By Colomba Bolognesi
Amid government scrutiny over the company’s situation, Bernardo Fontaine is expected to assume the chairmanship of Codelco’s board on May 25. The company generates profits but oes not reinvest them, as they are transferred to its owner, the State, and it faces a scenario of rising costs due to declining ore grades and increasing debt to finance new projects. The economist takes on the challenge of confronting a complex situation, warn voices from the mining sector consulted by The Clinic. Meanwhile, the current administration of the copper company has insisted that “Codelco is not in crisis.” This report details its figures.
On July 31, 2025, at 5:34 p.m., a seismic event of magnitude 4.3 Mw—the most violent recorded in the history of the El Teniente Division—caused the collapse of tons of rock and left six workers dead. The accident “fractured much more than the rock in the Andesita sector; it fractured the foundational trust of our organization,” acknowledged Codelco board chairman Máximo Pacheco at the latest shareholders’ meeting this year.
José Antonio Kast’s most likely candidate to assume this role is Bernardo Fontaine, who is expected to take office on May 25. Fontaine worked on the 2025 presidential campaign as part of the team that designed the “Challenge 90 Plan,” the roadmap for the first 90 days of government. He is 61 years old, an economist from the Catholic University, and has participated in more than 20 corporate boards, although without direct mining experience.
He arrives at the mining company preceded by doubts raised by board authorities regarding the company’s management, which became evident at the latest shareholders’ meeting with tense exchanges between Pacheco—who defended the company’s achievements—and the Ministers of Finance and Economy, Jorge Quiroz and Daniel Mas.
“Regarding the El Teniente accident, corrective measures are mentioned, but no problems. Is there no criticism at all? Does management not criticize itself in any way? Do you agree with this self-praise?” Minister Quiroz challenged during the presentation.
“I believe, Minister, that there are many things we should have done differently. We learned that it is not possible in mining to carry out four megaprojects simultaneously (Chuquicamata Underground, Rajo Inca, Andina transfer, and El Teniente expansion); that was a mistake,” replied Máximo Pacheco.
“Beyond explanations of the past or future expectations, the fact is that production in recent years fell by around 20% and US$17 billion was invested,” Quiroz also noted, highlighting the government’s concern over declining production and high investment levels without proportional returns.
The figures left by the copper company
“In the historical absence of capitalization, Codelco’s financing comes from depreciation, multilateral loans, and fundamentally from bond issuance in international markets. That is why debt grows every year,” the company explained in its 2026 shareholders’ meeting statement.
Between the end of 2021 and the end of 2025, Codelco’s debt increased by US$7.416 billion, rising from US$17.242 billion to US$24.658 billion. Pacheco noted that the company obtains financing at “extraordinarily low” rates, with competitive spreads compared to U.S. Treasury bonds and Chile’s sovereign bonds.
Direct production costs rose from 133 cents to 208.6 cents per pound of copper between 2021 and 2025. “The increase in costs at Codelco is the bill we are paying today for believing that operational management could indefinitely compensate for problems that were essentially geological and structural,” they explained.
Pacheco compared the company’s situation with its private counterparts: “If Codelco were subject to the same rules as the private industry—paying only income tax and mining royalties—its current debt would be one-fifth of what it is; we would be talking about just US$5 billion. However, Codelco must also contribute an additional 40% tax on profits for state-owned enterprises and 10% of export sales under Law 13,196, in addition to not being allowed to retain earnings.” In fact, the state-owned company has only been capitalized twice by its owner (the State): in 2014 and between 2021 and 2024 through a plan to reinvest 30% of its profits.
Codelco contributed US$1.778 billion to the Treasury in 2025 and US$7.039 billion over the last four years. “Faced with interpretations suggesting that the corporation generates debt rather than wealth, historical and operational data show the opposite reality. Codelco is, and has been, a fundamental pillar of Chile’s development: throughout its history, it has contributed US$164 billion (in current currency) to the Treasury. The debt we take on is to invest in projects that are extending the life of deposits by another 30 to 50 years, and it will be repaid when they reach full production,” they added.
Between 2022 and 2025, the company maintained an average annual investment of US$4.3 billion, reaching US$5.054 billion in the last fiscal year.
The “structural project portfolio” that Fontaine will inherit includes Chuquicamata Underground, Rajo Inca, El Teniente’s portfolio (Andes Norte, Diamante, Andesita), Future Development Andina, and lithium management through a partnership with SQM to create NovaAndino Litio, a majority state-owned company that will operate in the Atacama Salt Flat until 2060. It also includes projects to extend the life of deposits such as Radomiro Tomic, Gabriela Mistral, and Ministro Hales.
In 2025, EBITDA reached US$6.67 billion, 22% above the 10-year average (2015–2024), equivalent to US$18 million per day. “Codelco is not in crisis. On the contrary, the data show that Codelco is and remains the best business for Chile. The irrefutable proof lies in our ability to generate cash, EBITDA,” they stated.
Challenges according to economic and mining experts
Experts from both the public and private sectors agree that the new board chairman, Bernardo Fontaine, will lead a company that needs to regain its production focus and control its debt.
Senator Yasna Provoste, president of the Senate Mining Commission, stated that Codelco “must reverse the decline in production, improve occupational safety levels, and accelerate the implementation of structural projects such as Rajo Inca, as there is a cycle of higher prices that could positively impact fiscal revenues.”
She also highlighted the importance of advancing partnerships with private companies to increase lithium production both in NovaAndino and in its alliance with Rio Tinto in the Maricunga Salt Flat.
Meanwhile, Deputy Cristian Tapia, president of the Chamber of Deputies’ Mining Commission, believes that “Fontaine must be an executive chairman present at the mining sites and knowledgeable about mining. He is an economist—I don’t know how much he knows about mining.”
He added that Fontaine must control debt and quickly complete pending projects, particularly Rajo Inca and Chuquicamata, which are significantly delayed.
“He cannot act as the current chairman has, making decisions without considering the country. I would also like Fontaine to immediately dispel rumors about privatizing part of Codelco’s assets. That must not happen under any circumstances,” Tapia concluded.
Juan Carlos Guajardo, executive director of Plusmining, stated that “in the short term, the main challenge is to stabilize production at economically sustainable levels, given delays and the complexity of structural projects. Codelco is in a very delicate transition phase, where execution is critical.”
He added that the company must recover capital discipline and credibility in project management, in an environment of rising costs and tighter margins, which further pressure already high debt levels.
Academics also expressed concern about the challenges ahead. Francisco Rivas, director of Mining Engineering at Universidad Central, emphasized the need to “ stabilize production. Last year, although targets were met, it was very tight due to certain events, such as those at El Teniente. Structural projects like Rajo Inca must be brought online to provide some relief to the El Salvador division.”
He also highlighted safety as a major issue, noting that Codelco operates the largest underground mines in the world, posing significant risk management challenges.
Carlos Moraga Cruz, from the University of Talca, stressed the importance of defining Codelco’s role in the National Lithium Strategy and whether it will act as a main operator or strategic partner.
He also pointed to the execution of structural projects, noting that results so far have not been fully satisfactory and have required higher-than-expected investment.
Operationally, key challenges include increasing copper production to levels seen a decade ago (around 1.6 million tons), reducing costs, and restoring competitiveness in a context of declining ore grades and harder minerals.
Finally, economist Gustavo González from the Pontifical Catholic University stated that “the strategic challenge is not only improving internal efficiency but also adapting management to a scenario where growth depends less on increasing volume and more on optimizing processes, prioritizing investments, and ensuring long-term financial sustainability.”
He concluded that a fundamental issue affecting the entire copper industry is the increasing difficulty of expanding production, largely due to declining ore grades, which has steadily increased exploration and extraction costs.
Source: The Clinic