Washington D.C., November 21, 2006 -
The boards of directors of the International Finance Corporation and the Multilateral Investment Guarantee Agency today approved a $170 million investment by IFC and a guarantee of up to $350 million from MIGA for the Orion pulp mill project in Uruguay. The two organizations, after completing a thorough review of the facts, are convinced that the mill will generate significant economic benefits for Uruguay and cause no environmental harm.
The Orion mill, majority owned by Finnish company Oy Metsä-Botnia Ab, will be operated to the highest global standards and comply with IFC and MIGA's respective environmental and social standards. A recently issued independent report provided conclusive evidence that the local area, including the Argentine city of Gualeguaychu, will not experience adverse environmental impacts.
"Today's decision paves the way for us to move forward and engage with stakeholders to maximize economic, environmental, and social benefits to local communities on both sides of the river," said Lars Thunell, Executive Vice President of IFC.
The regional environmental improvements related to the mill include treating wastewater from the nearby town of Fray Bentos; generating electricity from mill operations that will offset 68,000 tons a year of carbon dioxide and reduce acid rain by replacing oil burned in public generating plants; treating the untreated effluent of an older, unrelated pulp mill in the nearby town of Mercedes; and producing sufficient sodium chlorate to allow local mills in Argentina and Uruguay to move to elemental chlorine-free pulp production.
The Orion mill represents the largest foreign investment in Uruguay's history and will help the country move up the value chain beyond the export of raw materials, while generating some 2,500 much needed local jobs. The plant will generate value added equivalent to 2 percent of Uruguay's entire GDP (based on 2005 figures) and slightly more than 8 percent of the country’s exports for each year of full-capacity production.
IFC and MIGA carried out 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 experts’ report assessed the final cumulative impact study, which examined the combined impacts of the Orion plant and Grupo Empresarial ENCE’s Celulosa de M’Bopicua (CMB) plant. The experts concluded that their recommendations and findings made in April 2006 were addressed in the final study.
IFC and MIGA are not taking any position on the eventual outcome of the case brought by Argentina pending with the International Court of Justice in The Hague.
About IFC
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
About MIGA
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 95 developing countries, totaling more than $16 billion in coverage. MIGA’s gross exposure stands at $5.2 billion.
