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Codelco Discloses Copper Production Overstatements, Faces Up to $140M Inventory Impact
Chile's state-owned copper producer has uncovered substantial irregularities in its production and inventory records for 2024 and 2025. The findings have triggered external audits, management changes and a broader review of Codelco's financial and operational performance.
By Paul Ploumis | Published November 6, 2026
Key Points
- Production discrepancies: Codelco's official release reports preliminary overstatements of 27,600 tonnes in 2024 and 18,100 tonnes in 2025.
- Inventory impact: Approximately 18,800 tonnes of artificially inflated inventory, with a potential US$120–140 million financial effect.
- Recovery measures: Independent audits, tighter production controls and an investment strategy focused on profitability and cash generation.
SEATTLE (Scrap Monster): Chile's state-owned copper producer Codelco has disclosed significant irregularities in copper production reported during 2024 and 2025, raising questions about internal controls as the company faces declining output, higher costs and mounting financial pressure.
At an extraordinary shareholders' meeting on November 5, board chairman Bernardo Fontaine presented preliminary findings from investigations into inaccurate production records and inflated copper inventories.
Reuters reported an aggregate production overstatement of 42,100 tonnes. However, Codelco's official November 5 statement lists 27,600 tonnes for 2024 and 18,100 tonnes for 2025, totalling 45,700 tonnes. The difference has not been reconciled in the available disclosures, and the company says its audits remain ongoing.
The company also reported that suspected duplication of production records had inflated copper inventories by approximately 18,800 tonnes, with a preliminary estimated financial impact of US$120 million to US$140 million.
SCRAPMONSTER EDGE | COPPER MARKET ANALYSIS
Production Reliability Becomes as Important as Output Volume
The financial impact is only part of Codelco's challenge. Inaccurate production and inventory records can complicate assessments of mine performance, available metal inventories and future supply expectations.
Codelco's findings are particularly significant because the company is a major supplier to the global copper market, where mine production, refining capacity and deliverable inventories are closely monitored.
Industry takeaway: The discrepancies do not establish an equivalent shortage of physical copper in the market. However, they reinforce the importance of independently verified production data when evaluating mine supply, procurement exposure and longer-term copper market forecasts.
Audits Reveal Weaknesses in Production and Inventory Controls
Codelco has launched internal investigations alongside independent external reviews by KPMG and EY.
KPMG is reviewing production records across Codelco's operating divisions for 2024 and 2025. EY is conducting a forensic investigation into potential duplicated production records, their causes and their financial implications.
The company announced the termination of employment of eight executives and professionals on October 29 across its Chuquicamata, Ministro Hales and Salvador divisions and corporate headquarters.
The irregularities may also have affected performance-based incentive payments to certain employees and executives. The amounts involved have not yet been finalized.
Management is strengthening metallurgical balance procedures and inventory controls to ensure reported production can be traced to verifiable operating records.
$32 Billion in Investment Fails to Reverse Production Decline
The reporting irregularities come amid broader concerns about Codelco's financial performance and the returns generated by its major development projects.
According to figures presented by Fontaine, the company invested approximately US$32 billion over eight years, while annual copper production declined from around 1.6 million tonnes to 1.2 million tonnes.
During the most recent four-year period examined by the chairman, Codelco transferred approximately US$7 billion to the Chilean government, a decline of 43% from the preceding four-year period despite copper prices being around 30% higher.
Fontaine also reported that company debt increased 50%, while operating costs and expenses rose substantially. He said Codelco's total production cost per pound in 2025 was 78% higher than the comparison group used in his analysis.
These figures illustrate the pressure facing the miner as it attempts to maintain essential capital investment while improving productivity, profitability and cash flow.
Codelco Shifts Focus Toward Profitability and Stronger Governance
Codelco's board and management are developing a recovery plan aimed at improving operating performance, financial returns and the reliability of corporate reporting.
The strategy prioritizes workplace safety, profitability, environmental and operational sustainability, tighter controls and stronger accountability.
The company also intends to evaluate public-private partnerships and prioritize investments capable of generating more attractive financial returns.
The recovery plan reflects a shift from measuring success primarily through copper production volumes toward assessing the economic value generated by each tonne and the returns achieved on invested capital.
Codelco now expects production in 2026 to be slightly above 1.2 million tonnes, with annual output projected at approximately 1.3 million tonnes over the following four years.
These expectations remain dependent on operational performance, project execution and the successful implementation of the company's recovery measures.
Restoring Confidence Will Require Verified Results
Codelco's immediate priorities include completing its investigations, determining responsibility for inaccurate production records, strengthening inventory verification and addressing any resulting financial losses.
The longer-term challenge will be translating substantial capital spending into reliable production, stronger cash flow and sustainable returns.
Until the audits are complete, the final scale of the production overstatements and their financial consequences remains subject to revision.
Sources: Codelco, November 5 shareholder meeting statement; Codelco, October 29 personnel and audit announcement; Reuters, November 5, 2026. Original reporting courtesy of MINING.COM.
