We often receive questions about UPM’s operations in Uruguay. Here we answer some of the most frequently asked queries.
At UPM we are open to a constructive dialogue on how we can respond to global challenges, people's daily needs and create a fossil-free future. UPM complies with the law, the requirements of certificates and its responsibility principles in all its operations.
The start of the forest industry in Uruguay is based on the national forest law passed by the Uruguayan government in the 1987 – through which the country sought to diversify its land use and industrial structure, and to advance the protection of native forests. In addition, the country has created a taxation practice that attracts capital-intensive investments from various industries.
These investments have created jobs, export income, educational opportunities, and better transport connections and services for the country, especially in rural inland areas. In the case of the pulp industry, the entire value chain from wood supply to logistics is located in Uruguay. UPM operations alone represent more than 3% of Uruguay’s GDP. UPM continuously assesses the environmental, social, and economic impacts of its operations and engages in active dialogue with its stakeholders.
UPM follows the Uruguayan tax legislation. Uruguay has a well-established tax regulation and a tax framework that systematically promotes long-term investments. Part of this tax framework is a free trade zone (FTZ) regime, an arrangement that Uruguay, like numerous other countries, has used for decades to attract major investments. In 2023, there are 12 free trade zones that are creating quality jobs in Uruguay with a significant impact on exports and the country's GDP. Hundreds of global and regional companies operate within Uruguay’s FTZs servicing customers worldwide. All national laws and regulations are followed in the free trade zones, including strict environmental and social regulations.
UPM's two pulp mills in Uruguay are both located in free trade zones and the company pays a fixed annual FTZ fee on both the mills. Everything outside the mill gates – from nurseries and plantation operations to logistics and transportation – is and will be subject to local taxes in Uruguay. After the launch of the UPM Paso de los Toros pulp mill, the total estimated annual contribution of UPM's value chain in tax and social security payments is estimated to be USD 280 million for the company's operations.
In May 2023 water levels in the Paso Severino freshwater reservoir, which serves more than half of Uruguay's 3.5 million people, were reported at historical lows, according to state water company Obras Sanitarias del Estado (OSE). Meteorologists say 50 mm of rain is needed daily through to June for reservoir levels to start to recover.
The reason for the water crisis in Montevideo was the exceptional drought and lower rainfalls received in Uruguay during the last three years because of the La Niña weather pattern. This drought is the worst in 74 years in the region, and Argentina is also seriously impacted.
Uruguay has six major watersheds: the Uruguay River, Plata River, Atlantic, Merin Lake, Negro River and Santa Lucía River. As the next map shows, 96% of all forest plantations in Uruguay are located outside the Santa Lucia water basin supplying the metropolitan area. This means that the plantations were not the cause of the water scarcity in the Montevideo area. UPM plantations are scattered in rural areas in Uruguay as a mosaic between natural grasslands, which are mainly used for cattle grazing. All natural forests in Uruguay are protected.
Both UPM mills are located outside the Montevideo water basin area. The water used by the mills is not potable water, but surface water from the river. Most (80%) of the water used in the pulping process is returned to the river after effective treatment.
The green areas in the below map represent the total area planted with trees in Uruguay.
Located in the temperate zone, Uruguay is a humid subtropical country where rainfall makes it well suited for growing tree plantations. The annual rainfall is 1,200 to 1,500 mm and it is well distributed during the year without a regular dry season.
On average, water reaching the water courses, which finally ends up going to six major water bodies (e.g. the rivers Río Uruguay and Río Negro), represents around 35% of the total rainfall. This means that water is an abundant resource in Uruguay.
The flows of the superficial water streams in Uruguay depend primarily on the rains, much more than on land use, and is therefore very fluctuating. This fluctuation reflects the amount of rain fallen in previous days, ranging rapidly from a minimal flow to a flooding situation.
For plantations in general the distribution, regularity and availability of sufficient water is essential. In addition to the amount of annual rainfall and its variability over the years, it is important to analyse the monthly distribution of rainfall. Apart from nursery activities, eucalyptus plantations are not irrigated.
Water usage of eucalyptus plantations has been studied and monitored for decades in different geographical contexts, including Uruguay. It should be noted that the water use of eucalyptus and its effects are very context specific, and therefore results from international research projects should not be directly applied to the Uruguayan context due to the differences in natural conditions such as climate, geology, soils and catchment geomorphology.
Apart from nursery activities, eucalyptus plantations are not irrigated. Plantation forest management minimises the impact on water e.g. with unplanted buffer zones and natural drainage areas, or with a mosaic of different age classes to prevent major changes in land cover. Plantations also have positive effects, including, for example, reduction of soil erosion from water runoff and flooding, and mitigation of impacts of extreme events such as flash floods and storms.
During periods of severe drought, which have historically not been common in Uruguay, eucalyptus trees reduce their growth and recycle the water inside their own biomass. They can even start dropping leaves to keep their need for water for survival at a very minimum level if there was a more severe drought.
UPM has been undertaking long-term water monitoring studies since 2007 in cooperation with Uruguay’s National University (UDELAR). The key findings of these paired catchment studies, comparing plantations and grasslands, indicate so far that:
• Plantations capture more rainfall and reduce surface water runoff volumes – this reduction coincides with the amount of water that is intercepted by the forest canopy and evaporated to the atmosphere
• The effect of this reduction becomes less noticeable as the size of the catchments increases
• Groundwater recharge is not affected
• Water quality is not affected.
Based on the above and other research, there is no evidence of eucalyptus affecting groundwater resources in the Uruguayan context, where soils are shallow, and the effective rooting depth of eucalyptus does not usually exceed the first metre due to clay-rich or rocky layers of soil.
Changes in precipitation and water availability have always been one of the key considerations in planning any industrial operations including plantations grown by UPM.
In 2019 UPM engaged with the Finnish Meteorological Institute to further study the physical impacts of climate change, considering aspects such as water availability and weather extremes. Link to the study
UPM does not use potable water for irrigation in its nurseries. The nurseries use untreated water, mainly from the nearby rivers and reservoirs (that collect surface runoff water), which are not the primary sources of drinking water for the surrounding communities. All three of our nurseries are located next to UPM’s eucalyptus plantations in Paysandú and Durazno.
The water sources used are adapted to each nursery, all of them being sources that ensure supply at any time of the year without affecting other users
The average daily water usage in each nursery is 550 m3 of which 35% is recycled in the nurseries.
A centralised precision irrigation system working through a centralised fertigation delivery enables to supply water and nutrients according to the needs of the plants.
The design of the nurseries allows the recovery of excess irrigation water, minimising nutrient inputs to watercourses. In addition, substrates with high water retention are used.
The agrochemicals used in plantations are all accepted and regulated by FSCTM and PEFC certification. All UPM plantations are certified. The amount of chemicals used has been minimised over the years.
In 2022 UPM received fines from the Uruguayan authorities, because the Santana Nursery used agrochemicals which were not registered for tree nursery use – only for agricultural use. This has been corrected so that now all of these agrochemicals are registered also for tree nursery use.
UPM’s certified eucalyptus plantations are situated on grasslands that were previously used for cattle grazing. Plantations are established on forest priority soils, which are modified natural grasslands with poor productivity for agriculture but suitable for tree plantations. UPM does not, and will not, convert natural forests into plantations. All natural forests are protected by law.
In general, the biodiversity values in forest plantations are lower than in natural forests and the composition, at species level, is different. Forest plantations, on the other hand, have turned out to be beneficial for some animal species restricted to forests.
The focus of UPM’s biodiversity work in Uruguay is on the unplanted area. On average 60% of the UPM owned land is planted and 40% unplanted. These natural unplanted areas are a harbour for many natural species of plants and animals. In 2020 UPM defined biodiversity indicators for its land in Uruguay as part of its global biodiversity programme established in 1998.
At present the network of UPM’s formal conservation areas in Uruguay covers nearly 14,000 hectares. The aim is to increase these protected areas and continue with UPM’s long term biodiversity programme. Unplanted areas are managed while maintaining a network of natural areas that conserve representative and complementary samples of biodiversity at all levels and contribute to connectivity. Significant concentrations of biodiversity have been recorded in environmental studies. A total of 33 species were identified for the first time in Uruguay’s flora by UPM. At the same time, a worldwide unknown species was detected – the news were published in a specialised scientific magazine under the scientific name Antyphythum charruasorum. The goals of the network include biodiversity at regional, ecosystem and species levels.
Eucalyptus plantations require relatively low amounts of nutrients to grow and are very efficient in using the available nutrients, especially when compared to agricultural crops. This is supported by the harvesting method used by UPM where leaves, branches and bark are left on site to decompose and recycle nutrients back to the soil.
Long-term monitoring studies have been undertaken to assess the soil impacts of plantations. These changes include an increase of organic carbon, pH reduction and a reduction of cations (positively charged ions) such as calcium, magnesium and potassium. These modifications are not affecting forestry productivity, at least for the initial three or four rotations. If needed, these can be managed by adding standard natural soil amendments (e.g. dolomite or calcite) and minor amounts of fertilisers, clearly lower than the amounts used in agricultural crops.
All UPM plantations are certified to both FSC™ (SGS-FM / COC-000606) and PEFC (UY11 / 20080091) forest standards. We only use agrochemicals and fertilisers that are allowed by both these certification schemes. The intensity of use of agrochemicals in forest plantations is much lower than, for example, in agriculture, as these products are required only during the first year of rotation cycles. Eucalyptus in UPMs plantations are harvested every 10 to 12 years. Environmental aspects of the plantations are controlled annually by external audits as part of the external certification process.
If plantation areas were to return to pastures or other land uses in the future, changes in the soil chemistry can be managed with proven, simple and affordable agricultural practices.
UPM is fully committed to respecting and protecting human rights in its operations globally, including in Uruguay. Our human rights work is based on the UN Guiding Principles on Business and Human Rights and guided by our Code of Conduct and its associated policies, rules and guidelines. We expect a similar commitment from our suppliers and third parties, as defined in our Supplier and Third-Party Code.
Our human rights due diligence in Uruguay has been and will continue to be an ongoing, people-centric process with continuous engagement and dialogue particularly with those potentially affected but also with the broader society, including stakeholders that are critical towards our operations.
Any substantiated allegations related to human rights violations would be investigated, and remedy would be provided where deemed necessary.
UPM’s Code of Conduct forms the basis for respecting and promoting decent working conditions and fair employment at UPM. Our global Human Resources Rules define more in detail the principles of working conditions, labour practices and decent work as defined by the International Labour Organization (ILO). Wherever we operate, we comply with international, national and local laws and regulations, and respect international agreements concerning human and labour rights and freedom of association.
Contractors in Uruguay are covered by UPM’s contractor assurance system to ensure compliance with UPM standards and Uruguayan laws. Uruguay has advanced, strict laws for outsourcing. A three-phase system helps to oversee the work conditions of our contractors and their employees:
• Contractors and their employees submit their data to a digital tool, including personal information such as age and state of health, as well as work permits and salaries.
• A third party company conducts labour compliance through cross-examination of all data in the tool, including payroll.
• The UPM contractor assurance team conducts field audits and interviews contractor employees about on-site security, safety and working standards and crosschecks findings with pre-existing data.
UPM does not acquire land irresponsibly. UPM has established its eucalyptus plantations in Uruguay on purchased and leased lands. There is a well-established land sale market in Uruguay and the related legislation is robust – therefore the context for land ownership and sale is very similar to that in Finland. The lands purchased or leased by UPM in Uruguay are privately owned and the acquisition follows defined processes and applicable legislative requirements.
Land acquisition is conducted through willing-buyer willing-seller transactions, the transactions are negotiated, and sellers are provided with fair compensation based on prevailing market values. In Uruguay land is not expropriated for the use of plantation forestry, nor can the government allocate land to forestry companies by bypassing the rightful private landowners. The prevailing market prices for land transactions are established transparently and fairly in the market.
UPM’s plantation development does not result in involuntary resettlement of people.
UPM plantations are established as a mosaic – several smaller forest management units – what enables access opportunities and other land uses in between the plantations.
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