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CUMULATIVE IMPACT STUDY ON URUGUAYAN PULP MILLS RELEASED BY WORLD BANK GROUP



Adriana Gomez
IFC Corporate Relations
1-202-458-5204
Agomez@ifc.org

Angela Gentile
MIGA
1-202-473-3509
agentile@worldbank.org

Joseph O’Keefe
1-202-458-4032
jokeefe@ifc.org


WASHINGTON, D.C., Dec. 19, 2005 – Officials of the World Bank Group on Monday released a cumulative environmental and social impact study on two proposed pulp mill processing plants in Uruguay, opening a consultation period to receive feedback from the general public and technical specialists on the study’s methodology and findings.

“This report provides a detailed and factual analysis of the combined impacts of the Orion plant of Oy-Metsa Botnia and the Celulosa de M’Bopicua (CMB) plant of Grupo Empresarial ENCE,” said Dimitris Tsitsiragos, director of the International Finance Corporation’s Global Manufacturing Department. “It will provide a foundation for the consultations ahead, and we welcome additional feedback on the consultation process and the study’s findings in the coming weeks.”

The International Finance Corporation (IFC), the private sector financing arm of the World Bank Group, is currently evaluating whether to provide financing to both the Orion and CMB plants. In addition, the Multilateral Investment Guarantee Agency (MIGA), also of the World Bank Group, is evaluating whether to provide political risk insurance to the Orion plant. Both plants are located on the Rio Uruguay in western Uruguay.

Neither IFC nor MIGA will make a decision on whether to proceed with funding until the consultation period of the cumulative impact study is completed.

“We want to have a full review of the facts and an open dialogue surrounding the combined impact of the two pulp mills,” Tsitsiragos said. “We are hoping to get a high level of engagement from local communities so we can be assured that there is a clear understanding of the environmental and social impacts of these mills.”

The Cumulative Impact Study

Each of the pulp companies has prepared comprehensive Environmental Impact Assessments of their projects in accordance with Uruguayan and World Bank Group requirements. Oy-Metsa Botnia examined cumulative impacts in its environmental impact assessment. However, the World Bank Group required an additional study of the cumulative impact of the two plants.

The cumulative impact study addresses more than 30 issues, ranging from social and economic issues, such as the effects on traffic, labor supply, and tourism in the region, to issues such as air quality, water quality, and biodiversity. Among the issues highlighted by the study are:

  • Air Quality. On rare occasions during the initial three to four-month-long commissioning of the plants, odorous gases might be detected at a range of 5-10 kilometers from the plants, depending upon wind conditions. The prevailing winds in the region are from the north to northeast. During routine operations of the mills, odor emissions would occasionally be detectable 1-2 kilometers from the mills for periods of less than 1 hour. Air emissions from the plants, whether for particulate matter, nitrogen oxides, or sulfur dioxide, will meet World Bank Group standards.
  • Water Quality. Detailed computer modeling of treated wastewater discharges from the plants shows that the discharges into the Rio Uruguay will be undetectable within a short distance of the plants and will not impact aquatic life or recreational use of the river.
  • Tourism. Both mills will be constructed using the best available pollution control technology, and the plants will meet World Bank Group and European Union standards. Thus, air and water quality impacts on tourism will be limited. The visual impact of the mills on tourist areas will be low.
  • Labor. The combined labor requirements of the two plants during construction could peak at more than 7,000 workers, resulting in an influx of workers, most of whom will be younger and male, into the Fray Bentos region. This labor demand will increase employment, primarily in Uruguay, but also increase the demand for housing and public services such as health, public safety, education, and transportation;
  • Traffic. The two roads leading to the plants will witness a marked increase in traffic levels and could reach a level of 580 trucks per day;
  • Forestry Plantations. The development of the two pulp mills is expected to result in an additional plantation of 65,000 hectares of eucalyptus in western Uruguay. The current stock of plantation forestry in the western Uruguayan region is 172,000 hectares.

The Consultation Process

With the release of the cumulative impact study (CIS) on Monday, the World Bank Group proposed a process for consultation on the document:

  • The draft CIS will be available for public review, comment and possible modification for a minimum of 60 days prior to any decisions by World Bank Group institutions.  
  • Starting in mid-January, the World Bank Group will convene four review sessions/meetings to enable stakeholders to provide comments and concerns on the draft CIS.  These meetings will be held in Montevideo, Fray Bentos, Gualeyguaychu, and Buenos Aires. IFC and MIGA experts and representatives of the teams working on the projects, as well as company representatives, will be on hand to hear comments and concerns.  These meetings will be facilitated by an independent third party who will define the structure and format to ensure a focused dialogue and a fair process.
  • During the initial disclosure period through January, the Governments of Uruguay and Argentina will each be invited to nominate a technical expert to participate in the review process as indicated below.  A third expert will also be drawn from among a pool of technically qualified nominees.
  • The experts will have an advisory rather than decision-making role. They will assess the validity of challenges to the content and technical analysis provided in the CIS and then provide the World Bank Group with their findings and advice.  The experts’ findings and advice will be made available to the public.  The terms of reference for the role of the experts will be publicly released.
  • At any time following release of the draft CIS through February 17, written commentary and alternative data or findings provided by stakeholders can be submitted to the World Bank Group, which will share this information with the technical experts.  
  • The experts will have until February 24 to review and assess the validity of the written commentary and alternative data or findings provided by stakeholders. They will then provide the World Bank Group with their findings and advice.  
  • Once the experts have submitted their findings and advice, IFC and MIGA will review and respond to these findings and advice, indicating any specific actions that have been agreed to be undertaken by the companies or other stakeholders.  At this time, IFC and MIGA will also indicate whether or not their respective managements will seek Board approval to provide financing to the mills.

Electronic copies of this press release and the Cumulative Impact Study, in English and in Spanish, can be obtained from the website of the International Finance Corporation, at: http://www.ifc.org/lac.