Former Chilean president slams Codelco’s governance, calls for greater autonomy

Former Chilean president slams Codelco’s governance, calls for greater autonomy

Former Chilean president Ricardo Lagos (2000-2006) has called for a more independent Codelco, the state-owned copper company that is the world’s No.1 producer of the industrial metal.

Speaking at the 30-year anniversary of local mining think tank Cesco, Lagos said the miner’s corporate governance should be similar to that of the country’s central bank, La Segunda reports (in Spanish).

Chile’s monetary authority has its own legal framework and The President is responsible for appointing its five directors for a 10-year period, with the consent of the senate.

A nine-member board currently rules Codelco, with of three of the directors named by the President, four selected from a shortlist provided by the senior public management council, and two workers' representatives.

"If you compare Codelco's current corporate structure to that of the central bank, the degrees of autonomy are clearly different, which is based on the importance the company plays in the country's public finances," Lagos was quoted as saying.

Budget battles

Former Chilean president slams Codelco’s governance, calls for greater autonomy

Ministro Hales copper-silver mine. Panoramic.

As a state-owned company, Codelco has often been in a tug-of-war with the government over its investment budget. Of about $100bn in profits that Codelco has transferred to the state since it was nationalized in 1971, only $4bn has been returned back to the miner.

But earlier this month Michelle Bachelet’s government announced its decision to invest up to $4 billion in the miner to 2018, with Codelco receiving around $3 billion via treasury-issued debt and close to $1 billion from returned profits.

While Lagos praised the move, aimed to help the company finance its massive investment program, he called the newly elected authorities to be “extremely responsible in the task they have in front of them.”

He said it is vital to grant Codelco greater control of its own future, especially when it comes to setting budgets.

He sees it as a key part of the firm's ambitious investment strategy, which in the next stage will plow $25 billion to overhaul older mines with depleted ore grades and launch new projects by 2018.

"I know it's hard, I have been President before, but we must push for an autonomous board in our copper miner,” he concluded.

Copper accounts for 60% of Chile's exports and 15% of gross domestic product.