Codelco’s New CEO Faces Multiple Challenges, Including Boosting Copper Output and Leading Lithium Initiatives
Chile's state mining corporation, Codelco, is preparing for a new era under the leadership of incoming CEO Ruben Alvarado. His tenure, set to commence on September 1, carries the substantial responsibilities of reviving copper production, curbing escalating costs, and spearheading Chile's foray into lithium, a vital battery metal.
Alvarado, a veteran chemical engineer, initially joined Codelco as a graduate in 1984. However, for the past two decades, he has been engaged in managerial roles outside the mining sector, including overseeing the state-owned Santiago subway system, Metro. Those familiar with his work praise his technical proficiency and his knack for identifying hidden challenges.
Louis de Grange, the former president of Metro who collaborated with Alvarado during his tenure as general manager from 2014 to 2022, remarked, "He has an unusual profile as he is technically very good … but also has a special sensitivity to detect issues most executives don't see."
Alvarado managed the expansion of the metro system during a period of considerable unrest in 2019 when widespread riots and arson incidents occurred at some metro stations.
This background managing a complex state entity could be advantageous in navigating the unique challenges of Codelco, a company that funnels most of its profits to the state and holds a pivotal role in Chile's economy.
Nonetheless, Alvarado's prolonged absence from the mining industry comes at a time when Codelco faces significant issues. The company has witnessed a sharp decline in production due to project delays aimed at modernizing its largest mines to counteract diminishing ore grades. Accidents, adverse weather conditions, and operational hiccups have further exacerbated these challenges, leading to rising costs and debt.
Moreover, Codelco has been tasked with leading Chile's new public-private model for lithium development, considering Chile's status as the world's top copper producer and second-largest lithium producer.
Alvarado will need to collaborate closely with Codelco's influential chairman, Maximo Pacheco, who plays a pivotal mediating role between the company and the government. Pacheco welcomed Alvarado's appointment, describing him as more technically oriented than political, which is seen as a positive attribute.
Alvarado's selection came as a surprise to many in the sector, as internal candidates or executives from other major mining firms in Chile were initially anticipated.
His journey at Codelco began in the foundry division, culminating in his role as general manager at El Teniente, Codelco's largest mine, from 2000 to 2004. He is credited with reversing a projected production decline during his tenure there.
Subsequently, Alvarado held positions as director of engineering and maintenance for LAN Airlines (now LATAM Airlines), a director at the Chilean charity foundation Cristo Vive, and general manager at Port San Antonio. He stepped down from his role at Metro in 2022, amid some public criticism related to metro station security and train delays.
Amador Pantoja, president of the Federation of Copper Workers, an umbrella Codelco union, expressed confidence in Alvarado's ability to address the company's challenges and maintain an open-door policy.
Alvarado will need to utilize his wealth of management experience to navigate the complexities of leading Codelco, a task that Sergio Jarpa, head of the mining chamber Voces Mineras, believes he is well-suited for. Jarpa emphasized that tackling Codelco's formidable challenges necessitates a team effort, with Alvarado's leadership expected to play a pivotal role.
