Brazil federal agency seeks billions against Braskem in salt-mine case

HOUSTON (ICIS)–A federal agency in Brazil has filed a petition against Braskem, seeking billions of dollars in reparations involving damage that the company’s salt mine had caused in the northeastern state of Alagoas.

Brazil’s Federal Public Ministry (MPF), similar to a department of justice, filed a public civil action, requesting that Braskem should be responsible for societal and environmental damage worth at least real (R)20.5bn ($5.07bn), it said.

The MPF wants the liability to be extended to Braskem’s two major shareholders, construction company Odebrecht and state-energy producer Petrobras.

Given the scope of the damage, the MPF wants the three to be responsible for establishing a fund worth 15% of the minimum repair bill, or R3.075bn. The working capital in the fund cannot fall below R2bn.

Once the MPF determines the scope and duration of the repairs, the fund must be large enough to cover 12 months of expenses, it said.

Odebrecht did not immediately respond to requests for comments. Petrobras said it had no comment.

Braskem acknowledged that it received the petition. Braskem said it would take any legal action as appropriate in regards to the petition.

The salt mine at the centre of the MPF’s petition had caused subsidence and fissures in the neighbourhoods of Pinheiro, Mutange and Bebedouro in the city of Maceio in Alagoas state.

Brazil’s Geological Service (CPRM) released a report saying that Braskem’s salt mine was the cause of the damage. The fissures are not just unsightly cracks. On 3 March 2018, the CPRM detected an earthquake in Pinheiro.

Braskem has since suspended operations at the mine. This has caused a chain of shutdowns. The mine provides brine to a chlor-alkali plant that also was shut down, as well as a downstream ethylene dichloride (EDC) unit.

The report from the geological service came out while LyondellBasell was still in talks about acquiring Braskem with Odebrecht, the company’s controlling shareholder.

LyondellBasell has since ended the discussions, without giving a reason.

Odebrecht has filed for bankruptcy protection for reasons unrelated to the salt mine.

(adds Petrobras comment, paragraph 6)

($1 = R4.04)