20-F: SQM Amends Atacama Salt Flat Agreement, Focuses on Community and Operations

SQM and Codelco have executed a First Amendment to their Association Agreement for the Atacama Salt Flat, refining terms related to closing conditions, community engagement, and financial contributions.

Summary

• SQM and Codelco have amended their Association Agreement for the Atacama Salt Flat, effective December 27, 2025.
• The amendment clarifies closing conditions, allowing for the Closing to occur even if certain related agreements are not yet executed.
• It also updates provisions related to Atacameo Indigenous Communities, replacing the definition and detailing a new framework for community governance and participation.
• The amendment addresses the contribution by Dixin Corporation and Series E Shares, adjusting dividend distribution mechanisms.
• A resolutory condition is introduced, subject to specific legal and shareholder approval outcomes related to the merger between SQM Salar SpA and Minera Tarar SpA.
• Several other sections of the original agreement are amended to refine operational and administrative terms.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this filing as moderately positive, indicating progress in operational and community agreements, but with underlying risks related to regulatory approvals and potential legal challenges.

Positives

• The amendment clarifies closing conditions for the partnership, potentially streamlining the process.
• Enhanced focus on community engagement and participation through updated provisions for Atacameo Indigenous Communities.
• The amendment addresses financial contributions and dividend distribution mechanisms, providing clarity.
• The agreement remains in force through December 31, 2060, ensuring long-term operational planning.

Negatives

• The introduction of a resolutory condition related to legal challenges and shareholder approvals introduces a layer of uncertainty until these conditions are definitively resolved.
• The potential for disagreements between SQM and Codelco, particularly regarding the timing of regulatory approvals, could lead to delays or increased costs.

Risks

• The inability of the Nova Andino Litio Joint Venture to obtain a new environmental permit for the Salar de Atacama beyond 2030 could materially affect business operations.
• The potential for political or economic instability in Chile could impact operations and financial performance.
• Changes in environmental laws and regulations, or their interpretation, could lead to increased costs or operational delays.
• The dependence on Codelco's actions and decisions, especially after 2030 when SQM loses control of the joint venture, poses a risk.
• Disagreements between SQM and Codelco could lead to decision-making delays or deadlocks, adversely affecting the joint venture's operations and profitability.
• The potential for future legal proceedings or regulatory actions related to environmental, tax, or labor matters could adversely impact the company.

Future Outlook

The filing does not contain specific forward-looking financial guidance. However, it details ongoing capital expenditure programs and strategic initiatives for expanding production capacity in lithium, iodine, and nitrate operations, as well as exploration projects.

Industry Context

StockSavvy.ai notes that this amendment reflects the ongoing strategic adjustments within the lithium and mining sectors in Chile, particularly concerning state-owned enterprise partnerships and community relations. The focus on environmental permits and indigenous community engagement highlights key operational and regulatory considerations for the industry.

Corporate Governance

Legal Proceedings

• The appeal filed by Inversiones TLC SpA under Case No. 52.750-2025 against the judgment of the Honorable Court of Appeals of Santiago dated November 11, 2025, rendered in the administrative litigation case No. 508-2024, which rejected the claim of illegality brought by Inversiones TLC SpA against Exempt Resolution No. 6,441, dated July 15, 2024, issued by the Financial Market Commission (the "Judgment").
• An extraordinary meeting of SQM shareholders convened to approve the Merger: (a) does not approve the Merger, or (b) if the Merger is approved, SQM shareholders representing a percentage of the total shares issued by said company greater than that agreed upon at the respective meeting exercise their right of withdrawal pursuant to Article 69 of Law No. 18,046 and Article 134 of its implementing regulations.
• SQM executing a public deed setting forth (a) verification of the circumstances described in the preceding items (i) and (ii), and attach as annexes to said deed, registered under the same file number, copies of: (1) the Judgment; (2) the Regulatory Authorizations; (3) the signed minutes of the extraordinary meeting of SQM shareholders that does not approve the Merger, or alternatively, the signed minutes of the extraordinary meeting of SQM shareholders that approves the Merger, accompanied by the notices through which one or more shareholders exercised their right of withdrawal exceeding the percentage referred to in 3.1(ii)(b); and (4) the SQM Restitutions; and (b) that it does not waive the condition subsequent set forth herein.

Related Party Transactions

• The amendment involves a partnership agreement between SQM and Codelco, a state-owned entity, for the development of the Atacama Salt Flat operations.
• The merger by incorporation of Minera Tarar SpA (a Codelco subsidiary) into SQM Salar SpA (now Nova Andino Litio SpA) is a significant related party transaction.
• The agreement includes provisions for dividend distribution adjustments between Series A and B shares, impacting related parties holding these shares.

Stakeholder Impact

• Atacameo Indigenous Communities: The updated agreement aims to enhance their participation and collaboration in the Joint Venture's operations through a new Community Governance framework.
• Shareholders: The amendment clarifies certain aspects of the partnership and its governance, potentially impacting future dividend distributions and the overall value of their investment.
• Codelco: As a partner, Codelco's role and influence in the Joint Venture are further defined, particularly regarding decision-making and economic benefits.
• Government Authorities (Corfo, CCHEN, SEA): The agreement operates within the existing regulatory framework and highlights the need for future environmental permits, impacting regulatory oversight.

Next Steps

• The Joint Venture will require a new environmental permit (RCA) from the Chilean Environmental Authority (SEA) for mineral exploitation activities in the Salar de Atacama beyond December 31, 2030.
• The parties will continue to implement the Community Governance framework as an annex to the Agreement within 120 days from its incorporation.
• The parties will act diligently to prevent the occurrence of circumstances constituting the Resolutory Condition and identify actions to return to the state prior to the Merger.
• SQM will deliver certified copies of title certificates, mortgages, liens, prohibitions, and litigation regarding mining rights, real property, and water rights within sixty days from Closing.
• The company will continue to monitor and manage its operations in compliance with environmental laws and regulations in Chile and Australia.

Key Dates

Recommendation

The amendment clarifies operational and community aspects of the Atacama Salt Flat partnership, which is positive. However, the introduction of a resolutory condition tied to legal and shareholder approvals, coupled with the ongoing risks associated with environmental permits and the company's dependence on its state-owned partner, warrants a cautious 'hold' stance. Investors should monitor the resolution of these conditions and the company's ability to secure future environmental permits.

Keywords

SQM, Codelco, Atacama Salt Flat, Association Agreement, First Amendment, Joint Venture, Community Governance, Environmental Permit, Lithium Production, Chile, Mining Concessions, Regulatory Filings