Sociedad Quimica y Minera de Chile S A : Financial statements as of December 31, 2018

CONSOLIDATED FINANCIAL STATEMENTS

For the period ended

December 31, 2018

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

El Trovador 4285

Las Condes, Santiago, Chile 75500

sqm.com

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

Table of Contents -Consolidated Financial Statements

Consolidated Classified Statements of Financial Position............................................................................		7
Consolidated Statements of Income by Function..........................................................................................		9
Consolidated Statements of Comprehensive Income..................................................................................		11
Consolidated Statements of Cash Flows......................................................................................................		12
Consolidated Statements of Changes in Equity..........................................................................................		14
Note 1	Identification and Activities of the Company and Subsidiaries.......................................................	16
1.1	Historical background......................................................................................................................	16
1.2	Main domicile where the Company performs its production activities ...........................................	16
1.3	Codes of main activities...................................................................................................................	16
1.4	Description of the nature of operations and main activities.............................................................	16
1.5	Other background.............................................................................................................................	18
Note 2	Basis of presentation for the consolidated financial statements.......................................................	20
2.1	Accounting period............................................................................................................................	20
2.2	Consolidated financial statements....................................................................................................	20
2.3	Basis of measurement......................................................................................................................	21
2.4	Accounting pronouncements...........................................................................................................	22
2.5	Basis of consolidation......................................................................................................................	27
Note 3	Significant accounting policies........................................................................................................	30
3.1	Classification of balances as current andnon-current......................................................................	30
3.2	Functional and presentation currency..............................................................................................	30
3.3	Foreign currency translation............................................................................................................	30
3.4	Subsidiaries......................................................................................................................................	32
3.5	Consolidated statement of cash flows..............................................................................................	32
3.6	Financial assets................................................................................................................................	32
3.7	Financial liabilities...........................................................................................................................	33
3.8	Financial instruments at fair value through profit or loss................................................................	33
3.9	Financial instrument offsetting........................................................................................................	33
3.10	Reclassification of financial instruments.........................................................................................	33
3.11	Derivative and hedging financial instruments.................................................................................	33
3.12	Available for sale financial assets....................................................................................................	35
3.13	Derecognition of financial instruments............................................................................................	35
3.14	Derivative financial instruments......................................................................................................	35
3.15	Fair value initial measurements.......................................................................................................	36
3.16	Deferred acquisition costs from insurance contracts.......................................................................	36
3.17	Classification Leases........................................................................................................................	36
3.18	Trade and other receivables.............................................................................................................	36
3.19	Inventory measurement....................................................................................................................	37
3.20	Investments in associates and joint ventures....................................................................................	38
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3.21	Transactions withnon-controllinginterests.....................................................................................	39
3.22	Related party transactions................................................................................................................	39
3.23	Property, plant and equipment.........................................................................................................	39
3.24	Depreciation of property, plant and equipment, continued..............................................................	40
3.25	Goodwill..........................................................................................................................................	40
3.26	Intangible assets other than goodwill...............................................................................................	41
3.27	Research and development expenses...............................................................................................	42
3.28	Prospecting expenses.......................................................................................................................	42
3.29	Impairment ofnon-financialassets..................................................................................................	43
3.30	Minimum dividend...........................................................................................................................	43
3.31	Earnings per share............................................................................................................................	43
3.32	Trade and other payables.................................................................................................................	44
3.33	Interest-bearingborrowings.............................................................................................................	44
3.34	Other provisions...............................................................................................................................	44
3.35	Obligations related to employee termination benefits and pension commitments...........................	45
3.36	Compensation plans.........................................................................................................................	45
3.37	Revenue recognition........................................................................................................................	45
3.38	Finance income and finance costs....................................................................................................	46
3.39	Income tax and deferred taxes.........................................................................................................	46
3.40	Segment reporting............................................................................................................................	47
3.41	Responsibility for Information and Estimates Made.......................................................................	48
3.42	Environment.....................................................................................................................................	49
Note 4	Changes in accounting estimates and policies (consistent presentation) .........................................	49
4.1	Changes in accounting estimates.....................................................................................................	49
4.2	Changes in accounting policies........................................................................................................	49
Note 5	Financial risk management..............................................................................................................	50
5.1	Financial risk management policy................................................................................................	50
5.2	Risk Factors....................................................................................................................................	51
5.3	Risk measurement..........................................................................................................................	69
Note 6	Background of companies included in consolidation......................................................................	70
6.1 Parent'sstand-aloneassets and liabilities..............................................................................................		70
6 .2	Parent entity.....................................................................................................................................	70
Note 7	Board of Directors, Senior Management And Key management personnel ....................................	71
7.1	Board of Directors and Senior Management....................................................................................	71
7.2	Key management personnel compensation......................................................................................	74
Note 8	Background on companies included in consolidation and non-controlling interests.......................	75
8.1	Background on companies included in consolidation......................................................................	75
8.2	Assets, liabilities, results of consolidated subsidiaries.....................................................................	78
8.3	Detail of transactions between consolidated companies..................................................................	82
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Sociedad Química y Minera de Chile S.A. and Subsidiaries

8.4	Background onnon-controllinginterests.........................................................................................	85
Note 9	Equity-accountedinvestees..............................................................................................................	86
9.1	Investments in associates recognized according to the equity method of accounting ....................	86
9.2	Assets, liabilities, revenue and expenses of associates....................................................................	89
9.3	Other information.............................................................................................................................	90
9.4	Disclosures on interest in associates................................................................................................	90
Note 10	Joint Ventures................................................................................................................................	92
10.1	Policy for the accounting of equity accounted investment in joint ventures ...................................	92
10.2	Disclosures of interest in joint ventures...........................................................................................	92
10.3	Investment in joint ventures accounted for under the equity method of accounting .......................	94
10.4	Assets, liabilities, revenue and expenses from joint ventures:.........................................................	98
10.5	Other Joint Venture disclosures:......................................................................................................	99
Note 11 Cash and cash equivalents...........................................................................................................		100
11.1	Types of cash and cash equivalents...............................................................................................	100
11.2	Short-terminvestments, classified as cash equivalents..................................................................	100
11.3	Information on cash and cash equivalents by currency.................................................................	101
11.4	Amount restricted (unavailable) cash balances..............................................................................	101
11.5	Short-termdeposits, classified as cash equivalents.......................................................................	102
11.6	Other information...........................................................................................................................	104
Note 12	Inventories...................................................................................................................................	105
Note 13 Related party disclosures.............................................................................................................		107
13.1	Related party disclosures...............................................................................................................	107
13.2	Relationships between the parent and the entity............................................................................	107
13.3	Detailed identification of the link between the Parent and subsidiary...........................................	108
13.4	Detail of related parties and related party transactions..................................................................	111
13.5	Trade receivables due from related parties, current:......................................................................	112
13.6	Trade payables due to related parties, current:..............................................................................	112
Note 14	Financial instruments...................................................................................................................	113
14.1	Types of other financial assets.......................................................................................................	113
14.2	Trade and other receivables...........................................................................................................	114
14.3	Hedging assets and liabilities.........................................................................................................	117
14.4	Financial liabilities.........................................................................................................................	119
14.5	Trade and other payables...............................................................................................................	133
14.6	Financial liabilities at fair value through profit or loss..................................................................	134
14.7	Financial asset and liability categories...........................................................................................	135
14.8	Fair value measurement of assets and liabilities............................................................................	137
14.9	Financial assets pledged as a guarantee.........................................................................................	141
14.10	Estimated fair value of financial instruments and financial derivatives ........................................	142
14.11	Nature and scope of risks arising from financing instruments.......................................................	143
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	Sociedad Química y Minera de Chile S.A. and Subsidiaries
Note 15 Intangible assets and goodwill.....................................................................................................		144
15.1	Balances.........................................................................................................................................	144
15.2	Disclosures on intangible assets and goodwill...............................................................................	144
Note 16 Property, plant and equipment.....................................................................................................		150
16.1	Types of property, plant and equipment........................................................................................	150
16.2	Reconciliation of changes in property, plant and equipment by type: ...........................................	152
16.3	Detail of property, plant and equipment pledged as guarantee ......................................................	156
16.4	Impairment of assets......................................................................................................................	156
16.5	Additional Information..................................................................................................................	156
Note 17 Other current andnon-currentnon-financialassets.....................................................................		157
Note 18	Employee benefits.......................................................................................................................	158
18.1	Provisions for employee benefits...................................................................................................	158
18.2	Policies on defined benefit plan.....................................................................................................	158
18.3	Otherlong-termbenefits................................................................................................................	159
18.4	Post-employmentbenefit obligations.............................................................................................	160
18.5	Staff severance indemnities...........................................................................................................	161
18.6	Executive compensation plan........................................................................................................	163
Note 19 Provisions and othernon-financialliabilities..............................................................................		164
19.1	Types of provisions........................................................................................................................	164
19.2	Description of other provisions......................................................................................................	165
19.3	Other current liabilities..................................................................................................................	166
19.4	Changes in provisions....................................................................................................................	167
Note 20 Disclosures on equity...................................................................................................................		168
20.1	Capital management.......................................................................................................................	168
20.2	Disclosures on preferred share capital...........................................................................................	169
20.3	Disclosures on reserves in equity...................................................................................................	171
20.4	Dividend policies...........................................................................................................................	174
20.5	Interim and provisional dividends..................................................................................................	176
Note 21 Earnings per share........................................................................................................................		178
Note 22 Contingencies and restrictions.....................................................................................................		179
22.1	Lawsuits and other relevant events................................................................................................	179
22.2	Restrictions to management or financial limits..............................................................................	186
22.3	Environmental contingencies.........................................................................................................	187
22.4	Tax contingency.............................................................................................................................	189

22.5Contingencies regarding the Changes to the Contracts with Corfo. Appeal No.10301-2018,

Santiago Court of Appeals:........................................................................................................................		191
22.6	Restricted or pledged cash.............................................................................................................	193
22.7	Securities obtained from third parties............................................................................................	194
22.8	Indirect guarantees.........................................................................................................................	195
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