The former head of Santiago’s subway will take over as chief executive officer of Codelco as Chile’s state copper behemoth navigates one of the toughest moments in its 52-year history.
(Bloomberg) — The former head of Santiago’s subway will take over as chief executive officer of Codelco as Chile’s state copper behemoth navigates one of the toughest moments in its 52-year history.
Ruben Alvarado will replace Andre Sougarret next month, the company said in a regulatory filing late Friday, becoming the third CEO in a year. Sougarret resigned in June, citing difficulties in reconciling the demands of the job with those of his personal life.
Alvarado takes over with Codelco’s production at the lowest in a quarter century as delays in projects to overhaul aging mines exacerbate the impact of deteriorating ore grades. Costs have surged and earnings have slumped — all at a time when Chile needs more money to fight festering inequalities and the world needs more copper for batteries and electric grids as it transitions away from fossil fuels.
The chemical engineer, who holds a MBA from Tulane University in New Orleans, will be charged with steadying the ship. The company faces the risk that debt, currently standing at $19 billion, could balloon to $30 billion in four years, pushing leverage to the limit, according to a report by research center Cesco.
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Still, in a presentation earlier Friday, Sougarret said 2023 probably will be the low point for production, with output set to get back to 2021 levels by the end of the decade. Chairman Maximo Pacheco added that the heavy investment will ensure Codelco’s output over the next 50 years.
While declining ore grades and project delays are common across the sector, the state miner is facing bigger challenges than most as it plays catchup after years of under-investment. It’s juggling several big projects at a time of lingering supply chain disruptions, inflation and construction bottlenecks. The task is made more difficult by decision-making that’s less nimble than the private sector.
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After reviewing projects, management determined that they’ve reached a point of no return, Sougarret said Friday. The company will focus on ways to improve execution, including streamlining decision making and decentralizing duties. If his successor fails to do so, Codelco may lose the title of No. 1 copper producer to BHP Group.
Alvarado was CEO of subway operator Metro from 2014 to 2022 and has worked at transport and logistics firms. He returns to Codelco after a two-decade stint, including as head of the El Teniente mine from 2000 to 2004.
“It seems to be an appointment within the usual line of Codelco rather than a search for a change in profile to face the great challenges,” said Juan Carlos Guajardo, head of consulting firm Plusmining. “Mr. Alvarado has been away from mining for a long time.”
As Codelco CEO, he’ll also be tasked with brokering deals with lithium companies under the Chilean government’s new public-private-participation model for the battery metal.
His appointment caps a series of changes among Chilean mining officials this week, with another state mining company, Enami, getting a new CEO and President Gabriel Boric replacing his mining minister and undersecretary.
–With assistance from Andreina Itriago Acosta.
(Adds Guajardo’s comments in ninth paragraph)
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