MercoPress. South Atlantic News Agency

Uruguay displacing Argentina in forestry industry

Uruguay is rapidly displacing Argentina in the South American forestry and pulp industry and ranks only behind Brazil and Chile.

Carlos Faroppa, a consultant for the Finnish paper and pulp consortium Botnia which is constructing a pulp mill in Uruguay said that Argentina is lagging in investment both in developing new forests and in increasing its paper and pulp capacities.

Addressing a gathering of businessmen on Tuesday at Uruguay's Chamber of Industry sponsored by the Uruguay/Germany Chamber of Commerce, Mr. Faroppa revealed that according to the Forestry Investment Attraction Institute, (FIAI) Argentina "seems to have accepted the fact that it no longer occupies the third position in annual pulp manufacturing".

The FIAI index in 2002 showed Argentina and Uruguay virtually tied with 44 points, behind Brazil with 60 and Chile 53 points.

"Argentina and Uruguay were technically tied at the time, but when the two pulp plants currently under construction in Fray Bentos next to the river Uruguay, across from Argentina, begin production, Uruguay will rapidly advance to an undisputed third place", forecasted Mr. Faroppa.

When the two plants are in full operation in 2007/08, "Uruguay will be producing over 1.5 million tons of pulp, while Argentina will remain stagnant with a million tons"

Mr. Faroppa added that following its pioneering thrust, Argentina became stagnant and has been unable to expand production, with an increasingly negative balance regarding forestry industry produce exports and imports. Uruguay on the other hand is moving in the opposite direction with exports programmed to expand steadily in the coming years.

"Uruguay is rapidly becoming a new forestry pole for the industry" and that can be attributed to the ongoing "governments' forestry policy", "a (several decades) long term policy which is now beginning to flourish", said the consultant.

Mr. Faroppa also suggested that the advance of Uruguay in the forestry and pulp industry could very well be "another reason for Argentina's attitude regarding the construction of the pulp mills in Uruguay".

The Argentine government arguing "environmental" reasons has repeatedly requested that the pulp mills construction be suspended until a full independent environment impact report is done.

Argentina has announced that in the first week of May it will present the bilateral dispute case before the International Court of The Hague. The Kirchner administration claims that Uruguay violated at least three times the 1974 bilateral statute of the river Uruguay which commits both countries to consultations and consensus, regarding any major investment in the border river.