Brazil: Heineken challenged by local businessman over water rights

In a more than 20-year-old dispute local businessman, Maurício Brito Marcelino da Silva is fighting in court with the government to gain the rights to mineral resources, including those used by Heineken for the water in their plant in Alagoinhas, Bahia state. If successful, Heineken will have to pay for the water or stop brewing, according to a recent report by Financial Times.

The Bahia plant was bought by Heineken early last year as part of the $700 million take-over of Brasil Kirin when the Japanese brewer Kirin Holdings Co withdrew from the South American market after unsuccessfully trying 6 years to turn Brazilian’s No. 2 brewer Schincariol into a profitable business. (inside.beer, 13.2.2017)

In 1997 Schincariol bought a piece of land near the town of Alagoinhas, 120 km north of Salvador, the capital of Brazil’s northeastern state of Bahia. The plot was originally part of a larger territory which was sold to Mr. da Silva one year before for exploiting phosphate. The National Department of Mineral Production (DNPM), allowed him rights to just three-quarters of the total area, saying the remainder was in an urban zone to protect the town from the pollution associated with mineral exploitation.

After a long battle an appeals court in 2015 awarded Mr. da Silva the rights over the spring, saying it was outside the urban zone. In late July the government’s attorney-general rejected this interpretation of the decision, which Mr. da Silva now tries to enforce by court. His lawyers ask now for a daily fine of R $ 50,000 (US$ 12,000) in case of non-compliance.

Heineken does not seem to be too much worried about the proceedings. “Heineken Brazil informs that its plant in the city of Alagoinhas has been in operation more than 20 years in conformity with all of the current legislation, generating jobs and income for the Bahian population,” said Heineken in an official statement. Moreover, the Dutch brewer points to the fact that it is not a party to the case as the legal fight concerns only Mr. da Silva and the government.

 

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