CONTRACT BETWEEN CORFO AND SQM SALAR

The conditions of the contract are the same established since 1986. However, it was in 2018 when both parties modified the lease, whose new clauses began to be implemented immediately, including a significant increase in the lease rates for the products sold.

The objective of the applied modification was to add greater value to the Salar de Atacama area and to the region in general. This is how SQM works together with the Regional Government of Antofagasta, the municipalities of San Pedro de Atacama, Antofagasta and María Elena, contributing important annual sums to community development plans that are translated into contributions made by the company.

SUPPORT TO COMMUNITIES

During 2019, SQM's total investment value in the communities was ThUS $ 5.256. This value does not consider the contributions delivered by agreement signed by CORFO, which will range between ThUS $ 10.000 and ThUS $ 15.000 annually. Additionally, the administration expense for community work was ThUS $ 1.373.

Likewise, and in order to prioritize transparency in compliance with the agreement, there are two audits. One of them is led by an environmental auditor, who ensures compliance with the environmental commitments of the Salar de Atacama project, and the other is led by a contractual auditor, who ensures the correct payment of the rental income and other financial obligations.

Likewise, the agreement with Corfo includes the delivery of information that covers the entire production process, from production information, communications with the different environmental entities, information on the invoices of our subsidiaries for our products and other export information. SQM, along with complying with the provisions of the modification of the contract signed with CORFO in 2018, deepens the creation of shared social value, care and respect for people, the environment and communities.

ENVIRONMENTAL MONITORING SYSTEM

As of August 31, 2020, the website “SQM en Línea (www.sqmsenlinea.com)” was made available to the community, whose environmental monitoring system will allow access to parameters and variables from approximately 300 measurement points that we had available from the nucleus to the areas surrounding the Salar de Atacama, including historical information that in some variables can reach up to 20 years of information, all of which is available to all public and free of charge, seeking to improve the understanding of this unique ecosystem.

R&D

Along the same lines, the modification of the contract also contemplated a contribution of a total of US $ 200 million for research and development in the Antofagasta region, which seeks to strengthen the region as the center of technological development of the country in terms of energy clean (Institute of Clean Technologies). The application process has already concluded this year and we are waiting for Corfo to announce the beneficiaries of these funds.

GREATER PRODUCTION CAPACITY

It is also important to highlight that in the modification of the contract, in 2018, Corfo and the Chilean Nuclear Energy Commission (CChen) delivered to SQM Salar a greater quota of lithium production, which will allow the company to reach 2030 producing and supplying the world market, maintaining Chile as a relevant player. However, this increase in the production quota is not related to a greater extraction of brine, but to a greater production capacity, for which an increase in the company's capacity is required, improving yields and processes associated with the lithium production.

With this modification, SQM became a true commercial partner of the State of Chile, contributing to the country, through the development of this project, 50% of the margin generated by the commercialization of its products, something unprecedented worldwide for companies.

AUSTRALIA: MT HOLLAND PROJECT

SQM, as a way to generate different supply points for global demand, has been associated with the Mt Holland project located in Western Australia. SQM owns a 50% stake jointly with the Wesfarmers company.

This project is a very attractive opportunity to participate in the development of a large-scale, long-term, high-grade lithium hydroxide project in Western Australia. The project seeks to empower Australia as a global lithium processing center, making this project an excellent option for SQM to diversify its sources of lithium supply to respond to global demand, and which will have an initial capacity of 45.000 tons. of lithium per year.

Currently the project is in an evaluation stage, which consists of evaluating the project's capital, operating costs and working with clients to define product specifications.

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