Gerardo Illanes - Vice President of Finance Patricio Contesse - Chief Executive Officer.

Isabella Seminado - Bank of America Ravi Jain - HSBC Ben Isaacson - Scotia Capital Alberto Ariztía - Santander Tim Tiberio - Miller Tabak.

Good morning, and welcome to the SQM Third Quarter Earnings Conference Call. All participants will be in a listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Gerardo Illanes. Please go ahead sir..

Thank you. Good morning everyone, and welcome to SQM's third quarter 2014 earnings conference call. For your information, this conference call will be recorded and is being webcast live. You may access the webcast later on at our website, www.sqm.com. Joining me today as speaker is Patricio Contesse, Chief Executive Officer.

Before we begin, let me remind you that statements in this conference concerning the company's business outlook, future economic performance, anticipated profitabilities, revenues, expenses or other financial items, anticipated cost synergies and product or service line growth, together with other statements that are not historical facts, are forward-looking statements as such term is defined under the Federal Securities Law.

Any forward-looking statements are estimates, reflecting the best judgment of SQM, based on currently available information, and involve a number of risks and uncertainties and other factors that could cause actual results to differ materially from those stated in such statements.

Risks, uncertainties and factors that could affect the accuracy of such forward-looking statements are identified in the public filings made with the Securities and Exchange Commission. Any forward-looking statements should be considered in light of those factors.

I now leave with you the Chief Executive Officer Patricio Contesse, for brief comments, before we move to Q&A..

Thank you, Gerardo. Good morning and thank you for joining the SQM third quarter earnings conference call. I will start with a brief introduction before we open up the lines for questions. On Tuesday evening, we posted our results for the first nine months of 2014.

Earnings for this period reached $218.4 million, lower than the first nine months of 2013. Revenues totaled $1.5 billion, down 11% for the same period 2013. During the first nine months of 2014, we saw some positive signs from our manure fertilizer market.

In the potash market, we saw some prices recovery and increase in sales volume when compared to the first nine months of last year. We also saw some positive pricing in the SOP market and strong demand growth in potassium nitrate market. As expected, the iodine market saw lower prices during the first nine months of 2014.

Prices during the third quarter of 2014 were lower than prices seen during the first half of the year and we expect this downward trend to continue during the fourth quarter of 2014. As discussed on our last earnings calls, we have been working diligently on a significant cost reduction plan over the past 12 months.

Despite lower revenues during the third quarter, EBITDA margins were up. This is a direct result of this cost reduction effort. We are proud to say that the EBITDA margin this quarter was higher than it has been in the six most recent quarters.

I will close by saying that 2014 is a transitional year for SQM, and we will continue to manage the company with a focus on the long term and we will work to maximize shareholder values. Thanks..

Thank you, Patricio. Operator, we may now go to Q&A session. .

[Operator Instructions] Our first question comes today from Isabella Seminado with Bank of America..

I had two questions. First question is on potash.

Do you have any preliminary views on prices after the incidents in the Uralkali mines, what that could mean in terms of price performance going forward? And the second question is on lithium, if you could give us an update of the negotiations with Corfo and also you mentioned in the release that you now expect new supply to be lower than your previous expectation in 2015 and what changed in there?.

First of all, I think it’s very preliminary to make any statement on Uralkali had just recently this new [indiscernible]. It will depend, anyhow in terms of the other provisional policies are positive and it says there is going to be some less supply.

But on the other hand, we have to wait how much will be planted by farmers, so how much demand for next year will be.

At this moment, for us, it’s hard to say an impact on prices of the Uralkali situation because there are some other variables that has to come on stream to make a more favourable decision or commitment to what we can see in the potash market in the end after this action.

Regarding lithium, we have not – as you know we are in arbitration with Corfo, we are very optimistic in that. But meanwhile the arbitration goes through, it’s hard to make any new negotiation to obtain more lithium.

So what we see is a stable situation in the sense of volumes and in the side of SQM we see a strong market growing, or announcement of newcomers this year that has not been successful given they are in the equivalent of the Chapter 11 in Canada, there are some announcement of new list that could come on stream from Argentina next year but I think in subtracting we think that we should be more or less in the same volumes we have been this year.

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Our next question comes from Ravi Jain with HSBC..

I had a couple of questions. Firstly, on the iodine segment. As you mentioned that you will be working to increase your market share back to historic levels.

If you expect – if we expect the demand to be normalized, stable in the new few years, by when do you expect to come back to the 12,000 tons production and sales approximately, would it be more like a 3 to 5 years, or would it be sooner than that? And my second question is on the cost.

Does the devaluation of the Chilean peso also help in further reduction of costs next year? Do you expect that to also be a factor?.

Regarding – we have said that we are looking forward on an objective of one-third of the market share today, we are in the 27%, 28%, so still some place to take on. How much this will take, I think maybe two to three years, that very could be. That’s our best guess.

We have to see that how is expecting the new pricing scenario on competition today is in place, also we have to think that on prices, people had some extra debentures that have been sold this year and also when prices are going down and still peso stabilized but tend to have very little iodine.

So that will have, in the moment that we cannot be exactly when will happen that it could come more demand because some inventory were held by other companies that has claimed and on the other hand, lower inventory in our clients – it could have in the moment maybe an impact on that time that I said before could be short.

In terms of cost, I must say that the price on one hand of the iodine have been reduced by 23% prices in the first nine months compared to the first nine months of last year. But on the other hand, we have been able to reduce the costs to 15%. Clearly they are very things that are behind what we have been able to achieve in costs.

One of the main ones has been the restructuring of the company and better process of better deals in our sales. And on the other hand, higher value of the dollar compared to the Chilean peso also have a big impact. On the license basis, we have reduced around $130 million to cost and 40 million is due to the value of the dollar.

This 130 million reduction in the last 12 months on an annualized basis is not immediately seen because – go to the inventory price cost we had before, so gradually the cost is going down and the margins are not fully obtained until we don’t go through all the inventory we had before. .

Thank you. Our next question comes from Ben Isaacson with Scotia Capital..

My first question is on RB Energy.

Can you talk a little bit about those two assets, the Iodine and the lithium and are those something that you would look to, to consolidate to help improve the tightness of the market and your market share?.

Well for the moment, we are not looking at them because it’s not in the market. Of course, both achieved, they produced as part of the materials we work with, so we have to understand well operation of the lithium in Canada that we don’t know that good, we know more about how is the operation in Chile.

And of course, it could be a point in a moment that could be of interest depending on the market situation..

Can you talk a little bit about whether you’re seeing discipline by Chilean iodine producers or are most people running at less than full capacity?.

We don’t know exactly, because you know, those companies, only RB Energy makes a public statement, of the other two major companies are private companies where you can have guesses but not strong information. .

And my last question is on the SOP premium. Can you talk about the supply demand kind of balance right now, obviously it’s a little bit tight.

How do you see that changing over the next couple of quarters?.

We see a very positive. This lack of potassium free of chlorine due to the problems, situation of producing SOP at this moment and the factors behind that are making an SOP producing at this level, we don’t see in the near, medium term that they will change.

We have been seeing and that also of course helped push the potassium nitrate demand and that has permitted us to – the prices of potassium nitrate and SOP that we produce has reduced the prices much less than the potash because still there is some lack of potash or potassium free of chlorine. .

And just one last question if I may.

Your cost savings plan, does any of that – is any of that going to improve your cash cost of production of MOP of potash, and if so, what’s the magnitude of improvement that you expect to see?.

We think the effort of reducing cost has not ended. We still have some plans for next year that could be in the range of $50 million. We are working on a plan to reduce further those $50 million in several areas. And till now what we have achieved for this year compared to last year, in potash, we have reduced our costs by 13%.

In potassium nitrate we have reduced our costs by 18% and in iodine we have reduced our costs by 15%. The cost saving process is still a way to go. .

Thank you. Our next question comes from Alberto Ariztía with Bank of Santander..

Could you tell us your official a nitrate, potash guidance for this year and for the next one? And secondly, could you tell us if you have some information regarding the lithium committee organized by the government, when do you expect to have some conclusions?.

Well, excuse me, regarding the potash market for us, we have a stable production, that so we don’t see an increase in volumes in there. We have been any how increasing slightly more – to sell more granular than crystallized potash. So that could be further changes in that sense but not all.

Regarding potassium nitrate, we see increased volumes in our perspective for next year, increase in demand. Regarding lithium, we have think about that before, go to the lithium commission that has been working with the government, it has not yet come to any final conclusion.

So there is lot of discussion and different ideas, the final conclusions are not there yet in place..

Yeah but is there any main ideas supported by majority of the commission?.

What we have there is relatively informal information and sometimes they are in the sector area of mining make some statements but I think to get – I think the precision just of those statements are informal information, I think it would not be for us a way to say what really is going on at the end of the day there. .

Our next question comes from Tim Tiberio with Miller Tabak..

I just wanted to clarify, in your press release and your prepared remarks, you indicated that we’re likely to see a continued iodine price pressure. I believe Industrial Minerals indicated that the spot price has fallen below $30 a kilogram in recent weeks.

When you made that comment, are you referring primarily to where prices were in Q3 or do you see further downside even from current spot prices?.

We’re not making ourselves any announcement of a price of either. So I didn’t know – where you got those $30 per kilogram, because it’s not from us, and it’s not in our press release. .

No, that was from just an industry source, so I just wanted to clarify that, so that’s very helpful. And if that is kind of an accurate assessment of the market, historically that seems to be kind of where the market has kind of stabilized, would you tend to agree with that or –.

What we said – we will have another – in this moment we would not like to put in public what is our strategy regarding the iodine pricing policy as well as – now I think at this moment with different clients in the world, so I will apologize in not making a certainty on your comment or where you have some sort of public information.

But we have said in the press release regarding iodine for that we expect downward trend, to be a specific – to continue during the fourth quarter of 2014. And that is the change also that we could continue into 2015, until we reach one third of the market and we said what we have been looking for. .

This concludes our question and answer session. I would like to turn the conference call back over to SQM management for any closing remarks. End of Q&A.

Thank you all very much for joining us today and we hope to have you with us in the next conference call. Good bye, everyone. .

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect..