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(Bloomberg) — As global demand for copper surges, one of the world’s biggest miners finds itself in a precarious state.

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Chile’s state-owned Codelco, long the backbone of the country’s mining industry and a crucial source of government revenue, is struggling under $25 billion of debt and its lowest output in 28 years. It’s also contending with a series of controversies, including a fatal accident and probes into inflated production figures. 

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Those difficulties have prompted concern that Codelco’s model is failing to capture the benefits of near-record copper prices as artificial intelligence and the energy transition boost consumption of the metal. They’ve also sparked a debate that would have been almost unthinkable just a few years ago: Does Codelco need to shelve its growth ambitions and give a larger role to private capital?

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It’s a question that has taken on new urgency since conservative hard-liner José Antonio Kast took office as Chile’s president earlier this year, marking the sharpest rightward shift since Augusto Pinochet’s dictatorship a half-century earlier. 

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Even in Chile’s new government, few politicians advocate denationalizing Codelco, making radical change unlikely. Formed in the 1970s when Chile wrested control of massive mines from US companies, Codelco became a symbol of economic sovereignty. It now occupies a near-sacred place in the country’s political history, having survived a wave of industry privatizations under Pinochet. 

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But with the copper market poised for the largest shortfall in history, policymakers and industry groups are exploring ways to overhaul the miner to cut debt and improve returns. Options range from selling assets and curtailing spending to expanding joint ventures and infrastructure sharing. If Chile doesn’t act, Codelco risks largely missing out on a watershed surge in copper consumption that’s sent prices for the metal to record highs.“Without copper, we don’t have AI, air conditioners, electric vehicles, or the modern economy,” billionaire mining magnate Robert Friedland, whose I-Pulse Inc. recently began working with Codelco on a new way to crush rocks, said in an interview last month. “Codelco remains wildly important.”

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Scrutiny of Codelco has intensified over the past year. 

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In late July of 2025, a collapse at El Teniente, Codelco’s most profitable mine, killed six workers in Chile’s deadliest mining accident in decades and halted work in key expansion areas.

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An internal audit found “inconsistencies and concealment” in technical reports relating to a rockburst at the same mine two years earlier, prompting the removal of three executives. Prosecutors and regulators are investigating whether those 2023 reporting failures affected oversight of risks before last year’s fatal collapse.

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Codelco is also facing multiple probes into inflated production figures that allowed it to meet output targets. An internal review revealed that the miner had overstated its 2025 copper production by almost 27,000 metric tons, equivalent to about 2% of output.

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The scandals have energized a long-running debate over whether Codelco needs a more fundamental overhaul.

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The over-counting case has coincided with the arrival of Chairman Bernardo Fontaine, an economist and businessman appointed by Kast in May. Fontaine and senior ministers launched an unusually sharp critique of Codelco’s performance under former chairman Maximo Pacheco and pledged to revamp operations, finances and corporate governance.