By Fabian Cambero

SANTIAGO Chilean state mining giant Codelco's incoming chief executive Ruben Alvarado has a mammoth task ahead of him: boosting copper output from its lowest level in 25 years, reining in ballooning costs, and spearheading a state push into battery metal lithium.

Alvarado, 64, will start as CEO on Sept. 1 after a search to replace the outgoing Andre Sougarret, who abruptly announced in June he would step down, citing personal reasons and "complexities" running the world's largest copper producer.

Alvarado, a chemical engineer, joined Codelco as a graduate in 1984, but for the last two decades has been managing firms outside mining, including state-owned Santiago subway operator Metro. Those who know him talked up his technical expertise and ability to spot problems others had missed.

"He has an unusual profile as he is technically very good ... but also has a special sensitivity to detect issues most executives don't see," said Louis de Grange, former president of Metro, who worked with Alvarado when he was the general manager there from 2014 to 2022.

Alvarado oversaw the metro's expansion with new lines and managed it through a difficult period in 2019 when there were widespread riots in the capital and some metro stations were set on fire.

That experience running a complex state entity could help him with one of the biggest challenges of Codelco - negotiating the politics of a company that gives most of its profits to the state and is the biggest economic driver in the country.

But he has been away from the mining sector for a long time - and there are major issues to fix.

Codelco has seen production fall sharply in the last few years due to delays in projects to overhaul some of its biggest mines, necessary to counter declining ore grades. There have also been accidents, weather setbacks and other operational issues. Costs and debt have jumped.

Codelco has also recently been tasked with leading Chile's new public-private model to develop battery metal lithium. The country is the world's no. 1 copper and no. 2 lithium producer.

'MORE TECHNICAL THAN POLITICAL'

Alvarado will need to work closely with Codelco's powerful chairman Maximo Pacheco, who plays an important mediation role between the company and the government. Pacheco welcomed Alvarado "back home" in a statement.

"(Alvarado) is more technical than political and that is a positive," said a former Codelco executive. "It was lucky they 'discovered' this candidate as I don't think they had many alternatives."

The naming of Alvarado was a surprise to many in the sector, who had expected an internal candidate or a head of another major mining firm in Chile.

Alvarado started at Codelco in the foundry division and worked up to be general manager from 2000-2004 at El Teniente, Codelco's biggest mine. Codelco credits him for "reversing" an expected drop in output during his time there.

He went on to be director of engineering and maintenance for LAN Airlines, now LATAM Airlines, a director at Chilean charity foundation Cristo Vive, and general manager at port San Antonio. He stepped down from his Metro role in 2022 amid some public criticism about a lack of metro station security and train delays.

"He understands that the challenges are not minor, they are complex," said Amador Pantoja, president of umbrella Codelco union the Federation of Copper Workers, who knows Alvarado from his time at El Teniente and said he had spoken with him recently.

"He is aware that there are very good people at Codelco and with good workers we can overcome this crisis," he said. "The deal with him was always person-to-person. I don't have any reason to doubt he will keep an open door."

Alvarado will need to leverage all the management nous he has to steer the giant firm.

"Facing the difficult challenges of Codelco is not the task of a single person, but a team led by someone who knows how to organize, direct, delegate, support and demand results," said Sergio Jarpa, head of mining chamber Voces Mineras.

"Given his background and managerial experience, Ruben Alvarado has a suitable profile."

(Reporting by Fabian Cambero; Editing by Adam Jourdan and Rosalba O'Brien)