Good day everyone and thank you for standing by. Welcome to the SQM second quarter 2026 conference call. At this time all participants are in a listen only mode. After the presentation there will be a question and answer session. To ask a question you will need to press star 1 1 on your telephone. You will then hear a message advising your hand is raised. To withdraw the question press star 1 1 again. Please be advised that today's conference is being recorded. Now it's my pleasure to hand the conference to Megan Suter with Investor Relations. Please proceed.

Good day and thank you for joining SQM's Earnings Conference Call for the second quarter of 2026. This call is being recorded and webcast live. Our earnings press release and the accompanying results presentation are available on our website where you can also find a link to the webcast. Today's participants include Mr. Ricardo Ramos, Chief Executive Officer, Mr. Gerardo Illanes, Chief Financial Officer, Mr. Carlos Diaz, CEO of Novandino, Mr. Pablo Altimiras, CEO of the Iodine and Plant Nutrition Division, and Mr. Mark Fons, CEO of the International Lithium Division. Also joining us today are members of our commercial and business intelligence teams, Mr. Felipe Smith, Commercial Vice President of Novandino Mr. Pablo Hernández, Vice President of Strategy and Development of Novandino Mr. Juan Pablo del Olio, Commercial Vice President for Plant Nutrition and Specialty Products Mr. Alvaro Araya, CFO of the International Lithium Division Mr. Andrés Fontanaz, Commercial Vice President of the International Lithium Division and Mr. Max Vial, Head of Studies of the International Lithium Division. Before we begin, please note that statements made during this 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 U.S. federal securities laws. These statements are not historical facts and are subject to risks and uncertainties that could cause actual results to differ materially. We assume no obligation to update these statements except as required by law. For a full discussion of forward-looking statements, please refer to our earnings press release and presentation. With that, I will now turn the call over to our Chief Executive Officer, Mr. Ricardo Ramos.

Thank you. Good morning and thank you for joining us today. I'm pleased to report SQM's second quarter results, which reflect a strong performance across our main business lines. I would like to start by highlighting an important milestone for our lithium operations in Chile. In July, Novandino Lithio, our association with CODELCO, submitted the environmental and technical documentation for the SALAR Futuro project to the authorities. Salar Futuro represents the next stage in the transformation of our operations in the Salar Atacama, subject to the required approvals. The project contemplates approximately $3 billion of investment over seven years and is designed to increase production while significantly reducing the environmental footprint of our operations. I would also like to highlight the contribution that our operations make to Chile. During the first half of this year, SQM and its subsidiaries accrue more than 1.6 billion in payments to the Chilean government, including taxes, contribution to local governments, and payments to Corfo. Moving to the lithium market, we achieve record quarterly sales volumes of more than 84,000 metric tons of lithium carbonate equivalent from our operations in Chile through Novandino Lithium and in Australia through Covalent Lithium. As anticipated in our previous earnings report, lithium prices increased during the second quarter, supported by a strong than expected market demand. We now expect global lithium demand to exceed 2.1 million metric tons in 2026. We continue to expand our production capabilities in both Chile and Australia. In Chile, we expect Nova Andino Lithium to produce between 280,000 and 290,000 metric tons of lithium carbonate equivalent this year, and to have approximately 300,000 metric tons of production capacity by next year. In Australia, together with our partner with farmers, we recently announced the expansion of the Moon Holland mine and concentrator, which is expected to double its podium in concentrate production capacity to approximately Thank you very much. Robust market demand and favorable pricing. We expect demand to remain robust. Our seawater pipeline is currently in its commissioning phase and will provide additional flexibility to optimize our production and respond to market conditions. We are now producing iodine from our four different operations and we expect total iodine production to reach approximately 15.5 thousand metric tons this year. We continue to expect full-year sales volumes to increase by approximately 10% compared to 2025. Market conditions have benefited from supply constraints in certain markets, and we expect these conditions to gradually normalize toward the end of the year. Finally, We have updated our capital expenditure outlook. We now included 2028 and we expect approximately total capital expenditures of approximately 3 billion over the three years 26-28 period. This investment is mainly focused on supporting future growth and enhancing the competitiveness of our operations through lower production costs. Overall, We are encouraged by the performance delivered during the first half of the year and remain focused on executing our growth plans and creating long-term value from our shareholders. With that, I will turn the call and we can go operator to the Q&A. Thank you.

Thank you so much. And as a reminder, if you do have a question, simply press star 11 to get in the queue and wait for your name to be announced. To withdraw your question, press star 11 again. One moment, please. Our first question is from Joel Jackson with BMO Capital Markets. Please proceed.

Hi, thank you. I'm going to ask a couple questions one by one. Can you talk about Q3 for a second? If I look at Q3 for the lithium segment, you're guiding to prices about flat, volumes, seems like about flat, and then costs I had a question about because costs kept down a lot in Q2. Should we expect Q3 Lithium earnings gross margin to be about the same as Q2?

Hello Joel, this is Felipe.

I will comment about the Novandino part, of course. So, yeah, indeed, we had a very good second quarter. We are very enthusiastic about how the market is doing. Regarding Q3, first of all, in terms of sales volume, we expect Q3 2026 to remain strong in line with Q2. And in terms of the price, I would say that The average price based on the indexes, because you know that our contracts are all based on indices and indices are well known. Based on that, we believe that the price of Q3 should be more or less in line with what we saw as the average of the first semester. But again, nobody can predict where the indexes are going. It's a very volatile market today. Still difficult to predict prices too long.

Hi Joe, this is Carlos Diaz. Regarding to, you asked about the cost, no? Well, mainly we have been working harder the last year in continuous efficiency and improvement process. And that is together with the economy of scale, as we have been increasing the production level, we have been constantly being able to make a cost improvement. So, But in the Q3, we expect similar costs that we already got in the Q2. But this year, at least 26, it should be lower compared with last year.

Okay. Thank you for that. I want to ask about price realizations between Novendino and International Australia. I understand some of the math that works with toll and things like that. But the premium... Chile, the Novendino average selling price is really expanding, like the discount, the premium of Novendino average selling price, the premium is really widening versus international. Should we expect to catch up in Q3, like even if Novendino average selling price is about the same in Q3, should we not expect international selling price to catch up, like go up, and the gap to reduce?

Hey Joel, this is Andres Fontanas from Scheme International. Well, you know, most of our sales are based on spodumene concentrate, so in order to compare, you need to add some conversion cost and also to take into consideration the conversion yield. So that's where the main difference is. And at the end, what matters the most is that we are also following the market. and these shipments that are discrete because not every month we have sales. All these shipments are following market conditions at the moment of shipment.

That's the point of my question though. The spodumene average selling price by your own numbers increased by $600 from Q1 to Q2. Spodumene went up, $600 a ton price, Q1 to Q2. Your LCE equivalent international selling price barely went up. That's what I'm confused about.

Yeah, well, as we commented before, our prices are affected by the timing of the shipments. Again, not every month we are having shipments. And as I said, in the coming quarters, you will see this better reflected in our price report.

Let's ask one more question to be greedy. So you've raised your lithium demand expectations for the full year by 200,000 tons. I imagine you're going to tell me, us on the demand side, it's all from energy storage. Where's the extra 200,000 tons of supply coming from? Is that restarts in Australia? Is that Africa? Is that Lipidolite in China? Where's the extra 200,000 tons of supply coming this year to meet the growing demand?

Hey, Joel. This is Pablo Andres speaking. So, of course, these are just our estimations, so we cannot predict what's actually happening fully in the market. But we believe there's some increase of supply mainly coming from China, both from Spodumene and Brine, but also some ramp-up projects in Africa and Argentina. And, of course, as you've heard, because of the current price scenario, there are some restarts in Australia also as well coming into the market.

Thank you very much. Thank you.

Thank you. One moment for our next question that comes from Isabella Simonato with Bank of America. Please proceed.

Isabella, your line is open.

Hi. Good afternoon, everyone. Do you hear me?

Yes. Please proceed.

Thank you. Hi, everyone. Thank you. I have two questions. First, it's still on the lithium market, right? I believe you guys are ramping up production in Avondino faster, right, than initially expected when the deal was signed. So I wonder if you could update us on, and you mentioned about 300,000 tons next year, but beyond that and when the new concession starts in place, what could be a feasible Thank you very much. Thank you.

Hi, Isabella.

Sorry, this is Carlos Diaz again. Well, this year we expect, as our CEO said before, that we expect to produce around 280,000 to 290,000 metric tons. And looking ahead, growth will initially be more motivated as we continue reducing the price structure. Specifically for next year, we expect a production close to 300,000. And for the coming year, we're still studying different initiatives in order to keep and to increase a little bit their production. But you have to have in account that we have been reducing the prime extraction. So it's an exercise we are not ready yet. So in the coming probably conference that we can share with you.

Hello, Isabela, Pablo Altimiras speaking. Well, regarding to your question about the ayudan and the new supply, again, this is our estimations, but we believe that the main supply could arrive from projects here in Chile. We see a particular new project that is coming. It's a project of Caliche Org. Respective to the amount of product that will come into the market, actually we don't know, but we expect that they will provide more product. That's the reason why we believe that our volume, sales volume, this year will be similar to what we see last year. Of course, if something different happens with the supply, well, we could potentially see more sales in our case, but everything will depend on the supply and demand.

Thank you very much. Just a final comment on the iodine. Can you quantify a little bit what this new project in Chile means in terms of volumes? And again, any significant disruption in terms of supply demand and also prices?

What is important to remain that we have seen a good demand. Our demand forecast for this year is that the growth will be around 3%. So we expect that the new capacity that will come into the market will compensate that growth, but we don't see more than that.

Great. Thank you very much.

Thank you. Our next question comes from Emerson Vieira with Goldman Sachs. Please proceed.

Hello, good morning. Thanks for the time. A couple of questions here. First, can you guys please break down on the expected production capacity increase to 300,000 tons in 2027? I mean, how much is coming from Chile, given that you are converting the hydroxide plant? And how much is coming from tooling contracts? That's the first question. And I have some follow-ups.

What is that? No, I'm right. Look at me. I-A-T.

Okay, Emerson, Carlos Diaz speaking. Well, first of all, all our production is coming from the Salera da Gama in two different ways. One is lithium chlorine that is refined in Chile, and lithium sulfate we are refining in China. So what I said before this year, we expect 280 to 290, and for next year, 300,000 of those. We estimate now 80 of those is going to be from lithium sulfate, and the other 220 for lithium chlorine or for our Antofagasta chemical plant.

All right, thank you.

I'm sorry, you asked for the hydroxide production? And carbonate. We don't see more than 20,000 or 30,000 of those in total. I mean, 10% of those productions will be hydroxide and the remaining, obviously, carbonate.

Okay, thank you. Just on Mount Holland, very quickly, you guys recently approved the expansion, right, on the mining concentrator. So just wondering about a potential expansion in the refinery Are you guys planning maybe to do this just after the expansion is concluded? How are you thinking about the mix between hydroxide and spodumene sales going in 2007 and later on? Please.

Hi, Emerson. This is Mark Fones here. Thanks for your question. Regarding, first of all, we're very proud of the decision of expanding Monholland, first the Miner Concentrator. Regarding the refinery, we still remain open to that decision. We have not yet come to a conclusion or a decision there yet. This will be continued analysis by Covalent and with Farmers, our partner, and it will be depending also on reaching our ramp-up at full extent by second semester next year, later on. Regarding the balance for next year in terms of cells and production, we expect next year to be a higher lithium hydroxide production than this year, for sure, based on the same ramp-up curve. Therefore, our cells of direct sediment concentrate cells should be probably lower than this year.

Okay, thank you. We're clear.

One moment for our next question, please. It comes from Lucas Ferreira with JP Morgan. Please proceed.

Hi, guys.

Good afternoon. Thanks for the time. My first question is a follow-up on the sulfate production, especially in regards to the tolling process in China. This production surprised me to the I never thought you guys could ramp up this tolling and find too much capacity in a short period of time. So my question is regarding these tolling contracts. I just wanted to understand how long they are and if you guys see any risk over the next few years, you have to give some away. or find new partners for this tolling at maybe different costs if these fees, they are sort of a fixed and predictable. Just to understand sort of the operational risk of running, you know, if not mistaken, something around 50,000 tons, right, of sulfate tolling with these third parties. And then my second question is regarding follow-up on Mount Holland. Since the expectation is for a first production in 2030, this seems to be sort of extended period of time, considering this is a brownfield. Just wondering what are sort of the next sort of big milestones there that you think you should deliver to expand the production capacity or the main challenges to bring this capacity online? Thank you very much.

Hello, this is Carlos Diaz speaking. Regarding to the lithium sulfur production, yes, we have been increasing the production very strongly in the last three or four years. And what we said before, we expect this year, we expect to produce next year in a range of 80,000 to 90,000 as LCE equivalent. First of all, we have to remind that we have our own plant in China, the Chin plant that we produce. and many more.

Lucas, hi, this is Mark Fons. Regarding the Mount Holland timeline, and you're right, the first product is expected by first half 2030, well, the schedule reflects the normal sequencing for a project of this scale, and we are building the scale to achieve the risk rather than a rushed project. You need to consider also that this is a relevant, not a marginal, brownfield increase, so we are loving the capacity where our operation already exists. and giving some milestones which you asked for. I would say the next relevant milestone has to do with the start of the construction of the facility itself A construction of a facility of this nature takes between 18 and 24 months in duration. Ahead of that, we need to, of course, purchase long-lead items, prepare earthworks and earth folk movements. After the construction of these 18 to 24 months, there's a period there of commissioning, which will follow in 2029, to reach a first product by the beginnings of 2030. So that's the overall scheme of things and the relevant milestones in there. In terms of if there are any opportunities to compress this shuttle, yes, there are opportunities. Covalent and our technical teams are actively advising, analyzing those, and we will continue to push it forward. But please take into consideration that this brownfield, of course, has relevant opportunities since we're working on an existing operation, but also it increases levels of challenges, and we need to be always mindful and safe.

Perfect. Thank you very much, guys.

Thank you. One moment for our next question that comes from Corinne Blanchard with Deutsche Bank. Please proceed.

Hi. Good afternoon, Tim. Mary, can we come back to your commentary about the choice you said being in line with 2Q? How do we think about it for 4Q? Because normally 4Q, I think, on seasonality is your highest quarter. Do you also expect 4Q to be high 70s to maybe like, you know, 80 kiloton-ish? Or are you expecting a strong 3Q followed maybe by a softer 4Q?

Hello, Corinne. This is Felipe.

You know, 4Q is so far away now. So I will try to speak about the future, the long future, but I only have hopes that we can at least have the volume of a second and third quarter, because as I said before, third quarter, we expect to have similar volume as second quarter. So I expect minimum that in the fourth quarter, but hope that could be more. But again, My boss is looking at me like, what are you doing? But this is my personal hope, okay?

I will try. So that would bring your total lithium volume to 315, 320 kilotons, which is much more than what you have guided, right?

Yeah, if you add only the Novandino part, I mean, I will speak about the Novandino part, it's hopefully above 280, and then my colleagues in the international could comment. Maybe Andres? Good luck.

Yeah, Corinne, Andres speaking here. We are expecting sales to be around 27,000 to 30,000 tons LCE for the full year.

Okay, thank you. And then maybe a bigger picture question, because I think we seem to have some investors starting to think a little bit more longer term. Can you just talk a little bit about what happened after 2030, 2031? I mean, we know that Codeco will be probably much more in charge than you guys, but I think if you can just provide a high-level view to frame it for us and how we should think about You know, strategic decision and capex and et cetera. I think that will be helpful.

Thank you.

Okay. Ricardo Ramos speaking. Yes, as Felipe said, fourth quarter is a really long term. It's really far, far away. 2031 is just a little bit More difficult to have predictions what's going to happen, but again, I think that we are working very good now in Novo Andino. I think the agreement with God has been even better than expected in terms of coordination, working together, and the board level having cooperation between both companies. That's why we are very positive about that. We already commented in the press release that we are starting the submission. We did it in July of the Salar Futuro. We're working in engineering, in everything, in order to be ready for the investment. That's why I hope in 2031 we will be in the middle of the investment of Salar Futuro. We think it's going to be a great project. We are really committed with CODELCO in order to do so. I think everything is included in our long-term projections, all the investment of the work we want to do and what Carlos is doing today with their team is trying to have a very good expectation about the volumes, sales volumes for the future and I think we will share with you and the next conference call our first view about what we expect for the next year and we will continue to have a long-term view. But we are working very hard and very good agreement so far and Coelco is a very good partner. Thank you.

Thank you.

One moment for our next question. That comes from Ben Isakson with Scotiabank. Please proceed.

Thank you very much and Good afternoon. Just two questions for me. Number one is I think there's a bit of confusion among investors in terms of your recent filing of spending $3 billion at Solar Futuro and some are drawing the conclusion that it is all going towards increasing capacity by 30,000 tons and therefore your capex is $100,000 per ton and I think that's wrong. Can you just separate the $3 billion spend from the 30,000 ton increase in capacity.

Ben, it's very important to consider that the Salar Futuro project is not only increasing capacity, it's changing technology. It means we are, as you know, we are offering a very good technology in terms of cost, in terms of production, in terms of environmental footprint, and that's why you have to analyze the Salar Futuro project as a whole in terms of having a New beginning of the Salar de Cajama for the next 60 years operation. That's exactly our 30 years operation that we have. That's the whole idea. And of course, we expect to have more production. We're working on it and it will depend on the deals and depend on the quality of the solutions that we're going to bring to the process. and we will disclosure our best estimate in the next two years but the whole project Salar Futuro is not just an idea to increase production capacity. It's much more than that in terms of having a revamping, having a new Salar de Atacama for the future. That makes sense. Thank you for that.

And then my second question is on the lithium market. I understand that battery storage production has been about one terawatt hours or around that area, but installations have only been about half of that. And so my question is, are we seeing a big inventory build in battery storage and we could be going into some temporary oversupply over the next 12 to 18 months and that could put a cap on lithium demand growth? Or is this just part of the normal I agree with your view on the market. Indeed, we have seen much larger shipments of batteries for BSS than actual deployments of those batteries.

So there's some gap there that we are monitoring. We believe most of that gap is related to some larger projects being implemented, which larger projects naturally bring some longer terms in terms of implementation and some delays from approvals and everything. So there's a natural delay on that end. But of course, as well, I think there's also some push forward of some sales from 2027 because of tax rebates that have been removed from the export side in China. So overall, my view for the longer term is that there indeed, for the following years, we might see some slowdown in the pace at which the BSS battery implementation is growing. Great. Sorry, Ben, but just to finish that. But of course, still, BSS will remain a very relevant and strong demand factor for the future. Of course. Thank you very much.

Thank you, ladies and gentlemen. This will conclude our Q&A session and conference for today. We want to thank everyone for participating and you may now disconnect.