Operator: Hello, everyone, and welcome to the SQM First Quarter 2025 Earnings Conference Call. [Operator Instructions]. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please note, this event is being recorded. Now it’s my pleasure to turn the call over to the Investor Relations Officer, Isabel Bendeck. The floor is yours.

Isabel Bendeck: Thank you, operator. Good morning, and thank you for joining SQM earnings conference call for the first quarter 2025. This is the conference call will be recorded and is being webcast live. Our earnings press release and presentation with a summary of the results have been uploaded at our website, where you can also find a link to the webcast. Today’s figures include CEO Ricardo Ramos; CFO, Gerardo Illanes; Carlos Diaz, CEO of Lithium Chile division; Pablo Altimiras, CEO of Iodine and Plant Nutrition Division; Andres Fontannaz, Commercial Vice President of International Lithium Division; Felipe Smith, Commercial Vice President of Lithium Chile Division; Pablo Hernandez, Vice President of Strategy and Development of Lithium Chile Division; and Juan Pablo Bellolio, Commercial Vice President of Ireland and Industrial Chemicals.

Before we begin, I would like to remind you that statements made in this conference call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses and other financial items, along with expected cost synergies and product or service line growth, are considered forward-looking statements under the Federal Securities Laws. These statements are not historical facts and may be subject to changes due to new information, future developments or other factors. We assume no obligation to update these statements, except as required by law. For a complete forward-looking statement, please refer to our earnings press release and presentation. I am now leaving you with our Chief Executive Officer, Mr. Ricardo Ramos.

Ricardo Ramos: Thank you. Good morning, everyone, and thank you for joining us today. We are pleased to report that SQM began 2025 with solid operational and commercial performance. In the first quarter, we achieved the highest first quarter lithium sales volumes in our company’s history, driven by the 20% year-on-year increase — this growth reflects sustained strong demand, particularly from electric vehicles market in China and Europe as well as growing adoption of energy storage systems worldwide. Lithium prices, on the other hand, were relatively stable during the first quarter 2025. But over the past few weeks, we have seen a decline in prices that we don’t think is sustainable. In the industry, we was already showing negative results.

In any case, as a result of this, our average realized prices for the second quarter 2025 should be lower than the levels since in the first quarter. In Australia, the production of spodumene concentrate at Mt. Holland is progressing well, and the commissioning of the Kwinana refinery is also moving forward with the expectation to see first product in the coming months. In Chile, we continue working on our capacity expansions to reach capacity to 240,000 metric tons of lithium carbonate and 100,000 metric tons of lithium hydroxide. Moving to our Iodine business, we are pleased with another strong quarter. Prices have reached a record average amidst tight supply and steady demand, primarily driven by the X-ray contrast media application. Our seawater pipeline construction is advancing rapidly and will be key to expanding production capacity.

In the meantime, we are investing in operational efficiencies to respond to customer needs and optimize output. In Specialty Plant Nutrition, sales volumes grew at a healthy pace. We also an upward trend in prices early in this year, mainly due to strong demand for potassium chloride and some supply disruptions. Market dynamics remain favorable across Latin America, the U.S. and Europe. In our potassium business, as anticipated, volumes were significantly lower compared to the same period last year. This reflects our strategy to reduce potassium production to give priority to high lithium content brands and focus on the production of more value-added products within our SPN business lines. To summarize, SQM delivered strong commercial results in the first quarter despite a complex pricing environment.

Our long-term fundamentals remain intact. We are confident in our strategy, our investment in capacity and innovation and our commitment to sustainable, high-quality growth. Thank you all.

Unidentified Company Representative : Operator, we can now move to Q&A.

Operator: [Operator Instructions] One moment for our first question, please. And it comes from the line of Ben Isaacson with Scotiabank.

Ben Isaacson : Thank you very much. Three questions. First one, just a very straightforward, simple question. You talked about the ASP in Q2 being a little bit lower than in Q1. Do you expect that on an operating cash flow basis, you will be breakeven or positive per metric ton in lithium in Q2?

Gerardo Illanes: We are far from breakeven costs. We were not expecting to be close to breakeven and significantly above that in the second quarter this year and in the upcoming quarters. We believe we are one of the lowest cost producers. So we are far from that position.

Ben Isaacson: Perfect. Perfect. And then another question for you, Gerardo. Lithium prices are obviously lower than a lot of people expected this year. Your growth plans haven’t changed. And so what the plug is now going to mean is less operating cash flow to fund that CapEx growth and a greater reliance on accessing capital markets. Can you talk about how your mind may or may not be changing in terms of capital structure or funding future projects now that lithium is coming in a little lower than expected?

Gerardo Illanes: Well, just before answering your question, and of course, we have other business lines and products are doing quite well. So the capacity to generate cash that the company has is quite strong. On top of that, we have a strong balance sheet. We have a track record of having a very strong balance sheet and we plan to continue having a strong balance sheet. So we are constantly assessing all the projects that we have on our portfolio, of course, understanding what is happening in the market. But so far, the financial or the balance sheet has not been a constraint, and we don’t expect it will be a constraint in the future either.

Ben Isaacson: Okay. And then just very last one, Ricardo, maybe for you. We’re hearing a lot of noise and politics out of Chile right now and kind of a fight about the outcome and the future of the Codelco JV. I didn’t understand — I don’t understand why this is even a debate or even being brought up. I thought this is a signed agreement and you’re just kind of dotting the i’s and crossing the t’s and then it will be effective Jan 1. Can you talk about why is this even a debate right now in Chile? And what are the different paths forward.

Ricardo Ramos: Okay. I mean as you say at the beginning, it’s a lot of noise. And I think that’s the perfect word to describe what we were known. A lot of noise when you start digging into the numbers, it’s a great deal. It’s a great deal for the country. It’s a great deal for the region, for the communities, for Codelco, it means something very good. Sometimes when you are in an election year, you have a lot of noise from everything. It’s not the only noise in Chile, if you have a Chile newspaper, we have a lot of different noises. Everywhere, it means an election year, you always have different discussions. But what is the real fact. The fact is that we are advancing according to our original plan with Codelco, working very hard.

We are now in the end of the process, not us, CORFO is in the end of the process of the consultation with the towns near the operations that’s being carried out by CORFO. And finally, we are — we submit all the documents required by the regulatory authorities of free competition in China. Therefore, we think that the time frame for the transaction to be finally executed will be during the second half of this year. No changes about that. And again, you will have — it is a big transaction. Chile is a small country, and these kind of transactions are important in a country where you have not many things going on, but at the end, it’s just noise. I don’t foresee any real reason or fundamentals to have any debate about the transaction.

Operator: One moment for our next question that comes from the line of Joel Jackson with BMO Capital Markets.

Joel Jackson: I’ll ask my questions 1 by 1 as well. Team, I noticed in this slide deck in this release that you maintain your view that lithium demand will grow 17% globally as a market this year. Would you no longer show your commentary from a few months ago, do you think that SQM sales themselves for lithium will grow about 15% year-over-year? Can you maintain that you will grow 15% sales this year? And if not, what’s your new number?

Felipe Smith: Yes. Hello, Joel. This is Felipe Smith. Look, considering the current market conditions, with uncertainty derived from geopolitical and trade tensions, we have not really updated our annual volume forecast for 2025. However, regarding Q2, I can comment that we expect a similar or slightly lower volume versus the first quarter.

Joel Jackson: Okay. Second question would be — there’s been some commentary in the market as prices in China have decreased a lot. You sell product to China. Obviously, you’ve got some contracts, I believe, with floors. There’s some discussion about customers fighting back and saying spot prices are below floors, we want to pay lower prices. Can you comment on that dynamic and how you are dealing with it?

Felipe Smith: Yes. Joe, I would like to start saying that we have more than 200 customers worldwide. Each of these customers have a different type of price mechanism. I’m talking about specifically in China.

Joel Jackson: You’re talking about typically in China I know I recall just China, I know if you could talk about China, I’d really appreciate it. I know you have lots of customers, different qualities, different products, but maybe just in China specifically, it would be very helpful.

Felipe Smith: Yes, what I want to highlight is that with each customer, and this happens in China also, with this customer, we have different price mechanism and conditions that are all confidential. And I cannot comment. So I would ask you to please understand that I will not go into any specifics about that.

Joel Jackson: Okay. And just finally, just followed up on Ben’s question a little bit, but I think that SQM’s philosophical [dominar] has been, hey, we’re going to double our production over the next 7 years because, hey, global demand is growing 3x — so we’re just growing double our own capacity. So there you go, we’re not really adding to market. But when I look at your commentary, and you talk about the markets oversupplied, the market is probably cut by surprise, how weak it is. As stewards of capital here, do you not have to think about what is the right amount of capacity to add when it seems like there’s a lot going on in this market that maybe is not easily visible or understood?

Carlos Diaz: This is Carlos Diaz, CEO of Lithium Division in Chile, Yes, we’re still working on this final capacity. We’re the leader of production of lithium in the world and minus that we have the lowest cost in the industry. And we continue with our program to expand the capacity in Chile to produce more in surface related to convert in China. It’s been a successful business for us. So we are really confident about the demand, and we feel confident that we will do keeping expanding our capacity. We don’t see an issue there.

Joel Jackson: Sorry, just 1 more for me. I get your confident on demand, but it seems like you’re not — no 1 in the industry is compound supply and using raise and some of your own commentary in this quarter. So don’t you get worried that your view on supply could be wrong?

Carlos Diaz: Yes. We know that we had a number of supply, but I said we know there is a chart, and we were confident in the long-term the kind of oversupply is going to disappear, and we have a good position to supply in this time, what I said before, we are the leader. We are the lowest cost producer in the industry.

Operator: Our next question comes from Lucas Ferreira with JPMorgan. All right. One moment for our next question, Lucas, if you can queue up again. Our next question is from Corinne Blanchard with Deutsche Bank.

Corinne Blanchard: The first question would be on the Mt. Holland. We saw in a recent presentation from Wesfarmers that they decreased their volume guidance by 9% or 10%. So I wanted to see what your view here is? And how do you think volume would be for ’25 and going into ‘26.

Andres Fontannaz: Yes. Thanks. This is Andres Fontannaz from SQM International Lithium. You need to be careful with what Wesfarmers reported because they follow a fiscal year our guidance — anyway, our guidance for this calendar year for SQM share is between 150,000 to 180,000 tons, which is around 10,000 tons lower than our range provided in November last year. So — and this revision is primarily due to the impact of bushfires and limited equipment availability. So as you know, during January, we were impacted by a regional bushfire and the surroundings of the mine and was a significant event in the region, tens of thousands hectares were affected. But this kind of risk, we are the ones that you are prepared. So starting from the refine of the plant to the implementation of procedures to having established and trainee management scenario thanks to all of that, we can say that nobody was hurt and we are extremely proud of the performance of the team and appreciative of covalence team, especially about the reaction and also that was recognized by the authorities in Western Australia.

So that is what we can comment about production for 2025.

Corinne Blanchard: And then a second question. Can you please remind us the dividend policy? I think we’re getting some questions about whether you’re going to restart doing quarterly dividend on annual. So just if you can comment on policy — dividend policy and the cadence of it.

Gerardo Illanes: The dividend policy that was approved by the Board and presented to the shareholders, established that the company will distribute 30% of its net income of 2025. The dividend policy also established or according to the law in Chile that dividend has to be paid or has to be approved by shareholders in the ordinary shareholders meeting that is scheduled to happen in April next year. Companies can pay interim dividends during the year. Sometimes in the past, we SQM, we have paid interim dividends. But at this moment, we are not considering these payments at least for the first quarter, and that will be assessed in the future. But the dividend policy established a 30% dividend payment.

Operator: Our next question and it comes from Emerson Vieira with Goldman Sachs. Please proceed. One moment for our next question, comes from Alejandro Demichelis with Jefferies.

Alejandro Demichelis: Two small questions, if I may, please. The first 1 is when you’re talking about your growth plans. And so could you please confirm how you see your CapEx requirements for, say, this year and next year? That’s the first question. And then the second question, follow-up to the previous question on pricing. — is how should we think about your realized prices if lithium prices continue to come down — should we expect them to follow that path or you expect them to be more moderate than what we see in — on the screens, let’s call it.

Gerardo Illanes: This is Gerardo. Well, we usually review our CapEx plan once a year and once that is reviewed its share with the market, we should review our CapEx plan in the upcoming months. And of course, we will share with the market the conclusions for that. Today, we don’t have any updates from what was shared a few months ago. We’re working on the expansion of our lithium production facilities in Chile, carbonate and hydroxide, also expanding our abilities to produce lithium sulfate. On top of that, we’re working on the Mt. Holland commissioning of the refinery. And on top of that, the initiatives that we’re working on, on the nitrates and Iodine side, where the most important 1 is the seawater pipeline that should let us expand in the future our capacity to produce more Iodine. So no update as of this moment.

Ricardo Ramos: Yes. Hello, Alejandro, regarding prices. Well, as you probably know, after remaining relatively stable during Q4 ’24 and Q1 2025, with some daily fluctuations up and down. Lithium prices in China started to go down about 1.5 months ago, and prices in Asia outside China have also been going down. So our sales volume is largely concentrated in China and our realized prices remain mainly linked to price indices. Consequently, we do expect a lower average sales price in Q2 compared to Q1.

Alejandro Demichelis: Okay. So the answer is that your prices will be linked to those indices, yes?

Ricardo Ramos: Yes. Yes, indeed.

Operator: Our next question is from Julia Zaniolo with Bank of America.

Julia Zaniolo: My question is about your thoughts on your [indiscernible] investment in a lithium project in Chile. But as we know, the market has an oversupply and price under pressure. So if you could share your thoughts on how do you see your — what impact do you expect for the market and supply demand and also for SQM competitive positioning in Chile?

Pablo Hernandez: Julia, this is Pablo Hernandez. So during 2025, we expect the demand to reach around 1.4 million metric tons, representing over 15% year-over-year growth. China remains with a significant lead in the EV market with more than 40% year-over-year growth and roughly 70% of the EV global sales. On the other hand, the European Union has had a very strong first quarter with the U.S. having a slight decrease, but we continue to evaluate potential impacts on the corresponding new regulatory environment. Overall market should continue to shift slightly towards some carbonate production with LFP continuing their dominance in China and starting to expand abroad. During 2025, supply is expected to grow close to 15% as well, reaching between 1.5 million to 1.6 million metric tons, assuming no significant production delays occur in the market as a consequence of the current low price environment.

Operator: One moment for our next question. And it comes from the line of Juraj Domic with LarrainVial.

Juraj Domic: Okay. Okay. Perfect. So — we have 2 questions. The first one regarding the lithium competition you are facing in China from other producers. Because it seems that several of them should be struggling at these prices. But production, it seems that it’s continuing. That’s my first question. And in the — and my second is you mentioned in the fourth quarter that you we’re seeing some optimism over a positive trend in 2026. Has this view changed with the information so far in 2025?

Pablo Hernandez: This is Pablo Hernandez. So regarding competition in China, of course, we face significant competitors in China. They have a large portion of the market. But as many of the competitors that we see in the lithium industry overall — some of them have had not so very good results, of course, due to the lithium price environment. So I think this is — overall, the industry is struggling with this current pricing. And regarding your question on prices for 2026, of course, prices will be a consequence of the supply/demand balance. So we will see how this year develops and see what the impacts will be for next year.

Operator: [Operator Instructions] Our next question is from Lucas Ferreira with JPMorgan.

Lucas Ferreira: Hi, everyone. I hope you hear me now. Sorry, my line dropped the previous time. I don’t know if my question was answered while it was out, but it’s very much — the first question to confirm your CapEx numbers for this year and the next few years, if you can? And which are the main projects in the pipeline now consuming this CapEx? And the second question regarding production cost of lithium. First, let’s talk about Atacama if the ramp up to 240 gives you sort of a fixed cost dilution effects, if there’s anything in the Carmen plant in the pipeline to help on reducing cost eventually. So pretty much if you can share any sort of what number to expect for cash cost in that will be great. And any initial views on the cost of the production in Mt. Holland, how it’s been evolving? And if you have anything to share with us, that would be great.

Ricardo Ramos: Lucas, your CapEx question was answered already. If you want, we can discuss about that later. Carlos?

Carlos Diaz: Hi, Lucas. This is Carlos Diaz. Regarding to the — our cost in Chile, I have to mention, well, you already know that we have been facing very lowest prices during this year. And, in terms of that, we have been working in several cost reduction initiative in order to maintain our cost leadership in the market. We have been working at the same time increasing the capacity, working on quality and all of that we have been improving the yield. So we expect to reduce our operational cost during this year and the coming year.

Lucas Ferreira : Perfect. So should we expect a declining nominal, costs for lithium in this year and the coming year? Is that fair to assume?

Carlos Diaz: Yes, we’ll expect all the climbing and I mean, out of the cost, yes. So what we have in the first quarter.

Lucas Ferreira : Okay. Thank you very much.

Andres Fontannaz: Yes. Lucas, Andres Fontannaz here, regarding your question on Mt. Holland. Let me start by saying that even at current prices, our Mt. Holland operation is cash positive and we are executing as planned. So we continue to be in ramp-up mode in the concentrator. So as you know every operation in ramp up is facing higher cost, but we are confident that over long-term our project will generate satisfactory returns because we do have an attractive cost structure. And on top of that, we will have an integrated lithium hydroxide production. And as you know, we are commissioning the refinery right now and we are very happy with the results of the commissioning, which is currently at 95%.

Ricardo Ramos: Okay. Lucas, Ricardo Ramos speaking here. Just want to put a summary here that we have a positive view about the long term in the lithium industry. It means today price environment is not sustainable. It means there’s no way the industry can survive these prices. SQM is probably the only one. I’m not sure it is the only, but one of the only that can have reasonable profits at today pricing. It means that price should improve in the future, probably in the near future. What we can say is that there is no one in the world best prepared. We are the best one, in order to take advantage of the market. We have been very successful increasing capacity. Today, we have the capacity, the quality, the alternative, the market, Australia.

I mean, everything is in our favor to take advantage of the recovery of the prices. That is coming. I mean, we cannot know, we don’t know when, but market is very strong. It means demand is stronger than ever. The uses of the electric vehicles industry is better than expected, in terms of quality of the cars, performance, whatever. That’s why we think that even though there are some issues in the world, in the trading activities between different countries in the medium-term, this demand will continue to increase, will continue to increase and we are prepared to supply the lithium to the market. It means that we have a positive view. My view is, I don’t have the crystal ball anyway, but my view is positive for next year. They think that prices will go back to a reasonable price environment, and I think the demand will continue to grow.

We are going to be the number one prepared. And again, as Carlos Diaz said before, we had all the time, it means our cost is by far the lowest cost, but it’s even better today than what we used to be two years ago. I mean, the work in our facility has been great, in terms that we have been able to have. And you see my numbers, in our numbers in the first quarter and our numbers speak by themselves, in terms that we generate significant profits in the lithium industry, even though prices were very low. And that’s something that we are very proud to, it will continue in the near future. And in Australia, as was commented, now we think that we have one of the best production of spodumene and probably we will start producing now hydroxide that we’re integrated.

Very good news and probably we’re a very strong competitor in the industry. Means, again, very — I have a positive outlook in the medium, maybe long-term, but, of course, we are facing a situation very complicated second quarter, in terms of the pricing. Everyone is facing the situation, not only SQM. Everyone is selling in China. China is the big, is the most important market in the world. There’s no one big producer of lithium without selling their products in China and the end facing what is the market price and we think that we are the best one to do it.

Operator: Thank you so much. Our next question is from Constanza Gonzalez with Quest Capital.

Constanza Gonzalez: Hi. Thank you for taking my question. I have a question regarding Mt. Holland that is not so clear for me. I appreciate, if you can verify the information of passcode that you are considering right now by assuming in the case of Mt. Holland project? Or could you give us more details about the levels that you are seeing this quarter?

Andres Fontannaz: Hey, Constanza, Andres here. As I said before, we are still in ramp-up mode and in that period of course, you are facing higher cost. But as mentioned, we — as soon as we reach the stage, the project is cash flow positive, even at these prices. So we are confident and very satisfied with the evolution of that project.

Constanza Gonzalez: Okay. Just to clarify, are you considering the depreciation in Mt. Holland project too? Because if you look for the information in comparison with first quarter of 2024. The depreciation rise a lot, so that’s why I was asking if you are considering that.

Gerardo Illanes: Hi, Constanza. This is Gerardo. Andres was referring to cash cost in his statement.

Operator: Alright. And this will conclude our question-and-answer session for today and our program as well. Thank you all for participating, and you may now disconnect.

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