Codelco Makes US$500 Million Bid for 10 Percent Stake in Quebrada Blanca Mine

Chilean state-run copper giant Codelco has made a US$500 million bid to acquire a 10 percent stake in the Quebrada Blanca mine, operated by Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK).

According to a Tuesday (September 3) Bloomberg report, the offer, directed to fellow state entity Empresa Nacional de Minería (Enami), is currently under consideration by Enami's board. The move is part of Codelco’s strategy to sustain its position as the world’s leading copper supplier amid declining production levels.

Enami’s stake in Quebrada Blanca represents a carried interest, meaning the firm isn't responsible for the mine’s capital expenditures. The sale, if approved, would provide Enami with funds to address financial challenges.

The company has faced consistent losses in recent years due to its role in processing minerals for small-scale miners in Chile. The infusion of US$500 million could help reduce its debt burden while limiting the necessity for public funding.

Quebrada Blanca, located in Northern Chile, is a significant copper mine that is primarily owned by Teck Resources (60 percent), with Japan’s Sumitomo Metal Mining (TSE:5713) holding a 30 percent interest.

As mentioned, acquiring Enami's stake in Quebrada Blanca would help Codelco stabilize its copper production, which dropped to its lowest level in 25 years in 2023. It would also help the company retain its title as the world's top producer.

However, the proposed purchase is not without obstacles. The Chilean National Mining Society (Sonami), which holds a position on Enami’s 10 member board, has voiced concerns about the process.

Sonami believes any sale of the Quebrada Blanca stake should be conducted via an open and competitive bidding process, not a direct transaction with Codelco — potentially delaying or complicating the approval process for the bid.

Regardless, the move comes at a critical time for Chile, as the nation faces challenges in maintaining its status as the top global copper producer. Declining ore grades, aging infrastructure and competition from other copper-producing countries have all combined to put pressure on the state’s output.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.