SQM-Codelco Agreement: State Directors Must Account with Personal Assets if Pact Harms Chile

The basis for this responsibility is found in the company's statutes. According to Article 49 of Law No. 19,705, the Constitutional Organic Law of Codelco.

The Citizen

23/10/2025 11:30am

Original article: Acuerdo SQM-Codelco: Directorio de la estatal deberá responder con su patrimonio si el pacto es perjudicial para Chile

The newly approved alliance between Codelco and SQM to extract lithium until 2060 not only marks a significant milestone in the mining industry but also activates a legal mechanism of high responsibility for the nine members of the state corporation’s board. If it is proven that the agreement causes economic harm to Codelco, the directors could potentially face personal financial repercussions.

The basis for this responsibility is found in the company’s statutes. According to the Article 49 of Law No. 19,705, the Constitutional Organic Law of Codelco, directors are civilly liable before the company for damages and losses resulting from intent, guilt, or negligence while performing their duties. This regulation is not merely a formality; it serves as a guarantee that strategic decisions are made with the utmost diligence.

“Thus, the board is legally accountable and must utilize their own assets for any damages that may result to the company,” states an analysis of the company’s governance.

If the documentation requested by the Comptroller General of the Republic, Dorothy Pérez, from Máximo Pacheco regarding the «hidden» contract of the state with JP Morgan reveals that there are incentives linked to the agreement, or that the amounts charged and compensations obtained by the state through the arrangement with SQM until 2060 in the Salar de Atacama are economically harmful to the state, then the state board may find itself in serious legal trouble.

Reports indicate that the vote by Codelco’s board to approve the agreement was made without all necessary information and despite a conclusive report from the Investigative Commission of the Chamber of Deputies regarding economic harm; the decision has not been reversed.

The legal structure of responsibility on the board makes it “very difficult to reverse the agreement” once it has been unanimously approved, as was the case here, according to experts.

A Nearly Total Shield

The alliance was approved by the entire board, and under Codelco’s governing rules, can only be undone with a majority of five votes from the nine available.

The fact that directors are liable with their personal assets acts as a strong internal deterrent against reversing the pact. Sources familiar with the process have stated that the potential economic losses from dismantling the «joint venture» would be “enormous,” resulting from fines, litigation, and penalty clauses present in the contract with JP Morgan.

However, if the agreement is realized, the costs could still be greater for the state.

Experts knowledgeable about the responsibilities of company boards in such decision-making processes suggest that “The board is in a very precarious situation; what they can do to avoid risking their own assets is to inform the Comptroller’s office of the conditions under which their vote was obtained.”

The Countdown: China’s Approval

Meanwhile, Codelco is moving towards the finalization of the deal. The company had anticipated that the process to close the «joint venture» with SQM would be ready by September, which it has not.

One of the most critical “closing conditions of the agreement” is the approval from China’s antitrust authority, which is currently reviewing the agreement’s details within its institutional framework.

Beijing’s decision will therefore be the last significant hurdle before one of the most meaningful mining alliances in Chile’s history is officially sealed, accompanied by unprecedented personal liability for its approvers.

Given the current board’s appointment dates, the agreement could only be reversed until 2027, as the current members face pressure to respond with their assets if it is proven that there is harm to the state due to their decisions.

El Ciudadano