WASHINGTON, D.C., October 17, 2006
– The World Bank Group’s International Finance Corporation and Multilateral
Investment Guarantee Agency announced today that they will ask their Boards
of Directors to approve IFC financing and MIGA guarantee support for Oy-Metsa
Botnia’s Orion pulp mill project in Uruguay.
The decision to proceed was based on
an extensive due diligence process, which included the conclusive and positive
findings of a cumulative impact study and a subsequent review of the study
undertaken by independent experts (the Hatfield report).
The conclusions of the study and the
experts’ report confirm that the mill will comply with IFC and MIGA’s
environmental and social policies while generating significant economic
benefits for the Uruguayan economy.
The experts’ report, issued today,
assesses the final cumulative impact study, which examined the combined
impacts of the Orion plant and Grupo Empresarial ENCE’s Celulosa de M’Bopicua
plant. The experts reviewed whether their recommendations and findings
made in April 2006 were addressed in the final study:
“We consider that the revised cumulative
impact study of September 2006 effectively addresses the issues raised
by ourselves and by stakeholders.”
“We further consider that the study
shows that the mills are designed in accordance with modern, environmentally
sustainable practices, in accordance with Best Available Techniques.”
The results of the cumulative impact
study and the experts’ report confirm that the local area in Argentina
and Uruguay will experience no adverse environmental impacts. In
particular, the Argentine city of Gualeguaychú will experience no adverse
IFC, the private sector arm of the World
Bank Group, is considering providing a $170 million loan to the Orion pulp
mill project. In addition, MIGA is considering providing political
risk insurance for the project. IFC had been considering support
for both the Orion and CMB projects. However, following Grupo Empresarial
ENCE’s announcement to relocate its plant, IFC has decided to put the
CMB project on hold until the Corporation has had an opportunity to assess
that project in its new location, and to consider only the financing of
the Orion mill at this time.
IFC and MIGA will seek Board consideration
for the Orion project in mid-November.
The Orion project will have a significant,
positive impact on the economy of Uruguay. It is expected to generate
revenues equivalent to 2 percent of the country’s GDP (2005 figures) and
more than 8 percent of the country’s exports annually for an estimated
30 years of full production. The employment impacts will also be
significant. The Orion project will create approximately 2,500 jobs
in Uruguay, of which 300 will be at the mill and 2,200 will be in forestry
and local transport. This project represents the largest foreign
investment in Uruguay's history and supports the country's strategy to
diversify its export base and increase its competitiveness. It will
help Uruguay move up the value chain beyond the export of primary products.
The International Finance Corporation,
the private sector arm of the World Bank Group, is the largest multilateral
provider of financing for private enterprise in developing countries. IFC
finances private sector investments, mobilizes capital in international
financial markets, facilitates trade, helps clients improve social and
environmental sustainability, and provides technical assistance and advice
to businesses and governments. From its founding in 1956 through
FY06, IFC has committed more than $56 billion of its own funds for private
sector investments in the developing world and mobilized an additional
$25 billion in syndications for 3,531 companies in 140 developing countries.
With the support of funding from donors, it has also provided more
than $1 billion in technical assistance and advisory services. For
more information, visit www.ifc.org.
MIGA was created in 1988 as a member
of the World Bank Group to promote foreign direct investment into emerging
economies to support economic growth, reduce poverty, and improve people’s
lives. MIGA fulfills this mandate by offering political risk insurance
(guarantees) to investors and lenders (covering expropriation, breach of
contract, currency transfer restriction, and war and civil disturbance).
MIGA also mediates investment disputes and provides technical assistance
to promote investment opportunities in developing countries. Since
its inception, MIGA has issued nearly 850 guarantees for projects in 92
developing countries, totaling more than $16 billion in coverage. MIGA’s
gross exposure stands at $5.2 billion.
For a copy of the cumulative impact
study and the experts’ report, and for more information, please visit:
*For definition of Best Available Techniques
on integrated pollution prevention and control (IPPC), see European Union
Web site, http://europa.eu/scadplus/leg/en/lvb/l28045.htm