SANTIAGO, March 17 (Reuters) - Chile's state-owned

copper giant Codelco has reported a sharp drop in production to

start this year, leading copper industry analysts and former

Codelco executives to question its reports of surging output at

the end of 2025 that helped the company meet its annual

production target.

Last week, Chile's state copper commission Cochilco

reported that Codelco produced 91,000 metric tons, its

fourth-lowest monthly production figure this decade. The January

figure represents a year-on-year drop of 1.8% and a decline of

47% from December.

In December, the company reported its largest monthly

output figure of 172,300 metric tons. It was its largest monthly

output for the decade so far, and far exceeded the monthly

average of 105,600 tons from January to November.

Industry insiders have been questioning how the surge was

achieved, whether the figure represented fully refined copper,

and what it signals for the miner's long-term goals to boost

production toward its goal of 1.7 million tons by 2030.

"Figures are always embellished across the industry to

better meet targets, but there are significant differences here

that are at least questionable," a former senior executive at

Codelco told Reuters, speaking on the condition of anonymity due

to his current work in the industry.

"At the very least, there was poor planning," the former

executive said. Reuters spoke to four former Codelco executives

who expressed doubts about the figure and the company's 2030

goal.

Codelco's production levels slid to a quarter-century low in

2023 due to declining ore grades and problems with major

construction projects to overhaul key mines. The miner was able

to boost production in 2024 and surpassed that number by 3,000

tons in 2025 for a production of 1.33 million tons.

According to an internal production document seen by Reuters,

December production from oxides at Codelco's Chuquicamata mine

reached 25,000 tons, more than six times the projected 4,000

tons.

Its Andina mine registered its highest monthly production

figure since 2014 and its small Salvador division produced

11,500 tons, far surpassing the projected 4,600.

When asked about the figures, Codelco said its production

boost was due to the increased use of stockpiled inventory,

unplanned sources of material and improved performance at some

divisions.

"This result is especially significant considering the

contingencies faced, confirming the corporation's technical and

human capacity to sustain its productive performance," the

company told Reuters.

The company said the use of leach yard inventory in

Chuquicamata helped raise production volume while Andina's

production was driven by better ore grades and higher processing

rates.

For Salvador, Codelco noted the division was helped by the

ramp-up of the Rajo Inca project and inventory stockpiled from a

stoppage of its Potrerillos smelter in June.

Juan Ignacio Guzmán, CEO of mining consultancy GEM, said that

while end-of-year production surges are normal, he thinks a

strong deviation raises warning flagsor signals a calculation

error.

"When expectations differ widely from reality, an internal

audit is needed to understand what went wrong in the original

estimate and to improve future forecasts," Guzmán said.

The commission told Reuters it regularly and periodically

audits Codelco but it had no publicly available information

explaining operational, technical or management factors behind

production deviations at divisional level.

Cochilconoted it is legally required to keep much of its

oversight work confidential.

Juan Carlos Guajardo, head of consultancy Plusmining, said

use of leach inventories helped lift output toward year-end,

noting that Codelco has relied on unusually high inventory use

in November and December since 2022.

"Another factor is the year-end operational push,

reinforcing a pattern of December rebounds seen in previous

years," he said.

LONG-TERM COMPETITIVE ISSUES REMAIN

Codelco still faces long-term problems with low ore grades.

Structural projects designed to offset this have suffered delays

and cost overruns, weighing on output.

Guzmán said the miner has had trouble competing with

private-sector peers due to bureaucracy and lack of focus.

"Codelco's production has fallen, among other reasons,

because these projects haven't even been close to come together

how they should have and that's due in part to Codelco's

projects not being developed competitively," Guzman said.

"When companies stop competing and adopt practices that

aren't market-competitive, you start to see 'kitchen-sink'

accounting so the numbers don't look as bad," he said.

Codelco had a fatal accident at a project in its flagship El

Teniente mine that left six workers dead in July and triggered a

judicial investigation. Several underground areas were shut and

are restarting gradually, while others remain halted.

The company said it is reassessing business and development

plans to gauge the impact on future production. Despite the

accident, El Teniente missed its December target by only about

900 tons. Codelco attributed this to the mine performing above

expectations earlier in the year.

For 2026, Codelco has set a production target of 1.344 million

tons, about 0.7% above 2025 levels. Analysts wonder whether the

company can sustain growth and reach that level.

"There is obviously distrust in the business world and in

the private sector over whether these (competitiveness) problems

at Codelco are also triggering this, or more directly, whether

this is yet another symptom of the internal problems it has,"

Guzman said.