Sociedad Química y Minera de Chile Profile
Sociedad Química y Minera de Chile S.A. operates as a producer of potassium nitrate, iodine, and lithium worldwide.
The company also produces specialty plant nutrients, iodine derivatives, lithium derivatives, potassium chloride, potassium sulfate and certain industrial chemicals (including industrial nitrates and solar salts). The company’s products are sold in approximately 110 countries through its worldwide distribution network, with 98% of its sales in 2022 derived from countries outside Chile.
The company’s products are mainly derived from mineral deposits found in northern Chile. The company mines and processes caliche ore and brine deposits. The caliche ore in northern Chile contains the only known nitrate and iodine deposits in the world and is the world’s largest commercially exploited source of natural nitrates. The brine deposits of the Salar de Atacama, a salt-encrusted depression in the Atacama Desert in northern Chile, contain high concentrations of lithium and potassium, as well as significant concentrations of sulfate and boron.
From its caliche ore deposits, the company produces a wide range of nitrate-based products used for specialty plant nutrients and industrial applications, as well as iodine and iodine derivatives. At the Salar de Atacama, the company extracts brines rich in potassium, lithium, sulfate and boron in order to produce potassium chloride, potassium sulfate, lithium solutions and bischofite (magnesium chloride). The company produces lithium carbonate and lithium hydroxide at its plant near the city of Antofagasta, Chile, from the solutions brought from the Salar de Atacama. The company markets all of these products through an established worldwide distribution network.
The company’s products are divided into six categories: specialty plant nutrients; iodine and its derivatives; lithium and its derivatives; potassium chloride and potassium sulfate; industrial chemicals and other commodity fertilizers. Specialty plant nutrients are premium fertilizers that enable farmers to improve yields and the quality of certain crops. The company’s main specialty fertilizer is potassium nitrate, which is used primarily in high-value crops. Iodine and its derivatives are mainly used in the X-ray contrast media and biocides industries and in the production of polarizing film, which is an important component in LCD screens. Lithium and its derivatives are mainly used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the company worldwide. Potassium sulfate is a specialty fertilizer used primarily in crops, such as vegetables, fruits and industrial crops. Industrial chemicals have a wide range of applications in certain chemical processes, such as the manufacturing of glass, explosives and ceramics. Industrial nitrates are also being used in concentrated solar power plants as a means for energy storage. In addition, the company complements its product portfolio through the buying and selling of other fertilizers in Chile and around the world.
Specialty Plant Nutrition: The company produces four main types of specialty plant nutrients which offer nutritional solutions for fertigation, direct soil and foliar fertilizer applications: potassium nitrate, sodium nitrate, sodium potassium nitrate and specialty blends. The company also sells other specialty fertilizers, including third party products. All of these products are used in either solid or liquid form mainly on high value crops, such as fruit, flowers and some vegetables. These fertilizers are widely used in crops that use modern agricultural techniques, such as hydroponics, greenhouses and crops with foliar application and fertigation (in the latter case, the fertilizer is dissolved in water before irrigation).
Specialty plant nutrients have certain advantages over commodity fertilizers, such as rapid and effective absorption (without requiring nitrification), superior water solubility, increased soil pH (which reduces soil acidity) and low chloride content. One of the most important products in this business line is potassium nitrate, which is sold in crystalline or prill form, allowing for different application methods. Crystalline potassium nitrate products are ideal for application by fertigation and foliar applications, and potassium nitrate prills are suitable for direct soil applications.
The company has developed brands for marketing according to the different applications and uses of its products. The company’s main brands are: Ultrasol (fertigation), Qrop (soil application), Speedfol (foliar application) and Allganic (organic agriculture).
The company’s products, including customized specialty blends that meet specific needs along with the agronomic service provided, allow it to create plant nutrition solutions that add value to crops through higher yields and better-quality production. Because the company’s products are derived from natural nitrate compounds or natural potassium brines, they have certain advantages over synthetically produced fertilizers.
Iodine and its Derivatives: The company is a producer of iodine and iodine derivatives, which are used in a wide range of medical, pharmaceutical, agricultural and industrial applications, including x-ray contrast media, polarizing films for LCD and LED, antiseptics, biocides and disinfectants, in the synthesis of pharmaceuticals, electronics, pigments and dye components.
Lithium and its Derivatives: The company is a producer of lithium carbonate, which is used in a variety of applications, including electrochemical materials for batteries used in electric vehicles, portable computers, tablets, cellular telephones and electronic apparatus, frits for the ceramic and enamel industries, heat-resistant glass (ceramic glass), air conditioning chemicals, continuous casting powder for steel extrusion, pharmaceuticals and lithium derivatives. The company is also a supplier of lithium hydroxide, which is primarily used as an input for the lubricating greases industry and for cathodes for high energy capacity batteries.
Potassium: The company produces potassium chloride and potassium sulfate from brines extracted from the Salar de Atacama. Potassium chloride is a commodity fertilizer used to fertilize a variety of crops, including corn, rice, sugar, soybean and wheat. Potassium sulfate is a specialty fertilizer used mainly in crops, such as vegetables, fruits and industrial crops.
Industrial Chemicals: The company produces and sells three industrial chemicals: sodium nitrate, potassium nitrate and potassium chloride. Sodium nitrate is used primarily in the production of glass, explosives, and metal treatment, metal recycling and the production of insulation materials, among other uses. Potassium nitrate is used in the manufacturing of specialty glass, and it is also an important raw material for the production of frits for the ceramics, enamel industries, metal treatment and pyrotechnics. Solar salts, a combination of potassium nitrate and sodium nitrate, are used as a thermal storage medium in concentrated solar power plants. Potassium chloride is a basic chemical used to produce potassium hydroxide, and it is also used as an additive in oil drilling, as well as in food processing, among other uses.
Other Products and Services: The company also sells other fertilizers and blends, some of which it does not produce. The company produces and distributes the three main potassium sources: potassium nitrate, potassium sulfate and potassium chloride.
Business Strategy
The company is a global company that develops and produces diverse products for several industries essential for human progress, such as health, nutrition, renewable energy and technology through innovation and technological development.
The company work every day to expand this culture through the attraction, retention and development of talent as well encouraging an inclusive and diverse work environment ensuring the unique knowledge and innovation needed to sustain its business. The company strives for safe and accident-free operations by promoting conduct that favors the physical safety and psychological well-being of everyone who works directly and indirectly with its company.
Specialty Plant Nutrition
The company’s strategy in its specialty plant nutrition business is to: leverage the advantages of its specialty products over commodity-type fertilizers; selectively expand its business by increasing its sales of higher margin specialty plant nutrients based on potassium and natural nitrates, particularly soluble potassium nitrate and specialty blends; pursue investment opportunities in complementary businesses to enhance its product portfolio, increase production and add value to the marketing of its products; develop new specialty nutrient blends produced in its mixing plants that are strategically located in or near its principal markets in order to meet specific customer needs; focus primarily on the markets where it can sell its plant nutrients in soluble and foliar applications in order to establish a leadership position; and further develop its global distribution and marketing system directly and through strategic alliances with other producers and global or local distributors.
Iodine and its Derivatives
The company’s strategy in its iodine business is to: reach and maintain a sufficient market share of the iodine market in order to optimize the use of its available production capacity; encourage demand growth and promote new iodine uses; participate in iodine recycling projects through the Ajay-SQM Group (ASG); and supply a product with consistent quality according to the requirements of its customers.
Lithium and its Derivatives
The company’s strategy in its lithium business is to: strategically allocate its sales of lithium carbonate and lithium hydroxide; encourage demand growth and promote new lithium uses; selectively pursue opportunities in the lithium derivatives business by creating new lithium compounds; supply a product with consistent quality according to the requirements of its customers; and diversify its operations geographically and jurisdictionally; and diversifying its asset base or adjusting risk by acquiring new projects and interests (either alone or with joint venture partners), divesting existing projects or selling down its interests in projects.
Potassium
The company’s strategy in its potassium business is to: offer a portfolio of potassium products, including potassium sulfate, potassium chloride and other fertilizers, to its traditional markets; have flexibility to offer crystalized (standard) or granular (compacted) form products according to market requirements; focus on markets where it has logistical advantages and synergies with its specialty plant nutrition business and supply a product with consistent quality according to the specific requirements of its customers.
Industrial Chemicals
The company’s strategy in its industrial chemical business is to: maintain its leadership position in the industrial nitrates market; encourage demand growth in different applications, as well as exploring new potential applications; position itself as a long-term, reliable supplier for the thermal storage industry, maintaining close relationships with R&D programs and industrial initiatives; and supply a product with consistent quality according to the requirements of its customers.
Main Business Lines
Specialty Plant Nutrition
Products
The company is the producer of potassium nitrate. In addition to potassium nitrate, the company produces the following specialty plant nutrients: sodium nitrate, sodium potassium nitrate and specialty blends (containing various combinations of nitrogen, phosphate and potassium and generally known as ‘NPK blends’).
Marketing and Customers
In 2022, the company sold its specialty plant nutrients in approximately 103 countries and to more than 1,000 customers. The company’s ten largest customers accounted in the aggregate for approximately 34% of revenues during 2022.
The company sells its specialty plant nutrition products globally mainly through its own worldwide network of commercial offices and distributors.
The company has developed marketing channels, brands (Ultrasol, Champion, Sangral, Qrop, Speedfol), supply chain, and mixing and packaging plants to be able to reach practically the entire world with its products and has a direct presence in the main markets of America, Europe, South Africa, and China.)
During 2022 the company continued with the growth in sales of differentiated fertilizers, such as Ultrasoline for improved root growth and optimal nitrogen metabolism, ProP for greater efficiency in phosphorus absorption, Prohydric which allows for fertilization and more efficient water use.
The company’s specialty plant nutrients are used on a wide variety of crops, particularly value-added crops, where the use of its products enables its customers to increase yields and achieve a premium price for their products.
In the Chilean market, the company offers a wide range of products developed specifically for the crops grown in the country which require specialty plant nutrients.
The company sells local products, as well as products imported from different countries around the world.
Competition
In the potassium nitrate market, the company’s largest competitor is Haifa Chemicals Ltd. (Haifa), in Israel, which is a subsidiary of Trans Resources International Inc.
Iodine and its Derivatives
Products
The company is producer of iodine. The company produces iodine in its Nueva Victoria plant, near Iquique, Chile, and its Pedro de Valdivia plant, close to María Elena, Chile. The company has a total production capacity of approximately 14,800 metric tons per year of iodine, including the Iris plant, which is located close to the Nueva Victoria plant.
Through Ajay SQM Group (ASG), the company produces organic and inorganic iodine derivatives. ASG has production plants in the United States, Chile and France. ASG is one of the world’s leading inorganic and organic iodine derivatives producer.
Consistent with its iodine business strategy, the company is constantly working on the development of new applications for its iodine-based products, pursuing a continuing expansion of its businesses and maintaining its market leadership.
The company manufactures its iodine and iodine derivatives in accordance with international quality standards and has qualified its iodine facilities and production processes under the ISO 9001:2015 program, providing third party certification of the quality management system and international quality control standards that it has implemented.
Marketing and Customers
In 2022, the company sold its iodine products in approximately 50 countries to approximately 258 customers, and most of its sales were exports. Two customers accounted for approximately 41% of revenues, and its ten largest customers accounted in the aggregate for approximately 75% of revenues.
The company sells iodine through its own worldwide network of representative offices and through its sales, support and distribution affiliates.
Lithium and its Derivatives
The company is the largest producers of lithium carbonate and lithium hydroxide.
Products
The company produces lithium carbonate at its Carmen Lithium production facility, near Antofagasta, Chile, from highly concentrated lithium chloride produced in the Salar de Atacama. The annual production capacity of the company’s lithium carbonate plant at the Carmen Lithium production facility is 180,000 metric tons per year. The company is in the process of increasing its production capacity to 210,000 metric tons per year by 2025. The technologies the company uses, together with the high concentrations of lithium and the characteristics of the Salar de Atacama, such as high evaporation rate and concentration of other minerals, allow it to be one of the lowest cost producers of lithium worldwide.
The company also produces lithium hydroxide at the Carmen Lithium production facility, next to the lithium carbonate operation. The lithium hydroxide facility has a production capacity of 30,000 metric tons per year and it is in the process of increasing this production capacity to 100,000 metric tons per year by 2025. In addition, the company is developing the Mt. Holland lithium project in Australia through its joint venture with Wesfarmers, which it expects will have a total production capacity of 50,000 metric tons when completed.
Marketing and Customers
In 2022, the company sold its lithium products in approximately 41 countries to approximately 198 customers, and most of its sales were to customers outside of Chile. During 2022, 93% of the company’s sales of lithium were in Asia. The company’s ten largest customers accounted in the aggregate for approximately 60% of revenues. The company makes lease payments to Corfo which are associated with the sale of different products produced in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride.
The company sells lithium carbonate and lithium hydroxide through its own worldwide network of representative offices and through its sales, support and distribution affiliates. The company maintains inventories of these products at its facilities throughout the world to facilitate prompt delivery to customers. Sales of lithium carbonate and lithium hydroxide are made based on spot purchase orders or through different supply contracts. The contracts generally specify minimum and maximum annual sales volumes commitments while prices are adjusted periodically based on different price indices established in the market.
Competition
The main competitors in the lithium market are Albemarle (16%), Tianqi Lithium Corp. (7%), Jiangxi Ganfeng Lithium Co (6%), Livent Corporation (3%), and Allkem (4%).
Potassium
Products
The company produces potassium chloride and potassium sulfate by extracting brines from the Salar de Atacama that are rich in potassium and other salts.
Potassium chloride differs from the company’s specialty plant nutrition products because it is a commodity fertilizer and contains chloride. The company offers potassium chloride in two grades: standard and compacted. Potassium sulfate is considered a specialty fertilizer and the company offers this product in soluble grades. Potassium is one of the three macronutrients that a plant needs to the company produces potassium chloride and potassium sulfate by extracting brines from the Salar de Atacama that are rich in potassium and other salts.
Potassium chloride differs from the company’s specialty plant nutrition products because it is a commodity fertilizer and contains chloride. The company offers potassium chloride in two grades: standard and compacted. Potassium sulfate is considered a specialty fertilizer and the company offers this product in soluble grades. Potassium chloride is also an important component for the company’s specialty plant nutrition product line, where it is used as a raw material to produce potassium nitrate.
Marketing and Customers
In 2022, the company sold potassium chloride and potassium sulfate to approximately 467 customers in approximately 32 countries. The company makes lease payments to Corfo which are associated with the sale of different products produced in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride.
Competition
The company’s main competitors are Nutrien, Uralkali, Belaruskali and Mosaic.
Industrial Chemicals
Products
The company produces and sells three industrial chemicals: sodium nitrate, potassium nitrate and potassium chloride. In addition to producing sodium and potassium nitrate for agricultural applications, the company produces different grades of these products, including prilled grades, for industrial applications. The company has operational flexibility in producing industrial grade nitrates, because they are produced from the same process as their equivalent agricultural grades, needing only an additional step of purification. In addition to producing industrial nitrates, the company produces, markets and sells industrial-grade potassium chloride.
Marketing and Customers
In 2022, the company sold its industrial nitrate products in approximately 58 countries, to approximately 261 customers. The company makes lease payments to Production Development Corporation (Corfo) which are associated with the sale of different products produced in the Salar de Atacama, including lithium carbonate, lithium hydroxide and potassium chloride.
The company’s industrial chemical products are marketed mainly through its own network of offices, logistic platforms, representatives and distributors. The company maintains updated inventories of its stocks of sodium nitrate and potassium nitrate, classified according to graduation, to facilitate prompt dispatch from its warehouses. The company provides support to its customers and continuously work with them to improve its service and quality, together with developing new products and applications for its products.
Competition
The company’s competitors in sodium nitrate are mainly based in Europe and Asia, producing sodium nitrate as a by-product of other production processes. In sodium nitrate, BASF AG, a German corporation, and several producers in Eastern Europe and China are competitive since they produce industrial sodium nitrate as a by-product.
The company’s main competitors in the industrial potassium nitrate business are Haifa Chemicals and Kemapco.
Other Products
The company also derives revenue from the commercialization of third-party fertilizers (specialty and commodity). These fertilizers are traded in large volumes worldwide and are used as raw material for the company’s specialty mixes or to complement its product portfolio. The company has developed commercial management, supply, flexibility and inventory management capabilities that allow it to adapt to the changing fertilizer market in which it operates and obtains profits from these transactions.
Suppliers
The company’s electricity needs are primarily covered by Power Purchase Agreements that it entered into with Empresa Electrica Cochrane SpA. For its supply of liquefied natural gas, the company maintains a five-year contract with Engie. In addition, the company has a supply of liquefied petroleum gas (LPG) from Lipigas at the Carmen Lithium production facility and the Salar de Atacama.
Government Regulations
Under Law No. 16,319 that created the Chilean Nuclear Energy Commission (Comisión Chilena de Energía Nuclear), or ‘CCHEN’, the company has an obligation to the CCHEN regarding the exploitation and sale of lithium from the Salar de Atacama, which prohibits the use of lithium for nuclear fusion. In addition, CCHEN has imposed quotas that limit the total tonnage of lithium authorized to be sold, along with other conditions.
The company is also subject to the Chilean Labor Code and the Subcontracting Law, which are overseen by the Labor Authority (Dirección del Trabajo), the National Geology and Mining Service (Servicio Nacional de Geología y Minería) or ‘Sernageomin’, and the National Health Service.
In addition, the company is subject to Law No. 20,393, which establishes criminal liability for legal entities, for crimes such as, asset laundering, financing terrorism, bribery and obliging employees to breach sanitary restrictions ordered by the local authorities.
The company is subject to the Securities Market Law and Law No. 18,046 on Corporations (Ley de Sociedades Anónimas) or the ‘Chilean Corporations Act’, which regulates corporate governance of public companies.
The company’s operations in Chile are subject to both national and local regulations related to safety, health and environmental protection. In Chile, the main regulations on these matters that are applicable to it are the Mine Health and Safety Act of 1989 (Reglamento de Seguridad Minera or the ‘Mine Health and Safety Act’), the Health Code (Código Sanitario), the Health and Basic Conditions Act of 1999 (Reglamento sobre Condiciones Sanitarias y Ambientales Básicas en los Lugares de Trabajo or the ‘Health and Basic Conditions Act’), the Subcontracting Law, the Environmental Law of 1994, amended in 2010 (Ley sobre Bases Generales del Medio Ambiente or the ‘Environmental Law’) and Law No.16,744 of the Labor Code relating to workplace accidents and occupational diseases (Law No. 16,744).
The company is subject to the general provisions of the Health and Basic Conditions Act, its own internal standards and the provisions of the Mine Health and Safety Act.
The company is committed to continuously improving its environmental performance through its Environmental Management System (EMS). In other jurisdictions, in 2022 the company continued its work for the registrations of products under other similar chemicals control regulations, including the U.K. REACH, Turkey REACH and Korea REACH.
History
Sociedad Química y Minera de Chile S.A. was founded in 1960. The company was incorporated in 1968.
