(Adds comments from Braskem executive regarding settlement details)
By Alberto Alerigi and Jamie McGeever
SAO PAULO/BRASILIA, Jan 3 (Reuters) - Brazilian petrochemical producer Braskem SA has agreed to a 2.7 billion reais ($667 million) settlement with federal and state authorities in the northeastern state of Alagoas to cover damage caused by a salt mining project there.
Preferred shares in the company surged as much as 8% on the news, to a five-month high and on track for their biggest one-day gain since May 20, as investors breathed a sigh of relief that the amount of damages to be paid was not higher.
The rise goes some way to reversing losses of 35% suffered by the stock last year.
According to a securities filing on Friday, 1.7 billion reais is for financial compensation and relocation of some 17,000 people in the state capital Maceio, while 1 billion reais will be used to close the company's rock salt wells in the city.
Prosecutors had alleged the mine caused large cracks in the ground and serious damage to real estate in the city, which was backed up by a report by the Brazilian geological service in May. Braskem disputed this.
Marcelo Arantes, the company's vice-president for communications and sustainable development, told Reuters that the agreement does not mean the company is taking responsibility for all of the ground issues in the city.
Andrade said the company is still working on technical analysis of all the wells it operates in the area in order to better understand the possible connection to areas where the ground has collapsed.
The company has two years to relocate people and pay compensations, Andrade said, adding he believed there was only a "minimal" chance of the agreed costs increasing.
When Braskem proposed to the National Mining Agency in November the steps it would take to close the Maceio salt wells, it estimated that around 400 buildings and 1,500 people would be affected, while the city of Maceio's estimates were more than 9,600 properties and over 40,000 people.
In Friday's securities filing, Braskem also said the authorities accepted its request to free up 3.7 billion reais that had been frozen since June.
Braskem's preferred shares rose to 32.81 reais, the highest in five months, strongly outperforming the wider Bovespa index of leading Brazilian shares which spent most of Friday trading between 0.5% and 1% lower. ($1 = 4.06 reais) (Reporting by Jamie McGeever and Alberto Alerigi; Editing by Jonathan Oatis and Alistair Bell)