UPDATE 1-Chile's SQM to invest $1 bln 2008-2010 in capacity

(Adds CEO quote, capacity forecasts)

SANTIAGO, July 24 (Reuters) - Chile's leading fertilizer exporter Soquimich (SQM) said on Thursday it would invest some $1 billion from 2008 through 2010 to expand production capacity.

SQM, a leading exporter of potassium-based fertilizers and the global leader in lithium and iodine production, said it would invest to increase output in all three areas, with investment financed mainly by internal cash flows.

"The plan includes projected capital expenditures of approximately $1 billion over the period, including approximately $350 million for the year 2008," the company said in a statement.

The company's stock SQM_pb.SN has more than doubled year-to-date as world prices for potassium-based fertilizers have surged.

"Our capex plan aims to increase production capacity across our business lines, especially in potassium-based products, which have become a key contributor to the company's margins," said Chief Executive Patricio Contesse.

The company said it planned to increase current combined capacity for potassium chloride and potassium sulfate of some 820,000 tonnes by about 250,000 tonnes over the next three years. Its new Coya Sur potassium nitrate plant is scheduled to come on line in the second half of 2010.

SQM said iodine and nitrate capacity would increase by 25 percent by the end of 2012, and its current annual lithium carbonate capacity would increase from 30,000 tonnes to about 40,000 tonnes by the third quarter of this year. (Reporting by Lisa Yulkowski, editing by Gerald E. McCormick)