Uruguay bets on forestry despite pollution and civil unrest

To travel inland through Uruguay is to encounter a repetitive landscape of soya and eucalyptus. Where the forests of one company end, those belonging to another begin. The parallel lines of eucalyptus form dark corridors, where the trees grow for approximately 10 years before being felled, peeled and loaded onto huge trucks for processing.

As of 2023, more than 1.1 million hectares were dedicated to eucalyptus and pine monocultures – approximately 6% of Uruguay’s land area. As concerns over the environmental damage associated with Uruguay’s pulp and paper industry grow, expansion plans are appearing on the horizon. In 2024, wood pulp became Uruguay’s leading export for the first time, surpassing beef. It represented 20% of Uruguay’s total annual exports, generating revenues of more than USD 2.5 billion.

Just two companies dominate the market: the Finnish company UPM, with one plant in the municipality of Fray Bentos and another in the municipality of Durazno; and Montes del Plata, which bases its industrial operations in the south-western Colonia department.

The remnants of a UPM eucalyptus stand in Grecco. As of 2023, more than 1.1 million hectares of Uruguay’s land were dedicated to eucalyptus and pine tree monocultures (Image: Eitan Abramovich / Dialogue Earth)

China was the main destination, receiving 42% of Uruguay’s wood pulp exports. Dialogue Earth spoke to Ignacio Bartesaghi, who directs the Catholic University of Uruguay’s International Business Institute. “China is a key partner in this and other products, but especially in the case of pulp, and the potential for further growth in pulp production,” says Bartesaghi.

In its latest climate change mitigation plans – submitted to the UN in 2024 and covering the years up to 2035 – Uruguay stated the intention to increase its forest plantation area by 20% of the total area recorded in 2020. It also plans to maintain the same area of “native forest land” as recorded in 2012 (although there is a general lack of agreement on how to define this term).

The president of Uruguay’s Society of Forest Producers (SPF), Lucía Basso, agrees “there is room for more” eucalyptus. Basso expects the country to reach 1.8 million hectares of forested land by 2050.

Forestry’s policy-powered rise

Uruguay’s forestry sector was boosted in 2005, when Uruguay struck a pulp mill deal with UPM (named Botnia at the time). It led to the first pulp mill on the coast of the Uruguay River, located in the Fray Bentos municipality on the country’s western border with Argentina. “The development of this industry is the result of a successful state policy, the Forestry Law,” explains Bartesaghi, “which together with another policy on free trade zones and free ports has allowed investments worth several billion dollars to flow into the sector.”

This pulp mill was UPM’s first in Uruguay. It stands on the bank of the Uruguay River in Frey Bentos, at the western edge of the country. Uruguay’s 1987 Forestry Law has boosted the sector in a variety of ways, enabling subsidies and tax exemptions (Image: UPM)

UPM’s second Uruguayan pulp mill opened in 2023. Located in the central city of Paso de los Toros, the mill receives 1,300 truckloads of logs and chemical inputs every day and can produce 2.1 million tonnes of pulp annually (Image: Eitan Abramovich / Dialogue Earth)

The 1987 Forestry Law has boosted the sector in a variety of ways. It enabled subsidies and tax exemptions. It defined forestry-priority soils; generally, these are soils not productive enough for agricultural or livestock purposes, or those degraded by intensive agriculture. It established the need for an endorsement from the Ministry of Livestock, Agriculture and Fisheries’ Forestry Directorate before a plantation project can go ahead; new plantations between 40 and 100 hectares must be registered with the government; and projects larger than 100 hectares must pass an environmental authorisation process prior to establishment.

In June 2023, UPM’s second Uruguayan pulp mill opened. Located near the central city of Paso de los Toros, the mill receives 1,300 truckloads of logs and chemical inputs every day and can produce 2.1 million tonnes of pulp annually. The logs are ground into what are called “chips”, then pressure-cooked and subjected to intense washing. This uses 129 million litres of water daily, which is returned to the Río Negro after 10 cycles. The pulp then travels to the ports of Montevideo and Nueva Palmira on a cargo train, which began operating in 2024. And it leaves the country.

Forestry pollution

Recent incidents, such as a sulphuric acid spill at UPM’s Fray Bentos plant in mid-March, are raising concerns about the environmental impact of Uruguay’s pulp and paper industry. Paso de los Toros accumulated 11 sanctions during its construction and was issued with fines for each by the environment ministry. This has been followed by three incidents since its opening, including discharges of caustic soda (investigated by the ministry in September 2023) and cellulose into waterways.

In 2017, Daniel Panario, a science researcher at the University of the Republic (Udelar) in Montevideo, co-authored a report for the human rights NGO, Serpaj, which explored UPM’s then-upcoming Paso de los Toros project. It looked beyond the contribution that such forestation projects can make to carbon sequestration, to highlight their negative impacts. For example, the water demands of eucalyptus trees, which are not native to Uruguay, can generate water imbalances in the country’s grassland soils. This reduces the amount of water that flows into aquifers to feed local water cycles.

Panario says another problem is eucalyptus roots, which spread out horizontally and create competition for space. This adds a barrier to the movement of organic matter through the soil, which accelerates its acidification.

Panario also points out that, beyond the plant’s spillages, the polluted water discharged from Paso de los Toros contributes to dense green blooms of cyanobacteria in the Río Negro: the pollution increases the availability of nutrients in water bodies, which is altering aquatic ecosystems. This has led, for example, to large deposits of cyanobacteria on the beaches of Palmar, a tourist destination. “You have to close the window, it’s hard to concentrate. You go to sit down to study, and you feel the smell,” says veterinarian Juan Aguirrezabala. He has lived in Palmar for seven years and assisted in the autopsies of animals found after drinking from its polluted reservoir.

Polluted water discharged by UPM into the Río Negro contributes to the disruption of aquatic ecosystems and triggers dense, green blooms of cyanobacteria (Image: Eitan Abramovich / Dialogue Earth)

Geese on the bank of the Río Negro, in Paso de los Toros. Local veterinarian Juan Aguirrezabala has encountered multiple wild animal deaths attributed to the ingestion of polluted water (Image: Eitan Abramovich / Dialogue Earth)

Dialogue Earth contacted UPM about the Fray Bentos acid spill as well as its potential contribution to cyanobacterial blooms. The company referred these matters to the environmental authorities. The Ministry of Environment told Dialogue Earth UPM is still within the deadline to reply to its request for information regarding the latest incident. It says a heavy sanction will not be ruled out if irregularities are detected.

On its website, UPM shares information regarding the sustainability of its business. It says 40% of its land is used for livestock activities, natural resource conservation and infrastructure. It describes how its production uses a circular economy system, with constant water monitoring and measures to minimise environmental impacts.

Communal consequences

Edgardo Gutiérrez Lavié, councillor for the National Party in Paso de los Toros, argues that the residue left in the city is significant. He says he can see the plant across the river from his front door, but he can also feel it: there is a “musty smell” in the air, and “a constant buzzing” coming from the chimneys.

Smoke rises from UPM’s Paso de los Toros plant. Local councillor Edgardo Gutiérrez Lavié lives opposite this factory and claims its smoke is toxic (Image: Eitan Abramovich / Dialogue Earth)

“There are breathing problems, eyesight problems, nasal secretion problems,” he adds. “There are many things that are polluting because what is coming out of that chimney is not just [ordinary] smoke. It’s a lot of toxins.”

In reports filed to the monitoring commission, UPM said “no significant environmental contingencies associated with the air matrix have been noted”. UPM also said it had not received many complaints. The company does acknowledge, however, that “there have been exceedances of the established daily [chemical discharge] limits and a frequent occurrence of diluted odorous gas venting, especially during the first months of operation”.

Gutiérrez Lavié says the pulp project has created another problem for him, on his cattle ranch. When the eucalyptus trees are cut down, displaced wildlife such as foxes, caracaras and wild boars emerge to prey on his livestock. One of his sheep was attacked by what he thinks was a fox, based on the bites. That same fox may be one of the many that can be seen on the sides of busy roads.

On his land in Tacuarembo department, 50km from Paso de los Toros, Gutiérrez Lavié checks his injured sheep. He believes a fox attacked it after being displaced by forestry activity (Image: Eitan Abramovich / Dialogue Earth)

A dead fox on the outskirts of Durazno, approximately 60km south of Paso de los Toros. Gutiérrez Lavié says wildlife including foxes, caracaras and wild boars are displaced when forestry plantations are cut down, after which they prey on his livestock (Image: Eitan Abramovich / Dialogue Earth)

Meanwhile, protesters at town hall meetings have been demanding housing for the 12 families of the La Balanza settlement. They say these families were left out of UPM’s delivery to the state of 60 houses in 2023, which included repurposed dwellings that were previously used by workers who built the plant.

One of these petitioners is Lucas Correa, who also bemoans the lack of jobs created by UPM. He says: “Many people who were in the settlement with us came from elsewhere in search of work through UPM, but today, the jobs here are provided by the municipality, and many people inherit jobs from their parents. And the rest of us are either living on a hand-to-mouth basis or going somewhere else to work. The going is tough.” The demand for housing and jobs in Paso de los Toros contrasts with what is happening in the city of Durazno, around 60 kilometres to the south. Durazno is home to many who commute to jobs at the Paso de los Toros plant, and the housing market is strong there.

Lucas Correa (right) and his neighbours protest in front of Paso de los Toros’ city hall. The group represents 12 local families who have been overlooked for repurposed UPM housing that was gifted to the city. Their banner reads: “Where are our houses? The La Balanza neighbourhood is here” (Image: Eitan Abramovich / Dialogue Earth)

The mayor of Durazno, Carmelo Vidalín, highlights the installation of a new UPM tree nursery and the arrival of 15 transport companies, which between them generate some 600 jobs linked to the mill. He adds that he has been advocating for UPM’s goods train network to also be made available for other freight, and for passengers. Vidalín admits, however, that “the results in general have been negative in terms of pollution”. He claims he has always received good answers from UPM and the national authorities during pollution incidents.

Henry Rosano lives 200 metres from the train tracks in Durazno. He was a driver during the construction of the Paso de los Toros plant and was dedicated to UPM; he still takes advantage of the job opportunities the plant offers. However, Rosano speaks with caution. He believes UPM “gave people a lot of work”, but says the primary benefit – the pulp mill – does not favour Uruguayans.

Rosano proposes taking stock in 40 to 50 years to find out “if it was worth it or not”. He concludes: “That’s for those who come after us to know.”