New Uruguayan President Tabaré Vázquez has told Argentine President Néstor Kirchner he will not suspend plans for two massive pulp plants on the banks of the Uruguay River, across from the Argentine province of Entre Ríos.

The projects were approved by Vázquez’s predecessor, Jorge Battle, who reached the end of his term on March 1. Entre Ríos authorities and citizens’ groups have criticized them strongly on grounds they will cause significant air and water pollution in the region.

Many in the province had hoped that Vázquez, Uruguay’s first left-leaning president, would suspend the pulp-mill plans. But in a meeting May 5 with Kirchner in Buenos Aires, Uruguay’s new president said the projects will go forward. Also attending the meeting was Entre Ríos Gov. Jorge Busti, who five days earlier had led 40,000 people in a demonstration against the projects on one of the three main bridges linking the two countries.

Vázquez did agree in the meeting to form a binational technical committee that will conduct a 180-day study of Argentina’s concerns, though construction of the plants will continue while it is being carried out.

In a press conference after the meeting, Vázquez defended the pulp-mill projects, pointing out that Argentina has three pulp plants “with technology that is older and more dangerous for the environment” than the technology Uruguay’s mills will be using.

Asked about that point, Raúl Estrada Oyuela, the Argentine Foreign Ministry’s special representative for international environmental affairs, responds: “That is true, but it’s also true that in approving the plants, Uruguay violated the Uruguay River Statute.”

That agreement, signed by the two countries in 1975, establishes that projects with potentially significant impacts on Uruguay River water quality must be reviewed by a special panel of experts from Argentina and Uruguay. Uruguay’s previous administration approved plans for the mills without submitting them to the panel, called the Uruguay River Administrative Commission (Caru).

Record private investment

The bigger of the two pulp-plant projects involves a US$1.1 billion investment by Metsä-Botnia of Finland, reportedly the largest single private investment in Uruguay’s history. Metsä-Botnia says that once up and running by the second half of 2007, the mill will make a million tons of pulp annually using wood from Uruguay’s extensive eucalyptus plantations.

Spain’s Ence is building the second mill. Since plans for this facility are not as far along, investment and production projections are hard to come by. But according to rough estimates, the Ence mill will cost US$600 million and produce 500,000 tons of pulp annually.

Both companies pledge they will not use elemental chlorine as a bleaching agent, a major culprit in dioxin pollution, but will employ a chlorine-dioxide process instead. While much cleaner than the elemental-chlorine process, the use of chlorine-dioxide still produces dioxins, which are harmful even in small quantities and bio-accumulate in the environment. Neither Ence nor Metsä-Botnia has embraced chlorine-free bleaching alternatives such as hydrogen peroxide or ozone.

Warns Gabriel Moguilner, Entre Ríos’ environmental director: “We’re going to fight in order to prevent the Uruguay River from becoming a large sewer.”

Uruguayan officials cite the economic reward, saying the Metsä-Botnia mill alone will generate 8,000 direct and indirect jobs and that the two plants collectively will boost Uruguay’s GDP by 1.6%. But they also promise strict environmental oversight.

In an interview with EcoAméricas this month, Uruguayan National Environment Director Alicia Torres said Metsä-Botnia executives have pledged to meet European emission standards. Uruguay, she insists, will not let investment trump environmental protection.

“This government wants to bet on an Uruguay that’s sustainable socially, economically and environmentally,” Torres said. “None of these variables matters more than another. We’re interested in investments coming to Uruguay, but not by any path. We’re going to make sure that these companies don’t damage the environment.”