Report of Foreign Issuer (6-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE

SECURITIES EXCHANGE ACT OF 1934

For the month of September, 2016.

Commission File Number 33-65728

CHEMICAL AND MINING COMPANY OF CHILE INC.

(Translation of registrant’s name into English)

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

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F: x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

SQM S.A.
El Trovador 4285,
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

SQM Salar S.A.

Santiago, Chile. September 14, 2016.- Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reports the translation of its financial statements for the six months ended June 30, 2016, the Spanish version of which was filed with the Chilean Superintendency of Securities and Insurance ( Superintendencia de Valores y Seguros or “SVS”) on August 24, 2016.

SQM Salar S.A.

CONSOLIDATED FINANCIAL STATEMENTS

For the period ended

June 30, 2016

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

In Thousands of United States Dollars

This document includes:

Report of Independent Register Public Accounting Firms

Consolidated Classified Statements of Financial Position

Consolidated Statements of Income by Function

Consolidated Statements of Comprehensive Income

Consolidated Statements of Cash Flows

Consolidated Statements of Changes in Equity

Notes to the Consolidated Financial Statements

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

Table of Contents –Consolidated Financial Statements

Consolidated Classified Statements of Financial Position		9
Consolidated Statements of Income by Function		11
Consolidated Statements of Comprehensive Income		13
Consolidated Statements of Cash Flows		14
Consolidated Statements of Changes in Equity		16
Note 1	Identification and activities of the Company and Subsidiaries	18
1.1	Historical background	18
1.2	Main domicile where the Company performs its production activities	18
1.3	Codes of main activities	18
1.4	Description of the nature of operations and main activities	18
1.5	Other background	20
Note 2	Basis of presentation for the consolidated financial statements	22
2.1	Accounting period	22
2.2	Financial statements	22
2.3	Basis of measurement	23
2.4	Accounting pronouncements	24
2.5	Basis of consolidation	28
2.6	Significant accounting judgments, estimates and assumptions	30
Note 3	Significant accounting policies	31
3.1	Classification of balances as current and non-current	31
3.2	Functional and presentation currency	31
3.3	Foreign currency translation	31
3.4	Subsidiaries	33
3.5	Consolidated statement of cash flows	33
3.6	Financial assets	33
3.7	Financial liabilities	34
3.8	Financial instruments at fair value through profit or loss	34
3.9	Financial instrument offsetting	34
3.10	Reclassification of financial instruments	34
3.11	Derivative and hedging financial instruments	34
3.12	Derecognition of financial instruments	36
3.13	Derivative financial instruments	36
3.14	Fair value measurements	36
3.15	Leases	36

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

3.16	Deferred acquisition costs from insurance contracts	37
3.17	Trade and other receivables	37
3.18	Inventory measurement	37
3.19	Investments in associates and joint ventures	38
3.20	Transactions with non-controlling interests	39
3.21	Related party transactions	39
3.22	Property, plant and equipment	39
3.23	Depreciation of property, plant and equipment	40
3.24	Goodwill	41
3.25	Intangible assets other than goodwill	41
3.26	Research and development expenses	42
3.27	Prospecting expenses	42
3.28	Impairment of non-financial assets	43
3.29	Minimum dividend	44
3.30	Earning per share	44
3.31	Trade and other payables	44
3.32	Interest-bearing borrowings	45
3.33	Other provisions	45
3.34	Obligations related to employee termination benefits and pension commitments	46
3.35	Compensation plans	46
3.36	Revenue recognition	46
3.37	Finance income and finance costs	47
3.38	Income tax and deferred taxes	48
3.39	Segment reporting	49
3.40	Environment	50
Note 4	Financial risk management	50
4.1	Financial risk management policy	50
4.2	Risk factors	51
4.3	Risk measurement	54
Note 5	Changes in accounting estimates and policies (consistent presentation)	54
5.1	Changes in accounting estimates	54
5.2	Changes in accounting policies	54
Note 6	Background of companies included in consolidation	55
6.1	Parent’s stand-alone assets and liabilities	55
6.2	Parent entity	55
6.3	Joint arrangements of controlling interest	55

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

6.4	General information on consolidated subsidiaries	56
6.5	Information attributable to non-controlling interests	59
6.6	Information on consolidated subsidiaries	60
6.7	Detail of transactions between consolidated companies	64
Note 7	Cash and cash equivalents	65
7.1	Types of cash and cash equivalents	65
7.2	Short-term investments, classified as cash equivalents	65
7.3	Information on cash and cash equivalents by currency	66
7.4	Amount of significant restricted (unavailable) cash balances	66
7.5	Short-term deposits, classified as cash equivalents	67
Note 8	Inventories	68
Note 9	Related party disclosures	69
9.1	Related party disclosures	69
9.2	Relationships between the parent and the entity	69
9.3	Detailed identification of the link between the Parent and subsidiary	70
9.4	Detail of related parties and related party transactions	72
9.5	Trade receivables due from related parties, current:	73
9.6	Trade payables due to related parties, current:	73
9.7	Board of Directors and Senior Management	74
9.8	Key management personnel compensation	77
Note 10	Financial instruments	78
10.1	Types of other financial assets	78
10.2	Trade and other receivables	79
10.3	Hedging assets and liabilities	81
10.4	Financial liabilities	83
10.5	Trade and other payables	94
10.6	Financial liabilities at fair value through profit or loss	95
10.7	Financial asset and liability categories	96
10.8	Fair value measurement of assets and liabilities	98
10.9	Financial assets pledged as guarantee	99
10.10	Estimated fair value of financial instruments and financial derivatives	99
10.11	Nature and scope of risks arising from financing instruments	101
Note 11	Equity-accounted investees	102
11.1	Investments in associates recognized according to the equity method of accounting	102
11.2	Assets, liabilities, revenue and expenses of associates	103
11.3	Other information	104

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Note 12	Joint Ventures	104
12.1	Policy for the accounting of equity accounted investment in joint ventures	104
12.2	Disclosures of interest in joint ventures	104
12.3	Investment in joint ventures accounted for under the equity method of accounting	105
12.4	Assets, liabilities, revenue and expenses from joint ventures:	107
12.5	Other Joint Venture disclosures:	108
Note 13	Intangible assets and goodwill	109
13.1	Balances	109
13.2	Disclosures on intangible assets and goodwill	109
Note 14	Property, plant and equipment	115
14.1	Types of property, plant and equipment	115
14.2	Reconciliation of changes in property, plant and equipment by type:	116
14.3	Detail of property, plant and equipment pledged as guarantee	120
14.4	Additional information	120
14.5	Impairment of assets	120
Note 15	Employee benefits	120
15.1	Provisions for employee benefits	120
15.2	Policies on defined benefit plan	121
15.3	Other long-term benefits	122
15.4	Post-employment benefit obligations	123
15.5	Staff severance indemnities	123
Note 16	Executive compensation plan	125
Note 17	Disclosures on equity	126
17.1	Capital management	126
17.2	Disclosures on preferred share capital	127
17.3	Disclosures on reserves in equity	129
17.4	Dividend policies	130
17.5	Provisional dividends	131
Note 18	Provisions and other non-financial liabilities	132
18.1	Types of provisions	132
18.2	Description of other provisions	133
18.3	Other non-financial liabilities, current	133
18.4	Changes in provisions	134
18.5	Detail of main types of provisions	135
Note 19	Contingencies and restrictions	136
19.1	Lawsuits and other relevant events	136

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

19.2	Restrictions to management or financial limits	141
19.3	Commitments	142
19.4	Tax contingency	143
19.4	Tax contingency, continued	144
19.5	Restricted or pledged cash	144
19.6	Securities obtained from third parties	146
19.7	Indirect guarantees	147
Note 20	Revenue	149
Note 21	Earnings per share	149
Note 22	Borrowing costs	150
22.1	Costs of capitalized interest, property, plant and equipment	150
Note 23	Effect of fluctuations on foreign currency exchange rates	151
Note 24	Environment	152
24.1	Disclosures of disbursements related to the environment	152
24.2	Detail of information on disbursements related to the environment	153
24.3	Description of each project, indicating whether these are in process or have been finished	159
Note 25	Other current and non-current non-financial assets	162
Note 26	Operating segments	163
26.1	Operating segments	163
26.2	Operating segment disclosures:	165
26.3	Statement of comprehensive income classified by operating segments based on groups of products	167
26.4	Revenue from transactions with other Company’s operating segments	169
26.5	Disclosures on geographical areas	169
26.6	Disclosures on main customers	169
26.7	Segments by geographical areas as of June 30, 2016 and June 30, 2015	170
Investment accounted for under the equity method		170
Intangible assets other than goodwill		170
Investment accounted for under the equity method		170
Intangible assets other than goodwill		170
26.8	Property, plant and equipment classified by geographical areas	171
Note 27	Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature	172
27.1	Revenue	172
27,2	Cost of sales	172

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

27.3	Other income	173
27.4	Administrative expenses	173
27.5	Other expenses by function	174
27.7	Summary of expenses by nature	175
27.8	Finance expenses	175
Note 28	Income tax and deferred taxes	176
28.1	Current tax assets	176
28.2	Current tax liabilities	177
28.3	Tax earnings	177
28.4	Income tax and deferred taxes	178
Note 29	Disclosures on the effects of fluctuations in foreign currency exchange rates	189
Note 30	Mineral resource exploration and evaluation expenditure	194
Note 31	Lawsuits and complaints	195
Note 32	Sanction proceedings	197
Note 33	Potential Arbitration Proceeding for the Settlement Insurance Policy for Heavy Rains in the Atacama Saltpeter Deposit	197
Note 34	Closure of the Pedro de Valdivia Site	198
Note 35	Effects on Premises after the Rain Storms in the Tocopilla Zone	198
Note 36	Events occurred after the reporting date	198
36.1	Authorization of the financial statements	198
36.2	Disclosures on events occurring after the reporting date	199
36.3	Detail of dividends declared after the reporting date	199

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Consolidated Classified Statements of Financial Position

Assets	Note	As of June 30, 2016 ThUS$		As of December 31, 2015 ThUS$
		Unaudited		Audited
Current assets
Cash and cash equivalents	7.1		582,991		527,259
Other current financial assets	10.1		231,622		636,325
Other current non-financial assets	25		47,105		62,006
Trade and other receivables, current	10.2		307,203		302,225
Trade receivables due from related parties, current	9.5		77,327		99,907
Current inventories	8		1,017,854		1,003,846
Current tax assets	28.1		60,613		65,277
Total current assets			2,324,715		2,696,845

Non-current assets
Other non-current financial assets	10.1		2,741		486
Other non-current non-financial assets	25		26,103		33,526
Trade receivables, non-current	10.2		1,250		1,050
Investments in associates	11.1		56,449		49,836
Investments in joint ventures	12.3		58,694		29,466
Intangible assets other than goodwill	13.1		108,970		110,428
Goodwill	13.1		38,088		38,388
Property, plant and equipment	14.1		1,621,593		1,683,576
Deferred tax assets	28.4		643		161
Total non-current assets			1,914,531		1,946,918
Total assets			4,239,246		4,643,762

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Consolidated Classified Statements of Financial Position, (continued)

Liabilities and Equity	Note	As of June 30, 2016 ThUS$			As of December 31, 2015 ThUS$
		Unaudited			Audited
Liabilities
Current liabilities
Other current financial liabilities	10.4		242,699			402,030
Trade and other payables, current	10.5		129,232			136,840
Trade payables due to related parties, current	9.6		-			435
Other current provisions	18.1		33,150			28,141
Current tax liabilities	28.2		40,946			52,070
Provisions for employee benefits, current	15.1		7,980			13,445
Other current non-financial liabilities	18.3		116,555			69,966
Total current liabilities			570,562			702,927

Non-current liabilities
Other non-current financial liabilities	10.4		1,097,220			1,290,203
Other non-current provisions	18.1		8,890			8,890
Deferred tax liabilities	28.4		219,481			219,391
Provisions for employee benefits, non-current	15.1		22,188			21,995
Total non-current liabilities			1,347,779			1,540,479
Total liabilities			1,918,341			2,243,406

Equity	17
Share capital			477,386			477,386
Retained earnings			1,803,002			1,882,196
Other reserves			(19,521	)		(19,797	)
Equity attributable to owners of the Parent			2,260,867			2,339,785
Non-controlling interests			60,038			60,571
Total equity			2,320,905			2,400,356
Total liabilities and equity			4,239,246			4,643,762

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Consolidated Statements of Income by Function

		January to June						April to June
		2016			2015			2016			2015
	Note	ThUS$			ThUS$			ThUS$			ThUS$
					Unaudited

Revenue	27.1		881,459			871,768			489,614			484,249
Cost of sales	27.2		(620,967	)		(576,523	)		(342,682	)		(319,699	)
Gross profit			260,492			295,245			146,932			164,550

Other income	27.3		5,662			7,291			1,638			2,413
Administrative expenses	27.4		(40,807	)		(44,547	)		(22,716	)		(23,382	)
Other expenses by function	27.5		(9,611	)		(25,216	)		(3,167	)		(10,336	)
Other gains (losses)	27.6		755			3,895			(432	)		3,502
Profit (loss) from operating activities			216,491			236,668			122,255			136,747
Finance income			6,617			6,012			2,309			2,662
Finance costs	22		(32,421	)		(34,973	)		(14,990	)		(18,038	)
Share of profit of associates and joint ventures accounted for using the equity method	11-12		10,596			6,843			4,852			3,284
Foreign currency translation differences	23		(1,594	)		(3,209	)		2,579			(12,918	)
Profit (loss) before taxes			199,689			211,341			117,005			111,737
Income tax expense, continuing operations	28.4		(57,291	)		(55,667	)		(33,255	)		(27,875	)

Profit (loss) from continuing operations			142,398			155,674			83,750			83,862

Profit for the year			142,398			155,674			83,750			83,862
Profit attributable to
Owners of the Parent			141,613			154,904			83,087			83,219
Non-controlling interests			785			770			663			643
Profit for the year			142,398			155,674			83,750			83,862

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Consolidated Statements of Income by Function, (continued)

			January to June				April to June
			2016		2015		2016		2015
		Note	US$		US$		US$		US$
	Unaudited

Earnings per share
Common shares
Basic earnings per share (US$ per share)		21		0.5381		0.5885		0.3157		0.3161

Basic earnings per share (US$ per share) from continuing operations				0.5381		0.5885		0.3157		0.3161

Diluted common shares
Diluted earnings per share (US$ per share)		21		0.5381		0.5885		0.3157		0.3161

Diluted earnings per share (US$ per share) from continuing operations				0.5381		0.5885		0.3157		0.3161

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Consolidated Statements of Comprehensive Income

	January to June						April to June
	2016			2015			2016			2015
Statements of comprehensive income	ThUS$			ThUS$			ThUS$			ThUS$
	Unaudited

Profit for the year		142.398			155,674			83,750			83,862
Components of other comprehensive income before taxes and foreign currency translation differences
Gain (loss) from foreign currency translation differences, before taxes		1,316			(4,306	)		(146	)		(1,144	)
Other comprehensive income before taxes and foreign currency translation differences		(1,316	)		(4,306	)		(146	)		(1,144	)
Cash flow hedges
(Gain) loss from cash flow hedges before taxes		(359	)		1,217			2,635			(2,379	)
Other comprehensive income before taxes and cash flow hedges		(359	)		1,217			2,635			(2,379	)
Other comprehensive income before taxes and actuarial gains (losses) from defined benefit plans		(1,014	)		657			(1,013	)		675
Other components of other comprehensive income before taxes		(57	)		(2,432	)		1,476			(2,848	)

Income taxes associated with components of other comprehensive income
Income taxes associated with cash flow hedges in other comprehensive income		148			(382	)		(617	)		433
Income taxes related to defined benefit plans in other comprehensive income		197			-			197			-
Income taxes associated with components of other comprehensive income		345			(382	)		(420	)		433

Other comprehensive income		288			(2,814	)		1,056			(2,415	)

Total comprehensive income		142,686			152,860			84,806			81,447

Comprehensive income attributable to
Owners of the Parent		141,889			152,152			84,136			80,843
Non-controlling interests		797			708			670			604
Total comprehensive income		142,686			152,860			84,806			81,447

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Consolidated Statements of Cash Flows

Consolidated Statements of cash flows	Note	06/30/2016 ThUS$			06/30/2015 ThUS$
		Unaudited
Cash flows from (used in) operating activities

Types of receipts from operating activities

Cash receipts from sales of goods and rendering of services			866,528			909,875
Cash receipts from premiums and benefits, annuities and other benefits from policies entered			1,295			-

Types of payments

Cash payments to suppliers for the provision of goods and services			(473,072	)		(534,958	)
Cash payments to and on behalf of employees			(91,575	)		(24,425	)
Other payments related to operating activities			(4,920	)		(5,393	)
Dividends received			2,167			4,697
Interest paid			(1,274	)		(32,443	)
Interest received			6,617			6,012
Reimbursed (paid) income taxes			(38,263	)		(40,369	)
Other incomes (outflows) of cash			(8,503	)		9,821

Net cash generated from (used in) operating activities			259,000			292,817

Cash flows from (used in) investing activities
Other cash payments made to acquire interest in joint ventures			(25,000	)		(59	)
Proceeds from the sale of property, plant and equipment			575			221
Acquisition of property, plant and equipment			(64,399	)		(53,392	)
Proceeds from sales of intangible assets			1,706			3,283
Cash advances and loans granted to third parties			56			755
Other incomes (outflows) of cash (*)			395,846			(61,572	)

Net cash generated from (used in) investing activities			308,784			(110,764	)

(*) Includes other cash receipts (payments), investments and redemptions of time deposits and other financial instruments, which do not qualify as cash and cash equivalents in accordance with IAS 7.7 as they record a maturity date from their date of origin greater than 90 days.

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Consolidated Statements of Cash Flows, (continued)

	Note	06/30/2016 ThUS$			06/30/2015 ThUS$

Cash flows from (used in) financing activities

Proceeds from short-term borrowings			60,000			80,000
Total proceeds from borrowings			60,000			80,000
Repayment of borrowings			(200,000	)		(100,000	)
Dividends paid			(175,111	)		(39,955	)
Other cash receipts (payments)			(200,000	)		-

Net cash generated from (used in) financing activities			(515,111	)		(59,955	)

Net increase (decrease) in cash and cash equivalents before the effect of changes in the exchange rate			52,673			122,099

Effects of exchange rate fluctuations on cash held			3,059			(3,716	)
Net (decrease) increase in cash and cash equivalents			55,732			118,382

Cash and cash equivalents at beginning of period			527,259			354,566
Cash and cash equivalents at end of period			582,991			472,948

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Consolidated Statements of Changes in Equity

2016	Share capital		Foreign currency translation difference reserves			Cash flow hedge reserves			Actuarial gains (losses) from defined benefit plans			Other miscellaneous reserves			Other reserves			Retained earnings			Equity attributable to owners of the Parent			Non-controlling interests			Total
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity at beginning of the year		477,386		(14,035	)		(1,699	)		(2,386	)		(1,677	)		(19,797	)		1,882,196			2,339,785			60,571			2,400,356
Profit for the year		-		-			-			-			-			-			141,613			141,613			785			142,398
Other comprehensive income		-		449			(211	)		(792	)		830			276			-			276			12			288
Comprehensive income		-		449			(211	)		(792	)		830			276			141,613			141,889			797			142,686
Dividends		-		-			-			-			-			-			(220,807	)		(220,807	)		(1,330	)		(222,137	)
Increase (decrease) in equity		-		449			(211	)		(792	)		830			276			(79,194	)		(78,918	)		(533	)		(79,451	)

Equity as of June 30, 2016 (Unaudited)		477,386		(13,586	)		(1,910	)		(3,178	)		(847	)		(19,521	)		1,803,002			2,260,867			60,038			2,320,905

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

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

Consolidated Statements of Changes in Equity

2015	Share capital		Foreign currency translation difference reserves			Cash flow hedge reserves			Actuarial gains (losses) from defined benefit plans			Other miscellaneous reserves			Other reserves			Retained earnings			Equity attributable to owners of the Parent			Non-controlling interests			Total
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity at beginning of the year		477,386		(7,701	)		(1,881	)		(1,903	)		(1,677	)		(13,162	)		1,775,612			2,239,836			59,867			2,299,703
Profit for the year		-		-			-			-			-			-			154,904			154,904			770			155,674
Other comprehensive income		-		(4,244	)		993			499			-			(2,752	)		-			(2,752	)		(62	)		(2,814	)
Comprehensive income		-		(4,244	)		993			499			-			(2,752	)		154,904			152,152			708			152,860
Dividends		-		-			-			-			-			-			(77,452	)		(77,452	)		(986	)		(78,438	)
Increase (decrease) in equity		-		(4,244	)		993			499			-			(2,752	)		77,452			74,700			(278	)		74,422

Equity as of June 30, 2015 (Unaudited)		477,386		(11,945	)		(888	)		(1,404	)		(1,677	)		(15,914	)		1,853,064			2,314,536			59,589			2,374,125

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 1

Identification and activities of the Company and Subsidiaries

1.1

Historical background

Sociedad Química y Minera de Chile S.A. "SQM" is an open stock corporation organized under the laws of the Republic of Chile, Tax Identification No.93.007.000-9.

The Company was incorporated through a public deed dated June 17, 1968 by the notary public of Santiago MR. Sergio Rodríguez Garcés. Its existence was approved by Decree No. 1,164 of June 22, 1968 of the Ministry of Finance, and it was registered on June 29, 1968 in the Registry of Commerce of Santiago, on page 4,537 No. 1,992. SQM's headquarters are located at El Trovador 4285, Fl. 6, Las Condes, Santiago, Chile. The Company's telephone number is +56 2 2425-2000.

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

1.2

Main domicile where the Company performs its production activities

The Company’s main domiciles are: Calle Dos Sur plot No. 5 - Antofagasta; Arturo Prat 1060 - Tocopilla; Administración Building w/n - Maria Elena; Administración Building w/n Pedro de Valdivia - María Elena, Anibal Pinto 3228 - Antofagasta, Kilometer 1378 Ruta 5 Norte Highway - Antofagasta, Coya Sur Plant w/n - Maria Elena, kilometer 1760 Ruta 5 Norte Highway - Pozo Almonte, Salar de Atacama (Atacama Saltpeter deposit) potassium chloride plant s/n - San Pedro de Atacama, potassium sulfate plant at Salar de Atacama s/n – San Pedro de Atacama, Minsal Mining Camp s/n CL Plant CL, Potassium– San Pedro de Atacama, formerly the Iris Saltpeter office S/N, Commune of Pozo Almonte, Iquique.

1.3

Codes of main activities

The codes of the main activities as established by the Chilean Superintendence of Securities and Insurance are as follows:

1700 (Mining)

2200 (Chemical products)

1300 (Investment)

1.4

Description of the nature of operations and main activities

Our products are mainly derived from mineral deposits found in northern Chile. We mine and process caliche ore and brine deposits. The ore deposit in northern Chile contains nitrate and iodine deposits. The brine deposits of the Salar de Atacama, in northern Chile, contain high concentrations of lithium and potassium as well as significant concentrations of sulfate.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 1

Identification and Activities of the Company and Subsidiaries (continued)

1.4

Description of the nature of operations and main activities, continued

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

We sell our products in over 100 countries worldwide through our global distribution network and generate our revenue mainly from abroad.

Our products are divided into six categories: specialty plant nutrition, iodine and its derivatives, lithium and its derivatives, industrial chemicals, potassium and other products and services, described as follows:

Specialty plant nutrition: SQM produces and sells four types of specialty plant nutrition in this line of business: potassium nitrate, sodium nitrate, sodium potassium nitrate, and specialty mixes. This business is characterized by being closely related to its customers for which it has specialized staff who provide expert advisory in best practices for fertilization according to each type of crop, soil and climate. Within this type of business, potassium derivative products and specially potassium nitrate have had a leading role given the contribution they make to develop crops insuring an improvement in post-crop life in addition to improving quality, flavor and fruit color. The potassium nitrate, which is sold in multiple formats and as a part of other specialty mixtures, is complemented by sodium nitrate, potassium sodium nitrate, and more than 200 fertilizing mixtures.

Iodine: The Company is a major producer of iodine at worldwide level. Iodine is widely used in the pharmaceutical industry, technology and nutrition. Additionally, iodine is used as X ray contrast media and polarizing film for LCD displays.

Lithium: the Company’s lithium is mainly used for manufacturing rechargeable batteries for cell phones, cameras and notebooks. Through the manufacturing of lithium-based products, SQM provides significant materials to face great challenges such as the efficient use of energy and raw materials. Lithium is mainly not used for rechargeable batteries for small electrical appliances such as mobile phones, tablets and laptops. It is also used in industrial applications such as the manufacturing of glass, ceramics and lubricating greases. Other uses include the pharmaceutical and chemical industries.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 1

Identification and Activities of the Company and Subsidiaries (continued)

1.4

Description of the nature of operations and main activities, continued

Industrial Chemicals: Industrial chemicals are products used as supplies for a number of production processes. SQM participates in this line of business producing sodium nitrate, potassium nitrate and potassium chloride. Industrial nitrates have increased their importance over the last few years due to their use as storage means for thermal energy at solar energy plants, which are widely used in countries as Spain and the United States in their search for decreasing CO ₂ emissions .

Potassium: The potassium is a primary essential macro-nutrient, and even though does not form part of the plant’s structure, has a significant role for the developing of its basic functions, validating the quality of a crop, increasing post-crop life, improving the crop flavor, its amount in vitamins and its physical appearance. Within this business line, SQM has also potassium chlorate and potassium sulfate, both extracted from the salt layer located under the Salar de Atacama (the Atacama Saltpeter Deposit).

Other products and services: This business line includes revenue from commodities, services, interests, royalties and dividends.

1.5

Other background

Staff

As of June 30, 2016 and December 31, 2015, staff was detailed as follows:

	06/30/2016						12/31/2015
Employees	SQM S.A		Other subsidiaries		Total		SQM S.A.		Other subsidiaries		Total
Executives		29		75		104		26		71		97
Professionals		122		875		997		116		838		954
Technicians and operators		273		2,997		3,270		256		2,741		2,997
Foreign employees		-		201		201		-		202		202
Overall total		424		4,148		4,572		398		3,852		4,250

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 1

Identification and Activities of the Company and subsidiaries (continued)

1.5

Other background, continued

Main shareholders

The table below establishes certain information about the beneficial property of Series A and Series B shares of SQM as of June 30, 2016 and December 31, 2015. In respect to each shareholder which has interest of more than 5% of outstanding Series A or B shares. The information below is taken from our records and reports controlled in the Central Securities Depository and reported to the Superintendence of Securities and Insurance (SVS) and the Chilean Stock Exchange, whose main shareholders are as follows:

Shareholder as of June 30, 2016	No. of Series A with ownership		% of Series A shares			No. of Series B with ownership		% of Series B shares			% of total shares
The Bank of New York Mellon, ADRs		-		-			60.146.965		49.97	%		22.68	%
Sociedad de Inversiones Pampa Calichera S.A.(*)		44,892,374		31.43	%		7,007,688		5.82	%		19.72	%
Inversiones El Boldo Limitada		29,330,326		20.54	%		17,963,546		14.92	%		17.97	%
Inversiones RAC Chile Limitada		19,200,242		13.44	%		2,202,773		1.83	%		8.13	%
Potasios de Chile S.A.(*)		18,179,147		12.73	%		-		-			6.91	%
Inversiones PCS Chile Limitada		15,526,000		10.87	%		-		-			5.90	%
Banco de Chile on behalf of non-resident third parties		-		-			8,975,261		7.46	%		3.41	%
Inversiones Global Mining (Chile) Limitada (*)		8,798,539		6.16	%		-		-			3.34	%
Banco Itaú on behalf of investors		20,950		0.01	%		6,158,980		5.12	%		2.35	%
Inversiones La Esperanza Limitada		3,711,598		2.60	%		46,500		0.04	%		1.43	%

(*) Total Pampa Group 29.97%

Shareholder as of December 31, 2015	No. of Series A with ownership		% of Series A shares			No. of Series B with ownership		% of Series B shares			% of total shares
The Bank of New York Mellon, ADRs		-		-			59,079,533		49,08	%		22,45	%
Sociedad de Inversiones Pampa Calichera S.A.(*)		44,880,793		31.43	%		7,007,688		5.82	%		19.72	%
Inversiones El Boldo Limitada		29,330,326		20.54	%		17,963,546		14.92	%		17.97	%
Inversiones RAC Chile Limitada		19,200,242		13.44	%		2,202,773		1.83	%		8.13	%
Potasios de Chile S.A.(*)		18,179,147		12.73	%		-		-			6.91	%
Inversiones PCS Chile Limitada		15,526,000		10.87	%		-		-			5.90	%
Inversiones Global Mining (Chile) Limitada (*)		-		-			9,055,272		7,52	%		3.44	%
Banco de Chile on behalf of non-resident third parties		8,798,539		6.16	%		-		-			3.34	%
Banco Itaú on behalf of investors		20,950		0.01	%		5,679,753		4.72	%		2.27	%
Inversiones La Esperanza Limitada		3,711,598		2.60	%		46,500		0.04			1.43	%

(*) Total Pampa Group 29.97%

On June 30, 2016 the total number of shareholders had risen to 1,208.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 2

Basis of presentation for the consolidated financial statements

2.1

Accounting period

These consolidated financial statements cover the following periods:

Consolidated Statements of Financial Position for the periods ended June 30, 2016 and December 31, 2015.

Consolidated Statements of Changes in Equity for the periods ended June 30, 2016 and 2015.

Consolidated Statements of Comprehensive Income for the periods between January and June 30, 2016 and 2015.

Statements of Direct-Method Cash Flows for the periods ended June 30, 2016 and 2015.

2.2

Financial statements

The consolidated financial statements of Sociedad Química y Minera de Chile S.A. and its Subsidiaries were prepared in accordance with International Financial Reporting Standards (hereinafter “IFRS”) and represent the full, explicit and unreserved adoption of International Financial Reporting Standards as issued by the International Accounting Standards Board (hereinafter the “IASB”).

These consolidated financial statements fairly reflect the equity and financial position of the Company and the results of its operations, changes in statement of income recognized and cash flows occurring during the periods then ended.

IFRS establish certain alternatives for their application. Those applied by the Company are detailed in this Note.

On October 17, 2014, the Chilean Superintendence of Securities and Insurance issued Official Communication No. 856 providing instructions for inspected entities to recognize in 2014 against equity differences in deferred tax assets and liabilities resulting directly from the increase in the corporate income introduced by Law No. 20.780. Such accounting treatment differs from that provided by International Accounting Standard 12 (IAS 12) and, accordingly, represented a change in the accounting framework for the preparation and presentation of financial information that had been adopted through such date.

Considering that indicated in the preceding paragraph, this represented a specific and temporary departure from the IFRS, starting from 20146 and in conformity with that established in paragraph 4ª of IFRS 1, the Company has decided to retrospectively apply such standards (in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”) as if had never ceased their application.

Because of that indicated in the preceding paragraph it does not amend any of the accounts disclosed in the statements of financial position as of June 30, 2016 and 2015, in conformity with that indicated in paragraph 4ª of IAS 1 “Presentation of Financial Statements”, the presentation of the statement of financial position as of January 1, 2015 (third column) is not necessary.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 2

Basis of presentation for the consolidated financial (continued)

2.2

Financial statements, continued

The accounting policies used for the preparation of the annual consolidated accounts comply with all IFRS in issue at the reporting date.

As explained in Note 28.4, on September 29, 2014, Law No. 20.780 was enacted, which introduces amendments to the income tax system in Chile and addresses other tax matters. On October 17, 2014, the Chilean Superintendence of Securities and Insurance (SVS) issued Circular No. 856, which establishes that the effects of changes in income tax rates on deferred tax assets and liabilities must be recognized directly in “Retained earnings” in equity instead of the statement of income, which is different from that required by IAS 12.

Note 2

Basis of presentation for the consolidated financial statements (continued)

2.3

Basis of measurement

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

Inventories are recorded at the lower of cost and net realizable value.

Other current and non-current asset and financial liabilities at amortized cost.

Financial derivatives at fair value; and

Staff severance indemnities and pension commitments at actuarial value.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 2

Basis of presentation for the consolidated financial statements (continued)

2.4

Accounting pronouncements

New accounting pronouncements

a) The following standards, interpretations and amendments are mandatory for the first time for annual periods beginning on January 1, 2016:

Amendments and improvements		Mandatory for annual periods beginning on

Amendment to IFRS 11 “Joint Arrangements” – on the acquisition of interest in a joint operation – Issued in May 2014. This amendment includes guidance related to the method for accounting for an acquisition of an interest in a joint operation in which the activity constitutes a business, specifying the proper treatment for such acquisitions.		01/01/2016

Amendment to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets” on depreciation and amortization – Issued in May 2014. The amendments clarify that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate because revenue generated by such an activity in general reflects other factors other than the use of the economic benefits embedded in the asset or item of property, plant and equipment. Accordingly, a rebuttable presumption exists that a revenue-based depreciation or amortization method is inappropriate.		01/01/2016

Amendment to IAS 27 “Separate Financial Statements” on the equity method – Issued in August 2014. This amendment allows entities to use the equity method of accounting for the recognition of investments in subsidiaries, joint ventures and associates in their separate financial statements.		01/01/2016

Amendment to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”. Issued in September 2014. This amendment addresses an inconsistency between the requirements of IFRS 10 and IAS 28 for the treatment of a sale or contribution of assets between an investor and its associate or joint venture. The main consequence of this amendment is the recognition of a full gain or loss when the transaction involves a business (whether or not in a subsidiary) and a partial gain or loss when the transaction involves assets that are not a business, even if such assets are in a subsidiary.		01/01/2016

Amendment to IAS 1 “Presentation of Financial Statements.” Issued in December 2014. This amendment clarifies the application guidance of IAS 1 on materiality and aggregation, presentation of subtotals, structure of the financial statements and disclosure of accounting policies. The amendments are part of the IASB’s Initiative on Disclosures.		01/01/2016

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 2

Basis of presentation for the consolidated financial statements (continued)

2.4

Accounting Pronouncements, continued

Improvements to International Financial Reporting Standards (2014) issued in September 2014		Mandatory for annual periods beginning on

IFRS 7 "Financial Instruments: Disclosures " It establishes two amendments to IFRS 7: (1) Service contracts: if a Company transfers a financial asset to a third party under conditions that allow the assigner to dispose of the asset, IFRS 7 requires the disclosure of any type of continued involvement that the entity may still have on transferred assets. IFRS 7 provides guidance on what is understood as continued involvement within this context. The amendment is prospective with the option of applying it retrospectively. This also affects IFRS 1 to provide the same option to the first-time adopters of IFRS 1; (2) Interim Financial Statements: The amendment clarifies that the additional disclosure required by amendments to IFRS 7 “Offsetting Financial Assets and Financial Liabilities” is not specifically required for all interim periods, unless required by IAS 34. The amendment is retrospective.		01/01/2016

IAS 19, "Employee Benefits" – This amendment clarifies that in order to determine the discount rate for post-employment benefit obligations, the important aspect is the currency in which liabilities are denominated, not the country where they generate. The evaluation of whether a deep market exists for high-quality corporate bonds is based on corporate bonds in such currency, not in corporate bonds of a particular country. Likewise, where there is no deep market for high-quality corporate bonuses in such currency, government bonds in the related currency have to be used. Such amendment is retrospective but limited at the beginning of the first period presented.		01/01/2016

IAS 34, "Interim Financial Reporting" – This amendment clarifies the meaning of disclosure of information ‘elsewhere in the interim financial report’ and amends IAS 34 to require the inclusion of a cross-reference from the interim financial statements to the location of the information. This amendment is retrospective.		01/01/2016

The adoption of the standards, amendments and interpretations indicated above has no significant impact on the Company’s consolidated financial statements.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 2

Basis of presentation for the consolidated financial statements (continued)

2.4

Accounting Pronouncements, continued

b) Standards, interpretations and amendments issued, not effective for the financial statements beginning on January 1, 2016, which the Company has not adopted early are as follows:

Standards and Interpretations		Mandatory for annual periods beginning on

IFRS 9 “Financial Instruments” – Issued in July 2014. The IASB has issued the full version of IFRS 9, which supersedes the application guidance in IAS 39. This final version includes requirements on the classification and measurement of financial assets and financial liabilities and an expected credit losses model that replaces the incurred loss impairment model used today. The final hedging accounting part of IFRS 9 was issued in November 2013. Early adoption is permitted.		01/01/2018

IFRS 15 “Revenue from Contracts with Customers” – Issued in May 2014. This standard establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. For such purposes, the basic principle is that an entity will recognize revenue representing the transfer of goods or services to customers in an amount that reflects the consideration that the entity expects to receive in exchange for such goods or services. The application of this standard will replace IAS 11 Construction Contracts and IAS 18 Revenue, as well as IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue-Barter Transactions Involving Advertising Services. Early application is permitted.		01/01/2018

IFRS 16 “Leases” – issued in January 2016 establishes the principle for the recognition, measurement, presentation and disclosure of leases. IFRS 16 supersedes the current IAS 17 and introduces a single model for accounting recognition for lessees and requires a lessee to recognize the assets and liabilities of all lease contracts over a term of more than 12 months, unless the underlying asset has a low value. The objective is ensuring that lessees and lessors provide relevant information that fairly represents transactions conducted. IFRS 16 is effective for annual periods beginning on or after January 1, 2019, early adoption is permitted for entities applying IFRS 15 or prior to the date of initial application of IFRS 16.		01/01/2019

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Interim Consolidated Financial Statements As of June 30, 2016 ( Unaudited )

Note 2

Basis of presentation for the consolidated financial statements (continued)

2.4

Accounting Pronouncements, continued

Amendments and improvements		Mandatory for annual periods beginning on

Amendment to IAS 7 “Statement of Cash Flows.” – Issued in February 2016. This amendment introduces additional disclosures allowing users of financial statements to assess changes in obligations from financing activities.		01/01/2017

Amendment to IAS 12 “Income Taxes.” - Issued in February 2016. This amendment clarifies how to account for deferred tax assets related to debt securities measured at fair value.		01/01/2017

The Company's management is in the process of assessing the impacts on the consolidated financial statements of the adoption of IFRS 9, IFRS 15 and IFRS 16. However, for the remaining standards, amendments and interpretations described above, it believes they will not have any significant impact for the initial application period.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 2

Basis of presentation for the consolidated financial statements (continued)

2.5

Basis of consolidation

(a)

Subsidiaries

Relate to all the entities on which Sociedad Química y Minera de Chile S.A. has control when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those variable returns through its power over the entity. Subsidiaries apply the same accounting policies of their Parent.

To account for the acquisition, the Company uses the acquisition method. Under this method the acquisition cost is the fair value of assets delivered, equity securities issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingencies assumed in a business combination are measured initially at fair value at the acquisition date. For each business combination, the Company will measure non-controlling interest of the acquiree either at fair value or as proportional share of net identifiable assets of the acquiree.

Companies included in consolidation:

				Ownership interest
		Country of		06/30/2016						12/31/2015
TAX ID No	Foreign subsidiaries	origin	Functional currency	Direct		Indirect		Total		Total
Foreign	Nitratos Naturais Do Chile Ltda.	Brazil	US$		0.0000		100.0000		100.0000		100.0000
Foreign	Nitrate Corporation Of Chile Ltd.	United Kingdom	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM North America Corp.	USA	US$		40.0000		60.0000		100.0000		100.0000
Foreign	SQM Europe N.V.	Belgium	US$		0.5800		99.4200		100.0000		100.0000
Foreign	Soquimich S.R.L. Argentina	Argentina	US$		0.0000		100.0000		100.0000		100.0000
Foreign	Soquimich European Holding B.V.	Netherlands	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Corporation N.V.	Netherlands	US$		0.0002		99.9998		100.0000		100.0000
Foreign	SQI Corporation N.V.	Netherlands	US$		0.0159		99.9841		100.0000		100.0000
Foreign	SQM Comercial De México S.A. de C.V.	Mexico	US$		0.0100		99.9900		100.0000		100.0000
Foreign	North American Trading Company	USA	US$		0.0000		100.0000		100.0000		100.0000
Foreign	Administración y Servicios Santiago S.A. de C.V.	Mexico	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Peru S.A.	Peru	US$		0.9800		99.0200		100.0000		100.0000
Foreign	SQM Ecuador S.A.	Ecuador	US$		0.0040		99.9960		100.0000		100.0000
Foreign	SQM Nitratos Mexico S.A. de C.V.	Mexico	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQMC Holding Corporation L.L.P.	USA.	US$		0.1000		99.9000		100.0000		100.0000
Foreign	SQM Investment Corporation N.V.	Netherlands	US$		1.0000		99.0000		100.0000		100.0000
Foreign	SQM Brasil Limitada	Brazil	US$		1.0900		98.9100		100.0000		100.0000
Foreign	SQM France S.A.	France	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Japan Co. Ltd.	Japan	US$		1.0000		99.0000		100.0000		100.0000
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	US$		1.6700		98.3300		100.0000		100.0000
Foreign	SQM Oceania Pty Limited	Australia	US$		0.0000		100.0000		100.0000		100.0000

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 2

Basis of presentation for the consolidated financial statements (continued)

2.5

Basis of consolidation, continued

				Ownership interest
		Country of		06/30/2016						12/31/2015
TAX ID No.	Foreign subsidiaries	origin	Functional currency	Direct		Indirect		Total		Total
Foreign	Rs Agro-Chemical Trading Corporation A.V.V.	Aruba	US$		98.3333		1.6667		100.0000		100.0000
Foreign	SQM Indonesia S.A.	Indonesia	US$		0.0000		80.0000		80.0000		80.0000
Foreign	SQM Virginia L.L.C.	USA	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Italia SRL	Italy	US$		0.0000		100.0000		100.0000		100.0000
Foreign	Comercial Caimán Internacional S.A.	Panama	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Africa Pty.	South Africa	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Lithium Specialties LLC	USA	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Iberian S.A.	Spain	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Agro India Pvt. Ltd.	India	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Beijing Commercial Co. Ltd.	China	US$		0.0000		100.0000		100.0000		100.0000
Foreign	SQM Thailand Limited	Thailand	US$		0.0000		99.996		99.996		99.996
Foreign	SQM Vitas Spain	Spain	Euro		0.0000		100.0000		100.0000		-

				Ownership interest
		Country of		06/30/2016						12/31/2015
TAX ID No.	Domestic subsidiaries	origin	Functional currency	Direct		Indirect		Total		Total
96.801.610-5	Comercial Hydro S.A.	Chile	US$		0.0000		60.6383		60.6383		60.6383
96.651.060-9	SQM Potasio S.A.	Chile	US$		99.9999		0.0000		99.9999		99.9999
96.592.190-7	SQM Nitratos S.A.	Chile	US$		99.9999		0.0001		100.0000		100.0000
96.592.180-K	Ajay SQM Chile S.A.	Chile	US$		51.0000		0.0000		51.0000		51.0000
86.630.200-6	SQMC Internacional Ltda.	Chile	Ch$		0.0000		60.6381		60.6381		60.6381
79.947.100-0	SQM Industrial S.A.	Chile	US$		99.0470		0.9530		100.0000		100.0000
79.906.120-1	Isapre Norte Grande Ltda.	Chile	Ch$		1.0000		99.0000		100.0000		100.0000
79.876.080-7	Almacenes y Depósitos Ltda.	Chile	Ch$		1.0000		99.0000		100.0000		100.0000
79.770.780-5	Servicios Integrales de Tránsitos y Transferencias S.A.	Chile	US$		0.0003		99.9997		100.0000		100.0000
79.768.170-9	Soquimich Comercial S.A.	Chile	US$		0.0000		60.6383		60.6383		60.6383
79.626.800-K	SQM Salar S.A.	Chile	US$		18.1800		81.8200		100.0000		100.0000
78.053.910-0	Proinsa Ltda.	Chile	Ch$		0.0000		60.5800		60.5800		60.5800
76.534.490-5	Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	Chile	Ch$		0.0000		100.0000		100.0000		100.0000
76.425.380-9	Exploraciones Mineras S.A.	Chile	US$		0.2691		99.7309		100.0000		100.0000
76.064.419-6	Comercial Agrorama Ltda. (a)	Chile	Ch$		0.0000		42.4468		42.4468		42.4468
76.145.229-0	Agrorama S.A.	Chile	Ch$		0.0000		60.6377		60.6377		60.6377
76.359.919-1	Orcoma Estudios SPA	Chile	US$		51.0000		-		51.0000		51.0000
76.360.575-2	Orcoma SPA	Chile	US$		100.0000		-		100.0000		100.0000

(a)

The Company consolidated Comercial Agrorama Ltda. as it has the control of this company’s relevant activities.

Subsidiaries are consolidated using the line-by-line method, adding the items that represent assets, liabilities, revenues, and expenses of similar content, and eliminating those related to intragroup transactions.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 2

Basis of presentation for the consolidated financial statements (continued)

2.5

Basis of consolidation, continued

Profit or loss of depending companies acquired or disposed of during the year are included in profit or loss accounts consolidated from the date control is transferred to the Group, or up to the date control is lost, as applicable.

Non-controlling interest represents the equity of a subsidiary not directly or indirectly attributable to the Parent.

2.6

Significant accounting judgments, estimates and assumptions

Management of Sociedad Química y Minera de Chile S.A. and its subsidiaries is responsible for the information contained in these consolidated financial statements, which expressly indicate that all the principles and criteria included in IFRSs, as issued by the International Accounting Standards Board (IASB), have been applied in full.

In preparing the consolidated financial statements of Sociedad Química y Minera de Chile S.A. and its subsidiaries, Management has made judgments and estimates to quantify certain assets, liabilities, revenues, expenses and commitments included therein. Basically, these estimates refer to:

The useful lives of property, plant and equipment, and intangible assets and their residual value;

Impairment losses of certain assets, including trade receivables;

Assumptions used in calculating the actuarial amount of pension-related and severance indemnity payment benefit commitments;

Provisions for commitments assumed with third parties and contingent liabilities;

Provisions on the basis of technical studies that cover the different variables affecting products in stock (density and moist, among others), and allowance for slow-moving spare-parts in stock;

Future cost for closure of mining sites;

The determination of the fair value of certain financial assets and derivative instruments;

The determination and assignment of fair values in business combinations.

Despite the fact that these estimates have been made on the basis of the best information available on the date of preparation of these consolidated financial statements, certain events may occur in the future and oblige their amendment (upwards or downwards) over the next few years, which would be made prospectively, recognizing the effects of the change in estimates in the related future consolidated financial statements.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies

3.1

Classification of balances as current and non-current

In the attached consolidated statement of financial position, balances are classified in consideration of their remaining recovery (maturity) dates; i.e., those maturing on a date equal to or lower than twelve months are classified as current and those with maturity dates exceeding the aforementioned period are classified as non-current.

The exception to the foregoing relates to deferred taxes, which are classified as non-current, regardless of the maturity they have.

3.2

Functional and presentation currency

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

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

The consolidated financial statements are presented in thousands of United States dollars without decimals.

3.3

Foreign currency translation

(a)

Group entities:

The revenue, expenses, assets and liabilities of all entities that have a functional currency other than the presentation currency are converted to the presentation currency as follows:

Assets and liabilities are converted at the closing exchange rate prevailing on the reporting date.

Revenues and expenses of each profit or loss account are converted at monthly average exchange rates.

All resulting foreign currency translation gains and losses are recognized as a separate component in translation reserves.

In consolidation, foreign currency differences arising from the translation of a net investment in foreign entities are recorded in equity (other reserves). At the date of disposal, such foreign currency translation differences are recognized in the statement of income as part of the gain or loss from the sale.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.3

Foreign currency translation, continued

The main exchange rates used to translate monetary assets and liabilities, expressed in foreign currency at the end of each period in respect to U.S. dollars, are as follows:

	06/30/2016		12/31/2015
	US$		US$

Brazilian real		3,20		3.90
New Peruvian sol		3,29		3.41
Argentine peso		14,20		12.90
Japanese yen		102,91		120.61
Euro		1,11		0.92
Mexican peso		18,55		17.34
Australian dollar		0,74		0.73
Pound Sterling		1,34		0.67
South African rand		14,70		15.61
Ecuadorian dollar		1,00		1.00
Chilean peso		661,37		710.16
UF		39,39		36.09

(b)

Transactions and balances

Non-monetary transactions in currencies other than the functional currency (U.S. dollar) foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. All differences are recorded in the statement of income except for all monetary item that provide effective hedge for a net investment in a foreign operation. These items are recognized in other comprehensive income on the disposal of the investment; at the time they are recognized in the statement of income. Charges and credits attributable to foreign currency translation differences on those hedge monetary item are also recognize in other comprehensive income.

Non-monetary assets and liabilities that are measured at historical cost in a foreign currency are retranslated to the functional currency at the historical exchange rate of the transaction. Non-monetary items that are measured based on fair value in a foreign currency are translated using the exchange rate at the date on which the fair value is determined.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.4

Subsidiaries

SQM S.A. establishes, as basis, the control exercised in subsidiaries, to determine their share in the consolidated financial statements. Control consists of the Company’s ability to exercise power in the subsidiary, exposure, or right, to variable performance from its share in the investee and the ability to use its power on the investee to have an influence on the amount of the investor’s performance.

The Company prepares the consolidated financial statements using consistent accounting policies for the entire Group, the consolidation of a subsidiary commences when the Company has control over the subsidiary and stops when control ceases.

3.5

Consolidated statement of cash flows

Cash equivalents correspond to highly-liquid short-term investments that are easily convertible in known amounts of cash. They are subject to insignificant risk of changes in their value and mature in less than three months from the date of acquisition of the instrument.

For purposes of the statement of cash flows, cash and cash equivalents comprise cash and cash equivalents as defined above.

The statement of cash flows includes movements in cash performed during the year, determined using the direct method.

3.6

Financial assets

Management determines the classification of its financial assets at the time of initial recognition, on the basis of the business model for the management of financial assets and the characteristics of contractual cash flows from the financial assets. In accordance with IAS 39, financial assets are measured initially at fair value plus transaction costs that may have been incurred and are directly attributable to the acquisition of the financial asset. Subsequently, financial assets are measured at amortized cost or fair value.

The Company assesses, at each reporting date, whether there is objective evidence that an asset or group of assets is impaired. An asset or group of financial assets is impaired if and only if there is evidence of impairment as a result of one or more events occurring after the initial recognition of the asset or group of assets. For the recognition of impairment, the loss event has to have an impact on the estimate of future cash flows from the asset or groups of financial assets.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.7

Financial liabilities

Management determines the classification of its financial liabilities at the time of initial recognition. As established in IAS 39, financial liabilities at the time of initial recognition are measured at fair value, less transaction costs that may have been incurred and are directly attributable to the issue of the financial liability. Subsequently, these are measured at amortized cost using the effective interest method. For financial liabilities that have been initially recognized at fair value through profit or loss, these will be measured subsequently at fair value.

3.8

Financial instruments at fair value through profit or loss

Management will irrevocably determine, at the time of initial recognition, the designation of a financial instrument at fair value through profit or loss. By doing so, this eliminates and/or significantly reduces measurement or recognition inconsistency that would otherwise have arisen from the measurement of assets or liabilities or from the recognition of gains and losses from them on different bases.

3.9

Financial instrument offsetting

The Company offsets an asset and liability if and only if it presently has a legally enforceable right of setting off the amounts recognized and has the intent of settling for the net amount of realizing the asset and settling the liability simultaneously.

3.10

Reclassification of financial instruments

At the time when the Company changes its business model for managing financial assets, it will reclassify the financial assets affected by the new business model.

For financial liabilities these could not be reclassified.

3.11

Derivative and hedging financial instruments

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

(a)

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

(b)

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

At the beginning of the transaction, the Company documents the relationship existing between hedging instruments and those items hedged, as well as their objectives for risk management purposes and the strategy to conduct different hedging operations.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.11

Derivative and hedging financial instruments, continued

The Company also documents its evaluation both at the beginning and at the end of each period if derivatives used in hedging transactions are highly effective to offset changes in the fair value or in cash flows of hedged items.

The fair value of derivative instruments used for hedging purposes is shown in Note 10.3 (hedging assets and liabilities). Changes in the cash flow hedge reserve are classified as a non-current asset or liability if the remaining expiration period of the hedged item is higher than 12 months, and as a current asset or liability if the remaining expiration period of the entry is lower than 12 months.

Derivatives that are not designated or do not qualify as hedging derivatives are classified as current assets or liabilities, and changes in the fair value are directly recognized through profit or loss.

(a)

Fair value hedge

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

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

If the hedged entry is derecognized, the fair value not amortized is immediately recognized with a debit or credit to profit or loss.

(b)

Cash flow hedges

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

Amounts taken to equity are transferred to profit or loss when the hedged transaction affects profit or loss, as when the hedged interest income or expense is recognized when a projected sale occurs. When the hedged entry is the cost of a non-financial asset or liability, amounts taken to other reserves are transferred to the initial carrying value of the non-financial asset or liability.

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.12

Derecognition of financial instruments

In accordance with IAS 39, the Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred; and the control of the financial assets has not been retained.

The Company derecognizes a financial liability when its contractual obligations or a part of these are discharged, paying to the creditor or its legally extinguished entity the primary responsibility for the liability.

3.13

Derivative financial instruments

The Company maintains derivative financial instruments to hedge its exposure to foreign currencies. Derivative financial instruments are recognized initially at fair value; attributable transaction costs are recognized when incurred. Subsequent to initial recognition, changes in fair value of such derivatives are recognized in profit or loss as part of gains and losses.

The Company permanently assesses the existence of embedded derivatives, both in its contracts and financial instruments. As of June 30, 2016 and December 31, 2015, there are no embedded derivatives.

3.14

Fair value measurements

From the initial recognition, the Company measures its assets and liabilities at fair value plus or minus transaction costs incurred that are directly attributable to the acquisition of a financial asset or issuance of a financial liability.

3.15

Leases

(a)

Lease - Finance lease

Leases are classified as finance leases when the Company holds substantially all the risks and rewards derived from the ownership of the asset. Finance leases are capitalized at the beginning of the lease, at the lower of the fair value of the leased asset or the present value of minimum lease payments.

Each lease payment is distributed between the liability and the interest expenses to obtain ongoing interest on the pending balance of debt. The respective lease obligations, net of interest expense, are included in other non-current liabilities. The interest element of finance cost is debited in the consolidated statement of income during the lease period so that a regular ongoing interest rate is obtained on the remaining balance of the liability for each year.

(b) Lease – Operating lease

Leases in which the lesser maintains a significant part of the risks and rewards derived from the ownership are classified as operating leases. Operating lease payments (net of any incentive received from the lesser) are debited to the statement of income or capitalized (as applicable) on a straight-line basis over the lease period.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.16

Deferred acquisition costs from insurance contracts

Acquisition costs from insurance contracts are classified as prepayments and correspond to insurance contracts in force, recognized using the straight-line method and on an accrual basis, and are recognized under other non-financial assets.

3.17

Trade and other receivables

Trade and other receivables relate to non-derivative financial assets with fixed and determinable payments and are not quoted in any active market. These arise from sales operations involving the products and/or services, of which the Company commercializes directly to its customers.

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

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

3.18

Inventory measurement

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

Commercial discounts, rebates obtained, and other similar entries are deducted in the determination of the acquisition price.

The net realizable value represents the estimate of the sales price, less all finishing estimated costs and costs which will be incurred in commercialization, sales, and distribution processes.

The Company conducts an evaluation of the net realizable value of inventories at the end of each year, recording an estimate with a charge to income when these are overstated. When a situation arises whereby the circumstances, which previously caused the rebate to cease to exist, or when there is clear evidence of an increase in the net realizable value due to a change in the economic circumstances or prices of main raw materials, the estimate made previously is modified.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.18

Inventory measurement, continued

The valuation of obsolete, impaired or slow-moving products relates to their net estimated, net realizable value.

Provisions on the Company's inventories have been made based on a technical study which covers the different variables which affect products in stock (density and humidity, among others).

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

3.19

Investments in associates and joint ventures

Interests in companies on which joint control is exercised (joint venture) or where an entity has significant influence (associates) are recognized using the equity method of accounting. Significant influence is presumed to exist when interest greater than 20% is held in the capital of an investee.

Under this method, the investment is recognized in the statement of financial position at cost plus changes, subsequent to the acquisition, and considering the proportional share in the equity of the associate. For such purposes, the interest percentage in the ownership of the associate is used. The associated goodwill acquired is included in the carrying amount of the investee and is not amortized. The debit or credit to profit or loss reflects the proportional share in the profit or loss of the associate.

Unrealized gains for transactions with affiliates or associates are eliminated considering the interest percentage the Company has on such entities. Unrealized losses are also eliminated, except if the transaction provides evidence of impairment loss of the transferred asset.

Changes in the equity of associates are recognized considering the proportional amounts with a charge or credit to “Other reserves” and classified considering their origin.

Reporting dates of the associate, the Company and related policies are similar for equivalent transactions and events under similar circumstances.

In the event that the significant influence is lost or the investment is sold or is held as available for sale, the equity method is discontinued, suspending the recognition of proportional share of profit or loss.

If the resulting amount according to the equity method is negative, the share of profit or loss is reflected at zero value in the consolidated financial statements, unless a commitment exists by the Company to reinstate the Company’s equity position, in which case the related provision for risks and expenses is recorded.

Dividends received by these companies are recorded by reducing the equity value, and the proportional share of profit or loss recognized in conformity with the share of equity are included in the consolidated profit or loss accounts in the caption “Equity share of profit (loss) of associates and joint ventures that are accounted for using the equity method of accounting”.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.20

Transactions with non-controlling interests

Non-controlling interests are recorded in the consolidated statement of financial position within equity separate from equity attributable to the owners of the Parent.

3.21

Related party transactions

Transactions between the Company and its subsidiaries are part of the Company’s normal operations within its scope of business activities. Conditions for such transactions are those normally effective for those types of operations with regard to terms and market prices. Also, these transactions have been eliminated in consolidation. Expiration conditions for each case vary by virtue of the originating transaction.

3.22

Property, plant and equipment

Tangible property, plant and equipment assets are stated at acquisition cost, net of the related accumulated depreciation, amortization and impairment losses that they might have experienced.

In addition to the price paid for the acquisition of tangible property, plant and equipment, the Company has considered the following concepts as part of the acquisition cost, as applicable:

1. Accrued interest expenses during the construction period which are directly attributable to the acquisition, construction or production of qualifying assets, which are those that require a substantial period prior to being ready for use. The interest rate used is that related to the project’s specific financing or, should this not exist, the average financing rate of the investor company.

2. The future costs that the Company will have to experience, related to the closure of its facilities at the end of their useful life, are included at the present value of disbursements expected to be required to settle the obligation.

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

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

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.22

Property, plant and equipment, continued

The replacement of full assets, which increase the asset’s useful life or its economic capacity, are recorded as a higher value of property, plant and equipment with the related derecognition of replaced or renewed elements.

Gains or losses which are generated from the sale or disposal of property, plant and equipment are recognized as income (or loss) in the period, and calculated as the difference between the asset’s sales value and its net carrying value.

Costs derived from daily maintenance of property, plant and equipment are recognized when incurred.

3.23

Depreciation of property, plant and equipment

Property, plant and equipment are depreciated through the straight-line distribution of cost over the estimated technical useful life of the asset which is the period in which the Company expects to use the asset. When components of one item of property, plant and equipment have different useful lives, they are recorded as separate assets. Useful lives are reviewed on an annual basis.

In the case of mobile equipment depreciation is performed depending on the hours of operation

The useful lives used for the depreciation and amortization of assets included in property, plant and equipment are presented below.

Types of property, plant and equipment	Minimum life or rate		maximum life or rate
Buildings		2		40
Machinery		2		25
Transport equipment		3		30
Furniture and fixtures		2		18
Office equipment		1		20
Production plants		1		25
Mining assets		2		20
Other property, plant and equipment		1		30

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.24

Goodwill

Goodwill acquired represents the excess in acquisition cost on the fair value of the Company's ownership of the net identifiable assets of the subsidiary on the acquisition date. Goodwill acquired related to the acquisition of subsidiaries is included in goodwill, which is subject to impairment tests every time consolidated financial statements are issued, and is stated at cost less accumulated impairment losses. Gains and losses related to the sale of an entity include the carrying value of goodwill related to the entity sold.

This intangible asset is assigned to cash-generating units with the purpose of testing impairment losses. It is allocated based on cash-generating units expected to obtain benefits from the business combination from which the aforementioned goodwill acquired arose.

3.25

Intangible assets other than goodwill

Intangible assets mainly relate to water rights, trademarks, and rights of way related to electric lines, development expenses, and computer software licenses.

(a)

Water rights

Water rights acquired by the Company relate to water from natural sources and are recorded at acquisition cost. Given that these assets represent legal rights granted in perpetuity to the Company, they are not amortized, but are subject to annual impairment tests.

(b)

Right of way for electric lines

As required for the operation of industrial plants, the Company has paid rights of way in order to install wires for the different electric lines in third party land. These rights are presented under intangible assets. Amounts paid are capitalized at the date of the agreement and charged to income, according to the life of the right of way.

(c)

Computer software

Licenses for IT programs acquired are capitalized based on costs that have been incurred to acquire them and prepare them to use the specific program. These costs are amortized over their estimated useful lives.

Expenses related to the development or maintenance of IT programs are recognized as an expense as and when incurred. Costs directly related to the production of unique and identifiable IT programs controlled by the Group, and which will probably generate economic benefits that are higher than costs during more than a year, are recognized as intangible assets. Direct costs include expenses of employees that develop information technology software and general expenses in accordance with corporate charges received.

The costs of development for IT programs recognized as assets are amortized over their estimated useful lives.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.25

Intangible assets other than goodwill, continued

(d)

Mining property and concession rights

The Company holds mining property and concession rights from the Chilean Government. Property rights are usually obtained with no initial cost (other than the payment of mining patents and minor recording expenses) and upon obtaining rights on these concessions, these are retained by the Company while annual patents are paid. Such patents, which are paid annually, are recorded as prepaid assets and amortized over the following twelve months. Amounts attributable to mining concessions acquired from third parties that are not from the Chilean Government are recorded at acquisition cost within intangible assets.

No impairment of intangible assets exists as of June 30, 2016 and December 31, 2015.

3.26

Research and development expenses

Research and development expenses are charged to profit or loss in the period in which the disbursement was made.

3.27

Prospecting expenses

The Company has mining property and concession rights from the Chilean Government and acquired from third parties other than the Chilean Government, destined to the exploitation of caliche ore and saltpeter deposits and also the exploration of this type of deposits.

Upon obtaining these rights, the Company initially records disbursements directly associated with the exploration and evaluation of deposits (associated with small deposits with trading feasibility) as asset at cost. Such disbursements include the following concepts:

Disbursements for geological reconnaissance evaluation

Disbursements for drilling

Disbursements for drilling work and sampling

Disbursements for activities related to technical assessment and trading feasibility of drilling work

And any disbursement directly related to specific projects where its objective is finding mining resources.

Subsequently, the Company distinguishes exploration and evaluation projects according to the economic feasibility of the mineral extracted in the area or exploration, among those that finally will deliver future benefits to the Company (profitable projects) and those projects for which it is not probable that economic benefit will flow to the Company in the future (i.e., when the mine site has low ore grade and its exploitation is not economically profitable).

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.27

Prospecting expenses, continued

If technical studies determine that the ore grade is not economically suitable for exploitation, the asset is directly expensed. Otherwise, it is held in the caption “other non-current assets”, reclassifying the portion related to the area to be exploited in the year in the caption inventories and such amount is amortized as production cost on the basis of estimated tons to be extracted.

The technical reasons for this classification correspond to the fact that this is an identifiable non-monetary asset that is owned to be used in the production of our processes as a main raw material.

For this reason and because our disbursements correspond to proven reserves with a trading feasibility and used as main raw material in our production processes, these are presented as inventories that will be exploited within the commercial year and the remainder as development expenses for small deposits and prospecting expenses in the caption “other non-current assets”.

3.28

Impairment of non-financial assets

Assets subject to depreciation and amortization are subject to impairment testing, provided that an event or change in the circumstances indicates that the amounts in the accounting records may not be recoverable. An impairment loss is recognized for the excess of the book value of the asset over its recoverable amount.

The recoverable amount of an asset is the higher between the fair value of an asset or cash generating unit (“CGU”) less costs of sales and its value in use, and is determined for an individual asset unless the asset does not generate any cash inflows that are clearly independent from other assets or groups of assets.

When the carrying value of an asset exceeds its recoverable amount, the asset is considered an impaired asset and is reduced to its net recoverable amount.

In evaluating value in use, estimated future cash flows are discounted using a discount rate before taxes which reflects current market evaluation on the time value of money and specific asset risks.

To determine the fair value less costs to sell, an appropriate valuation model is used.

Impairment losses from continuing operations are recognized with a debit to profit or loss in the categories of expenses associated with the impaired asset function, except for properties reevaluated previously where the revaluation was taken to equity.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.28

Impairment of non-financial assets, continued

For assets other than acquired goodwill, an annual evaluation is conducted of whether there are impairment loss indicators recognized previously that might have already decreased or ceased to exist. The recoverable amount is estimated if such indicators exist. An impairment loss previously recognized is reversed only if there have been changes in estimates used to determine the asset’s recoverable amount from the last time in which an impairment loss was recognized. If this is the case, the carrying value of the asset is increased to its recoverable amount. This increased amount cannot exceed the carrying value that would have been determined net of depreciation if an asset impairment loss would have not been recognized in prior years. This reversal is recognized with a credit to profit or loss.

3.29

Minimum dividend

As required by the Shareholders’ Corporations Act, unless decided otherwise by the unanimous vote by the shareholders of subscribed and paid shares, a public company must distribute dividends as agreed by the shareholders at the General Shareholders’ Meeting held each year with a minimum of 30% of its profit, except when the Company records unabsorbed losses from prior years. However, the Company defines as policy the distribution of 50% of its profit for the year.

3.30

Earnings per share

The net basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary owners of the parent by the weighted average number of ordinary shares outstanding during the year.

The Company has not conducted any type of operation of potential dilutive effect that assumes diluted earnings per share other than the basic earnings per share.

3.31

Trade and other payables

Trade and other payables are measured at fair value plus all costs associated with the transaction. Subsequently, these are carried at amortized cost using the effective interest rate method.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.32

Interest-bearing borrowings

At initial recognition, interest-bearing borrowings are measured at fair value. Subsequently, they are measured at amortized cost using the effective interest rate method. Amortized cost is calculated considering any premium or discount from the acquisition and includes costs of transactions which are an integral part of the effective interest rate.

These are recorded as non-current when their expiration period exceeds twelve months and as current when the term is lower than such term. Interest expense is calculated in the year in which they are accrued following a financial criterion.

3.33

Other provisions

Provisions are recognized when:

The Company has a present obligation as the result of a past event.

It is more likely than not that certain resources must be used, including benefits, to settle the obligation.

A reliable estimate can be made of the amount of the obligation.

In the event that the provision or a portion of it is reimbursed, the reimbursement is recognized as a separate asset solely if there is certainty of income.

In the consolidated statement of income, the expense for any provision is presented net of any reimbursement.

Should the effect of the time value of money be significant, provisions are discounted using a discount rate before tax that reflects the liability’s specific risks. When a discount rate is used, the increase in the provision over time is recognized as a finance cost.

The Company’s policy is maintaining provisions to cover risks and expenses based on a better estimate to deal with possible or certain and quantifiable responsibilities from current litigation, compensations or obligations, pending expenses for which the amount has not yet been determined, collaterals and other similar guarantees for which the Company is responsible. These are recorded at the time the responsibility or the obligation that determines the compensation or payment is generated.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.34

Obligations related to employee termination benefits and pension commitments

Obligations with the Company’s employees are in accordance with that established in the collective bargaining agreements in force, formalized through collective employment agreements and individual employment contracts, except for the United States that is regulated in accordance with employment plans in force up to 2002.

These obligations are valued using actuarial calculations, according to the projected unit credit method which considers such assumptions as the mortality rate, employee turnover, interest rates, retirement dates, effects related to increases in employees’ salaries, as well as the effects on variations in services derived from variations in the inflation rate. This, considering criteria in force contained in the revised IAS 19.

Actuarial gains and losses that may be generated by variations in defined, pre-established obligations are directly recorded in other comprehensive income.

Actuarial losses and gains have their origin in departures between the estimate and the actual behavior of actuarial assumptions or in the reformulation of established actuarial assumptions.

The discount rate used by the Company for calculating the obligation was 4.775% and 5.5% for the periods ended June 30, 2016 and December 31, 2015, respectively.

The Company’s subsidiary SQM North America has established pension plans for its retired employees that are calculated by measuring the projected obligation using a net salary progressive rate net of adjustments for inflation, mortality and turnover assumptions, deducting the resulting amounts at present value using a 5.5% interest rate for 2016 and 2015. The net balance of this obligation is presented under the non-current provisions for employee benefits.

3.35

Compensation plans

Compensation plans implemented through benefits in share-based payments settled in cash, which have been provided, are recognized in the financial statements at their fair value, in accordance with International Financial Reporting Standards No. 2 "Share-based Payments.” Changes in the fair value of options granted are recognized with a charge to payroll on a straight-line basis during the period between the date on which these options are granted and the payment date (see Note 16).

3.36

Revenue recognition

Revenue includes the fair value of considerations received or receivable for the sale of goods and services during performance of the Company's activities. Revenue is presented net of value added tax, estimated returns, rebates and discounts and after the elimination of sales among subsidiaries.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.36

Revenue recognition, continued

Revenue is recognized when its amount can be stated reliably. It is possible that the future economic rewards will flow to the entity and the specific conditions for each type of activity related revenue are complied with, as follows:

(a)

Sale of goods

The sale of goods is recognized when the Company has delivered products to the customer, and there is no obligation pending compliance that could affect the acceptance of products by the customer. The delivery does not occur until products have been shipped to the customer or confirmed as received by customers. When the related risks of obsolescence and loss have been transferred to the customer and the customer has accepted products in accordance with the conditions established in the sale, when the acceptance period has ended, or when there is objective evidence that those criteria required for acceptance have been met.

Sales are recognized in consideration of the price set in the sales agreement, net of volume discounts and estimated returns at the date of the sale. Volume discounts are evaluated in consideration of annual foreseen purchases and in accordance with the criteria defined in agreements.

(b)

Sale of services

Revenue associated with the rendering of services is recognized considering the degree of completion of the service as of the date of presentation of the consolidated classified statement of financial position, provided that the result from the transaction can be estimated reliably.

(c)

Interest income

Interest income is recognized when interest is accrued in consideration of the principal pending payment using the effective interest rate method.

(d)

Income from dividends

Income from dividends is recognized when the right to receive the payment is established.

3.37

Finance income and finance costs

Finance income is mainly composed of interest income in financial instruments such as term deposits and mutual fund deposits. Interest income is recognized in profit or loss at amortized cost, using the effective interest rate method.

Finance costs are mainly composed of interest on bank borrowing expenses, interest on bonds issued and interest capitalized for borrowing costs for the acquisition, construction or production or qualifying assets.

Borrowing costs and bonds issued are recognized in profit or loss using the effective interest rate method.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.37

Finance income and finance costs, continued

For finance costs accrued during the construction period that are directly attributable to the acquisition, construction or production of qualifying assets, the effective interest rate related to the project’s specific financing is used. If none exist, the average financing rate of the subsidiary that makes the investment is utilized. Borrowing and financing costs that are directly attributable to the acquisition, construction or production of an asset are capitalized as part of that asset’s cost.

3.38

Income tax and deferred taxes

Corporate income tax for the year is determined as the sum of current taxes from the different consolidated companies.

Current taxes are based on the application of the various types of taxes attributable to taxable income for the year.

Differences between the book value of assets and liabilities and their tax basis generate the balance of deferred tax assets or liabilities, which are calculated using the tax rates expected to be applicable when the assets and liabilities are realized.

In conformity with current Chilean tax regulations, the provision for corporate income tax and taxes on mining activity is recognized on an accrual basis, presenting the net balances of accumulated monthly tax provisional payments for the fiscal period and associated credits. The balances of these accounts are presented in current income taxes recoverable or current taxes payable, as applicable.

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

At each reporting period, the carrying amount of deferred tax assets has been reviewed and reduced to the extent there will not be sufficient taxable income to allow the recovery of all or a portion of the deferred tax assets. Likewise, as of the date of the consolidated financial statements, deferred tax assets that are not recognized were evaluated and not recognized as it was more likely than not that future taxable income will allow for recovery of the deferred tax asset.

With respect to deductible temporary differences associated with investments in subsidiaries, associated companies and interest in joint ventures, deferred tax assets are recognized solely provided that it is more likely than not that the temporary differences will be reversed in the near future and that there will be taxable income with which they may be used.

The deferred income tax related to entries directly recognized in equity is recognized with an effect on equity and not with an effect on profit or loss.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.38

Income tax and deferred taxes, continued

Deferred tax assets and liabilities are offset if there is a legally receivable right of offsetting tax assets against tax liabilities and the deferred tax is related to the same tax entity and authority.

3.39

Segment reporting

IFRS 8 requires that companies adopt a “management approach” to disclose information on the operations generated by its operating segments. In general, this is the information that management uses internally for the evaluation of segment performance and making the decision on how to allocate resources for this purpose.

An operating segment is a group of assets and operations responsible for providing products or services subject to risks and performance different from those of other business segments. A geographical segment is responsible for providing products or services in a given economic environment subject to risks and performance different from those of other segments that operate in other economic environments.

For assets and liabilities the allocation to each segment is not possible given that these are associated with more than one segment, except for depreciation, amortization and impairment of assets, which are directly allocated to the applicable segments, in accordance with the criteria established in the costing process for product inventories.

The following operating segments have been identified by the Company:

Specialty plant nutrients

Industrial chemicals

Iodine and derivatives

Lithium and derivatives

Potassium

Other products and services

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 3

Significant accounting policies (continued)

3.40

Environment

In general, the Company follows the criteria of considering amounts used in environmental protection and improvement as environmental expenses. However, the cost of facilities, machinery and equipment used for the same purpose are considered property, plant and equipment, as the case may be.

Note 4

Financial risk management

4.1

Financial risk management policy

The Company’s financial risk management policy is focused on safeguarding the stability and sustainability of Sociedad Química y Minera de Chile S.A. and its subsidiaries with regard to all such relevant financial uncertainty components.

The Company’s operations are subject to certain financial risk factors that may affect its financial position or results. The most significant risk exposures are market risk, liquidity risk, currency risk, doubtful accounts risk, and interest rate risk, among others.

Potentially, additional known or unknown risks may exist, of which we currently deem not to be significant, which could also affect the Company’s business operations, its business, financial position, or profit or loss.

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

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 4

Financial risk management, continued

4.2

Risk factors

4.2.1

Market risk

Market risk refers to the uncertainty associated with fluctuations in market variables affecting the Company’s assets and liabilities, including:

Country risk: The economic situation of the countries where the Company operates may affect its financial position. For example, sales conducted in emerging markets expose SQM to risks related to economic conditions and trends in those countries. In addition, inventories may also be affected by the economic scenario in such countries and/or the global economy, among other probable economic impacts.

Price risk : The Company’s product prices are affected by the fluctuations in international prices of fertilizers and chemicals, as well as changes in productive capacities or market demand, all of which might affect the Company’s business, financial position and results of operations.

Commodity price risk : The Company is exposed to changes in commodity prices and energy which may have an impact on its production costs that may cause unstable results.

As of to-date, the SQM Group incurs an annual expenditure of approximately US$98 million associated with fuel, gas, energy and equivalents from which US$61 million related to direct electrical supply consumption. A change of 10% in the prices of energy required for the Company’s operations may involve costs of approximately US$10 million in short-term movements.

The markets in which the Company operates are unpredictable, exposed to significant fluctuations in supply and demand, and price high volatility. Additionally, the supply of certain fertilizers or chemicals, including certain products which the Company trades, vary mainly depending on the production of top producers and their related business strategies. Accordingly, the Company cannot forecast with certainty changes in demand, responses from competitors or fluctuations in the final price of its products. These factors can lead to significant impacts on the Company’s product sales volumes, financial position and share price.

Quality standards: In the markets in which we operate, customers might impose quality standards on our products and/or governments could enact more stringent standards for the distribution and/or use of our products. Consequently, we might not be able to sell our products if we are not able to meet those new standards. In addition, our production costs might increase to meet such new standards. Not being able to sell our products in one or more markets or to key customers might significantly affect our business, financial position or the results of our operations.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 4

Financial risk management, continued

4.2.2

Credit risk

A contraction of the global economy and the potentially adverse effects in the financial position of our customers may extend the receivables recovery period for SQM, increasing its exposure to doubtful account risk. While measures have been taken to minimize such risk, the global economic situation may result in losses that might have a material adverse effect on the Company’s business, financial position or results of operations.

To mitigate these risks, SQM actively controls debt collection and has established certain safeguards which include loan insurance, letters of credit, and prepayments for a portion of receivables.

Financial investments correspond to time deposits with maturities exceeding 90 days and less than 360 days from the investment date, so they are not exposed to significant market risks.

4.2.3

Currency risk

As a result of its influence on price level determination as well as its relationship with cost of sales, and since a significant portion of the Company’s business transactions are performed in that foreign currency, the functional currency of SQM is the United States dollar. However, the global business activities of the Company expose it to the foreign exchange fluctuations of several currencies with respect to the value of the U.S. dollar. Accordingly, SQM has entered into hedge contracts to mitigate the exposure generated by its main mismatches (assets, net of liabilities) in currencies other than the U.S. dollar against the foreign exchange fluctuation. These contracts are periodically updated depending on the mismatch amount to be hedged in such currencies. Occasionally, and subject to the Board of Directors’ approval, in the short-term the Company insures cash flows from certain specific items in currencies other than the U.S. dollar.

A significant portion of the Company’s costs, particularly payroll, is denominated in Chilean pesos. Accordingly, an increase or decrease in the exchange rate against the U.S. dollar would affect the Company’s profit for the period. Approximately US$ 318 million of the Company’s costs are denominated in Chilean pesos. A significant portion of the effect of such obligations on the statement of financial position is hedged by derivative instrument transactions on the balance mismatch in such currency.

As of June 30, 2016, the Company recorded derivative instruments classified as currency and interest rate hedges associated with all the bonds payable, denominated in UF, with a fair value of US$53 million against SQM. As of December 31, 2015, this amounts to US$75 million in against SQM.

As of June 30, 2016, the Chilean peso to U.S. dollar exchange rate was Ch$661.37 per US$1.00 (Ch$ 710.16 per US$ 1.00 as of December 31, 2015).

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 4

Financial risk management, continued

4.2.4

Interest rate risk

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

The Company has current and non-current debts valued at LIBOR, plus a spread. The Company is partially exposed to fluctuations in such rate, as SQM currently holds hedging derivative instruments to hedge a portion of its liabilities subject to the LIBOR rate fluctuations.

As of June 30, 2016, approximately 4% of the Company’s financial liabilities are measured at LIBOR. Accordingly, any significant increase in this rate may have an impact on the Company’s financial position. A 100 basic point variation in this rate may trigger variations in financial expenses of close to US$ 0.07 million. However, this effect is significantly counterbalanced by the returns of the Company’s investments that are also strongly related to LIBOR.

In addition, as of June 30, 2016, the Company's financial liabilities are mainly concentrated in the long-term and approximately 16% have maturities of less than 12 months, decreasing in the process the exposure to changes in interest rates.

4.2.5

Liquidity risk

Liquidity risk relates to the funds needed to comply with payment obligations. The Company’s objective is to maintain financial flexibility through a comfortable balance between fund requirements and cash flows from regular business operations, bank borrowings, bonds, short term investments, and marketable securities, among others.

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

On the other hand, world financial markets go through periods of contraction and expansion that are unforeseeable in the long-term and may affect SQM’s access to financial resources. Such factors may have a material adverse impact on the Company’s business, financial position and results of operations.

SQM constantly monitors the matching of its obligations with its investments, taking due care of maturities of both, from a conservative perspective, as part of this financial risk management strategy. As of June 30, 2016, the Company had unused, available revolving credit facilities with banks, for a total of approximately US$388 million.

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

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 4

Financial risk management, continued

4.3

Risk measurement

The Company has methods to measure the effectiveness and efficiency of financial risk hedging strategies, both prospectively and retrospectively. These methods are consistent with the risk management profile of the Group.

Note 5

Changes in accounting estimates and policies (consistent presentation)

5.1

Changes in accounting estimates

The Company had no changes in the determination of accounting estimates at the closing date of the consolidated financial statements.

5.2

Changes in accounting policies

As of June 30, 2016, the Company’s consolidated financial statements present no changes in accounting policies or estimates compared to the prior period.

The consolidated statements of financial position as of June 30, 2016 and December 31, 2015 and the statements of comprehensive income, changes in equity and cash flows for the periods ended June 30, 2016 and 2015, have been prepared in accordance with the Standards issued by the Chilean Superintendence of Securities and Insurance (SVS), which consider the International Financial Reporting Standards (IFRS), except for that indicated in Note 2.2, and the accounting principles and criteria have been applied consistently.

The accounting principles and criteria were applied consistently.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation

6.1

Parent’s stand-alone assets and liabilities

	06/30/2016			12/31/2015
	ThUS$			ThUS$

Assets		3,685,710			4,012,556
Liabilities		(1,424,844	)		(1,672,771	)
Equity		2,260,866			2,339,785

6.2

Parent entity

As provided in the Company’s by-laws, no shareholder can concentrate more than 32% of the Company’s voting right shares and therefore there is no controlling entity.

6.3

Joint arrangements of controlling interest

Sociedad de Inversiones Pampa Calichera S.A., Potasios de Chile S.A., and Inversiones Global Mining (Chile) Limitada, collectively the Pampa Group, are the owners of a number of shares that are equivalent to 29.97% as of June 30, 2016 of the current total amount of shares issued, subscribed and fully-paid of the Company. In addition, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A. and La Esperanza Delaware Corporation, collectively the Kowa Group, are the owners of a number of shares equivalent to 2.12% of the total amount of issued, subscribed and fully-paid shares of SQM S.A.

The Pampa Group and the Kowa Group have informed SQM S.A., the Chilean SVS and the relevant stock exchanges in Chile and abroad that they are not and have never been related parties between them. In addition, this is regardless of the fact that both Groups on December 21, 2006 have entered into a Joint Action Agreement (JAA) related to those shares. Consequently, the Pampa Group, by itself, does not concentrate more than 32% of the voting right capital of SQM S.A., and the Kowa Group does not concentrate by itself more than 32% of the voting right capital of SQM S.A.

Likewise, the Joint Action Agreement has not transformed the Pampa and Kowa Groups into related parties between them. The Joint Action Agreement has only transformed the current controller of SQM S.A., composed of the Pampa Group, and the Kowa Group into related parties of SQM S.A.

Detail of effective concentration

Tax ID No.	Name	Ownership interest %
96.511.530-7	Sociedad de Inversiones Pampa Calichera S.A.		19.72
76.165.311-5	Potasios de Chile S.A.		6.91
96.863.960-9	Inversiones Global Mining (Chile) Limitada		3.34
Total Pampa Group			29.97

79.798.650-k	Inversiones la Esperanza (Chile) Ltda.		1.43
59.046.730-8	Kowa Co Ltd.		0.30
96.518.570-4	Kochi S.A.		0.30
59.023.690-k	La Esperanza Delaware Corporation		0.09
Total Kowa Group			2.12

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation (continued)

6.4

General information on consolidated subsidiaries

As of June 30, 2016 and December 31, 2015, the general information of the companies on which the Company exercises control and significant influence is as follows:

					Ownership interest
Subsidiary	Tax ID	Address	Country of incorporation	Functional currency	Direct		Indirect		Total

SQM Nitratos S.A.	96.592.190-7	El Trovador 4285 Las Condes	Chile	US$		99.9999		0.0001		100.0000
Proinsa Ltda.	78.053.910-0	El Trovador 4285 Las Condes	Chile	Ch$		-		60.5800		60.5800
SQMC Internacional Ltda.	86.630.200-6	El Trovador 4285 Las Condes	Chile	Ch$		-		60.6381		60.6381
SQM Potasio S.A.	96.651.060-9	El Trovador 4285 Las Condes	Chile	US$		99.9999		-		99.9999
Serv. Integrales de Tránsito y Transf. S.A.	79.770.780-5	Arturo Prat 1060, Tocopilla	Chile	US$		0.0003		99.9997		100.0000
Isapre Norte Grande Ltda.	79.906.120-1	Anibal Pinto 3228, Antofagasta	Chile	Ch$		1.0000		99.0000		100.0000
Ajay SQM Chile S.A.	96.592.180-K	Av. Pdte. Eduardo Frei 4900, Santiago	Chile	US$		51.0000		-		51.0000
Almacenes y Depósitos Ltda.	79.876.080-7	El Trovador 4285 Las Condes	Chile	Ch$		1.0000		99.0000		100.0000
SQM Salar S.A.	79.626.800-K	El Trovador 4285 Las Condes	Chile	US$		18.1800		81.8200		100.0000
SQM Industrial S.A.	79.947.100-0	El Trovador 4285 Las Condes	Chile	US$		99.0470		0.9530		100.0000
Exploraciones Mineras S.A.	76.425.380-9	El Trovador 4285 Las Condes	Chile	US$		0.2691		99.7309		100.0000
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	76.534.490-5	Anibal Pinto 3228, Antofagasta	Chile	Ch$		-		100.0000		100.0000
Soquimich Comercial S.A.	79.768.170-9	El Trovador 4285 Las Condes	Chile	US$		-		60.6383		60.6383
Comercial Agrorama Ltda.	76.064.419-6	El Trovador 4285 Las Condes	Chile	Ch$		-		42.4468		42.4468
Comercial Hydro S.A.	96.801.610-5	El Trovador 4285 Las Condes	Chile	Ch$		-		60.6383		60.6383
Agrorama S.A.	76.145.229-0	El Trovador 4285 Las Condes	Chile	Ch$		-		60.6377		60.6377
Orcoma Estudios SPA	76.359.919-1	Apoquindo 3721 Of.131 Las Condes	Chile	US$		51.0000		-		51.0000
Orcoma SPA	76.360.575-2	Apoquindo 3721 Of.131 Las Condes	Chile	US$		100.0000		-		100.0000
SQM North America Corp.	Foreign	2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA	United States	US$		40.0000		60.0000		100.0000
RS Agro Chemical Trading Corporation A.V.V.	Foreign	Caya Ernesto O. Petronia 17, Orangestad	Aruba	US$		98.3333		1.6667		100.0000
Nitratos Naturais do Chile Ltda.	Foreign	Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo	Brazil	US$		-		100.0000		100.0000
Nitrate Corporation of Chile Ltd.	Foreign	1 More London Place London SE1 2AF	United Kingdom	US$		-		100.0000		100.0000
SQM Corporation N.V.	Foreign	Pietermaai 123, P.O. Box 897, Willemstad, Curacao	Netherlands	US$		0.0002		99.9998		100.0000
SQM Peru S.A.	Foreign	Avenida Camino Real N° 348 of. 702, San Isidro, Lima	Peru	US$		0.9800		99.0200		100.0000
SQM Ecuador S.A.	Foreign	Av. José Orrantia y Av. Juan Tanca Marengo Edificio Executive Center Piso 2 Oficina 211	Ecuador	US$		0.0040		99.9960		100.0000
SQM Brasil Ltda.	Foreign	Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville Barureri, CEP 06455-020, Sao Paulo	Brazil	US$		1.0900		98.9100		100.0000

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation (continued)

6.4

General information on consolidated subsidiaries, continued

Ownership interest

Subsidiary

Tax ID

Address

Country of
incorporation

Functional
currency

Direct

Indirect

Total

SQI Corporation N.V.

Foreign

Pietermaai 123, P.O. Box 897, Willemstad, Curacao

Netherlands

US$

0.0159

99.9841

100.0000

SQMC Holding Corporation L.L.P.

Foreign

2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta

United States

US$

0.1000

99.9000

100.0000

SQM Japan Co. Ltd.

Foreign

From 1 ^st Bldg 207, 5-3-10 Minami- Aoyama, Minato-ku, Tokyo

Japan

US$

1.0000

99.0000

100.0000

SQM Europe N.V.

Foreign

Houtdok-Noordkaai 25a B-2030 Antwerp, Belgium

Belgium

US$

0.5800

99.4200

100.0000

SQM Italia SRL

Foreign

Via A. Meucci, 5 500 15 Grassina Firenze

Italy

US$

100.0000

SQM Indonesia S.A.

Foreign

Perumahan Bumi Dirgantara Permai, Jl Suryadarma Blok Aw No 15 Rt 01/09 17436 Jatisari Pondok Gede

Indonesia

US$

80.0000

North American Trading Company

Foreign

2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA

United States

US$

100.0000

SQM Virginia LLC

Foreign

2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA

United States

US$

100.0000

SQM Comercial de México S.A. de C.V.

Foreign

Av. Moctezuma 144-4 Ciudad del Sol. CP 45050, Zapopan, Jalisco México

Mexico

US$

0.0010

99.9900

100.0000

SQM Investment Corporation N.V.

Foreign

Pietermaai 123, P.O. Box 897, Willemstad, Curacao

Netherlands

US$

1.0000

99.0000

100.0000

Royal Seed Trading Corporation A.V.V.

Foreign

Caya Ernesto O. Petronia 17, Orangestad

Aruba

US$

1.6700

98.3300

100.0000

SQM Lithium Specialties LLP

Foreign

2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA

United States

US$

100.0000

Soquimich SRL Argentina

Foreign

Espejo 65 Oficina 6 – 5500 Mendoza

Argentina

US$

100.0000

Comercial Caimán Internacional S.A.

Foreign

Edificio Plaza Bancomer Calle 50

Panama

US$

100.0000

SQM France S.A.

Foreign

ZAC des Pommiers 27930 FAUVILLE

France

US$

100.0000

Administración y Servicios Santiago S.A. de C.V.

Foreign

Av. Moctezuma 144-4 Ciudad del Sol. CP 45050, Zapopan, Jalisco México

Mexico

US$

100.0000

SQM Nitratos México S.A. de C.V.

Foreign

Av. Moctezuma 144-4 Ciudad del Sol. CP 45050, Zapopan, Jalisco México

Mexico

US$

100.0000

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation (continued)

6.4

General information on consolidated subsidiaries, continued

Ownership interest

Subsidiary

Tax ID

Address

Country of
incorporation

Functional
currency

Direct

Indirect

Total

Soquimich European Holding B.V.

Foreign

Loacalellikade 1 Parnassustoren 1076 AZ Amsterdam

Netherlands

US$

100.0000

SQM Iberian S.A

Foreign

Provenza 251 Principal 1a CP 08008, Barcelona

Spain

US$

100.0000

SQM Africa Pty Ltd.

Foreign

Tramore House, 3 Wterford Office Park, Waterford Drive, 2191 Fourways, Johannesburg

South Africa

US$

100.0000

SQM Oceania Pty Ltd.

Foreign

Level 9, 50 Park Street, Sydney NSW 2000, Sydney

Australia

US$

100.0000

SQM Agro India Pvt. Ltd.

Foreign

C 30 Chiragh Enclave New Delhi, 110048

India

US$

100.0000

SQM Beijing Commercial Co. Ltd.

Foreign

Room 1001C, CBD International Mansion N 16 Yong An Dong Li, Jian Wai Ave Beijing 100022, P.R.

China

US$

100.0000

SQM Thailand Limited

Foreign

Unit 2962, Level 29, N° 388, Exchange Tower Sukhumvit Road, Klongtoey Bangkok

Thailand

US$

99.996

SQM Vitas Spain

Foreign

C/Manuel Echeverria Manzana 2 Muelle de la Cab (Puerto Real)

Spain

Euro

100.0000

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation (continued)

6.5

Information attributable to non-controlling interests

Subsidiary	% of interests in the ownership held by non- controlling interests.			Profit (loss) attributable to non-controlling interests					Equity, non-controlling interests				Dividends paid to non- controlling interests
				06/30/2016			12/31/2015		06/30/2016		12/31/2015		06/30/2016		12/31/2015
				ThUS$			ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Proinsa Ltda.		0.1	%		-			-		-		-		-		-
SQM Potasio S.A.		0.0000001	%		-			-		-		-		-		-
Ajay SQM Chile S.A.		49	%		733			1,551		8,258		8,107		582		1,946
SQM Indonesia S.A.		20	%		-			-		1		1		-		-
Soquimich Comercial S.A.		39.3616784	%		174			2,605		49,317		49,897		87		1,303
Comercial Agrorama Ltda.		30	%		(123	)		3		187		292		-		-
Agrorama S.A.		0.001	%		-			-		-		-		-		-
Orcoma Estudios SPA		49	%		1			5		2,275		2,274		-		-
SQM (Thailand) Limited.		0.004	%		-			-		-		-		-		-
Total					785			4,164		60,038		60,571		669		3,249

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation (continued)

6.6

Information on consolidated subsidiaries

	06/30/2016
Subsidiary	Assets				Liabilities				Revenue		Profit (loss)			Comprehensive income (loss)
	Current		Non-current		Current		Non-current
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$

SQM Nitratos S.A.		587,538		59,549		586,990		6,708		44,927		2,979			2,992
Proinsa Ltda.		156		1		-		-		-		(4	)		(4	)
SQMC Internacional Ltda.		207		-		-		-		-		(2	)		(2	)
SQM Potasio S.A.		131,955		949,295		34,626		24,101		4,534		119,383			119,636
Serv. Integrales de Tránsito y Transf. S.A.		56,899		62,058		92,340		6,221		11,504		(1,763	)		(1,878	)
Isapre Norte Grande Ltda.		560		733		544		149		1,537		38			55
Ajay SQM Chile S.A.		17,291		946		979		405		15,770		1,496			1,496
Almacenes y Depósitos Ltda.		283		45		1		-		-		(6	)		95
SQM Salar S.A.		892,922		831,816		579,801		206,632		432,761		146,980			147,062
SQM Industrial S.A.		1,125,426		676,494		812,791		80,452		318,647		(760	)		1,119
Exploraciones Mineras S.A.		517		31,493		5,820		-		-		(176	)		(175	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S,A.		345		587		464		397		972		9			12
Soquimich Comercial S.A.		150,445		21,282		45,366		1,070		45,622		443			428
Comercial Agrorama Ltda.		8,720		1,685		9,749		32		5,905		(411	)		(398	)
Comercial Hydro S.A.		9,162		68		42		14		23		195			194
Agrorama S.A.		10,283		862		12,060		34		5,147		(599	)		(603	)
Orcoma SpA		-		2,356		13		-		-		(5	)		(5	)
Orcoma Estudio SpA		1,081		3,582		18		1		-		1			1
SQM North America Corp.		186,814		15,589		204,275		485		131,806		(16,946	)		(18,207	)
RS Agro Chemical Trading Corporation A.V.V.		5,182		-		-		-		-		(13	)		(13	)
Nitratos Naturais do Chile Ltda.		3		254		3,457		-		-		(176	)		(176	)
Nitrate Corporation of Chile Ltd.		5,076		-		-		-		-		-			-
SQM Corporation N.V.		668		110,483		3,549		-		-		(5,503	)		(5,126	)
SQM Peru S.A.		356		1		1,174		-		-		(63	)		(63	)
SQM Ecuador S.A.		16,721		136		15,727		35		11,935		205			205
SQM Brasil Ltda.		179		1		724		2,267		116		(205	)		(205	)
SQI Corporation N.V.		-		22		45		-		-		(8	)		(8	)
SQMC Holding Corporation L.L.P.		22,532		14,409		1,000		-		-		1,848			1,848
SQM Japan Co. Ltd.		2,952		247		341		580		1,569		474			474

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation (continued)

6.6

Information on consolidated subsidiaries, continued

	06/30/2016
Subsidiary	Assets				Liabilities				Revenue		Profit (loss)			Comprehensive income (loss)
	Current		Non-current		Current		Non-current
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$

SQM Europe N.V.		331,742		2,359		293,350		-		333,889		(3,895	)		(3,895	)
SQM Italia SRL		1,141		-		14		-		-		-			-
SQM Indonesia S.A.		4		-		1		-		-		-			-
North American Trading Company		158		145		39		-		-		-			-
SQM Virginia LLC		14,814		14,360		14,814		-		-		-			-
SQM Comercial de México S.A. de C.V.		94,944		1,988		69,814		-		96,490		(1,582	)		(1,582	)
SQM Investment Corporation N.V.		74,316		125		27,024		861		-		(4,986	)		(4,986	)
Royal Seed Trading Corporation A.V.V.		52,854		-		73,245		-		-		(118	)		15
SQM Lithium Specialties LLP		15,766		3		1,264		-		-		-			-
Soquimich SRL Argentina		214		-		175		-		-		(5	)		(5	)
Comercial Caimán Internacional S.A.		262		-		1,122		-		-		-			-
SQM France S.A.		345		6		114		-		-		-			-
Administración y Servicios Santiago S.A. de C.V.		234		120		688		97		1,314		264			264
SQM Nitratos México S.A. de C.V.		35		2		19		7		126		(2	)		(2	)
Soquimich European Holding B.V.		63,440		106,104		71,565		212		-		(6,237	)		(5,152	)
SQM Iberian S.A.		77,713		1,675		73,166		162		71,273		720			747
SQM Africa Pty Ltd.		95,340		1,323		88,837		-		27,014		(6,535	)		(6,535	)
SQM Oceania Pty Ltd.		2,334		-		400		-		1,266		18			18
SQM Agro India Pvt, Ltd.		1		-		1		-		-		(3	)		(3	)
SQM Beijing Commercial Co. Ltd.		4,329		34		18		-		4,384		2,167			2,167
SQM Thailand Limited		9,075		6		6,463		-		1,930		(9	)		(9	)
SQM Vitas Spain S.A.		3,112		728		2,234				6,520		373			373
Total		4,076,446		2,912,972		3,136,263		330,922		1,576,981		227,581			230,169

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation (continued)

6.6

Information on consolidated subsidiaries, continued

	12/31/2015
Subsidiary	Assets				Liabilities				Revenue		Profit (loss)			Comprehensive income (loss)
	Current		Non-current		Current		Non-current
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$

SQM Nitratos S.A.		521,948		69,159		531,903		7,913		146,731		(715	)		(739	)
Proinsa Ltda.		149		-		-		-		-		-			-
SQMC Internacional Ltda.		195		-		-		-		-		(1	)		(1	)
SQM Potasio S.A.		90,230		843,842		7,748		23,438		10,785		184,315			184,533
Serv. Integrales de Tránsito y Transf. S.A.		46,646		63,973		81,703		6,642		44,045		(12,450	)		(12,316	)
Isapre Norte Grande Ltda.		791		540		664		143		3,883		-			6
Ajay SQM Chile S.A.		17,044		942		879		563		38,414		3,165			3,165
Almacenes y Depósitos Ltda.		264		41		-		-		-		(12	)		(77	)
SQM Salar S.A.		639,804		871,339		474,225		201,581		762,058		193,367			193,300
SQM Industrial S.A.		1,030,937		702,192		741,820		83,751		685,634		19,144			11,224
Exploraciones Mineras S.A.		482		31,443		5,560		-		-		(666	)		(666	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S,A.		296		550		423		364		2,299		(130	)		12
Soquimich Comercial S.A.		138,413		22,447		33,058		1,037		162,582		6,618			6,301
Comercial Agrorama Ltda.		10,231		1,554		10,796		16		13,806		11			12
Comercial Hydro S.A.		9,014		87		122		-		50		460			460
Agrorama S.A.		12,848		595		13,759		16		15,131		(380	)		(380	)
Orcoma SpA		-		2,356		9		-		-		(8	)		(8	)
Orcoma Estudio SpA		2,059		2,931		347		-		-		9			9
SQM North America Corp.		200,156		16,348		201,343		-		255,455		(12,774	)		(12,774	)
RS Agro Chemical Trading Corporation A.V.V.		5,194		-		-		-		-		(7	)		(7	)
Nitratos Naturais do Chile Ltda.		2		229		3,255		-		-		618			618
Nitrate Corporation of Chile Ltd.		5,076		-		-		-		-		-			-
SQM Corporation N.V.		668		115,720		3,539		-		-		4,882			303
SQM Peru S.A.		421		1		1,176		-		22		(104	)		(104	)
SQM Ecuador S.A.		19,660		147		18,883		35		16,778		447			447
SQM Brasil Ltda.		121		1		585		2,142		375		(2,694	)		(2,694	)
SQI Corporation N.V.		-		23		38		-		-		53			52
SQMC Holding Corporation L.L.P.		21,296		13,873		1,000		-		-		2,044			2,044
SQM Japan Co. Ltd.		2,327		211		239		495		2,861		159			159

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation (continued)

6.6

Information on consolidated subsidiaries, continued

	12/31/2015
Subsidiary	Assets				Liabilities				Revenue		Profit (loss)			Comprehensive income (loss)
	Current		Non-current		Current		Non-current
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$

SQM Europe N.V.		315,642		2,111		273,123		-		530,912		(5,536	)		(5,536	)
SQM Italia SRL		1,124		-		14		-		-		-			-
SQM Indonesia S.A.		3		-		1		-		-		-			-
North American Trading Company		158		145		39		-		-		(1	)		(1	)
SQM Virginia LLC		14,814		14,360		14,814		-		-		(7	)		(7	)
SQM Comercial de México S.A. de C.V.		87,686		1,710		61,589		-		183,374		(3,399	)		(3,399	)
SQM Investment Corporation N.V.		81,328		130		29,054		861		-		17,865			17,865
Royal Seed Trading Corporation A.V.V.		72,828		-		93,235		-		-		(3,490	)		(3,089	)
SQM Lithium Specialties LLP		15,766		3		1,264		-		-		(7	)		(7	)
Soquimich SRL Argentina		243		-		199		-		-		(135	)		(135	)
Comercial Caimán Internacional S.A.		261		-		1,122		-		-		(5	)		(5	)
SQM France S.A.		345		6		114		-		-		-			-
Administración y Servicios Santiago S.A. de C.V.		167		-		635		227		3,094		(90	)		(90	)
SQM Nitratos México S.A. de C.V.		40		4		25		6		291		4			4
Soquimich European Holding B.V.		71,166		112,488		79,906		-		-		3,245			(1,881	)
SQM Iberian S.A.		55,444		65		50,169		-		137,869		11			11
SQM Africa Pty Ltd.		94,508		1,372		81,552		-		88,247		4,945			4,945
SQM Oceania Pty Ltd.		2,357		-		440		-		2,378		(192	)		(192	)
SQM Agro India Pvt, Ltd.		3		-		-		-		-		(1	)		(1	)
SQM Beijing Commercial Co. Ltd.		2,827		43		608		-		5,373		(58	)		(58	)
SQM Thailand Limited		9,765		27		6,991		-		11,539		125			125
Total		3,602,747		2,893,008		2,827,968		329,230		3,123,986		398,625			381,428

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 6

Background of companies included in consolidation (continued)

6.7

Detail of transactions between consolidated companies

Transactions conducted in 2016

On May 12, 2016, the subsidiary SQM Iberian S.A. acquired 100% of interest in SQM Vitas Spain for ThUS$ 1,710, generating al loss of ThUS$104.

Transactions conducted in 2015

On August 5, 2015, the subsidiary SQM Brasil Ltda. made a capital contribution of ThUS$572 in its subsidiary Nitratos Naturais do Chile Ltda. As a result of such transaction, SQM Brasil Ltda. increased its interest from 0.001% to 70.82% in such company. SQM Industrial S.A. was not involved in such capital increase, decreasing its interest from 99.99% to 29.18%. This generated no effects on the consolidated profit or loss of SQM S.A.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 7

Cash and cash equivalents

7.1

Types of cash and cash equivalents

As of June 30, 2016 and December 31, 2015, cash and cash equivalents are detailed as follows:

	06/30/2016		12/31/20151
a) Cash	ThUS$		ThUS$
Cash on hand		90		87
Cash in banks		64,518		31,977
Other demand deposits		4,282		9,042
Total cash		68,890		41,106

	06/30/2016		12/31/2015
b) Cash equivalents	ThUS$		ThUS$
Short-term deposits, classified as cash equivalents		196,209		84,662
Short-term investments, classified as cash equivalents		317,892		401,491
Total cash equivalents		514,101		486,153

Total cash and cash equivalents		582,991		527,259

7.2

Short-term investments, classified as cash equivalents

As of June 30, 2016 and December 31, 2015, short-term investments, classified as cash and cash equivalents relate to mutual funds (investment liquidity funds) for investments in:

Institution	06/30/2016 MUS$		12/31/2015 MUS$
Legg Mason - Western Asset Institutional Cash Reserves		162,960		204,082
JP Morgan US dollar Liquidity Fund Institutional		154,932		197,409
Total		317,892		401,491

Short-term investments are highly liquid fund manager accounts that are basically invested in short-term fixed rate notes in the U.S. market.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 7

Cash and cash equivalents (continued)

7.3

Information on cash and cash equivalents by currency

As of June 30, 2016 and December 31, 2015, information on cash and cash equivalents by currency is detailed as follows:

	06/30/2016		12/31/2015
Original currency	MUS$		MUS$
Chilean Peso (*)		1,413		2,656
US Dollar		564,105		512,809
Euro		13,098		4,245
Mexican Peso		173		1,439
South African Rand		1,426		4,123
Japanese Yen		1,951		1,690
Peruvian Sol		2		1
Brazilian Real		20		8
Chinese Yuan		765		272
Indian Rupee		9		14
Thai Baht		1		1
Argentine Peso		4		1
Pound Sterling		24		-
Total		582,991		527,259

(*) The Company maintains financial derivative policies which allow dollarizing these term deposits in Chilean pesos.

7.4

Amount of significant restricted (unavailable) cash balances

Cash on hand and in current bank accounts are available resources, and their carrying value is equal to their fair value.

As of June 30, 2016 and December 31, 2015, restricted cash balances are presented in Note 10.9.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 7

Cash and cash equivalents (continued)

7.5

Short-term deposits, classified as cash equivalents

The detail at the end of each period is as follows:

2016 Receiver of the deposit	Type of deposit	Original Currency	Interest rate		Placement date	Expiration date	Principal ThUS$		Interest accrued to-date ThUS$		06/30/2016 ThUS$
Scotiabank	Fixed term	US$		0,55	06/08/2016	07/13/2016		20,000		7		20,007
Corpbanca	Fixed term	US$		0,72	06/09/2016	07/28/2016		20,176		8		20,184
Corpbanca	Fixed term	US$		0,60	06/16/2016	08/03/2016		20,111		5		20,116
Corpbanca	Fixed term	Ch$		0,35	05/31/2016	07/05/2016		20,903		73		20,976
Banco Crédito e Inversiones	Fixed term	US$		0,65	06/08/2016	07/20/2016		20,011		8		20,019
HSBC	Fixed term	US$		0,95	06/24/2016	08/03/2016		8,000		1		8,001
Banco Crédito e Inversiones	Fixed term	US$		0,65	06/08/2016	07/20/2016		20,011		8		20,019
Banco Santander Santiago	Fixed term	US$		0,73	06/09/2016	07/28/2016		10,006		4		10,010
Banco Santander Santiago	Fixed term	US$		0,65	06/22/2016	08/10/2016		20,008		3		20,011
Banco Santander Santiago	Fixed term	US$		0,58	06/30/2016	07/07/2016		550		-		550
Banco Santander Santiago	Fixed term	US$		0,60	06/30/2016	07/15/2016		5,100		-		5,100
Banco Santander Santiago	Fixed term	US$		0,62	06/30/2016	07/22/2016		3,100		-		3,100
Banco Santander Santiago	Fixed term	US$		0,65	06/30/2016	08/01/2016		587		-		587
Banco de Chile	Fixed term	US$		0,60	06/30/2016	08/01/2016		4,250		-		4,250
Banco Crédito e Inversiones	Fixed term	US$		0,70	06/30/2016	08/01/2016		5,000		-		5,000
Corpbanca	Fixed term	US$		0,70	06/30/2016	08/01/2016		7,000		-		7,000
Corpbanca	Fixed term	US$		0,75	06/30/2016	08/01/2016		2,000		-		2,000
Citibank New York	Overnight	US$		0,01	06/30/2016	07/01/2016		1,025		-		1,025
Citibank New York	Overnight	US$		0,01	06/30/2016	07/01/2016		4,671		-		4,671
BBVA Banco Francés	Fixed term	US$		0,28	06/062016	07/11/2016		205		-		205
Nedbank	On demand	US$		-	06/30/2016	07/01/2016		3,378		-		3,378
Total								196,092		117		196,209

2015 Receiver of the deposit	Type of deposit	Original Currency	Interest rate		Placement date	Expiration date	Principal ThUS$		Interest accrued to-date ThUS$		12/31/2015 ThUS$
Banco Crédito e Inversiones	Fixed term	US$		0.50	12/23/2015	1/27/2016		50,000		6		50,006
Corpbanca	Fixed term	US$		0.65	12/22/2015	1/21/2016		25,000		4		25,004
Banco Crédito e Inversiones	Fixed term	Ch$		0.32	12/30/2015	1/14/2016		1,338		-		1,338
Banco Santander Santiago	Fixed term	Ch$		0.31	12/30/2015	1/14/2016		704		-		704
Banco Crédito e Inversiones	Fixed term	US$		0.30	12/11/2015	1/11/2016		1,000				1,000
Citibank New York	Overnight	US$		0.01	12/31/2015	1/2/2016		225		-		225
Citibank New York	Overnight	US$		0.01	12/31/2015	1/2/2016		614		-		614
BBVA Banco Francés	Fixed term	US$		19.00	12/2/2015	1/4/2016		236		-		236
ABN Amro Bank	On demand	Euro		-	12/31/2015	1/2/2016		1,240		-		1,240
Nedbank	On demand	US$		-	12/31/2015	1/2/2016		4,295		-		4,295
Total								84,652		10		84,662

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 8

Inventories

The composition of inventory at each period-end is as follows:

Type of inventory	06/30/2016 ThUS$		12/31/2015 ThUS$

Raw material reserves		7,849		4,844
Supplies for production reserves		29,738		29,353
Products-in-progress reserves		469,304		478,627
Finished product reserves		510,963		491,022
Total		1,017,854		1,003,846

As of June 30, 2016, the Company maintained inventories of caliche ore available for treatment for an amount of ThUS$ 35,036 and of ThUS$ 32,203 as of December 31, 2015.

As of June 30, 2016, the sum registered as cost of sale related to inventory in the statement of income amounts to ThUS$528,331 and to ThUS$507,546 as of June 30, 2015.

Inventory reserves recognized as of June 30, 2016 amount to ThUS$78,981, and ThUS$80,369 as of December 31, 2015. Inventory reserves have been made based on a technical study that covers the different variables affecting products in stock (density and humidity, among others). Additionally, reserves are recognized if goods are sold cheaper than the related cost, and for differences that arise from inventory counts.

The breakdown of inventory reserves is detailed as follows:

Type of inventory	06/30/2016 ThUS$		12/31/2015 ThUS$

Raw material reserves		93		93
Supplies for production reserves		920		920
Products-in-progress reserves		53,306		53,187
Finished product reserves		24,662		26,169

Total		78,981		80,369

The Company has not delivered inventory as collateral for the periods indicated above.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 9

Related party disclosures

9.1

Related party disclosures

Balances pending at period-end are not guaranteed, accrue no interest and are settled in cash. No guarantees have been delivered or received for trade and other receivables due from related parties or trade and other payables due to related parties. For the period ended June 30, 2016, the Company has not recorded any impairment in accounts receivable related to amounts owed by related parties. This evaluation is conducted every year through an examination of the financial position of the related party in the market in which it operates.

9.2

Relationships between the parent and the entity

According to the Company’s by-laws, no shareholder can own more than 32% of the Company’s voting right shares.

Sociedad de Inversiones Pampa Calichera S.A., Potasios de Chile S.A., and Inversiones Global Mining (Chile) Ltda., collectively the Pampa Group, are the owners of a number of shares that are equivalent to 29.97% as of June 30, 2016 of the current total amount of shares issued, subscribed and fully-paid of the Company. In addition, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A. and La Esperanza Delaware Corporation, collectively the Kowa Group, are the owners of a number of shares equivalent to 2.12% of the total amount of shares of SQM S.A. issued, subscribed and fully-paid.

Detail of effective concentration

Tax ID No.	Name	Ownership interest %
96.511.530-7	Sociedad de Inversiones Pampa Calichera S.A.		19.72
76.165.311-5	Potasios de Chile S.A.		6.91
96.863.960-9	Inversiones Global Mining (Chile) Ltda.		3.34
Total Pampa Group			29.97

79.798.650-k	Inversiones la Esperanza (Chile) Ltda.		1.43
59.046.730-8	Kowa Co Ltd.		0.30
96.518.570-4	Kochi S.A.		0.30
59.023.690-k	La Esperanza Delaware Corporation		0.09
Total Kowa Group			2.12

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 9

Related party disclosures (continued)

9.3

Detailed identification of the link between the Parent and subsidiary

As of June 30, 2016 and December 31, 2015, the detail of entities that are related parties of the SQM S.A. Group is as follows:

Tax ID No.	Name	Country of origin	Functional currency	Nature
Foreign	Nitratos Naturais Do Chile Ltda.	Brazil	US$	Subsidiary
Foreign	Nitrate Corporation Of Chile Ltd.	United Kingdom	US$	Subsidiary
Foreign	SQM North America Corp.	United States	US$	Subsidiary
Foreign	SQM Europe N.V.	Belgium	US$	Subsidiary
Foreign	Soquimich S.R.L. Argentina	Argentina	US$	Subsidiary
Foreign	Soquimich European Holding B.V.	The Netherlands	US$	Subsidiary
Foreign	SQM Corporation N.V.	The Netherlands	US$	Subsidiary
Foreign	SQI Corporation N.V.	The Netherlands	US$	Subsidiary
Foreign	SQM Comercial De México S.A. de C.V.	Mexico	US$	Subsidiary
Foreign	North American Trading Company	United States	US$	Subsidiary
Foreign	Administración y Servicios Santiago S.A. de C.V.	Mexico	US$	Subsidiary
Foreign	SQM Peru S.A.	Peru	US$	Subsidiary
Foreign	SQM Ecuador S.A.	Ecuador	US$	Subsidiary
Foreign	SQM Nitratos Mexico S.A. de C.V.	Mexico	US$	Subsidiary
Foreign	SQMC Holding Corporation L.L.P.	United States	US$	Subsidiary
Foreign	SQM Investment Corporation N.V.	The Netherlands	US$	Subsidiary
Foreign	SQM Brasil Limitada	Brazil	US$	Subsidiary
Foreign	SQM France S.A.	France	US$	Subsidiary
Foreign	SQM Japan Co. Ltd.	Japan	US$	Subsidiary
Foreign	Royal Seed Trading Corporation A.V.V.	Aruba	US$	Subsidiary
Foreign	SQM Oceania Pty Limited	Australia	US$	Subsidiary
Foreign	Rs Agro-Chemical Trading Corporation A.V.V.	Aruba	US$	Subsidiary
Foreign	SQM Indonesia S.A.	Indonesia	US$	Subsidiary
Foreign	SQM Virginia L.L.C.	United States	US$	Subsidiary
Foreign	SQM Italia SRL	Italy	US$	Subsidiary
Foreign	Comercial Caiman Internacional S.A.	Panamá	US$	Subsidiary
Foreign	SQM Africa Pty. Ltd.	South Africa	US$	Subsidiary
Foreign	SQM Lithium Specialties LLC	United States	US$	Subsidiary
Foreign	SQM Iberian S.A.	Spain	US$	Subsidiary
Foreign	SQM Agro India Pvt. Ltd.	India	US$	Subsidiary
Foreign	SQM Beijing Commercial Co. Ltd.	China	US$	Subsidiary
Foreign	SQM Thailand Limited	Thailand	US$	Subsidiary
Foreign	SQM Vitas Spain (2)	Spain	US$	Subsidiary
96.801.610-5	Comercial Hydro S.A.	Chile	Chilean peso	Subsidiary
96.651.060-9	SQM Potasio S.A.	Chile	US$	Subsidiary
96.592.190-7	SQM Nitratos S.A.	Chile	US$	Subsidiary
96.592.180-K	Ajay SQM Chile S.A.	Chile	US$	Subsidiary

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 9

Related party disclosures (continued)

9.3

Detailed identification of the link between the Parent and subsidiary, continued

As of June 30, 2016 and December 31, 2015, the detail of entities that are a related parties of the SQM S.A: Group is as follows:

Tax ID No.	Name	Country of origin	Functional currency	Nature
86.630.200-6	SQMC Internacional Ltda.	Chile	Chilean peso	Subsidiary
79.947.100-0	SQM Industrial S.A.	Chile	US$	Subsidiary
79.906.120-1	Isapre Norte Grande Ltda.	Chile	Chilean peso	Subsidiary
79.876.080-7	Almacenes y Depósitos Ltda.	Chile	Chilean peso	Subsidiary
79.770.780-5	Servicios Integrales de Tránsitos y Transferencias S.A.	Chile	US$	Subsidiary
79.768.170-9	Soquimich Comercial S.A.	Chile	US$	Subsidiary
79.626.800-K	SQM Salar S.A.	Chile	US$	Subsidiary
78.053.910-0	Proinsa Ltda.	Chile	Chilean peso	Subsidiary
76.534.490-5	Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	Chile	Chilean peso	Subsidiary
76.425.380-9	Exploraciones Mineras S.A.	Chile	US$	Subsidiary
76.064.419-6	Comercial Agrorama Ltda.	Chile	Chilean peso	Subsidiary
76.145.229-0	Agrorama S.A.	Chile	Chilean peso	Subsidiary
76.359.919-1	Orcoma Estudios SPA	Chile	US$	Subsidiary
76.360.575-2	Orcoma SPA	Chile	US$	Subsidiary
77.557.430-5	Sales de Magnesio Ltda.	Chile	Chilean peso	Associate
Foreign	Abu Dhabi Fertilizer Industries WWL	Arab Emirates	Arab Emirates dirham	Associate
Foreign	Doktor Tarsa Tarim Sanayi AS	Turkey	Turkish lira	Associate
Foreign	Ajay North America	United States	US$	Associate
Foreign	Ajay Europe SARL	France	Euro	Associate
Foreign	SQM Eastmed Turkey	Turkey	Euro	Associate
Foreign	Charlee SQM Thailand Co. Ltd.	Thailand	Thai baht	Associate
Foreign	Sichuan SQM Migao Chemical Fertilizers Co Ltda.	China	US$	Joint venture
Foreign	Coromandel SQM India	India	Indian rupee	Joint venture
Foreign	SQM Vitas Fzco.	Arab Emirates	Arab Emirates dirham	Joint venture
Foreign	SQM Star Qingdao Corp Nutrition Co., Ltd.	China	US$	Joint venture
Foreign	SQM Vitas Holland B.V	Dutch Antilles	Euro	Joint venture
Foreign	Kowa Company Ltd.	Japan	US$	Joint control
96.511.530-7	Sociedad de Inversiones Pampa Calichera	Chile	US$	Joint control
96.529.340-k	Norte Grande S.A.	Chile	Chilean peso	Other related parties
79.049.778-9	Callegari Agricola S.A.	Chile	Chilean peso	Other related parties
Foreign	Coromandel Internacional	India	Indian rupee	Other related parties
Foreign	Vitas Roullier SAS	France	Euro	Other related parties
Foreign	SQM Vitas Brazil Agroindustria	Brazil	US$	Joint control or significant influence
Foreign	SQM Vitas Peru S.A.C.	Peru	US$	Joint control or significant influence
Foreign	SQM Vitas Plantacote B.V	Dutch Antilles	Euro	Joint control or significant influence
Foreign	Minera Exar S.A.	Argentina	US$	Joint venture
Foreign	SQM Vitas Southern Africa Pty.(1)	South Africa	US$	Joint control or significant influence

(1)

During June 2015, SQM Vitas Fzco. sold the ownership it had in SQM Vitas Southern Africa Pty., generating a loss of ThUS$450.

(2)

During May 2016, SQM Vitas Holland B.V. sold the interest it had in SQM Vitas Spain, to SQM Iberian S.A. resulting in the latter obtaining 100% o9f the interest through such transaction, which generated a loss of ThUS$ 104.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 9

Related party disclosures (continued)

9.4

Detail of related parties and related party transactions

Transactions between the Parent and its subsidiaries are part of the Company's common transactions. Their conditions are those customary for this type of transactions in respect of terms and market prices. In addition, these have been eliminated in consolidation and are not detailed in this note.

Maturity terms for each case vary by virtue of the transaction giving rise to them.

As of June 30, 2016 and December 31, 2015, there are no allowances for doubtful accounts related to balances pending of transactions with related parties as there is no impairment in them.

As of June 30, 2016 and December 31, 2015, the detail of significant transactions with related parties is as follows:

Tax ID No.

Company

Nature

Country of

origin

Transaction

06/30/2016

ThUS$

12/31/2015

ThUS$

Foreign

Doktor Tarsa Tarim Sanayi As

Associate

Turkey

Sale of products

11,619

17,842

Foreign

Ajay Europe S,A.R.L.

Associate

France

Sale of products

10,480

23,545

Foreign

Ajay Europe S.A.R.L.

Associate

France

Dividends

658

1,748

Foreign

Ajay North America LLC.

Associate

United States

Sale of products

7,821

15,618

Foreign

Ajay North America LLC.

Associate

United States

Dividends

1,303

5,185

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

Sale of products

2,186

7,902

Foreign

Charlee SQM Thailand Co. Ltd.

Associate

Thailand

Sale of products

2,412

5,557

Foreign

Charlee SQM Thailand Co. Ltd.

Associate

Thailand

Dividends

296

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Sale of products

740

1,187

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Dividends

206

286

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Sale of services

Foreign

Kowa Company Ltd.

Other related parties

Japan

Sale of products

36,877

62,543

Foreign

Kowa Company Ltd.

Other related parties

Japan

Services received

(1,217

)

(933

)

Foreign

SQM Vitas Brasil Agroindustria

Joint control or significant influence

Brazil

Sale of products

8,410

32,019

Foreign

SQM Vitas Peru S.A.C.

Joint control or significant influence

Peru

Sale of products

11,707

34,586

Foreign

SQM Vitas Southern Africa Pty.

Joint control or significant influence

South Africa

Sale of products

2,187

Foreign

SQM Vitas Fzco.

Joint venture

United Arab Emirates

Sale of products

965

1,060

Foreign

Sichuan SQM Migao Chemical Fertilizers Co Ltda.

Joint venture

China

Sale of products

22,624

Foreign

Coromandel SQM India

Joint venture

India

Sale of products

2,977

4,012

Foreign

SQM Vitas Spain

Joint venture

Spain

Sale of products

6,956

8,587

Foreign

SQM Vitas Plantacote B.V.

Joint venture

Netherlands

Sale of products

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 9

Related party disclosures (continued)

9.5

Trade receivables due from related parties, current:

Tax ID N°

Company

Nature

Country of origin

Currency

06/30/2016

12/31/2015

ThUS$

77.557.430-5

Sales de Magnesio Ltda.

Associate

Chile

Ch$

743

377

Foreign

Charlee SQM Thailand Co. Ltd.

Associate

Thailand

US$

2,420

2,338

Foreign

Ajay Europe S.A.R.L.

Associate

France

Euro

4,100

3,031

Foreign

Ajay North America LLC.

Associate

United States

US$

2,755

2,538

Foreign

Abu Dhabi Fertilizer Industries WWL

Associate

United Arab Emirates

Arab Emirates dirham

779

772

Foreign

Doktor Tarsa Tarim Sanayi AS

Associate

Turkey

YTL

9,314

Foreign

Kowa Company Ltd.

Jointly controlled entity

Japan

US$

22,482

23,465

96.511.530-7

Soc.de Inversiones Pampa Calichera

Jointly controlled entity

Chile

US$

Foreign

SQM Vitas Brasil Agroindustria

Joint venture

Brazil

US$

9,379

19,156

Foreign

SQM Vitas Peru S.A.C.

Joint venture

Peru

US$

14,452

16,026

Foreign

Coromandel SQM India

Joint venture

India

Indian rupee

2,390

750

Foreign

Sichuan SQM Migao Chemical Fertilizers Co Ltda.

Joint venture

China

US$

17,043

21,464

79.049.778-9

Callegari Agrícola S.A.

Other related parties

Chile

Ch$

Foreign

SQM Vitas Fzco.

Joint venture

United Arab Emirates

Arab Emirates dirham

157

Foreign

SQM Vitas Spain

Joint venture

Spain

Euro

566

Foreign

SQM Vitas Plantacote B.V.

Joint venture

Holland

Euro

404

Foreign

SQM Star Qingdao Corp Nutrition Co., Ltd.

Joint venture

China

US$

Foreign

SQM Vitas Holland

Joint venture

Holland

Euro

Total

77,327

99,907

9.6

Trade payables due to related parties, current:

Tax ID
No.

Company.

Nature

Country of
origin

Currency

06/30/2016

ThUS$

12/31/2015

ThUS$

Foreign

SQM Vitas Fzco.

Joint venture

Arab Emirates

Arab Emirates dirham

251

Foreign

SQM Vitas Plantacote B.V.

Joint venture

Holland

Euro

184

Total as of to-date

435

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 9

Related party disclosures (continued)

9.7

Board of Directors and Senior Management

Board of directors

SQM S.A. is managed by a Board of Directors which is composed of 8 regular directors, 2 of which are independent directors, who are elected for a three-year period. The present Board of Directors was elected by the shareholders at the Ordinary Shareholders' Meeting of April 26, 2016.

As of June 30, 2016, the Company has the following Committees:

Directors’ Committee: composed of Hans Dieter Linneberg A. and Edward J. Waitzer, Julio Rebolledo D. Such Committee performs the duties contained in Article 50 bis of Law No. 18.046, the Chilean “Securities Act”.

Audit Committee: composed of Hans Dieter Linneberg A. and Edward J. Waitzer, Julio Rebolledo D.

Health, Safety and Environmental Matters Committee: composed of Mrs. Joanne L. Boyes, Gonzalo Guerrero Y. and Arnfinn F. Prugger.

Corporate Governance Committee: composed of Edward J. Waitzer, Robert A. Kirkpatrick, and Hans Dieter Linneberg A.

During the periods covered by these financial statements, there are no pending balances receivable and payable between the Company, its directors or members of Senior Management other than those related to remuneration, fee allowances and profit-sharing. In addition, there were no transactions conducted between the Company, its directors or members of Senior Management.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 9

Related party disclosures (continued)

9.7

Board of Directors and Senior Management, continued

Directors’ Compensation

Directors’ compensation is detailed as follows:

The payment of a fixed, gross and monthly amount of three hundred Unidades de Fomento (inflation-adjusted units) in favor the Chairman of the Board of Directors of SQM S.A. and of two hundred Unidades de Fomento in favor of each of the remaining seven directors of SQM S.A. regardless of the number of Meetings held or not held during the related month and for the periods between May 1, 2016 and April 30, 2017.

A payment in domestic currency in favor of the Chairman of the Company’s Board of Directors consisting of a variable and gross amount equivalent to 0.135% of profit for the period effectively earned by the Company during fiscal year 2016.

A payment in domestic currency in favor of each Company’s directors excluding the Chairman of the Board, consisting of a variable and gross amount equivalent to 0.06% of profit for the period effectively earned by the Company during fiscal years 2016.

The fixed and variable amounts indicated above will not be subject to any challenge between them and those expressed in percentages will be paid after the related General Shareholders’ Meeting of SQM S.A. approves the Balance Sheet, Financial Statements, Annual Report, the Account Inspectors’ Report and Independent Auditor’s Report of SQM S.A. for the commercial year ended December 31, 2016.

The amounts expressed in UF will be paid in accordance with the value determined by the Chilean Superintendence of Banks and Financial Institutions (SBIF), the Central Bank of Chile (Banco Central de Chile) or another relevant institution replacing them during the last day of the calendar year applicable. The amounts reflected in or referred to in U.S. dollars will be converted to Chilean pesos and paid in Chilean pesos in accordance with the exchange rate with which the dividend declared for the commercial year 2016 is paid.

Therefore, the remunerations and profit sharing paid to members of the Board of Directors and Audit Committee during 2016 amount to ThUS$1.943 (ThUS$ 2,769 as of December 31, 2015).

Audit Committee

The remuneration of Directors Committee is composed of:

The payment of a fixed, gross and monthly amount of three seventy-five Unidades de Fomento (inflation-adjusted units) in favor the three Directors that are members of the Director’s Committee regardless of the number of Meetings held or not held during the related month and for the periods between May 1, 2016 and April 30, 2017.

A payment in domestic currency in favor of each of the three Directors consisting of a variable and gross amount equivalent to 0.02% of profit for the period effectively earned by the Company during fiscal year 2016 resulting after deducting the relevant amount for the concept of the amortization of gain from bargain purchase and regardless of the number of Meetings held or not held by the Directors’ Committee during such year.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 9

Related party disclosures (continued)

9.7

Board of Directors and Senior Management, continued

Corporate Governance Committee, Health, Safety and Environmental Matters Committee and other Company’s Committees

Remuneration of such committees is composed of the payment of a fixed, gross, monthly amount of UF 50 for each director comprising such committees, regardless of the number of meetings held or not held during the related month or year.

No guarantees have been constituted in favor of the directors.

Senior management compensation:

As of June 30, 2016, the global compensation paid to the 104 main executives amounts to ThUS$12,157 and the global compensation paid to the 103 main executives as of December 31, 2015 amounted to ThUS$19,355. This includes monthly fixed salary and variable performance bonuses.

The Company has a bonuses intermediate and biannual plan for compliance target and level of individual contribution to the Company’s profit or loss. These benefits are structured in a minimum and maximum of gross remunerations which are paid once a year or every two years.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 9

Related party disclosures (continued)

9.7

Board of Directors and Senior Management, continued

Additionally, the Company has retention bonuses for the Company’s executives. The amount of these bonuses is linked to the price of the Company’s share and is payable in cash between 2012 and 2016 (see Note 16).

No guarantees have been constituted in favor of the Company’s management.

The Company’s Managers and Directors do not receive or have not received any benefit during the period ended June 30, 2016 and the year ended December 31, 2015 or compensation for the concept of pensions, life insurance, paid time off, profit sharing, incentives, or benefits due to disability other than those mentioned in the preceding points.

9.8

Key management personnel compensation

	06/30/2016		12/31/2015
	ThUS$		ThUS$

Key management personnel compensation		12,157		19,355

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments

Financial instruments in accordance with IAS 39 are detailed as follows:

10.1

Types of other financial assets

Description of other financial assets	06/30/2016 ThUS$		12/31/2015 ThUS$

Other current financial assets (1)		221,421		617,267
Derivatives (2)		9,548		19,058
Hedging assets		653		-
Total other current financial assets		231,622		636,325

Other non-current financial assets (3)		2,741		486
Total other non-current financial assets		2,741		486

(1)

Relates to term deposits with maturities exceeding 90 days and less than 360 days from the investment date.

(2)

Relate to forwards and options that were not classified as hedging instruments (see detail in Note 10.3).

(3)

The detail of other financial assets, non-current is as follows:

	06/30/2016 ThUS$		12/31/2015 ThUS$

Non-current investments not accounted for using the equity method of accounting		2,695		444
Other financial assets, non-current		46		42
Total other financial assets, non-current		2,741		486

Detail of other current financial assets

Institution	06/30/2016 ThUS$		12/31/2015 ThUS$
Banco Santander		52,294		175,433
Banco de Crédito e Inversiones		650		97,739
Banco de Chile		-		20,049
Corpbanca		81,644		122,951
Banco Itaú		81,463		80,830
Banco Security		-		24,861
Morgan Stanley		5,370		8,200
Scotiabank Sud Americano		-		78,180
HSBC Bank Chile		-		9,024
Total		221,421		617,267

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments, (continued)

10.2

Trade and other receivables

	06/30/2016						12/31/2015
	Current		Non-current		Total		Current		Non-current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$$		ThUS$
Trade receivables		281,048		-		281,048		279,590		-		279,590
Prepayments		15,730		-		15,730		9,155		-		9,155
Other receivables		10,425		1,250		11,675		13,480		1,050		14,530
Total trade and other receivables		307,203		1,250		308,453		302,225		1,050		303,275

	06/30/2016							12/31/2015
	Assets before allowances		Allowance for doubtful trade receivables			Assets for trade receivables, net		Assets before allowances		Allowance for doubtful trade receivables			Assets for trade receivables, net
	ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$
Receivables related to credit operations, current		296,254		(15,206	)		281,048		294,525		(14,935	)		279,590
Trade receivables, current		296,254		(15,206	)		281,048		294,525		(14,935	)		279,590
Prepayments, current		18,530		(2,800	)		15,730		11,955		(2,800	)		9,155
Other receivables, current		12,439		(2,014	)		10,425		15,476		(1,996	)		13,480
Current trade and other receivables		327,223		(20,020	)		307,203		321,956		(19,731	)		302,225
Other receivables, non-current		1,250		-			1,250		1,050		-			1,050
Non-current receivables		1,250		-			1,250		1,050		-			1,050
Total trade and other receivables		328,473		(20,020	)		308,453		323,006		(19,731	)		303,275

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments, (continued)

10.2

Trade and other receivables, continued

Portfolio stratification, continued

The Company’s policy is to require guarantees (such as letters of credit, guarantee clauses and others) and/or maintaining insurance policies for certain accounts as deemed necessary by management.

Unsecuritized portfolio

As of June 30, 2016 and December 31, 2015, the detail of the unsecuritized portfolio is as follows:

06/30/2016
	Not overdue		1 - 30 days		31 - 60 days		61 - 90 days		91 - 120 days		121 - 150 days		151 - 180 days		181 - 210 days		211 - 250 days		Over 250 days		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Number of customers, portfolio under no renegotiated terms		3,556		1,359		1,024		858		766		280		277		241		264		1,907		10,532
Portfolio under no renegotiated terms		232,124		18,732		9,531		10,450		7,474		1,878		301		115		199		9,815		290,619
Number of customers under renegotiated terms portfolio		10		242		77		48		26		15		9		9		18		368		822
Portfolio under renegotiated terms, gross		174		1,463		795		222		132		68		57		5		96		2,623		5,635
Total gross portfolio		232,298		20,195		10,326		10,672		7,606		1,946		358		120		295		12,438		296,254

12/31/2015
	Not overdue		1 - 30 days		31 - 60 days		61 - 90 days		91 - 120 days		121 - 150 days		151 - 180 days		181 - 210 days		211 - 250 days		Over 250 days		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Number of customers, portfolio under no renegotiated terms		3,653		698		388		2,617		565		241		253		667		311		1,836		11,229
Portfolio under no renegotiated terms		249,892		13,268		1,484		9,572		2,720		19		264		6,159		1,067		6,340		290,785
Number of customers under renegotiated terms portfolio		17		1		551		38		8		1		3		7		6		235		867
Portfolio under renegotiated terms, gross		540		10		625		13		170		15		259		35		293		1,780		3,740
Total gross portfolio		250,432		13,278		2,109		9,585		2,890		34		523		6,194		1,360		8,120		294,525

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments, (continued)

10.2

Trade and other receivables, continued

The detail of allowances is as follows:

Provision and write-offs	06/30/2016 MUS$			12/31/2015 MUS$
Allowance for portfolio under no renegotiated terms		17,584			18,980
Allowance for portfolio with renegotiated terms		2,442			2,356
Write-offs for the period		(6	)		(1,605	)
Total		20,020			19,731

Credit risk concentration

Credit risk concentration with respect to trade receivables is reduced due to the great number of entities included in the Company’s client database and their distribution throughout the world.

10.3

Hedging assets and liabilities

The balance represents derivative instruments measured at fair value which have been classified as hedges from exchange and interest rate risks related to the total obligations associated with bonds of the Company in Chilean pesos and UF (and the exchange risk in Chilean pesos of the Company’s investment plans). As of June 30, 2016, the face value of cash flows in Cross Currency Swap contracts agreed upon in US dollars amounted to ThUS$325,972 and as of December 31, 2015 such contracts amounted to ThUS$331,853.

Hedging assets with
underlying debt

Derivative
instruments
(Fwds)

Effect on profit or

loss for the period
Derivative
instruments

Hedging reserve
in gross equity

Deferred tax
hedging
reserve in
equity

Hedging
reserve in
equity

ThUS$

June 30, 2016

653

706

(54

)

(54

)

Hedging liabilities
with underlying debt

Derivative
instruments
(CCS)

Effect on profit or
loss for the period
Derivative
instruments

Hedging reserve
in gross equity

Deferred tax
hedging
reserve in
equity

Hedging
reserve in
equity

ThUS$

June 30, 2016

52,425

20,652

(1,816

)

510

(1,306

)

Hedging liabilities with
underlying
investments

Derivative
instruments
(CCS)

Effect on profit or
loss for the period
Derivative
instruments

Hedging reserve
in gross equity

Deferred tax
hedging
reserve in
equity

Hedging
reserve in
equity

ThUS$

June 30, 2016

3,009

(2,404

)

(606

)

701

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.3

Hedging assets and liabilities, continued

Hedging liabilities

Derivative
instruments
(CCS)

Effect on profit or
loss for the period
Derivative
instruments

Hedging reserve
in gross equity

Deferred tax
hedging
reserve in
equity

Hedging
reserve in
equity

ThUS$

December 31, 2015

74,786

(29,245

)

182

The balances in the “effect on profit or loss” column consider the interim effects of the contracts in force As of June 30, 2016 and December 31, 2015.

Derivative contract maturities are detailed as follows:

Series	Contract amount ThUS$		Currency	Maturity date
C		53,881	UF	12/01/2026
H		191,638	UF	01/05/2018
M		46,463	UF	02/01/2017
O		68,339	UF	02/01/2017

The Company uses cross currency swap derivative instruments to hedge the possible financial risk associated with the volatility of the exchange rate associated with Chilean pesos and UF. The objective is to hedge the exchange rate financial risks associated with bonds payable. Hedges are documented and tested to measure their effectiveness.

Based on a comparison of critical terms, hedging is highly effective, given that the hedged amount is consistent with obligations maintained for bonds denominated in Chilean pesos and UF. Likewise, hedging contracts are denominated in the same currencies and have the same expiration dates of bond principal and interest payments.

Hedge Accounting

The Company classifies derivative instruments as hedging that may include derivative or embedded derivatives either as fair value hedge derivative instruments, cash flow hedge derivative instruments, or hedge derivative instruments for net investment in a business abroad.

a) Fair value hedge

Changes in fair values of derivative instruments classified as fair value hedge derivative instruments are accounted for in gains and losses immediately along with any change in the fair value of the hedged item that is attributable to the risk being hedged.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.3

Hedging assets and liabilities, continued

The Company documents the relationship between hedge instruments and the hedged item along with the objectives of its risk management and strategy to carry out different hedging transactions. In addition, upon commencement of the period hedged and then on a quarterly basis the Company documents whether hedge instruments have been efficient and met the objective of hedging market fluctuations for the purpose of which we use the effectiveness test. A hedge instrument is deemed effective if the effectiveness test result is between 80% and 125%.

The hedge instruments are classified as effective or not effective on the basis of the effectiveness test results. As of to date, hedges are classified as effective on the basis of the effectiveness tests. This note includes the detail of fair values of derivatives classified as hedging instruments.

b) Cash flow hedges

Cash flow hedges cover exposure to the cash flow variations attributable to a risk associated with a specific transaction that is very likely to be executed, that may have material effects on the results of the Company.

10.4

Financial liabilities

Other current and non-current financial liabilities

As of June 30, 2016 and December 31, 2015, the detail is as follows:

	06/30/2016						12/31/2015
	Current		Non-current		Total		Current		Non-current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Bank borrowings		158,011		-		158,011		178,183		140,000		318,183
Obligations with the public		58,824		1,062,078		1,120,902		221,092		1,077,172		1,298,264
Derivatives		5,460		-		5,460		981		-		981
Hedging liabilities		20,404		35,142		55,546		1,774		73,031		74,805
Total		242,699		1,097,220		1,339,919		402,030		1,290,203		1,692,233

Current and non-current borrowings

As of June 30, 2016 and December 31, 2015, the detail is as follows:

	06/30/2016		12/31/2015
	ThUS$		ThUS$
Long-term borrowings		-		140,000
Short-term borrowings		97,866		97,079
Current portion of long-term borrowings		60,145		81,104
Short-term loans and current portion of long-term borrowings		158,011		178,183
Total borrowings assumed		158,011		318,183

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Bank loans, current:

As of June 30, 2016 and December 31, 2015, the detail of this caption is as follows:

Debtor

Creditor

Currency or
adjustment

Effective

Nominal

Tax ID No

Company

Country

Tax ID No.

Financial institution

Country

index

Repayment

Rate

rate

93.007.000-9

SQM.S.A.

Chile

97.018.000-1

Scotiabank Sud Americano

Chile

US$

Upon maturity

0.82

93.007.000-9

SQM.S.A.

Chile

97.030.000-7

Banco Estado

Chile

US$

Upon maturity

4.3

93.007.000-9

SQM.S.A.

Chile

97.018.000-1

Scotiabank Sud Americano

Chile

US$

Upon maturity

0.85

79.626.800-K

SQM Salar S.A.

Chile

97.018.000-1

Scotiabank Sud Americano

Chile

US$

Upon maturity

0.84

79.947.100-0

SQM Industrial S.A.

Chile

97.030.000-7

Banco Estado

Chile

US$

Upon maturity

1.20

Foreign

Royal Seed Trading Corporation A.V.V.

Aruba

Foreign

Bank of America

United States

US$

Upon maturity

0.74

1.80

Foreign

Royal Seed Trading Corporation A.V.V.

Aruba

Foreign

The Bank of Tokyo-Mitsubishi UFJ, Lda. (New York)

United States

US$

Upon maturity

1.64

1.54

Foreign

Royal Seed Trading Corporation A.V.V.

Aruba

Foreign

Export Development Canada

Canada

US$

Upon maturity

1.55

1.87

		06/30/2016						06/30/2016
Debtor	Creditor	Nominal amounts						Current amounts
Company	Financial institution	Up to 90 days ThUS$		90 days to 1 year ThUS$		Total ThUS$		Up to 90 days ThUS$		90 days to 1 year ThUS$		Subtotal ThUS$		Borrowing costs ThUS$			Total ThUS$
SQM.S.A.	Scotiabank Sud Americano		20,000		-		20,000		20,020		-		20,020		-			20,020
SQM.S.A.	Banco Estado		-		20,662		20,662		-		20,721		20,721		-			20,721
SQM.S.A.	Scotiabank Sud Americano		17,000		-		17,000		17,012		-		17,012		-			17,012
SQM Salar S.A.	Scotiabank Sud Americano		-		20,000		20,000		24		20,000		20,024		-			20,024
SQM Industrial S.A.	Banco Estado		-		20,000		20,000				20,089		20,089		-			20,089
Royal Seed Trading Corporation A.V.V.	Bank of America		-		40,000		40,000		-		40,170		40,170		(16	)		40,154
Royal Seed Trading Corporation A.V.V.	The Bank of Tokyo-Mitsubishi UFJ, Lda. (New York)		-		10,000		10,000		-		10,034		10,034		(19	)		10,015
Royal Seed Trading Corporation A.V.V.	Export Development Canada		-		10,000		10,000		-		10,005		10,005		(29	)		9,976
Total			37,000		120,662		157,662		37,056		121,019		158,075		(64	)		158,011

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Debtor

Creditor

Currency or
adjustment

Effective

Nominal

Tax ID No

Company

Country

Tax ID No.

Financial institution

Country

index

Repayment

Rate

rate

93.007.000-9

SQM.S.A.

Chile

97.018.000-1

Scotiabank Sud Americano

Chile

US$

Upon maturity

0.57

93.007.000-9

SQM.S.A.

Chile

97.030.000-7

Banco Estado

Chile

US$

Upon maturity

0.70

93.007.000-9

SQM.S.A.

Chile

97.018.000-1

Scotiabank Sud Americano

Chile

US$

Upon maturity

0.58

93.007.000-9

SQM S.A.

Chile

Foreign

Banco Estado NY Branch

United States

US$

Upon maturity

1.94

2.54

79.626.800-K

SQM Salar S.A.

Chile

97.018.000-1

Scotiabank Sud Americano

Chile

US$

Upon maturity

0.57

79.947.100-0

SQM Industrial S.A.

Chile

97.030.000-7

Banco Estado

Chile

US$

Upon maturity

0.44

Foreign

Royal Seed Trading Corporation A.V.V.

Aruba

Foreign

Bank of America

United States

US$

Upon maturity

1.43

1.30

Foreign

Royal Seed Trading Corporation A.V.V.

Aruba

Foreign

The Bank of Tokyo-Mitsubishi UFJ, Lda. (New York)

United States

US$

Upon maturity

1.18

1.05

Foreign

Royal Seed Trading Corporation A.V.V.

Aruba

Foreign

Export Development Canada

Canada

US$

Upon maturity

1.75

1.39

		12/31/2015						12/31/2015
Debtor	Creditor	Nominal amounts						Current amounts
Company	Financial institution	Up to 90 days ThUS$		90 days to 1 year ThUS$		Total ThUS$		Up to 90 days ThUS$		90 days to 1 year ThUS$		Subtotal ThUS$		Borrowing costs ThUS$			Total ThUS$
SQM.S.A.	Scotiabank Sud Americano		-		20,000		20,000		13		20,000		20,013		-			20,013
SQM.S.A.	Banco Estado		-		20,000		20,000		9		20,000		20,009		-			20,009
SQM.S.A.	Scotiabank Sud Americano		-		17,000		17,000		8		17,000		17,008		-			17,008
SQM S.A.	Banco Estado NY Branch		-		-		-		1,067		-		1,067		-			1,067
SQM Salar S.A.	Scotiabank Sud Americano		-		20,000		20,000		16		20,000		20,016		-			20,016
SQM Industrial S.A.	Banco Estado		20,000		-		20,000		20,032		-		20,032		-			20,032
Royal Seed Trading Corporation A.V.V.	Bank of America		-		40,000		40,000		-		40,137		40,137		(49	)		40,088
Royal Seed Trading Corporation A.V.V.	The Bank of Tokyo-Mitsubishi UFJ, Lda. (New York)		-		20,000		20,000		-		20,052		20,052		(54	)		19,998
Royal Seed Trading Corporation A.V.V.	Export Development Canada		-		20,000		20,000		-		20,010		20,010		(58	)		19,952
Total			20,000		157,000		177,000		21,145		157,199		178,344		(161	)		178,183

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Unsecured obligations, current:

As of June 30, 2016 and December 31, 2015, the detail of current unsecured interest-bearing obligations is composed of promissory notes and bonds, as follows:

Bonds

Debtor			Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Periodicity		Effective rate			Nominal rate
Tax ID No.	Company	País					Payment of interest	Repaymnet
93.007.000-9	SQM S.A.	Chile	-	ThUS$250,000	4/21/2016	US$	Semiannual	Upon maturity		5.94	%		5.50	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$250,000	7/28/2016	US$	Semiannual	Upon maturity		4.62	%		4.38	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$300,000	4/3/2016	US$	Semiannual	Upon maturity		3.95	%		3.63	%
93.007.000-9	SQM S.A.	Chile	446	C	6/1/2016	UF	Semiannual	Semiannual		5.57	%		4.00	%
93.007.000-9	SQM S.A.	Chile	564	H	7/5/2016	UF	Semiannual	Semiannual		5.22	%		4.90	%
93.007.000-9	SQM S.A.	Chile	700	M	8/1/2016	UF	Semiannual	Upon maturity		4.83	%		3.30	%
93.007.000-9	SQM S.A.	Chile	699	O	8/1/2016	UF	Semiannual	Upon maturity		3.97	%		3.80	%

			06/30/2016						06/30/2016
			Nominal maturities						Current maturities
Company	Country	Series	Up to 90 days		91 days to 1 year		Total		Up to 90 days		91 days to 1 year		Subtotal		Bond issuance costs			Total
			ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
SQM S,A,	Chile	ThUS$250,000		-				-		-		2.635		2,635		(386	)		2,249
SQM S,A,	Chile	ThUS$250,000		-				-		-		4,618		4,618		(433	)		4,185
SQM S,A,	Chile	ThUS$300,000		-		-		-		-		2,628		2,628		(615	)		2,013
SQM S,A,	Chile	C		-		5,909		5,909		-		6,107		6,107		-			6,107
SQM S,A,	Chile	H		-		-		-		3,708		-		3,708		(139	)		3,569
SQM S,A,	Chile	M		-		38,537		38,537		534		39,391		39,925		(79	)		39,846
SQM S,A,	Chile	O		-		-		-		921		-		921		(66	)		855
Total				-		44,446		44,446		5,163		55,379		60,542		(1,718	)		58,824

Effective rates of bonds in Chilean pesos and UF are expressed and calculated in U.S. dollars based on the flows agreed in Cross Currency Swap Agreements.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Debtor			Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Periodicity		Effective rate			Nominal rate
Tax ID No.	Company	País					Payment of interest	Repayment
93.007.000-9	SQM S.A.	Chile	-	ThUS$200,000	4/15/2016	US$	Semiannual	Upon maturity		9.19	%		6.13	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$250,000	4/21/2016	US$	Semiannual	Upon maturity		5.89	%		5.50	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$250,000	1/28/2016	US$	Semiannual	Upon maturity		4.61	%		4.38	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$300,000	4/3/2016	US$	Semiannual	Upon maturity		3.93	%		3.63	%
93.007.000-9	SQM S.A.	Chile	446	C	6/1/2016	UF	Semiannual	Semiannual		6.52	%		4.00	%
93.007.000-9	SQM S.A.	Chile	564	H	1/5/2016	UF	Semiannual	Semiannual		5.20	%		4.90	%
93.007.000-9	SQM S.A.	Chile	700	M	2/1/2016	UF	Semiannual	Upon maturity		4.32	%		3.30	%
93.007.000-9	SQM S.A.	Chile	699	O	2/1/2016	UF	Semiannual	Upon maturity		3.97	%		3.80	%

			12/31/2015						12/31/2015
			Nominal maturities						Current maturities
Company	Country	Series	Up to 90 days		91 days to 1 year		Total		Up to 90 days		91 days to 1 year		Subtotal		Bond issuance costs			Total
			ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
SQM S,A,	Chile	ThUS$200,000		-		200,000		200,000		-		202,586		202,586		(73	)		202,513
SQM S,A,	Chile	ThUS$250,000		-		-		-		-		2,674		2,674		(386	)		2,288
SQM S,A,	Chile	ThUS$250,000		-		-		-		4,648		-		4,648		(433	)		4,215
SQM S,A,	Chile	ThUS$300,000		-		-		-		-		2,658		2,658		(614	)		2,044
SQM S,A,	Chile	C		-		5,413		5,413		-		5,610		5,610		-			5,610
SQM S,A,	Chile	H		-		-		-		3,417		-		3,417		(139	)		3,278
SQM S,A,	Chile	M		-		-		-		492		-		492		(130	)		362
SQM S,A,	Chile	O		-		-		-		849		-		849		(67	)		782
Total				-		205,413		205,413		9,406		213,528		222,934		(1,842	)		221,092

Effective rates of bonds in Chilean pesos and UF are expressed and calculated in U.S. dollars based on the flows agreed in Cross Currency Swap Agreements.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Types of interest-bearing borrowings, non-current

Non-current interest-bearing borrowings as of June 30, 2016 and December 31, 2015 are detailed as follows:

Debtor

Creditor

Currency or
adjustment

Repayment

Effective
rate

Nominal
rate

Tax ID No.

Company

Country

Tax ID No.

Financial institution

Country

index

93.007.000-9

SQM S.A.

Chile

Foreign

Banco Estado NY Branch

United States

US$

Upon maturity

1.94

2.54

		Nominal non-current maturities								Non-current maturities
		12/31/2015								12/31/2015
Company	Financial institution	Over 1 years to 2		Over 2 years to 3		Over 3 years to 4		Total		Over 1 years to 2		Over 2 years to 3		Over 3 years to 4		Subtotal		Borrowings costs		Total
		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
SQM S.A.	Banco Estado NY Branch		140,000		-		-		140,000		140,000		-		-		140,000		-		140,000
Total			140,000		-		-		140,000		140,000		-		-		140,000		-		140,000

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Non-current unsecured interest-bearing bonds

The breakdown of non-current unsecured interest-bearing bonds as of June 30, 2016 and December 31, 2015 is detailed as follows:

							Periodicity
Tax ID No.	Company	Country	Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Payment of interest	Repayment	Effective rate			Nominal rate
93.007.000-9	SQM S.A.	Chile	-	ThUS$250,000	04/21/2020	US$	Semiannual	Upon maturity		5.94	%		5.50	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$250,000	01/28/2025	US$	Semiannual	Upon maturity		4.62	%		4.38	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$300,000	04/03/2023	US$	Semiannual	Upon maturity		3.95	%		3.63	%
93.007.000-9	SQM S.A.	Chile	446	C	12/01/2026	UF	Semiannual	Semiannual		5.57	%		4.00	%
93.007.000-9	SQM S.A.	Chile	564	H	01/05/2030	UF	Semiannual	Semiannual		5.22	%		4.90	%
93.007.000-9	SQM S.A.	Chile	699	O	02/01/2033	UF	Semiannual	Upon maturity		3.97	%		3.80	%

Nominal non-current maturities 06/30/2016													Non-current maturities 06/30/2016
Series	Over 1 year to 2		Over 2 years to 3		Over 3 Years to 4		Over 4 Years to 5		Over 5 years		Total		Over 1 year to 2		Over 2 years to 3		Over 3 Years to 4		Over 4 Years to 5		Over 5 years		Subtotal		Bond issuance costs			Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
MMUS$250		-		250,000		-		-		-		250,000		-		250,000		-		-		-		250,000		(1,096	)		248,904
MMUS$250		-		-		-		-		250,000		250,000		-		-		-		-		250,000		250,000		(3,286	)		246,714
MMUS$300		-		-		-		-		300,000		300,000		-		-		-		-		300,000		300,000		(3,537	)		296,463
C		5,909		5,909		5,909		5,909		32,496		56,132		5,909		5,909		5,909		5,909		32,496		56,132		-			56,132
H		-		-		-		-		157,564		157,564		-		-		-		-		157,564		157,564		(1,740	)		155,824
O		-		-		-		-		59,087		59,087		-		-		-		-		59,087		59,087		(1,046	)		58,041
Total		5,909		255,909		5,909		5,909		799,147		1,072,783		5,909		255,909		5,909		5,909		799,147		1,072,783		(10,705	)		1,062,078

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Non-current unsecured interest-bearing bonds, continued

As of June 30, 2016 and December 31, 2015, the breakdown of unsecured interest-bearing liabilities, non-current is as follows:

							Periodicity
Tax ID No.	Company	Country	Number of registration or ID of the instrument	Series	Maturity date	Currency or adjustment index	Payment of interest	Repayment	Effective rate			Nominal rate
93.007.000-9	SQM S.A.	Chile	-	ThUS$200,000	04/15/2016	US$	Semiannual	Upon maturity		9.19	%		6.13	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$250,000	04/21/2020	US$	Semiannual	Upon maturity		5.89	%		5.50	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$250,000	01/28/2025	US$	Semiannual	Upon maturity		4.61	%		4.38	%
93.007.000-9	SQM S.A.	Chile	-	ThUS$300,000	04/03/2023	US$	Semiannual	Upon maturity		3.93	%		3.63	%
93.007.000-9	SQM S.A.	Chile	446	C	12/01/2026	UF	Semiannual	Semiannual		6.53	%		4.00	%
93.007.000-9	SQM S.A.	Chile	564	H	01/05/2030	UF	Semiannual	Semiannual		5.20	%		4.90	%
93.007.000-9	SQM S.A.	Chile	700	M	02/01/2017	UF	Semiannual	Upon maturity		4.32	%		3.30	%
93.007.000-9	SQM S.A.	Chile	699	O	02/01/2033	UF	Semiannual	Upon maturity		3.97	%		3.80	%

Nominal non-current maturities 12/31/2015													Non-current maturities 12/31/2015
Series	Over 1 year to 2		Over 2 years to 3		Over 3 Years to 4		Over 4 Years to 5		Over 5 years		Total		Over 1 year to 2		Over 2 years to 3		Over 3 Years to 4		Over 4 Years to 5		Over 5 years		Subtotal		Bond issuance costs			Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
MMUS$250		-		-		250,000		-		-		250,000		-		-		250,000		-		-		250,000		(1,290	)		248,710
MMUS$250		-		-		-		-		250,000		250,000		-		-		-		-		250,000		250,000		(3,502	)		246,498
MMUS$300		-		-		-		-		300,000		300,000		-		-		-		-		300,000		300,000		(3,843	)		296,157
C		5,413		5,413		5,413		5,413		32,482		54,134		5,413		5,413		5,413		5,413		32,482		54,134		-			54,134
H		-		-		-		-		144,357		144,357		-		-		-		-		144,357		144,357		(1,810	)		142,547
M		36,089		-		-		-		-		36,089		36,089		-		-		-		-		36,089		(17	)		36,072
O		-		-		-		-		54,134		54,134		-		-		-		-		54,134		54,134		(1,080	)		53,054
Total		41,502		5,413		255,413		5,413		780,973		1,088,714		41,502		5,413		255,413		5,413		780,973		1,088,714		(11,542	)		1,077,172

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Additional information

Bonds

On the 30 of June 2016 and the 31st of December 2015, short term bonds of MUS$58,824 and MUS$221,092 respectively were classified as short-term, consisting of the current portion due plus accrued interest to date, excluding bond issue costs. The non-current portion consisted of MUS$1,062,078 on the 30 of June 2016 and MUS$1,077,172 on the 31 ^st December 2015, corresponding to the issuance of series C bonds, Single series bonds (ThUS$200), series H bonds second issue single series bonds (ThUS$250), series M bonds, series O bonds, third issue single series bonds (ThUS$300) and fourth issue single series bonds (ThUS$250) excluding debt issue costs.

As of June 30, 2016 and December 31, 2015, the details of each issuance are as follows:

Series “C” bonds

On January 24, 2006, the Company placed Series C bonds for UF 3,000,000 (ThUS$101,918) at an annual rate of 4.00%.

As of June 30, 2016 and December 31, 2015, the Company has made the following payments with a charge to the Series C bonds:

Payments made	06/30/2016		12/31/2015
	MUS$		MUS$
Principal payment		2,826		5,729
Interest payment		1,676		3,570

Single series first issue ThUS$200,000

On April 5, 2006, the Company placed Single Series bonds for ThUS$200,000 at an annual rate of 6.125% under "Rule 144 and regulation S of the U.S. Securities Act of 1933."

As of June 30, 2016 and December 31, 2015, the Company has made the following payments with a charge to the Single series bonds:

Payments made	06/30/2016 ThUS$		12/31/2015 ThUS$
Payments of principal owed		200,000		-
Payments of interest		6,125		12,250

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Series “G” and “H” bonds

On January 13, 2009, the Company placed two bond series in the domestic market. Series H for UF 4,000,000 (ThUS$139,216) at an annual interest rate of 4.9% at a term of 21 years with payment of principal beginning in 2019 and Series G for ThCh$ 21,000,000 (ThUS$34,146), which was placed at a term of 5 years with a single payment at the maturity of the term and an annual interest rate of 7%.

As of June 30, 2016 and December 31, 2015, the Company has made the following payments with a charge to the Series G and H bonds:

Payments made		06/30/2016 ThUS$				12/31/2015 ThUS$
Payments of interest, Series H bonds			3,461				7,696

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Single series bonds, second issue ThUS$250,000

On April 21, 2010, the Company informed the Chilean Superintendence of Securities and Insurance of its placement in international markets of an unsecured bond of ThUS$250,000 with a maturity of 10 years beginning on the aforementioned date with an annual interest rate of 5.5% and destined to refinance long-term liabilities.

As of June 30, 2016 and December 31, 2015, the detail of payments charged to the line of single series bonds, second issue is as follows:

Payments made		06/30/2016 ThUS$				12/31/2015 ThUS$
Interest payment			6,875				13,750

Series “M” and “O” bonds

On April 4, 2012, the Company placed two bond series in the domestic market. Series M for UF 1,000,000 (ThUS$46,601) was placed at a term of 5 years with a single payment at the maturity of the term and an annual interest rate of 3.3%, and Series O for UF 1,500,000 (ThUS$69,901) was placed at a term of 21 years with a single payment at the maturity of the term and an annual interest rate of 3.80%

As of June 30, 2016, and December 31, 2015 the Company has made the following payments with a charge to the Series M and O bonds:

Payments made	06/30/2016 ThUS$		12/31/2015 ThUS$
Payment of interest, Series M bonds		590		1,248
Payment of interest, Series O bonds		1,019		2,153

Single series bonds, third issue ThUS$300,000

On April 3, 2013 in the United States, the Company issued a non-guaranteed bond with a value of US$ 300 million. The bond is for a 10 year term with an annual coupon rate of 3.625% and an annual yield of 3.716%. This rate equates to a difference of 180 basis points to comparable US Treasury bonds. The funds raised will be used to refinance long term liabilities and finance general corporate objectives.

As of June 30, 2016 and December 31, 2015, the following payments have been made with a debit to the line of single-series bonds, third issue:

Payments made		06/30/2016 ThUS$				12/31/2015 ThUS$
Payment of interest			5,438				10,875

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.4

Financial liabilities, continued

Single series bonds, fourth issuance ThUS$ 250

On October 23, 2014, the Company informed the Chilean Superintendence of Securities and Insurance that Sociedad Química y Minera de Chile S.A. agreed to issue and place unsecured bonds of ThUS$ 250,000 in international markets. This, essentially, maturing in 2025 with a cover annual interest rate of 4.375% equivalent to a spread of 215 basis points on comparable US Treasury bonds, which were offered to the investors at a price of 99.410% with respect to capital. The aforementioned agreement was agreed on October 23, 2014 and the issuance and placement of such bonds was performed in conformity with the provisions of Rule 144A of the US Securities Act of 1933 and these bonds will not be publicly offered in Chile.

As of June 30, 2016 and December 31, 2015, the following payments have been made.

Payments made		06/30/2016 ThUS$				12/31/2015 ThUS$
Payment of interest			5,469				8,203

10.5

Trade and other payables

	06/30/2016						12/31/2015
	Current		Non- current		Total		Current		Non- current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Accounts payable		128,962		-		128,962		136,668		-		136,668
Other accounts payable		270		-		270		172		-		172
Total		129,232		-		129,232		136,840		-		136,840

Purchase commitments held by the Company are recognized as liabilities when the goods and services are received by the Company. As of June 30, 2016, the Company has purchase orders amounting to ThUS$28,022 (ThUS$15,888 as of December 31, 2015).

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.6

Financial liabilities at fair value through profit or loss

This balance relates to derivative instruments measured at their fair value, which has generated balances against the Company. The detail of this type of instrument is as follows:

Financial liabilities at fair value through profit or loss	06/30/2016 ThUS$		Effect on profit or loss as of 06/30/2016			12/31/2015 ThUS$		Effect on profit or loss as of 12/31/2015
			ThUS$					ThUS$
Current
Derivative instruments (IRS)		113		(168	)		283		(242	)
		113		(168	)		283		(242	)

Balances in the column effect on profit or loss consider the effects of agreements which were in force as of June 30, 2016, including derivatives, received during the year.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.7

Financial asset and liability categories

Financial Assets

	06/30/2016						12/31/2015
	Current		Non-current		Total		Current		Non-current		Total
Description of financial assets	Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$

Financial assets measured at amortized cost		221,421		-		221,421		617,267		-		617,267
Investments held-to-maturity measured at amortized cost		-		2,741		2,741		-		486		486
Loans and receivables measured at amortized cost		307,203		1,250		308,453		302,225		1,050		303,275
Total financial assets measured at amortized cost		528,624		3,991		532,615		919,492		1,536		921,028

Financial assets at fair value through profit or loss		10,201		-		10,201		19,058		-		19,058
Total financial assets at fair value		10,201		-		10,201		19,058		-		19,058
Total financial assets		538,825		3,991		542,816		938,550		1,536		940,086

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.7

Financial asset and liability categories (continued)

Financial liabilities

	06/30/2016						12/31/2015
	Current		Non-current		Total		Current		Non-current		Total
Description of financial liabilities	Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$		Amount ThUS$

Financial liabilities at fair value through profit or loss		25,864		35,142		61,006		2,755		73,031		75,786
Financial liabilities at fair value through profit or loss		25,864		35,142		61,006		2,755		73,031		75,786


Financial liabilities measured at amortized cost		344,525		1,062,207		1,406,732		536,115		1,217,172		1,753,287
Total financial liabilities measured at amortized cost		344,525		1,062,207		1,406,732		536,115		1,217,172		1,753,287
Total financial liabilities		370,389		1,097,349		1,467,738		538,870		1,290,203		1,829,073

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.8

Fair value measurement of assets and liabilities

Financial assets and liabilities measured at fair value consist of Options and Forwards hedging the mismatch in the balance sheet and cash flows, Cross Currency Swaps (CCS) to hedge bonds issued in local currency ($/UF), and Interest Rate Swaps (IRS) to hedge LIBOR rate debt issued.

The value of the Company’s assets and liabilities recognized by CCS contracts is calculated as the difference between the present value of discounted cash flows of the asset (pesos/UF) and liability (US$) parts of the derivative. In the case of the IRS, the asset value recognized is calculated as the difference between the discounted cash flows of the asset (variable rate) and liability (fixed rate) parts of the derivative. Forwards: Are calculated as the difference between the strike price of the contract and the spot price plus the forwards points at the date of the contract. Options: The value recognized is calculated using the Black-Scholes method.

In the case of CCS, the entry data used for the valuation models are UF, peso, and basis swap rates. In the case of fair value calculations for IRS, the FRA (Forward Rate Agreement) rate and ICVS 23 Curve (Bloomberg: cash/deposits rates, futures, swaps). In the case of forwards, the forwards curve for the currency in question is used. Finally, with options, the spot price, risk-free rate and volatility of exchange rate are used, all in accordance with the currencies used in each valuation. The financial information used as entry data for the Company’s valuation models is obtained from Bloomberg, the well-known financial software company. Conversely, the fair value provided by the counterparties of derivatives contracts is used only as a control and not for valuation.

The effects on profit or loss of movements in these amounts may be recognized in the caption Finance costs, foreign currency translation gain (loss) or cash flow hedges in the statement of comprehensive income, depending on each particular case.

The fair value measurement of debt is only performed to determine the present market value of secured and unsecured long-term obligations; bonds denominated in local currency (Ch$/UF) and foreign currency (US$), credits denominated in foreign currency (US$), which is classified under Level 2 in the fair value hierarchy established by IFRS.

The value of the Company’s reported liabilities is calculated as the present value of discounted cash flows at market rates at the time of valuation, taking into account the maturity date and exchange rate. The entry data used for the model includes the UF and peso rates, which are obtained using Bloomberg, the well-known financial software company and the ‘Asociación de Bancos e Instituciones Financieras’ (ABIF) (Association of Banks and Financial Institutions’).

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.9

Financial assets pledged as guarantee

On November 4, 2004, Isapre Norte Grande maintains a guarantee equivalent to the total amount owed to its members and healthcare providers, which is managed and maintained by Banco de Chile.

As of June 30, 2016 and December 31, 2015, assets pledged as guarantees are as follows:

Restricted cash	06/30/2016 ThUS$		12/31/2015 ThUS$
Isapre Norte Grande Ltda.		678		496
Total		678		496

10.10

Estimated fair value of financial instruments and financial derivatives

As required by IFRS 7, the following information is presented for the disclosure of the estimated fair value of financial assets and liabilities.

Although inputs represent Management's best estimate, they are subjective and involve significant estimates related to the current economic and market conditions, as well as risk features.

Methodologies and assumptions used depend on the risk terms and characteristics of instruments and include the following as a summary:

Cash equivalent approximates fair value due to the short-term maturities of these instruments.

The fair value of trade receivables, current is considered to be equal to the carrying amount due to the maturity of such accounts at short-term.

Other current financial liabilities are considered at fair value equal to their carrying values.

For interest-bearing liabilities with original maturity of more than a year, fair values are calculated at discounting contractual cash flows at their original current market with similar terms.

The fair value of debt is considered in Level 2.

For forward and swap contracts, fair value is determined using quoted market prices of financial instruments with similar characteristics.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.10

Estimated fair value of financial instruments and financial derivatives, continued

The detail of the Company’s instruments at carrying value and estimated fair value is as follows:

	06/30/2016				12/31/2015
	Carrying value		Fair value		Carrying value		Fair value
	ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		582,991		582,991		527,259		527,259
Current trade and other receivables		307,203		307,203		302,225		302,225
Receivables due from related parties, current		77,327		77,327		99,907		99,907
Other financial assets, current:
- Time deposits		221,491		221,491		617,267		617,267
- Derivative instruments		9,548		9,548		19,058		19,058
- Hedging assets		653		653		-		-
Total other current financial assets		231,692		231,692		636,325		636,325
Non-Current Trade Receivables		1,250		1,250		1,050		1,050
Other non-current financial assets:		2,741		2,741		486		486
Other non-current financial assets:		2,741		2,741		486		486
Other financial liabilities, current:
- Bank loans		158,011		158,011		178,183		178,183
- Derivative instruments		5,460		5,460		981		981
- Hedging liabilities		20,404		20,404		1,774		1,774
- Unsecured obligations		58,824		58,824		221,092		221,092
Other financial liabilities, current		242,699		242,699		402,030		402,030
Current and non-current accounts payable		129,232		129,232		136,840		136,840
Payables due to related parties, non-current		-		-		435		435
Other non-current financial liabilities:
- Bank loans		-		-		140,000		160,265
- Unsecured obligations		1,062,078		1,253,245		1,077,172		1,221,002
- Non-current hedging liabilities		35,142		35,142		73,031		73,031
Other non-current financial liabilities:		1,097,220		1,288,387		1,290,203		1,454,298

Fair value hierarchy

Fair value hierarchies are as follows:

Level 1: When only quoted (unadjusted) prices have been used in active markets.

Level 2: When in a phase in the valuation process variable other than prices quoted in Level 1 have been used which are directly observable in markets.

Level 3: When in a phase in the valuation process variable which are not based in observable market data have been used.

The valuation technique used to determine the fair value of our hedging instruments is that indicated for Level 2.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

100

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 10

Financial instruments (continued)

10.11

Nature and scope of risks arising from financing instruments

As indicated in paragraphs 33 to 42 of IFRS 7 the disclosure of information associated with the nature and scope of risks arising from financial instruments is presented in Note 4 - Financial Risk Management.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

101

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 11

Equity-accounted investees

11.1

Investments in associates recognized according to the equity method of accounting

As of June 30, 2016 and December 31, 2015, in accordance with criteria established in Note 3.19, investment in associates recognized according to the equity method of accounting and joint ventures are as follows:

Associates	Equity-accounted investees				Share on profit (loss) of associates and joint ventures accounted for using the equity method					Share on other comprehensive income of associates and joint ventures accounted for using the equity method, net of tax					Share on total other comprehensive income of associates and joint ventures accounted for using the equity method
	06/30/2016		12/31/2015		06/30/2016		12/31/2015			06/30/2016		12/31/2015			06/30/2016		12/31/2015
	ThUS$		ThUS$		ThUS$		ThUS$			ThUS$		ThUS$			ThUS$		ThUS$
Sales de Magnesio Ltda.		1,840		1,535		374		819			-		-			374		819
Abu Dhabi Fertilizer Industries WWL		12,641		11,766		744		1,455			-		455			744		1,910
Doktor Tarsa Tarim Sanayi AS		18,725		15,032		4,190		2,505			371		-			4,561		2,505
Ajay North America		13,691		12,913		1,965		3,600			-		-			1,965		3,600
Ajay Europe SARL		8,025		7,202		660		1,732			3		(21	)		663		1,711
SQM Eastmed Turkey		67		70		-		(4	)		-		-			-		(4	)
Charlee SQM Thailand Co. Ltd,		1,460		1,318		82		122			2		89			84		210
Total		56,449		49,836		8,015		10,229			376		523			8,391		10,751

	Description of the nature of the		Country of	Share of ownership in			Dividends received
Associate	Relationship	Domicile	incorporation	associates			06/30/2016		12/31/2015
							ThUS$		ThUS$

Sales de Magnesio Ltda.	Commercialization of magnesium salts.	El Trovador 4285, Las Condes	Chile		50	%		206		286
Abu Dhabi Fertilizer Industries WWL	Distribution and commercialization of specialty plant nutrients in the Middle East.	PO Box 71871, Abu Dhabi	United Arab Emirates		37	%		-		-
Doktor Tarsa Tarim Sanayi AS	Distribution and commercialization of specialty plant nutrients in Turkey.	Organize Sanayi Bolgesi, Ikinci Kisim, 22 cadde TR07100 Antalya	Turkey		50	%		-		-
Ajay North America	Production and distribution of iodine derivatives.	1400 Industry RD Power Springs GA 30129	United States		49	%		1.303		5,185
Ajay Europe SARL	Production and commercialization of iodine derivatives.	Z.I. du Grand Verger BP 227 53602 Evron Cedex	France		50	%		658		1,748
SQM Eastmed Turkey	Production and commercialization of specialty products.	Organize Sanayi Bolgesi, Ikinci Kisim, 22 cadde TR07100 Antalya	Turkey		50	%		-		-
Charlee SQM Thailand Co. Ltd.	Distribution and commercialization of specialty plant nutrients.	31 Soi 138 (Meesuk) LLapdrawrd, Bangkapi, 10240 Bangkok	Thailand		40	%		-		296

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

102

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 11

Equity-accounted investees (continued)

11.2

Assets, liabilities, revenue and expenses of associates

06/30/2016
											Gain (loss) from		Other
	Assets				Liabilities						continuing		comprehensive		Comprehensive
	Current		Non-current		Current		Non-current		Revenue		operations		income		income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Sales de Magnesio Ltda.		4,736		1,153		2,168		41		6,641		749		-		749
Abu Dhabi Fertilizer Industries WWL		35,555		2,337		3,729		-		22,208		2,010		-		2,010
Doktor Tarsa Tarim Sanayi AS		86,597		8,509		57,655		-		60,090		8,381		741		9,122
Ajay North America		20,566		10,847		3,471		-		19,791		4,010		-		4,010
Ajay Europe SARL		20,607		1,611		6,169		-		19,605		1,320		6		1,326
SQM Eastmed Turkey		924		360		26		1,125		-		-		-		-
Charlee SQM Thailand Co. Ltd.		7,400		551		4,299		-		5,786		205		6		211
Total		176,385		25,368		77,517		1,166		134,121		16,675		753		17,428

12/31/2015
											Gain (loss) from			Other
	Assets				Liabilities				Revenue		continuing operations			comprehensive income			Comprehensive income
	Current		Non-current		Current		Non-current
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$			ThUS$

Sales de Magnesio Ltda.		4,141		825		1,881		16		11,982		1,638			-			1,638
Abu Dhabi Fertilizer Industries WWL		33,770		2,529		4,499		-		46,609		3,932			1,230			5,162
Doktor Tarsa Tarim Sanayi AS		103,099		7,555		80,588		-		64,374		5,009			-			5,009
Ajay North America		18,651		10,619		2,917		-		43,453		7,347			-			7,347
Ajay Europe SARL		18,979		1,661		6,239		-		40,484		3,464			(42	)		3,422
SQM Eastmed Turkey		976		380		27		1,189		-		(8	)		-			(8	)
Charlee SQM Thailand Co. Ltd.		7,418		566		4,687		-		12,524		304			222			526
Total		187,034		24,135		100,838		1,205		219,516		21,686			1,410			23,096

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

103

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 11

Investment in Associates (continued)

11.3

Other information

The Company has no participation in unrecognized losses in investments in associates.

The Company presents no investments unaccounted for according to the equity method of accounting.

The equity method was applied to the Statement of Financial Position as of June 30, 2016 and December 31, 2015.

The basis of preparation of the financial information of associates corresponds to the amounts included in the financial statements in conformity with the entity’s IFRS.

Note 12

Joint Ventures

12.1

Policy for the accounting of equity accounted investment in joint ventures

The method for the recognition of joint ventures is that in which participation is initially recorded at cost, and subsequently adjusted, considering changes after the acquisition in the portion of the entity’s net assets of the entity which correspond to the investor. Profit or loss for the period of the investor will collect the portion which belongs to it in the results of the controlled entity as a whole.

12.2

Disclosures of interest in joint ventures

Operations conducted in 2016

On March 28, 2016, Sociedad Química y Minera de Chile S.A. entered into an agreement to enter a joint venture with Lithium Americas Corp to develop the Cauchari-Olaroz lithium project in Argentina.

SQM S.A. made a capital contribution of ThUS$25,000 in exchange for 50% of the ownership of Minera Exar S.A.

During May 2016, SQM Vitas Holland B.V. sold its interest in SQM Vitas Spain, to SQM Iberian S.A. resulting in the latter obtaining 100% in this transaction generating a loss of ThUS$ 104.

Operations conducted in 2015

During June 2015, SQM Vitas Fzco. sold the ownership it had in SQM Vitas Southern Africa Pty., generating a loss of ThUS$450.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

104

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 12

Joint Ventures (continued)

12.3

Investment in joint ventures accounted for under the equity method of accounting

			Country of	Share of interest			Dividends received
Joint venture	Description of the nature of the relationship	Domicile	incorporation	in ownership			06/30/2016		12/31/2015
							ThUS$		ThUS$
Sichuan SQM Migao Chemical Fertilizers Co. Ltda.	Production and distribution of soluble fertilizers.	Huangjing Road, Dawan Town, Qingbaijiang District, Chengdu Municipality, Sichuan Province	China		50	%		-		-
Coromandel SQM India	Production and distribution of potassium nitrate.	1-2-10, Sardar Patel Road, Secunderabad – 500003 Andhra Pradesh	India		50	%		-		-
SQM Vitas Fzco.	Production and commercialization of specialty plant and animal nutrition and industrial hygiene.	Jebel ALI Free Zone P.O. Box 18222, Dubai	United Arab Emirates		50	%		-		-
SQM Star Qingdao Corp Nutrition. Co. Ltd.	Production and distribution of nutrient plant solutions with specialties NPK soluble	Longquan Town, Jimo City, Qingdao Municipality, Shangdong Province	China		50	%		-		-
SQM Vitas Brazil Agroindustria	Production and commercialization of specialty plant and animal nutrition and industrial hygiene.	Via Cndeias, Km. 01 Sem Numero, Lote 4, Bairro Cia Norte, Candeias, Bahia.	Brazil		49.99	%		-		-
SQM Vitas Southern Africa Pty.	Production and commercialization of specialty plant and animal nutrition and industrial hygiene	33 Waterford Office Park Waterford Drive Fourways, 2055 South Africa	South Africa		50	%		-		-
SQM Vitas Peru S.A.C.	Production and commercialization of specialty plant and animal nutrition and industrial hygiene	Av. Juan de Arona 187, Torre B, Oficina 301-II, San Isidro, Lima	Peru		50	%		-		-
SQM Vitas Spain(1)	Production and commercialization of specialty plant nutrition	C/Manuel Echeverria Manzana 2 Muelle de la Cab ( Puerto Real )	Spain		50	%		-		-
SQM Vitas Holland B.V	Without information	Herikerbergweg 238, 1101 CM Amsterdam Zuidoost	Holland		50	%		-		-
SQM Vitas Plantacote B.V.	Production and commercialization of controlled-released fertilizers	Herikerbergweg 238, 1101 CM Amsterdam Zuidoost	Holland		50	%		-		-
Minera Exar S.A.	Exploration and exploitation of minerals, processing and trading of such minerals	Dr. Sabín 1082 Ciudad de Nieva – San Salvador de Jujuy- Jujuy- República Argentina	Argentina		50	%		-		-

(1)

During May 2016, SQM Vitas Holland B.V. sold its interest in SQM Vitas Spain, to SQM Iberian S.A. resulting in the latter obtaining 100% in this transaction generating a loss of ThUS$ 104.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

105

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 12

Joint Ventures (continued)

12.3

Investment in joint ventures accounted for under the equity method of accounting, continued:

Joint Venture	Equity-accounted investees				Share on profit (loss) of associates and joint ventures accounted for using the equity method						Share on other comprehensive income of associates and joint ventures accounted for using the equity method, net of tax					Share on total other comprehensive income of associates and joint ventures accounted for using the equity method
	06/30/2016		12/31/2015		06/30/2016			12/31/2015			06/30/2016		12/31/2015			06/30/2016			12/31/2015
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$		ThUS$			ThUS$			ThUS$

Sichuan SQM Migao Chemical Fertilizers Co. Ltd.		12,679		13,257		(672	)		(845	)		-		(12	)		(672	)		(857	)
Coromandel SQM India		974		962		-			88			-		-			-			88
SQM Vitas Fzco,		16,057		11,604		2,879			369			510		9,686			3,389			10,055
SQM Star Qingdao Corp. Nutrition Co. Ltd.		2,596		2,462		139			495			-		-			139			495
SQM Vitas Holland		1,388		1,181		235			(10	)		-		-			235			(11	)
Minera Exar S.A.		25,000		-		-						-		-			-			-
Total		58,694		29,466		2,581			97			510		9,674			3,091			9,770

Joint Venture	Equity-accounted investees				Share on profit (loss) of associates and joint ventures accounted for using the equity method						Share on other comprehensive income of associates and joint ventures accounted for using the equity method, net of tax				Share on total other comprehensive income of associates and joint ventures accounted for using the equity method
	06/30/2016		12/31/2015		06/30/2016			12/31/2015			06/30/2016		12/31/2015		06/30/2016			12/31/2015
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$		ThUS$		ThUS$			ThUS$

SQM Vitas Brazil Agroindustria(1)		8,746		3,722		4,000			(72	)		2,839		-		4,839			(36	)
SQM Vitas Peru S.A.C (1)		6,452		5,061		1,253			786			-		-		627			393
SQM Vitas Spain (2)		-		1,182		-			(251	)		-		-		-			109
SQM Vitas Plantacote B.V. (2)		721		3,598		(63	)		215			-		-		(32	)		(125	)
Total		15,919		13,563		5,190			678			2,839		-		5,434			341

The following companies are subsidiaries of

(1)

SQM Vitas Fzco.

(2)

SQM Vitas Holland

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

106

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 12

Joint Ventures (continued)

12.4

Assets, liabilities, revenue and expenses from joint ventures:

	06/30/2016
	Assets				Liabilities						Gain (loss) from continuing			Other comprehensive		Comprehensive
Joint Venture	Current		Non-current		Current		Non-current		Revenue		operations			income		income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$		ThUS$

Sichuan SQM Migao Chemical Fertilizers Co. Ltda.		51,510		7,659		33,810		-		10,310		(1,344	)		-		(1,344	)
Coromandel SQM India		3,320		924		2,226		70		-		-			-		-
SQM Vitas Fzco,		18,565		16,722		3,174		-		4,700		5,758			1,019		6,777
SQM Star Qingdao Corp. Nutrition Co. Ltd.		5,621		213		642		-		4,272		278			-		278
SQM Vitas Brazil Agroindustria		29,691		8,589		29,533		-		31,683		4,000			5,678		9,678
SQM Vitas Peru S.A.C		23,870		8,732		21,554		4,594		8,758		1,253			-		1,253
SQM Vitas Holland B.V		2,075		721		19		-		-		471			-		471
SQM Vitas Plantacote B.V.		763		-		42		-		-		(63	)		-		(63	)
Total		135,415		43,560		91,000		4,664		59,723		10,353			6,697		17,050

	12/31/2015
	Assets				Liabilities						Gain (loss) from continuing			Other comprehensive			Comprehensive
Joint Venture	Current		Non-current		Current		Non-current		Revenue		operations			income			income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$			ThUS$

Sichuan SQM Migao Chemical Fertilizers Co. Ltda.		56,053		8,023		37,563		-		65,929		(1,689	)		(24	)		(1,713	)
Coromandel SQM India		3,738		924		2,668		70		5,816		176			-			176
SQM Vitas Fzco.		14,096		10,575		1,464		-		17,893		738			19,371			20,109
SQM Star Qingdao Corp. Nutrition Co. Ltd.		5,100		202		377		-		10,539		990			-			990
SQM Vitas Brazil Agroindustria		32,449		6,638		35,365		-		67,870		(72	)		-			(72	)
SQM Vitas Peru S.A.C		24,432		6,562		25,933		-		45,739		786			-			786
SQM Vitas Spain		1,662		729		1,208		-		11,875		218			-			218
SQM Vitas Holland B.V		428		1,955		18		-		-		(21	)		-			(21	)
SQM Vitas Plantacote B.V.		802		-		30		-		-		(250	)		-			(250	)
Total		138,760		35,608		104,626		70		225,661		876			19,347			20,223

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

107

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 12

Joint Ventures (continued)

12.5

Other Joint Venture disclosures:

	Cash and cash equivalents				Other current financial liabilities				Other non-current financial liabilities
	06/30/2016		12/31/2015		06/30/2016		12/31/2015		06/30/2016		12/31/2015
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$$

Sichuan SQM Migao Chemical Fertilizers Co. Ltda.		6,198		737		13,727		13,955		-		-
Coromandel SQM India		63		63		1,027		1,027		-		-
SQM Vitas Fzco,		7,673		7,574		-		-		-		-
SQM Star Qingdao Corp. Nutrition Co. Ltd.		2,796		3,870		-		-		-		-
SQM Vitas Brazil Agroindustria		1,282		827		10,351		11,215		-		-
SQM Vitas Peru S.A.C.		159		160		-		-		-		-
SQM Vitas Spain		-		272		-		-		-		-
SQM Vitas Holland B.V		2,075		428		-		-		-		-
SQM Vitas Plantacote B.V.		763		802		-		-		-		-
Total		21,009		14,733		25,105		26,197		-		-

	Depreciation and amortization expense						Interest expense						Income tax expense, continuing operations
	06/30/2016			12/31/2015			06/30/2016			12/31/2015			06/30/2016			12/31/2015
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Sichuan SQM Migao Chemical Fertilizers Co. Ltda.		(344	)		(687	)		(2	)		(241	)		79			233
Coromandel SQM India		-			(69	)		-			(73	)		-			(89	)
SQM Vitas Fzco.		(269	)		(1,067	)		(5	)		(10	)		-			-
SQM Star Qingdao Corp. Nutrition Co. Ltd.		(31	)		(66	)		-			(2	)		(122	)		(378	)
SQM Vitas Brazil Agroindustria		(220	)		(29	)		(1,009	)		(1,651	)		(51	)		(49	)
SQM Vitas Peru S.A.C.		(16	)		(29	)		(1	)		-			(38	)		(370	)
SQM Vitas Spain		-			(116	)		-			(4	)		-			(73	)
SQM Vitas Holland B.V		-			-			-			(2	)		-			-
SQM Vitas Plantacote B.V.		-			-			-			(3	)		-			-
Total		(880	)		(2,063	)		(1.017	)		(1,986	)		(132	)		(726	)

The basis of preparation of the financial information of joint ventures corresponds to the amounts included in the financial statements in conformity with the entity’s IFRS.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

108

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 13

Intangible assets and goodwill

13.1

Balances

	06/30/2016		12/31/2015
	ThUS$		ThUS$
Intangible assets other than goodwill		108,970		110,428
Goodwill (1)		38,088		38,388
Total		147,058		148,816

(1)

The recoverable amount of the cash-generating unit has been determined based on a calculation of the value in use which used cash flow projections for a 5-year period.

The present value of the future cash flows generated by these assets has been estimated given a variance in sales volumes, market prices and costs, discounted at weighted average cost of capital (WACC).

13.2

Disclosures on intangible assets and goodwill

Intangible assets relate to goodwill, water rights, trademarks, industrial patents, rights of way, software, and mining claims which correspond to exploitation rights acquired from third-parties.

Balances and movements in the main classes of intangible assets as of June 30, 2016 and December 31, 2015 are detailed as follows:

		06/30/2016
Intangible assets and goodwill	Useful life	Gross amount ThUS$		Accumulated Amortization ThUS$			Net Value ThUS$

Software	Finite		23,258		(14,919	)		8,339
Intellectual property rights, patents and other industrial property rights, service	Finite		1,482		(1,005	)		477
Intellectual property rights, patents and other industrial property rights, service	Indefinite		96,503		-			96,503
Other intangible assets	Indefinite		3,651		-			3,651
Intangible assets other than goodwill			124,894		(15,924	)		108,970
Goodwill	Indefinite		38,088		-			38,088
Total intangible assets and goodwill			162,982		(15,924	)		147,058

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

109

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 13

Intangible assets and goodwill (continued)

13.2

Disclosures on intangible assets and goodwill, continued

		12/31/2015
Intangible assets and goodwill	Useful life	Gross amount ThUS$		Accumulated Amortization ThUS$			Net Value ThUS$

Trademarks	Finite		3,821		(3,821	)		-
Software	Finite		23,251		(13,438	)		9,813
Intellectual property rights, patents and other industrial property rights, service	Finite		1,448		(984	)		464
Intellectual property rights, patents and other industrial property rights, service	Indefinite		96,500		-			96,500
Other intangible assets	Indefinite		3,651		-			3,651
Intangible assets other than goodwill			128,671		(18,243	)		110,428
Goodwill	Indefinite		38,388		-			38,388
Total intangible assets and goodwill			167,059		(18,243	)		148,816

Estimated useful lives or amortization rates used for finite identifiable intangible assets

Finite useful life measures the lifetime or the number of productive units or other similar variables which constitute its useful life.

The estimated useful life for software is 3 and 6 years, for other finite useful life assets the period in which they are amortized relates to periods defined by contracts or rights which generate them.

Intellectual property rights, patents and other industrial property rights, service and exploitation rights, mainly relate to water rights and are obtained as indefinite.

Method used to express the amortization of identifiable intangible assets (life or rate)

The method used to express the amortization is useful life, and estimated tons to be extracted in the case of mining claims.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

110

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 13

Intangible assets and goodwill (continued)

13.2

Disclosures on intangible assets and goodwill, continued

Minimum and maximum amortization lives or rates of intangible assets:

Estimated useful lives or amortization rate	Minimum life or rate	Maximum life or rate

Intellectual property rights, patents and other industrial property rights, service and exploitation rights	Indefinite	Indefinite

Intangible assets other than goodwill	Indefinite	Indefinite

Intellectual property rights, patents and other industrial property rights, service and exploitation rights	1 year	16 years

Trademarks	1 year	5 years

Software	2 years	6 years

Information to be disclosed on assets generated internally

The Company has no intangible assets generated internally.

Other information to disclose on intangible assets

SQM has property rights and mining concessions of the Chilean Government, intended for the exploration and exploitation of saltpeter and brine. Such rights, have had no initial cost over registration costs, which are insignificant.

Also, SQM has acquired from third-parties other than the Chilean Government, mining concessions, which have been recognized at acquisition cost, which are amortized as the corresponding area is exploited based on the tons estimated to be extracted.

Expenses prior to obtaining the mining concessions are recognized in profit or loss for the year as incurred.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

111

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 13

Intangible assets and goodwill (continued)

13.2

Disclosures on intangible assets and goodwill, continued

Movements in identifiable intangible assets as of June 30, 2016:

Movements in identifiable intangible assets, gross	Trademarks			Software			Intellectual property rights, patents and other industrial property rights, service, rights of way		Intellectual property rights, patents and other industrial property rights, service, rights of way		Other intangible assets		Goodwill			Identifiable intangible assets
	ThUS$			ThUS$			ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
Opening balance		3,821			23,251			1,448		96,500		3,651		38,388			167,059
Additions		-			88			19		-		-		-			107
Other increases (decreases)		(3,821	)		(81	)		15		3		-		(300	)		(4,184	)

Final balance		-			23,258			1,482		96,503		3,651		38,088			162,982

Movements in identifiable intangible assets, accumulated amortization	Trademarks			Software			Intellectual property rights, patents and other industrial property rights, service, rights of way			Intellectual property rights, patents and other industrial property rights, service, rights of way		Other intangible assets		Goodwill		Identifiable intangible assets
	ThUS$			ThUS$			ThUS$			ThUS$		ThUS$		ThUS$		ThUS$
Opening balance		(3,821	)		(13,438	)		(984	)		-		-		-		(18,243	)
Additions		-			-			-			-		-		-		-
Amortization		-			(1,476	)		(20	)		-		-		-		(1,496	)
Other increases (decreases)		3,821			(5	)		(1	)		-		-		-		3,815

Final balance		-			(14,919	)		(1,005	)		-		-		-		(15,924	)

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

112

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 13

Intangible assets and goodwill (continued)

13.2

Disclosures on intangible assets and goodwill, continued

Movements in identifiable intangible assets as of June 30, 2016, continued

Movements in identifiable intangible assets, net	Trademarks		Software			Intellectual property rights, patents and other industrial property rights, service, rights of way			Intellectual property rights, patents and other industrial property rights, service rights of way		Other intangible assets		Goodwill			Identifiable intangible assets
	ThUS$		ThUS$			ThUS$			ThUS$		ThUS$		ThUS$			ThUS$
Opening balance		-		9,813			464			96,500		3,651		38,388			148,816
Additions		-		88			19			-		-		-			107
Amortization		-		(1,476	)		(20	)		-		-		-			(1,496	)
Other increases (decreases)		-		(86	)		14			3		-		(300	)		(369	)

Final balance		-		8,339			477			96,503		3,651		38,088			147,058

Movements in identifiable intangible assets as of December 31, 2015:

Movements in identifiable intangible assets, gross	Trademarks		Software		Intellectual property rights, patents and other industrial property rights, service, rights of way			Intellectual property rights, patents and other industrial property rights, service, rights of way			Other intangible assets			Goodwill		Identifiable intangible assets
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$		ThUS$
Opening balance		3,821		23,062		1,524			97,386			3,698			38,388		167,879
Additions		-		189		15			-			-			-		204
Other increases (decreases)		-		-		(91	)		(886	)		(47	)		-		(1,024	)

Final balance		3,821		23,251		1,448			96,500			3,651			38,388		167,059

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

113

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 13

Intangible assets and goodwill (continued)

13.2

Disclosures on intangible assets and goodwill, continued

Movements in identifiable intangible assets as of December 31, 2015:

Movements in identifiable intangible assets, accumulated amortization	Trademarks			Software			Intellectual property rights, patents and other industrial property rights, service, rights of way			Intellectual property rights, patents and other industrial property rights, service, rights of way		Other intangible assets		Goodwill		Identifiable intangible assets
	ThUS$			ThUS$			ThUS$			ThUS$		ThUS$		ThUS$		ThUS$
Opening balance		(3,821	)		(9,996	)		(939	)		-		-		-		(14,756	)
Additions		-			-			-			-		-		-		-
Amortization		-			(3,432	)		(45	)		-		-		-		(3,477	)
Other increases (decreases)		-			(10	)		-			-		-		-		(10	)

Final balance		(3,821	)		(13,438	)		(984	)		-		-		-		(18,243	)

Movements in identifiable intangible assets, net	Trademarks		Software			Intellectual property rights, patents and other industrial property rights, service rights of way			Intellectual property rights, patents and other industrial property rights, service rights of way			Other intangible assets			Goodwill		Identifiable intangible assets
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$
Opening balance		-		13,066			585			97,386			3,698			38,388		153,123
Additions		-		189			15			-			-			-		204
Amortization		-		(3,432	)		(45	)		-			-			-		(3,477	)
Other increases (decreases)		-		(10	)		(91	)		(886	)		(47	)		-		(1,034	)

Final balance		-		9,813			464			96,500			3,651			38,388		148,816

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

114

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 14

Property, plant and equipment

As of June 30, 2016 and December 31, 2015, the detail of property, plant and equipment is as follows:

14.1

Types of property, plant and equipment

Description of types of property, plant and equipment	06/30/2016 MUS$		12/31/2015 MUS$
Property, plant and equipment, net
Land		34,624		34,589
Buildings		119,031		128,375
Machinery		346,669		393,461
Transport equipment		15,756		14,766
Furniture and fixtures		6,996		8,516
Office equipment		5,895		6,168
Production plants		85,764		80,027
Mining assets		33,813		41,392
Constructions in progress		191,964		151,831
Other property, plant and equipment (1)		781,081		824,451
Total		1,621,593		1,683,576
Property, plant and equipment, gross
Land		34,624		34,589
Buildings		266,939		264,645
Machinery		1,216,175		1,211,927
Transport equipment		79,978		79,979
Furniture and fixtures		37,592		37,492
Office equipment		38,963		38,285
Production plants		185,687		171,769
Mining assets		228,240		228,240
Constructions in progress		191,964		151,831
Other property, plant and equipment		1,806,636		1,804,515
Total		4,086,798		4,023,272

Accumulated depreciation and value impairment of property, plant and equipment, total
Accumulated depreciation and impairment of buildings		147,908		136,270
Accumulated depreciation and impairment of machinery		869,506		818,466
Accumulated depreciation and impairment of transport equipment		64,222		65,213
Accumulated depreciation and impairment of furniture and fixtures		30,596		28,976
Accumulated depreciation and impairment of office equipment		33,068		32,117
Accumulated depreciation and impairment of production plants		99,923		91,742
Accumulated depreciation and impairment of mining assets		194,427		186,848
Accumulated depreciation and impairment of other property, plant and equipment		1,025,555		980,064
Total		2,465,205		2,339,696

(1)

The detail of other property, plant and equipment is as follows:

	06/30/2016 MUS$		31/12/2015 MUS$
Other property, plant and equipment, net
Conveyor belt		36,533		39,666
Tank (TK)		21,486		26,046
Geomembrane/liner		148,369		155,409
Electric facilities		50,400		56,600
Lights		1,451		2,252
Other constructions		112,600		109,478
Piping		15,368		17,174
Pool		152,602		160,869
Well (water)		40,991		44,432
Pipes/HD lines		119,448		131,431
Railroad track		15,222		11,001
Other property, plant and equipment		66,611		70,093
Total		781,081		824,451

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

115

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 14

Property, plant and equipment (continued)

14.2

Reconciliation of changes in property, plant and equipment by type:

Reconciliation entries of changes in property, plant and equipment by type as of June 30, 2016, gross	Land		Buildings		Machinery			Transport equipment			Furniture and fixtures			Office equipment			Production plants		Mining assets		Constructions in progress			Other property, plant and equipment			Property, plant and equipment
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$		ThUS$			ThUS$			ThUS$

Opening balance		34,589		264,645		1,211,927			79,979			37,492			38,285			171,769		228,240		151,831			1,804,515			4,023,272
Changes
Additions		-		-		464			-			-			423			-		-		73,653			155			74,695
Divestitures		-		-		(623	)		-			-			(1	)		-		-		(216	)		(181	)		(1,021	)
Increase(decrease) in foreign currency exchange		35		7		23			10			-			68			-		-		-			79			222
Reclassification		-		2,287		-			-			216			598			13,918		-		(21,134	)		4,115			-
Other increases (decreases) (*)		-		-		4,384			(11	)		(116	)		(410	)		-		-		(12,170	)		(2,047	)		(10,370	)
Total changes		35		2,294		4,248			(1	)		100			678			13,918		-		40,133			2,121			63,526
Final balance		34,624		266,939		1,216,175			79,978			37,592			38,963			185,687		228,240		191,964			1,806,636			4,086,798

Reconciliation entries of changes in property, plant and equipment by type as of June 30, 2016, Accumulated depreciation	Land		Buildings			Machinery			Transport equipment			Furniture and fixtures			Office equipment			Production plants			Mining assets			Constructions in progress		Other property, plant and equipment			Property, plant and equipment
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$			ThUS$

Opening balance		-		(136,270	)		(818,466	)		(65,213	)		(28,976	)		(32,117	)		(91,742	)		(186,848	)				(980,064	)		(2,339,696	)
Changes
Divestitures		-		-			230			-			-			-			-			-			-		-			230
Depreciation expense		-		(11,064	)		(44,866	)		(3,504	)		(1,585	)		(1,261	)		(8,184	)		(7,579	)		-		(42,967	)		(121,010	)
Increase(decrease) in foreign currency exchange		-		(12	)		-			(8	)		-			(33	)		-			-			-		(17	)		(70	)
Reclassification		-		-			(202	)		-			-			-			-			-			-		202			-
Other increases (decreases) (*)		-		(562	)		(6,202	)		4,503			(35	)		343			3			-			-		(2,709	)		(4,659	)
Total changes		-		(11,638	)		(51,040	)		991			(1,620	)		(951	)		(8,181	)		(7,579	)		-		(45,491	)		(125,509	)
Final balance		-		(147,908	)		(869,506	)		(64,222	)		(30,596	)		(33,068	)		(99,923	)		(194,427	)		-		(1,025,555	)		(2,465,205	)

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

116

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 14

Property, plant and equipment (continued)

14.2

Reconciliation of changes in property, plant and equipment by type, continued:

Reconciliation entries of changes in property, plant and equipment by type as of June 30, 2016, net	Land		Buildings			Machinery			Transport equipment			Furniture and fixtures			Office equipment			Production plants			Mining assets			Constructions in progress			Other property, plant and equipment			Property, plant and equipment
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Opening balance		34,589		128,375			393,461			14,766			8,516			6,168			80,027			41,392			151,831			824,451			1,683,576
Changes
Additions		-		-			464			-			-			423			-			-			73,653			155			74,695
Divestitures		-		-			(393	)		-			-			(1	)		-			-			(216	)		(181	)		(791	)
Depreciation expense		-		(11,064	)		(44,866	)		(3,504	)		(1,585	)		(1,261	)		(8,184	)		(7,579	)		-			(42,967	)		(121,010	)
Increase(decrease) in foreign currency exchange		35		(5	)		23			2			-			35			-			-			-			62			152
Reclassification		-		2,287			(202	)		-			216			598			13,918			-			(21,134	)		4,317			-
Other increases (decreases) (*)		-		(562	)		(1,818	)		4,492			(151	)		(67	)		3			-			(12,170	)		(4,756	)		(15,029	)
Total changes		35		(9,344	)		(46,792	)		990			(1,520	)		(273	)		5,737			(7,579	)		40,133			(43,370	)		(61,983	)
Final balance		34,624		119,031			346,669			15,756			6,996			5,895			85,764			33,813			191,964			781,081			1,621,593

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

117

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 14

Property, plant and equipment (continued)

14.2

Reconciliation of changes in property, plant and equipment by type, continued:

Reconciliation entries of changes in property, plant and equipment by type as of December 31, 2015, gross	Land			Buildings		Machinery			Transport equipment			Furniture and fixtures		Office equipment			Production plants		Mining assets			Constructions in progress			Other property, plant and equipment			Property, plant and equipment
	ThUS$			ThUS$		ThUS$			ThUS$			ThUS$		ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$

Opening balance		34,622			240,356		1,145,426			78,402			32,082		35,512			171,277		225,917			237,321			1,711,266			3,912,181
Changes
Additions		49			933		1,109			32			28		1,338			-		-			145,376			4,122			152,987
Divestitures		-			-		(13	)		(5	)		-		(1	)		-		-			(9,193	)		(369	)		(9,581	)
Increase(decrease) in foreign currency exchange		(82	)		-		(53	)		(23	)		-		(104	)		-		-			(1	)		(180	)		(443	)
Reclassification		-			23,355		68,187			3,742			5,382		1,585			491		2,324			(178,445	)		88,703			15,324
Other increases (decreases) (*)					1		(2,729	)		(2,169	)				(45	)		1		(1	)		(43,227	)		973			(47,196	)
Total changes		(33	)		24,289		66,501			1,577			5,410		2,773			492		2,323			(85,490	)		93,249			111,091
Final balance		34,589			264,645		1,211,927			79,979			37,492		38,285			171,7689		228,240			151,831			1,804,515			4,023,272

Reconciliation entries of changes in property, plant and equipment by type as of December 31, 2015, Accumulated depreciation	Land		Buildings			Machinery			Transport equipment			Furniture and fixtures			Office equipment			Production plants			Mining assets			Constructions in progress		Other property, plant and equipment			Property, plant and equipment
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$			ThUS$

Opening balance		-		(115,954	)		(791,878	)		(64,227	)		(23,066	)		(29,147	)		(62,504	)		(142,585	)		-		(794,866	)		(2,024,227	)
Changes
Divestitures		-		-			-			-			-			-			-			-			-		-			-
Depreciation expense		-		(13,945	)		(94,006	)		(15,575	)		(4,250	)		(3,051	)		(7,594	)		(15,236	)		-		(114,611	)		(268,268	)
Increase(decrease) in foreign currency exchange		-		1			-			16			-			66			-			-			-		30			113
Reclassification		-		(5,348	)		70,419			24,887			(433	)		2			(21,644	)		(29,027	)		-		(54,180	)		(15,324	)
Other increases (decreases) (*)		-		(1,024	)		(3,001	)		(10,314	)		(1,227	)		13									-		(16,437	)		(31,990	)
Total changes		-		(20,316	)		(26,588	)		(986	)		(5,910	)		(2,970	)		(29,238	)		(44,263	)		-		(185,198	)		(315,469	)
Final balance		-		(136,270	)		(818,466	)		(65,213	)		(28,976	)		(32,117	)		(91,742	)		(186,848	)		-		(980,064	)		(2,339,696	)

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

118

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 14

Property, plant and equipment (continued)

14.2

Reconciliation of changes in property, plant and equipment by type, continued:

Reconciliation entries of changes in property, plant and equipment by type as of December 31, 2015, net	Land			Buildings			Machinery			Transport equipment			Furniture and fixtures			Office equipment			Production plants			Mining assets			Constructions in progress			Other property, plant and equipment			Property, plant and equipment
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Opening balance		34,622			124,402			353,548			14,175			9,016			6,365			108,773			83,332			237,321			916,400			1,887,954
Changes
Additions		49			933			1,109			32			28			1,338			-			-			145,376			4,122			152,987
Divestitures		-			-			(13	)		(5	)		-			(1	)		-			-			(9,193	)		(369	)		(9,581	)
Depreciation expense		-			(13,945	)		(94,006	)		(15,575	)		(4,250	)		(3,051	)		(7,594	)		(15,236	)		-			(114,611	)		(268,268	)
Increase(decrease) in foreign currency exchange		(82	)		1			(53	)		(7	)		-			(38	)		-			-			(1	)		(150	)		(330	)
Reclassification		-			18,007			138,606			28,629			4,949			1,587			(21,153	)		(26,703	)		(178,445	)		34,523			-
Other increases (decreases) (*)		-			(1,023	)		(5,730	)		(12,483	)		(1,227	)		(32	)		1			(1	)		(43,227	)		(15,464	)		(79,186	)
Total changes		(33	)		3,973			39,913			591			(500	)		(197	)		(28,746	)		(41,940	)		(85,490	)		(91,949	)		(204,378	)
Final balance		34,589			128,375			393,461			14,766			8,516			6,168			80,027			41,392			151,831			824,451			1,683,576

(*) The net balance of other increases (decreases) corresponds to: 1) investment plan expenses which are expensed to profit or loss (forming part of cost of sales and other expenses per function, as appropriate), 2) the variation representing the purchase and use of materials and spare parts 3) projects corresponding mainly to exploration expenditures and stain development and 4) impairment costs associated with the closure of the operations in the Pedro de Valdivia site, which are recognized in the caption Other expenses per function. The impairment amounted to ThUS$ 36,823 (see Note 27.5 and Note 34).

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

119

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 14

Property, plant and equipment (continued)

14.3

Detail of property, plant and equipment pledged as guarantee

There are no restrictions in title or guarantees for the compliance with obligations which affect property, plant and equipment.

14.4

Additional information

Interest capitalized in construction-in-progress:

The amount capitalized for this concept amounted to ThUS$2,453 as of June 30, 2016 and ThUS$ 4,466 as of December 31, 2015.

Financing costs are not capitalized for periods which exceed the normal term of acquisition, construction or installation of the asset, such as the case of delays, interruptions or temporary suspension of the project due to technical, financial or other issues, which prevent that the asset is maintained in good conditions for its use.

14.5

Impairment of assets

As stated in Note 3.28, the recoverable amount of property, plant and equipment is measured whenever there is an indication that the asset may be impaired. As of June 30, 2016 and December 31, 2015, no impairment adjustments were generated, except for that indicated in Note 34.

Note 15

Employee benefits

15.1

Provisions for employee benefits

Classes of benefits and expenses by employee	06/30/2016		12/31/2015
	MUS$		MUS$
Current
Profit sharing and bonuses		7,980		13,445
Total		7,980		13,445

Non-current
Profit sharing and bonuses		-		-
Severance indemnity payments		22,188		21,995
Total		22,188		21,995

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

120

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 15

Employee benefits (continued)

15.2

Policies on defined benefit plan

This policy is applied to all benefits received for services provided by the Company's employees.

Short-term benefits for active employees are represented by salaries, social welfare benefits, paid time-off, sickness leaves and other leaves, profit sharing and incentives and non-monetary benefits; e.g., healthcare service, housing, subsidized or free goods or services. These will be paid in a term which does not exceed twelve months.

The Company only provides compensation and benefits to active employees, with the exemption of SQM North America which applies the definitions under 15.4 below.

SQM maintains incentive programs for its employees based on the personal performance, the Company’s performance and other short-term, mid-term and long-term indicators.

For each incentive bonus delivered to the Company’s employees, there will be a disbursement in the first quarter of the following year and this will be calculated based on profit for the period at the end of each period applying a factor obtained subsequent to the employee appraisal process.

Employee benefits include retention bonuses for the Company’s executives, which are linked to the Company’s share price and it is paid in cash. The short-term portion is presented as provision for current employee benefits and the long-term portion as non-current.

The bonus provided to the Company’s directors is calculated based on Profit for the period at each year-end and will consider the application of a percentage factor.

The benefit related to vacations (short-term benefits to employees, current), which is provided in the Labor Code which indicates that employees with more than a year of service will be entitled to annual holidays for a period not lower than fifteen paid business days. The Company provides the benefit of two additional vacation days.

Staff severance indemnities are agreed and payable based on the last salary for each year of service for the Company or with certain maximum limits in respect to the number of years to be considered or in respect to monetary terms. In general, this benefit is payable when the employee or worker ceases to provide his/her services to the Company and the right for its collection can be acquired because of different causes, as indicated in the respective agreements; e.g., retirement, dismissal, voluntary retirement, incapacity or disability, death, etc..

Law No. 19,728 published on May 14, 2001 which became effective on October 1, 2002 required “Compulsory Unemployment Insurance” in favor of all depending employees regulated by the Chilean Labor Code. Article 5 of this law provided the financing of this insurance through monthly contribution payments by both the employee and the employer.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

121

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 15

Employee benefits (continued)

15.3

Other long-term benefits

The other long-term benefits relate to staff severance indemnities and are recorded at their actuarial value.

Staff severance indemnities at actuarial value	06/30/2016		12/31/2015
	ThUS$		ThUS$
Staff severance indemnities, Chile		20,984		20,883
Other obligations in companies elsewhere		1,204		1,112
Total other non-current liabilities		22,188		21,995

Staff severance indemnities have been calculated under the actuarial assessment method of the Company’s obligations with respect to staff severance indemnities, which relate to defined benefit plans which consist of days of remuneration per year served at the time of retirement under conditions agreed in the respective agreements established between the Company and its employees.

Under this benefit plan, the Company retains the obligation for the payment of staff severance indemnities related to retirements, without establishing a separate fund with specific assets, which is referred to as not funded. The discount interest rate of expected flows to be used was 4.775%.

Benefit payment conditions

The staff severance indemnity benefit relates to remuneration days for year worked for the Company with no limit of salary or years of services for the Company, when employees cease to work for the Company due to turnover or death. In this case, the maximum age for men is 65 years and 60 years old for women, which are the usual ages for retirement due to achieving the senior citizen age according to the Chilean pensions system provided in Decree Law 3,500 of 1,980.

Methodology

The determination of the obligation for benefits under IAS 19 Projected Benefit Obligation (PBO) is described as follows:

To determine the Company's total liability, we used a mathematical simulation model which was programmed using a computer and which processed the situation of each employee on an individual basis.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

122

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 15

Employee benefits (continued)

15.3

Other long-term benefits, continued

This model considered months as discrete time; i.e., the Company determined the age of each person and his/her salary on a monthly basis according to the growth rate. Thus, information on each person was simulated from the beginning of the life of his/her employment contract or when he/she started earning benefits up to the month in which it reaches the normal retirement age, generating in each period the possible retirement according to the Company’s turnover rate and the mortality rate according to the age reached. When he/she reaches the retirement age, the employee finishes his/her service for the Company and receives indemnity related to retirement due to old age.

The methodology followed to determine the accrual for all the employees adhered to agreements has considered turnover rates and the mortality rate RV-2009 established by the Chilean Superintendence of Securities and Insurance to calculate pension-related life insurance reserves in Chile according to the Accumulated Benefit Valuation or Accrued Cost of Benefit Method. This methodology is established in IAS 19 on Retirement Benefit Costs.

15.4

Post-employment benefit obligations

Our subsidiary SQM North America, has established with its employees, a pension plan until 2002 called “SQM North America Retirement Income Plan”, whereby obligation is calculated measuring the expected future forecasted staff severance indemnity obligation using a net salary gradual rate of restatements for inflation, mortality and turnover assumptions discounting the resulting amounts at present value using the interest rate defined by the authorities.

Since 2003, SQM North America offers to its employee benefits related to pension plans based on the 401-K system, which do not generate obligations for the Company.

15.5

Staff severance indemnities

As of June 30, 2016 and December 31, 2015, severance indemnities calculated at the actuarial value are as follows:

	06/30/2016 ThUS$			12/31/2015 ThUS$
Opening balance		(21,995	)		(30,952	)
Current cost of service		(495	)		(898	)
Interest cost		(711	)		(1,588	)
Actuarial gain/loss		(462	)		1,242
Exchange rate difference		(1,466	)		3,582
Benefits paid during the year		2,941			6,619
Balance		(22,188	)		(21,995	)

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

123

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 15

Employee benefits (continued)

15.5

Staff severance indemnities, continued

Actuarial assumptions

The liability recorded for staff severance indemnity is valued at the actuarial value method, using the following actuarial assumptions:

	06/30/2016			12/31/2015

Mortality rate		RV - 2009			RV - 2009
Actual annual interest rate		4.775	%		4.89	%
Voluntary retirement rotation rate:
Men		7.16	%		7.16	%	annual
Women		7.16	%		7.16	%	annual
Salary increase		3.60	%		3.60	%	annual
Retirement age:
Men		65			65		years
Women		60			60		years

Sensitivity analysis of assumptions

As of June 30, 2016 and December 31, 2015, on the actuarial calculation, the Company has conducting the sensitivity analysis of the main assumptions, determining the following:

Sensitivity analysis 06/30/2016

Effect + 100 basis points

ThUS$

Effect - 100 basis points

ThUS$

Discount rate

(1,517

)

1,558

Employee turnover rate

(264

)

157

Sensitivity analysis 12/31/2015

Effect + 100 basis points

ThUS$

Effect - 100 basis points

ThUS$

Discount rate

(1,437

)

1,607

Employee turnover rate

(250

)

148

Sensitivity relates to an increase/decrease of 100 basis points.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

124

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 16

Executive compensation plan

Through the present date, the Company has a compensation plan with the purpose of encouraging the Company’s executives and encourage them to stay in the Company, by granting payments based on the change in price of SQM’s shares.

Average Share Price Spread

Plan characteristics

This compensation plan is related to the Company’s performance through the SQM Series B share price (Santiago Stock Exchange).

Plan participants

This compensation plan includes 21 of the Company’s executives, who obtain this benefit, provided they remain in the Company at the payment dates. Payment dates, if applicable, will be in the first weeks of January 2016, 2017 and 2018.

Compensation

The compensation for each executive is the differential between the average share price during each of the months of December 2015, December 2016 and December 2017, respectively, in its equivalent in US dollars and the reference prices, of US$23.48 and the average weighted price of the trading of SQM Series B shares in the Santiago Stock Exchange during December 2014. The differential cannot exceed US$15.00 and will be multiplied by 5,000. If the amount calculated is negative or zero, no bonus will be paid during that period, but in such case, the bond of benefit payable in the following period to the employee will be equal to the product of multiplying the difference by 10,000. If the value was negative or zero in December 2015 and also in December 2016, for calculating the bond of December 2017, the differential will be multiplied by 15,000.

The movement of the options in effect for the period, the average prices for the fiscal year of the options and the average contractual life of the options in effect as of June 30, 2016 and December 31, 2015 are the following:

Movement for the period	2016			2015
In effect as of January 1		405,000			390,000
Redundant workers		(15,000	)		(45,000	)
Granted during the fiscal year		-			60,000
In circulation		390,000			405,000
Average weighted contractual life		18 months			24 months
Executives		21			24

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

125

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 17

Disclosures on equity

The detail and movements in the funds of equity accounts are shown in the consolidated statement of changes in equity.

17.1

Capital management

The main object of capital management relative to the administration of the Company’s financial debt and equity is to ensure the regular conduct of operations and business continuity in the long term, with the constant intention of maintaining an adequate level of liquidity and in compliance with the financial safeguards established in the debt contracts in force. Within this framework, decisions are made in order to maximize the value of SQM.

Capital management must comply with, among others, the limits contemplated in the Financing Policy approved Board of Directors, which establish a maximum consolidated indebtedness level of 1.5 times the debt/equity. This limit can be exceeded only if the Company’s management has a written and previously granted authorization issued at the Extraordinary Shareholders’ Meeting.

In addition, capital management must comply with the external capital requirements imposed (or covenants) in its financial obligations, which regulate the indebtedness level by 1.2 times, in its more strict level.

In conjunction with the level of indebtedness, it is also important for the Company to maintain a comfortable profile of maturities for its financial obligations, in order to oversee the relation between its short-term financial obligations and the long-term maturities, and the relation they have with the Company’s asset distribution. Consequently, the Company has maintained a liquidity level of 3 times during the last periods.

The Company’s management controls capital management based on the following ratios:

CAPITAL MANAGEMENT	06/30/2016			12/31/2015			Description (1)	Calculation (1)
Net Financial Debt MUS$		525,307			528,649		Financial Debt – Financial Resources	Other current Financial Liabilities + Other Non-Current Financial Liabilities – Cash and Cash Equivalents – Other Current Financial Assets – Hedging Assets, non-current
Liquidity		4,07			3.84		Current Asset divided by Current Liability	Total Current Assets / Total Current Liabilities
Net Debt / Capitalization		0.18			0.18		Net Financial Debt divided by Total Equity	Net financial debt / ( Net financial debt + Total Equity)
ROE		8.8	%		9.1	%	Income divided by Total Equity	Total Income / Equity (UH 12 months)
ROA		12.8	%		13.4	%	EBITDA – Depreciation divided by Net Total Assets of financial resources less related parties investments	(Gross Income – Administrative Expenses)/ (Total Assets – Cash and Cash Equivalents – Other Current Financial Assets – Other Non-Current Financial Assets – Equity-accounted Investees) (UH 12 months)
Indebtedness		0.83			0.93		Total Liability on Equity	Total Liabilities / Total Equity

(1)

Assumes the absolute value of the accounting records

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

126

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 17

Disclosures on equity (continued)

17.1

Capital management, continued

The Company’s capital requirements change depending on variables such as work capital requirements, of new investment financing and dividends, among others. The Company manages its capital structure and makes adjustments on the basis of the predominant economic conditions so as to mitigate the risks associated with adverse market conditions and take advantage of the opportunities there may be to improve the liquidity position.

There have been no changes in the capital management objectives or policy within the years reported in this document. No breaches of external requirements of capital imposed (or covenants) have been recorded.

17.2

Disclosures on preferred share capital

Issued share capital is divided into 263,196,524 fully paid and subscribed shares with no par value composed of 142,819,552 Series "A" shares and 120,376,972 Series “B” shares, where both series are preferred shares.

The preferential voting rights for each series are detailed as follows:

Series “A”:

If the election of the Company’s President results in a tie vote, the Company's directors may vote once again, without the vote of the director elected by the Series B shareholders.

Series “B”:

A general or extraordinary shareholders' meeting may be called at the request of shareholders representing 5% of the Company's Series B shares.

An extraordinary meeting of the Board of Directors may be called with or without the agreement of the Company's President, at the request of the director elected by Series B shareholders.

As of June 30, 2016 and December 31, 2015, the Group does not maintain shares in the parent either directly or through its companies in which it has investments.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

127

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 17

Disclosures on equity (continued)

17.2

Disclosures on preferred share capital, continued

Detail of types of capital in preference shares:

Type of capital in preferred shares	06/30/2016				12/31/2015
Description of type of capital in
preferred shares	Series A		Series B		Series A		Series B
Number of authorized shares		142,819,552		120,376,972		142,819,552		120,376,972
Number of fully subscribed and paid shares		142,819,552		120,376,972		142,819,552		120,376,972
Number of subscribed, partially paid shares		-		-		-		-
Par value of shares in ThUS$		0.9435		2.8464		0.9435		2.8464
Increase (decrease) in the number of current shares		-		-		-		-
Number of current shares		142,819,552		120,376,972		142,819,552		120,376,972
Number of shares owned by the entity or its subsidiaries or associates		-		-		-		-
Number of shares whose issuance is reserved due to the existence of options or agreements to dispose shares		-		-		-		-
Capital amount in shares ThUS$		134,750		342,636		134,750		342,636
Amount of premium issuance ThUS$		-		-		-		-
Amount of reserves ThUS$		-		-		-		-
Total number of subscribed shares, total		142,819,552		120,376,972		142,819,552		120,376,972

As of June 30, 2016 and December 31, 2015, the Company has not placed any new issuances of shares on the market.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

128

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 17

Disclosures on equity (continued)

17.3

Disclosures on reserves in equity

As of June 30, 2016 and December 31, 2015, this caption comprises the following:

	06/30/2016			12/31/2015
	ThUS$			ThUS$
Reserve for currency exchange conversion		(13,586	)		(14,035	)
Reserve for cash flow hedges		(1,910	)		(1,699	)
Reserve for actuarial gains or losses in defined benefit plans		(3,178	)		(2,386	)
Other reserves		(847	)		(1,677	)
Total other reserves		(19,521	)		(19,797	)

Reserves for currency exchange conversion

This balance reflects retained earnings for changes in the exchange rate when converting financial statements of subsidiaries whose functional currency is from each company’s origin country and the presentation currency is the US dollar.

Reserve for cash flow hedges

The Company maintains, as hedge instruments, financial derivatives related to obligations with the public issued in UF and Chilean pesos. Changes from the fair value of derivatives designated and classified as hedges are recognized under this classification.

Reserve for actuarial gains or losses in defined benefit plans

For the domestic subsidiaries the effects of changes in assumptions are considered, mainly changes in the discount rate.

The subsidiary SQM North America has established pension plans for its retired employees that are calculated by measuring the projected obligation of IAS using a net salary progressive rate net of adjustments to inflation, mortality and turnover assumptions, deducting the resulting amounts at present value using a 5.5% interest rate for 2016 and 2015.

Other reserves

Corresponds to the acquisition of the subsidiary SQM Iberian S.A., which was already under ownership of the Company at the acquisition date (IAS 27 R).

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

129

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 17

Disclosures on equity (continued)

17.4

Dividend policies

As required by Article 79 of the Chilean Companies Act, unless otherwise decided by unanimous vote of the holders of issued and subscribed shares, we must distribute a cash dividend in an amount equal to at least 30% of our consolidated Profit for the period for year ended as of December 31, unless and except to the extent it has a deficit in retained earnings (losses not absorbed in prior years).

The Company’s dividend policy for 2016 is as follows:

Distribution and payment in favor of each shareholder of a final dividend which will be equivalent to 50% of Profit for the period obtained in 2016.

Distribution and payment, if possible during 2016, of a provisional dividend which will be recorded against the aforementioned final dividend. This provisional dividend will be paid probably during the last quarter of 2016 and its amount could not exceed 50% of the retained earnings for distribution obtained during 2016, which are reflected in the Company’s financial statements as of September 30, 2016.

The distribution and payment by the Company of the remaining balance of the final dividend related to Profit for the period for the 2016 commercial year in up to two installments, which will have to be effectively paid and distributed prior to June 30, 2017.

An amount equivalent to the remaining 50% of the Company’s Profit for the period for 2016 will be retained and destined to the financing of operations of one or more of the Company’s investment projects with no prejudice of the possible future capitalization of the entirety or a portion of this.

The Board of Directors does not consider the payment of any additional dividends.

The Board of Directors does not consider the payment of any interim dividends

The Board of Directors considers as necessary to indicate that the aforementioned dividends policy corresponds to the intention or expectation of the Board regarding this matter. Consequently, the enforcement of such dividends policy is necessarily conditioned to net incomes finally obtained, to the results indicating the Company’s regular forecasts or the existence of certain conditions that could affect them. Notwithstanding the above and to the extent that such policy dividend does not suffer a significant change, SQM S.A. will timely communicate its shareholders on this matter.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

130

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 17 -

Disclosures on equity (continued)

17.5

Provisional dividends

On November 17, 2015, the Company reported to the Chilean Superintendence of Securities and Insurance that the Company’s Board of Directors at the Ordinary meeting held today agreed to approve that the Company pays and distributes the provisional dividend referred to in the “Dividend Policy of SQM S.A. for Commercial Year 2015”, which was reported at the Shareholders’ Annual Ordinary Meeting held on April 24, 2015.

Consequently, SQM will pay and distribute, starting on December 10, 2015, a provisional dividend of US$0.31915 per share that is equivalent to a total of approximately US$84,000,000 or 49.82889% of net profit for distribution for commercial year 2015, accumulated as of December 31, 2015. This will be made with a charge to profit for such commercial year in favor of the Shareholders registered with the Company’s Shareholders’ Register on the fifth business day prior to December 10, 2015 and in its equivalent amount in Chilean pesos converted at the “Observed U.S. dollar” or “U.S. dollar” exchange rate as published in the Official Gazette of December 3, 2015.

At the Fortieth General Ordinary Shareholders’ Meeting of April 24, 2015, the shareholders approved the payment of a final dividend of US$ 0.56304 per share from profit for the year 2014. Such final dividend amount is to be discounted the provisional dividend of US$ 0.41493 per share already paid. Accordingly, the remaining balance of US$ 0.14811 per share shall be paid and distributed in favor of the Company’s shareholders who are registered with the related Shareholders’ Record on the fifth business day prior to the day in which such dividend will be paid. Such amount, if applicable, will be paid in Chilean pesos in accordance with the “Observed U.S. dollar exchange rate” or “U.S. dollar exchange rate” as published in the Official Gazette on April 24, 2015.

Dividends presented deducted from equity are:

	06/30/2016 ThUS$		12/31/2015 ThUS$
Dividends attributable to owners of the parent		1,243		85,945
Contingent dividend		150,000		-
Dividends payable		70,895		23,887
Total		222,138		109,832

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

131

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 18

Provisions and other non-financial liabilities

18.1

Types of provisions

	06/30/2016						12/31/2015
	Current		Non- current		Total		Current		Non- current		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Provision for legal complaints (*)		18,067		3,000		21,067		18,067		3,000		21,067
Provision for dismantling, restoration and rehabilitation cost (**)		-		5,890		5,890		-		5,890		5,890
Other provisions		15,083		-		15,083		13,445		-		13,445
Total		33,150		8,890		42,040		31,512		8,890		40,402

(*) Provisions for legal complaints relate to legal expenses for lawsuits whose resolution are pending, and correspond to funds estimated necessary to make the disbursement of expenses incurred for this purpose. This provision relates mainly to the litigation of its subsidiary located in Chile, Brazil and the United States (see note 19.1).

(**) Such provision is calculated considering the instructions issued by the regulating agency (Servicio Nacional de Geología y Minería de Chile, Sernageomin (The Chilean National Geology and Mining Service).

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

132

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 18

Provisions and other non-financial liabilities (continued)

18.2

Description of other provisions

Current provisions, other short-term provisions	06/30/2016		12/31/2015
	ThUS$		ThUS$
Provision for tax loss in fiscal litigation		742		610
Royalties, agreement with CORFO (the Chilean Economic Development Agency)		9,703		6,310
Provision for additional tax related to foreign loans		555		524
Provision for article No. 21 one-off tax, fines and value-added tax		-		1,449
Miscellaneous provisions		4,083		4,552
Total		15,083		13,445
Other long-term provisions
Mine closure		5,890		5,890
Total		5,890		5,890

18.3

Other non-financial liabilities, current

Description of other liabilities	06/30/2016		12/31/2015
	ThUS$		ThUS$
Tax withholdings		901		5,946
VAT payable		1,800		6,677
Guarantees received		748		748
Accrual for dividend		70,894		23,887
Monthly tax provisional payments		6,389		5,985
Deferred income		16,670		9,764
Withholdings from employees and salaries payable		4,900		3,459
Accrued vacations		14,016		13,171
Other current liabilities		237		329
Total		116,555		69,966

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

133

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 18

Provisions and other non-financial liabilities (continued)

18.4

Changes in provisions

	06/30/2016
Description of items that gave rise to variations	Guarantee		Restructuring		Legal complaints		Onerous contracts		Provision for dismantling, restoration and rehabilitation cost		Other provisions			Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$

Total provisions, initial balance		-		-		21,067		-		5,890		13,445			40,402
Changes in provisions:
Additional provisions		-		-		-		-		-		7,471			7,471
Provision used		-		-		-		-		-		(5,937	)		(5,937	)
Increase(decrease) in foreign currency exchange		-		-		-		-		-		104			104
Total provisions, final balance		-		-		21,067		-		5,890		15,083			42,040

	12/31/2015
Description of items that gave rise to variations	Guarantee		Restructuring (*)			Legal complaints			Onerous contracts		Provision for dismantling, restoration and rehabilitation cost		Other provisions			Total
	ThUS$		ThUS$			ThUS$			ThUS$		ThUS$		ThUS$			ThUS$

Total provisions, initial balance		-		-			22,567			-		5,890		8,180			36,637
Changes in provisions:
Additional provisions		-		16,327			8,500			-		-		14,733			39,560
Provision used		-		(16,327	)		(10,000	)		-		-		(9,111	)		(35,438	)
Increase(decrease) in foreign currency exchange		-		-			-			-		-		(357	)		(357	)
Total provisions, final balance		-		-			21,067			-		5,890		13,445			40,402

(*) Provisions relating to restructuring in 2015 are related to the closure of the Pedro de Valdivia site. See Note 34.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

134

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 18

Provisions and other non-financial liabilities (continued)

18.5

Detail of main types of provisions

Legal expenses: This provision depends on the pending resolution of a legal lawsuit, to pay the expenses associated to and incurred during such lawsuit (incurred mainly in Brazil, Chile and the United States).

Tax accrual in tax litigation: This accrual relates to lawsuits pending resolution related to taxes in Brazil for two of our subsidiaries, SQM Brazil and NNC.

CORFO (Economic Development Agency) Royalties agreement: Relates to the commercialization of mining properties that SQM Salar S.A. pays the Economic Development Agency for on a quarterly basis. The amount of the lease payable is calculated based on sales of products extracted from the Atacama Saltpeter deposit.

The settlement of the aforementioned amounts is performed on a quarterly basis.

To date, the Company and its subsidiaries have no significant uncertainties about the timing and amount of one class of provision.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

135

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions

According to note 18.1 the Company has only registered a provision for the lawsuits in which the probability that judgments are unfavorable for the Company is more likely than not. The Company is party to lawsuits and other relevant legal actions that are detailed as follows:

19.1

Lawsuits and other relevant events

1.	Plaintiff	:	Nancy Erika Urra Muñoz.
	Defendants	:	Fresia Flores Zamorano, Duratec-Vinilit S.A. and SQM S.A. and their Insurers.
	Date	:	December 2008.
	Court	:	1st Civil Court of Santiago.
	Reason	:	Labor Accident.
	Status	:	Subpoena to hear the verdict.
	Nominal value	:	ThUS$550.

2.	Plaintiff	:	City of Pomona, California USA.
	Defendant	:	SQM North America Corporation.
	Date	:	December 2010.
	Court	:	United States District Court Central District of California.
	Reason	:	Payment of expenses and other amount related to the treatment of groundwater to allow for consumption by removing the existing perchlorate in such groundwater and that supposedly come from Chilean fertilizer.
	Status	:	The Jury rejected the lawsuit. The plaintiff files an appeal, the resolution of which is pending.
	Nominal value	:	ThUS$32,000.

3.	Plaintiff	:	City of Lindsay, California USA.
	Defendant	:	SQM North America Corporation The lawsuit also was filed against Sociedad Química y Minera de Chile S.A. this lawsuit has not yet been notified to the Company.
	Date	:	December 2010.
	Court	:	United States District Court Eastern District of California.
	Reason	:	Payment of expenses and other amount related to the treatment of groundwater to allow for consumption by removing the existing perchlorate in such groundwater and that supposedly come from Chilean fertilizer.
	Status	:	Claim. Processing suspended.
	Nominal value	:	Not possible to determine.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

136

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.1

Lawsuits and other relevant events, continued

4.	Plaintiff	:	H&V Van Mele N.V.
	Defendant	:	SQM Europe N.V. and its insurance companies.
	Date	:	July 2013.
	Court	:	Commercial Court.
	Reason	:	Alleged indirect responsibility for the absence of adequate specification for the SOP–WS by the Belgian distributor.
	Status	:	Evidence.
	Nominal value	:	ThUS$430.

5.	Plaintiff	:	Carlos Aravena Carrizo et al.
	Defendant	:	SQM Nitratos S.A. and its insurers.
	Date	:	May 2014.
	Court	:	18th Civil Court of Santiago.
	Reason	:	Compensation claim for alleged civil liability under tort as a result of an explosion that occurred on September 6, 2010 near Baquedano, causing the death of 6 workers. Transactions performed with the families of five of such workers.
	Status	:	Evidence.
	Nominal value	:	ThUS$500.

6.	Plaintiff	:	Corporación de Fomento de la Producción (CORFO).
	Defendant	:	SQM Salar S.A. and Sociedad Química y Minera de Chile S.A.
	Date	:	May 2014.
	Court	:	Arbitration court.
	Reason	:	Early termination of lease agreement entered into on November 12, 1993 maturing on December, 2030 -i- because of alleged noncompliance of the full payment of quarterly income related to certain products between 2009-2013 and -ii- and alleged lack of demarcation of certain mining properties owned by CORFO for which a demarcation was never required in such agreement, and in addition, compensation for damages, among other matters.
	Status	:	Evidence.
	Nominal value	:	ThUS$9,000.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

137

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.1

Lawsuits and other relevant events, continued

7.	Plaintiff	:	CORFO
	Defendants	:	SQM Salar S.A, SQM Potasio S.A. and SQM S.A.
	Date	:	August 2016.
	Court	:	Arbitration Court- Arbitrator Mr. Héctor Humeres.
	Reason	:	Project early termination entered on November 12, 1993 and other related contracts among other matters involving compensation for damages.
	Status	:	Demand filed.
	Nominal value	:	Not determined.

8.	Plaintiff	:	SQM Salar S.A and SQM S.A.
	Defendant	:	CORFO
	Date	:	Not determined.
	Court	:	Arbitration Court - Arbitrator Mr. Héctor Humeres.
	Reason	:	Complaint for declaratory relief for the determination of whether the income from the lease paid by SQM Salar S.A. under the Lease Contract entered into on November 12, 1993, has been consistent with the agreement by the parties and the income formula as applied and has been useful for CORFO.
	Status	:	Constitution of the arbitration proceeding where the establishment of the Rules of procedure is pending.
	Nominal value	:	Not yet defined.

9.	Plaintiff	:	Evt Consulting SpA.
	Defendant	:	SQM Nitratos S.A.
	Date	:	October 2014.
	Court	:	23th Civil Court of Santiago.
	Reason	:	Lawsuit seeking compensation for damages related to the termination of the purchase and sale agreement for metallic structures.
	Status	:	Evidence.
	Nominal value	:	ThUS$ 835.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

138

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.1

Lawsuits and other relevant events, continued

10.	Plaintiff	:	Hugo Gutiérrez Gálvez.
	Defendant	:	Sociedad Química y Minera de Chile S.A. et al and Senators Jaime Orpis B. and Fulvio Rossi C.
	Date	:	July 2015.
	Court	:	8 ^th Supervisory Court in Preliminary Proceedings of Santiago, Chile
	Reason	:	Alleged extortion–bribery and money laundering under Law No. 20.393 on the Legal Responsibility of Juridical Persons and other standards.
	Status	:	Initial filing.
	Nominal value	:	None.

11.	Plaintiff	:	Patricio Contesse G.
	Defendant	:	SQM S.A.
	Date	:	September 2015.
	Court	:	First Labor Court of Santiago.
	Reason	:	Seeking the payment of severance indemnities and other employment termination benefits.
	Status	:	Appeal
	Nominal value	:	ThUS$5,665.

12.	Plaintiff	:	SQMS
	Defendant	:	RSA Seguros Chile S.A.
	Date	:	In August 2016.
	Court	:	Arbitration Court – Arbitrator Mr. Gonzalo Fernández.
	Reason	:	Complaint for forced compliance and collection of indemnification for insurance claim of February 7 and 8, 2013.
	Status	:	Arbitration proceeding constituted. The complaint will be presented in the near future.
	Nominal value	:	US$ 20,657,860.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

139

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.1

Lawsuits and other relevant events, continued

13.	Plaintiff	:	Tyne and Wear Pension Fund as represented by the Council of the Borough of South Tyneside acting as Lead Plaintiff – Class Action – Class Period.
	Defendant	:	Sociedad Química y Minera de Chile S.A.
	Date	:	January 2016.
	Court	:	United States District Court – Southern District of New York.
	Reason	:	Class Actions – Class Period. SQM would have not reported properly to the US Securities and Exchange Commission on certain expenses made during certain years which could be associated with alleged contributions to politicians. Such expenses would not have the related supporting documentation for being substantiated as necessary to generate income and this would have generated the intervention by several Chilean Government authorities – the Chilean Superintendence of Securities and Insurance (SVS), the Chilean Internal Revenue Service and Public Ministry – and the decrease of the value of the shares –ADS’s of SQM owned by the plaintiffs.
	Status	:	Filing of the class action.
	Nominal value	:	Not determined.

The Company and its subsidiaries have been involved and will probably continue to be involved either as plaintiffs or defendants in certain judicial proceedings that have been and will be heard by the Arbitration or Ordinary Courts of Justice that will make the final decision. Those proceedings that are regulated by the appropriate legal regulations are intended to exercise or oppose certain actions or exceptions related to certain mining claims either granted or to be granted and that do not or will not affect in an essential manner the development of the Company and its subsidiaries.

Soquimich Comercial S.A. has been involved and will probably continue being involved either as plaintiff or defendant in certain judicial proceedings through which it intends to collect and receive the amounts owed, the total nominal value of which is approximately ThUS$700.

The Company has made efforts and continues making efforts to obtain payment of certain amounts that are still owed it on occasion of their activities. Such amounts will continue to be required using judicial or non-judicial means by the plaintiffs, and the actions and exercise related to these are currently in full force and effect.

The Company and its subsidiaries have not received legal notice of any claims other than those mentioned in paragraph I above. The claims detailed above seek to annul certain mining claims that were purchased by SQM S.A. and Subsidiaries, the proportional purchase value of which, with respect to the portion affected by the superimposition, exceeds the nominal and approximate amount of ThUS$150. The claims seek payment of certain amounts allegedly owed by the Company due to its own activities, which exceed the approximate, nominal and individual amount of ThUS$150.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

140

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.2

Restrictions to management or financial limits

Credit contracts subscribed by the SQM Group with domestic and foreign banks and the issuance of bonuses in the local and international market require that the Company comply with the following level of consolidated financial indicators, calculated for a moving period which considers the last twelve months:

To maintain a minimum equity of ThUS$1,000,000.

To maintain a Net Financial Debt and EBITDA ratio not higher than 3 times.

To maintain a Total Indebtedness Ratio not higher than 1.2 times Total Indebtedness level defined as the Total Liabilities ratio divided by Total Equity.

To maintain a ratio between the operating subsidiaries SQM Industrial S.A. and SQM Salar S.A., or their respective legal successor financial debt and the total Issuer’s consolidated current assets not higher than 0.3 times.

As of June 30, 2016, the aforementioned financial indicators are as follows:

Indicator	06/30/2016		12/31/2015
Equity ThUS$		2,320,905		2,400,356
Net Financial Debt/ EBITDA		0.77		0.73
Indebtedness		0.83		0.93
SQM Industrial and SQM Salar debt / Current assets		0.02		0.01

Issuance contracts for bonuses issued abroad does not require that the Company merge or dispose at any title the asset as a whole or as a substantial part of it, unless the following copulative conditions are met: (i) the legal successor company is an entity subject to Chilean or American laws, and assumes under a complimentary contract the Company’s obligations, (ii) the Issuer does not fail to comply immediately after the merge or disposal, and (iii) the Issuer delivers a legal opinion stating the merge or disposal and the complimentary contract meet the requirements described in the original contract.

In addition, SQM S.A. is committed to disclose financial information on quarterly basis.

The Company and its subsidiaries have complied and are fully complying with all aforementioned limitations, restrictions and obligations.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

141

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.3

Commitments

The subsidiary SQM Salar S.A. has signed a rental contract with the Economic Development Agency (CORFO), which establishes that the subsidiary will pay rent to CORFO for the concept of commercialization of certain mining properties owned by CORFO and for the products resulting from the commercialization. The annual rent stated in the aforementioned contract is calculated on the basis of sales of each type of product. The contract is in force until 2030, and rent began being paid in 1996 reflecting an expense amount of ThUS$ 18,058 as of June 30, 2016 (ThUS$ 23,155 as of December 31, 2015).

On 15 November 2013, Corporación de Fomento de la Producción (CORFO) sent a letter to SQM Salar S.A. (SQMS) stating its intention to a) collect the amount of Ch$2,530,298,919 (ThUS$4,823) that in CORFO’s opinion, SQMS would owe to it for the calculation and payment of rental payments according to the “Lease Agreement of OMA Mining Claims located in the Atacama Salt Flat” entered into between CORFO and SQMS on November 12, 1993 (the AGREEMENT) and b) require the constitution of an instance of arbitration stated in the AGREEMENT with the purpose that the arbitrator appointed by the “Arbitration Center of the Santiago Chamber of Commerce” determines if other alleged lease payment obligations may exist that SQMS could owe to CORFO under the AGREEMENT.

During May 2014, CORFO filed a lawsuit against SQMS requesting the early termination of the agreement and other requests explained in Note 19.1. Such lawsuit is currently being processed.

SQMS differs completely form CORFO’s claims. In fact, the AGREEMENT has been in force for more than 20 years and during all this time, SQMS has paid to CORFO more than 80 quarterly payments in their entirety and on a timely basis that CORFO has received satisfactorily.

In our legal advisors’ opinion, there are no legal grounds to early terminate the lease agreement as –i- noncompliance on which the lawsuit is based do not exist and, if any, -ii- these are not gross or essential or hinder the purpose of the agreement –iii- the company has never had the intention of deceiving and has always been fully transparent in providing the information delivered. On the contrary, the conflict solely corresponds to a discussion on the right formula to calculate the rent amount.

The total amount finally requested by CORFO was at least US$ 8,940,829 – plus interests and costs – and the arbitration proceeding is close to the beginning of the evidentiary stage. CORFO and SQMS waived all recourses against the judgment provided by the arbitrator. However, it is not possible to discard the filing of a complaint appeal or an appeal in cassation alleging incompetence or ultra petita and indicating the jurisprudence of the courts of justice, considering that both recourses cannot be waived.

On August 17, 2016, CORFO noticed a new arbitration claim filed against SQM Potasio S.A., SQM S.A. and SQM Salar S.A., by virtue of which it required the early termination of the Project Contract entered on November 12, 1993 and other related contracts among other matters.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

142

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.3

Commitments, continued

In addition, on June 15, 2016, SQM S.A. and SQM Salar S.A. have started the process for filing a new arbitration claim against CORFO. Through this arbitration proceeding, SQM S.A. and SQM Salar S.A. expect to obtain a declaratory judgment that determines whether income paid under the Lease contract for the entire period elapsed of the contract have been useful for CORFO. The establishment of the Rules of the procedure is pending.

During the period ended June 30, 2016, income related to products from the Atacama saltpeter deposit represented a 42.56% of total comprehensive income of the Company for the same period. This corresponds to income considered in the Potassium and Lithium product business lines.

Additionally, during the same period, SQM Salar S.A. sold potassium salts (sylvinite) and wet potassium chloride for a total of ThUS$ 51,296 to SQM Industrial S.A., a subsidiary of SQM to be used as supplies in the production of potassium nitrate.

On June 6, 2016, The Chilean Superintendence of the Environment filed charges against SQM S.A. with respect to the Pampa Hermosa project for possible noncompliance with RCA 890/2010.

These charges relate to certain variables of the Follow-up Plan and the implementation of a mitigation action contemplated in the related Environmental Impact Study. The Company has submitted a Compliance Program which details the actions and commitments that the Company will perform to resolve the objections by the environmental authority. The Chilean Superintendence of the Environment is currently reviewing such Compliance Program and has to provide its sentence.

19.4

Tax contingency

During 2015, SQM and its subsidiaries SQM Salar and SQM Industrial have submitted to the Chilean IRS four tax amendments (two by SQM, one by SQM Salar and one by SQM Industrial).

The first two (one filed by SQM and another filed by SQM Salar), subsequent to being approved by the Chilean IRS generated payments of taxes, interests and other charges for ThUS$ 8,100, which was recorded in a provision in the results for the first quarter of 2015.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

143

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.4

Tax contingency, continued

Additionally, during August 2015, the Company provided to the Chilean IRS for review and approval, the documentation required to amend the annual income tax returns of SQM and SQM Industrial. SQM believes that as a result of these amendments the Company will have to pay approximately US$1.4 million for the concept of taxes, interests and other charges, Such amount was recorded in a provision in the results for the second quarter of 2015.

Finally, during 2016, the last 12 invoices were amended with approximate payment of US$ 50 thousand.

Accordingly, SQM and its subsidiaries understand the internal analysis they have been performing has ended, the purpose of which was the identification of the expenses incurred by them during the commercial years 2008 to 2014 and which could be a matter of tax amendment.

Because of the aforementioned amendments, SQM, SQM Salar and SQM Industrial might be affected by additional penalty established in article 97 No. 4, first subparagraph of the Tax Code for an amount between 50% and 300% of taxes paid. The Company has currently not estimated making any provisions related to this possible additional penalty.

On August 28, 2015, the Chilean IRS sent to SQM a request for payment of taxes of US$8.7 million plus interests and fines related to the tax difference resulting from the application of articles 64 Bis and 64 Ter of the Chilean Income Tax Law. On September 9, 2015, SQM filed a Request for Voluntary Administrative Reconsideration with the Chilean IRS, which was not accepted. As a result, the Company paid the amounts as requested totaling US$14.6 million, and reserved its right to file a tax claim against the request for payment by the Chilean IRS with the Courts of Justice.

In the Company’s tax lawyers’ opinion, grounds exist to believe this case will be resolved in favor of the Company and, as such, no provisions have been made with respect to this case.

19.5

Restricted or pledged cash

The subsidiary Isapre Norte Grande Ltda., in compliance with that established by the Chilean Superintendence of Healthcare which regulates the running of pension-related health institutions, maintains a guarantee in financial instruments delivered in deposits, custody and administration to Banco de Chile.

This guarantee, according to the regulations issued by the Chilean Superintendence of Healthcare is equivalent to the total sum owed to its members and medical providers Banco de Chile reports the present value of the guarantee to the Chilean Superintendence of Healthcare and Isapre Norte Grande Ltda. on a daily basis. As of June 30, 2016, the guarantee amounts to ThUS$678.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

144

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.5

Restricted or pledged cash, continued

SQM S.A. maintains funds with Morgan Stanley for the concept of margin call, which provide collateral for the Bank’s exposition towards the Company.

Such collateral hedges the fair value of the Cross Currency Swap that SQM S.A. has to hedge a portion of the Series H Bond.

Through the present date, SQM S.A. has delivered ThUS$ 5,370 to Morgan Stanley, which will be released when any of the following conditions occur:

The market value of the Cross Currency Swap is lower than the sum of that delivered ThUS$5,370 and the collateral threshold ThUS$ 5,000.

The Cross Currency Swap associated with the H Series Bond expires on January 5, 2018.

SQM S.A. maintains funds with BCI for the concept of margin call, which provide collateral for the Bank’s exposition towards the Company.

Such collateral hedges the fair value of the Cross Currency Swap that SQM S.A. has to hedge the Series H Bond.

Through the present date, SQM S.A. has delivered ThUS$650 to BCI, which will be released when any of the following conditions occur:

The market value of the Cross Currency Swap of the last business day of the month is lower than the sum of that delivered ThUS$650 and the collateral threshold ThUS$ 10,000.

The Cross Currency Swap associated with the H Series Bond expires on January 5, 2018.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

145

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.6

Securities obtained from third parties

The main security received (exceeding ThUS$100) from third parties to guarantee Soquimich Comercial S.A.’s compliance with obligations in contracts of commercial mandates for the distribution and sale of fertilizers amounted to ThUS$8,401 and ThUS$7,137 on June 30, 2016 and December 31, 2015 respectively; which is detailed as follows:

		06/30/2016		12/31/2015
Grantor	Relationship	ThUS$		ThUS$
Agrícola Lobert Ltda.	Unrelated third party		613		760
Agroc Patricio Bornand L. Eirl	Unrelated third party		352		322
Arena Fertilizantes y Semillas	Unrelated third party		227		211
Bernardo Guzman Schmidt	Unrelated third party		125		115
Comercial Agrosal Ltda.	Unrelated third party		105		-
Contador Frutos S.A.	Unrelated third party		1,575		1,443
Covepa SPA	Unrelated third party		1,679		780
Gilberto Rivas Y Cia. Ltda.	Unrelated third party		125		115
Hortofruticola La Serena	Unrelated third party		292		267
Johannes Epple Davanzo	Unrelated third party		581		451
Juan Luis Gaete Chesta	Unrelated third party		244		227
Lemp Martin Julian	Unrelated third party		112		103
Soc. Agrocom. Julio Polanco	Unrelated third party		151		141
Tattersall Agroinsumos S.A.	Unrelated third party		2,000		2,000
Vicente Oyarce Castro	Unrelated third party		220		202
Total			8,401		7,137

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

146

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.7

Indirect guarantees

Guarantees in which there is no pending balance indirectly reflect that the respective guarantees are in force and approved by the Company’s Board of Directors and have not been used by the respective subsidiary.

Debtor

Balances as of the
closing date of the
financial statements

Creditor of the guarantee

Name

Relationship

Type of
guarantee

06/30/2016

ThUS$

12/31/2015

ThUS$

Australian and New Zealand Bank

SQM North America Corp

Subsidiary

Bond

Australian and New Zealand Bank

SQM Europe N.V.

Subsidiary

Bond

Generale Bank

SQM North America Corp

Subsidiary

Bond

Generale Bank

SQM Europe N.V.

Subsidiary

Bond

Kredietbank

SQM North America Corp

Subsidiary

Bond

Kredietbank

SQM Europe N.V.

Subsidiary

Bond

Banks and financial institutions

SQM Investment Corp. N.V.

Subsidiary

Bond

Banks and financial institutions

SQM Europe N.V.

Subsidiary

Bond

Banks and financial institutions

SQM North America Corp

Subsidiary

Bond

Banks and financial institutions

Nitratos Naturais do Chile Ltda.

Subsidiary

Bond

Banks and financial institutions

SQM México S.A. de C.V.

Subsidiary

Bond

Banks and financial institutions

SQM Brasil Ltda.

Subsidiary

Bond

“BNP”

SQM Investment Corp. N.V.

Subsidiary

Bond

Sociedad Nacional de Mineria A.G.

SQM Potasio S.A.

Subsidiary

Bond

Scotiabank & Trust (Cayman) Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

Scotiabank & Trust (Cayman) Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

Bank of America

Royal Seed Trading A.V.V.

Subsidiary

Bond

40,170

40,137

Export Development Canada

Royal Seed Trading A.V.V.

Subsidiary

Bond

10,005

20,010

The Bank of Tokyo-Mitsubishi UFJ Ltd.

Royal Seed Trading A.V.V.

Subsidiary

Bond

10,034

20,052

JP Morgan Chase Bank

SQM Industrial S.A.

Subsidiary

Bond

The Bank of Nova Scotia

SQM Investment Corp. N.V.

Subsidiary

Bond

Morgan Stanley Capital Services

SQM Investment Corp. N.V.

Subsidiary

Bond

The Bank of Tokyo-Mitsubishi UFJ Ltd.

SQM Investment Corp. N.V.

Subsidiary

Bond

HSBC

SQM Investment Corp. N.V.

Subsidiary

Bond

Deutsche Bank AG

SQM Investment Corp. N.V.

Subsidiary

Bond

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

147

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 19

Contingencies and restrictions (continued)

19.7

Indirect guarantees, continued

The bonds which disclose a balance as of June 30, 2016 and December 31, 2015 are detailed below:

Debtor

Pending balances as of
the closing date of the
financial statements

Creditor of the guarantee

Name

Relationship

Type of
guarantee

06/30/2016

ThUS$

12/31/2015

ThUS$

Credit Suisse International

SQM Investment Corp. N.V.

Subsidiary

Bond

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

148

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 20

Revenue

As of June 30, 2016 and 2015, revenue is detailed as follows:

	January to June				April to June
	2016		2015		2016		2015
Types of revenue	ThUS$		ThUS$		ThUS$		ThUS$

Sales of goods		879,357		868,269		489,159		482,414
Provision of services		2,102		3,499		455		1,835
Total		881,459		871,768		489,614		484,249

Note 21

Earnings per share

Basic earnings per share are calculated by dividing net income attributable to the Company’s shareholders by the weighted average of the number of shares in circulation during that period.

As expressed, earnings per share are detailed as follows:

Basic earnings per share

06/30/2016

ThUS$

06/30/2015

ThUS$

Earnings (losses) attributable to owners of the parent

141,613

154,904

06/30/2016

Units

12/31/2015

Units

Number of common shares in circulation

263,196,524

		06/30/2016				06/30/2015
Basic earnings per share (US$ per share)			0.5381				0.5885

The Company has not made any operations with a potential dilutive effect that assumes diluted earnings per share are different from the basic earnings per share.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

149

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 22

Borrowing costs

The cost of interest is recognized as expenses in the year in which it is incurred, except for interest that is directly related to the acquisition and construction of tangible property, plant and equipment assets and that complies with the requirements of IAS 23. As of June 30, 2016, total interest expenses incurred amount to ThUS$32,421 (ThUS$34,973 as of June 30, 2015).

The Company capitalizes all interest costs directly related to the construction or to the acquisition of property, plant and equipment, which require a substantial time to be suitable for use.

22.1

Costs of capitalized interest, property, plant and equipment

The cost of capitalized interest is determined by applying the average or weighted average of all financing costs incurred by the Company to the monthly end balances of works-in-progress meeting the requirements of IAS 23.

The rates and costs for capitalized interest of property, plant and equipment are detailed as follows:

	06/30/2016			06/30/2015

Capitalization rate of costs for capitalized interest, property, plant and equipment		5	%		5	%

Amount of costs for interest capitalized in ThUS$		2,453			2,407

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

150

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 23

Effect of fluctuations on foreign currency exchange rates

Foreign currency exchange differences recognized in profit or loss except for financial instruments measured at fair value through profit or loss:

	06/30/2016 ThUS$			06/30/2015 ThUS$

Conversion foreign exchange gains (losses) recognized in the result of the year.		(1,594	)		(3,209	)

Conversion foreign exchange reserves attributable to the owners of the controlling entity		1,279			(4,244	)

Conversion foreign exchange reserves attributable to the non-controlling entity		37			(62	)

Reserves for foreign currency exchange differences:

As of June 30, 2016, and December 31, 2015, foreign currency exchange differences are detailed as follows:

Detail	06/30/2016 ThUS$			12/31/2015 ThUS$

Changes in equity generated by conversion of equity value:
Comercial Hydro S.A.		1,004			1,004
SQMC Internacional Ltda.		(11	)		(20	)
Proinsa Ltda.		(9	)		(15	)
Comercial Agrorama Ltda.		(70	)		(100	)
Isapre Norte Grande Ltda.		(117	)		(155	)
Almacenes y Depósitos Ltda.		28			(31	)
Sales de Magnesio Ltda.		(50	)		(161	)
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		(5	)		(9	)
Agrorama S.A.		(52	)		(35	)
Doktor Tarsa		(8,815	)		(8,305	)
SQM Vitas Fzco		(1,741	)		(2,245	)
Ajay Europe		(1,591	)		(1,731	)
SQM Eastmed Turkey		(85	)		(81	)
Charlee SQM (Thailand) Co. Ltd.		(431	)		(476	)
Coromandel SQM India		(301	)		(301	)
SQM Italia SRL		(233	)		(250	)
SQM Oceania Pty Ltd.		(634	)		(634	)
SQM Indonesia S.A.		(123	)		(123	)
Abu Dhabi Fertilizers Industries WWL.		21			21
SQM Vitas Holland		(303	)		(320	)
SQM Thailand Limited		(68	)		(68	)
Total		(13,586	)		(14,035	)

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

151

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 23

Effect of fluctuations on foreign currency exchange rates (continued)

Functional and presentation currency

The functional currency in these companies corresponds to the currency of the country of origin of each entity, and its presentation currency is the U.S. dollar.

Reasons to use one presentation currency and a different functional currency

The total revenues of these subsidiaries are associated with the local currency.

The commercialization cost structure of these companies is affected by the local currency.

The equities of these companies are expressed in local currency (Chilean peso).

Note 24

Environment

24.1

Disclosures of disbursements related to the environment

The Company is continuously concerned with protecting the environment both in its production processes and with respect to products manufactured. This commitment is supported by the principles indicated in the Company’s Sustainable Development Policy. The Company is currently operating under an Environmental Management System (EMS) that has allowed it to strengthen its environmental performance through the effective application of the Company’s Sustainable Development Policy.

Operations that use caliche as a raw material are carried out in desert areas with climatic conditions that are favorable for drying solids and evaporating liquids using solar energy. Operations involving the open-pit extraction of minerals, due to their low waste-to-mineral ratio, generate remaining deposits that slightly alter the environment. A portion of the ore extracted is crushed, a process in which particle emissions occur. Currently this operation is conducted only at the Pedro de Valdivia worksite and no ore crushing process is conducted in the María Elena sector.

Many of the Company’s products are shipped in bulk at the Port of Tocopilla. In 2007, the city of Tocopilla was declared a zone saturated with MP10 Particles mainly due to the emissions from the electric power plants that operate in that city. In October 2010, the Decontamination Plan for Tocopilla was put in place. Accordingly, the Company has committed to taking several measures to mitigate the effects derived from bulk product movements in the port. These measures have been successfully implemented since 2007.

The Company carries out environmental follow-up and monitoring plans based on specialized scientific studies. Within this context, the Company entered into a contract with the National Forestry Corporation (CONAF) aimed at researching the activities of flamingo groups that live in the Salar de Atacama (Atacama Saltpeter Deposit) lagoons. Such research includes a population count of the birds, as well as breeding research. Environmental monitoring activities carried out by the Company at the Salar de Atacama and other systems in which it operates are supported by a number of studies that have integrated diverse scientific efforts from prestigious research centers, including Dictuc from the Pontificia Universidad Católica in Santiago and the School of Agricultural Science of the Universidad de Chile.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

152

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 24

Environment (continued)

24.1

Disclosures of disbursements related to the environment, continued

Furthermore, within the framework of the environmental studies which the Company is conducting, the Company performs significant activities in relation to the recording of Pre-Columbian and historical cultural heritage, as well as the protection of heritage sites, in accordance with current Chilean laws. These activities have been especially performed in the areas surrounding Maria Elena and the Nueva Victoria plants. This effort is being accompanied by cultural initiatives within the community and the organization of exhibits in local and regional museums.

As emphasized in its Sustainable Development Policy, the Company strives to maintain positive relationships with the communities surrounding the locations in which it carries out its operations, as well as to participate in communities’ development by supporting joint projects and activities which help to improve the quality of life for residents. For this purpose, the Company has focused its efforts on activities involving the rescue of historical heritage, education and culture, as well as development.

In order to do so, it acts both individually and in conjunction with private and public entities.

24.2

Detail of information on disbursements related to the environment

The accumulated disbursements in which the Company incurred as of June 30, 2016 for the concept of investments in production processes, verification and control of compliance with ordinances and laws relative to industrial processes and facilities, including prior year disbursements related to these projects amounted to ThUS$2,177 and are detailed as follows:

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

153

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 24

Environment (continued)

24.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses as of 06/30/2016

Identification of the
Parent or subsidiary

Name of the project with which expenditure is
associated

Concept for which the expenditure was made
or will be made

Asset / Expense

Description of the
asset or expense
Item

Amount of
expenditure

Actual or
estimated date on
which
expenditure was
or will be made

Miscellaneous

Environmental-operational area

Not classified

Expense

Not classified

542

06/30/2016

SQM Industrial S.A.

IQWZ - Normalization TK NV liquid fuels

Sustainability: Environment and Risk Prevention

Asset

Not classified

174

11/30/2016

SQM Industrial S.A.

PPZU - Standardize and Certify Plant Fuel Tanks

Environmental processing

Asset

Not classified

11/30/2016

SQM Industrial S.A.

J0033 – Improvements to water distribution

Sustainability: Environment and Risk Prevention

Expense

Not classified

221

12/31/2016

SQM Industrial S.A.

J0041 - DIA Disposal filed area Coya Sur

Environmental processing

Asset

Not classified

12/31/2016

SQM Industrial S.A.

I0076 – NV evaporation ponds

Sustainability: Environment and Risk Prevention

Expense

Not classified

09/29/2016

SQM Salar S.A.

C0015 – 2016 Extraction ponds (Peralte)

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2016

SQM Salar S.A.

J0043 – Energy efficiency study

Sustainability: Environment and Risk

Prevention

Expense

Not classified

12/31/2016

SQM S.A.

I0046 – 2014-2015 Pampa Hermosa Cultural Heritage

Sustainability

Expense

Not classified

307

12/31/2016

SQM S.A.

I007300 – Compliance with Iodine Gas Exposure Regulations

Environmental processing

Expense

Not classified

257

12/31/2016

SQM S.A.

I0032- Hazardous Materials Standardization

Sustainability: Environment and Risk

Prevention

Asset

Not classified

12/31/2016

SQM S.A.

I0055 – Standardization of SO2 plants

Sustainability

Asset

Not classified

11/30/2016

SQM S.A.

I0067 – Enablement of CPC wells

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2016

SQM S.A.

I0071 – 2015-2016 Environmental Follow-up Plan for Pampa del Tamarugal

Sustainability

Expense

Not classified

107

03/31/2017

SQM S.A.

I0072 – 2015-2016 Environmental Follow-up Plan Salar de Llamara

Sustainability: Environment and Risk Prevention

Asset

Not classified

03/31/2017

SQM S.A.

P0030 – Plant 1 Scrubber and Plant 3 Scrubber

Sustainability: Environment and Risk Prevention

Asset

Not classified

166

12/31/2016

SQM S.A.

P0035 – Tur Development Master Plan

Sustainability: Environment and Risk

Prevention

Expense

Not classified

12/31/2016

SQM S.A.

I0093 - Replacement of lighting for NV warehouse

Sustainability: Environment and Risk Prevention

Asset

Not classified

12/31/2016

SIT S.A.

T0030 – Archeological salvage for northern access, Port of Tocopilla

Sustainability

Expense

Not classified

12/31/2016

Total

2,177

SQM

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

154

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 24

Environment (continued)

24.2

Detail of information on disbursements related to the environment, continued

Future expenses as of 06/30/2016

Identification of the
Parent or subsidiary

Name of the project with which expenditure is
associated

Concept for which the expenditure was made
or will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
expenditure

Actual or
estimated date on
which expenditure
was or will be
made

SQM Industrial S.A.

IQWZ - Normalization TK NV liquid fuels

Sustainability: Environment and Risk Prevention

Expense

Not classified

11/30/2016

SQM Industrial S.A.

PPZU - Standardize and Certify Plant Fuel Tanks

Environmental processing

Asset

Not classified

11/30/2016

SQM Industrial S.A.

J0041 - DIA Disposal filed area Coya Sur

Environmental processing

Asset

Not classified

12/31/2016

SQM Industrial S.A.

J0033 – Improvements to water distribution

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2016

SQM Industrial S.A.

J0043 – Energy efficiency study

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/30/2016

SQM Industrial S.A.

I0076 - NV evaporation ponds

Sustainability: Environment and Risk Prevention

Expense

Not classified

108

09/29/2016

SQM Industrial S.A.

J0046 – 2016 Atmospheric Plant Sustentation

Sustainability: Environment and Risk Prevention

Asset

Not classified

177

12/31/2016

SQM Industrial S.A.

I0101 – Training and acquisition of supplies for the Nueva Victoria Rescue Brigade.

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2016

SQM Salar S.A.

C0015 - 2016 Extraction ponds (Peralte)

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2016

SQM S.A.

I0032 - Hazardous Materials Standardization

Sustainability: Environment and Risk Prevention

Asset

Not classified

12/31/2016

SQM S.A.

I0046 - 2014-2015 Pampa Hermosa Cultural Heritage

Sustainability

Expense

Not classified

129

12/31/2016

SQM S.A.

I0055 – Standardization of SO2 plants

Sustainability

Asset

Not classified

11/30/2016

SQM S.A.

I0071 – 2015-2016 Environmental Follow-up Plan for Pampa del Tamarugal

Sustainability

Expense

Not classified

03/31/2017

SQM S.A.

I0072 – 2015-2016 Environmental Follow-up Plan Salar de Llamara

Sustainability: Environment and Risk Prevention

Asset

Not classified

03/31/2017

SQM S.A.

I0073 – Compliance with Iodine and Gas Capture Standard

Environmental processing

Expense

Not classified

315

12/31/2016

SQM S.A.

P0030 – Plant 1 Scrubber and Plant 3 Scrubber

Sustainability: Environment and Risk Prevention

Asset

Not classified

12/31/2016

SQM S.A.

P0035 – Tur Development Master Plan

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2016

SQM S.A.

I0093 - Replacement of lighting for NV warehouse

Sustainability: Environment and Risk Prevention

Asset

Not classified

12/31/2016

SQM S.A.

I0067 – Enablement of CPC wells

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2016

SIT S.A.

T0030 – Archeological salvage for northern access, Port of Tocopilla

Sustainability

Expense

Not classified

12/31/2016

Total

1,336

SQM

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

155

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 24

Environment (continued)

24.3

Detail of information on disbursements related to the environment, continued

Accumulated expenses as of 12/31/2015

Identification of the
Parent or subsidiary

Name of the project with which expenditure is
associated

Concept for which the expenditure was made
or will be made

Asset / Expense

Description of the
asset or expense
Item

Amount of
expenditure

Actual or
estimated date on
which
expenditure was
or will be made

Miscellaneous

Environmental-operational area

Not classified

Expense

Not classified

1,683

12/31/2015

SQM Industrial S.A.

IQWZ - Normalization TK NV liquid fuels

Sustainability: Environment and Risk Prevention

Asset

Not classified

138

04/30/2016

SQM Industrial S.A.

MP5W - Normalization TK´s Fuels

Sustainability: Environment and Risk Prevention

Asset

Not classified

2,619

12/31/2015

SQM Industrial S.A.

PPZU - Standardize and Certify Plant Fuel Tanks

Environmental processing

Asset

Not classified

3,174

12/31/2016

SQM Industrial S.A.

PQXM – Elaboration DIA Operation with batteries in PV

Environmental processing

Asset

Not classified

12/31/2015

SQM Industrial S.A.

04-I0002 - Nueva Iris TAS

Sustainability

Asset

Not classified

12/31/2015

SQM Industrial S.A.

04-I0023 - Acquisition of leak detection equipment

Sustainability: Environment and Risk Prevention

Asset

Not classified

12/31/2015

SQM Industrial S.A.

04-J0033 – Improvements to water distribution

Sustainability: Environment and Risk Prevention

Expense

Not classified

392

12/31/2015

SQM Industrial S.A.

04-I0076 – NV evaporation ponds

Sustainability: Environment and Risk Prevention

Expense

Not classified

09/29/2016

SQM S.A.

IPFT - Cultural Heritage Region I

Sustainability

Expense

Not classified

174

12/31/2015

SQM S.A.

IQ1M - PSA Re-injection of water to Puquios Llamara

Sustainability: Environment and Risk Prevention

Asset

Not classified

2,579

12/31/2015

SQM S.A.

IQOW- Deposit authorization for Humberstone heritage

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2015

SQM S.A.

IQWS - Mine Area equity measures Stage II

Sustainability: Environment and Risk Prevention

Expense

Not classified

102

12/31/2015

SQM S.A.

IQX6 – Environmental management plan of Tamarugos Pampa del Tamarugal 2013-2014

Sustainability: Environment and Risk Prevention

Asset

Not classified

154

12/31/2015

SQM S.A.

IQXB – Environmental management plan of Tamarugos Salar de Llamara 2013-2014

Sustainability: Environment and Risk Prevention

Asset

Not classified

12/31/2015

SQM S.A.

01-I0032 – Standardization of hazardous materials

Sustainability: Environment and Risk Prevention

Asset

Not classified

12/31/2016

SQM S.A.

01-I0042 – Mine are equity measures Stage III

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2015

SQM S.A.

01-I0046 – Cultural Heritage Pampa Hermosa 2014 - 2015

Sustainability

Expense

Not classified

03/31/2016

SQM

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

156

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 24

Environment (continued)

24.2

Detail of information on disbursements related to the environment, continued

Accumulated expenses as of 12/31/2015, continued

Identification of the
Parent or subsidiary

Name of the project with which expenditure is
associated

Concept for which the expenditure was made
or will be made

Asset / Expense

Description of the
asset or expense
Item

Amount of
expenditure

Actual or
estimated date on
which
expenditure was
or will be made

SQM S.A.

01-IQWP - 01-J0011 - DIA expansion of NV mine site

Environmental processing

Expense

Not classified

04/02/2016

SQM S.A.

01-I0055 – Standardization of SO2 plants

Sustainability

Asset

Not classified

12/31/2016

SQM S.A.

01-I0067 – Enablement of CPC wells

Sustainability: Environment and Risk Prevention

Expense

Not classified

133

01/01/2016

SQM S.A.

01-I0071 – 2015-2016 Environmental Follow-up Plan for Pampa del Tamarugal

Sustainability

Expense

Not classified

363

03/31/2017

SQM S.A.

01-I0072 - Environmental Follow-up Plan Salar de Llamara 2015-2016

Sustainability: Environment and Risk Prevention

Asset

Not classified

03/31/2017

SQM S.A.

01-I0073 – Compliance with Iodine and Gas Capture Standard

Sustainability: Environment and Risk Prevention

Asset

Not classified

07/31/2017

SQM S.A.

01-P0030 – Plant 1 Scrubber and Plant 3 Scrubber

Sustainability: Environment and Risk Prevention

Asset

Not classified

210

12/31/2015

SQM S.A.

01-P0035 – Tur Development Master Plan

Sustainability: Environment and Risk Prevention

Expense

Not classified

01/31/2016

SQM Salar S.A.

LQDM – certification of tanks

Sustainability: Replacement of equipment

Asset

Not classified

256

12/31/2015

SIT S.A.

TQQ5 – Environmental curtains, Field No.8

Sustainability: Environment and Risk Prevention

Expense

Not classified

221

12/31/2015

SIT S.A.

03-T0008 – Mobile belt protections 2, 5 and 7

Sustainability: Environment and Risk Prevention

Expense

Not classified

12/31/2016

SIT S.A.

03-T0030 – Archeological salvage for northern access, Port of Tocopilla

Sustainability

Expense

Not classified

12/31/2015

Total

12,560

SQM

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

157

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 24

Environment (continued)

24.3

Detail of information on disbursements related to the environment, continued

Future expenses as of 12/31/2015

Identification of the
Parent or subsidiary

Name of the project with which expenditure is
associated

Concept for which the expenditure was made
or will be made

Asset /
Expense

Description of
the asset or
expense Item

Amount of
expenditure

Actual or
estimated date on
which expenditure
was or will be
made

SQM Industrial S.A.

IQWZ - Normalization TK NV liquid fuels

Sustainability: Environment and Risk Prevention

Asset

Not classified

373

04/30/2016

SQM Industrial S.A.

MP5W - Normalization TK´s Fuels

Sustainability: Environment and Risk Prevention

Asset

Not classified

12/31/2016

SQM Industrial S.A.

PPZU - Standardize and Certify Plant Fuel Tanks

Environmental processing

Asset

Not classified

290

12/31/2016

SQM Industrial S.A.

M0006 – Significant maintenance of ME town streets and ME garbage dumps

Sustainability

Asset

Not classified

150

12/31/2016

SQM Industrial S.A.

04-J0041 – Coya Sur Field Disposal DIA

Environmental processing

Asset

Not classified

12/31/2016

SQM Salar S.A.

19-LQXW – White water

Environmental processing

Asset

Not classified

269

12/31/2016

SQM S.A.

01-I0032- Hazardous Materials Standardization

Sustainability

Asset

Not classified

12/31/2016

SQM S.A.

01-I0046 - Cultural heritage Pampa Hermosa 2014 – 2015

Sustainability

Expense

Not classified

130

03/31/2016

SQM S.A.

01-I0055 – Standardization of SO2 plants

Sustainability

Asset

Not classified

12/31/2016

SQM S.A.

01-I0067 – Enablement of CPC wells

Sustainability: Environment and Risk Prevention

Expense

Not classified

01/01/2016

SQM S.A.

01-I0071 – 2015-2016 Environmental Follow-up Plan for Pampa del Tamarugal

Sustainability

Expense

Not classified

658

03/31/2017

SQM S.A.

01-I0072 – 2015-2016 Environmental Follow-up Plan Salar de Llamara 2015-2016

Sustainability: Environment and Risk Prevention

Asset

Not classified

248

03/31/2017

SQM S.A.

01-I0073 – Compliance with Iodine and Gas Capture Standard

Sustainability: Environment and Risk Prevention

Asset

Not classified

124

07/31/2017

Total

2,501

SQM

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

158

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 24

Environment (continued)

24.3

Description of each project, indicating whether these are in process or have been finished

SQM Industrial S.A.

IQWZ: Performing an analysis of the tank facilities (civil works, mechanical work, piping, electrical work and instruments) by a company specialized in liquid fuels and that is a Certifying Entity. After that, performance of the detail engineering and then implementation of the modifications required to normalize the TKs facilities and leave them in conditions to be declared and filed with the SEC. The budget of ThUS$123 only covers expenses related to the analysis and detail engineering. The project is in process.

PPZU: The necessary actions to normalize and certify fuel tanks in the plants in Maria Elena, Coya Sur and Pedro de Valdivia will be performed. This project is in process.

J0033: This project contemplates improving the reliability and sustainability of industrial water and drinking water, mitigating uncontrolled water loss, making investments for the change in the distribution line to processing plants, investment in technological equipment and engineering studies; improving water adduction from the Loa and San Salvador rivers, complying with the ongoing controls by the Governmental Authorities (DGA (the General Directorate of Water and Seremi Salud (the Ministerial Regional Secretariat for Health). This project is in process.

I0076: Development of the Project for the exploitation of iodine in the northern area of Iquique. This project is in progress.

J0046: Generating equipment sustainability which need to be renewed and ensure availability in key points in the Atmospheric Plant. This Project is in progress.

J0041 : Preparation and Processing of the Environmental Impact Statement, for unauthorized disposal field areas and request a new area to build evaporation ponds. This project is currently in progress.

I0101: Increasing the training level for the Brigade staff to safely and efficiently respond to any emergency situation occurred in the SQM’s premises and surroundings.

J0043: Energy efficiency study and plant technological improvements.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

159

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 24

Environment (continued)

24.3

Description of each project, indicating whether these are in process or have been finished, continued

SQM S.A.

I0032: Presenting departures from the standard currently in force with respect to storage of hazardous substances and provisions of SD 78/2010. This project is in process.

I0046: The project consists of the implementation of equity measures committed in the Environmental Assessment of the Pintados sector (geoglyphs and former railway station) and for the Sur Viejo sector the implementation of development activities and archeological works are contemplated. This project is in progress.

I0055: This project consists of changing gas extractors to increase air flows, changing SO2 absorption towers for prilling, extending the diameter of ducts; thereby guaranteeing an increase and sustaining the gas/liquid ratio. In order to decrease SO2 emissions require the installation of a scrubber unit (tower, pump, gas extractor and piping), the same concept developed at the ME Iodine SO2 plant. This project is in progress.

I0067: This stage of the project will allow identifying equity findings and other environmental commitments in addition to the performance of the basic engineering for the impulsion, electric line and crossing of Ruta 5 Norte highway. This project is in progress.

I0071: This project consists of implementing mitigation and compensation actions as committed in the Environmental Assessment of the Pampa Hermosa Environmental Impact Assessment (EIA). Actions to be implemented are those contemplated in the Environmental Management Plan of Tamarugos in Pampa del Tamarugal (Environmental Education Program, planting tamarugos, ex situ conservation of tamarugos, tamarugo production, and support for the phytosanitary control of tamarugos). This project is in progress.

I0072: This project consists of implementing mitigation and compensation actions as committed in the Environmental Assessment of the Pampa Hermosa Environmental Impact Assessment (EIA). Actions to be implemented are those contemplated in the Environmental Management Plan of Tamarugos in Salar de Llamara (Environmental Education Program, planting tamarugos, ex situ conservation of tamarugos, tamarugo production, and support for the phytosanitary control of tamarugos). This project is in progress.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

160

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 24

Environment (continued)

24.2

Description of each project, indicating whether these are in process or have been finished, continued

I0073: Installation in the iodine plant and warehouse of an iodine gas capturing system that allows meeting the applicable standard. This is composed of: large volume capacity gas extractors, gas ducts designed with recommended speeds for the ventilation system, towers with packing to absorb iodine gases. This requires a conceptual engineering study, the development of IB and details for the acquisition and supply of equipment, assembly and start-up (iodine gas measurements). As committed with our mutual organization (Chilean Domestic Hygiene and Occupational Health Plan overseen by the Health Service), this project should be operating on April 30, 2016 (letter to the Regional Secretariat of the Health Ministry (SEREMI) of the Tarapaca Region dated July 14, 2014: Sanitary Resolution Ref: 2317). This project is in progress.

P0030: To reply to the indication by the Health Service, the Company must install a Scrubber tower in each plant, which will collect the residual SO2 from the plant chimneys. To perform this, the Company will install existing towers through which brine solutions will go through absorbing the SO2 found in the gaseous phase. This project is in progress.

P0035 : The cultural, historical and local promotion, the dissemination of the saltpeter touristic amenities and the enhancement of tangible and intangible saltpeter equity. This project is in progress.

I0093: Replacing the current lighting by type LED IP67 lights, which secures lower energy consumption and generates lower heat dissipation, avoiding iodine caking and lower consumption of electric energy in the air conditioning system in the warehouse. This project is in progress.

SQM Salar S.A.

C0015: Harvesting and building floor for a pond. The pumping system will be built.

SIT S.A.

T0030: An archeological salvage must be performed through excavations with stratigraphic control, with the purpose of recovering the remains of, at least, four funeral contexts noted in the profiles of trenches Nos. 9 and 11. In addition, it is necessary to collect the disturbed osseous remains, which, due to reasons unknown to us, are located in the current surface of the land where the trenches are located. This project is in process.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

161

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 25

Other current and non-current non-financial assets

As of June 30, 2016, and December 31, 2015, the detail of other current and non-current assets is as follows:

Other non-financial assets, current	06/30/2016		12/31/2015
	ThUS$		ThUS$
Domestic Value Added Tax		9,635		16,112
Foreign Value Added Tax		3,619		7,795
Prepaid mining licenses		4,535		1,209
Prepaid insurance		2,742		6,536
Other prepayments		1,003		602
Refund of Value Added Tax to exporters		8,061		13,183
Mining royalty tax paid (*)		14,565		14,565
Other assets		2,945		2,004
Total		47,105		62,006

(*) The Company reserved its right to file a tax claim with the Courts of Justice against the request for payment by the SII. See Note 19.4.

Other non-financial assets, non-current	06/30/2016		12/31/2015
	ThUS$		ThUS$
Stain development expenses and prospecting expenses (1)		24,366		31,911
Guarantee deposits		678		496
Pension plan		-		27
Other assets		1,059		1,092
Total		26,103		33,526

Reconciliation of changes in assets for exploration and mineral resource evaluation, by type

Movements in assets for the exploration and evaluation of mineral resources as of June 30, 2016, and December 31, 2015:

Reconciliation	06/30/2016			12/31/2015
	ThUS$			ThUS$

Opening balance		31,911			29,569
Changes
Additions, other than business combinations		-			3,871
Depreciation and amortization		(6,802	)		(2,287	)
Increase (decrease) due to transfers and other charges		(743	)		758
Total changes		(7,545	)		2,342
Total		24,366			31,911

As of the presentation date, no reevaluations of assets for exploration and assessment of mineral resources have been conducted.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

162

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 26

Operating segments

26.1

Operating segments

General information:

The amount of each item presented in each operating segment is equal to that reported to the maximum authority that makes decisions regarding the operation, in order to decide on the allocation of resources to the defined segments and to assess its performance.

Factors used to identify segments on which a report should be presented:

Segments reported are strategic business units that offer different products and services. These are managed separately because each business requires different technology and marketing strategies.

Description of the types of products and services on which each reportable segment obtain its income from ordinary activities

The operating segments, through which incomes of ordinary activities are obtained, that generate expenses and whose operating results are reviewed on a regular basis by the maximum authority who makes decisions regarding operations, relate to the following groups of products:

Specialty plant nutrients

Iodine and its derivatives

Lithium and its derivatives

Industrial chemicals

Potassium

Other products and services

Description of income sources for all the other segments

Information relative to assets, liabilities, profit and expenses that cannot be assigned to the segments indicated above, due to the nature of production processes, is included under "Unassigned amounts” category of the disclosed information.

Basis of accounting for transactions between reportable segments

Sales between segments are made in the same conditions as those made to third parties, and are consistently measures as presented in the income statement.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

163

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 26

Operating segments (continued)

26.1

Operating segments, continued

Description of the nature of the differences between measurements of results of reportable segments and the result of the entity before the expense or income tax expense of incomes and discontinued operations.

The information reported in the segments is extracted from the Company’s consolidated financial statements and therefore is not required to prepare reconciliations between the data mentioned above and those reported in the respective segments, according to what is stated in paragraph 28 of IFRS 8, "Operating Segments".

Description of the nature of the differences between measurements of assets of reportable segments and the Company´s assets

Assets are not shown classified by segments, as this information is not readily available, Some of these assets are not separable by the type of activity by which they are affected since this information is not used by management in decision-making with respect to resources to be allocated to each defined segment, All assets are disclosed in the "unallocated amounts" category.

Description of the nature of the differences between measurements of liabilities of reportable segments and the Company’s liabilities

Liabilities are not shown classified by segments, as this information is not readily available, Some of these liabilities are not separable by the type of activity by which they are affected, since this information is not used by management in decisions making regarding resources to be allocated to each defined segment, All liabilities are disclosed in the "unallocated amounts" category.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

164

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 26

Operating segments (continued)

26.2

Operating segment disclosures:

06/30/2016
Operating segment items	Specialty plant nutrients			Iodine and its derivatives			Lithium and its derivatives			Industrial chemicals			Potassium			Other products and services			Reportable segments			Operating segments			Elimination of inter- segments amounts			Unallocated amounts			Total 06/30/2016
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Revenue		332,221			118,566			192,774			30,518			181,621			25,759			881,459			881,459			-			-			881,459
Revenues from transactions with other operating segments of the same entity		57,837			142,276			152,048			194,933			173,721			98,819			819,634			819,634			(819,634	)		-			-

Revenues from external customers and transactions with other operating segments of the same entity		390,058			260,842			344,822			225,451			355,342			124,578			1,701,093			1,701,093			(819,634	)		-			881,459

Costs of sales		(248,969	)		(98,731	)		(71,510	)		(21,394	)		(156,317	)		(24,046	)		(620,967	)		(620,967	)		-			-			(620,967	)
Administrative expenses		-			-			-			-			-			-			-			-			2,836			(43,644	)		(40,807	)
Interest expense		-			-			-			-			-			-			-			-			45,561			(77,982	)		(32,421	)
Depreciation and amortization expense		(50,454	)		(20,009	)		(14,492	)		(4,336	)		(31,678	)		(4,872	)		(125,841	)		(125,841	)		-			(2,169	)		(128,010	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			-			-			-			10,596			10,596
Income tax expense, continuing operations		-			-			-			-			-			-			-			-			-			(57,291	)		(57,291	)
Other items other than significant cash		-			-			-			-			-			-			-			-			-			-			-
Income (loss) before taxes		83,252			19,835			121,264			9,124			25,304			1,713			260,492			260,492			(194,605	)		133,802			199,689

Net income (loss) from continuing operations		83,252			19,835			121,264			9,124			25,304			1,713			260,492			260,492			(194,605	)		76,511			142,398
Net income (loss) from discontinued operations
Net income (loss)		83,252			19,835			121,264			9,124			25,304			1,713			260,492			260,492			(194,605	)		76,511			142,398

Assets		-			-			-			-			-			-			-			-			(6,435,882	)		10,675,128			4,239,246
Equity-accounted investees		-			-			-			-			-			-			-			-			(3,131,020	)		3,246,163			115,143
Increase of non-current assets		-			-			-			-			-			-			-			-						(35,323	)		(35,323	)
Liabilities		-			-			-			-			-			-			-			-			(2,973,687	)		4,892,028			1,918,341
Impairment loss recognized in profit or loss		-			(98	)		(140	)		-			(288	)		(204	)		(730	)		(730	)		-			(207	)		(937	)
Reversal of impairment losses recognized in profit or loss for the period		887			-			-			372			-			-			1,259			1,259			-			-			1,259
Cash flows from (used in) operating activities		-			-			-			-			-			-			-			-			-			259,000			259,000
Cash flows from (used in) investing activities		-			-			-			-			-			-			-			-			-			308,784			308,784
Cash flows from (used in) financing activities		-			-			-			-			-			-			-			-			-			(515,111	)		(515,111	)

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

165

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 26

Operating segments (continued)

26.2

Operating segment disclosures, continued

06/30/2015
Operating segment items	Specialty plant nutrients			Iodine and its derivatives			Lithium and its derivatives			Industrial chemicals			Potassium			Other products and services			Reportable segments			Operating segments			Elimination of inter- segments amounts			Unallocated amounts			Significant reconciling items		Total 06/30/2015
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$
Revenue		335,279			139,178			100,353			52,460			220,445			24,053			871,768			871,768			-			-			-		871,768
Revenues from transactions with other operating segments of the same entity		67,361			232,153			67,121			172,616			209,574			128,840			877,665			877,665			(877,665	)		-			-		-

Revenues from external customers and transactions with other operating segments of the same entity		402,640			371,331			167,474			225,076			430,019			152,893			1,749,433			1,749,433			(877,665	)		-			-		871,768

Costs of sales		(234,196	)		(95,121	)		(48,772	)		(33,527	)		(143,738	)		(21,169	)		(576,523	)		(576,523	)		-			-			-		(576,523	)
Administrative expenses		-			-			-			-			-			-			-			-			4,244			(48,791	)		-		(44,547	)
Interest expense		-			-			-			-			-			-			-			-			71,258			(106,231	)		-		(34,973	)
Depreciation and amortization expense		(54,505	)		(22,138	)		(11,352	)		(7,802	)		(33,453	)		(4,926	)		(134,176	)		(134,176	)		-			(332	)		-		(134,508	)
The entity’s interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			-			-			-			6,843			-		6,843
Income tax expense, continuing operations		-			-			-			-			-			-			-			-			-			(55,667	)		-		(55,667	)
Other items other tan significant cash		-			-			-			-			-			-			-			-			-						-		-
Income (loss) before taxes		101,083			44,056			51,580			18,934			76,707			2,885			295,245			295,245			(293,200	)		209,296			-		211,341

Net income (loss) from continuing operations		101,083			44,056			51,580			18,934			76,707			2,885			295,245			295,245			(293,200	)		153,629			-		155,674
Net income (loss) from discontinued operations
Net income (loss)		101,083			44,056			51,580			18,934			76,707			2,885			295,245			295,245			(293,200	)		153,629			-		155,674

Assets		-			-			-			-			-			-			-			-			(8,010,368	)		12,778,333			-		4,767,965
Equity-accounted investees		-			-			-			-			-			-			-			-			(3,528,796	)		3,604,213			-		75,417
Increase of non-current assets		-			-			-			-			-			-			-			-						(89,693	)		-		(89,693	)
Liabilities		-			-			-			-			-			-			-			-			(4,148,893	)		6,542,733			-		2,393,840
Impairment loss recognized in profit or loss		-			(178	)		(337	)		-			(2,732	)		(120	)		(3,367	)		(3,367	)		-			(105	)		-		(3,472	)
Reversal of impairment losses recognized in profit or loss for the period		2,986			-			-			1,080			-			-			4,066			4,066			-			-			-		4,066
Cash flows from (used in) operating activities		-			-			-			-			-			-			-			-			-			292,817			-		292,817
Cash flows from (used in) investing activities		-			-			-			-			-			-			-			-			-			(110,764	)		-		(110,764	)
Cash flows from (used in) financing activities		-			-			-			-			-			-			-			-			-			(59,955	)		-		(59,955	)

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

166

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 26

Operating segments (continued)

26.3

Statement of comprehensive income classified by operating segments based on groups of products

	06/30/2016
Items in the statement of comprehensive income	Specialty plant nutrients ThUS$			Iodine and its derivatives ThUS$			Lithium and its derivatives ThUS$			Industrial chemicals ThUS$			Potassium ThUS$			Other products and services ThUS$			Corporate Unit ThUS$			Total segments and Corporate unit ThUS$

Revenue		332,221			118,566			192,774			30,518			181,621			25,759			-			881,459
Cost of sales		(248,969	)		(98,731	)		(71,510	)		(21,394	)		(156,317	)		(24,046	)		-			(620,967	)

Gross profit		83,252			19,835			121,264			9,124			25,304			1,713			-			260,492

Other incomes by function		-			-			-			-			-			-			5,662			5,662
Administrative expenses		-			-			-			-			-			-			(40,807	)		(40,807	)
Other expenses by function		-			-			-			-			-			-			(9,611	)		(9,611	)
Other gains (losses)		-			-			-			-			-			-			755			755
Financial income		-			-			-			-			-			-			6,617			6,617
Financial costs		-			-			-			-			-			-			(32,421	)		(32,421	)
interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			10,596			10,596
Exchange differences		-			-			-			-			-			-			(1,594	)		(1,594	)
Profit (loss) before taxes		83,252			19,835			121,264			9,124			25,304			1,713			(60,803	)		199,689
Income tax expense		-			-			-			-			-			-			(57,291	)		(57,291	)
Profit (loss) from continuing operations		83,252			19,835			121,264			9,124			25,304			1,713			(118,094	)		142,398
Profit (loss) from discontinued operations		-			-			-			-			-			-			-			-
Profit (loss)		83,252			19,835			121,264			9,124			25,304			1,713			(118,094	)		142,398
Profit (loss), attributable to
Profit (loss) attributable to the controller´s owners		-			-			-			-			-			-			-			141,613
Profit (loss) attributable to the non-controllers		-			-			-			-			-			-			-			785
Profit (loss)		-			-			-			-			-			-			-			142,398

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

167

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 26

Operating segments (continued)

26.3

Statement of comprehensive income classified by operating segments based on groups of products, continued

	06/30/2015
Items in the statement of comprehensive income	Specialty plant nutrients ThUS$			Iodine and its derivatives ThUS$			Lithium and its derivatives ThUS$			Industrial chemicals ThUS$			Potassium ThUS$			Other products and services ThUS$			Corporate Unit ThUS$			Total segments and Corporate unit ThUS$

Revenue		335,279			139,178			100,353			52,460			220,445			24,053			-			871,768
Cost of sales		(234,196	)		(95,122	)		(48,772	)		(33,527	)		(143,738	)		(21,168	)		-			(576,523	)

Gross profit		101,083			44,056			51,581			18,933			76,707			2,885			-			295,245

Other incomes by function		-			-			-			-			-			-			7,291			7,291
Administrative expenses		-			-			-			-			-			-			(44,547	)		(44,547	)
Other expenses by function		-			-			-			-			-			-			(25,216	)		(25,216	)
Other gains (losses)		-			-			-			-			-			-			3,895			3,895
Financial income		-			-			-			-			-			-			6,012			6,012
Financial costs		-			-			-			-			-			-			(34,973	)		(34,973	)
interest in the profit or loss of associates and joint ventures accounted for by the equity method		-			-			-			-			-			-			6,843			6,843
Exchange differences		-			-			-			-			-			-			(3,209	)		(3,209	)
Profit (loss) before taxes		101,083			44,056			51,581			18,933			76,707			2,885			(83,904	)		211,341
Income tax expense		-			-			-			-			-			-			(55,667	)		(55,667	)
Profit (loss) from continuing operations		101,083			44,056			51,581			18,933			76,707			2,885			(139,571	)		155,674
Profit (loss) from discontinued operations		-			-			-			-			-			-			-			-
Profit (loss)		101,083			44,056			51,581			18,933			76,707			2,885			(139,571	)		155,674
Profit (loss), attributable to
Profit (loss) attributable to the controller´s owners		-			-			-			-			-			-			-			154,904
Profit (loss) attributable to the non-controlling interests		-			-			-			-			-			-			-			770
Profit (loss)		-			-			-			-			-			-			-			155,674

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

168

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 26

Operating segments (continued)

26.4

Revenue from transactions with other Company’s operating segments

06/30/2016
Items in the statement of comprehensive income	Specialty plant nutrients ThUS$		Iodine and its derivatives ThUS$		Lithium and its derivatives ThUS$		Industrial chemicals ThUS$		Potassium ThUS$		Other products and services ThUS$		Total segments and Corporate unit ThUS$

Revenue		332,221		118,566		192,774		30,518		181,621		25,759		881,459

06/30/2015
Items in the statement of comprehensive income	Specialty plant nutrients ThUS$		Iodine and its derivatives ThUS$		Lithium and its derivatives ThUS$		Industrial chemicals ThUS$		Potassium ThUS$		Other products and services ThUS$		Total segments and Corporate unit ThUS$

Revenue		335,279		139,178		100,353		52,460		220,445		24,053		871,768

26.5

Disclosures on geographical areas

As indicated in paragraph 33 of IFRS 8, the entity discloses geographical information on its revenue from operating activities with external customers and from non-current assets that are not financial instruments, deferred income tax assets, assets related to post-employment benefits or rights derived from insurance contracts.

26.6

Disclosures on main customers

With respect to the degree of dependency of the Company on its customers, in accordance with paragraph N° 34 of IFRS N° 8, the Company has no external customers who individually represent 10% or more of its revenue, Credit risk concentrations with respect to trade and other accounts receivable are limited due to the significant number of entities in the Company’s portfolio and its worldwide distribution, The Company’s policy requires guarantees (such as letters of credit, guarantee clauses and others) and/or to maintain insurance policies for certain accounts as deemed necessary by the Company's Management.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

169

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 26

Operating segments (continued)

26.7

Segments by geographical areas as of June 30, 2016 and June 30, 2015

	06/30/2016
Items	Chile ThUS$		Latin America and the Caribbean ThUS$		Europe ThUS$		North America ThUS$		Asia and others ThUS$		Total ThUS$
Revenue		58.102		120.842		216.094		232.516		253.905		881.459
Investment accounted for under the equity method		1,765		25,000		29,465		13,691		45,222		115,143
Intangible assets other than goodwill		108,744		-		-		225		1		108,970
Goodwill		26,629		86		11,373		-		-		38,088
Property, plant and equipment, net		1,614,411		249		3,162		2,396		1,375		1,621,593
Investment property		-		-		-		-		-		-
Other non-current assets		25,962		141		-		-		-		26,103
Non-current assets		1,777,511		25,476		44,000		16,312		46,598		1,909,897

	06/30/2015
Items	Chile ThUS$		Latin America and the Caribbean ThUS$		Europe ThUS$		North America ThUS$		Asia and others ThUS$		Total ThUS$
Revenue		64,867		146,529		186,430		257,317		216,625		871,768
Investment accounted for under the equity method		1,552		-		25,808		12,511		35,546		75,417
Intangible assets other than goodwill		112,814		-		-		251		1		113,066
Goodwill		26,929		86		11,373		-		-		38,388
Property, plant and equipment, net		1,791,840		153		1,303		2,253		1,496		1,797,045
Investment property		-		-		-		-		-		-
Other non-current assets		34,630		145		-		643		-		35,418
Non-current assets		1,967,765		384		38,484		15,658		37,043		2,059,334

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

170

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 26

Operating segments (continued)

26.8

Property, plant and equipment classified by geographical areas

The company's main productive facilities are located near their mines and extraction facilities in northern Chile, The following table presents the main production facilities as of June 30, 2016 and December 31, 2015:

	Location	Products
-	Pedro de Valdivia	:	Production of iodine and nitrate salts
-	María Elena	:	Production of iodine and nitrate salts
-	Coya Sur	:	Production of nitrate salts
-	Nueva Victoria	:	Production of iodine and nitrate salts
-	Salar de Atacama	:	Potassium chloride, lithium chloride, boric acid and potassium sulfate
-	Salar del Carmen	:	Production of lithium carbonate and lithium hydroxide
-	Tocopilla	:	Port facilities

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

171

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 27

Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature

27.1

Revenue

	06/30/2016		06/30/2015
	ThUS$		ThUS$
Products		879,357		868,269
Services		2,102		3,499
Total		881,459		871,768

27.2

Cost of sales

	06/30/2016			06/30/2015
	ThUS$			ThUS$
Raw material and supplies		(230,134	)		(231,157	)
Types of employee benefits expenses
Salaries and wages		(49,133	)		(43,079	)
Other short-term employee benefits		(30,916	)		(9,726	)
Termination benefit expenses		(2,713	)		(1,797	)
Total employee benefits expenses		(82,762	)		(54,602	)
Depreciation expense		(120,954	)		(132,643	)
Amortization expense		(1,501	)		(1,532	)
Small deposit amortization expense		(3,384	)		-
Impairment losses (reversals of impairment losses) recognized in profit or loss for the period		529			699
Operating leases		(51,295	)		(36,669	)
Investment plan expenses		(8,643	)		-
Maintenance and repair		(4,182	)		(4,616	)
Contractors		(30,224	)		(20,746	)
Operations transport		(24,623	)		(21,749	)
Freight and product transport costs		(15,197	)		(14,558	)
Packaging costs		(498	)		(651	)
Sales commissions		(3,776	)		(3,120	)
Port costs		(5,947	)		(6,387	)
CORFO right costs		(18,058	)		(10,832	)
Other expenses, by nature		(20,318	)		(37,960	)
Total		(620,967	)		(576,523	)

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

172

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 27

Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature, (continued)

27.3

Other income

	06/30/2016			06/30/2015
	ThUS$			ThUS$
Discounts obtained from suppliers		437			622
Indemnification received and insurance recoveries		-			23
Penalties charged to suppliers		96			118
Tax recoveries		3			1
Insurance recoveries		1,485			77
Excess in the provision for liabilities with 3rd parties		539			1,040
Sale of property, plant and equipment		(13	)		-
Sale of materials, spare parts and supplies		11			877
Sale de scrap		1			-
Interest collected from direct customers		20			-
Options on mining properties		1,459			1,373
Easements, ducts and roads		1			1,700
Non-conventional renewable energy		245			211
Reimbursement of mining patents and notarial expenses		1,013			658
Miscellaneous services		15			171
Other operating income		350			420
Total		5,662			7,291

27.4

Administrative expenses

	06/30/2016			06/30/2015
	ThUS$			ThUS$
Employee benefit expenses by nature
Salaries and wages		(20,135	)		(22,445	)
Other short-term benefits to employees		(1,973	)		(1,982	)
Total employee benefit expenses		(22,108	)		(24,427	)
Amortization expense		(3	)		(209	)
Other expenses, by nature		(18,696	)		(19,911	)
Total		(40,807	)		(44,547	)

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

173

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 27

Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature (continued)

27.5

Other expenses by function

	06/30/2016			06/30/2015
	ThUS$			ThUS$
Employee benefit expenses by nature
Depreciation and amortization expenses
Depreciation of stopped assets		(56	)		(124	)
Depreciation, residual value		-			-
Subtotal to date		(56	)		(124	)
Impairment loss (review of impairment losses) recognized in profit or loss for the year
Impairment of allowance for doubtful accounts		(207	)		(105	)
Subtotal to date		(207	)		(105	)

Other expenses, by nature
Legal Expenses		(2,005	)		(10,131	)
VAT and other unrecoverable tax		(407	)		(451	)
Fines, interests and tax (*)		(260	)		(4,513	)
Advisory services		(33	)		(7	)
Investment plan expenses		(3,022	)		(6,310	)
Small deposit amortization expenses		(2,112	)		-
Provision for energy arbitration proceeding		-			3,500
Article No, 21 one-off tax, (*)		(167	)		(5,635	)
Donations rejected as tax credits		(623	)		(670	)
Other operating expenses		(719	)		(770	)
Subtotal to date		(9,348	)		(24,987	)
Total		(9,611	)		(25,216	)

(*) These balances are considered payments as at June 2015 for approximately MUS$9.5 in taxes (Tax under Article No. 21 of the Income Tax Law and Value-added Tax), interest and other charges performed by the Company to the Chilean Internal Revenue Service (Servicio de Impuestos Internos) because of the submission of amendments to its income tax returns for tax years from 2009 through 2014, as it identified expenses for which the Company did not have sufficient supporting documentation to be considered expenses necessary to generate income in accordance with the current Chilean tax regulations for approximately MUS$14.7.

27.6

Other income (expenses)

	06/30/2016			06/30/2015
	ThUS$			ThUS$
Adjustment of reversal of provision for staff severance indemnities		-			3,466
Adjustment of Equity Method, prior year		1,130			429
Other gains (losses)		(375	)		-
Total		755			3,895

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

174

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 27

Gains (losses) from operating activities in the statement of income by function of expenses, included according to their nature (continued)

27.7

Summary of expenses by nature

	January to June						April to June
	2016			2015			2016			2015
	ThUS$			ThUS$			ThUS$			ThUS$

Raw material and supplies used		(230,134	)		(231,157	)		(123,239	)		(138,334	)

Types of employee benefits expenses

Salaries and wages		(69,268	)		(65,524	)		(38,991	)		(39,391	)
Other short-term employee benefits		32,889	)		(11,708	)		(23,648	)		(6,884	)
Termination benefit expenses		(2,713	)		(1,797	)		(1,163	)		(1,141	)
Total employee benefit expenses		(104,870	)		(79,029	)		(63,802	)		(47,416	)
Depreciation and amortization expenses
Depreciation expense		(121,010	)		(132,767	)		(60,855	)		(65,367	)
Amortization expense		(1,504	)		(1,741	)		(729	)		(1,390	)
Small deposit amortization expenses		(5,496	)		-			(1,307	)		-
Impairment loss (reversal of impairment losses) recognized in profit or loss for the year		322			594			1,019			128
Operating leases		(51,295	)		(36,669	)		(28,106	)		(22,690	)
Investment plan expenses		(11,665	)		(6,310	)		(4,397	)		-
Maintenance and repair		(4,182	)		(4,616	)		(2,126	)		(2,762	)
Contractors		(30,224	)		(20,746	)		(16,404	)		(12,580	)
Operations transport		(24,623	)		(21,749	)		(13,467	)		(14,106	)
Freight and product transport costs		(15,197	)		(14,558	)		(8,155	)		(9,076	)
Packaging costs		(498	)		(651	)		(334	)		(374	)
Sales commissions		(3,776	)		(3,120	)		(2,729	)		(2,326	)
Port costs		(5,947	)		(6,387	)		(3,748	)		(3,996	)
Corfo rights		(18,058	)		(10,832	)		(9,546	)		(5,936	)
Other expenses, by nature		(43,228	)		(76,548	)		(30,639	)		(35,049	)
Total expenses, by nature		(671,385	)		(646,286	)		(368,564	)		(361,274	)

This table corresponds to the summary required by the Chilean Superintendence of Securities and Insurance (SVS) and considers notes 27.2, 27.4 and 27.5.

27.8

Finance expenses

	January to June
	2016			2015
	ThUS$			ThUS$
Interest expense from bank borrowings and overdrafts		(1,058	)		(1,184	)
Interest expense from bonds		(29,743	)		(32,028	)
Interest expense from loans		(3,507	)		(3,413	)
Capitalized interest expenses		2,453			2,407
Other finance costs		(566	)		(755	)
Total		(32,421	)		(34,973	)

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

175

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes

Accounts receivable from taxes as of June 30, 2016 and December 31, 2015, are as follows:

28.1

Current tax assets

	06/30/2016		12/31/2015
	ThUS$		ThUS$
Monthly provisional income tax payments, Chilean companies current year		56,788		62,126
Monthly provisional payment Royalty		1,138		1,138
Monthly provisional income tax payments, foreign companies		1,842		1,178
Corporate tax credits (1)		776		830
Corporate tax absorbed by tax losses (2)		69		5
Total		60,613		65,277

(1)

These credits are available to companies and relate to the corporate tax payment in April of the following year, These credits include, amongst others, training expense credits (SENCE) and property, plant and equipment acquisition credits that are equivalent to 4% of the property, plant and equipment purchases made during the year, In addition, some credits relate to the donations the Group has made during 2016 and 2015.

(2)

This concept corresponds to the absorption of non-operating losses (NOL’s) determined by the company at year end, which must be imputed or recorded in the Retained Taxable Profits Registry (FUT).

In accordance with the laws in force and as provided by article 31 No, 3 of the Income Tax Law, when profits recorded in the FUT that have not been withdrawn or distributed are totally or partially absorbed by NOL’s, the corporate tax paid on such profits (24%, 22,5%, 21%, 20% or 17%, depending on the year in which profits were generated) will be considered to be a provisional payment with respect to the portion representing the absorbed accumulated tax profits.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

176

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.1

Current tax assets, continued

Tax payers are entitled to apply for a refund of this monthly provisional income tax payments on the absorbed profits recorded in the FUT registry via their tax returns (Form 22).

Therefore, the provisional payment for absorbed profits (PPAP) recorded in the FUT is in effect a recoverable tax, and as such the Company records it as an asset.

28.2

Current tax liabilities

Current tax liabilities	06/30/2016		12/31/2015
	ThUS$		ThUS$
1st Category income tax		22,523		30,705
Foreign company income tax		18,364		21,090
Article 21 single tax		59		275
Total		40,946		52,070

Income tax is calculated based on the profit or loss for tax purposes that is applied to the effective tax rate applicable in Chile. As established by Law No.20,780, an income tax rate of 21% was set starting from 2014, a rate of 22.5% for 2015, a rate of 24% for 2016, a rate of 25.5% for 2017, and a rate of 27% starting from 2018.

The provision for royalty is determined by applying the tax rate determined for the net operating income (NOI). Currently, the Company pays 5% for the application of the Tax Invariability Contract established with the Ministry of Economy in 2010.

In conclusion, both concepts represent the estimated amount the Company will have to pay for income tax and tax on mining.

28.3

Tax earnings

As of June 30, 2016 and December 31, 2015, the Company and its subsidiaries have recorded the following consolidated balances for retained tax earnings, income not constituting revenue subject to income tax, accumulated tax losses and credit for shareholders:

	06/30/2016 ThUS$		12/31/2015 ThUS$
Taxable profits with credit rights		1,228,440		1,254,859
Taxable profits without credit right		76,187		94,073
Taxable loss		14,017		9,947
Credit for shareholders		328,550		302,081

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

177

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.3

Tax earnings, continued

The Retained Taxable Profits Registry (FUT) is a chronological registry where the profits generated and distributed by the company are recorded. The object of the FUT is to control the accumulated tax profits of the company that may be distributed, withdrawn or remitted to the owners, shareholders or partners, and the final taxes that must be imposed, called in Chile Global Aggregate Tax (that levies persons resident or domiciled in Chile), or additional tax (that levies persons “not” resident or domiciled in Chile).

The FUT Register contains profits with credit rights and profits without credit rights, which arise out of the inclusion of the net taxable income determined by the company or the profits received by the company that may be dividends received or withdrawals made during the period.

Profits without credit rights represent the tax payable by the company within the year and filed the following year, therefore they will be deducted from the FUT Registry the following year.

Profits with credit rights may be used to reduce the final tax burden of owners, shareholders or partners, which upon withdrawal are entitled to use the credits associated with the relevant profits.

In summary, companies use the FUT Registry to maintain control over the profits they generate that have not been distributed to the owners and the relevant credits associated with such profits.

28.4

Income tax and deferred taxes

Assets and liabilities recognized in the statement of financial position are offset if and only if:

The Company has legally recognized before the right the tax authority to offset the amounts recognized in these entries; and

Deferred income tax assets and liabilities are derived from income tax related to the same tax authority on:

(i)

the same entity or tax subject; or

( ii)

different entities or tax subjects who intend either to settle current fiscal assets and liabilities for their net amount, or to realize assets and pay liabilities simultaneously in each of the future periods in which the Company expects to settle or recover significant amounts of deferred tax assets or liabilities.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

178

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

Deferred income tax assets recognized are the income taxes that are to be recovered in future periods, related to:

deductible temporary differences.

the offset of losses obtained in prior periods and not yet subject to tax deduction; and

the offset of unused credits from prior periods.

The Company recognizes a deferred tax asset when there is certainty that these can be offset with tax income from subsequent periods, losses or fiscal credits not yet used, but solely as long as it is more likely than not that there will be tax earnings in the future against which to charge to these losses or unused fiscal credits.

Deferred tax liabilities recognized refer to the amounts of income taxes payable in future periods related to taxable temporary differences.

d.1

Income tax assets and liabilities as of June 30, 2016 are detailed as follows:

	Net position, assets				Net position, liabilities
Description of deferred income tax assets and liabilities	Assets		Liabilities		Assets		Liabilities
	ThUS$		ThUS$		ThUS$		ThUS$
Depreciation		-		-		-		233.916
Doubtful accounts impairment		-		-		5,150		-
Accrued vacations		-		-		3,589		-
Manufacturing expenses		-		-		-		111,182
Unrealized gains (losses) from sales of products		-		-		90,747		-
Fair value of bonds		-		-		594		-
Severance indemnity		-		-		-		4,411
Hedging		-		-		7,950		-
Inventory of products, spare parts and supplies		1		-		29,071		-
Research and development expenses		-		-		-		5,083
Tax losses		-		-		3,653		-
Capitalized interest		-		-		-		3,471
Expenses in assumption of bank loans		-		-		-		3,392
Unaccrued interest		-		-		146		-
Fair value of property, plant and equipment		-		-		-		3,601
Employee benefits		-		-		1,844		-
Royalty deferred income taxes		-		-		-		6,212
Provision for lawsuits and legal expenses		-		-		7,104		-
Provision for investment plan		-		-		1,940		-
Provision of fines and crushing site closure		-		-		-		-
Other		642		-		-		1
Balance to date		643		-		151,788		371,269
Net balance		643		-		-		219,481

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

179

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

d.2

Income tax assets and liabilities as of December 31, 2015 are detailed as follows

	Net position, assets				Net position, liabilities
Description of deferred income tax assets and liabilities	Assets		Liabilities		Assets		Liabilities
	ThUS$		ThUS$		ThUS$		ThUS$
Depreciation		-		-		-		233,073
Doubtful accounts impairment		-		-		5,119		-
Accrued vacations		-		-		3,368		-
Manufacturing expenses		-		-		-		109,134
Unrealized gains (losses) from sales of products		-		-		87,440		-
Fair value of bonds		-		-		446		-
Severance indemnity		-		-		-		4,178
Hedging		-		-		11,876		-
Inventory of products, spare parts and supplies		1		-		29,473		-
Research and development expenses		-		-		-		7,981
Tax losses		-		-		1,522		-
Capitalized interest		-		-		-		3,133
Expenses in assumption of bank loans		-		-		-		3,651
Unaccrued interest		-		-		156		-
Fair value of property, plant and equipment		-		-		-		3,375
Employee benefits		-		-		1,920		-
Royalty deferred income taxes		-		-		-		6,410
Acquisition of intangible assets		-		-		-		-
Provision for lawsuits and legal expenses		-		-		7,357		-
Provision for investment plan		-		-		3,312		-
Provision of fines and crushing site closure		-		-		-		-
Other		160		-		-		445
Balance to date		161		-		151,989		371,380
Net balance		161		-		-		219,391

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

180

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

d.3

Reconciliation of changes in deferred tax liabilities (assets) as of June 30, 2016

	Deferred tax liabilities (assets) at the beginning of the period			Deferred tax expense (income) recognized in profit or loss			Deferred tax related to items credited (debited) directly to equity			Total increase (decrease) of deferred tax liabilities (assets)			Deferred tax liabilities (assets) at the end of the period
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Depreciation		233,073			843			-			843			233,916
Doubtful accounts impairment		(5,119	)		(31	)		-			(31	)		(5,150	)
Accrued vacations		(3,368	)		(221	)		-			(221	)		(3,589	)
Manufacturing expenses		109,134			2,048			-			2,048			111,182
Unrealized gains (losses) from sales of products		(87,440	)		(3,307	)		-			(3,307	)		(90,747	)
Fair value of bonds		(446	)		-			(148	)		(148	)		(594	)
Severance indemnity		4,178			430			(197	)		233			4,411
Hedging		(11,876	)		3,926			-			3,926			(7,950	)
Inventory of products, spare parts and supplies		(29,474	)		402			-			402			(29,072	)
Research and development expenses		7,981			(2,898	)		-			(2,898	)		5,083
Capitalized interest		3,133			338			-			338			3,471
Expenses in assumption of bank loans		3,651			(259	)		-			(259	)		3,392
Unaccrued interest		(156	)		10			-			10			(146	)
Fair value of property, plant and equipment		3,375			226			-			226			3,601
Employee benefits		(1,920	)		76			-			76			(1,844	)
Royalty deferred income taxes		6,410			(198	)		-			(198	)		6,212
Unused tax losses		(1,522	)		(2,131	)		-			(2,131	)		(3,653	)
Purchase of intangible assets		-			-			-			-			-
Provision for lawsuits and legal expenses		(7,357	)		253			-			253			(7,104	)
Provision for investment plan		(3,312	)		1,372			-			1,372			(1,940	)
Provision of fines and crushing site closure		-			-			-			-			-
Other ID		285			(926	)		-			(926	)		(641	)
Total temporary differences, losses and unused fiscal credits		219,230			(47	)		(345	)		(392	)		218,838

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

181

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

d.4

Reconciliation of changes in deferred tax liabilities (assets) as of December 31, 2015

	Deferred tax liabilities (assets) at the beginning of the period			Deferred tax expense (income) recognized in profit or loss			Deferred tax related to items credited (debited) directly to equity			Total increase (decrease) of deferred tax liabilities (assets)			Deferred tax liabilities (assets) at the end of the period
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Depreciation		233,862			(789	)		-			(789	)		233,073
Doubtful accounts impairment		(6,755	)		1,636			-			1,636			(5,119	)
Accrued vacations		(3,735	)		367			-			367			(3,368	)
Manufacturing expenses		81,650			27,484			-			27,484			109,134
Unrealized gains (losses) from sales of products		(83,355	)		(4,085	)		-			(4,085	)		(87,440	)
Fair value of bonds		(350	)		-			(96	)		(96	)		(446	)
Severance indemnity		5,950			(2,081	)		309			(1,772	)		4,178
Hedging		(5,512	)		(6,364	)		-			(6,364	)		(11,878	)
Inventory of products, spare parts and supplies		(24,632	)		(4,842	)		-			(4,842	)		(29,474	)
Research and development expenses		4,285			3,696			-			3,696			7,981
Capitalized interest		26,904			(23,771	)		-			(23,771	)		3,133
Expenses in assumption of bank loans		4,011			(360	)		-			(360	)		3,651
Unaccrued interest		(150	)		(6	)		-			(6	)		(156	)
Fair value of property, plant and equipment		(70	)		3,445			-			3,445			3,375
Employee benefits		(2,450	)		530			-			530			(1,920	)
Royalty deferred income taxes		7,791			(1,381	)		-			(1,381	)		6,410
Unused tax losses		(715	)		(807	)		-			(807	)		(1,522	)
Purchase of intangible assets		235			(235	)		-			(235	)		-
Provision for lawsuits and legal expenses		(3,663	)		(3,694	)		-			(3,694	)		(7,357	)
Provision for investment plan		(8,946	)		5,634			-			5,634			(3,312	)
Provision of fines and crushing site closure		(1,654	)		1,654			-			1,654			-
Other ID		308			(23	)		-			(23	)		285
Total temporary differences, losses and unused fiscal credits		223,009			(3,992	)		213			(3,779	)		219,230

During the period ended June 30, 2016 and December 31, 2015, the Company calculated and accounted for taxable income considering a rate of 24% and 22.5% respectively, in conformity with Law No, 20,780, Tax Reform, published in the Official Gazette on September 29, 2014.

The main amendments include a gradual increase in the corporate income tax rate up to 27% starting from 2018.

SQM S.A.

El Trovador 4285

Las Condes, Santiago, Chile

Tel: (56 2) 2425 2000

www.sqm.com

182

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

d.5

Deferred taxes related to benefits for tax losses

The Company’s tax loss carryforwards (NOL carryforwards) were mainly generated by losses in Chile, which in accordance with current Chilean tax regulations have no expiration date.

As of June 30, 2016 and December 31, 2015, tax loss carryforwards (NOL carryforwards) are detailed as follows:

	06/30/2016		12/31/2015
	ThUS$		ThUS$

Chile		3,653		1,522
Total		3,653		1,522

Tax losses as of June 30, 2016 correspond mainly to SQM S.A., Exploraciones Mineras S.A. and Agrorama S.A.

d.6

Unrecognized deferred income tax assets and liabilities

Unrecognized deferred tax assets and liabilities as of June 30, 2016 and December 31, 2015 are as follows:

	06/30/2016			12/31/2015
	ThUS$			ThUS$
	Assets (liabilities)			Assets (liabilities)

Tax losses (NOL’s)		139			139
Doubtful accounts impairment		81			81
Inventory impairment		1,020			1,020
Pensions plan		(715	)		(715	)
Accrued vacations		29			29
Depreciation		(57	)		(57	)
Other		(19	)		(19	)
Balances to date		478			478

Tax losses mainly relate to the United States, and they expire in 20 years.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

183

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

d.7

Movements in deferred tax assets and liabilities

Movements in deferred tax assets and liabilities as of June 30, 2016 and December 31, 2015 are detailed as follows:

	06/30/2016			12/31/2015
	ThUS$			ThUS$
	Liabilities (assets)			Liabilities (assets)

Deferred tax assets and liabilities, net opening balance		219,230			223,009
Increase (decrease) in deferred taxes in profit or loss		(47	)		(3,992	)
Increase (decrease) in deferred taxes in equity		(345	)		213
Balances to date		218,838			219,230

d.8

Disclosures on income tax expense (income)

The Company recognizes current tax and deferred taxes as income or expenses, and they are included in profit or loss, unless they arise from:

(a)

a transaction or event recognized in the same period or in a different period, outside profit or loss either in other comprehensive income or directly in equity; or

(b)

a business combination

Current and deferred tax expenses (income) are detailed as follows:

	06/30/2016			06/30/2015
	ThUS$			ThUS$
	Income (expenses)			Income (expenses)

Current income tax expense
Current income tax expense		(57,338	)		(64,922	)
Adjustments to prior year current income tax		-			2,114
Current income tax expense, net, total		(57,338	)		(62,808	)

Deferred tax expense
Deferred tax expense (income) relating to the creation and reversal of temporary differences		47			7,141
Deferred tax expense, net, total		47			7,141
Tax expense (income)		(57,291	)		(55,667	)

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

184

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

Tax expenses (income) for foreign and domestic parties are detailed as follows:

	06/30/2016			06/30/2016
	ThUS$			ThUS$
	Income (expenses)			Income (expenses)

Current income tax expense by foreign and domestic parties, net
Current income tax expense, foreign parties, net		(543	)		(3,010	)
Current income tax expense, domestic, net		(56,795	)		(59,798	)
Current income tax expense, net, total		(57,338	)		(62,808	)

Deferred tax expense by foreign and domestic parties, net
Deferred tax expense, foreign parties, net		571			(35	)
Deferred tax expense, domestic, net		(524	)		7,176
Deferred tax expense, net, total		47			7,141
Income tax expense		(57,291	)		(55,667	)

d.9

Equity interest in taxation attributable to equity-accounted investees

The Company does not recognize any deferred tax liability in all cases of taxable temporary differences associated with investments in subsidiaries, branches and associated companies or interest in joint ventures, because as indicated in the standard, the following two conditions are jointly met:

(a)

the parent, investor or interest holder is able to control the time for reversal of the temporary difference; and

(b)

It is more likely than not that the temporary difference is not reversed in the foreseeable future.

In addition, the Company does not recognize deferred income tax assets for all deductible temporary differences from investments in subsidiaries, branches and associated companies or interests in joint ventures because it is not possible to meet for the following requirements:

(a)

Temporary differences are reversed in a foreseeable future; and

(b)

The Company has tax earnings, against which temporary differences can be used.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

185

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

d.10

Disclosures on the tax effects of other comprehensive income components:

Income tax related to other income and expense components with a charge or credit to net equity	Amount before taxes (expense) gain			(Expense) income for income taxes		Amount after taxes
	06/30/2016			06/30/2016		06/30/2016
	ThUS$			ThUS$		ThUS$
Gain (loss) from defined benefit plans		(1,014	)		197		(817	)
Cash flow hedge		(359	)		765		(211	)
Total		(1,373	)		765		(1,028	)

Income tax related to components of other income and expense with a charge or credit to net equity	Amount before taxes (expense) gain		((Expense) income for income taxes			Amount after taxes
	06/30/2015		06/30/2015			06/30/2015
	ThUS$		ThUS$			ThUS$
Gain (loss) from defined benefit plans		657		(158	)		499
Cash flow hedge		1,217		(224	)		993
Total		1,874		(382	)		1,492

d.11

Explanation of the relationship between expense (income) for tax purposes and accounting income.

In accordance with paragraph No, 81, letter c) of IAS 12, the Company has estimated that the method that discloses more significant information for the users of its financial statements is the reconciliation of tax expense (income) to the result of multiplying income for accounting purposes by the tax rate in force in Chile, This option is based on the fact that the Parent and its subsidiaries incorporated in Chile generate almost the total amount of tax expense (income) and the fact that amounts of subsidiaries incorporated in foreign countries have no relevant significance within the context of the total amount of tax expense (income).

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

186

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

Reconciliation of numbers in income tax expenses (income) and the result of multiplying financial gain by the rate prevailing in Chile,

	Income (expense)
	06/30/2016			06/30/2015
	ThUS$			ThUS$
Consolidated income before taxes		199,689			211,341
Income tax rate in force in Chile		24	%		22,5	%

Tax expense using the legal rate		(47,925	)		(47,552	)
Effect of royalty tax expense		(2,809	)		(4,968	)
Tax effect of non-taxable revenue		3,100			1,966
Effect of taxable rate of non-deductible expenses for determination of taxable income (loss)		(894	)		(2,912	)
Tax effect of tax rates supported abroad		2,600			91
Other tax effects from the reconciliation between the accounting income and tax expense		(11,363	)		(2,292	)
Tax expense using the effective rate		(57,291	)		(55,667	)

d.12

Tax periods potentially subject to verification:

The Group’s Companies are potentially subject to income tax audits by tax authorities in each country, These audits are limited to a number of interim tax periods, which, in general, when they elapse, give rise to the expiration of these inspections,

Tax audits, due to their nature, are often complex and may require several years, Below, we provide a summary of tax periods that are potentially subject to verification, in accordance with tax regulations in force in the country of origin:

Chile

According to article 200 of Decree Law No 830, the tax authority shall review for any deficiencies in its settlement and taxes turn giving rise, by applying a requirement of 3 years term from the expiration of the legal deadline when payment should have been made, Besides, this requirement was extended to 6 years term for the revision of taxes subject to declaration, when such declaration was not been filed or has been presented maliciously false.

United States

In the United States, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return, In the event that an omission or error is detected in the tax return of sales or cost of sales, the review can be extended for a period of up to 6 years.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

187

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 28

Income tax and deferred taxes (continued)

28.4

Income tax and deferred taxes, continued

Mexico:

In Mexico, the tax authority can review tax returns up to 5 years from the expiration date of the tax return.

Spain:

In Spain, the tax authority can review tax returns up to 4 years from the expiration date of the tax return.

Belgium:

In Belgium, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return if no tax losses exist, In the event of detecting an omission or error in the tax return, the review can be extended for a period of up to 5 years.

South Africa:

In South Africa, the tax authority may review tax returns for up to 3 years from the expiration date of the tax return, In the event an omission or error in the tax return is detected, the review can be extended for a period of up to 5 years.

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

188

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 29

Disclosures on the effects of fluctuations in foreign currency exchange rates

Assets held in foreign currency subject to fluctuations in exchange rates are detailed as follows:

Class of assets	Currency	06/30/2016 ThUS$		12/31/2015 ThUS$
Current assets
Cash and cash equivalents	ARS		4		1
Cash and cash equivalents	BRL		20		8
Cash and cash equivalents	CLP		1,413		2,656
Cash and cash equivalents	CNY		765		272
Cash and cash equivalents	EUR		13,097		4,245
Cash and cash equivalents	GBP		24		-
Cash and cash equivalents	IDR		4		-
Cash and cash equivalents	INR		8		14
Cash and cash equivalents	MXN		173		1,439
Cash and cash equivalents	PEN		2		1
Cash and cash equivalents	THB		-		1
Cash and cash equivalents	YEN		1,950		1,690
Cash and cash equivalents	ZAR		1,426		4,123
Subtotal cash and cash equivalents			18,886		14,450
Other current financial assets	CLF		-		17,507
Other current financial assets	CLP		22,217		131,633
Subtotal other current financial assets			22,217		149,140
Other current non-financial assets	ARS		1		-
Other current non-financial assets	AUD		-		34
Other current non-financial assets	BRL		13		8
Other current non-financial assets	CLF		60		38
Other current non-financial assets	CLP		28,744		39,091
Other current non-financial assets	CNY		50		27
Other current non-financial assets	EUR		1,354		2,278
Other current non-financial assets	MXN		1,705		1,036
Other current non-financial assets	THB		2		8
Other current non-financial assets	YEN		20		29
Other current non-financial assets	ZAR		696		4,466
Subtotal other current non-financial assets			32,645		47,015
Trade and other receivables	AUD		1		-
Trade and other receivables	BRL		24		19
Trade and other receivables	CLF		358		993
Trade and other receivables	CLP		54,445		76,748
Trade and other receivables	CNY		53		77
Trade and other receivables	EUR		40,368		38,797
Trade and other receivables	GBP		1,196		582
Trade and other receivables	MXN		595		425
Trade and other receivables	PEN		19		112
Trade and other receivables	THB		1,488		1,473
Trade and other receivables	YEN		361		-
Trade and other receivables	ZAR		13,702		15,549
Subtotal trade and other receivables			112,610		134,775
Receivables from related parties	AED		-		-
Receivables from related parties	CLP		34		52
Receivables from related parties	EUR		576		604
Receivables from related parties	THB		786		1,112
Receivables from related parties	CNY		-		-
Receivables from related parties	YEN		211		193
Receivables from related parties	ZAR		-		-
Subtotal receivables from related parties			1,607		1,961

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

189

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 29

Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

Class of assets	Currency	06/30/2016 ThUS$		12/31/2015 ThUS$
Current tax assets	ARS		4		-
Current tax assets	CLP		1,380		1,453
Current tax assets	EUR		124		177
Current tax assets	ZAR		448		424
Current tax assets	MXN		679		8
Current tax assets	PEN		230		222
Subtotal current tax assets			2,865		2,284
Non-current assets
Other non-current financial assets	CLP		20		20
Other non-current financial assets	YEN		46		39
Subtotal other non-current financial assets			66		59
Other non-current non-financial assets	BRL		142		116
Other non-current non-financial assets	CLP		721		536
Subtotal other non-current non-financial assets			863		652
Non-current right receivable	CLF		409		415
Non-current right receivable	CLP		672		467
Subtotal non-current rights receivable			1,081		882
Equity-accounted investees	AED		28,697		23,369
Equity-accounted investees	CLP		1,840-		1,535
Equity-accounted investees	IDR		-		-
Equity-accounted investees	EUR		8,025		7,201
Equity-accounted investees	INR		974		962
Equity-accounted investees	THB		1,805		1,672
Equity-accounted investees	TRY		18,794		15,103
Subtotal equity-accounted investees			60,135		49,842
Intangible assets other than goodwill	CLP		306		284
Intangible assets other than goodwill	CNY		1		1
Subtotal intangible assets other than goodwill			307		285
Property, plant and equipment	CLP		10,122		4,089
Subtotal property, plant and equipment			10,122		4,089
Total non-current assets			72,574		55,809
Total assets			263,403		405,434

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

190

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 29

Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

Liabilities held in foreign currencies are detailed as follows:

		06/30/2016						12/31/2015
Class of liability	Currency	Up to90 days ThUS$		91 days to 1 year ThUS$		Total ThUS$		Up to90 days ThUS$		91 days to 1 year ThUS$		Total ThUS$
Current liabilities
Other current financial liabilities	CLF		4,958		45,418		50,376		4,423		5,610		10,033
Other current financial liabilities	CLP		-		20,721		20,721
Subtotal other current financial liabilities			4,958		66,139		71,097		4,423		5,610		10,033
Trade and other payables	BRL		36		2		36		38		-		38
Trade and other payables	CHF		-		-		-		-		-		-
Trade and other payables	CLP		30,617		1		30,617		48,707		-		48,707
Trade and other payables	CNY		-		-		-		-		-		-
Trade and other payables	EUR		9,993		136		9,993		8,591		-		8,591
Trade and other payables	GBP		31		-		31		55		-		55
Trade and other payables	INR		1		-		1		1		-		1
Trade and other payables	MXN		1		-		1		76		-		76
Trade and other payables	PEN		9		-		9		11		-		11
Trade and other payables	ZAR		1,382		-		1,382		1,727		-		1,727
Subtotal trade and other payables			42,070		139		42,209		59,206		-		59,206
Other current provisions	BRL		-		-		-		9		-		9
Other current provisions	CLP		-		69		69		15		-		15
Other current provisions	EUR		6		-		6		5		-		5
Subtotal other current provisions			6		69		75		29		-		29
Current tax liabilities	CNY		-		-		-		-		2		2
Current tax liabilities	EUR		-		794		794		-		889		889
Current tax liabilities	MXN		-		258		258		-		24		24
Subtotal current tax liabilities			-		1,052		1,052		-		915		915

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

191

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 29

Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

		06/30/2016						12/31/2015
Class of liability	Currency	Up to 90 days ThUS$		over 90 days to 1 year ThUS$		Total ThUS$		Up to90 days ThUS$		Over 90 days to 1 year ThUS$		Total ThUS$
Other current non-financial liabilities	BRL		5		-		5		3		-		3
Other current non-financial liabilities	CLP		3,799		4,630		8,429		4,684		6,556		11,240
Other current non-financial liabilities	CNY		-		-		-		28		-		28
Other current non-financial liabilities	EUR		891		-		891		1,143		-		1,143
Other current non-financial liabilities	MXN		821		36		857		394		31		425
Other current non-financial liabilities	YEN		-		10		10
Other current non-financial liabilities	PEN		70		-		70		70		-		70
Other current non-financial liabilities	GBP		9		-		9
Other current non-financial liabilities	ZAR		6		-		6		13		-		13
Subtotal other current non-financial liabilities			5,601		4,676		10,277		6,335		6,587		12,922
Total current liabilities			52,635		72,075		124,710		69,993		13,112		83,105

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

192

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 29

Disclosures on the effects of fluctuations in foreign currency exchange rates (continued)

		06/30/2016
Class of liability	Currency	1 to 2 years ThUS$		2 to 3 years ThUS$		3 to 4 years ThUS$		4 to 5 years ThUS$		Over 5 years ThUS$		Total ThUS$
Non-current liabilities
Other non-current financial liabilities	CLF		5,909		5,909		5,909		5,909		246,361		269,997
Subtotal other non-current financial liabilities			5,909		5,909		5,909		5,909		246,361		269,997
Non-current provisions for employee benefits	CLP		-		-		-		-		609		609
Non-current provisions for employee benefits	MXN		-		-		-		-		103		103
Non-current provisions for employee benefits	YEN		-		-		-		-		580		580
Subtotal non-current provisions for employee benefits			-		-		-		-		1,292		1,292
Total non-current liabilities			5,909		5,909		5,909		5,909		247,653		271,289

		12/31/2015
Class of liability	Currency	1 to 2 years ThUS$		2 to 3 years ThUS$		3 to 4 years ThUS$		4 to 5 years ThUS$		Over 5 years ThUS$		Total ThUS$
Non-current liabilities
Other non-current financial liabilities	CLF		41,485		5,413		5,413		5,413		228,083		285,807
Subtotal other non-current financial liabilities			41,485		5,413		5,413		5,413		228,083		285,807
Non-current provisions for employee benefits	CLP		-		-		-		-		539		539
Non-current provisions for employee benefits	MXN		-		-		-		-		100		100
Non-current provisions for employee benefits	YEN		-		-		-		-		495		495
Subtotal non-current provisions for employee benefits			-		-		-		-		1,134		1,134
Total non-current liabilities			41,485		5,413		5,413		5,413		229,217		286,941

SQM S.A.
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

193

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 30

Mineral resource exploration and evaluation expenditure

Because of the nature of the operations of Sociedad Química y Minera de Chile S.A. and its subsidiaries and the type of exploration they conduct (which is different than other mining businesses where the exploration process results in significant time), the exploration and process and the definition of the economic feasibility occurs normally within the year. Accordingly, although expenditure is initially capitalized, it could be recognized in profit or loss for the same year should there be no technical and commercial feasibility. This results in having no significant expenditure that have no feasibility study at the end of the year.

Prospecting expenditure can be found in 4 different stages: execution, economically feasible, not economically feasible and under exploitation:

1. Execution: prospecting expenditure which are under execution and accordingly there is no yet a definition as to its economic feasibility are classified in the caption property, plant and equipment, as of June 30, 2016 and December 31, 2015, the balance amounts to ThUS$13,442 and ThUS$ 10,135, respectively,

2. Economically feasible: prospecting expenditure, which upon completion, has been concluded to be economically feasible is classified in the caption non-current assets in other non-current non-financial assets, as of June 30, 2016 and December 31, 2015, the balance amounts to ThUS$27,247 and ThUS$ 31,911 respectively,

3. Not economically feasible: Prospecting expenditure, which upon completion it has been concluded that are not economically feasible are recorded in profit or loss: As of June 30, 2016, this amounts to ThUS$ 0 and ThUS$12 as of June 30, 2015.

4. Under exploitation: Prospecting expenditure under exploitation is classified in the caption current assets in current inventories, These are amortized considering the exploited material, as of June 30, 2016 and December 31, 2015, the balance amounts to ThUS$2,012 and ThUS$ 1,269 respectively.

For the amount of capitalized expenditure, the total amount disbursed in exploration and evaluation of mineral resources as of June 30, 2016 ThUS$2,010, and correspond to non-metallic projects, Such expenditure mainly correspond to studies, either topographical, geological, exploratory drilling, sampling, among others,.

With respect to this expenditure, the Company has defined classifying it in accordance with IFRS 6.9:

For exploration expenditure where the mineral has low ore grade that is not economically exploitable, it is debited directly to profit or loss.

If studies determine that the ore grade is economically exploitable, it is classified in other non-current assets in the caption stain development and prospecting expenses and at the time of making the decision for exploiting the zone it is classified in the caption inventories as part of the cost of raw materials required for production purposes.

SQM
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

194

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 31

Lawsuits and complaints

During 2015, the Chilean IRS has filed several lawsuits and complaints related to the so-called “SQM Case”, which are associated with the irregular financing of politicians against a number of individuals, amongst others, the legal representatives of the Company Patricio de Sominihac T. – CEO – and Ricardo Ramos R. – Vice President of Finance–. Basically, those lawsuits and complaints relate to alleged tax crimes associated with a possible undue decrease in taxable net income of the Company and two of its subsidiaries over the last seven years by recording as expenses in their accounting records invoices and fee receipts, which could be considered to be ideologically false. Such legal actions are also filed against the taxpayers who provided the tax documents that allowed the alleged performance of the related illicit acts.

Likewise, during 2015 Oscar Gajardo S. filed several similar lawsuits against the Directors and Executives of ten major Chilean companies, including SQM, alleging undue appropriation incurred by making contributions regulated by the Law and the Chilean Electoral Service without the approval of their shareholders. Subsequently, Mr. Gajardo filed a new lawsuit against Patricio Contesse G. – former CEO of SQM – and Ricardo Ramos R. el al for the alleged perpetration of several crimes for the irregular financing of politicians to the detriment of SQM and its shareholders.

Additionally, during 2015 and within the context of the “SQM Case”, the Deputy of the Tarapacá Region of Chile Hugo Gutiérrez G. filed a lawsuit for alleged extortion-bribery and money laundering referred to in Law No. 20.393 on Legal Responsibility of Juridical Persons against SQM and its legal representative Patricio de Sominihac T. and Senators of the Tarapacá Region of Chile Jaime Orpis B. and Fulvio Rossi C.

Actions performed by the Authority

The Public Ministry and Chilean IRS (Servicio de Impuestos Internos (SII)) have performed a number of actions within the framework of the so-called “SQM Case” where the Company and its executives have provided their cooperation. Several of the Company’s executives have granted access to their computers and made several statements at the request of the Prosecutors responsible for the investigation. Additionally, SQM has provided physical and digital copies of its accounting records and its subsidiaries’ accounting records. In addition, SQM has also provided the Public Ministry with its email files and all the documentation that has been required by the related authority.

SQM
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

195

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 31

Lawsuits and complaints, (continued)

Shearman & Sterling and Ad-Hoc Committee

At its Extraordinary Meeting of February 26, 2015, the Board of Directors formed an Ad-Hoc Committee (the Committee) starting April 24, 2015, composed of the Directors Robert A. Kirkpatrick, Wolf von Appen B. and Edward J. Waitzer (the latter acting as Chairman) to investigate and gather all the information necessary related to the “Penta case – specific SQM Case” to report upon performance of such activities to the Board of Directors the results, conclusions and recommendations resulting from its work. The Board of Directors delegated in the Committee the authority required to perform its duties and empowered it so that at its discretion engages all legal and accounting advisory required and other independent external advisory services as it deems appropriate and that upon performing its duties reports to the Board of Directors under the terms indicated above.

The Committee engaged the legal Advisory of the law firms Shearman & Sterling and Vial / Serrano, and the forensic services provided by the US company FTI (the “Advisors”) to conduct an investigation and analysis of the possible contingencies to which SQM may be exposed under the standards contained in the Foreign Corrupt Practices Act (FCPA) of the United States of America, which is applicable to the Company as the issuer of securities in the US market. Specifically, the investigation was focused on conducting an analysis of: (a) whether the Company had made any undue payment defined as a corrupt practice for FCPA purposes; and (b) whether the Company had not complied with the accounting regulations in accordance with that established in the FCPA.

On December 15, 2015, the Committee, together with the Advisors, reported to the Board of Directors the results, conclusions and recommendations resulting from their work. Likewise, on the same date, the Advisors reported such results, conclusions and recommendations to the Chilean Authorities and on January 7, 2016, they reported these to the US Regulators.

The main conclusions contained in the Ad-Hoc Committee Report are: (a) the Committee identified payments authorized by the former General Manager of SQM, Mr. Patricio Contesse G. with respect to which the Company found no sufficient supporting documentation; (b) no evidence was identified demonstrating that such payments were made with the purpose of inducing an public officer to act or refrain from acting with the purpose of helping SQM obtain economic benefits: (c) a conclusion was reached with respect to the cost center managed by the former General Manager of SQM Mr. Patricio Contesse G., that the Company’s accounting records did not accurately reflect the transactions challenged, notwithstanding the fact that, because of their amount, such transactions are below the materiality level defined by the Company’s external auditors determined in comparison to the volume of equity, sales, expenses or profits of SQM within the reported period; and that (d) SQM’s internal controls were not sufficient to monitor the expenses included in the cost center managed by the former General Manager of SQM and that the Company relied in the adequate use of the resources by Mr. P. Contesse G. ”

SQM
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

196

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 32

Sanction proceedings

On April 1, 2015, the SVS started an administrative proceeding against five Directors of SQM for supposedly not having provided to the market on a timely and truthful basis information which could be significant for making investment decisions. Such information mainly relates to the preliminary estimate of the impact on the Company’s financial statements of certain expenses paid by the Company between 2008 and 2014 and which might not qualify as expenses under current Chilean tax regulations because of the absence of supporting documentation.

On December 31, 2015, the Company reported that the Chilean Superintendence of Securities and Insurance (SVS) has made its resolution to impose sanctions on Patricio Contesse Fica, Julio Ponce Lerou – former Company’s Directors–, Hernán Büchi Buc, Juan Antonio Guzmán Molinari and Wolf von Appen Berhmann –current Company’s Directors – for not having reported to the market, in March 2015, as an Essential event and in their role of Company’s Directors, on the expenses that SQM incurred during certain years, which did not have sufficient reporting documentation or might be considered to be unnecessary to generate income. The sanction imposed relates to a fine of UF 1,000 on each of the aforementioned individuals and a remedy can be sought with the Chilean Superintendence of Securities and Insurance (SVS) and courts of justice.

Note 33

Potential Arbitration Proceeding for the Settlement Insurance Policy for Heavy Rains in the Atacama Saltpeter Deposit

On February 7 and 8, 2013, strong and unusual heavy rains occurred on the Atacama Saltpeter deposit in the Antofagasta Region of Chiloe affecting SQM’s facilities and resulting and damages in its roads, buildings, laboratories, evaporation ponds, equipment and other assets and loss of products-in-process and finished products.

On June 18, 2015. The insurance appraiser, SGC Transporte, issued the Final Settlement Report within the framework of the “Stock Throughput” insurance policy engaged by the Company with insurance company RSA, which, in summary indicated that the claim reported is covered by such policy and that total losses have been quantified as amounting to US$ 20.7 million. RSA has rejected such Final Settlement Report issued by SGC Transporte. With the purpose of requiring the payment of the amount owed by the insurance company, Compañía de Seguros RSA, in conformity with the procedure established in the related insurance policy, an arbitrator was appointed and the arbitration procedure was agreed. The related complaint will be filed in the next few days.

SQM
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

197

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 34

Closure of the Pedro de Valdivia Site

On September 22, 2015, the Company reported to the Chilean Superintendence of Securities and Insurance (SVS) that its Board of Directors opted to close the mining operations at the Pedro de Valdivia site and a portion of such site’s industrial operations. The larger part of this closure will occur at the end of November 2015 and the nitrate and iodine operations that will continue to generate production in the remaining industrial plants at the Pedro de Valdivia operation will amount to approximately one third of the current production volumes.

This decision is based on the fact that the Company has continued to increase its production capacity of iodine and nitrate salts in its industrial mining operations at the Nueva Victoria site and has reduced its production costs to meet sales forecasts and increase its current worldwide market share in the iodine market.

As of December 31, 2015, the effect on profit or loss of stopping operations are detailed as follows:

	ThUS$
Property, plant and equipment		36,823
Constructions in progress		3,195
Total property, plant and equipment		40,018
Legal and voluntary severance indemnity payments		17,647
Total closure of the Pedro de Valdivia site		57,665

Note 35

Effects on Premises after the Rain Storms in the Tocopilla Zone

Subsequent to the rain storms that affected the Tocopilla Zone at the beginning of August 2015, SQM reviewed the status of the railway that joints the Coya Sur location and Port of Tocopilla. The observation found certain damaged and weakened zones. Because of this, the train is currently not operating. Detailed studies are being conducted to determine the steps that should be followed.

Note 36

Events occurred after the reporting date

36.1

Authorization of the financial statements

The consolidated financial statements of Sociedad Química y Minera de Chile S.A. and subsidiaries prepared in accordance with International Financial Reporting Standards for the period ended June 30, 2016 were approved and authorized for issuance by the Board of Directors at their meeting held on August 24, 2016.

SQM
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

198

Notes to the Consolidated Financial Statements as of June 30, 2016 ( Unaudited )

Note 36

Events occurred after the reporting date, (continued)

36.2

Disclosures on events occurring after the reporting date

On August 17, 2016, CORFO noticed a new arbitration claim filed against SQM Potasio S.A., SQM S.A. and SQM Salar S.A., by virtue of which it requires the early termination of the Project Contract entered into on November 12, 1993 and other related contracts, among other matters.

Management is unaware of other significant events, occurred between June 30, 2016 and the date of issuance of these consolidated financial statements that may significantly affect them.

36.3

Detail of dividends declared after the reporting date

At the closing date of the financial statements, there are no dividends declared after the reporting date.

SQM
El Trovador 4285
Las Condes, Santiago, Chile
Tel: (56 2) 2425 2000
www.sqm.com

199

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CHEMICAL AND MINING COMPANY OF CHILE INC.

	(Registrant)

Date: September 14, 2016	/s/ Ricardo Ramos

	By: Ricardo Ramos

	CFO & Vice President of Corporate Services

Persons who are to respond to the collection of information contained SEC 1815 (04-09) in this form are not required to respond unless the form displays currently valid OMB control number.