$5bn Pulp Mill Meets Protest: Paraguay's Paracel Under Scrutiny

Paracel's $5bn pulp project in northern Paraguay — the largest private investment in the country's history — now faces documented accusations of water contamination, pesticide exposure, forced evictions and failed consultations across 12 communities, according to an investigation by the Guardian with the Paraguayan outlets Consenso and the Paraguay Post.

The joint venture, built from the Paraguayan Zapag group, the Austrian pulp producer Heinzel and Sweden's Girindus Investments, is planting 162m eucalyptus trees on former ranchland in Concepción region and constructing a mill in Paso Horqueta to process the non-native fibre into pulp for global paper and packaging markets. The project has reportedly created 7,000 jobs and is financed by the Inter-American Development Bank and Paraguay's government.

The company says it has invested $1.4bn as of December 2025 and contributed $3.6m to the national treasury in 2025. It employs 1,013 registered workers.

What does the investigation document?

In Tacuarita, an Indigenous Mbya Guaraní community of 211 people, plantations now begin less than 200 metres from crops and homes. "They fulfilled all their promises," chief Florencio Garcete, 55, said of Paracel's arrival six years ago, when it improved roads and dug a well. Today the well fails during power cuts and minimum-wage forestry work dwindles.

Official documents show the plantations are treated with sulfluramid, an insecticide that degrades into PFOS — a "forever chemical" the US EPA recently classified as likely carcinogenic, with no safe level in drinking water. Sulfluramid is banned in the EU, one of Paracel's two main export markets alongside China.

In Puentesiño, farmers accuse Paracel of occupying land earmarked for the poor by presidential decree 50 years ago. After a local organisation occupied a disputed property and planted maize and cassava in March 2024, residents say the company used drones at night to spray an unknown substance, causing headaches, vomiting and diarrhoea. Police evicted the group in September 2025 after talks with Paracel. "We left crying like children," said leader Bernardino Galeano, 67, who now faces criminal charges. Paracel says a government demarcation confirms its title and that it conducted only ground-based spraying.

How were communities consulted?

In Amambay, Paracel held meetings with the Paĩ Tavyterã community of Cerro Akangué. "We said no, no and no. But they kept insisting," said Ana Valiente of the Kuña Guaraní Aty. Participants say Paracel indicated the project would proceed regardless; the meetings only determined whether communities wanted solar panels, wells and jobs.

A 2022 report by the Bank Information Center and five other civil society organisations found Paracel had not translated key documents into Spanish or Guaraní, misled communities into consenting and failed to record objectors. Paracel "categorically" denies the claims, citing 52 meetings in Guaraní with the government Indigenous institute INDI. The year after Cerro Akangué declined to participate, the company received an environmental licence to plant downstream of local watercourses. "What sense does it make to consult us once the government has already given them permission?" asked local leader Silvino Mendoza.

What is the chemical and deforestation record?

Paracel's annual report shows it used 703 tonnes and 118,000 litres of herbicides, insecticides, fungicides, surfactants and spray oils between 2023 and 2025, plus nearly 43,000 tonnes of fertiliser. Glyphosate, which the company uses, was classified as "probably carcinogenic to humans" by the WHO in 2015.

An official inquiry found 252 hectares of forest cover lost at Rancho Z between 2004 and 2021; Paracel bought the ranch in 2020 and denies illegal deforestation, saying the loss predates its purchase.

The mill will discharge treated wastewater through an underwater pipe into the Paraguay River more than a mile from the site. Concepción city, 12 miles downriver, pumps river water to 30,000 households. Paracel says it has not detected its agrochemicals in ground or surface water, sprays no closer than 100 metres from streams and communities, and models plantations reducing water levels by no more than 2.3%.

What precedent does the region set?

Experts point to Uruguay, where a UPM mill leaked roughly 1m litres of caustic soda in 2023, killing fish and drawing a $188,000 fine, followed by a tonne of sulphuric acid released in March 2025 with a $40,000 penalty. "The forestry industry has generated serious environmental, economic and social problems over the past 40 years," said Daniel Peña Vergara of the University of the Republic in Montevideo. "The promised jobs never materialised."

In 2023, the carbon-credit certifier Verra rejected Paracel's certification over doubts about "additionality" — the company had claimed it needed carbon revenue despite a $200m IDB loan. Paracel's own 2020 environmental review projected gross annual emissions above 400,000 tonnes of CO2-equivalent; the company calls those figures outdated. In September, Verra approved Paracel's first batch of carbon credits, covering nearly 24,000 hectares.

Political uncertainty compounds the scrutiny. Former president Santiago Peña, who headlined the mill's construction launch in May, was removed from office and arrested this month over the collapse of Ueno Bank. He denies wrongdoing; the case is unrelated to Paracel but clouds his administration's signature projects. Paso Horqueta, meanwhile, has no environmental officer, and Paracel pays no local taxes inside the free trade zone.

The next milestones to track: Verra's continued certification of Paracel's plantations, the criminal case against Galeano, and the mill's first discharge into the Paraguay River.