Aug 01, 2006. /Lesprom Network/. Spanish paper producer Ence is mulling over cancelling the construction of its pulp mill in Fray Bentos, Uruguay, on the border with Argentina, which has caused a diplomatic conflict in the region, Invertia reported citing Argentine daily La Nacion. The decision has reportedly been taken following a meeting between Ence’s president, Juan Luis Arregui, and the chief of cabinet of Argentina, Alberto Fernandez, and Argentina’s foreign minister, Jorge Taiana, held in Madrid in June 2006. Uruguay defends the construction of two pulp mills on the border river Uruguay, in Fray Bentos, by Ence and Finnish paper producer Metsa-Botnia, needing total investments of some $1.8 billion. Argentina protests against the construction of the paper mills, saying it would damage the environment. The violent protests in the Argentine border city of Gualeguaychu, in Entre Rios province, have caused to Uruguay losses of some $500 million, the Uruguayan government said. Argentina filed a claim against Uruguay in the International Court of the Hague in the first half of 2006 in connection with the construction of the pulp mills, and earlier in July 2006, the court ruled in favour of Uruguay. The next hearing of the International Court of the Hague is scheduled for January 2007.