Skip to main content

Copper production at Chile’s state-owned Codelco is likely to have fallen to a 25-year low in 2023, compounding consecutive declines across several previous years. Rapidly rising costs have ramped up the debt load that Codelco will need to carry in the future, spurring recent credit rating downgrades from Moody’s and S&P. Chile is the world’s top copper exporting nation, but it will take time for Codelco to regain the production threshold it had reached prior to the outbreak of COVID-19. This could raise questions about the long-term global supply.

Related ETF: Global X Copper Miners ETF (COPX)

MRP previously covered a 2022 drop in copper output at Chile’s sprawling state-owned mining giant, Codelco, to its lowest level in a quarter century. The situation may have gotten even worse in 2023, as company presentation materials before a congressional commission showed Q4 production declined by nearly -6.8%, putting annual production at just 1.324 million tonnes. If that annual figure holds when the company reports official results in March, it will mark a significant decline from 2022 output of 1.446 million tonnes. Prior to the outbreak of COVID-19, Codelco produced 1.706 million tons of copper in 2019.

Codelco struggled with financial, managerial, and operational setbacks throughout 2023. CEO Andre Sougarret departed his post in June after a tenure that lasted just a year, citing “complexities” in running the world’s leading copper supplier. Sougarret’s replacement, Ruben Alvarado, took over as the company’s third CEO in just over a year’s time. Codelco dealt with further executive shakeups that emerged shortly after the company suffered a credit rating downgrade by Moody’s Investor Service last October. The miner’s baseline credit assessment was cut two notches to ba2 from baa3. The outlook assigned to Codelco was negative, suggesting more turbulence may lie ahead. The rationale behind the downgrade was straightforward, with Moody’s citing “lower production volumes, consequently higher costs, and higher capital spending requirements”. Per Chile’s Centre for Copper and Mining Studies (CESCO), rising expenditures mean Codelco’s debt is likely to…

To read the complete Intelligence Briefing, current All-Access clients, SIGN IN

All-Access clients receive the full-spectrum of MRP’s research, including daily investment insights and unlimited use of our online research archive. For a free trial of MRP’s All-Access membership, or to save 50% on your first year by signing up now, CLICK HERE