UN Unilever NV

NEW DELHI—Unilever PLC said that it has agreed to compensate hundreds of workers of a now-closed production facility in southern India, ending a decade-old dispute over alleged mercury poisoning and corporate negligence in India.

In a statement Wednesday, the Anglo-Dutch consumer giant said it agreed to pay 591 former workers on "humanitarian considerations."

"We have worked hard over many years to address this and find the right solution for our former workers," Dev Bajpai, Unilever's head of legal affairs in India, said in a joint statement with the facility's former workers association. "We, alongside all involved, are glad to see an outcome to this long-standing case."

Unilever didn't disclose the amount or the terms of the settlement, but said workers had decided to drop a 2006 lawsuit against the company in exchange.

"We are pleased with all the terms," S.A. Mahindra Babu, who led the former workers' association, said according to the statement. "We now consider this issue to be fully resolved and have no more grievance against the company," he added.

Activist groups and former workers have blamed Unilever for dumping toxic waste outside a thermometer plant in Kodaikanal, a hill town in the southern state of Tamil Nadu. In 2001, rights groups, led by Greenpeace International, said the facility had sold a stockpile of crushed glass, tainted with mercury, to a scrap dealer near the plant. Unilever acknowledged the sale had happened and that it violated its practices. It shut down the facility in response.

"There were strict processes in place for recycling glass scrap with residual mercury. It was these procedures that had been breached," the company said at the time. It, however, denied polluting factory surroundings.

In 2006, plant workers took the company to court, alleging their health had severely deteriorated from exposure to mercury inside the facility. Excessive mercury exposure is known to cause nervous breakdowns, kidney failure, and in severe cases, death. Activists alleged more than 30 workers had died prematurely—an allegation Unilever denied.

A court-appointed committee concluded in 2007 it found no evidence to show workers' health had suffered. Unilever said its own studies, as well as those conducted by several independent bodies, found workers' health hadn't been affected. Meanwhile, a study published by India's Ministry of Labor and Employment in 2011 alleged the exposure hadn't just hampered the lives of workers, but also taken a toll on their newborn children. Unilever challenged these findings.

The long-standing conflict resurfaced last year after a rap song, inspired by Nicki Minaj's hit single Anaconda, went viral on social media. The song, composed by a Sari-draped Indian rapper, called for Unilever to "clean up your mess," and prompted a public debate over what was until then being discussed in courtrooms.

Chief Executive Paul Polman responded to the outcry sparked by the song, tweeting from his verified account that the issue called for "facts not false emotions." He added the company was "determined to solve" the matter.

"People power works. That's the key lesson we're drawing from today's big announcement," Rachita Taneja of Jhatkaa.org, an activist group that lobbied for the workers, said in a statement Wednesday.

"The settlement is a victory of the workers and the local campaigning efforts," Greenpeace said in a statement Wednesday. "But there remains other unfinished business related to the factory: the need for a thorough environmental remediation of the site," it added.

Unilever said it was already working with local authorities and had sought permission to carry out soil remediation around the facility. "We have been working hard to resolve this issue, but we are not able to commence the cleanup until we receive consent," the company said. "We are eagerly awaiting this so we can begin work as soon as possible."

Write to Preetika Rana at preetika.rana@wsj.com

(END) Dow Jones Newswires

March 10, 2016 07:35 ET (12:35 GMT)

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