MercoPress. South Atlantic News Agency

Uruguay confirms third pulp mill project, but to the east of the country close to Brazil

Montes del Plata on the River Plate should begin production in early 2014

Finland's UPM/Botnia plant, which is an ongoing motive of dispute with Argentina is planning a second pulp mill but to the east of Uruguay, announced Vice-president Danilo Astori, confirming a previous statement from the First Lady and Senator Lucia Topolansky.

 “There is a third pulp mill project, from UPM, but to the east of the country” said Astori, while Senator Topolansky underlined that “there are no plans at all for another pulp mill on the River Uruguay, but yes a third mill will be constructed to the east, close to the Brazilian border”.

Astori added that “the forestry industry expansion in Uruguay is far from over”. Uruguay already has two pulp plants: UPM, former Botnia on the shared river Uruguay and a motive of ongoing clashes with Argentina, and Montes del Plata, from Chile's Arauco and Finland's Stora Enso, in Colonia to the south east on the River Plate and which should be operational in early 2014.

Once UPM implements its recently allowed production expansion and Montes del Plata begins to roll, between the two output will be over three million tons a year.

The project of a new pulp mill comes in the midst of a conflict with Argentina over UPM' latest production expansion authorized by the Uruguayan government to the fury of Argentina which has again threatened to take the case to the International Court of The Hague, plus the usual bullying tactics: doubling the delay for Uruguayan exports to Argentina and explicitly limiting the activities of Uruguayan ports.

This has been achieved by banning all Argentine exports from being shipped from Uruguayan ports, mainly Montevideo, arguing the lack of an agreement on the issue with Uruguay in the framework of Mercosur, and drastically increasing the cost for barges from Paraguay, whose cargo is shipped overseas from Uruguayan ports, Nueva Palmira.

Tugs pulling barges down the Paraná River crossing Argentina, now 'for safety reasons' instead of the usual 16 or 12, have to cut the number by half, leaving the other 8 or 6 docked and waiting in Rosario, and obviously paying rates and more than doubling costs for the overall operation.

The UPM mill which Argentina is constantly claiming is a hazard for the environment, but with no conclusive scientific data, started production in 2007. For over four years the international bridge linking the neighboring countries, and next to the mill, was blocked by Argentine pickets to protest the construction of the plant.

In 2010 The Hague International Court of Law ruled that the plant did not contaminate according to the standards agreed, thus favoring Uruguay, but at the same time ordered a standing monitoring of the water and air of the region to analyze the degree of pollution, if any.

Since the construction of UPM, the forestry industry and exports of pulp and wood figure among Uruguay's short list of main export items.