Chile’s Codelco is seeking a US$2 billion financial lifeline by structurally merging its three largest northern copper mines, according to sources familiar with the matter. told Bloomberg.
According to sources, management recently presented Codelco’s board with a four-year plan to deeply integrate the Chuquicamata, Ministro Helles and Radomiro Tomic mines.
The strategy aims to generate US$2 billion in combined cost savings and new revenues by 2027 through shared processing plants and integrated operational planning under a potentially consolidated management structure.
However, the ambitious overhaul is being loomed by a governance crisis, directly involving those two core assets.
An internal audit recently confirmed that Codelco classified approximately 27,000 tons of material at the Chuquicamata and Ministro mines as finished product rather than work-in-process inventory.
The inflated metrics, which represent about 2 percent of Codelco’s 2025 output, allowed the company to artificially achieve its December production targets, triggering unearned executive bonuses and hiding an ongoing operating crisis.
Amid the fallout, Codelco had already fired one executive, disciplined seven others, and referred the case to government prosecutors to determine whether criminal fraud had occurred.
Critics said the phantom tons delivered Codelco’s strongest monthly production this decade, far exceeding its January-to-November average of 105,600 tons.
The accounting failure has sparked intense political fire, complicating the miner’s efforts to present its consolidation strategy to the government in the coming months.
Chile’s Economy and Mining Minister Daniel Mas said this on social media said it bluntly: “Codelco is out of control,” saying that the administration of President José Antonio Caste is obliged to restore accountability.
Despite the reputational damage, the macroeconomic mandate for Codelco to cut costs remains critical.
Like its global competitors, the company is struggling with severe inflationary pressures that have largely erased the benefits of historically high copper prices. Decreasing ore grades mean that the miner must extract and process significantly more rock to maintain baseline production.
Additionally, the ongoing war in the Middle East has increased the cost of energy and sulfuric acid, a critical input for copper processing.
To avoid pressure, the proposed northern integration will see ore transported across asset lines to optimize plant capacity and blend the material to meet specific customer requirements. Preliminary talks are already underway with local unions regarding the restructuring.
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Securities Disclosure: I, Gian Liguid, do not have any direct investment interest in any of the companies mentioned in this article.
