Start up of Metsä-Botnia pulp mill in Uruguay set to be postponed

The construction of the enormous Metsä-Botnia pulp mill in Fray Bentos, Uruguay, has been completed. The Finnish pulp and paper manufacturer reports that despite all the primarily political complications, the undertaking was accomplished on schedule.
      The facility is ready for start up during the third quarter of the year, in other words, by the end of September as was promised. The first test runs have already been performed, albeit without pulpwood.
      But nobody knows, or at least nobody wants to say out loud, when precisely the actual production will commence, or when - if ever - an official opening ceremony will be held at the mill.
     
The authorisation to switch on the mill will be given by the Uruguayan government, but the processing of the request is still under way.
      The environmental authorities are still performing their last check-ups at the mill, which is also being inspected by the fire officials.
     
In other words, the commencing of production at the mill no longer depends on technical matters, but on permit issues alone.
      Taking into account all that has happened before, surely politics and the dispute between Argentina and Uruguay, the bone of contention of which Metsä-Botnia has unwittingly become, will once again play a major role in the matter.
      In any event, every postponed production day will cost money. Though Metsä-Botnia is reluctant to mention any figures, according to an outside expert the price of the loss of production is in the region of EUR 30 million per month, in other words, a million euros per day.
     
The political dispute between the two South American neighbours is still very much in an inflamed state. The mill has not even been put onstream yet, and already it has been blamed, among other things, for green rain and a mass death of bees in Argentina. The inevitable smell detriment that the launch of production will undoubtedly bring on will do little to improve matters at this stage.
      In Argentina there will be a presidential election in a month’s time, in which the reins look to be passing from Néstor Kirchner to his wife Christine Fernández de Kirchner. The latter will hardly venture such a political risk as to be seen to settle the mill dispute with Uruguay just before the election.
     
A settlement of a sort will surely be the aim of the summit between the two nations in early November, on conclusion of the King of Spain’s one-year term as a voluntary arbitrator in the dispute.
      Before that, ministerial level negotiations will be held between the foreign ministers of the two countries in connection with the United Nations General Assembly in New York next week.
      There are also other than economic reasons why Metsä-Botnia wants to start production at the mill quickly. "Only once the mill is running can we prove how environmentally friendly it is", a company spokesman explains.
     
Metsä-Botnia has a USD 350 million guarantee from the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) against political risks.
      The insurance, however, does not cover the postponing of production through political reasons. Instead, the facility is insured, for example, against its being forcibly nationalised.


Previously in HS International Edition:
  Metsä-Botnia continues construction of Uruguay pulp mill despite appeal by two presidents (13.3.2006)
  Harbour handling Botnia pulp deliveries in Uruguay opened on Wednesday (30.8.2007)
  Solution to paper factory dispute between Argentina and Uruguay more remote than ever (13.3.2007)
  Metsä-Botnia to build massive pulp factory in Uruguay (8.3.2005)

See also:
  Opponents of Botnia pulp mill threaten tougher action (23.5.2007)

Links:
  Metsä-Botnia