Mining Minister Daniel Mas and Finance Minister Jorge Quiroz announced on August 10 that Chile would allow Codelco to capitalize 100% of its 2025 profits, marking the first time since the company was founded in 1976.

“Our goal is to provide real equity capacity to safeguard the risk rating,” Mas said in a statement.

The measure represents an unprecedented shift from prior practice. The previous government allowed Codelco to retain approximately 30% of annual profits, with the remainder flowing to the Chilean treasury.

Codelco Chairman Bernardo Fontaine described the decision as critical support for the company’s recovery plan. “This capital injection gives us great support right when we need to work to implement a comprehensive recovery plan,” he said, adding that management would prioritize “truly strategic investments to restore productive capacity and maximize our contribution to the country and State.”

El Teniente output falls 27% year-on-year in first five months of 2026
The reinvestment decision underscores the severity of Codelco’s operational challenges. The company reported output of 1.31 million tonnes in 2025, down 19% from 1.62 million tonnes in 2021, according to an internal audit announced in May. This marks the lowest annual production in nearly three decades.

The production decline has intensified in 2026. El Teniente, Codelco’s flagship underground mine and largest single contributor to output, saw production fall approximately 27% year-on-year in the first five months of 2026, according to industry analysts. This follows a fatal accident on July 31, 2025, when a rockburst killed six workers and forced a temporary suspension of operations.

Fontaine acknowledged that the company’s longstanding goal of returning to 1.7 million tonnes of annual production by 2030 is no longer achievable, as reported by mining.com.

Codelco suspends Andes Norte expansion with two-year delay
Codelco suspended development and construction activities at the Andes Norte expansion project at El Teniente on August 4 following six months of geological studies that identified emerging seismic risks distinct from previously understood hazards at the operation.

“The available background information is consistent with the potential existence of an emerging risk associated with the greater depth of the Andes Norte project works,” the company said in a statement. “These analyses have identified the existence of an emerging seismic phenomenon with characteristics different from the risks that have historically been known and managed in the operation.”

The suspension timeline remains uncertain. Union sources cited in media reports said the expansion pause could extend as long as two years, compounding production headwinds.

A recent report suggests production at the Andes Norte section could restart in 2029, but this conflicts with the “two-year” union estimate.

The Andes Norte project is adjacent to the Andesita and Teniente 7 mining areas, where the July 2025 rockburst occurred. Codelco said prioritizing worker safety required halting development pending completion of technical investigations and implementation of new control measures.

“Codelco are right to say ‘We’re not going to chase copper dollars’ when people’s lives are on the line,” a mining source told Fastmarkets.

Debt burden and financial constraints
Codelco ended 2025 with net debt of US$25.1 billion, one of the largest debt burdens in the global mining sector. The company spent US$4.7 billion on capital expenditure in 2025—approximately 70% of earnings before interest, tax, depreciation and amortization (EBITDA) and the highest investment level in its history—focused on overhaul projects at aging mines.

Finance Minister Jorge Quiroz emphasized the government’s confidence in Codelco’s business case in an August 10 announcement, stating: “When we do this—representing the interests of all Chileans—it is because we believe Codelco is a good business. With these resources, we aim to help it contain its debt and undertake relevant projects.”

Analysts warned that the reinvestment alone will not automatically resolve Codelco’s financial pressures. Juan Carlos Guajardo, founder of Santiago-based consultancy Plusmining, had told the Financial Times that the measure would give the company “greater financial breathing space and reduce the need to go back to the market to finance part of its investments,” but cautioned that “Codelco must demonstrate its ability to use this capital efficiently.”

Wider copper supply implications
Codelco’s output decline is contributing to tightness in global copper concentrate markets. The copper concentrates TC implied smelters purchase, cif Asia Pacific, was calculated at another fresh low of $(173.62) per tonne on Friday, down by $12.22 per tonne from $(161.40) per tonne a week earlier — marking a sharp acceleration in weekly declines. The assessment has deteriorated $128.12 per tonne since January 2, when it stood at $(45.50) per tonne, underscoring the severity of smelter margin compression as concentrate scarcity persists.

Chile’s state copper commission Cochilco forecast on August 11 that the country’s total copper production would fall 2.6% to 5.27 million tonnes in 2026 before recovering to 5.55 million tonnes in 2027. The weaker 2026 outlook reflects “exceptionally poor” first-half performance at Codelco and BHP’s Escondida and Spence operations, alongside structural restrictions at several mines.

Cochilco reported that strong global demand and persistent supply constraints would keep the market tight.

Gonzalo Lara Skiba, Codelco’s vice president of Andean Operations Integration, submitted his voluntary resignation effective August 21. Lara had been tasked with leading implementation of the Andina–Los Bronces district’s Joint Mining Plan.

Codelco is also pursuing technological solutions to address worker safety and equipment operator shortages at El Teniente. Japanese telecommunications firm NTT Docomo Business launched a study and proof-of-concept on August 6 to assess whether a next-generation optical network can support remote operation of heavy mining equipment from a control center in Rancagua, approximately 1,500 km from the underground mine.

From: Julienne Raboca, Fastmarkets, 19 AUG 2026, https://www.fastmarkets.com/insights/chile-backs-codelco-with-2-4-bln-reinvestment-as-el-teniente-output-falls-to-25-year-low-andes-norte-suspended-two-years/.