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 environmental impacts.
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.
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 92 developing countries, totaling more than $16 billion in coverage. MIGA’s gross exposure stands at $5.2 billion.
