Edgar Filing: CHEMICAL & MINING CO OF CHILE INC

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 six-month period ended June 30, 2008 filed by Sociedad Química y Minera de Chile S.A. before the Superintendencia de Valores y Seguros de Chile on August 12, 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 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 August 12, 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 six-month period ended June 30, 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 SIX-MONTH PERIOD ENDED JUNE 30, 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

June 30, 2008 and 2007

Consolidated Financial Statements

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

As of June 30, 2008 and 2007

and for the six months ended June 30, 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 June 30,
	Note		2008			2007
			ThUS$			ThUS$
ASSETS

Current assets
Cash				29,381			16,043
Time deposits				6,436			4,393
Marketable securities		4		54,582			96,715
Accounts receivable, net		5		357,835			236,318
Other accounts receivable, net		5		11,847			9,787
Accounts receivable from related companies		6		50,965			38,576
Inventories, net		7		535,989			377,544
Recoverable taxes				34,801			20,556
Prepaid expenses				6,774			6,492
Other current assets				51,135			13,347
Total current assets				1,139,745			819,771

Property, plant and equipment, net		8		1,004,161			951,930

Other assets
Investments in related companies		9		34,236			20,477
Goodwill, net		10		33,077			35,216
Negative goodwill, net		10		(1,279	)		(1,928	)
Long-term accounts receivable, net		5		1,056			109
Long-term accounts receivable from related companies		6		2,000			2,118
Intangible assets, net				3,463			4,172
Other long-term assets		11		35,196			39,735
Total other assets				107,749			99,899
Total assets				2,251,655			1,871,600

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 June 30,
	Note		2008		2007
			ThUS$		ThUS$
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Short-term bank debt		12		71,740		1,923
Current portion of long-term debt		12		455		823
Current portion of bonds payable		13		8,654		8,227
Dividends payable				474		107
Accounts payable				120,530		109,585
Other accounts payable				406		371
Notes and accounts payable to related companies		6		255		488
Accrued liabilities		14		48,718		29,979
Withholdings				7,142		6,388
Income taxes				34,591		8,244
Deferred income				79,511		23,570
Deferred income taxes		15		2,514		2,730
Other current liabilities				3,691		682
Total current liabilities				378,681		193,117

Long-term liabilities
Long-term bank debt		12		180,000		180,000
Long-term obligations with the public (bonds)		13		301,063		298,093
Other accounts payable				586		765
Deferred income taxes		15		49,241		50,885
Long-term accrued liabilities		16		35,062		19,760
Total long-term liabilities				565,952		549,503

Minority interest		17		51,359		39,208

Shareholders' equity
Paid-in capital		18		477,386		477,386
Other reserves		18		163,187		156,855
Retained earnings		18		615,090		455,531
Total shareholders' equity				1,255,663		1,089,772
Total liabilities and shareholders' equity				2,251,655		1,871,600

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 six months ended
			June 30,
	Note		2008			2007
			ThUS$			ThUS$
Operating results

Sales				787,120			558,792
Cost of sales				(502,854	)		(394,485	)
Gross margin				284,266			164,307
Selling and administrative expenses				(41,942	)		(32,050	)
Operating income				242,324			132,257

Non-operating results
Non-operating income		20		23,120			13,518
Non-operating expenses		20		(24,418	)		(26,613	)
Non-operating loss				(1,298	)		(13,095	)
Income before income taxes				241,026			119,162
Income tax expense		15		(43,081	)		(24,075	)
Income before minority interest				197,945			95,087
Minority interest		17		(7,449	)		(1,143	)
Net income before negative goodwill				190,496			93,944
Net income				190,496			93,944

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 six months ended June 30
		2008			2007
		ThUS$			ThUS$
Cash flows from operating activities
Net income			190,496			93,944
Charges (credits) to income not representing cash flows
Depreciation expense	8		50,754			47,042
Amortization of intangible assets			350			349
Write-offs and accruals			19,259			15,987
Gain on equity investments in related companies			(9,666	)		(2,201	)
Loss on equity investments in related companies			34			66
Amortization of goodwill	10		1,113			1,147
(Profit) loss on sales of assets			(708	)		(16	)
Loss from sale of investments			(1,388	)		-
Other credits to income not representing cash flows			(8,855	)		(583	)
Other charges to income not representing cash flows			99,173			56,285
Foreign exchange difference, net			2,927			2,061
Net changes in operating assets and liabilities (Increase) decrease:
Trade accounts receivable			(69,311	)		(12,615	)
Inventories			(155,832	)		(16,946	)
Other assets			(5,357	)		(9,193	)
Accounts payable			1,045			10,438
Interest payable			(143	)		(733	)
Net income taxes payable			(19,116	)		(14,615	)
Other accounts payable			-			(5,740	)
VAT and taxes payable			(12,846	)		5,794
Minority interest	17		7,449			1,143
Net cash provided by operating activities			89,378			171,614

Cash flows from financing activities
Proceeds from short term bank financing			70,240			-
Payment of dividends			(115,455	)		(95,257	)
Repayment of bank financing			-			(56,422	)
Payment of obligations with the public			(3,138	)		(2,636	)
Payment of expenses for the issuance and placement of bonds payable			-			-
Net cash used in financing activities			(48,353	)		(154,315	)

Cash flows from investing activities
Sales of property, plant and equipment			1,552			1,435
Sales of investments in related companies			1,688			-
Other investment income	24		-			357
Additions to property, plant and equipment			(103,432	)		(80,338	)
Capitalized interest			(4,264	)		(6,492	)
Other disbursements			(367	)		(16	)
Net cash used in investing activities			(104,823	)		(85,054	)

Effect of inflation on cash and cash equivalents			(4,465	)		962
Net change in cash and cash equivalents			(68,263	)		(66,793	)
Beginning balance of cash and cash equivalents			164,213			183,943
Ending balance of cash and cash equivalents			95,950			117,150

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 June 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 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 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)		0.00		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)

a) 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)	Reporting period

These consolidated financial statements have been prepared as of June 30, 2008 and 2007 and for the six-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 those 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 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 ( 3.2% and 1.9% 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 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 at each period end of Ch$526.05 per US$1 at June 30, 2008 and Ch$526.86 per US$1 at June 30, 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 June 30, 2008 and 2007 generated a net gain (loss) of ThUS$ (2,927) and ThUS$ (2,061) 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 June 30, as follows:

	2008		2007
	US$		US$
Brazilian Real		1.59		1.92
New Peruvian Sol		3.19		3.19
Argentine Peso		3.04		3.09
Japanese Yen		106.42		123.26
Euro		0.63		0.74
Mexican Peso		10.30		10.79
Australian Dollar		1.04		1.18
Pound Sterling		0.50		0.50
Ecuadorian Sucre		1.00		1.00
South African Rand		7.83		6.99

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

Cash and cash equivalents include cash and bank balances recorded under 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 defines operating cash movements as 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 investing 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 mining activities 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 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 they 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 income 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.

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 using 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 June, 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.

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)

p)	Accrued employee severance

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

Saleback operations are recorded 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 an 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.

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)

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

w)	Research and development expenses

Research and development costs 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 relates to the recognition of documented sales, the delivery of which occurs subsequent to the closing date of the financial statements.

aa)

Employee benefits

Benefits other than staff severance indemnities that the Company and its subsidiaries will have to pay to its employees by virtue of agreements entered 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, in order to reflect the currency that represents the underlying transactions, events and conditions that are relevant to the control of the investment by the Parent Company.

During the period ended June 30, 2008, there were no other changes in the application of generally accepted accounting principles in Chile, compared to the prior year, that 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 June 30 marketable securities are detailed as follows:

	2008		2007
	ThUS$		ThUS$

Mutual funds		54,582		96,715
Total		54,582		96,715

Mutual funds relate to investments made in 'Citifunds Institutional Liquid Reserve Limited' for ThUS$ 53,270 (ThUS$ 93,859 in 2007) and in 'Merrill Lynch Institutional Liquidity Fund' for ThUS$ 1,312, (ThUS$ 2,856 in 2007)

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

Note 5 - Short- and Long-Term Accounts Receivable

a)	Short- and long-term accounts receivable and other accounts receivable as of June 30 are detailed as follows:

					Between 90 days
	Up to 90 days				and 1 year				Total (net)
	2008		2007		2008		2007		2008			2007
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			ThUS$
Short-term
Trade accounts receivable		243,802		153,778		66,463		54,947		310,265			208,725
Allowance for doubtful accounts										(8,587	)		(7,824	)
Notes receivable		13,856		16,122		48,750		23,237		62,606			39,359
Allowance for doubtful accounts										(6,449	)		(3,942	)
Short-term receivables, net										357,835			236,318

Other accounts receivable		7,374		10,082		5,621		857		12,995			10,939
Allowance for doubtful accounts										(1,148	)		(1,152	)
Other receivables, net										11,847			9,787

Long-term receivables										1,056			109

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$

Short-term trade accounts receivable, net
Balance		145,244			41,827			106,499			71,472			5,853			14,945			41,594			35,504			2,488			37,153			301,678			200,901
% of total		48.15	%		20.81	%		35.30	%		35.58	%		1.94	%		7.44	%		13.79	%		17.67	%		0.82	%		18.50	%		100.00	%		100.00	%

Short-term notes receivable, net
Balance		52,995			26,443			-			2,821			-			689			-			498			3,162			4,966			56,157			35,417
% of total		94.37	%		74.66	%		-			7.97	%		-			1.94	%		-			1.41	%		5.63	%		14.02	%		100.00	%		100,00	%

Short-term other accounts receivable, net
Balance		8,737			5,711			2,224			1,520			142			153			671			2,123			73			280			11,847			9,787
% of total		73.75	%		58.35	%		18.77	%		15.53	%		1.20	%		1.57	%		5.66	%		21.69	%		0.62	%		2.86	%		100.00	%		100.00	%

Subtotal short-term accounts receivable, net
Balance		206,976			73,981			108,723			75,813			5,995			15,787			42,265			38,125			5,723			42,399			369,682			246,105
% of total		55.99	%		30.06	%		29.41	%		30.81	%		1.62	%		6.41	%		11.43	%		15.49	%		1.55	%		17.23	%		100.00	%		100.00	%

Long-term accounts receivable, net
Balance		1,056			109			-			-			-			-			-			-			-			-			1,056			109
% of total		100.00	%		100.00	%		-			-			-			-			-			-			-			-			100.00	%		100.00	%

Total short and long-term accounts receivable, net
Balance		208,032			74,090			108,723			75,813			5,995			15,787			42,265			38,125			5,723			42,399			370,738			246,214
% of total		56.11	%		30.09	%		29.33	%		30.80	%		1.62	%		6.41	%		11.40	%		15.48	%		1.54	%		17.22	%		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 in respect to term and market price. Expiration conditions for each case vary depending on the transaction which generated the balance.

On April 21, 2008, Inversiones SQ S.A. and SQH S.A. acquired from Yara Netherland B.V. 49% of the shares of the privately-held shareholders’ company Inversiones SQYA S.A. Beginning on the date referred to above, SQYA S.A. Yara is no longer a related company of Sociedad Química y Minera de Chile S.A.

a) Amounts included in balances with related parties as of June 30, 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		9,056		10,351		-		-
Nutrisi Holding N.V.		1,924		1,647		-		-
Ajay Europe S.A.R.L.		5,058		8,060		-		-
Ajay North America LLC		5,704		2,435		-		-
Abu Dhabi Fertilizer Industries WWL		7,737		3,041		2,000		2.000
NU3 B.V.		1,960		668		-		-
NU3 N.V.		744		-		-		-
Sales de Magnesio Ltda.		104		136		-		-
SQM Agro India		544		264		-		-
Misr Specialty Fertilizers (MSF)		886		478		-		118
Soc.Inv.Pampa Calichera S.A.		8		8		-		-
Inversiones PCS Chile S.A.		-		26		-		-
Kowa Company Ltd.		16,109		11,462		-		-
SQM East Med Turkey		1,131		-		-		-
Total		50,965		38,576		2,000		2,118

b) Amounts included in balances with related parties as of June 30, 2008 and 2007, continued:

	Short-term
	2008		2007
Accounts payable	ThUS$		ThUS$

SQM Thailand Co. Ltd.		255		231
NU3 N.V.		-		257
Total		255		488

There were no outstanding long-term accounts payable with related parties as of June 30, 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)

c)	During the six months ended June 30, 2008 and 2007, the principal transactions with related parties were as follows:

			Amount of		Impact 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	13,510	3,669	6,111	1,161
Doktor Tarsa Tarim Sanayi AS	Indirect	Sales of products	8,851	6,383	5,976	1,866
Abu Dhabi Fertilizer Ind. WWL	Indirect	Sales of products	5,962	1,901	2,543	349
	Indirect	Income financial	42	-	42	-
Ajay Europe S.A.R.L.	Indirect	Sales of products	12,145	14,735	4,027	5,411
	Indirect	Income financial	5	-	5	-
	Indirect	Dividends	118	-	-	-
NU3 B.V.	Indirect	Sales of products	6,434	4,423	1,946	1,372
	Indirect	Services	54
Ajay North America LLC	Indirect	Sales of products	16,858	7,546	5,883	3,902
	Indirect	Dividends	54	-	54	-
Kowa Company Ltd.	Shareholder	Sales of products	47,001	42,634	22,855	27,224
SQM Agro India PVT Ltd	Indirect	Sales of products	362	-	157	-
Misr Specialty Fertilizers (MSF)	Indirect	Sales of products	733	-	420	-
	Indirect	Income financial	3	-	3	-
Nutrisi Holding N.V.	Indirect	Income financial	51	-	51	-
Sales de Magnesio Ltda.	Indirect	Sales of products	377	-	170	-
SQM East Med Turkey	Indirect	Sales of products	134	-	121	-

Note 7 - Inventories

Net inventories are summarized as follows:

	2008		2007
	ThUS$		ThUS$

Finished products		344,241		220,652
Work in process		159,202		133,836
Supplies		32,546		23,056
Total		535,989		377,544

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		80,534		82,496
Mining Concessions		30,086		30,086
Total		110,620		112,582

Buildings and Infrastructure
Buildings		151,900		163,796
Installations		313,243		272,582
Construction-in-progress		236,671		222,586
Other		208,744		191,382
Total		910,558		850,346

Machinery and Equipment
Machinery		541,451		485,863
Equipment		133,449		127,487
Project-in-progress		36,678		15,369
Other		19,999		19,374
Total		731,577		648,093

Other Property, Plant and Equipment
Tools		9,490		8,950
Furniture and office equipment		15,718		14,888
Project-in-progress		11,071		13,197
Other		9,769		17,133
Total