Codelco board ousts CEO Thomas Keller after strategy disagreements

The board of Chilean state-run copper miner Codelco removed Chief Executive Officer Thomas Keller with a majority vote after a clash over strategy.

Codelco, the worlds biggest copper miner with a significant influence on the metals global market, seeks new leadership at a crucial time for the company, but opponents said the decision was politically motivated. It comes only a month after Chilean President Michelle Bachelet newly appointed a third of the board.

Mr. Keller was praised for his efforts to cut costs and overhaul old mines at Codelco, but his strategy created friction with the new government and the companys unions. However, his unyielding attempts to reduce expenditures and prevent a decline in output by investing more than $20 billion by the end of the decade faced the board and union leaders disapproval.

Oscar Landerretche, Chairman of Codelco said: “Codelco is in a critical stage, it needs to be reestablished. We asked Thomas Keller to tender his resignation as CEO as a result of the companys move towards a new phase with new challenges that require new leadership.” He added: “The majority of the board voted for a change in leadership.”

The board voted 5-3 with one abstention to oust Keller, asking him to resign as of June 13th, and is looking to find a replacement within a couple of months. Mr. Keller advocated for more investment in the company to overhaul ageing mines and battle decreasing competitiveness, something he believed he would achieve by investing about $20 billion in a series of structural projects. Without the investment, production would decline by more than 50%, Keller said.

Codelco has often clashed with the government over its investment budget. Since it was brought under state control in 1971, the company has earned Chile around $100 billion in profits, only $4 billion of which were returned back to the miner.

Nic Brown, head of commodities research at Natixis SA in London said, cited by Bloomberg: “There have been huge tensions between Codelco and the Chilean government, given what appear to be mutually incompatible aims and resources. Codelco has to invest huge amounts to maintain output over the medium term. For this, it will require help from government.”

There is currently no obvious candidate announced to succeed Mr. Keller, but several names are circled by the local media – former Codelco executive Sergio Jarpa, current Codelco executive Juan Medel and Nelson Pizarro, who heads the Chilean Caserones mine project.

Chilean Finance Minister Alberto Arenas said the new center-left government is committed to reinvesting in the miner and will approve or revise Codelcos investment plan by the end of the month. Some analysts expressed confidence in the boards new composition, but others voiced concerns that the management shifts and new direction might politicize the worlds biggest miner and steer it off course.