Pulp Mills Damage Food Sovereignty in Uruguay

The installation of several pulp mills in South America's Southern Cone is consolidating a production model that damages the region. This model based on large extensions of land devoted to forestry monocultures for pulp production has caused a series of negative economic, social, environmental impacts as well as impacts on political and food sovereignty. In this international context of unbalanced production and consumption growth, transnational corporations Botnia, Ence and Stora Enso installed their facilities in Uruguay.

Botnia is a Finnish transnational corporation (member of the group Metsa Botnia), founded in 1973. It has 5 pulp mills in Finland and it it the world's second pulp mill producer. In South America it is only present in Uruguay, and it produces different kinds of pulp. Botnia´s subsidiary in Uruguay Compañía Forestal Oriental S.A. (COFOSA), owns 170,000 hectares of land, supplying the mega pulp mill with raw material. The construction of the pulp mill ended in September of 2007 and the plant began operating in November of that year. The pulp mill has a production capacity of a million tons of pulp mill a year. The investment was of nearly 1.1 billion dollars. The plant – built in the town of Fray Bentos - represented the largest industrial investment in Uruguay's history. It is also Finland's largest investment in the private industry sector abroad.

The installation of Botnia's pulp mill has different consequences on Uruguay's and on the region's productive model. It increases land concentration and foreignization in the hands of few transnational corporations like Botnia, Ence or Stora Enso. Nowadays these corporations have 170,000, 150,000 and 45,000 hectares respectively, destined to forestation.

The transnational corporations invested in Uruguay because they can reduce the production costs, they can operate almost without paying taxes, they employ few people and in bad working conditions (in the plantations) and they have free access to productive resources such as land and water. Besides, the companies are protected under bilateral investment treaties signed by Uruguay in the 90s and until 2005 (precisely with countries like Finland, Spain, Portugal and Sweden), which have secured these companies the monopoly since it is very hard to change this model by imposing susbtantially different tax, environmental, productive or labor regulations.

Impacts on the water supply to produce food on a small scale are already seen in the regions where forestation is moving forward, and also on the natural ecosystem of the meadows as a result of soil erosion. There is intensive use of agrotoxics in the plantations, which also affects forestry workers.

The main instruments on which Botnia bases its power position to obtain profits are Bilateral Investment Protection Treaties between Uruguay and the countries of origin, the threat to sue the Uruguayan state before international tribunals like ICSID (International Center for the Settlement of Investment Disputes, a World Bank agency), free trade zones and an aggressive Corporate Social Responsibility campaign. The main players involved in this case are the successive Uruguayan administrations since 1985 to the present time, as well as the Finnish government, international financial institutions like the World Bank (and World Bank agencies like ICSID and the International Finance Corporation), the European Investment Bank and the Northern Investment Bank, the European Union and clearly the transnational corporations themselves, which strengthen each other.

A case is filed before the PPT against pulp and forestation transnational corporations as the players that have advanced their power most: economic, political, financial power, power to impose a certain productive model, and last but not least, cultural and ideological power.

Key issues: Natural Resources and Neocolonialism

Denouncing organizations: REDES – Amigos de la Tierra/Friends of the Earth Uruguay, ATTAC Argentina, FISYP Argentina