15
SQM THIRD QUARTER 2017 RESULTS
SQMTHIRD QUARTER 2017 RESULTS
Statements in this presentation concerning theCompany’s business outlook or future economicperformances, anticipated profitability, revenues,expenses, or other financial items, anticipated costsynergies and product or service line growth, togetherwith other statements that are not historical facts, are“forward-looking statements” as that term is definedunder Federal Securities Laws.
Any forward-looking statements are estimates, reflectingthe best judgment of SQM based on currently availableinformation and involve a number of risks, uncertaintiesand other factors that could cause actual results to differmaterially from those stated in such statements.
Risks, uncertainties, and factors that could affect theaccuracy of such forward-looking statements areidentified in the public filing made with the Securities andExchange Commission, and forward-looking statementsshould be considered in light of those factors.
SQM
Important Notice
2
3
Potassium S p e c i a l t y P l a n t N u t r i e n t s
Iodine & Derivatives
Lithium & Derivatives
Industrial Chemicals
FERTILIZERS
SQM at a Glance
R e v e n u e L T M 1 : U S $ 2 . 1 b i l l i o n | E B I T D A L T M : U S $ 8 9 2 m i l l i o n | E B I T D A M a r g i n L T M : ~ 4 2 %
N F D / E B I T D A : . 3 | M o o d y ´ s : B a a 1 | S t a n d a r d a n d P o o r ´ s : B B B
SPECIALTY CHEMICALS
19%32%
12%
29%
5%9%17%
7%
61%
5%
Revenue Gross Profit
Contribution to Revenue vs. Gross Profit 9M20172
1 Twelve months ended September 30, 20172 Excluding “Others”
• High concentrations of potassium and lithium
• High evaporation rates
• Production rights are pursuant to a lease agreement with CORFO until 2030
• Technology and experience to efficiently operate
Caliche Ore
Technology and experience to efficiently operate
• Caliche ore is only found in Chile
• The world’s largest deposits of nitrates and iodine
• Proprietary mining rights pursuant to exploitation concessions
Salar Brines
Sodium nitrate + Potassium chloride = Potassium nitrate + (Sodium chloride)
+NaNO3
KCl = KNO3
Sustainable Operations in the North of Chile
4
Natural Resources and Experience
Review of Results
US
$ M
illio
n
US
$ M
illio
n
Revenue Contribution 9M2017/9M2016
Gross Profit Contribution 9M2017/9M2016
Impact of higher volumes outweighs lower prices in iodine and industrial chemical business lines. Prices increased in lithium and potassium business lines.
5
1,386
1,583
24 16
127 38 5
(13)
1,100
1,300
1,500
1,700
406
385 385 394
511 525 546
546
0
(21)
9
117 14 21 0
200
300
400
500
600
700
Lithium and Derivatives
27% Market Share1
51.0k MT LTM2 Sales Volumes
US$642 mm LTM Revenues
61% Contribution to LTM Gross Profit
SQM Lithium Projects
Argentina
Australia
• Minera Exar, 50/50 JV
• Caucharí-Olaroz, Jujuy
• Capacity 25,000 MT (I stage 2019) + 25,000 (II stage)
• Total CAPEX (stage I+II) ~US$675 million
• Mt. Holland integrated project, 50/50 JV
• Capacity 40,000 MT in 2022
• Initial investment US$110 million
Chile
LITHIUM CARBONATE
• Current capacity 48,000 MT
• Expansion to 63,000 in 2018
• CAPEX ~US$50 million
LITHIUM HYDROXIDE
• Current capacity 6,000 MT
• Expansion to 13,500 MT in 2018
• CAPEX ~US$30 million
Lithium Carbonate & Hydroxide
61 As of December 31, 20162 Twelve months ended September 30, 2017
Demand expected to double every 5 yearsDemand growth is based on xEVs growth
Lithium Demand
E V O L U T I O N
Demand
expected to
double
every 5
years
Source: SQM
88 116 116 11668
126 146 16852
280
400
540
0
100
200
300
400
500
600
700
800
900
2017 2025 Scenario 1 2025 Scenario 2 2025 Scenario 3
Demand forecast final application (kTM-LCE)
ElectricVehicle (EV)
208
500
650
800
Demand
growth is
based on
EVs growth
Key assumptions 2025Scenario 1
2025Scenario 2
2025Scenario 3
Total vehicles, million units 100 100 100
Electric Vehicle (EV), penetration 8% 10% 12%
Avg. LCE, kg/vehicle 35 40 45
Other batteries, % growth 8% 10% 12%
Others, % growth 3.5% 3.5% 3.5%
Lithium Supply
The largest
concentration of
new projects is in
Australia (11) and
Argentina (7)
Source: SQM (includes expansions of current producers)
Projects Status
State Projects Total capacity
(kTMLCE)
Country N
Upcoming Start-up / Construction
9 133 AustraliaChile
CanadaArgentina
Brazil
32121
Advanced Plant pilot or DFS
9 149 ArgentinaChile
AustraliaBrazil
BoliviaOther
114111
Possible Announced or PFS
20 325 AustraliaArgentina
ChinaSerbia
CanadaChileOther
4451123
Total 38 607 (includes SQM expansion)
Current projects
Upcoming projects
Advanced projects
Possible projects
N E W P R O J E C T S
Iodine and Derivatives
• Lowest-cost producer
• Main uses: X-ray contrast media - 23%, pharmaceuticals –13%, LCD - 12%.
• Expansion to 14,000 MT per year by end-2018
• Average prices in 9M2017 ~20 US$
• Expected sales volumes in 2017 ~12,500 MT
• Global demand in 2017 is expected to be ~34,900 MT (~3% annual growth)
29% Market Share1
12.4k MT LTM2 Sales Volumes
US$247 mm LTM Revenues
6% Contribution to LTM Gross Profit
Iodine
91 As of December 31, 2016 2 Twelve months ended September 30, 2017
Specialty Plant Nutrients
46% KNO3 Market Share1
902k MT LTM2 Sales Volumes
US$648 mm LTM Revenues
17% Contribution to LTM Gross Profit
• Potassium nitrate (KNO3) provides unique benefits: chlorine-free, water soluble, and fast absorption
• Water soluble segment grows at ~5% per year
SQM competitive advantage:
• Access to reserves of both potassium and nitrates
• Developed distribution network and diverse customer base
• Current production capacity: 1 million MT/year, expansion
to 1.5 million MT/year in 2018
Potassium Nitrate (KNO3)
101 As of December 31, 2016 2 Twelve months ended September 30, 2017
Potassium Chloride & Sulfate
Potassium
<3% Market Share1
1.5 million MT LTM2 Sales Volumes
US$408 mm LTM Revenues
9% Contribution to LTM Gross Profit
• MOP is the most common used potassium based fertilizer
• 2017 market size estimate ~ 63 million MT
• Major players in Belarus, Canada and Russia
• Slight Price recovery seen in 1H2017, average prices in 9M2017 ~US$278/MT
SQM competitive advantage:
• Low-cost producer of MOP
• Flexibility to produce MOP, SOP and KNO3 depending on market needs
• Effective production capacity: 2 million MT/year (including KCL for KNO3 production), expected sales in 2017 ~1.3 million MT
• Sintukola project in Republic of Congo (Kore Potash Ltd), US$20 million investment for 18% ownership stake. Feasibility study results in 2018
111 As of December 31, 2016 2 Twelve months ended September 30, 2017
Solar Salts
Industrial Chemicals
179k MT LTM1 Sales Volumes
US$142 mm LTM Revenues
7% Contribution to LTM Gross Profit
• Various traditional uses for industrial nitrates related to glass, metal treatment and explosives
• Solar Salts:
• A 50MW parabolic CSP plant with 7.5 hours of indirect storage requires ~30k MT of
solar salts
• Solar salts expected installed capacity of Concentrated Solar Power (CSP) to reach
~20GW by 2020 and supply 12% of world electricity by 2050
• Project being developed in Europe, Northern and Southern Africa, Middle East, Chile,
China and Australia
• Prices remain flat in 2017 compared to 2016
• Sales volumes expected to be over 90k MT in 2017
SQM competitive advantage:
• Operational flexibility with certain industrial sodium and potassium nitrate products
• Production of both potassium nitrate and sodium nitrate, the two raw materials in
solar salts production12
1 Twelve months ended September 30, 2017
2016-2018: Lithium Hydroxide Expansion to 13.5k MT: ~US$30 million
2017-2018: Potassium Nitrate Expansion to 1.5m MT: ~US$100 million
2017-2018: Lithium Carbonate Expansion to 63k MT: ~US$50 million
2017-2018: Iodine capacity expansion to 14k MT: ~US$30 million
2016-2019 (first stage 25k MT): Chaucharí – Olaroz project inArgentina - ~US$425 million + ~US$250 million (pre VAT) for stages Iand II, respectively. (50/50 JV: SQM will be responsible for 50% of theinvestment).
2017-2022: Mt. Holland project in Australia (50/50 JV, 40k MT)~US$110 million initial stage, total investment TBD
Historical Maintenance CAPEX: ~US$100 million
Capex
13
14
Ownership Structure1
Other Relevant Topics
Dividend Policy2
2017 Net Income distribution in 3 interim & 1 final dividend
100% 80% 60%
(a) 𝑐𝑎𝑠ℎ+𝑜𝑡ℎ𝑒𝑟 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠≥ 2.5 2.0 1.5
(b)𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦≤ 1.1 1.2 1.3
If none of the above parameters is met: 50% of 2017 Net Income
1As of September 30, 2017 2Please see the full version on our website at www.sqm.com
21%
32%
32%
15%
Bank of New York (ADRS)
Potash Corp
Pampa Group and Kowa Group
Other Chile
SQMC O N T A C T I N F O R M A T I O N :
• G e r a r d o I l l a n e s : V P o f F i n a n c eg e r a r d o . i l l a n e s @ s q m . c o m
• K e l l y O ’ B r i e n : H e a d o f I n v e s t o r R e l a t i o n s k e l l y . o b r i e n @ s q m . c o m
• I r i n a A x e n o v a : I n v e s t o r R e l a t i o n s i r i n a . a x e n o v a @ s q m . c o m
