Oy Metsä-Botnia Orion Pulp Mill Project - Uruguay Presented by J. Daniel Taillant Center for Human Rights and Environment (CEDHA)

ArgentinaUruguay Rio Uruguay Botnia Ence

Relocation Drivers for Botnia Higher Growth Rate of Trees (12-15 vs yrs) Higher Growth Rate of Trees (12-15 vs yrs) Pulp Costs 50% Less than Cost in Europe Pulp Costs 50% Less than Cost in Europe Tax Exemption Haven (30 years) Tax Exemption Haven (30 years) Lower wages in Uruguay Lower wages in Uruguay Exhaustion of Natural Resources at Home Exhaustion of Natural Resources at Home Strengthening of European Legislation Strengthening of European Legislation Proximity to Ports (preexisting lands for woodchips) Proximity to Ports (preexisting lands for woodchips) Proximity to International Roads Proximity to International Roads Proximity to Natural Resources Proximity to Natural Resources More Flexible Environmental Controls More Flexible Environmental Controls Expanding Cellulose Industry in the Region Expanding Cellulose Industry in the Region International Development Agency Sponsorship International Development Agency Sponsorship

Argentina Apparition of foreign papermill - & aware of experiences in Misiones (Arg), Chile, Brazil) – all ECF technology), results in Argentina and Uruguay opposition (before ENCE mill – 1996) Apparition of foreign papermill - & aware of experiences in Misiones (Arg), Chile, Brazil) – all ECF technology), results in Argentina and Uruguay opposition (before ENCE mill – 1996) Uruguayan stakeholders seek collaboration with Argentines Uruguayan stakeholders seek collaboration with Argentines Botnia appears and magnifies problem (tripling ENCE production) Botnia appears and magnifies problem (tripling ENCE production) International Protest - April of 2005, 50,000 people to the international bridge International Protest - April of 2005, 50,000 people to the international bridge Assembly meets 2 times weekly to discuss opposition strategy Assembly meets 2 times weekly to discuss opposition strategy Legal Actions considered, fervent protest, and other methods Legal Actions considered, fervent protest, and other methods Assembly links up with CEDHA and files CAO complaint in 9/2005, then others Assembly links up with CEDHA and files CAO complaint in 9/2005, then others Nearly 40,000 people sign complaint (with Power of Attorney) Nearly 40,000 people sign complaint (with Power of Attorney) Assembly Intensifies Opposition to Date Assembly Intensifies Opposition to Date Promises to Oppose Until Botnia Leaves Promises to Oppose Until Botnia Leaves Nascence of Social-Environmental Movement

IFC CLAIMS BROAD COMMUNITY SUPPORT!

Argentina Botnia Strikes Last Minute Secret Deal with Uruguay Botnia Strikes Last Minute Secret Deal with Uruguay No Cumulative Impact Study of Mills only 5km appart No Cumulative Impact Study of Mills only 5km appart No site study showing environment/social adequacy (12/1200pp.) No site study showing environment/social adequacy (12/1200pp.) No evidence showing proper use of BAT No evidence showing proper use of BAT No EIA for Chemical Operations No EIA for Chemical Operations No convincing data on impacts on water, air, land, etc. No convincing data on impacts on water, air, land, etc. No Prior and Informed Consultation or Disclosure No Prior and Informed Consultation or Disclosure Failure to obtain Social License to Operate Failure to obtain Social License to Operate No review of International Law Obligations of Uruguay/Argentina No review of International Law Obligations of Uruguay/Argentina Open Legal Complaints in Uruguayan and Argentine Courts Open Legal Complaints in Uruguayan and Argentine Courts IFC and Botnia Ignore CAO Findings and Recommendations IFC and Botnia Ignore CAO Findings and Recommendations IFC and Botnia Ignore Presidential Accord of April 2006 IFC and Botnia Ignore Presidential Accord of April 2006 Spawns Largest Environmental Social Movement in Global History Spawns Largest Environmental Social Movement in Global History IFC Goes to Board in April of 2005 saying projects are OK! IFC Goes to Board in April of 2005 saying projects are OK! Botnia Accelerates construction due to Local Opposition Botnia Accelerates construction due to Local Opposition IFC Goes Back to do further studies, admitting faults IFC Goes Back to do further studies, admitting faults Botnia’s and IFC’s Trail of Unacceptable Errors

CAO Audit Findings Complaint by 40,000 Stakeholders Complaint by 40,000 Stakeholders –“IFC’s due diligence to satisfy itself that the EAs were complete in all material respects was inadequate and not incompliance with the organization’s Disclosure Policy” (CAO, Feb 22, 2006) –Insufficient evidence that proper consultation has occurred –No cumulative impact study; IFC Fosters Separation of Projects! –Need to generate transboundary trust in Local Communities –Botnia’s beginning construction undermines legitimacy –Special Efforts must be made to legitimize future studies –Must study impacts of eucalyptus tree farming on water –Must examine International Law Obligations; MIGA says not needed! –Establishes legitimacy of (Gualeguaychú Assembly) –IFC Fails to Give Clarity on how it will address Study Flaws –“Further technical information and facts will not be sufficient”

IFC Systematically Tries to Cover Errors IFC Ignores CAO Recommendations and Fails to do consultation before terms of reference for study (violating OP - 12a) IFC Ignores CAO Recommendations and Fails to do consultation before terms of reference for study (violating OP - 12a) IFC Designs 60-day consultation period during holiday season; boycotted by Assembly, Argentina and Uruguay IFC Designs 60-day consultation period during holiday season; boycotted by Assembly, Argentina and Uruguay IFC leaves 1000 residents waiting … IFC leaves 1000 residents waiting … Consultation Concludes Fruitlessly, CAO warns of rushed “fait accompli” attitude Consultation Concludes Fruitlessly, CAO warns of rushed “fait accompli” attitude CAO Publishes Critical Audit of IFC Faults CAO Publishes Critical Audit of IFC Faults Hatfield Report notes missing elements (many in original CAO complaint) Hatfield Report notes missing elements (many in original CAO complaint) Ecometrix Report Published Erroneously and not removed from Website Ecometrix Report Published Erroneously and not removed from Website Conclusions Insult Stakeholders (public will become accustomed to mills) Conclusions Insult Stakeholders (public will become accustomed to mills) Botnia remains silent, but continues construction …

Violent Assembly Members Scare off IFC Consultants in Gualeguaychú 900 Assembly Members wait for IFC Consultation Team Which Never Show up!

Findings by Ecometrix “The change to the landscape is a permanent impact, however the public’s response to these new industrial features is subjective and may potentially change over time as the public becomes accustomed to the new landscape. Case studies have shown that tourism can co- exist with pulp mills”.

Argentina IFC was Negligent and Irresponsible fostering 2 Projects that were not in compliance with its own environmental and social policies IFC was Negligent and Irresponsible fostering 2 Projects that were not in compliance with its own environmental and social policies CAO reports were conclusive indicating the many IFC faults CAO reports were conclusive indicating the many IFC faults IFC and Botnia ignored social tensions and the international conflict that have been mounting for nearly 3 years and continued on schedule IFC and Botnia ignored social tensions and the international conflict that have been mounting for nearly 3 years and continued on schedule IFC misled the Board of Directors as early as April of 2005 regarding supposed “broad public support” for these projects IFC misled the Board of Directors as early as April of 2005 regarding supposed “broad public support” for these projects The proposed investment is the focus of numerous legal claims, including at International Tribunals and filings in local courts in Arg/URU The proposed investment is the focus of numerous legal claims, including at International Tribunals and filings in local courts in Arg/URU The project sponsor and IFC failed to make efforts to help resolve the conflict that they fueled and instead have worsened the situation The project sponsor and IFC failed to make efforts to help resolve the conflict that they fueled and instead have worsened the situation The World Bank must not provoke or worsen the conflict The World Bank must not provoke or worsen the conflict This investment project is the focus of one of the largest recorded local oppositions ever for a Bank sponsored project and is causing dangerous levels of intolerance and hatred between brotherly communities and an open dispute between member government of the World Bank This investment project is the focus of one of the largest recorded local oppositions ever for a Bank sponsored project and is causing dangerous levels of intolerance and hatred between brotherly communities and an open dispute between member government of the World Bank The World Bank must abandon its consideration of loans to Botnia at the present site, and should, if anything, help work with project sponsors to study possible relocations, as the SPANISH ENCE is considering. The World Bank must abandon its consideration of loans to Botnia at the present site, and should, if anything, help work with project sponsors to study possible relocations, as the SPANISH ENCE is considering. Summary and Conclusions

Argentina Specific Instance Oy Metsä-Botnia Orion Pulp Mill Project - Uruguay Contact Information Jorge Daniel Taillant Center for Human Rights and Environment (CEDHA) Tel Oscar Bargas Citizens Assembly of Gualeguaychú - Argentina Liliana Medina Cocaro MOVITDES – Uruguay Moviemiento por la Vida el Trabajo y un Desarrollo Sustentable