Uruguay River: Green Hydrogen Deal Nears as New Pulp Mill Revives Old Fears

URUGUAY–ARGENTINA · POLITICS

The Uruguay River is quietly testing whether two countries that once fought a five-year diplomatic war over a pulp mill have learned to de-escalate — just as a new paper plant appears on the horizon.

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De-escalation on the Uruguay River

The Uruguay River dispute that has strained Montevideo and Buenos Aires for more than a year is moving toward a negotiated landing. The US$5.385 billion green hydrogen and synthetic-fuels plant that HIF Global plans in the department of Paysandú will be relocated away from the riverbank site at Constancia — barely three kilometers across the water from the Argentine resort city of Colón — to an industrial property further inland, Uruguayan media reported in July and August.

El Telégrafo of Paysandú reported on 19 July that the government had settled on a site belonging to state oil company Ancap in Nuevo Paysandú, next to its portland cement plant, and that state utility UTE had agreed with the company on an electricity price close to US$45 per megawatt-hour. Infobae reported on 12 August that the leading option is a 48-hectare, industrially zoned property controlled by Ancap’s biofuels arm ALUR — whose ethanol plant would also supply the project’s captured biogenic CO2. Lawmaker Juan Gorosterrazú said in early July that HIF had accepted the move, which removes the “visual contamination” objection raised from Colón: the new location sits roughly ten kilometers from the Argentine city, no longer directly opposite its beaches.

The economics are converging too. President Yamandú Orsi said on 28 August that the price numbers “had moved closer” — the gap between UTE’s offer and the US$40 per megawatt-hour HIF has sought since 2023 has narrowed, as we reported on 30 August. Industry Minister Fernanda Cardona cautioned on 22 July that “there is no contract with HIF yet”: the parties are closing a memorandum with public agencies, after which the company would seek financing and take its final investment decision in 2027. The project — a 1.1-gigawatt electrolyser fed by roughly 2,300 megawatts of new solar and wind capacity — would be the largest private investment in Uruguay’s history, a bet we examined in August.

How the Conflict Played — and Why It Stayed Civil

The dispute escalated fast after Uruguay granted the project location viability in November 2025. On 2 November, hundreds of Colón residents, environmental groups and tourism operators marched to the General Artigas international bridge; a second caravan followed on 16 November. The protests were explicitly backed by Fundavida, the Gualeguaychú assembly that led the historic fight against the Botnia pulp mill, and its playbook was visible: bridge caravans, cross-border networks, and demands routed through the Administrative Commission of the Uruguay River (CARU), the binational body created by the 1975 river statute.

The conflict also acquired a judicial dimension. In April, federal judge Hernán Viri in Concepción del Uruguay partially admitted a pre-emptive evidence petition — case 3276/2026 — filed by Entre Ríos legislators Guillermo Michel, Marianela Marclay and Adán Bahl. He ordered Uruguay’s environmental agency Dinacea to hand over the project’s authorization request and impact study, asked CARU whether the venture had been formally notified, and appointed a court biologist, MercoPress reported. La Nación reported in June that the Argentine judiciary had advanced in the case. Entre Ríos governor Rogelio Frigerio had threatened in March to take the matter to The Hague if the plant went ahead opposite Colón.

What did not happen is as notable as what did. Foreign ministers Mario Lubetkin and Pablo Quirno met twice in six months; at their 12 May meeting in Montevideo — joined by Frigerio, Colón mayor José Luis Walser and Uruguay’s environment and industry ministers — Uruguay formally put “other possible locations” on the table in a joint communiqué. Quirno’s line set the tone: Argentina “will never oppose investments in Uruguay,” he said, describing a “conciliatory, pro-investment position” aimed at win-win solutions. Paysandú mayor Nicolás Olivera confirmed after the meeting that Argentina had never asked to delay the project — only to move it. Uruguay’s environment ministry had already included Colón in the plant’s official zone of influence, forcing cross-border impacts into the full environmental study HIF must still file.

The Botnia Shadow

Every actor in this story measures itself against 2005–2010. Back then, the installation of the Botnia (later UPM) pulp mill in Fray Bentos triggered a blockade of the Gualeguaychú–Fray Bentos bridge that lasted years, poisoned bilateral relations and landed before the International Court of Justice. The ICJ ruled in 2010 that Uruguay had breached the procedural obligations of the 1975 river statute but had not been proven to cause environmental harm; the mill stayed. Former president Tabaré Vázquez later admitted he had considered armed-conflict scenarios during the crisis, AFP recalled in May.

This time, the procedural channel worked early: CARU was seized, the impact zone was widened to Argentine soil, and the site was moved before positions hardened. The contrast is the strongest evidence that both governments absorbed the lesson of the pulp-mill war.

Enter the Next Paper Mill

The test of that lesson may come sooner than expected. In February, Uruguayan deputy Walter Verri confirmed that the investor group Amberplan is studying a new paper plant on the Uruguay River — a US$800 million facility producing 144,000 tonnes of tissue paper a year, mainly for export to Argentina, with Paysandú and neighboring Soriano as candidate locations, according to El Telégrafo, El Once and Gualeguaychú’s El Día. “I want to roll out the red carpet for them to set up in Paysandú,” Verri said, confirming coordination with mayor Olivera.

The project is at study stage and no environmental filing exists. But the fact that Argentina’s Entre Ríos press covered it under headlines like “another paper mill opposite our shores” shows how quickly the old reflexes return. A pulp or paper plant is precisely the asset class that started the 2005 war — and unlike hydrogen, it carries the word that still mobilizes Gualeguaychú.

What to Watch

Three milestones will show whether the de-escalation holds: the signature of the HIF investment agreement, which Olivera said in July was “days, not weeks” away; the company’s full environmental impact study, which must now assess effects on Colón and include public hearings; and the final investment decision, expected in 2027. On the Argentine side, the Concepción del Uruguay court case remains open and could reactivate if the process stalls.

And then there is Amberplan. If the tissue mill advances to a formal filing, the 1975 statute obliges Uruguay to notify CARU before authorizing it — the exact procedural step whose omission lit the fuse two decades ago. The river has seen this movie before; the sequel, both governments insist, will be different.

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