Chile’s state-owned copper giant Codelco has identified 42,100 tonnes of artificially inflated production in its reporting, exposing weaknesses in internal controls as the miner struggles with declining output, rising costs and mounting debt.
Board chairman Bernardo Fontaine disclosed the figure Thursday at an extraordinary shareholders’ meeting, adding that a separate irregularity had affected 17,000 tonnes of copper inventory valued at between $120 million and $140 million.
“Recent incidents related to production figures have affected confidence in Codelco and its reputation. There’s no point in denying it,” Fontaine said.
The revelations deepen concerns about Codelco’s turnaround after production fell to two-decade lows in 2022 and 2023. As one of the world’s largest copper producers, the company plays a critical role in global supply as demand grows from electrification, power grids, electric vehicles and AI data centres.
Codelco has ordered audits and dismissed nine employees across three mines and its corporate offices as it investigates whether production figures were overstated.
“This is a serious issue because it reveals weaknesses in control, traceability and operational validation,” Juan Carlos Guajardo, executive director of consultancy Plusmining, told MINING.COM.
Financial deterioration
Beyond the reporting scandal, Fontaine delivered a stark assessment of Codelco’s financial performance, revealing that billions of dollars in investment have failed to reverse declining production while costs and debt have climbed.
The company invested $32 billion over the past eight years, yet annual copper output fell from approximately 1.6 million tonnes to 1.2 million tonnes, Fontaine said.
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Codelco transferred $7 billion to the Chilean government over the past four years, 43% less than in the preceding four-year period, despite a 30% increase in copper prices. The company also increased its debt by 50% to finance those contributions, he said.
Operating cash outflows rose 42%, while Codelco’s total cost per pound of copper in 2025 was 78% higher than that of a comparison group comprising three major multinational miners and Chile’s three largest mining operations.
Fontaine also criticized the performance of Codelco’s major development projects, saying they had failed to deliver the production and financial returns originally expected from the capital invested.
The figures highlight the challenge facing management as it attempts to restore profitability while maintaining the investments needed to sustain production.
Recovery strategy
Fontaine said the board and new management are developing a recovery plan focused on improving profitability, generating cash flow and strengthening the company’s long-term financial position.
The strategy will prioritize safety, profitability, operational and environmental sustainability, and stronger internal governance, including tighter controls, greater transparency and clearer accountability.
Codelco also plans to pursue growth through public-private partnerships while directing capital towards projects capable of generating stronger returns.
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“For too long, the discussion has been overly focused on how many tons Codelco produced, and that hasn’t been immune to generating false production figures. But we have to ask ourselves how much value each ton generates and how much return each dollar invested delivers,” Fontaine said.
The shift comes as Codelco expects copper production in 2026 to be closer to 1.2 million tonnes, with annual output projected at around 1.3 million tonnes over the following four years.
Fontaine acknowledged that restoring confidence would require stronger inventory audits, more effective oversight and greater individual accountability for operational decisions.
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“There will be difficult times and the process will take time,” he said.
The recovery plan will test whether Codelco can translate its substantial capital spending into sustainable production and stronger financial returns while rebuilding trust in the figures used to measure its performance.