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Uruguay Delays Permit for Botnia to Open Pulp Mill

November 01, 2007

Uruguay delayed a permit for a pulp mill owned by Metsae-Botnia Oy because of a request by Spain, which is mediating a dispute between Argentina and Uruguay over the potential environmental damage to a river that runs between South American countries.

``It's a limited delay,'' Uruguayan Minister of Housing, Land and Environment Mariano Arana said today in a press conference in Montevideo.

Botnia is a joint venture between UPM-Kymmene Oyj (UPM1V) and a Finnish forestry cooperative and had planned to open the $1.1 billion facility in Fray Bentos, Uruguay, at the end of September. It has been delayed by inspections and paperwork associated with environmental and safety requirements, the company said earlier.

The mill will produce 1 million tons of eucalyptus pulp a year when running at full capacity. The pulp will be used by UPM and M-real Oyj, the forestry cooperative's papermaking arm. Chief Executive Officer Jussi Pesonen said earlier this week that the one-month delay in opening will cost the company about 10 million to 15 million euros .

Argentina brought a case against Uruguay over the mill's potential environmental impact on the Uruguay River at the International Court of Justice in The Hague in May 2006. The river forms the border between Uruguay and Argentina.

Arana said that next week authorities from Argentina, Uruguay and Spain will meet in Chile to discuss the issue.

``It was always possible that the Botnia plant would be inaugurated, something that is within the rights of the Uruguayan government,'' Argentine Cabinet Chief Alberto Fernandez said today in an interview with Radio del Plata in Buenos Aires. ``But we will continue pressing our international demands because there are standards that we should all be subject to.''

To contact the reporter on this story: Eliana Raszewski in Buenos Aires Diana ben-Aaron in Helsinki at

To contact the editor responsible for this story: Andrew J. Barden at

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