Codelco debt and high costs hurt competitiveness, document says

Chile’s state-run copper giant Codelco sees soaring costs, which are over one-and-a-half times above its global rivals, and heavy debt are the main challenges to the struggling company’s competitiveness, according to an internal document seen by Reuters.

The document said that, compared with industry rivals, Codelco has “significantly higher” costs, with a direct cost (C1) 57% higher than major international mining companies and 72% higher than the main national operations.

“The main competitive gap identified by the comparison is concentrated in operational costs, which remain significantly above international and national benchmarks,” the report said.

The analysis also highlighted that the company’s net debt to EBITDA is 3.8x, compared to 0.7x for global mining and 0.5x for the industry in Chile.

Despite losing its spot as world’s largest copper producer in 2025, the report showed that the quality of its mining resources weren’t the main detriment compared to competitors.

The document showed that Codelco’s average ore grade was 0.62% compared to 0.59% at its global counterparts, despite being below the 0.80% of other miners in Chile.

“Codelco’s main challenges are focused on increasing operational competitiveness, improving profitability and increasing the return on the significant investments made, rather than on its production scale or the quality of its resource base,” the report said.

It added that comparisons showed that there are “significant room for improvement in productivity, operational efficiency, and economic performance.”

In its latest earnings, the company said it faced rising costs across several of its mines for varying reasons, including the fatal accident in El Teniente, poor ore grade in Ministro Hales and maintenance costs in Chuquicamata, El Salvador and Gabriela mistral.

The results said costs also rose due to currency appreciation, the rising cost of materials and lower production.

After a scandal involving inflated production figures, Codelco’s new chairman, Bernardo Fontaine, has said he’s reviewing all the company’s operations and projects to restructure its investment and production plans.

Codelco, by law, must return all its profits to the state and debt has become its main source of financing. That debt has also ballooned due to its multi-billion mine expansion projects that were intended to counteract declining ore grades but have been plagued by missteps, cost overruns and accidents.

(By Fabian Cambero; Editing by Alexander Villegas and Nick Zieminski)