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  HOME | Uruguay

UPM Does Not Intend to Build Pulp Mills in Uruguay

HELSINKI – Finnish company UPM, one of the largest forestry groups in the world, does not intend for the moment to build any new pulp mills in Uruguay, said Jaakko Sarantola, vice president of the cellulose division of the company.

Uruguayan President Jose Mujica is visiting Finland to try to boost negotiations with UPM to build another paper plant in a depressed area of the country like the one operating since 2009 in Fray Bentos, northwest of Montevideo.

“We’re flattered that president Mujica traveled from Uruguay to talk to us. We are ready to speak with the Uruguayan government, but the construction of a new pulp mill is currently not on UPM’s agenda,” Sarantola said in an interview with Efe.

In his opinion, before UPM can boost their investments in Uruguay, the government needs to “improve the infrastructure to facilitate logistics, especially the road network and port facilities.”

“We know Uruguay very well, we have been working there for almost 25 years and we are aware of the opportunities and challenges facing the country,” he added.

The meeting, according to Sarantola, focused instead on the need to improve the infrastructure of Uruguay, “a prerequisite for progress in the development of this industry.”

Mujica and UPM executives also discussed the importance of education for technically-trained personnel in the fields of engineering and forestry.

“The foundation of competitiveness is to have enough people ready to develop this activity, especially when it comes to small countries with limited resources such as Uruguay and Finland,” Sarantola added.

UPM’s operations in the South American country include the pulp mill in Fray Bentos on the banks of the Uruguay River, and another UPM logging company in Forestal Oriental, which manages about 230,000 hectares (568,000 acres) of land, of which 60 percent are eucalyptus plantations.

UPM acquired these businesses from the Finnish company Botnia in 2009 in a $2.4 billion deal.

Last June, the Finnish group was authorized by the Uruguayan government to increase production to 1.3 million tons per year, which rekindled a diplomatic dispute with Argentina.

The Argentine government claims that the Fray Bentos plant pollutes the border river with Uruguay, although in 2010 the International Court of Justice in The Hague ruled against Argentina and upheld the Uruguayan government.

According Sarantola, the factory does not reach full capacity until the second half of 2015, as it will be necessary to get “small additional investment” in order to increase the production process.

Besides the cellulose factory in Fray Bentos, the company has a biomass thermal plant generating 10 percent of all electricity produced in Uruguay.

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