Sociedad Quimica Y Minera De Chile Sa Pfd Series A · BCS:SQM_A
Sociedad Quimica Y Minera De Chile Sa Pfd Series A — Chemical & Mining Co of Chile — Investor Day (September 2017)
58 slides from Sociedad Quimica Y Minera De Chile Sa Pfd Series A's investor day presentation, Sep 7, 2017
Slide 1: SQM Investor Day 2017
SQM INVESTOR DAY.2017
Slide 2: Important Notice
Statements in this presentation concerning the Company’s business outlook or 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 fa
Slide 3: Investor Day Program
01. Patricio de Solminihac, CEO 03. 02. Carlos D í az, VP Operations Nitrates & Iodine INVESTOR DAY PROGRAM Juan Carlos Barrera, VP Operations Potassium & Lithium 05. Q&A 04. Gerardo Illanes, VP Finance & IR Presentation will be available at our website www.sqm.com
Slide 4: Patricio de Solminihac, CEO of SQM
Patricio de Solminihac CEO of SQM
Slide 5: CEO of SQM Patricio de Solminihac
CEO of SQM PATRICIO DE SOLMINIHAC
Slide 6: SQM Strategy
SQM Strategy is based on: Strengthening internal processes to ensure access to key resources necessary for the sustainability of our business Extending M1 (lean operations) to the entire organization to improve our cost position, enhance quality and guarantee safety Investing in the development of t
Slide 7: SQM Strategy Recap
SQM Strategy Recap Business line SPN MOP IODINE IQ LITHIUM 2016 Recap Add value to KNO 3 Low - cost producer Increase market share Solar salts – 200,000 MT base sales volumes by 2020 • Grow and diversify geographically • JV with LAC (Exar project, Argentina) 2017 and Beyond • Nitrates capacity expan
Slide 8: New Board of Directors
New Board of Directors Eugenio Ponce Gerardo Jofré Joanne Boyes Arnfinn Prugger Bob Kirkpatrick Fernando Massu Gonzalo Guerrero Hernán Büchi Chairman Vice Chairman Board member Board member Board member Board member Board member Board member
Slide 9: Sustainable Business
Sustainable Business Employees Natural Resources Environment Communities Investors Customers Suppliers Regulators SQM
Slide 10: Sustainable business: Safety
Sustainable business Safety OPERATIONAL RISK MANAGEMENT SYSTEM (SISGRO) Safety is a core value at SQM and is integrated into our work system and daily actions. We strive to build a preventive culture, which has enabled us to care for and protect our employees KEY CONCEPTS OF THE SYSTEM: • Leadership
Slide 11: Integrity: All Stakeholders
Integrity : All Stakeholders Professional development Internal m obility program Graduate and post - graduate scholarships
Slide 12: Sustainable business: Environment
Annual internal environmental audits done at all production facilities. Independent environmental audits for the operations at Salar de Atacama and Salar del Carmen. • Environmental monitoring and early warning plans at all operations • Identification of opportunities for improvement and implementat
Slide 13: M1 – SQM Lean Operation
At the end of 2013, SQM began a transformation towards operational excellence, through the implementation of a lean project with the support of McKinsey, focusing on the continuous improvement and innovative approach to problem solving, with the participation and commitment of all SQM . M1 – SQM LEA
Slide 14: a
a
Slide 15: Lithium resources
• Lithium is an abundant resource • Lithium is found in : Continental brines ( 100 - 2 , 700 ppm) • Dried out “ Salares ” (e . g . Atacama in Chile, Hombre Muerto in Argentina and Uyuni in Bolivia) • Salt lakes (e . g . Zhabuye and Qinghai in China) Minerals ( 2 , 300 - 18 , 000 ppm) • About 145 min
Slide 16: Lithium Demand: Main Uses
42% 25% 33% Lithium Chemicals Demand 2017 Others EVs batteries Other batteries Lithium Demand MAIN USES Energy Storage expected to account for 58% of demand in 2017 Source: SQM 208 kMT - LCE
Slide 17: Lithium Demand Evolution
Lithium Demand EVOLUTION Demand expected to double every 5 years Source: SQM 88 116 116 116 68 126 146 168 52 280 400 540 0 100 200 300 400 500 600 700 800 900 2017 2025 Scenario 1 2025 Scenario 2 2025 Scenario 3 Demand forecast final application (kTM - LCE) Electric Vehicle (EV) Other batteries Oth
Slide 18: Lithium Supply: Current Situation
Lithium Supply CURRENT SITATION Source: SQM AUSTRALIA (HARD ROCK): Greenbushes Mt.Cattlin Mt. Marion Wodgina (beginning) CHILE (BRINE): Salar de Atacama (SQM, ALB) ARGENTINA (BRINE): Salar de Hombre Muerto (FMC) Olaroz (ORE) CHINA (BRINE): Taijinar ( Citic , QLL) Zhabuye ( Tibet ) Chaerhan (QSLG) CH
Slide 19: Lithium Supply: New Projects
Lithium Supply The largest concentration of new projects is in Australia (11) and Argentina (7) Source: SQM (includes expansions of current producers) Projects Status State Projects Total capacity ( kTM LCE) Country N Upcoming Start - up / Construction 9 133 Australia Chile Canada Argentina Brazil 3
Slide 20: SQM Lithium Projects
SQM Lithium Projects Argentina Australia • Minera Exar , 50/50 JV • Caucharí - Olaroz , Jujuy • Capacity 25,000 MT (I stage 2019) + 25,000 (II stage) • Total CAPEX (stage I+II) ~ US$675 million • Mt. Holland, 50/50 JV • Capacity 40,000 MT • Initial investment US$110 million
Slide 21: SQM Lithium Projects Chile and Arbitration
LITHIUM CARBONATE • Current capacity 48,000 MT • Expansion to 63,000 in 2018 • CAPEX ~ US$50 million Chile SQM Lithium Projects LITHIUM HYDROXIDE • Current capacity 6,000 MT • Expansion to 13,500 MT in 2018 • CAPEX ~ US$30 million Arbitration CORFO 1993: SQM signed lease agreement and project agreem
Slide 22: Vision of the Future
The energy storage market poses an enormous challenge for the lithium industry Strong commitment to growth, investments in Chile and abroad Well positioned to capture the growth of the SPN, Iodine and Solar salts markets Focus on safety procedure, work towards a zero - accident rate Foster strong re
Slide 23: VP Operations Nitrates & Iodine Carlos Díaz
VP Operations Nitrates & Iodine Carlos Díaz
Slide 24: Brief History of Nitrates and Iodine Operations
1926 Begin nitrate production at María Elena through the Guggenheim process Iodine & Nitrates Operational Highlights A BRIEF HISTORY OF NITRATES AND IODINE OPERATIONS 1951 Begin potassium nitrate production at Coya Sur 2006 Increase iodine capacity at Nueva Victoria and start nitrate salt production
Slide 25: Caliche Ore Reserves
• At the current production rate, SQM has confirmed caliche reserves for more than 40 years • Caliche ore is found under a layer of barren overburden (varying in thickness between zero centimeters and two and a half meters) inseams with variable thickness up to six meters • Know how and vast experie
Slide 26: Process and Production Capacity of Nitrates/Iodine
Process and Production Capacity of Nitrates/Iodine 37 MMT 650 l/s Caliche ore extraction Heap leaching Solar evaporation ponds Iodide plants Intermediate plants Potassium Chloride Water Finishing plants Prilled nitrates Crystallized nitrates Port Port Iodine ( capacity ) NV: 8.000 MT I 2 Iris: 2.000
Slide 27: Caliche Ore Surface Mining
Caliche Ore Tons of Ore / Year SURFACE MINING • Mineralized deposit is less than 6 meters thick, directly under desert topsoil • Highest Ore/Waste ratio in mining industry Confirmed Ore Reserves LEACHING HEAP CONSTRUCTION • Heaps of 1 million tons, 10 meters high are built every 10 days Built / Mont
Slide 28: Heap Leaching
Heap Leaching At all times LEACHING PROCESS • Leaching agents are water and solutions recycled from the leaching system • Record yields through process innovation Process Duration 55 heaps 540 days SELECTIVE LEACHING PROCESS → HIGH RECOVERY Avg. I 2 Recovery 75% CIRCUIT OPERATION • Leaching circuit
Slide 29: Iodide and Iodine Plants
Iodide and Iodine Plants (Nueva Victoria & Iris) Annual I 2 – Nueva Victoria PROPIETARY PROCESS • Unique solvent extraction technology, developed and patented by SQM • Higher yield than blow - out process used by competitors in caliche industry Annual I 2 - Iris Brine - Iris 8,000 MT 2,000 MT 0.35 g
Slide 30: Nitrate Salt Production
Nitrate Salt Production Total Evaporation Area HIGH EVAPORATION RATE • Located for year - round sunlight and wind, for the highest possible evaporation rate NaNO 3 / year CHEMICAL CONTROL • Daily chemical analysis to obtain high grade of potassium nitrate salts KCL / year INSTALLED CAPACITY • Evapor
Slide 31: KNO3 and NaNO3 Crystallization
KNO 3 and NaNO 3 Crystallization Annual KON3 – Coya Sur • Low cost Raw Material consumption • Nitrate salt • Low grade Potassium Salts and reduced consumption rate. UNIQUE PROCESS • Integrated crystallizations process of Coya Sur plant to obtain different grades at minimum cost KCl added per MT of K
Slide 32: Prilling and Drying Plants
1,200,000 MT Prilling and Drying Plants Total Prill Capacity Unique prilling potassium nitrate plant developed in - house to obtain bigger prill size and reduce impurity at minimum cost Total Drying Capacity Different formulations with physical and chemical properties to satisfy our demanding custom
Slide 33: Our People
• SQM has implemented the Lean manufacturing methodology, establishing it as a central part of the SQM culture, resulting in: • Obtaining a significant cost reduction in their process • Achieving continuously increased production levels • Lower accident rate, making our operations safer and more env
Slide 34: Our People: Evolution of Key Indicators
Our People: Evolution of Key Indicators Production MT/day Cost USD/MT Safety AFR
Slide 35: Latest improvements and future challenges
Latest improvements and future challenges Challenge • Development of a project in Nueva Victoria to increase the iodine production capacity by 3 , 000 MT per year, with an investment of approximately US $ 30 million • This year we are constructing a nitrate plant, which will produce 350 , 000 MT of
Slide 36: VP Operations Potassium & Lithium Juan Carlos Barrera
VP OPERATIONS POTASSIUM & LITHIUM Juan Carlos Barrera
Slide 37: Salar Brines Lithium & Potassium Chile Operations
Salar Brines Lithium & Potassium Chile Operations • High concentrations of potassium and lithium • High evaporation rates • Production rights are pursuant to a lease agreement with CORFO until 2030 Salar Brines • Technology and experience to operate efficiently • Know - how: exploration, process and
Slide 38: Our History
1993 SQM buys 75% AMAX – Molymet project Our History 1996 Li 2 CO 3 plant starts operations 1998 - 2002 MOP and Li 2 CO 3 capacity expansions 2008 Li 2 CO 3 capacity expansion from 30,000 to 40,000 MT/year 2010 - 2011 Li 2 CO 3 capacity expansion from 40,000 to 48,000 MT/year 1995 MOP plant starts o
Slide 39: Brine Operations
Brine Operations RESOURCE • Brine “is alive”, it moves: highly heterogeneous wells 0.3 to 200 l/s • High complexity of hydrogeological simulation (chemical, mathematical and flow model) OPERATION PROCESS Ponds • Predict evaporation rate (function of radiation, wind and rain) • Geometry of the solar
Slide 40: Brine Operations: Key Success Factor: Our Team
Brine Operations KEY SUCCESS FACTOR: OUR TEAM • Team of 37 talented hydrogeologists and geologists, highly professional and experienced in brine and rock deposits. Cooperation with the world ´ s best university for hydrogeology. Cooperation with different geology universities • Process Team (50 proc
Slide 41: Main Products
Main Products SOP - G SOP - S SOP - WS USOP - 52 Salar de Atacama Lithium Brines Salar de Atacama MOP - H MOP - G MOP - S Salar de Atacama Lithium Carbonate Lithium Hydroxide Lithium Chloride Salar del Carmen Potassium Chloride Brines Salar de Atacama Potassium Sulfate Lithium
Slide 42: Current Production
Current Production Total production wellfield summary as of September 2017: MOP BRINE • 376 wells SOP BRINE • 8 wells TOTAL • 384 wells WELL FIELD Dep1 Dep2 Dep3
Slide 43: Ponds, drilling and wells
PONDS MOP and Lithium 165,000 meters of drilling up to 800m of depth 4,539 boreholes and 384 wells in operation 41.6 km 2 of evaporation ponds in operations in 360 solar ponds 4,060 km of brine and water pipelines 2,450 km of roads 1,300,000 chemical analyses per year
Slide 44: Potassium Chloride / Lithium Carbonate Process
Potassium Chloride / Lithium Carbonate Process • There are three MOP production ponds lines, MOP I , MOP II and MOP III • The lithium is obtained from lines I and III • The carnallite I plant is currently being used for the lithium process I/II Carnalite I and II Plant
Slide 45: Salar del Carmen
Salar del Carmen 48k MT/year of Li2CO3 → Expansion to 63k MT /year 6k MT/year of LiOH → Expansion to 13.5k MT/year Over 600k chemical analyses per year
Slide 46: Salar del Carmen / Lithium Plant Process
Salar del Carmen / Lithium Plant Process Li2Co3
Slide 47: Cauchari-Olaroz, Minera Exar, SQM Argentina
• Similar technology as used in the Salar de Atacama operation , minimum mine life 40 years • Project capacity 50,000 MT of LCE in two stages of 25,000 MT each • Start production of first stage in 2019 • 30 productive brine wells • 12.0 km2 of evaporations ponds area • 40 evaporations ponds • 11 ion
Slide 48: Cauchari ponds process: design and configuration
Cauchari ponds process: design and configuration KEY SUCCESS FACTORS • SQM experience in Atacama • Hydrogeological model used to design tailor - made solar ponds • Tailor - made pond process designed using SQM simulation model for this deposit • Ponds constructions and procurement SQM project and
Slide 49: Cauchari Plant Process: Design and configuration
Cauchari Plant Process: Design and configuration KEY SUCCESS FACTORS • SQM Experience in Salar de Atacama and Salar del Carmen • Plant design and process tailor - made using SQM simulation model • Plant constructions and procurement SQM project and engineering team Filter Purification Stage Additi
Slide 50: Construction Stage
Construction Stage: • Key advantage - the “detail engineering” reflects the improvements SQM made during the construction of ponds and plants for the last 20 years and the expertise of the project team • Plant design - similar configuration of Salar del Carmen plant (mixture between lithium carbonat
Slide 51: Mt. Holland, SQM Australia
• Spodumene production (open mining) • Earl Grey Resource: 128 million MT at 1.44% Li 2 O for 4.54 million MT of LCE • Integrated project • Maximum value added to the mineral • Dual plant production of lithium carbonate and hydroxide • Production capacity ~ 40,000 MT of LCE • Waste/Ore ratio 1.9 for
Slide 52: Mt Holland Project, Western Australia
Mt Holland Project, Western Australia CONCENTRATOR AND REFINERY UNIT STAGES KNOWLEDGE OF THE PROCESS SQM experience Process being further developed Activities Drilling & Blasting ACTIVITY Own execution of more than 37 million MT/ year in Caliche Ore in Chile Mining 14 + 37 million MT/ year of ore in
Slide 53: VP Finance & IR Gerardo Illanes
VP FINANCE & IR GERARDO ILLANES
Slide 54: Capex
2016 - 2018 : Lithium Hydroxide Expansion to 13 . 5 k MT : ~US $ 30 million 2017 - 2018 : Potassium Nitrate Expansion to 1 . 5 m MT : ~US $ 100 million 2017 - 2018 : Lithium Carbonate Expansion to 63 k MT : ~US $ 50 million 2017 - 2018 : Iodine capacity expansion to 14 k MT : ~US $ 30 million 2016 -
Slide 55: Strong Financial Position
Strong Financial Position 0 50 100 150 200 250 300 350 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2033 Maturity Debt Profile (Mill USD) PAE Bono CL Bono US
Slide 56: Proven Cash Generation Capabilities
x Over the last 18 quarters : x SQM has distributed more than US $ 1 . 3 B in dividend x Reduced the Net Financial Debt almost US $ 600 M x Invested more than US $ 820 M In 4.5 years SQM has generated more than US$2.7B (US$1.9M net of CAPEX) Proven Cash Generation Capabilities
Slide 57: Review of Results
Review of Results Revenue LTM: US$2.1 billion | EBITDA LTM: US$853 million | EBITDA Margin LTM: ~ 41% US$ Million US$ Million 260 241 241 246 341 352 357 358 0 ( 19 ) 4 95 11 5 1 100 150 200 250 300 350 400 450 6M2016 SPN Iodine Lithium Industrial Chemicals Potassium Others 6M2017 881 1024 (6) 10 10
Slide 58: SQM Contact Information
SQM CONTACT INFORMATION: • Gerardo Illanes : VP of Finance gerardo.illanes@sqm.com • Kelly O’Brien: Head of Investor Relations kelly.obrien@sqm.com • Irina Axenova : Investor Relations irina.axenova@sqm.com About SQM SQM is an integrated producer and distributor of lithium, iodine, specialty plant n
Chemical & Mining Co of Chile — Investor Day (September 2017) on 6ix