Braskem estimates spending another Real 1.2 bil to address geological damage in Alagoas

Sao Paulo — Brazilian petrochemical producer Braskem estimates it will have to spend another Real 1.2 billion to address geological damage in the state of Alagoas, the company said Dec. 30.

The increase was announced after Braskem reached agreements with the Brazilian authorities aiming to end two public interest civil actions — one of a socio-environmental nature and another from residents of the affected neighborhoods.

Braskem's total provisions to take care of geological damage in Alagoas have reached Real 9.1 billion.

The company added Real 900 million to provisions that would implement necessary measures to address damages resulting from salt-extraction activities in Maceio, including stabilizing the cavities and monitoring the soil, along with repairing socio-urbanistic impacts and damages.

Braskem also said it is still in discussions with ANM, the national mining agency in Brazil, to close the salt mines. The company said Nov. 26 it received a letter from ANM requiring Braskem to close more wells than previously estimated.

Another Real 300 million was provisioned to relocate 5,500 additional properties, totaling around 15,000. According to Braskem, about 9,000 families left the risky area in 2020 and are now receiving financial compensations.

Brazilian authorities filed a lawsuit against Braskem in April 2019 after local media reports suggested the company was responsible for damaging the soil and causing cracks in streets and buildings.

Braskem immediately shut the salt mining operation, as well as chlor-alkali and ethylene dichloride plants in Maceio, the capital city of Alagoas, when the Brazil Geological Survey issued a report in May 2019 linking the mining activity to the damages, which included fissures and a minor earthquake in March 2018. The company had mined salt in Alagoas since the mid-1970s.

Since the closures, Braskem has been wholly dependent on imports of caustic soda to supply customers and EDC to maintain downstream polyvinyl chloride production.