It exists at the level of ideas, hallway conversations, and expert commentary. Toward the third quarter, the state-owned company will conduct a comprehensive review of its asset portfolio. Lithium is one of those assets, and its high prices could tip the balance toward capturing its present value.
Some experts recommend analyzing the sale of the US$900 million lithium exploration and production project between Rio Tinto and Codelco, in which the Anglo-Australian company would provide the funding.
The matter has not been discussed at the board level, nor does it appear in any formal document. However, by September, when the strategic plan of the company led by Chairman Bernardo Fontaine is expected to be finalized, Novandino Lithium could emerge as Codelco’s main financial lifeline. No decision has been made, but the topic is being
discussed.
According to sources within the company, Codelco’s new strategic plan will evaluate all aspects of the business: operational, commercial, and, of course, financial. In this last category, minority stakes in copper assets and majority stakes in lithium assets could—potentially—play a key role in financing investments or reducing a debt burden that continues to grow year after year and has already reached US$25 billion.
Fontaine himself, upon taking office at Codelco, criticized the fact that the company ultimately transfers approximately US$7 billion annually to the Chilean state while having to incur an equivalent amount of debt, increasing its financial burden year after year. In his view, it is akin to robbing Peter to pay Paul.
Within Codelco, some have discussed divesting the company’s stakes in El Abra or Quebrada Blanca. Yesterday, Codelco issued a statement saying that an “evaluation of the sale” of those holdings “does not reflect reality. We wish to clarify that neither Codelco’s Board of Directors nor its Chairman has analyzed, discussed, or adopted any decision regarding the sale of such participations,” the statement reads.
However, the company did not completely rule out future divestments. “In the coming months, the company will carry out the process of defining its Strategic Plan, during which various aspects of its management and future development will be comprehensively evaluated, including its operational and cost structure, project portfolio, and potentially its asset portfolio.”
Which Assets Could Be Considered?
The case of Novandino Lithium—the joint venture between SQM and Codelco to develop the Atacama Salt Flat—has already become a topic of discussion among politicians and industry experts and will likely continue to be debated.
There are several arguments in favor of such a move and others against it. A former official from Sebastián Piñera’s administration argues that the agreement structured by Codelco and SQM under the fast-paced leadership of Máximo Pacheco is undoubtedly “a good deal” in itself, “although it is also true that it takes Codelco away from its core business.”
At one point, the agreement was criticized by nearly all presidential candidates, and there was even a resolution proposed in the Chamber of Deputies opposing it.
Last year, lithium traded at around US$8,000 per tonne, far below its peak levels. Today it is close to US$24,000 per tonne. Realizing that value today through the sale of the 50% plus one share that Codelco holds in the Atacama lithium operations would provide an immediate injection of funds for Codelco and, naturally, for a state facing fiscal deficits.
Such a sale would also eliminate the risk that a more efficient, cheaper, and faster-charging substitute material for lithium batteries could emerge and significantly reduce lithium prices—and therefore the value of Novandino.
Another argument in favor of parting with what some call Pacheco’s “child” is that Codelco should focus on its core business—copper—and determine how to reverse its weak production level of 1.3 million tonnes, which threatens to continue declining.
As a result, this valuable asset joins the list of state-owned holdings in Quebrada Blanca, Anglo Sur, and El Abra, all major expansion projects that could command attractive valuations at a time when copper prices are approaching US$6 per pound on average and investor appetite for mining assets remains strong.
Expert Debate
Juan Carlos Guajardo, Executive Director of Plusmining, offers his perspective, noting that this remains a hypothetical scenario for which there is neither economic information available nor any prior assessment by the state-owned company. Nevertheless, he argues that given the complex situation facing Codelco, all possible options should be evaluated to help the company move forward.
“The organization, labor issues, and many other fronts need to be reviewed, but one of them is undoubtedly the asset portfolio (…). The company needs money.”
Regarding lithium, Guajardo says he has doubts about its long-term price outlook and therefore believes that divestment is an option worth analyzing. He adds that Codelco should avoid distractions from its core business and that Novandino could potentially represent an attractive opportunity, although he cautions that the terms governing the state’s exit from the venture are not well understood.
However, a lawyer with extensive experience in contracts and deep familiarity with the case points out that the SQM-Codelco agreement involves a chain of state approvals that has not been made public, as well as pending filings before Chile’s Comptroller General. He adds that the lack of transparency surrounding the establishment of the subsidiary companies, the appointment of directors at both the parent and subsidiary levels, and the absence of Comptroller rulings regarding the creation, modification, or extension of intermediary entities creates a significant risk of legal contingencies and price-related litigation in the event of a sale. “For that reason, in any hypothetical sale, a buyer of those rights would inevitably require substantial protections against potential price fluctuations and adjustment mechanisms, which would ultimately translate into discounts.”
Guajardo further notes that it is important for the company to focus on assets that can make a meaningful difference to its core business—that is, assets directly linked to large-scale mining. In that context, he questions whether it makes sense to continue operating Salvador and Gabriela Mistral (Gaby). “I’m not saying a decision should be made to sell them, but it is something that should be evaluated. They complicate matters because they are fundamentally different operations from the large-scale mines.”
Regarding Codelco’s minority stakes in Quebrada Blanca (10%) and Anglo American Sur (primarily Los Bronces, where Codelco also owns 20%), he notes that the former is a valuable asset because it benefits from a free carry arrangement, meaning Codelco is not required to contribute capital in the event of a major expansion project such as Quebrada Blanca II, operated by Teck. As for Anglo Sur, he points out that because Anglo American operates the same orebody as Andina, maintaining that position could be strategically beneficial given the synergies arising from the existing partnership.
However, in the case of El Abra (49%), where Codelco is partnered with Freeport-McMoRan on a US$7.5 billion expansion project designed to increase production from 80,000 to 300,000 tonnes, Guajardo says a sale could be considered, given the substantial value Codelco could realize. “There is a shortage of mining projects worldwide, and right now all copper assets carry extraordinary value.” This situation is reflected in copper prices, which currently exceed US$6 per pound.
“Selling Would Be a Mistake”
Marcos Lima, former CEO of Codelco, argues that the key question is: “What is worth more? Today, if you think about El Abra, it is worth far less than it could be worth in two years, once the project advances and obtains the necessary approvals to increase copper production from 80,000 to 300,000 tonnes. Selling today would be absurd.”
“My position is that Codelco has the opportunity to partner with an international sovereign wealth fund, strengthen its equity base, and become a green mining giant. That will not happen if it starts selling assets piecemeal.” He adds, He also believes that divesting lithium assets would be a mistake: “Codelco’s value today is far greater than in the past because it has both copper and lithium, two of the most important critical minerals on the planet.”
Álvaro Merino, Executive Director of Núcleo Minero, says that given Codelco’s critical financial and operational situation, the company must undertake a comprehensive operational and financial action plan to ensure its long-term sustainability. “A thorough review of all assets should be conducted, with attention focused on those most relevant to achieving the company’s strategic objectives. Assets that are not aligned with those objectives should be evaluated for potential divestment.”
He adds that selling stakes in Anglo American Sur, El Abra, Novandino, and Quebrada Blanca could be a viable alternative for raising funds for the state-owned company. According to Codelco’s financial statements as of March 31, 2026, the book value of these investments amounts to approximately US$7.167 billion.
The Political Debate
Senator Yasna Provoste (Christian Democratic Party), chair of the Senate Mining Committee, believes that the copper and lithium industries in which Codelco participates “have tremendous future potential and should be strengthened through additional productive partnerships rather than weakened through asset sales. It is a bad idea.”
However, Senator Renzo Trisotti (Republican Party), a member of the Mining Committee, stated: “If there are non- trategic assets whose sale could improve the company’s financial position without compromising its future development, that is an option that can be examined using technical, responsible, and long-term criteria.”
Congressman Cristián Tapia (Independent), chairman of the Chamber of Deputies’ Mining Committee, said that: “Certain assets that may not currently be in use or may not be generating the returns the State requires could be reviewed.”
Congressman Marco Antonio Sulantay (UDI), also a member of the Mining Committee, noted: “Now more than ever, it is absolutely necessary to provide a transparent assessment of Codelco’s economic, commercial, and operational situation. Only once this scenario is fully understood is it responsible to make decisions regarding structural measures, including the sale of assets.”
How Novandino Lithium Is Operating Under the Leadership of Bernardo Fontaine
The new company responsible for extracting lithium from the world’s largest lithium-bearing brine deposit has been operating for six months and has already had two chairmen of its board. The merger between the Codelco and SQM subsidiaries—which allowed the private company to maintain its participation in the Atacama Salt Flat through 2060—is supported by a complex corporate structure.
Currently, Novandino Lithium’s board consists of three directors appointed by Codelco (Bernardo Fontaine, Luz Garnier, and Alfredo Moreno) and three appointed by SQM (Ricardo Ramos, Hernán Uribe, and Manuel Ovalle). Behind Novandino Lithium, on the Codelco side, is Salares de Chile, which holds 50% plus one share of ownership. This state- owned subsidiary owns Codelco’s lithium assets and has its own board of directors. According to a source familiar with the matter, it is not merely a paper entity, as its directors have met every month. (Codelco was not available to provide information regarding the current composition of that board.) Codelco owns 100% of Salares de Chile.
A similar structure exists on the SQM side, where a board sits above Novandino Lithium. That board is chaired by Gina Ocqueteau.
However, according to a source familiar with the company’s operations, all governance decisions are made at the Novandino Lithium board level—not at Salares de Chile, Codelco, or SQM.
This is “a very widespread misunderstanding,” says Alfredo Enrione, Director of the Center for Corporate Governance and Society at ESE Business School (Universidad de los Andes).
“A director does not report to the shareholder who appointed them; their loyalty is owed to the company. (…) A subsidiary director is not an ambassador of the parent company; they are a fiduciary of the subsidiary. Information flows to the parent companies through formal channels—the shareholders’ meeting, financial statements, and accounting consolidation—not through directors privately informing the shareholders that appointed them, which could also raise confidentiality concerns.”
The Novandino Lithium board faces a particular challenge: creating a new company with its own culture and processes when the entire operation originated within SQM. For that reason, according to someone familiar with the company’s operations, the directors have worked with advisors to establish a new brand and develop systems and processes that are autonomous and independent. The company also operates from a different building, with offices separate from both Codelco and SQM.
SQM clarified that the merger did not alter the executive management team of the lithium business, as SQM Lithium (which merged with Codelco’s subsidiary to create Novandino) had already separated its functions from SQM Iodine and Plant Nutrition.
Source: El Mercurio