Chile's Codelco Signals Major Restructuring Plan Delayed Until Late 2026

Chilean state-owned copper producer Codelco announced its comprehensive restructuring plan may not be finalized until the end of 2026, a significant delay for a strategy intended to reverse years of declining output and rising costs. The company confirmed the new timeline to Reuters on Wednesday, pushing back the plan's expected release from this October.

Turnaround Strategy Pushed Back

The delay follows the appointment of new Chief Executive Officer Jorge Gomez in July. Codelco stated it is undertaking a "diagnostic process to figure out its strategic direction and develop a recovery plan," which it described as a standard procedure under new leadership. The company's chairman, Bernardo Fontaine, had previously indicated the plan would be presented between October and November.

This turnaround strategy is critical for the mining giant, which has been grappling with operational challenges and high costs. The new leadership is reportedly reassessing production targets, with Fontaine stating in August that output is likely to remain around 1.3 million metric tons in the coming years, a downward revision from a previous goal of 1.7 million tons.

Potential for Significant Job Cuts

While Codelco stated it was "too early to speculate" on specific decisions, four sources familiar with the matter told Reuters the restructuring could involve a workforce reduction of between 5% and 20%. Such a move would primarily impact the company's nearly 77,000-strong workforce, of which contractors account for approximately 80%.

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Any significant layoffs would have broad implications for Chile's economy, where mining plays a dominant role. The potential cuts come as the country's unemployment rate reached 9.5% in July, a politically sensitive issue for President Jose Antonio Kast's administration.

Union and Market Context

The Copper Workers Federation (FTC), which represents the company's unions, told Reuters it has not been formally informed of any plans to reduce headcount. The union's president, Hector Roco, argued that any staffing adjustments must be made "rationally, not by decree."

CEO Jorge Gomez, who previously helped stabilize production at the major Collahuasi copper mine, is expected to apply a similar turnaround approach at Codelco. The delay in the plan's release suggests a deep and thorough review of the state-owned enterprise's operations is underway before any decisive actions are taken.