Edgar Filing: CHEMICAL & MINING CO OF CHILE INC

UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

OF THE SECURITIES AND EXCHANGE ACT OF 1934

Includes SQM’s consolidated financial statements as of December 31, 2012, 2011, and 2010, together with management’s discussion and analysis of financial condition and results of operations and a discussion of its business.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

(Exact name of registrant as specified in its charter)

CHEMICAL AND MINING COMPANY OF CHILE INC.

(Translation of registrant's name into English)

El Trovador 4285, Santiago, Chile (562) 2425-2000

(Address and phone number of principal executive offices)

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 whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨

No x

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82_________

Management’s discussion and analysis of

financial condition and results of operations

Overview of our results of operations

We divide our operations into the production and sale of the following product lines:

specialty plant nutrients;

iodine and its derivatives;

lithium and its derivatives;

potassium, including potassium chloride and potassium sulfate;

industrial chemicals, principally industrial nitrates and solar salts; and

the purchase and sale of other commodity fertilizers for use primarily in Chile.

We sell our products through three primary channels: our own sales offices; a network of distributors; and, in the case of our fertilizer products, through Yara International ASA’s (formerly Norsk Hydro ASA) (“Yara”) distribution network in countries where its presence and commercial infrastructure are larger than ours. Similarly, in those markets where our presence is larger, both our specialty plant nutrients and Yara’s are marketed through our offices.

Factors affecting our results of operations

Our results of operations substantially depend on:

trends in demand for and supply of our products, including global economic conditions, which impact prices and volumes;

efficient operations of our facilities, particularly as some of them run at production capacity;

our ability to accomplish our capital expenditures program in a timely manner;

the levels of our inventories;

trends in the exchange rate between the U.S. dollar and Chilean peso, as a significant portion of the cost of sales is in Chilean pesos, and trends in the exchange rate between the U.S. dollar and the euro, as a significant portion of our sales is denominated in euros; and

energy, logistics, raw materials, labor and maintenance costs.

Our revenues totaled US$2,429.2 million during 2012, representing an increase of 13.2% from revenues of US$2,145.3 million in 2011. Gross margin reached US$1,028.6 million (42.3% of revenues), 20.3% higher than gross revenues of US$854.8 million (39.8% of revenues) in 2011. Profit attributable to controlling interests increased by 18.9% to US$649.2 million in 2012, compared to US$545.8 million in 2011.

Our sales volumes in the specialty plant nutrition product line in 2012 decreased by 8.1% compared to 2011. The decrease was a result of increased supply in the market and low market growth mainly due to economic uncertainty in Europe, one of the most important markets for the product line. In general, the specialty plant nutrition markets are less volatile than commodity and fertilizer markets, but future improvement in this product line will depend on the behavior of the market for potassium based fertilizers such as potassium chloride. Potassium chloride is an important raw material in the production of potassium nitrate, a specialty fertilizer and, as a result, prices of the two products are related. We feel confident in the future of specialty plant nutrient market as food quality requirements increase, and land and fresh water scarcity impacts some parts of the world. We suspect market growth to be led primarily by potassium nitrate, and we believe we are prepared to meet the growing market demand in the future.

Our sales volumes in the iodine product line decreased by 10.0% in 2012, as a result of new supply by competitors in the market, and as we returned to normal operational inventory. This volume decrease was more than offset by prices that were more than 40% higher than the average prices in this product line during 2011, thus increasing margins in the iodine segment. This increase in average prices in 2012 was attributable to an increase in demand which was met by new supply in 2012, which stabilized average prices at higher levels compared to 2011. We continue to be a world leader in the iodine market, and these special market conditions have created unique opportunities for us. We expect to maintain our efforts to assure that world iodine needs are met in the future.

Our sales volumes in the lithium product line increased by 12% in 2012 compared to 2011. Along with increased sales volumes, we saw increased prices in this product line during 2012 when compared to 2011, resulting in increased margins in this product line by nearly 30%. The increase in sales volumes and prices were principally attributable to stronger demand and higher costs for marginal producers compared to 2011. We believe the lithium market is positioned to grow in the short and long term due to the development of new technologies, as well as strong growth in industrial applications. We expect world lithium production to increase in the near future, as a number of new projects have been announced and have begun procurement.

Our sales volumes in the potassium product line increased by almost 10% in 2012 compared to the prior year, as we took advantage of our developed distribution network. Our average prices in the potassium market remained relatively stable as compared to 2011. In the fourth quarter of 2012, the potassium market saw major contracts close at lower prices than seen earlier in 2012; during the first quarter of 2013, prices have remained stable. We expect market sales volumes to increase during 2013, but we expect that price pressures will have an impact on potassium revenues in the near term.

Our sales volumes in the industrial chemicals product line increased by 52% in 2012 compared to 2011. The increase was driven by new alternative energy projects that utilize industrial-grade sodium and potassium nitrate in solar thermal energy storage. As a result of the uncertain financial situation in Europe and continued slow growth in the United States, the market has seen higher financing costs for projects in Europe and the United States. As a result, we anticipate some project delays which, in turn, we expect will have an impact on short term sales in the industrial chemicals product line. We remain confident in the long-term prospects in the solar thermal energy storage market, and expect to see industrial chemicals sales volumes in 2014 exceed volumes seen in 2013.

Our profit for the fourth quarter of 2012 declined by 10.8% from the comparable period in 2011 and was 14.2% lower than our profit for the third quarter of 2012, due principally to the decline in average prices in the potassium market during the fourth quarter of 2012, which affected our specialty plant nutrients product line and potassium product line, and decreased sales volumes in our iodine product line as a result of new supply by competitors in the market. Although potassium prices have remained stable in 2013 to date at the levels reached during the fourth quarter of 2012, we expect pressure on potassium prices to have an impact on our overall profits during the near term. The effect of the volume decrease in our iodine product line was partially offset by prices that were more than 40% higher for 2012 than the average prices in this product line during 2011. As mentioned above, increased supply entered the market in 2012, and we expect to see additional new supply in 2013.

The following table sets forth our revenues and the percentage accounted for by each of our product lines for each of the years indicated:

	Year Ended December 31,
	2012				2011				2010				2009
(in millions of U.S. dollars)	US$		%		US$		%		US$		%		US$		%
Specialty plant nutrients		675.3		28		721.7		34		603.7		33		527.0		37
Iodine and its derivatives		578.1		24		454.5		21		316.3		17		190.9		13
Lithium and its derivatives		222.2		9		183.4		9		150.8		8		117.8		8
Potassium		605.1		25		555.7		26		528.2		29		399.1		28
Industrial chemicals		245.2		10		139.5		7		149.7		8		115.4		8
Other commodity fertilizers⁽¹⁾		103.2		4		90.5		4		81.8		5		88.5		6
Total		2,429.2		100		2,145.3		100		1,830.4		100		1,438.7		100

(1)

Primarily consists of imported fertilizers distributed in Chile.

The following table sets forth certain of our financial information and the percentage of our revenues of such financial information for each of the years indicated:

	Year Ended December 31,
	2012					2011					2010
(in millions of U.S. dollars)	US$			%		US$			%		US$			%
Revenues		2,429.2			100.0		2,145.3			100.0		1,830.4			100.0
Cost of sales		(1,400.6	)		57.7		(1,290.5	)		60.2		(1,204.4	)		65.8
Gross profit		1,028.6			42.3		854.8			39.8		626.0			34.2
Other income		12.7			0.5		47.7			2.2		6.5			0.4
Administrative expenses		(106.4	)		4.4		(91.8	)		4.3		(78.8	)		4.3
Other expenses		(34.6	)		1.4		(63.0	)		2.9		(36.2	)		2.0
Other gains (losses)		0.7			—		5.8			0.3		(7.0	)		0.4
Finance income		29.1			1.2		23.2			1.1		12.9			0.7
Finance expenses		(54.1	)		2.2		39.3			1.8		(35.0	)		1.9
Equity income of associates and joint ventures accounted for using the equity method		24.4			1.0		21.8			1.0		10.7			0.6
Foreign currency exchange differences		(26.8	)		1.1		(25.3	)		1.2		(5.8	)		0.3
Income before income tax expense		873.5			36.0		733.8			34.2		493.3			27.0
Income tax expense		(216.1	)		8.9		(179.7	)		8.4		(106.0	)		5.8

Profit attributable to:
Controlling interests		649.2			26.7		545.8			25.4		382.1			20.9
Non-controlling interests		8.2			0.3		8.4			0.4		5.1			0.3
Profit for the year		657.4			27.1		554.1			25.8		387.3			21.2

Results of operations—year ended December 31, 2012 compared to year ended December 31, 2011

Revenues

During 2012, we generated total revenues of US$2,429.2 million, a 13.2% increase compared to US$2,145.3 million in 2011.

The main factors causing the increase in revenues and the variation in the different product lines are described below.

Specialty plant nutrition

Specialty plant nutrition revenues for 2012 totaled US$675.3 million, a 6.4% decrease compared to US$721.7 million in 2011. Set forth below are sales volume data for the specified years by product category in this product line.

(in Th. MT)	2012		2011		% Change
Potassium nitrate and sodium potassium nitrate		469.3		551.1		(15	)%
Specialty blends		197.5		189.3		4	%
Other specialty plant nutrients (*)		89.0		86.7		3	%
Sodium nitrate		24.4		22.2		10	%

* Includes trading of other specialty fertilizers.

Market supplies of the specialty plant nutrition market increased during 2012, as a significant competitor returned to normal production levels. In general, the specialty plant nutrition markets are less volatile than commodity and fertilizer markets, but future improvement in this product line will depend on the behavior of the market for potassium based fertilizers such as potassium chloride.

Our overall sales volumes in the specialty plant nutrition product line in 2012 decreased compared to 2011. This was a result of increased supply in the market and low market growth due mainly to the financial situation in Europe, one of the most important markets for this product line. Prices within our specialty plant nutrition product line increased by almost 2% in 2012 as compared to 2011.

Iodine and its derivatives

Revenues for iodine and its derivatives during 2012 totaled US$578.1 million, a 27.2% increase compared to US$454.5 million in 2011. Set forth below are sales volume data for the specified years.

(in Th. MT)		2012				2011				% Change
Iodine and its derivatives			11.0				12.2				(10	)%

Overall market sales volumes of iodine reached new levels in 2012 mainly as a result of increased demand. Strong demand was led primarily by X-ray contrast media and pharmaceutical applications. Increased supply entered the market in 2012, and we expect to see additional new supply in 2013.

Our sales volumes decreased by approximately 10% in 2012, as a result of new market supply, and as we returned to normal operational inventory. These volume decreases were more than offset by prices that were more than 40% higher than average prices during 2011, increasing gross profit in the iodine product line by over 38%.

Lithium and its derivatives

Revenues for lithium and its derivatives totaled US$222.2 million during 2012, a 21.2% increase compared to US$183.4 million in 2011. Set forth below are sales volume data for the specified years.

(in Th. MT)		2012				2011				% Change
Lithium and its derivatives			45.7				40.7				12	%

The lithium market continued to grow in 2012, primarily due to growth in the rechargeable battery and lubricating grease markets, as has been the trend in recent years.

Our sales volumes in the lithium segment increased by 12% in 2012, as compared to 2011. We believe we supply over one-third of the world lithium chemical market, and aim to maintain this market share in coming years.

Along with increased volumes, we saw increased prices of approximately 8% in this product line during 2012 as compared to the previous year, increasing our gross margin by approximately 30% as compared with 2011.

We believe we are the lowest cost producer of lithium in the world. We produce lithium as a by-product of potassium chloride, which gives us a unique competitive advantage.

Potassium

Potassium revenues for 2012 totaled US$605.1 million, an 8.9% increase as compared to US$555.7 million in 2011. Set forth below are sales volume data for the specified years.

(in Th. MT)		2012				2011				% Change
Potassium chloride and potassium sulfate			1,209.5				1,103.4				10	%

We estimate that market sales volumes of potassium chloride decreased by 12% in 2012 as compared to 2011. Despite favorable economic conditions of relevant crops, demand was mainly affected by economic uncertainty in Europe and the behavior of influential buyers in China and India.

We increased our sales volumes in this product line approximately 10% compared to 2011, as we took advantage of our developed distribution network. Average prices in the potassium market remained relatively stable as compared to 2011. In the fourth quarter of 2012, the potassium market saw major contracts close at lower prices than seen earlier in 2012; during the first quarter of 2013, prices have remained stable.

Industrial chemicals

Industrial chemicals revenues for 2012 totaled US$245.2 million, a 75.8% increase as compared to US$139.5 million in 2011. Set forth below are sales volume data for the specified years by product category.

(in Th. MT)	2012		2011		% Change
Industrial nitrates		277.7		181.2		53	%
Boric acid		1.8		2.4		(23	)%

Industrial chemical demand for traditional applications such as detergents and glass has remained relatively stable as compared to 2011.

New alternative energy projects that utilize industrial-grade sodium and potassium nitrate in solar thermal energy storage had a positive impact on our 2012 industrial chemicals volumes, which increased by over 50% as compared to 2011.

Prices for industrial chemicals increased by 15%, mainly because of the product mix, increasing our gross margins by approximately 48%.

Other products and services

Revenues from sales of other commodity fertilizers and other products totaled US$103.2 million during 2012, a 14.0% increase compared to US$90.5 million in 2011.

Cost of sales

During 2012, cost of sales increased by 8.5% to US$1,400.6 million in 2012 from US$1,290.5 million in 2011, but remained stable as a percentage of revenues, representing 58% of revenues in 2012 as compared to 60% of revenues in 2011. This increase was principally caused by higher volume production and a stronger Chilean peso. Cost of sales includes, among others, the costs of depreciation and amortization.

Gross profit

Gross profit increased by 20.3% from US$854.8 million in 2011 to US$1,028.6 million in 2012, but remained stable as percentage of revenues, representing 42.3% of revenues in 2012 as compared to 39.8% of revenues in 2011. Gross margin was impacted by generally higher average prices in 2012 compared to 2011, led by iodine prices, which increased by 40% on average in 2012 as compared to prices in 2011.

Administrative expenses

Administrative expenses as a percentage of revenues remained stable in 2012 as compared to 2011. Administrative expenses were US$106.4 million (4.4% of revenues) in 2012 and US$91.8 million (4.3% of revenues) in 2011.

Other expenses

Other expenses decreased by 45.1% to US$34.6 million in 2012 from US$63.0 million in 2011. Other expenses represented 1.4% of revenues in 2012 as compared to 2.9% of revenues in 2011. The decrease in other expenses is attributable to a decrease in expenses accounted for as depreciation of assets no longer in use.

Other gains (losses)

Other gains (losses) decreased by 87.9% to a gain of US$0.7 million in 2012 from a gain of US$5.8 million in 2011, but remained stable as a percentage of revenues, representing 0.0% of revenues in 2012 as compared to 0.3% of revenues in 2011. The decrease is attributable in part to a loss in sales of investment in associates and a provision no longer in effect for the suspension of our operations at El Toco mine at the Maria Elena facility.

Finance income

Finance income increased by 25.4% to US$29.1 million in 2012 from US$23.2 million in 2011, but remained stable as a percentage of revenues, representing 1.2% of revenues in 2012 as compared to 1.1% of revenues in 2011.

Finance expenses

Finance expenses increased by 37.7% to US$54.1 million in 2012 from US$39.3 million in 2011, but remained stable as a percentage of revenues, representing 1.8% of revenues in 2011 as compared to 2.1% of revenues in 2012. The increase in finance expenses was due to a net increase in indebtedness during 2012 and a decrease in capitalized interest related to ongoing capital expenditure projects as compared to 2011.

Equity income of associates and joint ventures accounted for using the equity method

Equity income of associates and joint ventures accounted for using the equity method increased by 11.9% to US$24.4 million in 2012 from US$21.8 million in 2011, but remained stable as a percentage of revenues, representing 1.0% of revenues both in 2012 and in 2011.

Foreign currency exchange differences

Losses from foreign currency exchange differences increased by 5.9% to a loss of US$26.8 million in 2012 from a loss of US$25.3 million in 2011, but remained stable as a percentage of revenues, representing 1.1% of revenues in 2012 as compared to 1.2% of revenues in 2011. Since most of our operations are in Chile, part of our costs of sales are related to the Chilean peso. Although we have an active hedging program and policy, we are subject to currency fluctuations. During 2012, the Chilean peso appreciated by 7.6% against the U.S. dollar.

Income tax expense

In 2012, income tax expense increased by 20.3% to US$216.1 million, representing an effective consolidated tax rate of 24.7%, compared to income tax expense of US$179.7 million in 2011. This increase was a result of an increase in gross profit of 20.3% from 2011 to 2012.

Profit for the year

Profit for the year increased by 18.6% to US$657.4 million in 2012 from US$554.1 million in 2011, as a result of the foregoing factors.

Results of operations—year ended December 31, 2011 compared to year ended December 31, 2010

Revenues

During 2011, we generated total revenues of US$2,145.3 million, a 17.2% increase compared to US$1,830.4 million in 2010.

The main factors causing the increase in revenues and the variation in the different product lines are described below:

Specialty plant nutrition

Specialty plant nutrition revenues for 2011 totaled US$721.7 million, a 19.5% increase compared to US$603.7 million in 2010. Set forth below are sales volume data for the specified years by product category in this product line.

(in Th. MT)	2011		2010		% change
Potassium nitrate and sodium potassium nitrate		551.1		534.7		3	%
Specialty blends		189.3		176.3		7	%
Other specialty plant nutrients(*)		86.7		87.6		(1	)%
Sodium nitrate		22.2		16.8		32	%

* Includes trading of other specialty fertilizers.

Market sales volumes of fertilizer showed a significant improvement in 2011 over 2010 levels, and our specialty plant nutrition product line was no exception. The specialty plant nutrition market showed the same upward trend as the potash market. Additionally, tight supply issues in the potassium nitrate market created opportunities to increase sales volumes, and this, coupled with strong growth in demand in potassium, led to increased prices in 2011. North American and European markets were demand drivers during 2011.

Average prices in 2011 increased by 14% over average prices in 2010. We also had improved margins as a result of increased production from the highly efficient facility in Coya Sur.

Iodine and its derivatives

Revenues for iodine and its derivatives during 2011 totaled US$454.5 million, a 43.7% increase compared to US$316.3 million in 2010. Set forth below are sales volume data for the specified years.

(in Th. MT)		2011				2010				% change
Iodine and its derivatives			12.2				11.9				3	%

Iodine markets surpassed previous records and reached historical levels in 2011. Demand increased in most applications, but specifically in the X-ray contrast media market and for pharmaceutical uses. Weakened supply also had an impact on the iodine markets in 2011, driving spot prices to unprecedented highs. As a result of a strong demand recovery, together with a tightened availability from other suppliers, iodine prices increased substantially during 2011, and SQM saw an increase in average prices for iodine of almost 40%.

We continue to be a world leader in the iodine market, and we were uniquely positioned to take advantage of increased demands in the iodine markets and meet the shortfall in supply in 2011.

Lithium and its derivatives

Revenues for lithium and its derivatives totaled US$183.4 million during 2011, a 21.6% increase as compared to US$150.8 million in 2010. Set forth below are sales volume data for the specified years.

(in Th. MT)		2011				2010				% change
Lithium and its derivatives			40.7				32.4				26	%

The lithium market continued to grow in 2011, primarily due to growth in the rechargeable battery and lubricating grease markets. Lithium sales exceeded expectations in 2011. Prices in this product line remained relatively stable throughout 2011.

Potassium

Potassium revenues for 2011 totaled US$555.7 million, a 5.2% increase as compared to US$528.21 million in 2010. Set forth below are sales volume data for the specified years.

(in Th. MT)		2011				2010				% change
Potassium chloride & Potassium Sulfate			1,103.4				1,273.0				(13	)%

The potassium chloride market continued to be robust in 2011, as farmers continued to be motivated to maximize yields and improve soil productivity through optimal fertilization. Additionally, world demand for commodity products continues to expand as the world population grows and the demand for more and better quality food increases.

Prices in the fertilizer market continued to increase over the course of 2011, and average prices in the potassium product line were 21% higher in 2011 as compared to 2010.

Industrial chemicals

Industrial chemicals revenues for 2011 totaled US$139.5 million, a 6.8% decrease from US$149.7 million in 2010. Set forth below are sales volume data for the specified years by product category.

(in Th. MT)	2011		2010		% change
Industrial nitrates		181.2		198.9		(9	)%
Boric acid		2.4		2.6		(9	)%

Industrial chemical demand for traditional applications such as explosives, detergents and glass, among others, remained relatively stable in 2011 as compared to 2010. Average prices for industrial chemicals in 2011 saw a slight increase compared to 2010.

Other products and services

Revenues from sales of other commodity fertilizers and other products totaled US$90.5 million during 2011, a 10.6% increase compared to US$81.8 million in 2010.

Cost of sales

During 2011, cost of sales increased by 7.1% to US$1,290.5 in 2011 from from US$1,204.4 million in 2010, but decreased as a percentage of revenues, representing 60% of revenues in 2011 as compared to 66% of revenues in 2010. This cost of sales increase was mainly caused by higher energy prices and a stronger Chilean peso. Cost of sales includes, among others, the costs of depreciation and amortization.

Gross profit

Gross profit increased by 36.5% from US$626.0 million in 2010 to US$854.8 million in 2011. As a percentage of revenues, gross profit increased from 34.2% of revenues in 2010 to 39.8% of revenues in 2011. Gross margin increased mainly as a result of higher average prices of potash (approximately 20%) and iodine (approximately 40%) in 2011as compared to 2010.

Administrative expenses

Administratives expenses as a percentage of revenues remained unchanged in 2011 as compared to 2010. Administrative expenses were US$91.8 million in 2011 and US$78.8 million in 2010, representing 4.3% of revenues in both years.

Other expenses

Other expenses increased by 74.0% to US$63.0 million in 2011 from US$36.2 million in 2010. Other expenses represented 2.9% of revenues in 2011 as compared to 2.0% of revenues in 2010. The increase in other expenses is attributable in part to the recognition of depreciation of certain assets that we no longer use.

Other gains (losses)

Other gains (losses) increased to a gain of US$5.8 million in 2011 from a loss of US$7.0 million in 2010, but remained stable as a percentage of revenues, representing 0.3% of revenues in 2011 as compared to 0.4% of revenues in 2010. This increase is attributable in part to the provision relating to the temporary suspension of our operations at El Toco mine at the Maria Elena facility.

Finance income

Finance income increased by 79.8% to US$23.2 million in 2011 from US$12.9 million in 2010, but remained stable as a percentage of revenues, representing 1.1% of revenues in 2011 as compared to 0.7% of revenues in 2010. The increase was mainly due to an increase in cash and cash equivalents in 2011, together with higher investment yields in Chile in 2011.

Finance expenses

Finance expenses increased by 12.3% to US$39.3 million in 2011 from US$35.0 million in 2010, but remained stable as a percentage of revenues, representing 1.8% of revenues in 2011 as compared to 1.9% of revenues in 2010.

Equity income of associates and joint ventures accounted for using the equity method

Equity income of associates and joint ventures accounted for using the equity method increased by 103.7% to US$21.8 million in 2011 from US$10.7 million in 2010, but remained relatively stable as a percentage of revenues, representing 1.0% of revenues in 2011 as compared to 0.6% of revenues in 2010.

Foreign currency exchange differences

Losses from foreign currency exchange differences increased to a loss of US$25.3 million in 2011 from a loss of US$5.8 million in 2010, partly due to significant depreciations in the euro and South African rand. Although we have an active hedging program and policy, we are still subject to exchange rate fluctuations.

Income tax expense

In 2011, income tax expense increased by 69.5% to US$179.7 million, representing an effective consolidated tax rate of 24.5%, as compared to income tax expense of US$106.0 million in 2010. This increase was a result of an increase in the Chilean corporate tax rate from 17% in 2010 to 20% in 2011, as well as an increase in gross profit of 36.5% from 2010 to 2011.

Profit for the year

Profit for the year increased by 43.1% to US$554.1 million in 2011 from US$387.3 million in 2010, as a result of the foregoing factors.

Liquidity and capital resources

As of December 31, 2012, we had US$568.5 million of cash and cash equivalents and time deposits. In addition, as of December 31, 2012, we had unused uncommitted working capital credit lines amounting to US$530.0 million.

Shareholders’ equity increased from US$1,812.8 million as of December 31, 2011 to US$2,132.8 million as of December 31, 2012. Our ratio of total liabilities to total equity (including non-controlling interest) on a consolidated basis decreased from 1.08 as of December 31, 2011 to 1.02 as of December 31, 2012.

We evaluate from time to time our cash requirements to fund capital expenditures, dividend payouts and increases in working capital. As debt requirements also depend on the level of accounts receivables and inventories, we cannot accurately determine the amount of debt we will require.

The table below sets forth our cash flows for 2012, 2011, and 2010:

(in millions of U.S. dollars)	2012			2011			2010
Net cash from (used in):
Net cash from operating activities		650.2			571.3			618.5
Net cash used in financing activities		(197.7	)		(105.2	)		(254.2	)
Net cash used in investing activities		(562.9	)		(516.2	)		(236.8	)
Effects of exchange rate fluctuations on cash and cash equivalents		(10.3	)		(29.6	)		21.5
Net increase (decrease) in cash and cash equivalents		(120.6	)		(79.7	)		149.0

We operate a capital-intensive business that requires significant investments in revenue-generating assets. Our growth strategy has included the purchase of production facilities and equipment and has also included the improvement and expansion of existing facilities. Funds for capital expenditures and working capital requirements have been obtained from net cash from by operating activities, borrowings under credit facilities and issuance of debt securities.

Our capital expenditures, including the purchase of property, plant and equipment, amounted to approximately US$446.0 million in 2012. For 2013, we expect total capital expenditures of approximately US$500.0 million, which amount may be increased or decreased based on market conditions. See “Business—Business strategy—Capital expenditure program.”

Our other major use of funds is the payment of dividends. We paid dividends of US$334.8 million and US$277.3 million during 2012 and 2011, respectively. Our current dividend policy, as approved by shareholders, is to pay 50% of our profit for each fiscal year in dividends. Under Chilean law, the minimum dividend payout is 30% of profit for each fiscal year.

Financing activities

Our current ratio (current assets divided by current liabilities) was 3.69 as of December 31, 2012. The following table sets forth key information about our outstanding long- and short-term debt as of December 31, 2012.

Debt Instrument⁽¹⁾⁽²⁾	Interest rate			Issue date	Maturity date	Amortization
Series O Bond — UF 1.50 million		3.80	%	Apr. 4, 2012	Feb. 1, 2033	Bullet
Series H Bond — UF 4 00 million		4.90	%	Jan. 13, 2009	Jan. 5, 2030	Semiannual, beginning in 2019
Series C Bond — UF 2.1 million		4.00	%	Jan. 24, 2006	Dec. 1 , 2026	Semiannual, beginning in 2007
5.50% Notes due 2020 — US$250 million		5.50	%	Apr. 21, 2010	Apr. 21, 2020	Bullet
Series M Bond — UF 1.00 million		3.30	%	Apr. 4, 2012	Feb. 1, 2017	Bullet
Bilateral loan — US$140 million		2.69	%	Sep. 13, 2012	Sep. 13, 2017	Bullet
6.125% Notes due 2016 — US$200 million		6.13	%	Apr. 5, 2006	Apr. 15, 2016	Bullet
Bilateral loan — US$40 million		1.52	%	Oct. 6, 2011	Oct. 6, 2016	Bullet
Bilateral loan — US$50 million		1.26	%	Oct. 12, 2011	Oct. 12, 2016	Semiannual, beginning in 2014
Bilateral loan — US$50 million		1.46	%	Dec. 21, 2011	Dec. 21, 2016	Semiannual, beginning in 2014
Bilateral loan — US$50 million		1.62	%	Oct. 19, 2012	Oct. 19, 2015	Bullet
Series G Bond — CH$21,000 million		7.00	%	Jan. 13, 2009	Jan. 5, 2014	Bullet
Series I Bond — UF 1.50 million		3.00	%	May 8, 2009	Apr. 1, 2014	Bullet
Series J Bond — CH$52,000 million		5.50	%	May. 8, 2009	Apr. 1, 2014	Bullet
Bilateral loan — US$50 million		1.54	%	Sep. 12, 2011	Sep. 12, 2014	Bullet
Bilateral loan — US$20 million⁽³⁾		1.04	%	Apr. 19, 2012	Jan. 16, 2013	Bullet
Bilateral loan — US$20 million⁽⁴⁾		1.03	%	May 4, 2012	Feb. 28, 2013	Bullet
Bilateral loan — US$20 million		1.90	%	May 15, 2012	May 10, 2013	Bullet
Bilateral loan — US$20 million		1.64	%	Jun. 25, 2012	Jun. 20, 2013	Bullet
Bilateral loan — US$20 million		1.70	%	Jun. 29, 2012	Jun. 24, 2013	Bullet
Bilateral loan — US$20 million		1.09	%	Dec. 3, 2012	Aug. 30, 2013	Bullet

(1)

UF- and Ch$-denominated bonds are fully hedged to U.S. dollars with cross-currency swaps.

(2)

Some floating rate bilateral loans are currently hedged to fixed rate loans using interest rate swaps.

(3)

On January 16, 2013, we repaid a short term bank loan, in the principal amount of US$20 million, with a term of nine months and an annual interest rate of approximately LIBOR + 0.72%, and we entered into a short term bank loan, in the principal amount of US$20 million, with a term of eight months and an annual interest rate of approximately LIBOR + 0.315%.

(4)

On February 28, 2013, we repaid a short term bank loan, in the principal amount of US$20 million, with a term of 10 months and an annual interest rate of approximately LIBOR + 0.72%, and we entered into a short term bank loan, in an amount of US$20 million with a term of nine months and an annual interest rate of approximately LIBOR 3M + 0.35%.

As of December 31, 2012, we had total debt of US$1,599 million, compared to total debt of US$1,398.03 million as of December 31, 2011. Taking into account the effects of financial derivatives, our total debt amounted to US$1,498.39 million as of December 31, 2012 and US$1,341.93 million as of December 31, 2011. Of the total debt as of December 31, 2012, US$152.84 million was short-term debt. All of our UF and Ch$ local bonds, as of December 31, 2012, were hedged with cross-currency swaps to the U.S. dollar.

The financial covenants related to our debt instruments include: (i) limitations on the ratio of total liabilities to equity (including non-controlling interest) on a consolidated basis, (ii) minimum net worth requirements, (iii) limitations on net financial debt to EBITDA, (iv) limitations on interest indebtedness of operating subsidiaries and (v) minimum production assets. We believe that the terms and conditions of our debt agreements are standard and customary and that we are in compliance in all material respects with such terms and conditions.

The following table sets forth the maturities of our long-term debt by year as of December 31, 2012:

Maturity⁽¹⁾ (in millions of U.S. dollars)	Amount
2013		7.14
2014		300.67
2015		97.14
2016		287.14
2017		194.74
2018		7.14
2019 and thereafter		568.92
Total		1,462.89

(1)

Only the principal amount has been included. For the UF- and Ch$-denominated local bonds, the amounts presented reflect the real U.S. dollar obligation as of December 31, 2012, not including the effects of the cross currency swaps that hedge these bonds to the U.S. dollar and which had, as of December 31, 2012, a market value of US$100.6 million in favor of SQM.

Derivative financial instruments and hedging

We use derivative financial instruments, including foreign currency forwards and options contracts as well as cross currency and interest rate swaps, to mitigate the risks associated with fluctuations in interest and exchange rates. Such derivative financial instruments are initially recognized at fair value as of the date of the derivative contract and are subsequently remeasured at fair value quarterly. Derivatives are recorded as assets when fair value is positive and as liabilities when fair value is negative. Any gain or loss that arises from the changes of the fair value of derivatives during the year that does not qualify for hedge accounting is recorded directly to the statement of income. The fair value of cross currency and interest rate swaps is calculated using market information to estimate their net present values, which later are confirmed with the corresponding counterparty.

Off-balance sheet arrangements

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, retained or contingent interests in transferred assets, derivative instruments or other contingent arrangements that would expose us to material continuing risks, contingent liabilities, or any other obligations arising out of a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us or that engages in leasing, hedging or research and development services with us.

Market risk analysis

We are exposed to market risk from changes in currency exchange rates and interest rates. Through various arrangements described below, we seek to hedge our foreign currency exposures.

For additional information concerning our hedging transactions, see note 9.3 to our audited financial statements included below.

Foreign currency risk

We transact a significant portion of our business in U.S. dollars, and the U.S. dollar is the currency of the primary economic environment in which we operate. In addition, the U.S. dollar is our functional currency for financial statement reporting purposes. A significant portion of our costs, however, is related to the Chilean peso. Therefore, an increase or decrease in the exchange rate between the Chilean peso and the U.S. dollar would affect our costs of production. As of December 31, 2012, the Chilean peso exchange rate was Ch$479.96 per U.S. dollar, while as of December 31, 2011, the Chilean peso exchange rate was Ch$519.20 per U.S. dollar. As of March 15, 2013, the Observed Exchange Rate was Ch$471.10 per U.S. dollar.

As an international company operating in several other countries, we also transact business and have assets and liabilities in other non-U.S. dollar currencies, such as, among others, the euro, the South African rand, the Mexican peso, the Chinese yuan and the Brazilian real. As a result, fluctuations in the exchange rates of such foreign currencies to the U.S. dollar may materially affect our business, financial condition and results of operations.

Interest rate risk

We have outstanding short- and long-term debt that bears interest based on LIBOR plus a spread. Since we are currently hedging only a portion of these liabilities into fixed rates, we are exposed to interest rate risk relating to LIBOR fluctuations. As of December 31, 2012, approximately 21% our financial debt had LIBOR-based pricing that was not hedged into fixed rates. A significant increase in the rate could materially impact our financial condition and results of operations.

Critical accounting policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, which would potentially result in materially different results under different assumptions and conditions. For more information regarding our critical accounting policies, see note 3 to our see not 3 to our audited consolidated financial statements included below.

We believe that our critical accounting policies applied in the preparation of our audited consolidated financial statements are limited to those described below. It should be noted that in many cases, IFRS specifically dictates the accounting treatment of a particular transaction, limiting management’s judgment in their application. There are also areas in which management’s judgment in selecting available alternatives would not produce materially different results.

Trade and other accounts receivable

Trade and other accounts receivable relate to non-derivative financial assets with fixed payments that can be determined and are not quoted in any active market. These arise from sales operations involving the products and/or services that we sell directly to our customers that are not within the following categories:

those which we have the intention of selling immediately in the near future and which are held-for-sale;

those designated at their initial recognition as available-for-sale; and

those through which the holder does not intend to partially recover substantially its entire investment for reasons other than credit impairment and therefore must be classified as available-for-sale.

These assets are initially recognized at their fair value (which is equivalent to their face value, discounting implicit interest for installment sales) and subsequently at amortized cost according to the effective interest rate method less a provision for impairment loss. When the face value of the account receivable does not significantly differ from its fair value, it is recognized at face value. An allowance for impairment loss is established for trade accounts receivable when there is objective evidence that we will not be able to collect all the amounts owed to us according to the original terms of accounts receivable.

Implicit interest in installment sales is recognized as interest income when interest is accrued over the term of the sale.

Income tax

Corporate income tax for the year is determined as the aggregate of current taxes from all of the consolidated companies. Current taxes are calculated on the basis of the tax laws enacted or substantively enacted as of the date of our statements of financial position in the countries in which we and our subsidiaries operate and generate taxable income.

Deferred tax is recognized using the liability method on temporary differences arising between the tax basis for assets and liabilities and their carrying amounts in our audited consolidated financial statements. Deferred income taxes are calculated using the tax rates expected to be applicable when the assets are realized or the liabilities are settled.

In conformity with current Chilean 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 credits associated with it. The balances of these accounts are presented in current income taxes recoverable or current taxes payable, as applicable.

Tax on companies and variations in deferred tax assets or liabilities that are not the result of business combinations are recorded in income statement accounts or net shareholders’ equity accounts in our consolidated statements of financial position, depending on the origin of the gains or losses which have generated them.

At year end, the carrying value of deferred tax assets has been reviewed and reduced for as long as it is possible for there to be no sufficient taxable income to allow the recovery of all or a portion of the deferred tax asset. Likewise, at the date of the statement of financial position, deferred tax assets not recognized are revalued and recognized as long as it has become possible that future taxable income will allow the recovery of the deferred tax asset.

With respect to deductible temporary differences associated with investments in subsidiaries, associated companies and interests in joint ventures, deferred tax assets are recognized solely provided that there is a possibility 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 income tax related to entries directly recognized in equity is recognized with an effect on equity and not with an effect on profit or loss.

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.

Inventory

We state inventory for the lower of cost and net realizable value. The method used to determine the cost of inventory is weighted average cost. The cost of finished products and products-in-progress includes direct costs of materials and, as applicable, labor costs, indirect costs incurred to transform raw materials into finished products and general expenses incurred in carrying inventory to their current location and conditions.

The net realizable value represents the estimate of the sales price less all finishing estimated costs and costs that will be incurred in sales and distribution processes. Commercial discounts, rebates obtained and other similar entries are deducted in the determination of the cost. We conduct an evaluation of the net realizable value of inventory at the end of each year, recording a provision with a charge to income when circumstances warrant. When the circumstances that previously gave rise to the reserve cease to exist, or when there is clear evidence of an increase in the net realizable value due to a change in economic circumstances or prices of main raw materials, the estimate made previously is modified. The valuation of obsolete, impaired or slow-moving products relates to their estimated net realizable value.

Provisions on our inventory have been made based on a technical study which covers the different variables affecting products in stock (density, humidity, among others).

Raw materials, supplies and materials are recorded at the lower of acquisition cost or market value. Acquisition cost is calculated according to the annual average price method.

Obligations related to staff severance indemnities and pension commitments

Our obligations with respect to our employees are established in collective bargaining agreements and individual employment contracts. In the case of our employees in the United States, our obligations are established through a pension plan, which was terminated in 2002 (see note 3.11 to our audited financial statements included below).

These obligations are valued using the actuarial calculation, which considers such hypotheses 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.

Actuarial losses and gains that may be generated by variations in previously defined obligations are directly recorded in profit or loss for the year.

Actuarial losses and gains that have their origin in deviations between the estimate and the actual behavior of actuarial hypotheses or in the reformulation of established actuarial hypotheses are recorded in equity.

The discount rate used by us for calculating the obligation was 6% for the periods ended as of December 31, 2012.

Our subsidiary SQM North America Corp. has established pension plans for its retired employees that are calculated by measuring the projected obligation of International Accounting Standards (“IAS”) using a net salary progressive rate net of adjustments to inflation, mortality and turnover assumptions, deducting the resulting amounts at present value using a 5.0% interest rate for 2012. The net balance of this obligation is presented in the line item called Noncurrent Employee Benefit Provisions.

Mining development costs

Mine exploration costs and stripping costs to maintain production of mineral resources extracted from operating mines are considered variable production costs and are included in the cost of inventory produced during the period. Mine development costs at new mines, and major development costs at operating mines outside existing areas under extraction that are expected to benefit future production, are capitalized under “other long-term assets” and amortized using a units-of-production method over the associated proven and probable reserves. We determine our proven and probable reserves based on drilling, brine sampling and geostatistical reservoir modeling in order to estimate mineral volume and composition.

All other mine exploration costs, including expenses related to low grade mineral resources rendering reserves that are not economically exploitable, are charged to the statement of income in the period in which they are incurred.

Asset value impairment

We assess on an annual basis any impairment on the amount of buildings, plant and equipment, intangible assets, goodwill and investments accounted for using the equity method of accounting in accordance with IAS 36 “Impairment of Assets.” Assets to which this method applies are:

investments recognized using the equity method of accounting;

property, plant and equipment;

intangible assets; and

goodwill.

Assets are reviewed for impairment as to the existence of any indication that the carrying value is lower than the recoverable amount. If such an indication exists, the asset recoverable amount is calculated in order to determine the extent of the impairment, if any. In the event that the asset does not generate any cash flows independent from other assets, we determine the recoverable amount of the cash generating unit to which this asset belongs according to the corresponding business segment (specialty plant nutrients, iodine and derivatives, lithium and derivatives, industrial chemicals, potassium and other products and services.)

We conduct impairment tests on intangible assets and goodwill with indefinite useful lives on an annual basis and every time there is indication of impairment. If the recoverable value of an asset is estimated at an amount lower than its carrying value, the latter decreases to its recoverable amount.

Financial derivatives and hedging transactions

Derivatives are recognized initially at fair value at the date in which the derivatives contract has been signed and subsequently they are valued at fair value at each period end. The method for recognizing the resulting loss or gain depends on whether the derivative has been designated as an accounting hedging instrument and if so, the type of hedging, which may be:

fair value hedge of assets and liabilities recognized (fair value hedges); or

hedging of a single risk associated with an asset or liability recognized or a highly possible foreseen transaction (cash flow hedge).

At the beginning of the transaction, we document the relationship between hedging instruments and those entries hedged, as well as their objectives for risk management purposes and the strategy to conduct different hedging operations.

We also document our evaluation both at the beginning and the end of each period of whether derivatives used in hedging transactions are highly effective to offset changes in the fair value or in cash flows of hedged entries.

The fair value of derivative instruments used for hedging purposes is shown in note 9.3 to our audited financial statements included below.

Non-hedge instruments are classified as current assets or liabilities, and the change in their fair value is recognized directly in profit or loss.

Fair value hedge

The change in the fair value of a derivative is recognized with a debit or credit to profit or loss, as applicable. The change in the fair value of the hedged entry attributable to hedged risk is recognized as part of the carrying value of the hedged entry and is also recognized with a debit or credit to profit or loss.

For fair value hedging related to items recorded at amortized cost, the adjustment of the fair value is amortized against income on the remaining year to its expiration. Any adjustment to the carrying value of a hedged financial instrument for which the effective rate is used is amortized with a debit or credit to profit or loss at its fair value attributable to the risk being covered.

If the hedged entry no longer meets the criteria for hedge accounting, the fair value not amortized is immediately recognized with a debit or credit to profit or loss.

Cash flow hedge

The effective portion of gains or losses from the hedging instrument is initially recognized as “other revenue” with a debit or credit to other comprehensive income whereas any ineffective portion is immediately recognized with a debit or credit to profit or loss, as applicable.

Amounts accumulated in equity are transferred to profit or loss when the hedged transaction affects income for the period, such as when the hedged interest income or expense is recognized when a forecasted sale occurs. When the hedged item is the cost of a non-financial asset or liability, amounts taken to equity are transferred to the initial carrying value of the non-financial asset or liability.

Should the expected firm transaction or commitment no longer be expected to occur, the amounts previously recognized other comprehensive income are transferred to income. If a hedging instrument expires, is sold, finished, and exercised without any replacement, or if a rollover is performed or if its designation as hedging is revoked, the amounts previously recognized in equity are maintained in equity until the expected firm transaction or commitment occurs.

Business

Business overview

We believe that we are the world’s largest producer of potassium nitrate, iodine and lithium chemicals. We also produce specialty plant nutrients, iodine and iodine derivatives, lithium and lithium derivatives, potassium chloride, potassium sulfate and certain industrial chemicals (including industrial nitrates and solar salt). Our products are sold in more than 110 countries through our worldwide distribution network, with 89% of our sales in 2012 derived from countries outside Chile.

Our products are mainly derived from mineral deposits found in northern Chile. We mine and process caliche ore and brine deposits. The caliche ore in northern Chile contains the only known nitrate and iodine deposits in the world and is the world’s largest commercially exploited source of natural nitrates. The brine deposits of the Salar de Atacama, a salt-encrusted depression in the Atacama desert in northern Chile, contain high concentrations of lithium and potassium as well as significant concentrations of sulfate and boron.

From our caliche ore deposits, we produce a wide range of nitrate-based products used for specialty plant nutrients and industrial applications, as well as iodine and iodine derivatives. At the Salar de Atacama, we extract brines rich in potassium, lithium, sulfate and boron in order to produce potassium chloride, potassium sulfate, lithium solutions, boric acid and bischofite (magnesium chloride). We produce lithium carbonate and lithium hydroxide at our plant near the city of Antofagasta, Chile, from the solutions brought from the Salar de Atacama. We market all of these products through an established worldwide distribution network.

Our products are divided into six categories: specialty plant nutrients; iodine and its derivatives; lithium and its derivatives; potassium chloride and potassium sulfate; industrial chemicals and other commodity fertilizers. Specialty plant nutrients are premium fertilizers that enable farmers to improve yields and the quality of certain crops. Iodine, lithium and their derivatives are used in human nutrition, pharmaceuticals and other industrial applications. Iodine and its derivatives are mainly used in the X-ray contrast media and biocides industries and in the production of polarizing film, which is an important component in LCD screens. Lithium and its derivatives are mainly used in batteries, greases and frits for production of ceramics. Industrial chemicals have a wide range of applications in certain chemical processes such as the manufacturing of glass, explosives and ceramics, and, more recently, industrial nitrates are being used in solar thermal energy plants as a means for energy storage. Potassium chloride is a commodity fertilizer that is produced and sold by SQM worldwide. In addition, we complement our portfolio of plant nutrients through the buying and selling of other fertilizers for use mainly in Chile.

For the year ended December 31, 2012, we had revenues of US$2,429.2 million, gross profit of US$1,028.6 million and profit attributable to equity holders of SQM of US$649.2 million. Our market capitalization as of December 31, 2012 was approximately US$15.0 billion.

The following table sets forth the percentage breakdown of our revenues for the years ended December 31, 2012, 2011, 2010 and 2009 by product line:

	2012			2011			2010			2009
Specialty plant nutrients		28	%		34	%		33	%		37	%
Iodine and its derivatives		24	%		21	%		17	%		13	%
Lithium and its derivatives		9	%		9	%		8	%		8	%
Potassium		25	%		26	%		29	%		28	%
Industrial chemicals		10	%		7	%		8	%		8	%
Other commodity fertilizers		4	%		4	%		5	%		6	%
Total		100	%		100	%		100	%		100	%

History

We were formed in 1968 through a joint venture between Compañía Salitrera Anglo Lautaro S.A. (“Anglo Lautaro”) and Corporación de Fomento de la Producción (“Corfo”), a Chilean government entity. Three years after our formation, in 1971, Anglo Lautaro sold all of its shares to Corfo, and we were wholly owned by the Chilean government until 1983. In 1983, Corfo began a process of privatization by selling our shares to the public and subsequently listing such shares on the Santiago Stock Exchange. By 1988, all of our shares were publicly owned. Our Series B ADSs have traded on the NYSE under the ticker symbol “SQM” since 1993.

Since our inception, in addition to producing nitrates, we produced iodine, also found in the caliche ore deposits in northern Chile. Between 1994 and 1999, we invested approximately US$300 million in the development of the Salar de Atacama project in northern Chile. The project involved the construction of a potassium chloride plant, a lithium carbonate plant, a potassium sulfate plant, and a boric acid plant. During 2000 and 2004, we focused on consolidating our business to reduce costs and improve efficiencies.

In 2005, we strengthened our leadership in our core businesses by increasing our capital expenditure program and making advantageous acquisitions and divestitures. During this period we acquired Kemira Emirates Fertiliser Company (“Kefco”) in Dubai and the iodine business of Royal DSM N.V. (“DSM”). We also sold (i) Fertilizantes Olmeca, our Mexican subsidiary, (ii) our butyllithium plant located in Houston, Texas and (iii) our stake in Impronta S.R.L., our Italian subsidiary. These sales allowed us to concentrate our efforts on our core products. In 2007, we completed the construction of a new prilling and granulating plant and, in 2008 we completed our lithium carbonate capacity expansion and began work on the engineering stage of a new potassium nitrate plant.

From 2010 to 2012, we continued to expand our production capacity of potassium products in our operations in the Salar de Atacama. In 2011, we completed the construction of a new potassium nitrate facility in Coya Sur, increasing our overall production capacity of potassium nitrate by 300,000 metric tons. In addition, in 2008 we entered into a joint venture with Migao Corporation (“Migao”) for the construction of a potassium nitrate plant with a production capacity of 40,000 metric tons per year. This facility was completed and began operating in January 2011.

In the second half of 2011, we effected a corporate reorganization whereby our subsidiary Soquimich European Holding B.V. acquired a 66.6% ownership in Fertilizantes Naturales S.A. (later renamed SQM Iberian S.A.) from Nutrisi Holding N.V. Soquimich European Holding B.V. owned a non-controlling 50% stake in Nutrisi Holding N.V. which was divested following this acquisition in December 2011. The effect of these transactions has been that we indirectly control SQM Iberian S.A. through Soquimich European Holding B.V. SQM Iberian S.A. sells and distributes fertilizers, primarily in Spain.

In 2012, SQM Vitas FZ Company, our joint venture with the French Roullier Group, started the construction of new plants in Brazil (Candeias), Peru and South Africa (Durban) for the production of water soluble fertilizers containing different relative amounts of nitrogen, phosphorus and potassium, and, occasionally, smaller amounts of other chemicals. The Brazilian plant (Candeias Industrial Complex) began operating in March 2012. It has a production capacity of 25,000 metric tons per year, and represented a total investment of US$10 million.

Business strategy

Our general business strategy is to:

maintain leadership in specialty plant nutrients, iodine, lithium and industrial nitrates, in terms of production capacity, competitive pricing and the development of new products;

increase our production capacity of potassium-related fertilizers from the Salar de Atacama;

maintain our competitiveness through the continued increase in the efficiency of our production processes and cost reduction;

evaluate and execute acquisitions, joint ventures or commercial alliances which have concrete synergies with our current core businesses or provide sustainable competitive advantages; and

maintain a solid, conservative financial position and investment grade ratings for our debt securities.

We have identified market demand in each of our major product lines, both within our existing customer base and in new markets, for existing products and for additional products that can be produced from our natural resources. In order to take advantage of these opportunities, we have developed specific strategies for each of our product lines.

Specialty plant nutrition

Our strategy in our specialty plant nutrients business is to: (i) continue expanding our sales of natural nitrates by continuing to leverage the advantages of our specialty products over commodity-type fertilizers; (ii) selectively expand by increasing our sales of higher margin specialty plant nutrients based on potassium and natural nitrates, particularly soluble potassium nitrate and NPK blends; (iii) pursue investment opportunities in complementary businesses to enhance our product portfolio, increase production, reduce costs, and add value to, and improve the marketing of, our products; (iv) develop new specialty nutrient blends produced in our mixing plants that are strategically located in or near our principal markets, in order to meet specific customer needs; (v) focus primarily on the markets for plant nutrients in soluble and foliar applications in order to establish a leadership position; (vi) further develop our global distribution and marketing system directly and through strategic alliances with other producers and global or local distributors; and (vii) reduce our production costs through improved processes and higher labor productivity so as to compete more effectively.

Iodine and its derivatives

Our strategy in our iodine business is to (i) maintain our leadership in the iodine market by expanding our production capacity in line with demand growth; (ii) encourage demand growth and develop new iodine derivatives, (iii) participate in iodine recycling projects; and (iv) reduce our production costs through improved processes and higher productivity in order to compete more effectively.

Lithium and its derivatives

Our strategy in our lithium business is to (i) maintain our leadership in the lithium industry as a principal producer and distributor of lithium carbonate and lithium hydroxide; (ii) encourage demand growth, (iii) selectively pursue opportunities in the lithium derivatives business by creating new lithium compounds; and (iv) reduce our production costs through improved processes and higher productivity in order to compete more effectively.

Potassium

Our strategy in our potassium business is to significantly increase our production capacity of potassium chloride and potassium sulfate. Our distribution strategy is to (i) offer a portfolio of potassium products, including potassium sulfate, potassium chloride and other fertilizers to our traditional markets; (ii) create flexibility to offer crystalized (standard) or granular (compacted) form products according to market requirements; and (iii) focus on markets where we have logistical advantages.

Industrial chemicals

Our strategy in our industrial chemical business is to (i) maintain our leadership position in the industrial nitrates market, (ii) encourage demand growth in different applications, (iii) become a long-term, reliable supplier for the thermal storage industry; and (iv) reduce our production costs through improved processes and higher productivity in order to compete more effectively.

New business ventures

From time to time we evaluate opportunities to expand in our current core businesses or within new businesses in which we believe we may have sustainable competitive advantages, both within and outside Chile, and we expect to continue to do so in the future. We are currently exploring concessions for certain metallic minerals. If such minerals are found, we may decide to exploit, sell or enter into a joint venture to extract these resources. We may decide to acquire part or all of the equity of, or undertake joint ventures or other transactions with, other companies involved in our businesses or in other businesses. We are also exploring the possibility of acquiring controlling interests in companies that have mining properties in our core business areas, and that are in early stages of development. Consistent with our business strategy, we will continue to evaluate acquisitions, joint ventures and alliances in our core businesses and, depending on all facts and circumstances, may seek to acquire controlling stakes or other interests in companies with mining properties outside of Chile and Latin America, including in other emerging markets.

In addition we are actively conducting exploration operations in various properties we own for copper, gold and other metals deposits and we have already identified several areas in which we are conducting more targeted exploration. Fiel Rosita, a copper-gold deposit located close to the city of Vallenar, is our most advanced prospect. It is located in the same district as other deposits currently being exploited by other companies. We are completing a preliminary economic assessment, expected in 2013, based on which we will decide whether to conduct a pre-feasibility study or to sell part or all of the deposit. We may decide not to move forward with any potential metallic prospects discovered from our exploration operations.

In parallel to our exploration operations, we have entered into memoranda of understanding, option agreements and similar arrangements with third-party mining companies relating to metallic minerals. In all these agreements, we retain the rights on non-metallic minerals such as nitrate, iodine, potassium, lithium and their respective derivatives.

Capital expenditure program

We regularly review different opportunities to improve our production methods, reduce costs, increase production capacity of existing products and develop new products and markets. Additionally, significant capital expenditures are required every year in order to sustain our production capacity. We are focused on developing new products in response to identified customer demand, as well as new products that can be derived as part of our existing production or other products that could fit our long-term development strategy. Our capital expenditures during the past five years were mainly related to the acquisition of new assets, construction of new facilities and renewal of plant and equipment.

Our capital expenditures include investments aimed at sustaining, improving or increasing production levels, including acquisitions and investments in related companies.

Our capital expenditures for the years ended December 31, 2012, 2011 and 2010 were as follows:

(in millions of U.S. dollars)		2012				2011				2010
Capital Expenditures			446.0				501.1				336.0

During 2010, we had total capital expenditures of US$336.0 million, primarily relating to:

continued investment in a new potassium nitrate production facility in Coya Sur;

investments related to increasing production capacity of potassium-based products at the Salar de Atacama;

upgrades of our railroad system to handle expanded production capacity; and

various projects designed to maintain production capacity, increase yields and reduce costs.

During 2011, had total capital expenditures of US$501.1 million, primarily relating to:

increased production capacity of potassium-based products at the Salar de Atacama, with the continued construction and completion of potassium chloride and granulated potassium chloride facilities at the Salar de Atacama;

increased capacity and efficiencies at nitrate and iodine facilities;

optimization of our rail system; and

various projects designed to maintain production capacity, increase yields and reduce costs.

During 2012, we had total capital expenditures of US$446.0 million, primarily relating to:

projects designed to increase capacity and efficiencies at nitrate and iodine facilities in the Tarapacá region;

continued investments related to increasing production capacity of potassium-based products at the Salar de Atacama, including several projects related to production of finished products; and

various projects designed to maintain production capacity, increase yields and reduce costs.

We have developed a capital expenditure program for 2013 calling for investments totaling approximately US$500.0 million, excluding possible mergers, acquisitions or similar arrangements. Among other things, the program will focus on:

investments related to increasing production of potassium-based products at the Salar de Atacama;

continued investments related to increased production capacity and efficiencies at our nitrate and iodine facilities;

optimization of our muriate of potassium facility at the Salar de Atacama; and

various projects designed to maintain production capacity, increased yields and reduce costs.

Our products

Specialty plant nutrition

We believe we are the world’s largest producer of potassium nitrate. We estimate that our sales accounted for approximately 46% of global potassium nitrate sales by volume in 2012. This estimate does not include potassium nitrate we produced and sold locally in China, only net imports. During 2012, the potassium nitrate market was stable compared to 2011, despite increases in price. Global sales totaled approximately 0.9 million metric tons in 2012. We also produce the following specialty plant nutrients: sodium nitrate, sodium potassium nitrate and specialty blends (containing various combinations of nitrogen, phosphate and potassium and generally known as “NPK blends”).

These specialty plant nutrients have specific characteristics that increase productivity and enhance quality when used on certain crops and soils. Our specialty plant nutrients have significant advantages for certain applications over commodity fertilizers based on nitrogen and potassium, such as urea and potassium chloride.

In particular, our specialty plant nutrients:

are fully water soluble, allowing their use in hydroponics, fertigation, foliar applications and other advanced agricultural techniques;

improve the water use efficiency of crops and help conserve water;

are chlorine-free, which prevents chlorine toxicity in certain crops associated with high levels of chlorine in plant nutrients;

provide nitrogen in nitric form, thereby allowing crops to absorb nutrients faster than they absorb urea or ammonium-based fertilizers;

do not release hydrogen after application, thereby avoiding increased soil acidity;

possess trace elements, which promote disease resistance in plants; and

are more attractive to customers who prefer products of natural origin.

In 2012, our specialty plant nutrients sales were US$675.3 million, representing 28% of our total sales for that year and a 6.4% decrease from US$721.7 million specialty plant nutrients sales in 2011. This increase was a result of higher demand for premium vegetables and fruits, caused by improved economic conditions, which has reinforced the consumption of specialty fertilizers.

Market

The target market for our specialty plant nutrients includes producers of high-value crops such as vegetables, fruits, industrial crops, flowers, cotton and others. Furthermore, we sell specialty plant nutrients to producers of chloride-sensitive crops. Since 1990, the international market for specialty plant nutrients has grown at a faster rate than the international market for commodity-type fertilizers. This is mostly due to: (i) the application of new agricultural technologies such as fertigation and hydroponics, and the increasing use of greenhouses; (ii) the increase in the cost of land and the scarcity of water, which has forced farmers to improve their yields and reduce water use; and (iii) the increase in demand for higher quality crops, such as fruits and vegetables.

Over the last 10 years, the compound annual growth rate for vegetable production per capita was 3.0% while the compound annual growth rate for the world population was only 1.5%.

Worldwide scarcity of water and arable land drives the development of new agricultural techniques to maximize the use of these resources. Irrigation has grown at an average annual rate of 1.5% during last 20 years (a pace equal with population growth). However, micro-irrigation has grown at 10% per year over the same period. Microirrigation systems, which include drip-irrigation and micro-sprinklers, are the most efficient forms of technical irrigation. Global microirrigation acreage is estimated at 10 million hectares, which represents approximately 3% of total worldwide irrigated area. These applications require fully water-soluble plant nutrients. Our nitrate-based specialty plant nutrients provide nitrogen in nitric form, which helps crops absorb these nutrients faster than they absorb urea- or ammonium-based fertilizers, facilitating a more efficient application of nutrients to the plant and thereby increasing the crop’s yield and improving its quality.

Our Products

Potassium nitrate, sodium potassium nitrate and specialty blends are higher margin products derived from, or consisting of, sodium nitrate, and they are all produced in crystallized or prilled form. Specialty blends are produced using our own specialty plant nutrients and other components at blending plants operated by us or our affiliates and related companies in Chile, the United States, Mexico, United Arab Emirates, South Africa, Turkey, China, India, Thailand, Brazil and Peru.

The following table shows our sales volumes and revenues from specialty plant nutrients for 2012, 2011, 2010 and 2009.

Sales Volume (in Th. MT)	2012		2011		2010		2009
Potassium nitrate and sodium potassium nitrate.		469.3		551.1		534.7		392.1
Blended and other specialty plant nutrients⁽¹⁾		286.5		276.0		263.9		256.9
Sodium nitrate		24.4		22.2		16.8		16.5
Revenues (in millions of U.S. dollars)		675.3		721.7		603.7		527.0

(1)

Includes blended and other specialty plant nutrients. It also includes Yara’s products sold pursuant to our commercial agreement.

Marketing and customers

In 2012, we sold our specialty plant nutrients in close to 90 countries. During the same year, sales of our specialty plant nutrients were exported to the following regions: 18% to customers in Central and South America (not including Chile), 19% to customers in Chile, 27% to customers in North America, 18% to customers in Europe and 18% to customers in other regions. No single customer represented more than 10% of our specialty plant nutrient sales during 2012, and we estimate that our 10 largest customers accounted in the aggregate for approximately 29% of sales during that period.

The following table shows the geographical break down of our sales for 2012, 2011, 2010 and 2009:

Sales volume breakdown	2012			2011			2010			2009
Central and South America		18	%		14	%		14	%		22	%
North America		27	%		24	%		25	%		26	%
Europe		18	%		26	%		22	%		22	%
Chile		19	%		17	%		16	%		10	%
Others		18	%		19	%		23	%		20	%

We sell our specialty plant nutrients products outside Chile mainly through our own worldwide network of representative offices and our distribution affiliates.

We maintain stocks of our specialty plant nutrients in the main markets of the Americas, Asia, Europe, the Middle East and Africa in order to facilitate prompt deliveries to customers. In addition, we sell specialty plant nutrients directly to some of our large customers. Sales are made pursuant to spot purchase orders and short-term contracts.

In connection with our marketing efforts, we provide technical and agronomical assistance and support to our customers. By working closely with our customers, we are able to identify new, higher-value-added products and markets. Our specialty plant nutrients products are used on a wide variety of crops, particularly value-added crops, where the use of our products enables our customers to increase yield and command a premium price.

Our customers are located in both the northern and southern hemispheres. Consequently, we believe there are no seasonal or cyclical factors that can materially affect the sales of our specialty plant nutrient products.

Joint ventures and agreements

From time to time we evaluate opportunities to expand in our current core businesses, including our specialty plant nutrients business, or within new businesses in which we believe we may have sustainable competitive advantages, both within and outside Chile. Consistent with our business strategy, we evaluate potential acquisitions, joint ventures and alliances in our core businesses with companies outside of Chile and Latin America, including in emerging markets.

In November 2001, we signed an agreement with Yara. This agreement allows us to make use of Yara’s distribution network in countries where its presence and commercial infrastructure are larger than ours. Similarly, in those markets where our presence is larger, both our specialty plant nutrients and Yara’s are marketed through our offices. Both parties, however, maintain an active control over the marketing of their own products.

In 2005, SQM acquired 100% of the shares of Kefco, which has a urea phosphate plant located in Dubai. Urea phosphate is a specialty plant nutrient that is used primarily in drip irrigation systems. The plant has an annual production capacity of 30,000 metric tons.

In 2005, SQM and Yara formed a joint venture called MISR Specialty Fertilizers, for the production of tailor-made liquid NPK (nitrogen-phosphate-potassium) fertilizers. The plant is located in Egypt and has a production capacity of 80,000 metric tons per year. We sold our stake in this joint venture in 2012.

In May 2008, we signed a commitment letter for a joint venture with Migao for the production and distribution of specialty plant nutrients in China. In 2009, we signed a shareholders agreement in connection with this joint venture. Through the joint venture, we constructed a potassium nitrate plant with a production capacity of 40,000 metric tons per year. The plant began operating in January 2011. This joint venture will enable us to increase our presence in China, which represents one of the most important and fastest-growing markets for the fertilizer industry.

In May 2009, our subsidiary Soquimich European Holdings entered into an agreement with Coromandel Fertilizers Ltd. to create a joint venture for the production and distribution of water soluble fertilizers in India. The agreement established a 50⁄50 contribution to the joint venture. As part of the agreement, a new 15,000 metric ton facility was constructed in the city of Kakinada to produce water soluble fertilizers (NPK grades). This new facility required a total investment of approximately US$2.6 million and began operating in January 2012.

In October 2009, SQM S.A. signed an agreement with Qingdao Star Plant Protection Technology Co., Ltd., resulting in the creation of the joint venture SQM Star, for the production, distribution and sale of soluble NPK specialty plant nutrients in China. The agreement, a 50⁄50 joint venture, entailed a total investment of US$2 million for the construction of a new production plant. The plant, located in the city of Jimo, province of Shangdong, is currently operational and has an annual production capacity of 15,000 metric tons.

In December 2009, we signed an agreement with the French Roullier Group to form the joint venture SQM Vitas. This agreement joins two of the largest companies in the businesses of specialty plant nutrients, specialty animal nutrition and professional hygiene. Peru, Brazil and Dubai are the main focus markets of this joint venture. As part of the agreement, our phosphate plant located in Dubai became part of this joint venture. In September 2010, SQM Vitas implemented a new phosphate line that will allow the production of two of the main water soluble phosphorus products in the world: mono ammonium phosphate and urea phosphate.

In the second half of 2011, we effected a corporate reorganization whereby our subsidiary Soquimich European Holding B.V. acquired a 66.6% ownership in Fertilizantes Naturales S.A. (later renamed SQM Iberian S.A.) from Nutrisi Holding N.V. Soquimich European Holding B.V. owned a non-controlling 50% stake in Nutrisi Holding N.V. which was sold following this acquisition. The effect of these transactions has been that we indirectly control SQM Iberian S.A. through Soquimich European Holding B.V. SQM Iberian S.A. sells and distributes fertilizers, primarily in Spain.

In 2012, SQM Vitas started the construction of new plants in Brazil (Candeias), Peru and South Africa (Durban) for the production of water soluble fertilizers containing different relative amounts of nitrogen, phosphorus and potassium, and at times, smaller amounts of other chemicals. The Brazilian plant (Candeias Industrial Complex) began operating in March 2012. It has a production capacity of 25,000 million tons per year, and represented a total investment of US$10 million.

Between 2010 and 2012, we continued to expand our production capacity of potassium products in our operations in the Salar de Atacama. In 2011, we completed the construction of a new potassium nitrate facility in Coya Sur, increasing our overall production capacity of potassium nitrate by 300,000 metric tons. In addition, as mentioned above, we entered into a joint venture with Migao in 2008 for the construction of a potassium nitrate plant with a production capacity of 40,000 metric tons per year that began operating in January 2011.

Fertilizer sales in Chile

We market specialty plant nutrients in Chile through Soquimich Comercial S.A., either as a standalone product or in blends with other imported products, in particular triple super phosphate (TSP) and diammonium phosphate (DAP).

Soquimich Comercial S.A. sells imported fertilizers to farmers in Chile principally for use in the production of sugar beets, cereals, industrial crops, potatoes, grapes and other fruits. Most of the fertilizers that Soquimich Comercial S.A. imports are purchased on a spot basis from different countries in the world, including China, Mexico and Venezuela.

All contracts and agreements between Soquimich Comercial S.A. and its suppliers of imported fertilizers generally contain standard and customary commercial terms and conditions. During the preceding 10 years, Soquimich Comercial S.A. has experienced no material difficulties in obtaining adequate supplies of such fertilizers at satisfactory prices.

Soquimich Comercial S.A.’s sales of fertilizers represented approximately 30% of total fertilizer sales in Chile during 2012. No single customer represented more than 8% of Soquimich Comercial S.A.’s total fertilizer sales revenues, and its 10 largest customers in total represented less than 43% of its revenues. Revenues generated by Soquimich Comercial S.A. represented 10.6% of our 2012 consolidated revenues. Soquimich Comercial S.A.’s consolidated revenues were approximately US$256 million and US$227 million in 2012 and 2011, respectively.

Competition

We believe we are the world’s largest producer of sodium and potassium nitrate for agricultural use. Our sodium nitrate products compete indirectly with specialty and commodity-type substitutes, which may be used by some customers instead of sodium nitrate depending on the type of soil and crop to which the product will be applied. Such substitute products include calcium nitrate, ammonium nitrate and calcium ammonium nitrate.

In the potassium nitrate market our largest competitor is Haifa Chemicals Ltd. (“Haifa”), in Israel, which is a subsidiary of Trans Resources International Inc. We estimate that sales of potassium nitrate by Haifa accounted for approximately 34% of total world sales during 2012 (excluding sales by Chinese producers to the domestic Chinese market), compared to our share of the market which accounted for approximately 46% of global potassium nitrate sales by volume for the period.

ACF, another Chilean producer, mainly oriented to iodine production, has produced potassium nitrate from caliche ore and potassium chloride since 2005. Kemapco, a Jordanian producer owned by Arab Potash, produces potassium nitrate in a plant located close to the Port of Aqaba, Jordan. In addition, there are several potassium nitrate producers in China, the largest of which are Wentong and Migao. Most of the Chinese production is consumed by the Chinese domestic market.

The principal means of competition in the sale of potassium nitrate are product quality, customer service, location, logistics, agronomic expertise and price.

In Chile, our products mainly compete with imported fertilizer blends that use calcium ammonium nitrate or potassium magnesium sulfate. Our specialty plant nutrients also compete indirectly with lower-priced synthetic commodity-type fertilizers such as ammonia and urea, which are produced by many producers in a highly price-competitive market. Our products compete on the basis of advantages that make them more suitable for certain applications as described above

Iodine and its derivatives

We believe we are the world’s largest producer of iodine. In 2012, our revenues from iodine and iodine derivatives amounted to US$578.1 million, representing 24% of our total revenues in that year. We estimate that our sales accounted for approximately 34% of world iodine sales by volume in 2012.

Market

Iodine and iodine derivatives are used in a wide range of medical, agricultural and industrial applications as well as in human and animal nutrition products. Iodine and iodine derivatives are used as raw materials or catalysts in the formulation of products such as X-ray contrast media, biocides, antiseptics and disinfectants, pharmaceutical intermediates, polarizing films for LCDs, chemicals, herbicides, organic compounds and pigments. Iodine is also added in the form of potassium iodate or potassium iodide to edible salt to prevent iodine deficiency disorders. Iodine is also added in the form of potassium iodate or potassium iodide to edible salt to prevent iodine deficiency disorders. We have seen consistent growth in the iodine market in recent years, with demand being led by uses related to X-ray contrast media and pharmaceuticals. We estimate that the global market size in 2012 was just under 31,000 metric tons, with almost 60% of supply coming from Chilean producers, including us. Increased supply entered the market in 2012 and we expect to see additional new supply in 2013.

Our products

We produce iodine, and through a joint venture with Ajay North America L.L.C., (“Ajay”), a U.S.-based Company, we produce organic and inorganic iodine derivatives. Ajay-SQM Group (“ASG”), established in the mid-1990s, has production plants in the United States, Chile and France. ASG is the world’s leading inorganic and organic iodine derivatives producer.

Consistent with our business strategy, we are constantly working on the development of new applications for our iodine-based products, pursuing a continuing expansion of our businesses and maintaining our market leadership.

We manufacture our iodine and iodine derivatives in accordance with international quality standards and have qualified our iodine facilities and production processes under the ISO-9001:2008 program, providing third party certification of the quality management system and international quality control standards that we have implemented.

The following table sets forth our total sales and revenues from iodine and iodine derivatives for 2012, 2011, 2010 and 2009:

Sales Volume (in Th. MT)	2012		2011		2010		2009
Iodine and its derivatives		11.0		12.2		11.9		7.2
Revenues (in millions of U.S. dollars)		578.1		454.5		316.3		190.9

Our sales revenues increased from US$454.5 million in 2011 to US$578.1 million in 2012. This increase was primarily attributable to increases in sales volumes and increases in price as a consequence of strong demand growth among most users.

Marketing and customers

In 2012, we sold our iodine products to approximately 300 customers in 60 countries and most of our sales were exports: 31% was sold to customers in Europe, the Middle East and Africa, 36% to customers in North America, 3% to customers in Central and South America and 30% to customers in Asia and other regions. No single customer accounted for more than 8% of our iodine sales in 2012, and we estimate that our 10 largest customers accounted in the aggregate for approximately 47% of sales.

The following table sets forth the geographical breakdown of our sales for 2012, 2011, 2010 and 2009.

Sales breakdown	2012			2011			2010			2009
Europe, Middle East and Africa		31	%		36	%		35	%		31	%
North America		36	%		32	%		33	%		36	%
Central and South America		3	%		3	%		5	%		3	%
Asia and Others		30	%		29	%		27	%		30	%

We sell iodine through our own worldwide network of representative offices and through our sales, support and distribution affiliates. We maintain inventories of iodine at our facilities throughout the world to facilitate prompt delivery to customers. Iodine sales are made pursuant to spot purchase orders or within the framework of supply agreements. Supply agreements generally specify annual minimum and maximum purchase commitments, and prices are adjusted periodically, according to prevailing market prices.

Competition

The world’s main iodine producers are based in Chile, Japan and the United States. Iodine is also produced in Russia, Turkmenistan, Indonesia and China.

Iodine production in Chile starts from a unique mineral ore known as caliche ore, whereas in Japan, the United States, Russia, Turkmenistan and Indonesia, producers extract iodine from underground brines that are mainly obtained together with the extraction of natural gas and petroleum. In China, iodine is extracted from seaweed.

Six Chilean companies (SQM; Sirocco Mining Inc., a Canadian company previously known as Atacama Minerals; Atacama Chemical S.A. (Cosayach), controlled by the Chilean holding Inverraz S.A.; ACF Minera S.A. also owned by a Chilean family; Algorta Norte S.A., a joint venture between ACF Minera and Toyota Tsusho; and SCM Bullmine) accounted for approximately 58% of global iodine sales in 2012 (34% by SQM and 24% by the other five Chilean producers).

We estimate that eight Japanese iodine producers accounted for approximately 31% of global iodine sales in 2012, including recycled iodine.

We estimate that iodine producers in the United States (one of which is owned by Ise Chemicals Ltd., a Japanese company) accounted for 4% of world iodine sales in 2012.

Iodine recycling is an increasing trend worldwide. Several Japanese producers have recycling facilities where they recover iodine and iodine derivatives from iodine waste streams. Iodine recycling, mainly related to LCD consumption, has increased over the past few years and currently represents approximately 17% of world iodine sales. It is estimated that approximately 70% to 75% of the world recycling was done by Japanese iodine producers.

SQM, through ASG or alone, is also actively participating in the iodine recycling business using iodinated side-streams from a variety of chemical processes in Europe, the United States and Asia.

We estimate that worldwide sales of iodine were slightly less than 31.0 thousand metric tons in 2012.

The prices of iodine and iodine derivative products are determined by market conditions. World iodine prices vary depending upon, among other things, the relationship between supply and demand at any given time. The supply of iodine varies principally depending upon the production of the few major iodine producers, including us, and their respective business strategies. As a result of steadily growing demand, and despite new supply from other Chilean producers, our average iodine sales prices increased to more than US$50 per kilogram in 2012.

Demand for iodine varies depending upon overall levels of economic activity and the level of demand in the medical, pharmaceutical, industrial and other sectors that are the main users of iodine and iodine-derivative products.

The main factors of competition in the sale of iodine and iodine derivative products are reliability, price, quality, customer service and the price and availability of substitutes. We believe we have competitive advantages compared to other producers due to the size and quality of our mining reserves and the available production capacity. We believe our iodine is competitive with that produced by other manufacturers in certain advanced industrial processes. We also believe we benefit competitively from the long-term relationships we have established with our largest customers. While there are substitutes for iodine available for certain applications, such as antiseptics and disinfectants, there are limited cost-effective substitutes currently available for the main nutritional, pharmaceutical, animal feed, and main chemical uses of iodine, which together account for most iodine sales.

Lithium and its derivatives

We believe we are one of the principal producers of lithium carbonate and one of the world’s largest producers of lithium hydroxide. In 2012, our revenues from lithium sales amounted to US$222.2 million, representing 9% of our total revenues. We estimate that our sales accounted for approximately 35% of the sale of global lithium chemicals sales in volume.

Market

Lithium carbonate is used in a variety of applications, including electrochemical materials for batteries, ceramic and enamel frits, heat resistant glass (ceramic glass), primary aluminum smelting process, air conditioning chemicals, continuous casting powder for steel extrusion, synthesis of pharmaceuticals and lithium derivatives.

Lithium hydroxide is primarily used as a raw material in the lubricating grease industry, as well as in the dyes and the battery industries.

Our products

We produce lithium carbonate at the Salar del Carmen facilities, near Antofagasta, Chile, from solutions with high concentrations of lithium coming from the potassium chloride production at the Salar de Atacama. The annual production capacity of our lithium carbonate plant is 48,000 metric tons per year. We believe that the technologies we use, together with the high concentrations of lithium and unique characteristics of the Salar de Atacama, such as high evaporation rate and concentration of other minerals, allow us to be one of the lowest cost producers worldwide.

We also produce lithium hydroxide at our facilities at the Salar del Carmen, next to the lithium carbonate operation. The lithium hydroxide facility has a production capacity of 6,000 metric tons per year and is one of the largest plants in the world.

The following table sets forth our total sales and revenues from lithium carbonate and its derivatives for 2012, 2011, 2010 and 2009:

Sales Volume (in Th. MT)	2012		2011		2010		2009
Lithium and its derivatives		45.7		40.7		32.4		21.3
Revenues (in millions of U.S. dollars)		222.2		183.4		150.8		117.8

Our revenues in 2012 were US$222.2 million, a 21% increase from US$183.4 million in 2011, due to significantly higher sales volumes resulting from an increase in demand in 2012, mainly driven by an increase in demand for rechargeable batteries and by uses related to construction, such as grease and glass. Other producers experienced some supply constraints during part of the year, allowing us to strengthen our position as a leader in lithium carbonate supply.

Marketing and customers

In 2012, we sold our lithium products to over 300 customers in approximately 50 countries. Virtually all of our lithium products were sold overseas: 24% to customers in Europe, the Middle East and Africa, 10% to customers in North America, 64% to customers in Asia and Oceania and 2% to customers in other regions. No single customer accounted for more than 13% of our lithium sales in 2012, and we estimate that our 10 largest customers accounted in aggregate for approximately 50% of sales.

The following table sets forth the geographical breakdown of our sales for 2012, 2011, 2010 and 2009.

Sales breakdown	2012			2011			2010			2009
Europe, Middle East and Africa		24	%		28	%		34	%		31	%
North America		10	%		10	%		12	%		14	%
Asia and Oceania		64	%		61	%		53	%		53	%
Central and South America		2	%		1	%		1	%		2	%

We sell lithium carbonate and lithium hydroxide through our own worldwide network of representative offices and through our sales, support and distribution affiliates. We maintain inventories of these products at our facilities throughout the world to facilitate prompt delivery to customers. Sales of lithium carbonate and lithium hydroxide are made pursuant to spot purchase orders or within the framework of supply agreements. Supply agreements generally specify annual minimum and maximum purchase commitments, and prices are adjusted periodically, according to prevailing market prices.

Competition

Our main competitors in the lithium carbonate and lithium hydroxide businesses are Rockwood Lithium (“Rockwood”), a subsidiary of Rockwood Specialties Group Inc., and FMC Corporation (“FMC”). In addition, a number of Chinese producers also contributed to the lithium chemical world market in 2012. Rockwood produces lithium carbonate at its operations in Chile, through Sociedad Chilena del Litio Limitada, and in Nevada, United States. Its production of downstream lithium products is mostly performed in the United States, Germany and Taiwan. FMC has production facilities in Argentina through Minera del Altiplano S.A., where it produces lithium chloride and lithium carbonate. Production of its downstream lithium products is mostly performed in the United States and the United Kingdom.

We believe that lithium production will increase in the near future. A number of new projects to develop lithium deposits have been announced recently, some of which could materialize in the short- to medium-term.

We estimate that worldwide sales of lithium chemicals, expressed as lithium carbonate equivalent (excluding direct use for lithium minerals), amounted to approximately 125,000 metric tons in 2012.

Potassium

We produce potassium chloride and potassium sulfate by extracting brines from the Salar de Atacama that are rich in potassium chloride and other salts.

Since 2009, our end product capacity has increased to over 2 million metric tons per year, granting us improved flexibility and market coverage.

In 2012, our potassium chloride and potassium sulfate revenues amounted to US$605.1 million, representing 25% of our total revenues and a 8.9% increase compared to 2011. We are currently making investments within our potassium products that will enable us to increase our production and sales of these products.

Potassium is one of the three macronutrients that a plant needs to develop. Although potassium does not form part of a plant’s structure, it is essential to the development of its basic functions. Potassium chloride is the most commonly used potassium-based fertilizer, and it is used to fertilize crops that can resist high levels of chloride, such as wheat, corn and soybeans, among others.

Some benefits that may be obtained through the use of potassium are:

increased yield and quality;

increased production of proteins;

increased photosynthesis;

intensified transport and storage of assimilates;

prolonged and more intense assimilation period;

improved water efficiency;

regulated opening and closure of stomata; and

synthesis of lycopene.

Potassium chloride is also an important component for our specialty plant nutrients product line where it is used as a raw material to produce potassium nitrate.

Market

During the last decade, the potassium chloride market has experienced rapid growth due to several key factors such as a growing world population, higher demand for protein-based diets and less arable land. All of these factors have contributed to growing demand for fertilizers and, in particular, potassium chloride, as efforts are being made to maximize crop yields and use resources more efficiently. For the last 10 years, the compound annual growth for the global potassium chloride market was approximately 2%.

Demand in the potassium chloride market decreased in 2012. We estimate that demand reached the level of 50 million metric tons for potassium chloride during 2012, a reduction of approximately 10% as compared to 2011. Despite favorable economic conditions for relevant crops, the demand was mainly affected by economic uncertainty. We expect the potassium chloride market to return to levels closer to 55 million during 2013.

Average prices in the potassium market remained relatively stable compared to 2011. The market has seen major industry contracts close at significantly lower prices in the early months of 2012. We believe these price pressures will have an impact on our potassium revenues in the near term.

Our products

Potassium chloride differs from our specialty plant nutrient products because it is a commodity fertilizer and contains chloride. We offer potassium chloride in two grades: standard and compacted. Potassium sulfate is considered a specialty fertilizer and we offer three grades: standard, compacted and soluble.

The following table shows our combined sales volumes and revenues from potassium chloride and potassium sulfate for 2012, 2011, 2010 and 2009:

Sales Volume (in Th. MT)	2012		2011		2010		2009
Potassium chloride and potassium sulfate		1,209.5		1,103.4		1,273.0		690.0
Revenues (in millions of U.S. dollars)		605.1		555.7		528.2		399.1

Marketing and Customers

In 2012, we sold potassium chloride and potassium sulfate in approximately 80 countries, with 5% of our sales to customers in Chile, 42% to customers in other countries in Central and South America, 11% to customers in Africa, 15% to customers in North America and 27% to customers in other regions. No single customer accounted for more than 23% of our sales of potassium chloride and potassium sulfate in 2012, and we estimate that our 10 largest customers accounted in the aggregate for approximately 61% of such sales.

The following table sets forth the geographical breakdown of our sales for 2012, 2011, 2010 and 2009.

Sales breakdown	2012			2011			2010			2009
Chile		5	%		8	%		6	%		9	%
Central and South America		42	%		32	%		21	%		18	%
Africa		11	%		15	%		16	%		16	%
North America		15	%		11	%		10	%		13	%
Others		27	%		34	%		47	%		44	%

Competition

We estimate that we accounted for less than 3% of global sales of potassium chloride in 2012. Our main competitors are Uralkali Group, PCS, Belaruskali and Mosaic. We believe that in 2012 the principal producers in the market were Uralkali Group, which accounted for approximately 18% of global sales, PCS and Belaruskali, which each accounted for approximately 16% of global sales, and Mosaic, which accounted for approximately 15% of global sales.

In the potassium sulfate market, we have several competitors, of which the most important are K+S KALI GmbH (Germany), Tessenderlo Chemie (Belgium) and Great Salt Lake Minerals Corp. (United States). We believe that those three producers account for approximately 40% of the world production of potassium sulfate.

Industrial chemicals

In addition to producing sodium and potassium nitrate for agricultural applications, we produce three grades of sodium and potassium nitrate for industrial applications: industrial, technical and refined grades. The three grades differ mainly in their chemical purity. We enjoy certain operational flexibility when producing industrial sodium and potassium nitrate because they are produced from the same process as their equivalent agricultural grades, needing only an additional step of purification. We may, with certain constraints, shift production from one grade to the other depending on market conditions. This flexibility allows us to maximize yields and to reduce commercial risk.

In addition to producing industrial nitrates, we produce and commercialize other industrial chemicals such as boric acid, a by-product of the production of potassium sulfate, and industrial-grade potassium chloride, both of which are sold into industrial markets in crystalline form. In 2012, our revenues from industrial chemicals were US$245.2 million, representing approximately 10% of our total revenues for that year.

Market

Industrial sodium and potassium nitrates are used in a wide range of industrial applications, including the production of glass, ceramics, explosives, charcoal briquettes, metal treatments and various chemical processes. In addition, this product line enjoys long-term growth potential from industrial nitrates for thermal storage in solar energy projects. Solar salts for this specific application contain a blend of 60% sodium nitrate and 40% potassium nitrate by weight ratio.

Boric acid is primarily used as raw material in the manufacturing of glass, fiberglass, ceramic and enamel frits, and LCD flat panel displays.

Industrial potassium chloride is mainly used as an additive in oil and gas drilling fluids as well as in the production of carragenine.

Our products

The following table sets forth our sales volumes of industrial chemicals and total revenues for 2012, 2011, 2010 and 2009:

Sales Volume (in Th. MT)	2012		2011		2010		2009
Industrial nitrates		277.7		181.2		98.9		149.2
Boric Acid		1.8		2.4		2.6		3.4
Revenues (in millions of U.S. dollars)		245.2		139.5		149.7		115.4

Sales of industrial chemicals increased from US$139.5 million in 2011 to US$245.2 million in 2012 primarily as a result of an increase in sales volumes of solar salts products due to new alternative energy projects that utilize industrial grade sodium and potassium nitrate solar thermal energy.

Marketing and customers

We sold our industrial nitrate products in 50 countries in 2012, with 49% percent of our sales of industrial chemicals to customers in North America, 37% to customers in Europe, the Middle East and Africa, 7% to customers in Central and South America and 7% to customers in other regions. No single customer accounted for more than 33% of our sales of industrial chemicals in 2012, and we estimate that our 10 largest customers accounted in the aggregate for approximately 70% of such sales.

The following table sets forth the geographical breakdown of our sales for 2012, 2011, 2010 and 2009.

Sales breakdown	2012			2011			2010			2009
North America		49	%		26	%		18	%		30	%
Europe, Middle East and Africa		37	%		52	%		55	%		45	%
Central and South America		7	%		17	%		22	%		18	%
Others		7	%		5	%		5	%		7	%

We sell our industrial chemical products mainly through our own worldwide network of representative offices and through our sales and distribution affiliates. We maintain inventories of our different grades of sodium nitrate and potassium nitrate products at our facilities in Europe, North America, South Africa and South America to achieve prompt deliveries to customers. Our Research and Development department, together with our foreign affiliates, provides technical support to our customers and continuously works with them to develop new products or applications for our products.

Competition

We believe we are the world’s largest producer of industrial sodium and potassium nitrate. In the case of industrial sodium nitrate, we estimate that our sales represented 60% of world demand in 2012 (excluding China and India internal demand, for which we believe reliable estimates are not available). Our competitors are mainly based in Europe and Asia, producing sodium nitrate as a by-product of other production processes. In refined grade sodium nitrate, BASF AG, a German corporation and several producers in China and Eastern Europe are highly competitive in the European and Asian markets. Our industrial sodium nitrate products also compete indirectly with substitute chemicals, including sodium carbonate, sodium hydroxide, sodium sulfate, calcium nitrate and ammonium nitrate, which may be used in certain applications instead of sodium nitrate and are available from a large number of producers worldwide.

Our main competitor in the industrial potassium nitrates business is Haifa; which we estimate had a 25% of the market share. We estimate that our market share was approximately 40% for 2012.

Producers compete in the market for industrial sodium and potassium nitrate based on reliability, product quality, price and customer service. We believe that we are a low cost producer of both products and are able to produce high quality products.

In the boric acid market, we are a relatively small producer mainly supplying regional needs.

Other products

A large part of our other revenue is related to fertilizer trading, usually commodities. These fertilizers are traded in large volumes worldwide. We have developed a trade, supply, and inventory management business that allows us to respond quickly and effectively to the changing fertilizer market in which we operate and profit on these trades.

Production process

Our integrated production process can be classified according to our natural resources:

caliche ore deposits, which contain nitrates and iodine; and

salar brines, which contain potassium, lithium, sulfate, boron and magnesium.

Caliche ore deposits

Caliche ore deposits are located in northern Chile. During 2012, we operated three mines in this region: Pedro de Valdivia, El Toco (mining site of Maria Elena production facilities) and Nueva Victoria. In March 2010, operations at El Toco and Pampa Blanca, two of our mines, were temporarily suspended in an effort to optimize inventory of these products due to decreased global demand for nitrates and iodine during the preceding 15 months. In November 2010, mining activities resumed in El Toco. Mining operations at Pampa Blanca have not resumed.

Caliche ore is found under a layer of barren overburden in seams with variable thickness from twenty centimeters to five meters, and with the overburden varying in thickness from half a meter to one and a half meters.

Before proper mining begins, a full exploration stage is carried out, including full geological reconnaissance, sampling and drilling caliche ore to determine the features of each deposit and its quality. Drill-hole samples are properly identified and tested at our chemical laboratories. With the exploration information on a closed grid pattern of drill holes, the ore evaluation stage provides information for mine planning purposes. Mine planning is done on a long-term basis (10 years), medium-term basis (three years) and short-term basis (one year). A mine production plan is a dynamic tool that details daily, weekly and monthly production plans. After drill holes are made, information is updated to offer the most accurate ore supply schedule to the processing plants.

The mining process generally begins with bulldozers first ripping and removing the overburden in the mining area. This process is followed by production drilling and blasting to break the caliche seams. Front-end loaders load the ore on off-road trucks. In the Pedro de Valdivia mine, trucks deliver the ore to stockpiles next to rail loading stations. The stockpiled ore is later loaded onto railcars that take the mineral to the processing facilities.

At the Pedro de Valdivia facility, the ore is crushed and leached to produce concentrated solutions carrying the nitrate and iodine. The crushing of the ore produces a coarse fraction that is leached in a vat system and a fine fraction that is leached by agitation. These are followed by liquid-solid separation, where solids precipitate as sediment and liquids containing nitrate and iodine are sent to be processed. Operations at the El Toco mining site of Maria Elena use a heap leaching production process. In Nueva Victoria and El Toco, the run of mine ore is loaded in heaps and leached to produce concentrated solutions.

Caliche ore-derived products

Caliche ore-derived products are: sodium nitrate, potassium nitrate, sodium potassium nitrate, iodine and iodine derivatives.

Sodium nitrate

During 2012, sodium nitrate for both agricultural and industrial applications was produced at the Pedro de Valdivia facility using the Guggenheim method, which was originally patented in 1921, and is based on a closed circuit method of leaching vats. This process uses heated brines to leach the crushed caliche in vats and selectively dissolve the contents. The concentrated solution is then cooled, producing sodium nitrate crystals, which can then be separated from the brine using basket centrifuges. After the crystallization process, the brine is pumped to the iodine facilities, where the iodide is separated in a solvent extraction plant. The brine is returned to the vat leaching process. The fine fraction of caliche’s crushing process is leached at ambient temperature with water, producing a weak solution that is pumped to the iodine facilities. After a solvent extraction process, the brine is pumped to solar evaporation ponds in Coya Sur, 15 km south of María Elena.

Our total current crystallized sodium nitrate production capacity at the Pedro de Valdivia facility is approximately 500,000 metric tons per year. Crystallized sodium nitrate is processed further at the Coya Sur and María Elena production plants to produce potassium nitrate in different qualities, sodium potassium nitrate and/or crystallized or prilled nitrates (potassium or sodium), which are transported to our port facilities in Tocopilla by railway for shipping to customer and distributors worldwide.

Potassium nitrate

Potassium nitrate is produced at our Coya Sur facility using a production process developed by us. The brine leached with the fine fraction process at Pedro de Valdivia and the brines produced by heap leaching process in Maria Elena are pumped to Coya Sur’s solar evaporation ponds for a nitrate concentration process. After the nitrate concentration process, the brine is pumped to a conversion plant where potassium salts are added and where a chemical reaction begins and produces brine with dissolved potassium nitrate. This brine is pumped to a crystallization plant, which crystallizes the potassium nitrate by cooling and separating it from the liquid by centrifuge.

Concentrated nitrate salts were produced at Pampa Blanca until March 2010, and are currently produced at Nueva Victoria by leaching caliche ore in heaps in order to extract solutions that are rich in iodine and nitrates. These solutions are then sent to plants where iodine is extracted through both solvent-extraction and blow out processes. The remaining solutions are subsequently sent to solar evaporation ponds where the solutions are evaporated and rich nitrate salts are produced. These concentrated nitrate salts are then sent to Coya Sur where they are used to produce potassium nitrate.

Our current potassium nitrate production capacity at Coya Sur is approximately 950,000 metric tons per year, including 500,000 metric tons per year of technical grade potassium nitrate. A new potassium nitrate plant began operations in 2011. During 2012, we produced approximately 246,000 tons of potassium nitrate at this plant. This new plant was designed to use raw material salts harvested in Nueva Victoria and potassium salts from the Salar de Atacama.

The nitrates produced in crystallized or prilled form at Coya Sur have been certified by TÜV-Rheiland under the quality standard ISO 9001:2008. Potassium nitrate produced at Coya Sur and María Elena is transported to Tocopilla for shipping to customers and distributors.

Sodium potassium nitrate

Sodium potassium nitrate is a mixture of approximately two parts sodium nitrate per one part potassium nitrate. We produce sodium potassium nitrate at our Coya Sur and María Elena prilling facilities using standard, non-patented production methods we have developed. Crystallized sodium nitrate is mixed with the crystallized potassium nitrate to make sodium potassium nitrate, which is then prilled. The prilled sodium potassium nitrate is transported to Tocopilla for bulk shipment to customers.

The production process for sodium potassium nitrate is basically the same as that for sodium nitrate and potassium nitrate. With certain production restraints and following market conditions we may supply sodium nitrate, potassium nitrate or sodium potassium nitrate either in prilled or crystallized form.

Iodine and iodine derivatives

We produce iodine at our Pedro de Valdivia, Maria Elena and Nueva Victoria facilities. During 2012, iodine was produced by extracting it from the solutions resulting from the heap leaching of caliche ore at María Elena and Nueva Victoria, including the Iris facility as part of the Nueva Victoria facility, and from the vat leaching of caliche ore at the Pedro de Valdivia facilities. Production of iodine at the Iris plant began in December 2011.

As in the case of nitrates, the process of extracting iodine from the caliche ore is well established, but variations in the iodine and other chemical contents of the treated ore and other operational parameters require a high level of know-how to manage the process effectively and efficiently.

The solutions resulting from the leaching of caliche carry iodine in iodate form. Part of the iodate solution is reduced to iodide using sulfur dioxide, which is produced by burning sulfur. The resulting iodide is combined with the rest of the untreated iodate solution to release elemental iodine in low concentrations. The iodine is then extracted from the aqueous solutions and concentrated as iodide form using a solvent extraction and stripping plant in the Pedro de Valdivia and Nueva Victoria facilities and using a blow out plant in Iris. The concentrated iodide is oxidized to solid iodine, which is then refined through a smelting process and prilled. We have obtained patents in the United States and recently in Chile under the Chilean patent number 47,080, for our iodine prilling process.

Prilled iodine is tested for quality control purposes, using international standard procedures that we have implemented, then packed in 20 to 50 kilogram drums or 350 to700 kilogram maxibags and transported by truck to Antofagasta or Iquique for export. Our iodine and iodine derivatives production facilities have qualified under the new ISO-9001:2008 program, providing third-party certification—by TÜV-Rheiland—of the quality management system. The last recertification process was approved in February 2011. Iodine from the Iris plant was certified under ISO-9001:2008 in April 2012.

Our total iodine production in 2012 was approximately 10,900 metric tons: approximately 6,000 metric tons from Nueva Victoria and Iris, 3,200 metric tons from Pedro de Valdivia, and 1,700 metric tons from María Elena. The Nueva Victoria facility is also used for recycling iodine from the potassium iodide contained in the LCD waste solutions imported mainly from Korea. Nueva Victoria is also equipped to toll iodine from iodide delivered from other SQM facilities. We have the flexibility to adjust our production according to market conditions. Our total current production capacity at our iodine production plants is approximately 12,500 metric tons per year.

We use a portion of the produced iodine to manufacture inorganic iodine derivatives, which are intermediate products used for manufacturing agricultural and nutritional applications, at facilities located near Santiago, Chile. We also produce inorganic and organic iodine derivative products together with Ajay, which purchases iodine from us. In the past, we have primarily marketed our iodine derivative products in South America, Africa and Asia, while Ajay and its affiliates have primarily sold their iodine derivative products in North America and Europe.

In September 2010, the National Environmental Commission of Chile (Comisión Nacional del Medioambiente or “CONAMA”) approved the environmental study of our Pampa Hermosa project in the Region of Tarapacá in Chile. This approval allowed us to increase the production capacity of our Nueva Victoria operations from 4,500 to 11,000 metric tons of iodine per year and to produce up to 1.2 million metric tons of nitrates, mine up to 33 million metric tons of caliche per year and use new water rights of up to 570.8 liters per second. During 2012, we made investments in order to increase the water capacity in the Nueva Victoria operations from two water sources approved by the environmental study of Pampa Hermosa, expand the capacity of solar evaporation ponds and to implement new areas of mining and collection of solutions. Additional expansions may be done from time to time in the future, depending on market conditions.

During 2012, we submitted a request to the CONAMA requesting approval to expand our caliche ore extraction in the region of Antofagasta, which, if approved, is expected to increase production capacity by 10,000 tons of iodine and 1.3 million tons of nitrates per year. The project also requested permission to build a pipeline from the Pacific Ocean to the mining site. Currently, the request is being evaluated by the commission and other governmental agencies.

Salar de Atacama brine deposits

The Salar de Atacama, located approximately 250 kilometers east of Antofagasta, is a salt-encrusted depression in the Atacama desert, within which lies an underground deposit of brines contained in porous sodium chloride rock fed by an underground inflow from the Andes mountains. The brines are estimated to cover a surface of approximately 2,800 square kilometers and contain commercially exploitable deposits of potassium, lithium, sulfates and boron. Concentrations vary at different locations throughout the Salar de Atacama. Our production rights to the Salar de Atacama are pursuant to a lease agreement with Corfo, which expires in 2030. The lease agreement permits the CCHEN to establish a total accumulated extraction limit of 180,100 tons of lithium. More than halfway through the term of the lease agreement, we have extracted less than half of the total accumulated extraction limit of lithium.

Brines are pumped from depths of 1.5 to 60 meters below surface, through a field of wells that are located in areas of the Salar de Atacama that contain relatively high concentrations of potassium, lithium, sulfate, boron and other minerals.

We process these brines to produce potassium chloride, potassium sulfate, lithium carbonate, lithium hydroxide, lithium chloride, boric acid and bischofite (magnesium chloride).

Potassium chloride

We use potassium chloride in the production of potassium nitrate. Production of our own supplies of potassium chloride provides us with substantial raw material cost savings.

In order to produce potassium chloride, brines from the Salar de Atacama are pumped to solar evaporation ponds. Evaporation of the brines results in a complex crystallized mixture of salts of potassium, sodium and magnesium. Waste sodium chloride salts are removed by precipitation. After further evaporation, the sodium and potassium salts are harvested and sent for treatment at one of the potassium chloride plants where potassium chloride is separated by a grinding, flotation, and filtering process. Potassium salts also containing magnesium are harvested and sent for treatment at one of the cold leach plants where magnesium is removed. Potassium chloride is transferred for approximately 300 kilometers to our Coya Sur facilities via a dedicated truck transport system, where it is used in the production of potassium nitrate. We sell potassium chloride produced at the Salar de Atacama in excess of our needs to third parties. All of our potassium-related plants in the Salar de Atacama currently have a production capacity in excess of up to 2.6 million metric tons per year. Actual production capacity will depend on volume, metallurgical recovery rates and quality of the mining resources pumped from the Salar de Atacama.

During 2012, we achieved a production capacity of compacted potassium chloride in excess of 1.2 million metric tons per year and we plan to carry out further expansions of production capacity of the compaction plant during 2013.

The by-products of the potassium chloride production process are (i) brines remaining after removal of the potassium chloride, which are used to produce lithium carbonate as described below, with the excess amount being reinjected into the Salar de Atacama; (ii) sodium chloride, which is similar to the surface material of the Salar de Atacama and is deposited at sites near the production facility; and (iii) other salts containing magnesium chloride.

Lithium carbonate and lithium chloride

A portion of the brines remaining after the production of potassium chloride is sent to additional solar concentration ponds adjacent to the potassium chloride production facility. Following additional evaporation, the remaining concentrated solution of lithium chloride is transported by truck to a production facility located near Antofagasta, approximately 230 kilometers from the Salar de Atacama. At the production facility, the solution is purified and treated with sodium carbonate to produce lithium carbonate, which is dried and then, if necessary, compacted and finally packaged for shipment. A portion of this purified lithium chloride solution is packaged and shipped to customers. The production capacity of our lithium carbonate facility is approximately 48,000 metric tons per year. Future production will depend on the actual volumes and quality of the lithium solutions sent by the Salar de Atacama operations, as well as prevailing market conditions.

Lithium carbonate production quality assurance program has been certified by TÜV-Rheiland under ISO 9001:2000 since 2005 and under ISO 9001:2008 since October 2009.

Lithium hydroxide

Lithium carbonate is sold to customers, and we also use it as a raw material for our lithium hydroxide monohydrate facility, which started operations at the end of 2005. This facility has a production capacity of 6,000 metric tons per year and is located in the Salar del Carmen, adjacent to our lithium carbonate operations. In the production process, lithium carbonate is reacted with a lime solution to produce lithium hydroxide brine and calcium carbonate salt, which is filtered and piled in reservoirs. The brine is evaporated in a multiple effect evaporator and crystallized to produce the lithium hydroxide monohydrate, which is dried and packaged for shipment to customers.

Lithium hydroxide production quality assurance program has been certified by TÜV-Rheiland under ISO 9001:2000 since 2007 and under ISO 9001:2008 since October 2009.

Potassium sulfate and boric acid

Approximately 12 kilometers northeast of the potassium chloride facilities at the Salar de Atacama, we use the brines from the Salar de Atacama to produce potassium sulfate, potassium chloride (as a by-product of potassium sulfate process) and boric acid. The plant is located in an area of the Salar de Atacama where high sulfate and potassium concentrations are found in the brines. Brines are pumped to pre-concentration solar evaporation ponds where waste sodium chloride salts are removed by precipitation. After further evaporation, the sulfate and potassium salts are harvested and sent for treatment at the potassium sulfate plant. Potassium sulfate is produced using flotation, concentration and reaction processes, after which it is crystallized, dried and packaged for shipment. Production capacity for the potassium sulfate plant is approximately 340,000 metric tons per year. This capacity is part of the total plant capacity of 2.6 million metric tons per year, in our dual plant complex where we may switch, to some extent, between potassium chloride and potassium sulfate production.

The principal by-products of the production of potassium sulfate are: (i) non-commercial sodium chloride, which is deposited at sites near the production facility, and (ii) remaining solutions, which are re-injected into the Salar de Atacama or returned to the evaporation ponds. The principal by-products of the boric acid production process are remaining solutions that are treated with sodium carbonate to neutralize acidity and then are reinjected into the Salar de Atacama.

Raw materials

The main raw material that we require in the production of nitrate and iodine is caliche ore, which is obtained from our surface mines. The main raw material in the production of potassium chloride, lithium carbonate and potassium sulfate is the brine extracted from our operations at the Salar de Atacama.

Other important raw materials are sodium carbonate (used for lithium carbonate production and for the neutralization of iodine solutions), sulfur, sulfuric acid, kerosene, anti-caking and anti-dust agents, ammonium nitrate (used for the preparation of explosives in the mining operations), woven bags for packaging our final products, electricity acquired from electric utilities, and liquefied natural gas and fuel oil in heat generation. Our raw material costs (excluding caliche ore and salar brines and including energy) represented approximately 20% of our cost of sales in 2012.

We have several electricity supply agreements signed with major producers in Chile which are expected to cover our electricity needs until 2030. We have been connected to the northern power grid in Chile, which currently supplies electricity to most cities and Industrial facilities in northern Chile, since April 2000.

In May 2001, we entered into a 10-year gas supply contract with Distrinor S.A. (a subsidiary of E-CL) for a maximum of 3,850,000 million Btu per year. This gas supply was considered sufficient at the time to satisfy the requirements for the facilities that are connected to a natural gas supply. However, beginning in 2004, the Argentinean government imposed restrictions on the supply of natural gas to Chile and, in 2011, the supply came to a complete stop. In 2010, Chile began to import liquefied natural gas. In 2012, we received liquefied natural gas through this supply stream.

We obtain ammonium nitrate, sulfur, sulfuric acid, kerosene and soda ash from several large suppliers, mainly in Chile and the United States, under long-term contracts or general agreements, some of which contain provisions for annual revisions of prices, quantities and deliveries. Diesel fuel is obtained under contracts that provide fuel at international market prices.

We believe that all of our contracts and agreements with third-party suppliers with respect to our main raw materials contain standard and customary commercial terms and conditions.

Chilean government regulations

We are subject to the full range of government regulations and supervision generally applicable to companies engaged in business in Chile, including labor laws, social security laws, public health laws, consumer protection laws, environmental laws, tax laws, securities laws and anti-trust laws. These include regulations to ensure sanitary and safety conditions in manufacturing plants.

We conduct our mining operations pursuant to exploration concessions and exploitation concessions granted pursuant to applicable Chilean law. Exploitation concessions essentially grant a perpetual right to conduct mining operations in the areas covered by the concessions, provided that annual concession fees are paid (with the exception of the Salar de Atacama rights, which have been leased to us until 2030). Exploration concessions permit us to explore for mineral resources on the land covered thereby for a specified period of time, and to subsequently request a corresponding exploitation concession.

Under Law No. 16,319 that created the CCHEN (Ley 16.319 que crea la Comisión Chilena de Energía Nuclear), we have an agreement with the CCHEN regarding the exploitation and sale of lithium from the Salar de Atacama. The agreement sets quotas for the tonnage of lithium authorized to be sold.

We also hold water rights obtained from the Chilean water regulatory authority for the supply of water from rivers or wells near our production facilities sufficient to meet our current and anticipated operating requirements. The Water Code is subject to changes, which could have a material adverse impact on our business, financial condition and results of operations. Law No. 20,017, published on June 16, 2005, modified the Chilean laws relating to water rights. Under certain conditions, these modifications allow the constitution of permanent water rights of up to two liters per second for each well built prior to June 30, 2004, in the locations where we conduct our mining operations. In constituting these new water rights, the law does not consider the availability of water, or how the new rights may affect holders of existing rights. Therefore, the amount of water we can effectively extract based on our existing rights could be reduced if these additional rights are exercised. These and other potential future changes to Chilean laws relating to water rights could have a material adverse impact on our business, financial condition and results of operations.

We operate port facilities at Tocopilla for shipment of products and delivery of certain raw materials pursuant to maritime concessions, under applicable Chilean laws, which are normally renewable on application, provided that such facilities are used as authorized and annual concession fees are paid.

In 2005, the Chilean Congress approved the Royalty Law, which established a royalty tax to be applied to mining activities developed in Chile. In 2010, modifications were made to the law and taxes were increased. In 2012, new modifications to the tax laws were enacted to permanently set the corporate tax rate at 20%. The Chilean government may again decide to levy additional taxes on mining companies or other corporations in Chile, and such taxes could have a material adverse impact on our business, financial condition and results of operations.

In 2006, the Chilean Congress amended the Labor Code, and effective January 15, 2007, certain changes were made affecting companies that hire subcontractors to provide certain services. This new law, known as the Subcontracting Law (Ley de Subcontratación), further amends the Labor Accidents Law No. 16,744 to provide that, that when a serious accident in the workplace occurs, a company must halt work at the site where the accident took place until authorities from the SERNAGEOMIN, the Labor Board or the SNA, inspect the site and prescribe the measures such company must take to prevent future risks. Work may not be resumed until such company has taken the prescribed measures, and the period of time before work may be resumed may last for a number of hours, days, or longer. The effects of this law could have a material adverse effect on our business, financial condition and results of operations.

On December 2, 2009, Law No. 20,393 went into effect, establishing a system of criminal liability for legal entities. The objective of the new regulation is to allow legal entities to be prosecuted for the crimes of (a) asset laundering, (b) financing terrorism and (c) bribery, where such crimes are committed by people who hold relevant positions within a legal entity in order to benefit that legal entity. The law establishes a prevention model that includes, among others, the designation of a person in charge of prevention and the establishment of special programs and policies. The implementation of this model can exempt a company from liability.

On January 1, 2010, Law No. 20,382 went into effect, introducing modifications to the Securities Law and Law No. 18,046 on Corporations (Ley de Sociedades Anónimas or the “Chilean Corporations Act”). The new law relates to corporate governance and, in general, seeks to improve such matters as the professionalization of senior management at corporations, the transparency of information, and the detection and resolution of possible conflicts of interest. The law establishes the concept of an independent director for certain corporations, including SQM. Such director has a preferential right to be a member of the Directors’ Committee, which position, in turn, grants the director further powers. The new independent director may be proposed by any shareholder with an ownership interest of 1% or more in a company, but he or she must satisfy a series of independence requirements with respect to the company and the company’s competition, providers, customers and majority shareholders. The new law also refines the regulations regarding the information that companies must provide to the general public and to the SVS, as well as regulations relating to the use of inside information, the independence of external auditors, and procedures for the analysis of transactions with related parties.

On January 26, 2010, the Chilean Congress amended the Environmental Law to create the Ministry of Environment, the Environmental Assessment Service and the environmental enforcement superintendence (Superintendencia del Medioambiente or “Environmental Enforcement Superintendence”). These changes introduced important amendments to environmental regulations by setting up new agencies and introducing new provisions and procedures applicable to projects whose operations bear an impact on the environment. The new Ministry designs and implements environmental policies relating to environmental conservation, sustainable growth and the protection of Chile’s renewable energy resources. In addition, the Ministry is responsible for enacting emission and quality standard regulations, as well as recovery and decontamination plans. The Environmental Assessment Service pursues procedures of the Environmental Impact Assessment System, pursuant to which projects are environmentally approved or rejected. In procedures for obtaining an environmental license, any person, including legal entities and companies, will be allowed to file oppositions and comments. Summary procedures, such as Environmental Impact Statements, allow comments in support or opposition under certain circumstances. Technical reports from governmental agencies are considered to be final. The Environmental Enforcement Superintendence is an independent agency which oversees and coordinates with other governmental agencies in charge of supervision of suspended projects and projects requiring environmental approval. Likewise, it will receive, investigate and decide complaints concerning the infringement of environmental regulations and will sanction violators, deliver injunction orders and levy relevant fines. The Environmental Enforcement Superintendence had its powers suspended until the First Environmental Court was installed in Santiago on December 28, 2012.

There are currently no material legal or administrative proceedings pending against us except as discussed in note 16.1 to our audited financial statements included below and under “Safety, health and environmental regulations in Chile” and we believe that we are in compliance in all material respects with all applicable statutory and administrative regulations with respect to our business.

Safety, health and environmental regulations in Chile

Our operations in Chile are subject to both national and local regulations related to safety, health, and environmental protection. In Chile, the main regulations on these matters that are applicable to SQM are the Mine Health and Safety Act of 1989 (Reglamento de Seguridad Minera or the “Mine Health and Safety Act”), the Health Code (Código Sanitario), the Health and Safety Act 1999 (Reglamento sobre Condiciones Sanitarias y Ambientales Básicas en los Lugares de Trabajo or the “Health and Basic Conditions Act”), the Subcontracting Law, and the environmental framework law (Ley sobre Bases Generales del Medio Ambiente or the “Environmental Law”).

Health and safety at work are fundamental aspects in the management of mining operations, which is why SQM has made constant efforts to maintain good health and safety conditions for the people working at its mining sites. In addition to the role played by us in this important matter, the Chilean government has a regulatory role, enacting and enforcing regulations in order to protect and ensure the health and safety of workers. The Chilean government, acting through the Ministry of Health and the SERNAGEOMIN, performs health and safety inspections and oversees mining projects, among other tasks, and it has exclusive powers to enforce standards related to environmental conditions and the health and safety of the people performing activities related to mining.

The Mine Health and Safety Act protects workers and nearby communities against health and safety hazards, and it provides for enforcement of the law where compliance has not been achieved. SQM’s Internal Mining Standards (Reglamentos Internos Mineros) establish our obligation to maintain a workplace that is safe and free of health risks, in as much as this is reasonably practicable. We must comply with the general provisions of the Health and Basic Conditions Act, our own internal standards, and the provisions of the Mine Health and Safety Act. In the event of non-compliance, the Ministry of Health and particularly the SERNAGEOMIN are entitled to use their enforcement powers to ensure compliance with the law.

In November 2011, the Ministry of Mining enacted Law No. 20,551 that Regulates Mine Closure and its Facilities (Ley que Regula el Cierre de Faenas e Instalaciones Mineras). This new statute entered in force in November 2012. Its main requirements are related to disclosures to the SERNAGEOMIN regarding decommissioning plans for each mining site and its facilities, along with the estimated cost to implement such plans. There is a requirement to provide a form of financial assurance to the SERNAGEOMIN to secure compliance with the decommissioning plans. There are various types of financial assurance that satisfy the requirement. By November 2014, we have to inform the SERNAGEOMIN of the estimated costs for each of our decommissioning plans and the corresponding financial assurances we propose to provide, which are subject to approval by the SVS.

The Environmental Law was subjected to several important modifications that entered into effect in January 2010, including the creation of the Ministry of the Environment, the Environmental Assessment Service, and the Environmental Enforcement Superintendence. The Environmental Enforcement Superintendence began operations on December 28, 2012. The new and modified Environmental Law replaced the CONAMA with both the Ministry of the Environment, which is currently the governmental agency responsible for coordinating and supervising environmental issues and the Environmental Assessment Service. Under the new Environmental Law, we will continue to be required to conduct environmental impact studies or statements of any future projects or activities (or their significant modifications) that may affect the environment. With the above mentioned modifications to the Environmental Law, the Environmental Assessment Service, together with other public institutions with mandates related to the environment, evaluates environmental impact studies or statements submitted for its approval. The Environmental Enforcement Superintendence is responsible for auditing environmental performance during the construction, operation, and closure of the projects. The Environmental Law also promotes citizen participation in project evaluation and implementation, providing more opportunities during the environmental evaluation process.

In August 10, 1993, the Ministry of Health published in the Official Gazette a resolution establishing that atmospheric particulate levels at our production facilities in María Elena and Pedro de Valdivia exceeded air quality standards, affecting the nearby towns. The high particulate matter levels came principally from dust produced during the processing of caliche ore, particularly the crushing of the ore before leaching. Residents of the town of Pedro de Valdivia were relocated to the town of María Elena, practically removing Pedro de Valdivia from the scope of the determination of the Ministry of Health. In 1998, authorities approved a plan to reduce the atmospheric particulate levels later modified by Decree No. 37/2004 in March 2004, which called for an 80% reduction of the emissions of atmospheric particulate material, This was achieved by 2008 through the implementation of a project that modified the milling and screening systems used in the processing of the caliche ore at the María Elena facilities. Due to international market conditions, this project ceased its operation in March 2010, and today the milling and screening systems used in the processing of the caliche ore at the María Elena facilities remain closed. Air quality in the area has improved significantly and compliance of air quality standards required by law is being assessed. When the average of three consecutive years meets the Chilean air quality standard, the resolution of 1993 of the Ministry of Health may be reviewed.

On March 16, 2007, the Ministry of Health published in the Official Gazette a resolution establishing that atmospheric particulate levels exceeded air quality standards in the coast-town of Tocopilla, where we have our port operations. The high particulate matter levels are caused mainly by two thermoelectric power plants that use coal and fuel oil and are located next to our port operations. Our participation in particulate matter emissions is very small (less than 0.20% of the total). However, a decontamination plan was developed by the environmental authority, and its implementation began in October 2010. During 2008 and 2009, earlier than required, SQM implemented control measures for mitigating particulate matter emissions in its port operations according to the requirements of this plan. We do not expect any additional measures to be required of SQM following the implementation of the plan.

We continuously monitor the impact of our operations on the environment and have made, from time to time, modifications to our facilities in an effort to eliminate any adverse impacts. Also, over time, new environmental standards and regulations have been enacted, which have required minor adjustments or modifications of our operations for full compliance. We anticipate that additional laws and regulations will be enacted over time with respect to environmental matters. While we believe that we will continue to be in compliance with all applicable environmental regulations of which we are now aware, there can be no assurance that future legislative or regulatory developments will not impose new restrictions on our operations. We are committed to both complying with all applicable environmental regulations and applying an Environmental Management System to continuously improve our environmental performance.

We have submitted and will continue to submit several environmental impact assessment studies related to our projects to the governmental authorities. We require the authorization of these submissions in order to maintain and to increase our production capacity.

Organizational structure

All of our principal operating subsidiaries are essentially wholly-owned, except for Soquimich Comercial S.A., which is approximately 61% owned by us and whose shares are listed and traded on the Santiago Stock Exchange, and Ajay SQM Chile S.A., which is 51% owned by us. The following is a summary of our main subsidiaries as of December 31, 2012. For a list of all our consolidated subsidiaries, see note 2.5 to our audited financial statements included elsewhere below.

Principal subsidiaries	Activity	Country of Incorporation	SQM Beneficial Ownership Interest (Direct/Indirect)
SQM Nitrates S.A.	Extracts and sells caliche ore to subsidiaries and affiliates of SQM	Chile		100	%
SQM Industrial S.A.	Produces and markets SQM’s products directly and through other subsidiaries and affiliates of SQM	Chile		100	%
SQM Salar S.A.	Exploits the Salar de Atacama to produce and market SQM’s products directly and through other subsidiaries and affiliates of SQM	Chile		100	%
SQM Potasios S.A.	Produces and markets SQM’s products directly and through other subsidiaries and affiliates of SQM	Chile		100	%
Servicios Integrates de Transitos y Transferencias S.A. (SIT)	Owns and operates a rail transport system and also owns and operates the Tocopilla port facilities	Chile		100	%
Soquimich Comercial S.A.	Markets SQM’s specialty plant nutrition products domestically and imports fertilizers for resale in Chile	Chile		61	%
Ajay-SQM Chile S.A.	Produces and markets SQM’s iodine and iodine derivatives	Chile		51	%
Sales and distribution subsidiaries in the United States, Belgium, Brazil, Venezuela, Ecuador, Peru, Argentina, Mexico, South Africa and other locations.	Market SQM’s products throughout the world	Various

Concessions, extraction yields and reserves for the caliche ore mines and salar brines

Concessions for the caliche ore mines and salar brines

As of December 31, 2012, approximately 93% of our total mining concessions were held pursuant to exploitation concessions and 7% pursuant to exploration concessions. Of the exploitation concessions, approximately 80% already have been granted pursuant to applicable Chilean law, and approximately 20% are in the process of being granted. Of the exploration concessions, approximately 54% already have been granted pursuant to applicable Chilean law, and approximately 46% are in the process of being granted.

We made payments to the Chilean government for our exploration and exploitation concessions of approximately US$9.6 million in 2012.

Additional mining operations leased in the Salar De Atacama region

As of December 31, 2012, SQM Salar S.A. held 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 S.A. is entitled to exploit the mineral resources existing in 81,920 hectares. These rights are owned by Corfo and leased to SQM Salar S.A. pursuant to a lease agreement between Corfo and SQM Salar S.A. (the “Lease Agreement”). Corfo may not unilaterally amend the Lease Agreement, and the rights to exploit the resources cannot be transferred. The Lease Agreement provides that SQM Salar S.A. is responsible for the maintenance of Corfo’s exploitation rights and for annual payments to the Chilean government, and it expires on December 31, 2030. Furthermore, the same lease Agreement permits the CCHEN to establish a total accumulated extraction limit set at,180,100 tons of lithium per year. More than halfway through the term of the lease agreement, we have extracted less than half of the total accumulated extraction limit of lithium. SQM Salar S.A. is required to make lease-royalty payments to Corfo according to specified percentages of the value of production of minerals extracted from the Salar de Atacama brines. SQM Salar S.A. holds an additional 119,023 hectares of constituted exploitation rights in the Salar de Atacama.

In addition, as of December 31, 2012, we held constituted exploration rights covering approximately 52,400 hectares, and we had applied for additional exploration rights covering approximately 54,600 hectares. Exploration rights are valid for a period of two years, after which we can (i) request an exploitation concession for the land, (ii) request an extension of the exploration rights for an additional two years (the extension only applies to a reduced surface area equal to 50% of the initial area), or (iii) cease exploration of the zone covered by the rights. The weighted average age of the assets of our mining facilities at the Salar de Atacama is approximately 6.79 years. Solar energy is the primary source of power used by the Salar de Atacama operation.

Under the terms of the Salar de Atacama project agreement between Corfo and SQM Salar S.A., (the “Project Agreement”), Corfo has agreed that it will not permit any other person to explore, exploit or mine any mineral resources in approximately 147,000 hectares of the Salar de Atacama (which include the 140,000 hectares) mentioned above. The Project Agreement expires on December 31, 2030.

The following table sets forth our constituted exploitation and exploration concessions as of December 31, 2012:

	Exploitation concessions				Exploration concessions				Total
Mines	Total number		Hectares		Total number		Hectares		Total number		Hectares
Pedro de Valdivia		576		147,302		—		—		576		147,302
EI Toco		611		180,964		5		1,500		616		182,464
Pampa Blanca		465		136,962		—		—		465		136,962
Nueva Victoria		303		78,654		1		1,200		304		79,854
Subtotal Caliche Ore Mines		1,955		543,882		6		2,700		1,961		546,582
Salar de Atacama		409		266,143		178		52,400		587		318,543
Subtotal Mines		2,364		810,025		184		55,100		2,548		865,125

Subtotal other Areas		7,609		1,690,433		224		70,800		7,833		1,761,233
Total		9,973		2,500,458		408		125,900		10,381		2,626,358

Extraction yields

The following table sets forth certain operating data relating to each of our mines for 2012, 2011, 2010 and 2009:

(in thousands, unless otherwise stated)	2012		2011		2010		2009
Pedro de Valdivia
Metric tons of ore mined		12,027		12,151		11,773		11,631
Average grade nitrate (% by weight)		7.3		7.2		7.4		7.3
Iodine (parts per million (ppm))		406		417		403		363
Metric tons of crystallized nitrate produced		466		454		496		434
Metric tons of iodine produced		3.2		3.1		3.0		2.6

Maria Elena⁽¹⁾
Metric tons of ore mined		6,787		6,027		307		5,443
Average grade nitrate (% by weight)		6.2		5.9		5.8		6.8
Iodine (ppm)		454		466		443		375
Metric tons of crystallized nitrate produced		–		–		22		155
Metric tons of iodine produced		1.7		0.8		0.2		1.2

Coya Sur⁽²⁾
Metric tons of crystallized nitrate produced		491		395		155		193

Pampa Blanca⁽¹⁾
Metric tons of ore mined		–		–		383		3,785
Iodine (ppm)		–		–		634		645
Metric tons of iodine produced		–		–		0.8		1.2

Nueva Victoria
Metric tons of ore mined		23,937		18,418		14,252		17,326
Iodine (ppm)		465		457		456		463
Metric tons of iodine produced		6.0		5.2		4.8		5.1

(in thousands, unless otherwise stated)	2012		2011		2010		2009
Salar de Atacama ⁽³⁾
Metric tons of lithium carbonate produced		41		38		26		14
Metric tons of potassium chloride and potassium sulfate produced		1,977		1,448		1,409		1,075

(1)

Operations at the El Toco and Pampa Blanca mines were temporarily suspended in March 2010. Mining activities resumed at El Toco in November 2010. Operations have not resumed at Pampa Blanca.

(2)

Includes production at Coya Sur from treatment of fines from María Elena and Pedro de Valdivia, nitrates from pile treatment at Pampa Blanca and net production from NPT, or technical (grade) potassium nitrate, plants.

(3)

Lithium carbonate is extracted at the Salar de Atacama and processed at our facilities at the Salar del Carmen.

Reserves for the caliche ore deposits

Our in-house staff of geologists and mining engineers prepares our estimates of caliche ore reserves. The proven and probable reserve figures presented below are estimates, and no assurance can be given that the indicated levels of recovery of nitrates and iodine will be realized.

We estimate ore reserves based on engineering evaluations of assay values derived from sampling of drill-holes and other openings. Drill-holes have been made at different space intervals in order to recognize mining resources. Normally, we start with 400x400 meters and then we reduce spacing to 200x200 meters, 100x100 meters and 50x50 meters. The geological occurrence of caliche mineral is unique and different from other metallic and non-metallic minerals. Caliche ore is found in large horizontal layers at depths ranging from one to four meters and has an overburden between zero and two meters. This horizontal layering is a natural geological condition and allows us to estimate the continuity of the caliche bed based on surface geological reconnaissance and analysis of samples and trenches. Mining resources can be calculated using the information from the drill-hole sampling.

According to our experience in caliche ore, the grid pattern drill-holes with spacing equal to or less than 100 meters produce data on the caliche resources that is sufficiently defined to consider them measured resources and then, adjusting for technical, economic and legal aspects, as proven reserves. These reserves are obtained using the Kriging Method and the application of operating parameters to obtain economically profitable reserves. Similarly, the information obtained from detailed geologic work and samples taken from grid pattern drill-holes with spacing equal to or less than 200 meters can be used to determine indicated resources. By adjusting such indicated resources to account for technical, economic and legal factors, it is possible to calculate probable reserves. Probable reserves are calculated by evaluating polygons and have an uncertainty or error margin greater than that of proven reserves. However, the degree of certainty of probable reserves is high enough to assume continuity between points of observation.

Probable reserves are the economically mineable part of a “mineral resource” and, in some circumstances, a “measured mineral resource.” An indicated mineral resource is that part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. The calculation is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings, and drill holes. A measured mineral resource is the part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings, and drill holes.

The calculation of reserves includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction is reasonably justified.

Proven and probable reserves are determined using extensive drilling, sampling and mine modeling, in order to estimate potential restrictions on production yields, including cut-off grades, ore type, dilution, waste-to-ore ratio and ore depth. Economic feasibility is determined on the basis of this information.

The estimates of proven reserves of caliche ore at each of our mines as of December 31, 2012 are as follows:

Mine	Proven Reserves⁽¹⁾ (millions of metric tons)		Nitrate Average Grade (percentage by weight)			Iodine Average Grade (parts per million)
Pedro de Valdivia		172.3		7.0	%		365
Maria Elena		135.3		7.1	%		414
Pampa Blanca		71.4		5.6	%		544
Nueva Victoria⁽³⁾		351.2		5.7	%		451

In addition, the estimates of our probable reserves of caliche ore at each of our principal mines as of December 31, 2012, are as follows:

Mine	Probable Reserves⁽¹⁾⁽²⁾ (millions of metric tons)		Nitrate Average Grade (percentage by weight)			Iodine Average Grade (parts per million)
Pedro de Valdivia		78.5		6.9	%		488
Maria Elena		98.0		7.3	%		380
Pampa Blanca		447.8		5.8	%		538
Nueva Victoria		59.1		7.6	%		362

Note: Information set forth in the table above was validated in February 2013, by Mrs. Marta Aguilera, a geologist with over 20 years of experience in the field. She is currently employed by SQM as Manager of Non-metallic Geology. Mrs. Aguilera is a Competent Person (Persona Competente), as that term is defined under the Competent Person Law.

Notes on Reserves:

(1)

The proven and probable reserves set forth in the tables above are shown before losses related to exploitation and mineral treatment. Proven and probable reserves are affected by mining exploitation methods, which result in differences between the estimated reserves that are available for exploitation in the mining plan and the recoverable material that is finally transferred to the leaching vats or heaps. The average mining exploitation factor for our different mines ranges between 80% and 90%, whereas the average global metallurgical recoveries of processes for nitrate and iodine contained in the recovered material vary between 55% and 65%.

(2)

Probable reserves can be expressed as proven reserves using a conversion factor. On average, this conversion factor is higher than 60%. This factor depends on geological conditions and caliche ore continuity, which vary from mine to mine. The difference between the probable reserve amounts and the converted probable reserve amounts is the result of the lower degree of certainty pertaining to probable reserves compared with proven reserves.

The proven and probable reserves shown above are the result of exploration and evaluation of approximately 19.3% of the total caliche-related mining property of SQM. However, we have explored those areas in which we believe there is a higher potential of finding high-grade caliche ore minerals. The remaining 80.7% of this area has not been explored yet or has had limited reconnaissance to determine hypothetical resources. Reserves shown in these tables are calculated based on mining properties that are not involved in any legal disputes between SQM and other parties.

We maintain an ongoing program of exploration and resource evaluation on the land surrounding the mines at Nueva Victoria, Pedro de Valdivia, María Elena and Pampa Blanca and at other sites for which we have the appropriate concessions. In 2012, we continued a basic reconnaissance program on new mining properties including a geological mapping of the surface and spaced drill-hole campaign covering approximately 17,000 hectares. Additionally, we conducted general explorations based on a closer grid pattern of drill-holes over a total area of approximately 9,365 hectares and, in addition, carried out in-depth sampling of approximately 3,563 hectares (771 hectares at Pedro de Valdivia, 206 hectares at Maria Elena and 2,586 hectares at Nueva Victoria). The exploration and development program in 2013 calls for a basic reconnaissance program over a total area of 4,378 hectares, general exploration over a total area of approximately 2,400 hectares and, in addition, in-depth sampling of approximately 1,957 hectares.

Reserves for the Salar de Atacama brines

Our in-house staff of hydro-geologists and mining engineers prepares our estimates of potassium, sulfate, lithium and boron reserves at the Salar de Atacama. We have exploration concessions of approximately 819.2 square kilometers where we have carried out geological exploration, brine sampling and geostastical analysis. We estimate that our proven and probable reserves as of December 31, 2012, based on economic restrictions, geological exploration, brine sampling and geostatistical analysis up to a depth of 100 meters of our total exploration concessions, and additionally, up to a depth of 500 meters over approximately 47% of the same total area, are as follows:

	Proven Reserves ⁽¹⁾ (millions of metric tons)		Probable Reserves ⁽¹⁾ (millions of metric tons)		Total (millions of metric tons)
Potassium (K+) ⁽²⁾		54.0		18.6		72.6
Sulfate (SO4-2) ⁽³⁾		39.7		2.3		42.0
Lithium (Li+) ⁽⁴⁾		3.0		3.2		6.2
Boron (B3+) ⁽⁵⁾		1.1		0.2		1.3

Note: Information set forth in the table above was validated in February 2013, by Mrs. Aguilera, a geologist with over 20 years of experience in the field. She is currently employed by SQM as Manager of Non-metallic Geology. Mrs. Aguilera is a Competent Person (Persona Competente), as that term is defined under the Competent Person Law.

Notes on Reserves:

(1)

Metric tons of potassium, sulfate, lithium and boron considered in the proven and probable reserves are shown before losses from evaporation processes and metallurgical treatment. The recoveries of each ion depend on both brine composition, which changes over time, and the process applied to produce the desired commercial products.

(2)

Recoveries for potassium vary from 47% to 77%.

(3)

Recoveries for sulfate vary from 27% to 45%.

(4)

Recoveries for lithium vary from 28% to 40%.

(5)

Recoveries for boron vary from 28% to 32%.

The proven and probable reserves are based on drilling, brine sampling and geo-statistic reservoir modeling in order to estimate brine volumes and their composition. To evaluate reserves, we conduct a geostatistical study using the Kriging Method in 2D. We calculate the quality of brine effectively drainable or exploitable in each evaluation unit. We consider chemical parameters to determine the process to be applied to the brines. Based on the chemical characteristics, the volume of brine and drainable porosity, we determine the number of metric tons for each of the chemical ions. Proven reserves are defined as those geographical blocks that comply with a Kriging method estimation error of up to 15%. In the case of probable reserves, the selected blocks must comply with an estimation error between 15% and 35%. Blocks with an error greater than 35% are not considered in the evaluation of reserves. This procedure is used to estimate potential restrictions on production yields and the economic feasibility of producing such commercial products as potassium chloride, potassium sulfate, lithium carbonate and boric acid is determined on the basis of the evaluation.

Ports and water rights

We operate port facilities at Tocopilla in northern Chile for shipment of products and delivery of certain raw materials pursuant to renewable concessions granted by Chilean regulatory authorities, provided that such facilities are used as authorized and annual concession fees are paid by us. We also hold water rights for the supply of water from rivers and wells near our production facilities sufficient to meet our current operational requirements.

Transportation and storage facilities

We own and operate railway lines and equipment, as well as port and storage facilities, for the transport and handling of finished products and consumable materials.

Our main center for production and storage of raw materials is the hub composed of the facilities in Coya Sur - Pedro de Valdivia and the Salar de Atacama facilities. Other facilities include Nueva Victoria and the lithium carbonate and lithium hydroxide finishing plants. The Tocopilla port terminal (“Tocopilla Port Terminal”), which we own, is the main facility for storage and shipment of our products.

Nitrate raw materials are produced and first stored at our Pedro de Valdivia mine, and then transported by trucks to the plants described in the next paragraph, for further processing. Nitrate raw material is also produced at Nueva Victoria, from where it is transported by trucks to Coya Sur for further processing.

Nitrate finished products are produced at our facilities in Coya Sur and then transported by our rail system to Tocopilla Port Terminal, where they are stored and shipped, either bagged or in bulk. Potassium chloride is produced at our facilities in the Salar de Atacama and transported either to Tocopilla Port Terminal or Coya Sur by truck owned by a third-party dedicated contractor. Products transported to Coya Sur are used as a raw material for the production of potassium nitrate. Potassium sulfate and boric acid are both produced at our facilities in the Salar de Atacama and are then transported by trucks to the Tocopilla Port Terminal.

Lithium solutions, produced at our facilities in the Salar de Atacama, are transported to the lithium carbonate facility in the Salar del Carmen area, where finished lithium carbonate is produced. Part of the lithium carbonate is fed to the adjacent lithium hydroxide plant, where finished lithium hydroxide is produced. These two products are bagged and stored on the premises and are subsequently transported by truck to the Tocopilla Port Terminal or to the Antofagasta and Mejillones terminals for shipment on charter vessels or container vessels.

Iodine raw material, obtained in the same mines as the nitrates, is processed, bagged and stored exclusively in the facilities of Pedro de Valdivia and Nueva Victoria, and then shipped by truck to Antofagasta, Mejillones or Iquique for vessel container transport or by truck to Santiago, where iodine derivatives are produced.

The facilities at Tocopilla Port Terminal are located approximately 186 kilometers north of Antofagasta and approximately 124 kilometers west of Pedro de Valdivia, 84 kilometers west of María Elena and Coya Sur and 372 kilometers west of the Salar de Atacama. Our subsidiary, Servicios Integrales de Tránsitos y Transferencias S.A. (SIT) operates the facilities under maritime concessions granted pursuant to applicable Chilean laws. The port also complies with ISPS (International Ship and Port Facility Security Code) regulation. The Tocopilla Port Terminal facilities include a railcar dumper to transfer bulk product into the conveyor belt system used to store and ship bulk product.

Storage facilities consist of a six silo system, with a total production capacity of 55,000 metric tons, and an open storage area for approximately 250,000 metric tons. Additionally, to meet future storage needs, we will continue to make investments in accordance with the investment plan outlined by management. Products are also bagged at port facilities in Tocopilla, where the bagging capacity is approximately 300,000 metric tons per year.

For shipping bulk product, the conveyor belt system extends over the coast line to deliver product directly inside bulk carrier hatches. Using this system, the loading capacity is 1,200 tons per hour. Bags are loaded to bulk vessels using barges that are loaded in the Tocopilla Port Terminal dock and unloaded by vessel cranes into the hatches. Both bulk and bagged trucks are loaded in Tocopilla Port Terminal for transferring product directly to customers or for container vessels shipping from other ports, mainly Antofagasta, Mejillones and Iquique.

Bulk carrier loading in the Tocopilla Port Terminal is mostly contracted to transfer product to our hubs around the world or for shipping to customers, which in limited cases use their own contracted vessels for delivery. Trucking is provided by a mix of spot, contracted and customer- owned equipment.

Tocopilla processes related to the reception, handling, storage, and shipment of bulk/packaged nitrates produced in Coya Sur are certified by third party organization TÜV-Rheiland under the quality standard ISO 9001:2008.

Research and development, patents and licenses

One of the main objectives of our research and development team is to develop new processes and products in order to maximize the returns obtained from the resources that we exploit. Our research is performed by four different units whose research topics include chemical process design, phase chemistry, chemical analysis methodologies and physical properties of finished products.

Our research and development policy emphasizes the following: (i) optimization of current processes in order to decrease costs and improve product quality through the implementation of new technology, and (ii) development of higher-margin products from current products through vertical integration or different product specifications.

Our research and development activities have been instrumental in improving our production processes and developing new value-added products. As a result of research and development activities, new methods of extraction, crystallization and finishing products have been developed. Technological advances in recent years have enabled us to improve process efficiency for the nitrate, potassium and lithium operations, to improve the physical quality of our prilled products and to reduce dust emissions and caking by applying specially designed additives for our products handled in bulk. Our research and development efforts have also resulted in new, value-added markets for our products. One example is the use of sodium nitrate and potassium nitrate as thermal storage in solar power plants.

We have patented several production processes for nitrate, iodine, and lithium products. These patents have been filed mainly in the United States, Chile, and in other countries when necessary.

Employees

As of December 31, 2012, we had 5,643 permanent employees, 193 of whom were employed outside of Chile. The average tenure of our permanent employees is approximately 6.5 years.

	As of December 31,
	2012		2011		2010		2009
Employees in Chile		5,450		4,720		4,073		4.161
Employees outside of Chile		193		182		254		226
Total employees		5,643		4,902		4.327		4.387

As of December 31, 2012, 67% of our permanent employees in Chile were represented by 24 labor unions, which represent their members in collective negotiations with us. Compensation for unionized personnel is established in accordance with the relevant collective bargaining agreements. The terms of most such agreements currently in effect are three years, and expiration dates of such agreements vary from contract to contract. Under these agreements, employees receive a salary according to a scale that depends upon job function, seniority and productivity. Unionized employees also receive certain benefits provided by law and certain benefits provided under the applicable collective bargaining agreement, which vary depending upon the terms of the collective agreement, such as housing allowances and additional death and disability benefits.

In addition, we own all of the equity of Institución de Salud Previsional Norte Grande Limitada (“Isapre Norte Grande”), which is a health care organization that provides medical services primarily to our employees and Sociedad Prestadora de Servicios de Salud Cruz de Norte S.A. (“Prestadora”), which is a hospital in María Elena. We make contributions to Isapre Norte Grande and to Prestadora in accordance with Chilean laws and the provisions of our various collective bargaining agreements, but we are not otherwise responsible for its liabilities.

Non-unionized employees receive individually negotiated salaries, benefits provided for by law and certain additional benefits which we provide.

We provide housing and other facilities and services for employees and their families at the María Elena site.

We do not maintain any pension or retirement programs for our Chilean employees. Most workers in Chile are subject to a national pension law, adopted in 1980, which establishes a system of independent pension plans that are administered by the corresponding Sociedad Administradora de Fondos de Pensiones. We have no liability for the performance of any of these pension plans or any pension payments to be made to our employees. We, however, sponsor staff severance indemnities plans for our employees and employees of our Chilean subsidiaries whereby we commit to provide a lump sum payment to each employee at the end of his/her employment, whether due to death, termination, resignation or retirement.

As in previous years, during 2012, we negotiated collective labor contracts with individual unions one year before their agreement ended. As of December 2012, we have concluded advanced negotiations with 22 labor unions, which represent 96% our total unionized workers, signing new agreements each for durations of three years.

Legal proceedings

We are party to various lawsuits arising in the ordinary course of business. For more information on these lawsuits, see note 16.1 to our audited financial statements included below. We believe it is unlikely that any losses associated with such lawsuits will significantly affect our result of operations, financial position, and cash flows

Index to Financial Statements

Audited Consolidated Financial Statements as of December 31, 2012, 2011 and 2010 and for the years ended December 31, 2012, 2011 and 2010

Independent Auditor’s Report	F-2
Report of Independent Registered Public Accounting Firm	F-4
Consolidated Statements of Financial Position	F-5
Consolidated Statements of Income	F-7
Consolidated Statements of Comprehensive Income	F-9
Consolidated Statements of Cash Flows	F-10
Statement of Changes in Equity	F-12
Notes to Consolidated Financial Statements	F-15

CH$	—	Chilean pesos
ThCh$	—	Thousands of Chilean pesos
US$	—	United States dollars
ThUS$	—	Thousands of United States dollars
UF	—	The UF is an inflation-indexed, Chilean peso-denominated monetary unit. The UF rate is set daily in advance, based on the change in the Consumer Price Index of the previous month.

F-1

F-2

F-3

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Sociedad Química y Minera de Chile S.A.:

We have audited the accompanying consolidated statement of financial position of Sociedad Química y Minera de Chile S.A. and subsidiaries (“the Company”) as of December 31, 2010 and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sociedad Química y Minera de Chile S.A. and subsidiaries as of December 31, 2010, and the consolidated results of their operations and their cash flows for the year ended December 31, 2010, in conformity with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (“IASB”)

ERNST & YOUNG LTDA.
Santiago, Chile, March 01, 2011

F-4

Sociedad Química y Minera de Chile S.A. and Subsidiaries

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS	Note		As of December 31, 2012		As of December 31, 2011		As of December 31, 2010
			ThUS$		ThUS$		ThUS$
Current assets

Cash and cash equivalents		6.1		324,353		444,992		524,652
Current financial assets		9.1		316,103		169,261		76,178
Other non-financial assets		20		67,820		63,792		44,442
Trade and other accounts receivable		9.2		510,616		412,062		375,945
Trade receivables due from related parties		8.3		101,372		117,139		36,172
Inventories		7.0		896,236		744,402		605,101
Deferred tax assets		23.1		30,234		4,765		32,773
Total current assets				2,246,734		1,956,413		1,695,263

Non-current assets
Non-current financial assets		9.1		29,492		30,488		92,674
Other non-current non-financial assets		20		17,682		24,651		24,157
Trade receivables, non-current		9.2		1,311		1,070		1,102
Investments accounted for using the equity method		10.1		70,298		60,694		62,271
Intangible assets other than goodwill		11		24,013		4,316		3,270
Goodwill		11		38,388		38,605		38,388
Property, plant and equipment		12		1,988,290		1,755,042		1,453,973
Investment property		12		-		-		1,373
Deferred tax assets		23.4		223		304		365
Total non-current assets				2,169,697		1,915,170		1,677,573
Total assets				4,416,431		3,871,583		3,372,836

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

F-5

Sociedad Química y Minera de Chile S.A. and Subsidiaries

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

Liabilities and Equity	Note		As of December 31, 2012			As of December 31, 2011			As of December 31, 2010
			ThUS$			ThUS$			ThUS$
Liabilities
Current liabilities
Current financial liabilities		9.4		152,843			161,008			187,555
Trade and other accounts payable		9.5		207,944			183,032			152,147
Trade accounts payable due to related parties		8.3		19			873			3,538
Other current provisions		15.1		18,489			16,937			15,014
Current tax liabilities		23.2		23,624			75,418			7,113
Current accruals for employee benefits		13.1		33,974			30,074			44,011
Other current non-financial liabilities		15.3		172,200			161,961			67,459
Total current liabilities				609,093			629,303			476,837

Non-current liabilities
Non-current financial liabilities		9.4		1,446,194			1,237,027			1,090,188
Other non-current provisions		15.1		7,357			8,595			5,500
Deferred tax liabilities		23.4		125,445			98,594			100,781
Non-current accruals for employee benefits		13.1		40,896			33,684			28,710
Total non-current liabilities				1,619,892			1,377,900			1,225,179
Total liabilities				2,228,985			2,007,203			1,702,016

Equity		14
Share capital				477,386			477,386			477,386
Retained earnings				1,676,169			1,351,560			1,155,131
Other reserves				(20,772	)		(16,112	)		(9,713	)
Equity attributable to controlling interests				2,132,783			1,812,834			1,622,804
Non-controlling interest				54,663			51,546			48,016
Total equity				2,187,446			1,864,380			1,670,820
Total liabilities and equity				4,416,431			3,871,583			3,372,836

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

F-6

Sociedad Química y Minera de Chile S.A. and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

			Year ended December 31,
	Note		2012			2011			2010
			ThUS$			ThUS$			ThUS$

Revenues		22.1		2,429,160			2,145,286			1,830,413
Cost of sales		22.2		(1,400,567	)		(1,290,494	)		(1,204,410	)
Gross profit				1,028,593			854,792			626,003

Other income		22.3		12,702			47,681			6,545
Administrative expenses		22.4		(106,442	)		(91,760	)		(78,819	)
Other expenses		22.5		(34,628	)		(63,047	)		(36,212	)
Other gains (losses)		22.6		683			5,787			(6,979	)
Income from operating activities				900,908			753,453			510,538
Finance income				29,068			23,210			12,930
Finance expenses				(54,095	)		(39,335	)		(35,042	)
Equity income of associates and joint ventures accounted for using the equity method				24,357			21,808			10,681
Foreign currency exchange differences		18		(26,787	)		(25,307	)		(5,807	)
Income before income tax expense				873,451			733,829			493,300
Income tax expense		23.4		(216,082	)		(179,710	)		(106,029	)

Profit for the year				657,369			554,119			387,271
Profit attributable to
Controlling interests				649,167			545,758			382,122
Non-controlling interests				8,202			8,361			5,149
Profit for the year				657,369			554,119			387,271

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

F-7

Sociedad Química y Minera de Chile S.A. and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME (continued)

			Year ended December 31,
	Note		2012		2011		2010
			US$		US$		US$
Earnings per common share

Basic earnings per share (US$ per share)		17		2.47		2.07		1.45

Diluted common shares

Diluted earnings per share (US$ per share)		17		2.47		2.07		1.45

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

F-8

Sociedad Química y Minera de Chile S.A. and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Year ended December 31,
	2012			2011			2010
	ThUS$			ThUS$			ThUS$

Statement of comprehensive income

Profit for the year		657,369			554,119			387,271
Components of other comprehensive income before taxes
Gain (loss) from foreign currency translation differences		982			(2,890	)		663
Cash flow hedges
Loss from cash flow hedges		(7,872	)		(1,241	)		(1,474	)
Actuarial gains (losses) from defined benefit plans		711			(918	)		1,020
Other		-			(1,677	)		-
Comprehensive income before income tax		(6,179	)		(6,726	)		209

Income taxes associated with other comprehensive income		1,580			218			251

Other comprehensive income (loss)		(4,599	)		(6,508	)		460

Total comprehensive income		652,770			547,611			387,731

Comprehensive income attributable to
Controlling interests		644,507			539,359			382,215
Non-controlling interest		8,263			8,252			5,516
Total comprehensive income		652,770			547,611			387,731

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

F-9

Sociedad Química y Minera de Chile S.A. and Subsidiaries

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year ended December 31,
	2012 ThUS$			2011 ThUS$			2010 ThUS$

Cash flows from operating activities

Profit for the period		657,369			554,119			387,271
Adjustment to reconcile profit for the period

Adjustment for decreases (increases) in inventories		(167,826	)		(147,238	)		26,545
Adjustment for decreases (increases) in trade receivables		(52,993	)		(135,401	)		(18,266	)
Adjustment for increases in other receivables from operating activities		(57,300	)		(37,393	)		(21,614	)
Adjustment for increases in trade payables		(49,025	)		(44,566	)		(84,731	)
Adjustment for increases in other payables from operating activities		(204,067	)		(72,976	)		(12,083	)
Adjustment for depreciation and amortization		196,158			195,897			143,940
Adjustment for provisions		33,657			23,055			9,927
Adjustment for income tax expense		216,082			179,710			106,029
Adjustment for unrealized foreign currency translation loss		26,787			25,307			5,807
Adjustment for undistributed profit from associates		(24,357	)		(21,808	)		(10,681	)
Other adjustments		67,044			50,689			91,259

Reconciling adjustments		(15,840	)		15,276			236,132

Net cash flows provided by operating activities		641,529			569,395			623,403

Dividends received		15,126			4,299			1,774
Interest paid		(6,449	)		(2,349	)		(6,655	)
Net cash flows provided by operating activities		650,206			571,345			618,522

Cash flows used in investing activities

Cash flows from changes in ownership interest in subsidiaries and investments		961			5,736			-
Payments to acquire interest in joint ventures		(197	)		(4,909	)		(3,500	)
Loans to related parties		(4,000	)		-			-
Proceeds from the sale of property, plant and equipment		2,050			43,231			1,433
Acquisition of property, plant and equipment		(445,984	)		(501,118	)		(335,997	)
Cash advances and loans granted to third parties		(623	)		83			1,275
Net (purchases) sales of short term financial assets		(115,092	)		(59,251	)		99,980
Net cash used in investing activities		(562,885	)		(516,228	)		(236,809	)

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

F-10

Sociedad Química y Minera de Chile S.A. and Subsidiaries

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

			Year ended December 31,
	Note		2012 ThUS$			2011 ThUS$			2010 ThUS$

Cash flows used in financing activities

Proceeds from the issuance of long-term loans				366,502			550,000			564,000
Repayment of loans				(220,000	)		(370,000	)		(632,540	)
Dividends paid				(334,762	)		(277,334	)		(175,539	)
Other cash outflows				(9,437	)		(7,862	)		(10,156	)
Net cash used in financing activities				(197,697	)		(105,196	)		(254,235	)

Net increase (decrease) in cash and cash equivalents before the effect of changes in exchange rates				(110,376	)		(50,079	)		127,478

Effects of exchange rate fluctuations on cash and costs equivalents				(10,263	)		(29,581	)		21,535
Net increase (decrease) in cash and cash equivalents				(120,639	)		(79,660	)		149,013

Cash and cash equivalents at beginning of period				444,992			524,652			375,639

Cash and cash equivalents at end of period		6		324,353			444,992			524,652

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

F-11

Sociedad Química y Minera de Chile S.A. and Subsidiaries

STATEMENT OF CHANGES IN EQUITY

	Share capital		Foreign currency translation difference reserves			Cash flow hedge reserves			Actuarial gains (losses) from defined benefit plans			Other reserves			Subtotal other reserves			Retained earnings			Equity attributable to owners of the Parent			Non- controlling interest			Total
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity at January 1, 2012		477,386		(1,251	)		(10,230	)		(2,954	)		(1,677	)		(16,112	)		1,351,560			1,812,834			51,546			1,864,380

Profit		-		-			-			-			-			-			649,167			649,167			8,202			657,369

Other comprehensive income (loss)		-		921			(6,292	)		711			-			(4,660	)		-			(4,660	)		61			(4,599	)

Comprehensive income (loss)		-		921			(6,292	)		711			-			(4,660	)		649,167			644,507			8,263			652,770

Dividends declared		-		-			-			-			-			-			(324,558	)		(324,558	)		(5,146	)		(329,704	)

Increase (decrease) in transfers and other changes		-		-			-			-			-			-			-			-			-			-

Increase (decrease) in equity		-		921			(6,292	)		711			-			(4,660	)		324,609			319,949			3,117			323,066

Equity as of December 31, 2012		477,386		(330	)		(16,522	)		(2,243	)		(1,677	)		(20,772	)		1,676,169			2,132,783			54,663			2,187,446

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

F-12

Sociedad Química y Minera de Chile S.A. and Subsidiaries

STATEMENT OF CHANGES IN EQUITY

	Share capital		Foreign currency translation difference reserves			Cash flow hedge reserves			Actuarial gains (losses) from defined benefit plans			Other reserves			Subtotal other reserves			Retained earnings			Equity attributable to owners of the Parent			Non- controlling interest			Total
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity at January 1, 2011		477,386		1,530			(9,207	)		(2,036	)		-			(9,713	)		1,155,131			1,622,804			48,016			1,670,820

Profit (loss)		-		-			-			-			-			-			545,758			545,758			8,361			554,119

Other comprehensive income (loss)		-		(2,781	)		(1,023	)		(918	)		(1,677	)		(6,399	)		-			(6,399	)		(109	)		(6,508	)

Comprehensive income (loss)		-		(2,781	)		(1,023	)		(918	)		(1,677	)		(6,399	)		545,758			539,359			8,252			547,611

Dividends declared		-		-			-			-			-			-			(349,329	)		(349,329	)		(3,706	)		(353,035	)

Increase (decrease) from transfers and other changes		-		-			-			-			-			-			-			-			(1,016	)		(1,016	)

Increase (decrease) in equity		-		(2,781	)		(1,023	)		(918	)		(1,677	)		(6,399	)		196,429			190,030			3,530			193,560

Equity as of December 31, 2011		477,386		(1,251	)		(10,230	)		(2,954	)		(1,677	)		(16,112	)		1,351,560			1,812,834			51,546			1,864,380

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

F-13

Sociedad Química y Minera de Chile S.A. and Subsidiaries

STATEMENTS OF CHANGES IN EQUITY

	Share capital		Foreign currency translation difference reserves		Cash flow hedge reserves			Actuarial gains (losses) from defined benefit plans			Subtotal Other reserves			Retained earnings			Equity attributable to owners of the Parent			Non- controlling interest			Total
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity at January 1, 2010		477,386		1,234		(7,984	)		(3,056	)		(9,806	)		951,173			1,418,753			45,697			1,464,450

Restated opening balance of equity		477,386		1,234		(7,984	)		(3,056	)		(9,806	)		951,173			1,418,753			45,697			1,464,450

Profit (loss)		-		-		-			-			-			382,122			382,122			5,149			387,271

Other comprehensive income (loss)		-		296		(1,223	)		1,020			93			-			93			367			460

Comprehensive income (loss)		-		296		(1,223	)		1,020			93			382,122			382,215			5,516			387,731

Dividends declared		-		-		-			-			-			(178,164	)		(178,164	)		-			(178,164	)

Increase (decrease) from transfers and other changes		-		-		-			-			-			-			-			(3,197	)		(3,197	)

Increase (decrease) in equity		-		296		(1,223	)		1,020			93			203,958			204,051			2,319			206,370

Equity as of December 31, 2010		477,386		1,530		(9,207	)		(2,036	)		(9,713	)		1,155,131			1,622,804			48,016			1,670,820

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

F-14

Notes to the consolidated financial statements as of December 31, 2012

Note 1 – Identification and Activities of the Company and Subsidiaries

1.1

Historical background

Sociedad Química y Minera de Chile S.A. (the “Company” or “SQM”) is an open stock corporation organized under the laws of the Republic of Chile, Tax Identification N° 93.007.000-9. The Company was constituted by public deed issued on June 17, 1968 by the Notary Public of Santiago, Mr. Sergio Rodríguez Garcés. Its existence was approved by Decree No. 1,164 on June 22, 1968 by the Ministry of Finance, and it was registered on June 29, 1968 in the Registry of Commerce of Santiago, on page 4,537 N° 1,992. SQM's headquarters are located at El Trovador 4285, Fl. 6, Las Condes, Santiago, Chile. The Company's telephone number is +56 2 425-2000.

The Company is registered with the Securities Registry of the Chilean Superintendence of Securities and Insurance (“SVS”) under No. 0184 dated March 18. 1983 and is subject to the inspection of the SVS.

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; Administración Building w/n - Maria Elena; Administración Building w/n Pedro de Valdivia - María Elena, Former Florencia office w/n - Sierra Gorda, Anibal Pinto 3228 - Antofagasta, Kilometer 1378 5 Norte Highway - Antofagasta, Coya Sur Plant w/n - Maria Elena, kilometer 1760 5 Norte Highway - Pozo Almonte, Pampa Yumbes w/n - Tal-tal.

1.3

Codes of main activities

The codes of the main activities as established by the SVS include codes:

1700 Mining

2200 Chemical products

1300 Investment

1.4

Description of the nature of operations and main activities

The Company´s products are mainly derived from mineral deposits found in northern Chile, where the Company mine and processes caliche ore and brine deposits. The caliche ore in northern Chile is the world’s largest commercially exploited source of natural nitrates and contains the only known nitrate and iodine deposits in the world. The Brine deposits of the Salar de Atacama, a salt-encrusted depression within the Atacama desert in northern Chile, contain high concentrations of lithium and potassium as well as significant concentrations of sulfate and boron.

F-15

Notes to the consolidated financial statements as of December 31, 2012

Note 1 – Identification and Activities of the Company and Subsidiaries (continued)

1.4

Description of the nature of operations and main activities, continued

From the Company´s caliche ore deposits, the Company produces a wide range of nitrate-based products used for specialty plant nutrients and industrial applications, as well as iodine and iodine derivatives. At the Salar de Atacama, it extracts brines rich in potassium, lithium, sulfate and boron in order to produce potassium chloride, potassium sulfate, lithium solutions, boric acid and bischofite (magnesium chloride). The Company produces lithium carbonate and lithium hydroxide at its plant near the city of Antofagasta, Chile, from solutions delivered from the Salar de Atacama. The Company markets all of these products through an established worldwide distribution network, in more than 110 countries worldwide and generates most of its revenue from foreign countries.

The Company´s products are divided into six categories, which are also classified as operating segments: specialty plant nutrition, iodine and derivatives, lithium and derivatives, industrial chemicals, potassium, and other products and services, each of which is described below.

Specialty plant nutrients: This segment is characterized by being closely related to its customers for which employs specialized staff who provide expert advice in best practices for fertilization according to each type of crop, soil and climate. Within this segment, potassium derivative products and specially potassium nitrate have a leading role in their contribution crop to development ensuring improvements in post-crop life, in addition to improving quality, flavor and fruit color. Potassium nitrate, which is sold in multiple formats and as a part of other specialty mixtures, is complemented by sodium nitrate, potassium sodium nitrate, and more than 200 fertilizing mixtures.

Iodine and derivatives: The Company is the largest producer of iodine in the world, which is a product widely used in the pharmaceutical, technology and nutrition industries. Additionally, iodine is used as X-ray contrast media and polarizing film for LCD displays.

Lithium and derivatives: The Company’s lithium is mainly used for manufacturing rechargeable batteries for cell phones, cameras and notebooks. Through the manufacturing of lithium-based products, SQM provides significant materials to adress challenges such as the efficient use of energy and raw materials. Lithium is not only used for rechargeable batteries and in new technologies for electric vehicles, but is also used in industrial applications to lower melting temperature and to help reduce energy costs.

F-16

Notes to the consolidated financial statements as of December 31, 2012

Note 1 – Identification and Activities of the Company and Subsidiaries (continued)

1.4 Description of the nature of operations and main activities, continued

Industrial Chemicals: Industrial chemicals products are used as supplies for a number of production processes. SQM has more than 30 years of experience participating in this segment producing sodium nitrate, potassium nitrate, boric acid and potassium chloride. Industrial nitrates have increased in importance over the last few years due to their use as storage means for thermal energy at solar energy plants, which are widely used in countries such as Spain and the United States in their search for decreasing CO₂emissions.

Potassium: Potassium is a primary essential macro-nutrient, and even though it does not form part of the plant’s structure, has a significant role for developing basic crop functions, improving quality, increasing post-crop life, improving flavor, its amount of vitamins and its physical appearance. This segment also includes potassium chlorate and potassium sulfate, both extracted from the salt layer located under the Salar de Atacama.

Other products and services: Includes revenues from commodities, provision of services, interest, royalties and dividends.

1.5

Other background

Employees

As of December 31, 2012, 2011 and 2010, the Company’s permanent employees were 5,643, 4,902 and 4,327, respectively.

F-17

Notes to the consolidated financial statements as of December 31, 2012

Note 1 – Identification and Activities of the Company and Subsidiaries (continued)

1.5

Other background, continued

Main shareholders

The table below provides certain information about the beneficial ownership of shareholder with more than 5% of outstanding Series A and Series B shares of SQM as of December 31, 2012, 2011 and 2010. The information below is derived from the Company´s records and reports controlled by Central Securities Depository and reported to the SVS and the Chilean Santiago Stock Exchange.

Shareholders as of 12/31/2012	Number of Series A shares with ownership		% of Series A shares			Number of Series B shares with ownership		% of Series B shares B			Total % of shares
Inversiones El Boldo Limitada		44,751,196		31.33	%		17,571,676		14.60	%		23.68	%
Sociedad de Inversiones Pampa Calichera S.A.(*)		44,558,830		31.20	%		9,003,799		7.48	%		20.35	%
The Bank of New York		-		-			46,559,106		38.68	%		17.69	%
Inversiones RAC Chile Limitada		19,200,242		13.44	%		2,699,773		2.24	%		8.32	%
Potasios de Chile S.A.(*)		17,919,147		12.55	%		-		-			6.81	%
Inversiones Global Mining (Chile) Limitada (*)		8,798,539		6.16	%		-		-			3.34	%
Banco Itau on behalf of investors		-		-			4,579,293		3.80	%		1.74	%
Inversiones La Esperanza Limitada		3,693,977		2.59	%		-		-			1.40	%
Banco Santander on behalf of foreign investors		-		-			3,238,105		2.69	%		1.23	%
Banco de Chile for other non residents		-		-			3,082,612		2.56	%		1.17	%

(*) Total Pampa Group 30.50%

Shareholders as of 12/31/2011	Number of Series A shares with ownership		% of Series A shares			Number of Series B shares with ownership		% of Series B shares B			Total % of shares
Inversiones El Boldo Limitada		44,751,196		31.33	%		17,571,676		14.60	%		23.68	%
Sociedad de Inversiones Pampa Calichera S.A.(*)		44,758,830		31.34	%		12,241,799		10.17	%		21.66	%
The Bank of New York		-		-			42,036,912		34.92	%		15.97	%
Inversiones RAC Chile Limitada		19,200,242		13.44	%		2,699,773		2.24	%		8.32	%
Potasios de Chile S.A.(*)		18,179,147		12.73	%		156,780		0.13	%		6.97	%
Inversiones Global Mining (Chile) Limitada (*)		8,798,539		6.16	%		-		-			3.34	%
Banchile Corredores de Bolsa S.A.		136,919		0.10	%		4,890,193		4.06	%		1.91	%
Corpbanca Corredores de Bolsa S.A.		11,189		0.01	%		4,264,250		3.54	%		1.62	%
Inversiones La Esperanza Limitada		3,693,977		2.59	%		-		-			1.40	%
Banco Itau on behalf of investors		-		-			3,693,080		3.07	%		1.40	%

(*) Total Pampa Group 31.97%

F-18

Notes to the consolidated financial statements as of December 31, 2012

Note 1 – Identification and Activities of the Company and Subsidiaries (continued)

1.5

Other background, continued

Main shareholders, continued

Shareholders as of 12/31/2010	Number of Series A shares with ownership		% of Series A shares			Number of Series B shares with ownership		% of Series B shares B			Total % of shares
Sociedad de Inversiones Pampa Calichera S.A.(*)		55,437,977		38,82	%		8,903,774		7.40	%		24.45	%
Inversiones El Boldo Limitada		44,746,513		31.33	%		17,576,359		14.60	%		23.68	%
The Bank of New York		-		-			45,345,530		37.67	%		17.23	%
Inversiones RAC Chile Limitada		19,200,242		13.44	%		2,699,773		2.24	%		8.32	%
Inversiones Global Mining (Chile) Limitada (*)		13,798,539		9,66	%		-		-			5.24	%
Banchile Corredores de Bolsa S.A.		131,914		0.09	%		5,178,641		4.30	%		2.02	%
Larrain Vial S.A. Corredora de Bolsa		2,549,382		1.79	%		2,369,576		1.97	%		1.87	%
Inversiones La Esperanza Limitada		3,693,977		2.59	%		-		—			1.40	%
AFP Provida S.A.							3,109,256		2.58	%		1.18	%
Banco Itau on behalf of investors		-		-			2,874,819		2.39	%		1.09	%

(*) Total Pampa Group 29.69%

F-19

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Bases of presentation for consolidated financial statements (continued)

2.1

Financial statements

The consolidated financial statements of Sociedad Química y Minera de Chile S.A. and subsidiaries, have been prepared in accordance with International Financial Reporting Standards (IFRS) and represent the full, explicit issued by the International Accounting Standards Board (IASB).

The accounting policies used in the preparation of these consolidated Financial Statements are described below and comply with each IFRS in force at their date of presentation.

2.2

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for the following material items:

inventories are recorded at the lower of cost and net realizable value;

other current and non-current financial liabilities are carried at amortized cost;

financial derivatives are presented at fair value; and

staff severance indemnities and pension commitments are recorded at actuarial value.

F-20

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Bases of presentation for consolidated financial statements (continued)

2.3

Accounting pronouncements

At the date of these consolidated financial statements, the following accounting pronouncements have been issued by the IASB for which term application date is not yet effective.

	Standards	Mandatory application for periods beginning:
IAS 19	Employee Benefits	January 1, 2013
IAS 27	Separate Financial Statements	January 1, 2013
IAS 28	Associates and Joint Ventures	January 1, 2013
IFRS 9	Financial Instruments	January 1, 2013
IFRS 10	Consolidated financial statements	January 1, 2013
IFRS 11	Joint arrangements	January 1, 2013
IFRS 12	Disclosure of Interests in Other Entities	January 1, 2013
IFRS 13	Fair Value Measurement	January 1, 2013

IAS 19 Revised “Employee Benefits”

Issued in June 2011, supersedes IAS 19 (1998). This revised standard amends the recognition and measurement of defined benefit plan expenses and termination benefits. Additionally, it includes amendments to disclosures of all employee benefits.

IAS 27 “Separate Financial Statements”

Issued in May 2011, supersedes IAS 27 (2008). The scope of this standard is restricted solely to separate financial statements, given that the aspects linked to the definition of control and consolidation were removed and included in IFRS 10. Its early adoption is allowed together with IFRS 10, IFRS 11 and IFRS 12 and the amendment to IAS 28.

IAS 28 "Associates and Joint Ventures"

Issued in May 2011, supersedes IAS 28 (2003). It includes the requirements for associates and joint ventures that have to be equity accounted following the issue of IFRS 11. Its early adoption is allowed together with IFRS 10, IFRS 11 and IFRS 12 and the amendment to IAS 27.

IFRS 9 “Financial Instruments”

Issued in December 2009, amends the classification and measurement of financial assets.

Subsequently, this standard was amended in November 2010 to include the treatment and classification of financial liabilities. Early adoption is permitted.

IFRS 10 “Consolidated Financial Statements”

Issued in May 2011, supersedes SIC 12 “Consolidation – Special Purpose Entities” and portions of IAS 27 “Consolidated Financial Statements”. It establishes clarifications and new parameters for the definition of control, as well as the preparation of consolidated financial statements. Its early adoption is permitted together with IFRS 11, IFRS 12 and amendments to IAS 27 and IAS 28.

F-21

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Bases of presentation for consolidated financial statements (continued)

2.3

Accounting pronouncements, continued

IFRS 11 “Joint Arrangements”

Issued in May 2011, supersedes IAS 31 “Interests in Joint Ventures” and SIC 13 “Joint Controlled Entities”. Its amendments include the elimination of the concept of jointly-controlled assets and the possibility of proportional consolidation of entities under common control. Its early adoption is permitted together with IFRS 10, IFRS 12 and amendments to IAS 27 and IAS 28.

IFRS 12 “Disclosure of Interests in Other Entities”

Issued in May 2011, is applicable for entities with investments in subsidiaries, joint ventures and associates. Its early adoption is permitted together with IFRS 10, IFRS 11 and amendments to IAS 27 and IAS 28.

IFRS 13 “Fair Value Measurement”

Issued in May 2011, gathers in one single standard the method for measuring fair value of assets and liabilities and disclosures required for this purpose and incorporates new concepts and clarifications for measurement.

	Improvements and Amendments	Mandatory application for:
IAS 1	Presentation of Financial Statements	July 1, 2012
IFRS 7	Financial Instruments: Information to be disclosed	January 1, 2013
IAS 32	Financial Instruments: Presentation	January 1, 2014
IAS 16	Property, Plant and Equipment	January 1, 2013
IAS 32	Financial Instruments: Presentation	January 1, 2013
IAS 34	Intermediate Financial Information	January 1, 2013
IFRS 10	Consolidated Financial Statements	January 1, 2013
IFRS 11	Joint Agreements	January 1, 2013
IFRS 12	Disclosures of participation in other entities	January 1, 2013

IAS 1 “Presentation of Financial Statements”

Issued in June 2011, the main amendment is that it requires that items in Other Comprehensive Income must be classified and grouped by assessing whether they will be reclassified to subsequent periods. Early adoption of the new classification requirements is permitted.

IFRS 7 “Financial Instruments: Information to be disclosed”

Issued in December 2011. Improves disclosures of compensation of financial assets and liabilities, in order to increase the convergence between IFRS and Generally Accepted Accounting Principles in the United States. These disclosures are centered on quantitative information related to financial instruments, which are included in the consolidated financial statements. Its early adoption is permitted.

IAS 32 “Financial Instruments: Presentation”

Issued in December 2011. Explains the requirements for the compensation of financial assets and liabilities. Specifically, it indicates that the right to compensation must be available as of the date of the financial statements and not dependent on a future event. The right to compensation also must be legally binding for the counterpary in the normal course of the business, as well as in cases of non payment, insolvency, or bankruptcy. Its early adoption is permitted.

F-22

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Bases of presentation for consolidated financial statements (continued)

IAS 16 “Property, Plant, and Equipment”

Issued in May 2012. Clarifies that spare parts and service equipment should be classified as Property, Plant, and Equipment, instead of inventories, whenever it meets the definition of Property, Plant, and Equipment.

IAS 32 “Presentation of Financial Instruments”

Issued in May 2012. Clarifies that the treatment of income taxes related to equity distributions and transaction costs.

IAS 34 “Intermediate Financial Information”

Issued in May 2012. Clarifies the requirements to present assets and liabilities by segments, during interim periods, confirming the same requirements applicable to the annual financial statements.

IFRS 10 Consolidated Financial Statements, IFRS 11 “Joint Agreements”, IFRS 12 Disclosures of participation in other entities”

Issued in June 2012. Clarifies that it is necessary to apply these standards on the first day of the annual period in which the regulations are adopted. Therefore, it could be necessary to make modifications to comparative information presented in such periods, if the evaluation of control over investments results in that recognized according to IAS 27/SIC 12.

Management is currently evaluating the adoption of the standards, amendments and interpretations described above; however, they are not expected to have a significant impact on the consolidated financial statements.

F-23

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Basis of presentation for consolidated financial statements (continued)

2.4

Transactions in foreign currency

(a)

Functional and presentation currency

The Company’s consolidated financial statements are presented in United States Dollars (“U.S. Dollars” or “US$”), which is the Company’s functional and presentation currency and is the currency of the primary economic environment in which it operates.

Consequently, the term foreign currency is defined as any currency other than the U.S. Dollar.

The conversion of the financial statements of foreign subsidiaries with functional currency other than the U.S. Dollars is performed as follows:

Assets and liabilities using the exchange rate prevailing on the closing date of the consolidated financial statements.

Statement of income account items using average exchange rates for the year.

Equity accounts are stated at the historical exchange rate on the transaction date.

Foreign currency translation differences which arise from the conversion of financial statements of subsidiaries are recorded in the account “Foreign currency translation differences" within equity.

(b)

Basis of conversion

Domestic subsidiaries:

Assets and liabilities denominated in Chilean Pesos and other currencies other than U.S. Dollar as of December 31, 2012 and December 31, 2011 have been translated to U.S. Dollars at the exchange rates prevailing on those dates. The corresponding Chilean Pesos were converted at Ch$479,96, Ch$519.20 and Ch$468.01 per US$1.00 as of December 31, 2012, 2011 and 2010 respectively.

The values of the UF (a Chilean Peso-denominated, inflation-indexed monetary unit) used to convert the UF denominated assets and liabilities as of December 31, 2012 amounted to Ch$22,840.75 (US$47,59), Ch$22,294.03 (US$42.94) and Ch$21,455.55 (US$45.84) as of December 31, 2012, 2011 and 2010 respectively.

F-24

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Basis of presentation for consolidated financial statements (continued)

2.4

Transactions in foreign currency, (continued)

Foreign subsidiaries

The exchange rates used to translate the monetary assets and liabilities expressed in foreign currencies at the closing date of each period in respect to the U.S. Dollar are as follows:

	12/31/2012		12/31/2011		12/31/2010
	US$		US$		US$

Brazilian Real		2.04		1.88		1.66
New Peruvian Sol		2.75		2.77		2.81
Argentinean Peso		4.92		4.30		3.98
Japanese Yen		86.58		77.74		81.49
Euro		0.76		0.77		0.75
Mexican Peso		12.99		13.98		12.38
Australian Dollar		1.05		1.03		1.01
Pound Sterling		0.62		0.64		0.64
South African Rand		8.47		8.10		6.63
Ecuadorian Dollar		1.00		1.00		1.00
Chilean Peso		479.96		519.20		468.01
UF		47.59		42.94		45.84

(c)

Transactions and balances

Non-monetary transactions and balances denominated in a currency other than the U.S. Dollar are translated using the exchange rate in at the transaction date. Monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate of the functional currency prevailing at the closing date of the Consolidated Statement of Financial Position. All differences are recorded to the Statement of Income with the exception of all monetary items that provide an effective hedge for a net investment in a foreign operation. These items are recognized in Other Comprehensive Income upon the disposal of the investment, at which time they are recognized in the Statement of Income. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in Other Comprehensive Income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

F-25

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Basis of presentation for consolidated financial statements (continued)

2.4

Transactions in foreign currency, continued

(d)

Group entities

The profit or loss, assets and liabilities of all entities with a functional currency other than the U.S. Dollar are translated to the presentation currency as follows:

Assets and liabilities are translated at the closing date exchange rate as of the date of the Consolidated Statement of Financial Position.

Income and expenses are translated at average exchange rates for the year.

All resulting foreign currency exchange differences are recognized in the foreign currency translation difference reserve in Equity.

In consolidation, foreign currency exchange differences which arise from the conversion of a net investment in foreign entities are recorded Equity (other reserves). At the disposal date, these exchange differences are recognized in the Statement of Comprehensive Income as part of the gain or loss from the sale.

2.5

Basis of consolidation

(a)

Subsidiaries

Subsidiaries are all entities over which the Company has the ability to govern financial and operating policies generally, accompanying a shareholding of more than one half of the voting rights. The Company also assesses the existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstance where the size of the group’s voting rights relative to the size and dispersion of holding of other shareholders give the Company power to govern the financial and operating policies.

Subsidiaries are consolidated from the date in which control is transferred to the Company and are excluded from consolidation on the date in which this control ceases to exit.

Intercompany transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from intercompany transactions that are recognized in assets are also eliminated. All subsidiaries apply the same accounting policies as described in Note 3.

Non-controlling interest represent the portion of a subsidiary is net assets and operating results not owned directly or indirectly by the parent company.

F-26

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Basis of presentation for consolidated financial statements (continued)

2.5

Basis of consolidation, continued

Companies included in consolidation:

				Ownership interest
		Country of	Functional	12/31/2012						12/31/2011		12/31/2010
TAX ID No.	Foreign subsidiaries	origin	currency	Direct		Indirect		Total		Total		Total
Foreign	Nitratos Naturais Do Chile Ltda.	Brazil	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	Nitrate Corporation Of Chile Ltd.	United Kingdom	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	SQM North America Corp.	USA	US$		40.0000		60.0000		100.0000		100.0000		100.0000
Foreign	SQM Europe N.V.	Belgium	US$		0.8600		99.1400		100.0000		100.0000		100.0000
Foreign	Soquimich S.R.L. Argentina	Argentina	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	Soquimich European Holding B.V.	The Netherlands	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	SQM Corporation N.V.	Dutch Antilles	US$		0.0002		99.9998		100.0000		100.0000		100.0000
Foreign	SQI Corporation N.V.	Dutch Antilles	US$		0.0159		99.9841		100.0000		100.0000		100.0000
Foreign	SQM Comercial De México S.A. De C.V.	Mexico	US$		0.0013		99.9987		100.0000		100.0000		100.0000
Foreign	North American Trading Company	USA	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	Administración Y Servicios Santiago S.A. De C.V.	Mexico	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	SQM Perú S.A.	Peru	US$		0.9800		99.0200		100.0000		100.0000		100.0000
Foreign	SQM Ecuador S.A.	Ecuador	US$		0.0040		99.9960		100.0000		100.0000		100.0000
Foreign	SQM Nitratos Mexico S.A. De C.V.	Mexico	US$		0.0000		51.0000		51.0000		51.0000		51.0000
Foreign	SQMC Holding Corporation L.L.P.	USA.	US$		0.1000		99.9000		100.0000		100.0000		100.0000
Foreign	SQM Investment Corporation N.V.	Dutch Antilles	US$		1.0000		99.0000		100.0000		100.0000		100.0000
Foreign	SQM Brasil Limitada	Brazil	US$		2.7900		97.2100		100.0000		100.0000		100.0000
Foreign	SQM France S.A.	France	US$		0.0000		100.0000		100.0000		100.0000		100.0000

F-27

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Basis of presentation for consolidated financial statements (continued)

2.5

Basis of consolidation, continued

Companies included in consolidation:

				Ownership interest
		Country of	Functional	12/31/2012						12/31/2011		12/31/2010
TAX ID No.	Foreign subsidiaries	origin	currency	Direct		Indirect		Total		Total		Total
Foreign	SQM Japan Co. Ltd.	Japan	US$		1.0000		99.0000		100.0000		100.0000		100.0000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	US$		1.6700		98.3300		100.0000		100.0000		100.0000
Foreign	SQM Oceania Pty Limited	Australia	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	Rs Agro-Chemical Trading A.V.V.	Aruba	US$		98.3333		1.6667		100.0000		100.0000		100.0000
Foreign	SQM Indonesia S.A.	Indonesia	US$		0.0000		80.0000		80.0000		80.0000		80.0000
Foreign	SQM Virginia L.L.C.	USA	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	SQM Italia SRL	Italy	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	Comercial Caimán Internacional S.A.	Cayman Islands	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	SQM Africa Pty.	South Africa	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	SQM Lithium Specialties LLC	USA	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	SQM Iberian S.A.(a)	Spain	US$		0.0000		100.0000		100.0000		100.0000		66.6750
Foreign	Iodine Minera B.V.	The Netherlands	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	SQM Agro India Pvt. Ltd.	India	US$		0.0000		100.0000		100.0000		100.0000		100.0000
Foreign	SQM Beijing Commercial Co. Ltd.	China	US$		0.0000		100.0000		100.0000		100.0000		100.0000
96.801.610-5	Comercial Hydro S.A	Chile	US$		0.0000		60.6383		60.6383		60.6383		60.6383
96.651.060-9	SQM Potasio S.A.	Chile	US$		99.9999		0.0000		99.9974		99.9974		99.9974

F-28

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Basis of presentation for consolidated financial statements (continued)

2.5

Basis of consolidation, continued

Companies included in consolidation:

				Ownership interest
		Country of	Functional	12/31/2012						12/31/2011		12/31/2010
TAX ID No.	Foreign subsidiaries	origin	currency	Direct		Indirect		Total		Total		Total
96.592.190-7	SQM Nitratos S.A.	Chile	US$		99.9999		0.0001		100.0000		100.0000		100.0000
96.592.180-K	Ajay SQM Chile S.A.	Chile	US$		51.0000		0.0000		51.0000		51.0000		51.0000
86.630.200-6	SQMC Internacional Ltda.	Chile	Chilean peso		0.0000		60.6381		60.6381		60.6381		60.6381
79.947.100-0	SQM Industrial S.A.	Chile	US$		99.0470		0.9530		100.0000		100.0000		100.0000
79.906.120-1	Isapre Norte Grande Ltda.	Chile	Chilean peso		1.0000		99.0000		100.0000		100.0000		100.0000
79.876.080-7	Almacenes y Depósitos Ltda.	Chile	Chilean peso		1.0000		99.0000		100.0000		100.0000		100.0000
79.770.780-5	Servicios Integrales de Tránsitos y Transferencias S.A.	Chile	US$		0.0003		99.9997		100.0000		100.0000		100.0000
79.768.170-9	Soquimich Comercial S.A.	Chile	US$		0.0000		60.6383		60.6383		60.6383		60.6383
79.626.800-K	SQM Salar S.A.	Chile	US$		18.1800		81.8200		100.0000		100.0000		100.0000
78.602.530-3	Minera Nueva Victoria Ltda.(b)	Chile	US$		-		-		-		100.0000		100.0000
78.053.910-0	Proinsa Ltda.	Chile	Chilean peso		0.0000		60.5800		60.5800		60.5800		60.5800
76.534.490-5	Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	Chile	Chilean peso		0.0000		100.0000		100.0000		100.0000		100.0000
76.425.380-9	Exploraciones Mineras S.A.	Chile	US$		0.2691		99.7309		100.0000		100.0000		100.0000
76.064.419-6	Comercial Agrorama Ltda. (c)	Chile	Chilean peso		0.0000		42.4468		42.4468		42.4468		42.4468
76.145.229-0	Agrorama S.A. (d)	Chile	Chilean peso		0.0000		60.6377		60.6377		60.6377		-

(a)

On December 14, 2011, Fertilizantes Naturales S.A. changed its legal name to SQM Iberian S.A.

(b)

Effective November 30, 2012, this entity was merged with SQM Potasio S.A.

(c)

Comercial Agrorama Ltda. is consolidated as the Company has control through its subsidiary Soquimich Comercial S.A.

(d)

This subsidiary was incorporated on April 7, 2011.

F-29

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Basis of presentation for consolidated financial statements (continued)

2.5

Basis of consolidation, continued

(b)

Equity accounted investments

Interests in companies in which control is exercised together with another company (joint ventures) or in which the Company has significant influence (associated companies) are accounted for using the equity method. Significant influence is assumed to exist when the Company has interest exceeding 20% of the investee's equity. Under the equity method, the investment is initially recognize at cost, and the carrying amount is increased or decreased to recognize the Company’s share of the profit or loss of the investee after the acquisition date. The Company’s investments include goodwill identified upon acquisition.

The Company’s share of post acquisition profit or loss is recognized in the Statement of Income. When the Company’s share of losses in an investee equals or exceeds its interest, the Company does not recognize further losses unless it has incurred a legal or constructive obligations or made payments on behalf of the investee.

The Company determines at each reporting date whether there is any objective evidence that the investments are impaired. If impaired, the Company recognizes an impairment loss in the Statement of Income as the difference between the recoverable amount of the investee and its carrying value.

Unrealized profits and losses resulting from transactions with investees are recognized in the consolidated financial statements to the extent of unrelated investor’s interest in the investee. Unrealized losses are eliminated unless the transaction provides evidence of loss from impairment of the assets transferred. The reporting dates and accounting policies of the investees are consistent with those adopted by the Company.

2.6

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (“CODM”). The CODM, who is responsible for allocating reserves and assessing performance of the operating segments, has been identified as a committee comprised of the Chief Executive Officer, and the Executive Vice President & Chief Operating Officer. The following operating segments are based on the information provided to the CODM and the organizational structure of the Company:

-	Specialty plant nutrients
-	Industrial chemicals
-	Iodine and derivatives
-	Lithium and derivatives
-	Potassium
-	Other products and services

F-30

Notes to the consolidated financial statements as of December 31, 2012

Note 2 - Basis of presentation for consolidated financial statements (continued)

2.7

Significant accounting judgments, estimates and assumptions

Significant accounting judgments, estimates and assumptions by management to prepare these consolidated fiancial statements include:

-	The useful lives of tangible and intangible assets and their residual values.
-	Impairment evaluations of certain assets, including trade and other accounts recivaible.
-	Assumptions used for impairment the actuarial calculation of liabilities for employee pensions and staff severance indemnities.
-	Inventory provisions allowances on slow-moving obsolete in inventories.
-	Future costs for and the timing of the closure of mining facilities.
-	The determination of the fair value of certain financial and non-financial assets and derivative financial instruments.
-	The determination and allocation of fair values in business combinations.

Although these estimates have been made considering information available as of the date of preparation of these consolidated financial statements, it is possible that future events may require their modification. Changes would be recorded prospectively, recognizing the effects of any changes in estimates in future consolidated financial statements. There have been no significant changes in the methodology or assumptions used in these estimates.

F-31

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies

3.1

Cash and cash equivalents

Cash equivalents consist of short-term, highly liquid investments that are readily convertible into known amounts of cash and are subject to low risk of change in value, with original maturities of three months or less from the date of acquisition.

3.2

Financial assets

The Company classifies its financial assets under the following categories: at fair value through profit or loss, loans and trade receivables, financial assets held-to-maturity and financial assets available-for-sale. The classification depends on the purpose for which financial assets were acquired. Management determines the classification of its financial assets at the time of initial recognition.

At each reporting date management assesses whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of assets is deemed to be impaired if and only if there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset or group of assets (a “loss event”) and that loss event or events has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

(a)

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it is acquired mainly for the purpose of being sold in the short-term. Derivatives are also classified as acquired for trading unless they are designated as hedges. Assets under this category are classified as current assets if expected to be settled within 12 months, and their changes in fair value are directly recognized in profit or loss.

(b)

Loans and trade receivables

Loans and trade receivables are non-derivative financial assets with fixed or determinable payments not quoted in any active market. These are included in current assets, except for maturities greater than 12 months from the end of the reporting period, which are classified as non-current assets. The Company’s loans and receivables consist of “trade and other accounts receivable” and “cash and cash equivalents” in the Statement of Financial Position (notes 6.1 and 9.2).

(c)

Financial assets held to maturity

Financial assets held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities which management has the positive intention and ability of holding to maturity. If a significant amount of financial assets held to maturity were to be sold, the full category would be reclassified as available for sale. Assets in this category are stated at amortized cost.

F-32

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies (continued)

3.3

Financial derivatives and hedge transactions

Derivatives are recognized initially at fair value as of the date in which the derivative contract is entered into and subsequently remeasured at fair value. The method for recognizing the resulting gain or loss depends on whether the derivative has been designated as a hedge instrument and if so, the nature of the item being hedged. The Company designates certain derivatives as either:

(a)

Fair value hedges of recognized assets and liabilities or firm commitments (fair value hedges).

(b)

Hedging a forecasted risk associated with a recognized asset or liability or a highly possible forecasted transaction (cash flow hedge).

At hedge inception, the Company documents the relationship between hedging instruments and hedged items, as well as their risk management objectives, and the strategy for undertaking different hedging transactions. The Company also documents its evaluation both at hedge inception and at each reporting period, whether derivatives used in hedging transactions are highly effective in offsetting changes in fair values or in cash flows of hedged items.

The fair value of derivative instruments used for hedging purposes is shown in Note 10.3. (Hedge assets). Movements in the cash flow hedge reserve are classified as a non-current asset or liability if the remaining hedged item is more than 12 months, and as a current asset or liability if the remaining maturity of the hedged item is less than 12 months. Other derivatives are classified as a current asset or current liability, with the change in their fair value recognized directly in profit or loss.

(a)

Fair value hedge

Changes in the fair value derivatives that are designated and qualify as fair value hedges are recorded to profit or loss, as applicable. The change in the fair value of the hedged asset or liability attributable to hedged risk is also recognized in profit or loss.

For fair value hedges related to assets or liabilities recorded at amortized cost, the adjustment of the fair value is amortized against profit or loss during the period through maturity. Any adjustment to the carrying value of a hedged financial instrument for which the effective rate is used is amortized to profit or loss at its fair value attributable to the hedged risk.

F-33

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies (continued)

If the hedge no longer meets the criteria for hedge accounting, the fair value not amortized is immediately recognized in profit or loss.

(b)

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other reserves within equity. The gain or loss related to the ineffective portion is immediately recognized in profit or loss.

Amounts accumulated in equity are reclassified to profit or loss in periods when the hedged item affects profit or loss, such as when the hedged interest income or expense is recognized, or when a forecasted transaction occurs. When the hedged item is the cost of a non-financial asset or liability, amounts recorded in equity are transferred to the initial carrying value of the non-financial asset or liability.

Should the expected firm transaction or commitment no longer be expected to occur, amounts previously recognized in equity are transferred to profit or loss. If a hedge instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any amounts previously recognized in equity are maintained in equity until the expected firm transaction is ultimately recognized in profit or loss.

3.4

Trade and other receivables

Trade and other receivables relate to non-derivative financial assets with fixed and determinable payments and are not quoted in any active market. These receivables arise from sales involving products and services to customers.

These assets are initially recognized at their fair value, which is equivalent to their face value, and subsequently at amortized cost according to the effective interest rate method less a provision for impairment loss. An allowance for impairment loss is established for trade receivables when there is objective evidence that the Company will not be able to collect amounts which are owed to it according to the original terms of receivables.

3.5

Inventory

Inventories are stated at the lower of cost and net realizable value. Cost is determined based on the weighted average method. The cost of finished goods and products-in-process includes direct costs of materials, direct labor, and other direct costs and related overheads incurred to transform raw materials into finished products, including expenses incurred in transporting inventories to their current location and condition. Net realizable value represents is the estimated sales price in the ordinary course of business less all estimated costs expected to be incurred in the sales and distribution process.

The Company evaluates the net realizable value of inventories at the end of each reporting period, recording a provision with a charge to income when circumstances are warranted. When the circumstances previously causing the reserve cease to exist, or when there is clear evidence of an increase in the net realizable value due to a change in the economic circumstances or prices, the previous estimate is modified accordingly. Provisions on the Company's inventories are made based on a technical studies covering the different variables affecting finished products such as density and humidity, among other factors.

F-34

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies (continued)

Raw materials, and supplies for production inventories are recorded at the lower of acquisition cost or market value. Acquisition cost is calculated according to the weighted average cost method.

3.6

Intangible assets

Intangible assets consist of goodwill, water rights, rights of ways related to electric lines, and computer software licenses.

(a)

Goodwill

Goodwill represents the excess of the consideration transferred over the net fair value of assets acquired and liabilities assumed in the acquisition of subsidiaries.

For purposes of impairment testing, goodwill acquired in a business combination is allocated to each cash generating unit “CGU”, which is expected to benefit from the synergies of the combination. Each CGU to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.

Goodwill impairment reviews are conducted annually, or more frequently if events or changes in circumstances indicate a potential for impairment. The carrying value of goodwill is compared to its recoverable amount, which is the higher of value in use and the fair valueless cost to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed.

(b)

Water rights

Acquired water rights represent water from natural sources and are recorded at acquisition cost. Depending on the contractual terms, water rights can be granted on a perpetual basis or be subject to a fixed term. Water rights with a contractual fixed term are amortized over the life of the agreement. Water rights granted on a perpetual basis are not amortized; however, they are subject to an annual impairment assessment.

(c)

Right of way for electric lines

As required for the operation of industrial plants, the Company acquires rights of ways in order to install wires for electric lines on third party land. Amounts paid are capitalized and charged to income according to their contractual lives.

F-35

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies (continued)

(d)

Computer software

Acquired computer software licenses are capitalized based on initial acquisition costs and costs incurred to prepare them for their intended use. These costs are amortized over their estimated useful lives.

Expenses related to internally developed IT programs are recognized when incurred. Costs directly attributable to the development of unique and identifiable IT programs are recognized as intangible assets to the extent such IT will generate future economic benefits. IT development costs are amortized over their estimated useful lives, which does generally not exceed three years.

3.7

Property, plant and equipment

Property, plant and equipment assets are stated at acquisition cost, net of accumulated depreciation, amortization and impairment losses that they might have experienced. Acquisition cost includes the following when applicable:

(a)

Interest expense incurred during the construction period directly attributable to the acquisition, construction or production of qualifying assets, includes those that require a substantial period prior to being ready for their intended use. The interest rate used to capitalize interest corresponds to the project’s specific financing or, should this not exist, the average borrowing rate of Company. Interest expenses are not capitalized for periods which exceed the normal term of acquisition, construction or installation of the asset, such as in the case of delays, interruptions, or temporary suspension of the project due to technical, financial, or other issues.

(b)

Future costs the Company will incur related to the closure of its facilities at the end of their useful life are recorded at the present value of expected future disbursements required to settle the obligation.

Construction-in-progress is transferred to property, plant and equipment in operation once the assets are available for their intended use and the related depreciation and amortization begins on that date.

Extension, modernization or improvement costs that represent an increase in productive, capacity or efficiency, or an extension of the useful lives of property, plant and equipment are capitalized as a an increase in the cost of the related assets. All maintenance, preservation and repair expenses are charged to expense as incurred.

Property, plant and equipment components are depreciated using the straight-line method over estimated useful lives. When components of property, plant and equipment have different useful lives, these components are recorded and depreciated separately. The useful lives are reviewed annually and revised as necessary. The useful lives used for the depreciation and amortization of assets included in property, plant and equipment are presented below.

F-36

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies (continued)

Types of property, plant and equipment	Life minimum		Life maximum

Buildings		3		60
Plant and equipment		3		35
Information technology equipment		3		10
Fixtures and fittings		3		35
Moto vehicles		5		10
Other property, plant and equipment		2		30

Gains or losses 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 net sales value and its carrying value.

The Company obtains property rights and mining concessions from the Chilean Ministry of Mining. Property rights are generally obtained through payment of mining licenses and minor registration expenses, along with annual license fees. Annual license fees are recorded as prepaid expenses and amortized over their twelve month effective period. Amounts attributable to mining concessions acquired from third parties, which are not from the Chilean State, are recorded at their acquisition cost.

3.8

Impairment of non-financial assets

Assets subject to depreciation and amortization are reviewed for impairment whenever events or changes circumstances indicate that the carrying value may not be recoverable. For purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows. An impairment loss is recognized for the excess of the carrying value of the asset over its recoverable amount. The recoverable amount of an asset is the higher between the fair value of an asset or CGU, less selling costs and its value in use. Assets other than goodwill, that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

3.9

Financial liabilities

The Company classifies its financial liabilities under the following categories: at fair value through profit or loss, trade payables, interest-bearing loans, or derivatives designated as hedging instruments. Management determines the classification of its financial liabilities at the time of initial recognition.

Financial debt obligations are recorded at face value and as non-current when their maturity is greater than 12 months and as current when maturity is less than twelve months. Interest expenses is recognized in profit and loss when incurred.

Financial liabilities are derecognized when the obligation is repaid, settled or expires.

F-37

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies (continued)

(a)

Financial liabilities at fair value through profit or loss

Financial liabilities are classified at fair value when these are held for trading or designated in their initial recognition at fair value through profit or loss. This category includes derivative instruments not designated for hedge accounting.

(b)

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from to suppliers. Trade payables are initially recognized at fair value and are subsequently stated at their amortized cost using the effective interest rate method.

(c)

Interest-bearing loans

Loans are initially recognized at fair value and are subsequently stated at amortized cost using the effective interest rate method. Amortized cost is calculated considering any premium or discount from the acquisition and includes transaction costs which are an integral part of the effective interest rate.

3.10

Current and deferred taxes

Corporate income tax for the year is determined as the aggregate of current taxes from all of the consolidated companies. Current taxes are calculated on the basis of the tax laws enacted or substantively enacted as of the Statement of Financial Position in the countries where the Company and its subsidiaries operate and generate taxable income.

Deferred tax is recognized using the liability method on temporary differences arising between the tax basis for assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income taxes are calculated using the tax rates expected to be applicable when the assets are realized or the liabilities are settled.

In conformity with current Chilean 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.

Tax on companies and variations in deferred tax assets or liabilities that are not the result of business combinations are recorded in 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.

F-38

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies (continued)

The carrying value of deferred tax assets has been reviewed and reduced to the extent there will not be sufficient taxable income to allow the recovery of all or a portion of the deferred tax assets. Likewise, deferred tax assets that are not recognized were evaluated and not recognized if it was not more likely than not, that future taxable income will not allow for recovery of the deferred tax asset.

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.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset tax assets against tax liabilities and the deferred tax is related to the same tax entity and authority, and there is intention to settle the balances on a net basis.

3.11

Obligations related to employee termination benefits and pension commitments

Obligations to the Company’s employees are established in accordance with agreements in force and formalized through collective employment agreements and individual employment contracts. In the case of certain United States employees, benefit obligations are in accordance with a defined benefit pension plan, which was terminated in 2002. Liabilities for these obligations are recognized in the Statement of Financial Position using values established by actuarial calculations, which consider various assumptions including mortality rates, employee turnover, interest rates, retirement dates, future salary increases, and inflation.

Actuarial gains and losses generated by changes in previously defined obligations are directly recorded in profit or loss for the year. Actuarial gains and losses and gains resulting from differences between the estimate and actual behavior of the actuarial assumptions are recorded in equity in other comprehensive in the period in which they arise.

3.12

Share based payments

The Company has a cash settled shared based payment plan whereby executives and senior management receive cash payments based on changes in the Company’s share price over a vesting period. The fair value of the vested portion of the awards is recorded as a liability and premeasured each reporting period using a Black Scholes model. Changes in the fair value of the awards are recorded directly to profit and loss for the period.

F-39

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies (continued)

3.13

Other provisions

Provisions are recognized for environmental restoration, legal claims and other matters when the Company has a present legal or constructive obligation as the result of a past event; it is probable that resources must be used to settle the obligation; and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value of the expenditures expected to required to settle the obligation using pretax discount rate that reflects the liability’s specific risks

The increase in the provision over time is recognized as a finance cost.

3.14

Revenue recognition

Revenue includes the fair value of considerations received or receivable for the sale of goods and services. Revenue is presented net of value added tax and rebates and discounts. Revenue is recognized when its amount can be reliably measured, it is probable that the future economic benefits will flow to the Company, and the specific conditions for each type of revenue related activity have been met, as follows:

(a)

Sale of goods

Sales of goods are recognized when the Company has delivered products to the customer, the customer has total discretion on the distribution channel and the price at which products are sold 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 customers when the related risks of obsolescence and loss have been transferred to the customer and the customer has accepted products in accordance with the conditions established in the sale, the acceptance period has ended, or 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 other credits 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)

Sales of services

Revenue associated with the rendering of services consist primary of rental income and related services provided, and is recognized considering the degree of completion of the service as of each reporting date provided that the results can be reliably estimated.

F-40

Notes to the consolidated financial statements as of December 31, 2012

Note 3 – Significant accounting policies (continued)

3.15

Exploration expenses

Exploration expenses are capitalized pending determination of the economic viability. Exploration expenses related to non economically minable reserves are charged to expense. Exploration expenses associated with the future development of economically mineable mineral reserves are capitalized as other non-financial assets until such time as mined. Expenses associated with mineral reserves in development are reclassified to Inventory and amortized according to the estimated mineral content.

3.16

Research and development costs

Research and development costs are expensed in the period incurred, with the exception of property, plant and equipment acquired for use in research and development activities.

3.17

Environmental expenditures

Amounts incurred for environmental protection and improvement as recorded as environmental expenses in profit and loss. The cost of facilities, machinery and equipment used for the same purpose are considered property, plant and equipment and capitalized as such.

3.18

Minimum dividend

According to the Chilean Corporations Act, a publicly traded corporation must pay dividends according to the policy decided at the General Shareholders' Meeting each year, with a minimum of 30% of the net income for the year if the corporation does not have unabsorbed accumulated deficit from prior years, unless it otherwise decided by unanimous vote of the shareholders.

3.19

Earnings per share

Basic earnings per share is calculated by dividing profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the year. The Company has not conducted any type of operation, which would give rise to a potential dilutive effect on its earnings per share.

There have been no significant changes in accounting policies during 2012.

F-41

Notes to the consolidated financial statements as of December 31, 2012

Note 4 – Financial risk management

4.1

Risk Management Policy

The Financial Risk Management Policy of the Company is oriented towards safeguarding the stability and sustainability of Sociedad Química y Minera de Chile S.A. and subsidiaries in relation to all such relevant financial uncertainty components.

The operations of the Company are subject to certain financial risk factors that may affect the financial position or results of the same. Among these risks, the most relevant are market risk, liquidity risk, foreign exchange rate risk, bad debt risk, and interest rate risk.

There may be additional unknown risks or other known risks that might also affect the commercial operations, the business, the financial position or the results of the Company, but the Company believes at this time they are not significant.

The financial risk management structure includes identifying, determining, analyzing, quantifying, measuring and controlling these events. Management, in particular Finance Management, is responsible for constantly assessing the financial risk. The Company uses derivatives to hedge a significant portion of these risks.

4.2

Risk Factors

4.2.1

Market Risk

Market risks are those uncertainties associated with fluctuations of market variables that affect the assets and liabilities of the Company, such as:

Country risk

The economic position of the countries where the Company has a presence may affect its financial position. For example, the sales carried out in emerging markets expose SQM to risks related to economic conditions and trends in those countries. On the other hand, inventories may also be affected by the economic situation of these countries and/ or the global economy, amongst other probable economic impacts.

Price volatility risk

The prices of the products of the Company are affected by the fluctuations of international prices of fertilizers and chemical products and changes in productive capacities or market demand, all of which might affect the Company’s business, financial condition and operational results.

F-42

Notes to the consolidated financial statements as of December 31, 2012

Note 4 – Financial Risk Management (Continued)

Commodities price risk

The Company is exposed to changes in the prices of raw materials and energy which may have an impact on its production costs, thus giving rise to instability in the results.

At present, the Company has direct annual expenses of approximately US$130 million related to oil related products, natural gas and equivalents, and approximately US$60 million for electricity. Variations of 10% in the prices of energy the Company requires to operate would involve in the short term movement of costs amounting to US$19 million.

4.2.2

Uncollectible Accounts Risks

A contraction of the global economy and the potentially negative effects in the financial position of the Company´s clients may extend the accounts receivable collection time for SQM, increasing the Company bad debt exposure. While measures have been taken in order to minimize this risk, the global economy may trigger losses that might have a material adverse effect on the business, financial position or the results of the Company’s operations.

To mitigate these risks, SQM actively controls debt collections and uses measures such as, credit insurance, letters of credit, and prepayments with regard to certain accounts receivable.

4.2.3

Foreign Exchange Risk

As a result of its influence in the determination of prices, its relationship with costs of sales, and since a significant part of our business is carried out in U.S. Dollars, the functional currency of SQM is the U.S. Dollar. However, the global business activities of the Company expose it to foreign exchange fluctuations of several currencies with respect to the U.S. Dollar. Therefore, SQM has hedge contracts to mitigate the exposure of its main balance mismatches (net assets) in currencies other than the U.S. Dollar against foreign exchange fluctuations. Those contracts are periodically updated depending upon the mismatch amount to be covered in these currencies.

A significant portion of the costs of the Company, particularly wages, is related to the Chilean Peso. Therefore, an increase or decrease in the exchange rate against the U.S. Dollar would affect the net income of SQM. At December 31, 2012, approximately US$440 million of the costs of the Company are related to the Chilean Peso. A significant portion of the effect of such obligations in the balance is covered by operations of derivatives that hedge the mismatch of balance in this currency.

At December 31, 2011, the Company had outstanding derivative instruments designated as hedging currency and interest rate risks associated with all Chilean Peso- and UF-denominated bonds obligations, with a fair value of US$ 56.1 million. As of December 31, 2012, the fair value was US$100.6 million, in each case in favor of SQM.

F-43

Notes to the consolidated financial statements as of December 31, 2012

Note 4 – Financial Risk Management, Objectives and Policies (continued)

On December 31, 2012, the Chilean Peso to U.S. Dollar exchange rate was Ch$ 479.96 for US$ 1.00, at December 31, 2011 it was Ch$ 519.20 for US$ 1.00 and at December 31, 2010 it was Ch$ 468.01 for US$ 1.00.

4.2.4

Interest rate risk

Interest rate fluctuations, due to the uncertain future behavior of markets, may have a material impact on the financial results of the Company.

The Company has short and long term debts valued at LIBOR plus a spread. The Company is partially exposed to fluctuations of this rate, as SQM currently holds hedging derivative instruments to hedge a portion of its liabilities subject to LIBOR rate fluctuations.

As of December 31, 2012, approximately 21% of the Company’s current financial obligations were subject to LIBOR rate fluctuation and therefore, significant increases in the rate may impact its financial position. A 100 basis points variation in this rate may trigger variations in financial expenses of approximately US$3.1 million. Notwithstanding, this effect is significantly counter-balanced by the returns of the Company’s investments that also relate to LIBOR.

In addition, as of December 31, 2012, the Company's total financial debt is primarily long-term, with 8% of maturities less than 12 months, which decreases the exposure to changes in the interest rates.

F-44

Notes to the consolidated financial statements as of December 31, 2012

Note 4 – Financial Risk Management, Objectives and Policies (continued)

4.2.5

Liquidity Risk

Liquidity risk relates to funding requirements to comply with payment obligations. The Company´s objective is to keep financial flexibility by comfortably balancing funding requirements and cash flows from the regular business conduct, bank loans, public bonds, short term investments, and negotiable instruments, among others.

The Company has an important capital expense program which is subject to change over time.

On the other hand, world financial markets go through contraction and expansion periods that are not foreseeable in the long term and may affect SQM’s access to financial resources. These factors may have a material adverse impact on the business, financial position, and operational results of the Company.

SQM constantly monitors that its obligations and investments match, taking care as part of its financial risk management strategy of the obligations and investments maturities from a conservative perspective. As of December 31, 2012, the Company had non-committed and available working capital bank credit lines for a total of US$530 million.

The position in other cash and cash equivalents generated by the Company is invested in highly liquid mutual funds which have an AAA risk rating.

4.3

Risk Measurement

The Company has methods to measure the effectiveness and efficiency of corporate risk strategies, both prospectively and retrospectively.

Note 5 – Background of consolidated companies

5.1 Parent’s separate assets and liabilities

The assets and liabilities of the legal entity Sociedad Química y Minera de Chile S.A. before the effects of consolidation consists of the following:

	12/31/2012			12/31/2011			12/31/2010
	ThUS$			ThUS$			ThUS$

Assets		3,908,259			3,626,748			3,338,594
Liabilities		(1,775,476	)		(1,813,914	)		(1,715,791	)
Total		2,132,783			1,812,834			1,622,803

5.2 Controlling entity

In accordance with the Company’s By-Laws, no shareholder can control more than 32% of the Company’s voting shares; therefore, there is no controlling shareholder.

F-45

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.3 Joint arrangements of the controlling interest

Sociedad de Inversiones Pampa Calichera S.A., Potasios de Chile S.A. and Global Mining Investments (Chile) S.A. together form the Pampa Group, and are the owners of 30.50% of SQM ’s issued, subscribed and fully-paid shares as of December 31, 2012. Additionally, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada. Kochi S.A. and La Esperanza Delaware Corporation, together the Kowa Group, are the owners of 2.08% of SQM S.A.’s currently issued, subscribed and fully-paid shares as of December 31, 2012.

In December 2006, the Pampa and Kowa groups entered into a joint venture agreement in regards to the management of their ownership of the Company’s shares. However, both the Pampa Group and the Kowa Group have informed SQM, the SVS, and the relevant stock markets in Chile and the United States that they are not currently, nor have they ever been, related parties between themselves. Therefore, neither the Pampa Group, nor the Kowa Group individually control more than 32% of the voting right shares of SQM S.A.

Detail of effective concentration

Tax ID Number	Name	Ownership interest %
96.511.530-7	Sociedad de Inversiones Pampa Calichera S.A.		20.35
96.863.960-9	Global Mining Investments (Chile) S.A.		3.34
76.165.311-5	Potasios de Chile S.A.		6.81
Total Pampa Group			30.50

79.798.650-k	Inversiones la Esperanza (Chile) Ltda.		1.40
59.046.730-8	Kowa Co Ltd.		0.30
96.518.570-4	Kochi S.A.		0.29
59.023.690-k	La Esperanza Delaware Corporation		0.09
Total Kowa Group			2.08

F-46

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.4 Information on consolidated subsidiaries

Financial information as of December 31, 2012 of the companies in which the group exerts control and significant influence is as follows:

12/31/2012
				Ownership interest						Assets		Liabilities		Total equity		Net profit
Subsidiary	Tax ID No.	Country of incorporation	Functional currency	Direct		Indirect		Total		ThUS$		ThUS$		ThUS$		(loss) ThUS$
SQM Nitratos S.A.	96.592.190-7	Chile	US$		99.9999		0.0001		100.0000		735,546		534,869		200,677		148,768
Proinsa Ltda.	78.053.910-0	Chile	Chilean peso		-		60.5800		60.5800		221		-		221		-
SQMC Internacional Ltda.	86.630.200-6	Chile	Chilean peso		-		60.6381		60.6381		292		-		292		2
SQM Potasio S.A.	96.651.060-9	Chile	US$		99.9974		-		99.9999		1,149,717		14,306		1,135,411		259,578
Serv. Integrales de Tránsito y Transf. S.A.	79.770.780-5	Chile	US$		0.0003		99.9997		100.0000		357,590		326,522		31,068		4,330
Isapre Norte Grande Ltda.	79.906.120-1	Chile	Chilean peso		1.0000		99.0000		100.0000		1,527		872		655		263
Ajay SQM Chile S.A.	96.592.180-K	Chile	US$		51.0000		-		51.0000		26,262		6,226		20.036		9,980
Almacenes y Depósitos Ltda.	79.876.080-7	Chile	Chilean peso		1.0000		99.0000		100.0000		451		-		451		(11	)
SQM Salar S.A.	79.626.800-K	Chile	US$		18.1800		81.8200		100.0000		1,611,208		464,669		1,146,539		318,275
SQM Industrial S.A.	79.947.100-0	Chile	US$		99.0470		0.9530		100.0000		1,988,068		1,070,450		917,618		93,488
Exploraciones Mineras S.A.	76.425.380-9	Chile	US$		0.2691		99.7309		100.0000		31,944		4,383		27,561		(236	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	76.534.490-5	Chile	Chilean peso		-		100.0000		100.0000		1,037		902		135		17
Soquimich Comercial S.A.	79.768.170-9	Chile	US$		-		60.6383		60.6383		186,462		73,470		112,992		8,555
Comercial Agrorama Ltda.	76.064.419-6	Chile	Chilean peso		-		42.4468		42.4468		17,208		15,996		1,212		(185	)
Comercial Hydro S.A.	96.801.610-5	Chile	Chilean peso		-		60.6383		60.6383		8,100		230		7,870		430
Agrorama S.A.	76.145.229-0	Chile	Chilean peso		-		60.6377		60.6377		14,250		14,093		157		47
SQM North America Corp.	Foreign	United States	US$		40.0000		60.0000		100.0000		319,812		284,290		35,522		23,737

F-47

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.4 Information on consolidated subsidiaries, continued

12/31/2012
				Ownership interest						Assets		Liabilities		Total equity			Net profit
Subsidiary	Tax ID No.	Country of incorporation	Functional currency	Direct		Indirect		Total		ThUS$		ThUS$		ThUS$			(loss) ThUS$
RS Agro Chemical Trading A.V.V.	Foreign	Aruba	US$		98.3333		1.6667		100.0000		5,214		-		5,214			(10	)
Nitratos Naturais do Chile Ltda.	Foreign	Brazil	US$		-		100.0000		100.0000		290		5,005		(4,715	)		(284	)
Nitrate Corporation of Chile Ltd.	Foreign	United Kingdom	US$		-		100.0000		100.0000		5,076		-		5,076			-
SQM Corporation N.V.	Foreign	Dutch Antilles	US$		0.0002		99.9998		100.0000		86,953		3,724		83,229			(3,314	)
SQM Perú S.A.	Foreign	Peru	US$		0.9800		99.0200		100.0000		904		1,214		(310	)		(165	)
SQM Ecuador S.A.	Foreign	Ecuador	US$		0.0040		99.9960		100.0000		19,419		18,065		1,354			244
SQM Brasil Ltda.	Foreign	Brazil	US$		2.7900		97.2100		100.0000		723		942		(219	)		78
SQI Corporation N.V.	Foreign	Dutch Antilles	US$		0.0159		99.9841		100.0000		17		43		(26	)		(8	)
SQMC Holding Corporation L.L.P.	Foreign	Aruba	US$		0.1000		99.9000		100.0000		24,597		1,657		22,940			2,422
SQM Japan Co. Ltd.	Foreign	Japan	US$		1.0000		99.0000		100.0000		2,476		711		1,765			(125	)
SQM Europe N.V.	Foreign	Belgium	US$		0.8600		99.1400		100.0000		391,590		356,719		34,871			(14,928	)
SQM Italia SRL	Foreign	Italy	US$		-		100.0000		100.0000		1,360		18		1,342			-
SQM Indonesia S.A.	Foreign	Indonesia	US$		-		80.0000		80.0000		5		1		4			-
North American Trading Company	Foreign	United States	US$		-		100.0000		100.0000		305		39		266			-
SQM Virginia LLC	Foreign	United States	US$		-		100.0000		100.0000		29,204		14,829		14,375			(1	)
SQM Comercial de México S.A. de C.V.	Foreign	Mexico	US$		0.0013		99.9987		100.0000		79,092		55,672		23,420			3,254

F-48

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.4 Information on consolidated subsidiaries, continued

12/31/2012
				Ownership interest						Assets		Liabilities		Total equity			Net profit
Subsidiary	Tax ID No.	Country of incorporation	Functional currency	Direct		Indirect		Total		ThUS$		ThUS$		ThUS$			(loss) ThUS$
SQM investment Corporation N.V.	Foreign	Dutch Antilles	US$		1.0000		99.0000		100.0000		64,264		40,239		24,025			743
Royal Seed Trading Corporation A.V.V.	Foreign	Aruba	US$		1.6700		98.3300		100.0000		242,707		253,736		(11,029	)		(2,435	)
SQM Lithium Specialties LLP	Foreign	United States	US$		-		100.0000		100.0000		15,785		1,265		14,520			(1	)
Soquimich SRL Argentina	Foreign	Argentina	US$		-		100.0000		100.0000		422		176		246			(39	)
Comercial Caimán Internacional S.A.	Foreign	Panama	US$		-		100.0000		100.0000		333		1,146		(813	)		(58	)
SQM France S.A.	Foreign	France	US$		-		100.0000		100.0000		351		114		237			-
Administración y Servicios Santiago S.A. de C.V.	Foreign	Mexico	US$		-		100.0000		100.0000		50		811		(761	)		127
SQM Nitratos México S.A. de C.V.	Foreign	Mexico	US$		-		51.0000		51.0000		33		23		10			-
Soquimich European Holding B.V.	Foreign	The Netherlands	US$		-		100.0000		100.0000		179,048		102,950		76,098			(4,932	)
SQM Iberian S.A	Foreign	Spain	US$		-		100.0000		100.0000		81,429		81,883		(454	)		(2,135	)
Iodine Minera B.V.	Foreign	The Netherlands	US$		-		100.0000		100.0000		16,929		0		16,929			3,708
SQM Africa Pty Ltd.	Foreign	South Africa	US$		-		100.0000		100.0000		98,127		91,370		6,757			(2,921	)
SQM Oceania Pty Ltd.	Foreign	Australia	US$		-		100.0000		100.0000		5,621		1,613		4,008			755
SQM Agro India Pvt. Ltd.	Foreign	India	US$		-		100.0000		100.0000		18		11		7			(38	)
SQM Beijing Commercial Co. Ltd.	Foreign	China	US$		-		100.0000		100.0000		3,637		1,779		1,858			1,621

Total											7.805.674		3.847.033		3.958.641			848.596

F-49

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.4 Information on consolidated subsidiaries, continued

12/31/2011
				Ownership interest						Assets		Liabilities		Total equity		Net profit
Subsidiary	Tax ID No.	Country of incorporation	Functional currency	Direct		Indirect		Total		ThUS$		ThUS$		ThUS$		(loss) ThUS$
SQM Nitratos S.A.	96.592.190-7	Chile	US$		99.9999		0.0001		100.0000		819,424		665,515		153,909		106,473
Proinsa Ltda.	78.053.910-0	Chile	Chilean peso		-		60.5800		60.5800		204		-		204		(1	)
SQMC Internacional Ltda.	86.630.200-6	Chile	Chilean peso		-		60.6381		60.6381		268		-		268		(4	)
SQM Potasio S.A.	96.651.060-9	Chile	US$		99.9974		-		99.9974		771,112		120,138		650,974		246,439
Serv. Integrales de Tránsito y Transf. S.A.	79.770.780-5	Chile	US$		0.0003		99.9997		100.0000		277,296		250,558		26,738		4,302
Isapre Norte Grande Ltda.	79.906.120-1	Chile	Chilean peso		1.0000		99.0000		100.0000		1,127		716		411		28
Ajay SQM Chile S.A.	96.592.180-K	Chile	US$		51.0000		-		51.0000		26,977		9,855		17,122		10,066
Almacenes y Depósitos Ltda.	79.876.080-7	Chile	Chilean peso		1.0000		99.0000		100.0000		419		1		418		(17	)
SQM Salar S.A.	79.626.800-K	Chile	US$		18.1800		81.8200		100.0000		1,438,672		610,538		828,134		286,239
SQM Industrial S.A.	79.947.100-0	Chile	US$		99.0470		0.9530		100.0000		1,889,981		1,066,598		823,383		93,062
Minera Nueva Victoria S.A..	78.602.530-3	Chile	US$		99.000		1.0000		100.0000		112,628		4,527		108,101		4,069
Exploraciones Mineras S.A.	76.425.380-9	Chile	US$		0.2691		99.7309		100.0000		31,878		4,082		27,796		(207	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	76.534.490-5	Chile	Chilean peso		-		100.0000		100.0000		757		648		109		(23	)
Soquimich Comercial S.A.	79.768.170-9	Chile	US$		-		60.6383		60.6383		191,346		82,750		108,596		7,220
Comercial Agrorama Ltda.	76.064.419-6	Chile	Chilean peso		-		42.4468		42.4468		11,555		10,264		1,291		29
Comercial Hydro S.A.	96.801.610-5	Chile	Chilean peso		-		60.6383		60.6383		7,681		241		7,440		334
Agrorama S.A.	76.145.229-0	Chile	Chilean peso		-		60.6377		60.6377		328		226		102		(91	)
SQM North America Corp.	Foreign	United States	US$		40.0000		60.0000		100.0000		188,554		176,816		11,738		(19,702	)

F-50

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.4 Information on consolidated subsidiaries, continued

12/31/2011
				Ownership interest						Assets		Liabilities		Total equity			Net profit
Subsidiary	Tax ID No.	Country of incorporation	Functional currency	Direct		Indirect		Total		ThUS$		ThUS$		ThUS$			(loss) ThUS$
RS Agro Chemical Trading A.V.V.	Foreign	Aruba	US$		98.3333		1.6667		100.0000		5,224		-		5,224			(4	)
Nitratos Naturais do Chile Ltda.	Foreign	Brazil	US$		-		100.0000		100.0000		2,349		6,804		(4,455	)		271
Nitrate Corporation of Chile Ltd.	Foreign	United Kingdom	US$		-		100.0000		100.0000		5,076		-		5,076			-
SQM Corporation N.V.	Foreign	Dutch Antilles	US$		0.0002		99.9998		100.0000		89,469		3,715		85,754			40,340
SQM Perú S.A.	Foreign	Peru	US$		0.9800		99.0200		100.0000		6,466		6,611		(145	)		(759	)
SQM Ecuador S.A.	Foreign	Ecuador	US$		0.0040		99.9960		100.0000		9,724		9,176		548			(83	)
SQM Brasil Ltda.	Foreign	Brazil	US$		2.7900		97.2100		100.0000		354		1,050		(696	)		113
SQI Corporation N.V.	Foreign	Dutch Antilles	US$		0.0159		99.9841		100.0000		17		36		(19	)		6
SQMC Holding Corporation L.L.P.	Foreign	Aruba	US$		0.1000		99.9000		100.0000		21,131		614		20,517			10,926
SQM Japan Co. Ltd.	Foreign	Japan	US$		1.0000		99.0000		100.0000		2,968		1,078		1,890			518
SQM Europe N.V.	Foreign	Belgium	US$		0.8600		99.1400		100.0000		430,994		393,419		37,575			20,135
SQM Italia SRL	Foreign	Italy	US$		-		100.0000		100.0000		1,333		17		1,316			-
SQM Indonesia S.A.	Foreign	Indonesia	US$		-		80.0000		80.0000		5		1		4			(1	)
North American Trading Company	Foreign	United States	US$		-		100.0000		100.0000		306		39		267			-
SQM Virginia LLC	Foreign	United States	US$		-		100.0000		100.0000		29,207		14,830		14,377			(3	)
SQM Comercial de México S.A. de C.V.	Foreign	Mexico	US$		0.0013		99.9987		100.0000		68,572		48,406		20,166			(1,061	)

F-51

Notes to the consolidated financial statements as of December 31, 2012

Note 5– Background of consolidated companies (continued)

5.4 Information on consolidated subsidiaries, continued

12/31/2011
				Ownership interest						Assets		Liabilities		Total equity			Net profit
Subsidiary	Tax ID No.	Country of incorporation	Functional currency	Direct		Indirect		Total		ThUS$		ThUS$		ThUS$			(loss) ThUS$
SQM investment Corporation N.V.	Foreign	Dutch Antilles	US$		1.0000		99.0000		100.0000		65,123		41,991		23,132			1,887
Royal Seed Trading Corporation A.V.V.	Foreign	Aruba	US$		1.6700		98.3300		100.0000		196,735		203,543		(6,808	)		1,251
SQM Lithium Specialties LLP	Foreign	United States	US$		-		100.0000		100.0000		15,785		1,264		14,521			(3	)
Soquimich SRL Argentina	Foreign	Argentina	US$		-		100.0000		100.0000		429		144		285			(78	)
Comercial Caimán Internacional S.A.	Foreign	Panama	US$		-		100.0000		100.0000		477		1,232		(755	)		(14	)
SQM France S.A.	Foreign	France	US$		-		100.0000		100.0000		351		114		237			-
Administración y Servicios Santiago S.A. de C.V.	Foreign	Mexico	US$		-		100.0000		100.0000		13		915		(902	)		100
SQM Nitratos México S.A. de C.V.	Foreign	Mexico	US$		-		51.0000		51.0000		27		17		10			-
Soquimich European Holding B.V.	Foreign	The Netherlands	US$		-		100.0000		100.0000		153,211		72,969		80,242			38,850
SQM Iberian S.A	Foreign	Spain	US$		-		100.0000		100.0000		27,225		25,638		1,587			258
Iodine Minera B.V.	Foreign	The Netherlands	US$		-		100.0000		100.0000		13,228		7		13,221			3,100
SQM Africa Pty Ltd.	Foreign	South Africa	US$		-		100.0000		100.0000		62,335		52,657		9,678			7,821
SQM Venezuela S.A.	Foreign	Venezuela	US$		-		100.0000		100.0000		5		328		(323	)		(157	)
SQM Oceania Pty Ltd.	Foreign	Australia	US$		-		100.0000		100.0000		4,349		1,042		3,307			2,372
SQM Agro India Pvt. Ltd.	Foreign	India	US$		-		100.0000		100.0000		63		18		45			(27	)
SQM Beijing Commercial Co. Ltd.	Foreign	China	US$		-		100.0000		100.0000		2,147		1,910		237			140

Total											6,984,905		3,893,058		3,091,847			864,114

F-52

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.4 Information on consolidated subsidiaries, continued

12/31/2010
				Ownership interest						Assets		Liabilities		Total equity		Net profit
Subsidiary	Tax ID No.	Country of incorporation	Functional currency	Direct		Indirect		Total		ThUS$		ThUS$		ThUS$		(loss) ThUS$
SQM Nitratos S.A.	96.592.190-7	Chile	US$		99.9999		0.0001		100.0000		714,318		621,882		92,436		29,622
Proinsa Ltda.	78.053.910-0	Chile	Chilean peso		-		60.5800		60.5800		228		-		228		-
SQMC Internacional Ltda.	86.630.200-6	Chile	Chilean peso		-		60.6381		60.6381		302		-		302		(2	)
SQM Potasio S.A.	96.651.060-9	Chile	US$		99.9974		-		99.9974		663,203		172,353		490,850		139,838
Serv. Integrales de Tránsito y Transf. S.A.	79.770.780-5	Chile	US$		0.0003		99.9997		100.0000		209,545		187,108		22,437		10,113
Isapre Norte Grande Ltda.	79.906.120-1	Chile	Chilean peso		1.0000		99.0000		100.0000		1,161		735		426		20
Ajay SQM Chile S.A.	96.592.180-K	Chile	US$		51.0000		-		51.0000		17,677		7,580		10,097		2,049
Almacenes y Depósitos Ltda.	79.876.080-7	Chile	Chilean peso		1.0000		99.0000		100.0000		465		1		464		(13	)
SQM Salar S.A.	79.626.800-K	Chile	US$		18.1800		81.8200		100.0000		1,024,623		372,643		651,980		185,315
Comercial Hydro S.A.	96.801.610-5	Chile	Chilean peso		-		60.6383		60.6383		7,219		113		7,106		217
SQM Industrial S.A.	79.947.100-0	Chile	US$		99.0470		0.9530		100.0000		1,659,803		905,642		754,161		130,230
Minera Nueva Victoria S.A..	78.602.530-3	Chile	US$		99.000		1.0000		100.0000		126,971		2,940		124,031		4,369
Exploraciones Mineras S.A.	76.425.380-9	Chile	US$		0.2691		99.7309		100.0000		31,818		3,814		28,004		(178	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	76.534.490-5	Chile	Chilean peso		-		100.0000		100.0000		738		591		147		(3	)
Soquimich Comercial S.A.	79.768.170-9	Chile	US$		-		60.6383		60.6383		156,553		49,376		107,177		10,107
Agrorama Callegari Ltda.	76.064.419-6	Chile	Chilean peso		-		42.4468		42.4468		6,516		5,115		1,401		(293	)
SQM North America Corp.	Foreign	United States	US$		40.0000		60.0000		100.0000		125,392		93,177		32,215		8,143

F-53

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.4 Information on consolidated subsidiaries, continued

12/31/2010
				Ownership interest						Assets		Liabilities		Total equity			Net profit
Subsidiary	Tax ID No.	Country of incorporation	Functional currency	Direct		Indirect		Total		ThUS$		ThUS$		ThUS$			(loss) ThUS$
RS Agro Chemical Trading A.V.V.	Foreign	Aruba	US$		98.3333		1.6667		100.0000		5,227		-		5,227			(5	)
Nitratos Naturais do Chile Ltda.	Foreign	Brazil	US$		-		100.0000		100.0000		295		5,022		(4,727	)		(124	)
Nitrate Corporation of Chile Ltd.	Foreign	United Kingdom	US$		-		100.0000		100.0000		5,076		-		5,076			-
SQM Corporation N.V.	Foreign	Dutch Antilles	US$		0.0002		99.9998		100.0000		53,276		3,712		49,564			13,472
SQM Perú S.A.	Foreign	Peru	US$		0.9800		99.0200		100.0000		15,642		15,027		615			1,236
SQM Ecuador S.A.	Foreign	Ecuador	US$		0.0040		99.9960		100.0000		8,787		8,149		638			298
SQM Brasil Ltda.	Foreign	Brazil	US$		2.7900		97.2100		100.0000		370		1,180		(810	)		17
SQI Corporation N.V.	Foreign	Dutch Antilles	US$		0.0159		99.9841		100.0000		10		33		(23	)		-
SQMC Holding Corporation L.L.P.	Foreign	Aruba	US$		0.1000		99.9000		100.0000		9,999		619		9,380			492
SQM Japan Co. Ltd.	Foreign	Japan	US$		1.0000		99.0000		100.0000		2,073		699		1,374			218
SQM Europe N.V.	Foreign	Belgium	US$		0.8600		99.1400		100.0000		358,668		341,425		17,243			7,107
SQM Italia SRL	Foreign	Italy	US$		-		100.0000		100.0000		1,377		17		1,360			-
SQM Indonesia S.A.	Foreign	Indonesia	US$		-		80.0000		80.0000		5		1		4			-
North American Trading Company	Foreign	United States	US$		-		100.0000		100.0000		306		39		267			-
SQM Virginia LLC	Foreign	United States	US$		-		100.0000		100.0000		29,213		14,834		14,379			(1	)
SQM Comercial de México S.A. de C.V.	Foreign	Mexico	US$		0.0013		99.9987		100.0000		59,742		60,646		(904	)		(1,523	)

F-54

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.4

Information on consolidated subsidiaries, continued

12/31/2010
				Ownership interest						Assets		Liabilities		Total equity			Net profit
Subsidiary	Tax ID No.	Country of incorporation	Functional currency	Direct		Indirect		Total		ThUS$		ThUS$		ThUS$			(loss) ThUS$
SQM investment Corporation N.V.	Foreign	Dutch Antilles	US$		1.0000		99.0000		100.0000		71,651		50,257		21,394			587
Royal Seed Trading Corporation A.V.V.	Foreign	Aruba	US$		1.6700		98.3300		100.0000		88,567		96,627		(8,060	)		(9,058	)
SQM Lithium Specialties LLP	Foreign	United States	US$		-		100.0000		100.0000		15,789		1,264		14,525			(1	)
Soquimich SRL Argentina	Foreign	Argentina	US$		-		100.0000		100.0000		472		109		363			(83	)
Comercial Caimán Internacional S.A.	Foreign	Panama	US$		-		100.0000		100.0000		339		1,080		(741	)		(174	)
SQM France S.A.	Foreign	France	US$		-		100.0000		100.0000		351		114		237			-
Administración y Servicios Santiago S.A. de C.V.	Foreign	Mexico	US$		-		100.0000		100.0000		47		1,049		(1,002	)		(173	)
SQM Nitratos México S.A. de C.V.	Foreign	Mexico	US$		-		51.0000		51.0000		28		17		11			4
Soquimich European Holding B.V.	Foreign	The Netherlands	US$		-		100.0000		100.0000		140,106		94,565		45,541			12,481
Fertilizantes Naturales S.A	Foreign	Spain	US$		-		66.6750		66.6750		16,505		15,175		1,330			749
Iodine Minera B.V.	Foreign	The Netherlands	US$		-		100.0000		100.0000		10,122		1		10,121			1,175
SQM Africa Pty Ltd.	Foreign	South Africa	US$		-		100.0000		100.0000		38,610		36,736		1,874			149
SQM Venezuela S.A.	Foreign	Venezuela	US$		-		100.0000		100.0000		80		402		(322	)		(161	)
SQM Oceania Pty Ltd.	Foreign	Australia	US$		-		100.0000		100.0000		1,466		533		933			120
SQM Agro India Pvt. Ltd.	Foreign	India	US$		-		100.0000		100.0000		235		149		86			(14	)
SQM Beijing Commercial Co. Ltd.	Foreign	China	US$		-		100.0000		100.0000		173		77		96			(4	)

Total											5,681,139		3,172,628		2,508,511			546,318

F-55

Notes to the consolidated financial statements as of December 31, 2012

Note 5 – Background of consolidated companies (continued)

5.5

Detail of transactions between consolidated companies

Transactions conducted in 2012

On November 30, 2012, SQM transferred its 99% ownership interest in Minera Nueva Victoria Limitada to SQM Potasio S.A., which resulted in SQM Potasio S.A. owning 100% of the outstanding shares in this enity. Subsequent to this transaction, the assets and liabilities of Minera Nueva Victoria Limitada were absorbed into SQM Potasio S.A. resulting in the legal dissolution of Minera Victoria Limitada.

Transactions conducted in 2011

On April 7, 2011, Agrorama S.A. was incorporated with an ownership interest of Soquimich Comercial S.A. of 99.999% and by Sociedad Productora de Insumos Agrícolas Ltda. of 0.001%. This new company will have share capital of ThCh$100.000 (ThUS$211), its lifespan will be indefinite and its line of business will be the trading and distribution of fertilizers, pesticides and agricultural products or supplies.

In August and September of 2011, SQM Industrial S.A. made capital contributions totalling ThUS$22,017 in its subsidiary SQMC Mexico S.A. de CV. increasing its ownership interest to 99.8739% .

In September 2011, Soquimich European Holding B.V., acquired from its associate, Nutrisi Holding N.V. a 66.6% ownership interest in Fertilizantes Naturales S.A. for ThUS$3,179.

In December, 2011, Comercial Agrorama Callegari Ltda. changed its name to “Comercial Agrorama Limitada” and Fertilizantes Naturales S.A. changed its name to “SQM Iberian S.A.”

In December 2011, Soquimich European Holding B.V. sold its 50% ownership interest in Nutrisi Holding N.V. for ThUS$5,736.

Transactions conducted in 2010

In February , 2010, SQM Beijing Commercial Co. Ltd. was formed, to which SQM Industrial S.A. contributed capital of ThUS$100, obtaining an equity interest of 100%.

F-56

Notes to the consolidated financial statements as of December 31, 2012

Note 6 – Cash and cash equivalents

6.1

Cash and cash equivalents

Cash and cash equivalents consist of the following:

a) Cash	12/31/2012		12/31/2011		12/31/2010
	ThUS$		ThUS$		ThUS$

Cash on hand		90		73		83
Cash in banks		41,541		34,659		22,255
Other demand deposits		833		3,291		2,011
Total cash		42,464		38,023		24,349

b) Cash equivalents	12/31/2012		12/31/2011		12/31/2010
	ThUS$		ThUS$		ThUS$

Short-term deposits		139,943		263,396		375,058
Short-term investments		141,946		143,573		125,245
Total cash equivalents		281,889		406,969		500,303

Total cash and cash equivalents		324,353		444,992		524,652

6.2

Short-term investments, classified as cash equivalents

Short-term investments consist of the following investments in US$ short-term fixed rate liquidity funds:

Institution	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$
Legg Mason - Western Asset Institutional Liquid Reserves		47,408		47,162		52,576
BlackRock - Institutional cash series PLC		47,490		48,025		36,712
JP Morgan USD Dollar Liquidity Fund Institutional		47,048		48,386		35,957
Total		141,946		143,573		125,245

F-57

Notes to the consolidated financial statements as of December 31, 2012

Note 6 – Cash and cash equivalents (continued)

6.3

Information on cash and cash equivalents by currency

Cash and cash equivalents classified by currency consist of the following:

Original currency	12/31/2012	12/31/2011	12.31.2010
	ThUS$	ThUS$	ThUS$
U.S. Dollar	234,166	308,631	176,703
Chilean Peso (*)	76,712	125,118	331,011
South African Rand	7,421	5,450	8,776
Euro	3,601	3,070	6,784
All other	2,453	2,723	1,378
Total	324.353	444,992	524,652

(*) The Company maintains financial derivative policies to convert CLP (Chilean Peso) term deposits in into U.S. Dollars.

6.4

Amount of significant restricted or (unavailable) cash balances

Cash on hand and in current bank accounts are available resources, and their carrying value is equal to their fair value.

Except as disclosed in note 9.8, there were no significant cash balances with any type of restriction at December 31, 2012, 2011 and 2010.

F-58

Notes to the consolidated financial statements as of December 31, 2012

Note 6 – Cash and cash equivalents (continued)

6.5 Short-term deposits, classified as cash equivalents

The detail at the end of each period is as follows:

							Principal		Interest accrued		12/31/2012		12/31/2011		12/31/2010
Receiver of the deposit	Type of deposit	Original Currency	Interest rate		Placement date	Expiration date	ThUS$		to-date ThUS		ThUS$		ThUS$		ThUS$
Banco Crédito e Inversiones	Fixed term	Chilean peso		0,49	12/10/2012	01/17/2013		25.290		87		25.377		9.677		26,401
Banco Crédito e Inversiones	Fixed term	Chilean peso		0,50	12/07/2012	02/07/2013		12.299		49		12.348		9.676		4,168
Banco Crédito e Inversiones	-	-		-	-	-		-		-		-		25.209		6,738
Banco Crédito e Inversiones	-	-		-	-	-		-		-		-		20.010		10,574
Banco Crédito e Inversiones	-	-		-	-	-		-		-		-		20.531		10,150
Banco Crédito e Inversiones	-	-		-	-	-		-		-		-		20.011		10,355
Banco Crédito e Inversiones	-	-		-	-	-		-		-		-		20.014		-
Banco Santander-Santiago	Fixed term	Chilean peso		0,49	12/06/2012	0103/2013		11.609		47		11.656		12.093		10,499
Banco Santander-Santiago	Fixed term	Chilean peso		0,49	12/06/2012	01/03/2013		7.493		30		7.523		20.110		15,528
Banco Santander-Santiago	Fixed term	Chilean peso		0,45	12/28/2012	01/10/2013		6.252		3		6.255		20.110		20,897
Banco Santander-Santiago	Fixed term	US$		1,12	12/07/2012	02/07/2013		8.005		6		8.011		20.110		31,752
Banco Santander-Santiago	Fixed term	US$		0,70	12/21/2012	01/07/2013		3.500		1		3.501		3.001		6,251
Banco Santander Santiago	Fixed term	US$		0,70	12/21/2012	01/07/2013		3.500		1		3.501		-		3,200
Citibank New – York	Overnight	US$		0,01	12/31/2012	12/01/2013		20.146		-		20.146		115		557
Citibank New – York	Overnight	US$		0,01	12/31/2012	01/01/2013		1.181		-		1.181		1.586		-
Citibank New – York	Overnight	US$		0,01	12/31/2012	01/01/2013		17.256		-		17.256		-		-
Citibank New – York	Overnight	US$		0,01	12/31/2012	01/03/2013		10.605		-		10.605		-		-
Citibank New – York	Overnight	US$		0,01	12/31/2012	01/02/2013		2.582		-		2.582		-		-
Corpbanca	Fixed term	Chilean peso		0,53	12/26/2012	02/01/2013		9.990		-		9.999		16.043		-
Corpbanca	-	-		-	-	-		-		-		-		20.016		-
Corpbanca	-	-		-	-	-		-		-		-		10.032		-
Corpbanca	-	-		-	-	-		-		-		-		10.008		-
IDBI Bank	-	-		-	-	-		-		-		-		2		-
Banco BBVA Chile	Fixed term	Indian rupee		-	12/31/2012	01/31/2013		2		-		2		5.042		-
Banco de Chile	-	-		-	-	-		-		-		-		-		20,781
Banco de Chile	-	-		-	-	-		-		-		-		-		16,056
Banco de Chile	-	-		-	-	-		-		-		-		-		15,832
Banco de Chile	-	-		-	-	-		-		-		-		-		20,962
Banco de Chile	-	-		-	-	-		-		-		-		-		7,271
Banco de Chile	-	-		-	-	-		-		-		-		-		20,306
Banco de Chile	-	-		-	-	-		-		-		-		-		1,667
Banco Estado	-	-		-	-	-		-		-		-		-		17,001
Banco Santander Santiago	-	-		-	-	-		-		-		-		-		20,009
Banco Security	-	-		-	-	-		-		-		-		-		16,014
Banco Security	-	-		-	-	-		-		-		-		-		7,017

F-59

Notes to the consolidated financial statements as of December 31, 2012

Note 6 – Cash and cash equivalents (continued)

6.5 Short-term deposits, classified as cash equivalents, continued

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 ThUS$		Interest accrued to-date ThUS$		12.31.2012 ThUS$		12.31.2011 ThUS$		12.31.2010 ThUS$
Corpbanca	Fixed term	US Dollar		1.30	10/18/2011	01/11/2012		16,000		43		-		-		15,556
Corpbanca	Fixed term	US Dollar		2.60	12/20/2011	01/19/2012		20,000		16		-		-		5,786
Corpbanca	Fixed term	US Dollar		2.75	12/21/2011	01/25/2012		10,024		8		-		-		4,060
Corpbanca	Fixed term	US Dollar		2.75	12/21/2011	01/25/2012		10,000		8		-		-		8,786
IDBI Bank	Fixed term	Rupia Hindú		-	12/31/2011	01/31/2012		2		-		-		-		3
Scotiabank Sud Americano	-	-		-	-	-		-		-		-				20,880
Total												139,943		263,396		375,058

F-60

Notes to the consolidated financial statements as of December 31, 2012

Note 7 - Inventory

Inventory consists of the following:

Type of inventory	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$

Raw materials		8,675		10,111		7,120
Supplies for production		37,919		31,602		21,398
Products-in-progress		411,039		356.038		291,536
Finished products		438,603		346.651		285,047
Total		896,236		744,402		605,101

Inventory reserves recognized as of December 31, 2012, 2011 and 2010 amounted to ThUS$72,687, ThUS$58,220, and ThUS$63,597, respectively. Inventory reserves have been made based on a technical studies covering different variables affecting products in stock such as density, humidity, and others. Reserves are also recognized for lower of cost or market assessments, and for differences that arise from inventory counts.

Reserves by inventory class are as follows:

Type of inventory	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$

Raw material reserves		93		593		593
Supplies for production reserves		500		500		500
Products-in-progress reserves		46,635		33,811		43,115
Finished product reserves		25,459		23,316		19,389

Total		72,687		58,220		63,597

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

F-61

Notes to the consolidated financial statements as of December 31, 2012

Note 8 – Related party disclosures

8.1

Related 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. The Company has not recorded any impairment in accounts receivable related to amounts owed by related parties based on evaluations conducted each reporting period through an examination of the financial position of the related party in the market in which they operates.

8.2

Detailed identification of the link between the company and its related parties

Details of the Company’s related parties is as follows:

Tax ID no.	Name	Country of origin	Functional currency	Nature
77.557.430-5	Sales de Magnesio Ltda.	Chile	Chilean peso	Associate
Foreign	Abu Dhabi Fertilizer Industries WWL	United Arab Emirates	Arab Emirates dirham	Associate
Foreign	Doktor Tarsa Tarim Sanayi AS	Turkey	Turkish lira	Associate
Foreign	Ajay North America	United States	US$	Associate
Foreign	Ajay Europe SARL	France	Euro	Associate
Foreign	SQM Eastmed Turkey	Turkey	Euro	Associate
Foreign	SQM Thailand Co. Ltd.	Thailand	Bath Tailandés	Associate
Foreign	Sichuan SQM Migao Chemical Fertilizers Co Ltda.	China	US$	Joint business
Foreign	Coromandel SQM	India	Indian rupee	Joint business
Foreign	SQM Vitas Fzco.	United Arab Emirates	Arab Emirates dirham	Joint business
Foreign	SQM Star Qingdao Crop Nutrition Co., Ltd.	China	US$	Joint business
Foreign	Kowa Company Ltd.	Japan	US$	Other related parties
96.511.530-7	Sociedad de Inversiones Pampa Calichera	Chile	US$	Other related parties
79.049.778-9	Callegari Agricola S.A.	Chile	Chilean peso	Other related parties
Foreign	Coromandel Internacional	India	Indian rupee	Other related parties
Foreign	Vitas Roullier SAS	France	Euro	Other related parties
Foreign	SQM Vitas Brasil Agroindustria	Brazil	US$	Joint business or significant influence
Foreign	SQM Vitas Perú S.A.C.	Peru	US$	Joint business or significant influence
Foreingn	SQM Vitas Southem Africa Pty.	South Africa	US$	Joint business or significant influence
Foreign	Misr Speciality Fertilizers(*)	Egypt	Egyptian pound	Associate
Foreign	NU3 N.V. (a)	Belgium	Euro	Associate
Foreign	NU3 B.V. (a)	The Netherlands	Euro	Associate

A detail listing of the Company’s subsidiaries is provided in note 5.4.

F-62

Notes to the consolidated financial statements as of December 31, 2012

Note 8 – Related party disclosures (continued)

8.2

Detail of related parties and transactions with related parties

Transactions between the Parent (SQM S.A.) and its subsidiaries 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. In addition, these have been eliminated in consolidation and are not detailed in this note.

Maturity terms for each case vary by virtue of the transaction giving rise to them.

As of December 31, 2012, 2011 and 2010, there were no allowances for doubtful accounts related to balances pending of transactions with related parties as there was no impairment to them.

Set forth below are the transactions with related parties as of December 31, 2012, 2011and 2010.

Tax ID No.

Company

Nature

Country of
origin

Transaction

12/31/2012
ThUS$

12/31/2011

ThUS$

12/31/2010

ThUS$

Foreign

Doktor Tarsa Tarim Sanayi As

Associate

Turkey

Sale of products

9,587

26,748

12,460

Foreign

Ajay Europe S.A.R.L.

Associate

France

Sale of products

37,232

27,743

22,150

Foreign

Ajay Europe S.A.R.L.

Associate

France

Dividends

3,564

824

628

Foreign

Ajay North America LLC.

Associate

United States

Sale of products

42,081

47,501

35,502

Foreign

Ajay North America LLC.

Associate

United States

Dividends

10,175

1,499

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

Sale of products

6,285

8,234

12,384

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

Dividends

525

Foreign

NU3 B.V.

Associate

The Netherlands

Sale of products

15,708

12,921

Foreign

NU3 B.V.

Associate

The Netherlands

Services sales

102

Foreign

NU3 N.V.

Associate

Belgium

Sale of products

9,993

12,590

Foreign

SQM Thailand Co. Ltd.

Associate

Thailand

Sale of products

10,203

7,355

1,613

Foreign

Misr Speciality Fertilizers

Associate

Egypt

Sale of products

502

F-63

Notes to the consolidated financial statements as of December 31, 2012

Note 8 – Related party disclosures (continued)

8.2

Detail of related parties and transactions with related parties, continued

Tax ID No.

Company

Nature

Country of
origin

Transaction

12/31/2012
ThUS$

12/31/2011

ThUS$

12/31/2010

ThUS$

Foreign

SQM Thailand Co. Ltd.

Associate

Thailand

Dividends

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Sale of products

1,472

834

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Dividends

1,052

491

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Services sales

353

Foreign

Kowa Company Ltd.

Other related parties

Japan

Sale of products

123,581

138,818

94,611

78.062.420-5

Minera Saskatchewan Ltda. (PCS)

Other related parties

Chile

Services sales

423

Foreign

SQM Vitas Brasil Agroindustria

Joint control or significant influence

Brazil

Sale of products

40,518

34,514

Foreign

SQM Vitas Perú S.A.C.

Joint control or significant influence

Peru

Sale of products

26,123

13,608

Foreign

SQM Vitas Southern Africa Pty.

Joint control or significant influence

South Africa

Sale of products

10,930

2,287

Foreign

SQM Vitas Fzco.

Joint venture

United Arab Emirates

Sale of products

120

1,562

Foreing

Sichuan SQM Migao Chemical Fertilizers Co Ltda.

Joint Venture

China

Services sales

Foreing

Coromandel SQM

Joint Venture

India

Sale of products

2,300

F-64

Notes to the consolidated financial statements as of December 31, 2012

Note 8 – Related party disclosures (continued)

8.3

Trade receivables due from related parties, current:

12/31/2012

12/31/2011

12/31/2010

Tax ID No.

Name

Nature

Country of origin

Currency

ThUS$

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Chilean peso

303

685

106

Foreign

SQM Thailand Co. Ltd.

Associate

Thailand

US$

6,098

5,521

656

Foreign

Doktor Tarsa Tarim Sanayi AS

Associate

Turkey

US$

3,899

Foreign

Ajay Europe S.A.R. L.

Associate

France

US$

4,775

4,603

2,043

Foreign

Ajay North America LLC.

Associate

United States

US$

4,633

7,387

2,666

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

US$

1,805

4,587

4,517

Foreign

Misr Speciality Fertilizers

Associate

Egypt

US$

199

335

Foreign

Kowa Company Ltd.

Jointly controlled entity

Japan

US$

29,929

44,188

23,134

96.511.530-7

Soc.de Inversiones Pampa Calichera

Jointly controlled entity

Chile

US$

Foreign

SQM Star Qingdao Corp Nutrition Co. Ltd

Joint venture

China

US$

Foreign

SQM Vitas Brasil Agroindustria

Joint venture

Brazil

US$

27,903

27,523

Foreign

SQM Vitas Perú S.A.C.

Joint venture

Peru

US$

18,143

17,534

Foreign

SQM Vitas Southern Africa PTY

Joint venture

South Africa

US$

1,478

597

Foreign

Coromandel SQM

Joint venture

India

Indian rupee

756

Foreign

Sichuan SQM Migao Chemical Fertilizers Co Ltda.

Joint venture

China

US$

4,000

79.049.778-9

Callegari Agrícola S.A.

Other related parties

Chile

Chilean peso

844

314

Foreing

Coromandel Internacional

Other related parties

India

Indian rupee

670

Foreing

Nutrisi Holding N.V.

Associate

Belgium

Euro

1,618

Foreing

NU3 B.V.

Associate

The Netherlands

Euro

1,083

Total to-date

101,372

117,139

36,172

F-65

Notes to the consolidated financial statements as of December 31, 2012

Note 8 – Related party disclosures (continued)

8.3

Trade payables due to related parties, current:

12/31/2012

12/31/2011

12/31/2010

Tax ID No.

Name

Nature

Country of origin

Currency

ThUS$

Foreign

SQM Vitas Fzco

Joint venture

United Arab Emirates

Arab Emirates dirham

873

2,614

Foreign

Doktor Tarsa Tarim Sanayi AS

Associate

Turkey

US Dollar

Foreign

NU3 N.V.

Associate

Belgium

US Dollar

270

Foreign

SQM Coromandel Fertilizers Limited

Joint venture

India

Rupee

581

Total to-date

873

3,538

F-66

Notes to the consolidated financial statements as of December 31, 2012

Note 8 – Related party disclosures (continued)

8.4

Board of directors and senior management

Board of directors

The Company is managed by a Board of Directors which is composed of eight regular directors who are elected for a three-year period. The present Board of Directors was elected by the shareholders at the Ordinary Shareholders' Meeting of April 28, 2011.

As of December 31, 2012, the Company has an Audit Committee made up of three members of the Board of Directors. This Committee performs those duties provided in Article 50 bis of Law No. 18,046 of the Chilean Corporation Act.

During the periods covered by these financial statements, there were no pending balances receivable and payable 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.

Directors’ Compensation

For the years ended December 31, 2012, 2011 and 2010, Directors’ compensation was as follows:

A payment of a monthly fixed gross amount of UF 300 to the Chairman of the Company’s Board of Directors and UF 50 in favor of the seven remaining board members regardless of their attendance at Board meetings or the number of meetings attended during the related month.

A payment in domestic currency in favor of the Chairman of the Company’s Board of Directors consisting of a variable and gross amount equivalent to 0.35% of profit for the period effectively earned by the Company during each fiscal year.

A payment in domestic currency in favor of each Company’s directors excluding the Chairman of the Board, consisting of a variable and gross amount equivalent to 0.04% of profit for the period effectively earned by the Company during each fiscal year.

The fixed and variable amounts indicated above will not be subject to any charge between them, and those expressed as a percentage will be paid immediately after the shareholders at the respective Annual General Shareholders’ Meeting of the Company approve the consolidated financial statements, the annual report, the report by the account inspectors and the report of external auditors for each fiscal year.

F-67

Notes to the consolidated financial statements as of December 31, 2012

Note 8 – Related party disclosures (continued)

8.4

Board of directors and senior management, continued

The remuneration of the Audit Committee is detailed as follows:

A payment of a monthly, fixed and gross amount of UF 17 in favor of each of the three Directors who are a part of the Company’s Audit Committee regardless of the number of meetings conducted during the respective month.

A payment in domestic currency and in favor of each of the three Directors of a variable and gross amount equivalent to 0.013% of the Company’s profit for the period effectively earned by the Company during fiscal years 2012 and 2011.

The remunerations and profit sharing paid to members of the Board of Directors and Audit Committee during 2012, 2011 and 2010 amount to ThUS$3,973, ThUS$3,030, and ThUS$2,869, respectively.

As of December 31, 2012, 2011 and 2010, the global compensation paid to the 120 top executives amounted to ThUS$32,888, ThUS$22,509 and ThUS$21,809, respectively. This includes monthly fixed salary and variable performance bonuses.

Additionally, the Company has retention bonuses for the Company’s executives. The amount of these bonuses is linked to the price of the Company’s shares and is payable in cash between 2012 and 2016 (See Note 15).

No guarantees have been constituted in favor of the Company’s management.

The Company’s Directors and senior managment do not receive or have not received any benefit during the period ended December 31, 2012, 2011 and 2010 or compensation related to pensions, life insurance, paid time off, profit sharing, incentives, or benefits due to disability other than those mentioned in the preceding paragraphs.

One of the Company’s Board of Directors is member of the Ultramar Group. Operations with between the Company and the Ultramar Group consisted of approximately ThUS$22,577, ThUS$13,751, and ThUS$11,532 for the years ended December 31, 2012, 2011 and 2010, respectively.

No guarantees have been constituted in favor of the directors.

F-68

Notes to the consolidated financial statements as of December 31, 2012

Note 9 – Financial instruments

Financial assets in conformity with IAS 39 are detailed as follows:

9.1

Types of other financial assets

Types of other financial assets	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$

Other current financial assets (1)		244,161		129,069		69,818
Derivatives (2)		680		14,455		1,362
Hedging assets, current		71,262		25,737		4,998
Total other current financial assets		316,103		169,261		76,178

Other non-current financial assets (3)		107		117		118
Hedging assets, non-current		29,385		30,371		92,556
Total other non-current financial assets		29,492		30,488		92,674

(1)

Term deposits with maturities exceeding 90 days from the investment date.

(2)

Forwards and options that are not classified as hedging instruments (see detail in Note 9.3).

(3)

Guarantees delivered for the lease of offices and investments in Sociedad Garantizadora de Pensiones (ownership interest of 3%).

Detail of other current financial assets

Institution	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$
Banco Santander		41,691		13,753		-
BBVA		31,579		33,528		-
Banco de Crédito e Inversiones		82,145		17,739		36,251
Banco de Chile		42,992		44,849		10,333
Corpbanca		10,499		19,200		18,031
Banco Scotiabank		25,141		-		-
Banco Itau		10,114		-		5,203
Total		244,161		129,069		69,818

9.2

Trade and other receivables, current and non-current

	12/31/2012						12/31/2011
	Current		Non-current		Total		Current		Non-current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Trade receivables		490,770		-		490,770		387,607		-		387,607
Prepayments		14,046		-		14,046		10,706		-		10,706
Other receivables		5,800		1,311		7,111		13,749		1,070		14,819
Total trade and other receivables		510,616		1,311		511,927		412,062		1,070		413,132

F-69

Notes to the consolidated financial statements as of December 31, 2012

Note 9 – Financial instruments (continued)

9.2

Trade and other receivables, current and non-current, continued

	12/31/2010
	Current		Non-current		Total
	ThUS$		ThUS$		ThUS$

Trade receivables		350,720		-		350,720
Prepayments		16,300		-		16,300
Other receivables		8,925		1,102		10,027
Total trade and other receivables		375,945		1,102		377,047

F-70

Notes to the consolidated financial statements as of December 31, 2012

Note 9 – Financial instruments, (continued)

9.2

Trade and other receivables, continued

	12/31/2012							12/31/2011
	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		507,562		(16,792	)		490,770		404,320		(16,713	)		387,607

Trade receivables, current		507,562		(16,792	)		490,770		404,320		(16,713	)		387,607

Prepayments, current		14,046		-			14,046		10,706		-			10,706
Other receivables, current		7,801		(2,001	)		5,800		15,709		(1,960	)		13,749

Trade and other receivables, current		529,409		(18,793	)		510,616		430,735		(18,673	)		412,062

Other receivables, non-current		1,311		-			1,311		1,070		-			1,070

Non-current receivables		1,311		-			1,311		1,070		-			1,070

Total trade and other receivables		530,720		(18,793	)		511,927		431,805		(18,673	)		413,132

	12/31/2010
	Assets before allowances		Allowance for doubtful trade receivables			Assets for trade receivables, net
	ThUS$		ThUS$			ThUS$
Receivables related to credit operations, current		367,546		(16,825	)		350,721

Trade receivables, current		367,546		(16,825	)		350,721

Prepayments, current		16,337		-			16,337
Other receivables, current		10,944		(2,057	)		8,887

Trade and other receivables, current		394,827		(18,882	)		375,945

Other receivables, non-current		1,102		-			1,102

Non-current receivables		1,102		-			1,102

Total trade and other receivables		395,929		(18,882	)		377,047

F-71

Notes to the consolidated financial statements as of December 31, 2012

Note 9 – Financial instruments (continued)

9.2

Trade and other receivables, continued

Portfolio stratification, continued

The Company’s policy is to require guarantees (such as letters of credit, guarantee clauses and others) and/or maintaining insurance policies for certain accounts as deemed necessary by management.

Unsecuritized portfolio

As of December 31, 2012 as of December 31, 2011, and December 31, 2010 the detail of the unsecuritized portfolio is as follows:

12/31/2012
	Not overdue		1 - 30 days		31 and 60 days		61 - 90 days		91 - 120 days		121 - 150 days		151 - 180 days		181 - 210 days		211 - 250 days		Over 250 days		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Number of customers, non-renegotiated portfolio		2,666		2,241		545		409		367		308		325		279		311		33,724		41,041
Non-renegotiated portfolio, gross		412,557		20,121		1,259		46,268		38		129		395		10,140		794		15,862		507,562
Number of customers, renegotiated portfolio		-		-		-		-		-		-		-		-		-		-		-

Renegotiated portfolio, gross		-		-		-		-		-		-		-		-		-		-		-

Total portfolio, gross		412,557		20,121		1,259		46,268		38		129		395		10,140		794		15,862		507,562

12/31/2011
	Not overdue		1 - 30 days		31 and 60 days		61 - 90 days		91 - 120 days		121 - 150 days		151 - 180 days		181 - 210 days		211 - 250 days		Over 250 days		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Number of customers, non-renegotiated portfolio		5,369		1,701		640		401		340		340		332		335		340		2,147		11,945
Non-renegotiated portfolio, gross		348,299		27,945		4,778		12,058		817		87		407		103		299		8,673		403,466
Number of customers, renegotiated portfolio		1		2		-		-		-		-		-		-		-		-		3

Renegotiated portfolio, gross		504		350		-		-		-		-		-		-		-		-		854

Total portfolio, gross		348,803		28,295		4,778		12,058		817		87		407		103		299		8,673		404,320

F-72

Notes to the consolidated financial statements as of December 31, 2012

Note 9 – Financial instruments (continued)

9.2

Trade and other receivables, continued

Portfolio stratification, continued

12/31/2010
	Not overdue		1 - 30 days		31 and 60 days		61 - 90 days		91 - 120 days		121 - 150 days		151 - 180 days		181 - 210 days		211 - 250 days		Over 250 days		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Number of customers, non-renegotiated portfolio		3,004		933		331		214		176		172		172		172		175		1,168		6,514
Non-renegotiated portfolio, gross		306,960		19,392		2,436		23,531		345		87		323		4,133		441		9,898		367,546
Number of customers, renegotiated portfolio		-		-		-		-		-		-		-		-		-		-		-

Renegotiated portfolio, gross		3,004		933		331		214		176		172		172		172		175		1,168		6,514

Total portfolio, gross		306,960		19,392		2,436		23,531		345		87		323		4,133		441		9,898		367,546

The detail of allowance is as follows:

Allowance and write-offs	12/31/2012 ThUS$			12/31/2011 ThUS$			12/31/2010 ThUS$

Allowance for non-renegotiated portfolio		20,191			21,961			19,000
Write-offs for the period		(1,398	)		(3,288	)		(118	)
Total		18,793			18,673			18,882

Credit risk concentration

Credit risk concentrations with respect to trade receivables are reduced due to the large number of entities included in the Company’s client database and their distribution throughout the world.

F-73

Notes to the consolidated financial statements as of December 31, 2012

Note 9 – Financial instruments (continued)

9.3

Hedging assets and liabilities

The balance represents derivative instruments measured at fair value which have been classified as hedges from exchange and interest rate risks related to the total obligations relating to bonds of the Company in Chilean Pesos and UF (and the exchange risk in Chilean Pesos of the Company’s investment plans). As of December 31, 2012. The face value of cash flows in Cross Currency Swap contracts agreed upon in U.S. Dollars amounted to ThUS$515,156 as of December 31, 2011 such contracts amounted to ThUS$ 405,486, and as of December 31, 2010 such contracts amounted to ThUS$ 410,618.

Hedging assets	Derivative instruments (CCS)		Effect on profit or loss for the year, derivative instruments			Hedging reserve in gross equity			Deferred tax hedging reserve in equity		Hedging reserve in equity
	ThUS$		ThUS$			ThUS$			ThUS$		ThUS$

December 31, 2012		100,647		49,853			(18,419	)		3,684		(14,735	)

December 31, 2011		56,108		(39,718	)		(12,184	)		2,104		(10,080	)

December 31, 2010		97,553		46,936			(11,093	)		1,886		(9,207	)

Hedging liabilities	Derivative instruments (IRS)		Effect on profit or loss for the year, derivative instruments			Hedging reserve in gross equity			Deferred tax hedging reserve in equity		Hedging reserve in equity
	ThUS$		ThUS$			ThUS$			ThUS$		ThUS$

December 31, 2012		1,879		27			(1,786	)		-		(1,786	)

December 31, 2011		270		(120	)		(150	)		-		(150	)

December 31, 2010		-		-			-			-		-

Amounts recorded in the effect on profit or loss column consider the mark - market effects of the contracts in force as of December 31, 2012, 2011 and 2010.

F-74

Notes to the consolidated financial statements as of December 31, 2012

Note 9 – Financial instruments (continued)

9.3

Hedging assets and liabilities, continued

Derivative contract maturities are detailed as follows:

Series		Contract amount ThUS$		Currency	Maturity date
	C		71,841	UF	12/01/2026
	G		33,673	Chilean peso	01/05/2014
	H		146,360	UF	01/05/2013
	I		56,041	UF	04/01/2014
	J		92,440	Chilean peso	04/01/2014
	M		46,463	UF	02/01/2017
	O		68,338	UF	02/01/2017

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 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 Chilean Pesos and UF. Likewise, hedging contracts are denominated in the same currencies and have the same expiration dates of bond principal and interest payments.

Hedge Accounting

The Company classifies derivative instruments as hedging that may include derivative or embedded derivatives either as fair value hedge derivative instruments, cash flow hedge derivative instruments, or hedge derivative instruments.

a) Fair value hedge

Changes in fair values of derivative instruments classified as fair value hedge derivative instruments are accounted for in gains and losses immediately along with any change in the fair value of the hedged item that is attributable to the risk being hedged.

The Company documents the relationship between hedge instruments and the hedged item along with the objectives of its risk management and strategy to carry out different hedging transactions. In addition, upon commencement of the period hedged and then on a quarterly basis the Company documents whether hedge instruments have been efficient and met the objective of hedging market fluctuations for the purpose of which we use the effectiveness test. A hedge instrument is deemed effective if the effectiveness test result is between 80% to 120%.

The hedge instruments are classified as effective or not effective on the basis of the effectiveness test results. This note includes the detail of fair values of derivatives classified as hedging instruments.

F-75

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.3

Hedging assets and liabilities, continued

b) Cash flow hedges

Cash flow hedges cover exposure to the cash flow variations attributable to a risk associated with a specific transaction that is very likely to be executed, that may have material effects on the results of the Company.

9.4

Financial liabilities

Other current and non-current financial liabilities

As of December 31, 2012, 2011 and 2010, the detail is as follows:

	12/31/2012						12/31/2011
	Current		Non-current		Total		Current		Non-current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Bank loans		122,373		379,119		501,492		141,436		329,150		470,586
Obligations with the public (bonds payable)		20,135		1,067,075		1,087,210		17,129		907,877		925,006
Other financial liabilities		10,335		-		10,335		2,443		-		2,443
Total		152,843		1,446,194		1,599,037		161,008		1,237,027		1,398,035

	12/31/2010
	Current		Non current		Total
	ThUS$		ThUS$		ThUS$

Bank loans		150,958		140,000		290,958
Obligations with the public (bonds payable)		18,244		950,188		968,432
Other financial liabilities		18,353		-		18,353
Total		187,555		1,090,188		1,277,743

F-76

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities

Other current and non-current financial liabilities

The detail of current and non-current loans assumed

	12/31/2012		12/31/2011		12/31/2010
	ThUS$		ThUS$		ThUS$

Long-term loans		379,119		329,150		140,000

Short-term loans		120,921		140,538		150,030
Current portion of long-term loans		1,452		898		928
Short-term loans and current portion of long-term loans		122,373		141,436		150,958
Total loans assumed		501,492		470,586		290,958

F-77

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Bank loans, current are as follows:

Debtor			Creditor											12/31/2012 Current maturities
Tax ID No.	Subsidiary	Country	Tax ID No.	Financial institution	Country	Currency or adjustment index	Amortization	Effective rate			Nominal rate			Up to 90 days ThUS$			91 days to 1 year ThUS$			Total ThUS$
93.007.000-9	SQM.S.A.	Chile	97.030.000-7	Banco Estado	Chile	US$	Upon maturity		1.70	%		1.70	%		-			20,175			20,175
93.007.000-9	SQM.S.A.	Chile	97.030.000-7	Banco Estado	Chile	US$	Upon maturity		1.09	%		1.09	%		-			20,017			20,017
93.007.000-9	SQM S.A.	Chile	Foreign	Banco Estado NY Branch	United States	US$	Upon maturity		3.01	%		2.69	%		1,139			-			1,139
79.626.800-K	SQM Salar S.A.	Chile	97.032.000-8	Banco BBVA Chile	Chile	US$	Upon maturity		1.90	%		1.90	%		-			20,243			20,243
79.626.800-K	SQM Salar S.A.	Chile	97.018.000-1	Scotiabank Sud Americano	Chile	US$	Upon maturity		1.03	%		1.03	%		20,153			-			20,153
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Bank of America	United States	US$	Upon maturity		1.83	%		1.52	%		-			141			141
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Export Development Canada	Canada	US$	Upon maturity		1.81	%		1.46	%		-			20			20
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Scotiabank & Trust (Cayman) Ltd.	Cayman Islands	US$	Upon maturity		1.60	%		1.54	%		-			235			235
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Scotiabank & Trust (Cayman) Ltd.	Cayman Islands	US$	Upon maturity		1.92	%		1.62	%		-			164			164
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	The Bank of Tokyo-Mitsubishi UFJ, Lda. (New York)	United States	US$	Upon maturity		1.49	%		1.26	%		-			140			140
79.947.100-0	SQM Industrial S.A.	Chile	97.030.000-7	Banco Estado	Chile	US$	Upon maturity		1.64	%		1.64	%		-			20,172			20,172
79.947.100-0	SQM Industrial S.A.	Chile	97.018.000-1	Scotiabank Sud Americano	Chile	US$	Upon maturity		1.04	%		1.04	%		20,162			-			20,162
Total															41,454			81,307			122,761
Borrowing costs															(26	)		(362	)		(388	)
Total															41,428			80,945			122,373

F-78

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Debtor			Creditor											12/31/2011 Current maturities
Tax ID No.	Subsidiary	Country	Tax ID No.	Financial institution	Country	Currency or adjustment index	Amortization	Effective rate			Nominal rate			Up to 90 days ThUS$			91 days to 1 year ThUS$			Total ThUS$
93.007.000-9	SQM.S.A.	Chile	97.032.000-8	Banco BBVA Chile	United States	US$	Upon maturity		1.00	%		1.00	%		20,094			-			20,094
93.007.000-9	SQM.S.A.	Chile	97.030.000-7	Banco Estado	United States	US$	Upon maturity		0.95	%		0.95	%		20,089			-			20,089
93.007.000-9	SQM S.A.	Chile	Foreign	Banco Estado NY Branch	United States	US$	Upon maturity		3.02	%		2.72	%		-			645			645
79.626.800-K	SQM Salar S.A.	Chile	97.030.000-7	Banco Estado	Chile	US$	Upon maturity		1.24	%		1.24	%		-			20,114			20,114
79.626.800-K	SQM Salar S.A.	Chile	97.004.000-5	Banco de Chile	Chile	US$	Upon maturity		1.03	%		1.03	%		20,085			-			20,085
79.626.800-K	SQM Salar S.A.	Chile	97.018.000-1	Scotiabank Sud Americano	Chile	US$	Upon maturity		0.75	%		0.75	%		48			20,000			20,048
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Bank of America	United States	US$	Upon maturity		2.56	%		1.47	%		-			140			140
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Export Development Canada	United States	US$	Upon maturity		2.36	%		1.75	%		-			24			24
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Scotiabank & Trust (Cayman) Ltd.	Cayman Islands	US$	Upon maturity		1.74	%		1.35	%		207			-			207
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	The Bank of Tokyo-Mitsubishi UFJ, Lda. (New York)	United States	US$	Upon maturity		2.17	%		1.23	%		-			137			137
79.947.100-0	SQM Industrial S.A.	Chile	97.004.000-5	Banco de Chile	Chile	US$	Upon maturity		1.58	%		1.58	%		-			20,057			20,057
79.947.100-0	SQM Industrial S.A.	Chile	97.018.000-1	Scotiabank Sud Americano	Chile	US$	Upon maturity		0.70	%		0.70	%		51			20,000			20,051
Total															60,574			81,117			141,691
Borrowing costs															(61	)		(194	)		(255	)
Total															60,513			80,923			141,436

F-79

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Debtor			Creditor											12.31.2010 Current maturities
Tax ID No.	Subsidiary	Country	Tax ID No.	Financial institution	Country	Currency or adjustment index	Amortization	Effective rate			Nominal rate			Up to 90 days ThUS$		91 days to 1 year ThUS$			Total ThUS$
93.007.000-9	SQM S.A.	Chile	Foreign	Banco Estado NY Branch	United States	US$	Upon maturity		3.93	%		3.77	%		20,214		-			20,214
93.007.000-9	SQM S.A.	Chile	Foreign	Banco Estado NY Branch	United States	US$	Upon maturity		3.93	%		3.77	%		10,104		-			10,104
93.007.000-9	SQM S.A.	Chile	Foreign	Banco Estado NY Branch	United States	US$	Upon maturity		2.55	%		2.55	%		-		625			625
93.007.000-9	SQM S.A.	Chile	97.032.000-8	BBVA Banco Bilbao Vizcaya Argentaria	Chile	US$	Upon maturity		0.64	%		0.64	%		20,030		-			20,030
93.007.000-9	SQM S.A.	Chile	97.032.000-8	BBVA Banco Bilbao Vizcaya Argentaria	Chile	US$	Upon maturity		0.26	%		0.26	%		20,000		-			20,000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	ING Capital LLC	United States	US$	Upon maturity		1.00	%		0.80	%		-		80,055			80,055
Total															70,348		80,680			151,028
Borrowing costs															-		(70	)		(70	)
Total															70,348		80,610			150,958

F-80

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Unsecured obligations, current:

The detail of current unsecured interest-bearing obligations is composed of promissory notes and bonds, as follows:

Bonds

Debtor							Periodicity								12/31/2012 Current maturities
TAX ID No.	Subsidiary	Country	Number of registration or ID of the instrument	Series	Maturity date	Adjustment index for the bond	Payment of interest	Repayment	Effective rate			Nominal rate			Up to 90 days ThUS$			91 days to 1 year ThUS$			Total ThUS$
93.007.000-9	SQM S.A	Chile	-	Single	04/15/2013	US$	Semi-annual	Upon maturity		6.32	%		6.13	%		-			2,577			2,577
93.007.000-9	SQM S.A	Chile	-	Single	04/21/2013	US$	Semi-annual	Upon maturity		5.70	%		5.50	%		-			2,667			2,667
93.007.000-9	SQM S.A	Chile	446	C	06/01/2013	UF	Semi-annual	Semi-annual		4.44	%		4.00	%		-			7,464			7,464
93.007.000-9	SQM S.A	Chile	563	G	01/05/2013	Ch$	Semi-annual	Upon maturity		7.50	%		7.00	%		1,465			-			1,465
93.007.000-9	SQM S.A	Chile	564	H	01/05/2013	UF	Semi-annual	Semi-annual		5.10	%		4.90	%		4,484			-			4,484
93.007.000-9	SQM S.A	Chile	563	I	04/01/2013	UF	Semi-annual	Upon maturity		3.35	%		3.00	%		-			532			532
93.007.000-9	SQM S.A	Chile	563	J	04/01/2013	Ch$	Semi-annual	Upon maturity		6.23	%		5.50	%		-			1,470			1,470
93.007.000-9	SQM S.A.	Chile	700	M	02/01/2013	UF	Semi-annual	Upon maturity		3.62	%		3.30	%		644			-			644
93.007.000-9	SQM S.A.	Chile	699	O	02/01/2013	UF	Semi-annual	Upon maturity		3.95	%		3,80	%		1,110			-			1,110
			Total													7,703			14,710			22,413
			Bond issue costs													(473	)		(1,805	)		(2,278	)
			Total													7,230			12,905			20,135

Effective rates of bonds in Chilean Pesos and UF are expressed and calculated in U.S. dollars based on the flows agreed in Cross Currency Swap Agreements.

F-81

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Debtor							Periodicity								12/31/2011 Current maturities
Tax ID No.	Subsidiary	Country	Number of registration or ID of the instrument	Series	Maturity date	Adjustment index for the bond	Payment of interest	Repayment	Effective rate			Nominal rate			Up to 90 days ThUS$			91 days to 1 year ThUS$			Total ThUS$
93.007.000-9	SQM S.A	Chile	-	Single	04/15/2012	US$	Semi-annual	Upon maturity		6.32	%		6.13	%		-			2,577			2,577
93.007.000-9	SQM S.A	Chile	-	Single	04/21/2012	US$	Semi-annual	Upon maturity		5.70	%		5.50	%		-			2,667			2,667
93.007.000-9	SQM S.A	Chile	446	C	06/01/2012	UF	Semi-annual	Semi-annual		4.44	%		4.00	%		-			6,754			6,754
93.007.000-9	SQM S.A	Chile	563	G	01/05/2012	Ch$	Semi-annual	Upon maturity		7.50	%		7.00	%		1,354			-			1,354
93.007.000-9	SQM S.A	Chile	564	H	01/05/2012	UF	Semi-annual	Semi-annual		5.10	%		4.90	%		4,045			-			4,045
93.007.000-9	SQM S.A	Chile	563	I	04/01/2012	UF	Semi-annual	Upon maturity		3.35	%		3.00	%		-			477			477
93.007.000-9	SQM S.A	Chile	563	J	04/01/2012	Ch$	Semi-annual	Upon maturity		6.23	%		5.50	%		-			1,351			1,351
			Total													5,399			13,826			19,225
			Bond issue costs													(276	)		(1,820	)		(2,096	)
			Total													5,123			12,006			17,129

Debtor							Periodicity								12/31/2010 Current maturities
Tax ID No.	Subsidiary	Country	Number of registration or ID of the instrument	Series	Maturity date	Adjustment index for the bond	Payment of interest	Repayment	Effective rate			Nominal rate			Up to 90 days ThUS$			91 days to 1 year ThUS$			Total ThUS$
93.007.000-9	SQM S.A	Chile	-	Single	04/15/2012	US$	Semi-annual	Upon maturity		6.69	%		6.13	%		-			2,591			2,591
93.007.000-9	SQM S.A	Chile	-	Single	04/21/2012	US$	Semi-annual	Upon maturity		5.93	%		5.50	%		-			2,682			2,682
93.007.000-9	SQM S.A	Chile	446	C	06/01/2012	UF	Semi-annual	Semi-annual		6.56	%		4.00	%		-			7,237			7,237
93.007.000-9	SQM S.A	Chile	563	G	01/05/2012	Ch$	Semi-annual	Upon maturity		7.53	%		7.00	%		1,502			-			1,502
93.007.000-9	SQM S.A	Chile	564	H	01/05/2012	UF	Semi-annual	Semi-annual		6.29	%		4.90	%		4,319			-			4,319
93.007.000-9	SQM S.A	Chile	563	I	04/01/2012	UF	Semi-annual	Upon maturity		5.36	%		3.00	%		-			512			512
93.007.000-9	SQM S.A	Chile	563	J	04/01/2012	Ch$	Semi-annual	Upon maturity		6.64	%		5.50	%		-			1,508			1,508
			Total													5,821			14,530			20,351
			Bond issue costs													(270	)		(1,820	)		(2,107	)
			Total													5,551			12,006			18,244

F-82

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4 Financial liabilities, continued

Types of non-current interest-bearing loans

Non-current interest-bearing loans as of December 31, 2012 and December 31, 2011 are detailed as follows:

Non-current interest-bearing bank loans

Debtor			Creditor											12/31/2012 Years to maturity
Tax ID No.	Subsidiary	Country	Tax ID No.	Financial institution	Country	Currency or adjustment index	Repayment	Effective rate			Nominal rate			1 to 3 ThUS$			3 to 5 ThUS$			Over 5 ThUS$		Total ThUS$
93.007.000-9	SQM S.A.	Chile	Foreign	Banco Estado NY Branch	United States	US$	Upon maturity		3.01	%		2.69	%		-			140,000			-		140,000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Scotiabank & Trust (Cayman) Ltd.	Cayman Islands	US$	Upon maturity		1.60	%		1.54	%		50,000			-			-		50,000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Scotiabank & Trust (Cayman) Ltd.	Cayman Islands	US$	Upon maturity		1.92	%		1.62	%		50,000			-			-		50,000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Bank of America	United States	US$	Upon maturity		1.83	%		1.52	%		-			40,000			-		40,000

Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Export Development Canada	Canada	US$	Upon maturity		1.81	%		1.46	%		-			50,000			-		50,000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	The Bank of Tokyo-Mitsubishi UFJ, Ltd (New York)	United States	US$	Upon maturity		1.49	%		1.26	%		-			50,000			-		50,000
Total															100,000			280,000			-		380,000
Borrowing costs															(235	)		(646	)		-		(881	)
Total															99,765			279,354			-		379,119

F-83

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Debtor			Creditor											12/31/2011 Years to maturity
Tax ID No.	Subsidiary	Country	Tax ID No.	Financial institution	Country	Currency or adjustment index	Repayment	Effective rate			Nominal rate			1 to 3 ThUS$			3 to 5 ThUS$			Over 5 ThUS$		Total ThUS$
93.007.000-9	SQM S.A.	Chile	Foreign	Banco Estado NY Branch	United States	US$	Upon maturity		3.02	%		2.72	%		140,000			-			-		140,000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Scotiabank & Trust (Cayman) Ltd.	Cayman Islands	US$	Upon maturity		1.74	%		1.35	%		50,000			-			-		50,000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Bank of America	United States	US$	Upon maturity		2.56	%		1.47	%		-			40,000			-		40,000

Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	Export Development	Cayman Islands	US$	Upon maturity		2.36	%		1.74	%		-			50,000			-		50,000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	Foreign	The Bank of Tokyo-Mitsubishi UFJ, Ltd (New York)	United States	US$	Upon maturity		2.17	%		1.23	%		-			50,000			-		50,000
Total															190,000			140,000			-		330,000
Borrowing costs															(104	)		(746	)		-		(850	)
Total															189,896			139,254			-		329,150

Debtor			Creditor											12/31/2010 Years to maturity
Tax ID No.	Subsidiary	Country	Tax ID No.	Financial institution	Country	Currency or adjustment index	Repayment	Effective rate			Nominal rate			1 to 3 ThUS$		3 to 5 ThUS$		Over 5 ThUS$		Total ThUS$
93.007.000-9	SQM S.A.	Chile	Foreign	Banco Estado NY Branch	United States	US$	Upon maturity		2.55	%		2.55	%		-		140,000		-		140,000
Total															-		140,000		-		140,000
Borrowing costs															-		-		-		-
Total															-		140,000		-		140,000

F-84

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Non-current unsecured interest-bearing bonds

The breakdown of non-current unsecured interest-bearing bonds as of December 31, 2012, 2011 and 2010 is detailed as follows:

Debtor							Periodicity											12/31/2012 Current maturities
Tax ID No.	Subsidiary	Country	Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Payment of interest	Repayment	Effective rate			Nominal rate			1 to 3 years ThUS$			3 to 5 years ThUS$			Over 5 years ThUS$			Total ThUS$
93.007.000-9	SQM S.A	Chile	-	Single	04/15/2016	US$	Semi-annual	Upon maturity		6.32	%		6.13	%		-			200,000			-			200,000
93.007.000-9	SQM S.A	Chile	-	Single	04/21/2020	US$	Semi-annual	Upon maturity		5.70	%		5.50	%		-			-			250,000			250,000
93.007.000-9	SQM S.A	Chile	446	C	12/01/2026	UF	Semi-annual	Semi-annual		4.44	%		4.00	%		14,280			14,280			64,260			92,820
93.007.000-9	SQM S.A	Chile	564	H	01/05/2030	UF	Semi-annual	Semi-annual		7.50	%		4.90	%		-			-			190,401			190,401
93.007.000-9	SQM S.A	Chile	563	G	01/05/2014	Ch$	Semi-annual	Upon maturity		5.10	%		7.00	%		43,764			-			-			43,764
93.007.000-9	SQM S.A	Chile	563	I	04/01/2014	UF	Semi-annual	Upon maturity		3.35	%		3.00	%		71,400			-			-			71,400
93.007.000-9	SQM S.A	Chile	563	J	04/01/2014	Ch$	Semi-annual	Upon maturity		6.23	%		5.50	%		108,368			-			-			108,368
93.007.000-9	SQM S.A.	Chile	700	M	02/01/2017	UF	Semi-annual	Upon maturity		3.62	%		3.30	%		-			47,600			-			47,600
93.007.000-9	SQM S.A.	Chile	699	O	02/01/2033	UF	Semi-annual	Upon maturity		3.95	%		3.80	%		-			-			71,400			71,400
			Total													237,812			261,880			576,061			1,075,753
			Bond issue costs													(631	)		(1,420	)		(6,627	)		(8,678	)
			Total													237,181			260,460			569,434			1,067,075

Debtor							Periodicity												12/31/2011 Current maturities
Tax ID No.	Subsidiary	Country	Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Payment of interest		Repayment	Effective rate			Nominal rate			1 to 3 years ThUS$			3 to 5 years ThUS$			Over 5 years ThUS$			Total ThUS$
93.007.000-9	SQM S.A	Chile	-	Single	04/15/2016	US$		Semi-annual	Upon maturity		6,32	%		6,13	%		-			200,000			-			200,000
93.007.000-9	SQM S.A	Chile	-	Single	04/21/2020	US$		Semi-annual	Upon maturity		5,70	%		5,50	%		-			-			250,000			250,000
93.007.000-9	SQM S.A	Chile	446	C	12/01/2026	UF		Semi-annual	Semi-annual		4,44	%		4,00	%		12,881			12,881			64,408			90,170
93.007.000-9	SQM S.A	Chile	564	H	01/05/2030	UF		Semi-annual	Semi-annual		7,50	%		4,90	%		-			-			171,753			171,753
93.007.000-9	SQM S.A	Chile	563	G	01/05/2014	Ch$		Semi-annual	Upon maturity		5,10	%		7,00	%		40,446			-			-			40,446
93.007.000-9	SQM S.A	Chile	563	I	04/01/2014	UF		Semi-annual	Upon maturity		3,35	%		3,00	%		64,408			-			-			64,408
93.007.000-9	SQM S.A	Chile	563	J	04/01/2014	Ch$		Semi-annual	Upon maturity		6.23	%		5,50	%		100,152			-			-			100,152
			Total														217,887			212,881			486,161			916,929
			Bond issue costs														(1,700	)		(1,332	)		(6,030	)		(9,052	)
			Total														216,187			211,559			480,131			907,877

F-85

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Debtor							Periodicity											12/31/2010 Current maturities
Tax ID No.	Subsidiary	Country	Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Payment of interest	Repayment	Effective rate			Nominal rate			1 to 3 years ThUS$			3 to 5 years ThUS$			Over 5 years ThUS$			Total ThUS$
93.007.000-9	SQM S.A	Chile	-	Single	04/15/2016	US$	Semi-annual	Upon maturity		7.33	%		6.13	%		-			-			200,000			200,000
93.007.000-9	SQM S.A	Chile	-	Single	04/21/2020	US$	Semi-annual	Upon maturity		6.19	%		5.50	%		-			-			250,000			250,000
93.007.000-9	SQM S.A	Chile	446	C	12/01/2026	UF	Semi-annual	Semi-annual		6.85	%		4.00	%		13,755			13,755			75,654			103,164
93.007.000-9	SQM S.A	Chile	564	H	01/05/2030	UF	Semi-annual	Semi-annual		5.79	%		4.90	%		-			-			183,402			183,402
93.007.000-9	SQM S.A	Chile	563	G	01/05/2014	Ch$	Semi-annual	Upon maturity		6.93	%		7.00	%		-			44,877			-			44,877
93.007.000-9	SQM S.A	Chile	563	I	04/01/2014	UF	Semi-annual	Upon maturity		5.59	%		3.00	%		-			68,776			-			68,776
93.007.000-9	SQM S.A	Chile	563	J	04/01/2014	Ch$	Semi-annual	Upon maturity		5.23	%		5.50	%		-			111,124			-			111,124
			Total													13,755			238,532			709,056			961,343
			Bond issue costs													(682	)		(2,670	)		(7,803	)		(11,155	)
			Total													13,073			235,862			701,253			950,188

F-86

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Additional information

Bonds

As of December 31, 2012, 2011 and 2010, ThUS$20,135, ThUS$17,129 and ThUS$18,244, respectively are presented as short-term related to principal, current portion plus interest accrued at that date, not including bond issue costs. The non-current portion, consisting of ThUS$1,067,075, ThUS$907,877 and ThUS$ 950,188 as of December 31, 2012, 2011 and 2010, respectively, related to principal installments of Series C bonds, Single Series bonds, Series G bonds, Series H bonds, Series I bonds, Series J bonds and Single series Second Issue bonds.

The details of each issue are as follows

Series “C” bonds

In January 2006, the Company placed Series C bonds for UF 3,000,000 (ThUS$101,918) at an annual rate of 4.00%.

The Company has made the following payments towards the Series C bonds:

Payments made	12/31/2012		12/31/2011		12/31/2010
	ThUS$		ThUS$		ThUS$
Principal		6,858		6,678		6,298
Interest		4,004		4,169		4,175

Single Series bonds

In April 2006, the Company placed Single Series bonds for ThUS$200,000 at an annual rate of 6.125% under Rule 144 and Regulation S of the U.S. Securities Act of 1933.

The Company has made no principal payments and interest payments amounting to ThUS$12,250 for the years ending December 31, 2012, 2011, and 2010, respectively on these bonds:

F-87

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Series “G” and “H” bonds

In January 2009, the Company placed two bond series in the domestic market, Series H for UF 4,000,000 (ThUS$139,216) at an annual interest rate of 4.9% and a term of 21 years with payment of principal beginning in 2019 and Series G for ThCh$ 21,000,000 (ThUS$34,146), which was placed at a term of 5 years with a single payment upon maturity and an annual interest rate of 7%.

The Company has made the following payments on the Series G and H bonds:

	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$
Payment of interest, Series G bonds		2,845		3,094		2,750
Payment of interest, Series H bonds		8,565		8,989		7,763

Series “J” and “I” bonds

In May 8, 2009, the Company placed two bond series in the domestic market, Series J for ThCh$52,000,000 (ThUS$92,456) which was placed at a term of 5 years with single payment at maturity and annual interest rate of 5.5% and Series I for UF 1,500,000 (ThUS$56,051) which was placed at a term of 5 years with single payment upon maturity and an annual interest rate of 3.00%.

The Company has made the following payments on the Series J and I bonds:

	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$
Payment of interest, Series J bonds		5,879		5,665		5,588
Payment of interest, Series I bonds		2,100		1,954		1,873

F-88

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.4

Financial liabilities, continued

Single series bonds, second issue

In April 2010, the Company informed the SVS of its placement in international markets of an unsecured bond of ThUS$250,000 with a maturity of 10 years beginning on the aforementioned date with annual interest rate of 5.5% which was used to refinance other long-term liabilities.

For the years ended December 31, 2012, 2011, and 2010 the Company has made interest payments totaling ThUS$13,750, ThUS$13,750 and ThUS$6,875, respectively.

Series “M” and “O” bonds

In April 2012 the company placed two series of bonds in the national market. The “series M” of UF 1,000,000 (ThUS$46,601) was placed at a period of 5 years, with a sole amortization when the term ends and with an annual interest rate of 3.3%, and the “series O” of UF 1,500,000 (ThUS$69,901) that was placed at a term of 21 years, with a sole amortization when the term expires and with an annual interest rate of 3.80%.

For the Year ended December 31, 2012, the Company paid interest of ThUS$765 on Series M bonds and ThUS$1,320 on Series O bonds.

Promissory notes with middle-term maturities

On April 2, 2009 the Company issued promissory notes in the local market for an amount of ThCH$ 15,000,000 (ThUS$ 25,770) identified as line 47, Series 1-B, with a maturity of 10 years. The maximum amount to be issued is UF 1,500,000. In 2010, the Company paid ThUS$29,040 in full settlement of these notes.

F-89

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.5

Trade and other payables

Current trade and other payables consists of the following:

	12/31/2012		12/31/2011		12/31/2010
	Current		Current		Current
	ThUS$		ThUS$		ThUS$

Accounts payable		207,429		182,552		151,516
Retained (or accrued)		515		480		631
Total		207,944		183,032		152,147

The Company had no long-term trade and other payables as of December 31, 2012, 2011 and 2010, respectively.

Purchase commitments held by the Company are recognized as liabilities when the goods and services are received by the Company. As of December 31, 2012 the Company had open purchase orders amounting to ThUS$127,484 (ThUS$79,045, 2011 and ThUS$51,347 as of December 31, 2011 and 2010, respectively).

F-90

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.6

Financial liabilities at fair value through profit or loss

Derivative instruments measured at their fair value through profit or loss consists of the following:

Financial liabilities at fair value through profit or loss	12/31/2012		Effect on profit or loss as of 12/31/2012			12/31/2011		Effect on profit or loss as of 12/31/2011			12/31/2010		Effect on profit or loss as of 12/31/2010
	ThUS$		ThUS$			ThUS$		ThUS$			ThUS$		ThUS$
Curren
Derivative instruments (forward)		5,612		(4,559	)		1,053		(1,053	)		15,818		(15,818	)
Derivative instruments (options)		2,492		(1,456	)		1,036		(1,036	)		2,535		(2,533	)
Derivative instruments (Swaps)		2,231		(240	)		354		(150	)		-		-
		10,335		(6,255	)		2,443		(2,239	)		18,353		(18,355	)

F-91

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.7

Financial asset and liability categories

Financial Assets

	12/31/2012						12/31/2011
	Current		Non-current		Total		Current		Non-current		Total
Description of financial assets	Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$

Financial assets at fair value through profit or loss, classified as held-for-trading		244,161		-		244,161		129,069		-		129,069
Financial assets at fair value through profit or loss, mandatorily measured at fair value		680		-		680		14,455		-		14,455
Financial assets at fair value through profit or loss		244,841		-		244,841		143,524		-		143,524
Investments held to maturity		-		107		107		-		117		117
Loans and receivables		510,616		1,311		511,927		412,062		1,070		413,132
Financial assets at fair value through other comprehensive income		71,261		29,385		100,646		25,737		30,371		56,108
Total financial assets		826,718		30,803		857,521		581,323		31,558		612,881

	12/31/2010
	Current		Non-current		Total
Description of financial assets	Amount ThUS$		Amount ThUS$		Amount ThUS$

Financial assets at fair value through profit or loss, classified as held-for-trading		69,818		-		69,818
Financial assets at fair value through profit or loss, mandatorily measured at fair value		1,363		-		1,363
Financial assets at fair value through profit or loss		71,181		-		71,181
Investments held to maturity		-		118		118
Loans and receivables		375,945		1,102		377,047
Financial assets at fair value through other comprehensive income		4,997		92,556		97,553
Total financial assets		452,123		93,776		545,899

F-92

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.7

Financial asset and liability categories (continued)

Financial liabilities

	12/31/2012						12/31/2011
	Current		Non-current		Total		Current		Non-current		Total
Description of financial liabilities at fair value through profit or loss	Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$

Financial liabilities at fair value through profit or loss, designed as such at initial recognition		10,335		-		10,335		2,443		-		2,443
Financial liabilities at fair value through profit or loss		10,335		-		10,335		2,443		-		2,443

Financial liabilities measured at amortized cost		350,452		1,446,194		1,796,646		341,597		1,237,027		1,578,624
Total financial liabilities		360,787		1,446,194		1,806,981		344,040		1,237,027		1,581,067

	12/31/2010
	Current		Non-current		Total
Description of financial liabilities at fair value through profit or loss	Amount ThUS$		Amount ThUS$		Amount ThUS$

Financial liabilities at fair value through profit or loss, designed as such at initial recognition		18,353		-		18,353
Financial liabilities at fair value through profit or loss		18,353		-		18,353

Financial liabilities measured at amortized cost		321,349		1,090,188		1,411,537
Total financial liabilities		339,702		1,090,188		1,429,890

F-93

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.8

Financial assets pledged as guarantee

On November 4, 2004, the Company’s subsidiary Isapre Norte Grande maintains a guarantee equivalent to the total amount owed to its members and healthcare providers, which is managed and maintained by Banco de Chile. Assets, in the form of restricted cash pledged as guarantees as of December 31, 2012, 2011, and 2010 were ThUS$571, ThUS$428, and ThUS$514, respectively.

9.9

Estimated fair value of financial instruments and financial derivatives

Although inputs used to estimate the fair value of financial assets and liabilities represent Management's best estimate, they are subjective in nature and involve assumptions related to the current economic and market conditions, as well as underlying risk features. The methodologies and assumptions used to value each financial instrument depend on the risk profile and underlying characteristics of instrument as follows:

Cash equivalent approximates fair value due to the short-term maturities of these instruments.

Other current financial liabilities are considered at fair value equal to their carrying values.

Interest-bearing liabilities with original maturity of more than a year, fair values are calculated at discounting contractual cash flows at their original current market values with similar terms.

Forward and swap contracts, fair value is determined using quoted market prices of financial instruments with similar characteristics.

F-94

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.9

Estimated fair value of financial instruments and financial derivatives, continued

Details of the carrying values and estimated fair values of the Company’s financial instruments is as follows:

	12/31/2012				12/31/2011				12/31/2010
	Carrying value		(*) Fair value		Carrying value		(*) Fair value		Carrying value		(*) Fair value
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		324,353		324,353		444,992		444,992		524,652		524,652
Current trade and other receivables		510,616		510,616		412,062		412,062		375,945		375,945
Other current financial assets:
- Time deposits		244,161		244,161		129,069		129,069		69,818		69,818
- Derivative instruments		680		680		14,455		14,455
- Current hedging assets		71,262		71,262		25,737		25,737
Total other current financial assets		316,103		316,103		169,261		169,261		76,178		76,178
Other non-current financial assets:		107		107		117		117		118		118
Non-current hedging assets		29,385		29,385		30,371		30,371		92,556		92,556
Total other non-current financial assets		29,492		29,492		30,488		30,488		92,674		92,674
Other current financial liabilities:
- Bank loans		122,373		122,373		141,436		141,436		150,958		150,958
- Derivative instruments		8,456		8,456		2,174		2,174
- Hedging liabilities		1,879		1,879		269		269
- Unsecured obligations		20,135		20,135		17,129		17,129		18,244		18,244
Total other current financial liabilities		152,843		152,843		161,008		161,008		187,555		187,555
Current and non-current accounts payable		207,944		207,944		183,032		183,032		152,147		152,147
Other non-current financial liabilities:
- Bank loans		379,119		401,065		329,150		348,218		140,000		143,174
- Unsecured obligations		1,067,075		1,137,363		907,877		1,074,907		950,188		1,092,026
Total other non-current financial liabilities:		1,446,194		1,538,428		1,237,027		1,423,125		1,090,188		1,235,200

Fair value hierarchies are as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability either directly (prices) or indirectly (derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data, or unobservable inputs.

The valuation techniques used to determine the fair value of our hedging instruments are those indicated in level 2.

F-95

Notes to the consolidated financial statements as of December 31, 2012

Note 9 - Financial instruments (continued)

9.10

Nature and scope of risks arising from financing instruments

Disclosure of information associated with the nature and scope of risks arising from financial instruments is presented in note 4.

Note 10 – Equity-accounted investees

10.1 Investment in associates recognized according to the equity method of accounting

Equity accounted investments and joint ventures consist of the following:

					Investment				Share on profit (loss) of equity- accounted investees
	Note No.		12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$		12/31/2012 ThUS$		12/31/2011 ThUS$			12/31/2010 ThUS$

Equity-accounted investees		10.1 10.3		50,955		43,057		38,262		24,104		22,157			10,090
Joint ventures		10.4		19,343		17,637		24,009		253		(349	)		591
Total				70,298		60,694		62,271		24,357		21,808			10,681

F-96

Notes to the consolidated financial statements as of December 31, 2012

Note 10 – Equity-accounted investees (continued)

10.2

Assets, liabilities, revenue and expenses of associates

12-31-2012
Tax ID No.	Associate	Country of incorporation	Functional currency	Assets ThUS$		Liabilities ThUS$		Revenue ThUS$		Net profit (loss) ThUS$
77.557.430-5	Sales de Magnesio Ltda.	Chile	Chilean Peso		5,026		1,713		14,436		2,177
Foreign	Abu Dhabi Fertilizer Industries WWL	United Arab Emirates	U.A.E Dirham		24,662		4,291		42,899		3,255
Foreign	Doktor Tarsa Tarim Sanayi AS	Turkey	Turkish Lira		77,084		44,635		77,839		8,267
Foreign	Ajay North America	United States	US Dollar		44,889		6,292		83,340		22,300
Foreign	Ajay Europe SARL	France	Euro		36,106		12,688		84,203		12,591
Foreign	SQM Eastmed Turkey	Turkey	Euro		428		258		-		-
Foreign	SQM Thailand Co. Ltd.	Thailand	Thai Bath		17,068		13,048		13,536		81

	Total				205,263		82,925		316,253		48,671

12-31-2011
Tax ID No.	Associate	Country of incorporation	Functional currency	Assets ThUS$		Liabilities ThUS$		Revenue ThUS$		Net profit (loss) ThUS$
77.557.430-5	Sales de Magnesio Ltda.	Chile	Chilean Peso		4,484		1,595		8,652		1,335
Foreign	Abu Dhabi Fertilizer Industries WWL	United Arab Emirates	U.A.E Dirham		22,964		5,849		38,024		2,985
Foreign	Doktor Tarsa Tarim Sanayi AS	Turkey	Turkish Lira		78,090		53,752		67,205		5,160
Foreign	Ajay North America	United States	US Dollar		47,866		9,876		80,923		23,689
Foreign	Ajay Europe SARL	France	Euro		32,332		14,600		59,189		8,384
Foreign	Mirs Specialty Fertilizers	Egypt	Egyptian pound		5,476		2,802		-		(266	)
Foreign	SQM Eastmed Turkey	Turkey	Euro		438		264		29		(94	)
Foreign	SQM Thailand Co. Ltd.	Thailand	Thai Bath		8,130		4,227		10,895		175

	Total				199,780		92,965		264,917		41,368

12-31-2010
Tax ID No.	Associate	Country of incorporation	Functional currency	Assets ThUS$		Liabilities ThUS$		Revenue ThUS$		Net profit (loss) ThUS$
77.557.430-5	Sales de Magnesio Ltda.	Chile	Chilean Peso		3,847		1,143		6,494		1,408
Foreign	Abu Dhabi Fertilizer Industries WWL	United Arab Emirates	U.A.E Dirham		22,001		7,869		35,506		1,960
Foreign	Doktor Tarsa Tarim Sanayi AS	Turkey	Turkish Lira		56,853		33,256		64,540		8,003
Foreign	Nutrisi Holding N.V.	Belgium	Euro		11,217		3,228		-		3,056
Foreign	Ajay North America	United States	US Dollar		22,511		5,168		52,237		4,143
Foreign	Ajay Europe SARL	France	Euro		17,651		6,519		41,992		2,212
Foreign	Mirs Specialty Fertilizers	Egypt	Egyptian pound		6,227		3,206		4,231		(521	)
Foreign	SQM Eastmed Turkey	Turkey	Euro		626		247		646		-
Foreign	SQM Thailand Co. Ltd.	Thailand	Thai Bath		5,894		2,035		11,149		594

	Total				146,827		62,671		216,795		20,855

F-97

Notes to the consolidated financial statements as of December 31, 2012

Note 10 – Equity-accounted investees (continued)

10.3

Detail of investments in associates

The Company’s ownership in its associates is detailed as follows:

Associate	Main activities of the associate	Ownership %			Investment		Investment		Investment
					12/31/2012		12/31/2011		12/31/2010
					ThUS$		ThUS$		ThUS$
Sales de Magnesio Ltda.	Commercialization of magnesium salts.		50	%		1,656		1,444		1,352
Abu Dhabi Fertilizer Industries Co. W.W.L.	Distribution and commercialization of specialty plant nutrients in the Middle East.		50	%		9,890		8,558		7,066
Ajay North America L.L.C	Production and commercialization of iodine derivatives.		49	%		15,357		14,866		7,251
Doktor Tarsa Tarim Sanayi AS	Distribution and commercialization of specialty plant nutrients in Turkey.		50	%		15,346		12,169		11,799
Nutrisi Holding N.V.	Holding company		50	%		-		-		3,551
Ajay Europe SARL	Production and distribution of iodine and iodine derivatives.		50	%		8,495		3,102		4,076
Misr Specialty Fertilizers S.A.E.	Production and commercialization of liquid specialty plant nutrients for Egypt.		47.4857	%		-		1,270		1,435
SQM Eastmed Turkey	Production and commercialization of specialty products.		50	%		85		87		189
SQM Thailand Co. Ltd.	Distribution and commercialization of specialty plant nutrients.		40	%		126		1,561		1,543
Total						50,955		43,057		38,262

Associate	Main activities of the associate	Ownership %			Share on profit (loss) of equity-accounted investees
					12/31/2012		12/31/2011			12/31/2010
					ThUS$		ThUS$			ThUS$
Sales de Magnesio Ltda.	Commercialization of magnesium salts.		50	%		1,088		667			704
Abu Dhabi Fertilizer Industries Co. W.W.L.	Distribution and commercialization of specialty plant nutrients in the Middle East.		50	%		1,628		1,492			980
Ajay North America L.L.C	Production and commercialization of iodine derivatives.		49	%		10,927		11,608			2,030
Doktor Tarsa Tarim Sanayi AS	Distribution and commercialization of specialty plant nutrients in Turkey.		50	%		4,134		2,580			4,002
Nutrisi Holding N.V.	Holding company		50	%		-		1,720			1,278
Ajay Europe SARL	Production and distribution of iodine and iodine derivatives.		50	%		6,295		4,192			1,106
Misr Specialty Fertilizers S.A.E.	Production and commercialization of liquid specialty plant nutrients for Egypt.		47.49	%		-		(126	)		(247	)
SQM Eastmed Turkey	Production and commercialization of specialty products.		50	%		-		(46	)		(1	)
SQM Thailand Co. Ltd.	Distribution and commercialization of specialty plant nutrients.		40	%		32		70			238
Total						24,104		22,157			10,090

The Company has no participation in unrecognized losses in investments in associates.

F-98

Notes to the consolidated financial statements as of December 31, 2012

Note 10 - Equity-accounted investees (continued)

10.4

Detail of assets, liabilities and profit or loss of significant investments in joint ventures by company:

12/31/2012
				Asset						Liability								Ownership-
Tax ID No.	Joint venture	Country of incorporation	Functional currency	Current ThUS$		Non- current ThUS$		Total ThUS$		Current ThUS$		Non- current ThUS$		Total ThUS$		Revenue ThUS$		related expenses ThUS$			Profit or loss ThUS$
Foreign	Sichuan SQM Migao Chemical Fertilizers Co Ltda.	China	US Dollar		21,843		9,984		31,827		6,899		4,072		10,971		29,980		(29,407	)		573
Foreign	Coromandel SQM	India	Indian Rupee		5,059		1,397		6,456		4,419		-		4,419		5,633		(5,264	)		369
Foreign	SQM Vitas Fzco.	United Arab Emirates	U.A.E. Dirham		22,536		10,522		33,058		785		-		785		19,643		(20,175	)		(532	)
Foreign	SQM Qindao-Star Co. Ltda.	China	US Dollar		1,986		304		2,291		132		-		132		5,028		(4,933	)		95
	Total				51,424		22,207		73,631		12,235		4,072		16,307		60,284		(59,779	)		505

31/12/2011
				Asset						Liability								Ownership
Tax ID No.	Joint venture	Country of incorporation	Functional currency	Current ThUS$		Non- current ThUS$		Total ThUS$		Current ThUS$		Non- current ThUS$		Total ThUS$		Revenue ThUS$		related expenses ThUS$			Profit or loss ThUS$
Foreign	Sichuan SQM Migao Chemical Fertilizers Co Ltda.	China	US Dollar		18,014		10,576		28,590		8,306		-		8,306		23,818		(23,455	)		363
Foreign	Coromandel SQM	India	Indian Rupee		559		1,074		1,633		62		-		62		23		(60	)		(37	)
Foreign	SQM Vitas Fzco.	United Arab Emirates	U.A.E. Dirham		24,887		8,920		33,807		1,005		-		1,005		25,207		(26,266	)		(1,059	)
Foreign	SQM Qindao-Star Co. Ltda.	China	US Dollar		1,974		403		2,377		314		-		314		5,065		(5,028	)		37
	Total				45,434		20,973		66,407		9,687		-		9,687		54,113		(54,809	)		(696	)

31/12/2010
				Asset						Liability								Ownership-
Tax ID No.	Joint venture	Country of incorporation	Functional currency	Current ThUS$		Non- current ThUS$		Total ThUS$		Current ThUS$		Non- current ThUS$		Total ThUS$		Revenue ThUS$		related expenses ThUS$			Profit or loss ThUS$
Foreign	Sichuan SQM Migao Chemical Fertilizers Co Ltda.	China	US Dollar		2,987		11,677		14,664		3,744		-		3,744		-		(46	)		(46	)
Foreign	Coromandel SQM	India	Indian Rupee		10		862		872		7		-		7		3		-			3
Foreign	SQM Vitas Fzco.	United Arab Emirates	U.A.E. Dirham		27,534		9,499		37,033		2,828		-		2,828		19,954		(18,756	)		1,198
Foreign	SQM Qindao-Star Co. Ltda.	China	US Dollar		2,448		387		2,835		808		-		808		2,900		(2,873	)		27
	Total				32,979		22,425		55,404		7,387		-		7,387		22,857		(21,675	)		1,182

F-99

Notes to the consolidated financial statements as of December 31, 2012

Note 10 - Equity-accounted investees (continued)

10.5

Detail of investments in joint ventures:

Joint venture	Main activities of the joint venture	Ownership %			Investment 12/31/2012 ThUS$		Investment 12/31/2011 ThUS$		Investment 12/31/2010 ThUS$
Coromandel SQM	Production and distribution of potassium nitrate.		50	%		683		786		432
Sichuan SQM Migao Chemical Fertilizer Co. Ltda.	Production and distribution of soluble fertilizers.		50	%		10,428		10,142		5,461
SQM Vitas Fzco.	Production and commercialization of specialty plant and animal nutrition and industrial hygiene.		50	%		7,153		5,677		17,102
SQM Quindao-Star Co. Ltda.	Production and distribution of nutrient plant solutions with specialties NPK soluble		50	%		1,079		1,032		1,014
Total						19,343		17,637		24,009

F-100

Notes to the consolidated financial statements as of December 31, 2012

Note 11 - Intangible assets and goodwill

11.1 Balances

Balances	12/31/2012		12/31/2011		12/31/2010
	ThUS$		ThUS$		ThUS$

Intangible assets other than goodwill		24,013		4,316		3,270
Goodwill		38,388		38,605		38,388

Total		62,401		42,921		41,658

11.2 Disclosures on intangible assets and goodwill

Intangible assets relate to goodwill, water rights, trademarks, industrial patents, rights of way and software.

		12/31/2012
Intangible assets and goodwill	Useful life	Gross amount ThUS$		Accumulated Amortization ThUS$			Net Value ThUS$

Trademarks	Finite		3,821		(3,821	)		-
Software	Finite		3,765		(2,115	)		1,650
Rights of way and water rights	Finite		1,198		(820	)		378
Rights of way and water rights	Indefinite		22,612		(1,987	)		20,625
Other intangible assets	Indefinite		1,512		(152	)		1,360
Intangible assets other than goodwill			32,908		(8,895	)		24,013

Goodwill	Indefinite		40,178		(1,790	)		38,388

Total intangible assets and goodwill			73,086		(10,685	)		62,401

F-101

Notes to the consolidated financial statements as of December 31, 2012

Note 11 - Intangible assets and goodwill (continued)

11.2 Disclosures on intangible assets and goodwill (continued)

		12/31/2011
Intangible assets and goodwill	Useful life	Gross amount ThUS$		Accumulated Amortization ThUS$			Net Value ThUS$

Trademarks	Finite		3,821		(3,821	)		-
Software	Finite		3,476		(1,538	)		1,938
Rights of way and water rights	Finite		1,198		(758	)		440
Rights of way and water rights	Indefinite		3,536		(1,994	)		1,542
Other intangible assets	Indefinite		548		(152	)		396
Intangible assets other than goodwill			12,579		(8,263	)		4,316

Goodwill	Indefinite		40,178		(1,573	)		38,605

Total intangible assets and goodwill			52,757		(9,836	)		42,921

		12/31/2010
Intangible assets and goodwill	Useful life	Gross amount ThUS$		Accumulated Amortization ThUS$			Net Value ThUS$

Trademarks	Finite		3,821		(3,817	)		4
Software	Finite		1,664		(841	)		823
Rights of way and water rights	Finite		1,197		(696	)		501
Rights of way and water rights	Indefinite		3,536		(1,990	)		1,546
Other intangible assets	Indefinite		548		(152	)		396
Intangible assets other than goodwill			10,766		(7,496	)		3,270

Goodwill	Indefinite		39,961		(1,573	)		38,388

Total intangible assets and goodwill			50,727		(9,069	)		41,658

F-102

Notes to the consolidated financial statements as of December 31, 2012

Note 11 - Intangible assets and goodwill (continued)

11.2 Disclosures on intangible assets and goodwill, continued

The estimated useful life for software is 3 years. For other finite useful life assets, the amortization period corresponds to their contractually defined period. Indefinite useful life intangible assets primarily consist of water rights and rights of way, which have do not expire.

The minimum and maximum useful lives of intangible assets are as follows:

Estimated useful lives or amortization rate	Minimum life or rate	Maximum life or rate

Rights of way and water rights	Indefinite	Indefinite
Other intangible assets	Indefinite	Indefinite
Rights of way and water rights	1 year	16 years
Trademarks	1 year	5 years
Software	2 years	3 years

The Company has no internally generated intangible assets.

F-103

Notes to the consolidated financial statements as of December 31, 2012

Note 11 - Intangible assets and goodwill (continued)

11.2 Disclosures on intangible assets and goodwill, continued

Movements in identifiable intangible assets as of December 31, 2012:

Movements in identifiable intangible assets	Trademarks Net ThUS$		Software, Net ThUS$			Water rights and rights of way- finited life, Net ThUS$			Water rights and rights of way-indefinite life, Net ThUS$		Other intangible assets, Net ThUS$		Goodwill, Net ThUS$			Identifiable intangible assets, Net ThUS$

Opening balance		-		1,938			440			1,542		396		38,605			42,921
Additions		-		501			-			19,080		964		-			20,545
Amortization		-		(789	)		(62	)		-		-		-			(851	)
Other increases (decreases)		-		-			-			3		-		(217	)		(214	)

Final balance		-		1,650			378			20,625		1,360		38,388			62,401

Movements in identifiable intangible assets as of December 31, 2011:

Movements in identifiable intangible assets	Trademarks Net ThUS$			Software, Net ThUS$			Water rights and rights of way- finited life, Net ThUS$			Water rights and rights of way-indefinite life, Net ThUS$			Other intangible assets, Net ThUS$		Goodwill, Net ThUS$		Identifiable intangible assets, Net ThUS$

Opening balance		4			823			501			1,546			396		38,388		41,658
Additions		-			1,812			-			-			-		217		2,029
Amortization		(4	)		(697	)		(61	)		-			-		-		(762	)
Other increases (decreases)		-			-			-			(4	)		-		-		(4	)

Final balance		-			1,938			440			1,542			396		38,605		42,921

F-104

Notes to the consolidated financial statements as of December 31, 2012

Note 11 - Intangible assets and goodwill (continued)

11.2 Disclosures on intangible assets and goodwill, continued

Movements in identifiable intangible assets as of December 31, 2010:

Movements in identifiable intangible assets	Trademarks Net ThUS$			Software, Net ThUS$			Water rights and rights of way- finited life, Net ThUS$			Water rights and rights of way-indefinite life, Net ThUS$			Other intangible assets, Net ThUS$		Goodwill, Net ThUS$		Identifiable intangible assets, Net ThUS$

Opening balance		-			322			570			1,549			395		38,388		41,224
Additions		-			839			-			92			-		-		931
Amortization		(368	)		(338	)		(69	)		(95	)		-		-		(870	)
Other increases (decreases)		372			-			-			-			1		-		373

Final balance		4			823			501			1,546			396		38,388		41,658

F-105

Notes to the consolidated financial statements as of December 31, 2012

Note 12 - Property, plant and equipment

12.1

Classes of property, plant and equipment

The details of property, plant and equipment is as follows:

Description of classes of property, plant and equipment	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$

Property, plant and equipment, net

Land		109,060		108,992		107,869
Buildings		169,731		146,532		88,320
Machinery		438,331		424,460		294,467
Transport equipment		88,954		82,822		48,936
Furniture and fixtures		6,736		5,015		4,450
Office equipment		5,249		5,312		5,706
Constructions in progress		423,184		297,996		356,551
Other property, plant and equipment		747,045		683,913		546,674
Total		1,988,290		1,755,042		1,453,973
Property, plant and equipment, gross

Land		109,060		108,992		107,869
Buildings		329,397		291,401		221,715
Machinery		1,065,641		972,179		746,725
Transport equipment		224,462		199,998		151,544
Furniture and fixtures		22,667		19,090		17,250
Office equipment		36,215		34,480		33,195
Constructions in progress		423,184		297,996		356,551
Other property, plant and equipment		1,336,991		1,194,765		989,192
Total		3,547,617		3,118,901		2,624,041

F-106

Notes to the consolidated financial statements as of December 31, 2012

Note 12 - Property, plant and equipment (continued)

12.1

Classes of property, plant and equipment, continued

	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$
Accumulated depreciation and value impairment of property, plant and equipment, total
Accumulated depreciation and value impairment of buildings		159,666		144,869		133,395
Accumulated depreciation and value impairment of machinery		627,310		547,719		451,258
Accumulated depreciation and value impairment of transport equipment		135,508		117,176		102,608
Accumulated depreciation and value impairment of furniture and fixtures		15,931		14,075		12,800
Accumulated depreciation and value impairment of office equipment		30,966		29,168		27,490
Accumulated depreciation and value impairment of other property, plant and equipment		589,946		510,852		442,518
Total		1,559,327		1,363,859		1,170,069

F-107

Notes to the consolidated financial statements as of December 31, 2012

Note 12 - Property, plant and equipment (continued)

12.2

Reconciliation of changes in property, plant and equipment by class as of December 31, 2012 as of December 31, 2011 and December 31, 2010:

Reconciliation entries of changes in property, plant and equipment by class as of December 31, 2012	Land		Buildings, net			Machinery, net			Transport equipment, net			Furniture and fixtures, net			Office equipment, net			Construction in progress			Other property, plant and equipment, net			Property, plant and equipment net
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Opening balance		108,992		146,532			424,460			82,822			5,015			5,312			297,996			683,913			1,755,042

Changes
Additions		36		-			1,092			34			70			323			443,349			972			445,876
Divestitures		-		-			(115	)		-			(67	)		(12	)		(2,936	)		(78	)		(3,208	)
Depreciation expense		-		(14,800	)		(79,534	)		(18,400	)		(1,858	)		(1,857	)		-			(79,709	)		(196,158	)
Increase(decrease) in foreign currency exchange		32		(1	)		5			15			-			(13	)		-			68			106
Reclassifications		-		37,916			92,441			24,535			3,576			1,478			(287,291	)		127,345			-
Other increases (decreases) (*)		-		84			(18	)		(52	)		-			18			(27,934	)		14,534			(13,368	)

Total changes		68		23,199			13,871			6,132			1,721			(63	)		125,188			63,132			233,248

Ending balance		109,060		169,731			438,331			88,954			6,736			5,249			423,184			747,045			1,988,290

(*) The net balance of Other increases (decreases) corresponds to: 1) investment plan expenses recorded to profit or loss (forming part of cost of sales and other expenses per function, as appropriate), 2) the change representing the purchase and use of materials and spare parts and 3) projects corresponding mainly to exploration expenditures.

F-108

Notes to the consolidated financial statements as of December 31, 2012

Note 12 - Property, plant and equipment (continued)

12.2

Reconciliation of changes in property, plant and equipment by class as of December 31, 2012 as of December 31, 2011 and December 31, 2010, continued:

Reconciliation entries of changes in property, plant and equipment by class as of December 31, 2011	Land			Buildings, net			Machinery, net			Transport equipment, net			Furniture and fixtures, net			Office equipment, net			Construction in progress			Other property, plant and equipment, net			Property, plant and equipment net
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Opening balance		107,869			88,320			295,467			48,936			4,450			5,706			356,551			546,674			1,453,973

Changes
Additions		1,251			178			424			558			39			302			474,042			1,054			477,848
Divestitures		(85	)		(1,371	)		(64	)		(451	)		-			-			-			-			(1,971	)
Depreciation expense		-			(11,477	)		(97,046	)		(14,902	)		(1,281	)		(2,053	)		-			(69,137	)		(195,896	)
Increase(decrease) in foreign currency exchange		(42	)		-			1			(23	)		-			122			-			(24	)		34
Reclassifications					69,410			228,116			48,717			1,805			1,442			(546,769	)		197,279			-
Other increases (decreases) (*)		(1	)		1,472			(2,438	)		(13	)		2			(205	)		14,172			8,067			21,055

Total changes		1,123			58,212			128,993			33,886			565			(394	)		(58,555	)		137,239			301,069

Ending balance		108,992			146,532			424,460			82,822			5,015			5,312			297,996			683,913			1,755,042

F-109

Notes to the consolidated financial statements as of December 31, 2012

Note 12 - Property, plant and equipment (continued)

12.2

Reconciliation of changes in property, plant and equipment by class as of December 31, 2012, December 31, 2011, and Decembre 31, 2010 continued:

Reconciliation entries of changes in property, plant and equipment by class as of December 31, 2010	Land			Buildings, net			Machinery, net			Transport equipment, net			Furniture and fixtures, net			Office equipment, net			Construction in progress			Other property, plant and equipment, net			Property, plant and equipment net
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Opening balance		108,356			86,252			286,486			55,341			3,166			4,760			379,416			376,769			1,300,546

Changes
Additions		386			1,021			208			6,784			12			138			354,884			446			363,879
Divestitures		(25	)		(114	)		(1,631	)		(6,334	)		-			(34	)		(3,094	)		(1,868	)		(13,100	)
Depreciation expense		-			(9,226	)		(58,649	)		(11,837	)		(1,100	)		(2,081	)		-			(61,015	)		(143,908	)
Increase(decrease) in foreign currency exchange					2			38			13			-			3			-			30			86
Reclassifications		(1,018	)		9,360			48,497			2,075			1,688			2,330			(259,515	)		196,583			-
Other increases (decreases) (*)		170			1,025			20,518			2,894			684			590			(115,140	)		35,729			(53,531	)

Total changes		(487	)		2,068			8,981			(6,405	)		1,284			946			(22,865	)		169,905			153,427

Ending balance		107,869			88,320			295,467			48,936			4,450			5,706			356,551			546,674			1,453,973

F-110

Notes to the consolidated financial statements as of December 31, 2012

Note 12 - Property, plant and equipment (continued)

12.3

Detail of property, plant and equipment pledged as guarantee

There are no title restrictions or guarantees associated with property, plant and equipment.

12.4

Additional Information

Leased property, plant and equipment

At December 31, 2012 and 2011, the Company had no leased assets. As of December 31, 2010 the Company had leased assets of ThUS$1,373 corresponding to two floors of the Las Americas building in Santiago, Chile. These leased assets were classified as investment properties.

Interest capitalized in construction in-progress

The cost of capitalized interest is determined by applying the average or weighted average of all financing costs incurred by the Company to the month end balances of construction in progress. The effective interest rate used to capitalize interest on construction in progress was 7% for the years ended December 31, 2012, 2011 and 2010.

For the years ended December 31, 2012, 2011 and 2010, capitalized interest amounted to ThUS$14,156, ThUS$22,249, ThUS$25,947, respectively.

Note 13 – Employee benefits

13.1

Provisions for employee benefits

Provisions for employee benefits consists of the following:

	12/31/2012		12/31/2011		12/31/2010
	ThUS$		ThUS$		ThUS$
Current
Profit sharing and bonuses		33,974		30,074		44,011
Total		33,974		30,074		44,011

Non-current
Profit sharing and bonuses		6,056		4,083		800
Severance indemnities		34,431		28,188		27,208
Pension Plan		409		1,413		702
Total		40,896		33,684		28,710

F-111

Notes to the consolidated financial statements as of December 31, 2012

Note 13 Employee benefits (continued)

13.2

Policies on employee benefits

Short-term benefits for active employees are represented by salaries, social welfare benefits, paid time-off, sickness other leaves of absence, profit sharing and incentives, and non-monetary benefits such as healthcare, housing, and subsidized or free goods or services. These benefits will be paid in a term which does not exceed twelve months, The Company only provides compensation and benefits to active employees, with the exemption of SQM North America as described in Note 13.5 below,

Bonuses paid to the Company’s employees are disbursement in the first quarter of the following year, which is calculated based on profit for each reporting period in consideration of the employee appraisal process.

Benefits related to vacations are provided in accordance with the Labor Code which indicates that employees with more than a year of service will be entitled to annual holidays for a period not lower than fifteen paid business days per year. The Company provides the benefit of two additional vacation days per year.

Staff severance indemnities represent payments due to employees upon their separation from the Company including for retirement, involuntary and voluntary termination, disability, or death. Actual payments made to employees at the time of separation are calculated based on years of service and a percentage of employees final year´s salary as stipulated in established agreements between the Company and its employees and in accordance with local obligations. The Company recognizes a liability for severance indemnities using an actuarial model on an employee by employee basis considering the terms of individual employee contracts.

13.3

Other long-term benefits

Other long-term benefits relate to staff severance indemnities and defined benefit pension obligations and are recorded at their actuarial value and consist of the following.

	12/31/2012		12/31/2011		12/31/2010
Staff severance indemnities at actuarial value	ThUS$		ThUS$		ThUS$
Staff severance indemnities, Chile		33,731		27,574		26,577
Other obligations in companies elsewhere		700		614		631
Total other non-current liabilities		34,431		28,188		27,208

SQM North America’s pensions plan		409		1,413		702
Total post employment obligations		409		1,413		702

F-112

Notes to the consolidated financial statements as of December 31, 2012

Note 13 - Employee benefits (continued)

13.4

Chilean staff severance indemnities

The change in severance indemnities calculated at the actuarial value are as follows:

	2012 ThUS$			2011 ThUS$			2010 ThUS$
Opening balance		(28,188	)		(27,208	)		(28,682	)
Current cost of service		(8,087	)		(7,871	)		(1,798	)
Interest cost		(1,037	)		(1,106	)		(1,889	)
Actuarial gain/loss		40			(151	)		88
Exchange rate difference		(2,237	)		2,693			(1,785	)
Contributions paid		5,078			5,455			6,858
Balance		(34,431	)		(28,188	)		(27,208	)

The liability for staff severance indemnities in accordance with an actuarial model , use the following significant assumptions:

	12/31/2012			12/31/2011			12/31/2010

Mortality rate		RV - 2011			RV - 2010			RV – 2009
Actual annual interest rate		6	%		6	%		6	%
Annual voluntary turnover rotation rate:
Men		0,9	%		0,9	%		0,9	%
Women		1,53	%		1,53	%		1,53	%
Average annual salary increase		3,0	%		3,0	%		3,0	%
Retirement age (years):
Men		65			65			65
Women		60			60			60

The methodology followed to determine the accrual for all employees considereds RV-2010 turnover and mortality rates established by the Chilean Superintendence of Securities and Insurance to calculate pension-related life insurance reserves in Chile according to the Accumulated Benefit Valuation or Accrued Cost of Benefit Method, which is an established methodology in IAS 19 Retirement Benefit Costs.

The discount rate of 6% is based on the Company’s long-term borrowing rates.

The Company retains the full obligation for the payment of staff severance indemnities upon separation without establishing a separate fund or restriction of assets for payment of such obligations, which is typically referred to as an unfunded plan.

F-113

Notes to the consolidated financial statements as of December 31, 2012

Note 13 - Employee benefits (continued)

13.5

Defined benefit pension obligations

SQM North America had a defined pension plan the SQM North America Retirement Income Plan, which was terminated in 2002 and replaced with a 401K plan, that does not generate future obligations to the Company. The obligations under this terminated plan are calculated measuring the expected future forecasted staff severance indemnity obligation using a net salary gradual rate of restatements for inflation, mortality and turnover assumptions discounting the resulting amounts to their present values.

The table below establishes the status of amounts recognized in the Consolidated Statement of Financial Position:

	2012			2011			2010
	ThUS$			ThUS$			ThUS$
Variation in projected benefit obligation (liability):
Benefit liability at the beginning of year		6,620			6,548			6,972
Cost of service		1			1			1
Interest cost		406			413			427
Actuarial loss		(236	)		(46	)		(374	)
Benefits paid		(309	)		(297	)		(297	)
Benefit obligation (liability) at year-end		6,482			6,619			6,549

Change in the plan’s assets:
Fair value of the plan’s assets at beginning of year		5,206			5,847			5,082
Contributions by the employer		436			189			192
Actual return (loss) on plan assets		740			(533	)		869
Benefits paid		(309	)		(297	)		(296	)
Fair value of the plan’s assets at year-end		6,073			5,206			5,847

Accrued liability pension plan		(409	)		(1,413	)		(702	)
Items not yet recognized as net regular pension-related cost elements:
Net actuarial loss at the beginning of year		(2,954	)		(2,111	)		(3,131	)
Amortization during the period		131			84			155
Net gain or loss during the period		580			(927	)		865
Adjustment made to recognize the minimum pension-related liability		(2,243	)		(2,954	)		(2,111	)

F-114

Notes to the consolidated financial statements as of December 31, 2012

Note 13 - Employee benefits (continued)

The change in the defined benefit obligation over the years is as follows:

	2012			2011			2010
	ThUS$			ThUS$			ThUS$

Costs or benefits of services earned during the period		2			1			1
Cost of interest in benefit liability		406			413			427
Actual return in plan’s assets		739			(532	)		(869	)
Amortization of loss from prior periods		131			84			154
Net gain for the period		(344	)		973			492
Net regular pension-related expense		142			57			(205	)

13.6

Shared based compensation

The Company maintains a share based compensation plan to encourage retention of its top 40 executives. Individuals receive annual cash payments based on changes in SQM´s share price. Compensation for each individual is calculated as the differential between the average prices of the SQM´s Series B shares as traded on the Santiago Stock Exchange during April of each year compared to a base price of US$50 per share. Individuals are awarded a fixed number of shares over a five year vesting period through 2016.

Share based award activities are as following:

Movement for the period	2012		2011		2010
Shares outstanding as of January 1		2,340,000		3,370,025		1,150,025
Grants		103,500		-		2,370,000
Forfeitures		103,500		-		-
Exercised during the fiscal year		139,500		1,030,025		150,000
Shares outstanding as of December 31		2,200,500		2,340,000		3,370,025
Average contractual life		40 months		48 months		60 months

December 31 share price		US$57.93		US$53.85		US$58.42

Compensation expense under the plan amount to ThUS$3,142, ThUS$11,200 and ThUS$22,782 for the years ended December 31, 2012, 2011 and 2010, respectively.

F-115

Notes to the consolidated financial statements as of December 31, 2012

Note 14 - Disclosures on equity

14.1

Capital management

The Company’s primary capital management object is to administer the financial debt and capital of SQM and its subsidiaries, ensure continuing operations and long term business continuity, ensure financing of new investments in order to maintain steady growth, have an adequate capital structure in accordance with economic cycles that have an impact on the business and the nature of the industry, and maximize the value of SQM and its subsidiaries over the medium the mid and long term.

Capital management adheres to the limits specified in the Financial Policy approved at the General Ordinary Shareholders Meeting, which established a maximum level of consolidated leverage of 1.5 times equity. This limit can only be exceeded to the extent that Management has previously been granted express authorization at the previous Shareholders Meeting.

Additionally, capital management must meet external capital requirements (or covenants) established in SQM´s financial obligations, which regulates the debt limit to 1.4 times equity times.

Together with the overall debt level the Company seeks to maintain a reasonable maturity profile of its financial obligations, ensure financial ratios between short-term and long-term maturities, and the relationship they maintain with the distribution of the Company´s assets. Consequently, the Company has maintained in recent periods current ratio levels in exess of 3.0.

F-116

Notes to the consolidated financial statements as of December 31, 2012

Note 14 – Equity Disclosures (continued)

Management reviews overall

Capital management objectives are measured in accordance with the following ratios:

Capital Management	31/12/2012			31/12/2011			31/12/2010			Description (1)	Calculation (1)
Net Financial Debt ThUS$		929,197			753,410			584,357		Financial Debt - Financial Resources	Other Current Financial Liabilities + Other Financial Liabilities, Non-Current – Cash and cash equivalents – Other Current Financial Assets- Other non-current Hedging Assets
Current Ratio		3.69			3.11			3.56		Current Assets divided by Current Liabilities	Total Current assets / Total Current Liabilities
Net Financial Debt/ Capitalization		0.30			0.29			0.26		Net Financial Debt divided by Equity	Net Financial Debt / (Net Financial Debt + Equity)
ROE		30.1	%		29.7	%		23.2	%	Net Income divided by Equity	Net Income/ Equity (Last 12 months)
ROA		25.1	%		24.1	%		20.9	%	EBITDA – Depreciation divided by total assets of financial resources minus investments in related enterprises	(Net Income – Administrative expenses) / (Total Assets – Cash and cash equivalents – Other Current Assets – Other Current Financial Assets- investments using the participation method) (Last 12 months)
Leverage		1.02			1.08			1.02		Total Liability divided by Equity	Total Liabilities / Total Equity

(1) Assumes absolute value of various accounts

The Company´s capital requirements vary depending on: working capital requirements, financing of new investments and dividends, among others. SQM manages its capital structure and makes adjustments based on prevailing economic conditions, in order to mitigate the risks associated with adverse market conditions and to take advantage of opportunities to improve overall liquidity.

There have been no changes in the capital management objectives or policies within the years covered by these consolidated financial statements.

F-117

Notes to the consolidated financial statements as of December 31, 2012

Note 14 – Equity Disclosures (continued)

14.2

Disclosures on preferred share capital

Issued share capital is divided into 263,196,524 fully paid and subscribed shares with no par value composed of 142,819,552 Series "A" shares and 120,376,972 Series “B” shares.

The voting rights for each series are detailed as follows:

Series “A”:

If the election of the Company’s President results in a tie vote, the Company's directors may vote once again, without the vote of the director elected by the Series B shareholders.

Series “B”:

A general or extraordinary shareholders' meeting may be called at the request of shareholders representing 5% of the Company's Series B shares.

Extraordinary meeting of the Board of Directors may be called with or without the agreement of the Company's President, at the request of the director elected by Series B shareholders.

As of December 31, 2012, 2011 and 2010, the Company did not hold any shares in the parent either directly or through its companies in which it has investments.

F-118

Notes to the consolidated financial statements as of December 31, 2012

Note 14 – Disclosures on equity (continued)

14.3

Disclosures on preferred share capital (continued)

Capital in preference shares consist of the following:

Type of capital in preferred shares	12/31/2012				12/31/2011				12/31/2010
Description of type of capital in preferred shares	Series A		Series B		Series A		Series B		Series A		Series B
Number of authorized shares		142,819,552		120,376,972		142,819,552		120,376,972		142,819,552		120,376,972
Number of fully subscribed and paid shares		142,819,552		120,376,972		142,819,552		120,376,972		142,819,552		120,376,972
Number of subscribed, partially paid shares		-		-		-		-		-		-
Par value of shares in ThUS$		0,9435		2,8464		0,9435		2,8464		0,9435		2,8464
Increase (decrease in the number of current shares		-		-		-		-		-		-
Number of current shares		142,819,552		120,376,972		142,819,552		120,376,972		142,819,552		120,376,972
Number of shares owned by the entity or its subsidiaries or associates		-		-		-		-		-		-
Number of shares whose issuance is reserved due to the existence of options or agreements to dispose shares		-		-		-		-		-		-
Capital amount in shares ThUS$		134,750		342,636		134,750		342,636		134,750		342,636
Amount of premium issuance ThUS$		-		-		-		-		-		-
Amount of reserves ThUS$		-		-		-		-		-		-
Total number of subscribed shares, total		142,819,552		120,376,972		142,819,552		120,376,972		142,819,552		120,376,972

During the years ended December 31, 2012, 2011, and 2010 as the Company did not issue any new shares.

F-119

Notes to the consolidated financial statements as of December 31, 2012

Note 14 - Disclosures on equity (continued)

14.4

Disclosures on reserves in equity

Reserves for currency exchange conversion

This balance reflects retained earnings for changes due to the transalation of subsidiaries financial statements into U.S. Dollars.

Reserve for cash flow hedges

This balance reflects changes in the fair value of derivative financial instruments classified as hedging changes in cash flows associated with UF-and Chilean Peso-denominated debt obligations.

Reserve for actuarial gains or losses in defined benefit plans

This balance reflects changes in the actuarial gains and losses in the calculation of defined benefit obligations, refer to Note 13.5.

Other reserves

Other reserves correspond to the acquisition of the remaining interest in SQM Iberian S.A., which was already controlled by the Company upon the acquisition date of the additional interest.

Changes in these reserves consist of the following:

	12/31/2012 ThUS$			12/31/2011 ThUS$			12/31/2010 ThUS$
Reserve for currency exchange conversion		(330	)		(1,251	)		1,530
Reserve for cash flow hedge		(16,522	)		(10,230	)		(9,207	)
Reserve for actuarial gains or losses in defined benefit plans		(2,243	)		(2,954	)		(2,036	)
Other reserves		(1,677	)		(1,677	)		-

Total other reserves		(20,772	)		(16,112	)		(9,713	)

F-120

Notes to the consolidated financial statements as of December 31, 2012

Note 14 - Disclosures on equity (continued)

14.5

Dividend policies

As required by Article 79 of the Chilean Companies Act, the Company is required to distribute a cash dividend in an amount equal to at least 30% of its consolidated profit for the period for year unless and except to the extent it has a deficit in retained earnings (losses not absorbed in prior years), or as otherwise determined by a unanimous vote of shareholders.

The dividend policys defined by the Shareholders’ General Meeting is:

Distribution and payment in favor of each shareholder of a final dividend which will be equivalent to 50% of profit for the period.

Distribution and payment, if possible during the year, of a provisional dividend which will be recorded against the aforementioned final dividend, This provisional dividend will normally be paid during the last quarter of the year and its amount can not exceed 50% of the retained earnings for distribution obtained during the year, which are reflected in the Company’s financial statements as of September 30 of each year.

The distribution and payment by the Company of the remaining balance of the final dividend related to profit for the year in up to two installments, which must be paid prior to June 30 of the following year.

An amount equivalent to the remaining 50% of the Company’s profit for the year will be retained and used to finance operations and one or more of the Company’s investment projects with no prejudice of the possible future capitalization of this investment.

The Board of Directors does not consider the payment of any additional or interim dividends.

The application of the Company´s dividend policy is dependent upon final profit for the year, and in future, to the Company’s regular forecasts and the existence of conditions or events that could affect them. Any significant change in the Company´s dividend policy or in events and conditions that may affect the Company´s dividend policy will be timely communicated to all shareholders.

14.6

Provisional dividends

On November 20, 2012, the Company reported to the SVS, that the Company’s Board of Directors agreed to pay and distribute a provisional dividend of approximately US$0.94986 per share. The dividend was paid on December 12, 2012 from accumulated profits during the first nine months of 2012, in favor of all Shareholders registered in SQM Shareholders Register as of December 5, 2012. The dividend was paid in equivalent Chilean Pesos, based on U.S. Dollar exchange rate as published in the Official Gazette on December 5, 2012.

F-121

Notes to the consolidated financial statements as of December 31, 2012

Note 14 - Disclosures on equity (continued)

On April 26, 2012, in the Thirty-Seventh General Ordinary Shareholders’ Meeting, the payment of a definite dividend of US$1,03679 per share was approved because of the net profit obtained during the 2011’s commercial exercise, To that dividend, should be discounted US$0,73329 per share that has already been paid on account of provisory dividend and the remainder, then amounting to US$0,30350 per share, will be paid and distributed in favor of SQM’s shareholders who are registered in the corresponding Record, during the fifth working day before the date when this will be paid, Such last amount, in case that correspond, will be paid in its equivalent in CLP (Chilean Peso) according to the value of “Dólar Observado” or “U.S. Dollar” published in the Official Gazette of April 26, 2012.

On November 22, 2011, it was reported to the Superintendence of Securities and Insurance that the Board of Directors of Sociedad Química y Minera de Chile S.A., in its meeting on November 22, 2011, unanimously agreed to pay and distribute the provisional dividend referred to in SQM’s current “2011 Dividends Policy” which was informed to SQM’s General Annual Ordinary Shareholders Meeting that was held on April 28 of this year, This, for the essential purpose of being able to pay and distribute as of December 19, 2011, a provisional dividend of US$0,73329 per share –and which is approximately equivalent to the total amount of US$193 million and the latter corresponds to 50% of the distributable net income of the fiscal year 2011 that has been accrued at September 30, 2011, The above, is charged against the net income of said fiscal year, in favor of the Shareholders who appeared registered in SQM’s Shareholders Registry by the 5 working day prior to December 19, 2011, and in its equivalent in Chilean pesos according to the value of the “Observed dollar” or “USA dollar” that appears published in the Official Gazette on December 13, 2011.

At the Annual Board of Directors meeting held on April 28, 2011, the Directors unanimously agreed to pay a final dividend of US$0,7259 per share in relation to net profit for the year, Notwithstanding the above, US$0,41794 per share was already paid as an interim dividend, and this amount should be subtracted from the final dividend detailed above, In line with this, the balance, amounting to US$0,30798 per share, will be paid and distributed among shareholders of the Company who are registered with their respective shareholders registry as of the fifth business day prior to the day in which this dividend will be paid.

Dividends presented deducted from equity are:

	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$
Dividends attributable to controlling interests		253,438		270,915		173,527
Dividends payable		76,267		82,120		5,831

F-122

Notes to the consolidated financial statements as of December 31, 2012

Note 15 – Provisions and other non-financial liabilities

15.1

Classes of provisions

	12/31/2012						12/31/2011								12/31/2010
	Current		Non- current		Total		Current		Non- current		Total		Current		Non- current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Legal provision		5,567		3,000		8,567		4,571		3,000		7,571		2,590		2,000		4,590
Provision for dismantling, restoration and rehabilitation costs		-		4,357		4,357		-		3,724		3,724		-		3,500		3,500
Other provisions		12,922		-		12,922		12,366		1,871		14,237		12,424		-		12,424
Total		18,489		7,357		25,846		16,937		8,595		25,532		15,014		5,500		20,514

(*) Legal provisions consists primarily of estimated obligations related to certain legal claims brought against the Company’s subsidiaries in Brazil and United States (see note 16.1).

F-123

Notes to the consolidated financial statements as of December 31, 2012

Note 15 - Provisions and other non-financial liabilities (continued)

15.2

Description of other provisions

Description of other provisions	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$

Current provisions
Provision for tax loss in fiscal litigation		1,606		1,441		1,634
Royalties, agreement with CORFO (the Chilean Economic Development Agency)		7,712		6,800		5,182
Closure of Toco operations		-		-		3,264
Fines payable in Brazil		2,500		2,500		-
Miscellaneous provisions		1,104		1,625		2,344
Total		12,922		12,366		12,424
Long-term provisions
Mine closure		4,357		3,724		3,500
Indemnity obligation to Yara South Africa		-		1,871		-
Total		4,357		5,595		3,500

15.3

Other non-financial liabilities, current

Description of other liabilities	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$

Tax withholdings		11,887		9,837		5,529
VAT payable		16,481		21,087		12,416
Guarantees received		872		920		1,028
Accrual for dividend		76,267		81,325		4,637
Monthly tax provisional payments		22,073		11,239		8,171
Deferred income		16,291		15,284		14,350
Withholdings from employees and salaries payable		7,546		5,554		4,936
Accrued vacations		20,710		15,874		14,854
Other current liabilities		73		841		1,538
Total		172,200		161,961		67,459

F-124

Notes to the consolidated financial statements as of December 31, 2012

Note 15 - Provisions and other non-financial liabilities (continued)

15.4

Changes in provisions for the year ending December 31, 2012:

Description of items that gave rise to variations	Legal complaints			Provision for dismantling, restoration and rehabilitation cost		Other provisions			Total
	ThUS$			ThUS$		ThUS$			ThUS$
Total provisions, initial balance		7,571			3,724		14,237			25,532
Changes in provisions:
Additional provisions		1,000			633		8,863			10,496
Provision used		(4	)		-		(10,061	)		(10,065	)
Increase (decrease) in foreign currency translation		-			-		(117	)		(117	)

Total provisions, final balance		8,567			4,357		12,922			25,846

F-125

Notes to the consolidated financial statements as of December 31, 2012

Note 15 - Provisions and other non-financial liabilities (continued)

15.4

Changes in provisions for the year ending December 31, 2011:

Description of items that gave rise to variations	Legal complaints			Provision for dismantling, restoration and rehabilitation cost		Other provisions			Total
	ThUS$			ThUS$		ThUS$			ThUS$
Total provisions, initial balance		4,590			3,500		12,424			20,514
Changes in provisions:
Additional provisions		3,000			224		13,076			16,300
Provision used		(19	)		-		(11,080	)		(11,099	)
Increase (decrease) in foreign currency translation		-			-		(183	)		(183	)

Total provisions, final balance		7,571			3,724		14,237			25,532

F-126

Notes to the consolidated financial statements as of December 31, 2012

Note 15 - Provisions and other non-financial liabilities (continued)

15.4

Changes in provisions for the year ending December 31, 2010

Description of items that gave rise to variations	Legal complaints		Provision for dismantling, restoration and rehabilitation cost		Other provisions			Total
	ThUS$		ThUS$		ThUS$			ThUS$
Total provisions, initial balance		590		3,500		15,852			19,942
Changes in provisions:
Additional provisions		4,000		-		16,081			20,081
Provision used		-		-		(19,583	)		(19,583	)
Increase (decrease) in foreign currency translation		-		-		74			74

Total provisions, final balance		4,590		3,500		12,424			20,514

F-127

Notes to the consolidated financial statements as of December 31, 2012

Note 15 - Provisions and other non-financial liabilities (continued)

15.5

Detail of main classes of provisions

Legal expenses: Provision for legal claims brought against the Company’s subsidiaries in Brazil and the United States.

Tax accrual in tax litigation: This accrual relates to lawsuits pending resolution of taxes claims in Brazil for SQM Brazil and NNC.

CORFO royalties agreement: Relates to the commercialization of mining properties payable from SQM Salar S.A. to CORFO on a quarterly basis. The royalty is calculated based on sales of products extracted from the Salar de Atacama.

Provisions are updated each reporting period based on changes in the facts and circumstances of each obligation.

There are no significant uncertainties with respect to the timing or amount of an specific provision.

F-128

Notes to the consolidated financial statements as of December 31, 2012

Note 16 - Contingencies and restrictions

16.1

Lawsuits and other relevant events

1.	Plaintiffs	:	JB Comércio de Fertilizantes e Defensivos Agrícolas Ltda. (JB)
	Defendant	:	Nitratos Naturais do Chile Ltda. (NNC)
	Date	:	December 1995
	Court	:	MM 1ª, Vara Civel de Comarca de Barueri, Brazil,
	Reason	:	Compensation claim filed by JB against NNC for having appointed a distributor in a territory of Brazil for which JB had an exclusive contract,
	Status	:	Lower court ruling against Nitratos Naturais do Chile Ltda. and recourse of appeal pending resolution
	Claim amount	:	ThUS$1,800

2.	Plaintiff	:	Nancy Erika Urra Muñoz
	Defendants	:	Fresia Flores Zamorano, Duratec-Vinilit S.A. and SQM S.A. and their insurers
	Date	:	December 2008
	Court	:	1st Civil Court of Santiago
	Reason	:	Labor Accident
	Status	:	Evidence
	Claim amount	:	ThUS$ 550

3.	Plaintiffs	:	Eduardo Fajardo Nuñez, Ana Maria Canales Poblete, Raquel Beltran Parra, Eduardo Fajardo Beltran and Martina Fajardo Beltran
	Defendants	:	SQM Salar S.A. and insured parties
	Date	:	November 2009
	Court	:	20th Civil Court in Santiago
	Reason	:	Labor accident
	Status	:	Summons to hear the judgement
	Claim amount	:	ThUS$ 1,880

4.	Plaintiff	:	City of Pomona, California USA
	Defendant	:	SQM North America Corp (SQM NA)
			The lawsuit also was filed against Sociedad Química y Minera de Chile S.A. however the Company has not yet been formally notified
	Date	:	December 2010
	Court	:	United States District Court for the Central District of California

F-129

Notes to the consolidated financial statements as of December 31, 2012

Note 16 - Contingencies and restrictions (continued)

16.1 Lawsuits and other relevant events, continued

	Reason	:	Expenses and related damages to treat and remove perchlorate from groundwater alledegely caused by the Company’s fertilizer products
	Status	:	Pending appeal by the the plaintiff, who lost in the first instance.
	Claim amount	:	Not possible to determine

5.	Plaintiff	:	City of Lindsay, California USA
	Defendant	:	SQM North America Corp (SQM NA)
			The lawsuit also was filed against Sociedad Química y Minera de Chile S.A. this lawsuit has not yet been notified to the Company
	Date	:	December 2010
	Court	:	United States District Court for the Eastern District of California
	Reason	:	Expenses and related damages to treat and remove perchlorate from groundwater alledegely caused by the Company’s fertilizer products
	Status	:	Claim, Procedure suspended
	Claim value	:	Not possible to determine

6.	Plaintiff	:	Metalúrgica FAT Limitada
	Defendant	:	SQM Salar S.A.
	Date	:	August 2011
	Court	:	9th Civil Court in Santiago
	Reason	:	Compensation for early termination of supply contract and installation of metal structures
	Status	:	Evidence gathering
	Claim value	:	ThUS$200

7.	Plaintiff	:	Angelina Castillo Figueroa and others
	Defendant	:	SQM Nitratos S.A. and its assurers
	Date	:	June 2012
	Court	:	2nd Civil Court of Santiago
	Reason	:	Demand for damages related to a 2010 explosion near Baquedano, that resulted in the death of six employees
	Status	:	Evidence gathering
	Claim value	:	ThUS$9,400

F-130

Notes to the consolidated financial statements as of December 31, 2012

Note 16 - Contingencies and restrictions (continued)

16.1

Lawsuits and other relevant events, continued

8.	Plaintiff	:	Nilda Ester Muñoz Muñoz y otros
	Defendant	:	Alejandro Reyes R., Transportes Transerik Limitada, Contructora Excon S.A., y SQM Salar S.A. and their insurers
	Date	:	July 2012
	Court	:	15th Civil Court of Santiago
	Reason	:	Claim for damages for an accident occurring in 2010 at our Salar de Atacama facility causing the death of Mr. Daniel Opazo Muñoz
	Status	:	Answer to the complaint
	Claim value	:	ThUS$2,400

9.	Plaintiff	:	Sociedad industrial Seguel y Ortiz Limitada
	Defendant	:	SQM Salar S.A.
	Date	:	August 2012
	Court	:	Arbitral
	Reason	:	Indemnity for supposed damages derived from anticipated end of contract for services rendered
	Status	:	Answer to the complaint
	Claim value	:	ThUS$3,500

10.	Plaintiff	:	María Angélica Alday Fuentes
	Defendant	:	Vladimir Roco Alvarez, Compass Catering S.A. y SQM S.A.
	Date	:	August 2012
	Court	:	1st Civil Court Antofagasta
	Reason	:	Damages related to attempted sexual abuse
	Status	:	Answer to the complaint
	Claim amount	:	ThUS$200

The Company has only registered a provision for estimated losses in those lawsuits described above in which the probability of loss is considered to be more likely than not.

The Company and its subsidiaries have been involved and will likely continue to be involved either as plaintiffs or defendants in certain judicial proceedings that have been and will be heard by the Arbitral or Ordinary Courts of Justice who will make the final decision. Those proceedings governed by the appropriate legal regulations are intended to exercise or oppose certain actions or exceptions related to specefic mining claims either granted or to be granted and that do not or will not have an adverse affect on the development of the Company and its subsidiaries.

F-131

Notes to the consolidated financial statements as of December 31, 2012

Note 16 - Contingencies and restrictions (continued)

16.1

Lawsuits and other relevant events, continued

Soquimich Comercial S.A. has been involved and will probably continue being involved either as plaintiff or defendant in certain judicial proceedings through which it intends to collect and receive the amounts owed, the total claim value of which is approximately ThUS$700.

The Company has made efforts and continues making efforts to obtain payment of certain amounts that are still owed it on occasion of its ongoing activities. Such amounts will continue required using judicial or non-judicial means by the plaintiffs, until the actions and exercise related to these actions are currently in full force and effect.

The Company and its subsidiaries have not received legal notice of any claims other than those mentioned above. The claims detailed above seek to annul certain mining claims that were purchased by SQM and ist subsidiaries, the proportional purchase value of which, with respect to the portion affected by the superimposition, exceeds the nominal and approximate amount of ThUS$150. The claims seek payment of certain amounts allegedly owed by the Company due to its own activities, which exceed the approximate, nominal and individual amount of ThUS$ 150.

16.2

Restrictions to the management or financial limits

Credit Agreements executed by the Company and its subsidiaries with national and foreign banks and international bonds outstanding, require the Company comply with the following consolidated financial ratios:

Maintain a minimum Net Worth of ThUS$ 900,000.

Maintain a Net Financial Debt to EBITDA ratio no greater than 3.00:1.00.

Maintain a Leverage ratio no greater than 1.40:1.00.

Maintain an Operating Subsidiaries’ Interest Indebtedness ratio, defined as the sum of SQM Salar S.A. and SQM Industrial S.A. financial debt over Total Current Assets, no greater than 0.30:1.00.

The calculated ratios mentioned above as are as follows:

Indicator	12/31/2012		12/31/2011		12/31/2010
Net Worth ThUS$		2,187,446		1,864,380		1,670,820
Net Financial Debt/EBITDA		0.83		0.79		0.85
Leverage		1.02		1.08		1.02
Debt SQM Industrial and SQM Salar/Current Assets		0.04		0.05		-

F-132

Notes to the consolidated financial statements as of December 31, 2012

Note 16 - Contingencies and restrictions (continued)

Covenants included in notes issued outside of Chile require that the Company will not consolidate with or merge into any othere entity or convey or substantially transfer its properties and assets to another entity, unless (i) the successor enity will be a enity existing under the laws of the United States (or any State thereof or the District of Columbia) or Chile and will assume, by a supplemental indenture, the due and punctual payment of the principal, premium, if any related, and interest in respect of all the outstanding notes and the performance of every covenant in the indenture on the part of the Company to be performed or observed, (ii) immediately after giving effect to such transaction, no event of default, and no event which, after notice or lapse of time, or both, would become an event of default, will have happened and be continuing; and (iii) the Company will have delivered to the Trustee an officer’s certificate and opinion of counsel stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with the foregoing provisions relating to such transaction. In case of any such consolidation, merger conveyance or transfer (other than a lease), such successor entity will succeed to and be substituted for the Company as obligor on the notes, with the same effect as if it had been named in the Indenture as such obligor.

In addition, SQM is required to provide quarterly financial information.

The Company and its subsidiaries are in full compliance with all limitations, restrictions and obligations mentioned above.

16.3

Commitments

SQM Salar S.A. entered into a royalty agreement with the CORFO which requires annual payments to CORFO for the commercialization of certain mining properties owned by CORFO and the related products produced from these mining properteis. Annual royalties are calculated based on the sales of each type of product. The contract expires in 2030. Royalties amounted to ThUS$27,193, ThUS$23,951 and ThUS$18,717 for the years ended December 31, 2012, 2011 and 2010.

16.4

Restricted or pledged cash

Isapre Norte Grande Ltda. in compliance with requirements established by the Chilean Superintendence of Healthcare, which regulates the running of pension-related health institutions, maintains a guarantee of financial instruments, delivered in the form of deposits, in the custody and administration of Banco de Chile. This guarantee, according to the regulations issued by the Chilean Superintendence of Healthcare is the equivalent of the total amounts owed to its members and medical providers. Banco de Chile reports the present value of the guarantee to the Chilean Superintendence of Healthcare and Isapre Norte Grande Ltda. on a daily basis. As of December 31, 2012, 2011 and 2010, the guarantee amounted to ThUS$571, ThUS$428 and ThUS$514, respectively.

F-133

Notes to the consolidated financial statements as of December 31, 2012

Note 16 - Contingencies and restrictions (continued)

16.5

Securities obtained from third parties

Security received from third parties (distributors) to guarantee Soquimich Comercial S.A.’s compliance with contractual obligations derived from the distribution and sale of fertilizers amounted to ThUS$4,126, ThUS$4,467 and ThUS$6,389 as of December 31, 2012, 2011 and 2010, respectively. The following entities have provided securities:

Entity name	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2011 ThUS$

Llanos y Wammes Soc, Com, Ltda		2,084		1,926		2,037
Fertglobal Chile Ltda.		1,042		1,541		3,352
Tattersall Agroinsumos S.A.		1,000		1,000		1,000

F-134

Notes to the consolidated financial statements as of December 31, 2012

Note 16 - Contingencies and restrictions (continued)

16.6

Indirect guarantees

Guarantees issued in which there is no current balance, reflect indirect guarantees in force and approved by the Company's Board of Directors and have not been drawn upon by the respective subsidiary.

Pending balances as of the

closing date of the financial

statements

Debtor

Type of

12/31/2012

12/31/2011

12/31/2010

Creditor of the guarantee

Name

Relationship

guarantee

ThUS$

Australian and New Zealand Bank

SQM North America Corp

Subsidiary

Bond

Australian and New Zealand Bank

SQM Europe N.V

Subsidiary

Bond

Generale Bank

SQM North America Corp

Subsidiary

Bond

Generale Bank

SQM Europe N.V.

Subsidiary

Bond

Kredietbank

SQM North America Corp

Subsidiary

Bond

Kredietbank

SQM Europe N.V.

Subsidiary

Bond

Banks and financial institutions

SQM Investment Corp. N.V.

Subsidiary

Bond

Banks and financial institutions

SQM Europe N.V.

Subsidiary

Bond

Banks and financial institutions

SQM North America Corp

Subsidiary

Bond

Banks and financial institutions

Nitratos Naturais do Chile Ltda.

Subsidiary

Bond

Banks and financial institutions

SQM México S.A. de C.V.

Subsidiary

Bond

Banks and financial institutions

SQM Brasil Ltda.

Subsidiary

Bond

“BNP”

SQM Investment Corp. N.V.

Subsidiary

Bond

Sociedad Nacional de Mineria A.G.

SQM Potasio S.A.

Subsidiary

Bond

ING Capital LLC

Royal Seed Trading A.V.V.

Subsidiary

Bond

80,055

Scotiabank & Trust (Cayman) Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,235

50,207

Scotiabank & Trust (Cayman) Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,164

Bank of America

Royal Seed Trading A.V.V.

Subsidiary

Bond

40,141

40,140

Export Development Canada

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,020

50,024

The Bank of Tokyo-Mitsubishi UFJ Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

50,140

50,137

JP Morgan Chase Bank

SQM Industrial S.A.

Subsidiary

Bond

The Bank of Nova Scotia

SQM Investment Corp. N.V.

Subsidiary

Bond

Morgan Stanley Capital Services

SQM Investment Corp. N.V.

Subsidiary

Bond

The Bank of Tokyo-Mitsubishi UFJ Ltd.

SQM Investment Corp. N.V.

Subsidiary

Bond

HSBC

SQM Investment Corp. N.V.

Subsidiary

Bond

Deutsche Bank AG

SQM Investment Corp. N.V.

Subsidiary

Bond

Credit Suisse International

SQM Investment Corp. N.V.

Subsidiary

Bond

F-135

Notes to the consolidated financial statements as of December 31, 2012

Note 17 - Earnings per Share

Basic earnings per share are calculated by dividing net income attributable to the Company’s shareholders by the weighted average of the number of shares outstanding during that period,

As expressed, earnings per share are detailed as follows:

Basic earnings per share	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$

Earnings attributable to owners of the parent		649,167		545,758		382,122

Number of common shares in circulation		263,196,524		263,196,524		263,196,524

Basic earnings per share (US$ per share)		2,47		2,07		1,45

The Company has not entered into any operation or issued any securities or financial instruments with a potential dilutive effect. Therefore diluted earnings per share is the same as basic earnings per share.

F-136

Notes to the consolidated financial statements as of December 31, 2012

Note 18 - Effect of fluctuations on the foreign currency exchange rates

Foreign currency exchange differences recognized in profit or loss except for financial instruments measured at fair value through profit or loss:

	12/31/2012 ThUS$			12/31/2011 ThUS$			12/31/2010 ThUS$
Conversion foreign exchange gains (losses) recognized in the result of the year		(26,787	)		(25,307	)		(5,807	)
Conversion of foreign exchange reserves attributable to the owners of the controlling entity		921			(2,781	)		296
Conversion of foreign exchange reserves attributable to the non-controlling entity		61			(109	)		367

Reserves for foreign currency exchange differences:

Foreign currency exchange differences are detailed as follows:

Detail	12/31/2012 ThUS$			12/31/2011 ThUS$			12/31/2010 ThUS$

Changes in equity generated through the equity method:
Comercial Hydro S.A.		937			937			937
SQMC Internacional Ltda.		36			23			41
Proinsa Ltda.		27			17			31
Agrorama Callegari Ltda.		152			102			161
Isapre Cruz del Norte Ltda.		89			55			99
Almacenes y Depósitos Ltda.		103			57			90
Sales de Magnesio Ltda.		177			48			132
Sociedad de Servicios de Salud S.A.		33			24			39
Agrorama S.A.		(11	)		(11	)		-
Doktor Tarsa		(1,035	)		(1,964	)		-
Nutrisi Holding		(42	)		(42	)		-
SQM Vitas Fzco		(318	)		(159	)		-
Ajay Europe		(275	)		(176	)		-
Misr Specialty Ferti		(39	)		(39	)		-
SQM Eastmed Turkey		(42	)		(40	)		-
Charlee SQM (Thailand) Co. Lta.		(32	)		(52	)		-
Coromandel SQM India		(118	)		(31	)		-
SQM Italia SRL		28			-			-
Total		(330	)		(1,251	)		1,530

Functional and presentation currency

The functional currency in these companies corresponds to the currency of the country of origin of each entity, and its presentation currency is the U.S. Dollar.

F-137

Notes to the consolidated financial statements as of December 31, 2012

Note 18 - Effect of fluctuations on the foreign currency exchange rates (continued)

Reasons to use one presentation currency and a different functional currency

The total revenues of these subsidiaries are associated with the local currency.

The commercialization cost structure of these companies is affected by the local currency.

The equities of these companies are expressed in local currency (Chilean peso).

Note 19 - Environment

19.1

Disclosures of disbursements related to the environment

The Company is concerned with protecting the environment both in its production processes and with respect to products manufactured. This commitment is supported by the principles indicated in the Company’s Sustainable Development Policy. The Company is currently operating under an Environmental Management System (EMS) that has allowed it to strengthen its environmental performance through the effective application of the Company’s Sustainable Development Policy.

Operations that use caliche as a raw material are carried out in desert areas with climatic conditions that are favorable for drying solids and evaporating liquids using solar energy. Operations involving the open-pit extraction of minerals, due to their low waste-to-mineral ratio, generate remaining deposits that slightly alter the environment. A portion of the ore extracted is crushed, a process in which in the emission of particulates. Currently this operation is only conducted at the Company´s Pedro de Valdivia operations.

Many of the Company’s products are shipped in bulk at the Port of Tocopilla, Chile. In 2007, the city of Tocopilla was declared a zone saturated with MP10 particles mainly due to the emissions from electric power plants that operate in that city. In October 2010 the Decontamination Plan for Tocopilla was put in place. Accordingly, the Company has committed to taking several measures to mitigate the effects derived from bulk product movements in the port. These measures have been successfully implemented since 2007.

The Company carries out environmental monitoring plans based on specialized scientific studies, Within this context, the Company entered into a contract with the National Forestry Corporation (CONAF) aimed at researching the activities of flamingo groups that live in the Salar de Atacama lagoons. Such research includes a population count of the birds, as well as breeding research. Environmental monitoring activities carried out by the Company at the Salar de Atacama and other systems in which it operates are supported by a number of studies that have integrated diverse scientific efforts from prestigious research centers, including Dictuc from the Pontificia Universidad Católica in Santiago and the School of Agricultural Science of the Universidad de Chile.

F-138

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.1

Disclosures of disbursements related to the environment (continued)

Furthermore, within the framework of the environmental studies that the Company is conducting, the Company performs significant activities in relation to the recording of Pre-Columbian and historical cultural heritage, as well as the protection of heritage sites, in accordance with current Chilean laws. These activities have been specifically performed in the areas surrounding our Maria Elena and Nueva Victoria plants. This effort is being accompanied by cultural initiatives within the community and the organization of exhibits in local and regional museums.

As emphasized in its Sustainable Development Policy, the Company strives to maintain positive relationships with the communities surrounding the locations in which it carries out its operations, as well as to participate in communities’ development by supporting joint projects and activities which help to improve the quality of life for residents. For this purpose, the Company has focused its efforts on activities involving the rescue of historical heritage, education and culture, as well as development, and in order to do so, it acts both individually and in conjunction with private and public entities.

19.2

Detail of information on disbursements related to the environment

Cummulative disbursements as of December 31, 2012 in related to investments in production processes, verification and control of compliance with environmental ordinances and laws relative to industrial processes and facilities, amounted to ThUS$23,207 and are detailed as follows:

F-139

Notes to the consolidated financial statements as of December 31, 2012

Note 19- Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses as of December 31, 2012

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made
or will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Actual or estimated
date on which
disbursements were or
will be made

SQM Industrial S.A.

Environmental Management (Expense as of December 2012)

Not classified

Expense

Not classified

1,808

12-31-2012

SQM Industrial S.A.

IQ8G – Improvement of Bureau of Exchange, offices and facilities

Sustainability

Asset

Not classified

12-31-2012

SQM Industrial S.A.

JQEZ – Change of Berrtrams Prilling Boiler CS

Sustainability: Replacement of equipment

Asset

Development

235

12-31-2012

SQM Industrial S.A.

JQH9 – Purchase of Bertrams Boiler

Sustainability: Replacement of equipment

Asset

Development

600

12-31-2012

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2012

SQM Industrial S.A.

MP5W - TK's Fuel Standards

Sustainability

Asset

Not classified

841

12-31-2012

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

211

12-31-2012

SQM Industrial S.A.

MQ8M - Reconditioning monitoring station ME

Sustainability: Renovation

Expense

Not classified

12-31-2012

SQM Industrial S.A.

MQA8 – Normalization gas systems peripheral casinos (stage 1 of project)

Not classified

Expense

Not classified

106

12-31-2012

SQM Industrial S.A.

MQAJ - Improvements to Camp Water and Sewage (P Contesse commitment to DDSS)

Not classified

Expense

Not classified

12-31-2012

SQM Industrial S.A.

MQBM - Archaeological Digging Deployment Maria Elena - Toco

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2012

SQM Industrial S.A.

MQHF- Pilas ME Maintenance

Sustainability

Asset

Not classified

161

12-31-2012

SQM Industrial S.A.

MQK2- Elimination of PCBs I

Not classified

Expense

Not classified

12-31-2012

F-140

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses as of December 31, 2012, continued

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made
or will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Actual or estimated
date on which
disbursements were or
will be made

SQM Industrial S.A.

PPC1 - Remove switches park OCB sub 3 and 1/12 Pedro de Valdivia

Sustainability: Replacement of equipment

Expense

Not classified

147

12-31-2012

SQM Industrial S.A.

PPNK - Management of Ammonia PV stoppage plant

Sustainability: Environment and Risk prevention

Asset
Expense

Not classified

193

12-31-2012

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Sustainability: Environment and Risk prevention

Asset

Not classified

1,763

12-31-2012

SQM Industrial S.A.

SQ7X - Reach 2011-2013

Sustainability

Expense

Not classified

199

12-31-2012

SQM Industrial S.A.

TQA2 – Improvement sewage Villa Prat

Not classified

Expense

Not classified

12-31-2012

SQM Industrial S.A.

JQ8K – DIA Line 4 Floor Drying , Coya Sur (Project: Drying Line 4)

Environmental procedure

Asset

Not classified

12-31-2012

SQM Industrial S.A.

FP55 - FPXA - Zone Mine EIS PB - PB Expansion EIS (Projects: Pampa Blanca Saltwater - Saltwater Stage I)

Environmental procedure

Asset

Not classified

1,425

12-31-2012

SQM Industrial S.A.

JQB6 - NPTIV (DIA Planta NPT4, Coya Sur)

Environmental procedure

Asset

No Clasificado

12-31-2012

SQM Industrial S.A.

PQLV- Mine PV New Area (DIA Pedro de Valdivia Mine)

Ambient procedure

Expense

Not classified

131

12-31-2012

SQM Industrial S.A.

CQLX-Yard for Hazrdous Waste – S. del Carmen and Lagarto

Sustainability

Not classified

12-31-2012

SQM S.A.

MQLQ- Gas Washing System

Sustainability: Risk Prevention and Environment

Asset

Development

324

12-31-2012

SQM S.A.

AQ0A - Well Drilling 4 Uptake Change Point Tamarugal Pampa

Sustainability: Natural Resources

Asset

Development

534

12-31-2012

F-141

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses as of December 31, 2012, continued

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made
or will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Actual or estimated
date on which
disbursements were or
will be made

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability: Environment and Risk prevention

Expense

Not classified

166

12-31-2012

SQM S.A.

IPXE - Environmental Monitoring Plan Llamara Salt flat

Sustainability: Environment and Risk prevention

Expense

Not classified

872

12-31-2012

SQM S.A.

IPXF - Environmental Monitoring Plan Tamarugal Pampa

Sustainability: Environment and Risk prevention

Expense

Not classified

881

12-31-2012

SQM S.A.

IQ08 - PSA Llamara & Pampa Tamarugal

Sustainability: Natural Resources

Asset

Development

1,759

12-31-2012

SQM S.A.

IQ0C - Mine Area Enhancement NV

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2012

SQM S.A.

IQ1K - Construction of 3 observation wells in Sur Viejo

Sustainability: Natural Resources

Asset

Development

195

12-31-2012

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Not classified

Asset

Not classified

1,653

12-31-2012

SQM S.A.

IQ3S - Hazardous Materials Management Standardization

Sustainability: Environment and Risk prevention

Expense

Not classified

251

12-31-2012

SQM S.A.

IQ52 - New Victoria Environment Office

Not classified

Expense

Not classified

12-31-2012

SQM S.A.

IQ53 - Cultural heritage route Soronal adduction (Pampa Hermosa)

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2012

SQM S.A.

IQ54 - Cultural heritage Pampa Hermosa

Sustainability: Environment and Risk prevention

Expense

Not classified

500

12-31-2012

SQM S.A.

IQ9V - Project Quillagua

Not classified

Expense

Not classified

788

12-31-2012

SQM S.A.

IQOW- Equipping deposit for heritage interest at
Humberstone

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2012

SQM S.A.

IQPJ- Cultural Heritage Measures in Mina Etapa

Sustainability

Expense

Not classified

12-31-2012

F-142

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses as of December 31, 2012, continued

Identification of the
Parent or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Actual or estimated
date on which
disbursements were or
will be made

SQM S.A.

PQB9 - Change of exhaust SO2 gas

Sustainability

Asset

Not classified

178

12-31-2012

SQM S.A.

IQ6M/ IQ6N - DIA Expansion Nueva Victoria Sur Mine (Projects: Exploration NVS7 2011 and Exploration Nva, Victoria Oeste)

Environmental procedure

Expense

Not classified

115

12-31-2012

SQM S.A.

IP83 - DIA Expansion TLN-15 (Projects: Management Administration Expenses SQM Nueva Victoria)

Not classified

Expense

Not classified

12-31-2012

SQM Salar S.A.

LQFD- Changing Houses

Sustainability

Asset

Not classified

160

12-31-2012

SQM Salar S.A.

CQ4M – Regularization of Contractor facilities

Sustainability: Environment and Risk prevention

Asset

Not classified

12-31-2012

SQM Salar S.A.

CQ8U - New Changing Room CL - HL

Capacity Upgrade

Asset

Not classified

242

12-31-2012

SQM Salar S.A.

LP82 - Project for the Promotion of Agricultural Activity in Communities of the Salt deposit

Sustainability

Expense

Development

1,126

12-31-2012

SQM Salar S.A.

LPTF – Environmental study and exploration 2010

Sustainability

Expense

Not classified

398

12-31-2012

SQM Salar S.A.

LPTJ - Improvements Sanitary Works

Sustainability

Asset

Not classified

206

12-31-2012

SQM Salar S.A.

LQDM – Certification of tanks

Sustainability

Asset - Expense

Not classified

146

12-31-2012

SQM Salar S.A.

LQI6- Surveys and Ambient Prospections 2011 (EIA Operation Actualization in Salar de Atacama)

Ambient Procedure

Asset

Not classified

358

12-31-2012

SQM Salar S.A.

LQNI-DIA Expansion of drying plant and compacted KCL facility

Ambient Procedure

Asset

Not classified

12-31-2012

SIT S.A.

TQNA- Meteorological station Tocopilla
(Decontamination plan system Tocopilla)

Sustainability: Risk and Environment Prevention

Asset

Not classified

12-31-2012

SIT S.A.

MQ6Y - Maintenance and repair and bureau of exchange Tocopilla ME

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2012

F-143

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses as of December 31, 2012, continued

Identification of the
Parent or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Actual or estimated
date on which
disbursements were or
will be made

SIT S.A.

TQM2 – Capsulation Project charge/ discharge Fields 1 and 8

Costs Reduction

Expense

Not classified

12-31-2012

SIT S.A.

TPR8 - Disposal of liquid waste generation by aspiration

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2012

SIT S.A.

TPYX – Equipping of dust collector of the cradle and seal - Field 3 Tocopilla

Sustainability: Environment and Risk prevention

Asset - Expense

Development

1,658

12-31-2012

SIT S.A.

TQAP - Paving Field No, 3 and No, 4

Capacity Upgrade

Expense

Not classified

12-31-2012

SIT S.A.

TQAV - Paving paths IV

Sustainability: Environment and Risk prevention

Expense

Development

12-31-2012

SIT S.A.

TQLY- Dust Extractor for packing line N°1

Ambient Procedure

Expense

Not classified

12-31-2012

SIT S.A.

TQQ5- Environental Divisions yard N°8

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2012

SQM Potasio S.A.

IQ4C - Camp Development (Osmosis and Others)

Capacity Upgrade

Asset

Not classified

1,987

12-31-2012

SQM Nitratos S.A.

IQDN- Storage Rises – Maintenance of Mine NV

Sustainability: Risk Prev,, and Environment

Asset

Not classified

12-31-2012

SQM Nitratos S.A.

PQI9 – Mine waste water treatment plant

Sustainability: Environment and Risk prevention

Asset

Not classified

12-31-2012

SQM Nitratos S.A.

IQMH-Operation Standardization NV mine

Sustainability: Environment and Risk prevention

Asset

Not classified

12-31-2012

Total

23,207

F-144

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Future expenses as of December 31, 2012

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Actual or estimated
date on which
disbursements were or
will be made

SQM Industrial S.A.

Environment management (Budget 2012 Available at IV Quarter 2012)

Not classified

Expense

Not classified

2,027

12-31-2013

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Sustainability: Environment and Risk prevention

Asset

Not classified

12-31-2013

SQM Industrial S.A.

MP5W - TK's Fuel Standards

Sustainability

Asset

Not classified

1,600

12-31-2013

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

152

06-30-2013

SQM Industrial S.A.

MQBM - Archaeological Digging Deployment Maria Elena - Toco

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

03-31-2013

SQM Industrial S.A.

MQHF – Sustaining of batteries ME

Sustainability

Asset - Expense

Not classified

08-01-2013

SQM Industrial S.A.

MQK2 – Elimination of PCBs I

Not classified

Asset - Expense

Not classified

554

03-31-2014

SQM Industrial S.A.

PPC1 - Remove switches park OCB sub 3 and 1/12 Pedro de Valdivia

Sustainability: Replacement of equipment

Asset - Expense

Not classified

12-31-2013

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

1,315

12-31-2013

SQM Industrial S.A.

SQ7X - Reach 2011-2013

Sustainability

Expense

Not classified

01-31-2014

SQM Industrial S.A.

TQA2 - Drainage Improvement Villa Prat

Not classified

Asset - Expense

Not classified

104

06-30-2013

SQM Industrial S.A.

CQLX- Yard for Dangerous Residue - S, Carmen y Lagarto

Sustainability: Risk Prevention and Environment

Asset - Expense

Not classified

03-31-2013

SQM Industrial S.A.

JQL7- Engineering and Project for the reception of prilado and dried dust, KNO3

Capacity Upgrade

Expense

Research

200

08-01-2013

F-145

Notes to the consolidated financial statements as of December 31, 2012

Note 19- Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Future expenses as of December 31, 2012

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Actual or estimated
date on which
disbursements were or
will be made

SQM Industrial S.A.

FP55 - FPXA - EIA Expansion (Projects: Pampa Blanca Saltwater - Saltwater Stage I)

Sustainability

Asset

Development

135

08-31-2013

SQM Industrial S.A.

JQB6 – NPTIV (DIA Planta NPT4, Coya Sur)

Ambient Procedure

Asset

Not classified

11-30-2013

SQM Industrial S.A.

PQLV – New Area of Mine PV (DIA Pedro de Valdivia Mine)

Ambient Procedure

Asset

Not classified

243

09-30-2013

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability: Environment and Risk prevention

Expense

Not classified

03-31-2013

SQM S.A.

IPXE - Environmental Monitoring Plan Llamara Salt flat

Sustainability: Environment and Risk prevention

Expense

Not classified

03-31-2013

SQM S.A.

IPXF - Environmental Monitoring Plan Tamarugal Pampa

Sustainability: Environment and Risk prevention

Expense

Not classified

168

06-30-2013

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Not classified

Asset

Not classified

441

12-31-2013

SQM S.A.

IQ3S - Hazardous Materials Management Standardization

Sustainability: Environment and Risk prevention

Asset

Not classified

148

12-31-2013

SQM S.A.

IQ54 - Cultural heritage Pampa Hermosa

Sustainability: Environment and Risk prevention

Asset

Not classified

219

12-31-2013

SQM S.A.

MQLQ – Fumes Washing System

Sustainability: Risk Prevention and Environment

Asset

Development

288

06-30-2013

SQM S.A.

IQOW- Equipping deposit of patrimony Humberstone

Sustainability: Risk and Environment Prevention

Expense

Not classified

03-31-2013

SQM S.A.

IQ6M/ IQ6N - DIA Expansion Nueva Victoria Sur Mine (Projects: Exploration NVS7 2011 and Exploration Nva, Victoria Oeste)

Sustainability: Natural Resources

Asset

Not classified

03-31-2013

SQM Salar S.A.

LQDM – Certification of tanks

Sustainability

Expense

Not classified

600

12-31-2013

SQM Salar S.A.

LQI6 –EIA Update: operation in the Salar de Atacama

Ambient Procedure

Asset

Not classified

265

06-30-2013

F-146

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Future expenses as of December 31, 2012

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Actual or estimated
date on which
disbursements were or
will be made

SQM Salar S.A.

LQNI-DIA Expansion of drying plant and compacted KCL facility

Ambient Procedure

Asset

Not classified

08-31-2013

SQM Salar S.A.

LQG8 – Waste room Toconao Campsite

Not classified

Asset - Expense

Not classified

03-31-2013

SIT S.A.

TPYX - Enabling the dust collector of the crib and court seal 3 Tocopilla

Sustainability: Environment and Risk prevention

Asset

Development

12-31-2013

SIT S.A.

TQAV - Paving paths IV

Sustainability: Environment and Risk prevention

Expense

Development

162

12-31-2013

SIT S.A.

TQQ5- Environental Divisions yard N°8

Sustainability: Environment and Risk prevention

Expense

Not classified

04-27-2013

SQM Nitratos S.A.

IQMH-Normalización Operaciones área mina NV

Sustainability: Environment and Risk prevention

Asset

Not classified

157

03-31-2013

Total

9,279

F-147

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses, as of December 31, 2011

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM Industrial S.A.

Environment Management (2010 Expense)

Not classified

Expense

Not classified

1,868

12-31-2011

SQM Industrial S.A.

SQ7X - Reach 2011-2013

Sustainability

Expense

Not classified

01-31-2014

SQM Industrial S.A.

ANMI - Infrastructure consulting for the storage of dangerous chemical substances

Sustainability: Environment and Risk prevention

Asset

Development

06-30-2011

SQM Industrial S.A.

FNWR EID Discard field Pampa Blanca

Sustainability: Environment and Risk prevention

Expense

Development

12-31-2011

SQM Industrial S.A.

FP55 - FPXA - Mine Area EIS PB - PB Expansion EIS (Projects: Pampa Blanca Saltwater - Saltwater Stage I)

Sustainability

Asset

Development

945

12-31-2012

SQM Industrial S.A.

JNTU - Assessment of waters at San Isidro

Sustainability: Environment and Risk prevention

Asset

Not classified

556

12-31-2011

SQM Industrial S.A.

JPX9 - Enhanced Ground Granulated EID-Prilado Coya Sur (Project: Pilot Plant TD and Pilot Testing of Resin)

Sustainability: Research and Development

Asset

Research

06-30-2011

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Sustainability: Environment and Risk prevention

Asset

Not classified

12-01-2011

SQM Industrial S.A.

MP17 - Standardization Water Chlorination ME / CS / PV

Sustainability

Asset

Not classified

06-30-2011

SQM Industrial S.A.

MP5W - TK's Fuel Standards

Sustainability

Asset

Not classified

613

12-31-2011

SQM Industrial S.A.

MPIS - Stabilization of streets and sidewalks dust suppression

Sustainability

Asset

Development

736

06-30-2011

SQM Industrial S.A.

MPL5 - Repair sanitary and electrical services

Sustainability

Asset

Development

184

06-30-2011

SQM Industrial S.A.

MPLS - Automation and Alarm Monitoring Station Hospital information

Not classified

Asset

Not classified

06-30-2011

F-148

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses, as of December 31, 2011, continued

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM Industrial S.A.

MQ51 - Terms of Reference Project ME equity measures

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2011

SQM Industrial S.A.

PPNK - Management of Ammonia PV stoppage plant

Sustainability: Environment and Risk prevention

Asset

Not classified

12-31-2011

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

785

12-01-2011

SQM Industrial S.A.

JQ8K – DIA Line 4 Floor Drying , Coya Sur (Project: Drying Line 4)

Capacity Upgrade

Asset

Development

09-01-2012

SQM Industrial S.A.

IQ8G – Improvement of Bureau of Exchange, offices and facilities

Sustainability

Asset

Not classified

12-31-2011

SQM Industrial S.A.

MQ7P - ME Village sewer lids change

Sustainability

Expense

Not classified

12-31-2011

SQM Industrial S.A.

JQB6 - EID Ground NPT4, Coya Sur (Project: NPTIV)

Capacity Upgrade

Asset

Development

04-30-2012

SQM Industrial S.A.

TQ78 - motorized sweepers

Sustainability: Replacement of equipment

Asset

Development

206

12-31-2011

Minera Nueva Victoria Ltda.

IPMN - Capacity Expansion Sanitary Iris

Capacity upgrade

Asset

Development

06-30-2011

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

199

12-31-2011

SQM Industrial S.A.

PPC1 - Remove switches park OCB sub 3 and 1/12 Pedro de Valdivia

Sustainability: Replacement of equipment

Asset – Expense

Not classified

12-31-2012

SQM Industrial S.A.

MQ8M - Reconditioning monitoring station ME

Sustainability: Renovation

Asset

Not classified

12-31-2011

SQM Industrial S.A.

MQAJ - Improvements to Camp Water and Sewage (P Contesse commitment to DDSS)

Not classified

Asset

Not classified

12-31-2011

F-149

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses, as of December 31, 2011, continued

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

Minera Nueva Victoria Ltda.

IPNW - Improvements Halls C / D / B Iris

Sustainability

Asset

Not classified

08-31-2011

Minera Nueva Victoria Ltda.

IQ4C - Development Camp (Osmosis and Others)

Capacity Upgrade

Asset

Not classified

1,630

12-31-2012

SIT S.A.

TPLR - Implementation sewage pumping system to sewer

Sustainability: Environment and Risk prevention

Asset

Not classified

06-30-2011

SIT S.A.

TPM7 – Environmental nets field 3 and 4

Not classified

Asset - Expense

Not classified

524

06-30-2011

SIT S.A.

TPR8 - Disposal of liquid waste generation by aspiration

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

12-31-2011

SIT S.A.

TPYX - Enabling the dust collector of the crib and court seal 3 Tocopilla

Sustainability: Environment and Risk prevention

Asset

Development

1,496

12-31-2011

SIT S.A.

TQAV - Paving paths IV

Sustainability: Environment and Risk prevention

Expense

Development

12-01-2011

SIT S.A.

TQAP - Paving Field No, 3 and No, 4

Capacity Upgrade

Expense

Not classified

10-30-2012

SQM Nitratos S.A.

IP6W - Treatment Plant Riles

Sustainability: Environment and Risk prevention

Asset

Not classified

06-30-2011

SQM Nitratos S.A.

PP0V - Environmental Medium Maintenance Projects ME-PV-NV-PB

Sustainability: Environment and Risk prevention

Asset – Expense

Development

06-30-2011

SQM S.A.

AQ0A - Well Drilling 4 Uptake Change Point Tamarugal Pampa

Sustainability: Natural Resources

Asset

Development

534

12-31-2011

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability: Environment and Risk prevention

Expense

Not classified

127

12-31-2011

SQM S.A.

IPXE - Environmental Monitoring Plan Llamara Salt flat

Sustainability: Environment and Risk prevention

Expense

Not classified

465

12-31-2012

F-150

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses, as of December 31, 2011, continued

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM S.A.

IPXF - Environmental Monitoring Plan Tamarugal Pampa

Sustainability: Environment and Risk prevention

Expense

Not classified

230

12-31-2012

SQM S.A.

IQ08 - PSA Llamara & Pampa Tamarugal

Sustainability: Natural Resources

Expense

Development

1,740

12-31-2011

SQM S.A.

IQ0C - Mine Area Enhancement NV

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2011

SQM S.A.

IQ1K - Construction of 3 observation wells in Sur Viejo

Sustainability: Natural Resources

Asset

Development

195

12-31-2011

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Not classified

Asset

Not classified

962

12-31-2011

SQM S.A.

IQ3S - Hazardous Materials Management Standardization

Sustainability: Environment and Risk prevention

Asset

Not classified

100

12-31-2012

SQM S.A.

IQ52 - New Victoria Environment Office

Not classified

Asset

Not classified

12-31-2011

SQM S.A.

IQ53 - Cultural heritage route Soronal adduction (Pampa Hermosa)

Sustainability: Environment and Risk prevention

Asset

Not classified

12-31-2011

SQM S.A.

IQ54 - Cultural heritage Pampa Hermosa

Sustainability: Environment and Risk prevention

Asset

Not classified

188

12-31-2012

SQM S.A.

SCI6 - Environmental Studies - Project Region I

Not classified

Asset

Not classified

2,376

12-31-2011

SQM S.A.

IQ6M - DIA Expansion Nueva Victoria Sur Mine

Sustainability: Natural Resources

Asset

Not classified

262

01-31-2011

SQM S.A.

IQ9V – Quillagua Project

Not classified

Asset

Not classified

323

12-31-2014

SQM Salar S.A.

CPTP - Installing emergency showers drinking water

Sustainability

Asset

Not classified

12-31-2011

F-151

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses, as of December 31, 2011, continued

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM Salar S.A.

CPZH - Management of Descartes Filter Presses Hydroxide

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2011

SQM Salar S.A.

LP5J - Water Recharge Study Atacama Salt flat

Sustainability: Environment and Risk prevention

Expense

Research

105

12-31-2011

SQM Salar S.A.

LP82 - Project for the Promotion of Agricultural Activity in Communities of the Salt deposit

Sustainability

Expense

Development

761

12-31-2014

SQM Salar S.A.

LPTF – Environmental study and exploration 2010

Sustainability

Expense

Not classified

370

12-31-2011

SQM Salar S.A.

LPTJ - Improvements Sanitary Works

Sustainability

Asset

Not classified

206

12-31-2011

SQM Salar S.A.

LQ38 - Field Drying Sludge

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

12-31-2011

SQM Salar S.A.

CQ8U - New Changing Room CL - HL

Capacity Upgrade

Asset

Not classified

238

12-31-2011

SQM Salar S.A.

LQAK - garbage rooms MOP and SOP

Sustainability

Expense

Not classified

12-31-2011

Total

19,912

F-152

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Future Expenses

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM Industrial S.A.

Environment management (Budget 2011- Expense to March 2011)

Not classified

Expense

Not classified

2,243

12-31-2011

SQM Industrial S.A.

SQ7X - Reach 2011-2013

Sustainability

Expense

Not classified

551

01-31-2014

SQM Industrial S.A.

FP55 - FPXA - Mine Area EIS PB - PB Expansion EIS (Projects: Pampa Blanca Saltwater - Saltwater Stage I)

Sustainability

Asset

Development

800

12-31-2012

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Sustainability: Environment and Risk prevention

Asset

Not classified

107

12-01-2011

SQM Industrial S.A.

MP5W - TK's Fuel Standards

Sustainability

Asset

Not classified

487

12-31-2011

SQM Industrial S.A.

MPQU - Construction of Hazardous Chemical Supplies warehouse

Sustainability: Environment and Risk prevention

Asset

Development

264

12-31-2011

SQM Industrial S.A.

PPC1 - Remove switches park OCB sub 3 and 1/12 Pedro de Valdivia

Sustainability: Replacement of equipment

Asset - Expense

Not classified

122

12-31-2012

SQM Industrial S.A.

PPNK - Management of Ammonia PV stoppage plant

Sustainability: Environment and Risk prevention

Asset

Not classified

178

12-31-2011

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

2,715

12-01-2011

SQM Industrial S.A.

JQ8K – DIA Line 4 Floor Drying , Coya Sur (Project: Drying Line 4)

Capacity Upgrade

Asset

Development

09-01-2012

SQM Industrial S.A.

IQ8G – Improvement of Bureau of Exchange, offices and facilities

Sustainability

Asset

Not classified

12-31-2011

SQM Industrial S.A.

JQB6 - EID Ground NPT4, Coya Sur (Project: NPTIV)

Capacity Upgrade

Asset

Development

04-30-2012

SQM Industrial S.A.

TQA2 - Drainage Improvement Villa Prat

Not classified

Asset

Not classified

170

12-30-2011

F-153

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Future expenses (continued)

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM Industrial S.A.

MQAJ - Improvements to Camp Water and Sewage (P Contesse commitment to DDSS)

Not classified

Asset

Not classified

297

12-31-2011

SQM Industrial S.A.

MQA8 - Normalization gas system, external cafeterias (Stage 1: projects)

Not classified

Asset

Not classified

150

12-30-2011

SQM Industrial S.A.

MQBM - Archaeological Digging Deployment Maria Elena - Toco

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2011

Minera Nueva Victoria Ltda.

IQ4C - Camp Development (Osmosis and Others)

Capacity Upgrade

Asset

Not classified

1,370

12-31-2012

SIT S.A.

TPR8 - Disposal of liquid waste generation by aspiration

Sustainability: Environment and Risk prevention

Asset - Expense

Not classified

12-31-2011

SIT S.A.

TPYX - Enabling the dust collector of the crib and court seal 3 Tocopilla

Sustainability: Environment and Risk prevention

Asset

Development

204

12-31-2011

SIT S.A.

MQ6Y - Maintenance and repair and bureau of exchange Tocopilla ME

Sustainability: Environment and Risk prevention

Asset

Not classified

12-30-2011

SIT S.A.

TQAV - Paving paths IV

Sustainability: Environment and Risk prevention

Expense

Development

297

12-01-2011

SQM Nitratos S.A.

IQDN - Storage Rises – Maintenance of Mine NV

Sustainability: Environment and Risk prevention

Asset

Not classified

07-30-2012

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2011

SQM S.A.

IPXE - Environmental Monitoring Plan Llamara Salt flat

Sustainability: Environment and Risk prevention

Expense

Not classified

1,276

12-31-2012

SQM S.A.

IPXF - Environmental Monitoring Plan Tamarugal Pampa

Sustainability: Environment and Risk prevention

Expense

Not classified

1,836

12-31-2012

SQM S.A.

IQ08 - PSA Llamara & Pampa Tamarugal

Sustainability: Natural Resources

Expense

Development

12-31-2011

F-154

Notes to the consolidated financial statements as of December 31, 2012

Note 19- Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Future expenses (continued)

Identification of the Parent
or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM S.A.

IQ0C - Mine Area Enhancement NV

Sustainability: Environment and Risk prevention

Expense

Not classified

12-31-2011

SQM S.A.

IQ1K - Construction of 3 observation wells in Sur Viejo

Sustainability: Natural Resources

Asset

Development

12-31-2011

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Not classified

Asset

Not classified

783

12-31-2011

SQM S.A.

IQ3S - Hazardous Materials Management Standardization

Sustainability: Environment and Risk prevention

Asset

Not classified

300

12-31-2012

SQM S.A.

IQ52 - New Victoria Environment Office

Not classified

Asset

Not classified

12-31-2011

SQM S.A.

IQ53 - Cultural heritage route Soronal adduction (Pampa Hermosa)

Sustainability: Environment and Risk prevention

Asset

Not classified

12-31-2011

SQM S.A.

IQ54 - Cultural heritage Pampa Hermosa

Sustainability: Environment and Risk prevention

Asset

Not classified

764

12-31-2012

SQM S.A.

IQ9V – Quillagua Project

Not classified

Asset – Expense

Not classified

849

12-31-2014

SQM S.A.

PQB9 - Change of exhaust SO2 gas

Sustainability

Asset

Not classified

178

12-01-2011

SQM Salar S.A.

CQ4M – Regularization of Contractor facilities

Sustainability: Environment and Risk prevention

Asset

Not classified

12-31-2012

SQM Salar S.A.

LP82 - Project for the Promotion of Agricultural Activity in Communities of the Salt deposit

Sustainability

Expense

Development

822

12-31-2014

SQM Salar S.A.

CQ8U - New Changing Room CL - HL

Capacity Upgrade

Asset

Not classified

102

12-31-2011

Total

17,338

F-155

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses, as of December 31, 2010

Identification of the Parent
Company or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM Industrial S.A.

Environment Management (2010 Expense)

Not classified

Expense

Not classified

1,270

12-01-2011

SQM Industrial S.A.

EPRH – REACH 2010

Support

Expense

Not classified

1,010

12-31-2010

SQM Industrial S.A.

MCLX - Cleaning of the saving yards

Cost reduction

Expense

Development

604

10-01-2010

SQM Industrial S.A.

ANMI - Infrastructure consulting for the storage of dangerous chemical substances

Support: Risk prevention and the environment

Asset

Development

12-01-2010

SQM Industrial S.A.

MNH8 - Lightning upgrades

Support

Expense

Development

228

12-01-2010

SQM Industrial S.A.

SCCY - Disposal of dangerous residue

Support

Asset - Expense

Development

165

12-01-2010

SQM Industrial S.A.

JNTU - San Isidro water evaluation

Support: Risk prevention and the environment

Asset

Not classified

556

12-31-2010

SQM Industrial S.A.

JNNX - Nitrate environment various

Support: Risk prevention and the environment

Asset

Not classified

12-01-2010

SQM Industrial S.A.

MNTE - Industrial hygiene equipment

Support: Risk prevention and the environment

Asset

Development

12-01-2010

SQM Industrial S.A.

INST - Acquisition of used lubricant rapid disposal bank, NV-ME-PB

Support: Risk prevention and the environment

Expense

Development

07-01-2010

SQM Industrial S.A.

MP17 - Normalization of consumable water ME/CS/PV

Support

Asset

Not classified

12-01-2010

SQM Industrial S.A.

MP5W - Normalization TK´s fuel

Support

Asset

Not classified

397

12-01-2010

SQM Industrial S.A.

FNWR EID Discard field Pampa Blanca

Support: Risk prevention and the environment

Expense

Development

12-01-2010

SQM Industrial S.A.

MNYS Actions for the dissemination of cultural heritage, technology change Maria Elena

Support: Risk prevention and the environment

Asset

Not classified

12-31-2010

SQM Industrial S.A.

FP55-FPXA

Support

Asset

Development

1,106

12-31-2010

SQM Industrial S.A.

MP8Z Automation of water volume inlet pipe ME, CS and Vergara

Support

Asset

Development

523

12-01-2010

SQM Industrial S.A.

MPL5Repair of sanitary and electric facilities

Support

Asset

Development

184

10-01-2010

SQM Industrial S.A.

MPIS - Stabilization of streets and suppression of dust at sidewalks

Support

Asset

Development

736

10-01-2010

SQM Industrial S.A.

PPNK Handling of PV ammonia in Detention of plant

Support: Risk prevention and the environment

Asset

Not classified

12-01-2010

SQM Industrial S.A.

MPGF Improvement of sealing and pressurization room 031

Support

Asset - Expense

Not classified

12-01-2010

SQM Industrial S.A.

TPO4 Indigenous camp

Support

Asset

Not classified

06-11-2010

SQM Industrial S.A.

MPLS Automated alarms and information of monitoring station Hospital

Not classified

Asset

Not classified

12-01-2010

Minera Nueva Victoria S.A.

IPNW Extension in sanitary capacity for Iris

Support

Asset

Not classified

12-01-2010

Minera Nueva Victoria S.A.

IPMN Extension in sanitary capacity for Iris

Capacity upgrade

Asset

Development

12-01-2010

SQM Nitratos S.A.

PNH2 Maintenance of Environmental projects ME-PV-NV-PB

Support: Risk prevention and the environment

Asset - Expense

Development

06-29-2010

F-156

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - The environment (continued)

19.2

Detail of information on disbursements related to the environment (continued)

Accumulated expenses, as of December 31, 2010 (continued)

Identification of the Parent
Company or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM Nitratos S.A.

PP0V - Maintenance of environmental projects ME-PV-NV-PB

Support: Risk prevention and the environment

Asset - Expense

Development

12-01-2010

SQM Nitratos S.A.

IP6W Treatment plants of “riles”

Support: Risk prevention and the environment

Asset

Not classified

12-01-2010

SQM Nitratos S.A.

PPAT - Risk prevention projects Sem II 2008

Support: Risk prevention and the environment

Expense

Development

157

12-01-2010

SQM Salar S.A.

LP5K Environmental evaluation (mop)

Support: Risk prevention and the environment

Asset

Not classified

12-01-2010

SQM Salar S.A.

LP5J - Water study Water Recharge Atacama Saltpeter deposit

Support: Risk prevention and the environment

Expense

Research

12-31-2010

SQM Salar S.A.

LNNT Environmental projects Salar Chaxa

Support: Risk prevention and the environment

Expense

Not classified

12-01-2010

SQM Salar S.A.

LPIL Upgrade SOP plant

Capacity upgrade

Asset

Development

12-01-2010

SQM Salar S.A.

LPIK Potassium Plant

Capacity upgrade

Asset

Development

12-01-2010

SQM Salar S.A.

LP82 - Project to foster the agricultural activity in Locations of Salar

Support

Expense

Development

331

12-31-2012

SQM Salar S.A.

LPGA Improvement in facilitiesToconao

Capacity upgrade

Asset

Not classified

109

09-30-2010

SQM Salar S.A.

LPK2 Cash exchange house

Not classified

Asset

Not classified

102

12-01-2010

SQM Salar S.A.

LPN3 New plant MOP

Support

Asset

Investigation

12-31-2011

SQM Salar S.A.

CPTP - Installation of drinking water emergency showers

Support

Asset

Not classified

04-01-2011

SQM Salar S.A.

LPTF Environment projects

Support

Expense

Not classified

169

12-31-2010

SQM Salar S.A.

LPTJ Sanitary upgrades

Support

Asset

Not classified

05-01-2011

SQM Salar S.A.

LPPJ - EID SOP upgrade

Capacity upgrade

Asset

Not classified

12-31-2011

SIT S.A.

TNLA - Road paving

Support: Risk prevention and the environment

Asset

Development

12-01-2010

SIT S.A.

PNOT - Lightning upgrade (train area)

Support

Asset -Expense

Development

369

12-01-2010

SIT S.A.

TPR8 - Elimination of waste water generation through vacuum

Support: Risk prevention and the environment

Asset - Expense

Not classified

12-01-2010

SIT S.A.

TPLR - Waste disposal system

Support: Risk prevention and the environment

Asset

Not classified

12-01-2010

SIT S.A.

TPM7 - Environment projects

Not classified

Asset - Expense

Not classified

524

06-30-2011

SQM S.A.

SCI6 - Environment studies

Not classified

Expense

Not classified

2,376

10-01-2010

F-157

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - The environment (continued)

19.2

Detail of information on disbursements related to the environment (continued)

Accumulated expenses, as of December 31, 2010 (continued)

Identification of the Parent
Company or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or estimated
date on which
disbursements were or
will be made

SQM S.A.

AQ0A Llamara & Tamarugal Meadows

Support Natural resources

Asset

Development

03,30,2011

SQM S.A.

IPFT - I Region of Chile Cultural heritage

Support: Risk prevention and the environment

Expense

Not classified

111

12,31,2011

SQM S.A.

IPXE- Environmental follow-up plan at Tamarugal Meadows

Support: Risk prevention and the environment

Expense

Not classified

12,31,2012

12,345

F-158

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - The environment (continued)

19.2

Detail of information on disbursements related to the environment (continued)

Future expenses from December 31, 2010

Identification of the Parent
Company or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or
estimated date on
which
disbursements
were or will be
made

SQM Industrial S.A.

Management Environment (Ppto 2011)

Not Classified

Expense

Not Classified

1,771

12/1/2011

SQM SQM Industrial S.A. S.A.

ACI9 - Enhanced Ground Granulated DAY-Prilado Coya Sur (Project: Study PCl II)

Sustainability: Research and Development

Expense

Research

12/31/2011

SQM Industrial S.A.

IMNA - Consulting Infrastructure for Alm, of Sust Quim, conditions),

Sustainability: Prev and Environment Risk

Asset

Development

6/30/2011

SQM Industrial S.A.

MNH8 - Improvements in lighting

Sustainability

Expense

Development

6/30/2011

SQM Industrial S.A.

MP5W - TK's Fuel Standards

Sustainability

Asset

Not Classified

703

12/31/2011

SQM Industrial S.A.

MNYS - Measures of Technological Change Cultural Heritage Dissemination Maria Elena

Sustainability: Prev and Environment Risk

Asset

Not Classified

12/31/2011

SQM Industrial S.A.

FP55 - FPXA - Mine Area EIS PB - PB Expansion EIS (Projects: Pampa Blanca Saltwater - Saltwater Stage I)

Sustainability

Asset

Development

204

12/31/2011

SQM Industrial S.A.

MP8Z - Automation Control Flow intakes ME, CS and Vergara

Sustainability

Asset

Development

261

12/31/2011

SQM Industrial S.A.

PPC1 - Remove switches park OCB sub 3 and 1/12 Pedro de Valdivia

Sustainability: Replacement of equipment

Asset - Expense

Not Classified

171

12/31/2011

SQM Industrial S.A.

MPIS - Stabilization of streets and sidewalks dust suppression

Sustainability

Asset

Development

6/30/2011

SQM Industrial S.A.

PPNK - Management of Ammonia PV plant in Custody

Sustainability: Prev and Environment Risk

Asset

Not Classified

177

12/31/2011

SQM Industrial S.A.

PPZU - Standardize and certify Plant Fuel Tanks

Sustainability: Prev and Environment Risk

Asset - Expense

Not Classified

3,000

7/1/2011

SQM Industrial S.A.

IQ5B - Preparation of slab to transfer pumps

Capacity Expansion

Asset expenditure

Not Classified

110

10/10/2011

SQM Industrial S.A.

MQ51 - Terms of Reference Project ME economic measures

Sustainability

Expense

Not Classified

6/30/2011

F-159

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - The environment (continued)

19.2 Detail of information on disbursements related to the environment (continued)

Future expenses from December 31, 2010, continued

Identification of the Parent
Company or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or
estimated date on
which
disbursements
were or will be
made

SQM Industrial S.A.

FQ39 - Close plain white

Sustainability: Prev and Environment Risk

Asset

Development

500

12/1/2011

Minera Nueva Victoria S.A.

IQ4C - Development Camp (TAS and Osmosis)

Sustainability

Asset - Expense

Not Classified

3,000

12/31/2012

SQM Nitratos S.A.

PP0V - Environmental Medium Maintenance Projects ME-PV-NV-PB

Sustainability: Prev and Environment Risk

Asset - Expense

Development

6/30/2011

SQM Nitratos S.A.

PPAT - Risk Prevention Projects Sem II 2008

Sustainability: Prev and Environment Risk

Expense

Development

6/30/2011

SQM Salar S.A.

LP5J - Water Recharge Study Salar de Atacama

Sustainability: Prev and Environment Risk

Research

6/30/2011

SQM Salar S.A.

LQ38 - Field Drying Sludge

Sustainability: Prev and Environment Risk

Asset - Expense

Not Classified

154

9/30/2011

SQM Salar S.A.

LP82 - Project for the Promotion of Agricultural Activity in Cities of Salt

Sustainability

Expense

Development

528

12/31/2012

SQM Salar S.A.

LPK2 - money exchange enablement

Not Classified

Asset

Not Classified

102

12/31/2011

SQM Salar S.A.

CPTP - Installing emergency showers drinking water

Sustainability

Asset

Not Classified

4/1/2011

SQM Salar S.A.

LPTF - Study and Environmental Survey 2010

Sustainability

Expense

Not Classified

226

12/31/2011

SQM Salar S.A.

LPTJ - Improvements Sanitary Works

Sustainability

Asset

Not Classified

104

5/1/2011

SQM Salar S.A.

LQ33 - Adjustments Salar

Not Classified

Asset - Expense

Not Classified

300

12/31/2011

SIT S.A.

PNOT - Improved lighting FFCC area

Sustainability

Asset expenditure

Development

6/30/2011

SIT S.A.

TPR8 - Disposal of liquid waste generation by aspiration

Sustainability: Prev and Environment Risk

Asset - Expense

Not Classified

12/31/2011

SIT S.A.

TPLR - Implementation sewage pumping system to sewer

Sustainability: Prev and Environment Risk

Asset

Not Classified

6/30/2011

F-160

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - The environment (continued)

19.2 Detail of information on disbursements related to the environment (continued)

Future expenses from December 31, 2010, continued

Identification of the Parent
Company or subsidiary

Name of the project with which the disbursement is
associated

Concept for which the
disbursement was made or
will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
disbursement
for the Period
ThUS$

Certain or
estimated date on
which
disbursements
were or will be
made

SIT S.A.

TPM7 - environmental mail for fields 3 and 4

Not Classified

Asset - Expense

Not Classified

6/30/2011

SQM

SCI6 - Environmental Studies - Project Region I

Not Classified

Expense

Not Classified

6/30/2011

SQM S.A.

AQ0A - Well Drilling 4 Uptake Change Point Tamarugal Pampa

Sustainability: Natural Resources

Asset

Development

595

3/30/2011

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability: Prev and Environment Risk

Expense

Not Classified

12/31/2011

SQM S.A.

IQ0C - Mine Area Enhancement NV

Sustainability: Prev and Environment Risk

Expense

Not Classified

139

12/31/2011

SQM S.A.

IPXE - Environmental Monitoring Plan Llamara Salt

Sustainability: Prev and Environment Risk

Expense

Not Classified

530

12/31/2012

SQM S.A.

IPXF - Environmental Monitoring Plan Tamarugal Pampa

Sustainability: Prev and Environment Risk

Expense

Not Classified

543

12/31/2012

SQM S.A.

IQ08 - PSA Llamara & Pampa Tamarugal

Sustainability: Natural Resources

Expense

Development

424

2/28/2011

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Not Classified

Asset

Not Classified

1,649

7/31/2011

SQM S.A.

IQ1K - Construction of 3 observation wells in Old South

Sustainability: Natural Resources

Asset

Development

200

3/31/2011

SQM S.A.

IQ3S - Hazardous Materials Management Standardization

Sustainability: Prev and Environment Risk

Asset

Not Classified

400

12/30/2012

SQM S.A.

IQ52 - NV Office Environment

Sustainability: Prev and Environment Risk

Asset

Not Classified

6/30/2011

SQM S.A.

IQ54 - Cultural heritage Pampa Hermosa

Sustainability: Prev and Environment Risk

Asset

Not Classified

340

12/31/2011

SQM S.A.

IQ53 - Cultural heritage route Soronal adduction (Pampa Hermosa)

Sustainability: Prev and Environment Risk

Asset

Not Classified

12/31/2011

16,586

F-161

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

19.3

Description of each project, indicating whether they are in process or have been completed

SQM Industrial S.A.

IQ8G: Improvement of restrooms, expanding their capacity, and improving water storage. The project is in process.

JQEZ: Purchasing and installing Bertrams Boilers in Coya Sur Prill in order to improve the level of combustion, and decreasing and controlling the emission of fumes into the environment. The project is in process.

JQH9: Purchasing Bertram’s boilers in order to improve the combustion levels, decreasing and controlling the emission of fumes to the environment. The project is in process.

MNYS: Preparation and execution of geoglyphs conservation; editing and publishing a related book, implementing a learning center, and construction of a collection deposit. These are compensation measures of the Technological Change Maria Elena project. The project is in process.

MP5W: Normalization of fuel storage and distribution system in SQM installations. The project is in process.

MPQU: Construction of warehouses for dangerous chemicals in order to comply with current regulations and decrease the chance of high risk accidents.

MQ8M: Performing maintenance to structures and closing monitoring stations in Maria Elena. The project is in process.

MQA8: Standarization of the gas network in peripheral casinos;stage 1: projects include: CS, Lagarto, Yodo, PV, Toco and Rancho 6. The project is in process.

MQAJ: Improving the water and sewer network in Maria Elena to improve operations. The project is in process.

MQBM: Implementing archeological measures in Maria Elena – Toco site, such as the archeological registry, analysis of lithic materials, and generating reports, among others. The project is in process.

MQHF: To equip a sewage plant in Toco according to DS 594, including a changing room for operators and contractors, among other improvements. The project is in process.

MQK2: Decontaminating equipment and other items contaminated with PCBs in accordance with applicable regulations. The project is in process.

PPC1: Purchasing and replaceming equipment contaminated with PCB and obsolete equipment without spare parts. The project is in process.

F-162

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

PPNK: Control of the ammonia gas in the crystal plant stoppage. The project is in process.

PPZU: Normalize and certify fuel tanks in the María Elena, Coya Sur and Pedro de Valdivia plants. The project is in process.

SQ7X: Obtaining and recording information of components and finished products of SQM in the ECHA database to comply with the requirements of REACH regulation of the European Union. The project is in process.

TQA2: Improving the Villa Prat sewage system.The project is in process.

CQLX: Construction in each place a field of approximately 145 m2. The project is in process.

JQL7: Improve product recovery and to control emissions. The Project is in process.

JQ8K: Building a new drying plant in Coya Sur. The project is in process.

FP55 – FPXA: These 2 projects have a final objective consisting in the installation of a sea water sucking system of 87 km from the Mejillones area to the SQM facilities located in Pampa Blanca. The projected expenses correspond only to the filing of the EIA of the PB mine zone and the EIA of the PB expansion. Both projects are in process.

JQB6: Preparation and filing of the EID of project NPT4 of Coya Sur, which increases the salt production capacity. The project is in process.

PQLV: Elaboration of the DIA Pedro de Valdivia Mine. The project is in process.

SQM S.A.

AQ0A: To enable the use of water rights granted in several wells in the Conaf Pampa del Tamarugal reservation and to move them outside of the Tamarugo Forest and the reservation to reduce the environmental impact of its development. The project is in process.

IPFT: Implementing measures committed in various projects related to the Nueva Victoria mine, and updating Nueva Victoria’s operations, including evaporation ponds in the Iris. The project is in process.

IPXE: To implement the environment follow-up plan of Project Pampa Hermosa in Salar de Llamara. The project is in process.

IPXF: To implement the environment ollow-up of plan of Project Pampa Hermosa in Pampa del Tamarugal. The project is in process.

IQ08: Various projects associated with water reservoirs in Pampa del Tamarugal and Salar de Llamara, including constructing and enabling observation and monitoring wells, pumping tests, and construction of roads over the hard sand terrain of the Salar crust. The project is in process.

F-163

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

IQ0C: Improving the area adjacent to Route 5, enabling the development of a self-guided tour of the Cantón de Lagunas area to understand the Salar’s history. The project has been completed.

IQ1K: Construction of the observation wells in Sur Viejo to comply with the environmental commitments proposed in the EIS of Pampa Hermosa and to be able to monitor the water reservoir adjacent to these wells. The project has been completed.

IQ1M: To implement various environmental commitments included in the EIS project “Pampa Hermosa” to safeguard the puquíos zone that is in the Salar de Llamara water reservoir. The project is in process.

IQ3S: Improveming the storage installations of dangerous raw materials in Nueva Victoria. The project is in process.

IQ52: Enabling and expansion of environment offices in Nueva Victoria. The project is in process.

IQ53: To perform a survey for the new location of the Soronal abduction trace in Project Pampa Hermosa (RCA N° 890/2010). The project is in process.

IQ54: Implementing various environmental commitments acquired through the environment assessment of the project Pampa Hermosa (RCA N°890/2010). The project is in process.

IQ9V: To support the development of agriculture and tourism industries in the location of Quillagua, through productive measures, technical assistance and marketing. The project is in process.

PQB9: Installing two larger SO2 extractors at the end of the process. The project is in process.

IQLR: Updaing the design, implementation and operation of mitigation measures in the puquíos at Salar Llamara. The project is in progress.

MQLQ: Design and implement a fumes scrubbing system to mitigate SO2 emissions, aligned with our Sustainable Development Policy. The project is in progress.

IQ6M – IQ6N: Preparation and filing of the EID of the Project “Nueva Victoria Mine Expansion.” The projected expenses only include filing the EID. The project is in process.

IP83: Preparation and filing of the EID of the Project “Extension TLN-15”, The projected expenses only include the environment document filing, The project is in process.

IQOW: Enable a heritage interest deposit in Humberstone Historic Saltpeter Office to store materials of cultural interest recovered in the site from project under execution ZMNV.

IQPJ: The project consists of the implementation of the cultural measures compromised in the Environmental Evaluation for the mining areas. The measures will be implemented depending on the requirements of the Mining Operation of the VPONV, project in execution.

F-164

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

SQM Salar S.A.

LQFD: Construction of exchange offices for the comfort for our employees. The project is in process.

LQG8: Increase the capacity of the garbage facilities at the Toconao Camp to avoid problems associated with gathering and handling garbage. The project is in process.

LQ38: Compliance with the current regulations and observations raised by SEREMI. The project is in process.

LQAK: Construction of garbage facilities in the MOP and SOP lunchrooms to increase waste capacity. The project is in process.

CQ4M: Regulating electrical facilities including changing of cables, and electric and illumination control panels, as well as installing restrooms with showers for permanent contractor personnel. The project is in process.

CQ8U: Improving the condition and capacity of the exchange rooms in Salar del Carmen. The project is in process.

LP82: Support development of demonstration fields and provide technical assistance agriculture improvements such as watering practices. The project is in process.

LPTF: Perform required semi-annual reports to present improvements and optimizations at environmental control points, and the knowledge of improvements in geologic and hydrogeologic variables near Salar de Atacama. The project is in process.

LPTJ: Acquisition of equipment to ensure the operating continuity of the TAS and OR plants, the change in the current control system of TK's drinking water, wastewater, and wastewater elevation chambers. The project has been completed.

LQDM: Certification of the liquid fuel storage tanks. The project is in process.

LQI6: Elaboration and update of our EIA associated with operations in the Atacama Salt Deposit. The project is in process.

LQNI: Elaboration and document application for the DIA of the project "Drying and compacting KCl facility expansion", The considered expenses, only includes the environmental mitigation costs. The project is under execution.

SIT S.A.

TQNA: Installation of a meteorology station in order to measure the speed and direction of wind in the south sector of Tocopilla to comply with commitments made to local authorities. The project is in process.

MQ6Y: To maintain and repair the Bureau of Exchange in María Elena and Tocopilla to comply with Decree No. 594. The project is in its completion stage.

F-165

Notes to the consolidated financial statements as of December 31, 2012

Note 19 - Environment (continued)

TPR8: Reduce the generation of industrial waste through the use of vacuum and no-washing technologies through implementing a vacuum system that avoids the use of water and therefore the generation of liquid industrial waste. The project is in process.

TPYX: To comply with commitments to decrease emissions of particulate material towards the city of Tocopilla. The project is in process.

TQAP: To decrease the environmental pollution and product losses associated with product storage. The project is in process.

TQAV: Paving and maintenance of internal roads at the port of Tocopilla to decrease pollution and to comply with the Supreme Decree related to the local saturated zone. The project is in process.

TQM2: Recovering operating conditions through modification to the duct yard N°1, thus being able to diminish the environmental pollution. The project is in process.

TQLY: Eliminate the posible ambient contamination that may exist in working areas. The project is in process.

TQQ5: This project will reduce emissions of particulate matter, and minimize the environmental impact in neighboring communities. This project is under commission.

SQM POTASIO S.A.

IQ4C: Supply, construction and assembly of osmosis and septic wells and related plant at the Iris camp. The project is in its completion stage.

SQM Nitratos S.A.

PQI9: Construt new wells to replace the current ones with a modern waste water treatment technology. The project is in process.

IQMH: Creating storage area for dangerous substances. The project is in process.

IQDN: Building a parapet to form a squared or rectangular pool with an impermeable membrane covering in order to be used as mud deposit. The project is in process.

F-166

Notes to the consolidated financial statements as of December 31, 2012

Note 20 - Other current and non-current non-financial assets

The detail of other current and non-current assets consists of the following:

	12/31/2012		12/31/2011		12/31/2010
Other non-financial assets, current	ThUS$		ThUS$		ThUS$
Domestic Value Added Tax		42,136		46,243		30,795
Foreign Value Added Tax		9,306		5,879		4,167
Prepaid mining licenses		1,512		1,228		1,281
Prepaid insurance		8,278		6,979		4,575
Other prepayments		494		236		86
Other assets		6,094		3,227		3,538
Total		67,820		63,792		44,442

	12/31/2012		12/31/2011		12/31/2010
Other non-financial assets, non-current	ThUS$		ThUS$		ThUS$
Exploration and evaluation expenses (1)		16,839		21,395		21,350
Guarantee deposits		571		428		514
Other assets		272		2,829		2,293
Total		17,682		24,652		24,157

(1)

Assets for the exploration or evaluation of mineral resources are amortized to the extent that the explored or evaluated area has been exploited. Amortization is based on a variable rate applied to extracted tons determined through measured mineral reserves and exploration costs. Capitalized expenses under current development are reclassified to inventory and are amortized according to the estimated ore reserves. Expenses associated with future economically produicible reserves are presented under Other non-current assets. Those expenses incurred on properties with an ore grade that is not economical are directly charged to profit and loss. Amounts associated with the exploration and assessment of mineral resources presented under inventory are ThUS$6,174, ThUS$3,699 and ThUS$1,723 as of December 31, 2012, 2011, and 2010, respectively.

F-167

Notes to the consolidated financial statements as of December 31, 2012

Note 20 - Other current and non-current non-financial assets (continued)

Reconciliation of changes in assets for exploration and mineral resource evaluation, by type

The change in exploration and evaluation assets consists of the following:

	12/31/2012			12/31/2011			12/31/2010
Reconciliation	ThUS$			ThUS$			ThUS$

Balance as of January 1		21,395			21,350			26,832

Additions		843			3,777			-
Depreciation and amortization		(2,080	)		(1,883	)		(2,044	)
Transfers and other charges		(3,319	)		(1,849	)		(3,438	)

Assets for exploration and assement of mineral resources, net, final balance		16,839			21,395			21,350

Note 21 - Operating segments

21.1

Operating segments

General information

Amounts disclosed in each operating segment is the same as that reported to the CODM for purposes of allocating resources and assessing performance. Each segment represents a strategic business units that offers disticnt products and services. Each segment is managed separately as each business requires different thecnologies and marketing strategies.

Information related to assets and liabilities, and income and expenses that cannot be assigned to a specifc segment is included under the "Corporate Unit." The CODM asseses performance of the operating segments based on gross profit and net income without any specific adjustments.

Sales between segments are carried out at arm’s length under similar terms and conditions as those made to third parties. Revenues from third parties is reported to the CODM in a manner consistent with that in the Statement of Income.

Assets and liabiliteis are not disclosed by segments as this information is not easily available, certain assets can not be separable as to their specific activity, and because this information is not used by the CODM. All assets and liabilities are disclosed in the category “amounts not assigned.”

F-168

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.2

Information on operating segments as of December 31, 2012 as of December 31, 2011 and December 31, 2010:

12/31/2012
Operating segment items	Specialty plant nutrients			Iodine and derivatives			Lithium and derivatives			Industrial chemicals			Potassium			Other products and services			Reportable segments			Operating segments			Elimination of inter-segments amounts			Unallocated amounts			Significant reconciliation entries		Total 12/31/2012
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$

Revenues		675,350			578,091			222,238			245,208			605,059			103,214			2,429,160			2,429,160			-			-			-		2,429,160
Revenues from transactions with other operating segments of the same entity		265,814			848,243			154,248			348,667			569,219			493,884			2,680,075			2,680,075			(2,680,075	)		-			-		-

Revenues from external customers and transactions with other operating segments of the same entity		941,164			1,426,334			376,486			593,875			1,174,278			597,098			5,109,235			5,109,235			(2,680,075	)		-			-		2,429,160

Interest revenue		-			-			-			-			-			-			-			-			-			-			-		-
Interest expense		-			-			-			-			-			-			-			-			225,396			(279,491	)		-		(54,095	)
depreciation and amortization expense		(54,383	)		(47,100	)		(17,896	)		(19,745	)		(48,723	)		(8,311	)		(196,158	)		(196,158	)		-			-			-		(196,158	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			-			-			-			24,357			-		24,357
income tax expense, continuing operations		-			-			-			-			-			-			-			-			-			(216,082	)		-		(216,082	)
Other items other than significant cash		-			-			-			-			-			-			-			-			-						-		-
Income (loss) before taxes		217,880			362,518			110,695			83,055			246,027			8,419			1,028,594			1,028,594			(786,634	)		631,491			-		873,451

Net income (loss)		217,880			362,518			110,695			83,055			246,027			8,419			1,028,594			1,028,594			(786,634	)		415,409			-		657,369

Assets		-			-			-			-			-			-			-			-			(7,296,791	)		11,713,222			-		4,416,431
Equity-accounted investees		-			-			-			-			-			-			-			-			(3,423,758	)		3,494,056			-		70,298
Increase of non-current assets		-			-			-			-			-			-			-			-						255,363			-		255,363
Liabilities		-			-			-			-			-			-			-			-			(3,393,525	)		5,622,510			-		2,228,985
Equity																																		2,187,446
Equity and liabilities																																		4,416,431
Impairment loss recognized in profit or loss		(10,281			(2,081	)		(162	)		(3,043	)		(2,471	)		(120	)		(18,158	)		(18,158	)		-			(2,900	)		-		(21,058	)
Cash flows from (used in) operating activities		-			-			-			-			-			-			-			-			-			650,206			-		650,206
Cash flows from (used in) investing activities		-			-			-			-			-			-			-			-			-			(562,885	)		-		(562,885	)
Cash flows from (used in) financing activities		-			-			-			-			-			-			-			-			-			(197,697	)		-		(197,697	)

F-169

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.2

Information on operating segments as of December 31, 2012 as of December 31, 2011 and December 31, 2010:

12/31/2011
Operating segment items	Specialty plant nutrients			Iodine and derivatives			Lithium and derivatives			Industrial chemicals			Potassium			Other products and services			Reportable segments			Operating segments			Elimination of inter- segments amounts			Unallocated amounts			Significant reconciliation entries		Total 12/31/2011
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$

Revenue		721,696			454,468			183,403			139,508			555,742			90,469			2,145,286			2,145,286			-			-			-		2,145,286
Revenues from transactions with other operating segments of the same entity		268,628			620,516			136,894			265,298			568,393			365,225			2,224,954			2,224,954			(2,224,954	)		-			-		-

Revenues from external customers and transactions with other operating segments of the same entity		990,324			1,074,984			320,297			404,806			1,124,135			455,694			4,370,240			4,370,240			(2,224,954	)		-			-		2,145,286

Interest revenue		-			-			-			-			-			-			-			-			-			-			-		-
Interest expense		-			-			-			-			-			-			-			-			196,461			(235,796	)		-		(39,335	)
depreciation and amortization expense		(65,902	)		(41,500	)		(16,747	)		(12,739	)		(50,748	)		(8,261	)		(195,897	)		(195,897	)		-			-			-		(195,897	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			-			-						21,808					21,808
income tax expense, continuing operations		-			-			-			-			-			-			-			-			-			(179,710	)		-		(179,710	)
Other items other tan significant cash		-			-			-			-			-			-			-			-			-						-		-
Income (loss) before taxes		227,476			262,361			85,230			56,005			218,264			5,456			854,792			854,792			(757,832	)		636,869			-		733,829

Net income (loss)		227,476			262,361			85,230			56,005			218,264			5,456			854,792			854,792			(757,832	)		457,159			-		554,119

Assets		-			-			-			-			-			-			-			-			(6,740,071	)		10,611,654			-		3,871,583
Equity-accounted investees		-			-			-			-			-			-			-			-			(2,595,886	)		2,656,580			-		60,694
Increase of non-current assets		-			-			-			-			-			-			-			-						207,320			-		207,320
Liabilities		-			-			-			-			-			-			-			-			(3,699,768	)		5,706,971			-		2,007,203
Equity																																		1,864,380
Equity and liabilities																																		3,871,583
Reversing for value impairments recognized in the period’s profit or loss														1,543						1,543			1,543						179					1,722
Impairment loss recognized in profit or loss		(3,379	)		(596	)		(420	)		(3,085	)		-			(207	)		(7,687	)		(7,687	)		-			(5,364	)		-		(13,051	)
Cash flows from (used in) operating activities		-			-			-			-			-			-			-			-			-			571,345			-		571,345
Cash flows from (used in) investing activities		-			-			-			-			-			-			-			-			-			(516,228	)		-		(516,228	)
Cash flows from (used in) financing activities		-			-			-			-			-			-			-			-			-			(105,196	)		-		(105,196	)

F-170

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.2

Information on operating segments as of December 31, 2012 as of December 31, 2011 and December 31, 2010:

12/31/2010
Operating segment items	Specialty plant nutrients			Iodine and derivatives			Lithium and derivatives			Industrial chemicals			Potassium			Other products and services			Reportable segments			Operating segments			Elimination of inter- segments amounts			Unallocated amounts			Significant reconciliation entries		Total 12/31/2010
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$

Revenue		603,678			316,253			150,810			149,706			528,151			81,815			1,830,413			1,830,413			-			-			-		1,830,413
Revenues from transactions with other operating segments of the same entity		233,064			416,758			91,675			227,567			468,169			225,402			1,662,635			1,662,635			(1,662,635	)		-			-		-

Revenues from external customers and transactions with other operating segments of the same entity		836,742			733,011			242,485			377,273			996,320			307,217			3,493,048			3,493,048			(1,662,635	)		-			-		1,830,413

Interest revenue		-			-			-			-			-			-			-			-			-			-			-		-
Interest expense		-			-			-			-			-			-			-			-			164,170			(199,212	)		-		(35,042	)
depreciation and amortization expense		(47,472	)		(24,870	)		(11,860	)		(11,771	)		(41,533	)		(6,434	)		(143,940	)		(143,940	)		-			-			-		(143,940	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			-			-			(361	)		11,042			-		10,681
income tax expense, continuing operations		-			-			-			-			-			-			-			-			-			(106,029	)		-		(106,029	)
Other items other tan significant cash		-			-			-			-			-			-			-			-			-						-		-
Income (loss) before taxes		171,943			138,828			65,214			67,217			178,059			4,742			626,003			626,003			(586,334	)		453,631			-		493,300

Net income (loss)		171,943			138,828			65,214			67,217			178,059			4,742			626,003			626,003			(586,334	)		347,602			-		387,271

Assets		-			-			-			-			-			-			-			-			(5,646,896	)		9,019,732			-		3,372,836
Equity-accounted investees		-			-			-			-			-			-			-			-			(2,196,899	)		2,259,170			-		62,271
Increase of non-current assets		-			-			-			-			-			-			-			-						229,344			-		229,344
Liabilities		-			-			-			-			-			-			-			-			(3,186,403	)		4,888,419			-		1,702,016
Equity																																		1,670,820
Equity and liabilities																																		3,372,836
Impairment loss recognized in profit or loss											(642	)		(1,240	)					(1,882	)		(1,882	)					(1,746	)		-		(3,628	)
Reversing for value impairments recognized in the period’s profit or loss		1,639			93			76									24			1,832			1,832						83					1,915
Cash flows from (used in) operating activities		-			-			-			-			-			-			-			-			-			618,522			-		618,522
Cash flows from (used in) investing activities		-			-			-			-			-			-			-			-			-			(236,809	)		-		(236,809	)
Cash flows from (used in) financing activities		-			-			-			-			-			-			-			-			-			(254,235	)		-		(254,235	)

F-171

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.3

Income statement by operation segments as of December 31, 2012:

Items of integral income statement	Specialty plant nutriente ThUS$			Iodine and derivatives ThUS$			Lithium and derivatives ThUS$			Industrial chemicals ThUS$			Potassium ThUS$			Other products and services ThUS$			Corporate Unit ThUS$			Total Segments and Corporate Unit ThUS$

Revenues		675,350			578,091			222,238			245,208			605,059			103,214			-			2,429,160
Cost of sales		(431,735	)		(177,425	)		(85,596	)		(82,489	)		(350,092	)		(77,093	)		-			(1,400,567	)

Gross Profit		217,880			362,518			110,695			83,055			246,027			8,418			-			1,028,593

Other income		-			-			-			-			-			-			12,702			12,702
Administrative expenses		-			-			-			-			-			-			(106,442	)		(106,442	)
Other expenses		-			-			-			-			-			-			(34,628	)		(34,628	)
Other gains (losses)		-			-			-			-			-			-			683			683
Finance income		-			-			-			-			-			-			29,068			29,068
Finance expenses		-			-			-			-			-			-			(54,095	)		(54,095	)
Equity in income of associates and joint ventures accounted for using the equity method		-			-			-			-			-			-			24,357			24,357
Foreign currency exchange differences		-			-			-			-			-			-			(26,787	)		(26,787	)
Income before income tax expense		217,880			362,518			110,695			83,055			246,027			8,418			(155,142	)		873,451
Income tax expense		-			-			-			-			-			-			(216,082	)		(216,082	)
Profit for the year		217,880			362,518			110,695			83,055			246,027			8,418			(371,224	)		657,369
Profit attributable to
Controlling interests		-			-			-			-			-			-			-			649,167
Non controlling interests		-			-			-			-			-			-			-			8,202
Profit for the year		-			-			-			-			-			-			-			657,369

F-172

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.3

Income statement by segments of operation as of December 31, 2011:

Items of integral income statement	Specialty plant nutriente ThUS$			Iodine and derivatives ThUS$			Lithium and derivatives ThUS$			Industrial chemicals ThUS$			Potassium ThUS$			Other products and services ThUS$			Corporate Unit ThUS$			Total Segments and Corporate Unit ThUS$

Revenues		721,696			454,468			183,403			139,508			555,742			90,469			-			2,145,286
Cost of sales		(494,220	)		(192,107	)		(98,173	)		(83,503	)		(337,478	)		(85,013	)		-			(1,290,494	)

Gross Profit		227,476			262,361			85,230			56,005			218,264			5,456			-			854,792

Other income		-			-			-			-			-			-			47,681			47,681
Administrative expenses		-			-			-			-			-			-			(91,760	)		(91,760	)
Other expenses		-			-			-			-			-			-			(63,047	)		(63,047	)
Other gains (losses)		-			-			-			-			-			-			5,787			5,787
Finance income		-			-			-			-			-			-			23,210			23,210
Finance expenses		-			-			-			-			-			-			(39,335	)		(39,335	)
Equity in income of associates and joint ventures accounted for using the equity method		-			-			-			-			-			-			21,808			21,808
Foreign currency exchange differences		-			-			-			-			-			-			(25,307	)		(25,307	)
Income before income tax expense		227,476			262,361			85,230			56,005			218,264			5,456			(120,963	)		733,829
Income tax expense		-			-			-			-			-			-			(179,710	)		(179,710	)
Profit for the year		227,476			262,361			85,230			56,005			218,264			5,456			(300,673	)		554,119
Profit attributable to
Controlling interests		-			-			-			-			-			-			-			545,758
Non controlling interests		-			-			-			-			-			-			-			8,361
Profit for the year		-			-			-			-			-			-			-			554,119

F-173

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.3

Income statement by segments of operation as of December 31, 2010:

Items of integral income statement	Specialty plant nutriente ThUS$			Iodine and derivatives ThUS$			Lithium and derivatives ThUS$			Industrial chemicals ThUS$			Potassium ThUS$			Other products and services ThUS$			Corporate Unit ThUS$			Total Segments and Corporate Unit ThUS$

Revenues		603,678			316,253			150,810			149,706			528,151			81,815			-			1,830,413
Cost of sales		(494,220	)		(192,107	)		(98,173	)		(69,766	)		(337,478	)		(85,013	)		-			(1,204,410	)

Gross Profit		171,943			138,828			65,214			67,217			178,059			4,742			-			626,003

Other income		-			-			-			-			-			-			6,545			6,545
Administrative expenses		-			-			-			-			-			-			(78,819	)		(78,819	)
Other expenses		-			-			-			-			-			-			(36,212	)		(36,212	)
Other gains (losses)		-			-			-			-			-			-			(6,979	)		(6,979	)
Finance income		-			-			-			-			-			-			12,930			12,930
Finance expenses		-			-			-			-			-			-			(35,042	)		(35,042	)
Equity in income of associates and joint ventures accounted for using the equity method		-			-			-			-			-			-			10,681			10,681
Foreign currency exchange differences		-			-			-			-			-			-			(5,807	)		(5,807	)
Income before income tax expense		171,943			138,828			65,214			67,217			178,059			4,742			(132,703	)		493,300
Income tax expense		-			-			-			-			-			-			(106,029	)		(106,029	)
Profit for the year		171,943			138,828			65,214			67,217			178,059			4,742			(238,732	)		387,271
Profit attributable to
Controlling interests		-			-			-			-			-			-			-			382,122
Non controlling interests		-			-			-			-			-			-			-			5,149
Profit for the year		-			-			-			-			-			-			-			387,271

F-174

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.4

Income from regular activities proceeding from transactions with other operating segments of the Company as of December 31, 2012:

Items of integral income statement	Specialty plant nutritients ThUS$		Iodine and derivatives ThUS$		Lithium and derivatives ThUS$		Industrial chemicals ThUS$		Potassium ThUS$		Other products and services ThUS$		TotalSegments and Corporate Unit ThUS$

Income from regular activities		675,350		578,091		222,238		245,208		605,059		103,214		2,429,160

21.4

Income from regular activities proceeding from transactions with other operating segments of the Company, as of December 31, 2011:

Items of integral income statement	Specialty plant nutritients ThUS$		Iodine and derivatives ThUS$		Lithium and derivatives ThUS$		Industrial chemicals ThUS$		Potassium ThUS$		Other products and services ThUS$		Total Segments and Corporate Unit ThUS$

Income from regular activities		721,696		454,468		183,403		139,508		555,742		90,469		2,145,286

21.4

Income from regular activities proceeding from transactions with other operating segments of the Company, as of December 31, 2010:

Items of integral income statement	Specialty plant nutritients ThUS$		Iodine and derivatives ThUS$		Lithium and derivatives ThUS$		Industrial chemicals ThUS$		Potassium ThUS$		Other products and services ThUS$		TotalSegments And Corporate Unit ThUS$

Income from regular activities		603,678		316,253		150,810		149,706		528,151		81,815		1,830,413

F-175

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.5

Information about geographic areas

The Company disclose geographic information of its income from regular activities from external clients and for assets excluding financial instruments, assets associated with income taxes, assets associated with employee benefits and rights derived from insurance contracts.

21.6

Information on main customers

The Company has no external customers who individually represent 10% or more of consolidated revenues or accounts receivable. Concentration of credit risk associated with trade and other accounts receivable is limited due to the significant number of customers in the Company’s portfolio and its worldwide distribution.

F-176

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.7

Segment information by geographical area

Items	Chile		Latin America and the Caribbean		Europe		North America		Asia and others		12/31/2012
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Revenue		269,421		416,089		558,245		619,667		565,738		2,429,160

Non-current assets:		2,054,806		488		35,709		18,066		29,602		2,138,671
Equity-accounted investees		1,656		-		24,051		15,357		29,234		70,298
Intangible assets other than goodwill		23,630		-		-		378		5		24,013
Goodwill		26,929		86		11,373		-		-		38,388
Property, plant and equipment, net		1,985,128		183		285		2,331		363		1,988,290
Investment property		-		-		-		-		-		-
Other non-current assets		17,463		219		-		-		-		17,682

Items	Chile		Latin America and the Caribbean		Europe		North America		Asia and others		12/31/2011
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Revenue		247,510		284,605		837,126		445,048		330,997		2,145,286

Non-current assets:		1,809,871		1,757		28,681		15,335		27,664		1,883,308
Equity-accounted investees		1,444		-		16,919		14,867		27,464		60,694
Intangible assets other than goodwill		3,877		-		-		439		-		4,316
Goodwill		27,146		86		11,373		-		-		38,605
Property, plant and equipment, net		1,752,991		1,433		389		29		200		1,755,042
Investment property		-		-		-		-		-		-
Other non-current assets		24,413		238		-		-		-		24,651

F-177

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.7

Segments by geographical areas as of December 31, 2012 as of December 31, 2011 and December 31, 2010, continued

Items	Chile		Latin America and the Caribbean		Europe		North America		Asia and others		12/31/2010
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Revenue		216,028		162,967		799,457		363,676		288,285		1,830,413

Non-current assets:		1,594,033		2,171		31,323		11,809		36,652		1,675,988
Equity-accounted investees		1,352		-		19,615		7,251		34,053		62,271
Intangible assets other than goodwill		2,765		-		4		501		-		3,270
Goodwill		24,147		86		11,373		724		2,058		38,388
Property, plant and equipment, net		1,451,576		1,858		331		40		168		1,453,973
Investment property		1,373		-		-		-		-		1,373
Other non-current assets		112,820		227		-		3,293		373		116,713

F-178

Notes to the consolidated financial statements as of December 31, 2012

Note 21 - Operating segments (continued)

21.8

Property, plant and equipment classified by geographical areas

The Company's primary production facilities are located near their mines and extraction facilities in the North of Chile. The following table describes our primary production facilities:

Location		Products:
Pedro de Valdivia		Production of nitrite, sulfate, and iodine
María Elena		Production of nitrite, sulfate, and iodine
Coya Sur		Production of nitrite, sulfate, and iodine
Nueva Victoria		Production of iodine and nitrate salts
Salar de Atacama		Potassium chloride, Lithium chloride and boric acid
Salar del Carmen		Production of Lithium carbonate lithium hydroxide, and of boron
Tocopilla		Port facilities

F-179

Notes to the consolidated financial statements as of December 31, 2012

Note 22 – Income and expenses from operating activities

		12/31/2012		12/31/2011		12/31/2010
		ThUS$		ThUS$		ThUS$
22.1	Revenue

	Products		2,420,357		2,138,264		1,823,843
	Services		8,803		7,022		6,570

	Total		2,429,160		2,145,286		1,830,413

		12/31/2012			12/31/2011			12/31/2010
		ThUS$			ThUS$			ThUS$
22.2	Cost of sales
	Raw material and supplies		(1,066,803	)		(762,350	)		(541,766	)

	Types of employee benefits expenses
	Salaries and wages		(134,400	)		(104,757	)		(82,406	)
	Other short-term employee benefits		(66,370	)		(52,804	)		(62,900	)
	Termination benefit expenses		(4,325	)		(4,646	)		(3,027	)
	Total employee benefits expenses		(205,095	)		(162,207	)		(148,333	)

	Depreciation and amortization expenses
	Depreciation expense		(190,509	)		(163,438	)		(138,263	)

	Provisions for inventory losses		(18,158	)		(6,144	)		(50	)
	Other expenses, by nature (1)		79,998			(196,355	)		(375,998	)

	Total		(1,400,567	)		(1,290,494	)		(1,204,410	)

(1)

Include the change in finished and in-process inventories

F-180

Notes to the consolidated financial statements as of December 31, 2012

Note 22 – Income and expenses from operating activities (continued)

		12/31/2012		12/31/2011		12/31/2010
		ThUS$		ThUS$		ThUS$
22.3	Other income

	Discounts obtained from suppliers		648		777		922
	Compensation received		53		876		272
	Penalties charged to suppliers		312		453		109
	Tax recoveries		15		12		26
	Insurance recoveries		5,187		395		201
	Change in the provision of liabilities with third parties		669		630		424
	Change in allowance for doubtful accounts		154		178		83
	Sale of property, plant and equipment		281		2,213		448
	Sale of materials, spare parts and supplies		1,388		959		668
	Sale of mining concessions		1,578		613		872
	Other disposals		176		141		68
	Indemnities at Minera Esperanza		28		192		763
	Change indemnity provision Yara South Africa		335		-		-
	Change inventory provision		-		559		-
	Sale of concession of Minera Sierra Gorda		-		37,679		-
	Other services		2		84		539
	Other operating results		1,876		1,920		1,150

	Total		12,702		47,681		6,545

		12/31/2012			12/31/2011			12/31/2010
		ThUS$			ThUS$			ThUS$
22.4	Administrative expenses

	Employee benefit expenses by nature
	Salaries and wages		(44,429	)		(42,609	)		(33,813	)
	Other short-term benefits to employees		(2,868	)		(3,884	)		(4,151	)

	Total employee benefit expenses		(47,297	)		(46,493	)		(37,964	)

	Other expenses		(59,145	)		(45,267	)		(40,855	)

	Total		(106,442	)		(91,760	)		(78,819	)

F-181

Notes to the consolidated financial statements as of December 31, 2012

Note 22 – Income and expenses from operating activities (continued)

		12/31/2012			12/31/2011			12/31/2010
		ThUS$			ThUS$			ThUS$
22.5	Other expenses

	Expenses for employe benefits
	Other benefits for short term employees		(24	)		(16	)		(4	)
	Depreciation and amortization expenses
	Depreciation of assets no longer in use		(5,649	)		(32,459	)		(5,677	)

	Impairment loss (review of impairment losses) recognized in profit or loss for the year
	Impairment of allowance for doubtful accounts		(1,054	)		(3,364	)		(1,746	)
	Provision for loss in auction of materials and spare parts		(2,000	)		(2,000	)		-

	Subtotal		(3,054	)		(5,364	)		(1,746	)

	Other expenses
	Legal expenses		(1,984	)		(2,422	)		(2,087	)
	VAT and other unrecoverable taxes		(1,182	)		(685	)		(543	)
	Investment plan expenses		(13,578	)		(11,462	)		(13,279	)
	Donations		(5,517	)		(2,557	)		(2,095	)
	Provision for work closing		(634	)		(224	)		-
	Legal provision		-			(3,500	)		(2,000	)
	Indemnities		(281	)		(3,495	)		-
	Fixd asset impairment		-			-			(1,000	)
	Exploracion expenses		-			-			(4,000	)
	Other operating expenses		(2,725	)		(863	)		(3,781	)

	Subtotal		(25,901	)		(25,208	)		(28,785	)

	Total		(34,628	)		(63,047	)		(36,212	)

		12/31/2012			12/31/2011		12/31/2010
		ThUS$			ThUS$		ThUS$
22.6	Other gains (losses)

	Sale of investment in associates		(404	)		1,467		-
	Retirement plan provision		-			880		(100	)
	El Toco closing provision		-			3,016		(6,900	)
	Other		1,087			424		21

	Total		683			5,787		(6,979	)

F-182

Notes to the consolidated financial statements as of December 31, 2012

Note 22 – Income and expenses from operating activities (continued)

22.7	Summary of expenses by nature :	Year ended December 31,
		2012			2011			2010
		ThUS$			ThUS$			ThUS$

	Raw material and supplies		(1,066,803	)		(762,350	)		(541,766	)

	Types of employee benefits expenses

	Salaries and wages		(178,829	)		(147,366	)		(116,219	)
	Other short-term employee benefits		(69,262	)		(56,704	)		(67,055	)
	Termination benefit expenses		(4,325	)		(4,646	)		(3,027	)
	Total employee benefit expenses		(252,416	)		(208,716	)		(186,301
	Depreciation and amortization expenses
	Depreciation expense		(196,158	)		(195,897	)		(143,940	)
	Impairment loss (review of impairment losses) recognized in profit or loss for the year		(21,212	)		(11,508	)		(1,796	)
	Other expenses, by nature		(5,048	)		(266,830	)		(452,617	)

	Total expenses, by nature		(1,541,637	)		(1,445,301	)		(1,326,42

This table corresponds to the summary from Note 22.2 to 22.6 required by the SVS.

F-183

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes

23.1

Current tax assets:

	12/31/2012		12/31/2011		12/31/2010
	ThUS$		ThUS$		ThUS$
Monthly provisional income tax payments, Chilean companies current year		23,713		1,758		19,614
Monthly provisional income tax payments, Chilean companies prior year		2,430		-		2,158
Monthly provisional income tax payments, foreign companies		1,979		857		562
Corporate tax credits (1)		144		394		1,111
Corporate tax absorbed by tax losses (2)		1,968		1,756		9,328
Total		30,234		4,765		32,773

(1)

These credits correspond to corporate tax payment made in April of the following year. These credits include, amongst others, training expense credits (SENCE) and property, plant and equipment acquisition credits that are equivalent to 4% of the property, plant and equipment purchases made during the year. In addition, some credits relate to donations the Company has made during 2012 and 2011.

(2)

Generation of non-operating losses (NOL’s), which must be imputed or recorded in the Retained Taxable Profits Registry (FUT).

In accordance with the laws in force and as provided by article 31, No. 3 of the Income Tax Law, when profits are recorded in the FUT that have not been withdrawn or distributed are totally or partially absorbed by NOL’s, the corporate tax paid on such profits (20%, 17%, 16,5%, 16%, 15%, 10% depending on the year in which profits were generated) will be considered to be a provisional payment with respect to the portion representing the absorbed accumulated tax profits.

F-184

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

23.1

Current tax assets, continued

Taxpayers are entitled to apply for a refund of this monthly provisional income tax payments on the absorbed profits recorded in the FUT registry via their tax returns (Form 22).

Therefore, the provisional payment for absorbed profits (PPAP) recorded in the FUT is in effect a recoverable tax, and as such the Company records it as an asset.

23.2

Current tax liabilities:

Current tax liabilities	12/31/2012		12/31/2011		12/31/2010
	ThUS$		ThUS$		ThUS$
Companies incorporated in Chile		13,408		67,543		5,915
Companies incorporated abroad		10,206		7,868		1,174
Tax under article 21		10		7		24
Total		23,624		75,418		7,113

Income tax is determined based on the Chilean fiscal rate applied, and as per Act 20,630, was fixed at 20% beginning with the fiscal year ending December 31, 2012. The provision for royalty is determined by applying the tax rate determined for net operating income (NOI). Both concepts represent the estimated amount the Company will pay for income tax and specific tax on mining activities.

23.3

Tax earnings

The Company and its subsidiaries have recorded the following consolidated balances for retained tax earnings, income not constituting revenue subject to income tax, accumulated tax losses and credit for shareholders:

	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$
Taxable profits with credit rights (1)		1,262,201		1,053,651		602,536
Taxable profits without credit rights (1)		138,535		150,234		86,920
Taxable loss		9,931		15,069		21,630
Credit for shareholders		294,146		242,143		123,322

F-185

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

23.3

Tax earnings, continued

(1)

The FUT is a chronological registry where the profits generated and distributed by the Company are recorded. The object of the FUT is to control the accumulated tax profits of the Company that may be distributed, withdrawn or remitted to the owners, shareholders or partners, and the final taxes that must be imposed, thereon called in Chile Global Aggregate Tax (that is levied on persons resident or domiciled in Chile), or Withholding Tax (that is levied on non resident persons).

The FUT Register contains profits with credit rights and profits without credit rights, which arise out of the inclusion of the net taxable income determined by the Company or the profits received by the Company that may be dividends received or withdrawals made during the period. Profits without credit rights represent tax payable by the Company within the year and filed the following year, therefore they will be deducted from the FUT Registry the following year. Profits with credit rights may be used to reduce the final tax burden of owners, shareholders or partners, which upon withdrawal are entitled to use the credits associated with the relevant profits. In summary, companies using the FUT Registry to maintain control over their profits that have not been distributed to the owners and the relevant credits associated with such profits.

23.4

Income tax and deferred taxes

Assets and liabilities recognized in the Statement of Financial Position are offset if and only if:

The Company has legally recognized before the tax authority the right to offset the amounts recognized in these entries; and

Deferred income tax assets and liabilities are derived from income tax related to the same tax authority on the same entity or tax subject; or different entities or tax subjects who intend either to settle current fiscal assets and liabilities for their net amount, or to realize assets and pay liabilities simultaneously in each of the future periods in which the Company expects to settle or recover significant amounts of deferred tax assets or liabilities.

Deferred income tax assets recognized are those income taxes to be recovered in future periods, related to:

(a) deductible temporary differences;

(b) the offset of losses obtained in prior periods and not yet subject to tax deduction; and

The Company recognizes a deferred tax asset when there is certainty that these can be offset with tax income from subsequent periods, losses or fiscal credits not yet used, but solely as long as it is more likely than not that there will be tax earnings in the future against which to charge to these losses or unused fiscal credits.

F-186

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

Deferred tax liabilities recognized refer to the amounts of income taxes payable in future periods related to taxable temporary differences.

d.1 Deferred income tax assets and liabilities net as of December 31, 2012 are detailed as follows:

Description of deferred income tax assets and	Assets		Liabilities *
liabilities	ThUS$		ThUS$
Depreciation		-		145,251
Provision for doubtful accounts impairment		-		(5,807	)
Accrued vacations		-		(3,971	)
Manufacturing expenses		-		60,160
Unrealized gains from sales of products		-		(105,879	)
Fair value of bonds		-		(3,684	)
Severance indemnity		-		4,483
Hedging		-		22,890
Inventory of products, spare parts and supplies		37		(14,990	)
Research and development expenses		-		4,917
Tax losses		-		(1,509	)
Capitalized interest		-		20,449
Expenses in assumption of bank loans		-		2,243
Unaccrued interest		-		(215	)
Fair value of property, plant and equipment		-		2,743
Employee benefits		-		(2,027	)
Royalty taxes		-		8,430
Other		186		(8,039	)
Total		223		125,445

(*) Deferred tax assets are netted with deferred tax liabilities as allowed under applicable tax jurisdictions.

F-187

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

23.4

Income tax and deferred taxes, continued

d.2 Deferred income tax assets and liabilities net as of December 31, 2011 are detailed as follows:

Description of deferred income tax assets and	Assets		Liabilities *
liabilities	ThUS$		ThUS$
Depreciation		-		114,151
Provision for doubtful accounts		16		(4,045	)
Vacation accrual		9		(2,633	)
Production expenses		-		54,747
Unrealized gains from sales of products		-		(97,441	)
Bonds fair value		-		(2,104	)
Employee termination benefits		-		3,036
Hedging		-		16,636
Inventory of products, spare parts and supplies		85		(7,781	)
Research and development expenses		-		4,598
Tax losses		-		(1,046	)
Capitalized interest		-		17,461
Expenses in assumption of bank loans		-		1,855
Unaccrued interest		-		(386	)
Fair value of property, plant and equipment		-		(1,539	)
Employee benefits		-		(1,177	)
Royalty taxes		-		10,035
Other		194		(5,773	)
Total		304		98,594

d.3 Deferred income tax assets and liabilities net as of December 31, 2010 are detailed as follows:

Description of deferred income tax assets and	Assets			Liabilities *
liabilities	ThUS$			ThUS$
Depreciation		-			88,785
Provision for doubtful accounts		139			(3,452	)
Vacation accrual		9			(2,382	)
Production expenses		-			47,442
Unrealized gains from sales of products		-			(49,181	)
Bonds fair value		-			(1,886	)
Employee termination benefits		-			2,984
Hedging		-			20,739
Inventory of products, spare parts and supplies		(1,050	)		(8,950	)
Research and development expenses		-			4,215
Tax losses		796			(2,748	)
Capitalized interest		-			14,784
Expenses in assumption of bank loans		-			2,278
Unaccrued interest		-			(261	)
Fair value of property, plant and equipment		-			(9,634	)
Employee benefits		-			(6,052	)
Royalty taxes		-			7,462
Other		471			(3,362	)
Total		365			100,781

F-188

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

23.4

Income tax and deferred taxes, continued

d.3 Deferred taxes related to benefits for tax losses

The Company’s tax loss carryforwards (NOL carryforwards) were mainly generated by losses in Chile, which in accordance with current Chilean tax regulations have no expiration date.

Tax loss carryforwards (NOL carryforwards) are detailed as follows:

	12/31/2012		12/31/2011		12/31/2010
	ThUS$		ThUS$		ThUS$

Chile		1,509		1,046		2,748
Other countries		-		-		796

Balances to date		1,509		1,046		3,544

Tax losses as of December 31, 2012 correspond mainly to Servicios Integrales de Tránsitos y Transferencias S.A., Exploraciones Mineras and Isapre Norte Grande Ltda.

d.4 Unrecognized deferred income tax assets and liabilities

Tax loss carryforwards (NOL carryforwards) are detailed as follows:

	12/31/2012			12/31/2011			12/31/2010
	ThUS$			ThUS$			ThUS$
	Assets (liabilities)			Assets (liabilities)			Assets (liabilities)

Tax losses (NOL’s)		139			139			251
Doubtful accounts impairment		81			81			98
Inventory impairment		1,020			1,020			704
Pensions plan		(536	)		(536	)		266
Accrued vacations		29			29			29
Depreciation		(57	)		(57	)		(67	)
Other		(19	)		(19	)		(17	)

Balances to date		657			657			1,264

Tax losses mainly relate to losses generated in the United States, which expire in 20 years.

F-189

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

23.4

Income tax and deferred taxes, continued

Movements in deferred tax assets and liabilities are detailed as follows:

	12/31/2012			12/31/2011			12/31/2010
	ThUS$			ThUS$			ThUS$
	Liabilities (assets)			Liabilities (assets)			Liabilities (assets)

Deferred tax assets and liabilities, net opening balance		98,290			100,416			52,932
Increase (decrease) in deferred taxes in profit or loss		28,512			(3,664	)		47,735
Tax Recovery of first category credit absorbed by tax losses		-			1,756			-
Decrease in deferred taxes in equity		(1,580	)		(218	)		(251	)

Balances to date		125,222			98,290			100,416

Disclosures of income tax expense (income)

The Company recognizes current tax and deferred taxes as income or expenses, and they are included in profit or loss, unless they arise from:

(a)

a transaction or event recognized in the same period or in a different period, outside profit or loss either in other comprehensive income or directly in equity; or

(b)

a business combination.

F-190

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

23.4

Income tax and deferred taxes, continued

Current and deferred tax expenses (income) are detailed as follows :

	12/31/2012			12/31/2011			12/31/2010
	ThUS$			ThUS$			ThUS$
	Income (expense)			Income (expense)			Income (expense)

Current income tax expense
Current income tax expense		(187,715	)		(181,424	)		(60,863	)
Adjustments to prior year current income tax		145			(1,950	)		2,569

Current income tax expense, net, total		(187,570	)		(183,374	)		(58,294	)

Deferred tax expense
Deferred tax expense (income) relating to the creation and reversal of temporary differences		(28,512	)		3,664			(47,735	)
Deferred tax expense, net, total		(28,512	)		3,664			(47,735	)

Tax expense (income)		(216,082	)		(179,710	)		(106,029	)

Tax expenses (income) for foreign and domestic parties are detailed as follows:

	12/31/2012			12/312011			12/31/2010
	ThUS$			ThUS$			ThUS$
	Income (expense)			Income (expense)			Income (expense)

Current income tax expense by foreign and domestic parties, net
Current income tax expense, foreign parties, net		(14,790	)		(5,231	)		(2,208	)
Current income tax expense, domestic, net		(172,780	)		(178,143	)		(56,086	)

Current income tax expense, net, total		(187,570	)		(183,374	)		(58,294	)

Deferred tax expense by foreign and domestic parties, net
Deferred tax expense, foreign parties, net		474			(651	)		(646	)
Deferred tax expense, domestic, net		(28,986	)		4,315			(47,089	)

Deferred tax expense, net, total		(28,512	)		3,664			(47,735	)

Income tax expense		(216,082	)		(179,710	)		(106,029	)

F-191

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

23.4

Income tax and deferred taxes, continued

The Company does not recognize any deferred tax liability in cases of taxable temporary differences associated with investments in associated companies or interest in joint ventures, because the following two conditions are jointly met:

(a)

the parent, investor or interest holder is able to control the time for reversal of the temporary difference; and

(b)

It is more likely than not that the temporary difference is not reversed in the foreseeable future.

In addition, the Company does not recognize deferred income tax assets for all deductible temporary differences from investments in associated companies or interests in joint ventures because it is not possible to meet for the following requirements:

(a)

Temporary differences are reversed in a foreseeable future; and

(b)

The Company has tax earnings, against which temporary differences can be used.

Disclosures on the tax effects of other comprehensive income components

Income tax related to components of other income and expense with a charge or credit to net equity	12/31/2012 ThUS$
	Amount before taxes			Expense (income) for income taxes		Amount after taxes
Cash flow hedge		(6,236	)		1,580		(4,656	)
Total		(6,236	)		1,580		(4,656	)

Income tax related to components of other income and expense with a charge or credit to net equity				12/31/2011 ThUS$
	Amount before taxes			Expense (income) for income taxes		Amount after taxes

Cash flow hedge		(1,091	)		218		(873	)
Total		(1,091	)		218		(873	)

F-192

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

23.4

Income tax and deferred taxes, continued

Income tax related to components of other income and expense with a charge or credit to net equity	12/31/2010 ThUS$
	Amount before taxes			Expense (income) for income taxes		Amount after taxes
Cash flow hedge		(1,474	)		251		(1,223	)
Total		(1,474	)		251		(1,223	)

Explanation of the relationship between expense (income) for tax purposes and accounting income.

The Company has estimated that the method that discloses more significant information for the users of its financial statements is the reconciliation of tax expense (income) to the result of multiplying income for accounting purposes by the tax rate in force in Chile. This option is based on the fact that the both SQM entire amount of tax expense (income) and considering that amounts from subsidiaries incorporated in foreign countries have an insignificant amount of tax expense (income).

Reconciliation of numbers in income tax expenses (income) and the result of multiplying financial gain by the rate prevailing in Chile

	12/31/2012			12/31/2011			12/31/2010
	ThUS$			ThUS$			ThUS$
	Income (expense)			Income (expense)			Income (expense)

Consolidated income before taxes		873,451			733,829			493,300
Income tax rate in force in Chile		20	%		20	%		17	%

Tax expense using the legal rate		(174,690	)		(146,766	)		(83,861	)
Effect of royalty tax expense		(25,486	)		(24,487	)		(11,115	)
Tax effect of non-taxable revenue		7,419			6,865			2,783
Tax effect of rates in other jurisdictions		(3,091	)		(2,548	)		(1,360	)
Tax effect of tax rates supported abroad		(5,265	)		(3,173	)		(3,996	)
Effect on the tax rate arising from changes in the tax rate		-			-			(11,385	)
Other effects from the reconciliation between carrying amount and the tax expense (income)		(14,969	)		(9,601	)		2,905
Tax expense using the effective rate		(216,082	)		(179,710	)		(106,029	)

F-193

Notes to the consolidated financial statements as of December 31, 2012

Note 23 - Income Tax and Deferred Taxes (continued)

23.4

Income tax and deferred taxes, continued

Tax periods potentially subject to verification:

The Company and its subsidiaries are potentially subject to income tax audits by tax authorities in each country of operations based on the statutory time limits of each country.

Tax audits, due to their nature, are often complex and may require several years for ultimate resolution. A summary of tax periods that are potentially subject to verification, in accordance with tax regulations in force in the country of origin for our primary tax jurisdictions is provided below:

Chile

According to article 200 of Decree Law No, 830, the tax authority shall review for any deficiencies in tax settlements and returns, by applying a requirement of 3 years term from the expiration of the legal deadline when payment should have been made. Besides, this requirement was extended to 6 years term for the revision of taxes subject to declaration, when such declaration was not filed or has been presented maliciously false.

United States

In the United States, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return, In the event that an omission or error is detected in the tax return of sales or cost of sales, the review can be extended for a period of up to 6 years.

Mexico:

In Mexico, the tax authority can review tax returns up to 5 years from the expiration date of the tax return.

Spain:

In Spain, the tax authority can review tax returns up to 4 years from the expiration date of the tax return.

Belgium:

In Belgium, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return if no tax losses exist, In the event of detecting an omission or error in the tax return, the review can be extended for a period of up to 5 years.

South Africa:

In South Africa, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return, In the event an omission or error in the tax return is detected, the review can be extended for a period of up to 5 years.

F-194

Notes to the consolidated financial statements as of December 31, 2012

Note 24 - Disclosures on the effects of fluctuations in foreign currency exchange rates

Assets held in foreign currency are detailed as follows:

Class of asset	Currency	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$
Current assets:
Cash and cash equivalents	BRL		20		22		22
Cash and cash equivalents	CLP		76,712		125,118		332,624
Cash and cash equivalents	CNY		181		300		104
Cash and cash equivalents	EUR		3,601		3,070		6,709
Cash and cash equivalents	GBP		70		14		5
Cash and cash equivalents	IDR		5		5		16
Cash and cash equivalents	INR		13		45		-
Cash and cash equivalents	MXN		720		29		102
Cash and cash equivalents	PEN		75		16		13
Cash and cash equivalents	YEN		1,369		2,292		1,193
Cash and cash equivalents	ZAR		7,421		5,450		1,523
Subtotal cash and cash equivalents			90,187		136,361		342,311
Other current financial assets	CLP		182,427		129,069		69,818
Subtotal other current financial assets			182,427		129,069		69,818
Other current non-financial assets	ARS		29		35		42
Other current non-financial assets	AUD		-		91		-
Other current non-financial assets	BRL		5		4		2
Other current non-financial assets	CLF		23		22		21
Other current non-financial assets	CLP		42,378		46,366		30,966
Other current non-financial assets	CNY		29		16		23
Other current non-financial assets	EUR		8,534		4,504		4,303
Other current non-financial assets	INR		-		17		-
Other current non-financial assets	MXN		736		606		552
Other current non-financial assets	PEN		55		37		331
Other current non-financial assets	YEN		15		-		-
Other current non-financial assets	ZAR		702		1,443		167
Subtotal other current non-financial assets			52,506		53,141		36,407
Trade and other receivables	ARS		-		-		5
Trade and other receivables	AUD		14		-		-
Trade and other receivables	BRL		58		41		64
Trade and other receivables	CLF		826		1,172		1,015
Trade and other receivables	CLP		78,112		107,973		114,108
Trade and other receivables	CNY		2,014		1,811		48
Trade and other receivables	EUR		47,962		60,382		97,193
Trade and other receivables	GBP		399		488		409
Trade and other receivables	MXN		200		141		58
Trade and other receivables	PEN		114		211		2
Trade and other receivables	YEN		-		-		2
Trade and other receivables	ZAR		16,004		16,004		7,292
Subtotal trade and other receivables			145,703		188,223		220,196
Receivables from related parties	AED		-		379		-
Receivables from related parties	CLP		1,154		999		111
Receivables from related parties	EUR		34		150		2,651
Receivables from related parties	YEN		28		93		-
Receivables from related parties	ZAR		3,312		-		-
Subtotal receivables from related parties			4,528		1,621		2,762
Current tax assets	AUD		452		-		-
Current tax assets	CLP		457		590		9,098
Current tax assets	CNY		-		-		20
Current tax assets	EUR		72		70		140
Current tax assets	INR		5		-		-
Current tax assets	MXN		698		6		39
Current tax assets	PEN		363		239		61
Current tax assets	YEN		135		34		16
Current tax assets	ZAR		-		-		123
Subtotal current tax assets			2,182		939		9,497
Total current assets			477,533		509,354		680,991

F-195

Notes to the consolidated financial statements as of December 31, 2012

Note 24 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

Class of asset	Currency	12/31/2012 ThUS$		12/31/2011 ThUS$		12/31/2010 ThUS$
Non-current assets:
Other non-current financial assets	BRL		30		30		34
Other non-current financial assets	CLP		20		20		20
Other non-current financial assets	EUR		-		3		3
Other non-current financial assets	YEN		54		61		58
Subtotal other non-current financial assets			104		114		115
Other non-current non-financial assets	BRL		219		238		227
Other non-current non-financial assets	CLP		624		477		599
Other non-current non-financial assets	YEN		-		-		373
Subtotal other non-current non-financial assets			843		715		1,199
Non-current rights receivable	CLF		602		362		633
Non-current rights receivable	CLP		709		709		469
Subtotal non-current rights receivable			1,311		1,071		1,102
Equity-accounted investees	AED		17,044		14,236		24,168
Equity-accounted investees	CLP		1,656		1,444		1,352
Equity-accounted investees	EGP		-		1,270		1,435
Equity-accounted investees	EUR		8,495		3,102		9,560
Equity-accounted investees	INR		683		785		432
Equity-accounted investees	THB		1,608		1,561		1,543
Equity-accounted investees	TRY		15,431		12,256		11,988
Subtotal equity-accounted investees			44,917		34,654		50,478
Intangible assets other than goodwill	CLP		170		42		-
Intangible assets other than goodwill	CNY		6		-		-
Subtotal intangible assets other than goodwill			176		42		-
Property, plant and equipment	CLP		3,639		3,264		1,762
Subtotal property, plant and equipment			3,639		3,264		1,762
Total non-current assets			50,990		39,860		54,656
Total assets			528,523		549,214		735,647

F-196

Notes to the consolidated financial statements as of December 31, 2012

Note 24 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

Liabilities held in foreign currency are detailed as follows:

		12/31/2012						12/31/2011						12/31/2010
Class of liability	Currency	Up To 90 Days ThUS$		Over 90 Days Up To One Year ThUS$		Up To 90 Days ThUS$		Over 90 Days Up To One Year ThUS$		Total ThUS$		Total ThUS$		Up To 90 Days ThUS$		Over 90 Days Up To One Year ThUS$		Total ThUS$
Current liabilities
Other current financial liabilities	CLF		5,967		7,465		13,432		3,906		6,640		10,546		3,577		7,749		11,326
Other current financial liabilities	CLP		1,265		1,470		2,735		1,217		799		2,016		814		1,508		2,322
Subtotal other current financial liabilities			7,232		8,935		16,167		5,123		7,439		12,562		4,391		9,257		13,648
Trade and other payables	ARS		1		-		1		3		-		3		1		-		1
Trade and other payables	BRL		71		-		71		320		-		320		341		-		341
Trade and other payables	CHF		155		-		155		221		-		221		-		-		-
Trade and other payables	CLP		132,037		35		132,072		115,694		236		115,930		85,403		-		85,403
Trade and other payables	CNY		1,642		-		1,642		1,821		-		1,821		57		-		57
Trade and other payables	EUR		18,983		279		19,262		12,265		181		12,446		22,356		1,535		23,891
Trade and other payables	GBP		142		-		142		24		-		24		40		-		40
Trade and other payables	INR		4		-		4		1		-		1		1		-		1
Trade and other payables	MXN		808		2		810		426		-		426		1,020		140		1,160
Trade and other payables	PEN		36		-		36		31		-		31		43		-		43
Trade and other payables	YEN		66		49		115		124		-		124		-		-		-
Trade and other payables	ZAR		1,810		-		1,810		2,831		108		2,939		1,280		1,062		2,342
Subtotal trade and other payables			155,755		365		156,120		133,761		525		134,286		110,542		2,737		113,279
Payables to related parties	EUR		-		-		-		-		-		-		-		997		997
Subtotal payables to related parties			-		-		-		-		-		-		-		997		997
Other short-term provisions	ARS		-		-		-		62		-		62		-		-		-
Other short-term provisions	BRL		17		1,606		1,623		-		1,459		1,459		-		1,634		1,634
Other short-term provisions	CLP		28		-		28		29		-		29		20		-		20
Other short-term provisions	EUR		248		-		248		140		-		140		323		-		323
Other short-term provisions	MXN		-		-		-		-		250		250		-		-		-
Subtotal other short-term provisions			293		1,606		1,899		231		1,709		1,940		343		1,634		1,977
Current tax liabilities	ARS		5		55		60		-		-		-		-		-		-
Current tax liabilities	BRL		-		3		3		-		-		-		-		-		-
Current tax liabilities	CLP		-		2,660		2,660		-		2,129		2,129		-		-		-
Current tax liabilities	CNY		-		22		22		49		-		49		-		-		-
Current tax liabilities	EUR		-		2,742		2,742		-		2,011		2,011		-		335		335
Current tax liabilities	MXN		36		-		36		140		-		140		-		-		-
Current tax liabilities	YEN		-		-		-		-		386		386		-		-		-
Current tax liabilities	ZAR		-		-		-		-		109		109		-		-		-
Subtotal current tax liabilities			41		5,482		5,523		189		4,635		4,824		-		335		335
Current provisions for employee benefits	CLP		7,557		14,760		22,317		6,915		22,807		29,722		34,211		9,455		43,666
Current provisions for employee benefits	MXN		-		212		212		-		334		334		-		292		292
Subtotal current provisions for employee benefits			7,557		14,972		22,529		6,915		23,141		30,056		34,211		9,747		43,958

F-197

Notes to the consolidated financial statements as of December 31, 2012

Note 24 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

		12/31/2012						12/31/2011						12/31/2010
Class of liabilities	Currency	Up To 90 Days ThUS$		Over 90 Days Up To One Year ThUS$		Total ThUS$		Up To 90 Days ThUS$		Over 90 Days Up To One Year ThUS$		Total ThUS$		Up To 90 Days ThUS$		Over 90 Days Up To One Year ThUS$		Total ThUS$
Other current non-financial liabilities	ARS		-		-		-		-		-		-		-		4		4
Other current non-financial liabilities	BRL		12		44		56		12		44		56		12		-		12
Other current non-financial liabilities	CLP		9,561		26,714		36,275		7,464		36,006		43,470		6,299		12,557		18,856
Other current non-financial liabilities	CNY		26		-		26		12		-		12		18		-		18
Other current non-financial liabilities	EUR		637		-		637		631		-		631		29		84		113
Other current non-financial liabilities	MXN		250		103		353		1,331		53		1,384		710		54		764
Other current non-financial liabilities	PEN		70		-		70		118		-		118		79		-		79
Other current non-financial liabilities	ZAR		9		-		9		-		-		-		-		-		-
Subtotal other current non-financial liabilities			10,565		26,861		37,426		9,568		36,103		45,671		7,147		12,699		19,846
Total current liabilities			181,443		58,221		239,644		155,787		73,552		229,339		156,634		37,406		194,040

F-198

Notes to the consolidated financial statements as of December 31, 2012

Note 24 - Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

		12/31/2012								12/31/2011
Class of liabilities	Currency	Over 1 year up to 3 years ThUS$		Over 3 years up to 5 years ThUS$		Over 5 years ThUS$		Total ThUS$		Over 1 year up to 3 years ThUS$		Over 3 years up to 5 years ThUS$		Over 5 years ThUS$		Total ThUS$
Non-current liabilities
Other non-current financial liabilities	CLF		85,681		61,119		321,857		468,657		76,417		12,510		232,938		321,865
Other non-current financial liabilities	CLP		151,500		-		-		151,500		139,770		-		-		139,770
Subtotal other non-current financial liabilities			237,181		61,119		321,857		620,157		216,187		12,510		232,938		461,635
Deferred tax liabilities	CLP		-		-		43		43		57		-		56		113
Deferred tax liabilities	MXN		159		-		-		159		590		-		-		590
Subtotal deferred tax liabilities			159		-		43		202		647		-		56		703
Non-current provisions for employee benefits	CLP		-		-		33,766		33,766		-		-		27,573		27,573
Non-current provisions for employee benefits	MXN		-		-		132		132		-		-		520		520
Non-current provisions for employee benefits	YEN		-		-		532		532		-		-		94		94
Subtotal non-current provisions for employee benefits			-		-		34,430		34,430		-		-		28,187		28,187
Total non-current liabilities			237,340		61,119		356,330		654,789		216,834		12,510		261,181		490,525

		12/31/2010
Class of liabilities	Currency	Over 1 year up to 3 years ThUS$		Over 3 years up to 5 years ThUS$		Over 5 years ThUS$		Total ThUS$
Non-current liabilities
Other non-current financial liabilities	CLF		-		66,081		284,056		350,137
Other non-current financial liabilities	CLP		-		154,485		-		154,485
Subtotal other non-current financial liabilities			-		220,566		284,056		504,622
Deferred tax liabilities	CLP		56		-		36		92
Deferred tax liabilities	MXN		-		-		-		-
Subtotal deferred tax liabilities			56		-		36		92
Non-current provisions for employee benefits	CLP		-		-		26,578		26,578
Non-current provisions for employee benefits	MXN		-		-		195		195
Non-current provisions for employee benefits	YEN		-		-		436		436
Subtotal non-current provisions for employee benefits			-		-		27,209		27,209
Total non-current liabilities			56		220,566		311,301		531,923

F-199

Note 25 - Subsequent events

25.1

Authorization of the financial statements

The consolidated financial statements of Sociedad Química y Minera de Chile S.A. and subsidiaries prepared in accordance with IFRS for the year ended December 31, 2012 were approved and authorized for issuance by the Board of Directors at their meeting held on March 5, 2013.

25.2

Disclosures on subsequent events

Management is not aware of any other significant events that occurred between December 31, 2012 and March 5, 2013, the date of issuance of these consolidated financial statements, that may significantly affect them.

F-200

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Conf:	/s/ Ricardo Ramos R.
Ricardo Ramos R.
Chief Financial Officer

Date: March 18, 2013.