Gerardo Illanes - VP, Finance and IR Patricio Solminihac - CEO.

Isabella Simonato - Bank of America Alexandre Falcao - HSBC Ben Isaacson - Scotiabank Andrew McCarthy - Banchile César Pérez-Novoa - BTG Pactual.

Good morning and welcome to the SQM 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note this event is being recorded. I would now like to turn the conference over to Mr. Gerardo Illanes.

Vice President of Finance and Investor Relations. Please go ahead..

Thank you. Good morning, everyone, and welcome to SQM’s fourth quarter 2015 earnings conference call. For your information, this 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 our speakers are Patricio Solminihac, Chief Executive Officer; and Ricardo Ramos, CFO.

Before we begin, let me remind you that statements in this conference concerning the Company’s business outlook, future economic performance, anticipated profitability, revenues, expenses or other financial items, anticipated cost synergies and product or service line growth, together with other statements that are not historical facts, are forward-looking statements as that term is defined under federal securities law.

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

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

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

Revenues were down in this business line in 2015. The most important product in this business line is solar salt. In 2015, we sold approximately 37,000 tons. Prospect in this market remained positive. And we expect to see sales volume related to solar salt almost double in 2016. I will now open up the line for questions..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Isabella Simonato with Bank of America. Please go ahead..

I have a couple of questions, first on the lithium business. If you could anticipate some of the new supply that could come in 2017, and what do you expect to see in terms of prices more towards the end of 2016 and ‘17? And if you could give an update also on the arbitration process with CORFO? That would be my first question.

My second question is on the SQM business and the focus that you’re now giving water soluble fertilizers. If you could provide us more color in terms of the margin -- the difference between the products within the SPN line? Those will be my two questions. Thank you..

Regarding your first question, basically we were expecting some of the new supply, like core [ph] from Argentina to start production and then selling actually more product during 2016 but they have delayed. We expect them to start to move more product during 2016. We’ll have to see they solve all their problems that they announced.

But they indicated that they will try to get to their nameplate capacity during 2016. This is the most important new entrance. There are also a couple of additional productions in China of the active producer but it’s not that important. We are seeing very strong demand, basically from the battery [ph] producers.

So, we think that the market will continue during 2016 to be tied and that mean that we will -- and we are seeing now higher prices. We believe that this should continue during the full year of 2016. What happens in 2017, depend on finally if there are these new capacities or not. We’re seeing that new projects are not easy.

So, we’re optimistic about the future in the lithium market. We expect to sell more volume from our side during 2016 and of course see higher prices on average in 2016 versus 2015. Regarding the arbitration process, the process continue, as established. We’re in the process of the prove.

We expect that we should have some time -- we don’t have the specific date for finishing it, but the expectation is that should be near the end of the year. Regarding to your second question, in SPN, water soluble is the higher margin product within this line. We have been -- and also the line of product that grows more.

So, we have been putting more efforts in the growth of these business lines. And if you look at the margins that we have during 2015, that is the clear result of the strategy..

The next question comes from Alexandre Falcao with HSBC. Please go ahead..

Hi, good morning. So, I have two questions. First one is, can you comment on how’s the competitive environment for the Brazil market, specifically just wanted to know if anyone has been a little bit more aggressive or not, and is the market really softer in the potash level? That’s the first question.

And the second question is on your dividend policy and the cash generation. Just wondering if is there any change on what you’re planning to do with excess cash and the cash generation, specifically for next year. Thank you..

Thank you, Alexandre. Regarding to your first question, clearly Brazil has not been easy. Brazil is going through tough times. So the market of potash has not been an exception. Traditionally, Brazil used to be a market that used to pay more than the contract price that the Chinese have, the yearly contract price, because was a more spot market.

But what we have seen in the last year is that that gap has been narrowed and the price in Brazil are tending to go more close to the Chinese contract price. And also, given the uncertainties that are in the market, they are being less aggressive taking inventories.

On the other hand, given that there is not a closure on the Chinese contract yet, most of the producer of potash are also trying to move their volumes more aggressively into the field and that make it a more competitive market. Regarding the dividend policy, there has not been a change.

We have shareholder meeting in April and that is a decision that the shareholders should have to make at that time..

And just a quick follow-up on that. So, do you think this is more dependent on the decision of arbitration and what’s going to happen with that than anything else, or it’s going to something that depends? Thank you..

No. We are very confident on the situation of the arbitration. We think that we have a strong case that we perform all our duties to the contracts. So, we feel confident on that process. We have a very strong balance sheet. We have a very good financial position. We have been looking for some M&A activity.

So, board should consider all these issues in order to propose to the shareholder meeting. We have a dividend policy in place that is 50% of our net income..

Our next question comes from Ben Isaacson with Scotiabank. Please go ahead..

Hi, thank you. Patricio, my first question is on the iodine market. Prices are about $25 per kilogram right now.

Can you talk about what that means in terms of whether or not you’re starting to see some of the high cost producers shut down or at least talk about it; what are you seeing out there; is there rationalization on the way?.

Hi, Ben. Iodine market our strategy has been very clearly established. We are getting back the market share; we are increasing volume. We did increase our volumes in 2015 and we will increase our volumes more than the market growth in 2016. And the price will be a result of the demand and supply, demand continuing in the main application of iodine.

Regarding supply and going directly to your question, there has been already one high cost producer that closed their operation, as we understand, in Chile. And there has been also some other information saying that other producers are -- high cost producers being preoccupied about the level of price that we’re seeing today..

That’s great. My second question is in the solar salt market. You talked about possibly doubling your sales this year.

Why is there’s going to be such a big increase in sales and what’s the potential for the market and what’s your capacity to sell into that market?.

The solar salt is a mixture of sodium nitrate and potassium nitrate. We do have capacity in place to serve this market. This market is a project market, meaning once a company, a power company build a solar plant, we sell the solar as a part of the plant when it’s built, in order to be able to operate.

So, what we were expecting this year, one specific project that was delayed for next year. So, we have the purchase order and the only problem was that the building of that project took a little bit more time, and then we delayed the delivery of the solar salt.

This technology has been improving a lot and there have been some locations that it can operate without subsidies. So, we are very confident that we will start to see, and we’re seeing and we’re talking to the people, to the power companies that are pursuing those projects that this market could continue to increase.

Next year, we expect to sell in the range of 70,000 tons. And we believe that we can go over 100,000 tons per year, in the following years..

And then, just my very last question on the lithium industry.

Can you just remind us what the government of Chile is doing in terms of growing the industry and what are SQM’s plans with respect to lithium growth, over the next several years, if any?.

Well, in the lithium industry, the most important thing for us is that we have to finish the arbitration with CORFO. We expect that that could be finished by end of the year, as I said before. And of course, our idea of being able to product more volumes in Chile, we also continue look in other opportunities around the world.

We do have a strong knowhow technically and commercially in the industry. So, we’re an important player in the lithium industry and our strategy is to continue to be so..

The next question comes from Andrew McCarthy with Banchile. Please go ahead..

I was just looking at the press release and saw the part about the development of potential new business initiatives. I was just wondering if you could maybe add a little color to what areas in particular you’re looking at, maybe in general terms and also whether that relates to the outcome of the arbitration process with CORFO..

No, it’s nothing to do with the arbitration of CORFO. We have been developing a growing strategy. You know that we have a very important investment in our capacity for our current business lines. And we went through a couple of years of consolidation.

We wanted to make sure that all the investments that we did are operating in a well manner and also diminishing the costs, which have been very successful as in our focus as we have stated before.

And we start -- which was very good all this process, much before of all the other industry in Chile, the copper industry that’s also facing similar challenges now. And at the same time, we continue to look, as we have been, opportunities around the world in all the business that we know that we have a competitive advantage.

We do not want to grow just for growth, what we want to be is to have profitable business, to increase our returns. So, if we’re not sure that that will be the case, we’re to some extent conservative in these new businesses.

What I can comment is that we continue to do our exploration with our mining rights for metallic minerals directly and also through the agreements that we have with junior and medium-sized companies.

And that continues to be a lot of activity; it’s a long-term plan that had already good results like the discovery on [indiscernible] and we also see that could have interesting results in the future..

And just tone follow-up question, if I may. You mentioned in the status for MCROs [ph] that there is a potential or a possibility of 50% to 300% fine against the taxes you’ve paid to the Chilean tax authority last year.

I was just wondering if you could explain or give a bit more color on what that means and what amounts talking about there?.

Basically, as you know, we did from rectification on some expenses that we did not find the support, and that means that they are not considering -- they are not considered by the tax authority, as expenses needed to generate the income.

And we have to pay the tax of 35% plus as some interest and fine and that we pay in total close to $10 million in the fourth rectification that we did.

And according to our lawyers there is a -- we won’t see as a possible to get to pay this but this is in the regulation that there is a possibility that could be 50% to 300% fine on the tax paid, which is in the range of $5 million. So, will be 50% of $5 million up to 300% of $5 million, more or less..

The next question comes from César Pérez-Novoa with BTG Pactual. Please go ahead..

Good afternoon, gentlemen. Could you please provide some breakdown of the stated $150 million CapEx program, and is part of that amount also go in to Pampa Hermosa? Thank you..

You know that our depreciation is $260 million, so the $150 million is basically related to sustainable capital. We plan to continue to strength our position in Nueva Victoria.

We also need to do some investment in the Salar to be able to produce a little bit more SOP than MOP in order to optimize the margins, and also some expenses that we are doing in the iodine plant, as I said Nueva Victoria.

Regarding lithium, we also are doing some investment improving the capacity of [indiscernible] products vis-à-vis industrial products, lithium carbonate and lithium hydroxide. That’s mainly the 150. The Pampa Hermosa is including which is a development that goes by stage.

We do have enough capacity today of nitrate and iodine, so we will continue to do the project expansion in Pampa Hermosa that we have approved, if we see that we will need additional volumes in the market..

Thank you all very much for joining us today. And we hope to have you with us in the next conference call. Goodbye everyone..

The conference has now concluded. You may now disconnect..