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 statement of income.

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.

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 statement of income 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 covering the risk of insolvency and unpaid invoices correspond to 90% of all receivables with third parties. The credit risk associated with receivables is analyzed in Note 12.2 b) and the related accounting policy can be found in Note 3.6.

Bank promissory notes: These are negotiable promissory notes issued by a bank payable upon maturity at the request of customers to guarantee collection of the Company. Bank promissory notes are accepted based on the classification used by the industrial and Commercial Bank of China Limited (ICBC), which provides a list of accepted banks for clearing and/or collection of these documents based on their credit rating.

No significant modifications have been made during the period to risk models or parameters used in comparison to December 31, 2023, and no modifications have been made to contractual cash flows that have been significant during this period, except for considering in December 31, 2023 the incorporation of cash flows received from insurance claims in the determination of the allowance for doubtful accounts. The effect of this change was not significant to the overall financial statements as of December 31, 2023.

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.

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:

Financial institution

Financial assets

Rating

As of
December 31,
2024

Moody´s

S&P

Fitch

ThUS$

Banco Santander

Time deposits

P-1

A-1

104,542

Banco Crédito e Inversiones

Time deposits

P-1

A-2

1,003

Banco Estado

Time deposits

P-1

A-1

104,084

Banco de Chile

Time deposits

P-1

A-1

6,307

Scotiabank Chile

Time deposits

F1+

106,564

Banco Crédito e Inversiones

Investment fund

AA+

4,997

JP Morgan US dollar Liquidity Fund Institutional

Investment fund

Aaa-mf

1,974

Legg Mason - Western Asset Institutional cash reserves

Investment fund

AAAmmf

122,337

Total

451,808

Banco Crédito e Inversiones

Time deposits

P-1

A-2

174,684

Banco Estado

Time deposits

P-1

A-2

90,975

Banco Santander

Time deposits

P-1

A-1

415,851

Banco Itaú CorpBanca

Time deposits

P-1

A-2

66,166

Scotiabank Chile

Time deposits

F1+

240,164

Bank of Nova Scotia

Time deposits

P-1

A-1

F1+

51,025

KBC Bank

Time deposits

A-2

22,397

Total

1,061,262

Financial institution

Financial assets

Rating

As of
December 31,
2023

Moody´s

S&P

Fitch

ThUS$

Banco Santander- Santiago

Time deposits

P-1

A-2

6,318

Banco Crédito e Inversiones

Time deposits

P-1

A-2

1,001

Corpbanca

Time deposits

P-2

A-2

5,014

Banco de Chile

Time deposits

P-1

A-1

4,460

Scotiabank Sud Americano

Time deposits

F1+

6,752

Banco Crédito e Inversiones

Time deposits

AA+

5,031

JP Morgan US dollar Liquidity Fund Institutional

Investment fund

Aaa-mf

AAAm

AAAmmf

22,845

Legg Mason - Western Asset Institutional cash reserves

Investment fund

AAAm

AAAmmf

312,924

Total

364,345

Banco Crédito e Inversiones

Time deposits

P-1

A-2

74,459

Banco Morgan Stanley

Time deposits

P-1

A-2

5,590

Banco Santander

Time deposits

P-1

A-2

100,083

Banco Itaú CorpBanca

Time deposits

P-2

A-2

372,061

Scotiabank Sud Americano

Time deposits

F1+

319,128

Bank of Nova Scotia

Time deposits

P-1

353,592

Sumitomo Mitsui Banking

Time deposits

P-1

91,884

Total

1,316,797

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 mismatches 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, are associated with the Peso. Therefore, an increase or decrease in its exchange rate with the US dollar will provoke a respective decrease or increase in these accounting costs, which would be reflected in the Company’s statement of income. By the fourth quarter of 2024, approximately US$831 million accumulated in expenses are associated with the Peso.

As of December 31, 2024, the Company held derivative instruments classified as hedges of foreign exchange risks associated with 100% of all the bond obligations denominated in UF, for a net liability fair value of US$25.83 million, this significant variation is explained primarily by the USD/CLP exchange rate observed at the end of the period. As of December 31, 2023, this value corresponds to a net asset amounting US$ 2.52 million.

Furthermore, on of December 31, 2024, 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 net asset fair value of US$15.40 million. As of December 31, 2023, a net liability fair value was recognized for an amount of US$18.30 million.

The Company contracted derivatives classified as foreign exchange hedges for all the expected disbursements in Australian dollars for the Mt Holland project (See note 8.5), to hedge its exposure to cash flow variations. The fair value of this hedge was a net asset of US$ 1.44 million as of December 31, 2023.

The Company had the following derivative contracts as of December 31, 2024 (at the absolute value of the sum of their notional values), to hedge the difference between its assets and liabilities: US$ 5.90 million CLP/US dollar derivative contracts, US$ 40.35 million Euro/US dollar derivative contracts, US$ 28.92 million in South African rand/US dollar derivative contracts, US$ 302.65 million in Chinese renminbi/US dollar derivative contracts, US$ 7.79 million in Australian dollar/US dollar derivative contracts and US$ 8.00 million in other currencies.

Financial institution

Financial assets

Rating

Moody´s

S&P

Fitch

MUFG

Derivative

P-1

Merrill Lynch International

Derivative

P-1

A-2

F1+

JP Morgan

Derivative

P-1

A-1

F1+

Morgan Stanley

Derivative

P-1

A-2

The Bank of Nova Scotia

Derivative

P-1

A-1

F1+

Banco Itaú-Corpbanca

Derivative

P-2

A-2

Banco de Chile

Derivative

P-1

A-1

Barclays

Derivative

P-2

A-2

HSBC

Derivative

P-2

A-2

F1+

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.

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 ratio2, which enables it to cover current obligations with clearance. (As of December 31, 2024 this was 2.51 and 2.50 for December 31, 2023).

On the other hand, world financial markets go through periods of contraction and expansion that are unforeseeable in the long-term and may affect the Company’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 the maturities of both, from a conservative perspective, as part of this financial risk management strategy. As of December 31, 2024, the Company had unused, available revolving credit facilities with banks, for a total of US$1,676 million.


	Nature of undiscounted cash flows
As of December 31, 2024	Carrying amount	Less than 1 year	1 to 5 years	Over 5 years	Total
(figures expressed in millions of US dollars)
Bank borrowings	984.80	907.07	77.49	71.89	1,056.45
Unsecured obligations	3,815.34	433.76	1,258.08	3,355.57	5,047.41
Sub total	4,800.14	1,340.83	1,335.57	3,427.46	6,103.86
Hedging liabilities	28.76	6.40	40.33	10.34	57.07
Derivative financial instruments	0.16	0.16	—	—	0.16
Sub total	28.92	6.56	40.33	10.34	57.23
Current and non-current lease liabilities (1)	83.81	25.12	62.49	0.67	88.28
Trade accounts payable and other accounts payable	471.45	471.45	—	—	471.45
Total	5,384.32	1,843.96	1,438.39	3,438.47	6,720.82


	Nature of undiscounted cash flows
As of December 31, 2023	Carrying amount	Less than 1 year	1 to 5 years	Over 5 years	Total
(figures expressed in millions of US dollars)
Bank borrowings	1,464.26	1,117.86	268.80	62.05	1,448.71
Unsecured obligations	2,999.17	98.88	729.56	2,733.92	3,562.36
Sub total	4,463.43	1,216.74	998.36	2,795.97	5,011.07
Hedging liabilities	25.37	24.11	30.08	1.30	55.49
Derivative financial instruments	14.81	14.81	—	—	14.81
Sub total	40.18	38.92	30.08	1.30	70.30
Current and non-current lease liabilities	75.16	19.94	56.45	3.79	80.18
Trade accounts payable and other accounts payable	449.63	449.63	—	—	449.63
Total	5,028.40	1,725.23	1,084.89	2,801.06	5,611.18

The Company documents and maintains methods for qualitatively measuring the effectiveness and efficiency of financial risk management strategies. These methods are consistent with SQM Group’s risk management profile.