MercoPress. South Atlantic News Agency

Sixty days “truce” for contested pulp mills construction

The World Bank's private sector arm released Monday a draft study of the expected social and environmental impacts of two contested pulp mills in neighbouring Uruguay, and said it would not decide on funding the projects for at least two months.

The preliminary review by the International Finance Corp. found air emissions and water discharges from the plant would be safe and said it would discuss the mills' effect on traffic, tourism and labor with Uruguay and Argentina.

"Both mills will be constructed using the best available pollution control technology, and the plants will meet World Bank Group and European Union standards" pointed out the IFC.

The report said it expected tourism in areas near the plants -- on the banks of the Uruguay River, a natural border with Argentina -- would see "limited" impact from the mills, noting "the visual impact of the mills on tourist areas will be low".

However the governor of Entre Rios province, just across from where the pulp mills are to be built in Fray Bentos, Uruguay argued that the environmental impact report was based on information from a survey undertaken by a consultant "close" to World Bank interests and warned he would continue with his crusade to stop the "contaminating" massive investment estimated in over 1.5 billion US dollars.

"If necessary we'll go all the way to the International Court of Justice in The Hague", said Governor Eduardo Busti

The IFC estimates that over 7,000 workers could be needed to build the plants, causing an influx of workers into the region, boosting employment and also requiring more housing and health, education and transport services.

"The two roads leading to the plants will witness a marked increase in traffic levels and could reach a level of 580 trucks per day," the Washington-based lender said.

The IFC has proposed nearly 400 million US dollars to help finance the mills' construction, which is the major investment in Uruguay in the last three decades.

The Argentine government argued the plants, to be built by Finland's Metsa-Botnia and Spain's Ence could emit harmful toxins into the air and water and called for the projects to be halted until an in depth independent assessment was completed.

This originally caused a diplomatic rift between Uruguay and Argentina but the President Kirchner administration has said it will abide by World Bank decisions and emphasized is not intent in frustrating productive investments involving shared waters as long as there are no environmental consequences. However Governor Busti insists that the whole project will pollute the river Uruguay waters and contaminate the air in a rich farming and livestock region.

Before deciding on financing for the projects, the IFC said it would make its draft review available for public comment for a minimum of 60 days and conduct four review sessions with stakeholders in Uruguay and Argentina.