The government of President José Antonio Kast announced this Monday its decision not to withdraw the profits of Codelco corresponding to the 2025 fiscal year, which amounted to US$ 2.422 billion during the period, mostly accounting benefits, with the aim that these earnings be invested in the state-owned company. "We have to recover that national pride that is Codelco. This symbol, we all have seen it and you carry it there, next to your heart. And we have to take care of it, we have to treasure it," said President Kast. With this measure, the Minister of Mining, Daniel Mas, stated that a "direct injection" of funds is generated. "For the first time in its more than 50 years of history, the State authorizes the retention of 100% of the surpluses generated in a single annual exercise," Mas said. The plan is authored by the chairman of the company's board, Bernardo Fontaine, who has insisted since taking over as chairman and suggested it to President Kast in the first meeting he held with the president, on June 3, according to people familiar with the negotiations. Later, Fontaine obtained the support of the heads of Finance, Jorge Quiroz, and Mining, in successive meetings. The request was made by Codelco's board to the Ministry of Finance and considers capitalization of up to US$ 2.422 billion, which corresponds to the reported profits for the 2025 fiscal year. However, much of that figure originates from Novandino Lithium, the joint venture between Codelco and SQM. Specifically, a total of US$ 2.006 billion corresponds to the accounting recognition of the company's stake in that alliance. This means that the operation does not practically represent new resources for Codelco, but it does relieve pressure. Fontaine said it is equivalent to a capitalization, in an interview with DF at closing. "Basically, Codelco earned US$ 400 million in the copper business, quite little, and recognized 50% plus one share of Novandino, which it owns US$ 2,000 million in round numbers," he explained. "Now, why is it a capitalization? Because according to the law, the government could have demanded US$ 2.400 billion from Codelco, regardless of whether they were in the treasury or not, whether they were liquid profits or not. Codelco would then have had to borrow US$ 2.400 billion to transfer the money, or part of it, because it wouldn't have had the cash to cover that amount. So, in that sense, it would be a full capitalization. Now, that allows this to be recorded as equity and not be forced to borrow US$ 2,000 million to give it to the State," he said. "The most important thing is the signal," added Fontaine. Privately, in Codelco, they explain that they had to convince the Ministry of Finance, which is strict about its fiscal accounts, of the capitalization. However, the Ministry of Finance did not expect those resources: the withdrawal of profits from Codelco or by the Treasury was not considered in the 2026 Budget Law nor in the Public Finance Reports presented this year. The focus of the profits that will remain in the company will be mainly for investments. The new administration has been clear that it is reviewing each of the company's investments, defining precisely the budget for projects, which are close to 170 initiatives. In the last quarter of the year, Codelco will present its strategic plan, showing the main investment decisions it will make. Debt-to-equity reduction The professor of mining law and former legal manager of Codelco, Cristián Quinzio, views the decision positively. "I think it's very positive that the owner, which is the State of Chile, through the government, has decided this time to leave all the profits inside." The expert recalls that "Codelco's profit pays the 27% corporate tax rate paid by all companies. It pays an additional 40% on the remaining profit to the State. It pays 10% of sales until 2032 to the Armed Forces. And what remains is for capitalization." Quinzio also remembers that "under Bachelet II, US$ 3 billion was contributed. And under President Boric's government, there was a capital injection that allowed retaining 30% of the profit for a couple of years." However, he points out, "having 100% of the profits as is being done now, that has never been done before." The director of Núcleo Minero, Álvaro Merino, says that the announcement helps to alleviate the company's critical financial situation. And that, financially, he pointed out that the copper company's debt-to-equity ratio decreases. "Naturally, the debt-to-equity ratio decreases. Currently, the liabilities to equity ratio is 3.27, meaning that for every peso of equity, there are 3.27 pesos of liabilities. This indicator is very high considering that the main mining companies are around 1. If eventually these resources were used to pay debt, liabilities would decrease by US$ 2.422 billion, so the debt ratio would be 2.77, still very high compared to the industry. If Codelco did not have the implicit backing of the State, it would be very difficult to access financing," he said. The partner lawyer at Garrigues and former arbitrator at CAM, Pilar González, pointed out the same: "not distributing profits favorably affects Codelco's debt-to-equity ratio compared to the opposite scenario, that is, withdrawing those profits," she said. She clarified that regarding liquidity, it is important to distinguish between profit and cash. "The fact that Codelco retains profits does not necessarily mean it has an equivalent amount in cash. In fact, the profit could be partly composed of the appreciation of an asset that has not yet been realized, and which will only translate into cash in the future," she added. "For example, if Codelco owns a stake in a company whose value increases, that higher value can be recognized accounting-wise as profit, even if the company does not receive any money at that moment. On the other hand, not distributing profits from Codelco to the Treasury does not imply a lower income tax payment, because Codelco pays that tax when determining its taxable profits. The Treasury, for its part, does not pay taxes for receiving those profits. Therefore, the decision affects the resources the Treasury receives, but not the income tax paid by Codelco," she clarified.