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Shell, BASF Agree to Settle Brazil Contamination Case for $187 Million -Court

The Brazilian units of Royal Dutch Shell PLC (RDSB.LN) and Germany’s BASF (BASFR) agreed to pay 370.8 million Brazilian reais ($187 million) to settle a lawsuit over suspected contamination at a now-shuttered pesticide plant, Brazil’s Supreme Labor Court said Monday.

The completed settlement brings to a close a court dispute first initiated in 2007, when workers at the plant filed a court case after the discovery of low concentrations of a pesticide chemical in ground water and soil around the site of the Paulinia facility in the 1990s. Shell and BASF had previously said they had accepted a settlement proposed by the court as part of conciliation hearings.

The court had been expected to finalize the settlement last month.

The settlement comes as the president of Shell’s local unit said recently that the company is interested in auctions of oil and gas exploration licences this year.

Shell sold the Paulinia pesticide facility, which is located around 100 kilometers (63 miles) from Sao Paulo, in 1995 to Cyanamid Company. In 2000, BASF bought the Paulinia plant, which was then closed in 2002.

The settlement includes damages of BRL170.8 million for the 1,058 workers involved in the lawsuit and BRL200 million to be spent on the construction of a local maternity hospital and two medical centers focused on workplace health and safety.

Shell previously said it regrets that there was environmental contamination at the Paulinia site but, based on numerous medical studies, it believes there is no link between the company’s industrial activities in Paulinia and health problems.

Since the environmental impact from industrial activities in the city of Paulinia was discovered, Shell has taken extensive measures to remedy the area and bought back the site in 2008 to make it easier to conduct the remediation work, the company added.

–Selina Williams in London contributed to this report.

Write to Jeff Fick at [email protected]

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