Kast Ministers Raise Codelco Crisis as Pacheco Defends Record

The Codelco crisis is now the first major state-enterprise test of the Kast administration, with copper output, safety governance, and the succession all on the table at once.

The Rio Times, the Latin American financial news outlet, reports that the Codelco crisis broke into public view on Monday, April 20, when two cabinet ministers of President José Antonio Kast used the state miner’s annual shareholders’ meeting to openly question the direction of the world’s largest copper producer. The encounter lasted several hours and was described by participants as an atmosphere that “could be cut with a knife.” It marked a formal break between the outgoing leadership appointed under former president Gabriel Boric and the new right-wing administration that took office on March 11.

Finance Minister Jorge Quiroz and biminister of Economy and Mining Daniel Mas attended as representatives of the president, and their tone was unusually direct for a meeting that in prior years had functioned as a procedural formality. Quiroz pressed outgoing Codelco president Máximo Pacheco for self-criticism regarding the July 31, 2025 accident at the El Teniente division, in which six contractor workers died in a rockburst. “Is there any self-criticism?” Quiroz asked, according to local media reports.

Mas had previewed the tone days earlier, telling reporters on April 13 that the government held “a critical view of what is happening at Codelco.” On Monday he confirmed the administration would announce the three new board directors selected by Kast “in the coming days,” alongside the strategic guidelines that will govern the state miner.

Production decline defines the Codelco crisis

The core of the Codelco crisis is a production collapse that has resisted record-breaking investment. Quiroz told reporters after the meeting that output has fallen “around 20 percent” despite roughly US$17 billion invested since 2022. In 2025 the company produced 1,334,400 tonnes of copper — a modest stabilization after years of decline, but far from the historical peak of 1.7 million tonnes that the state miner now targets for 2030.

“We see the future of the company with concern and attention, and we will be watching it,” Quiroz said as he left the session, describing the situation as a “red light.” The minister specifically flagged the gap between rising capital expenditure and falling production as evidence of deeper structural problems that the incoming administration plans to address directly.

Pacheco rejected the framing. “Codelco is not in crisis,” he told the ministers, pointing to 2025 Ebitda of US$6.67 billion — roughly US$18 million in daily cash generation. He defended the company’s long-term outlook and warned that “subjecting the corporation to the instability of political cycles or short-term visions is a risk the country cannot afford,” and noted that in 2024 Codelco contributed more than US$1.5 billion to the Chilean treasury.

Pacheco’s admissions and the cash-flow warning

Despite his defense, Pacheco made several pointed admissions that softened the official message of solid management. He acknowledged that executing four megaprojects simultaneously “was a mistake” and that the company had “over-centralized the execution of investments” and “over-externalized many activities.” He added: “It is not a good idea to be arrogant. We are too successful a company, and sometimes our enemy is arrogance.”

On financial strategy Pacheco was even more direct. He told Quiroz that Codelco’s net cash flow after its investment budget “for the next three to four years clearly appears negative, and therefore shows a debt increase,” and added that the corporation will be “obliged to continue increasing debt to finance investments” unless the shareholder decides otherwise. That admission stood out because it effectively contradicted the initial framing of financial strength and pointed toward further balance-sheet strain during a commodity upcycle.

Chile produces roughly 24 percent of global copper mine output, and the metal accounts for about 50 percent of the country’s export revenues and 10 percent of GDP. Codelco’s production performance therefore carries systemic weight, since every cent-per-pound shift in copper prices moves Chilean fiscal revenues by roughly US$30 million.

Succession, safety, and the Fontaine signal

Pacheco’s term on the Codelco board ends on May 25. In mining and political circles the successor is widely considered a decided matter: Bernardo Fontaine Talavera, a 61-year-old economist from the Pontificia Universidad Católica who advised Kast during his presidential campaign. Fontaine led the “Con mi plata no” movement against pension reform, served as a convencional constituyente during Chile’s constitutional process, and authored the “Plan Desafío 90” roadmap for Kast’s first months in office.

Fontaine’s background is entirely in private-sector boards — he has served on more than 20 directorships across finance, industry, retail, and logistics — but he has no direct operational experience in mining. Analysts read his likely appointment as a signal that the new administration wants to introduce financial discipline and a management style closer to that of a private company. His family also carries weight: his father Arturo Fontaine Aldunate directed the newspaper El Mercurio in the late 1970s and later served as ambassador to Argentina, while his brother Juan Andrés Fontaine was economy and public works minister under former president Sebastián Piñera.

The safety dimension casts a long shadow over the transition, because the July 31, 2025 rockburst at El Teniente’s Andesita project — at roughly 900 meters underground — killed six contractor workers from Zublin, SalfaCorp, and Gardilcic, and injured nine more. An internal Codelco audit later detected “inconsistencies and concealments” in how a previous rockburst from July 2023 had been reported to regulators, leading in February 2026 to the dismissal of a vice-president, the division’s general manager, the operations manager, and the mine manager. Codelco was fined US$20,000 and the three contractors a combined US$87,000.

Privatization debate and the lithium angle

The April 20 meeting also brought privatization into the public conversation for the first time since Kast took office. Mas confirmed the administration is evaluating removing Pacheco from the board of NovaAndino Litio — the joint venture with SQM to operate the Salar de Atacama lithium reserves, where his mandate runs until 2027 — and signaled openness to a debate about partial privatization of the state miner itself. Former Piñera-era mining minister Laurence Golborne called the privatization discussion “legitimate” but argued that Codelco faces “more structural problems” that require attention first.

For Pacheco the line was clear. He ruled out partial privatization on the corporation’s part, saying such decisions belong to the Kast government, not to the board. The remark left the political heat with the executive — a calculated move by an outgoing president who has managed, through the Anglo American tie-up and the Glencore smelter partnership, to reshape the state miner’s global positioning during his tenure.

The coming weeks will define whether the Codelco crisis translates into a deeper structural overhaul or remains a rhetorical confrontation. The appointment of Fontaine, the strategic guidelines promised by Mas, and the direction of the privatization debate will set the tone for Kast’s broader state-enterprise doctrine. For international investors tracking Latin America’s commodity exposure, Chile’s copper output decisions now sit at the intersection of fiscal stability, energy-transition supply chains, and the political test of a new right-wing government.

Related coverage: Chile Economy 2026: Kast, Copper, and the Path Forward • Codelco 2025 Profit and EBITDA Report • Anglo American and Codelco Tie-Up