Codelco Chair Indicates Shift in Prioritization from Expansion to Profitability

Codelco Shifts Focus to Profitability Under New Chairman

Codelco, the Chilean state-owned copper giant, is signaling a shift in its priorities under the leadership of its new chairman, Bernardo Fontaine. In a statement released on Thursday, Fontaine emphasized that the company's mandate is no longer focused solely on producing copper, but rather on doing so safely, efficiently, and profitably.

Fontaine, a longtime critic of Codelco's governance 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 board meeting, directors agreed to maximize contributions to the state while seeking to avoid increasing debt, which is near record levels.

This change in emphasis marks a departure from the approach of Fontaine's predecessor, Máximo Pacheco, who had prioritized restoring production growth at Codelco's aging mines. However, increased scrutiny of investment decisions could temper expansion plans and help keep the global copper market tight as demand rises from the energy transition and data-center build-out.

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The board also instructed its audit committee to hire an external forensic auditor to review the calculation of 2024-25 production figures and the costs associated with renovating Codelco's headquarters. This move follows the discovery of production overcounting that led to the dismissal of an executive and a prosecutor's investigation. After removing incorrectly classified material, Codelco's 2025 output would be its lowest since 1997.

Despite this, Codelco reported first-quarter production on Friday that was in line with what Pacheco revealed in an interview last month. Output in the first three months fell about 8% from the year-earlier period as the company continued to grapple with the fallout from a fatal accident at El Teniente. The result was also dragged down by lower ore grades at Hales, plant issues at Chuquicamata, and maintenance elsewhere.

Codelco delivered $430 million to the state in the first quarter, a 94% increase from the same period last year, as a 31% jump in realized prices offset a 10% increase in costs.

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Directors also agreed to strengthen governance and transparency and create a special committee to monitor issues related to the El Teniente collapse in July. Fontaine emphasized the need for Codelco to "put the house in order" and restore confidence, while pursuing public-private partnerships and management changes to strengthen the miner's long-term prospects.