Q4 2023 Sociedad Química y Minera de Chile SA Earnings Call

Okay.

Operator: Good day, and welcome to the SQM fourth quarter 2023 earnings conference call. Today, all participants will be in a listen only mode.

Speaker Change: Good day and welcome to the Q and the fourth quarter 2023 earnings Conference call. All participants will be in a listen only mode should you need assistance during todays call. We should go for a conference specialist by pressing the Starkey followed by zero.

Operator: Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then one on your telephone keypad.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad. If you would like to withdraw your question. Please press Star then two please note that today's event is being recorded I would now like to turn the conference over to Irina excellent head of Investor.

Operator: If you would like to withdraw your question, please press star, then two. Please note that today's event is being recorded. I would now like to turn the conference over to Irina Axenova, Head of Investor Relations. Please go ahead. Thank you, Chris.

Irina: <unk>. Please go ahead.

Irina: Thank you Chris Good morning. Thank you for joining <unk> earnings conference call for the fourth quarter of 2023. This conference call will be recorded and is being webcast slides our earnings press release and the presentation with a summary of the results have been uploaded to our website, where you can also find links to the webcast.

Irina Axenova: Good morning. Thank you for joining SQM's earnings conference call for the fourth quarter of 2023. This conference call will be recorded and is being webcast live. Our earnings press release and a presentation with a summary of the results have been uploaded to our website. We can also find a link to Ricardo Ramos, our Chief Executive Officer, will be speaking on the call today. Gerardo Illanes, our Chief Financial Officer, Carlos Diaz, Executive Vice President of Lithium, Felipe Smith, Commercial Vice President of Lithium, Juan Pablo Bellolio, Commercial Vice President of Iodine and Industrial Chemicals, and Goncalo Hill, Business Intelligence Director, will also be available Before we begin, I would like to remind you that statements made in this conference call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses, and other financial items, along with expected cost synergies and product or service line growth, are considered forward-looking statements under federal securities laws.

Irina: Got about almost our chief Executive officer will be speaking on the call today get out of a young our Chief Financial Officer, Carlos <unk> Executive Vice President lithium Philip Smith commercial Vice President of Michelle Juan Pablo below they'll commercial vice president of iodine and industrial chemicals and once our Hill's business intelligence director will be also available to answer any.

Irina: <unk> laid out in the Q&A.

Irina: Before we begin I would like to remind you that statements made in this conference call regarding our business outlook future economic performance anticipated profitability readiness expenses and other financial items, along with expected cost synergies and product or service line growth I can see their eyes forward looking statements under federal Securities laws. These statements.

Irina Axenova: These statements are not historical facts and may be subject to changes due to new information, future developments, or other factors. We assume no obligations to update this statement, except as required by law. For a complete forward-looking statement, please refer to our earnings press release and pre-tax statement. I now leave you with our Chief Executive Officer, Ricardo Ramos. Thank you, Irina.

Irina: We are not historical facts and may be subject to changes due to new information future developments or other factors, we assume no obligations to update these statements except as required by law for a complete forward looking statement. Please refer to our earnings press release and presentation and now we need here with our Chief Executive Officer, Vik I go down much.

Vik Igo: Yeah. Thank you Dana and good morning, and thank you for joining the call today, we reported our full year 2023 earnings yesterday with our net income reaching over 2 billion dollar deliberating over $7 and earnings per share I'd like to focus on key performance drivers observed during the last year and our first one.

Ricardo Ramos: And good morning, and thank you for joining the call today. We reported our full-year 2023 earnings yesterday, with our net income reaching over $2 billion, delivering over $7 in earnings per share. I would like to focus on key performance drivers observed during the last year and our first impression of how this year should cool and fall for SQM. Starting with the lithium business, our full-year revenues were over $5 billion, approximately 36%. Lower when compared to the previous year, partially offset by record high sales volumes, 170,000 metric tons, almost 10% higher when compared to the previous year. The sales volumes during the 4th quarter were over 51,000 metric tons, a record quarterly sales volume for SQM.

Speaker Change: And how do you see your shoe cool pool for us, Jeff starting with lithium business. Our full year revenues were over $5 billion, approximately a 36% lower when compared to the previous year, partially offset by record high sales volumes of 170000 metric tons, almost 10% higher when compared.

Speaker Change: Paired to the previous year the sales volumes during the fourth quarter were over 51000 metric tons record quarterly sales volumes for <unk>.

Ricardo Ramos: Their revenues were affected by lower sales prices, which were decreasing quarter over quarter starting at the beginning of 2023 as a result of the capacity and inventory excess in the battery supply. Our Lithium Sales Volumes Guidance for this year considers an expected growth around 5-10% based on the contracted sales volumes for the year. As well as market estimates and conditions we are seeing at the moment, we believe lithium demand could grow another 20% this year. China remains the biggest demand and supply market for lithium products and is still going through the stocking of both battery materials and lithium chemicals inventory accumulated in the past year. That, coupled with an estimated incremental supply, makes it challenging at the moment to expect our sales volumes to increase above provided guidance. Nevertheless, depending on the timing of new supplies and any potential production curtailments, we could revisit our guidance as we advance through the year.

Speaker Change: Their revenues were affected by lower sales prices, which were decreasing quarter over quarter is starting at the beginning of 2023 as a result of the capacity and inventory access in the battery supply chain, our lithium sales volumes guidance for this year considers and expect to grow around 5% to 10% based on the.

Speaker Change: <unk> sales volumes for the year as well as market estimates on conditions. We are seeing at the moment, we believe lithium demand could roll up another 20%. This year, China remains the biggest demand and supply market for lithium products and you're still going through the stocking of both battery materials.

Speaker Change: On lithium chemicals inventory accumulated in the past years.

Speaker Change: Copley without an estimate tremendous supply makes it challenging at the moment expect I would sales volumes increase above provided guidance. Nevertheless, depending on the timing of new supply on any potential production curtailments, we call revisit our guidance as we advance through the year later later in.

Ricardo Ramos: Later in this call, we will discuss in more detail our lithium market views and electric vehicle market dynamics. In the IONI business, we reached record high production volumes in 2023, producing over 13,000 metric tons of iodine and increasing our sales volume despite global demand contractions seen during last year. We expect to see some demand recovery in the IONI market during 2024 with relatively stable prices as seen at the end of last year and stable sales volumes with a potential upside, subject to the lack of any incremental volumes from the competition. We believe SGM, as the industry leader, is the only global IONI producer which has been able to materially increase its supplies in recent years. In the fertilizer business, we saw some sales volumes recovery and market prices stabilizing.

This call, we will discuss in more detail, our lithium market views and electric vehicles market dynamics, India, you're in a business. We reached record high production volumes during 2023, producing over 13000 metric tons of iodine and increasing our sales volume despite global demand contraction seen during last year, we expect to.

Speaker Change: See some demand recovery, India Union market during 2024 with relatively stable prices are seen at the end of last year and a stable sales volume with a potential upside subject to lack of any incremental volumes from the competition. We believe this game as the industry leader is the only global Aon and producer which has been able to mature.

Speaker Change: Really increase it supplies in the recent years.

Speaker Change: The laser business, we saw some but sales volumes recovery of market prices stabilizing we expect to see positive demand growth in the potassium nitrate market driven by increased demand and product availability and expect our sales volumes to grow accordingly.

Ricardo Ramos: We expect to see positive demand growth in the potassium nitrate market driven by increased demand and product availability and expect our sales volumes to grow accordingly. In the meantime, we will focus on cost improvements and new market opportunities for our products. Finally, I would like to thank the SQM team for its dedication and unified vision sustaining our leadership position in our key markets and consistently delivering great performance year over year.

Speaker Change: In the meantime, we will focus on cost improvements and new market opportunities for our products finally, I would like to sign.

Speaker Change: The <unk> team for dedication and unified vision is sustaining our leadership position in our key markets and consistently delivering great performance year over year. Thank you.

Speaker Change: Before before we move to the Q&A I would like.

Ricardo Ramos: Before we move to the Q&A, I would like... this is going to be something different today. I would like to address one of the issues that have been brought up in the conversation with investors, and especially in the last two months, probably related to the future of the electric vehicle industry. For this discussion, I have invited to this meeting Gonzalo Gil. He is responsible for lithium market intelligence at SQM and could help us to visualize the EV battery industry better. Thank you for being here, Gonzalo.

Speaker Change: Going to be something different today I would like to address one of the issues that has been brought up in the conversation with investors.

Speaker Change: And especially in the last two months probably related to the future of the electric vehicles industry for this discussion I have invited to this meeting well Selfheal Monsanto is responsible for lithium market intelligence and SQL and could help us to visualize bidder EV battery industry. Thank you for being here with Tullow and.

Ricardo Ramos: And I have some questions. I think we're gonna get on for 10 to 15 minutes in order to go through these, but I think it's very important in order to have an outlook on the lithium industry in the future. Gonzalo, my first point is, as you know, in recent weeks, it has been reported in the press that the U.S. and other countries are considering delaying deadlines for requiring a minimum percentage of electric vehicles in new cars. How do you think this could affect electric vehicle penetration in the long term? Well, it's true that we have seen some news, many of them coming from the U.S.

Speaker Change: Some questions I think we're going to go down 10, 10 to 15 minutes in order to go through these but I think it's very important in order to have an outlook of the lithium industry in the future Lasalle parish point East East as you know in the recent weeks. It has been reported in the press that the U S and other countries are considering delaying deadlines for <unk>.

Speaker Change: Acquiring minimum percentage of electric vehicles, and new cars, how do you think the school effect electric vehicles penetration in the long term.

Speaker Change: Well, it's true that we have seen some new many of them coming from the U S. A.

Speaker Change: However, it is essential to remember that the U S market, while significant calculate currently represents slightly less than 20% of the global car sales.

Gonzalo Gil: However, it's essential to remember that the U.S. market, while significant, currently represents slightly less than 20% of global car sales. On the other hand, looking back one year, there were concerns about 2033 being a challenging year for EVs due to the end of the subsidies in China, macroeconomic factors, and bearish sentiments. But still, global EV sales for 2033 were even higher than initial estimates and closed the year with more than 14 million units sold. In China, they already went through these very same doubts. Fearing the market couldn't sustain itself without support, they no longer have relevant subsidies, just some tax exemptions.

On the R side looking back one year. When we were there were concerns about 10 doing three being a challenging year for <unk> due to the end of the subsidies in China macroeconomic factors I'm bearish sentiments, but steel globally.

Speaker Change: Sales for 'twenty, two and three were even higher that initial estimates closed the year with more than 14 million units all.

Speaker Change: In China. They already went through these very same doubts feeling the market couldn't sustain itself without support they no longer have really want subsidies just some tax exemptions, but the industry continues to grow incredibly it's not an industry that could collapse if subsidies are removed.

Speaker Change: I would like to put emphasis on October they soften overlook it is important not to forget the product, but we are talking about.

Speaker Change: If we look at the malls on the market, we have already reached performance levels much higher than what we expected a few years ago ranges over 250 miles. He may models, and we are even reach even reaching the 10 to 100 rule that it's 100 mile fast charges in a week or seven minutes.

Gonzalo Gil: But the industry continues to grow incredibly. It is not an industry that could collapse if subsidies were removed. I would like to put emphasis on a topic that is often overlooked.

Gonzalo Gil: It is important not to forget the product that we are talking about. If we look at the models on the market, we have already reached performance levels much higher than what we expected a few years ago, ranges of over 250 miles in many models, and we are even reaching the 7 to 100 rule, that it's 100 miles fast charges in as quick as 7 minutes. I don't know who can say that these numbers are not at the same level or even better than their ICD equivalents.

Speaker Change: I don't know who can say that these numbers are not at the same level or even better than their ICD equivalents.

Speaker Change: The future of this industry is not based on government incentives, but but unconverted competitiveness performance and obviously on the positive impacts on the environment.

Yeah, that's all about but at similar performance level, let's suppose similar performance between two alternatives are <unk> more expensive really.

Gonzalo Gil: The future of this industry is not based on government incentives, but on competitiveness, performance, and, obviously, the positive impacts on the environment. Yeah, Gonzalo, but at a similar performance level, let's suppose similar performance between two alternatives, are EVs more expensive, really? But less and less every day. Thanks to the price competition between manufacturers, we see that in recent years prices have fallen sharply. Today, the most popular EV in the US, the Tesla Model Y, can be purchased new for about $35,000.

Speaker Change: But less and less everyday thanks to a price competition between manufacturers, we see that in recent years prices have fallen sharply to me. The most popular ev's in the U S. The testimonial way can be purchased new for about $35000.

Speaker Change: And to make a fair comparison, when we look at the total cost of ownership with which considers a how much someone will spend for some years since electric vehicles require less maintenance and a lower cost to move around we see that the gap between Ev's and IC how has it been narrowing.

Speaker Change: After year, that's across all segments and according to some analysis light vehicles are already in the money.

Gonzalo Gil: And to make a fair comparison, when we look at the total cost of ownership, which considers how much someone will spend for some years since electric vehicles require less maintenance and a lower cost to move around, we see that the gap between EVs and ICEs has been narrowing year after year, across all segments. And according to some analysis, light vehicles are already in the money. In Europe, countries like Norway achieved over 80% EV penetration last year, aiming to end ICE sales from next year, and others like Sweden are following not far behind, with no reason why, in the medium term, the ED cannot be at the same cost or even lower than its traditional equivalent. Since successful companies such as Tesla, Hyundai, Kia, and several Chinese producers have shown us that they can be extremely cost efficient when producing an EV and continue delivering cars of the highest quality.

Speaker Change: In Europe countries like Norway have achieved over 80% you've you been attrition last year aiming to an IC sales from next year.

Speaker Change: Like Sweden are following not far behind with close to 60%.

Speaker Change: We see no reason why in the immune term babies cannot be on the same costs are even lower than its traditional equiavlent.

Speaker Change: It seems successful companies such as Tesla, Hyundai Kia and several Chinese producers have shown us that they can be extremely cost efficient.

Speaker Change: When producing nev and continue the leerink gods of the highest quality.

Speaker Change: Yeah, but if you think it's reasonable to expect in some way high price of lithium in the future. If you considered a significant additional supply and additional demand.

Speaker Change: In particular, where you think that doubling or tripling the demand for lithium iffy if were positive all the electric vehicles.

Gonzalo Gil: Yeah, but if you think it's reasonable to expect, in some way, a higher price of lithium in the future, if you consider a significant additional supply and additional demand, in particular, where you think that doubling or tripling the demand for lithium, if we're positive about all the electric vehicles, this surely will affect the cost and the way it competes with electric vehicles. What's your opinion about that? I understand. Maybe to approach this concern, we should do a simple exercise with numbers.

Speaker Change: This is surely we will affect the cost uncompetitive.

Speaker Change: The way we compete competes electric vehicles, what's your opinion about that.

Speaker Change: I understand.

Maybe the approach to this concern, let's do a simple exercise with numbers.

Speaker Change: If we take an electric car like the test like I said before.

Speaker Change: Two manufactured that battery it takes approximately 50 kilo.

Speaker Change: The kilos of lithium carbonate equivalent per car okay.

Speaker Change: Now if we think about some price, let's say tornado last like you know lithium costs would mean, a total of $1000 per car, we're talking about less than 3% of the total price on each additional dollar of the lithium price affect the final cost of the car by only $50.

Gonzalo Gil: If we take an electric car, like the Tesla I said before, to manufacture that battery, it takes approximately 50 kilos of lithium carbonate equivalent per car. Okay? Now if we think about some price, let's say $20 a kilo, the lithium cost would mean a total of $1,000 per car. We are talking about less than 3% of the total price, and each additional dollar of the lithium price affects the final cost of the car by only $50. As you can see, lithium is not so relevant to the price; at least, it should not be a variable that affects the demand for EVs in the future. Obviously, I've seen all the industries.

Speaker Change: As you can see literally is not so relevant to their price at least it should not be a variable that affects the demand for evs in the future.

Speaker Change: Obviously as in all industries for.

Speaker Change: Producers will try to lower costs as much as they can.

Speaker Change: Finally, the price will be linked to a total module cost that into investments of all the brakes needed to satisfy the demand.

Speaker Change: Today, the cost of batteries is high basically due to the significant investments in R&D that have allowed huge improvement in the performance.

Speaker Change: It is reasonable to expect the first sterilization of R&D expenses.

Speaker Change: As well as the economies of scale in daily production will allow significant reaction in total costs. There's no reason to think that in the long term.

Gonzalo Gil: Producers will try to lower costs as much as they can. And finally, the price will be linked to the total marginal cost, that is, including investments, of all the products needed to satisfy demand. Today, the cost of batteries is high, basically due to the significant investments in R&D that have allowed huge improvements in their performance. It is reasonable to expect that the stabilization of R&D expenses, as well as the economies of scale in daily production, will allow a significant reduction in total cost. There is no reason to think that, in the long term, EVs should be more expensive than their traditional counterparts.

Speaker Change: It should be more expensive than their traditional counterparts.

Speaker Change: Baby being sold is a good car and it's competitive at least the price of lithium should not be a factor that prevents its adoption.

Speaker Change: And what's about the some some opinion related to the potential negative environmental effects of lithium mining.

Speaker Change: Yeah.

Speaker Change: Maybe we can take a S. Given Ali's alliance with Codelco. Atwood example, it shows some signs of the industry leadership with full commitment to environmental standards, we can see that the brakes like seller to doodle Mark an extraordinary step in the right environmental direction and will set the standard that will be required to <unk>.

Gonzalo Gil: If the EV being sold is a good car and is competitive, at least the price of lithium should not be a factor that prevents its adoption. What about some opinions related to the potential negative environmental effects of lithium? Yeah. Maybe we can take the SQM Alliance with CODELCO as a good example.

Speaker Change: Tire industry <unk>.

Speaker Change: Briggs will meet to incorporate this environmental standards into our costs given that they will be a minimum requirement in the industry.

Speaker Change: This way the entire industry will aim to be sustainable.

Speaker Change: It is also important to note that the users batteries in be assess makes the energy transition viable due to the operational intermittency of renewable sources, which certainly has a very direct effect on reducing the environmental impact from the use of fossil fuels in the electric grid.

Gonzalo Gil: It shows signs of industry leadership with full commitment to environmental standards. Projects like Salar Futuro mark an extraordinary step in the right environmental direction and will set the standard that will be required by the entire industry. New projects will need to incorporate these environmental standards into their costs, given that they will be a minimum requirement in the industry.

Speaker Change: Yeah talking about the electric agreed on.

Speaker Change: There's also doubt and some people's thing about the electric grid and the availability of fast charging stations. If they can support the expected growth of the electric vehicles.

Gonzalo Gil: In this way, the entire industry will aim to be sustainable. It is also important to note that the use of batteries in BESS makes the energy transition viable due to the operational intermittency of renewable sources, which certainly has a very direct effect on reducing the environmental impact from the use of fossil fuels in the electric grid. Yeah, talking about the electric grid, there are also doubts, and some people think about the electric grid and the availability of fast charging stations if they can support the expected growth of the electric grid. The thing is that this concern has always existed since the early days of EVs. China is a solid example that these elements are not the real constraints. In three years, they increased their annual sales by over six times without this effect causing major problems. As the man grows older...

Speaker Change: The thing is that this concern has always existed since the early days of the East China is a solid example that these elements are not the real constraint in three years they increase their annual sales over six times without this effect, causing major problems.

Speaker Change: As demand grows charging stations should follow quickly it's not a very complex technology, it's frustrating it's really simple.

Speaker Change: Additionally for example in the U S. There are several apparel incentives and subsidies to encourage the installation with Chargers to a point that today. It is estimated that 125, new Chargers and brings do everyday.

Speaker Change: And also last year, we saw some declarations involving seven of the largest Oems to jointly develop charging networks through how they market.

Gonzalo Gil: Charging stations should follow quickly. It's not a very complex technology. Fast charging is really simple.

Speaker Change: We maybe can be complement to a sustainable budget generation without going any further again, we can see for example companies like SQL investing in our U S startup electric era, but it's going to start fast charging networks backed by stationary lithium batteries. So that electricity can be purchased at times of law.

Gonzalo Gil: Additionally, for example, in the U.S., there are several federal incentives and subsidies to encourage the installation of chargers, to the point that today it is estimated that 125 new chargers are being installed every day. And also, last year we saw some declarations involving seven of the largest OEMs to jointly develop charging networks throughout the market, with the aim of the baby can be complemented to sustainable power generation. Without going any further, we can see, for example, companies like SQM investing in a U.S. startup, Electric Era, that is going to install fast-charging networks backed by stationary lithium batteries so that electricity can be purchased at times of lower cost and then be stored for a car to be charged during the day, all of this helping to soften the demand and optimize the grid generation and distribution.

Our cost and then be store for a card to be charged during the day all of these coping to soften the reman and optimize the Greek duration and distribution.

Speaker Change: Finally, Ed I think it's very interesting, but finally when you theme what do you think about the lift from the man in the long term, we think in the long term and who do you think the supply.

Speaker Change: Can can respond to these potential demand.

Ed: Well, if we look at 10 years from now.

Ed: I think that maybe for 2000 and has reached a reasonable to think that more than 50% of new car sales worldwide should be east. It is also reasonable that average batteries are going to be more powerful than the current ones.

Ed: We were not we must not forget that increase that we are seeing unexpectedly in BSS due to its role in the energy transition goals the different countries have said.

Gonzalo Gil: Finally, and I think it's very interesting, but finally, what do you think about the lead from demand in the long term? We think in the long term, and who do you think the supply can respond to these potential demands? Well, if we look 10 years from now, I think that maybe in 2023, it's reasonable to think that more than 50% of new car sales worldwide should be EVs. It is also reasonable to think that average batteries are going to be more powerful than the current ones.

Ed: This together with batteries going to buses and trucks with another 600000 tons to Lehman.

Ed: So if we consider all of this it would seem reasonable to think in something near 4 million tons of lithium carbonate equivalent which is kind of a fourfold increase from last year demand.

Ed: We're at the beginning of a revolution and there are four months has really exceeded expectations.

Ed: A significant portion of the market was waiting for some important issues like range and charging times to stabilize at a point, where they feel it's comfortable and I think that's already been achieved.

Gonzalo Gil: And we must not forget the increase that we are seeing and expecting in BSS due to its role in the energy transition goals that different countries have set. This, together with batteries going to buses and trucks, could add another 600,000 tons to demand. So if we consider all of this, it would seem reasonable to think of something near 4 million tons of lithium carbonate equivalent, which is kind of a fourfold increase from last year's demand. We're at the beginning of an I.V. revolution, and their performance has greatly exceeded expectations.

Ed: Well, we have already reached levels, where people are getting excited.

Ed: Luke.

Ed: How everyone everywhere is talking about EV. It is one of the mandatory conversation topics. This is the way in the immune term, we should continue to see demand growing.

Ed: Lithium batteries are extraordinary.

Ed: There may be technologies that are better in a certain aspect, but when we consider all the equally qualities together. It is clearly the unquestionable leader and the extra advantage that there's already a well developed ecosystem that supports production and analysts rally. If we look ahead and also consider for example, some of the comments from.

Gonzalo Gil: I think that a significant portion of the market was waiting for some important issues like range and charging times to stabilize at a point where they feel it's comfortable. And I think that's already been achieved. Well, we have already reached levels where people are getting excited. Just look at how everyone, everywhere, is talking about EVs. It is one of the mandatory conversation topics. This is why, in the near term, we should continue to see demand growing. Living batteries are extraordinary.

Ed: Badri manufacturers, it's spice should continue to trend downward from now on should.

Ed: Should we expect lithium being replaced.

Ed: Maybe for some for some niche uses but nothing I really one way.

Speaker Change: Now to answer the last part of the question.

Speaker Change: Based on the behavior that we have been able to observe in the market in the recent years and all the announcements of brilliance that bank to enter I believe that yes, we should have lithium supply for those volumes.

Gonzalo Gil: There may be technologies that are better in certain aspects, but when we consider all the qualities together, it is clearly the unquestionable leader and has the extra advantage that there's already a well-developed ecosystem that supports production. And additionally, if we look ahead and also consider, for example, some of the comments from battery manufacturers, its price should continue to trend downward from now on. Should we expect lithium to be replaced? Maybe for some niche uses, but not in a relevant way?

Speaker Change: However, I also think that it's reasonable too that the total cost of those lost tons produced will be much higher than the current prices.

Speaker Change: Should be growing two 2 million 3 million 4 million and it steps should require supply entering the market. So there should be a minority of projects of different cost to supply this product in the market.

Ricardo Ramos: Now, to answer the last part of the question. Based on the behavior that we have been able to observe in the market in recent years and all the announcements of projects that we plan to enter, I believe that, yes, we should have a lithium supply for those volumes. However, I also think that it's reasonable that the total cost of those last tons produced will be much higher than the current price. Demand should be growing to 2 million, 3 million, 4 million, and each step should require supply to enter the market. So there should be a variety of projects of different costs to supply this product in the market. Thank you, Gonzalo.

Speaker Change: Thank you will subtle please stay with us because probably you will receive some questions. During the Q&A I hope you will receive some challenge of your assumptions.

Speaker Change: I hope it will.

Speaker Change: Eating out that said, we can go to the Q&A everything perfect. Thank you. That's all I think Ricardo I increase they can open the line for questions.

Speaker Change: Thank you we will now begin our question and answer session. As a reminder to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.

Ricardo: If at any time. Your question has been addressed and you would like to withdraw it. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Ricardo Ramos: Please stay with us because you will probably receive some questions during the Q&A. I hope you will receive some challenge to your assumptions. I hope it will. Irina, that's it.

Ricardo: Today's first question comes from Joel Jackson with BMO capital markets. Please proceed.

Joel Jackson: Hi, good morning.

Joel Jackson: Two questions I'll ask one at a time can you help us understand how to.

Joel Jackson: The math of your sales guidance your volume guidance when it relates to the lithium sulfate business or sulfate China, great hydroxide. When you say you did 130000 tonnes and 23 was that all in excluding Sulfates and when you say volume will be up five you expect you will be able to do 5% to 10% higher volume in 2000 and <unk>.

Irina Axenova: We can go to the Q&A, I think. Perfect. Thank you, Gonzalo. Thank you, Ricardo.

Operator: And Chris, we can open the line for questions. Thank you. We will now begin our question and answer session. As a reminder, to ask a question, you may press star and then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing.

Joel Jackson: 24, that's 180 something thousand Tayo is that excluding sulfate.

Joel Jackson: We Wanna add salt based so all these numbers and how much of sulfate should we add.

Operator: If at any time your question has been addressed and you would like to withdraw it, please press star then 2. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Joel Jackson with BMO Capital Markets. Please proceed. Hi, good morning.

Joel Jackson: Hello, the draw this is Carlos.

Carlos: The synthesis of a little surface that already included in the initial that we're reporting.

Carlos: Borgwarner.

Carlos: These include lithium hydroxide.

Carlos: You have to remember that we we do have refining in China.

Carlos: Feeding the plant with lithium sulfate and we produce deterrent brookside those withdraw brookside Arabian crude in there.

Carlos Diaz Ortiz: I have two questions. I'll ask one at a time. Can you help us understand how to do the math of your sales guidance, your volume guidance, when it relates to the lithium sulfate business or sulfates to China upgraded to hydroxide? When you say that you did 170,000 tons in 23, was that all excluding sulfates? And when you say volume will be up five, you expect you'd be able to do five to 10% higher volume in 2024. That's 180 something tons. Is that excluding sulfates? We want to add sulfates to all these numbers. And how much sulfate should we add? Hello, Joel. This is Carlos Diaz.

Carlos: In Q4.

Speaker Change: Okay great.

Speaker Change: Great.

Speaker Change: He is also included in our guidance for the next year when we considered all the lithium we're going to sell.

Speaker Change: And worldwide.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: So let's fallen so if theyre going to sell 180, something thousand tonnes SCR and you were supposed to do 20 to 25000 tons of sulfate.

Speaker Change: And you're supposed to produce you pause that we had 210000 times ignores the sulfate opportunity does that mean youre going to be building something like I don't know 50 or 60000 tons of inventory. So your guidance suggests you will build 50000 tons or so of inventory. This year is that fair.

Speaker Change: Yeah. It works regarding the capacity, where we're already closing or duration the capacity to 200 and total in Chile.

Carlos Diaz Ortiz: Yeah, the cell is, the lithium sulfate is already included in the cells that were brought in the fourth quarter. It's included as a lithium hydroxide. You have to remember that we do the refining in China, feeding the plant with lithium sulfate, and we produce lithium hydroxide. And those lithium hydroxides are already included in the Q4. And you're OK, but sorry, it's also included in our guidance for the next year, and we considered all the lithium we're gonna sell and worldwide. OK. So let's fall back on that.

Speaker Change: And an additional two data we will have our capacity in China to transform the consult with unique drug side on the new production that is coming from Australia. So in total we expect to produce this year around 220 to 230000 metric tons.

So horribly this capacity cannot be necessary be reflecting failure, given the need to qualify with customers the products that come from the new plan.

Ricardo Ramos: So they're gonna sell 180 thousand tons this year, and you were supposed to do 20 to 25,000 tons of sulfate. And you're supposed to produce your ponds now 210,000 tons, which ignores the sulfate opportunity. Does that mean you're gonna be building something like, I don't know, 50 or 60,000 tons of inventory this year? Your guidance suggests you will build 50,000 tons or so of inventory this year. Is that fair?

Speaker Change: On the oil Pan our always our strategy has been to produce a full capacity so that.

Speaker Change: But the way we are always prepared to supply more product to the market with its nevis.

Speaker Change: So Doug why does it even in the fourth quarter, Yes, let me add something yes, we will increase.

Doug: Inventory, yes for sure probably will be lower than 50000, not not not a significant 50 sell some but keep in mind that we signed an agreement of codelco that we have apps.

Doug: A significant.

Doug: Challenging selling additional tons until the year 2030, having nine additional inventory is going to be a very good news in order to face what is expected for the year to swap 2025 onward, Bob but again as we see as we said in the press release and now we comment I would guidance is depending what is.

Ricardo Ramos: Yeah, well, regarding capacity, we're already closing on or reaching the capacity of 210,000 in Chile. And in addition to that, we have our capacity in China to transform the lithium sulfate into lithium hydroxide and the new production that is coming from Australia. So in total, we expect to produce this year around 220 to 230,000 metric tons. However, this capacity cannot necessarily be reflected in sales given the need to qualify with customers the product that comes from the new plant. On the other hand, our strategy is always to produce at full capacity so that, by the way, we are always prepared to supply more products to the market when it's needed. So, that's what you have to do in the fourth quarter.

Doug: The specific situation of this year, but this destitution is slightly better or better we will have the advantage it or we will have the advantage of the volume of inventory in order to move forward.

Speaker Change: It's my last question just kind of on the same question I'll pass. It on is is your are your economics on the hydroxide.

Speaker Change: <unk> been producing lithium sulfate is that pretty much similar economics as your normal hydroxide correctly legacy hydroxide production. Please include world Corvo lease payments as part of that economics.

Carlos Diaz Ortiz: Yeah, let me add something. Yes, we will increase inventories, yes, for sure, probably will be lower than $50,000. Not as significant as $50,000, but keep in mind that with an agreement of CODELCO that we have a... A-A a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a significant em, eh, Challenge in selling additional tons until the year 2030, having an additional inventory is going to be a very good news in order to face what is expected for the year 2025 onward. But again, as we said in the press release, and now we comment, our guidance is depending on what is the specific situation of this year, but if the situation is slightly better or better, we will have the advantage of the volume of inventory in order to move forward. It's my last question, which is kind of on the same question, I'll pass it on is, is your are your economics on the hydroxide? Being produced from lithium sulfate.

Speaker Change: It's quite similar to both for economics.

Speaker Change: Thank you very much.

Speaker Change: The next question is from Isabella <unk> with Bank of America. Please proceed.

Isabella: Thank you good morning, gentlemen, thank you for the call and.

Great.

Isabella: Presentation at <unk> and my question is you want on the lithium sales dynamics are if I recall correctly in Q3, you're right. You mentioned that you were looking for actually lower volumes in Q4, when actually volumes were record right last quarter. So I wonder if we could.

Isabella: Explain a little bit more the strategy you followed during the quarter in terms of sales and how are you seeing.

Isabella: I think inventories down the chain right and.

Isabella: I think that's the trickiest part to track at this point it is how much volume there is overseas and now there.

Isabella: And trying to figure out a little bit of supply and demand balance and my second question is this is the first call post the agreement with Codelco right. So I wonder if you could tell us a little bit more the strategy of capital location going forward right considering that you already know what's going to happen beyond 2000.

Operator: Is that pretty much similar economics as your normal hydroxide, your legacy hydroxide production? Please include world Corfo lease payments as part of that economics. It's pretty quite similar economically. Thank you very much.

Isabella: 30, how do your T ask you an operational footprint unlike them globally right I did that investment in Australia.

Operator: The next question is from Isabella Simonato with Bank of America. Please proceed. Thank you. Good morning, gentlemen.

Isabella: Recently, so I was wondering how do you see the geographic exposure.

Ricardo Ramos: Thank you for the call and great presentation on EVs. My question is still on the lithium sales dynamics. If I recall correctly, in Q3, you mentioned that you were looking for lower volumes in Q4 when actually volumes were record high last quarter. So I wonder if you could explain a little bit more the strategy you followed during the quarter in terms of sales and how you are seeing, I think, inventories down the chain, right, and I think that's the trickiest part to track at this point is how much volume there is overseas and out there and trying to figure And my second question is, this is the first call post the agreement with Codelco, right, so I wonder if you could tell us a little bit more about the strategy of capital allocation going forward, right, considering that you already know what's going to happen beyond 2030. How do you see SQM's operational footprint on lithium globally, right? You did that investment in Australia recently, so I was wondering how you see the geographic exposure for the company over the years, considering that you already have the agreement in place? Thank you. Excuse me, this is the operator.

Isabella: For the company over the years.

Isabella: Considering that you already have the equipment.

Isabella: Yep.

Isabella: Excuse me. This is the operator I. The speaker line is open if you would like to speak.

Speaker Change: Okay, I will answer to the first question.

Speaker Change: As Carlos commented just before our strategy is to be prepared.

Operator: Third always to meet the needs of our clients. So at the end of Q4 significant demand was generated that.

Speaker Change: Could have been for different reasons, such as restocking needs prior to the Chinese new year or potentially some price speculation from our customers.

Speaker Change: Customers.

Speaker Change: But independent of that.

Speaker Change: What I could comment is that despite our better than expected Q4 2023. We're also expecting a Q1 2020 for volume to be higher than Q1 2023.

Speaker Change: About the second point of your question on the Capex allocation considering codelco agreement.

Speaker Change: I can say because I'm speaking that that we have I think a full agreement with Golar Gabor with challenging there's a lot of like our man hour Capex in terms of that as you know we are investing in and decided that got Mcpherson increasing capacity, we want to reach at least the 240000 metric tons of total production capacity were increasing.

Operator: The speaker line is open if you would like to speak. Okay, I will answer the first question. As Carlos commented just before, our strategy is... to always be prepared to meet the needs of our clients. So, at the end of Q4, significant demand was generated that could have been for different reasons, such as restocking needs prior to the Chinese New Year or potentially some price speculation from customers. But independent of that, what I could comment is that despite a better than expected Q4 2023, we are also expecting a Q1 2024 volume to be higher than Q1 2023. About the second point of your question on the CAPEX allocation considering the CODELCO agreement, I can say, Ricardo Ramos speaking, that we have, I think, a full agreement with CODELCO about our challenge in the Salar de la Cama and our CAPEX in terms that, as you know, we are investing first in the Salar de la Cama to increase capacity.

Speaker Change: Our production of lithium hydroxide in order to have more alternatives of litho metric side are there are the worst facilities and Carmen in Chile.

Speaker Change: Of course, we're committed with Kalydeco to move forward with this allowed for due to a project that is the new project in order to move I hope a much better quality much better.

Speaker Change: Position probably are better.

Speaker Change: Better better environmental footprint embedded deals of the process, but again, we have a.

Speaker Change: Full agreement, we don't expect to change our capex in the near future in Chile, we are full aligned with gold going to strategy and our study of Capex allocation outside Chile. The bends of opportunities. We have been very clear that you, we foresee an opportunity to take a position in a mining resources that is good for the company and that will allow us to be.

<unk> in the lithium industry and we believe in the lithium industry. We're ready to go on as you know we are in Mount Holland project that he started two months ago, we're producing we're very happy about that and we know we had this new joint venture potentially with him hand cooked in order to go to a solely that we think is a very good program and we will move forward to you we have another.

Operator: We want to reach at least 240,000 metric tons of total production capacity. We're increasing our production of lithium hydroxide in order to have more alternatives of lithium hydroxide at our facilities in Carmen, Chile. And, of course, we are committed with CODELCO to moving forward with the Salar Futuro project. That is the new project in order to move to a much better quality, much better, Class position, probably on a better environmental footprint, and better deals in the process. But again, we have a full agreement. We don't expect to change our CAPEX in the near future in Chile. We're fully aligned with Colombia's strategy.

Speaker Change: More alternatives in the future you never know, but are more than open to go to good alternatives in the lithium industry.

Speaker Change: That's clear thank you.

Speaker Change: The next question is from Ben Isaacson with Scotiabank. Please proceed.

Thank you very much and good morning, everyone.

Ben Isaacson: I have three questions. The first question is just trying to reconcile two comments that you made on the one hand, you said that you expect oversupply of lithium to persist throughout 2024, and we've seen what that has done to pricing, but on the other hand, you have said that you expect average realized prices for lithium to be.

Ricardo Ramos: And our strategy of CAPEX allocation outside Chile depends on opportunities. We have been very clear that if we foresee an opportunity to take a position in mining resources that is good for the company and that will allow us to be competitive in the lithium industry, and we believe in the lithium industry, we're ready to go. And as you know, we are in a Mount Holland project that started two months ago. We're producing. We're very happy about that.

Ben Isaacson: Similar to last year, which I believe was averaged about $30000 in order to achieve $30000 and if we assume Q1 is going to be the same as Q4, we would need to see prices exceeding $40000 to at some point throughout the year.

Ben Isaacson: How can we achieve that if you expect there to be oversupply for the rest of the year.

Speaker Change: Hello, Ben.

Ben Isaacson: As we have always explained in the past and we cannot predict what is going to happen with the price in the coming months. This will be the result of the supply demand balance.

Ricardo Ramos: And now we have this new potential joint venture potentially with Hankook in order to go to Asure, which we think is a very good project and we will move forward with. If we have more alternatives in the future, you never know. But more than open to going to good alternatives in the lithium industry. That's clear, thank you. The next question is from Ben Isaacson with Scotiabank. Please proceed. Thank you very much and good morning, everyone.

Ben Isaacson: And you know that most of our sales are linked with in excess of the spot price movement should influence our realized prices with a certain lag.

Ben Isaacson: We have seen stable prices in the last three months.

Ben Isaacson: And we do not have information today that allow us to foresee important changes in the coming three months. However.

Ben Isaacson: However.

Ben Isaacson: We may see some upside based on the timing of new supply entering the market as commissioning phases, sometimes take longer than expected.

Operator: I have three questions. The first question is just trying to reconcile two comments that you made. On the one hand, you said that you expect the oversupply of lithium to persist throughout 2024, and we've seen what that has done to prices. But on the other hand, you said that you expect average realized prices for lithium to be similar to last year, which I believe averaged about $30,000. In order to achieve $30,000, and if we assume Q1 is going to be the same as Q4, we would need to see prices exceeding $40,000 at some point throughout the year. How can we achieve that if you expect there to be an oversupply for the rest of the year? Hello Ben.

Ben Isaacson: Or we could also see some possible impacts in the production of less competitive suppliers at current prices.

Ben Isaacson: And regarding total demand, we maintain an unexpected sorry unexpected growth of 20% and do not anticipate major changes.

Ben Isaacson: There is less uncertainty that in display.

Ben Isaacson: Ben Yes, I wasn't very clear that our our estimate for the year 2024 is yes, a lot of uncertainty, but we don't expect that the average price of 2024 will be the same off the average price of the previous year. What we're seeing is some price elastic stability considering what we have been.

Carlos Diaz Ortiz: As we have always explained in the past, we cannot predict what is going to happen with the price in the coming months. This will be the result of the supply-demand balance. You know that most of our sales are linked to indexes, so the spot price movement should influence our realized prices with a certain lag. We have seen stable prices in the last three months. And we do not have information today that would allow us to foresee important changes in the coming three weeks.

Ben Isaacson: Facing in the market in the last probably five to six months, but we're not seeing that the whole 2004 would be at an average.

Speaker Change: Same average of 2023 I understand thank you I.

Speaker Change: I misunderstood that so I just have two more questions second is on the.

Speaker Change: On your costs.

Speaker Change: Producing lithium I know you don't disclose exactly what the cash cost sorry, but can you talk about how inflation has impacted those cash costs over the past year.

Carlos Diaz Ortiz: However, we may see some upside based on the timing of new supply entering the market as commissioning phases sometimes take longer than expected. Or we could also see some possible impacts in the production of less competitive suppliers at the current time. Regarding total demand, we maintain an unexpected growth of 20% and do not anticipate major changes.

And excuse me. This is the operator again your speaker line is open at the Iran hybrid.

Ricardo Ramos: There is less uncertainty than in the supply. Ben, I want to be very clear that our estimate for the year 2024 is, yes, there is a lot of uncertainty, but we don't expect that the average price of 2024 will be the same as the average price of the previous year. What we think is some price stability considering what we have been facing in the market for the last probably five to six months. But we're not saying that the whole of 2004 will be average. Second, on your costs of producing lithium, I know you don't disclose exactly what the cash costs are, but can you talk about how inflation has impacted those cash costs over the past year? Hi Ben, this is Gerardo Illanes.

Speaker Change: Of course, we have seen some pressure on inflation. There of course is higher in T led all over the world what it was before the pandemic, but also we're seeing that sort of net out with the with the effect of a weaker Chilean peso.

Speaker Change: When compared to weather, we saw about a year ago. So.

Speaker Change: Both together make us think that is more or less even.

Okay. Thank you for that Corrado and then my last question.

Speaker Change: I don't want to challenge CEB speaker, but I do have a question which is.

Speaker Change: If trump is elected and he kills the IR array.

Speaker Change: I don't think Theres, a doubt Scott EBIT demand is still going to be there, but if demand slows down in the U S and everything gets pushed out really what that speaks to is a higher probability of there being oversupply in lithium for the next several years can you just address stock risk. Please.

Gerardo Illanes: Of course, we have seen some pressure on inflation, which is, of course, higher in Chile and all over the world than it was before the pandemic. But also, we're seeing that sort of net out with the effect of a weaker Chilean peso compared to what we saw about a year ago. So both together make us think that it's more or less even.

Speaker Change: And excuse me. This is the operator again the speaker line is open.

Speaker Change: And just to give us a second we'll connect Gonzalo.

Gerardo Illanes: Okay, thank you for that, Gerardo. And then, my last question, I don't want to challenge the EV speaker, but I do have a question, which is, you know, if Trump is elected and he kills the IRA, I don't think there's a doubt that EV demand is still going to be there. But if EV demand slows down in the US, and everything gets pushed out, really, what that speaks to is a higher probability of there being an oversupply of lithium for the next several years. Can you just address that risk? Excuse me, this is the operator again. The speaker line is open.

Speaker Change: Yes.

Speaker Change: Hi, Ben this is gonzalo here.

Gonzalo: Yeah, So to me as I mentioned earlier.

Gonzalo: The EV demand in the U S. It's currently close to 10% so yes broadly.

Gonzalo: All of these is considering in in the forecast not only ours, but in everyone's forecast.

I am.

Gonzalo: There will there will be some growth in the future in the long term I think there is no impact at all.

Operator: Just give us a second, and we'll connect with Gonzalo. Hi, Ben. This is Gonzalo here.

Gonzalo Gil: Yeah, so today, as I mentioned earlier, EV demand in the U.S. is currently close to 10%. So, yeah, probably all of this is considered in the forecast, not only ours, but in everyone's forecast. There will be some growth in the future, but in the long term, I think there will be no impact at all. And I think that everyone is expecting something, but it will keep growing, and it will not be that huge of an impact. Thank you very much.

Gonzalo: And I think that everyone is expecting something but it will keep growing.

Gonzalo: And it will not be that huge of an impact.

Gonzalo: Okay.

Speaker Change: Thank you very much.

Corinne Jeannine Blanchard: Our next question comes from coin Blanchard with Deutsche Bank. Please proceed.

Corinne Jeannine Blanchard: Good morning, everyone.

Operator: Our next question comes from Corinne Blanchard with Deutsche Bank. Please proceed. Good morning, everyone.

Corinne Jeannine Blanchard: So I want to come back on pricing.

Blanchard: So it hit.

Carlos Diaz Ortiz: So I want to come back on Malaysian pricing. For you, you expect relatively stable prices for this year. Just want to confirm, when you say, right, if it's stable, do you mean versus 4Q? So it has about 15,000.

Thanks, I'll actually with cable or pricing Buggins, yeah, just want to confirm when you say relatively stable do you mean that this Q. So it is about 15000.

Carlos Diaz Ortiz: So that would be kind of part of the first question. And the second question on lithium is when 4Q realized pricing was much lower versus expectation and much closer to spot. So can you talk a little bit about maybe, did you have a shift of your volume being more at spot versus some of the benchmarks or what just happened in 4Q?

Corinne Jeannine Blanchard: The first question and the second question on lithium is paying.

Corinne Jeannine Blanchard: I mean, the folks you realized pricing not slow out best expectation and much closer to spot. So can you talk a little bit about maybe did you have a shift.

Corinne Jeannine Blanchard: Wholesale volume being lots bombast as some of the benchmark on what just happened in Tokyo.

Carlos Diaz Ortiz: And yeah, as I mentioned before, we only commented on the coming three months, Corinne, so according to the information we are handling today, we see more or less stable prices, okay? What could happen later after that is, of course, uncertain. And I could not, I could not comment on that and regarding our contract base. I can comment on that.

Speaker Change: Yeah, as I mentioned before.

Speaker Change: We already commented about the coming three months Corrine I saw there are according to the information we are handling today, we see more or less stable prices. Okay. What could happen later after that.

Speaker Change: Of course, they are uncertain.

Speaker Change: And I could not.

Speaker Change: I cannot comment on Bob.

Speaker Change: And regarding our contract.

Contract base I can comment that.

Speaker Change: All of our contracts today are all linked to indexes just with certain lag and it depends also if your sales are in China, where you may use different indexes than when you are outside China.

Carlos Diaz Ortiz: All of our contracts today are all linked to indexes, just with a certain lag, and it depends also if your sales are in China, where you may use different indexes than when you're outside. Okay, thank you. And maybe for a follow-up, um, can you give an idea of the volume cadence for the year? I mean, one cue is normally seasonally low, and then we should see like a beta improvement in 2Q and 3Q. But, Yeah, if you can just talk a little bit about that, that would be very helpful. Yeah, I could comment on that.

Speaker Change: Thank you.

Speaker Change: Okay. Thank you and maybe for a follow up.

Speaker Change: Can you give an idea of the volume cadence for the year I mean, why don't you normally seasonally low and then we should see like a better improvement in <unk>, but.

Speaker Change: Yeah. If you can just talk anytime you talk about that that would be very helpful. Thank you.

Speaker Change: Yeah.

Speaker Change: I could comment up.

Carlos Diaz Ortiz: Probably, the second semester volumes will be higher than the first semester volumes. And yeah, regarding, I mean, that's all I could comment on, actually, because, as we said before, there are also things that could happen to the supply, potentially, that could change, and we have a strategy of having stocks and being ready to sell if the market needs them at any time. So take my comments as a.

Speaker Change: Probably the second semester volumes will be higher than the first semester volumes.

Speaker Change: And then yeah regarding I mean, that's all what I could comment actually I because.

Speaker Change: As I as we said before there are also things that are.

Speaker Change: Could happen on the supply potentially that could change there and we have a strategy of having stock and be ready to sell if the market needs at any time.

Speaker Change: So take my comments as a <unk>.

Carlos Diaz Ortiz: All things keep going as usual, but things could change. Okay, great. Thank you. I will take the right one.

Speaker Change: All things.

Speaker Change: Keeping as usual, but things could change also.

Speaker Change: Okay, great. Thank you I would take that right.

Operator: The next question comes from Gabriel Simoes with Goldman Sachs. Please proceed. Hi all, thanks for the presentation and for taking my questions. My first question is about the Mount Holland project. Given that you recently started production, it would be interesting to have an update on the project and on your expectations for this year. So, I'd like to understand better what the strategy is for spodumene production given that your refinery is not expected to start up until next year, right? Do you plan on tolling and selling lithium directly or selling spodumene directly or building inventories for when the refinery starts? And you mentioned your guidance already includes all your lithium sales globally, so could you break down how much could come from Australia versus Chile and others, right? Given this strategy? And the second question is taking advantage of Gonzalo's presence. It'll be interesting to hear more about your outlook for lifting prices in 2024. I know we've discussed this a little bit, but I just wanted to understand it.

Speaker Change: Okay.

Speaker Change: The next question comes from Gabriel <unk> with Goldman Sachs. Please proceed.

Gabriel: Hi, all thanks for the presentation and for taking my questions.

My first question is about the Mount Holland project, given that you've recently started production.

Gabriel: Interesting to have an update on the project and on your expectations for this year. So.

Gabriel: I can understand better what the strategy is for spodumene production given that your refinery is not expected to startup.

Gabriel: Until next year right. So do you plan on tolling and selling lithium directly or selling spodumene directly or building inventory for when the refinery starts and you mentioned your guidance already includes all your lithium sales globally. So could you breakdown how much could come from from Australia versus Chile.

Gabriel: And others right given this the strategy.

And the second question is taking advantage of <unk> strategies.

Gabriel: It'll be interesting to hear more about your outlook for lithium prices in 2024.

Gabriel: We've discussed this a little bit I just wanted to understand so you mentioned you expect it to remain flat while dementia grow around 20%. So in terms of supply then.

Ricardo Ramos: So you mentioned prices are expected to remain flat while demand should grow around 20%. So in terms of supply, then how do you expect this equation to behave ahead, right? So is this stable price related mostly to supply additions in 2023? Or are you also mapping significant additions for 2024? If you could give us some projects that you're tracking closely, that'll be interesting as well. And also, what are you observing in terms of the cash cost curve for the segment, right? Given the addition of suppliers here, in that scenario, would you expect stoppages ahead?

Gabriel: Like how do you expect this equation to behave ahead, Rachel is it stable price related mostly to supply additions in 2023 or are you also lapping significant additions for 2024, if you could give us some some projects that youre tracking closely that'd be interesting as well.

Gabriel: And also what are you observing in terms of the cash cost curve for the segment right. Given the addition in supplier tier.

Speaker Change: That scenario would you expect stoppages ahead, if current prices remain that comes from my side. Thank you.

Ricardo Ramos: If current prices remain, that's it from our side. Thank you. Sorry, I get a little bit confused about many questions, but let me try to answer the first one and we can review the other questions in order to be more clear what you want from us. But the first one about MUNHOLAND, the project, as you know, is a project; the idea of the project is to be a 50,000 metric tons equivalent capacity of lithium nitroxide. That's the project itself. We are very positive after two months of production. And we think this year, even though it's the starting year, there will be commissioning of some of the facilities for the production of spodumene. We will produce close to 300,000 metric tons of spodumene that is equivalent to lithium nitroxide. If you convert it to lithium nitroxide, it's close to 40,000.

Speaker Change: Sorry, just a little bit confused about many question, but let me tie to the first one and we can review their all their questions in order to be more clear with you one from us about the first one about them on hold on.

Speaker Change: In the project as you can always have project K. The idea of the projects to be a 50000 metric tons equivalent capacity of lithium hydroxide that stay at the project itself. We are very positive after two months of production and we think this year, even though you say starting here there is commissioning of some of the facilities are there.

Speaker Change: The production of a spud human we will produce close to 300000 metric tonnes of spodumene that equivalent in lithium hydroxide. If you convert to lithium hydroxide. It's close to 40000. It means he is very close to the final.

Speaker Change: Production capacity that we estimating this first step of the project I Hope next second semester. This year second half will be according our word.

Ricardo Ramos: It means it's very close to the final production capacity that we estimate in this first step of the project. I hope next semester, the second half of the year, will be according to our 50,000 metric tons per year capacity. Looking forward, very positive about what's going on in the project. And, of course, because we expect to produce this close to 300,000 metric tons, that is close to 40,000 metric tons equivalent in lithium hydroxide. As we have 50% of that, it means close to 20,000 metric tons of lithium hydroxide or the equivalent. Our strategy is both.

Speaker Change: We're 50000 metric tons per year capacity that we are.

Speaker Change: Looking for we're very positive about what's going on in the project and of course, because we expect to produce this close to 300000 metric tonnes that is close to.

Speaker Change: 240000 metric tons equivalent in lithium <unk> Kim.

Speaker Change: We have 50% of that it means close to 20000 metric tons of lithium hydroxide the equivalent.

Speaker Change: This strategy is bold first to try to have some tolling in China in order to convert some of spodumene to leave fuel metric site in order to sell Lithia metric side, probably will be no more than 5000 to 7000 metric tons, we don't know yet.

Speaker Change: We will have stuck and we have inventory of the difference of spodumene in order to have more display demand when the facility that we're building in Australia in order to be discrete electric side. It will be ready that is going to be ready next year and we're going to have we're going to have these these additional these additional sportsman bar, but again, we don't.

Ricardo Ramos: First, to try to have some tolling in China in order to convert some spodumene to lithium hydroxide in order to sell it. It probably will be no more than 5,000 to 7,000 metric tons. We don't know yet, but probably we will stock and have an inventory of the different types of spodumene in order to have more spodumene when the facility that we are building in Australia in order to produce lithium hydroxide will be ready. That is going to be ready next year, and we are going to have this additional spodumene. But again, we don't expect to sell spodium into the market. It's not our business.

Speaker Change: We expect to sell us put them into their markets not our business. We if we do something is to transform and to have a toll agreement in order to transform to lithium hydroxide, but again, it's not going to be so relevant means if you consider our estimates of total volume sales for this year that a kobe is going to be close to 200000 merchants.

Speaker Change: Two two.

Speaker Change: Maybe maybe lower than that but okay close to.

Speaker Change: For this total amount 7000 is not that big but it's that's what he's going to be the first estimate and the project. The good news the projects going ahead very good.

Ricardo Ramos: If we do something, it's to transform and have a total agreement in order to transform to lithium hydroxide. But again, it's not going to be so relevant. It means if you consider our estimates of total volume sales for this year, which I hope are going to be close to 200,000 megatons, Nah, that's too high; maybe lower than that.

Speaker Change: The production quality the volume mistake, we've been the word everything is working on and we're very happy about that the second question I am not so sure what's what's worth related.

Speaker Change: Sure. Thanks for the answer actually is the second question is more about the outlook for prices right. So you mentioned that you expect prices to remain flat, while dementia grow by 20%. Rachel This is probably due to the oversupply that you guys have mentioned right. So I just wanted to understand whether most of this oversupply.

Ricardo Ramos: But okay. Close to. And for this total amount, $7,000 is not that big.

Ricardo Ramos: But that's what the first estimate is going to be. And the project, the good news, the project is going very well. The production quality, the volumes, the equipment, the work, everything is working. And we're very happy about that. The second question, I'm not so sure. What's it related to?

Speaker Change: You you expect comes from projects that were added into the end of like closer to the end of Q3 or you're also like mapping significant additions in supply for 2024, and which projects you guys are tracking for 2024 that you think could be important for us to track as well.

Ricardo Ramos: Sure, thanks for the answer. Actually, the second question is more about the outlook for prices, right? So, you mentioned that you expect prices to remain flat while dimensions grow, right? But by 20%, right?

Speaker Change: So that's one question and then the other question here about the market is regarding the cash cost curve.

Speaker Change: So how you've seen that that curve change given the new suppliers and new projects that have joined the market.

Ricardo Ramos: So, this is probably due to the oversupply that you guys have mentioned, right? So, I just wanted to understand whether most of this oversupply you expect comes from projects that were added closer to the end of 2023, or if you're also mapping significant additions in supply for 2023. And which projects are you guys tracking for 2024 that you think could be important for us to track as well? So, that's one question.

Speaker Change: In that scenario with a renewed cost curve here. If you would expect any stoppages ahead for new for older project higher cost project.

Speaker Change: The current prices remain.

That's it.

Speaker Change: At one point during third quarter, we don't want to comment on a specific projects from our competitors. We don't of course, we will have our forecast for <unk> of them and we put that on average what we estimate of the market, but we will not comment on that specifically within when project is going to go ahead or the other nowadays is good or not good whatever but again with playing before.

Speaker Change: We foresee stable prices in the short term, probably we're more optimism I'm more positive for the second half this year, yes.

Ricardo Ramos: And then the other question here about the market is regarding the cash cost curve. So, how has that curve changed given the new suppliers and new projects that have joined the market? And in that scenario with a renewed cost curve here, would you expect any stoppages ahead for older projects, higher cost projects, if the current prices remain? That's it.

Speaker Change: We are more positive, but but in the short term we are more.

Speaker Change: Stable oil price environment, there will be some announced previously announced project that everybody know some new projects are coming to the market that everyone knows there's no secrets here, we're the ones that are producing or trying to produce lithium. That's the average we put together plus we have a very strong view.

Ricardo Ramos: One point that is very important, we don't want to comment on a specific project from our competitors. Of course, we have our forecast for different ones, and we put as an average what we estimate of the market, but we will not comment on specific if we think one project is going to go ahead or the other not, it's good or not good, whatever. But again, as we explained before, we foresee stable prices in the short term. Probably, we are more optimistic about the second half of this year.

Speaker Change: You about the demand for this year and the demand in the future and at the end the cash cost I don't know see cash cost is so important in that market is growing more than 20% per year means if youre, having a market growing that big in terms of lithium.

Speaker Change: You should consider the total cost because we need new projects completely new projects every year in order to supply the demand. That's why what is important is to keep on like what is the total cost of new production coming to the market because that is relevant in order to to see what is going to be the Caribbean price of lithium carbonate and lithium hydroxide.

Ricardo Ramos: We are more positive, but in the short term, we are more stable in the price environment. There will be some previously announced projects that everybody knows, and some new projects that are coming to the market that everyone knows. There's no secret here.

Speaker Change: Okay.

Speaker Change: Perfect. Thank you.

Speaker Change: The next question comes from <unk> Perez Novoa with BTG Pactual. Please proceed.

Cesar Perez: Good morning, everyone or good afternoon.

Two questions here on your Iron market assessment, you foresee demand growth in 2024, but your volumes as you mentioned in the press release will be will be flattish. This because your your production and global market share actually increased a lot in 2023 on the.

Ricardo Ramos: We're the ones that are producing or trying to produce lithium. That's the average we put together. Plus, we have a very strong view about the demand for this year and the demand in the future. And, at the end, the cash cost. I don't think cash cost is so important in a market that is growing more than 20% per year. It means if you're having a market growing that big in terms of lithium, you should consider the total cost, because we need new projects, completely new projects every year in order to supply the demand. That's why it is important to keep an eye on what is the total cost of new production coming to the market. Because that's relevant in order to see what the equilibrium price of lithium carbonate and lithium nitrogen is going to be.

Cesar Perez: Inception of pump Atlanta, and my second question relates to the.

Cesar Perez: Sure minerals transaction, you received competition law approval earlier.

Cesar Perez: Earlier. This week can you. Please comment on the next milestones and our subsequent filings that you need to make them that market, including your your new a report on the on the transaction. Thank you.

Cesar Perez: Hi, Seth this is Juan Pablo.

Juan Pablo: Well as we explained in the past or in the call of the last quarters.

Ricardo Ramos: Perfect, thank you. The next question comes from Cesar Perez Novoa with BTG Pactual; please proceed. Good morning, everyone, or good afternoon.

Juan Pablo: Improving the capacity deny earnings really hard last year, even with a weaker.

Juan Pablo: Weaker demand than expected, we were able to bring up capacity and being able to cover the supply of our competitors that were below our expectations. So that that's why during last year, we went up and our volumes.

Operator: Two questions here. In your iodine market assessment, you foresee demand growth in 2024, but your volumes, as you mentioned in the press release, will be flat. Is this because your production and global market share actually increased a lot in 2023 on the inception of Pampa Blanca? And my second question relates to the Azure Minerals transaction.

Juan Pablo: Even the demand wind down.

Juan Pablo: We are expecting for 2024 to keep.

Juan Pablo: Our ability to keep producing with <unk>, because we have done in the past, but we may expect that.

Juan Pablo: Some of our competitors recover there their supply and that's why we're considering.

Juan Pablo: You received competition law approval earlier this week. Can you please comment on the next milestones and subsequent filings that you need to make in that market, including your new report on the transaction? Thank you. Hi Cesar, this is Juan Pablo. Well, as we explained in the past or in the call of the last quarters, improving the capacity in Ireland is really hard. Last year, even with a weaker demand than expected, we were able to bring up capacity and cover the supply of our competitors who were below our expectations. So that's why, during last year, we went up in our volumes; even the demand went down.

Juan Pablo: Flat sales, even though demand may be growing.

Juan Pablo: Since our breakout about talking about the suite of project.

Speaker Change: So do you have any further question about the hiring or go to no no. No that was that was my question actually on why volumes were flat.

Speaker Change: Thank you okay.

So there is you know this this kind of transaction in Australia are fully regulated by law and there is various specific procedures to follow we had been under the procedure. We informed the board of a suite of everything on time and the authorities on time and the next step are according what is it.

Speaker Change: In the legal procedure I don't want to comment about that in terms that there is some a.

Juan Pablo: We're expecting for 2024 to keep our ability to keep producing with Pampa Blanca, as we have done in the past, but we may expect that some of our competitors will recover their supply, and that's why we're considering... Flat sales, even though the demand may be growing. Cesar, and Ricardo talking about the Surya Project. Sorry, do you have any further questions about Iodine? Or go to the... No, no, that was actually my question, actually, about why volumes were flat.

Speaker Change: Formal process, we have to follow and we have been following the formal process and you can be sure that will inform on time.

Speaker Change: To the market when we move to the next step in the project, but we are fully committed with our partners where are we think it's a great project and we have a very good relation with henkel and together. We think we are going to have a great project, that's what I want to say now.

Speaker Change: Thank you, Okay, that's fair enough.

Ricardo Ramos: Thank you. Okay. About Asure, as you know, this kind of transaction in Australia is fully regulated by law, and there are very specific procedures to follow.

Thank you Ricardo.

Speaker Change: And at this time there are no further questioners in the queue and this does conclude our question and answer session. At this time I would like to turn the conference back to arena action over for any closing remarks.

Ricardo Ramos: We have been in the legal procedure. We informed the Board of Assure of everything on time and the authorities on time, and the next steps are according to what is in the legal procedure. So I don't want to comment on that in terms of there being some formal process we have to follow, and we have been following the formal process. You can be sure that we will inform the market on time when we move to the next step in the project. But we are fully committed with our partners. We think it's a great project, and we have a very good relationship with Hancock, and together, we think we are going to have a great project.

Arena: Thank you, Chris and thanks, everyone for joining US today, we look forward to having been in our next call have a great day and goodbye.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.

Speaker Change: Okay.

Ricardo Ramos: That's what I want to say now. Thank you. OK, that's fair enough.

Speaker Change: [music].

Irina Axenova: Thank you, Ricardo. And at this time, there are no further questioners in the queue, and this does conclude our question and answer session. At this time, I would like to turn the conference back to Irina Axenova for any closing remarks. Thank you, Chris, and thank you, everyone, for joining us today. We look forward to having you on our next call. Have a great day, and goodbye. The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect. BF-WATCH TV 2021 BF-WATCH TV 2021 BF-WATCH TV 2021, BF-WATCH TV 2021 BF-WATCH TV 2021, BF-WATCH TV 2021 BF-WATCH TV 2021

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.