Good day, everyone, and welcome to the SQM First Quarter 2017 Earnings Conference Call. [Operator Instructions] Please also note that today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Gerardo Illanes, Vice President of Finance and Investor Relations. Sir, you may begin.

Thank you. Good morning, everyone, and welcome to SQM's First Quarter 2017 Earnings Conference Call. For your information, this conference call will be recorded and is being webcast live. You may access the webcast later on at our website, www.sqm.com. Joining me today as speakers are Patricio de Solminihac, Chief Executive Officer; and Ricardo Ramos, CFO. Before we begin, let me remind you that statements in this conference concerning the company's business outlook, future economic performance, anticipated profitability, revenue, expenses or other financial items, anticipated cost synergies and production -- sorry, and product or service line growth, together with other statements that are not historical facts are forward-looking statements as that term is defined under federal securities law. Any forward-looking statements are estimates reflecting the best judgment of SQM based on currently available information and involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. Risks, uncertainties and factors that could affect the accuracy of such forward-looking statements are identified in the public filings made with the Securities and Exchange Commission and forward-looking statements should be considered in light of those factors. I now leave you with our Chief Executive Officer, Patricio de Solminihac, for brief comments before we move to Q&A.

Thank you, Gerardo. Good morning, and thank you for joining SQM First Quarter 2017 Earnings Conference Call. Last night, we post our results for the quarter. Our net income reached $103.2 million, an increase of more than 70% when compared to the first quarter last year. Higher sales volumes were the reason we saw strong results. As announced last night, sales volumes were higher in every business line when compared to the first quarter last year. Strong sales volume trends will continue in iodine, where we expect them to increase approximately 15% this year compared to 2016. Furthermore, we believe SPN and lithium sales volume could be slightly higher than last year. Solar salt volume reached approximately 45,000 tons during the first quarter, and we believe volume could reach approximately 90,000 metric ton this year, almost 30% more than our previous expectation. Despite the higher sales volume, we reported, in the potassium business line, our focus on lithium production will lead to a decrease in potassium chloride production in 2017, resulting in lower potassium sales volume of approximately 15% when compared with 2016. We have seen some price recovery in recent months and look forward to seeing market demand surpass the 60 million tons this year for potassium chloride. As we mentioned in the press release, we now believe that lithium demand could increase approximately 14% during 2017. As a result of this demand growth, coupled with the exceptional capabilities we have developed to produce lithium efficiently, we have decided to fill -- further expand our lithium capacity. We're pleased to announce that we will expand our capacity in Chile to 63,000 metric ton per year from our current capacity of 48,000 metric ton per year. This new capacity will let us serve the growing needs of the market even more efficiently. At the same time, our lithium projects in Argentina remain on a schedule and will make us the operator of what we believe will be the 2 most efficient lithium projects in the world. I thank you for joining the call today. And we'll now open up the line for questions.

[Operator Instructions] And our first question today comes from Isabella Simonato from Bank of America.

I have a question on lithium. Thinking about the project that you announced for 2018 and -- how do you think of prices for the next year? I understand that you are a little bit more optimistic for the second half of this year, but considering that are projects, aside from yours, that should come online next year, how can we think about price environment in the next year or 2? And assuming it goes back to $8,000, $7,000 per ton, how do you think of the returns of that project?

Thank you, Isabella. We have been very clear that we are very optimistic, and I think, with less risk on the demand side for lithium, we think that the demand is strong. We now believe that this year it will increase 14%, and we're looking forward of the years to come, also, to keep a higher growth between 10% or 12%. So the -- in order to answer your question regarding how we see the price, that will depend, of course, on the demand-and-supply balance. Basically, the risks are on the supply. Basically, also in the past, the industry has not been very good at accomplishing what it has promised. But we think that, of course, there are now projects that are starting and will be delivering product. So the main question is that all this new supply will be enough to balance or even have more product into the market. We think, as we indicated in the press release and in my comments, is that for the rest of this year, we are more optimistic and maybe the price could go down less than we thought originally. And for 2018 or 2019, we believe and our estimate is that the price could go down some because of this new project getting in. Regarding the profitability of our expansion, we believe that we are one of the lowest cost producer. So even though if we see this price reduction in the levels that you indicated, the project will continue to be very profitable.

And our next question comes from Ben Isaacson from Scotiabank.

This is Carl Chen stepping for Ben here. So just, I guess, first question. Given the iodine prices are sitting at multi-year low right now, how much room is there for your production costs to go down to achieve more of a margin expansion? And then, if you could, what is the current state with your competitors given your kind of volume-over-price strategy in the iodine sector?

Thank you, Carl. Regarding iodine, we have been very clear in our strategy, in the sense that we wanted to recover our market share. We, at the same time, have been doing a lot of efforts in trying to diminish our cost with our industrial restructuring that we have done in the past years. And this, in our opinion, has been working as we expected, even a little bit better. We have been recovering volumes that we wanted, and we have been able to diminish our cost. What we saw in the last quarter was much more volume than we have already originally thought. And on the second hand, we have seen that the price has diminished -- they're down and even we see now, for the next quarters, a more stable price scenario. What will happen in longer term? Again, like my answer in lithium, will depend on the supply-and-demand balance. We are getting to market shares that we wanted. And we will continue to supply the growth of the market with our production, which we think we will continue to improve on the cost.

Perfect. Perhaps one more question, if I may. You mentioned that you guys are seeing overall improvement in potash demand in Brazil so far this year. What are you seeing down there that's really contributed to the resurgence in demand and how sustainable do you view this is?

Regarding potash, as you know, we are really volume and price takers. We will sell less this year, close to 15% less than previous year, because we are putting more efforts on our lithium production. So what we do in this market is that we are followers, we follow what is going on and what the big guys are doing. The most important thing right now for us is to see what happened with the next agreement with the Chinese, which is not ready yet. When we see what the Chinese will sign with the main producer, we will see -- have more visibility for the future. But in the last quarter, as you indicated, we have seen price recoveries and more demand in Brazil, basically because of the requirements on the crops. And we feel that this could continue in the rest of the year. But, again, the most important thing for the big picture will be to see what happens with the Chinese.

Our next question comes from Andrew McCarthy from Citi.

On the lithium expansion in Chile, I was wondering if you could provide any more detail on whether you need to get any sort of agreements made with Corfo to enable you to do this expansion or any environmental approvals. Or -- also apart from with Corfo with the CCHEN as well, whether you need to adjust -- make any adjustment there as to how much you can extract on the annual quotas? And my second question is also on the lithium expansion, whether you can add some more color on exactly where you are doing expansion. Is it both in terms of the extraction in the Salar de Atacama and also at the conversion plant at the Salar del Carmen? And also whether that will change the amount of lithium carbonate and/or lithium hydroxide that you'll be able to produce going forward?

Thank you, Andrew. Basically, we -- what we have in our Corfo contract is the total amount for -- that we can produce and sell of lithium in the total life of the contract, which we have been -- we have used already, in the previous 20 years that we've been operating, close to 60%. So we have 40% less. So we don't need any specific new approval or requirement from this agreement. Regarding environmental, yes, like any new project, this needs to be -- to have environmental approvals, which we have been working already for some time. And we expect to have it in the next month and -- in order to be able to accomplish with our target time of being able to up the project ready by the end of next year. And then we don't need any other requirement from regulatory authorities on that. Regarding the -- where the project will be done, this is basically an addition to our actual plant -- conversion plant in Salar del Carmen, where we do have our actual capacity for 48,000 tons. And then we are able to get this lower CapEx for this amount of new volume because, of course, if the bottlenecking and -- including additional treatment in the same plant. We don't need to do any important change in our traction or Salar de Atacama operation because we are already getting those brines for -- that we are reinjecting, and we use only the potash now.

That's very clear. And just one final point or question, if I may. You mentioned that the -- for the current lithium, higher lithium production that you're doing at the moment, you're expecting to cut potash output in the order of 15%. I was just wondering if that would have any knock-on consequences for the potassium nitrate business. Whether that would also, therefore, see reduction in volumes in the next year or so?

No. Basically, our main objective when we produce potassium chloride is, of course -- or potash is, of course, as a raw material, it's a very low-cost raw material for our potassium nitrate business. So that will not be affected. And, of course, we are increasing our sales, and we expect to increase some of our sales in the potassium nitrate. So we will use more potassium chloride for that production. So we'll be not affected at all. And then the net reduction in sales in potassium chloride -- of potassium chloride will be in the range of 200,000 tons to 250,000 tons, if you compare with last year.

[Operator Instructions] Our next question comes from David Wang from MorningStar.

Patricio, I just had a question on the lithium project and then a follow-up. It looks like it's only going to be about $3.3 million per ton in capital intensity. And it looks like, as compared to your peer in Chile, it was far more capital intensive, say, $10-or-so million per ton. What's driving with the difference between why this project is so relatively capital light? Maybe you touched on it a little bit in the previous answer. And then a second question, follow-up is, how quickly will you be able to ramp up? I think you mentioned that it should be completed by 2018, but should we expect a further delay beyond that as the brine needs to go through the entire evaporation and processing conditions. And then maybe if I can follow up. With higher lithium production and finite amount of lithium that you can extract, it seems like this would decrease the number of years that you can extract at this level. Does this mean that you have a better expectation for future growth in lithium, say, within resolution of arbitration of Corfo, does it make you more optimistic about where the total volumes can be heading longer term?

Okay. Thank you, David. Quite a long question. I will try to remember all. Well, the first part, of course, it's a very low capital intensive, as I answered in the previous question. And this is because this is changes in our actual plant. We are using a lot of the infrastructure that is in place. And then we are also debottlenecking parts of the plant and putting some additional equipment in order to be able to increase the amount that we are increasing. We think that even some of the production could be by middle year of next year and the total by the end. So we are -- that will depend on the implementation that we will be doing. Of course, as I indicated before, we have a total amount in the actual condition of the contract. So if we produce more in the beginning of the years, then, of course, we will have less years to produce lithium in the contract. And we think that this is a good decision from our part to do it. But we also have to think that we expect that we will have a solution with Corfo that we'll benefit, the country will benefit, Corfo will benefit us. We look forward to have sooner than later solution on that. And at the same time, being an important player in the lithium industry and having seen what is the demand projection for the lithium industry, we, of course, are developing our project in Argentina that should be in operation in 2019 in the first stage of 25,000 tons, and immediately after that, probably, start the second stage of 25,000 tons additional. And we continue to look for other opportunities. We, as a company, think that we have an important opportunity in this business line, but at the same time, responsibility with our customers to supply them in this growth stage.

[Operator Instructions] And we do have an additional question from Chris Damas from BCMI Research.

Last September it turns [indiscernible] was quite excited to buy some shares for [indiscernible] capital, but most recent reports are... [ Technical Difficulty ]

Can you please repeat your question. We've not been -- I mean, we cannot hear you.

Okay. I will try and speak more clearly. And my wife is here, she is fluent in Spanish and she can translate. It turns the lithium giving up on buying more SQM and has Chilean government expressed lithium as a strategic asset that can't be sold?

Chris, I'm sorry, we were not able to -- it seems that there is a problem with your phone. We cannot understand your question. If you want, later on you can reach us over e-mail, and we will try to help you with your concerns.

And ladies and gentlemen, at this time, I'm showing no additional questions. I'd like to turn the call back over to management for any closing remarks.

Well, thank you all very much for joining us today, and we hope to have you with us on our next conference call. Goodbye, everyone.

Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending. You may now disconnect your lines.