UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549










FORM 20-F










(Mark One)

| |  ̈ | REGISTRATION
                                         STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



OR



| | x | ANNUAL
                                         REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | -----------------------------------------------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2016



OR



| |  ̈ | TRANSITION
                                         REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ---------------------------------------------------------------------------------------------------------------------------------



for the transition period from  to



OR



| |  ̈ | SHELL
                                         COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------------------------------------------------------------



Date of event requiring this shell company
report



Commission file number 33-65728



SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

(Exact name of Registrant as specified in
its charter)



CHEMICAL AND MINING COMPANY OF CHILE INC.

(Translation of Registrant’s name
into English)



CHILE

(Jurisdiction of incorporation)



El Trovador 4285, 6th floor, Santiago,
Chile +56 2 2425 2000

(Address of principal executive offices)



Gerardo Illanes +56 2 2425-2485 gerardo.illanes@sqm.com
El Trovador 4285, 6th floor, Santiago, Chile

(Name, Telephone, E-mail and/or Facsimile
Number and Address of Company Contact Person)










Securities registered or to be registered, pursuant to Section 12(b)
of the Act



|Title of each class                                                                                 |  | Name of each exchange
    on which registered
|--------------------------------------------------------------------------------------------------- |  | ---------------------------------------------
|Series B shares, in the form of American Depositary Shares each representing
    one Series B share |  | New York Stock Exchange                      











Securities registered or to be registered pursuant to Section 12(g)
of the Act.

None



Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act



None



Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No   ̈



If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.     Yes   ̈    No  x



Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.     Yes  x   No   ̈



Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).     Yes   ̈    No   ̈



Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated
filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer  x         Accelerated
filer   ̈           Non-accelerated
filer   ̈           Emerging
growth company   ̈



If an emerging growth company that prepares its financial statements
in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange
Act.  ̈



† The term “new or revised financial accounting
standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification
after April 5, 2012.



Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:



|U.S. GAAP   ̈ |  | International Financial Reporting Standards
        as issued
        by the International Accounting Standards
        Board  x |  | Other   ̈
|------------ |  | -------------------------------------------------------------------------------------------------------------------------------- |  | --------



If “Other” has been checked in response to the previous
question indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  x    Item 18   ̈



If this is an annual report, indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x



Indicate the number of outstanding shares of each of the issuer’s
classes of capital stock or common stock as of the close of business covered by the annual report.



|Series A Shares | 142,819,552
|--------------- | -----------
|                |            
|Series B Shares | 120,376,972











TABLE OF CONTENTS

Page



|PRESENTATION OF INFORMATION                               | iv                                                                          
|--------------------------------------------------------- | ----------------------------------------------------------------------------
|GLOSSARY                                                  | iv                                                                          
|CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS | vii                                                                         
|                                                          |                                                                             
|ITEM 1.                                                   | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                       
|ITEM 2.                                                   | OFFER STATISTICS AND EXPECTED TIMETABLE                                     
|ITEM 3.                                                   | KEY INFORMATION                                                             
|ITEM 4.                                                   | INFORMATION ON THE COMPANY                                                  
|ITEM 4A.                                                  | UNRESOLVED STAFF COMMENTS                                                   
|ITEM 5.                                                   | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                
|ITEM 6.                                                   | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                  
|ITEM 7.                                                   | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                           
|ITEM 8.                                                   | FINANCIAL INFORMATION                                                       
|ITEM 9.                                                   | THE OFFER AND LISTING                                                       
|ITEM 10.                                                  | ADDITIONAL INFORMATION                                                      
|ITEM 11.                                                  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  
|ITEM 12.                                                  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      
|ITEM 13.                                                  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                             
|ITEM 14.                                                  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|ITEM 15.                                                  | CONTROLS AND PROCEDURES                                                     
|ITEM 16.                                                  | [Reserved]                                                                  
|ITEM 16A.                                                 | AUDIT COMMITTEE FINANCIAL EXPERT                                            
|ITEM 16B.                                                 | CODE OF ETHICS                                                              
|ITEM 16C.                                                 | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                      
|ITEM 16D.                                                 | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                  
|ITEM 16E.                                                 | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS      
|ITEM 16G.                                                 | CORPORATE GOVERNANCE                                                        
|ITEM 16H.                                                 | MINE SAFETY AND DISCLOSURE                                                  
|ITEM 17.                                                  | FINANCIAL STATEMENTS                                                        
|ITEM 18.                                                  | FINANCIAL STATEMENTS                                                        
|ITEM 19.                                                  | EXHIBITS                                                                    
|SIGNATURES                                                | 136                                                                         
|                                                          |                                                                             
|CONSOLIDATED FINANCIAL STATEMENTS                         | 137                                                                         
|EXHIBIT 1.1                                               |                                                                             
|EXHIBIT 8.1                                               |                                                                             
|EXHIBIT 12.1                                              |                                                                             
|EXHIBIT 12.2                                              |                                                                             
|EXHIBIT 13.1                                              |                                                                             
|EXHIBIT 13.2                                              |                                                                             
|EXHIBIT 23.1                                              |                                                                             
|EXHIBIT 23.2                                              |                                                                             
|EXHIBIT 23.3                                              |                                                                             
|EXHIBIT 99.1                                              |                                                                             
|EXHIBIT 99.2                                              |                                                                             
|EXHIBIT 99.3                                              |                                                                             
|EXHIBIT 99.4                                              |                                                                             



iii







PRESENTATION OF INFORMATION



In this Annual Report on Form 20-F, except
as otherwise provided or unless the context requires otherwise, all references to “we,” “us,”
“Company” or “SQM” are to Sociedad Química y Minera de Chile S.A., an open stock
corporation (sociedad anónima abierta) organized under the laws of the Republic of Chile, and its consolidated subsidiaries.



All references to “$,”
“US$,” “U.S. dollars,” “USD” and “dollars” are to
United States dollars, references to “pesos,” “CLP” and “Ch$” are to
Chilean pesos, references to ThUS$ are to thousands of United States dollars, references to ThCh$ are to thousands of Chilean
pesos and references to “UF” are to Unidades de Fomento. The UF is an inflation-indexed, peso-denominated
unit that is linked to, and adjusted daily to reflect changes in, the previous month’s Chilean consumer price index. As
of December 31, 2016, UF 1.00 was equivalent to US$39.49 and Ch$26,347.98 according to the Chilean Central Bank (Banco Central
de Chile). As of April 20, 2017, UF 1.00 was equivalent to US$40.96 and Ch$26,528.10.



The Republic of Chile is governed by a democratic
government, organized in fourteen regions plus the Metropolitan Region (surrounding and including Santiago, the capital of Chile).
Our production operations are concentrated in northern Chile, specifically in the Tarapacá Region and in the Antofagasta
Region.



Our fiscal year ends on December 31. As December
31 is a bank holiday in Chile, certain financial information is reflected as of December 30, 2016.



We use the metric system of weights and measures
in calculating our operating and other data. The United States equivalent units of the most common metric units used by us are
as shown below:



1 kilometer equals approximately
0.6214 miles



1 meter equals approximately 3.2808
feet



1 centimeter equals approximately
0.3937 inches



1 hectare equals approximately 2.4710
acres



1 metric ton (“MT”)
equals 1,000 kilograms or approximately 2,205 pounds.



We are not aware of any independent, authoritative
source of information regarding sizes, growth rates or market shares for most of our markets. Accordingly, the market size, market
growth rate and market share estimates contained herein have been developed by us using internal and external sources and reflect
our best current estimates. These estimates have not been confirmed by independent sources.



Percentages and certain amounts contained
herein have been rounded for ease of presentation. Any discrepancies in any figure between totals and the sums of the amounts
presented are due to rounding.



GLOSSARY



“assay values”
Chemical result or mineral component amount contained by the sample.



“average
global metallurgical recoveries” Percentage that measures the metallurgical treatment effectiveness based on the quantitative
relationship between the initial product contained in the mine-extracted material and the final product produced in the plant.



“average
mining exploitation factor” Index or ratio that measures the mineral exploitation effectiveness, based on the quantitative
relationship between (in-situ mineral minus exploitation losses) / in-situ mineral.



“CAGR”
Compound annual growth rate, the year over year growth rate of an investment over a specified period of time.



“cash
and cash equivalents”The International Accounting Standards Board (IASB) defines cash and cash equivalents as
short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.



“Controller
Group”* A person or company or group of persons or companies that according to Chilean law, have executed a joint performance
agreement, that have a direct or indirect share in a company’s ownership and have the power to influence the decisions of
the company’s management.



“Corfo”
Production Development Corporation (Corporación de Fomento de la Producción), formed in 1939, a national
organization in charge of promoting Chile’s manufacturing productivity and commercial development.



iv







“cut-off
grade” The minimal assay value or chemical amount of some mineral component above which exploitation is economical.



“dilution”
Loss of mineral grade because of contamination with barren material (or waste) incorporated in some exploited ore mineral.



“exploitation
losses” Amounts of ore mineral that have not been extracted in accordance with exploitation designs.



“fertigation”
The process by which plant nutrients are applied to the ground using an irrigation system.



“geostatistical
analysis” Statistical tools applied to mining planning, geology and geochemical data that allow estimation of averages,
grades and quantities of mineral resources and reserves.



“heap
leaching” A process whereby minerals are leached from a heap, or pad, of ROM (run of mine) ore by leaching solutions
percolating down through the heap and collected from a sloping, impermeable liner below the pad.



“horizontal
layering” Rock mass (stratiform seam) with generally uniform thickness that conform to the sedimentary fields (mineralized
and horizontal rock in these cases).



“hypothetical
resources” Mineral resources that have limited geochemical reconnaissance, based mainly on geological data and samples
assay values spaced between 500–1000 meters.



“Indicated Mineral
Resource” See “Resources—Indicated Mineral Resource.”



“Inferred Mineral
Resource” See “Resources—Inferred Mineral Resource.”



“industrial
crops” Refers to crops that require processing after harvest in order to be ready for consumption or sale. Tobacco,
tea and seed crops are examples of industrial crops.



“Kriging
Method”A technique used to estimate ore reserves, in which the spatial distribution of continuous geophysical variables
is estimated using control points where values are known.



“LIBOR”London Inter Bank Offered Rate.



“limited reconnaissance”
Low or limited level of geological knowledge.



“Measured Mineral
Resource” See “Resources—Measured Mineral Resource.”



“metallurgical
treatment” A set of chemical and physical processes applied to the caliche ore and to the salar brines to extract their
useful minerals (or metals).



“ore depth”
Depth of the mineral that may be economically exploited.



“ore type”
Main mineral having economic value contained in the caliche ore (sodium nitrate or iodine).



“ore”
A mineral or rock from which a substance having economic value may be extracted.



“Probable Mineral
Reserve” See “Reserves—Probable Mineral Reserve.”



“Proven Mineral
Reserve” See “Reserves—Proven Mineral Reserve.”



“Reserves—Probable
Mineral Reserve”** The economically mineable part of an Indicated Mineral Resource and, in some circumstances, Measured
Mineral Resource. The calculation of the reserves includes diluting of materials and allowances for losses which may occur when
the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out and include consideration
of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental
factors. These assessments demonstrate at the time of reporting that extraction is reasonably justified. A Probable Mineral Reserve
has a lower level of confidence than a Proved Mineral Reserve.



“Reserves—Proven
Mineral Reserve” ** The economically mineable part of a Measured Mineral Resource. The calculation of the reserves includes
diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include
feasibility studies, have been carried out and include consideration of and modification by realistically assumed mining, metallurgical,
economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting
that extraction is reasonably justified.



v







“Resources—Indicated
Mineral Resource” ** The part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade
and mineral content can be estimated with a reasonable level of confidence. The calculation is based on detailed exploration,
sampling and testing information gathered through appropriate sampling techniques from locations such as outcrops, trenches and
exploratory drill holes. The locations are too widely or inappropriately spaced to confirm geological continuity and/or grade
continuity but are spaced closely enough for continuity to be assumed. An Indicated Mineral Resource has a lower level of confidence
than that applying to a Measured Mineral Resource, but has a higher level of confidence than that applying to an Inferred Mineral
Resource.



A deposit may
be classified as an Indicated Mineral Resource when the nature, quality, amount and distribution of data are such as to allow
the Competent Person, as that term is defined under Chilean Law Number 20,235, determining the Mineral Resource to confidently
interpret the geological framework and to assume continuity of mineralization. Confidence in the estimate is sufficient to allow
the appropriate application of technical and economic parameters and to enable an evaluation of economic viability.



“Resources—Inferred
Mineral Resource” ** The part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with
a low level of confidence, by inferring them on the basis of geological evidence and assumed but not verified geological and/or
grade continuity. The estimate is based on information gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes, and this information is of limited or uncertain quality and/or reliability. An Inferred
Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource.



“Resources—Measured
Mineral Resource” ** The part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade
and mineral content can be estimated with a high level of confidence. The estimate is based on detailed exploration, sampling
and testing information gathered through appropriate sampling techniques from locations such as outcrops, trenches and exploratory
drill holes. The locations are spaced closely enough to confirm geological and/or grade continuity.



A deposit may
be classified as a Measured Mineral Resource when the nature, quality, amount and distribution of data are such as to leave no
reasonable doubt, in the opinion of the Competent Person, as that term is defined under Chilean Law Number 20,235, determining
the Mineral Resource, that the tonnage and grade of the deposit can be estimated within close limits and that any variation from
the estimate would not significantly affect potential economic viability. This category requires a high level of confidence in,
and understanding of, the geology and controls of the mineral deposit. Confidence in the estimate is sufficient to allow the appropriate
application of technical and economic parameters and to enable an evaluation of economic viability.



“Resources—Mineral
Resource” ** A concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the
Earth’s crust in such form or quantity and of such grade or quality that it has reasonable prospects for economically viable
extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated
or interpreted from specific geological, metallurgical and technological evidence.



“solar
salts”A mixture of 60% sodium nitrate and 40% potassium nitrate used in the storage of thermo-energy.



“vat
leaching” A process whereby minerals are extracted from crushed ore by placing the ore in large vats containing leaching
solutions.



“waste”
Rock or mineral which is not economical for metallurgical treatment.



“Weighted
average age” The sum of the product of the age of each fixed asset at a given facility and its current gross book value
as of December 31, 2016 divided by the total gross book value of the Company’s fixed assets at such facility as of December
31, 2016.



| | * | The definition of a Controller Group that has been provided
is the one that applies to the Company. Chilean law provides for a broader definition of a Controller Group.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ** | The definitions we use for resources and reserves are based
on those provided by the “Instituto de Ingenieros de Minas de Chile” (Chilean Institute of Mining Engineers).
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



vi







CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS



This Form 20-F contains statements that are
or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These
statements are not based on historical facts and reflect our expectations for future events and results. Words such as “believe,”
“expect,” “predict,” “anticipate,” “intend,” “estimate,” “should,”
“may,” “likely,” “could” or similar expressions may identify forward-looking information.
These statements appear throughout this Form 20-F and include statements regarding the intent, belief or current expectations
of the Company and its management, including but not limited to any statements concerning:



| | · | trends
                                         affecting the prices and volumes of the products we sell;
| | - | ---------------------------------------------------------------------------------------------------------

| | · | level
                                         of reserves, quality of the ore and brines, and production levels and yields;
| | - | ----------------------------------------------------------------------------------------------------------------------------

| | · | our
                                         capital investment program and development of new products;
| | - | --------------------------------------------------------------------------------------------------------

| | · | the
                                         future impact of competition; and
| | - | ------------------------------------------------------------------------------

| | · | regulatory
                                         changes.
| | - | ------------------------------------------------------------



Such forward-looking statements are not guarantees
of future performance and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking
statements included in this Form 20-F, including, without limitation, the information under Item 4. Information on the Company,
Item Number 5. Operating and Financial Review and Prospects and Item 11. Quantitative and Qualitative Disclosures About Market
Risk. Factors that could cause actual results to differ materially include, but are not limited to:



| | · | volatility
                                         of global prices for our products;
| | - | --------------------------------------------------------------------------------------

| | · | political,
                                         economic and demographic developments in certain emerging market countries, where we
                                         conduct a large portion of our business;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | changes
                                         in production capacities;
| | - | --------------------------------------------------------------------------

| | · | the
                                         nature and extent of future competition in our principal markets;
| | - | --------------------------------------------------------------------------------------------------------------

| | · | our
                                         ability to implement our capital expenditures program, including our ability to obtain
                                         financing when required;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | changes
                                         in raw material and energy prices;
| | - | -----------------------------------------------------------------------------------

| | · | currency
                                         and interest rate fluctuations;
| | - | ---------------------------------------------------------------------------------

| | · | risks
                                         relating to the estimation of our reserves;
| | - | ------------------------------------------------------------------------------------------

| | · | changes
                                         in quality standards or technology applications;
| | - | -------------------------------------------------------------------------------------------------

| | · | adverse
                                         legal, regulatory or labor disputes or proceedings;
| | - | ----------------------------------------------------------------------------------------------------

| | · | changes
                                         in governmental regulations; and
| | - | ---------------------------------------------------------------------------------

| | · | additional
                                         factors discussed below under Item 3. Key Information—Risk Factors.
| | - | -----------------------------------------------------------------------------------------------------------------------



vii







PART I

ITEM 1.    IDENTITY OF DIRECTORS,
SENIOR MANAGEMENT AND ADVISERS



Not Applicable.



ITEM 2.    OFFER STATISTICS AND
EXPECTED TIMETABLE



Not Applicable.



ITEM 3.    KEY INFORMATION



3.A. Selected
Financial Data

The following table presents selected financial
data as of and for the years ended December 31, 2016, 2015, 2014, 2013, and 2012. The selected financial data should be read in
conjunction with the Consolidated Financial Statements and notes thereto, “Item 5. Operating and Financial Review and Prospects”
and other financial information included herein.



|                                                                                     |  | As of and for the year ended December 31, |         
|------------------------------------------------------------------------------------ |  | ----------------------------------------- | --------
|(in millions of US$)(1)                                                              |  | 2016                                      |         
|Statement of income:                                                                 |  |                                           |         
|Revenues                                                                             |  |                                           | 1,939.3 
|Cost of sales                                                                        |  |                                           | (1,328.3
|Gross profit                                                                         |  |                                           | 611.0   
|                                                                                     |  |                                           |         
|Other income (2)                                                                     |  |                                           | 14.8    
|Administrative expenses                                                              |  |                                           | (88.4   
|Other expenses (3)(4)(5)                                                             |  |                                           | (89.7   
|Other gains (losses)                                                                 |  |                                           | 0.7     
|Finance income                                                                       |  |                                           | 10.6    
|Finance expenses                                                                     |  |                                           | (57.5   
|Equity income of associates and joint ventures accounted for using the equity method |  |                                           | 13.0    
|Foreign currency exchange differences                                                |  |                                           | 0.4     
|Income before income tax expense(3)                                                  |  |                                           | 414.9   
|                                                                                     |  |                                           |         
|Income tax expense (6)                                                               |  |                                           | (133.0  
|                                                                                     |  |                                           |         
|Profit for the year(3)(6)                                                            |  |                                           | 281.9   
|Profit attributable to:                                                              |  |                                           |         
|Controlling interests (3)(6)                                                         |  |                                           | 278.3   
|Non-controlling interests                                                            |  |                                           | 3.6     
|Profit for the year (3) (6)                                                          |  |                                           | 281.9   
|                                                                                     |  |                                           |         
|Basic earnings per share(7)                                                          |  |                                           | 1.06    
|Basic earnings per ADS(8)(9)                                                         |  |                                           | 1.06    
|Dividends per share(9)(10)(11)                                                       |  |                                           | 1.44    
|Dividends per ADS(10)(11)(12)                                                        |  |                                           | 1.44    
|Weighted average(7)(8)shares outstanding (000s)                                      |  |                                           | 263,197 



| | (1) | Except shares outstanding, dividend and net earnings per
share and net earnings per ADS.
| | --- | ----------------------------------------------------------------------------------------



1







| | (2) | Other income for 2013 includes
                                         US$84 million for the sale of royalties for the Antucoya mining project. After taxes,
                                         this sale had a one-time effect of US$67 million on profit for the year.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Other expenses for 2014 includes
                                         provisions of approximately US$7 million corresponding to payments made in 2015 to the
                                         Chilean Internal Revenue Service (Servicio de Impuestos Internos or “SII”)
                                         for expenses that may not have qualified as tax expenses under the Chilean tax code.
                                         However, since such payments were made after March 3, 2015, the date on which the Company
                                         filed its statutory consolidated financial statements filed with the Chilean Superintendence
                                         of Securities and Insurance (Superintendencia de Valores y Seguros or “SVS”),
                                         such provisions were included in net income for the period ended December 31, 2015 for
                                         purposes of the Company’s statutory consolidated financial statements. For more
                                         information, see “Item 3D. Risk Factors—Risks Relating to our Business—We
                                         could be subject to numerous risks in Chile as a result of ongoing investigations by
                                         the Chilean Public Prosecutor in relation to certain payments made by SQM between the
                                         tax years 2009 and 2015.”
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Other
                                         expenses for 2015 include a charge of US$57.7 million for impairment and severance indemnities
                                         related to the restructuring of our Pedro de Valdivia operations.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Other expenses for 2016 includes
                                         a charge of US$32.8 million for impairment related to the closing of the train between
                                         Coya Sur and Tocopilla. Other expenses for 2016 also includes charges of approximately
                                         US$30.5 million for impairment related to the Company's agreement with the U.S. Department
                                         of Justice and the administrative cease and desist order issued by the U.S. Securities
                                         and Exchange Commission in connection the inquiries arising out of the alleged violations
                                         of the books and records and internal controls provisions of the Foreign Corrupt Practices
                                         Act. For more information, see “Item 3D. Risk Factors—Risks Relating to our
                                         Business—We could be subject to numerous risks in Chile as a result of ongoing
                                         investigations by the Chilean Public Prosecutor in relation to certain payments made
                                         by SQM between the tax years 2009 and 2015” and “Item 8.A.7 Legal Proceedings.”
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | In accordance with IAS 12, the
                                         effects generated by the change in the income tax rate approved by Law No. 20.780 on
                                         income and deferred taxes have been applied to the income statement. For purposes of
                                         the Company’s statutory consolidated financial statements filed with the SVS, in
                                         accordance with the instructions issued by the SVS in its circular 856 of October 17,
                                         2014, the effects generated by the change in the income tax rate were accounted for as
                                         retained earnings. The amount charged to equity as of December 31, 2014 was US$52.3 million,
                                         thereby giving rise to a difference of US$52.3 million in profit and income tax expense
                                         in 2014 as presented in the Company’s Audited Consolidated Financial Statements
                                         compared with profit and income tax expense presented in the Company’s statutory
                                         consolidated financial statements filed with the SVS. The effects of subsequent changes
                                         in the income tax rate will be recognized in profit or loss for the period in the Company’s
                                         statutory consolidated financial statements in accordance with IAS 12.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | The Company has not conducted
                                         any transaction that would give rise to a potential dilutive effect on its earnings per
                                         share in any of the indicated years. The total number of outstanding shares as of each
                                         period end is the same as the weighted average shares outstanding.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | The calculation of earnings per
                                         ADSs and dividends per ADS for the years indicated is based on the ratio of 1:1.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | Dividends per share are calculated
                                         based on 263,196,524 shares for each of the years indicated.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------

| | (10) | Dividends are paid from net
                                         income as determined in accordance with SVS regulations. See “Item 8.A. Dividend
                                         Policy.” For dividends in Ch$, see “Item 8.A. Dividend Policy—Dividends.”
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (11) | Dividend amount paid per calendar
                                         year to shareholders of the Company. See “Item 8.A. Dividend Policy.”
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | (12) | Dividend amounts per share paid
                                         in Chilean pesos were Ch$936.15 in 2016, Ch$316.06 in 2015, Ch$806.79 in 2014, Ch$536.16
                                         in 2013 and Ch$604.59 in 2012.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                |  | As of and for the year ended December 31, |        
|----------------------------------------------- |  | ----------------------------------------- | -------
|(in millions of US$)                            |  | 2016                                      |        
|Balance sheet data:                             |  |                                           |        
|Total assets                                    |  |                                           | 4,218.6
|Total liabilities                               |  |                                           | 1,911.4
|Total equity                                    |  |                                           | 2,307.3
|Equity attributable to controlling interests    |  |                                           | 2,246.1
|Equity attributable to non-controlling interest |  |                                           | 61.2   
|Capital stock                                   |  |                                           | 477.4  



2







EXCHANGE RATES



Chile has two currency markets, the Formal
Exchange Market (Mercado Cambiario Formal) in which we conduct our transactions, and the Informal Exchange Market (Mercado
Cambiario Informal). The Formal Exchange Market comprises banks and other entities authorized by the Chilean Central Bank.
The Informal Exchange Market comprises entities that are not expressly authorized to operate in the Formal Exchange Market, such
as certain foreign exchange houses and travel agencies, among others. The Chilean Central Bank is empowered to determine that
certain purchases and sales of foreign currencies be carried out on the Formal Exchange Market.



Both the Formal Exchange Market and the Informal
Exchange Market are driven by free market forces. Current regulations require that the Chilean Central Bank be informed of certain
transactions and that these transactions be effected through the Formal Exchange Market.



The Observed Exchange Rate (dólar
observado), which is reported by the Chilean Central Bank and published daily in the Chilean newspapers, is computed by taking
the weighted average of the previous business day’s transactions on the Formal Exchange Market. The Chilean Central Bank
has the power to intervene by buying or selling foreign currency on the Formal Exchange Market to attempt to maintain the Observed
Exchange Rate within a desired range. During the past few years the Chilean Central Bank has intervened to attempt to maintain
the Observed Exchange Rate within a certain range only under special circumstances. Although the Chilean Central Bank is not required
to purchase or sell U.S. dollars at any specific exchange rate, it generally uses spot rates for its transactions. Other banks
generally carry out authorized transactions at spot rates as well.



The Informal Exchange Market reflects transactions
carried out at an informal exchange rate (the “Informal Exchange Rate”). There are no limits imposed on the extent
to which the Informal Exchange Rate can fluctuate above or below the Observed Exchange Rate. In recent years, the variations between
the Observed Exchange Rate and the Informal Exchange Rate have not been significant.



The Federal Reserve Bank of New York does
not report a noon buying rate for Chilean pesos.



The U.S. dollar is our functional currency.
However, unless otherwise indicated, any amounts translated into U.S. dollars from Chilean pesos were translated using the Observed
Exchange Rate for December 31, 2016, which was Ch$669.47 per US$1.00. As of April 20, 2017 the Observed Exchange Rate was US$1.00
per Ch$647.68.



3







|Observed Exchange Rate(1)
|-------------------------
|                         
|(Ch$ per US$)            
|                         
|Year                     
|                         
|2012                     
|2013                     
|2014                     
|2015                     
|2016                     



|Last six months |  | Low (1) |        |  | High (1) |  |        | Average (1)(2) |  |  | Year/Month End (3) | 
|--------------- |  | ------- | ------ |  | -------- |  | ------ | -------------- |  |  | ------------------ | 
|                |  |         |        |  |          |  |        |                |  |  |                    | 
|2016            |  |         |        |  |          |  |        |                |  |  |                    | 
|October         |  |         | 651.65 |  |          |  | 670.88 |                |  |  | 663.92             | 
|November        |  |         | 650.72 |  |          |  | 679.24 |                |  |  | 666.12             | 
|December        |  |         | 649.40 |  |          |  | 677.11 |                |  |  | 667.17             | 
|2017            |  |         |        |  |          |  |        |                |  |  |                    | 
|January         |  |         | 648.31 |  |          |  | 673.36 |                |  |  | 661.19             | 
|February        |  |         | 638.35 |  |          |  | 646.97 |                |  |  | 643.21             | 
|March           |  |         | 648.88 |  |          |  | 669.52 |                |  |  | 661.20             | 



Source: Central
Bank of Chile



| | (1) | Reflects high and low rates on a day-to-day basis, for
each period reported.
| | --- | ----------------------------------------------------------------------------

| | (2) | The monthly average rate is calculated on a day-to-day
basis for each month reported. The yearly average rate is calculated on a month-to-month basis for each year reported.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Based on transactions observed during the last day of the
period.
| | --- | -----------------------------------------------------------------



3.B. Capitalization
and Indebtedness

Not applicable.



3.C. Reasons
for the Offer and Use of Proceeds

Not applicable.



3.D. Risk Factors



Our operations are subject to certain risk
factors that may affect SQM’s business, financial condition, cash flows, or results of operations. In addition to other
information contained in this Annual Report on Form 20-F, you should carefully consider the risks described below. These risks
are not the only ones we face. Additional risks not currently known to us or that are known but we currently believe are not significant
may also affect our business operations. Our business, financial condition, cash flows or results of operations could be materially
affected by any of these risks.



4







Risks Relating to our Business



We could be subject to numerous risks
in Chile as a result of ongoing investigations by the Chilean Internal Revenue Service and the Chilean Public Prosecutor in relation
to certain payments made by SQM between the tax years 2009 and 2015



The SII has been conducting investigations
related to the payment of invoices by SQM and its subsidiaries, SQM Salar S.A. and SQM Industrial S.A., for services that may
not have been properly supported or that may not have been necessary to generate corporate income. The Chilean Public Prosecutor
is conducting related inquiries to determine whether such payments may be linked with alleged violations by SQM, these subsidiaries
and public officials of political contribution or anti-corruption laws. The SII and the Chilean Public Prosecutor are also conducting
similar investigations related to the payment of invoices by other Chilean companies that may not have been properly supported
or that may not have been necessary to generate corporate income.



On February 26, 2015, SQM’s Board of
Directors resolved to establish an ad-hoc committee of the Board of Directors (the “ad-hoc Committee”) authorized
to conduct an internal investigation relating to the issues that were the subject of the SII and Public Prosecutor investigations
and to retain such independent external advice as it deemed appropriate. The original members of the ad-hoc Committee were José
María Eyzaguirre B., Juan Antonio Guzmán M. and Wolf von Appen B.



The ad-hoc Committee engaged its own lawyers
from Chile and the U.S. and forensic accountants from the U.S. to assist with its internal review. The U.S. lawyers retained by
the ad-hoc Committee were principally charged with reviewing the relevant facts and analyzing those facts against the requirements
of the U.S. Foreign Corrupt Practices Act (FCPA). The factual findings of the ad-hoc Committee, however, were ultimately shared
with Chilean as well as U.S. authorities.



On March 12, 2015, José María
Eyzaguirre B. resigned from the ad-hoc Committee and his position was subsequently filled by Hernán Büchi B.



On March 16, 2015, the Board of Directors
decided to terminate the employment contract of the Company’s then- CEO, Patricio Contesse G. This followed his failure
to cooperate with the ad-hoc Committee’s investigation.



On March 17, 2015, three members of the Board
of Directors resigned, all of whom had been nominated by Potash Corporation of Saskatchewan Inc. (“PCS”), one of SQM’s
two principal shareholder groups. PCS issued a press release stating that the directors resigned because of their concern that
they could not ensure that the Company was conducting an appropriate investigation and collaborating effectively with the Public
Prosecutor.



On March 20, 2015, the Company identified
to the SII approximately US$11 million in payments of invoices that may not have been properly supported by services rendered
or that may not qualify as tax expenses under the Chilean tax code. These payments originated from the office of the former CEO,
Patricio Contesse G., during the six-year tax period from 2009 to 2014. As a result, the Company subsequently submitted amendments
to its tax returns for the 2009 to 2014 tax years and thereafter paid taxes and interest relating to such amended returns totaling
approximately US$7 million. On April 24, 2015, the Company announced that it had identified up to an additional US$2 million in
payments by its subsidiary SQM Salar S.A. during the same six-year tax period that were also authorized by the former CEO and
that may be deemed not properly supported by services rendered or that may not qualify as tax expenses under the Chilean tax code.
Subsequently, SQM Salar S.A. filed amended tax returns and paid taxes and interest relating to such amended returns totaling approximately
US$1.2 million. On August 14, 2015, the Company announced that it had identified to the SII approximately US$1.6 million in additional
payments by SQM S.A. and its subsidiary SQM Industrial S.A. that may be deemed not properly supported by services rendered or
that may not qualify as tax expenses under the Chilean tax code. SQM S.A. and SQM Industrial S.A. subsequently filed amended tax
returns and, in early 2016, SQM Industrial S.A. paid taxes and interest relating to such amended returns totaling approximately
US$0.3 million, and SQM S.A. paid taxes and interest relating to such amended returns totaling approximately US$1.3 million. The
statute of limitations under Chilean law for tax claims is up to six years, during which period the former CEO had an annual discretionary
budget covering the Company and its subsidiaries of approximately US$6 million.



5







On March 23, 2015, the SII, based on the Income
Tax Law (Ley de Impuesto a La Renta),filed a criminal claim against the Company’s former CEO and the current
CEO and CFO in their capacities as the Company’s tax representatives relating to part of the payments referred to above.
This and subsequent related similar claims filed by the SII against these officers and third parties are currently under review
by the Public Prosecutor.



On March 31, 2015, the SVS filed an administrative
claim against five then-current and former members of the Board of Directors, alleging that they did not release information in
a timely manner relating to the payments that are subject to the tax claim referred to above. On September 30, 2015, the SVS proceeded
to fine them UF1,000 each (approximately US$36,000). They are currently appealing this decision to the Chilean courts.



On April 24, 2015, new members were elected
to the Board of Directors at the Annual General Shareholders’ Meeting, including three new members that were nominated by
PCS, and the ad-hoc Committee was subsequently reconstituted by Board of Directors members Robert A. Kirkpatrick, Wolf von Appen
B. and Edward J. Waitzer.



On April 30, 2015, the Public Prosecutor,
after reviewing the claims filed by the SII, informed the Company’s former CEO that it was formally investigating allegations
that he approved the payment of invoices that may not be properly supported by services rendered or that may not qualify as tax
expenses under the Chilean tax code and in connection therewith made intentionally false or incomplete declarations or used fraudulent
procedures designed to conceal or disguise the true amount of transactions or to circumvent taxes. If he is finally adjudicated
responsible, the Company may also be subject to the payment of a fine by the Chilean Criminal Court totaling 50%
to 300% of the taxes paid. The Company estimates that no provision is needed at this stage.



On May 11, 2015, the SII filed an additional
criminal claim against the former CEO and the current CEO and CFO in their capacities as the Company’s tax representatives
alleging violations of the Chilean Inheritance and Donations Law (Ley sobre Impuesto a Las Herencias, Asignaciones y Donaciones).
The claim states that the Company paid two invoices in 2009 and 2010 totaling approximately US$175,000 that are alleged to have
been improperly supported. The claim states that these payments should have been classified as donations, and appropriate taxes
should have been paid. These payments were accounted for in the amended tax returns filed with the SII. Subsequently, the SII
filed a number of additional claims against these officers and third parties alleging violations of Chilean tax law and the Chilean
Inheritance and Donations Law. The most recent of these criminal claims was filed by the SII on March 9, 2016. All of these claims
are under review by the Public Prosecutor.



On July 31, 2015, the deputy of the Tarapacá
region of Chile, Hugo Gutiérrez G., filed a lawsuit against the Company, broadly alleging violations of the anti-corruption
and money laundering provisions of Law No. 20,393 on Criminal Liability of Legal Entities. Potential sanctions under this law
could include (i) fines, (ii) loss of certain governmental benefits during a given period, (iii) a temporary or permanent bar
against the Company executing contracts with governmental entities, and (iv) dissolution of the Company. This claim is under review
by the Public Prosecutor.



6







On September 29, 2015, the Company was notified
of a labor lawsuit by its former CEO, Patricio Contesse, claiming payment from the Company related to the termination of his employment
contract. The total amount claimed in the lawsuit is approximately Ch$4.0 billion (approximately US$5.7 million), including severance
payments for years of service and other legal or contractual payments. The lower court held that Mr. Contesse’s claim was
barred by the statute of limitations. On November 8, 2016, the Santiago Court of Appeals overruled the lower court decision. On
March 27, 2017, the Company reached an agreement with Mr. Contesse to terminate the labor lawsuit Mr. Contesse filed against the
Company. The amount included in the agreement was provisioned for in the financial statements as of December 31, 2016.



On October 14, 2015, two class action complaints
then pending against the Company, our former CEO and current CEO and CFO, alleging violations of the U.S. securities laws in connection
with the subject matter of the investigations described above, were consolidated into a single action in the United States District
Court for the Southern District of New York.  On November, 13, 2015, our former CEO and current CEO and CFO were voluntarily
dismissed from the case without prejudice.  On January 15, 2016, the lead plaintiff filed a consolidated class action complaint
exclusively against the Company. For more information on the consolidated class action, see “Item 8.A.7 Legal Proceedings.”



During 2015, the ad-hoc Committee that was
established in February 15, 2015, conducted an investigation into whether the Company faced possible liability under the U.S.
Foreign Corrupt Practices Act. The ad-hoc Committee engaged its own separate counsel, Shearman & Sterling LLP, which presented
a report to the Board of Directors on December 15, 2015.



Following the presentation by the ad-hoc Committee
of its findings to the Board of Directors, the Company voluntarily shared the findings of the ad-hoc Committee investigation with
authorities in Chile and the U.S. (including the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department
of Justice (“DOJ”)).



On January 13, 2017, the Company and the DOJ
reached agreement on the terms of a Deferred Prosecution Agreement (“DPA”) that would resolve the DOJ’s inquiry,
based on alleged violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act. Among
other terms, the DPA calls for the Company to pay a monetary penalty of US$15,487,500, and engage a compliance monitor for a term
of two (2) years. Upon successful completion of the three (3) year term of the DPA, all charges against the Company would be dismissed.
On the same date, the SEC agreed to resolve its inquiry through an administrative cease and desist order, arising out of the alleged
violations of the same accounting provisions of the FCPA. Among other terms, the SEC order calls for the Company to pay an additional
monetary penalty of US$15 million. These penalites were reflected in the 2016 financial statements.



In Chile, the authorities’ review of
the questioned payments is ongoing. We are unable to predict the duration, scope, or results of this review, or how it may affect
our business, financial condition, cash flows, results of operations and the prices of our securities. There can be no assurance
that the authorities will agree with the conclusions of the ad-hoc Committee or that the authorities will not conclude that a
violation of applicable law has occurred. There can be no assurance that authorities in Chile or the U.S. will not undertake a
broader investigation or seek to commence additional litigation against the Company.



Responding to our regulators’ inquiries
and any future civil, criminal or regulatory inquiries or proceedings diverts our management’s attention from day-to-day
operations. Additionally, expenses that may arise from responding to such inquiries or proceedings, our review of responsive materials,
any related litigation or other associated activities may continue to be significant. Current and former employees, officers and
directors may seek indemnification, advancement or reimbursement of expenses from us, including attorneys’ fees, with respect
to the current inquiry or future proceedings related to this matter. If, as a result of further investigations, it is determined
that our financial statements were materially incorrect, we could be required to restate financial information for prior reporting
periods. Chilean authorities could impose sanctions discussed above under Law No. 20,393. The occurrence of any of the foregoing
could materially and adversely affect our business, financial condition, cash flows, results of operations and the prices of our
securities.



7







For more information, see “Item 8.A.7
Legal Proceedings.”



An arbitration proceeding under the
Lease Agreement for the Salar de Atacama, if determined adversely to us, would materially adversely affect our business and operations



Our subsidiary
SQM Salar S.A. (“SQM Salar”) holds exclusive and temporary exploitation rights to mineral resources in 81,920 hectares
in the Salar de Atacama pursuant to a 1993 lease agreement over mining exploitation concessions between SQM Salar and Corfo, a
Chilean government entity (the “Lease Agreement”). The mining exploitation concessions related to such rights are
owned by Corfo and leased to SQM Salar in exchange for quarterly lease payments to Corfo based on specified percentages associated
to the value of the products resulting from the minerals extracted from such concessions. For the year ended December 31, 2016,
revenue related to products originating from the Salar de Atacama represented 48% of our consolidated revenues, which corresponded
to revenues from our potassium product line and our lithium and derivatives product line for the period. All of our products originating
from the Salar de Atacama are derived from our extraction operations under the Lease Agreement.



In May 2014, Corfo initiated an arbitration
proceeding against SQM Salar alleging (i) SQM Salar had incorrectly applied the formulas to determine lease payments resulting
in an underpayment to Corfo of at least US$8.9 million for 2009 through 2013 and (ii) SQM Salar had not complied with its obligation
to protect the mining rights of Corfo by failing to construct or replace markers to delineate property lines. Based on the alleged
breaches of the Lease Agreement, Corfo sought (i) at least US$8.9 million plus any other amount that may be due in respect of
periods after 2013, (ii) early termination of the Lease Agreement, (iii) lease payments that would have been paid through 2030
as compensation for the early termination of the Lease Agreement and (iv) punitive damages (daño moral) equal to
30% of the contractual damages awarded. SQM Salar contested the claim, asserting that both parties have applied mutually agreed
formulas for the calculation and payment of lease payments for more than 20 years without conflict, in accordance with the terms
of the Lease Agreement and their mutual understanding of the agreements by the parties during the term of the Lease Agreement.
SQM Salar also asserted that the alleged breaches would be technical breaches and that Corfo may terminate the Lease Agreement
solely for a material breach. SQM Salar in consultation with external counsel believes that it is likely it will prevail in the
arbitration proceeding. However, an adverse ruling awarding damages sought by Corfo or permitting early termination of the Lease
Agreement would have a material adverse effect on our business, financial condition, cash flows, results of operations and share
price. We cannot assure you that Corfo will not use this arbitration proceeding to seek to renegotiate the terms of the Lease
Agreement in a manner that is not favorable to SQM Salar.



In August 2016, Corfo requested a second arbitration
proceeding, demanding (i) the early termination of the Project Contract signed between Corfo, SQM Potasio S.A., SQM Salar, and
the Company, (ii) the dissolution of SQM Salar and (iii) the early termination of the Lease Agreement for alleged breaches of
the Project Contract. In addition, Corfo demanded SQM Salar return (i) the assets Corfo contributed to it under a condition subsequent,
(ii) the OMA mining properties and the aquifers included in the Lease Agreement, (iii) the water rights granted to SQM Salar and
(iv) the legal mining easements identified in the lawsuit. Finally, Corfo requested that the defendants pay damages as a result
of the breaches alleged in the lawsuit. The Company believes there is insufficient evidence to demonstrate that the Project Contract
has been breached. However, there can be no assurance that the Company will prevail against Corfo or that other legal actions
will not be taken by Corfo against the Company’s interests.



8







Our market reputation, commercial dealings
or the price of our securities could be adversely affected by the negative outcome of certain proceedings against certain former
members of our Board and certain other named defendants



On September 10, 2013, the SVS issued a press
release disclosing it had instituted certain administrative proceedings (the “Cascading Companies Proceedings”) against
(i) Julio Ponce Lerou (who was the Chairman of the Board and a director of the Company until April 24, 2015), (ii) Patricio Contesse
Fica, who was a director of the Company until April 24, 2015 and is the son of Patricio Contesse González (who was the
Company’s CEO until March 16, 2015), and (iii) other named defendants. The Company has been informed that Mr. Ponce and
persons related to him beneficially owned 29.97% of SQM’s total shares as of December 31, 2016. See “Item 6.E. Share
Ownership.” The SVS alleged breaches of Chilean corporate and securities laws in connection with acts performed by entities
with direct or indirect share ownership interests in SQM (the “Cascading Companies”). The allegations made in connection
with the Cascading Companies Proceedings do not relate to the Company’s operations, nor do they relate to any acts or omissions
of the Company or any of its directors, officers or employees in their capacities as such.



In connection with the Cascading Companies
Proceedings, the SVS alleged the existence of a scheme involving the named defendants whereby, through a number of transactions
occurring between 2009 and 2011, the Cascading Companies allegedly sold securities of various companies, including securities
of SQM, at below-market prices to companies related to Mr. Ponce and other named defendants. These companies allegedly subsequently
sold such securities after a lapse of time, in most cases back to the Cascading Companies, at prices higher than the purchase
price. The SVS alleged violations by the defendants of a number of Chilean corporate and securities laws in furtherance of the
alleged scheme.



On January 31, 2014, the SVS added a number
of Chilean financial institutions and asset managers, and certain of their controlling persons, executives or other principals,
as named defendants to the Cascading Companies Proceedings. On September 2, 2014, the SVS issued a decision imposing an aggregate
fine against all of the defendants of UF 4.0 million (approximately US$144.7 million as of December 31, 2015), including a fine
against Mr. Ponce of UF 1.7 million (approximately US$61.4 million as of December 31, 2015) and a fine against Mr. Contesse Fica
of UF 60,000 (approximately US$2.2 million as of December 31, 2015). The defendants are currently challenging the SVS administrative
decision before a Chilean Civil Court.



The High Complexity Crimes Unit (Unidad
de Delitos de Alta Complejidad) of the Metropolitan District Central Northern Attorney’s Office (Fiscalía
Metropolitana Centro Norte) is also investigating various criminal complaints filed against various parties to the Cascading
Companies Proceedings. The SII requested payment of taxes by the Cascading Companies, and the Cascading Companies filed a complaint
with the tax courts.



If, for any reason, the Company is unable
to differentiate itself from the named defendants, such failure could have a material adverse effect on the Company’s market
reputation and commercial dealings. Furthermore, we cannot assure you that a non-appealable ruling in connection with the Cascading
Companies Proceedings or the investigations of the High Complexity Crimes Unit or the SII that is adverse to Mr. Ponce or Mr.
Contesse Fica will not have a material adverse effect on our market reputation, commercial dealings and the price of our securities,
or that the Cascading Companies will not sell shares of the Company or vote to increase the dividends we pay to our shareholders.



We identified a material weakness in
our internal controls over payments directed by the office of the former Chief Executive Officer



In the past, our management determined that
the Company did not maintain effective control over payments directed by the office of the former CEO. This determination was
reported in our annual report for the year ended December 31, 2014 on Form 20-F, filed with the SEC on May 18, 2015.



9







We believe we have taken the necessary steps
to remediate the identified material weakness and enhance our internal controls. However, any failure to maintain effective internal
control over financial reporting could (i) result in a material misstatement in our financial reporting or financial statements
that would not be prevented or detected, (ii) cause us to fail to meet our reporting obligations under applicable securities laws
or (iii) cause investors to lose confidence in our financial reporting or financial statements, the occurrence of any of which
could materially and adversely affect our business, financial condition, cash flows, results of operations and the prices of our
securities.



Volatility of world fertilizer and chemical
prices and changes in production capacities could affect our business, financial condition and results of operations



The prices of our products are determined
principally by world prices, which, in some cases, have been subject to substantial volatility in recent years. World fertilizer
and chemical prices vary depending upon the relationship between supply and demand at any given time. Supply and demand dynamics
for our products are tied to a certain extent to global economic cycles, and have been impacted by circumstances related to such
cycles. Furthermore, the supply of certain fertilizers or chemical products, including certain products that we provide, varies
principally depending on the production of the major producers, (including us) and their respective business strategies.



Since 2008, world prices of potassium-based
fertilizers (including some of our specialty plant nutrients and potassium chloride) have fluctuated as a result of the broader
global economic and financial conditions. Although prices of potassium-based fertilizers stabilized in 2009 after the conclusion
of important contract negotiations between major producers and buyers, during the second half of 2013, potassium prices declined
as a result of an unexpected announcement made by the Russian company Uralkali (“Uralkali”) that it was terminating
its participation in Belarus Potash Corporation (“BPC”). As a result of the termination of Uralkali’s participation
in BPC, there was increased price competition in the market. In addition, in 2016, we observed lower pricing of contracts between
Chinese purchasers and major potash producers, which increased volatility in the price of fertilizers. The average price for our
potassium chloride and potassium sulfate business line was approximately 24% lower in 2016 compared to 2015. Our sales volumes
for this business line were approximately 24% higher in 2016 compared to 2015. We cannot assure you that potassium-based fertilizer
prices and sales volumes will not decline in the future.



Iodine prices followed an upward trend beginning
at the end of 2008 and continuing through 2012, reaching an average price of approximately US$53 per kilogram in 2012, over 40%
higher than average prices in 2011. During the following years, supply growth outpaced demand growth, causing a decline in iodine
prices. We obtained an average price for iodine of approximately US$23 per kilogram in 2016, approximately 19% less than average
prices obtained in 2015. We cannot assure you that iodine prices or sales volumes will not continue to decline in the future.



As a result of events in global markets during
2009, demand for lithium carbonate declined, causing a decrease in lithium prices and sales volumes. In September 2009, we announced
a 20% reduction in lithium carbonate and lithium hydroxide prices as a means of stimulating demand. As a result, in 2010 we observed
demand recovery in the lithium carbonate market, and this upward trend has continued over the last few years, driven mostly by
an increase in demand related to battery use. In 2016, demand growth was accompanied by an increase in supply that was lower than
expected, and as a result, average prices for this business line increased approximately 80% compared to 2015. We cannot assure
you that lithium prices and sales volumes will not decline in the future.



We expect that prices for the products we
manufacture will continue to be influenced, among other things, by worldwide supply and demand and the business strategies of
major producers. Some of the major producers (including us) have increased or have the ability to increase production. As a result,
the prices of our products may be subject to substantial volatility. High volatility or a substantial decline in the prices or
sales volumes of one or more of our products could have a material adverse effect on our business, financial condition and results
of operations.



10







Our sales to emerging markets and expansion
strategy expose us to risks related to economic conditions and trends in those countries



We sell our products in more than 115 countries
around the world. In 2016, approximately 46% of our sales were made in emerging market countries: 12% in Latin America (excluding
Chile); 9% in Africa and the Middle East (excluding Israel); 8% in Chile and 16% in Asia and Oceania (excluding Australia, Japan,
New Zealand, South Korea and Singapore). We expect to expand our sales in these and other emerging markets in the future. In addition,
we may carry out acquisitions or joint ventures in jurisdictions in which we currently do not operate, relating to any of our
businesses or to new businesses in which we believe we may have sustainable competitive advantages. The results of our operations
and our prospects in other countries in which we establish operations will depend, in part, on the general level of political
stability and economic activity and policies in those countries. Future developments in the political systems or economies of
these countries or the implementation of future governmental policies in those countries, including the imposition of withholding
and other taxes, restrictions on the payment of dividends or repatriation of capital, the imposition of import duties or other
restrictions, the imposition of new environmental regulations or price controls or changes in relevant laws or regulations, could
have a material adverse effect on our business, financial condition and results of operations in those countries.



Our inventory levels may increase for
economic or operational reasons



In general, economic conditions or operational
factors can affect our inventory levels. At the end of 2016, our inventory levels were relatively high compared to prior years,
but lower than 2015. Higher inventories carry a financial risk due to increased need for cash to fund working capital and could
imply increased risk of loss of product. We cannot assure you that inventory levels will not continue to remain high or increase
further in the future. These factors could have a material adverse effect on our business, financial condition and results of
operations.



Our level of and exposure to unrecoverable
accounts receivable may significantly increase



Potentially negative effects of global economic
conditions on the financial condition of our customers may include the extension of the payment terms of our accounts receivable
and may increase our exposure to bad debt. While we have implemented certain safeguards, such as using credit insurance, letters
of credit and prepayment for a portion of sales, to minimize this risk, the increase in our accounts receivable coupled with the
financial condition of customers may result in losses that could have a material adverse effect on our business, financial condition
and results of operations.



New production of iodine or lithium
carbonate from current or new competitors in the markets in which we operate could adversely affect prices



In recent years, new and existing competitors
have increased the supply of iodine and lithium carbonate, which has affected prices for both products. Further production increases
could negatively impact prices. There is limited information on the status of new iodine or lithium carbonate production capacity
expansion projects being developed by current and potential competitors and, as such, we cannot make accurate projections regarding
the capacities of possible new entrants into the market and the dates on which they could become operational. If these potential
projects are completed in the short term, they could adversely affect market prices and our market share, which, in turn, could
have a material adverse effect on our business, financial condition and results of operations.



We have a capital expenditure program
that is subject to significant risks and uncertainties



Our business is capital intensive. Specifically,
the exploration and exploitation of reserves, mining and processing costs, the maintenance of machinery and equipment and compliance
with applicable laws and regulations require substantial capital expenditures. We must continue to invest capital to maintain
or to increase our exploitation levels and the amount of finished products we produce.



11







In addition, we require environmental permits
for our new projects. Obtaining permits in certain cases may cause significant delays in the execution and implementation of new
projects and, consequently, may require us to reassess the related risks and economic incentives. We cannot assure you that we
will be able to maintain our production levels or generate sufficient cash flow, or that we will have access to sufficient investments,
loans or other financing alternatives, to continue our activities at or above present levels, or that we will be able to implement
our projects or receive the necessary permits required for them in time. Any or all of these factors may have a material adverse
effect on our business, financial condition and results of operations.



High raw materials and energy prices
could increase our production costs and cost of sales, and energy may become unavailable at any price



We rely on certain raw materials and various
energy sources (diesel, electricity, liquefied natural gas, fuel oil and others) to manufacture our products. Purchases of energy
and raw materials we do not produce constitute an important part of our cost of sales, approximately 13% in 2016. In addition,
we may not be able to obtain energy at any price if supplies are curtailed or otherwise become unavailable. To the extent we are
unable to pass on increases in the prices of energy and raw materials to our customers or we are unable to obtain energy, our
business, financial condition and results of operations could be materially adversely affected.



Our reserves estimates could be subject
to significant changes



Our caliche ore mining reserves estimates
are prepared by our own geologists and were most recently validated in January 2017 by Mr. Sergio Alarcón and Mr. Orlando
Rojas. Mr. Alarcón is a geologist with over 30 years of experience in the field. He is currently employed by SQM as Geology
Supervisor. Mr. Alarcón is a Competent Person (Persona Competente), as that term is defined under Chilean Law No.
20,235, known as the Law that Regulates the Position of Competent Person and Creates the Qualifying Committee for Competencies
in Mining Resources and Reserves (Ley que Regula la Figura de las Personas Competentes y Crea la Comisión Calificadora
de Competencias de Recursos y Reservas Mineras or “Competent Person Law”), and he is registered under No. 164
in the Public Registry of Competent Persons in Mining Resources and Reserves in accordance with such law and related regulations.
Mr. Orlando Rojas is a civil mining engineer and independent consultant. He is Partner and Chief Executive Officer of the company
EMI-Ingenieros y Consultores S.A., whose offices are located at Renato Sánchez No. 3357, Las Condes, Santiago, Chile. He
is a member of the Institute of Mining Engineers and is registered under No. 118 in the Public Registry of Competent Persons in
Mining Resources and Reserves in accordance with the Competent Person Law and related regulations. He has worked as a mining engineer
for 39 years since graduating from university, including more than 33 years working on estimates for reserves and resources.



Our Salar de Atacama brine mining reserve
estimates are prepared by our own hydrogeologists and geologists and were most recently validated in March 2017 by Mr. Álvaro
Henríquez and Mr. Orlando Rojas. Mr. Henríquez is a geologist with more than ten years of experience in the field
of hydrogeology. He is currently employed by SQM as Superintendent of Geology, in the Salar Hydrogeology department. He is a Competent
Person and is registered under No. 226 in the Public Registry of Competent Persons in Mining Resources and Reserves, in accordance
with the Competent Person Law and related regulations. As a hydrogeologist, he has evaluated multiple brine-based projects and
has experience evaluating resources and reserves.



Estimation methods involve numerous uncertainties
as to the quantity and quality of the reserves, and reserve estimates could change upwards or downwards. In addition, our reserve
estimates are not subject to review by external geologists or an external auditing firm. A downward change in the quantity and/or
quality of our reserves could affect future volumes and costs of production and therefore have a material adverse effect on our
business, financial condition and results of operations.



12







Quality standards in markets in which
we sell our products could become stricter over time



In the markets in which we do business, customers
may impose quality standards on our products and/or governments may enact stricter regulations for the distribution and/or use
of our products. As a result, if we cannot meet such new standards or regulations, we may not be able to sell our products. In
addition, our cost of production may increase in order to meet any such newly imposed or enacted standards or regulations. Failure
to sell our products in one or more markets or to important customers could materially adversely affect our business, financial
condition and results of operations.



Chemical and physical properties of
our products could adversely affect their commercialization



Since our products are derived from natural
resources, they contain inorganic impurities that may not meet certain customer or government standards. As a result, we may not
be able to sell our products if we cannot meet such requirements. In addition, our cost of production may increase in order to
meet such standards. Failure to meet such standards could materially adversely affect our business, financial condition and results
of operations if we are unable to sell our products in one or more markets or to important customers in such markets.



Our business is subject to many operating
and other risks for which we may not be fully covered under our insurance policies



Our facilities and business operations in
Chile and abroad are insured against losses, damage or other risks by insurance policies that are standard for the industry and
that would reasonably be expected to be sufficient by prudent and experienced persons engaged in businesses similar to ours.



We may be subject to certain events that may
not be covered under our insurance policies, which could have a material adverse effect on our business, financial condition and
results of operations. Additionally, as a result of major earthquakes and unexpected rains and flooding in Chile, as well as other
natural disasters worldwide, conditions in the insurance market have changed and may continue to change in the future, and as
a result, we may face higher premiums and reduced coverage, which could have a material adverse effect on our business, financial
condition and results of operations.



Changes in technology or other developments
could result in preferences for substitute products



Our products, particularly iodine, lithium
and their derivatives, are preferred raw materials for certain industrial applications, such as rechargeable batteries and LCDs.
Changes in technology, the development of substitute raw materials or other developments could adversely affect demand for these
and other products which we produce. In addition, other alternatives to our products may become more economically attractive as
global commodity prices shift. Any of these events could have a material adverse effect on our business, financial condition and
results of operations.



We are exposed to labor strikes and
labor liabilities that could impact our production levels and costs



Over 95% of our employees are employed in
Chile, of which approximately 65% were represented by 22 labor unions as of December 31, 2016. During 2016, we renegotiated collective
labor contracts with individual unions one year before the expiration of such contracts. During 2017, we expect to renegotiate
collective labor contracts with three unions. Our collective labor contracts with 16 unions, representing 80% of the unionized
workers, will expire in 2019. Our collective labor contracts with five unions, representing 20% of the unionized workers will
expire in 2020. We are exposed to labor strikes and illegal work stoppages that could impact our production levels. If a strike
or illegal work stoppage occurs and continues for a sustained period of time, we could be faced with increased costs and even
disruption in our product flow that could have a material adverse effect on our business, financial condition and results of operations.



13







Chilean Law No. 20,123, known as the Subcontracting
Law, provides that when a serious workplace accident occurs, the company in charge of the workplace must halt work at the site
where the accident took place until authorities from either the National Geology and Mining Service (Servicio Nacional de Geología
y Minería or “Sernageomin”), the Labor Board (Dirección del Trabajo or “Labor Board”),
or the National Health Service (Servicio Nacional de Salud), inspect the site and prescribe the measures such company must
take to minimize the risk of similar accidents taking place in the future. Work may not be resumed until the respective company
has taken the prescribed measures, and the period of time before work may be resumed may last for a number of hours, days, or
longer. The effects of this law could have a material adverse effect on our business, financial condition and results of operations.



On September 8, 2016, Chilean Law No. 20,940
was published and modified the Labor Code by introducing, among other things, changes to the formation of trade unions, the election
of inter-company union delegates, the presence of women on union boards, anti-union practices and related sanctions, and collective
negotiations. Due to these changes to the labor regulations, we may face an increase in our expenses that may have a significant
adverse effect on our business, financial condition, and results of operations.



Lawsuits and arbitrations could adversely
impact us



We are party to a range of lawsuits and arbitrations
involving different matters as described in Note 19.1 of our Consolidated Financial Statements and “Item 8.A. Legal Proceedings”.
Although we intend to defend our positions vigorously, our defense of these actions may not be successful. Adverse judgments or
settlements in these lawsuits may have a material adverse effect on our business, financial condition and results of operations.
In addition, our strategy of being a world leader includes entering into commercial and production alliances, joint ventures and
acquisitions to improve our global competitive position. As these operations increase in complexity and are carried out in different
jurisdictions, we might be subject to legal proceedings that, if settled against us, could have a material adverse effect on our
business, financial condition and results of operations.



We have operations in multiple jurisdictions
with differing regulatory, tax and other regimes



We operate in multiple jurisdictions with
complex regulatory environments that are subject to different interpretations by companies and respective governmental authorities.
These jurisdictions may have different tax codes, environmental regulations, labor codes and legal framework, which adds complexity
to our compliance with these regulations. Any failure to comply with such regulations could have a material adverse effect on
our business, financial condition and results of operations.



Environmental laws and regulations could
expose us to higher costs, liabilities, claims and failure to meet current and future production targets



Our operations in Chile are subject to national
and local regulations relating to environmental protection. In accordance with such regulations, we are required to conduct environmental
impact studies or statements before we conduct any new projects or activities or significant modifications of existing projects
that could impact the environment or the health of people in the surrounding areas. We are also required to obtain an environmental
license for certain projects and activities. The Environmental Evaluation Service (Servicio de Evaluación Ambientalor “Environmental Evaluation Service”) evaluates environmental impact studies submitted for its approval. The
public, government agencies or local authorities may review and challenge projects that may adversely affect the environment,
either before these projects are executed or once they are operating, if they fail to comply with applicable regulations. In order
to ensure compliance with environmental regulations, Chilean authorities may impose fines up to approximately US$9 million per
infraction, revoke environmental permits or temporarily or permanently close facilities, among other enforcement measures.



14







Chilean environmental regulations have become
increasingly stringent in recent years, both with respect to the approval of new projects and in connection with the implementation
and development of projects already approved, and we believe that this trend is likely to continue. Given public interest in environmental
enforcement matters, these regulations or their application may also be subject to political considerations that are beyond our
control.



We regularly monitor the impact of our operations
on the environment and on the health of people in the surrounding areas and have, from time to time, made modifications to our
facilities to minimize any adverse impact. Future developments in the creation or implementation of environmental requirements
or their interpretation could result in substantially increased capital, operation or compliance costs or otherwise adversely
affect our business, financial condition and results of operations.



On June 6, 2016, the Superintendence of the
Environment filed charges against SQM S.A. regarding the operations at Nueva Victoria for possible non-compliance with RCA No.
890/2010. The charges related to certain variables of a monitoring plan and to the implementation of a mitigation measure considered
in the respective environmental impact study.



On November 28, 2016, the Superintendence
of the Environment filed charges against SQM Salar S.A. regarding possible non-compliance with RCA No. 226/2006 as a result of
the company’s operations at Salar de Atacama. The charges referred to certain aspects of the monitoring and contingency
plans, and the condition of a group of trees in the Camar sector considered as a part of the environmental monitoring.



For both cases, we have presented compliance
programs that detail the actions and commitments we will take to resolve the issues raised by the environmental authority. The
Superintendence of the Environment is reviewing both compliance programs and will release an opinion on them.



The success of our current investments at
the Salar de Atacama and Nueva Victoria is dependent on the behavior of the ecosystem variables being monitored over time. If
the behavior of these variables in future years does not meet environmental requirements, our operation may be subject to important
restrictions by the authorities on the maximum allowable amounts of brine and water extraction.



Our future development depends on our ability
to sustain future production levels, which requires additional investments and the submission of the corresponding environmental
impact studies or statements. If we fail to obtain approval or required environmental licenses, our ability to maintain production
at specified levels will be seriously impaired, thus having a material adverse effect on our business, financial condition and
results of operations.



In addition, our worldwide operations are
subject to international and other local environmental regulations. Since environmental laws and regulations in the different
jurisdictions in which we operate may change, we cannot guarantee that future environmental laws, or changes to existing environmental
laws, will not materially adversely impact our business, financial condition and results of operations.



Our water supply could be affected by
geological changes or climate change



Our access to water may be impacted by changes
in geology, climate change or other natural factors, such as wells drying up or reductions in the amount of water available in
the wells or rivers from which we obtain water, that we cannot control. Any such change may have a material adverse effect on
our business, financial condition and results of operations.



15







Any loss of key personnel may materially
and adversely affect our business



Our success depends in large part on the skills,
experience and efforts of our senior management team and other key personnel. The loss of the services of key members of our senior
management or employees with critical skills could have a negative effect on our business, financial condition and results of
operations. If we are not able to attract or retain highly skilled, talented and qualified senior managers or other key personnel,
our ability to fully implement our business objectives may be materially and adversely affected.



Risks Relating to Financial Markets



Currency fluctuations may have a negative
effect on our financial performance



We transact a significant portion of our business
in U.S. dollars, and the U.S. dollar is the currency of the primary economic environment in which we operate. In addition, the
U.S. dollar is our functional currency for financial statement reporting purposes. A significant portion of our costs, however,
is related to the Chilean peso. Therefore, an increase or decrease in the exchange rate between the Chilean peso and the U.S.
dollar would affect our costs of production. The Chilean peso has been subject to large devaluations and revaluations in the past
and may be subject to significant fluctuations in the future. As of December 31, 2016, the Chilean peso exchange rate was Ch$669.47
per U.S. dollar, while as of December 31, 2015, the Chilean peso exchange rate was Ch$710.16 per U.S. dollar. The Chilean peso
therefore appreciated against the U.S. dollar by 6.0% in 2016. As of April 20, 2017, the Observed Exchange Rate was Ch$647.68
per U.S. dollar.



As an international company operating in several
other countries, we also transact business and have assets and liabilities in other non-U.S. dollar currencies, such as, among
others, the euro, the South African rand, the Mexican peso, the Chinese yuan, the Thai baht and the Brazilian real. As a result,
fluctuations in the exchange rates of such foreign currencies to the U.S. dollar may have a material adverse effect on our business,
financial condition and results of operations.



Interest rate fluctuations may have
a material impact on our financial performance



We have outstanding short and long-term debt
that bears interest based on LIBOR, plus a spread. Since we are currently hedging only a portion of these liabilities into fixed
rates, we are exposed to interest rate risk relating to LIBOR fluctuations. As of December 31, 2016, approximately 2% our financial
debt had LIBOR-based pricing that was not hedged into fixed rates. A relative increase in the rate could materially impact our
business, financial condition and results of operations.



Risks Relating to Chile



As we are a company based in Chile,
we are exposed to Chilean political risks



Our business, results of operations, financial
condition and prospects could be affected by changes in policies of the Chilean government, other political developments in or
affecting Chile, legal changes in the standards or administrative practices of Chilean authorities or the interpretation of such
standards and practices, over which we have no control.



Changes in regulations regarding, or
any revocation or suspension of our concessions could negatively affect our business



Any changes to regulations to which we are
subject or adverse changes to our concession rights, or a revocation or suspension of our concessions, could have a material adverse
effect on our business, financial condition and results of operations.



16







Changes in mining or port concessions
could affect our operating costs



We conduct our mining operations, including
brine extraction, under exploitation and exploration concessions granted in accordance with provisions of the Chilean constitution
and related laws and statutes. Our exploitation concessions essentially grant a perpetual right (with the exception of the Salar
de Atacama rights, which have been leased to us until 2030) to conduct mining operations in the areas covered by the concessions,
provided that we pay annual concession fees. Our exploration concessions permit us to explore for mineral resources on the land
covered thereby for a specified period of time and to subsequently request a corresponding exploitation concession. Our subsidiary
SQM Salar, as leaseholder, holds exclusive and temporary rights over the mineral resources in an area covering approximately 140,000
hectares of land in the Salar de Atacama in northern Chile, of which SQM Salar is entitled to exploit the mineral resources of
81,920 hectares. These rights are owned by Corfo and leased to SQM Salar pursuant to the Lease Agreement between Corfo and SQM
Salar. Corfo may not unilaterally modify the Lease and Project Agreements, and the rights to exploit the mineral substances cannot
be transferred. The Lease Agreement establishes that SQM Salar is responsible for making quarterly lease payments to Corfo, maintaining
Corfo’s rights over the mining exploitation concessions, and making annual payments to the Chilean government for such concession
rights. The Lease Agreement expires on December 31, 2030. Furthermore, under the regulations of the Chilean Nuclear and Energy
Commission (Comisión Chilena de Energía Nuclear or “CCHEN”), we are limited to 180,100 tons of
total lithium (958,672 tons of lithium carbonate equivalent) extraction in the aggregate for all periods. We are over halfway
through the term of the Lease Agreement and have extracted approximately 59% of the total accumulated extraction limit of lithium.
There can be no assurance that we will not reach the lithium extraction limit prior to the term of the lease agreement.



In August 2016, Corfo requested a second
arbitration proceeding, demanding (i) the early termination of the Project Contract signed between Corfo, SQM Potasio S.A.,
SQM Salar, and the Company, (ii) the dissolution of SQM Salar and (iii) the early termination of the Lease Agreement for
alleged breaches of the Project Contract. In addition, Corfo demanded SQM Salar return (i) the assets Corfo contributed to it
under a condition subsequent, (ii) the OMA mining properties and the aquifers included in the Lease Agreement, (iii) the
water rights granted to SQM Salar and (iv) the legal mining easements identified in the lawsuit. Finally, Corfo requested
that the defendants pay damages as a result of the breaches alleged in the lawsuit. The Company believes there is
insufficient evidence to demonstrate that the Project Contract has been breached. However, there can be no assurance that the
Company will prevail against Corfo or that other legal actions will not be taken by Corfo against the Company’s
interests See “—Risks Relating to our Business—An arbitration proceeding under the Lease Agreement for the
Salar de Atacama, if determined adversely to us, would materially adversely affect our business and operations.”



We also operate port facilities at Tocopilla,
Chile for the shipment of products and the delivery of raw materials pursuant to maritime concessions, which have been granted
under applicable Chilean laws and are normally renewable on application, provided that such facilities are used as authorized
and annual concession fees are paid.



Any significant changes to any of these concessions
could have a material adverse effect on our business, financial condition and results of operations.



Changes in water rights laws and other
regulations could affect our operating costs



We hold water use rights that are key to our
operations. These rights were obtained from the Chilean Water Authority (Dirección General de Aguas) for supply
of water from rivers and wells near our production facilities, which we believe are sufficient to meet current operating requirements.
However, the Chilean water rights code (Código de Aguas or the “Water Code”) is subject to changes,
which could have a material adverse impact on our business, financial condition and results of operations. For example, a series
of bills are currently being discussed at the Chilean National Congress that seek desalinate seawater for use in mining production
processes, amend the Mining Code for water use in mining operations, amend the Political Constitution on water and introduce changes
to the regulatory framework governing the terms of inspection and sanction of water. As a result, the amount of water that we
can actually use under our existing rights may be reduced or the cost of such use could increase. These and potential future changes
to the Water Code or other relevant regulations could have a material adverse effect on our business, financial condition and
results of operations.



17







The Chilean government could levy additional
taxes on corporations operating in Chile



In Chile, there is a royalty tax that is applied
to mining activities developed in the country.



Following the earthquake and tsunami in February
in 2010, the Chilean government raised the corporate income tax rate in order to pay for reconstruction. Such legislation increased
the general corporate tax rate from its historic rate of 17.0% to 20.0% for the income accrued in 2011, which was declared and
paid in 2012. In 2012, Law No. 20,630 introduced new amendments to existing tax legislation. There can be no assurance that this
legislation will not be modified in the future.



On September 29, 2014, Law No. 20,780 was
published (the “Tax Reform”), introducing significant changes to the Chilean taxation system and strengthening the
powers of the SII to control and prevent tax avoidance. Subsequently, on February 8, 2016, Law No. 20,899 that simplifies the
income tax system and modifies other legal tax provisions was published. As a result of these reforms, open stock corporations
like SQM are subject to the partially integrated shareholder tax regime (sistema parcialmente integrado). The corporate tax rate
applicable to us increased to 24% in 2016. It will increase to 25.5% in 2017 and increase to a maximum rate of 27% in 2018.



Under the partially integrated shareholder
taxation regime, shareholders bear the tax on dividends upon payment, but they will only be permitted to credit against such shareholder
taxes a portion of the Chilean corporate tax paid by us on our earnings, unless the shareholder is resident in a country with
a tax treaty in force with Chile or signed with Chile prior to January 1, 2017, whether or not in force. In that case, 100% of
the Chilean corporate tax paid by us may be credited against the final taxes at the shareholder level.



As a result, foreign shareholders resident
in a non-treaty jurisdiction will be subject to a higher effective tax rate than residents of treaty jurisdictions. There is a
temporary rule in effect from January 1, 2017 through December 31, 2019 that treaty jurisdictions for this purpose will include
jurisdictions with tax treaties signed with Chile prior to January 1, 2017, whether or not such treaties are in force. This is
currently the status of the treaty signed between Chile and United States.



The Tax Reform tax increase prompted a US$52.3
million increase in our deferred tax liabilities as of December 31, 2014. In accordance with IAS 12, the effects generated by
the change in the income tax rate approved by Law No. 20.780 on income and deferred taxes were applied to the income statement.
For purposes of the Company’s statutory consolidated financial statements filed with the SVS, in accordance with the instructions
issued by the SVS in its circular 856 of October 17, 2014, the effects generated by the change in the income tax rate were accounted
for as retained earnings. The amount charged to equity as of December 31, 2014 was US$52.3 million, thereby giving rise to a difference
of US$52.3 million in profit for the year and income tax expense as presented in the Company’s Audited Consolidated Financial
Statements compared with profit and income tax expense as presented in the Company’s statutory consolidated financial statements
filed with the SVS.



Given the difference in accounting treatments
between IFRS and the instructions of the SVS, we will continue to analyze the effects of the Tax Reform on our financial statements
and reporting obligations, and we cannot be sure of how our future financial statements will reflect these changes.



In addition, the Tax Reform may have other
material adverse effects on our business, financial condition and results of operations. Likewise, we cannot assure you that the
manner in which the Royalty Law or the corporate tax rate are interpreted and applied will not change in the future. The Chilean
government may decide to levy additional taxes on mining companies or other corporations in Chile. Such changes could have a material
adverse effect on our business, financial condition and results of operations.



18







Ratification of the International Labor
Organization’s Convention 169 concerning indigenous and tribal peoples might affect our development plans



Chile, a member of the International Labor
Organization (“ILO”), has ratified the ILO’s Convention 169 (the “Indigenous Rights Convention”)
concerning indigenous and tribal people. The Indigenous Rights Convention established several rights for indigenous people and
communities. Among other rights, the Indigenous Rights Convention states that (i) indigenous groups should be notified and consulted
prior to the development of any project on land deemed indigenous, although veto rights are not mentioned and (ii) indigenous
groups have, to the extent possible, a stake in benefits resulting from the exploitation of natural resources in indigenous land.
The extent of these benefits has not been defined by the Chilean government. The Chilean government has addressed item (i) above
through Supreme Decree No. 66, issued by the Social Development Ministry. This decree requires government entities to consult
indigenous groups that may be directly affected by the adoption of legislative or administrative measures, and it also defines
criteria for the projects or activities that must be reviewed through the environmental evaluation system that also require such
consultation. To the extent that the new rights outlined in the Indigenous Rights Convention become laws or regulations in Chile,
they could affect the development of our investment projects in lands that have been defined as indigenous, which could have a
material adverse effect on our business, financial condition and results of operations.



Chile is located in a seismically active
region



Chile is prone to earthquakes because it is
located along major fault lines. The most recent major earthquake in Chile occurred offshore in 2015 and had a magnitude of 8.3
on the Richter scale. There were also earthquakes in 2014 and 2010 that caused substantial damage to some areas of the country.
Chile has also experienced volcanic activity. A major earthquake or a volcanic eruption could have significant negative consequences
for our operations and for the general infrastructure, such as roads, rail, and access to goods, in Chile. Although we maintain
industry standard insurance policies that include earthquake coverage, we cannot assure you that a future seismic or volcanic
event will not have a material adverse effect on our business, financial condition and results of operations.



Risks Relating to our Shares and to
our ADSs



The price of our ADSs and the U.S. dollar
value of any dividends will be affected by fluctuations in the U.S. dollar/Chilean peso exchange rate



Chilean trading in the shares underlying our
ADSs is conducted in Chilean pesos. The depositary will receive cash distributions that we make with respect to the shares in
Chilean pesos. The depositary will convert such Chilean pesos to U.S. dollars at the then prevailing exchange rate to make dividend
and other distribution payments in respect of ADSs. If the value of the Chilean peso falls relative to the U.S. dollar, the value
of the ADSs and any distributions to be received from the depositary will decrease.



Developments in other emerging markets
could materially affect the value of our ADSs and our shares



The Chilean financial and securities markets
are, to varying degrees, influenced by economic and market conditions in other emerging market countries or regions of the world.
Although economic conditions are different in each country or region, investor reaction to developments in one country or region
can have significant effects on the securities of issuers in other countries and regions, including Chile and Latin America. Events
in other parts of the world may have a material effect on Chilean financial and securities markets and on the value of our ADSs
and our shares.



19







The volatility and low liquidity of
the Chilean securities markets could affect the ability of our shareholders to sell our ADSs



The Chilean securities markets are substantially
smaller, less liquid and more volatile than the major securities markets in the United States. The volatility and low liquidity
of the Chilean markets could increase the price volatility of our ADSs and may impair the ability of a holder to sell our ADSs
into the Chilean market in the amount and at the price and time he wishes to do so.



Our share or ADS price may react negatively
to future acquisitions and investments



As world leaders in our core businesses, part
of our strategy is to look for opportunities that will allow us to consolidate and strengthen our competitive position in jurisdictions
in which we currently do not operate. Pursuant to this strategy, we may carry out acquisitions or joint ventures relating to any
of our businesses or to new businesses in which we believe we may have sustainable competitive advantages. Depending on our capital
structure at the time of such acquisitions or joint ventures, we may need to raise significant debt and/or equity which will affect
our financial condition and future cash flows. Any change in our financial condition could affect our results of operations, negatively
impacting our share or ADS price.



ADS holders may be unable to enforce
rights under U.S. securities laws



Because we are a Chilean company subject to
Chilean law, the rights of our shareholders may differ from the rights of shareholders in companies incorporated in the United
States, and ADS holders may not be able to enforce or may have difficulty enforcing rights currently in effect under U.S. federal
or state securities laws.



Our Company is an open stock corporation incorporated
under the laws of the Republic of Chile. Most of our directors and officers reside outside the United States, principally in Chile.
All or a substantial portion of the assets of these persons are located outside the United States. As a result, if any of our
shareholders, including holders of our ADSs, were to bring a lawsuit against our officers or directors in the United States, it
may be difficult for them to effect service of legal process within the United States upon these persons. Likewise, it may be
difficult for them to enforce judgments obtained in United States courts based upon the civil liability provisions of the federal
securities laws in the United States against them in the United States.



In addition, there is no treaty between the
United States and Chile providing for the reciprocal enforcement of foreign judgments. However, Chilean courts have enforced judgments
rendered in the United States, provided that the Chilean court finds that the United States court respected basic principles of
due process and public policy. Nevertheless, there is doubt as to whether an action could be brought successfully in Chile in
the first instance on the basis of liability based solely upon the civil liability provisions of the United States federal securities
laws.



As preemptive rights may be unavailable
for our ADS holders, they have the risk of their holdings being diluted if we issue new stock



Chilean laws require companies to offer their
shareholders preemptive rights whenever issuing new shares of capital stock so shareholders can maintain their existing ownership
percentage in a company. If we increase our capital by issuing new shares, a holder may subscribe for up to the number of shares
that would prevent dilution of the holder’s ownership interest.



If we issue preemptive rights, United States
holders of ADSs would not be able to exercise their rights unless a registration statement under the Securities Act were effective
with respect to such rights and the shares issuable upon exercise of such rights or an exemption from registration were available.
We cannot assure holders of ADSs that we will file a registration statement or that an exemption from registration will be available.
We may, in our absolute discretion, decide not to prepare and file such a registration statement. If our holders were unable to
exercise their preemptive rights because we did not file a registration statement, the depositary bank would attempt to sell their
rights and distribute the net proceeds from the sale to them, after deducting the depositary’s fees and expenses. If the
depositary could not sell the rights, they would expire and holders of ADSs would not realize any value from them. In either case,
ADS holders’ equity interest in us would be diluted in proportion to the increase in our capital stock.



20







If we were classified as a Passive Foreign
Investment Company by the U.S. Internal Revenue Service, there could be adverse consequences for U.S. investors



We believe that we were not classified as
a Passive Foreign Investment Company (“PFIC”) for 2016. Characterization as a PFIC could result in adverse U.S. tax
consequences to you if you are a U.S. investor in our shares or ADSs. For example, if we (or any of our subsidiaries) are a PFIC,
our U.S. investors may become subject to increased tax liabilities under U.S. tax laws and regulations and will become subject
to burdensome reporting requirements. The determination of whether or not we (or any of our subsidiaries or portfolio companies)
are a PFIC is made on an annual basis and will depend on the composition of our (or their) income and assets from time to time.
See “Item 10.E. Taxation—United States Tax Considerations.”



Changes in Chilean tax regulations could
have adverse consequences for U.S. investors



Currently cash dividends paid by us to foreign
shareholders are subject to a 35% Chilean withholding tax. When the Company pays a corporate income tax on the income from which
the dividend is paid, known as a “First Category Tax”, a credit for the full amount of the First Category Tax effectively
reduces the rate of Withholding Tax. Changes in Chilean tax regulations could have adverse consequences for U.S. investors. See
“Item 3.D. Risk Factors—Risks Relating to Chile—The Chilean Government Could Levy Additional Taxes on Corporations
Operating in Chile” and “Item 10.E. Taxation—Chilean Tax Considerations.”



ITEM 4.    INFORMATION ON THE
COMPANY



4.A.    History
and Development of the Company



Historical
Background



Sociedad Química y Minera de Chile
S.A. is an open stock corporation organized under the laws of the Republic of Chile. We were constituted by public deed issued
on June 17, 1968 by the Notary Public of Santiago, Mr. Sergio Rodríguez Garcés. Our existence was approved by Decree
No. 1,164 of June 22, 1968 of the Ministry of Finance, and we were registered on June 29, 1968 in the Registry of Commerce of
Santiago, on page 4,537 No. 1,992. Our headquarters is located at El Trovador 4285, Fl. 6, Las Condes, Santiago, Chile. Our telephone
number is +56 2 2425-2000.



Commercial exploitation of the caliche ore
deposits in northern Chile began in the 1830s, when sodium nitrate was extracted from the ore for use in the manufacturing of
explosives and fertilizers. By the end of the nineteenth century, nitrate production had become the leading industry in Chile,
and the country was the world’s leading supplier of nitrates. The accelerated commercial development of synthetic nitrates
in the 1920s and the global economic depression in the 1930s caused a serious contraction of the Chilean nitrate business, which
did not recover significantly until shortly before the Second World War. After the war, the widespread commercial production of
synthetic nitrates resulted in a further contraction of the natural nitrate industry in Chile, which continued to operate at depressed
levels into the 1960s.



21







We were formed in 1968 through a joint venture
between Compañía Salitrera Anglo Lautaro S.A. (“Anglo Lautaro”) and Corfo, a Chilean government entity.
Three years after our formation, in 1971, Anglo Lautaro sold all of its shares to Corfo, and we were wholly owned by the Chilean
Government until 1983. In 1983, Corfo began a process of privatization by selling our shares to the public and subsequently listing
such shares on the Santiago Stock Exchange. By 1988, all of our shares were publicly owned. Our Series B ADSs have traded on the
NYSE under the ticker symbol “SQM” since 1993. We accessed international capital markets again for the issuance of
additional ADSs in 1995 and 1999. On December 21, 2006, two groups of shareholders, the “Pampa Group” (which includes
the company Sociedad de Inversiones Pampa Calichera S.A. (“Pampa Calichera”) and its related companies, Inversiones
Global Mining Chile Limitada and Potasios de Chile S.A.) and Kowa Group (which includes the companies Kowa Company Ltd., Inversiones
La Esperanza (Chile) Limitada, Kochi S.A and La Esperanza Delaware Corporation) signed a joint agreement and became the controlling
group of SQM.



Since our inception, we have produced nitrates
and iodine, which are obtained from the caliche ore deposits in northern Chile. In 1985, we began to use heap leaching processes
to extract nitrates and iodine, and in 1986 we started to produce potassium nitrate at our Coya Sur facility. Between 1994 and
1999, we invested approximately US$300 million in the development of the Salar de Atacama project in northern Chile, which enabled
us to produce potassium chloride, lithium carbonate, potassium sulfate and boric acid.



From 2000 through 2004, we principally consolidated
the investments carried out in the preceding five years. We focused on reducing costs and improving efficiencies throughout the
organization. In addition, in 2001, we signed a commercial distribution agreement with the Norwegian company Yara International
ASA, in order to take advantage of cost synergies in the Specialty Plant Nutrition business line.



Starting in 2005, we began strengthening our
leadership position in our core businesses through a combination of capital expenditures and advantageous acquisitions and divestitures.
Our acquisitions have included the Kemira Emirates Fertiliser Company (“Kefco”) in Dubai in 2005 and the iodine business
of Royal DSM N.V. (“DSM”) in 2006. We also entered into a number of joint ventures, including a joint venture with
Migao Corporation (“Migao”), signed in 2008, for the production of potassium nitrate, and SQM VITAS, our joint venture
with the French Roullier Group. Pursuant to the latter joint venture, in 2010, we launched a new line of soluble phosphate products,
and in 2012 we built new plants for the production of water-soluble fertilizers in Brazil (Candeias), Peru and South Africa (Durban).
We have also sold: (i) Fertilizantes Olmeca, our former Mexican subsidiary, in 2006, (ii) our stake in Impronta S.R.L., our former
Italian subsidiary, in 2007 and (iii) our former butyllithium plant located in Houston, Texas, in 2008. These sales allowed us
to concentrate our efforts on our core products.



The capital expenditure program has allowed
us to add new products to our product lines and increase the production capacity of our existing products. In 2005, we started
production of lithium hydroxide at a plant in the Salar del Carmen, near the city of Antofagasta in the north of Chile. In 2007,
we completed the construction of a new prilling and granulating plant for nitrates in Coya Sur. In 2011, we completed expansions
of our lithium carbonate capacity, achieving 48,000 metric tons of capacity per year. Since 2010, we have continued to expand
our production capacity of potassium products in our operations in the Salar de Atacama. In 2011, we completed the construction
of a new potassium nitrate facility in Coya Sur, increasing our overall production capacity of potassium nitrate by 300,000 metric
tons per year. In 2013, we completed expansions in the production capacity of our iodine plants in Nueva Victoria. Our capital
expenditure program also includes exploration for metallic minerals. Our exploration efforts have led to discoveries that in some
cases may result in sales of the discovery and the generation of royalty income in the future. Within this context, in 2013 we
sold our royalty rights to the Antucoya mining project to Antofagasta Minerals. In 2013 we also opened a trading office in Thailand.



In 2014, we invested in the development of
new extraction sectors and production increases in both nitrates and iodine at Nueva Victoria, reaching an approximate production
capacity (including the Iris facility) of 8,500 metric tons per year of iodine at the facility. We also issued a bond in the international
capital markets for US$250 million, primarily to refinance existing indebtedness.



22







In 2015, we focused on increasing the efficiency
of our operations. Within this context, we announced a plan to restructure our iodine and nitrate operations. In an effort to
take advantage of our highly efficient production facilities at our Nueva Victoria site, we decided to suspend the mining and
nitrate operations and reduce iodine production at our Pedro de Valdivia site. During the year, we increased our iodine production
capacity at Nueva Victoria to approximately 9,000 metric tons per year. Including Pedro de Valdivia and Nueva Victoria our effective
iodine capacity is approximately 10,000 metric tons per year.



In 2016, we entered into a 50/50 joint venture
with Lithium Americas to develop the Caucharí-Olaroz lithium project in the Jujuy province of Argentina. The project’s
production capacity is targeted at 50,000 tons per year of lithium carbonate equivalent. Under the current project timeline, we
expect to commission plant production by 2019. We also made a capital contribution of US$20 million to Elemental Minerals Limited
(“Elemental Minerals”), an Australian based company whose main assets are various potassium deposits in the Republic
of Congo. We invested approximately US$20 million in exchange for 18% of the company, and a right of first refusal for approximately
20% of the total potash production of Elemental Minerals. Following this transaction at the end of 2016, Elemental Minerals changed
its name to Kore Potash Limited. The State General Reserve Fund of Oman contributed US$20 million. These investments are not included
in the capital expenditure program amounts discussed in the section below. These investments were carried out with internal financing.



Capital
Expenditure Program



We regularly review different opportunities
to improve our production methods, reduce costs, increase production capacity of existing products and develop new products and
markets. Additionally, significant capital expenditures are required every year in order to sustain our production capacity. We
are focused on developing new products in response to identified customer demand, as well as new products that can be derived
as part of our existing production or other products that could fit our long-term development strategy. Our capital expenditures
during the past five years were mainly related to the organic growth and sustainability of our business, including the construction
of new facilities and the renovation of plants and equipment; during 2016, we begin new investment projects associated with our
lithium, potassium nitrate and iodine business lines. These investments were carried out with internal financing through our capital
expenditure program for investments in Chile.



Our capital expenditures for the years ended
December 31, 2016, 2015 and 2014 were as follows:



|(in millions of US$) |  | 2016 |       |  | 2015 |  |       | 2014 | 
|-------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- | 
|Capital expenditures |  |      | 131.3 |  |      |  | 111.3 |      | 



During 2016, we had total capital expenditures
of US$131.3 million, primarily related to:



| | · | Completion
                                         of the project related to the expansion of ponds at Nueva Victoria to increase the production
                                         of iodine and nitrates;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Capacity
                                         expansion projects related to our potassium nitrate production;
| | - | -----------------------------------------------------------------------------------------------------------------

| | · | Capacity
                                         expansion project related to our lithium hydroxide production;
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | Improvements
                                         in the open storage areas at the Port of Tocopilla;
| | - | ---------------------------------------------------------------------------------------------------------

| | · | General
                                         maintenance of all production units in order to ensure the fulfillment of production
                                         targets and the safety of all of our employees.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During 2015, we had total capital expenditures
of US$111.3 million, primarily related to:



| | · | expansion
                                         of ponds at Nueva Victoria in order to increase the production of iodine and nitrates;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



23







| | · | refining
                                         system at potassium nitrate plants;
| | - | -------------------------------------------------------------------------------------

| | · | exploration
                                         and construction of new wells to sustain production at the Salar de Atacama and
| | - | ------------------------------------------------------------------------------------------------------------------------------------

| | · | maintenance
                                         of production facilities in order to ensure production goals are met, as well as improvements
                                         in the open storage areas at the Port of Tocopilla.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During 2014, we had total capital expenditures
of US$112.1 million, primarily related to:



| | · | development
                                         of new extraction sectors and production increases for both nitrates and iodine at Nueva
                                         Victoria;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | investments
                                         aimed at maintaining and improving the quality of finished nitrate products;
| | - | ---------------------------------------------------------------------------------------------------------------------------------

| | · | exploration
                                         and construction of wells to sustain long-term production at the Salar de Atacama;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

| | · | consolidation
                                         of our corporate enterprise resource planning into SAP and
| | - | -----------------------------------------------------------------------------------------------------------------

| | · | maintenance
                                         across all production units in order to ensure fulfillment of production targets.
| | - | --------------------------------------------------------------------------------------------------------------------------------------



The Board of Directors has approved a capital
expenditures plan for 2017 of approximately US$170 million primarily focused on the maintenance of our production facilities in
order to strengthen our ability to meet our production goals and to increase lithium and nitrates production capacity. This amount
does not include an approximately US$100 million investment in the development of the Caucharí-Olaroz lithium project in
Argentina, which we expect to begin construction on, as planned, during the first half of 2017. In addition, we will begin the
engineering and preliminary supply purchases related to the potassium nitrate plant, and we will complete the construction of
a new lithium hydroxide plant. We do not expect that our 2017 capital investment program will require external financing. However,
we always have the option to access capital markets in order to optimize our financial position.



4.B. Business
Overview



The Company



We believe that we are the world’s largest
producer of potassium nitrate and iodine. We also produce specialty plant nutrients, iodine derivatives, lithium and its derivatives,
potassium chloride, potassium sulfate and certain industrial chemicals (including industrial nitrates and solar salts). Our products
are sold in over 115 countries through our worldwide distribution network, with 92% of our sales in 2016 derived from countries
outside Chile.



Our products are mainly derived from mineral
deposits found in northern Chile. We mine and process 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 our caliche ore deposits, we produce
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, we extract brines rich in potassium, lithium, sulfate and boron in order to produce potassium
chloride, potassium sulfate, lithium solutions and bischofite (magnesium chloride). We produce lithium carbonate and lithium hydroxide
at our plant near the city of Antofagasta, Chile, from the solutions brought from the Salar de Atacama. We market all of these
products through an established worldwide distribution network.



24







Our 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. 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 us 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, and, more recently, industrial nitrates are being used in concentrated solar
power plants as a means for energy storage. In addition, we complement our portfolio of plant nutrients through the buying and
selling of other commodity fertilizers for use mainly in Chile.



For the year ended December 31, 2016, we had
revenues of US$1,939.3 million, gross profit of US$611.0 million and profit attributable to controlling interests of US$278.3
million. Our worldwide market capitalization as of December 31, 2016 was approximately US$7.9 billion.



Specialty Plant Nutrition: We
produce four main types of specialty plant nutrients: potassium nitrate, sodium nitrate, sodium potassium nitrate and specialty
blends. Furthermore, we sell other specialty fertilizers including trading of third party products. All of these specialty plant
nutrients are used in either solid or liquid form mainly on high value crops such as vegetables, fruits and flowers. They are
widely used in crops that employ modern agricultural techniques such as hydroponics, green housing, fertigation (where fertilizer
is dissolved in water prior to irrigation) and foliar application. According to the type of use or application, our products are
primarily marketed under the following brands: UltrasolTM (fertigation), QropTM (open field application), SpeedfolTM
(foliar application) and AllganicTM (organic farming). 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 available in crystalline and prill form, allowing for multiple application methods. Crystalline potassium nitrate products
are ideal for application by fertigation and foliar sprays, and potassium nitrate prills are suitable for soil applications.



The needs of more sophisticated customers
are causing the industry to provide solutions rather than individual products. The advantages of our products, plus customized
specialty blends that meet specific needs along with the agronomic service provided, allow us to create plant nutrition solutions
that add value to crops through higher yields and better quality production. Because our products are derived from natural nitrate
compounds or natural potassium brines, they have certain advantages over synthetically produced fertilizers, including the presence
of certain beneficial trace elements, which makes them more attractive to customers who prefer products of natural origin. As
a result, specialty plant nutrients are sold at a premium price compared to commodity fertilizers.



Iodine and its Derivatives:We
believe that we are the world’s leading 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. We market iodine using
the brand QIodineTM.



Lithium and its Derivatives:
We are a leading producer of lithium carbonate, which is used in a variety of applications, including electrochemical materials
for batteries, frits for the ceramic and enamel industries, heat-resistant glass (ceramic glass), air conditioning chemicals,
continuous casting powder for steel extrusion, primary aluminum smelting process, pharmaceuticals and lithium derivatives. We
are also a leading supplier of lithium hydroxide, which is primarily used as an input for the lubricating greases industry and
for certain cathodes for batteries. We market lithium using the following brands: QLithiumCarbonateTM, QLithiumHydroxideTM
and QLubelithTM.



25







Potassium:We produce 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. We market potassium chloride using the brand QropTM MOP.



Industrial
Chemicals: We produce three industrial chemicals: sodium nitrate, potassium nitrate and potassium chloride. Sodium nitrate
is used primarily in the production of glass, explosives, and metal treatment. 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 and enamel industries.
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. We market our industrial chemicals using the following brands: QSodiumNitrateTM,
QPotassiumNitrateTM, and QPotassiumChlorideTM.



Other Products and Services:We
also sell other fertilizers and blends, some of which we do not produce. We are the largest company that produces and distributes
the three main potassium sources: potassium nitrate, potassium sulfate and potassium chloride.



The following table shows the percentage breakdown
of our revenues for 2016, 2015 and 2014 according to our product lines:



|                          |  | 2016 |     |   | 2015 |  |     | 2014 | 
|------------------------- |  | ---- | --- | - | ---- |  | --- | ---- | 
|Specialty Plant Nutrition |  |      | 32  | % |      |  | 38  | %    | 
|Iodine and Derivatives    |  |      | 12  | % |      |  | 15  | %    | 
|Lithium and Derivatives   |  |      | 27  | % |      |  | 13  | %    | 
|Potassium                 |  |      | 21  | % |      |  | 25  | %    | 
|Industrial Chemicals      |  |      | 5   | % |      |  | 6   | %    | 
|Other                     |  |      | 3   | % |      |  | 4   | %    | 
|Total                     |  |      | 100 | % |      |  | 100 | %    | 



Business Strategy



Our business strategy is to be a mining operator
that selectively integrates the production and sale of products, while efficiently supplying products to industries essential
for human development (e.g. food, health, technology). This strategy was built on the following six principles:



| | · | strengthen
                                         internal processes to ensure access to key resources required for the sustainability
                                         of the business;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | extend
                                         M1 (lean operations) to the entire organization to strengthen our cost position, increase
                                         quality and ensure safety;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | invest
                                         in the development of a specialty fertilizer market, including product differentiation,
                                         sales channel management and price optimization;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | recover
                                         the iodine market share, seek consolidation and vertical integration opportunities, and
                                         invest in the development of industrial nitrate applications;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | search
                                         and invest in lithium and potassium assets outside of Chile to leverage our operational
                                         capabilities and take advantage of the current lithium market appeal and ensure access
                                         to raw materials for our potassium nitrate production; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | seek
                                         diversification opportunities in gold, copper and zinc projects in the region to leverage
                                         our mining operating capabilities and provide business continuity to our exploration
                                         program.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



26







These principles are based on the
following four concepts:



| | · | build
                                         an organization with strategic clarity, inspirational leaders, responsible personnel
                                         and strong values;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | develop
                                         a strategic planning process that responds to the needs of our customers and market trends,
                                         while ensuring coordination between all segments of the business, including sales and
                                         operations;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | develop
                                         a robust risk control and mitigation process to actively manage our risk; and
| | - | ------------------------------------------------------------------------------------------------------------------------------

| | · | improve
                                         our stakeholder management to establish links with the community and communicate to Chile
                                         and worldwide our contribution to industries essential for human development.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We have identified market demand in each of
our major product lines, both within our existing customer base and in new markets, for existing products and for additional products
that can be produced from our natural resources. To take advantage of these opportunities, we have developed specific strategies
for each of our product lines.



Specialty Plant Nutrition

Our strategy in our specialty plant nutrition
business is to: (i) continue expanding our sales of natural nitrates by continuing to leverage the advantages of our specialty
products over commodity-type fertilizers; (ii) selectively expand by increasing our sales of higher margin specialty plant nutrients
based on potassium and natural nitrates, particularly soluble potassium nitrate and NPK blends; (iii) pursue investment opportunities
in complementary businesses to enhance our product portfolio, increase production, reduce costs, and add value to and improve
the marketing of our products; (iv) develop new specialty nutrient blends produced in our mixing plants that are strategically
located in or near our principal markets in order to meet specific customer needs; (v) focus primarily on the markets for plant
nutrients in soluble and foliar applications in order to establish a leadership position; (vi) further develop our global distribution
and marketing system directly and through strategic alliances with other producers and global or local distributors; (vii) reduce
our production costs through improved processes and higher labor productivity so as to compete more effectively and (viii) supply
a product with consistent quality according to the requirements of our customers.



Iodine and its Derivatives

Our strategy in our iodine business is to:
(i) reach or at least maintain our market share of over 30% in the iodine market in order to optimize the use of our available
production capacity; (ii) encourage demand growth and promote new iodine uses; (iii) participate in iodine recycling projects
through the Ajay-SQM Group (“ASG”); (iv) reduce our production costs through improved processes and higher productivity
in order to compete more effectively and (v) supply a product with consistent quality according to the requirements of our customers.



Lithium and its Derivatives

Our strategy in our lithium business is to:
(i) strategically allocate our sales of lithium carbonate and lithium hydroxide; (ii) encourage demand growth and promote new
lithium uses; (iii) selectively pursue opportunities in the lithium derivatives business by creating new lithium compounds; (iv)
reduce our production costs through improved processes and higher productivity in order to compete more effectively and (v) supply
a product with consistent quality according to the requirements of our customers.



Potassium

Our strategy in our potassium business is
to: (i) offer a portfolio of potassium products, including potassium sulfate, potassium chloride and other fertilizers, to our
traditional markets; (ii) create flexibility to offer crystalized (standard) or granular (compacted) form products according to
market requirements; (iii) focus on markets where we have logistical advantages and synergies with our specialty plant nutrition
business and (iv) supply a product with consistent quality according to the requirements of our customers.



27







Industrial Chemicals

Our strategy in our industrial chemical business
is to: (i) maintain our leadership position in the industrial nitrates market as well as increase our supply of potassium chloride
in markets where we have natural advantages; (ii) encourage demand growth in different applications; (iii) become a long-term,
reliable supplier for the thermal storage industry, maintaining close relationships with R&D programs; (iv) reduce our production
costs through improved processes and higher productivity in order to compete more effectively and (v) supply a product with consistent
quality according to the requirements of our customers.



New Business Ventures

From time to time we evaluate opportunities
to expand in our current core businesses or within new businesses in which we believe we may have sustainable competitive advantages,
both within and outside Chile, and we expect to continue to do so in the future.



We are continuously exploring the possibility
of acquiring controlling stakes or other interests in companies that have mining properties in our core business areas and are
in early stages of development. Consistent with our business strategy, we will continue to evaluate acquisitions, joint ventures
and alliances in our core businesses and, depending on all facts and circumstances, may seek to acquire controlling stakes or
other interests related to our core businesses both inside and outside of Chile, including other emerging markets.



In addition, we are actively conducting exploration
for metallic minerals in the mining properties we own. If such minerals are found, we may decide to exploit, sell or enter into
an association to extract these resources. Our exploration efforts are currently focused on the layer of bedrock that lies beneath
the caliche ore that we use as the primary raw material in the production of iodine and nitrates. This bedrock has significant
potential for metallic mineralization, particularly copper and gold. A significant portion of our mining properties are located
in the Antofagasta region of Chile, where many large copper producers operate.



We have an in-house geological exploration
team that explores the area directly, drilling targets and assessing new prospects. In 2016, the team identified 15 new targets
and confirmed mineralization in four of the targets, using its own truck-mounted drill rigs. The number of perforated meters reached
32,000 meters, and were made with three machines of which two were internal and the other external. We also have a metal business
development team that works to engage partners interested in investing in metal exploration within our mining properties. As of
December 31, 2016, we had ten option agreements in place with eight companies, including small junior mining companies, private
equity firms and large mining companies.



Main Business Lines



Specialty Plant Nutrition



We believe we are the world’s largest
producer of potassium nitrate. We estimate that our sales accounted for approximately 44% of global potassium nitrate sales for
all applications by volume in 2016, an increase from 43% in 2015. During 2016, the potassium nitrate market increased by around
3%. These estimates do not include potassium nitrate produced and sold locally in China, only net imports/exports.



In addition to potassium nitrate, we also
produce 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”).



These specialty plant nutrients have specific
characteristics that increase productivity and enhance quality when used on certain crops and soils. Our specialty plant nutrients
have significant advantages for certain applications over commodity fertilizers based on nitrogen and potassium, such as urea
and potassium chloride.



28







In particular, our specialty plant nutrients:



| | · | are
                                         fully water soluble, allowing their use in hydroponics, fertigation, foliar applications
                                         and other advanced agricultural techniques;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | improve
                                         the water use efficiency of crops and help conserve water;
| | - | -----------------------------------------------------------------------------------------------------------

| | · | are
                                         chloride-free, which prevents chloride toxicity in certain crops associated with high
                                         levels of chlorine in plant nutrients;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | provide
                                         nitrogen in nitric form, thereby allowing crops to absorb nutrients faster than they
                                         absorb urea or ammonium-based fertilizers;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | do
                                         not release hydrogen after application, thereby avoiding increased soil acidity;
| | - | ----------------------------------------------------------------------------------------------------------------------------

| | · | possess
                                         trace elements, which promote disease resistance in plants and
| | - | ---------------------------------------------------------------------------------------------------------------

| | · | are
                                         more attractive to customers who prefer products of natural origin.
| | - | ----------------------------------------------------------------------------------------------------------------



In 2016, our specialty plant nutrients revenues
decreased to US$623.9 million, representing 32% of our total revenues for that year and a 4.4% decrease from US$652.3 million
in specialty plant nutrients revenues in 2015. This decrease was the result of lower prices compared to 2015. Prices decreased
approximately 5% in 2016.



Specialty Plant Nutrition: Market



The target market for our specialty plant
nutrients includes producers of high-value crops such as vegetables, fruits, industrial crops, flowers, cotton and others. Furthermore,
we sell specialty plant nutrients to producers of chloride-sensitive crops. Since 1990, the international market for specialty
plant nutrients has grown at a faster rate than the international market for commodity-type fertilizers. This is mostly due to:
(i) the application of new agricultural technologies such as fertigation and hydroponics, and the increasing use of greenhouses;
(ii) the increase in the cost of land and the scarcity of water, which has forced farmers to improve their yields and reduce water
use; and (iii) the increase in demand for higher quality crops, such as fruits and vegetables.



Over the last ten years, the compound annual
growth rate for vegetable production per capita was 3% while the compound annual growth rate for the world population was closer
to 1%.



Worldwide scarcity of water and arable land
drives the development of new agricultural techniques to maximize the use of these resources. Irrigation has grown at an average
annual rate of 1% during the last 20 years (a pace similar to population growth). However, microirrigation has grown at 10% per
year over the same period. Microirrigation systems, which include drip irrigation and micro-sprinklers, are the most efficient
forms of technical irrigation. These applications require fully water-soluble plant nutrients. Our nitrate-based specialty plant
nutrients provide nitrogen in nitric form, which helps crops absorb these nutrients faster than they absorb urea- or ammonium-based
fertilizers, facilitating a more efficient application of nutrients to the plant and thereby increasing the crop’s yield
and improving its quality.



Asia is the region with the lowest microirrigation
to total irrigated hectares ratio in the world, reaching around 3%. This represents a high potential for this technology, which
is reflected in the high growth rates in recent years.



The market for potassium nitrate in China
is an important market for this product, although its demand is largely fulfilled by domestic producers. Demand totals approximately
400,000 to 420,000 metric tons, of which approximately 150,000 is related to the tobacco industry and 120,000 is related to the
horticulture business. Of the total, between 20,000 and 30,000 metric tons are imports.



29







Specialty Plant Nutrition: Our Products



Potassium nitrate, sodium potassium nitrate
and specialty blends are higher margin products derived from, or consisting of, sodium nitrate, and they are all produced in crystallized
or prilled form. Specialty blends are produced using our own specialty plant nutrients and other components at blending plants
operated by us or our affiliates and related companies in Chile, the United States, Mexico, the United Arab Emirates, South Africa,
Turkey, China, India, Thailand, Brazil, Spain, Netherlands and Peru.



The following table shows our sales volumes
of and revenues from specialty plant nutrients for 2016, 2015 and 2014:



|                                               |  | 2016 |       |  | 2015 |  |       | 2014 | 
|---------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- | 
|Sales volumes (Th. MT)                         |  |      |       |  |      |  |       |      | 
|Sodium nitrate                                 |  |      | 24.4  |  |      |  | 26.0  |      | 
|Potassium nitrate and sodium potassium nitrate |  |      | 475.8 |  |      |  | 493.6 |      | 
|Specialty blends(1)                            |  |      | 213.5 |  |      |  | 203.9 |      | 
|Other specialty plant nutrients(2)             |  |      | 127.2 |  |      |  | 108.4 |      | 
|                                               |  |      |       |  |      |  |       |      | 
|Total revenues(in US$ millions)                |  |      | 623.9 |  |      |  | 652.3 |      | 



| | (1) | Includes Yara’s products
                                         sold pursuant to our commercial agreement.
| | --- | ------------------------------------------------------------------------------------------------------------

| | (2) | Includes trading of other specialty
                                         fertilizers.
| | --- | -----------------------------------------------------------------------------------------



Depending on the systems used to apply specialty
nutrients, fertilizers can be classified as specialty field fertilizers or water-soluble fertilizers.



Specialty field fertilizers are applied directly
to the soil, manually or in a mechanized fashion. Their high solubility levels, lack of chlorine and absence of acidic reactions
make them particularly advantageous for tobacco, potatoes, coffee, cotton and a wide range of fruits and vegetables.



Water-soluble fertilizers are specialty nutrients
that are delivered to the crops using modern irrigation systems. As these systems feature refined technology, the products used
in them must be highly soluble, rich in nutrients, free of impurities and insoluble substances, and with a low salinity index.
The leading nutrient in this segment is potassium nitrate, whose optimal balance of nitric nitrogen and chlorine-free potassium
(the two macronutrients most needed by plants) make it an indispensable source of nutrition for crops that use modern irrigation
systems.



In addition, potassium nitrate is widely known
to be a vital component in foliar feeding applications, where usage is recommended in order to stave off nutritional deficiencies
before the first symptoms appear, correct any deficiencies that arise and prevent physiological stress. This nutrient also helps
promote a suitable balance between fruit production and/or growth, and plant development, particularly in crops with physiological
disorders.



Foliar feeding with potassium nitrate can
have beneficial effects:



| | · | when
                                         soil chemistry limits nutrient solubility and availability (pH, organic matter, type
                                         and percentage of clay);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | when
                                         nutrient absorption through the roots is limited as a result of conditions that hamper
                                         root growth (temperature, moisture, oxygen and loss of soil structure);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | when
                                         the plant’s local internal demand may surpass real internal nutrient redistribution
                                         capacity, leaving the demand unsatisfied;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | when
                                         nutrient mobility is limited, when plants flower before the leaf growth phase, imposing
                                         limiting factors on xylem nutrient transport and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



30







| | · | to
                                         promote rapid recovery from leaf stress caused by climatic conditions, soil conditions
                                         and irrigation management.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Another benefit of our potassium nitrate is
that, according to a 2014 study by the consulting firm Arthur D. Little Benelux, our production process generates up to 40% less
greenhouse gases compared to other major potassium nitrate producers in the world.



In addition to these products, SQM has consolidated
a product portfolio of over 200 specialty fertilizer blends, including top brands such as UltrasolTM, for fertigation;
QropTM, for application to the soil; SpeedfolTM, for foliar feeding and AllganicTM, for organic
crops.



In 2015, we added a new product to our portfolio
of specialty field fertilizers: QropTMKS. This product was developed by our research and development team and is an
improvement to existing products. It is more physically stable and is not required to be transported as hazardous cargo, which
means it can be sold in other markets.



Specialty Plant Nutrition: Marketing
and Customers



In 2016, we sold our specialty plant nutrients
in approximately 98 countries. One customer represented more than 10% of our specialty plant nutrient revenues during 2016, representing
approximately 27% of our total specialty plant nutrition revenues, and our ten largest customers accounted in the aggregate for
approximately 50% of revenues during that period. No supplier accounted for more than 10% of the costs of sales for this business
line.



The table below shows the geographical breakdown
of our revenues:



|Revenues breakdown        |  | 2016 |    |   | 2015 |  |    | 2014 | 
|------------------------- |  | ---- | -- | - | ---- |  | -- | ---- | 
|North America             |  |      | 33 | % |      |  | 33 | %    | 
|Europe                    |  |      | 18 | % |      |  | 22 | %    | 
|Central and South America |  |      | 11 | % |      |  | 28 | %    | 
|Asia and Others           |  |      | 37 | % |      |  | 16 | %    | 



We sell our specialty plant nutrition products
outside Chile mainly through our own worldwide network of representative offices and through our distribution affiliates.



We maintain inventory of our specialty plant
nutrients in the main markets of the Americas, Asia, Europe, the Middle East and Africa in order to facilitate prompt deliveries
to customers. In addition, we sell specialty plant nutrients directly to some of our large customers. Sales are made pursuant
to spot purchase orders and short-term contracts.



In connection with our marketing efforts,
we provide technical and agronomical assistance and support to some of our customers. By working closely with our customers, we
are able to identify new, higher-value-added products and markets. Our specialty plant nutrients are used on a wide variety of
crops, particularly value-added crops, where the use of our products enables our customers to increase yields and command a premium
price.



Our customers are located in both the northern
and southern hemispheres. Consequently, we do not believe there are any seasonal or cyclical factors that can materially affect
the sales of our specialty plant nutrients.



31







Specialty Plant Nutrition: Joint Ventures
and Agreements



Consistent with our business strategy, from
time to time we evaluate opportunities to expand in our current core businesses, including our specialty plant nutrition business,
or within new businesses in which we believe we may have sustainable competitive advantages. We evaluate potential acquisitions,
joint ventures and alliances with companies both within and outside of Chile, including in other emerging markets.



In May 2008, we signed a joint venture agreement
with Migao for the production and distribution of specialty plant nutrients in China. Through the joint venture, we constructed
a potassium nitrate plant with a production capacity of 40,000 metric tons per year. The plant began operating in January 2011,
and has allowed us to increase our presence in China, which is one of the most important and fastest growing markets for the fertilizer
industry.



In May 2009, our subsidiary Soquimich European
Holdings entered into an agreement with Coromandel Fertilizers Ltd. to create a joint venture for the production and distribution
of water soluble fertilizers in India. The agreement established a 50⁄50 contribution to the joint venture. As part of the
agreement, a new 15,000 metric ton facility was constructed in the city of Kakinada to produce water soluble NPK grade fertilizers.
This new facility began operating in January 2012.



In December 2009, we signed an agreement with
the French Roullier Group to form the joint venture SQM Vitas. This agreement joins two of the largest companies in the businesses
of specialty plant nutrition, specialty animal nutrition and professional hygiene. Peru, Brazil and South Africa are the main
focus markets of this joint venture, and Dubai is the main productive unit. As part of the agreement, our phosphate plant located
in Dubai became part of this joint venture.



Between 2010 and 2012, we continued to expand
our production capacity of potassium products in our operations in the Salar de Atacama. In 2011, we completed the construction
of a new potassium nitrate facility in Coya Sur, increasing our overall production capacity of potassium nitrate by 300,000 metric
tons.



In 2012, SQM Vitas started the construction
of new plants in Brazil (Candeias), Peru and South Africa (Durban) for the production of water soluble fertilizers containing
different relative amounts of nitrogen, phosphorus and potassium, and at times, smaller amounts of other chemicals. The Candeias
Industrial Complex plant in Brazil began operating in March 2012 and has a production capacity of 25,000 metric tons per year.



In 2013, the operations of SQM Vitas in Spain
began with a water soluble NPK fertilizer plant that has a production capacity of 15,000 metric tons per year.



During 2013, the marketing activities of our
joint ventures integrated in SQM (Beijing). This change aims to enhance the efficiency of distribution channels for fertilizer
products by consolidating marketing into a unified brand and management team, thus reducing costs. In addition, our strategy in
this segment is to increase production of water soluble fertilizers and extend our technologies and their applications in order
to increase popularity and expand the use of these products.



In 2015, an asset transfer agreement was signed
in December 2014 between Plantacote BV and Plantacote NV entered into effect. As a result of this agreement, the business and
Plantacote® brand were transferred to the new company Plantacote NV, but with no changes to the business or the Controlled
Release Fertilizer project. SQM continues to hold a 50% ownership stake in the company.



In 2015, SQM Vitas South Africa, was acquired
by Roulliers. As a result, Roullier manages the operations, and the production facilities are owned by SQM.



In 2016, we began operating soluble specialty
plant nutrient production facilities through our joint ventures in Peru and Netherlands. We also began operating a third facility
in Mexico.



32







Specialty Plant Nutrition: Fertilizer
Sales in Chile



We market specialty plant nutrients in Chile
through our subsidiary Soquimich Comercial S.A. (“SQMC”).



SQMC is currently one of the main players
in the Chilean market, offering a wide range of products developed specifically for the crops grown in the country. As specialty
plant nutrients have differentiating qualities with respect to traditional fertilizers, they play a key role in this market.



SQMC sells local products as well as products
imported from different countries around the world.



All contracts and agreements between Soquimich
Comercial S.A. and its foreign suppliers of fertilizers generally contain standard and customary commercial terms and conditions.
SQMC has been able to obtain adequate supplies of these products with good pricing conditions.



Soquimich Comercial S.A.’s fertilizer
sales represented approximately 24% of total fertilizer sales in Chile during 2016. No customer accounted for more than 10% of
Soquimich Comercial S.A.’s revenues in 2016. Soquimich Comercial S.A.’s consolidated revenues were approximately US$150
million and US$177 million in 2016 and 2015, respectively.



Specialty Plant Nutrition: Competition



We believe we are the world’s largest
producer of sodium nitrate and potassium nitrate for agricultural use. Our sodium nitrate products compete indirectly with specialty
and commodity-type substitutes, which may be used by some customers instead of sodium nitrate depending on the type of soil and
crop to which the product will be applied. Such substitute products include calcium nitrate, ammonium nitrate and calcium ammonium
nitrate.



In the potassium nitrate market our largest
competitor is Haifa Chemicals Ltd. (“Haifa”), in Israel, which is a subsidiary of Trans Resources International Inc.
We estimate that sales of potassium nitrate by Haifa accounted for approximately 31% of total world sales during 2016 (excluding
sales by Chinese producers to the domestic Chinese market), compared to our share of the market which accounted for approximately
44% of global potassium nitrate sales by volume for the period.



ACF, another Chilean producer, mainly oriented
to iodine production, has produced potassium nitrate from caliche ore and potassium chloride since 2005. Kemapco, a Jordanian
producer owned by Arab Potash, produces potassium nitrate in a plant located close to the Port of Aqaba, Jordan. In addition,
there are several potassium nitrate producers in China, the largest of which are Yuantong and Migao. Most of the Chinese production
is consumed by the Chinese domestic market.



The principal means of competition in the
sale of potassium nitrate are product quality, customer service, location, logistics, agronomic expertise and price.



In Chile, our products mainly compete with
imported fertilizer blends that use calcium ammonium nitrate or potassium magnesium sulfate. Our specialty plant nutrients also
compete indirectly with lower-priced synthetic commodity-type fertilizers such as ammonia and urea, which are produced by many
producers in a highly price-competitive market. Our products compete on the basis of advantages that make them more suitable for
certain applications as described above.



33







Iodine and its Derivatives



We believe we are the world’s largest
producer of iodine. In 2016, our revenues from iodine and iodine derivatives amounted to US$231.1 million, representing 12% of
our total revenues in that year. We estimate that our sales accounted for approximately 29% of world iodine sales by volume in
2016.



Iodine: Market



Iodine and iodine derivatives are used in
a wide range of medical, agricultural and industrial applications as well as in human and animal nutrition products. Iodine and
iodine derivatives are used as raw materials or catalysts in the formulation of products such as X-ray contrast media, biocides,
antiseptics and disinfectants, pharmaceutical intermediates, polarizing films for LCD and LED screens, chemicals, organic compounds
and pigments. Iodine is also added in the form of potassium iodate or potassium iodide to edible salt to prevent iodine deficiency
disorders.



X-ray contrast media is the leading application
of iodine, accounting for approximately 23% of demand. Iodine’s high atomic number and density make it ideally suited for
this application, as its presence in the body can help to increase contrast between tissues, organs, and blood vessels with similar
X-ray densities. Other applications include pharmaceuticals, which we believe account for 13% of demand; LCD and LED screens,
12%; iodophors and povidone-iodine, 10%; animal nutrition, 8%; fluoride derivatives, 7%; biocides, 5%; nylon, 4%; human nutrition,
3% and other applications, 16%.



During 2016, iodine demand grew slightly compared
to 2015, partly as a result of very minimal growth in the iodine market for uses related to LEC and LCD and the reuse of iodine
in the iodine market related to plastics. We estimate that the global market size in 2016 was approximately 33,500 metric tons,
with around 57% of supply coming from Chilean producers, including us.



Iodine: Our Products



We produce iodine in our Nueva Victoria plant,
near Iquique, and our Pedro de Valdivia plant, close to María Elena. We have a total effective production capacity of approximately
10,000 metric tons per year of iodine, including the Iris plant, which is located next to the Nueva Victoria plant.



Through ASG, we produce organic and inorganic
iodine derivatives. ASG was established in the mid-1990s and has production plants in the United States, Chile and France. ASG
is the world’s leading inorganic and organic iodine derivatives producer.



Consistent with our business strategy, we
are constantly working on the development of new applications for our iodine-based products, pursuing a continuing expansion of
our businesses and maintaining our market leadership.



We manufacture our iodine and iodine derivatives
in accordance with international quality standards and have qualified our iodine facilities and production processes under the
ISO-9001:2008 program, providing third party certification of the quality management system and international quality control
standards that we have implemented.



The following table shows our total sales
volumes and revenues from iodine and iodine derivatives for 2016, 2015 and 2014:



|                                |  | 2016 |       |  | 2015 |  |       | 2014 | 
|------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- | 
|Sales volumes(Th. MT)           |  |      |       |  |      |  |       |      | 
|Iodine and derivatives          |  |      | 10.2  |  |      |  | 9.3   |      | 
|                                |  |      |       |  |      |  |       |      | 
|Total revenues(in US$ millions) |  |      | 231.1 |  |      |  | 262.6 |      | 



34







Our revenues decreased to US$231.1 million
in 2016 from US$262.6 million in 2015. This decrease was primarily attributable to the decrease in iodine prices during 2016.
Average iodine prices were more than 19% lower in 2016 when compared to 2015. Our sales volumes increased 9% in 2016, outpacing
global iodine demand growth.



Iodine: Marketing and Customers



In 2016, we sold our iodine products to approximately
300 customers in over 55 countries, and most of our sales were exports. Two in the aggregate customers each accounted for more
than 10% of our iodine revenues in 2016. These two customers accounted for approximately 40% of revenues, and our ten largest
customers accounted in the aggregate for approximately 77% of revenues. No supplier accounted for more than 10% of the cost of
sales of this business line.



The following table shows the geographical
breakdown of our revenues for 2016, 2015 and 2014:



|Revenues breakdown        |  | 2016 |    |   | 2015 |  |    | 2014 | 
|------------------------- |  | ---- | -- | - | ---- |  | -- | ---- | 
|North America             |  |      | 25 | % |      |  | 29 | %    | 
|Europe                    |  |      | 36 | % |      |  | 34 | %    | 
|Central and South America |  |      | 0  | % |      |  | 4  | %    | 
|Asia and Others           |  |      | 38 | % |      |  | 33 | %    | 



We sell iodine through our own worldwide network
of representative offices and through our sales, support and distribution affiliates. We maintain inventories of iodine at our
facilities throughout the world to facilitate prompt delivery to customers. Iodine sales are made pursuant to spot purchase orders
or within the framework of supply agreements. Supply agreements generally specify annual minimum and maximum purchase commitments,
and prices are adjusted periodically, according to prevailing market prices.



Iodine: Competition



The world’s main iodine producers are
based in Chile, Japan and the United States. Iodine is also produced in Russia, Turkmenistan, Azerbaijan, Indonesia and China.



Iodine is produced in Chile using a unique
mineral known as caliche ore, whereas in Japan, the United States, Russia, Turkmenistan, Azerbaijan, and Indonesia, producers
extract iodine from underground brines that are mainly obtained together with the extraction of natural gas and petroleum. In
China, iodine is extracted from seaweed.



Five Chilean companies accounted for approximately
57% of total global sales of iodine in 2016, including SQM, with approximately 29%, and four other producers, accounting for the
remaining 28%. The other Chilean producers are: Atacama Chemical S.A. (Cosayach), controlled by the Chilean holding Inverraz S.A.;
ACF Minera S.A. owned by the Chilean family Urruticoechea; Algorta Norte S.A., a joint venture between ACF Minera S.A. and Toyota
Tsusho; and RB Energy (a Canadian company previously known as Sirocco Mining Inc. or as Atacama Minerals).



We estimate that eight Japanese iodine producers
accounted for approximately 30% of global iodine sales in 2016, including recycled iodine.



We estimate that iodine producers in the United
States (one of which is owned by Toyota Tsusho and another is owned by Ise Chemicals Ltd., both of which are Japanese companies)
accounted for nearly 5% of world iodine sales in 2016.



35







Iodine recycling is a growing trend worldwide.
Several producers have recycling facilities where they recover iodine and iodine derivatives from iodine waste streams. Iodine
recycling, mainly related to LCD and LED consumption, has increased over the past few years and currently represents approximately
18% of world iodine sales. It is estimated that approximately 75% of total world iodine recycling was done by Japanese iodine
producers.



Through ASG or alone, we are also actively
participating in the iodine recycling business using iodinated side-streams from a variety of chemical processes in Europe and
the United States.



The prices of iodine and iodine derivative
products are determined by market conditions. World iodine prices vary depending upon, among other things, the relationship between
supply and demand at any given time. Iodine supply varies primarily as a result of the production levels of the iodine producers
(including us) and their respective business strategies. Our annual average iodine sales prices decreased to approximately US$23
per kilogram in 2016, continuing the downward trend observed in 2015.



Demand for iodine varies depending upon overall
levels of economic activity and the level of demand in the medical, pharmaceutical, industrial and other sectors that are the
main users of iodine and iodine-derivative products. Certain substitutes for iodine are available for certain applications, such
as antiseptics and disinfectants, which could represent a cost-effective alternative to iodine depending on prevailing prices.



The main factors of competition in the sale
of iodine and iodine derivative products are reliability, price, quality, customer service and the price and availability of substitutes.
We believe we have competitive advantages compared to other producers due to the size and quality of our mining reserves and the
available production capacity. We believe our iodine is competitive with that produced by other manufacturers in certain advanced
industrial processes. We also believe we benefit competitively from the long-term relationships we have established with our largest
customers.



Lithium and its Derivatives



We believe we are one of the world’s
largest producers of lithium carbonate and lithium hydroxide. In 2016, our revenues from lithium sales amounted to US$514.6 million,
representing 27% of our total revenues. We estimate that our sales volumes accounted for approximately 27% of the global lithium
chemicals sales volumes.



Lithium: Market



Lithium is mainly sold as lithium carbonate.
The next most traded compound is lithium hydroxide. Both of these compounds are used to produce the cathodes for rechargeable
batteries, taking advantage of lithium’s extreme electrochemical potential and low density. Batteries are the leading application
for lithium, accounting for approximately 53% of total demand, including batteries for electric vehicles, which accounted for
approximately 20% of total lithium demand. Lithium carbonate is also used in applications such as ceramic and enamel frits (approximately
4% of demand), heat resistant glass (ceramic glass) (approximately 4% of demand), air conditioning chemicals (approximately 3%
of demand), continuous casting powder for steel extrusion (approximately 2% of demand), primary aluminum smelting process (approximately
1% of demand) and others, including the synthesis of pharmaceuticals and lithium derivatives.



Lithium hydroxide is also used as a raw material
in the lubricating greases industry (approximately 9% of total lithium chemical demand), as well as in the dyes and the battery
industries.



Lithium chloride solutions are primarily used
as an input for the production of other lithium derivatives.



Lithium’s main properties, which facilitate
its use in this range of applications, are:



36







| | · | it
                                         is the lightest solid element at room temperature;
| | - | ----------------------------------------------------------------------------------------------

| | · | it
                                         has a low coefficient of thermal expansion;
| | - | ---------------------------------------------------------------------------------------

| | · | it
                                         has high electrochemical potential and low density and
| | - | --------------------------------------------------------------------------------------------------

| | · | it
                                         is the solid with the highest specific heat capacity.
| | - | -------------------------------------------------------------------------------------------------



During 2016, lithium chemicals demand increased
by approximately 14%, reaching approximately 182,000 metric tons, with close to 44% supplied by Chilean producers. We expect applications
related to energy storage to continue driving demand in the coming years.



Lithium: Our Products



We produce lithium carbonate at our Salar
del Carmen facilities, near Antofagasta, Chile, from solutions with high concentrations of lithium, in the form of lithium chloride,
as a by-product of the potassium chloride production at the Salar de Atacama. The annual production capacity of our lithium carbonate
plant is 48,000 metric tons per year. We also sell the lithium chloride solutions that we produce at the Salar de Atacama, which
are purified in the Salar del Carmen. We believe that the technologies we use, 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 us to
be one of the lowest cost producers worldwide.



We also produce lithium hydroxide at our facilities
at the Salar del Carmen, next to the lithium carbonate operation. The lithium hydroxide facility has a production capacity of
6,000 metric tons per year and is one of the largest plants in the world. During 2017, we plan to increase this capacity to 13,500
through increased efficiencies and the construction of a 7,000 metric ton plant.



The following table shows our total sales
volumes and revenues from lithium carbonate and its derivatives for 2016, 2015 and 2014:



|                                |  | 2016 |       |  | 2015 |  |       | 2014 | 
|------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- | 
|Sales volumes(Th. MT)           |  |      |       |  |      |  |       |      | 
|Lithium and derivatives         |  |      | 49.7  |  |      |  | 38.7  |      | 
|                                |  |      |       |  |      |  |       |      | 
|Total revenues(in US$ millions) |  |      | 514.6 |  |      |  | 223.0 |      | 



Our revenues in 2016 were US$514.6 million,
a 131.0% increase from US$223.0 million in 2015, due to higher prices and higher sales volumes. The average price for 2016 was
approximately 80% higher than the average price in 2015, as global demand growth outpaced supply growth.



Lithium: Marketing and Customers



In 2016, we sold our lithium products to over
235 customers in approximately 44 countries, and most of our sales were to customers outside of Chile. One customer accounted
for more than 10% of our lithium revenues in 2016, accounting for approximately 12% of our lithium revenues. Our ten largest customers
accounted in aggregate for approximately 62% of revenues. Only one supplier accounted for over 10% of the cost of sales of this
business line, accounting for approximately 13% of the cost of sales.



The following table shows the geographical
breakdown of our revenues for 2016, 2015 and 2014:



|Revenues breakdown        |  | 2016 |    |   | 2015 |  |    | 2014 | 
|------------------------- |  | ---- | -- | - | ---- |  | -- | ---- | 
|North America             |  |      | 8  | % |      |  | 11 | %    | 
|Europe                    |  |      | 19 | % |      |  | 21 | %    | 
|Central and South America |  |      | 1  | % |      |  | 1  | %    | 
|Asia and Others           |  |      | 73 | % |      |  | 67 | %    | 



37







We sell lithium carbonate and lithium hydroxide
through our own worldwide network of representative offices and through our sales, support and distribution affiliates. We maintain
inventories of these products at our facilities throughout the world to facilitate prompt delivery to customers. Sales of lithium
carbonate, lithium hydroxide and lithium chloride solutions are made pursuant to spot purchase orders or within the framework
of supply agreements. Supply agreements generally specify annual minimum and maximum purchase commitments, and prices are adjusted
periodically, according to prevailing market prices.



Lithium: Competition



Our main competitors in the lithium carbonate
and lithium hydroxide businesses are Albemarle, which, according to our estimates, has a market share of approximately 17%, and
FMC Corporation (“FMC”), which has an estimated market share of approximately 10%. In addition, there are at least
ten lithium producers in China that, together, supplied approximately 37% of the world market in 2016. These producers can be
divided according to the type of raw material they use: brines (6%) or hard rock (31%). A significant portion of the hard rock
that is processed in China is imported from Australia. The largest producer in China is Sichuan Tianqi Lithium Industries (“Tianqi”).
Albemarle produces lithium carbonate at its operations in Chile and in Nevada, United States. Its production of downstream lithium
products is mostly performed in the United States, Germany and Taiwan. Albemarle and Tianqi are 49%/51% partners in Talison Lithium
Pty Ltd., an Australian company that produces lithium mineral concentrate in Western Australia. FMC has production facilities
in Argentina through Minera del Altiplano S.A., where it produces lithium chloride and lithium carbonate. Production of its downstream
lithium products is mostly performed in the United States and the United Kingdom. In 2015, Orocobre Ltd. began producing lithium
carbonate in Argentina. It is estimated that it had a market share of approximately 8% in 2016.



We believe that lithium production will increase
in the near future, balancing the expected growth in demand. Recently, a number of new projects to develop lithium deposits have
been announced recently. Some of these projects are already under advanced development and others could materialize in the medium
term.



Potassium



We produce potassium chloride and potassium
sulfate by extracting brines from the Salar de Atacama that are rich in potassium chloride and other salts.



Since 2009, our effective end product capacity
has increased to over 2 million metric tons per year, granting us improved flexibility and market coverage.



In 2016, our potassium chloride and potassium
sulfate revenues amounted to US$403.3 million, representing 21% of our total revenues and a 6.3% decrease compared to 2015.



Potassium is one of the three macronutrients
that a plant needs to develop. Although potassium does not form part of a plant’s structure, it is essential to the development
of its basic functions. Potassium chloride is the most commonly used potassium-based fertilizer. It is used to fertilize crops
that can tolerate relatively high levels of chloride, and to fertilize crops that are grown under conditions with sufficient rainfall
or irrigation practices that prevent chloride from accumulating to excess levels in the rooting systems of the plant.



Some benefits that may be obtained through
the use of potassium are:

| | · | increased
                                         yield and quality;
| | - | ---------------------------------------------------------------------

| | · | increased
                                         production of proteins;
| | - | --------------------------------------------------------------------------

| | · | increased
                                         photosynthesis;
| | - | ------------------------------------------------------------------

| | · | intensified
                                         transport and storage of assimilates;
| | - | ------------------------------------------------------------------------------------------



38







| | · | prolonged
                                         and more intense assimilation period;
| | - | ----------------------------------------------------------------------------------------

| | · | improved
                                         water efficiency;
| | - | -------------------------------------------------------------------

| | · | regulated
                                         opening and closure of stomata; and
| | - | --------------------------------------------------------------------------------------

| | · | synthesis
                                         of lycopene.
| | - | ---------------------------------------------------------------

Potassium chloride is also an important component
for our specialty plant nutrition product line, where it is used as a raw material to produce potassium nitrate.



Potassium: Market



During the last decade, growth in demand for
potassium chloride, and for fertilizers in general, has been driven by several key factors, such as a growing world population,
higher demand for protein-based diets and less arable land. All of these factors contribute to fertilizer demand growth as a result
of efforts to maximize crop yields and use resources more efficiently. For the last ten years, the compound annual growth for
the global potassium chloride market was approximately 1% to 2%. We estimate that demand totaled approximately 58 million metric
tons in 2016, similar to demand in 2015.



According to studies prepared by the International
Fertilizer Industry Association, cereals account for approximately 37% of world potassium consumption, including corn (15%), rice
(12%) and wheat (6%). Oilseeds, predominantly soybeans and palm oil, represent approximately 20% of total potassium demand. Fruits
and vegetables account for around 17% of world potassium demand, and sugar crops account for close to 8%.



Potassium: Our Products



Potassium chloride differs from our specialty
plant nutrition products because it is a commodity fertilizer and contains chloride. We offer potassium chloride in two grades:
standard and compacted. Potassium sulfate is considered a specialty fertilizer and we offer this product in soluble grades.



The following table shows our sales volumes
of and revenues from potassium chloride and potassium sulfate for 2016, 2015 and 2014:



|                                         |  | 2016 |         |  | 2015 |  |         | 2014 | 
|---------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | ---- | 
|Sales volumes(Th. MT)                    |  |      |         |  |      |  |         |      | 
|Potassium chloride and potassium sulfate |  |      | 1,534.7 |  |      |  | 1,241.8 |      | 
|                                         |  |      |         |  |      |  |         |      | 
|Total revenues(in US$ millions)          |  |      | 403.3   |  |      |  | 430.6   |      | 



Potassium: Marketing and Customers



In 2016, we sold potassium chloride and potassium
sulfate to approximately 500 customers in over 80 countries. There were three individual customers that each accounted for more
than 10% of our revenues of potassium chloride and potassium sulfate in 2016, totaling approximately 35% of the revenues of potassium
chloride and potassium sulfate during this period. We estimate that our ten largest customers accounted in the aggregate for approximately
55% of such revenues. One supplier accounted for more than 10% of the cost of sales of this business line, accounting for approximately
16% of the cost of sales for the business line.



The following table shows the geographical
breakdown of our revenues for 2016, 2015 and 2014:



|Revenues breakdown        |  | 2016 |    |   | 2015 |  |    | 2014 | 
|------------------------- |  | ---- | -- | - | ---- |  | -- | ---- | 
|North America             |  |      | 20 | % |      |  | 22 | %    | 
|Europe                    |  |      | 20 | % |      |  | 12 | %    | 
|Central and South America |  |      | 38 | % |      |  | 42 | %    | 
|Asia and Others           |  |      | 22 | % |      |  | 24 | %    | 



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Potassium: Competition



We estimate that we accounted for less than
3% of global sales of potassium chloride in 2016. Our main competitors are Uralkali, Belaruskali, PCS and Mosaic. We estimate
that in 2016, Uralkali accounted for approximately 19% of global sales, Belaruskali accounted for approximately 16% of global
sales, PCS accounted for approximately 15% of global sales, and The Mosaic Company accounted for approximately 13% of global sales.



In the potassium sulfate market, we have several
competitors, of which the most important are K+S KALI GmbH (Germany), Tessenderlo Chemie (Belgium) and Great Salt Lake Minerals
Corp. (United States). We estimate that these three producers account for approximately 30% of the worldwide production of potassium
sulfate. SQM accounts for less than 2% of global production.



Industrial Chemicals



In addition to producing sodium and potassium
nitrate for agricultural applications, we produce different grades of these products for industrial applications. The different
grades differ mainly in their chemical purity. We enjoy certain operational flexibility when producing industrial nitrates, because
they are produced from the same process as their equivalent agricultural grades, needing only an additional step of purification.
We may, with certain constraints, shift production from one grade to the other depending on market conditions. This flexibility
allows us to maximize yields and to reduce commercial risk.



In addition to producing industrial nitrates,
we produce, market and sell industrial-grade potassium chloride.



In 2016, our revenues from industrial chemicals
were US$104.1 million, representing approximately 5% of our total revenues for that year.



Industrial Chemicals: Market



Industrial sodium and potassium nitrates are
used in a wide range of industrial applications, including the production of glass, ceramics, explosives, charcoal briquettes,
metal treatments and various chemical processes.



In addition, this product line has also experienced
growth from the use of industrial nitrates as thermal storage in concentrated solar power plants (commonly known as “CSP”).
Solar salts for this specific application contain a blend of 60% sodium nitrate and 40% potassium nitrate by weight ratio used
as a storage and heat transfer medium. Unlike traditional photovoltaic plants, these new plants use a “thermal battery”
that contains molten sodium nitrate and potassium nitrate, which store the heat collected during the day. The salts are heated
up during the day, while the plants are operating under direct sunlight, and at night they release the solar energy that they
have captured, allowing the plants to operate even during hours of darkness. Depending on the power plant technology, solar salts
are also used as a heat transfer fluid in the plant system and thereby make CSP plants even more efficient, increasing their output
and reducing the Levelized Cost of Electricity (LCOE).



Experts believe that CSP plays a critical
role in electricity grid stabilization and manageability due to its inherent large scale storage capability. Nevertheless, such
large installations are capital intensive and are strongly influenced by the generation mix in each country. Therefore, fluctuations
in solar salts demand are unavoidable in terms of quantity and timing. During 2017 and thereafter, we expect to see further developments
in new markets such as the Middle East, Chile and China, as well as recently developed markets such as Morocco and South Africa
that continue to make progress on their programs.



Industrial-grade potassium chloride is used
as an additive in oil drilling as well as in food processing, among other applications.



40







Industrial Chemicals: Our Products



The following table shows our sales volumes
of industrial chemicals and total revenues for 2016, 2015 and 2014:



|                                |  | 2016 |       |  | 2015 |  |       | 2014 | 
|------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- | 
|Sales volumes(Th. MT)           |  |      |       |  |      |  |       |      | 
|Industrial chemicals            |  |      | 128.9 |  |      |  | 126.1 |      | 
|                                |  |      |       |  |      |  |       |      | 
|Total revenues(in US$ millions) |  |      | 104.1 |  |      |  | 97.6  |      | 



Revenues for industrial chemicals increased
from US$97.6 million in 2015 to US$104.1 million in 2016, as a result of higher sales volumes in this business line.



Industrial Chemicals: Marketing and
Customers



We sold our industrial nitrate products in
approximately 54 countries in 2016 to approximately 317 customers. Two customers accounted for more than 10% of our revenues of
industrial chemicals in 2016, accounting for approximately 46%, and our ten largest customers accounted in the aggregate for approximately
62% of such revenues. No supplier accounted for more than 10% of the cost of sales of this business line.



The following table shows the geographical
breakdown of our revenues for 2016, 2015 and 2014:



|Revenues breakdown        |  | 2016 |    |   | 2015 |  |    | 2014 | 
|------------------------- |  | ---- | -- | - | ---- |  | -- | ---- | 
|North America             |  |      | 24 | % |      |  | 31 | %    | 
|Europe                    |  |      | 14 | % |      |  | 15 | %    | 
|Central and South America |  |      | 9  | % |      |  | 11 | %    | 
|Asia and Others           |  |      | 54 | % |      |  | 43 | %    | 



We sell our industrial chemical products mainly
through our own worldwide network of representative offices and through our sales and distribution affiliates. We maintain inventories
of our different grades of sodium nitrate and potassium nitrate products at our facilities in Europe, North America, South Africa,
Asia and South America to achieve prompt deliveries to customers. Our Research and Development department, together with our foreign
affiliates, provides technical support to our customers and continuously works with them to develop new products or applications
for our products.



Industrial Chemicals: Competition



We believe we are one of the leading producers
of sodium nitrate, potassium nitrate and potassium chloride for industrial uses. In the case of industrial sodium nitrate, we
estimate that our sales represented close to 33% of world demand in 2016 (excluding internal demand for China and India, for which
we believe reliable estimates are not available). Our competitors are mainly based in Europe and Asia, producing sodium nitrate
as a by-product of other production processes. In refined grade sodium nitrate, BASF AG, a German corporation and several producers
in China and Eastern Europe are highly competitive in the European and Asian markets. Our industrial sodium nitrate products also
compete indirectly with substitute chemicals, including sodium carbonate, sodium sulfate, calcium nitrate and ammonium nitrate,
which may be used in certain applications instead of sodium nitrate and are available from a large number of producers worldwide.



Our main competitor in the industrial potassium
nitrate business is Haifa Chemicals, which we estimate had a market share of 25%. We estimate that our market share was approximately
24% for 2016.



41







In the solar salts business, we believe we
have been the market leader since we started selling to commercial projects in 2007. Our competitors include Haifa Chemicals,
which is a potassium nitrate supplier, and BASF AG, which is a sodium nitrate supplier.



Producers compete in the market for industrial
sodium and potassium nitrate based on reliability, product quality, price and customer service. We believe that we are a low cost
producer of both products and are able to produce high quality products.



In the industrial potassium chloride market,
we are a relatively small producer, mainly supplying regional needs.



Other Products



A large part of our other revenue is related
to fertilizer trading, usually commodities. These fertilizers are traded in large volumes worldwide. We have developed a trade,
supply and inventory management business that allows us to respond quickly and effectively to the changing fertilizer market in
which we operate and profit on these trades.



Production Process



Our integrated production process can be classified
according to our natural resources:



| | · | caliche
                                         ore deposits, which contain nitrates, iodine and potassium; and
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | brines
                                         from the Salar de Atacama, which contain potassium, lithium, sulfate, boron and magnesium.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



Caliche Ore Deposits



Caliche ore deposits are located in northern
Chile. During 2016, we operated one mine in this region: Nueva Victoria. We also began establishing a new mining area called Tente
en el Aire, which is also located in northern Chile, about 15 kilometers northwest of our Nueva Victoria operations. We believe
this new mine will allow us to capture operating synergies that will increase efficiency and reduce costs. In November 2015, mining
and nitrate operations at Pedro de Valdivia were suspended, and iodine production was reduced at the Pedro de Valdivia site, in
order to take advantage of the highly efficient production facilities at Nueva Victoria. Mining operations at the Pampa Blanca
site and the El Toco mine (which is part of the María Elena site) were suspended in March 2010 and November 2013, respectively,
in an effort to optimize our production facilities with lower production costs.



Caliche ore is found under a layer of barren
overburden in seams with variable thickness from one centimeter to four meters, and with the overburden varying in thickness between
zero centimeters and two meters.



Before proper mining begins, the exploration
stage is carried out, including complete geological reconnaissance, sampling and drilling caliche ore to determine the quality
and characteristics of each deposit. Drill-hole samples are properly identified and tested at our chemical laboratories. With
the exploration information on a closed grid pattern of drill holes, the ore evaluation stage provides information for mine planning
purposes. Mine planning is done on a long-term basis (ten years), medium-term basis (three years) and short-term basis (one year).
Once all of this information has been compiled, detailed planning for the exploitation of the mine takes place.



The mining process generally begins with bulldozers
first breaking and then removing the overburden in the mining area. This process is followed by an inspection and review of the
drill holes before production drilling and blasting occurs to break the caliche seams. Front-end loaders load the ore onto off-road
trucks, which take it to be processed.



42







The run of mine ore is loaded in heaps and
leached with water to produce concentrated solutions containing nitrate, iodine and potassium. These solutions are then sent to
plants where iodine is extracted through both solvent-extraction and blow out processes. The remaining solutions are subsequently
sent to solar evaporation ponds where the solutions are evaporated and rich nitrate salts are produced. These concentrated nitrate
salts are then sent to Coya Sur where they are used to produce potassium nitrate.



Currently, the Pedro de Valdivia and María
Elena sites continue to generate solutions that are produced by leaching the mine tailings. These solutions are treated at the
iodide plants at María Elena and Pedro de Valdivia. The iodide that is produced at the María Elena plant is subsequently
sent to Pedro de Valdivia in order to produce prilled iodine. After iodide is obtained at both plants, the remaining solutions,
which are rich in nitrate and potassium, are sent to the solar evaporation ponds at Coya Sur in order to be used in the production
of potassium nitrate.



Caliche Ore-Derived Products



Caliche ore-derived products are: sodium nitrate,
potassium nitrate, sodium potassium nitrate and iodine.



Sodium Nitrate



During 2016, sodium nitrate for both agricultural
and industrial applications was produced by inventory generated at the Pedro de Valdivia facility and subsequently processed at
the Coya Sur plants. At the Pedro de Valdivia facility, until November 2015, the caliche ore was crushed, creating two products:
a coarse fraction and a fine fraction. In preparation for the eventual suspension of nitrates operations at Pedro de Valdivia,
we had increased our sodium nitrate inventory levels through November 2015. As of December 2016, we had approximately 450,000
tons of crystallized sodium nitrate in inventory, which will provide us with enough sodium nitrate to produce finished nitrates
for approximately three years. For subsequent production, we are in the process of adapting the crystallization plant at Pedro
de Valdivia to be able to produce sodium nitrate using nitrate salts from our Nueva Victoria facility.



Crystallized sodium nitrate is an intermediate
product that is subsequently processed further at the Coya Sur production plants to produce sodium nitrate, potassium nitrate
and sodium potassium nitrate in different chemical and physical qualities, including crystallized and prilled products. Finally,
the products are transported by railway or truck to our port facilities in Tocopilla for shipping to customers and distributors
worldwide.



Potassium Nitrate



Potassium nitrate is produced at our Coya
Sur facility using a production process developed by us. The brines generated by the leaching processes at Pedro de Valdivia and
María Elena are pumped to Coya Sur’s solar evaporation ponds for a nitrate concentration process. After the nitrate
concentration process, the brine is pumped to a conversion plant where potassium salts from the Salar de Atacama and nitrate and
potassium salts produced at Nueva Victoria or Coya Sur, are added. A chemical reaction begins, producing brine with dissolved
potassium nitrate. This brine is pumped to a crystallization plant, which crystallizes the potassium nitrate by cooling it and
separating it from the liquid by centrifuge.



Our current potassium nitrate production capacity
at Coya Sur is approximately 1,100,000 metric tons per year. Since the end of 2013, we have been working with external advisors
to implement the “lean” method of manufacturing in our potassium nitrate plants. We achieved complete implementation
of this method of manufacturing during 2015. The improvements we have achieved have enabled us to reduce costs, improve energy
consumption, increase the production of potassium nitrate and decrease our accident rates. This method is based on increasing
the involvement of our workers in decision-making, and strengthening the leadership of our production supervisors. The goal is
to identify opportunities to improve the production process and reduce waste on an ongoing basis.



43







During 2016, the potassium nitrate refining
plants entered into operation, allowing the production of a higher quality product with lower impurity content as required by
the new market conditions. These new facilities enable integrated production at the plants of Coya Sur, allowing the Company to
reuse rinsing solutions, and thereby reducing the total cost of production.



The potassium nitrate produced in crystallized
or prilled form at Coya Sur has been certified by TÜV-Rheiland under the quality standard ISO 9001:2008. The potassium nitrate
produced at Coya Sur is transported to Tocopilla for shipping and delivery to customers and distributors.



Sodium Potassium Nitrate



Sodium potassium nitrate is a mixture of approximately
two parts sodium nitrate per one part potassium nitrate. We produce sodium potassium nitrate at our Coya Sur prilling facilities
using standard, non-patented production methods we have developed. Crystallized sodium nitrate is mixed with the crystallized
potassium nitrate to make sodium potassium nitrate, which is then prilled. The prilled sodium potassium nitrate is transported
to Tocopilla for bulk shipment to customers.



The production process for sodium potassium
nitrate is basically the same as that for sodium nitrate and potassium nitrate. With certain production restraints and following
market conditions, we may supply sodium nitrate, potassium nitrate or sodium potassium nitrate, either in prilled or crystallized
form.



Iodine and Iodine Derivatives



During 2016, we produced iodine at our facilities
at Nueva Victoria (including the Iris facility), Pedro de Valdivia and María Elena.Iodine is extracted from solutions
produced by leaching caliche ore.



As in the case of nitrates, the process of
extracting iodine from the caliche ore is well established, but variations in the iodine and other chemical contents of the treated
ore and other operating parameters require a high level of know-how to manage the process effectively and efficiently.



The solutions resulting from the leaching
of caliche carry iodine in iodate form. Part of the iodate solution is reduced to iodide using sulfur dioxide, which is produced
by combusting sulfur. The resulting iodide is combined with the rest of the untreated iodate solution to release elemental iodine
in low concentrations. The iodine is then extracted from the aqueous solutions and concentrated as iodide form using a solvent
extraction and stripping plant in the Pedro de Valdivia and Nueva Victoria facilities and using a blow out plant in Iris. The
concentrated iodide is oxidized to solid iodine, which is then refined through a smelting process and prilled. We have obtained
patents in the United States and Chile (Chilean patent number 47,080) for our iodine prilling process.



Prilled iodine is tested for quality control
purposes, using international standard procedures that we have implemented. It is then packed in 20 to 50 kilogram drums or 350
to 700 kilogram maxibags and transported by truck to Antofagasta, Mejillones, or Iquique for export. Our iodine and iodine derivatives
production facilities have qualified under the ISO-9001:2008 program, providing third-party certification—by TÜV-Rheiland—of
the quality management system. The last recertification process was approved in February 2011. Iodine from the Iris plant was
certified under ISO-9001:2008 in April 2012.



Our total iodine production in 2016 was 8,542
metric tons: 7,744 metric tons from Nueva Victoria and Iris; 610 metric tons from Pedro de Valdivia; and 188 metric tons from
María Elena. Nueva Victoria is also equipped to toll iodine from iodide delivered from our other facilities. We have the
flexibility to adjust our production according to market conditions. Following the production facility restructuring at Pedro
de Valdivia and Nueva Victoria announced in 2015, our total current effective production capacity at our iodine production plants
is approximately 10,000 metric tons per year.



44







We use a portion of the iodine we produce
to manufacture inorganic iodine derivatives, which are intermediate products used for manufacturing agricultural and nutritional
applications, at facilities located near Santiago, Chile. We also produce inorganic and organic iodine derivative products together
with Ajay, which purchases iodine from us. In the past, we have primarily sold our iodine derivative products in South America,
Africa and Asia, while Ajay and its affiliates have primarily sold their iodine derivative products in North America and Europe.



In September 2010, CONAMA, currently known
as the Environmental Evaluation Service, approved the environmental study of our Pampa Hermosa project in the Tarapacá
Region of Chile. This environmental permit allows for an increase in the production capacity of our Nueva Victoria operations
to 11,000 metric tons of iodine per year and to produce up to 1.2 million metric tons of crystallized nitrates, mine up to 37
million metric tons of caliche per year and use new water rights of up to 570.8 liters per second. In recent years, we have made
investments in order to increase the water capacity in the Nueva Victoria operations from two water sources approved by the environmental
study of Pampa Hermosa, expand the capacity of solar evaporation ponds, and implement new areas of mining and collection of solutions.
Our current production capacity at Nueva Victoria is approximately 9,000 metric tons per year of iodine (including the Iris operations)
and 700,000 metric tons per year of nitrates. Additional expansions may be done from time to time in the future, depending on
market conditions.



Salar de Atacama Brine Deposits



The Salar de Atacama, located approximately
250 kilometers east of Antofagasta, is a salt-encrusted depression in the Atacama Desert, within which lies an underground deposit
of brines contained in porous sodium chloride rock fed by an underground inflow from the Andes mountains. The brines are estimated
to cover a surface of approximately 2,800 square kilometers and contain commercially exploitable deposits of potassium, lithium,
sulfates and boron. Concentrations vary at different locations throughout the Salar de Atacama. Our mining exploitation rights
to the Salar de Atacama are pursuant to the Lease Agreement, which expires in 2030. The Lease Agreement permits the CCHEN to establish
a total accumulated extraction and sales limit of 180,100 tons of lithium metal (958,672 tons of lithium carbonate equivalent)
in the aggregate for all periods. We are over halfway through the term of the Lease Agreement and have extracted approximately
59% of the total accumulated extraction and sales limit of lithium.



Brines are pumped from depths of 1.5 to 60
meters below surface, through a field of wells that are located in the Salar de Atacama, distributed in areas authorized for exploitation,
and which contain relatively high concentrations of potassium, lithium, sulfate, boron and other minerals.



Products Derived from the Salar de Atacama
Brines



The products derived from the Salar de Atacama
brines are: potassium chloride, potassium sulfate, potassium salts, lithium carbonate, lithium hydroxide, lithium chloride, boric
acid and bischofite (magnesium chloride).



Potassium Chloride



We use potassium chloride in the production
of potassium nitrate. Production of our own supplies of potassium chloride provides us with substantial raw material cost savings.
We also sell potassium chloride to third parties, primarily as a commodity fertilizer.



45







In order to produce potassium chloride, brines
from the Salar de Atacama are pumped to solar evaporation ponds. Evaporation of the water contained in the brine, results in a
crystallized mixture of salts with various content levels of potassium, sodium and magnesium. In the first stage of the precipitation,
sodium chloride salts are removed; these salts are not used in the production process of other products. After further evaporation,
the sodium and potassium salts are harvested and sent for treatment at one of the wet potassium chloride plants where potassium
chloride is separated by a grinding, flotation, and filtering process. In the final evaporation stage, salts containing potassium
and magnesium are harvested and sent for treatment at one of the cold leach plants where magnesium is removed. Potassium chloride
is transported approximately 300 kilometers to our Coya Sur facilities via a dedicated truck transport system, where it is used
in the production of potassium nitrate. We sell potassium chloride produced at the Salar de Atacama in excess of our needs to
third parties. All of our potassium-related plants in the Salar de Atacama currently have nominal production capacity in excess
of up to 2.6 million metric tons per year. Actual production capacity depends on volume, metallurgical recovery rates and quality
of the mining resources pumped from the Salar de Atacama.



The by-products of the potassium chloride
production process are (i) solutions remaining after removal of the potassium chloride, which are used to produce lithium carbonate
as described below, with the excess amount not required for lithium carbonate production being reinjected into the Salar de Atacama;
(ii) sodium chloride, which is similar to the surface material of the Salar de Atacama and is deposited at sites near the production
facility and (iii) other salts containing magnesium chloride.



Lithium Carbonate and Lithium Chloride



After the production of potassium chloride,
a portion of the solutions remaining is sent to additional solar concentration ponds adjacent to the potassium concentration ponds.
At this stage, the solution is concentrated and purified by precipitation to remove impurities it may still contain, including
calcium, sulfate, potassium, sodium and magnesium. Next is the process of concentration and purification of the remaining concentrated
solution of lithium chloride, which is transported by truck to the Salar del Carmen production facility located near Antofagasta,
approximately 230 kilometers from the Salar de Atacama. At this plant, the solution is further purified and treated with sodium
carbonate to produce lithium carbonate, which is dried and then, if necessary, compacted and finally packaged for shipment. A
portion of this purified lithium chloride solution is packaged and shipped to customers. The production capacity of our lithium
carbonate facility is approximately 48,000 metric tons per year. Future production will depend on the actual volumes and quality
of the lithium solutions sent by the Salar de Atacama operations, as well as prevailing market conditions. Our future production
is also subject to the extraction limit of 180,100 tons of lithium (958,672 tons of lithium carbonate equivalent) in the aggregate
for all periods of the Lease Agreement mentioned above.



Our lithium carbonate production quality assurance
program has been certified by TÜV-Rheiland under ISO 9001:2000 since 2005 and under ISO 9001:2008 since October 2009.



Lithium Hydroxide



Lithium carbonate is sold to customers, and
we also use it as a raw material for our lithium hydroxide production, which started operations at the end of 2005. This facility
has a production capacity of 6,000 metric tons per year and is located in the Salar del Carmen, adjacent to our lithium carbonate
operations. In the production process, lithium carbonate is reacted with a lime solution to produce lithium hydroxide brine and
calcium carbonate salt, which is filtered and piled in reservoirs. The lithium hydroxide solution is evaporated in a multiple
effect evaporator and crystallized to produce the lithium hydroxide, which is filtered, dried and packaged for shipment to customers.



Our lithium hydroxide production quality assurance
program has been certified by TÜV-Rheiland under ISO 9001:2000 since 2007 and under ISO 9001:2008 since October 2009.



46







Potassium Sulfate and Boric Acid



Approximately 12 kilometers northeast of the
potassium chloride facilities at the Salar de Atacama, we use the brines from the Salar de Atacama to produce potassium sulfate,
potassium chloride (as a by-product of the potassium sulfate process) and, depending on market conditions, boric acid. The plant
is located in an area of the Salar de Atacama where high sulfate and potassium concentrations are found in the brines to produce
potassium sulfate. The brine is pumped to solar evaporation ponds, where sodium chloride salts are precipitated, harvested and
put into piles. After further evaporation, the sulfate and potassium salts precipitate in different concentrations and are harvested
and sent for processing to the potassium sulfate plant. Potassium sulfate is produced using flotation, concentration and reaction
processes, after which it is crystallized, filtered, dried, classified and packaged for shipment.



Production capacity for the potassium sulfate
plant is approximately 340,000 metric tons per year, of which approximately 95,000 metric tons correspond to potassium chloride
obtained as a by product of the potassium sulfate process. This capacity is part of the total nominal plant capacity of 2.6 million
metric tons per year. In our dual plant complex, we may switch, to some extent, between potassium chloride and potassium sulfate
production. Part of the pond system in this area is also used to process potassium chloride brines extracted from the low sulfate
concentration areas found in the salar.



The principal by-products of the production
of potassium sulfate are: (i) non-commercial sodium chloride, which is deposited at sites near the production facility and (ii)
remaining solutions, which are re-injected into the Salar de Atacama or returned to the evaporation ponds. The principal by-products
of the boric acid production process are remaining solutions that are treated with sodium carbonate to neutralize acidity and
then are reinjected into the Salar de Atacama.



Raw Materials



The main raw material that we require in the
production of nitrate and iodine is caliche ore, which is obtained from our surface mines. The main raw material in the production
of potassium chloride, lithium carbonate and potassium sulfate is the brine extracted from our operations at the Salar de Atacama.



Other important raw materials are sodium carbonate
(used for lithium carbonate production and for the neutralization of iodine solutions), sulfuric acid, kerosene, anti-caking and
anti-dust agents, ammonium nitrate (used for the preparation of explosives in the mining operations), woven bags for packaging
our final products, electricity acquired from electric utilities companies, and liquefied natural gas and fuel oil for heat generation.
Our raw material costs (excluding caliche ore and salar brines and including energy) represented approximately 13% of our cost
of sales in 2016.



We have been connected to the northern power
grid in Chile, which currently supplies electricity to most cities and industrial facilities in northern Chile, since April 2000.
We have several electricity supply agreements signed with major producers in Chile, which are within the contract terms. Our electricity
needs are primarily covered by the Electrical Energy Supply Agreement that we entered into with AES Gener S.A. (formerly known
as Gener S.A.) on December 31, 2012. Pursuant to the terms of the Electrical Energy Supply Agreement, we are required to purchase
an amount of electricity that exceeds the amount that we estimate we will need for our operations. The excess amount is sold at
marginal cost, which could result in a material loss for us.



For the supply of liquefied natural gas, in
2013 and 2014 we had a contract with Solgas. For 2015 and 2016, we executed supply contracts with Enel Chile (formerly Endesa)
as with Solgas, primarily to serve our operations at the Salar del Carmen and Coya Sur.



We obtain ammonium nitrate, sulfuric acid,
kerosene and soda ash from several large suppliers, mainly in Chile and the United States, under long-term contracts or general
agreements, some of which contain provisions for annual revisions of prices, quantities and deliveries. Diesel fuel is obtained
under contracts that provide fuel at international market prices.



We believe that all of our contracts and agreements
with third-party suppliers with respect to our main raw materials contain standard and customary commercial terms and conditions.



47







Water Supply



We hold water rights for the supply
of surface and subterranean water near our production facilities. The main sources of water for our nitrate and iodine facilities
at Pedro de Valdivia, María Elena and Coya Sur are the Loa and San Salvador rivers, which run near our production facilities.
Water for our Nueva Victoria and Salar de Atacama facilities is obtained from wells near the production facilities. In addition,
we buy water from third parties for our production processes at the Salar del Carmen lithium carbonate and lithium hydroxide plants,
and we also purchase potable water from local utility companies. We have not experienced significant difficulties obtaining the
necessary water to conduct our operations.



Government Regulations



Regulations in Chile Generally



We are subject to the full range of government
regulations and supervision generally applicable to companies engaged in business in Chile, including labor laws, social security
laws, public health laws, consumer protection laws, tax laws, environmental laws, free competition laws, and securities laws.
These include regulations to ensure sanitary and safety conditions in manufacturing plants.



We conduct our mining operations pursuant
to judicial exploration concessions and exploitation concessions granted pursuant to applicable Chilean law. Exploitation concessions
essentially grant a perpetual right (with the exception of the Salar de Atacama rights, which have been leased to us until 2030)
to conduct mining operations in the areas covered by such concessions, provided that annual concession fees are paid. Exploration
concessions permit us to explore for mineral resources on the land covered thereby for a specified period of time, and to subsequently
request a corresponding exploitation concession.



Under Law No. 16,319 that created the Chilean
Nuclear Energy Commission (Comisión Chilena de Energía Nuclear or “CCHEN”), we have 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 annual quotas that limit the total tonnage of lithium authorized to be sold.



We also hold water use rights granted by the
respective administrative authorities and which enable us to have a supply of water from rivers or wells near our production facilities
sufficient to meet our current operating requirements. See “Item 3.D. Risk Factors—Risks Relating to Chile—Changes
in water rights laws and other regulations could affect our operating costs.” The Water Code and related regulations are
subject to change, which could have a material adverse impact on our business, financial condition and results of operations.



We operate port facilities at Tocopilla, Chile
for the shipment of products and the delivery of raw materials in conformity with maritime concessions, which have been granted
by the respective administrative authority. These concessions are normally renewable on application, provided that such facilities
are used as authorized and annual concession fees are paid.



In 2005, Law No. 20,026, known as the Law
to Establish a Specific Tax on Mining Activity” (Ley que Establece un Impuesto Específico a la Actividad Mineraor the “Royalty Law”), established a royalty tax to be applied to mining activities developed in Chile. In 2010,
modifications were made to the law and taxes were increased.



In 2012, new modifications to the tax laws
were enacted to set the corporate tax rate at 20% for companies like SQM.



48







On September 29, 2014, Law No. 20,780 was
published (the “Tax Reform”), introducing significant changes to the Chilean taxation system and strengthening the
powers of the SII to control and prevent tax avoidance. Subsequently, on February 8, 2016, Law No. 20,899 that simplifies the
income tax system and modifies other legal tax provisions was published. As a result of these reforms, open stock corporations,
like SQM, are subject to the partially integrated shareholder tax regime (sistema parcialmente integrado). The corporate
tax rate applicable to us increased gradually from 20% to 24% in 2016. It will increase to 25.5% in 2017 and increase to a maximum
rate of 27% in 2018.



The Tax Reform tax increase prompted a US$52.3
million increase in our deferred tax liabilities as of December 31, 2014. In accordance with IAS 12, the effects generated by
the change in the income tax rate approved by Law No. 20.780 on income and deferred taxes were applied to the income statement.
For purposes of the Company’s statutory consolidated financial statements filed with the SVS, in accordance with the instructions
issued by the SVS in its circular 856 of October 17, 2014, the effects generated by the change in the income tax rate were accounted
for as retained earnings. The amount charged to equity as of December 31, 2014 was US$52.3 million, thereby giving rise to a difference
of US$52.3 million in profit for the year and income tax expense as presented in the Company’s Audited Consolidated Financial
Statements compared with profit and income tax expense as presented in the Company’s statutory consolidated financial statements
filed with the SVS.



The Chilean government may again decide to
levy additional taxes on mining companies or other corporations in Chile, and such taxes could have a material adverse impact
on our business, financial condition and results of operations.



We are 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. Recent changes to these laws and their application may have a material adverse effect on our business, financial
condition and results of operations. See “Item 3.D. Risk Factors—Risks Relating to Our Business—We are exposed
to labor strikes and labor liabilities that could impact our production levels and costs.”



In addition, we are subject to Law No. 20,393,
which establishes criminal liability for legal entities, for the crimes of (a) asset laundering, (b) financing terrorism and (c)
bribery. Potential sanctions for violations under this law could include (i) fines, (ii) loss of certain governmental benefits
during a given period, (iii) a temporary or permanent bar against the corporation executing contracts with governmental entities,
and (iv) dissolution of corporation.



Finally, we are governed by the Securities
Law and Law No. 18,046 on Corporations (Ley de Sociedades Anónimas or the “Chilean Corporations Act”),
which regulates corporate governance. Specifically, the Chilean Corporations Act regulates, among other things, independent director
requirements, disclosure obligations to the general public and to the SVS, as well as regulations relating to the use of inside
information, the independence of external auditors, and procedures for the analysis of transactions with related parties. See
“Item 6.C. Board Practices” and Item 7.B. Related Party Transactions.”



There are currently no material legal or administrative
proceedings pending against us except as discussed in Note 19.1 to our Consolidated Financial Statements and below under “Safety,
Health and Environmental Regulations in Chile.”



Safety, Health and Environmental Regulations
in Chile



Our 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 us 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 Trabajoor the “Health and Basic Conditions
Act”), the Subcontracting Law and the Environmental Law of 1994, amended in 2010 (Ley sobre Bases Generales del Medio
Ambiente or the “Environmental Law”).



49







Health and safety at work are fundamental
aspects in the management of mining operations, which is why we have made constant efforts to maintain good health and safety
conditions for the people working at our mining sites and facilities. In addition to the role played by us in this important matter,
the Chilean government has a regulatory role, enacting and enforcing regulations in order to protect and ensure the health and
safety of workers. The Chilean government, acting through the Ministry of Health and the Sernageomin, performs health and safety
inspections at the mining sites and oversees mining projects, among other tasks, and it has exclusive powers to enforce standards
related to environmental conditions and the health and safety of the people performing activities related to mining.



The Mine Health and Safety Act protects workers
and nearby communities against health and safety hazards, and it provides for enforcement of the law where compliance has not
been achieved. Our Internal Mining Standards (Reglamentos Internos Mineros) establish our obligation to maintain a workplace
where safety and health risks are managed appropriately. We must comply with the general provisions of the Health and Basic Conditions
Act, our own internal standards and the provisions of the Mine Health and Safety Act. In the event of non-compliance, the Ministry
of Health and particularly the Sernageomin are entitled to use their enforcement powers to ensure compliance with the law.



In November 2011, the Ministry of Mining enacted
Law No. 20,551 that Regulates the Closure of Mining Sites and Facilities (Ley que Regula el Cierre de Faenas e Instalaciones
Mineras). This statute entered in force in November 2012 and required all mining sites to present or update their closure
plans as of November 2014. SQM has fulfilled this requirement for all of its mining sites and facilities. The main requirements
of the law are related to disclosures to the Sernageomin regarding decommissioning plans for each mining site and its facilities,
along with the estimated cost to implement such plans. The mining site closure plans are approved by Sernageomin and the corresponding
financial assurances are subject to approval by the SVS. In both cases, SQM has received the requisite approvals and kept the
respective guarantees up to date according to the useful life of each mining site.



The new and modified Chilean Environmental
Law defines the Ministry of the Environment as the governmental agency responsible for coordinating and supervising environmental
issues. The Environmental Assessment Service is responsible for reviewing environmental assessments of new projects or significant
modifications of existing ones, and the decision to grant or reject environmental permits rests with the Environmental Assessment
Commission. On the other hand, the Superintendence for the Environment is responsible for supervising environmental performance
during the construction, operation and closure of the projects that have been evaluated for environmental permits, and it is also
responsible for enforcing compliance with prevention and atmospheric decontamination plans. The Environmental Law also promotes
citizen participation in project evaluation and implementation, providing more opportunities for observations or objections to
be made during the environmental evaluation process. Annually, the Superintendence for the Environment audits a sample of approved
projects to verify compliance with the environmental permits, and it may pursue fines or sanctions if applicable, which can be
challenged in the Environmental Court.



We continuously monitor the impact of our
operations on the environment and on the health of our employees and other persons who may be affected by such operations. We
have made modifications to our facilities in an effort to eliminate any adverse impacts. Also, over time, new environmental standards
and regulations have been enacted, which have required minor adjustments or modifications of our operations for full compliance.
We anticipate that additional laws and regulations will be enacted over time with respect to environmental matters. While we believe
we will continue to be in compliance in all material respects with all applicable environmental regulations of which we are now
aware, there can be no assurance that future legislative or regulatory developments will not impose new restrictions on our operations.
We are committed to both complying with all applicable environmental regulations and to continuously improving our environmental
performance through our Environmental Management System (“EMS”), voluntary evaluations, such as Ecovadis, and international
certifications, such as the Responsible Conduct certification from the Chilean Industrial Chemicals Association, which applies
to our operations at Nueva Victoria, and the Protect&Sustain certification from the International Fertilizer Association,
which applies to our operations at Coya Sur, the Salar de Atacama, Tocopilla, Antofagasta and Santiago.



50







We have submitted and will continue to submit
several environmental impact assessment studies related to our projects to the governmental authorities. We require the authorization
of these submissions in order to maintain and to increase our production capacity.



International Regulations



We employ our best efforts to ensure compliance
with the complex regulatory environments in which we operate.



In March 2016, the European Commission sent
to the European Parliament a new regulatory proposal for fertilizers, which is expected to be approved by the end of 2017, following
which there will be a transition period for its implementation. The new European regulation proposes to reduce the maximum content
limit of perchlorates in inorganic fertilizer with macronutrients, such as the potassium nitrate sold by us, from 0.01% to 0.005%.
The fertilizers that we sell contain less than 0.005% of perchlorate. However, we anticipate that in 2017, the Food Chain Security
unit of the General Health and Consumer Affairs Council may revise the perchlorate limits in food that are currently in force
and effect, following the European Food Safety Authority’s (“EFSA”) evaluation of the data from the 2016 monitoring
program that analyzed perchlorate levels in food and in drinkable water. The new limits of perchlorates in food is expected to
be established by the end of 2017.



With respect to the regulation on explosives
in Europe, we issued a procedure for all employees of SQM Europe NV (Procedure for the Reporting of Suspicious Transactions and
Theft of Products covered by Regulation (EU) No. 98/2013). We completed a new training program for employees in related European
companies with respect to such regulation. This regulation considers nitrogen, phosphorus, and potassium (“NPK”) mixes
produced in Europe as well as the nitrates in the product line and third party products covered by the regulation. The member
states that participate in the European Committee that reviews the regulation did not reach a consensus on defining the ranges
of concentration for fertilizer products. We will continue to monitor the development of changes to the regulation through our
participation in the Potassium Nitrate Association as part of the public–private committee created by the European Committee.
In 2017, the reviewing committee expects to prepare a report evaluating the regulation.



In September 2016, we fulfilled the United
States Environmental Protection Agency’s (“US-EPA”) requirement under the Chemical Data Reporting (“CDR”)
regulation and the Toxic Substances Control Act (US-TSCA) to disclose all chemical substances imported to the United States by
SQM North America Corp. during the 2012-2015 period, including the amount in tons per year and its uses. We conducted a survey
of all products imported to the United States of America from our headquarters and affiliates during this period and reported
the information per chemical substance to the US-EPA. This disclosure will be made again in 2020 for products imported during
the 2016-2019 period.



In January 2016, a new Korean regulation for
the management of chemical products known as K-REACH came into effect. K-REACH contains requirements that are similar to those
established by the European regulation, REACH. K-REACH defines obligations for both importers and users of our products with respect
to the evaluation of security and the communication of risks to the supply chain. K-REACH also defines substances that should
be registered in accordance with the regulation that will be implemented in July 2018. We intend to act through a sole representative
in Korea for all products subject to the regulation.



On March 14, 2016, Normative Instruction No.
5 became effective in Brazil, which defines specification requirements, guarantees, tolerances, registration requirements, packaging
requirements, and the labeling of fertilizer products, among others. Normative Instruction No. 5 also defines changes to the information
presented for the new registration of products and for the renewal of existing registries, when applicable.



51







Research and Development, Patents and
Licenses



See “Item 5.C. Research and Development,
Patents and Licenses.”



4.C.
   Organizational Structure



All of our principal operating subsidiaries
are essentially wholly-owned, except for Soquimich Comercial S.A., which is approximately 61% owned by us and whose shares are
listed and traded on the Santiago Stock Exchange, and Ajay SQM Chile S.A., which is 51% owned by us. The following is a summary
of our main subsidiaries as of December 31, 2016. For a list of all our consolidated subsidiaries, see Note 2.5 to our Consolidated
Financial Statements.



|Principal subsidiaries                                                                                                                                                     |  | Activity                                                                                                                             |  | Country ofIncorporation |  | SQM BeneficialOwnership Interest(Direct/Indirect)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- |  | -------------------------------------------------
|SQM Nitrates S.A.                                                                                                                                                          |  | Extracts and sells caliche ore to subsidiaries and affiliates
    of SQM                                                             |  | Chile                   |  | 100%                                             
|SQM Industrial S.A.                                                                                                                                                        |  | Produces and markets SQM’s products directly and through
    other subsidiaries and affiliates of SQM                                |  | Chile                   |  | 100%                                             
|SQM Salar S.A.                                                                                                                                                             |  | Exploits the Salar de Atacama to produce and market SQM’s
    products directly and through other subsidiaries and affiliates of SQM |  | Chile                   |  | 100%                                             
|SQM Potasios S.A.                                                                                                                                                          |  | Produces and markets SQM’s products directly and through
    other subsidiaries and affiliates of SQM                                |  | Chile                   |  | 100%                                             
|Servicios Integrates de Transitos y Transferencias S.A. (SIT)                                                                                                              |  | Owns and operates a rail transport system and also owns and
    operates the Tocopilla port facilities                               |  | Chile                   |  | 100%                                             
|Soquimich Comercial S.A.                                                                                                                                                   |  | Markets SQM’s specialty plant nutrition products domestically
    and imports fertilizers for resale in Chile                        |  | Chile                   |  | 61%                                              
|Ajay-SQM Chile S.A.                                                                                                                                                        |  | Produces and markets SQM’s iodine and iodine derivatives                                                                             |  | Chile                   |  | 51%                                              
|Sales and distribution subsidiaries in the United States, Belgium,
    Brazil, Ecuador, Peru, Argentina, Mexico, South Africa, Spain, China, Thailand and other locations. |  | Market SQM’s products throughout the world                                                                                           |  | Various                 |  |                                                  



52







4.D.
   Property, Plant and Equipment



We carry out our operations through the use
of mining rights, production facilities and transportation and storage facilities. Discussion of our mining rights is organized
below according to the geographic location of our mining operations. Our caliche ore mining interests are located throughout the
valley of the Tarapacá and Antofagasta regions of northern Chile (in a part of the country known as “el Norte Grande”).
From caliche ore, we produce products based on nitrates and iodine, and caliche also contains concentrations of potassium. Our
mining interests in the brine deposits of the Salar de Atacama are found within the Atacama Desert, in the eastern region of el
Norte Grande. From these brines we produce products based on potassium, sulfate, lithium and boron.



The map below shows the location of our principal
mining operations and the exploitation and exploration mining concessions that have been granted to us, as well as the mining
properties that we lease from Corfo:



53













54







Mining Concessions



Mining Concessions for the Exploration
and Exploitation of Caliche Ore Mining Resources



We hold our mining rights pursuant to mining
concessions for exploration and exploitation of mining resources that have been granted pursuant to applicable law in Chile:



| | (1) | “Mining Exploitation Concessions”:
                                         entitle us to use the land in order to exploit the mineral resources contained therein
                                         on a perpetual basis, subject to annual payments to the Chilean government.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | “Mining Exploration Concessions”:
                                         entitle us to use the land in order to explore for and verify the existence of mineral
                                         resources for a period of two years, at the expiration of which the concession may be
                                         extended one time only for two additional years, if the area covered by the concession
                                         is reduced by half. We may alternatively request an exploitation concession in respect
                                         of the area covered by the original exploration concession, which must be made within
                                         the timeframe established by the original exploration concession.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A Mining Exploration Concession is generally
obtained for purposes of evaluating the mineral resources in a defined area. If the holder of the Mining Exploration Concession
determines that the area does not contain commercially exploitable mineral resources, the Mining Exploration Concession is usually
allowed to lapse. An application also can be made for a Mining Exploitation Concession without first having obtained a Mining
Exploration Concession for the area involved.



As of December 31, 2016, the surface area
covered by Mining Exploitation Concessions that have been granted in relation to the caliche resources of SQM S.A.’s mining
sites corresponds to approximately 569,323 hectares. In addition, as of December 31, 2016, the surface area covered by Mining
Exploration Concessions in relation to the caliche resources of SQM S.A.’s mining sites corresponds to approximately 6,800
hectares. We have not requested additional mining rights.



Mining Concessions for the Exploitation
of Brines at the Salar de Atacama



As of December 31, 2016, our subsidiary SQM
Salar held exclusive rights to exploit the mineral resources in an area covering approximately 140,000 hectares of land in the
Salar de Atacama in northern Chile, of which SQM Salar is only entitled to exploit the mineral resources of 81,920 hectares. These
rights are owned by Corfo and leased to SQM Salar pursuant to the Lease Agreement. Corfo cannot unilaterally modify the Lease
Agreement, and the rights to exploit the resources cannot be transferred. The Lease Agreement establishes that SQM Salar is responsible
for making quarterly lease payments to Corfo according to specified percentages of the value of production of minerals extracted
from the Salar de Atacama brines, maintaining Corfo’s rights over the mining exploitation concessions and making annual
payments to the Chilean government for such concession rights. The Lease Agreement expires on December 31, 2030.



Under the terms of the Salar de Atacama project
agreement between Corfo and SQM Salar (the “Project Agreement”), Corfo has agreed that it will not permit any other
person to explore, exploit or mine any mineral resources in the approximately 140,000 hectares area of the Salar de Atacama mentioned
above. The Project Agreement expires on December 31, 2030.



SQM Salar holds an additional 254,940 hectares
of constituted Mining Exploitation Concessions in areas near the Salar de Atacama, which correspond to mining reserves that have
not been exploited. SQM Salar also holds Mining Exploitation Concessions that are in the process of being granted covering 72,178
hectares in areas near the Salar de Atacama.



55







In addition, as of December 31, 2016, SQM
Salar held constituted Mining Exploration Concessions covering approximately 68,400 hectares and had applied for additional Mining
Exploration Concessions of approximately 2,600 hectares. Exploration rights are valid for a period of two years, after which we
can (i) request a Mining Exploitation Concession for the land, (ii) request an extension of the Mining Exploration Concession
for an additional two years (the extension only applies to a reduced surface area equal to 50% of the initial area) or (iii) allow
the concession to expire.



According to the terms of the Lease Agreement,
with respect to lithium production, the CCHEN has established a total accumulated extraction limit set at 180,100 tons of lithium
(958,672 tons of lithium carbonate equivalent) in the aggregate for all periods while the Lease Agreement is in force. More than
halfway through the term of the Lease Agreement, we have extracted approximately 59% of the total accumulated extraction limit
of lithium.



Corfo has initiated arbitration proceedings
in connection with the Lease Agreement. For more information, see “Item 8.A.7 Legal Proceedings”.



Concessions Generally



As of December 31, 2016, approximately 96%
of SQM’s mining interests were held pursuant to Mining Exploitation Concessions and 4% pursuant to Mining Exploration Concessions.
Of the Mining Exploitation Concessions, approximately 93% already have been granted pursuant to applicable Chilean law, and approximately
7% are in the process of being granted. Of the Mining Exploration Concessions, approximately 96% already have been granted pursuant
to applicable Chilean law, and approximately 4% are in the process of being granted.



In 2016, we made payments of approximately
US$7.2 million to the Chilean government for Mining Exploration and Exploitation Concessions, including the concessions we lease
from Corfo. These payments do not include the payments we made directly to Corfo pursuant to the Lease Agreement, according to
the percentages of the sales price of products produced using brines from the Salar de Atacama.



The following table shows the constituted
Mining Exploitation and Exploration Concessions held by SQM, including the mining properties we lease from Corfo, as of December
31, 2016:



|                      |  | Exploitation
 Concessions |        |  | Exploration
 Concessions |  |           | Total        | 
|--------------------- |  | ------------------------- | ------ |  | ------------------------ |  | --------- | ------------ | 
|Region of Chile       |  | Total
Number              |        |  | Hectares                 |  |           | Total
Number | 
|Region I              |  |                           | 2,820  |  |                          |  | 538,454   |              | 
|Region II             |  |                           | 9,011  |  |                          |  | 2,372,895 |              | 
|Region III and others |  |                           | 406    |  |                          |  | 97,768    |              | 
|Total                 |  |                           | 12,237 |  |                          |  | 3,009,117 |              | 



The majority of the Mining Exploitation Concessions
held by SQM were requested primarily for non-metallic mining purposes. However, a small percentage of our Mining Concessions were
requested for metallic mining purposes. The annual payment to the Chilean government for this group of concessions is higher.



Geological studies over mining properties
that were requested primarily for non-metallic mining purposes may show that the concession area is of interest for metallic mining
purposes, in which case we must inform the Sernageomin, indicating that the type of substance contained by such Mining Concessions
has changed, for purposes of the annual payment for these rights.



56







Caliche: Facilities and Reserves



Caliche: Facilities



During 2016, caliche ore mining operations
were focused in the first region of Chile, and our Nueva Victoria mine was exploited. In November 2015, the mining and nitrate
operations at Pedro de Valdivia were suspended, and iodine production was reduced at the Pedro de Valdivia site, in order to take
advantage of the highly efficient production facilities at Nueva Victoria. Operations at the Pampa Blanca site were suspended
in 2010, and operations at the María Elena site were suspended in October 2013.



María Elena

The María Elena mine and facilities,
named El Toco, are located 220 kilometers northeast of Antofagasta and are accessible by highway. Until February 2010, caliche
was used at this facility to produce nitrates and iodine through vat leaching. Subsequently, these facilities were equipped to
produce nitrates and iodine through the use of heap leaching and solar evaporation ponds. Heap leaching operations at this site
were suspended in October 2013. During 2014 and 2015, we continued to produce solutions rich in iodine and nitrates by leaching
the mine tailings. These solutions are treated at the iodide plant at María Elena, and subsequently the prilled iodine
is produced at Pedro de Valdivia. The main production facilities at this site include the operations center located at El Toco
and the iodide plant located at María Elena. The area mined until operations were suspended is located approximately 14
kilometers north of the María Elena production facilities. Electricity and fuel oil are the primary sources of power for
this operation.



Nueva Victoria

The Nueva Victoria mine and facilities are
located 180 kilometers north of María Elena and are accessible by highway. Since 2007, the Nueva Victoria mine includes
the mining properties Soronal, Mapocho and Iris. At this site, we use caliche to produce salts rich in nitrates and iodine, through
heap leaching and the use of solar evaporation ponds. The main production facilities at this site include the operation centers
for the heap leaching process, the iodide and iodine plants at Nueva Victoria and Iris and the evaporation ponds at the Sur Viejo
sector of the site. The areas currently being mined are located approximately 4 kilometers northeast of Nueva Victoria. Solar
energy and electricity are the primary sources of power for this operation.



Pampa Blanca

The mining facilities at Pampa Blanca, which
is located 100 kilometers northeast of Antofagasta, have been suspended since March 2010. At this site, we used caliche to produce
nitrates and iodine through heap leaching and the use of solar evaporation ponds. The main production facilities at this site
included the operation centers for the heap leaching system and the iodide plant. Electricity was the primary source of power
for this operation.



Pedro de Valdivia

The Pedro de Valdivia mine and facilities
are located 170 kilometers northeast of Antofagasta and are accessible by highway. At this site, we used caliche to produce nitrates
and iodine through vat leaching and solar evaporation ponds. The main production facilities at this site include the crushing,
vat leaching, fines processing, nitrate crystallization plant, and iodide and iodine plants. In November 2015, the mining and
nitrate operations at Pedro de Valdivia were suspended, and iodine production was reduced. Electricity, natural gas and fuel oil
are the primary sources of power for this operation.



57







Caliche: Reserves



Our in-house staff of geologists and mining
engineers prepares our estimates of caliche ore reserves. The Proven and Probable Reserve figures presented below are estimates,
and may be subject to modifications due to natural factors that affect the distribution of mineral grades, which would, in turn,
modify the recovery of nitrate and iodine. Therefore, no assurance can be given that the indicated levels of recovery of nitrates
and iodine will be realized.



We estimate ore reserves based on evaluations,
performed by engineers and geologists, of assay values derived from sampling of drill-holes and other openings. Drill-holes have
been made at different space intervals in order to recognize mining resources. Normally, we start with 400x400 meters and then
we reduce spacing to 200x200 meters, 100x100 meters and 50x50 meters. The geological occurrence of caliche ore is unique and different
from other metallic and non-metallic minerals. Caliche ore is found in large horizontal layers at depths ranging from one to four
meters and has an overburden between zero and two meters. This horizontal layering is a natural geological condition and allows
the Company to estimate the continuity of the caliche bed based on surface geological reconnaissance and analysis of samples and
trenches. Mineral resources can be calculated using the information from the drill-hole sampling.



A Mineral Resource is a concentration or occurrence
of natural, solid, inorganic or fossilized organic material in or on the Earth’s crust in such form or quantity and of such
grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics
and continuity of a mineral resource are known, estimated or interpreted from specific geological, metallurgical and technological
evidence.



A Measured Resource is the part of a Mineral
Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high
level of confidence. The estimate is based on detailed exploration, sampling and testing information gathered through appropriate
sampling techniques from locations such as outcrops, trenches, and exploratory drill holes.



An Indicated Mineral Resource is the part
of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated
with a reasonable level of confidence. The estimate is based on detailed exploration, sampling and testing information gathered
through appropriate sampling techniques from locations such as outcrops, trenches and exploratory drill holes.



According to our experience in caliche ore,
the grid pattern drill-holes with spacing equal to or less than 100 meters produce data on the caliche resources that is sufficiently
defined to consider them Measured Resources and then, adjusting for technical, economic and legal aspects, as Proven Reserves.
These reserves are obtained using the Kriging Method and the application of operating parameters to obtain economically profitable
reserves.



Similarly, the information obtained from detailed
geologic work and samples taken from grid pattern drill-holes with spacing equal to or less than 200 meters can be used to determine
Indicated Resources. By adjusting such Indicated Resources to account for technical, economic and legal factors, it is possible
to calculate Probable Reserves. Probable Reserves are calculated by using a polygon-based methodology and have an uncertainty
or margin of error greater than that of Proven Reserves. However, the degree of certainty of Probable Reserves is high enough
to assume continuity between points of observation.



Proven Reserves are the economically mineable
part of a Measured Resource. The calculation of the reserves includes the application of mining parameters including maximum overburden,
minimum thickness of caliche ore, stripping ratio, cutoff grade and application of dilution factors to the grade values. Appropriate
assessments, including pre-feasibility studies or feasibility studies, have been carried out and include consideration of metallurgical,
economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting
that extraction is reasonably justified.



58







Probable Reserves are the economically mineable
part of an Indicated Resource and in some cases a Measured Resource. The calculation of the reserves includes the application
of mining parameters including maximum overburden, minimum thickness of caliche ore, stripping ratio, cutoff grade and application
of dilution factors to the grade values. Appropriate assessments, including pre-feasibility studies, have been carried out or
are in process and include consideration of metallurgical, economic, marketing, legal, environmental, social and governmental
factors. These assessments demonstrate at the time of reporting that extraction is reasonably justified.



The estimates of Proven Reserves of caliche
ore at each of our mines as of December 31, 2016 are set forth below. The Company holds 100% of the concession rights for each
of these mines.



|Mine              |  | Proven Reserves (1)(millions of metric
    tons) |       |  | Nitrate Average Grade(percentage by
    weight) |  |     | Iodine Average Grade(parts per million) |  |  | Cutoff Grade Average for Mine (2)
|----------------- |  | ------------------------------------------------ | ----- |  | ----------------------------------------------- |  | --- | --------------------------------------- |  |  | ---------------------------------
|Pedro de Valdivia |  |                                                  | 109.0 |  |                                                 |  | 7.1 | %                                       |  |  | 377                              
|María Elena       |  |                                                  | 83.3  |  |                                                 |  | 7.2 | %                                       |  |  | 436                              
|Pampa Blanca      |  |                                                  | 54.7  |  |                                                 |  | 5.7 | %                                       |  |  | 538                              
|Nueva Victoria    |  |                                                  | 377.0 |  |                                                 |  | 6.4 | %                                       |  |  | 430                              



In addition, the estimates of our Probable
Reserves of caliche ore at each of our principal mines as of December 31, 2016, are as follows:



|Mine              |  | Probable Reserves (3)(millions of metric
 tons) |         |  | Nitrate Average  Grade(percentage by

    weight) |  |     | Iodine Average Grade(parts per
    million) |  |  | Cutoff Grade (2)
|----------------- |  | ----------------------------------------------- | ------- |  | ------------------------------------------------- |  | --- | ------------------------------------------- |  |  | ----------------
|Pedro de Valdivia |  |                                                 | 334.7   |  |                                                   |  | 7.3 | %                                           |  |  | 421             
|María Elena       |  |                                                 | 148.8   |  |                                                   |  | 7.2 | %                                           |  |  | 381             
|Pampa Blanca      |  |                                                 | 464.6   |  |                                                   |  | 5.7 | %                                           |  |  | 540             
|Nueva Victoria    |  |                                                 | 1,020.7 |  |                                                   |  | 5.3 | %                                           |  |  | 421             



| | (1) | The Proven Reserves set forth in the table above are shown
before losses related to exploitation and mineral treatment. Proven Reserves are affected by mining exploitation methods, which
result in differences between the estimated reserves that are available for exploitation in the mining plan and the recoverable
material that is finally transferred to the leaching vats or heaps. The average mining exploitation factor for each of our different
mines ranges between 80% and 90%, whereas the average global metallurgical recoveries of processes for nitrate and iodine contained
in the recovered material vary between 60% and 70%.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | The cutoff grades for the Proven and Probable Reserves
vary according to the objectives of each mine. These amounts correspond to the averages of the different areas.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Probable Reserves can be expressed as Proven Reserves using
a conversion factor, only for purposes of obtaining a projection to be used for long-term planning purposes. On average, this
conversion factor is higher than 60%, depending on geological conditions and caliche ore continuity, which vary from mine to mine
(Pedro de Valdivia 60%, María Elena 50%, Pampa Blanca 70% and Nueva Victoria 60%).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The complete technical supporting documentation
for the information set forth in the table above is contained in the report “Methodology, Procedure, and Classification
of SQM’s Nitrate and Iodine Resources and Reserves for the Year 2016,” was prepared for each mine by the geologist
Vladimir Tejerina and other engineering professionals employed by SQM and validated by Mr. Sergio Alarcón and Mr. Orlando
Rojas.



59







Mr. Sergio Alarcón is a geologist with
more than 30 years of experience in the field. He is currently employed by SQM as a Geology Supervisor. Mr. Alarcón is
a Competent Person (Persona Competente), as that term is defined under Chilean Law No. 20,235, known as the Law that Regulates
the Position of Competent Person and Creates the Qualifying Committee for Competencies in Mining Resources and Reserves (Ley
que Regula la Figura de las Personas Competentes y Crea la Comisión Calificadora de Competencias de Recursos y Reservas
Mineras or “Competent Person Law”). He is registered under No. 164 in the Public Registry of Competent Persons
in Mining Resources and Reserves in accordance with the Competent Person Law and related regulations. He has worked as a geologist
with both metallic and non-metallic deposits, with vast experience in the latter.



Mr. Orlando Rojas is a civil mining engineer
and independent consultant. He is Partner and Chief Executive Officer of the company EMI-Ingenieros y Consultores S.A., whose
offices are located at Renato Sánchez No. 3357, Las Condes, Santiago, Chile. He is a member of the Institute of Mining
Engineers and is registered under No. 118 in the Public Registry of Competent Persons in Mining Resources and Reserves in accordance
with the Competent Person Law and related regulations. He has worked as a mining engineer for 39 years since graduating from university,
including more than 33 years working on estimates for reserves and resources.



Copies of the certificates of qualified competency
issued by the Chilean Mining Commission are attached hereto as Exhibits 99.1 and 99.2.



The proven and probable reserves shown above
are the result of the evaluation of approximately 21.34% of the total caliche-related mining property of our Company. However,
we have explored more intensely the areas in which we believe there is a higher potential of finding high-grade caliche ore minerals.
The remaining 78.66% of this area has not been explored or has had limited reconnaissance, which is not sufficient to determine
the sources of potential and hypothetical resources. In 2016, we did not carry out basic reconnaissance of new mining properties.
With respect to detailed explorations, in 2016, we carried out recategorizations of indicated resources in the NVWS (“Nueva
Victoria West South”), and Franja West sectors, totaling 1,575.64 hectares, which is still in process. Our 2017 exploration
program includes the exploration of Tente en el Air section, which totals 687 hectares. The reserves shown in these tables are
calculated based on properties that are not involved in any legal disputes between SQM and other parties.



Caliche ore is the key raw material used in
the production of iodine, specialty plant nutrients and industrial chemicals. The following gross margins for the business lines
specified were calculated on the same basis as cut off grades used to estimate our reserves. We expect costs to remain relatively
stable in the near future.



|                          |  | 2016         |    | 2015 |       | 2014      
|------------------------- |  | ------------ | -- | ---- | ----- | ----------
|                          |  | Gross Margin |    |      | Price |           
|Iodine and Derivatives    |  |              | 17 | %    |       | US$23/kg  
|Specialty Plant Nutrition |  |              | 23 | %    |       | US$742/ton
|Industrial Chemicals      |  |              | 35 | %    |       | US$808/ton



We maintain an ongoing program of exploration
and resource evaluation on the land surrounding the mines at Nueva Victoria, Pedro de Valdivia, María Elena, Pampa Blanca
and other sites for which we have the appropriate concessions.



60







Brines from the Salar de Atacama: Facilities
and Reserves



Salar de Atacama: Facilities



Salar de Atacama

Our facilities at the Salar de Atacama are
located 208 kilometers to the east of the city of Antofagasta and 188 kilometers to the southeast of the city of María
Elena. At this site we use brines extracted from the salar to produce potassium chloride, potassium sulfate, boric acid, magnesium
chloride salts and lithium solutions, which are subsequently sent to our lithium carbonate plant at the Salar del Carmen for processing.
The main production plants at this site include the potassium chloride flotation plants (MOP-H I and II), the potassium carnallite
plants (PC I and extension), the potassium sulfate flotation plant (SOP-H), the boric acid plant (ABO), the potassium chloride
drying plant (Dual Plant or MOP-S), the potassium chloride compacting plant (MOP-G), the potassium sulfate drying plant (SOP-S)
and the potassium sulfate compacting plant (SOP-G). Solar energy is the primary energy source used for the Salar de Atacama operations.



Salar de Atacama: Reserves



Our in-house staff of hydro-geologists and
geologists prepares our estimates of the reserve base of potassium, sulfate, lithium and boron dissolved in brines at the Salar
de Atacama. We have exploitation concessions covering an area of 81,920 hectares, in which we have carried out geological exploitation,
brine sampling and geostatistical analysis. We estimate that our proven and probable reserves as of December 31, 2016, based on
economic restrictions, geological exploitation, brine sampling and geostatistical analysis up to a depth of 110 meters of our
total exploitation concessions, and additionally, up to a depth of 300 meters over approximately 47% of the same total area, are
as follows:



|                    |  | Proven Reserves (1)(millions of metric tons) |       |  | Probable Reserves (1)(millions of metric tons) |  |       | Total Reserves(millions of metric tons) | 
|------------------- |  | -------------------------------------------- | ----- |  | ---------------------------------------------- |  | ----- | --------------------------------------- | 
|Potassium (K+) (2)  |  |                                              | 54.62 |  |                                                |  | 39.00 |                                         | 
|Sulfate (SO4-2) (3) |  |                                              | 47.82 |  |                                                |  | 37.06 |                                         | 
|Lithium (Li+) (4)   |  |                                              | 4.89  |  |                                                |  | 3.17  |                                         | 
|Boron (B3+) (5)     |  |                                              | 1.76  |  |                                                |  | 1.26  |                                         | 



| | (1) | Metric tons of potassium, sulfate,
                                         lithium and boron considered in the proven and probable reserves are shown before losses
                                         from evaporation processes and metallurgical treatment. The recoveries of each ion depend
                                         on both brine composition and the process applied to produce the desired commercial products.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Recoveries for potassium vary
                                         from 47% to 77%.
| | --- | ---------------------------------------------------------------------------------------



| | (3) | Recoveries for sulfate vary from
                                         27% to 45%.
| | --- | -------------------------------------------------------------------------------------



| | (4) | Recoveries for lithium vary from
                                         28% to 40%.
| | --- | -------------------------------------------------------------------------------------



| | (5) | Recoveries for boron vary from
                                         28% to 32%.
| | --- | -----------------------------------------------------------------------------------



The information set forth in the table above
was validated in February 2017 by Messrs. Álvaro Henríquez and Orlando Rojas using information that was prepared
by SQM’s hydrogeologists, geologists and engineers and external advisors.



Mr. Henríquez is a geologist with more
than thirteen years of experience in the field of mining hydrogeology. He is currently employed by SQM as Superintendent of Geology,
in the Salar Hydrogeology department. He is a Competent Person and is registered under No. 226 in the Public Registry of Competent
Persons in Mining Resources and Reserves, in accordance with the Competent Person Law. As a hydrogeologist in Chile and abroad,
he has evaluated multiple brine-based projects and has experience evaluating resources and reserves.



61







Mr. Orlando Rojas is a civil mining engineer
and independent consultant. He is Partner and Chief Executive Officer of the company EMI-Ingenieros y Consultores S.A., whose
offices are located at Renato Sánchez No. 3357, Las Condes, Santiago, Chile. He is a member of the Institute of Mining
Engineers and is registered under No. 118 in the Public Registry of Competent Persons in Mining Resources and Reserves in accordance
with the Competent Person Law and related regulations. He has worked as a mining engineer for 38 years since graduating from university,
including more than 32 years working on estimates for reserves and resources.



Copies of the certificate of qualified competency
issued by the Chilean Mining Commission for Mr. Rojas and Mr. Henríquez are attached hereto as Exhibit 99.2 and 99.3.



A cutoff grade of 1.0% K is used in the calculation,
considering a low margin scenario using only MOP-S as and using diluted brine with higher levels of contaminants as the raw
material and with recovery yields of approximately 47%, which is on the lower end of the range. In this scenario, considering
current market conditions and market conditions from recent years, the production cost of MOP production is still competitive.



The cutoff grade for lithium extraction is
set at 0.05% Li. The cost of the process is competitive in the market despite a small cost increase due to the expansions in the
evaporation area (to reach the required Li concentration) and to the use of additives to maintain the quality of the brine that
is used to feed the plant.



The proven and probable reserves are based
on production experience, drilling, brine sampling and geo-statistic reservoir modeling in order to estimate brine volumes and
their composition. We calculate the reserve base, which is the volume of brine effectively drainable or exploitable in each evaluation
unit, by building a three-dimensional block model. The following variables are used to populate the model:



| | · | Porosity:
                                         obtained from measurements of drainable porosity in core rocks, test pumping data, geophysical
                                         records and changes in the level of the brine. The volume of brine is estimated on the
                                         basis of the interpolation of the drainable porosity data.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Grades:The brine chemistry is subjected to an exploratory data analysis and a variographic
                                         analysis, in order to determine the chemical populations in the Salar. Subsequently,
                                         the grades are interpolated using the Kriging method.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Based on the chemical characteristics, the
volume of brine and drainable porosity, we determine the number of metric tons for each of the chemical ions being evaluated.



Reserves are defined as hydrogeological units
with proven historical brine yield production, and a quality and piezometric brine monitoring network to control brine evolution
over time. Reserve classification is finally achieved by using the geostatistical estimation error and hydrogeological knowledge
of the units that have been explored, as an indicator between proven and probable reserves.



Probable reserves and inferred resources are
being explored in order to be able to reclassify them as proven reserves and indicated or measured resources, respectively. This
exploration includes systematic packer testing, chemical brine sampling and long-term pilot production pumping tests.



We consider chemical parameters to determine
the process to be applied to the brines. These parameters are used to estimate potential restrictions on production yields, and
the economic feasibility of producing such commercial products as potassium chloride, potassium sulfate, lithium carbonate and
boric acid is determined on the basis of the evaluation.



Complementing the reserves information, SQM
has an environmental impact assessment (RCA 226/06) which defines a maximum brine extraction per year until the end of the Lease
Agreement (in 2030). Considering the maximum brine production rates, and including reinjection factors, we have performed several
hydrogeological numeric simulations to estimate changes in the volume and quality of the brine during the life of the project.
This procedure allows us to estimate an amount of 30.8 metric tons of potassium out of our environmentally approved reserves,
which is considered to be a fraction of the proven and probable reserves previously defined.



62







Brines from the Salar de Atacama are the key
raw material used in the production of potassium chloride and potassium sulfate, and lithium and its derivatives. The following
gross margins for the business lines specified were calculated on the same basis as cut off grades used to estimate our reserves.
We expect costs to remain relatively stable in the near future.



|                                         |  | 2016         |    | 2015 |       | 2014         
|---------------------------------------- |  | ------------ | -- | ---- | ----- | -------------
|                                         |  | Gross Margin |    |      | Price |              
|Potassium Chloride and Potassium Sulfate |  |              | 11 | %    |       | US$263/ton   
|Lithium and Derivatives                  |  |              | 66 | %    |       | US$10,362/ton



Other Production Facilities



Coya Sur

The Coya Sur site is located approximately
15 kilometers south of María Elena, and production activities undertaken there are associated with the production of potassium
nitrate and finished products. The main production plants at this site include four potassium nitrate plants with a total capacity
of 1,100,000 metric tons per year. There are also five production lines for crystallized nitrates, with a total capacity of 1,200,000
metric tons per year, and a prilling plant with a capacity of 320,000 metric tons per year. The potassium nitrate produced at
Coya Sur is an intermediate product that is used as a raw material for the production of finished products (crystallized nitrates
and prilled nitrates). Therefore, the production capacities listed above are not independent of one another and cannot be added
together to obtain an overall total capacity. Natural gas is the main source of energy for our Coya Sur operation.



Salar del Carmen

The Salar del Carmen site is located approximately
14 kilometers to the east of Antofagasta. The production plants at this facility include the lithium carbonate plant, with a production
capacity of 48,000 metric tons per year, and the lithium hydroxide plant, with a production capacity of 6,000 metric tons per
year. Electricity and natural gas are the main sources of energy for our Salar del Carmen operation.



63







The following table provides a summary of
our production facilities as of December 31, 2016:



|Facility                          |  | Type of Facility                                                                   |  | ApproximateSize(hectares) (1) |         |  | Nominal Production
        Capacity
        (thousands of metric
        tons/year) |                                                                           | WeightedAverageAge(years) (2) |  |      | Gross BookValue(millions of US$)(2) | 
|--------------------------------- |  | ---------------------------------------------------------------------------------- |  | ----------------------------- | ------- |  | ----------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ----------------------------- |  | ---- | ----------------------------------- | 
|Coya Sur (3) (4)                  |  | Nitrates production                                                                |  |                               | 1.518   |  |                                                                                     | Potassium nitrate: 1,100Crystallized nitrates: 1,200Prilled nitrates: 320 |                               |  | 9.0  |                                     | 
|María Elena (5) (6)               |  | Nitrates and iodine production                                                     |  |                               | 35.830  |  |                                                                                     | Nitrates: n/aIodine: 1.6Prilled nitrates: 300                             |                               |  | 13.5 |                                     | 
|Nueva Victoria (5) (7)            |  | Concentrated nitrate salts and iodine production                                   |  |                               | 47.492  |  |                                                                                     | Iodine: 9.0                                                               |                               |  | 7.8  |                                     | 
|Pampa Blanca (5) (7) (8)          |  | Concentrated nitrate salts and iodide production                                   |  |                               | 10.441  |  |                                                                                     | Nitrates: n/aIodine: n/a                                                  |                               |  | 7.8  |                                     | 
|Pedro de Valdivia (3) (9)         |  | Nitrates and iodine production                                                     |  |                               | 253.880 |  |                                                                                     | Nitrates: n/aIodine: 3.2                                                  |                               |  | 12.4 |                                     | 
|Salar de Atacama (3) (10)         |  | Potassium chloride, potassium sulfate, lithium chloride, and boric acid production |  |                               | 35.911  |  |                                                                                     | Potassium chloride: 2,680Potassium sulfate: 245Boric acid: 15             |                               |  | 12.1 |                                     | 
|Salar del Carmen, Antofagasta (3) |  | Lithium carbonate and lithium hydroxide production                                 |  |                               | 126     |  |                                                                                     | Lithium carbonate: 48Lithium hydroxide: 6                                 |                               |  | 8.5  |                                     | 
|Tocopilla (11)                    |  | Port facilities                                                                    |  |                               | 22      |  |                                                                                     | -                                                                         |                               |  | 12.6 |                                     | 



| | (1) | Approximate size considers both the production facilities
and the mine for María Elena, Nueva Victoria, Pampa Blanca, Pedro de Valdivia and the Salar de Atacama. Mining areas are
those authorized for exploitation by the environmental authority and/or Sernageomin.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Weighted average age and gross book value correspond to
production facilities, excluding the mine, for María Elena, Nueva Victoria, Pampa Blanca, Pedro de Valdivia and the Salar
de Atacama.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Includes production facilities and solar evaporation ponds.
| | --- | -----------------------------------------------------------

| | (4) | The potassium nitrate produced at Coya Sur is an intermediate
product that is used as a raw material for the production of finished products (crystallized nitrates and prilled nitrates). Therefore,
the production capacities listed above are not independent of one another and cannot be added together to obtain an overall total
capacity.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Includes production facilities, solar evaporation ponds
and leaching heaps.
| | --- | ---------------------------------------------------------------------------

| | (6) | Operations at the El Toco mine at María Elena were
suspended in November 2013.
| | --- | ------------------------------------------------------------------------------

| | (7) | The nominal production capacity for iodine considers the
capacity of our plants. The effective capacity is 10,000 metric tons per year.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------

| | (8) | Operations at Pampa Blanca were suspended in March 2010.
| | --- | --------------------------------------------------------

| | (9) | In November 2015, the mining and nitrate operations at
Pedro de Valdivia were suspended, and iodine production was reduced at the Pedro de Valdivia site, in order to take advantage
of the highly efficient production facilities at Nueva Victoria.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10) | Potassium chloride and potassium sulfate are produced in
a dual plant, and the production capacity for each of these products depends on the production mix. Therefore, the production
capacities for these two products are not independent of one another and cannot be added together to obtain an overall total capacity.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (11) | The Tocopilla port facilities were originally constructed
in 1961 and have been refurbished and expanded since that time.
| | ---- | -------------------------------------------------------------------------------------------------------------------------



The railway line that runs between our Coya
Sur production facilities and our Tocopilla port facilities was damaged in August 2015 as a result of storms in the north of Chile.
The train is not currently operating and as a consequence, we have replaced the train with trucks to ship products from Coya Sur.
Detailed engineering studies were performed to assess the damage of the railway. During the third quarter of 2016, the report
was completed; it concluded that the cost and time needed to repair the railway at this time is not economical in the short and
medium term. As a result of this determination, the Company wrote-off the assets related to the train. We do not believe it will
materially impact future sales volumes or transportation costs.



We consider the condition of our principal
plant and equipment to be good, with the exception of the railway line.



We directly or indirectly through subsidiaries
own, lease or hold concessions over the facilities at which we carry out our operations. Such facilities are free of any material
liens, pledges or encumbrances, and we believe they are suitable and adequate for the business we conduct in them.



64







Extraction Yields



The following table shows certain operating
data relating to each of our mines for 2016, 2015 and 2014:



|(in thousands, unless otherwise stated)                                              |  | 2016 |        |  | 2015 |  |        | 2014 | 
|------------------------------------------------------------------------------------ |  | ---- | ------ |  | ---- |  | ------ | ---- | 
|Pedro de Valdivia(1)                                                                 |  |      |        |  |      |  |        |      | 
|Metric tons of ore mined                                                             |  |      | –      |  |      |  | 9,754  |      | 
|Average grade nitrate (% by weight)                                                  |  |      | –      |  |      |  | 7.8    |      | 
|Iodine (parts per million (ppm))                                                     |  |      | –      |  |      |  | 424    |      | 
|Metric tons of crystallized nitrate produced                                         |  |      | –      |  |      |  | 346    |      | 
|Metric tons of iodine produced                                                       |  |      | 0.6    |  |      |  | 2.8    |      | 
|                                                                                     |  |      |        |  |      |  |        |      | 
|Maria Elena(2)                                                                       |  |      |        |  |      |  |        |      | 
|Metric tons of ore mined                                                             |  |      | –      |  |      |  | –      |      | 
|Average grade nitrate (% by weight)                                                  |  |      | –      |  |      |  | –      |      | 
|Iodine (ppm)                                                                         |  |      | –      |  |      |  | –      |      | 
|Metric tons of crystallized nitrate produced                                         |  |      | –      |  |      |  | –      |      | 
|Metric tons of iodine produced                                                       |  |      | 0.2    |  |      |  | 0.1    |      | 
|                                                                                     |  |      |        |  |      |  |        |      | 
|Coya Sur(3)                                                                          |  |      |        |  |      |  |        |      | 
|Metric tons of crystallized nitrate produced                                         |  |      | 573    |  |      |  | 611    |      | 
|                                                                                     |  |      |        |  |      |  |        |      | 
|Pampa Blanca(2)                                                                      |  |      |        |  |      |  |        |      | 
|Metric tons of ore mined                                                             |  |      | –      |  |      |  | –      |      | 
|Iodine (ppm)                                                                         |  |      | –      |  |      |  | –      |      | 
|Metric tons of iodine produced                                                       |  |      | –      |  |      |  | –      |      | 
|                                                                                     |  |      |        |  |      |  |        |      | 
|Nueva Victoria(4)                                                                    |  |      |        |  |      |  |        |      | 
|Metric tons of ore mined                                                             |  |      | 29,902 |  |      |  | 23,969 |      | 
|Iodine (ppm)                                                                         |  |      | 454    |  |      |  | 458    |      | 
|Metric tons of iodine produced                                                       |  |      | 7.7    |  |      |  | 7.5    |      | 
|                                                                                     |  |      |        |  |      |  |        |      | 
|Salar de Atacama (5)                                                                 |  |      |        |  |      |  |        |      | 
|Metric tons of lithium carbonate produced                                            |  |      | 44     |  |      |  | 33     |      | 
|Metric tons of potassium chloride and potassium sulfate and potassium salts produced |  |      | 2,045  |  |      |  | 1,988  |      | 



| | (1) | In November 2015, mining and nitrate operations at Pedro
de Valdivia were suspended, and iodine production was reduced at the Pedro de Valdivia site, in order to take advantage of the
highly efficient production facilities at Nueva Victoria.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Operations at the El Toco and Pampa Blanca mines were suspended
in November 2013 and March 2010, respectively. During 2014 and 2015, María Elena obtained production from caliche ore exploited
in prior years.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Includes production at Coya Sur from treatment of nitrates
solutions from María Elena and Pedro de Valdivia, nitrate salts from pile treatment at Nueva Victoria, and net production
from NPT, or technical grade potassium nitrate, plants.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Operations at the Iris iodine plant were suspended in October
2013 and restarted in August 2014.
| | --- | ------------------------------------------------------------------------------------------------

| | (5) | Lithium carbonate is extracted at the Salar de Atacama
and processed at our facilities at the Salar del Carmen. Potassium salts include synthetic sylvinite produced in the plant and
other harvested potassium salts (natural sylvinite, carnalites and harvests from plant ponds) that are sent to Coya Sur for the
production of crystallized nitrates.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



65







Transportation and Storage Facilities



The transportation of our products is carried
out by trucks that are operated by dedicated third parties through long term contracts. Furthermore, we own port and storage facilities
for the transportation and management of finished products and consumable materials.



Our main centers for the production and storage
of raw materials are the Nueva Victoria, Coya Sur, Pedro de Valdivia and Salar de Atacama facilities. Other facilities include
chemical plants for the finished products of lithium carbonate and lithium hydroxide at the Salar del Carmen plant. The Port of
Tocopilla terminal, which we own, has a surface area of approximately 22 hectares and is the principal facility for the storage
and shipment of our bulk products and packaged potassium chloride (MOP), potassium sulphate (SOP) and nitrates.



The nitrate finished products are produced
at our Coya Sur facilities and then transported via trucks to the Port of Tocopilla terminal where they are stored and shipped,
either packaged (polypropylene bags, polyethylene or polypropylene FIBC big bags) or in bulk. The potassium chloride is produced
at our Salar de Atacama facilities and we transport it by truck, either to the Port of Tocopilla terminal or the Coya Sur facility.
The product transported to Coya Sur is an intermediate product that is used as a raw material for the production of potassium
nitrate. On the other hand, the product transported to the Port of Tocopilla is a final product that will be shipped or transported
to the client or affiliate. The raw material of nitrate for the production of potassium nitrate in Coya Sur is currently produced
at Nueva Victoria and the remaining raw material is provided from historical stock stored in Coya Sur that was produced at the
Pedro de Valdivia facility when it was operating. This raw material is obtained from the processing of caliche that is extracted
from our mines. On the other hand, our potassium sulphate and boric acid products are produced at our Salar de Atacama facilities
and later transported by trucks to the Port of Tocopilla terminal.



The lithium chloride solution, which contains
a high concentration of boron, produced at our Salar de Atacama facilities, is transported to the lithium carbon plant in the
Salar del Carmen area where the finished lithium carbonate is produced. Part of the lithium carbonate is provided to the adjacent
lithium hydroxide plant where the finished lithium hydroxide is produced. These two products are packed in packaging of distinct
characteristics (polyethylene bags, multi-layer or polypropylene FIBC big bags), stored within the same facilities and secured
in roofed storerooms. Thereafter, they are consolidated into containers that are transported by trucks to a transit warehouse
or directly to port terminals for their subsequent shipment. The port terminals used are currently suited to receive container
ships and are situated in Antofagasta, Mejillones and Iquique.



Iodine obtained from the same caliche used
for the production of nitrates, is processed, packaged and stored exclusively in the Pedro de Valdivia and Nueva Victoria facilities.
The packaging used for iodine are drums and polypropylene FIBC big bags with an internal polyethylene bag and oxygen barrier,
which at the time of transportation are consolidated into containers and sent by truck to port terminals suited for their management,
principally located in Antofagasta, Mejillones and Iquique. Thereafter, they are sent to distinct markets by container ship or
by truck to Santiago where iodine derivatives are produced in the Ajay-SQM Chile plants.



The Port of Tocopilla terminal facilities
are located approximately 186 kilometers north of Antofagasta, approximately 124 kilometers west of María Elena and Coya
Sur and 372 kilometers to the west of Salar de Atacama. Our affiliate, Servicios Integrales de Tránsitos y Transferencias
S.A. (SIT), operates facilities for the shipment of products and the delivery of certain raw materials based on renewable concessions
granted by Chilean regulatory authorities, provided that the facilities are used in accordance with the authorization granted
and we pay an annual concession fee. The port also complies with the ISPS (International Ship and Port Security) Code. The Port
of Tocopilla terminal facilities include a truck weighing machine that confirms product entry into the port and transfers the
product to distinct storage zones, a piezometer within the shipping system to carry out bulk product loaded onto ships and a crane
with a 40 ton capacity for the loading of sealed product onto ships.



66







The storage facilities consist of a system
of 6 silos, with a total storage capacity of 55,000 metric tons, and a mixed storage area of open storehouses with a total storage
capacity of approximately 250,000 metric tons. In addition, to fulfill future storage needs, we will continue to make investments
in accordance with the investment plan outlined by management. The products are also put into bags at the Port of Tocopilla terminal
facilities where the bagging capacity is established by two bag packaging machines, one for sacks and polypropylene FIBC big bags
and one for FFS polyethylene. The products that are packaged in Tocopilla may be subsequently shipped at the same port or may
also be consolidated into trucks or containers for its subsequent dispatch to clients by land or sea through containers from other
ports, principally located in Antofagasta, Mejillones and Iquique.



For the transportation of bulk product, the
transportation belt system extends across the coastline to deliver products directly to the hatches of bulk cargo ships. The nominal
load capacity of this shipping system is 1,200 tons per hour. The transportation of packaged product is carried out utilizing
the same bulk cargo ships using trailers without motors located in the dock and loaded by a crane with a 40 ton capacity from
the Port of Tocopilla terminal. Thereafter, they are towed and unloaded using ship cranes to the respective warehouses.



We normally contract bulk cargo ships to transfer
the product from the Port of Tocopilla terminal to our hubs around the world or to clients directly, who, in certain instances,
use their own contracted vessels for delivery.



Tocopilla processes related to the reception,
handling, storage and shipment of bulk/packaged nitrates produced at Coya Sur are certified by the third-party organization TÜV-Rheiland
under the quality standard ISO 9001:2008.



Water Rights



We hold water rights for the supply
of surface and subterranean water near our production facilities. The main sources of water for our nitrate and iodine facilities
at Pedro de Valdivia, María Elena, and Coya Sur are the Loa and San Salvador rivers, which run near our production facilities.
Water for our Nueva Victoria and Salar de Atacama facilities is obtained from wells near the production facilities. In addition,
we buy water from third parties for our production processes at the Salar del Carmen lithium carbonate and lithium hydroxide plants,
and we also purchase potable water from local utility companies. We have not experienced significant difficulties obtaining the
necessary water to conduct our operations.



Computer System



In addition to the above-listed facilities,
we operate a computer and information system linking our principal subsidiaries to our operating facilities throughout Chile via
a local area network. The computer and information system is used mainly for accounting, monitoring of supplies and inventories,
billing, quality control and research activities. The system’s mainframe computer equipment is located at our offices in
Santiago.



ITEM 4A.    UNRESOLVED STAFF COMMENTS



None.



67







ITEM 5.    OPERATING AND FINANCIAL
REVIEW AND PROSPECTS



The information in this Item 5 should be read
in conjunction with the Company’s Consolidated Financial Statements and the notes thereto included elsewhere in this Annual
Report.



Since January 1, 2010, the Company’s
Consolidated Financial Statements have been prepared in accordance with the International Financial Reporting Standards as published
by the International Accounting Standards Board (IASB).



CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Critical accounting policies are defined as
those that are reflective of significant judgments and uncertainties, which would potentially result in materially different results
under different assumptions and conditions.



We believe that our critical accounting policies
applied in the preparation of our Audited Consolidated Financial Statements are limited to those described below. It should be
noted that in many cases, IFRS specifically dictates the accounting treatment of a particular transaction, limiting management’s
judgment in their application. There are also areas in which management’s judgment in selecting available alternatives would
not produce materially different results.



Trade and Other Accounts Receivable



Trade and other accounts receivable relate
to non-derivative financial assets with fixed payments that can be determined and are not quoted in any active market. These arise
from sales operations involving products and/or services that we sell directly to our customers that are not within the following
categories:



| | · | those
                                         which we have the intention of selling immediately in the near future and which are held-for-sale;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------

| | · | those
                                         designated at their initial recognition as available-for-sale and
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | those
                                         through which we do not intend to recover for reasons other than credit impairment and
                                         therefore must be classified as available-for-sale.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



These assets are initially recognized at their
fair value (which is equivalent to their face value, discounting implicit interest for installment sales) and subsequently at
amortized cost according to the effective interest rate method less a provision for impairment loss. When the face value of the
account receivable does not significantly differ from its fair value, it is recognized at face value. An allowance for impairment
loss is established for trade accounts receivable when there is objective evidence that we will not be able to collect all the
amounts owed to us according to the original terms of accounts receivable. The Company calculates the allowance for doubtful accounts
corresponding to receivables that are not guaranteed or insured as a function of the delays that may occur in the collection of
such accounts.



Implicit interest in installment sales is
recognized as interest income when interest is accrued over the term of the sale.



68







Income tax



Corporate income tax for the year is determined
as the aggregate of current taxes from all of the consolidated companies. Current taxes are calculated on the basis of the tax
laws enacted or substantively enacted as of the date of our statements of financial position in the countries in which we and
our subsidiaries operate and generate taxable income.



Deferred tax is recognized using the liability
method on temporary differences arising between the tax basis for assets and liabilities and their carrying amounts in our Audited
Consolidated Financial Statements. Deferred income taxes are calculated using the tax rates expected to be applicable when the
assets are realized or the liabilities are settled.



In conformity with current Chilean tax regulations,
the provision for corporate income tax and taxes on mining activity is recognized on an accrual basis, presenting the net balances
of accumulated monthly tax provisional payments for the fiscal period and credits associated with it. The balances of these accounts
are presented in current income taxes recoverable or current taxes payable, as applicable.



Tax on companies and variations in deferred
tax assets or liabilities that are not the result of business combinations are recorded in income statement accounts or net shareholders’
equity accounts in our consolidated statements of financial position, depending on the origin
of the gains or losses which have generated them.



At the year end, the carrying value of deferred
tax assets has been reviewed and reduced for as long as possible for there to be no sufficient taxable income to allow the recovery
of all or a portion of the deferred tax asset. Likewise, at the date of the statement of financial position, deferred tax assets
not recognized are revalued and recognized as long as it has become possible that future taxable income will allow the recovery
of the deferred tax asset.



With respect to deductible temporary differences
associated with investments in subsidiaries, associated companies and interests in joint ventures, deferred tax assets are recognized
solely provided that there is a possibility that the temporary differences will be reversed in the near future and that there
will be taxable income with which they may be used.



The deferred income tax related to entries
directly recognized in equity is recognized with an effect on equity and not with an effect on profit or loss.



Deferred tax assets and liabilities are offset
if there is a legally receivable right of offsetting tax assets against tax liabilities and the deferred tax is related to the
same tax entity and authority.



Inventories



We state inventory at the lower of cost and
net realizable value. The method used to determine the cost of inventory is weighted average cost. The cost of finished products
and products-in-progress includes direct costs of materials and, as applicable, labor costs, indirect costs incurred to transform
raw materials into finished products and general expenses incurred in carrying inventory to their current location and conditions.



The net realizable value represents the estimate
of the sales price less all finishing estimated costs and costs that will be incurred in sales and distribution processes. Commercial
discounts, rebates obtained and other similar entries are deducted in the determination of the cost. We conduct an evaluation
of the net realizable value of inventory at the end of each year, recording a provision with a charge to income when circumstances
warrant. When the circumstances that previously gave rise to the reserve cease to exist, or when there is clear evidence of an
increase in the net realizable value due to a change in economic circumstances or prices of main raw materials, the estimate made
previously is modified. The valuation of obsolete, impaired or slow-moving products relates to their estimated net realizable
value.





69







Provisions on our inventory have been made
based on a technical study which covers the different variables affecting products in stock (density, humidity, among others).



Raw materials, supplies and materials are
recorded at the lower of acquisition cost or market value. Acquisition cost is calculated according to the annual average price
method.



Obligations related to staff severance
indemnities and pension commitments



Our obligations with respect to our employees
are established in collective bargaining agreements and individual employment contracts. In the case of certain employees in the
United States, our obligations are established through a pension plan, which was terminated in 2002.



These obligations are valued using an actuarial
calculation that considers factors such as mortality rate, employee turnover, interest rates, retirement dates, effects related
to increases in employees’ salaries, as well as the effects on variations in services derived from variations in the inflation
rate.



Actuarial losses and gains that may be generated
by variations in previously defined obligations are directly recorded in profit or loss for the year.



Actuarial losses and gains originating from
deviations between the estimate and the actual behavior of actuarial hypotheses or in the reformulation of established actuarial
hypotheses are recorded in equity.



The discount rate used for calculating obligations
outside the United States was 4.5% and 4.9% for the periods ended as of December 31, 2016 and 2015, respectively.



Our United States subsidiary, SQM North America
Corp. has established pension plans for its retired employees that are calculated by measuring the projected benefit obligation
in accordance with International Accounting Standards (“IAS”) using a net salary progressive rate net of adjustments
to inflation, mortality and turnover assumptions, deducting the resulting amounts at present value using a 5.5% interest rate
for both 2015 and 2016. The net balance of this obligation is presented in the “Provisions for employee benefits, non-current”
line item.



Mining development costs



Mine exploration costs and stripping costs
to maintain production of mineral resources extracted from operating mines are considered variable production costs and are included
in the cost of inventory produced during the period. Mine development costs at new mines, and major development costs at operating
mines outside existing areas under extraction that are expected to benefit future production, are capitalized under “other
long-term assets” and amortized using a units-of-production method over the associated proven and probable reserves. We
determine our proven and probable reserves based on drilling, brine sampling and geostatistical reservoir modeling in order to
estimate mineral volume and composition.



All other mine exploration costs, including
expenses related to low grade mineral resources rendering reserves that are not economically exploitable, are charged to the statement
of income in the period in which they are incurred.



Asset value impairment



We assess on an annual basis any impairment
on the value of buildings, plant and equipment, intangible assets, goodwill and investments accounted for using the equity method
of accounting in accordance with IAS 36 “Impairment of Assets.” Assets to which this method applies are:



70







| | · | investments
                                         recognized using the equity method of accounting;
| | - | ------------------------------------------------------------------------------------------------------

| | · | property,
                                         plant and equipment;
| | - | -----------------------------------------------------------------------

| | · | intangible
                                         assets and
| | - | --------------------------------------------------------------

| | · | goodwill.
| | - | ---------



Assets are reviewed for impairment as to the
existence of any indication that the carrying value is lower than the recoverable amount. If such an indication exists, the asset
recoverable amount is calculated in order to determine the extent of the impairment, if any. In the event that the asset does
not generate any cash flows independent from other assets, we determine the recoverable amount of the cash generating unit to
which this asset belongs according to the corresponding business segment (specialty plant nutrients, iodine and derivatives, lithium
and derivatives, potassium, industrial chemicals and other products and services.)



We conduct impairment tests on intangible
assets and goodwill with indefinite useful lives on an annual basis and every time there is indication of impairment. If the recoverable
value of an asset is estimated at an amount lower than its carrying value, the latter decreases to its recoverable amount.



The results of the impairment tests the Company
has performed on its primary intangible assets demonstrated that there was no need for the Company to make any accounting adjustments
to such assets. These impairment tests were performed using conservative scenarios. For more information, see Note 13.1 to our
Consolidated Financial Statements.



Financial derivatives and hedging transactions



Derivatives are recognized initially at fair
value at the date in which the derivatives contract has been signed and subsequently they are valued at fair value at each period
end. The method for recognizing the resulting loss or gain depends on whether the derivative has been designated as an accounting
hedging instrument and if so, the type of hedging, which may be:



| | a. | fair value hedge of assets and
                                         liabilities recognized (fair value hedges), or
| | -- | ----------------------------------------------------------------------------------------------------------------------

| | b. | hedging of a single risk associated
                                         with an asset or liability recognized or a highly possible foreseen transaction (cash
                                         flow hedge).
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



At the beginning of the transaction, we document
the relationship between hedging instruments and those entries hedged, as well as their objectives for risk management purposes
and the strategy to conduct different hedging operations.



We also document our evaluation both at the
beginning and the end of each period of whether derivatives used in hedging transactions are highly effective to offset changes
in the fair value or in cash flows of hedged entries.



The fair value of derivative instruments used
for hedging purposes is shown in Note 10.3 to our Consolidated Financial Statements.



Non-hedge instruments are classified as current
assets or liabilities, and the change in their fair value is recognized directly in profit or loss.



a.       Fair value hedge



The change in the fair value of a derivative
is recognized with a debit or credit to profit or loss, as applicable. The change in the fair value of the hedged entry attributable
to hedged risk is recognized as part of the carrying value of the hedged entry and is also recognized with a debit or credit to
profit or loss.



71







For fair value hedging related to items recorded
at amortized cost, the adjustment of the fair value is amortized against income on the remaining years to its expiration. Any
adjustment to the carrying value of a hedged financial instrument for which the effective rate is used is amortized with a debit
or credit to profit or loss at its fair value attributable to the risk being covered.



If the hedged entry no longer meets the criteria
for hedge accounting, the fair value not amortized is immediately recognized with a debit or credit to profit or loss.



b.       Cash flow hedge



The effective portion of gains or losses from
the hedging instrument is initially recognized as “other revenue” with a debit or credit to other comprehensive income
whereas any ineffective portion is immediately recognized with a debit or credit to profit or loss, as applicable.



Amounts accumulated in equity are transferred
to profit or loss when the hedged transaction affects income for the period, such as when the hedged interest income or expense
is recognized when a forecasted sale occurs. When the hedged item is the cost of a non-financial asset or liability, amounts taken
to equity are transferred to the initial carrying value of the non-financial asset or liability.



Should the expected firm transaction or commitment
no longer be expected to occur, the amounts previously recognized as other comprehensive income are transferred to income. If
a hedging instrument expires, is sold, finished, and exercised without any replacement, or if a rollover is performed or if its
designation as hedging is revoked, the amounts previously recognized in equity are maintained in equity until the expected firm
transaction or commitment occurs.



5.A.    Operating
Results



Introduction



The following discussion should
be read in conjunction with the Company’s Consolidated Financial Statements. Certain calculations (including percentages)
that appear herein have been rounded.



Our Consolidated Financial Statements
are prepared in accordance with IFRS standards and prepared in U.S. dollars. The U.S. dollar is the primary currency in which
we operate.



We operate as an independent corporation.
Nonetheless we are a “controlled corporation,” as that term is defined under Chilean law. See “Item 6.E. Share
Ownership.”



Overview
of Our Results of Operations



We divide our operations into the following
business lines:



| | · | the
                                         production and sale of specialty plant nutrients;
| | - | ----------------------------------------------------------------------------------------------

| | · | the
                                         production and sale of iodine and its derivatives;
| | - | -----------------------------------------------------------------------------------------------

| | · | the
                                         production and sale of lithium and its derivatives;
| | - | ------------------------------------------------------------------------------------------------

| | · | the
                                         production and sale of potassium, including potassium chloride and potassium sulfate;
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                         production and sale of industrial chemicals, principally industrial nitrates and solar
                                         salts and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                         purchase and sale of other commodity fertilizers for use primarily in Chile.
| | - | -------------------------------------------------------------------------------------------------------------------------



We sell our products through three
primary channels: our own sales offices, a network of distributors and, in the case of our fertilizer products, through Yara International
ASA’s (“Yara”) distribution network in countries where its presence and commercial infrastructure are larger
than ours. Similarly, in those markets where our presence is larger, both our specialty plant nutrients and Yara’s are marketed
through our offices.



72







Factors
Affecting Our Results of Operations



Our results of operations substantially
depend on:



| | · | trends
                                         in demand for and supply of our products, including global economic conditions, which
                                         impact prices and sales volumes;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | efficient
                                         operations of our facilities, particularly as some of them run at production capacity;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| | · | our
                                         ability to accomplish our capital expenditures program in a timely manner;
| | - | -----------------------------------------------------------------------------------------------------------------------

| | · | the
                                         levels of our inventories;
| | - | -----------------------------------------------------------------------

| | · | trends
                                         in the exchange rate between the U.S. dollar and Chilean peso, as a significant portion
                                         of the cost of sales is in Chilean pesos, and trends in the exchange rate between the
                                         U.S. dollar and the euro, as a significant portion of our sales is denominated in euros
                                         and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | energy,
                                         logistics, raw materials, labor and maintenance costs.
| | - | -------------------------------------------------------------------------------------------------------



Impact of Foreign Exchange Rates



We transact a significant portion of our business
in U.S. dollars, which is the currency of the primary economic environment in which we operate and is our financial currency for
financial reporting purposes. A significant portion of our costs is related to the Chilean peso as most of our operations occur
in Chile, and therefore an increase or decrease in the exchange rate between the Chilean peso and the U.S. dollar affects our
costs of production. Additionally, as an international company operating in Chile and several other countries, we transact a portion
of our business and have assets and liabilities in Chilean pesos and other non-U.S. dollar currencies, such as the Euro, the South
African Rand and the Mexican peso. As a result, fluctuations in the exchange rate of such currencies to the U.S. dollar may affect
our financial condition and results of operations. See Note 22 to the Financial Statements included in this Annual Report.



We monitor and attempt to balance our non-dollar
assets and liabilities position, including through foreign exchange contracts and other hedging instruments, to minimize our exposure
to foreign exchange rate risk. As of December 31, 2016, for hedging purposes we had open contracts to buy U.S. dollars and sell
euros for approximately US$35.41 million (EUR33 million) and sell South African rand for approximately US$21.24 million (ZAR299.5
million), as well as forward exchange contracts to sell U.S. dollars and buy Chilean pesos for US$63.5 million (Ch$42,511 million).
All of our UF and Chilean pesos bonds were hedged with cross-currency swaps to the U.S. dollar for approximately US$357 million
as of December 31, 2016.



In addition, we had open forward exchange
contracts to buy U.S. dollars and sell Chilean pesos for approximately US$51.2 million (Ch$34,263 million) and to sell U.S. dollars
for approximately US$20.2 million (Ch$ 13,540 million) to hedge our short-term loans in Chilean pesos.



73







The following table shows our revenues
(in millions of US$) and the percentage accounted for by each of our product lines for each of the periods indicated:



|                            |  | 2016 |         |  | 2015 |  |     | 2014 | 
|--------------------------- |  | ---- | ------- |  | ---- |  | --- | ---- | 
|                            |  | US$  |         |  | %    |  |     | US$  | 
|Specialty plant nutrition   |  |      | 623.9   |  |      |  | 32  | %    | 
|Iodine and derivatives      |  |      | 231.1   |  |      |  | 12  | %    | 
|Lithium and derivatives     |  |      | 514.6   |  |      |  | 27  | %    | 
|Potassium                   |  |      | 403.3   |  |      |  | 21  | %    | 
|Industrial chemicals        |  |      | 104.1   |  |      |  | 5   | %    | 
|Other products and services |  |      | 62.2    |  |      |  | 3   | %    | 
|                            |  |      |         |  |      |  |     |      | 
|Total                       |  |      | 1,939.3 |  |      |  | 100 |      | 



The following table shows certain
financial information of the Company under IFRS (in millions of US$) for each of the periods indicated, as a percentage of revenues:



|                                                                                     |  | Year Ended December 31, |         
|------------------------------------------------------------------------------------ |  | ----------------------- | --------
|                                                                                     |  | 2016                    |         
|(in millions of US$)                                                                 |  | US$                     |         
|Revenues                                                                             |  |                         | 1,939.3 
|Cost of sales                                                                        |  |                         | (1,328.3
|Gross profit                                                                         |  |                         | 611.0   
|Other income                                                                         |  |                         | 14.8    
|Administrative expenses                                                              |  |                         | (88.4   
|Other expenses (1)(2)(3)                                                             |  |                         | (89.7   
|Other gains (losses)                                                                 |  |                         | 0.6     
|Finance income                                                                       |  |                         | 10.6    
|Finance expenses                                                                     |  |                         | (57.5   
|Equity income of associates and joint ventures accounted for using the equity method |  |                         | 13.0    
|Foreign currency exchange differences                                                |  |                         | 0.4     
|Income before income tax expense (1)(2)(3)                                           |  |                         | 414.9   
|Income tax expense (4)                                                               |  |                         | (133.0  
|                                                                                     |  |                         |         
|Profit attributable to:                                                              |  |                         |         
|Controlling interests (1)                                                            |  |                         | 278.3   
|Non-controlling interests                                                            |  |                         | 3.6     
|Profit for the year (1)                                                              |  |                         | 281.9   



| | (1) | Other expenses for 2014 includes
                                         provisions of approximately US$7 million corresponding to payments made in 2015 to the
                                         SII for expenses that may not have qualified as tax expenses under the Chilean tax code.
                                         However, since such payments were made after March 3, 2015, the date on which the Company
                                         filed its statutory consolidated financial statements filed with the SVS, such provisions
                                         were included in net income for the period ended December 31, 2015 for purposes of the
                                         Company’s statutory consolidated financial statements. For more information, see
                                         “Item 3D. Risk Factors—Risks Relating to our Business—We could be subject
                                         to numerous risks in the U.S. and Chile as a result of ongoing investigations by the
                                         SII and the Chilean Public Prosecutor in relation to certain payments made by SQM between
                                         the tax years 2009 and 2015.”
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Other expenses for 2015 includes
                                         a charge of US$57.7 million for impairment and severance indemnities related to the restructuring
                                         of our Pedro de Valdivia operations.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Other expenses for 2016 includes
                                         a charge of US$32.8 million for impairment related to the closure of our train between
                                         Coya Sur and Tocopilla. Other expenses for 2016 also includes charges of approximately
                                         US$30.5 million for impairment related to the Company's agreement with the DOJ and the
                                         administrative cease and desist order issued by the SEC in connection the inquiries arising
                                         out of the alleged violations of the books and records and internal controls provisions
                                         of the Foreign Corrupt Practices Act. For more information, see “Item 3D. Risk
                                         Factors—Risks Relating to our Business—We could be subject to numerous risks
                                         in Chile as a result of ongoing investigations by the Chilean Public Prosecutor in relation
                                         to certain payments made by SQM between the tax years 2009 and 2015” and “Item
                                         8.A.7 Legal Proceedings.”
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



74







| | (4) | In accordance with IAS 12, the
                                         effects generated by the change in the income tax rate approved by Law No. 20.780 on
                                         income and deferred taxes have been applied to the income statement. For purposes of
                                         the Company’s statutory consolidated financial statements filed with the SVS, in
                                         accordance with the instructions issued by the SVS in its circular 856 of October 17,
                                         2014, the effects generated by the change in the income tax rate were accounted for as
                                         retained earnings. The amount charged to equity as of December 31, 2014 was US$52.3 million,
                                         thereby giving rise to a difference of US$52.3 million in profit and income tax expense
                                         in 2014 as presented in the Company’s Audited Consolidated Financial Statements
                                         compared with profit and income tax expense presented in the Company’s statutory
                                         consolidated financial statements filed with the SVS. The effects of subsequent changes
                                         in the income tax rate will be recognized in profit or loss for the period in the Company’s
                                         statutory consolidated financial statements in accordance with IAS 12.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Results
of Operations – 2016 compared to 2015



Revenues



Revenues increased by 12.2% to US$1,939.3
million in 2016 from US$1,728.3 million in 2015.



The main factors that caused the increase
in revenues and variations in different product lines are described below.



Specialty Plant Nutrition



Specialty plant nutrition revenues decreased
4.4% to US$623.9 million in 2016 from US$652.3 million in 2015. Set forth below are sales volume data for the specified years
by product category in this product line:



|(in Th. MT)                                    |  | 2016 |       |  | 2015 |  |       | % Change | 
|---------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | -------- | 
|Potassium nitrate and sodium potassium nitrate |  |      | 475.8 |  |      |  | 493.6 |          | 
|Specialty blends                               |  |      | 213.5 |  |      |  | 203.9 |          | 
|Other specialty plant nutrients (*)            |  |      | 127.2 |  |      |  | 108.4 |          | 
|Sodium nitrate                                 |  |      | 24.4  |  |      |  | 26.0  |          | 

* Includes trading of other specialty fertilizers.



We sell various products within the specialty
plant nutrition business line, and most of our specialty fertilizers are sold as either field fertilizers or water soluble fertilizers.
Our sales volumes in the field fertilizer market decreased in 2016 compared to 2015 due to decreased demand.



In addition, average prices in the specialty
plant nutrition business line were US$742/MT in 2016, slightly lower than US$784/MT in 2015.



Iodine and Derivatives



Iodine and derivatives revenues decreased
12.0% to US$231.1 million in 2016 from US$262.6 million in 2015. Set forth below are sales volume data for the specified years:



|(in Th. MT)            |  | 2016 |      |  | 2015 |  |     | % Change | 
|---------------------- |  | ---- | ---- |  | ---- |  | --- | -------- | 
|Iodine and derivatives |  |      | 10.2 |  |      |  | 9.3 |          | 



In the iodine market, global demand grew by
1% in 2016 as a result of nominal growth in the LED and LCD markets. Our sales volumes in this business line increased by approximately
9% compared to 2015, increasing our participation in the market.



75







However, average prices during 2016 continued
to face downward pressure. Our average price for the year was US$23/kilogram, a decrease of over 19% compared to 2015.



Lithium and Derivatives



Lithium and derivatives revenues increased
130.8% to US$514.6 million in 2016 from US$223.0 million in 2015. Set forth below are sales volume data for the specified years:



|(in Th. MT)             |  | 2016 |      |  | 2015 |  |      | % Change | 
|----------------------- |  | ---- | ---- |  | ---- |  | ---- | -------- | 
|Lithium and derivatives |  |      | 49.7 |  |      |  | 38.7 |          | 



World demand in the lithium market continued
to grow at robust levels in 2016, around 14%. This demand growth is led by uses related to batteries, specifically batteries related
to electric vehicles. In 2016, batteries accounted for almost 53% of the total lithium market, including electric cars. Introduction
of new lithium supply was delayed in 2016, and only a minimal amount of new production was offered for sale.



Average prices in this business line increased
significantly in 2016, with average prices reaching nearly US$10,400/MT, 80% higher than average prices of approximately US$5,800/MT
in 2015. Our sales volumes in 2016 increased more than 28% compared to sales volumes in 2015.



Potassium



Potassium revenues decreased 6.3% to US$403.3
million in 2016 from US$430.6 million in 2015. Set forth below are sales volume data for the specified years:



|(in Th. MT)                              |  | 2016 |         |  | 2015 |  |         | % Change | 
|---------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | -------- | 
|Potassium chloride and potassium sulfate |  |      | 1,534.7 |  |      |  | 1,241.8 |          | 



The potassium chloride market experienced
little change in global demand in 2016 compared to 2015.



However, market prices in 2016 were significantly
lower than in 2015 due to slight demand growth and increased supply in the market. Our average price in this business line, including
both potassium chloride and potassium sulfate, was US$263/MT in 2016, a decrease of 24.2% compared to the average price of US$347/MT
in 2015.



This decline in our average price was partially
offset by the increase in our sales volumes. Our sales volumes in this business line increased 24% in 2016 compared to 2015. This
increase in sales volumes, in 2016, was attributable to lower sales volumes in 2015 due to production and shipping problems.



Industrial Chemicals



Industrial chemicals revenues increased 6.8%
to US$104.1 million in 2016 from US$97.6 million in 2015. Set forth below are sales volume data for the specified years by product
category:



|(in Th. MT)          |  | 2016 |       |  | 2014 |  |       | % Change | 
|-------------------- |  | ---- | ----- |  | ---- |  | ----- | -------- | 
|Industrial chemicals |  |      | 128.9 |  |      |  | 126.1 |          | 



Industrial chemicals demand for traditional
applications decreased in 2016 compared to 2015, as did our sales volumes related to traditional uses due to increased sales of
solar salts. Solar salt sales volumes in 2016 reached just over 57,000 metric tons, an increase of over 53% compared to 2015.



76







Other Products
and Services



Revenues from sales of other commodity fertilizers
and other income decreased 0.1% to US$62.2 million in 2016 from US$62.3 million in 2015, due to lower prices in the fertilizer
market.



Cost of Sales



Our overall cost of sales increased 12.0%
to US$1,328.3 million in 2016, which represented 69% of revenues, from US$1,185.6 million in 2015, which represented 69% of revenues.
The main factors that caused the increase in cost of sales and variations in different product lines are described below.



Specialty Plant Nutrition



Specialty plant nutrition cost of sales increased
3.7% to US$478.1 million in 2016 from US$461.0 million in 2015, as a result of a product mix change. The average cost of sales
in the specialty plant nutrition business line was US$568/MT in 2016, slightly higher than US$554/MT in 2015.



Iodine and Derivatives



Iodine and derivatives cost of sales increased
3.7% to US$191.3 million in 2016 from US$184.6 million in 2015, as a result of increased sales volumes in 2016. The average cost
of sales in the iodine and derivatives business line was US$19/kilogram in 2016, a decrease of almost 5% from US$20/kilogram in
2015. We believe we are the lowest cost producer of iodine. The vast majority of our production capacity comes from our most efficient
plant in Nueva Victoria.



Lithium and Derivatives



Lithium and derivatives cost of sales increased
60.5% to US$175.6 million in 2016 from US$109.4 million in 2015, as result of increased sales volumes, higher lease payments to
Corfo, and operating our production plant close to full capacity. The average cost of sales in the lithium and derivatives business
line was US$3,536/MT in 2016, an increase of almost 25% from US$2,825/MT in 2015.



Potassium



Potassium cost of sales increased 18.4% to
US$359.5 million in 2016 from US$303.6 million in 2015, as a result of increased sales volumes.] The average cost of sales in
the potassium business line was US$234/MT in 2016, a decrease of almost 4% from US$245/MT in 2015.



Industrial Chemicals



Industrial chemicals cost of sales decreased
5.4% to US$67.4 million in 2016 from US$71.3 million in 2015, as a result of decreased sales of potassium nitrate for industrial
use that has a higher average cost of sales. The average cost of sales in the industrial chemicals business line was US$523/MT
in 2016, a decrease of almost 8% from US$565/MT in 2015. This decrease in cost was a result of a change in product mix.



Gross Profit



Gross profit increased 12.6% to US$611.0 million
in 2016, which represented 31.5% of revenues, from US$542.7 million in 2015, which represented 31.4% of revenues. As discussed
above, this increase is attributable to the increase in revenues as a result of higher sales volumes in all of our business lines,
and significantly higher average prices in the lithium and derivatives business line, partially offset by the increase in cost
of sales as a result of higher revenues, as costs as a percentage of sales did not change between 2016 and 2015.



77







Other Income



Other income decreased 3.7% to US$14.8 million
in 2016, which represented 0.8% of revenues, from US$15.3 million in 2015, which represented 0.9% of revenues. As a percentage
of revenues, other income remained very similar between 2016 and 2015.



Administrative Expenses



Administrative expenses increased 1.8% to
US$88.4 million in 2016, which represented 4.6% of revenues, from US$86.8 million in 2015, which represented 5.0% of revenues.
We were able to reduce our costs as a percentage of revenues through increased efficiencies.



Other Expenses



Other expenses decreased 15.7% to US$89.7
million in 2016, which represented 4.6% of revenues, from US$106.4 million in 2015, which represented 6.2% of revenues. This decrease
was primarily attributable to a one-time charge of US$57.7 million in 2015, for impairment and severance indemnities related to
the restructuring of our operations in Pedro de Valdivia.



Other Gains (Losses)



Other gains (losses) decreased to a gain of
US$0.7 million in 2016, which represented 0.04% of revenues, from a gain of US$3.8 million in 2015, which represented 0.2% of
revenues.



Finance Income



Finance income decreased 8.8% to US$10.5 million
in 2016, which represented 0.5% of revenues, from US$11.6 million in 2015, which represented 0.7% of revenues, due to lower interest
rates earned on our investments.



Finance Expenses



Finance expenses decreased 17.7% to US$57.5
million in 2016, which represented 3.0% of revenues, from US$69.9 million in 2015, which represented 4.0% of revenues, due to
decreased levels of debt that we incurred at the end of 2016.



Equity Income of Associates and Joint Ventures
Accounted for Using the Equity Method



Equity income of associates and joint ventures
accounted for using the equity method increased 26.4% to US$13.0 million in 2016, which represented 0.7% of revenues, from US$10.3
million in 2015, which represented 0.6% of revenues.



Foreign Currency Exchange Differences



Losses from foreign currency exchange differences
decreased 104% to US$0.5 million in 2016, which represented 0.02% of revenues, from US$12.4 million in 2015, which represented
0.7% of revenues. A significant portion of our costs is related to the Chilean peso as most of our operations occur in Chile.
Because the U.S. dollar is our functional currency, we are subject to currency fluctuations. We aim to mitigate this impact through
an active hedging program. During 2016, the Chilean peso appreciated 6.0% against the U.S. dollar.



78







Profit Before Taxes



Profit before taxes increased by US$79.7 million,
or 25.9%, to US$414.9 million in 2016 from US$308.3 million in 2015. This increase was primarily attributable to increase in revenues
by US$211 million and a decrease in financial expenses by US$12.4 million, partially offset by an increase in cost of sales by
US$142.7 million, each for the reasons described above.



Income Tax Expense



Income tax expenses increased 58.7% to US$133.0
million in 2016, representing an effective tax rate of 32.0%, compared to US$83.8 million in 2015, representing an effective tax
rate of 27.2%. The Chilean corporate tax rate was 22.5% during 2015 and increased to 24.0% during 2016. The difference between
the statutory and effective tax rates was due primarily to royalty taxes on income.



Profit for the Year



Profit for the year increased 25.6% to US$281.9
million in 2016 from US$224.5 million in 2015 primarily as a result of increased volumes in all business lines, and significantly
higher prices in the lithium business line in 2016 compared to 2015.



Results
of Operations – 2015 compared to 2014



Revenues



Revenues decreased 14.2% to US$1,728.3 million
in 2015 from US$2,014.2 million in 2014.



The main factors causing the decrease in revenues
and the variation in the costs of sales for the different product lines are described below.



Specialty Plant Nutrition



Specialty plant nutrition revenues decreased
7.9% to US$652.3 million in 2015 from US$708.0 million in 2014. Set forth below are sales volume data for the specified years
by product category in this product line:



|(in Th. MT)                                    |  | 2015 |       |  | 2014 |  |       | % Change | 
|---------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | -------- | 
|Potassium nitrate and sodium potassium nitrate |  |      | 493.6 |  |      |  | 531.6 |          | 
|Specialty blends                               |  |      | 203.9 |  |      |  | 228.0 |          | 
|Other specialty plant nutrients (*)            |  |      | 108.4 |  |      |  | 102.5 |          | 
|Sodium nitrate                                 |  |      | 26.0  |  |      |  | 15.8  |          | 

* Includes trading of other specialty fertilizers.



We sell various products within the specialty
plant nutrition business line, and most of our specialty fertilizers are sold as either field fertilizers or water soluble fertilizers.
While sales volumes in field fertilizer market decreased in 2015 compared to 2014, our sales volumes in the water soluble fertilizer
market increased approximately 5%.



Average prices in the specialty plant nutrition
business line in 2015 were US$784/MT, slightly lower than US$807/MT in 2014.



79







Iodine and Derivatives



Iodine and derivatives revenues decreased
21.7% to US$262.6 million in 2015 from US$335.4 million in 2014. Set forth below are sales volume data for the specified years:



|(in Th. MT)            |  | 2015 |     |  | 2014 |  |     | % Change | 
|---------------------- |  | ---- | --- |  | ---- |  | --- | -------- | 
|Iodine and derivatives |  |      | 9.3 |  |      |  | 8.8 |          | 



In the iodine market, global demand grew more
than 4% during 2015, and our sales volumes in this business line increased by approximately 6% compared to 2014. Demand growth
was led by uses related to x-ray contrast media, LCD and the polymer industry.



Prices during 2015 continued to face downward
pressure. Our average price for the year was US$28/kilogram, a decrease of over 26% compared to 2014.



Lithium and Derivatives



Lithium and derivatives revenues increased
7.8% to US$223.0 million in 2015 from US$206.8 million in 2014. Set forth below are sales volume data for the specified years:



|(in Th. MT)             |  | 2015 |      |  | 2014 |  |      | % Change | 
|----------------------- |  | ---- | ---- |  | ---- |  | ---- | -------- | 
|Lithium and derivatives |  |      | 38.7 |  |      |  | 39.5 |          | 



World demand in the lithium market continued
to grow at robust levels in 2015, around 5%. This demand growth was led by uses related to batteries. In 2015, batteries accounted
for almost 50% of the total lithium market, including electric cars. Introduction of new lithium supply was delayed in 2015, and
only a minimal amount of new production was offered for sale.



Prices in this business line increased in
2015, with average prices reaching nearly US$5,800/MT, 10% higher than average prices of approximately US$5,200/MT in 2014. Our
sales volumes in 2015 decreased more than 2.1% compared to sales volumes in 2014.



Potassium



Potassium revenues decreased 26.3% to US$430.6
million in 2015 from US$584.3 million in 2014. Set forth below are sales volume data for the specified years:



|(in Th. MT)                              |  | 2015 |         |  | 2014 |  |         | % Change | 
|---------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | -------- | 
|Potassium chloride and potassium sulfate |  |      | 1,241.8 |  |      |  | 1,556.2 |          | 



The potassium chloride market faced weaker
global demand in 2015 when compared to 2014.



The main issue in this market was the significant
decrease in prices over the last few quarters. In 2015, our average price in this business line, including both potassium chloride
and potassium sulfate, was US$346/MT, a decrease of 7.7% compared to the average price of US$376/MT in 2014.



Our sales volumes in this business line decreased
20% in 2015 compared to 2014. This was a result of shipping and production delays during the first half of 2015.



80







Industrial Chemicals



Industrial chemicals revenues decreased 4.2%
to US$97.6 million in 2015 from US$101.9 million in 2014. Set forth below are sales volume data for the specified years by product
category:



|(in Th. MT)          |  | 2015 |       |  | 2014 |  |       | % Change | 
|-------------------- |  | ---- | ----- |  | ---- |  | ----- | -------- | 
|Industrial chemicals |  |      | 126.1 |  |      |  | 125.5 |          | 



Industrial chemicals demand for traditional
applications remained relatively stable in 2015 when compared to 2014. Solar salt sales volumes in 2015 reached just over 37,000
metric tons, an increase of over 65% compared to 2014.



Other Products
and Services



Revenues from sales of other commodity fertilizers
and other income decreased 19.9% to US$62.3 million in 2015 from US$77.7 million in 2014, due to lower prices in the fertilizer
market. That was reflected in a 18.3% decrease of cost of sales to US$55.7 million in 2015 compared to US$68.2 million in 2014.



Cost of Sales



Our overall cost of sales decreased 17.2%
to US$1,185.6 million in 2015, which represented 69% of revenues, from US$1,431.2 million in 2014, which represented 71% of revenues.
Cost of sales decreased primarily as a result of lower production costs and the weaker Chilean peso. The main factors that caused
the decrease in cost of sales and variations in different product lines are described below.



Specialty Plant Nutrition



Specialty plant nutrition average cost of
sales decreased 18.3% to US$461.0 million in 2015 from US$564.2 million in 2014.



Iodine and Derivatives



Iodine and derivatives cost of sales decreased
6.1% to US$184.5 million in 2015 from US$196.5 million in 2014. We believe we are the lowest cost producer of iodine. Following
the restructuring of our iodine production facilities in 2015, the vast majority of our production capacity came from our most
efficient plant in Nueva Victoria.



Lithium and Derivatives



Lithium and derivatives average cost of sales
decreased 7.6% to US$109.4 million in 2015 from US$118.4 million in 2014.



Potassium



Potassium average cost of sales decreased
28.3% to US$303.6 million in 2015 from US$423.5 million in 2014. This change was related to the significant decrease in sales
volumes reported in 2015 compared to 2014.



81







Industrial Chemicals



Industrial chemicals cost of sales increased
17.9% to US$71.3 million in 2015 from US$60.5 million in 2014.



Gross Profit



Gross profit decreased 6.9% to US$542.7 million
in 2015, which represented 31.4% of revenues, from US$583.0 million in 2014, which represented 28.9% of revenues. Cost of sales
decreased primarily as a result of lower production costs and the weaker Chilean peso. Revenues decreased as a result of lower
average prices in several of our business lines, and lower volumes in our fertilizer business lines. We were able to reduce costs
more than revenues decreased.



Other Income



Other income decreased 36.5% to US$15.3 million
in 2015, which represented 0.9% of revenues, from US$24.1 million in 2014, which represented 1.2% of revenues.



Administrative Expenses



Administrative expenses decreased 10.1% to
US$86.8 million in 2015, which represented 5.0% of revenues, from US$96.5 million in 2014, which represented 4.8% of revenues.



Other Expenses



Other expenses increased 65.5% to US$106.4
million in 2015, which represented 6.2% of revenues, from US$64.3 million in 2014, which represented 3.2% of revenues. This increase
was primarily related to a one-time charge of US$57.7 million in 2015, for depreciation and severance indemnities related to the
restructuring of our operations in Pedro de Valdivia.



Other Gains (Losses)



Other gains (losses) decreased to a gain of
US$3.8 million in 2015, which represented 0.2% of revenues, from a gain of US$4.4 million in 2014, which represented 0.2% of revenues.



Finance Income



Finance income decreased 28.0% to US$11.6
million in 2015, which represented 0.7% of revenues, from US$16.1 million in 2014, which represented 0.8% of revenues, due to
lower interest rates earned on our investments.



Finance Expenses



Finance expenses increased 10.3% to US$69.9
million in 2015, which represented 4.0% of revenues, from US$63.4 million in 2014, which represented 3.1% of revenues, due to
increased levels of debt that we incurred at the end of 2014.



Equity Income of Associates and Joint Ventures
Accounted for Using the Equity Method



Equity income of associates and joint ventures
accounted for using the equity method decreased 43.1% to US$10.3 million in 2015, which represented 0.6% of revenues, from US$18.1
million in 2014, which represented 0.9% of revenues.



82







Foreign Currency Exchange Differences



Losses from foreign currency exchange differences
decreased 24.8% to US$12.4 million in 2015, which represented 0.7% of revenues, from US$16.5 million in 2014, which represented
0.8% of revenues. A significant portion of our costs is related to the Chilean peso as most of our operations occur in Chile.
Because the U.S. dollar is our functional currency, we are subject to currency fluctuations. We aim to mitigate this impact through
an active hedging program. During 2015, the Chilean peso depreciated 17.0% against the U.S. dollar.



Profit Before Taxes



Profit before taxes decreased by US$96.7 million, or 23.9%, to
US$308.3 million in 2015 from US$405.0 million in 2014. This decrease was primarily attributable to decrease in revenues by US$285.9
million, an increase in other expenses by US$42.1 million and an increase in finance expenses of US$6.5 million, partially offset
by a decrease in cost of sales by US$ 245.6 million, each for the reasons described above.



Income Tax Expense



Income tax expenses decreased 47.9% to US$83.8
million in 2015, representing an effective tax rate of 27.8%, compared to US$160.7 million in 2014, representing an effective
tax rate of 39.7%. The higher effective tax rate in 2014 was primarily due to an increase of US$52.3 million in our deferred tax
liabilities, as a result of the 2014 Chilean Tax Reform. The Chilean corporate tax rate was 21.0% during 2014 and increased to
22.5% during 2015. The difference between the statutory and effective tax rates was due primarily to royalty taxes on income.



Profit for the Year



Profit for the year decreased 8.1% to US$224.5
million in 2015 from US$244.3 million in 2014 primarily as a result of the foregoing factors and lower prices across multiple
business lines compared to 2014.



5.B.    Liquidity
and Capital Resources



As of December 31, 2016, we had US$798.8 million
of cash and cash equivalents and time deposits. In addition, as of December 31, 2016, we had US$267 million of unused uncommitted
working capital credit lines.



Shareholders’ equity decreased to US$2,307.3
million as of December 31, 2016 from US$2,400.4 million as of December 31, 2015. Our ratio of total liabilities to total equity
(including non-controlling interest) on a consolidated basis decreased to 0.83 as of December 31, 2016 from 0.93 as of December
31, 2015.



We evaluate from time to time our cash requirements
to fund capital expenditures, dividend payouts and increases in working capital, but we believe our working capital is sufficient
for our present requirements. As debt requirements also depend on the level of accounts receivable and inventories, we cannot
accurately determine the amount of debt we will require nor are our requirements typically seasonal.



The table below shows our cash flows for 2016,
2015 and 2014:



|(in millions of US$)                                               |  | 2016 |        |   | 2015 |  |        | 2014 | 
|------------------------------------------------------------------ |  | ---- | ------ | - | ---- |  | ------ | ---- | 
|Net cash from operating activities                                 |  |      | 640.1  |   |      |  | 427.3  |      | 
|Net cash used in financing activities                              |  |      | (816.4 | ) |      |  | (180.3 | )    | 
|Net cash from (used in) investing activities                       |  |      | 155.9  |   |      |  | (69.8  | )    | 
|Effects of exchange rate fluctuations on cash and cash equivalents |  |      | 7.8    |   |      |  | (4.5   | )    | 
|Net increase (decrease) in cash and cash equivalents               |  |      | (12.6  | ) |      |  | 172.7  |      | 



83







We operate a capital-intensive business that
requires significant investments in revenue-generating assets. Our past growth strategies have included purchasing production
facilities and equipment and the improvement and expansion of existing facilities. Funds for capital expenditures and working
capital requirements have been obtained from net cash from operating activities, borrowing under credit facilities and issuing
debt securities.



The Board of Directors approved a capital
expenditures plan for 2017 of approximately US$170 million in connection with investments to be made in Chile. The 2017 capital
investment program is primarily focused on the maintenance of our production facilities. Our 2017 capital investment program does
not call for any external financing. However, we always have the option to access capital markets in order to optimize our financial
position. See “Item 4.A. History and Development of the Company—Capital Expenditure Program.”



Our other major use of funds is for dividend
distributions. We paid dividends of US$398 million and US$123 million during 2016 and 2015, respectively. Our 2016 dividend policy,
as disclosed at our 2016 annual general shareholders’ meeting, is to pay 50% of our net income, as calculated in our financial
statements filed with the SVS for each fiscal year, in dividends. Under Chilean law, the minimum dividend payout is 30% of net
income for each fiscal year. On March 22, 2016, the Company’s Board of Directors agreed to recommend that, subject to the
approval of SQM’s shareholders at the next Annual General Shareholders’ Meeting on April 26, 2016, the Company distribute
and pay a final dividend, totaling 50% of the Company’s 2015 net income. In addition, on March 22, 2016, the Board of Directors
agreed to partially modify the current “dividend policy in effect to add a special dividend (dividendo eventual)
of US$150 million. This dividend payment was presented for consideration at the Annual General Shareholders’ Meeting held
on April 26, 2016 and was charged to SQM’s retained earnings.



On November 23, 2016, the Board of Directors,
with a divided vote, agreed: (i) to pay and distribute on December 20, 2016 a provisional dividend of US$225 million, equivalent
to US$0.85487 per share, to be charged against the 2016 net income, (ii) to change the Dividend Policy for the 2016 business year
as discussed at the Annual General Shareholders’ Meeting held on April 26, 2016, (iii) that no further provisional dividend
would be charged against the 2016 net income and (iv) that the remaining amount of net income for the 2016 business year, if any,
would be withheld and used to finance the Company’s operations or one or more of the Company’s investment projects
and to fund all or part of any possible future expenditures, without prejudice.



On April 11, 2017, the Board of Directors,
agreed to recommend to the shareholders the payment of a definitive dividend representing 100% of the 2016 net income. This definitive
dividend payment will be presented for consideration at the Annual General Shareholders’ Meeting held on April 28, 2017.
Therefore, and subject to the approval at the Shareholders’ meeting, the Company shall pay a final dividend of US$1.05735
per share, the amount of US$0.85487 per share must be deducted from the final dividend, which was already paid as a provisional
dividend on December 20, 2016. The balance, in the amount of US$0.20248 per share, shall be paid and distributed to Company’s
shareholders, pending shareholders’ approval, on May 11, 2017.



84







Financing Activities



Our current ratio, defined as current assets
divided by current liabilities, increased to 4.02 as of December 31, 2016 from 3.84 as of December 31, 2015. The following table
shows key information about our outstanding long- and short-term debt as of December 31, 2016.



|Debt Instrument(1)(2)                  |  | Interest Rate |      |   | Issue Date |               | Maturity Date |               | Amortization
|-------------------------------------- |  | ------------- | ---- | - | ---------- | ------------- | ------------- | ------------- | ------------
|5.50% Notes due 2020 — US$250 million  |  |               | 5.50 | % |            | Apr. 21, 2010 |               | Apr. 21, 2020 |             
|3.625% Notes due 2023 — US$300 million |  |               | 3.63 | % |            | Apr. 03, 2013 |               | Apr. 03, 2023 |             
|4.375% Notes due 2025 — US$250 million |  |               | 4.38 | % |            | Oct. 28, 2014 |               | Jan. 28, 2025 |             
|Series C Bond — UF 1.5 million         |  |               | 4.00 | % |            | Dec. 01, 2005 |               | Dec. 01, 2026 |             
|Series H Bond — UF 4 million.          |  |               | 4.90 | % |            | Jan. 05, 2009 |               | Jan. 05, 2030 |             
|Series O Bond — UF 1.5 million         |  |               | 3.80 | % |            | Feb. 01, 2012 |               | Feb. 01, 2033 |             





| | (1) | UF- denominated bonds are fully hedged to U.S. dollars
with cross-currency swaps.
| | --- | ---------------------------------------------------------------------------------



| | (2) | Some floating rate bilateral loans are currently hedged
to fixed rate loans using interest rate swaps.
| | --- | ------------------------------------------------------------------------------------------------------



As of December 31, 2016, we had total financial
debt of US$1,215 million compared to US$1,616 million as of December 31, 2015. Considering the effects of financial derivatives,
our total financial debt amounted to US$1,273 million as of December 31, 2016 and US$1,692 million as of December 31, 2015. Of
the total debt as of December 31, 2016, US$179 million was short-term debt. All of our UF local bonds were hedged with cross-currency
swaps to the U.S. dollar as of December 31, 2016.



As of December 31, 2016, all of our long-term
debt, including the current portion, was denominated in U.S. dollars, and all our UF-denominated bonds were hedged with cross-currency
swaps to the U.S. dollar.



The financial covenants related to our debt
instruments include: (i) limitations on the ratio of total liabilities to equity (including non-controlling interest) on a consolidated
basis, (ii) minimum net worth requirements, (iii) limitations on net financial debt to EBITDA, (iv) limitations on interest indebtedness
of operating subsidiaries and (v) minimum production assets. We believe that the terms and conditions of our debt agreements are
standard and customary and that we are in compliance in all material respects with such terms and conditions as of December 31,
2016.



The following table shows the maturities of
our long-term debt by year as of December 31, 2016 (in millions of US dollars):



|Maturity(1)         |  | Amount |        
|------------------- |  | ------ | -------
|2017                |  |        | 145.7  
|2018                |  |        | 5.9    
|2019                |  |        | 13.1   
|2020                |  |        | 270.2  
|2021 and thereafter |  |        | 780.4  
|Total               |  |        | 1,215.3



(1) Only the principal amount has been included.
For the UF-denominated local bonds, the amounts presented reflect the real U.S. dollar obligation as of December 31, 2016 not
including the effects of the cross currency swaps that hedge these bonds to the U.S. dollar and which had, as of December 31,
2016, a market value of US$400 million against SQM.



85







Environmental and Occupational Safety
and Health Projects



We spent US$9.3 million on environmental,
safety and health projects in 2016. We have budgeted approximately US$9.7 million in 2017 for environmental, safety and health
projects. This amount forms part of the capital expenditure program discussed above.



5.C.
   Research and Development, Patents and Licenses, etc.



One of the main objectives of our
research and development team is to develop new processes and products in order to maximize the returns obtained from the resources
that we exploit. Our research is performed by three different units, whose research topics cover all of the processes involved
in the production of our products, including chemical process design, phase chemistry, chemical analysis methodologies and physical
properties of finished products.



Our research and development policy
emphasizes the following: (i) optimizing current processes in order to decrease costs and improve product quality through the
implementation of new technology, (ii) developing higher-margin products from current products through vertical integration or
different product specifications, (iii) adding value to inventories and (iv) using renewable energy in our processes.



Our research and development activities
have been instrumental in improving our production processes and developing new value-added products. As a result, new methods
of extraction, crystallization and finishing products have been developed. Technological advances in recent years have enabled
us to improve process efficiency for the nitrate, potassium and lithium operations, improve the physical quality of our prilled
products and reduce dust emissions and caking by applying specially designed additives to our products handled in bulk. Our research
and development efforts have also resulted in new, value-added markets for our products. One example is the use of sodium nitrate
and potassium nitrate as thermal storage in solar power plants.



We have patented several production processes
for nitrate, iodine and lithium products. These patents have been filed mainly in the United States, Chile and in other countries
when necessary. The patents used in our production processes include Chilean patent No. 47,080 for iodine (production of spherical
granules of chemicals that sublime), Japanese patent No. 4,889,848 for nitrates (granular fertilizers) and patent Nos. 41,838
from Chile, 5393-B and 5391-B from Bolivia, AR001918B1 and AR001916B1 from Argentina and 5,676,916 and 5,939,038 from the U.S.
for lithium (removal of boron from brines).



For the years ended December 31, 2016, 2015
and 2014, we invested US$11.0 million, US$4.4 million and US$7.4 million, respectively, in research and development activities.



5.D.    Trend Information



Our revenues increased 12.2% to US$1,939.3
million in 2016 from US$1,728.3 million in 2015. Gross profit increased 12.6% to US$611.0 million in 2016, which represented 31.5%
of revenues, from US$542.7 million in 2015, which represented 31.4% of revenues. Profit attributable to controlling interests
increased 26.3% to US$278.3 million in 2016 from US$220.4 million in 2015.



Our sales volumes in the specialty plant nutrition
business line increased 1.1% in 2016 compared to 2015, while average prices decreased by 5.4%. As a result, our revenues in this
business line decreased by 4.4%. We sell various products within this business line, and most of our specialty fertilizers are
sold as either field fertilizers or water soluble fertilizers. Our recent strategy in this business line has been to focus primarily
on the water soluble fertilizer market, which in general yields higher margins and has more growth potential. Average prices in
this business line were slightly lower in 2016, and we expect average prices to be lower in 2017.



86







Our sales volumes in the iodine business line
increased 9.0% in 2016. However, the continued downward pressure on prices throughout the year led to a decrease of nearly 12%
in our revenues for this business line. Average prices decreased more than 19% in 2016, but we have seen the prices stabilize
in recent months and we are cautiously optimistic that prices may not deteriorate more during 2017. However, as the lowest cost
producer in Chile, we believe that we are well positioned to face the challenging pricing environment. We expect that our sales
volumes will increase as we continue to work to regain some of our market share. According to our estimates, the worldwide iodine
market grew approximately 3% during 2016. We believe that market demand reached approximately 33,500 metric tons, of which SQM
had a market share of approximately 29%. We expect worldwide demand to grow around 2% in 2017.



Our sales volumes in the lithium business
line increased by 28.3% in 2016 compared to 2015. The average price of lithium carbonate increased 76.1% in 2016, and the average
price of lithium hydroxide increased 67.0%. This upward trend in pricing exceeded our expectations and together with higher sales
volumes, impacted our 2016 revenues. According to our estimates, worldwide demand for lithium grew approximately 14% in 2016,
driven primarily by growth in the rechargeable battery market. We estimate that our market share for 2016 was approximately 27%.
However, we expect reduced growth in worldwide demand in 2017, around 10%, as we expect that other lithium producers will add
new supplies during the second half of 2017. We expect our sales volumes for lithium, in 2017, to be similar to those observed
in 2016. However, we expect our product mix to shift, leading to higher lithium hydroxide sales volumes in 2017.



Our sales volumes in the potassium business
line increased by 23.6% in 2016 compared to 2015, but average prices were 24.2% lower. These increased sales volumes in 2016 when
compared to 2015, allowed us to return to the sales volumes we saw in 2014. We believe that we could see a decrease in potassium
chloride production during 2017, and potassium chloride sales volumes could decrease in the future. The lower prices reflected
the weaker global demand for potassium chloride in 2016. We expect average prices for this business line to be lower in 2017 than
in 2016, although we anticipate that 2017 global potash market may increase by an additional 2 million tons.



Our sales volumes in the industrial chemicals
product line increased 2.3% in 2016 compared to 2015. Although sales of industrial nitrates for traditional applications decreased,
sales volumes of solar salts increased. We remain confident in the long-term prospects in the solar thermal energy storage market,
and we expect annual sales volumes for 2017, 2018 and 2019 to be higher than sales volumes for 2016.



5.E.    Off-Balance
Sheet Arrangements



We have not entered into
any transactions with unconsolidated entities whereby we have financial guarantees, retained or contingent interests in transferred
assets, derivative instruments or other contingent arrangements that would expose us to material continuing risks, contingent
liabilities, or any other obligations arising out of a variable interest in an unconsolidated entity that provides financing,
liquidity, market risk or credit risk support to us or that engages in leasing, hedging or research and development services with
us.



5.F.    Tabular
Disclosure of Contractual Obligations





The following tables show our material
expected obligations and commitments as of December 31, 2016:





|                                              |  |       |           |  | Less Than |  |         | 1 - 3 |  |  | 3 - 5   |  |  | More Than |        
|--------------------------------------------- |  | ----- | --------- |  | --------- |  | ------- | ----- |  |  | ------- |  |  | --------- | -------
|                                              |  | Total |           |  | 1 year    |  |         | years |  |  | Years   |  |  | 5 years   |        
|                                              |  | ThUS$ |           |  | ThUS$     |  |         | ThUS$ |  |  | ThUS$   |  |  | ThUS$     |        
|Financial liabilities (1)                     |  |       | 1,550,290 |  |           |  | 196,840 |       |  |  | 261,806 |  |  |           | 217,740
|Operating leases                              |  |       | 35,643    |  |           |  | 2,546   |       |  |  | 5,092   |  |  |           | 5,092  
|Purchase commitments (2)                      |  |       | 19,959    |  |           |  | 19,959  |       |  |  | -       |  |  |           | -      
|Staff severance indemnities                   |  |       | 22,532    |  |           |  | -       |       |  |  | -       |  |  |           | -      
|Total contractual obligations and commitments |  |       | 78,134    |  |           |  | 22,505  |       |  |  | 5,092   |  |  |           | 5,092  



|                                              |  |       |           |  | Less Than |  |         | 1 - 3 |  |  | 3 - 5   |  |  | More Than |        
|--------------------------------------------- |  | ----- | --------- |  | --------- |  | ------- | ----- |  |  | ------- |  |  | --------- | -------
|                                              |  | Total |           |  | 1 year    |  |         | years |  |  | Years   |  |  | 5 years   |        
|                                              |  | ThUS$ |           |  | ThUS$     |  |         | ThUS$ |  |  | ThUS$   |  |  | ThUS$     |        
|Financial liabilities                         |  |       | 1,550,290 |  |           |  | 196,840 |       |  |  | 261,806 |  |  |           | 217,740
|Operating leases                              |  |       | 35,643    |  |           |  | 2,546   |       |  |  | 5,092   |  |  |           | 5,092  
|Purchase commitments (2)                      |  |       | 19,959    |  |           |  | 19,959  |       |  |  | -       |  |  |           | -      
|Staff severance indemnities                   |  |       | 22,532    |  |           |  | -       |       |  |  | -       |  |  |           | -      
|Total contractual obligations and commitments |  |       | 1,628,424 |  |           |  | 219,345 |       |  |  | 266,898 |  |  |           | 222,832



(1) Interest was calculated based on the contractual agreements
and considering the effect of hedging financial instruments



(2) The purchase commitments held by the
Company are recognized as a liability when the services and goods are received by the Company.



87







5.G.    Safe Harbor



The information contained in Items
5.E and 5.F contains statements that may constitute forward-looking statements. See “Cautionary Statement Regarding Forward-Looking
Statements” in this Annual Report, for safe harbor provisions.



ITEM 6.    DIRECTORS, SENIOR
MANAGEMENT AND EMPLOYEES



6.A.    Directors
and Senior Management



We are managed by our executive
officers under the direction of our Board of Directors, which, in accordance with our by-laws, consists of eight directors, seven
of whom are elected by holders of Series A common shares and one of whom is elected by holders of Series B common shares. The
entire Board of Directors is regularly elected every three years at our Ordinary Shareholders’ Meeting. Cumulative voting
is allowed for the election of directors. The Board of Directors may appoint replacements to fill any vacancies that occur during
periods between elections. If a vacancy occurs, the entire Board must be elected or re-elected at the next regularly scheduled
Ordinary Shareholders’ Meeting. Our Chief Executive Officer is appointed by the Board of Directors and holds office at the
discretion of the Board. The Chief Executive Officer appoints our executive officers. There are regularly scheduled meetings of
the Board of Directors once a month. Extraordinary meetings may be called by the Chairman when requested by (i) the director elected
by holders of the Series B common shares, (ii) any other director with the assent of the Chairman or (iii) an absolute majority
of all directors. The Board has a Directors’ Committee and its regulations are discussed below.





The current Board of Directors was elected
for a three-year term at the Annual Ordinary Shareholders’ Meeting that took place on April 26, 2016. On this date, the current
Board Members were elected, and between January 1, 2016 and April 26, 2016 Juan Anotnio Guzmán, Wolf von Appen and Hernán
Büchi served as Board Members. On March 22, 2017, Julio Rebolledo D. informed the Board of Directors that he had decided to
resign from his position as director of SQM effective April 27, 2017. As a result of his resignation, the entire Board of Directors
will be elected at the next Annual Ordinary Shareholders’ Meeting on April 28, 2017.



88







Our current directors are as follows:



|Name              |  | Position
    and relevant experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Current
    position
held since
|----------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------
|Eugenio Ponce L.  |  | Chairman
of the Board and Director. Mr. Ponce earned a mechanical engineering degree from the Universidad Católica de Valparaiso.
In 1981, he joined SQM as Sales Manager. He became Commercial Manager in 1982, Commercial and Operations Manager in 1988 and Chief
Executive Officer of SQM Nitratos S.A. in 1991. Between 2000 and 2016, he was Senior Commercial Vice President. He was also a
member of the Board of IANSA. Currently, Mr. Ponce is a member of the Board of Soquimich Comercial. In April 2016, he was elected
to the Board of SQM, and in May 2016, he was nominated as Chairman of the Board. He is the brother of Julio Ponce L.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | April 2016                     
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                                
|Edward J. Waitzer |  | Vice
Chairman of the Board and Director. Mr. Waitzer was Chair of Stikeman Elliott LLP, a leading Canadian law firm, from 1999 to 2006
and remains a senior partner whose practice focuses on complex business transactions.  He also advises on a range of public
policy and governance matters.  He is a professor and the Jarislowsky Dimma Mooney Chair in Corporate Governance and is director
of the Hennick Centre for Business and Law at Osgoode Hall and the Schulich School of Business at York University.  Mr. Waitzer
served from 1993 to 1996 as Chair of the Ontario Securities Commission and of the Technical Committee of the International Organization
of Securities Commissions and as Vice-President of the Toronto Stock Exchange until 1981. He was Chair of the Liquor Control
Board of Ontario from 2013 to 2016. He has written and spoken extensively on a variety of legal and public policy issues
and serves or has served as director of a number of corporations, foundations, community organizations, editorial boards and advisory
groups. He earned his LL.B. in 1976 and his LL.M. in 1981 from the Faculty of Law, University of Toronto. Mr. Waitzer was
called to the Ontario Bar in 1978 and admitted to the New York Bar in 1985. |  | April 2015                     
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                                
|Joanne L. Boyes   |  | Director.
Ms. Boyes is Vice President, Treasury, Risk & Corporate Reporting of PotashCorp. She has been with PotashCorp since 2004 and
is responsible for PotashCorp’s enterprise risk management and corporate-wide insurance program, global external financial
and integrated reporting, and complex accounting. Prior to this, she was responsible for treasury, internal control compliance
and aspects of internal audit. She is a regular management participant on PotashCorp ́s Audit Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | April 2015                     



89







|Name                     |  | Position
    and relevant experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Current
    position
held since
|------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------
|Gonzalo Guerrero Y.(1)   |  | Director. Mr. Guerrero
    earned a law degree from the Universidad de Chile and a Masters of Business Law from the Universidad Adolfo Ibáñez.
    He was General Counsel and substitute board member of Integramédica S.A for seven years and was Director of Inversiones
    Oro Blanco S.A and VNT S.A. (Vantrust Capital Asset Management) until April 2016. Currently, he is an executive board member
    of Guerrero and Associates, and a board member of Asfaltos Chilenos S.A., Sanasalud S.A. and Club Deportivo Palestino SADP.                                                                                           |  | April 2016                     
|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                
|Robert A. Kirkpatrick    |  | Director. Mr. Kirkpatrick
    is Vice President, Deputy General Counsel and Assistant Corporate Secretary of PotashCorp. He has been with PotashCorp since
    1994 and is responsible for securities regulatory compliance and advising on corporate finance and development matters.  He
    is a regular management participant on PotashCorp’s Corporate Governance and Nominating Committee.                                                                                                                                                                                                                                     |  | April 2015                     
|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                
|Hans Dieter Linneberg A. |  | Director.
Mr. Linneberg earned an economics degree from the Universidad de Chile and a Master of Arts and a Ph.D.(C) from the Université
Catholique Louvain in Belgium. Currently, he is Director of the Corporate Governance and Capital Markets Department at the Business
School of the Universidad de Chile where he is also a faculty member, lecturing on corporate governance and international finance.                                                                                                                                                                                                                       |  | April 2015                     
|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                
|Arnfinn F. Prugger       |  | Director.
Dr. Prugger is Vice President, Technical Services of PotashCorp. He has been with the company for over 25 years and has a wide
range of senior–level experience in mining and applied geophysics.                                                                                                                                                                                                                                                                                                                                                                                                                           |  | April 2015                     
|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                
|Julio Rebolledo D.(2)    |  | Director. Mr. Rebolledo
    is member of SQM’s Directors’ Committee, an adjunct faculty member at Pontificia Universidad Católica de
    Chile and a Senior Consultant at FEN-Business Center at the Universidad de Chile. From 2000 to 2011, he was a finance lecturer
    at the Universidad de Chile and the University of Bath in the U.K., and a visiting researcher scholar at Chilean Central Bank.
    In 2008, he received the Presidente de la Republica grant for his doctoral studies at the University of Bath where he was
    awarded a research teaching associate position for his research in economic forecasting. |  | April 2016                     



90







Our current executive officers are as follows:



|Name                      |  | Position
    and relevant experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Current
    positionheld since
|------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------
|Patricio de Solminihac T. |  | Chief Executive Officer. Mr.
de Solminihac earned an industrial engineering degree from the Pontificia Universidad Católica de Chile and a Master of
Business Administration from the University of Chicago. In 1988, he joined SQM as Business Development Vice President. Currently,
he is a member of the Board of Directors of Melon S.A.                                                                                                                                                                                                                                                                                                                                                                                                             |  | March 2015                    
|                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                               
|Ricardo Ramos R.          |  | Chief Financial Officer and Vice President
of Corporate Services. Mr. Ramos earned an industrial engineering degree from the Pontificia Universidad Católica de Chile.
In 1989, he joined SQM as Finance Advisor. In 1991, he took a position in the Sales Department where he was in charge of operations
and sales coordination. In 1994, Mr. Ramos returned to the Finance Department as CFO. Mr. Ramos is also a member of the Board
of Directors of Soquimich Comercial S.A.                                                                                                                                                                                                                                                                         |  | May 2016                      
|                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                               
|Gonzalo Aguirre T.        |  | General Counsel. Mr. Aguirre studied law at the Universidad
    Católica de Chile and earned a Master of Laws (LL.M) degree from Georgetown University Law Center. He joined SQM in
    April 2016 and has served as Legal Vice President since September of the same year. Prior to joining SQM, he worked at SunEdison
    as Head of Legal for Latin America and at AES Gener, where he served as a counsel on corporate and project matters. Prior
    to his in-house practice, he worked for Carey, Paul Hastings LLP (as an international legal consultant) and Vial and Palma,
    where his practice focused on corporate and financial matters. He is admitted to practice in Chile and in Washington, D.C.,
    as a special legal consultant. |  | September 2016                



91







|Name                           |  | Position
    and relevant experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Current
    positionheld since              
|------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------
|Pablo Altimiras
    C.         |  | Vice President of
    Development and Planning. Mr. Altimiras is earned an engineering degree and a Master of Business Administration from the Universidad
    Católica de Chile. In 2007, he joined SQM as Chief of Logistics Projects. In 2009, he was promoted to Regulatory Affairs
    Director. He was Business Development Vice Manager from 2010 to 2011 and Development and Planning Manager in 2012. In
    2016, he became Vice President of Development and Planning.                                                                                                                                          |  | May 2016                                    
|                               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                             
|Juan Carlos Barrera
    P.(3)  |  | Vice
President of Operations, Potassium and Lithium. Mr. Barrera earned an industrial engineering degree from the Pontificia Universidad
Católica de Chile and a Master of Business Administration from Tulane University and Universidad de Chile.  From 1991
to 1994, he served in various roles at SQM, including as Advisor in the Business Development area. In 1995, he was Business Development
Manager of SQM Nitratos S.A. Thereafter, he was Corporate Quality Manager in 1999, Corporate Supply Chain Vice President in 2000
and General Manager of Soquimich Comercial S.A. in 2006.                           |  | January 2007                                
|                               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                             
|Jose Miguel Berguño
    C. (4) |  | Vice
President of Human Resources and Performance. Mr. Berguño earned an engineering degree and Master of Business Administration
from the Universidad Católica de Chile. In 1998, he joined SQM as Planning Engineer. In 2001, he served as Supply Chain
Manager, and in 2006 he was Human Resources Manager. From 2010 to 2011, he was the National Director of Science under the Minister
of Labor. In 2012, he was Human Resources Manager for Vitamina Work Life. In 2013, he resumed his role as Supply Chain Manager
at SQM, and in 2016 took on the position of Vice President of Human Resources and Performance. |  | May 2016                                    
|                               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                             
|Frank Biot                     |  | Vice
        President of Sales, Potassium and Nitrate. Frank Biot earned a Master in Applied Economics from the University of Antwerp
        in Belgium and a Master of Business Administration from the Catholic University of Leuven. In 1984, he joined Nitrate
        Corporation of Chile Ltd. established in London. In 1991, he was promoted to President of SQM Europe at SQM’s regional
        headquarters for Europe, Africa, Asia and Oceania. In 2000, he assumed the position of Commercial Vice President Specialty
        Plant Nutrition.                                                            |  | May
                                    2016



92







|Name                   |  | Position
    and relevant experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Current
    positionheld since
|---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------
|Pauline De Vidts S.(5) |  | Vice President of Public Affairs and
Sustainability. Mrs. De Vidts earned an industrial engineering degree from the Pontificia Universidad Católica de Chile
and a Ph.D. in chemical engineering from Texas A&M University. In 1996, she joined SQM to work in process development for
the Salar de Atacama Operations. In 1998, she was Development Manager. In 2001, she was Corporate R&D and thereafter Environmental
Issues Vice President. Since 2005, she has overseen safety, health, environmental and community issues, and in 2011, she also
began overseeing corporate communications and public affairs for SQM. In 2016, she assumed the role of Vice President of Public
Affairs and Sustainability. |  | May 2016                      
|                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                               
|Carlos Díaz O.         |  | Vice President of Operations, Nitrates
and Iodine. Mr. Díaz earned an engineering degree and a Master of Business Administration from the Pontificia Universidad
Católica de Chile. In 1996, he joined SQM as Planning Engineer in the Sales Division. He was promoted to Planning Manager
in 1998. In 2002, he assumed the position of Deputy Financial Manager of the Commercial Offices. In 2006, he became our Logistics
Manager.                                                                                                                                                                                                                                                                               |  | October 2012                  
|                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                               
|Gerardo Illanes G. (6) |  | Vice President of Finance. Mr. Illanes earned an engineering
    degree from the Universidad Católica de Chile and a Master of Business Administration from Emory University's Goizueta
    Business School. In 2006, he joined SQM and has served in several positions within the finance area in Santiago, Chile and
    in subsidiaries around the world. Mr. Illanes is also a member of the Board of Soquimich Comercial. In May 2016, he became
    Vice President of Finance                                                                                                                                                                                                                                 |  | May 2016                      



93







|Name                |  | Position
    and relevant experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Current
    positionheld since
|------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------
|Daniel Jiménez Sch. |  | Vice President of Sales Iodine, Lithium
and Industrial Chemicals. Mr. Jiménez earned an industrial engineering degree from the Pontificia Universidad Católica
de Chile and a Master of Business Administration from Old Dominion University. In 1991, he joined SQM and has served in several
positions within the finance and sales areas at SQM’s headquarters and foreign subsidiaries in the United States and Belgium
for eight years.  In 2002, he became VP Sales and Marketing Iodine, Lithium and Industrial Chemicals. In 2007, he became
Senior VP of Human Resources and Corporate Services. In 2016, he became VP of Sales of Iodine, Lithium and Industrial Chemicals.
Mr. Jiménez is also a member of the Board of Directors of Soquimich Comercial S.A. |  | May 2016                      
|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                               
|Raul Puerto M.      |  | Internal Audit Manager. He earned
a Master of Business Administration from the University of Chile and Tulane University and an industrial engineering degree from
the Pontificia Universidad Javeriana de Colombia. Mr. Puerto has 18 years of experience in auditing, risk management, internal
control, and compliance, having worked in several multinational companies in Chile and Latin America.                                                                                                                                                                                                                                                                                                                                                                  |  | January 2016                  
|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                               
|Andrés Yaksic B.    |  | Risk Management and Compliance Officer. Mr. Yaksic is earned
    an engineering degree and a Master of Business Administration from the Pontificia Universidad Católica de Chile. In
    2008, he joined SQM as a Strategic Marketing Engineer. He was promoted to Strategic Marketing Manager the following year.
    In 2012 and 2013, he was Development Manager for New Lithium Projects and in November 2013 worked as the Finance Manager for
    the Commercial Offices.                                                                                                                                                                                                                                                                                          |  | October 2015                  



| | (1) | As of December 31, 2016, Mr. Guerrero
                                         beneficially owned 1,353 of SQM ́s shares.
| | --- | ------------------------------------------------------------------------------------------------------------------------

| | (2) | On March 22, 2017, Julio Rebolledo
                                         D. informed the Board of Directors that he has decided to resign from his position as
                                         director of SQM effective April 27, 2017.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | As of December 31, 2016, Mr. Barrera
                                         beneficially owned 224 of SQM’s shares.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | (4) | As of December 31, 2016, Mr. Berguño
                                         beneficially owned 380 of SQM’s shares.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | (5) | On April 11, 2017, as a result of
                                         a Company reorganization, Pauline de Vidts left her position as Vice President of Public
                                         Affairs and Sustainability at SQM.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | As of December 31, 2016, Mr. Illanes
                                         beneficially owned 800 of SQM’s shares.
| | --- | ---------------------------------------------------------------------------------------------------------------------



6.B.     Compensation



At the Ordinary Shareholders’
Meeting held on April 26, 2016, shareholders did not vote to maintain the Ad-Hoc Committee created at the Ordinary Shareholders’
Meeting held on April 24, 2015. The compensation for the Audit and Financial Risk Committee, Corporate Governance Committee and
the Safety, Health and Environmental Committee was approved during the Ordinary Shareholders’ Meeting held on April 26,
2016.



94







During 2016, directors were paid
a monthly fee, which was independent of attendance and the number of Board sessions. For the Chairman, the fee amounted to UF
300 per month. For the remaining seven directors, the fee amounted to UF 200. In addition, the directors received variable compensation
(in Chilean pesos) based on a profit-sharing program approved by the shareholders. In 2016, the Chairman received the equivalent
of 0.135% of 2015 profit and each of the remaining seven directors received the equivalent of 0.06% of 2015 profit.



In addition, during 2016, members
of the Directors’ Committee were paid UF 75 per month, regardless of the number of sessions held by the Directors’
Committee. In addition, the members of the Directors’ Committee received variable compensation (in Chilean pesos) based
on a profit-sharing program approved by the shareholders. In 2016, members of the Directors’ Committee each received an
amount equal to 0.02% of 2015 profit. This remuneration is also independent from what the Committee members obtain as members
of our Board of Directors.



During 2016, the members of the
Safety, Health and Environmental Committee received UF 50 per month, regardless of the number of sessions held. During 2016, the
members of the ad-hoc Committee received UF 50 per month for the period between January and April, regardless of the number of
sessions held. During 2016, the members of the Corporate Governance Committee received UF 50 per month, regardless of the number
of sessions held.



During 2016, the compensation paid
to each of our directors who served on the Board during the year was as follows (amounts in Chilean pesos):



|                         |  | SQM Board  Meeting (CH$) |               |  | SQM  Directors'  Committee  (CH$) |  |             | SQM Health,  Safety and  Environment  Committee  (CH$) |  |  | Corporate  Governance  Committee  (CH$) |  |  | Ad-Hoc  Committee  (CH$) |            |  | SQMC  Board  Meeting  (CH$) |  |            | Total (CH$) | 
|------------------------ |  | ------------------------ | ------------- |  | --------------------------------- |  | ----------- | ------------------------------------------------------ |  |  | --------------------------------------- |  |  | ------------------------ | ---------- |  | --------------------------- |  | ---------- | ----------- | 
|Joanne L. Boyes          |  |                          | 121,519,416   |  |                                   |  | -           |                                                        |  |  | 9,008,878                               |  |  |                          | -          |  |                             |  | -          |             | 
|Hernán Büchi B.          |  |                          | 106,096,980   |  |                                   |  | 36,224,761  |                                                        |  |  | -                                       |  |  |                          | -          |  |                             |  | -          |             | 
|Gonzalo Guerrero Y.      |  |                          | 41,908,638    |  |                                   |  | -           |                                                        |  |  | 10,477,162                              |  |  |                          | -          |  |                             |  | -          |             | 
|Juan Antonio Gúzman M.   |  |                          | 230,946,965   |  |                                   |  | -           |                                                        |  |  | -                                       |  |  |                          | -          |  |                             |  | -          |             | 
|Robert A. Kirkpatrick    |  |                          | 121,519,416   |  |                                   |  | -           |                                                        |  |  | -                                       |  |  |                          | 9,008,878  |  |                             |  | 7,709,225  |             | 
|Hans Dieter Linneberg A. |  |                          | 153,131,436   |  |                                   |  | 53,862,684  |                                                        |  |  | -                                       |  |  |                          | 16,911,885 |  |                             |  | -          |             | 
|Luis Eugenio Ponce Lerou |  |                          | 62,862,957    |  |                                   |  | -           |                                                        |  |  | -                                       |  |  |                          | -          |  |                             |  | -          |             | 
|Arnfinn F. Prugger       |  |                          | 121,519,416   |  |                                   |  | -           |                                                        |  |  | 9,008,878                               |  |  |                          | -          |  |                             |  | -          |             | 
|Julio Cesar Rebolledo D. |  |                          | 36,639,042    |  |                                   |  | 13,739,642  |                                                        |  |  | -                                       |  |  |                          | -          |  |                             |  | -          |             | 
|Wolf Von Appen B.        |  |                          | 116,342,480   |  |                                   |  | -           |                                                        |  |  | 7,714,644                               |  |  |                          | -          |  |                             |  | 7,714,644  |             | 
|Edward J. Waitzer        |  |                          | 152,959,848   |  |                                   |  | 53,801,338  |                                                        |  |  | -                                       |  |  |                          | 16,868,988 |  |                             |  | 7,709,225  |             | 
|Total                    |  |                          | 1,265,446,594 |  |                                   |  | 157,628,425 |                                                        |  |  | 36,209,562                              |  |  |                          | 42,789,751 |  |                             |  | 23,133,094 |             | 



For the year ended December 31,
2016, the aggregate compensation paid to our 105 principal executives based in Chile was Ch$13,683 million. We do not disclose
to our shareholders or otherwise make available to the public information as to the compensation of our individual executive officers.



95







We maintain incentive programs
for our employees based on individual performance, company performance and short and long-term indicators. We provide executives
with an annual and a long-term bonus plan payable in the first quarter of 2021 or the date of the employee ́s resignation,
taking into account achievement of targets and individual contribution to the Company’s operating results. These incentives
are based on the following variables: a) Short term (annual): the Company’s operating results and safety indices; and b)
Long term: the Company’s after-tax return on equity. SQM also operates a compensation plan designed to retain its executives
by providing bonuses linked to the Company’s share price.



As of December 31, 2016, we had
a provision related to all of the incentive programs in an aggregate of US$20.2 million.



We do not maintain any pension
or retirement programs for the members of the Board or our executive officers in Chile.



6.C.      Board Practices



Information regarding the period
of time each of SQM’s current Directors has served in his office is provided in the discussion of each member of the Board
above in Item 6.A. Directors and Senior Managers.



The date of expiration of the term
of the current Board of Directors is April 2019. The contracts of our executive officers are indefinite. The current Board of
Directors was elected at the previous Annual Ordinary Shareholders’ Meeting held on April 26, 2016.



The members of the Board are remunerated
in accordance with the information provided above in Item 6.B. Compensation. There are no contracts between SQM, or any of its
subsidiaries, and the members of the Board providing for benefits upon termination of their term.



Directors’ Committee – Audit
Committee



As required by Chilean Law, during 2016, we
had a Directors’ Committee (Comité de Directores) composed of three Directors, which performs many of the
functions of an audit committee. This Directors’ Committee complies with the requirements of the NYSE corporate governance
rules applicable to audit committees. Under the NYSE corporate governance rules, the audit committee of a U.S. company must perform
the functions detailed in the NYSE Listed Company Manual Rules 303A.06 and 303A.07. Non-U.S. companies are required to comply
with Rule 303A.06 but are not at any time required to comply with Rule 303A.07.



Since April 26, 2016, our Directors’
Committee has been comprised of three Directors Hans Dieter Linneberg A., Julio Rebolledo D., and Edward J. Waitzer, each of whom
meets the NYSE independence and Chilean independence requirements for audit committee members.



Between January 1, 2016 and April 26, 2016,
our Directors’ Committee was comprised of three Directors: Mr. Waitzer, Mr. Hernán Büchi B., and Mr. Linneberg.
Each of the three members met the NYSE independence requirements for audit committee members. According to Chilean independence
requirements, Mr. Linneberg and Mr. Waitzer met the requirements for independence. On March 22, 2016, Mr. Büchi informed
the Board of Directors that he had decided to resign from his position as director of SQM effective April 25, 2016.



During 2016, the Directors’ Committee
of SQM (the “Committee”) analyzed (i) the Company’s Unaudited Financial Statements and Reports; (ii) the Company’s
Audited Financial Statements and Reports; (iii) the Reports and proposals of external auditors, accounts inspectors and independent
risk rating agencies for the Company; (iv) the proposal to SQM’s Board of Directors about the external auditors and independent
rating agencies that the Board could recommend to the respective shareholders’ meeting for their subsequent appointment;
(v) the tax and other services, other than audit services, provided by the Company’s external auditors and its subsidiaries
in Chile and abroad; (vi) the remuneration and compensation plans for the Company’s main executives; (vii) the information
related to the Company’s operations as referred to in Title XVI of the Corporations Act; (viii) the report on internal control
of the Company and (ix) the various matters referred to in the Chapter titled “Directors’ Committee” included
in SQM’s Financial Statements at December 31, 2016.



96







Regarding the above, the Committee:



| | (a) | Examined the information
                                         regarding the financial statements of SQM for the 2016 business year and the Report issued
                                         thereon by the External Auditors of SQM. Similarly, it also examined the Company’s
                                         Interim Consolidated Financial Statements for the 2016 business year.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Examined, at its Meeting
                                         No. 111 on November 7, 2016, the resolution of four broker agreements in Japan and other
                                         Asian countries with the Japanese company Kowa Co., Ltd. (“Kowa”). Kowa is
                                         a related party of the Company based on a Joint Operation Agreement with Sociedad de
                                         Inversiones Pampa Calichera S.A. The Directors’ Committee of the Company approved
                                         such contracts. In its Meeting No. 729 on November 7, 2016, the Board of Directors was
                                         informed in a timely manner of such approval by the Directors’ Committee and, in
                                         turn, also confirmed that such contracts were on terms, prices and other conditions similar
                                         to those prevailing in the respective markets at the pertinent time and approved, by
                                         the unanimous vote of directors present at the meeting, the execution of such agreements.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Proposed to the Company’s
                                         Board of Directors the names of the External Auditors and the Independent Risk Rating
                                         Agencies for SQM and the Company’s Board of Directors, in turn, suggested their
                                         appointment to the respective Annual Ordinary Shareholders Meeting of SQM. The Company’s
                                         Board of Directors approved said suggestions and the Shareholders’ Meeting also
                                         ratified them.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Examined and approved
                                         the remuneration system and the compensation plans for the Company’s employees
                                         and senior executives.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Committee also (i) authorized the contracting
by the Company of various consulting services with PwC, (ii) reviewed the expenses of the Company's CEO, and (iii) reviewed the
reports from the Company’s internal audit and risk and compliance areas.



Finally,
the Committee issued the Annual Management Report referred to in Law No. 18,046.



On April 26, 2016, the Annual General Shareholders’
Meeting of SQM approved an operational budget for the Committee; the operational budget is equivalent to the annual remuneration
of the members of the Committee. The activities carried out by the Committee, as well as the expenses incurred by it, are disclosed
at the General Shareholders Meeting. During 2016 the Committee incurred expenses of approximately US$65,000 for advisory services.



Article 50 bis of the Chilean Corporations
Act states that the Committee should consist of three Directors, of which at least one member should preferably be independent
from the controller (i.e. any person or entity who “controls” the company for Chilean law purposes), if any, and that
their functions be remunerated.



Comparative Summary of Differences in
Corporate Governance Standards



The following table provides a comparative
summary of differences in corporate governance practices followed by us under our home-country rules and those applicable to U.S.
domestic issuers pursuant to Section 303A of the New York Stock Exchange (NYSE) Listed Company Manual.



97







Listed Companies that are foreign private
issuers, such as SQM, are permitted to follow home country practices in lieu of the provisions of Section 303A, except such companies
are required to comply with the requirements of Section 303A.06, 303A.11 and 303A.12(b) and (c).



|Section |  | NYSE
    Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | SQM
    practices pursuant to Chilean Stock Exchangeregulations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|303A.01 |  | Listed companies
    must have a majority of independent directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | There
is no legal obligation to have a majority of independent directors on the Board but,
according to Chilean law, the Company’s directors cannot serve as executive officers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|303A.02 |  | No
        director qualifies as “independent” unless the Board of Directors affirmatively determines that the director
        has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization
        that has a relationship with the company).
        In
        addition, a director is not independent if:
        (i) The
        director is, or has been within the last three years, an employee of the listed company, or an immediate family member
        is, or has been within the last three years, an executive officer, of the listed company.
        (ii) The
        director has received, or has an immediate family member who has received, during any twelve-month period within
        the last three years, more than $120,000 in direct compensation from the listed company, other than director and
        committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not
        contingent in any way on continued service).
        (iii)
        (A) The director is a current partner or employee of a firm that is the listed company’s internal or external auditor;
        (B) the director has an immediate family member who is a current partner of such a firm; (C) the director has an immediate
        family member who is a current employee of such a firm and personally works on the listed company’s audit; or (D)
        the director or an immediate family member was within the last three years a partner or employee of such a firm and personally
        worked on the listed company’s audit within that time.
        (iv) The
        director or an immediate family member is, or has been with the last three years, employed as an executive officer
        of another company where any of the listed company’s present executive officers at the same time serves or served
        on that company’s compensation committee.
        (v)
The director is a current employee, or an immediate family member is a current executive officer, of a company that
has made payments to, or received payments from, the listed company for property or services in an amount which, in any of
the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues. |  | A
        director would not be considered independent if, at any time, within the last 18 months he or she:
        
        (i)	Maintained
        any relationship of a relevant nature and amount with the company, with other companies of the same group, with its controlling
        shareholder or with the principal officers of any of them or has been a director, manager, administrator or officer of
        any of them;
        
        (ii)	
        Maintained a family relationship with any of the members described in (i) above;
        
        (iii)
        Has been a director, manager, administrator or principal officer of non-profit organizations that have received contributions
        from (i) above;
        
        (iv)
        Has been a partner or a shareholder that has had or controlled, directly or indirectly, 10% or more of the capital stock
        or has been a director, manager, administrator or principal officer of an entity that has provided consulting or legal
        services for a relevant consideration or external audit services to the persons listed in (i) above;
        
        (v)
        Has been a partner or a shareholder that has had or controlled, directly or indirectly, 10% or more of the capital stock
        or has been a director, manager, administrator or principal officer of the principal competitor, supplier or clients.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|303A.03 |  | The
non-management directors must meet at regularly scheduled executive sessions without management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | These
meetings are not needed given that directors cannot serve as executive officers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|303A.04 |  | (a) Listed companies
    must have a nominating/corporate governance committee composed entirely of independent directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | This committee is
    not required as such in the Chilean regulations.  However, pursuant to Chilean regulations SQM has a Directors’
    Committee (see Board practices above).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



98









|Section |  | NYSE Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | SQM practices pursuant to Chilean Stock Exchangeregulations                                                                                                                                                                                                                                                                                                     
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | (b) The nominating/corporate governance committee must have a written charter that addresses:                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                                                                                                                                                                                                                                                                                                                                 
|        |  | (i) the committee’s purpose and responsibilities – which, at minimum, must be to: identify individuals qualified to become board members, consistent with criteria approved by the board, and to select, or to recommend that the board select, the director nominees for the next annual meeting of shareholders; develop and recommend to the board a set of corporate governance guidelines applicable to the corporation; and oversee the evaluation of the board and management; and(ii) an annual performance evaluation of the committee. |  |                                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                 
|303A.05 |  | Listed companies must have a compensation committee composed entirely of independent directors, and must have a written charter                                                                                                                                                                                                                                                                                                                                                                                                                  |  | This committee is not required as such in the Chilean regulations. Pursuant to Chilean regulations, SQM has a Directors’ Committee (see Board practices above) that is in charge of reviewing management’s compensation.                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                 
|303A.06 |  | Listed companies must have an audit committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | This committee is not required as such in the Chilean regulations. Pursuant to Chilean regulations, SQM has a Directors’ Committee that performs the functions of an audit committee and that complies with the requirements of the NYSE corporate governance rules.                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                 
|303A.07 |  | The audit committee must have a minimum of three members. All audit committee members must satisfy requirements of independence, and the committee must have a written charter.The listed companies must have an internal audit function to provide management with ongoing assistance of the Company’s risk management process and the system of internal controls                                                                                                                                                                              |  | Pursuant to Section 303A.00, SQM is not required to comply with requirements in 303A.07. Pursuant to Chilean Regulations SQM has a Director’s Committee (see Board practices above) that also performs the functions of an audit committee with certain requirements of independence.                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                 
|303A.08 |  | Shareholders must have the opportunity to vote on all equity-compensation plans and material revisions thereto.                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | SQM does not have equity compensation plans. However, as mentioned in Item 6.B. Compensation, the Company does have a long-term cash bonus compensation plan. Directors and executives may only acquire SQM shares by individual purchases. The purchaser must give notice of such purchases to the Company and the Superintendence of Securities and Insurance.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                 
|303A.09 |  | Listed companies must adopt and disclose corporate governance guidelines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Chilean law does not require that corporate governance guidelines be adopted.  Directors’ responsibilities and access to management and independent advisors are directly provided for by applicable law.  Directors’ compensation is approved at the annual meeting of shareholders, pursuant to applicable law.                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                 
|303A.10 |  | Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees and promptly disclose any waivers of the code for directors or executive officers.                                                                                                                                                                                                                                                                                                                                          |  | Not required in the Chilean regulations.  SQM has adopted and disclosed a Code of Business Conduct and Ethics, available at the Company’s website, www.sqm.com.                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                 
|303A.11 |  | Listed foreign private issuers must disclose any significant ways in which their corporate governance practices differ from those followed by domestic companies under NYSE listed standards.                                                                                                                                                                                                                                                                                                                                                    |  | Pursuant to 303A.11, this table shows a comparative summary of differences in corporate governance practices followed by SQM under Chilean regulations and those applicable to U.S. domestic issuers pursuant to Section 303A.                                                                                                                                  





99







|Section |  | NYSE Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | SQM practices
    pursuant to Chilean Stock Exchangeregulations                                         
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------
|303A.12 |  | Each
listed company CEO must (a) certify to the NYSE each year that he or she is not aware of any violation by the listed company of
NYSE corporate governance listing
standards; (b) promptly notify the NYSE in writing after any executive officer becomes aware of any material non-compliance with
any applicable provisions of Section 303A; and (c) must submit an executed Written Affirmation annually to the NYSE.In addition, each listed company must submit an interim Written Affirmation as and when required by the interim Written Affirmation
form specified by the NYSE. The annual and interim Written Affirmations must be in the form specified by the NYSE. |  | Not required in the Chilean regulations.  The CEO
    must only comply with Section 303A.12 (b) and (c).
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                                                                         
|303A.13 |  | The NYSE may issue a public reprimand letter to any listed company
    that violates a NYSE listing standard.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Not specified in the Chilean regulations.                                                               



6.D.      Employees



As of December 31, 2016, we had
4,751 permanent employees, 216 of whom were employed outside of Chile. The average tenure of our permanent employees is approximately
6.2 years.



|                           |  | As of December 31, |      
|-------------------------- |  | ------------------ | -----
|                           |  | 2016               |      
|Employees in Chile         |  |                    | 4,535
|Employees outside of Chile |  |                    | 216  
|Total employees            |  |                    | 4,751



100







As of December 31, 2016, 65% of
our permanent employees in Chile were represented by 22 labor unions, which represent their members in collective negotiations
with us. Compensation for unionized personnel is established in accordance with the relevant collective bargaining agreements.
The terms of most such agreements currently in effect are three years, and expiration dates of such agreements vary from agreement
to agreement. Under these agreements, employees receive a salary according to a scale that depends upon job function and productivity.
Unionized employees also receive certain benefits provided by law and certain benefits provided under the applicable collective
bargaining agreement, which vary depending upon the terms of the collective agreement, such as scholarships and additional health,
death and disability benefits, among others.



In addition, we own all of the
equity of Institución de Salud Previsional Norte Grande Limitada (“Isapre Norte Grande”), which is a health
care organization that provides medical services primarily to our employees, and of Sociedad Prestadora de Servicios de Salud
Cruz de Norte S.A. (“Prestadora”), which is a hospital in María Elena. We make contributions to Isapre Norte
Grande and to Prestadora in accordance with Chilean laws and the provisions of our various collective bargaining agreements, but
we are not otherwise responsible for their liabilities.



Non-unionized employees receive
individually negotiated salaries, benefits provided for by law and certain additional benefits which we provide.



We provide housing and other facilities
and services for employees and their families at the María Elena site.



We do not maintain any pension
or retirement programs for our Chilean employees. Most workers in Chile are subject to a national pension law, adopted in 1980,
which establishes a system of independent pension plans that are administered by the corresponding Pension Fund Administrator
(“Sociedad Administradora de Fondos de Pensiones”). We have no liability for the performance of any of these pension
plans or any pension payments to be made to our employees. We do, however, sponsor staff severance indemnities plans for our employees
and employees of our Chilean subsidiaries whereby we commit to provide a lump sum payment to each employee at the end of his/her
employment, whether due to death, termination, or resignation.



Over 95% of our employees are employed in
Chile, of which approximately 65% were represented by 22 labor unions as of December 31, 2016. As in previous years, during 2016,
we renegotiated collective labor contracts with individual unions one year before the expiration of such contracts. During 2017,
we expect to renegotiate collective labor contracts with three unions. Collective labor contracts with 16 unions, representing
80% of unionized workers, will expire in 2019. Collective labor contracts with three unions, representing 20% of unionized workers,
will expire in 2020. We are exposed to labor strikes and illegal work stoppages that could impact our production levels. If a
strike or illegal work stoppage occurs and continues for a sustained period of time, we could be faced with increased costs and
even disruption in our product flow that could have a material adverse effect on our business, financial condition and results
of operations.



6.E.      Share Ownership



We do not grant stock options or
other arrangements involving the capital of SQM to directors, managers or employees. For more information on the shareholdings
of current directors and executive officers, see “Item 6. Directors, Senior Management and Employees—Directors and
Senior Management.”



101







ITEM 7. 	MAJOR SHAREHOLDERS AND RELATED
PARTY TRANSACTIONS



7.A.      Major Shareholders



The following table shows certain information
concerning beneficial ownership of the Series A and Series B common shares of SQM as of April 20, 2017 with respect to each shareholder
known by us to beneficially own more than 5% of the outstanding Series A or Series B common shares. The following information
is derived from our records and reports filed by certain of the persons named below with the SVS and the Santiago Stock Exchange.



|Shareholder                                         |  | Number of series  A shares  beneficially owned |            |  | % series A  shares |  |       | Number of  series B shares  beneficially  owned |  |  | % series B  shares |  |  | % total  shares |      
|--------------------------------------------------- |  | ---------------------------------------------- | ---------- |  | ------------------ |  | ----- | ----------------------------------------------- |  |  | ------------------ |  |  | --------------- | -----
|The Bank of New York                                |  |                                                | —          |  |                    |  | —     |                                                 |  |  | 56,451,520         |  |  |                 | 46.90
|Sociedad de Inversiones Pampa Calichera S.A.(1) (2) |  |                                                | 44,894,152 |  |                    |  | 31.43 | %                                               |  |  | 7,007,688          |  |  |                 | 5.82 
|Inversiones El Boldo Ltda.(3)                       |  |                                                | 29,330,326 |  |                    |  | 20.54 | %                                               |  |  | 16,363,546         |  |  |                 | 13.59
|Inversiones RAC Chile Ltda.(3)                      |  |                                                | 19,200,242 |  |                    |  | 13.44 | %                                               |  |  | 2,202,773          |  |  |                 | 1.83 
|Potasios de Chile S.A.(2)                           |  |                                                | 18,179,147 |  |                    |  | 12.73 | %                                               |  |  | —                  |  |  |                 | —    
|Inversiones PCS Chile Limitada.(3)                  |  |                                                | 15,526,000 |  |                    |  | 10.87 | %                                               |  |  | 1,600,000          |  |  |                 | 1.33 
|Banco de Chile por Cuenta de Terceros No Residentes |  |                                                | —          |  |                    |  | —     |                                                 |  |  | 8,714,235          |  |  |                 | 7.24 
|Inversiones Global Mining Chile Ltda.(2)            |  |                                                | 8,798,539  |  |                    |  | 6.16  | %                                               |  |  | —                  |  |  |                 | —    



| | (1) | Pampa Calichera is a publicly
                                         held corporation whose shares are traded on the Santiago Stock Exchange. Originally,
                                         the shareholders of Pampa Calichera were employees of SQM. Pampa Calichera was formed
                                         to hold the capital stock of SQM contributed by such employees or later acquired in the
                                         open market.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | As of April 20, 2017, SQM had
                                         a “controlling group,” as such term is defined in Title XV of Chilean Law
                                         No. 18,045. SQM has been informed that, as of April 20, 2017, Mr. Julio Ponce Lerou,
                                         who is the brother of Eugenio Ponce L., and related persons control 100% of Inversiones
                                         SQYA Ltda. (“SQYA”) and 100% of Inversiones SQ Ltda. These two companies
                                         control indirectly 29.97% of all shares of SQM (consisting of 71,871,838 Series A shares
                                         and 7,007,688 Series B shares), as follows: (i) Inversiones SQ Ltda. controls 0.0258%
                                         of Norte Grande S.A. (“Norte Grande”) and SQYA controls 67.59% of Norte Grande,
                                         which controls 76.82% of Sociedad de Inversiones Oro Blanco S.A., which controls 88.64%
                                         of Pampa Calichera, which controls 19.72% of SQM; (ii) Pampa Calichera controls 99.99%
                                         of Inversiones Global Mining (Chile) Limitada, which controls 3.34% of SQM and (iii)
                                         Norte Grande controls 76.34% of Nitratos de Chile S.A., which controls 98.89% of Potasios
                                         de Chile S.A., which controls 10.07% of Pampa Calichera and 6.91% of SQM. Thus, Pampa
                                         Calichera and its related companies, Inversiones Global Mining Chile Limitada and Potasios
                                         de Chile S.A. (together, the “Pampa Group”), control 29.97% of SQM.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of April 20, 2017, Kowa Company
Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A., and La Esperanza Delaware Corporation (together, the “Kowa
Group”) are owners of 2.11% of all shares in SQM. On December 21, 2006, the Pampa Group and the Kowa Group entered into
a Joint Operation Agreement which currently allows them to have the status of “controlling group” of the Company.
The aforementioned Joint Operation Agreement refers to a filing made with the SVS that was filed by Sociedad de Inversiones Pampa
Calichera S.A. on December 21, 2006.



The following table shows the combined
stakes that the Controller Group held in SQM as of the dates specified:



|                  |  | %Beneficial ownership |      
|----------------- |  | --------------------- | -----
|April 20, 2017    |  |                       | 32.08
|December 31, 2016 |  |                       | 32.08
|December 31, 2015 |  |                       | 32.08
|December 31, 2014 |  |                       | 32.03



102







Separately from any ownership interest
held by the Controller Group, as of April 20, 2017, SQM has been informed that PCS indirectly controls 100% of the shares of Inversiones
El Boldo Limitada, 100% of the shares of Inversiones RAC Chile Limitada and 100% of the shares of Inversiones PCS Chile Limitada.
Through these companies, PCS owns 32.00% of the total shares of SQM.



| | (3) | As of April 20, 2016, PCS owns
                                         100% of Inversiones El Boldo Limitada, 100% of Inversiones RAC Chile Ltda., and 100%
                                         of Inversiones PCS Chile Limitada, and, accordingly, is the beneficial owner of 84,222,887,
                                         or 32.00%, of SQM’s total shares. The stake held by PCS as of December 31, 2015
                                         and 2014 was, respectively, 32.00% and 32.00% of SQM’s total shares.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On December 21, 2006, Pampa Calichera and
Kowa executed a joint performance agreement that allows them to become the “controller group” of the Company, as such
term is defined under Chilean law. We have been informed that, as of April 15, 2017, Mr. Julio Ponce L. and related persons beneficially
owned, through Pampa Calichera and certain other companies, 29.97% of the shares of the Company. As of April 20, 2017, Kowa Group
owned, directly and indirectly, 2.11% of the shares of the Company. As of April 20, 2017, pursuant to the joint performance agreement,
the “controller group” led by Mr. Julio Ponce L. beneficially owned 32.08% of the total shares of the Company.



On April 17, 2017, certain entities owned
by the Pampa Group, the Kowa Group and PCS, which collectively own 61.92% of the total outstanding shares of SQM, entered into
a letter agreement with respect to certain corporate governance matters of SQM (the “Corporate Governance Agreement”).
The full text of the Corporate Governance Agreement is attached hereto as Exhibit 99.4 and incorporated herein by reference.



The Company believes that approximately 51.33%
of its Series A shares and 20.19% of its Series B shares were beneficially held in Chile as of April 20, 2017. Approximately 1,231
record holders were in Chile as of April 20, 2017.



Series A and Series B common shares have the
same economic rights (i.e., both series are entitled to share equally in any dividends declared on the outstanding stock) and
voting rights at any shareholders meeting, whether ordinary or extraordinary, with the exception of the election of the Board,
in which the Series A shareholders elect seven members and the Series B shareholders elect one member. Additionally, Series B
common shares cannot exceed 50% of SQM’s issued and outstanding stock; shareholders of at least 5% of this Series may call
an Ordinary or Extraordinary Shareholders’ Meeting; and the director elected by this Series may request an extraordinary
Board meeting without the authorization of the Chairman of the Board. These conditions will remain in effect until 2043. Under
our by-laws, the maximum individual voting power personally and/or in representation of other shareholders per Series is limited
to 37.5% of the subscribed shares of each Series with voting rights and 32% of the total subscribed shares with voting rights.
To calculate these percentages, shares that belong to the voting shareholder’s related persons must be added. In addition,
the director elected by the Series B shareholders cannot vote in the election of the Chairman of the Board if a tie vote has occurred
in the prior voting process. As of April 20, 2017, there are 142,819,552 Series A common shares and 120,376,972 Series B common
shares outstanding.



7.B.      Related Party Transactions



Title XVI of the Chilean Corporations Act
regulates transactions with related parties for publicly held corporations and its related parties.



Articles 146 to 149 of the Chilean Corporations
Act requires that our transactions with related parties (i) have as their purpose to contribute to SQM’s interests (ii)
be on price, terms and conditions similar to those customarily prevailing in the market at the time of their approval and (iii)
satisfy the requirements and procedures established by the Chilean Corporations Act. Violation of such articles may also result
in administrative or criminal sanctions and civil liability may be sought by SQM, shareholders or interested third parties that
suffer losses as a result of such violations.



103







In addition, article 89 of the Chilean Corporations
Act requires that transactions between affiliates, subsidiaries or related parties of a closed-stock company, such as some of
SQM’s main affiliates and subsidiaries, shall also be on terms similar to those customarily prevailing in the market. Directors
and executive officers of companies that violate article 89 are liable for losses resulting from such violations.



With respect to SQM, operations with related
parties include negotiations, proceedings, contracts or operations involving SQM and its controller, directors, managers and officers,
and their spouses and relatives, and other companies and persons connected to the abovementioned parties or mentioned in the by-laws
or by the Directors’ Committee. Such operations may only be carried out if (i) their objective is to contribute to SQM’s
interests and if their price, terms and conditions conform to prevailing market prices, terms and conditions at the time of their
approval and (ii) they satisfy the requirements and procedures established by the Chilean Corporations Act. Such requirements
include, among others:



| | · | that
                                         the operation be informed to the Directors’ Committee and to the Board of Directors
                                         prior to its execution;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | that
                                         the Board of Directors, excluding any Directors involved in the operation, approves the
                                         operation with an absolute majority of its members, or, if an absolute majority is not
                                         feasible, with a unanimous vote by the Directors not involved in the transaction, or,
                                         if neither of these options is available, that an Extraordinary Shareholders’ Meeting
                                         be held and that shareholders representing 2/3 of the outstanding shares with voting
                                         rights approve the operation. In the latter case, prior to the meeting, the shareholders
                                         must be provided with a report by an independent evaluator and with statements by the
                                         directors as to whether or not such operation is in SQM’s interest;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | that
                                         the grounds for the decision and for the exclusion be recorded in the respective minutes
                                         of the Board meeting; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | that
                                         the agreement and the names of the directors who approved the same be reported at the
                                         next shareholders’ meeting. Infractions will not affect the validity of the operation
                                         but they will grant SQM or its shareholders the right to demand that the related party
                                         committing such infraction refund the amount equivalent to the benefits received by such
                                         party in the operation to SQM, and that such party indemnify for any corresponding damages.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



However, the Board of Directors may authorize
the following operations with related parties to be carried out without following such requirements and procedures, as long as
such authorization is obtained in advance: (a) operations wherein the amount of the transaction is not significant or (b) operations
that, according to the general policies on customary practices determined by the Board of Directors, are considered normal based
on SQM’s business activities or (c) operations carried out between legal entities wherein SQM holds at least a 95% ownership
interest in the counterpart.



We believe that we have complied with the
applicable requirements of the referred articles in all transactions with related parties. Accounts receivable from and payable
to related companies are stated in U.S. dollars and accrue no interest. Other than the above, transactions are made under terms
and conditions that are similar to those offered to unrelated third parties. We further believe that we could obtain from third
parties all raw materials now being provided by related parties that are not our affiliates. The provision of such raw materials
by new suppliers could initially entail additional expenses.



In each case, terms and conditions vary depending
on the transaction pursuant to which it was generated.



The Company regularly enters into business
arrangements with related parties, principally its joint ventures and associates, which are described in Note 9 to the Consolidated
Financial Statements.



104







7.C.      Interests
of Experts and Counsel



Not applicable.



ITEM 8.  FINANCIAL INFORMATION



8.A.     Consolidated
Statements and Other Financial Information



8.A.1 See
“Item 18. Financial Statements.”



8.A.2 See
“Item 18. Financial Statements.”



8.A.3 See
“Item 19. Exhibits—Index to Financial Statements—Reports of Independent Registered Public Accounting Firm.”



8.A.4 Not
applicable.



8.A.5 Not
applicable.



8.A.6 Export Sales



We derive most of our revenues from sales
outside of Chile. The distribution of sales presented below reflects the location of the Company’s subsidiaries making such
sales and does not necessarily reflect the final destination of the products sold.



The following is the composition of the consolidated
sales for the periods ending on December 31, 2016, 2015 and 2014:



|Th. US$         |  | 2016 |           |   | 2015 |  |           | 2014 | 
|--------------- |  | ---- | --------- | - | ---- |  | --------- | ---- | 
|Foreign sales   |  |      | 1,776,845 |   |      |  | 1,539,740 |      | 
|Total sales     |  |      | 1,939,323 |   |      |  | 1,728,332 |      | 
|                |  |      |           |   |      |  |           |      | 
|Foreign sales % |  |      | 91.6      | % |      |  | 89.1      | %    | 



8.A.7    Legal Proceedings



Chilean Investigation



The SII has been conducting investigations
related to the payment of invoices by SQM and its subsidiaries, SQM Salar S.A. and SQM Industrial S.A., for services that may
not have been properly supported or that may not have been necessary to generate corporate income. The Chilean Public Prosecutor
(Ministerio Público) is conducting related inquiries to determine whether such payments may be linked with alleged
violations by SQM, these subsidiaries and public officials of political contribution or anti-corruption laws. The SII and the
Chilean Public Prosecutor are also conducting similar investigations related to the payment of invoices by other Chilean companies
that may not have been properly supported or that may not have been necessary to generate corporate income.



On February 26, 2015, SQM’s Board of
Directors resolved to establish an ad-hoc Committee authorized to conduct an internal investigation relating to the issues that
were the subject of the SII and Public Prosecutor investigations and to retain such independent external advice as it deemed appropriate.
The original members of the ad-hoc Committee were José María Eyzaguirre B., Juan Antonio Guzmán M. and Wolf
von Appen B.



105







The ad-hoc Committee engaged its own lawyers
from Chile and the U.S. and forensic accountants from the U.S. to assist with its internal review. The U.S. lawyers retained by
the ad-hoc Committee were principally charged with reviewing the relevant facts and analyzing those facts against the requirements
of the FCPA. The factual findings of the ad-hoc Committee, however, were ultimately shared with Chilean as well as U.S. authorities.



On March 12, 2015, José María
Eyzaguirre B. resigned from the ad-hoc Committee and his position was subsequently filled by Hernán Büchi B.



On March 16, 2015, the Board of Directors
decided to terminate the employment contract of the Company’s then- CEO, Patricio Contesse G. This followed his failure
to cooperate with the ad-hoc Committee’s investigation.



On March 17, 2015, three members of the Board
of Directors resigned, all of whom had been nominated by PCS, one of SQM’s two principal shareholder groups. PCS issued
a press release stating that the directors resigned because of their concern that they could not ensure that the Company was conducting
an appropriate investigation and collaborating effectively with the Public Prosecutor.



On March 20, 2015, the Company identified
to the SII approximately US$11 million in payments of invoices that may not have been properly supported by services rendered
or that may not qualify as tax expenses under the Chilean tax code. These payments originated from the office of the former CEO,
Patricio Contesse G., during the six-year tax period from 2009 to 2014. As a result, the Company subsequently submitted amendments
to its tax returns for the 2009 to 2014 tax years and thereafter paid taxes and interest relating to such amended returns totaling
approximately US$7 million. On April 24, 2015, the Company announced that it had identified up to an additional US$2 million in
payments by its subsidiary SQM Salar S.A. during the same six-year tax period that were also authorized by the former CEO and
that may be deemed not properly supported by services rendered or that may not qualify as tax expenses under the Chilean tax code.
Subsequently, SQM Salar S.A. filed amended tax returns and paid taxes and interest relating to such amended returns totaling approximately
US$1.2 million. On August 14, 2015, the Company announced that it had identified to the SII approximately US$1.6 million in additional
payments by SQM S.A. and its subsidiary SQM Industrial S.A. that may be deemed not properly supported by services rendered or
that may not qualify as tax expenses under the Chilean tax code. SQM S.A. and SQM Industrial S.A. subsequently filed amended tax
returns and, in early 2016, SQM Industrial S.A. paid taxes and interest relating to such amended returns totaling approximately
US$0.3 million, and SQM S.A. paid taxes and interest relating to such amended returns totaling approximately US$1.3 million. The
statute of limitations under Chilean law for tax claims is up to six years, during which period the former CEO had an annual discretionary
budget covering the Company and its subsidiaries of approximately US$6 million.



On March 23, 2015, the SII, based on the Income
Tax Law (Ley de Impuesto a La Renta)filed a criminal claim against the Company’s former CEO and the current CEO
and CFO in their capacities as the Company’s tax representatives relating to part of the payments referred to above. This
and subsequent related similar claims filed by the SII against these officers and third parties are currently under review by
the Public Prosecutor.



On March 31, 2015, the SVS filed an administrative
claim against five current or former members of the Board of Directors, alleging that they did not release information in a timely
manner relating to the payments that are subject to the tax claim referred to above. On September 30, 2015, the SVS proceeded
to fine the three current and the two former members of the Board of Directors UF1,000 each (approximately US$36,000). They are
currently appealing this decision to the Chilean courts.



On April 24, 2015, new members were elected
to the Board of Directors at the Annual General Shareholders’ Meeting, including three new members that were nominated by
PCS, and the ad-hoc Committee was subsequently reconstituted by Board of Directors members Robert A. Kirkpatrick, Wolf von Appen
B. and Edward J. Waitzer.



106







On April 30, 2015, the Public Prosecutor,
after reviewing the claims filed by the SII, informed the Company’s former CEO that it was formally investigating allegations
that he approved the payment of invoices that may not be properly supported by services rendered or that may not qualify as tax
expenses under the Chilean tax code and in connection therewith made intentionally false or incomplete declarations or used fraudulent
procedures designed to conceal or disguise the true amount of transactions or to circumvent taxes. If he is finally adjudicated
responsible, the Company may also be subject to the payment of a fine by the Chilean Criminal Court totaling 50%
to 300% of the taxes paid. The Company estimates that no provision is needed at this stage.



On May 11, 2015, the SII filed an additional
criminal claim against the former CEO and the current CEO and CFO in their capacities as the Company’s tax representatives
alleging violations of the Chilean Inheritance and Donations Law (Ley sobre Impuesto a Las Herencias, Asignaciones y Donaciones).
The claim states that the Company paid two invoices in 2009 and 2010 totaling approximately US$175,000 that are alleged to have
been improperly supported. The claim states that these payments should have been classified as donations, and appropriate taxes
should have been paid. These payments were accounted for in the amended tax returns filed with the SII. Subsequently, the SII
filed a number of additional claims against these officers and third parties alleging violations of Chilean tax law and the Chilean
Inheritance and Donations Law. The most recent of these criminal claims was filed by the SII on March 9, 2016. All of these claims
are under review by the Public Prosecutor.



On July 31, 2015, the deputy of the Tarapacá
region of Chile, Hugo Gutiérrez G., filed a lawsuit against the Company, broadly alleging violations of the anti-corruption
and money laundering provisions of Law No. 20,393 on Criminal Liability of Legal Entities. Potential sanctions under this law
could include (i) fines, (ii) loss of certain governmental benefits during a given period, (iii) a temporary or permanent bar
against the Company executing contracts with governmental entities, and (iv) dissolution of the Company. This claim is under review
by the Public Prosecutor.



On September 29, 2015, the Company was notified
of a labor lawsuit by its former CEO, Patricio Contesse, claiming payment from the Company related to the termination of his employment
contract. The total amount claimed in the lawsuit is approximately Ch$4.0 billion (approximately US$5.7 million), including severance
payments for years of service and other legal or contractual payments. The Company has not paid any indemnities to the former
CEO, and the lawsuit is pending in the Chilean courts. The Company estimates that no provision is needed at this stage. On March
27, 2017, the Company reached an agreement with Mr. Contesse to terminate the labor lawsuit Mr. Contesse filed against the Company.
The amount included in the agreement was provisioned for in the financial statements as of December 31, 2016.



During 2015, the ad-hoc Committee that was
established in February 2015, conducted an investigation into whether the Company faced possible liability under the U.S. Foreign
Corrupt Practices Act. The ad-hoc Committee engaged its own separate counsel, Shearman & Sterling LLP, which presented a report
to the Board of Directors on December 15, 2015.



Following the presentation by the ad-hoc Committee
of its findings to the Board of Directors, the Company voluntarily shared the findings of the ad-hoc Committee investigation with
authorities in Chile and the U.S. (including the SEC and the DOJ).



On January 13, 2017, the Company and the DOJ
reached agreement on the terms of a Deferred Prosecution Agreement (“DPA”) that would resolve the DOJ’s inquiry,
based on alleged violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act. Among
other terms, the DPA calls for the Company to pay a monetary penalty of US$15,487,500, and engage a compliance monitor for a term
of two (2) years. Upon successful completion of the three (3) year term of the DPA, all charges against the Company would be dismissed.
On the same date, the SEC agreed to resolve its inquiry through an administrative cease and desist order, arising out of the alleged
violations of the same accounting provisions of the FCPA. Among other terms, the SEC order calls for the Company to pay an additional
monetary penalty of US$15 million. These penalites were reflected in the 2016 financial statements.



107







In Chile, the authorities’ review of
the questioned payments is ongoing. We are unable to predict the duration, scope, or results of this review, or how it may affect
our business, financial condition, cash flows, results of operations and the prices of our securities. There can be no assurance
that the authorities will agree with the conclusions of the ad-hoc Committee or that the authorities will not conclude that a
violation of applicable law has occurred. There can be no assurance that authorities in Chile or the U.S. will not undertake a
broader investigation or seek to commence additional litigation against the Company.



Responding to our regulators’ inquiries
and any future civil, criminal or regulatory inquiries or proceedings diverts our management’s attention from day-to-day
operations. Additionally, expenses that may arise from responding to such inquiries or proceedings, our review of responsive materials,
any related litigation or other associated activities may continue to be significant. Current and former employees, officers and
directors may seek indemnification, advancement or reimbursement of expenses from us, including attorneys’ fees, with respect
to the current inquiry or future proceedings related to this matter. If, as a result of further investigations, it is determined
that our financial statements were materially incorrect, we could be required to restate financial information for prior reporting
periods. Chilean authorities could impose a range of sanctions, including the sanctions discussed above under Law No. 20,393.



Class Actions



Since October 2015, a consolidated class action
lawsuit has been pending against the Company in federal district court in the United States, alleging violations of the U.S. securities
laws in connection with the subject matter of the investigations described above.  The complaint alleges that certain statements
made by the Company between June 30, 2010 and June 18, 2015, principally in the Company’s SEC filings and press releases,
were materially false and/or misleading in violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange
Act”) and Rule 10b-5 promulgated thereunder.  Specifically, the complaint challenges certain of the Company’s
statements concerning its compliance with applicable laws and regulations; the effectiveness of its internal controls; its adoption
of a code of ethics consistent with SEC requirements; its revenues and taxes owed; and its compliance with applicable accounting
standards.  The complaint also alleges that the Company made inadequate disclosures concerning the status of the Corfo litigation
described below.  The lead plaintiff seeks to represent a putative class consisting of all persons who purchased SQM ADSs
between June 30, 2010 and June 18, 2015, and seeks damages of an undetermined amount to recover the economic losses allegedly
suffered by the class as a result of the challenged statements.



On March 30, 2016, the Company filed a motion
to dismiss the complaint under the doctrine of forum non conveniens or, alternatively, pursuant to Rules 9(b) and 12(b)(6)
of the Federal Rules of Civil Procedure for failure to state a claim under Section 10(b) of the Exchange Act.  Briefing on
that motion to dismiss was completed on June 29, 2016.  On March 28, 2017, the district court issued an opinion and order
denying in part and granting in part the motion to dismiss.  The district court denied the motion to dismiss under the doctrine
of forum non conveniens; denied the motion to dismiss for failure to state a claim with respect to the statements concerning
legal compliance, internal controls, and financial reporting and accounting; and granted the motion to dismiss for failure to
state a claim with respect to the statements concerning the Company’s code of ethics and the status of the Corfo litigation.



108







Corfo Litigation



Our subsidiary SQM Salar holds exclusive and
temporary exploitation rights to mineral resources in 81,920 hectares in the Salar de Atacama pursuant to the Lease Agreement.
The mining exploitation concessions related to such rights are owned by Corfo and leased to SQM Salar in exchange for quarterly
lease payments to Corfo based on specified percentages associated to the value of the products resulting from the minerals extracted
from such concessions. For the year ended December 31, 2016, revenue related to products originating from the Salar de Atacama
represented 47% of our consolidated revenues, which corresponded to revenues from our potassium product line and our lithium and
derivatives product line for the period. All of our products originating from the Salar de Atacama are derived from our extraction
operations under the Lease Agreement.



In May 2014, Corfo initiated an arbitration
proceeding against SQM Salar alleging (i) SQM Salar had incorrectly applied the formulas to determine lease payments resulting
in an underpayment to Corfo of at least US$8.9 million for 2009 through 2013 and (ii) SQM Salar had not complied with its obligation
to protect the mining rights of Corfo by failing to construct or replace markers to delineate property lines. Based on the alleged
breaches of the Lease Agreement, Corfo sought (i) at least US$8.9 million plus any other amount that may be due in respect of
periods after 2013, (ii) early termination of the Lease Agreement, (iii) lease payments that would have been paid through 2030
as compensation for the early termination of the Lease Agreement and (iv) punitive damages (daño moral) equal to
30% of the contractual damages awarded. SQM Salar contested the claim, asserting that both parties have applied mutually agreed
formulas for the calculation and payment of lease payments for more than 20 years without conflict, in accordance with the terms
of the Lease Agreement and their mutual understanding of the agreements by the parties during the term of the Lease Agreement.
SQM Salar also asserted that the alleged breaches would be technical breaches and that Corfo may terminate the Lease Agreement
solely for a material breach. SQM Salar in consultation with external counsel believes that it is likely it will prevail in the
arbitration proceeding. However, an adverse ruling awarding damages sought by Corfo or permitting early termination of the Lease
Agreement would have a material adverse effect on our business, financial condition, cash flows, results of operations and share
price. We cannot assure you that Corfo will not use this arbitration proceeding to seek to renegotiate the terms of the Lease
Agreement in a manner that is not favorable to SQM Salar.



In August 2016, Corfo requested a second arbitration
proceeding, demanding (i) the early termination of the Project Contract signed between Corfo, SQM Potasio S.A., SQM Salar, and
the Company, (ii) the dissolution of SQM Salar and (iii) the early termination of the Lease Agreement for alleged breaches of
the Project Contract. In addition, Corfo demanded SQM Salar return (i) the assets Corfo contributed to it under a condition subsequent,
(ii) the OMA mining properties and the aquifers included in the Lease Agreement, (iii) the water rights granted to SQM Salar and
(iv) the legal mining easements identified in the lawsuit. Finally, Corfo requested that the defendants pay damages as a result
of the breaches alleged in the lawsuit. The Company believes there is insufficient evidence to demonstrate that the Project Contract
has been breached. However, there can be no assurance that the Company will prevail against Corfo or that other legal actions
will not be taken by Corfo against the Company’s interests.



SQMNA Litigation



In October 2010, the City of Pomona, California,
named Sociedad Química y Minera de Chile S.A. and SQM North America Corporation (“SQMNA”) and SQM as defendants
in an action filed in the California Superior Court for Los Angeles County. In this matter the plaintiff seeks damages for alleged
groundwater contamination from the use of defendant’s fertilizer products. The Plaintiff subsequently s withdrew its lawsuit
against SQM. On June 10, 2015, the jury rejected the lawsuit against SQMNA, and the plaintiff filed an appeal, the resolution
of which is pending. SQMNA intends to vigorously defend this action.



109







In October 2010, the City of Lindsay, California,
named Sociedad Química y Minera de Chile S.A. and SQMNA as defendants in an action filed in the California Superior Court
for Tulare County. In this matter the plaintiff seeks damages for alleged groundwater contamination from the use of defendant’s
fertilizer products. This case is pending in the trial court. SQMNA and SQM (if it is legally served) intend to vigorously defend
this action. The process has been suspended and we are awaiting results from the case in Pomona. SQMNA and SQM intend to vigorously
defend this action. Other Matters



In addition, various lawsuits, claims and
proceedings, other than those specifically disclosed above, have been or may be instituted or asserted against the Company, relating
to the conduct of the company’s business, including those pertaining to mining, civil, tort, commercial, labor and regulatory
matters, among others. Although the outcome of other litigation cannot be predicted with certainty, and some lawsuits, claims
or proceedings may be disposed of unfavorably to the Company, our management believes the disposition of such other pending matters
will not have a material effect on the company’s business, financial condition, results of operations or cash flows.



8.A.8. Dividend Policy



As required by Chilean law and regulations,
our dividend policy is decided upon from time to time by our Board of Directors and is announced at the Annual Ordinary Shareholders’
Meeting, which is generally held in April of each year. Shareholder approval of the dividend policy is not required. However,
each year the Board must submit the declaration of the final dividend or dividends in respect of the preceding year, consistent
with the then-established dividend policy, to the Annual Ordinary Shareholders’ Meeting for approval. As required by the
Chilean Companies Act, unless otherwise decided by unanimous vote of the holders of issued shares, we must distribute a cash dividend
in an amount equal to at least 30% of our consolidated net income for that year (determined in accordance with SVS regulations),
unless and to the extent the Company has a deficit in retained earnings.



At the Annual Shareholders’ Meeting
held on April 26, 2016, shareholders agreed to pay and distribute a dividend equal to 50% of the distributable income for 2015
(to be determined in accordance with SVS regulations). The cash dividends for 2015 have been calculated and approved by shareholders
based on the profit attributable to owners of the parent as presented in the Chilean statutory consolidated financial statements,
of US$213.2 million. The amount of the final dividend approved by shareholders at the Annual Shareholders’ Meeting held
on April 26, 2016 was US$0.40496 per share. This amount was partially paid on December 10, 2015, through an interim dividend of
US$0.31915 per share. The remaining US$0.08581 was paid on May 6, 2016. Additionally, the shareholders approved the distribution
and payment of a special dividend (“dividendo eventual”) of US$150 million, equivalent to US$0.56992 per share, to
be charged to the Company’s retained earnings, and also paid on May 6, 2016.



The dividend policy for 2016 established that
SQM must distribute and pay in favor of its shareholders, as a final dividend, the amount in Chilean pesos equivalent to 50% of
the distributable income for 2016. For this purpose, distributable net income includes income for the year included in the income
statement item “Profit (Loss) Attributable to Owners of the Parent” (determined in accordance with SVS regulations).



On November 23, 2016, with a divided vote,
the Board of Directors agreed: (i) to pay and distribute on December 20, 2016 a provisional dividend of US$225 million, equivalent
to US$0.85487 per share, to be charged against the 2016 net income, (ii) to change the Dividend Policy for the 2016 business year,
as discussed at the Annual General Shareholders’ Meeting held on April 26, 2016, (iii) that no further provisional dividend
would be charged against the 2016 net income and iv) that the remaining amount of net income for the 2016 business year, if any,
would be withheld and used to finance of the Company’s operations or one or more of the Company’s investment projects
and to fund all or part of any possible future expenditures, without prejudice.



110







On April 11, 2017, the Board of Directors,
agreed to recommend to the shareholders the payment of a definitive dividend representing 100% of the 2016 net income. This definitive
dividend payment will be presented for consideration at the Annual General Shareholders’ Meeting held on April 28, 2017.
Therefore, and subject to the approval at the Shareholders’ meeting, the Company shall pay a final dividend of US$1.05735
per share, the amount of US$0.85487 per share must be deducted from the final dividend, which was already paid as a provisional
dividend on December 20, 2016. The balance, in the amount of US$0.20248 per share, shall be paid and distributed to Company’s
shareholders, pending shareholders’ approval, on May 11, 2017.



On March 1, 2016, the Company filed its Chilean
statutory consolidated financial statements with the SVS, an English language copy of which was furnished by the Company on Form
6-K dated April 7, 2016. For purposes of the Company’s Chilean statutory consolidated financial statements, in accordance
with the instructions issued by the SVS in its circular 856 of October 17, 2014, the effects generated by the change in the income
tax rate were accounted for as retained earnings. The amount charged to equity as of December 31, 2014 was US$52.3 million, thereby
giving rise to a difference of US$52.3 million in profit and income tax expense in 2014 as presented in the Company’s Audited
Consolidated Financial Statements compared with profit and income tax expense presented in the Company’s Chilean statutory
consolidated financial statements filed with the SVS. The effects of subsequent changes in the income tax rate will be recognized
in retained earnings instead of the income statement.



There is also a difference between net income
for the periods ended December 31, 2015 and December 31, 2014 in the Audited Consolidated Financial Statements and net income
for such periods in the Chilean statutory consolidated financial statements filed with the SVS. In March 2015, the Company made
payments to the SII for expenses that may not have qualified as tax expenses under the Chilean tax code. Provisions of approximately
US$7 million corresponding to such payments were included in net income for the period ended December 31, 2014 in these financial
statements. However, since such payments were made after March 3, 2015, the date on which the Company filed its statutory consolidated
financial statements for the period ended December 31, 2014, with the SVS, such provisions were included in net income for the
period ended December 31, 2015 for purposes of the Company’s statutory consolidated financial statements. For more information,
see “Item 3D. Risk Factors—Risks Relating to our Business. The amount of any dividends to be paid will be calculated
on the basis of net income as determined for purposes of the Company’s statutory consolidated financial statements.



The dividend policy for 2017 will be announced
at the Annual Shareholders’ Meeting held on April 28, 2017.



We generally declare dividends in U.S. dollars
(but may declare dividends in Chilean pesos) and pay such dividends in Chilean pesos. When a dividend is declared in U.S. dollars,
the exchange rate to be used to convert the dividend into Chilean pesos is decided by the shareholders at the meeting that approves
the dividend, which has usually been the Observed Exchange Rate on the date the dividend is declared. In the case of interim dividends,
the exchange rate to be used is the Observed Exchange Rate published five business days before the payment date.



The amount and timing for payment of dividends
is subject to revision from time to time, depending upon our then current level of sales, costs, cash flow and capital requirements,
as well as market conditions. Accordingly, there can be no assurance as to the amount or timing of declaration or payment of dividends
in the future. Any change in dividend policy would ordinarily be effective for dividends declared in the year following adoption
of the change, and a notice as to any such change of policy must be filed with Chilean regulatory authorities and would be publicly
available information.



111







Dividends



Each Series A Share and Series B Share is
entitled to share equally in any dividends declared on the outstanding capital stock of SQM.



The following table shows the U.S. dollar
equivalent of dividends per share and per ADS paid in each of the years indicated, based on the Observed Exchange Rate for the
date on which the dividend was declared.



|Dividends                      |  |  |         |  |  | Per Share |        |  | Per ADS | 
|------------------------------ |  |  | ------- |  |  | --------- | ------ |  | ------- | 
|Declared for the business year |  |  | Paid in |  |  | Ch$       |        |  | US$     | 
|                               |  |  |         |  |  |           |        |  |         | 
|2010 (interim)                 |  |  | 2010    |  |  |           | 198.90 |  |         | 
|2010                           |  |  | 2011    |  |  |           | 142.40 |  |         | 
|2011 (interim)                 |  |  | 2011    |  |  |           | 376.99 |  |         | 
|2011                           |  |  | 2012    |  |  |           | 147.66 |  |         | 
|2012(interim)                  |  |  | 2012    |  |  |           | 456.93 |  |         | 
|2012                           |  |  | 2013    |  |  |           | 134.56 |  |         | 
|2013 (interim)                 |  |  | 2013    |  |  |           | 401.60 |  |         | 
|2013                           |  |  | 2014    |  |  |           | 73.48  |  |         | 
|n/a (eventual)                 |  |  | 2014    |  |  |           | 479.51 |  |         | 
|2014 (interim)                 |  |  | 2014    |  |  |           | 253.80 |  |         | 
|2014                           |  |  | 2015    |  |  |           | 91.55  |  |         | 
|2015 (interim)                 |  |  | 2015    |  |  |           | 224.51 |  |         | 
|2015                           |  |  | 2016    |  |  |           | 57.35  |  |         | 
|n/a (eventual)                 |  |  | 2016    |  |  |           | 380.91 |  |         | 
|2016 (interim)                 |  |  | 2016    |  |  |           | 555.15 |  |         | 



Dividends payable to holders of ADSs will
be paid net of conversion expenses of the Depositary and will be subject to Chilean withholding tax, currently imposed at the
rate of 35% (subject to credits in certain cases).



As a general requirement, a shareholder who
is not a resident of Chile must register as a foreign investor under one of the foreign investment regimes contemplated by Chilean
law to have dividends, sale proceeds or other amounts with respect to its shares remitted outside Chile through the Formal Exchange
Market. Under the Foreign Investment Contract, the Depositary, on behalf of ADR holders, will be granted access to the Formal
Exchange Market to convert cash dividends from Chilean Pesos to U.S. dollars and to pay such U.S. dollars to ADS holders outside
Chile net of taxes, and no separate registration of ADS holders is required.



8.B.      Significant
Changes



No significant change has occurred since the
date of the financial statements set forth in Item 18.



112







ITEM 9.	THE OFFER AND LISTING



9.A.     Offer and Listing Details



Price History



The table below shows, for the periods indicated,
the reported high and low market prices for our shares on the Santiago Stock Exchange and the high and low market prices of the
ADSs as reported by the NYSE, as the two main exchanges on which our shares are traded. On March 27, 2008, the Company voluntarily
delisted its Series A ADSs from the New York Stock Exchange. The ratio of ordinary shares to Series B ADSs is 1:1.



(a)	        Last 5 years



|     |  | Santiago Stock Exchange |        |  | NYSE     | 
|---- |  | ----------------------- | ------ |  | -------- | 
|     |  | Per Share (1)           |        |  | Per ADS  | 
|     |  | Series A                |        |  | Series B | 
|     |  | High                    |        |  | Low      | 
|     |  | Ch$                     |        |  | Ch$      | 
|2012 |  |                         | 30,100 |  |          | 
|2013 |  |                         | 27,350 |  |          | 
|2014 |  |                         | 19,071 |  |          | 
|2015 |  |                         | 19,450 |  |          | 
|2016 |  |                         | 21,500 |  |          | 



| | (b) | 2015 to 2017 by quarter
| | --- | -----------------------





|               |  | Santiago Stock Exchange |        |  | NYSE     | 
|-------------- |  | ----------------------- | ------ |  | -------- | 
|               |  | Per Share (1)           |        |  | Per ADS  | 
|               |  | Series A                |        |  | Series B | 
|               |  | High                    |        |  | Low      | 
|               |  | Ch$                     |        |  | Ch$      | 
|               |  |                         |        |  |          | 
|2015           |  |                         |        |  |          | 
|First quarter  |  |                         | 16,300 |  |          | 
|Second quarter |  |                         | 16,500 |  |          | 
|Third quarter  |  |                         | 17,500 |  |          | 
|Fourth quarter |  |                         | 19,450 |  |          | 
|               |  |                         |        |  |          | 
|2016           |  |                         |        |  |          | 
|First quarter  |  |                         | 18,250 |  |          | 
|Second quarter |  |                         | 18,500 |  |          | 
|Third quarter  |  |                         | 18,500 |  |          | 
|Fourth quarter |  |                         | 21,500 |  |          | 
|               |  |                         |        |  |          | 
|2017           |  |                         |        |  |          | 
|First quarter  |  |                         | 23,500 |  |          | 





113







| | (c) | Last 6 months
| | --- | -------------



|              |  | Santiago Stock Exchange |        |  | NYSE     | 
|------------- |  | ----------------------- | ------ |  | -------- | 
|              |  | Per Share (1)           |        |  | Per ADS  | 
|              |  | Series A                |        |  | Series B | 
|              |  | High                    |        |  | Low      | 
|              |  | Ch$                     |        |  | Ch$      | 
|October 2016  |  |                         | 21,300 |  |          | 
|November 2016 |  |                         | 20,900 |  |          | 
|December 2016 |  |                         | 21,500 |  |          | 
|January 2017  |  |                         | 22,130 |  |          | 
|February 2017 |  |                         | 23,500 |  |          | 
|March 2017    |  |                         | 23,500 |  |          | 



(1)Pesos
per share of Common Stock reflect nominal price at trade date.

(2)Series B shares began trading on the New
York Stock Exchange on September 20, 1993.





As of April 20, 2017, there were 56.451.520
Series B ADSs outstanding. As of April 20, 2017, such ADSs represented approximately 21.45% of the total number of issued and outstanding
shares of our Company.





9.BPlan
Of Distribution



Not Applicable.



9.CMarkets



The Series A shares and the Series B shares
are currently traded on the Santiago Stock Exchange, the Bolsa Electrónica de Chile Bolsa de Valores S.A., (the Electronic
Stock Exchange) and the Bolsa de Corredores Bolsa de Valores S.A., (the Valparaíso Stock Exchange). As of April 20, 2017,
the Series B shares were also traded on the New York Stock Exchange in the form of ADSs at a ratio of 1:1. The ADSs representing
Series B shares have traded on the NYSE since September 20, 1993. The depositary bank for these ADSs is the Bank of New York
Mellon.



9.D	Selling
Shareholders



Not applicable.



9.E      	Dilution



Not applicable.



9.F	Expenses
Of The Issue



Not applicable.



114







ITEM 10.	ADDITIONAL INFORMATION



10.A.    Share
Capital



Not applicable.



10.B.    Memorandum
and Articles of Association



Sociedad Química
y Minera de Chile S.A.,headquartered at El Trovador No. 4285, 6th Floor, Santiago, Chile, is an open stock corporation
organized under the laws of the Republic of Chile. The Company was constituted by public deed issued on June 17, 1968 by Mr. Sergio
Rodríguez Garcés, Notary Public of Santiago. Its existence was approved by Decree No. 1,164 of June 22, 1968, of
the Ministry of Finance, and it was registered on June 29, 1968, in the Business Registry of Santiago, on page 4,537 No. 1,992.



Corporate purposes



Our main purposes, which appear in article
4 of our By-laws, are to: (a) perform all kinds of chemical or mining activities and businesses and, among others, those related
to researching, prospecting, extracting, producing, working, processing, purchasing, disposing of, and marketing properties, as
applicable, of all metallic and non-metallic and fossil mining substances and elements of any type or nature, to be obtained from
them or from one or more concessions or mining deposits, and in their natural or converted state, or transformed into different
raw materials or manufactured or partially manufactured products, and of all rights and properties thereon; (b) manufacture, produce,
work, purchase, transfer ownership, import, export, distribute, transport, and market in any way, all kinds of fertilizers, components,
raw materials, chemical, mining, agricultural, and industrial products, and their by-products; (c) generate, produce, distribute,
purchase, transfer ownership, and market, in any way, all kinds of electrical, thermal, geothermic or other type of power, and
hydric resources or water rights in general; (d) request, manifest, claim, constitute, explore, work, lease, transfer ownership,
and purchase, in any way, all kinds of mining concessions; (e) purchase, transfer ownership, and administer, in any way, any kind
of telecommunications, railroads, ships, ports, and any means of transport, and represent and manage shipping companies, common
carriers by water, airlines, and carries in general; (f) manufacture, produce, market, maintain, repair, assemble, construct,
disassemble, purchase and transfer ownership, and in any way, any kind of electromechanical structure, and substructure in general,
components, parts, spares, or parts of equipment, and machines, and execute, develop, advice, and market, any kind of electromechanical
or smelting activities; (g) purchase, transfer ownership, lease, and market any kind of agro industrial and farm forestry activities,
in any way (h) purchase, transfer ownership, lease, and market, in any way, any kind of urban or rural real estate; (i) render
any kind of health services and manage hospitals, private clinics, or similar facilities; (j) construct, maintain, purchase, transfer
ownership, and manage, in any way, any kind of roads, tunnels, bridges, water supply systems, and other required infrastructure
works, without any limitation, regardless of whether they may be public or private, among others, to participate in bids and enter
into any kind of contracts, and to be the legal owner of the applicable concessions; and (k) purchase, transfer ownership, and
market, in any way, any kind of intangible properties such as stocks, bonds, debentures, financial assets, commercial papers,
shares or rights in corporations, and any kind of bearer securities or instruments, and to administer such investments, acting
always within the Investment and Financing Policies approved by the applicable General Shareholders Meeting. We may comply with
the foregoing by acting ourselves or through or with other different legal entities or natural persons, within the country or
abroad, with properties of our own or owned by third parties, and additionally, in the ways and territories, and with the aforementioned
properties and purposes, we may also construct and operate industrial or agricultural facilities or installations; constitute,
administer, purchase, transfer ownership, dissolve, liquidate, transform, modify, or form part of partnerships, institutions,
foundations, corporations, or associations of any kind or nature; perform all actions, enter into all contracts, and incur in
all obligations convenient or necessary for the foregoing; perform any business or activity related to our properties, assets,
or patrimony, or with that of our affiliates, associated companies, or related companies; and render financial, commercial, technical,
legal, auditing, administrative, advisory, and other pertinent services.



115







Directors



As stated in article 9 of the Company’s
By-laws, the Company has eight Directors. One of the Directors must be “independent” as such term is defined in article
50 bis of Law No. 18,046. Moreover, the possession of shares is not a condition necessary to become a Director of the Company.



As stated in article 10 of the Company’s
By-laws, the term of the Directors is of three years and they can be reelected indefinitely; thus, there is no age limit for their
retirement.



The Company’s By-laws, in articles 16
and 16 bis, essentially establish that the transactions in which a Director has a material interest must comply with the provisions
set forth in articles 136 and 146 to 149 of Law No. 18,046 and the applicable regulations of such Law.



The Board
of Directors duties are remunerated, as stated in article 17 of the Company’s By-laws, and the amount of that compensation
is fixed yearly by the Ordinary Shareholders’ Meeting. Therefore, Directors can neither determine nor modify their compensation.



Directors
cannot authorize Company loans on their behalf.



The Board
of Directors must provide shareholders and the public with sufficient, reliable and timely information pertaining to the Company’s
legal, economic and financial situation, as required by the Law or the Chilean Superintendency of Securities and Insurance. The
Board of Directors must adopt the appropriate measures in order to avoid the disclosure of such information to persons other than
those persons who should possess such information as a result of their title, position or activity within the Company before such
information is disclosed to shareholders and the public. The Board of Directors must treat business dealings and other information
about the Company as confidential until such information is officially disclosed. No Director may take advantage of the knowledge
about commercial opportunities that he has obtained through his position as Director.



Independent Directors and Directors Committee



According
to Chilean Law, SQM must appoint at least one Independent Director and a Directors’ Committee, due to the fact that (a)
the Company has a market capitalization greater than or equal to UF 1,500,000 and (b) at least 12.5% of the Company’s shares
with voting rights are held by shareholders who, on an individual basis, control or possess less than 10% of such shares.



Persons
who have not been involved in any of the circumstances described in the Law at any time during the preceding 18 months are considered
independent. Candidates for the position of Independent Director must be proposed by shareholders representing 1% or more of the
Company’s shares, at least 10 days prior to the date of the shareholders’ meeting that has been called in order to
elect the Directors. No less than two days prior to the respective shareholders’ meeting, the candidate must provide the
Chief Executive Officer with a sworn statement indicating that he: (a) accepts his candidacy for the position of Independent Director
(b) does not meet any of the conditions that would prevent him from being the Independent Director (c) is not related to the Company,
the other companies of the group to which the Company belongs, the controller of the Company, or any of the Company’s officers
in such a way that would deprive a sensible person of a reasonable degree of autonomy, interfere with his ability to perform his
duties objectively and effectively, generate a potential conflict of interest, or interfere with his independent judgment, and
(d) assumes the commitment to remain independent as long as he holds the position of Director.



116







The Directors’
Committee shall have the following powers and duties: (a) to examine the reports of the external auditors, the balance sheet and
other financial statements presented by the Company’s managers or liquidators to its shareholders and issue an opinion about
the same prior to their submission for the approval of the shareholders (b) to propose to the Board of Directors the external
auditors and risk rating agencies to be proposed to the shareholders at the respective shareholders’ meeting. In the event
that an agreement cannot be reached, the Board of Directors shall formulate its own suggestion, and both options shall be submitted
for shareholder consideration at such shareholders’ meeting (c) to examine the information relating to operations referred
to in articles 146 to 149 of Law No. 18,046 and to prepare a report about such operations. A copy of such report shall be sent
to the Board of Directors, and such report must be read at the Board Meeting called for the purpose of approving or rejecting
the respective operation or operations (d) to examine the remuneration system and compensation plans for the Company’s management,
officers and employees (e) to prepare an annual report on its activities, including its main recommendations to the shareholders
(f) to inform the Board of Directors about whether or not it is advisable to hire the external audit firm to provide non-audit
services where the audit firm is not prohibited from providing such services because the nature of the same could pose a threat
to the audit firm’s independence, and (g) any other issues indicated in the Company’s by-laws or authorized by a shareholders’
meeting or the Board of Directors.



The Directors’
Committee shall be comprised of three members, with at least one independent member. In the event that more than three Directors
have the right to form part of the Committee, these same Directors shall unanimously determine who shall make up the Committee.
In the event that an agreement cannot be reached, the Directors who were elected with a greater percentage of votes by shareholders
controlling or possessing less than 10% of the Company’s shares shall be given priority. If there is only one Independent
Director, this Director shall name the other members of the Committee among the other Directors who are not independent. Such
other members of the Committee shall have all of the rights associated with such position. The members of the Committee shall
be compensated for their role. The amount of their remuneration shall be set annually at the General Shareholders’ Meeting,
and it may not be less than the remuneration set for the Company Directors, plus an additional 1/3 of that amount. The General
Shareholders’ Meeting shall determine a budget for the expenses of the Committee and its advisors. Such budget may not be
less than the sum of the annual remunerations of the Committee members. The Committee may need to hire professional advisory services
in order to carry out its duties in accordance with the abovementioned budget. The proposals made by the Committee to the Board
of Directors that are not accepted by the latter must be reported to the shareholders’ meeting prior to the vote by shareholders
on the corresponding matter or matters. In addition to the responsibilities that are associated with the position of Director,
the members of the Committee are jointly and severally liable for any damages they cause in performing their duties as such to
the shareholders and to the Company.



Shares



Dividends
are annually distributed to the Series A and Series B shareholders of record on the fifth business day prior to the date for payment
of the dividends. The By-laws do not specify a time limit after which dividend entitlement elapses but Chilean regulations establish
that after five years, unclaimed dividends are to be donated to the fire department.



Article
5 of the Company’s By-laws establishes that Series B shares may in no case exceed 50% of the issued, outstanding and paid
shares of SQM Series B. SQM Series B shares have a restricted right to vote as they can only elect one Director of the Company,
regardless of their capital stock’s share. Series B shares have the right to call for an Ordinary or Extraordinary Shareholders’
Meeting when the shareholders of at least 5% of the Series B issued shares request so and for an Extraordinary Board of Directors
Meeting without the Chairman’s authorization when it is requested by the Director elected by the shareholders of the Series
B shares. Series A shares have the option to exclude the Director elected by Series B shareholders from the voting process in
which the Chairman of the Board is to be elected, if there is a tie in the first voting process. However, articles 31 and 31 bis
of the Company’s By-laws establish that in General Shareholders’ Meetings each shareholder will have a right to one
vote for each share he owns or represents and (a) that no shareholder will have the right to vote for himself or on behalf of
other shareholders of the same Series A or Series B shares representing more than 37.5% of the total outstanding shares with right
to vote of each Series and (b) that no shareholder will have the right to vote for himself or on behalf of other shareholders
representing more than 32% of the total outstanding shares with a right to vote. In calculating a single shareholder’s ownership
of Series A or B shares, the shareholder’s stock and those pertaining to third parties related to them are to be added.



117







Article
5 bis of the Company’s By-laws establishes that no person may directly or by means of related third persons concentrate
more than 32% of the Company’s total shares with right to vote.



Each Series
A share and Series B share is entitled to share equally in the Company’s profits, i.e., they have the same rights on any
dividends declared on the outstanding shares of SQM.



The Company
By-laws do not contain any provision relating to (a) redemption provisions (b) sinking funds or (c) liability to capital calls
by the Company.



As established
in article 103 of Law No. 18,046, a company subject to the supervision of the Superintendency of Securities and Insurance (SVS)
may be liquidated in the following cases:



(a) Expiration
of the duration term, if any, as established in its By-laws;

(b) All
the shares end up in the possession of one individual for more than ten continuous days;

(c) By agreement
of an Extraordinary Shareholders Meeting;

(d) By abolition,
pursuant to applicable laws, of the decree that authorized its existence;

(e) Any
other reason contemplated in its By-laws.



Article
40 of the Company’s By-laws states that in the event of liquidation, the shareholders’ meeting will appoint a three-member
receiver committee that will have the authority to carry out the liquidation process. Any surplus will be distributed equally
among the shareholders.



The only
way to change the rights of the holders of the SQM shares is by modifying its By-laws, which can only be carried out by an Extraordinary
Shareholders’ Meeting, as established in article 28 of the Company By-laws.



Shareholders’ Meetings



Article 29 of the Company’s By-laws
states that the call to a shareholders’ meeting, either Ordinary or Extraordinary, will be by means of a highlighted public
notice that will be published at least three times, and on different days, in the newspaper of the legal address determined by
the shareholders’ meeting, and in the way and under the conditions indicated by the regulations. Additionally, a notice
will be sent by mail to each shareholder at least fifteen days prior to the date of the Meeting, which shall include a reference
of the matters to be addressed at the meeting. However, those meetings with the full attendance of the shares with right to vote
may be legally held, even if the foregoing formal notice requirements are not met. Notice of any shareholders’ meeting shall
be delivered to the SVS at least fifteen days in advance of such meeting.



Any holder of Series A and/or Series B shares
registered in the Company’s shareholder registry on the fifth business day prior to the date of the meeting will have a
right to participate at that meeting



118







Article
67 of Law No. 18,046 provides that decisions made at Extraordinary Shareholders’ Meeting on the following matters require
the approval of 2/3 of the outstanding shares with voting rights: (1) transformation or division of the Company and its merger
with another company; (2) modification of the Company’s term of duration, if any; (3) early dissolution of the Company;
(4) change of the corporate domicile; (5) capital decrease; (6) approval of contributions and estimation of non-cash assets; (7)
modification of powers reserved for Shareholders Meetings or limitations on powers of the Board of Directors; (8) reduction in
the number of members of the Board of Directors; (9) disposal of 50% or more of the Company’s assets; formulation or modification
of any business plan exceeding the above percentage; disposal of 50% or more of an asset belonging to a subsidiary that represents
at least 20% of the Company’s assets and disposal of shares of the referred subsidiary such that the parent company would
lose its position as controller of the same; (10) method in which profits are distributed; (11) granting of real or personal guarantees
as sureties for third-party obligations that exceed 50% of the Company assets, except for subsidiaries, in which case approval
of the Board of Directors shall suffice; (12) acquisition of own shares as set forth in articles 27A and 27B of the said law;
(13) other matters indicated in the By-laws; (14) amendment of the Company By-laws as a result of errors in the constitution process
and amendments in the By-laws involving one or more of the matters stated in the preceding numbers; (15) forced sale of shares
carried out by the controller who would acquire more than 95% of the Company’s shares in a tender offer, and (16) approval
or ratification of proceedings or contracts with related parties in accordance with the provisions of articles 44 and 147 of Law
No. 18,046.



Amendments
to the By-laws that are intended to create, modify, defer or suspend preferential rights shall be approved by 2/3 of the shares
of the affected Series.



The transformation
of the Company, the merger of the same, the disposal of assets referred to in number (9) above, the constitution of guarantees
set forth in number (11) above, the constitution of preferences or the increase, postponement or decrease of the existing preferences,
the reparation of formal nullities incurred in the By-laws and the possession of more than 95% of the Company’s shares and
other matters contemplated in the Law or in the By-laws, confer “withdrawal rights.”



Foreign Shareholders



There exists
no restriction on ownership or share concentration, or limiting the exercise of the related right to vote, by local or foreign
shareholders other than those discussed under Item 10.B. Memorandum and Articles of Association.



Change in Control



The Company By-laws provide that no shareholder
may hold more than 32% of the Company’s shares, unless the By-laws are modified at an Extraordinary Shareholders’
Meeting. Moreover, on December 12, 2000, the Chilean Government published the Ley de Oferta Pública de Acciones (“Public
Share Offering Law”) or (OPA law) that seeks to protect the interests of minority shareholders of open stock corporations
in transactions involving a change in control, by requiring that the potential new controller purchase the shares owned by the
remaining shareholders either in total or pro rata. The law applies to those transactions in which the controlling party would
receive a material premium price compared with the price that would be received by the minority shareholders.



There are three conditions that would make
it mandatory to operate under the OPA law:



| | 1) | When an investor wants to take
                                         control of a company’s stock.
| | -- | -----------------------------------------------------------------------------------------------------

| | 2) | When a controlling shareholder
                                         holds two-thirds of the company’s stock. If such shareholder buys one more share,
                                         it will be mandatory to offer to acquire the rest of the outstanding stock within 30
                                         days of surpassing that threshold.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3) | When an investor wants to take
                                         control of a corporation, which, in turn, controls an open stock corporation that represents
                                         75% or more of the consolidated assets of the former corporation.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Parties interested in taking control of a
company must (i) notify the company of such intention in writing, and notify its controllers, the companies controlled by it,
the SVS and the markets where its stocks are traded and (ii) publish a highlighted public notice in two newspapers of national
circulation at least 10 business days prior to the date of materialization of the OPA.



119







Disclosure of Share Ownership



The Company’s By-laws do not provide
for a minimum threshold at which share ownership must be disclosed.



10.C.    Material
Contracts



The Company, during the normal course of business,
has entered into different contracts, some of which have been described herein, related to its production, commercial and legal
operations. We believe all of these contracts are standard for this type of industry, and none of them is expected to have a material
effect on the Company’s results of operations, with the exception of the Electrical Energy Supply agreement with Gener S.A.
described in “Item 4.B. Business Overview—Raw Materials.”



10.D.    Exchange Controls



The Central Bank of Chile is responsible for,
among other things, monetary policies and exchange controls in Chile. Appropriate registration of a foreign investment in Chile
permits the investor access to the Formal Exchange Market. Foreign investments can be registered with the Foreign Investment Committee
under Decree Law No. 600 of 1974 or can be registered with the Central Bank of Chile under the Central Bank Act, Law No 18,840
of October 1989. The Central Bank Act is an organic constitutional law requiring a “special majority” vote of the
Chilean Congress to be modified. Effective January 1, 2016, Decree Law No. 600 was repealed by Article 9 of the 2014 Tax Reform.
Therefore, foreign investments made on or after January 1, 2016 cannot be registered with the Foreign Investment Committee. According
to the Tax Reform, a new law, replacing Decree Law No. 600, must be enacted prior to December 31, 2015. Given that such new law
was not enacted by December 31, 2015, the repeal of Decree Law No. 600 will be postponed until such new law has been enacted.



Our 1993, 1995 and 1998 capital increases
were carried out under and subject to the then current legal regulations, whose summary is hereafter included:



A ‘Convención Capítulo
XXVI del Título I del Compendio de Normas de Cambios Internacionales’ or Compendium of Foreign Exchange Regulations
of the Central Bank of Chile, “Foreign Investment Contract” was entered into and among the Central Bank of Chile,
our Company and the Depositary, pursuant to Article 47 of the Central Bank Act and to Chapter XXVI of the Compendium of Foreign
Exchange Regulations of the Central Bank of Chile, “Chapter XXVI,” which addresses the issuance of ADSs by a Chilean
company. Absent the Foreign Investment Contract, under applicable Chilean exchange controls, investors would not be granted access
to the Formal Exchange Market for the purposes of converting from Chilean pesos to U.S. dollars and repatriating from Chile amounts
received in respect to deposited Series B shares, or Series B shares withdrawn from deposit on surrender of ADSs (including amounts
received as cash dividends and proceeds from the sale in Chile of the underlying Series B shares and any rights arising therefrom).
The following is a summary of the material provisions contained in the Foreign Investment Contract. This summary does not purport
to be complete and is qualified in its entirety by reference to Chapter XXVI and the Foreign Investment Contract.



Under Chapter XXVI and the Foreign Investment
Contract, the Central Bank of Chile has agreed to grant to the Depositary, on behalf of ADS holders, and to any investor not residing
or not domiciled in Chile who withdraws Series B shares upon delivery of ADSs (such Series B shares being referred to herein as
“Withdrawn Shares”) access to the Formal Exchange Market to convert Chilean pesos to U.S. dollars (and remit such
U.S. dollars outside of Chile) in respect of the Withdrawn Shares, including amounts received as (a) cash dividends, (b) proceeds
from the sale in Chile of Withdrawn Shares, or from shares distributed because of the liquidation, merger or consolidation of
the Company, subject to receipt by the Central Bank of Chile of a certificate from the holder of such shares (or from an institution
authorized by the Central Bank of Chile) that such holder’s residence and domicile are outside Chile and a certificate from
a Chilean stock exchange (or from a brokerage or securities firm established in Chile) that such shares were sold on a Chilean
Exchange, (c) proceeds from the sale in Chile of preemptive rights to subscribe for additional Series A and Series B shares, (d)
proceeds from the liquidation, merger or consolidation of the Company and (e) other distributions, including without limitation
those resulting from any recapitalization, as a result of holding Withdrawn Shares. Transferees of Withdrawn Shares will not be
entitled to any of the foregoing rights under Chapter XXVI unless the Withdrawn Shares are redeposited with the Depositary. Investors
receiving Withdrawn Shares in exchange for ADSs will have the right to redeposit such shares in exchange for ADSs, provided that
the conditions to redeposit described hereunder are satisfied.



120







Chapter XXVI provided that access to the Formal
Exchange Market in connection with dividend payments will be conditioned upon certification by the Company to the Central Bank
of Chile that a dividend payment has been made and any applicable tax has been withheld. Chapter XXVI also provided that access
to the Formal Exchange Market in connection with the sale of Withdrawn Shares or distributions thereon will be conditioned upon
receipt by the Central Bank of Chile of certification by the Depositary that such shares have been withdrawn in exchange for ADSs
and receipt of a waiver of the benefit of the Foreign Investment Contract with respect thereto until such Withdrawn Shares are
redeposited.



Chapter XXVI and the Foreign Investment Contract
provide that a person who brings certain types of foreign currency into Chile, including U.S. dollars, to purchase Series B shares
with the benefit of the Foreign Investment Contract must convert it into Chilean pesos on the same date and has 5 banking business
days within which to invest in Series B shares in order to receive the benefits of the Foreign Investment Contract. If such person
decides within such period not to acquire Series B shares, he can access the Formal Exchange Market to reacquire foreign currency,
provided that the applicable request is presented to the Central Bank within 7 banking business days of the initial conversion
into Chilean pesos. Series B shares acquired as described above may be deposited for ADSs and receive the benefits of the Foreign
Investment Contract, subject to receipt by the Central Bank of Chile of a certificate from the Depositary that such deposit has
been effected and that the related ADSs have been issued and receipt by the Custodian of a declaration from the person making
such deposit waiving the benefits of the Foreign Investment Contract with respect to the deposited Series B shares.



Access to the Formal Exchange Market under
any of the circumstances described above is not automatic. Pursuant to Chapter XXVI, such access requires approval of the Central
Bank of Chile based on a request presented through a banking institution established in Chile. The Foreign Investment Contract
will provide that if the Central Bank of Chile has not acted on such request within seven banking days, the request will be deemed
approved.



Under current Chilean law, foreign investments
abiding by the Foreign Investment Contract cannot be changed unilaterally by the Central Bank of Chile. No assurance can be given,
however, that additional Chilean restrictions applicable to the holders of ADSs, the disposition of underlying Series B shares
or the repatriation of the proceeds from such disposition could not be imposed in the future, nor can there be any assessment
of the duration or impact of such restrictions if imposed.



As of April 19, 2001, Chapter XXVI of Title
I of the Compendio de Normas de Cambios Internacionales of the Central Bank of Chile was eliminated and new investments
in ADSs by non-residents of Chile, are now governed by Chapter XIV of the Compendio de Normas de Cambios Internacionales
of the Central Bank of Chile. This was made with the purpose of simplifying and facilitating the flow of capital to and from Chile.
According to the new regulations, such investments must be carried out through Chile’s Formal Exchange Market and only reported
to the Central Bank of Chile. Foreign investments may still be registered with the Foreign Investment Committee under Decree Law
600 of 1974, as amended, and obtain the benefits of the contract executed under Decree Law 600. Effective January 1, 2016, Decree
Law No. 600 was repealed by Article 9 of the 2014 Tax Reform. Therefore, foreign investments made on or after January 1, 2016
cannot be registered with the Foreign Investment Committee. According to the Tax Reform, a new law, replacing Decree Law No. 600,
must be enacted prior to December 31, 2015. If such new law has not been enacted by December 31, 2015. Given that such new law
was not enacted by December 31, 2015, the repeal of Decree Law No. 600 will be postponed until such new law has been enacted.



121







The Central Bank is also responsible for controlling
incurrence of loan obligations to be paid from Chile and by a Chilean borrower to banks and certain other financial institutions
outside Chile. Chapter XIV establishes what type of loans, investments, capital increases and foreign currency transactions are
subject to the current Chapter XIV framework. Foreign currency transactions related to foreign loans must be performed through
the Formal Exchange Market, and such transactions and the subsequent modifications of original loans must be properly informed
to the Central Bank. Transactions prior to April 19, 2001, will continue to be regulated by the previous legal framework, except
in cases where an express request has been presented to the Central Bank resigning previous rights to be regulated by the provisions
of Chapter XIV. This summary does not purport to be complete and is qualified in its entirety by reference to the provisions of
Chapter XIV.



As of December 31, 2016, we had bonds issued
in the international markets under Rule 144A/Regulation S of US$250 million, US$250 million and US$300 million. Additionally,
we had outstanding bilateral loans through wholly owned subsidiaries in the amount of US$40 million, which were fully guaranteed
by us. Also we had US$60 million in bilateral loans through SQM S.A.



Any purchases of U.S. dollars in connection
with payments on these loans will occur with the Formal Exchange Market. There can be no assurance, however, that restrictions
applicable to payments in respect to the loans could not be imposed in the future, nor can there be any assessment of the duration
or impact of such restrictions if imposed.



10.E.    Taxation



Chilean Tax Considerations



The following describes the material Chilean
income tax consequences of an investment in SQM ADSs by an individual who is not domiciled or resident in Chile or any legal entity
that is not organized under the laws of Chile and does not have a permanent establishment located in Chile, a (“foreign
holder”). This discussion is based upon Chilean income tax laws presently in force, including Ruling No. 324 (1990) of the
Chilean Internal Revenue Service and other applicable regulations and rulings. The discussion is not intended as tax advice to
any particular investor, which can be rendered only in light of that investor’s particular tax situation.



Under Chilean law, provisions contained in
statutes such as tax rates applicable to foreign holders, the computation of taxable income for Chilean purposes and the manner
in which Chilean taxes are imposed and collected may only be amended by another statute. In addition, the Chilean tax authorities
issue rulings and regulations of either general or specific application and interpret the provisions of Chilean tax law. Chilean
tax may not be assessed retroactively against taxpayers who act in good faith relying on such rulings, regulations and interpretations,
but Chilean tax authorities may change said rulings, regulations and interpretations prospectively.



122







Cash Dividends and Other Distributions



System in Effect Through 2016



The following taxation of cash dividends and
property distributions applies through 2016.



Cash dividends paid by the Company with respect
to the shares, including shares represented by ADSs held by a U.S. holder will be subject to a 35% Chilean withholding tax, which
is withheld and paid by the Company, the “Withholding Tax.” If the Company has paid corporate income tax, the “First
Category Tax,” on the income from which the dividend is paid, a credit for the full amount of the First Category Tax effectively
reduces the rate of Withholding Tax. When a credit is available, the Withholding Tax is computed by applying the 35% rate to the
pre-tax amount needed to fund the dividend and then subtracting from the tentative withholding tax so determined the amount of
First Category Tax actually paid on the pre-tax income. Under Chilean income tax law, dividends are assumed to have been paid
out of our oldest retained tax profits for purposes of determining the rate at which the First Category Tax was paid.



The effective Withholding Tax rate, after
giving effect to the credit for First Category Tax, generally is:



(Withholding Tax rate) - (First Category
Tax effective rate)
1 - (First Category Tax effective rate)



The effective rate of Withholding Tax to be
imposed on dividends paid by the Company will vary depending upon the amount of the First Category Tax paid by the Company on
the earnings to which the dividends are attributed. The withholding tax rates of the three dividends distributed by the Company
during 2016 are as follows:



|Month               |  | Withholding Tax Rate |         
|------------------- |  | -------------------- | --------
|May 2016 (Eventual) |  |                      | 18.75000
|May 2016 (Final)    |  |                      | 20.37340
|December 2016       |  |                      | 18.74328



Dividend distributions made in property (such
as distribution of cash equivalents) would be subject to the same Chilean tax rules as cash dividends. Stock dividends are not
subject to Chilean taxation.



New System in Effect Starting in 2017



On September 29, 2014, the Tax Reform was
published, introducing significant changes to the Chilean taxation system and strengthening the powers of the SII to control and
prevent tax avoidance. Subsequently, on February 8, 2016, Law No. 20,899 that simplifies the income tax system and modifies other
legal tax provisions was published. As a result of these reforms, open stock corporations like SQM are subject to the partially
integrated shareholder tax regime (sistema parcialmente integrado). The corporate tax rate applicable to us increased to
24% in 2016. It will increase to 25.5% in 2017 and increase to a maximum rate of 27% in 2018.



Under the partially integrated shareholder
taxation regime, shareholders bear the tax on dividends upon payment, but they will only be permitted to credit against such shareholder
taxes a portion of the Chilean corporate tax paid by us on our earnings, unless the shareholder is resident in a country with
a tax treaty in force with Chile or signed with Chile prior to January 1, 2017, whether or not in force. In that case, 100% of
the Chilean corporate tax paid by us may be credited against the final taxes at the shareholder level.



As a result, foreign shareholders, resident
in a non-treaty jurisdiction will be subject to a higher effective tax rate than residents of treaty jurisdictions. There is a
temporary rule in effect from January 1, 2017 through December 31, 2019 that treaty jurisdictions for this purpose will include
jurisdictions with tax treaties signed with Chile prior to January 1, 2017, whether or not such treaties are in force. This is
currently the status of the treaty signed between Chile and United States.



123







Capital Gains



Gains from the sale or other disposition by
a foreign holder of ADSs outside Chile will not be subject to Chilean taxation. The deposit and withdrawal of the shares in exchange
for ADRs will not be subject to any Chilean taxes.



The tax basis of the shares received in exchange
for ADSs (repatriation) will be the acquisition value of the shares. The Series B shares exchanged for ADSs are valued at the
highest price at which they trade on the Chilean Stock Exchange on the date of the exchange or on either of the two business days
preceding the exchange. Consequently, the conversion of ADSs into the shares and the immediate sale of such shares at a price
equal to or less than the highest price for Series B shares on the Chilean Stock Exchange on such dates will not generate a gain
subject to Chilean taxation.



Gain recognized on a sale or exchange of shares
(as distinguished from sales or exchanges of ADSs representing such shares) will be subject to both the First Category Tax and
the Withholding Tax if either (i) the foreign holder has held the shares for less than one year since exchanging the ADSs for
the shares, (ii) the foreign holder acquired and disposed of the shares in the ordinary course of its business or as a regular
trader of shares, or (iii) the foreign holder and the purchaser of the shares are related parties within the meaning of Chilean
tax law. The amount of the First Category Tax may be credited against the amount of the Withholding Tax. In all other cases, gain
on the disposition of the shares will be subject only to a capital gains tax, which is assessed at the same rate as the First
Category Tax. Gain recognized in the transfer of common shares that have significant trading volumes in the stock exchange, however,
is not subject to capital gains tax in Chile, provided that the common shares are transferred in a local stock exchange authorized
by the SVS, within the process of a public tender of common shares governed by the Chilean Securities Market Act. Law No. 20,448
states that common shares must also have been acquired after April 19, 2001, either on a local stock exchange authorized by the
SVS, within the referred process of public tender of a common shares governed by the Chilean Securities Market Act, in an initial
public offering of common shares resulting from the formation of a corporation or a capital increase of the same, in an exchange
of convertible securities subject to public offer, or in the redemption of mutual funds shares. According to Ruling No. 224 (2008)
of the Chilean Internal Revenue Service, common shares received by exchange of ADRs are also considered as “acquired on
a stock exchange” if the respective ADRs have been acquired on a foreign stock exchange authorized by the SVS (i.e. London
Stock Exchange, New York Stock Exchange and Bolsa de Valores de Madrid). Common shares are considered to have a high presence
in the stock exchange when they: (a) are registered in the Securities Registry, (b) are registered in a Chilean Stock Exchange,
(c) have an adjusted presence equal to or above 25%.



As of June 19, 2001, capital gains obtained
in the sale of common shares that are publicly traded in a stock exchange are also exempt from capital gains tax in Chile when
the sale is made by “foreign institutional investors” such as mutual funds and pension funds, provided that the sale
is made in a local stock exchange authorized by the SVS, or in accordance with the provisions of the securities market law (Law
18,045). To qualify as foreign institutional investors, the referred entities must be formed outside of Chile, not have a domicile
in Chile, and they must be an “investment fund” in according with the Chilean tax law.



Starting January 1, 2017, capital gains obtained
in the sales of shares owned by foreign holders are subject to First Category Tax and Withholding Tax, and the First Category
Tax serves as a credit in Chile to reduce the Withholding Tax. The exercise of preemptive rights relating to shares will not be
subject to Chilean taxation. Any gain on the sale or assignment of preemptive rights relating to shares will be subject to both
the First Category Tax and the Withholding Tax (the former being creditable against the latter).



124







Other Chilean Taxes



No Chilean inheritance, gift or succession
taxes apply to the transfer or disposition of the ADSs by a foreign holder, but such taxes generally will apply to the transfer
at death or by gift of the shares by a foreign holder. No Chilean stamp, issue, registration or similar taxes or duties apply
to foreign holders of ADSs or shares.



Withholding Tax Certificates



Upon request, the Company will provide to
foreign holders appropriate documentation evidencing the payment of Chilean withholding taxes.



United States Tax Considerations



The following discussion summarizes the principal
U.S. federal income tax consequences to beneficial owners arising from ownership and disposition of the Series A shares and the
Series B shares, together the “shares” and the ADSs. The discussion which follows is based on the United States Internal
Revenue Code of 1986, as amended, the “Code,” the Treasury regulations promulgated thereunder, and judicial and administrative
interpretations thereof, all as in effect and available on the date hereof, and is subject to any changes in these or other laws
occurring after such date. In addition, the summary assumes that the depositary’s activities are clearly and appropriately
defined so as to ensure that the tax treatment of ADSs will be identical to the tax treatment of the underlying shares.



For purposes of this summary, the term “U.S.
Holder” means a beneficial owner of shares or ADSs that is, for U.S. federal income tax purposes, (a) an individual who
is a United States citizen or resident, (b) a corporation or partnership created or organized under the laws of the United States
or any political subdivision thereof, (c) an estate, the income of which is subject to U.S. federal income tax regardless of the
source, or (d) a trust (i) that validly elects to be treated as a U.S. person for U.S. federal income tax purposes or (ii)(A)
if a court within the U.S. is able to exercise primary supervision over the administration of the trust and (B) one or more U.S.
persons have the authority to control all substantial decisions of the trust.



The term “Non-U.S. Holder” means,
for purposes of this discussion, a beneficial owner of shares or ADSs that is not a U.S. Holder.



If a partnership (or any other entity treated
as a partnership for U.S. federal income tax purposes) holds shares or ADSs, the tax treatment of the partnership and a partner
in such partnership generally will depend on the status of the partner and the activities of the partnership. Such a partner or
partnership should consult its own tax advisor as to its consequences.



The discussion that follows is not intended
as tax advice to any particular investor and is limited to investors who will hold the shares or ADSs as “capital assets”
within the meaning of Section 1221 of the Code and whose functional currency is the United States dollar. The summary does not
address the tax treatment of U.S. Holders and Non-U.S. Holders that may be subject to special U.S. federal income tax rules, such
as insurance companies, tax-exempt organizations, financial institutions, persons who are subject to the alternative minimum tax,
or persons who are broker-dealers in securities, who hold the shares or ADSs as a hedge against currency risks, as a position
in a “straddle” for tax purposes, or as part of a conversion or other integrated transaction, or who own (directly,
indirectly or by attribution) 10% or more of the total combined voting power of all classes of the Company’s capital stock
entitled to vote or 10% or more of the value of the outstanding capital stock of the Company.



As of this date, there is currently no applicable
income tax treaty in effect between the United States and Chile. However, in 2010, the United States and Chile signed an income
tax treaty that will enter into force once the treaty is ratified by both countries. There can be no assurance that the treaty
will be ratified by either country. The following summary assumes that there is no applicable income tax treaty in effect between
the United States and Chile.



125







The discussion below does not address the
effect of any United States state, local, estate or gift tax law or foreign tax law on a U.S. Holder or Non-U.S. Holder of the
shares or ADSs. U.S. HOLDERS AND NON-U.S. HOLDERS OF SHARES OR ADSs SHOULD CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR
CONSEQUENCES UNDER ANY SUCH LAW OF OWNING OR DISPOSING THE SHARES OR ADSs.



For purposes of applying U.S. federal income
tax law, any beneficial owner of an ADS generally will be treated as the owner of the underlying shares represented thereby.



Cash Dividends and Other Distributions



The following discussion is based on the current
regime for taxation of cash dividends and distributions applicable in Chile until 2016. For 2017 and later, we are subject to
the partially integrated shareholder tax regime, which is very similar to the regime in effect until December 31, 2016. See “Item
10.E. Taxation—Chilean Tax Considerations—Cash Dividends and Other Distributions—New System in Effect Starting
in 2017” above.



The following discussion of cash dividends
and other distributions is subject to the discussion below under “Passive Foreign Investment Company Considerations.”
The gross amount of a distribution with respect to shares or ADSs generally will be treated as a taxable dividend to the extent
of the Company’s current and accumulated earnings and profits, computed in accordance with U.S. federal income tax principles.
A dividend distribution will be so included in gross income when received by (or otherwise made available to) (i) the U.S. Holder
in the case of the shares or (ii) the depositary in the case of the ADSs, and in either case will be characterized as ordinary
income for U.S. federal income tax purposes. Distributions in excess of the Company’s current and accumulated earnings and
profits will be applied against and will reduce the U.S. Holder’s tax basis in the shares or ADRs and, to the extent distributions
exceed such tax basis, the excess will be treated as gain from a sale or exchange of such shares or ADSs. U.S. Holders that are
corporations will not be allowed a deduction for dividends received in respect of distributions on the shares or the ADSs. For
example, if the gross amount of a distribution with respect to the shares or ADSs exceeds the Company’s current and accumulated
earnings and profits by US$10.00, such excess will generally not be subject to a U.S. tax to the extent the U.S. Holder’s
tax basis in the shares or ADSs equals or exceeds US$10.00. The Company does not maintain calculations of its earnings and profits
under U.S. federal income tax principles. Accordingly, U.S. Holders should assume that any cash distribution made by us will be
treated as a dividend for U.S. federal income tax purposes.



If a dividend distribution is paid in Chilean
pesos, the amount includable in income will generally be the U.S. dollar value, on the date of receipt by the U.S. Holder in the
case of the shares or by the depositary in the case of the ADSs, of the peso amount distributed, regardless of whether the payment
is actually converted into U.S. dollars. The amount of any distribution of property other than cash will be the fair market value
of such property on the date of distribution. Any gain or loss resulting from currency exchange rate fluctuations during the period
from the date the dividend is includable in the income of the U.S. Holder to the date the pesos are converted into U.S. dollars
will be treated as ordinary income or loss.



A dividend distribution will be treated as
foreign source income and will generally be classified as “passive category income” or in the case of certain U.S.
Holders “general category income” for U.S. foreign tax credit purposes. If Chilean withholding taxes are imposed on
a dividend, U.S. Holders will be treated as having actually received the amount of such taxes (net of any credit for the First
Category Tax) and as having paid such amount to the Chilean taxing authorities. As a result, the amount of dividend income included
in gross income by a U.S. Holder will be greater than the amount of cash actually received by the U.S. Holder with respect to
such dividend income. A U.S. Holder may be able, subject to certain generally applicable limitations, to claim a foreign tax credit
or a deduction for Chilean withholding taxes (net of any credit for the First Category Tax) imposed on dividend payments. The
rules relating to the determination of the U.S. foreign tax credit are complex and the calculation of U.S. foreign tax credits
and, in the case of a U.S. Holder that elects to deduct foreign taxes, the availability of deductions, involve the application
of rules that depend on a U.S. Holder’s particular circumstances. U.S. Holders should, therefore, consult their own tax
advisors regarding the application of the U.S. foreign tax credit rules to dividend income on the shares or ADSs.



126







Subject to the discussion below under “Information
Reporting and Backup Withholding,” if you are a Non-U.S. Holder, you generally will not be subject to U.S. federal income
or withholding tax on dividends received by you on your shares or ADSs, unless you conduct a trade or business in the United States
and such income is effectively connected with that trade or business.



The U.S. Treasury Department has expressed
concern that depositaries for ADSs, or other intermediaries between the holders of shares of an issuer and the issuer, may be
taking actions that are inconsistent with the claiming of U.S. foreign tax credits by U.S. holders of such receipts or shares.
Accordingly, the analysis regarding the availability of a U.S. foreign tax credit for Chilean taxes and sourcing rules described
below could be affected by future actions that may be taken by the U.S. Treasury Department.



Capital Gains



A U.S. Holder will generally recognize gain
or loss on the sale, redemption or other disposition of the shares or ADRs in an amount equal to the difference between the amount
realized on the sale or exchange and the U.S. Holder’s adjusted basis in such shares or ADSs. Thus, if the U.S. Holder sells
the shares for US$40.00 and such U.S. Holder’s tax basis in such shares is US$30.00, such U.S. Holder will generally recognize
a gain of US$10.00 for U.S. federal income tax purposes. Subject to the discussion below under “Passive Foreign Investment
Company Considerations,” gain or loss upon the sale of the shares or ADSs will be capital gain or loss if the shares or
ADSs are capital assets in the hands of the U.S. Holder. Capital gains on the sale of capital assets held for one year or less
are subject to U.S. federal income tax at ordinary income tax rates. Net capital gains derived with respect to capital assets
held for more than one year are eligible for reduced rates of taxation. Gain or loss realized by a U.S. Holder on the sale or
exchange of shares or ADSs will be U.S. source income. In addition, certain limitations exist on the deductibility of capital
losses by both corporate and individual taxpayers. Any tax imposed by Chile directly on the gain from such a sale would generally
be eligible for the U.S. foreign tax credit; however, because the gain would generally be U.S. source, a U.S. Holder might not
be able to use the credit otherwise available. U.S. Holders should consult their own tax advisors regarding the foreign tax credit
implications of the sale, redemption or other disposition of a share or ADS.



Subject to the discussion below under “Information
Reporting and Backup Withholding,” a Non-U.S. Holder of ADSs or shares will not be subject to United States income or withholding
tax on gain from the sale or other disposition of ADSs or shares unless, in general (i) such gain is effectively connected with
the conduct of a trade or business within the United States or (ii) the Non-U.S. Holder is an individual who is present in the
United States for at least 183 days during the taxable year of the dispositionand certain other
conditions are met.



Passive Foreign Investment Company Considerations



A Non-U.S. corporation will be classified
as a “passive foreign investment company,” or a PFIC, for U.S. federal income tax purposes in any taxable year in
which, after applying certain look-through rules, either (i) at least 75% of its gross income is “passive income”
or (ii) at least 50% of the average value of its gross assets is attributable to assets that produce “passive income”
or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties,
rents and gains from the sale of stock (including gains from the sale of stock of certain subsidiaries), partnership interests,
securities or commodities.



Based on certain estimates of our gross income
and gross assets and the nature of our business, the Company believes that it was not classified as a PFIC in 2016. The Company’s
status in future years will depend on its assets and activities in those years. If the Company were a PFIC for 2016 or for any
prior or future taxable year during which a U.S. Holder held shares or ADSs, such U.S. Holder of shares or ADSs generally would
be subject to additional filing requirements, imputed interest charges and other disadvantageous tax treatment (including the
denial of taxation at the lower rates applicable to long-term capital gains with respect to any gain from the sale or exchange
of shares or ADSs).



127







Information Reporting and Backup Withholding



Payments of dividends on the shares or ADSs
and the proceeds of sale or other disposition of the shares or ADSs within the United States by holders may be subject to U.S.
information reporting and backup withholding. A U.S. Holder generally will be subject to U.S. information reporting and backup
withholding (currently at a rate of 28%) unless the recipient of such payment supplies an accurate taxpayer identification number,
as well as certain other information, or otherwise establishes an exemption, in the manner prescribed by United States law and
applicable regulations. U.S. information reporting and backup withholding of U.S. federal income tax at the same rate may also
apply to Non-U.S. Holders that are not “exempt recipients” and that fail to provide certain information as may be
required by United States law and applicable regulations. Any amount withheld under U.S. backup withholding is not an additional
tax and is generally allowable as a credit against the U.S. Holder’s federal income tax liability upon furnishing the required
information to the IRS.



In addition, certain U.S. Holders, electing
nonresident aliens and residents of a U.S. possession may be required to report information with respect to their investment in
shares or, it is assumed, ADSs to the Internal Revenue Service. Investors who fail to report required information could become
subject to substantial penalties and/or an extended statute of limitations.



HOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE APPLICATION OF U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING RULES TO THEIR PARTICULAR CIRCUMSTANCES.



10.F.    Dividends
and Paying Agents



Not applicable.



10.G.    Statement
by Experts



Not applicable.



10.H.    Documents
on Display



We are subject to the information requirements
of the Exchange Act, except that as a foreign issuer, we are not subject to the SEC proxy rules (other than general anti-fraud
rules) or the short-swing profit disclosure rules of the Exchange Act. In accordance with these statutory requirements, we file
or furnish reports and other information with the SEC. Reports and other information filed or furnished with the SEC may be inspected
and copied at the public reference facilities maintained by the SEC at Room 1024, 100 F Street, N.E., Washington, D.C. 20549.
In addition, the SEC maintains a website that contains electronically filed information, which can be accessed at http://www.sec.gov.



10.I.     Subsidiary
Information



See “Item 4.C. Organizational Structure.”



ITEM 11.	QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK



As explained elsewhere in this Annual Report,
we transact our businesses in more than 110 countries, thereby rendering our market risk dependent upon the fluctuations of foreign
currencies and local and international interest rates. These fluctuations may generate losses in the value of financial instruments
taken in the normal course of business.



We, from time to time and depending upon then
current market conditions, review and re-establish our financial policies to protect our operations. Management is authorized
by our Board of Directors to engage in certain derivative contracts such as forwards and swaps to specifically hedge the fluctuations
in interest rates and in currencies other than the U.S. dollar.



128







Derivative instruments used by us are generally
transaction-specific so that a specific debt instrument or contract determines the amount, maturity and other terms of the hedge.
We do not use derivative instruments for speculative purposes.



Interest Rate Risk. As of December 31, 2016,
we had approximately 2% of our financial debt effectively priced at LIBOR, and therefore significant increases in the rate could
impact our financial condition.



Interest rate fluctuations, due to the uncertain
future behavior of markets, may have a material impact on our financial results.



We have short term debt valued at LIBOR plus
a spread. We are partially exposed to fluctuations of this rate, as we hold hedging derivative instruments to hedge a portion
of our liabilities subject to LIBOR rate fluctuations.



As of December 31, 2016, our total financial
debt is primarily long-term, with 12% of maturities less than 12 months, which decreases the exposure to changes in the interest
rates.



Exchange Rate Risk. Although the U.S. dollar
is the primary currency in which we transact our businesses, our operations throughout the world expose us to exchange rate variations
for non-U.S. dollar currencies. Therefore, fluctuations in the exchange rate of such local currencies may affect our financial
condition and results of operations. To lessen these effects, we maintain derivative contracts to protect the net difference between
our principal assets and liabilities for currencies other than the U.S. dollar. These contracts are renewed periodically depending
on the amount covered in each currency. Aside from this, we do not hedge potential future income and expenses in currencies other
than the U.S. dollar with the exception of the Euro and Chilean peso. We estimate annual sales in Euros and expenses in Chilean
pesos, and depending on the circumstances we secure the exchange difference with derivative contracts.



The following is a summary of the aggregate
net monetary assets and liabilities that are denominated in non-U.S. dollar currencies as of December 31, 2016, 2015 and 2014.
Figures do not include our financial hedging positions for year-end:



|                   |  | 2016   |          |   | 2015   |  |         | 2014   | 
|------------------ |  | ------ | -------- | - | ------ |  | ------- | ------ | 
|                   |  | Th US$ |          |   | Th US$ |  |         | Th US$ | 
|Chilean pesos      |  |        | (240,563 | ) |        |  | (78,824 | )      | 
|Brazilian real     |  |        | 183      |   |        |  | 101     |        | 
|Euro               |  |        | 15,621   |   |        |  | 42,674  |        | 
|Japanese yen       |  |        | 1,892    |   |        |  | 1,456   |        | 
|Mexican pesos      |  |        | 1,166    |   |        |  | 2,283   |        | 
|South African rand |  |        | 25,542   |   |        |  | 22,822  |        | 
|Dirhams            |  |        | 21,297   |   |        |  | 23,369  |        | 
|Other currencies   |  |        | 24,367   |   |        |  | 21,507  |        | 
|Total, net         |  |        | (150,495 | ) |        |  | 35,388  |        | 



Also, we had open forward exchange contracts
to buy U.S. dollars and sell Chilean pesos to hedge our time deposits in Chilean pesos for approximately US$51.2 million (Ch$34,263
million).



129







The information contained in Item 11. Quantitative
and Qualitative Disclosures About Market Risk, contains statements that may constitute forward-looking statements. See “Cautionary
Statement Regarding Forward-Looking Statements” in this Annual Report, for safe harbor provisions.



ITEM 12.	DESCRIPTION OF SECURITIES
OTHER THAN EQUITY SECURITIES



ITEM 12.A.DEBT SECURITIES



Not applicable.



ITEM 12.B. WARRANTS AND RIGHTS



Not applicable.



ITEM 12.C. OTHER SECURITIES



Not applicable.



ITEM 12.D. AMERICAN DEPOSITARY RECEIPTS



Depositary Fees and Charges



The Company’s American Depositary Shares
(“ADS”) program is administered by The Bank of New York Mellon (101 Barclay St., 22 Fl. W., New York, NY 10286), as
Depositary. Under the terms of the Deposit Agreement, an ADS holder may have to pay the following service fees to the Depositary:



|Service Fees                                             |  |  | Fees            | 
|-------------------------------------------------------- |  |  | --------------- | 
|Execution and delivery of ADSs and the surrender of ADRs |  |  | $0.05 per share | 



Depositary Payments Fiscal Year 2016



The Depositary has agreed to reimburse certain
expenses related to the Company’s ADS program and incurred by the Company in connection with the program. In 2016, the Depositary
reimbursed expenses related to investor relations for a total amount of US$131,890.90.



130







PART II



ITEM 13. DEFAULTS, DIVIDEND
ARREARAGES AND DELINQUENCIES



None.



ITEM 14. MATERIAL MODIFICATIONS TO
THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS



None.



ITEM 15. CONTROLS AND PROCEDURES



| | (a) | Disclosure Control
                                         and Procedures
| | --- | --------------------------------------------------------------------------



SQM management, with the participation of
the Company’s current Chief Executive Officer and Chief Financial Officer and other members of the Company’s executive
management, evaluated the effectiveness of our disclosure controls and procedures, pursuant to Rule 13a-15(e) promulgated under
the Exchange Act, as of the end of the period covered by this Annual Report. Based upon that evaluation, our current Chief Executive
Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective
in providing reasonable assurance that material information is made known to management and that financial and non-financial information
is properly recorded, processed, summarized and reported as of December 31, 2016.



The Company’s disclosure controls and
procedures are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports
that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms, and that such information is accumulated and communicated to management of the Company,
with the participation of its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosures. However, through the same design and evaluation period of the disclosure controls and procedures, the Company’s
management, including the Company’s Chief Executive Officer and Chief Financial Officer, recognized that there are inherent
limitations to the effectiveness of any control system regardless of how well designed and operated. In such a way they can provide
only reasonable assurance of achieving the desired control objectives, and no evaluation can provide absolute assurance that all
control issues or instances of fraud, if any, within the Company have been detected.



| | (b) | Management’s Annual Report on Internal Control
Over Financial Reporting
| | --- | -----------------------------------------------------------------------



SQM management is responsible for establishing
and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). The
Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted
accounting principles.



Because of its inherent limitations, internal
control over financial reporting may not necessarily prevent or detect some misstatements. It can only provide reasonable assurance
regarding financial statement preparation and presentation. Also, projections of any evaluation of effectiveness for future periods
are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance
with the polices or procedures may deteriorate over time.



Management assessed the effectiveness of its
internal control over financial reporting as of December 31, 2016. The assessment was based on criteria established in the framework
“Internal Controls — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on the assessment, SQM management has concluded that as of December 31, 2016, the Company’s
internal control over financial reporting was effective.



131













| | (c) | Attestation Report of the Registered Public Accounting
Firm
| | --- | -----------------------------------------------------------

For the report of PricewaterhouseCoopers Consultores Auditores SpA, independent registered public accounting firm, dated April
26, 2017, on the effectiveness of our internal control over financial reporting as of December 31, 2016, see page F-2 of our Audited
Consolidated Financial Statements.



| | (d) | Changes in Internal Control Over Financial Reporting
| | --- | ----------------------------------------------------



There has been no change in the Company’s
internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period
covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, internal control over
financial reporting.



ITEM 16. [Reserved]



ITEM 16A.      AUDIT COMMITTEE
FINANCIAL EXPERT



The Board of Directors has determined that
the Company does not have an audit committee financial expert within the meaning of the regulations adopted under the Sarbanes-Oxley
Act of 2002.



Pursuant to Chilean regulations, the Company
has a Directors’ Committee whose main duties are similar to those of an audit committee. Each of the members of the Directors’
Committee is a member of the audit committee. See “Item 6.C. Board Practices.”



Our Board believes that the members of the
Directors’ Committee have the necessary expertise and experience to perform the functions of the Directors’ Committee
pursuant to Chilean regulations.



ITEM 16B.      CODE OF
ETHICS



We have adopted a Code of Business Conduct
that applies to the Chief Executive Officer, the Chief Financial Officer, the Internal Auditor as well as all our officers and
employees. Our Code adheres to the definition set forth in Item 16B. of Form 20-F under the Exchange Act.



No waivers have been granted therefrom to
the officers mentioned above.



The full text of the code is available on
our website at http://www.sqm.com in the Investor Relations section under “Corporate Governance.”



Amendments to, or waivers from one or more
provisions of the code will be disclosed on our website.



ITEM 16C.      PRINCIPAL
ACCOUNTANT FEES AND SERVICES





The table shows the amount
of fees billed to SQM by our independent auditors, PwC for the 2016 and 2015 fiscal years, in relation to audit and tax services
provided to us (in thousands of US$) (excluding amounts related to the pre-approved non-audit services referred to below):



|           |  | 2016 |       |  | 2015 | 
|---------- |  | ---- | ----- |  | ---- | 
|Audit fees |  |      | 1,488 |  |      | 
|Tax fees   |  |      | 176   |  |      | 
|Total fees |  |      | 1,664 |  |      | 



132











Audit and tax fees in the above table are the aggregate fees
approved by the Directors’ Committee for PwC in 2016 and 2015, in connection with the audit of our annual Consolidated Financial
Statements, as well as the review of other statutory filings excluding the non-audit related fees described in the below paragraph.

In addition to the amount disclosed above, in 2016, non-audit related fees approved by the SQM
Directors’ Committee for PwC were US$1.1 million. Non-audit related fees are related to services such as transfer pricing
and others.All of the fees disclosed in the table above were pre-approved by the Directors’ Committee
pre-approval policies and procedures.



Directors’
Committee Pre-Approval Policies and Procedures.





Chilean law states that public companies are
subject to “pre-approval” requirements under which all audit and non-audit services provided by the independent auditor
must be pre-approved by the Directors’ Committee. Our Directors’ Committee approves all audits, audit-related, tax
and other services provided by our auditors.



Any services provided by our auditors that
are not specifically included within the scope of the audit must be pre-approved by the Directors’ Committee prior to any
engagement.



ITEM 16D.	      EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES



Not applicable.



ITEM 16E.	      PURCHASES OF EQUITY SECURITIES BY THE ISSUER
AND AFFILIATED PURCHASERS



None.



ITEM 16F.      	CHANGE IN REGISTRANT’S
CERTIFYING ACCOUNTANT



None.



ITEM 16G.     	CORPORATE GOVERNANCE



For a summary of the significant differences
between our corporate governance practices and the NYSE corporate governance standards, see “Item 6.C. Board Practices.”



ITEM 16H.	     MINE SAFETY AND DISCLOSURE



Not applicable.



133







PART III



ITEM 17.	   FINANCIAL STATEMENTS



See “Item 18. Financial Statements.”



ITEM 18.	  FINANCIAL STATEMENTS



For a list of all financial statements filed
as part of this Form 20-F Annual Report, see “Item 19. Exhibits.”



ITEM 19.	  EXHIBITS



(a) Index to Financial Statements



|Reports of Independent Registered
    Public Accounting Firms                                                              | F-1 
|-------------------------------------------------------------------------------------------------------------------------- | ----
|Consolidated Financial Statements:                                                                                         |     
|Audited Consolidated Statements of Financial Position as of December 31, 2016 and 2015                                     | F-3 
|Audited Consolidated Statements
    of Income for each of the three years in the period ended December 31, 2016            | F-5 
|Audited Consolidated Statement
    of Comprehensive Income for the three years in the period ended December 31, 2016       | F-7 
|Audited Consolidated Statements
    of Cash Flows for each of the three years in the period ended December 31, 2016        | F-8 
|Audited Consolidated Statements of Changes in Equity
    for each of the three years in the period ended December 31, 2016 | F-10
|Notes to the Audited Consolidated Financial Statements                                                                     | F-13
|Supplementary Schedules*                                                                                                   |     



*All other schedules have
been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or
notes thereto.





134







(b) Exhibits



|ExhibitNo. |  | Exhibit                                                                
|---------- |  | -----------------------------------------------------------------------
|           |  |                                                                        
|1.1        |  | By-laws (Estatutos) of the Company**                                   
|           |  |                                                                        
|8.1        |  | Significant subsidiaries of the Company                                
|           |  |                                                                        
|12.1       |  | Section 302 Chief Executive Officer Certification                      
|           |  |                                                                        
|12.2       |  | Section 302 Chief Financial Officer Certification                      
|           |  |                                                                        
|13.1       |  | Section 906 Chief Executive Officer Certification                      
|           |  |                                                                        
|13.2       |  | Section 906 Chief Financial Officer Certification                      
|           |  |                                                                        
|23.1       |  | Consent of Sergio Alarcón                                              
|           |  |                                                                        
|23.2       |  | Consent of Orlando Rojas                                               
|           |  |                                                                        
|23.3       |  | Consent of Álvaro Henríquez                                            
|           |  |                                                                        
|99.1       |  | Certificate of qualified competency issued by Chilean Mining Commission
|           |  |                                                                        
|99.2       |  | Certificate of qualified competency issued by Chilean Mining Commission
|           |  |                                                                        
|99.3       |  | Certificate of qualified competency issued by Chilean Mining Commission



**Incorporated by reference to the
Company’s Annual Report on Form 20-F for the year ended December 31, 2010 filed with the Securities and Exchange Commission
on June 30, 2011.



135







SIGNATURES



The registrant hereby certifies that it meets
all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual
report on its behalf.



SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.



(CHEMICAL AND MINING COMPANY OF CHILE INC.)



| | /s/ Ricardo Ramos                          | 
| | ------------------------------------------ | 
| |                                            | 
| | Ricardo Ramos R.                           | 
| | Chief Financial Officer and                | 
| | Business Development Senior Vice President | 
| |                                            | 
| | Date: April 26, 2017                       | 



136









| | Sociedad Química
    y Minera de Chile S.A. and Subsidiaries
| | ------------------------------------------------------------



SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
AND SUBSIDIARIES



Index to Consolidated Financial Statements



|Contents                                                                                                                           |     
|---------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                   |     
|Report of Independent Registered Public Accounting Firm                                                                            | F-1 
|                                                                                                                                   |     
|Consolidated Financial Statements                                                                                                  |     
|                                                                                                                                   |     
|Audited Consolidated Statements of Financial
    Position as of December 31, 2016 and 2015                                         | F-3 
|Audited Consolidated Statements of Income
    for each of the three years in the period ended December 31, 2016                    | F-5 
|Audited Consolidated Statement of Other Comprehensive
    Income for each of the three years in the period ended December 31, 2016 | F-7 
|Audited Consolidated Statements of Cash Flows
    for each of the three years in the period ended December 31, 2016                | F-8 
|Audited Consolidated Statements of Changes
    in Equity for each of the three years in the period ended December 31, 2016         | F-10
|Notes to the Audited Consolidated Financial
    Statements                                                                         | F-13



|Ch$   | - | Chilean pesos                                                                                                                                                                         
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ThCh$ | - | Thousands of Chilean pesos                                                                                                                                                            
|US$   | - | United States dollars                                                                                                                                                                 
|ThUS$ | - | Thousands of United States dollars                                                                                                                                                    
|UF    | - | The UF is an inflation-indexed, Chilean peso-denominated monetary
    unit. The UF rate is set daily in advance, based on the change in the Consumer Price Index of the previous month



137







REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM



To the Board of Directors and Shareholders

Sociedad Química y Minera de Chile S.A.



In our opinion, the accompanying consolidated
statement of financial position and the related consolidated statements of income, other comprehensive income, changes in equity
and cash flows present fairly, in all material respects, the financial position of Sociedad Química y Minera de Chile S.A.
and its subsidiaries at December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2016 in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible
for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in Management’s Annual Report on Internal Control
Over Financial Reporting appearing under Item 15(b) of this Annual Report on Form 20F. Our responsibility is to express opinions
on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.



A company’s internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.



F-1







Report of Independent Registered Public Accounting Firm

Sociedad Química y Minera de Chile S.A.

2





Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.







/s/ PricewaterhouseCoopers

Santiago, Chile

April 26, 2017





F-2











Consolidated Classified
Statements of Financial Position



|                                                                            |  | Note      |  | As of December 31, 2016 |           |  | As of December 31, 2015 | 
|--------------------------------------------------------------------------- |  | --------- |  | ----------------------- | --------- |  | ----------------------- | 
|                                                                            |  |           |  | ThUS$                   |           |  | ThUS$                   | 
|Assets                                                                      |  |           |  |                         |           |  |                         | 
|                                                                            |  |           |  |                         |           |  |                         | 
|Current assets                                                              |  |           |  |                         |           |  |                         | 
|Cash and cash equivalents                                                   |  | 7.1       |  |                         | 514,669   |  |                         | 
|Other current financial assets                                              |  | 10.1      |  |                         | 289,189   |  |                         | 
|Other current non-financial assets                                          |  | 25        |  |                         | 30,273    |  |                         | 
|Trade and other receivables, current                                        |  | 10.2      |  |                         | 368,761   |  |                         | 
|Trade receivables due from related parties, current                         |  | 9.5       |  |                         | 82,259    |  |                         | 
|Current inventories                                                         |  | 8         |  |                         | 993,072   |  |                         | 
|Current tax assets                                                          |  | 27.1      |  |                         | 54,787    |  |                         | 
|Current assets other tan assets classified as held-for-sale
    or disposal |  |           |  |                         | 2,333,010 |  |                         | 
|Non-current assets or asset groups for disposal classified as held-for-sale |  |           |  |                         | 2,056     |  |                         | 
|Total current assets                                                        |  |           |  |                         | 2,335,066 |  |                         | 
|                                                                            |  |           |  |                         |           |  |                         | 
|Non-current assets                                                          |  |           |  |                         |           |  |                         | 
|Other non-current financial assets                                          |  | 10.1      |  |                         | 14,099    |  |                         | 
|Other non-current non-financial assets                                      |  | 23        |  |                         | 24,690    |  |                         | 
|Trade receivables, non-current                                              |  | 10.2      |  |                         | 1,840     |  |                         | 
|Investments classified using the equity method of accounting                |  | 11.1-12.3 |  |                         | 133,140   |  |                         | 
|Intangible assets other than goodwill                                       |  | 13.1      |  |                         | 109,439   |  |                         | 
|Goodwill                                                                    |  | 13.1      |  |                         | 37,972    |  |                         | 
|Property, plant and equipment                                               |  | 14.1      |  |                         | 1,532,710 |  |                         | 
|Tax assets, non-current                                                     |  |           |  |                         | 29,024    |  |                         | 
|Deferred tax assets                                                         |  | 27.4      |  |                         | 664       |  |                         | 
|Total non-current assets                                                    |  |           |  |                         | 1,883,578 |  |                         | 
|Total assets                                                                |  |           |  |                         | 4,218,644 |  |                         | 



The accompanying notes form an integral part of these consolidated
financial statements.



F-3











Consolidated Classified Statements of Financial Position, (continued)



|                                               |  | Note |  | As of December 31, 2016 |           |   | As of December 31, 2015 | 
|---------------------------------------------- |  | ---- |  | ----------------------- | --------- | - | ----------------------- | 
|                                               |  |      |  | ThUS$                   |           |   | ThUS$                   | 
|Liabilities and Equity                         |  |      |  |                         |           |   |                         | 
|                                               |  |      |  |                         |           |   |                         | 
|Current liabilities                            |  |      |  |                         |           |   |                         | 
|Other current financial liabilities            |  | 10.4 |  |                         | 179,144   |   |                         | 
|Trade and other payables, current              |  | 10.5 |  |                         | 200,496   |   |                         | 
|Trade payables due to related parties, current |  | 9.6  |  |                         | 7         |   |                         | 
|Other current provisions                       |  | 18.1 |  |                         | 41,912    |   |                         | 
|Current tax liabilities                        |  | 27.2 |  |                         | 75,872    |   |                         | 
|Provisions for employee benefits, current      |  | 15.1 |  |                         | 20,998    |   |                         | 
|Other current liabilities                      |  | 18.3 |  |                         | 61,920    |   |                         | 
|Total current liabilities                      |  |      |  |                         | 580,349   |   |                         | 
|                                               |  |      |  |                         |           |   |                         | 
|Non-current liabilities                        |  |      |  |                         |           |   |                         | 
|Other non-current financial liabilities        |  | 10.4 |  |                         | 1,093,438 |   |                         | 
|Other non-current provisions                   |  | 18.1 |  |                         | 8,934     |   |                         | 
|Deferred tax liabilities                       |  | 27.4 |  |                         | 206,119   |   |                         | 
|Provisions for employee benefits, non-current  |  | 15.1 |  |                         | 22,532    |   |                         | 
|Total non-current liabilities                  |  |      |  |                         | 1,331,023 |   |                         | 
|Total liabilities                              |  |      |  |                         | 1,911,372 |   |                         | 
|                                               |  |      |  |                         |           |   |                         | 
|Equity                                         |  | 17   |  |                         |           |   |                         | 
|Share capital                                  |  |      |  |                         | 477,386   |   |                         | 
|Retained earnings                              |  |      |  |                         | 1,781,576 |   |                         | 
|Other reserves                                 |  |      |  |                         | (12,888   | ) |                         | 
|Equity attributable to owners of the Parent    |  |      |  |                         | 2,246,074 |   |                         | 
|Non-controlling interests                      |  |      |  |                         | 61,198    |   |                         | 
|Total equity                                   |  |      |  |                         | 2,307,272 |   |                         | 
|Total liabilities and equity                   |  |      |  |                         | 4,218,644 |   |                         | 



The accompanying notes form an integral part of these consolidated
financial statements.



F-4











Consolidated Statements
of Income by Function



|                                                                                       |  |         |  | January to December |           
|-------------------------------------------------------------------------------------- |  | ------- |  | ------------------- | ----------
|                                                                                       |  | Note    |  | 2016                |           
|                                                                                       |  |         |  | ThUS$               |           
|                                                                                       |  |         |  |                     |           
|Revenue                                                                                |  | 20      |  |                     | 1,939,322 
|Cost of sales                                                                          |  | 26.1    |  |                     | (1,328,285
|Gross profit                                                                           |  |         |  |                     | 611,037   
|                                                                                       |  |         |  |                     |           
|Other income                                                                           |  | 26.2    |  |                     | 14,781    
|Administrative expenses                                                                |  | 26.3    |  |                     | (88,436   
|Other expenses by function                                                             |  | 26.4    |  |                     | (89,731   
|Other gains (losses)                                                                   |  | 26.5    |  |                     | 679       
|Profit from operating activities                                                       |  |         |  |                     | 448,330   
|Finance income                                                                         |  |         |  |                     | 10,550    
|Finance costs                                                                          |  | 22-26.8 |  |                     | (57,498   
|Share of profit of associates and joint ventures accounted for using the equity method |  | 11-12   |  |                     | 13,047    
|Foreign currency translation differences                                               |  | 23      |  |                     | 460       
|Profit before taxes                                                                    |  |         |  |                     | 414,889   
|Income tax expense, continuing operations                                              |  | 27.4    |  |                     | (132,965  
|                                                                                       |  |         |  |                     |           
|Profit for the year                                                                    |  |         |  |                     | 281,924   
|Profit attributable to                                                                 |  |         |  |                     |           
|Owners of the Parent                                                                   |  |         |  |                     | 278,290   
|Non-controlling interests                                                              |  |         |  |                     | 3,634     
|Profit for the year                                                                    |  |         |  |                     | 281,924   



The accompanying notes form an integral part of these consolidated
financial statements.



F-5











Consolidated Statements of Income by Function, (continued)



|                                           |  |      |  | January to December |       
|------------------------------------------ |  | ---- |  | ------------------- | ------
|                                           |  | Note |  | 2016                |       
|                                           |  |      |  | US$                 |       
|                                           |  |      |  |                     |       
|Earnings per share                         |  |      |  |                     |       
|Common shares                              |  |      |  |                     |       
|Basic earnings per share (US$ per share)   |  | 21   |  |                     | 1.0573
|                                           |  |      |  |                     |       
|Diluted common shares                      |  |      |  |                     |       
|Diluted earnings per share (US$ per share) |  | 21   |  |                     | 1.0573



The accompanying notes form an integral part of these consolidated
financial statements.



F-6











Consolidated Statements
of Comprehensive Income



|                                                                                                                                 |  | January to December |        
|-------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | -------
|                                                                                                                                 |  | 2016                |        
|                                                                                                                                 |  | ThUS$               |        
|Statement of comprehensive income                                                                                                |  |                     |        
|                                                                                                                                 |  |                     |        
|Profit (loss) for the year                                                                                                       |  |                     | 281,924
|Other comprehensive income                                                                                                       |  |                     |        
|Other comprehensive income that will not be reclassified to profit for the
    year, before taxes                                |  |                     |        
|Other comprehensive income, before taxes, gains (losses) from remeasurements
    of defined benefit plans                        |  |                     | (3,397 
|Total other comprehensive income that will not be reclassified
    to profit for the year, before taxes                          |  |                     | (3,397 
|                                                                                                                                 |  |                     |        
|Other comprehensive income that will be reclassified  to profit
    for the year, before taxes                                   |  |                     |        
|                                                                                                                                 |  |                     |        
|Foreign currency exchange gains I(losses) before taxes                                                                           |  |                     | (2,252 
|Gains (losses) from cash flow hedges                                                                                             |  |                     | 2,233  
|Gains (losses) in financial assets measured at fair value through other
    comprehensive income                                 |  |                     | 4,813  
|Total other comprehensive income to be reclassified to
    income for the year                                                   |  |                     | 4,794  
|                                                                                                                                 |  |                     |        
|Total Other items of other comprehensive income before
    taxes                                                                 |  |                     | 1,397  
|                                                                                                                                 |  |                     |        
|Income taxes related to items of other comprehensive income that will not
    be reclassified to profit for the year             |  |                     |        
|Income taxes related to remeasurements of defined benefit plans in other
    comprehensive income                                |  |                     | 921    
|Accumulated income taxes related to items of other comprehensive
    income that will not be reclassified to profit for the year |  |                     | 921    
|                                                                                                                                 |  |                     |        
|Income taxes related to items of other comprehensive income that will be reclassified
    to profit for the year                 |  |                     |        
|Income taxes related to cash flow hedges in other comprehensive income                                                           |  |                     | (470   
|Income tax relating to financial assets measured at fair value through changes
    in other comprehensive income                 |  |                     | (1,300 
|Accumulated income taxes related to items of other comprehensive income that
    will be reclassified to profit for the year     |  |                     | (1,770 
|                                                                                                                                 |  |                     |        
|Total other comprehensive income                                                                                                 |  |                     | 548    
|                                                                                                                                 |  |                     |        
|Total comprehensive income                                                                                                       |  |                     | 282,472
|                                                                                                                                 |  |                     |        
|Comprehensive income attributable to                                                                                             |  |                     |        
|Owners of the Parent                                                                                                             |  |                     | 278,831
|Non-controlling interests                                                                                                        |  |                     | 3,641  
|Total comprehensive income                                                                                                       |  |                     | 282,472



The accompanying notes form an integral part of these consolidated
financial statements.



F-7











Consolidated Statements of Cash Flows



|                                                                                                 |  | Note |  |  | 12/31/2016 |  |           | 12/31/2015 |  |  | 12/31/2014 |  
|------------------------------------------------------------------------------------------------ |  | ---- |  |  | ---------- |  | --------- | ---------- |  |  | ---------- | -
|                                                                                                 |  |      |  |  | ThUS$      |  |           | ThUS$      |  |  | ThUS$      |  
|Consolidated Statements of cash flows                                                            |  |      |  |  |            |  |           |            |  |  |            |  
|                                                                                                 |  |      |  |  |            |  |           |            |  |  |            |  
|Cash flows from operating activities                                                             |  |      |  |  |            |  |           |            |  |  |            |  
|                                                                                                 |  |      |  |  |            |  |           |            |  |  |            |  
|Cash receipts from sales of goods and rendering of services                                      |  |      |  |  |            |  | 1,874,202 |            |  |  | 1,713,549  |  
|Cash receipts from premiums and benefits, annuities and other benefits from insurance recoveries |  |      |  |  |            |  | 5,071     |            |  |  | -          |  
|Cash payments to suppliers for the provision of goods and services                               |  |      |  |  |            |  | (803,418  | )          |  |  | (1,082,704 | )
|Cash payments to and on behalf of employees                                                      |  |      |  |  |            |  | (253,163  | )          |  |  | (44,916    | )
|Other payments related to operating activities                                                   |  |      |  |  |            |  | (32,185   | )          |  |  | (70,991    | )
|Dividends received                                                                               |  |      |  |  |            |  | 4,345     |            |  |  | 7,515      |  
|Interest paid                                                                                    |  |      |  |  |            |  | (55,217   | )          |  |  | (44,225    | )
|Interest received                                                                                |  |      |  |  |            |  | 10,550    |            |  |  | 11,570     |  
|Income taxes paid                                                                                |  |      |  |  |            |  | (113,991  | )          |  |  | (72,579    | )
|Other incomes (outflows) of cash                                                                 |  |      |  |  |            |  | (2,532    | )          |  |  | 10,098     |  
|                                                                                                 |  |      |  |  |            |  |           |            |  |  |            |  
|Net cash generated from (used in) operating activities                                           |  |      |  |  |            |  | 633,662   |            |  |  | 427,317    |  
|                                                                                                 |  |      |  |  |            |  |           |            |  |  |            |  
|Cash flows from (used in) investing activities                                                   |  |      |  |  |            |  |           |            |  |  |            |  
|Cash flows from the loss of control of subsidiaries or other businesses                          |  |      |  |  |            |  | -         |            |  |  | -          |  
|Payments made to acquire interest in joint ventures                                              |  |      |  |  |            |  | (45,000   | )          |  |  | (59        | )
|Income from capital increase in subsidiaries                                                     |  |      |  |  |            |  | -         |            |  |  |            |  
|Proceeds from the sale of property, plant and equipment                                          |  |      |  |  |            |  | 4,347     |            |  |  | 388        |  
|Acquisition of property, plant and equipment                                                     |  |      |  |  |            |  | (131,251  | )          |  |  | (111,315   | )
|Proceeds from sales of intangible assets                                                         |  |      |  |  |            |  | 3,435     |            |  |  | 4,586      |  
|Purchases of intangible assets                                                                   |  |      |  |  |            |  | (2,090    | )          |  |  | -          |  
|Cash advances and loans granted to third parties                                                 |  |      |  |  |            |  | (163      | )          |  |  | -          |  
|Proceeds from the repayment of advances and loans granted to third parties                       |  |      |  |  |            |  | -         |            |  |  | 420        |  
|Other inflows (outflows) of cash (*)                                                             |  |      |  |  |            |  | 333,108   |            |  |  | 36,175     |  
|                                                                                                 |  |      |  |  |            |  |           |            |  |  |            |  
|Net cash generated from (used in) investing activities                                           |  |      |  |  |            |  | 162,386   |            |  |  | (69,805    | )



(*) Includes other cash receipts (payments),
investments and redemptions of time deposits and other financial instruments, which do not qualify as cash and cash equivalents
in accordance with IAS 7.7 as they record a maturity date from their date of origin greater than 90 days.



The accompanying notes form an integral part of these consolidated
financial statements.



F-8











Consolidated Statements of Cash Flows, (continued)





|                                                                                                           |  | Note |  |  | 12/31/2016 |  |          | 12/31/2015 |  |  | 12/31/2014 |  
|---------------------------------------------------------------------------------------------------------- |  | ---- |  |  | ---------- |  | -------- | ---------- |  |  | ---------- | -
|                                                                                                           |  |      |  |  | ThUS$      |  |          | ThUS$      |  |  | ThUS$      |  
|Cash flows used in financing activities                                                                    |  |      |  |  |            |  |          |            |  |  |            |  
|                                                                                                           |  |      |  |  |            |  |          |            |  |  |            |  
|Proceeds from long-term borrowings                                                                         |  |      |  |  |            |  | -        |            |  |  | -          |  
|Proceeds from short-term borrowings                                                                        |  |      |  |  |            |  | 100,000  |            |  |  | 137,000    |  
|Repayment of borrowings                                                                                    |  |      |  |  |            |  | (517,000 | )          |  |  | (190,000   | )
|Dividends paid                                                                                             |  |      |  |  |            |  | (399,410 | )          |  |  | (127,343   | )
|                                                                                                           |  |      |  |  |            |  |          |            |  |  |            |  
|Net cash generated used in financing activities                                                            |  |      |  |  |            |  | (816,410 | )          |  |  | (180,343   | )
|                                                                                                           |  |      |  |  |            |  |          |            |  |  |            |  
|Net increase (decrease) in cash and cash equivalents before the effect of
    changes in the exchange rate |  |      |  |  |            |  | (20,362  | )          |  |  | 177,169    |  
|                                                                                                           |  |      |  |  |            |  |          |            |  |  |            |  
|Effects of exchange rate fluctuations on cash held                                                         |  |      |  |  |            |  | 7,772    |            |  |  | (4,476     | )
|Net (decrease) increase in cash and cash equivalents                                                       |  |      |  |  |            |  | (12,590  | )          |  |  | 172,693    |  
|                                                                                                           |  |      |  |  |            |  |          |            |  |  |            |  
|Cash and cash equivalents at beginning of period                                                           |  |      |  |  |            |  | 527,259  |            |  |  | 354,566    |  
|Cash and cash equivalents at end of period                                                                 |  |      |  |  |            |  | 514,669  |            |  |  | 527,259    |  



The accompanying notes form an integral part of these consolidated
financial statements.



F-9











Consolidated Statements
of Changes in Equity



|2016                                                       |  | Sharecapital |         |  | Foreigncurrencytranslationdifferencereserves |  |         | Cashflowhedgereserves |  |  | Reserve forgains (losses)from financialassetsmeasured atfair valuethrough othercomprehensiveincome |   |  | Actuarialgains(losses)fromdefinedbenefitplans |       |  | Othermiscellaneousreserves |  |        | Otherreserves |  |  | Retainedearnings |   |  | Equityattributableto owners ofthe Parent |         |   | Non-controllinginterests |  |           | Total | 
|---------------------------------------------------------- |  | ------------ | ------- |  | -------------------------------------------- |  | ------- | --------------------- |  |  | -------------------------------------------------------------------------------------------------- | - |  | --------------------------------------------- | ----- |  | -------------------------- |  | ------ | ------------- |  |  | ---------------- | - |  | ---------------------------------------- | ------- | - | ------------------------ |  | --------- | ----- | 
|                                                           |  | ThUS$        |         |  | ThUS$                                        |  |         | ThUS$                 |  |  | ThUS$                                                                                              |   |  | ThUS$                                         |       |  | ThUS$                      |  |        | ThUS$         |  |  | ThUS$            |   |  | ThUS$                                    |         |   | ThUS$                    |  |           | ThUS$ | 
|                                                           |  |              |         |  |                                              |  |         |                       |  |  |                                                                                                    |   |  |                                               |       |  |                            |  |        |               |  |  |                  |   |  |                                          |         |   |                          |  |           |       | 
|Equity at beginning of the year                            |  |              | 477,386 |  |                                              |  | (14,035 | )                     |  |  | (1,699                                                                                             | ) |  |                                               |       |  |                            |  | (2,386 | )             |  |  | (1,677           | ) |  |                                          | (19,797 | ) |                          |  | 1,882,196 |       | 
|Profit for the year                                        |  |              | -       |  |                                              |  | -       |                       |  |  | -                                                                                                  |   |  |                                               |       |  |                            |  | -      |               |  |  | -                |   |  |                                          | -       |   |                          |  | 278,290   |       | 
|Other comprehensive income                                 |  |              | -       |  |                                              |  | (2,287  | )                     |  |  | 1,763                                                                                              |   |  |                                               | 3,513 |  |                            |  | (2,448 | )             |  |  | -                |   |  |                                          | 541     |   |                          |  | -         |       | 
|Comprehensive income                                       |  |              | -       |  |                                              |  | (2,287  | )                     |  |  | 1,763                                                                                              |   |  |                                               | 3,513 |  |                            |  | (2,448 | )             |  |  | -                |   |  |                                          | 541     |   |                          |  | 278,290   |       | 
|Dividends                                                  |  |              | -       |  |                                              |  | -       |                       |  |  | -                                                                                                  |   |  |                                               | -     |  |                            |  | -      |               |  |  | -                |   |  |                                          | -       |   |                          |  | (375,000  | )     | 
|Increase (decrease) due to transfers and other
    changes |  |              |         |  |                                              |  | (3,141  | )                     |  |  | -                                                                                                  |   |  |                                               | -     |  |                            |  | -      |               |  |  | 9,509            |   |  |                                          | 6,368   |   |                          |  | (3,910    | )     | 
|Increase (decrease) in equity                              |  |              | -       |  |                                              |  | (5,428  | )                     |  |  | 1,763                                                                                              |   |  |                                               | 3,513 |  |                            |  | (2,448 | )             |  |  | 9,509            |   |  |                                          | 6,909   |   |                          |  | (100,620  | )     | 
|                                                           |  |              |         |  |                                              |  |         |                       |  |  |                                                                                                    |   |  |                                               |       |  |                            |  |        |               |  |  |                  |   |  |                                          |         |   |                          |  |           |       | 
|Equity as of December 31, 2016                             |  |              | 477,386 |  |                                              |  | (19,463 | )                     |  |  | 64                                                                                                 |   |  |                                               | 3,513 |  |                            |  | (4,834 | )             |  |  | 7,832            |   |  |                                          | (12,888 | ) |                          |  | 1,781,576 |       | 



The accompanying notes form an integral part of these consolidated
financial statements.



F-10











Consolidated Statements of Changes in Equity



|2015                               |  | Sharecapital |         |  | Foreigncurrencytranslationdifferencereserves |  |         | Cash flowhedgereserves |  |  | Actuarialgains (losses)from definedbenefit plans |   |  | Othermiscellaneousreserves |        |   | Otherreserves |  |        | Retainedearnings |  |  | Equityattributableto owners ofthe Parent |   |  | Non-controllinginterests |           |   | Total | 
|---------------------------------- |  | ------------ | ------- |  | -------------------------------------------- |  | ------- | ---------------------- |  |  | ------------------------------------------------ | - |  | -------------------------- | ------ | - | ------------- |  | ------ | ---------------- |  |  | ---------------------------------------- | - |  | ------------------------ | --------- | - | ----- | 
|                                   |  | ThUS$        |         |  | ThUS$                                        |  |         | ThUS$                  |  |  | ThUS$                                            |   |  | ThUS$                      |        |   | ThUS$         |  |        | ThUS$            |  |  | ThUS$                                    |   |  | ThUS$                    |           |   | ThUS$ | 
|                                   |  |              |         |  |                                              |  |         |                        |  |  |                                                  |   |  |                            |        |   |               |  |        |                  |  |  |                                          |   |  |                          |           |   |       | 
|Equity at beginning of the year    |  |              | 477,386 |  |                                              |  | (7,701  | )                      |  |  | (1,881                                           | ) |  |                            | (1,903 | ) |               |  | (1,677 | )                |  |  | (13,162                                  | ) |  |                          | 1,768,424 |   |       | 
|Profit for the year                |  |              | -       |  |                                              |  | -       |                        |  |  | -                                                |   |  |                            | -      |   |               |  | -      |                  |  |  | -                                        |   |  |                          | 220,356   |   |       | 
|Other comprehensive income         |  |              | -       |  |                                              |  | (6,334  | )                      |  |  | 182                                              |   |  |                            | (483   | ) |               |  | -      |                  |  |  | (6,635                                   | ) |  |                          | -         |   |       | 
|Comprehensive income               |  |              | -       |  |                                              |  | (6,334  | )                      |  |  | 182                                              |   |  |                            | (483   | ) |               |  | -      |                  |  |  | (6,635                                   | ) |  |                          | 220,356   |   |       | 
|Dividends                          |  |              | -       |  |                                              |  | -       |                        |  |  | -                                                |   |  |                            | -      |   |               |  | -      |                  |  |  | -                                        |   |  |                          | (106,584  | ) |       | 
|Increase
    (decrease) in equity  |  |              | -       |  |                                              |  | (6,334  | )                      |  |  | 182                                              |   |  |                            | (483   | ) |               |  | -      |                  |  |  | (6,635                                   | ) |  |                          | 113,772   |   |       | 
|                                   |  |              |         |  |                                              |  |         |                        |  |  |                                                  |   |  |                            |        |   |               |  |        |                  |  |  |                                          |   |  |                          |           |   |       | 
|Equity as of December
    31, 2015 |  |              | 477,386 |  |                                              |  | (14,035 | )                      |  |  | (1,699                                           | ) |  |                            | (2,386 | ) |               |  | (1,677 | )                |  |  | (19,797                                  | ) |  |                          | 1,882,196 |   |       | 



The accompanying notes form an integral part of these consolidated
financial statements.



F-11











Consolidated Statements of Changes in Equity



|2014                                                                |  | Sharecapital |         |  | Foreigncurrencytranslationdifferencereserves |  |        | Cash flowhedgereserves |  |  | Actuarialgains (losses)from definedbenefit plans |   |  | Othermiscellaneousreserves |        |   | Otherreserves |  |        | Retainedearnings |  |  | Equityattributableto owners ofthe Parent |   |  | Non-controllinginterests |           |   | Total | 
|------------------------------------------------------------------- |  | ------------ | ------- |  | -------------------------------------------- |  | ------ | ---------------------- |  |  | ------------------------------------------------ | - |  | -------------------------- | ------ | - | ------------- |  | ------ | ---------------- |  |  | ---------------------------------------- | - |  | ------------------------ | --------- | - | ----- | 
|                                                                    |  | ThUS$        |         |  | ThUS$                                        |  |        | ThUS$                  |  |  | ThUS$                                            |   |  | ThUS$                      |        |   | ThUS$         |  |        | ThUS$            |  |  | ThUS$                                    |   |  | ThUS$                    |           |   | ThUS$ | 
|                                                                    |  |              |         |  |                                              |  |        |                        |  |  |                                                  |   |  |                            |        |   |               |  |        |                  |  |  |                                          |   |  |                          |           |   |       | 
|Equity at beginning of the year                                     |  |              | 477,386 |  |                                              |  | (3,817 | )                      |  |  | (3,766                                           | ) |  |                            | (1,231 | ) |               |  | (1,677 | )                |  |  | (10,491                                  | ) |  |                          | 1,909,725 |   |       | 
|Profit for the year                                                 |  |              | -       |  |                                              |  | -      |                        |  |  | -                                                |   |  |                            | -      |   |               |  | -      |                  |  |  | -                                        |   |  |                          | 236,889   |   |       | 
|Other comprehensive income                                          |  |              | -       |  |                                              |  | (3,884 | )                      |  |  | 1,885                                            |   |  |                            | (672   | ) |               |  | -      |                  |  |  | (2,671                                   | ) |  |                          | -         |   |       | 
|Comprehensive income                                                |  |              | -       |  |                                              |  | (3,884 | )                      |  |  | 1,885                                            |   |  |                            | (672   | ) |               |  | -      |                  |  |  | (2,671                                   | ) |  |                          | 236,889   |   |       | 
|Dividends                                                           |  |              | -       |  |                                              |  | -      |                        |  |  | -                                                |   |  |                            | -      |   |               |  | -      |                  |  |  | -                                        |   |  |                          | (378,190  | ) |       | 
|Increase (decrease) due to changes in interests
    in subsidiaries |  |              | -       |  |                                              |  | -      |                        |  |  | -                                                |   |  |                            | -      |   |               |  | -      |                  |  |  | -                                        |   |  |                          | -         |   |       | 
|Increase (decrease) in equity                                       |  |              | -       |  |                                              |  | (3,884 | )                      |  |  | 1,885                                            |   |  |                            | (672   | ) |               |  | -      |                  |  |  | (2,671                                   | ) |  |                          | (141,301  | ) |       | 
|                                                                    |  |              |         |  |                                              |  |        |                        |  |  |                                                  |   |  |                            |        |   |               |  |        |                  |  |  |                                          |   |  |                          |           |   |       | 
|Equity as of December 31, 2014                                      |  |              | 477,386 |  |                                              |  | (7,701 | )                      |  |  | (1,881                                           | ) |  |                            | (1,903 | ) |               |  | (1,677 | )                |  |  | (13,162                                  | ) |  |                          | 1,768,424 |   |       | 



The accompanying notes form an integral part of these consolidated
financial statements.



F-12


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
1      Identification and activities of the Company and Subsidiaries



| | 1.1 | Historical background
| | --- | ---------------------



Sociedad Química y Minera de Chile
S.A. "SQM" is an open stock corporation organized under the laws of the Republic of Chile, Tax Identification No.93.007.000-9.



The Company was incorporated through a public
deed dated June 17, 1968 by the notary public of Santiago MR. Sergio Rodríguez Garcés. Its existence was approved
by Decree No. 1,164 of June 22, 1968 of the Ministry of Finance, and it was registered on June 29, 1968 in the Registry of Commerce
of Santiago, on page 4,537 No. 1,992. SQM's headquarters are located at El Trovador 4285, Fl. 6, Las Condes, Santiago, Chile.
The Company's telephone number is +56 2 24252000.



The Company is registered with the Securities
Registry of the Chilean Superintendence of Securities and Insurance (SVS) under No. 0184 dated March 18. 1983 and is subject to
the inspection of the SVS.



| | 1.2 | Main domicile where
                                         the Company performs its production activities
| | --- | -----------------------------------------------------------------------------------------------------------



The Company’s main domiciles are: Calle
Dos Sur plot No. 5 - Antofagasta; Arturo Prat 1060 - Tocopilla; Administración Building w/n - Maria Elena; Administración
Building w/n Pedro de Valdivia - María Elena, Anibal Pinto 3228 - Antofagasta, Kilometer 1378 Ruta 5 Norte Highway - Antofagasta,
Coya Sur Plant w/n - Maria Elena, kilometer 1760 Ruta 5 Norte Highway - Pozo Almonte, Salar de Atacama (Atacama Saltpeter deposit)
potassium chloride plant s/n - San Pedro de Atacama, potassium sulfate plant at Salar de Atacama s/n – San Pedro de Atacama,
Minsal Mining Camp s/n CL Plant CL, Potassium– San Pedro de Atacama, formerly the Iris Saltpeter office S/N, Commune of
Pozo Almonte, Iquique.



| | 1.3 | Codes of main activities
| | --- | ------------------------



The codes of the main activities as established
by the Chilean Superintendence of Securities and Insurance are as follows:



| | - | 1700
                                         (Mining)
| | - | ------------------------------------------------------



| | - | 2200
                                         (Chemical products)
| | - | -----------------------------------------------------------------



| | - | 1300
                                         (Investment)
| | - | ----------------------------------------------------------



| | 1.4 | Description of the
                                         nature of operations and main activities
| | --- | ----------------------------------------------------------------------------------------------------



Our products are mainly derived from mineral
deposits found in northern Chile. We mine and process caliche ore and brine deposits. The ore deposit in northern Chile contains
nitrate and iodine deposits. The brine deposits of the Salar de Atacama, in northern Chile, contain high concentrations of lithium
and potassium as well as significant concentrations of sulfate.



F-13


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
1      Identification and Activities of the Company and Subsidiaries (continued)



| | 1.4 | Description
                                         of the nature of operations and main activities, continued
| | --- | ---------------------------------------------------------------------------------------------------------------



From our caliche ore deposits located in the
north of Chile, we produce 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, we extract brines rich in potassium, lithium and sulfate in
order to produce potassium chloride, potassium sulfate, lithium solutions, and bischofite (magnesium chloride). We produce lithium
carbonate and lithium hydroxide at our plant near the city of Antofagasta, Chile, from the solutions brought from the Salar de
Atacama.



We sell our products in over 100 countries
worldwide through our global distribution network and generate our revenue mainly from abroad.



Our products are divided into six categories:
specialty plant nutrition, iodine and its derivatives, lithium and its derivatives, industrial chemicals, potassium and other
products and services, described as follows:



Specialty plant nutrition: SQM produces
and sells four types of specialty plant nutrition in this line of business: potassium nitrate, sodium nitrate, sodium potassium
nitrate, and specialty blends. This business is characterized by being closely related to its customers, having specialized staff
who provide expert advisory in best practices for fertilization, according to each type of crop, soil and climate. Within this
type of business, potassium derivative products and specialty potassium nitrate have a leading role given the contribution they
make to develop crops, insuring an improvement in post-crop life in addition to improving quality, flavor and fruit color. The
potassium nitrate, which is sold in multiple formats and as a part of other specialty blends, is complemented by sodium nitrate,
potassium sodium nitrate, and more than 200 other fertilizer blends.



Iodine: The Company is a major producer
of iodine at worldwide level. Iodine is widely used in the pharmaceutical industry, technology and nutrition. Additionally, iodine
is used as X ray contrast media and polarizing film for LCD displays.



Lithium: The Company’s lithium
is mainly used for manufacturing rechargeable batteries for cell phones, cameras and notebooks. Through the manufacturing of lithium-based
products, SQM provides significant materials to face great challenges such as the efficient use of energy and raw materials. Lithium
is mainly used for rechargeable batteries for small electrical appliances such as mobile phones, tablets and laptops. It is also
used in industrial applications such as the manufacturing of glass, ceramics and lubricating greases. Other uses include the pharmaceutical
and chemical industries.



F-14


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
1      Identification and Activities of the Company and Subsidiaries (continued)



| | 1.4 | Description
                                         of the nature of operations and main activities, continued
| | --- | ---------------------------------------------------------------------------------------------------------------



Industrial Chemicals: Industrial chemicals
are products used as supplies for a number of production processes. SQM participates in this line of business producing sodium
nitrate, potassium nitrate and potassium chloride. Industrial nitrates have increased their importance over the last few years
due to their use as storage means for thermal energy at solar energy plants, which are widely used by such countries as Spain
and the United States in their search for decreasing CO2emissions.



Potassium: The potassium is a primary
essential macro-nutrient, and even though it does not form part of the plant’s structure, it has a significant role in the
development of its basic functions, validating the quality of a crop, increasing post-crop life, improving the crop flavor, its
amount of vitamins and its physical appearance. Within this business line, SQM has also potassium chlorate and potassium sulfate,
both extracted from the salt layer located under the Salar de Atacama (the Atacama Saltpeter Deposit).



Other products and services: This business
line includes revenue from commodities, services, interests, royalties and dividends.



| | 1.5 | Other background
| | --- | ----------------



Staff



As of December 31, 2016 and December 31, 2015,
personnel was detailed as follows:



|                          |  | 12/31/2016 |     |  | 12/31/2015         | 
|------------------------- |  | ---------- | --- |  | ------------------ | 
|Employees                 |  | SQM S.A.   |     |  | Other subsidiaries | 
|Executives                |  |            | 31  |  |                    | 
|Professionals             |  |            | 119 |  |                    | 
|Technicians and operators |  |            | 262 |  |                    | 
|Foreign employees         |  |            | 8   |  |                    | 
|Overall total             |  |            | 420 |  |                    | 



F-15


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
1      Identification and Activities of the Company and subsidiaries (continued)



| | 1.5 | Other background,
                                         continued
| | --- | --------------------------------------------------------------------



Main shareholders



Information about shareholders that own more
than 5% of SQM’s outstanding Series A or Series B shares as of December 31, 2016 and December 31, 2015, according to information
provided by the Central Securities Depositary (Depósito Central de Valores or “DCV”), is set forth in the table
below:



|Shareholder as of December 31, 2016                        |  | No. of Series A with
    ownership |            |  | % of Series A
    shares |  |       | No. of Series B with
    ownership |  |  | % of Series B
    shares |  |  | % of total
    shares |      
|---------------------------------------------------------- |  | ---------------------------------- | ---------- |  | ------------------------ |  | ----- | ---------------------------------- |  |  | ------------------------ |  |  | --------------------- | -----
|The Bank of New York Mellon, ADRs                          |  |                                    | -          |  |                          |  | -     |                                    |  |  | 59,373,011               |  |  |                       | 49.32
|Sociedad de Inversiones Pampa Calichera S.A.(*)            |  |                                    | 44,894,152 |  |                          |  | 31.43 | %                                  |  |  | 7,007,688                |  |  |                       | 5.82 
|Inversiones El Boldo Limitada                              |  |                                    | 29,330,326 |  |                          |  | 20.54 | %                                  |  |  | 16,363,546               |  |  |                       | 13.59
|Inversiones RAC Chile Limitada                             |  |                                    | 19,200,242 |  |                          |  | 13.44 | %                                  |  |  | 2,202,773                |  |  |                       | 1.83 
|Potasios de Chile S.A.(*)                                  |  |                                    | 18,179,147 |  |                          |  | 12.73 | %                                  |  |  | -                        |  |  |                       | -    
|Inversiones PCS Chile Limitada                             |  |                                    | 15,526,000 |  |                          |  | 10.87 | %                                  |  |  | 1,600,000                |  |  |                       | 1.33 
|Banco de Chile on behalf of non-resident third
    parties |  |                                    | -          |  |                          |  | -     |                                    |  |  | 8,962,355                |  |  |                       | 7.45 
|Inversiones Global Mining (Chile) Limitada (*)             |  |                                    | 8,798,539  |  |                          |  | 6.16  | %                                  |  |  | -                        |  |  |                       | -    
|Banco Itaú on behalf of investors                          |  |                                    | 20,950     |  |                          |  | 0.01  | %                                  |  |  | 6,502,217                |  |  |                       | 5.40 
|Inversiones La Esperanza Limitada                          |  |                                    | 3,711,598  |  |                          |  | 2.60  | %                                  |  |  | 46,500                   |  |  |                       | 0.04 



(*) Total Pampa Group 29.97%



|Shareholder as of December 31, 2015                        |  | No. of Series A with
    ownership |            |  | % of Series A
    shares |  |       | No. of Series B with
    ownership |  |  | % of Series B
    shares |  |  | % of total
    shares |      
|---------------------------------------------------------- |  | ---------------------------------- | ---------- |  | ------------------------ |  | ----- | ---------------------------------- |  |  | ------------------------ |  |  | --------------------- | -----
|The Bank of New York Mellon, ADRs                          |  |                                    | -          |  |                          |  | -     |                                    |  |  | 59,079,533               |  |  |                       | 49,08
|Sociedad de Inversiones Pampa Calichera S.A.(*)            |  |                                    | 44,880,793 |  |                          |  | 31.43 | %                                  |  |  | 7,007,688                |  |  |                       | 5.82 
|Inversiones El Boldo Limitada                              |  |                                    | 29,330,326 |  |                          |  | 20.54 | %                                  |  |  | 17,963,546               |  |  |                       | 14.92
|Inversiones RAC Chile Limitada                             |  |                                    | 19,200,242 |  |                          |  | 13.44 | %                                  |  |  | 2,202,773                |  |  |                       | 1.83 
|Potasios de Chile S.A.(*)                                  |  |                                    | 18,179,147 |  |                          |  | 12.73 | %                                  |  |  | -                        |  |  |                       | -    
|Inversiones PCS Chile Limitada                             |  |                                    | 15,526,000 |  |                          |  | 10.87 | %                                  |  |  | -                        |  |  |                       | -    
|Banco de Chile on behalf of non-resident third
    parties |  |                                    | -          |  |                          |  | -     |                                    |  |  | 9,055,272                |  |  |                       | 7,52 
|Inversiones Global Mining (Chile) Limitada (*)             |  |                                    | 8,798,539  |  |                          |  | 6.16  | %                                  |  |  | -                        |  |  |                       | -    
|Banco Itaú on behalf of investors                          |  |                                    | 20,950     |  |                          |  | 0.01  | %                                  |  |  | 5,679,753                |  |  |                       | 4.72 
|Inversiones La Esperanza Limitada                          |  |                                    | 3,711,598  |  |                          |  | 2.60  | %                                  |  |  | 46,500                   |  |  |                       | 0.04 



(*) Total Pampa Group 29.97%



On December 31, 2016 the total number of shareholders was 1,187.



F-16


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
2      Basis of presentation for the consolidated financial statements



| | 2.1 | Accounting period
| | --- | -----------------



These consolidated financial statements cover
the following periods:



| | - | Consolidated Statements of Financial Position as of December 31,
                                         2016 and 2015.
| | - | ------------------------------------------------------------------------------------------------------------------------

| | - | Consolidated Statements of Changes in Equity for the three years
                                         ended December 31, 2016.
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | - | Consolidated Statements of Comprehensive Income for the three years
                                         ended December 31, 2016.
| | - | -------------------------------------------------------------------------------------------------------------------------------------

| | - | Statements of Cash Flows for the three years ended December 31,
                                         2016.
| | - | --------------------------------------------------------------------------------------------------------------



| | 2.2 | Financial statements
| | --- | --------------------



The consolidated financial statements of Sociedad
Química y Minera de Chile S.A. and its Subsidiaries were prepared in accordance with International Financial Reporting
Standards (hereinafter “IFRS”) and represent the full, explicit and unreserved adoption of International Financial
Reporting Standards as issued by the International Accounting Standards Board (hereinafter the “IASB”).



These consolidated financial statements fairly
reflect the Company’s financial position, the comprehensive results of operations, changes in equity and and cash flows
occurring during the years then ended.



IFRS establish certain alternatives for their
application. Those applied by the Company are detailed in this Note.



The accounting policies used in the preparation
of these consolidated annual accounts comply with each IFRS in force at their date of presentation.



F-17


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
2      Basis of presentation for the consolidated financial (continued)



| | 2.2 | Financial
                                         statements, continued
| | --- | ------------------------------------------------------------------------



There is a difference in net income for the
period ended December 31, 2015 in these financial statements and the Company’s statutory consolidated financial statements
filed with the SVS. In March 2015, the Company made payments to the Chilean Internal Revenue Service (Servicio de Impuestos
Internosor “SII”) for expenses that may not have qualified as tax expenses under the Chilean tax code. See Note
30. Provisions of approximately US$7 million corresponding to such payments were included in net income for the period ended December
31, 2014 in these financial statements. However, since such payments were made after March 3, 2015, the date on which the Company
filed its statutory consolidated financial statements for the period ended December 31, 2015, with the SVS, such provisions were
included in net income for the period ended December 31, 2015 for purposes of the Company’s statutory consolidated financial
statements.



As of December 31, 2016, there are no differences
in the financial statements reported to the SVS.



A reconciliation of such differences is presented
as follows.



|As of December 31, 2015              |  |                                           |           |   |                                           |  |           |            | 
|------------------------------------ |  | ----------------------------------------- | --------- | - | ----------------------------------------- |  | --------- | ---------- | 
|Equity                               |  | Consolidated Financial Statements for SVS |           |   | Consolidated Financial Statements for SEC |  |           | Diferencia | 
|                                     |  | ThUS$                                     |           |   | ThUS$                                     |  |           | ThUS$      | 
|Parent’s ownership                   |  |                                           | 2,339,785 |   |                                           |  | 2,339,785 |            | 
|Share capital                        |  |                                           | 477.386   |   |                                           |  | 477.386   |            | 
|Other reserves                       |  |                                           | (19,797   | ) |                                           |  | (19,797   | )          | 
|                                     |  |                                           |           |   |                                           |  |           |            | 
|Retained earnings                    |  |                                           | 1,882,196 |   |                                           |  | 1,882,196 |            | 
|Retained earning for the last period |  |                                           | 1,669,028 |   |                                           |  | 1,661,840 |            | 
|Net Income (loss) for the period     |  |                                           | 213,168   |   |                                           |  | 220,356   |            | 
|Total Retained earnings              |  |                                           | 1,882,196 |   |                                           |  | 1,882,196 |            | 
|                                     |  |                                           |           |   |                                           |  |           |            | 
|Non-controlling                      |  |                                           | 60,571    |   |                                           |  | 60,571    |            | 
|Retained earnings                    |  |                                           |           |   |                                           |  |           |            | 
|Retained earning for the last period |  |                                           | 59,867    |   |                                           |  | 59,867    |            | 
|Net Income (loss) for the period     |  |                                           | 4,164     |   |                                           |  | 4,164     |            | 
|Other comprehensive income           |  |                                           | (212      | ) |                                           |  | (212      | )          | 
|Dividends                            |  |                                           | (3,248    | ) |                                           |  | (3,248    | )          | 
|Total Retained earnings              |  |                                           | 60,571    |   |                                           |  | 60,571    |            | 
|                                     |  |                                           |           |   |                                           |  |           |            | 
|Total Equity                         |  |                                           | 2,400,356 |   |                                           |  | 2,400,356 |            | 



F-18


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
2      Basis of presentation for the consolidated financial statements (continued)



| | 2.2 | Financial
                                         statements, continued
| | --- | ------------------------------------------------------------------------



Dividends paid and the mandatory mínimum
dividend provision were determined in accordance with the standards set by the SVS.



F-19


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
2      Basis of presentation for the consolidated financial statements (continued)



| | 2.3 | Basis of measurement
| | --- | --------------------



The consolidated financial statements have
been prepared on the historical cost basis except for the following:



| | - | Inventories are recorded at the
                                         lower of cost and net realizable value.
| | - | ----------------------------------------------------------------------------------------------------------------



| | - | Financial derivatives at fair value;
                                         and
| | - | ---------------------------------------------------------------------------------



| | - | Staff severance indemnities and
                                         pension commitments at actuarial value
| | - | ---------------------------------------------------------------------------------------------------------------



| | - | Certain financial investments classified
                                         as available for sale measured at fair value with a counterparty in other comprehensive
                                         income.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Other current and non-current asset
                                         and financial liabilities at amortized cost.
| | - | -------------------------------------------------------------------------------------------------------------------------



| | 2.4 | Accounting pronouncements
| | --- | -------------------------



New accounting pronouncements



a)        The
following standards, interpretations and amendments are mandatory for the first time for annual periods beginning on January 1,
2016:



|Amendments and
    improvements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Mandatory
    for annualperiods beginning on
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------
|Amendment to IFRS 11 “Joint Arrangements”
    – on the acquisition of interest in a joint operation – Issued in May 2014. This amendment includes guidance related
    to the method for accounting for an acquisition of an interest in a joint operation in which the activity constitutes a business,
    specifying the proper treatment for such acquisitions.                                                                                                                                                                                                                                                                                              |  | 01/01/2016                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                             
|Amendment to IAS 16 “Property, Plant and Equipment”and IAS 38 “Intangible Assets” on depreciation and amortization – Issued in May 2014. The amendments
    clarify that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset
    is not appropriate because revenue generated by such an activity in general reflects other factors other than the use of the
    economic benefits embedded in the asset or item of property, plant and equipment.  Accordingly, a rebuttable presumption
    exists that a revenue-based depreciation or amortization method is inappropriate.                   |  | 01/01/2016                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                             
|Amendment to IAS 27 “Separate Financial Statements”
    on the equity method – Issued in August 2014. This amendment allows entities to use the equity method of accounting
    for the recognition of investments in subsidiaries, joint ventures and associates in their separate financial statements.                                                                                                                                                                                                                                                                                                                                                        |  | 01/01/2016                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                             
|Amendment to IFRS 10 “Consolidated Financial Statements”and IAS 28 “Investments in Associates and Joint Ventures”. Issued in September 2014. This amendment
    addresses an inconsistency between the requirements of IFRS 10 and IAS 28 for the treatment of a sale or contribution of assets
    between an investor and its associate or joint venture. The main consequence of this amendment is the recognition of a full
    gain or loss when the transaction involves a business (whether or not in a subsidiary) and a partial gain or loss when the
    transaction involves assets that are not a business, even if such assets are in a subsidiary. |  | 01/01/2016                                  



F-20


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
2      Basis of presentation for the consolidated financial statements (continued)



| | 2.4 | Accounting
                                         Pronouncements, continued
| | --- | -----------------------------------------------------------------------------





|Amendments
    and improvements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Mandatory
    for annualperiods beginning on
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------
|Amendment to IFRS
    10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures.”
    Issued in December 2014. The amendment clarifies the application of the exception from consolidation for investment entities
    and their subsidiaries. The amendment to IFRS 10 clarifies on the exception on consolidation available for entities in group
    structures that include investment entities. The amendment to IAS 28 allows an entity that is not an investment entity, but
    has an interest in an associated or joint venture that is an investment entity, an option of accounting policy in the application
    of the equity method. The entity may opt for maintaining measurement at fair value applied by the associate or joint venture
    that is an investment entity or, consolidating at investment entity level (associate or joint venture). |  | 01/01/2016                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                                             
|Amendment to IAS
    1 “Presentation of Financial Statements.” Issued in December 2014. This amendment clarifies the application guidance
    of IAS 1 on materiality and aggregation, presentation of subtotals, structure of the financial statements and disclosure of
    accounting policies. The amendments are part of the IASB’s Initiative on Disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | 01/01/2016                                  





|Improvements
    to International Financial Reporting Standards (2014) issued in September 2014                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Mandatory
    for annualperiods beginning on
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------
|IFRS 5, "Non-current Assets Held for Sale and Discounted
    Operations.” This amendment clarifies that when an asset (or disposal group) is reclassified from being “held
    for sale” to “held for distribution” or vice versa, this is not an amendment of a plan of sale or a plan
    of distribution and should not be accounted for as such. This means that the asset (or disposal group) is not to be reinstated
    in the financial statements as if it had never been classified as “held for sale” or “held for distribution,”
    simply because disposal conditions have changed. The amendment also rectifies an omission in the standard explaining that
    guidance on changes in a sale plan has to be applied to an asset (or disposal group) that is no longer held for distribution,
    but is not reclassified as “held for sale.”                                                                                                         |  | 01/01/2016                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                             
|IFRS 7 "Financial Instruments: Disclosures"
    It establishes two amendments to IFRS 7: (1) Service contracts: if a Company transfers a financial asset to a third party
    under conditions that allow the assigner to dispose of the asset, IFRS 7 requires the disclosure of any type of continued
    involvement that the entity may still have on transferred assets. IFRS 7 provides guidance on what is understood as continued
    involvement within this context. The amendment is prospective with the option of applying it retrospectively. This also affects
    IFRS 1 to provide the same option to the first-time adopters of IFRS 1; (2) Interim Financial Statements: The amendment clarifies
    that the additional disclosure required by amendments to IFRS 7 “Offsetting Financial Assets and Financial Liabilities”
    is not specifically required for all interim periods, unless required by IAS 34. The amendment is retrospective. |  | 01/01/2016                                  



F-21


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
2      Basis of presentation for the consolidated financial statements (continued)



| | 2.4 | Accounting
                                         Pronouncements, continued
| | --- | -----------------------------------------------------------------------------



|Improvements
    to International Financial Reporting Standards (2014) issued in September 2014                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Mandatory
    for annualperiods beginning on
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------
|IAS 19, "Employee Benefits"– This amendment clarifies that in order to determine the discount rate for post-employment benefit obligations,
        the important aspect is the currency in which liabilities are denominated, not the country where they generate. The evaluation
        of whether a deep market exists for high-quality corporate bonds is based on corporate bonds in such currency, not in
        corporate bonds of a particular country. Likewise, where there is no deep market for high-quality corporate bonuses in
        such currency, government bonds in the related currency have to be used. Such amendment is retrospective but limited at
        the beginning of the first period presented. |  | 01/01/2016                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                             
|IAS 34, "Interim Financial Reporting"–
    This amendment clarifies the meaning of disclosure of information ‘elsewhere in the interim financial report’
    and amends IAS 34 to require the inclusion of a cross-reference from the interim financial statements to the location of the
    information. This amendment is retrospective.                                                                                                                                                                                                                                                                                                                                                                                          |  | 01/01/2016                                  



The adoption of the standards, amendments
and interpretations indicated above has no significant impact on the Company’s consolidated financial statements.



b)	Standards, interpretations and amendments
issued, not effective for the financial statements beginning on January 1, 2016, which the Company has not adopted early are as
follows:



|Standards and
    Interpretations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Mandatory
    for annualperiods beginning on
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------
|IFRS 9 “Financial Instruments”– Issued
    in July 2014. The IASB has issued the full version of IFRS 9, which supersedes the application guidance in IAS 39. This final
    version includes requirements on the classification and measurement of financial assets and financial liabilities and an expected
    credit losses model that replaces the incurred loss impairment model used today. The final hedging accounting part of IFRS
    9 was issued in November 2013. Early adoption is permitted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | 01/01/2018                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                             
|IFRS 15 “Revenue from Contracts with Customers”– Issued in May 2014. This standard establishes the principles that an entity shall apply to report useful information
    to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from
    a contract with a customer. For such purposes, the basic principle is that an entity will recognize revenue representing the
    transfer of goods or services to customers in an amount that reflects the consideration that the entity expects to receive
    in exchange for such goods or services. The application of this standard will replace IAS 11 Construction Contracts and IAS
    18 Revenue, as well as IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC
    18 Transfers of Assets from Customers and SIC 31 Revenue-Barter Transactions Involving Advertising Services. Early application
    is permitted. |  | 01/01/2018                                  



F-22


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
2      Basis of presentation for the consolidated financial statements (continued)



| | 2.4 | Accounting
                                         Pronouncements, continued
| | --- | -----------------------------------------------------------------------------



|Improvements
    to International Financial Reporting Standards (2014) issued in September 2014                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Mandatory
    for annualperiods beginning on
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------
|IFRS 16 “Leases” – issued in January 2016
    establishes the principle for the recognition, measurement, presentation and disclosure of leases. IFRS 16 supersedes the
    current IAS 17 and introduces a single model for accounting recognition for lessees and requires a lessee to recognize the
    assets and liabilities of all lease contracts over a term of more than 12 months, unless the underlying asset has a low value.
    The objective is ensuring that lessees and lessors provide relevant information that fairly represents transactions conducted.
    IFRS 16 is effective for annual periods beginning on or after January 1, 2019, early adoption is permitted for entities applying
    IFRS 15 or prior to the date of initial application of IFRS 16. |  | 01/01/2019                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                             
|IFRIC 22 “Foreign Currency Transactions and Advance
    Consideration.”  Issued in December 2016. This Interpretation is applied to a foreign currency transaction
    (o a portion thereof) when an entity recognizes a non-monetary asset or non-monetary liability arising from the payment or
    receipt of advance consideration before the entity recognizes the related asset, expense or income (or related part thereof).
    The interpretation provides guidance for when an entity mas a single payment/receipt, as well as for situations where multiple
    payments/receipts are made. It is intended to reduce the diversity in the practice.                                                                                                                        |  | 01/01/2018                                  



|Amendments
    and improvements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Mandatory
    for annualperiods beginning on
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------
|Amendment to IAS 7 “Statement of Cash Flows.”– Issued in February 2016. This amendment introduces additional disclosures allowing users of financial statements
    to assess changes in obligations from financing activities.                                                                                                                                                                                                                                                                                                      |  | 01/01/2017                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                             
|Amendment to IAS 12 “Income Taxes.”-
    Issued in February 2016. This amendment clarifies how to account for deferred tax assets related to debt securities measured
    at fair value.                                                                                                                                                                                                                                                                                                                                             |  | 01/01/2017                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                             
|Amendment to IFRS 15 “Revenue from Contracts with Customers”
    issued in April 2016. This amendment provides clarification for the guidance for the identification of performance obligations
    in contracts with customers, the accounting for intellectual property license and the assessment of principal versus agent
    (gross presentation vs. net presentation of revenue). It includes new and amended illustrative examples, as well as practical
    examples related to the transition to the new revenue standard. |  | 01/01/2018                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                             
|Amendment to IFRS 12 “Disclosure of Interest in Other
    Entities.” Issued in December 2016.  This amendment clarifies the scope of this standard. These amendments
    must be applied retrospectively to annual periods beginning on or after January 1, 2017.                                                                                                                                                                                                                                                                    |  | 01/01/2017                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                             
|Amendment to IAS 28 “Investments in Associates and Joint
    Ventures” related to the measurement of the associate or joint venture at fair value. Issued in December 2016.                                                                                                                                                                                                                                                                                                                                                          |  | 01/01/2018                                  



As of December 31, 2016, the company is in the process of evaluating
the impact of adopting the IFRS 9, IFRS 15 and IFRS 16. These standards will not be early adopted. For the rest of the standards
mentioned in the table above, the Company does not expect a material impact on the consolidated financial statements upon initial
application.



F-23


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
2      Basis of presentation for the consolidated financial statements (continued)



| | 2.5 | Basis of consolidation
| | --- | ----------------------



| | (a) | Subsidiaries
| | --- | ------------



Relate to all the entities on which Sociedad
Química y Minera de Chile S.A. has control when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those variable returns through its power over the entity. Subsidiaries apply the
same accounting policies of their Parent.



To account for the acquisition, the Company
uses the acquisition method. Under this method the acquisition cost is the fair value of assets delivered, equity securities issued
and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingencies assumed
in a business combination are measured initially at fair value at the acquisition date. For each business combination, the Company
will measure non-controlling interest of the acquiree either at fair value or as proportional share of net identifiable assets
of the acquiree.



Companies included in consolidation:



|           |  |                                                      |  |                  |  |                     |  | Ownership
    interest |        
|---------- |  | ---------------------------------------------------- |  | ---------------- |  | ------------------- |  | ---------------------- | -------
|TAX ID No. |  | Foreign subsidiaries                                 |  | Country oforigin |  | Functional currency |  |                        |        
|           |  |                                                      |  |                  |  |                     |  | Direct                 |        
|Foreign    |  | Nitratos Naturais Do Chile Ltda.                     |  | Brazil           |  | US$                 |  |                        | 0.0000 
|Foreign    |  | Nitrate Corporation Of Chile Ltd.                    |  | United Kingdom   |  | US$                 |  |                        | 0.0000 
|Foreign    |  | SQM North America Corp.                              |  | USA              |  | US$                 |  |                        | 40.0000
|Foreign    |  | SQM Europe N.V.                                      |  | Belgium          |  | US$                 |  |                        | 0.5800 
|Foreign    |  | Soquimich S.R.L. Argentina                           |  | Argentina        |  | US$                 |  |                        | 0.0000 
|Foreign    |  | Soquimich European Holding B.V.                      |  | Netherlands      |  | US$                 |  |                        | 0.0000 
|Foreign    |  | SQM Corporation N.V.                                 |  | Netherlands      |  | US$                 |  |                        | 0.0002 
|Foreign    |  | SQI Corporation N.V.                                 |  | Netherlands      |  | US$                 |  |                        | 0.0159 
|Foreign    |  | SQM Comercial De México S.A. de C.V.                 |  | Mexico           |  | US$                 |  |                        | 0.0100 
|Foreign    |  | North American Trading Company                       |  | USA              |  | US$                 |  |                        | 0.0000 
|Foreign    |  | Administración y Servicios Santiago
    S.A. de C.V. |  | Mexico           |  | US$                 |  |                        | 0.0000 
|Foreign    |  | SQM Peru S.A.                                        |  | Peru             |  | US$                 |  |                        | 0.9800 
|Foreign    |  | SQM Ecuador S.A.                                     |  | Ecuador          |  | US$                 |  |                        | 0.0040 
|Foreign    |  | SQM Nitratos Mexico S.A. de C.V.                     |  | Mexico           |  | US$                 |  |                        | 0.0000 
|Foreign    |  | SQMC Holding Corporation L.L.P.                      |  | USA.             |  | US$                 |  |                        | 0.1000 
|Foreign    |  | SQM Investment Corporation N.V.                      |  | Netherlands      |  | US$                 |  |                        | 1.0000 
|Foreign    |  | SQM Brasil Limitada                                  |  | Brazil           |  | US$                 |  |                        | 1.0900 
|Foreign    |  | SQM France S.A.                                      |  | France           |  | US$                 |  |                        | 0.0000 
|Foreign    |  | SQM Japan Co. Ltd.                                   |  | Japan            |  | US$                 |  |                        | 0.5376 
|Foreign    |  | Royal Seed Trading Corporation A.V.V.                |  | Aruba            |  | US$                 |  |                        | 1.6700 
|Foreign    |  | SQM Oceania Pty Limited                              |  | Australia        |  | US$                 |  |                        | 0.0000 



F-24


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
2      Basis of presentation for the consolidated financial statements (continued)



| | 2.5 | Basis of
                                         consolidation, continued
| | --- | --------------------------------------------------------------------------



|           |  |                                                 |  |                  |  |                     |  | Ownership interest |        
|---------- |  | ----------------------------------------------- |  | ---------------- |  | ------------------- |  | ------------------ | -------
|TAX ID No. |  | Foreign subsidiaries                            |  | Country oforigin |  | Functional currency |  |                    |        
|           |  |                                                 |  |                  |  |                     |  | Direct             |        
|Foreign    |  | Rs Agro-Chemical Trading Corporation
    A.V.V. |  | Aruba            |  | US$                 |  |                    | 98.3333
|Foreign    |  | SQM Indonesia S.A.                              |  | Indonesia        |  | US$                 |  |                    | 0.0000 
|Foreign    |  | SQM Virginia L.L.C.                             |  | USA              |  | US$                 |  |                    | 0.0000 
|Foreign    |  | SQM Italia SRL                                  |  | Italy            |  | US$                 |  |                    | 0.0000 
|Foreign    |  | Comercial Caimán Internacional S.A.             |  | Panama           |  | US$                 |  |                    | 0.0000 
|Foreign    |  | SQM Africa Pty.                                 |  | South Africa     |  | US$                 |  |                    | 0.0000 
|Foreign    |  | SQM Lithium Specialties LLC                     |  | USA              |  | US$                 |  |                    | 0.0000 
|Foreign    |  | SQM Iberian S.A.                                |  | Spain            |  | US$                 |  |                    | 0.0000 
|Foreign    |  | SQM Agro India Pvt. Ltd.                        |  | India            |  | US$                 |  |                    | 0.0000 
|Foreign    |  | SQM Beijing Commercial Co. Ltd.                 |  | China            |  | US$                 |  |                    | 0.0000 
|Foreign    |  | SQM Thailand Limited                            |  | Thailand         |  | US$                 |  |                    | 0.0000 
|Foreign    |  | SQM Vitas Spain                                 |  | Spain            |  | Euro                |  |                    | 0.0000 



|             |  |                                                                   |  |                    |  |                     |  | Ownership interest |         
|------------ |  | ----------------------------------------------------------------- |  | ------------------ |  | ------------------- |  | ------------------ | --------
|TAX ID No.   |  | Domestic subsidiaries                                             |  | Country  of
origin |  | Functional currency |  |                    |         
|             |  |                                                                   |  |                    |  |                     |  | Direct             |         
|96.801.610-5 |  | Comercial Hydro S.A.                                              |  | Chile              |  | US$                 |  |                    | 0.0000  
|96.651.060-9 |  | SQM Potasio S.A.                                                  |  | Chile              |  | US$                 |  |                    | 99.9999 
|96.592.190-7 |  | SQM Nitratos S.A.                                                 |  | Chile              |  | US$                 |  |                    | 99.9999 
|96.592.180-K |  | Ajay SQM Chile S.A.                                               |  | Chile              |  | US$                 |  |                    | 51.0000 
|86.630.200-6 |  | SQMC Internacional  Ltda.                                         |  | Chile              |  | Ch$                 |  |                    | 0.0000  
|79.947.100-0 |  | SQM Industrial S.A.                                               |  | Chile              |  | US$                 |  |                    | 99.0470 
|79.906.120-1 |  | Isapre Norte Grande Ltda.                                         |  | Chile              |  | Ch$                 |  |                    | 1.0000  
|79.876.080-7 |  | Almacenes y Depósitos Ltda.                                       |  | Chile              |  | Ch$                 |  |                    | 1.0000  
|79.770.780-5 |  | Servicios Integrales de Tránsitos y
    Transferencias S.A.       |  | Chile              |  | US$                 |  |                    | 0.0003  
|79.768.170-9 |  | Soquimich Comercial S.A.                                          |  | Chile              |  | US$                 |  |                    | 0.0000  
|79.626.800-K |  | SQM Salar S.A.                                                    |  | Chile              |  | US$                 |  |                    | 18.1800 
|78.053.910-0 |  | Proinsa Ltda.                                                     |  | Chile              |  | Ch$                 |  |                    | 0.0000  
|76.534.490-5 |  | Sociedad Prestadora de Servicios de Salud
    Cruz del Norte S.A. |  | Chile              |  | Ch$                 |  |                    | 0.0000  
|76.425.380-9 |  | Exploraciones Mineras S.A.                                        |  | Chile              |  | US$                 |  |                    | 0.2691  
|76.064.419-6 |  | Comercial Agrorama Ltda. (a)                                      |  | Chile              |  | Ch$                 |  |                    | 0.0000  
|76.145.229-0 |  | Agrorama S.A.                                                     |  | Chile              |  | Ch$                 |  |                    | 0.0000  
|76.359.919-1 |  | Orcoma Estudios SPA                                               |  | Chile              |  | US$                 |  |                    | 51.0000 
|76.360.575-2 |  | Orcoma SPA                                                        |  | Chile              |  | US$                 |  |                    | 100.0000



| | (a) | The Company consolidated
                                         Comercial Agrorama Ltda. as it has the control of this company’s relevant activities.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



Subsidiaries are consolidated using the line-by-line
method, adding the items that represent assets, liabilities, revenues, and expenses of similar content, and eliminating those
related to intragroup transactions.



F-25


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 2      Basis
of presentation for the consolidated financial statements (continued)



| | 2.5 | Basis of consolidation, continued
| | --- | ---------------------------------



Profit or loss of subsidiaries acquired or
disposed during the year are included in profit or loss accounts consolidated from the date control is transferred to the Group,
or up to the date control is lost, as applicable.



Non-controlling interest represents the equity
of a subsidiary not directly or indirectly attributable to the Parent.



Note
3      Significant accounting policies



| | 3.1 | Classification of balances as current
                                         and non-current
| | --- | ----------------------------------------------------------------------------------------------



In the attached consolidated statement of
financial position, balances are classified in consideration of their remaining recovery (maturity) dates; i.e., those maturing
on a date equal to or lower than twelve months are classified as current and those with maturity dates exceeding the aforementioned
period are classified as non-current.



The exception to the foregoing relates to
deferred taxes, which are classified as non-current, regardless of the maturity they have.



| | 3.2 | Functional and presentation currency
| | --- | ------------------------------------



The Company’s consolidated financial
statements are presented in United States dollars (“U.S. dollars” or “US$”), which is the Company’s
functional and presentation currency and is the currency of the main economic environment in which it operates.



Consequently, the term foreign currency is
defined as any currency other than the U.S. dollar.



The consolidated financial statements are
presented in thousands of United States dollars without decimals.



| | 3.3 | Foreign currency translation
| | --- | ----------------------------



| | (a) | Group
                                         entities:
| | --- | --------------------------------------------------------



The revenue, expenses, assets and liabilities
of all entities that have a functional currency other than the presentation currency are converted to the presentation currency
as follows:



| | - | Assets and liabilities
                                         are converted at the closing exchange rate prevailing on the reporting date.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



| | - | Revenues and expenses
                                         of each profit or loss account are converted at monthly average exchange rates.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | - | All resulting foreign
                                         currency translation gains and losses are recognized as a separate component in translation
                                         reserves.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In consolidation, foreign currency differences
arising from the translation of a net investment in foreign entities are recorded in equity (other reserves). At the date of disposal,
such foreign currency translation differences are recognized in the statement of income as part of the gain or loss from the sale.



F-26


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.3 | Foreign
                                         currency translation, continued
| | --- | --------------------------------------------------------------------------------



The main exchange rates used to translate
monetary assets and liabilities, expressed in foreign currency at the end of each period in respect to U.S. dollars, are as follows:



|                   |  | 12/31/2016 |        |  | 12/31/2015 | 
|------------------ |  | ---------- | ------ |  | ---------- | 
|                   |  | US$        |        |  | US$        | 
|                   |  |            |        |  |            | 
|Brazilian real     |  |            | 3.25   |  |            | 
|New Peruvian sol   |  |            | 3.35   |  |            | 
|Argentine peso     |  |            | 15.84  |  |            | 
|Japanese yen       |  |            | 116.83 |  |            | 
|Euro               |  |            | 0.95   |  |            | 
|Mexican peso       |  |            | 20.63  |  |            | 
|Australian dollar  |  |            | 0.72   |  |            | 
|Pound Sterling     |  |            | 0.81   |  |            | 
|South African rand |  |            | 13.70  |  |            | 
|Ecuadorian dollar  |  |            | 1.00   |  |            | 
|Chilean peso       |  |            | 669.47 |  |            | 
|UF                 |  |            | 39.36  |  |            | 



| | (b) | Transactions
                                         and balances
| | --- | ------------------------------------------------------------------



Non-monetary transactions in currencies other
than the functional currency (U.S. dollar) foreign currencies are translated to the respective functional currencies of Group
entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies
at the reporting date are retranslated to the functional currency at the exchange rate at that date. All differences are recorded
in the statement of income except for all monetary item that provide effective hedge for a net investment in a foreign operation.
These items are recognized in other comprehensive income on the disposal of the investment; at the time they are recognized in
the statement of income. Charges and credits attributable to foreign currency translation differences on those hedge monetary
item are also recognized in other comprehensive income.



Non-monetary assets and liabilities that are
measured at historical cost in a foreign currency are retranslated to the functional currency at the historical exchange rate
of the transaction. Non-monetary items that are measured based on fair value in a foreign currency are translated using the exchange
rate at the date on which the fair value is determined.



F-27


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 3      Significant
accounting policies (continued)



| | 3.4 | Subsidiaries
| | --- | ------------



SQM S.A. establishes, as basis, the control
exercised in subsidiaries, to determine their share in the consolidated financial statements. Control consists of the Company’s
ability to exercise power in the subsidiary, exposure, or right, to variable performance from its share in the investee and the
ability to use its power on the investee to have an influence on the amount of the investor’s performance.



The Company prepares the consolidated financial
statements using consistent accounting policies for the entire Group, the consolidation of a subsidiary commences when the Company
has control over the subsidiary and stops when control ceases.



| | 3.5 | Consolidated statement
                                         of cash flows
| | --- | -----------------------------------------------------------------------------



Cash equivalents correspond to highly-liquid
short-term investments that are easily convertible in known amounts of cash. They are subject to insignificant risk of changes
in their value and mature in less than three months from the date of acquisition of the instrument.



For purposes of the statement of cash flows,
cash and cash equivalents comprise cash and cash equivalents as defined above.



The statement of cash flows includes movements
in cash performed during the year, determined using the direct method.



| | 3.6 | Financial assets
| | --- | ----------------



Management determines the classification of
its financial assets at the time of initial recognition, on the basis of the business model for the management of financial assets
and the characteristics of contractual cash flows from the financial assets. In accordance with IAS 39, financial assets are measured
initially at fair value plus transaction costs that may have been incurred and are directly attributable to the acquisition of
the financial asset. Subsequently, financial assets are measured at amortized cost or fair value.



The Company assesses, at each reporting date,
whether there is objective evidence that an asset or group of assets is impaired. An asset or group of financial assets is impaired
if and only if there is evidence of impairment as a result of one or more events occurring after the initial recognition of the
asset or group of assets. For the recognition of impairment, the loss event has to have an impact on the estimate of future cash
flows from the asset or groups of financial assets.



F-28


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 3      Significant
accounting policies (continued)



| | 3.7 | Financial liabilities
| | --- | ---------------------



Management determines the classification of
its financial liabilities at the time of initial recognition. As established in IAS 39, financial liabilities at the time of initial
recognition are measured at fair value, less transaction costs that may have been incurred and are directly attributable to the
issue of the financial liability. Subsequently, these are measured at amortized cost using the effective interest method. For
financial liabilities that have been initially recognized at fair value through profit or loss, these will be measured subsequently
at fair value.



| | 3.8 | Financial instruments at fair value
                                         through profit or loss
| | --- | ---------------------------------------------------------------------------------------------------



Management will irrevocably determine, at
the time of initial recognition, the designation of a financial instrument at fair value through profit or loss. By doing so,
this eliminates and/or significantly reduces measurement or recognition inconsistency that would otherwise have arisen from the
measurement of assets or liabilities or from the recognition of gains and losses from them on different bases.



| | 3.9 | Financial instrument offsetting
| | --- | -------------------------------



The Company offsets an asset and liability
if and only if it presently has a legally enforceable right of setting off the amounts recognized and has the intent of settling
for the net amount of realizing the asset and settling the liability simultaneously.



| | 3.10 | Reclassification of financial instruments
| | ---- | -----------------------------------------



At the time when the Company changes its business
model for managing financial assets, it will reclassify the financial assets affected by the new business model.



For financial liabilities these could not
be reclassified.



| | 3.11 | Derivative and hedging financial
                                         instruments
| | ---- | -------------------------------------------------------------------------------------



Derivatives are recognized initially at fair
value as of the date on which the derivatives contract is signed and, subsequently, are assessed at fair value. The method for
recognizing the resulting gain or loss depends on whether the derivative has been designated as an accounting hedge instrument
and, if so, it depends on the type of hedging, which may be as follows:



| | (a) | Fair value hedge of assets and liabilities
                                         recognized (fair value hedges);
| | --- | -------------------------------------------------------------------------------------------------------------------

| | (b) | Hedging of a single risk associated
                                         with an asset or liability recognized or a highly probable forecast transaction (cash
                                         flow hedge).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



At the beginning of the transaction, the Company
documents the relationship existing between hedging instruments and those items hedged, as well as their objectives for risk management
purposes and the strategy to conduct different hedging operations.



F-29


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.11 | Derivative
                                         and hedging financial instruments, continued
| | ---- | ------------------------------------------------------------------------------------------------



The Company also documents its evaluation
both at the beginning and at the end of each period if derivatives used in hedging transactions are highly effective to offset
changes in the fair value or in cash flows of hedged items.



The fair value of derivative instruments used
for hedging purposes is shown in Note 10.3 (hedging assets and liabilities). Changes in the cash flow hedge reserve are classified
as a non-current asset or liability if the remaining expiration period of the hedged item is higher than 12 months, and as a current
asset or liability if the remaining expiration period of the entry is lower than 12 months.



Derivatives that are not designated or do
not qualify as hedging derivatives are classified as current assets or liabilities, and changes in the fair value are directly
recognized through profit or loss.



| | (a) | Fair value
                                         hedge
| | --- | ---------------------------------------------------------



Changes in the fair value of derivatives that
are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair value of
the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the effective portion of
interest rate swaps hedging fixed rate borrowings is recognised in profit or loss within finance costs, together with changes
in the fair value of the hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective
portion is recognised in profit or loss within other income or other expenses. If the hedge no longer meets the criteria for hedge
accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised
to profit or loss over the period to maturity using a recalculated effective interest rate.



| | (b) | Cash flow
                                         hedges
| | --- | ---------------------------------------------------------



The effective portion of gains or losses from
the hedge instrument is initially recognized with a debit or credit to other comprehensive income, whereas any ineffective portion
is immediately recognized with a debit or credit to profit or loss, as applicable.



Amounts taken to equity are transferred to
profit or loss when the hedged transaction affects profit or loss, as when the hedged interest income or expense is recognized
when a projected sale occurs. When the hedged entry is the cost of a non-financial asset or liability, amounts taken to other
reserves are transferred to the initial carrying value of the non-financial asset or liability.



Should the expected firm transaction or commitment
no longer be expected to occur, the amounts previously recognized in equity are transferred to profit or loss. If a hedge instrument
expires, is sold, finished, or exercised without any replacement, or if a rollover is performed or if its designation as hedging
is revoked, the amounts previously recognized in other reserves are maintained in equity until the expected firm transaction or
commitment occurs.



F-30


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.12 | Available for sale financial assets
| | ---- | -----------------------------------



Available for sale financial assets are non-derivative
financial assets, which have been designated as available for sale and are not classified in any of the previous categories of
financial instruments. Available for sale financial instruments are initially recognized at fair value plus any directly attributable
transaction costs.

Subsequent to initial recognition, they are
recognized at fair value and changes other than impairment losses are recognized in other comprehensive income and presented in
equity in the fair value reserve. If an investment is derecognized, the accumulated gain or loss is reclassified to profit or
loss.



| | 3.13 | Derecognition of financial instruments
| | ---- | --------------------------------------



In accordance with IAS 39, the Company derecognizes
a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred; and the control of the financial assets has not been retained.



The Company derecognizes a financial liability
when its contractual obligations or a part of these are discharged, paid to the creditor or legally extinguished.



| | 3.14 | Derivative financial instruments
                                         not considered as hedge
| | ---- | -------------------------------------------------------------------------------------------------



The Company maintains derivative financial
instruments to hedge its exposure to foreign currencies. Derivative financial instruments are recognized initially at fair value;
attributable transact	ion costs are recognized when incurred. Subsequent to initial recognition, changes in fair value of such
derivatives are recognized in profit or loss as part of gains and losses.



The Company permanently assesses the existence
of embedded derivatives, both in its contracts and financial instruments. As of December 31, 2016 and December 31, 2015, there
are no embedded derivatives.



| | 3.15 | Fair value initial measurements
| | ---- | -------------------------------



From the initial recognition, the Company
measures its assets and liabilities at fair value plus or minus transaction costs incurred that are directly attributable to the
acquisition of a financial asset or issuance of a financial liability.



F-31


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.16 | Leases
| | ---- | ------



| | (a) | Lease
                                         - Finance lease
| | --- | --------------------------------------------------------------



Leases are classified as finance leases when
the Company holds substantially all the risks and rewards derived from the ownership of the asset. Finance leases are capitalized
at the beginning of the lease, at the lower of the fair value of the leased asset or the present value of minimum lease payments.



Each lease payment is distributed between
the liability and the interest expenses to obtain ongoing interest on the pending balance of debt. The respective lease obligations,
net of interest expense, are included in other non-current liabilities. The interest element of finance cost is debited in the
consolidated statement of income during the lease period so that a regular ongoing interest rate is obtained on the remaining
balance of the liability for each year.



| | (b) | Lease
                                         – Operating lease
| | --- | ----------------------------------------------------------------



Leases in which the lessor maintains a significant
part of the risks and rewards derived from the ownership are classified as operating leases. Operating lease payments (net of
any incentive received from the lessor) are debited to the statement of income or capitalized (as applicable) on a straight-line
basis over the lease period.



| | 3.17 | Deferred acquisition costs from insurance
                                         contracts
| | ---- | --------------------------------------------------------------------------------------------



Acquisition costs from insurance contracts
are classified as prepayments and correspond to insurance contracts in force, recognized using the straight-line method and on
an accrual basis, and are recognized under other non-financial assets.



| | 3.18 | Trade and other receivables
| | ---- | ---------------------------



Trade and other receivables relate to non-derivative
financial assets with fixed and determinable payments and are not quoted in any active market. These arise from sales operations
involving the products and/or services, of which the Company commercializes directly to its customers.



These assets are initially recognized at their
fair value and subsequently at amortized cost according to the effective interest rate method, less a provision for impairment
loss. An allowance for impairment loss is established for trade receivables when there is objective evidence that the Company
will not be able to collect all the amounts which are owed to it, according to the original terms of receivables.



Implicit interest in installment sales is
recognized as interest income when interest is accrued over the term of the operation.



F-32


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.19 | Inventory measurement
| | ---- | ---------------------



The Company states inventories at the lower
of cost and net realizable value. The cost price of finished products and products in progress includes the direct cost of materials
and, when applicable, labor costs, indirect costs incurred to transform raw materials into finished products, and general expenses
incurred in carrying inventories to their current location and conditions. The method used to determine the cost of inventories
is weighted average cost.



Commercial discounts, rebates obtained, and
other similar entries are deducted in the determination of the acquisition price.



The net realizable value represents the estimate
of the sales price, less all finishing estimated costs and costs which will be incurred in commercialization, sales, and distribution
processes.



The Company conducts an evaluation of the
net realizable value of inventories at the end of each year, recording an estimate with a charge to income when these are overstated.
When a situation arises whereby the circumstances, which previously caused the rebate to cease to exist, or when there is clear
evidence of an increase in the net realizable value due to a change in the economic circumstances or prices of main raw materials,
the estimate made previously is modified.



The valuation of obsolete, impaired or slow-moving
products relates to their net estimated, net realizable value.



Provisions on the Company's inventories have
been made based on a technical study which covers the different variables which affect products in stock (density and humidity,
among others).



Raw materials, supplies and materials are
recorded at the lower of acquisition cost or market value. Acquisition cost is calculated according to the average price method.



F-33


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.20 | Investments in associates and joint
                                         ventures
| | ---- | -------------------------------------------------------------------------------------



Interests in companies on which joint control
is exercised (joint venture) or where an entity has significant influence (associates) are recognized using the equity method
of accounting. Significant influence is presumed to exist when interest greater than 20% is held in the capital of an investee.



Under this method, the investment is recognized
in the statement of financial position at cost plus changes, subsequent to the acquisition, and considering the proportional share
in the equity of the associate. For such purposes, the interest percentage in the ownership of the associate is used. The associated
goodwill acquired is included in the carrying amount of the investee and is not amortized. The debit or credit to profit or loss
reflects the proportional share in the profit or loss of the associate.



Unrealized gains for transactions with affiliates
or associates are eliminated considering the interest percentage the Company has on such entities. Unrealized losses are also
eliminated, except if the transaction provides evidence of impairment loss of the transferred asset.



Changes in the equity of associates are recognized
considering the proportional amounts with a charge or credit to “Other reserves” and classified considering their
origin.



Reporting dates of the associate, the Company
and related policies are similar for equivalent transactions and events under similar circumstances.



In the event that the significant influence
is lost or the investment is sold or is held as available for sale, the equity method is discontinued, suspending the recognition
of proportional share of profit or loss.



If the resulting amount according to the equity
method is negative, the share of profit or loss is reflected at zero value in the consolidated financial statements, unless a
commitment exists by the Company to reinstate the Company’s equity position, in which case the related provision for risks
and expenses is recorded.



Dividends received by these companies are
recorded by reducing the equity value, and the proportional share of profit or loss recognized in conformity with the share of
equity are included in the consolidated profit or loss accounts in the caption “Equity share of profit (loss) of associates
and joint ventures that are accounted for using the equity method of accounting”.



| | 3.21 | Transactions with non-controlling
                                         interests
| | ---- | ------------------------------------------------------------------------------------



Non-controlling interests are recorded in
the consolidated statement of financial position within equity separate from equity attributable to the owners of the Parent.



| | 3.22 | Related party transactions
| | ---- | --------------------------



Transactions between the Company and its subsidiaries
are part of the Company’s normal operations within its scope of business activities. Conditions for such transactions are
those normally effective for those types of operations with regard to terms and market prices. Also, these transactions have been
eliminated in consolidation. Expiration conditions for each case vary according to the originating transaction.



F-34


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 3      Significant
accounting policies (continued)



| | 3.23 | Property, plant and equipment
| | ---- | -----------------------------



Tangible property, plant and equipment assets
are stated at acquisition cost, net of the related accumulated depreciation, amortization and impairment losses that they might
have experienced.



In addition to the price paid for the acquisition
of tangible property, plant and equipment, the Company has considered the following concepts as part of the acquisition cost,
as applicable:



1.        Accrued
interest expenses during the construction period which are directly attributable to the acquisition, construction or production
of qualifying assets, which are those that require a substantial period prior to being ready for use. The interest rate used is
that related to the project’s specific financing or, should this not exist, the average financing rate of the investor company.



2.         The
future costs that the Company will have to experience, related to the closure of its facilities at the end of their useful life,
are included at the present value of disbursements expected to be required to settle the obligation.



Construction-in-progress is transferred to
property, plant and equipment in operation once the assets are available for use and the related depreciation and amortization
begins on that date.



Extension, modernization or improvement costs
that represent an increase in productivity, ability or efficiency or an extension of the useful lives of property, plant and equipment
are capitalized as a higher cost of the related assets. All the remaining maintenance, preservation and repair expenses are charged
to expense as incurred.



The replacement of full assets, which increase
the asset’s useful life or its economic capacity, are recorded as a higher value of property, plant and equipment with the
related derecognition of replaced or renewed elements.



Gains or losses which are generated from the
sale or disposal of property, plant and equipment are recognized as income (or loss) in the period, and calculated as the difference
between the asset’s sales value and its net carrying value.



Costs derived from daily maintenance of property,
plant and equipment are recognized when incurred.



F-35


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.24 | Depreciation of property, plant and
                                         equipment
| | ---- | --------------------------------------------------------------------------------------



Property, plant and equipment are depreciated
through the straight-line distribution of cost over the estimated technical useful life of the asset which is the period in which
the Company expects to use the asset. When components of one item of property, plant and equipment have different useful lives,
they are recorded as separate assets. Useful lives are reviewed on an annual basis.



In the case of mobile equipment depreciation
is performed depending on the hours of operation



The useful lives used for the depreciation
and amortization of assets included in property, plant and equipment in years are presented below.



|Types of property, plant and equipment |  | Minimum life or rate |   |  | Maximum life or rate | 
|-------------------------------------- |  | -------------------- | - |  | -------------------- | 
|Buildings                              |  |                      | 3 |  |                      | 
|Machinery                              |  |                      | 2 |  |                      | 
|Transport equipment                    |  |                      | 3 |  |                      | 
|Furniture and fixtures                 |  |                      | 2 |  |                      | 
|Office equipment                       |  |                      | 2 |  |                      | 
|Production plants                      |  |                      | 1 |  |                      | 
|Mining assets                          |  |                      | 3 |  |                      | 
|Other property, plant and equipment    |  |                      | 1 |  |                      | 



| | 3.25 | Goodwill
| | ---- | --------



Goodwill acquired represents the excess in
acquisition cost on the fair value of the Company's ownership of the net identifiable assets of the subsidiary on the acquisition
date. Goodwill acquired related to the acquisition of subsidiaries is included in goodwill, which is subject to impairment tests
annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is stated at cost less
accumulated impairment losses. Gains and losses related to the sale of an entity include the carrying value of goodwill related
to the entity sold.



This intangible asset is assigned to cash-generating
units with the purpose of testing impairment losses. It is allocated based on cash-generating units expected to obtain benefits
from the business combination from which the aforementioned goodwill acquired arose.



F-36


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.26 | Intangible assets other than goodwill
| | ---- | -------------------------------------



Intangible assets mainly relate to water rights,
rights of way for electric lines expenses and software license and development expenses.



| | (a) | Water
                                         rights
| | --- | -----------------------------------------------------



Water rights acquired by the Company relate
to water from natural sources and are recorded at acquisition cost. Given that these assets represent legal rights granted in
perpetuity to the Company, they are not amortized, but are subject to annual impairment tests.



| | (b) | Right
                                         of way for electric lines
| | --- | ------------------------------------------------------------------------



As required for the operation of industrial
plants, the Company has paid rights of way in order to install wires for the different electric lines in third party land. These
rights are presented under intangible assets. Amounts paid are capitalized at the date of the agreement and charged to the statement
of income, according to the life of the right of way.



| | (c) | Computer
                                         software
| | --- | ----------------------------------------------------------



Licenses for IT programs acquired are capitalized
based on costs that have been incurred to acquire them and prepare them to use the specific program. These costs are amortized
over their estimated useful lives.



Expenses related to the development or maintenance
of IT programs are recognized as an expense as and when incurred. Costs directly related to the production of unique and identifiable
IT programs controlled by the Group, and which will probably generate economic benefits that are higher than costs during more
than a year, are recognized as intangible assets. Direct costs include expenses of employees that develop information technology
software and general expenses in accordance with corporate charges received.



The costs of development for IT programs recognized
as assets are amortized over their estimated useful lives.



| | (d) | Mining
                                         property and concession rights
| | --- | ------------------------------------------------------------------------------



The Company holds mining property and concession
rights from the Chilean Government. Property rights are usually obtained with no initial cost (other than the payment of mining
patents and minor recording expenses) and upon obtaining rights on these concessions, these are retained by the Company while
annual patents are paid. Such patents, which are paid annually, are recorded as prepaid assets and amortized over the following
twelve months. Amounts attributable to mining concessions acquired from third parties that are not from the Chilean Government
are recorded at acquisition cost within intangible assets.



No impairment of intangible assets exists
as of December 31, 2016 and December 31, 2015.



F-37


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.27 | Research and development expenses
| | ---- | ---------------------------------



Research and development expenses are charged
to profit or loss in the period in which the expenditure was incurred.



| | 3.28 | Prospecting expenses
| | ---- | --------------------



The Company has mining property and concession
rights from the Chilean Government and acquired from third parties other than the Chilean Government, destined to the exploitation
of caliche ore and saltpeter deposits and also the exploration of this type of deposits.



Upon obtaining these rights, the Company initially
records disbursements directly associated with the exploration and evaluation of deposits (associated with small deposits with
trading feasibility) as asset at cost. Such disbursements include the following concepts:



| | - | Disbursements for geological
                                         reconnaissance evaluation
| | - | -----------------------------------------------------------------------------------------------



| | - | Disbursements for drilling
| | - | --------------------------



| | - | Disbursements for drilling
                                         work and sampling
| | - | -------------------------------------------------------------------------------------



| | - | Disbursements for activities
                                         related to technical assessment and trading feasibility of drilling work
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | - | And any disbursement
                                         directly related to specific projects where its objective is finding mining resources.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



Subsequently, the Company distinguishes exploration
and evaluation projects according to the economic feasibility of the mineral extracted in the area or exploration, among those
that finally will deliver future benefits to the Company (profitable projects) and those projects for which it is not probable
that economic benefit will flow to the Company in the future (i.e., when the mine site has low ore grade and its exploitation
is not economically profitable).



If technical studies determine that the ore
grade is not economically suitable for exploitation, the asset is directly expensed. Otherwise, it is held in the caption “other
non-current assets”, reclassifying the portion related to the area to be exploited in the year in the caption inventories
and such amount is amortized as production cost on the basis of estimated tons to be extracted.



The technical reasons for this classification
correspond to the fact that this is an identifiable non-monetary asset that is owned to be used in the production of our processes
as a main raw material.



For this reason and because our disbursements
correspond to proven reserves with a trading feasibility and used as main raw material in our production processes, these are
presented as inventories that will be exploited within the commercial year and the remainder as development expenses for small
deposits and prospecting expenses in the caption “other non-current assets”.



F-38


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.29 | Impairment of non-financial assets
| | ---- | ----------------------------------



Assets subject to depreciation and amortization
are subject to impairment testing, provided that an event or change in the circumstances indicates that the amounts in the accounting
records may not be recoverable. An impairment loss is recognized for the excess of the book value of the asset over its recoverable
amount.



The recoverable amount of an asset is the
higher between the fair value of an asset or cash generating unit (“CGU”) less costs of sales and its value in use,
and is determined for an individual asset unless the asset does not generate any cash inflows that are clearly independent from
other assets or groups of assets.



When the carrying value of an asset exceeds
its recoverable amount, the asset is considered an impaired asset and is reduced to its net recoverable amount.



In evaluating value in use, estimated future
cash flows are discounted using a discount rate before taxes which reflects current market evaluation on the time value of money
and specific asset risks.



To determine the fair value less costs to
sell, an appropriate valuation model is used.



Impairment losses from continuing operations
are recognized with a debit to profit or loss in the categories of expenses associated with the impaired asset function, except
for properties reevaluated previously where the revaluation was taken to equity.



For assets other than acquired goodwill, an
annual evaluation is conducted of whether there are impairment loss indicators recognized previously that might have already decreased
or ceased to exist. The recoverable amount is estimated if such indicators exist. An impairment loss previously recognized is
reversed only if there have been changes in estimates used to determine the asset’s recoverable amount from the last time
in which an impairment loss was recognized. If this is the case, the carrying value of the asset is increased to its recoverable
amount. This increased amount cannot exceed the carrying value that would have been determined net of depreciation if an asset
impairment loss would have not been recognized in prior years. This reversal is recognized with a credit to profit or loss.



| | 3.30 | Minimum dividend
| | ---- | ----------------



As required by the Shareholders’ Corporations
Act, unless decided otherwise by the unanimous vote by the shareholders of subscribed and paid shares, a public company must distribute
dividends as agreed by the shareholders at the General Shareholders’ Meeting held each year with a minimum of 30% of its
profit, except when the Company records unabsorbed losses from prior years. However, the Company defines as policy the distribution
of 50% of its profit for the year, unless decided otherwise by the unanimous vote by the shareholders at the General Shareholders ́
meeting held each year.



F-39


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.31 | Earnings per share
| | ---- | ------------------



The basic earnings per share amounts are calculated
by dividing profit for the year attributable to ordinary owners of the parent by the weighted average number of ordinary shares
outstanding during the year.



The Company has not conducted any type of
operation of potential dilutive effect that implies the disclosure of diluted earnings per share.



| | 3.32 | Trade and other payables
| | ---- | ------------------------



Trade and other payables are measured at fair
value plus all costs associated with the transaction. Subsequently, these are carried at amortized cost using the effective interest
rate method.



| | 3.33 | Interest-bearing borrowings
| | ---- | ---------------------------



At initial recognition, interest-bearing borrowings
are measured at fair value net of transaction costs incurred. Subsequently, they are measured at amortized cost using the effective
interest rate method. Amortized cost is calculated considering any premium or discount from the acquisition and includes costs
of transactions which are an integral part of the effective interest rate.



These are recorded as non-current when their
expiration period exceeds twelve months and as current when the term is lower than such term. Interest expense is calculated in
the year in which they are accrued following a financial criterion.



| | 3.34 | Other provisions
| | ---- | ----------------



Provisions are recognized when:



| | - | The Company has a present
                                         obligation or constructive obligation as the result of a past event.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | - | It is more likely than
                                         not that certain resources must be used, including benefits, to settle the obligation.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | A reliable estimate
                                         can be made of the amount of the obligation.
| | - | ---------------------------------------------------------------------------------------------------------



In the event that the provision or a portion
of it is reimbursed, the reimbursement is recognized as a separate asset solely if there is certainty of income.



In the consolidated statement of income, the
expense for any provision is presented net of any reimbursement.



Should the effect of the time value of money
be significant, provisions are discounted using a discount rate before tax that reflects the liability’s specific risks.
When a discount rate is used, the increase in the provision over time is recognized as a finance cost.



F-40


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.34 | Other
                                         provisions, continued
| | ---- | --------------------------------------------------------------------



The Company’s policy is maintaining
provisions to cover risks and expenses based on a better estimate to deal with possible or certain and quantifiable responsibilities
from current litigation, compensations or obligations, pending expenses for which the amount has not yet been determined, collaterals
and other similar guarantees for which the Company is responsible. These are recorded at the time the responsibility or the obligation
that determines the compensation or payment is generated.



| | 3.35 | Obligations related to employee termination
                                         benefits and pension commitments
| | ---- | ---------------------------------------------------------------------------------------------------------------------



Obligations with the Company’s employees
are in accordance with that established in the collective bargaining agreements in force, formalized through collective employment
agreements and individual employment contracts, except for the United States that is regulated in accordance with employment plans
in force up to 2002. (See more details in Note 15.4)



These obligations are valued using actuarial
calculations, according to the projected unit credit method which considers such assumptions as the mortality rate, employee turnover,
interest rates, retirement dates, effects related to increases in employees’ salaries, as well as the effects on variations
in services derived from variations in the inflation rate. This, considering criteria in force contained in the revised IAS 19.



Actuarial gains and losses that may be generated
by variations in defined, pre-established obligations are directly recorded in other comprehensive income.



Actuarial losses and gains have their origin
in departures between the estimate and the actual behavior of actuarial assumptions or in the reformulation of established actuarial
assumptions.



The discount rate used by the Company for
calculating the obligation was 4.52% and 4.89% for the periods ended December 31, 2016 and December 31, 2015, respectively.



The Company’s subsidiary SQM North America
has established pension plans for its retired employees that are calculated by measuring the projected obligation using a net
salary progressive rate net of adjustments for inflation, mortality and turnover assumptions, deducting the resulting amounts
at present value using a 4.5% interest rate for 2016 and 5.5% for 2015. The net balance of this obligation is presented under
the non-current provisions for employee benefits (refer to Note 15.4)



| | 3.36 | Compensation plans
| | ---- | ------------------



Compensation plans implemented through benefits
in share-based payments settled in cash, which have been provided, are recognized in the financial statements at their fair value,
in accordance with International Financial Reporting Standards No. 2 "Share-based Payments.” Changes in the fair value
of options granted are recognized with a charge to payroll on a straight-line basis during the period between the date on which
these options are granted and the payment date (see Note 16).



F-41


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.37 | Revenue recognition
| | ---- | -------------------



Revenue includes the fair value of considerations
received or receivable for the sale of goods and services during performance of the Company's activities. Revenue is presented
net of value added tax, estimated returns, rebates and discounts and after the elimination of sales among subsidiaries.



Revenue is recognized when its amount can
be stated reliably. It is possible that the future economic rewards will flow to the entity and the specific conditions for each
type of activity related revenue are complied with, as follows:



| | (a) | Sale of
                                         goods
| | --- | ------------------------------------------------------



The sale of goods is recognized when the Company
has delivered products to the customer, and there is no obligation pending compliance that could affect the acceptance of products
by the customer. The delivery does not occur until products have been shipped to the customer or confirmed as received by customers.
When the related risks of obsolescence and loss have been transferred to the customer and the customer has accepted products in
accordance with the conditions established in the sale, when the acceptance period has ended, or when there is objective evidence
that those criteria required for acceptance have been met.



Sales are recognized in consideration of the
price set in the sales agreement, net of volume discounts and estimated returns at the date of the sale. Volume discounts are
evaluated in consideration of annual foreseen purchases and in accordance with the criteria defined in agreements.



| | (b) | Sale of
                                         services
| | --- | ---------------------------------------------------------



Revenue associated with the rendering of services
is recognized considering the degree of completion of the service as of the date of presentation of the consolidated classified
statement of financial position, provided that the result from the transaction can be estimated reliably.



| | (c) | Interest
                                         income
| | --- | --------------------------------------------------------



Interest income is recognized when interest
is accrued in consideration of the principal pending payment using the effective interest rate method.



| | (d) | Income
                                         from dividends
| | --- | --------------------------------------------------------------



Income from dividends is recognized when the
right to receive the payment is established.



| | 3.38 | Finance income and finance costs
| | ---- | --------------------------------



Finance income is mainly composed of interest
income in financial instruments such as term deposits and mutual fund deposits. Interest income is recognized in profit or loss
at amortized cost, using the effective interest rate method.



Finance costs are mainly composed of interest
on bank borrowing expenses, interest on bonds issued and interest capitalized for borrowing costs for the acquisition, construction
or production or qualifying assets.



Borrowing costs and bonds issued are recognized
in profit or loss using the effective interest rate method.



F-42


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.38 | Finance
                                         income and finance costs, continued
| | ---- | ------------------------------------------------------------------------------------



For finance costs accrued during the construction
period that are directly attributable to the acquisition, construction or production of qualifying assets, the effective interest
rate related to the project’s specific financing is used. If none exist, the average financing rate of the subsidiary that
makes the investment is utilized. Borrowing and financing costs that are directly attributable to the acquisition, construction
or production of an asset are capitalized as part of that asset’s cost.



| | 3.39 | Income tax and
                                         deferred taxes
| | ---- | ----------------------------------------------------------------------



Corporate income tax for the year is determined
as the sum of current taxes from the different consolidated companies.



Current taxes are based on the application
of the various types of taxes attributable to taxable income for the year.



Differences between the book value of assets
and liabilities and their tax basis generate the balance of deferred tax assets or liabilities, which are calculated using the
tax rates expected to be applicable when the assets and liabilities are realized.



In conformity with current Chilean tax regulations,
the provision for corporate income tax and taxes on mining activity is recognized on an accrual basis, presenting the net balances
of accumulated monthly tax provisional payments for the fiscal period and associated credits. The balances of these accounts are
presented in current income taxes recoverable or current taxes payable, as applicable.



Tax on companies and variations in deferred
tax assets or liabilities that are not the result of business combinations are recorded in statement of income accounts or equity
accounts in the consolidated statement of financial position, considering the origin of the gains or losses which have generated
them.



At each reporting period, the carrying amount
of deferred tax assets has been reviewed and reduced to the extent there will not be sufficient taxable income to allow the recovery
of all or a portion of the deferred tax assets. Likewise, as of the date of the consolidated financial statements, deferred tax
assets that are not recognized were evaluated and not recognized as it was more likely than not that future taxable income will
allow for recovery of the deferred tax asset.



With respect to deductible temporary differences
associated with investments in subsidiaries, associated companies and interest in joint ventures, deferred tax assets are recognized
solely provided that it is more likely than not that the temporary differences will be reversed in the near future and that there
will be taxable income with which they may be used.



The deferred income tax related to entries directly recognized
in equity is recognized with an effect on equity and not with an effect on profit or loss.



F-43


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
3      Significant accounting policies (continued)



| | 3.39 | Income
                                         tax and deferred taxes, continued
| | ---- | ---------------------------------------------------------------------------------



Deferred tax assets and liabilities are offset
if there is a legally receivable right of offsetting tax assets against tax liabilities and the deferred tax is related to the
same tax entity and authority.



| | 3.40 | Segment reporting
| | ---- | -----------------



IFRS 8 requires that companies adopt a “management
approach” to disclose information on the operations generated by its operating segments. In general, this is the information
that management uses internally for the evaluation of segment performance and making the decision on how to allocate resources
for this purpose.



An operating segment is a group of assets
and operations responsible for providing products or services subject to risks and performance different from those of other business
segments. A geographical segment is responsible for providing products or services in a given economic environment subject to
risks and performance different from those of other segments that operate in other economic environments.



For assets and liabilities, the allocation
to each segment is not possible given that these are associated with more than one segment, except for depreciation, amortization
and impairment of assets, which are directly allocated to the applicable segments, in accordance with the criteria established
in the costing process for product inventories.



The following operating segments have been
identified by the Company:



| | - | Specialty plant nutrients
| | - | -------------------------



| | - | Industrial chemicals
| | - | --------------------



| | - | Iodine and derivatives
| | - | ----------------------



| | - | Lithium and derivatives
| | - | -----------------------



| | - | Potassium
| | - | ---------



| | - | Other products and
                                         services
| | - | --------------------------------------------------------------------



F-44


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 3      Significant
accounting policies (continued)



| | 3.41 | Environment
| | ---- | -----------



In general, the Company follows the criteria
of considering amounts used in environmental protection and improvement as environmental expenses. However, the cost of facilities,
machinery and equipment used for the same purpose are considered property, plant and equipment, as the case may be.



| | 3.42 | Significant accounting judgments,
                                         estimates and assumptions
| | ---- | ----------------------------------------------------------------------------------------------------



Management of Sociedad Química y Minera
de Chile S.A. and its subsidiaries is responsible for the information contained in these consolidated financial statements, which
expressly indicate that all the principles and criteria included in IFRSs, as issued by the International Accounting Standards
Board (IASB), have been applied in full.



In preparing the consolidated financial statements
of Sociedad Química y Minera de Chile S.A. and its subsidiaries, Management has made judgments and estimates to quantify
certain assets, liabilities, revenues, expenses and commitments included therein. Basically, these estimates refer to:



| | - | The
                                         useful lives of property, plant and equipment, and intangible assets and their residual
                                         value -Estimated useful lives are determined based on current facts and past experience,
                                         and take into consideration the anticipated physical life of the asset, the potential
                                         for technological obsolescence, and regulations. See notes 3.24, 13 and 14.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Impairment losses of
                                         certain assets - Assets, including property, plant and equipment, exploration assets,
                                         goodwill and intangible assets are reviewed for impairment whenever events or changes
                                         in circumstances indicate that their carrying amounts exceed their recoverable amounts.
                                         If an impairment assessment is required, the assessment of fair value often requires
                                         estimates and assumptions such as discount rates, exchange rates, commodity prices, future
                                         capital requirements and future operating performance. Changes in such estimates could
                                         impact recoverable values of these assets. Estimates are reviewed regularly by management.
                                         See notes 13 and 14
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Assumptions used in
                                         calculating the actuarial amount of pension-related and severance indemnity payment benefit
                                         commitments- See Note 15;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Contingencies
                                         – The amount recognized as provision, including legal, contractual, constructive
                                         and other exposures or obligations, is the best estimate of the consideration required
                                         to settle the related liability, including any related interest charges, taking into
                                         account the risks and uncertainties surrounding the obligation. In addition, contingencies
                                         will only be resolved when one or more future events occur or fail to occur. Therefore,
                                         assessment of contingencies inherently involves the exercise of significant judgment
                                         and estimates of the outcome of future events. The Company assesses its liabilities and
                                         contingencies based upon the best information available, relevant tax laws and other
                                         appropriate requirements. See note 18 and 19
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Provisions on the basis
                                         of technical studies that cover the different variables affecting products in stock (density
                                         and moist, among others), and related allowance - Inventory valuation requires judgment
                                         to determine obsolescence and estimates of provisions for obsolescence to ensure that
                                         the carrying value of inventory is not in excess of net realizable value. See note 8.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Despite the fact that these estimates have
been made on the basis of the best information available on the date of preparation of these consolidated financial statements,
certain events may occur in the future and oblige their amendment (upwards or downwards) over the next few years, which would
be made prospectively, recognizing the effects of the change in estimates in the related future consolidated financial statements.



F-45


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
4      Financial risk management



| | 4.1 | Financial risk management policy
| | --- | --------------------------------



The Company’s financial risk management
policy is focused on safeguarding the stability and sustainability of Sociedad Química y Minera de Chile S.A. and its subsidiaries
with regard to all such relevant financial uncertainty components.



The Company’s operations are subject
to certain financial risk factors that may affect its financial position or results. The most significant risk exposures are market
risk, liquidity risk, currency risk, doubtful accounts risk, and interest rate risk, among others.



Potentially, additional known or unknown risks
may exist, of which we currently deem not to be significant, which could also affect the Company’s business operations,
its business, financial position, or profit or loss.



The financial risk management structure includes
identifying, determining, analyzing, quantifying, measuring and controlling these events. Management and, in particular, Finance
Management, is responsible for constantly assessing the financial risk. The Company uses derivatives to hedge a significant portion
of those risks.



| | 4.2 | Risk factors
| | --- | ------------



| | 4.2.1 | Market risk
| | ----- | -----------



Market risk refers to the uncertainty associated
with fluctuations in market variables affecting the Company’s assets and liabilities, including:



| | a) | Price risk:
                                         The Company’s product prices are affected by the fluctuations in international
                                         prices of fertilizers and chemicals, as well as changes in productive capacities or market
                                         demand, all of which might affect the Company’s business, financial position and
                                         results of operations.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | Commodity price
                                         risk: The Company is exposed to changes in commodity prices and energy which may
                                         have an impact on its production costs that may cause unstable results.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of to-date, the SQM Group incurs
an annual expenditure of approximately US$95 million associated with fuel, gas, energy and equivalents from which US$60 million
related to direct electrical supply consumption. A change of 10% in the prices of energy required for the Company’s operations
may involve costs of approximately US$9.5 million in short-term movements.



The markets in which the Company
operates are unpredictable, exposed to significant fluctuations in supply and demand, and price high volatility. Additionally,
the supply of certain fertilizers or chemicals, including certain products which the Company trades, vary mainly depending on
the production of top producers and their related business strategies. Accordingly, the Company cannot forecast with certainty
changes in demand, responses from competitors or fluctuations in the final price of its products. These factors can lead to significant
impacts on the Company’s product sales volumes, financial position and share price.



| | c) | Quality standards:In the markets in which we operate, customers might impose quality standards on our
                                         products and/or governments could enact more stringent standards for the distribution
                                         and/or use of our products. Consequently, we might not be able to sell our products if
                                         we are not able to meet those new standards. In addition, our production costs might
                                         increase to meet such new standards. Not being able to sell our products in one or more
                                         markets or to key customers might significantly affect our business, financial position
                                         or the results of our operations.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-46


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 4      Financial
risk management (continued)



| | 4.2.2 | Credit risk
| | ----- | -----------



A contraction of the global economy and the
potentially adverse effects in the financial position of our customers may extend the receivables recovery period for SQM, increasing
its exposure to doubtful account risk. While measures have been taken to minimize such risk, the global economic situation may
result in losses that might have a material adverse effect on the Company’s business, financial position or results of operations.



To mitigate these risks, SQM actively controls
debt collection and has established certain safeguards which include loan insurance, letters of credit, and prepayments for a
portion of receivables.



Financial investments correspond to time deposits
with maturities exceeding 90 days and less than 360 days from the investment date, so they are not exposed to significant market
risks.



The credit quality of financial assets that
are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information
about counterparty default rates:



|Financial Institution                                  |  | Financial Asset            |  | Rating Institution |  | 12/31/2016 | 
|------------------------------------------------------ |  | -------------------------- |  | ------------------ |  | ---------- | 
|                                                       |  |                            |  | Moody ́s            |  | S&P        | 
|Banco BBVA Chile                                       |  | Fixed term deposit         |  | A3                 |  | BBB+       | 
|Banco Crédito e Inversiones                            |  | Fixed term deposit         |  | A1                 |  | A          | 
|Banco de Chile                                         |  | Fixed term deposit         |  | Aa3                |  | A+         | 
|Banco Santander - Santiago                             |  | Fixed term deposit         |  | A3                 |  | A-         | 
|BBVA Banco Francés                                     |  | Fixed term deposit         |  | -                  |  | -          | 
|Citibank New York                                      |  | Fixed term deposit         |  | A1                 |  | A+         | 
|Corpbanca                                              |  | Fixed term deposit         |  | A3                 |  | BB+        | 
|JP Morgan US dollar Liquidity Fund Institutional       |  | Fixed term deposit         |  | Aaa                |  | -          | 
|Legg Mason - Western Asset Institutional Cash Reserves |  | investment liquidity funds |  | -                  |  | AAA        | 
|Nedbank                                                |  | investment liquidity funds |  | -                  |  | BBB-       | 
|Scotiabank Sud Americano                               |  |                            |  | -                  |  | -          | 
|Total                                                  |  |                            |  |                    |  |            | 



|Financial Institution       |  | Financial Asset   |  | Rating Institution |  | 12/31/2016 | 
|--------------------------- |  | ----------------- |  | ------------------ |  | ---------- | 
|                            |  |                   |  | Moody ́s            |  | S&P        | 
|Banco Crédito e Inversiones |  | 90 days to 1 year |  | A1                 |  | A          | 
|Banco Itau Chile            |  | 90 days to 1 year |  | A3                 |  | BB+        | 
|Banco Santander - Santiago  |  | 90 days to 1 year |  | A3                 |  | A-         | 
|Banco Security              |  | 90 days to 1 year |  | -                  |  | BBB-       | 
|Corpbanca                   |  | 90 days to 1 year |  | A3                 |  | BB+        | 
|Morgan Stanley              |  | 90 days to 1 year |  | A3                 |  | BBB-       | 
|Scotiabank Sud Americano    |  | 90 days to 1 year |  | -                  |  | -          | 
|Total                       |  |                   |  |                    |  |            | 



F-47


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 4      Financial
risk management (continued)



| | 4.2.3 | Currency
                                         risk
| | ----- | ------------------------------------------------------



As a result of its influence on price level
determination as well as its relationship with cost of sales, and since a significant portion of the Company’s business
transactions are performed in that foreign currency, the functional currency of SQM is the United States dollar. However, the
global business activities of the Company expose it to the foreign exchange fluctuations of several currencies with respect to
the value of the U.S. dollar. Accordingly, SQM has entered into hedge contracts to mitigate the exposure generated by its main
mismatches (assets, net of liabilities) in currencies other than the U.S. dollar against the foreign exchange fluctuation. These
contracts are periodically updated depending on the mismatch amount to be hedged in such currencies. Occasionally, and subject
to the Board of Directors’ approval, in the short-term the Company insures cash flows from certain specific items in currencies
other than the U.S. dollar.



A significant portion of the Company’s
costs, particularly payroll, is denominated in Chilean pesos. Accordingly, an increase or decrease in the exchange rate against
the U.S. dollar would affect the Company’s profit for the period. Approximately US$317 million of the Company’s costs
are denominated in Chilean pesos. A significant portion of the effect of such obligations on the statement of financial position
is hedged by derivative instrument transactions on the balance mismatch in such currency.



As of December 31, 2016, the Company recorded
derivative instruments classified as currency and interest rate hedges associated with all the bonds payable, denominated in UF,
with a fair value of US$40.5 million against SQM. As of December 31, 2015, this amounts to US$75 million in against SQM.



As of December 31, 2016, the Chilean peso
to U.S. dollar exchange rate was Ch$669.47 per US$1.00 (Ch$710.16 per US$1.00 as of December 31, 2015).



| | 4.2.4 | Interest
                                         rate risk
| | ----- | -----------------------------------------------------------



Interest rate fluctuations, primarily due
to the uncertain future behavior of markets, may have a material impact on the financial results of the Company.



The Company has current and non-current debts
valued at LIBOR, plus a spread. The Company is partially exposed to fluctuations in such rate, as SQM currently holds hedging
derivative instruments to hedge a portion of its liabilities subject to the LIBOR rate fluctuations.



As of December 31, 2016, approximately 2%
of the Company’s financial liabilities are measured at LIBOR. Accordingly, any significant increase in this rate may have
an impact on the Company’s financial position. A 100 basic point variation in this rate may trigger variations in financial
expenses of close to US$0.03 million. However, this effect is significantly counterbalanced by the returns of the Company’s
investments that are also strongly related to LIBOR.



In addition, as of December 31, 2016, the
Company's financial liabilities are mainly concentrated in the long-term and approximately 12% have maturities of less than 12
months, decreasing in the process the exposure to changes in interest rates.



F-48


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 4      Financial
risk management (continued)



| | 4.2.5 | Liquidity
                                         risk
| | ----- | -------------------------------------------------------



Liquidity risk relates to the funds needed
to comply with payment obligations. The Company’s objective is to maintain financial flexibility through a comfortable balance
between fund requirements and cash flows from regular business operations, bank borrowings, bonds, short term investments, and
marketable securities, among others.



The Company has an important capital expense
program which is subject to change over time.



On the other hand, world financial markets
go through periods of contraction and expansion that are unforeseeable in the long-term and may affect SQM’s access to financial
resources. Such factors may have a material adverse impact on the Company’s business, financial position and results of
operations.



SQM constantly monitors the matching of its
obligations with its investments, taking due care of maturities of both, from a conservative perspective, as part of this financial
risk management strategy. As of December 31, 2016, the Company had unused, available revolving credit facilities with banks, for
a total of approximately US$267 million.



The position in other cash and cash equivalents
generated by the Company are invested in highly liquid mutual funds with an AAA risk rating.



F-49


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 4      Financial
risk management (continued)



| | 4.2.5 | Liquidity
                                         risk, continued
| | ----- | ------------------------------------------------------------------



|                                         |  | Maturity of undiscounted cash flows |         
|---------------------------------------- |  | ----------------------------------- | --------
|As of December 31, 2016                  |  | Book Value                          |         
|(in millions of US$)                     |  |                                     |         
|Other non-derivate financial liabilities |  |                                     |         
|Bank loans                               |  |                                     | 101,27  
|Unsecured obligations                    |  |                                     | 1,130.22
|Subtotal                                 |  |                                     | 1,231.49
|Other derivate financial liabilities     |  |                                     |         
|Hedging liabilities                      |  |                                     | 42.62   
|Derivate financial instruments           |  |                                     | (2.175  
|Subtotal                                 |  |                                     | 40.45   
|Total                                    |  |                                     | 1,271.93





|                                         |  | Maturity of undiscounted cash flows |         
|---------------------------------------- |  | ----------------------------------- | --------
|As of December 31, 2015                  |  | Book Value                          |         
|(in millions of US$)                     |  |                                     |         
|Other non-derivate financial liabilities |  |                                     |         
|Bank loans                               |  |                                     | 318.34  
|Unsecured obligations                    |  |                                     | 1,311.65
|Subtotal                                 |  |                                     | 1,629.99
|Other derivate financial liabilities     |  |                                     |         
|Hedging liabilities                      |  |                                     | 74.81   
|Derivate financial instruments           |  |                                     | (18.08  
|Subtotal                                 |  |                                     | 56.73   
|Total                                    |  |                                     | 1,686.72



| | 4.3 | Risk measurement
| | --- | ----------------



The Company has methods to measure the effectiveness
and efficiency of financial risk hedging strategies, both prospectively and retrospectively. These methods are consistent with
the risk management profile of the Group.



F-50


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
5      Changes in accounting estimates and policies (consistent presentation)



| | 5.1 | Changes in accounting estimates
| | --- | -------------------------------



The Company had no significant changes in
the determination of accounting estimates at the closing date of the consolidated financial statements.



| | 5.2 | Changes in accounting policies
| | --- | ------------------------------



As of December 31, 2016, the Company’s
consolidated financial statements present no significant changes in accounting policies or estimates compared to the prior period.
(for further details refer to Note 2.6).



The consolidated statements of financial position
as of December 31, 2016 and 2015 and the statements of comprehensive income, changes in equity and cash flows for the periods
ended December 31, 2016, 2015 and 2014 have been prepared in accordance with the International Financial Reporting Standards (IFRS).
The accounting principles and criteria have been applied consistently.



F-51


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
6      Background of companies included in consolidation



| | 6.1 | Parent’s stand-alone
                                         assets and liabilities
| | --- | ------------------------------------------------------------------------------------





|            |  | 12/31/2016 |            |   | 12/31/2015 | 
|----------- |  | ---------- | ---------- | - | ---------- | 
|            |  | ThUS$      |            |   | ThUS$      | 
|            |  |            |            |   |            | 
|Assets      |  |            | 3,824,137  |   |            | 
|Liabilities |  |            | (1,578,063 | ) |            | 
|Equity      |  |            | 2,246,074  |   |            | 





| | 6.2 | Parent entity
| | --- | -------------



As provided in the Company’s by-laws,
no shareholder can concentrate more than 32% of the Company’s voting right shares and therefore there is no controlling
entity.



| | 6.3 | Joint arrangements of controlling
                                         interest
| | --- | -----------------------------------------------------------------------------------



Sociedad de Inversiones Pampa Calichera S.A.,
Potasios de Chile S.A., and Inversiones Global Mining (Chile) Limitada, collectively the Pampa Group, are the owners of a number
of shares that are equivalent to 29.97% as of December 31, 2016 of the current total amount of shares issued, subscribed and fully-paid
of the Company. In addition, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A. and La Esperanza Delaware
Corporation, collectively the Kowa Group, are the owners of a number of shares equivalent to 2.12% of the total amount of issued,
subscribed and fully-paid shares of SQM S.A.



The Pampa Group and the Kowa Group have informed
SQM S.A., the Chilean SVS and the relevant stock exchanges in Chile and abroad that they are not and have never been related parties
between them. In addition, this is regardless of the fact that both Groups on December 21, 2006 have entered into a Joint Action
Agreement (JAA) related to those shares. Consequently, the Pampa Group, by itself, does not concentrate more than 32% of the voting
right capital of SQM S.A., and the Kowa Group does not concentrate by itself more than 32% of the voting right capital of SQM
S.A.



Likewise, the Joint Action Agreement has not
transformed the Pampa and Kowa Groups into related parties between them. The Joint Action Agreement has only transformed the current
controller of SQM S.A., composed of the Pampa Group, and the Kowa Group into related parties of SQM S.A.



Detail of effective concentration



|Tax ID No.        |  | Name                                         |  | Ownership
    interest % |      
|----------------- |  | -------------------------------------------- |  | ------------------------ | -----
|96.511.530-7      |  | Sociedad de Inversiones Pampa Calichera S.A. |  |                          | 19.72
|76.165.311-5      |  | Potasios de Chile S.A.                       |  |                          | 6.91 
|96.863.960-9      |  | Inversiones Global Mining (Chile) Limitada   |  |                          | 3.34 
|Total Pampa Group |  |                                              |  |                          | 29.97
|                  |  |                                              |  |                          |      
|79.798.650-k      |  | Inversiones la Esperanza (Chile) Ltda.       |  |                          | 1.43 
|59.046.730-8      |  | Kowa Co Ltd.                                 |  |                          | 0.30 
|96.518.570-4      |  | Kochi S.A.                                   |  |                          | 0.30 
|59.023.690-k      |  | La Esperanza Delaware Corporation            |  |                          | 0.09 
|Total Kowa Group  |  |                                              |  |                          | 2.12 



F-52


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 6 | Background of companies included in consolidation (continued)
| | ------ | -------------------------------------------------------------



| | 6.4 | General information on consolidated subsidiaries
| | --- | ------------------------------------------------



As of December 31, 2016 and December 31,
2015, the general information of the companies on which the Company exercises control and significant influence is as follows:



|                                                              |  |              |  |                                                                                                           |  | Country of     |  | Functional |  | Ownership interest |         
|------------------------------------------------------------- |  | ------------ |  | --------------------------------------------------------------------------------------------------------- |  | -------------- |  | ---------- |  | ------------------ | --------
|Subsidiary                                                    |  | Tax ID       |  | Address                                                                                                   |  | incorporation  |  | currency   |  | Direct             |         
|                                                              |  |              |  |                                                                                                           |  |                |  |            |  |                    |         
|SQM Nitratos S.A.                                             |  | 96.592.190-7 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | US$        |  |                    | 99.9999 
|Proinsa Ltda.                                                 |  | 78.053.910-0 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | Ch$        |  |                    | -       
|SQMC Internacional Ltda.                                      |  | 86.630.200-6 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | Ch$        |  |                    | -       
|SQM Potasio S.A.                                              |  | 96.651.060-9 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | US$        |  |                    | 99.9999 
|Serv. Integrales de Tránsito y Transf. S.A.                   |  | 79.770.780-5 |  | Arturo Prat 1060, Tocopilla                                                                               |  | Chile          |  | US$        |  |                    | 0.0003  
|Isapre Norte Grande Ltda.                                     |  | 79.906.120-1 |  | Anibal Pinto 3228, Antofagasta                                                                            |  | Chile          |  | Ch$        |  |                    | 1.0000  
|Ajay SQM Chile S.A.                                           |  | 96.592.180-K |  | Av. Pdte. Eduardo Frei 4900, Santiago                                                                     |  | Chile          |  | US$        |  |                    | 51.0000 
|Almacenes y Depósitos Ltda.                                   |  | 79.876.080-7 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | Ch$        |  |                    | 1.0000  
|SQM Salar S.A.                                                |  | 79.626.800-K |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | US$        |  |                    | 18.1800 
|SQM Industrial S.A.                                           |  | 79.947.100-0 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | US$        |  |                    | 99.0470 
|Exploraciones Mineras S.A.                                    |  | 76.425.380-9 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | US$        |  |                    | 0.2691  
|Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A. |  | 76.534.490-5 |  | Anibal Pinto 3228, Antofagasta                                                                            |  | Chile          |  | Ch$        |  |                    | -       
|Soquimich Comercial S.A.                                      |  | 79.768.170-9 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | US$        |  |                    | -       
|Comercial Agrorama Ltda. (*)                                  |  | 76.064.419-6 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | Ch$        |  |                    | -       
|Comercial Hydro S.A.                                          |  | 96.801.610-5 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | Ch$        |  |                    | -       
|Agrorama S.A.                                                 |  | 76.145.229-0 |  | El Trovador 4285 Las Condes                                                                               |  | Chile          |  | Ch$        |  |                    | -       
|Orcoma Estudios SPA                                           |  | 76.359.919-1 |  | Apoquindo 3721 Of.131 Las Condes                                                                          |  | Chile          |  | US$        |  |                    | 51.0000 
|Orcoma SPA                                                    |  | 76.360.575-2 |  | Apoquindo 3721 Of.131 Las Condes                                                                          |  | Chile          |  | US$        |  |                    | 100.0000
|SQM North America Corp.                                       |  | Foreign      |  | 2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA                                              |  | United States  |  | US$        |  |                    | 40.0000 
|RS Agro Chemical Trading Corporation A.V.V.                   |  | Foreign      |  | Caya Ernesto O. Petronia 17, Orangestad                                                                   |  | Aruba          |  | US$        |  |                    | 98.3333 
|Nitratos Naturais do Chile Ltda.                              |  | Foreign      |  | Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville
    Barureri, CEP 06455-020, Sao Paulo |  | Brazil         |  | US$        |  |                    | -       
|Nitrate Corporation of Chile Ltd.                             |  | Foreign      |  | 1 More London Place London SE1 2AF                                                                        |  | United Kingdom |  | US$        |  |                    | -       
|SQM Corporation N.V.                                          |  | Foreign      |  | Pietermaai 123, P.O. Box 897, Willemstad, Curacao                                                         |  | Netherlands    |  | US$        |  |                    | 0.0002  
|SQM Peru S.A.                                                 |  | Foreign      |  | Avenida Camino Real N° 348 of. 702, San Isidro, Lima                                                      |  | Peru           |  | US$        |  |                    | 0.9800  
|SQM Ecuador S.A.                                              |  | Foreign      |  | Av. José Orrantia y Av. Juan Tanca Marengo Edificio Executive
    Center Piso 2 Oficina 211               |  | Ecuador        |  | US$        |  |                    | 0.0040  
|SQM Brasil Ltda.                                              |  | Foreign      |  | Al. Tocantis 75, 6° Andar, Conunto 608 Edif. West Gate, Alphaville
    Barureri, CEP 06455-020, Sao Paulo |  | Brazil         |  | US$        |  |                    | 1.0900  



(*) SQM controls Soquimich Comercial, which in turn controls
Comercial Agrorama Ltda. SQM has control of the administration of Comercial Agrorama Ltda.



F-53


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 6 | Background of companies included in consolidation (continued)
| | ------ | -------------------------------------------------------------



| | 6.4 | General information on consolidated subsidiaries, continued
| | --- | -----------------------------------------------------------



|                                                 |  |         |  |                                                                                                       |  | Country of    |  | Functional |  | Ownership interest |       
|------------------------------------------------ |  | ------- |  | ----------------------------------------------------------------------------------------------------- |  | ------------- |  | ---------- |  | ------------------ | ------
|Subsidiary                                       |  | Tax ID  |  | Address                                                                                               |  | incorporation |  | currency   |  | Direct             |       
|                                                 |  |         |  |                                                                                                       |  |               |  |            |  |                    |       
|SQI Corporation N.V.                             |  | Foreign |  | Pietermaai 123, P.O. Box 897, Willemstad, Curacao                                                     |  | Netherlands   |  | US$        |  |                    | 0.0159
|SQMC Holding Corporation L.L.P.                  |  | Foreign |  | 2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta                                              |  | United States |  | US$        |  |                    | 0.1000
|SQM Japan Co. Ltd.                               |  | Foreign |  | From 1st Bldg 207, 5-3-10 Minami- Aoyama, Minato-ku,
    Tokyo                                        |  | Japan         |  | US$        |  |                    | 0.5376
|SQM Europe N.V.                                  |  | Foreign |  | Houtdok-Noordkaai 25a B-2030 Antwerp, Belgium                                                         |  | Belgium       |  | US$        |  |                    | 0.5800
|SQM Italia SRL                                   |  | Foreign |  | Via A. Meucci, 5 500 15 Grassina Firenze                                                              |  | Italy         |  | US$        |  |                    | -     
|SQM Indonesia S.A.                               |  | Foreign |  | Perumahan Bumi Dirgantara Permai, Jl Suryadarma Blok Aw No 15 Rt
    01/09 17436 Jatisari Pondok Gede |  | Indonesia     |  | US$        |  |                    | -     
|North American Trading Company                   |  | Foreign |  | 2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA                                          |  | United States |  | US$        |  |                    | -     
|SQM Virginia LLC                                 |  | Foreign |  | 2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA                                          |  | United States |  | US$        |  |                    | -     
|SQM Comercial de México S.A. de C.V.             |  | Foreign |  | Av. Moctezuma 144-4  Ciudad del Sol. CP 45050, Zapopan,
    Jalisco México                            |  | Mexico        |  | US$        |  |                    | 0.0010
|SQM Investment Corporation N.V.                  |  | Foreign |  | Pietermaai 123, P.O. Box 897, Willemstad, Curacao                                                     |  | Netherlands   |  | US$        |  |                    | 1.0000
|Royal Seed Trading Corporation A.V.V.            |  | Foreign |  | Caya Ernesto O. Petronia 17, Orangestad                                                               |  | Aruba         |  | US$        |  |                    | 1.6700
|SQM Lithium Specialties LLP                      |  | Foreign |  | 2727 Paces Ferry Road, Building Two, Suite 1425, Atlanta, GA                                          |  | United States |  | US$        |  |                    | -     
|Soquimich SRL Argentina                          |  | Foreign |  | Espejo 65 Oficina 6 – 5500 Mendoza                                                                    |  | Argentina     |  | US$        |  |                    | -     
|Comercial Caimán Internacional S.A.              |  | Foreign |  | Edificio Plaza Bancomer  Calle 50                                                                     |  | Panama        |  | US$        |  |                    | -     
|SQM France S.A.                                  |  | Foreign |  | ZAC des Pommiers  27930   FAUVILLE                                                                    |  | France        |  | US$        |  |                    | -     
|Administración y Servicios Santiago S.A. de C.V. |  | Foreign |  | Av. Moctezuma 144-4  Ciudad del Sol. CP 45050, Zapopan,
    Jalisco México                            |  | Mexico        |  | US$        |  |                    | -     
|SQM Nitratos México S.A. de C.V.                 |  | Foreign |  | Av. Moctezuma 144-4  Ciudad del Sol. CP 45050, Zapopan,
    Jalisco México                            |  | Mexico        |  | US$        |  |                    | -     



F-54


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 6 | Background of companies included in consolidation (continued)
| | ------ | -------------------------------------------------------------



| | 6.4 | General information on consolidated subsidiaries, continued
| | --- | -----------------------------------------------------------



|                                |  |         |  |                                                                                                   |  | Country of    |  | Functional |  | Ownership interest |  
|------------------------------- |  | ------- |  | ------------------------------------------------------------------------------------------------- |  | ------------- |  | ---------- |  | ------------------ | -
|Subsidiary                      |  | Tax ID  |  | Address                                                                                           |  | incorporation |  | currency   |  | Direct             |  
|                                |  |         |  |                                                                                                   |  |               |  |            |  |                    |  
|Soquimich European Holding B.V. |  | Foreign |  | Loacalellikade 1 Parnassustoren 1076 AZ Amsterdam                                                 |  | Netherlands   |  | US$        |  |                    | -
|SQM Iberian S.A                 |  | Foreign |  | Provenza 251 Principal 1a CP 08008, Barcelona                                                     |  | Spain         |  | US$        |  |                    | -
|SQM Africa Pty Ltd.             |  | Foreign |  | Tramore House, 3 Wterford Office Park, Waterford Drive, 2191 Fourways,
    Johannesburg           |  | South Africa  |  | US$        |  |                    | -
|SQM Oceania Pty Ltd.            |  | Foreign |  | Level 9, 50 Park Street, Sydney NSW 2000, Sydney                                                  |  | Australia     |  | US$        |  |                    | -
|SQM  Agro India Pvt. Ltd.       |  | Foreign |  | C 30 Chiragh Enclave New Delhi, 110048                                                            |  | India         |  | US$        |  |                    | -
|SQM Beijing Commercial Co. Ltd. |  | Foreign |  | Room 1001C, CBD International Mansion N 16 Yong An Dong Li, Jian
    Wai Ave Beijing 100022, P.R. |  | China         |  | US$        |  |                    | -
|SQM Thailand Limited            |  | Foreign |  | Unit 2962, Level 29, N° 388, Exchange Tower Sukhumvit Road,
    Klongtoey Bangkok                 |  | Thailand      |  | US$        |  |                    | -
|SQM Vitas Spain                 |  | Foreign |  | C/Manuel Echeverria Manzana 2 Muelle de la Cab (Puerto Real)                                      |  | Spain         |  | Euro       |  |                    | -



F-55


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 6 | Background of companies included in consolidation (continued)
| | ------ | -------------------------------------------------------------



| | 6.5 | Information attributable to non-controlling interests
| | --- | -----------------------------------------------------



|Subsidiary               |  | % of interests in  the ownership held  by non-controlling  interests. |            |   | Profit (loss) attributable to non- controlling interests |  |       | Equity, non-controlling  interests |  |  | Dividends paid to non- controlling interests | 
|------------------------ |  | --------------------------------------------------------------------- | ---------- | - | -------------------------------------------------------- |  | ----- | ---------------------------------- |  |  | -------------------------------------------- | 
|                         |  |                                                                       |            |   | 12/31/2016                                               |  |       | 12/31/2015                         |  |  | 12/31/2016                                   | 
|                         |  |                                                                       |            |   | ThUS$                                                    |  |       | ThUS$                              |  |  | ThUS$                                        | 
|Proinsa Ltda.            |  |                                                                       | 0.1        | % |                                                          |  | -     |                                    |  |  | -                                            | 
|SQM Potasio S.A.         |  |                                                                       | 0.0000001  | % |                                                          |  | -     |                                    |  |  | -                                            | 
|Ajay SQM Chile S.A.      |  |                                                                       | 49         | % |                                                          |  | 1,360 |                                    |  |  | 1,551                                        | 
|SQM Indonesia S.A.       |  |                                                                       | 20         | % |                                                          |  | -     |                                    |  |  | -                                            | 
|Soquimich Comercial S.A. |  |                                                                       | 39.3616784 | % |                                                          |  | 2,378 |                                    |  |  | 2,605                                        | 
|Comercial Agrorama Ltda. |  |                                                                       | 30         | % |                                                          |  | (106  | )                                  |  |  | 3                                            | 
|Agrorama S.A.            |  |                                                                       | 0.001      | % |                                                          |  | -     |                                    |  |  | -                                            | 
|Orcoma Estudios SPA      |  |                                                                       | 49         | % |                                                          |  | 2     |                                    |  |  | 5                                            | 
|SQM (Thailand) Limited.  |  |                                                                       | 0.004      | % |                                                          |  | -     |                                    |  |  | -                                            | 
|Total                    |  |                                                                       |            |   |                                                          |  | 3,634 |                                    |  |  | 4,164                                        | 



F-56


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 6 | Background of companies included in consolidation (continued)
| | ------ | -------------------------------------------------------------



| | 6.6 | Information on consolidated subsidiaries
| | --- | ----------------------------------------



|12/31/2016                                                   
|-------------------------------------------------------------
|                                                             
|Subsidiary                                                   
|                                                             
|                                                             
|SQM Nitratos S.A.                                            
|Proinsa Ltda.                                                
|SQMC Internacional Ltda.                                     
|SQM Potasio S.A.                                             
|Serv. Integrales de Tránsito y Transf. S.A.                  
|Isapre Norte Grande Ltda.                                    
|Ajay SQM Chile S.A.                                          
|Almacenes y Depósitos Ltda.                                  
|SQM Salar S.A.                                               
|SQM Industrial S.A.                                          
|Exploraciones Mineras S.A.                                   
|Sociedad Prestadora de Servicios de Salud Cruz del Norte S,A.
|Soquimich Comercial S.A.                                     
|Comercial Agrorama Ltda.                                     
|Comercial Hydro S.A.                                         
|Agrorama S.A.                                                
|Orcoma SpA                                                   
|Orcoma Estudio SpA                                           
|SQM North America Corp.                                      
|RS Agro Chemical Trading Corporation A.V.V.                  
|Nitratos Naturais do Chile Ltda.                             
|Nitrate Corporation of Chile Ltd.                            
|SQM Corporation N.V.                                         
|SQM Peru S.A.                                                
|SQM Ecuador S.A.                                             
|SQM Brasil Ltda.                                             
|SQI Corporation N.V.                                         
|SQMC Holding Corporation L.L.P.                              
|SQM Japan Co. Ltd.                                           



F-57


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 6 | Background of companies included in consolidation (continued)
| | ------ | -------------------------------------------------------------



| | 6.6 | Information on consolidated subsidiaries, continued
| | --- | ---------------------------------------------------



|12/31/2016                                      
|------------------------------------------------
|                                                
|Subsidiary                                      
|                                                
|                                                
|SQM Europe N.V.                                 
|SQM Italia SRL                                  
|SQM Indonesia S.A.                              
|North American Trading Company                  
|SQM Virginia LLC                                
|SQM Comercial de México S.A. de C.V.            
|SQM Investment Corporation N.V.                 
|Royal Seed Trading Corporation A.V.V.           
|SQM Lithium Specialties LLP                     
|Soquimich SRL Argentina                         
|Comercial Caimán Internacional S.A.             
|SQM France S.A.                                 
|Administración y Servicios Santiago S.A. de C.V.
|SQM Nitratos México S.A. de C.V.                
|Soquimich European Holding B.V.                 
|SQM Iberian S.A.                                
|SQM Africa Pty Ltd.                             
|SQM Oceanía Pty Ltd.                            
|SQM Agro India Pvt. Ltd.                        
|SQM Beijing Commercial Co. Ltd.                 
|SQM Thailand Limited                            
|SQM Vitas Spain S.A.                            
|Total                                           



F-58


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 6 | Background of companies included in consolidation (continued)
| | ------ | -------------------------------------------------------------



| | 6.6 | Information on consolidated subsidiaries, continued
| | --- | ---------------------------------------------------



|12/31/2015                                                   
|-------------------------------------------------------------
|                                                             
|Subsidiary                                                   
|                                                             
|                                                             
|SQM Nitratos S.A.                                            
|Proinsa Ltda.                                                
|SQMC Internacional Ltda.                                     
|SQM Potasio S.A.                                             
|Serv. Integrales de Tránsito y Transf. S.A.                  
|Isapre Norte Grande Ltda.                                    
|Ajay SQM Chile S.A.                                          
|Almacenes y Depósitos Ltda.                                  
|SQM Salar S.A.                                               
|SQM Industrial S.A.                                          
|Exploraciones Mineras S.A.                                   
|Sociedad Prestadora de Servicios de Salud Cruz del Norte S,A.
|Soquimich Comercial S.A.                                     
|Comercial Agrorama Ltda.                                     
|Comercial Hydro S.A.                                         
|Agrorama S.A.                                                
|Orcoma SpA                                                   
|Orcoma Estudio SpA                                           
|SQM North America Corp.                                      
|RS Agro Chemical Trading Corporation A.V.V.                  
|Nitratos Naturais do Chile Ltda.                             
|Nitrate Corporation of Chile Ltd.                            
|SQM Corporation N.V.                                         
|SQM Peru S.A.                                                
|SQM Ecuador S.A.                                             
|SQM Brasil Ltda.                                             
|SQI Corporation N.V.                                         
|SQMC Holding Corporation L.L.P.                              
|SQM Japan Co. Ltd.                                           



F-59


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 6 | Background of companies included in consolidation (continued)
| | ------ | -------------------------------------------------------------



| | 6.6 | Information on consolidated subsidiaries, continued
| | --- | ---------------------------------------------------



|12/31/2015                                      
|------------------------------------------------
|                                                
|Subsidiary                                      
|                                                
|                                                
|SQM Europe N.V.                                 
|SQM Italia SRL                                  
|SQM Indonesia S.A.                              
|North American Trading Company                  
|SQM Virginia LLC                                
|SQM Comercial de México S.A. de C.V.            
|SQM Investment Corporation N.V.                 
|Royal Seed Trading Corporation A.V.V.           
|SQM Lithium Specialties LLP                     
|Soquimich SRL Argentina                         
|Comercial Caimán Internacional S.A.             
|SQM France S.A.                                 
|Administración y Servicios Santiago S.A. de C.V.
|SQM Nitratos México S.A. de C.V.                
|Soquimich European Holding B.V.                 
|SQM Iberian S.A.                                
|SQM Africa Pty Ltd.                             
|SQM Oceania Pty Ltd.                            
|SQM Agro India Pvt, Ltd.                        
|SQM Beijing Commercial Co. Ltd.                 
|SQM Thailand Limited                            
|Total                                           



F-60


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 6 | Background of companies included in consolidation (continued)
| | ------ | -------------------------------------------------------------



| | 6.7 | Detail of transactions between consolidated companies
| | --- | -----------------------------------------------------



| | a) | Transactions conducted in 2016
| | -- | ------------------------------



On May 12, 2016, the subsidiary SQM Iberian
S.A. acquired 100% of interest in SQM Vitas Spain for ThUS$1,710.



| | b) | Transactions conducted in 2015
| | -- | ------------------------------



On August 5, 2015, the subsidiary SQM Brasil
Ltda. made a capital contribution of ThUS$572 in its subsidiary Nitratos Naturais do Chile Ltda. As a result of such transaction,
SQM Brasil Ltda. increased its interest from 0.001% to 70.82% in such company. SQM Industrial S.A. was not involved in such capital
increase, decreasing its interest from 99.99% to 29.18%. This generated no effects on the consolidated profit or loss of SQM S.A.



F-61


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 7 | Cash and cash equivalents
| | ------ | -------------------------



| | 7.1 | Types of cash and cash equivalents
| | --- | ----------------------------------



As of December 31, 2016 and December 31,
2015, cash and cash equivalents are detailed as follows:



|a)        Cash        |  | 12/31/2016 |        |  | 12/31/20151 | 
|--------------------- |  | ---------- | ------ |  | ----------- | 
|                      |  | ThUS$      |        |  | ThUS$       | 
|Cash on hand          |  |            | 53     |  |             | 
|Cash in banks         |  |            | 80,287 |  |             | 
|Other demand deposits |  |            | 1,260  |  |             | 
|Total cash            |  |            | 81,600 |  |             | 



|b)        Cash equivalents                             |  | 12/31/2016 |         |  | 12/31/2015 | 
|------------------------------------------------------ |  | ---------- | ------- |  | ---------- | 
|                                                       |  | ThUS$      |         |  | ThUS$      | 
|Short-term deposits, classified as cash equivalents    |  |            | 95,673  |  |            | 
|Short-term investments, classified as cash equivalents |  |            | 337,396 |  |            | 
|Total cash equivalents                                 |  |            | 433,069 |  |            | 
|                                                       |  |            |         |  |            | 
|Total cash and cash equivalents                        |  |            | 514,669 |  |            | 



| | 7.2 | Short-term investments, classified as cash equivalents
| | --- | ------------------------------------------------------



As of December 31, 2016 and December 31,
2015, short-term investments, classified as cash and cash equivalents relate to mutual funds (investment liquidity funds) for investments
in:





|Institution                                            |  | 12/31/2016 ThUS$ |         |  | 12/31/2015  ThUS$ | 
|------------------------------------------------------ |  | ---------------- | ------- |  | ----------------- | 
|Legg Mason - Western Asset Institutional Cash Reserves |  |                  | 178,446 |  |                   | 
|JP Morgan US dollar Liquidity Fund Institutional       |  |                  | 158,950 |  |                   | 
|Total                                                  |  |                  | 337,396 |  |                   | 



Short-term investments are highly liquid fund manager accounts
that are basically invested in short-term fixed rate notes in the U.S. market.



F-62


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 7 | Cash and cash equivalents (continued)
| | ------ | -------------------------------------



| | 7.3 | Information on cash and cash equivalents by currency
| | --- | ----------------------------------------------------



As of December 31, 2016 and December 31,
2015, information on cash and cash equivalents by currency is detailed as follows:





|                   |  | 12/31/2016 |         |  | 12/31/2015 | 
|------------------ |  | ---------- | ------- |  | ---------- | 
|Original currency  |  | ThUS$      |         |  | ThUS$      | 
|Chilean Peso (*)   |  |            | 6,044   |  |            | 
|US Dollar          |  |            | 490,978 |  |            | 
|Euro               |  |            | 11,386  |  |            | 
|Mexican Peso       |  |            | 309     |  |            | 
|South African Rand |  |            | 3,250   |  |            | 
|Japanese Yen       |  |            | 2,149   |  |            | 
|Peruvian Sol       |  |            | 3       |  |            | 
|Brazilian Real     |  |            | 59      |  |            | 
|Chinese Yuan       |  |            | 400     |  |            | 
|Indian Rupee       |  |            | 8       |  |            | 
|Thai Baht          |  |            | 8       |  |            | 
|Argentine Peso     |  |            | 4       |  |            | 
|Pound Sterling     |  |            | 71      |  |            | 
|Total              |  |            | 514,669 |  |            | 





(*) The Company maintains financial derivative policies which
allow to minimize the risk of the variation in Chilean pesos exchange rate



| | 7.4 | Amount of restricted (unavailable) cash balances
| | --- | ------------------------------------------------



Cash on hand and in current bank accounts
are available resources, and their carrying value is equal to their fair value.



As of December 31, 2016 and December 31,
2015, restricted cash balances are presented in Note 10.9.



F-63


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 7 | Cash and cash equivalents (continued)
| | ------ | -------------------------------------



| | 7.5 | Short-term deposits, classified as cash equivalents
| | --- | ---------------------------------------------------



The detail at the end of each period is
as follows:



|2016 Receiver of the deposit |  | Type of deposit |  | Original Currency |  | Interest rate |      |  | Placement date |            | Expiration date |           | Principal ThUS$ |  |        | Interest accrued to-date
    ThUS$ |  |  | 12/31/2016  ThUS$ | 
|---------------------------- |  | --------------- |  | ----------------- |  | ------------- | ---- |  | -------------- | ---------- | --------------- | --------- | --------------- |  | ------ | ---------------------------------- |  |  | ----------------- | 
|Banco Santander              |  | Fixed term      |  | US$               |  |               | 1.28 |  |                | 12/29/2016 |                 | 1/31/2017 |                 |  | 9,900  |                                    |  |  | 1                 | 
|Banco Crédito e Inversiones  |  | Fixed term      |  | US$               |  |               | 0.90 |  |                | 12/30/2016 |                 | 1/9/2017  |                 |  | 15,000 |                                    |  |  | 1                 | 
|Banco Santander              |  | Fixed term      |  | US$               |  |               | 0.90 |  |                | 12/30/2016 |                 | 1/10/2017 |                 |  | 10,000 |                                    |  |  | -                 | 
|Scotiabank Sud Americano     |  | Fixed term      |  | US$               |  |               | 0.93 |  |                | 10/11/2016 |                 | 1/30/2017 |                 |  | 13,000 |                                    |  |  | 27                | 
|Banco de Chile               |  | Fixed term      |  | US$               |  |               | 0.75 |  |                | 10/11/2016 |                 | 1/30/2017 |                 |  | 2,000  |                                    |  |  | 3                 | 
|Corpbanca                    |  | Fixed term      |  | US$               |  |               | 1.21 |  |                | 12/1/2016  |                 | 1/3/2017  |                 |  | 3,500  |                                    |  |  | 4                 | 
|Banco Santander - Santiago   |  | Fixed term      |  | US$               |  |               | 0.76 |  |                | 12/7/2016  |                 | 1/6/2017  |                 |  | 3,900  |                                    |  |  | 2                 | 
|Banco Crédito e Inversiones  |  | Fixed term      |  | US$               |  |               | 0.90 |  |                | 12/12/2016 |                 | 1/12/2017 |                 |  | 5,000  |                                    |  |  | 2                 | 
|Corpbanca                    |  | Fixed term      |  | US$               |  |               | 1.30 |  |                | 12/12/2016 |                 | 1/12/2017 |                 |  | 1,700  |                                    |  |  | 1                 | 
|Banco Crédito e Inversiones  |  | Fixed term      |  | US$               |  |               | 0.88 |  |                | 12/14/2016 |                 | 1/17/2017 |                 |  | 2,000  |                                    |  |  | 1                 | 
|Banco Santander - Santiago   |  | Fixed term      |  | US$               |  |               | 1.28 |  |                | 12/20/2016 |                 | 2/21/2017 |                 |  | 800    |                                    |  |  | -                 | 
|Banco Santander - Santiago   |  | Fixed term      |  | US$               |  |               | 1.28 |  |                | 12/20/2016 |                 | 2/21/2017 |                 |  | 5,000  |                                    |  |  | 2                 | 
|Banco BBVA Chile             |  | Fixed term      |  | US$               |  |               | 0.75 |  |                | 12/22/2016 |                 | 1/23/2017 |                 |  | 3,500  |                                    |  |  | 1                 | 
|Banco de Chile               |  | Fixed term      |  | US$               |  |               | 1.25 |  |                | 12/28/2016 |                 | 2/9/2017  |                 |  | 3,900  |                                    |  |  | 1                 | 
|Banco Santander - Santiago   |  | Fixed term      |  | US$               |  |               | 1.31 |  |                | 12/28/2016 |                 | 2/9/2017  |                 |  | 3,300  |                                    |  |  | -                 | 
|Banco Crédito e Inversiones  |  | Fixed term      |  | US$               |  |               | 1.00 |  |                | 12/29/2016 |                 | 1/30/2017 |                 |  | 3,800  |                                    |  |  | -                 | 
|Corpbanca                    |  | Fixed term      |  | Ch$               |  |               | 0.31 |  |                | 12/16/2016 |                 | 1/2/2017  |                 |  | 1,942  |                                    |  |  | 3                 | 
|Scotiabank Sud Americano     |  | Fixed term      |  | Ch$               |  |               | 0.32 |  |                | 12/29/2016 |                 | 1/9/2017  |                 |  | 597    |                                    |  |  | 1                 | 
|Scotiabank Sud Americano     |  | Fixed term      |  | Ch$               |  |               | 0.33 |  |                | 12/30/2016 |                 | 1/9/2017  |                 |  | 2,091  |                                    |  |  | -                 | 
|Citibank New York            |  | Overnight       |  | US$               |  |               | 0.01 |  |                | 12/31/2016 |                 | 1/1/2017  |                 |  | 1,742  |                                    |  |  | -                 | 
|BBVA Banco Francés           |  | Fixed term      |  | US$               |  |               | 0.21 |  |                | 24/102016  |                 | 1/31/2017 |                 |  | 199    |                                    |  |  | -                 | 
|Nedbank                      |  | On demand       |  | US$               |  |               | -    |  |                | 12/1/2016  |                 | 1/31/2017 |                 |  | 2,752  |                                    |  |  | -                 | 
|Total                        |  |                 |  |                   |  |               |      |  |                |            |                 |           |                 |  | 95,623 |                                    |  |  | 50                | 



|2015 Receiver of the deposit |  | Type of deposit |  | Original Currency |  | Interest rate |       |  | Placement date |            | Expiration date |           | Principal ThUS$ |  |        | Interest accrued to-date
    ThUS$ |  |  | 12/31/2015  ThUS$ | 
|---------------------------- |  | --------------- |  | ----------------- |  | ------------- | ----- |  | -------------- | ---------- | --------------- | --------- | --------------- |  | ------ | ---------------------------------- |  |  | ----------------- | 
|Banco Crédito e Inversiones  |  | Fixed term      |  | US$               |  |               | 0.50  |  |                | 12/23/2015 |                 | 1/27/2016 |                 |  | 50,000 |                                    |  |  | 6                 | 
|Corpbanca                    |  | Fixed term      |  | US$               |  |               | 0.65  |  |                | 12/22/2015 |                 | 1/21/2016 |                 |  | 25,000 |                                    |  |  | 4                 | 
|Banco Crédito e Inversiones  |  | Fixed term      |  | Ch$               |  |               | 0.32  |  |                | 12/30/2015 |                 | 1/14/2016 |                 |  | 1,338  |                                    |  |  | -                 | 
|Banco Santander Santiago     |  | Fixed term      |  | Ch$               |  |               | 0.31  |  |                | 12/30/2015 |                 | 1/14/2016 |                 |  | 704    |                                    |  |  | -                 | 
|Banco Crédito e Inversiones  |  | Fixed term      |  | US$               |  |               | 0.30  |  |                | 12/11/2015 |                 | 1/11/2016 |                 |  | 1,000  |                                    |  |  | -                 | 
|Citibank New York            |  | Overnight       |  | US$               |  |               | 0.01  |  |                | 12/31/2015 |                 | 1/2/2016  |                 |  | 225    |                                    |  |  | -                 | 
|Citibank New York            |  | Overnight       |  | US$               |  |               | 0.01  |  |                | 12/31/2015 |                 | 1/2/2016  |                 |  | 614    |                                    |  |  | -                 | 
|BBVA Banco Francés           |  | Fixed term      |  | US$               |  |               | 19.00 |  |                | 12/2/2015  |                 | 1/4/2016  |                 |  | 236    |                                    |  |  | -                 | 
|ABN Amro Bank                |  | On demand       |  | Euro              |  |               | -     |  |                | 12/31/2015 |                 | 1/2/2016  |                 |  | 1,240  |                                    |  |  | -                 | 
|Nedbank                      |  | On demand       |  | US$               |  |               | -     |  |                | 12/31/2015 |                 | 1/2/2016  |                 |  | 4,295  |                                    |  |  | -                 | 
|Total                        |  |                 |  |                   |  |               |       |  |                |            |                 |           |                 |  | 84,652 |                                    |  |  | 10                | 



F-64


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 8 | Inventories
| | ------ | -----------



The composition of inventory at each period-end is as follows:



|Type of inventory                |  | 12/31/2016 ThUS$ |         |  | 12/31/2015 ThUS$ |  |           | 12/31/2014 ThUS$ | 
|-------------------------------- |  | ---------------- | ------- |  | ---------------- |  | --------- | ---------------- | 
|                                 |  |                  |         |  |                  |  |           |                  | 
|Raw material reserves            |  |                  | 7,536   |  |                  |  | 4,844     |                  | 
|Supplies for production reserves |  |                  | 23,610  |  |                  |  | 29,353    |                  | 
|Products-in-progress reserves    |  |                  | 482,261 |  |                  |  | 478,627   |                  | 
|Finished product reserves        |  |                  | 479,665 |  |                  |  | 491,022   |                  | 
|Total                            |  |                  | 993,072 |  |                  |  | 1,003,846 |                  | 



As of December 31, 2016, the Company had
inventories of caliche ore available for processing for ThUS$43,400 (ThUS$32,203 as of December 31, 2015 and ThUS$38,265 as of
December 31, 2014).



The sum registered as cost of sale related
to inventory in the statement of income amounts to ThUS$1,116,057 as of December 31, 2016, ThUS$1,070,387 as of December 31, 2015
and ThUS1,259,983 as of December 31, 2014.



Inventory reserves recognized as of December
31, 2016 amount to ThUS$81,295, and ThUS$80,369 as of December 31, 2015 and ThUS$97,248 as of December 31, 2014. Inventory reserves
have been made based on a technical study that covers the different variables affecting products in stock (density and humidity,
among others). Additionally, reserves are recognized if goods are sold cheaper than the related cost, and for differences that
arise from inventory counts.



The breakdown of inventory reserves is detailed as follows:



|Type of inventory                |  | 12/31/2016 ThUS$ |        |  | 12/31/2015 ThUS$ |  |        | 12/31/2014 ThUS$ | 
|-------------------------------- |  | ---------------- | ------ |  | ---------------- |  | ------ | ---------------- | 
|                                 |  |                  |        |  |                  |  |        |                  | 
|Raw material reserves            |  |                  | 93     |  |                  |  | 93     |                  | 
|Supplies for production reserves |  |                  | 920    |  |                  |  | 920    |                  | 
|Products-in-progress reserves    |  |                  | 52,843 |  |                  |  | 53,187 |                  | 
|Finished product reserves        |  |                  | 27,439 |  |                  |  | 26,169 |                  | 
|                                 |  |                  |        |  |                  |  |        |                  | 
|Total                            |  |                  | 81,295 |  |                  |  | 80,369 |                  | 



The Company has not delivered inventory
as collateral for the periods indicated above.

F-65


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 8 | Inventories (continued)
| | ------ | -----------------------



As of December 31, 2016 and 2015, movements
in provisions are detailed as follows



|Reconciliation                             |  | 12/31/2016 |         |   | 12/31/2015 |  |         | 12/31/2014 | 
|------------------------------------------ |  | ---------- | ------- | - | ---------- |  | ------- | ---------- | 
|                                           |  | ThUS$      |         |   | ThUS$      |  |         | ThUS$      | 
|Opening balance                            |  |            | 80,369  |   |            |  | 82,966  |            | 
|Changes                                    |  |            |         |   |            |  |         |            | 
|Additional provisions                      |  |            | 33,118  |   |            |  | 18,461  |            | 
|Increase (decrease) in existing provisions |  |            | (32,192 | ) |            |  | (21,058 | )          | 
|Total changes                              |  |            | 926     |   |            |  | (2,597  | )          | 
|Final Balance                              |  |            | 81,295  |   |            |  | 80,369  |            | 



| | Note 9 | Related party disclosures
| | ------ | -------------------------



| | 9.1 | Related party disclosures
| | --- | -------------------------



Balances pending at period-end are not
guaranteed, accrue no interest and are settled in cash. No guarantees have been delivered or received for trade and other receivables
due from related parties or trade and other payables due to related parties. For the period ended December 31, 2016, the Company
has not recorded any impairment in accounts receivable related to amounts owed by related parties. This evaluation is conducted
every year through an examination of the financial position of the related party in the market in which it operates.



| | 9.2 | Relationships between the parent and the entity
| | --- | -----------------------------------------------



According to the Company’s by-laws,
no shareholder can own more than 32% of the Company’s voting right shares.



Sociedad de Inversiones Pampa Calichera
S.A., Potasios de Chile S.A., and Inversiones Global Mining (Chile) Ltda., collectively the Pampa Group, are the owners of a number
of shares that are equivalent to 29.97% as of December 31, 2016 of the current total amount of shares issued, subscribed and fully-paid
of the Company. In addition, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A. and La Esperanza Delaware
Corporation, collectively the Kowa Group, are the owners of a number of shares equivalent to 2.12% of the total amount of shares
of SQM S.A. issued, subscribed and fully-paid.



The Pampa Group and the Kowa Group have
informed SQM S.A., the Chilean SVS and the relevant stock exchanges in Chile and abroad that they are not and have never been related
parties between them. In addition, this is regardless of the fact that both Groups on December 21, 2006 have entered into a Joint
Action Agreement (JAA) related to those shares. Consequently, the Pampa Group, by itself, does not concentrate more than 32% of
the voting right capital of SQM S.A., and the Kowa Group does not concentrate by itself more than 32% of the voting right capital
of SQM S.A.



Likewise, the Joint Action Agreement has
not transformed the Pampa and Kowa Groups into related parties between them. The Joint Action Agreement has only transformed the
current controller of SQM S.A., composed of the Pampa Group, and the Kowa Group into related parties of SQM S.A.



F-66


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 9 | Related party disclosures (continued)
| | ------ | -------------------------------------



| | 9.3 | Relationships between the parent and the entity, continued
| | --- | ----------------------------------------------------------



Detail of effective concentration



|Tax ID No.        |  | Name                                         |  | Ownership  interest % |      
|----------------- |  | -------------------------------------------- |  | --------------------- | -----
|96.511.530-7      |  | Sociedad de Inversiones Pampa Calichera S.A. |  |                       | 19.72
|76.165.311-5      |  | Potasios de Chile S.A.                       |  |                       | 6.91 
|96.863.960-9      |  | Inversiones Global Mining (Chile) Ltda.      |  |                       | 3.34 
|Total Pampa Group |  |                                              |  |                       | 29.97
|                  |  |                                              |  |                       |      
|79.798.650-k      |  | Inversiones la Esperanza (Chile) Ltda.       |  |                       | 1.43 
|59.046.730-8      |  | Kowa Co Ltd.                                 |  |                       | 0.30 
|96.518.570-4      |  | Kochi S.A.                                   |  |                       | 0.30 
|59.023.690-k      |  | La Esperanza Delaware Corporation            |  |                       | 0.09 
|Total Kowa Group  |  |                                              |  |                       | 2.12 







F-67


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 9 | Related party disclosures (continued)
| | ------ | -------------------------------------



| | 9.3 | Detailed identification of the link between the Parent and subsidiary
| | --- | ---------------------------------------------------------------------



As of December 31, 2016 and December 31,
2015, the detail of entities that are related parties of the SQM S.A. Group is as follows:



|Tax ID No.   |  | Name                                             |  | Country of origin |  | Functional currency |  | Nature    
|------------ |  | ------------------------------------------------ |  | ----------------- |  | ------------------- |  | ----------
|Foreign      |  | Nitratos Naturais Do Chile Ltda.                 |  | Brazil            |  | US$                 |  | Subsidiary
|Foreign      |  | Nitrate Corporation Of Chile Ltd.                |  | United Kingdom    |  | US$                 |  | Subsidiary
|Foreign      |  | SQM North America Corp.                          |  | United States     |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Europe N.V.                                  |  | Belgium           |  | US$                 |  | Subsidiary
|Foreign      |  | Soquimich S.R.L. Argentina                       |  | Argentina         |  | US$                 |  | Subsidiary
|Foreign      |  | Soquimich European Holding B.V.                  |  | The Netherlands   |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Corporation N.V.                             |  | The Netherlands   |  | US$                 |  | Subsidiary
|Foreign      |  | SQI Corporation N.V.                             |  | The Netherlands   |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Comercial De México S.A. de C.V.             |  | Mexico            |  | US$                 |  | Subsidiary
|Foreign      |  | North American Trading Company                   |  | United States     |  | US$                 |  | Subsidiary
|Foreign      |  | Administración y Servicios Santiago S.A. de C.V. |  | Mexico            |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Peru S.A.                                    |  | Peru              |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Ecuador S.A.                                 |  | Ecuador           |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Nitratos Mexico S.A. de C.V.                 |  | Mexico            |  | US$                 |  | Subsidiary
|Foreign      |  | SQMC Holding Corporation L.L.P.                  |  | United States     |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Investment Corporation N.V.                  |  | The Netherlands   |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Brasil Limitada                              |  | Brazil            |  | US$                 |  | Subsidiary
|Foreign      |  | SQM France S.A.                                  |  | France            |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Japan Co.  Ltd.                              |  | Japan             |  | US$                 |  | Subsidiary
|Foreign      |  | Royal Seed Trading Corporation A.V.V.            |  | Aruba             |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Oceania Pty Limited                          |  | Australia         |  | US$                 |  | Subsidiary
|Foreign      |  | Rs Agro-Chemical Trading Corporation A.V.V.      |  | Aruba             |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Indonesia S.A.                               |  | Indonesia         |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Virginia L.L.C.                              |  | United States     |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Italia SRL                                   |  | Italy             |  | US$                 |  | Subsidiary
|Foreign      |  | Comercial Caiman Internacional S.A.              |  | Panamá            |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Africa Pty. Ltd.                             |  | South Africa      |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Lithium Specialties LLC                      |  | United States     |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Iberian S.A.                                 |  | Spain             |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Agro India Pvt. Ltd.                         |  | India             |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Beijing Commercial Co. Ltd.                  |  | China             |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Thailand Limited                             |  | Thailand          |  | US$                 |  | Subsidiary
|Foreign      |  | SQM Vitas Spain                                  |  | Spain             |  | US$                 |  | Subsidiary
|96.801.610-5 |  | Comercial Hydro  S.A.                            |  | Chile             |  | Chilean peso        |  | Subsidiary
|96.651.060-9 |  | SQM Potasio S.A.                                 |  | Chile             |  | US$                 |  | Subsidiary
|96.592.190-7 |  | SQM Nitratos S.A.                                |  | Chile             |  | US$                 |  | Subsidiary
|96.592.180-K |  | Ajay SQM Chile S.A.                              |  | Chile             |  | US$                 |  | Subsidiary



F-68


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 9 | Related party disclosures (continued)
| | ------ | -------------------------------------



| | 9.4 | Detailed identification of the link between the Parent
and subsidiary, continued
| | --- | --------------------------------------------------------------------------------



As of December 31, 2016 and December 31, 2015, the detail of
entities that are a related parties of the SQM S.A: Group is as follows:



|Tax ID No.   |  | Name                                                          |  | Country of origin |  | Functional currency  |  | Nature                                    
|------------ |  | ------------------------------------------------------------- |  | ----------------- |  | -------------------- |  | ------------------------------------------
|86.630.200-6 |  | SQMC Internacional Ltda.                                      |  | Chile             |  | Chilean peso         |  | Subsidiary                                
|79.947.100-0 |  | SQM Industrial S.A.                                           |  | Chile             |  | US$                  |  | Subsidiary                                
|79.906.120-1 |  | Isapre Norte Grande Ltda.                                     |  | Chile             |  | Chilean peso         |  | Subsidiary                                
|79.876.080-7 |  | Almacenes y Depósitos Ltda.                                   |  | Chile             |  | Chilean peso         |  | Subsidiary                                
|79.770.780-5 |  | Servicios Integrales de Tránsitos y Transferencias S.A.       |  | Chile             |  | US$                  |  | Subsidiary                                
|79.768.170-9 |  | Soquimich Comercial S.A.                                      |  | Chile             |  | US$                  |  | Subsidiary                                
|79.626.800-K |  | SQM Salar S.A.                                                |  | Chile             |  | US$                  |  | Subsidiary                                
|78.053.910-0 |  | Proinsa Ltda.                                                 |  | Chile             |  | Chilean peso         |  | Subsidiary                                
|76.534.490-5 |  | Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A. |  | Chile             |  | Chilean peso         |  | Subsidiary                                
|76.425.380-9 |  | Exploraciones Mineras S.A.                                    |  | Chile             |  | US$                  |  | Subsidiary                                
|76.064.419-6 |  | Comercial Agrorama Ltda.                                      |  | Chile             |  | Chilean peso         |  | Subsidiary                                
|76.145.229-0 |  | Agrorama S.A.                                                 |  | Chile             |  | Chilean peso         |  | Subsidiary                                
|76.359.919-1 |  | Orcoma Estudios SPA                                           |  | Chile             |  | US$                  |  | Subsidiary                                
|76.360.575-2 |  | Orcoma SPA                                                    |  | Chile             |  | US$                  |  | Subsidiary                                
|77.557.430-5 |  | Sales de Magnesio Ltda.                                       |  | Chile             |  | Chilean peso         |  | Associate                                 
|Foreign      |  | Abu Dhabi Fertilizer Industries WWL                           |  | Arab Emirates     |  | Arab Emirates dirham |  | Associate                                 
|Foreign      |  | Doktor Tarsa Tarim Sanayi AS                                  |  | Turkey            |  | Turkish lira         |  | Associate                                 
|Foreign      |  | Ajay North America                                            |  | United States     |  | US$                  |  | Associate                                 
|Foreign      |  | Ajay Europe SARL                                              |  | France            |  | Euro                 |  | Associate                                 
|Foreign      |  | SQM Eastmed Turkey                                            |  | Turkey            |  | Euro                 |  | Associate                                 
|Foreign      |  | Charlee SQM Thailand Co. Ltd.                                 |  | Thailand          |  | Thai baht            |  | Associate                                 
|Foreign      |  | Sichuan SQM Migao Chemical Fertilizers Co Ltda.               |  | China             |  | US$                  |  | Joint venture                             
|Foreign      |  | Coromandel SQM India                                          |  | India             |  | Indian rupee         |  | Joint venture                             
|Foreign      |  | SQM Vitas Fzco.                                               |  | Arab Emirates     |  | Arab Emirates dirham |  | Joint venture                             
|Foreign      |  | SQM Star Qingdao Corp Nutrition Co., Ltd.                     |  | China             |  | US$                  |  | Joint venture                             
|Foreign      |  | SQM Vitas Holland B.V.                                        |  | Dutch Antilles    |  | Euro                 |  | Joint venture                             
|Foreign      |  | Kowa Company Ltd.                                             |  | Japan             |  | US$                  |  | Shareholder                               
|96.511.530-7 |  | Sociedad de Inversiones Pampa Calichera                       |  | Chile             |  | US$                  |  | Significant shareholder                   
|96.529.340-k |  | Norte Grande S.A.                                             |  | Chile             |  | Chilean peso         |  | Parent Company of significant share holder
|79.049.778-9 |  | Callegari Agricola S.A.                                       |  | Chile             |  | Chilean peso         |  | Other related parties                     
|Foreign      |  | Coromandel Internacional                                      |  | India             |  | Indian rupee         |  | Other related parties                     
|Foreign      |  | Vitas Roullier SAS                                            |  | France            |  | Euro                 |  | Other related parties                     
|Foreign      |  | SQM Vitas Brazil Agroindustria                                |  | Brazil            |  | US$                  |  | Joint venture                             
|Foreign      |  | SQM Vitas Peru S.A.C.                                         |  | Peru              |  | US$                  |  | Joint venture                             
|Foreign      |  | SQM Vitas Plantacote B.V                                      |  | Dutch Antilles    |  | Euro                 |  | Joint venture                             
|Foreign      |  | Minera Exar S.A.                                              |  | Argentina         |  | US$                  |  | Joint venture                             
|Foreign      |  | SQM Vitas Southern Africa Pty.                                |  | South Africa      |  | US$                  |  | Joint venture                             



| | (1) | During December 2016, SQM Salar S.A. sold the interest it had in Sales de Magnesio Ltda. to Rockwood Litio Ltda. This transaction
generated a gain of ThUS$7,636.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



F-69


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 9 | Related party disclosures (continued)
| | ------ | -------------------------------------



| | 9.4 | Detail of related parties and related party transactions
| | --- | --------------------------------------------------------



Transactions between the Parent and its
subsidiaries, associates, joint ventures and other related parties are part of the Company's common transactions. Their conditions
are those customary for this type of transactions in respect of terms and market prices. In addition, these have been eliminated
in consolidation and are not detailed in this note.



Maturity terms for each case vary according
to the transaction giving rise to them.



As of December 31, 2016 and December 31,
2015, there are no allowances for doubtful accounts related to balances pending of transactions with related parties as there is
no impairment in them.



As of December 31, 2016 and December 31,
2015, the detail of significant transactions with related parties is as follows:





|Tax ID No.   |  | Company                                         |  | Nature                                 |  | Country of origin    |  | Transaction        |  | 12/31/2016 ThUS$ |        |  | 12/31/2015 ThUS$ |  |        | 12/31/2014 ThUS$ | 
|------------ |  | ----------------------------------------------- |  | -------------------------------------- |  | -------------------- |  | ------------------ |  | ---------------- | ------ |  | ---------------- |  | ------ | ---------------- | 
|Foreign      |  | Doktor Tarsa Tarim Sanayi As                    |  | Associate                              |  | Turkey               |  | Sale of products   |  |                  | 11,619 |  |                  |  | 17,842 |                  | 
|Foreign      |  | Ajay Europe S,A.R.L.                            |  | Associate                              |  | France               |  | Sale of products   |  |                  | 17,977 |  |                  |  | 23,545 |                  | 
|Foreign      |  | Ajay Europe S.A.R.L.                            |  | Associate                              |  | France               |  | Dividends          |  |                  | 1,338  |  |                  |  | 1,748  |                  | 
|Foreign      |  | Ajay North America LLC.                         |  | Associate                              |  | United States        |  | Sale of products   |  |                  | 12,865 |  |                  |  | 15,618 |                  | 
|Foreign      |  | Ajay North America LLC.                         |  | Associate                              |  | United States        |  | Dividends          |  |                  | 2,605  |  |                  |  | 5,185  |                  | 
|Foreign      |  | Ajay North America LLC.                         |  | Associate                              |  | United States        |  | Sale of services   |  |                  | -      |  |                  |  | -      |                  | 
|Foreign      |  | Abu Dhabi Fertilizer Industries WWL             |  | Associate                              |  | United Arab Emirates |  | Sale of products   |  |                  | 8,312  |  |                  |  | 7,902  |                  | 
|Foreign      |  | Charlee SQM Thailand Co. Ltd.                   |  | Associate                              |  | Thailand             |  | Sale of products   |  |                  | 3,798  |  |                  |  | 5,557  |                  | 
|Foreign      |  | Charlee SQM Thailand Co. Ltd.                   |  | Associate                              |  | Thailand             |  | Dividends          |  |                  | -      |  |                  |  | 296    |                  | 
|77.557.430-5 |  | Sales de Magnesio Ltda.                         |  | Associate                              |  | Chile                |  | Sale of products   |  |                  | -      |  |                  |  | 1,187  |                  | 
|77.557.430-5 |  | Sales de Magnesio Ltda.                         |  | Associate                              |  | Chile                |  | Dividends          |  |                  | -      |  |                  |  | 286    |                  | 
|77.557.430-5 |  | Sales de Magnesio Ltda.                         |  | Associate                              |  | Chile                |  | Sale of services   |  |                  | -      |  |                  |  | 34     |                  | 
|79.049.778-9 |  | Callegari Agrícola S.A.                         |  | Other related parties                  |  | Chile                |  | Other transactions |  |                  | -      |  |                  |  | -      |                  | 
|Foreign      |  | Kowa Company Ltd.                               |  | Holding Company                        |  | Japan                |  | Sale of products   |  |                  | 91,678 |  |                  |  | 62,543 |                  | 
|Foreign      |  | Kowa Company Ltd.                               |  | Shareholder                            |  | Japan                |  | Services received  |  |                  |        |  |                  |  | (933   | )                | 
|Foreign      |  | SQM Vitas Brasil Agroindustria                  |  | Joint venture                          |  | Brazil               |  | Sale of products   |  |                  | 17,686 |  |                  |  | 32,019 |                  | 
|Foreign      |  | SQM Vitas Peru S.A.C.                           |  | Joint control or significant influence |  | Peru                 |  | Sale of products   |  |                  | 22,090 |  |                  |  | 34,586 |                  | 
|Foreign      |  | SQM Vitas Southern Africa Pty.                  |  | Joint control or significant influence |  | South Africa         |  | Sale of products   |  |                  | -      |  |                  |  | 2,187  |                  | 
|Foreign      |  | SQM Vitas Fzco.                                 |  | Joint venture                          |  | United Arab Emirates |  | Sale of products   |  |                  | 965    |  |                  |  | 1,060  |                  | 
|Foreign      |  | Sichuan SQM Migao Chemical Fertilizers Co Ltda. |  | Joint venture                          |  | China                |  | Sale of products   |  |                  | 9,950  |  |                  |  | 22,624 |                  | 
|Foreign      |  | Sichuan SQM Migao Chemical Fertilizers Co Ltda. |  | Joint venture                          |  | China                |  | Sale of services   |  |                  | 257    |  |                  |  | -      |                  | 
|Foreign      |  | Coromandel SQM India                            |  | Joint venture                          |  | India                |  | Sale of products   |  |                  | 4,630  |  |                  |  | 4,012  |                  | 
|Foreign      |  | SQM Vitas Spain                                 |  | Joint venture                          |  | Spain                |  | Sale of products   |  |                  | 5,528  |  |                  |  | 8,587  |                  | 
|Foreign      |  | SQM Vitas Plantacote B.V.                       |  | Joint venture                          |  | Netherlands          |  | Sale of products   |  |                  | 49     |  |                  |  | 27     |                  | 
|Foreign      |  | SQM Star Qingdao Corp Nutrition Co., Ltd.       |  | Joint venture                          |  | China                |  | Sale of products   |  |                  | 166    |  |                  |  | -      |                  | 
|Foreign      |  | SQM Vitas Holland B.V.                          |  | Joint venture                          |  | Netherlands          |  | Sale of products   |  |                  | 634    |  |                  |  | -      |                  | 





F-70


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 9 | Related party disclosures (continued)
| | ------ | -------------------------------------



Trade receivable and payable between the
Parent and its subsidiaries, associates, joint ventures and other related parties are part of the Company's common transactions.
Their conditions are those customary for this type of transactions in respect of terms and market prices. In addition, these have
been eliminated in consolidation and are not detailed in this note.



| | 9.5 | Trade receivables due from related parties, current:
| | --- | ----------------------------------------------------



|Tax ID N°    |  | Company                                         |  | Nature                    |  | Country of origin    |  | Currency             |  | 12/31/2016 |        |  | 12/31/2015 | 
|------------ |  | ----------------------------------------------- |  | ------------------------- |  | -------------------- |  | -------------------- |  | ---------- | ------ |  | ---------- | 
|             |  |                                                 |  |                           |  |                      |  |                      |  | ThUS$      |        |  | ThUS$      | 
|77.557.430-5 |  | Sales de Magnesio Ltda.                         |  | Associate                 |  | Chile                |  | Ch$                  |  |            | -      |  |            | 
|Foreign      |  | Charlee SQM Thailand Co. Ltd.                   |  | Associate                 |  | Thailand             |  | US$                  |  |            | 1.315  |  |            | 
|Foreign      |  | Ajay Europe S.A.R.L.                            |  | Associate                 |  | France               |  | Euro                 |  |            | 3.801  |  |            | 
|Foreign      |  | Ajay North America LLC.                         |  | Associate                 |  | United States        |  | US$                  |  |            | 3.095  |  |            | 
|Foreign      |  | Abu Dhabi Fertilizer Industries WWL             |  | Associate                 |  | United Arab Emirates |  | Arab Emirates dirham |  |            | 764    |  |            | 
|Foreign      |  | Doktor Tarsa Tarim Sanayi AS                    |  | Associate                 |  | Turkey               |  | YTL                  |  |            | -      |  |            | 
|Foreign      |  | Kowa Company Ltd.                               |  | Shareholders              |  | Japan                |  | US$                  |  |            | 34.377 |  |            | 
|96.511.530-7 |  | Soc.de Inversiones Pampa Calichera              |  | Jointly controlled entity |  | Chile                |  | US$                  |  |            | 6      |  |            | 
|Foreign      |  | SQM Vitas Brasil Agroindustria                  |  | Joint venture             |  | Brazil               |  | US$                  |  |            | 9.580  |  |            | 
|Foreign      |  | SQM Vitas Peru S.A.C.                           |  | Joint venture             |  | Peru                 |  | US$                  |  |            | 13.318 |  |            | 
|Foreign      |  | Coromandel SQM India                            |  | Joint venture             |  | India                |  | Indian rupee         |  |            | 1.177  |  |            | 
|Foreign      |  | Sichuan SQM Migao Chemical Fertilizers Co Ltda. |  | Joint venture             |  | China                |  | US$                  |  |            | 14.547 |  |            | 
|79.049.778-9 |  | Callegari Agrícola S.A.                         |  | Other related parties     |  | Chile                |  | Ch$                  |  |            | 41     |  |            | 
|Foreign      |  | SQM Vitas Fzco.                                 |  | Joint venture             |  | United Arab Emirates |  | Arab Emirates dirham |  |            | 97     |  |            | 
|Foreign      |  | SQM Vitas Spain                                 |  | Joint venture             |  | Spain                |  | Euro                 |  |            | -      |  |            | 
|Foreign      |  | SQM Vitas Plantacote B.V.                       |  | Joint venture             |  | Netherlands          |  | Euro                 |  |            | 91     |  |            | 
|Foreign      |  | SQM Star Qingdao Corp Nutrition Co., Ltd.       |  | Joint venture             |  | China                |  | US$                  |  |            | 48     |  |            | 
|Foreign      |  | Plantacote N.V.                                 |  | Associate                 |  | Belgium              |  | Euro                 |  |            | 2      |  |            | 
|Total        |  |                                                 |  |                           |  |                      |  |                      |  |            | 82.259 |  |            | 





| | 9.6 | Trade payables due to related parties, current:
| | --- | -----------------------------------------------



|Tax ID  No.         |  | Company.                     |  | Nature        |  | Country
of origin |  | Currency             |  | 12/31/2016  ThUS$ |   |  | 12/31/2015  ThUS$ | 
|------------------- |  | ---------------------------- |  | ------------- |  | ----------------- |  | -------------------- |  | ----------------- | - |  | ----------------- | 
|Foreign             |  | Doktor Tarsa Tarim Sanayi AS |  | Associate     |  | Turkey            |  | YTL                  |  |                   | 7 |  |                   | 
|Foreign             |  | SQM Vitas Fzco.              |  | Joint venture |  | Arab Emirates     |  | Arab Emirates dirham |  |                   | - |  |                   | 
|Foreign             |  | SQM Vitas Plantacote B.V.    |  | Joint venture |  | Netherlands       |  | Euro                 |  |                   | - |  |                   | 
|Total as of to-date |  |                              |  |               |  |                   |  |                      |  |                   | 7 |  |                   | 



F-71


Notes to the Consolidated Financial Statements as of December 31, 2016






| | Note 9 | Related party disclosures (continued)
| | ------ | -------------------------------------



| | 9.7 | Board of Directors and Senior Management
| | --- | ----------------------------------------



| | 1) | Board
                                         of directors
| | -- | -----------------------------------------------------------



SQM S.A. is managed by a Board of Directors
which is composed of 8 regular directors, 2 of which are independent directors, who are elected for a three-year period. The present
Board of Directors was elected by the shareholders at the Ordinary Shareholders' Meeting of April 26, 2016.



As of December 31, 2016, the Company has
the following Committees:



| | - | Directors’ Committee: composed of Hans Dieter Linneberg A. and Edward J. Waitzer, Julio Rebolledo
D. Such Committee performs the duties contained in Article 50 bis of Law No. 18.046, the Chilean “Securities Act”.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | Audit Committee: composed of Hans Dieter Linneberg A. and Edward J. Waitzer, Julio Rebolledo D.
| | - | -----------------------------------------------------------------------------------------------

| | - | Health, Safety and Environmental Matters Committee: composed of Mrs. Joanne L. Boyes, Gonzalo Guerrero
Y. and Arnfinn F. Prugger.
| | - | ---------------------------------------------------------------------------------------------------------------------------------

| | - | Corporate Governance Committee: composed of Edward J. Waitzer, Robert A. Kirkpatrick, and Hans
Dieter Linneberg A.
| | - | ------------------------------------------------------------------------------------------------------------------



During the periods covered by these financial
statements, there are no pending balances receivable and payable between the Company, its directors or members of Senior Management
other than those related to remuneration, fee allowances and profit-sharing. In addition, there were no transactions conducted
between the Company, its directors or members of Senior Management.



1.1 Shearman & Sterling and Ad-Hoc Committee



At its Extraordinary Meeting of February
26, 2015, the Board of Directors formed an Ad-Hoc Committee, which is currently composed of the Directors Robert A. Kirkpatrick,
Wolf von Appen B. and the Chairman Edward J. Waitzer. The Board of Directors delegated in the Committee the authority required
to perform its duties and empowered it so that at its discretion engages all legal and accounting advisory required and other independent
external advisory services as it deems appropriate and that upon performing its duties reports to the Board of Directors on its
conclusions and possible recommendations for courses of action. The Committee engaged the legal Advisory of the law firms Shearman
& Sterling and Vial / Serrano, and the forensic services provided by FTI.



F-72


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 9 | Related party disclosures (continued)
| | ------ | -------------------------------------



| | 9.7 | Board of Directors and Senior Management, continued
| | --- | ---------------------------------------------------



| | 2) | Directors’ Compensation
| | -- | -----------------------



Directors’ compensation is detailed
as follows:



| | a) | The payment of a fixed, gross and monthly amount of three hundred Unidades de Fomento (inflation-adjusted
units) in favor the Chairman of the Board of Directors of SQM S.A. and of two hundred Unidades de Fomento in favor of each of the
remaining seven directors of SQM S.A. regardless of the number of Meetings held or not held during the related month and for the
periods between May 1, 2016 and April 30, 2017.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | A payment in domestic currency in favor of the Chairman of the Company’s Board of Directors
consisting of a variable and gross amount equivalent to 0.135% of profit for the period effectively earned by the Company during
fiscal year 2016.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | A payment in domestic currency in favor of each Company’s directors excluding the Chairman
of the Board, consisting of a variable and gross amount equivalent to 0.06% of profit for the period effectively earned by the
Company during fiscal years 2016.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d) | The fixed and variable amounts indicated above will not be subject to any challenge between them
and those expressed in percentages will be paid after the related General Shareholders’ Meeting of SQM S.A. approves the
Balance Sheet, Financial Statements, Annual Report, the Account Inspectors’ Report and Independent Auditor’s Report
of SQM S.A. for the commercial year ended December 31, 2016.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | The amounts expressed in UF will be paid in accordance with the value determined by the Chilean
Superintendence of Banks and Financial Institutions (SBIF), the Central Bank of Chile (Banco Central de Chile) or another relevant
institution replacing them during the last day of the calendar year applicable. The amounts reflected in or referred to in U.S.
dollars will be converted to Chilean pesos and paid in Chilean pesos in accordance with the exchange rate with which the dividend
declared for the commercial year 2016 is paid.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f) | Therefore, the remunerations and profit sharing paid to members of the Board of Directors and Audit
Committee during 2016 amount to ThUS$2,292 (ThUS$2,769 as of December 31, 2015).
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3) | Audit Committee
| | -- | ---------------



The remuneration of Directors Committee is composed of:



| | a) | The payment of a fixed, gross and monthly amount of three seventy-five Unidades de Fomento (inflation-adjusted
units) in favor the three Directors that are members of the Director’s Committee regardless of the number of Meetings held
or not held during the related month and for the periods between May 1, 2016 and April 30, 2017.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | A payment in domestic currency in favor of each of the three Directors consisting of a variable
and gross amount equivalent to 0.02% of profit for the period effectively earned by the Company during fiscal year 2016 resulting
after deducting the relevant amount for the concept of the amortization of gain from bargain purchase and regardless of the number
of Meetings held or not held by the Directors’ Committee during such year.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-73


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 9 | Related party disclosures (continued)
| | ------ | -------------------------------------



| | 9.7 | Board of Directors and Senior Management, continued
| | --- | ---------------------------------------------------



| | c) | The fixed and variable amounts indicated above will not be subject to any challenge between them
and those expressed in percentages will be paid after the related General Shareholders’ Meeting of SQM S.A. approves the
Balance Sheet, Financial Statements, Annual Report, the Account Inspectors’ Report and Independent Auditor’s Report
of SQM S.A. for the commercial year ended December 31, 2016.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d) | The amounts expressed in UF will be paid in accordance with the value determined by the Chilean
Superintendence of Banks and Financial Institutions (SBIF), the Central Bank of Chile (Banco Central de Chile) or another relevant
institution replacing them during the last day of the calendar year applicable. The amounts reflected in or referred to in U.S.
dollars will be converted to Chilean pesos and paid in Chilean pesos in accordance with the exchange rate with which the dividend
declared for the commercial year 2016 is paid.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4) | Corporate Governance Committee, Health, Safety and Environmental
Matters Committee and other Company’s Committees
| | -- | -----------------------------------------------------------------------------------------------------------------



Remuneration of such committees is composed
of the payment of a fixed, gross, monthly amount of UF 50 for each director comprising such committees, regardless of the number
of meetings held or not held during the related month or year.



| | 5) | No guarantees have been constituted in favor of the directors.
| | -- | --------------------------------------------------------------



| | 6) | Senior management compensation:
| | -- | -------------------------------



| | a) | As of December 31, 2016, the global compensation paid to the 105 main executives amounts to ThUS$20,439
and the global compensation paid to the 103 main executives as of December 31, 2015 amounted to ThUS$19,355. This includes monthly
fixed salary and variable performance bonuses.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | The Company provides its executives with an annual and a long-term bonus plan payble in the first
quarter of 2021 or the date of the employee ́s resignation, taking into account achievement of targets and individual contribution
to the Company’s operating results.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7) | Additionally, the Company has retention bonuses for the Company’s executives. The amount
of these bonuses is linked to the price of the Company’s share and is payable in 2021 (see Note 16).
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 8) | No guarantees have been constituted in favor of the Company’s management.
| | -- | -------------------------------------------------------------------------



| | 9) | The Company’s Managers and Directors do not receive or have not received any benefit during
the period ended December 31, 2016 and the year ended December 31, 2015 or compensation for the concept of pensions, life insurance,
paid time off, profit sharing, incentives, or benefits due to disability other than those mentioned in the preceding points.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-74


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 9 | Related party disclosures (continued)
| | ------ | -------------------------------------



| | 9.7 | Board of Directors and Senior Management, continued
| | --- | ---------------------------------------------------



| | 10) | In accordance with IAS 24, we should report that the Company's Director Mr. Wolf Von Appen B. is
also a member of the Ultramar Group. As of December 31, 2015, the amount of transactions with this Group is approximately ThUS$7,854
(ThUS$12,287 as of December 31, 2014).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 9.8 | Key management personnel compensation
| | --- | -------------------------------------



|                                          |  | 12/31/2016 |        |  | 12/31/2015 | 
|----------------------------------------- |  | ---------- | ------ |  | ---------- | 
|                                          |  | ThUS$      |        |  | ThUS$      | 
|                                          |  |            |        |  |            | 
|Key management personnel compensation (1) |  |            | 20,439 |  |            | 



| | (1) | Corresponds to a number of executives (see Note 9.7 6) b).
| | --- | ----------------------------------------------------------



F-75


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 10 | Financial instruments
| | ------- | ---------------------



Financial instruments in accordance with IAS 39 are detailed
as follows:



| | 10.1 | Types of other financial assets
| | ---- | -------------------------------



|Description of other financial assets    |  | 12/31/2016 ThUS$ |         |  | 12/31/2015 ThUS$ | 
|---------------------------------------- |  | ---------------- | ------- |  | ---------------- | 
|                                         |  |                  |         |  |                  | 
|Other current financial assets (1)       |  |                  | 284,160 |  |                  | 
|Derivatives (2)                          |  |                  | 4,095   |  |                  | 
|Hedging assets                           |  |                  | 934     |  |                  | 
|Total other current financial assets     |  |                  | 289,189 |  |                  | 
|                                         |  |                  |         |  |                  | 
|Other non-current financial assets (3)   |  |                  | 14,099  |  |                  | 
|Total other non-current financial assets |  |                  | 14,099  |  |                  | 



| | (1) | Relates to term deposits with maturities exceeding 90 days and less than 360 days from the investment date.
| | --- | -----------------------------------------------------------------------------------------------------------



| | (2) | Relate to forwards and options that were not classified as hedging instruments (see detail in Note 10.3).
| | --- | ---------------------------------------------------------------------------------------------------------



| | (3) | The detail of other financial assets, non-current is as follows:
| | --- | ----------------------------------------------------------------



|                                                                                                                  |  | 12/31/2016 ThUS$ |        |  | 12/31/2015 ThUS$ | 
|----------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------ |  | ---------------- | 
|                                                                                                                  |  |                  |        |  |                  | 
|Non-current investments not accounted for using the equity method of accounting, classified as available for sale |  |                  | 6,899  |  |                  | 
|Hedging assets                                                                                                    |  |                  | 7,156  |  |                  | 
|Other financial assets, non-current                                                                               |  |                  | 44     |  |                  | 
|Total other financial assets, non-current                                                                         |  |                  | 14,099 |  |                  | 



Detail of other current financial assets



|Institution                    |  | 12/31/2016 ThUS$ |         |  | 12/31/2015 ThUS$ | 
|------------------------------ |  | ---------------- | ------- |  | ---------------- | 
|Banco Santander                |  |                  | 54,364  |  |                  | 
|Banco de Crédito e Inversiones |  |                  | 40,627  |  |                  | 
|Banco de Chile                 |  |                  | -       |  |                  | 
|Corpbanca                      |  |                  | 19,247  |  |                  | 
|Banco Itaú                     |  |                  | 44,722  |  |                  | 
|Banco Security                 |  |                  | 15,007  |  |                  | 
|Morgan Stanley                 |  |                  | 3,150   |  |                  | 
|Scotiabank Sud Americano       |  |                  | 107,043 |  |                  | 
|HSBC Bank Chile                |  |                  | -       |  |                  | 
|Total                          |  |                  | 284,160 |  |                  | 



F-76


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 10 | Financial instruments, (continued)
| | ------- | ----------------------------------



| | 10.2 | Trade and other receivables
| | ---- | ---------------------------



|                                  |  | 12/31/2016 |         |  | 12/31/2015  | 
|--------------------------------- |  | ---------- | ------- |  | ----------- | 
|                                  |  | Current    |         |  | Non-current | 
|                                  |  | ThUS$      |         |  | ThUS$       | 
|Trade receivables                 |  |            | 344,839 |  |             | 
|Prepayments                       |  |            | 6,621   |  |             | 
|Other receivables                 |  |            | 17,301  |  |             | 
|Total trade and other receivables |  |            | 368,761 |  |             | 



|                                                  |  | 12/31/2016                |         |  | 12/31/2015                                | 
|------------------------------------------------- |  | ------------------------- | ------- |  | ----------------------------------------- | 
|                                                  |  | Assets before  allowances |         |  | Allowance for doubtful trade  receivables | 
|                                                  |  | ThUS$                     |         |  | ThUS$                                     | 
|Receivables related to credit operations, current |  |                           | 361,656 |  |                                           | 
|Trade receivables, current                        |  |                           | 361,656 |  |                                           | 
|Prepayments, current                              |  |                           | 9,421   |  |                                           | 
|Other receivables, current                        |  |                           | 19,300  |  |                                           | 
|Current trade and other receivables               |  |                           | 390,377 |  |                                           | 
|Other receivables, non-current                    |  |                           | 1,840   |  |                                           | 
|Non-current receivables                           |  |                           | 1,840   |  |                                           | 
|Total trade and other receivables                 |  |                           | 392,217 |  |                                           | 



F-77


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	  Financial instruments, (continued)



10.2	   Trade and other receivables, continued



Portfolio stratification, continued



The Company’s policy is to require guarantees
(such as letters of credit, guarantee clauses and others) and/or maintaining insurance policies for certain accounts as deemed
necessary by management.



Unsecuritized portfolio



As of December 31, 2016 and December 31, 2015, the detail of the
unsecuritized portfolio is as follows:



|12/31/2016                                                    
|--------------------------------------------------------------
|                                                              
|                                                              
|Number of customers, portfolio under no renegotiated
    terms
|Portfolio under no renegotiated terms                         
|Number of customers under renegotiated terms portfolio        
|Portfolio under renegotiated terms, gross                     
|Total gross portfolio                                         



|12/31/2015                                                    
|--------------------------------------------------------------
|                                                              
|                                                              
|Number of customers, portfolio under no renegotiated
    terms
|Portfolio under no renegotiated terms                         
|Number of customers under renegotiated terms portfolio        
|Portfolio under renegotiated terms, gross                     
|Total gross portfolio                                         



F-78


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
10	    Financial instruments, (continued)



10.2	   Trade and other receivables, continued



The detail of allowances is as follows:



|Provision and write-offs                            |  | 12/31/2016 |        |   | 12/31/2015 |  |        | 12/31/2014 | 
|--------------------------------------------------- |  | ---------- | ------ | - | ---------- |  | ------ | ---------- | 
|                                                    |  | ThUS$      |        |   | ThUS$      |  |        | ThUS$      | 
|Allowance for portfolio under no renegotiated terms |  |            | 19,428 |   |            |  | 18,980 |            | 
|Allowance for portfolio with renegotiated terms     |  |            | 2,193  |   |            |  | 2,356  |            | 
|Write-offs for the period                           |  |            | (5     | ) |            |  | (1,605 | )          | 
|Total                                               |  |            | 21,616 |   |            |  | 19,731 |            | 



As of December 31, 2016 and 2015, movements
in provisions are detailed as follows



|Reconciliation                             |  | 12/31/2016 |        |   | 12/31/2015 |  |        | 12/31/2014 | 
|------------------------------------------ |  | ---------- | ------ | - | ---------- |  | ------ | ---------- | 
|                                           |  | ThUS$      |        |   | ThUS$      |  |        | ThUS$      | 
|Opening balance                            |  |            | 19,731 |   |            |  | 19,828 |            | 
|Additional provisions                      |  |            | 10,632 |   |            |  | 2,836  |            | 
|Increase (decrease) in existing provisions |  |            | (8,747 | ) |            |  | (2,933 | )          | 
|Final Balance                              |  |            | 21,616 |   |            |  | 19,731 |            | 



Credit risk concentration



Credit risk concentration with respect to
trade receivables is reduced due to the great number of entities included in the Company’s client database and their distribution
throughout the world.



F-79


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	    Financial instruments,
(continued)



| | 10.3 | Hedging assets and liabilities
| | ---- | ------------------------------



The balance represents derivative instruments
measured at fair value which have been classified as hedges from exchange and interest rate risks related to the total obligations
associated with bonds of the Company in Chilean pesos and UF (and the exchange risk in Chilean pesos of the Company’s investment
plans). As of December 31, 2016, the notional amount of cash flows in Cross Currency Swap contracts agreed upon in US dollars
amounted to ThUS$320,155 and as of December 31, 2015 such contracts amounted to ThUS$331,853 and as of December 31, 2014 such
contracts amounted to ThUS$343,519.



|Hedging assets with  underlying debt |  | Derivative  instruments  (Fwds) |     |  | Effect on profit or  loss for the period Derivative  instruments |  |     | Hedging reserve  in gross equity |  |  | Deferred tax  hedging  reserve in  equity |  |  | Hedging  reserve in  equity |   
|------------------------------------ |  | ------------------------------- | --- |  | ---------------------------------------------------------------- |  | --- | -------------------------------- |  |  | ----------------------------------------- |  |  | --------------------------- | --
|                                     |  | ThUS$                           |     |  | ThUS$                                                            |  |     | ThUS$                            |  |  | ThUS$                                     |  |  | ThUS$                       |   
|December 31, 2016                    |  |                                 | 830 |  |                                                                  |  | 789 |                                  |  |  | 41                                        |  |  |                             | (9



|Hedging liabilities   with underlying  debt |  | Derivative  instruments  (CCS) |        |  | Effect on profit or
loss for the period Derivative  instruments |  |        | Hedging reserve
 in gross equity |  |  | Deferred tax  hedging  reserve in  equity |   |  | Hedging  reserve in  equity |  
|------------------------------------------- |  | ------------------------------ | ------ |  | --------------------------------------------------------------- |  | ------ | -------------------------------- |  |  | ----------------------------------------- | - |  | --------------------------- | -
|                                            |  | ThUS$                          |        |  | ThUS$                                                           |  |        | ThUS$                            |  |  | ThUS$                                     |   |  | ThUS$                       |  
|December 31, 2016                           |  |                                | 43,235 |  |                                                                 |  | 28,108 |                                  |  |  | (29                                       | ) |  |                             | 5



F-80


Notes to the Consolidated Financial Statements as of December 31, 2016






Note 10	   Financial instruments
(continued)



10.3	   Hedging assets and liabilities, continued



|Hedging liabilities  with underlying  investments |  | Derivative  instruments  (CCS) |     |  | Effect on profit or  loss for the period  Derivative  instruments |  |      | Hedging reserve  in gross equity |  |  | Deferred tax  hedging  reserve in  equity |  |  | Hedging  reserve in  equity |    
|------------------------------------------------- |  | ------------------------------ | --- |  | ----------------------------------------------------------------- |  | ---- | -------------------------------- |  |  | ----------------------------------------- |  |  | --------------------------- | ---
|                                                  |  | ThUS$                          |     |  | ThUS$                                                             |  |      | ThUS$                            |  |  | ThUS$                                     |  |  | ThUS$                       |    
|December 31, 2016                                 |  |                                | 218 |  |                                                                   |  | (294 | )                                |  |  | 76                                        |  |  |                             | (19



|Hedging liabilities |  | Derivative  instruments  (CCS) |        |  | Effect on profit or
loss for the period Derivative  instruments |  |         | Hedging reserve
in gross equity |  |  | Deferred tax  hedging  reserve in  equity |  |  | Hedging  reserve in  equity |     
|------------------- |  | ------------------------------ | ------ |  | --------------------------------------------------------------- |  | ------- | ------------------------------- |  |  | ----------------------------------------- |  |  | --------------------------- | ----
|                    |  | ThUS$                          |        |  | ThUS$                                                           |  |         | ThUS$                           |  |  | ThUS$                                     |  |  | ThUS$                       |     
|                    |  |                                |        |  |                                                                 |  |         |                                 |  |  |                                           |  |  |                             |     
|December 31, 2015   |  |                                | 74,786 |  |                                                                 |  | (29,245 | )                               |  |  | 86                                        |  |  |                             | 96  
|December 31, 2014   |  |                                | 37,034 |  |                                                                 |  | (43,236 | )                               |  |  | 1,638                                     |  |  |                             | (311



The balances in the “effect on profit
or loss” column consider the effects of the contracts in force as of December 31, 2016 and December 31, 2015.



Derivative contract maturities are detailed
as follows:



|Series |  | Contract  amount |         |  | Currency |    | Maturity date
|------ |  | ---------------- | ------- |  | -------- | -- | -------------
|       |  | ThUS$            |         |  |          |    |              
|C      |  |                  | 51,315  |  |          | UF |              
|H      |  |                  | 191,638 |  |          | UF |              
|M      |  |                  | 46,463  |  |          | UF |              
|O      |  |                  | 68,339  |  |          | UF |              



The Company uses cross currency swap derivative
instruments to hedge the possible financial risk associated with the volatility of the exchange rate associated with Chilean pesos
and UF. The objective is to hedge the exchange rate financial risks associated with bonds payable. Hedges are documented and tested
to measure their effectiveness.



Based on a comparison of critical terms, hedging
is highly effective, given that the hedged amount is consistent with obligations maintained for bonds denominated in Chilean pesos
and UF. Likewise, hedging contracts are denominated in the same currencies and have the same expiration dates of bond principal
and interest payments.



Hedge Accounting



The Company classifies derivative instruments
as hedging that may include derivative or embedded derivatives either as fair value hedge derivative instruments, cash flow hedge
derivative instruments, or hedge derivative instruments for net investment in a business abroad.



a) Fair value hedge



Changes in fair values of derivative instruments
classified as fair value hedge derivative instruments are accounted for in gains and losses immediately along with any change
in the fair value of the hedged item that is attributable to the risk being hedged.



F-81


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	   Financial instruments
(continued)



10.3	   Hedging assets and liabilities, continued



The Company documents the relationship between
hedge instruments and the hedged item along with the objectives of its risk management and strategy to carry out different hedging
transactions. In addition, upon commencement of the period hedged and then on a quarterly basis the Company documents whether
hedge instruments have been efficient and met the objective of hedging market fluctuations for the purpose of which we use the
effectiveness test. A hedge instrument is deemed effective if the effectiveness test result is between 80% and 125%.



The hedge instruments are classified as effective
or not effective on the basis of the effectiveness test results. As of to date, hedges are classified as effective on the basis
of the effectiveness tests. This note includes the detail of fair values of derivatives classified as hedging instruments.



b) Cash flow hedges



Cash flow hedges cover exposure to the cash
flow variations attributable to a risk associated with a specific transaction that is very likely to be executed, that may have
material effects on the results of the Company.



10.4	   Financial liabilities



Other current and non-current financial liabilities



As of December 31, 2016 and December 31, 2015, the detail is as
follows:





|                                    |  | 12/31/2016 |         |  | 12/31/2015  | 
|----------------------------------- |  | ---------- | ------- |  | ----------- | 
|                                    |  | Current    |         |  | Non-current | 
|                                    |  | ThUS$      |         |  | ThUS$       | 
|Bank borrowings                     |  |            | 101,270 |  |             | 
|Obligations with the public (bonds) |  |            | 58,973  |  |             | 
|Derivatives                         |  |            | 1,920   |  |             | 
|Hedging liabilities                 |  |            | 16,981  |  |             | 
|Total                               |  |            | 179,144 |  |             | 



Current and non-current bank borrowings



As of December 31, 2016 and December 31, 2015, the detail is as
follows:



|                                                                  |  | 12/31/2016 |         |  | 12/31/2015 | 
|----------------------------------------------------------------- |  | ---------- | ------- |  | ---------- | 
|                                                                  |  | ThUS$      |         |  | ThUS$      | 
|Long-term bank borrowings                                         |  |            | -       |  |            | 
|Short-term bank borrowings                                        |  |            | 101,270 |  |            | 
|Current portion of long-term bank borrowings                      |  |            | -       |  |            | 
|Short-term borrowings and current portion of long-term borrowings |  |            | 101,270 |  |            | 
|Total bank borrowings                                             |  |            | 101,270 |  |            | 



F-82


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	   Financial instruments
(continued)



10.4	   Financial liabilities, continued



a)	        Bankborrowings, current:



As of December 31, 2016 and December 31, 2015, the detail of this
caption is as follows:



|Debtor       |  | Creditor            |  | Currency or  adjustment |  |              |  | Effective                |  |         | Nominal |      
|------------ |  | ------------------- |  | ----------------------- |  | ------------ |  | ------------------------ |  | ------- | ------- | -----
|Tax ID No    |  | Company             |  | Country                 |  | Tax ID No.   |  | Financial institution    |  | Country |         | index
|93.007.000-9 |  | SQM.S.A.            |  | Chile                   |  | 97.018.000-1 |  | Scotiabank Sud Americano |  | Chile   |         | US$  
|93.007.000-9 |  | SQM.S.A.            |  | Chile                   |  | 97.030.000-7 |  | Banco Estado             |  | Chile   |         | US$  
|93.007.000-9 |  | SQM.S.A.            |  | Chile                   |  | 97.018.000-1 |  | Scotiabank Sud Americano |  | Chile   |         | US$  
|93.007.000-9 |  | SQM.S.A.            |  | Chile                   |  | 97.018.000-1 |  | Scotiabank Sud Americano |  | Chile   |         | US$  
|79.626.800-K |  | SQM Salar S.A.      |  | Chile                   |  | 97.018.000-1 |  | Scotiabank Sud Americano |  | Chile   |         | US$  
|79.947.100-0 |  | SQM Industrial S.A. |  | Chile                   |  | 97.030.000-7 |  | Banco Estado             |  | Chile   |         | US$  



|                    |  |                          |  | 12/31/2016           |        |  | 12/31/2016               | 
|------------------- |  | ------------------------ |  | -------------------- | ------ |  | ------------------------ | 
|Debtor              |  | Creditor                 |  | Nominal amounts      |        |  | Current amounts          | 
|Company             |  | Financial institution    |  | Up to 90  days ThUS$ |        |  | 90 days to  1 year ThUS$ | 
|SQM.S.A.            |  | Scotiabank Sud Americano |  |                      | -      |  |                          | 
|SQM.S.A.            |  | Banco Estado             |  |                      | -      |  |                          | 
|SQM.S.A.            |  | Scotiabank Sud Americano |  |                      | -      |  |                          | 
|SQM.S.A.            |  | Scotiabank Sud Americano |  |                      | -      |  |                          | 
|SQM Salar S.A.      |  | Scotiabank Sud Americano |  |                      | -      |  |                          | 
|SQM Industrial S.A. |  | Banco Estado             |  |                      | 20,000 |  |                          | 
|Total               |  |                          |  |                      | 20,000 |  |                          | 



F-83


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	    Financial instruments
(continued)



10.4	    Financial liabilities, continued



|Debtor       |  | Creditor                              |  | Currency or  adjustment |  |              |  | Effective                                         |  |               | Nominal |      
|------------ |  | ------------------------------------- |  | ----------------------- |  | ------------ |  | ------------------------------------------------- |  | ------------- | ------- | -----
|Tax ID No    |  | Company                               |  | Country                 |  | Tax ID No.   |  | Financial institution                             |  | Country       |         | index
|93.007.000-9 |  | SQM.S.A.                              |  | Chile                   |  | 97.018.000-1 |  | Scotiabank Sud Americano                          |  | Chile         |         | US$  
|93.007.000-9 |  | SQM.S.A.                              |  | Chile                   |  | 97.030.000-7 |  | Banco Estado                                      |  | Chile         |         | US$  
|93.007.000-9 |  | SQM.S.A.                              |  | Chile                   |  | 97.018.000-1 |  | Scotiabank Sud Americano                          |  | Chile         |         | US$  
|93.007.000-9 |  | SQM S.A.                              |  | Chile                   |  | Foreign      |  | Banco Estado NY Branch                            |  | United States |         | US$  
|79.626.800-K |  | SQM Salar S.A.                        |  | Chile                   |  | 97.018.000-1 |  | Scotiabank Sud Americano                          |  | Chile         |         | US$  
|79.947.100-0 |  | SQM Industrial S.A.                   |  | Chile                   |  | 97.030.000-7 |  | Banco Estado                                      |  | Chile         |         | US$  
|Foreign      |  | Royal Seed Trading Corporation A.V.V. |  | Aruba                   |  | Foreign      |  | Bank of America                                   |  | United States |         | US$  
|Foreign      |  | Royal Seed Trading Corporation A.V.V. |  | Aruba                   |  | Foreign      |  | The Bank of Tokyo-Mitsubishi UFJ, Lda. (New York) |  | United States |         | US$  
|Foreign      |  | Royal Seed Trading Corporation A.V.V. |  | Aruba                   |  | Foreign      |  | Export Development Canada                         |  | Canada        |         | US$  



|                                      |  |                                                   |  | 12/31/2015           |        |  | 12/31/2015               | 
|------------------------------------- |  | ------------------------------------------------- |  | -------------------- | ------ |  | ------------------------ | 
|Debtor                                |  | Creditor                                          |  | Nominal amounts      |        |  | Current amounts          | 
|Company                               |  | Financial institution                             |  | Up to 90  days ThUS$ |        |  | 90 days to  1 year ThUS$ | 
|SQM.S.A.                              |  | Scotiabank Sud Americano                          |  |                      | -      |  |                          | 
|SQM.S.A.                              |  | Banco Estado                                      |  |                      | -      |  |                          | 
|SQM.S.A.                              |  | Scotiabank Sud Americano                          |  |                      | -      |  |                          | 
|SQM S.A.                              |  | Banco Estado NY Branch                            |  |                      | -      |  |                          | 
|SQM Salar S.A.                        |  | Scotiabank Sud Americano                          |  |                      | -      |  |                          | 
|SQM Industrial S.A.                   |  | Banco Estado                                      |  |                      | 20,000 |  |                          | 
|Royal Seed Trading Corporation A.V.V. |  | Bank of America                                   |  |                      | -      |  |                          | 
|Royal Seed Trading Corporation A.V.V. |  | The Bank of Tokyo-Mitsubishi UFJ, Lda. (New York) |  |                      | -      |  |                          | 
|Royal Seed Trading Corporation A.V.V. |  | Export Development Canada                         |  |                      | -      |  |                          | 
|Total                                 |  |                                                   |  |                      | 20,000 |  |                          | 



F-84


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	    Financial instruments (continued)



10.4
    Financial liabilities, continued



b)	Unsecured obligations, current:



As of December 31, 2016 and December 31, 2015,
the detail of current unsecured interest-bearing obligations is composed of promissory notes and bonds, as follows:



Bonds





|Debtor       |  | Number of  registration
    or ID of  the instrument |  |       | Series |  | Maturity  date |  | Currency or  adjustment  index |              | Periodicity |            | Effective rate |     |                     | Nominal rate |          
|------------ |  | ---------------------------------------------------- |  | ----- | ------ |  | -------------- |  | ------------------------------ | ------------ | ----------- | ---------- | -------------- | --- | ------------------- | ------------ | ---------
|Tax ID No.   |  | Company                                              |  | País  |        |  |                |  |                                |              |             |            |                |     | Payment of
interest |              | Repayment
|93.007.000-9 |  | SQM S.A.                                             |  | Chile |        |  | -              |  |                                | ThUS$250,000 |             | 10/21/2016 |                | US$ |                     | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                             |  | Chile |        |  | -              |  |                                | ThUS$250,000 |             | 1/28/2017  |                | US$ |                     | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                             |  | Chile |        |  | -              |  |                                | ThUS$300,000 |             | 10/3/2016  |                | US$ |                     | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                             |  | Chile |        |  | 446            |  |                                | C            |             | 12/1/2016  |                | UF  |                     | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                             |  | Chile |        |  | 564            |  |                                | H            |             | 1/5/2017   |                | UF  |                     | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                             |  | Chile |        |  | 700            |  |                                | M            |             | 2/1/2017   |                | UF  |                     | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                             |  | Chile |        |  | 699            |  |                                | O            |             | 2/1/2017   |                | UF  |                     | Semiannual   |          







|         |  |         |  | 12/31/2016         |  |               | 12/31/2016         | 
|-------- |  | ------- |  | ------------------ |  | ------------- | ------------------ | 
|         |  |         |  | Nominal maturities |  |               | Current maturities | 
|Company  |  | Country |  | Series             |  | Up to 90 days |                    | 
|         |  |         |  |                    |  | ThUS$         |                    | 
|SQM S,A, |  | Chile   |  | ThUS$250,000       |  |               | -                  | 
|SQM S,A, |  | Chile   |  | ThUS$250,000       |  |               | -                  | 
|SQM S,A, |  | Chile   |  | ThUS$300,000       |  |               | -                  | 
|SQM S,A, |  | Chile   |  | C                  |  |               |                    | 
|SQM S,A, |  | Chile   |  | H                  |  |               | -                  | 
|SQM S,A, |  | Chile   |  | M                  |  |               | 39,356             | 
|SQM S,A, |  | Chile   |  | O                  |  |               | -                  | 
|Total    |  |         |  |                    |  |               | 39,356             | 





Effective rates of bonds in Chilean pesos and UF are expressed
and calculated in U.S. dollars based on the flows agreed in Cross Currency Swap Agreements.



F-85


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	   Financial instruments
(continued)



10.4	   Financial liabilities, continued





|Debtor       |  | Number
    of
 registration     or ID 
of  the instrument |  |       | Series |  | Maturity  date |  | Currency or  adjustment  index |              | Periodicity |           | Effective rate |     |                      | Nominal rate |          
|------------ |  | --------------------------------------------------------- |  | ----- | ------ |  | -------------- |  | ------------------------------ | ------------ | ----------- | --------- | -------------- | --- | -------------------- | ------------ | ---------
|Tax ID No.   |  | Company                                                   |  | País  |        |  |                |  |                                |              |             |           |                |     | Payment of  interest |              | Repayment
|93.007.000-9 |  | SQM S.A.                                                  |  | Chile |        |  | -              |  |                                | ThUS$200,000 |             | 4/15/2016 |                | US$ |                      | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                                  |  | Chile |        |  | -              |  |                                | ThUS$250,000 |             | 4/21/2016 |                | US$ |                      | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                                  |  | Chile |        |  | -              |  |                                | ThUS$250,000 |             | 1/28/2016 |                | US$ |                      | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                                  |  | Chile |        |  | -              |  |                                | ThUS$300,000 |             | 4/3/2016  |                | US$ |                      | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                                  |  | Chile |        |  | 446            |  |                                | C            |             | 6/1/2016  |                | UF  |                      | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                                  |  | Chile |        |  | 564            |  |                                | H            |             | 1/5/2016  |                | UF  |                      | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                                  |  | Chile |        |  | 700            |  |                                | M            |             | 2/1/2016  |                | UF  |                      | Semiannual   |          
|93.007.000-9 |  | SQM S.A.                                                  |  | Chile |        |  | 699            |  |                                | O            |             | 2/1/2016  |                | UF  |                      | Semiannual   |          







|         |  |         |  | 12/31/2015         |  |               | 12/31/2015         | 
|-------- |  | ------- |  | ------------------ |  | ------------- | ------------------ | 
|         |  |         |  | Nominal maturities |  |               | Current maturities | 
|Company  |  | Country |  | Series             |  | Up to 90 days |                    | 
|         |  |         |  |                    |  | ThUS$         |                    | 
|SQM S,A, |  | Chile   |  | ThUS$200,000       |  |               | -                  | 
|SQM S,A, |  | Chile   |  | ThUS$250,000       |  |               | -                  | 
|SQM S,A, |  | Chile   |  | ThUS$250,000       |  |               | -                  | 
|SQM S,A, |  | Chile   |  | ThUS$300,000       |  |               | -                  | 
|SQM S,A, |  | Chile   |  | C                  |  |               | -                  | 
|SQM S,A, |  | Chile   |  | H                  |  |               | -                  | 
|SQM S,A, |  | Chile   |  | M                  |  |               | -                  | 
|SQM S,A, |  | Chile   |  | O                  |  |               | -                  | 
|Total    |  |         |  |                    |  |               | -                  | 



Effective rates of bonds in Chilean pesos and UF are expressed
and calculated in U.S. dollars based on the flows agreed in Cross Currency Swap Agreements.



F-86


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	   Financial instruments
(continued)



10.4	   Financial liabilities, continued



c)	        Types of interest-bearing borrowings, non-current



Non-current interest-bearing borrowings as
of December 31, 2016 and December 31, 2015 are detailed as follows:



|Debtor       |  | Creditor |  | Currency or  adjustment  index |  | Repayment  |  | Effective  rate        |  |               | Nominal  rate |    
|------------ |  | -------- |  | ------------------------------ |  | ---------- |  | ---------------------- |  | ------------- | ------------- | ---
|Tax ID No.   |  | Company  |  | Country                        |  | Tax ID No. |  | Financial institution  |  | Country       |               |    
|93.007.000-9 |  | SQM S.A. |  | Chile                          |  | Foreign    |  | Banco Estado NY Branch |  | United States |               | US$



|         |  |                        |  | Nominal non-current maturities |         |  | Non-current maturities | 
|-------- |  | ---------------------- |  | ------------------------------ | ------- |  | ---------------------- | 
|         |  |                        |  | 12/31/2015                     |         |  | 12/31/2015             | 
|Company  |  | Financial institution  |  | Over 1  years to 2             |         |  | Over 2  years to 3     | 
|         |  |                        |  | ThUS$                          |         |  | ThUS$                  | 
|SQM S.A. |  | Banco Estado NY Branch |  |                                | 140,000 |  |                        | 
|Total    |  |                        |  |                                | 140,000 |  |                        | 



F-87


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	   Financial instruments
(continued)



10.4    	Financial liabilities, continued



d)         	Non-current unsecured interest-bearing bonds



The breakdown of non-current unsecured interest-bearing
bonds as of December 31, 2016 and December 31, 2015 is detailed as follows:



|             |  |          |  |         |  |                                                  |     |  |        |              |                |            |                               |     | Periodicity          |            |           |               |                 |  |     
|------------ |  | -------- |  | ------- |  | ------------------------------------------------ | --- |  | ------ | ------------ | -------------- | ---------- | ----------------------------- | --- | -------------------- | ---------- | --------- | ------------- | --------------- |  | ----
|Tax ID No.   |  | Company  |  | Country |  | Number of  registration or ID  of the instrument |     |  | Series |              | Maturity  date |            | Currency or  adjustment index |     | Payment of  interest |            | Repayment |               | Effective  rate |  |     
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | -   |  |        | ThUS$250,000 |                | 04/21/2020 |                               | US$ |                      | Semiannual |           | Upon maturity |                 |  | 5.94
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | -   |  |        | ThUS$250,000 |                | 01/28/2025 |                               | US$ |                      | Semiannual |           | Upon maturity |                 |  | 4.62
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | -   |  |        | ThUS$300,000 |                | 04/03/2023 |                               | US$ |                      | Semiannual |           | Upon maturity |                 |  | 3.95
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | 446 |  |        | C            |                | 12/01/2026 |                               | UF  |                      | Semiannual |           | Semiannual    |                 |  | 5.57
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | 564 |  |        | H            |                | 01/05/2030 |                               | UF  |                      | Semiannual |           | Semiannual    |                 |  | 5.22
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | 699 |  |        | O            |                | 02/01/2033 |                               | UF  |                      | Semiannual |           | Upon maturity |                 |  | 3.97



|Nominal non-current maturities
     12/31/2016 |  | Non-current maturities
     12/31/2016 |      
|---------------------------------------------- |  | -------------------------------------- | -----
|Series                                         |  | Over 1  year to 2                      |      
|                                               |  | ThUS$                                  |      
|ThUS$250                                       |  |                                        | -    
|ThUS$250                                       |  |                                        | -    
|ThUS$300                                       |  |                                        | -    
|C                                              |  |                                        | 5,903
|H                                              |  |                                        | -    
|O                                              |  |                                        | -    
|Total                                          |  |                                        | 5,903



F-88


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	   Financial instruments
(continued)



10.4	  Financial liabilities, continued



| | d) | Non-current unsecured interest-bearing bonds, continued
| | -- | -------------------------------------------------------



As of December 31, 2016 and December 31, 2015,
the breakdown of unsecured interest-bearing liabilities, non-current is as follows:



|             |  |          |  |         |  |                                                  |     |  |        |              |                |            |                               |     | Periodicity          |            |           |               |                 |  |     
|------------ |  | -------- |  | ------- |  | ------------------------------------------------ | --- |  | ------ | ------------ | -------------- | ---------- | ----------------------------- | --- | -------------------- | ---------- | --------- | ------------- | --------------- |  | ----
|Tax ID No.   |  | Company  |  | Country |  | Number of  registration or ID  of the instrument |     |  | Series |              | Maturity  date |            | Currency or  adjustment index |     | Payment of  interest |            | Repayment |               | Effective  rate |  |     
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | -   |  |        | ThUS$200,000 |                | 04/15/2016 |                               | US$ |                      | Semiannual |           | Upon maturity |                 |  | 9.19
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | -   |  |        | ThUS$250,000 |                | 04/21/2020 |                               | US$ |                      | Semiannual |           | Upon maturity |                 |  | 5.89
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | -   |  |        | ThUS$250,000 |                | 01/28/2025 |                               | US$ |                      | Semiannual |           | Upon maturity |                 |  | 4.61
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | -   |  |        | ThUS$300,000 |                | 04/03/2023 |                               | US$ |                      | Semiannual |           | Upon maturity |                 |  | 3.93
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | 446 |  |        | C            |                | 12/01/2026 |                               | UF  |                      | Semiannual |           | Semiannual    |                 |  | 6.53
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | 564 |  |        | H            |                | 01/05/2030 |                               | UF  |                      | Semiannual |           | Semiannual    |                 |  | 5.20
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | 700 |  |        | M            |                | 02/01/2017 |                               | UF  |                      | Semiannual |           | Upon maturity |                 |  | 4.32
|93.007.000-9 |  | SQM S.A. |  | Chile   |  |                                                  | 699 |  |        | O            |                | 02/01/2033 |                               | UF  |                      | Semiannual |           | Upon maturity |                 |  | 3.97



|Nominal
                                         non-current maturities 12/31/2015 |  | Non-current
                                         maturities 12/31/2015 |       
|---------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------- | ------
|Series                                                                             |  | Over 1  year to
    2                                                      |       
|                                                                                   |  | ThUS$                                                                      |       
|ThUS$250                                                                           |  |                                                                            | -     
|ThUS$250                                                                           |  |                                                                            | -     
|ThUS$300                                                                           |  |                                                                            | -     
|C                                                                                  |  |                                                                            | 5,413 
|H                                                                                  |  |                                                                            | -     
|M                                                                                  |  |                                                                            | 36,089
|O                                                                                  |  |                                                                            | -     
|Total                                                                              |  |                                                                            | 41,502



F-89


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	    Financial instruments
(continued)



10.4	 Financial liabilities, continued



| | e) | Additional information
| | -- | ----------------------



Bonds



On the 30 of September 2016 and the 31st of
December 2015, short term bonds of ThUS$58,973 and ThUS$221,092 respectively were classified as short-term, consisting of the
current portion due plus accrued interest to date, debt is presented net of bond issuance costs. The non-current portion consisted
of ThUS$1,059,706 on the 31 of December 2016 and ThUS$1,077,172 on the 31st December 2015, corresponding to the issuance
of series C bonds, Single series bonds (ThUS$200), series H bonds second issue single series bonds (ThUS$250), series M bonds,
series O bonds, third issue single series bonds (ThUS$300) and fourth issue single series bonds (ThUS$250) excluding debt issue
costs.



As of December 31, 2016 and December 31, 2015,
the details of each issuance are as follows:



Series “C” bonds



On January 24, 2006, the Company placed Series
C bonds for UF 3,000,000 (ThUS$101,918) at an annual rate of 4.00%.



As of December 31, 2016, December 31, 2015
and December 31,2014, the Company has made the following payments with a charge to the Series C bonds:



|Payments made     |  | 12/31/2016 |       |  | 12/31/2015 |  |       | 12/31/2014 | 
|----------------- |  | ---------- | ----- |  | ---------- |  | ----- | ---------- | 
|                  |  | ThUS$      |       |  | ThUS$      |  |       | ThUS$      | 
|Principal payment |  |            | 5,729 |  |            |  | 5,729 |            | 
|Interest payment  |  |            | 3,275 |  |            |  | 3,570 |            | 



Single series first issue ThUS$200,000



On April 5, 2006, the Company placed Single
Series bonds for ThUS$200,000 at an annual rate of 6.125% under "Rule 144 and regulation S of the U.S. Securities Act of
1933."



As of December 31, 2016, December 31, 2015
and December 31,2014, the Company has made the following payments with a charge to the Single series bonds:



|Payments made              |  | 12/31/2016 ThUS$ |         |  | 12/31/2015 ThUS$ |  |        | 12/31/2014 ThUS$ | 
|-------------------------- |  | ---------------- | ------- |  | ---------------- |  | ------ | ---------------- | 
|Payments of principal owed |  |                  | 200,000 |  |                  |  | -      |                  | 
|Payments of interest       |  |                  | 6,125   |  |                  |  | 12,250 |                  | 



F-90


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	   Financial instruments
(continued)



10.4	     Financial liabilities, continued



Series “G” and “H”
bonds



On January 13, 2009, the Company placed two
bond series in the domestic market. Series H for UF 4,000,000 (ThUS$139,216) at an annual interest rate of 4.9% at a term of 21
years with payment of principal beginning in 2019 and Series G for ThCh$21,000,000 (ThUS$34,146), which was placed at a term of
5 years with a single payment at the maturity of the term and an annual interest rate of 7%.



As of December 31, 2016, December 31, 2015
and December 31,2014, the Company has made the following payments with a charge to the Series G and H bonds:



|Payments made                          |  | 12/31/2016 ThUS$ |       |  | 12/31/2015 ThUS$ |  |       | 12/31/2014 ThUS$ | 
|-------------------------------------- |  | ---------------- | ----- |  | ---------------- |  | ----- | ---------------- | 
|Payments of interest, Series H bonds   |  |                  | 7,289 |  |                  |  | 7,696 |                  | 
|Payment of principal of Series G bonds |  |                  | -     |  |                  |  | -     |                  | 
|Payments of interest, Series G bonds   |  |                  | -     |  |                  |  | -     |                  | 



F-91


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	   Financial instruments
(continued)



10.4	    Financial liabilities, continued



Single series bonds, second issue ThUS$250,000



On April 21, 2010, the Company informed the
Chilean Superintendence of Securities and Insurance of its placement in international markets of an unsecured bond of ThUS$250,000
with a maturity of 10 years beginning on the aforementioned date with an annual interest rate of 5.5% and destined to refinance
long-term liabilities.



As of December 31, 2016, December 31, 2015
and December 31,2014, the detail of payments charged to the line of single series bonds, second issue is as follows:



|Payments made    |  | 12/31/2016 ThUS$ |        |  | 12/31/2015 ThUS$ |  |        | 12/31/2014 ThUS$ | 
|---------------- |  | ---------------- | ------ |  | ---------------- |  | ------ | ---------------- | 
|Interest payment |  |                  | 13,750 |  |                  |  | 13,750 |                  | 



Series “M” and “O” bonds



On April 4, 2012, the Company placed two bond
series in the domestic market. Series M for UF 1,000,000 (ThUS$46,601) was placed at a term of 5 years with a single payment at
the maturity of the term and an annual interest rate of 3.3%, and Series O for UF 1,500,000 (ThUS$69,901) was placed at a term
of 21 years with a single payment at the maturity of the term and an annual interest rate of 3.80%



As of December 31, 2016, December 31, 2015
and December 31,2014 the Company has made the following payments with a charge to the Series M and O bonds:



|Payments made                       |  | 12/31/2016 ThUS$ |       |  | 12/31/2015 ThUS$ |  |       | 12/31/2014 | 
|----------------------------------- |  | ---------------- | ----- |  | ---------------- |  | ----- | ---------- | 
|Payment of interest, Series M bonds |  |                  | 1,242 |  |                  |  | 1,248 |            | 
|Payment of interest, Series O bonds |  |                  | 2,142 |  |                  |  | 2,153 |            | 
|                                    |  |                  |       |  |                  |  |       |            | 



Single series bonds, third issue ThUS$300,000



On April 3, 2013 in the United States, the Company issued a non-guaranteed
bond with a value of US$300 million. The bond is for a 10 year term with an annual coupon rate of 3.625% and an annual yield of
3.716%. This rate equates to a difference of 180 basis points to comparable US Treasury bonds. The funds raised will be used to
refinance long term liabilities and finance general corporate objectives.



As of December 31, 2016, December 31, 2015
and December 31,2014, the following payments have been made with a debit to the line of single-series bonds, third issue:



|Payments made       |  | 12/31/2016 ThUS$ |        |  | 12/31/2015 ThUS$ |  |        | 12/31/2014 ThUS$ | 
|------------------- |  | ---------------- | ------ |  | ---------------- |  | ------ | ---------------- | 
|Payment of interest |  |                  | 10,875 |  |                  |  | 10,875 |                  | 



F-92


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10   	Financial instruments
(continued)



10.4    	Financial liabilities, continued



Single series bonds, fourth issuance ThUS$250,000



On October 23, 2014, the Company informed
the Chilean Superintendence of Securities and Insurance that Sociedad Química y Minera de Chile S.A. agreed to issue and
place unsecured bonds of ThUS$250,000 in international markets. This, essentially, maturing in 2025 with a cover annual interest
rate of 4.375% equivalent to a spread of 215 basis points on comparable US Treasury bonds, which were offered to the investors
at a price of 99.410% with respect to capital. The aforementioned agreement was agreed on October 23, 2014 and the issuance and
placement of such bonds was performed in conformity with the provisions of Rule 144A of the US Securities Act of 1933 and these
bonds will not be publicly offered in Chile.



As of December 31, 2016, December 31, 2015
and December 31,2014, the following payments have been made.



|Payments made       |  | 12/31/2016 ThUS$ |        |  | 12/31/2015 ThUS$ |  |       | 12/31/2014 ThUS$ | 
|------------------- |  | ---------------- | ------ |  | ---------------- |  | ----- | ---------------- | 
|Payment of interest |  |                  | 10,938 |  |                  |  | 8,203 |                  | 



| | 10.5 | Trade and other payables
| | ---- | ------------------------



|                       |  | 12/31/2016 |         |  | 12/31/2015   | 
|---------------------- |  | ---------- | ------- |  | ------------ | 
|                       |  | Current    |         |  | Non- current | 
|                       |  | ThUS$      |         |  | ThUS$        | 
|Accounts payable       |  |            | 200,215 |  |              | 
|Other accounts payable |  |            | 281     |  |              | 
|Total                  |  |            | 200,496 |  |              | 



Purchase commitments held by the Company are
recognized as liabilities when the goods and services are received by the Company. As of December 31, 2016, the Company has purchase
orders amounting to ThUS$19,959 (ThUS$15,888 as of December 31, 2015).



F-93


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	   Financial instruments
(continued)



| | 10.6 | Financial liabilities at fair value
                                         through profit or loss
| | ---- | ---------------------------------------------------------------------------------------------------



This balance relates to derivative instruments
measured at their fair value, which has generated balances against the Company. The detail of this type of instrument is as follows:



|Financial liabilities at fair  value through profit or loss |  | 12/31/2016 ThUS$ |   |  | Effect on  profit or loss  as of 12/31/2016 |  |      | 12/31/2015 ThUS$ |  |  | Effect on  profit or loss  as of 12/31/2015 |  |  | 12/31/2014 ThUS$ |       |   | Effect on  profit or  loss as of 12/31/2014 | 
|----------------------------------------------------------- |  | ---------------- | - |  | ------------------------------------------- |  | ---- | ---------------- |  |  | ------------------------------------------- |  |  | ---------------- | ----- | - | ------------------------------------------- | 
|                                                            |  |                  |   |  | ThUS$                                       |  |      |                  |  |  | ThUS$                                       |  |  |                  |       |   | ThUS$                                       | 
|Current                                                     |  |                  |   |  |                                             |  |      |                  |  |  |                                             |  |  |                  |       |   |                                             | 
|Derivative instruments (Forward)                            |  |                  | - |  |                                             |  | -    |                  |  |  | -                                           |  |  |                  | -     |   |                                             | 
|Derivative instruments (options)                            |  |                  | - |  |                                             |  | -    |                  |  |  | 215                                         |  |  |                  | 1,304 |   |                                             | 
|Derivative instruments (IRS)                                |  |                  | - |  |                                             |  | (229 | )                |  |  | 283                                         |  |  |                  | (242  | ) |                                             | 
|                                                            |  |                  | - |  |                                             |  | (229 | )                |  |  | 498                                         |  |  |                  | 1,062 |   |                                             | 



Balances in the column effect on profit or
loss consider the effects of agreements which were in force as of December 31, 2016, including derivatives, received during the
year.



F-94


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10      Financial
instruments (continued)



| | 10.7 | Financial asset and liability categories
| | ---- | ----------------------------------------



a)	Financial Assets



|                                                                               |  |                             |  | 12/31/2016 |           |  | 12/31/2015  | 
|------------------------------------------------------------------------------ |  | --------------------------- |  | ---------- | --------- |  | ----------- | 
|                                                                               |  | Financial                   |  | Current    |           |  | Non-current | 
|Description of financial assets                                                |  | instruments                 |  | Amount     |           |  | Amount      | 
|                                                                               |  |                             |  | ThUS$      |           |  | ThUS$       | 
|Cash and cash equivalent                                                       |  |                             |  |            | 514,669   |  |             | 
|Trade receivables due from related parties                                     |  |                             |  |            | 82,259    |  |             | 
|                                                                               |  |                             |  |            |           |  |             | 
|Financial assets measured at amortized cost                                    |  | Term deposits               |  |            | 284,160   |  |             | 
|Loans and receivables measured at amortized cost                               |  | Trade and other receivables |  |            | 368,761   |  |             | 
|Total financial assets measured at amortized cost                              |  |                             |  |            | 1,249,849 |  |             | 
|                                                                               |  |                             |  |            |           |  |             | 
|                                                                               |  |                             |  |            |           |  |             | 
|Financial assets at fair value through profit or loss                          |  | Derivative instruments      |  |            | 5,029     |  |             | 
|Financial assets classified as available for sale at fair value through equity |  | Other investments           |  |            | -         |  |             | 
|Total financial assets at fair value                                           |  |                             |  |            | 5,029     |  |             | 
|Total financial assets                                                         |  |                             |  |            | 1,254,878 |  |             | 



F-95


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10      Financial instruments (continued)



| | 10.7 | Financial asset and liability categories (continued)
| | ---- | ----------------------------------------------------



b)	       Financial liabilities



|                                                           |  |                             |  | 12/31/2016 |          |  | 12/31/2015  | 
|---------------------------------------------------------- |  | --------------------------- |  | ---------- | -------- |  | ----------- | 
|                                                           |  | Financial                   |  | Current    |          |  | Non-current | 
|Description of financial liabilities                       |  | instruments                 |  | Amount     |          |  | Amount      | 
|                                                           |  |                             |  | ThUS$      |          |  | ThUS$       | 
|Trade payables due to related parties                      |  |                             |  |            | 7        |  |             | 
|Financial liabilities at fair value through profit or loss |  | Derivative instruments      |  |            | 18,901   |  |             | 
|Financial liabilities at fair value through profit or loss |  |                             |  |            | 18,908   |  |             | 
|                                                           |  |                             |  |            |          |  |             | 
|                                                           |  |                             |  |            |          |  |             | 
|Financial liabilities measured at amortized cost           |  | Bank borrowings             |  |            | 101,270, |  |             | 
|Financial liabilities measured at amortized cost           |  | Obligations with the public |  |            | 58,973   |  |             | 
|Financial liabilities measured at amortized cost           |  | Trade and other payables    |  |            | 200,496  |  |             | 
|Total financial liabilities measured at amortized cost     |  |                             |  |            | 360,739  |  |             | 
|Total financial liabilities                                |  |                             |  |            | 379,647  |  |             | 



F-96


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10      Financial
instruments (continued)



| | 10.8 | Fair value measurement of assets and liabilities
| | ---- | ------------------------------------------------



Financial assets and liabilities measured
at fair value consist of Options and Forwards hedging the mismatch in the balance sheet and cash flows, Cross Currency Swaps (CCS)
to hedge bonds issued in local currency ($/UF), and Interest Rate Swaps (IRS) to hedge LIBOR rate debt issued.



The value of the Company’s assets and
liabilities recognized by CCS contracts is calculated as the difference between the present value of discounted cash flows of
the asset (pesos/UF) and liability (US$) parts of the derivative. In the case of the IRS, the asset value recognized is calculated
as the difference between the discounted cash flows of the asset (variable rate) and liability (fixed rate) parts of the derivative.
Forwards: Are calculated as the difference between the strike price of the contract and the spot price plus the forwards points
at the date of the contract. Options: The value recognized is calculated using the Black-Scholes method.



In the case of CCS, the entry data used for
the valuation models are UF, peso, and basis swap rates. In the case of fair value calculations for IRS, the FRA (Forward Rate
Agreement) rate and ICVS 23 Curve (Bloomberg: cash/deposits rates, futures, swaps). In the case of forwards, the forwards curve
for the currency in question is used. Finally, with options, the spot price, risk-free rate and volatility of exchange rate are
used, all in accordance with the currencies used in each valuation. The financial information used as entry data for the Company’s
valuation models is obtained from Bloomberg, the well-known financial software company. Conversely, the fair value provided by
the counterparties of derivatives contracts is used only as a control and not for valuation.



The effects on profit or loss of movements
in these amounts may be recognized in the caption Finance costs, foreign currency translation gain (loss) or cash flow hedges
in the statement of comprehensive income, depending on each particular case.



The fair value measurement of debt is only
performed to determine the present market value of secured and unsecured long-term obligations; bonds denominated in local currency
(Ch$/UF) and foreign currency (US$), credits denominated in foreign currency (US$), which is classified under Level 2 in the fair
value hierarchy established by IFRS.



The value of the Company’s reported
liabilities is calculated as the present value of discounted cash flows at market rates at the time of valuation, taking into
account the maturity date and exchange rate. The entry data used for the model includes the UF and peso rates, which are obtained
using Bloomberg, the well-known financial software company and the ‘Asociación de Bancos e Instituciones Financieras’
(ABIF) (Association of Banks and Financial Institutions’).



F-97


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10      Financial instruments
(continued)



| | 10.8 | Fair value measurement of assets and liabilities, continued
| | ---- | -----------------------------------------------------------



Fair value hierarchy



The fair value hierarchy is detailed as follows:



a) Level 1: Quoted (unadjusted) prices in
active markets for identical assets or liabilities.



b)Level 2 Inputs other than quoted
prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices).



c)Level 3: Inputs for the asset or
liability that are not based on observable market data (that is, unobservable inputs).

The valuation technique used for determining
fair value of our hedging instruments is that indicated in Level 2





|                        |  | Fair value |        |  | Measurement methodology | 
|----------------------- |  | ---------- | ------ |  | ----------------------- | 
|                        |  | 12/31/2016 |        |  | Level 1                 | 
|                        |  | ThUS$      |        |  | ThUS$                   | 
|Financial assets        |  |            |        |  |                         | 
|Investment              |  |            |        |  |                         | 
|Shares                  |  |            | 6,879  |  |                         | 
|Non-hedging derivatives |  |            |        |  |                         | 
|Forwards                |  |            | 924    |  |                         | 
|Options                 |  |            | 426    |  |                         | 
|Swaps                   |  |            | 2,745  |  |                         | 
|Hedging derivatives     |  |            |        |  |                         | 
|Swaps                   |  |            | 8,090  |  |                         | 
|Other                   |  |            | 64     |  |                         | 
|Financial liabilities   |  |            |        |  |                         | 
|Non-hedging derivatives |  |            |        |  |                         | 
|Forwards                |  |            | 1,557  |  |                         | 
|Options                 |  |            | 363    |  |                         | 
|Hedging derivatives     |  |            |        |  |                         | 
|Swaps                   |  |            | 50,713 |  |                         | 



F-98


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10      Financial instruments
(continued)



| | 10.8 | Fair value measurement of assets and liabilities, continued
| | ---- | -----------------------------------------------------------



|                        |  | Fair value |        |  | Measurement methodology | 
|----------------------- |  | ---------- | ------ |  | ----------------------- | 
|                        |  | 12/31/2015 |        |  | Level 1                 | 
|                        |  | ThUS$      |        |  | ThUS$                   | 
|Financial assets        |  |            |        |  |                         | 
|Investment              |  |            |        |  |                         | 
|Investment in companies |  |            | 424    |  |                         | 
|Non-hedging derivatives |  |            |        |  |                         | 
|Forwards                |  |            | 18,709 |  |                         | 
|Options                 |  |            | 349    |  |                         | 
|Other                   |  |            | 62     |  |                         | 
|Financial liabilities   |  |            |        |  |                         | 
|Non-hedging derivatives |  |            |        |  |                         | 
|Forwards                |  |            | 574    |  |                         | 
|Options                 |  |            | 407    |  |                         | 
|Hedging derivatives     |  |            |        |  |                         | 
|Swaps                   |  |            | 74,805 |  |                         | 



| | 10.9 | Financial assets pledged as guarantee
| | ---- | -------------------------------------



On November 4, 2004, Isapre Norte Grande maintains
a guarantee equivalent to the total amount owed to its members and healthcare providers, which is managed and maintained by Banco
de Chile.



As of December 31, 2016 and December 31, 2015,
assets pledged as guarantees are as follows:



|Restricted cash           |  | 12/31/2016 ThUS$ |     |  | 12/31/2015 ThUS$ | 
|------------------------- |  | ---------------- | --- |  | ---------------- | 
|Isapre Norte Grande Ltda. |  |                  | 685 |  |                  | 
|Total                     |  |                  | 685 |  |                  | 



F-99


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	Financial instruments
(continued)



| | 10.10 | Estimated fair value of financial instruments and
                                         financial derivatives
| | ----- | ----------------------------------------------------------------------------------------------------------------



As required by IFRS 7, the following information
is presented for the disclosure of the estimated fair value of financial assets and liabilities.



Although inputs represent Management's best
estimate, they are subjective and involve significant estimates related to the current economic and market conditions, as well
as risk features.



Methodologies and assumptions used depend
on the risk terms and characteristics of instruments and include the following as a summary:



| | - | Cash equivalent approximates fair value
                                         due to the short-term maturities of these instruments.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | - | The fair value of trade receivables,
                                         current is considered to be equal to the carrying amount due to the maturity of such
                                         accounts at short-term.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | The fair value of other current financial
                                         liabilities is considered to be equal to their carrying values due to the maturity of
                                         such accounts at short-term.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | For interest-bearing liabilities with
                                         original maturity of more than a year, fair values are calculated at discounting contractual
                                         cash flows at their original current market with similar terms.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | The fair value of debt is considered
                                         in Level 2.
| | - | -----------------------------------------------------------------------------------------



| | - | For forward and swap contracts, fair
                                         value is determined using quoted market prices of financial instruments with similar
                                         characteristics.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-100


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 10	Financial instruments
(continued)



| | 10.10 | Estimated fair value of financial instruments and
                                         financial derivatives, continued
| | ----- | ---------------------------------------------------------------------------------------------------------------------------



The detail of the Company’s instruments at carrying value
and estimated fair value is as follows:





|                                              |  | 12/31/2016     |           |  | 12/31/2015 | 
|--------------------------------------------- |  | -------------- | --------- |  | ---------- | 
|                                              |  | Carrying
value |           |  | Fair
value | 
|                                              |  | ThUS$          |           |  | ThUS$      | 
|Cash and cash equivalents                     |  |                | 514,669   |  |            | 
|Current trade and other receivables           |  |                | 368,761   |  |            | 
|Receivables due from related parties, current |  |                | 82,259    |  |            | 
|Other financial assets, current:              |  |                |           |  |            | 
|- Time deposits                               |  |                | 284,160   |  |            | 
|- Derivative instruments                      |  |                | 4,095     |  |            | 
|- Hedging assets                              |  |                | 934       |  |            | 
|Total other current financial assets          |  |                | 289,189   |  |            | 
|Non-Current Trade Receivables                 |  |                | 1,840     |  |            | 
|Other non-current financial assets:           |  |                | 14,099    |  |            | 
|Other non-current financial assets:           |  |                | 14,099    |  |            | 
|Other financial liabilities, current:         |  |                |           |  |            | 
|- Bank loans                                  |  |                | 101,270   |  |            | 
|- Derivative instruments                      |  |                | 1,920     |  |            | 
|- Hedging liabilities                         |  |                | 16,981    |  |            | 
|- Unsecured obligations                       |  |                | 58,973    |  |            | 
|Other financial liabilities, current          |  |                | 179,144   |  |            | 
|Current and non-current accounts payable      |  |                | 200,496   |  |            | 
|Payables due to related parties, non-current  |  |                | 7         |  |            | 
|Other non-current financial liabilities:      |  |                |           |  |            | 
|- Bank loans                                  |  |                | -         |  |            | 
|- Unsecured obligations                       |  |                | 1,059,706 |  |            | 
|- Non-current hedging liabilities             |  |                | 33,732    |  |            | 
|Other non-current financial liabilities:      |  |                | 1,093,438 |  |            | 







All of the resulting fair value
estimates are included in level 1 and 2.



10.11 Nature and scope of risks arising
from financing instruments



As indicated in paragraphs 33 to 42 of IFRS
7 the disclosure of information associated with the nature and scope of risks arising from financial instruments is presented
in Note 4 - Financial Risk Management.



F-101


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
11	Equity-accounted investees



| | 11.1 | Investments in associates recognized
                                         according to the equity method of accounting
| | ---- | --------------------------------------------------------------------------------------------------------------------------



As of December 31, 2016 and December 31, 2015,
in accordance with criteria established in Note 3.19, investment in associates recognized according to the equity method of accounting
and joint ventures are as follows:



|Associates                          |  | Equity-accounted investees |        |  | Share on profit (loss) of associates
    and joint  ventures accounted for using the equity  method |  |        | Share on other comprehensive 
    income of associates and joint  ventures accounted for using the  equity method, net of tax |  |  | Share
                                         on total other comprehensive income of associates
                                         and joint ventures accounted forusing the equity method |  
|----------------------------------- |  | -------------------------- | ------ |  | --------------------------------------------------------------------------------------------------- |  | ------ | ----------------------------------------------------------------------------------------------------------------------------- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|                                    |  | 12/31/2016                 |        |  | 12/31/2015                                                                                          |  |        | 12/31/2016                                                                                                                    |  |  | 12/31/2015                                                                                                                                                                                        |  
|                                    |  | ThUS$                      |        |  | ThUS$                                                                                               |  |        | ThUS$                                                                                                                         |  |  | ThUS$                                                                                                                                                                                             |  
|Sales de Magnesio Ltda.             |  |                            | -      |  |                                                                                                     |  | 1,535  |                                                                                                                               |  |  | -                                                                                                                                                                                                 |  
|Abu Dhabi Fertilizer Industries WWL |  |                            | 13,343 |  |                                                                                                     |  | 11,766 |                                                                                                                               |  |  | 1,482                                                                                                                                                                                             |  
|Doktor Tarsa Tarim Sanayi AS        |  |                            | 16,712 |  |                                                                                                     |  | 15,032 |                                                                                                                               |  |  | 4,026                                                                                                                                                                                             |  
|Ajay North America                  |  |                            | 13,457 |  |                                                                                                     |  | 12,913 |                                                                                                                               |  |  | 2,794                                                                                                                                                                                             |  
|Ajay Europe SARL                    |  |                            | 7,373  |  |                                                                                                     |  | 7,202  |                                                                                                                               |  |  | 1,132                                                                                                                                                                                             |  
|SQM Eastmed Turkey                  |  |                            | -      |  |                                                                                                     |  | 70     |                                                                                                                               |  |  | (100                                                                                                                                                                                              | )
|Charlee SQM Thailand Co. Ltd,       |  |                            | 1,763  |  |                                                                                                     |  | 1,318  |                                                                                                                               |  |  | 244                                                                                                                                                                                               |  
|Kore Potash Ltd.                    |  |                            | 20,000 |  |                                                                                                     |  | -      |                                                                                                                               |  |  | -                                                                                                                                                                                                 |  
|Total                               |  |                            | 72,648 |  |                                                                                                     |  | 49,836 |                                                                                                                               |  |  | 9,578                                                                                                                                                                                             |  





|Associate                           |  | Description of the nature of the relationship                                       |  | Domicile                                                        |  | Country of  incorporation |  | Share of ownership  in associates |       |   | Dividends received | 
|----------------------------------- |  | ----------------------------------------------------------------------------------- |  | --------------------------------------------------------------- |  | ------------------------- |  | --------------------------------- | ----- | - | ------------------ | 
|                                    |  |                                                                                     |  |                                                                 |  |                           |  |                                   |       |   | 12/31/2016         | 
|                                    |  |                                                                                     |  |                                                                 |  |                           |  |                                   |       |   | ThUS$              | 
|                                    |  |                                                                                     |  |                                                                 |  |                           |  |                                   |       |   |                    | 
|Sales de Magnesio Ltda. (1)         |  | Commercialization of magnesium salts.                                               |  | El Trovador 4285, Las Condes                                    |  | Chile                     |  |                                   | 50    | % |                    | 
|Abu Dhabi Fertilizer Industries WWL |  | Distribution and commercialization of specialty plant nutrients in the Middle East. |  | PO Box 71871, Abu Dhabi                                         |  | United Arab Emirates      |  |                                   | 37    | % |                    | 
|Doktor Tarsa Tarim Sanayi AS        |  | Distribution and commercialization of specialty plant nutrients in Turkey.          |  | Organize Sanayi Bolgesi, Ikinci Kisim, 22 cadde TR07100 Antalya |  | Turkey                    |  |                                   | 50    | % |                    | 
|Ajay North America                  |  | Production and distribution of iodine derivatives.                                  |  | 1400 Industry RD Power Springs GA 30129                         |  | United States             |  |                                   | 49    | % |                    | 
|Ajay Europe SARL                    |  | Production and commercialization of iodine derivatives.                             |  | Z.I. du Grand Verger BP 227 53602 Evron Cedex                   |  | France                    |  |                                   | 50    | % |                    | 
|SQM Eastmed Turkey                  |  | Production and commercialization of specialty products.                             |  | Organize Sanayi Bolgesi, Ikinci Kisim, 22 cadde TR07100 Antalya |  | Turkey                    |  |                                   | 50    | % |                    | 
|Charlee SQM Thailand Co. Ltd.       |  | Distribution and commercialization of specialty plant nutrients.                    |  | 31 Soi 138 (Meesuk) LLapdrawrd, Bangkapi, 10240 Bangkok         |  | Thailand                  |  |                                   | 40    | % |                    | 
|Kore Potash Ltd.                    |  | Prospecting, exploration and mining development                                     |  | L 3 88 William St Perth, was 6000                               |  | Australia                 |  |                                   | 18,02 | % |                    | 





| | (1) | During December 2016, SQM Salar S.A. sold the interest it had
                                         in Sales de Magnesio Ltda. to Rockwood Litio Ltda. This transaction generated a gain
                                         of ThUS$7,636. See Note 26.5 of our consolidated financial statements.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-102


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 11	Equity-accounted
investees (continued)



| | 11.2 | Assets, liabilities, revenue and
                                         expenses of associates
| | ---- | ------------------------------------------------------------------------------------------------



|12/31/2016                         
|-----------------------------------
|                                   
|                                   
|                                   
|                                   
|                                   
|Sales de Magnesio Ltda.            
|Abu Dhabi Fertilizer Industries WWL
|Doktor Tarsa Tarim Sanayi AS       
|Ajay North America                 
|Ajay Europe SARL                   
|SQM Eastmed Turkey                 
|Charlee SQM Thailand Co. Ltd.      
|Total                              



|12/31/2015                         
|-----------------------------------
|                                   
|                                   
|                                   
|                                   
|                                   
|Sales de Magnesio Ltda.            
|Abu Dhabi Fertilizer Industries WWL
|Doktor Tarsa Tarim Sanayi AS       
|Ajay North America                 
|Ajay Europe SARL                   
|SQM Eastmed Turkey                 
|Charlee SQM Thailand Co. Ltd.      
|Total                              



F-103


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 11	Equity-accounted
investees (continued)



| | 11.2 | Assets, liabilities, revenue and expenses of associates,
continued
| | ---- | ------------------------------------------------------------------



|12/31/2014                         
|-----------------------------------
|                                   
|                                   
|                                   
|                                   
|                                   
|Sales de Magnesio Ltda.            
|Abu Dhabi Fertilizer Industries WWL
|Doktor Tarsa Tarim Sanayi AS       
|Ajay North America                 
|Ajay Europe SARL                   
|SQM Eastmed Turkey                 
|Charlee SQM Thailand Co. Ltd.      
|Total                              



F-104


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
11	Investment in Associates (continued)



| | 11.3 | Other information
| | ---- | -----------------



The Company has no participation in unrecognized
losses in investments in associates.



The Company presents no investments unaccounted
for according to the equity method of accounting.



The equity method was applied to the Statement
of Financial Position as of December 31, 2016 and December 31, 2015.



The basis of preparation of the financial
information of associates was adjusted to confirm with the accounting policies of the Company.



| | 11.4 | Disclosures on interest in associates
| | ---- | -------------------------------------



a) Transactions conducted in 2016:

During December 2016, SQM Salar S.A. sold
the interest it had in Sales de Magnesio Ltda. to Rockwood Litio Ltda. generating a gain of ThUS$7,636.

During November 2016, SQM S.A. made a capital
contribution of ThUS$20,000, in exchange for 18.02% of the interest of Kore Potash Limited. This contribution was paid to Elemental
Minerals Limited.



F-105


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
12	Joint Ventures



| | 12.1 | Policy for the accounting of equity
                                         accounted investment in joint ventures
| | ---- | -------------------------------------------------------------------------------------------------------------------



The method for the recognition of joint ventures
is that in which participation is initially recorded at cost, and subsequently adjusted, considering changes after the acquisition
in the portion of the entity’s net assets of the entity which correspond to the investor. Profit or loss for the period
of the investor will collect the portion which belongs to it in the results of the controlled entity as a whole.



| | 12.2 | Disclosures of interest in joint
                                         ventures
| | ---- | ----------------------------------------------------------------------------------



a)	Operations conducted in 2016



On March 28, 2016, Sociedad Química
y Minera de Chile S.A. entered into an agreement to enter a joint venture with Lithium Americas Corp to develop the Cauchari-Olaroz
lithium project in Argentina.



SQM S.A. made a capital contribution of ThUS$25,000
in exchange for 50% of the ownership of Minera Exar S.A.



During May 2016, SQM Vitas Holland B.V. sold
its interest in SQM Vitas Spain, to SQM Iberian S.A. resulting in the latter obtaining 100% in this transaction generating a loss
of ThUS$104.



b)	Operations conducted in 2015



During June 2015, SQM Vitas Fzco. sold the
ownership it had in SQM Vitas Southern Africa Pty., generating a loss of ThUS$450.



F-106


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 12	Joint Ventures
(continued)



| | 12.3 | Investment in joint ventures accounted
                                         for under the equity method of accounting
| | ---- | -------------------------------------------------------------------------------------------------------------------------



|Joint venture                                    |  | Description of the nature of the relationship                                                        |  | Domicile                                                                                      |  | Country of  incorporation |  | Share of  interest in
     ownership |       |   | Dividends received | 
|------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------- |  | ------------------------- |  | ------------------------------------ | ----- | - | ------------------ | 
|                                                 |  |                                                                                                      |  |                                                                                               |  |                           |  |                                      |       |   | 12/31/2016         | 
|                                                 |  |                                                                                                      |  |                                                                                               |  |                           |  |                                      |       |   | ThUS$              | 
|Sichuan SQM Migao Chemical Fertilizers Co. Ltda. |  | Production and distribution of soluble fertilizers.                                                  |  | Huangjing Road, Dawan Town, Qingbaijiang District, Chengdu
    Municipality, Sichuan Province |  | China                     |  |                                      | 50    | % |                    | 
|Coromandel SQM India                             |  | Production and distribution of potassium nitrate.                                                    |  | 1-2-10, Sardar Patel Road, Secunderabad – 500003 Andhra Pradesh                               |  | India                     |  |                                      | 50    | % |                    | 
|SQM Vitas Fzco.                                  |  | Production and commercialization of specialty plant and animal
    nutrition and industrial hygiene. |  | Jebel ALI Free Zone P.O. Box 18222, Dubai                                                     |  | United Arab Emirates      |  |                                      | 50    | % |                    | 
|SQM Star Qingdao Corp Nutrition. Co. Ltd.        |  | Production and distribution of nutrient plant solutions with
    specialties NPK soluble             |  | Longquan Town, Jimo City, Qingdao Municipality, Shangdong Province                            |  | China                     |  |                                      | 50    | % |                    | 
|SQM Vitas Brazil Agroindustria                   |  | Production and commercialization of specialty plant and animal nutrition
    and industrial hygiene. |  | Via Cndeias, Km. 01 Sem Numero, Lote 4, Bairro Cia Norte, Candeias,
    Bahia.                |  | Brazil                    |  |                                      | 49.99 | % |                    | 
|SQM Vitas Southern Africa Pty.                   |  | Production and commercialization of specialty plant and animal nutrition
    and industrial hygiene  |  | 33 Waterford Office Park Waterford Drive Fourways, 2055 South Africa                          |  | South Africa              |  |                                      | 50    | % |                    | 
|SQM Vitas Peru S.A.C.                            |  | Production and commercialization of specialty plant and animal nutrition
    and industrial hygiene  |  | Av. Juan de Arona 187, Torre B, Oficina 301-II, San Isidro, Lima                              |  | Peru                      |  |                                      | 50    | % |                    | 
|SQM Vitas Spain                                  |  | Production and commercialization of specialty plant nutrition                                        |  | C/Manuel Echeverria Manzana 2 Muelle de la Cab (Puerto Real)                                  |  | Spain                     |  |                                      | 50    | % |                    | 
|SQM Vitas Holland B.V                            |  | Without information                                                                                  |  | Herikerbergweg 238, 1101 CM Amsterdam Zuidoost                                                |  | Netherlands               |  |                                      | 50    | % |                    | 
|SQM Vitas Plantacote B.V.                        |  | Production and commercialization of controlled-released fertilizers                                  |  | Herikerbergweg 238, 1101 CM Amsterdam Zuidoost                                                |  | Netherlands               |  |                                      | 50    | % |                    | 
|Minera Exar S.A.                                 |  | Exploration and exploitation of minerals, processing and trading
    of such minerals                |  | Dr. Sabín 1082 Ciudad de Nieva – San Salvador de Jujuy-
    Jujuy- República Argentina        |  | Argentina                 |  |                                      | 50    | % |                    | 





F-107


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 12	Joint Ventures
(continued)



| | 12.3 | Investment in joint ventures accounted for under the
equity method of accounting, continued:
| | ---- | --------------------------------------------------------------------------------------------



|Joint Venture                                   |  | Equity-accounted investees |        |  | Share on profit (loss) of associates and joint  ventures accounted for using the equity method | 
|----------------------------------------------- |  | -------------------------- | ------ |  | ---------------------------------------------------------------------------------------------- | 
|                                                |  | 12/31/2016                 |        |  | 12/31/2015                                                                                     | 
|                                                |  | ThUS$                      |        |  | ThUS$                                                                                          | 
|                                                |  |                            |        |  |                                                                                                | 
|Sichuan SQM Migao Chemical Fertilizers Co. Ltd. |  |                            | 12,150 |  |                                                                                                | 
|Coromandel SQM India                            |  |                            | 1,499  |  |                                                                                                | 
|SQM Vitas Fzco,                                 |  |                            | 17,956 |  |                                                                                                | 
|SQM Star Qingdao Corp. Nutrition Co. Ltd.       |  |                            | 2,618  |  |                                                                                                | 
|SQM Vitas Holland                               |  |                            | 1,269  |  |                                                                                                | 
|Minera Exar S.A.                                |  |                            | 25,000 |  |                                                                                                | 
|Total                                           |  |                            | 60,492 |  |                                                                                                | 



|Joint Venture                                   |  | Share on other comprehensive income of  associates and joint ventures accounted for  using the equity method, net of tax |     |  | Share on total other comprehensive  income of associates and joint ventures  accounted for using the equity method | 
|----------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------ | --- |  | ------------------------------------------------------------------------------------------------------------------ | 
|                                                |  | 12/31/2016                                                                                                               |     |  | 12/31/2015                                                                                                         | 
|                                                |  | ThUS$                                                                                                                    |     |  | ThUS$                                                                                                              | 
|                                                |  |                                                                                                                          |     |  |                                                                                                                    | 
|Sichuan SQM Migao Chemical Fertilizers Co. Ltd. |  |                                                                                                                          | -   |  |                                                                                                                    | 
|Coromandel SQM India                            |  |                                                                                                                          | -   |  |                                                                                                                    | 
|SQM Vitas Fzco,                                 |  |                                                                                                                          | 449 |  |                                                                                                                    | 
|SQM Star Qingdao Corp. Nutrition Co. Ltd.       |  |                                                                                                                          | -   |  |                                                                                                                    | 
|SQM Vitas Holland                               |  |                                                                                                                          | -   |  |                                                                                                                    | 
|Minera Exar S.A.                                |  |                                                                                                                          | -   |  |                                                                                                                    | 
|Total                                           |  |                                                                                                                          | 449 |  |                                                                                                                    | 



F-108


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 12	Joint Ventures
(continued)



| | 12.3 | Investment in joint ventures accounted for under the
equity method of accounting, continued:
| | ---- | --------------------------------------------------------------------------------------------



|Joint Venture                     |  | Equity-accounted investees |        |  | Share on profit (loss) of associates and  joint ventures accounted for using the  equity method | 
|--------------------------------- |  | -------------------------- | ------ |  | ----------------------------------------------------------------------------------------------- | 
|                                  |  | 12/31/2016                 |        |  | 12/31/2015                                                                                      | 
|                                  |  | ThUS$                      |        |  | ThUS$                                                                                           | 
|                                  |  |                            |        |  |                                                                                                 | 
|SQM Vitas Brazil Agroindustria(1) |  |                            | 9,343  |  |                                                                                                 | 
|SQM Vitas Peru S.A.C (1)          |  |                            | 5,964  |  |                                                                                                 | 
|SQM Vitas Southern Africa (1)     |  |                            | -      |  |                                                                                                 | 
|SQM Vitas Spain (2)               |  |                            | -      |  |                                                                                                 | 
|SQM Vitas Plantacote B.V. (2)     |  |                            | 588    |  |                                                                                                 | 
|Total                             |  |                            | 15,895 |  |                                                                                                 | 



|Joint Venture                     |  | Share on other comprehensive income of  associates and joint ventures accounted for  using the equity method, net of tax |        |  | Share on total other comprehensive  income of associates and joint ventures  accounted for using the equity method | 
|--------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------ | ------ |  | ------------------------------------------------------------------------------------------------------------------ | 
|                                  |  | 12/31/2016                                                                                                               |        |  | 12/31/2015                                                                                                         | 
|                                  |  | ThUS$                                                                                                                    |        |  | ThUS$                                                                                                              | 
|                                  |  |                                                                                                                          |        |  |                                                                                                                    | 
|SQM Vitas Brazil Agroindustria(1) |  |                                                                                                                          | 2,845  |  |                                                                                                                    | 
|SQM Vitas Peru S.A.C (1)          |  |                                                                                                                          | -      |  |                                                                                                                    | 
|SQM Vitas Southern Africa (1)     |  |                                                                                                                          | -      |  |                                                                                                                    | 
|SQM Vitas Spain (2)               |  |                                                                                                                          | -      |  |                                                                                                                    | 
|SQM Vitas Plantacote B.V. (2)     |  |                                                                                                                          | -      |  |                                                                                                                    | 
|Total                             |  |                                                                                                                          | 2,,845 |  |                                                                                                                    | 



The following companies are subsidiaries of



| | (1) | SQM Vitas Fzco.
| | --- | ---------------



| | (2) | SQM Vitas Holland
| | --- | -----------------



F-109


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 12	Joint Ventures
(continued)



| | 12.4 | Assets, liabilities, revenue and
                                         expenses from joint ventures:
| | ---- | -------------------------------------------------------------------------------------------------------





|                                                 |  | 12/31/2016 |        
|------------------------------------------------ |  | ---------- | -------
|                                                 |  | Assets     |        
|Joint Venture                                    |  | Current    |        
|                                                 |  | ThUS$      |        
|                                                 |  |            |        
|Sichuan SQM Migao Chemical Fertilizers Co. Ltda. |  |            | 43,639 
|Coromandel SQM India                             |  |            | 4,485  
|SQM Vitas Fzco,                                  |  |            | 20,896 
|SQM Star Qingdao Corp. Nutrition Co. Ltd.        |  |            | 5,733  
|SQM Vitas Brazil Agroindustria                   |  |            | 21,511 
|SQM Vitas Peru S.A.C                             |  |            | 23,598 
|SQM Vitas Holland B.V                            |  |            | 1,961  
|SQM Vitas Plantacote B.V.                        |  |            | 619    
|Total                                            |  |            | 122,442



|                                                 |  | 12/31/2015 |        
|------------------------------------------------ |  | ---------- | -------
|                                                 |  | Assets     |        
|Joint Venture                                    |  | Current    |        
|                                                 |  | ThUS$      |        
|                                                 |  |            |        
|Sichuan SQM Migao Chemical Fertilizers Co. Ltda. |  |            | 56,053 
|Coromandel SQM India                             |  |            | 3,738  
|SQM Vitas Fzco.                                  |  |            | 14,096 
|SQM Star Qingdao Corp. Nutrition Co. Ltd.        |  |            | 5,100  
|SQM Vitas Brazil Agroindustria                   |  |            | 32,449 
|SQM Vitas Peru S.A.C                             |  |            | 24,432 
|SQM Vitas Spain                                  |  |            | 1,662  
|SQM Vitas Holland B.V                            |  |            | 428    
|SQM Vitas Plantacote B.V.                        |  |            | 802    
|Total                                            |  |            | 138,760





F-110


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 12	Joint Ventures
(continued)



| | 12.4 | Assets, liabilities, revenue and expenses from joint
ventures, continued:
| | ---- | -------------------------------------------------------------------------





|                                                 |  | 12/31/2014 |        
|------------------------------------------------ |  | ---------- | -------
|                                                 |  | Assets     |        
|Joint Venture                                    |  | Current    |        
|                                                 |  | ThUS$      |        
|                                                 |  |            |        
|Sichuan SQM Migao Chemical Fertilizers Co. Ltda. |  |            | 61,381 
|Coromandel SQM India                             |  |            | 4,820  
|SQM Vitas Fzco.                                  |  |            | 6,366  
|SQM Star Qingdao Corp. Nutrition Co. Ltd.        |  |            | 4,363  
|SQM Vitas Brazil Agroindustria                   |  |            | 39,006 
|SQM Vitas Peru S.A.C                             |  |            | 25,346 
|SQM Vitas Southern Africa                        |  |            | 3,703  
|SQM Vitas Spain                                  |  |            | 2,066  
|SQM Vitas Holland B.V.                           |  |            | 512    
|SQM Vitas Plantacote B.V.                        |  |            | 1,529  
|Total                                            |  |            | 149,092





| | 12.5 | Other Joint Venture disclosures:
| | ---- | --------------------------------



|                                                 |  | Cash and cash equivalents |        |  | Other current financial liabilities |  |        | Other non-current financial liabilities | 
|------------------------------------------------ |  | ------------------------- | ------ |  | ----------------------------------- |  | ------ | --------------------------------------- | 
|                                                 |  | 12/31/2016                |        |  | 12/31/2015                          |  |        | 12/31/2016                              | 
|                                                 |  | ThUS$                     |        |  | ThUS$                               |  |        | ThUS$                                   | 
|                                                 |  |                           |        |  |                                     |  |        |                                         | 
|Sichuan SQM Migao Chemical Fertilizers Co. Ltda. |  |                           | 4,097  |  |                                     |  | 737    |                                         | 
|Coromandel SQM India                             |  |                           | 15     |  |                                     |  | 63     |                                         | 
|SQM Vitas Fzco,                                  |  |                           | 11,514 |  |                                     |  | 7,574  |                                         | 
|SQM Star Qingdao Corp. Nutrition Co. Ltd.        |  |                           | 3,756  |  |                                     |  | 3,870  |                                         | 
|SQM Vitas Brazil Agroindustria                   |  |                           | 2,168  |  |                                     |  | 827    |                                         | 
|SQM Vitas Peru S.A.C.                            |  |                           | 958    |  |                                     |  | 160    |                                         | 
|SQM Vitas Spain                                  |  |                           | -      |  |                                     |  | 272    |                                         | 
|SQM Vitas Holland B.V.                           |  |                           | 1,961  |  |                                     |  | 428    |                                         | 
|SQM Vitas Plantacote B.V.                        |  |                           | 615    |  |                                     |  | 802    |                                         | 
|Total                                            |  |                           | 25,084 |  |                                     |  | 14,733 |                                         | 



F-111


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 12	Joint Ventures
(continued)



| | 12.5 | Other Joint Venture disclosures, continued:
| | ---- | -------------------------------------------



|                                                 |  | Depreciation and amortization expense |        |   | Interest expense |  |        | Income tax expense, continuing operations | 
|------------------------------------------------ |  | ------------------------------------- | ------ | - | ---------------- |  | ------ | ----------------------------------------- | 
|                                                 |  | 12/31/2016                            |        |   | 12/31/2015       |  |        | 12/31/2014                                | 
|                                                 |  | ThUS$                                 |        |   | ThUS$            |  |        | ThUS$                                     | 
|                                                 |  |                                       |        |   |                  |  |        |                                           | 
|Sichuan SQM Migao Chemical Fertilizers Co. Ltda. |  |                                       | (691   | ) |                  |  | (687   | )                                         | 
|Coromandel SQM India                             |  |                                       | -      |   |                  |  | (69    | )                                         | 
|SQM Vitas Fzco.                                  |  |                                       | (717   | ) |                  |  | (1,067 | )                                         | 
|SQM Star Qingdao Corp. Nutrition Co. Ltd.        |  |                                       | (64    | ) |                  |  | (66    | )                                         | 
|SQM Vitas Brazil Agroindustria                   |  |                                       | (438   | ) |                  |  | (29    | )                                         | 
|SQM Vitas Peru S.A.C.                            |  |                                       | (82    | ) |                  |  | (29    | )                                         | 
|SQM Vitas Southern Africa                        |  |                                       |        |   |                  |  |        |                                           | 
|SQM Vitas Spain                                  |  |                                       | -      |   |                  |  | (116   | )                                         | 
|SQM Vitas Holland B.V                            |  |                                       | -      |   |                  |  | -      |                                           | 
|SQM Vitas Plantacote B.V.                        |  |                                       | -      |   |                  |  | -      |                                           | 
|Total                                            |  |                                       | (1,992 | ) |                  |  | (2,063 | )                                         | 



The basis of preparation of the financial
information of joint ventures corresponds to the amounts included in the financial statements in conformity with the entity’s
IFRS.



F-112


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
13	Intangible assets and goodwill



| | 13.1 | Balances
| | ---- | --------





|                                      |  | 12/31/2016 |         |  | 12/31/2015 | 
|------------------------------------- |  | ---------- | ------- |  | ---------- | 
|                                      |  | ThUS$      |         |  | ThUS$      | 
|Intangible assets other than goodwill |  |            | 109,439 |  |            | 
|Goodwill                              |  |            | 37,972  |  |            | 
|Total                                 |  |            | 147,411 |  |            | 





The recoverable amount of the cash-generating
unit has been determined based on a calculation of the value in use which used cash flow projections for a 5-year period, plus
perpetuity.



The present value of the future cash flows
generated by these assets has been estimated given a variance in sales volumes, market prices and costs, discounted at weighted
average cost of capital (WACC) of 8.04%.



| | 13.2 | Disclosures on intangible assets
                                         and goodwill
| | ---- | --------------------------------------------------------------------------------------



Intangible assets relate to goodwill, water
rights, industrial patents, rights of way, software, and mining claims which correspond to exploitation rights acquired from third-parties.



Balances and movements in the main classes
of intangible assets as of December 31, 2016 and December 31, 2015 are detailed as follows:



|                                                                                    |  |             |  | 12/31/2016         |        
|----------------------------------------------------------------------------------- |  | ----------- |  | ------------------ | -------
|Intangible assets and goodwill                                                      |  | Useful life |  | Gross amount ThUS$ |        
|                                                                                    |  |             |  |                    |        
|Software                                                                            |  | Finite      |  |                    | 23,280 
|Intellectual property rights, patents and other industrial property rights, service |  | Finite      |  |                    | 1,483  
|Intellectual property rights, patents and other industrial property rights, service |  | Indefinite  |  |                    | 98,596 
|Other intangible assets                                                             |  | Indefinite  |  |                    | 3,337  
|Intangible assets other than goodwill                                               |  |             |  |                    | 126,696
|Goodwill                                                                            |  | Indefinite  |  |                    | 37,972 
|Total intangible assets and goodwill                                                |  |             |  |                    | 164,668



F-113


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 13	Intangible assets
and goodwill (continued)



| | 13.2 | Disclosures on intangible assets and goodwill, continued
| | ---- | --------------------------------------------------------



|                                                                                    |  |             |  | 12/31/2015         |        
|----------------------------------------------------------------------------------- |  | ----------- |  | ------------------ | -------
|Intangible assets and goodwill                                                      |  | Useful life |  | Gross amount ThUS$ |        
|                                                                                    |  |             |  |                    |        
|Software                                                                            |  | Finite      |  |                    | 23,251 
|Intellectual property rights, patents and other industrial property rights, service |  | Finite      |  |                    | 1,448  
|Intellectual property rights, patents and other industrial property rights, service |  | Indefinite  |  |                    | 96,500 
|Other intangible assets                                                             |  | Indefinite  |  |                    | 3,651  
|Intangible assets other than goodwill                                               |  |             |  |                    | 124,850
|Goodwill                                                                            |  | Indefinite  |  |                    | 38,388 
|Total intangible assets and goodwill                                                |  |             |  |                    | 163,238



a)	Estimated useful lives or amortization rates used for
finite identifiable intangible assets



Finite useful life measures the lifetime or
the number of productive units or other similar variables which constitute its useful life.



The estimated useful life for software is
3 and 6 years, for other finite useful life assets the period in which they are amortized relates to periods defined by contracts
or rights which generate them.



Intellectual property rights, patents and
other industrial property rights, service and exploitation rights, mainly relate to water rights and are obtained as indefinite.



b)	Method used to express the amortization of identifiable
intangible assets (life or rate)



The method used to express the amortization is useful life, and
estimated tons to be extracted in the case of mining claims.



F-114


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 13   	Intangible assets
and goodwill (continued)



| | 13.2 | Disclosures on intangible assets and goodwill, continued
| | ---- | --------------------------------------------------------



| | c) | Minimum and maximum amortization lives or rates of intangible
assets:
| | -- | ---------------------------------------------------------------------



|Estimated useful lives or amortization rate                                                                     | Minimum life orrate | Maximum life orrate
|--------------------------------------------------------------------------------------------------------------- | ------------------- | -------------------
|                                                                                                                |                     |                    
|Intellectual property rights, patents and other industrial property rights, service and
    exploitation rights | Indefinite          | Indefinite         
|Intangible assets other than goodwill                                                                           | Indefinite          | Indefinite         
|Intellectual property rights, patents and other industrial property rights, service and
    exploitation rights | 1 year              | 16 years           
|Software                                                                                                        | 2 years             | 6 years            



| | d) | Information to be disclosed on assets generated internally
| | -- | ----------------------------------------------------------



The Company has no intangible assets generated internally.



| | e) | Other information to disclose on intangible assets
| | -- | --------------------------------------------------



SQM has property rights and mining concessions
of the Chilean Government, intended for the exploration and exploitation of saltpeter and brine. Such rights, have had no initial
cost over registration costs, which are insignificant.



Also, SQM has acquired from third-parties
other than the Chilean Government, mining concessions, which have been recognized at acquisition cost, which are amortized as
the corresponding area is exploited based on the tons estimated to be extracted.



Expenses prior to obtaining the mining concessions
are recognized in profit or loss for the year as incurred.



F-115


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 13   	Intangible assets
and goodwill (continued)



| | 13.2 | Disclosures on intangible assets and goodwill, continued
| | ---- | --------------------------------------------------------



| | f) | Movements in identifiable intangible assets as of December
31, 2016:
| | -- | --------------------------------------------------------------------



|Movements in identifiable intangible assets, gross |  | Software |        |   | Intellectual property  rights, patents
    and other  industrial property rights,  service, rights of way |  |       | Intellectual property rights,  patents
    and other industrial  property rights, service,  rights of way |  |  | Other  intangible  assets |   |  | Goodwill |       |   | Identifiable  intangible  assets | 
|-------------------------------------------------- |  | -------- | ------ | - | --------------------------------------------------------------------------------------------------------- |  | ----- | --------------------------------------------------------------------------------------------------------- |  |  | ------------------------- | - |  | -------- | ----- | - | -------------------------------- | 
|                                                   |  | ThUS$    |        |   | ThUS$                                                                                                     |  |       | ThUS$                                                                                                     |  |  | ThUS$                     |   |  | ThUS$    |       |   | ThUS$                            | 
|Opening balance                                    |  |          | 23,251 |   |                                                                                                           |  | 1,448 |                                                                                                           |  |  | 96,500                    |   |  |          | 3,651 |   |                                  | 
|Additions                                          |  |          | 160    |   |                                                                                                           |  | 25    |                                                                                                           |  |  | 2,100                     |   |  |          | -     |   |                                  | 
|Other increases (decreases)                        |  |          | (131   | ) |                                                                                                           |  | 10    |                                                                                                           |  |  | (4                        | ) |  |          | (314  | ) |                                  | 
|                                                   |  |          |        |   |                                                                                                           |  |       |                                                                                                           |  |  |                           |   |  |          |       |   |                                  | 
|Final balance                                      |  |          | 23,280 |   |                                                                                                           |  | 1,483 |                                                                                                           |  |  | 98,596                    |   |  |          | 3,337 |   |                                  | 



|Movements in identifiable intangible assets, 
accumulated amortization |  | Software |         |   | Intellectual property  rights, patents
    and other  industrial property rights,  service, rights of way |  |        | Intellectual property rights,  patents
    and other industrial  property rights, service,  rights of way |  |  | Other  intangible  assets |  |  | Goodwill |   |  | Identifiable  intangible  assets | 
|---------------------------------------------------------------------- |  | -------- | ------- | - | --------------------------------------------------------------------------------------------------------- |  | ------ | --------------------------------------------------------------------------------------------------------- |  |  | ------------------------- |  |  | -------- | - |  | -------------------------------- | 
|                                                                       |  | ThUS$    |         |   | ThUS$                                                                                                     |  |        | ThUS$                                                                                                     |  |  | ThUS$                     |  |  | ThUS$    |   |  | ThUS$                            | 
|Opening balance                                                        |  |          | (13,438 | ) |                                                                                                           |  | (984   | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 
|Additions                                                              |  |          | -       |   |                                                                                                           |  | -      |                                                                                                           |  |  | -                         |  |  |          | - |  |                                  | 
|Amortization                                                           |  |          | (2,796  | ) |                                                                                                           |  | (38    | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 
|Other increases (decreases)                                            |  |          | -       |   |                                                                                                           |  | (1     | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 
|                                                                       |  |          |         |   |                                                                                                           |  |        |                                                                                                           |  |  |                           |  |  |          |   |  |                                  | 
|Final balance                                                          |  |          | (16,234 | ) |                                                                                                           |  | (1,023 | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 



F-116


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 13	Intangible assets
and goodwill (continued)



| | 13.2 | Disclosures on intangible assets and goodwill, continued
| | ---- | --------------------------------------------------------



| | f) | Movements in identifiable intangible assets as of December
                                         31, 2016, continued
| | -- | -----------------------------------------------------------------------------------------------------------------------



|Movements in identifiable intangible assets, net |  | Software |        |   | Intellectual property rights,  patents
    and other industrial  property rights, service, rights  of way |  |     | Intellectual property rights,  patents
    and other industrial  property rights, service rights  of way |  |  | Other  intangible  assets |   |  | Goodwill |       |   | Identifiable  intangible assets | 
|------------------------------------------------ |  | -------- | ------ | - | --------------------------------------------------------------------------------------------------------- |  | --- | -------------------------------------------------------------------------------------------------------- |  |  | ------------------------- | - |  | -------- | ----- | - | ------------------------------- | 
|                                                 |  | ThUS$    |        |   | ThUS$                                                                                                     |  |     | ThUS$                                                                                                    |  |  | ThUS$                     |   |  | ThUS$    |       |   | ThUS$                           | 
|Opening balance                                  |  |          | 9,813  |   |                                                                                                           |  | 464 |                                                                                                          |  |  | 96,500                    |   |  |          | 3,651 |   |                                 | 
|Additions                                        |  |          | 160    |   |                                                                                                           |  | 25  |                                                                                                          |  |  | 2,100                     |   |  |          | -     |   |                                 | 
|Amortization                                     |  |          | (2,796 | ) |                                                                                                           |  | (38 | )                                                                                                        |  |  | -                         |   |  |          | -     |   |                                 | 
|Other increases (decreases)                      |  |          | (131   | ) |                                                                                                           |  | 9   |                                                                                                          |  |  | (4                        | ) |  |          | (314  | ) |                                 | 
|                                                 |  |          |        |   |                                                                                                           |  |     |                                                                                                          |  |  |                           |   |  |          |       |   |                                 | 
|Final balance                                    |  |          | 7,046  |   |                                                                                                           |  | 460 |                                                                                                          |  |  | 98,596                    |   |  |          | 3,337 |   |                                 | 



| | g) | Movements in identifiable intangible assets as of December
                                         31, 2015:
| | -- | -------------------------------------------------------------------------------------------------------------



|Movements in identifiable intangible assets, gross |  | Software |        |  | Intellectual property rights,  patents
    and other industrial  property rights, service, rights  of way |  |       | Intellectual property rights,  patents
    and other industrial  property rights, service, rights  of way |  |  | Other  intangible  assets |   |  | Goodwill |       |   | Identifiable  intangible assets | 
|-------------------------------------------------- |  | -------- | ------ |  | --------------------------------------------------------------------------------------------------------- |  | ----- | --------------------------------------------------------------------------------------------------------- |  |  | ------------------------- | - |  | -------- | ----- | - | ------------------------------- | 
|                                                   |  | ThUS$    |        |  | ThUS$                                                                                                     |  |       | ThUS$                                                                                                     |  |  | ThUS$                     |   |  | ThUS$    |       |   | ThUS$                           | 
|Opening balance                                    |  |          | 23,062 |  |                                                                                                           |  | 1,524 |                                                                                                           |  |  | 97,386                    |   |  |          | 3,698 |   |                                 | 
|Additions                                          |  |          | 189    |  |                                                                                                           |  | 15    |                                                                                                           |  |  | -                         |   |  |          | -     |   |                                 | 
|Other increases (decreases)                        |  |          | -      |  |                                                                                                           |  | (91   | )                                                                                                         |  |  | (886                      | ) |  |          | (47   | ) |                                 | 
|                                                   |  |          |        |  |                                                                                                           |  |       |                                                                                                           |  |  |                           |   |  |          |       |   |                                 | 
|Final balance                                      |  |          | 23,251 |  |                                                                                                           |  | 1,448 |                                                                                                           |  |  | 96,500                    |   |  |          | 3,651 |   |                                 | 



F-117


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 13	Intangible assets
and goodwill (continued)



| | 13.2 | Disclosures on intangible assets and goodwill, continued
| | ---- | --------------------------------------------------------



| | g) | Movements in identifiable intangible assets as of December
                                         31, 2015:
| | -- | -------------------------------------------------------------------------------------------------------------



|Movements in identifiable intangible assets,  accumulated amortization |  | Software |         |   | Intellectual property  rights, patents
    and other  industrial property rights,  service, rights of way |  |      | Intellectual property rights,  patents
    and other industrial  property rights, service,  rights of way |  |  | Other  intangible  assets |  |  | Goodwill |   |  | Identifiable  intangible  assets | 
|---------------------------------------------------------------------- |  | -------- | ------- | - | --------------------------------------------------------------------------------------------------------- |  | ---- | --------------------------------------------------------------------------------------------------------- |  |  | ------------------------- |  |  | -------- | - |  | -------------------------------- | 
|                                                                       |  | ThUS$    |         |   | ThUS$                                                                                                     |  |      | ThUS$                                                                                                     |  |  | ThUS$                     |  |  | ThUS$    |   |  | ThUS$                            | 
|Opening balance                                                        |  |          | (9,996  | ) |                                                                                                           |  | (939 | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 
|Additions                                                              |  |          | -       |   |                                                                                                           |  | -    |                                                                                                           |  |  | -                         |  |  |          | - |  |                                  | 
|Amortization                                                           |  |          | (3,432  | ) |                                                                                                           |  | (45  | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 
|Other increases (decreases)                                            |  |          | (10     | ) |                                                                                                           |  | -    |                                                                                                           |  |  | -                         |  |  |          | - |  |                                  | 
|                                                                       |  |          |         |   |                                                                                                           |  |      |                                                                                                           |  |  |                           |  |  |          |   |  |                                  | 
|Final balance                                                          |  |          | (13,438 | ) |                                                                                                           |  | (984 | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 



|Movements in identifiable intangible assets, net |  | Software |        |   | Intellectual property  rights, patents
    and other  industrial property rights,  service rights of way |  |     | Intellectual property rights,  patents
    and other industrial  property rights, service  rights of way |  |  | Other  intangible  assets |   |  | Goodwill |       |   | Identifiable  intangible  assets | 
|------------------------------------------------ |  | -------- | ------ | - | -------------------------------------------------------------------------------------------------------- |  | --- | -------------------------------------------------------------------------------------------------------- |  |  | ------------------------- | - |  | -------- | ----- | - | -------------------------------- | 
|                                                 |  | ThUS$    |        |   | ThUS$                                                                                                    |  |     | ThUS$                                                                                                    |  |  | ThUS$                     |   |  | ThUS$    |       |   | ThUS$                            | 
|Opening balance                                  |  |          | 13,066 |   |                                                                                                          |  | 585 |                                                                                                          |  |  | 97,386                    |   |  |          | 3,698 |   |                                  | 
|Additions                                        |  |          | 189    |   |                                                                                                          |  | 15  |                                                                                                          |  |  | -                         |   |  |          | -     |   |                                  | 
|Amortization                                     |  |          | (3,432 | ) |                                                                                                          |  | (45 | )                                                                                                        |  |  | -                         |   |  |          | -     |   |                                  | 
|Other increases (decreases)                      |  |          | (10    | ) |                                                                                                          |  | (91 | )                                                                                                        |  |  | (886                      | ) |  |          | (47   | ) |                                  | 
|                                                 |  |          |        |   |                                                                                                          |  |     |                                                                                                          |  |  |                           |   |  |          |       |   |                                  | 
|Final balance                                    |  |          | 9,813  |   |                                                                                                          |  | 464 |                                                                                                          |  |  | 96,500                    |   |  |          | 3,651 |   |                                  | 



F-118


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 13	Intangible assets
and goodwill (continued)



| | 13.2 | Disclosures on intangible assets and goodwill, continued
| | ---- | --------------------------------------------------------



| | h) | Movements in identifiable intangible assets as of December
                                         31, 2014:
| | -- | -------------------------------------------------------------------------------------------------------------



|Movements in identifiable intangible assets, gross |  | Software |        |  | Intellectual property  rights, patents
    and other  industrial property rights,  service, rights of way |  |       | Intellectual property rights,  patents
    and other industrial  property rights, service,  rights of way |  |  | Other  intangible  assets |   |  | Goodwill |       |   | Identifiable  intangible  assets | 
|-------------------------------------------------- |  | -------- | ------ |  | --------------------------------------------------------------------------------------------------------- |  | ----- | --------------------------------------------------------------------------------------------------------- |  |  | ------------------------- | - |  | -------- | ----- | - | -------------------------------- | 
|                                                   |  | ThUS$    |        |  | ThUS$                                                                                                     |  |       | ThUS$                                                                                                     |  |  | ThUS$                     |   |  | ThUS$    |       |   | ThUS$                            | 
|Opening balance                                    |  |          | 5,342  |  |                                                                                                           |  | 1,576 |                                                                                                           |  |  | 97,392                    |   |  |          | 4,081 |   |                                  | 
|Additions                                          |  |          | 14,462 |  |                                                                                                           |  | -     |                                                                                                           |  |  | -                         |   |  |          | -     |   |                                  | 
|Other increases (decreases)                        |  |          | 3,258  |  |                                                                                                           |  | (52   | )                                                                                                         |  |  | (6                        | ) |  |          | (383  | ) |                                  | 
|                                                   |  |          |        |  |                                                                                                           |  |       |                                                                                                           |  |  |                           |   |  |          |       |   |                                  | 
|Final balance                                      |  |          | 23,062 |  |                                                                                                           |  | 1,524 |                                                                                                           |  |  | 97,386                    |   |  |          | 3,698 |   |                                  | 



|Movements in identifiable intangible assets,
 accumulated amortization |  | Software |        |   | Intellectual property  rights, patents
    and other  industrial property rights,  service, rights of way |  |      | Intellectual property rights,  patents
    and other industrial  property rights, service,  rights of way |  |  | Other  intangible  assets |  |  | Goodwill |   |  | Identifiable  intangible  assets | 
|---------------------------------------------------------------------- |  | -------- | ------ | - | --------------------------------------------------------------------------------------------------------- |  | ---- | --------------------------------------------------------------------------------------------------------- |  |  | ------------------------- |  |  | -------- | - |  | -------------------------------- | 
|                                                                       |  | ThUS$    |        |   | ThUS$                                                                                                     |  |      | ThUS$                                                                                                     |  |  | ThUS$                     |  |  | ThUS$    |   |  | ThUS$                            | 
|Opening balance                                                        |  |          | (3,146 | ) |                                                                                                           |  | (882 | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 
|Additions                                                              |  |          | -      |   |                                                                                                           |  | -    |                                                                                                           |  |  | -                         |  |  |          | - |  |                                  | 
|Amortization                                                           |  |          | (3,547 | ) |                                                                                                           |  | (58  | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 
|Other increases (decreases)                                            |  |          | (3,303 | ) |                                                                                                           |  | 1    |                                                                                                           |  |  | -                         |  |  |          | - |  |                                  | 
|                                                                       |  |          |        |   |                                                                                                           |  |      |                                                                                                           |  |  |                           |  |  |          |   |  |                                  | 
|Final balance                                                          |  |          | (9,996 | ) |                                                                                                           |  | (939 | )                                                                                                         |  |  | -                         |  |  |          | - |  |                                  | 



F-119


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 13	Intangible assets
and goodwill (continued)



| | 13.2 | Disclosures on intangible assets and goodwill, continued
| | ---- | --------------------------------------------------------



| | h) | Movements in identifiable intangible assets as of
                                         December 31, 2014:
| | -- | -------------------------------------------------------------------------------------------------------------



|Movements in identifiable intangible assets, net |  | Software |        |   | Intellectual property  rights, patents
    and other  industrial property rights,  service rights of way |  |     | Intellectual property rights,  patents
    and other industrial  property rights, service  rights of way |  |  | Other  intangible  assets |   |  | Goodwill |       |   | Identifiable  intangible  assets | 
|------------------------------------------------ |  | -------- | ------ | - | -------------------------------------------------------------------------------------------------------- |  | --- | -------------------------------------------------------------------------------------------------------- |  |  | ------------------------- | - |  | -------- | ----- | - | -------------------------------- | 
|                                                 |  | ThUS$    |        |   | ThUS$                                                                                                    |  |     | ThUS$                                                                                                    |  |  | ThUS$                     |   |  | ThUS$    |       |   | ThUS$                            | 
|Opening balance                                  |  |          | 2,196  |   |                                                                                                          |  | 694 |                                                                                                          |  |  | 97,392                    |   |  |          | 4,081 |   |                                  | 
|Additions                                        |  |          | 14,462 |   |                                                                                                          |  | -   |                                                                                                          |  |  | -                         |   |  |          | -     |   |                                  | 
|Amortization                                     |  |          | (3,547 | ) |                                                                                                          |  | (58 | )                                                                                                        |  |  | -                         |   |  |          | -     |   |                                  | 
|Other increases (decreases)                      |  |          | (45    | ) |                                                                                                          |  | (51 | )                                                                                                        |  |  | (6                        | ) |  |          | (383  | ) |                                  | 
|                                                 |  |          |        |   |                                                                                                          |  |     |                                                                                                          |  |  |                           |   |  |          |       |   |                                  | 
|Final balance                                    |  |          | 13,066 |   |                                                                                                          |  | 585 |                                                                                                          |  |  | 97,386                    |   |  |          | 3,698 |   |                                  | 



F-120


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
14	Property, plant and equipment



As of December 31, 2016 and December 31, 2015, the detail of property,
plant and equipment is as follows:



| | 14.1 | Types of property, plant and equipment
| | ---- | --------------------------------------



|Description of types of property, plant and equipment                                 |  | 12/31/2016 ThUS$ |           |  | 12/31/2015 ThUS$ | 
|------------------------------------------------------------------------------------- |  | ---------------- | --------- |  | ---------------- | 
|Property, plant and equipment, net                                                    |  |                  |           |  |                  | 
|Land                                                                                  |  |                  | 32,701    |  |                  | 
|Buildings                                                                             |  |                  | 120,691   |  |                  | 
|Machinery                                                                             |  |                  | 312,878   |  |                  | 
|Transport equipment                                                                   |  |                  | 2,153     |  |                  | 
|Furniture and fixtures                                                                |  |                  | 5,429     |  |                  | 
|Office equipment                                                                      |  |                  | 5,768     |  |                  | 
|Production plants                                                                     |  |                  | 113,630   |  |                  | 
|Mining assets                                                                         |  |                  | 29,726    |  |                  | 
|Constructions in progress                                                             |  |                  | 170,710   |  |                  | 
|Other property, plant and equipment (1)                                               |  |                  | 739,024   |  |                  | 
|Total                                                                                 |  |                  | 1,532,710 |  |                  | 
|Property, plant and equipment, gross                                                  |  |                  |           |  |                  | 
|Land                                                                                  |  |                  | 32,701    |  |                  | 
|Buildings                                                                             |  |                  | 272,791   |  |                  | 
|Machinery                                                                             |  |                  | 1,223,174 |  |                  | 
|Transport equipment                                                                   |  |                  | 74,628    |  |                  | 
|Furniture and fixtures                                                                |  |                  | 38,264    |  |                  | 
|Office equipment                                                                      |  |                  | 37,665    |  |                  | 
|Production plants                                                                     |  |                  | 227,494   |  |                  | 
|Mining assets                                                                         |  |                  | 230,567   |  |                  | 
|Constructions in progress                                                             |  |                  | 170,710   |  |                  | 
|Other property, plant and equipment                                                   |  |                  | 1,832,847 |  |                  | 
|Total                                                                                 |  |                  | 4,140,841 |  |                  | 
|                                                                                      |  |                  |           |  |                  | 
|Accumulated depreciation and value impairment of property, plant and equipment, total |  |                  |           |  |                  | 
|Accumulated depreciation and impairment of buildings                                  |  |                  | 152,100   |  |                  | 
|Accumulated depreciation and impairment of machinery                                  |  |                  | 910,296   |  |                  | 
|Accumulated depreciation and impairment of transport equipment                        |  |                  | 72,475    |  |                  | 
|Accumulated depreciation and impairment of furniture and fixtures                     |  |                  | 32,835    |  |                  | 
|Accumulated depreciation and impairment of office equipment                           |  |                  | 31,897    |  |                  | 
|Accumulated depreciation and impairment of production plants                          |  |                  | 113,864   |  |                  | 
|Accumulated depreciation and impairment of mining assets                              |  |                  | 200,841   |  |                  | 
|Accumulated depreciation and impairment of other property, plant and equipment        |  |                  | 1,093,823 |  |                  | 
|Total                                                                                 |  |                  | 2,608,131 |  |                  | 



(1)	The detail of other property, plant and equipment is as
follows:



|                                         |  | 12/31/2016 ThUS$ |         |  | 31/12/2015 ThUS$ | 
|---------------------------------------- |  | ---------------- | ------- |  | ---------------- | 
|Other property, plant and equipment, net |  |                  |         |  |                  | 
|Conveyor belt system in plant            |  |                  | 33,046  |  |                  | 
|Tank (TK)                                |  |                  | 18,993  |  |                  | 
|Geomembrane/liner                        |  |                  |         |  |                  | 
|Electric facilities                      |  |                  | 45,408  |  |                  | 
|Lights                                   |  |                  | 1,110   |  |                  | 
|Other constructions                      |  |                  | 126,969 |  |                  | 
|Piping                                   |  |                  |         |  |                  | 
|Pool                                     |  |                  | 284,025 |  |                  | 
|Well (water)                             |  |                  | 42,584  |  |                  | 
|Pipes/HDPE lines                         |  |                  | 127,805 |  |                  | 
|Railroad track                           |  |                  | 2,274   |  |                  | 
|Other property, plant and equipment      |  |                  | 56,810  |  |                  | 
|Total                                    |  |                  | 739,024 |  |                  | 



F-121


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 14	Property, plant
and equipment (continued)



| | 14.2 | Reconciliation of changes in property,
                                         plant and equipment by type:
| | ---- | ------------------------------------------------------------------------------------------------------------



|Reconciliation entries of changes in  property, plant and equipment by type as
     of December 31, 2016, gross |  | Land  |        |   | Buildings |  |         | Machinery |  |  | Transport  equipment |   |  | Furniture and  fixtures |        |   | Office  equipment |  |        | Production  plants |  |  | Mining assets |   |  | Constructions in  progress |         |  | Other property,  plant
    and  equipment |  |         | Property,  plant
    and  equipment | 
|--------------------------------------------------------------------------------------------------------------- |  | ----- | ------ | - | --------- |  | ------- | --------- |  |  | -------------------- | - |  | ----------------------- | ------ | - | ----------------- |  | ------ | ------------------ |  |  | ------------- | - |  | -------------------------- | ------- |  | ----------------------------------------- |  | ------- | ----------------------------------- | 
|                                                                                                                |  | ThUS$ |        |   | ThUS$     |  |         | ThUS$     |  |  | ThUS$                |   |  | ThUS$                   |        |   | ThUS$             |  |        | ThUS$              |  |  | ThUS$         |   |  | ThUS$                      |         |  | ThUS$                                     |  |         | ThUS$                               | 
|                                                                                                                |  |       |        |   |           |  |         |           |  |  |                      |   |  |                         |        |   |                   |  |        |                    |  |  |               |   |  |                            |         |  |                                           |  |         |                                     | 
|Opening balance                                                                                                 |  |       | 34,589 |   |           |  | 264,645 |           |  |  | 1,211,927            |   |  |                         | 79,979 |   |                   |  | 37,492 |                    |  |  | 38,285        |   |  |                            | 171,769 |  |                                           |  | 228,240 |                                     | 
|Changes                                                                                                         |  |       |        |   |           |  |         |           |  |  |                      |   |  |                         |        |   |                   |  |        |                    |  |  |               |   |  |                            |         |  |                                           |  |         |                                     | 
|Additions                                                                                                       |  |       | -      |   |           |  | -       |           |  |  | 1,192                |   |  |                         | 50     |   |                   |  | 14     |                    |  |  | 763           |   |  |                            | -       |  |                                           |  | -       |                                     | 
|Divestitures                                                                                                    |  |       | -      |   |           |  | -       |           |  |  | (1,166               | ) |  |                         | (5,540 | ) |                   |  | (28    | )                  |  |  | (1            | ) |  |                            |         |  |                                           |  |         |                                     | 
|Increase(decrease) in foreign currency exchange                                                                 |  |       | 28     |   |           |  | 1       |           |  |  | 18                   |   |  |                         | 8      |   |                   |  | -      |                    |  |  | 52            |   |  |                            | -       |  |                                           |  | -       |                                     | 
|Reclassification                                                                                                |  |       | -      |   |           |  | 8,145   |           |  |  | 11,203               |   |  |                         | 277    |   |                   |  | 786    |                    |  |  | 548           |   |  |                            | 55,725  |  |                                           |  | 2,327   |                                     | 
|Other increases (decreases) (*)                                                                                 |  |       | (25    | ) |           |  | -       |           |  |  | -                    |   |  |                         | (146   | ) |                   |  | -      |                    |  |  | (1,982        | ) |  |                            | -       |  |                                           |  | -       |                                     | 
|Decreases for classification as held-for-sale (1)                                                               |  |       | (1,891 | ) |           |  | -       |           |  |  | -                    |   |  |                         | -      |   |                   |  | -      |                    |  |  | -             |   |  |                            | -       |  |                                           |  | -       |                                     | 
|Total changes                                                                                                   |  |       | (1,888 | ) |           |  | 8,146   |           |  |  | 11,247               |   |  |                         | (5,351 | ) |                   |  | 772    |                    |  |  | (620          | ) |  |                            | 55,725  |  |                                           |  | 2,327   |                                     | 
|Final balance                                                                                                   |  |       | 32,701 |   |           |  | 272,791 |           |  |  | 1,223,174            |   |  |                         | 74,628 |   |                   |  | 38,264 |                    |  |  | 37,665        |   |  |                            | 227,494 |  |                                           |  | 230,567 |                                     | 



|Reconciliation entries of changes in  property, plant and equipment by type
    as  of December 31, 2016, Accumulated 
depreciation |  | Land  |   |  | Buildings |  |          | Machinery |  |  | Transport  equipment |   |  | Furniture and  fixtures |         |   | Office  equipment |  |         | Production  plants |  |  | Mining assets |   |  | Constructions in  progress |          |   | Other property,  plant
    and  equipment |  |          | Property,  plant and
     equipment | 
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----- | - |  | --------- |  | -------- | --------- |  |  | -------------------- | - |  | ----------------------- | ------- | - | ----------------- |  | ------- | ------------------ |  |  | ------------- | - |  | -------------------------- | -------- | - | ----------------------------------------- |  | -------- | ----------------------------------- | 
|                                                                                                                                    |  | ThUS$ |   |  | ThUS$     |  |          | ThUS$     |  |  | ThUS$                |   |  | ThUS$                   |         |   | ThUS$             |  |         | ThUS$              |  |  | ThUS$         |   |  | ThUS$                      |          |   | ThUS$                                     |  |          | ThUS$                               | 
|                                                                                                                                    |  |       |   |  |           |  |          |           |  |  |                      |   |  |                         |         |   |                   |  |         |                    |  |  |               |   |  |                            |          |   |                                           |  |          |                                     | 
|Opening balance                                                                                                                     |  |       | - |  |           |  | (136,270 | )         |  |  | (818,466             | ) |  |                         | (65,213 | ) |                   |  | (28,976 | )                  |  |  | (32,117       | ) |  |                            | (91,742  | ) |                                           |  | (186,848 | )                                   | 
|Changes                                                                                                                             |  |       |   |  |           |  |          |           |  |  |                      |   |  |                         |         |   |                   |  |         |                    |  |  |               |   |  |                            |          |   |                                           |  |          |                                     | 
|Divestitures                                                                                                                        |  |       | - |  |           |  | -        |           |  |  | 759                  |   |  |                         | 5,540   |   |                   |  | 28      |                    |  |  | -             |   |  |                            | -        |   |                                           |  | -        |                                     | 
|Depreciation expense                                                                                                                |  |       | - |  |           |  | (14,379  | )         |  |  | (81,090              | ) |  |                         | (2,682  | ) |                   |  | (3,426  | )                  |  |  | (1,893        | ) |  |                            | (22,125  | ) |                                           |  | (13,993  | )                                   | 
|Impairment                                                                                                                          |  |       |   |  |           |  | (180     | )         |  |  | (5,612               | ) |  |                         | (14,209 | ) |                   |  | (269    | )                  |  |  | -             |   |  |                            | -        |   |                                           |  | -        |                                     | 
|Increase(decrease) in foreign currency exchange                                                                                     |  |       | - |  |           |  | (13      | )         |  |  | -                    |   |  |                         | (14     | ) |                   |  | -       |                    |  |  | (28           | ) |  |                            | -        |   |                                           |  | -        |                                     | 
|Reclassification                                                                                                                    |  |       | - |  |           |  | (1,258   | )         |  |  | (5,889               | ) |  |                         | 3,974   |   |                   |  | (192    | )                  |  |  | (36           | ) |  |                            | -        |   |                                           |  | -        |                                     | 
|Other increases (decreases) (*)                                                                                                     |  |       | - |  |           |  | -        |           |  |  | 2                    |   |  |                         | 129     |   |                   |  | -       |                    |  |  | 2,177         |   |  |                            | 3        |   |                                           |  | -        |                                     | 
|Decreases for classification as held-for-sale (1)                                                                                   |  |       | - |  |           |  | -        |           |  |  | -                    |   |  |                         | -       |   |                   |  | -       |                    |  |  | -             |   |  |                            | -        |   |                                           |  | -        |                                     | 
|Total changes                                                                                                                       |  |       | - |  |           |  | (15,830  | )         |  |  | (91,830              | ) |  |                         | (7,262  | ) |                   |  | (3,859  | )                  |  |  | 220           |   |  |                            | (22,122  | ) |                                           |  | (13,993  | )                                   | 
|Final balance                                                                                                                       |  |       | - |  |           |  | (152,100 | )         |  |  | (910,296             | ) |  |                         | (72,475 | ) |                   |  | (32,835 | )                  |  |  | (31,897       | ) |  |                            | (113,864 | ) |                                           |  | (200,841 | )                                   | 



F-122


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 14	Property, plant
and equipment (continued)



| | 14.2 | Reconciliation of changes in property, plant and equipment
by type, continued:
| | ---- | ------------------------------------------------------------------------------



|Reconciliation entries of changes in  property, plant and equipment by type as
     of December 31, 2016, net |  | Land  |        |   | Buildings |  |         | Machinery |  |  | Transport  equipment |   |  | Furniture and  fixtures |         |   | Office  equipment |  |        | Production  plants |  |  | Mining assets |   |  | Constructions in  progress |         |   | Other property,  plant
    and  equipment |  |         | Property,  plant
    and  equipment | 
|------------------------------------------------------------------------------------------------------------- |  | ----- | ------ | - | --------- |  | ------- | --------- |  |  | -------------------- | - |  | ----------------------- | ------- | - | ----------------- |  | ------ | ------------------ |  |  | ------------- | - |  | -------------------------- | ------- | - | ----------------------------------------- |  | ------- | ----------------------------------- | 
|                                                                                                              |  | ThUS$ |        |   | ThUS$     |  |         | ThUS$     |  |  | ThUS$                |   |  | ThUS$                   |         |   | ThUS$             |  |        | ThUS$              |  |  | ThUS$         |   |  | ThUS$                      |         |   | ThUS$                                     |  |         | ThUS$                               | 
|                                                                                                              |  |       |        |   |           |  |         |           |  |  |                      |   |  |                         |         |   |                   |  |        |                    |  |  |               |   |  |                            |         |   |                                           |  |         |                                     | 
|Opening balance                                                                                               |  |       | 34,589 |   |           |  | 128,375 |           |  |  | 393,461              |   |  |                         | 14,766  |   |                   |  | 8,516  |                    |  |  | 6,168         |   |  |                            | 80,027  |   |                                           |  | 41,392  |                                     | 
|Changes                                                                                                       |  |       |        |   |           |  |         |           |  |  |                      |   |  |                         |         |   |                   |  |        |                    |  |  |               |   |  |                            |         |   |                                           |  |         |                                     | 
|Additions                                                                                                     |  |       | -      |   |           |  | -       |           |  |  | 1,192                |   |  |                         | 50      |   |                   |  | 14     |                    |  |  | 763           |   |  |                            | -       |   |                                           |  | -       |                                     | 
|Divestitures                                                                                                  |  |       | -      |   |           |  | -       |           |  |  | (407                 | ) |  |                         | -       |   |                   |  | -      |                    |  |  | (1            | ) |  |                            | -       |   |                                           |  | -       |                                     | 
|Depreciation expense                                                                                          |  |       | -      |   |           |  | (14,379 | )         |  |  | (81,090              | ) |  |                         | (2,682  | ) |                   |  | (3,426 | )                  |  |  | (1,893        | ) |  |                            | (22,125 | ) |                                           |  | (13,993 | )                                   | 
|Impairment (**)                                                                                               |  |       |        |   |           |  | (180    | )         |  |  | (5,612               | ) |  |                         | (14,209 | ) |                   |  | (269   | )                  |  |  | -             |   |  |                            | -       |   |                                           |  | -       |                                     | 
|Increase(decrease) in foreign currency exchange                                                               |  |       | 28     |   |           |  | (12     | )         |  |  | 18                   |   |  |                         | (6      | ) |                   |  | -      |                    |  |  | 24            |   |  |                            | -       |   |                                           |  | -       |                                     | 
|Reclassification                                                                                              |  |       | -      |   |           |  | 6,887   |           |  |  | 5,314                |   |  |                         | 4,251   |   |                   |  | 594    |                    |  |  | 512           |   |  |                            | 55,725  |   |                                           |  | 2,327   |                                     | 
|Other increases (decreases) (*)                                                                               |  |       | (25    | ) |           |  | -       |           |  |  | 2                    |   |  |                         | (17     | ) |                   |  | -      |                    |  |  | 195           |   |  |                            | 3       |   |                                           |  | -       |                                     | 
|Decreases for classification as held-for-sale (***)                                                           |  |       | (1,891 | ) |           |  | -       |           |  |  | -                    |   |  |                         | -       |   |                   |  | -      |                    |  |  | -             |   |  |                            | -       |   |                                           |  | -       |                                     | 
|Total changes                                                                                                 |  |       | (1,888 | ) |           |  | (7,684  | )         |  |  | (80,583              | ) |  |                         | (12,613 | ) |                   |  | (3,087 | )                  |  |  | (400          | ) |  |                            | 33,603  |   |                                           |  | (11,666 | )                                   | 
|Final balance                                                                                                 |  |       | 32,701 |   |           |  | 120,691 |           |  |  | 312,878              |   |  |                         | 2,153   |   |                   |  | 5,429  |                    |  |  | 5,768         |   |  |                            | 113,630 |   |                                           |  | 29,726  |                                     | 



(*) The net balance of other increases (decreases)
corresponds to: 1) Work in progress which are expensed to profit or loss (forming part of cost of sales and other expenses per
function, as appropriate), 2) the variation representing the purchase and use of materials and spare parts and 3) projects which
correspond to prospecting and stain development.



(**) See Note 14.4



(***) The Company classifies as non-current
assets held-for-sale the property, plant and equipment (assets that are going to be sold), the ones that as of the closing of
the financial statements had entered into a sale process and is expected to finalized in the 12 months following the closing of
the said financial statements. These assets are valued at the book value or at sale value minus the costs associated with the
sale, whichever is lower. The depreciation of these assets is stopped at the moment that they are considered held-for-sale assets.



F-123


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 14	Property, plant
and equipment (continued)



| | 14.2 | Reconciliation of changes in property, plant and equipment
by type, continued:
| | ---- | ------------------------------------------------------------------------------



|Reconciliation entries of changes in  property, plant and equipment by type as
     of December 31, 2015, gross |  | Land  |        |   | Buildings |  |         | Machinery |  |  | Transport  equipment |   |  | Furniture and  fixtures |        |   | Office  equipment |  |        | Production  plants |  |  | Mining assets |   |  | Constructions in  progress |         |  | Other property,  plant
    and  equipment |  |         | Property,  plant
    and  equipment | 
|--------------------------------------------------------------------------------------------------------------- |  | ----- | ------ | - | --------- |  | ------- | --------- |  |  | -------------------- | - |  | ----------------------- | ------ | - | ----------------- |  | ------ | ------------------ |  |  | ------------- | - |  | -------------------------- | ------- |  | ----------------------------------------- |  | ------- | ----------------------------------- | 
|                                                                                                                |  | ThUS$ |        |   | ThUS$     |  |         | ThUS$     |  |  | ThUS$                |   |  | ThUS$                   |        |   | ThUS$             |  |        | ThUS$              |  |  | ThUS$         |   |  | ThUS$                      |         |  | ThUS$                                     |  |         | ThUS$                               | 
|                                                                                                                |  |       |        |   |           |  |         |           |  |  |                      |   |  |                         |        |   |                   |  |        |                    |  |  |               |   |  |                            |         |  |                                           |  |         |                                     | 
|Opening balance                                                                                                 |  |       | 34,622 |   |           |  | 240,356 |           |  |  | 1,145,426            |   |  |                         | 78,402 |   |                   |  | 32,082 |                    |  |  | 35,512        |   |  |                            | 171,277 |  |                                           |  | 225,917 |                                     | 
|Changes                                                                                                         |  |       |        |   |           |  |         |           |  |  |                      |   |  |                         |        |   |                   |  |        |                    |  |  |               |   |  |                            |         |  |                                           |  |         |                                     | 
|Additions                                                                                                       |  |       | 49     |   |           |  | 933     |           |  |  | 1,109                |   |  |                         | 32     |   |                   |  | 28     |                    |  |  | 1,338         |   |  |                            | -       |  |                                           |  | -       |                                     | 
|Divestitures                                                                                                    |  |       | -      |   |           |  | -       |           |  |  | (13                  | ) |  |                         | (5     | ) |                   |  | -      |                    |  |  | (1            | ) |  |                            | -       |  |                                           |  | -       |                                     | 
|Impairment                                                                                                      |  |       | -      |   |           |  | -       |           |  |  | -                    |   |  |                         | -      |   |                   |  | -      |                    |  |  | -             |   |  |                            | -       |  |                                           |  | -       |                                     | 
|Increase(decrease) in foreign currency exchange                                                                 |  |       | (82    | ) |           |  | -       |           |  |  | (53                  | ) |  |                         | (23    | ) |                   |  | -      |                    |  |  | (104          | ) |  |                            | -       |  |                                           |  | -       |                                     | 
|Reclassification                                                                                                |  |       | -      |   |           |  | 23,355  |           |  |  | 68,187               |   |  |                         | 3,742  |   |                   |  | 5,382  |                    |  |  | 1,585         |   |  |                            | 491     |  |                                           |  | 2,324   |                                     | 
|Other increases (decreases) (*)                                                                                 |  |       |        |   |           |  | 1       |           |  |  | (2,729               | ) |  |                         | (2,169 | ) |                   |  |        |                    |  |  | (45           | ) |  |                            | 1       |  |                                           |  | (1      | )                                   | 
|Total changes                                                                                                   |  |       | (33    | ) |           |  | 24,289  |           |  |  | 66,501               |   |  |                         | 1,577  |   |                   |  | 5,410  |                    |  |  | 2,773         |   |  |                            | 492     |  |                                           |  | 2,323   |                                     | 
|Final balance                                                                                                   |  |       | 34,589 |   |           |  | 264,645 |           |  |  | 1,211,927            |   |  |                         | 79,979 |   |                   |  | 37,492 |                    |  |  | 38,285        |   |  |                            | 171,769 |  |                                           |  | 228,240 |                                     | 



|Reconciliation entries of changes in  property, plant and equipment by type as
     of December 31, 2015, Accumulated
 depreciation |  | Land  |   |  | Buildings |  |          | Machinery |  |  | Transport  equipment |   |  | Furniture and  fixtures |         |   | Office  equipment |  |         | Production  plants |  |  | Mining assets |   |  | Constructions in  progress |         |   | Other property,  plant
    and  equipment |  |          | Property,  plant
    and  equipment | 
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----- | - |  | --------- |  | -------- | --------- |  |  | -------------------- | - |  | ----------------------- | ------- | - | ----------------- |  | ------- | ------------------ |  |  | ------------- | - |  | -------------------------- | ------- | - | ----------------------------------------- |  | -------- | ----------------------------------- | 
|                                                                                                                                    |  | ThUS$ |   |  | ThUS$     |  |          | ThUS$     |  |  | ThUS$                |   |  | ThUS$                   |         |   | ThUS$             |  |         | ThUS$              |  |  | ThUS$         |   |  | ThUS$                      |         |   | ThUS$                                     |  |          | ThUS$                               | 
|                                                                                                                                    |  |       |   |  |           |  |          |           |  |  |                      |   |  |                         |         |   |                   |  |         |                    |  |  |               |   |  |                            |         |   |                                           |  |          |                                     | 
|Opening balance                                                                                                                     |  |       | - |  |           |  | (115,954 | )         |  |  | (791,878             | ) |  |                         | (64,227 | ) |                   |  | (23,066 | )                  |  |  | (29,147       | ) |  |                            | (62,504 | ) |                                           |  | (142,585 | )                                   | 
|Changes                                                                                                                             |  |       |   |  |           |  |          |           |  |  |                      |   |  |                         |         |   |                   |  |         |                    |  |  |               |   |  |                            |         |   |                                           |  |          |                                     | 
|Divestitures                                                                                                                        |  |       | - |  |           |  | -        |           |  |  | -                    |   |  |                         | -       |   |                   |  | -       |                    |  |  | -             |   |  |                            | -       |   |                                           |  | -        |                                     | 
|Depreciation expense                                                                                                                |  |       | - |  |           |  | (13,198  | )         |  |  | (88,899              | ) |  |                         | (15,327 | ) |                   |  | (3,093  | )                  |  |  | (3,041        | ) |  |                            | (7,121  | ) |                                           |  | (1,682   | )                                   | 
|Impairment                                                                                                                          |  |       | - |  |           |  | (747     | )         |  |  | (5,107               | ) |  |                         | (248    | ) |                   |  | (1,157  | )                  |  |  | (10           | ) |  |                            | (473    | ) |                                           |  | (13,554  | )                                   | 
|Increase(decrease) in foreign currency exchange                                                                                     |  |       | - |  |           |  | 1        |           |  |  | -                    |   |  |                         | 16      |   |                   |  | -       |                    |  |  | 66            |   |  |                            | -       |   |                                           |  | -        |                                     | 
|Reclassification                                                                                                                    |  |       | - |  |           |  | (5,348   | )         |  |  | 70,419               |   |  |                         | 24,887  |   |                   |  | (433    | )                  |  |  | 2             |   |  |                            | (21,644 | ) |                                           |  | (29,027  | )                                   | 
|Other increases (decreases) (*)                                                                                                     |  |       | - |  |           |  | (1,024   | )         |  |  | (3,001               | ) |  |                         | (10,314 | ) |                   |  | (1,227  | )                  |  |  | 13            |   |  |                            |         |   |                                           |  |          |                                     | 
|Total changes                                                                                                                       |  |       | - |  |           |  | (20,316  | )         |  |  | (26,588              | ) |  |                         | (986    | ) |                   |  | (5,910  | )                  |  |  | (2,970        | ) |  |                            | (29,238 | ) |                                           |  | (44,263  | )                                   | 
|Final balance                                                                                                                       |  |       | - |  |           |  | (136,270 | )         |  |  | (818,466             | ) |  |                         | (65,213 | ) |                   |  | (28,976 | )                  |  |  | (32,117       | ) |  |                            | (91,742 | ) |                                           |  | (186,848 | )                                   | 



F-124


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 14	Property, plant
and equipment (continued)



| | 14.3 | Reconciliation of changes in property, plant and equipment
by type, continued:
| | ---- | ------------------------------------------------------------------------------



|Reconciliation entries of changes in  property, plant and equipment by type as
     of December 31, 2015, net |  | Land  |        |   | Buildings |  |         | Machinery |  |  | Transport  equipment |   |  | Furniture and  fixtures |         |   | Office  equipment |  |        | Production  plants |  |  | Mining assets |   |  | Constructions in  progress |         |   | Other property,  plant
    and  equipment |  |         | Property,  plant
    and  equipment | 
|------------------------------------------------------------------------------------------------------------- |  | ----- | ------ | - | --------- |  | ------- | --------- |  |  | -------------------- | - |  | ----------------------- | ------- | - | ----------------- |  | ------ | ------------------ |  |  | ------------- | - |  | -------------------------- | ------- | - | ----------------------------------------- |  | ------- | ----------------------------------- | 
|                                                                                                              |  | ThUS$ |        |   | ThUS$     |  |         | ThUS$     |  |  | ThUS$                |   |  | ThUS$                   |         |   | ThUS$             |  |        | ThUS$              |  |  | ThUS$         |   |  | ThUS$                      |         |   | ThUS$                                     |  |         | ThUS$                               | 
|                                                                                                              |  |       |        |   |           |  |         |           |  |  |                      |   |  |                         |         |   |                   |  |        |                    |  |  |               |   |  |                            |         |   |                                           |  |         |                                     | 
|Opening balance                                                                                               |  |       | 34,622 |   |           |  | 124,402 |           |  |  | 353,548              |   |  |                         | 14,175  |   |                   |  | 9,016  |                    |  |  | 6,365         |   |  |                            | 108,773 |   |                                           |  | 83,332  |                                     | 
|Changes                                                                                                       |  |       |        |   |           |  |         |           |  |  |                      |   |  |                         |         |   |                   |  |        |                    |  |  |               |   |  |                            |         |   |                                           |  |         |                                     | 
|Additions                                                                                                     |  |       | 49     |   |           |  | 933     |           |  |  | 1,109                |   |  |                         | 32      |   |                   |  | 28     |                    |  |  | 1,338         |   |  |                            | -       |   |                                           |  | -       |                                     | 
|Divestitures                                                                                                  |  |       | -      |   |           |  | -       |           |  |  | (13                  | ) |  |                         | (5      | ) |                   |  | -      |                    |  |  | (1            | ) |  |                            | -       |   |                                           |  | -       |                                     | 
|Depreciation expense                                                                                          |  |       | -      |   |           |  | (13,198 | )         |  |  | (88,899              | ) |  |                         | (15,327 | ) |                   |  | (3,093 | )                  |  |  | (3,041        | ) |  |                            | (7,121  | ) |                                           |  | (1,682  | )                                   | 
|Imperment                                                                                                     |  |       |        |   |           |  | (747    | )         |  |  | (5,107               | ) |  |                         | (248    | ) |                   |  | (1,157 | )                  |  |  | (10           | ) |  |                            | (473    | ) |                                           |  | (13,554 | )                                   | 
|Increase(decrease) in foreign currency exchange                                                               |  |       | (82    | ) |           |  | 1       |           |  |  | (53                  | ) |  |                         | (7      | ) |                   |  | -      |                    |  |  | (38           | ) |  |                            | -       |   |                                           |  | -       |                                     | 
|Reclassification                                                                                              |  |       | -      |   |           |  | 18,007  |           |  |  | 138,606              |   |  |                         | 28,629  |   |                   |  | 4,949  |                    |  |  | 1,587         |   |  |                            | (21,153 | ) |                                           |  | (26,703 | )                                   | 
|Other increases (decreases) (*)                                                                               |  |       | -      |   |           |  | (1,023  | )         |  |  | (5,730               | ) |  |                         | (12,483 | ) |                   |  | (1,227 | )                  |  |  | (32           | ) |  |                            | 1       |   |                                           |  | (1      | )                                   | 
|Total changes                                                                                                 |  |       | (33    | ) |           |  | 3,973   |           |  |  | 39,913               |   |  |                         | 591     |   |                   |  | (500   | )                  |  |  | (197          | ) |  |                            | (28,746 | ) |                                           |  | (41,940 | )                                   | 
|Final balance                                                                                                 |  |       | 34,589 |   |           |  | 128,375 |           |  |  | 393,461              |   |  |                         | 14,766  |   |                   |  | 8,516  |                    |  |  | 6,168         |   |  |                            | 80,027  |   |                                           |  | 41,392  |                                     | 



(*) The net balance of other increases (decreases)
corresponds to: 1) Work in progress which are expensed to profit or loss (forming part of cost of sales and other expenses per
function, as appropriate), 2) the variation representing the purchase and use of materials and spare parts 3) projects corresponding
mainly to exploration expenditures and stain development.



F-125


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 14	Property, plant
and equipment (continued)



| | 14.3 | Detail of property, plant and equipment
                                         pledged as guarantee
| | ---- | -----------------------------------------------------------------------------------------------------



There are no restrictions in title or guarantees
for the compliance with obligations which affect property, plant and equipment.



| | 14.4 | Impairment of assets
| | ---- | --------------------



As stated in Note 3.28, the recoverable amount
of property, plant and equipment is measured whenever there is an indication that the asset may be impaired. As of December 31,
2016 and December 31, 2015, impairment adjustments were generated because of the closure of the railway stations for the transportation
of products, see Note 34 and the closure of the Pedro de Valdivia mine site indicated in Note 32, respectively.



Railway for transportation of products
from the Coya Sur location and the Port of Tocopilla



As a result of the rain storms that affected
the Tocopilla Zone at the beginning of August 2015, SQM S.A. confirmed the existence of damages in several zones in the railway
between the sites Coya Sur and Tocopilla. Accordingly, starting from such date the Company has used the transport of trucks replacing
the transport through the railway. SQM has performed several internal and external studies with the purpose of determining the
costs and terms necessary to repair the damages in the railway.



The analysis of the internal and external
reports performed during 2015 and 2016 concluded that the costs associated with repairing the damages caused by the rain storms
would imply long-terms and high costs, and accordingly, it is not convenient at short and medium-term to repair the railway. Such
decision does not affect the production process or imply additional employee reductions.



Consequently, SQM has adjusted the value of
the assets associated with the railway (fixed equipment, facilities and rolling equipment), which has translated into a charge
of approximately US$32 million which are reflected in the line other expenses by function in the consolidated statement of income
for the period. Such amount approximately represents 0.8% of SQM’s total assets and 11% of SQM’s net income reported
at the end of December 2016.



| | 14.5 | Additional information
| | ---- | ----------------------



Interest capitalized in construction-in-progress:



The amount capitalized for this concept amounted
to ThUS$5,406 as of December 31, 2016 and ThUS$4,466 as of December 31, 2015.



Financing costs are not capitalized for periods
which exceed the normal term of acquisition, construction or installation of the asset, such as the case of delays, interruptions
or temporary suspension of the project due to technical, financial or other issues, which prevent that the asset is maintained
in good conditions for its use.



F-126


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 14	Property, plant
and equipment (continued)



| | 14.5 | Additional information
| | ---- | ----------------------



Available for sale assets



Non-current assets held for sale and the components
of groups held for sale classified as held for sale are recorded in the Consolidated Statement of Financial Position in a single
line under the following concept: “Non-current assets or asset groups for disposal classified as held for sale.”



The main classes of assets of non-current
assets held for sale are shown below.



|Available for sale assets |  | 12/31/2016 |       |  | 12/31/2015 | 
|------------------------- |  | ---------- | ----- |  | ---------- | 
|                          |  | ThUS$      |       |  | ThUS$      | 
|                          |  |            |       |  |            | 
|Land                      |  |            | 1,891 |  |            | 
|Facilities and fixtures   |  |            | 165   |  |            | 
|Total                     |  |            | 2,056 |  |            | 



Note
15	Employee benefits



| | 15.1 | Provisions for employee benefits
| | ---- | --------------------------------



|Classes of benefits and expenses by employee |  | 12/31/2016 |        |  | 12/31/2015 | 
|-------------------------------------------- |  | ---------- | ------ |  | ---------- | 
|                                             |  | ThUS$      |        |  | ThUS$      | 
|Current                                      |  |            |        |  |            | 
|Profit sharing and bonuses                   |  |            | 20,998 |  |            | 
|Total                                        |  |            | 20,998 |  |            | 
|                                             |  |            |        |  |            | 
|Non-current                                  |  |            |        |  |            | 
|Profit sharing and bonuses                   |  |            | -      |  |            | 
|Severance indemnity payments                 |  |            | 22,532 |  |            | 
|Total                                        |  |            | 22,532 |  |            | 



F-127


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 15   Employee benefits (continued)



| | 15.2 | Policies on defined benefit plan
| | ---- | --------------------------------



This policy is applied to all benefits
received for services provided by the Company's employees.



Short-term benefits for active employees
are represented by salaries, social welfare benefits, paid time-off, sickness leaves and other leaves, profit sharing and incentives
and non-monetary benefits; e.g., healthcare service, housing, subsidized or free goods or services. These will be paid in a term
which does not exceed twelve months.



The Company only provides compensation
and benefits to active employees, with the exemption of SQM North America which applies the definitions under 15.4 below.



SQM maintains incentive programs for its
employees based on the personal performance, the Company’s performance and other short-term, mid-term and long-term indicators.



For each incentive bonus delivered to the
Company’s employees, there will be a disbursement in the first quarter of the following year and this will be calculated
based on profit for the period at the end of each period applying a factor obtained subsequent to the employee appraisal process.



Employee benefits include retention bonuses
for the Company’s executives, which are linked to the Company’s share price and it is paid in cash. The short-term
portion is presented as provision for current employee benefits and the long-term portion as non-current.



The bonus provided to the Company’s
directors is calculated based on Profit for the period at each year-end and will consider the application of a percentage factor.



The benefit related to vacations (short-term
benefits to employees, current), which is provided in the Labor Code which indicates that employees with more than a year of service
will be entitled to annual holidays for a period not lower than fifteen paid business days. The Company provides the benefit of
two additional vacation days (classified in Note 18.3).



Staff severance indemnities are agreed
and payable based on the last salary for each year of service for the Company or with certain maximum limits in respect to the
number of years to be considered or in respect to monetary terms. In general, this benefit is payable when the employee or worker
ceases to provide his/her services to the Company and the right for its collection can be acquired because of different causes,
as indicated in the respective agreements; e.g., retirement, dismissal, voluntary retirement, incapacity or disability, death,
etc.



Law No. 19,728 published on May 14, 2001
which became effective on October 1, 2002 required “Compulsory Unemployment Insurance” in favor of all depending employees
regulated by the Chilean Labor Code. Article 5 of this law provided the financing of this insurance through monthly contribution
payments by both the employee and the employer.



F-128


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 15   Employee benefits
(continued)



| | 15.3 | Other long-term benefits
| | ---- | ------------------------



The other long-term benefits relate to staff severance indemnities
and are recorded at their actuarial value.



|Staff severance indemnities at actuarial value |  | 12/31/2016 |        |  | 12/31/2015 | 
|---------------------------------------------- |  | ---------- | ------ |  | ---------- | 
|                                               |  | ThUS$      |        |  | ThUS$      | 
|Staff severance indemnities, Chile             |  |            | 21,384 |  |            | 
|Other obligations in companies elsewhere       |  |            | 1,148  |  |            | 
|Total other non-current liabilities            |  |            | 22,532 |  |            | 



Staff severance indemnities have been calculated
under the actuarial assessment method of the Company’s obligations with respect to staff severance indemnities, which relate
to defined benefit plans which consist of days of remuneration per year served at the time of retirement under conditions agreed
in the respective agreements established between the Company and its employees.



Under this benefit plan, the Company retains
the obligation for the payment of staff severance indemnities related to retirements, without establishing a separate fund with
specific assets, which is referred to as not funded. The discount interest rate of expected flows to be used was 4.5522%.



Benefit payment conditions



The staff severance indemnity benefit relates
to remuneration days for year worked for the Company with no limit of salary or years of services for the Company, when employees
cease to work for the Company due to turnover or death. In this case, the maximum age for men is 65 years and 60 years old for
women, which are the usual ages for retirement due to achieving the senior citizen age according to the Chilean pensions system
provided in Decree Law 3,500 of 1,980.



Methodology



The determination of the obligation for
benefits under IAS 19 Projected Benefit Obligation (PBO) is described as follows:



To determine the Company's total liability,
we used a mathematical simulation model which was programmed using a computer and which processed the situation of each employee
on an individual basis.



F-129


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 15   Employee benefits
(continued)



| | 15.3 | Other long-term benefits, continued
| | ---- | -----------------------------------



This model considered months as discrete
time; i.e., the Company determined the age of each person and his/her salary on a monthly basis according to the growth rate. Thus,
information on each person was simulated from the beginning of the life of his/her employment contract or when he/she started earning
benefits up to the month in which it reaches the normal retirement age, generating in each period the possible retirement according
to the Company’s turnover rate and the mortality rate according to the age reached. When he/she reaches the retirement age,
the employee finishes his/her service for the Company and receives indemnity related to retirement due to old age.



The methodology followed to determine the
accrual for all the employees adhered to agreements has considered turnover rates and the mortality rate RV-2009 established by
the Chilean Superintendence of Securities and Insurance to calculate pension-related life insurance reserves in Chile according
to the Accumulated Benefit Valuation or Accrued Cost of Benefit Method. This methodology is established in IAS 19 on Retirement
Benefit Costs.



| | 15.4 | Post-employment benefit obligations
| | ---- | -----------------------------------



Our subsidiary SQM North America, has established
with its employees, a pension plan until 2002 called “SQM North America Retirement Income Plan”, whereby obligation
is calculated measuring the expected future forecasted staff severance indemnity obligation using a net salary gradual rate of
restatements for inflation, mortality and turnover assumptions discounting the resulting amounts at present value using the interest
rate defined by the authorities.



Since 2003, SQM North America offers to
its employee benefits related to pension plans based on the 401-K system, which do not generate obligations for the Company.



|Reconciliation                                  |  | 12/31/2016 |       |   | 12/31/2015 |  |       | 12/31/2014 | 
|----------------------------------------------- |  | ---------- | ----- | - | ---------- |  | ----- | ---------- | 
|Changes in the benefit obligation               |  | ThUS$      |       |   | ThUS$      |  |       | ThUS$      | 
|Benefit obligation at the beginning of the year |  |            | 7,949 |   |            |  | 7,324 |            | 
|Service cost                                    |  |            | 2     |   |            |  | 3     |            | 
|Interest cost                                   |  |            | 387   |   |            |  | 380   |            | 
|Actuarial loss                                  |  |            | 200   |   |            |  | 600   |            | 
|Benefits paid                                   |  |            | (353  | ) |            |  | (358  | )          | 
|Benefit obligation at the end of the year       |  |            | 8,185 |   |            |  | 7,949 |            | 



F-130


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 15   Employee benefits
(continued)



| | 15.4 | Post-employment benefit obligations, continued
| | ---- | ----------------------------------------------



|                                                                  |  | 12/31/2016 |        |   | 12/31/2015 |  |        | 12/31/2014 | 
|----------------------------------------------------------------- |  | ---------- | ------ | - | ---------- |  | ------ | ---------- | 
|Changes in the plan assets:                                       |  | ThUS$      |        |   | ThUS$      |  |        | ThUS$      | 
|Fair value of plan assets at the beginning of the year            |  |            | 7,464  |   |            |  | 7,967  |            | 
|Employer ́s contributions                                          |  |            | -      |   |            |  | -      |            | 
|Actual return (loss) in plan assets                               |  |            | 293    |   |            |  | (145   | )          | 
|Benefits paid                                                     |  |            | (353   | ) |            |  | (358   | )          | 
|Fair value of plan assets at the end of the year                  |  |            | 7,404  |   |            |  | 7,464  |            | 
|Financing status                                                  |  |            | (782   | ) |            |  | (485   | )          | 
|Items not yet recognized as net periodic pension cost components: |  |            |        |   |            |  |        |            | 
|Net actuarial loss at the beginning of the year                   |  |            | (3,165 | ) |            |  | (1,903 | )          | 
|Amortization during the year                                      |  |            | 184    |   |            |  | 68     |            | 
|Net estimated gain or loss occurred during the year               |  |            | (451   | ) |            |  | (1,330 | )          | 
|Adjustment to recognize the minimum pension obligation            |  |            | (3,432 | ) |            |  | (3,165 | )          | 





The net periodic pension expense was composed
of the following components for the years ended December 31, 2016, 2015 and 2014:



|Reconciliation                                    |  | 12/31/2016 |     |  | 12/31/2015 |  |      | 12/31/2014 | 
|------------------------------------------------- |  | ---------- | --- |  | ---------- |  | ---- | ---------- | 
|                                                  |  | ThUS$      |     |  | ThUS$      |  |      | ThUS$      | 
|Service cost or benefits received during the year |  |            | 2   |  |            |  | 3    |            | 
|Interest cost in benefit obligation               |  |            | 387 |  |            |  | 380  |            | 
|Actual return in plan assets                      |  |            | 293 |  |            |  | (145 | )          | 
|Amortization of prior year losses                 |  |            | 184 |  |            |  | 68   |            | 
|Net gain during the year                          |  |            | 610 |  |            |  | 728  |            | 
|Net periodic pension expense                      |  |            | 29  |  |            |  | (133 | )          | 



| | 15.5 | Staff severance indemnities
| | ---- | ---------------------------





As of December 31, 2016. 2015 and 2014, severance indemnities
calculated at the actuarial value are as follows:





|                              |  | 12/31/2016 ThUS$ |         |   | 12/31/2015 ThUS$ |  |         | 12/31/2014 ThUS$ | 
|----------------------------- |  | ---------------- | ------- | - | ---------------- |  | ------- | ---------------- | 
|Opening balance               |  |                  | (21,995 | ) |                  |  | (30,952 | )                | 
|Current cost of service (*)   |  |                  | (1,333  | ) |                  |  | (898    | )                | 
|Interest cost                 |  |                  | (1,407  | ) |                  |  | (1,588  | )                | 
|Actuarial gain/loss           |  |                  | (2,253  | ) |                  |  | 1,242   |                  | 
|Exchange rate difference      |  |                  | (1,215  | ) |                  |  | 3,582   |                  | 
|Benefits paid during the year |  |                  | 5,671   |   |                  |  | 6,619   |                  | 
|Balance                       |  |                  | (22,532 | ) |                  |  | (21,995 | )                | 



(*) Current cost for the year ended December 31, 2015 includes
the reversal of a provision in the amount of ThUS$3,575 (see note 26.5).



F-131


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 15   Employee benefits
(continued)



| | 15.5 | Staff severance indemnities, continued
| | ---- | --------------------------------------



a)       Actuarial assumptions



The liability recorded for staff severance indemnity is valued
at the actuarial value method, using the following actuarial assumptions:



|                                    |  | 12/31/2016 |           |   | 12/31/2015 |  |           | 12/31/2014 |  |  |          
|----------------------------------- |  | ---------- | --------- | - | ---------- |  | --------- | ---------- |  |  | ---------
|                                    |  |            |           |   |            |  |           |            |  |  |          
|Mortality rate                      |  |            | RV - 2014 |   |            |  | RV - 2009 |            |  |  | RV – 2009
|Actual annual interest rate         |  |            | 4.522     | % |            |  | 4.89      | %          |  |  | 5.5      
|Voluntary retirement rotation rate: |  |            |           |   |            |  |           |            |  |  |          
|Men                                 |  |            | 7.16      | % |            |  | 7.16      | %          |  |  | 1.71     
|Women                               |  |            | 7.16      | % |            |  | 7.16      | %          |  |  | 1.96     
|Salary increase                     |  |            | 3.60      | % |            |  | 3.60      | %          |  |  | 3.00     
|Retirement age:                     |  |            |           |   |            |  |           |            |  |  |          
|Men                                 |  |            | 65        |   |            |  | 65        |            |  |  | 65       
|Women                               |  |            | 60        |   |            |  | 60        |            |  |  | 60       



| | b) | Sensitivity analysis of assumptions
| | -- | -----------------------------------



As of December 31, 2016 and December 31,
2015, on the actuarial calculation, the Company has conducting the sensitivity analysis of the main assumptions, determining the
following:



|Sensitivity analysis 12/31/2016 |  | Effect + 100 basis points |        |   | Effect - 100 basis points | 
|------------------------------- |  | ------------------------- | ------ | - | ------------------------- | 
|                                |  | ThUS$                     |        |   | ThUS$                     | 
|Discount rate                   |  |                           | (1,576 | ) |                           | 
|Employee turnover rate          |  |                           | (207   | ) |                           | 



|Sensitivity analysis 12/31/2015 |  | Effect + 100 basis points |        |   | Effect - 100 basis points | 
|------------------------------- |  | ------------------------- | ------ | - | ------------------------- | 
|                                |  | ThUS$                     |        |   | ThUS$                     | 
|Discount rate                   |  |                           | (1,437 | ) |                           | 
|Employee turnover rate          |  |                           | (250   | ) |                           | 



Sensitivity relates to an increase/decrease
of 100 basis points.



F-132


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 16   Executive compensation plan



Through the present date, the Company has
a compensation plan with the purpose of encouraging the Company’s executives and encourage them to stay in the Company, by
granting payments based on the change in price of SQM’s shares.



1) Shares



Characteristics of the plan



This compensation plan was related with
the company performance through the price of the Series B SQM share (Santiago Stock Exchange).



Participants in this plan



This compensation plan includes eight executives
of the Company, who are entitled to this benefit, provided they stay with the Company during the dates these options are executed.
The dates for exercising the options were the first seven calendar days of the month of May following the fiscal year end.



Compensation



The compensation for each executive was
the differential between the average prices of the share during April of each year compared to the base price established by Company’s
management. The base price fixed by the Company for this compensation plan amounts to US$50 per share. The Company reserves the
right to exchange that benefit for shares or share options. The resulting amount would have been paid in cash directly to the executives.



The related liability is recorded in profit
sharing and bonuses in note 15.1.



|Movement for the period (number of shares) |  | 2016 |   |  | 2015 | 
|------------------------------------------ |  | ---- | - |  | ---- | 
|In effect as of January 1                  |  |      | - |  |      | 
|Former executives                          |  |      | - |  |      | 
|Granted during the fiscal year             |  |      | - |  |      | 
|In circulation                             |  |      | - |  |      | 
|Average contractual life                   |  |      | - |  |      | 
|Executives                                 |  |      | - |  |      | 



F-133


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
16   Executive compensation plan, continued





2) Average Share Price Spread



Plan characteristics



This compensation plan is related to the
Company’s performance through the SQM Series B share price (Santiago Stock Exchange).



Plan participants



This compensation plan includes 24 of the
Company’s executives, who obtain this benefit, provided they remain in the Company at the payment dates. Payment dates, if
applicable, will be in 2021.



Compensation



The compensation for each executive is
the differential between the average share price during each of the months of December 2015, December 2016 and December 2017, respectively,
in its equivalent in US dollars and the reference prices, of US$23.43 and the average weighted price of the trading of SQM Series
B shares in the Santiago Stock Exchange during December 2014. The differential cannot exceed US$15.00 and will be multiplied by
5,000. If the amount calculated is negative or zero, no bonus will be paid during that period, but in such case, the bond of benefit
payable in the following period to the employee will be equal to the product of multiplying the difference by 10,000. If the value
was negative or zero in December 2015 and also in December 2016, for calculating the bond of December 2017, the differential will
be multiplied by 15,000. The resulting amount would have been paid in cash directly to the executives.



The movement of the options in effect for
the period, the average prices for the fiscal year of the options and the average contractual life of the options in effect as
of December 31, 2016 and December 31, 2015 are the following:



|Movement for the period (number of shares) |  | 2016 |           |   | 2015 | 
|------------------------------------------ |  | ---- | --------- | - | ---- | 
|In effect as of January 1                  |  |      | 405,000   |   |      | 
|Former executives                          |  |      | (45,000   | ) |      | 
|Granted during the fiscal year             |  |      | -         |   |      | 
|In circulation                             |  |      | 360,000   |   |      | 
|Average weighted contractual life          |  |      | 12 months |   |      | 
|Executives                                 |  |      | 24        |   |      | 





F-134


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
17   Disclosures on equity



The detail and movements in the funds of
equity accounts are shown in the consolidated statement of changes in equity.



| | 17.1 | Capital management
| | ---- | ------------------



The main object of capital management relative
to the administration of the Company’s financial debt and equity is to ensure the regular conduct of operations and business
continuity in the long term, with the constant intention of maintaining an adequate level of liquidity and in compliance with the
financial safeguards established in the debt contracts in force. Within this framework, decisions are made in order to maximize
the value of SQM.



Capital management must comply with, among
others, the limits contemplated in the Financing Policy approved by Board of Directors, which establish a maximum consolidated
indebtedness level of 1.5 times the debt/equity. This limit can be exceeded only if the Company’s management has a written
and previously granted authorization issued at the Extraordinary Shareholders’ Meeting.



In addition, capital management must comply
with the external capital requirements imposed (or covenants) in its financial obligations, which regulate the indebtedness level
by 1.2 times, in its stricter level.



In conjunction with the level of indebtedness,
it is also important for the Company to maintain a comfortable profile of maturities for its financial obligations, in order to
oversee the relation between its short-term financial obligations and the long-term maturities, and the relation they have with
the Company’s asset distribution. Consequently, the Company has maintained a liquidity level of 3 times during the last periods.



The Company’s management controls
capital management based on the following ratios:



|CAPITAL  MANAGEMENT       |  | 12/31/2016 |         |   | 12/31/2015 |  |         | Description (1) |  | Calculation (1)                                                                                           
|------------------------- |  | ---------- | ------- | - | ---------- |  | ------- | --------------- |  | ----------------------------------------------------------------------------------------------------------
|Net Financial Debt ThUS$  |  |            | 468,725 |   |            |  | 528,649 |                 |  | Financial Debt – Financial Resources                                                                      
|Liquidity                 |  |            | 4.02    |   |            |  | 3.84    |                 |  | Current Asset divided by Current Liability                                                                
|Net Debt / Capitalization |  |            | 0.17    |   |            |  | 0.18    |                 |  | Net Financial Debt divided by Total Equity                                                                
|ROE                       |  |            | 12.22   | % |            |  | 9.1     | %               |  | Income divided by Total Equity                                                                            
|ROA                       |  |            | 16.0    | % |            |  | 13.4    | %               |  | EBITDA – Depreciation divided by Net Total Assets of financial resources less  related parties investments
|Indebtedness              |  |            | 0.83    |   |            |  | 0.93    |                 |  | Total Liability on Equity                                                                                 
|                          |  |            |         |   |            |  |         |                 |  |                                                                                                           
|                          |  |            |         |   |            |  |         |                 |  | (1) Assumes the absolute value of the accounting records                                                  



F-135


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 17   Disclosures
on equity (continued)



| | 17.1 | Capital management, continued
| | ---- | -----------------------------



The Company’s capital requirements
change depending on variables such as work capital requirements, of new investment financing and dividends, among others. The Company
manages its capital structure and makes adjustments on the basis of the predominant economic conditions so as to mitigate the risks
associated with adverse market conditions and take advantage of the opportunities there may be to improve the liquidity position.



There have been no changes in the capital
management objectives or policy within the years reported in this document. No breaches of external requirements of capital imposed
(or covenants) have been recorded.



| | 17.2 | Disclosures on preferred share capital
| | ---- | --------------------------------------



Issued share capital is divided into 263,196,524
fully paid and subscribed shares composed of 142,819,552 Series "A" shares and 120,376,972 Series “B” shares,
where both series are preferred shares.



The preferential voting rights for each
series are detailed as follows:



Series “A”:



If the election of the Company’s
President results in a tie vote, the Company's directors may vote once again, without the vote of the director elected by the Series
B shareholders.



Series “B”:



| | 1) | A general or extraordinary shareholders' meeting may be called at the request of shareholders representing
5% of the Company's Series B shares.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------



| | 2) | An extraordinary meeting of the Board of Directors may be called with or without the agreement
of the Company's President, at the request of the director elected by Series B shareholders.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of December 31, 2016 and December 31,
2015, the Group does not maintain shares in the parent either directly or through its companies in which it has investments.



F-136


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 17   Disclosures
on equity (continued)



| | 17.2 | Disclosures on preferred share capital, continued
| | ---- | -------------------------------------------------



Detail of types of capital in preference shares:



|Type of capital in preferred shares                                                                         |  |            |             |  |            | 
|----------------------------------------------------------------------------------------------------------- |  | ---------- | ----------- |  | ---------- | 
|Description of type of capital in preferred                                                                 |  | 12/31/2016 |             |  | 12/31/2015 | 
|shares                                                                                                      |  | Series A   |             |  | Series B   | 
|Number of authorized shares                                                                                 |  |            | 142,819,552 |  |            | 
|Number of fully subscribed and paid shares                                                                  |  |            | 142,819,552 |  |            | 
|Number of subscribed, partially paid shares                                                                 |  |            | -           |  |            | 
|Par value of shares in US$                                                                                  |  |            | 0.9435      |  |            | 
|Increase (decrease) in the number of current shares                                                         |  |            | -           |  |            | 
|Number of current shares                                                                                    |  |            | 142,819,552 |  |            | 
|Number of shares owned by the entity or its subsidiaries or associates                                      |  |            | -           |  |            | 
|Number of shares whose issuance is reserved due to the existence of options or agreements to dispose shares |  |            | -           |  |            | 
|Capital amount in shares ThUS$                                                                              |  |            | 134,750     |  |            | 
|Amount of premium issuance ThUS$                                                                            |  |            | -           |  |            | 
|Amount of reserves ThUS$                                                                                    |  |            | -           |  |            | 
|Total number of subscribed shares, total                                                                    |  |            | 142,819,552 |  |            | 



As of December 31, 2016 and December 31, 2015, the Company has
not placed any new issuances of shares on the market.



F-137


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 17   Disclosures
on equity (continued)



|17.3 | Disclosures on reserves in equity
|---- | ---------------------------------



As of December 31, 2016 and December 31, 2015, this caption
comprises the following:



|                                                                                                             |  | 12/31/2016 |         |   | 12/31/2015 |  |         | 12/31/2014 | 
|------------------------------------------------------------------------------------------------------------ |  | ---------- | ------- | - | ---------- |  | ------- | ---------- | 
|                                                                                                             |  | ThUS$      |         |   | ThUS$      |  |         | ThUS$      | 
|Reserve for currency exchange conversion                                                                     |  |            | (19,463 | ) |            |  | (14,035 | )          | 
|Reserve for cash flow hedges                                                                                 |  |            | 64      |   |            |  | (1,699  | )          | 
|Reserve for gains and losses from financial assets measured at fair value through other comprehensive income |  |            | 3,513   |   |            |  |         |            | 
|Reserve for actuarial gains or losses in defined benefit plans                                               |  |            | (4,834  | ) |            |  | (2,386  | )          | 
|Other reserves                                                                                               |  |            | 7,832   |   |            |  | (1,677  | )          | 
|Total other reserves                                                                                         |  |            | (12,888 | ) |            |  | (19,797 | )          | 



F-138


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 17   Disclosures
on equity (continued)



| | 17.3 | Disclosures on reserves in equity,
                                         continued
| | ---- | -------------------------------------------------------------------------------------



The movements of other Reserves and Changes in ownership interest
were as follows:





|Reserve                                            |  | Foreign currency exchange gains (losses) before taxes |         |   | Gains (losses) from cash flow hedges |  |         | Actuarial
gains (loss) |  |  | Gains (losses) in financial assets measured at fair value through other comprehensive income |   |  | Other Miscellaneous |        |   | Total reserves | 
|-------------------------------------------------- |  | ----------------------------------------------------- | ------- | - | ------------------------------------ |  | ------- | ---------------------- |  |  | -------------------------------------------------------------------------------------------- | - |  | ------------------- | ------ | - | -------------- | 
|movement                                           |  | Before taxes                                          |         |   | Before taxes                         |  |         | Income taxes           |  |  | Before taxes                                                                                 |   |  | Deferred taxes      |        |   | Before taxes   | 
|                                                   |  | ThUS$                                                 |         |   | ThUS$                                |  |         | ThUS$                  |  |  | ThUS$                                                                                        |   |  | ThUS$               |        |   | ThUS$          | 
|Initial balance current period January 1, 2014     |  |                                                       | (3,817  | ) |                                      |  | (4,427  | )                      |  |  | 661                                                                                          |   |  |                     | (1,231 | ) |                | 
|                                                   |  |                                                       |         |   |                                      |  |         |                        |  |  |                                                                                              |   |  |                     |        |   |                | 
|Increase (decrease) in reserves                    |  |                                                       | (4,016  | ) |                                      |  | 20,795  |                        |  |  | -                                                                                            |   |  |                     | (672   | ) |                | 
|Deferred taxes                                     |  |                                                       | -       |   |                                      |  | -       |                        |  |  | (311                                                                                         | ) |  |                     | -      |   |                | 
|Reclassification profit or loss of reserves        |  |                                                       | -       |   |                                      |  | (18,599 | )                      |  |  | -                                                                                            |   |  |                     | -      |   |                | 
|                                                   |  |                                                       |         |   |                                      |  |         |                        |  |  |                                                                                              |   |  |                     |        |   |                | 
|Closing balance of current year, December 31, 2014 |  |                                                       | (7,833  | ) |                                      |  | (2,231  | )                      |  |  | 350                                                                                          |   |  |                     | (1,903 | ) |                | 
|                                                   |  |                                                       |         |   |                                      |  |         |                        |  |  |                                                                                              |   |  |                     |        |   |                | 
|Increase (decrease) in reserves                    |  |                                                       | (6,499  | ) |                                      |  | 854     |                        |  |  | -                                                                                            |   |  |                     | (221   | ) |                | 
|Deferred taxes                                     |  |                                                       | -       |   |                                      |  | -       |                        |  |  | 95                                                                                           |   |  |                     | -      |   |                | 
|Reclassification profit or loss of reserves        |  |                                                       | -       |   |                                      |  | (767    | )                      |  |  | -                                                                                            |   |  |                     | 47     |   |                | 
|                                                   |  |                                                       |         |   |                                      |  |         |                        |  |  |                                                                                              |   |  |                     |        |   |                | 
|Closing balance of current year, December 31, 2015 |  |                                                       | (14,332 | ) |                                      |  | (2,144  | )                      |  |  | 445                                                                                          |   |  |                     | (2,077 | ) |                | 
|                                                   |  |                                                       |         |   |                                      |  |         |                        |  |  |                                                                                              |   |  |                     |        |   |                | 
|Increase (decrease) in reserves                    |  |                                                       | (2,252  | ) |                                      |  | 3,626   |                        |  |  | -                                                                                            |   |  |                     | (3,397 | ) |                | 
|Deferred taxes                                     |  |                                                       | -       |   |                                      |  | -       |                        |  |  | (470                                                                                         | ) |  |                     | -      |   |                | 
|Reclassification profit or loss of reserves        |  |                                                       | -       |   |                                      |  | (1,393  | )                      |  |  | -                                                                                            |   |  |                     | 28     |   |                | 
|                                                   |  |                                                       |         |   |                                      |  |         |                        |  |  |                                                                                              |   |  |                     |        |   |                | 
|Closing balance of current year, December 31, 2016 |  |                                                       | (16,584 | ) |                                      |  | 89      |                        |  |  | (25                                                                                          | ) |  |                     | (5,446 | ) |                | 









F-139


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 17   Disclosures
on equity (continued)



| | 17.3 | Disclosures on reserves in equity, continued
| | ---- | --------------------------------------------



Reserves for currency exchange conversion



This balance reflects retained earnings
for changes in the exchange rate when converting financial statements of subsidiaries whose functional currency is from each company’s
origin country and the presentation currency is the US dollar.



Reserve for cash flow hedges



The Company maintains, as hedge instruments,
financial derivatives related to obligations with the public issued in UF and Chilean pesos. Changes from the fair value of derivatives
designated and classified as hedges are recognized under this classification.



Reserve for gains and losses from financial
assets measured at fair value through other comprehensive income



This caption includes investments in shares
where the Company has no significant influence and; accordingly, have been measured at fair value through equity. In the event
that such equity instruments are fully or partially disposed of, the proportional accumulated effect of accumulated fair value
will be transferred to profit or loss.



Reserve for actuarial gains or losses
in defined benefit plans



For the domestic subsidiaries the effects
of changes in assumptions are considered, mainly changes in the discount rate.



The subsidiary SQM North America has established
pension plans for its retired employees that are calculated by measuring the projected obligation of IAS using a net salary progressive
rate net of adjustments to inflation, mortality and turnover assumptions, deducting the resulting amounts at present value using
a 5.5% interest rate for 2016 and 2015.



F-140


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 17   Disclosures
on equity (continued)



| | 17.3 | Disclosures on reserves in equity, continued
| | ---- | --------------------------------------------



Other reserves





Corresponds to reserves from prior years
through 2015 in reserves for currency translation differences, and reserves of prior years through 2015 in Retained earnings (losses)
in the subsidiary SQM Ibeian S.A



Corresponds to the legal reserves reported
in the individual financial statements of the subsidiaries that are mentioned below and that have been recognized in the equity
of SQM, through the application of the equity method.



|Subsidiary - Associate                                                                                                                                     |  | ThUS$ |       
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- | ------
|SQM Iberian S,A,                                                                                                                                           |  |       | 5,963 
|SQM Europe NV                                                                                                                                              |  |       | 1,958 
|Soquimich European holding B.V.                                                                                                                            |  |       | 828   
|Abu Dhabi Fertilizer Industries WWL                                                                                                                        |  |       | 455   
|Doktor Tarsa Tarim Sanayi AS                                                                                                                               |  |       | 305   
|                                                                                                                                                           |  |       |       
|Total                                                                                                                                                      |  |       | 9,509 
|                                                                                                                                                           |  |       |       
|2. Corresponds to the acquisition of the subsidiary SQM Iberian S.A., which was already under ownership of the Company at the acquisition date (IAS 27 R). |  |       | (1,677
|                                                                                                                                                           |  |       |       
|Total Other reserves                                                                                                                                       |  |       | 7,832 





| | 17.4 | Dividend policies
| | ---- | -----------------



As required by Article 79 of the Chilean
Companies Act, unless otherwise decided by unanimous vote of the holders of issued and subscribed shares, we must distribute a
cash dividend in an amount equal to at least 30% of our consolidated Profit for the period for year ended as of December 31, unless
and except to the extent it has a deficit in retained earnings (losses not absorbed in prior years).



The Company’s dividend policy for
2016 is as follows:



| | - | Distribution and payment in favor of each shareholder
of a final dividend which will be equivalent to 50% of Profit for the period obtained in 2016.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Distribution and payment, if possible during 2016, of
a provisional dividend which will be recorded against the aforementioned final dividend. This provisional dividend will be paid
probably during the last quarter of 2016 and its amount could not exceed 50% of the retained earnings for distribution obtained
during 2016, which are reflected in the Company’s financial statements as of December 31, 2016.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | The distribution and payment by the Company of the remaining
balance of the final dividend related to Profit for the period for the 2016 commercial year in up to two installments, which will
have to be effectively paid and distributed prior to June 30, 2017.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | An amount equivalent to the remaining 50% of the Company’s
Profit for the period for 2016 will be retained and destined to the financing of operations of one or more of the Company’s
investment projects with no prejudice of the possible future capitalization of the entirety or a portion of this.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | The Board of Directors does not consider the payment
of any additional dividends.
| | - | ---------------------------------------------------------------------------------



| | - | The Board of Directors does not consider the payment
of any interim dividends
| | - | -----------------------------------------------------------------------------



| | - | The Board of Directors considers as necessary to indicate
that the aforementioned dividends policy corresponds to the intention or expectation of the Board regarding this matter. Consequently,
the enforcement of such dividends policy is necessarily conditioned to net incomes finally obtained, to the results indicating
the Company’s regular forecasts or the existence of certain conditions that could affect them. Notwithstanding the above
and to the extent that such policy dividend does not suffer a significant change, SQM S.A. will timely communicate its shareholders
on this matter.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-141


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 17 - Disclosures
on equity (continued)



| | 17.5 | Interim and provisional dividends – fiscal year 2016
| | ---- | ----------------------------------------------------



On March 22, 2016, the Company communicated that the Directors
of Sociedad Química y Minera de Chile S.A. (SQM), at the Ordinary Meeting unanimously agreed the following:



Partially amend the “Dividend Policy
for Commercial Year 2015 of SQM S.A.” which was reported to the Ordinary Shareholders’ Meeting of April 24, 2015 with
the main purpose of including in such “Policy” the payment of an interim dividend of US$150,000,000, equivalent to
US$0.56992 per share, which will be paid with a charge to retained earnings of SQM S.A.



On November 23, 2016, the Board of Directors
of Sociedad Química y Minera de Chile S.A, approved paying a provisional dividend of US$225 million, equivalent to US$0.85487
per share with a charge to profit for 2016. Such amount would be paid at its equivalent in Chilean pesos using the Observed U.S.
dollar exchange rate published in the Official Gazette on December 13, 2016.



This payment of dividend would be made
in favor of the shareholders personally or through their duly authorized representatives from 9:00 am on December 20, 2016. The
shareholders of record with the Shareholder’ Registry 5 business days prior to December 20, 2016.



Change in the Dividend Policy in 2016:



On November 23, 2016, the Board of Directors
agreed: i) to pay and distribute on December 20, 2016, a provisional dividend of US$225 million, equivalent to US$0.85487 per share,
to be charged against the 2016 net income, ii) to change the Dividend Policy for the 2016 business year, as discussed at the Annual
General Shareholders’ meeting held on April 26, 2016, iii) that no further provisional dividend would be charged against
the 2016 net income and iv) that the remaining amount of the net income for the 2016 business year, if any, would be withheld and
used to finance of the Company’s operations of one or more of the Company’s investment projects and to fund all or
part of any possible future expenditures, without prejudice.



On April 11, 2017, the Board of Directors,
agreed to recommend to the shareholders the payment of a definitive dividend representing 100% of the 2016 net income. This definitive
dividend payment will be presented for consideration at the Annual General Shareholders’ Meeting held on April 28, 2017.
Therefore, and subject to the approval at the Shareholders’ meeting, the Company shall pay a final dividend of US$1.05735
per share, the amount of US$0.85487 per share must be deducted from the final dividend, which was already paid as a provisional
dividend on December 20, 2016. The balance, in the amount of US$0.20248 per share, shall be paid and distributed to Company’s
shareholders, pending shareholders’ approval, on May 11, 2017.



F-142


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 17 - Disclosures
on equity (continued)



| | 17.6 | Interim and provisional dividends – fiscal year
2015
| | ---- | ----------------------------------------------------



On November 17, 2015, the Board of Directors
of Sociedad Química y Minera de Chile S.A. agreed that the Company pay and distribute a provisional dividend referred to
in the “Dividend Policy for Commercial year 2015 of SQM S.A.” as agreed at the Annual General Ordinary Shareholders’
Meeting of April 24, 2015.



Accordingly, the Company paid and distributed
starting from December 10, 2015 a provisional dividend per share of US$0.31915, which was equivalent to approximately US$84,000,000
and, this, to 49.82889% of net profit for distribution from the commercial year 2015, which was accumulated as of December 31 of
such year. Such dividend will be charged to profit from the commercial year to the Shareholders recorded in the Shareholders’
Record of SQM on the fifth business day prior to December 10 indicated above and at its amount equivalent in Chilean pesos, the
domestic currency at its "Observed U.S. Dollar” or “U.S. dollar” exchange rate published in the Official
Gazette on December 3, 2015.



On April 24, 2015, at the Fortieth General
Ordinary Shareholders’ Meeting, the shareholders agreed the payment of a dividend declared of US$0.56304 per share for the
net profit obtained during the 2014 commercial year. From this dividend declared the amount of US$0.41493 per share was discounted,
which was paid for the concept of the provisional dividend and the remaining balance, then amounting to US$0.14811 per share, was
paid and distributed in favor of the Shareholders of SQM recorded with the related Shareholders’ Record on the fifth business
day prior to the date in which the dividend was paid. Such amount was paid at its equivalent amount in Chilean pesos the domestic
currency per the “Observed U.S. dollar” or “U.S. dollar” exchange rate, which was published on April 24,
2015.



Dividends presented deducted from equity
are:



|                                               |  | 12/31/2016ThUS$ |         |  | 12/31/2015ThUS$ |  |         | 12/31/2014ThUS$ | 
|---------------------------------------------- |  | --------------- | ------- |  | --------------- |  | ------- | --------------- | 
|Dividends attributable to owners of the parent |  |                 | 3,014   |  |                 |  | 3,248   |                 | 
|Provisional dividend                           |  |                 | 225,000 |  |                 |  | 106,584 |                 | 
|Interim dividend                               |  |                 | 150,000 |  |                 |  | -       |                 | 
|Total                                          |  |                 | 378,014 |  |                 |  | 109,832 |                 | 



F-143


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
18   Provisions and other non-financial liabilities



| | 18.1 | Types of provisions
| | ---- | -------------------



|                                                                    |  | 12/31/2016 |        |  | 12/31/2015  | 
|------------------------------------------------------------------- |  | ---------- | ------ |  | ----------- | 
|                                                                    |  | Current    |        |  | Non-current | 
|                                                                    |  | ThUS$      |        |  | ThUS$       | 
|                                                                    |  |            |        |  |             | 
|Provision for legal complaints (*)                                  |  |            | 20,867 |  |             | 
|Provision for dismantling, restoration and rehabilitation cost (**) |  |            | -      |  |             | 
|Other provisions (***)                                              |  |            | 21,045 |  |             | 
|Total                                                               |  |            | 41,912 |  |             | 



(*) Provisions for legal complaints relate
to legal expenses for lawsuits whose resolution are pending, and correspond to funds estimated necessary to make the disbursement
of expenses incurred for this purpose. This provision relates mainly to the litigation of its subsidiary located in Chile, Brazil
and the United States (see note 19.1). Legal expenses: This provision depends on the pending resolution of a legal lawsuit,
to pay the expenses associated to and incurred during such lawsuit (incurred mainly in Brazil, Chile and the United States). Tax
accrual in tax litigation: This accrual relates to lawsuits pending resolution related to taxes in Brazil for two of our subsidiaries,
SQM Brazil and NNC.CORFO (Economic Development Agency) Royalties agreement: Relates to the commercialization of mining properties
that SQM Salar S.A. pays the Economic Development Agency for on a quarterly basis. The amount of the lease payable is calculated
based on sales of products extracted from the Atacama Saltpeter deposit.



(**) Such provision is calculated considering
the instructions issued by the regulating agency (Servicio Nacional de Geología y Minería de Chile, Sernageomin (The
Chilean National Geology and Mining Service).



(***) Provisions for executive bonus compensation
and others.



The settlement of the aforementioned amounts
is performed on a quarterly basis.



F-144


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 18   Provisions
and other non-financial liabilities (continued)



| | 18.2 | Description of other provisions
| | ---- | -------------------------------



|Current provisions, other short-term provisions                           |  | 12/31/2016 |        |  | 12/31/2015 | 
|------------------------------------------------------------------------- |  | ---------- | ------ |  | ---------- | 
|                                                                          |  | ThUS$      |        |  | ThUS$      | 
|Provision for tax loss in fiscal litigation                               |  |            | 750    |  |            | 
|Royalties, agreement with CORFO (the Chilean Economic Development Agency) |  |            | 11,452 |  |            | 
|Provision for additional tax related to foreign loans                     |  |            | 450    |  |            | 
|Miscellaneous provisions                                                  |  |            | 8,393  |  |            | 
|Total                                                                     |  |            | 21,045 |  |            | 
|Other long-term provisions                                                |  |            |        |  |            | 
|Mine closure                                                              |  |            | 5,890  |  |            | 
|Miscellaneous                                                             |  |            | 44     |  |            | 
|Total                                                                     |  |            | 5,934  |  |            | 



| | 18.3 | Other liabilities current
| | ---- | -------------------------



|Description of other liabilities                 |  | 12/31/2016 |        |  | 12/31/2015 | 
|------------------------------------------------ |  | ---------- | ------ |  | ---------- | 
|                                                 |  | ThUS$      |        |  | ThUS$      | 
|Tax withholdings                                 |  |            | 14,340 |  |            | 
|VAT payable                                      |  |            | 3,949  |  |            | 
|Guarantees received                              |  |            | 2,638  |  |            | 
|Accrual for dividend                             |  |            | 1,189  |  |            | 
|Monthly tax provisional payments                 |  |            | 9,545  |  |            | 
|Deferred income                                  |  |            | 6,507  |  |            | 
|Withholdings from employees and salaries payable |  |            | 5,552  |  |            | 
|Accrued vacations                                |  |            | 15,841 |  |            | 
|Other current liabilities                        |  |            | 2,359  |  |            | 
|Total                                            |  |            | 61,920 |  |            | 



F-145


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 18   Provisions
and other non-financial liabilities (continued)



| | 18.4 | Changes in provisions
| | ---- | ---------------------



|                                                  |  | 12/31/2016 |  
|------------------------------------------------- |  | ---------- | -
|Description of items that gave rise to variations |  | Guarantee  |  
|                                                  |  | ThUS$      |  
|                                                  |  |            |  
|Total provisions,
    initial balance             |  |            | -
|Changes in provisions:                            |  |            |  
|Additional provisions                             |  |            | -
|Provision used                                    |  |            | -
|Increase(decrease) in foreign currency exchange   |  |            | -
|others                                            |  |            | -
|Total provisions, final
    balance               |  |            | -



|                                                  |  | 12/31/2015 |  
|------------------------------------------------- |  | ---------- | -
|Description of items that gave rise to variations |  | Guarantee  |  
|                                                  |  | ThUS$      |  
|                                                  |  |            |  
|Total provisions,
    initial balance             |  |            | -
|Changes in provisions:                            |  |            |  
|Additional provisions                             |  |            | -
|Provision used                                    |  |            | -
|Increase(decrease) in foreign currency exchange   |  |            | -
|Total provisions, final
    balance               |  |            | -



(*) Provisions relating to restructuring in 2015 are related
to the closure of the Pedro de Valdivia site. See Note 32.



F-146


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 18   Provisions
and other non-financial liabilities (continued)



| | 18.4 | Changes in provisions, continued
| | ---- | --------------------------------



|                                                  |  | 12/31/2014 |  
|------------------------------------------------- |  | ---------- | -
|Description of items that gave rise to variations |  | Guarantee  |  
|                                                  |  | ThUS$      |  
|                                                  |  |            |  
|Total provisions,
    initial balance             |  |            | -
|Changes in provisions:                            |  |            |  
|Additional provisions                             |  |            | -
|Provision used                                    |  |            | -
|Increase(decrease) in foreign currency exchange   |  |            | -
|Total provisions, final
    balance               |  |            | -



F-147


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
19   Contingencies and restrictions



According to note 18.1 the Company has
only registered a provision for the lawsuits in which the probability that judgments are unfavorable for the Company is more likely
than not. The Company is party to lawsuits and other relevant legal actions that are detailed as follows:



| | 19.1 | Lawsuits and other relevant events
| | ---- | ----------------------------------



|1.   Plaintiff | : | Nancy Erika Urra Muñoz.                                                                                                                                                                                         
|-------------- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants     | : | Fresia Flores Zamorano, Duratec-Vinilit S.A. and SQM S.A. and their insurers.                                                                                                                                   
|Date           | : | December 2008.                                                                                                                                                                                                  
|Court          | : | 1st Civil Court of Santiago.                                                                                                                                                                                    
|Reason         | : | Labor Accident.                                                                                                                                                                                                 
|Status         | : | Appeal filed by the plaintiff.                                                                                                                                                                                  
|Nominal value  | : | ThUS$550.                                                                                                                                                                                                       
|               |   |                                                                                                                                                                                                                 
|2.   Plaintiff | : | City of Pomona, California USA.                                                                                                                                                                                 
|Defendants     | : | SQM North America Corporation.                                                                                                                                                                                  
|Date           | : | December 2010.                                                                                                                                                                                                  
|Court          | : | United States District Court Central District of California.                                                                                                                                                    
|Reason         | : | Payment of expenses and other amount related to the treatment of groundwater to allow for consumption by removing the existing perchlorate in such groundwater and that supposedly come from Chilean fertilizer.
|Status         | : | The Jury rejected the lawsuit. The plaintiff files an appeal, and the court has scheduled for hearings on May 2017.                                                                                             
|Nominal value  | : | Not determined.                                                                                                                                                                                                 



|3.   Plaintiff | : | City of Lindsay, California USA.                                                                                                                                                                               
|-------------- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants     | : | SQM North America Corporation                                                                                                                                                                                  
|Date           | : | December 2010.                                                                                                                                                                                                 
|Court          | : | United States District Court Eastern District of California.                                                                                                                                                   
|Reason         | : | Payment of expenses and other amount related o the treatment of groundwater to allow for consumption by removing the existing perchlorate in such groundwater and that supposedly come from Chilean fertilizer.
|Status         | : | The Jury rejected the lawsuit. The plaintiff files an appeal, and the court has scheduled for hearings on May 2017.                                                                                            
|Nominal value  | : | Not determined.                                                                                                                                                                                                



F-148


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.1 | Lawsuits and other relevant events, continued
| | ---- | ---------------------------------------------



|4.   Plaintiff | : | H&V Van Mele N.V.                                                                                                   
|-------------- | - | --------------------------------------------------------------------------------------------------------------------
|Defendants     | : | SQM Europe N.V. and its insurance companies.                                                                        
|Date           | : | July 2013.                                                                                                          
|Court          | : | Commercial Court.                                                                                                   
|Reason         | : | Alleged indirect responsibility for the absence of adequate specification for the SOP–WS by the Belgian distributor.
|Status         | : | Evidence.                                                                                                           
|Nominal value  | : | ThUS$430.                                                                                                           



|5.   Plaintiff | : | Carlos Aravena Carrizo et al.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------------- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants     | : | SQM Nitratos S.A. and its insurers.                                                                                                                                                                                                                                                                                                                                                                                                                           
|Date           | : | May 2014.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Court          | : | Commercial Court.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Reason         | : | Compensation claim for alleged civil liability under tort as a result of an explosion that occurred on September 6, 2010 near Baquedano, causing the death of 6 workers. Out of court settlements were agreed and executedwith the families of five of such workers.                                                                                                                                                                                          
|Status         | : | Evidence.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Nominal value  | : | ThUS$500.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|6.   Plaintiff | : | Corporación de Fomento de la Producción (CORFO).                                                                                                                                                                                                                                                                                                                                                                                                              
|Defendants     | : | SQM Salar S.A. and Sociedad Química y Minera de Chile S.A.                                                                                                                                                                                                                                                                                                                                                                                                    
|Date           | : | May 2014.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Court          | : | Arbitration court.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Reason         | : | Early termination of Lease Agreement entered into on November 12, 1993 for (i) alleged failure in full payment of quarterly rental payments linked to certain products during the period 2009–2013 and (ii) alleged absence of demarcation of certain mining properties owned by Corfo which such agency never demarcated with respect to which never requested a demarcation in such Agreement and also seeking compensation for damages among other matters.
|Status         | : | Evidence.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Nominal value  | : | ThUS$9,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                   



F-149


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.1 | Lawsuits and other relevant events, continued
| | ---- | ---------------------------------------------



|7.   Plaintiff | : | CORFO                                                                                                                                                     
|-------------- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants     | : | SQM Salar S.A, SQM Potasio S.A. and SQM S.A.                                                                                                              
|Date           | : | August 2016.                                                                                                                                              
|Court          | : | Arbitration Court- Arbitrator Mr. Héctor Humeres.                                                                                                         
|Reason         | : | Project early termination entered on November
        12, 1993 and other related contracts among
        other matters involving compensation for damages.
|Status         | : | Deliberation stage finished. Through resolution of January 24, 2017, the Court ordered accumulating this case with the case reported in No. 6 above.      
|Nominal value  | : | Not determined.                                                                                                                                           



|8.   Plaintiff | : | SQM Salar S.A and SQM S.A.                                                                                                                                                                                                                                                       
|-------------- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants     | : | CORFO                                                                                                                                                                                                                                                                            
|Date           | : | September 28, 2016.                                                                                                                                                                                                                                                              
|Court          | : | Arbitration Court- Arbitrator Mr. Héctor Humeres.                                                                                                                                                                                                                                
|Reason         | : | Declaratory action to seek determination whether rent payments made by SQM Salar S.A. under the Lease Agreement entered into on November 12, 1993, have been in accordance with the agreement entered into by the parties and the rent formula applied has been useful for CORFO.
|Status         | : | Deliberation stage finished. Through resolution of January 24, 2017, the Court ordered accumulating this case with the case reported in No. 6 above.                                                                                                                             
|Nominal value  | : | Not yet defined.                                                                                                                                                                                                                                                                 



|9.   Plaintiff | : | Evt Consulting SpA.                                                                                                                                                                                                
|-------------- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants     | : | SQM Nitratos S.A.                                                                                                                                                                                                  
|Date           | : | October 2014.                                                                                                                                                                                                      
|Court          | : | 23th Civil Court of Santiago.                                                                                                                                                                                      
|Reason         | : | Lawsuit seeking compensation for damages related to the termination of the purchase and sale agreement for metallic structures.                                                                                    
|Status         | : | Judgment of December 15, 2016 final judgment, absolving SQM Nitratos S.A. of the payment of compensation. An appeal and appeal in cassation was filed by the plaintiff and an appeal was filed by SQM Nitratos S.A.
|Nominal value  | : | ThUS$835                                                                                                                                                                                                           



F-150


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.1 | Lawsuits and other relevant events, continued
| | ---- | ---------------------------------------------



|10. Plaintiff | : | Hugo Gutiérrez Gálvez                                                                                                                    
|------------- | - | -----------------------------------------------------------------------------------------------------------------------------------------
|Defendants    | : | Sociedad Química y Minera de Chile S.A. et al and Senators Jaime Orpis B. and Fulvio Rossi C.                                            
|Date          | : | July 2015.                                                                                                                               
|Court         | : | 8th Supervisory Court in Preliminary Proceedings of Santiago, Chile                                                                      
|Reason        | : | Alleged extortion–bribery and money laundering under Law No. 20.393 on the Legal Responsibility of Juridical Persons and other standards.
|Status        | : | Initial filing.                                                                                                                          
|Nominal value | : | None.                                                                                                                                    



|11. Plaintiff | : | Patricio Contesse G.                                                                                                                        
|------------- | - | --------------------------------------------------------------------------------------------------------------------------------------------
|Defendants    | : | SQM S.A.                                                                                                                                    
|Date          | : | September 2015                                                                                                                              
|Court         | : | First Labor Court of Santiago.                                                                                                              
|Reason        | : | Seeking the payment of severance indemnities and other employment termination benefits.                                                     
|Status        | : | On March 27, 2017, the Company reached an agreement with Mr. Contesse to terminate the labor lawsuit Mr. Contesse filed against the Company.
|Nominal value | : | ThUS$5,665.                                                                                                                                 



|12. Plaintiff | : | SQMS and SQM S.A.                                                                                               
|------------- | - | ----------------------------------------------------------------------------------------------------------------
|Defendants    | : | RSA Seguros Chile S.A.                                                                                          
|Date          | : | In August 2016.                                                                                                 
|Court         | : | Arbitration Court – Arbitrator Mr. Gonzalo Fernández.                                                           
|Reason        | : | Complaint for forced compliance and collection of indemnification for insurance claim of February 7 and 8, 2013.
|Status        | : | Deliberation stage finished                                                                                     
|Nominal value | : | US$20,657,860.                                                                                                  



F-151


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.1 | Lawsuits and other relevant events, continued
| | ---- | ---------------------------------------------



|13. Plaintiff | : | Tyne and Wear Pension Fund as represented by the Council of the Borough of South Tyneside acting as Lead Plaintiff – Class Action – Class Period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------------- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants    | : | Sociedad Química y Minera de Chile S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Date          | : | January 2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Court         | : | United States District Court – Southern District of New York.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Reason        | : | Class Actions – Class Period. SQM would have not reported properly to the US Securities and Exchange Commission on certain expenses made during certain years which could be associated with alleged contributions to politicians. Such expenses would not have the related supporting documentation for being substantiated as necessary to generate income and this would have generated the intervention by several Chilean Government authorities – the Chilean Superintendence of Securities and Insurance (SVS), the Chilean Internal Revenue Service and Public Ministry – and the decrease of the value of the shares –ADS’s of SQM owned by the plaintiffs.
|Status        | : | On March 28, 2017, the district court issued an opinion and order denying in part and granting in part the motion to dismiss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|14. Plaintiff | : | Thorco Shipping A/S                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Defendants    | : | Sociedad Química y Minera de Chile S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Date          | : | January 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Court         | : | Arbitration court – London Maritime Arbitrators' Association.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Reason        | : | Lawsuit seeking compensation for damages alleging a freight agreement breach.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Status        | : | On January 31, 2017, the Company was ordered to pay US$247,845. The Company has filed an appeal against such judgment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Nominal value | : | ThUS$325                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



F-152


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.1 | Lawsuits and other relevant events, continued
| | ---- | ---------------------------------------------



|15. Plaintiff | : | Ernesto Saldaña González et al.                                                                                                                                                                                                                                                                                                               
|------------- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants    | : | SQM Salar S.A., SQM Industrial S.A. and their insurance companies.                                                                                                                                                                                                                                                                            
|Date          | : | May 2016.                                                                                                                                                                                                                                                                                                                                     
|Court         | : | 13th Civil Court of Santiago.                                                                                                                                                                                                                                                                                                                 
|Reason        | : | Lawsuit seeking compensation for damages for alleged civil liability under tort law arising from the accident occurred on July 21, 2014 to Mr. Marco Antonio Saldaña González while he was repairing a truck of a contractor in the María Elena location which resulted in his death when a portion of the truck’s structure fell down on him.
|Status        | : | Evidentiary stage.                                                                                                                                                                                                                                                                                                                            
|Nominal value | : | ThUS$515.                                                                                                                                                                                                                                                                                                                                     



|16. Plaintiff | : | María Yolanda Achiardi Tapia et al.                                                                                                                                                                                                                                                                                           
|------------- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants    | : | SQM Salar S.A. and its insurance companies and other 5 defendants                                                                                                                                                                                                                                                             
|Date          | : | February 2015.                                                                                                                                                                                                                                                                                                                
|Court         | : | 1st Civil Court of Antofagasta.                                                                                                                                                                                                                                                                                               
|Reason        | : | Lawsuit seeking compensation for damages for the alleged civil liability in tort law arising from a traffic accident occurred in April 20, 2011 in the city of Antofagasta, caused by a bus subcontracted by a Contractor, resulting in the death of three people travelling in a light vehicle which was collided by the bus.
|Status        | : | The lawsuit has not been served to one of the defendants.                                                                                                                                                                                                                                                                     
|Nominal value | : | ThUS$1,265.                                                                                                                                                                                                                                                                                                                   



|17. Plaintiff | : | SQM                                                                                                                                                                                                                                     
|------------- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants    | : | AES Gener S.A. y Empresa Eléctrica Cochrane S.A.                                                                                                                                                                                        
|Date          | : | April 2017                                                                                                                                                                                                                              
|Court         | : | Arbitration Panel                                                                                                                                                                                                                       
|Reason        | : | Lawsuit seeking the declaration from the arbitration panel with respect to the non-compliance by defendants of the requirements under the power purchase agreement to charge SQM the costs of the so called green tax under Law. 20.780.
|Status        | : | SQM has asked for the constitution of the arbitral panel. Claim has to be filed during May 2017.                                                                                                                                        
|Nominal value | : | Undetermined.                                                                                                                                                                                                                           



F-153


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.1 | Lawsuits and other relevant events, continued
| | ---- | ---------------------------------------------



|18. Plaintiff | : | AES Gener S.A. and Empresa Eléctrica Cochrane S.A.                                                                                                                                                                         
|------------- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Defendants    | : | SQM                                                                                                                                                                                                                        
|Date          | : | April 2017                                                                                                                                                                                                                 
|Court         | : | Arbitration Panel                                                                                                                                                                                                          
|Reason        | : | Lawsuit to solve differences in the amount to be charged by plaintiffs to SQM in connection a change of law provision contained in the power purchase agreement, with respect to the so called green tax under Law. 20.780.
|Status        | : | Plaintiffs has asked for the constitution of the arbitral panel.                                                                                                                                                           
|Nominal value | : | Undetermined.                                                                                                                                                                                                              
|              |   |                                                                                                                                                                                                                            
|19. Plaintiff | : | Union No. 2 SQM Nueva Victoria                                                                                                                                                                                             
|Defendants    | : | SQM Nitratos S.A.                                                                                                                                                                                                          
|Date          | : | November 2016                                                                                                                                                                                                              
|Court         | : | Iquique Labor Court                                                                                                                                                                                                        
|Reason        | : | The Union claims SQM miscalculated the formula of the incentive bonus to be paid under the current collective agreement between SQM and the Union.                                                                         
|Status        | : | Discussion period                                                                                                                                                                                                          
|Nominal value | : | ThUS$385.                                                                                                                                                                                                                  



The Company and its subsidiaries have been
involved and will probably continue to be involved either as plaintiffs or defendants in certain judicial proceedings that have
been and will be heard by the Arbitration or Ordinary Courts of Justice that will make the final decision. Those proceedings that
are regulated by the appropriate legal regulations are intended to exercise or oppose certain actions or exceptions related to
certain mining claims either granted or to be granted and that do not or will not affect in an essential manner the development
of the Company and its subsidiaries.



Soquimich Comercial S.A. has been involved
and will probably continue being involved either as plaintiff or defendant in certain judicial proceedings through which it intends
to collect and receive the amounts owed, the total nominal value of which is approximately ThUS$1,200.



The Company has made efforts and continues
making efforts to obtain payment of certain amounts that are still owed it on occasion of their activities. Such amounts will continue
to be required using judicial or non-judicial means by the plaintiffs, and the actions and exercise related to these are currently
in full force and effect.



The Company and its subsidiaries have received
no legal notice on lawsuits other than those indicated above, which exceed ThUS$200.



F-154


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.2 | Restrictions to management or financial limits
| | ---- | ----------------------------------------------



Credit contracts subscribed by the SQM
Group with domestic and foreign banks and the issuance of bonuses in the local and international market require that the Company
comply with the following level of consolidated financial indicators, calculated for a moving period which considers the last twelve
months:



| | - | To maintain a minimum equity of ThUS$1,000,000.
| | - | -----------------------------------------------



| | - | To maintain a Net Financial Debt and EBITDA ratio not
higher than 3 times.
| | - | --------------------------------------------------------------------------



| | - | To maintain a Total Indebtedness Ratio not higher than
1.2 times Total Indebtedness level defined as the Total Liabilities ratio divided by Total Equity.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | To maintain a ratio between the operating subsidiaries
SQM Industrial S.A. and SQM Salar S.A., or their respective legal successor financial debt and the total Issuer’s consolidated
current assets not higher than 0.3 times.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of December 31, 2016, the aforementioned
financial indicators are as follows:



|Indicator                                          |  | 12/31/2016 |           |  | 12/31/2015 | 
|-------------------------------------------------- |  | ---------- | --------- |  | ---------- | 
|Equity ThUS$                                       |  |            | 2,307,272 |  |            | 
|Net Financial Debt/ EBITDA                         |  |            | 0.58      |  |            | 
|Indebtedness                                       |  |            | 0.83      |  |            | 
|SQM Industrial and SQM Salar debt / Current assets |  |            | 0.02      |  |            | 



Issuance contracts for bonuses issued abroad
does not require that the Company merge or dispose at any title the asset as a whole or as a substantial part of it, unless the
following copulative conditions are met: (i) the legal successor company is an entity subject to Chilean or American laws, and
assumes under a complimentary contract the Company’s obligations, (ii) the Issuer does not fail to comply immediately after
the merge or disposal, and (iii) the Issuer delivers a legal opinion stating the merge or disposal and the complimentary contract
meet the requirements described in the original contract.



In addition, SQM S.A. is committed to disclose
financial information on quarterly basis.



The Company and its subsidiaries have complied
and are fully complying with all aforementioned limitations, restrictions and obligations.



F-155


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.3 | Arbitration proceedings with CORFO
| | ---- | ----------------------------------



The subsidiary SQM Salar S.A. (SQMS) has
signed a rental contract with the Economic Development Agency (CORFO), which establishes that the subsidiary will pay rent to CORFO
for the concept of commercialization of certain mining properties owned by CORFO and for the products resulting from the commercialization.
The annual rent stated in the aforementioned contract is calculated on the basis of sales of each type of product. The contract
is in force until 2030, and rent began being paid in 1996 reflecting an expense amount of ThUS$41,962 as of December 31, 2016 (ThUS$23,155
as of December 31, 2015).



On 15 November 2013, Corporación
de Fomento de la Producción (CORFO) sent a letter to SQMS stating its intention to a) collect the amount of Ch$2,530,298,919
(ThUS$4,823) that in CORFO’s opinion, SQMS would owe to it for the calculation and payment of rental payments according to
the “Lease Agreement of OMA Mining Claims located in the Atacama Salt Flat” entered into between CORFO and SQMS on
November 12, 1993 (the AGREEMENT) and b) require the constitution of an instance of arbitration stated in the AGREEMENT with the
purpose that the arbitrator appointed by the “Arbitration Center of the Santiago Chamber of Commerce” determines if
other alleged lease payment obligations may exist that SQMS could owe to CORFO under the AGREEMENT.



During May 2014, CORFO filed a lawsuit
against SQMS requesting the early termination of the agreement and other requests explained in Note 19.1. Such lawsuit is currently
being processed.



SQMS differs completely form CORFO’s
claims. In fact, the AGREEMENT has been in force for more than 20 years and during all this time, SQMS has paid to CORFO more than
80 quarterly payments in their entirety and on a timely basis that CORFO has received satisfactorily.



In our legal advisors’ opinion, there
are no legal grounds to early terminate the lease agreement as –i- noncompliance on which the lawsuit is based do not exist
and, if any, -ii- these are not gross or essential or hinder the purpose of the agreement –iii- the company has never had
the intention of deceiving and has always been fully transparent in providing the information delivered. On the contrary, the conflict
solely corresponds to a discussion on the right formula to calculate the rent amount.



The total amount finally requested by CORFO
was at least US$8,940,829 – plus interests and costs – and the arbitration proceeding is close to the end of the evidentiary
stage. CORFO and SQMS waived all recourses against the judgment provided by the arbitrator. However, it is not possible to discard
the filing of a complaint appeal or an appeal in cassation alleging incompetence or ultra petita and indicating the jurisprudence
of the courts of justice, considering that both recourses cannot be waived.



On August 17, 2016, CORFO noticed a new
arbitration claim filed against SQM Potasio S.A., SQM S.A. and SQMS, by virtue of which it required the early termination of the
Project Contract entered on November 12, 1993 and other related contracts among other matters.



F-156


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.3 | Arbitration proceedings with CORFO, continued
| | ---- | ---------------------------------------------



In addition, on September 28, 2016, SQM
and SQMS. have file a request for a third arbitration with CORFO. Through this last arbitration, SQM. and SQMS expect to obtain
a declaratory action determining that in the payment of the rent payments made under the lease agreement for the agreement’s
term, there has been no damage for CORFO. Such arbitration is at the deliberation stage.



During the period ended December 31, 2016,
income related to products from the Atacama saltpeter deposit represented a 47.42% of total comprehensive income of the Company
for the same period. This corresponds to income considered in the Potassium and Lithium product business lines.



Additionally, during the same period, SQMS
sold potassium salts (sylvinite) and wet potassium chloride for a total of ThUS$96,037 to SQM Industrial S.A., a subsidiary of
SQM to be used as supplies in the production of potassium nitrate.



| | 19.4 | Environmental contingencies
| | ---- | ---------------------------



On June 6, 2016, The Chilean Superintendence
of the Environment filed charges against SQM with respect to the Pampa Hermosa project for possible noncompliance with RCA 890/2010.



This relates to charges associated with
certain variables in the Follow-up Plan and the implementation of a mitigation action contemplated in the related Environmental
Impact Study. SQM has submitted a compliance program detailing the actions and commitments that the Company will perform to overcome
the objections filed by the environmental authority. The Chilean Superintendence of the Environment is currently reviewing such
compliance program.



Through Exempt Resolution No. 1/Journal
F-041-2016 of November 28, 2016 as amended through Exempt Resolution No. 4/Journal F-041-2016 of December 23, 2016, the Chilean
Superintendence of the Environment presented charges against SQMS for the extraction of brine over the authorized amount, gradual
impact on the vitality status of carob trees, delivery of incomplete information, amendment of variables, among others. SQMS has
submitted a compliance program detailing the actions and commitments that the Company will perform to try to overcome the objections
presented by the environmental authority. The Chilean Superintendence of the Environment is currently reviewing such compliance
program.



Should the Chilean Superintendence of the
Environment reject any of the aforementioned compliance programs, the Company is exposed to fines and other sanctions established
in the Chilean environmental legislation.



F-157


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.5 | Tax contingency
| | ---- | ---------------



During 2015, SQM and its subsidiaries SQM
Salar and SQM Industrial have submitted to the Chilean IRS four tax amendments (two by SQM, one by SQM Salar and one by SQM Industrial).



The first two (one filed by SQM and another
filed by SQM Salar), subsequent to being approved by the Chilean IRS generated payments of taxes, interests and other charges for
ThUS$8,100, which was recorded in a provision in the results for the first quarter of 2015.



Additionally, during August 2015, the Company
provided to the Chilean IRS for review and approval, the documentation required to amend the annual income tax returns of SQM and
SQM Industrial. SQM believes that as a result of these amendments the Company will have to pay approximately US$1.4 million for
the concept of taxes, interests and other charges, such amount was recorded in a provision in the results for the second quarter
of 2015.



Finally, during 2016, the last 12 invoices
were amended with approximate payment of US$50 thousand.



Accordingly, SQM and its subsidiaries understand
the internal analysis they have been performing has ended, the purpose of which was the identification of the expenses incurred
by them during the commercial years 2008 to 2014 and which could be a matter of tax amendment.



Because of the aforementioned amendments,
SQM, SQM Salar and SQM Industrial might be affected by additional penalty established in article 97 No. 4, of the Tax Code. The
Company has currently not estimated making any provisions related to this possible additional penalty.



On August 28, 2015, the Chilean IRS sent
to SQM a request for payment of taxes of US$8.7 million plus interests and fines related to the tax difference resulting from the
application of articles 64 Bis and 64 Ter of the Chilean Income Tax Law. On September 9, 2015, SQM filed a Request for Voluntary
Administrative Reconsideration with the Chilean IRS, which was not accepted. As a result, the Company paid the amounts as requested
totaling US$14.6 million, and reserved its right to file a tax claim against the request for payment by the Chilean IRS with the
Courts of Justice.



Based on the opinion of the tax lawyers,
management believes grounds exist to believe this case will be resolved in favor of the Company and, as such, no provisions have
been made with respect to this case.



On August 26, 2016, SQM Salar filed with
the Third Tax and Customs Court of the Metropolitan Region of Chile a tax claim against tax assessments Nos. 169, 170, 171 and
172, seeking to extend the application of the Specific Tax on Mining Activities to the exploitation of lithium. The amount involved
is approximately ThUS$17,809. The tax claim is at the deliberation stage.





On December 7, 2016, the Chilean Internal
Revenue Service (Servicio de Impuestos Internos (SII)) through notice No.1587-16 communicated to SQMS the outcome of its inspections
of Income Taxes for the tax years 2015 and 2016, through Resolution No.156 / 2016 and tax assessment No. 207, respectively. As
a result, the Company paid the amounts as requested totaling US$13.2 million, and reserved its right to file a tax claim against
the request for payment by the Chilean IRS with the Courts of Justice.





On March 24, 2017, SQM Salar filed with
the Third Tax and Customs Court of the Metropolitan Region of Chile a tax claim against the mentioned Resolution No.156 / 2016.



F-158


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.6 | Restricted or pledged cash
| | ---- | --------------------------



The subsidiary Isapre Norte Grande Ltda.,
in compliance with that established by the Chilean Superintendence of Healthcare which regulates the running of pension-related
health institutions, maintains a guarantee in financial instruments delivered in deposits, custody and administration to Banco
de Chile.



This guarantee, according to the regulations
issued by the Chilean Superintendence of Healthcare is equivalent to the total sum owed to its members and medical providers Banco
de Chile reports the present value of the guarantee to the Chilean Superintendence of Healthcare and Isapre Norte Grande Ltda.
on a daily basis. As of December 31, 2016, the guarantee amounts to ThUS$685.



SQM S.A. maintains funds with Morgan Stanley for the concept
of Marging Call, which provide collateral for the Bank’s exposition towards the Company.



Such collateral hedges the fair value of the Cross Currency
Swap that SQM S.A. has to hedge a portion of the Series H Bond.



Through the present date, SQM S.A. has delivered ThUS$3,810
to Morgan Stanley, which will be released when any of the following conditions occur:



| | 1. | The market value of the Cross Currency Swap is lower than the sum of that delivered ThUS$3,810 and the collateral threshold
ThUS$5,000.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------

| | 2. | The Cross Currency Swap associated with the H Series Bond expires on January 5, 2018.
| | -- | -------------------------------------------------------------------------------------



SQM S.A. maintains funds with BCI for the concept of margin
call, which provide collateral for the Bank’s exposition towards the Company.



Such collateral hedges the fair value of the Cross Currency
Swap that SQM S.A. has to hedge the Series H Bond.



Through the present date, SQM S.A. has delivered ThUS$0 to BCI,
which will be released when any of the following conditions occur:



| | 1. | The market value of the Cross Currency Swap of the last business day of the month is lower than the sum of that delivered ThUS$0
and the collateral threshold ThUS$10,000.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | The Cross Currency Swap associated with the H Series Bond expires on January 5, 2018.
| | -- | -------------------------------------------------------------------------------------



F-159


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies and restrictions (continued)



| | 19.7 | Securities obtained from third parties
| | ---- | --------------------------------------



The main security received (exceeding ThUS$100)
from third parties to guarantee Soquimich Comercial S.A.’s compliance with obligations in contracts of commercial mandates
for the distribution and sale of fertilizers amounted to ThUS$6,984 and ThUS$6,445 on December 31, 2016 and December 31, 2015 respectively;
which is detailed as follows:



|Grantor                        |  | Relationship           |  | 12/31/2016 |       |  | 12/31/2015 | 
|------------------------------ |  | ---------------------- |  | ---------- | ----- |  | ---------- | 
|                               |  |                        |  | ThUS$      |       |  | ThUS$      | 
|                               |  |                        |  |            |       |  |            | 
|Tattersall Agroinsumos S.A.    |  | Unrelated third party  |  |            | 2,000 |  |            | 
|Contador Frutos S.A.           |  | Unrelated third party  |  |            | 1,574 |  |            | 
|Agrícola Lobert Ltda.          |  | Unrelated third party  |  |            | 1,141 |  |            | 
|Covepa SPA                     |  | Unrelated third party  |  |            | 747   |  |            | 
|Johannes Epple Davanzo         |  | Unrelated third party  |  |            | 333   |  |            | 
|Juan Luis Gaete Chesta         |  | Unrelated third party  |  |            | 241   |  |            | 
|Arena Fertilizantes y Semillas |  | Unrelated third party  |  |            | 224   |  |            | 
|Vicente Oyarce Castro          |  | Unrelated third party  |  |            | 220   |  |            | 
|Soc. Agrocom. Julio Polanco    |  | Unrelated third party  |  |            | 149   |  |            | 
|Bernardo Guzmán Schmidt        |  | Unrelated third party  |  |            | 125   |  |            | 
|Gilberto Rivas Y Cia. Ltda.    |  | Unrelated third party  |  |            | 125   |  |            | 
|Agroc Patricio Bornand L.Eirl  |  | Unreleated third party |  |            | -     |  |            | 
|Hortofruticola La Serena       |  | Unreleated third party |  |            | -     |  |            | 
|Lemp Martin Julian             |  | Unreleated third party |  |            | -     |  |            | 
|Comercial Agrosal Ltda.        |  | Unrelated third party  |  |            | 105   |  |            | 
|Total                          |  |                        |  |            | 6,984 |  |            | 



F-160


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies and restrictions (continued)



| | 19.8 | Indirect guarantees
| | ---- | -------------------



Guarantees in which there is no pending
balance indirectly reflect that the respective guarantees are in force and approved by the Company’s Board of Directors and
have not been used by the respective subsidiary.



The bonds which disclose a balance as of December 31, 2016 and
December 31, 2015 are detailed below:



|                                      |  | Debtor                           |  |              |  | Balances as of the closing  date of the financial
statements | 
|------------------------------------- |  | -------------------------------- |  | ------------ |  | ------------------------------------------------------------ | 
|Creditor of the guarantee             |  | Name                             |  | Relationship |  | Type of
    guarantee                                        | 
|Australian and New Zealand Bank       |  | SQM North America Corp           |  | Subsidiary   |  | Bond                                                         | 
|Australian and New Zealand Bank       |  | SQM Europe N.V.                  |  | Subsidiary   |  | Bond                                                         | 
|Generale Bank                         |  | SQM North America Corp           |  | Subsidiary   |  | Bond                                                         | 
|Generale Bank                         |  | SQM Europe N.V.                  |  | Subsidiary   |  | Bond                                                         | 
|Kredietbank                           |  | SQM North America Corp           |  | Subsidiary   |  | Bond                                                         | 
|Kredietbank                           |  | SQM Europe N.V.                  |  | Subsidiary   |  | Bond                                                         | 
|Banks and financial institutions      |  | SQM Investment Corp. N.V.        |  | Subsidiary   |  | Bond                                                         | 
|Banks and financial institutions      |  | SQM Europe N.V.                  |  | Subsidiary   |  | Bond                                                         | 
|Banks and financial institutions      |  | SQM North America Corp           |  | Subsidiary   |  | Bond                                                         | 
|Banks and financial institutions      |  | Nitratos Naturais do Chile Ltda. |  | Subsidiary   |  | Bond                                                         | 
|Banks and financial institutions      |  | SQM México S.A. de C.V.          |  | Subsidiary   |  | Bond                                                         | 
|Banks and financial institutions      |  | SQM Brasil Ltda.                 |  | Subsidiary   |  | Bond                                                         | 
|“BNP”                                 |  | SQM Investment Corp. N.V.        |  | Subsidiary   |  | Bond                                                         | 
|Sociedad Nacional de Mineria A.G.     |  | SQM Potasio S.A.                 |  | Subsidiary   |  | Bond                                                         | 
|Scotiabank & Trust (Cayman) Ltd.      |  | Royal Seed Trading A.V.V.        |  | Subsidiary   |  | Bond                                                         | 
|Scotiabank & Trust (Cayman) Ltd.      |  | Royal Seed Trading A.V.V.        |  | Subsidiary   |  | Bond                                                         | 
|Bank of America                       |  | Royal Seed Trading A.V.V.        |  | Subsidiary   |  | Bond                                                         | 
|Export Development Canada             |  | Royal Seed Trading A.V.V.        |  | Subsidiary   |  | Bond                                                         | 
|The Bank of Tokyo-Mitsubishi UFJ Ltd. |  | Royal Seed Trading A.V.V.        |  | Subsidiary   |  | Bond                                                         | 
|JP Morgan Chase Bank                  |  | SQM Industrial S.A.              |  | Subsidiary   |  | Bond                                                         | 
|The Bank of Nova Scotia               |  | SQM Investment Corp. N.V.        |  | Subsidiary   |  | Bond                                                         | 



F-161


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 19   Contingencies
and restrictions (continued)



| | 19.8 | Indirect guarantees, continued
| | ---- | ------------------------------



|                                      |  | Debtor                    |  |              |  | Pending balances as of the closing date of the financial statements | 
|------------------------------------- |  | ------------------------- |  | ------------ |  | ------------------------------------------------------------------- | 
|Creditor of the guarantee             |  | Name                      |  | Relationship |  | Type of guarantee                                                   | 
|Credit Suisse International           |  | SQM Investment Corp. N.V. |  | Subsidiary   |  | Bond                                                                | 
|Morgan Stanley Capital Services       |  | SQM Investment Corp. N.V. |  | Subsidiary   |  | Bond                                                                | 
|The Bank of Tokyo-Mitsubishi UFJ Ltd. |  | SQM Investment Corp. N.V. |  | Subsidiary   |  | Bond                                                                | 
|HSBC                                  |  | SQM Investment Corp. N.V. |  | Subsidiary   |  | Bond                                                                | 
|Deutsche Bank AG                      |  | SQM Investment Corp. N.V. |  | Subsidiary   |  | Bond                                                                | 



F-162


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
20   Revenue



As of December 31, 2016, 2015 and 2014,
revenue is detailed as follows:



|         |  | 12/31/2016 |           |  | 12/31/2015 |  |           | 12/31/2014 | 
|-------- |  | ---------- | --------- |  | ---------- |  | --------- | ---------- | 
|         |  | ThUS$      |           |  | ThUS$      |  |           | ThUS$      | 
|Products |  |            | 1,933,828 |  |            |  | 1,721,064 |            | 
|Services |  |            | 5,494     |  |            |  | 7,268     |            | 
|Total    |  |            | 1,939,322 |  |            |  | 1,728,332 |            | 



Note
21   Earnings per share



Basic earnings per share are calculated
by dividing net income attributable to the Company’s shareholders by the weighted average of the number of shares in circulation
during that period.



As expressed, earnings per share are detailed
as follows:



|Basic earnings per share                               |  | 12/31/2016 ThUS$ |         |  | 12/31/2015 ThUS$ |  |         | 12/31/2014 ThUS$ | 
|------------------------------------------------------ |  | ---------------- | ------- |  | ---------------- |  | ------- | ---------------- | 
|                                                       |  |                  |         |  |                  |  |         |                  | 
|Earnings (losses) attributable to owners of the parent |  |                  | 278,290 |  |                  |  | 220,356 |                  | 



|                                       |  | 12/31/2016 Units |             |  | 12/31/2015 Units |  |             | 12/31/2014 Units | 
|-------------------------------------- |  | ---------------- | ----------- |  | ---------------- |  | ----------- | ---------------- | 
|                                       |  |                  |             |  |                  |  |             |                  | 
|Number of common shares in circulation |  |                  | 263,196,524 |  |                  |  | 263,196,524 |                  | 



|                                         |  | 12/31/2016 |        |  | 12/31/2015 |  |      | 12/31/2014 | 
|---------------------------------------- |  | ---------- | ------ |  | ---------- |  | ---- | ---------- | 
|                                         |  |            |        |  |            |  |      |            | 
|Basic earnings per share (US$ per share) |  |            | 1.0573 |  |            |  | 0.84 |            | 



The Company does not have any potential
dilutive shares.



F-163


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
22   Borrowing costs



The cost of interest is recognized as expenses
in the year in which it is incurred, except for interest that is directly related to the acquisition and construction of tangible
property, plant and equipment assets and that complies with the requirements of IAS 23. As of December 31, 2016, total interest
expenses incurred amount to ThUS$57,459 (ThUS$69,853 as of December 31, 2015).



| | 22.1 | Costs of capitalized interest, property, plant and equipment
| | ---- | ------------------------------------------------------------



The Company capitalizes all interest costs
directly related to the construction or to the acquisition of property, plant and equipment, which require a substantial time to
be suitable for use.



The cost of capitalized interest is determined
by applying the average or weighted average of all financing costs incurred by the Company to the monthly end balances of works-in-progress
meeting the requirements of IAS 23.



The rates and costs for capitalized interest
of property, plant and equipment are detailed as follows:



|                                                                                     |  | 12/31/2016 |       |   | 12/31/2015 | 
|------------------------------------------------------------------------------------ |  | ---------- | ----- | - | ---------- | 
|                                                                                     |  |            |       |   |            | 
|Capitalization rate of costs for capitalized interest, property, plant and equipment |  |            | 4     | % |            | 
|                                                                                     |  |            |       |   |            | 
|Amount of costs for interest capitalized in ThUS$                                    |  |            | 5,406 |   |            | 



F-164


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
23   Effect of fluctuations on foreign currency exchange rates



| | a) | Foreign currency exchange differences recognized in profit or loss and other comprehensive income:
| | -- | --------------------------------------------------------------------------------------------------



|                                                                                                               |  | 12/31/2016 ThUS$ |        |   | 12/31/2015 ThUS$ |  |         | 12/31/2014 ThUS$ | 
|-------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------ | - | ---------------- |  | ------- | ---------------- | 
|                                                                                                               |  |                  |        |   |                  |  |         |                  | 
|Conversion foreign exchange gains (losses) recognized in profit or loss.                                       |  |                  | 460    |   |                  |  | (12,364 | )                | 
|                                                                                                               |  |                  |        |   |                  |  |         |                  | 
|Conversion foreign exchange as other comprehensive income attributable to the owners of the controlling entity |  |                  | (5,428 | ) |                  |  | (6,334  | )                | 
|                                                                                                               |  |                  |        |   |                  |  |         |                  | 
|Conversion foreign exchange as other comprehensive income attributable to the non-controlling entity           |  |                  | 35     |   |                  |  | (165    | )                | 



| | b) | Reserves for foreign currency exchange differences
(balance):
| | -- | -------------------------------------------------------------



As of December 31, 2016, and December 31, 2015, foreign currency
exchange differences are detailed as follows:



|Detail                                                        |  | 12/31/2016 ThUS$ |         |   | 12/31/2015 ThUS$ |  |         | 12/31/2014 ThUS$ | 
|------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- |  | ------- | ---------------- | 
|                                                              |  |                  |         |   |                  |  |         |                  | 
|Changes in equity generated by conversion of equity value:    |  |                  |         |   |                  |  |         |                  | 
|Comercial Hydro S.A.                                          |  |                  | 1,004   |   |                  |  | 1,004   |                  | 
|SQMC Internacional Ltda.                                      |  |                  | (13     | ) |                  |  | (20     | )                | 
|Proinsa Ltda.                                                 |  |                  | (10     | ) |                  |  | (15     | )                | 
|Comercial Agrorama Ltda.                                      |  |                  | (69     | ) |                  |  | (100    | )                | 
|Isapre Norte Grande Ltda.                                     |  |                  | (124    | ) |                  |  | (155    | )                | 
|Almacenes y Depósitos Ltda.                                   |  |                  | 47      |   |                  |  | (31     | )                | 
|Sales de Magnesio Ltda.                                       |  |                  | (29     | ) |                  |  | (161    | )                | 
|Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A. |  |                  | (6      | ) |                  |  | (9      | )                | 
|Agrorama S.A.                                                 |  |                  | (49     | ) |                  |  | (35     | )                | 
|Doktor Tarsa                                                  |  |                  | (12,264 | ) |                  |  | (8,305  | )                | 
|SQM Vitas Fzco                                                |  |                  | (1,801  | ) |                  |  | (2,245  | )                | 
|Ajay Europe                                                   |  |                  | (1,935  | ) |                  |  | (1,731  | )                | 
|SQM Eastmed Turkey                                            |  |                  | (95     | ) |                  |  | (81     | )                | 
|Charlee SQM (Thailand) Co. Ltd.                               |  |                  | (460    | ) |                  |  | (476    | )                | 
|Coromandel SQM India                                          |  |                  | (282    | ) |                  |  | (301    | )                | 
|SQM Italia SRL                                                |  |                  | (287    | ) |                  |  | (250    | )                | 
|SQM Oceania Pty Ltd.                                          |  |                  | (634    | ) |                  |  | (634    | )                | 
|SQM Indonesia S.A.                                            |  |                  | (124    | ) |                  |  | (123    | )                | 
|Abu Dhabi Fertilizers Industries WWL.                         |  |                  | (434    | ) |                  |  | 21      |                  | 
|SQM Vitas Holland                                             |  |                  | (280    | ) |                  |  | (320    | )                | 
|SQM Thailand Limited                                          |  |                  | (68     | ) |                  |  | (68     | )                | 
|SQM Europe N.V.                                               |  |                  | (1,550  | ) |                  |  | -       |                  | 
|Total                                                         |  |                  | (19,463 | ) |                  |  | (14,035 | )                | 



F-165


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 23   Effect of fluctuations
on foreign currency exchange rates (continued)



| | c) | Functional and presentation currency
| | -- | ------------------------------------



The functional currency in these companies
corresponds to the currency of the country of origin of each entity, and its presentation currency is the U.S. dollar.



| | d) | Reasons to use one presentation currency and a different functional currency
| | -- | ----------------------------------------------------------------------------



| | - | The total revenues of these subsidiaries are associated
with the local currency.
| | - | --------------------------------------------------------------------------------



| | - | The commercialization cost structure of these companies
is affected by the local currency.
| | - | ------------------------------------------------------------------------------------------



| | - | The equities of these companies are expressed in local
currency (Chilean peso).
| | - | -------------------------------------------------------------------------------



Note
24   Other current and non-current non-financial assets



As of December 31, 2016, and December 31,
2015, the detail of other current and non-current assets is as follows:



|Other non-financial assets, current    |  | 12/31/2016 |        |  | 12/31/2015 | 
|-------------------------------------- |  | ---------- | ------ |  | ---------- | 
|                                       |  | ThUS$      |        |  | ThUS$      | 
|Domestic Value Added Tax               |  |            | 13,999 |  |            | 
|Foreign Value Added Tax                |  |            | 2,537  |  |            | 
|Prepaid mining licenses                |  |            | 1,136  |  |            | 
|Prepaid insurance                      |  |            | 6,323  |  |            | 
|Other prepayments                      |  |            | 408    |  |            | 
|Refund of Value Added Tax to exporters |  |            | 855    |  |            | 
|Mining royalty tax paid (*)            |  |            | -      |  |            | 
|Other assets                           |  |            | 5,015  |  |            | 
|Total                                  |  |            | 30,273 |  |            | 



|Other non-financial assets, non-current                 |  | 12/31/2016 |        |  | 12/31/2015 | 
|------------------------------------------------------- |  | ---------- | ------ |  | ---------- | 
|                                                        |  | ThUS$      |        |  | ThUS$      | 
|Stain development expenses and prospecting expenses (1) |  |            | 23,008 |  |            | 
|Guarantee deposits                                      |  |            | 685    |  |            | 
|Pension plan                                            |  |            | -      |  |            | 
|Other assets                                            |  |            | 997    |  |            | 
|Total                                                   |  |            | 24,690 |  |            | 



(*) The Company reserved its right to file a tax claim with
the Courts of Justice against the request for payment by the SII. See Note 19.5



F-166


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 24   Other
current and non-current non-financial assets, continued



| | 1) | Reconciliation of changes in assets for exploration and mineral resource evaluation, by type
| | -- | --------------------------------------------------------------------------------------------



Movements in assets for the exploration
and evaluation of mineral resources as of December 31, 2016, and December 31, 2015:



|Reconciliation                                         |  | 12/31/2016 |        |   | 12/31/2015 | 
|------------------------------------------------------ |  | ---------- | ------ | - | ---------- | 
|                                                       |  | ThUS$      |        |   | ThUS$      | 
|                                                       |  |            |        |   |            | 
|Opening balance                                        |  |            | 31,911 |   |            | 
|Changes                                                |  |            |        |   |            | 
|Additions, other than business combinations            |  |            | -      |   |            | 
|Depreciation and amortization                          |  |            | (9,498 | ) |            | 
|Increase (decrease) due to transfers and other charges |  |            | 595    |   |            | 
|Total changes                                          |  |            | (8,903 | ) |            | 
|Total                                                  |  |            | 23,008 |   |            | 



As of the presentation
date, no reevaluations of assets for exploration and assessment of mineral resources have been conducted.



F-167


Notes to the Consolidated Financial Statements as of December 31, 2016




Note
25   Reportable segments



| | 25.1 | Reportable segments
| | ---- | -------------------



General information:



The amount of each item presented in each
operating segment is equal to that reported to the maximum authority that makes decisions regarding the operation, in order to
decide on the allocation of resources to the defined segments and to assess its performance.



These operating segments mentioned are
consistent with the way the Company is managed and how results will be reported by Company. These segments reflect separate operating
results which are regularly reviewed by chief operating decision maker in order to make decisions about the resources to be allocated
to the segment and assess its performance (See Note 24.2).

The segments performance is measured based on net income and revenues. Sales between segments are conducted using terms and conditions
at current market rates.



Factors used to identify segments on
which a report should be presented:



Segments reported are strategic business
units that offer different products and services. These are managed separately because each business requires different technology
and marketing strategies.



Description of the types of products
and services on which each reportable segment obtain its income from ordinary activities



The operating segments, through which incomes
of ordinary activities are obtained, that generate expenses and whose operating results are reviewed on a regular basis by the
maximum authority who makes decisions regarding operations, relate to the following groups of products:



| | 1. | Specialty plant nutrients
| | -- | -------------------------

| | 2. | Iodine and its derivatives
| | -- | --------------------------

| | 3. | Lithium and its derivatives
| | -- | ---------------------------

| | 4. | Industrial chemicals
| | -- | --------------------

| | 5. | Potassium
| | -- | ---------

| | 6. | Other products and services
| | -- | ---------------------------



Description of income sources for all the other segments



Information relative to assets, liabilities,
profit and expenses that cannot be assigned to the segments indicated above, due to the nature of production processes, is included
under "Unassigned amounts” category of the disclosed information.



Basis of accounting for transactions between reportable segments



Sales between segments are made in the
same conditions as those made to third parties, and are consistently measures as presented in the income statement.



F-168


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.1 | Reportable segments, continued
| | ---- | ------------------------------



Description of the nature of the differences
between measurements of results of reportable segments and the result of the entity before the expense or income tax expense of
incomes and discontinued operations.



The information reported in the segments
is extracted from the Company’s consolidated financial statements and therefore is not required to prepare reconciliations
between the data mentioned above and those reported in the respective segments, according to what is stated in paragraph 28 of
IFRS 8, "Operating Segments".



For the process of cost allocation in inventory valuation, we
identify the direct costs (can be assigned directly to a product) and the common costs (belong to processes of co-production, for
example costs of common leaching for the production of iodine and nitrates). The direct costs are directly associated with the
product and the common costs are allocated using percentages of sales, prices and inventory rotation.



The allocation of other common costs
that are not included in the inventory valuation process, but go straight to the cost of sales, use similar criteria: the costs
associated with a product or sales in particular are assigned to that particular product or sales, and the common costs associated
with different products or business lines are allocated according to the sales.



Description of the nature of the differences
between measurements of assets of reportable segments and the Company ́s assets



Assets are not shown classified by segments,
as this information is not readily available. Some of these assets are not separable by the type of activity by which they are
affected since this information is not used by management in decision-making with respect to resources to be allocated to each
defined segment. All assets are disclosed in the "unallocated amounts" category.



Description of the nature of the differences
between measurements of liabilities of reportable segments and the Company’s liabilities



Liabilities are not shown classified by
segments, as this information is not readily available. Some of these liabilities are not separable by the type of activity by
which they are affected, since this information is not used by management in decisions making regarding resources to be allocated
to each defined segment. All liabilities are disclosed in the "unallocated amounts" category.



F-169


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.2 | Reportable segment disclosures:
| | ---- | -------------------------------



|12/31/2016                                                                                                         
|-------------------------------------------------------------------------------------------------------------------
|Operating segment items                                                                                            
|                                                                                                                   
|Revenue                                                                                                            
|Revenues from transactions with other operating segments of the
    same entity                                    
|                                                                                                                   
|Revenues from external customers and transactions
    with other operating segments of the same entity             
|                                                                                                                   
|Costs of sales                                                                                                     
|Administrative expenses                                                                                            
|Interest expense                                                                                                   
|Depreciation and amortization expense                                                                              
|The entity’s interest in the profit or loss of associates
    and joint ventures accounted for by the equity method
|Income tax expense, continuing operations                                                                          
|Other items other than significant cash                                                                            
|Income (loss) before taxes                                                                                         
|                                                                                                                   
|Net income (loss) from continuing operations                                                                       
|Net income (loss) from discontinued operations                                                                     
|Net income (loss)                                                                                                  
|                                                                                                                   
|Assets                                                                                                             
|Equity-accounted investees                                                                                         
|Increase of non-current assets                                                                                     
|Liabilities                                                                                                        
|Impairment loss recognized in profit or loss                                                                       



F-170


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.2 | Reportable segment disclosures, continued
| | ---- | -----------------------------------------



|12/31/2015                                                                                                         
|-------------------------------------------------------------------------------------------------------------------
|Operating segment items                                                                                            
|                                                                                                                   
|Revenue                                                                                                            
|Revenues from transactions with other operating segments of the
    same entity                                    
|                                                                                                                   
|Revenues from external customers and transactions
    with other operating segments of the same entity             
|                                                                                                                   
|Costs of sales                                                                                                     
|Administrative expenses                                                                                            
|Interest expense                                                                                                   
|Depreciation and amortization expense                                                                              
|The entity’s interest in the profit or loss of associates
    and joint ventures accounted for by the equity method
|Income tax expense, continuing operations                                                                          
|Other items other tan significant cash                                                                             
|Income (loss) before taxes                                                                                         
|                                                                                                                   
|Net income (loss) from continuing operations                                                                       
|Net income (loss) from discontinued operations                                                                     
|Net income (loss)                                                                                                  
|                                                                                                                   
|Assets                                                                                                             
|Equity-accounted investees                                                                                         
|Increase of non-current assets                                                                                     
|Liabilities                                                                                                        
|Impairment loss recognized in profit or loss                                                                       



F-171


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.2 | Reportable segment disclosures, continued
| | ---- | -----------------------------------------



|12/31/2014                                                                                                         
|-------------------------------------------------------------------------------------------------------------------
|Operating segment items                                                                                            
|                                                                                                                   
|Revenue                                                                                                            
|Revenues from transactions with other operating
    segments of the same entity                                    
|                                                                                                                   
|Revenues from external customers
    and transactions with other operating segments of the same entity             
|                                                                                                                   
|Costs of sales                                                                                                     
|Administrative expenses                                                                                            
|Interest expense                                                                                                   
|Depreciation and amortization expense                                                                              
|The entity’s interest in the profit or
    loss of associates and joint ventures accounted for by the equity method
|Income tax expense, continuing operations                                                                          
|Other items other tan significant cash                                                                             
|Income (loss) before taxes                                                                                         
|                                                                                                                   
|Net income (loss) from continuing operations                                                                       
|Net income (loss) from discontinued operations                                                                     
|Net income (loss)                                                                                                  
|                                                                                                                   
|Assets                                                                                                             
|Equity-accounted investees                                                                                         
|Increase of non-current assets                                                                                     
|Liabilities                                                                                                        
|Impairment loss recognized in profit or loss                                                                       



F-172


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.3 | Statement of comprehensive income classified by reportable segments based on groups of products
| | ---- | -----------------------------------------------------------------------------------------------



|                                                                                                       |  | 12/31/2016                        |         
|------------------------------------------------------------------------------------------------------ |  | --------------------------------- | --------
|Items in the statement of comprehensive income                                                         |  | Specialty
    plant
    nutrients |         
|                                                                                                       |  | ThUS$                             |         
|Revenue                                                                                                |  |                                   | 623,853 
|Cost of sales                                                                                          |  |                                   | (478,074
|                                                                                                       |  |                                   |         
|Gross
    profit                                                                                       |  |                                   | 145,779 
|                                                                                                       |  |                                   |         
|Other incomes by function                                                                              |  |                                   | -       
|Administrative expenses                                                                                |  |                                   | -       
|Other expenses by function                                                                             |  |                                   | -       
|Other gains (losses)                                                                                   |  |                                   | -       
|Financial income                                                                                       |  |                                   | -       
|Financial costs                                                                                        |  |                                   | -       
|interest in the profit
    or loss of associates and joint ventures accounted for by the equity method |  |                                   | -       
|Exchange differences                                                                                   |  |                                   | -       
|Profit
    (loss) before taxes                                                                         |  |                                   | 145,779 
|Income tax expense                                                                                     |  |                                   | -       
|Profit
    (loss) from continuing operations                                                           |  |                                   | 145,779 
|Profit (loss) from discontinued
    operations                                                         |  |                                   | -       
|Profit
    (loss)                                                                                      |  |                                   | 145,779 
|Profit
    (loss), attributable to                                                                     |  |                                   |         
|Profit (loss) attributable
    to the controller ́s owners                                              |  |                                   | -       
|Profit (loss) attributable
    to the non-controllers                                                  |  |                                   | -       
|Profit
    (loss)                                                                                      |  |                                   | -       



F-173


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.3 | Statement of comprehensive income classified by reportable
segments based on groups of products, continued
| | ---- | ----------------------------------------------------------------------------------------------------------



|                                                                                                       |  | 12/31/2015                         |         
|------------------------------------------------------------------------------------------------------ |  | ---------------------------------- | --------
|Items in the statement of comprehensive income                                                         |  | Specialty
     plant
    nutrients |         
|                                                                                                       |  | ThUS$                              |         
|Revenue                                                                                                |  |                                    | 652,278 
|Cost of sales                                                                                          |  |                                    | (461,028
|                                                                                                       |  |                                    |         
|Gross
    profit                                                                                       |  |                                    | 191,250 
|                                                                                                       |  |                                    |         
|Other incomes by function                                                                              |  |                                    | -       
|Administrative expenses                                                                                |  |                                    | -       
|Other expenses by function                                                                             |  |                                    | -       
|Other gains (losses)                                                                                   |  |                                    | -       
|Financial income                                                                                       |  |                                    | -       
|Financial costs                                                                                        |  |                                    | -       
|interest in the profit
    or loss of associates and joint ventures accounted for by the equity method |  |                                    | -       
|Exchange differences                                                                                   |  |                                    | -       
|Profit
    (loss) before taxes                                                                         |  |                                    | 191,250 
|Income tax expense                                                                                     |  |                                    | -       
|Profit
    (loss) from continuing operations                                                           |  |                                    | 191,250 
|Profit (loss) from discontinued
    operations                                                         |  |                                    | -       
|Profit
    (loss)                                                                                      |  |                                    | 191,250 
|Profit
    (loss), attributable to                                                                     |  |                                    |         
|Profit (loss) attributable
    to the controller ́s owners                                              |  |                                    | -       
|Profit (loss) attributable
    to the non-controlling interests                                        |  |                                    | -       
|Profit
    (loss)                                                                                      |  |                                    | -       



F-174


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.3 | Statement of comprehensive income classified by reportable
segments based on groups of products, continued
| | ---- | ----------------------------------------------------------------------------------------------------------



|                                                                                                       |  | 12/31/2014                     |         
|------------------------------------------------------------------------------------------------------ |  | ------------------------------ | --------
|Items in the statement of comprehensive income                                                         |  | Specialty
 plant
    nutrients |         
|                                                                                                       |  | ThUS$                          |         
|Revenue                                                                                                |  |                                | 708,023 
|Cost of sales                                                                                          |  |                                | (564,151
|                                                                                                       |  |                                |         
|Gross profit                                                                                           |  |                                | 143,872 
|                                                                                                       |  |                                |         
|Other incomes by function                                                                              |  |                                | -       
|Administrative expenses                                                                                |  |                                | -       
|Other expenses by function                                                                             |  |                                | -       
|Other gains (losses)                                                                                   |  |                                | -       
|Financial income                                                                                       |  |                                | -       
|Financial costs                                                                                        |  |                                | -       
|interest in the profit or loss of associates and joint ventures
    accounted for by the equity method |  |                                | -       
|Exchange differences                                                                                   |  |                                | -       
|Profit (loss) before taxes                                                                             |  |                                | 143,872 
|Income tax expense                                                                                     |  |                                | -       
|Profit (loss) from continuing operations                                                               |  |                                | 143,872 
|Profit (loss) from discontinued operations                                                             |  |                                | -       
|Profit (loss)                                                                                          |  |                                | 143,872 
|Profit (loss), attributable to                                                                         |  |                                |         
|Profit (loss) attributable to the controller ́s owners                                                  |  |                                | -       
|Profit (loss) attributable to the non-controlling interests                                            |  |                                | -       
|Profit (loss)                                                                                          |  |                                | -       



F-175


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.4 | Revenue from transactions with other Company’s operating segments
| | ---- | -----------------------------------------------------------------



|12/31/2016                                    
|----------------------------------------------
|Items in the statement of comprehensive income
|                                              
|Revenue                                       



|12/31/2015                                    
|----------------------------------------------
|Items in the statement of comprehensive income
|                                              
|Revenue                                       



|12/31/2014                                    
|----------------------------------------------
|Items in the statement of comprehensive income
|                                              
|Revenue                                       



| | 25.5 | Disclosures on geographical areas
| | ---- | ---------------------------------



As indicated in paragraph 33 of IFRS 8,
the entity discloses geographical information on its revenue from operating activities with external customers and from non-current
assets that are not financial instruments, deferred income tax assets, assets related to post-employment benefits or rights derived
from insurance contracts.



| | 25.6 | Disclosures on main customers
| | ---- | -----------------------------



With respect to the degree of dependency
of the Company on its customers, in accordance with paragraph N° 34 of IFRS N° 8, the Company has no external customers
who individually represent 10% or more of its revenue, Credit risk concentrations with respect to trade and other accounts receivable
are limited due to the significant number of entities in the Company’s portfolio and its worldwide distribution, The Company’s
policy requires guarantees (such as letters of credit, guarantee clauses and others) and/or to maintain insurance policies for
certain accounts as deemed necessary by the Company's Management.



F-176


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.7 | Segments
by geographical areas as of December 31, 2016, December 31, 2015 and December 31, 2014
| | ---- | -----------------------------------------------------------------------------------------------



|                                                      |  | 12/31/2016  |          
|----------------------------------------------------- |  | ----------- | ---------
|Items                                                 |  | Chile ThUS$ |          
|Revenue                                               |  |             | 162,478  
|Investment accounted for under the equity method      |  |             | -        
|Intangible assets other than goodwill                 |  |             | 109,227  
|Goodwill                                              |  |             | 23,731   
|Property, plant and equipment, net                    |  |             | 1,524,936
|Investment property                                   |  |             | -        
|Other non-current non-financial assets                |  |             | 24,551   
|Non-current assets that are not financial instruments |  |             | 1,682,445



|                                                      |  | 12/31/2015  |          
|----------------------------------------------------- |  | ----------- | ---------
|Items                                                 |  | Chile ThUS$ |          
|Revenue                                               |  |             | 188,592  
|Investment accounted for under the equity method      |  |             | 1,535    
|Intangible assets other than goodwill                 |  |             | 110,199  
|Goodwill                                              |  |             | 26,929   
|Property, plant and equipment, net                    |  |             | 1,677,194
|Investment property                                   |  |             | -        
|Other non-current non-financial assets                |  |             | 33,384   
|Non-current assets that are not financial instruments |  |             | 1,849,241



|                                                      |  | 12/31/2014  |          
|----------------------------------------------------- |  | ----------- | ---------
|Items                                                 |  | Chile ThUS$ |          
|Revenue                                               |  |             | 227,261  
|Investment accounted for under the equity method      |  |             | 1,159    
|Intangible assets other than goodwill                 |  |             | 114,476  
|Goodwill                                              |  |             | 26,929   
|Property, plant and equipment, net                    |  |             | 1,883,534
|Investment property                                   |  |             | -        
|Other non-current non-financial assets                |  |             | 31,354   
|Non-current assets that are not financial instruments |  |             | 2,057,452



F-177


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 25   Reportable
segments (continued)



| | 25.8 | Property, plant and equipment classified by geographical areas
| | ---- | --------------------------------------------------------------



The company's main productive facilities
are located near their mines and extraction facilities in northern Chile. The following table presents the main production facilities
as of December 31, 2016 and December 31, 2015:



| |   | Location          |   | Products                                                              
| | - | ----------------- | - | ----------------------------------------------------------------------
| | - | Pedro de Valdivia | : | Production of iodine and nitrate salts                                
| | - | María Elena       | : | Production of iodine and nitrate salts                                
| | - | Coya Sur          | : | Production of nitrate salts                                           
| | - | Nueva Victoria    | : | Production of iodine and nitrate salts                                
| | - | Salar de Atacama  | : | Potassium chloride, lithium chloride, boric acid and potassium sulfate
| | - | Salar del Carmen  | : | Production of lithium carbonate and lithium hydroxide                 
| | - | Tocopilla         | : | Port facilities                                                       



F-178


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 26 | Gains (losses) from operating activities in the statement
of income by function of expenses, included according to their nature
| | ------- | -------------------------------------------------------------------------------------------------------------------------------



| | 26.1 | Cost of sales
| | ---- | -------------



|                                    |  | 12/31/2016 |            |   | 12/31/2015 |  |            | 12/31/2014 | 
|----------------------------------- |  | ---------- | ---------- | - | ---------- |  | ---------- | ---------- | 
|                                    |  | ThUS$      |            |   | ThUS$      |  |            | ThUS$      | 
|Raw material and supplies           |  |            | (485,788   | ) |            |  | (484,797   | )          | 
|Types of employee benefits expenses |  |            |            |   |            |  |            |            | 
|Salaries and wages                  |  |            | (104,144   | ) |            |  | (97,010    | )          | 
|Other short-term employee benefits  |  |            | (77,507    | ) |            |  | (33,662    | )          | 
|Termination benefit expenses        |  |            | (3,836     | ) |            |  | (5,719     | )          | 
|Total employee benefits expenses    |  |            | (185,487   | ) |            |  | (136,391   | )          | 
|Depreciation expense                |  |            | (239,546   | ) |            |  | (253,979   | )          | 
|Amortization expense                |  |            | (3,210     | ) |            |  | (3,469     | )          | 
|Exploration cost write-off          |  |            | (6,917     | ) |            |  | -          |            | 
|Inventory Provision                 |  |            | 1,956      |   |            |  | 96         |            | 
|Operating leases                    |  |            | (107,284   | ) |            |  | (89,229    | )          | 
|Investment plan expenses            |  |            | (16,624    | ) |            |  | (17,574    | )          | 
|Maintenance and repair              |  |            | (7,187     | ) |            |  | (10,112    | )          | 
|Contractors                         |  |            | (62,501    | ) |            |  | (49,727    | )          | 
|Operations transport                |  |            | (54,476    | ) |            |  | (52,079    | )          | 
|Freight and product transport costs |  |            | (43,716    | ) |            |  | (31,052    | )          | 
|Packaging costs                     |  |            | (1,703     | ) |            |  | (1,369     | )          | 
|Sales commissions                   |  |            | (9,434     | ) |            |  | (7,742     | )          | 
|Port costs                          |  |            | (20,793    | ) |            |  | (11,613    | )          | 
|CORFO right costs                   |  |            | (41,962    | ) |            |  | (23,155    | )          | 
|Adjustment of customer prices       |  |            | (8,380     | ) |            |  | (2,132     | )          | 
|Other expenses, by nature           |  |            | (35,233    | ) |            |  | (11,259    | )          | 
|Total                               |  |            | (1,328,285 | ) |            |  | (1,185,583 | )          | 



F-179


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 26 | Gains (losses) from operating activities in the statement
of income by function of expenses, included according to their nature, (continued)
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------



| | 26.2 | Other income
| | ---- | ------------



|                                                         |  | 12/31/2016 |        |  | 12/31/2015 |  |        | 12/31/2014 | 
|-------------------------------------------------------- |  | ---------- | ------ |  | ---------- |  | ------ | ---------- | 
|                                                         |  | ThUS$      |        |  | ThUS$      |  |        | ThUS$      | 
|Discounts obtained from suppliers                        |  |            | 771    |  |            |  | 1,343  |            | 
|Indemnification received and insurance recoveries        |  |            | 205    |  |            |  | 39     |            | 
|Penalties charged to suppliers                           |  |            | 358    |  |            |  | 73     |            | 
|Tax recoveries                                           |  |            | 26     |  |            |  | 12     |            | 
|Insurance recoveries                                     |  |            | 5,636  |  |            |  | 2,182  |            | 
|Excess in the provision for liabilities with 3rd parties |  |            | 573    |  |            |  | 1,039  |            | 
|Overstatement of doubtful accounts                       |  |            | 56     |  |            |  | 115    |            | 
|Sale of property, plant and equipment                    |  |            | 657    |  |            |  | 8      |            | 
|Sale of materials, spare parts and supplies              |  |            | 30     |  |            |  | 1,358  |            | 
|Sale de scrap                                            |  |            | 1      |  |            |  | -      |            | 
|Sale of mining properties                                |  |            | -      |  |            |  | -      |            | 
|Reversal of allowance for inventories                    |  |            | 815    |  |            |  | -      |            | 
|Options on mining properties                             |  |            | 2,577  |  |            |  | 2,261  |            | 
|Easements, ducts and roads                               |  |            | 219    |  |            |  | 1,980  |            | 
|Non-conventional renewable energy                        |  |            | 639    |  |            |  | 344    |            | 
|Reimbursement of mining patents and notarial expenses    |  |            | 1,300  |  |            |  | 1,025  |            | 
|Miscellaneous services                                   |  |            | -      |  |            |  | 405    |            | 
|Reimbursements from creditors                            |  |            | -      |  |            |  | 890    |            | 
|Other operating income                                   |  |            | 918    |  |            |  | 2,269  |            | 
|Total                                                    |  |            | 14,781 |  |            |  | 15,343 |            | 



F-180


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 26 | Gains (losses) from operating activities in the statement
of income by function of expenses, included according to their nature, (continued)
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------



| | 26.4 | Administrative expenses
| | ---- | -----------------------



|                                                      |  | 12/31/2016 |         |   | 12/31/2015 |  |         | 12/31/2014 | 
|----------------------------------------------------- |  | ---------- | ------- | - | ---------- |  | ------- | ---------- | 
|                                                      |  | ThUS$      |         |   | ThUS$      |  |         | ThUS$      | 
|Employee benefit expenses by nature                   |  |            |         |   |            |  |         |            | 
|Salaries and wages                                    |  |            | (42,828 | ) |            |  | (41,661 | )          | 
|Other short-term benefits to employees                |  |            | (4,389  | ) |            |  | (3,011  | )          | 
|Total employee benefit expenses                       |  |            | (47,217 | ) |            |  | (44,672 | )          | 
|Amortization expense                                  |  |            | (6      | ) |            |  | (5      | )          | 
|Advisory services                                     |  |            | (7,086  | ) |            |  | (7,293  | )          | 
|Audit fees                                            |  |            | (1,767  | ) |            |  | (415    | )          | 
|Marketing costs                                       |  |            | (1,338  | ) |            |  | (1,614  | )          | 
|Building and facilities rent expenses                 |  |            | (2,489  | ) |            |  | (1,836  | )          | 
|Advertising expenses                                  |  |            | (173    | ) |            |  | (230    | )          | 
|Luncheon expenses                                     |  |            | (548    | ) |            |  | (350    | )          | 
|Accommodation expenses                                |  |            | (633    | ) |            |  | (434    | )          | 
|Personnel expenses                                    |  |            | (453    | ) |            |  | (27     | )          | 
|Representation expenses                               |  |            | (506    | ) |            |  | (277    | )          | 
|Tickets and transportation                            |  |            | (1,599  | ) |            |  | (1,594  | )          | 
|Isapre (Healthcare institution) contribution payments |  |            | (532    | ) |            |  | (363    | )          | 
|Other employee expenses                               |  |            | (1,386  | ) |            |  | (1,440  | )          | 
|General materials                                     |  |            | (1,110  | ) |            |  | (1,434  | )          | 
|Light truck rent                                      |  |            | (622    | ) |            |  | (517    | )          | 
|Professional services                                 |  |            | (1,275  | ) |            |  | (2,164  | )          | 
|Data transmission services                            |  |            | (1,365  | ) |            |  | (1,317  | )          | 
|Maintenance services                                  |  |            | (713    | ) |            |  | (559    | )          | 
|Miscellaneous contractors                             |  |            | (2,497  | ) |            |  | (2,141  | )          | 
|Mobile phone services                                 |  |            | (584    | ) |            |  | (303    | )          | 
|Acquisition of software                               |  |            | (1,945  | ) |            |  | (1,258  | )          | 
|Real estate contributions                             |  |            | (838    | ) |            |  | (819    | )          | 
|Business licenses                                     |  |            | (843    | ) |            |  | (1,052  | )          | 
|Insurance policies                                    |  |            | (1,271  | ) |            |  | (774    | )          | 
|Miscellaneous expenses                                |  |            | (1,184  | ) |            |  | (1,044  | )          | 
|Other expenses, by nature                             |  |            | (8,456  | ) |            |  | (12,898 | )          | 
|Total                                                 |  |            | (88,436 | ) |            |  | (86,830 | )          | 



F-181


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 26 | Gains (losses) from operating activities in the statement
of income by function of expenses, included according to their nature (continued)
| | ------- | -------------------------------------------------------------------------------------------------------------------------------------------



| | 26.4 | Other expenses by function
| | ---- | --------------------------



|                                                                                        |  | 12/31/2016 |         |   | 12/31/2015 |  |          | 12/31/2014 | 
|--------------------------------------------------------------------------------------- |  | ---------- | ------- | - | ---------- |  | -------- | ---------- | 
|                                                                                        |  | ThUS$      |         |   | ThUS$      |  |          | ThUS$      | 
|Employee benefit expenses by nature                                                     |  |            |         |   |            |  |          |            | 
|Depreciation and amortization expenses                                                  |  |            |         |   |            |  |          |            | 
|Depreciation of stopped assets                                                          |  |            | (111    | ) |            |  | (316     | )          | 
|Depreciation, residual value                                                            |  |            | -       |   |            |  | -        |            | 
|Subtotal to date                                                                        |  |            | (111    | ) |            |  | (316     | )          | 
|Impairment loss (review of impairment losses) recognized in profit or loss for the year |  |            |         |   |            |  |          |            | 
|Impairment of allowance for doubtful accounts                                           |  |            | (7.198  | ) |            |  | (2.981   | )          | 
|Subtotal to date                                                                        |  |            | (7.198  | ) |            |  | (2.981   | )          | 
|                                                                                        |  |            |         |   |            |  |          |            | 
|Other expenses, by nature                                                               |  |            |         |   |            |  |          |            | 
|Legal Expenses                                                                          |  |            | (5,737  | ) |            |  | (17,204  | )          | 
|Mine site activity disruption expenses (impairment)                                     |  |            | (32,061 | ) |            |  | (57,665  | )          | 
|Indemnities paid                                                                        |  |            | -       |   |            |  | (3,714   | )          | 
|VAT and other unrecoverable tax                                                         |  |            | (1,015  | ) |            |  | (1,146   | )          | 
|Fines, interests and tax (*)                                                            |  |            | (1,378  | ) |            |  | (3,953   | )          | 
|SEC and Department of Justice fines                                                     |  |            | (30,488 | ) |            |  | -        |            | 
|Advisory services                                                                       |  |            | (59     | ) |            |  | (15      | )          | 
|Provisions, materials and action sales                                                  |  |            | (815    | ) |            |  | -        |            | 
|Provisions, Investment plan expenses materials and closing                              |  |            | (6,657  | ) |            |  | (16,246  | )          | 
|Tax on rejected expenses (*)                                                            |  |            | -       |   |            |  | (1,653   | )          | 
|Donations rejected as tax credits                                                       |  |            | (1,692  | ) |            |  | (1,350   | )          | 
|Other operating expenses                                                                |  |            | (2,520  | ) |            |  | (172     | )          | 
|Subtotal to date                                                                        |  |            | (82,422 | ) |            |  | (103,118 | )          | 
|Total                                                                                   |  |            | (89,731 | ) |            |  | (106,415 | )          | 



(*) These balances are considered payments
as at september 2015 for approximately ThUS$9.5 in taxes (Tax under Article No. 21 of the Income Tax Law and Value-added Tax),
interest and other charges performed by the Company to the Chilean Internal Revenue Service (Servicio de Impuestos Internos) because
of the submission of amendments to its income tax returns for tax years from 2009 through 2014, as it identified expenses for which
the Company did not have sufficient supporting documentation to be considered expenses necessary to generate income in accordance
with the current Chilean tax regulations for approximately ThUS$14.7.





F-182


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 26 | Gains (losses) from operating activities in the statement
of income by function of expenses, included according to their nature (continued)
| | ------- | -------------------------------------------------------------------------------------------------------------------------------------------



| | 26.5 | Other Gains (losses)
| | ---- | --------------------



|                                                                    |  | 12/31/2016 |        |   | 12/31/2015 |  |       | 12/31/2014 | 
|------------------------------------------------------------------- |  | ---------- | ------ | - | ---------- |  | ----- | ---------- | 
|                                                                    |  | ThUS$      |        |   | ThUS$      |  |       | ThUS$      | 
|Adjustment of reversal of provision for staff severance indemnities |  |            | -      |   |            |  | 3,575 |            | 
|Sale of investments in associates                                   |  |            | 7,636  |   |            |  | -     |            | 
|Profit (loss) for not being involved in capital contribution        |  |            | -      |   |            |  | -     |            | 
|Provision for staff severance indemnities                           |  |            | (6,300 | ) |            |  | -     |            | 
|Other gains (losses)                                                |  |            | (657   | ) |            |  | 185   |            | 
|Total                                                               |  |            | 679    |   |            |  | 3,760 |            | 



F-183


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 26 | Gains (losses) from operating activities in the statement
of income by function of expenses, included according to their nature (continued)
| | ------- | -------------------------------------------------------------------------------------------------------------------------------------------



| | 26.6 | Summary of expenses by nature
| | ---- | -----------------------------



|                                                                                          |  | January to December |           
|----------------------------------------------------------------------------------------- |  | ------------------- | ----------
|                                                                                          |  | 2016                |           
|                                                                                          |  | ThUS$               |           
|                                                                                          |  |                     |           
|Raw material and supplies used                                                            |  |                     | (485,788  
|                                                                                          |  |                     |           
|Types of employee benefits expenses                                                       |  |                     |           
|Salaries and wages                                                                        |  |                     | (146,972  
|Other short-term employee benefits                                                        |  |                     | (81,896   
|Termination benefit expenses                                                              |  |                     | (3,836    
|Total employee benefit expenses                                                           |  |                     | (232,704  
|Depreciation and amortization expenses                                                    |  |                     |           
|Depreciation expense                                                                      |  |                     | (239,657  
|Depreciation expense, residual value                                                      |  |                     | -         
|Amortization expense                                                                      |  |                     | (3,217    
|Small deposit amortization expenses                                                       |  |                     | (6,917    
|Impairment loss (reversal of impairment losses) recognized in profit or loss for the year |  |                     | (6,057    
|Operating leases                                                                          |  |                     | (107,284  
|Production disruption expenses                                                            |  |                     | (32,061   
|Fines paid                                                                                |  |                     | (31,867   
|Investment plan expenses                                                                  |  |                     | (23,281   
|Maintenance and repair                                                                    |  |                     | (7,187    
|Contractors                                                                               |  |                     | (62,501   
|Operations transport                                                                      |  |                     | (54,476   
|Freight and product transport costs                                                       |  |                     | (43,716   
|Packaging costs                                                                           |  |                     | (1,703    
|Sales commissions                                                                         |  |                     | (9,434    
|Port costs                                                                                |  |                     | (20,793   
|Corfo rights                                                                              |  |                     | (41,962   
|Adjustment of customer prices                                                             |  |                     | (8,380    
|Advisory services                                                                         |  |                     | (7,086    
|Audit fees                                                                                |  |                     | (1,767    
|Marketing costs                                                                           |  |                     | (1,338    
|Rent of buildings and facilities                                                          |  |                     | (2,489    
|Advertising expenses                                                                      |  |                     | (173      
|Luncheon expenses                                                                         |  |                     | (548      
|Accommodation expenses                                                                    |  |                     | (633      
|Personnel expenses                                                                        |  |                     | (453      
|Representation expenses                                                                   |  |                     | (506      
|Tickets and transportation expenses                                                       |  |                     | (1,599    
|Isapre (healthcare institution) contributions                                             |  |                     | (532      
|Other employee expenses                                                                   |  |                     | (1,386    
|General material expenses                                                                 |  |                     | (1,110    
|Rent of light trucks                                                                      |  |                     | (622      
|Professional services                                                                     |  |                     | (1,275    
|Data transmission services                                                                |  |                     | (1,365    
|Maintenance services                                                                      |  |                     | (713      
|Miscellaneous contractors                                                                 |  |                     | (2,497    
|Mobile phone services                                                                     |  |                     | (584      
|Acquisition of software                                                                   |  |                     | (1,945    
|Real estate contributions                                                                 |  |                     | (838      
|Business license                                                                          |  |                     | (843      
|Insurance policies                                                                        |  |                     | (1,271    
|Miscellaneous expenses                                                                    |  |                     | (1,184    
|Other expenses by nature                                                                  |  |                     | (54,709   
|Total expenses by nature                                                                  |  |                     | (1,506,451



This table corresponds to the summary required by the Chilean Superintendence
of Securities and Insurance (SVS) and considers notes 25.2, 25.4 and 25.5.



F-184


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 26 | Gains (losses) from operating activities in the statement
of income by function of expenses, included according to their nature (continued)
| | ------- | -------------------------------------------------------------------------------------------------------------------------------------------



| | 26.7 | Finance expenses
| | ---- | ----------------



|                                                     |  | January to December |        
|---------------------------------------------------- |  | ------------------- | -------
|                                                     |  | 2016                |        
|                                                     |  | ThUS$               |        
|Interest expense from bank borrowings and overdrafts |  |                     | (854   
|Interest expense from bonds                          |  |                     | (57,409
|Interest expense from loans                          |  |                     | (4,581 
|Capitalized interest expenses                        |  |                     | 5,406  
|Other finance costs                                  |  |                     | (60    
|Total                                                |  |                     | (57,498



| | Note 27 | Income tax and deferred taxes
| | ------- | -----------------------------



Accounts receivable from taxes as of December 31, 2016 and December
31, 2015, are as follows:



| | 27.1 | Current and non-current tax assets
| | ---- | ----------------------------------



| | a) | Current tax assets
| | -- | ------------------



|                                                                        |  | 12/31/2016 |        |  | 12/31/2015 | 
|----------------------------------------------------------------------- |  | ---------- | ------ |  | ---------- | 
|                                                                        |  | ThUS$      |        |  | ThUS$      | 
|Monthly provisional income tax payments, Chilean companies current year |  |            | 49,110 |  |            | 
|Monthly provisional payment Royalty                                     |  |            | 3,542  |  |            | 
|Monthly provisional income tax payments, foreign companies              |  |            | 1,323  |  |            | 
|Corporate tax credits (1)                                               |  |            | 748    |  |            | 
|Corporate tax absorbed by tax losses (2)                                |  |            | 64     |  |            | 
|Total                                                                   |  |            | 54,787 |  |            | 



| | b) | Non-current tax assets
| | -- | ----------------------



|                                                                      |  | 12/31/2016 |        |  | 12/31/2015 | 
|--------------------------------------------------------------------- |  | ---------- | ------ |  | ---------- | 
|                                                                      |  | ThUS$      |        |  | ThUS$      | 
|Monthly provisional income tax payments, Chilean companies prior year |  |            | 3,243  |  |            | 
|Specific tax on mining activities paid (on consignment)               |  |            | 25,781 |  |            | 
|Total                                                                 |  |            | 29,024 |  |            | 



| | (1) | These credits are available to companies and relate to
the corporate tax payment in April of the following year. These credits include, amongst others, training expense credits (SENCE)
and property, plant and equipment acquisition credits that are equivalent to 4% of the property, plant and equipment purchases
made during the year. In addition, some credits relate to the donations the Group has made during 2016 and 2015.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-185


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.1 | Current and non-current tax assets, continued
| | ---- | ---------------------------------------------



| | (2) | This concept corresponds to the absorption of non-operating
losses (NOL’s) determined by the company at year end, which must be imputed or recorded in the Retained Taxable Profits
Registry (FUT).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In accordance with the laws in force and as
provided by article 31 No, 3 of the Income Tax Law, when profits recorded in the FUT that have not been withdrawn or distributed
are totally or partially absorbed by NOL’s, the corporate tax paid on such profits (24%, 22,5%, 21%, 20% or 17%, depending
on the year in which profits were generated) will be considered to be a provisional payment with respect to the portion representing
the absorbed accumulated tax profits.



Tax payers are entitled to apply for a refund
of this monthly provisional income tax payments on the absorbed profits recorded in the FUT registry via their tax returns (Form
22).



Therefore, the provisional payment for absorbed
profits (PPAP) recorded in the FUT is in effect a recoverable tax, and as such the Company records it as an asset.



| | 27.2 | Current tax liabilities
| | ---- | -----------------------



|Current tax liabilities    |  | 12/31/2016 |        |  | 12/31/2015 | 
|-------------------------- |  | ---------- | ------ |  | ---------- | 
|                           |  | ThUS$      |        |  | ThUS$      | 
|1st Category income tax    |  |            | 50,174 |  |            | 
|Foreign company income tax |  |            | 25,276 |  |            | 
|Tax on rejected expenses   |  |            | 422    |  |            | 
|Total                      |  |            | 75,872 |  |            | 



Income tax is calculated based on the profit
or loss for tax purposes that is applied to the effective tax rate applicable in Chile. As established by Law No.20,780, an income
tax rate of 21% was set starting from 2014, a rate of 22.5% for 2015, a rate of 24% for 2016, a rate of 25.5% for 2017, and a rate
of 27% starting from 2018.



The provision for royalty is determined by
applying the tax rate determined for the net operating income (NOI). Currently, the Company pays 5% for the application of the
Tax Invariability Contract established with the Ministry of Economy in 2010.



In conclusion, both concepts represent the
estimated amount the Company will have to pay for income tax and tax on mining.



F-186


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.3 | Tax earnings
| | ---- | ------------



As of December 31, 2016 and December 31, 2015,
the Company and its subsidiaries have recorded the following consolidated balances for retained tax earnings, income not constituting
revenue subject to income tax, accumulated tax losses and credit for shareholders:



|                                     |  | 12/31/2016 ThUS$ |         |  | 12/31/2015 ThUS$ |  |           | 12/31/2014 ThUS$ | 
|------------------------------------ |  | ---------------- | ------- |  | ---------------- |  | --------- | ---------------- | 
|Taxable profits with credit rights   |  |                  | 727,624 |  |                  |  | 1,254,859 |                  | 
|Taxable profits without credit right |  |                  | 588,942 |  |                  |  | 94,073    |                  | 
|Taxable loss                         |  |                  | 9,081   |  |                  |  | 9,947     |                  | 
|Credit for shareholders              |  |                  | 203,612 |  |                  |  | 302,081   |                  | 



The Retained Taxable Profits Registry (FUT)
is a chronological registry where the profits generated and distributed by the company are recorded. The object of the FUT is to
control the accumulated tax profits of the company that may be distributed, withdrawn or remitted to the owners, shareholders or
partners, and the final taxes that must be imposed, called in Chile Global Aggregate Tax (that levies persons resident or domiciled
in Chile), or additional tax (that levies persons “not” resident or domiciled in Chile).



The FUT Register contains profits with credit
rights and profits without credit rights, which arise out of the inclusion of the net taxable income determined by the company
or the profits received by the company that may be dividends received or withdrawals made during the period.



Profits without credit rights represent the
tax payable by the company within the year and filed the following year, therefore they will be deducted from the FUT Registry
the following year.



Profits with credit rights may be used to reduce
the final tax burden of owners, shareholders or partners, which upon withdrawal are entitled to use the credits associated with
the relevant profits.



In summary, companies use the FUT Registry
to maintain control over the profits they generate that have not been distributed to the owners and the relevant credits associated
with such profits.



| | 27.4 | Income tax and deferred taxes
| | ---- | -----------------------------



Assets and liabilities recognized in the statement
of financial position are offset if and only if:



| | 1 | The Company has legally recognized before the right the
tax authority to offset the amounts recognized in these entries; and
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | 2 | Deferred income tax assets and liabilities are derived
from income tax related to the same tax authority on:
| | - | ------------------------------------------------------------------------------------------------------------



| | (i) | the same entity or tax subject; or
| | --- | ----------------------------------



| | (ii) | different entities or tax subjects who intend either to
settle current fiscal assets and liabilities for their net amount, or to realize assets and pay liabilities simultaneously in
each of the future periods in which the Company expects to settle or recover significant amounts of deferred tax assets or liabilities.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-187


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



Deferred income tax assets recognized are the
income taxes that are to be recovered in future periods, related to:



| | a) | deductible temporary differences.
| | -- | ---------------------------------



| | b) | the offset of losses obtained in prior periods and not
yet subject to tax deduction; and
| | -- | ----------------------------------------------------------------------------------------



| | c) | the offset of unused credits from prior periods.
| | -- | ------------------------------------------------



The Company recognizes a deferred tax asset
when there is certainty that these can be offset with tax income from subsequent periods, losses or fiscal credits not yet used,
but solely as long as it is more likely than not that there will be tax earnings in the future against which to charge to these
losses or unused fiscal credits.



Deferred tax liabilities recognized refer to
the amounts of income taxes payable in future periods related to taxable temporary differences.



| | d.1 | Income tax assets and liabilities as of December 31, 2016
are detailed as follows:
| | --- | ----------------------------------------------------------------------------------



|                                                          |  | Net position, assets |     |  | Net position, liabilities | 
|--------------------------------------------------------- |  | -------------------- | --- |  | ------------------------- | 
|Description of deferred income tax assets and liabilities |  | Assets               |     |  | Liabilities               | 
|                                                          |  | ThUS$                |     |  | ThUS$                     | 
|Depreciation                                              |  |                      | -   |  |                           | 
|Doubtful accounts impairment                              |  |                      | 32  |  |                           | 
|Accrued vacations                                         |  |                      | -   |  |                           | 
|Manufacturing expenses                                    |  |                      | -   |  |                           | 
|Unrealized gains (losses) from sales of products          |  |                      | -   |  |                           | 
|Fair value of bonds                                       |  |                      | -   |  |                           | 
|Severance indemnity                                       |  |                      | -   |  |                           | 
|Hedging                                                   |  |                      | -   |  |                           | 
|Inventory of products, spare parts and supplies           |  |                      | 77  |  |                           | 
|Research and development expenses                         |  |                      | -   |  |                           | 
|Tax losses                                                |  |                      | -   |  |                           | 
|Capitalized interest                                      |  |                      | -   |  |                           | 
|Expenses in assumption of bank loans                      |  |                      | -   |  |                           | 
|Unaccrued interest                                        |  |                      | -   |  |                           | 
|Fair value of property, plant and equipment               |  |                      | -   |  |                           | 
|Employee benefits                                         |  |                      | -   |  |                           | 
|Royalty deferred income taxes                             |  |                      | -   |  |                           | 
|Acquisition of intangible assets                          |  |                      |     |  |                           | 
|Provision for lawsuits and legal expenses                 |  |                      | -   |  |                           | 
|Provision for investment plan                             |  |                      | -   |  |                           | 
|Provision for materials, spare-parts and supplies         |  |                      | -   |  |                           | 
|Deferred taxes, investments in equity instruments         |  |                      | -   |  |                           | 
|Provision for mine closure, fine copper and crushing      |  |                      | -   |  |                           | 
|Other                                                     |  |                      | 575 |  |                           | 
|Balance to date                                           |  |                      | 684 |  |                           | 
|Net balance                                               |  |                      | 664 |  |                           | 



F-188


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



| | d.2 | Income tax assets and liabilities as of December 31, 2015
are detailed as follows
| | --- | ---------------------------------------------------------------------------------



|                                                          |  | Net position, assets |     |  | Net position, liabilities | 
|--------------------------------------------------------- |  | -------------------- | --- |  | ------------------------- | 
|Description of deferred income tax assets and liabilities |  | Assets               |     |  | Liabilities               | 
|                                                          |  | ThUS$                |     |  | ThUS$                     | 
|Depreciation                                              |  |                      | -   |  |                           | 
|Doubtful accounts impairment                              |  |                      | -   |  |                           | 
|Accrued vacations                                         |  |                      | -   |  |                           | 
|Manufacturing expenses                                    |  |                      | -   |  |                           | 
|Unrealized gains (losses) from sales of products          |  |                      | -   |  |                           | 
|Fair value of bonds                                       |  |                      | -   |  |                           | 
|Severance indemnity                                       |  |                      | -   |  |                           | 
|Hedging                                                   |  |                      | -   |  |                           | 
|Inventory of products, spare parts and supplies           |  |                      | 1   |  |                           | 
|Research and development expenses                         |  |                      | -   |  |                           | 
|Tax losses                                                |  |                      | -   |  |                           | 
|Capitalized interest                                      |  |                      | -   |  |                           | 
|Expenses in assumption of bank loans                      |  |                      | -   |  |                           | 
|Unaccrued interest                                        |  |                      | -   |  |                           | 
|Fair value of property, plant and equipment               |  |                      | -   |  |                           | 
|Employee benefits                                         |  |                      | -   |  |                           | 
|Royalty deferred income taxes                             |  |                      | -   |  |                           | 
|Acquisition of intangible assets                          |  |                      | -   |  |                           | 
|Provision for lawsuits and legal expenses                 |  |                      | -   |  |                           | 
|Provision for investment plan                             |  |                      | -   |  |                           | 
|Provision for mine closure, fine copper and crushing      |  |                      | -   |  |                           | 
|Other                                                     |  |                      | 160 |  |                           | 
|Balance to date                                           |  |                      | 161 |  |                           | 
|Net balance                                               |  |                      | 161 |  |                           | 



F-189


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



| | d.3 | Reconciliation of changes in deferred tax liabilities (assets)
as of December 31, 2016
| | --- | --------------------------------------------------------------------------------------



|                                                              |  | Deferred tax liabilities (assets) at the beginning of the period |         |   | Deferred tax expense (income) recognized in profit or loss |  |         | Deferred tax related to items credited (debited) directly to equity |  |  | Total increase (decrease) of deferred tax liabilities (assets) |   |  | Deferred tax liabilities (assets) at the end of the period |        
|------------------------------------------------------------- |  | ---------------------------------------------------------------- | ------- | - | ---------------------------------------------------------- |  | ------- | ------------------------------------------------------------------- |  |  | -------------------------------------------------------------- | - |  | ---------------------------------------------------------- | -------
|                                                              |  | ThUS$                                                            |         |   | ThUS$                                                      |  |         | ThUS$                                                               |  |  | ThUS$                                                          |   |  | ThUS$                                                      |        
|Depreciation                                                  |  |                                                                  | 233,073 |   |                                                            |  | (11,281 | )                                                                   |  |  | -                                                              |   |  |                                                            | (11,281
|Doubtful accounts impairment                                  |  |                                                                  | (5,119  | ) |                                                            |  | 814     |                                                                     |  |  | -                                                              |   |  |                                                            | 814    
|Accrued vacations                                             |  |                                                                  | (3,368  | ) |                                                            |  | (694    | )                                                                   |  |  | -                                                              |   |  |                                                            | (694   
|Manufacturing expenses                                        |  |                                                                  | 109,134 |   |                                                            |  | 1,584   |                                                                     |  |  | -                                                              |   |  |                                                            | 1,584  
|Unrealized gains (losses) from sales of products              |  |                                                                  | (87,440 | ) |                                                            |  | 1,284   |                                                                     |  |  | -                                                              |   |  |                                                            | 1,284  
|Fair value of bonds                                           |  |                                                                  | (446    | ) |                                                            |  | -       |                                                                     |  |  | 470                                                            |   |  |                                                            | 470    
|Severance indemnity                                           |  |                                                                  | 4,178   |   |                                                            |  | 1,946   |                                                                     |  |  | (920                                                           | ) |  |                                                            | 1,026  
|Hedging                                                       |  |                                                                  | (11,876 | ) |                                                            |  | 1,646   |                                                                     |  |  | -                                                              |   |  |                                                            | 1,646  
|Inventory of products, spare parts and supplies               |  |                                                                  | (29,474 | ) |                                                            |  | 8,498   |                                                                     |  |  | -                                                              |   |  |                                                            | 8,498  
|Research and development expenses                             |  |                                                                  | 7,981   |   |                                                            |  | (3,340  | )                                                                   |  |  | -                                                              |   |  |                                                            | (3,340 
|Capitalized interest                                          |  |                                                                  | 3,133   |   |                                                            |  | (1,793  | )                                                                   |  |  | -                                                              |   |  |                                                            | (1,793 
|Expenses in assumption of bank loans                          |  |                                                                  | 3,651   |   |                                                            |  | (536    | )                                                                   |  |  | -                                                              |   |  |                                                            | (536   
|Unaccrued interest                                            |  |                                                                  | (156    | ) |                                                            |  | 20      |                                                                     |  |  | -                                                              |   |  |                                                            | 20     
|Fair value of property, plant and equipment                   |  |                                                                  | 3,375   |   |                                                            |  | 804     |                                                                     |  |  | -                                                              |   |  |                                                            | 804    
|Employee benefits                                             |  |                                                                  | (1,920  | ) |                                                            |  | (4,863  | )                                                                   |  |  | -                                                              |   |  |                                                            | (4,863 
|Royalty deferred income taxes                                 |  |                                                                  | 6,410   |   |                                                            |  | 48      |                                                                     |  |  | -                                                              |   |  |                                                            | 48     
|Unused tax losses                                             |  |                                                                  | (1,522  | ) |                                                            |  | 220     |                                                                     |  |  | -                                                              |   |  |                                                            | 220    
|Purchase of intangible assets                                 |  |                                                                  | -       |   |                                                            |  | 218     |                                                                     |  |  | -                                                              |   |  |                                                            | 218    
|Provision for lawsuits and legal expenses                     |  |                                                                  | (7,357  | ) |                                                            |  | (1,919  | )                                                                   |  |  | -                                                              |   |  |                                                            | (1,919 
|Provision for investment plan                                 |  |                                                                  | (3,312  | ) |                                                            |  | 1,359   |                                                                     |  |  | -                                                              |   |  |                                                            | 1,359  
|Provision of fines and crushing site closure                  |  |                                                                  | -       |   |                                                            |  | (7,547  | )                                                                   |  |  | -                                                              |   |  |                                                            | (7,547 
|Other ID                                                      |  |                                                                  | -       |   |                                                            |  | -       |                                                                     |  |  | 1,299                                                          |   |  |                                                            | 1,299  
|Depreciation                                                  |  |                                                                  | 285     |   |                                                            |  | (1,092  | )                                                                   |  |  | -                                                              |   |  |                                                            | (1,092 
|Total temporary differences, losses and unused fiscal credits |  |                                                                  | 219,230 |   |                                                            |  | (14,624 | )                                                                   |  |  | 849                                                            |   |  |                                                            | (13,775



F-190


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



| | d.4 | Reconciliation of changes in deferred tax liabilities (assets)
as of December 31, 2015
| | --- | --------------------------------------------------------------------------------------



|                                                              |  | Deferred tax liabilities (assets) at the beginning of the period |         |   | Deferred tax expense 
(income) recognized in profit or loss |  |         | Deferred tax related to items
    credited (debited) directly to equity |  |  | Total increase (decrease) of deferred tax liabilities
 (assets) |   |  | Deferred tax liabilities (assets) at the end of the period |        
|------------------------------------------------------------- |  | ---------------------------------------------------------------- | ------- | - | ----------------------------------------------------------- |  | ------- | ----------------------------------------------------------------------- |  |  | --------------------------------------------------------------- | - |  | ---------------------------------------------------------- | -------
|                                                              |  | ThUS$                                                            |         |   | ThUS$                                                       |  |         | ThUS$                                                                   |  |  | ThUS$                                                           |   |  | ThUS$                                                      |        
|Depreciation                                                  |  |                                                                  | 233,862 |   |                                                             |  | (789    | )                                                                       |  |  | -                                                               |   |  |                                                            | (789   
|Doubtful accounts impairment                                  |  |                                                                  | (6,755  | ) |                                                             |  | 1,636   |                                                                         |  |  | -                                                               |   |  |                                                            | 1,636  
|Accrued vacations                                             |  |                                                                  | (3,735  | ) |                                                             |  | 367     |                                                                         |  |  | -                                                               |   |  |                                                            | 367    
|Manufacturing expenses                                        |  |                                                                  | 81,650  |   |                                                             |  | 27,484  |                                                                         |  |  | -                                                               |   |  |                                                            | 27,484 
|Unrealized gains (losses) from sales of products              |  |                                                                  | (83,355 | ) |                                                             |  | (4,085  | )                                                                       |  |  | -                                                               |   |  |                                                            | (4,085 
|Fair value of bonds                                           |  |                                                                  | (350    | ) |                                                             |  | -       |                                                                         |  |  | (96                                                             | ) |  |                                                            | (96    
|Severance indemnity                                           |  |                                                                  | 5,950   |   |                                                             |  | (2,081  | )                                                                       |  |  | 309                                                             |   |  |                                                            | (1,772 
|Hedging                                                       |  |                                                                  | (5,512  | ) |                                                             |  | (6,364  | )                                                                       |  |  | -                                                               |   |  |                                                            | (6,364 
|Inventory of products, spare parts and supplies               |  |                                                                  | (24,632 | ) |                                                             |  | (4,842  | )                                                                       |  |  | -                                                               |   |  |                                                            | (4,842 
|Research and development expenses                             |  |                                                                  | 4,285   |   |                                                             |  | 3,696   |                                                                         |  |  | -                                                               |   |  |                                                            | 3,696  
|Capitalized interest                                          |  |                                                                  | 26,904  |   |                                                             |  | (23,771 | )                                                                       |  |  | -                                                               |   |  |                                                            | (23,771
|Expenses in assumption of bank loans                          |  |                                                                  | 4,011   |   |                                                             |  | (360    | )                                                                       |  |  | -                                                               |   |  |                                                            | (360   
|Unaccrued interest                                            |  |                                                                  | (150    | ) |                                                             |  | (6      | )                                                                       |  |  | -                                                               |   |  |                                                            | (6     
|Fair value of property, plant and equipment                   |  |                                                                  | (70     | ) |                                                             |  | 3,445   |                                                                         |  |  | -                                                               |   |  |                                                            | 3,445  
|Employee benefits                                             |  |                                                                  | (2,450  | ) |                                                             |  | 530     |                                                                         |  |  | -                                                               |   |  |                                                            | 530    
|Royalty deferred income taxes                                 |  |                                                                  | 7,791   |   |                                                             |  | (1,381  | )                                                                       |  |  | -                                                               |   |  |                                                            | (1,381 
|Unused tax losses                                             |  |                                                                  | (715    | ) |                                                             |  | (807    | )                                                                       |  |  | -                                                               |   |  |                                                            | (807   
|Purchase of intangible assets                                 |  |                                                                  | 235     |   |                                                             |  | (235    | )                                                                       |  |  | -                                                               |   |  |                                                            | (235   
|Provision for lawsuits and legal expenses                     |  |                                                                  | (3,663  | ) |                                                             |  | (3,694  | )                                                                       |  |  | -                                                               |   |  |                                                            | (3,694 
|Provision for investment plan                                 |  |                                                                  | (8,946  | ) |                                                             |  | 5,634   |                                                                         |  |  | -                                                               |   |  |                                                            | 5,634  
|Provision of fines and crushing site closure                  |  |                                                                  | (1,654  | ) |                                                             |  | 1,654   |                                                                         |  |  | -                                                               |   |  |                                                            | 1,654  
|Other ID                                                      |  |                                                                  | 308     |   |                                                             |  | (23     | )                                                                       |  |  | -                                                               |   |  |                                                            | (23    
|Total temporary differences, losses and unused fiscal credits |  |                                                                  | 223,009 |   |                                                             |  | (3,992  | )                                                                       |  |  | 213                                                             |   |  |                                                            | (3,779 



During the period ended December 31, 2016 and
December 31, 2015, the Company calculated and accounted for taxable income considering a rate of 24% and 22.5% respectively, in
conformity with Law No, 20,780, Tax Reform, published in the Official Gazette on September 29, 2014.



The main amendments include a gradual increase
in the corporate income tax rate up to 27% starting from 2018.



F-191


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



| | d.5 | Deferred taxes related to benefits for tax losses
| | --- | -------------------------------------------------



The Company’s tax loss carryforwards
(NOL carryforwards) were mainly generated by losses in Chile, which in accordance with current Chilean tax regulations have no
expiration date.



As of December 31, 2016 and December 31, 2015,
tax loss carryforwards (NOL carryforwards) are detailed as follows:



|      |  | 12/31/2016 |       |  | 12/31/2015 | 
|----- |  | ---------- | ----- |  | ---------- | 
|      |  | ThUS$      |       |  | ThUS$      | 
|      |  |            |       |  |            | 
|Chile |  |            | 1,302 |  |            | 
|Total |  |            | 1,302 |  |            | 



Tax losses as of December 31, 2016 correspond mainly to SQM S.A.,
Exploraciones Mineras S.A. and Agrorama S.A.



F-192


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 27      Income tax and deferred taxes
(continued)



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



| | d.6 | Movements in deferred tax assets and liabilities
| | --- | ------------------------------------------------



Movements in deferred tax assets and liabilities as of December
31, 2016 and December 31, 2015 are detailed as follows:



|                                                         |  | 12/31/2016           |         |   | 12/31/2015           | 
|-------------------------------------------------------- |  | -------------------- | ------- | - | -------------------- | 
|                                                         |  | ThUS$                |         |   | ThUS$                | 
|                                                         |  | Liabilities (assets) |         |   | Liabilities (assets) | 
|                                                         |  |                      |         |   |                      | 
|Deferred tax assets and liabilities, net opening balance |  |                      | 219,230 |   |                      | 
|Increase (decrease) in deferred taxes in profit or loss  |  |                      | (14,624 | ) |                      | 
|Increase (decrease) in deferred taxes in equity          |  |                      | 849     |   |                      | 
|Balances to date                                         |  |                      | 205,455 |   |                      | 



| | d.7 | Disclosures on income tax expense (income)
| | --- | ------------------------------------------



The Company recognizes current tax and deferred taxes as income
or expenses, and they are included in profit or loss, unless they arise from:



| | (a) | a transaction or event recognized in the same period or
in a different period, outside profit or loss either in other comprehensive income or directly in equity; or
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | a business combination
| | --- | ----------------------



Current and deferred tax expenses (income) are detailed as follows:



|                                                                                             |  | 12/31/2016        |          |   | 12/31/2015        |  |         | 12/31/2014        | 
|-------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | ----------------- |  | ------- | ----------------- | 
|                                                                                             |  | ThUS$             |          |   | ThUS$             |  |         | ThUS$             | 
|                                                                                             |  | Income (expenses) |          |   | Income (expenses) |  |         | Income (expenses) | 
|                                                                                             |  |                   |          |   |                   |  |         |                   | 
|Current income tax expense                                                                   |  |                   |          |   |                   |  |         |                   | 
|Current income tax expense                                                                   |  |                   | (149,669 | ) |                   |  | (89,869 | )                 | 
|Adjustments to prior year current income tax                                                 |  |                   | 2,080    |   |                   |  | 2,111   |                   | 
|Current income tax expense, net, total                                                       |  |                   | (147,589 | ) |                   |  | (87,758 | )                 | 
|                                                                                             |  |                   |          |   |                   |  |         |                   | 
|Deferred tax expense                                                                         |  |                   |          |   |                   |  |         |                   | 
|Deferred tax expense (income) relating to the creation and reversal of temporary differences |  |                   | 14,624   |   |                   |  | 3,992   |                   | 
|Deferred tax expense, net, total                                                             |  |                   | 14,624   |   |                   |  | 3,992   |                   | 
|Tax expense (income)                                                                         |  |                   | (132,965 | ) |                   |  | (83,766 | )                 | 



F-193


Notes to the Consolidated Financial Statements as of December 31, 2016




Note 27      Income tax and deferred taxes
(continued)



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



Tax expenses (income) for foreign and domestic
parties are detailed as follows:



|                                                                |  | 12/31/2016         |          |   | 12/31/2015         |  |         | 12/31/2014         | 
|--------------------------------------------------------------- |  | ------------------ | -------- | - | ------------------ |  | ------- | ------------------ | 
|                                                                |  | ThUS$              |          |   | ThUS$              |  |         | ThUS$              | 
|                                                                |  | Income  (expenses) |          |   | Income  (expenses) |  |         | Income  (expenses) | 
|                                                                |  |                    |          |   |                    |  |         |                    | 
|Current income tax expense by foreign and domestic parties, net |  |                    |          |   |                    |  |         |                    | 
|Current income tax expense, foreign parties, net                |  |                    | (10,844  | ) |                    |  | (5,719  | )                  | 
|Current income tax expense, domestic, net                       |  |                    | (136,745 | ) |                    |  | (82,039 | )                  | 
|Current income tax expense, net, total                          |  |                    | (147,589 | ) |                    |  | (87,758 | )                  | 
|                                                                |  |                    |          |   |                    |  |         |                    | 
|Deferred tax expense by foreign and domestic parties, net       |  |                    |          |   |                    |  |         |                    | 
|Deferred tax expense, foreign parties, net                      |  |                    | 626      |   |                    |  | (232    | )                  | 
|Deferred tax expense, domestic, net                             |  |                    | 13,998   |   |                    |  | 4,224   |                    | 
|Deferred tax expense, net, total                                |  |                    | 14,624   |   |                    |  | 3,992   |                    | 
|Income tax expense                                              |  |                    | (132,965 | ) |                    |  | (83,766 | )                  | 



| | d.8 | Equity
                                         interest in taxation attributable to equity-accounted investees
| | --- | ---------------------------------------------------------------------------------------------------------------



The Company does not recognize any deferred
tax liability in all cases of taxable temporary differences associated with investments in subsidiaries, branches and associated
companies or interest in joint ventures, because as indicated in the standard, the following two conditions are jointly met:



| | (a) | the parent, investor or interest holder is able to control the time for reversal of the temporary
difference; and
| | --- | -----------------------------------------------------------------------------------------------------------------



| | (b) | It is more likely than not that the temporary difference is not reversed in the foreseeable future.
| | --- | ---------------------------------------------------------------------------------------------------



In addition, the Company does not recognize
deferred income tax assets for all deductible temporary differences from investments in subsidiaries, branches and associated companies
or interests in joint ventures because it is not possible to meet for the following requirements:



| | (a) | Temporary differences are reversed in a foreseeable future;
and
| | --- | ---------------------------------------------------------------



| | (b) | The Company has tax earnings, against which temporary differences
can be used.
| | --- | ------------------------------------------------------------------------------



F-194


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



| | d.9 | Disclosures on the tax effects of other comprehensive income
components:
| | --- | ------------------------------------------------------------------------



|Income tax related to other income and expense components with a charge or credit to net equity            |  | Amount before taxes (expense) gain |        |   | (Expense) income for income taxes |  |        | Amount after taxes | 
|---------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ------ | - | --------------------------------- |  | ------ | ------------------ | 
|                                                                                                           |  | 12/31/2016                         |        |   | 12/31/2016                        |  |        | 12/31/2016         | 
|                                                                                                           |  | ThUS$                              |        |   | ThUS$                             |  |        | ThUS$              | 
|Gain (loss) from defined benefit plans                                                                     |  |                                    | (3,397 | ) |                                   |  | 920    |                    | 
|Cash flow hedge                                                                                            |  |                                    | 2,233  |   |                                   |  | (470   | )                  | 
|Reserve for gains (losses) from financial assets measured at fair value through other comprehensive income |  |                                    | 4,813  |   |                                   |  | (1,299 | )                  | 
|Total                                                                                                      |  |                                    | 3,649  |   |                                   |  | (849   | )                  | 



|Income tax related to components of other income and expense with a charge or credit to net equity |  | Amount before taxes (expense) gain |      |   | ((Expense) income for income taxes |  |      | Amount after taxes | 
|-------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ---- | - | ---------------------------------- |  | ---- | ------------------ | 
|                                                                                                   |  | 12/31/2015                         |      |   | 12/31/2015                         |  |      | 12/31/2015         | 
|                                                                                                   |  | ThUS$                              |      |   | ThUS$                              |  |      | ThUS$              | 
|Gain (loss) from defined benefit plans                                                             |  |                                    | (174 | ) |                                    |  | (309 | )                  | 
|Cash flow hedge                                                                                    |  |                                    | 86   |   |                                    |  | 96   |                    | 
|Total                                                                                              |  |                                    | (88  | ) |                                    |  | (213 | )                  | 



|Income tax related to components of other income and expense with a charge or credit to net equity |  | Amount before taxes (expense) gain |       |  | ((Expense) income for income taxes |  |      | Amount after taxes | 
|-------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ----- |  | ---------------------------------- |  | ---- | ------------------ | 
|                                                                                                   |  | 12/31/2014                         |       |  | 12/31/2014                         |  |      | 12/31/2014         | 
|                                                                                                   |  | ThUS$                              |       |  | ThUS$                              |  |      | ThUS$              | 
|Cash flow hedge                                                                                    |  |                                    | 1,638 |  |                                    |  | (311 | )                  | 
|Total                                                                                              |  |                                    | 1,638 |  |                                    |  | (311 | )                  | 



| | d.10 | Explanation of the relationship between expense (income)
for tax purposes and accounting income.
| | ---- | ------------------------------------------------------------------------------------------------



In accordance with paragraph No, 81, letter
c) of IAS 12, the Company has estimated that the method that discloses more significant information for the users of its financial
statements is the reconciliation of tax expense (income) to the result of multiplying income for accounting purposes by the tax
rate in force in Chile, This option is based on the fact that the Parent and its subsidiaries incorporated in Chile generate almost
the total amount of tax expense (income) and the fact that amounts of subsidiaries incorporated in foreign countries have no relevant
significance within the context of the total amount of tax expense (income).



F-195


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



Reconciliation of numbers in income tax expenses
(income) and the result of multiplying financial gain by the rate prevailing in Chile,



|                                                                                             |  | Income (expense) |         
|-------------------------------------------------------------------------------------------- |  | ---------------- | --------
|                                                                                             |  | 12/31/2016       |         
|                                                                                             |  | ThUS$            |         
|Consolidated income before taxes                                                             |  |                  | 414,889 
|Income tax rate in force in Chile                                                            |  |                  | 24      
|                                                                                             |  |                  |         
|Tax expense using the legal rate                                                             |  |                  | (99,573 
|Effect of royalty tax expense                                                                |  |                  | (6,311  
|Tax effect of non-taxable revenue                                                            |  |                  | 2,461   
|Effect of taxable rate of non-deductible expenses for determination of taxable income (loss) |  |                  | (10,202 
|Tax effect from foreign subsidiaries                                                         |  |                  | (15,187 
|Effect of tax rate from changes in tax rate                                                  |  |                  | -       
|Other tax effects from the reconciliation between the accounting income and tax expense      |  |                  | (4,153  
|Tax expense using the effective rate                                                         |  |                  | (132,965



| | d.11 | Tax periods potentially subject to verification:
| | ---- | ------------------------------------------------



The Group’s Companies are potentially
subject to income tax audits by tax authorities in each country. These audits are limited to a number of interim tax periods, which,
in general, when they elapse, give rise to the expiration of these inspections.



Tax audits, due to their nature, are often
complex and may require several years, Below, we provide a summary of tax periods that are potentially subject to verification,
in accordance with tax regulations in force in the country of origin:



Chile



According to article 200 of Decree Law No 830,
the tax authority shall review for any deficiencies in its settlement and taxes turn giving rise, by applying a requirement of
3 years term from the expiration of the legal deadline when payment should have been made, Besides, this requirement was extended
to 6 years term for the revision of taxes subject to declaration, when such declaration was not been filed or has been presented
maliciously false.



United States



In the United States, the tax authority may
review tax returns for up to 3 years from the expiration date of the tax return, In the event that an omission or error is detected
in the tax return of sales or cost of sales, the review can be extended for a period of up to 6 years.



F-196


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 27 | Income tax and deferred taxes (continued)
| | ------- | -----------------------------------------



| | 27.4 | Income tax and deferred taxes, continued
| | ---- | ----------------------------------------



Mexico:



In Mexico, the tax authority can review tax returns up to 5 years
from the expiration date of the tax return.



Spain:



In Spain, the tax authority can review tax
returns up to 4 years from the expiration date of the tax return.



Belgium:



In Belgium, the tax authority may review tax
returns for up to 3 years from the expiration date of the tax return if no tax losses exist, In the event of detecting an omission
or error in the tax return, the review can be extended for a period of up to 5 years.



South Africa:



In South Africa, the tax authority may review
tax returns for up to 3 years from the expiration date of the tax return, In the event an omission or error in the tax return is
detected, the review can be extended for a period of up to 5 years.



F-197


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 28 | Disclosures on the effects of fluctuations in foreign currency
exchange rates
| | ------- | -----------------------------------------------------------------------------



Assets held in foreign currency subject to fluctuations in exchange
rates are detailed as follows:



|Class of assets                             |  | Currency |  | 12/31/2016 ThUS |         |  | 12/31/2015 ThUS$ | 
|------------------------------------------- |  | -------- |  | --------------- | ------- |  | ---------------- | 
|Current assets:                             |  |          |  |                 |         |  |                  | 
|Cash and cash equivalents                   |  | ARS      |  |                 | 4       |  |                  | 
|Cash and cash equivalents                   |  | BRL      |  |                 | 60      |  |                  | 
|Cash and cash equivalents                   |  | CLP      |  |                 | 6,044   |  |                  | 
|Cash and cash equivalents                   |  | CNY      |  |                 | 400     |  |                  | 
|Cash and cash equivalents                   |  | EUR      |  |                 | 11,386  |  |                  | 
|Cash and cash equivalents                   |  | GBP      |  |                 | 71      |  |                  | 
|Cash and cash equivalents                   |  | IDR      |  |                 | -       |  |                  | 
|Cash and cash equivalents                   |  | INR      |  |                 | 12      |  |                  | 
|Cash and cash equivalents                   |  | MXN      |  |                 | 310     |  |                  | 
|Cash and cash equivalents                   |  | PEN      |  |                 | 3       |  |                  | 
|Cash and cash equivalents                   |  | THB      |  |                 | -       |  |                  | 
|Cash and cash equivalents                   |  | YEN      |  |                 | 2,150   |  |                  | 
|Cash and cash equivalents                   |  | ZAR      |  |                 | 3,250   |  |                  | 
|Subtotal cash and cash equivalents          |  |          |  |                 | 23,690  |  |                  | 
|Other current financial assets              |  | CLF      |  |                 | -       |  |                  | 
|Other current financial assets              |  | CLP      |  |                 | 50,740  |  |                  | 
|Subtotal other current financial assets     |  |          |  |                 | 50,740  |  |                  | 
|Other current non-financial assets          |  | ARS      |  |                 | 5       |  |                  | 
|Other current non-financial assets          |  | AUD      |  |                 | 45      |  |                  | 
|Other current non-financial assets          |  | BRL      |  |                 | -       |  |                  | 
|Other current non-financial assets          |  | CLF      |  |                 | 47      |  |                  | 
|Other current non-financial assets          |  | CLP      |  |                 | 14,554  |  |                  | 
|Other current non-financial assets          |  | CNY      |  |                 | 10      |  |                  | 
|Other current non-financial assets          |  | EUR      |  |                 | 822     |  |                  | 
|Other current non-financial assets          |  | MXN      |  |                 | 1,734   |  |                  | 
|Other current non-financial assets          |  | THB      |  |                 | 21      |  |                  | 
|Other current non-financial assets          |  | YEN      |  |                 | 53      |  |                  | 
|Other current non-financial assets          |  | ZAR      |  |                 | 18      |  |                  | 
|Subtotal other current non-financial assets |  |          |  |                 | 17,309  |  |                  | 
|                                            |  |          |  |                 |         |  |                  | 
|Trade and other receivables                 |  | BRL      |  |                 | 23      |  |                  | 
|Trade and other receivables                 |  | CLF      |  |                 | 545     |  |                  | 
|Trade and other receivables                 |  | CLP      |  |                 | 71,908  |  |                  | 
|Trade and other receivables                 |  | CNY      |  |                 | 48      |  |                  | 
|Trade and other receivables                 |  | EUR      |  |                 | 30,941  |  |                  | 
|Trade and other receivables                 |  | GBP      |  |                 | 152     |  |                  | 
|Trade and other receivables                 |  | MXN      |  |                 | 423     |  |                  | 
|Trade and other receivables                 |  | PEN      |  |                 | -       |  |                  | 
|Trade and other receivables                 |  | THB      |  |                 | 2,777   |  |                  | 
|Trade and other receivables                 |  | YEN      |  |                 | 209     |  |                  | 
|Trade and other receivables                 |  | ZAR      |  |                 | 25,835  |  |                  | 
|Subtotal trade and other receivables        |  |          |  |                 | 132,861 |  |                  | 
|Receivables from related parties            |  | PEN      |  |                 | 40      |  |                  | 
|Receivables from related parties            |  | CLP      |  |                 | 41      |  |                  | 
|Receivables from related parties            |  | EUR      |  |                 | 476     |  |                  | 
|Receivables from related parties            |  | THB      |  |                 | 705     |  |                  | 
|Receivables from related parties            |  | CNY      |  |                 | 48      |  |                  | 
|Receivables from related parties            |  | YEN      |  |                 | -       |  |                  | 
|Subtotal receivables from related parties   |  |          |  |                 | 1,310   |  |                  | 



F-198


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 28 | Disclosures on the effects of fluctuations in foreign
currency exchange rates (continued)
| | ------- | -----------------------------------------------------------------------------------------



|Class of assets                                 |  | Currency |  | 12/31/2016 ThUS$ |         |  | 12/31/2015 ThUS$ | 
|----------------------------------------------- |  | -------- |  | ---------------- | ------- |  | ---------------- | 
|                                                |  |          |  |                  |         |  |                  | 
|Current tax assets                              |  | ARS      |  |                  | 5       |  |                  | 
|Current tax assets                              |  | CLP      |  |                  | 1,640   |  |                  | 
|Current tax assets                              |  | EUR      |  |                  | 118     |  |                  | 
|Current tax assets                              |  | BRL      |  |                  | 3       |  |                  | 
|Current tax assets                              |  | ZAR      |  |                  | 386     |  |                  | 
|Current tax assets                              |  | MXN      |  |                  | 202     |  |                  | 
|Current tax assets                              |  | PEN      |  |                  | 203     |  |                  | 
|Subtotal current tax assets                     |  |          |  |                  | 2,557   |  |                  | 
|Non-current assets                              |  |          |  |                  |         |  |                  | 
|Other non-current financial assets              |  | CLP      |  |                  | 20      |  |                  | 
|Other non-current financial assets              |  | YEN      |  |                  | 41      |  |                  | 
|Subtotal other non-current financial assets     |  |          |  |                  | 61      |  |                  | 
|Other non-current non-financial assets          |  | BRL      |  |                  | 139     |  |                  | 
|Other non-current non-financial assets          |  | CLP      |  |                  | 729     |  |                  | 
|Subtotal other non-current non-financial assets |  |          |  |                  | 868     |  |                  | 
|Non-current right receivable                    |  | CLF      |  |                  | 344     |  |                  | 
|Non-current right receivable                    |  | CLP      |  |                  | 1,382   |  |                  | 
|Subtotal non-current rights receivable          |  |          |  |                  | 1,726   |  |                  | 
|Equity-accounted investees                      |  | AED      |  |                  | 31,297  |  |                  | 
|Equity-accounted investees                      |  | CLP      |  |                  | -       |  |                  | 
|Equity-accounted investees                      |  | EUR      |  |                  | 7,373   |  |                  | 
|Equity-accounted investees                      |  | INR      |  |                  | 1,499   |  |                  | 
|Equity-accounted investees                      |  | THB      |  |                  | 1,932   |  |                  | 
|Equity-accounted investees                      |  | TRY      |  |                  | 16,712  |  |                  | 
|Subtotal equity-accounted investees             |  |          |  |                  | 58,813  |  |                  | 
|Intangible assets other than goodwill           |  | CLP      |  |                  | 294     |  |                  | 
|Intangible assets other than goodwill           |  | CNY      |  |                  | 1       |  |                  | 
|Subtotal intangible assets other than goodwill  |  |          |  |                  | 295     |  |                  | 
|Property, plant and equipment                   |  | CLP      |  |                  | 3,810   |  |                  | 
|Subtotal property, plant and equipment          |  |          |  |                  | 3,810   |  |                  | 
|Total non-current assets                        |  |          |  |                  | 65,573  |  |                  | 
|Total assets                                    |  |          |  |                  | 294,040 |  |                  | 



F-199


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 28 | Disclosures on the effects of fluctuations in foreign
currency exchange rates (continued)
| | ------- | -----------------------------------------------------------------------------------------



Liabilities held in foreign currencies are detailed as follows:



|                                             |  |          |  | 12/31/2016              |        |  | 12/31/2015                   | 
|-------------------------------------------- |  | -------- |  | ----------------------- | ------ |  | ---------------------------- | 
|Class of liability                           |  | Currency |  | 91 days to 1 year ThUS$ |        |  | over 90 days to 1 year ThUS$ | 
|Current liabilities                          |  |          |  |                         |        |  |                              | 
|Other current financial liabilities          |  | CLF      |  |                         | 44,327 |  |                              | 
|Other current financial liabilities          |  | CLP      |  |                         | -      |  |                              | 
|Subtotal other current financial liabilities |  |          |  |                         | 44,327 |  |                              | 
|Trade and other payables                     |  | BRL      |  |                         | 38     |  |                              | 
|Trade and other payables                     |  | THB      |  |                         | 131    |  |                              | 
|Trade and other payables                     |  | CLP      |  |                         | 40,604 |  |                              | 
|Trade and other payables                     |  | EUR      |  |                         | 30,545 |  |                              | 
|Trade and other payables                     |  | GBP      |  |                         | 6      |  |                              | 
|Trade and other payables                     |  | INR      |  |                         | 1      |  |                              | 
|Trade and other payables                     |  | MXN      |  |                         | 67     |  |                              | 
|Trade and other payables                     |  | PEN      |  |                         | 4      |  |                              | 
|Trade and other payables                     |  | ZAR      |  |                         | 3,054  |  |                              | 
|Subtotal trade and other payables            |  |          |  |                         | 74,450 |  |                              | 
|Other current provisions                     |  | BRL      |  |                         | -      |  |                              | 
|Other current provisions                     |  | CLP      |  |                         | -      |  |                              | 
|Other current provisions                     |  | EUR      |  |                         | 5      |  |                              | 
|Subtotal other current provisions            |  |          |  |                         | 5      |  |                              | 
|Current tax liabilities                      |  | CLP      |  |                         | -      |  |                              | 
|Current tax liabilities                      |  | CNY      |  |                         | -      |  |                              | 
|Current tax liabilities                      |  | EUR      |  |                         | -      |  |                              | 
|Current tax liabilities                      |  | ZAR      |  |                         | 27     |  |                              | 
|Current tax liabilities                      |  | MXN      |  |                         | -      |  |                              | 
|Subtotal current tax liabilities             |  |          |  |                         | 27     |  |                              | 



F-200


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 28 | Disclosures on the effects of fluctuations in foreign
currency exchange rates (continued)
| | ------- | -----------------------------------------------------------------------------------------



|                                                 |  |          |  | 12/31/2016          |         |  | 12/31/2015                   | 
|------------------------------------------------ |  | -------- |  | ------------------- | ------- |  | ---------------------------- | 
|Class of liability                               |  | Currency |  | Up to 90 days ThUS$ |         |  | over 90 days to 1 year ThUS$ | 
|Other current non-financial liabilities          |  | BRL      |  |                     | 4       |  |                              | 
|Other current non-financial liabilities          |  | CLP      |  |                     | 7,481   |  |                              | 
|Other current non-financial liabilities          |  | CNY      |  |                     | 78      |  |                              | 
|Other current non-financial liabilities          |  | EUR      |  |                     | 958     |  |                              | 
|Other current non-financial liabilities          |  | MXN      |  |                     | 1,284   |  |                              | 
|Other current non-financial liabilities          |  | PEN      |  |                     | 70      |  |                              | 
|Other current non-financial liabilities          |  | GBP      |  |                     | -       |  |                              | 
|Other current non-financial liabilities          |  | ZAR      |  |                     | 866     |  |                              | 
|Subtotal other current non-financial liabilities |  |          |  |                     | 10,741  |  |                              | 
|Total current liabilities                        |  |          |  |                     | 129,550 |  |                              | 



F-201


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 28 | Disclosures on the effects of fluctuations in foreign
currency exchange rates (continued)
| | ------- | -----------------------------------------------------------------------------------------



|                                                      |  | 12/31/2016
|----------------------------------------------------- |  | ----------
|Class of liability                                    |  | Currency  
|Non-current liabilities                               |  |           
|Other non-current financial liabilities               |  | CLF       
|Subtotal other non-current financial liabilities      |  |           
|Non-current provisions for employee benefits          |  | CLP       
|Non-current provisions for employee benefits          |  | MXN       
|Non-current provisions for employee benefits          |  | YEN       
|Subtotal non-current provisions for employee benefits |  |           
|Total non-current liabilities                         |  |           



|                                                      |  | 12/31/2015
|----------------------------------------------------- |  | ----------
|Class of liability                                    |  | Currency  
|Non-current liabilities                               |  |           
|Other non-current financial liabilities               |  | CLF       
|Subtotal other non-current financial liabilities      |  |           
|Non-current provisions for employee benefits          |  | CLP       
|Non-current provisions for employee benefits          |  | MXN       
|Non-current provisions for employee benefits          |  | YEN       
|Subtotal non-current provisions for employee benefits |  |           
|Total non-current liabilities                         |  |           



F-202


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 29 | Mineral resource exploration and evaluation expenditure
| | ------- | -------------------------------------------------------



Because of the nature of the operations of
Sociedad Química y Minera de Chile S.A. and its subsidiaries and the type of exploration they conduct (which is different
than other mining businesses where the exploration process results in significant time), the exploration and process and the definition
of the economic feasibility occurs normally within the year. Accordingly, although expenditure is initially capitalized, it could
be recognized in profit or loss for the same year should there be no technical and commercial feasibility. This results in having
no significant expenditure that have no feasibility study at the end of the year.



Prospecting expenditure can be found in 4 different
stages: execution, economically feasible, not economically feasible and under exploitation:



1.          Execution: prospecting
expenditure which are under execution and accordingly there is no yet a definition as to its economic feasibility are
classified in the caption property, plant and equipment, as of December 31, 2016 and December 31, 2015, the balance amounts
to ThUS$12,163 and ThUS$10,135, respectively,



2.           Economically feasible:
prospecting expenditure, which upon completion, has been concluded to be economically feasible is classified in the caption
non-current assets in other non-current non-financial assets, as of December 31, 2016 and December 31, 2015, the balance
amounts to ThUS$23,008 and ThUS$31,911 respectively,



3.           Not economically feasible:
Prospecting expenditure, which upon completion it has been concluded that are not economically feasible are recorded in
profit or loss: As of December 31, 2016, this amounts to ThUS$0 and ThUS$520 as of December 31, 2015.



4.           Under exploitation:
Prospecting expenditure under exploitation is classified in the caption current assets in current inventories. These are
amortized considering the exploited material, as of December 31, 2016 and December 31, 2015, the balance amounts to ThUS$674
and ThUS$1,269 respectively.



For the amount of capitalized expenditure,
the total amount disbursed in exploration and evaluation of mineral resources as of December 31, 2016ThUS$2,028, and correspond
to non-metallic projects. Such expenditure mainly corresponds to studies, either topographical, geological, exploratory drilling,
sampling, among others.



With respect to this expenditure, the Company
has defined classifying it in accordance with IFRS 6.9:



For exploration expenditure where the mineral
has low ore grade that is not economically exploitable, it is debited directly to profit or loss.



If studies determine that the ore grade is
economically exploitable, it is classified in other non-current assets in the caption stain development and prospecting expenses
and at the time of making the decision for exploiting the zone it is classified in the caption inventories as part of the cost
of raw materials required for production purposes.



F-203


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 30 | Lawsuits and complaints
| | ------- | -----------------------



Lawsuits and complaints



During 2015, the Chilean IRS has filed several
lawsuits and complaints related to the so-called “SQM Case”, which are associated with the irregular financing of politicians
against a number of individuals, amongst others, the legal representatives of the Company Patricio de Sominihac T. – CEO
– and Ricardo Ramos R. – Vice President of Corporate Services –. Basically, those lawsuits and complaints relate
to alleged tax crimes associated with a possible undue decrease in taxable net income of the Company and two of its subsidiaries
over the last seven years by recording as expenses in their accounting records invoices and fee receipts, which could be considered
to be ideologically false. Such legal actions are also filed against the taxpayers who provided the tax documents that allowed
the alleged performance of the related illicit acts.



Additionally, during 2015 and within the context
of the “SQM Case”, the Deputy of the Tarapacá Region of Chile Hugo Gutiérrez G. filed a lawsuit for alleged
extortion-bribery and money laundering referred to in Law No. 20.393 on Legal Responsibility of Juridical Persons against SQM and
its legal representative Patricio de Sominihac T. and Senators of the Tarapacá Region of Chile Jaime Orpis B. and Fulvio
Rossi C.



Actions performed by the Authority



The Public Ministry and Chilean IRS (Servicio
de Impuestos Internos (SII)) have performed a number of actions within the framework of the so-called “SQM Case” where
the Company and its executives have provided their cooperation. Several of the Company’s executives have granted access to
their computers and made several statements at the request of the Prosecutors responsible for the investigation. Additionally,
SQM has provided physical and digital copies of its accounting records and its subsidiaries’ accounting records. In addition,
SQM has also provided the Public Ministry with its email files and all the documentation that has been required by the related
authority.



F-204


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 30 | Lawsuits and complaints, (continued)
| | ------- | ------------------------------------



Shearman & Sterling and Ad-Hoc Committee



On February 26, 2015, SQM’s Board of
Directors resolved to establish an ad-hoc committee of the Board of Directors (the “ad-hoc Committee”) authorized to
conduct an internal investigation relating to the issues that were the subject of the SII and Public Prosecutor investigations
and to retain such independent external advice as it deemed appropriate.



The ad-hoc Committee engaged its own lawyers
from Chile and the U.S. and forensic accountants from the U.S. to assist with its internal review. The U.S. lawyers retained by
the ad-hoc Committee were principally charged with reviewing the relevant facts and analyzing those facts against the requirements
of the U.S. Foreign Corrupt Practices Act (“FCPA”). The factual findings of the ad-hoc Committee, however, were ultimately
shared with Chilean as well as U.S. authorties.



On December 15, 2015, the ad-hoc Committee
presented its findings to the Board of Directors. In addition to presenting a discussion of the facts surrounding the payments
at issue, the ad-hoc Committee concluded that, for purposes of the U.S. Foreign Corrupt Practices Act:



(a) payments were identified that had been
authorized by SQM's former CEO for which the Company did not find sufficient supporting documentation;

(b) no evidence was identified that demonstrates
that the payments were made in order to induce a public official to act or refrain from acting in order to assist SQM in obtaining
economic benefits;

(c) regarding the cost center managed by SQM's
former CEO, it was concluded that the Company's books did not accurately reflect transactions that have been questioned, notwithstanding
the fact that, based on the amounts involved, these transactions were deemed quantitatively immaterial in comparison to SQM's equity,
revenues, expenses or earnings within the reported period; and

(d) SQM's internal controls were not sufficient
to supervise the expenses made by the cost center managed by SQM's former CEO and that the Company trusted Patricio Contesse G.
to make proper use of the resources.



Following the presentation by the ad-hoc Committee
of its findings to the Board of Directors, the Company voluntarily shared the findings of the ad-Hoc Committee investigation with
authorities in Chile and the U.S. (including the SEC and the U.S. Department of Justice (“DOJ”)), and it has cooperated
with requests for additional documents and information from these authorities regarding the internal investigation discussed above.



F-205


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 30 | Lawsuits and complaints, (continued)
| | ------- | ------------------------------------



Investigation by the Department of Justice and the Securities
Exchange Commission

SQM informed of the investigation performed
by Shearman & Sterling on US regulating entities (Department of Justice and Securities and Exchange Commission), in conformity
with the standards effective in the United States of America. The outcome of such investigation was delivered to these regulating
entities, which have started investigations to determine the existence of possible noncompliance with FCPA (Foreign Corruption
Practices Act) or internal control standards (refer to Note 35).



| | Note 31 | Sanction proceedings
| | ------- | --------------------



On April 1, 2015, the SVS started an administrative
proceeding against five Directors of SQM for supposedly not having provided to the market on a timely and truthful basis information
which could be significant for making investment decisions. Such information mainly relates to the preliminary estimate of the
impact on the Company’s financial statements of certain expenses paid by the Company between 2008 and 2014 and which might
not qualify as expenses under current Chilean tax regulations because of the absence of supporting documentation.



On December 31, 2015, the Company reported
that the Chilean Superintendence of Securities and Insurance (SVS) has made its resolution to impose sanctions on Patricio Contesse
Fica, Julio Ponce Lerou – former Company’s Directors–, Hernán Büchi Buc, Juan Antonio Guzmán
Molinari and Wolf von Appen Berhmann – former Directors of SQM – for not having reported to the market, in March 2015,
as an Essential event and in their role of Company’s Directors, on the expenses that SQM incurred during certain years, which
did not have sufficient reporting documentation or might be considered to be unnecessary to generate income. The sanction imposed
relates to a fine of UF 1,000 on each of the aforementioned individuals and a remedy can be sought with the Chilean Superintendence
of Securities and Insurance (SVS) and courts of justice.



| | Note 32 | Closure of the Pedro de Valdivia Site
| | ------- | -------------------------------------



On September 22, 2015, the Company reported
to the Chilean Superintendence of Securities and Insurance (SVS) that its Board of Directors opted to close the mining operations
at the Pedro de Valdivia site and a portion of such site’s industrial operations. The larger part of this closure occurred
at the end of November 2015 and the nitrate and iodine operations that will continue to generate production in the remaining industrial
plants at the Pedro de Valdivia operation will amount to approximately one third of the current production volumes.



F-206


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 32 | Closure of the Pedro de Valdivia Site (continued)
| | ------- | -------------------------------------------------



This decision is based on the fact that the
Company has continued to increase its production capacity of iodine and nitrate salts in its industrial mining operations at the
Nueva Victoria site and has reduced its production costs to meet sales forecasts and increase its current worldwide market share
in the iodine market.



As of December 31, 2015, the effect on profit
or loss of stopping operations are detailed as follows:



|                                                 |  | ThUS$ |       
|------------------------------------------------ |  | ----- | ------
|Property, plant and equipment                    |  |       | 36,823
|Constructions in progress                        |  |       | 3,195 
|Total property, plant and equipment              |  |       | 40,018
|Legal and voluntary severance indemnity payments |  |       | 17,647
|Total closure of the Pedro de Valdivia site      |  |       | 57,665



| | Note 33 | Railway for transportation of products between the site
Coya Sur and the Port of Tocopilla
| | ------- | ------------------------------------------------------------------------------------------



As a result of the rain storms that affected
the Tocopilla Zone at the beginning of August 2015, SQM S.A. confirmed the existence of damages in several zones in the railway
between the sites Coya Sur and Tocopilla. Accordingly, starting from such date the Company has used the transport of trucks replacing
the transport through the railway. SQM has performed several internal and external studies with the purpose of determining the
costs and terms necessary to repair the damages in the railway.



The analysis of the internal and external reports
allows concluding that the costs associated with repairing the damages caused by the rain storms would imply long-terms and high
costs, and accordingly, it is not convenient at short and medium-term to repair the railway. Such decision does not affect the
production process or imply additional employee reductions.



Consequently, SQM has adjusted the value of
the assets associated with the railway (fixed equipment, facilities and rolling equipment), which has translated into a charge
of approximately US$32 million which are reflected in the line other expenses by function in the consolidated statement of income
for the period. Such amount approximately represents 0.7% of SQM’s total assets reported at the end of September 2016.



| | Note 34 | Events occurred after the reporting date
| | ------- | ----------------------------------------



| | 34.1 | Authorization of the financial statements
| | ---- | -----------------------------------------





The consolidated financial statements
of Sociedad Química y Minera de Chile S.A. and subsidiaries prepared in accordance with International Financial Reporting
Standards for the period ended December 31, 2016 were approved and authorized for issuance by Management on April 26, 2017.



F-207


Notes to the Consolidated Financial Statements as of December 31, 2016




| | Note 34 | Events occurred after the reporting date, (continued)
| | ------- | -----------------------------------------------------



| | 34.2 | Disclosures on events occurring after the reporting date
| | ---- | --------------------------------------------------------



On January 13, 2017, the Company entered into
agreements with the Department of Justice (the “DOJ”) and the Securities and Exchange Commission (the “SEC”),both
based in the United States of America (the “United States”), with respect to the investigations that such agencies
have conducted as a result of payments to suppliers and entities that might have been related to politically exposed persons during
the years from 2008 through 2015, which resulted in the performance of an internal investigation at the Company through an Ad-hoc
Committee from its Board of Directors and which was led by the law firm Shearman & Sterling (the “Investigated Facts”).
Because the Company’s securities are traded in the United States, the Company is subject to the U.S. legislation. The Company
has voluntarily provided the results of its internal investigation and documents supporting it to the DOJ, the SEC and the relevant
Chilean authorities.



In conformity with the terms of the agreement
entered into with the DOJ, referred to as Deferred Prosecution Agreement (the “DPA”), the Company has accepted that
the DOJ presents (i) a charge for the infractions referred to the absence of implementation of effective internal accounting systems
and internal accounting controls and (ii) a charge for infractions related to failure to properly maintain accounting ledgers,
records and sections with respect to the Investigated Facts. By virtue of the DPA, the DOJ has agreed not to prosecute those charges
against the Company for a period of 3 years and releasing the Company from such responsibility after such period to the extent
that within such term the Company complies with the terms in the DPA, which include the payment of a fine of 15,487,500 United
States dollars (“U.S. dollars”) and the acceptance of an external monitor for a term of 24 months (the “Monitor”)
which evaluates the Company’s compliance program, for a subsequent independent report by the Company for an additional year.



With respect to the agreement entered into
with the SEC, the Company has agreed to (i) pay a fine of 15 million of U.S. dollars and (ii) maintaining the Monitor for the aforementioned
term.



The SEC has issued a Cease and Desist Order
which does not identify any other events of noncompliance with the standards applicable in the United States.



The aforementioned amounts of approximately
US$30.5 million were reflected in the profit or loss of SQM during the fourth quarter of 2016 in the line item Other expenses by
function.



Management is not aware of any other significant
events occurring between December 31, 2016 and the date of issuance of these consolidated financial statements, which affect them.



| | 34.3 | Detail of dividends declared after the reporting date
| | ---- | -----------------------------------------------------



As of the closing date of the financial statements,
there are no dividends declared after the reporting date.



On April 11, 2017, the Board of Directors,
agreed to recommend to the shareholders the payment of a definitive dividend representing 100% of the 2016 net income. This definitive
dividend payment will be presented for consideration at the Annual General Shareholders’ Meeting held on April 28, 2017.
Therefore, and subject to the approval at the Shareholders’ meeting, the Company shall pay a final dividend of US$1.05735
per share, the amount of US$0.85487 per share must be deducted from the final dividend, which was already paid as a provisional
dividend on December 20, 2016. The balance, in the amount of US$0.20248 per share, shall be paid and distributed to Company’s
shareholders on May 11, 2017., pending shareholders’ approval.



F-208