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 three-month period ended March 31, 20078 filed by Sociedad Química y Minera de Chile S.A. before the Superintendencia de Valores y Seguros de Chile on April 29, 2008.

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 ______

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 ______

No x

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

On April 29, 2008, 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 three-month period ended March 31, 2008. 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 THREE-MONTH PERIOD ENDED MARCH 31, 2008 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

March 31, 2008 and 2007

Consolidated Financial Statements

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

As of March 31, 2008 and 2007

and for the three months ended March 31, 2008 and 2007

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

Contents

Consolidated Financial Statements

Consolidated Balance Sheets	3
Consolidated Statements of Income	5
Consolidated Statements of Cash Flows	6
Notes to the Consolidated Financial Statements	7

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 Statements of Income

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

		As of March 31,
	Note		2008		2007
			ThUS$		ThUS$
ASSETS

Current Assets
Cash			25,752		18,078
Time deposits			77,239		31,934
Marketable securities	4		63,395		118,229
Accounts receivable, net	5		256,579		167,180
Other accounts receivable, net	5		8,435		10,341
Accounts receivable from related companies	6		91,633		75,029
Inventories, net	7		442,154		384,042
Recoverable taxes			38,598		34,042
Prepaid expenses			9,291		7,831
Other current assets			45,488		11,538
Total Current Assets			1,058,564		858,244

Property, Plant and Equipment, net	8		1,006,525		932,544

Other Assets
Investments in related companies	9		25,929		18,962
Goodwill, net	10		33,822		35,762
Negative goodwill, net	10		(1,291	)	(1,928	)
Long-term accounts receivable, net	5		1,245		390
Long-term accounts receivable from related companies	6		2,000		2,118
Intangible assets, net			3,642		4,353
Other long-term assets	11		34,569		45,745
Total Other Assets			99,916		105,402
Total Assets			2,165,005		1,896,190

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Consolidated Statements of Income

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

		As of March 31,
	Note		2008	2007
			ThUS$	ThUS$
LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Short-term bank debt	12		627	32,133
Current portion of long-term debt	12		1,687	1,966
Current portion of bonds payable	13		14,107	9,574
Dividends payable			534	262
Accounts payable			118,040	85,220
Other accounts payable			398	816
Notes and accounts payable to related companies	6		2,310	704
Accrued liabilities	14		32,671	21,453
Withholdings			17,956	9,156
Income taxes			18,381	11,879
Deferred income			58,458	1,748
Deferred income taxes	15		9,512	3,478
Other current liabilities			5,870	2,171
Total Current Liabilities			280,551	180,560

Long-Term Liabilities
Long-term bank debt	12		180,000	180,000
Long-term Obligations with the Public (Bonds)	13		322,295	299,689
Other accounts payable			764	790
Deferred income taxes	15		50,881	48,530
Long-term accrued liabilities	16		31,473	19,264
Total Long-Term Liabilities			585,413	548,273

Minority Interest	17		51,031	39,034

Shareholders' equity
Paid-in capital	18		477,386	477,386
Other reserves	18		164,232	154,601
Retained earnings	18		606,392	496,336
Total Shareholders' Equity			1,248,010	1,128,323
Total Liabilities and Shareholders' Equity			2,165,005	1,896,190

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 three months ended
		March 31,
	Note		2008		2007
			ThUS$		ThUS$
Operating Results

Sales			326,335		237,149
Cost of sales			(222,092	)	(164,120	)
Gross margin			104,243		73,029
Selling and administrative expenses			(18,021	)	(14,232	)
Operating Income			86,222		58,797


Non-operating Results
Non-operating income	20		7,769		8,249
Non-operating expenses	20		(11,379	)	(12,973	)
Non-operating Loss			(3,610	)	(4,724	)
Income before income taxes			82,612		54,073
Income tax expense	15		(13,270	)	(10,557	)
Income before Minority Interest			69,342		43,516
Minority interest	17		(4,558	)	(553	)
Net income before negative goodwill			64,784		42,963
Net Income			64,784		42,963

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))

		For the three months ended March 31
			2008		2007
			ThUS$		ThUS$
Cash flows from operating activities
Net income			64,784		42,963
Charges (credits) to income not representing cash flows
Depreciation expense	8		25,221		22,750
Amortization of intangible assets			172		169
Write-offs and accruals			6,823		6,944
Gain on equity investments in related companies			(2,107	)	(456	)
Loss on equity investments in related companies			50		-
Amortization of goodwill	10		558		558
Amortization of negative goodwill	10		-		-
(Profit) loss on sales of assets			(754	)	(2	)
Loss from sale of investments			-		-
Other credits to income not representing cash flows			(2,485	)	(966	)
Other charges to income not representing cash flows			36,994		26,599
Foreign currency translation, net			2,222		870
Net changes in operating assets and liabilities (Increase) decrease:
Trade accounts receivable			(1,959	)	(3,766	)
Inventories			(57,954	)	(20,834	)
Other assets			(5,144	)	(11,804	)
Accounts payable			(4,773	)	(6,265	)
Interest payable			5,502		2,954
Net income taxes payable			(6,643	)	(6,432	)
Other accounts payable			(7,294	)	(1,793	)
VAT and taxes payable			(1,865	)	(1,837	)
Minority interest	17		4,558		553
Net cash provided by operating activities			55,906		50,205

Cash flows from financing activities
Proceeds from short term bank financing			-		-
Bonds payable			-		-
Payment of dividends			(19	)	(56	)
Repayment of bank financing			(1,179	)	(25,000	)
Payment of obligations with the public			-		-
Payment of expenses for the issuance and placement of bonds payable			-		-
Net cash used in financing activities			(1,198	)	(25,056	)

Cash flows from investing activities
Sales of property, plant and equipment			1,159		-
Sales of investments in related companies			-		-
Other investing income	24		220		97
Additions to property, plant and equipment			(49,309	)	(37,794	)
Capitalized interest			(1,856	)	(3,038	)
Purchase of investments in related companies			-		-
Other disbursements			(740	)	(136	)
Net cash used in investing activities			(50,526	)	(40,871	)

Effect of inflation on cash and cash equivalents			(751	)	20
Net change in cash and cash equivalents			3,431		(15,702	)
Beginning balance of cash and cash equivalents			164,212		183,943
Ending balance of cash and cash equivalents			167,643		168,241

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.

The subsidiary registered in the Superintendency of Securities and Insurance registry of securities is as follows:

Soquimich Comercial S.A., Registration No. 0436 dated January 11, 1993.

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 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”). 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 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)

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

	Direct or indirect ownership
	2008	2007
	%	%
Foreign subsidiaries:
Nitrate Corp. of Chile Limited (United Kingdom)	100.00	100.00
Soquimich SRL - Argentina	100.00	100.00
Nitratos Naturais do Chile Ltda. (Brazil)	100.00	100.00
SQM Europe NV (Belgium)	100.00	100.00
SQM North America Corp. (USA)	100.00	100.00
North American Trading Company (USA)	100.00	100.00
SQM Peru S.A.	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
Soquimich European Holding B.V. (Holland)	100.00	100.00
SQMC Holding Corporation L.L.P. (USA)	100.00	100.00
SQM Ecuador S.A.	100.00	100.00
Cape Fear Bulk L.L.C.(USA)	0.00	51.00
SQM Investment Corporation N.V. (Dutch Antilles)	100.00	100.00
SQM Brasil Ltda.	100.00	100.00
Royal Seed Trading Corporation A.V.V. (Aruba)	100.00	100.00
SQM Japon Co. Ltd.	100.00	100.00
SQM Oceanía PTY Limited (Australia)	100.00	100.00
SQM France S.A.	100.00	100.00
RS Agro-Chemical Trading A.V.V. (Aruba)	100.00	100.00
SQM Comercial de México S.A. de C.V.	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 SRL (Italy)	100.00	100.00
Comercial Caiman Internacional S.A. (Cayman Islands)	100.00	100.00
SQM Africa PTY (South Africa)	100.00	100.00
Administración y Servicios Santiago S.A. de C.V. (Mexico)	100.00	100.00
SQM Lithium Specialties L.L.P. (USA)	100.00	100.00
SQM Nitratos México S.A. de C.V. (México)	51.00	51.00
Fertilizantes Naturales S.A.	66.67	66.67
Iodine Minera B.V.	100.00	100.00
SQM Dubai - FZCO.	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)

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

	Direct or indirect ownership
	2008	2007
	%	%
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.	100.00	100.00
Minera Nueva Victoria S.A.	100.00	100.00
Exploraciones Mineras S.A.	100.00	100.00
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.	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.

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 March 31, 2008 and 2007 and for the three months 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 Chilean pesos 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 period-end constant pesos based on the change in the consumer price index during the period ( 0.8% and 0.2% in 2008 and 2007, 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 period-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$ 437.71 per US$1 at March 31, 2008 and Ch$ 539.21 per US$1 at March 31, 2007.

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 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 U.S. dollars at the average exchange rate for each month.

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

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)

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.

d) Foreign currency (continued)

Foreign exchange differences for the period ended March 31, 2008 and 2007 generated net earnings (loss) of ThUS$ (2,222) and ThUS$ (870) 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 at March 31, as follows:

	2008	2007
	US$	US$
Brazilian Real	1.73	2.06
New Peruvian Sol	3.19	3.18
Argentine Peso	3.17	3.10
Japanese Yen	100.19	118.05
Euro	0.65	0.75
Mexican Peso	10.70	11.05
Australian Dollar	1.10	1.24
Pound Sterling	0.50	0.51
Ecuadorian Sucre	1.00	1.00
South African Rand	8.14	7.22

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.

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)

e)	Cash and cash equivalents

Included in cash and cash equivalents are cash and bank balances included in cash, time deposits, financial instruments classified as marketable securities and other short-term investments maturing within 90 days, in compliance with Technical Bulletin No. 50 issued by the Chilean Association of Accountants.

The Company has considered as operating cash movements, all positive or negative cash flows directly related to its line of business and in general all cash flows that are not defined as from investment or financing.

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.

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 based on a technical study which covers the different variances which affect our products (density, moist, among others).

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

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

j)	Income taxes and deferred income 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.

Note 2 - Summary of Significant Accounting Policies (continued)

j)	Income and deferred taxes (continued)

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.

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))

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

Beginning January 1, 2000, the Company records deferred income taxes in accordance with Technical Bulletin Nos. 60, 69, 71 and 73 of the Chilean Association of Accountants, and with Circular No. 1466 issued on January 27, 2000 by the SVS, 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 were recorded in complementary asset and liability accounts, which are recognized in the statement of operations over the estimated period in which they reverse.

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 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. 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.

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)

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.

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 negative goodwill.

Beginning on January 1, 2004, goodwill and negative goodwill represent 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 of up to a maximum of 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.

Note 2 - Summary of Significant Accounting Policies (continued)

p)	Accrued employee severance

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))

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)	Saleback operations

These operations are registered in Other Current Assets at the amount of the purchase. Starting at the purchase date, the respective interest is recorded in accordance with SVS Circular 768.

s)	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.

t)	Reclassifications

For comparison purposes, certain reclassifications have been made to the 2007 financial statements.

u)	Revenue recognition

Income from the operation of the line of business of the Company and its subsidiaries is recorded as of the date of physical delivery of the products in accordance with the sales conditions stated in Technical Bulletin No. 70 issued by the Chilean Association of Accountants.

Note 2 - Summary of Significant Accounting Policies (continued)

v)	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 SVS Circular No. 1.819, dated November 14, 2007, computer systems acquired by the Company are recorded at cost

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))

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)	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 in the period of expiration of these.

y)	Provisions for mine closure costs

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

z)	Deferred income

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

aa)

Employee benefits

Benefits agreed other than staff severance indemnities which the Company and its subsidiaries will have to pay to its employees by virtue of agreements executed are recognized on an accrual basis.

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 3 - Changes in Accounting Principles

Beginning on January 1, 2008, the Company recognized the change in the functional currency (from Chilean pesos to U.S. dollars) in which the subsidiary Soquimich Comercial S.A. was controlled with the purpose of reflecting the currency which represents underlying transactions, events and conditions, which are relevant to the control of the investment by its Parent Company.

During the period ended March 31, 2008, there were no other changes in the application of generally accepted accounting principles in Chile compared to the prior year, which could significantly affect the interpretation 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 4 - Marketable Securities

As of March 31 marketable securities are detailed as follows:

	2008	2007
	ThUS$	ThUS$

Mutual funds	63,395	118,229
Total	63,395	118,229

Mutual funds relate to investments made in 'Citifunds Institutional Liquid Reserve Limited' for ThUS$ 62,098 (ThUS$ 97,592 in 2007) and in 'Merrill Lynch Institutional Liquidity Fund' for ThUS$ 1,297, (ThUS$ 20,637 in 2007)

These institutions are high-liquidity funds dedicated to invest basically in fixed income instruments in the U.S. market.

Note 5 - Short- and Long-Term Accounts Receivable

Short- and long-term accounts receivable and other accounts receivable as of March 31 are detailed as follows:

				Between 90 days			Total
	Up to 90 days			and 1 year			Short-term (net)
		2008	2007		2008	2007		2008		2007
		ThUS$	ThUS$		ThUS$	ThUS$		ThUS$		ThUS$
Short-term
Trade accounts receivable		161,369	120,934		48,567	17,065		209,936		137,999
Allowance for doubtful accounts								(6,408	)	(7,208	)
Notes receivable		43,126	32,393		15,039	7,281		58,165		39,674
Allowance for doubtful accounts								(5,114	)	(3,285	)
Accounts receivable, net								256,579		167,180

Other accounts receivable		6,932	10,818		3,226	1,029		10,158		11,847
Allowance for doubtful accounts								(1,723	)	(1,506	)
Other accounts receivable, net								8,435		10,341

Long-term receivables								1,245		390

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 (continued)

Consolidated Short- and Long-Term Receivables - by Geographic Location

					Asia and		USA, Mexico		Latin America
	Chile		Europe		Oceania		and Canada		and the Caribbean		Total
	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007
	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$

Net short-term trade accounts receivable
Balance	93,767	34,246	59,800	52,591	2,665	2,715	16,127	29,636	31,169	11,603	203,528	130,791
% of total	46.07%	26.18%	29.28%	40.21%	1.31%	2.08%	7.93%	22.66%	15.31%	8.87%	100.00%	100.00%

Net short-term notes receivable
Balance	50,225	29,086	-	2,898	-	264	-	475	2,826	3,666	53,051	36,389
% of total	94.67%	79.93%	-	7.96%	-	0.73%	-	1.31%	5.33%	10.07%	100.00%	100,00%

Net short-term other accounts receivable
Balance	6,376	5,562	1,487	1,917	10	9	101	2,647	461	206	8,435	10,341
% of total	75.59%	53.79%	17.62%	18.53%	0.12%	0.09%	1.20%	25.60%	5.47%	1.99%	100.00%	100.00%

Subtotal short-term accounts receivable, net
Balance	150,368	68,894	61,287	57,406	2,675	2,988	16,228	32,758	32,758	15,475	265,014	177,521
% of total	56.74%	38.81%	23.13%	32.34%	1.01%	1,68%	6.12%	18.45%	18.45%	8.72%	100.00%	100.00%

Long-term accounts receivable, net
Balance	1,245	390	-	-	-	-	-	-	-	-	1,245	390
% of total	100.00%	100.00%	-	-	-	-	-	-	-	-	100,00%	100.00%

Total short and long-term accounts receivable, net
Balance	151,613	69,284	61,287	57,406	2,675	2,988	16,228	32,758	34,456	15,475	266,259	177,911
% of total	56.94%	38.94%	23.02%	32.27%	1.00%	1.68%	6.10%	18.41%	12.94%	8.70%	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 under normal conditions in force for this type of operations with respect to term and market price. Expiration conditions for each case vary depending on the transaction involved. In addition, all those significant transactions with related parties with an amount exceeding 1% of net income for the period are disclosed.

a) Amounts included in balances with related parties as of March 31, 2008 and 2007 are as follows:


	Short-term		Long-term
	2008	2007	2008	2007
Accounts receivable	ThUS$	ThUS$	ThUS$	ThUS$
Doktor Tarsa Tarim Sanayi AS	8,018	11,597	-	-
Nutrisi Holding N.V.	1,885	1,626	-	-
Ajay Europe S.A.R.L.	6,726	9,244	-	-
Ajay North America LLC	3,865	3,135	-	-
Abu Dhabi Fertilizer Industries WWL	5,162	3,719	2,000	2.000
NU3 B.V.	1,908	447	-	-
NU3 N.V.	3,235	454	-	-
Sales de Magnesio Ltda.	57	133	-	-
SQM Agro India	486	221	-	-
Misr Specialty Fertilizers (MSF)	715	319	-	118
Soc.Inv.Pampa Calichera S.A.	8	8	-	-
Inversiones PCS Chile S.A.	17	17	-	-
Kowa Company Ltd.	15,069	11,433	-	-
SQM East Med Turkey	316	93	-	-
Yara AB	118	99	-	-
Yara Benelux B.V.	325	1,061	-	-
Yara Hellas S.A.	302	405	-	-
Yara International Australia PTY.	487	265	-	-
Yara Poland SP	1,031	804	-	-
Yara UK Ltd.	670	361	-	-
Yara CZECH Republic	17	13	-	-
Yara GMBH & CO KG	396	192	-	-
Yara Norge AS	53	8	-	-
Yara Iberian S.A.	2,777	1,598	-	-
Yara Argentina S.A.	343	40	-	-
Yara Colombia Ltda.	3,924	2,973	-	-
Adubos Trevo S.A.	252	252	-	-
Yara North America LLC.	9,640	8,430	-	-
Yara Fertilizantes Ltda (Brasil)	-	786	-	-
Yara France BU Latin America	2,305	-	-	-
Yara France BU Africa	1,445	1,088	-	-
Yara France S.A.	408	2,298	-	-
Yara S.A. PTY Ltd. Sudáfrica	12,267	-	-	-
Yara Western Cape Sudáfrica	1,443	-	-	-
Yara Internacional ASA	-	4,207	-	-
Yara International Asia Trade Pte Ltd.	3,443	928	-	-
Yara International Asia Trade Pte. (Singapur)	-	2,693	-	-
Yara East Africa Limited	707	514	-	-
Yara Italia SPA	1,350	626	-	-
Yara Fertilizers (New Zealand)	190	110	-	-
Yara Mexico S.A. de C.V.	-	2,832	-	-
Yara Danmark AS	22	-	-	-
Kemira Growhow OYJ Harjavalta	251	-	-	-
Total	91,633	75,029	2,000	2,118

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)

a) Amounts included in balances with related parties as of March 31, 2008 and 2007, continued:

	Short-term
		2008	2007
Accounts payable		ThUS$	ThUS$

SQM Thailand Co. Ltd.		238	223
Yara International ASA		116	-
Yara Mexico S.A.		94	-
Yara France BU Latin America		-	81
Yara Fertilizantes Ltd. (Brazil)		1,462	-
Yara Nederland B.V.		400	400
Total		2,310	704

There were no outstanding long-term accounts payable with related parties as of March 31, 2008 and 2007

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) During 2008 and 2007, the primary transactions with related parties were as follows:

			Amount of		Effect on income
Company	Relationship	Type of transaction	Transaction		(charge) credit
			2008	2007	2008	2007
			ThUS$	ThUS$	ThUS$	ThUS$

NU3 N.V. (Belgium)	Indirect	Sales of products	6,235	1,614	2,485	622
Doktor Tarsa Tarim Sanayi AS	Indirect	Sales of products	3,739	3,065	1,992	1,115
Abu Dhabi Fertilizer Ind. WWL	Indirect	Sales of products	1,874	835	714	150
Indirect		Income financial	26	-	26	-
Ajay Europe S.A.R.L.	Indirect	Sales of products	5,830	4,630	1,930	2,995
Indirect		Income financial	2	-	2	-
NU3 B.V.	Indirect	Sales of products	2,889	1,879	1,971	734
Indirect		Services	26	-	26	-
Ajay North America LLC	Indirect	Sales of products	7,377	3,555	2,309	1,843
Yara Italia SPA	Shareholder	Sales of products	906	608	388	204
Yara International Asia Trade Pte Ltd.	Shareholder	Sales of products	3,254	3,264	1,710	1,040
Yara France BU Africa	Shareholder	Sales of products	737	560	351	104
Yara Benelux B.V.	Shareholder	Sales of products	2,033	2,223	962	409
Yara Business Support	Shareholder	Services	3,600	-1,091	3,600	-1,091
Yara International Australia Pty Ltd.	Shareholder	Sales of products	674	539	270	175
Yara Iberian S.A.	Shareholder	Sales of products	3,175	1,704	1,334	650
Yara Colombia Ltda.	Shareholder	Sales of products	4,739	1,651	1,954	664
Yara Poland SP	Shareholder	Sales of products	1,386	708	727	271
Yara France	Shareholder	Sales of products	2,960	1,455	2,194	634
Yara Fertilizers Brazil	Shareholder	Sales of products	4,468	-	2,160	-
Shareholder		Services	39	-	39	-
Yara S.A. (PTY) Ltd. (Sudáfrica)	Shareholder	Sales of products	16 ,211	-	7,381	-
Yara France BU Latin America	Shareholder	Sales of products	-	2,014	-	595
Yara UK Ltd.	Shareholder	Sales of products	674	-	412	-
Yara Western (Sudafrica)	Shareholder	Sales of products	2,253	-	1,083	-
Yara Internacional ASA	Shareholder	Sales of products	-	6,461	-	1,146

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))

Yara North America	Shareholder	Sales of products	18,485	12,752	8,725	3,069
Yara China Ltd.	Shareholder	Sales of products	-	1,358	-	200
Yara East Africa Ltd.	Shareholder	Sales of products	-	516	-	138
Yara Mexico S.A. de C.V.	Shareholder	Sales of products	5.960	-	1,966	-
Kowa Company Ltd.	Shareholder	Sales of products	23,748	15,438	11,355	10,092

Note 7 - Inventories

Net inventories are summarized as follows:

	2008	2007
	ThUS$	ThUS$

Finished products	262,675	228,842
Work in process	151,624	135,565
Supplies	27,855	19,635
Total	442,154	384,042

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 8 - Property, Plant and Equipment

Property, plant and equipment are summarized as follows:

	2008	2007
	ThUS$	ThUS$
Land
Land	81,749	82,.383
Mining Concessions	30,086	30,086
Total	111,835	112,469

Buildings and Infrastructure
Buildings	163,714	163,470
Installations	311,356	273,830
Construction-in-progress	207,932	187,775
Other	207,997	190,682
Total	890,999	815,757

Machinery and Equipment
Machinery	558,030	484,114
Equipment	132,086	126,247
Project-in-progress	27,192	11,525
Other	19,735	19,244
Total	737,043	641,130

Other Property, Plant and Equipment
Tools	9,459	8,950
Furniture and office equipment	15,761	14,951
Project-in-progress	11,882	12,982
Other	8,435	18,525
Total	45,537	55,408

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 8 - Property, Plant and Equipment (continued)

	2008		2007
	ThUS$		ThUS$
Amounts Relating to Technical Revaluation of PP&E
Land	7,839		7,839
Buildings and infrastructure	41,439		41,439
Machinery and equipment	12,048		12,048
Other assets	53		53
	61,379		61,379
Total property, plant and equipment	1,846,793		1,686,143

Less: Accumulated Depreciation
Buildings and infrastructure	(351,696	)	(318,887	)
Machinery and equipment	(417,906	)	(368,178	)
Other property, plant and equipment	(32,267	)	(29,274	)
Technical appraisal	(38,399	)	(37,260	)
Total accumulated depreciation	(840,268	)	(753,599	)
Net property, plant and equipment	1,006,525		932,544

	2008		2007
Depreciation for the period ended March 31:	ThUS$		ThUS$

Buildings and infrastructure	(11,638	)	(10,622	)
Machinery and equipment	(12,587	)	(10,297	)
Other property, plant and equipment	(711	)	(1,546	)
Technical revaluation	(285	)	(285	)
Total depreciation	(25,221	)	(22,750	)

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 8 - Property, Plant and Equipment (continued)

The Company has capitalized assets obtained through leasing, which are included in other property, plant and equipment and are as follows:

	2008		2007
	ThUS$		ThUS$

Administrative office buildings	1,988		1,988
Accumulated depreciation	(528	)	(497	)
Total leased assets	1,460		1,491

The administrative office buildings were acquired for 230 installments of UF 663.75 each and an annual, contractually established interest rate of 8.5%.

Note 9 - Investments in and Receivables from Related Parties

a) Information on foreign investments

There are no plans for the foreign investments to pay dividends, as it is the Company’s policy to reinvest those earnings.

The Company has not designated its foreign investments as net investment hedges.

b) Transactions executed in 2008

As of March 31, 2008, there are no movements in investments.

c) Transactions executed in 2007

* On January 12, 2007, the subsidiary PTM SQM Ibérica S.A. was liquidated and extinguished. This operation gave rise to a loss of ThUS$ 41 in the subsidiary Soquimich European Holding B.V.

* On March 2, 2007, the subsidiary SQM Industrial S.A. made a capital increase of ThUS$ 130 in its subsidiary SQM Brasil Ltda. In accordance with Technical Bulletin No. 72 issued by the Chilean Association of Accountants and Circular No. 1,697 issued by the Chilean Superintendency of Securities and Insurance (SVS), the Company performed the valuation in consideration of the carrying value of equity of SQM Brasil Ltda. as of March 31, 2007, which does not significantly differ from its fair value determined at that date.

Note 9 - Investments in and Receivables from Related Companies (continued)

* On April 11, 2007, the subsidiary SQM S.A and the subsidiary Soquimich European Holding B.V. made a capital increase of ThUS$ 6,599 in their subsidiary SQM Europe N.V. In accordance with Technical Bulletin No. 72 issued by the Chilean Association of Accountants and Circular No. 1,697 issued by the Chilean Superintendency of Securities and Insurance, the valuation was conducted considering the book value of the equity of SQM Europe N.V. as of March 31 2008, which does not significantly differ from its fair value determined at that date.

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))

* On October 19, 2007, at the second General Extraordinary Shareholders’ Meeting of SQM Industrial S.A. the shareholders approved a capital increase of ThUS$ 300,000, through the issuance of 204,368,321 new shares.

Sociedad Química y Minera de Chile S.A. and SQM Potasio S.A. acquired all these shares through the subscription and payment of them through the capitalization of accounts payable. SQM S.A. acquired 197,556,044 shares and SQM Potasio S.A. acquired 6,812,277 shares and obtained ownership interest of 99.05% and 0.95%, respectively.

* On November 13, 2007, Exploraciones Mineras S.A. increased its capital by ThUS$30,000 through the issuance of 100,000 new shares which were subscribed and paid through the capitalization of accounts payable by 99.99% by Minera Nueva Victoria S.A. and by 1% by Sociedad Química y Minera de Chile S.A.

* On December 7, 2007, SQM North America Corp. sold to Nautilus International Holding Corporation all the rights which SQM North America Corp had in Cape Fear Bulk LLC. for ThUS$1,478, thereby generating a gain from the sale of investments of ThUS$ 1,316.

d) Investments with less than 20% participation

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 9 - Investments in and Receivables from Related Companies (continued)

d) Detail of investments in related companies


Tax Registration Number	Company	Country of origin	Controlling currency	Number of shares	Ownership interest		Equity of companies		Book value of investment		Net income (loss)		Equity participation in net income (loss)
					2008	2007	2008	2007	2008	2007	2008	2007	2008	2007
					%	%	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$	ThUS$


0-E	Nutrisi Holding N.V.	Belgium	Euros	-	50.00	50.00	11,281	8,861	5,460	4,305	1,082	505	5,460	4,305
0-E	Ajay North America LLC	USA	US$	-	49.00	49.00	12,448	11,282	5,075	4,461	782	-	6,099	5,528
0-E	Doktor Tarsa Tarim Sanayi AS	Turkey	Euros	-	50.00	50.00	10,080	5,759	5,040	2,880	1,738	369	5,040	2,880
0-E	Ajay Europe S.A.R.L.	France	Euros	36,700	50.00	50.00	9,318	6,640	3,821	1,825	-	-	4,659	3,320
0-E	Abu Dhabi Fertilizer
	Industries WWL	UAE	US$	1,961	50.00	50.00	4,931	3,968	2,465	1,984	219	48	2,465	1,984
0-E	Misr Specialty Fertilizers	Egypt	US$	-	47.00	47.00	4,056	4,312	1,926	2,048	-105	-	1,926	2,048
0-E	SQM Thailand Co. Ltd.	Thailand	US$	-	40.00	40.00	2,534	2,167	1,014	867	85	3	1,014	867
77557430-5	Sales de Magnesio Ltda.	Chile