Operator: Good day, ladies and gentlemen, and welcome to the First Quarter 2012 SQM Earnings Conference Call. My name is Jeff, and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will facilitate a question-and-answer session. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Mark Fones, Vice President of Finance and Investor Relations. You have the floor, sir.

Mark Fones - IR: Good afternoon, everyone and welcome to SQM's first quarter 2012 earnings conference call. For your information this conference 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 Contesse, Chief Executive Officer; Patricio Solminihac, Executive Vice President and Chief Operating 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 performances, anticipated profitability, revenues, expenses, or other financial items, anticipated cost synergies, and product or service line growth, together with other statements that are not historical facts, are forward-looking statements as that term is defined under the Federal Securities Laws.

Any forward-looking statements or 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, and forward-looking statements should be considered in light of those factors.

I'll now leave you with our CEO, Patricio Contesse for brief comments before we move to Q&A.

Patricio Contesse G. - CEO: Good morning, and thank you for joining us. We posted strong earnings during the first quarter of 2012 and we're pleased to be able to discuss them with you this morning. Our positive start to the year and strong results were a result of increased average prices in all business lines when compared to the first quarter of 2011, and increase in gross margin.

In our iodine business line the market has remained tight and pricing were up 10% when compared to the fourth quarter of 2011, while cost pressure has remained relatively stable. We continue to see strong demand from all users of iodine. In this (strengthened) market demand continues to grow, as a result of which we see our sales volumes for lithium and derivatives increase over 10% compared to the sales volume in 2011.

In terms of (indiscernible) revenue in our Potassium business line we are up compared to the first quarter of last year. Recently, we have seen signs of improvement in global potash demand and we (indiscernible) in countries like Brazil, etcetera. In SPN volumes were down as a result of increased supply and demand was lower than expected. We remain confident that this market will recover during the remainder of 2012.

Capital expenditure plans are moving forward and we're still expecting just over $500 million during 2012. About 70% of our CapEx during 2012 will be related to new expansion projects. We'll continue to monitor the financial market and developments very close and remain optimistic about the remainder of the 2012 for SQM. Thank you very much.

Mark Fones - IR: Thank you, Patricio. Operator, we may go now to the Q&A session.

Operator: Ben Isaacson, Scotiabank.

Ben Isaacson - Scotiabank: Just one question on potash and then I want to turn to the iodine market. Can you talk a little bit about the shift in mix in terms of where your potash was sold this quarter versus last year and how you see that evolving over the next year or two?

Patricio Contesse G. - CEO: Basically, last year where we ended up at the granular and compacting plan for last year that is permitting us to sell more in the (indiscernible) this quarter that we used to sell last year. There has been the most significant change.

Ben Isaacson - Scotiabank: How much potash do you sell in Latin America, not including the Brazilian market?

Patricio Contesse G. - CEO: We sell not too much. We sell by region in Argentina, Chile, Peru, Ecuador and Colombia. And at the end all those volumes should be in the range of 100,000 metric ton of (indiscernible).

Ben Isaacson - Scotiabank: Maybe I will just ask couple of questions on the iodine market. If I remember correctly, you closed down – I think it was one or two iodine plants a couple of years ago. Now, I don’t know if those are still shut down or not, but obviously, the market is starting to tighten up a little bit. Do you think you would open those up again soon?

Patricio Contesse G. - CEO: This year we are considering to sell slight lesser than last year. So, still (indiscernible) there our total capacity in the range of 25,000, but we are selling less than that, but even though we are increasing our capacity to 50,000. So, we expect to be used some in future and not the (indiscernible) today, but clearly this year those capacity are not open – we're not producing our total capacity.

Ben Isaacson - Scotiabank: The iodine prices that have increased quite recently is that entirely due to demand growth or are there some supply challenges globally?

Patricio Contesse G. - CEO: It's a mixture of both, demand has increased, but also there is some slower supply from our two (indiscernible).

Ben Isaacson - Scotiabank: Then just my last question on iodine, can you talk about your costs and how you see those costs changing, I think you mentioned in your initial comments you see the cost being relatively stable, can you provide a little bit more color in terms of costs and therefore margins?

Patricio Contesse G. - CEO: Well, I would say that (indiscernible) our cost in iodine and I apologize to that.

Ben Isaacson - Scotiabank: So, in a flat iodine price enterprise environment, you expect your margins to stay relatively flat?

Patricio Contesse G. - CEO: yes.

Operator: Rodrigo Ordonez, Santander.

Rodrigo Ordonez - Santander: I have two questions, first regarding the SPN division where you saw increasing competition and disaffected sales. Can you talk a little bit more about this, you were affected in prices or volumes? The second question is about the global market in the press release, you showed that a European consolidated sales decreased more than 40% compared to last year first quarter, is this a consequence of the economic slowdown in Europe? In line with this, how it is affecting the economic scenario to SQM operations regarding the situation in Europe and a chance of a slowdown in China?

Patricio Contesse G. - CEO: I’d just say related to SPN we saw again the fertilizer market was little bit weaker in the last quarter of 2011 and the first quarter 2012, not only for us (indiscernible). We see that is now changing significantly, so our forecast for the year is reasonably– as we had thought in the budget for the year. Of course, there are some less sales in SPN, seeing that Haifa has normalized their operation, but we see the next quarter, second, third and four would be much better than the first quarter that you have and we have.

Rodrigo Ordonez - Santander: Regarding the second question, the other thing about the economic scenario and the influence to SQM?

Patricio Contesse G. - CEO: The impact of European market today has really been significant to us. In the industrial chemical we are selling okay, the fertilizer was related to what was going on in the market and (indiscernible) not only in Europe. Clearly, the currency – the weakness of European market affects us on return in terms of the fertilizers that we sell there, not industrial chemical because we sell them in U.S. dollar basically, but the fertilizer was sell in euro, so clearly we are affected there on return. But prices of SPN are already good, but potash prices in Europe are very low because of exchange costs, but we have not seen our business significantly or importantly affected by what's going on in Europe up to now.

Rodrigo Ordonez - Santander: Regarding a chance of a slowdown in China

Patricio Contesse G. - CEO: In China, we sell very little fertilizer, so it does not affect us. Lithium has been very strong in China and iodine too. The fertilizer really we don’t sold too much. We have diversified (indiscernible) of our products.

Operator: Fernando Ferreira, Merrill Lynch.

Fernando Ferreira - Merrill Lynch: I just had a follow-up on iodine, when do you expect the supply/demand to be balanced again or the markets would be less tight than it is at the moment? It's still 2012 or you think this tightness might continue for the next couple of years?

Patricio Contesse G. - CEO: I think iodine today is (indiscernible) between supply and demand. There is no decline with our iodine today. Even with a slight increase in our inventories – but we are very low. We see (indiscernible) is gradual, the tension and some of the problem that is facing our competitors give us space for next year, because they now continue to grow, so we can lead the space until they solve the problem, but up to now we (indiscernible) where we are today.

Fernando Ferreira - Merrill Lynch: Then related to the potash, I am not sure, if I got it right, but you used to plant to sell 70% of your volumes into Brazil this year?

Patricio Contesse G. - CEO: Not 70%, what we are saying is that we're selling about 700,000 metric ton of granular product, and that’s nearly 70% of total sales is (indiscernible), but clearly not everything is going to receive a (rate), so we're not really selling 70% in Brazil, we're increasing to (40,000) metric ton of granular product effective to 700,000, but it doesn’t mean that there is going to be an issue.

Operator: Wesley Brooks, Morgan Stanley

Wesley Brooks - Morgan Stanley: My first question is on SPN, if I am not mistaken at the beginning of the year, you pushed up prices a bit there, I am just wondering, have those price increases gone through given the slightly weaker demand and has the restart or at least the production increase from Haifa impacted pricing at all, do you expect it to impact pricing or just more on the demand side?

Patricio Contesse G. - CEO: I think with SPN, we'll rather increase prices, but we see that I guess not being really there has been because again fertilizer were weak in the last quarter last year and the first quarter this year, so SPN was not different in that sense. We see a strong recovery for the next quarter, second, third and fourth. Anyhow, they have been a correction in pricing due to the euro – currency. The only reason that we sold some quantity less than last year would be because Haifa normalized their operations, beyond that we don’t see any other impact.

Wesley Brooks - Morgan Stanley: My next question, just thinking about the global potash markets. From a big picture perspective, we've got a interesting situation where Brazil and the U.S. is looking very strong, India, Europe and parts of Asia looking quite weak. I would be interested just to get your thoughts on what that means for the global pricing outlook? Also, if you think that might have any impact on the SPN business as that kind of plays out?

Patricio Contesse G. - CEO: Our views related to potash that prices would be sustained, we don’t see a decrease and we don’t see a increase. Volumes are touching up again. We have witnessed that you have (indiscernible). So, we have – if prices stay as they are, we see we are in a good relation with SPN. In our case I must say that, SPN will sell 100% of their volume of potash we produce.

Operator: (Giovanna Ro), Itau.

Giovanna Ro - Itau: My first question Patricio is about the potential allocations of potash to Brazil. If you could share with us what's the current share of Brazil in your total potash allocation, and what's the current mix between granular and non-granular potash?

Patricio Contesse G. - CEO: We are estimating to serve this year in the range of 1.1 million metric ton of products and that would be 700,000 metric ton of granular and composites and 400,000 standard. We are slightly (indiscernible) than last year and we are increasing significantly to granular capacity to 400,000 ton amount.

Giovanna Ro - Itau: Second question, balancing the prospects for prices and volumes for this year in each of your business lines, would you say that your operational performance in the second half of this year will be even stronger than we saw in the first quarter?

Patricio Contesse G. - CEO: I think operation has been quite generous in all sides of the Company. So, we see a quite stable situation in terms of cost and a normal operation during the year. I don’t see any major fall in the year.

Operator: (Hillary Brown, Lenin Partners).

Hillary Brown - Lenin Partners: I want to get back to volumes and prices. I know you said, especially about the specialty plant nutrition a couple times, but can you just repeat those numbers, your expectations for volumes for 2012 and prices, and then also the volumes and prices in your other businesses?

Patricio Contesse G. - CEO: Given where it was so they – they were telling me more or less question on that. We didn’t hear it better. If we had listened to you well, we see until now a very good scenario for our volumes, some pressure in terms of our business. So, we think we’ll have average prices in all our products, higher than what we had last year, I think volumes were slightly less in iodine and slightly less in SPN because of the Haifa.

Hillary Brown - Lenin Partners: Volumes slightly less in iodine and slightly less in SPN, but average prices roughly around the same.

Patricio Contesse G. - CEO: Regards pricing, we see us – we have seen already high than what they were last year.

Hillary Brown - Lenin Partners: Do you expect that trend to continue this year?

Patricio Contesse G. - CEO: I don’t see that prices there should move downward or upward.

Hillary Brown - Lenin Partners: I’m sorry could you please repeat that. I think my line quality is not very good.

Patricio Contesse G. - CEO: I was telling you that we don’t see upward or downward in prices for the rest of the year.

Hillary Brown - Lenin Partners: Okay so no upward and downward movements. I have a question about CapEx, could you please share with what you spent in the first quarter and just repeat what you expect to spend for the rest of the year?

Patricio Contesse G. - CEO: As communicated, we’re looking forward to spend slightly more than $500 million during the year, 70% is related to increase capacity. We are working to increase capacity in nitrate, in iodine, lithium and potash and we are (indiscernible) for next year to come.

Hillary Brown - Lenin Partners: Can you share what percentage of that you spent in the first quarter?

Patricio Contesse G. - CEO: About $80 million was spent during the first quarter, but we are working on (indiscernible) but really we're on time according to our budget.

Hillary Brown - Lenin Partners: I have a question about FX, at what average level this year would you expect to – what would you expect out of that positive impact on your margin, compared to last year?

Patricio Contesse G. - CEO: Can you repeat the question please?

Hillary Brown - Lenin Partners: Regarding FX, at what level of the dollar would you expect to have a positive increase on your margins compared to last year?

Patricio Contesse G. - CEO: We have increased our margins. In the first quarter in the range of 45% gross margin, that's been I think our highest (indiscernible). We think that trend to continue for the rest of the year considering what we see in the market today.

Hillary Brown - Lenin Partners: Could you repeat the last thing said, again?

Patricio Contesse G. - CEO: We think that the margin we have obtained in the first quarter are more or less the same we are going to have during the rest of the year.

Operator: Tim Tiberio, Miller Tabak.

Tim Tiberio - Miller Tabak: My first question, if I recall correctly, you sell a lot of your iodine volumes under contract pricing. Seeing that iodine spot prices really start spiking in the first half of 2011, can you give us an idea of how much of your annual volumes have been re-priced since we saw an upward movement in iodine prices last year?

Patricio Contesse G. - CEO: Last year we have about 25% of contracts and we have those 25% (indiscernible), so what moved the average price last year was the spot market are very high at the moment, but the spot market today does not exist, so basically the price that we had paid, the average price that we have got for renewal negotiation we had made of the contract that were ending last year.

Tim Tiberio - Miller Tabak: Where do you think average pricing is on a contract basis? We've seen prices on a kilogram basis?

Patricio Contesse G. - CEO: We don't really give, unfortunately (indiscernible), because we are always negotiating, so we don't give really and unfortunately we don't disclose these margins in that detail.

Tim Tiberio - Miller Tabak: But it sounds like you’ve full re-priced and taken advantage of the recent pricing move for your volumes in 2012?

Patricio Contesse G. - CEO: We're estimating lower volumes because there is a newcomer in Chile called Algorta, belong to traditional (indiscernible) Chile and for the conformation, yes, so considering that factor was resolved we are going to less volumes this year. That was the only reason why we're estimating lower volume because we are seeing their hand in the land very, very strong. Clearly is an (indiscernible).

Tim Tiberio - Miller Tabak: Just shifting to the SPN business, we have seen some weakness in the Mexican market related I think to the bumper to (indiscernible) crop. Can you give us an idea of how much of an impact that was in Q1 and whether you think that's a temporary impact and maybe how long you think that will take to rectify itself in the North American markets?

Patricio Contesse G. - CEO: We had last year a very strong (indiscernible), as in our history. Remember we sold as much as we sold last year. With some of our decline today, we don’t see that weakness in the market basically reached the highs that have normalized our operations.

Tim Tiberio - Miller Tabak: Just lastly I know you…

Patricio Contesse G. - CEO: Seeing this average, we think in favor and process you mentioned one, that's again, that are factored that we are selling more likely in the seasonal product for (indiscernible). So, we see the market more to stagnate, the main reason we are selling slightly less in because (indiscernible) operations being normalized.

Tim Tiberio - Miller Tabak: Just one last question, I recall over the last two quarters you really stressed the potential for new business in the industrial segment particularly the solar salts projects. Is this going to be more second half weighted looking at the decline in the first quarter sales numbers? How should we see, think about this from a linearity perspective.

Patricio Contesse G. - CEO: We think in 2012, the numbers are going be what we have set and we are reviewing the numbers for 2015, but totally because of the situations the state would become lower, not what we're thinking before.

Operator: (Lee Baco), Citigroup.

Lee Baco - Citigroup: My first question would be if you guys could give us an update on the capacity increase on the potash. You mentioned in the press release that you expect production to grow over than 25% versus 2011. I just wanted to check if there are investments and how it is proceeding this capacity increase in terms of ramp up? Also regarding the iodine, we are seeing a strong market for iodine, we have a tight supply. Can we expect capacity increase for 2012 this year or maybe for 2013? That would be my first question

Patricio Contesse G. - CEO: We have increased our capacity in iodine to 2,500 iodine equivalent. We should be by 2014, '15 almost 15,000. So, we're working on that (indiscernible) remains. Also, we are increasing our capacity in this year already in potash from slightly less than 1.7 last year to nearly 2 million this year and we're looking forward in the next year to be in the range of 2.5 considering (indiscernible) their production. Also, we are looking forward to increase our capacity on this.

Lee Baco - Citigroup: In this capacity increase, would you guys increase also the SPN capacity along with potash capacity?

Patricio Contesse G. - CEO: We are the only Company with spare capacity. Today, we have about more than 200,000 metric ton of spare capacity, so we think that in the next four, five year we should increase our on capacity because (indiscernible). Two years from now we'd see a new capacity.

Lee Baco - Citigroup: My second question is regarding…

Patricio Contesse G. - CEO: The only one question is the growth of the market.

Lee Baco - Citigroup: My second question would be on prices. We've seen a tight market in iodine and also looks like we will have a very good year for lithium, I just wanted to check if you guys are looking for a price increase in this both product or if there is enough scenario, the environment is good enough to have more price increase in these both products?

Patricio Contesse G. - CEO: At this moment, we're very cautious on that (indiscernible) hydropower economy, so we expect stable situation for rest of the year.

Operator: It looks like that was our final question.

Mark Fones - IR: Well, thank you all very much for joining us today and we hope to have you with us on the next conference call, so good bye everyone. Good afternoon.

Operator: Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a wonderful day.