Codelco Chair Signals Shift Toward Copper Profit Over Growth
(Bloomberg) — Codelco’s new chairman signaled a shift toward profitability over production volume at his first board meeting leading Chile’s state-owned copper giant.
“Our task is not to produce for the sake of producing, but to do it safely, efficiently and profitably,” Bernardo Fontaine said Thursday.
The economist, who has long been critical of Codelco’s management and efficiency, was appointed by Chile’s new right-wing President Jose Antonio Kast to help improve the company’s operational and financial performance. At Thursday’s meeting, executives agreed to maximize contributions to the state as they try to prevent debt growth that is near record levels.
The comments indicate a change in emphasis from predecessor Máximo Pacheco’s push to restore production growth after years of setbacks in projects aimed at overhauling aging mines. Greater scrutiny of investment decisions could temper expansion plans and help the global copper market remain tight as demand from the energy transition and data center build-out increases.
The board also instructed the audit committee to hire an external forensic auditor to review the calculation of 2024-25 production figures and the costs associated with the renovation of Codelco’s headquarters.
The move followed revelations of a production overcount that led to an executive and prosecutor’s investigation. Following the removal of misclassified materials, Codelco’s 2025 production will fall to its lowest level since 1997. Still, Codelco reported first-quarter production on Friday; This was in line with information Pacheco revealed in an interview last month.
Production fell nearly 8% in the first three months compared to the previous year as the company continued to grapple with the effects of the fatal crash in El Teniente. The result was also dragged down by lower ore grades at Hales, facility problems at Chuquicamata and maintenance elsewhere. Still, Codelco provided $430 million to the state, up 94% from the previous year; The 31% increase in realized prices offset the 10% increase in costs.
Executives on Thursday also agreed to strengthen governance and transparency and create a special committee to monitor issues related to the collapse of El Teniente in July.
Fontaine said the company needed to “put the house in order” and rebuild trust while pursuing public-private partnerships and management changes to strengthen the miner’s long-term prospects.
(First quarter results added in sixth and seventh paragraphs)
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