Brazil’s sinking city weighs on Latin America’s largest petrochemicals producer

All around the Pinheiro Baptist Church is abandonment. On either side of its white steeple stand houses and shops with bricked-up windows, no roofs and tropical vegetation sprouting. 

“The cause was not divine,” says pastor Wellington Santos, whose chapel remains open in defiance of the desolation. “To this day, the language used is catastrophe, tragedy. And it’s not,” he adds. “It is a crime.”

What looks like the aftermath of a war zone is in fact an urban environmental disaster of allegedly man-made origin, which has forced an estimated 55,000 people to permanently evacuate their homes in the seaside city of Maceió, north-eastern Brazil.

The reason for the mass departures was slowly sinking soil, which triggered cracks in buildings and craters in roads. The blame has been placed — by an official geology agency, as well as locals — on decades of underground salt mining by Braskem, Latin America’s largest petrochemicals producer.

Since the problems first emerged in early 2018, some 14,400 properties have been condemned on safety grounds because of the risks of subsidence. The exodus has turned whole blocks in the capital of Alagoas state into virtual ghost towns. 

Braskem is now facing legal actions that could add considerably to the R$14.6bn ($3bn) it has so far provisioned for costs related to the incident, a sum not far off the chemical group’s current market value of $3.2bn.

The calamity not only casts a shadow over a potential blockbuster takeover of Braskem, which has attracted international interest. To corporate critics, it falls into a pattern of behaviour by natural resource companies in the South American country, where twice in the past decade mining waste dams have collapsed with devastating consequences.

“What has happened in Maceió is just another example of a large company making vast profits in Brazil, taking from the land and destroying the local environment and the local communities. To make matters worse they do not act properly and fairly when something does go wrong,” says Tom Goodhead, chief executive of Pogust Goodhead.

The law firm is bringing a case in the Netherlands, home to a Braskem subsidiary, on behalf of 10 victims who argue they were not offered fair redress.

After a judge in Rotterdam granted jurisdiction, a hearing on the merits is scheduled for February. The lawyers have not yet publicly quantified the damages they are seeking. But if there is a favourable ruling and another 60-70,000 affected parties lodge their own claims, Goodhead estimates the total alleged liability could reach $3bn.

While no direct fatalities have resulted from the geological disturbances in Maceió, there are accounts of suicides, livelihoods lost and communities torn apart. 

What looks like the aftermath of a warzone is in fact an urban environmental disaster of allegedly man-made origin. It has forced 55,000 people to permanently evacuate their homes in the seaside city of Maceió, north-eastern Brazil.

There are gutted tower blocks, middle-class homes and favela dwellings. The blame has been placed — by an official geology agency, as well as locals — on decades of underground salt mining by Braskem, Latin America’s largest petrochemicals producer.

One of the claimants in the Dutch lawsuit, Maria Rosângela Ferreira da Silva, believes the upheaval of her family having to move played a part in her elderly mother’s demise. 

“She went into a deep depression,” recounts the 60-year-old civil servant tearfully. “She was hospitalised and in shock at the change. And then she didn’t want to live anymore.”

On Maria Rosângela’s old street, in a corner of Pinheiro she says was once vibrant, overgrowth creeps through crumbling ruins. Nothing stirs except birdsong and the rustle of leaves. 

She recalls the close bonds between neighbours and outdoor parties organised on public holidays such as carnival. “All that is gone.”

Similar scenes scar five neighbourhoods in the city of 960,000 inhabitants, located on a stretch of coast famed for its beaches and crystalline waters.

There are gutted tower blocks, middle-class homes and favela dwellings. Buildings in imminent danger of collapse have been demolished and empty residential rows hidden behind metal fences, the roof tiles stripped by departing homeowners for money. About 3,600 businesses have closed, according to authorities.

Rock salt extraction underneath Maceió began in the 1970s and the business fell under Braskem’s control after its formation through a merger of six companies in 2002.

Brine was pumped to the company’s nearby plants manufacturing caustic soda and PVC, a plastic used in the construction, automotive and food industries.

Signs that something was wrong came to light when residents of Pinheiro noticed fissures in their homes following heavy rainfall in 2018. Weeks later an earthquake struck several neighbourhoods. Sinkholes appeared in roads, as splits spread in walls and floors.

A 2019 report by the Geological Survey of Brazil concluded that there was a direct link between the subsidence and the mining, because of instability in subterranean cavities left by the activity.

Braskem at first said the study was flawed and inconclusive. It now argues there are other contributory factors alongside the mining, such as the region’s geology and deficient drainage, sewerage and construction quality.

Even so, the company ceased rock salt extraction in 2019 and today imports the raw material. Braskem is filling in the 35 defunct wells as part of remedial works, and this year signed a R$1.7bn compensation accord with the municipality of Maceió.

The São Paulo-headquartered corporation has already paid out R$3.8bn in compensation, financial aid and relocation support, under a redress scheme agreed in 2020 with public prosecutors and defenders. It told the Financial Times that 93 per cent of the anticipated indemnification payments have now been made.

Braskem declined an interview request, but said it was “committed to repairing, mitigating and compensating” the impacts of the subsidence. It added that the Dutch proceedings were “still in the preliminary phase” with “no value assigned”, noting that five individuals had withdrawn from the action after reaching agreements. It also provides psychological services to those affected.

However, several residents told the FT they felt the amounts Braskem offered for their properties were too low. The company says anyone unhappy with proposals can request a re-evaluation and ask a court to determine the settlement. 

Another common complaint is that the fixed sum of R$40,000 per household for “moral damages” — non-financial harm such as mental distress — is inadequate and does not take into account individual circumstances.

Residents of areas outside the evacuation zones say they have become isolated because of the surrounding desertion. They complain of a rise in criminality and vermin, as well as the loss of amenities.

Braskem declined an interview request, but said it was “committed to repairing, mitigating and compensating” the impacts of the subsidence. The São Paulo-headquartered corporation has already paid out R$3.8bn in compensation, financial aid and relocation support under a redress scheme.

Community leader Augusto Cícero da Silva describes the amount as “shameful”. Now living 110km away from his old neighbourhood of Bebedouro, where he also ran a small grocery store, he returns for a few days each week to run a dwindling residents association.

“It was demoralising for these people who suffered so much and continue to suffer today,” says the 67-year-old. “There were people who died of heartbreak because of all this.”

Braskem said it had looked to “the jurisprudence on moral damages” in general and similar cases when defining the parameters. 

The public defender’s office for the state of Alagoas told the FT that it believed each victim should be paid R$70,000 and it expected to launch legal proceedings at the start of 2024. Braskem did not respond to a request for comment on the proposed action.

A judge also recently ruled the government of Alagoas — one of Brazil’s poorest states, which claims it suffered an impact of R$35.8bn from the disaster — was owed compensation with the amount to be calculated by an expert. Braskem intends to appeal against the decision.

“We’ve had damage and losses in taxes, job creation and the economic dynamics,” governor Paulo Dantas told the FT. He has urged Brazil’s federal audit court to suspend the sale of a controlling stake in Braskem by the construction conglomerate Novonor.

Adding further national scrutiny, a parliamentary inquiry into the episode is planned. The situation will be on the radar of the leftwing administration of President Luiz Inácio Lula da Silva, not least since Braskem’s other main shareholder is the state-controlled oil major Petrobras.

Meanwhile, those on the ground are bearing the brunt. Residents of the Flexais district, which is outside the evacuation zones, say they have become isolated because of the surrounding desertion. 

They complain of a rise in criminality and vermin, as well as the loss of amenities and a paucity of employment and public transport. Many want to be rehomed but do not qualify. 

“It’s taken away our dreams. I worry there’s no hope for him here,” says 34-year-old Jainny Vieira, rocking her baby son.  

Alongside security patrols and pest control for vacated areas, Braskem says it has funded a package of measures for Flexais, including a free bus route and youth training. It also plans to build a new health clinic, day care centre and school.

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But, says Jainny: “What people want is relocation.”

Others in the risk zones are determined to stay put. Nereu Rezende says his residence is the last one still occupied in Bebedouro. The 66-year-old musician has refused to leave because the cost to replace his home recording studio would be prohibitive. 

“I built this house brick by brick,” he said. “If they want me out, they can kill me.” 

Photography and additional reporting by Ricardo Lisboa