Sociedad Química y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) announced today that the Company has decided to increase its total potassium nitrate production capacity by 500,000 metric tons per year. This increase will bring SQM’s potassium nitrate production capacity to a total of approximately 1.5 million metric tons per year.
In order to achieve this increase in production capacity, SQM will build a new plant with an initial capacity of 300,000 metric tons per year that will use nitrate sales from the Company’s Nueva Victoria operations and potassium salts from the Company’s potassium chloride operations as raw materials. In addition to the construction of a new plant, SQM has been implementing measures to increase operating efficiency at existing plants, and these measures will enable the Company to increase production capacity by approximately 100,000 metric tons per year during 2016 and by a further 100,000 metric tons per year during 2017.
Patricio de Solminihac, SQM’s Chief Executive Officer, stated, “The increase in potassium nitrate production capacity will enable us to significantly increase SQM’s operating flexibility. We will maintain high levels of installed capacity for the production of water soluble potassium nitrate for applications in the specialty plant nutrition market, and at the same time we will consolidate our position as the leading providers of nitrates (potassium nitrate and sodium nitrate) that are used for thermal storage in concentrated solar power plants.” With respect to the effect this decision will have on SQM’s strategic development, Mr. de Solminihac added, “This higher production capacity is consistent with our strategy of being a low-cost producer with an important installed capacity. In addition, we maintain high levels of inventory, which allows us to react quickly to changes in market conditions.”
The design of the new plant, which will be able to produce both sodium nitrate and potassium nitrate, includes the use of part of the productive assets at the Pedro de Valdivia site, which will allow the Company to significantly reduce the total investment required for this project. Furthermore, when combined with the efforts to optimize operations across all potassium nitrate plants, these initiatives will enable the Company to further reduce our production costs. SQM expects to determine the amount of the investment required for this new plant during the third quarter of this year, and production is expected to begin in mid-2018.
SQM is an integrated producer and distributor of specialty plant nutrients, iodine, lithium, potassium-related fertilizers and industrial chemicals. Its
products are based on the development of high quality natural resources that allow the Company to be a leader in costs, supported by a
specialized international network with sales in over 110 countries. SQM’s development strategy aims to maintain and strengthen the Company’s
position in each of its businesses.
The leadership strategy is based on the Company’s competitive advantages and on the sustainable growth of the different markets in which it
participates. SQM’s main competitive advantages in its different businesses include:
Low production costs based on vast and high quality natural resources;
Know-how and its own technological developments in its various production processes;
Logistics infrastructure and high production levels that allow SQM to have low distribution costs;
High market share in all its core products;
International sales network with offices in 20 countries and sales in over 110 countries;
Synergies from the production of multiple products that are obtained from the same two natural resources;
Continuous new product development according to the specific needs of its different customers;
Conservative and solid financial position.
