Codelco faces questions over 20,000-tonne output gap

Chilean state-run copper miner Codelco may have overstated its December output by about 20,000 tonnes after including material that did not qualify as finished product, according to a preliminary internal audit.

The additional tonnes helped the world’s largest copper producer meet its monthly target after it reported December output of 172,300 tonnes, its highest monthly total this decade and far above the January-to-November average of 105,600 tonnes.

The preliminary audit results, reported by local paper Diario Financiero, found an unnamed senior executive authorized the inclusion of volumes that failed to meet Codelco’s criteria for finished product and may have bypassed internal approval processes.

“My impression is that, if the published information is confirmed by the final audit, we are facing a serious issue for Codelco, not so much because of the volume itself, but because of what it reveals about the quality of its control, traceability and operational figure validation processes,” Juan Carlos Guajardo, executive director of Plusmining consultancy, told MINING.COM.

Questions over the December surge intensified after Chilean copper commission Cochilco reported January output of 91,000 tonnes, down 47% from December and the company’s fourth-lowest monthly total of the decade. Cochilco said earlier this week that Codelco’s production slipped another 10% in March to 110,900 tonnes, adding to concerns over the miner’s operational recovery.

Guajardo said the key issue was not whether the copper physically existed, but whether the tonnes met technical and accounting standards required to classify them as December production. If they did not, Codelco’s reported annual production recovery and achievement of targets could come into doubt.

Though the issue was backward-looking and did not alter the physical copper market, the output count could reinforce improving sentiment, BMO analysts said in a Wednesday note. LME three-month copper closed Tuesday at a record $14,021 per tonne, while the near-dated CME-LME spread rose to about $275 per tonne, its highest level since December.

Expected overhaul

The revelations come as Chile’s new right-wing government signals closer scrutiny of Codelco’s governance. President José Antonio Kast’s administration is seeking a more profit-driven approach after project delays, cost overruns and falling grades pushed production lower and debt higher.

Guajardo, one of the mining experts who questioned the December figures warned the discrepancy could damage confidence in both Codelco and Chile’s mining sector more broadly. Guajardo said the production issue, combined with accusations the company concealed information tied to an accident at the El Teniente mine, represented “two blows” to the miner’s credibility.

“The direct operational impact may be limited, because 20,000 tonnes alone do not change Codelco’s structural production capacity,” Guajardo said. “However, the reputational impact could be significant.”

Codelco is targeting output of 1.7 million tonnes annually by 2030, though analysts say aging mines and troubled structural projects remain major hurdles. Guajardo said if disputed tonnes contributed to internal targets or executive compensation, broader governance questions would follow, including who approved the production criteria and whether oversight mechanisms functioned independently.

“For a state-owned company as important as Codelco, trust in operational information is almost as important as financial information because it affects the relationship with the market, workers, the government and investors,” Guajardo concluded.

Juan Ignacio Guzmán, head of GEM consulting, said the company now needs an external audit to determine whether the discrepancy stemmed from a technical error or potential fraud.