Q2 2024 Sociedad Química y Minera de Chile SA Earnings Call

August 21, 2024

Operator: Good afternoon and welcome to the SQM second quarter 2024 earnings conference call.

Operator: Good afternoon, and welcome to the SQM Second Quarter 2024 Earnings Conference Call.

Unknown Executive: Good afternoon and welcome to the SQM second quarter 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.

Good afternoon, and welcome to the S. QM second quarter 'twenty 'twenty four earnings conference call.

Operator: 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.

Irina Axenova: I would like to turn the conference back over

Operator: 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.

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

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

Unknown Executive: 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. Please note this event is being recorded.

Operator: After today's presentation, there will be an opportunity to ask questions.

Operator: 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.

Speaker Change: After today's presentation there'll be an opportunity to ask questions.

Operator: To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.

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

Speaker Change: To withdraw your question. Please press Star then two.

Operator: Please note, this event is being recorded.

Speaker Change: Please note this event is being recorded.

Irina Axenova: I would now like to turn the conference over to Irina Axenova, Head of Investor Relations. Please go ahead.

Irina Axenova: I would now like to turn the conference over to Irina Axenova, Head of Investor Relations.

Irina Axenova: to Irina Axenova.

Irina <unk>: I would now like to turn the conference over to Irina <unk> head of Investor Relations. Please go ahead.

Irina Axenova: Please go ahead.

Unknown Executive: Thank you.

Irina Axenova: Thank you.

Irina Axenova: Please go ahead.

Irina Axenova: Thank you, Darian.

Irina <unk>: Thank you good afternoon, and thank you for joining <unk> earnings conference call for the second quarter of 'twenty 'twenty. Four this conference call will be recorded and is being webcast life. Our earnings press release, and a presentation with a summary of our results have been uploaded to our website, where you can also find a link to the webcast Ricardo Ramos.

Unknown Executive: Good afternoon. Thank you for joining us Kerms earnings conference call for the second quarter of 2024. This conference call will be recorded and is being broadcast 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.

Irina Axenova: Ricardo Ramos, our Chief Executive Officer, will be speaking on the call today. Here are the Yannis, our chief financial officer, Carlos Vier, CEO of SQM Salar, Mark Fones, CEO of SQM International Lithium, Philippe Smith, commercial vice president of SQM Salar, Pablo Hernandez, senior director of business strategy and development SQM Salar, Pablo Martinez, CEO of iodine nitrate, and Juan Pablo Bilolio, commercial vice president of iodine in industrial chemicals are also available to answer any questions.

Speaker Change: Decorative okay, so well be speaking on the call today he'd I'd be honest, our chief financial Officer, Carlos E. S. P O S.

Speaker Change: Excellent seal Eskom International lithium Philip Smith commercial by surprising a lot of modeling on that.

Speaker Change: Our director of business strategy and development Afghans, along well like 10 years feels iodine nitrate and hauling Pablo loyal commercial by surprise at the end of iodine and industrial chemicals are also available to answer any questions. Before we begin I would like to remind you that some statements made during this conference call regarding our business outlook.

Irina Axenova: Thank you.

Unknown Executive: 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.

Speaker Change: 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 Executive Officer Ricardo Ramos.

Irina Axenova: Good afternoon.

Irina Axenova: Before we close, I have a question from Marcia who couldn't connect.

Ricardo Ramos: And now I will leave you with our Chief Executive Officer, Ricardo Ramos.

Irina Axenova: Good afternoon.

Irina Axenova: If there's any dividend potential in the view of negative net income so far?

Ricardo Ramos: Thank you, Rina. Good afternoon, everyone, and thank you for joining us today before diving into the key drivers behind our results.

Ricardo Ramos: Thank you Dana.

Irina Axenova: Thank you for joining SQM's earnings conference call for the second quarter of 2024. This conference call will be recorded and is being webcast live.

Ricardo Ramos: Hey, good afternoon, everyone and thank you for joining us today before diving into the key drivers behind behind our results I'd like to highlight an important milestone we achieved last quarter.

Irina Axenova: Thank you for joining SQM's Earnings Conference Call for the second quarter of 2024. This conference call will be recorded and is being webcast live.

Gerardo Yanez: I don't know if you would like to take it.

Irina Axenova: Our earnings press release and a presentation with a summary of the result have been uploaded to our website where you can also find a link to the webcast.

Ricardo Ramos: I would like to highlight an important milestone, which is last quarter, as mentioning our earnings release. We are very pleased to have entered into a partnership agreement with Coelco to jointly operate the Salar Alacama until 2016 based on the principle of private public alliance. We believe this agreement is a pivotal moment for both SQM and for the future of the lithium industry in Chile. While there are several conditions precedent for the partnership to become effective together with Coelco, we are committed to ensure that these conditions are met by the first half of 2025. We are looking forward to working together with Coelco to operate the most sustainable lithium operation in the world based in the Salar Alacama.

Irina Axenova: Ricardo Ramos, our Chief Executive Officer, will be speaking on the call today.

Irina Axenova: 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.

Speaker Change: Mentioning our earnings release, we're very pleased to have entered into a partnership agreement with Codelco, we don't.

Irina Axenova: Ricardo Ramos, our Chief Executive Officer, will be speaking on the call today.

Irina Axenova: Gerardo Illanes, our Chief Financial Officer.

Speaker Change: <unk> operators a lot of the gamma until 2016 based on the principle of private public Alliance. We believe disagreement so pivotal moment for both a scam them for the future of the lithium industry in Chile, while there are several conditions precedent for the partnership to become effective together with codelco, we're committed to ensure that this <unk>.

Irina Axenova: Carlos Diaz, CEO of SQM Salar.

Irina Axenova: Gerardo Yanez, our Chief Financial Officer.

Irina Axenova: Carlos Diaz, CEO of SQM Salar.

Irina Axenova: Mark Fones, CEO of SQM International Lithium.

Irina Axenova: Felipe Smith, Commercial Vice President of SQM Salar.

Speaker Change: Digital starter met by the first half of 2025 were looking forward to working together with codelco to operate the most sustainable lithium operation in the world based in there's a lot of the gamma.

Irina Axenova: Pablo Hernandez, Senior Director of Business Strategy and Development at SQM Salar.

Ricardo Ramos: I will say our second quarter results were positively impacted by a strong volume of growth in all our major businesses supported by a strong demand growth in their respective markets. Were reported record sales volumes in lithium and iron businesses exceeding 52,000 metric tons and 4,000 metric tons, respectively. We anticipated solid growth in the lithium market this year, driven by a strong EV performance, mainly in China. The man growth in the iron market this year exceed our expectations. We expect this trend to continue for the remainder of the year and believe that our iodine volumes could exceed 10,500 metric tons this year, marking 2024 a record.

Irina Axenova: Pablo Altimiris, CEO of Iodine Nitrates.

Gerardo Yanez: The company has a dividend policy that has, been approved by the board and informed to the shareholders. And that dividend policy established that we will distribute the dividend as a function of the net income if certain conditions are met on our balance sheet.

Speaker Change: I will say our second quarter results were positively impacted by strong volume growth in all our major businesses supported by a strong demand growth in their respective markets were reported.

Irina Axenova: And Juan Pablo Bilolio,

Irina Axenova: Commercial Vice President of Iodine and Industrial Chemicals, are also available to answer any questions.

Gerardo Yanez: Since the net income is negative because of a one-time effect that hit the results because of the lithium mining tax that was applied in the first quarter.

Record sales volumes in lithium and iodine businesses exceeding 52000 metric tons. Some 40000 metric tons, respectively. We anticipate solid growth in the lithium market. This year driven by a strong U V performance mainland China demand growth in the Ida market this year to exceed our expectations. We expect these.

Irina Axenova: 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.

Gerardo Yanez: I mean, the result is negative.

Gerardo Yanez: And because of that, the net income that the board has approved as interim dividend has been zero. So, it depends on what will happen in the rest of the year.

Gerardo Yanez: But the policy is quite clear in that regard.

Speaker Change: Trend to continue for the remainder of the year and believe that I would argue that volumes could it could exceed 14.5 thousand metric tons. This year, marking 2020 for a record year why would I ever at a realized price in the lithium business improve it slightly in the second quarter compared to the previous quarter, we have seen lithium prices decline.

Ricardo Ramos: While our average realized price in the lithium business improves slightly in the second quarter compared to the previous quarter, we have seen lithium prices decline since the beginning of July. As most of our contracts are linked to price indices and our average prices follow the prevailing market prices, we believe that our average selling prices in the third quarter could be lower than in the previous quarter, even in the current price environment.

Speaker Change: Since the beginning of July.

As most of our contracts are linked to price indices, and how would I ever had surprises followed the prevailing market prices, we believe that our average selling prices in the third quarter will be lower than in the previous quarter. Even the current price environment. We are convinced that most of the work.

Ricardo Ramos: We are convinced that most of our green fields are not profitable. While we continue with our previously announced capacity expansion projects, we are also reassessing the attractiveness of certain markets and initiatives in the current price environment. We believe our lithium sales volumes in the second half of the year could be similar to those reported for the first half of the year, with a potential upside should the market conditions improve. We recently formed SKM International Lithium to develop our lithium business on the side of Chile. The primary objective is to leverage the lithium assets and expertise we have in exploration, project development, mining, and chemical operations to expand our lithium portfolios overseas.

Speaker Change: Of the Greenfield projects are not profitable, while we continue with our previously announced capacity expansion projects. We're also reassessing the attractiveness of certain market.

Speaker Change: On the initiatives in the current price environment, we believe our lithium sales volumes in the second half of the year could be similar to those reported for the first half of the year with a potential upside should the market conditions improve we recently form S game international lithium to develop our lithium business outside of Chile, It's premature death.

Speaker Change: He has to liberate the lithium assets and expertise we have in exploration project development mining and chemical operations to expand our leisure lithium portfolios overseas. Thank you, but aid or will note, though opened to the line of questions.

Irina Axenova: Please note that the same cautionary language used in our press release and presentation also applies to this call.

Irina Axenova: Thank you, Gerardo.

Ricardo Ramos: Thank you, but later we will now go open to the line of questions.

Unknown Executive: 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 speaker phone, please pick up your handset before pressing the keys. To draw your question, please press star, then two.

Irina Axenova: And now I will leave you with our Chief Executive Officer, Ricardo Ramos.

Irina Axenova: And this concludes our call today.

Speaker Change: We will now begin the question and answer session.

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

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

Speaker Change: To withdraw your question. Please press Star then two.

Joel Jackson: Our first question today is from Joel Jackson with BMO Capital Markets. Please go ahead.

Ricardo Ramos: Thank you, Irina.

Irina Axenova: Thank you for joining us.

Speaker Change: Our first question today is from Joel Jackson with BMO capital markets. Please go ahead.

Anthony: Good afternoon, this is Anthony on for Joel. You indicated in the press release that, in the current lithium price environment, peers may take production out of the market. Yes, SKM is maintaining 24 production targets, with sales volume slightly lower.

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

Operator: And we look forward to having you in our next call.

Speaker Change: Good afternoon. This is Anthony on for Joel. So you indicated in the press release and the current lithium price environment peers may take production out of the market.

Speaker Change: Yes, QM is maintaining 24 production targets with sales volume may be slightly lower obviously <unk> has a unique quota system with Corpo Emily.

Ricardo Ramos: Before diving into the key drivers behind our results, I would like to highlight an important milestone we achieved last quarter. As mentioned in our earnings release, we're very pleased to have entered into a partnership agreement with Codelco to jointly operate the Salar de Atacama until 2060. Based on the principle of private-public alliance, we believe this agreement is a pivotal moment for both SQM and for the future of the lithium industry in Chile.

Unknown Executive: Obviously, SKM has a unique quota system with Corpo, and the lease level is free to save firing, which encourages you to maximize production. But shouldn't SKM, as a market leader, be disciplined and maybe lower volumes?

Speaker Change: The expiring, which incurs in maximizing production, but so necessary under the market leader be disciplined and maybe lower volumes.

Ricardo Ramos: While there are several conditions precedent for the partnership to become effective, together with Codelco, we are committed to ensure that these conditions are met by the first half of 2025.

Operator: Have a great day, everyone.

Felipe Smith: Hello, this is Felipe Smith here. How are you? I'm not sure if I understood correctly your question, but let me rephrase that we estimate that the sales in the second semester 2024 will be similar to those rich in the first semester. Meaning that our annual sales could be around 190,000 tonne. With a potential upside should market conditions recover?

Irina Axenova: Felipe Smith, Commercial Vice President of SQM Salar.

Speaker Change: Hello. This is Felipe Smith here how are you.

Speaker Change: Yeah.

Speaker Change: I'm not sure if I understood correctly your question, but let me rephrase that we estimate that the sales in the second semester 'twenty 'twenty four will be similar to those reached in the first semester started before.

Meaning that our annual status could be around 190000 tonne.

Speaker Change: We have a potential upside should market conditions recover.

Unknown Executive: It's just to follow up on that.

Speaker Change: Yeah.

Speaker Change: Yeah, just a follow up on that the question was that I guess around.

Unknown Executive: The question was that gets around whether SKM as a market leader should be disciplined if we start needing to see production come out of the market.

Speaker Change: Whether SQL as a market leader should be disciplined.

We're starting to see production come out of the market.

Operator: Bye.

Operator: The conference is now concluded.

Carlos Diaz: Hello, this is Carlos Diaz. How are you? Well, let me tell you that it will be our capacity in Chile. Now it's according to our schedule, and I saw respect this year to produce $210,000 as a little carbon equivalent in the different quality and the carbon dioxide or sulfate.

Irina Axenova: Pablo Hernandez, Senior Director of Business Strategy and Development SQM Salar.

Speaker Change: Yeah. Hello. This is Carlos D. S. How are you.

Irina Axenova: Pablo Altimiris, CEO of Iodine Nitrates.

Irina Axenova: And Juan Pablo Bellolio, Commercial Vice President of Iodine and Industrial Chemicals are also available to answer any questions.

Speaker Change: Well, let me tell you a little beyond our capacity to lead a snowy accordion, our mosquito the omnicell. We expected this year to produce 210000 cell lithium carbonate we were learning the different quality young, let's say carbonate Brookside O sulfate.

Operator: Thank you for attending today's conference.

Carlos Diaz: We should dose 30,000 are converted in China, so we're still reviewing the volume to be converted in China for a little sulfate to a drug set of carbonate, and during the second semester. So the total of the volume converted in China obviously will depend on the specific market segment, and following the current price environment. Finally, it would depend on how the price is coming in the next month, so I don't know if answer your question.

At we should dose of 30000 are converted in China, So where we're at with their review in the boardroom to be converted in China for a little sofa to Brookside O carbonate.

Speaker Change: And good in the second semester so.

Speaker Change: The total volume of converted in China, obviously will depend on the specific market segment and now following the Korean pricing myeloma. So final is good it would've been a shall we say hold their price is coming.

Yeah.

Speaker Change: It makes them also.

Speaker Change: I don't know if <unk> answered your question.

Speaker Change: Great. Thanks.

Carlos Diaz: Just to follow up, so maybe weighing strategic priorities, how would S2M rank delaying future times out of Chile versus investments in places like Australia or other opportunities moving forward. Hi, moving forward, as it's clear, we are going to develop a huge project that is called Salar Futuro together with Codelco. That's why our investment together with Codelco in the next 10 years in Chile is going to be significant. If you consider the Salar Futuro project, we will develop together. We expect to increase some production in Salar with the project, of course, but this is mainly Chile; it's mainly oriented to the Salar Futuro project.

Speaker Change: Just a follow up so maybe Wayne strategic priority.

Speaker Change: I would ask you M ranked delaying future plans out of Chile versus investments in places like Australia or other opportunities moving forward.

Ricardo Ramos: We're looking forward to working together with Codelco to operate the most sustainable lithium operation in the world based in the Salar de Atacama.

Operator: Thank you for attending today's presentation.

Ricardo Ramos: Our second quarter results were positively impacted by strong volume growth in all our major businesses, supported by a strong demand growth in their respective markets. We reported record sales volumes in lithium and iodine businesses, exceeding 52,000 metric tons and 4,000 metric tons respectively. We anticipated solid growth in the lithium market this year, driven by a strong EV performance mainly in China.

Ricardo Ramos: Demand growth in the iodine market this year exceeds our expectations. We expect this trend to continue for the remaining of the year and believe that our iodine volumes could exceed 14.5,000 metric tons.

Ricardo Ramos: This year, marking 2024, a record year, year.

Speaker Change: Hi.

Speaker Change: Moving her weight US is here, we were going out there they'll open the huge project that is called cell article Duda together with Codelco, that's why our investment together with Codelco in the next 10 years in Chile is going to be significant if you consider this is also due to a project. We will develop together, we expect to increase some production and there's a lot of the gamma with.

Speaker Change: Project of course.

And but this is this mainly Chile is mainly oriented to this allowed for due to project of course, we want to grow with outside Chile, you would find good opportunities as you know we we have been active we have investment today in Australia. We continue to have geologists looking for new alternatives and probably we will announce new investment on new projects.

Carlos Diaz: Of course, we want to grow outside Chile if we find good opportunities. As you know, we have been active; we have investment today in Australia. We continue to have geologists looking for new alternatives, and probably we will announce new investment on new projects in Australia in the medium term. I don't know, but we are working very hard in order to do it.

Speaker Change: In Australia and in the medium term I don't know, but we are working very hard in order to do it.

Speaker Change: Yeah.

Speaker Change: Great. Thank you.

Ben Isaacson: The next question is from Ben Isaacson with Scotiabank. Please go ahead.

Operator: You may now disconnect.

Irina Axenova: Please note that the same cautionary language used in our press release and presentation also applies to this call.

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

Unknown Executive: Hi everyone, this is the Perva on Perven. I might just take you back off of the last question a little bit, but given that the market is currently over-supplied and you've previously shared in based on your 210,000 tons of production versus about 190,000 of sales, is the expectation that you'll be able to work through these inventory? Are you finding any challenges, seeing any challenges, and finding buyers for that lithium inventory? Are you holding an anticipation of demand and pricing, picking up the near term?

Irina Axenova: And now I will leave you with our Chief Executive Officer, Ricardo Ramos.

Speaker Change: Hi, everyone. This is a promo.

Speaker Change: Nature.

Speaker Change: Piggyback off the last question a little bit.

Given that the market.

Speaker Change: Mr item previously Sheridan this time, you're at 210000 tonnes of ore production versus about 100 trails.

Speaker Change:

Speaker Change: Is the expectation still that you'll be able to work through.

Ricardo Ramos: Thank you, Irina.

Speaker Change: Hum argued.

Speaker Change: Are you finding any challenges are seeing any challenges in finding buyers for that lithium inventory of your whole global in anticipation of demand and pricing.

Speaker Change: In the near term.

Speaker Change: Yeah.

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

Speaker Change: Well, we're really call me I don't know if you were going with respect to sell this year around two 190000 metric tons of lithium carbonate and we expect to produce a rounded to dump them 210000. So you can do is going to be 20000 exceeds approximately what we sell in one month's or wait for the other side, we had to prepare for next.

Ricardo Ramos: Before diving into the key drivers behind our results, I would like to highlight an important milestone we achieved last quarter. As mentioned in our earnings release, we are very pleased to have entered into a partnership agreement with Codelco to jointly operate the Salar de la Cama until 2006. Based on the principle of private-public alliance, we believe this agreement is a pivotal moment for both SQM and for the future of the lithium industry in Chile.

Unknown Executive: So for the others, I will have to prepare for next year whether we expect to sell a little bit more. So it's a good investment in capital work and working capitalism. We don't see that it's too much; it's healthy.

Speaker Change: Yeah, what that way, we expect to sell it even more so you're so good investment in capital working working capitalism, we don't see that as tumazos healthy inventory.

Speaker Change: Okay.

Unknown Executive: All right, and then follow up, your production budget for 2024 were contracted with kind of a one-month-like despot. How should we be thinking about what's in realized pricing in Q3 so far, given that order to date the index was down, what, 15 to 20 percent? Is there any sort of indication as to whether you're baking price floors and ceilings into your contract?

Speaker Change: Alright.

Speaker Change: All along.

Speaker Change: Okay.

Scott: For 2024 were contracted with kind of a one month lag to Scott how.

How should we be thinking about what.

Ricardo Ramos: While our average realized price in the lithium business improved slightly in the second quarter compared to the previous quarter, we have seen lithium prices decline since the beginning of July. As most of our contracts are linked to price indices, and our average prices follow the prevailing market prices, we believe that our average selling prices in the third quarter will be lower than in the previous quarter, given the current price environment.

Ricardo Ramos: We are convinced that most of our, of the greenfield projects are not profitable. While we continue with our previously announced capacity expansion projects, we're also reassessing the attractiveness of certain market initiatives in the current price environment.

Scott: So.

Ricardo Ramos: We believe our lithium sales volumes in the second half of the year could be similar to those reported, for the first half of the year, with a potential upside should the market conditions improve.

Scott: So I kept on that quarter to date.

Ricardo Ramos: We recently formed SQM International Lithium to develop our lithium business outside of Chile. Its primary objective is to leverage the lithium assets and expertise we have in exploration, project development, mining, and chemical operations to expand our lithium portfolios overseas.

Scott: Yeah.

Scott: The 20%.

Speaker Change: Is there any sort of indication as to whether you're pitching floors and ceilings.

Ricardo Ramos: Thank you, Pereiro.

Okay.

Felipe Smith: Yeah, hello, Felipe again. So indeed the Q&M price mechanism is based on pricing this is in the different geographies with certain lag, which average approximately one month. This means that, in general, our realized average price will always be close to the prevailing average spot price.

Felipe Smith: Yeah, Hello, Felipe again.

So yeah, Indeed, SQL price mechanism is based on pricing. This is in the different geographies with certain lag, which average approximately one month.

Felipe Smith: This means that in general our realized average price will always be close to the prevailing average spot price.

Operator: We'll now go open to the line of questions.

Felipe Smith: Now, during the beginning of the second quarter, we observed a certain price recovery, which unfortunately lasted until mid-April. Then we saw price fluctuations that were quite moderate, but over the last three months we have seen a persistent decline in the index prices, especially in Q3. So that is why we are expecting that the average price in Q3 will be lower than in Q2.

Felipe Smith: Now during the beginning of second quarter.

Operator: We will now begin the question and answer session.

Felipe Smith: We observed a certain price recovery, which unfortunately lasted until mid April than we saw.

Felipe Smith: A price fluctuations that were quite moderate but over the last three months, we have seen a persistent decline in the index prices, especially in China.

Felipe Smith: So that is why we are expecting that the average price in Q3 will be lower than in Q2.

Unknown Executive: Thank you.

Unknown Executive: And if I may sneak in a... Pardon me, man, we seem to have lost audio from your location.

Felipe Smith: Thank you.

Felipe Smith: Mckenna.

Speaker Change: Pardon me ma'am, we seem to have lost the audio from your location.

Unknown Executive: Hello, can you hear it? Can you hear the main speakers? We can't hear the questioner.

Mckenna: Hello can you hear.

Speaker Change: And can you do the main speakers, we can't hear the question or.

Operator: To ask a question, you may press star, then one on your telephone keypad.

Speaker Change: Okay.

Isabella Simonato: Can we go to the next question, please? The next question will come from Isabella Simanato with Bank of America.

Speaker Change: Can we go to the next question please.

Speaker Change: The next question will come from Isabella <unk> with Bank of America. Please go ahead.

Operator: If you're using a speakerphone, please pick up your handset

Isabella Simonato: Please go ahead. Thank you.

Isabella: Thank you good afternoon, everyone. So I have a couple of questions first of all on lithium.

Isabella Simonato: Good afternoon, everyone. So I have a couple of questions. First of all, I'll leave them. When you say right that you are looking for a little evaluation, it's a revelating the market and what's attractive about these levels. I wonder what exactly do you mean by that, and what are things that are being taken into consideration here. And also on the international expansion here, if you mention $100,000 by 2030. If you could give us a sense, what are the main readers or focus on the main raw materials and what type of cost or production should we be thinking about for $100,000.

Operator: before pressing the keys.

Operator: To withdraw your question, please press star, then two.

Speaker Change: When you say right that's your Lam.

He was looking for.

Operator: Our first question today is from Joel Jackson with BMO Capital Markets.

Speaker Change: Delaware.

Speaker Change: We're evaluating.

The marchand sand much attractive at these levels I wonder what exactly do you mean by that and what are things that are being taken into consideration here.

Operator: Please go ahead.

Speaker Change: And also on the international expansion here at <unk>.

Speaker Change: And you mentioned 900000 tons by 2030.

Speaker Change: Could you give us a chance.

Speaker Change: What are the the main a leader with a focus on the main raw materials and eventually what type of costs up it does Ah shall we be thinking about a poor Friday 100000 tests. Thank you.

Unknown Executive: Thank you.

Carlos Diaz: As we come away with respect to produce a little bit more than $200,000 in Chile, maybe $30,000 or $40,000 of those is producing a little sulphate in Salad Acama that is sending later to China to convert to a little carbon and a drug site. So that is something that we could evaluate according to the market condition, the production that we are going to expect to produce in China in the second quarter, in the second semester. Sir, that's the point.

Speaker Change: Okay.

Speaker Change: As we were coming their way with respect to Bruce a little bit more than 200000 in Chile is 30 or 40000 of those who see producers of lithium sulfate in solar that gamma that descend elated to shana to convert to lithium carbonate at Brookside. So that is something that we could they are reevaluating their own and according to the market condition. The probation, Doug we're going now.

Speaker Change: The spectrogram Gucci, Jamie in the second quarter in the second semester.

Speaker Change: But at this point.

Anthony: Good afternoon.

Speaker Change: Yeah.

Mark Fones: Regarding the feature projects, I'm Mark Fones here speaking. Regarding the feature projects in Australia and what was mentioned in press release regarding the 100,000 tons per year of lithium carbon equivalent production into looking into 2030. As you know, we've been pretty active in Australia. We now have gained access to two world-class lithium deposits, namely the Endover project. Both of which were expected not only to have a significant scale, but also we are already discussing the expansion for mononism projects. In addition to that, we continue to work on monitor and invest in various early exploration projects, not only in Australia, but also across the world.

Regarding their future products.

Mark: Mark phone here speaking.

Speaker Change: Regarding the future projects and in Australia, and what was mentioned in the press release regarding them. They aren't 1000 tons per year of lithium carbonate equivalent production into looking into 'twenty 30, as you know we've been pretty active in Australia. We now have the gain access to world class lithium deposits, namely the Andover predict on them on Halloween.

Anthony: This is Anthony on for Joel.

Anthony: So, you indicated in the press release that in the, current lithium price environment, peers may take production out of the market.

Mark: Predict.

Both of which were expected not only to have a significant scale, but also we are already discussing the expansion for them on Holland lithium project.

Mark: In addition to that'll be continuing to work on monitor and invest in various early exploration projects not only in Australia, but also across the world. We have just recently announced a.

Mark Fones: We have just recently announced a new partnership in Sweden with Taga Group. All of them developed to, or aimed to develop an early stage. Innovative and marginal cost effective products into the long term. We intend to be a lithium chemical processor, not only Chile, but also outside and leveraging on SKM's knowledge and also technology and innovative process to be in the lower part of the marginal cost of production.

Mark: New partnerships in Sweden with target group.

Mark: All of them develop to a or aimed to little early stage and innovative and marginal cost effective products into the long term.

Anthony: Yet, SQM is maintaining 24 production targets with sales volume maybe slightly lower. Obviously, SQM has a unique quota system with Corfo and the lease that was previously expiring, which encourages maximizing production.

Speaker Change: We intend to be a lithium chemical processor, not only China, but also outside and leveraging on S. Kim's knowledge and also technology innovative process to be in the lower part of the marginal cost of production.

Mark: Yeah.

Anthony: But

Mark: Thank you.

Lucas Ferreira: The next question is from Lucas Ferrero with JP Morgan. Please go ahead.

Mark: Yeah.

Mark: The next question is from Lucas Ferreira with JP Morgan. Please go ahead.

Lucas Ferreira: Hi, guys. Can you hear me? Yes. Okay. Thank you.

Lucas Ferreira: Hi, guys.

Lucas Ferreira: Can you hear me.

Anthony: shouldn't SQM as a market leader be disciplined in maybe lower volumes?

Lucas Ferreira: Yes, yes, okay. Thank you. So two questions. The first one can you explain in correct me, if I'm wrong, but I'm seeing your average cost cash cost per ton lithium increasing like 8% quarter over quarter.

Unknown Executive: So two questions.

Unknown Executive: The first one, can you explain, and correct me if I'm wrong, but I'm seeing your average cost, cash cost per ton in lithium, increasing like 8% quarter to quarter. That's driving your gross margin to be reduced. So can you explain the reason why I was expecting actually the opposite things I would imagine. Lease payment allocations would be lower, given the lower prices, and also higher volumes would imply maybe fixed cost dilution. The depreciation of the peso maybe helps you as well. So can you explain why this quarter specifically cost was higher?

Lucas Ferreira: That's driving your gross margin to be reduced so can you explain the reason why I was expecting actually the opposite things.

Speaker Change: I would imagine a lease payments allocations will be lower given the lower prices.

Speaker Change: And then also pyre volumes would imply maybe fixed cost dilution the depreciation of the peso.

Maybe helped you as well so can you explain why this quarter, specifically corso was higher.

Ricardo Ramos: And the second question to Ricardo Ramos: I just to confirm, so you signed already the contract with Codelco for the JV, but you mentioned that certain conditions must be matched. So I just wanted to clarify that. So apart from the signing of the contract, what are the next steps for the JV to be actually formed and run smoothly?

Speaker Change: And the second question.

Ricardo Ramos: To Ricardo Ramos just to confirm so obviously you signed already the contract with Codelco for the JV, but you mentioned that a third certain convinced conditions must be match.

Speaker Change: So just wanted to clarify that so apart from that the the signing of the contract are what are the next steps for the JV to be actually formed in and run smoothly, so and how long that could take if you can explain that will be that'll be great. Thank you.

Ricardo Ramos: So and how long that could take if you can explain that would be that would be great. Thank you.

Speaker Change: Yeah.

Ricardo Ramos: Hi, Ricardo Ramos speaking. We published the agreement with Codelco is available for everyone in our web page, and there's a list of conditions present that are included in the in the in the corner you can you can check it. But are mainly legal ones that we have to follow some steps in the companies and so on in the by law, whatever. But we are working on that, and we are going to be ready as we speak in the first quarter of next year. But if you want to review in detail this condition present, those are included in the contract. Are public.

Ricardo Ramos: While there are several conditions precedent for the partnership to become effective, together with CODELCO, we are committed to ensure that these conditions are met by the first half of 2025.

Ricardo Ramos: We are looking forward to working together with CODELCO to operate the most sustainable lithium operation in the world based in the Salar de Tacama.

Speaker Change: I forgot what almost speaking we publish the agreement with Gorilla glass six available for everyone in our webpage and there's a list of condition precedent dairy are included in the in the in the country you can take it but there are mainly legal ones that we.

Ricardo Ramos: Our second quarter results were positively impacted by a strong volume of growth in all our major businesses.

Speaker Change: Have to forego some steps in the companies and so on in the bi lo or whatever but we are working on that and we're gonna be radius, we speak in the first quarter of next year, but.

Speaker Change: But if you want to reviewing detailed these condition prison. Those are included in the contract there are public.

Felipe Smith: Hello, this is Felipe Smith here.

Okay.

Ricardo Ramos: Supported by a strong demand growth in their respective markets were reported. Record sales volumes in lithium and iron businesses exceeding 52,000 metric tons and 4,000 metric tons respectively. We anticipated solid growth in the lithium market this year, driven by a strong EV performance, mainly in China.

Carlos Diaz: Hi Lucas, this is Carlos Diaz Piquín. Well, I respect your first question about the Cachecos of the lithium. This is mainly explained because of the inventory adjustment related to the Lithuan sulfate. The lithuan sulfate that we sport to China that was later is converted to carbon and hydroxide. It was sported during the second quarter where the prices were higher. And the royalty are paid in the moment that we export, so you will have an effect mainly related with that. The royalty that we pay to the corpus for in Chile.

Ricardo Ramos: Demand growth in the Iodine market this year exceeds our expectations. We expect this trend to continue for the remaining of the year and believe that our Iodine volumes could exceed 14.5 thousand metric tons this year, marking 2024 a record year.

Speaker Change: Hi, Luca this is kind of a b S begin aim.

Luca: Our area of respect to your first question about the cash cost of the lithium N and M D.

Speaker Change: This is mainly explained because of the mentally adjustment related to lithium sulfate day religious sulfate that we export to China that were later this convert into carbon Brookside was exported in during the second quarter, where the where the price were higher you know.

Speaker Change: And the royalties are paid in the moment that we export so how it may affect mainly related with that.

Speaker Change: The royalty that we bring to the court for sorry.

Speaker Change: Julie.

Carlos Diaz: Perfect. So if I may, just a quick follow-up: what's your lithium cache cost today? Is it remains around 5,000? Is this something we can work with? Our cost is stable; I mean, we don't see a significant change on what are coming. Before, it was most related with the priority that we pay. As we pay in the moment that we export, and not we pay when in the moment that we sell. And you know there is a lack because we have to export from Chile to China, and we give inventory there and so on. And that is the main effect that is in the lithium sulfate.

Speaker Change: Perfect.

Speaker Change: If I may just a quick follow up what's your.

Speaker Change: Lithium cash cost.

Speaker Change: Today's it remains around 5000. This is this is this something we we can work with.

Speaker Change: Our cousins juices table.

Ricardo Ramos: We believe that our average selling prices in the third quarter could be lower than in the previous quarter, given the current price environment.

In this period I mean, we don't see a significant change or whether they come in before it was mostly related with the ability that we pay as we bring the moment, Doug we explore and now we pay women demanded that we sell and you know there is a lag because we have to export from Chile to China, and we'll keep inventory there and so on and that is the main ethics.

Speaker Change: Ladies.

Speaker Change: And the little surgery.

Speaker Change: Okay.

Unknown Executive: Perfect.

Speaker Change: Perfect.

Gerardo Illanes: And I apologize, in this topic of the royalty, if I may, can you confirm if that quota, that quota, legacy quota of the previous contract with Corphal before 2017. So, if not mistaken, as of this year, you should be already exploring part of the quota, something like 50,000 tons a year with a fixed flat rate. Is this already in place? So eventually that comes to serve a flow into the PML in future sales if you can confirm this place.

Ken: And I apologize one final it in this in this topic of the royalties if I may Ken can you confirm if that quota.

Ken: The quota of legacy quarter of the previous contract with with quarter four before.

Ken: Before 2017 so.

Speaker Change: If not mistaken as of this year it should be already exploring part part of the quarter something like 50000 tons a year with a that seek said flat rates.

Speaker Change: Is this already in place. So eventually that comes to serve out flowing through the P&L in future sales. If you can confirm this place.

Felipe Smith: How are you?

Felipe Smith: I'm not sure if I understood correctly your question, but let me rephrase that we estimate that the sales in the second semester of 2024 will be similar to those reached in the first semester of 2024, meaning that our annual sales could be around 190,000 tons.

Speaker Change: Yeah.

Gerardo Illanes: Hi, Lucas, this is Gerardo. Yes, what you're saying is right, and for the ones that are not familiar, what we, when we signed the new contract in 2018, had a balance in the previous contract at a fixed rate of 6.8% with Corphal. And according to the new contract, this, the balance that we had could be used from 2024 onwards, and it's approximately 50,000 metric tons per year. So approximately 50,000 metric tons sold this year will pay a fixed rate of 6.8%, while the rest will pay based on the table that is publicly available.

Luca: Hi, Luca this is get out of a yes, what you're saying is a write down for the ones that are not familiar what we when we signed a new contract in 2018, we had a balance in the the previous contract at a fixed rate of six 8% with careful.

Felipe Smith: With a potential upside, should market conditions recover?

Anthony: Just to follow up on that, the question was, I guess, around whether SQM as a market leader, should be disciplined if we start needing to see production come out of the market.

Luca: According to the new contract. These the balance that we had.

Anthony: Just to follow up on that, the question was, I guess, around whether SQM as a market leader, should be disciplined if we start needing to see production come out of the market.

Speaker Change: It could be used from 'twenty to 'twenty four onwards, and is approximately 50000 metric tons per year.

Speaker Change: So approximately 50000 metric ton sold this year will pay a fixed rate of six weighted while the rest will pay based on the on the table that he said publicly available.

Carlos Diaz: Hello, this is Carlos Diaz.

Unknown Executive: Perfect. Thank you very much, everyone.

Speaker Change: Perfect. Thank you very much everyone.

Alejandro DeMichelis: The next question is from Alejandro, Michaelis from Jeffries. Please go ahead.

Alejandro <unk>: The next question is from Alejandro <unk> from Jefferies. Please go ahead.

Carlos Diaz: How are you?

Alejandro DeMichelis: Yes, good morning. Thank you very much for taking my question.

Alejandro <unk>: Yes. Good morning. Thank you for taking my question just one question on the Codelco agreement.

Carlos Diaz: Well, let me tell you a little bit about our capacity in Chile.

Ricardo Ramos: Just one question on the collelco agreement. If you, as I said, you get the condition of presence in the first half, 25, then my understanding is there is a kickoff of extra capacity there. Are there any discussions with Coralco regarding what could happen to that extra capacity in 2025?

Carlos Diaz: Now it's according to our schedule, and so we expect this year to produce 210,000 as a lithium carbon equivalent in a different quality, let's say carbon dioxide or sulfate.

Carlos Diaz: We should those 30,000 are converted in China.

Carlos Diaz: So we're still reviewing the volume to be converted, in China for lithium sulfate to hydroxide or carbonate during the second semester.

Speaker Change: If you.

Alejandro <unk>: As he said you you get the conditional precedents in the first half 'twenty. Five then my understanding there is a kickoff of extra capacity deaths are there any discussions with codelco regarding what could capex with that extra capacity to 25.

Unknown Executive: Good afternoon and welcome to the SQM Second Quarter 2024 earnings conference call.

Unknown Executive: Good afternoon and welcome to the SQM Second Quarter 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.

Unknown Executive: 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.

Ricardo Ramos: No, we are not having marketing or commercial discussion with Godelco yet because there's part of the condition presence are some authorization and the following antitrust rules we need to have the agreement ready before starting to talk about commercial strategy. So, if the current lithium market pricing conditions continue, if there are chance that the extra capacity for next year may not become available, or you may choose to delay that, as someone said before, we're a very disciplined company, it means that we will increase the capacity anyway and we will sell more lithium carbon dioxide as compared to this year, that's for sure.

Speaker Change: No we are not having marketing or commercial discussion with political yet because they're part of the condition presence are some authorization on them.

Unknown Executive: After today's presentation there will be an opportunity to ask questions.

Unknown Executive: 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. Please note this event is being recorded.

Unknown Executive: To ask a question you may press star then one on your telephone keypad. To withdraw your question please press star then two.

Speaker Change: Following antitrust rules, we need to have the agreement already before you're starting to talk about is commercial it's Charlie.

Unknown Executive: Please note this event is being recorded.

Irina Axenova: I would now let's turn to the conference over to Irina Axenova Head of Investor Relations.

Irina Axenova: I would now let's turn to the conference over to Irina Axenova Head of Investor Relations. Please go ahead. Thank you. Good afternoon. Thank you for joining us Kerms earnings conference call for the second quarter of 2024. This conference call will be recorded and is being broadcast live. Our earnings press release and a presentation with a summary of the result have been uploaded to our website where you can also find a link to the webcast.

Speaker Change: Yeah.

Carlos Diaz: So the total volume converted in China obviously will depend on the specific market segment and following the current price environment.

Speaker Change: So if the current lithium market pricing conditions continue Easter of channels that the extra capacity for next year may not become available or you may choose to delay that.

Carlos Diaz: So finally, it would depend on how the price is coming in the next month.

Unknown Executive: Please go ahead.

Unknown Executive: Thank you.

Speaker Change: As someone said before we're very disciplined company. It means that we will increase the capacity anyway, we will sell more lithium carbonate thanks, Hugo as compared to this year that's for sure.

Irina Axenova: Ricardo Ramos, our chief executive officer will be speaking on the call today. Here are the Yannis, our chief financial officer Carlos Vier, CEO of SQM Salar, Mark Fones, CEO of SQM International Lithium, Philippe Smith, commercial vice president of SQM Salar, Pablo Hernandez, senior director of business strategy and development SQM Salar, Pablo Martinez, CEO of iodine nitrate, and Juan Pablo Bilolio, commercial vice president of iodine in industrial chemicals are also available to answer any questions.

Unknown Executive: Okay, that's very clear.

Hugo: Okay, that's very clear thank you.

Santhosh Seshadri: The next question is from Santhosh Seshadri, HSBC. Please go ahead. Thank you very much.

Carlos Diaz: So I don't know if I answered your question.

Speaker Change: The next question is from Santos It Seshadri excuse me with HSBC. Please go ahead.

Anthony: Great, thanks.

Anthony: Just a follow-up.

Speaker Change: Okay.

Santhosh Seshadri: Just a follow-up on cost.

Speaker Change: Pretty much just a follow up on cost so how do you expect cost to panel.

Carlos Diaz: So, how do you expect cost to pan out through the rest of the year in the light of electricity pricing increases, Santhosh Seshadri? And do you have any cost mitigation program in place, possibly by reducing production of your hydroxide volume, Seshadri, which has relatively higher cost space, or maybe by slowing down ramp up at more flow and product. Okay, thank you.

Speaker Change: The rest of the year in light of.

Speaker Change: Liquidity price increases announced in Chile, and do you have any cost mitigation program in place, possibly by reducing production of your hydroxide volumes in Chile.

Irina Axenova: 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.

Speaker Change: Which has said relatively high cost base, but maybe by slowing down ramp up at more colon project. Thank you.

Anthony: So maybe weighing strategic priorities, how would SQM rank delaying future times out of Chile versus investments in places like Australia or other opportunities moving forward?

Speaker Change: You.

Ricardo Ramos: And now I will leave you with our chief executive officer Ricardo Ramos. Thank you Rina. Good afternoon everyone and thank you for joining us today before diving into the key drivers behind our results.

Carlos Diaz: So, this is kind of yes. Our focus is to reduce our cost and to look at alternatives to keeping increasing the quality of the cost and the carbon footprint and so on. So, but we're not thinking a bit to reduce our capacity of lithium dioxide. I don't know if you was your question, but no, we will continue our plan to expand in the lithium carbon dioxide in Chile.

Speaker Change: So these are all things our focus is to use our gross onto two to look at alternative to keep.

Unknown Executive: Good afternoon.

Nicolas: The increase in the quality of deal with it as Nicolas on the carbon.

Ricardo Ramos: I would like to highlight an important milestone which is last quarter as mentioning our earnings release. We are very pleased to have entered into a partnership agreement with coelco to jointly operate the Salar Alacama until 2016 based on the principle of private public alliance. We believe this agreement is a pivotal moment for both SQM and for the future of the lithium industry in Chile, while there are several conditions precedent for the partnership to become effective together with coelco, we are committed to ensure that these conditions are met by the first half of 2025. We are looking forward to working together with coelco to operate the most sustainable lithium operation in the world based in the Salar Alacama.

Speaker Change: One foot prevent so one so but oh, we're not thinking a little bit to reduce our capacity of lithium at Brooks and my view was your question, but no. We will continue with our plan to spend in daily to carbon in our Brooks heading Chile.

Unknown Executive: Okay. Thank you.

Speaker Change: Yeah. Thank you.

Mark Fones: And just a question on your own whole line project. You know, are you planning to slow down, ramp up, you know, given the adverse economics? And what would this mean for the sales contribution in 2024 and 2025?

Speaker Change: Question on your long haul line project.

You know what are you planning to slow down ramp up.

Speaker Change: Given the adverse economics.

Yes.

Speaker Change: And what does this mean for the sales contribution in 2024 and 2025.

Ricardo Ramos: Hi, moving forward, as is clear, we are going to develop a huge project that is called Salar Futuro together with Codelco.

Mark Fones: Hi, Mark from here. Thanks for your question. No, we continue full throttle. So, managing the Monolidium project, we, as you know, are already producing sweat and concentrate from the minor concentrator. We have already produced more than 100,000 tons of sweat and concentrate. We will continue to increase productivity, reduce costs, and maintain quality into the future. On the refinery side, we have already above 80% construction completion. We are starting commissioning on the refinery, which we expect to have first product meet 2025, so meet next year.

Unknown Executive: Thank you for joining us Kerms earnings conference call for the second quarter of 2024.

Ricardo Ramos: I will say our second quarter results were positively impacted by a strong volume of growth in all our major businesses supported by a strong demand growth in their respective markets were reported record sales volumes in lithium and iron businesses exceeding 52,000 metric tons and 4,000 metric tons respectively. We anticipated solid growth in the lithium market this year driven by a strong EV performance mainly in China. The man growth in the iron market this year exceed our expectations.

Speaker Change: Hi, Mark here. Thanks for your question no we continue full throttle.

Speaker Change: Managing them on Holland can predict we as you know are already producing spodumene concentrate from the mine and concentrator. We have already produced more than 100000 tons loss would've been concentrated we will continue to increase productivity reduce costs and maintain quality into the future on the refinery side we.

Unknown Executive: This conference call will be recorded and is being broadcast live.

Speaker Change: Have already and are above 80%.

Unknown Executive: Our earnings press release and a presentation with a summary of the result have been uploaded to our website where you can also find a link to the webcast.

Speaker Change: And construction completion, we are starting commissioning of the refinery, which we expect to have first product.

Unknown Executive: Ricardo Ramos, our chief executive officer will be speaking on the call today.

Ricardo Ramos: We expect this trend to continue for the remainder of the year and believe that our iodine volumes could exceed for 10,500 metric tons this year marking 2024 a record. While our average realized price in the lithium business improves slightly in the second quarter compared to the previous quarter, we have seen lithium prices decline since the beginning of July. As most of our contracts are linked to price indices and our average prices follow the prevailing market prices, we believe that our average selling prices in the third quarter could be lower than in the previous quarter, even the current price environment.

Speaker Change: And mid Twenty's or anybody else, who meet next year.

Mark Fones: Once completed, we expect the prey to be fully profitable and to increase and add value to the skins. We'll expect the prey.

Speaker Change: Once completed we expect the price will be fully profitable and to increase in and validate our value to lift games with respect to that.

Speaker Change: Great.

Speaker Change: Yeah.

Unknown Executive: And just a follow up on that.

Speaker Change: Got it and just a follow up on that so under commissioning Raphael refinery.

Mark Fones: So until commissioning of your refinery, are you looking at the tolling opportunities or selling spotty mean directly into the market or maybe just holding on to your spotty mean mean when please, until you commission the, you know, refinery? Yes, we do have a tolling commitment. We are tolling spotty mean concentrate, and we are also open to a beach and alternative in that respect.

Speaker Change: Looking at the tolling opportunities or are selling spodumene directly into the market or maybe just holding on PR for Dominion one piece until you commissioned up refi.

Speaker Change: Refinery.

Ricardo Ramos: We are convinced that most of our of the green fields are not profitable. While we continue with our previously announced capacity expansion projects, we are also reassessing the attractiveness of certain markets and initiatives in the current price environment. We believe our lithium sales volumes in the second half of the year could be similar to those reported for the first half of the year with a potential upside should the market conditions improve.

Speaker Change: Yes, we do have a tolling commitments, we are returning sweat them and concentrate and we are also open to omnichannel alternatives in that respect.

Speaker Change: Yeah.

Speaker Change: Okay.

Marcio Filho: The next question is from Marcio Sao with Goldman Sachs. Please go ahead.

Speaker Change: The next question is from Marcio silo with Goldman Sachs. Please go ahead.

Marcio silo: Thanks, everyone. Thanks for the opportunity.

Paul a question as it might apply all those new when we look at net income, let's say mega fueled by about 2 million wallets understand.

Unknown Executive: Here are the Yannis, our chief financial officer Carlos Vier, CEO of SQM Salar, Mark Fones, CEO of SQM International Lithium, Philippe Smith, commercial vice president of SQM Salar, Pablo Hernandez, senior director of business strategy and development SQM Salar, Pablo Martinez, CEO of iodine nitrate, and Juan Pablo Bilolio, commercial vice president of iodine in industrial chemicals are also available to answer any questions.

Ricardo Ramos: We recently formed SKM International Lithium to develop our lithium business on the side of Chile. The primary objective is to leverage the lithium assets and expertise we have in exploration, project development, mining and chemical operations to expand our lithium portfolios overseas.

Unknown Executive: 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.

Mainly explained by one performed.

Speaker Change #100: That would be.

Speaker Change #101: We've been in India, but just trying to understand how.

Unknown Executive: Please note that the same cautionary language used in our press release and presentation also applies to this call.

Unknown Executive: Thank you, but later we will now go open to the line of questions. 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 speaker phone, please pick up your handset before pressing the keys. To draw your question, please press star then two.

Speaker Change #102: If you care about myopia.

Speaker Change #101: Sorry.

Unknown Executive: Marcio, sorry to interrupt you, but there is a problem with your microphone. So we will go to the next question, and then we can come back with you. But please try to change to another microphone because there is a problem; we cannot hear anything of what you're saying.

Speaker Change #103: So sorry to interrupt you, but there is a problem with your microphone. So we will go to the next question.

Ricardo Ramos: And now I will leave you with our chief executive officer Ricardo Ramos.

Joel Jackson: Our first question today is from Joel Jackson with BMO Capital Markets. Please go ahead.

Ricardo Ramos: Thank you Rina.

Speaker Change #104: We can come back with you but.

Speaker Change #104: Yeah.

Ricardo Ramos: Good afternoon everyone and thank you for joining us today before diving into the key drivers behind our results.

Speaker Change #105: No no.

Speaker Change #104: No.

Speaker Change #106: Please try to change to another microphone because there is a product we cannot hear anything about what you are saying.

César Pérez: The next question is from Cesar Perez-Novole with BTG Patchwell. Please go ahead. Yes, good morning, good afternoon. I'm sorry.

Speaker Change #107: The next question is from assays are Perez novoa with BTG Pactual. Please go ahead.

Ricardo Ramos: We are convinced that most of our of the greenfield projects are not profitable. While we continue with our previously announced capacity expansion projects, we're also reassessing the effectiveness of certain market, and initiatives in their current price environment.

Speaker Change #108: Yes. Good morning, good afternoon, I'm, sorry in the press release.

Anthony: Good afternoon, this is Anthony on for Joel. You indicated in the press release that in the current lithium price environment, peers may take production out of the market. Yes, SKM is maintaining 24 production targets with sales volume slightly lower. Obviously, SKM has a unique quota system with Corpo and the lease level is free to save firing, which encourages you to maximize production.

César Pérez: In the press release, I see that management reaffirmed their previously announced expansion plan for this year, but at the same time, you also suggested of some certain reassessment of specific market and initiatives that may be, quote unquote, less attractive in the short term. Could you please provide further detail on that specific assessment and potential near-term impact? Thank you.

Ricardo Ramos: I would like to highlight an important milestone which is last quarter as mentioning our earnings release.

Speaker Change #109: I see that management reaffirmed or the previously announced.

Speaker Change #110: Expansion plan for for this year, but at the same time.

Ricardo Ramos: We believe our lithium sales volumes in the second half of the year could be similar to those reported for the first half of the year, with a potential upside should the market conditions improve.

Ricardo Ramos: We recently formed SQM International Lithium to develop our lithium business outside of Chile. Its primary objective is to leverage the lithium assets and expertise we have in exploration, project development, mining and chemical operations to expand our lithium portfolios overseas.

Speaker Change #111: You also suggested of some search and reassessment of specific market on and initiatives that may be a quote unquote less attractive in the short term could you. Please provide further detail on that specific assessment and potential near term impact. Thank you.

Unknown Executive: But shouldn't SKM as a market leader be disciplined and maybe lower volumes?

Carlos Diaz: So there is I think two different separately connected, but I will have our long term strategies to give it increase in our capacity of interior what I say before as a little carbon dioxide and to keep it growing at the same pace of the the management.

Speaker Change #112: So there is nothing to differentiate poorly connected better will have on our long term strategy is to keep it increases our capacity leading to the what I say before there's a lithium carbonate brookside.

Speaker Change #112: To keep it growing at the same pace or the the demand is doing.

Carlos Diaz: But it's a tactic in the short term is if we have to reduce the conversion what I say before in China because the price are not and not the convenience for us to do the business we're doing. It's something that we would do in the short term, but it's a little bit different that we are planning for the long term because we still think that this market is going to keep growing in the future.

Speaker Change #113: But as a tactic in the short term we see if we have to reduce all critical breakthrough I want to say before in China because of the price or not in.

Speaker Change #113: Another convenient for us to do the beat as we're doing them.

Speaker Change #113: Something that we would do in the short term, but it's a little bit different there were planning for the long term because we still feel better.

Speaker Change #113: This market is going to keep growing in the future.

Unknown Executive: Understood. Thank you.

Speaker Change #114: Okay understood. Thank you.

Speaker Change #114: Yeah.

Corinne Blanchard: The next question is from Corinne Blancher with Deutsche Bank. Please go ahead.

Speaker Change #114: The next question is from Karen Berlin share with Deutsche Bank. Please go ahead.

Unknown Executive: The question was that gets around whether SKM as a market leader should be disciplined if we start needing to see production come out of the market.

Corinne Blanchard: Hey, good afternoon. The first question just related to the pricing. Is there a scenario or is there a certain price like spot price at some point that you could be thinking actually of.

Karen Berlin: Hi, good afternoon.

Karen Berlin: The first question.

Speaker Change #116: Just related to the pricing scenario.

Stephane Paul: Stephane Paul.

Speaker Change #116: Paul.

Speaker Change #118: Tom Tom that you could be thank you Jennie O I, having contract weighs a negotiated price all basically the question is.

Corinne Blanchard: I've been contract with a negotiated price or basically the question is like are you considering at some point moving back was like maybe like fixed price contract or was having like a stronger like flow and sending price.

Carlos Diaz: Hello, this is Carlos Diaz, how are you? Well, let me tell you that it will be our capacity in Chile. Now it's according to our schedule, and I saw respect this year to produce $210,000 as a little carbon equivalent in the different quality and the carbon dioxide or sulfate.

Speaker Change #119: Are you considering at some point moving back with like maybe like steak fries.

Speaker Change #119: Right.

Speaker Change #119: Our strong garlock slow setting price.

Carlos Diaz: We should dose 30,000 are converted in China, so we're still reviewing the volume to be converted in China for a little sulfate to a drug set of carbonate, and during the second semester, so the total of the volume converted in China obviously will depend of the specific market segment, and following the current price environment, finally it would depend on how the price is coming in the next month, so I don't know if answer your question. Great, thanks.

Felipe Smith: Hello, Corinne, this is Felipe. As we have been doing already in the past years and we want to continue like this, we are a low cost producer, so we prefer to follow the indices. We think that this is the best way to contract our volumes; it is both good for the customer and for us.

Corinne: Hello Corinne.

Philippe: And this is Philippe.

Philippe:

Speaker Change #122: As we have been doing a already in the past years and we want to continue to like these we are a low cost producer. So we preferred to follow the indices. We think that this is the best way to contract our volumes.

Speaker Change #123: Ace Bowl is good both for the customer and for us.

Speaker Change #123: Okay.

Corinne Blanchard: Okay, I find out the second question.

Speaker Change #123: Okay.

Unknown Executive: Just to follow up, so maybe weighing strategic priorities, how would S2M rank delaying future times out of Chile versus investments in places like Australia or other opportunities moving forward.

Speaker Change #123: Alright.

Unknown Executive: Can you please give an update on the T&C situation? I mean, we saw a lot of filing since there is not a lot of further options for them to do anything but just trying to understand the view here that will be very helpful. Okay, what you call T&T situation is a public situation, we don't have different information than the one that is on the press. It means that T&T they have a different opinion of the regulatory in Chile, the CMF that is the regulatory, they have an opinion about the transaction and T&T has a different opinion and they appeal to the court with their position. We are participating in the peeling also with our opinion and there's nothing new about that.

Speaker Change #124: Second question can you. Please give an update on the TNT situation I mean, we saw a lot of filing.

Speaker Change #124: There is not a lot of Oh.

Speaker Change #124: Option for them to do anything, but just trying to defend the view here that would be very helpful.

Ricardo Ramos: We are very pleased to have entered into a partnership agreement with coelco to jointly operate the Salar Alacama until 2016 based on the principle of private public alliance.

Unknown Executive: Hi, moving forward, as it's clear, we are going to develop a huge project that is called Salar Futuro together with Codelco. That's why our investment together with Codelco in the next 10 years in Chile is going to be significant. If you consider the Salar Futuro project, we will develop together. We expect to increase some production in Salar with the project, of course, but this is mainly Chile, it's mainly oriented to the Salar Futuro project.

Speaker Change #125: Okay, well you called the N T situation is a public is a situation we don't have different information than the one that he soon on the brass and it means that gen. G. They have a different opinion of the of the regulator in Chile. The C. M. S studies de regulate George do you have an opinion about the transaction.

Ricardo Ramos: We believe this agreement is a pivotal moment for both SQM and for the future of the lithium industry in Chile, while there are several conditions precedent for the partnership to become effective together with coelco, we are committed to ensure that these conditions are met by the first half of 2025.

Ricardo Ramos: We are looking forward to working together with coelco to operate the most sustainable lithium operation in the world based in the Salar Alacama.

Speaker Change #126: Since she has a different opinion and they appeal to the court with their position we are participating in the appealing also with our opinion and there's nothing new about that that means it's a public good and she has been very public about their the statements. Their opinion on the company has been also very public about what's our opinion.

Unknown Executive: Of course, we want to grow outside Chile if we find good opportunities, as you know, we have been active, we have investment today in Australia, we continue to have geologists looking for new alternatives, and probably we will announce new investment on new projects in Australia in the medium term. I don't know, but we are working very hard in order to do it.

Unknown Executive: It means it's a public, T&T has been very public about their statements, their opinion and the company has been also very public about what's our opinion about the situation and the regulators, CMF also being very clear about their opinion about this specific situation.

Speaker Change #126: Oh, the sedation and they and their regulators CMS also being very clear about their opinion about the specifics edition.

Unknown Executive: Great, thank you.

Unknown Executive: But maybe differently, can they do? Is there any other step that it can be taken, or would you try to understand what can further up on, or this is just a static code at this point? Probably you have to ask T&T about the potential future steps. I really don't know, but of course in this specific situation we expect that after the court decision, that we are very optimistic about the court decision. I hope it's going to be over, but again if they are thinking something else, you have to ask T&T. I don't know how to answer.

Speaker Change #127: The Miami Dade County.

Can they do either any of them.

Ben Isaacson: The next question is from Ben Isaacson with Scotiabank.

Speaker Change #127: So that they can be taken but we're just trying to understand why.

Unknown Executive: Please go ahead.

Further upon or this is just a static call. It at this point.

Ricardo Ramos: We anticipated solid growth in the lithium market this year driven by a strong EV performance mainly in China.

Unknown Executive: Hi everyone, this is the Perva on Perven. I might just take you back off of the last question a little bit, but given that the market is currently over-supplied and you've previously shared in based on your 210,000 tons of production versus about 190,000 of sales, is the expectation that you'll be able to work through these inventory? Are you finding any challenges, seeing any challenges and finding buyers for that lithium inventory? Are you holding an anticipation of demand and pricing, picking up the near term?

Ricardo Ramos: The man growth in the iron market this year exceed our expectations.

Hello.

Speaker Change #127: Okay.

Speaker Change #128: Probably you have two Oscar can tell you about the potential future missteps died I really don't know bad but of course in this specific situation. We expect that after the court decision that I. We are very optimistic about the court decision I hope he is going to be over but again, if they are seeing.

Ricardo Ramos: We expect this trend to continue for the remainder of the year and believe that our iodine volumes could exceed for 10,500 metric tons this year marking 2024 a record.

Speaker Change #129: Something else that you you'll have to ask the Egencia I don't have the answer.

Camilla Barger: All right, thank you. The next question is from Camilla Barger with Berrezco. Please go ahead.

Speaker Change #130: Alright, thank you.

Unknown Executive: Well, we're already coming out of here. We expect to sell this year around to 190,000 tons of lithium carbonate, and we expect to produce around the 200,000 tons, so it's going to be 20,000 exceed that is approximately what we sell in one month. So for the others, I will have to prepare for next year whether we expect to sell a little bit more. So it's a good investment in capital work and working capitalism.

Speaker Change #130: The next question is from Camilla Burger with Bradesco. Please go ahead.

Camilla Barger: Hi, good afternoon. Thank you for taking my questions. So just quick questions on my side, regarding the deal with Codec, could you please elaborate on the main challenges in discussions with local communities? And the second question is on topics. In case the market gets worse, would you consider flexibilizing topics, and if so, how much would it be?

Camilla Burger: Hi, Good afternoon. Thank you for taking my questions. So just two quick questions on my side regarding the deal with could equal could you. Please elaborate on the main challenges in your discussions with local communities and the second question.

Ricardo Ramos: That's why our investment together with Codelco in the next 10 years in Chile is going to be significant.

Speaker Change #131: On topics.

Speaker Change #133: The market gets worse or would you consider flexible Iceland topics and if so how much would it be.

Unknown Executive: We don't see that it's too much, it's healthy. All right, and then follow up, your production budget for 2024 were contracted with kind of a one-month-like despot. How should we be thinking about what's in realized pricing in Q3 so far given that order to date the index was down what 15 to 20 percent? Is there any sort of indication as to whether you're baking price floors and ceilings into your contract?

Carlos Diaz: Thank you. Okay about the deal with codec, there is a clear process in order to have a relation with the communities for the new agreement, and we are working on it. You have to go to the communities, ask their opinion that is not binding, but it's a very important opinion for the court, for the companies, and for them. We are working very hard in order to do it as soon as we can, and with relation with the communities, I will say that are very good. We are open with them, they are open with us, and we are working in order to solve any difference that we may have.

Speaker Change #134: Thank you.

Ricardo Ramos: If you consider the Salar Futuro project, we will develop together.

Speaker Change #134: Okay.

Speaker Change #135: Okay about the deal with Codelco days, a clear process in order to have a relation with the community DC pillar for the new agreement and we're working on it and this has a you'll have to go to the communities ask there or PD lone that is not binding but its a very important opinion four called for in the arm for the companies and four.

Ricardo Ramos: We expect to increase some production in Salar de Cama with the project, of course.

Ricardo Ramos: But this is, mainly Chile.

Felipe Smith: Yeah, hello, Felipe again. So indeed the Q&M price mechanism is based on pricing this is in the different geographies with certain lag which average approximately one month. This means that in general our realized average price will always be close to the prevailing average spot price. Now, during the beginning of second quarter, we observed a certain price recovery, which unfortunately lasted until mid-April, then we saw price fluctuations that were quite moderate but over the last three months we have seen a persistent decline in the index prices, especially in Q3. So that is why we are expecting that the average price in Q3 will be lower than in Q2.

Ricardo Ramos: It's mainly oriented to the Salar Futuro project.

Speaker Change #134: Dan.

Speaker Change #134: We are where we're working very hard in order to do it as soon as we can and our relation with the communities I will say that is a very good we are open with them, they're open with us and we are working in order to solve any difference that we may have.

Ricardo Ramos: Of course, we want to grow outside Chile if we find good opportunities.

Ricardo Ramos: As you know, we have been active.

Speaker Change #134: Yeah.

Carlos Diaz: No, no, the capex. Sorry, regarding the capex, the capex informed by the company, it will continue. We are, we think that the capex we have today in the lithium industry is very good; in the iron and nitrates, it's the right one, and the projects that we have in Australia, the right one.

Speaker Change #136: No no the Capex is solid.

Speaker Change #137: Regarding the Capex the Capex informed by the company. It will continue we are we think that the capex. We have today in the lithium industry is very good in the IAA nitrates is the right one and the projects that we have in Australia. The right. One as mentioned before we don't think that the long term.

Ricardo Ramos: We have investment today in, Australia.

Ricardo Ramos: We continue to have geologists looking for new alternatives and probably we will announce new investment or new projects in Australia in the medium term.

Ricardo Ramos: I don't know, but we are working very hard in order to do it.

Ricardo Ramos: And as mentioned before, we don't think that the long-term, really, we don't think that the long-term pricing of lithium is the today price environment. There's a specific situation today of the price environment, but we are, we are very clear that the price will be different in the future. That's why we have a clear plan of investment in the lithium. We are really committed about that, and we are very low cost-producer. That's why we will continue to do our, our, our, our investment.

Speaker Change #137: Really we don't think that the long term pricing of lithium as day to day price environment. This specific situation today of the price environment, but where are we are very clear that the prize will be different in the future. That's why we have a clear plan of investment in the lithium we're really committed about that and we are very low cost producer. That's why we will continue to do what we're aware of where you invest.

Unknown Executive: Thank you. And if I may sneak in a... Pardon me man, we seem to have lost audio from your location. Hello, can you hear it? Can you hear the main speakers? We can't hear the questioner.

Speaker Change #137: Ben.

Speaker Change #137: Yeah.

Unknown Executive: Okay, thank you very much.

Ben Isaacson: Okay. Thank you very much.

Operator: Great, thank you.

Unknown Executive: Can we go to the next question please?

Irina Axenova: This concludes our question and answer session. I would like to turn the conference back over to Arena, Exanova.

Operator: Thank you, operator.

This concludes our question and answer session I would like to turn the conference back over to Irina accident over.

Operator: We'll now go open to the line of questions.

Operator: The next question is from Ben Isaacson with Scotiabank.

Operator: We will now begin the question and answer session.

Unknown Executive: Thank you, Gary.

Irina <unk>: Thank you Darren Gee before requires I have a question from Marcio, who couldn't connect if there's any dividend potential navy of negative net income so far.

Operator: Please go ahead.

Unknown Executive: Before we close, we have a question from Marcia, who couldn't connect, if there's any dividend potential in the view of negative net income so far. I'm not sure how you would like to see? The company has a dividend policy that has been approved by the board and informed to the shareholders, and that dividend policy established that we will distribute the dividend as a function of the net income if certain conditions are met on our balance sheet. Since the net income is negative because of a one-time effect that hit the results because of the lithium mining tax that was applied in the first quarter, I mean, the result is negative, and because of that, the net income that the board has approved as an interim dividend has been zero.

Operator: To ask a question, you may press star then 1 on your telephone keypad.

Apurva: Hi, everyone.

Operator: If you are using a speakerphone, please pick up your handset before pressing the key.

Apurva: This is Apurva on for Ben.

Apurva: I might just piggyback off of the last question a little, bit.

Apurva: But given that the market is currently oversupplied and you've previously shared based on your 210,000 tons of production versus about 190,000 of sales, is the expectation still that you'll be able to work through these inventories?

Apurva: Are you finding any challenges – seeing any challenges in finding buyers for that, lithium inventory?

Isabella Simonato: The next question will come from Isabella Simanato with Bank of America. Please go ahead. Thank you.

Apurva: Are you holding in anticipation of demand and pricing picking up in the near term?

Carlos Diaz: Well, we're already coming.

Operator: To withdraw your question, please press star then 2.

Carlos Diaz: We expect to sell this year around to 190,000 metric tons of lithium, carbonate and we expect to produce around 210,000.

Operator: Our first question today is from Joel Jackson with BMO Capital Markets.

Irina <unk>: So now that you would like.

Carlos Diaz: So, it's going to be 20,000 exceed, which is approximately what we sell in one month.

Isabella Simonato: So, I have a couple of questions.

Joel Jackson: Please go ahead.

Carlos Diaz: So, for the other side, we have to prepare for next year where we expect to sell a little bit more.

Isabella Simonato: First of all, on lithium, when you say, right, that SQM is looking, for re-evaluation, re-evaluating the markets and what's attractive at the levels, I wonder what exactly do you mean by that and what are things that are being taken into consideration here.

Felipe Smith: Hello, this is Felipe Smith here.

The company has a dividend policy that as it being approved by the board and informed to the shareholders.

Carlos Diaz: So, it's a good investment in working capital.

Isabella Simonato: And also, on the international expansion here, and you mentioned 100,000 tons by 2030, if you could give us a sense, what are the main regions of focus, the main raw materials, and eventually what type of cost of production should we be thinking about for these 100,000 tons?

Felipe Smith: How are you?

Carlos Diaz: We don't see that it's too much.

Isabella Simonato: Thank you.

Felipe Smith: I'm not sure if I understood correctly your question, but let me rephrase that we estimate that the sales in the second semester 2024 will be similar to those reached in the first semester of 2024, meaning that our annual sales could be around 190,000 tonne with a potential upside should market conditions recover.

Carlos Diaz: It's a healthy investment.

Carlos Diaz: As we're coming, we expect to produce a little bit more than 200,000 in Chile. 30,000 or 40,000, of those is produced as lithium sulfate in Salada de Cama that is sent later to China to convert to lithium carbonate hydroxide.

Felipe Smith: And just to follow up on that, the question was, I guess, around, Whether SQM as a market leader should be disciplined if we start needing to see production come out of the market.

Apurva: All right, and then as a follow-up, your production volumes for 2024 were contracted with kind, of a one-month-like despot.

Unknown Executive: Good afternoon everyone. So I have a couple of questions. First of all, I'll leave them. When you say right that you are looking for a little evaluation, it's a revelating the market and what's attractive about these levels. I wonder what exactly do you mean by that and what are things that are being taken into consideration here. And also on the international expansion here, if you mention $100,000 by 2030. If you could give us a sense, what are the main readers or focus on the main raw materials and what type of cost or production should we be thinking about for $100,000.

Carlos Diaz: So, that is something that we could re-evaluate according to the market condition, the production that we're going to expect to produce in China in the second quarter, in the second semester.

Felipe Smith: Yeah.

Carlos Diaz: So that's this one.

Apurva: How should we be thinking about lithium realized pricing in Q3 so far, given that quarter-to-date the index was down, what, 15 to 20 percent?

Carlos Diaz: Hello, this is Carlos Diaz.

Mark Fones: Regarding the future projects.

Felipe Smith: Is there any sort of indication as to whether you're baking price floors and ceilings into your contracts?

Carlos Diaz: How are you?

Mark Fones: Hi, I'm Mark Fones here speaking.

Felipe Smith: Yeah, hello, Felipe again.

Carlos Diaz: Well, let me tell you a little bit about our capacity in Chile that is now is according to our schedule.

Irina <unk>: Davidson.

Mark Fones: Regarding the future projects in Australia and what was mentioned in the press release regarding the 100,000 tons per year of lithium carbon equivalent production into looking into 2030.

Felipe Smith: So, indeed, SQM price mechanism is based on price indices in the different geographies, with certain lag, which average approximately one month. This means that, in general, our realized average price will always be close to the prevailing average spot price. Now, during the beginning of second quarter, we observed a certain price recovery, which, unfortunately, lasted until mid-April. Then we saw price fluctuations that were quite moderate, but over the last three months, we have seen a persistent decline in the index prices, especially in China. So, that is why we are expecting that the average price in Q3 will be lower than in Q2.

Carlos Diaz: And so we expect this year to produce 210,000 as a lithium carbon equivalent in the different quality and let's say carbon dioxide or sulfate, at which of those 30,000 are converted in China.

Mark Fones: As you know, we've been pretty active in Australia.

Speaker Change #139: The policy established that we will distribute the dividend.

Apurva: Thank you, and if I may sneak in a...

Carlos Diaz: So we're still reviewing the volume to be converted in China for lithium sulfate to hydroxide or carbonate.

Operator: The next question is from Lucas Ferreira with JP Morgan.

Mark Fones: We now have gained access to two world class lithium deposits. Namely the Andover project and the Mon Holland project, both of which were expected not only to have a significant scale but also we are already discussing the expansion for Mon Holland project.

Operator: Pardon me, ma'am.

Carlos Diaz: And during the second semester, so.

Operator: Please go ahead.

Mark Fones: In addition to that we continue to work on monitor and invest in various early exploration projects, not only in Australia but also across the world.

Operator: We seem to have lost audio from your location.

Carlos Diaz: The total volume converted in China obviously will depend on the specific market segment and following the current price environment.

Lucas Ferreira: Hi guys.

Mark Fones: We have just recently announced a new partnership in Sweden with Talga Group.

Operator: Hello.

Carlos Diaz: So finally, it would depend on how the price is, coming in the next month.

Speaker Change #139: As a function of the net income if certain conditions are met on our balance sheet.

Lucas Ferreira: Can you hear me?

Mark Fones: All of them developed or aimed to develop early stage innovative and marginal cost effective products into the long term.

Operator: Can you hear us?

Carlos Diaz: I don't know if I answered your question.

Lucas Ferreira: Yes.

Mark Fones: We intend to be a lithium chemical processor, not only in Chile but also outside and leveraging on SQM's knowledge and also technology innovative process to be in the lower part of the marginal cost of production.

Operator: We can hear the main speakers.

Operator: Great, thanks.

Lucas Ferreira: Okay, thank you.

Mark Fones: Thank you.

Operator: We can't hear the questioner.

Operator: Just a follow up.

Lucas Ferreira: So two questions.

Felipe Smith: Is there any sort of indication as to whether you're baking price floors and ceilings into your contract?

Operator: Can we go to the next question, please?

Operator: So maybe weighing strategic priorities.

Lucas Ferreira: The first one, can you explain and correct me if I'm wrong, but I'm seeing your average cash cost per ton in lithium increasing like 8% quarter over quarter. That's driving your gross margin to be reduced.

Felipe Smith: Yeah, hello, Felipe again.

The net income is negative because of a onetime effect that.

Operator: The next question will come from Isabella

Operator: How would SQM rank delaying future times out of Chile versus, you know, investments in places like Australia or other opportunities moving forward?

Lucas Ferreira: So can you explain the reason why?

Felipe Smith: So, indeed, the SQM price mechanism is based on price indices in the different geographies with certain lags, which average approximately one month. This means that, in general, our realized average price.., will always be close to the prevailing average spot.

Operator: Simonotto with Bank of America.

Unknown Executive: Hi, moving forward, as is clear, we are going to develop a huge project that is called Salar Futuro together with Codelco.

Lucas Ferreira: I was expecting actually the opposite since I would imagine lease payments allocations would be lower given the lower prices and also higher volumes would imply maybe fixed cost dilution, the depreciation of the peso maybe helps you as well.

Felipe Smith: Now, during the beginning of second quarter.

Operator: Please go ahead.

Unknown Executive: That's why our investment together with Codelco in the next 10 years in Chile is going to be significant.

Lucas Ferreira: So can you explain why this quarter specifically cost was higher?

Felipe Smith: We observe a certain price recovery, which. Unfortunately lasted until mid-April.

Isabella Simonato: Thank you.

Unknown Executive: If you consider the Salar Futuro project, we will develop together.

Speaker Change #139: That hit the results because of the lithium mining tax.

Felipe Smith: Then we saw, a price fluctuations that were quite moderate.

Isabella Simonato: Good afternoon, everyone.

Unknown Executive: We expect to increase some production in Salar de Cama with the project, of course.

Lucas Ferreira: So just wanted to clarify that.

Felipe Smith: But over the last three months, we have seen climb in the index.

Unknown Executive: But this is mainly Chile, it's mainly oriented to the Salar Futuro project.

Lucas Ferreira: So apart from the signing of the contract, what are the next steps for the JV to be actually formed and run smoothly?

Felipe Smith: So that is why we are expecting that the average price, 3 will be lower.

Unknown Executive: Of course, we want to grow outside Chile.

Ricardo Ramos: So and how long that could take, if you can explain, that would be great.

Felipe Smith: Thank you.

Unknown Executive: If we find good opportunities, as you know, we have been active.

Ricardo Ramos: Thank you.

Felipe Smith: And if I may sneak in a, Pardon me, ma'am.

Unknown Executive: We have investment today in Australia.

Ricardo Ramos: Hi, Ricardo, Ramos speaking.

Operator: We seem to have lost audio from your location.

Unknown Executive: We continue to have geologists looking for new alternatives and probably we will announce new investment on new projects in Australia in the medium term.

Speaker Change #139: While supply in the first quarter.

Ricardo Ramos: We published the agreement with Codelco, it's available for everyone in our webpage.

Operator: Hello, can you hear it?

Unknown Executive: I don't know, but we are working very hard in order to do it.

Ricardo Ramos: And there's a list of condition presents that are included in the contract, you can check it.

Operator: You can hear the main speakers, we can't hear the questioner.

Operator: Great, thank you.

Ricardo Ramos: But are mainly legal ones that we have to follow some steps in the companies and so on in the bylaw, whatever.

I mean, the result is negative and because of that the net income that the board has approved us impaired.

Operator: Can we go to the next question, please?

Ben Isaacson: The next question is from Ben Isaacson with Scotiabank.

Ricardo Ramos: But we are working on that and we are going to be ready as we speak in the first quarter of next year.

Operator: The next question will come from Isabella Simonato with Bank of America.

Ben Isaacson: Please go ahead.

Carlos Diaz: And that is the main effect that is in the lithium source.

Ricardo Ramos: But if you want to review in detail these condition presents, those are included in the contract that are published.

Isabella Simonato: Please go ahead.

Ben Isaacson: Hi everyone, this is Apurva on for Ben.

Carlos Diaz: Can you confirm if that legacy quota of the previous contract with Corfo before 2017, so if not mistaken, as of this year, you should be already exploring part of the quota, something like 50,000 tonnes a year with that six flat rates.

Carlos Diaz: Hi Lucas, this is Carlos Diaz speaking.

Isabella Simonato: Thank you.

Ben Isaacson: I might just piggyback off of the last question a little bit, but given that the market is currently oversupplied and you've previously shared and based on your 210,000 tons of production versus about 190,000 of sales, is the expectation still that you'll be able to work through these inventories?

Carlos Diaz: Is this already in place?

Carlos Diaz: Well, I respect your first question about the cash cost of the lithium.

Isabella Simonato: Good afternoon, everyone.

Ben Isaacson: Are you finding any challenges, seeing any challenges in finding buyers for that lithium inventory?

Gerardo Illanes: So, eventually that comes to sort of flow into the P&L in future sales, if you can confirm this please.

Carlos Diaz: This is mainly explained because of the inventory adjustment related to lithium sulfate. The lithium sulfate that we export to China that will later be converted to carbon monoxide was exported during the second quarter when the prices were higher. And the royalties are paid in the moment that we export. So we have an effect mainly related, with that. The royalty that we pay to the Corp of Surrey in Chile.

Isabella Simonato: So I have a couple of questions.

Ben Isaacson: Are you holding in anticipation of demand and pricing picking up in the near term?

Gerardo Illanes: Hi Lucas, this is Gerardo.

Carlos Diaz: Perfect.

Isabella Simonato: First of all, on lithium, when you say, right, the SUM is looking for re-evaluation, re-evaluating the markets and what's attractive at those levels, I wonder what exactly do you mean by that and what are things that are being taken into consideration here.

Ben Isaacson: you.

Gerardo Illanes: Yes, what you're saying is right.

Lucas Ferreira: If I may, just a quick follow-up.

Speaker Change #139: The dividend.

Ben Isaacson: Well, we're already coming.

Gerardo Illanes: And for the ones that are not familiar, when we signed the new contract in 2018, we had a balance under the previous contract at a fixed rate of 6.8% with Corfo. And according to the new contract, the balance that we had could be used from 2024 onwards, and it's approximately 50,000 metric tons per year. So approximately 50,000 metric tons sold this year, we'll pay a fixed rate of 6.8% while the rest will pay based on the on the table that is publicly available.

Lucas Ferreira: What's your lithium cash cost today?

Isabella Simonato: Thank you.

Ben Isaacson: I don't know if you were going to expect to sell this year around to 180,000 metric ton of lithium carbonate.

Gerardo Illanes: Perfect.

Carlos Diaz: It remains around $5,000.

Isabella Simonato: As we come in, we expect to produce a little bit more than 200,000 in Chile, 30 or 40,000 of those is produced as a lithium sulfate in Salada de Cama that is sending later to China to convert to lithium carbon and hydroxide.

Speaker Change #139: As a busier so.

Ben Isaacson: And we expect to produce around 210,000.

Operator: Thank you very much, everyone.

Carlos Diaz: Is this something we can work with? Our cost is stable during this period.

Unknown Executive: So it depends on what will happen in the rest of the year, but the policy is quite clear in that regard.

Isabella Simonato: So that is something that we could re-evaluate according to the market condition, the production that we're going to expect to produce in China in the second quarter, in the second semester.

Ben Isaacson: So it's going to be 20,000 exceed, which is approximately what we sell in one month.

Alejandro de Miquelis: The next question is from Alejandro De Miquelis from Jeffreys.

Santhosh Seshadri: So how do you expect cost to pan out through rest of the year in the light of electricity price increases announced in Chile?

Carlos Diaz: I mean, we don't see a significant change.

Mark Fones: Regarding the future projects, I am Mark Fones here speaking, regarding the future projects in Australia and what was mentioned in press release regarding the 100,000 tons per year of lithium carbon equivalent production into looking into 2030.

Ben Isaacson: So we for the other side, we have to prepare for next year when we expect to sell a little bit more.

Alejandro de Miquelis: Please go ahead.

Carlos Diaz: And do you have any cost mitigation program in place, possibly by reducing production of your hydroxide volumes in Chile, which has a relatively higher cost base, or maybe by slowing down ramp up at Monterey and, So, this is Carlos Diaz.

Speaker Change #140: I E depends on what will happen in the rest of the year.

Carlos Diaz: What I, was commenting before, it was most related with the royalty that we pay.

Mark Fones: As you know we've been pretty active in Australia, we now have gained access to two world-class lithium deposits, namely the Andover project and the Mount Holland project, both of which were expected not only to have a significant scale but also we are already discussing the expansion for Mount Holland lithium project.

Ben Isaacson: So it's a good investment in capital.

Alejandro de Miquelis: Yes, good morning.

Carlos Diaz: Our focus is to reduce our cost and to look at alternatives to keep increasing the quality, reducing the cost and our carbon footprint and so on.

Carlos Diaz: As we pay in the moment that we export and not we pay in the moment that we sell. And you know there is a lack because we have to export from Chile to China and we keep inventory there and so on.

Mark Fones: In addition to that, we continue to work on, monitor, and invest in various early exploration projects, not only in Australia, but also across the world.

Ben Isaacson: Working working capitalism.

Alejandro de Miquelis: Thank you very much for taking my question.

Carlos Diaz: So, but we're not thinking to reduce our capacity of lithium hydroxide.

Carlos Diaz: And that is the main effect that is in the lithium sulfate.

Mark Fones: We have just recently announced a new partnership in Sweden with Talga Group.

Ben Isaacson: We don't see that it's too much.

Alejandro de Miquelis: Just one question on the CODELCO agreement.

Carlos Diaz: I don't know if it was your question, but no, we will continue with our plan to expand in the lithium carbon and hydroxide in Chile.

Lucas Ferreira: Perfect.

Mark Fones: All of them developed to, or aimed to develop early-stage, innovative, and marginal-cost, effective products into the long-term, and we intend to be a lithium chemical processor not only in Chile but also outside and leveraging on SQM's knowledge and also technology innovative process to be in the lower part of the marginal.

Speaker Change #141: But the policy is quite clear in that regard.

Ben Isaacson: It's healthy mental.

Operator: Thank you very much, everyone.

Alejandro de Miquelis: If you, as you said, you get the condition of presence in the first half of 2025, then my understanding is there is a kickoff of extra capacity there.

Carlos Diaz: Thank you.

Lucas Ferreira: And apologies, one final in this topic of the royalties, if I may.

Mark Fones: Thank you.

Ben Isaacson: All right, and then a follow-up.

Operator: The next question is from Alejandro de Michelis from Jefferies.

Alejandro de Miquelis: Are there any discussions with CODELCO regarding what could happen to that extra capacity in 2025?

Santhosh Seshadri: Question on your Mount Holon project, you know, are you planning to slow down, ramp up, you know, given the adverse economics, and what would this mean for the sales contribution in 2024 and 2025?

Lucas Ferreira: Can you

Lucas Ferreira: The next question is from Lucas Ferreira with JP Morgan.

Ben Isaacson: Production Visor 2024 were contracted with kind of a one-month like despot.

Operator: Please go ahead.

Alejandro de Miquelis: No, we we are not having marketing or commercial discussion with CODELCO yet because there's part of the condition presence are some authorization on the, Following antitrust rules, we need to have the agreement ready before starting to talk about a commercial strategy.

Mark Fones: Hi, Mark Fones here.

Lucas Ferreira: confirm if that quota, that legacy quota of the previous contract with Corfo before 2017, so if not mistaken, as of this year, it should be already exploring part of the quota, something like 50,000 tons a year with that fixed flat rate.

Lucas Ferreira: Please go ahead.

Unknown Executive: Thank you, Hiradar.

Ben Isaacson: How should we be thinking about lithium realized pricing in Q3 so far given that quarter to date the index is down what 15 to 20 percent?

Alejandro de Michelis: Yes, good morning.

Alejandro de Miquelis: So, if the current lithium market pricing conditions continue, is there a chance that the extra capacity for next year may not become available or you may choose to delay that?

Irina Axenova: This concludes our question and answer session.

Mark Fones: Thanks for your question.

Lucas Ferreira: Is this already in place?

Lucas Ferreira: Hi guys, can you hear me?

Speaker Change #142: Thank you and this concludes our call today. Thank you for joining us and we look forward to having done our next call have a great day everyone.

Unknown Executive: And this concludes our call today.

Alejandro de Michelis: Thank you very much for taking my question.

Alejandro de Miquelis: As someone said before, we're a very disciplined company.

Irina Axenova: I would like to turn the conference back over to Irina Axenova.

Mark Fones: Now, we continue full throttle managing the Mont-Holland project.

Lucas Ferreira: So eventually that comes to sort of flow into the P&L in future sales.

Lucas Ferreira: So two questions, the first one, can you explain, correct me if I'm wrong, but I'm seeing your average cash cost per ton in lithium increasing like 8% quarter over quarter, that's driving your gross margin to be reduced, so can you explain the reason why?

Alejandro de Michelis: Just one question on the CODELCO agreement.

Alejandro de Miquelis: It means that we will increase the capacity anyway, and we will sell more lithium carbonate next year as compared to this year.

Irina Axenova: Thank you, Darren.

Mark Fones: We, as you know, are already producing sputum and concentrate from the minor concentrator.

Lucas Ferreira: If you can confirm this, please.

Alejandro de Michelis: If you, as you said, you get the condition of presence in the first half of 2025, then my understanding is there is a kickoff of extra capacity there.

Unknown Executive: Thank you for joining us, and we look forward to having you now. Next poll. Have a great day, everyone.

Alejandro de Miquelis: That's for sure.

Irina Axenova: Before we close, I have a question from Marcy, who couldn't connect.

Mark Fones: We have already produced more than 100,000 tons of sputum and concentrate.

Gerardo Yanez: Hi Lucas, this is Gerardo.

Lucas Ferreira: And the second question to Ricardo Ramos, just to confirm, so obviously you signed already the contract with Codelco for the JV, but you mentioned that certain conditions must be met, so just wanted to clarify that, so apart from the signing of the contract, what are the next steps for the JV to be actually formed and run smoothly, so and how long that could take, if you can explain that would be great, thank you.

Alejandro de Michelis: Are there any discussions with CODELCO regarding what could happen to that extra capacity in 2025?

Santhosh Seshadri: The next question is from Santhosh Seshadri, HSBC.

Irina Axenova: If there's any dividend potential in the view of negative net income...

Mark Fones: We will continue to increase productivity, reduce costs, and maintain quality into the future.

Gerardo Yanez: Yes, what you're saying is right.

Ricardo Ramos: Hi, Ricardo Ramos speaking.

Alejandro de Michelis: No, we are not having marketing or commercial discussion with CODELCO yet because part of, the condition presence are some authorization and the following antitrust rules, we need to have the agreement ready before starting to talk about commercial strategy.

Santhosh Seshadri: Please go ahead.

Gerardo Illanes: Gerardo, you would like to speak. Since the net income is negative because of a one-time effect, that hit the results because of the lithium mining tax, that was applied in the first quarter.

Mark Fones: On the refinery side, we have already above 80% construction completion. We're starting commissioning at the refinery, which we expect to have first product mid-2025.

Gerardo Yanez: And for the ones that are, not familiar, when we signed the new contract in 2018, we had a balance under the previous contract at a fixed rate of 6.8% with Corfo. And according to the new contract, the balance that we had could be used from 2024 onwards, and it's approximately 50,000 metric tons per year. So approximately 50,000 metric tons sold this year will pay a fixed rate of 6.8%, while the rest will pay based on the table that is publicly available.

Ricardo Ramos: We published the agreement with Coelco, it is available for everyone in our webpage and there is a list of conditions present that are included in the contract, you can check it, but are mainly legal ones that we, Have to follow some steps in the companies and so on in the bylaw, whatever, but we are working on that and we are going to be ready as we speak in the first quarter of.

Alejandro de Michelis: So if the current lithium market pricing conditions continue, is there a chance that, the extra capacity for next year may not become available or you may choose to delay that?

Santhosh Seshadri: Thanks very much.

Gerardo Illanes: I mean, the result is negative.

Mark Fones: Once completed, we expect the project to be fully profitable, to increase and add value to Esquim's full respect of the project.

Lucas Ferreira: Perfect.

Ricardo Ramos: But if you want to review in detail these conditions present, those are included in the contract that are public.

Alejandro de Michelis: As someone said before, we are a very disciplined company, it means that we will increase the, capacity anyway and we will sell more lithium carbonate next year as compared to this year, that's for sure.

Santhosh Seshadri: Just a follow-up on cost.

Gerardo Illanes: And because of that, the net income that the board has approved as interim dividend.

Mark Fones: Go ahead and just to follow up on that, so until commissioning of your refinery, are you looking at the tolling opportunities or selling spodumene directly into the market or maybe just holding on to your spodumene inventories until you commission the refinery?

Carlos Diaz: Hi Lucas, this is Carlos Diaz speaking.

Unknown Executive: Bye.

Alejandro de Michelis: Okay, that's very clear, thank you.

Gerardo Illanes: S.A. B.

Mark Fones: Yes, we do have a tolling commitment.

Carlos Diaz: Respect your first question about the cash cost of the lithium.

Operator: The next question is from Santhosh Seshadri, HSBC.

Gerardo Illanes: It depends on what will happen in the rest of the year.

Mark Fones: We are tolling Spiderman Concentrate and we are also open to additional alternatives in that respect.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.

Carlos Diaz: This is mainly explained because of the inventory adjustment related to lithium sulfate. The lithium sulfate that we export to China that will later be converted to carbon and hydroxide, was exported in during the second quarter where the price were higher, you know, and the royalty are paid in the moment that we export. So you will have an effect mainly related, The Royalty that we pay to the court.

Operator: Please go ahead.

Gerardo Illanes: But the policy is quite clear in that.

Operator: The next question is from Marcio Sayu with Goldman Sachs.

Speaker Change #143: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Carlos Diaz: Perfect.

Operator: This concludes our question and answer session.

Santhosh Seshadri: Thanks very much.

Irina Axenova: And this concludes our call today.

Marcio Sayu: Please go ahead.

Carlos Diaz: If I may just a quick follow up, what's your, Sponsored ADR Pfd Class B we can work with.

Santhosh Seshadri: Just a follow-up on cost.

Irina Axenova: Thank you for joining us and we look forward to having you in our next call.

Marcio Sayu: Thanks, everyone.

Carlos Diaz: Our cost is stable during this period. I mean, we don't see a significant change or whatever coming before.

Santhosh Seshadri: So how do you expect cost to pan out through the rest of the year in the light of electricity, price increases unconstantially and do you have any cost mitigation program in place possibly by reducing production of your hydroxide volumes essentially, which has a relatively high cost base or maybe by slowing down ramp-up at more coal-and-protect?

Irina Axenova: Have a great day, everyone.

Marcio Sayu: Thanks for the opportunity.

Carlos Diaz: It was most related with the priority that we pay, as we pay in the moment that we export and not we pay when in the moment that we sell. And you know there is a lag because we have to export from Chile to China and we keep inventory there and so on.

You may now disconnect.

Santhosh Seshadri: Thank you.

Operator: Bye.

Marcio Sayu: A couple of questions on my side.

Carlos Diaz: So this is Carlos Díaz, our focus is to reduce our cost and to look at alternative to keep, increasing the quality, reducing the cost and our carbon footprint and so on, but we're not thinking to reduce our capacity of lithium hydroxide, I don't know if it was your question, but no, we will continue with our plan to expand in the lithium carbonate and hydroxide in Chile.

Operator: The conference is now concluded.

Marcio Sayu: Obviously, when we look at that income, it's still negative by about $650 million.

Carlos Diaz: Thank you.

Operator: Thank you for attending today's presentation.

Marcio Sayu: I understand that has been, you know, mainly explained by $1.1 billion in spending that will be there in the year, but just trying to understand how should we think about this?

Santhosh Seshadri: And just a question on your Mount Hohlein project, are you planning to slow down ramp-up, given the adverse economics and what would this mean for the sales contribution in 2024 and 2025?

Operator: You may now disconnect.

Marcio Sayu: Because my fear, my fear, sorry.

Mark Fones: Hi, Marc Fons here, thanks for your question.

Marcio Sayu: Marcia, sorry to interrupt you, but there is a problem with your microphone, so we will go to the next question and then we can come back with you, but please try to fix your microphone.

Speaker Change #143: Yeah.

Mark Fones: No, we continue full throttle managing the Mount Hohlein project.

Operator: Is it better now?

Speaker Change #143: [music].

Mark Fones: We, as you know, are already producing sodium concentrate from the mine and concentrator.

Marcio Sayu: No, let's please try to change to another microphone because there is a problem.

Mark Fones: We have already produced more than 100,000 tons of sodium concentrate.

Operator: We cannot hear anything.

Mark Fones: We will continue to increase productivity, reduce costs and maintain quality into the, future.

Operator: The next question is from Cesar Perez-Navarro with BTG Patrol.

Mark Fones: On the refinery side, we have already above 80% construction completion. We are starting commissioning at the refinery, which we expect to have first product mid-2025, so mid-next year.

Cesar Perez-Navarro: Please go ahead.

Mark Fones: Once completed, we expect the project to be fully profitable and to increase and add value, to Eskimos full respect of the project.

Cesar Perez-Navarro: Yes, good morning.

Mark Fones: Q.

Cesar Perez-Navarro: Good afternoon.

Santhosh Seshadri: Until commissioning of refinery, are you looking at tolling opportunities or selling, spodumene directly to the market or maybe just holding on to your spodumene inventories until you commission the refinery?

Cesar Perez-Navarro: I'm sorry.

Mark Fones: A.

Cesar Perez-Navarro: In the press release, I see that management reaffirmed their previously announced expansion plan for this year.

Mark Fones: Yes, we do have tolling commitments.

Cesar Perez-Navarro: But at the same time, you also suggested some certain reassessment of specific market and initiatives that may be, quote unquote, less attractive in the short term.

Mark Fones: We are tolling spodumene concentrate and we are, also open to additional alternatives in that respect.

Cesar Perez-Navarro: Could you please provide further detail on that specific assessment and potential near-term impact?

Operator: The next question is from Marcio Sayu with Goldman Sachs.

Speaker Change #143: Yes.

Cesar Perez-Navarro: Thank you.

Operator: Please go ahead.

Cesar Perez-Navarro: So there is, I think, two different, probably connected, but we have a lot of long-term strategies to keep increasing our capacity in Chile, what I said before, as a lithium carbon dioxide, and to keep it growing at the same pace that the man is doing.

Marcio Sayu: Thank you everyone.

Cesar Perez-Navarro: But it's a tactic in the short term, if we have to reduce the conversion, what I said before, in China, because of the price are not in.

Marcio Sayu: Thanks for the opportunity.

Unknown Executive: Thank you. As we come away with respect to produce a little bit more than $200,000 in Chile, maybe $30,000 or $40,000 of those is producing a little sulphate in Salad Acama that is sending later to China to convert to a little carbon and a drug site. So that is something that we could evaluate according to the market condition, the production that we are going to expect to produce in China in the second quarter, in the second semester. Sir, that's the point.

Cesar Perez-Navarro: I'm not a convenience for us to do the meetings we're doing.

Marcio Sayu: A couple of questions on my side.

Cesar Perez-Navarro: I mean, it's something that we would do in the short term, but it's a little bit different that we are planning for the long term because we still think that a...

Marcio Sayu: Obviously, when you look at my income year-to-date, it's still negative by about $650 million. I understand that has been mainly explained by $1.1 billion in spending that we did during the year, but

Cesar Perez-Navarro: This market is going to keep growing in the future.

Marcio Sayu: I'm just trying to understand how should we think about this?

Cesar Perez-Navarro: Okay, understood.

Speaker Change #143: Okay.

Marcio Sayu: Marcio, sorry to interrupt you, but there is a problem with your microphone.

Cesar Perez-Navarro: Thank you.

Operator: So we will, go to the next question and then we can come back with you, but please try to use your microphone.

Corinne Blanchard: The next question is from Corinne Blanchard with Deutsche Bank.

Speaker Change #143: Yeah.

Marcio Sayu: Is that enough?

Corinne Blanchard: Please go ahead.

Marcio Sayu: No, please try to change to another microphone because there is a problem.

Corinne Blanchard: Hey, good afternoon.

Operator: We cannot hear, anything of what you're saying.

Corinne Blanchard: The first question.

Speaker Change #143: [music].

Operator: The next question is from Cesar Perez-Navarro with BTG Patchwork.

Corinne Blanchard: Just related to the price.

Operator: Please go ahead.

Corinne Blanchard: Is there a scenario or is there a certain price, like spot price, at some point that you could be thinking actually of having contract with a negotiated price?

Cesar Perez-Navarro: Yes, good morning.

Corinne Blanchard: So basically, the question is, like, are you considering at some point moving back with like maybe like fixed price contract or with having like a stronger like flow and selling price?

Cesar Perez-Navarro: Good afternoon.

Felipe Smith: Hello Corinne!

Cesar Perez-Navarro: I'm sorry.

Felipe Smith: This is Felipe.

Cesar Perez-Navarro: In the press release, I see that management, reaffirmed their previously announced expansion plan for this year, but at the same time, you also suggested some certain reassessment of specific market and initiatives that may be quote-unquote less attractive in the short term.

Ricardo Ramos: We believe our lithium sales volumes in the second half of the year could be similar to those reported for the first half of the year with a potential upside should the market conditions improve.

Felipe Smith: M.

Cesar Perez-Navarro: Could you please provide further detail on that specific assessment and potential near-term impact?

Felipe Smith: As we have been doing already in the past years, and we want to continue like this, we are a low cost producer, so we prefer to follow the indices.

Cesar Perez-Navarro: Thank you.

Felipe Smith: We think that this is the best way to contract our volumes, is both is good both for the customer and for us.

Carlos Diaz: So there is, I think, two different things probably connected, but we have our long-term, strategies to keep increasing our capacity in Chile, what I said before, as a lithium carbon dioxide, and to keep it growing at the same pace that the man is doing.

Corinne Blanchard: Okay, um, the second question, can you please give an update on the TNC situation?

Carlos Diaz: But it's a tactic in the short term if we have to reduce the conversion, what I said before, in China because of the price are not a convenience for us to do the business we're doing.

Corinne Blanchard: I mean, we saw a lot of filing, since there is not a lot of further options for them to do anything, but just trying to understand the view here, that would be very helpful.

Carlos Diaz: I mean, it's something that we would do in the short term, but it's a little bit different than we are planning for the long term because we still think that this market is going to keep growing in the future.

Corinne Blanchard: Okay, what you call TNT situation is a public situation.

Cesar Perez-Navarro: Okay.

Corinne Blanchard: We don't have different information than the one that is on the press and it means that TNT, they have a different opinion of the regulator in Chile, the CMF, that is the regulator.

Cesar Perez-Navarro: Understood.

Corinne Blanchard: They have an opinion about the transaction.

Operator: Thank you.

Corinne Blanchard: TNT has a different opinion and they appeal to the court with their position.

Operator: The next question is from Corinne Blanchere with Deutsche Bank.

Corinne Blanchard: We are participating in the appealing also with our opinion and there's nothing new about that.

Operator: Please go ahead.

Corinne Blanchard: It means it's public.

Corinne Blanchard: Hi.

Corinne Blanchard: TNT has been very public about their statements, their opinion and the company has been also very public about what's our opinion about the situation and the regulators, CMF, also being very clear about their opinion about this specific situation.

Corinne Blanchard: Good afternoon.

Corinne Blanchard: So maybe differently ask, can they do, is there any other step that they can be taken?

Corinne Blanchard: The first question just related to the pricing, is there a scenario, or is there a certain price, like spot price, at some point that you could be thinking actually of having contract with a negotiated price?

Corinne Blanchard: So we're just trying to understand what can further happen or this is just a static cause at this point.

Corinne Blanchard: So basically the question is like, are you considering at some point moving back with like maybe like fixed price contract or with having like a stronger like flow in selling price?

Corinne Blanchard: Okay, I probably you have to ask a TNT about their potential future steps.

Felipe Smith: Hello Corinne, this is Felipe.

Corinne Blanchard: So I really don't know.

Unknown Executive: Thank you, but later we will now go open to the line of questions.

Mark Fones: Regarding the feature projects, I'm Mark Fones here speaking. Regarding the feature projects in Australia and what was mentioned in press release regarding the 100,000 tons per year of lithium carbon equivalent production into looking into 2030. As you know, we've been pretty active in Australia. We now have gained access to two world class lithium deposits, namely the endover project. Both of which were expected not only to have a significant scale, but also we are already discussing the expansion for mononism projects. In addition to that, we continue to work on monitor and invest in various early exploration projects, not only in Australia, but also across the world.

Felipe Smith: As we have been doing already in the past years and we want to continue like this, we are a low-cost producer, so we prefer to follow the indices.

Corinne Blanchard: But But of course, in this specific situation, we expect that after the court decision that I we are very optimistic about the court decision.

Felipe Smith: We think that this is the best way to contract our volumes.

Corinne Blanchard: I hope it's going to be over.

Felipe Smith: It's good both for the customer and for us.

Corinne Blanchard: But But again, if they are thinking something else, you have to ask a TNT, I don't have the answer, I thank you.

Corinne Blanchard: Okay.

Operator: The next question is from Camila Barger with Bradesco.

Corinne Blanchard: The second question, can you please give an update on the T&G situation?

Unknown Executive: We will now begin the question and answer session.

Camila Barger: Please go ahead.

Corinne Blanchard: I mean, we saw a lot of filing since there is not a lot of further options for them to do anything, but just trying to understand the view here, that would be very helpful.

Camila Barger: Hi.

Corinne Blanchard: Okay.

Camila Barger: Good afternoon.

Corinne Blanchard: What you call T&G situation is a public situation.

Camila Barger: Thank you for taking my questions.

Corinne Blanchard: We don't have different information than the one that is on the press.

Camila Barger: So, just quick questions on my side.

Corinne Blanchard: It means that T&G, they have a different opinion of the regulator in Chile, the CMF, that is the regulator.

Camila Barger: Regarding the deal with CODECO, could you please elaborate on the main challenges in discussions with local communities?

Corinne Blanchard: They have an opinion about the transaction.

Camila Barger: And the second question is on CAPEX.

Corinne Blanchard: T&G has a different opinion and they appeal to the court with their position.

Camila Barger: In case the market gets worse, would you consider flexibilizing CAPEX?

Corinne Blanchard: We are participating in the appealing also with our opinion and there's nothing new about that.

Camila Barger: And if so, how much would it be?

Corinne Blanchard: It means it's a public, T&G has been very public about their statements, their opinion, and the company has been also very public about what's our opinion about the situation and the regulators, CMF, also being very clear about their opinion about this specific situation.

Camila Barger: Thank you.

Corinne Blanchard: So maybe differently, can they do, is there any other step that can be taken?

Camila Barger: Okay, about the deal with Coelco, there's a clear process in order to have a relation with the communities for the new agreement, and we're working on it.

Corinne Blanchard: We're just trying to understand what can further happen or this is just a statute court at this point.

Camila Barger: You have to go to the communities, ask their opinion, that is not binding, but it's a very important opinion for Corfo and for the companies.

Corinne Blanchard: Okay, probably you have to ask T&G about their potential future steps.

Unknown Executive: To ask a question, you may press star then one on your telephone keypad.

Camila Barger: But we're working very hard in order to do it as soon as we can.

Corinne Blanchard: I really don't know, but of course in this specific situation, we expect that after the court decision, that we are very optimistic about the court decision, I hope it's going to be over.

Camila Barger: Our relation with the communities, I will say, are very good.

Corinne Blanchard: But again, if they are thinking something else, you have to ask T&G.

Camila Barger: We are open with them, they are open with us, and we are working in order to solve any difference that we may have.

Unknown Executive: If you are using a speaker phone, please pick up your handset before pressing the keys.

Corinne Blanchard: I don't have the answer.

Camila Barger: No, no, the CAPEX.

Corinne Blanchard: All right, thank you.

Camila Barger: Sorry, regarding the CAPEX, the CAPEX informed by the company, it will continue.

Operator: The next question is from Camilla Barger with Bradesco.

Camila Barger: We think that the CAPEX we have today in the lithium industry is very good in the iron and nitrates is the right one.

Operator: Please go ahead.

Camila Barger: And the projects that we have in Australia are the right one.

Camilla Barger: Hi, good afternoon.

Camila Barger: As mentioned before, we don't think that the long term, really, we don't think that the long term pricing of lithium is the today price environment.

Camilla Barger: Thank you for taking my questions.

Camila Barger: There's a specific situation today of the price environment, but we are very clear that the price will be different in the future. That's why we have a clear plan of investment in the lithium.

Camilla Barger: So just quick questions on my side, regarding the deal with Codeco, could you please elaborate on the main challenges in discussions with local communities?

Unknown Executive: To draw your question, please press star then two.

Camila Barger: We're really committed about that.

Camilla Barger: And the second question is on CAPEX.

Camila Barger: And we are very low cost producer.

Camilla Barger: In case the market gets worse, would you consider flexibilizing CAPEX?

Camila Barger: That's why we will continue to do our investment.

Camilla Barger: And if so, how much would it be?

Operator: Okay, thank you very much.

Camilla Barger: Thank you.

Unknown Executive: Okay, about the deal with Codeco, there's a clear process in order to have a relation, with the communities for the new agreement, and we're working on it.

Unknown Executive: You have to go to the communities, ask their opinion, that is not binding, but it's a very important opinion for the companies.

Speaker Change #143: Okay.

Unknown Executive: For them, we're working very hard in order to do it as soon as we can.

Unknown Executive: Our relation with the communities, I will say that is very good.

Joel Jackson: Our first question today is from Joel Jackson with BMO Capital Markets.

Unknown Executive: We are open with them, they're open with us, and we are working in order to solve any difference that we may have.

Unknown Executive: No, no, the CapEx is.

Speaker Change #143: [music].

Unknown Executive: Sorry.

Unknown Executive: So regarding the CapEx, the CapEx informed by the company, it will continue.

Unknown Executive: We are, we think that the CapEx we have today in the lithium industry is very good in the iron and nitrates is the right one.

Unknown Executive: And the projects that we have in Australia are the right one.

Unknown Executive: As mentioned before, we don't think that the long term, long term pricing of lithium is the today price environment. There's a specific situation today of the price environment, but we are very clear that the price will be different in the future. That's why we have a clear plan of investment in the lithium.

Unknown Executive: We're really committed about that.

Unknown Executive: Please go ahead.

Unknown Executive: And we are very low cost producer.

Unknown Executive: That's why we will continue to do our investment.

Unknown Executive: Okay.

Operator: Thank you very much.

Anthony: Good afternoon, this is Anthony on for Joel.

Unknown Executive: You indicated in the press release that in the current lithium price environment, peers may take production out of the market.

Unknown Executive: Yes, SKM is maintaining 24 production targets with sales volume slightly lower.

Mark Fones: We intend to be a lithium chemical processor, not only Chile, but also outside and leveraging on SKM's knowledge and also technology and innovative process to be in the lower part of the marginal cost of production. Thank you.

Unknown Executive: Obviously, SKM has a unique quota system with Corpo and the lease level is free to save firing, which encourages you to maximize production.

Unknown Executive: But shouldn't SKM as a market leader be disciplined and maybe lower volumes?

Lucas Ferreira: The next question is from Lucas Ferrero with JP Morgan. Please go ahead. Hi, guys. Can you hear me? Yes. Okay. Thank you.

Felipe Smith: Hello, this is Felipe Smith here.

Felipe Smith: How are you?

Felipe Smith: I'm not sure if I understood correctly your question, but let me rephrase that we estimate that the sales in the second semester 2024 will be similar to those rich in the first semester. Meaning that our annual sales could be around 190,000 tonne.

Lucas Ferreira: So two questions. The first one, can you explain in correct me if I wrong, but I'm seeing your average cost, cash cost per ton in lithium, increasing like 8% quarter to quarter. That's driving your gross margin to be reduced.

Felipe Smith: With a potential upside should market conditions recover?

Unknown Executive: It's just to follow up on that.

Unknown Executive: The question was that gets around whether SKM as a market leader should be disciplined if we start needing to see production come out of the market.

Carlos Diaz: So can you explain the reason why I was expecting actually the opposite things I would imagine. Lease payment allocations would be lower, given the lower prices, and also higher volumes would imply maybe fixed cost dilution, the depreciation of the peso, maybe helps you as well. So can you explain why this quarter specifically cost was higher?

Ricardo Ramos: And the second question to Ricardo Ramos, I just to confirm, so you signed already the contract with Codelco for the JV, but you mentioned that certain conditions must be matched. So I just wanted to clarify that.

Ricardo Ramos: So apart from the signing of the contract, what are the next steps for the JV to be actually formed and run smoothly? So and how long that could take if you can explain that would be that would be great. Thank you.

Ricardo Ramos: Hi, Ricardo Ramos speaking, we published the agreement with Codelco is available for everyone in our web page, and there's a list of conditions present that are included in the in the in the corner you can you can check it. But are mainly legal ones that we have to follow some steps in the companies and so on in the by law, whatever, but we are working on that and we are going to be ready as we speak in the first quarter of next year. But if you want to review in detail this condition present, those are included in the contract are public.

Carlos Diaz: Hello, this is Carlos Diaz, how are you?

Carlos Diaz: Hi Lucas, this is Carlos Diaz Piquín. Well, I respect your first question about the Cachecos of the Lithium. This is mainly explained because of the inventory adjustment related to the Lithuan sulfate. The Lithuan sulfate that we sport to China that was later is converted to carbon and hydroxide. It was sported during the second quarter where the price were higher. And the royalty are paid in the moment that we export, so you will have an effect mainly related with that. The royalty that we pay to the corpus for in Chile.

Unknown Executive: Perfect.

Carlos Diaz: Well, let me tell you that it will be our capacity in Chile.

Carlos Diaz: Now it's according to our schedule, and I saw respect this year to produce $210,000 as a little carbon equivalent in the different quality and the carbon dioxide or sulfate.

Carlos Diaz: We should dose 30,000 are converted in China, so we're still reviewing the volume to be converted in China for a little sulfate to a drug set of carbonate, and during the second semester, so the total of the volume converted in China obviously will depend of the specific market segment, and following the current price environment, finally it would depend on how the price is coming in the next month, so I don't know if answer your question.

Carlos Diaz: So if I may just a quick follow-up, what's your lithium cache cost today? Is it remains around 5,000? Is this something we can work with? Our cost is stable, I mean, we don't see a significant change on what are coming before it was most related with the priority that we pay. As we pay in the moment that we export and not we pay when in the moment that we sell. And you know there is a lack because we have to export from Chile to China and we give inventory there and so on. And that is the main effect that is in the Lithuan sulfate.

Unknown Executive: Great, thanks.

Unknown Executive: Perfect.

Lucas Ferreira: And I apologize, in this topic of the royalty, if I may, can you confirm if that quota, that quota, legacy quota of the previous contract with with Corphal before 2017. So if not mistaken, as of this year, you should be already exploring part of the quota, something like 50,000 tons a year with a fixed flat rate. Is this already in place?

Gerardo Illanes: So eventually that comes to serve a flow into the PML in future sales if you can confirm this place.

Unknown Executive: Hi, moving forward, as it's clear, we are going to develop a huge project that is called Salar Futuro together with Codelco.

Gerardo Illanes: Hi, Lucas, this is Gerardo. Yes, what you're saying is right and for the ones that are not familiar, what we, when we signed the new contract in 2018, we had a balance in the previous contract at a fixed rate of 6.8% with Corphal. And according to the new contract, this, the balance that we had could be used from 2024 onwards and it's approximately 50,000 metric tons per year. So approximately 50,000 metric tons sold this year will pay a fixed rate of 6.8% while the rest will pay based on the table that is publicly available. Perfect.

Unknown Executive: That's why our investment together with Codelco in the next 10 years in Chile is going to be significant.

Unknown Executive: Thank you very much, everyone.

Unknown Executive: If you consider the Salar Futuro project, we will develop together.

Unknown Executive: We expect to increase some production in Salar with the project, of course, but this is mainly Chile, it's mainly oriented to the Salar Futuro project.

Unknown Executive: I don't know, but we are working very hard in order to do it.

Alejandro DeMichelis: The next question is from Alejandro, Michaelis from Jeffries. Please go ahead. Yes, good morning. Thank you very much for taking my question. Just one question on the collelco agreement. If you, as I said, you get the condition of presence in the first half, 25, then my understanding is there is a kickoff of extra capacity there. Are there any discussions with Coralco regarding what could happen to that extra capacity in 2025?

Unknown Executive: Great, thank you.

Ben Isaacson: The next question is from Ben Isaacson with Scotiabank.

Unknown Executive: Please go ahead.

Perva: Hi everyone, this is the Perva on Perven.

Unknown Executive: I might just take you back off of the last question a little bit, but given that the market is currently over-supplied and you've previously shared in based on your 210,000 tons of production versus about 190,000 of sales, is the expectation that you'll be able to work through these inventory?

Unknown Executive: Are you finding any challenges, seeing any challenges and finding buyers for that lithium inventory?

Ricardo Ramos: No, we are not having marketing or commercial discussion with Godelco yet because there's part of the condition presence are some authorization and the following antitrust rules we need to have the agreement ready before starting to talk about commercial strategy. So, if the current lithium market pricing conditions continue if there are chance that the extra capacity for next year may not become available or you may choose to delay that as as someone said before we're very disciplined company it means that we will increase the capacity anyway and we will sell more lithium carbon dioxide as compared to this year that's for sure. Okay, that's very clear. Thank you.

Unknown Executive: Are you holding an anticipation of demand and pricing, picking up the near term?

Unknown Executive: Well, we're already coming out of here.

Unknown Executive: We expect to sell this year around to 190,000 tons of lithium carbonate, and we expect to produce around the 200,000 tons, so it's going to be 20,000 exceed that is approximately what we sell in one month.

Unknown Executive: So for the others, I will have to prepare for next year whether we expect to sell a little bit more.

Santhosh Seshadri: The next question is from Santhosh Seshadri, HSBC, please go ahead. Thank you very much. Just a follow-up on cost. So, how do you expect cost to pan out through the rest of the year in the light of electricity pricing increases, Santhosh Seshadri? And do you have any cost mitigation program in place possibly by reducing production of your hydroxide volume Seshadri which has relatively higher cost space or maybe by slowing down ramp up at more flow and product. Okay, thank you. So, this is kind of yes, our focus is to reduce our cost and to look at alternative to keeping increasing the quality of the cost and the carbon footprint and so on.

Unknown Executive: So it's a good investment in capital work and working capitalism.

Unknown Executive: We don't see that it's too much, it's healthy.

Unknown Executive: All right, and then follow up, your production budget for 2024 were contracted with kind of a one-month-like despot.

Unknown Executive: How should we be thinking about what's in realized pricing in Q3 so far given that order to date the index was down what 15 to 20 percent?

Unknown Executive: Is there any sort of indication as to whether you're baking price floors and ceilings into your contract?

Felipe Smith: Yeah, hello, Felipe again.

Felipe Smith: So indeed the Q&M price mechanism is based on pricing this is in the different geographies with certain lag which average approximately one month. This means that in general our realized average price will always be close to the prevailing average spot price.

Carlos Diaz: So, but we're not thinking a bit to reduce our capacity of lithium dioxide, I don't know if you was your question, but no, we will continue our plan to expand in the lithium carbon dioxide in Chile. Okay. Thank you.

Felipe Smith: Now, during the beginning of second quarter, we observed a certain price recovery, which unfortunately lasted until mid-April, then we saw price fluctuations that were quite moderate but over the last three months we have seen a persistent decline in the index prices, especially in Q3. So that is why we are expecting that the average price in Q3 will be lower than in Q2.

Unknown Executive: And just a question on your own whole line project.

Mark Fones: You know, are you planning to slow down ramp up, you know, given the adverse economics? And what would this mean for the sales contribution in 2024 and 2025?

Unknown Executive: Thank you.

Mark Fones: Hi, Mark from here. Thanks for your question. No, we continue full throttle. So, managing the monolidium project, we, as you know, are already producing sweat and concentrate from the minor concentrator. We have already produced more than 100,000 tons of sweat and concentrate. We will continue to increase productivity, reduce costs and maintain quality into the future. On the refinery side, we have already above 80% construction completion. We are starting commissioning on the refinery, which we expect to have first product meet 2025, so meet next year. Once completed, we expect the prey to be fully profitable and to increase and add value to the skins, we'll expect the prey.

Unknown Executive: And if I may sneak in a...

Mark Fones: And just a follow up on that. So until commissioning of your refinery, are you looking at the tolling opportunities or selling spotty mean directly into the market or maybe just holding on to your spotty mean mean when please, until you commission the, you know, refinery? Yes, we do have a tolling commitments. We are tolling spotty mean concentrate and we are also open to a beach and alternative in that respect.

Marcio Filho: The next question is from Marcio Sao with Goldman Sachs, please go ahead.

Unknown Executive: Pardon me man, we seem to have lost audio from your location.

Unknown Executive: Marcio, sorry to interrupt you, but there is a problem with your microphone. So we will go to the next question and then we can come back with you, but please try to change to another microphone because there is a problem we cannot hear anything of what you're saying.

Unknown Executive: Hello, can you hear it?

Unknown Executive: Can you hear the main speakers?

César Pérez: The next question is from Cesar Perez-Novole with BTG Patchwell, please go ahead. Yes, good morning, good afternoon, I'm sorry. In the press release, I see that management reaffirmed their previously announced expansion plan for for this year, but at the same time, you also suggested of some certain reassessment of specific market and initiatives that may be quote unquote less attractive in the short term. Could you please provide further detail on that specific assessment and potential near term impact? Thank you.

Unknown Executive: We can't hear the questioner.

Unknown Executive: Can we go to the next question please?

Isabella Simanato: The next question will come from Isabella Simanato with Bank of America.

Unknown Executive: Please go ahead.

Unknown Executive: Thank you.

Unknown Executive: So there is I think two different separately connected, but I will have our long term strategies to give it increase in our capacity of interior what I say before as a little carbon dioxide and to keep it growing at the same pace of the the management. But it's a tactic in the short term is if we have to reduce the conversion what I say before in China because the price are not and not the convenience for us to do the business we're doing.

Unknown Executive: Good afternoon everyone.

Unknown Executive: So I have a couple of questions.

Unknown Executive: It's something that we would do in the short term, but it's a little bit different that we are planning for the long term because we still think that this market is going to keep growing in the future. Understood. Thank you.

Unknown Executive: First of all, I'll leave them.

Corinne Blanchard: The next question is from Corinne Blancher with Deutsche Bank. Please go ahead.

Unknown Executive: When you say right that you are looking for a little evaluation, it's a revelating the market and what's attractive about these levels.

Corinne Blanchard: Hey, good afternoon. The first question just related to the pricing. Is there a scenario or is there certain price like spot price at some point that you could be thinking actually of. I've been contract with a negotiated price or basically the question is like are you considering at some point moving back was like maybe like fixed price contract or was having like a stronger like flow and sending price.

Unknown Executive: I wonder what exactly do you mean by that and what are things that are being taken into consideration here.

Unknown Executive: And also on the international expansion here, if you mention $100,000 by 2030.

Unknown Executive: If you could give us a sense, what are the main readers or focus on the main raw materials and what type of cost or production should we be thinking about for $100,000.

Unknown Executive: Thank you.

Felipe Smith: Hello, Corinne, this is Felipe. As we have been doing already in the past years and we want to continue like this, we are a low cost producer so we prefer to follow the indices, we think that this is the best way to contract our volumes is both is good both for the customer and for us.

Unknown Executive: As we come away with respect to produce a little bit more than $200,000 in Chile, maybe $30,000 or $40,000 of those is producing a little sulphate in Salad Acama that is sending later to China to convert to a little carbon and a drug site.

Corinne Blanchard: Okay, I find out the second question.

Unknown Executive: Can you please give an update on the T&C situation? I mean, we saw a lot of filing since there is not a lot of further options for them to do anything but just trying to understand the view here that will be very helpful. Okay, what you call T&T situation is a public situation, we don't have different information than the one that is on the press, it means that T&T they have a different opinion of the of the regulatory in Chile, the CMF that is the regulatory, they have an opinion about the transaction and T&T has a different opinion and they appeal to the court with their position, we are participating in the peeling also with our opinion and there's nothing new about that.

Unknown Executive: But maybe differently, can they do is there any other step that it can be taken, or would you try to understand what can further up on or this is just a static code at this point? Probably you have to ask T&T about the potential future steps, I really don't know but of course in this specific situation we expect that after the court decision that we are very optimistic about the court decision, I hope it's going to be over but again if they are thinking something else you have to ask T&T, I don't know how to answer.

Unknown Executive: All right thank you.

Camilla Barger: The next question is from Camilla Barger with Berrezco, please go ahead. Hi, good afternoon, thank you for taking my questions. So just quick questions on my side, regarding the deal with codec, could you please elaborate on the main challenges in discussions with local communities?

Unknown Executive: So that is something that we could evaluate according to the market condition, the production that we are going to expect to produce in China in the second quarter, in the second semester.

Unknown Executive: And the second question is on topics, in case the market gets worse, would you consider flexibilizing topics and is so how much would it be? Thank you. Okay about the deal with codec, there is a clear process in order to have a relation with the communities for the new agreement and we are working on it. You have to go to the communities ask their opinion that is not binding but it's a very important opinion for the court for the companies and for them we are working very hard in order to do it as soon as we can and with relation with the communities, I will say that is are very good, we are open with them, they are open with us and we are working in order to solve any difference that we may have.

Mark Fones: Sir, that's the point.

Ricardo Ramos: No, no, the capex, sorry regarding the capex, the capex informed by the company, it will continue. We are, we think that the capex we have today in the lithium industry is very good in the iron and nitrates, it's the right one and the projects that we have in Australia, the right one. And as mentioned before, we don't think that the long-term, really, we don't think that the long-term pricing of lithium is the today price environment, there's a specific situation today of the price environment, but we are, we are very clear that the price will be different in the future, that's why we have a clear plan of investment in the lithium, we are really committed about that, and we are very low cost-producer, that's why we will continue to do our, our, our, our investment.

Unknown Executive: Okay, thank you very much.

Mark Fones: As you know, we've been pretty active in Australia.

Mark Fones: We now have gained access to two world class lithium deposits, namely the endover project.

Mark Fones: Both of which were expected not only to have a significant scale, but also we are already discussing the expansion for mononism projects.

Irina Axenova: This concludes our question and answer session, I would like to turn the conference back over to Arena, Exanova. Thank you, Gary.

Mark Fones: In addition to that, we continue to work on monitor and invest in various early exploration projects, not only in Australia, but also across the world.

Mark Fones: We have just recently announced a new partnership in Sweden with Taga Group.

Unknown Executive: Before we close, we have a question from Marcia who couldn't connect, if there's any dividend potential in the view of negative net income so far, I'm not sure how do you would like to see? The company has a dividend policy that has been approved by the board and informed to the shareholders, and that dividend policy established that we will distribute the dividend as a function of the net income if certain conditions are met on our balance sheet.

Mark Fones: All of them developed to, or aimed to develop an early stage. Innovative and marginal cost effective products into the long term.

Unknown Executive: Thank you.

Gerardo Illanes: Since the net income is negative because of a one-time effect that hit the results because of the lithium mining tax that was applied in the first quarter, I mean, the result is negative and because of that, the net income that the board has approved as a interim dividend has been zero. So it depends on what will happen in the rest of the year, but the policy is quite clear in that regard. Thank you, Hiradar.

Lucas Ferreira: The next question is from Lucas Ferrero with JP Morgan.

Unknown Executive: Please go ahead.

Unknown Executive: Hi, guys.

Unknown Executive: And this concludes our call today. Thank you for joining us, and we look forward to having you now next poll. Have a great day, everyone. Bye.

Unknown Executive: Can you hear me?

Unknown Executive: Yes.

Unknown Executive: Okay.

Unknown Executive: Thank you.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.

Unknown Executive: So two questions.

Unknown Executive: You may now disconnect.

Unknown Executive: The first one, can you explain in correct me if I wrong, but I'm seeing your average cost, cash cost per ton in lithium, increasing like 8% quarter to quarter. That's driving your gross margin to be reduced.

Unknown Executive: So can you explain the reason why I was expecting actually the opposite things I would imagine.

Unknown Executive: Lease payment allocations would be lower, given the lower prices, and also higher volumes would imply maybe fixed cost dilution, the depreciation of the peso, maybe helps you as well.

Unknown Executive: So can you explain why this quarter specifically cost was higher?

Ricardo Ramos: And the second question to Ricardo Ramos, I just to confirm, so you signed already the contract with Codelco for the JV, but you mentioned that certain conditions must be matched.

Ricardo Ramos: So I just wanted to clarify that.

Ricardo Ramos: So apart from the signing of the contract, what are the next steps for the JV to be actually formed and run smoothly?

Ricardo Ramos: So and how long that could take if you can explain that would be that would be great.

Unknown Executive: Thank you.

Ricardo Ramos: But are mainly legal ones that we have to follow some steps in the companies and so on in the by law, whatever, but we are working on that and we are going to be ready as we speak in the first quarter of next year.

Ricardo Ramos: But if you want to review in detail this condition present, those are included in the contract are public.

Carlos Diaz: Hi Lucas, this is Carlos Diaz Piquín.

Carlos Diaz: Well, I respect your first question about the Cachecos of the Lithium.

Carlos Diaz: This is mainly explained because of the inventory adjustment related to the Lithuan sulfate.

Carlos Diaz: The Lithuan sulfate that we sport to China that was later is converted to carbon and hydroxide.

Carlos Diaz: It was sported during the second quarter where the price were higher.

Carlos Diaz: And the royalty are paid in the moment that we export, so you will have an effect mainly related with that.

Carlos Diaz: The royalty that we pay to the corpus for in Chile.

Unknown Executive: Perfect.

Unknown Executive: So if I may just a quick follow-up, what's your lithium cache cost today?

Unknown Executive: Is it remains around 5,000?

Unknown Executive: Is this something we can work with?

Carlos Diaz: Our cost is stable, I mean, we don't see a significant change on what are coming before it was most related with the priority that we pay.

Carlos Diaz: As we pay in the moment that we export and not we pay when in the moment that we sell.

Carlos Diaz: And you know there is a lack because we have to export from Chile to China and we give inventory there and so on.

Carlos Diaz: And that is the main effect that is in the Lithuan sulfate.

Unknown Executive: Perfect.

Unknown Executive: And I apologize, in this topic of the royalty, if I may, can you confirm if that quota, that quota, legacy quota of the previous contract with with Corphal before 2017.

Unknown Executive: So if not mistaken, as of this year, you should be already exploring part of the quota, something like 50,000 tons a year with a fixed flat rate.

Unknown Executive: Is this already in place?

Unknown Executive: So eventually that comes to serve a flow into the PML in future sales if you can confirm this place.

Gerardo Illanes: Hi, Lucas, this is Gerardo.

Gerardo Illanes: Yes, what you're saying is right and for the ones that are not familiar, what we, when we signed the new contract in 2018, we had a balance in the previous contract at a fixed rate of 6.8% with Corphal. And according to the new contract, this, the balance that we had could be used from 2024 onwards and it's approximately 50,000 metric tons per year.

Gerardo Illanes: So approximately 50,000 metric tons sold this year will pay a fixed rate of 6.8% while the rest will pay based on the table that is publicly available.

Unknown Executive: Perfect.

Unknown Executive: Thank you very much, everyone.

Alejandro DeMichelis: The next question is from Alejandro, Michaelis from Jeffries.

Unknown Executive: Please go ahead.

Unknown Executive: Yes, good morning.

Unknown Executive: Thank you very much for taking my question.

Unknown Executive: Just one question on the collelco agreement.

Unknown Executive: If you, as I said, you get the condition of presence in the first half, 25, then my understanding is there is a kickoff of extra capacity there.

Unknown Executive: Are there any discussions with Coralco regarding what could happen to that extra capacity in 2025?

Unknown Executive: No, we are not having marketing or commercial discussion with Godelco yet because there's part of the condition presence are some authorization and the following antitrust rules we need to have the agreement ready before starting to talk about commercial strategy.

Unknown Executive: So, if the current lithium market pricing conditions continue if there are chance that the extra capacity for next year may not become available or you may choose to delay that as as someone said before we're very disciplined company it means that we will increase the capacity anyway and we will sell more lithium carbon dioxide as compared to this year that's for sure.

Unknown Executive: Okay, that's very clear.

Unknown Executive: Thank you.

Santhosh Seshadri: The next question is from Santhosh Seshadri, HSBC, please go ahead.

Santhosh Seshadri: Thank you very much.

Santhosh Seshadri: Just a follow-up on cost.

Santhosh Seshadri: So, how do you expect cost to pan out through the rest of the year in the light of electricity pricing increases, Santhosh Seshadri?

Santhosh Seshadri: And do you have any cost mitigation program in place possibly by reducing production of your hydroxide volume Seshadri which has relatively higher cost space or maybe by slowing down ramp up at more flow and product.

Carlos Diaz: Okay, thank you.

Carlos Diaz: So, this is kind of yes, our focus is to reduce our cost and to look at alternative to keeping increasing the quality of the cost and the carbon footprint and so on.

Unknown Executive: Okay.

Mark Fones: Thank you.

Mark Fones: And just a question on your own whole line project.

Mark Fones: You know, are you planning to slow down ramp up, you know, given the adverse economics?

Mark Fones: And what would this mean for the sales contribution in 2024 and 2025?

Mark Fones: Hi, Mark from here.

Mark Fones: Thanks for your question.

Mark Fones: No, we continue full throttle.

Mark Fones: So, managing the monolidium project, we, as you know, are already producing sweat and concentrate from the minor concentrator.

Mark Fones: We have already produced more than 100,000 tons of sweat and concentrate.

Mark Fones: We will continue to increase productivity, reduce costs and maintain quality into the future.

Mark Fones: On the refinery side, we have already above 80% construction completion.

Mark Fones: We are starting commissioning on the refinery, which we expect to have first product meet 2025, so meet next year.

Mark Fones: Once completed, we expect the prey to be fully profitable and to increase and add value to the skins, we'll expect the prey.

Mark Fones: And just a follow up on that.

Mark Fones: Yes, we do have a tolling commitments.

Mark Fones: We are tolling spotty mean concentrate and we are also open to a beach and alternative in that respect.

Marcio Filho: The next question is from Marcio Sao with Goldman Sachs, please go ahead.

Unknown Executive: Marcio, sorry to interrupt you, but there is a problem with your microphone.

Unknown Executive: So we will go to the next question and then we can come back with you, but please try to change to another microphone because there is a problem we cannot hear anything of what you're saying.

César Pérez: The next question is from Cesar Perez-Novole with BTG Patchwell, please go ahead.

César Pérez: Yes, good morning, good afternoon, I'm sorry.

César Pérez: In the press release, I see that management reaffirmed their previously announced expansion plan for for this year, but at the same time, you also suggested of some certain reassessment of specific market and initiatives that may be quote unquote less attractive in the short term.

César Pérez: Could you please provide further detail on that specific assessment and potential near term impact?

César Pérez: Thank you.

César Pérez: So there is I think two different separately connected, but I will have our long term strategies to give it increase in our capacity of interior what I say before as a little carbon dioxide and to keep it growing at the same pace of the the management.

César Pérez: But it's a tactic in the short term is if we have to reduce the conversion what I say before in China because the price are not and not the convenience for us to do the business we're doing.

César Pérez: It's something that we would do in the short term, but it's a little bit different that we are planning for the long term because we still think that this market is going to keep growing in the future.

César Pérez: Understood.

César Pérez: Thank you.

Corinne Blanchard: The next question is from Corinne Blancher with Deutsche Bank.

Corinne Blanchard: Please go ahead.

Corinne Blanchard: Hey, good afternoon.

Corinne Blanchard: The first question just related to the pricing.

Corinne Blanchard: Is there a scenario or is there certain price like spot price at some point that you could be thinking actually of.

Felipe Smith: Hello, Corinne, this is Felipe.

Felipe Smith: As we have been doing already in the past years and we want to continue like this, we are a low cost producer so we prefer to follow the indices, we think that this is the best way to contract our volumes is both is good both for the customer and for us.

Felipe Smith: Okay, I find out the second question.

Unknown Executive: Can you please give an update on the T&C situation?

Unknown Executive: I mean, we saw a lot of filing since there is not a lot of further options for them to do anything but just trying to understand the view here that will be very helpful.

Unknown Executive: Okay, what you call T&T situation is a public situation, we don't have different information than the one that is on the press, it means that T&T they have a different opinion of the of the regulatory in Chile, the CMF that is the regulatory, they have an opinion about the transaction and T&T has a different opinion and they appeal to the court with their position, we are participating in the peeling also with our opinion and there's nothing new about that.

Unknown Executive: Probably you have to ask T&T about the potential future steps, I really don't know but of course in this specific situation we expect that after the court decision that we are very optimistic about the court decision, I hope it's going to be over but again if they are thinking something else you have to ask T&T, I don't know how to answer.

Unknown Executive: All right thank you.

Camilla Barger: The next question is from Camilla Barger with Berrezco, please go ahead.

Camilla Barger: Hi, good afternoon, thank you for taking my questions.

Camilla Barger: So just quick questions on my side, regarding the deal with codec, could you please elaborate on the main challenges in discussions with local communities?

Camilla Barger: And the second question is on topics, in case the market gets worse, would you consider flexibilizing topics and is so how much would it be?

Unknown Executive: Thank you.

Ricardo Ramos: Okay about the deal with codec, there is a clear process in order to have a relation with the communities for the new agreement and we are working on it.

Ricardo Ramos: You have to go to the communities ask their opinion that is not binding but it's a very important opinion for the court for the companies and for them we are working very hard in order to do it as soon as we can and with relation with the communities, I will say that is are very good, we are open with them, they are open with us and we are working in order to solve any difference that we may have.

Ricardo Ramos: No, no, the capex, sorry regarding the capex, the capex informed by the company, it will continue.

Ricardo Ramos: We are, we think that the capex we have today in the lithium industry is very good in the iron and nitrates, it's the right one and the projects that we have in Australia, the right one.

Ricardo Ramos: And as mentioned before, we don't think that the long-term, really, we don't think that the long-term pricing of lithium is the today price environment, there's a specific situation today of the price environment, but we are, we are very clear that the price will be different in the future, that's why we have a clear plan of investment in the lithium, we are really committed about that, and we are very low cost-producer, that's why we will continue to do our, our, our, our investment.

Unknown Executive: Okay, thank you very much.

Irina Axenova: This concludes our question and answer session, I would like to turn the conference back over to Arena, Exanova.

Irina Axenova: Thank you, Gary.

Gerardo Illanes: The company has a dividend policy that has been approved by the board and informed to the shareholders, and that dividend policy established that we will distribute the dividend as a function of the net income if certain conditions are met on our balance sheet.

Gerardo Illanes: So it depends on what will happen in the rest of the year, but the policy is quite clear in that regard.

Unknown Executive: Thank you, Hiradar.

Unknown Executive: And this concludes our call today.

Unknown Executive: Thank you for joining us, and we look forward to having you now next poll.

Unknown Executive: Have a great day, everyone.

Unknown Executive: Bye.

Unknown Executive: The conference is now concluded.

Unknown Executive: Thank you for attending today's presentation.

Unknown Executive: You may now disconnect.

Q2 2024 Sociedad Química y Minera de Chile SA Earnings Call

Request a DemoDemo

SQM

Sociedad Quimica y Minera de Chile SA

Earnings