The Supreme Court of Spain has uphold Ence's appeal against a previous decision of the National High Court and has confirmed the legality of the extraordinary concession extension granted to the Ence Pontevedra pulp mill. Under the concession, the Ence's Pontevedra pulp mill is allowed to operate at the current site until the year 2073.
The future of Pontevedra eucalyptus pulp mill in Spain’s northwestern region of Galicia is finally secured. The pulp and renewable energy company Ence Energía y Celulosa is permitted to continue operations at the Pontevedra pulp mill beyond 2033. This is the result of two rulings published by the Spanish Supreme Court in relation to the long-standing legal dispute over the future of the plant at its current site at the beginning of February.
With these rulings the Supreme Court has uphold Ence’s appeal against a previous decision of the National High Court and has confirmed the legality of the extraordinary concession extension granted to the Ence Pontevedra pulp mill in 2016, Ence said.
Ence can produce up to 680,000 tpy of bleached hardwood pulp at the Pontevedra biofactory. Under the extended concession, the company is allowed to operate at the current site until the year 2073.
In 2016, Spain’s Ministry for Agriculture and Environment under the government of Mariano Rajoy had extended the concession for the Pontevedra pulp mill until 2073, but annulled this decision three years later following a government change. In July 2021, the National High Court of Spain also ruled that the extension of the concession for the plots on which the mill stands was illegal. The Spanish Public Prosecutor’s Office argued that the maximum concession period could not exceed 75 years from the date the first concession was granted. As the Pontevedra plant was first commissioned in 1958, this meant that operation had to be ended in 2033 at the latest. The National High Court ruled that Ence should either wind down the pulp mill or remove the operations to another location.
As a result, Ence had reported net asset impairments and provisions for expenses of €200m in its 2021 financial statements. At the same time Ence appealed to the next highest court, the Spanish Supreme Court.
At the start of February, the Supreme Court of Spain ruled that concessions granted prior to the introduction of the country’s General Law on Coastal Protection of 1988 may be extended, provided favourable environmental reports. This was the case with Ence Pontevedra, which had favourable reports from the respective authorities, the court explained.
Ence has welcomed the latest decision by the Supreme Court as it would provide security for future operations at the Pontevedra site and make it possible to undertake its investment plans, Ence announced.
In addition, it will give a boost to the company’s 2022 results. “The reversal of asset impairments and expense provisions recorded in the 2021 financial statements, as a result of the National Court rulings, will have an estimated positive impact of €169 million on the company’s profit in 2022,” Ence explained.
