Brazil & Southern Cone - September 2026

The government of President José Antonio Kast decided on 10 August that the profit earned by state-owned copper giant Codelco in 2025 (US$2.4bn) should be reinvested by the company in its entirety. It was the first time in the company’s history that the state did not take a share of Codelco’s profits. 

One issue that swings with Latin America’s economic policy pendulum is the role of state-owned companies and the treatment of their profits. Left-wing governments have generally been more inclined to use state companies to pursue broader policy objectives, while right-wing governments have tended to favour greater commercial independence or privatisation. When leftist leader Luiz Inácio Lula da Silva returned to the presidency in Brazil in 2023, for example, he moved away from his right-wing predecessor’s policy of exceptionally large dividend payouts by state-controlled oil company Petrobras, placing greater emphasis on retaining profits for investment.

Unlike Brazil’s Petrobras, Codelco is 100% owned by the state and so has no minority shareholders to put pressure on the government to raise dividend payments. Even so, the reason for the change in policy, at least officially, was not ideological but practical. Codelco is heavily indebted and is in the midst of an overhaul of ageing mines that requires considerable amounts of capital, the government argued.

“It gives us great support just when we have to work to implement a deep recovery plan for Codelco,” Codelco’s chairman Bernardo Fontaine said. Indeed, the company has been facing considerable structural headwinds: ageing ore deposits, delays in major expansion projects, a string of safety incidents including a deadly tunnel collapse at the El Teniente mine last year, and net debt of US$25.1bn at the end of 2025.

“In light of the corporation’s production challenges and financial commitments, our goal is to strengthen its capital base in order to safeguard its credit rating, maintain liquidity ratios, and above all avoid responding to major production challenges by further increasing the company’s debt,” Economy and Mining Minister Daniel Mas said on 10 August. Upon taking office in May, Mas had painted a grim picture of the state of Codelco, saying it was marked by a “worrying level of indebtedness” and a “stagnation in production”.

While the previous leftist government led by former president Gabriel Boric (2022-2026) allowed Codelco to retain an average of 30% of profits for reinvestment each year, the current administration is allowing it to retain 100%. But Mas said the additional resources also imply increased responsibility. “This effort by the state must necessarily go hand in hand with an effort by Codelco,” he said on 10 August. “It demands financial discipline, maximum transparency, spending efficiency, and rigorous prioritisation of investments. Every peso that remains within the company belongs to the Chilean people and must be managed with the utmost rigour.”

Codelco’s pre-tax profit surged to US$1.97bn in the first six months of 2026, a substantial increase from US$429m during the same period a year earlier. The improvement came despite an 11% decrease in copper output as the metal’s price rose by more than 40%.

Economy stagnates

According to figures from the central bank (BCCh), Chile’s economic activity fell by 0.2% in the second quarter of 2026, compared with Q2 2025. This result was mainly due to a fall in exports and a decrease in mining activity, which was down 6.4% year-on-year, while non-mining activity was up 0.7%. In seasonally adjusted terms, GDP was unchanged from Q1 to Q2 this year, while there was a quarterly contraction of 0.3% in Q1 2026, a 0.4% quarterly rise in Q4 2025, and a 0.4% quarterly contraction in Q3 2025.