Edgar Filing: CHEMICAL & MINING CO OF CHILE INC

Unassociated Document

UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

OF THE SECURITIES AND EXCHANGE ACT OF 1934

Includes financial statements and their related notes for the nine-month period ended September 30, 2007, filed by Sociedad Química y Minera de Chile S.A. before the Superintendencia de Valores y Seguros de Chile on October 30, 2007.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

(Exact name of registrant as specified in its charter)

CHEMICAL AND MINING COMPANY OF CHILE INC.

(Translation of registrant's name into English)

El Trovador 4285, Santiago, Chile (562) 425-2000

(Address and phone number of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x

Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o

No x

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82_________

On October 30, 2007, the Registrant filed with the Superintendencia de Valores y Seguros of Chile (the "SVS") a report that included information as to the Registrant's consolidated financial condition and results of operations for the nine-month period ended September 30, 2007. Attached is a summary of such consolidated financial information included in the summary and in the report filed with the Superintendencia de Valores y Seguros of Chile. This financial information was prepared on the basis of accounting principles generally accepted in Chile and does not include a reconciliation of such information to accounting principles generally accepted in the United States of America.

THIS REPORT IS AN ENGLISH TRANSLATION OF, AND A CHILEAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES PRESENTATION OF, THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2007 REPORT FILED WITH THE SUPERINTENDENCIA DE VALORES Y SEGUROS (SVS) IN CHILE, AND UNLESS OTHERWISE INDICATED, FIGURES ARE IN US DOLLARS.

Consolidated Financial Statements

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Santiago, Chile

September 30, 2007 and 2006

Consolidated Financial Statements

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

As of September 30, 2007 and 2006

and for the nine months ended September 30, 2007 and 2006

(A translation of the original in Spanish- see note 2 (a))

Contents

Consolidated Financial Statements

Consolidated Balance Sheets	4
Consolidated Statements of Income	6
Consolidated Statements of Cash Flows	7
Notes to the Consolidated Financial Statements	8

Ch$	-	Chilean pesos
ThCh$	-	Thousands of Chilean pesos
US$	-	United States dollars
ThUS$	-	Thousands of United States dollars
ThEuro	-	Thousands of Euros
UF	-	The UF is an inflation-indexed, Chilean peso-denominated monetary unit. The UF rate is set daily in advance, based on the change in the Consumer Price Index of the previous month.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Consolidated Balance Sheets

(A translation of the original in Spanish- see note 2 (a))

			As of September 30,
	Note		2007			2006
			ThUS$			ThUS$
ASSETS

Current Assets
Cash				13,076			16,731
Time deposits				25,985			6,156
Marketable securities		4		74,733			61,904
Accounts receivable, net		5		266,488			228,526
Other accounts receivable, net		5		9,712			7,226
Accounts receivable from related companies		6		70,732			52,050
Inventories, net		7		385,930			387,466
Recoverable taxes				27,748			25,734
Prepaid expenses				7,151			5,870
Deferred income taxes		15		-			8,869
Other current assets				22,686			13,813
Total Current Assets				904,241			814,345

Property, Plant and Equipment, Net		8		967,705			902,198

Other Assets
Investments in related companies		9		21,866			18,230
Goodwill, net		10		34,733			41,044
Negative goodwill, net		10		(1,650	)		-
Intangible assets, net				3,988			4,814
Long-term accounts receivable, net		5		139			312
Long-term accounts receivable from related companies		6		2,118			2,000
Other long-term assets		11		38,745			50,838
Total Other Assets				99,939			117,238
Total Assets				1,971,885			1,833,781

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

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Consolidated Balance Sheets

(A translation of the original in Spanish- see note 2 (a))

			As of September 30,
	Note		2007		2006
			ThUS$		ThUS$
LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Short-term bank debt		12		1,253		92,052
Current portion of long-term debt		12		2,014		384
Current portion of bonds payable		13		12,687		9,593
Dividends payable				432		325
Accounts payable				115,169		90,171
Other accounts payable				335		251
Notes and accounts payable to related companies		6		1,733		1,097
Accrued liabilities		14		36,923		25,000
Withholdings				7,378		7,599
Income taxes				11,802		12,187
Deferred income				42,050		29,239
Deferred income taxes		15		4,113		-
Other current liabilities				865		2,080
Total Current Liabilities				236,754		269,978

Long-Term Liabilities
Long-term bank debt		12		180,000		100,000
Long-term obligations with the public (Bonds)		13		304,101		300,219
Other accounts payable				753		896
Deferred income taxes		15		51,964		49,138
Staff severance indemnities		16		20,812		19,372
Total Long-Term Liabilities				557,630		469,625

Minority interest		17		42,486		36,899

Shareholders' Equity
Paid-in capital		18		477,386		477,386
Other reserves		18		160,608		156,175
Retained earnings		18		497,021		423,718
Total Shareholders' Equity				1,135,015		1,057,279
Total Liabilities and Shareholders' Equity				1,971,885		1,833,781

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

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Consolidated Statements of Income

(A translation of the original in Spanish- see note 2 (a))

			For the nine months ended
			September 30,
	Note		2007			2006
			ThUS$			ThUS$
Operating Results

Sales				881,286			775,845
Cost of sales				(631,970	)		(554,572	)
Gross margin				249,316			221,273
Selling and administrative expenses				(49,907	)		(50,769	)
Operating Income				199,409			170,504

Non-operating Results
Non-operating income		20		17,773			14,458
Non-operating expenses		20		(41,162	)		(39,832	)
Non-operating Loss				(23,389	)		(25,374	)
Income before income taxes				176,020			145,130
Income tax expense		15		(38,256	)		(31,057	)
Income Before Minority Interest				137,764			114,073
Minority interest		17		(2,330	)		(2,519	)
Income Before Negative Goodwill				135,434			111,554
Amortization of negative goodwill		10		-			68
Net income				135,434			111,622

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

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Consolidated Statements of Cash Flows

(A translation of the original in Spanish- see note 2 (a))

		For the nine months ended
		September 30
		2007			2006
		ThUS$			ThUS$
Cash flows from operating activities
Net income			135,434			111,622
Charges (credits) to income not representing cash flows
Depreciation expense	8		71,800			66,136
Amortization of intangible assets			531			739
Write-offs and accruals			20,625			11,475
Gain on equity investments in related companies			(3,558	)		(1,450	)
Loss on equity investments in related companies			58			189
Amortization of goodwill	10		1,698			1,858
Amortization of negative goodwill	10		-			(68	)
(Gain) loss on sales of assets			(24	)		(634	)
Loss on sale of investments			-			197
Other credits to income not representing cash flows			(590	)		(8,586	)
Other charges to income not representing cash flows			92,835			63,502
Foreign currency translation, net			2,312			5,403
Net changes in operating assets and liabilities (Increase) decrease:
Trade accounts receivable			(53,752	)		(11,595	)
Inventories			(25,273	)		(58,848	)
Other assets			(14,120	)		3,287
Accounts payable			9,806			(12,342	)
Interest payable			5,343			2,295
Net income taxes payable			(18,320	)		(43,559	)
Other accounts payable			(5,589	)		(7,533	)
VAT and taxes payable			(6,221	)		7,576
Minority interest	17		2,330			2,519
Net cash provided by operating activities			215,325			132,183

Cash flows from financing activities
Proceeds from short term bank financing			-			176,281
Bonds payable			-			299,833
Payment of dividends			(94,999	)		(74,477	)
Repayment of bank financing			(57,090	)		(371,281	)
Payment of obligations with the public (Bonds payable)			(2,566	)		-
Payment of expenses for the issuance and placement of bonds payable			-			(6,629	)
Net cash (used in) provided by financing activities			(154,655	)		23,727

Cash flows from investing activities
Sales of property, plant and equipment			2,611			8,706
Sales of investments in related companies			-			902
Other investing income	24		361			24,481
Additions to property, plant and equipment			(123,015	)		(136,813	)
Capitalized interest			(9,400	)		-
Purchase of investments in related companies			-			(115,124	)
Other disbursements			(785	)		-
Net cash used in investing activities			(130,228	)		(217,848	)

Effect of inflation on cash and cash equivalents			1,125			2,034
Net change in cash and cash equivalents			(68,433	)		59,904
Beginning balance of cash and cash equivalents			183,943			147,956
Ending balance of cash and cash equivalents			115,510			88,052

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

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 1 – Company Background

Sociedad Química y Minera de Chile S.A. (the “Company”) was registered with the Chilean Superintendency of Securities and Insurance (“SVS”) on March 18, 1983.

Note 2 – Summary of Significant Accounting Policies

a) Basis of the preparation of the consolidated financial statements

The accompanying consolidated financial statements have been prepared in U.S. 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 to Chilean GAAP may not conform to generally accepted accounting principles in the United States (“US GAAP”) or International Financial Reporting Standards (“IFRS”). For the convenience of the reader, the consolidated financial statements and their accompanying notes have been translated from Spanish into English.

The consolidated financial statements include the accounts of Sociedad Química y Minera de Chile S.A. (the “Parent Company”) and subsidiaries (companies in which the Parent Company holds a controlling participation, generally equal to direct or indirect ownership of more than 50%). The Parent Company and its subsidiaries are referred to as the “Company”.

The preparation of financial statements 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.

In accordance with SVS Circular No. 1,697 and Technical Bulletins Nos. 64 and 72 of the Chilean Association of Accountants, the consolidated financial statements include the following subsidiaries:

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 – Summary of Significant Accounting Policies (continued)

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

	Direct or indirect ownership
	2007		2006
Foreign subsidiaries:		%	%
Nitratos Naturais do Chile Ltda. (Brazil)		100.00		100.00
Nitrate Corp. of Chile Limited (United Kingdom)		100.00		100.00
SQM North America Corp. (USA)		100.00		100.00
SQM Europe N.V. (Belgium)		100.00		100.00
Soquimich S.R.L. Argentina		100.00		100.00
Soquimich European Holding B.V. (Holland)		100.00		100.00
SQM Corporation N.V. (Dutch Antilles)		100.00		100.00
S.Q.I. Corporation N.V. (Dutch Antilles)		100.00		100.00
SQM Comercial de México S.A. de C.V.		100.00		100.00
North American Trading Company (USA)		100.00		100.00
Administración y Servicios Santiago S.A. de C.V. (Mexico)		100.00		100.00
SQM Peru S.A.		100.00		100.00
SQM Ecuador S.A.		100.00		100.00
Cape Fear Bulk L.L.C. (USA)		51.00		51.00
PTM – SQM Ibérica S.A. (Spain)		0.00		100.00
SQM Nitratos México S.A. de C.V. (México)		51.00		51.00
SQMC Holding Corporation L.L.P. (USA)		100.00		100.00
SQM Investment Corporation N.V. (Dutch Antilles)		100.00		100.00
SQM Brasil Ltda.		100.00		100.00
SQM France S.A.		100.00		100.00
SQM Japon Co. Ltd.		100.00		100.00
Royal Seed Trading Corporation A.V.V. (Aruba)		100.00		100.00
SQM Oceanía PTY Limited (Australia)		100.00		100.00
RS Agro-Chemical Trading A.V.V. (Aruba)		100.00		100.00
SQM Indonesia		80.00		80.00
SQM Virginia L.L.C. (USA)		100.00		100.00
Agricolima S.A. de C.V. (Mexico)		100.00		100.00
SQM Venezuela S.A.		100.00		100.00
SQM Italia S.R.L. (Italy)		100.00		95.00
Comercial Caiman Internacional S.A. (Cayman Islands)		100.00		100.00
Mineag SQM Africa Limited (South Africa)		100.00		100.00
Fertilizantes Olmeca y SQM S.A. de C.V. (Mexico)		0.00		100.00
SQM Lithium Specialties L.L.C. (USA)		100.00		100.00
SQM Dubai – FZCO.		100.00		100.00
Fertilizantes Naturales S.A.		66.67		66.67
Iodine Minera B.V.		100.00		100.00

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 – Summary of Significant Accounting Policies (continued)

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

	Direct or indirect ownership
	2007		2006
	%		%
Domestic subsidiaries:
Comercial Hydro S.A.		60.64	60,64
SQM Potasio S.A.		100.00	100.00
SQM Nitratos S.A.		99.99	99.99
Ajay SQM Chile S.A.		51.00	51.00
SQMC International Limitada.		60.64	60.64
SQM Industrial S.A.		100.00	100.00
Isapre Norte Grande Ltda.		100.00	100.00
Almacenes y Depósitos Ltda.		100.00	100.00
Servicios Integrales de Tránsitos y Transferencias S.A.		100.00	100.00
Soquimich Comercial S.A.		60.64	60.64
SQM Salar S.A.		100.00	100.00
Minera Nueva Victoria S.A.		100.00	100.00
Proinsa Ltda.		60.58	60.58
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.		100.00	100.00
Exploraciones Mineras S.A.		100.00	100.00

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

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 - Summary of Significant Accounting Policies (continued)

b)	Accounting period

These consolidated financial statements have been prepared as of September 30, 2007 and 2006 and for the nine-month periods then ended.

c)	Reporting currency and monetary correction

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

The Parent Company and those subsidiaries which maintain their accounting records in U.S. dollars are not required, or permitted, to restate the historical dollar amounts for the effects of inflation.

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 the Chilean peso during the period. 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 (5.1% and 2.5% in 2007 and 2006, 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-U.S. dollar denominated monetary assets and liabilities exposed to the effects of inflation.

Prior period financial statements presented for comparative purposes have not been restated to reflect the change in the purchasing power of the Chilean pesos during the most recent year-end. In accordance with Chilean GAAP, amounts expressed in U.S. dollars, including amounts included in the consolidated financial statements as determined in prior years from the translation of financial statements of those Chilean subsidiaries which maintain their accounting records in Chilean pesos, are not adjusted for price-level changes.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 - Summary of Significant Accounting Policies (continued)

d)	Foreign currency

Foreign currency transactions

Monetary assets and liabilities denominated in Chilean pesos and other currencies have been translated to U.S. dollars at the observed exchange rates determined by the Central Bank of Chile in effect at each year-end of Ch$ 511.23 per US$1 at September 30, 2007 and Ch$ 537.03 per US$1 at September 30, 2006.

ii)

Translation of non-U.S. dollar financial statements

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

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

Balance sheet accounts are translated to U.S. dollars at the year-end exchange rate without eliminating the effects of price-level restatement.

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

Translation gains and losses, as well as the price-level restatement of the balance sheet mentioned above, are included as an adjustment in shareholders’ equity, in conformity with Circular No. 1,697 of the SVS.

The financial statements of those foreign subsidiaries that keep their accounting records in currencies other than the U.S. dollar have been translated at historical exchange rates 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 are translated at average exchange rates between the US dollar and the local currency.

Any exchange differences are included in the results of operations for the period.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 - Summary of Significant Accounting Policies (continued)

d)	Foreign currency

iii) Foreign currency translation

Foreign currency translation for the period ended September 30, 2007 and 2006 generated net earnings (loss) of ThUS$ (2,311) and ThUS$ (5,403) respectively, which 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 September 30, as follows:

	2007		2006
	US$		US$
Brazilian Real		1.96		2.18
New Peruvian Sol		3.10		3.25
Argentine Peso		3.15		3.10
Japanese Yen		115.43		117.90
Euro		0.71		0.79
Mexican Peso		10.92		11.05
Indonesian Rupee		9,830.04		9,290.00
Australian Dollar		1.13		1.34
Pound Sterling		0.51		0.54
Ecuadorian Sucre		1.00		1.00
South African Rand		7.01		7.68

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.

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.

f)	Time deposits

Time deposits are recorded at cost plus accrued interest.

g)	Marketable securities

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

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 - Summary of Significant Accounting Policies (continued)

h)	Allowance for doubtful accounts

The Company records an allowance for doubtful accounts based on estimated probable losses.

i)	Inventories and materials

Inventories of finished products and products in process are stated at average production cost, which is presented net of provisions. Provisions have been made on the basis of a technical study which covers the different variables that affect our products (density, humidity, and others).

Materials and supplies received are stated at average acquisition cost and inventories in transit are stated at cost incurred as of the end of the period.

The cost of inventories does not exceed their net realizable value.

j)	Income taxes and deferred taxes

In conformity with current Chilean tax regulations, the Company recognizes the provision for corporate income tax expense and the income tax for the mining activity on an accrual basis.

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.

Under Chilean law, the Parent Company and its subsidiaries are required to file separate tax declarations.

Beginning January 1, 2000, the Company records deferred taxes in accordance with Technical Bulletin Nos. 60, 69, 71 and 73 of the Chilean Association of Accountants, and with SVS Circular No. 1466 issued on January 27, 2000, recognizing the deferred tax effects of temporary differences between the financial and tax values of assets and liabilities, using the liability method. The effect of the temporary differences at March 31, 1999 was recorded in complementary asset and liability accounts, which are recognized in the statement of operations over the estimated period in which they reverse.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 - Summary of Significant Accounting Policies (continued)

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 1989. Depreciation for the period is calculated according to the straight-line method based on the remaining technical useful lives of assets, estimated by management.

Property, plant and equipment acquired through capital 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. Other than minor filing fees, the property rights are usually obtained without initial cost, 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 to be amortized over the following twelve months. Values attributable to these original mining concessions are recorded in property, plant and equipment.

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 Nos. 368 and 1,697 and Technical Bulletins Nos. 64 and 72 issued by the Chilean Association of Accountants. Accordingly, the Company’s proportional share in the net income or loss of each investee is recognized in the non-operating income and expense classification in the consolidated statements of income on an accrual basis, after eliminating any unrealized profits from transactions with the related companies.

The translation adjustment to U.S. dollars of investments in domestic subsidiaries that maintain their accounting records and are controlled in Chilean pesos is recognized in other reserves within shareholders’ equity. Direct and indirect investments in foreign subsidiaries or affiliates are controlled in U.S. dollars.

Investments in which the Company has less than 20% participation and the capacity to exert significant influence or control over the investment, because SQM forms part of its Board of Directors, have been valued using the equity method.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 - Summary of Significant Accounting Policies (continued)

m)	Goodwill and negative goodwill

Goodwill is calculated as the excess of the purchase price of companies acquired over their net book value, whereas negative goodwill occurs when the net book value exceeds the purchase price of companies acquired. Goodwill and negative goodwill resulting from equity method investments are maintained in the same currency in which the investment was made and are amortized based on the estimated period of investment return, generally 20 years for goodwill and 10 years for negative goodwill.

Beginning on January 1, 2004, goodwill and negative goodwill represents the difference between the acquisition cost of the investment in a related company and the fair value of this investment at the acquisition date, which is amortized with a charge or credit to income in the expected period of return of the investment, which does not exceed 20 years.

n)	Intangible assets

Intangible assets are stated at cost plus acquisition expenses and are amortized over a period not longer than 40 years, in accordance with Technical Bulletin No. 55 of the Chilean Association of Accountants.

o)	Mining development cost

Mining development costs are recorded in other long-term assets and are amortized utilizing the unit of production basis.

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 assuming average employee tenure of 24 years and a real annual discount rate of 8%.

q)	Vacations

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

r)	Operations with resale agreements

Operations with resale agreements are recorded in Other Current Assets at the amount of the purchase. Starting at the purchase date, the respective interest is recorded on an accrual basis, in accordance with SVS Circular 768.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 - Summary of Significant Accounting Policies (continued)

s)	Dividends

Dividends are generally declared in U.S. 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 recorded at fair value with net losses recognized on the accrual basis and gains recognized when realized.

u)	Reclassifications

For comparison purposes, certain reclassifications have been made to the 2006 financial statements.

v)	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.

w)	Computer software

Computer systems developed internally using the Company’s personnel and materials are charged to income during the period in which the expenses are incurred. In accordance with Circular No. 1.819 dated November 14, 2006 of the SVS, computer systems acquired by the Company are recorded at acquisition cost plus additional associated costs.

x)	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.

y)	Obligations with the public (Bonds payable)

Bonds are stated at the principal amount plus interest accrued. The difference between the carrying value and the placement value is capitalized and amortized over the life of the bonds.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 - Summary of Significant Accounting Policies (continued)

z)	Provisions for mine closure costs

The Company has made a provision to cover those costs associated with the closure of mines and mining facilities, as well as the mitigation of environmental damage. This provision has been recorded at its present value. The amount determined is presented under accrued liabilities in long-term liabilities.

aa)

Deferred income

Deferred income relates to the recognition of documented sales whose delivery occurs subsequent to the closing date of the financial statements.

Note 3 - Changes in Accounting Principles

During the nine-month period ended September 30, 2007, there were no changes in the application of generally accepted accounting principles in Chile compared to the prior year that could significantly affect the interpretation of these financial statements.

Note 4 - Marketable Securities

As of September 30, marketable securities are detailed as follows:

	2007		2006
	ThUS$		ThUS$

Mutual funds		74,733		61,904
Total		74,733		61,904

Mutual funds consist of investments with Citibank in highly liquid funds invested in fixed-rate debt in the United States.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 5 - Short- and Long-Term Accounts Receivable

a)	Short- and long-term accounts receivable and other accounts receivable as of September 30, 2007 and 2006 are detailed as follows:

					Between 90 days
	Up to 90 days				and 1 year				Total
	2007		2006		2007		2006		2007			2006
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
Short-term
Trade accounts receivable		129,207		176,844		97,021		16,135		226,228			192,980
Allowance for doubtful accounts										(8,045	)		(7,600	)
Notes receivable		12,280		46,388		39,505		1,293		51,785			47,680
Allowance for doubtful accounts										(3,480	)		(4,534	)
Accounts receivable, net										266,488			228,526

Other accounts receivable		10,257		3,253		651		4,654		10,908			7,907
Allowance for doubtful accounts										(1,196	)		(681	)
Other accounts receivable, net										9,712			7,226

Long-term receivables										139			312

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 5 - Short-term and Long-term Accounts Receivable (continued)

Consolidated Short-term and Long-term Receivables – by Geographic Location

													Asia, Africa, Oceania						USA, México						Latin America
	Chile						Europe						And the Middle East						and Canada						and the Caribbean						Total
	2007			2006			2007			2006			2007			2006			2007			2006			2007			2006			2007			2006
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Net short-term trade accounts receivable
Balance		143,518			74,336			50,274			37,890			3,358			20,128			19,292			33,746			1,741			19,280			218,183			185,380
% of total		65.78	%		40.10	%		23.04	%		20.44	%		1.54	%		10.86	%		8.84	%		18.20	%		0.80	%		10.40	%		100.00	%		100.00	%

Net short-term notes receivable
Balance		45,834			28,787			-			7,717			-			629			-			2,092			2,471			3,921			48,305			43,146
% of total		94.88	%		66.72	%		-			17.88	%		-			1.46	%		-			4.85	%		5.12	%		9.09	%		100,00	%		100.00	%

Net short-term other accounts receivable
Balance		8,655			4,319			384			809			155			152			434			1,570			84			376			9,712			7,226
% of total		89.12	%		59.77	%		3.95	%		11.20	%		1.60	%		2.10	%		4.47	%		21.73	%		0.86	%		5.20	%		100.00	%		100.00	%

Subtotal short-term accounts receivable, net
Balance		198,007			107,442			50,658			46,416			3,513			20,909			19,726			37,408			4,296			23,577			276,200			235,752
% of total		71.69	%		45.57	%		18.34	%		19.69	%		1,27	%		8.87	%		7.14	%		15.87	%		1.56	%		10.00	%		100.00	%		100.00	%

Long-term accounts receivable, net
Balance		139			298			-			-			-			-			-			-			-			14			139			312
% of total		100.00	%		95.51	%		-			-			-			-			-			-			-			4.49	%		100.00	%		100.00	%

Total short- and long-term accounts receivable, net
Balance		198,146			107,740			50,658			46,416			3,513			20,909			19,726			37,408			4,296			23,591			276,339			236,064
% of total		71.70	%		45.64	%		18.33	%		19.66	%		1.27	%		8.86	%		7.15	%		15.85	%		1.55	%		9.99	%		100.00	%		100.00	%

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 6 - Balances and Transactions with Related Parties

Balances with related companies are generated by commercial transactions which accrue no interest. These transactions are carried out at market prices, and the terms are standard for these operations. Expiration conditions for each case vary depending on the transaction involved. All significant transactions with related parties for an amount exceeding 1% of net income for the year are disclosed.

a)	Accounts receivable from related parties as of September 30, 2007 and 2006 are as follows:

	Short-term				Long-term
	2007		2006		2007		2006
Accounts receivable	ThUS$		ThUS$		ThUS$		ThUS$
Doktor Tarsa -SQM Turkey		6,810		9,762		-		-
Nutrisi Holding N.V.		1,721		1,547		-		-
Generale de Nutrition Vegetale S.A.		-		132		-		-
Ajay Europe S.A.R.L.		7,439		5,183		-		-
Ajay North America LLC		3,743		3,146		-		-
Abu Dhabi Fertilizer Ind. WLL		3,265		2,990		2,000		2,000
NU3 B.V.		710		846		-		-
Sales de Magnesio Ltda.		85		-		-		-
SQM Agro India		322		46		-		-
Misr Specialty Fertilizers		501		9		118		-
Soc.Inv.Pampa Calichera S.A.		8		8		-		-
Kowa (Japan)		11,135		-		-		-
SQM East Med Turkey		115		-		-		-
PCS Sales Inc		40		40		-		-
Yara AB		44		12		-		-
Yara Benelux B.V		453		309		-		-
Yara Hellas S.A.		337		254		-		-
Yara International Australia PTY.		744		1.108		-		-
Yara Poland SP		164		478		-		-
Yara UK Ltd.		300		330		-		-
Yara GMBH & CO KG		433		206		-		-
Yara Iberian S.A.		2,554		1,884		-		-
Yara Argentina S.A.		383		17		-		-
Yara Colombia Ltda..		2,898		962		-		-
Adubo Trevo S.A. (Yara)		252		252		-		-
Yara North America LLC		6,163		6,039		-		-
Yara Italia SPA.		2,022		1,810		-		-
Yara France BU Africa		2,593		989		-		-
Yara Internacional ASA		-		7,405		-		-
Yara International Asia Trade Pte Ltd		378		3,055		-		-
Yara East Africa Limited		1		1,028		-		-
Yara Fertilizers (Philippines)		-		10		-		-
Yara Fertilizers (New Zealand)		200		296		-		-
Yara International Asia Trade Pte (Singapore)		2,295		-		-		-
Yara Int. Asia Trade Pte Vietnam		-		137		-		-
Yara France BU Latin America		1,702		1,454		-		-
Yara Danmark A/S		47		-		-		-
Inversiones PCS Chile Ltda.		17		17		-		-
Yara Fertilizantes Ltda (Brasil)		-		217		-		-
Yara S.A. PTY LTD Sudafrica		8,721		-		-		-
Yara Western Cape Sudafrica		578		-		-		-
Yara Phosyn Ltd		-		36		-		-
Yara France S.A.		1,559		36		-		-
Total		70,732		52,050		2,118		2,000

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 6 - Balances and Transactions with Related Parties (continued)

b)	Accounts payable to related parties as of September 30, 2007 and 2006 are as follows:

	Short-term
	2007		2006
Accounts payable	ThUS$		ThUS$

NU3 N.V.		3		954
Charlee SQM Thailand Co		106		91
SQM East Turkey		-		18
Yara internacional ASA		58		-
Fos		278		-
Yara Fertilizantes LTD		888		-
Sales de Magnesio Ltda..		-		34
Yara Nederland B.V.		400		-
Total		1,733		1,097

There were no outstanding long-term accounts payable with related parties as of September 30, 2007 and 2006.

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 6 - Balances and Transactions with Related Parties (continued)

c)	During the first nine months of 2007 and 2006, principal transactions with related parties were as follows:

			Amount of				Effect on income
Company	Relationship	Type of transaction	Transaction				(charge) credit

			2007		2006		2007		2006
			ThUS$		ThUS$		ThUS$		ThUS$

NU3 N.V. (Belgium)	Indirect	Sales of products		4,860		5,151		1,447		1,781
Doktor Tarsa	Indirect	Sales of products		6,629		8,679		1,781		2,351
Abu Dhabi Fertilizer WLL	Indirect	Sales of products		4,117		2,339		461		639
Ajay Europe S.A.R.L.	Indirect	Sales of products		18,964		11,787		7,139		4,747
NU3 B.V.	Indirect	Sales of products		6,302		5,481		1,988		2,012
Ajay North America LLC	Indirect	Sales of products		12,626		11,853		6,507		5,982
Yara Benelux B.V.	Shareholder	Sales of products		5,903		6,436		1,121		1,446
Yara UK Ltd.	Shareholder	Sales of products		1,118		1,112		305		334
Yara International Asia Trade Pte Ltd.	Shareholder	Sales of products		8,764		6,185		1,974		1,778
Yara France BU Africa	Shareholder	Sales of products		4,356		1,810		988		443
Yara Business Support	Shareholder	Services		3,273		3,500		-3,273		-3,500
Yara International Australia Pty Ltd.	Shareholder	Sales of products		2,059		1,917		567		571
Yara Iberian S.A.	Shareholder	Sales of products		7,026		6,461		1,788		2,240
Yara Colombia Ltda..	Shareholder	Sales of products		5,594		2,861		1,618		862
Yara Poland SP	Shareholder	Sales of products		2,055		1,697		632		602
Yara GMBH & Co Kg	Shareholder	Sales of products		1,768		1,621		470		541
Yara France	Shareholder	Sales of products		6,785		7,336		1,554		2,149
Yara China Ltd.	Shareholder	Sales of products		1,358		0		260		0
Yara Hellas S.A.	Shareholder	Sales of products		1,613		1,578		350		465
Yara France S.A.	Shareholder	Sales of products		9,850