Andres Luna

9/7/16
Managing Change
A. Company Name: Codelco
B. Change Issue: Codelco is struggling to stay profitable after the
severe halving of the copper price. Being a state owned copper
mining company where 75% of its profits is generated from
copper, it has been unable to pay its usual premium to Chile.
Historically, Codelcos financial success has provided the
government with funds for social programs, hospitals and
schools, but with every cent the copper price drops Codelco loses
$36 million and now the company cannot deliver.
C. Hypothesis: The change in price implies that Codelco would
have to cut production costs, cut down the amount of workers,
and increase investment spending on mining projects in an effort
to keep their level of production up. In addition, because of the
negative forecast of copper prices in the coming years, it will be
difficult for Codelco to raise new funds from investors and may
have to resort to selling assets (a controversial issue in Chile).
Ultimately, the price change implications likely show Codelco
losing its position as the worlds number one copper producer
within the next couple years if the change in price isnt dealt with
effectively.
D. Change Recommendation:
Joint Venture
o Due to the such a drastic change in price, it may be in
the companys best interest to a pursue a joint venture
with the private sector (or even internationally) with
partners that can help facilitate or fund its production
projects.
Cut production costs, while focusing investment on its biggest
most potential projects
o While it is in Codelcos best interest to cut production
costs to spend money in more cost efficient ways, it
needs to keep its production at a worldwide competitive
level and nurture the potential and life span of its most
promising mines
E. Links/References:

http://www.ft.com/cms/s/0/9255a814-438a-11e6-9b660712b3873ae1.html?siteedition=intl#axzz4JZwDZQNZ
http://www.mining-technology.com/features/featurecoppercodelco-chile-4939147/

http://www.mining.com/codelco-warns-strike-salvador-minerisks-divisions-future/
Copper Price Forecast From 2012 Present :