The World Bank Group’s International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) will seek to approve IFC financing and MIGA guarantee support for Oy-Metsa Botnia’s Orion pulp mill project in Uruguay.
The decision to proceed is based on an extensive due diligence process, which includes 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 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:
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 Gualeguaych will experience no adverse environmental impacts.
IFC, the private sector arm of the World Bank Group, is considering providing a US$170mn 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% of the country’s GDP (2005 figures) and more than 8% 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.