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Shell, BASF agree to pay-out over Brazil chemical contamination

* Labor prosecutors say chemical contamination killed 60

* Government shut down pesticide plant in 2002

* Shell doubts link between chemicals, worker injury

BRASILIA, March 11 (Reuters) - Oil producer Shell and German chemical company BASF agreed on Monday to pay compensation that could reach 620 million reais ($316 million) to workers exposed over three decades to toxic chemicals at a Brazil plant, prosecutors said.

Brazil’s public labor prosecution service said 60 people were killed from prolonged exposure to chemicals used to make pesticides at the plant. The factory began operating in the 1970s in Paulinia in Sao Paulo state until government authorities ordered it to shut down in 2002.

The companies have agreed to pay individual compensation to 1,068 former workers at the plant and provide them with lifetime medical care, which prosecutors estimated could total up to 420 million reais.

Shell and BASF would also make a separate 200 million reais payment for collective moral damages which would be used to build a maternity clinic in Paulinia and for donations to special health centers.

Shell has maintained throughout the case, brought in 2007, that it believed there was no link between the operations at the plant and injury to workers’ health, but it said it regretted the environmental contamination that occurred.

Seventy-six workers pursuing individual court action must also decide within 30 days whether to take the compensation offer which would require them to drop their own cases.

Shell built and operated the factory until it sold it to chemicals company Cyanamid in 1995, which in turn sold it to BASF in 2000. BASF produced pesticides at the plant for only two years before it was shut down.

Shell became the owner of the site again in 2008 when it bought it from BASF but the plant remains shut.

Spokespeople for Shell and BASF based in Brazil confirmed the two companies had agreed to the compensation deal, whose total amount would be worked out over the next 10 days.

Gislaine Rossetti, a spokeswoman at BASF, told Reuters the companies would not disclose the proportion of the total compensation each would pay. Shell would be solely responsible for reparations linked to soil pollution, she said.

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