Copper hits record high as Chile's largest miner suspends major project

The Chilean peso was yesterday the best-performing emerging-market currency in the world, and that fact alone captures the complexity of an economic moment Chile faces with contradictory signals: euphoria in commodity markets, operational fragility at its largest mining company, and a widening gap between financial indicators and the public mood.

The immediate trigger was geopolitical. Comments from Qatar about a draft peace agreement that would reopen the Strait of Hormuz unleashed a global repricing: Brent crude fell 6.1%, breaking below the US$80-per-barrel mark, while copper traded on the London Metal Exchange hit a new all-time high, topping US$6.43 per pound in its fourth consecutive session of gains. The average price of the red metal so far in 2026 now stands at US$5.97 per pound, according to Cochilco data, a figure that Finance Minister Jorge Quiroz described as a "positive juncture," while making clear that the fiscal commitment remains "ironclad." With that tailwind, the dollar plunged more than $13 to close near $911, its lowest level since June 22, in the biggest single-day drop for the exchange rate since May. The IPSA, however, did not join the celebration: it slipped 0.5% and gave up the 11,000-point mark, weighed down by the large banks on a day when inflation expectations eased, reducing appetite for local financial paper at the very moment Wall Street was setting record highs with the S&P 500 up 1.7%.

The divergence between record copper and a falling IPSA reflects a deeper structural tension: Chile captures the benefits of its commodities indirectly — through the exchange rate and tax revenue — but the domestic stock market answers to a different logic, driven by consumption and inflation expectations that have yet to firm up. VAT receipts have expanded in the second quarter, and consumption has rebounded strongly in recent months, but economists warn that it is premature to talk of a trend. The Pulso Ciudadano survey is, in that sense, an uncomfortable data point: 49.1% of Chileans rate the economic situation as bad or very bad, and 40.2% believe it will be worse a year from now, up from 34.5% in July. The contrast with the objective indicators is striking and suggests that the reactivation narrative of José Antonio Kast's government has yet to permeate public perception.

The week nevertheless brings political signals that the government hopes will help turn that pessimism around. The Senate approved by 27 votes to 22 the last pending article of the so-called mega-reform, or reconstruction bill, sealing its full passage through Congress after a last-minute negotiation in which Minister Quiroz signed protocol agreements with Senators Matías Walker and Sergio Gahona, guaranteeing resources for the reconstruction of Coquimbo and Atacama. The Executive will submit three line-item vetoes this Wednesday related to anatocism, the right to be forgotten in financial matters, and 30-day payment terms for SMEs — rules that the Finance Ministry considers harmful even though they "sound good." In parallel, the Chamber's Finance Committee unanimously approved the bill extending the mortgage credit subsidy and raising the ceiling on eligible housing units from 4,000 to 6,000 UF, adding 30,000 additional slots for a total of 80,000 and extending the program's validity until May 2028, a measure that the Finance and Housing ministers are pitching as a lever to work through the real estate inventory and revive construction employment.

While the government celebrates in Congress, Codelco concentrates the bulk of the day's troubling news. The state-owned company suspended work on the Andes Norte project at its El Teniente Division, one of its three structural projects, after technical analyses over the past six months identified an emerging seismic phenomenon with characteristics distinct from the risks historically known at the operation. The halt affects some 3,000 workers and more than 20 contracts with four contractor firms — exactly one year after the rock burst that killed six workers at the same division. The episode comes at the worst possible reputational moment for the copper company: its debt has climbed from US$17.6 billion in 2021 to close to US$26 billion, its output has systematically fallen short of targets, and projects such as Rajo Inca have accumulated cost overruns on the order of 73.5%. Board Chairman Joaquín Fontaine ruled out privatizations but opened the door to selling assets and divesting minority stakes in deposits operated by third parties. José Manuel Silva went further, arguing publicly that the debate over a stock market flotation of up to 25% of Codelco's capital through a capital increase — while preserving state control — is unavoidable: "Not discussing it is economic flat-earthism," he said. Dual-portfolio Minister Daniel Mas, for his part, unveiled from Iquique a plan to cut the sector-specific permits required for mining projects from 55 to 13, a measure sent to the Comptroller's Office that seeks to accelerate investment in a sector currently caught between record prices and operational capacity under strain.

Lithium, by contrast, delivered one of the best fiscal headlines of the period. Contributions to Corfo from the mineral quintupled in the first half of the year, reaching US$791 million on the back of an average price of US$18,733 per ton — more than double last year's — driven by tighter supply and demand from storage batteries and electromobility. The Budget Office projects annual lithium revenue of US$1.231 billion, a real increase of 234% over 2025, a significant relief for public accounts that the government describes as being in a consolidation process.

In the private sector, the day also produced mixed corporate results. Latam Airlines, whose shares trade on the Santiago Stock Exchange, reported second-quarter earnings of US$125 million, 48.2% lower than the same period in 2025, with fuel costs surging 93.1% as a direct consequence of the Middle East conflict. Even so, the airline has accumulated first-half profits of US$701 million, 17.5% higher than in the same period last year, supported by its diversified revenue model that includes the premium segment, cargo, and the Latam Pass program, which now has 56 million members. CCU, meanwhile, deepened its second-quarter losses despite an improvement in its Chilean business, while Mallplaza posted a 35% decline in first-half earnings, explained primarily by lower revaluation of investment properties and accounting effects tied to the UF, although its EBITDA grew 9.6% and sales at its retail partners advanced 6.7% to US$1.828 billion. At the other end of the spectrum, Concha y Toro received an overweight recommendation from BICE, after second-quarter results beat consensus estimates, with earnings per share also boosted by its share buyback program. The agricultural sector adds another warning: Hacienda Chada, the leading fruit company in the central zone with liabilities of US$97 million, secured a reorganization agreement that spares it from bankruptcy in exchange for launching a process to sell off farmland.

In the coming sessions, attention will be split between the trajectory of the copper price — at record levels it boosts revenue and the exchange rate, but requires Codelco to resolve its operational problems in order to capitalize on the cycle — and the legislative handling of the line-item vetoes the government will submit this Wednesday, whose approval in Congress will determine the effective scope of the recently passed mega-reform. The CMF, for its part, expects to issue before year-end its rule on internal risk models for systemically important banks, a signal that the financial system's regulatory modernization agenda is advancing in parallel with fiscal policy. The true test of whether the reactivation narrative has substance will come with the next employment and consumption data, in a country where markets are celebrating record copper prices and citizens are reporting record-high pessimism.

**LATAM Airlines (BVMF: LTMAU)** — The airline reported earnings of US$125.2 million in the second quarter of 2026, 48.2% below the same period last year, with fuel costs jumping 93.1% as a consequence of the Middle East conflict. For the first half, profits reached US$701 million, 17.5% higher than the same period in 2025, supported by growth in the premium segment and the Latam Pass loyalty program.

**Mallplaza (Bolsa de Santiago: MALLPLAZA)** — The shopping mall operator controlled by Falabella posted a 35.1% drop in first-half earnings, hit by lower revaluation of investment properties and the impact of UF variation on its debt. Its EBITDA, however, grew 9.6% to US$152.15 million, with retail partner sales of US$1.828 billion across its 37 assets in Chile, Peru, and Colombia.

**Viña Concha y Toro (Bolsa de Santiago: CONCHATORO / NYSE: VCO)** — BICE issued an overweight recommendation following second-quarter results that beat consensus estimates, with earnings per share also boosted by its ongoing share buyback program; the winery, whose ADRs trade in New York, also made headlines after its Don Melchor 2021 was named the best wine in the world by Wine Spectator.