Inventories

12 Months Ended

Dec. 31, 2018

Disclosure Of Inventories Explanatory [Abstract]

Note 11

Inventories

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

Type of inventory	12/31/2018 ThUS$		12/31/2017 ThUS$		12/31/2016 ThUS$

Raw material reserves		6,764		9,364		7,536
Supplies for production reserves		26,840		22,257		23,610
Products-in-progress reserves		423,621		456,333		482,261
Finished product reserves		456,449		414,120		479,665
Total		913,674		902,074		993,072

As of December 31, 2018, the Company has inventory of caliche ore (in piles or undergoing leaching process) available for processing valued at ThUS$347,100 and ThUS$333,194 as of December 31, 2017, (included in work in progress).

Inventory reserves recognized as of December 31, 2018 amount to ThUS$105,282, and ThUS$96,284 as of December 31, 2017. For finished and in-process products, the provisions constituted include the provision associated with the lower value of stock (considers lower realizable value, uncertain future use, reprocessing costs, etc.), inventory differences and potential errors in the determination of inventories (e.g., errors in topography, grade, humidity, etc.), see Note 3.19.

For inventories of raw materials, supplies, materials and parts, lower value provisions have been associated with the proportion of obsolete, defective or slow-moving materials and potential differences.

The amount from of inventory that was reclassified to cost of sales during 2018 was ThUS$1,300,940.

The amount from of inventory that was reclassified to cost of sales during 2017 was ThUS$1,230,321.

The amount from of inventory that was reclassified to cost of sales during 2016 was ThUS$1,130,799.

The breakdown of inventory reserves is detailed as follows:

Type of inventory	12/31/2018		12/31/2017		12/31/2016
	ThUS$		ThUS$		ThUS$

Raw material reserves		1,838		93		93
Supplies for production		-		-		920
Products-in-progress reserves		82,673		80,249		50,925
Finished product reserves		20,771		15,942		29,357
Total		105,282		96,284		81,295

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

As of December 31, 2018 and, 2017, movements in provisions are detailed as follows:

Conciliation	12/31/2018			12/31/2017			12/31/2016
	ThUS$			ThUS$			ThUS$
Beginning balance		96,284			81,295			80,369
Increase in Lower Value (1)		7,845			19,515			2,255
Additional Provision Differences of Inventory. ( 2 )		3,176			573			6,071
Increase / Decrease eventual differences and others ( 3 )		2,436			(178	)		(6,339	)
Provision Used		(4,459	)		(4,921	)		(1,061	)
Total changes		8,998			14,989			926
Final balance		105,282			96,284			81,295

(1)

There are three types of Lower Value Provisions: Economic Realizable Lower Value, Potential Inventory with Uncertain Future Use and 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. At least two annual inventories are taken in the production sites and in the port in Chile (“zero sum” systems have immediate potential adjustments).

(3)

This algorithm corresponds to diverse provision percentages based on the complexity in the measurement and rotation of stock, as well as standard differences based on previous profit and loss, as is the case with provisions in Commercial Offices.