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SQM Chemical & Mining Co of Chile

Filed: 2 Jun 21, 11:39am

 

 

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 June, 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. June 1, 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 three months ended March 31, 2021, the Spanish version of which was filed with the Chilean Commission for the Financial Market (Comisión para el Mercado Financiero or “CMF”) on May 19, 2021.

 

 

 

 

 

  

 

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

As of and for the periods ended

March 31, 2021

 

Sociedad Químicay Minera de Chile S.A. and Subsidiaries

 

In Thousands of United States Dollars

 

 

This document includes:

 

 -

Consolidated Interim Statements of Financial Position

 

-Consolidated Interim Statements of Income

 

-Consolidated Interim Statements of Comprehensive Income

 

-Consolidated Interim Statements of Cash Flows

 

-Consolidated Interim Statements of Changes in Equity

 

-Notes to the Consolidated Interim Financial Statements

 

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021  

 

 

Table of Contents –Consolidated Interim Financial Statements

 

Consolidated Interim Classified Statements of Financial Position1
Consolidated Interim Classified Statements of Financial Position2
Consolidated Statements of Income (Unaudited)3
Consolidated Statements of Comprehensive Income (Unaudited)4
Consolidated Interim Statements of Cash Flows (Unaudited)5
Consolidated Statements of Changes in Equity (Unaudited)7
Note 1   Identification and Activities of the Company and Subsidiaries10
1.1     Historical background10
1.2     Main domicile where the Company performs its production activities10
1.3     Codes of main activities10
1.4     Description of the nature of operations and main activities10
1.5     Other background11
1.6     Covid-1913
1.7     Capital Increase14
1.8     Approval of investment in Mount Holland15
Note 2   Basis of presentation for the consolidated financial statements15
2.1     Accounting period15
2.2     Consolidated financial statements16
2.3     Basis of measurement17
2.4    Accounting pronouncements17
2.5     Basis of consolidation19
2.6     Investments in associates and joint ventures20
Note 3   Significant accounting policies21
3.1     Classification of balances as current and non-current21
3.2     Functional and presentation currency21
3.3     Accounting policy for foreign currency translation21
3.4     Consolidated statement of cash flows23
3.5     Accounting policy for Financial assets23
3.6     Financial Asset Impairment24
3.7     Financial liabilities24
3.8     Reclassification of financial instruments24
3.9     Financial instrument derecognition24
3.10   Derivative and hedging financial instruments25
3.11    Derivative financial instruments not considered as hedges25
3.12   Deferred acquisition costs from insurance contracts26
3.13   Leases26
3.14   Inventory measurement27
3.15   Transactions with non-controlling interests28
3.16   Related party transactions28

 

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021  

 

 

3.17   Property, plant and equipment28
3.18   Depreciation of property, plant and equipment29
3.19   Goodwill29
3.20   Intangible assets other than goodwill30
3.21   Research and development expenses31
3.22   Exploration and evaluation expenses31
3.23   Impairment of non-financial assets32
3.24   Minimum dividend32
3.25   Earnings per share32
3.26   Capitalization of interest expenses33
3.27   Other provisions33
3.28   Obligations related to employee termination benefits and pension commitments33
3.29   Compensation plans34
3.30   Revenue recognition34
3.31   Finance income and finance costs34
3.32   Current income tax and deferred34
3.33   Operating segment reporting35
3.34   Primary accounting criteria, estimates and assumptions36
3.35   Environment36
Note 4   Financial risk management37
4.1     Financial risk management policy37
4.2     Risk Factors37
4.3     Risk measurement41
Note 5   Separate information on the main office, parent entity and joint action agreements42
5.1     Parent’s stand-alone assets and liabilities42
5.2     Parent entity42
Note 6      Board of Directors, Senior Management and Key management personnel43
6.1     Remuneration of the Board of Directors and Senior Management43
6.2     Key management personnel compensation45
Note 7   Background on companies included in consolidation and non-controlling interests46
7.1     Background on companies included in consolidation46
7.2     Assets, liabilities, results of consolidated subsidiaries as of March 31, 2021 and for the period then ended49
7.3     Background on non-controlling interests53
Note 8   Equity-accounted investees54
8.1     Investments in associates recognized according to the equity method of accounting54
8.2     Assets, liabilities, revenue and expenses of associates56
8.3     Other information57
Note 9   Joint Ventures58
9.1     Investment in joint ventures accounted for under the equity method of accounting58
9.2    Assets, liabilities, revenue and expenses from joint ventures61
9.3    Other Joint Venture disclosures62
9.4     Disclosure of interests in joint ventures63
9.5     Joint Ventures63

 

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021  

 

 

Note 10    Cash and cash equivalents64
10.1   Types of cash and cash equivalents64
10.2   Short-term investments, classified as cash equivalents64
10.3   Information on cash and cash equivalents by currency65
10.4   Amount restricted cash balances65
10.5   Short-term deposits, classified as cash equivalents66
10.6   Net Debt reconciliation68
Note 11   Inventories69
Note 12    Related party disclosures71
12.1   Related party disclosures71
12.2    Relationships between the parent and the entity71
12.3   Detailed identification of related parties and subsidiaries72
12.4   Detail of related parties and related party transactions75
12.5   Trade receivables due from related parties, current:76
12.6   Trade payables due to related parties, current:76
12.7   Other disclosures:76
Note 13 Financial instruments77
13.1   Types of other current and non-current financial assets77
13.2   Trade and other receivables78
13.3   Hedging assets and liabilities81
13.4   Financial liabilities82
13.5   Trade and other payables93
13.6    Financial asset and liability categories94
13.7   Fair value measurement of finance assets and liabilities96
13.8    Estimated fair value of financial instruments99
Nota 14 Right-of-use assets and Lease liabilities100
14.1 Right-of-use assets100
14.2   Lease liabilities101
Note 15   Intangible assets and goodwill107
15.1   Balances107
Note 16    Property, plant and equipment114
16.1   Types of property, plant and equipment114
16.2   Conciliation of changes in property, plant and equipment by type:116
16.3   Detail of property, plant and equipment pledged as guarantee120
16.4   Cost of capitalized interest, property, plant and equipment120
Note 17   Other current and non-current non-financial assets121
Note 18    Employee benefits123
18.1   Provisions for employee benefits123
18.2    Policies on defined benefit plan123
18.3    Other long-term benefits124
18.4   Post-employment benefit obligations124
18.5   Staff severance indemnities125
18.6   Executive compensation plan126

 

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021  

 

 

Note 19   Provisions and other non-financial liabilities127
19.1   Types of provisions127
19.2   Description of other provisions128
19.3   Other non-financial liabilities, Current129
19.4   Changes in provisions130
Note 20   Disclosures on equity131
20.1   Capital management131
20.2    Operational restrictions and financial limits132
20.3   Disclosures on preferred share capital133
20.4   Disclosures on reserves in Equity134
20.5   Dividend policies136
20.6   Interim and provisional dividends138
20.7   Potential and provisional dividends138
Note 21   Contingencies and restrictions139
21.1   Lawsuits and other relevant events139
21.2   Environmental contingencies141
21.3   Tax Contingencies141
21.4    Contingencies regarding to the Contracts with Corfo:142
21.5    Contingencies related to the Class Action lawsuit142
21.6   Contingencies associated with conflicts between shareholders of the Abu Dhabi Fertilizer Industries Company142
21.7   Restricted or pledged cash142
21.8   Securities obtained from third parties143
21.9   Indirect guarantees143
Note 22    Lawsuits and complaints144
Note 23   Environment145
23.1    Disclosures of disbursements related to the environment145
23.2   Detailed information on disbursements related to the environment146
23.3   Description of each project, indicating whether these are in process or have been finished155
Note 24   Gains (losses) from operating activities in the statement of income of expenses, included according to their nature160
24.1   Revenue from operating activities customer activities160
24.2   Cost of sales162
24.3   Other income163
24.4   Administrative expenses163
25.5   Other expenses164
24.6   Other gains164
24.7   (Impairment) /reversion of value of financial assets impairment losses165
24.8   Summary of expenses by nature165
24.9   Finance expenses166
24.10   Finance income166
Note 25   Reportable segments167
25.1   Reportable segments167

 

 

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021  

 

 

25.2   Reportable segment disclosures:169
25.3   Statement of comprehensive income classified by reportable segments based on groups of products171
25.4   Disclosures on geographical areas173
25.5   Disclosures on main customers173
25.6   Segments by geographical areas174
Note 26   Effect of fluctuations in foreign currency exchange rates175
Note 27   Disclosures on the effects of fluctuations in foreign currency exchange rates177
Note 28   Income tax and deferred taxes183
28.1   Current and non-current tax assets183
28.2   Current tax liabilities184
28.3   Income tax and deferred taxes185
Note 29    Events occurred after the reporting date193
29.1   Authorization of the financial statements193
29.2   Disclosures on events occurring after the reporting date193

 

 

 

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

Consolidated Interim Classified Statements of Financial Position

 

ASSETS Note N°  

As of

March 31,
2021
(Unaudited)

  

As of
December 31,
2020
(Audited)

 
   ThUS$  ThUS$ 
Current Assets            
Cash and cash equivalents  10.1   537,538   509,102 
Other current financial assets  13.1   303,761   348,069 
Other current non-financial assets  17   67,500   57,399 
Trade and other receivables, current  13.2   449,720   365,206 
Trade receivables due from related parties, current  12.5   55,735   62,601 
Current inventories  11   1,069,894   1,093,028 
Current tax assets  28.1   152,448   132,224 
Total current assets other than those classified as held for sale or disposal      2,636,596   2,567,629 
Non-current assets or groups of assets classified as held for sale      656   1,629 
Total non-current assets held for sale      656   1,629 
Total current assets      2,637,252   2,569,258 
             
Non-current assets            
Other non-current financial assets  13.1   33,822   51,925 
Other non-current non-financial assets  17   22,310   22,042 
Trade receivables, non-current  13.2   11,445   11,165 
Investments classified using the equity method of accounting  8.1-9.3   82,996   85,993 
Intangible assets other than goodwill  15.1   177,613   178,407 
Goodwill  15.1   41,966   41,966 
Property, plant and equipment net  16.1   1,747,617   1,737,319 
Right-of-use assets  15.1   38,177   30,024 
Tax assets, non-current  28.1   90,364   90,364 
Total non-current assets      2,246,310   2,249,205 
Total assets      4,883,562   4,818,463 

 

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

 

1

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

Consolidated Interim Classified Statements of Financial Position

 

Liabilities and Equity Note N°  

As of
March 31,
2021
(Unaudited)

  

As of
December 31,
2020
(Audited)

 
     ThUS$  ThUS$ 
Current liabilities            
Other current financial liabilities  13.4   47,232   68,955 
Lease liabilities, current  14.2   7,349   5,528 
Trade and other payables, current  13.5   193,627   203,933 
Trade payables due to related parties, current  12.6   -   606 
Other current provisions  19.1   101,393   104,166 
Current tax liabilities  28.2   24,605   22,643 
Provisions for employee benefits, current  18.1   6,490   9,096 
Other current non-financial liabilities  19.3   133,900   60,955 
Total current liabilities      514,596   475,882 
Non-current liabilities            
Other non-current financial liabilities  13.4   1,887,878   1,899,513 
Lease liabilities, non-current  14.2   32,006   25,546 
Trade and other payables, non-current  13.5   5,487   4,027 
Other non-current provisions  19.1   54,085   62,617 
Deferred tax liabilities  28.3   171,927   156,101 
Provisions for employee benefits, non-current  18.1   29,283   32,199 
Total non-current liabilities      2,180,666   2,180,003 
Total liabilities      2,695,262   2,655,885 
             
Equity            
Equity attributable to owners of the Parent  20         
Share capital      479,821   477,386 
Retained earnings      1,661,732   1,638,267 
Other reserves      6,898   7,432 
Equity attributable to owners of the Parent      2,148,451   2,123,085 
Non-controlling interests      39,849   39,493 
Total equity      2,188,300   2,162,578 
Total liabilities and equity      4,883,562   4,818,463 

 

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

 

2

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

Consolidated Statements of Income (Unaudited)

 

Consolidated Interim Statements of Income Note N°  For the period from January to
March of the year
 
     2021  2020 
     ThUS$  ThUS$ 
Revenue  24.1   528,477   392,037 
Cost of sales  24.2   (391,834)  (284,292)
Gross profit      136,643   107,745 
Other income  24.3   2,768   2,243 
Administrative expenses  24.4   (24,635)  (24,533)
Other expenses  24.5   (1,098)  (4,527)
Impairment of financial assets and reversal of impairment losses  24.7   1,240   1,769 
Other gains  24.6   4   699 
Profit from operating activities      114,922   83,396 
Finance income  24.10   799   6,761 
Finance costs  16-24.9   (19,920)  (23,067)
Share of profit of associates and joint ventures accounted for using the equity method  8.1-9.3   2,239   1,618 
Foreign currency translation differences  26   (2,326)  (2,661)
Profit before taxes      95,714   66,047 
Income tax expense  28.3   (26,000)  (20,592)
Profit net      69,714   45,455 
Profit attributable to:            
Profit attributable to Owners of the Parent      67,972   44,987 
Profit attributable to Non-controlling interests      1,742   468 
       69,714   45,455 

  

Earnings per share  Note N°  For the period from January to
March of the year
 
      2021  2020 
      ThUS$  ThUS$ 
Common shares            
Basic earnings per share (US$ per share)      0.2582   0.1709 
Diluted common shares            
Basic earnings per share (US$ per share)      0.2582   0.1709 

 

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

 

3

 

 

 

 

 

Notes to the Consolidated Interim Financial Statements  

 

March 31, 2021
 

 

Consolidated Statements of Comprehensive Income (Unaudited)

 

  For the period from January to March of the year 
  2021  2020 
Consolidated Statements of Comprehensive Income ThUS$  ThUS$ 
Profit net  69,714   45,455 
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  3,231   (280)
Gains (losses) from financial assets measured irrevocably at fair value through other comprehensive income  3,812   (1,994)
Total other comprehensive income (loss) that will not be reclassified to profit for the year, before taxes  7,043   (2,274)
Items of other comprehensive income that will be reclassified to profit for the year, before taxes        
Foreign currency exchange gains (losses)  1,551   (6,455)
(Losses) gains from cash flow hedges  2,882   (18,440)
Total other comprehensive income that will be reclassified to profit for the year  4,433   (24,895)
Other items of other comprehensive income, before taxes  11,476   (27,169)
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  (866)  538 
Benefit (income tax) relating to (losses) gains on financial assets measured irrevocably at fair value through other comprehensive income  (471)  78 
Total income tax relating to components of other comprehensive income that will be not reclassified to profit for the year  (1,337)  616 
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  (778)  4,979 
Total income tax relating to components of other comprehensive income that will be reclassified to profit for the year  (778)  4,979 
         
Total other comprehensive income  9,361   (21,574)
Total comprehensive income  79,075   23,881 
Comprehensive income attributable to        
Comprehensive income attributable to owners of the parent  77,254   22,973 
Comprehensive income attributable to non-controlling interest  1,821   908 
   79,075   23,881 

 

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

 

4

 

 

Notes to the Consolidated Interim Financial Statements  

 

March 31, 2021
 

 

Consolidated Interim Statements of Cash Flows (Unaudited)

 

     For the period from January to March of the year 
     2021  2020 
Consolidated Interim Statements of Cash Flows Note N°  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      490,959   466,548 
Cash receipts from premiums and benefits, annuities and other benefits from policies entered      689   1,051 
Cash receipts derived from sub-leases      57   58 
Classes of Payments            
Cash payments to suppliers for the provision of goods and services      (419,961)  (435,610)
Cash payments relating to variable leases      (146)  (36)
Other payments related to operating activities      (4,319)  (8,536)
Net cash generated from operating activities      67,279   23,475 
Dividends received      -   3,078 
Interest paid      (23,092)  (11,694)
Interest paid on lease liabilities      1,143   5,191 
Interest received      (353)  (341)
Income taxes paid      (27,353)  (39,580)
Other cash inflows (1)      16,508   33,858 
Net cash generated from operating activities      34,132   13,987 
             
Cash flows from (used in) investing activities            
Proceeds from the sale of equity instruments      10,123   - 
Proceeds from the sale of property, plant and equipment      -   23 
Other payments to acquire interest in joint ventures      -   (1,432)
Acquisition of property, plant and equipment      (66,711)  (74,026)
Proceeds from sales of intangible assets      2,025   78 
Proceeds (payments) related to futures, forward options and swap contracts      3,343   (576)
Purchases of intangible assets      -   446 
Loans to related parties      15,000   - 
Cash flows Proceeds from the sale of non-controlling interests      8,340   - 
Other cash inflows (outflows) (2)      31,921   (181,760)
Cash flow from (used in) investing activities      4,041   (257,247)

 

(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 interim financial statements.

 

5

 

 

Notes to the Consolidated Interim Financial Statements  

 

March 31, 2021
 

 

Consolidated Interim Statements of Cash Flows (Unaudited)

 

     For the period from January to March of the year 
     2021  2020 
Consolidated Statements of Cash Flows Note N°  ThUS$  ThUS$ 
Cash flows generated from (used in) financing activities            
Repayment of lease liabilities      (1,935)  (2,001)
Proceeds from long-term loans      -   400,000 
Repayment of borrowings      (7,055)  (7,506)
Capital increase      2,435   - 
Net cash generated (used in) from financing activities      (6,555)  390,493 
             
Net Increase in cash and cash equivalents before the effect of changes in the exchange rate      31,618   147,233 
Effects of exchange rate fluctuations on cash and cash equivalents      (3,182)  (8,164)
Increase in cash and cash equivalents      28,436   139,069 
Cash and cash equivalents at beginning of period      509,102   588,530 
Cash and cash equivalents at end of period  10   537,538   727,599 

 

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

 

6

 

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021 

 

Consolidated Statements of Changes in Equity (Unaudited)

 

  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 
Consolidated Statements of Changes in Equity ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Equity at January 1, 2021  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 
Net profit  -   -   -   -   -   -   -   67,972   67,972   1,742   69,714 
Other comprehensive income  -   1,492   2,104   3,341   2,345   -   9,282   -   9,282   79   9,361 
Comprehensive income  -   1,492   2,104   3,341   2,345   -   9,282   67,972   77,254   1,821   79,075 
Sale of equity instruments irrevocably recognized in OCI  -   -   -   (9,764)  -   -   (9,764)  9,764   -   -   - 
Dividends (1)  -   -   -   -   -   -   -   (54,378)  (54,378)  (1,465)  (55,843)
Capital increases  2,435   -   -   -   -   -   -   -   2,435   -   2,435 
Other increases (decreases) in equity  -   -   -   -   -   (52)  (52)  107   55   -   55 
Total changes in equity  2,435   1,492   2,104   (6,423)  2,345   (52)  (534)  23,465   25,366   356   25,722 
Equity as of March 31, 2021  479,821   (10,077)  6,595   449   (6,335)  16,266   6,898   1,661,732   2,148,451   39,849   2,188,300 

 

  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 
Consolidated Statements of Changes in Equity ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Equity at January 1, 2020  47 7,386   (25,745)  7,196   (270)  (9,490)  14,086   (14,223)  1,623,104   2,086,267   48,205   2,134,472 
Net Profit  -   -   -   -   -   -   -   44,987   44,987   468   45,455 
Other comprehensive income  -   (6,879)  (13,461)  (1,456)  (218)  -   (22,014)  -   (22,014)  440   (21,574)
Comprehensive income  -   (6,879)  (13,461)  (1,456)  (218)  -   (22,014)  44,987   22,973   908   23,881 
Dividends (1)  -   -   -   -   -   -   -   (44,987)  (44,987)  (2,252)  (47,239)
Other increases (decreases) in equity  -   -   -   -   -   1,608   1,608   -   1,608   (2,279)  (671)
Total changes in equity  -   (6,879)  (13,461)  (1,456)  (218)  1,608   (20,406)  -   (20,406)  (3,623)  (24,029)
Equity as of March 31, 2020  477,386   (32,624)  (6,265)  (1,726)  (9,708)  15,694   (34,629)  1,623,104   2,065,861   44,582   2,110,443 

 

(1)See Note 20.6

 

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

7

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021 

 

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;

 

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;

 

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 Interim Financial Statements
March 31, 2021 

 

IFRIC’’ International Financial Reporting Interpretations Committee;

 

IPC” Consumer Price Index;

 

IRS” interest 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;

 

ILO” International 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 Interim Financial Statements
March 31, 2021     

 

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 Interim Financial Statements
March 31, 2021     

 

(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 oil drilling, and to produce carrageenan.

 

(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.

 

1.5Other background

 

(a)Employees

 

As of March 31, 2021, and 2020, the workforce was as follows:

 

  As of March 31, 2021  As of December 31, 2020 
Employees SQM S.A.  other subsidiaries  Total  SQM S.A.  other subsidiaries  Total 
Executives  31   88   119   30   85   115 
Professionals  101   1,170   1,271   94   1,156   1,250 
Technicians and operators  263   3,343   3,606   267   3,310   3,577 
Foreign employees  17   456   473   17   548   565 
Overall total  412   5,057   5,469   408   5,099   5,507 

 

11

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

(b)Main shareholders

 

As of March 31, 2021, there were 1,510 shareholders.

 

Following table shows information about the main shareholders of the Company’s Series A or Series B shares in circulation as of March 31, 2021 and 2020, 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 March 31, 2021 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%  -   -   23.76%
The Bank of New York Mellon, ADRs  -   -   54,616,273   45.35%  20.75%
Sociedad de Inversiones Pampa Calichera S.A. (2)  44,989,231   31.50%  1,222,971   1.02%  17.55%
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 de Chile via State Street  1,290   0.00%  7,239,451   6.01%  2.75%
Euroamerica C de B S. A.  -   -   7,237,134   6.01%  2.75%
Banco Santander via foreign investor accounts  -   -   6,922,609   5.75%  2.63%
Banco de Chile non-resident third party accounts  -   -   5,121,957   4.25%  1.95%
Inversiones la Esperanza de Chile Limitada  4,147,263   2.90%  46,500   0.04%  1.59%
Banchile Corredora de Bolsa S. A.  410,894   0.29%  2,302,178   1.91%  1.03%
AFP Habitat S.A. for Pension Fund C  -   -   2,275,556   1.89%  0.86%

 

12

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

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%

 

(1) As reported by DCV, which records the Company's shareholders' register as of March 31, 2021 and December 31, 2020, Inversiones TLC SpA, a subsidiary of Tianqi, is the direct owner of 62,556,568 shares of The Company 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 March 31, 2021, Tianqi owns 25.86% of SQM's total Series A and B shares.

 

(2) as of March 31, 2021, Sociedad de Inversiones Pampa Calichera S.A. has 52,330,280 Series A and B shares; 6,118,078 Series B shares are held by different brokers. As of December 31, 2020, Sociedad de Inversiones Pampa Calichera S.A. has 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.

 

13

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

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).

 

(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 March 31, 2021, there have been no significant changes in the impacts associated with COVID-19 reported to the CMF.

 

1.7Capital Increase

 

At the Company's Extraordinary Shareholders' Meeting held on January 22, 2021, it was resolved, among other matters, to approve a capital increase 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 number 5 of Law 18,046 on Corporations, 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 a Series A shareholder who opposed the resolution at the meeting, giving them 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 before February 21, 2021. Further details can be found in Note 29.

 

14

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

On April 28, 2021, the Company completed a US$1.1 billion capital increase. The capital increase was approved at an extraordinary shareholders’ meeting held by the Company on January 22, 2021. It included a mandatory 30-day pre-emptive rights offering, under Chilean law, to existing holders of the Company’s Series B common stock and a corresponding pre-emptive rights offering to existing holders of American Depositary Shares (ADSs). Existing shareholders received transferable share rights to subscribe for shares of Series B common stock at a subscription price of US$50 per share and the share rights were traded in Chile on the Santiago Stock Exchange and the Electronic Stock Exchange. Existing ADS holders received transferable ADS rights to subscribe for ADSs at a subscription price of US$50 per ADS and the ADS rights were traded in the U.S. on the New York Stock Exchange. The pre-emptive rights offerings ended on April 24, 2021 with respect to the share rights in Chile and on April 19, 2021 with respect to the ADS rights in the U.S. Of the 22,441,932 new Series B shares offered in the pre-emptive rights offerings, a total of 21,687,549 Series B shares (including shares in the form of ADSs), i.e. almost 97% of the Serie B shares offered, were suscribed in the preemptive rights offerings. The remaining 754,383 Series B shares that were not subscribed for in the pre-emptive rights offerings were offered and placed in auctions (remates) conducted through the Santiago Stock Exchange to investors in Chile and outside Chile (including in the United States) on April 28, 2021, at an average price of approximately US$54 per share.

 

1.8Approval of investment in Mount Holland

 

On February 17, 2021, the Board of Directors approved the investment in the Mount Holland lithium project in Western Australia. SQM's share of the project investment is expected to be approximately US$700 million, between 2021 and 2025. The feasibility study confirms an expected initial production capacity of 50,000 metric tons of lithium hydroxide during the second half of 2024.

 

Note 2Basis of presentation for the consolidated financial statements

 

2.1Accounting period

 

These consolidated financial statements cover the following periods:

 

(a)Consolidated Interim Statements of Financial Position as of March 31, 2021 and December 31, 2020.

(b)Consolidated Interim Statements of Income for the three-month periods ended March 31, 2021 and 2020.

(c)Consolidated Interim Statements of Comprehensive Income for the three-month periods ended March 31, 2021 and 2020.

(d)Consolidated Interim Statements of Changes in Equity for the three-month periods ended March 31, 2021 and 2020.

(e)Consolidated Interim Statements of Cash Flows for the three-month periods ended March 31, 2021 and 2020.

 

15

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

2.2Consolidated financial statements

 

The consolidated interim financial statements of Sociedad Química y Minera de Chile S.A. and its subsidiaries were prepared in accordance with la IAS 34 “Interim Financial Reporting”.

 

The consolidated interim financial statements should be read in conjunction with the annual financial statements as of December 31, 2020.

 

The accounting principles and criteria used in these interim financial statements were consistently applied throughout both periods and to the annual financial statements as of December 31, 2020. There have been no changes in the methods used to calculate accounting estimates during the periods reported.

 

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

 

16

 

 

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

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, 2021:

 

Amendments and improvements Description Mandatory for annual periods
beginning on or after
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Reform to the referential interest rate (IBOR)- Fase 2” Published in August 2020. These amendments provide certain simplifications in relation to the reform to the referential interest rates, including the replacement of a reference rate by an alternative. 01-01-2021
     

Amendment to IFRS 16 “Lease Concessions” - Published in March 2021.

 This amendment extends by one year the period of application of the practical case of IFRS 16 Leases (contained in the amendment to that standard published in May 2020), with the purpose of assisting lessees in accounting for COVID-19 related rental concessions. The amendment is effective for annual periods beginning on or after April 1, 2021. However, early adoption is permitted even for financial statements not authorized for issue as of March 31, 2021. 01-01-2021

 

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

 

17

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

(b)Standards, interpretations and amendments issued that had not become effective for financial statements beginning on January 1, 2021 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
     
Amendments to IAS 1: “Presentation of the Financial Statements” and Practice Statement “Accounting policies, changes in accounting estimates and errors” published in February 2021. The amendments are intended to improve disclosures of accounting policies and to help users of financial statements distinguish between changes in accounting estimates and changes in accounting policies. 01-01-2023
     
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.

 

18

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

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 7.

 

19

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

2.6Investments in associates and 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.

 

(a)Joint ventures

 

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.

 

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''.

 

20

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

Note 3       Significant 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.

 

21

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

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 
  

As of

March 31,

2021

  

As of

December 31, 2020

  

As of

March 31,

2021

  

As of

December 31, 2020

 
Currencies ThUS$  ThUS$  ThUS$  ThUS$ 
Brazilian real  5.67   5.18   5.64   5.14 
New Peruvian sol  3.74   3.62   3.71   3.60 
Argentine peso  91.99   84.14   91.09   82.62 
Japanese yen  110.63   103.30   108.90   103.81 
Euro  0.85   0.81   0.84   0.82 
Mexican peso  20.44   19.93   20.77   19.97 
Australian dollar  1.31   1.30   1.30   1.33 
Pound Sterling  0.72   0.74   0.72   0.74 
South African rand  14.76   14.61   14.97   14.88 
Chilean peso  721.82   710.95   726.45   731.92 
Chinese yuan  6.56   6.51   6.51   6.53 
Indian rupee  73.11   73.30   72.78   73.65 
Thai Baht  31.23   29.94   30.81   30.08 
Turkish lira  8.24   7.36   7.68   7.70 
UF (*)  40.72   40.89   40.42   39.73 

 

(*) 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.

 

22

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

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 period, 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. Amounts presented in other comprehensive income will not be subsequently transferred to profit or loss.

 

23

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

3.6Financial 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 contract 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 expectations and 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 24.7. The subsequent recovery of previously canceled amounts are credited to the same line.

 

3.7Financial 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.

 

3.8Reclassification 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.

 

3.9Financial 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.

 

24

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

3.10Derivative 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.

 

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 13.3. 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.

 

3.11Derivative 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 March 31, 2021, and December 31, 2020, the Company does not have any embedded derivatives.

 

25

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

3.12Deferred 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.

 

3.13Leases

 

(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.

 

(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.

 

26

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

3.14Inventory 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 Interim Financial Statements

March 31, 2021

 

3.15Transactions 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.

 

3.16Related 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.

 

3.17Property, 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 Interim Financial Statements

March 31, 2021

 

 

3.18Depreciation 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   10   9 
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 

 

3.19Goodwill

 

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 Interim Financial Statements

March 31, 2021  

 

 

3.20Intangible 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

 

The finite useful life of mining properties is calculated using the productive unit method, except for the mining properties owned by Corfo, which have been leased to the Company and grant it the right to exclusively exploit them until December 31, 2030.

 

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 Interim Financial Statements

March 31, 2021  

 

 

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
Corfo Mining properties (1) 9 years 9 years
Mining rights Unit-production method
IT programs 2 years 8 years

 

(1) Mining properties owned by CORFO and leased to the Company, which grant it the exclusive right to exploit them until December 31, 2030.

 

3.21Research and development expenses

 

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

 

3.22Exploration 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 Interim Financial Statements

March 31, 2021 

 

 

3.23Impairment 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 March 31, 2021, the WACC rate was 9.96%.

 

3.24Minimum 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 20.4).

 

3.25Earnings 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 Interim Financial Statements

March 31, 2021  

 

 

3.26Capitalization 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.

 

3.27Other 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.

 

3.28Obligations 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 18.4).

 

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 18.4).

 

33

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021  

 

 

3.29Compensation 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 18.6).

 

3.30Revenue 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.

 

3.31Finance 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.

 

3.32Current 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 Interim Financial Statements

March 31, 2021  

 

 

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.

 

3.33Operating 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 Interim Financial Statements

March 31, 2021  

 

 

3.34Primary accounting criteria, estimates and assumptions

 

Management is responsible for the information contained in these consolidated annual accounts, 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 3.20, 15 and 16).

 

·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 15 and 16).

 

·Assumptions used in calculating the actuarial amount of pension-related and severance indemnity payment benefit commitments (See Note 18) 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 21).

 

·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 11).

 

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.

 

3.35Environment

 

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 Interim Financial Statements

March 31, 2021  

 

 

Note 4 Financial risk management

 

4.1Financial 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.

 

4.2Risk 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 13.2 b) and the associated accounting policy can be found in Note 3.6.

 

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, 2020, 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.

 

37

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

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

March 31,
2021

 
Financial institution Financial assets Moody´s  S&P  Fitch  ThUS$ 
Banco de Crédito e Inversiones Time deposits  P-1   A-1   -   21,506 
Banco de Chile Time deposits  P-1   A-1   -   11,506 
Banco Itau Corpbanca Time deposits  P-2   A-2   -   7,553 
Banco Santander – Santiago Time deposits  P-1   A-1   -   8,305 
Scotiabank Sud Americano Time deposits  -   -   F1+   4,302 
JP Morgan US dollar Liquidity Fund Institutional Investment fund  Aaa-mf   AAAm   AAAmmf   78,760 
Legg Mason - Western Asset Institutional cash reserves Investment fund  -   AAAm   AAAmmf   107,631 
Total                239,563 

 

    Rating  

As of
March 31,
2021

 
Financial institution Financial assets Moody´s  S&P  Fitch  ThUS$ 
Banco de Crédito e Inversiones 90 days to 1 year  P-1  ��A-1   -   152,956 
Banco Itaú Corpbanca 90 days to 1 year  P-2   A-2   -   90,111 
Banco Santander – Santiago 90 days to 1 year  P-1   A-1   -   46,202 
Scotiabank Sud Americano 90 days to 1 year  -   -   F1+   8,006 
Total                297,275 

 

    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 

 

38

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

    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 

 

(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 first quarter of 2021, approximately US$ 118 million accumulated in expenses are associated with the Peso.

 

As of March 31, 2021, 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$ 20.04 million. As of December 31, 2020, a liability was recognized amounting to US$ 18.41 million.

 

Furthermore, on March 31, 2021, 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$ 5.3 million in liabilities. On December 31, 2020, a liability was recognized for an amount of US$ 21 million.

 

The Company had the following derivative contracts as of March 31, 2021 (at the absolute value of the sum of their notional values), to hedge the difference between its assets and liabilities: US$ 68.25 million in Chilean peso/US dollar derivative contracts, US$ 65.9 million in Euro/US dollar derivative contracts, US$ 14.17 million in South African rand/US dollar derivative contracts, US$ 91.2 million in Chinese renminbi/US dollar derivative contracts and US$ 11.96 million in other currencies.

 

The Company also had US$ 190.79 million in derivative contracts to hedge its Chilean peso term deposit investments.

 

39

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

These derivative contracts are held with domestic and foreign banks, which have the following credit ratings.

 

     Rating 
Financial institution Financial assets  Moody´s   S&P   Fitch 
Banco crédito e inversiones Derivative  P-1   A-1   - 
Banco BICE Derivative  -   A2   F2 
Banco Estado Derivative  P-1   A-1   - 
Merrill Lynch International Derivative  A   A-   A+ 
Banco Santander - Santiago Derivative  P-2   A-2   - 
Banco Itau-Corpbanca Derivative  P-2   A-2   - 
JP Morgan Derivative  A   A-   AA- 
Morgan Stanley Derivative  A+   BBB+   A 
The Bank of Nova Scotia Derivative  A   A+   AA- 

 

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 March 31, 2021, 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.

 

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 March 31, 2021, this was 5.12).

 

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 March 31, 2021, the Company had unused, available revolving credit facilities with banks, for a total of US$ 493 million.

 

 

 

1 All current assets divided by all current liabilities.

 

40

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

 

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

 

  Nature of undiscounted cash flows 

As of March 31, 2021

(figures expressed in millions of US dollars)

 Carrying
amount
  Less than 1
year
  1 to 5 years  Over 5 years  Total 
Bank borrowings  70.32   0.92   71.41   -   72.33 
Unsecured obligations (1)  1,861.05   150.31   848.02   1,706.64   2,704.97 
Sub total  1,931.37   151.23   919.43   1,706.64   2,777.3 
Hedging liabilities  21.47   3.76   14.83   10.65   29.24 
Derivative financial instruments  0.96   0.96   -   -   0.96 
Sub total  22.43   4.72   14.83   10.65   30.20 
Current and non-current lease liabilities  39.36   8.59   28.69   6.37   43.65 
Trade accounts payable and other accounts payable  193.63   193.63   -   -   193.63 
Total  2,186.79   358.17   962.95   1,723.66   3,044.78 

 

  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 

 

(1) Unsecured obligations are presented on a contractual basis and are not affected by early redemption.

 

4.3Risk 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 13.8.

 

41

 

 

.

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

Note 5Separate information on the main office, parent entity and joint action agreements

 

5.1 Parent’s stand-alone assets and liabilities

 

Parent’s stand-alone assets and liabilities As of
March 31,
2021
  As of
December 31,
2020
 
  ThUS$  ThUS$ 
Assets  4,297,477   4,173,308 
Liabilities  (2,149,026)  (2,050,223)
Equity  2,148,451   2,123,085 

 

5.2       Parent 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.

 

42

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

Note 6Board of Directors, Senior Management and Key management personnel

 

6.1Remuneration 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 March 31, 2021, 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.

 

43

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

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 March 31, 2021 amounted to ThUS$ 793 and as of March 31, 2020 to ThUS$ 616.

 

(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.

 

44

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

(g)Senior management compensation:

 

(i)This includes monthly fixed salary and variable performance bonuses. (See Note 6.2)
(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 18.6)

 

(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 March 31, 2021 and the year ended December 31, 2020 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.

 

6.2Key management personnel compensation

 

As of March 31, 2021 and 2020, the number of the key management personnel is 122 and 128, respectively.

 

Key management personnel compensation 

For the year ended
March 31,
2021

  

For the year ended
March 31,
2020

 
 ThUS$  ThUS$ 
Key management personnel compensation  10,158   7,270 

 

Please also see the description of the compensation plan for executives in Note 18.6.

 

45

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

Note 7Background on companies included in consolidation and non-controlling interests

 

7.1Background on companies included in consolidation

 

The following tables detail general information as of March 31, 2021 and, December 31, 2020, 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 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 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

 

46

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

Subsidiaries TAX ID No. Address Country of Incorporation  Functional Currency Ownership Interest 
          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 
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 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 
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 

 

47

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

Subsidiaries TAX ID No. Address Country of Incorporation Functional Currency Ownership Interest 
      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 Australia PTY foreign Level 16, 201 Elizabeth Street Sydney Australia 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 foreign Suite 22, Kyobo Building, 15th Floor, 1 Jongno Jongno-gu, Seoul, 03154 South Korea Korea Dollar  -   100.0000   100.0000 
SQM Holland B.V. Foreign Herikerbergweg 238, 1101 CM Amsterdam Zuidoost Netherlands Dollar  -   100.0000   100.0000 

  

48

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

7.2Assets, liabilities, results of consolidated subsidiaries as of March 31, 2021 and for the period then ended.

 

    Assets    Liabilities  Revenue  Profit (loss)  Comprehensive income (loss) 
 Currents  Non-currents   Currents  Non-currents          
Subsidiaries ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
SQM Nitratos S.A.  520,854   60,536   430,722   5,683   35,048   9,728   9,883 
SQM Potasio S.A.  19,928   1,123,540   162,073   22,944   579   11,841   12,302 
Serv. Integrales de Tránsito y Transf. S.A.  63,974   35,553   82,357   6,894   7,498   1,136   1,177 
Isapre Norte Grande Ltda.  954   836   901   180   1,219   43   42 
Ajay SQM Chile S.A.  20,131   1,988   4,155   731   11,485   520   520 
Almacenes y Depósitos Ltda.  252   54   -   -   -   (3)  (21)
SQM Salar S.A.  913,645   1,058,132   878,566   225,306   143,765   8,814   9,360 
SQM Industrial S.A.  1,020,831   670,870   674,632   109,339   208,157   25,478   26,396 
Exploraciones Mineras S.A.  16,936   21,925   9,134   -   368   (129)  (129)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.  235   551   558   255   965   (161)  (174)
Soquimich Comercial S.A.  142,930   13,608   62,433   12,438   27,403   3,722   3,772 
Comercial Agrorama Ltda.  685   944   4,078   21   348   73   73 
Comercial Hydro S.A.  4,834   13   9   4   7   5   5 
Agrorama S.A.  46   -   5,527   2   47   10   17 
Orcoma SpA  -   2,366   37   -   -   (4)  (4)
Orcoma Estudio SpA  9   4,792   650   -   -   -   - 
SQM MaG SPA  1,739   516   1,395   5   815   (22)  (21)
Sociedad Contractual Minera Búfalo  69   488   536   -   -   (2)  (2)
SQM North America Corp.  151,862   20,916   134,265   1,565   68,983   624   624 
RS Agro Chemical Trading Corporation A.V.V.  5,155   -   97   -   -   (9)  (9)
Nitratos Naturais do Chile Ltda.  1   127   3,050   -   -   62   62 
Nitrate Corporation of Chile Ltd.  5,076   -   -   -   -   -   - 
SQM Corporation N.V.  7,696   57,942   3,611   -   -   1,735   1,735 
SQM Perú S.A.  25   -   80   -   -   3   3 
SQM Ecuador S.A.  22,503   897   17,633   59   9,925   1,388   1,388 
SQM Brasil Ltda.  184   1   492   2,069   -   24   24 
Subtotal  2,920,554   3,076,595   2,476,991   387,495   516,612   64,876   67,023 

 

49

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

  

  Assets  Liabilities  Revenue  Profit (loss)  Comprehensive 
  Currents  Non-currents  Currents  Non-currents        income (loss)
Currents
 
Subsidiaries  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
SQMC Holding Corporation L.L.P.  30,891   17,362   1,960   -   -   788   788 
SQM Japan Co. Ltd.  21,335   228   18,190   239   14,742   (50)  (50)
SQM Europe N.V.  420,520   8,802   363,591   2,338   188,187   5,533   5,533 
SQM Indonesia S.A.  3   -   1   -   -   -   - 
North American Trading Company  156   145   -   -   -   -   - 
SQM Virginia LLC  14,798   14,340   14,798   -   -   -   - 
SQM Comercial de México S.A. de C.V.  99,787   7,325   68,154   1,865   60,929   408   408 
SQM Investment Corporation N.V.  13,967   137,695   5,578   866   -   5,009   5,009 
Royal Seed Trading Corporation A.V.V.  59   -   18,904   -   -   (15)  (15)
SQM Lithium Specialties LLP  15,746   3   1,264   -   -   -   - 
Comercial Caimán Internacional S.A.  257   -   1,122   -   -   (1)  (1)
SQM France S.A.  345   6   114   -   -   -   - 
Administración y Servicios Santiago S.A. de C.V.  329   96   512   182   596   3   3 
SQM Nitratos México S.A. de C.V.  146   15   70   20   309   15   15 
Soquimich European Holding B.V.  4,969   179,444   369   -   -   6,890   6,890 
SQM Iberian S.A.  70,247   2,337   47,113   4   31,594   1,746   1,746 
SQM Africa Pty Ltd.  40,857   1,445   31,751   -   14,102   (302)  (302)
SQM Oceania Pty Ltd.  4,422   -   2,214   -   991   (227)  (227)
SQM Beijing Commercial Co. Ltd.  13,401   10   11,238   -   5,186   (3)  (3)
SQM Thailand Limited  3,316   -   16   -   -   (155)  (155)
SQM Colombia SAS  9,011   169   8,661   -   4,659   375   375 
SQM International NV  29,643   851   13,294   5,487   33,795   193   193 
SQM Shanghai Chemicals Co. Ltd.  115,964   360   104,024   -   49,960   7,085   7,085 
SQM Australia Pty Ltd.  19,319   137,202   4,827   41   -   (567)  (567)
SQM Korea LLC  1,023   160   514   -   432   2   2 
SQM Holland B.V.  5,743   15,974   2,352   19   3,666   (205)  (205)
Subtotal  936,254   523,969   720,631   11,061   409,148   26,522   26,522 
Total  3,856,808   3,600,564   3,197,622   398,556   925,760   91,398   93,545 

 

50

 

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

Assets, liabilities, results of consolidated subsidiaries as of December 31, 2020 and for the period ended March 31, 2020.

 

Subsidiary Assets  Liabilities      Comprehensive 
  Current  Non-current  Current  Non-current  Revenue  Profit (loss)  income (loss) 
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
SQM Nitratos S.A.  475,132   63,848   395,914   5,047   51,867   17,171   17,165 
SQM Potasio S.A.  16,680   1,108,579   155,379   23,323   826   22,915   22,817 
Serv. Integrales de Tránsito y Transf. S.A.  55,142   36,291   75,848   6,485   7,653   1,130   1,130 
Isapre Norte Grande Ltda.  812   839   795   181   766   24   (1)
Ajay SQM Chile S.A.  25,441   1,549   9,563   713   8,890   373   373 
Almacenes y Depósitos Ltda.  256   51   -   -   -   1   (126)
SQM Salar S.A.  855,683   1,035,088   814,686   214,914   164,414   27,029   26,909 
SQM Industrial S.A.  950,058   679,345   634,105   113,230   190,466   28,108   28,094 
Exploraciones Mineras S.A.  16,572   22,293   9,010   -   -   (65)  (65)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.  279   571   305   396   482   1   (14)
Soquimich Comercial S.A.  136,623   13,796   56,293   12,630   17,255   722   763 
Comercial Agrorama Ltda.  683   970   4,215   23   295   3   - 
Comercial Hydro S.A.  4,834   15   14   4   7   6   6 
Agrorama S.A.  55   -   5,631   10   75   46   45 
Orcoma SpA  3   2,365   35   -   -   -   - 
Orcoma Estudio SpA  4   4,559   411   -   -   (82)  (82)
SQM MaG SPA  1,491   521   1,129   6   532   (36)  (36)
Sociedad Contractual Minera Búfalo  50   323   350   -   -   -   - 
SQM North America Corp.  124,679   21,085   107,801   1,638   57,020   (1,228)  (1,228)
RS Agro Chemical Trading Corporation A.V.V.  5,155   -   88   -   -   (7)  (7)
Nitratos Naturais do Chile Ltda.  -   128   3,109   -   -   198   198 
Nitrate Corporation of Chile Ltd.  5,076   -   -   -   -   -   - 
SQM Corporation N.V.  7,696   56,356   3,607   -   -   1,251   1,251 
SQM Perú S.A.  25   -   83   -   -   -   - 
SQM Ecuador S.A.  26,490   918   23,074   59   9,404   (272)  (272)
SQM Brasil Ltda.  217   1   508   2,111   -   157   157 
Subtotal  2,709,136   3,049,491   2,301,953   380,770   509,952   97,445   97,077 

 

51

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

 Assets  Liabilities    Profit  Comprehensive income (loss) 
Subsidiaries Currents  Non-currents  Currents  Non-currents  Revenue  (loss)  Currents 
 ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
SQMC Holding Corporation L.L.P.  30,777   16,414   1,687   -   -   909   909 
SQM Japan Co. Ltd.  25,122   243   21,926   255   12,214   63   63 
SQM Europe N.V.  456,357   3,844   399,930   2,411   167,706   (4,906)  (4,906)
SQM Indonesia S.A.  3   -   1   -   -   -   - 
North American Trading Company  156   145   -   -   -   -   - 
SQM Virginia LLC  14,798   14,340   14,798   -   -   (2)  (2)
SQM Comercial de México S.A. de C.V.  107,803   7,574   76,721   1,972   57,589   247   247 
SQM Investment Corporation N.V.  13,965   132,994   5,434   864   -   (382)  (382)
Royal Seed Trading Corporation A.V.V.  21   -   18,851   -   -   (12)  (12)
SQM Lithium Specialties LLP  15,746   3   1,264   -   -   (3)  (3)
Comercial Caimán Internacional S.A.  258   -   1,122   -   -   -   - 
SQM France S.A.  345   6   114   -   -   -   - 
Administración y Servicios Santiago S.A. de C.V.  221   47   350   188   738   57   57 
SQM Nitratos México S.A. de C.V.  141   13   77   20   216   (4)  (4)
Soquimich European Holding B.V.  5,046   172,956   245   -   -   1,171   1,171 
SQM Iberian S.A.  41,485   2,359   20,118   4   29,514   1,417   1,417 
SQM Africa Pty Ltd.  47,069   1,420   37,636   -   13,380   3,675   3,675 
SQM Oceania Pty Ltd.  3,951   -   1,516   -   771   (318)  (318)
SQM Beijing Commercial Co. Ltd.  12,086   30   9,942   -   1,935   (178)  (178)
SQM Thailand Limited  3,539   -   83   -   872   (83)  (83)
SQM Colombia SAS  11,621   176   11,653   -   2,513   (795)  (795)
SQM International  31,998   923   17,374   4,027   7,165   (412)  (412)
SQM Shanghai Chemicals Co. Ltd.  84,318   379   79,482   -   6,997   (521)  (521)
SQM Australia Pty Ltd.  21,749   130,152   4,306   158   -   628   (4,532)
SQM Korea LLC  587   122   42   -   -   -   - 
SQM Holland B.V.  3,767   16,248   460   4   -   -   - 
Subtotal  932,929   500,388   725,132   9,903   301,610   551   (4,609)
Total  3,642,065   3,549,879   3,027,085   390,673   811,562   97,996   92,468 

 

52

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

7.3 Background on non-controlling interests

 

 % of interests in the ownership  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 
Subsidiary held by non-controlling interests  

As of

March 31,

2021

  

As of

March 31,

2020

  

As of

March 31,

2021

  

As of

March 31,

2020

  

As of

March 31,

2021

  

As of

March 31,

2020

 
     ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
SQM Potasio S.A.  0.0000001%  -   -   -   -   -   - 
Ajay SQM Chile S.A.  49.00000%  255   183   8,444   8,700   -   - 
Soquimich Comercial S.A.  39.36168%  1,465   284   32,145   36,490   1,465   2,252 
Comercial Agrorama Ltda.  30.00000%  22   1   (741)  (608)  -   - 
SQM Indonesia S.A.  20.00000%  -   -   1   -   -   - 
Agrorama S.A.  0.00000%  -   -   -   -   -   - 
SQM Thailand Limited  0,00400%  -   -   -   -   -   - 
Total      1,742   468   39,849   44,582   1,465   2,252 

 

53

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

Note 8 Equity-accounted investees

 

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

 

As of March 31, 2021, and December 31, 2020, in accordance with criteria established in Note 2:

 

Associates 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 
  As of March 31, 2021 (**)  As of December31, 2020 (**)  As of March 31, 2021  As of March 31, 2020  As of March 31, 2021  As of March 31, 2020  As of March 31, 2021  As of March 31, 2020 
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Abu Dhabi Fertilizer Industries WWL  11,504   11,505   -   80   -   -   -   80 
Doktor Tarsa Tarim Sanayi AS (*)  -   -   -   914   -   (302)  -   612 
Ajay North America  15,595   14,468   948   1,141   -   -   948   1,141 
Ajay Europe SARL  7,937   7,875   396   608   (426)  (198)  (30)  410 
SQM Eastmed Turkey (*)  -   -   -   -   -   (14)  -   (14)
Kore Potash PLC  28,646   26,175   -   -   2,518   (130)  2,518   (130)
Total  63,682   60,023   1,344   2,743   2,092   (644)  3,436   2,099 

 

(*) As of March 31, 2021, these investments no longer form part of the group.

 

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

 

54

 

 

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

 Description of the nature of the  Country of Share of
ownership
  Dividends received for the period
ending
 
Associate relationship Address incorporation in associates  As of March 31, 2021  As of March 31, 2020 
           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%  -   - 
Ajay Europe SARL Production and distribution of iodine and iodine derivatives. Z.I. du Grand Verger BP 227 53602 Evron Cedex France  50%  -   1,168 
Kore Potash PLC Prospecting, exploration and mining development. L 3 88 William ST Perth, was 6000 United Kingdom  20.15%  -   - 
Doktor Tarsa Tarim Sanayi AS Distribution and commercialization of specialty plant nutrients in the Turkey. Organize Sanayi Bolgesi, Ikinci Kisim, 22 cadde TR07100 Antalya Turkey  50%  -   - 
SQM Eastmed Turkey Production and trading of specialty products. Organize Sanayi Bolgesi, Ikinci Kisim, 22 cadde TR07100 Antalya Turkey  50%  -   - 
Total            -   1,168 

 

55

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

8.2Assets, liabilities, revenue and expenses of associates

 

 As of March 31, 2021  For the period ended as of March 31, 2021 
Associate Assets  Liabilities    Gain (loss) from
continuing
  Other
comprehensive
  Comprehensive 
  Current  Non-current  Current  Non-current  Revenue  operations  income  income 
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Abu Dhabi Fertilizer Industries WWL  29,312   8,586   6,706   101   -   -   -   - 
Ajay North America  22,571   15,492   6,237   -   13,167   1,935   -   1,935 
Ajay Europe SARL  23,971   1,395   9,492   -   12,845   792   (853)  (61)
Kore Potash PLC  5,780   136,610   786   -   -   -   12,498   12,498 
Total  81,634   162,083   23,221   101   26,012   2,727   11,645   14,372 

 

  As of December 31, 2020  For the period ended as of March 31, 2020 
  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  29,313   8,586   6,706   101   5,354   215   -   215 
Doktor Tarsa Tarim Sanayi AS  -   -   -   -   22,412   1,829   (603)  1,226 
Ajay North America  18,513   15,749   4,737   -   15,975   2,328   -   2,328 
Ajay Europe SARL  22,032   1,493   7,773   -   12,323   1,216   (397)  819 
SQM Eastmed Turkey  -   -   -   -   -   -   (27)  (27)
Kore Potash PLC  5,691   124,112   786   -   -   -   (675)  (675)
Total  75,549   149,940   20,002   101   56,064   5,588   (1,702)  3,886 

 

56

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

8.3Other information

 

(a) Transactions conducted in 2021:

 

During the first quarter 2021, Kore Potash PLC made a share payment to its non-executive board members (remuneration shares) plus certain employees and former employees (performance shares) which resulted in a 0.05% share reduction for the company, leaving it with 20.15%.This resulted in a transfer in equity of non-controlling interest to other reserves in an amount of ThUS$ 71.

 

(b) Transactions conducted in 2020:

 

 There were no operations in the first quarter of 2020.

 

57

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

Note 9 Joint Ventures

 

9.1Investment in joint ventures accounted for under the equity method of accounting.

 

  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

March 31,

2021 (****)

  

As of

December 31, 2020 (****)

  

As of

March 31,

2021

  

As of

March 31,

2020

  

As of

March 31,

2021

  

As of

March 31,

2020

  

As of

March 31,

2021

  

As of

March 31,

2020

 
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Coromandel SQM India (*)  -   -   -   -   -   -   -   - 
SQM Vitas Fzco.  12,201   9,720   771   (967)  (529)  (1,491)  242   (2,458)
SQM Qingdao Star Corp Nutrition Co. Ltd. (*)  -   -   -   30   -   -   -   30 
SQM Vitas B.V.  -   -   -   (9)  -   (28)  -   (37)
Pavoni & C. Spa  7,113   7,222   124   66   (177)  (80)  (53)  (14)
Covalent Lithium Pty Ltd. (**)  -   -   -   216   5   91   5   307 
Sichuan SQM Migao Chemical Fertilizers Co Ltd.(***)  -   9,028   -   (461)  -   -   -   (461)
Total  19,314   25,970   895   (1,125)  (701)  (1,508)  194   (2,633)

 

 

(*) As of March 31, 2021, these investments were no longer part of the group.

(**) As of March 31, 2021, this joint venture has a negative value of ThUS$ (19), which is presented in Other non-current provisions.

(***) See more details in Note 9.4 (a).

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

 

58

 

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

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

March 31,

2021

  

As of

December 31,

2020

  

As of

March 31,

2021

  

As of

March 31,

2020

  

As of

March 31,

2021

  

As of

March 31,

2020

  

As of

March 31,

2021

  

As of

March 31,

2020

 
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
SQM Vitas Brasil Agroindustria (1)  4,715   3,511   622   (1,415)  (529)  (1,491)  93   (2,906)
SQM Vitas Perú S.A.C. (1)  2,867   1,659   150   154   -   -   150   154 
Arpa Speciali S.R.L. (2)(*)  -   -   -   -   -   -   -   - 
Total  7,582   5,170   772   (1,261)  (529)  (1,491)  243   (2,752)

 

The following companies are subsidiaries of:

 

(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

March 31,

2021

  

As of

March 31,

2020

 
           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%  -   - 
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%  -   1,910 
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            -   1,910 

 

59

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

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

March 31,

2021

  

As of

March 31,

2020

 
            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 Interim Financial Statements

March 31, 2021

 

 

9.2Assets, liabilities, revenue and expenses from joint ventures

 

  As of March 31, 2021  For the period ended March 31, 2021 
Joint Venture Assets  Liabilities  Revenue  Gain (loss) from continuing  Other comprehensive  Comprehensive income 
  Current  Non-current  Current  Non-current     operations  income    
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
SQM Vitas Fzco.  3,971   20,930   501   -   -   1,542   -   1,542 
SQM Vitas Brasil Agroindustria  38,549   5,176   31,358   -   25,012   1,244   (1,058)  186 
SQM Vitas Perú S.A.C.  26,711   7,791   24,926   1,012   11,478   300   -   300 
Pavoni & C. Spa  12,248   7,124   10,836   722   4,966   248   (354)  (106)
Covalent Lithium Pty Ltd.  1,554   1,968   2,795   767   -   133   11   144 
Total  83,033   42,989   70,416   2,501   41,456   3,467   (1,401)  2,066 

 

  As of December 31, 2020  For the period ended March 31, 2020 
Joint Venture Assets  Liabilities  Revenue  Gain (loss) from continuing  Other comprehensive  Comprehensive income 
  Current  Non-current  Current  Non-current     operations  income    
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Sichuan SQM Migao Chemical Fertilizers Co Ltd.  29,507   4,412   14,156   -   -   (922)  -   (922)
SQM Vitas Fzco.  (496)  20,431   496   -   -   (1,933)  (2,983)  (4,916)
SQM Qingdao Star Corp Nutrition Co. Ltd.  -   -   -   -   1,569   59   -   59 
SQM Vitas B.V.  -   -   -   -   -   (18)  (57)  (75)
SQM Vitas Brasil Agroindustria  40,064   5,527   33,410   -   16,695   (2,831)  (2,983)  (5,814)
SQM Vitas Perú S.A.C.  34,548   7,928   33,145   1,080   10,056   307   -   307 
Pavoni & C. Spa  10,645   7,493   9,270   836   4,388   132   (160)  (28)
Covalent Lithium Pty Ltd.  1,418   2,131   2,823   910   -   432   183   615 
Total  115,686   47,922   93,300   2,826   32,708   (4,774)  (6,000)  (10,774)

 

61

 

  

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021

 

 

9.3Other Joint Venture disclosures

 

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

As of

March 31,

2021

  

As of

December 31,

2020

  

As of

March 31,

2021

  

As of

December 31,

2020

  

As of

March 31,

2021

  

As of

December 31,

2020

 
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Sichuan SQM Migao Chemical Fertilizers Co Ltd.  -   30   -   -   -   - 
Coromandel SQM India  -   -   -   -   -   - 
SQM Vitas Fzco.  4,126   4,251   -   -   -   - 
SQM Qingdao Star Corp Nutrition Co. Ltd.  -   -   -   -   -   - 
SQM Vitas B.V.  -   -   -   -   -   - 
SQM Vitas Brasil Agroindustria  2,221   4,065   5,134   6,820   -   - 
SQM Vitas Perú S.A.C.  549   1,043   230   227   609   691 
Pavoni & C. Spa  735   767   5,825   5,573   -   - 
Covalent Lithium Pty Ltd.  785   653   864   953   -   - 
Total  8,416   10,809   12,053   13,573   609   691 

 

  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

March 31,

2021

  

As of

March 31,

2020

  

As of

March 31,

2021

  

As of

March 31,

2020

  

As of

March 31,

2021

  

As of

March 31,

2020

 
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Sichuan SQM Migao Chemical Fertilizers Co Ltd.  -   (669)  -   -   -   34 
SQM Vitas Fzco.  -   -   -   (1)  -   - 
SQM Qingdao Star Corp Nutrition Co. Ltd.  -   (12)  -   -   -   (31)
SQM Vitas Brasil Agroindustria  (67)  (77)  (70)  (189)  -   - 
SQM Vitas Perú S.A.C.  (89)  -   (76)  (81)  (46)  (69)
Pavoni & C. Spa  (60)  (251)  (72)  (119)  (118)  (80)
Covalent Lithium Pty Ltd.  (47)  (24)  (12)  (7)  -   432 
Total  (263)  (1,033)  (230)  (397)  (164)  286 

 

62

 

 

 

 

 

 

 

Notes to the Consolidated Interim Financial Statements 
March 31, 2021

 

9.4Disclosure of interests in joint ventures

 

a)           Transactions in 2021

 

·On February 9, 2021, two of the Company’s subsidiaries signed an agreement to terminate a dispute related to sales contracts and interest in the joint venture of Sichuan SQM Migao Chemical Fertilizers Co Ltd. Consequently, the Company received US$ 11.5 million.

 

b)            Transactions in 2020

 

·SQM Vitas BV became a wholly owned subsidiary of the Company during the second quarter of 2020, through its subsidiary Soquimich European Holdings, at a cost of ThUS$ 1,276 and its name has been changed to SQM Holland. See Note 8.1.

 

9.5Joint 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.

 

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. As of March 31, 2021, this receivable was collected when it was contributed to Mt Holland in the Company’s name. The Company approved the investment decision referred to in Note 1.8.

 

63

 

 

Notes to the Consolidated Interim Financial Statements 
March 31, 2021

 

Note 10   Cash and cash equivalents

 

10.1Types of cash and cash equivalents

 

As of March 31, 2021, and December 31, 2020, cash and cash equivalents are detailed as follows:

 

Cash 

As of

March 31,

2021

  

As of

December 31,

2020

 
  ThUS$  ThUS$ 
Cash on hand 51  54 
Cash in banks 296,574  244,848 
Other demand deposits 1,350  2,227 
Total Cash 297,975  247,129 

 

Cash equivalents 

As of

March 31,

2021

  

As of

December 31, 2020

 
  ThUS$  ThUS$ 
Short-term deposits, classified as cash equivalents 53,172  51,595 
Short-term investments, classified as cash equivalents 186,391  210,378 
Total cash equivalents 239,563  261,973 
Total cash and cash equivalents 537,538  509,102 

 

10.2       Short-term investments, classified as cash equivalents

 

As of March 31, 2021, and December 31, 2020, the short-term investments classified as cash and cash equivalents relate to mutual funds (investment liquidity funds) for investments in:

 

Institution 

As of

March 31,

2021

  

As of

December 31, 2020

 
  ThUS$  ThUS$ 
Legg Mason - Western Asset Institutional Cash Reserves 107,631  107,625 
JP Morgan US dollar Liquidity Fund Institutional 78,760  102,753 
Total 186,391  210,378 

 

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

 

64

 

 

Notes to the Consolidated Interim Financial Statements 
March 31, 2021

 

10.3       Information on cash and cash equivalents by currency

 

As of March 31, 2021, and December 31, 2020, information on cash and cash equivalents by currency is detailed as follows:

 

Currency 

As of

March 31,

2021

  

As of

December 31, 2020

 
  ThUS$  ThUS$ 
Peso (*) 19,470  7,190 
Dollar 498,260  454,402 
Euro 3,375  17,144 
Mexican Peso 2,644  1,378 
South African Rand 4,145  14,286 
Japanese Yen 918  1,646 
Peruvian Sol 4  3 
Indian rupee -  6 
Chinese Yuan 1,599  11,597 
Indonesian rupee 3  3 
Argentine Peso -  - 
Pound Sterling 2  19 
Australian Dollar 6,731  1,411 
South Korean won 385  16 
Dirham United Arab Emirates 1  - 
Polish Zloty 1  1 
Total 537,538  509,102 

 

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

 

10.4       Amount restricted cash balances

 

The Company has granted a guarantee consisting of financial instruments, specified in deposits, custody and administration to Banco de Chile, for its subsidiary Isapre Norte Grande Ltda., in compliance with the provisions of the Superintendence of Health, which regulates social security health institutions.

 

According to the regulations of the Superintendence of Health, this guarantee is for the total payable to its affiliates and medical providers. Banco de Chile reports the current value of the guarantee to the Superintendence of Health and Isapre Norte Grande Ltda. on a daily basis.

 

 

As of March 31, 2021, and, December 31, 2020 pledged assets are as follows

 

Restricted cash balances 

As of

March 31,

2021

  

As of

December 31,

2020

 
  ThUS$  ThUS$ 
Isapre Norte Grande Ltda. 722  731 
Total 722  731 

 

65

 

 

Notes to the Consolidated Interim Financial Statements 
March 31, 2021

 

10.5       Short-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

March 31,

2021

 
             ThUS$  ThUS$  ThUS$ 
Banco crédito e inversiones Fixed term Peso  0.05% 03-23-2021 04-22-2021 15,004  2  15,006 
Banco de Chile Fixed term Dollar  0.50% 01-19-2021 04-01-2021 2,500  2  2,502 
Banco Santander Fixed term Dollar  0.57% 01-19-2021 04-01-2021 2,500  3  2,503 
Banco Itaú Corpbanca Fixed term Dollar  0.50% 01-26-2021 04-08-2021 3,000  3  3,003 
Banco de Chile Fixed term Dollar  0.51% 02-05-2021 04-15-2021 2,000  2  2,002 
Banco Itaú Corpbanca Fixed term Dollar  0.43% 02-16-2021 04-05-2021 3,000  2  3,002 
Banco de Chile Fixed term Dollar  0.50% 02-16-2021 04-05-2021 3,000  2  3,002 
Banco de Chile Fixed term Dollar  0.60% 03-03-2021 04-30-2021 1,000  1  1,001 
Banco Santander Fixed term Dollar  0.63% 03-04-2021 05-04-2021 1,200  1  1,201 
Scotiabank Fixed term Dollar  0.45% 03-04-2021 05-04-2021 2,000  1  2,001 
Banco Santander Fixed term Dollar  0.65% 03-08-2021 05-14-2021 1,000  -  1,000 
Banco Santander Fixed term Dollar  0.62% 03-09-2021 05-06-2021 1,000  -  1,000 
Banco Santander Fixed term Dollar  0.62% 03-11-2021 05-07-2021 600  -  600 
Banco Santander Fixed term Dollar  0.60% 03-16-2021 05-07-2021 2,000  -  2,000 
Scotiabank Fixed term Dollar  0.40% 03-18-2021 05-10-2021 500  -  500 
Banco Itaú Corpbanca Fixed term Dollar  0.54% 03-18-2021 05-10-2021 1,500  -  1,500 
Banco de Chile Fixed term Dollar  0.51% 03-19-2021 05-10-2021 1,000  -  1,000 
Banco Crédito e Inversiones Fixed term Dollar  0.17% 03-22-2021 05-11-2021 3,000  -  3,000 
Banco Crédito e Inversiones Fixed term Dollar  0.21% 03-29-2021 05-12-2021 2,500  -  2,500 
Banco de Chile Fixed term Dollar  0.45% 03-30-2021 05-10-2021 2,000  -  2,000 
Banco Crédito e Inversiones Fixed term Dollar  0.21% 03-31-2021 05-10-2021 1,000  -  1,000 
Scotiabank Fixed term Peso  3.00% 03-31-2021 04-07-2021 1,801  -  1,801 
Banco Itaú Corpbanca Fixed term Dollar  2.45% 03-31-2021 06-26-2021 48  -  48 
Total             53,153  19  53,172 

 

66

 

 

 

Notes to the Consolidated Interim Financial Statements  

 

March 31, 2021
 

 

 
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  0.40% 12-01-2020 01-15-2021 500  -  500 
Scotiabank Sud Americano Fixed term Dollar  0.40% 12-02-2020 01-20-2021 2,500  1  2,501 
Banco Santander - Santiago Fixed term Dollar  0.50% 12-09-2020 01-25-2021 500  -  500 
Scotiabank Sud Americano Fixed term Dollar  0.50% 12-09-2020 01-25-2021 1,000  -  1,000 
Banco Santander - Santiago Fixed term Dollar  0.50% 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  0.40% 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  0.20% 12-23-2020 02-05-2021 2,000  1  2,001 
Banco Itaú Corpbanca Fixed term Dollar  0.40% 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  1.80% 12-31-2020 03-06-2021 86  -  86 
Total             51,584  11  51,595 

 

67

 

 

Notes to the Consolidated Interim Financial Statements  

 

March 31, 2021
 

 

10.6       Net Debt reconciliation

 

This section presents an analysis of net debt plus lease liabilities and their movements for each of the reported periods. The definition of the net debt is described in Note 20.1.

 

Net debt 

As of

March 31,

2021

  

As of

December 31, 2020

 
  ThUS$  ThUS$ 
Cash and cash equivalents  537,538   509,102 
Other current financial assets  303,761   348,069 
Other non-current financial hedge assets  31,780   37,276 
Other current financial liabilities  (47,232)  (68,955)
Lease liabilities, current  (7,349)  (5,528)
Other non-current financial liabilities  (1,887,878)  (1,899,513)
Lease liabilities, non-current  (32,006)  (25,546)
Total  (1,101,386)  (1,105,095)

 

     From cash flow  Not from cash flow    
Cash and cash equivalents 

As of

December 31, 2020

  Amounts from loans  Amounts from interests  Other cash income/expenses  

Hedging and
non-
hedging

instruments

  Exchange rate differences  Others  

As of

March 31,

2021

 
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Obligations with the public and bank loans  (1,922,864)  7,518   20,458   -   -   1,708   (19,502)  (1,912,682)
Current and non-current lease liabilities  (31,074)  1,935   353   -   -   -   (10,569)  (39,355)
Financial instruments derived from hedging  (40,210)  (463)  2,634   -   13,547   -   3,021   (21,471)
Financial instruments derived from non-hedging  (5,395)  -   -   -   4,437   -   -   (958)
Current and non-current financial liabilities  (1,999,543)  8,990   23,445   -   17,984   1,708   (27,050)  (1,974,466)
Cash and cash equivalents  509,102   -   -   31,617   -   (3,181)  -   537,538 
Deposits that do not qualify as cash and cash equivalents  345,459   -   -   (43,663)  -   (4,176)  (345)  297,275 
Derivatives from hedge assets  37,277   -   (1,216)  12,958   (12,862)  -   (139)  36,018 
Derivatives from other financial non-hedge assets  2,610   -   -   (3,343)  2,982   -   -   2,249 
Total  (1,105,095)  8,990   22,229   (2,431)  8,104   (5,649)  (27,534)  (1,101,386)

 

68

 

 

Notes to the Consolidated Interim Financial Statements  

 

March 31, 2021
 

 

Note 11 Inventories

 

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

 

Type of inventory 

As of

March 31,

2021

  

As of

December 31,

2020

 
  ThUS$  ThUS$ 
Raw material  7,092   10,694 
Production supplies  31,303   31,007 
Products-in-progress  503,628   487,830 
Finished product  527,871   563,497 
Total  1,069,894   1,093,028 

 

As of March 31, 2021, and December 31, 2020, the Company held caliche stockpiles, solutions in solar ponds and intermediary salts amounting ThUS$ 432,282 and ThUS$ 422,535, respectively (including products in progress).

 

As of March 31, 2021, bulk inventories recognized within work in progress and finished goods were ThUS$ 113,151 and ThUS$ 140,934 respectively.

 

As of March 31, 2021, and December 2020, inventory allowances recognized, amounted to ThUS$ 77,736 and ThUS$ 80,930, 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 3.14).

 

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:

 

Type of inventory 

As of

March 31,

2021

  

As of

December 31,

2020

 
  ThUS$  ThUS$ 
Raw material and supplies for production 2,466  1,934 
Products-in-progress 61,275  66,122 
Finished product 13,995  12,874 
Total 77,736  80,930 

 

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

 

69

 

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

As of March 31, 2021, and December 31, 2020, movements in provisions are detailed as follows:

 

Conciliation 

As of
March 31,

2021

  

As of
December
31,2020

 
  ThUS$  ThUS$ 
Beginning balance 80,930  88,174 
Increase in Lower Value (1) (3,284) (5,404)
Additional Provision Differences of Inventory (2) -  (704)
Increase / Decrease eventual differences and others (3) 438  1,244 
Provision Used (348) (2,380)
Total changes (3,194) (7,244)
Final balance 77,736  80,930 

 

(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.

 

70

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

Note 12Related party disclosures

 

12.1Related 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.

 

12.2Relationships 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.

 

71

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

12.3Detailed identification of related parties and subsidiaries

 

As of March 31, 201 and December 31, 2020, 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 

 

72

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

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 SQM Vitas Fzco. Arab Emirates Arab Emirates dirham 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, 2020: Sichuan SQM Migao Chemical Fertilizers Co Ltd.

 

73

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

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 

 

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

 

Tax ID No Name Country of origin Nature

 

 

76.389.727-3 Sociedad Periodística El Libero Chile Other related parties 
90.193.000-7 El Mercurio S.A.P. Chile Other related parties 
92.580.000-7 Empresa Nacional de Telecomunicaciones S.A. Chile Other related parties 
96.806.980-2 Entel PCS Telecomunicaciones S.A. Chile Other related parties 
97.004.000-5 Banco de Chile Chile Other related parties 
99.012.000-5 Compañía de Seguros de Vida Consorcio Nacional Chile Other related parties 
10.581.580-8 Gonzalo Guerrero Yamamoto Chile Other related parties 
96.529.340-K Norte Grande S.A. Chile Other related parties 

 

74

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 

 

12.4Detail 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 March 31, 2021 and 2020, the detail of significant transactions with related parties is as follows

 

Tax ID No Name Nature Country of origin Transaction As of
March 31,
2021
  As of
March 31,
2020
 
          ThUS$  ThUS$ 
Foreign Doktor Tarsa Tarim Sanayi AS Associate Turkey Sale of products  -   4,055 
Foreign Ajay Europe S.A.R.L. Associate France Sale of products  8,735   8,483 
Foreign Ajay Europe S.A.R.L. Associate France Dividends  -   1,168 
Foreign Ajay North America LL.C. Associate USA Sale of products  7,621   7,991 
Foreign Abu Dhabi Fertilizer Industries WWL Associate United Arab Emirates Sale of products  -   191 
Foreign SQM Vitas Brasil Agroindustria Other related parties Brazil Sale of products  13,089   205 
Foreign SQM Vitas Perú S.A.C. Other related parties Peru Sale of products  -   2,544 
Foreign Coromandel SQM India Joint venture India Sale of products  -   226 
Foreign Terra Tarsa Ukraine LLC Other related parties Ukraine Sale of products  354   579 
Foreign Plantacote NV Other related parties Belgium Sale of products  -   1,219 
Foreign Pavoni & CPA Joint venture Italy Sale of products  472   1,924 
Foreign Arpa Speciali S.R.L. Other related parties Italy Sale of products  -   474 
Foreign SQM Star Qingdao Corp Nutrition Co., Ltd. Joint venture China Dividends  -   1,910 
Chile Banco de Chile Other related parties Chile Service provider  3,975     
Chile Empresa Nacional de Telecomunicaciones Other related parties Chile Service provider  505     

 

 

75

 

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

12.5Trade receivables due from related parties, current:

 

Tax ID No Name Nature Country of origin Currency 

As of

March 31,
2021

 

As of

December 31,

2020

          ThUS$ ThUS$
Foreign Ajay Europe S.A. R.L. Associate France Euro 6,472 4,625
Foreign Ajay North America LLC. Associate United States of America Dollar 4,645 2,956
Foreign Abu Dhabi Fertilizer Industries WWL Associate United Arab Emirates United Arab Emirates Dirham 595 595
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 24,363 24,335
Foreign SQM Vitas Perú S.A.C. Other related parties Peru Dollar 17,586 24,205
Foreign SQM Vitas Fzco. Joint venture United Arab Emirates United Arab Emirates Dirham 232 236
Foreign Pavoni & C SpA Joint venture Italy Euro 1,780 1,095
Foreign Covalent Lithium Pty Ltd. Joint venture Australia Australian dollar 56 84
Foreign Sichuan SQM Migao Chemical Fertilizers Co Ltd. Joint venture China Dollar - 4,464
Total         55,735 62,601

 

12.6Trade payables due to related parties, current:

 

Tax ID No Company Nature Country of origin Currency 

As of

March 31,

2021

  

As of
December 31,
2020

 
          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  -   - 
Foreign Covalent Lithium Pty Ltd Joint venture Australia Australian dollar  -   324 
Total          -   606 

 

12.7Other disclosures:

 

Note 6 describes the remuneration of the Board of Directors, administration and key management personnel.
 

76

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

Note 13 Financial instruments

 

13.1Types of other current and non-current financial assets

 

Description of other financial assets 

As of

March 31,

2021

  

As of

December 31,

2020

 
  ThUS$  ThUS$ 
Financial assets at amortized cost (1)  297,275   345,459 
Derivative financial instruments        
   - For hedging  4,238   - 
   - Non-hedging (2)  2,248   2,610 
Total other current financial assets  303,761   348,069 
Financial assets at fair value through other comprehensive income (4)  1,968   14,569 
Derivative financial instruments        
   - For hedging  31,780   37,276 
Other financial assets at amortized cost  74   80 
Total other non-current financial assets  33,822   51,925 

 

Institution 

As of

March 31,

2021

  

As of

December 31,

2020

 
  ThUS$  ThUS$ 
Banco de Crédito e Inversiones  152,955   185,589 
Banco Santander (3)  46,202   45,168 
Banco Itau Corpbanca  90,111   49,006 
Banco Security  -   - 
Banco de Chile  -   - 
Banco Estado  -   - 
Scotiabank Sud Americano  8,007   31,668 
JP Morgan Asset Management  -   34,028 
Total  297,275   345,459 

 

(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 13.3).

 

(3)As of March 31, 2021, and December 31, 2020 there were no margin calls.

 

(4)During the first quarter of 2021, equity instruments classified at fair value through other comprehensive income were irrevocably sold for US$ 16,413. The cumulative amount of the movements in other comprehensive income from the date of acquisition to the date of sale was transferred to retained earnings.

 

77

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

13.2       Trade and other receivables

 

  As of March 31, 2021  As of December 31, 2020 
  Current  Non-current  Total  Current  Non-current  Total 
Trade and other receivables  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Trade receivables, current  398,844   -   398,844   313,265   -   313,265 
Prepayments, current  27,537   -   27,537   19,900   -   19,900 
Other receivables, current  23,339   11,445   34,784   32,041   11,165   43,206 
Total trade and other receivables  449,720   11,445   461,165   365,206   11,165   376,371 

 

See discussion about credit risk in Note 4.2.

 

  As of March 31, 2021 As of December 31, 2020 
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  411,145  (12,301) 398,844  327,586  (14,321) 313,265 
Trade receivables, current  411,145  (12,301) 398,844  327,586  (14,321) 313,265 
Prepayments, current  28,321  (784) 27,537  20,684  (784) 19,900 
Other receivables, current  28,320  (4,981) 23,339  36,664  (4,623) 32,041 
Current trade and other receivables  56,641  (5,765) 50,876  57,348  (5,407) 51,941 
Other receivables, non-current  11,445  -  11,445  11,165  -  11,165 
Non-current receivables  11,445  -  11,445  11,165  -  11,165 
Total trade and other receivables  479,231  (18,066) 461,165  396,099  (19,728) 376,371 

 

78

 

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021  

 

 

(a)Portfolio analysis

 

As of March 31, 2021, and December 31, 2020 the detail of the renegotiated portfolio is as follows:

 

As of March 31, 2021
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  1,522   388,437   15   80 
1 - 30 days  97   14,657   5   164 
31 - 60 days  9   657   9   130 
61 - 90 days  5   44   3   52 
91 - 120 days  3   32   -   - 
121 - 150 days  2   16   -   - 
151 - 180 days  3   2   -   - 
181 - 210 days  3   105   1   40 
211 - 250 days  1   74   5   14 
>250 days  140   5,275   64   1,366 
Total  1,785   409,299   102   1,846 

 

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 

 

79

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021  

 

 

(b)Estimate for doubtful accounts

 

   As of March 31, 2021       
   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%  9%  35%  68%  93%  -   - 
Total Gross Book Value  388,517   14,821   787   96   6,924   411,145   56,828 
Deterioration Estimate  4,100   1,398   272   64   6,467   12,301   1,09 

 

  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   70,146 
Deterioration Estimate  3,187   1,207   477   83   9,367   14,321   7,545 

 

As of March 31, 2021, and December 31, 2020, movements in provisions are as follows:

 

Provisions 

As of

March 31,

2021

  

As of

December 31,

2020

 
  ThUS$   ThUS$ 
Provision Impairment Accounts receivable at the beginning of the Period  27,273   32,707 
(Decrease) increase impairment of accounts receivable  (1,240)  (4,684)
Use of Provision Applied to Accounts Receivable  (6,874)  (750)
Impairment of Accounts Receivable Provision at the end of the Period  19,159   27,273 
(1) Trade and other Receivables Provision  12,301   14,321 
(2) Current other Receivables Provision  5,765   5,407 
(3) Provision Trade payables due to related parties, current  1,093   7,545 
Recovery of Insurance  539   347 
Impairment of Accounts Receivable Provision  19,159   27,273 
Renegotiated Provision  1,542   1,728 
Non-renegotiated Provision  17,617   25,545 

 

80

 

 

Notes to the Consolidated Interim Financial Statements

March 31, 2021  

 

 

13.3Hedging 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 March 31, 2021, the notional amount of cash flows agreed upon in US dollars of the cross-currency swap contracts amounted to ThUS$ 549,117 (As of December 31, 2020 amounted to ThUS$ 565,295).

 

Expressed in ThUS$ Assets / (Liabilities) Derivative Instrument  Total Realized  Hedging Reserve in Gross Equity 
Hedging with debt as underlying as of March 31, 2021         
Hedging Assets  35,501   22,935   12,566 
Hedging Liabilities  (15,635)  (12,701)  (2,934)
Underlying Debt Hedge  19,866   10,234   9,632 
Underlying Investment Coverage as of March 31, 2021            
Hedging Assets  517   871   (354)
Hedging Liabilities  (5,836)  (5,673)  (163)
Underlying Investments Hedge  (5,319)  (4,802)  (517)

 

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)

 

Hedging Effect in Profit and Equity for the period as of March 31, 2021 Variation Total  Result  Hedge Reserve Variation 
Analysis Effect by Type of Coverage         
Underlying Debt Hedge  1,785   (1,238)  3,023 
Underlying Investments Hedge  15,685   15,824   (139)
Total hedging effect on profit or loss and equity in the period  17,470   14,586   2,884 
Analysis Effect by type of asset            
Hedging in Current and Non-Current Assets  (1,258)  (622)  (636)
Hedging in Current and Non-Current Liabilities  18,728   15,208   3,520 
Total Hedge Effect in Profit or Loss and Equity for the period  17,470   14,586   2,884 

 

81

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

The balances in the “total realized” column consider the intermediate effects of the contracts in force from January 1 to March 31, 2021 and from January 1 to December 31, 2020.

 

Derivative contract maturities are detailed as follows:

 

  Contract amount     
Series ThUS$  Currency Maturity date
H  126,994  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.

 

13.4       Financial liabilities

 

Other current and non-current financial liabilities

 

As of March 31, 2021, and December 31, 2020, the detail is as follows:

 

  As of March 31, 2021  As of December 31, 2020 
Other current and non-current financial liabilities Currents  Non-Current  Total  Currents  Non-Current  Total 
  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$  ThUS$ 
Liabilities at amortized cost                        
Bank borrowings  319   69,435   69,754   82   69,376   69,458 
Obligations with the public  34,906   1,808,022   1,842,928   36,781   1,816,626   1,853,407 
Derivative financial instruments                        
For hedging  11,050   10,421   21,471   26,699   13,511   40,210 
Non-Hedging  957   -   957   5,393   -   5,393 
Total  47,232   1,887,878   1,935,110   68,955   1,899,513   1,968,468 

 

Current and non-current bank borrowings

 

As of March 31, 2021, and 2020, the detail is as follows:

 

Current and non-current bank borrowings 

As of

March 31,

2021

  

As of

December 31,

2020

 
  ThUS$  ThUS$ 
Current loans  319   82 
Non-current loans  69,435   69,376 
Current and non-current loans  69,754   69,458 

 

82

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

a)                   Bank borrowings, current:

 

As of March 31, 2021, and December 31, 2020, 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 March 31, 2021  Current amounts as of March 31, 2021 
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  -   -   -   -   319   319   -   319 
Total    -   -   -   -   319   319   -   319 

 

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 05/30/2023  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 

 

83

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

b)Unsecured obligations, current:

 

As of March 31, 2021, and December 31, 2020, the detail of current unsecured interest-bearing obligations is composed of promissory notes and bonds, as follows:

 

Debtor          Periodicity      
Tax ID No. Company Country Number of
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$250 07/28/2021 US$ Semiannual Upon maturity  1.76%  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$400 07/22/2021 US$ Semiannual Upon maturity  4.06%  4.25%
93.007.000-9 SQM S.A. Chile  564  H 07/05/2021 UF Semiannual Semiannual  0.18%  4.90%
93.007.000-9 SQM S.A. Chile  699  O 08/01/2021 UF Semiannual Upon maturity  2.15%  3.80%
93.007.000-9 SQM S.A. Chile  563  P 07/15/2021 UF Semiannual Upon maturity  2.21%  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 March 31, 2021  Carrying amounts of maturities as of March 31, 2021 
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  -   1,914   1,914   -   1,914   1,914   (433)  1,481 
SQM S.A. Chile MUS$300  5,377   -   5,377   5,377   -   5,377   (614)  4,763 
SQM S.A. Chile MUS$450  7,650   -   7,650   7,650   -   7,650   (679)  6,971 
SQM S.A. Chile MUS$400  -   3,258   3,258   -   3,258   3,258   (237)  3,021 
SQM S.A. Chile H  -   16,350   16,350   -   16,350   16,350   (172)  16,178 
SQM S.A. Chile O  -   383   383   -   383   383   (82)  301 
SQM S.A. Chile P  -   831   831   -   831   831   (12)  819 
SQM S.A. Chile Q  1,393   -   1,393   1,393   -   1,393   (21)  1,372 
Total      14,420   22,736   37,156   14,420   22,736   37,156   (2,250)  34,906 

 

84

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021     

 

Debtor          Periodicity      
Tax ID No. Company Country Number of
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 Interim Financial Statements
March 31, 2021
 
 

 

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

 

The following table shows the details of bank loans as of March 31, 2021 and December 31, 2020:

 

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

 

Debtor Creditor Nominal non-current maturities as of March 31, 2021  Carrying amounts of maturities as of March 31, 2021 
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   (565)  69,435 
Total    -   70,000   -   70,000   -   70,000   -   70,000   (565)  69,435 

 

Debtor Creditor          
Tax ID No. Company Country Tax ID No. Financial institution Country Currency or adjustment index Type of amortization Effective rate  Nominal rate 
93.007.000-9 SQM S.A. Chile O-E 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 

 

86

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 
 

 

d)Non-current unsecured interest-bearing bonds

 

The following table shows the details of “unsecured debentures that accrue non-current interest” as of March 31, 2021, and December 31, 2020:

 

Debtor Number of registration or      Currency or Periodicity     
Tax ID No. Company Country ID of the
instrument
  Series Maturity date 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 March 31, 2021  Carrying amounts of maturities as of March 31, 2021 
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   (1,277)  248,773 
MUS$300  -   300,000   -   -   -   300,000   -   300,000   -   -   -   300,000   (628)  299,372 
MUS$450  -   -   -   -   450,000   450,000   -   -   -   -   450,000   450,000   (4,851)  445,149 
MUS$400  -   -   -   -   400,000   400,000   -   -   -   -   400,000   400,000   (6,524)  393,476 
H  -   -   -   -   118,467   118,467   -   -   -   -   118,467   118,467   (1,335)  117,132 
O  -   -   -   -   61,085   61,085   -   -   -   -   61,085   61,085   (883)  60,202 
P  -   -   -   -   122,669   122,669   -   -   -   -   122,669   122,669   (74)  122,095 
Q  -   -   -   -   122,669   122,669   -   -   -   -   122,669   122,669   (346)  121,823 
Total  -   300,000   250,000   -   1,273,890   1,823,890   -   300,000   250,000   -   1,273,890   1,823,890   (15,868)  1,808,022 

 

87

 

 

Notes to the Consolidated Interim Financial Statements
March 31, 2021
 
 

 

Debtor Number of registration or      Currency or Periodicity      
Tax ID No. Company Country ID of the instrument  Series Maturity date 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%

 

  Nom