MercoPress. South Atlantic News Agency

Second pulp mill in Uruguay delayed until 2008

Spain's forestry and pulp company ENCE announced Tuesday in Madrid that is was delaying construction of a pulp mill in Uruguay until 2008.

The announcement follows the company's recent decision to relocate the pulp mill, after intense protests from Argentine environmentalists. Originally the pulp mill was to be built next to a river which acts as a natural border between Uruguay and Argentina.

The mill together with a second one under construction by Finland's Botnia and involving an overall investment of 1.7 billion US dollars triggered an environmental dispute between Argentina and Uruguay which ended in the International Court of The Hague and in the Mercosur Dispute Tribunal.

Ence also said that in the coming six months it will decide on the new location of the mill and is currently assessing several options in accordance with Uruguayan authorities.

When the conflict with Argentina broke out, which also includes Botnia, Spain's Ence had already suspended all activities in the future pulp mill. However Ence later ratified the investment and anticipated it would be working by 2010.

"There's no doubt in my mind that we will build the pulp mill in Uruguay. The new location will be decided in the next six months and the production capacity will be a million tons annually", said Ence's delegate Pedro Oyarzabal.

Ence which has been operating in Uruguay for over a decade owns extensive forested land plus a couple of chip factories which are loaded directly to vessels.