Chile’s 2025 vote puts mining sector’s future on the line

Chile’s 2025 presidential election could reshape the future of its mining sector—impacting Codelco, lithium strategy, and global supply chains in copper and clean energy.

Chile is approaching a pivotal moment. On November 16, voters will elect a new president who will guide the country through the remainder of the decade—and, in doing so, set the course for the future of its most important economic pillar: the mining sector.

At the center of the debate is the fate of Codelco, the state-owned copper behemoth that once symbolized Chile’s development but now struggles under mounting debt, aging infrastructure, and years of declining output. Once the pride of the nation, Codelco faces an existential crisis. Its debt surpassed $20 billion by the end of 2024, while production continues a slow recovery after hitting a 25-year low in 2022.

Codelco is also burdened by legislation requiring it to hand over 70% of profits and 10% of sales to the government, leaving little room for reinvestment and modernization. This financial stranglehold threatens not only the company’s long-term survival but also Chile’s fiscal stability.

With rival candidates offering dramatically different approaches—from sweeping privatization to aggressive public reinvestment—the election is shaping up to be far more than a political contest. It’s a make-or-break decision for the mining industry, and the stakes are global.

As the world’s largest producer of copper and a key supplier of lithium, Chile plays a vital role in the global energy transition. If its mining engine stalls, the disruption will extend far beyond its borders.

Privatization vs. State-Led Reform: A Divided Political Landscape

On the right, presidential hopefuls Evelyn Matthei and José Antonio Kast are advocating for partial privatization of Codelco. They propose selling off non-core assets, inviting private capital, and scaling back government control to boost efficiency and restore the company’s financial health.

Their strategy includes shifting Codelco’s focus from being a cash cow for the state to an independent, performance-driven enterprise. Supporters argue this would reduce debt and revitalize the company, while critics warn of fierce union backlash and public resistance to privatizing national assets.

Despite the controversy, these market-oriented proposals have gained traction among foreign investors frustrated with red tape, permitting delays, and rising costs under the current administration.

On the left, Jeannette Jara of the Communist Party emerged as the ruling coalition’s candidate in June, defeating Carolina Tohá, who had pushed for a Codelco restructuring that would allow greater profit retention. Jara is calling for full public control of natural resources and has strongly opposed a proposed lithium joint venture between Codelco and SQM (NYSE: SQM), citing corruption concerns and advocating instead for a new, fully public lithium enterprise modeled after Codelco’s role in copper.

She has also signaled a shift in foreign policy, aiming to diversify trade ties with countries like China, India, and regional neighbors, particularly if U.S. tariffs on Chilean exports increase.

“We have to act prudently to safeguard our national interest,” Jara said in a recent speech.

Polls suggest she could advance to a runoff election on December 14, but she is expected to lose to a conservative challenger in most second-round matchups.

Investor Caution Amid Political Uncertainty

Despite political headwinds, Chile’s economy remains resilient. According to BNP Paribas, GDP grew 2.3% year-over-year in Q1 2025, with acceleration continuing into April, thanks in part to increased mining activity.

Still, investor confidence hinges on the next administration’s ability to resolve Codelco’s crisis and create a regulatory environment that encourages foreign capital without igniting social unrest.

“Chile’s election is a referendum on how to balance resource nationalism with economic pragmatism,” said John Zadeh, CEO of junior mining investment firm Discovery Alert. “The status quo, however, guarantees decline.”

Social issues also loom large in the campaign. Rising crime rates have become a top concern for voters, complicating the outlook for businesses already facing volatile commodities markets, tighter capital conditions, and pressure to meet decarbonization targets.

The Global Ripple Effect

As Chile enters the final stretch of its election cycle, the world is watching. Whether the country moves toward deeper state control, embraces privatization, or strikes a middle path, the decision will have lasting implications.

With a likely December runoff adding further uncertainty, global markets and mining investors are bracing for impact. The direction Chile chooses in 2025 will define not just the future of Codelco and its lithium ambitions—but also its standing in the global race toward a greener economy.