The Chilean government’s decision to let Codelco retain its profits aims to strengthen its equity and liquidity and reduce the need for additional borrowing to finance investment projects amid rising costs and production problems. File Photo by Elvis Gonzalez
SANTIAGO, Chile, Aug. 12 (UPI) — President José Antonio Kast’s government has authorized state-owned mining company Codelco to retain 100% of its 2025 profits for the first time in more than 50 years. That totals $2.422 billion.
The measure, announced this week, is intended to ease financial pressure on one of the world’s largest copper producers, which is grappling with heavy debt and declining operating performance.
The Chilean government’s decision seeks to strengthen Codelco’s equity and liquidity and reduce the need for additional borrowing to finance investment projects amid rising costs and production problems.
Codelco holds about 6% of the world’s copper reserves and produced 1.334 million metric tons of copper in 2025.
Codelco’s gross debt has reached about $26 billion, as the company’s costs have continued to rise, Álvaro Merino, director of Núcleo Minero, told Chilean newspaper La Tercera.
Merino said the state-owned company has a liabilities-to-equity ratio of 3.27, meaning it carries 3.27 Chilean pesos in liabilities for every peso of equity. Among the world’s leading mining companies, the ratio is about 1.
Economist Miguel Vargas Román, dean of the Faculty of Economics at Finis Terrae University, told UPI that Codelco faces serious financial and production challenges.
Vargas said the government’s decision improves Codelco’s financial position by allowing profits to remain within the company, rather than being transferred to the state, but its immediate effect on debt and production will be limited.
“They are not enough to close the gap with international mining companies that have much lower debt and lower costs,” Vargas said. “To achieve that, Codelco must increase production, reduce costs and improve the execution of its projects.”
Economy and Mining Minister Daniel Mas said the company needs to maintain investment in its major mining projects, address the aging of some deposits and restore production capacity.
Under the decision, the Chilean government will forgo Codelco’s profits as a source of revenue for the national budget this year.
In return, the government expects a financially stronger state-owned company to “produce more, invest better, reduce its dependence on debt and generate greater contributions to the state in the future,” Mas said.
Codelco invested $5.073 billion in 2025, the highest amount in its history. However, its direct production cost rose 4.8% to 208.6 cents per pound.
Codelco Chairman Bernardo Fontaine said the company will present a recovery plan in the coming months “to build a more robust, sustainable company capable of generating the greatest possible value for Chile. Our goal is for Codelco to regain the leadership it deserves.”
For this year, the company projects copper production of between 1.331 million and 1.357 million metric tons and investments of between $4 billion and $5 billion.
