Identification and Activities of the Company and Subsidiaries

12 Months Ended

Dec. 31, 2019

Disclosure of Identification and Activities of the Company and Subsidiaries [Abstract]

Disclosure of Identification and Activities of the Company and Subsidiaries [Text Block]

Note 1

Identification and Activities of the Company and Subsidiaries

1.1

Historical 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.

1.2

Main 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.

1.3

Codes of main activities

The codes of the main activities as established by the

CMF,

as follows:

1700 (Mining)

2200 (Chemical products)

1300 (Investment)

1.4

Description 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 produce 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 of 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.

(d)

Industrial chemicals:

The Company produce 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 frits for the ceramics and enamel industries. Solar salts, a combination of potassium nitrate and sodium nitrate, are used as a thermal storage medium in concentrated solar power plants. Potassium chloride is a basic chemical used to produce potassium hydroxide, and it is also used as an additive in oil drilling as well as in food processing, among other uses.

(e)

Potassium:

The Company produce 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 sell 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.

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

The agreement signed in January 2018, includes important amendments to the lease agreement and project agreement signed between CORFO and SQM in 1993. The main modifications became effective on April 10, 2018 and requires an increase in the lease payments by increasing the lease rates associated with the sale of the different products produced in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride. Regarding lithium carbonate, the former rate of 6.8% on FOB sales was changed to the following structure of progressive rates based on the final sale price:

Price US$/MT Li2CO3	Lease payment rate
$0 - $4,000		6.80	%
$4,000 - $5,000		8.00	%
$5,000 - $6,000		10.00	%
$6,000 - $7,000		17.00	%
$7,000 - $10,000		25.00	%
> $10,000		40.00	%

See Note

24.2

for the disclosure of lease payments made to CORFO for all periods presented.

Regarding potassium chloride, the former rate of 1.8% on FOB sales was changed to the following structure of progressive rates based on the final sale price:

Price US$/MT Li2CO3	Lease payment rate
$0 - $300		3.0	%
$300 - $400		7.0	%
$400 - $500		10.0	%
$500 - $600		15.0	%
> $600		20.0	%

Similarly, the lease rates associated with the other products (lithium hydroxide, potassium sulfate and others) shall have similar changes to those described in the previous products.

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

1.5

Other background

(a)

Staff

As of December 31, 2019, and December 31, 2018, the workforce was as follows:

	As of December 31, 2019						As of December 31, 2018
Employees	S.Q.M S.A.		Other ‎ subsidiaries		Total		S.Q.M S.A.		Other ‎ subsidiaries		Total
Executives		30		91		121		33		89		122
Professionals		110		1,170		1,280		115		1,078		1,193
Technicians and operators		282		3,481		3,763		260		3,287		3,547
Foreign employees		17		560		577		11		417		428
Overall total		439		5,302		5,741		419		4,871		5,290

(b)	Main shareholders

As of December 2019,

there were 1,413shareholders.

The following table shows information about the main shareholders of the Company’s Series A or Series B shares in circulation as of December 31, 2019 and December 31, 2018, in line with information provided by the DCV. The following table presents the information about the beneficial ownership of Series A and Series B shares of the Company as of December 31, 2019 and December 31, 2018, 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 Exchanges.

whose main shareholders are the following:

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

(1) As reported by DCV, which records the Company's shareholders' register as of December 31, 2019 and December 31, 2018, Inversiones TLC SpA, a subsidiary of Tianqi Lithium Corporation ("Tianqi"), is the direct owner of 62,556,568 shares of SQM equivalent to 23.77% of SQM’s shares'' According to information provided to the CMF by Inversiones TLC SpA dated December 5, 2018, Inversiones TLC SpA owns 25.86% of SQM’s shares

Shareholders as of December 31, 2018	No. of Series A		% of Serie A ‎ shares			No. of Series B		% of Serie B ‎ shares			% of total ‎ shares
Inversiones TLC SpA (1)		62,556,568		43.80	%		-		-			23.77	%
Sociedad de Inversiones Pampa Calichera S.A.		44,894,152		31.43	%		10,093,154		8.38	%		20.89	%
The Bank of New York Mellon, ADRs		-		-			35,254,267		29.29	%		13.39	%
Potasios de Chile S.A.		18,179,147		12.73	%		-		-			6.91	%
Banco de Chile via non-resident third party accounts		15,687		0.01	%		10,703,812		8.89	%		4.07	%
Inversiones Global Mining (Chile) Limitada		8,798,539		6.16	%		-		-			3.34	%
Banco Itau via foreign investor accounts		-		-			8,085,730		6.72	%		3.07	%
Banco Santander via foreign investor accounts		-		-			7,138,685		5.93	%		2.71	%
Banchile C de B S. A.		528,092		0.37	%		4,028,611		3.35	%		1.73	%
Inversiones la Esperanza de Chile Limitada		3,711,598		2.60	%		46,500		0.04	%		1.43	%