Uruguay's approval of paper mill angers Argentina

(Recasts, adds closure of border crossing)

By Patricia Avila

MONTEVIDEO, Nov 9 (Reuters) - Uruguay's decision to let a controversial paper mill start operating drew swift criticism on Friday from neighboring Argentina, which says the $1 billion plant will pollute a border river.

Uruguay gave the final go-ahead for the mill, owned by Finland's Metsa-Botnia group, on Thursday after a last-ditch effort to resolve the long-running dispute between the countries failed during a Latin American summit in Chile.

"We don't have a precise date, but we believe the mill will start producing pulp in about a week or maybe a little longer," a spokeswoman for Metsa-Botnia in Uruguay told local radio.

Argentina sued Uruguay at the International Court of Justice in The Hague on charges that Montevideo did not provide enough information on the project under a treaty on the Uruguay River, which divides the two nations.

The Metsa-Botnia plant, located in the Uruguayan city of Fray Bentos along the river, represents one of the largest private investments in Uruguay's history and is expected to produce about 1 million tonnes of pulp annually.

But it has soured normally friendly relations with Argentina, where environmentalists have staged protests against the mill and blocked roads repeatedly over the last two years.

Uruguay closed the border crossing closest to the plant on Friday and said it would remain shut over the weekend because of Argentine campaigners' "threats."

Environmentalists planned to hold a large protest on the river bridge on Saturday.

'STAB IN THE BACK'

Montevideo's authorization of the plant angered Argentine officials, particularly because it came just after Uruguayan President Tabare Vazquez gave a conciliatory speech at the summit in Chile and hugged Argentine President Nestor Kirchner.

Kirchner took a swipe at Uruguay's decision in a speech at the Ibero-American summit on Friday, blaming Vazquez for the abrupt end to talks mediated by the king of Spain aimed at resolving the dispute.

"You've stabbed the Argentine people in the back," Kirchner told Vazquez after the speech, according to official Argentine news agency Telam.

In Buenos Aires, the Foreign Ministry said it had summoned the Uruguayan ambassador to present a letter of protest, while Argentine Cabinet Chief Alberto Fernandez branded Uruguay's move as insincere.

"There's no way to explain how the Uruguayan president could have done such a thing (as approving the permit) after giving that speech and going over to President Kirchner to embrace him," Fernandez told local radio.

Vazquez maintained a conciliatory tone during his public remarks, saying: "My goal is to keep on talking so we can overcome this situation ... because the Argentines are as much brothers as neighbors."

Uruguayan media said Vazquez had decided to approve the mill permit after Kirchner greeted environmental protesters in the streets of Chile on Thursday, saying he supported their cause.

Metsa-Botnia, a venture of UPM-Kymmene (UPM1V.HE), M-real (MRLBV.HE) and co-operative-owned Metsaliitto, says any pollution from the plant will be within internationally accepted levels.

The company was ready to start the mill at the end of September but was forced to delay it because of the missing permit. Shares in M-real and UPM initially rose on the news but later fell back. (Additional reporting from Conrado Hornos, Tarmo Virki in Helsinki, Cesar Illiano in Buenos Aires and Ines Guzman in Santiago; Writing by Helen Popper and Hilary Burke; Editing by Xavier Briand)