UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 20-F

 

 ̈   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 31,2011**

OR

 

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

OR

 

 ̈  SHELL COMPANY REPORT PURSUANT TO SECTION 23 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell companyreport_______________________________ .

For the transition period from   _____________to__________ .

 

**Commission file number 33-65728**

 

**SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.**

(Exact name of registrant as specified inits charter)

** **

**CHEMICAL AND MINING COMPANY OF CHILEINC.**

(Translation of registrant's name into English)

**CHILE**

(Jurisdiction of incorporation or organization)

 

**El Trovador 4285, 6th Floor,Santiago, Chile +56 2 425-2000**

(Address of principal executive offices)

 

Securities registered or to be registeredpursuant to Section 12(b) of the Act.

 

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

**NONE**

 

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

**NONE**

 

Indicate the number of outstanding sharesof each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

 

Indicate by check mark if the registrantis a well-known seasoned issuer, as defined in rule 405 of the Securities Act:

xYES       ̈ NO

 

If this report is an annual or transitionreport, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the SecuritiesExchange act of 1934:

 ̈YES     x NO

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 preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

xYES       ̈ NO

Indicate by check mark whether the registranthas submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T (§232.405of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and postsuch files).

 ̈YES       ̈ NO

Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, or a non accelerated filer. See definition of “accelerated filer andlarge accelerated filer” in rule 12b-2 of the Exchange Act.

xLarge accelerated filer      ̈ Accelerated filer     ̈Non- accelerated filer

 

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

 ̈U.S. GAAP xInternational Financial Reporting Standards as issued by the InternationalAccounting Standards Board  ̈ Other

If “Other” has been checkedin response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Indicate by check mark which financial statementitem the registrant has elected to follow.

 ̈Item 17 x Item 18

If this is an annual report, indicate bycheck mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

  ̈YES   x NO    

 

 

TABLE OF CONTENTS

 

 

 

PRESENTATION OF INFORMATION

 

In this Annual Report on Form 20-F, unlessthe 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*) organizedunder the laws of the Republic of Chile, and its consolidated subsidiaries.

 

All references to "**$**,""**US$**," "**U.S. dollars,**" “USD” and "**dollars**" are to United Statesdollars, references to "**pesos,**" “**CLP**” and "**Ch$**" are to Chilean pesos, referencesto ThUS$ 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 dailyto reflect changes in, the previous month's Chilean consumer price index. As of December 31, 2011, UF 1.00 was equivalent to US$42.94and Ch$22.294,03.

 

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

 

Our fiscal year ends on December 31.

 

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

 

1 kilometer equals approximately0.6214 miles

 

1 meter equals approximately3.2808 feet

 

1 centimeter equals approximately0.3937 inches

 

1 hectare equals approximately2.4710 acres

 

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

 

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

 

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

 

GLOSSARY

 

“**assay values**” Chemicalresult or mineral component amount that contains the sample.

 

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

 

“**average mining exploitationfactor**” 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**”****Compoundannual 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 investmentsthat 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’smanagement.

 

“**Corfo**” ProductionDevelopment Corporation (*Corporación de Fomento de la Producción*), formed in 1939, a national organizationin charge of promoting Chile's manufacturing productivity and commercial development.

 

 

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

 

“**dilution**” Lossof 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 processby 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 quantitiesof mineral resources and reserves.

 

“**heap leaching**”A process whereby minerals are leached from a heap, or pad, of crushed ore by leaching solutions percolating down through the heapand 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 horizontalrock in these cases).

 

“**hypothetical resources**”Mineral resources that have limited geochemical reconnaissance, based mainly on geological data and samples assay values spacedbetween 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 cropsare examples of industrial crops.

 

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

** **

**“LIBOR”** London InterBank 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 (ormetals).

 

“**ore depth**” Depth ofthe mineral that may be economically exploited.

 

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

 

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

 

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

 

“**Proved Mineral Reserve**”See “Reserves—Proved Mineral Reserve.”

 

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

 

“**Reserves—ProvedMineral Reserve**”* The economically mineable part of a Measured Mineral Resource. The calculation of the reserves includesdiluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may includefeasibility 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 reportingthat extraction is reasonably justified. 

 

 

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

 

A deposit may be classified asan 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 geologicalframework and to assume continuity of mineralization. Confidence in the estimate is sufficient to allow the appropriate applicationof technical and economic parameters and to enable an evaluation of economic viability.

 

“**Resources—InferredMineral Resource**”* That part of a Mineral Resource for which tonnage, grade and mineral content can be estimated witha low level of confidence, by inferring them on the basis of geological evidence and assumed but not verified geological and/orgrade 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 InferredMineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource.

 

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

 

A deposit may be classified asa 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 notsignificantly 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 applicationof technical and economic parameters and to enable an evaluation of economic viability.

 

“**solar salts**”A mixture of 60% sodium nitrate and 40% potassium nitrate used in the storage of thermo-storage 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 mineralwhich 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 31,2011 divided by the total gross book value of the Company's fixed assets at such facility as of December 31, 2011.

 

 

 

CAUTIONARY STATEMENT REGARDINGFORWARD-LOOKING STATEMENTS

 

This Form 20-F contains statements thatare or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Thesestatements 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 statementsappear throughout this Form 20-F and include statements regarding the intent, belief or current expectations of the Company andits management, including but not limited to any statements concerning:

 

 

 

 

 

 

Such forward-looking statements are notguarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those describedin such forward-looking statements included in this Form 20-F, including, without limitation, the information under Item 4. Informationon the Company and Item 5. Operating and Financial Review and Prospects. Factors that could cause actual results to differ materiallyinclude, but are not limited to:

 

 

 

 

 

 

 

 

 

 

**PART 1**

 

ITEM1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

 

ITEM2.   OFFER STATISTICS AND EXPECTED TIMETABLE

 

Not Applicable.

 

ITEM3.    KEY INFORMATION

 

3.A.   Selected Financial Data

 

The following table presents selectedfinancial data as of December 31, 2011 and the previous two years. The selected financial data should be read in conjunction withthe Audited Consolidated Financial Statements and notes thereto, “Item 5. Operating and Financial Review and Prospects”and other financial information included herein.

 

Since January 1, 2010, the Company’sconsolidated financial statements are and will be prepared in accordance with the International Financial Reporting Standardsas published by the International Accounting Standards Board (IASB).

 

The Company’s consolidated financialinformation as of and for the year ended December 31, 2009 included in the Company’s annual consolidated financial statementswas restated in accordance with IFRS. See Note 2 to the Audited Consolidated Financial Statements of the Company.

 

 

 

 

(1) Except shares outstanding, dividendand net earnings per share and net earnings per ADR.

 

(2) There are no authoritative pronouncementsrelated to the calculation of earnings per share in accordance with IFRS.

 

(3) The Series A ADRs were delisted fromthe New York Stock Exchange on March 27, 2008. The ratio of ordinary shares to Series B ADRs changed from 10:1 to 1:1 on March28, 2008. The calculation of earnings per ADR is based on the ratio of 1:1.

 

(4) Dividends per share are calculatedbased on 263,196,524 shares for the periods ended December 31, 2009 and 2010, 2011.

 

(5) Dividends may only be paid from netincome as determined in accordance with IFRS; see Item 8.A.8. Dividend Policy. For dividends in Ch$ see Item 8.A.8.Dividend Policy— Dividends.

 

(6) Dividend amount paid per calendar year.

 

EXCHANGE RATES

 

Chile has two currency markets, the *MercadoCambiario Formal*, or the "Formal Exchange Market," in which SQM conducts its transactions, and the *Mercado CambiarioInformal*, or the "Informal Exchange Market." The Formal Exchange Market comprises banks and other entities authorizedby the Banco Central de Chile (the "Chilean Central Bank"). The Informal Exchange Market comprises entities that arenot 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 carriedout on the Formal Exchange Market.

 

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

 

The *dólar observado*, or "ObservedExchange Rate," which is reported by the Chilean Central Bank and published daily in the Chilean newspapers, is computed bytaking the weighted average of the previous business day's transactions on the Formal Exchange Market. Nevertheless, the ChileanCentral Bank has the power to intervene by buying or selling foreign currency on the Formal Exchange Market to attempt to maintainthe Observed Exchange Rate within a desired range.

 

On January 3, 2011, the Chilean CentralBank decided to intervene in the Formal Exchange Market by increasing the level of international reserves by US$12 billion, thebiggest-ever exchange rate intervention aimed at suppressing the rising peso. This plan was implemented in January 2011 and itwas terminated in December 2011.

 

 

The Informal Exchange Market reflects transactionscarried out at an informal exchange rate, or the "Informal Exchange Rate." There are no limits imposed on the extentto which the rate of exchange in the Informal Exchange Market can fluctuate above or below the Observed Exchange Rate.

 

The Federal Reserve Bank of New York doesnot report a noon buying rate for Chilean pesos.