MercoPress. South Atlantic News Agency

Uruguay authorizes Stora Enso to build a pulp mill next to the River Plate

Foreign Affairs minister Luis Almagro made the announcement in Helsinki

Uruguay announced that it will authorize Finland’s Stora Enso so build one of the world’s largest pulp mills but also warned about “wide ranging, strict supervision” of the environment to comply with international practice and to avoid problems with neighbouring Argentina, as happened with Botnia.

Uruguay’s Foreign Affairs minister Luis Almagro made the announcement in Helsinki where he met with his Finnish counterpart Alexander Stubb and officials from Stora Enso and UPM-Kymmene to discuss conditions for the new plant

“We will award Stora Enso a licence for a pulp mill in Uruguay, but we must still discuss with the forestry corporations technical specifications as well as the environmental and sociological impacts of such a project”, said Almagro.

Stora Enso operating in Brazil under the name of Veracel has been accused of “illegal activities and environmental crimes”. The Finnish-Swedish company which has plans to further expand in Brazil rejects such claims point blank.

“We must guarantee that such a situation is not repeated in Uruguay. We have implemented wide ranging supervision measures following on the experiences we have had with other pulp mill projects”, said Almagro who implicitly admitted he was well aware of the difficulties and claims the company is facing in Brazil and in China.

Stora Enso plans to build one of the world’s largest pulp mills in Uruguay where the company already owns large plantations of eucalyptus. The whole project is shared with the Chilean company Arauco, with a long history in the pulp industry.

The mill is planned to be built in Punta Pereira, Colonia, east of Uruguay next to the River Plate and only fifty kilometres away from Buenos Aires.

“We have made a decision based on preliminary results of our economic, operational and environmental analysis. Having chosen Punta Pereira we can now move to the following stage, assessing the feasibility of such a project”, according to Erwin Kaufmann, general manager of Montes del Plata, the name under which the association of Stora Enso and Arauco will operate in Uruguay.

Nevertheless the project which could involve over 1.5 billion US dollars, one of the largest in the country’s history, still faces “the sociological impact” which means convincing a divided community where the mill is planned to be built.

Furthermore the scars of the long diplomatic dispute (almost six years) with Argentina over the Botnia/UPM pulp mill, including having the dispute ruled by the International Court of Justice in The Hague, is only recently back on track.

Argentina and Uruguay finally agreed to a joint scientific monitoring of the shared River Uruguay, next to which the Botnia/UPM plant is located, and the first round of environmental tests has only begun, including allowing Argentine experts inside the plant to take samples.

Another issue is the price of land. For two decades Uruguay has been promoting forestry as another option for rural activities. However since then and particularly in the last five years the price of land has soared in US dollars (trebled, quadrupled) as the ongoing bull market for commodities, --and open economies--, are making farming a more global homogeneous industry.