Talks between Uruguay's government and Finnish pulp and paper maker UPM on a new pulp plant project in the Latin American country are proceeding, Uruguay's president Tabare Vazquez said on Monday.
Uruguayan media reports said last month that UPM and the local authorities were close to reaching a deal on a project to construct what would be the company's second pulp mill in the country, and which would cost in total US$4 billion.
UPM has confirmed initial talks but has denied that any quick deal is in sight, citing uncertainties regarding local infrastructure development and labor disputes.
Vazquez, who had traveled to Finland to meet politicians as well as UPM's management, said the talks had progressed. We are working intensively and we have high hopes that this investment will become a reality, he told a news conference.
He said the talks were still at the first of three stages, which can take up to four years, adding that the parties were seeking to complete the initial negotiation stage by the end of March.
Finnish pulp projects in Uruguay have faced difficulties in the past. UPM's current mill in Fray Bentos, originally built by Metsa Group, caused a dispute between Uruguay and neighboring Argentina, while Stora Enso's US$2 billion joint venture mill in Montes Del Plata was delayed by strikes and other labor issues before it finally opened in 2014
President Vazquez and several ministers were hosted at the Biofore House in Helsinki by UPM's President and CEO, Jussi Pesonen.
During the visit Pesonen presented UPM's operations highlighting, among other things, the importance of cost competitiveness and the fundamental role of logistics infrastructure in all environments where UPM operates.
Pesonen appreciated Uruguay's long-standing commitment in developing forestry sector in the country.
The visit to Europe is an example of that commitment, actively building and strengthening networks to continue this development, says Pesonen.
In July 2016, UPM started discussions in Uruguay with the Government of Uruguay on the local prerequisites for long-term industrial growth. The discussions in Montevideo have proceeded in a positive spirit. However, at present, a number of issues remain unsettled and the discussions continue, said the release from UPM.
The urgency of the Uruguayan government to reach an accord with UPM is not new and speculations about such advances forced the Finnish company last January to make an official release concerning an alleged pulp mill investment in Uruguay.
UPM states that it is not engaged in negotiations on a pulp mill investment with the Uruguayan government. As earlier announced, the company is considering prospects and prerequisites for long-term development in Uruguay. Currently UPM is engaged in discussions with the Government of Uruguay on infrastructure development.
The discussions with the Government of Uruguay have proceeded in positive spirit. The start of any investment project concerning a potential pulp mill would require a satisfaction of several requirements, one of them being a positive conclusion of the negotiations with the Government of Uruguay on the infrastructure development. However, at present, the discussions have not been concluded and a number of issues remain unsettled”.
Finally UPM will not comment on the negotiations in any further detail and will inform of potential progress as required under the applicable laws and regulations.