This joint venture went into effect following a capital contribution of US$25 million by SQM in exchange for a 50% ownership stake in Minera Exar, a wholly owned subsidiary of LAC. This amount includes US$15 million to cover intercompany loans between Minera Exar and LAC; the remaining US$10 million will be allocated to project development.

SQM and LAC intend to immediately advance a work and engineering plan, which contemplates completion of an updated definitive feasibility study based on an existing study for Caucharí that was completed by Minera Exar in 2012.

The updated study will evaluate economic feasibility for a project with a nameplate production capacity of approximately 40,000 metric tons per year of lithium carbonate equivalent. Depending on the results of the study, the project may be executed in stages.

SQM estimated that global demand for lithium chemicals totaled approximately 150,000 metric tons of lithium carbonate equivalent in 2015, and the company expects demand growth of approximately 10% in 2016. Sales of lithium and lithium derivatives from SQM’s existing operation in Chile accounted for 13% of revenues in 2015.

SQM is committed to the lithium business, both in Chile and abroad. The Salar de Caucharí is a great complement to our existing lithium operations in Chile, and it is located just a few hundred kilometers from the Salar de Atacama. We expect to have similar production processes at both sites, and as a result we should benefit from operating synergies.

—Patricio de Solminihac, Chief Executive Officer of SQM