Braskem, the company fined for damages in Maceió and coveted by an Arab state-owned company

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The crisis in the capital of Alagoas, caused by rock salt extraction, comes at an important time for the petrochemical company, which received an offer from a state-owned company in the United Arab Emirates at the beginning of November. Braskem sign next to a building that had to be evacuated in Maceió (AL) MAIRA ERLICH/BLOOMBERG VIA GETTY IMAGES/BBC The crisis arising from the risk of collapse of a rock salt mine in Maceió (AL) has brought it into focus Braskem, a global petrochemical company with origins in Brazil. The Environmental Institute of the State of Alagoas (IMA-AL) reported on Tuesday (05/12) that it fined the company more than R$72 million for problems related to mine 18, in the Mutange neighborhood. The IMA demands that the company be punished for environmental damage, the risk of collapse and the omission of information relating to the mine. In a note sent to BBC News Brasil, Braskem said the accusation that it omitted information from the IMA was “untrue.” “Immediate communications were made to the competent bodies, including the IMA, regarding the changes captured in the monitoring network data, as well as the security measures adopted by the company,” said the company. Also on Tuesday, the Brazilian stock exchange, B3, announced that, due to the situation in Maceió, Braskem was excluded from its Corporate Sustainability Index (ISE) — which tracks the performance of the assets of companies that are committed to issues environmental, social and corporate governance. Braskem did not respond to a request for a position made by the report on B3’s decision. The company — the largest in Latin America in the petrochemical sector and among the largest in the world — states that it continues to monitor the situation of mine 18, whose risk of collapse caused the Civil Defense of Maceió to issue an alert on the 29th and forced several families to evacuate their homes. In a bulletin about the crisis published by Braskem on its website on Monday (4/12), the company states that it continues to monitor the situation at the mine 24 hours a day and that the area remains isolated. However, the company found that the speed of ground movement has been decreasing and says that no new tremors were detected. How the situation will unfold, however, remains unclear for both residents and the company’s business. On Friday (1/12), the risk rating agency Fitch stated that the crisis in Maceió threatens Braskem’s ratings (a note that seeks to indicate the ability of companies and countries to honor their debts) and its cash flow. “Another geological event at the petrochemical facilities could substantially increase the number of new lawsuits against the company and impact its ability to access capital markets, as investors are more restrictive and concerned about environmental, social and governmental issues (ESG). , its acronym in English)”, says Fitch’s analysis. “At the moment, the consequences of a potential incident are still uncertain,” said the agency in a comment on the crisis in Maceió. On Friday (01/12), the Minister of Transport and licensed senator from Alagoas, Renan Filho, who was governor of Alagoas, attributed responsibility for the case to Braskem. “Braskem’s responsibility is total. In Brazil, environmental legislation imposes the crime on those who commit it,” he said. When contacted at the time, the company did not comment on the minister’s statement. Signaling ‘escape routes’ in Maceió MAIRA ERLICH/BLOOMBERG VIA GETTY IMAGES/BBC In August, Fitch had rated Braskem with a BBB- rating on a global scale and AAA on a national scale. The outlook on a global scale was downgraded from stable to negative, while the national metric remained stable. The downgrade at an international level was justified by Fitch due to “Braskem’s high vulnerability to the prolonged recession in the petrochemical sector”. On the other hand, the agency stated that “geographic and raw material diversification is an important pillar of Braskem’s business profile.” Braskem’s 2022 annual report shows that its revenue was R$96.5 billion. Since the 29th, with the beginning of a new chapter of the crisis in Maceió, Braskem’s shares on B3 have been falling. The crisis comes at an important time for the company, whose largest shareholders are Novonor (formerly Odebrecht) and Petrobras — the former with 38.3% of Braskem’s total capital and Petrobras with 36.1%. In early November, Adnoc, the United Arab Emirates’ state oil company, made an offer of US$2.1 billion (R$10.3 billion) to acquire a large part of Novonor’s stake in Braskem. The newspaper O Estado de S. Paulo published that, according to a source, the offer did not excite the parties. A BBC report revealed that the United Arab Emirates intended to use COP28, the Climate Change Summit, to request support from Brazil’s Environment Minister, Marina Silva, to “guarantee alignment and endorsement” of the offer for Braskem. Questioned by the Folha de S.Paulo newspaper, Marina Silva stated that “under no circumstances” did she discuss the matter with representatives from the United Arab Emirates. “I have no control over the issues that people say they will address [comigo], but it was not treated with me. And if it had, it would have been with the wrong person, because what do I have to do with Braskem?”, the minister told the newspaper. She also made statements about the Braskem mine in Maceió. In Germany, Marina Silva stated on Tuesday that the project in the capital of Alagoas is “disastrous” and called for greater rigor in the environmental licensing processes. Meanwhile, Braskem decided to cancel its participation in COP28 due to the “worsening of the crisis in Maceió.” ‘I will forever love my house’, says graffiti in Bebedouro, one of the affected neighborhoods in Maceió THIAGO SAMPAIO/EPA-EFE/REX/SHUTTERSTOCK/BBC On its website for investors, in the “Controversies” section, Braskem explains its history of rock salt exploration in Maceió. The company claims that it has been exploiting salt since 2002, a raw material for the production of chloro-soda and dichlorethane. In 2018, the first cracks in buildings and houses were recorded, in addition to a tremor in the city. In 2019, it was reported Braskem’s activity as a possible cause of the incidents. There was an evacuation in the neighborhoods of Pinheiro, Mutange and Bebedouro. “On May 9, 2019, Braskem preventively decided to halt rock salt extraction activities in the region, and in this context, began an investment project to acquire sea salt from third parties as raw material for the plant in Alagoas “, says the company’s website. Braskem responds to several legal actions regarding the situation in Maceió, including public civil actions and individual actions. The company has already signed some agreements with the Public Ministry and the Public Defender’s Office, at the state and federal levels. According to calculations by the UOL portal, Braskem has already disbursed R$9.2 billion in financial compensation to public authorities and residents since 2020. The company states that, by the end of October, it had presented 19,085 compensation proposals to families, of which 18,533 were accepted and 17,828 were paid. Braskem plant in Duque de Caxias (RJ) MARIA MAGDALENA ARRELLAGA/BLOOMBERG VIA GETTY IMAGES/BBC In a report at the end of September, Braskem stated that, although it already has agreements in progress and has set aside funds for this, the final cost of situation cannot yet be predicted. “The company cannot rule out future developments related to the geological event in Alagoas, the relocation process and actions in unoccupied and adjacent areas, so that the costs to be incurred by Braskem may be different from its estimates and provisions”, says an excerpt of the company document. Braskem was founded in 2002 from the integration of companies from the Odebrecht and Mariani groups, both Brazilian. Today, the company has offices and industrial units in 11 countries. The company’s range of products includes solvents, resins and other chemicals used in various industries, such as food packaging, automobiles and paint production.

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