Social conflicts UPM promotes the project as creating 8,000 permanent jobs (UPM, 2018).  However, these are indirect jobs that are expected to be created in the value chain, such as in the forestry and the transportation sector. The project itself will only create 400 - 500 permanent jobs, after the construction phase has been completed (Cuecar, 2018). It is questionable if that many jobs will be created in the value chain. According to official date, only 1,178 jobs were created in the forestry sector between 2007 and 2016, the period in which Uruguay’s two pulp mills came online (FundaVida, 2018).

During the construction phase there will be a large influx of migrant workers, estimated at over 5,000 people, just to work on the project. This does not include their families and others who will come, looking for new opportunities. The EIA warns about a possible increase in prostitution, crime and violence in the region of the mill due to the arrival of this large group of migrants (El Observador, 2018). It also warns about an impact of public services like health care, a rise in rent prices and a sharp rise in unemployment figures once construction is completed. According to the agreement, it is the duty of the government to provide public services such as health care, as well as access to (subsidized) credit systems to facilitate access to housing for people with fixed incomes.

Expropriations The project to build a new railway will impact an estimated 35,750 people and over 200 expropriations will have to occur to establish the 275 kilometer railway between Paso de los Toros and Montevideo (MVOTMA, 2018). A movement called "No al tren de UPM", is protesting against the project because of the lack of consultation of the impacted people and the generally flawed Environmental Impact assessment and licensing process. It has also send a letter to the Inter American Development Bank and the CAF (Development Bank for Latin America), asking them to refrain from financing the project (Ecos, 2019). They have also used constitutional previsions to start a petition that require the government to prohibit the railway from passing through the urban areas of the Municipality C, in Montevideo (No al tren de UPM, 2019). Similar initiatives are also taking place in other towns such as Sarandí Grande, Florida, Durazno, and 25 de Mayo.

Water floods Another 10,000 hectares, belonging to 750 families will be lost as it will be flooded by the reservoir that will be used to guarantee a minimum flow of water in the Rio Negro (FundaVida, 2018).This will not only impact the people that will loose their land, but it will also have broader economical impacts, as the lake is a popular tourist destination, and raising its level will flood existing beaches. This has led to strong protests by families that live next to the lake. As a result of this, in December 2018, the affected municipality declared the decision by UTE to raise the water level ‘illegitimate’, and the minister of Industry, Mining and Energy agreed that further studies were required, taking into account different aspects from the perspective of the country (Minister Cosse, 2018).

Health impacts There are also concerns about the lack of consultation of rural communities, especially about the impacts of the plantations in Uruguay, since these are not covered by the EIAs. Health impacts from the pollution caused by the mills and the plantations. The effluent of the mills contain chlorine and other endocrine disrupters, which contaminate the water and the fish. The mills also emit nauseating odours. Furthermore, many pesticides are used in the Uruguayan plantations, which affect the health of workers and pollute the water of nearby streams and rivers (Lang, 2008).

Cost of living If UPM does decide to build the mill, it will operate in a Free trade zone; it will not pay taxes to Uruguay for the export of pulp. These huge tax cuts have caused protests as the cost of living keeps rising. The huge investments that the government will make will also increase the country's fiscal debt, which will further increase the cost of living, as the government will have to increase revenues to repay the debt (El Pais, 2017). An opinion poll made for UPM shows that 57% of the Uruguayan population does not agree with the tax cuts (FundaVida, 2018). Critics argue that the project, which includes the mill and associated infrastructure, will have a very high cost to tax payers, with very little return (Bacchetta, 2018).

Labour legislation In the agreement Uruguay commits to change labour legislation, especially those that apply to the right of workers to strike. The agreement specifically states that if the new legislation is not “fully satisfactory to the needs of UPM, it could prevent UPM from issuing a positive FID” (UPM, 2018). This meddling of a corporation in a country’s labour laws is seen by critics as highly undemocratic and going against the Conventions by the International Labour Organization, which guarantees the right to strike (El pais, 2018).

Impacts on water To address the water availability issue, Uruguay has committed to guarantee that the river will have a minimum flow. This will be done by raising the water level of the Rincon del Bonete Reservoir by about one meter, causing the flooding of 10,000 hectares, and then controlling the release of the water into the Rio Negro (FundaVida, 2018).

Some 200 kilometers downstream polluted river water will flow into the Uruguay river which forms the border between Uruguay and Argentina. The mouth of the Rio Negro is located very close to UPM’s first mill in Uruguay, located in Fray Bentos. When this mill was built in 2007, it led to a diplomatic conflict between Uruguay and Argentina, over pollution of the river. Argentina claimed it had not been consulted and feared severe pollution of its touristic beaches. With this second mill that trans-boundary pollution will double, which potentially can lead to a new diplomatic crisis. Despite the Uruguayan Government's claim that it publishes information about the water quality of the Uruguay River, CARU, the Administrative Commission for the Uruguay River, only publishes information about Fecal Coliforms, Scherichia colis and Enterococci (CARU, 2019).

Eutrophication The effluents of the mill will be discharged in the small Rio Negro, which is already suffering from high levels of eutrophication. The 150 kilogram per day (UPM, 2017) to 213 kilogram per day (Baccheta, 2018) of phosphor that the mill will discharge into the river will worsen the eutrophication process and the growth of cyanobacteria, as will the temperature of the water, which will be on average around 30C (Bacchetta, 2018). In a problematic statement that shows complete subservience, the mayor of Paso de los Toros said that UPM will help clean the river as it will force the government to take action and adopt laws (UyPress, 2018). The already strong eutrophication of Uruguayan rivers, due to intensive agriculture, caused a large bloom of cynanobacteria along Uruguay's coast, in the summer of 2019, making the water unfit for swiming (El Pais, 2019).

Chlorine discharge The mill will also discharge chlorine containing contaminants, as it will use Elemental Chlorine Free technology, rather than the Total Chlorine Free technology for its bleaching process. Chlorine is an endocrine disrupter. A 2013 PhD thesis which assessed the impacts of endocrine disrupters in the lower Uruguay river, found that when Astyanax fasciatus wildfish were exposed to pulp mill effluent, their egg production decreased by half and their testes were smaller (Carames, 2013).

In 2018 the government amended the Law on Hydrobiological Resources (N° 19.175), limiting research and the publication of results into its eutrophic aquatic ecosystems to authorization from the Ministry (Bacchetta, 2018). Uruguayan researches published a letter in Science complaining about this censorship (Science, 2019).

Impacts on biodiversity The plantations required to feed the mill are located predominantly in the departments of Tacuarembó, Rivera, Cerro largo and Durazno, and in a lesser extent in Lavalleja and Treinta y Tres. UPM estimates that 180,000 - 220,000 ha of plantations are already established and that an additional 60,000 – 90,000 ha will be required for a sustainable supply of wood for the mill.  Most of these plantations were and will be established in Uruguay’s natural grasslands (UPM, 2018). Though the EIA for the mill does not specifically apply to the plantations, it does find that the establishment of plantations has negative effects on the biodiversity of birds and mammals that live in these pastures (UPM, 2018).

The plantations will also affect aquatic biota, as they lower the ground water level and reduce the water level of rivers by an average of 38%, and in dry years up to 63%. This happens mainly because the leaves intercept the rain water and later let the water evaporate again, not allowing it to flow into the river or underground reservoirs (UPM, 2018). Existing plantations in the region are already contributing to the high level of eutrophication of the Rio Negro and the Rincón del Bonete reservoir (Bacchetta,  2018).

The Agreement between UPM and the Republic of Uruguay In 2017, UPM signed an agreement with the Republic of Uruguay, regarding the construction of a pulp mill (UPM, 2017). This agreement has been widely criticised as being unfavourable for Uruguay and its legality has been questioned, as it was not approved by congress. In the agreement, Uruguay commits to fulfil a long list of prerequisites which should create favourable conditions for UPM. These investments are estimated to be worth somewhere between USD one billion (UPM, 2017) and well over USD two billion (Yohai, 2018). On the other hand, UPM commits to almost nothing, apart from deciding in 2020 if it will proceed, or not, with the construction of the mill.

The agreement signed between the Republic of Uruguay and UPM, requires Uruguay, among other things, to:  

• Establish a free trade zone for the mill
• Build a 275 kilometers railway between los Toros and Montevideo
• Renovate a network of roads so they can be used by tri-train trucks, including a viaduct in Montevideo
• Ensure a stable waterflow in the Rio Negro river, at no cost to UPM, and provide a guarantee that UPM will have the right to use the water
• Build a port for the export of pulp at the site of the present fisheries port and build a new fisheries port
• Buy all the electricity that the plant will produce at a higher price than the international one, during 20 years
• Let UPM have influence in the curriculum of a new technical degree “Tecnólogo Control de Processos”, to be offered at the Universidad Tecnológica
• Change labour law legislation, especially on the right to strike
• Speed up the licensing process.

Critics argue that in the agreement signed between the government of Uruguay and UPM, there is undue interference by UPM in Uruguay’s democratic processes, putting pressure on the government to get access to resources, in exchange for a few jobs.  “If carried out, the agreement between the Uruguayan government and UPM will mark a before and after in the history of the country, as a foreign company will have been granted the benefits and attributions of a colonial dependency statute”, said Victor Baccheta. Uruguay will invest more than half of the total amount of the project, and will receive 0% of the profits, which are estimated to be worth USD 1.5 billion a year (Melazzi, 2018).

Lawyers have stated that the contract is unconstitutional, as the government does not have the mandate to make such deals and many of the commitments it assumed require approval by congress (Movus, 2018).

Since the mill will be established in a free trade zone, Uruguay will not collect taxes from the export of pulp. It will only collect those from the export of timber to the Free Trade Zone. This means there is a very low benefit for Uruguay’s people in hosting the mill. Andres Massoler, a senior member of the Ministry of Economy and Finance, resigned during the negotiation period, as he disagreed with the high fiscal benefits that Uruguay was willing to give to UPM (El Observador, 2017).

The commitment to provide or deny permits for the mill, its plantations and the associated infrastructure, within a given time period, as estipulated by the contract, may affect the rigour with which they are analysed.

Uruguay commits to build a 275 kilometers railway between los Toros and Montevideo while UPM does not need to provide any minimum volume guarantees. The agreed price is USD 0.005 per tonne per transported kilometer, which amounts to less than USD three million a year, if UPM were to export all its production. According to Movus, the construction of the railway is expected to cost the government USD 2.2 billion, so it will never recover its investment (Movus, 2018). While UPM will not make any significant financial contribution to the railway, it will have priority access and it has influence over the construction process, as any changes to the original project will have to be approved by it. UPM has stated that it believes that the Uruguayan official rail transport company does not have the required experience to build the railway (FundaVida, 2018). 

The government has committed to ensure a stable waterflow in the Rio Negro river and guarantee UPM it will have the right to use the water. This will happen to the detriment of Uruguay’s State Energy company (FundaVida, 2018), which uses the water from the Rincon del Bonete Reservoir to produce hydroelectric power, which is cheaper than the power that UPM will produce (El Observador, 2017).

The government has committed to build a port for the export of pulp. In September 2018 the government’s agency launched a tender for its construction (Sud Estada, 2018). A problem is that the winner of the tender, whic is a concession for 50 years, is required to move at least 1.8 million of pulp a year, yet there is still no guarantee that the mill will be build (El Observador, 2018). The only private party (Tebetur) that had shown interest to build the port by October 2018, was a company linked to UPM. It won the tender, even before the end of the public consultation round for the project (Dinama, 2019).

According to the agreement, Uruguay will buy all the electricity that the mill will produce, at a higher price than usually (Melazzi, 2018). This is criticised, especially since Uruguay already produces more electricity, from windmills, than it consumes (El Pais, 2018). According to an estimate by Bacchetta, this translates into a governmental subsidy of USD 903 million per year for the company.

The fact that UPM will be involved in developing a new course in “Process control”, to be offered at the Universidad Tecnológica, puts in question the academic freedom of the institution and its academics.