Good morning, welcome to the SQM fourth quarter 2022 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there'll be an opportunity to ask questions. To ask a question, you may press star then one your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would like to turn the call to Irina Axenova of Investor Relations. Please go ahead. Thank you, Antonio. Good morning. Welcome for joining SQM's earnings conference call for the fourth quarter of 2022. This conference call will be recorded and is being webcast live. Our earnings press release and a presentation with a summary of the results have been uploaded to our website, where you can also find a link to the webcast. Speaking on the call today will be Ricardo Ramos, Chief Executive Officer, and Gerardo Illanes, Chief Financial Officer. Carlos Diaz, Executive Vice President of Lithium, Felipe Smith, Commercial Vice President of Lithium, and also Juan Pablo Bellolio, Commercial Vice President of Iodine, will be also available to answer any questions. 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, and that term is defined under federal securities laws. Any forward-looking statements are 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 our public filings made with the U.S. Securities and Exchange Commission and in our earnings release issued today. This forward-looking statement should be considered in light of those factors. We assume no obligation to update such statements, whether as a result of new information, future developments, or otherwise, except as required by law. I now leave you with our Chief Executive Officer, Ricardo Ramos. Thank you. Thank you, Irina. Good morning. Thank you for joining the call today. We are very pleased with the 2022 results we published last night. Lithium business contributed to almost 80% of our gross profit for the year, driven by significantly high sales volumes and average prices. Our long-term vision for the lithium market, investments in technology, innovation and new capacity, along with the risk we took and our operational success, enable us to make the most of favorable market conditions since last year. Through the public-private alliance with CORFO, our total contribution to Chile, including corporate taxes, surpassed $5 billion in 2022. We see a strong indicators of demand growth in the lithium market, driven by the electric vehicle sales growth worldwide and investment in renewable energy that require energy storage systems. We estimate that the total global lithium demand could reach 1.5 million metric tons by 2025 and deliver at least 20% growth in 2023. After an expected slowdown in demand during the Chinese New Year celebrations, electric vehicle sales have increased in recent weeks in China, while the U.S. market electric vehicles sales are doubling when compared to last year. This growth rate should continue for the remainder of the year, with major OEMs showing an increase in their production volumes. Our sales volume during the second half of the year should be higher than compared to the first half of the year. We will continue to invest in growing our lithium production globally. Our capital expenditure plan for the next three years includes investment in lithium, iodine, and nitrate capacity expansion in Chile, competition of the Mt. Holland project in Australia, and lithium refining capacity in China. We are also active on lithium mining exploration, and we will continue looking for attractive assets worldwide. This CapEx plan also includes investment in certain activities and initiatives related to our Salar Futuro project, which technically documentation we expect to submit for evaluation to the Chilean authorities in 2024. I would like to highlight our operation success during last year. We successfully completed a ramp-up of our lithium capacity, reaching 180,000 metric tons, and finished the year with record high iodine production volumes over those 12,000 metric tons. None of this would have been possible without the continuous dedication, support, and commitment of our team at SQM. Thank you. Operator, we would now open the line for questions. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question will come from P.J. Juvekar with Citigroup. You may now go ahead. Yes, good morning. You know, I think you had mentioned last quarter that for 2023 you were 100% exposed to spot price. I was wondering, can you explain spot price? Because there is China spot price, which has dropped recently, but spot price ex-China has not dropped as much. There is another price for seaborne lithium. We're wondering what price are you exposed to, and can you just talk about your pricing exposure? Thank you. Hello, PK. This is Felipe Smith. How are you? Good. Thank you. Well, I would like to comment that our sales are very well diversified geographically by segment, by product. You have to be careful when you look at the evolution of some of the indexes in the market because what we have is at the end is a mix of different geographies and market prices. What you are seeing today in China is still very early for us to consider as a real trend, because the level of transactions that we are seeing so far are not that much relatively. Okay? I would say that the main message is that we are going to be very well exposed to the market. Whatever the direction the market takes, our sales will be mainly following the market. Okay. Thank you. Secondly, you mentioned that, you know, the lithium sales in China slowed in the first two months, but recently have picked up. Was a comment you made. I was wondering, can you just talk about kinda what kind of bounce back have you seen recently? That'll be helpful. Thank you. Yes. We are seeing actually indeed, that, first of all, generally, we are starting to see very good figures of sales of EVs, and that will definitely, have an impact on the purchases of lithium. We are now already seeing that activity increasing. Thank you. Our next question will come from Ben Isaacson with Scotiabank. You may now go ahead. Good morning, everyone, and congrats on the good results. I have three questions. I'd like to ask them one by one, if that's okay. First question is on iodine. These prices are really incredible. I think they're now much higher than they were, after the Fukushima disaster 10 years ago. What's gonna crack the market? I mean, my view is that if demand destruction kind of didn't occur at $40 and $50 and $60, and now we're at $70, I mean, how is this market gonna crack in iodine? Hi, Ben. This is Juan Pablo. Well, yeah, prices are high today. I would say, almost at the same level or even higher in average than after Fukushima. It, it is mainly due to a healthy demand coming from the market. I would say contrast media industry is growing more than what was the average of the iodine industry. That demand is growing more than the supply pushing for prices. Where we still see that healthy demand coming this year, that will be still bring pressure on prices. We see at least now prices to be at the same level during the first half of the year compared to the end of 2022. Do you see any new capacity announcements? I mean, why wouldn't people be rational and start taking advantage of these very high margins? Sorry, could you repeat the question? Given that prices are so high, why aren't we seeing any announcements for new capacity? First of all, we as SQM, we have announced in the past, and we keep announcing, new investment in, new capacity in iodine. You need to remember that new capacity in iodine takes a lot of time. We are talking about material capacity or new projects will take time to get the permits and the environmental conditions to go ahead. That's why you have to look the price today to do that investment. You need to look the price for the future, and that's obviously something, not so clear. Thank you. My second question is on the SPN business. I think one of the messages that you guys have been giving is that over the next few years, your potash volume, your potash production will start to decline. If that's correct, then does that really limit the growth for NOP, for potassium nitrate in the SPN business? If not, then where does the growth come from in SPN? Hi. Ricardo Ramos speaking. Of course, we expect to have some reduction in the production of MOP because we are gonna reduce the pumping of solution, the brines from the Salar de Atacama in the future every year. We are increasing our technology and our deals at the Salar in order that we can control, in some way, the reduction in total production. Anyway, the total production of MOP today is more than enough in order to cover the production of potassium nitrate. That's why we don't foresee, until the next 10 years, having any issue Of supplying enough potash for the production of potassium nitrate. Of course, the sales to third parties of potash will be reduced, but we will not affect the growth of potassium nitrate from SCAN. Okay, that's helpful. Then my very last question, maybe just to follow up on P.J.'s question on the portfolio structure of lithium. You just said that you're gonna mainly follow the market. You know, there's there's a debate out there that perhaps stock prices or just in general, we'll start to see prices start to moderate over time. If that's true, why would you not add some more stability and predictability to your lithium portfolio by having a little bit more fixed prices, especially if you believe that prices will trend lower and moderate closer to the cost curve over the next few years? Why would you leave yourself exposed to spot if you believe prices will trend lower? Yes. Yes. Well, we have taken that decision already some time ago, that we want to have our contracts following the market. I think this, at the end, represents the best solution for customers and suppliers. Sometimes, I mean, we have learned the hard way in the past that sometimes when you fix prices and then market changes unexpectedly, then you are in a problem, and we want to avoid that. Thank you very much. Our next question will come from Corinne Blanchard with Deutsche Bank. You may now go ahead. Hey, good morning, everyone. Thanks for taking my question. The first one, I want to try to understand better, what you expect in terms of volume for this year, for 2023 for lithium? Do you want to know about capacity or about sales? Sales. Both. Capacity is easy. I think, yeah, sales is the important. Okay, okay. Yeah. Well, I will speak about sales. Carlos can comment about capacity, whatever. Who starts? Well, let's start talking about capacity because Well, the sale is gonna be probably a result of our capacity. finally, what is important to mention that we continue to focus to further expansion in Chile, where we were already are reaching the capacity 180,000, and now we're moving to produce 210,000 at the end of this year. We're continuing to expanding that. the new capacity that we will have now in China, in the Sichuan region, we expect to produce around 20,000 metric ton there. in total, it could be around 200,000 of product that is coming from the Salar de Atacama, from the brine extraction. in that way, we were on track with all our projects. An additional to that, by the end of this year, we expect to start producing spodumene in our Mt. Holland project in Australia. When I say we're continuing to increasing our capacity why would it gonna have any sale, when it's gonna depend on the supply and demand finally but it's not something that we could comment now. We are preparing now for supplying the market, for that is why we're reason that we're spending in Chile, China and Australia. All right. Thank you. Then, maybe to come back on the iodine, and I'm not sure if that's what the previous question. I think you mentioned you expect your pricing remaining strong, at the current level for the next 6 months. Just, I don't know, trying to get like a little bit color, like can you remain above the $60 per kilo or really remaining at a $60, $68, $69? Then what do you see for the second half of the year? Thank you. I would say you can look at our report, the prices that we have been selling at the end of the year, we see prices at the same level for Q1 and Q2. Okay. Thank you. Our next question will come from Joel Jackson with BMO. You may now go ahead. Hey, guys. This is Joseph on for Joel. Thanks for taking my question. For the first question, for the 30,000 ton carbonate expansion that's taking capacity to 200,000 tons, what will be the capital intensity for that, how does that compare to the project scope of past expansions? Hey, Joel. Ricardo Ramos speaking. As you know, our CapEx that was informed, that is this $3.4 billion if I'm not wrong for three years, includes the complete investment we have first in the nitrate business, as you may know, and also in the lithium business. In the lithium business, of course, we have important investment in order to reach the 210,000 metric tons that Carlos already explained. Also it's important to consider, it's not only reaching the 210,000 metric tons, we expect to significantly increase our production of lithium hydroxide capacity in Chile. We will now be with the expansion we are finishing now, 30,000-35,000 metric tons, but we want to be with investment in 2024, 2025 at the level of 100,000 metric ton. That's a huge expansion that I think is gonna be very good for the company in order to have more flexibility in the lithium industry, having more opportunities to deliver our product to different clients. That's something very important also, including our CapEx. Of course, the 210 is also included in this $3.4 billion. Just I want to mention that also Mount Holland is included, and we do expect, we're quite positive about our expectation that in 2024-2025, in our projection, we will expect some investment in the capacity increase in Mount Holland, because we think that the 50,000 metric tons of Mount Holland is just the first step. We strongly believe that we will reach an agreement. We will review all the data from the engineering and the geological studies that we're performing today, that will allow us to go forward to 100,000 metric tons or something close to. That's why we include in our CapEx a positive expectation that it will invest in more capacity in Australia. Okay, thanks for that. Secondly, in the past six or so months since you guys announced the Salar Futuro plans, what has been the local and national government feedback on that? Okay. Yes, we announced Salar Futuro. We're really excited about the project. I think it's a great opportunity for the company, for the country, for the region, for the communities. As you know, we continue in the process of informing our different authorities in Chile and the stakeholders and try to explain the scope of Salar Futuro project, that we have been very active about that so far, and I think very proud that everyone agrees on the interest of developing process and technology that aim to the objective of water balance. It means that it is a full agreement about that. High deals and maintaining extremely low carbon footprint also is very important for everyone. We think that is the way to have a sustainable productive activity in the Salar de Atacama in the future. In terms of what we're doing in the company, we're advancing at maximum speed in the work. We are working very hard and to develop a complete environmental survey of the project that is very complex to it. The project, as you know, is a big project. It's very intensive. That's the reason why we are so excited. It's a very good one, but it requires a high level of knowledge and experience. SQM, we are convinced that with our 25 years of experience in the Salar de Atacama, we have the human team, the experience, the commitment and of course, the resources to successfully face the project. We hope to complete all the necessary definitions to submit the final project to the environmental assessment. We hope it's gonna be during second half of 2024. In Chile, as you may know, complete progress is required in all the definitions of the project prior to being submitted to the environmental evaluation. It's important to consider, I think, at the end, that this project implies operation commitment that go far beyond the year 2030. Working in agreement and together with CORFO is necessary prior to its presentation to the environmental authority for evaluation. We all agree that the development of the Salar Futuro project must be carried out in a way that is positive for the second region, positive for the communities, positive for Chile and positive for SQM. Currently, everybody know and probably you know that it's a public knowledge that the government is working on defining a national lithium policy. We expect that it's gonna be this national lithium policy during this year. Of course, will be known for everyone. This is gonna be the start point in order to move forward in the Salar Futuro. We are moving as fast as we can today. We are gonna be ready at the end of 2024, we have some times in order to have a national agreement in order to move forward. Okay, thanks for that. Just one more, if I may. Do you guys have any views on the various commentary that's been coming out of CATL in China for the future lithium pricing? Yeah. you know, I will not comment about the decisions of other companies. What I can only say is that in our case, I will again emphasize that in our case, we believe that the direction of the price is totally depending on the supply-demand balance. This is how we are structuring our contracts with the customers, following market. I think this is the best solution. Our next question will come from Lucas Ferreira with JPMorgan. You may now go ahead. Yeah. Thank you. My first question is about the lithium market balance. Looking at your expectations of the demand growing 20%, I can be wrong, but I think it's more of on the conservative side when I look at the views of other lithium producers. How do you see the supply and demand balance shaping out this year's? If you think that increasing lithium like capacity China could put this market in a sort of a surplus this year, or if you think the market remains on a deficit. Pretty much how you reconcile this 20% demand growth expectations with the supply you see coming to the market. The second question is more of a follow-up on the CapEx guidance. Because when I look at the number that you guys provided in the investor day in September, I know this was a number for 2022, 2024, but there was a considerable increase in that number, right? I believe that part of this is explained by this increasing hydroxide capacity. My question there is this increasing in hydroxide capacity, considering that of $700 million you gave sort of as a potential CapEx for increasing in value-added products? If you can talk about if there was any sort of inflation in the CapEx, maybe from Australia, I guess the number I was expecting from Australia was lower. I don't know if this CapEx you announced now includes already the construction of the second phase or part of that. My question is just to understand how much of that was inflation and how much of that was actually new scope, new things added to the CapEx number. Thank you. There's 2 question I think, no? Yeah. Let me start with the CapEx, and I will give the answer to Felipe probably for the balance of the lithium. About the CapEx, you were right. It means we were talking about 22, 24, now we're talking about 23, 25. It's different timeframe. There's some initiatives. First, we included in our investor day most of what you can call inflation or new cost environment. I think it's not so relevant in our new estimates. I think new projects and new initiatives are the most important ones in order to affect the total CapEx for the period. First one is what we remember, that is nitrates, iodine, and lithium, most of the... It's not only lithium, and in nitrates, we're pushing very hard today, de-developing the seawater project for the production of nitrates and iodine in the first region. We are putting more efforts than before because we think it's gonna be a very good... We... First, will allow us to replace the consumption of continental water, but second, we significantly increase iodine production capacity because we will have more water available for our production in Nueva Victoria, that is in the first region. As you know, iodine is moving in the right direction in terms of healthy demand, in terms of pricing. That's why having more capacity as soon as we can is very important for the company. That's why this is a project that we increase our investment in the period. We try to push as much as we can. Second is that we expect to have a new project that is a new nitrates and iodine project that is Pampa Orcoma, that is gonna be 2024, 2025, most of the investment. I mean, most of it will be 2025. That's why it's so important in terms of having an additional capacity of iodine. It means between both projects, we will have a significant capacity increase in iodine for the market. That's something we were looking forward to do it. We expect to increase production capacity on high quality potassium nitrate and sodium nitrate, because at the moment you increase iodine, at the same moment you increase nitrates. That's why having capacity and facilities to have high quality potassium nitrate and sodium nitrate is very, very important. In lithium, as already mentioned, we have lithium and our new estimate of lithium, Mt. Holland and Australia. That is finishing during this year, next year, the total investment in the total project. I mean, concentration and the refinery. As I mentioned before, we are very positive, and we're including significant some amount of money, important amount of money about the expansion. We think we will start at the end of 2024 and mainly during 2025. Again, lithium hydroxide is very, very important, as you already mentioned. Finally, over the new few years, we hope to start investing in new technologies. It means we are working very hard in Salar Futuro. We will put some money during this year in all the new technology. We know that some of these new technology are so good in some terms that we can recover this investment in the medium term. I think that the investment that are included until 2025 may allow us to further increase our production capacity in lithium. That's something we're working now. Of course, using new technology goes in the right direction in order to have a better outcome in the lithium production. That's why you see we have a significant investment in this new technology, mainly in the year 2024, 2025. Hi, this is Carlos here. Respect to your question about demand growth, well, as we said at the beginning of the year, we expect a slowdown in demand due to the Chinese New Years. Now we're seeing that EV sales have now picked up and at the similar pace that we have at the end of last year. Additional to that what Felipe mentioned before, we recently knew one of the leader carmaker now announced an almost double the sale that production that have this month compared with last year. We're really confident that the demand will grow more than 20%, probably in a range of 25% or something like that. What would I say at the beginning, we're preparing for that, adding more capacity For from Chile and the China and Australia. Regarding to the production, the lithium coming from lepidolite, we really don't have a clear information about the extra capacity unless on the how is the quality or the sustainability of that production. We really we don't we cannot comment too much about that. Perfect. Thank you very much. Our next question will come from Javier Martinez with Morgan. You may now go ahead. Sorry guys, my questions were already taken. Thank you. Our next question will come from Cesar Perez-Novoa with BTG Pactual. You may now go ahead. Yes. Good afternoon, everyone, congratulations for the results. Two questions here. On production targets for 2023, you already mentioned sales volume of around 200,000 metric tons, of which China would account for roughly 10%. Is the volume sent for tolling in the Sichuan refinery in China going to pay the same royalty scheme as carbonate produced in Chile? My second question goes back to the CapEx program. Essentially, how would this be financed? Would this figure contemplate additional possible partnerships or earnings like your recent agreement with Azure Minerals? If I heard correctly, Ricardo mentioned some sort of additional exploration and looking for potential projects at the beginning of the presentation. Thank you. Okay. Regarding to the lithium production, what I mentioned at the beginning that, Well, our capacity this year is gonna be 180,000 as a lithium total in Chile, lithium carbonate plus lithium hydroxide. Additional to that, we'll have a capacity of 20,000-30,000 in China. At the end of the year, the spodumene production in Australia. In total is around 200,000-210,000 as a capacity. How much is gonna sell is gonna depend on the supply and the demand balance. We're not saying that we're gonna sell it in that range. We're just saying that we will have that capacity ready for supplying to the market. Regarding to the. Okay. Okay. Regarding to the China production, well, the plan now is continue to progress according to the plan and we'll be ready soon to start the commissioning and start producing. Respect to the royalty, well, it's more or less the same agreement. it's according to the lithium hydroxide royalty. No, not to lithium carbon, but yes, it's according to. It's already agreed with the CORFO. Okay, thank you. Okay, thank you. Cesar, regarding the investments that we have and the financial of CapEx. The financial situation of the company could not be better today. As you can see, December of this year, last year, our total cash and cash equivalents was higher than the total financial interest-bearing debt. It means that the company is positive in terms of debt. We are more than prepared for future projects. Of course, the most important way of financing the company is being very careful in the dividend policy. Far, we don't need to be very strong to reduce the dividend policy. As you may know, it has been 80%. Considering the profits of 2022 and 80% dividend policy means that we will retain a significant amount of money internally in the company. If you consider that we have no debt, not only no debt, we have excess of cash plus the retention of the net income, we don't foresee any issue in order to finance our CapEx. Yes, and the other point regarding potential M&A or potential new projects, potential geology studies, we're working very hard on it in a daily basis. It's not easy, and the best project sometimes is the one that you don't get into. You need to be very careful not to use. Not to be very to run after projects. We need to be clear that if we get into a new project or if we get into a new M&A, it will be good for the company, it will be good for the return on assets. That's why we need to be very careful, but we are working very hard. I cannot promise you that we will be a surprise or not, but I can promise you that we are working very hard in order to look alternatives where we can create money, create return on our investment. Absolutely. Fair enough, Ricardo. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Irina Axenova for any closing remarks. Thank you everyone for joining our call today. We look forward to having you on our next call. Have a great afternoon, everyone. Bye. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.