Q1 2024 Sociedad Química y Minera de Chile SA Earnings Call

May 23, 2024

Yes.

Operator: Good day, and welcome to the SQM first quarter 2024 earnings conference call. All participants will be in listen-only mode.

Operator: Good day, and welcome to the SQM Q1 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal 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 star then one on your telephone keypad. To withdraw your question, please press star then two. We do ask that you limit yourself to one question and one follow-up. Please also note today's event is being recorded. I'd now like to turn the conference over to Irina Aksenova, Head of Investor Relations. Please go ahead.

Speaker Change: Good day and welcome to the two of them first quarter 'twenty 'twenty four earnings conference call.

Speaker Change: All participants will be in listen only mode.

Operator: Should you need assistance, please signal 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 star then 1 on your telephone keypad. To withdraw your question, please press star then 2. We do ask that you limit yourself to one question and one follow-up. Please also note that today's event is being recorded. I'd now like to turn the conference over to Irina Axenova, Head of Investor Relations. Please go ahead. Thank you.

Speaker Change: Should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

Speaker Change: After todays presentation, there will be an opportunity to ask questions.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Operator: To withdraw your question, please press star then two. We do ask that you limit yourself to one question and one follow-up. Please also note today's event is being recorded. I'd now like to turn the conference over to Irina Aksenova, Head of Investor Relations. Please go ahead.

Speaker Change: Your question. Please press Star then two we do ask do you want me yourself to one question and one follow up.

Speaker Change: Please also note today's event is being recorded.

Noah: I'd now like to turn the conference over to relax Noah head of Investor Relations. Please go ahead.

Irina Axenova: Thank you. Good afternoon, everyone.

Irina Aksenova: Thank you. Good afternoon, everyone. Thank you for joining SQM's earnings conference call for Q1 2024. This conference 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, where you can also find a link to the webcast. Gerardo Illanes, our Chief Financial Officer, will be speaking on the call today. Carlos Diaz, Executive Vice President of Lithium, Mark Fones, Vice President of Lithium Development and M&A, Max Real, Lithium Market Intelligence Director, Pablo Altimiras, Executive Vice President of Nitrates and Iodine, and Juan Pablo Delolio, Commercial Vice President of Iodine and Industrial Chemicals, are also available to answer any questions. Our Chief Executive Officer, Ricardo Ramos, unfortunately, couldn't join the call today.

Speaker Change: Thank you good afternoon, everyone. Thank you for joining <unk> earnings conference call for the first quarter of 'twenty 'twenty. Four this conference will be recorded and is being webcast slides our earnings press release and a presentation with a summary of the results have been uploaded to our website, where you can also find the links.

Irina Axenova: Thank you for joining SQM's earnings conference call for the first quarter of 2024. This conference will be recorded and webcast live. Our earnings press release and a presentation with a summary of the results have been uploaded to our website, where you can also find a link to the webcast. Gerardo Illanes, our Chief Financial Officer, will be speaking on the call today. Carlos Diaz, Executive Vice President of Lithium. Mark Fones, Vice President of Lithium Development at M&A.

Irina Axenova: Max Daly, Lithium Market Intelligence Director. Pablo Altimiras, Executive Vice President of Nitrates and Iodine. And Juan Pablo Bellolio, Commercial Vice President of Iodine and Industrial Chemicals, is also available to answer any questions. Our Chief Executive Officer, Ricardo Ramos, unfortunately, couldn't join the call today. Before we begin, I would like to remind you that some statements made during this conference call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses, and other financial items are considered forward-looking statements. Please note that the same cautionary language used in our press release and presentation also applies to this call. And now, I will leave you with our Chief Financial Officer, Gerardo Illanes.

Irina Aksenova: Gerardo Illanes, our Chief Financial Officer, will be speaking on the call today. Carlos Diaz, Executive Vice President of Lithium, Mark Fones, Vice President of Lithium Development and M&A, Max Real, Lithium Market Intelligence Director, Pablo Altimiras, Executive Vice President of Nitrates and Iodine, and Juan Pablo Delolio, Commercial Vice President of Iodine and Industrial Chemicals, are also available to answer any questions. Our Chief Executive Officer, Ricardo Ramos, unfortunately, couldn't join the call today.

Speaker Change: Yeah, that'd be honest, our chief financial officer will be speaking on the call today Carlos de <unk> Executive Vice President of lithium Mark Fones, Vice President of lithium development M&A, Mark Staton lithium market intelligent director Pablo on Tomatoes, executive Vice President of nitrogen iodine and Juan Pablo de La <unk> commercial Vice President of iodine industrial clinic.

I'll also available to answer any questions, our chief Executive Officer, Ricardo Ramos, Unfortunately couldn't join the call today.

Irina Aksenova: Before we begin, I would like to remind you that some statements made during this conference call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses, and other financial items are considered forward-looking statements. Please note that the same cautionary language used in our press release and presentation also applies to this call. Now I will leave you with our Chief Financial Officer, Gerardo Illanes.

Speaker Change: Before we begin I would like to remind you that some statements made during this conference call regarding our business outlook future economic performance anticipated profitability revenues expenses and other financial items are considered forward looking statements. Please note that the same cautionary language used in our press release and presentation also applies to this.

Speaker Change: And now I'm going to leave you with our Chief Financial Officer.

Gerardo Illanes: Thank you, Irina. Good afternoon, everyone, and thank you for joining us today. As you may know, we reported our Q1 2024 earnings result yesterday. On this call, we will be discussing the key drivers behind these results and sharing our outlook for the year. Our total revenues for the first three months of the year reached almost $1.1 billion, with an adjusted EBITDA of over $400 million. Our net profit was impacted by a one-time adjustment related to the accounting treatment of the lithium mining tax in Chile from previous years, adding up to almost $1.1 billion as of 31 March 2024. This is not having a significant cash impact, since the majority of this amount, close to $930 million, was paid in prior years.

Speaker Change: Thank you Irina.

Gerardo Illanes: Good afternoon, everyone, and thank you for joining us today. As you may know, we reported our first quarter 2024 earnings results yesterday. On this call, we will be discussing the key drivers behind these results and sharing our outlook for the year. Our total revenues for the first three months of the year reached almost $1.1 billion, with an adjusted EVDA of over $400 million. Our net profit was impacted by a one-time adjustment related to an adjustment related to the accounting treatment of the lithium mining tax in Chile from previous years, adding up to almost $1.1 billion as of March 31, 2024. This is not having a significant cash impact since the majority of this amount, close to $930 million, was paid in prior years.

Irina: Good afternoon, everyone and thank you for joining us today.

Irina: As you May know, we reported our first quarter 'twenty 'twenty four earnings result yesterday on this call we will be discussing the key drivers behind these results I'm sharing our outlook for the year.

Our total revenues for the first three months of the year reached almost $1.1 billion with an adjusted EBITDA of over $400 million. Our net profit was impacted by a one time adjusted related to.

Gerardo Illanes: Our net profit was impacted by a one-time adjustment related to the accounting treatment of the lithium mining tax in Chile from previous years, adding up to almost $1.1 billion as of 31 March 2024. This is not having a significant cash impact, since the majority of this amount, close to $930 million, was paid in prior years.

Irina: Adjustment related to the accounting treatment of the lithium mining tax in Chile from previous years, I think you have to almost $1.1 billion as of March 31st 2024.

Irina: D C is not having a significant cash impact excuse me a majority of this amount close to $930 million was paid in prior years.

Gerardo Illanes: During the first quarter of this year, we delivered strong growth in our sales volume across all of our major business lines, reporting record high quarterly sales volumes in the IOM business, positive sales volume, recovery in the fertilizer business, and almost 30% higher lithium sales volumes compared to the same period last year. This growth helped partially offset the impact of lower average prices realized for the first quarter of 2024. In our Nitrates and ION business unit, we are proud of the results of the ramp-up of the Pampa Blanca project, which is expected to reach approximately 1.3 thousand metric tons of new ION capacity this year.

Gerardo Illanes: During Q1 of this year, we delivered strong growth in our sales volume across all of our major business lines, reporting record high quarterly sales volumes in the iodine business, positive sales volume recovery in the fertilizer business, and almost 30% higher lithium sales volumes compared to the same period last year. This growth helped partially offset the impact of lower average prices realized for Q1 2024. In our nitrates and iodine business unit, we are proud of the results of the ramp-up of Pampa Blanca project, which is expected to reach approximately 1,300 metric tons of new iodine capacity this year. A few months ago, we began the construction of a seawater pipeline, which is expected to be completed in 2026. It is an exciting development, but it's also a challenging project.

Irina: During the first quarter of this year, we delivered strong growth in our sales volume across all of our major business lines reporting record high quarterly sales volumes in the I O M business positive sales volume recovery in the fertilizer business and almost 30% higher lithium sales volume.

Irina: Compared to the same period last year.

Gerardo Illanes: This growth helped partially offset the impact of lower average prices realized for Q1 2024. In our nitrates and iodine business unit, we are proud of the results of the ramp-up of Pampa Blanca project, which is expected to reach approximately 1,300 metric tons of new iodine capacity this year. A few months ago, we began the construction of a seawater pipeline, which is expected to be completed in 2026. It is an exciting development, but it's also a challenging project.

Irina: These growth she helped partially offset the impact of lower average prices realized for the first quarter 2024.

Irina: In our nitrates and <unk> business unit, we are proud of the results of the ramp up of bump of Logcap project, which is expected to reach approximately 1.3 thousand metric dose of new are you adding capacity this year.

Gerardo Illanes: Also, a few months ago, we began the construction of a seawater pipeline, which is expected to be completed in 2020. It is an exciting development, but it's also a challenging project, almost 38 kilometers long, with a total elevation of over 1,000 meters running from the Pacific coast near the city of Iquique to our Nueva Victoria operations.

Irina: Also a few months ago, we began the construction of a seawater pipeline, which is expected to being to be completed in 2026.

Irina: It is an exciting development, but it's also a challenging project almost 38 kilometers long with a total elevation of over 1000 meters running from the Pacific Coast near the city of <unk> through our new Iot Iot operations was completed the pipeline will have a capacity of 900 leaders there.

Gerardo Illanes: Almost 38km long with a total elevation of over 1,000m running from the Pacific Coast near the city of Iquique to our Nueva Victoria operations. Once completed, the pipeline will have a capacity of 900L per second and will allow us to expand our production capacity even further while delivering fresh water to some neighboring communities. We have seen positive demand trends in the iodine and potassium nitrate market since the beginning of the year. Our outlook is that the iodine market demand could grow by approximately 4% this year, approaching 2022 levels. Our iodine sales volumes are projected to increase in 2024 compared to last year, with an expected stable average sales price with a possibility of a slight upside.

Gerardo Illanes: Once completed, the pipeline will have a capacity of 900 liters per second and will allow us to expand our production capacity even further while delivering fresh water to some neighboring communities. We have seen positive demand trends in the iron and potassium nitrate market since the beginning of the year. Our outlook is that the IOM market demand could grow by approximately 4% this year, approaching 2022 levels. Our IIN sales volumes are projected to increase in 2024, compared to last year, with an expected stable average sales price with a possibility of a slight increase. We are similarly optimistic about the potassium nitrate market outlook, with expectations of up to a 15% growth in demand this year. Our sales volumes are also anticipated to follow a similar pattern. Potassium nitrate prices have been relatively stable over several quarters, and we believe this trend could continue for the remainder of the year.

Irina: Chicken and will allow us to expand our production capacity, even further while delivering freshwater to some neighboring communities.

Gerardo Illanes: We have seen positive demand trends in the iodine and potassium nitrate market since the beginning of the year. Our outlook is that the iodine market demand could grow by approximately 4% this year, approaching 2022 levels. Our iodine sales volumes are projected to increase in 2024 compared to last year, with an expected stable average sales price with a possibility of a slight upside.

Irina: We have seen positive demand trends VDI, you're unemployed astrium nitrogen market since the beginning of the year.

Irina: Our outlook is that the I O market demand could grow by approximately 4%. This year approaching 2022 levels. Our sales volumes are projected to increase in 'twenty 'twenty four copper.

Irina: Two last year with an expected stable average sales price with a possibility of a slight up site. We are similarly optimistic about the potassium nitrate market outlook with expectations of up to a 15% growth in the demand. This year. Our sales volumes are also anticipated to follow a similar.

Gerardo Illanes: We are similarly optimistic about the potassium nitrate market outlook, with expectations of up to a 15% growth in the demand this year. Our sales volumes are also anticipated to follow a similar pattern. Potassium nitrate prices have been relatively stable over several quarters, and we believe this trend could continue for the remainder of the year. In the lithium business unit, having completed expansion of our lithium carbonate capacity in Chile to 210,000 metric tons, we're now focusing on a series of initiatives that should allow us to increase this capacity to 240,000 metric tons by the end of the year. Mainly through process improvements, increased quality, and efficiency of existing production facilities.

Irina: Similar pattern.

Irina: Potassium nitrate prices have been relatively stable over several quarters and we believe these trends could continue for the remainder of the year.

Gerardo Illanes: In the lithium business unit, having completed the expansion of our lithium carbonate capacity in Chile to 210,000 metric tons, we're now focusing on a series of initiatives that should allow us to increase this capacity to 240,000 metric tons by the end of the year, mainly through process improvements, increased quality, and efficiency of existing production facilities. Our lithium hydroxide capacity in Chile has reached 40,000 metric tons per year, and we expect to complete this expansion to reach 100,000 metric tons per year by 2025.

Gerardo Illanes: In the lithium business unit, having completed expansion of our lithium carbonate capacity in Chile to 210,000 metric tons, we're now focusing on a series of initiatives that should allow us to increase this capacity to 240,000 metric tons by the end of the year. Mainly through process improvements, increased quality, and efficiency of existing production facilities.

Irina: In the lithium business unit, having completed the expansion of our lithium carbonate capacity in Chile to 210000 metric dose. We're now focusing on a series of initiatives that you allow us to increase the capacity to 240000 metric dose by the end of the year, mainly through process improvements increased.

Irina: Quality.

Irina: <unk> C of existing production facilities, our lithium hydroxide capacity in Chile has reached 40000 metric goes for a year and we expect to complete this expansion to reach 100000 metric tons per year during 2025.

Gerardo Illanes: Our lithium hydroxide capacity in Chile has reached 40,000 metric tons per year, and we expect to complete this expansion to reach 100,000 metric tons per year during 2025. In China, we completed the modification of the Dixin lithium hydroxide conversion facility with a total capacity of 20,000 metric tons per year. This project represents years of innovation and development of a chemical facility to refine lithium sulfate produced in the Salar de Atacama to battery-grade lithium hydroxide. At the same time, we have reached agreements to total approximately 20,000 metric tons of lithium sulfate coming from the Salar de Atacama into lithium hydroxide in China. All of this, together with the initiatives we're working on in Australia, should let us reach a total production capacity of more than 300,000 metric tons of lithium products by the end of 2025.

Gerardo Illanes: In China, we completed the modification of the Dixim lithium hydroxide conversion facility with a total capacity of 20,000 metric tons per year. This project represents years of innovation and development of a chemical facility to refine lithium sulfate produced in Salar de la Cama into battery grade lithium hydroxide. At the same time, we have reached agreements to toll approximately 20,000 metric tons of lithium sulfate coming from Salara-La Cama into lithium hydroxide in China.

Irina: In China, we completed the modification of the <unk> lithium hydroxide conversion facility with a total capacity of 20000 metric tons per year destroy represent years of innovation and developmental Jamie Kubik, a facility to refined lithium sulfate reduce in the fan out of their gamma to battery grade.

Gerardo Illanes: At the same time, we have reached agreements to total approximately 20,000 metric tons of lithium sulfate coming from the Salar de Atacama into lithium hydroxide in China. All of this, together with the initiatives we're working on in Australia, should let us reach a total production capacity of more than 300,000 metric tons of lithium products by the end of 2025.

Irina: Hume hydroxide.

Irina: At the same time, we have reached agreements to total approximately 20000 metric dose of lithium sulfate coming from there's a lot of the gamma into lithium hydroxide in China. All of these together with the initiatives. We're working on in Australia should let us reach a total production capacity of more than 300000 metric dose of leaf.

Gerardo Illanes: All of this, together with the initiatives we're working on in Australia, should let us reach a total production capacity of more than 300,000 metric tons of lithium products by the end of 2024. Turning to the broader lithium market, we have observed some encouraging trends during the first month of this year.

Irina: New products by the end of 2025.

Gerardo Illanes: Strong demand growth has been driven by the Electric Demand Market, mainly in China, which accounts for almost 75% of global lithium demand. We anticipate that total EV sales could reach 17 million units by 2024, representing a 22% increase from 2023, and total lithium demand could exceed 1.1 million tons in 2024, representing a 20% increase compared to the previous year. Given this demand growth, we have anticipated our sales volumes outlook for this year, expecting to sell close to 200,000 metric tons.

Gerardo Illanes: Turning to broader lithium markets, we have observed some encouraging trends during the first month of this year. Strong demand growth has been driven by EV demand market, mainly in China, which accounts for almost 75% of global lithium demand. We anticipate that the total EV sales could reach 17 million units by 2024, representing a 22% increase from 2023, and total lithium demand could exceed 1.1 million tons in 2024, representing a 20% increase compared to the previous year. Given this demand growth, we have anticipated our sales volumes outlook for this year, expecting to sell close to 200,000 metric tons. The expected growth in global lithium supply this year could be up to 30% compared to 2023.

Irina: Turning to broader lithium market, we have observed some encouraging trends during the first months of this year strong demand and growth have been driven by.

Irina: By electric demand market, mainly in China, which accounts for almost 75% of global lithium demand, we anticipate that the total EV sales could reach 17 million units by 2024, representing a 22% increase from 2023.

Irina: Total lithium demand could exceed 1.1 million tons in 2024, representing a 20% increase compared to the previous year.

Gerardo Illanes: Given this demand growth, we have anticipated our sales volumes outlook for this year, expecting to sell close to 200,000 metric tons. The expected growth in global lithium supply this year could be up to 30% compared to 2023.

Speaker Change: Giving Disney mind growth, we have anticipated our cells volumes outlook for this year expecting to sell close to 200000 metric dose.

Gerardo Illanes: Defective Girls in Global Lithium Supply This Year could be up to 30% compared to 2023. However, given current lithium prices, the affected supply from high-cost producers could be affected, providing some price stability, as has been seen since February this year. Before concluding and opening the line for questions, I would like to ask Mark to share with us some of the recent developments in our lithium initiatives abroad.

Speaker Change: The expected growth in global lithium supply this year.

Speaker Change: It could be up to 30% compared to 2023, however, given current lithium prices the expected supply from high cost producers could be affected providing some price stability as has been seen since February of this year.

Gerardo Illanes: However, given current lithium prices, the expected supply from high-cost producers could be affected, providing some price stability, as has been seen since February this year. Before concluding and opening the line for questions, I would like to ask Mark to share with us some of the recent developments in our lithium initiatives abroad.

Speaker Change: Before concluding on opening the line for questions I would like to ask Mark to share with us some of the recent developments in our lithium initiative zebra.

Speaker Change: Yeah.

Mark Fones: Thank you, Gerardo. Good afternoon, everyone. From an Australian and international lithium perspective, for SQM, it has been a very eventful and exciting start to 2024, with spodumene concentrate production commencing at the world-class Mount Holland lithium project, jointly owned with our partner Wesfarmers, and the completion of the Azure Minerals acquisition with Hancock Prospecting. We're very fortunate to now have access to two globally significant lithium deposits, which we are progressing with two equally significant Australian partners, Wesfarmers and Hancock Prospecting. Moving first to Mount Holland. Last year, we commenced production at the newly constructed mine and concentrator facilities, exporting our first shipment of spodumene concentrate this month to be processed in China.

Mark: Thank you.

Speaker Change: Good afternoon, everyone from.

Mark Fones: From an Australian and international living perspective, Forest Kierman has been a very eventful and exciting start to 2024, with Spodumene Concentrate Production commencing at the world-class Mount Holland Ethan Project, jointly owned with our partner, West Farmers, and the completion of the Azure Minerals acquisition with Hancock.

Speaker Change: From an Australian and international even perspective, whereas Jamie has been a very eventful and exciting start to trend even before.

Mark: With spodumene concentrate production commencing in the World class Mount Holland Lithium project jointly owned with our partner with farmers and the completion of the Azure minerals acquisition with Henkel perspective.

Mark Fones: We're very fortunate to now have access to two globally significant lithium deposits, which we are progressing with two equally significant Australian partners, Wesfarmers and Hancock Prospecting. Moving first to Mount Holland. Last year, we commenced production at the newly constructed mine and concentrator facilities, exporting our first shipment of spodumene concentrate this month to be processed in China.

Mark Fones: They are very fortunate to now have access to two globally significant lithium deposits, which we are progressing with two equally significant Australian partners, West Farmers and Hancock Crossroads. Moving first to Monholland, last year we commenced production at the newly constructed mine and concentrated facility. Exporting our first shipment of Spodumene Concentrate this month, to be told, to China. During this calendar year, we expect to produce a total of between 120,000 and 150,000 metric tons of sodium concentrate.

Mark: We're very fortunate to now have access to two globally significantly time deposits, which we are progressing with two equally significant Australian partners with farmers and Hancock prospecting.

Mark: Moving first to Monhollen left ear, we commenced production at the newly constructed mine and concentrator facilities.

Sporting our first shipment of spodumene concentrate this month to be told in China.

Mark Fones: During this calendar year, we expect to produce a total of between 120,000 and 150,000 metric tons of spodumene concentrate, that's SQM's share, and a total close to 5,000 metric tons of lithium hydroxide. However, given the timing of tolling and quality certification requirements, we do not anticipate seeing these volumes on the market until the end of the year. In the meantime, work continues on the Kwinana Refinery, with construction of our 50,000 tons per year facility at about 75% to 80% complete and expected to be in production by mid next year, following commissioning later this year. We'll keep progressing with studies and environmental approvals for the Mount Holland mine and concentrator expansion, which would effectively see Mount Holland doubling its spodumene concentrate production facility after FID is taken.

Mark: During this calendar year, we expect to produce a total of between 120 and 150000 metric tonnes of spodumene concentrate that is kim's share and total close to 5000 metric tons of Piedmont Brookside. However.

Mark Fones: SQM's Chair, and to talk about close to 5,000 metric tons of plethyma drugs. However, given the timing of tolling and quality certification requirements, we do not anticipate seeing these volumes on the market until the end of the year.

Mark: However, given the timing of tolling and quantity of certification requirements. We do not anticipate seeing these volumes on the market until the end of the year.

Mark Fones: In the meantime, work continues on the Quinana Refinery, with construction of our 50,000 tons per year facility at about 75 to 80 percent complete and expected to be in production by mid-next. Following commission later this year, we keep progressing with studies and environmental approvals for the Mount Holden Mine and Concentrator Expansion, which would effectively see Monhoenland doubling its Ottoman Concentrate Production Facility, after FIDs. Moving now to the recent acquisition of Azure, which owns 60% of the Andover Lithium project in Western Australia, also concludes this month.

Mark: In the meantime, we're continuously on the Quintana refinery with construction of our 50000 tons per year facility and about 75% to 80% complete and expected to be in production by mid next year.

Mark: On a linked commission later this year.

Mark Fones: We'll keep progressing with studies and environmental approvals for the Mount Holland mine and concentrator expansion, which would effectively see Mount Holland doubling its spodumene concentrate production facility after FID is taken.

Mark: We keep progressing with studies and environmental approvals for the Mount Holland mine and concentrator expansion, which you would effectively see monhollen doubling its spodumene concentrate production facility.

Mark: After if I'd he's taken.

Mark Fones: Moving now to the recent acquisition of Azure, which owns 60% of the Andover Lithium project in Western Australia, also concluded this month. Together with Hancock Prospecting, we acquired all the outstanding shares of Azure Minerals Limited and jointly became owners of 60% of the Andover Lithium project. This significant investment by SQM further highlights our belief in Western Australia as one of the world's preeminent hard rock lithium mining jurisdictions. We're extremely happy with this acquisition and with our new partner, Hancock, who will provide excellent project development and mining expertise in Australia to complement SQM's market-leading lithium knowledge. We believe our business model of partnering with great local companies to discover and develop tier one lithium assets places SQM in a prominent position in the global hard rock lithium market.

Mark: Moving now to the recent acquisition of Azure, which owns 60% of the Andover lithium project in Western Australia also conclude this month.

Mark Fones: Together with Hancock Prospecting, we acquired all outstanding shares of Azur Minerals Ltd. and jointly became owners of 60% of the Andover Lithium project. This significant investment by SQM further highlights our belief in Western Australia as one of the world's prominent hard rock lithium mining jurisdictions. We're extremely happy with this acquisition and with our new partner, Hancock, who will provide excellent project development and mining expertise in Australia to complement SKM's market-leading lithium knowledge.

Mark: Together with Hanko prospecting, we acquired all outstanding shares of Azure minerals limited and jointly became owners of 60% of the Andover lithium project.

Mark: This significant investment by asking further highlights our belief in western Australia as one of the world's preeminent hard rock lithium mining jurisdictions.

Mark Fones: We're extremely happy with this acquisition and with our new partner, Hancock, who will provide excellent project development and mining expertise in Australia to complement SQM's market-leading lithium knowledge. We believe our business model of partnering with great local companies to discover and develop tier one lithium assets places SQM in a prominent position in the global hard rock lithium market.

Mark: We're extremely happy with this acquisition and with our new partner Henkel, who.

Mark: Who will provide excellent training development and mining expertise in Australia to complement as Kevin's market, leading Eaton knowledge.

Mark Fones: We believe our business model of partnering with great local companies to discover and develop tier one lithium places SQM in a prominent position in the global hard rock little market. In 2024, we will continue to work on the good work that Azure has done and work towards a resource estimate for the UNDOER project, as well as providing additional capabilities, continue with studies and regulatory approvals, as well as Project Definition and Project Development.

Mark: We believe our business model of partnering with great local companies to discover and develop tier one lithium assets places us squarely in a prominent position in the global hard rock little market.

Mark Fones: In 2024, we will continue the good work that Azure Minerals has done and work towards a resource estimate for the Andover project, as well as providing additional capabilities, continue with studies and regulatory approvals activities, as well as project definition and project development. While work still needs to be done to finalize this resource estimate, we're certainly looking at a deposit of global significance. Outside of these two major projects, as you may have seen in our public announcements, we continue to work on, monitor, and invest in various early-stage exploration projects in Australia with the aim to finding new high-grade lithium prospects with the potential for scale.

Mark: In 'twenty 'twenty four we will continue to work the good work that Azure has done.

Mark: And work towards a resource estimate for <unk> printing as well as providing additional capabilities continue with studies and regulatory approvals activities as well as point of definition and trade developments.

Mark: While work still needs to be done to finalize these resource estimate we're certainly looking at the deposit of global significance.

Mark Fones: Outside of these two major projects, as you may have seen in our public announcements, we continue to work on, monitor, and invest in various early-stage exploration projects in Australia with the aim to finding new high-grade lithium prospects with the potential for scale.

Mark Fones: While work still needs to be done to finalize this resource estimate, we are certainly looking at a deposit of global significance. Outside of these two major projects, as you may have seen in our public announcements, we continue to work on, monitor, and invest in various early-stage exploration projects in Australia, with the aim of finding new high-grade lithium prospects with the potential

Mark: Outside of these two major projects as you may have seen in our public announcements, we continue to work on monitor and investing various early stage exploration breaks in Australia with the aim to finding new high greatly impressed with the potential for scale.

Irina Axenova: Thank you, Mark. Operator, we will now open the lines to questions.

Irina Aksenova: Thank you, Mark. Operator, we will now open the lines to questions.

Speaker Change: Thank you Mark.

Speaker Change: On the radio we will now open the lines to questions.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the key.

Speaker Change: Yeah.

Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. We also ask that you please limit yourself to one question and one follow-up. Today's first question comes from Ben Isaacson with Scotiabank. Please go ahead.

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

Speaker Change: If you're using a speaker phone.

Speaker Change: Please pickup your handset before pressing the keys.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. We also ask that you please limit yourself to one question and one follow-up. Today's first question comes from Ben Isaacson with Scotiabank. Please go ahead. Thank you very much and good morning, everyone.

Speaker Change: In the meantime, your question has been addressed you later.

Speaker Change: Your question. Please press Star then two.

Speaker Change: We also ask you please limit yourself to one question and one follow up.

Today's first question comes from Ben Isaacson with Scotiabank. Please go ahead.

Ben Isaacson: First question is, I noticed in your presentation that the plant in China in Sichuan has actually increased by 10,000 tons. It was 30,000 last quarter, and now it's 40,000. Can you just explain that, please?

Ben Isaacson: Thank you very much and good morning everyone. I have three questions. I'd like to ask them one by one, if that's okay.

Ben Isaacson: Thank you very much, and good morning, everyone. I have three questions. I'd like to ask them one by one, if that's okay. First question is, I noticed in your presentation that the plant in China in Sichuan, it's actually increased by 10,000 tons. It was 30,000 last quarter, and now it's 40,000. Can you just explain that, please?

Ben Isaacson: Thank you very much and good morning, everyone. So.

Ben Isaacson: So I have three questions I'd like to ask them one by one if that's okay. First question is I noticed in your presentation that the plant in China in Sichuan adoption. It's increased by 10000 tons. It was 30000 last quarter and now it's 40000 can you just explain that please.

Carlos Diaz: Hi. Oh, sorry. Hi, Ben. This is Carlos Diaz. Our capacity in China is 20,000 metric tons in the Sichuan Dixin plant. The other 20,000 we are gonna produce it all starting from lithium sulfate, but with toller. In total, it's gonna be 40,000, but 20 for our own factory and the other 20 for tollers.

Speaker Change: Uh huh.

Carlos Diaz Ortiz: Sorry, hi Ben, this is Carlos Diaz. Yeah, our capacity in China is 20,000 metric tons at the Sichuan Dixin plant, and the other 20,000 we are going to produce starting from lithium sulfate but with a toller. So, in total, it's going to be 40,000, but 20 for our own factory and the other 20 for toller. That's great, thank you. But both are coming from a different surface; sorry. Yeah, yeah.

Carlos: Oh, sorry, Hi, Brian This is Carlos.

Speaker Change: Yeah, all of our capacity in China is $20 a metric ton in the Sichuan machine plant and the other 20 doses. We're gonna produces it all starts.

Speaker Change: Starting from the lithium sulfate ER by with taller. So in total it's going to be 40000 about 24 hour one come factory under 20 for Portola.

Ben Isaacson: That's great. Thank you.

Speaker Change: That's great. Thank you bye broker are coming from the surface ore.

Carlos Diaz: Both are coming from lithium sulfate. Sorry.

Ben Isaacson: Yeah, yeah, right. The second question is on the Azure acquisition. So, you have a 50% stake in 60% of Andover, if that's right. Can you just talk about what the next steps are for the project over the next 12 months or so, CapEx spending, and what should we expect to hear from you over the next year?

Ben Isaacson: Yeah. Right. Second question is on the Azure acquisition. You have a 50% stake in 60% of Andover, if that's right. Can you just talk about what next steps are for the project over the next 12 months or so, CapEx spending, and what should we expect to hear from you over the next year?

Speaker Change: Yeah, Yeah right second question is on the <unk> acquisition. So you.

Speaker Change: You have a 50% stake in 60% of Andover, if if if.

Speaker Change: That's right can you just talk about what next steps are for the project over the next 12 months or so our capex spending and what should we expect to hear from you over the next year.

Mark Fones: Thanks for the question, Joe. Yes, you're right on the math on the acquisition of the Andover lithium project. It's 50% of the 60%. Regarding next steps, as I mentioned, we are now aimed at three main things: a resource maiden estimate, driving more detail into what was already advanced by the Azure team. As you know, Azure issued an exploration target, which was a definition in between 100 to 240 million tons of mineral at between 1% to 1.5% lithium oxide content. The maiden resource estimate will give us a more detailed view on that.

Mark Fones: Thanks for the question, Joe. Yes, you're right on the math on the acquisition of the at the end and over a little break is 50% of the So regarding next steps, as I mentioned, we are now aiming at three main things is a resource made an estimate. Driving more detail into what was already advanced by the Azure team, as you know, Azure issued an exploration target, which was a definition of between 100 to 240 million tons of mineral at between 1 to 1.5% lithium oxide content.

Speaker Change: Thanks for the question, Joe, Yes, Youre right on there on the math on the acquisition of the at the end and overly can predict is 50% of the 60%.

Speaker Change: So regarding next steps as I mentioned, we are now in aim in three main things is a resource made an estimate.

Speaker Change: In.

Speaker Change: Driving more detail into what was already advanced by the Azure team as you know as we were issued an exploration target.

Speaker Change: Which was our next match.

Speaker Change: The finishing in between 100 to 240 million tons of mineral at between one to one 5% lithium oxide content.

Mark Fones: So, the maiden resource estimate will give us a more detailed view of that. At the same time, we are advancing on regulatory approvals, which usually, in this case of capital investments in the resource industry, a critical path is aimed at those regulatory approvals. So, we are advancing on those, as well as starting a pre-definition with our partner, Hancock. So, for the future and the short-term future, you won't see any capital requirements driving from Azure in the next steps of development until we move into DFS and FID. Great, thank you. And just one final question.

Speaker Change: Yeah. So the maiden resource estimate will give us a more detailed view on that at the same time, we are advancing on regulatory approvals, which usually in this case of Canada, having their own investments in the resource industry critical path is aim then to those regulatory approvals. So we are advancing on those and as little as a starting point.

Mark Fones: At the same time, we are advancing on regulatory approvals, which usually, in this case of capital investments in the resource industry, a critical path is aimed on to those regulatory approvals. We are advancing on those, as well as starting pre-definition with our partner, Hancock. For the future and the short term future, you won't see any capital requirements driving from Azure in next steps of development yet, until we move into the DFFs and FID.

Speaker Change: Finishing with our partner Hanko, so for the future in the short term future you won't see any covenant requirements driving from Azure in next steps of development, yet until we move into the offense and if any.

Ben Isaacson: Great, thank you. And just one final question on the iodine market. So the price was around $70 or so, and it's kind of slipped back a little bit to the mid-60s. Now it looks like things are strengthening again. Can you just give an overview as to where we are going over the next two or three years? It seems like there's not a lot of supply coming on. And demand growth remains really resilient, even in a weak kind of macro market. So will this tightness continue over the next couple of years? Thank you

Ben Isaacson: Great. Thank you. Just my final question in the iodine market. The price was around $70 or so, and it's kind of, it's slipped back a little bit down to the mid-60s. Now it looks like things are strengthening again. Can you just give an overview as to where are we going over the next two or three years? It seems like there's not a lot of supply coming on, and demand growth remains really resilient, even in a weak kind of macro market. Does this tightness continue over the next couple of years? Thank you.

Speaker Change: Great. Thank you and just my final question in the iodine market. So the price was around $70 or so and it kind of slipped back a little bit down to the mid sixties now it looks like things are strengthening again.

Speaker Change: Can you just give an overview as to where are we going over the next two or three years. It seems like theres not a lot of supply coming on and demand growth remains really resilient even in a weak kind of macro market. So does this tightness continue over the next couple of years. Thank you.

Juan Pablo Bellolio: Hi Ben, this is Juan Pablo. Well, talking about the airline market. As we mentioned in our release, we are seeing a recovery in demand compared to last year, when it went down about 4%.

Juan Pablo Delolio: Hi, Ben. This is Juan Pablo. Well, talking about the iodine market, as we mentioned in our release, we are seeing a recovery in the demand compared to last year. Last year went down about 4%. Now we're looking at it growing again this year. That's why we believe the price is gonna stabilize. Talking about the next two to three years, the drivers of the demand are still the growth of the contrast media industry, the LCD market, and other health purposes of the iodine. So we see that demand growing, maybe not at the 4% that we are gonna see this year, but you know, still growing. At the same time, we expect that new supply may arrive to the market.

Juan Pablo De-Lolio: Hi, Ben. This is Juan Pablo. Well, talking about the iodine market, as we mentioned in our release, we are seeing a recovery in the demand compared to last year. Last year went down about 4%. Now we're looking at it growing again this year. That's why we believe the price is gonna stabilize.

Speaker Change: Hi, Ben This is Juan Pablo.

Speaker Change: Well talking about the iodine market.

Speaker Change: As we mentioned in nowhere release, we are seeing a recovery in demand compared to last year last year when went down about 4% now we're looking at growing again. This year. That's why we believe that prices are going to stabilize.

Juan Pablo Bellolio: Now we're looking at growing again this year. That's why we believe the price is going to stabilize. I'm talking about the next two to three years. The drivers of the demand are still the growth of the contrast media industry, the LCD market, and other healthy purposes of the island. So we see that demand growing, maybe not at the 4% that we are going to see this year, but, you know, still growing.

Juan Pablo De-Lolio: Talking about the next two to three years, the drivers of the demand are still the growth of the contrast media industry, the LCD market, and other health purposes of the iodine. So we see that demand growing, maybe not at the 4% that we are gonna see this year, but you know, still growing. At the same time, we expect that new supply may arrive to the market.

Speaker Change: And talking about the next two to three years.

Speaker Change: The drivers of the demand or is still the growth of the contrast media industry the LCD market.

Speaker Change: They're healthy purpose of the airlines do we see that demand growing and maybe now that the 4% that we are going to see this year, but.

Speaker Change: But it's still growing and at the same time, we expect the new supply may arrive to the market. We know that some competitors ups has made some.

Juan Pablo Bellolio: And at the same time, we expect that a new supply may arrive on the market. We know that some competitors have made some major acquisitions for all projects that should be online in the next couple of years.

Mark Fones: We know that some competitors have made some moves, those acquisitions for all projects that should be online in the next couple of years. Okay?

Juan Pablo De-Lolio: We know that some competitors have made some moves, those acquisitions for all projects that should be online in the next couple of years. Okay?

Speaker Change: The move those acquisitions for all projects that should be online.

Speaker Change: In the next couple of years Okay.

Speaker Change:

Ben Isaacson: Great. Thanks again.

Speaker Change: Great. Thanks again.

Operator: Thank you. And our next question today comes from Joel Jackson with BMO Capital Markets. Please go ahead. Hi, good morning.

Operator: Thank you. Our next question today comes from Joel Jackson with BMO Capital Markets. Please go ahead.

Speaker Change: Thank you and our next question today comes from Joel Jackson with BMO capital markets. Please go ahead.

Joel Jackson: Hi, good morning. I also have three questions. I'll do one at a time.

Joel Jackson: Hi. Good morning. I also have three questions. I'll do one at a time. First question is, it was very clear a few months ago. It's happened before the SQM that you were gonna produce a bunch of lithium. The market may not be able to take it, and you would build inventory, have the tons for later, which is you do that for a lot of reasons. Usually what happens is you sell the tons anyways. The decision not to build inventory or as much inventory in a lithium price market that has been pretty flat the last few months. Explain that decision commercially. Is that a view you'd expect lithium price to be very stable here, and so no point to hold inventory back?

Joel Jackson: Hi, Good morning also three questions I'll do one at a time.

Joel Jackson: First question is he was very clear a few months ago. It's happened before that stream that you were going to produce a bunch of lithium.

Joel Jackson: Very clear a few months ago, it happened before that scram, that you were going to produce a bunch of lithium. The market may not be able to take it, and you would build inventory, add the tons for later, which you do for a lot of reasons, but usually, what happens is you sell the tons anyway. So the decision not to build inventory or as much inventory into a lithium price market that has been pretty flat the last few months. Does that explain that decision commercially? Is that a view you expect the lithium price to be very stable here? And so there's no point in holding them back, holding inventory back.

Joel Jackson: The market may not be able to take it and you would build inventory at the tons for later, which as you do that for a lot of reasons, but usually what happens is you sell the times anyways. So the decision not to build inventory or as much inventory intra lithium price market has been pretty flat. The last few months is that explained that decision commercially is that or do you expect lithium prices.

Joel Jackson: Usually what happens is you sell the tons anyways. The decision not to build inventory or as much inventory in a lithium price market that has been pretty flat the last few months. Explain that decision commercially. Is that a view you'd expect lithium price to be very stable here, and so no point to hold inventory back?

Joel Jackson: Very stable here and so no point to hold them back hold inventory back.

Joel Jackson: Yeah.

Carlos Diaz Ortiz: Hi y'all, this is Carlos Diaz again and... Well, as always, our strategy is to produce at full capacity and expand in line with the expected market growth in order to be always prepared to serve the needs of our customers. You know that the Lidl price hit a low level in China by the end of February 24. After we observed a quick recovery of almost 10% until mid-April, and for several weeks after that, price fluctuations were quite moderate, potentially indicating more stability for the rest of the year. So the outlook for the rest of the year will depend, as always, on the supply and demand balance. OK, you talk about capacity.

Carlos Diaz: Hi. Hi, Joel. This is Carlos Diaz again. Well, as always, our strategy is to produce at the full capacity and expanding in line with the expected market growth in order to be always prepared to serve the need of our customer. You know that, lithium price hit bottom level in China by the end of February 2024. After which we observed a quick recovery, of almost 10% until mid-April. For several weeks after that, price fluctuations were quite moderate, potentially indicating more stability for the rest of the year. The outlook for the rest of the year will depend, as always, on the supply and demand balance.

Joel Jackson: Hi.

Carlos This again.

Speaker Change: Well as always our scrubbed it is to reduce at the full capacity and expanding in line with the expected market World.

Speaker Change: In order to be always prepared to serve the need or customer doing denoted in lithium Brian hit bottom level in China by the end of February 24.

Speaker Change: After we wish we absorb it a quick recovery of almost 10% to mid April and for several week after that.

Carlos Diaz: For several weeks after that, price fluctuations were quite moderate, potentially indicating more stability for the rest of the year. The outlook for the rest of the year will depend, as always, on the supply and demand balance.

Speaker Change: Price realization were quite moderate.

Speaker Change: Potentially indicating more stability for the rest of the year.

Speaker Change: So the outlook for the rest of the year will depend as always so in this way all of them on balance.

Speaker Change: Yeah.

Joel Jackson: Okay. You talk about capacity reaching 300,000 tons at the end of 2025. Let's call that a production level for 2026 if you choose to produce that full utilization, as you just mentioned. If you can hit capacity of 305,000 tons at the end of 2025, and you were to run full out, what does that mean for actual production volume in 2025? Obviously, 305,000 tons is the capacity at the end of the year.

Joel Jackson: Okay. You talk about capacity reaching 300,000 tonnes at the end of 2025. Let's call that a production level for 2026 if you choose to produce at full utilization, as you just mentioned. If you can hit a capacity of 305,000 tonnes at the end of 2025, and you were to run full out, what does that mean for actual production volumes in 2025? Obviously, 305,000 tonnes is the capacity at the end of the year.

Speaker Change: Okay.

Speaker Change: When you talk about capacity, reaching 300000 tons at the end of 2025, let's call that a production level for 2026 would you choose to produce at full utilization as you just mentioned.

Speaker Change: If you can hit capacity of 305000 tons at the end of 2025, and you and you were to run full out what does that mean for actual production volume in 2025.

Speaker Change: 305000 times is the capacity at the end of the year.

Carlos Diaz Ortiz: Well, this year we expect to produce around 210,000. That is according to our capacity in Chile that was mentioned by Gerardo and the capacity that we have in China and additionally in Australia. But for next year, we're still reviewing what was announced. It was 250 this year, 240 in Chile, sorry, and... [inaudible] Administration.

Carlos Diaz: Well, this year we expect to produce around 210,000. That is, according to our capacity in Chile, where it was mentioned by Gerardo and the capacity that we have in China and additionally in Australia. Next year we're

Speaker Change: While this did this year with book to produce around 210000 bodies. According to our capacity in Chile.

Speaker Change: Well, we're worried was mentioned by anybody sit idly on the capacity that we were having in China. Additionally in Australia.

Speaker Change: But a mixture where we'll still are reviewing data about where what we've wassa mounts ended with 215. This year was 214 into this Oreo.

Gerardo Illanes: Still, reviewing that, about what was announced, it was 250 this year. There was 240 in Chile, sorry, and 40,000 in China, so 280 next year. But that is gonna be the capacity. Yeah. That is gonna be the capacity and 315 in the year 2025. How much we're gonna produce, well, we have to see obviously how the market is, how the customer need and so on. But I will always expect to sell according to our capacity. I mean, it should be close to that.

Carlos Diaz: Still, reviewing that, about what was announced, it was 250 this year. There was 240 in Chile, sorry, and 40,000 in China, so 280 next year. But that is gonna be the capacity. Yeah. That is gonna be the capacity and 315 in the year 2025. How much we're gonna produce, well, we have to see obviously how the market is, how the customer need and so on. But I will always expect to sell according to our capacity. I mean, it should be close to that.

Speaker Change: 40000 names in China saw 228, the next year, but that is going to be the material capacity, yeah, now theres going to be there the capacity to 210, a M fighting in the 25.

Speaker Change: How much were going to reduce well, we'll have to see always with you.

Speaker Change: It might be and how the customer need and so on but I will always respect to to say that according to our capacity I mean.

It should be close to that.

Joel Jackson: Okay, my last question has to be, oh, sorry. My last question has to be asked. It's kind of a two part question.

Joel Jackson: Okay. My last question has to be asked. It's kind of two-part. What is the last sticking point on finalizing this MOU with Codelco, which you said is gonna happen within a week here, end of May. Then, you know, Gerardo and team, how concerned are you know, that Tianqi is gonna use its legal options to force a shareholder vote. Then are you preparing for the potential that if in a complicated and complex outcome that you will get their Tianqi stake put it to you, how are you preparing to possibly handle this financially?

Speaker Change: Okay. My last question has to be Oh, sorry.

Joel Jackson: So what is the last sticking point on finalizing this MOU with Koudelka, which you said is going to happen within a week here, end of May? And then, you know, Gerardo and team, how concerned are you that Tianchi is going to use its legal options to force a shareholder vote? And then are you preparing for the potential that, in a complicated and complex outcome, you will get their Tianchi stake put it to you? How are you preparing to possibly handle this financial?

Speaker Change: My My last question it has to be asked.

Speaker Change: It's kind of a two part so what is the last sticking points on finalizing this Mou with Codelco, which you said was going to happen within a week here end of May and then Colorado and team how concerned argue that xi'an, she's going to lead us use it legal options to force. This shareholder vote and then are you prepare.

Speaker Change: Going for the opportunity potential that if in a complicated and complex outcome that you will get there dianchi stake put it to you how are you preparing to possibly handle there financially.

Joel Jackson: Hey, y'all. How are you?

Gerardo Illanes: Hey, Yo. How are you? This is Gerardo. As you can imagine, the deal with Codelco is quite a complicated deal with a lot of details, and we have been working really hard to meet the deadline. Last year, we had the deadline to issue something by the end of the year. At the end of December, we issued this MOU. Now we're working to make sure we have all the contracts finalized by the end of the month, and we keep on working on that. There is no particular sticking point as you ask. It's just that it's a complicated transaction.

Joe: Hey, Joe how are you just get out of them as you can imagine they deal with codelco is quite a complicated deal with a lot of details.

Gerardo Illanes: This is Gerardo. As you can imagine, the deal with Codelco is quite a complicated deal with a lot of details. And we have been working really, really hard to meet a deadline. Last year, we had a deadline to issue something by the end of the year. And at the end of December, we issued this MOU. Now we're working to make sure we have all the contracts finalized by the end of the month, and we keep on working on that. There is no particular sticking point, as you ask. It's just that it's complicated.

Joe: And we have been working really really hard to to meet the deadline.

Joe: Last year, we had the deadline to two two to two issues something by the end of the year and at the end of December we issue. These Mou.

Joe: And now we're working to make sure we have all the contracts finalized.

Joe: By the end of the balls at which you've been working on that there is no particular sticking point as you as you ask is just that is a complicated transaction.

Joe: Okay.

Joel Jackson: Now that Tianqi shareholders have voted, are you preparing financially to be able to protect yourself in the chance that, in a very complicated legal situation, Tianqi puts its shares to you?

Joel Jackson: Now, the Tianqi shareholder vote, are you preparing financially to be able to have to protect yourselves in the chance that in a very complicated legal situation, Tianqi puts its shares to you?

Speaker Change: Now the cianci shareholder vote are you preparing financially to be able to help you with.

Speaker Change: <unk> thousand and the chance that in a very complicated legal situation.

Speaker Change: She puts its shares to you.

Speaker Change: Okay.

Gerardo Illanes: I mean, the transaction, as it was asked for at the beginning of this year by the CMF, has to be approved by the board, and we're planning that it will happen this way. And then, once the contracts are signed, we will proceed with all the details to have the JV ready by the beginning of next year, but we're not planning for anything else, as the process should go as the regulator instructed.

Gerardo Illanes: I mean, the transaction as it was asked at the beginning of this year to the CMF has to be approved by the board. We're planning that it will happen this way. Once the contracts are signed, we will proceed with all the details to have the JV ready by the beginning of next year. We're not planning for anything else as the process should go as the regulator instructed.

Speaker Change: I mean, the the transaction.

Speaker Change: It was asked at the beginning yourself this year to the CNS.

Speaker Change: Has to be approved by the board.

Speaker Change: And we're planning that it will happen this way.

Speaker Change: And then once the contracts are signed we will we will proceed with the with all the details to how the JV ready by maybe beginning of.

Speaker Change: Next year, but.

Speaker Change: We're not planning for anything anything else us the process you'd go us the regulator restricted.

Joel Jackson: Okay, thank you.

Speaker Change: Okay. Thank you.

Operator: Thank you. And our next question comes from Gabrielle Simoes with Goldman Sachs. Please go ahead.

Operator: Thank you. Our next question comes from Gabriel Samos with Goldman Sachs. Please go ahead.

Speaker Change: Thank you and our next question comes from Gabriel Simoes with Goldman Sachs. Please go ahead.

Gabriel Simoes: Thank you for taking my questions. My first question will be on the lithium expansion. Given the increased capacity guidance that you gave for 2025, we'd like to understand where these investments will be made. So basically, you already mentioned the 10,000 tons additional towing capacity in China, but we'd like to understand what it would take for you to get to the increased 30,000 tons capacity in Chile, right? So if you need additional investment to get to that capacity, does it only need improvement in terms of efficiency, or does it require investment in more refining capacity as well? Just to understand how close you are already to your capacity in terms of refining and in terms of brine extraction. So that's the first question.

Gabriel Samos: Hi, thank you for taking my questions. My first question will be on the lithium expansion. Given the increased capacity guidance that you have, that's good for 2025, I'm sorry. We'd like to understand where these investments will be made. Basically, you already mentioned the 10,000 tons additional in tolling in China, but we'd like to understand what would take for you to get to the increased 30,000-ton capacity in Chile, right? If you need additional investment to get to that capacity, does it only need improvement in terms of efficiency, or does it require investment in more refining capacity as well? Just to understand how close you are already to your capacity in terms of refining and in terms of brine extraction.

Gabriel Simoes: Alright. Thank you for taking my questions. So my first question would be on the lithium expansion.

Gabriel Simoes: Given the increased capacity guidance.

The aggregate for a drink to refinance right now we'd like to understand where these investments will be made so basically you already mentioned the 10000 tons. Additionally, tolling in China, but we'd like to understand.

Gabriel Samos: Basically, you already mentioned the 10,000 tons additional in tolling in China, but we'd like to understand what would take for you to get to the increased 30,000-ton capacity in Chile, right? If you need additional investment to get to that capacity, does it only need improvement in terms of efficiency, or does it require investment in more refining capacity as well? Just to understand how close you are already to your capacity in terms of refining and in terms of brine extraction.

Gabriel Simoes: What would take for you to get to the increased 30000 ton capacity in in Chile right.

Speaker Change: And so if you need additional.

Speaker Change: Additional investments to get to that capacity.

Speaker Change: Does it only need improvement in terms of efficiency or does it require investing in more refining capacity as well just to understand how close you are already to your capacity in terms of refining.

Speaker Change: And in terms of brine extraction.

Gabriel Samos: That's the first question.

Speaker Change: So that's the first question.

Gabriel Simoes: Okay, Gabriel, thank you for your question. Well, it was already explained a little bit by Gerardo, but, um...

Carlos Diaz: Okay, Gabriel Samos. Thank you for your question. Well, it was already explained a little bit by Gerardo Illanes, but in the last year we have been focused on increasing the capacity in Chile of lithium carbonate, and now we're focusing on increasing of lithium hydroxide. We already reached a capacity of 210,000 in lithium carbonate, and now we're working to add and to focus on the bottleneck area of carbonate line and increasing the lithium recovery. This initially have a lower CapEx intensity when compared with the new production line. It's not significant as it was when we're building new lines, because more focus on the bottlenecking.

Speaker Change: Okay. Thank you for your question.

Speaker Change: When it was already explained that need to be both Hidalgo, but.

Unknown Executive: But in the last year, we have been focused on increasing the capacity in Chile as a lithium carbonate, and now we're focusing on increasing it as a lithium hydroxide. We already reached a capacity of 210,000 for lithium carbonate, and now we're working to add more, Focusing on the bottleneck of the area of the carbonate line and increasing the lithium recovery. This initiative has a lower capex intensity when compared with new production, so it's not as significant as it was when we were building new lines.

Speaker Change: But we went into in the last year, we have been focused to increasingly capacity in Chile and name as our lithium carbonate I know were focusing in nekoosa suddenly tore I Brookside.

Speaker Change: And we already recycled by 210000.

Lithium carbonate and now we're working to adding in.

And to whom.

Speaker Change: Focusing in on the bottleneck of area of carbon in line.

Speaker Change: The increase in the lithium recovery.

Carlos Diaz: This initially have a lower CapEx intensity when compared with the new production line. It's not significant as it was when we're building new lines, because more focus on the bottlenecking.

Speaker Change: But this initially have lower capacity capex intensity, when compared with the new production line.

Speaker Change: So it is most significant absolutely wasn't the day when we're building new lines.

It goes to model focusing the bottlenecking.

Unknown Executive: And while we're working obviously to keep it increasing in the future, now the lithium hydroxide and the idea to reach the 100,000 metric ton, let's say in the last quarter of the next, I don't know if that answers your question. It does, it does. Thank you. And I have just one more question on the lithium cost.

Gerardo Illanes: Well, we're working obviously, and to keep it increasing in the future, and now the lithium hydroxide and the idea to reach a 100,000 metric ton, let's say, at Q4 of the next year. I don't know if that answers your question.

Speaker Change: Well, we're working obviously named to keep increasing their future nowadays lithium hydroxide and media to reach the 100000 metric ton, let's say I did last quarter or the next year.

Speaker Change: I don't know Chris.

Speaker Change: Christian.

Gabriel Samos: It does. Thank you. I have just one more question on the lithium cost, right? A few quarters ago, you mentioned that you'd start to focus on increasing the efficiency in production. Not only to increase production, but also in terms of costs, right? In this quarter, the cost that you reported was already better than our estimate. We'd just like to understand what is the sustainable level of production cost that we should see for SQM's lithium production in the future, particularly in the Salar de Atacama, right? When you would expect to get there, given the initiatives you are making right now. Thank you.

Speaker Change: It does it does thank you and I have just one one more question on the lithium costs right. So a few quarters ago, you mentioned that you'd start to focus on increasing the efficiency and production so not only through to increase production, but also in terms of of course regularly in this quarter.

Gabriel Simoes: So a few quarters ago, you mentioned that you'd start to focus on increasing efficiency in production, not only in terms of production but also in terms of costs, right? So in this quarter, the cost that you reported was already better than our estimate, but we'd just like to understand what the sustainable level of production cost that we should see for SQM's lithium production in the future, particularly in the solar diatoma, right? And when you would expect to get there, given the initiatives you are making right now. Thank you.

Speaker Change: Australia reported was already better than dinner or anything like that we just like to understand.

Speaker Change: What is the sustainable level of prediction cost that we should see for questions lithium production in the future, particularly Linda sorry go on.

Speaker Change: Right and when you would expect to get there given the initiatives you were you were making right now thank you.

Unknown Executive: We expect the future cost to be as stable at the same level that it is today. We expect it to reduce, obviously, because we are increasing capacity and gaining energy. But on the other side, we have a, I don't know, a higher cost because we are the focus to produce a higher quality. So you always have more cost when you try to. S.A. S.A. S.A. S.A.

Carlos Diaz: We expect the future cost as stable on same level that is today. We expect to reduce obviously because we are increasing capacity and gaining synergy. For the other side we have I don't know higher cost because we are with the focus to produce a higher quality. Always you have more cost when you try to get into a better product. As a summary I would say because it's gonna be a stable cost compared to what it's been this year and last year.

Speaker Change: We were expecting.

Speaker Change: The future co to us stable on the same level that is today with respect to reduce obviously, because we are increasing capacity and guinea seemingly about for the other side we have a.

I dunno higher cost because we are.

Speaker Change: Literally the forgot your previous our hydro quality, so always you'll have more costs when you try to.

Bob: And getting a better product so Bob.

Bob: As a summary, I will say that he is going to be a stable cost competitor what it's been this year unless you.

Gabriel Simoes: Okay, perfect. Thank you.

Gabriel Samos: Okay, perfect. Thank you.

Speaker Change: Okay perfect. Thank you.

Operator: Thank you. And our next question comes from Corinne Blanchard with Deutsche Bank. Please go ahead. Hey, good.

Operator: Thank you. Our next question comes from Corinne Blanchard with Deutsche Bank. Please go ahead.

Speaker Change: Thank you and our next question comes from Chris Glynn Charlotte with Deutsche Bank. Please go ahead.

Corinne Blanchard: Hi, good afternoon. Thank you for taking my question. I have two questions.

Corinne Blanchard: Hi, good afternoon. Thank you for taking my question. I have two question. The first one to come back maybe on the MOU and Tianqi situation. So let's say you get the MOU finalized and signed at the end of next week, basically. Can Tianqi still continue creating some issue around this? Or would like, if you sign the deal next week, would that just seal the deal and basically kind of all the regulatory affair that you have had issue with, would that go away?

Speaker Change: Hi, good afternoon, and thank you for taking my question I'm asked a question.

Corinne Blanchard: The first one, to come back maybe on the MOU and T&C situation. So let's say you get the MOU finalized and signed at the end of next week. Basically, can T&C still create some issues around this? Or would, like, if you sign the deal next week, would that just seal the deal, and basically kind of all the regulatory affairs that you have an issue with, would that go away?

Speaker Change: Come back maybe on the Mou.

Speaker Change: So, let's say you get no Mou finalize and find at the end of that.

Speaker Change: Next week basically John Kiang.

Speaker Change: He is continuing.

Speaker Change: It's creating some issue our own data.

Speaker Change: Our wood.

Speaker Change: Like did you sign the deal with that.

Speaker Change: And basically kind of.

Speaker Change: Sure.

Speaker Change: Additional ways would that go away.

Gerardo Illanes: Hi Corinne, this is Gerardo. Well, we are working on the final documents for this agreement with CODELCO that was described in the MOU that was published at the end of last year. The approval process on our end was discussed or asked for by the regulator in Chile, the CMS, at the beginning of the year. The regulator was quite clear on the way this has to be approved, which is at the board level.

Gerardo Illanes: Hi, Corinne. This is Gerardo. Well, we are working on the final documents on this agreement with Codelco that was described on the MOU that was published at the end of last year. The approval process on our end was discussed or was asked to the regulator in Chile, the CMF, at the beginning of the year. The regulator was quite clear on the way this has to be approved, which is at the board level. Once the contracts are ready, the board will meet, will review the details of the contracts and will take a decision.

Speaker Change: Hi, Cory this is a hit out of them.

Speaker Change: Well, we are working on the on the final documents.

Speaker Change: On D. C agreement with Codelco that was described on the Mou that was published at the end of last year.

Speaker Change: The approval process.

Speaker Change: On our N was these gas or.

Speaker Change: Or was asked.

Speaker Change: To the regulator in Chile with CMS at the beginning of the year the.

Speaker Change: The regulator was quite.

Speaker Change: Quite clear on the way these has to be.

Speaker Change: Peru, which use at the board level. So was their contracts are already.

Gerardo Illanes: So, once the contracts are ready, the board will meet, review the details of the contracts, and will take a decision. On the CODELCO side, to be quite honest, I'm not that familiar with how the process goes on their end to get the approval steps, but this is what should happen on our end. Okay, thank you. And the second question would be, what do you see, like, industry-wise in the channel?

Speaker Change: The board will will meet will review the details of the of the contracts and we will take a decision on the political side too.

Gerardo Illanes: On the Codelco side, to be quite honest, I'm not that familiar on how the process goes on their end to get the approval steps, but this is what should happen on our end.

Speaker Change: To be quite honest I'm not that familiar with how the process goes on there and to get the approval steps, but this is what should happen on our end.

Corinne Blanchard: Okay. Thank you. The second question would be, what do you see, like, industry-wide in the channel, like in terms of inventory? Are you seeing like any restocking move happening, or is it still like a static quote?

Corinne Blanchard: Okay, thank you. And the second question would be, what do you see industry-wise in the channel, like in terms of inventory? Are you seeing again, you know, with the stocking move happening? Or is it still like a static quote?

Speaker Change: Okay. Thank you and the second question would be what do you see that industry wide in the in the channel that can come off inventory.

Speaker Change: I've seen like any restocking move Anthony.

That should call it.

Unknown Executive: Hello Corinne, we have a healthy inventory. If you see, this year, we expect to produce 210,000 and sell 200. So, we will only have to have more inventory in the chain because we are increasing our sales, and we want to have enough inventory to supply our customers. We have inventory in Chile, in China, a lot of inventory there because, obviously, our main sales more than 70% of our sales are done in China. We have in different warehouses and in Korea.

Carlos Diaz: Hello, Corinne. We have a healthy inventory. If you see this year, we expect to produce 210,000 and to sell 200. So obviously we will have to have more inventory in the chain because we are increasing the sales and we want to have enough inventory for supplying to our customer. We have inventory in Chile and in China, a lot of inventory there, because obviously our main sales, more than 70% of our sales is done in China. We have in different warehouse. And in Korea. I think I would say that that's the most important place where we have a inventory. We are in a healthy position now of inventory, and we want to keep it in that way.

Speaker Change: Hello Corey.

Speaker Change: We have a healthy inventory if you see this year, we expect to produce 210.

Speaker Change: And to sell 200.

Speaker Change: So obviously, we would hope to have more inventory in the in the shame because we're increasing the sales and.

Speaker Change: And we want to have enough inventory to supply into our customer we have.

Speaker Change: Inventory T lab in China, I don't if he mentored a dire because obviously our main sales more than 70% of our service is done in China, having different warehouse.

Speaker Change: And in Korea.

Unknown Executive: I think I would say that that's the most important place where we have inventory. We are in a healthy position now with inventory, and we want to keep it that way. We are not speculating with the price and so on. We just sell what the customer needs and according to our production.

Speaker Change: I will say that that's more important place it where we have the inventory we are in a healthy position out of inventory and we want to keep it in that way, we're not speculating with the brides and saw what we just said radu customer need and according to our production.

Gerardo Illanes: We are not speculating with the price and so on. We just sell what the customer needs, and according to our production.

Carlos Diaz: We are not speculating with the price and so on. We just sell what the customer needs, and according to our production.

Speaker Change: Yeah.

Corinne Blanchard: Okay. Thank you.

Speaker Change: Okay. Thank you.

Operator: Thank you. And our final question today comes from Cesar Perez-Navarro of BTG Pactual. Please go ahead.

Operator: Thank you. Our final question today comes from Cesar Perez-Navarra with BTG Pactual. Please go ahead.

Speaker Change: Thank you and our final question today comes from says our present <unk> with BTG Pactual. Please go ahead.

César Pérez: billion tax impact book in the first quarter of 2024, must we now assume that going forward our estimates must now include a higher mining tax? Is this reasonable to assume for the quarters ahead?

Cesar Perez-Navarra: Yes. Good morning and good afternoon, and thank you for taking my questions. Regarding the $1.1 billion tax impact booked in Q1 2024, must we now assume that going forward or estimates must now include a higher mining tax? Is this reasonable to assume for the quarters ahead? My second question is actually more clarification. For the incremental 30,000 that you plan to increase in the Carmen complex by 2025, you just mentioned that you will manage to achieve this via higher recovery, which is less capital intensive. Can you comment how much less intensive this is on a per ton basis? Is this already included in the $1.3 billion CapEx you reiterated in your press release for 2024? Thank you.

César Pérez Novoa: Yes. Good morning and good afternoon, and thank you for taking my questions. Regarding the $1.1 billion tax impact booked in Q1 2024, must we now assume that going forward or estimates must now include a higher mining tax? Is this reasonable to assume for the quarters ahead? My second question is actually more clarification.

Speaker Change: Yes. Good morning, good afternoon, and thank you for taking my questions are regarding the $1 1 billion tax impact books in the first quarter of 2024.

Speaker Change: We are.

Speaker Change: Now assume that going forward. Our estimates now include a higher mining tax is this a reasonable to assume for the quarters ahead and my second question is is actually more clarification for the incremental 30000 that you plan to increase in the government complex by.

César Pérez: And my second question is actually more clarification for the incremental $30,000 that you plan to increase in the Carmen complex by 2025. You just mentioned that you will manage to achieve this via higher recovery, which is less capital intensive. Can you comment on how much less intensive this is on a per ton basis? And is this already included in the 1.3 billion CAPEX you reiterated in your press release for 2024? Thank you.

César Pérez Novoa: For the incremental 30,000 that you plan to increase in the Carmen complex by 2025, you just mentioned that you will manage to achieve this via higher recovery, which is less capital intensive. Can you comment how much less intensive this is on a per ton basis? Is this already included in the $1.3 billion CapEx you reiterated in your press release for 2024? Thank you.

By 2025, you just mentioned that you will manage to achieve this via higher recovery, which is less capital intensive can you comment how much less intensive this is.

Speaker Change: On a per ton basis.

Speaker Change: And is this already included in the $1 3 billion Capex you reiterated in your in your press release for 2024. Thank you.

Gerardo Illanes: Hi Cesar, this is Gerardo. Regarding the one-time tax hit in the first quarter, it's related to the interpretation that the tax authorities have on the lithium mining tax, where they understand that it's subject to mining tax, but the lithium is not subject to mining tax, and we are of the understanding that it is not. We have had this dispute for a few years, and it has been described in detail in our financial statements. But because of the ruling of the appeals court in April, we have changed the accounting treatment of this tax, which, by the way, has been paid by the company every time we have been invoiced by the tax authorities.

Gerardo Illanes: Hi, Cesar. This is Gerardo. Regarding the one-time tax hit on Q1 is related to the interpretation that the tax authorities have on the lithium mining tax, where they understand that it's subject to mining tax, the lithium is subject to mining tax. We are of the understanding that it's not. We have had this dispute for a few years. It has been described in detail on our financial statements. Because of the ruling of the appeals court in April, we have changed the accounting treatment of this tax, which by the way has been paid by the company every time we have been invoiced by the tax authorities.

Speaker Change: Hi, Sara this is get out of them.

Speaker Change: Regarding the one time.

Speaker Change: <unk> hit on the first quarter is related to the interpretation that the tax authorities have on the lithium mining tax.

Speaker Change: The where they understand that.

Speaker Change: It is subject to two mining tax the lithium is subject to mining tax and we are all.

Speaker Change: They are sending that is not a we have had D C dispute or for a few years. It has been described in detail on our financial statement.

Speaker Change: But because of the ruling of the Appeals court.

Speaker Change: In April we have changed the accounting treatment.

<unk>.

Speaker Change: These tax which by the way has been paid by the company every time, we have been invoiced by the tax authority. So that's why he doesn't have a.

Gerardo Illanes: So that's why it doesn't have a significant cash impact on our balance sheet. Now, going forward, the treatment of these tax payments should continue to be exactly the same as it is today, or as it was reflected in the first quarter financial statement, as a function of the mining tax in Chile. To give you an idea, the impact in the first quarter, which is again the price of lithium and the profitability of the business, was approximately $8 million. Going forward, we will continue to book that as tax expenses, depending, of course, on how the legal case continues.

Gerardo Illanes: That's why it doesn't have a significant cash impact on our balance sheet. Now going forward, the treatment of these tax payments should continue to be exactly the same as it is today or as it was reflected on the Q1 financial statement as a function of the mining tax in Chile. To give you an idea, the impact in the Q1, which is again a function of the price of lithium and the profitability of the business, was approximately $8 million. Going forward, we will continue to book that as tax expenses depending on, of course, how the legal case continues.

Speaker Change: Our significant cash.

Speaker Change: In fact on our balance sheet.

Speaker Change: Now going forward. These are the treatment of these tax payments should continue to be exactly the same as it is today or as it was reflective of the first quarter.

Speaker Change: Financial statement.

Speaker Change: As a function of the mining tax in Chile.

Speaker Change: To give you an idea the impact in the first quarter, which is again a function of.

Speaker Change: The price of lithium and the profitability of the business.

Speaker Change: It was approximately $8 million.

Speaker Change: Going forward.

Speaker Change: We will continue to move that to ask the tax expenses.

Depending on of course, how the legal case.

Speaker Change: Denise.

Cesar Perez-Navarra: All right.

César Pérez Novoa: All right.

Speaker Change: Alright.

Carlos Diaz Ortiz: Hello Cesar, Carlos Rodriguez again, and... Well, as I mentioned before, at the beginning, we were focusing on increasing the capacity, adding new lines. After we finished that, now we are focusing on the bottleneck, the area where we expect if we increase the equipment or unit, we can easily increase the total capacity of the same plant. There are no new lines; it's just improving the bottlenecks of those areas. So that is what we estimate, let's say $70 million. It could be a little bit more, but a range around that, and we gain another 30,000 metric tons. If you do the math, this is around $2,300 per month. But just because it's a bottleneck, I say, you cannot ask me to reduce and increase the capacity more at the same cost, eh?

Carlos Diaz: Hello, Cesar Carmona here again. Well, as I mentioned before, at the beginning, we were focusing on increasing the capacity, adding the new lines. After we finished that, now we are focusing on the bottleneck of the area where we expect if we increase those, equipment or unit, we can easily increase the total capacity of the same plant. There is no new lines. It's just doing the bottleneck of those area. That is why we estimate, let's say $70 million, could be a little bit more, but a range around that. To gain another 30,000 metric tons. If you do the math, this is around $2,300 per tons.

Sasha: Hello, Sasha comes in your thinking.

Sasha: But as I mentioned before at the beginning where we're focusing and increasing the capacity add in the new lines. After we finish that now where we are focusing on the bottleneck at the area, where we expect if we increase dose.

Sasha: Equate mint or union, we can easily increase the total capacity of the of the same plan that is not new lines of Jetblue.

Speaker Change: Megan those area.

Speaker Change: So I think well, we estimate, let's say 70 million could be a little bit more but a range of our own debt onto again I know that said he felt some a metric ton to do.

Speaker Change: If you do the math this is our own $2300 per tons, but just because it had about a negative I see you're kind of asking me to produce onto <unk> capacity with the same E Cosmos.

Carlos Diaz: Just because it's at the bottleneck, I say you cannot ask me to produce and to increase more the capacity with the same cost, huh?

César Pérez: No, I understand. Thank you. Thank you very much, gentlemen.

Cesar Perez-Navarra: No, I understand.

César Pérez Novoa: No, I understand.

Speaker Change: No I understand.

Carlos Diaz: Okay. Thank you.

Cesar Perez-Navarra: Okay. Thank you very much, gentlemen.

César Pérez Novoa: Okay. Thank you very much, gentlemen.

Speaker Change #100: Thank you.

Speaker Change #101: Thank you very much gentlemen.

Irina Axenova: Thank you. And this concludes today's question and answer session. I'd like to turn the conference back over to Irina Axenova for her closing remarks.

Operator: Thank you. This concludes today's question and answer session. I'd like to turn the conference back over to Irina Aksenova for closing remarks.

Irina Axenova: Thank you everyone for joining us today, and we look forward to having you on our next call. Goodbye.

Speaker Change #101: Thank you and this concludes today's question and answer session I would like to turn the conference back over to Irina Axa over for closing remarks.

Irina Aksenova: Thank you everyone for joining today, and we look forward to having you on our next call. Goodbye.

Irina Axenova: Thank you everyone for joining us today, and we look forward to having you at our next call Goodbye.

Operator: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Speaker Change #103: This concludes today's conference call. We thank you all for attending today's presentation.

Speaker Change #103: You may now disconnect your lines and have a wonderful day.

Speaker Change #103: Okay.

Speaker Change #103: Oh.

Speaker Change #103: Okay.

Q1 2024 Sociedad Química y Minera de Chile SA Earnings Call

Request a DemoDemo

SQM

Sociedad Quimica y Minera de Chile SA

Earnings