Chile focuses on Codelco turnaround, not quick privatization fix

Chile’s new right-wing government said it’s focused on improving performance at state copper giant Codelco rather than trying to introduce private capital or sell assets.

“Codelco’s ownership is established in the Constitution, and any change would require a national decision that goes beyond any particular government,” Finance Minister Jorge Quiroz said. “For now, we are focused on improving performance.”

Quiroz and Economy and Mining Minister Daniel Mas spoke at Codelco’s annual general meeting Monday, the last of chairman Máximo Pacheco’s four-year term. Both ministers have been critical of the company’s results, which have been marked by falling production, rising debt and a fatal accident last year.

Asked about the possibility of asset sales, Mas said that would be a decision for the board under corporate governance rules, not the government. Pacheco later clarified that the company’s core deposits can’t be sold or brought into partnerships, although non-core assets could, in principle, be reviewed.

Earlier, Quiroz questioned Pacheco over what he described as a lack of self-criticism and whether the company’s outlook could be trusted after past disappointments.

Pacheco said the company learned from past mistakes, including overly optimistic targets, juggling major projects under a centralized approach, slow decision-making and excessive reliance on outsourcing.

Output is stabilizing and the project pipeline is now more realistic after earlier missteps, Pacheco said, rejecting suggestions the company is in crisis.

“We’ve learned to be humble, and it’s been a hard and painful process,” the chairman said.

Codelco’s rising debt — standing at about $25 billion last year — reflects its role as a state-owned company that transfers profits to the government, Pacheco said, adding that liabilities would be closer to one-fifth of current levels if it operated as a private firm.

The company will likely need to continue raising debt in coming years to fund investments, he said.

The government plans to announce three new Codelco board members in the coming days, including Pacheco’s replacement.

(By James Attwood)