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Braskem faces losses from Brazil blackout

By: Bob Moser
PLASTICS NEWS CORRESPONDENT

September 6, 2013

SÃO PAULO, BRAZIL — Braskem SA will lose nearly BRL50 million ($21.9 million) due to a blackout in Brazil's northeast last week that interrupted production at its plants, President Carlos Fadigas said Friday during an event in São Paulo.

The financial loss, which Fadigas deemed a preliminary calculation, will impact Braskem's third quarter financial results. A blackout hit Brazil's northeast last week for around three hours, affecting a majority of cities in the region.

The financial value represents the cost of interruption at the company's plants in the states of Bahia and Alagoas, the length of time the plants were idle, and the cost of restarting machinery. Braskem plants in the two states required four to five days to resume operations.

Braskem's estimated losses do not take into consideration the potential increase in costs that will occur in the near future, to the tune of a few million reais, if more costly power must be purchased by the company's plants. A majority of Brazil's energy in the northeast comes from hydroelectric and wind power plants.

Braskem's losses could have been worse, the company's president said, if not for investments that had already been made to ready its plants for blackout scenarios.

The company has invested in loss prevention and blackout recovery plans since February 2011, when the country's last major blackout resulted in Braskem needing four months to return some plants to full production.