Chile to curb budget growth as Codelco ramps up recovery, minister says

By Fabian Cambero

SANTIAGO (Reuters) -Chile will have a “responsible” 2026 budget with a limited increase while state-run Codelco, the world’s largest copper miner, seeks to recover from recent production problems, the country’s new finance minister told Reuters on Wednesday.

In an interview at his office in Santiago, Nicolas Grau, appointed in August by his close ally President Gabriel Boric, said the 2026 budget due in Congress would have a more “limited” spending increase than in recent years.

The specific amount will be announced by Boric, but the budget increase has been on a downward trend since 2023 when it grew 4.2%. Grau said that with this budget, the average annual increase would be about 2%.

“What we’re going to do is define a responsible budget with Congress that addresses the country’s needs, and provides sufficient flexibility to the next administration,” he said. Chile is facing a presidential election in November and Boric, who will serve until March, is not allowed to run for consecutive re-election.

CODELCO’S COPPER RECOVERY

Chile produces about a third of the world’s copper, its main source of income. State-owned Codelco has been struggling to boost output for years. In August, it cut its annual production target due to a fatal accident at its flagship El Teniente mine.

Grau emphasized his confidence in Codelco’s strategy to close production gaps in previous years, and highlighted initiatives like its partnership with Anglo American to exploit two neighboring deposits.

“(Codelco) is creating these public-private partnerships that allow it to maintain its leadership in the copper sector,” Grau said.

SPEEDING UP PERMITTING TO BOOST INVESTMENT

Grau said he was confident the economy would grow 2.5% this year, boosted by an investment increase of more than 5% for carbon-neutral projects like clean energy and digital infrastructure.

Rising unemployment has also been one of Grau’s priorities for the final months of the administration. The country’s former labor minister, Jeannette Jara, is the leftist government’s coalition candidate in the upcoming election.

“Although the unemployment rate has dropped somewhat in the latest data, 8.7% is a challenging unemployment rate. We believe that rate must be reduced,” Grau said.

He added that policies like pension reform and improved permitting – a key demand from large miners like BHP and renewable energy companies like TotalEnergies – have allowed for greater economic growth.