Codelco: Reinventing Copper Supply Chains for a Net Zero Era

The global transition to a net zero future presents a logistical paradox. To decarbonise transport and power sectors, industries requires immense quantities of raw materials for technologies like lithium-ion batteries. 

Copper is a primary component in this transition yet its extraction carries a substantial environmental footprint. 

For Codelco, a state-owned Chilean company and the world’s leading copper producer, navigating this challenge means fundamentally reengineering its supply chain from mine to market.

The company is a critical node in the global energy supply chain. Established through government action with roots stretching back to 1905, Codelco now operates seven mining divisions. 

Last year it produced more than 1.3 million tonnes of copper, demonstrating its scale and importance. As demand for green technologies accelerates, the sustainability of Codelco’s own operations and its wider value chain has become a central strategic issue.

Securing the future copper supply

Codelco is not merely extracting resources for today but is actively planning its role in the global supply chain for decades to come. This forward-looking strategy involves ensuring the longevity of its mineral reserves to meet sustained international demand. 

Speaking at a Global Metals, Mining and Steel Conference, Máximo Pacheco, Chair of the Board of Codelco, outlined this approach: “We are actively building the Codelco of tomorrow through the strategic development of our mineral reserves to sustain operations for the next 50 years.”

Máximo explained that this strategy is about more than just digging.

He continued: “Through ongoing structural projects and key partnerships in the copper and lithium sectors, we are unlocking invaluable growth opportunities, positioning ourselves as a critical player in the global energy transition.”

This signals a focus on securing not just the raw material but also the partnerships and operational structures needed to deliver it efficiently as global needs evolve.

Remodelling upstream operations

A large portion of Codelco's sustainability effort targets its direct operational footprint, what are known as Scope 1 and 2 emissions.

Pablo Contreras Silva, Codelco’s Head of Climate Action, highlights the logistical challenge:. “We have set ourselves ambitious targets for 2030 for Scope 1 and 2 and mining trucks account for 70-80% of our Scope 1 emissions,” he states.

“Like everybody else we are looking at the electrification of those trucks – but that is not something we are doing by ourselves.” 

The move toward electrifying underground mine production and logistics equipment is part of a wider commitment to reduce greenhouse gas emissions by 70% by 2030, powered by a 100% clean energy matrix.

Other key upstream changes include:

• Water security: reducing inland water consumption by 60% by incorporating a desalination plant, a measure that secures a critical operational input while lessening environmental strain.
• Circular economy: recycling 65% of industrial waste, an initiative that focuses on managing the outputs of the mining process by creating value from materials such as steel, wood and scrap metal.
• Airborne emissions: cutting airborne particulate matter by 25% by deploying new dust suppression technologies, which addresses a direct operational impact on the surrounding environment.

Acknowledging the wider value chain

The company’s strategy extends beyond its mine sites to address its wider supply network and Scope 3 emissions, which arise from activities not owned or controlled by the organisation. 

“Scope 3 is something not just us but the whole industry faces as it relates to the whole value chain,” Pablo notes. “In Codelco’s case, Scope 3 accounts for 65% of our total emissions so it is something we need to address and we are doing that through various initiatives.”

A cornerstone of this effort is a commitment to localise its procurement network. Codelco plans to broaden the supply of goods and services provided by local suppliers by 60% and increase its use of the local workforce. Theis strategy aims to build regional resilience, reduce transport-related emissions and strengthen its social licence to operate.

The focus on Scope 3 demonstrates an understanding that for a company like Codelco, true sustainability requires influencing and collaborating with partners across the entire supply chain.