MAC: Mines and Communities

Chile's president-elect pushes part-privatization of world's biggest copper company

Published by MAC on 2010-01-31
Source: La Tercera, Miningweekly

Socialists and workers fear for the country's "fiscal health"

It's the world's largest copper producer - and one of the few global mining enterprises still under state control.

Inextricably linked to the turbulent fortunes and misfortunes of Chilean society over the past 40 years, Codelco's survival as a nationalised company has been partially dependent on backing by the country's military -  a beneficiary of 10% of its revenues.

However, last year presidential candidate Sebastien Pinera said he would partially-privatize Codelco. See:

Pinera won the election and is now intent to follow through on his promise.

- Or threat, as many Chileans regard the move, fearing not only for jobs but also for the "fiscal health" of the nation.



New President-Elect Faces Criticism Over Proposed Sale Of Codelco

by James Fowler, La Tercera 

21 January 2010

Opponents fear reduced government spending

Leading political figures in the soon-to-be-out-of-power Concertacion coalition on Tuesday criticized plans to sell off parts of Chile's national copper company Codelco, dealing a blow to President-elect Sebastian Piñera's hopes to achieve a national consensus on the issue.

"Codelco needs to continue as an entirely public company," said Ricardo Nunez of Chile's socialist party. "It seems dangerous to begin discussing the sale of the firm's parts."

These comments followed a public rejection of the proposals by Mining Minister Santiago Gonzalez who stressed that private enterprise would not strengthen the firm (ST, Jan. 20).

Pinera, who takes office in March, proposed selling 20 percent of Codelco to private business during his election campaign in an effort to increase company efficiency and productivity.

Any sale needs approval by both chambers of Chile's parliament. Without a majority in either house, Piñera will need the support of opposing parties to advance his plan.

Foreign investors welcome Piñera's plan (ST. Jan 20), however the idea has been rejected by members of the incumbent Consertación government, whose candidate Eduardo Frei was defeated by Piñera in Sunday's Presidential run-off.

Unions representing Codelco employees back the Concertación stance, pointing to the firm's ongoing role in subsidizing government welfare programs.

In a statement Tuesday, the President of Chile's copper workers union Raimundo Espinoza estimated that in the last four years Codelco contributed "US$23 billion to the fiscal health of Chile." Espinoza warned that much less funding would be available to the state in future if part privatization went ahead.

Military officials also expressed concern that privatization would cut their budget in a meeting with Piñera on Monday. A constitutional law passed by Chile's former dictator Gen. Augusto Pinochet stipulates that 10 percent of Codelco's annual revenue goes to the military. Between 2006 and 2008, US$4 billion was passed to the military thanks to this law.

While the debate continues, Chile's current President Bachelet will name Codelco's new board in coming weeks, personally selecting three of the board's nine members. Two more members will be elected by Codelco employees, with the other four chosen by a bi-partisan advisory council to the President.

Commentators speculate that Bachelet will pick nominees acceptable to Piñera after his promise to keep the firm's current chief executive, Concertación member Jose Arellano, in his position.

Part of these plans include the development of a subterranean mine at the current Chuquicamata site in Chile's Atacama region (region III).

Chilean press reported over the weekend that Codelco is expected to post annual profits for 2009 in the region of US$3.5 billion, a 30 percent fall from 2008 profits.

Chile copper unions promise to fight privatisation threat

By Francisca Pouiller, Mining Weekly

20 January 2010

BUENOS AIRES - Unions representing Chilean copper miners have reacted strongly against comments made by newly-elected President Sebastián Piñera about privatising part of State-owned miner Codelco.

Piñera will only take office in March, but workers are already warning the right-wing politician that they are ready to fight back.

The powerful Copper Workers Federation is completely against the idea of privatisation, union president Raimundo Espinoza told Cooperativa Radio.

"If they try to privatise us, we will defend the country's interests," he asserted.

The organization proved its influence earlier this month, when 6 500 workers at Codelco's Chuquicamata mine stopped production for three days.

Piñera said on Monday that Codelco, the world's largest copper producer, would remain a State-owned company during his presidency, but promised "deep changes" at the group. He criticised productivity and efficiency losses at the copper miner, and said that Codelco will require fresh capital.

Additional funds will come from government, the utilities tax and from the revocation of a law that says 10% of Codelco's gross income must go to the Chilean army.

Any private ownership in Codelco would require constitutional reform and public approval, Piñera added.

The new President has been quoted previously as proposing the sale of as much as 20% of Codelco.

Online newspaper El said that a partial sale of Codelco is unlikely, because the new president will not have the required majority to push the changes through Congress.

However, he may be able to introduce some changes through the board of directors, the publication said.

Meanwhile, copper workers are trying to form a mining-energy confederation, to rally opposition against Piñera's plans.

Home | About Us | Companies | Countries | Minerals | Contact Us
© Mines and Communities 2013. Web site by Zippy Info