Uruguayan President Tabaré Vázquez announced the country will receive the biggest investment in its history from Finnish company UPM, which will invest US$5bn in infrastructure and logistics development over the next few years.
"Uruguay could accommodate a third state-of-art pulp mill with proven environmental performance, if the logistics infrastructure would be rebuilt to support large scale export-oriented businesses," said Jaakko Sarantola, UPM's senior VP for Uruguay, in a government release announcing the investment.
For this purpose, Uruguayan government plans within 60 days convene four working groups to analyze priorities in infrastructure, the environment, financial and economic conditions, as well as the labor market.
Discussions between UPM and the government will include development of railroad and road works, which are seen as a critical challenge in establishing a large scale industrial operation that also connects to a deep sea port.
The first working group will be headed by the transport and public works ministry (MTOP). UPM has estimated a need for 220km of highway routes, railways to transport production to the port in Montevideo, and works at the naval terminal.
The company highlighted its interest in participating in port development works, with investments of US$85mn.
Works for the new pulp mill would begin in November 2018, and production in 2020. Around 8,000 direct and indirect jobs are expected to be generated as a result.
The government estimates that the new pulp mill could have a positive impact on the economy equal to 2%-2.5% of GDP.