Sociedad Quimica Y Minera De Chile SA ADR (NYSE:SQM) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Ben Isaacson – Scotia Capital: I have three questions. My first question is on your CapEx. You’re lowering CapEx by $100 million and you anticipate lower CapEx in 2014. Where is that $100 million coming from? Is that coming from lithium, potash, iodine expansion? Can you provide some more color and also some more color as to what you are anticipating for lower CapEx next year?
Patricio Contesse – CEO: Related with the $100 million less this year is mainly related to maintenance CapEx. We have focused on it and reduced it significantly. We have obtained most of goals, CapEx goals. Related to 2014, we are still standing. We know already that it will be significantly lower but more accurate we will have that informed at the end of the year when the final CapEx will be approved by the Board formally, but it will be significantly low. But exactly, we are not in condition today to formally or officially publicly say.
Ben Isaacson – Scotia Capital: My second question is on the potassium nitrate market. Can you provide an understanding when the potash or the MOP price goes down by $10 or $20, how does that impact your cost for MOP and how do you see the relationship in terms of the price that you are able to get for MOP? Do you see that as a fixed percentage or a fixed dollar premium to the MOP market? Can you explain how these parts work?
Patricio Contesse – CEO: Well, first of all, there are potassium chloride and potassium nitrate, even though they are both potash products, but they are not absolutely in relate. They both go to complete different markets. The decline that we have been seeing in the potash in the last year or more, it has not really had same proportional impact in the potassium nitrate. Even beyond that because it’s a market that needs potassium free of chloride, today is quite tight between demand and supply. So in that sense, that’s why, we said in this analysis that we gave you that for this year with what we have seen in the market related with demand and supply that it is very tight, but we don’t see a movement in the potassium nitrate prices for this year.
Ben Isaacson – Scotia Capital: So does that mean that you expect margins to expand as your potassium chloride costs go down?
Patricio Contesse – CEO: To consolidate, when you say you can put it here or there, the lower costs – if you have the lower costs than the margin in potash, chloride will be lower. So, consolidating, related to having a lower cost potassium nitrate can increase the margin, but on the other hand you will see a decrease in the margin of potassium chloride.
Ben Isaacson – Scotia Capital: Just my very last question, obviously your stock is down significantly year-to-date and kind of much more than your fertilizer or industrial chemical peers. I have a lot of value investors that are looking at SQM in a three- or five-year basis. What do you see as kind of the catalyst to kind of turn around your stock or kind of how do we give confidence to current and prospective shareholders?
Patricio Contesse – CEO: It is hard to say at this stage with all the difficulties in potash to give any statement in that area. So I am not in condition to give anything related to potash. The only thing that we can say there we are increasing our volumes and also our costs are going to be reduced. So with that said, we will have more competitiveness in the potash business because our costs and quality are improving on day-to-day. Also the growth will be in the range of 15% growth in potash, 15% to 20% in that range. So that in one hand. But exactly the prices where they will move the next three or four/five years, I just can’t say any comment on that, because I don’t have the crystal ball. But in terms of our cost, level of production will be high. In terms of the iodine, I think that the market is growing. We will see opportunities and we will act aggressively in the market as SQM related with our position and also we are improving our costs there significantly. Then also, as I mentioned and you put the question, then we have a very stable product, that is potassium nitrite, and potassium nitrite, we are not decreasing the price as we don’t know what’s going on in the potash business for this year. So that means it’s much more stable and that means that it’s much less volatile. That has been shown historically, and now even more profoundly. Also, we see that market growing. Next year we should be selling in the range 40,000, 50,000 metric tons more of potassium nitrite, and that is the forecast growing per year and the next years to come in a very stable product, and related with demand flowing and prices much less volatile than normal commodity fertilizers. Also, even though the solar salts this year are going dramatically down and next year are forecasted the same, we are seeing already a comeback gradual in the market that (mean us) to say that 2015 onwards this market is starting again. That is relevant and will be relevant for SQM. Also, I mean, the competitive in terms of (course) of SQM in the next five years will change also dramatically.