MercoPress. South Atlantic News Agency

Uruguay tells Stora Enso: no new pulp mills next to Botnia

The huge Botnia plant at the heart of the dispute with Argentina

Uruguayan president elect Jose Mujica said Friday that Finland’s Stora Enso will not be constructing a pulp mill along the border with Argentina close to where another mill, Botnia is already functioning and has led to an ongoing conflict with the neighbouring country.

During a meeting with businessmen Mujica said that such an initiative would only help “to multiply conflicts” since Botnia, (in full production) is at the heart of a sustained controversy for at least the last four years.

“The future government is going to maintain its policy of favouring foreign investment in Uruguay”, but “we can’t encourage a concentration of mills in a place it will only multiply the pressure and conflict; this is also strategic”, said Mujica who is scheduled to take office next March first.

At the meeting he appealed to the “intelligence” of business leaders and investors, and “not imposition”, underlining “don’t ever ask us what we can’t give you”.

Following his statements at the meeting Mujica revealed he had received a phone call from Stora Enso officials assuring him that Fray Bentos, where Botnia is located, will not be chosen to set up the mill they are planning, “they have other sites in mind”.

As to the conflict with Argentina over Botnia, that is currently before the International Court of The Hague and a ruling is expected in the first half of 2010, Mujica said he trusts an understanding can be reached and if needed “I will meet with the Holy Spirit; I’m going to meet and talk with everybody to find a solution”.

Last October Stora Enso and Chile’s Arauco teamed up to buy the assets in Uruguay of Spain’s Ence with the purpose of constructing a pulp mill. Besides a site on the River Plate to build the plant Ence sold the group 160.000 hectares of forested land.

Argentina claims Uruguay never consulted her about the decision to authorize the construction of the 1.1 million tons annual production Botnia mill along a shared border river which is jointly managed by a treaty dating back to the seventies.

Argentina has taken the case to The Hague and for over two years now pickets on the Argentine side are blocking all traffic across an international bridge leading to Uruguay alleging the mill contaminates.

Mujica who has a good personal relation with Argentine President Cristina Kirchner and her husband and strong man Nestor Kirchner has promised to end the conflict and considers the relation with the neighbouring country “strategic”.