Sociedad Quimica y Minera S.A.

Good day and welcome to the SQM third quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Irina Axnova, Head of Investor Relations. Please go ahead.

Thank you, Dave. Good morning. Thank you for joining ESCOM's Earnings Conference Call for the third quarter of 2023. This conference call will be recorded and is being webcast live. Our earnings press release and the presentation with a summary of the results have been uploaded to our website. We can also find a link to the webcast. Ricardo Ramos, our chief executive officer, will be speaking on the call today. Gerardo Yanes, our chief financial officer, Carlos Diaz, executive vice president of lithium, Felipe Smith, commercial vice president of lithium, Mark Fons, vice president of strategy, and M&A Lithium, and Juan Pablo Biloglio, commercial vice president of iodine and industrial chemicals, will be also available to answer any questions. Before we begin, I would like to remind you that statements made in this conference call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses, and other financial items, along with expected cost synergies and product or service line growth, are considered forward-looking statements under federal securities laws. These statements are not historical facts and may be subject to changes due to new information, future developments, or other factors. We assume no obligation to update these statements except as required by law. For a complete forward-looking statement, please refer to our earnings press release and presentations. I now leave you with our Chief Executive Officer, Ricardo Ramos.

Thank you, Irina. Good morning. Thank you for joining the call today. Yesterday, we reported our third quarter 2023 earnings. And on this call, I would like to focus on the key drivers in each of the business behind our performance during this quarter. In the lithium business, we reported close to $1.3 billion in revenues, approximately 10% lower than compared to the previous quarter this year. primary as a result of significant lower realized sales prices, partially offset by record high sales volumes over 43,000 metric tons during the quarter. We all observe a downward price trend that commenced at the beginning of this year and could continue for the remainder of 2023. Since the majority of our sales contracts are linked to price indices which move with the market, I will realize sales prices have followed the same trend with a small delay, and it is reasonable to expect that they should continue to reflect market price dynamics in the upcoming month. we continue to see strong fundamentals behind long-term growth of lithium demands supported by EV production and sales volumes emission reduction targets worldwide. In the short term, however, the excess of inventories along chemicals and battery materials supply chain, as well as additional supply, which entered the market this year, have been negatively affecting customer purchasing activity. As a result, we expect to see quarter-on-quarter similar or lower sales volumes during the fourth quarter this year. In the iodine business, we reported over 210 million in revenues for the third quarter 2023, driven by a strong pricing environment with sales prices close to $70 per kilogram with year-to-date higher volumes than last year. This is supported by increased demand from X-ray contrast media segment, albeit some reduction in demand coming from other price-sensitive applications. We believe that Eskem remains the only iodine producer to increase its supplies this year while we keep on increasing our capacity. Moving to fertilized business, our revenues in specialty plant nutrition and potassium business segments reach almost $300 million during the third quarter as a result of positive demand growth, which began during the third quarter this year and is expected to continue into 2024. In the industrial chemical business, During the third quarter, we completed solar soils delivery to the concentrated solar power plant project in the Middle East, with a total of more than 430,000 metric tons of solar soils produced and shipped between 2020 and 2023. This mission proved to be challenging, particularly as the majority of the deliveries occurred amidst the global pandemic, which strained both our production capabilities and logistical conditions. We are proud of our accomplishments and the successful completion of this contract. I would also like to comment our progress with our expansion plans both in Chile and abroad. Our lithium carbonate capacity in Chile has reached the 200,000 metric tons per year, and we expect to complete the expansion to 210,000 metric tons in the beginning of 2024, almost a year earlier than anticipated. This gives us space to focus on production costs, optimization, and to ensure that we remain one of the most cost-efficient lithium producers in the world. In Australia, the first production of spodumene concentrate at Mount Holland is expected during this quarter, while in China, we have started lithium hydroxide production from lithium sulphate. As we continue our progress toward more sustainable operations, another very significant milestone reached last quarter was an international recognition from IRMA of our commitment to becoming the world's most sustainable source of lithium. Our operations in the Salar Atacama received the highest score to date of FIRMA 75, reflecting our dedication to transparency and community engagement. While there is a considerable amount of work ahead of us in collaboration with our communities and stakeholders, we will persist in the collective efforts to achieve our sustainable objectives. Thank you, operator, and we will now open for the line to questions.