Oil and Gas

Brazil's Braskem says 1,918 homes must be evacuated as mine crisis lingers

SAO PAULO, July 9 (Reuters) - Brazilian petrochemical giant Braskem SA said on Thursday it had been told by authorities in northeastern Brazil that residents of 1,918 homes had to be evacuated due to a geological event it has been accused of causing, and it was making an additional 1.6 billion reais ($305 million) in provisions.

Federal and state prosecutors in the state of Alagoas had written to the company, alerting it of the need to move the residents, Braskem said in a filing. It was in talks to define possible measures to be adopted by mutual agreement, considering it was not automatically obliged to support the evacuations, it said.

Prosecutors have alleged that a Braskem mine caused large cracks in the ground and serious damage to real estate in the city of Maceió, which was backed up by a report by the Brazilian geological service in May. Braskem has disputed this.

In January, the company announced a deal with prosecutors to provide 1.7 billion reais ($387.4 million) over two years to relocate and compensate 17,000 residents, though it did not admit blame for the damage.

The evacuations referred to on Thursday indicate that the scope of liability is expanding for the company.

Braskem said it expected the cost of moving the additional residents would be 850 million reais, with another 750 million reais for additional measures relating to the permanent closure of salt extraction activities in Maceió.

Brazil-listed shares in the company fell 4.3% at the opening, while Brazil’s benchmark Bovespa equities index was flat.

$1 = 5.25 reais Editing by Gabriel Stargardter and Bernadette Baum