Further embarrassment over Botnia

Minutes before cutting the ribbon of inauguration for the IFC-funded pulp mill owned by Finnish Company Oy Metsa Botnia in Uruguay at the start of November, Erikki Varis, CEO of the Finnish company was ordered to hold off by the Spanish government. The embarrassing incident follows more than two years of controversy surrounding the project, an investigation by the IFC's Compliance Advisor Ombudsman, and a complaint at the International Court of Justice (see Update 53, 51). King Juan Carlos of Spain has been the key mediator between the governments of Argentina and Uruguay after tensions over the pulp mill's effects on both nations arose more than two years ago.

The conflict that has arisen around the project on the border between the two South American countries has caused tension in the regional trade block MERCOSUR, to the point of Uruguay threatening to pull out of the trade agreement because of the dispute.

The Spanish government had urged Uruguayan president, Tabaré Vásquez to hold off the inauguration, until the Ibero-American Summit in Chile the following week.

However, the Uruguayan president authorised the inauguration during the summit, before discussing the issue with his Argentine counter part, Nestor Kirchner, and Spanish mediators. Both, the Argentine president and the king of Spain expressed their discontent, and media reports say that Argentina's President-elect, Cristina Fernández, will probably not compromise on the issue .

Despite the IFC's assertion that the project has "broad public support", there has been mass public protest on the Argentine side of the river, and public blockades of the bridges which link the two countries. According to Argentine NGO CEDHA, the Uruguayan government was forced to close the border with Argentina twice over the past month because thousands of Argentine opponents of the mill marched in protest.

The pulp mill and the dispute has already taken its toll on the area's tourism. Uruguayan newspaper El País, reports that in terms of tourism, the once popular beach resort area of "Las Cañas" in Fray Bentos has become a ghost town.

Concerns on environmental and health risks increased during the past week, when a gas leak coming from the Botnia pulp mill resulted in six local school children becoming ill, and an unbearable stench reported throughout the entire city of Fray Bentos.

The types of chemicals used by Oy Metsa Botnia in the production of paper have been listed on their website and include: sodium chlorate and chlorine dioxide. Following the leaks, the Finnish company apologised for the incident and stated that the smell was not damaging for human health. However, the University of Oxford lists sodium chlorate as a "toxic and corrosive" substance, while INCHEM, a chemical safety information website for intergovernmental organizations, states that "chlorine dioxide is very toxic by single inhalation exposure in rats."

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Published: 12 December 2007 , last edited: 17 December 2007

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