Codelco’s inflated copper output scandal hits 42,100 tonnes

Chile's state-owned copper company, Codelco, has revealed 42,100 tonnes of inflated production in its reports, highlighting issues within its internal controls as the mining giant deals with declining output, soaring costs, and mounting debt. At an extraordinary shareholders' meeting, board chairman Bernardo Fontaine disclosed the figure, emphasizing that a separate irregularity had impacted 17,000 tonnes of copper inventory worth between $120 million and $140 million.

Fontaine stated, "Recent incidents related to production figures have affected confidence in Codelco and its reputation. There's no point in denying it," according to Emol newspaper. The revelations intensify concerns about Codelco's recovery efforts following production lows in 2022 and 2023. As one of the world's leading copper producers, the company plays a crucial role in the global supply chain due to increasing demand from sectors like electrification, power grids, electric vehicles, and AI data centers.

Codelco has initiated audits and dismissed nine employees from three mines and its corporate offices as part of its investigation into potential overstated production figures. Juan Carlos Guajardo, executive director of consultancy Plusmining, noted that the issue raises concerns about control, traceability, and operational validation within the company.

Despite billions of dollars invested ($32 billion over eight years) to improve its situation, Codelco's annual copper output has dropped from 1.6 million tonnes to 1.2 million tonnes, while their operating cash outflows have increased by 42%, and total cost per pound of copper in 2025 is 78% higher than its competitors. Fontaine also criticized the performance of major development projects, stating they failed to meet the anticipated production and financial returns based on the invested capital.

The company's strategy moving forward includes improving profitability, generating cash flow, and strengthening its long-term financial position through stronger internal governance, tighter controls, greater transparency, and accountability. Codelco anticipates its 2026 copper production will be around 1.2 million tonnes, with an annual output of approximately 1.3 million tonnes over the next four years.