700 - Regularization Hazardous Substances Decree SQM Industrial  Environmental processing  Assets   615   12-31-2021
SQM Industrial S.A.  04-M004300 - Reduction of Industrial Waste  Sustainability: Environment and Risk Prevention  Expense   173   12-31-2021
SQM Industrial S.A.  04-P010200 - PV Heap Project (DIA)+ Studies  Sustainability: Environment and Risk Prevention  Expense   275   12-31-2021
SIT S.A.  03-T009900 - Air quality monitoring system Tocopilla  Sustainability: Environment and Risk Prevention  Assets   82   12-31-2021
SIT S.A.  03-T010500 - Hydrocarbon Detection System Tocopilla Port  Sustainability: Environment and Risk Prevention  Assets   75   12-31-2021
SQM Salar S.A.  19-C006800 - Renovation lighting towers  Sustainability: Environment and Risk Prevention  Assets   2   12-31-2021
SQM Salar S.A.  19-L014700 - Industrial Waste Management  Environmental processing  Assets   89   12-31-2021
SQM Salar S.A.  19-L018800 - UPC Consulting for NW and Others  Sustainability: Environment and Risk Prevention  Expense   46   12-31-2021
SQM Salar S.A.  19-L018900 - Evaporation 2018-2019  Sustainability: Environment and Risk Prevention  Assets   41   12-31-2021
SQM Salar S.A.  19-L019800 - Paleoclimate Study Iberia  Sustainability: Environment and Risk Prevention  Expense   35   12-31-2021
SQM Salar S.A.  19-L020000 - Improvement of Operational Monitoring Network  Sustainability: Environment and Risk Prevention  Assets   95   12-31-2021
SQM Salar S.A.  19-L021400 - Environmental monitoring 2019  Sustainability: Environment and Risk Prevention  Assets   21   12-31-2021
Subtotal            18,472    

 

151

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Committed expenses for future periods as of December 31, 2020

 

Parent Company
or Subsidiary
  Project Name Associated with Disbursement  Reason for Disbursement  Asset /
Expense
  Disbursement   Exact or
Estimated Date
of Disbursement
            ThUS$    
SQM Salar S.A.  19-L021700 - Update RH y MA 2019  Environmental processing  Expense   92   12-31-2021
SQM Salar S.A.  19-L024200 - Environmental Risk Analysis Study  Sustainability: Environment and Risk Prevention  Expense   58   12-31-2021
SQM Salar S.A.  19-L025300 - Compliance with Sanitary Resolution  Sustainability: Environment and Risk Prevention  Assets   161   12-31-2021
SQM Salar S.A.  19-L025600 - Purchase of Generators, Variators  Sustainability: Environment and Risk Prevention  Assets   46   12-31-2021
SQM Salar S.A.  19-L025800 - Normalization of Admin. System  Sustainability: Environment and Risk Prevention  Assets   8   12-31-2021
SQM Salar S.A.  19-L026800 - Removal of old dryers at Plant MOP G III  Environmental processing  Assets   20   12-31-2021
SQM Salar S.A.  19-L026900 - Cameras and Lighting Products  Environmental processing  Assets   17   12-31-2021
SQM Salar S.A.  19-S013400- Online Monitoring  Sustainability: Environment and Risk Prevention  Expense   187   12-31-2021
SQM Salar S.A.  19-S016200 - Acquisition of Hardware- Software  Sustainability: Environment and Risk Prevention  Assets   14   12-31-2021
SQM Salar S.A.  19-S016300 - Consulting 2020  Sustainability: Environment and Risk Prevention  Assets   39   12-31-2021
SQM Salar S.A.  19-S016400 - Implementation Acquiere BD Amb  Sustainability: Environment and Risk Prevention  Assets   4   12-31-2021
SQM Salar S.A.  19-S016500 - Incorporation of test models  Sustainability: Environment and Risk Prevention  Assets   12   12-31-2021
SQM Salar S.A.  19-S016700 – Improvements to recharge understanding  Sustainability: Environment and Risk Prevention  Assets   81   12-31-2021
SQM Salar S.A.  19-S016900 - Water dynamics monitoring  Sustainability: Environment and Risk Prevention  Assets   35   12-31-2021
SQM Nitratos S.A.  12-I039000 - Adaptation of hazardous waste warehouse  Environmental processing  Assets   80   12-31-2021
Orcoma Estudios Spa  15-I039100 - Sectoral Permits and compliance  Environmental processing  Expense   235   12-31-2021
Minera Búfalo  20-A008200 - Búfalo Project  Environmental processing  Expense   189   12-31-2021
SQM Potasio S.A.  14-I039400 - Adapting Pond Iris  Environmental processing  Assets   370   12-31-2021
SQM Potasio S.A.  14-I039800 - Adapting hazardous substances warehouse IRIS  Environmental processing  Assets   261   12-31-2021
Subtotal            1,909    
Total            20,381    

 

152

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Accumulated expenses as of December 31, 2019

 

Parent Company
or Subsidiary
  Project Name  Reason for Disbursement  A Asset /
Expense
  Disbursement   Exact or
Estimated Date
of Disbursement
            ThUS$    
Miscellaneous  Environment - Operating Area  Not classified  Expense   8,054   12-31-2019
SQM S.A.  01-I013800 - Increase height of Absorber Tower  Sustainability: Environment and Risk Prevention  Assets   15   12-31-2019
SQM S.A.  01-I017200 - CEDAM at Puquíos (ponds) at Llamara  Sustainability: Environment and Risk Prevention  Expense   3   12-31-2019
SQM S.A.  01-I017400 - Value Added Paints and Deposits  Sustainability: Environment and Risk Prevention  Expense   2   12-31-2019
SQM S.A.  01-I017600 - Regularization of Substances Decree  Environmental processing  Expense   63   12-31-2019
SQM S.A.  01-I018700 - Penalization Process for Salar de Llamara  Environmental processing  Assets   522   12-31-2019
SQM S.A.  01-I019400 - EIA Expansion of TEA and Seawater Impulsion  Environmental processing  Assets   898   12-31-2019
SQM S.A.  01-I028200 - EIA Llamara  Environmental processing  Expense   253   12-31-2019
SQM S.A.  01-I028300 - Implementation of PDC 2019  Sustainability: Environment and Risk Prevention  Expense   1,057   12-31-2019
SQM S.A.  01-I030700 - Sector Permits EIA Tente en el Aire Project  Environmental processing  Expense   131   12-31-2019
SQM Industrial S.A.  04-I017700 - Basic Engineering and EIA for TEA industrial area and seawater impulsion N.V.  Sustainability: Environment and Risk Prevention  Assets   318   12-31-2019
SQM Industrial S.A.  04-I025000 - Re-perforación Pozo 2PL-2 y Ma  Sustainability: Environment and Risk Prevention  Expense   7   12-31-2019
SQM Industrial S.A.  04-J007000 - Environmental impact statement  Environmental processing  Expense   7   12-31-2019
SQM Industrial S.A.  04-J010700 - Recovery Water Intake from Rivers  Sustainability: Environment and Risk Prevention  Assets   119   12-31-2019
SQM Industrial S.A.  04-J012200 - Environmental Impact Statement and Regularization of CS Ponds  Environmental processing  Assets   19   12-31-2019
SQM Industrial S.A.  04-J013500 - Handling of Equipment associated with PCBs  Sustainability: Environment and Risk Prevention  Expense   251   12-31-2019
SQM Industrial S.A.  04-J015200 - Implement Economizers  Sustainability: Environment and Risk Prevention  Assets   195   12-31-2019
SQM Industrial S.A.  04-J015700 - Update closure plans  Sustainability: Environment and Risk Prevention  Expense   52   12-31-2019
SQM Industrial S.A.  04-J017200 - Guarantee availability S  Sustainability: Environment and Risk Prevention  Assets   253   12-31-2019
SQM Industrial S.A.  04-J019900 - Provisional Access to Cerro Domina  Sustainability: Environment and Risk Prevention  Expense   141   12-31-2019
SQM Industrial S.A.  04-M002000 - Recovery of Potable Water at María Elena  Sustainability: Environment and Risk Prevention  Assets   225   12-31-2019
SQM Salar S.A.  19-C005700 - Solar Electric Recharge Point Project-  Sustainability: Environment and Risk Prevention  Assets   53   12-31-2019
SQM Salar S.A.  19-L012100 - Upgrade to weather stations  Sustainability: Environment and Risk Prevention  Assets   17   12-31-2019
SQM Salar S.A.  19-L018000 - Upgrade TT illumination  Sustainability: Environment and Risk Prevention  Assets   40   12-31-2019
SQM Salar S.A.  19-L018700 - 5th Update of environmental modeling  Environmental processing  Expense   10   12-31-2019
SQM Salar S.A.  19-L018800 - UPC Consulting for NW and others  Sustainability: Environment and Risk Prevention  Expense   166   12-31-2019
SQM Salar S.A.  19-L018900 - Evaporation 2018-2019  Sustainability: Environment and Risk Prevention  Assets   8   12-31-2019
SQM Salar S.A.  19-L019800 - Paleoclimate Study (Iberia)  Sustainability: Environment and Risk Prevention  Expense   1   12-31-2019
SQM Salar S.A.  19-L020000 - Improvement of Operations Monitoring Network  Sustainability: Environment and Risk Prevention  Assets   5   12-31-2019
SQM Salar S.A.  19-L020300 - Telemetry boreholes  Sustainability: Environment and Risk Prevention  Assets   821   12-31-2019
SQM Salar S.A.  19-L021400 - Environmental Monitoring 2019  Environmental processing  Expense   2,767   12-31-2019
SQM Salar S.A.  19-L021700 - Improvement of RH and MA 2019  Environmental processing  Expense   80   12-31-2019
SQM Salar S.A.  19- S013400- Online Monitoring  Sustainability: Environment and Risk Prevention  Expense   430   12-31-2019
Total            16,983    

 

153

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Future expenses as of December 31, 2019

 

Parent Company
or Subsidiary
  Project Name  Reason for Disbursement  A Asset /
Expense
  Disbursement   Exact or
Estimated Date of
Disbursement
            ThUS$    
Miscellaneous  Environment - Operating Area  Not classified  Expense   10,085   12-31-2020
SQM S.A.  01-I017200 - CEDAM at Puquíos (ponds) at Llamara  Sustainability: Environment and Risk Prevention  Expense   28   12-31-2020
SQM S.A.  01-I017400 - Development of Pintados and surrounding area.  Sustainability: Environment and Risk Prevention  Expense   108   12-31-2020
SQM S.A.  01-I017600 - Regularization of Substances Decree  Environmental processing  Expense   75   12-31-2020
SQM S.A.  01-I019400 - EIA Expansion of TEA and Seawater Impulsion  Environmental processing  Assets   426   12-31-2020
SQM S.A.  01-I028200 - EIA Llamara  Environmental processing  Expense   1,527   12-31-2020
SQM S.A.  01-I028300 - Implementation of PDC 2019  Sustainability: Environment and Risk Prevention  Expense   1,231   12-31-2020
SQM S.A.  01-I030700 - Sectorial Permits EIA Project Tente en el Aire  Environmental processing  Expense   284   12-31-2020
SQM Industrial S.A.  04-I025000 - Re-perforación Pozo 2PL-2 y Ma  Sustainability: Environment and Risk Prevention  Expense   128   12-31-2020
SQM Industrial S.A.  04-J012200 - DIA and Regularization of CS Ponds  Environmental processing  Assets   35   12-31-2020
SQM Industrial S.A.  04-J013500 - Handling of Equipment associated with PCBs  Sustainability: Environment and Risk Prevention  Expense   303   12-31-2020
SQM Industrial S.A.  04-J015200 - Implementation Economizers  Sustainability: Environment and Risk Prevention  Assets   59   12-31-2020
SQM Industrial S.A.  04-J015700 - Update of Closure Plans  Sustainability: Environment and Risk Prevention  Expense   127   12-31-2020
SQM Industrial S.A.  04-J015800 - Other Sector Regulatory Measures  Sustainability: Environment and Risk Prevention  Expense   237   12-31-2020
SQM Industrial S.A.  04-J017200 - Guarantee availability S  Sustainability: Environment and Risk Prevention  Assets   104   12-31-2020
SQM Industrial S.A.  04-J019900 - Provisional Access to Cerro Domina  Sustainability: Environment and Risk Prevention  Expense   95   12-31-2020
SQM Industrial S.A.  04-M003900 - Revocation of PDME  Sustainability: Environment and Risk Prevention  Expense   47   12-31-2020
SQM Salar S.A.  19-L014700 - Industrial Waste Management  Sustainability: Environment and Risk Prevention  Expense   135   12-31-2020
SQM Salar S.A.  19-L018800 - UPC Consulting for NW and others  Sustainability: Environment and Risk Prevention  Expense   238   12-31-2020
SQM Salar S.A.  19-L018900 - Evaporation 2018-2019  Sustainability: Environment and Risk Prevention  Assets   172   12-31-2020
SQM Salar S.A.  19-L019800 - Paleoclimate Study (Iberia)  Sustainability: Environment and Risk Prevention  Expense   49   12-31-2020
SQM Salar S.A.  19-L020000 - Improvement of Operations Monitoring Network  Sustainability: Environment and Risk Prevention  Assets   95   12-31-2020
SQM Salar S.A.  19-L021400 - Environmental Monitoring 2019  Environmental processing  Expense   33   12-31-2020
SQM Salar S.A.  19-L021700 - Improvement of RH and MA 2019  Environmental processing  Expense   132   12-31-2020
SQM Salar S.A.  19- S013400- Online Monitoring  Sustainability: Environment and Risk Prevention  Expense   300   12-31-2020
Total            16,053    

 

154

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

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

 

Sociedad Quimca y Minera de Chile S.A.

 

Environmental Commitments Implementation Projects

 

I0172: The project includes the commitments the Tamarugos Environmental Management Plan, which contemplates an Environmental Education Program that includes the design, construction and start-up of an Environmental Education Center (CEDAM) at Puquios de Llamara.

 

I0174: The Project include implementing "Value Added" at the former Pintados station. and a storage facility in Humberstone to store archaeological material, committed to in environmental assessments.

 

I0187: The project involves the implementation of measures that were committed to during the penalty process, including urgent and transitory measures and the compliance program approved by SMA.

 

I0283: The project involves the implementation of actions committed in the PDC. The implementation considers consulting with consultants (legal, hydrogeological and in processing with PDC), studies and additional follow-up.

 

I0307: The project involves the preparation and processing of sectoral and environmental permits with the DGA and SERNAGEOMIN for the “Tente en el Aire” Project.

 

I0384: The project contemplates updating the Conceptual and Numerical Hydrogeological Model for the Pampa del Tamarugal Aquifer.”

 

Environmental Improvement Initiatives and Projects

 

I0138: The project considers increasing the height of every SO2 absorption tower (regular and stand-by towers) to increase the SO2 absorption efficiency.

 

I0176: The project involves diagnosis of works for their adaptation to the recently enacted Regulation of Hazardous Substances.

 

I0396: The project involves improving NV's hazardous substances pond facilities, in accordance with the Adaptation Plan for Hazardous Substances Regulation DS 43.

 

I0397: The project involves constructing a new NV warehouse, in accordance with the Hazardous Substances Regulation DS 43.

 

P0103: The project involves improving the hazardous substances pond facilities at PV, in accordance with the Adaptation Plan for Hazardous Substances Regulation DS 43.

 

P0104: The project involves adapting the PV warehouse, in accordance with the Hazardous Substances Regulation DS 43.

 

Projects for the Studies and Presentations to the Environmental Assessment System

 

I0194: The project consists of the preparation and processing of the Environmental Impact Study for Expansion of TEA and Impulsion.

 

I0282: The project consists of the preparation and processing of the Environmental Impact Study for Llamara.

 

155

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

I0313: The project involves a preliminary environmental characterization (terrestrial biota, archeology and paleontology) of 4 alternative sites. Once the alternative to use has been defined based on technical and environmental criteria, a DIA/EIA will be implemented.

 

I0358: The project contemplates standardizing facilities in accordance with standard DS43, Hazardous Substances regulation.

 

S0142: The project considers SQM baseline survey in terms of ESG, we will compare ourselves to the industry and best practices to later plan how to reduce the gaps in the future with concrete initiatives.

 

S0159: The project considers surveying all the company’s sustainability initiatives, integrating the different practices in the areas of the company, identifying its strengths and opportunities to strengthen the management of its sustainability, aligning the strategy with the SDGs for all SQM operations in Chile. Support in completing the DJSI survey.

 

SQM Industrial S.A.

 

Environmental Commitments Implementation Projects

 

J0158: The project will prepare and process sectorial permits for favorable reports to construct in Coya Sur (CS) and permits for hydraulic works defined in Article 294 of the Water Code (evaporation wells) at CS and NV.

 

Environmental Improvement Initiatives and Projects

 

I0250: The project consists of re-drilling well 2Pl-2, with the relevant development work and pump tests.

 

I0326: The project considers installation of floating covers to reduce evaporation in water collection wells in NV.

 

I0382: The project consists of acquisition of floating covers to decrease evaporation, reducing the loss of water resources for the productive phase of iodine.

 

I0386 The project considers a monitoring and transmission system for effective extractions and dynamic levels in extraction wells owned by SQM, which supply the Nueva Victoria site.

 

J0107: The project looks to renovate and automate the operation of pump stations at the three water intakes, by incorporating automatic valves and smart controls for pumps.

 

J0135: This project consists of dealing with all the oils and components that contain 50ppm or more of Policlorobife PCB by 2025 at the latest.

 

J0152: The project will install exhaust gas heat recovery equipment in boilers and implement associated structural improvements.

 

J0157: The project will update the closure plans in accordance with the normal regime established by current legislation. These requirements include an initial external audit, detailed risks analysis and their control, and other requirements.

 

J0172: The project will ensure the availability of water resources in "CS, ME, VE and CV" adductions.

 

J0199: The project considers obtaining a provisional roadway approval from the Ministry of Public Works to prepare and use the intersection access to Cerro Dominador.

 

J0228: The project considers the installation and normalization of lighting in Coya Sur and María Elena.

 

156

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

 

J0237: The project involves improving the hazardous substance pond facilities at CS and improvements to the hazardous substance storage facilities at CS and ME, in accordance with the Adaptation Plan for Hazardous Substances Regulation DS 43.

 

M0043: The project considers the removal of industrial waste to free up the sites defined for this purpose.

 

Projects for the Studies and Presentations to the Environmental Assessment System

 

I0177: The project will complete the basic engineering, execute the EIA Tente en el Aire, obtain the legal and sectorial permits for a second stage to secure the execution of the project.

 

J0122: The project consists of entering the Coya Sur wells into the “environmental impact assessment system” and processing the permits for the Coya Sur wells with the General Directorate of Water Resources (DGA).

 

J0227: The project consists of the preparation and processing of an Environmental Impact Declaration (DIA) to extend the useful life of the NPT2 plant and incorporate fuel with KNO3. Prepare and process a DIA for the expansion and updating of Coya Sur.

 

P0102: The project considers developing the preliminary identification studies of the mine and PV heap area, identification of intake points and layouts for the sea water impulsion line.

 

SIT S.A.

 

Environmental Improvement Initiatives and Projects

 

T0099: The project involves preparing a detailed emissions inventory, particulate matter dispersion model and protocol development. Measurement of fugitive emissions from Tocopilla Port operations and Air Quality Monitoring.

 

T0105: The purpose of the project is to install a system that detects and issues early warnings of hydrocarbons in the sea near the facilities at Tocopilla Port.

 

SQM Salar S.A.

 

Environmental Commitments Implementation Projects

 

L0198: The project will date sediment in the depositional environments of the last 50,000 years to complement the facies sedimentological model provided by the consultant. The project will try to reconstruct the variability history of the lagoon system with absolute ages.

 

L0200: The project will identify an appropriate device. Field testing of sensors. Purchase of sensors for all points. Installation of sensors. Analyze remote data transmission (future project).

 

L0214: The project consists of implementing a 2019 environmental monitoring plan to monitor an optimum compliance of current environmental regulations.

 

L0217: The project involves quoting new equipment. Purchase of new equipment. Reparation of old equipment for use as backup in the event of unexpected failure of new equipment.

 

S0134: The project involves showing information online regarding extractions and reinjections from the Salar. Additionally, it includes biotic and hydrogeological information to show authorities and the community the actions implemented by SQM for the environmental variable it has committed to.

 

157

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Environmental Improvement Initiatives and Projects

 

C0068: The project consists of the renovation of 11 Maxi light towers, eliminating fuel consumption.

 

C0086: The project involves asphalting the Salar de Carmen plants to reduce the dust particles in suspension raised during the movement of trucks.

 

L0147: This project contemplates the reduction of these industrial waste storage points and packaging of different industrial waste according to the RCA and legislation in force.

 

L0188: The project involves the participation of an external consulting team to narrow down the sources of the risks identified, propose operational optimization plans, improvements to control systems (monitoring networks) and support in modeling this deposit with a view to a better evolution of short- and medium-term projections (5 years).

 

L0189: It includes improving the current lysimeter stations and implementing new stations in important sectors that are not currently measured, with the ability to remotely transmit information. This will improve the spatial coverage of the stations that measure evaporation within the basin. This considers consulting with an expert to propose methodological improvements.

 

L0232: This considers purchase of GPS and a Full Station for measuring stockpiles, salt height. Pursuant to CORFO requests, equipment is needed to provide information.

 

L0242: This contemplates consulting to study the large-scale behavior of lagoon systems through the development of analytic or semi-analytic solutions.

 

L0253: This considers the regularization of the potable water system and the disposal of sewage waters from management.

 

L0256: This contemplates the renovation of generators in SQM Salar to extend their useful life and purchase variators and transformers in different strengths to have stock in the event of failures and thereby ensure ongoing operations.

 

L0258: This considers the normalization of the Electricity System for maintaining and operating the transformer substations.

 

L0268: This considers the removal of old dryers and their final disposal at authorized facilities.

 

L0269: This considers improving controls over plant equipment and feed mixtures to keep products within specifications, to comply with current regulations regarding lighting and mitigate substandard conditions at the plant.

 

S0162: This contemplates the acquisition of technology for optimization and traceability of GHS data.

 

S0163: The project contains measurement methodology for different terrain parameters and subsequent conceptual modeling.

 

S0164: This contemplates the unification of proprietary and third-party databases.

 

S0165: This project takes responsibility for an opportunity to improve the speed of data analysis and efficiency in decision-making.

 

S0167: This contemplates a series of measures in the conceptualization of the Salar de Atacama basin, as well as updating data sets, which must be implemented to strengthen the model and which will be the management tool model for the basin.

 

S0169: The project aims to improve the understanding of dynamics between the vegetation and water bodies in the Aguas de Quelana sector.

 

158

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

SQM Nitratos S.A.

 

Environmental Improvement Initiatives and Projects

 

I0390: The project contemplates making improvements to the common warehouse in Mina Oeste based on the commitments defined in the adaptation plan presented to the Health SEREMI, thereby complying with DS43.

 

Sociedad Contractual Minera Bufalo

 

Environmental Improvement Initiatives and Projects

 

A0082: The project contemplates the characterization of a potential copper deposit, through the execution of a 3D geophysics program, drilling and sample studies, decreasing the uncertainty of the geological model, as well as processing environmental and sectoral permits that enable the development of activities in the area.

 

Orcoma Estudios Spa

 

Environmental Commitments Implementation Projects

 

I0391: The project consists of obtaining sectoral and environmental sectoral permits for the Orcoma Project.

 

SQM Potasio S.A.

 

Environmental Improvement Initiatives and Projects

 

I0394: The project involves improving Iris's hazardous substances pond facilities, in accordance with the Adaptation Plan for Hazardous Substances Regulation DS 43.

 

I0398: The project involves adapting the hazardous substances warehouse at the NV Iodine Plant, in accordance with Hazardous Substances Regulation DS 43.

 

159

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 25 Gains (losses) from operating activities in the statement of income of expenses, included according to their nature

 

25.1Revenue from operating activities customer activities

 

The Group derives revenues from the sale of goods (which are recognized at one point in time) and from the provision of services (which are recognized over time) and are distributed among the following geographical areas and main product and service lines.

 

(a)Geographic areas:

 

For the period ended December 31, 2020
Geographic areas  Specialty
plant
nutrition
   Iodine and
derivatives
   Lithium and
derivatives
   Potassium   Industrial
chemicals
   Other   Total
ThUS$
 
Chile   100,353    1,234    399    23,963    4,059    23,737    153,745 
Latin America and the Caribbean   69,535    10,843    1,597    72,697    4,951    367    159,990 
Europe   145,896    142,161    49,719    30,029    11,585    735    380,125 
North America   246,737    90,292    25,558    39,432    23,963    1,588    427,570 
Asia and Others   139,167    90,127    306,100    43,173    116,050    1,144    695,761 
Total   701,688    334,657    383,373    209,294    160,608    27,571    1,817,191 

 

For the period ended as of December 31, 2019
Geographic areas  Specialty
plant
nutrition
   Iodine and
derivatives
   Lithium and
derivatives
   Potassium   Industrial
chemicals
   Other   Total
ThUS$
 
Chile   109,975    1,064    599    27,371    39,512    33,336    211,857 
Latin America and the Caribbean   78,872    7,972    3,593    64,868    6,354    269    161,928 
Europa   149,992    123,525    76,250    27,973    15,289    735    393,764 
North America   243,399    90,070    45,810    43,312    27,798    883    451,272 
Asia and Others   141,682    148,389    379,462    48,627    5,922    752    724,834 
Total   723,920    371,020    505,714    212,151    94,875    35,975    1,943,655 

 

160

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(b)Main product and service lines:

 

  

For the period from January

to December of the year

 
Products and Services  2020   2019 
   ThUS$   ThUS$ 
Specialty plant nutrition   701,688    723,920 
 - Sodium Nitrates   18,291    20,679 
 -Potassium nitrate and sodium potassium nitrate   424,041    457,477 
 - Specialty Blends   163,033    153,739 
 - Other specialty fertilizers   96,323    92,025 
Iodine and derivatives   334,657    371,020 
Lithium and derivatives   383,373    505,714 
Potassium   209,294    212,151 
Industrial chemicals   160,608    94,875 
Other   27,571    35,975 
 - Services   3,241    3,410 
 - Income from property leases   1,457    1,438 
 - Income from subleases on right-of-use assets   176    261 
 - Commodities   11,938    16,176 
 -Other ordinary income of Commercial Offices   10,759    14,690 
Total   1,817,191    1,943,655 

 

161

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

25.2Cost of sales

 

Cost of sales broken down by nature of expense

 
   For the period from January to
December of the year
 
Nature of expense  2020   2019 
   ThUS$   ThUS$ 
Raw materials and consumables used   (287,877)   (271,912)
Classes of employee benefit expenses   (178,956)   (178,493)
Depreciation expense   (182,410)   (188,157)
Depreciation of Right-of-use Assets (contracts under IFRS 16)   (5,814)   (5,450)
Amortization expense   (12,655)   (5,102)
Investment plan expenses   (14,286)   (18,367)
Provision for site closure   (911)   (911)
Provision for materials, spare parts and supplies   640    (7,500)
Contractors   (142,001)   (120,793)
Operating leases   (57,461)   (47,708)
Mining concessions   (6,645)   (7,856)
Operations transport   (68,730)   (56,376)
Freight / product transport costs   (52,156)   (46,264)
Purchase of products from third parties   (224,115)   (210,583)
Insurance   (17,657)   (16,968)
CORFO rights and other agreements   (74,418)   (143,861)
Export costs   (71,718)   (75,908)
Expenses related to Variable Parts Leases (contracts under IFRS 16)   (1,133)   (1,037)
Variation in inventory   97,467    52,557 
Variation in inventory provision   7,244    17,107 
Other   (40,729)   (50,021)
Total   (1,334,321)   (1,383,603)

 

162

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

25.3Other income

 

  

For the period from January to

December of the year

 
Other income  2020   2019 
   ThUS$   ThUS$ 
Discounts obtained from suppliers   665    676 
Fines charged to suppliers   267    483 
Taxes recovered   346    457 
Amounts recovered from insurance   14,719    492 
Overestimate of provisions for third-party obligations   118    983 
Sale of assets classified as properties, plant and equipment   3,222    2,422 
Options on mining rights   5,852    5,298 
Easements, pipelines and roads   1,619    7,204 
Mining licenses and notary costs reimbursed   85    203 
Total   26,893    18,218 

 

25.4Administrative expenses

 

  

For the period from January to

December of the year

 
Administrative expenses  2020   2019 
   ThUS$   ThUS$ 
Employee benefit expenses   (55,152)   (60,255)
Marketing costs   (2,377)   (3,911)
Amortization expenses   (91)   (5)
Entertainment expenses   (4,858)   (5,783)
Advisory services   (13,880)   (13,862)
Lease of buildings and facilities   (3,111)   (3,653)
Insurance   (3,478)   (2,553)
Office expenses   (6,204)   (7,327)
Contractors   (5,079)   (4,874)
Depreciation of Right-of-use Assets (contracts under IFRS 16)   (2,617)   (2,501)
Other expenses, by nature   (10,170)   (12,456)
Total   (107,017)   (117,180)

 

163

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

25.5Other expenses

 

  

For the period from January to

December of the year

 
Other expenses  2020   2019 
   ThUS$   ThUS$ 
Depreciation and amortization expense          
Depreciation of assets not in use   (42)   (136)
Subtotal   (42)   (136)
Impairment losses (reversals of impairment losses) recognized in profit for the year          
Properties, plant and equipment   (9,563)   (49)
Intangible assets other than goodwill   (1,658)   (913)
Goodwill   (140)   (140)
Amortization of intangible assets   (283)   - 
Subtotal   (11,644)   (1,102)
Other expenses, by nature          
Legal expenses   (69,965)   (9,277)
VAT and other unrecoverable taxes   (626)   (613)
Fines paid   (314)   (145)
Investment plan expenses   (864)   (1,693)
Exploration expenses   (5,262)   (5,537)
Donations   (8,793)   (5,026)
Other operating expenses   (2,102)   (2,466)
Subtotal   (87,926)   (24,757)
Total   (99,612)   (25,995)

 

25.6Other gains (losses)

 

  

For the period from January to

December of the year

 
Other income (expenses)  2020   2019 
   ThUS$   ThUS$ 
Adjust previous year application method of participation   (49)   (985)
Losses in the sale of investments in associates   (11,830)   - 
Impairment of interests in associates   7,235    631 
Losses in the sale of investments in joint Ventures   (481)   - 
Others   (188)   (29)
Total   (5,313)   (383)

 

164

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

25.7(Impairment) /reversion of value of financial assets impairment losses

 

  

For the period from January to

December of the year

 
Description  2020   2019 
   ThUS$   ThUS$ 
(Impairment) /reversion of value of financial assets impairment losses (See Note 14.2)   4,684    (1,057)
Totals   4,684    (1,057)

 

25.8Summary of expenses by nature

 

The following summary considers notes 25.2, 25.4 and 25.5

 

  

For the period from January to

December of the year

 
Expenses by nature  2020   2019 
   ThUS$   ThUS$ 
Raw materials and consumables   (287,877)   (271,912)
Classes of Employee Benefit Expenses   (234,108)   (238,748)
Depreciation and amortization expense          
Depreciation expense   (182,452)   (188,293)
Depreciation of Right-of-use Assets   (8,431)   (7,951)
Impairment of Value   (1,658)   (913)
Properties, plant and equipment   (9,563)   (49)
Goodwill   (140)   (140)
Amortization expense   (13,029)   (5,107)
Legal expenses   (69,965)   (9,277)
Investment plan expenses   (15,150)   (20,060)
Exploration expenses   (5,262)   (5,537)
Provision for site closure   (911)   (911)
Provision for materials, spare parts and supplies   640    (7,500)
Contractors   (147,080)   (125,667)
Operation leases   (60,572)   (51,361)
Mining concessions   (6,645)   (7,856)
Operation transport   (68,730)   (56,376)
Freight and product transport costs   (52,156)   (46,264)
Purchase of products from third parties   (224,115)   (210,583)
CORFO rights y other agreements   (74,418)   (143,861)
Export costs   (71,718)   (75,908)
Expenses related to Variable Parts Leases (IFRS 16)   (1,133)   (1,037)
Insurance   (21,135)   (19,521)
Consultant and advisor services   (13,880)   (13,862)
Variation in gross inventory   97,467    52,557 
Variation in provision on product inventory   7,244    17,107 
Other expenses   (76,173)   (87,748)
Total expenses by nature   (1,540,950)   (1,526,778)

 

165

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

25.9Finance expenses

 

  

For the period from January to

December of the year

 
Finance expenses  2020   2019 
   ThUS$   ThUS$ 
Interest expense from bank borrowings and overdrafts   (2,797)   (2,133)
Interest expense from bonds   (87,030)   (72,984)
Interest expense from loans   (1,598)   (2,682)
Capitalized interest expenses   8,462    7,841 
Financial expenses for restoration and rehabilitation provisions   2,947    (4,417)
Interest on lease agreement   (1,133)   (1,535)
Other finance costs   (1,050)   (1,029)
Total   (82,199)   (76,939)

 

25.10Finance income

 

  

For the period from January to

December of the year

 
Finance income  2020   2019 
   ThUS$   ThUS$ 
Interest from term deposits   10,260    15,345 
Interest from marketable securities   2,147    6,765 
Interest from maintenance of minimum bank balance in current account   18    - 
Other finance income   1,031    4,130 
Other finance interest   259    49 
Total   13,715    26,289 

 

166

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 26    Reportable segments

 

26.1          Reportable segments

 

(a)General information:

 

The amount of each item presented in each operating segment is equal to that reported to the highest authority that makes decisions regarding the operation, in order to decide on the allocation of resources to the defined segments and to assess its performance.

 

These operating segments mentioned are consistent with the way the Company is managed and how results will be reported by the Company. These segments reflect separate operating results that are regularly reviewed by the executive responsible for operational decisions in order to make decisions about the resources to be allocated to the segment and assess its performance (See Note 26.2).

 

The performance of each segment is measured based on net income and revenues. Inter-segment sales are made using terms and conditions at current market rates.

 

(b)Factors used to identify segments on which a report should be presented:

 

The segments covered in the report are strategic business units that offer different products and services. These are managed separately because each business requires different technology and marketing strategies.

 

(c)Description of the types of products and services from which each reportable segment obtains its income from ordinary activities

 

The operating segments, which obtain income from ordinary activities, generate expenses and have its operating results reviewed on a regular basis by the highest authority who makes decisions regarding operations, relate to the following groups of products:

 

(i)Specialty plant nutrients
(ii)Iodine and its derivatives
(iii)Lithium and its derivatives
(iv)Industrial chemicals
(v)Potassium
(vi)Other products and services

 

(d)Description of income sources for all the other segments

 

Information regarding assets, liabilities, profits and expenses that cannot be assigned to the segments indicated above, due to the nature of production processes, is included under the "Unallocated amounts” category of the disclosed information.

 

167

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(e)Description of the nature of the differences between measurements of results of reportable segments and the result of the entity before the expense or income tax expense of incomes and discontinued operations

 

The information reported in the segments is extracted from the Company’s consolidated financial statements and therefore there is no need to prepare reconciliations between the data mentioned above and those reported in the respective segments, according to what is stated in paragraph 28 of IFRS 8, "Operating Segments".

 

For the allocation of inventory valuation costs, we identify the direct expenses (can be directly allocated to products) and the common expenses (belong to coproduction processes, for example common leaching expenses for production of Iodine and Nitrates), Direct costs are directly allocated to the product and the common costs are distributed according to percentages that consider different variables in their determination, such as margins, rotation of inventories, revenue, production and etc.

 

The allocation of other common costs that are not included in the inventory valuation process, but go straight to the cost of sales, use similar criteria: the costs associated with a product or sales in particular are assigned to that particular product or sales, and the common costs associated with different products or business lines are allocated according to the sales.

 

(f)Description of the nature of the differences between measurements of assets of reportable segments and the Company´s assets

 

Assets are not shown classified by segments, as this information is not readily available, some of these assets are not separable by the type of activity by which they are affected since this information is not used by management in decision-making with respect to resources to be allocated to each defined segment. All assets are disclosed in the "unallocated amounts" category.

 

(g)Description of the nature of the differences between measurements of liabilities of reportable segments and the Company’s liabilities

 

Liabilities are not shown classified by segments, as this information is not readily available, some of these liabilities are not separable by the type of activity by which they are affected, since this information is not used by management in decision-making regarding resources to be allocated to each defined segment. All liabilities are disclosed in the "unallocated amounts" category.

 

168

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

26.2          Reportable segment disclosures:

 

Operating segment items as of
December 31, 2020
  Specialty
plant
nutrients
   Iodine
and its
derivatives
   Lithium
and its
derivatives
   Industrial
chemicals
   Potassium   Other
products and
services
   Reportable
segments
   Operating
segments
   Unallocated
amounts
   Total as of
December 31,
2020
 
    ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Revenue   701,688    334,657    383,373    160,608    209,294    27,571    1,817,191    1,817,191    -    1,817,191 
Revenues from transactions with other operating segments of the same entity   -    -    -    -    -    -    -    -    -    - 
Revenues from external customers and transactions with other operating segments of the same entity   701,688    334,657    383,373    160,608    209,294    27,571    1,817,191    1,817,191    -    1,817,191 
Costs of sales   (537,801)   (168,499)   (297,048)   (119,092)   (187,019)   (24,862)   (1,334,321)   (1,334,321)   -    (1,334,321)
Administrative expenses   -    -    -    -    -    -    -    -    (107,017)   (107,017)
Finance expense   -    -    -    -    -    -    -    -    (82,199)   (82,199)
Depreciation and amortization expense   (55,335)   (40,687)   (56,092)   (14,136)   (34,570)   (3,092)   (203,912)   (203,912)   -    (203,912)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method   -    -    -    -    -    -    -    -    8,940    8,940 
Income (loss) before taxes   163,887    166,158    86,325    41,516    22,275    2,709    482,870    482,870    (244,332)   238,538 
Income tax expense   -    -    -    -    -    -    -    -    (70,179)   (70,179)
Net income (loss)   163,887    166,158    86,325    41,516    22,275    2,709    482,870    482,870    (314,511)   168,359 
Assets                                 -         4,818,463    4,818,463 
Equity-accounted investees   -    -    -    -    -    -    -    -    85,993    85,993 
Incorporation of non-current assets other than financial instruments, deferred tax assets, net defined benefit assets and rights arising from insurance contracts   -    -    -    -    -    -    -    -    358,009    358,009 
Liabilities   -    -    -    -    -    -    -    -    2,655,885    2,655,885 
Impairment loss recognized in profit or loss                                 -         4,684    4,684 
Reversal of impairment losses recognized in profit or loss for the period   -    -    -    -    -    -    -    -    (11,644)   (11,644)
Cash flows from (used in) operating activities   -    -    -    -    -    -    -    -    182,234    182,234 
Cash flows from (used in) investing activities   -    -    -    -    -    -    -    -    (167,091)   (167,091)
Cash flows from (used in) financing activities   -    -    -    -    -    -    -    -    (94,132)   (94,132)

 

169

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Operating segment items as of
December 31, 2019
  Specialty
plant
nutrients
   Iodine
and its
derivatives
   Lithium
and its
derivatives
   Industrial
chemicals
   Potassium   Other
products and
services
   Reportable
segments
   Operating
segments
   Unallocated
amounts
   Total as of
December 31,
2019
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Revenue   723,920    371,020    505,714    94,875    212,151    35,975    1,943,655    1,943,655    -    1,943,655 
Revenues from transactions with other operating segments of the same entity   -    -    -    -    -    -    -    -    -    - 
Revenues from external customers and transactions with other operating segments of the same entity   723,920    371,020    505,714    94,875    212,151    35,975    1,943,655    1,943,655    -    1,943,655 
Costs of sales   (573,808)   (230,468)   (306,250)   (63,590)   (176,199)   (33,288)   (1,383,603)   (1,383,603)   -    (1,383,603)
Administrative expenses   -    -    -    -    -    -    -    -    (117,180)   (117,180)
Finance expense   -    -    -    -    -    -    -    -    (76,939)   (76,939)
Depreciation and amortization expense   (67,700)   (43,336)   (45,238)   (6,854)   (37,691)   (532)   (201,351)   (201,351)   -    (201,351)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method   -    -    -    -    -    -    -    -    9,786    9,786 
Income tax expense, continuing operations   150,112    140,552    199,464    31,285    35,952    2,687    560,052    560,052    (169,430)   390,622 
Income tax expense   -    -    -    -    -    -    -    -    (110,019)   (110,019)
Net income (loss)   150,112    140,552    199,464    31,285    35,952    2,687    560,052    560,052    (279,449)   280,603 
Assets   -    -    -    -    -    -    -    -    4,684,151    4,684,151 
Equity-accounted investees   -    -    -    -    -    -    -    -    109,435    109,435 
Incorporation of non-current assets other than financial instruments, deferred tax assets, net defined benefit assets and rights arising from insurance contracts   -    -    -    -    -    -    -    -    110,021    110,021 
Liabilities   -    -    -    -    -    -    -    -    2,549,679    2,549,679 
Impairment loss recognized in profit or loss   -    -    -    -    -    -    -    -    (1,057)   (1,057)
Reversal of impairment losses recognized in profit or loss for the period   -    -    -    -    -    -    -    -    (1,102)   (1,102)
Cash flows from (used in) operating activities   -    -    -    -    -    -    -    -    426,971    426,971 
Cash flows from (used in) investing activities   -    -    -    -    -    -    -    -    (485,471)   (485,471)
Cash flows from (used in) financing activities   -    -    -    -    -    -    -    -    105,896    105,896 

 

170

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

26.3          Statement of comprehensive income classified by reportable segments based on groups of products

 

Items in the statement of comprehensive income

as of December 31, 2020

  Specialty
plant
nutrients
   Iodine
and its
derivatives
   Lithium
and its
derivatives
   Industrial
chemicals
   Potassium   Other
products
and services
   Corporate
Unit
   Total
segments and
Corporate unit
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Revenue   701,688    334,657    383,373    160,608    209,294    27,571    -    1,817,191 
Costs of sales   (537,801)   (168,499)   (297,048)   (119,092)   (187,019)   (24,862)   -    (1,334,321)
Gross profit   163,887    166,158    86,325    41,516    22,275    2,709    -    482,870 
Other incomes by function   -    -    -    -    -    -    26,893    26,893 
Administrative expenses   -    -    -    -    -    -    (107,017)   (107,017)
Other expenses by function   -    -    -    -    -    -    (99,612)   (99,612)
Impairment of gains and review of impairment losses (impairment losses) determined in accordance with IFRS 9   -    -    -    -    -    -    4,684    4,684 
Other gains (losses)   -    -    -    -    -    -    (5,313)   (5,313)
Financial income   -    -    -    -    -    -    13,715    13,715 
Financial costs   -    -    -    -    -    -    (82,199)   (82,199)
interest in the profit or loss of associates and joint ventures accounted for by the equity method   -    -    -    -    -    -    8,940    8,940 
Exchange differences   -    -    -    -    -    -    (4,423)   (4,423)
Profit (loss) before taxes   163,887    166,158    86,325    41,516    22,275    2,709    (244,332)   238,538 
Income tax expense   -    -    -    -    -    -    (70,179)   (70,179)
Profit (loss) from continuing operations   163,887    166,158    86,325    41,516    22,275    2,709    (314,511)   168,359 
Profit (loss) from discontinued operations   -    -    -    -    -    -    -    - 
Profit (loss)   163,887    166,158    86,325    41,516    22,275    2,709    (314,511)   168,359 
Profit, attributable to
Profit (loss) attributable to the controller´s owners   -    -    -    -    -    -    164,518    164,518 
Profit (loss) attributable to the non-controllers   -    -    -    -    -    -    3,841    3,841 
Profit   -    -    -    -    -    -    168,359    168,359 

 

171

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Items in the statement of comprehensive income
as of December 31, 2019
  Specialty
plant
nutrients
   Iodine
and its
derivatives
   Lithium
and its derivatives
   Industrial
chemicals
   Potassium   Other
products
and services
   Corporate
Unit
   Total
segments and
Corporate unit
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Revenue   723,920    371,020    505,714    94,875    212,151    35,975    -    1,943,655 
Cost of sales   (573,808)   (230,468)   (306,250)   (63,590)   (176,199)   (33,288)   -    (1,383,603)
Gross profit   150,112    140,552    199,464    31,285    35,952    2,687    -    560,052 
Other incomes by function   -    -    -    -    -    -    18,218    18,218 
Administrative expenses   -    -    -    -    -    -    (117,180)   (117,180)
Other expenses by function   -    -    -    -    -    -    (25,995)   (25,995)
Impairment of gains and review of impairment losses (impairment losses) determined in accordance with IFRS 9   -    -    -    -    -    -    (1,057)   (1,057)
Other gains (losses)   -    -    -    -    -    -    (383)   (383)
Financial income   -    -    -    -    -    -    26,289    26,289 
Financial costs   -    -    -    -    -    -    (76,939)   (76,939)
interest in the profit or loss of associates and joint ventures accounted for by the equity method   -    -    -    -    -    -    9,786    9,786 
Exchange differences   -    -    -    -    -    -    (2,169)   (2,169)
Profit (loss) before taxes   150,112    140,552    199,464    31,285    35,952    2,687    (169,430)   390,622 
Income tax expense   -    -    -    -    -    -    (110,019)   (110,019)
Profit (loss) from continuing operations   150,112    140,552    199,464    31,285    35,952    2,687    (279,449)   280,603 
Profit (loss) from discontinued operations   -    -    -    -    -    -    -    - 
Profit (loss)   150,112    140,552    199,464    31,285    35,952    2,687    (279,449)   280,603 
Profit (loss), attributable to
Profit (loss) attributable to the controller´s owners   -    -    -    -    -    -    278,115    278,115 
Profit (loss) attributable to the non-controllers   -    -    -    -    -    -    2,488    2,488 
Profit (loss)   -    -    -    -    -    -    280,603    280,603 

 

172

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

26.4Disclosures on geographical areas

 

As indicated in paragraph 33 of IFRS 8, the entity discloses geographical information on its revenue from operating activities with external customers and from non-current assets that are not financial instruments, deferred income tax assets, assets related to post-employment benefits or rights derived from insurance contracts.

 

26.5Disclosures on main customers

 

With respect to the degree of dependency of the Company on its customers, in accordance with paragraph 34 of IFRS 8, the Company has no external customers who individually represent 10% or more of its revenue.

 

173

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

26.6Segments by geographical areas

 

Items as of December 31, 2020  Chile   Latin America and the
Caribbean
   Europe   North America   Asia and others   Total 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Revenue   153,745    159,990    380,126    427,572    695,758    1,817,191 
Investment accounted for under the equity method   -    -    41,273    14,468    30,252    85,993 
Intangible assets other than goodwill   95,934    565    825    2,274    78,809    178,407 
Goodwill   23,065    -    18,901    -    -    41,966 
Property, plant and equipment, net   1,667,824    642    12,592    3,494    52,767    1,737,319 
Right-of-use assets   23,461    2,298    2,428    1,776    61    30,024 
Other non-current assets   19,377    17    7    2,641    -    22,042 
Non-current assets   1,829,661    3,522    76,026    24,653    161,889    2,095,751 

 

Items as of December 31, 2019  Chile   Latin America and the
Caribbean
   Europe   North America   Asia and others   Total 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Revenue   211,857    161,928    393,764    451,272    724,834    1,943,655 
Investment accounted for under the equity method   -    -    42,243    14,669    52,523    109,435 
Intangible assets other than goodwill   106,910    420    1,397    2,683    76,948    188,358 
Goodwill   23,205    -    11,521    -    -    34,726 
Property, plant and equipment, net   1,526,919    513    3,424    6,250    32,800    1,569,906 
Right-of-use assets   29,427    2,734    2,817    2,083    103    37,164 
Other non-current assets   20,321    28    4    (624)   -    19,729 
Non-current assets   1,706,782    3,695    61,406    25,061    162,374    1,959,318 

 

174

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

26.7Property, plant and equipment classified by geographical areas

 

The company's main production facilities are located near their mines and extraction facilities in northern Chile. The following table presents the main production facilities as of December 31, 2020 and 2019:

 

Location

 

-Pedro de Valdivia

-María Elena

-Coya Sur

-Nueva Victoria

-Salar de Atacama

-Salar del Carmen

-Tocopilla

 

175

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 27 Effect of fluctuations in foreign currency exchange rates

 

(a)Foreign currency exchange differences recognized in profit or loss and other comprehensive income:

 

Foreign currency exchange differences recognized in profit or loss and other comprehensive
income
  As of
December 31,
2020
   As of
December 31,
2019
 
   ThUS$   ThUS$ 
Conversion foreign exchange gains (losses) recognized in the result of the year   (4,423)   (2,169)
Conversion foreign exchange reserves          
Conversion foreign exchange reserves attributable to the owners of the controlling entity   14,176    562 
Conversion foreign exchange reserves attributable to the non-controlling entity   (176)   225 
Total   14,000    787 

 

(b)Reserves for foreign currency exchange differences:

 

As of December 31, 2020, and 2019, are detailed as follows:

 

Details  As of
December 31,
2020
   As of
December 31,
2019
 
   ThUS$   ThUS$ 
Changes in equity generated by the equity method value through conversion:        
Comercial Hydro S.A.   1,004    1,004 
SQMC Internacional Ltda.   (9)   (9)
Proinsa Ltda.   (10)   (10)
Comercial Agrorama Ltda.   (19)   33 
Isapre Norte Grande Ltda.   (14)   (44)
Almacenes y Depósitos Ltda.   211    142 
Sacal S.A.   (3)   (3)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.   (13)   (19)
Agrorama S.A.   92    231 
Doktor Tarsa   -    (13,811)
SQM Vitas Fzco   (3,736)   (2,267)
Ajay Europe   (693)   (1,449)
SQM Eastmed Turkey   -    (155)
Doctochem   -    7 
Coromandel SQM India   -    (431)
SQM Italia SRL   -    (236)
SQM Oceanía Pty Ltd.   (579)   (634)
SQM Indonesia S.A.   (124)   (124)
Abu Dhabi Fertillizers Industries WWL.   372    372 
SQM Vitas Holland   99    (197)
SQM Thailand Limited   (68)   (68)
SQM Europe   (1,983)   (1,983)
SQM Australia Pty Ltd.   (4,052)   (4,035)
Pavoni & C. Spa   164    (185)
Terra Tarsa BV   -    116 
Plantacote NV   -    (16)
Doktolab Tarim Arastirma San.   -    (54)
Kore Potash PLC (a)   (1,128)   (1,754)
SQM Colombia SAS   (80)   (166)
Total   (11,569)   (25,745)

 

176

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(c)Functional and presentation currency

 

The functional currency of these companies corresponds to the currency of the country of origin of each entity, and its presentation currency is the dollar.

 

(d)Reasons to use one presentation currency and a different functional currency

 

-A relevant portion of the revenues of these subsidiaries are associated with the local currency.

-The cost structure of these companies is affected by the local currency.

 

177

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 28 Disclosures on the effects of fluctuations in foreign currency exchange rates

 

a)Assets held in foreign currency subject to fluctuations in exchange rates are detailed as follows:

 

Class of Asset  Currency   As of
December 31,
2020
   As of
December 31,
2019
 
       ThUS$   ThUS$ 
Cash and cash equivalents   USD    454,402    558,572 
Cash and cash equivalents   ARS    -    3 
Cash and cash equivalents   CLP    7,190    8,240 
Cash and cash equivalents   CNY    11,597    2,484 
Cash and cash equivalents   EUR    17,144    3,131 
Cash and cash equivalents   GBP    19    3 
Cash and cash equivalents   AUD    1,411    8,492 
Cash and cash equivalents   INR    6    6 
Cash and cash equivalents   MXN    1,378    2,103 
Cash and cash equivalents   PEN    3    4 
Cash and cash equivalents   AED    -    - 
Cash and cash equivalents   JPY    1,646    1,559 
Cash and cash equivalents   ZAR    14,286    3,929 
Cash and cash equivalents   KRW    16    - 
Cash and cash equivalents   IDR    3    3 
Cash and cash equivalents   PLN    1    1 
Subtotal cash and cash equivalents        509,102    588,530 
Other current financial assets   USD    145,893    127,889 
Other current financial assets   CLF    -    36,896 
Other current financial assets   CLP    202,176    340,705 
Subtotal other current financial assets        348,069    505,490 
Other current non-financial assets   USD    20,645    16,535 
Other current non-financial assets   AUD    224    285 
Other current non-financial assets   BRL    -    2 
Other current non-financial assets   CLF    53    31 
Other current non-financial assets   CLP    27,837    24,374 
Other current non-financial assets   CNY    1,661    326 
Other current non-financial assets   EUR    1,531    3,055 
Other current non-financial assets   COP    70    - 
Other current non-financial assets   MXN    4,488    2,629 
Other current non-financial assets   THB    70    22 
Other current non-financial assets   JPY    157    174 
Other current non-financial assets   ZAR    646    3,119 
Other current non-financial assets   SEK    17    - 
Subtotal other non-financial current assets        57,399    50,552 
Trade and other receivables   USD    230,214    225,554 
Trade and other receivables   PEN    1    6 
Trade and other receivables   BRL    23    19 
Trade and other receivables   CLF    545    504 
Trade and other receivables   CLP    47,133    56,023 
Trade and other receivables   CNY    22,882    3,340 
Trade and other receivables   EUR    22,868    24,925 
Trade and other receivables   GBP    682    148 
Trade and other receivables   MXN    355    211 
Trade and other receivables   AED    533    1,193 
Trade and other receivables   THB    1,167    1,695 
Trade and other receivables   JPY    23,010    66,266 
Trade and other receivables   AUD    589    801 
Trade and other receivables   ZAR    12,504    15,900 
Trade and other receivables   COP    2,675    2,557 
Trade and other receivables   SEK    25    - 
Subtotal trade and other receivables        365,206    399,142 
Receivables from related parties   USD    61,379    60,135 
Receivables from related parties   EUR    1,222    1,092 
Subtotal receivables from related parties        62,601    61,227 

 

178

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Class of assets  Currency  As of
December 31,
2020
   As of
December 31,
2019
 
      ThUS$   ThUS$ 
Current inventories  USD   1,093,028    983,338 
Subtotal Current Inventories      1,093,028    983,338 
Current tax assets  USD   128,529    87,509 
Current tax assets  ARS   -    1 
Current tax assets  CLP   3,015    1,623 
Current tax assets  EUR   218    61 
Current tax assets  MXN   -    1,806 
Current tax assets  PEN   4    - 
Current tax assets  ZAR   26    139 
Current tax assets  COP   417    294 
Current tax assets  THB   15    - 
Subtotal current tax assets      132,224    91,433 
Non-current assets or groups of assets classified as held for sale  USD   1,629    2,454 
Subtotal Non-current assets or groups of assets classified as held for sale      1,629    2,454 
Total current assets      2,569,258    2,682,166 
Other non-current financial assets  USD   51,828    8,687 
Other non-current financial assets  CLP   20    20 
Other non-current financial assets  JPY   77    71 
Subtotal Other non-current financial assets      51,925    8,778 
Other non-current non-financial assets  USD   21,236    19,101 
Other non-current non-financial assets  BRL   17    22 
Other non-current non-financial assets  COP   -    6 
Other non-current non-financial assets  EUR   7    4 
Other non-current non-financial assets  CLP   782    596 
Subtotal Other non-current non-financial assets      22,042    19,729 
Other receivables, non-current  USD   10,061    522 
Other receivables, non-current  CLF   152    165 
Other receivables, non-current  MXN   102    43 
Other receivables, non-current  CLP   850    980 
Subtotal Other receivables, non-current      11,165    1,710 
Investments classified using the equity method of accounting  USD   23,417    57,777 
Investments classified using the equity method of accounting  TRY   792    26,624 
Investments classified using the equity method of accounting  AED   47,774    9,111 
Investments classified using the equity method of accounting  EUR   11,082    14,315 
Investments classified using the equity method of accounting  INR   1,304    1,568 
Investments classified using the equity method of accounting  THB   1,624    40 
Subtotal Investments classified using the equity method of accounting      85,993    109,435 
Intangible assets other than goodwill  USD   176,282    185,951 
Intangible assets other than goodwill  MXN   1,025    1,137 
Intangible assets other than goodwill  CLP   182    136 
Intangible assets other than goodwill  EUR   696    1,134 
Intangible assets other than goodwill  CNY   222    - 
Subtotal intangible assets other than goodwill      178,407    188,358 
Purchases goodwill, gross  USD   34,438    34,438 
Purchases goodwill, gross  CLP   -    140 
Purchases goodwill, gross  EUR   7,528    148 
Subtotal Purchases goodwill, gross      41,966    34,726 
Property, plant and equipment  USD   1,719,358    1,556,160 
Property, plant and equipment  CLP   3,237    3,294 
Property, plant and equipment  EUR   10,954    4,756 
Property, plant and equipment  AED   923    - 
Property, plant and equipment  BRL   111    - 
Property, plant and equipment  MXN   2,494    5,588 
Property, plant and equipment  COP   120    108 
Property, plant and equipment  KRW   122    - 
Subtotal property, plant and equipment      1,737,319    1,569,906 
Right-of-use assets  USD   25,238    37,164 
Right-of-use assets  EUR   2,428    - 
Right-of-use assets  AED   60    - 
Right-of-use assets  MXN   2,298    - 
Subtotal Right-of-use assets      30,024    37,164 
Current tax assets, non-current  USD   90,364    32,179 
Subtotal Current tax assets, non-current      90,364    32,179 
Total non-current assets      2,249,205    2,001,985 
Total assets      4,818,463    4,684,151 

 

179

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

      As of December 31, 2020  As of December 31, 2019 
Class of liability  Currency  Up to 90 days  More than 90
days to 1 year
  Total  Up to 90 days  More than 90
days to 1 year
  Total 
      ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Current liabilities                      
Other current financial liabilities  USD  43,218  4,676  47,894  20,582  250,694  271,276 
Other current financial liabilities  CLF  20,732  329  21,061  19,518  323  19,841 
Other current financial liabilities  BRL  -  -  -  11  -  11 
Subtotal other current financial liabilities     63,950  5,005  68,955  40,111  251,017  291,128 
Lease liabilities, current  USD  -  4,750  4,750  -  7,694  7,694 
Lease liabilities, current  MXN  -  416  416  -  -  - 
Lease liabilities, current  EUR  -  362  362  -  -  - 
Subtotal Lease liabilities, current     -  5,528  5,528  -  7,694  7,694 
Trade and other payables  USD  83,425  -  83,425  44,146  -  44,146 
Trade and other payables  CLF  123  -  123  -  -  - 
Trade and other payables  BRL  9  -  9  10  -  10 
Trade and other payables  THB  30  -  30  53  -  53 
Trade and other payables  CLP  73,857  -  73,857  73,703  17,108  90,811 
Trade and other payables  CNY  1,323  -  1,323  -  -  - 
Trade and other payables  EUR  40,280  -  40,280  58,538  5  58,543 
Trade and other payables  GBP  18  -  18  17  -  17 
Trade and other payables  INR  1  -  1  1  -  1 
Trade and other payables  MXN  584  -  584  5,122  -  5,122 
Trade and other payables  PEN  5  -  5  5  -  5 
Trade and other payables  AUD  2,935  -  2,935  4,442  -  4,442 
Trade and other payables  ZAR  1,168  -  1,168  2,260  -  2,260 
Trade and other payables  AED  -  -  -  188  -  188 
Trade and other payables  COP  175  -  175  192  -  192 
Subtotal trade and other payables     203,933  -  203,933  188,677  17,113  205,790 
Trade payables due to related parties, current  USD  -  282  282  475  -  475 
Trade payables due to related parties, current  AUD  324  -  324  -  -  - 
Subtotal Trade payables due to related parties, current     324  282  606  475  -  475 
Other current provisions  USD  103,252  698  103,950  109,650  820  110,470 
Other current provisions  ARS  -  -  -  7  -  7 
Other current provisions  CLP  216  -  216  82  -  82 
Other current provisions  EUR  -  -  -  6  -  6 
Subtotal other current provisions     103,468  698  104,166  109,745  820  110,565 

 

180

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

      As of December 31, 2020  As of December 31, 2019 
Class of liability  Currency  Up to90 days  91 days to 1 year  Total  Up to90 days  91 days to 1 year  Total 
      ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Current tax liabilities  USD  -  20,981  20,981  2,863  14,994  17,857 
Current tax liabilities  CLP  -  61  61  -  17  17 
Current tax liabilities  EUR  -  642  642  -  -  - 
Current tax liabilities  MXN  -  959  959  -  -  - 
Subtotal current tax liabilities     -  22,643  22,643  2,863  15,011  17,874 
Provisions for employee benefits, current  USD  2,981  6,011  8,992  12,486  3,901  16,387 
Provisions for employee benefits, current  AUD  58  -  58  -  -  - 
Provisions for employee benefits, current  CLP  3  -  3  -  -  - 
Provisions for employee benefits, current  THB  -  -  -  -  -  - 
Provisions for employee benefits, current  MXN  43  -  43  -  -  - 
Subtotal Provisions for employee benefits, current     3,085  6,011  9,096  12,486  3,901  16,387 
Other current non-financial liabilities  USD  51,995  397  52,392  117,136  154  117,290 
Other current non-financial liabilities  THB  -  -  -  30  -  30 
Other current non-financial liabilities  BRL  2  -  2  3  -  3 
Other current non-financial liabilities  CLP  6,264  792  7,056  5,969  2,439  8,408 
Other current non-financial liabilities  CNY  60  -  60  -  -  - 
Other current non-financial liabilities  EUR  913  119  1,032  842  -  842 
Other current non-financial liabilities  MXN  121  53  174  129  64  193 
Other current non-financial liabilities  JPY  52  -  52  21  12  33 
Other current non-financial liabilities  PEN  70  -  70  70  -  70 
Other current non-financial liabilities  ZAR  -  -  -  10  -  10 
Other current non-financial liabilities  COP  -  -  -  -  -  - 
Other current non-financial liabilities  ARS  -  117  117  20  -  20 
Subtotal other current non-financial liabilities     59,477  1,478  60,955  124,230  2,669  126,899 
Total current liabilities     434,237  41,645  475,882  478,587  298,225  776,812 

 

181

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

      As of December 31, 2020 
Class of liability  Currency  Over 1 year to 2
years
  Over 2 years to 3
years
  Over 3 years to 4
years
  Over 4 years to 5
years
  Over 5 years  Total 
      ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Non-current liabilities                      
Other non-current financial liabilities  USD  -  312,730  69,376  248,664  838,399  1,469,169 
Other non-current financial liabilities  CLF  -  -  -  -  430,344  430,344 
Subtotal Other non-current financial liabilities     -  312,730  69,376  248,664  1,268,743  1,899,513 
Non-current lease liabilities  USD  1,977  -  -  -  4,158  6,135 
Non-current lease liabilities  UF  15,258  -  -  -  -  15,258 
Non-current lease liabilities  MXN  2,189  -  -  -  -  2,189 
Non-current lease liabilities  JPY  1,964  -  -  -  -  1,964 
Subtotal non-current lease liabilities     21,388  -  -  -  4,158  25,546 
Non-current Trade and other payables  USD  -  4,027  -  -  -  4,027 
Subtotal Non-current Trade and other payables     -  4,027  -  -  -  4,027 
Other non-current provisions  USD  -  36,391  -  -  26,226  62,617 
Subtotal Other non-current provisions     -  36,391  -  -  26,226  62,617 
Deferred tax liabilities  USD  -  919  -  -  155,182  156,101 
Subtotal Deferred tax liabilities     -  919  -  -  155,182  156,101 
Provisions for employee benefits, non-current  USD  31,585  -  -  -  -  31,585 
Provisions for employee benefits, non-current  CLP  610  -  -  -  -  610 
Provisions for employee benefits, non-current  MXN  -  -  -  -  -  - 
Provisions for employee benefits, non-current  JPY  4  -  -  -  -  4 
Subtotal Provisions for employee benefits, non-current     32,199  -  -  -  -  32,199 
Total non-current liabilities     53,587  354,067  69,376  248,664  1,454,309  2,180,003 
Total liabilities                    2,655,885 

 

182

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

       As of December 31, 2019 
Class of liability  Currency   Over 1 year to 2 years   Over 2 years to 3 years   Over 3 years to 4 years   Over 4 years to 5 years   Over 5 years   Total 
       ThUS$   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Non-current liabilities                                  
Other non-current financial liabilities  USD    89,896    42,336    313,749    13,749    617,055    1,076,785 
Other non-current financial liabilities  CLF    -    -    -    -    411,938    411,938 
Subtotal Other non-current financial liabilities       89,896    42,336    313,749    13,749    1,028,993    1,488,723 
Non-current lease liabilities  USD    -    -    -    -    30,203    30,203 
Subtotal non-current lease liabilities       -    -    -    -    30,203    30,203 
Non-current Trade and other payables  USD    -    -    -    -    -    - 
Subtotal Non-current Trade and other payables       -    -    -    -    -    - 
Other non-current provisions  USD    23,014    167    -    1,452    10,057    34,690 
Subtotal Other non-current provisions       23,014    167    -    1,452    10,057    34,690 
Deferred tax liabilities  USD    -    -    -    -    183,411    183,411 
Subtotal Deferred tax liabilities       -    -    -    -    183,411    183,411 
Provisions for employee benefits, non-current  USD    -    -    -    -    34,884    34,884 
Provisions for employee benefits, non-current  CLP    -    -    -    -    519    519 
Provisions for employee benefits, non-current  MXN    -    -    -    -    236    236 
Provisions for employee benefits, non-current  JPY    -    -    -    -    201    201 
Subtotal Provisions for employee benefits, non-current       -    -    -    -    35,840    35,840 
Total non-current liabilities       112,910    42,503    313,749    15,201    1,288,504    1,772,867 
Total liabilities                                2,549,679 

 

b)Effect of exchange rate changes on the statement of income

 

   For the period from January to December of the year 
Foreign currency exchange rate changes  2020   2019 
   ThUS$   ThUS$ 
Profit (loss) in foreign currency   (4,423)   (2,169)
Foreign currency translation reserve (*)   14,176    562 
Total   9,753    (1,607)

 

(*) includes MUS$ 14,580, which were transferred through sale of Grupo Tarsa, SQM Eastmed and other smaller companies.

 

The average and closing exchange rate for foreign currency is revealed in Note 3.3

 

183

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 29 Income tax and deferred taxes

 

Accounts receivable from taxes as of December 31, 2020 and December 31, 2019, are as follows:

 

29.1Current and non-current tax assets

 

(a)Current

 

Current tax assets 

As of
December 31,
2020

  

As of
December 31,
2019

 
   ThUS$   ThUS$ 
Monthly provisional income tax payments, Chilean companies   37,123    47,283 
Monthly provisional income tax payments, foreign companies   1,265    124 
Corporate tax credits (1)   1,566    1,262 
1st category tax absorbed by tax loss (2)   2,322    916 
Taxes in recovery process   89,948    41,848 
Total   132,224    91,433 

 

(b)Non-current

 

Non-current tax assets 

As of
December 31,
2020

  

As of
December 31,
2019

 
   ThUS$   ThUS$ 
Monthly provisional income tax payments, Chilean companies compensated by the specific tax on mining activity (Lithium)   6,398    6,398 
Specific tax on mining activities (IEAM) paid by Lithium (on consignment)   83,966    25,781 
Total   90,364    32,179 

 

(1)These credits are available for Companies and are related to corporate tax payments in April of the following year. These credits include, among others, credits for training expenses (SENCE), credits for acquisition of fixed assets, donations and credits in Chile for taxes paid abroad.

 

(2)This concept corresponds to the absorption of the tax losses determined by the company at the end of the year, which must be attributed to the dividends received during the year.

 

184

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

29.2Current tax liabilities

 

Current tax liabilities 

As of
December 31,
2020

  

As of
December 31,
2019

 
   ThUS$   ThUS$ 
1st Category income tax   14,736    7,863 
Foreign company income tax   7,838    9,944 
Article 21 single tax   69    67 
Total   22,643    17,874 

 

Income tax is calculated based on the profit or loss for tax purposes that is applied to the effective tax rate applicable in Chile. As established by Law No. 20,780 is 27%.

 

The royalty is determined by applying the taxable rate to the net operating income obtained, according to the chart in force, the Company currently provisioned 5% for mining royalties that involve operations in the Salar de Atacama and 5.38% for caliche extraction operations.

 

The income tax rate for the main countries where the Company operates is presented below:

 
    Income tax     Income tax  
Country   2020     2019  
Spain     25 %     25 %
Belgium     25 %     29.58 %
Mexico     30 %     30 %
United States     21% + 3,36 %     21% + 3,25 %
South Africa     28 %     28 %

 

185

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

29.3Income tax and deferred taxes

 

(a)Deferred tax assets and liabilities as of December 31, 2020

 

   Net liability position 
Description of deferred tax assets and liabilities as of December 31, 2020  Assets   Liabilities 
   ThUS$   ThUS$ 
Unrealized loss   90,585    - 
Property, plant and equipment and capitalized interest   -    (187,168)
Restoration and rehabilitation provision   6,598    - 
Manufacturing expenses   -    (107,215)
Staff severance indemnities, unemployment insurance   -    (6,669)
Vacation accrual   6,138    - 
Inventory provision   22,200    - 
Materials provision   8,812    - 
Forward   -    - 
Employee benefits   -    - 
Research and development expenses   -    (3,580)
Bad debt provision   5,072    - 
Provision for legal complaints and expenses   19,637    - 
Loan acquisition expenses   -    (5,212)
Financial instruments recorded at market value   -    (3,929)
Specific tax on mining activity   -    (3,014)
Tax loss benefit   844    - 
Other   1,454    - 
Foreign items (other)   -    (654)
Balances to date   161,340    (317,441)
Net balance        (156,101)

 

186

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(b)Deferred tax assets and liabilities as of December 31, 2019

 

   Net liability position 
Description of deferred tax assets and liabilities  Assets   Liabilities 
   ThUS$   ThUS$ 
Unrealized loss   82,075    - 
Property, plant and equipment and capitalized interest   -    (197,167)
Facility closure provision   7,313    - 
Manufacturing expenses   -    (106,420)
Staff severance indemnities, unemployment insurance   -    (6,000)
Vacation   5,591    - 
Inventory provision   23,885    - 
Materials provision   7,982    - 
Employee benefits   2,689    - 
Research and development expenses   -    (3,533)
Bad debt provision   3,542    - 
Provision for legal complaints and expenses   2,546    - 
Loan acquisition expenses   -    (3,856)
Financial instruments recorded at market value   -    (1,287)
Specific tax on mining activity   -    (1,357)
Tax loss benefit   2,296    - 
Other   -    (2,021)
Foreign items (other)   311    - 
Balances to date   138,230    (321,641)
Net balance        (183,411)

 

187

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

(c)Reconciliation of changes in deferred tax liabilities (assets) as of December 31, 2020

 

Reconciliation of changes in deferred tax liabilities (assets)  Deferred tax liability
(asset) at beginning of period
   Deferred tax
(expense)
benefit
recognized in
profit (loss) for
the year
   Deferred taxes
related to items credited
(charged) directly
to equity
   Total increases
(decreases) in
deferred tax
liabilities (assets)
   Deferred tax
liability (asset)
at end of
period
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Unrealized loss   (82,076)   (8,509)   -    (8,509)   (90,585)
Property, plant and equipment and capitalized interest   197,167    (9,999)   -    (9,999)   187,168 
Facility closure provision   (7,312)   714    -    714    (6,598)
Manufacturing expenses   106,420    795    -    795    107,215 
Staff severance indemnities, unemployment insurance   6,000    514    155    669    6,669 
Vacation accrual   (5,591)   (547)   -    (547)   (6,138)
Inventory provision   (23,885)   1,685    -    1,685    (22,200)
Materials provision   (7,982)   (830)   -    (830)   (8,812)
Forward   -    1,001    (1,001)   -    - 
Employee benefits   (2,689)   2,689    -    2,689    - 
Research and development expenses   3,534    46    -    46    3,580 
bad debt provision   (3,542)   (1,530)   -    (1,530)   (5,072)
Provision for legal complaints and expenses   (2,546)   (17,091)   -    (17,091)   (19,637)
Loan approval expenses   3,856    1,356    -    1,356    5,212 
Junior mining companies (valued based on stock price)   1,287    -    2,642    2,642    3,929 
specific tax on mining activity   1,356    1,668    (10)   1,658    3,014 
Tax loss benefit   (2,296)   1,452    -    1,452    (844)
Other   2,021    (3,475)   -    (3,475)   (1,454)
Foreign items (other)   (311)   965    -    965    654 
Total temporary differences, unused losses and unused tax credits   183,411    (29,096)   1,786    (27,310)   156,101 

 

 

188

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

(d)Reconciliation of changes in deferred tax liabilities (assets) as of December 31, 2019

 

Reconciliation of changes in deferred tax liabilities (assets)  Deferred tax
liability (asset)
at beginning of
period
  

Deferred tax
(expense)
benefit

recognized in
profit (loss) for
the year

   Deferred taxes
related to items credited
(charged)
directly to equity
   Total increases
(decreases) in
deferred tax
liabilities (assets)
   Deferred tax
liability (asset)
at end of
period
 
   ThUS$   ThUS$   ThUS$   ThUS$   ThUS$ 
Unrealized loss   (75,832)   (6,243)   -    (6,243)   (82,075)
Property, plant and equipment and capitalized interest   196,843    324    -    324    197,167 
Facility closure provision   (4,280)   (3,033)   -    (3,033)   (7,313)
Manufacturing expenses   103,760    2,660    -    2,660    106,420 
Staff severance indemnities, unemployment insurance   5,679    1,007    (686)   321    6,000 
Vacation accrual   (5,155)   (436)   -    (436)   (5,591)
Inventory provision   (28,155)   4,270    -    4,270    (23,885)
Materials provision   (6,239)   (1,743)   -    (1,743)   (7,982)
Forward   (2,169)   (514)   2,683    2,169    - 
Employee benefits   (3,309)   620    -    620    (2,689)
Research and development expenses   2,216    1,317    -    1,317    3,533 
bad debt provisions   (4,188)   646    -    646    (3,542)
Provision for legal complaints and expenses   (4,013)   1,467    -    1,467    (2,546)
Loan approval expenses   2,337    1,519    -    1,519    3,856 
Financial instruments recorded at market value   976    -    311    311    1,287 
specific tax on mining activity   3,278    (1,905)   (16)   (1,921)   1,357 
Tax loss benefit   (1,124)   (1,172)   -    (1,172)   (2,296)
Other   (5,005)   7,026    -    7,026    2,021 
Foreign items (other)   (259)   (52)   -    (52)   (311)
Total temporary differences, unused losses and unused tax credits   175,361    5,758    2,292    8,050    183,411 

 

(e)Deferred taxes related to benefits for tax losses

 

The Company’s tax loss carryforwards were mainly generated by losses in Chile, which in accordance with current Chilean tax regulations have no expiration date.

 

As of December 31, 2020, and December 31, 2019, tax loss carryforwards are detailed as follows:

 

Deferred taxes related to benefits for tax losses 

As of
December 31, 2020

  

As of
December 31, 2019

 
   ThUS$   ThUS$ 
Chile   818    2,296 
Foreign   26    - 
Total   844    2,296 

 

The tax losses as of December 31, 2020 correspond mainly to SQM S.A., SQM Potasio S.A., SIT S.A., Orcoma SpA., and Orcoma Estudio SpA.

 

The tax losses from foreign companies correspond mainly to SQM Africa Pty Ltd. And SQM (Shanghai) Chemicals.

 

189

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

(f)Movements in deferred tax assets and liabilities

 

Movements in deferred tax assets and liabilities as of December 31, 2020 and December 31, 2019 are detailed as follows:

 

  Assets (liabilities) 
Movements in deferred tax assets and liabilities 

As of
December 31, 2020

  

As of
December 31, 2019

 
   ThUS$   ThUS$ 
Deferred tax assets and liabilities, net opening balance   (183,411)   (175,361)
Increase (decrease) in deferred taxes in profit or loss   29,096    (5,758)
Decrease in deferred taxes in equity   (1,786)   (2,292)
Total   (156,101)   (183,411)

 

(g)Disclosures on income tax (expenses) benefit

 

Current and deferred tax (expenses) benefit are detailed as follows:

 

  (Expense) Income 
Disclosures on income tax expense (benefit) 

As of
December 31, 2020

  

As of
December 31, 2019

 
   ThUS$   ThUS$ 
Current income tax (expense) income          
Current tax expense   (97,374)   (116,483)
Adjustments to prior year current income tax (expense) benefit   (1,901)   12,222 
Current income tax expense, net, total   (99,275)   (104,261)
Deferred tax expense          
Deferred tax expense relating to the creation and reversal of temporary differences   26,219    2,551 
Tax adjustments related to the creation and reversal of temporary differences from the previous year   2,877    (8,309)
Deferred tax expense, net, total   29,096    (5,758)
Income tax expense   (70,179)   (110,019)

 

190

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

Tax (expenses) benefit for foreign and domestic parties are detailed as follows:

 

  (Expense) Income 
Income tax (expense) benefit 

As of
December 31, 2020

  

As of
December 31, 2019

 
   ThUS$   ThUS$ 
Current income tax benefit (expense) by foreign and domestic parties, net          
Current income tax expense, foreign parties, net   (9,782)   (7,394)
Current income tax expense, domestic, net   (89,493)   (96,867)
Current income tax expense, net, total   (99,275)   (104,261)
Deferred tax benefit (expense) by foreign and domestic parties, net          
Current income tax benefit, foreign parties, net   10,284    2,370 
Current income tax benefit (expense), domestic, net   18,812    (8,128)
Deferred tax expense, net, total   29,096    (5,758)
Income tax expense   (70,179)   (110,019)

 

(h)Equity interest in taxation attributable to equity-accounted investees

 

The Company does not recognize any deferred tax liability in all cases of taxable temporary differences associated with investments in subsidiaries, branches and associated companies or interest in joint ventures, because as indicated in the standard, the following two conditions are jointly met:

 

(i)the parent, investor or interest holder is able to control the time for reversal of the temporary difference; and

 

(ii)It is more likely than not that the temporary difference will not be reversed in the foreseeable future.

 

In addition, the Company does not recognize deferred income tax assets for all deductible temporary differences from investments in subsidiaries, branches and associated companies or interests in joint ventures because it is unlikely that they will meet the following requirements:

 

(i)Temporary differences are reversed in a foreseeable future; and

 

(ii)The Company has tax earnings, against which temporary differences can be used.

 

191

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

(i)Disclosures on the tax effects of other comprehensive income components:

 

  As of December 31, 2020 
Income tax related to other income and expense components with a charge or credit to net equity  Amount before taxes
(expense) gain
   (Expense) income for
income taxes
   Amount after taxes 
   ThUS$   ThUS$   ThUS$ 
Gain (loss) from defined benefit plans   974    (145)   829 
Cash flow hedge   (3,706)   1,001    (2,705)
Reserve for gains (losses) from financial assets measured at fair value through other comprehensive income   9,785    (2,642)   7,143 
Total   7,053    (1,786)   5,267 

 

  As of December 31, 2019 
 Income tax related to other income and expense components with a charge or credit to net equity  Amount before taxes
(expense) gain
   (Expense) income for
income taxes
   Amount after taxes 
   ThUS$   ThUS$   ThUS$ 
Gain (loss) from defined benefit plans   (3,310)   702    (2,608)
Cash flow hedge   1,908    (2,683)   (775)
Reserve for gains (losses) from financial assets measured at fair value through other comprehensive income   1,152    (311)   841 
Total   (250)   (2,292)   (2,542)

 

(j)Explanation of the relationship between (expense) benefit for tax purposes and accounting income.

 

Based on IAS 12, paragraph 81, letter “c”, the company has estimated that the method that discloses the most significant information for users of the financial statements is the numeric conciliation between the tax expense (income) and the result of multiplying the accounting profit by the current rate in Chile. The aforementioned choice is based on the fact that the Company and subsidiaries established in Chile generate a large part of the Company’s tax expense (benefit). The amounts provided by subsidiaries established outside Chile have no relative importance in the overall context.

 

Reconciliation between the tax income (expense) and the tax calculated by multiplying accounting income by the Chilean corporate income tax rate.

 

Income Tax Expense (Benefit)  (Expense) Benefit 
  

As of
December 31, 2020

  

As of
December 31, 2019

 
   ThUS$   ThUS$ 
Consolidated income before taxes   238,538    390,622 
Income tax rate in force in Chile   27%   27%
Tax expense using the statutory tax rate   (64,405)   (105,468)
Net effect of royalty tax payments   (4,659)   (4,314)
Effect of fines affected by article 21 and passive income   (1,804)   (724)
Tax effect of revenue from regular activities exempt from taxation   1,786    2,376 
Tax rate effect of non-tax-deductible expenses for determining taxable profit (loss)   (2,987)   (2,128)
Tax effect of tax rates supported abroad   (2,077)   (252)
Effects of changes resulting from classifying a permanent item as a temporary one   4,826    - 
Other tax effects from reconciliation between accounting gains and tax expenses   (859)   491 
Tax expense using the effective tax rate   (70,179)   (110,019)

 

192

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

(k)Tax periods potentially subject to verification:

 

The Group’s Companies are potentially subject to income tax audits by tax authorities in each country These audits are limited to a number of interim tax periods, which, in general, when they elapse, give rise to the expiration of these inspections.

 

Tax audits, due to their nature, are often complex and may require several years. Below, we provide a summary of tax periods that are potentially subject to verification, in accordance with the tax regulations in force in the country of origin:

 

(i)Chile

 

According to article 200 of Decree Law No 830, the taxes will be reviewed for any deficiencies in terms of payment and to generate any taxes that might arise. There is a 3-year prescriptive period for such review, dating from the expiration of the legal deadline when payment should have been made. This prescriptive period can be extended to 6 years for the revision of taxes subject to declaration, when such declaration has not been filed or has been presented with maliciously false information.

 

(ii)United States

 

In the United States, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return. In the event that an omission or error is detected in the tax return of sales or cost of sales, the review can be extended for a period of up to 6 years.

 

(iii)Mexico:

 

In Mexico, the tax authority can review tax returns up to 5 years from the expiration date of the tax return.

 

(iv)Spain:

 

In Spain, the tax authority can review tax returns up to 4 years from the expiration date of the tax return.

 

A subsidiary of the Company, SQM Iberian S.A., is being reviewed by the Spanish Tax Authority. This audit could involve adjustments to tax returns filed in Spain.

 

(v)Belgium:

 

In Belgium, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return if no tax losses exist. In the event of detecting an omission or error in the tax return, the review can be extended for a period of up to 5 years.

 

On December 31, 2019, a current tax of ThUS$ 1,068 was recognized, which corresponds to a difference in taxes in SQM Europe N.V. determined at the end of an audit of transfer prices in the 2017 trade year.

 

(vi)South Africa:

 

In South Africa, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return. In the event that an omission or error in the tax return is detected, the review can be extended for a period of up to 5 years.

 

A subsidiary of the Company, SQM Africa Pty., is being reviewed by the South African Tax Authority. This audit could involve adjustments to tax returns filed in South Africa.

 

193

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 30Assets held for sale

 

The non-current assets held for sale and the components of the disposal groups classified as held for sale are presented in the Consolidated Statement of Financial Position under the item “Non-current assets or groups of assets classified as held for sale”.

 

The following table shows the movements in assets held for sale:

 

Assets held for sale  As of
December 31,
2020
   As of
December 31,
2019
 
   ThUS$   ThUS$ 
Land   1,493    2,454 
Mining rights   136    - 
Total assets held for sale   1,629    2,454 

 

194

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

Note 31Events occurred after the reporting date

 

31.1Authorization of the financial statements

 

The consolidated financial statements of the Company and its subsidiaries, prepared for the period ended December 31, 2020, were approved and authorized for issuance by the Company´s Board of Directors on March 3, 2021.

 

31.2Disclosures on events occurring after the reporting date

 

The total financial impact of COVID-19 cannot be reasonably estimated at this time, due to uncertainty as to its severity and duration. It was anticipated that average sales volumes and prices will depend on the duration of the coronavirus in different markets, the efficiency of the measures implemented to contain the spread of the virus in each country, and the fiscal and national incentives that can be implemented in different jurisdictions to promote economic recovery. The Company continues to monitor and evaluate the spread of the coronavirus and its impact on our operations, business, financial condition and results of operations.

 

On November 11, 2020, the DOJ presented a motion to dismiss the criminal information against the Company notified in Note 23. This motion was granted by the United States District Court for the District of Columbia on January 19, 2021. Note 23 contains further details.

 

An extraordinary shareholders' meeting held on January 22, 2021 resolved, among other matters, to approve an increase in the Company’s capital of US$ 1,100,000,000 by issuing 22,442,580 Series B shares, to be offered preferentially and under the same conditions only to Series B shareholders. Pursuant to Article 69 N° 5 of Law 18,046 on Corporations, the approval of this resolution grants the dissenting Series A shareholders the right to withdraw from the Company, upon payment by the Company of the value of their shares. A dissenting shareholder will be considered to be a Series A shareholder who at the meeting has opposed the resolution giving the right to withdraw, or who did not attend the meeting, but expressed their dissent in writing to the Company within 30 days of the date of the extraordinary shareholders' meeting, which is by February 21, 2021.

 

On January 7, 2021, Ocaña y Vega Limitada filed for arbitration against the Company to claim damages associated with the early termination of two construction contracts. The arbitration claim is valued at approximately ThUS$ 377.

 

On January 25, 2020, a sub-contractor´s employee sued the Company for compensation for a work-related accident in the sum of approximately ThUS$718.

 

On February 9, 2021, two of the Company´s subsidiaries signed an agreement to conclude a dispute related to sales contracts and share of the joint venture with Sichuan SQM Migao Chemical Fertilizers Co Ltd.The Company received US$ 11.5 million as a result of this settlement.

 

On February 17, 2021, the Company reported that the Board of Directors approved the investment in the Mount Holland lithium project in Australia. This project is a joint venture with Wesfarmers Limited. The Company's share of the investment in the project is expected to reach approximately US$700 million between 2021 and 2025, according to information provided in the final feasibility study.

 

On February 23, 2021, the Company informed the CMF that the declaratory public deed referred to in the extraordinary shareholders' meeting of the Company held on January 22, 2021, where it was agreed, among other matters, to increase the share capital by US$1,100,000,000, through the issuance of 22,442,580 Series B shares, to be issued, subscribed and paid within the term expiring on January 22, 2024, and which will be offered preferentially and under the same conditions to Series B assignees of the options and/or third parties, which was subject to the Resolutory Condition requiring the exercise of the aforementioned right to withdraw of more than 0.5% of the total Series A shares of the Company, all under the terms and conditions agreed at the Shareholders' Meeting.

 

195

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

The Declaratory Deed:

 

(a)establishes the waiver by the Company's board of directors, at an extraordinary meeting held on February 20, 2021, of the Resolutory Condition;

 

(b)establishes that the legal term of 30 days for the exercise of the right to withdraw from the Capital Increase expired on February 21, 2021, and only one shareholder expressed their intention to exercise this right, for a total of 648 Series A shares, representing approximately 0.0004% of the total Series A shares. Therefore, the Resolutory Condition, had it not been for the waiver indicated above, would not have been fulfilled and would have deemed to have failed; and

 

(c)establishes that pursuant to the provisions of the Meeting: (i) the Capital Increase and related matters have become effective as of February 1, 2021, the date on which the minutes of the Meeting were legalized in a public deed; (ii) the Capital Increase and related matters have become final, since the Resolutory Condition was waived by the Company's board of directors and would have failed, in any case, as the right to withdraw was exercised for less than 0.5% of the total Series A shares within the legal term; and (iii) with the execution of the Declaratory Deed, the requirements and formalities contemplated in the Meeting were fully met.

 

On March 3, 2021, the Board of Directors agreed to amend the general policy on regular transactions with related parties, approved at the meeting held on November 21, 2018, and it also approved a revised text of the policy, which is transcribed below:

 

1.Regular transactions between the Company and Soquimich Comercial S.A., Ajay SQM Chile S.A., Ajay North America, Ajay Europe SARL, SQM Vitas Fzco, SQM Vitas Holland, SQM Vitas Brasil Agroindustria, SQM Vitas Perú S.A.C., Abu Dhabi Fertilizer Industries WWL, Plantacote NV and Pavoni & C. SpA. are as follows:

 

(a)Any sale, marketing, distribution and supply of raw materials, by-products and products extracted, processed or marketed by the Company in any capacity by the aforementioned subsidiaries and affiliated companies.

 

(b)Any advisory services provided by the Company related to the activities referred to in (a) above, and the procurement of such services by the aforementioned subsidiaries and affiliated companies;

 

(c)Any advisory services covering financial, accounting, administrative, taxation, legal, infrastructure, advertising, IT, management, insurance, personnel selection, hiring, training and any general back office services provided by the Company, and the procurement of such services by the aforementioned subsidiaries and affiliated companies.

 

(d)Any working capital finance provided by the Company to the aforementioned subsidiaries and affiliated companies not exceeding US$ 5 million in a 12 consecutive month period, based on these subsidiaries as a whole.

 

2.Any engineering, environmental and other specialized studies provided by the Company to study, develop and construct mines related to the Mt. Holland project, and all ancillary activities required to complete those studies are regular transactions between the Company and Covalent Lithium Pty Ltd.

 

3.The following transactions with related parties may be performed without complying with the requirements and procedures of Article 147 of Corporation Law, if they are regular, ordinary and required for the Company's normal business:

 

(a)Any procurement from Empresa Nacional de Telecomunicaciones S.A. and Entel PCS Telecomunicaciones S.A. of telecommunications, computer and technology services in general, including the purchase, sale, lease and supply of equipment and goods required to operate and maintain these services, for amounts not exceeding US$ 5 million over a 12 consecutive month period, and

 

(b)Any procurement from Banco de Chile of any kind of financial or brokerage transactions, purchases and sales of foreign currencies and other usual treasury transactions.

 

196

 

 

Notes to the Consolidated Financial Statements

December 31, 2020

 

 

4.The Board of Directors also unanimously agreed to expressly adopt a generally applicable authorization that allows the Company to procure the following transactions (i) those that are not a material amount, and (ii) those between legal entities in which the Company directly or indirectly owns at least 95% of the counterparty, all without the need to comply with the requirements and procedures in paragraphs 1) to 7) of Article 147 of Corporation Law. The Board of Directors has defined transactions with related parties that are a material amount as (a) those that total over 3,000 UF over a 12 consecutive month period for directors, principal executives, their related persons, their spouses or relatives up to the second degree of consanguinity, and any entity controlled directly or indirectly by any of them, and (b) the threshold determined in accordance with paragraph a) of Article 147 of Corporation Law for all other counterparties.

 

On March 3, 2021, the Board of Directors agreed to call an ordinary general shareholders' meeting for April 23, 2021.

 

Management has no knowledge of other significant events occurring between December 31, 2020 and the date of issue of these consolidated financial statements, which could have a significant effect on these.

 

197

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  CHEMICAL AND MINING COMPANY OF CHILE INC.
  (Registrant)
   
Date: March 5, 2021 /s/ Gerardo Illanes
   
  By: Gerardo Illanes
   
  CFO

 

Persons who are to respond to the collection of information contained SEC 1815 (04-09) in this form are not required to respond unless the form displays currently valid OMB control number.

 

198