Ence will begin construction of a pulp mill in Uruguay at the end of the year

An investment of $1.000 billion will be needed

The Spanish company Ence will begin construction of a pulp mill in Uruguay at the end of the year, which will require an investment of $1.000 billion and will be operational in the first quarter of 2010, the company's CEO, Pedro Oyarzábal, announced today.

"We aspire for the pulp mill to be an engine of development for the Uruguayan economy, especially due to the possible association of different companies from various sectors with the project," the businessman added at a press conference.

Oyazábal made this statement after the presentation of a seminar entitled "Foreign Investment, Clusters and Competitiveness. Ence as an opportunity for productive Uruguay," aimed at local businessmen, industrialists and investors.

The Ence advisor explained that a cluster is a geographically close group of associated companies and institutions, interconnected in a specific field, linked by common and complementary activities and interests.

"The idea is that, starting with the pulp mill project, local companies in forestry, transportation, services, technology, staff training, research and others will partner with Botnia to seek the greatest and best mutual benefit," he added.

Ence's project "covers the forestry, pulp and energy sectors," and when the plant is operational, starting in the first half of 2010, "in addition to being self-sufficient in energy, it will generate about 60 megawatt-hours of electricity that can be fed into the Uruguayan grid, which is deficient, and support companies located in the vicinity of the plant," he added.

The Spanish company's factory will be located in the area called Punta Pereira, in the department of Colonia and on the Río de la Plata, from where the cellulose production will be shipped out to sea.

Initially, Ence planned to build its pulp mill near the city of Fray Bentos, where the Finnish company Botnia is about to complete another pulp mill that is generating the worst conflict in decades with Argentina.

The Botnia plant is located on the banks of the Uruguay River, the natural border between the two countries, and is opposed by Argentine authorities and groups of residents in the province of Entre Ríos on the grounds that it will cause damage to the environment of the area, a claim rejected by Uruguayan authorities and Botnia.

"The decision to relocate the plant was for logistical reasons and for Ence's business convenience, and the conflict with Argentina over the Botnia issue did not weigh heavily," Oyarzábal stated in response to a question from Efe, but he added, "it's always better to get along with your neighbors, and the new location chosen does not generate any disagreements."

Oyarzábal stated that Ence "delivered all the necessary documentation" to the National Directorate of the Environment (DINAMA) of the Ministry of Housing, Territorial Planning and Environment, which is the one that has to give its authorization for the start of the works.

"We are confident that the analysis of the documents will be completed in the coming months so that we can begin construction before the end of the year," he added.

The construction of the pulp mill will take two years and will be carried out by a company yet to be determined "in negotiations that are currently underway," he added, estimating that at the peak of the works "there could be up to 11.000 people dedicated to the task."

The plant will have a production capacity of 1.000.000 tons of pulp per year, almost double the original project that was going to be installed in Fray Bentos.

The CEO of Ence stated that the country was chosen for the project due to the "great development of eucalyptus fiber" in Uruguayan soils and affirmed that the plant "will be a model in environmental care."