Sociedad Quimica Y Minera De Chile Sa Pfd Series A · BCS:SQM_A
Sociedad Quimica Y Minera De Chile Sa Pfd Series A — SQM — Investor Day (September 2018)
28 slides from Sociedad Quimica Y Minera De Chile Sa Pfd Series A's investor day presentation, Sep 5, 2018
Slide 1: Investor Day 2018
INVESTOR D AY 2018 N Y S E S e p t e m b e r 5 www.sqm.com 1 2018
Slide 2: Customary Note Regarding Forward-Looking Statements
CUSTOMARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Statements in this presentation concerning the Company’s business outlook, future economic performance, anticipated profitability, revenues, expenses, or other financial items, anticipated cost synergies and product or service line growth, together
Slide 3: Investor Day Program
INVESTOR DAY PROGRAM 01. Patricio CEO de Solminihac Ricardo Ramos 02. CFO 03. Gerardo Illanes VP Finance & IR 04. Q&A Presentation is available on our website www.sqm.com www.sqm.com 3 2018
Slide 4: Patricio de Solminihac, CEO
PATRICIO DE SOLMINIHAC CEO www.sqm.com 4 2018
Slide 5: Our History
OUR 1830 HISTORY Commercial exploitation of the caliche ore deposits in northern Chile began 1926 Maria Elena begins operations using the Guggenheim Method 1951 SQM constructs crystalized nitrates plant in Coya Sur 1968 SQM is incorporated 1986 Production of potassium nitrate begins 1993 Listing of
Slide 6: Corporate Strategy
CORPORATE STRATEGY Be a global company with people committed to excellence, dedicated to the extraction of minerals and selectively integrated in the production and sale of products for the industries essential for human development Ensure Consolidate a culture Significantly Maximize the Successfull
Slide 7: Specialty Plant Nutrition: Potassium Nitrate
SPECIALTY PLANT NUTRITION Potassium 2017 Recap Nitrate 34% (KNO3) 20% • Currently 16 WSNPK plants; LTM CONTRIBUTION TO: GROSS PROFIT REVENUES further market development • New production • Water soluble fertilizer market growing at ~10% per plants year • Continued cost improvement for all • SQM volum
Slide 8: Potassium Chloride (MOP)
POTASSIUM CHLORIDE 2017 Recap MOP (KCL) MOP 7% 14% • Kore Potash project LTM CONTRIBUTION TO: GROSS PROFIT REVENUES • Continued cost improvements for • Low-cost raw material for our growing potassium all products nitrate business • Market growing, expected to reach ~63-64 million MT • 2018 sales vol
Slide 9: Iodine & Derivatives
IODINE & DERIVATIVES 2017 Recap Iodine (I2) IODINE MOP 10% 12% • More than 35% market share; >12k LTM CONTRIBUTION TO: GROSS PROFIT REVENUES MT sales volumes in 2017 • Market demand will grow close to 3% in 2018 • New capacity • Sales volumes up, expected to surpass 13k MT expansion in 2018 • Look f
Slide 10: Industrial Chemicals: Solar Salts
INDUSTRIAL CHEMICALS Solar Salts 2017 Recap (KNO3, NaNO3) MOP 6% 6% LTM CONTRIBUTION TO: GROSS PROFIT REVENUES • 2017 sales volumes expected 100,000 MT • Market growth coming from solar salts for CSP (concentrated solar power) projects • Goal for 2020 volumes to reach 200,000 MT SUSTAINABILITY & INN
Slide 11: Lithium & Derivatives
LITHIUM & DERIVATIVES Li2CO3 58% 2017 Recap 30% LiOH MOP • Exar project LTM CONTRIBUTION TO: GROSS PROFIT REVENUES • JV with Kidman • Market growth in 2018 expected to surpass 20% Resources (Mt. Holland, Australia) • Sales volumes in 2018 will surpass 50k MT • Look for new • First stage of lithium c
Slide 12: CORFO & Contract Negotiations in the Future
CORFO & CONTRACT NEGOTIATIONS IN THE FUTURE • Agreement reached with CORFO to maintain the lease through 2030 • Total production quota: 2.2 million MT of LCE • New rent scheme became effective April 10, 2018 • Major investments and expansions in Chile CORFO RENTAL FEE (LITHIUM CARBONATE) 45% 40% 35%
Slide 13: Contributions to the Development and Communities
CONTRIBUTIONS TO THE DEVELOPMENT AND COMMUNITIES • Annual contribution of US$11-19 million for R&D efforts • Annual contribution of US$10-15 million for neighboring communities of the Salar de Atacama • Annual contribution of 1.7% of SQM Salar’s sales per year for regional development www.sqm.com 13
Slide 14: Lithium Expansion in Australia
LITHIUM EXPANSION IN AUSTRALIA • Mt. Holland, 50/50 JV with Kidman Resources • Estimated to contain 189 million tons of 1.50% Li2O or 7.03 million tons of LCE (according to JORC Code* standards) • One of the world’s most significant hard rock lithium deposits. Expected to be at the low end of the gl
Slide 15: Conclusion
CONCLUSION 01. On track to capture opportunities in SPN, lithium, iodine and industrial chemicals business lines 02. Lithium is, and will continue to be, our main business line 03. We will continue to make decisions to maximize SQM value in the long-term www.sqm.com 15 2018
Slide 16: Ricardo Ramos, CFO
RICARDO RAMOS CFO www.sqm.com 16 2018
Slide 17: Gross Profit Evolution
GROSS PROFIT EVOLUTION 2010-2014: Iodine boom Market growth 2-4% 1,200 2007-2013: Fertilizer boom 2016- : Lithium boom Market growth 1-2% Market growth 15-20% 1,000 800 600 400 200 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Fertilizers (SPN+KCL) Iodine Lithium Industrial Chemicals www.
Slide 18: A Closer Look at the Lithium Market
A CLOSER LOOK AT THE LITHIUM MARKET LITHIUM CHEMICALS DEMAND COMPARISON Lithium Demand Evolution 2010-2017 250 200 150 KMT-LCE 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 Other applications Energy Storage (kMT-LCE) 2010 Total Demand: 98k 2017 Total Demand: 212k Demand growth has been led by ene
Slide 19: Even Higher Expected Demand Growth
A CLOSER LOOK AT THE LITHIUM MARKET EVEN HIGHER EXPECTED DEMAND GROWTH Lithium Expected Demand, kMT 900 800 700 CAGR: 15% - 17% 600 116-141 500 73-94 750 - 850 400 57-68 300 45-52 200 2018 2019 2020 2021 2022 2023 2024 2025 • Annual vehicle growth ~2% • EV penetration is expected to be from ~3% to 9
Slide 20: A Closer Look at the Lithium Market: SQM Strategy
A CLOSER LOOK AT THE LITHIUM MARKET* Demand is growing, and new capacity is needed. SQM´s Strategy: • Chile: capacity increase (48k 70k 120k 180k MT) • Australia: 45k MT Be prepared for higher demand growth rates • The best quality (physical and chemical), looking at the long-term requiremen
Slide 21: Global Lithium Supply Evolution
GLOBAL LITHIUM SUPPLY EVOLUTION Expected Supply, kMT 900 800 700 600 500 310 400 300 385 150 200 100 155 - 2018 2019 2020 2021 2022 2023 2024 2025 Other Producers Big Players KEY ASSUMPTIONS: • Other Players: Wodgina, Pilbara, other minerals and other brines From 155 to 385k MT CAGR ~14% • Big Pla
Slide 22: Global Lithium Supply & Demand Evolution
GLOBAL LITHIUM SUPPLY & DEMAND EVOLUTION Supply & Demand, kMT 800 700 600 500 400 300 200 2018 2019 2020 2021 2022 2023 2024 2025 Supply Demand at CAGR 15% Demand at CAGR 17% • 2024-2025, market will need new projects or the big players will have to increase their market share • Systematically, new
Slide 23: New Capacity in Chile & SQM JV Capacity
SUMMARY NEW CAPACITY IN CHILE & SQM JV CAPACITY SQM medium term projects and capacity: • Current Capacity: 70k MT/year (Chile) • End of 2019: +50k MT/year = 120k MT/year (Chile) • End of 2021: +60k MT/year=180k MT/year (Chile) • End of 2021: +22.5k MT/year=202.5k MT/year (Chile+AUS) As leading playe
Slide 24: Gerardo Illanes, VP Finance & IR
GERARDO ILLANES VP FINANCE & IR www.sqm.com 24 2018
Slide 25: Review of Results
REVIEW OF RESULTS SPN Iodine Lithium I.Chem. Potassium PRICE QUANTITY Revenue Contribution Gross Profit Contribution 800 2Q2018/2Q2017 2Q2018/2Q2017 350 700 300 224 639 US$ Million US$ Million 250 600 8 3 180 505 31 200 9 (5) 1 33 15 500 22 13 150 12 37 400 100 Prices increased in all business lines
Slide 26: Strong Financial Position
STRONG FINANCIAL POSITION Inventory Accounts Receivables (Months of Sales) (Months of Sales) 4.0 16.0 3.0 12.0 8.3 7.8 8.0 7.4 2.0 2.4 8.0 2.4 2.4 2.1 1.0 4.0 Jun 17 Dec 17 Mar 18 Jun 18 Jun 17 Dec 17 Mar 18 Jun 18 Liquidity Cash / Short-Term Financial Debt (Current Assets/Current Liabilities) 6.0 1
Slide 27: CAPEX
CAPEX Historical Maintenance CAPEX: ~US$100 million 2016-2018: Lithium Hydroxide Expansion to 13.5k MT: ~US$30 million 2017-2018: Potassium Nitrate Expansion to 1.5m MT: ~US$50 million 2017-2021: Lithium Carbonate Expansion to 180k MT: ~US$525 million 2017-2018: Iodine capacity expansion to 14k MT:
Slide 28: Contact Information
Gerardo Illanes VP OF FINANCE gerardo.illanes@sqm.com Kelly O’Brien HEAD OF INVESTOR RELATIONS kelly.obrien@sqm.com CONTACT INFORMATION Irina Axenova INVESTOR RELATIONS irina.axenova@sqm.com www.sqm.com 28 2018