Codelco chooses 33-year insider to replace Pizarro as CEO

World’s largest copper producer, Codelco, has name company insider Octavio Araneda as its new chief executive officer, following the departure of Nelson Pizarro.

Araneda, a mining engineer who has spent his entire 33-year career at the state-owned mining company, was chosen unanimously by the board of directors on Friday, Codelco said in a statement.

Pizarro (78), a stalwart at the copper producer for decades, took the top post in 2014. He played a critical role in the company’s drive to reduce spending and force a reduction in costs.

He also kicked off an ambitious overhaul of Codelco’s aging mines, originally pegged at $25 billion (now sitting at about $18bn), aimed at dealing with dwindling ore grades.

Unlike previous CEOs, the mining veteran remained at the helm despite a change in government in 2018, an unusual move, given that the role is often a political appointee.

Pizarro had signalled he would leave leave the company after the inauguration of the $5.6 billion conversion of the giant Chuquicamata open pit mine into an underground operation.

Codelco’s new CEO will oversee the remainder of a 10-year plan to upgrade the company’s aging mines, while keeping debt levels in check. He would also have to secure funding from the government and maintain production rates.

The next major mine overhaul is a new level at El Teniente underground mine, the company’s largest, which fell under Araneda’s mandate in his previous role.

Additionally, the new leader will deal with other major corporate modifications Piñera’s administration has promised, including legal changes to prevent the nation’s armed forces from using Codelco as a cash cow to finance weapons purchases.

The copper giant holds vast deposits of the red metal, accounting for over 10% of the world’s known proven and probable reserves and about 11% of the global annual copper output with 1.8 million tonnes of production.

Production decline, together with lower copper prices and higher costs, saw the company’s annual profits drop by a third last year to $2 billion, not counting paper losses worth almost $400 million, as it wrote down the value of its assets, including its Ventanas smelter and the open pit at its Salvador division.