May 2013 Important Notice Statements in this presentation concerning - - PowerPoint PPT Presentation

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May 2013 Important Notice Statements in this presentation concerning - - PowerPoint PPT Presentation

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May 2013 Important Notice Statements in this presentation concerning the Companys business outlook or future economic performances, anticipated profitability, revenues, expenses, or other financial items, anticipated cost synergies and product

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May 2013

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Statements in this presentation concerning the Company’s business outlook or future economic performances, anticipated profitability, revenues, expenses, or other financial items, anticipated cost synergies and product or service line growth, together with other statements that are not historical facts, are “forward-looking statements” as that term is defined under Federal Securities Laws. Any forward-looking statements are estimates, reflecting the best judgment of SQM based on currently available information and involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. Risks, uncertainties, and factors that could affect the accuracy of such forward-looking statements are identified in the public filing made with the Securities and Exchange Commission, and forward-looking statements should be considered in light of those factors. 2

Important Notice

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Overview Fertilizers Specialty Chemicals Financial Information

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Agenda

Photo: Evaporation Pond - Salar de Atacama, from which we produce potassium & lithium products

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4

SQM at a Glance

  • World Leader in Specialty Businesses: Potassium Nitrate,

Iodine, lithium & Solar Salts

  • Global Company: Based in Santiago, Chile with over 20
  • ffices on 6 continents
  • Strong Financial Profile
  • 2012 Revenue:

US$ 2.4 Billion (+13%)

  • 2012 EBITDA†:

US$ 1.1 Billion

  • 2012 EBITDA Margin:

> 46%

  • Revenue growth:

> 69 % since 2009

  • Highest liquidity in Chile
  • Listed on the Santiago Stock Exchange, and the

NYSE since 1993

  • Most liquid Chilean ADR on the NYSE in 2012
  • One of the five most liquid companies traded in the

Chilean Stock Market in 2012

  • Responsible growth

Specialty Business World Leadership Growth Opportunities 4

† EBITDA: gross profit – SGA + depreciation & amortization

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SQM at a Glance

Specialty Business World Leadership Growth Opportunities

SQM: Proud to be the world’s largest producer of lithium, iodine, potassium nitrate and solar salts

Fertilizers Specialty Chemicals

Potassium

24%*

Specialty Plant Nutrients

21%*

Iodine

35%*

Lithium

11%*

Industrial Chemicals

8%*

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* Contribution to SQM Consolidated Gross Profit of 2012

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Unique Natural Resources

Caliche Ore Salar Brines

Nitrates Iodine Iodine Potassium Lithium Potassium

NaNO3 + KCl = KNO3 + NaCl (salt)

Sodium nitrate + Potassium chloride = Potassium nitrate + Sodium chloride

Specialty Business World Leadership Growth Opportunities 6

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Operational Synergies and a low-cost structure

Caliche Ore Salar Brines

 Operational synergies and low-cost structure

  • Similar processes and industrial technologies are

used across our operations: solar ponds, evaporation, salt harvesting, crystalllizing, drying, among others

  • Raw materials are used in the production of

several different products, reducing costs significantly

  • Specialty Plant Nutrients, Potassium Chloride and

Industrial Chemicals volumes create logistics efficiencies  Commercial flexibility according to market conditions

  • Nitrates in different qualities are used for

industrial applications or for the fertilizer industry

  • Potassium can be sold as potassium chloride or

used as raw material in the production of potassium nitrate

  • Potassium chloride/sulfate allocation

Iodine Nitrates Potassium chloride Potassium sulfate Lithium Potassium nitrate

Specialty Business World Leadership Growth Opportunities 7

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Overview Fertilizers Specialty Chemicals Financial Information

Agenda

Photo: Potassium Nitrate Plant in Coya Sur

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†Market share figures are based

  • n 2012 SQM estimates.

*Figures are based on IFRS

Specialty Business World Leadership Growth Opportunities

Fertilizers: Uniquely Positioned

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Specialty Plant Nutrition

46% world market share KNO3† 2012 Revenues* US$675M (28%) 21% of total 2012 gross margin*

Potassium

2012 Revenues* US$605M (25%) 24% of total 2012 gross margin*

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Potassium Nitrate

Niche Market Demand Drivers

  • Chlorine free
  • Fully water soluble
  • 100% Natural origin
  • Fast absorption
  • High cost of land
  • Water scarcity
  • Demand for premium

crops

  • North America and

European vegetable and tomato markets Modern Agricultural Techniques

Fertilizers: Specialty Plant Nutrition

21% of Total 2012 Gross Margin

Vegetables 41% Fruits 22% Industrial Crops 28% Others 9%

Main uses: Premium crops*

*SQM estimates 2012

Specialty Business World Leadership Growth Opportunities 10

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Fertilizers: Specialty Plant Nutrition

21% of Total 2012 Gross Margin SQM & SPN: World Leader

  • Completion of new potassium nitrate facility

in Coya Sur (300,000 tons/year)

  • Developed distribution network: Proximity to

customers allows for us to meet changing needs and new market tendencies

  • Largest Producer: 46% World Market Share

Other producers: Haifa, Kemapco*

  • Prices are expected to decrease in 2013 as a

result of the new potash price environment Specialty Business World Leadership Growth Opportunities 11

* Figures are based on 2012 SQM

  • estimates. Market estimates do not

include imports/exports from China

600 800 1.000 200 400 600 800 1.000 2009 2010 2011 2012 SQM Avg. Price for SPN business line Th MT Year

World Potassium Nitrate Market*

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Fertilizers: Potassium

24% of Total 2012 Gross Margin Potassium Chloride

Market Demand Drivers

  • Commodity Fertilizer
  • ~50 million ton market

(2012)

  • Largest Global Producers:
  • Potash Corp
  • Uralkali
  • Global crop supply

pressure should have a positive impact on fertilizer prices

  • Contracts with China for

the first half of 2013 closed at $70 under prices seen in 2012

  • Main Uses:
  • Fruits/Vegetables
  • Corn
  • Rice
  • Demand growth still

being seen in Brazil

  • Population Growth
  • Farmer economics &

yield optimization

Specialty Business World Leadership Growth Opportunities

*SQM estimates **Price as of December for respective years

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100 200 300 400 500 600 10 20 30 40 50 60 2009 2010 2011 2012 Precio FOB Vancouver US$/ton ** millones de TM Año

Mercado MOP

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SQM & Potassium: Growth Opportunities

  • Expansion of potassium-based products:
  • Installed capacity of approximately

2 million MT in 2012

  • 2013 production volumes to be similar

to 2012

  • 2014 effective capacity expected to be

between 2.2 – 2.3 million MT

  • Three main sources of potassium that exist in

market today: SQM is the only company that produces all three sources

  • Internal development of production

technologies has allowed for a better utilization of natural resources and for higher yields through increased efficiencies

Fertilizers: Potassium

24% of Total 2012 Gross Margin

  • MOP is potassium chloride (KCl), also known as potash
  • SOP is potassium sulfate (K2SO4)

Specialty Business World Leadership Growth Opportunities 13

400 800 1200 1600 2000 2006 2007 2008 2009 2010 2011 2012 2013E

  • Th. MT

Year

SQM Production Volumes MOP + SOP

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Overview Fertilizers Specialty Chemicals Financial Information

Agenda

Photo: Salar de Atacama

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Specialty Chemicals: World Leadership

†Market share figures are based on 2012 SQM estimates ⁰ Considering the lithium chemicals market, excluding concentrated minerals *Figures are based on IFRS

Specialty Business World Leadership Growth Opportunities 15

Iodine & Derivatives

34% world market share† 2012 Revenues* US$578M (24%) 35% of total 2012 gross margin*

Lithium & Derivatives

35% world market share†⁰ 2012 Revenues *US$222M (9%) 11% of total 2012 gross margin*

Industrial Chemicals

2012 Revenues *US$245M (10%) 8% of total 2012 gross margin*

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Specialty Chemicals: Iodine

35% of Total 2012 Gross Margin

* Market participation based on SQM 2012 estimates Market supply estimates for Japan include supply from traditional production and recycling in Japan

Iodine

Niche Market Main Uses

  • SQM is the leading iodine

producer in the world

  • Global Demand: CAGR

2002-2012: 4%

  • Additional capacity from

Chilean competitors started production in 2012, aiming to reach projected capacity in 2013

  • X-Ray Contrast Media
  • LCD
  • Pharmaceuticals
  • Iodophors
  • Approximately 40% of

uses related to human health and nutrition

Specialty Business World Leadership Growth Opportunities 16

SQM 34% Japan 31% Others Chile 24% Others Recycling 5% USA 4% Others 2%

2012 Market Size Estimates: ~31 kMT*

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Specialty Chemicals: Iodine

35% of Total 2012 Gross Margin SQM & Iodine: World Leader

  • Current Capacity 12,500 MT
  • Future demand growth expected to

maintain a positive trend

  • Significant Price Growth 2010-2012

Specialty Business World Leadership Growth Opportunities

*SQM estimates

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5 10 15 20 25 30 35 40 45 50 55 5 10 15 20 25 30 35 2008 2009 2010 2011 2012 Iodine BL Price US$/kg TThousand MT Year

Iodine Market*

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Specialty Chemicals: Lithium

11% of Total 2012 Gross Margin

*SQM estimates: Lithium chemicals market

Specialty Business World Leadership Growth Opportunities

Lithium

Market Main Uses

  • SQM is the leading lithium

chemical producer in the world

  • Global demand: CAGR (2002-

2012): ~ 8%

  • Expected growth for 2012: ~

9%

  • Global lithium chemical

demand has increased over 25% between 2010-2012, with batteries being the primary demand driver

  • Battery technology historically

been the demand driver.

  • Batteries (over 41%)
  • Glass
  • Lubricating Greases
  • Glazes/Frits

Li2CO3

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SQM 35% China 10% Talison 22% Others Chile 19% FMC 11% Others 3%

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Lithium & SQM: Growth Opportunities

  • Current lithium carbonate plant capacity 48,000

MT/year

  • We believe SQM is one of the lowest cost

producer in the world

  • New production capacity is expected from

Australia & China during 2013

Lithium & Electric Cars: Outlook

  • Total production of e-cars (HEV-PHEV-EV) using

lithium-ion batteries (LIB) is expected to reach 1.5-3.0 million (2015), 5.0-10.0 million (2020)

  • Total lithium demand is expected to reach 250-

300 KMT-LCE (2020)

Specialty Chemicals: Lithium

11% of Total 2012 Gross Margin

*SQM estimates: Lithium chemicals market

Specialty Business World Leadership Growth Opportunities 19

2.000 4.000 6.000 40 60 80 100 120 140 2008 2009 2010 2011 2012 Lithium Average Price US$/ton

  • TH. MT - LCE

Year

Lithium Chemicals Market*

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Solar Salts:

New demand for industrial nitrates for thermal energy storage in solar power plants means increasing our nitrate consumption

  • Mixture of 60% sodium nitrate and 40%

potassium nitrate

  • Main projects: ACS Cobra-Sener, Aries,

Rocketdyne, Abengoa, SAMCA, Solar Reserves

  • 50 MW → ~30,000 MT of salts
  • 2012 solar salts are expected to reach

~ 180,000 MT .

  • 2013 sales expected to drop below

100,000 MT due to a delay of most projects until 2014 as a result of the financial situation in Europe

Specialty Chemicals: Industrial

8% of Total 2012 Gross Margin

Traditional Industrial Chemical applications include: metal treatment, water treatment, pyrotechnics, explosives, glass manufacturing, among others Specialty Business

World Leadership Growth Opportunities 20

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Overview Fertilizers Specialty Chemicals Financial Information

Agenda

Photo: SQM offices in Santiago

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22 1. Capacity expansion for potassium- based products in the Salar de Atacama 2. Increased capacity in iodine and nitrates facilities in first region, with increased plant efficiencies and higher quality products 3. Optimization railroad system,

  • ther projects aimed at improving

yields and reducing costs

Capital Expenditure Program

Approximately US$500 million for 2013

*Approximately 70% of capital expenditures will be related to expansion projects Specialty Business World Leadership Growth Opportunities 22

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Financial Performance

* 2008 figures prepared according to Chilean GAAP; 2009-2012 figures are based on IFRS numbers.

Specialty Business World Leadership Growth Opportunities 23

1774 1438 1830 2145 2429 500 1000 1500 2000 2500 3000 2008 2009 2010* 2011* 2012* US$ Million

Revenues*

501 340 382 546 649 100 200 300 400 500 600 700 2008 2009 2010 2011 2012 US$ Million

Net Income*

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Financial Performance*

NFD: interest bearing debt net of cash and cash equivalents, considering the effects of derivatives * 2008 figures prepared according to Chilean GAAP; 2009-2011 figures are based on IFRS numbers.

Specialty Business World Leadership Growth Opportunities 24

42% 41% 38% 45% 46% 0% 10% 20% 30% 40% 50% 2008 2009 2010 2011 2012

EBITDA/Revenues

1 2 2008 2009 2010 2011 2012

NFD/EBITDA

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Key Conclusions

Business flexibility according to market conditions

  • Largest global producer, lowest cost producer, market growth.
  • Specialty Plant Nutrition
  • Iodine
  • Lithium
  • Solar Salts
  • Growth opportunities and a low cost producer.
  • Potassium
  • Industrial Chemicals
  • Solid financial position
  • Focused on long-term growth

25 Specialty Business World Leadership Growth Opportunities 25