Chile finance minister floats idea of private capital at Codelco

Chile’s right-wing government opened the door to bringing private capital into copper giant Codelco in a way that retains state control, the latest twist in a debate over the indebted company’s future.

“The government’s position on this matter is always to seek for Codelco to enter into partnerships, perhaps to bring in private capital at some point, but never to cease being a company controlled by the state,” Finance Minister Jorge Quiroz told reporters at an unrelated event late Wednesday alongside President José Antonio Kast. “We have to be practical and we have to move the company forward.”

Quiroz’s comments follow remarks a day earlier by Economy and Mining Minister Daniel Mas that the government had no plans to privatize Codelco. Both were responding to a debate sparked earlier in the week by Arturo Squella, head of the Republican Party founded by Kast, who told La Tercera that the state should sell a stake in the company. To be sure, Codelco chairman Bernardo Fontaine, appointed by Kast in May, has said the company would remain 100% state-owned.

Codelco, long the backbone of Chile’s mining industry and a crucial source of government revenue, has built up a massive $25 billion in debt and last year posted its lowest copper output in 28 years. Its troubled efforts to overhaul aging mines reflect broader challenges across the global copper industry as ore grades decline and deposits become harder and more expensive to develop.

Selling a minority stake in Codelco or introducing private capital into its legacy mines would need to go through Congress. It already engages in joint ventures with private firms on exploration projects.

While Quiroz’s comments suggest the government may be willing to consider selling a minority stake, few Chilean politicians openly advocate privatizing Codelco given its near-sacred place in the country’s political history. Created in the 1970s after Chile nationalized its largest copper mines from US companies, Codelco became a symbol of economic sovereignty and remained in state hands through Augusto Pinochet’s wave of privatizations.

Opposition leaders slammed the privatization talk. Former Interior Minister Álvaro Elizalde said selling a stake would amount to surrendering control of one of Chile’s most important strategic assets, crossing a line “not even the dictatorship dared to cross.”

Socialist Party President Paulina Vodanovic said the right had an “insatiable plan” to privatize Codelco, noting that Quiroz had repeatedly assured Congress such a move wasn’t under consideration and urging him to stand by that commitment.

“It would be a political and economic mistake to sell Codelco in its current situation,” said Juan Ignacio Guzman, head of mining consulting firm GEM. “It’s better to get the company back on its feet first.”

(By James Attwood and Matthew Malinowski)