Chilean copper giant Codelco is considering a sweeping overhaul of the way the company operates. According to sources cited by Reuters, the restructuring plan could involve cutting the workforce by between 5% and as much as 20%, which, based on the company’s current workforce of around 77,000, could mean thousands of job losses. No final decisions have been made, however, and the company itself stresses that it is still too early to draw conclusions about specific measures.
Codelco is owned by the Chilean state and has for decades been one of the pillars of the country’s economy. The company is now facing a problem that is considerably more serious than temporary fluctuations in copper prices. Production remains under pressure, costs are rising, some investment projects are being delayed, and the new management team has launched a comprehensive review of the company’s operations. In June, Chairman Bernardo Fontaine told Chilean lawmakers that the company needed to assess its operating and cost structure, project portfolio, potential asset sales, and ways of financing its operations.
Codelco confirmed to Reuters that it is currently conducting a diagnostic process aimed at determining the company’s strategic direction and preparing a turnaround plan. The plan was initially expected to be presented in October, but the deadline has now been pushed back to the end of 2026. According to four sources familiar with the process, one of the options under consideration could be a significant reduction in the workforce. Codelco has not, however, confirmed that layoffs on such a scale will actually take place.
The scale of the potential restructuring stems from problems that have been building at Codelco for several years. The company has a huge base of copper assets, but production has not been developing at the pace expected, while some investment projects have encountered difficulties. In the first half of 2026, Codelco’s own copper production totaled 564,000 metric tons, 11% less than in the same period a year earlier. The company attributed the decline primarily to operational constraints at the El Teniente mine, as well as lower production at Chuquicamata and Ministro Hales.
At the same time, the company’s financial performance in the first half of the year was better than a year earlier, as it benefited from high copper prices. EBITDA rose to $4.648 billion, up 68% year on year, while net profit reached $669 million. This does not change the underlying problem, however, because the improvement in financial results was largely driven by favorable market prices, while production itself remained under pressure. Codelco’s management has therefore emphasized the need to restore productivity, improve asset efficiency, and impose greater cost discipline.
In June, management presented lawmakers with a plan that included, among other measures, putting the company’s finances in order, increasing its contribution to the state budget, improving management, and reviewing the entire structure of the business. Investment projects and potential asset transactions are also being assessed as part of the review. This means that employment is only one element of a much broader restructuring of the company.
Up to 20% of employees could be affected
The most sensitive element of the entire process is employment. Codelco has around 77,000 employees, meaning that even a relatively small percentage reduction would involve a substantial number of people. The 5% to 20% range reported by Reuters sources would correspond to roughly 3,900 to 15,400 jobs. This does not mean, however, that such a range of layoffs has been approved by the company.
Reuters reported that sources inside the company view workforce reductions as one possible component of the turnaround plan. Codelco, meanwhile, says that the company is still in the diagnostic stage and that it would be premature to determine what decisions will ultimately be taken. The final shape of the program is expected to become clear only after work on the strategy is completed, which is currently scheduled for the end of 2026.
Employment is particularly sensitive in Codelco’s case because the issue extends beyond the labor costs of the company itself. Codelco is one of Chile’s largest employers, and mining operations also support a broad employment chain among companies providing services to mines and investment projects. A decision affecting headcount could therefore have a much wider impact on mining regions than the number of people directly employed by Codelco alone would suggest.
New management wants to change the way the company is run
The change in approach is also linked to Codelco’s new management team. Jorge Gómez became chief executive in July 2026, while Bernardo Fontaine had previously taken over as chairman of the board. The new leadership has launched a detailed review of the company’s operations, covering not only employment but also operational management, the cost structure, the investment portfolio, and the use of assets.
Codelco itself has indicated that it wants to focus on improving productivity and operating performance. In a statement accompanying its first-half results, Jorge Gómez emphasized the need to simplify the organization, impose greater cost discipline, and use capital more efficiently. This direction suggests that the workforce review may be part of an effort to align the organization with the actual production capacity and prospects of individual assets.
The issue is more complicated than simply comparing the number of employees with production volumes. Codelco operates multiple mines and processing facilities, is carrying out investment projects, and relies on an extensive network of contractors. Cutting the workforce could reduce costs, but overly deep cuts could also make it more difficult to carry out investments and maintain production, particularly at a time when the company is already dealing with operational problems. The ultimate impact will therefore depend not only on how many positions are eliminated, but also on where the cuts are made.
Politics complicates decisions on layoffs
Codelco’s restructuring also has another dimension. The company is state-owned, while mining plays an exceptionally important economic and social role in Chile. Any decision involving major job cuts could therefore become the subject of political debate, particularly at a time when unemployment in the country stands at around 9.5%.
The issue has coincided with the beginning of President José Antonio Kast’s term in office. The new president takes office at a time when Codelco is preparing a turnaround plan that could require difficult decisions on costs and employment. During the election campaign, Kast pledged to reduce unemployment to around 6% by 2030 and create at least 300,000 jobs. A major workforce reduction at a state-owned mining company would therefore be politically difficult to reconcile with the direction outlined by the new administration.
The position of trade unions in Chile’s mining industry is also significant. Codelco employs tens of thousands of people, and its operations are concentrated in regions where mines are among the main sources of jobs and income. Potential layoffs could therefore trigger union pressure, protests, or negotiations over the scope and implementation of any restructuring. At this stage, however, unions have not been presented with a final workforce-reduction plan because such a plan does not yet exist.
Codelco is already trying to limit the impact of changes on workers
The company also has a recent example of reducing the impact of workforce changes associated with a specific project. Following the suspension of the Andes Norte project at the El Teniente division, Codelco prepared a program designed to mitigate the consequences for employees. In September, the company said it had found opportunities to reassign 1,782 people out of the 2,460 employees affected by measures related to the project.
The remaining 678 employees had not yet been reassigned to new positions, but Codelco said it would continue looking for opportunities to relocate them and would maintain their salary payments in the short term. The case shows that the company may try to limit layoffs by moving employees between projects and business areas. It is not clear, however, whether a similar mechanism would be sufficient if the restructuring ultimately covers the organization as a whole.
Employee transfers make particular sense where the company is simultaneously scaling back one project while increasing activity elsewhere. Codelco must nevertheless address a broader problem, because some of the planned changes are expected to affect the company’s overall cost structure. If the diagnostic process identifies a structural surplus of employees relative to production levels and planned investment, the scope for using internal transfers will be considerably more limited.
The delay in the strategy process means that Codelco’s most important decisions are unlikely to be presented in the coming weeks. The company initially planned to present the strategy in October, but now points to the end of 2026. During this period, it is expected to complete a diagnostic review covering the company’s strategic direction and the preparation of a turnaround program.
For the copper market, the key question will be whether the new strategy leads to a lasting increase in production and improved productivity, because workforce reductions alone cannot solve problems related to the age of some assets, investment delays, or operational constraints. Codelco remains one of the world’s most important copper producers, meaning that its problems affect not only Chile’s public finances but also the global copper market.
For now, it cannot be determined whether the reported 5% to 20% range will become the actual scale of workforce reductions. What is clear is that Codelco’s new management is conducting a broad review of costs, production, and the organization, and that employment is among the options being considered. The final answer to how many employees will remain at the company is expected to form part of the turnaround plan, whose publication is currently scheduled for the end of 2026.
Codelco confirms that it is conducting a strategic diagnostic and preparing a turnaround plan, but it has not confirmed any specific scale of layoffs. Reuters reported the 5% to 20% range based on four sources familiar with the process. Official Codelco data also confirm an 11% decline in the company’s own production in the first half of 2026, as well as initiatives aimed at improving productivity and cost discipline. The company has also previously reported the reassignment of 1,782 employees following the suspension of the Andes Norte project.
