Fray Bentos Pulp Mill to be re-located in Uruguay

Patricia Avila of Reuters Alertnet reports from Montevideo, Uruguay ,that Juan Luis Arregui, President of Spain's ENCE, who were to build a pulp mill at Fray Bentos (with the help of World Bank funds) near a plant built by a Finnish Consortium Botnia will move the location of the new plant but no firm plans have been announced.

He admitted that Fray Bentos, a town on the Uruguay River that divides Argentina and Uruguay , does not have enough infrastructure to support the two massive plants.

Arregui said the decision was not related to the environmental conflicts that had arisen, although he had said earlier that the company had halted progress on the plant until the differences with Argentina were resolved.

Relations between Uruguay and Argentina have been strained by the project, which represents the biggest private investment ever in Uruguay.The dispute was finally resolved by the United Nations' highest court, which rejected Argentina's request to suspend conbstruction of both plants.

A strike had halted Botnia's construction works as local workers opposed a plan by the Finnish firm to contract hundreds of building workers from Eastern Europe.

ENCE said on Wednesday it had laid off 40 of its administrative personnel out of a total of 60, in Montevideo, but Arregui said the company was not planning to leave Uruguay where they own massive Eucalyptus plantations.

"It has never crossed our mind to leave Uruguay. The layoffs announced are part of a restructuring," Arregui said.

Of course if the plant was moved to Argentina, their objections would probably dissolve, but as this would involve transporting Uruguayan timber across the river it would be economic nonsense.

Lord Patel wrote about the whole history of this last week. Globalisation - a winning solution in Uruguay. (Pic Brazilian Eucalyptus plantations)