Metal Remains Above US$6 per Pound
Experts warn that the performance of its structural projects, the company’s debt levels, and the competitiveness of its cost structure will be the main challenges.
Copper prices have been trending upward for some time, driven by structural factors such as electrification, renewable energy expansion, and growing demand from data centers. In January, Chile’s Copper Commission (Cochilco) raised its forecast for the average copper price in 2026 to US$4.95 per pound, but in reality the price has recently hovered around US$6 per pound. Despite this favorable scenario, experts are already warning about the difficulties Codelco, the world’s largest copper producer, will face in taking full advantage of this new “boom.”
One key issue is Codelco’s well-known debt burden. Ten years ago, it stood at around US$14 billion, but today it exceeds US$25 billion. This is particularly concerning because much of that capital has been invested in projects that have taken longer than expected to begin production—the well-known delays affecting the company’s “strategical projects.”
Juan Carlos Guajardo, Executive Director of Plusmining, argues that the challenges surrounding these projects will make it difficult for the state-owned company to surpass 1.5 million tonnes of copper production in the short term, which is significant given that these projects were originally designed to deliver substantially higher production levels. “In practice, high prices will be more of a financial relief, as they will help avoid a very complex cash and debt situation, but they do not solve the underlying problem of operational vulnerability,” he states.
With the market anticipating a bullish cycle, Codelco is currently undergoing a transition toward underground mining. The company faces a double challenge: reversing the production decline of recent years while also meeting the demands of a heavy financial burden.
The corporation states that its priority is to maintain a “robust, efficient operation aligned with international standards.” To maximize its performance, Codelco notes that it has a commercial structure with a presence in the United States, the United Kingdom, China, and Singapore, with the aim of capturing value in the markets for cathodes (high-purity refined
copper) and concentrates (semi-processed mineral products).
The Burden of Debt
For his part, Gustavo Lagos, an academic at Pontificia Universidad Católica, estimates that it will take at least five more years for the company to return to the production levels it had in 2021. Lagos adds that the loss of competitiveness dates back to 2009, when production at Chuquicamata began to decline due to geological factors. Although divisions such as El Teniente took on a leading role, incidents such as the accident that occurred in July 2025 have added further delays. According to Lagos, “Codelco’s high level of indebtedness is due to the fact that its owner, the Chilean state, has not reinvested what is necessary.”
Financial management has also sparked debate about the role of the State. Guajardo argues that any capital injection intended to allow Codelco to benefit from the current copper boom “should be conditional on an effective and verifiable improvement in management, particularly in the execution of structural projects.” In this regard, he suggests that such an evaluation should be assessed in three specific areas: Project execution, measured through indicators such as compliance with project timelines, operational competitiveness, where the company should demonstrate sustained improvements in its cost positioning within the industry. Cash flow generation and financial discipline, with Codelco showing the ability to generate sufficient cash to finance a significant portion of its investments without structurally relying on additional debt.
Nassam Estibill, Director of Consulting at Wood Mackenzie, notes that in recent years the share of debt-based financing at Codelco has increased, through bond issuances and credit lines, alongside a greater participation of export credit agencies. According to Estibill, Codelco could even expand its presence among these types of institutions in the future. “It would not be surprising to see the eventual participation of agencies such as the Export- Import Bank of the United States (EXIM) or the International Development Finance Corporation (DFC) enter the equation, especially considering the incoming government’s closer alignment with the United States.”
On the other hand, Lagos proposes another option: bringing in third-party capital, such as foreign sovereign wealth funds, to provide financial stability to the company without putting pressure on Chile’s public finances. “It would be more reasonable to prepare public opinion for the entry of third-party capital into Codelco that provides financial security for Chileans—for example sovereign wealth funds from countries such as Norway, Saudi Arabia, and others,” Lagos states.
Amid this scenario, Codelco’s entry into the lithium market appears as a strategic move to diversify risk. According to Lagos, this would allow the company to strengthen relationships with major global metals companies and improve its profile with banks. However, Juan Carlos Guajardo warns that “managing multiple strategic fronts simultaneously always places pressure on management capacity,” particularly within an organization that is already executing the largest investment program in its history. The Wood Mackenzie consultant agrees that the transition toward underground mining is a process of extremely high technical and financial complexity that requires full managerial focus.
Source: La Segunda