Chile’s state copper miner Codelco must build extensive partnerships with private miners to reverse a production decline that heavy spending failed to stop, board chairman Bernardo Fontaine warned on Monday. Fontaine told Chilean broadcaster Radio Duna that Codelco invested $32 billion over the past eight years while annual copper production fell from 1.7 million tonnes to 1.2 million tonnes, and that company reports put its costs 78 percent above comparable operations.
The warning follows the internal audit Fontaine ordered on taking office, which found 42,100 tonnes of production had been artificially inflated through three mechanisms across several divisions, with a separate inventory irregularity that could require a $120 million to $140 million accounting adjustment. Executives involved have left the company and investigations continue. Codelco disclosed preliminary overstatements of 27,600 tonnes for 2024 and 18,100 tonnes for 2025 at an extraordinary shareholders’ meeting on November 5.
Fontaine said Codelco holds one million hectares of mining concessions that remain unexploited and lacks both the management capacity and the capital to develop them. Legislation governing state enterprises restricts joint ventures and approval procedures are lengthy, he said, but existing partnerships with Rio Tinto, BHP and Anglo American show the model can work. “That is the only way it can grow, or even maintain, its production levels in the future,” he said.
The new management team has cut the production objective to an average of about 1.3 million tonnes a year. Fontaine said earlier forecasts were excessively optimistic and did not reflect what the company can actually produce, after output hit two-decade lows in 2022 and 2023 amid project delays, fatal accidents and falling ore grades.
For copper markets, the statement matters because Codelco’s pipeline, valued at about $34 billion in earlier Fontaine comments, cannot be financed from its own resources without more debt. Whether Chile changes the rules for state enterprise partnerships now decides how much of that pipeline private capital builds.