Prepared and Filed by St Ives Financial

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
Sociedad Química y Minera de Chile S.A.:

We have audited the accompanying consolidated balance sheets of Sociedad Química y Minera de Chile S.A. and subsidiaries (“the Company”) as of December 31, 2004 and 2005, and the related consolidated statements of income and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sociedad Química y Minera de Chile S.A. and subsidiaries at December 31, 2004 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in Chile, which differ in certain respects from accounting principles generally accepted in the United States of America (see Note 29 to the consolidated financial statements).

ERNST & YOUNG LTDA.

Santiago, Chile

February 17, 2006

(Except for Notes 28 and 29 for which the date is June 20, 2006)

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Audited Consolidated Balance Sheets

(Expressed in thousands of US dollars, except as stated)

			As of December 31,

	Note		2005			2004

			ThUS$			ThUS$

ASSETS

Current assets
Cash and cash equivalents		2 (e)		147,956			66,753
Accounts receivable, net		4		155,836			169,840
Other accounts receivable, net		4		9,737			8,343
Accounts receivable from related companies		5		56,459			26,029
Inventories, net		6		327,232			274,602
Recoverable taxes				31,212			19,185
Prepaid expenses				3,189			2,735
Deferred income taxes		13		2,528			—
Other current assets				8,634			7,963

Total current assets				742,783			575,450


Property, plant and equipment, net		7		794,647			694,762


Other Assets
Investments in related companies		8		20,676			15,987
Goodwill, net		9		27,209			17,470
Negative goodwill, net		9		(68	)		(271	)
Intangible assets, net				4,783			4,544
Long-term accounts receivable, net		4		379			289
Long-term accounts receivable from related companies		5		2,000			—
Other long-term assets		10		48,159			53,141

Total other assets				103,138			91,160

Total assets Total assets				1,640,568			1,361,372

The accompanying notes form an integral part of these consolidated financial statements.

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Audited Consolidated Balance Sheets

(Expressed in thousands of US dollars, except as stated)

			As of December 31,

	Note		2005		2004

			ThUS$		ThUS$
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Short-term bank debt		11		85,022		7,955
Current portion of long-term bank debt		11		204,880		4,577
Dividends payable				229		183
Accounts payable				70,292		57,859
Other accounts payable				1,036		2,054
Notes and accounts payable to related companies		5		7,662		14,025
Accrued liabilities and provisions		12		23,750		12,267
Withholdings				13,092		11,103
Income taxes				20,675		11,641
Deferred income taxes		13		—		7,933
Deferred income				1,262		441
Other current liabilities				368		1,206

Total current liabilities				428,268		131,244

Long-term liabilities
Long-term bank debt		11		100,000		200,000
Other accounts payable				1,065		1,106
Deferred income taxes		13		38,895		34,089
Staff severance indemnities		14		16,415		11,875

Total long-term liabilities				156,375		247,070


Minority interest		15		35,509		34,430


Commitments and contingencies		22		—		—

Shareholders' equity		16
Paid-in capital				477,386		477,386
Other reserves				157,287		150,887
Retained earnings				385,743		320,355

Total shareholders’ equity				1,020,416		948,628

Total liabilities and shareholders’ equity				1,640,568		1361,372

The accompanying notes form an integral part of these consolidated financial statements.

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Audited Consolidated Statements of Income

(Expressed in thousands of US dollars, except as stated)

			For the years ended December 31,

	Note		2005			2004			2003

			ThUS$			ThUS$			ThUS$
Operating income

Sales				895,970			788,516			691,806
Cost of sales				(652,901	)		(608,744	)		(553,964	)

Gross margin				243,069			179,772			137,842
Selling and administrative expenses				(61,878	)		(55,705	)		(50,590	)

Operating income				181,191			124,067			87,252



Non-operating income and expense

Non-operating income		18		16,433			20,829			18,654
Non-operating expenses		18		(50,755	)		(38,420	)		(39,813	)

Non-operating loss				(34,322	)		(17,591	)		(21,159	)

Income before income taxes, minority interest and amortization of negative goodwill				146,869			106,476			66,093


Income tax expense		13		(32,527	)		(27,308	)		(16,056	)

Income before minority interest and amortization of negative goodwill				114,342			79,168			50,037


Minority interest		15		(1,039	)		(5,139	)		(3,654	)

Income before amortization of negative goodwill				113,303			74,029			46,383


Amortization of negative goodwill		9		203			203			370

Net income for the year				113,506			74,232			46,753

The accompanying notes form an integral part of these consolidated financial statements.

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Cash Flow

(Expressed in thousands of US dollars, except as stated)

			For the years ended December 31

	Note		2005			2004			2003

			ThUS$			ThUS$			ThUS$
Cash flows from operating activities
Net income				113,506			74,232			46,753
Charges (credits) to income not representing cash flows
Depreciation expense		7		70,054			62,690			61,728
Amortization of intangible assets				498			173			298
Write-offs and accruals				17,034			23,584			25,230
Equity participation in net income of unconsolidated investees				(3,073	)		(4,897	)		(5,529	)
Equity participation in net losses of unconsolidated investees				477			387			1
Amortization of goodwill		9		2,070			1,073			1,134
Amortization of negative goodwill		9		(203	)		(203	)		(370	)
(Gains) losses on sales of assets				216			283			(13	)
Gain on sale of investment				—			(8,820	)		—
Foreign currency translation, net		18		3,804			475			(6,590	)
Other credits to income not representing cash flows				(10,109	)		(1,919	)		(2,793	)
Other charges to income not representing cash flows				87,689			59,092			29,433
Net changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable				(15,838	)		(9,447	)		(18,124	)
Increase in inventories				(58,807	)		(40,665	)		(12,578	)
(Increase) decrease in other assets				(10,783	)		(770	)		15,534
Increase (decrease) in accounts payable				(6,520	)		(6,829	)		(16,236	)
Increase (decrease) in interest payable				349			(38	)		134
Increase (decrease) in net income taxes payable				(25,620	)		1,284			(2,246	)
Increase (decrease) in other accounts payable				(10,517	)		(2,935	)		(1,062	)
Increase (decrease) in VAT and taxes payable				(3,282	)		137			(2,215	)
Minority interest		15		1,039			5,139			3,654

Net cash provided from operating activities				151,984			152,026			116,143

Cash flows from financing activities
Proceeds from short term bank financing				185,000			83,307			57,324
Loans to related companies				—			—			(5,275	)
Payment of dividends				(51,732	)		(25,706	)		(21,361	)
Repayment of bank financing				(6,000	)		(192,696	)		(82,559	)

Net cash used in financing activities				127,268			(135,095	)		(51,871	)

Cash flows from investing activities
Sales of property, plant and equipment				2,546			741			264
Sales of investments in related companies				—			69,337			—
Sales of other investments				—			210			542
Other investing income				1,345			877			7,699
Additions to property, plant and equipment				(185,603	)		(51,758	)		(55,084	)
Capitalized interest				(5,140	)		(1,708	)		(2,149	)
Purchase of investments in related companies, net of cash acquired				(12,026	)		(37,079	)		(11,150	)
Purchase of other investments				(2	)		(13	)		(210	)
Other disbursements				(666	)		—			(56	)

Net cash used in investing activities				(199,546	)		(19,393	)		(60,144	)

Effect of inflation on cash and cash equivalents				1,497			(58	)		(59	)
Net change in cash and cash equivalents				81,203			(2,520	)		4,069
Beginning balance of cash and cash equivalents				66,753			69,273			65,204

Ending balance of cash and cash equivalents		2e)		147,956			66,753			69,273

Supplemental cash flow information:
Interest paid				20,315			18,986			22,379
Income taxes paid				22,330			2,466			2,347
apital lease obligations incurred during the year				—			—			98

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 1 – Company Background

Sociedad Química y Minera de Chile S.A. (the “Company”) was registered with the Chilean Superintendency of Securities and Insurance (Superintendencia de Valores y Seguros - “SVS”) on March 18, 1983. The Company is regulated by the SVS as well as by the United States Securities and Exchange Commission (“SEC”) since issuing American Depositary Receipts (“ADRs”) in December 1995.

References herein to “Parent Company” are to Sociedad Química y Minera de Chile S.A. and references herein to the “Company” or “SQM” are to Sociedad Química y Minera de Chile S.A. together with its consolidated subsidiaries and the companies in which Sociedad Química y Minera de Chile S.A. holds significant equity interests.

The Company is an integrated producer and distributor of specialty fertilizers, iodine, lithium and other industrial chemicals. The Company extracts natural resources and develops them into products, which it then distributes to more than 100 countries.

Note 2 - Summary of Significant Accounting Policies

a) Basis for the preparation of the consolidated financial statements

The accompanying consolidated financial statements have been prepared in US dollars in accordance with accounting principles generally accepted in Chile (“Chilean GAAP”) and the regulations of the SVS. Certain accounting practices applied by the Company that conform with accounting Chilean GAAP do not conform with accounting principles generally accepted in the United States (“US GAAP”) or International Financial Reporting Standards (“IFRS”).

The consolidated financial statements include the accounts of Sociedad Química y Minera de Chile S.A. and subsidiaries (companies in which the Parent Company holds a controlling participation, generally equal to direct or indirect ownership of more than 50%). All significant inter-company transactions and balances have been eliminated in the consolidation.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 2 - Summary of Significant Accounting Policies (continued)

a) Basis for the preparation of the consolidated financial statements (continued)

The majority-owned subsidiaries of the SQM S.A. as of December 31, 2005, 2004 and 2003 are as follows:

	Direct or indirect ownership

	2005		2004		2003

Foreign subsidiaries:	%		%		%
Nitrate Corp. of Chile Limited (United Kingdom)		100.00		100.00		100.00
Soquimich SRL (Argentina)		100.00		100.00		100.00
Nitratos Naturais do Chile Ltda. (Brazil)		100.00		100.00		100.00
SQM Europe NV (Belgium)		100.00		100.00		100.00
SQM North America Corp. (USA)		100.00		100.00		100.00
North American Trading Company (USA)		100.00		100.00		100.00
SQM Peru S.A.		100.00		100.00		100.00
SQM Corporation NV (Dutch Antilles)		100.00		100.00		100.00
S.Q.I. Corporation NV (Dutch Antilles)		100.00		100.00		100.00
Soquimich European Holding BV (Holland)		100.00		100.00		100.00
PTM - SQM Ibérica S.A. (Spain)		100.00		100.00		100.00
SQMC Holding Corporation LLP (USA)		100.00		100.00		100.00
SQM Ecuador S.A.		100.00		100.00		100.00
Cape Fear Bulk LLC (USA)		51.00		51.00		51.00
SQM Investment Corporation NV (Dutch Antilles)		100.00		100.00		100.00
SQM Brasil Ltda.		100.00		100.00		100.00
Royal Seed Trading Corporation AVV (Aruba)		100.00		100.00		100.00
SQM Japan K.K.		100.00		100.00		100.00
SQM Oceanía PTY Limited (Australia)		100.00		100.00		100.00
SQM France S.A.		100.00		100.00		100.00
RS Agro-Chemical Trading AVV (Aruba)		100.00		100.00		100.00
SQM Comercial de México S.A. de C.V.		100.00		100.00		100.00
SQM Indonesia		80.00		80.00		80.00
SQM Virginia LLC (USA)		100.00		100.00		100.00
Agricolima S.A. de C.V. (Mexico)		100.00		100.00		100.00
SQM Venezuela S.A.		100.00		100.00		100.00
SQM Italia SRL (Italy)		95.00		95.00		95.00
Comercial Caiman Internacional S.A. (Cayman Islands)		100.00		100.00		100.00
Mineag SQM Africa Limited (South Africa)		100.00		100.00		100.00
Fertilizantes Olmeca y SQM S.A. de C.V. (Mexico)		100.00		100.00		100.00
Administración y Servicios Santiago S.A. de C.V. (Mexico)		100.00		100.00		100.00
SQM Lithium Specialties LLC (USA)		100.00		100.00		100.00
SQM Nitratos México S.A. de C.V. (Mexico)		51.00		51.00		51.00
SQM Dubai - Fzco (United Arab Emirates).		100.00		—		—
Fertilizantes Naturales S.A. (Spain) (1)		—		50.00		50.00

(1)

Up to December 31, 2004 the Company exerted control over Fertilizantes Naturales S.A. and that entity was included in the consolidation for the years ended December 31, 2004 and 2003. Beginning January 1, 2005, the Company no longer controls this entity and therefore it has been excluded from consolidation for the year ended December 31, 2005.

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 2 - Summary of Significant Accounting Policies (continued)

a) Basis for the preparation of the consolidated financial statements (continued)

	Direct or indirect ownership

	2005		2004

	%		%
Domestic subsidiaries:
Servicios Integrales de Tránsitos y Transferencias S.A.		100.00		100.00
Soquimich Comercial S.A.		60.64		60.64
Isapre Norte Grande Ltda.		100.00		100.00
Almacenes y Depósitos Ltda.		100.00		100.00
Ajay SQM Chile S.A.		51.00		51.00
SQM Nitratos S.A.		99.99		99.99
Proinsa Ltda.		60.58		60.58
SQM Potasio S.A.		100.00		100.00
SQMC International Limitada		60.64		60.64
SQM Salar S.A.		100.00		100.00
SQM Industrial S.A.(ex-PCS Yumbes)		100.00		100.00
Comercial Hydro S.A.		60.64		60.64

All significant inter-company balances, transactions and unrealized gains and losses arising from transactions between these companies have been eliminated in consolidation.

b) Periods presented

These consolidated financial statements are presented as of December 31, 2005 and 2004 and for each of the three years in the period ended December 31, 2005.

c) Reporting currency and price-level restatement

The financial statements of the Company are prepared in US dollars. As a significant portion of the Company’s operations are transacted in US dollars, the US dollar is considered the currency of the primary economic environment in which the Company operates.

Under Chilean GAAP, the Parent Company and those subsidiaries which maintain their accounting records in US dollars are not required, or permitted, to restate the historical dollar amounts for the effects of inflation in Chile.

In accordance with Chilean GAAP the financial statements of domestic subsidiaries that maintain their accounting records in Chilean pesos have been restated to reflect the effects of variations in the purchasing power of Chilean pesos during the year. For this purpose, and in accordance with Chilean regulations, non-monetary assets and liabilities, equity and income statement accounts have been restated in terms of year-end constant pesos based on the change in the consumer price index during the year (3.6% and 2.5% in 2005 and 2004, respectively). The resulting net charge or credit to income arises as a result of the gain or loss in purchasing power from the holding of non-US dollar denominated monetary assets and liabilities exposed to the effects of inflation.

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 2 - Summary of Significant Accounting Policies (continued)

c) Reporting currency and price-level restatement (continued)

Index-linked assets and liabilities

Assets and liabilities that are denominated in index-linked units of account are stated at the year-end values of the respective units of account. The principal index-linked unit used in Chile is the Unidad de Fomento (“UF”), which is adjusted daily to reflect the changes in Chile’s CPI. Values for the UF are as follows (historical Chilean pesos per UF):

	US$

December 31, 2003		28.28
December 31, 2004		31.07
December 31, 2005		35.07

d) Foreign currency translations

(i)

Foreign currency transactions

Monetary assets and liabilities denominated in Chilean pesos and other currencies have been translated to US dollars at the observed exchange rates determined by the Central Bank of Chile as of each year-end. The observed exchange rates of Chilean pesos were Ch$ 512.50 per US$ 1 at December 31, 2005 and Ch$ 557.40 per US$ 1 at December 31, 2004.

(ii)

Translation of non-US dollar financial statements

In accordance with Chilean GAAP, the financial statements of foreign and domestic subsidiaries that do not maintain their accounting records in US dollars are translated from the respective local currencies to US dollars in accordance with Technical Bulletin No. 64 and No. 72 issued by the Chilean Association of Accountants (“BT 64 and BT 72”) as follows:

a)	Domestic subsidiaries

For those subsidiaries and affiliates located in Chile that keep their accounting records in price-level adjusted Chilean pesos:

Balance sheet accounts are translated to US dollars at the year-end exchange rate without eliminating the effects of price-level restatement. The assets and liabilities were translated into US dollars at the exchange rates as of the respective balance sheet dates of Ch$ 512.50 and Ch$ 557.40 per US$ 1 as of December 31, 2005 and 2004, respectively.

Income statement accounts are translated to US dollars at the average exchange rate each month. The monetary correction account on the income statement, which is generated by the inclusion of price-level restatement on the non-monetary assets and liabilities and shareholders’ equity, is translated to US dollars at the average exchange rate for each month.

Translation gains and losses, as well as price-level restatement, are included as an adjustment in shareholders’ equity, in conformity with Circular No. 1697 of the SVS.

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 2 - Summary of Significant Accounting Policies (continued)

d) Foreign currency (continued)

(ii)

Translation of non-US dollar financial statements (continued)

b)	Foreign subsidiaries

The financial statements of those foreign subsidiaries that keep their accounting records in currencies other than the US dollar have been translated as follows:

Monetary assets and liabilities are translated at year-end exchange rates between the US dollar and the local currency.

All non-monetary assets and liabilities and shareholders’ equity are translated at historical exchange rates between the US dollar and the local currency.

Income and expense accounts, except for such accounts that are calculated using historical rates (e.g. depreciation and amortization) are translated at average exchange rates between the US dollar and the local currency.

Any foreign currency translation differences are included in the results of operations for the period.

Foreign exchange gains (losses) for the years ended December 31, 2005, 2004 and 2003 amounted to ThUS$ (3,804), ThUS$ (475) and ThUS$ 6,590, respectively and have been charged to the consolidated statements of income in each respective period.

The monetary assets and liabilities of foreign subsidiaries were translated into US dollars at the exchange rates per US dollar prevailing as of December 31, as follows:

	As of December 31,

	2005		2004		2003

Brazilian Real		2.34		2.65		2.89
New Peruvian Sol		3.34		3.47		3.46
Argentine Peso		3.03		2.98		2.96
Japanese Yen		118.07		104.21		107.13
Euro		0.85		0.73		0.79
Mexican Peso		10.71		11.22		11.20
Indonesian Rupee		9,290.00		9,289.97		8,465.00
Australian Dollar		1.36		1.28		1.33
Pound Sterling		0.52		0.52		0.58
South African Rand		6.33		5.80		6.59

The Company uses the “observed exchange rate”, which is the rate determined daily by the Chilean Central Bank based on the average exchange rates at which bankers conduct authorized transactions.

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 2 - Summary of Significant Accounting Policies (continued)

e) Cash and cash equivalents

The Company considers all highly liquid investments with a remaining maturity of less than 90 days as of the closing date of the financial statements to be cash equivalents. As of December 31, cash and cash equivalent are as follows:

	As of December 31,

	2005		2004		2003

	ThUS$		ThUS$		ThUS$
Cash		13,273		18,559		15,251
Time deposits		1,483		15,854		13,203
Mutual funds		132,303		30,797		38,629
Repurchase agreements		897		1,543		2,190

Total		147,956		66,753		69,273

f) Time deposits

Time deposits are recorded at cost plus accrued interest and UF indexation adjustments, as applicable.

g) Marketable securities

Marketable securities are recorded at the lower of cost plus accrued interest or market value.

h) Allowance for doubtful accounts

The Company records an allowance for doubtful accounts based on estimated probability of unrecoverability of accounts receivable.

This allowance is presented as a deduction from Trade accounts receivable, Notes receivable and Other accounts receivables.

i) Inventories

Inventories of finished products and work in process are valued at average production cost. Raw materials and goods for resale acquired from third parties are stated at average acquisition cost and materials-in-transit are valued at cost. These values do not exceed net realizable values.

Inventories of non-critical spare parts and supplies are classified as other current assets, except for those items for which the Company estimates a turnover period in excess of one year, which are classified as other long-term assets.

j) Income taxes and deferred income taxes

Current income tax provisions are recognized by the group companies on the basis of respective tax regulations in each jurisdiction where the Company operates.

Prior to 2000, income taxes were charged to results in the same period in which the income and expenses were recorded and were calculated in accordance with the enacted tax laws in Chile and the other jurisdictions in which the Company operated.

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 2 - Summary of Significant Accounting Policies (continued)

j) Income taxes and deferred income taxes (continued)

Beginning January 1, 2000, the Company records deferred income taxes in accordance with Technical Bulletin No. 60 (“BT 60”) and complementary technical bulletins thereto issued by the Chilean Association of Accountants, and with SVS Circulars No. 1466 and No. 1560, recognizing, using the liability method, the deferred tax effects of temporary differences between the financial and tax values of assets and liabilities. As a transitional provision at the date of adoption of BT 60, a contra asset or liability has been recorded offsetting the effects of the deferred tax assets and liabilities not recorded prior to January 1, 2000. Such contra asset or liability must be amortized to income over the estimated average reversal periods corresponding to the underlying temporary differences to which the deferred tax asset or liability relates calculated using the tax rates that will be in effect at the time of reversal.

Deferred tax assets are further reduced by a valuation allowance, if based on the weight of available evidence it is more-likely-than-not that some portion of the deferred tax assets will not be realized.

k) Property, plant and equipment

Property, plant, equipment and property rights are recorded at acquisition cost, considering in general an average residual value of 5%, except for certain assets that were restated in accordance with a technical appraisal in 1988. Depreciation expense has been calculated using the straight-line method based on the estimated useful lives of the assets and is charged directly to expenses.

	Estimated years of useful life

Mining Concessions		7 – 13
Building and infrastructure		3 – 80
Machinery and equipment		3 – 35
Other		2 – 30

Property, plant and equipment acquired through financial lease agreements are accounted for at the present value of the minimum lease payments plus the purchase option based on the interest rate included in each contract. The Company does not legally own these assets and therefore cannot freely dispose of them.

In conformity with Technical Bulletin No. 31 and 33 of the Chilean Association of Accountants, the Company capitalizes interest cost associated with the financing of new assets during the construction period of such assets.

Maintenance costs of plant and equipment are charged to expenses as incurred.

The Company obtains property rights and mining concessions from the Chilean state. The property rights are usually obtained without initial cost (other than minor filing fees) and once obtained, are retained by the Company as long as the annual fees are paid. Such fees, which are paid annually in March, are recorded as prepaid assets and are amortized on a straight-line basis over the following twelve months. Values attributable to mining concessions are recorded in property, plant and equipment.

F-12

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 2 - Summary of Significant Accounting Policies (continued)

l) Investments in related companies

Investments in related companies over which the Company has significant influence, are included in other assets and are recorded using the equity method of accounting, in accordance with SVS Circulars No. 368 and 1697 and Technical Bulletins No. 64 and 72 issued by the Chilean Association of Accountants. Accordingly, the Company’s proportional equity share in the net income or net loss of each investee is recognized in non-operating income and expenses in the consolidated statements of income on an accrual basis, after eliminating any unrealized profits from transactions with the related companies.

The translation adjustment resulting from conversions of investments in domestic subsidiaries that maintain their accounting records and are controlled in Chilean pesos to US dollars is recognized in other reserves within shareholders’ equity (cumulative translation adjustment). Direct and indirect investments in foreign subsidiaries or affiliates are controlled in US dollars.

Investments in which the Company has less than 20% participation, but it has the capacity to exert significant influence over the investment, because SQM’s nominee form part of its Board of Directors, have been valued using the equity method.

m) Goodwill and negative goodwill

Until December 31, 2003, goodwill was calculated as the excess of the purchase price of companies acquired over book value of their net assets, whereas negative goodwill arose when the net assets acquired exceeded the purchase price. Beginning January 1, 2004, the Company adopted Technical Bulletin No. 72 of the Chilean Association of Accountants that changes the basis for accounting for goodwill and negative goodwill, introducing the fair value of the acquired net assets as the basis to be compared with purchase price in a business combination in order to determine goodwill or negative goodwill.

Goodwill and negative goodwill resulting from acquisitions of equity method investments are controlled in the same currency in which the investment to which it relates is measured.

Both goodwill and negative goodwill are amortized based on the estimated period of investment return, which is generally 20 and 10 years for goodwill and negative goodwill, respectively.

n) Intangible assets

Intangible assets are stated at cost plus acquisition expenses and are amortized over a maximum period of 40 years, in accordance with Technical Bulletin No. 55 of the Chilean Association of Accountants.

o) Mining development cost

Expenses associated with mineral reserves under exploitation are capitalized as part of production cost to inventories. Expenses associated with future reserves are presented within Other long-term assets and are amortized according to estimated reserves of minerals.

p) Staff severance indemnities

The Company calculates the liability for staff severance indemnities based on the present value of the accrued benefits for the actual years of service worked based on average employee tenure of 24 years and a real annual discount rate of 8% (9% in 2004 and 2003).

F-13

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 2 - Summary of Significant Accounting Policies (continued)

q) Vacations

The cost of employee vacations is recognized in the financial statements on an accrual basis.

r) Reverse repurchase agreements

These operations are registered in Other Current Assets at the amount of the purchase. Since the purchase date, the respective interest is recognized on accrual basis in accordance with SVS Circular No. 768.

s) Dividends

Dividends are generally declared in US dollars but are paid in Chilean pesos.

t) Derivative contracts

The Company maintains derivative contracts to hedge against movements in foreign currencies, which are recorded in conformity with Technical Bulletin No. 57 of the Chilean Association of Accountants. Such contracts are generally recorded at fair value with net gain or losses recognized in results.

u) Revenue recognition

Revenue is recognized on the date goods are physically delivered or when they are considered delivered according to the terms of the contract.

v) Computer software

Computational systems developed internally using the Company’s personnel and materials are charged to income during the year in which the expenses are incurred. In accordance with Circular No. 981 issued by the SVS, computer systems acquired by the Company are recorded at cost.

w) Research and development expenses

Research and development cost are charged to the income statement in the period in which they are incurred. Property, plant and equipment that are acquired for use in research and development activities and determined to provide additional benefits to the Company are recorded in property, plant and equipment.

x) Reclassifications

Certain amounts in the prior years' financial statements have been reclassified to conform to the current year's presentation.

Note 3 - Accounting Changes

During the year ended December 31, 2005, the Company changed the discount rate used for the determination of staff severance indemnities provision from 9% applied in the years ended December 31, 2003 and 2004 to 8%. This change gave rise to a higher charge to income for the year ended December 31, 2005 of ThUS$ 678.

During the year ended December 31, 2005, the subsidiary SQM Industrial S.A. (formerly PCS Yumbes SCM acquired in December 2004) changed the method of depreciation of certain assets from the unit of production to the straight-line method based on the estimated remaining technical useful lives of the different classes of assets.

F-14

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 4 - Current and Long-term Accounts Receivable

a)	Current and long-term accounts receivable and other accounts receivable as of December 31, are detailed as follows:

	Up to 90 days				Between 90 days and 1 year				Total Short-term (net)

	2005		2004		2005		2004		2005			2004

	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
Short-term
Trade accounts receivable		105,618		124,724		12,570		7,137		118,188			131,861
Allowance for doubtful accounts										(7,737	)		(6,970	)
Notes receivable		34,950		38,439		14,772		10,517		48,844			48,192
Allowance for doubtful accounts										(3,459	)		(3,243	)

Accounts receivable, net										155,836			169,840


Other accounts receivable		9,454		8,908		999		113		10,453			9,021
Allowance for doubtful accounts										(716	)		(678	)

Other accounts receivable, net										9,737			8,343


Long-term receivables										379			289

b)	Changes in the allowance for doubtful accounts for the years ended December 31 are as follows:

	2005			2004			2003

	ThUS$			ThUS$			ThUS$

At January 1,		10,891			9,985			8,568
Charged to expenses		1,741			3,537			2,216
Deductions (release)		(1,097	)		(2,937	)		(1,372	)
Exchange rate differences		377			306			332
Companies not previously consolidated		—			—			241

At December 31,		11,912			10,891			9,985

F-15

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 4 - Current and Long-term Accounts Receivable (continued)

(c)	Consolidated Current and Long-term Receivables – by Geographic Location as of December 31, are detailed as follows:

	Chile						Europe, Africa and the Middle East						Asia and Oceania						USA, Mexico and Canada						Latin America and the Caribbean						Total

	2005			2004			2005			2004			2005			2004			2005			2004			2005			2004			2005			2004

	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Net current trade accounts receivable Balance		35,860			31,490			26,345			40,914			7,069			3,489			27,433			36,273			13,744			12,725			110,451			124,891
% of total		32.47	%		25.21	%		23.85	%		32.76	%		6.40	%		2.79	%		24.84	%		29.05	%		12.44	%		10.19	%		100.00	%		100.00	%

Net current notes receivable balance		38,016			39,065			2,826			2,524			563			515			357			120			3,623			2,725			45,385			44,949
% of total		83.76	%		86.91	%		6.23	%		5.62	%		1.24	%		1.15	%		0.79	%		0.26	%		7.98	%		6.06	%		100.00	%		100.00	%

Net current other accounts receivable Balance		4,631			3,558			1,504			1,943			11			2			3,064			2,591			527			249			9,737			8,343
% of total		47.56	%		42.65	%		15.45	%		23.29	%		0.11	%		0.02	%		31.47	%		31.06	%		5.41	%		2.98	%		100.00	%		100.00	%

Total net current accounts receivable Balance		78,507			74,113			30,675			45,381			7,643			4,006			30,854			38,984			17,894			15,699			165,573			178,183
% of total		47.42	%		41.59	%		18.53	%		25.47	%		4.62	%		2.25	%		18.62	%		21.88	%		10.81	%		8.81	%		100.00	%		100.00	%

Long-term accounts receivable, net Balance		322			199			—			75			42			—			—			—			15			15			379			289
% of total		84.96	%		68.86	%		—			25.95	%		11.08	%		—			—			—			3.96	%		5.19	%		100.00	%		100.00	%

Total current and long-term accounts receivable, net Balance		78,829			74,312			30,675			45,456			7,685			4,006			30,854			38,984			17,909			15,714			165,952			178,472
% of total		47.50	%		41.64	%		18.48	%		25.47	%		4.63	%		2.24	%		18.60	%		21.84	%		10.79	%		8.81	%		100.00	%		100.00	%

F-16

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 5 - Balances and Transactions with Related Parties

Accounts receivable from and payable to related companies are stated in US dollars and accrue no interest.

Transactions are made under terms and conditions that are similar to those offered to unrelated third parties.

a)	Amounts included in balances with related parties as of December 31, 2005 and 2004 are as follows:

	Short-term				Long-term

	2005		2004		2005		2004

Accounts receivable	ThUS$		ThUS$		ThUS$		ThUS$

Ajay Europe S.A.R.L.		1,948		3,583		—		—
Nutrisi Holding N.V.		1,432		1,653		—		—
Generale de Nutrition Vegetale S.A.		132		132		—		—
Abu Dhabi Fertilizer Ind. WLL		3,354		5,284		2,000		—
NU3 B.V.		467		607		—		—
Doktor Tarsa - SQM Turkey		12,688		4,813		—		—
Fertilizantes Naturales S.A.		5,887		—		—		—
Sales de Magnesio S.A.		72		52		—		—
Soc.Inv. Pampa Calichera S.A.		4		—		—		—
Sac S.A.		4		—		—		—
Ajay North America LLC		2,420		—		—		—
PCS Sales Inc.		—		31		—		—
Impronta SRL		5,042		2,568		—		—
Adubo Trevo S.A.		16		16		—		—
Yara International Asia Trade		1,359		1,682		—		—
Yara East Africa Limited		681		—		—		—
Yara Poland Sp. z o.o.		103		45		—		—
Yara Benelux B.V.		222		237		—		—
Yara Hellas S.A.		116		80		—		—
Yara International Australia PTY.		670		829		—		—
Yara UK Ltd.		132		144		—		—
Yara GMBH & CO KG		148		96		—		—
Yara Colombia Ltda.		1,480		355		—		—
Yara Fertilizers (Philippines)		60		—		—		—
Yara Fertilizers (New Zealand)		171		—		—		—
Yara Iberian S.A.		1,958		1,565		—		—
Yara North America LLC		7,727		218		—		—
Yara France BU Africa		1,025		743		—		—
Yara France BU Latin America		—		1,296		—		—
Yara Argentina S.A.		43		—		—		—
Yara Internacional ASA		7,098		—		—		—

Total		56,459		26,029		2,000		—

F-17

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Sociedad Química y Minera De Chile S.A. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

(Expressed in thousands of US dollars, except as stated)

Note 5 - Balances and Transactions with Related Parties (continued)

a)	Amounts included in balances with related parties as of December 31, 2005 and 2004, continued:

	Short-term

	2005		2004

Accounts payable		ThUS$		ThUS$


SQM Industrial S.A.		—		6,645
Charlee SQM Thailand CO.		88		—
NU3 N.V.		813		1,319
Rotem Amfert Negev Limited		—		1,424
Yara Int. Wholesale Sudafrica (South Africa)		362		—
Yara Argentina S.A.		—		4
Yara AB		1		14
Yara Business Suport		4,130		2,761
Yara Internacional ASA		—		446
Yara Fertilizantes Ltda.		575		—
Yara France S.A.		191		1,412
Yara France BU Latin America		1,502		—

Total		7,662		14,025

There were no outstanding long-term accounts payable with related parties as of December 31, 2005 and 2004.

F-18

Title of each class	Name of each exchange on which registered
Series A shares, in the form of American Depositary Shares Series B shares, in the form of American Depositary Shares	New York Stock Exchange New York Stock Exchange

Series A shares	142,819,552
Series B shares	120,376,972

		Page
PRESENTATION OF INFORMATION		iii
GLOSSARY		iii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		vi

PART I		1
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3.	KEY INFORMATION	1
ITEM 4.	INFORMATION ON THE COMPANY	11
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	44
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	62
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	73
ITEM 8.	FINANCIAL INFORMATION	74
ITEM 9.	THE OFFER AND LISTING	78
ITEM 10.	ADDITIONAL INFORMATION	79
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	89
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	91

PART II		91
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	91
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	91
ITEM 15.	CONTROLS AND PROCEDURES	91
ITEM 16.	RESERVED	92
ITEM 16.A.	AUDIT COMMITTEE FINANCIAL EXPERT	92
ITEM 16.B.	CODE OF ETHICS	92
ITEM 16.C	PRINCIPAL ACCOUNTANT FEES AND SERVICES	92
ITEM 16.D	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	93
ITEM 16.E	PURCHASES OF EQUITY SECURITIES BY THE ISSUERS AND AFFILIATED PURCHASERS.	93

PART III		94
ITEM 17.	FINANCIAL STATEMENTS	94
ITEM 18.	FINANCIAL STATEMENTS	94
ITEM 19.	EXHIBITS	94
SIGNATURES		95
CONSOLIDATED FINANCIAL STATEMENTS		F-1
EXHIBIT 1.1
EXHIBIT 8.1
EXHIBIT 12.1
EXHIBIT 12.2
EXHIBIT 13.1
EXHIBIT 13.2

	Year ended December 31,

	2005			2004			2003			2002			2001

Income Statement Data	(in millions of US$) (1)
Chilean GAAP

Total Revenues		896.0			788.5			691.8			553.8			526.4
Operating Income		181.2			124.1			87.3			82.7			73.7
Non-operating results, net		(34.4	)		(17.6	)		(21.2	)		(30.0	)		(29.2	)
Net income		113.5			74.2			46.8			40.2			30.1
Net earnings per share (2)		0.43			0.28			0.18			0.15			0.11
Net earnings per ADS (2)		4.31			2.82			1.78			1.53			1.14
Dividend per share (3)(4)		0.279			0.182			0.088			0.076			0.056

Weighted average shares Outstanding (000s) (2)		263,197			263,197			263,197			263,197			263,197


U.S. GAAP (4)

Total Revenues		896.0			788.5			691.8			553.8			526.4
Operating Income		163.9			117.1			76.4			86.4			74.6
Non-operating results, net		(6.1	)		(4.1	)		(4.0	)		(25.9	)		(41.6	)
Effect of change in accounting principles		—			—			—			0.5			—
Net income		125.2			86.8			57.8			46.9			24.4
Basic and diluted earnings per share		0.48			0.33			0.22			0.18			0.09
Basic and diluted earnings per ADS		4.76			3.30			2.19			1.78			0.93

Weighted average shares Outstanding (000s)(2)		263,197			263,197			263,197			263,197			263,197

	Year ended December 31,

	2005		2004		2003		2002		2001

Balance Sheet Data:	(In millions of US$) (1)
Chilean GAAP:

Total assets		1,640.6		1,361.4		1,363.5		1,322.3		1,413.4
Long-term debt		100.0		200.0		260.0		324.0		412.0
Total shareholders' equity		1,020.4		948.6		890.0		849.7		831.7
Capital Stock		477.4		477.4		477.4		477.4		477.4

U.S. GAAP

Total assets		1,609.0		1,318.5		1,319.4		1,274.6		1,354.8
Long-term debt		100.0		200.0		260.0		324.0		412.0
Total shareholders' equity		923.4		856.9		794.7		747.3		721.4
Capital Stock		479.3		479.3		479.3		479.3		479.3

	Observed Exchange Rate (1)
	Ch$ per US$

Year/Month	Low (1)		High (1)		Average (2)(3)		Year/Month End



2001		557.13		716.62		634.76		654.79
2002		641.75		756.56		692.32		718.61
2003		593.10		758.21		687.50		599.40
2004		559.21		649.45		612.13		559.83
2005		509.70		592.75		559.27		514.21
December 2005		509.70		518.63		514.33		514.21
January 2006		512.00		535.36		524.48		524.78
February 2006		516.91		532.35		525.70		517.76
March 2006		516.75		536.16		528.77		527.70
April 2006		511.44		526.18		517.33		518.62
May 2006		512.76		532.92		520.79		531.11

	2005(4)		2004(3)		2003(2)

		(in millions of US$)
Expenditures (1)		198.1		91.4		57.4

Sales Volume (in metric tons)	2005		2004(3)		2003		2002		2001

Sodium nitrate		63,300		58,900		62,500		59,500		63,100
Potassium nitrate and sodium potassium nitrate(1)		690,200		707,600		696,500		558,600		544,800
Potassium Sulfate		178,600		157,700		143,200		161,000		156,600
Blended and other specialty plant nutrients(2)		350,700		374,400		377,100		276,600		241,800
Revenues (in US$ millions)		487.8		426.8		362.8		281.4		259.1

Sales Breakdown	2005			2004			2003			2002			2001

Central and South America		29	%		29	%		26	%		30	%		24	%
North America		22	%		22	%		18	%		17	%		18	%
Europe		20	%		19	%		20	%		15	%		14	%
Others		20	%		20	%		27	%		27	%		31	%
Chile		9	%		10	%		9	%		11	%		13	%

Sales Volume (in metric tons)	2005		2004(1)		2003		2002		2001

Industrial nitrates		176,300		192,800		193,200		187,300		186,999
Sodium Sulfate		25,300		29,900		54,200		63,200		66,742
Boric Acid		6,300		6,120		10,700		11,300		12,822
Revenues (in US$ millions)		74.0		73.1		73.7		70.8		69.6

Main subsidiaries	Activity	Country of Incorporation	SQM Beneficial Ownership Interest (Direct/Indirect)

SQM Nitratos S.A.	Extracts and sells Caliche ore to subsidiaries and affiliates of SQM	Chile	100%
SQM Industrial S.A.	Produces and markets the Company’s products directly and through other subsidiaries and affiliates of SQM	Chile	100%
SQM Salar S.A.	Exploits the Atacama Salar to produce and market the Company’s products directly and through other subsidiaries and affiliates of SQM	Chile	100%
Minera Nueva Victoria S.A.	Produces and markets the Company’s products directly and through other subsidiaries and affiliates of SQM	Chile	100%
Servicios Integrales de Tránsitos 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 domestically the Company’s specialty plant nutrition products and imports fertilizers for re-sale in Chile	Chile	61%
Ajay-SQM Chile S.A.	Produces and markets the Company’s iodine and iodine derivatives	Chile	51%
Sales and distribution affiliates in the United States, Belgium, Brazil, Venezuela, Ecuador, Peru, Argentina, Mexico, South Africa and other locations.	Market the Company’s products throughout the world	Various

	Exploitation Concessions				Exploration Concessions

*Mines()**	Total number		hectares		Total number		hectares		Total number		hectares

Pedro de Valdivia		698		93,252		15		619		713		93,871
Maria Elena		651		126,000		29		1,102		680		127,102
Pampa Blanca		513		96,908		5		340		518		97,248
Nueva Victoria		63		8,128		7		1,369		70		9,497
Mapocho		61		8,240		11		367		72		8,607
Soronal		311		42,605		18		1,824		329		44,429
Atacama Salar		133		197,708		487		141,000		620		338,708
Sub total mines		2,430		572,841		572		146,621		3,002		719,462

Other caliche areas		5,277		1,425,147		2,401		635,429		7,678		2,060,576
Salars and other areas		267		50,008		126		33,500		393		83,508
Sub total other areas		5,544		1,475,155		2,527		668,929		8,071		2,144,084


Total		7,974		2,047,996		3,099		815,550		11,073		2,863,546

Mine	Proven Reserves (millions of metric tons)	Nitrate Average Grade (percentage by weight)	Iodine Average Grade (parts per million)

Pedro de Valdivia	144.0	7.2%	387
María Elena	146.8	7.3%	415
Pampa Blanca	81.4	6.3%	546
Nueva Victoria	95.3	4.2%	467
Mapocho	4.6	5.3%	436
Soronal	158.9	7.1%	405

Mine	Probable Reserves (millions of metric tons)	Nitrate Average Grade (percentage by weight)	Iodine Average Grade (parts per million)

Pedro de Valdivia	134.7	6.9%	441
María Elena	97.6	7.3%	380
Pampa Blanca	423.1	6.0%	526
Nueva Victoria	66.0	3.7%	443
Soronal	59.1	7.6%	362

	Proven Reserves (millions of metric tons)	Probable Reserves (millions of metric tons)

Potassium	39.8	5.0
Sulfate	35.9	1.6
Lithium	2.0	1.4
Boron	1.1	0.2

Location	Type of Facility	Approximate Size (1) (Hectares)

Pedro de Valdivia	Nitrate, sulfate and iodine production	126
María Elena	Nitrate, sulfate and iodine production	110
Coya Sur	Nitrate, sulfate and iodine production	232
Pampa Blanca	Concentrated nitrate salts and iodine production	86
Nueva Victoria	Iodine production	11
Atacama Salar(2)	Potassium chloride, lithium chloride, potassium sulfate and boric acid	2,288
Salar del Carmen, Antofagasta	Lithium carbonate and lithium hydroxide production	28
Salar del Carmen, Antofagasta	Boron production	4
Tocopilla	Port facilities	24

		Year 2005		Year 2004 (1)		% Change

Sodium nitrate	Th. Ton		63.3		58.9		8	%
Potassium nitrate and sodium potassium nitrate	Th. Ton		690.2		707.6		-3	%
Blended and other specialty fertilizers	Th. Ton		217.5		243.3		-11	%
Other non - SQM Specialty plant nutrients (2)	Th. Ton		133.2		131.1		2	%
Potassium sulfate	Th. Ton		178.6		157.7		13	%

(1)	2004 figures have been restated to reflect a reclassification affecting specialty plant nutrients. Products that used to be included under Specialty Plant Nutrition were relocated to reflect their industrial status.

(2)	Includes resales of purchased products.

		Year 2005		Year 2004		% Change

Iodine and derivatives	Th. Ton		8.1		7.7		5	%

		Year 2005		Year 2004(1)		% Change

Industrial nitrates	Th. Ton		176.3		192.9		-9	%
Soum Sulfate	Th. Ton		25.3		29.9		-15	%
Boric acid	Th. Ton		6.3		6.1		3	%

		Year 2004⁽¹⁾		Year 2003 ⁽²⁾		% Change

Sodium nitrate	Th. Ton		58.9		62.5		-6	%
Potassium nitrate and sodium potassium nitrate	Th. Ton		707.6		696.5		2	%
Blended and other specialty fertilizers	Th. Ton		243.3		252.1		-3	%
Other non- SQM specialty plant nutrients (3)	Th. Ton		131.1		125.0		5	%

Potassium sulfate	Th. Ton		157.7		143.2		10	%

					Year 2004			Year 2003			% Change
Iodine and derivatives			Th. Ton			7.7			6.6			17	%

	2005			2004
	Th US$			Th US$

Chilean pesos		53,167			66,980
Brazilian real		(941	)		(448	)
Euro		19,373			20,069
Japanese yen		6,333			3,693
Mexican pesos		8,101			(2,770	)
South African rand		7,529			7,074
Dirhams		11,543
Other currencies		3,282			2,224

	2005			2004

Weighted-average discount rate		7.5	%		7.5.	%
Rate of increase in compensation levels		0.0	%		0.0	%
Cost of living		2.5	%		2.5	%
Long-term rate of return on plan assets		8.5	%		8.5	%

	Total ThUS$		Less Than 1 year ThUS$		1 - 3 years ThUS$		3 - 5 years ThUS$		More Than 5 years ThUS$

Long- and Short-Term Debt		389,902		289,902		—		100,000		—
Capital lease obligations		1,249		184		416		490		159
Operating leases		98,630		3,945		7,890		7,890		78,905
Purchase commitments		64,046		64,046		—		—		—
Staff severance indemnities		16,415		—		—		—		16,415

Total Contractual Obligations and Commitments		570,242		358,077		8,306		108,380		95,479

Directors Name	Position	Current position held since

Julio Ponce L. (1)	Chairman of the Board and Director	September 1987
	Mr. Ponce is a Forestry Engineer from the Universidad de Chile. He joined the Company in 1981. He is also Chairman of the Board of the following corporations: Sociedad de Inversiones Pampa Calichera S.A., Sociedad de Inversiones Oro Blanco S.A., Norte Grande S.A. and Soquimich Comercial S.A. He is the brother of Luis Eugenio Ponce.

Wayne R. Brownlee	Vice Chairman of the Board and Director	May 2002
	Mr. Brownlee is Executive Vice-President, Treasurer and Chief Financial Officer of Potash Corporation of Saskatchewan, Inc. Mr. Brownlee earned degrees in Science and Business Administration from the University of Saskatchewan. He is on the Board of Great Western Brewing Company as well as PhilomBios, an agricultural biotechnology company. He became director at SQM on December 2001.

Hernán Büchi B.	Director	April 1993
	Mr. Büchi is a Civil Engineer from the Universidad de Chile. He served as Vice Chairman of SQM's Board from January 2000 to April 2002. He is currently a Board member in Quiñenco S.A., P y S S.A., Alto Palermo S.A., S.A.C.I. Falabella and Madeco S.A., among others.

José María Eyzaguirre B.	Director	December 2001
	Mr. Eyzaguirre is a lawyer, partner of the Chilean law firm Claro y Cia. He obtained his law degree from the Universidad de Chile and was admitted to the Chilean Bar in 1985. In 1987, he obtained a Master's Degree from New York University School of Law. He was admitted to the New York Bar in 1988. He is also a member of the board of directors of Gasoducto del Pacífico S.A., a transandean gas pipeline, and Chairman of the Board of directors of Club de Golf Valle Escondido.

Daniel Yarur E. (2)	Director	April 2003
	Mr. Yarur is an Information Engineer from the Universidad de Chile and holds an MSc in Finance at the London School of Economics and an AMP at Harvard Business School. He is a member of the Board of Banco de Credito e Inversiones, Antofagasta P.L.C. (based in London), Antogasta Minerals and Invertec Pesquera Mar de Chiloe S.A. Mr Yarur was Chairman of the Chilean Securities and Exchange Commission from 1994 to 2000 and was also Chairman of the Council Organization of the Securities Regulators of America. He is also a Professor at the Faculty of Economic and Administrative Sciences, Universidad de Chile.

Wolf von Appen	Director	May 2005
	Mr. Von Appen is an entrepreneur. He is currently a Board member of Sociedad de Fomento Fabril and Vice president of Centro de Estudios Publicos.

José Antonio Silva B.	Director	December 2001
	Mr. Silva is a lawyer from the Pontificia Universidad Católica de Chile and holds a Master's Degree in law at Harvard Law School. Currently, he is Senior Partner of the Chilean law firm Silva, Rencoret, Schultz & Lehuedé Abogados. He is also a sustitute member of the board of directors of HQI Transelec Chile S.A. and Embotelladora Andina S.A.


Kendrick T. Wallace	Director	December 2001
	Mr. Wallace is a lawyer who graduated from Harvard Law School. He is now Senior Vice President and General Counsel of Yara International ASA in Oslo, Norway. Prior to the spin-off of Yara International ASA from Norsk Hydro ASA, he was the chief legal counsel of Norsk Hydro ASA for North and South America in Tampa, Florida. Before that he was a partner in the law firm of Bryan Cave LLP in Kansas City, Missouri. Mr. Wallace is a member of the Board of Directors of Adubos Trevo S.A. in Brasil, OAO Minudobreniya (Rossosh) in Russia and of a number of subsidiaries of Yara International ASA. He is also on the Board of Directors of Norte Grande S.A., Sociedad de Inversiones Oro Blanco S.A. and Sociedad de Inversiones Pampa Calichera S.A.

Executive Officers Name	Position	Current position held since

Patricio Contesse G. (2)	Chief Executive Officer	March 1990
	Mr. Contesse is a Forestry Engineer from the Universidad de Chile. He joined the Company in 1981 as CEO, a position he held until 1982, and again in 1988. In the past, he was CEO of Celco Limitada, Schwager S.A. and Compañía de Aceros del Pacífico S.A. He has also served as Operations Senior Executive Vice President of Codelco Chile, President of Codelco USA and Executive President of Codelco Chile. Mr. Contesse is also a member of the Board of Soquimich Comercial.

Patricio de Solminihac T. (2)	Chief Operating Officer and Executive Vice President	January 2000
	Mr. de Solminihac is a Chemical Engineer from the Pontificia Universidad Católica de Chile and holds a Master in Business Administration from the University of Chicago. He joined the Company in 1988 as Business Development Vice President. In 1989, he became General Manager and later on he became Vice Chairman of the Board of SQM, a position he held from 1989 through January 2000. Mr. de Solminihac was Country Manager for Raychem Corporation. Currently he is a member of the Board of Empresas Melón S.A. and CEM. Mr. de Solminihac is also a member of the Board of Soquimich Comercial.

Matías Astaburuaga S. (2)	General Counsel	February 1989
	Mr. Astaburuaga is a lawyer from the Pontificia Universidad Católica de Chile. He joined the Company in 1989. Before that, he was Regional Counsel of The Coca Cola Export Corporation, Andean Region and Regional Counsel of American Life Insurance Company, Latin America Region.

Ricardo Ramos R. (2)	Chief Financial Officer and Business Development Senior Vice President	November 1994
	Mr. Ramos is an Industrial Engineer from the Pontificia Universidad Católica de Chile. He joined SQM in 1989 as an advisor in the Finance area. In 1991, he moved to the Sales department, where he was in charge of the coordination between operations and sales. In 1993, he returned to the Finance department and became deputy CFO. Mr. Ramos is also a member of the Board of Soquimich Comercial.

Jaime San Martín L. (2)	Mine Affairs and Internal Audit Senior Vice President	June 2005
	Mr. San Martín is a Transportation Engineer from the Pontificia Universidad Católica de Chile. He joined the Company in 1995 as Project Manager. He became Metallic Mining Development Manager in 1997, and Development Manager in 1998, Business Development and Mining Property Vice President in 1999 and Technical Senior Vice President in 2001.

Luis Eugenio Ponce L.	Corporate Commercial Senior Vice President	March 1999
	Mr. Ponce is a Mechanical Engineer from the Universidad Católica de Valparaíso. In 1981, he joined the Company as a 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. In the past he was member of the Board of IANSA. Currently he is a member of the board of Cerámicas Florencia S.A. Mr. Ponce is also a member of the Board of Soquimich Comercial. He is the brother of Julio Ponce.

Carlos Nakousi S. (2)	Salar-Lithium Operations Senior Vice President	May 2003
	Mr. Nakousi is an Industrial Engineer from the Pontificia Universidad Católica de Chile and a Harvard Business School alumni, after completing the Advanced Management Program in 2002. He joined the Company in 1989 as Head of Process Development. He became Deputy Development Manager in 1993, Development Manager of SQM Salar S.A. in 1995, Senior Vice President Salar Operations of SQM in 1999 and Operations Senior Vice President in 2003

Camila Merino C. (2)	Human Resources and Administration Senior Vice President Senior Vice President	March 2001
	Mrs. Merino is an Industrial Engineer from the Pontificia Universidad Católica de Chile and holds a Master in Business Administration degree from the Sloan School of Management at MIT. She joined the Company in 1991, and after a two-year period at MIT, she re-joined the Company in 1998 as Nitrates Operations Manager. In the same year she became Finance and Administration Manager of SQM Nitratos S.A. and later on, in 1999, Corporate Services Manager.

Mauricio Cabello.	Nitrates-Iodine Operations Senior Vice President	June 2005
	Mr. Cabello is a Mechanical Engineer from the Universidad de Santiago de Chile. He joined the Company in 2000 as Maintenance Superintendent of SQM Salar. He became Maintenance Manager of SQM Nitratos- Yodo in 2002 and Production Manager of SQM Nitratos-Yodo in 2004. He previously worked in various engineering-related positions in Pesquera San José S.A., Pesquera Coloso S.A. and Cintac S.A.

Pauline de Vidts S. (2)	Safety, Health & Environment and Technology Senior Vice President	June 2005
	Mrs. De Vidts is an Industrial Engineer from the Pontificia Universidad Católica de Chile and holds a Ph.D. in Chemical Engineering from Texas A&M University. She joined the company in 1996 to work in process development for the Salar de Atacama Operations, becoming Development Manager for this operations in 1998, and later on, in 2001, she became Corporate R&D and Environmental Issues Vice President.

	Total per subsidiaries Ch$								Annual Total Ch$

	SQM S.A.				SQMC

Name	Meeting		Committee		Meeting		Committee


Ponce Lerou, Julio		343,650,861				63,194,463				406,845,324
Büchi Buc, Hernán		50,597,279								50,597,279
Brownlee, Wayne R.		50,597,279		10,530,061						61,127,340
Eyzaguirre, José María		50,597,279								50,597,279
Silva, José Antonio		50,597,279		10,530,061						61,127,340
Wallace, Kendrick T.		50,597,279								50,597,279
Yarur, Daniel		50,597,279		8,804,534						59,401,813
Von Appen Wolf		7,081,298								7,081,298
Milstein, Avi (1)		40,931,363		864,145						41,795,508


Total		695,247,196		30,728,801		63,194,463		0		789,170,460

Section	NYSE Standards	SQM practices pursuant to Chilean regulations


303A.01	The majority of the listed company directors must be independent.	There is no legal obligation to have a majority of independent directors on the Board.

303A.02	Independence Test	A Director is considered independent if he would have been elected without the vote of the controlling shareholder and related persons and entities.

303A.03	Non-management directors must meet at regularly scheduled executive sessions without management.	These meetings are not needed given that directors do not also serve as executive officers.

303A.04	Listed companies must have a nominating/corporate governance committee composed entirely of independent directors, and must have a written charter.	This committee is not contemplated as such in the Chilean regulations. Pursuant to Chilean regulations SQM has a Directors' Committee (see Board practices above).

303A.05	Listed companies must have a compensation committee composed entirely of independent directors, and must have a written charter	This committee is not contemplated as such in the Chilean regulations. Pursuant to chilena regulations SQM has a Director’s 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 contemplated as such in the Chilean regulations. On june 21, 2005, the Board of directors approved the establishment of an audit committee to comply with the requirements of the NYSE corporate governance rules.

303A.07	The audit committe must have a minimum of three members. Each of them must satisfy requirements of independence and the committee must have a written charter.	Pursuant to Section 303A.00, SQM is not required to comply with requirements in 303A.07. Pursuant to Chilean Regulations SQM has a Director’ Committee( see Board practices above) with Certain requirements of independence.

303A.08	Shareholders must have the opportunity to vote on all equity-compensation plans involving directors, executives, employees, or other service providers.	SQM does not have equity compensation plans. 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.	Not contemplated 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 foreing 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 sets forth 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.

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 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; (c) must submit an executed Written Affirmation annually to the NYSE.	Not contemplated in the Chilean regulations. The CEO must only comply with Section 303A.12 (b) and (c).

		% Beneficial ownership

2006 (1)		24.96%
2005		24.96%
2004		22.63%
2003		20.35%

Shareholder	Number of Series A Shares Beneficially Owned		% Series A Shares			Number of Series B Shares Beneficially Owned		% Series B Shares			% Total Shares

Sociedad de Inversiones Pampa Calichera S.A. (1) (2)		52,434,256		36.71	%		—		0.00	%		19.92	%
Inversiones El Boldo Ltda. (3)		43,861,795		30.71	%		—		0.00	%		16.67	%
The Bank of New York		146,370		0.10	%		32,924,920		27.35	%		12.57	%
Inversiones RAC Chile Ltda. (3)		19,200,242		13.44	%		2,699,773		2.24	%		8.32	%
A.F.P. Habitat S.A. (4)		—		0.00	%		8,426,384		7.00	%		3.20	%
A.F.P. Provida S.A. (4)		—		0.00	%		8,325,985		6.92	%		3.16	%
Larrain Vial S.A.		3,005,558		2.10	%		4,725,709		3.93	%		2.94	%
Global Mining Investments (Chile ) S.A.		7,123,076		4.99	%		—		0.00	%		2.71	%
Inversiones SQYA S.A. (1)		6,145,092		4.30	%		—		0.00	%		2.33	%
A.F.P. Cuprum S.A. (4)		—		0.00	%		5,167,609		4.29	%		1.96	%