Chile's Codelco, seeking to protect workers' benefits, fires its cost-cutting president

SANTIAGO, Chile – The president of Chile’s state-owned mining company, Codelco, was fired on Friday after publicly airing differences with the board of directors about the future of the world’s biggest copper producer.

Codelco President Thomas Keller was ousted by a 5-3 vote with one abstention after telling the Chilean newspaper El Mercurio that he and the board had different visions for Codelco.

Codelco is hugely important to Chile’s government revenue and economy, and it faces tough choices as copper prices fall from historic highs. Keller told the paper that promised profits aren’t possible given current salaries, health care and other benefits. He planned $600 million in cuts at a time when the unions are pressing for more.

Codelco’s directors were reshuffled after President Michelle Bachelet took office in March. Keller, who was named to the post by former President Sebastian Pinera, said he’s “not prepared to make investments where Chileans will lose money.”

“The resignation of the executive president has been requested because the company is facing a new era of challenges that require a new leadership,” said the new president of Codelco’s board, socialist economist Oscar Landerretche, who also helped draft Bachelet’s tax reforms that aim at drawing more revenue from corporations and the wealthy.

Codelco is an a massive transformation, aiming to maintain profits from the world’s largest open-pit copper mine, Chuquicamata, by digging tunnels deep underground. At the same time, plans call for turning the world’s largest underground mine, El Teniente, into an open pit operation.

These and other changes will cost many billions of dollars at a time when production declined slightly, pre-tax quarterly profits dropped 38 per cent in the first quarter and copper prices fell.