President-elect Plans 'Deep Changes' at Codelco

Posted in Industry News on 23rd February 2010

In preparation of his forthcoming inauguration, Chile’s President-elect, Sebastián Piñera has informed his government of plans to make “very deep changes” in the country’s state owned copper giant Codelco.

Planned changes already highlighted by Mr Piñera include a stake sale aimed at injecting the company with fresh capital and helping improve efficiency.

Senior officials have been quick to establish that in the wake of the propositions, Codelco will still remain a public company. The improvements are being planned in order to combat low levels of productivity and overall efficiency. It is hoped that these changes will bring about fresh capital that will aid the rejuvenation.

There have been four major changes underlined by Mr Piñera, who is due to assume his role of president in March 2010, that will help Codelco become more competitive within the metals industry.

His first step will be to improve the company’s transparency by transforming Codelco into an open stock company. Once in place, there will be a complete overhaul of the board of directors, with officials being chosen in relation to their “technical, economic and efficiency criteria” rather than the current political agenda. In an attempt to raise an injection of fresh capital, a sale of 20% of Codelco’s pension funds has been proposed, as well as plans to eradicate an existing law that indicates Codelco must donate 10% of its annual export earnings into Chile’s armed forces.

Although clearly intended as a short term solution, implementation may turn out to be more long term.

The new plans have been greeted with support from Cesco, Chile’s copper and mining study group stating that Codelco “need changes that make it recover its dynamism”. In an apparent stumbling block, the move has created some resistance from Chile’s mining trade union’s who are concerned about the sale of a stake in the company.

Codelco has been the world’s largest copper producer for the past 4 years.

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