Codelco Turns to New CEO as Debt Piles Up at Top Copper Producer – by James Attwood and Valentina Fuentes (Bloomberg News – August 14, 2023)

(Bloomberg) — Codelco will name its third CEO in a year in the coming weeks as Chile’s state-owned copper company struggles to turn around a slump in output and earnings. With debt at $19 billion and rising, the stakes are getting higher for bondholders.

Production has hit the lowest in a quarter century, costs have surged and ore grades keep on falling, jeopardizing its status as the world’s No. 1 producer. That’s sent debt metrics to the worst in years despite copper prices staying more than 20% above the average of the last decade.

The task of digging the state behemoth out of its hole was too much for Andre Sougarret, who resigned as CEO after less than a year, citing difficulties in reconciling the demands with those of his personal life.

His replacement needs to steady the ship or debt could balloon to $30 billion in four years, pushing leverage to the limit, according to a report this month by research center Cesco. Analysts are starting to take an interest in Codelco bonds, until now seen as the safest of the safe.

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