Hello everyone, and welcome to the SQM Q1 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To participate, you will need to press *11 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press *11 again. Please note this event is being recorded. Now, it is my pleasure to turn the call over to the Investor Relations Officer, Isabel Bendeck. The floor is yours. Thank you, Operator. Good morning, and thank you for joining the SQM Earnings Conference Call for Q1 2025. This is a conference call that will be recorded and is being webcast live. Our earnings press release and presentation with a summary of the results have been uploaded to our website, where you can also find a link to the webcast. Today's speakers include CEO Ricardo Ramos, CFO Gerardo Illanes, Carlos Díaz, CEO of Lithium Chile Division, Pablo Altimiras, CEO of Iodine and Plant Nutrition Division, Andrés Fontanaz, Commercial Vice President of International Lithium Division, Felipe Smith, Commercial Vice President of Lithium Chile Division, Pablo Hernández, Vice President of Strategy and Development of Lithium Chile Division, and Juan Pablo Bellolio, Commercial Vice President of Iodine and Industrial Chemicals. Before we begin, I would like to remind you that statements made in this conference call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses, and other financial items, along with expected cost synergies and product or service line growth, are considered forward-looking statements under the Federal Securities Laws. These statements are not historical facts and may be subject to changes due to new information, future developments, or other factors. We assume no obligation to update these statements except as required by law. For a complete forward-looking statement, please refer to our earnings press release and presentation. I am now leaving you with our Chief Executive Officer, Mr. Ricardo Ramos. Thank you. Good morning, everyone, and thank you for joining us today. We're pleased to report that SQM began 2025 with solid operational and commercial performance. In the first quarter, we achieved the highest first quarter lithium sales volumes in our company's history, driven by a 20% year-on-year increase. This growth reflects sustained strong demand, particularly from electric vehicles markets in China and Europe, as well as growing adoption of energy storage systems worldwide. Lithium prices, on the other hand, were relatively stable during the first quarter 2025, but over the past few weeks, we have seen a decline in prices that we don't think is sustainable. In In the industry, it was already showing negative results. In any case, as a result of this, our average realized prices for the second quarter 2025 should be lower than the levels seen in the first quarter. In Australia, the production of spodumene concentrate at Mount Holland is progressing well, and the commissioning of the Kwinana refinery is also moving forward, with the expectation to see first product in the coming months. In Chile, we continue working on our capacity expansions to reach capacity to 240,000 metric tons of lithium carbonate and 100,000 metric tons of lithium hydroxide. Moving to our iodine business, we are pleased with another strong quarter. Prices have reached a record average amidst tight supply and steady demand, primarily driven by the X-ray contrast media application. Our seawater pipeline construction is advancing rapidly and will be key to expanding production capacity. In the meantime, we are investing in operational efficiencies to respond to customer needs and optimize output. In specialty plant nutrition, sales volumes grew at a healthy pace. We also saw an upward trend in prices early this year, mainly due to strong demand for potassium chloride and some supply disruptions. Market dynamics remain favorable across Latin America, the U.S., and Europe. In our potassium business, as anticipated, volumes were significantly lower compared to the same period last year. This reflects our strategy to reduce potassium production to give priority to high-lithium content brands and focus on the production of more value-added products within our SPN business lines. To summarize, SQM delivered strong commercial results in the first quarter despite a complex pricing environment. Our long-term fundamentals remain intact. We are confident in our strategy, our investment in capacity and innovation, and our commitment to sustainable high-quality growth. Thank you all. Operator, we can now move to Q&A. Thank you so much. As a reminder, that is *11 to get in the queue and wait for your name to be announced. To withdraw your question, simply press *11 again. One moment for our first question, please. It comes from the line of Ben Isaacson with Scotiabank. Please proceed. Thank you very much, and good afternoon, everyone. Three questions. First one, just a very straightforward, simple question. You've talked about the ASP in Q2 being a little bit lower than in Q1. Do you expect that on an operating cash flow basis, you will be break-even or positive per metric ton in lithium in Q2? Hi, Ben. How are you, CC Gerardo Illanes? We are far from break-even cost. We were not expecting to be close to break-even and significantly above that in Q2 this year and in the upcoming quarters. We believe we are one of the lowest cost producers, so we are far from that position. Perfect. Perfect. Another question for you, Gerardo. Lithium prices are obviously lower than a lot of people expected this year. Your growth plans have not changed, and what the plug is now going to mean is less operating cash flow to fund CapEx growth and a greater reliance on accessing capital markets. Can you talk about how your mind may or may not be changing in terms of capital structure of funding future projects now that lithium is coming in a little lower than expected? Just before answering your question, and you know, of course, we have other business lines and other products are doing quite well, so the capacity to generate cash that the company has is quite strong. On top of that, we have a strong balance sheet. We have a track record of having a very strong balance sheet, and we plan to continue having a strong balance sheet. We are constantly assessing all the projects that we have on our portfolio, of course, understanding what is happening in the market. So far, the financial or the balance sheet has not been a constraint, and we do not expect it will be a constraint in the future either. Okay. And then just very last one, Ricardo, maybe for you. We're hearing a lot of noise and politics out of Chile right now and kind of a fight about the outcome and the future of the Codelco JV. I don't understand why this is even a debate or even being brought up. I thought this is a signed agreement, and you're just kind of dotting the i's and crossing the t's, and then it'll be effective January 1. Can you talk about why is this even a debate right now in Chile, and what are the different paths forward? Thank you. Okay. As you say at the beginning, it's a lot of noise, and I think that's the perfect word to describe what's going on. A lot of noise. When you start digging into the numbers, it's a great deal. It's a great deal for the country. It's a great deal for the region, for the communities, for Codelco, for SQM. It means it's something very good. Sometimes when you are in an election year, you have a lot of noise from everything. It's not the only noise in Chile. If you have a Chilean newspaper, we have a lot of different noises everywhere. It means an election year, you always have different discussions. What is the real fact? The fact is that we are advancing according to our original plan with Codelco, working very hard. We are now in the end of the process. Not us. CORFO is in the end of the process of the consultation with the towns near the operations. That is being carried out by CORFO. Finally, we submit all the documents required by the regulatory authorities of free competition in China. Therefore, we think that the timeframe for the transaction to be finally executed will be during the second half of this year. No changes about that. Again, you will have it is a big transaction. Chile is a small country, and these kinds of transactions are important in a country where you have not many things going on, but at the end, it is just noise. I do not foresee any real reason or fundamentals to have any debate about the transaction. That makes sense. Thank you very much. Thank you. One moment for our next question that comes from the line of Joel Jackson with BMO Capital Markets. Please proceed. Hi, thanks. I'll ask my questions one by one as well. Team, I noticed in this slide deck, in this release, that you maintain your view that lithium demand will grow 17% globally as a market this year, but you no longer show your commentary from a few months ago. You think that SQM sales themselves for lithium will grow about 15% year over year. Do you maintain that you will grow 15% sales this year? If not, what's your new number? Yes. Hello, Joel. This is Felipe Smith. Look, considering the current market conditions, with uncertainty derived from geopolitical and trade tensions, we have not really updated our annual volume forecast for 2025. However, regarding Q2, I can comment that we expect a similar or slightly lower volume versus Q1. Okay. Second question would be, there's been some commentary out in the market as prices in China have decreased a lot. You sell product to China. Obviously, you've got some contracts, I believe, with floors. There's some discussion about customers fighting back and saying, "Spot prices are below floors. We want to pay lower prices." Can you comment on that dynamic and how you are dealing with it? Yeah. Joel, I would like to start saying that we have more than 200 customers worldwide. Each of these customers has a different type of price mechanism. I'm talking about specifically in China. I know. I know. I know. Just China. I know. If you could talk about China, I'd really appreciate it. I know you have lots of customers, different qualities, different products, but maybe just in China specifically would be very helpful. Yeah. What I want to say, what I want to highlight is that with each customer, and this happens in China also, with each customer, we have different price mechanisms and conditions that are all confidential. I cannot comment, so I would ask you to please understand that I will not go into any specifics about that. Okay. Just finally, this follows up on Ben's question a little bit, but I think that SQM's philosophical demeanor has been, "Hey, we're going to double our production over the next seven years because, hey, global demand is growing three times, so we're just growing double our own capacity. There you go. We're not really adding to the market." When I look at your commentary and you talk about the market's oversupplied, the market has probably caught you by surprise how weak it is. As stewards of capital here, do you not have to think about what is the right amount of capacity to add when it seems like there's a lot going on in this market that maybe is not easily visible or understood? Hi, this is Carlos Díaz, CEO of Lithium Division in Chile. Yeah, we're still working on expanding our capacity. We're the leader of production of lithium in the world, and that means that we have the lowest cost in the industry. We continue with our program to expand the capacity in Chile, to produce more lithium sulfate to later convert in China. It's been a successful business for us. We are really confident about the demand, and we feel confident that we will keep expanding our capacity. We do not see an issue there. Sorry, just one more from me. I get you're confident on demand, but it seems like no one in the industry is confident on supply. You didn't raise some of your own commentary on this quarter. Don't you get worried that your view on supply could be wrong? Yeah. We know there is an oversupply, but I say we know there is a short term. We're confident in the long term that oversupply is going to disappear, and we have a good position to supply in those times. What I said before, we are the leader. We are the lowest-cost producer in the industry. Thank you very much. Thank you. Our next question comes from Lucas Ferreira with JPMorgan. Please proceed. All right. One moment for our next question. Lucas, if you can queue up again. Our next question is from Corinne Blanchard with Deutsche Bank. Please proceed. Hey, good morning, Tim. The first question would be on the Mount Holland. We saw in a recent presentation from Wesfarmers that they decreased their volume guidance by 9% or 10%. I wanted to see what your view here is and how do you think volume would be for 2025 and going into 2026. Yeah. Thanks, Corinne. This is Andrés Fontanaz from SQM International Lithium. You need to be careful with what Wesfarmers reported because they follow a fiscal year. Anyway, our guidance for this calendar year for SQM share is between 150,000-180,000 tons, which is around 10,000 tons lower than our range provided November last year. This revision is primarily due to the impact of bushfires and limited equipment availability. As you know, during January, we were impacted by a regional bushfire in the surroundings of the mine. It was a significant event in the region. Tens of thousands of hectares were affected. This kind of risk, we are the ones that you are prepared. Starting from the design of the plan to the implementation of procedures to having established and trained on increased management scenario, thanks to all of that, we can say that nobody was hurt, and we are extremely proud of the performance of the team and appreciative of Covail's team especially about their reaction, and also that was recognized by the authorities in Western Australia. That is what we can comment about production for 2025. Thank you. And then a second question. Can you please remind us the dividend policy? I think we're getting some questions about whether you're going to restart doing quarterly dividend or only annual. So just if you can comment on dividend policy and the cadence of it. Thank you. Hi, Corinne. This is Gerardo. The dividend policy that was approved by the board and presented to the shareholders established that the company will distribute 30% of its net income of 2025. The dividend policy also established, or according to the law in Chile, that dividend has to be paid or has to be approved by shareholders in the ordinary shareholders' meeting that is scheduled to happen in April next year. Companies can pay interim dividends during the year. Sometimes in the past, we, SQM, we have paid interim dividends, but at this moment, we are not considering these payments, at least for the first quarter, and that will be assessed in the future. The dividend policy established a 30% dividend payment. Thank you. Thank you. One moment for our next question. It comes from Emerson Vieira with Goldman Sachs. Please proceed. One moment for our next question. It comes from Alejandro de Micheles with Jefferies. Please proceed. Yes. Good morning. Thank you very much for taking my questions. Actually, two small questions, if I may, please. The first one is, when you're talking about your growth plans and so on, could you please confirm how you see your CapEx requirements for, say, this year and next year? That's the first question. The second question is a bit of a follow-up to the previous question on pricing, is, how should we think about your realized prices if lithium prices continue to come down? Should we expect them to follow that path, or should we expect them to be more moderated than what we see on the screens, let's call it? Hi, Alejandro. This is Gerardo. We usually review our CapEx plan once a year, and once that is reviewed, it is shared with the market. We should review our CapEx plan in the upcoming months, and of course, we will share with the market the conclusions for that. Today, we do not have any updates from what was shared a few months ago. We are working on the expansion of our lithium production facilities in Chile, carbonate and hydroxide, also expanding our abilities to produce lithium sulfate. On top of that, we are working on the Mount Holland commissioning of the refinery. On top of that, the initiatives that we are working on on the nitrates and iodine side, where the most important one is the seawater pipeline, that should let us expand in the future our capacity to produce more iodine. No updates as of this moment. Okay. That's clear. Thank you. Y eah. Hello, Alejandro. Regarding prices, as you probably know, after remaining relatively stable during Q4 2024 and Q1 2025, with some daily fluctuations up and down, lithium prices in China started to go down about one and a half months ago, and prices in Asia outside China have also been going down. Our sales volume is largely concentrated in China, and our realized prices remain mainly linked to price indices. Consequently, we do expect a lower average sales price in Q2 compared to Q1. Okay. So the answer is that your prices will be linked to those indices, yeah? Yes. Yes, indeed. That's clear. Thank you. Thank you. Our next question is from Julia Zaniolo with Bank of America. Please proceed. Hi. Thank you for the call. My question is about your thoughts on huge incentive and investment in a lithium project in Chile. As we know, the market has an oversupply, and prices are pressured. If you could share your thoughts on how do you see your what impact do you expect for the market and supply and demand, and also for SQM competitive positioning in Chile. Hello, Julia. This is Pablo Hernández. During 2025, we expect the demand to reach around 1.4 million metric tons, representing over 15% year-over-year growth. China remains with a significant lead in the EV market, with more than 40% year-over-year growth and roughly 70% of the EV global sales. On the other hand, the European Union has had a very strong first quarter, with the US having a slight decrease, but we continue to evaluate potential impacts on their corresponding new regulatory environments. Overall, markets should continue to shift slightly towards some carbonate production, with LFP continuing their dominance in China and starting to expand abroad. During 2025, supply is expected to grow close to 15% as well, reaching between 1.5-1.6 million metric tons, assuming no significant production delays occur in the market as a consequence of the current low-price environment. Okay. Thank you. One moment for our next question. It comes from the line of Juraj Domic with LarrainVial. Please proceed. Oh, your volume is very low, Mr. Domic. If you can get higher. Barely. We can barely hear you. Let me know if it works. If not, Let me know if it works. If not, I can send it by email. All right. That's a little bit better. Okay. Okay. Perfect. We have two questions. The first one regarding the lithium competition you're facing in China from other producers. It seems that several of them should be struggling at these prices, but production, it seems that it's continuing. That's my first question. My second is, you mentioned in the fourth quarter that you were seeing some optimism over a positive trend in 2026. Has this view changed with the information so far in 2025? Hey, Gerard. This is Pablo Hernández. Regarding competition in China, of course, we face significant competitors in China. They have a large portion of the market. As many of the competitors that we see in the lithium industry overall, some of them have had not so very good results, of course, due to the lithium price environment. I think this is, overall, the industry struggling with this current pricing. Regarding your question on prices for 2026, of course, prices will be a consequence of this supply-demand balance. We will see how this year develops and see what the impacts will be for next year. Okay. Perfect. Thank you. Thank you. As a reminder, that is Star 11 if you do have a question. Our next question is from Lucas Ferreira with JPMorgan. Please proceed. Hi, everyone. I hope you hear me now. Sorry, my line dropped the previous time. Yep. You Yep. You can hear me. I do not know if my question was perfect. I do not know if my question was answered while I was out, but it is pretty much the first question to confirm your CapEx numbers for this year and the next few years, if you can, and which are the main projects in the pipeline now consuming these CapEx. The second question regarding production cost of lithium. First, let us talk about Atacama. If the ramp up to 240 gives you sort of a fixed cost dilution effects, if there is anything in the carbon plants in the pipeline to help on reducing cost eventually. Pretty much, if you can share any sort of what number to expect for cash cost in Chile, that would be great. have any initial views on the cost of production in Mount Holland, how it has been evolving, and if you have anything to share with us, that would be great. Thank you very much. Hi, Lucas. Your CapEx question was answered already. If you want, we can discuss about that later. Carlos. Hi, Lucas. This is Carlos Díaz. Regarding our cost in Chile, I have to mention, you already know that we have been facing very low prices during this year. Mainly because of that, we have been working in several cost reduction initiatives in order to maintain our cost leadership in the market. We have been working at the same time increasing the capacity, working on quality. All of that, we have been improving the yield. We expect to reduce our operational cost during this year and the coming year. Perfect. Should we expect a declining nominal cost for lithium this year and the coming year? Is that fair to assume? We expect a declining nominal cost, yes. It's already happened in the first quarter. Okay. Thank you very much. Very helpful. Yeah. Lucas Andrés Fontanaz here. Regarding your question on Mount Holland, let me start by saying that even at current prices, our Mount Holland operation is cash positive, and we are executing as planned. We continue to be in ramp-up mode in the concentrator. As you know, every operation in ramp-up is facing higher cost. We are confident that over the long term, our project will generate satisfactory returns because we do have an attractive cost structure. On top of that, we will have an integrated lithium hydroxide production. As you know, we are commissioning the refinery right now, and we are very happy with the results of the commissioning, which is currently at 95%. Okay. Lucas, Ricardo Ramos speaking here. Just want to put a summary here that we have a positive view about the long term in the lithium industry. It means today price environment is not sustainable. It means there's no way the industry can survive these prices. SQM is probably the only one—I'm not sure it is the only, but one of the only—that can have reasonable profits at today pricing. It means that price should improve in the future, probably in the near future. What we can say is that there's no one in the world best prepared. We are the best one in order to take advantage of the market. We have been very successful increasing capacity. Today, we have the capacity, the quality, the alternative, the market, Australia. It means everything is in our favor to take advantage of the recovery of the prices that is coming. It means we cannot know; we do not know when, but the market is very strong. It means demand is stronger than ever. The uses of the electric vehicles industry is better than expected in terms of quality of the cars, performance, whatever. That is why we think that even though there are some issues in the world, in the trading activities between different countries, in the medium term, this demand will continue to increase, will continue to increase, and we are prepared to supply the lithium to the market. It means that we have a positive view. My view is—I do not have the crystal ball anyway, but my view is positive for next year. They think that prices will go back to a reasonable price environment, and I think the demand will continue to grow. We are going to be the number one prepared. Again, as Carlos Díaz said before, we had all the time. It means our cost is by far the lowest cost, but it is even better today than what we used to be two years ago. It means the work in our facilities is being great in terms that we have been able to have. You see my numbers in our numbers in the first quarter, and our numbers speak by themselves in terms that we generate significant profits in the lithium industry, even though prices were very low. That is something that we are very proud to—we will continue in the near future. In Australia, as was commented, now we think that we have one of the best production of spodumene, and probably we will start producing now hydroxide that we are integrated. Very good news. Probably we are a very strong competitor in the industry. It means, again, I have a positive outlook in the medium, maybe long term, but of course, we are facing a situation, very complicated second quarter in terms of the pricing. Everyone is facing the situation, not only SQM. Everyone is selling in China. China is the most important market in the world. There is no one big producer of lithium without selling their products in China and then facing what is the market price. We think that we are the best one to do it. Thank you very much, guys, for the explanations. Thank you so much. Our next question is from Constanza González with Quest Capital. Please proceed. Constanza, if you can check your mute button. Hi. Thank you for taking my question. I had a question regarding Mount Holland that is not so clear for me. I appreciate you can clarify the information of tax codes that you are considering right now by spodumene in the case of Mount Holland project. Or could you give us more details about the levels that you are seeing this quarter? Constanza, Andrés here. As I said before, we are still in ramp-up mode. In that period, of course, you are facing higher cost. As mentioned, as soon as we reach this stage, the project is cash flow positive, even at these prices. We are confident and very satisfied with the evolution of that project. Okay. Just for clarify, are you considering the depreciation in Mount Holland project too? Because if you look for the information in comparison with first quarter of 2024, the depreciation rise a lot. That's why I was asking if you are considering that. Thanks. Hi, Constanza. This is Gerardo. Andrés was referring to cash cost in his statement. All right. This will conclude our question and answer session for today and our program as well. Thank you all for participating. You may now.