Key Takeaways:
An internal audit confirmed Codelco’s 2025 copper output was overstated by nearly 27,000 metric tons, revising production down to the lowest level since 1998.
The company fired one executive and disciplined seven others, referring the matter to public prosecutors after Chile’s mining minister said the state-owned miner was “out of control.”
Misstatement Breakdown by Division:
Chile’s state-owned copper giant Codelco confirmed its 2025 production fell to the lowest level in 27 years after an internal audit found nearly 27,000 metric tons of copper were improperly classified as finished product, undermining the company’s recovery narrative as copper prices trade near record highs.
"This is a serious issue because it reveals weaknesses in control, traceability and operational validation," Juan Carlos Guajardo, executive director of the Plusmining consultancy in Santiago, said. "For a state-owned company as important as Codelco, trust in operational information is almost as important as financial information."
The audit, which followed a March complaint, found that approximately 20,000 tonnes from its Chuquicamata division and 6,875 tonnes from its Ministro Hales mine were wrongly categorized. The company said this copper, which required further processing and should have been recorded as work-in-process inventory, will now be counted in 2026 production. With copper closing at $5.63 per pound, the misclassified volume represents over $335 million in gross value.
The findings intensify pressure on the world’s largest copper producer, which has been plagued by years of declining output, project delays, and rising debt. The scandal breaks just days before Bernardo Fontaine, a long-time critic of Codelco's efficiency, is set to take over as chairman.
The production misstatement has triggered sharp rebukes and immediate consequences. Codelco announced it fired one executive and took disciplinary action against seven other current and former employees. The company has also referred the findings to public prosecutors to determine if criminal conduct occurred.
The move follows pointed criticism from Chile’s government, Codelco's sole owner. "Codelco is out of control," Economy and Mining Minister Daniel Mas said in a social media post, adding that the government had a duty to restore transparency and accountability.
The controversy casts a shadow over Codelco's ambitious plan to generate $2 billion in savings and additional revenue by integrating its three northern mines: Chuquicamata, Radomiro Tomic, and Ministro Hales. The initiative, part of a four-year strategy to be presented to the government, is a critical response to falling ore grades and rising input costs that have eroded margins despite high copper prices.
The audit's revelations of weak internal controls at two of the three mines in the integration plan add a new layer of execution risk. Codelco's output of approximately 1.3 million tonnes accounts for nearly 10 percent of global production, making its operational turmoil a significant factor in a tight global market. The confirmed production shortfall adds further support for copper prices, which have risen more than 25 percent since the start of the year.
Disclaimer: This article is for informational purposes only and does not constitute investment advice.
