CFO of Codelco: Will Focus on Public-Private Partnerships to Boost Production

On June 11 (Wednesday), Alejandro Sanhueza, the Chief Financial Officer of Codelco, the world's largest copper producer based in Chile, stated that the company would focus more on public-private partnerships (PPPs) to improve its financial position and enhance its ability to develop new projects, all aimed at increasing production.

During the energy transition, global demand for copper and lithium has been growing, leading to a surge in demand. Codelco has been struggling to increase its production after hitting a 25-year low in 2023. The decline in production is partly due to falling ore grades and delays in key mine transformation projects.

His remarks represent the strongest indication yet that the state-owned enterprise will focus on seeking support from the private sector to boost growth.

Sanhueza said that PPPs would serve as "pillars of growth" rather than being used for major overhaul projects or any existing operations, in compliance with the company's nationalization regulations, which prohibit its mines from accepting private funding.

"Greenfield initiatives (new projects) are a key part of our growth strategy and an opportunity to collaborate with third parties. This will also help diversify risks," Sanhueza said.

"Our exploration partnerships allow us to attract external financing and (production) capabilities, enabling us to accelerate value creation by leveraging the additional resources available to Codelco."

In addition to its recent lithium joint venture, Codelco has also reached agreements with Rio Tinto and BHP to explore new potential copper mines, which sources say are promising.

Codelco already has a partnership with Freeport-McMoRan at the El Abra mine and owns a one-fifth stake in Anglo American. This year, it also acquired a 10% stake in the Quebrada Blanca resource from smaller company Enami.

Sanhueza said another goal is to establish joint infrastructure to facilitate the adoption of new technologies or minimize environmental impact.

Earlier this year, Codelco announced an agreement to jointly operate an adjacent copper mine with Anglo American. The company said it would increase production by 120,000 mt per year over 21 years.

The company is also strengthening its exploration budget, which averaged $83 million annually in 2023 and 2024 and will increase to an average of $150 million per year from 2025 to 2029.

"Collaboration with third parties allows us to better utilize these resources, which complement our own projects," Sanhueza said.