LatinFinance - May/June 2015 - 32

to accept Codelco's new senior executive
team. Nelson Pizarro replaced interim chief
executive Octavio Araneda in August. A mining engineer, Pizarro's most recent role was
CEO of Compañía Minera Lumina Copper
Chile.
According to Moreno, choosing a CEO
involved "the most careful selection among
a pool of candidates with very specific
profiles. Today Codelco needs someone
with experience in project development
within the mining industry. Pizarro shows
a long trajectory of almost 50 years in the
sector, leading complex projects such as
Caserones."
In March, Alejandro Rivera was brought
in as chief financial officer from Antofagasta
Minerals, where he had been head of corporate development.
Lemco, who had not met Pizarro when
LatinFinance spoke to him, praises the
company's consistent policy of employing
executives with wide expertise in the mining
industry. Diego Ocampo, analyst at Standard
& Poor's and specialist in heavy industries
in Latin America, argues that these changes
"don't stand out" as issues for ratings evaluations.
On the other hand, Lemco views government support as very relevant. Trujillo
agrees, recognizing that in spite of its chal-

IGNACIO MORENO
UNDERSECRETARY OF MINING

"THE COMPANY FACES
THE BIGGEST
CHALLENGES FOR
THE NEXT YEARS AND
DECADES. OLDER
DEPOSITS MEAN
HARDER ROCKS. THIS,
AMONG OTHER
STRUCTURAL
FACTORS, MAKES IT
DIFFICULT NOT
ONLY TO INCREASE
PRODUCTION, BUT TO
KEEP CURRENT
LEVELS"

lenges, "people consider Codelco critical to
the country, so state support remains quite
strong. That gives it a bit of a halo effect,
making investors quite comfortable."
The government has vowed support
throughout the years and recently did so
again. Last October, President Bachelet
signed a law to capitalize the miner with as
much as $4 billion between 2014 and 2018,
including up to $3 billion in fresh resources
and $1 billion from retained profits. In
fact, last year Codelco kept $200 million of
profits that would have typically gone to the
state, and for 2015 it's expected to request
another $800 million.
Looking at the big picture, the miner
needs much more capital to finance its
needs. Still, the government's promises
send a very important message to investors:
Latin America's highest-rated sovereign
fully backs one of its main contributors. "Inasmuch as Codelco posts positive returns,
it provides the state with the possibility to
implement social policies with much more
impact," says Moreno.
Rating agencies take this perception into
account when evaluating the company.
"Codelco has a place in the collective
psyche as a national champion. It's the
continued on page 35

Chile

From producer to service provider
Economists and markets have long criticized Chile's heavy reliance on mining and commodity exports. Ignacio Moreno, undersecretary
at the mining ministry, says the government is taking steps to diversify the national economy, without turning its back on its most important and historic source of income.
"No other industry in Chile can show such dramatic economic impact as the mining sector," he tells LatinFinance.
"There's no other field with such potential to create new technologies and generate patents. We are convinced that diversifying the
Chilean national industry must be done through providing other countries that want to develop the mining activity with technological
services, innovation, and knowledge. It's an opportunity."
The government has launched the "Mining Cluster" program, meant to spur development in three areas. First, it aims to favor worldclass suppliers with an innovative edge, especially in technology, helping them improve their commercial strategy and facilitating their
exports. Codelco plays a big role as a contractor of services. So far 73 companies are operating under this program, but the goal is to
enroll 250 suppliers by 2020.
Second, the program aims to develop human talent. This calls for education efforts to boost the training of a very specialized pool of
technicians and professionals. "We know what critical positions the mining industry will need to fill over the next decade," notes Moreno. "We require specialized electricians, mechanics to work with sophisticated equipment, geologists and metallurgists. And we need to
create an educational framework to supply that demand."
Finally, the country needs research centers to increase mining's potential. Some Chilean universities and public centers are already
part of a network concentrating in mining knowledge, and the country is also hoping to create alliances with international think tanks
and research centers specializing in mining.
"This way we plan to export services, innovation, and knowledge linked to mining activity," says Moreno. LF

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