Sebastian Perez-Ferreiro
Mining Practice Co-Director
AMI
In May, the world’s largest copper producer changed chairmen under a cloud of partisan hostility. Weeks earlier, the world’s second-largest copper producer headed into a presidential runoff with no consensus on whether its US$63 billion project pipeline would survive the result.
Chile and Peru — together the backbone of global copper supply — are running the exact scenario that Americas Market Intelligence’s whitepaper on Latin American mining risk identifies as the most dangerous moment for investors: the political transition.
Chile: When the Handover Becomes the Story
Máximo Pacheco completed his four-year term as Codelco’s chairman and handed the keys to Bernardo Fontaine, an economist and adviser to President José Antonio Kast who had no mining experience. The transition was anything but ceremonial.
In the weeks prior, mining minister Daniel Mas accused Pacheco’s term of delivering “disorder, opacity, and a management that was not up to Codelco’s historical responsibility.” At the April 20 shareholders’ meeting, finance minister Jorge Quiroz and Mas directly challenged Pacheco over a 20% fall in output and safety failures. Pacheco, in his farewell letter, accused his critics of acting on “purely partisan” motivations.
The collateral damage was immediate and specific. Legislators aligned with Kast began pressuring Pacheco to resign from NovaAndina Litio — the joint venture between Codelco and SQM to develop the Atacama lithium reserves — arguing the project needed to be “protected from any reputational cost.” Pacheco ultimately stepped down from that position as well. The SQM partnership, a critical piece of Chile’s lithium strategy, had its governance disrupted before it produced a single tonne at scale.
Codelco is not just a mine operator; it’s a hub of commercial relationships. Its construction contractors, equipment suppliers and JV partners plan capital allocations years in advance, tied to management continuity and strategic signals from the top. Fontaine arrives with a mandate to order an external audit of Codelco’s financial and operational state. That audit will produce findings that will shape procurement decisions, expansion timelines and debt restructuring — all of which flow downstream to vendors and partners who have nothing to do with politics.
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Peru: When the Campaign Is the Risk
Meanwhile, Peru is running a different version of the same problem at a different scale, as the country heads into a June 7 presidential runoff with a US$63 billion mining project pipeline hanging in the balance.
Keiko Fujimori, the winner of the first round with roughly 17% of the vote, proposes distributing 40% of mining royalties directly to communities and creating a fast track for strategic projects. Her opponent, leftist Roberto Sánchez, proposes renegotiating contracts, reducing tax benefits, introducing windfall taxes and launching a constitutional rewrite expanding the state’s role in the economy.
Peru’s national society of mining, petroleum and energy (SNMPE) has warned that these opposing mining policies may jeopardize billions of dollars in investment.
On paper, the policy divergence is the story. But the bigger risk, as the AMI framework identifies, is in the transition itself.
Whatever positions either candidate stakes out between now and June 7 will become extraordinarily difficult to reverse. The AMI framework calls this the “irrevocable position problem”: rhetoric deployed to win popular support in a competitive race becomes a constraint on governance.
Peru’s 2011 cycle offered a precedent and a warning. Ollanta Humala ran hard against the mining industry and, while a negotiated compromise was reached relatively quickly once he took office, the campaign’s bullying still cost investors months of uncertainty and capital hesitation.
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REACH OUTThe Pattern AMI Identified
These two stories fit a pattern that AMI’s whitepaper documented across the region. “The greatest risk of political interference is felt during national political campaigns when mining often takes center stage and potentially irrevocable positions are voiced in a race to win popular support,” the report notes.
Positions harden. Alliances are made with anti-mining constituencies that then expect payback. Incoming administrations feel compelled to audit, restructure or distance themselves from what their predecessors built. And the commercial relationships that make large capital projects possible – the JVs, vendor contracts, financing structures – are built on continuity assumptions that transitions systematically undermine.
Chile’s institutional mining culture is mature enough to absorb a change at Codelco without existential disruption. But the manner of this transition — the public hostility, the partisan framing, the pressure campaign against a sitting board member of a strategic JV — introduces exactly the kind of governance uncertainty that the AMI framework flags as an early-stage risk indicator. In Peru, the same dynamic is running on a compressed timeline with higher stakes.
Next Steps
Contact us if you anticipate political risk in the Latin American jurisdictions you or your clients operate in.
Our team extends throughout the region and can help you anticipate — and forestall — policy changes that could affect your operations.
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