MercoPress. South Atlantic News Agency

Mujica inclined to support UPM pulp production expansion but conditioned to environment improvements

The Uruguayan president wants to inform of the details to his peer Cristina Fernandez before making them public

Uruguay’s president Jose Mujica anticipated that his intention is to authorize the UPM pulp mill to expand production, as the Finnish company had requested, but conditioned to certain additional environmental measures, which will not be made public until talks with Argentine president Cristina Fernandez on Monday.

“I’m giving you so that you give me, but if you don’t, I won’t give you” summarized president Mujica in a long interview with Bloomberg in New York. “The decision will be somewhere in the middle line with demands for environmental improvements that will benefit the mill and expecting that those improvements effectively begin to be implemented”.

The measures refer to a better cooling of the water dumped into the river and a lower phosphorus percentage. It’s a whole package, the decision is not simple but I give you so that you give me, if not…” added Mujica.

UPM has requested to increase annual pulp production from 1.1 million to 1.3 million tons, but any decision is bound to have repercussions in Argentina given the long protracted dispute over the construction of the plant which came to a reasonable end with a ruling from the International Court of Justice in The Hague.

The most serious diplomatic conflict between Uruguay and Argentina in decades saw Argentine pickets block for several years the international San Martin bridge which links Fray Bentos where the pulp mill operates and the sister city of Gualeguaychú on the opposite side of the River Uruguay which is a natural frontier between the neighbouring countries and its waters quality are jointly monitored and managed.

Following on the rules, UPM in 2011 requested an increase in production because next year a second pulp mill begins production in Uruguay with an annual capacity of 1.5 million tons.

Likewise in Argentina, Cristina Fernandez faces mid term elections and primaries last month didn’t anticipate good results in October. Besides the province of Entre Rios across from Fray Bentos remains a faithful Kirchnerite stronghold.

Pickets are already re-organizing in Gualeguaychú most probably in an attempt to block the bridge and the government of Cristina Fernandez does not have the command and authority of only a year ago.

But going back to Mujica, Bloomberg asked him about iron mining and the construction of a deep water port to the east of the country on the Atlantic coast.

Mujica anticipated that the iron mining project of Aratirí would be signed before the end of the year and the port which is needed to ship the iron ore should begin to be constructed sometime in mid 2014.

“We want to make the port something like the Mississippi which is the confluence of several main waterways and helps ship exports from the heart of the US. Our deep water port is only feasible if the heart of Brazil, plus Bolivia make use of it, since we are a small economy and don’t have the cargo volume for such an undertaking”, explained the Uruguayan leader.

“Brazil and Bolivia iron ore exports need a deep water port in the outskirts of the River Plate. They bring the cargo in huge barges along the Parana, Uruguay, Paraguay rivers”, said Mujica in reference to the necessary trade. Besides Mercosur has become the soybean hub of the world with three members in the short list of global exporters of the oil seed.

He added that his government was ‘flirting’ with Brazil and China to see which will help finance the port. “For us it is a decision taken since this would mean a formidable logistics window for Uruguay, and geography is generous: the Atlantic ocean branches along the Uruguayan eastern coast with a natural depth of over 22 metres”.

Aratirí has agreed to finance one of the jetties from where to ship iron ore while the other demanding 400 million dollars will be financed by Uruguay, but from there on “it is for the private sector”.