Codelco’s CEO Denies Chilean Copper-Mining Giant Is Facing Financial Woes

Máximo Pacheco, CEO of the state-owned copper miner, said the company is “financially robust”, rejecting claims it is heading for insolvency

Chuquicamata, a copper mine near Calama, in Chile. Photographer: Cristóbal Olivares/Bloomberg
September 14, 2023 | 12:40 PM

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Santiago — Máximo Pacheco, chairman of Codelco’s board of directors, has stated that the state-owned copper-mining company is “financially solid and robust” in a session of the mining commission of the Chamber of Deputies.

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“Codelco’s EBITDA in a year in which production fell, where we are behind schedule with structural projects, this year, is going to exceed $5 billion,” he said. “That is, this company has a daily profit of $14 million.”

Pacheco explained that these resources even allow the company to pay taxes and 10% royalties, according to the country’s laws governing copper mining.

He recalled that Codelco issued bonds in New York to finance the development of its structural projects a week ago, and that the company was seeking $2 billion, while demand was almost fivefold


No risk of insolvency

Pacheco considered it “clownish” to believe that the state-owned copper company would be at risk of insolvency, referring to a report by the Cesco research center that analyzed the company’s main results and concluded that, if the current trajectory is maintained, the increase in the company’s debt could lead it to potential insolvency.

“I am left with the thousands of opinions of other people who continue to have confidence in this company,” Pacheco said.

Rising costs and falling profits pushed Moody’s Investors Service to place the company on review for a possible downgrade of its credit rating. Codelco is trying to increase its production and profits, but is saddled with a heavy $19 billion debt burden.


Pacheco said that the company’s difficulties do not correspond to financing or balance sheet problems, as the origin of the debt lies in the historical stance adopted by the Chilean state in withdrawing profits and authorizing indebtedness to sustain new mining projects.

“The origin of the debt is the Chilean state, owner of this company for 52 years, which withdrew all the profits generated by the company,” he said.

However, he pointed out that, during the Michelle Bachelet government, a capital contribution was made and now President Gabriel Boric, by means of a decree with the treasury, has authorized that 30% of the profits be reinvested in the state-owned company.

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Lower production ‘a headache’ for Codelco

According to Pacheco, the contraction in the state-owned company’s copper production is “a headache”.


His projection is that there will be a drop in production this year, but there will be a recovery next year, driven by simultaneous projects at Chuquicamata, the Hales Mine and Rajo Inca (in El Salvador).

Estimates suggest that the company could hit production of 1.7 million tons by the end of this decade. The company laid off 105 people between July and August.

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