News Code : 43673

Petrotahlil :Brazilian petrochemical producer Braskem has told the country's National Mining Agency it will permanently cease salt mining operations shut since May.

In a market statement released late Thursday, Braskem said it would end salt extraction in Maceio, the capital city in the Brazilian state of Alagoas, and close down the wells.

Braskem also proposed creating a protection area around certain wells, which will involve resettling about 1,500 people, vacating about 400 properties and taking additional monitoring measures.

Braskem said those measures were based on a study conducted by the Institute of Geomechanics of Leipzig in Germany, and must be implemented in coordination with Brazil's Civil Defense and other authorities.

Braskem began salt mining in Maceio in 1975, and shut the operation in May after the Brazil Geological Survey (CPRM) released a report linking the salt extraction to geological damage in the area, including fissures and cracks in foundations, as well as a minor earthquake in March 2018.

The company also shut the larger of its two chlor-alkali plants and its sole ethylene dichloride (EDC) plant in Brazil, because salt is needed to make chlorine, which makes EDC when mixed with ethylene. EDC is a precursor to construction staple polyvinyl chloride, used to make pipes, window frames, vinyl siding and flooring, and other products.

LOOKING FOR ANOTHER ALAGOAS SITE

The shutdowns forced Braskem to secure regular imports of EDC to maintain PVC production, as well as caustic soda, a byproduct of chlorine production that is a key feedstock for alumina and pulp and paper industries.

Those imports have largely come from the US. Through August this year, Brazil had received 181,447 mt of US-origin EDC, 81% more than in 2017 and more than double the flows in 2018, according to US International Trade Commission data.

Brazil also is the top export market for US caustic soda. From January through August this year, those flows reached 1.77 million mt, 18% higher than flows during the same span in 2018, USITC data showed.

Braskem has been trying to find another place in Alagoas to possibly establish a new salt mining operation, because the company lacks the infrastructure to import salt, which is required to restart the shut plants.

The company also is challenging the CPRM's conclusions that its activities caused the geological damages.

"As for the geological phenomenon that occurred in Maceio, Braskem will continue to collaborate with authorities, with the support from independent specialists, to identify the causes and to implement the necessary actions," the Braskem said in Thursday's statement.

Braskem is slated to release its third-quarter 2019 results on Monday, followed by a conference call featuring company executives.

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