Brazilian petrochemical giant reaches $356M settlement with city where mining destroyed neighborhoods

Brazil’s petrochemical giant Braskem said Friday it had reached a $356 million settlement with a coastal city where four decades of the company’s rock salt mining destroyed five urban neighborhoods and displaced tens of thousands of people.

Around 200,000 people in the Alagoas state’s capital of Maceio were affected by the excessive extraction of rock salt, according to the Brazil Senate’s website. In recent years, several Maceio communities became ghost towns as residents accepted Braskem’s payouts to relocate.

The settlement — about 1.7 billion Brazilian reais — between Braskem and Maceio will be used for structural works in the city and for a residents’ support fund, the municipality said in a statement. The agreement does not invalidate negotiations between Braskem and the residents of the affected areas, it added.

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The company has so far paid over 3.7 billion reais ($775 million) in various compensations, including financial aid, Braskem said earlier this month. It said that Friday’s settlement “represents yet another important advance” in the issue of Alagoas.

According to Braskem, over 17,000 residents — or over 90% of all residents that the company plans to compensate — and over 5,000 businesses had received compensation by the end of June.

Local activists were less enthusiastic following Friday’s announcement.

Pastor Wellington Santos at the Baptist church in Pinheiro, one of the affected neighborhoods, said he recognizes the funds will be used to “modernize the city and make it even more beautiful,” but wondered whether any amount of money could compensate for the destruction.

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Alexandre Sampaio, who heads an association of the mining victims, said the full extend of the mining damage is difficult to comprehend.

“The real size of the damage caused to the health, education, social assistance, infrastructure, urban mobility, material and immaterial historical heritage is not clear,” Sampaio said.

Braskem is one of the biggest petrochemical companies in the Americas, owned primarily by Brazilian state-run oil company Petrobras and construction giant Novonor, formerly known as Odebrecht.

Petrobras is currently negotiating a potential sale of Braskem.

Rock salt mining is a process of extracting salt from deep underground deposits. However, brine-filled cavities left behind when the salt has been extracted can eventually collapse, causing the soil above to settle. Structures built on top of such areas can topple.