The installation of Canadian mining company Rio Tinto Alcan in Paraguay is creating a face-off between those who see it as an opportunity for development and those who denounce its environmental risks. Rio Tinto has plants around the world, but it is accused of polluting sources of drinking water and devastating natural landscapes.

This article, published by Télam in March of this year, points to one of the largest and most controversial spaces of foreign direct investment in Paraguay. Canadian aluminium giant Rio Tinto Alcan entered talks with the coup regime of Federico Franco after their project was stalled by democratically elected President Francisco Lugo. In April, Paraguayans elected Horacio Cartes as President, he is expected to be favorable to Rio Tinto Alcan’s proposals.

The project to install a multinational aluminum smelter in Paraguay has generated a debate between those who defend the initiative as an opportunity for economic development and those who are opposed due to environmental risks and the costs it will incur to subsidize the energy.

“We are against yielding subsidized energy to multinational companies and also the current government – headed by Federico Franco, who began negotiations with the company -is illegitimate because it’s the result of a coup,” Maria Paz Valenzuela told Télam. She’s the spokeswoman of the campaign “No to Rio Tinto Alcan” which, together with 25,000 signatures, opposes the installation of the plant.

Rio Tinto Alcan (RTA) is a powerful Canadian firm in the field of aluminum production. It has plants around the world, but it is accused of polluting sources of drinking water and devastating natural landscapes.

The company seeks to build a plant and invest around $4 million in the Itapúa or Alto Paraná areas, with a promise to create jobs and attract business.

However, the movement “No to Rio Tinto Alcan,” which brings together professionals, former officials and environmentalists, opposes the construction plans and denounces the political reasons amid the campaign trails. More than anything, it highlights two main issues: energy and the environment.

For and against.

“The arrival of the aluminum electro-intensive industry in Paraguay, a country that has no raw materials, which has no coast, nor market, can only be because they want to compensate these obvious drawbacks with much lower energy costs than other countries where these factors exist,” said Mercedes Canese, former Deputy Minister of Mines and Energy, who wrote a book on the subject with her husband, Ricardo Canese.

RTA’s detractors argue that Paraguay is suffering the consequences of the lack of an energy policy.

“There are power outages at peak times, allegations of a lack of investment and the contradiction of those who govern who want to subsidize RTA‘s energy consumption,” said Valenzuela.

However, the project is defended by a sector considered to have a “strong case” to explain the importance of the arrival of Rio Tinto to Paraguay. One defender is Walter Bogarín, current vice president of the Center for Metallurgical Industries.

“Paraguay has enough power, which is one of the main elements to produce aluminum, our energy is going to Brazil and Argentina to develop industries in those countries,” he said in a telephone interview with Télam.

For Canese, the picture is different: “Argentina and Brazil always pay us far less than market prices and that’s always been our demand,” she said.

She noted “the maximum rate that RTA can afford – US$38 per megawatt / hour (MWh) – to be structurally efficient would leave a deficit for industry in Paraguay and it doesn’t even cover production costs. Its much less than what Brazil pays ($60 per MWh, including power transmission charges)”.

In terms of generating employment, according to Canese, “RTA will directly employ 1,250 workers, that will be subject to an unhealthy environment and most will be foreigners, as there are very few experts in aluminum in Paraguay”.

However, for Bogarín, the plant will attract a number of companies that will give a “jump” to the economy. “We have the power that others need and that generates interest and attracts business for the country,” he said.

“If it is installed, companies that develop aircraft components might come; all could be created in Paraguay if there is an aluminum company,” he concluded.

The environmental issue

The second point on the negotiating table that had been taken up in March deals with the environmental issues. Bogarín acknowledged that “this type of industry can cause pollution if allowed.”

“The environment is non-negotiable for us, we would not support something that goes against it, we do not discuss its aggression of any kind in exchange for money,” said Bogarín.

For Canese, however, Paraguay has laws that are “very permissive environmentally” and since it is not an “industrialized country”, it does not charge fines for the emission of greenhouse gases.

“This is all extremely convenient for Rio Tinto, which will emit 3,100 tons of carbon dioxide per day each year and more than 11 tons of sulfur dioxide, a gas that causes acid rain when there are thunderstorms, which are very common in the proposed locations of installation,” she said.

The debate was on hold due to the elections on April 21 and although there are eleven candidates for the Palacio de Lopez [Translator’s Note: Presidential palace and seat of government in Paraguay], the contenders seem limited to businessman Horacio Cartes, of the Colorado Party, and former Minister Efrain Alegre, of the Authentica Radical Liberal Party (PLRA, the government at the time), both of which are in favor of the installation of the plant.

“Currently there is total freedom of expression, we can debate and discuss, but we know it will be the politicians who decide,” said Bogarín.