While the strategy of partnering with private companies intensified during Pacheco’s tenure, there were earlier periods of intense partnership activity, with ties to Mitsui, Anglo American, Rio Tinto, Freeport, Kinross, PanAust, Glencore, among others.
By Valeria Ibarra
The slow pace of the Santiago summer was disrupted on Thursday, February 20, when, in the early hours, Codelco and Anglo American surprised the industry by forming a joint venture to manage what is the fourth-largest copper district in the world: Los Bronces-Andina. This agreement unlocks $5 billion over 21 years, from 2030 to 2051, and boosts the country’s copper production by 2.8%. To extract this amount of copper, companies estimate that an investment between $2.5 billion and $3.25 billion would be needed. However, the same result has been achieved without spending a single dollar.
The alliance, unprecedented in Chile, is not unique on a global scale; instead, it continues what Codelco has been doin—at different paces and with varying degrees of success—for decades. The state-owned company’s chairman, Máximo Pacheco, puts it simply: “We are partners with Anglo American Sur, with Teck in Quebrada Blanca, with Freeport in El Abra, with Rio Tinto in Nuevo Cobre, and we are also partners with Mitsui in Anglo American Sur
(Los Bronces).”
That’s in copper. In lithium, Codelco has formed an alliance with SQM to exploit the Salar de Atacama and is seeking partners for the Salar de Maricunga, where companies such as Rio Tinto, Chinese firms Tianqi, BYD, and CATL, and the local group Errázuriz, among others, are competing.
With the agreement with Anglo, “Codelco is connecting with the biggest players, moving closer to becoming a global company.” These words come from Diego Hernández, a heavyweight in the industry and former CEO of Codelco, as well as of Antofagasta Minerals and BHP Base Metals.
The Network of Agreements
Codelco has intensified its partnerships with private companies during the Pacheco era, but the truth is, there have been other periods of business activity before.
Juan Carlos Guajardo, Executive Director of Plusmining, identifies three key periods: the administration of Juan Villarzú (who served twice, under Frei-Ruiz Tagle and Ricardo Lagos), the arrival of Diego Hernández as chairman (2010–2012), and the current period under Pacheco, which, in his view, “has broken all the molds.” “The other CEOs have been more conservative, more state-oriented,” the analyst observes.
Diego Hernández explains that partnerships with private entities follow industry logic, as they “reduce financial risk in investments that are substantial and long-term, and allow for greater geographical diversification, as long as the operation is well managed.”
With the predecessors of Freeport McMoRan (Cyprus and Phelps), Codelco formed a partnership in El Abra, where the U.S. company holds 51% and Codelco holds 49%. Lacking monetary resources, the state-owned company contributed the mineral, and a special law had to be enacted in 1992 to enable this deal. Now that the operation is planning an expansion requiring $7.5 billion, experts believe that if the state-owned company does not contribute capital, it will have to dilute its stake or sell a portion. Contributing mineral resources as it did before is no longer feasible. “That’s already been done,” Hernández notes.
With Rio Tinto, Codelco is in Nuevo Cobre (where the multinational holds 57.54% and Codelco holds 42.26%), but the origins of this deal trace back 30 years, when the state- owned company created a joint venture to explore for gold in Atacama, called Agua de la Falda, with partners that changed over time, from Barrick to Meridian Gold. When geologists discovered more copper than gold, the partner changed, and Rio Tinto joined in 2023. “It is a medium-sized deposit, not a large one,” says Juan Carlos Guajardo.
Another key partnership is with Anglo American in Los Bronces, where Codelco holds 20%, which, according to insiders, was the foundation for the latest agreement. It’s a dramatic story: Codelco entered Los Bronces’ ownership in 2012 by exercising Enami’s option to purchase 49%, a deal conceived and executed by Diego Hernández.
The plan was for Codelco to partner with Japan’s Mitsui to exercise this right (which is open every three years), but this enraged its archrival Mitsubishi, which made a counteroffer, nearly doubling the price, and allied with Anglo to block the Codelco-Mitsui transaction. After a year of legal battles, an agreement was reached, and Codelco, along with the two Japanese firms, secured a stake in Los Bronces, where they remain. And everyone is happy—so much so that they approved the joint mining plan on February 19.
Quebrada Blanca Controversy
The purchase of the 10% stake that Enami held in Quebrada Blanca in September 2024 was, in Juan Carlos Guajardo’s opinion, “good for Codelco and bad for Enami; the best approach would have been to open the process to other players.”
Diego Hernández believes that once it was decided that this stake would remain under state control, having Codelco as the buyer was a positive move. The company paid $520 million for the asset.
The state-owned company has other, less visible partnerships: In Inca de Oro, with the Australian firm PanAust; with the Canadian Kinross in Minera Purén (gold); and with Xstrata do Brasil (now part of Glencore) in Brazil. In the technology sector, it partners with Honeywell in Kairos Mining.
The Worst Deal: Minmetals
The critical lack of capital and the refusal of the then Minister of Finance, Nicolás Eyzaguirre, to allow Codelco to take on debt led Juan Villarzú, in 2006, to negotiate an agreement with China’s Minmetals to finance the construction of Gaby (now the Gabriela Mistral division).
With the Chinese company, Codelco signed a preferential purchase contract for 55,750 tons of copper per year for 15 years, at a price between $1 and $1.50 per pound. The contract was signed in February 2006, but by May of that year, the copper price had tripled and continued to rise. “It was the worst deal Codelco ever made,” Hernández recalls. Experts estimate that the state-owned company lost over $3 billion. The partnership with Minmetals was dissolved in 2016.
Lithium with SQM
The alliance between Codelco and SQM aims to develop the Salar de Atacama from 2030 to 2060, increasing production to 300,000 tons without extracting more caliche from the basin and using new technology. Corfo entrusted Codelco in 2023 with the authority to represent it in future contracts in the salt flat, as the state agency owns the mining rights it leases to SQM and Albemarle.
The present value of this deal ranges between $25 billion and $50 billion, depending on lithium prices.
Source: Diario Financiero