Array

AMSTERDAM, June 8 (Reuters) - The International Court of Justice (ICJ) in The Hague begins two days of hearings today in a dispute between Argentina and Uruguay over the construction of two giant pulp mills.

Argentina sued neighbouring Uruguay in the world court over the mills on the Uruguay side of a shared river, which Argentina fears will cause pollution.

Argentina wants the ICJ to suspend construction of the mills while it weighs its claim that the project violates bilateral treaties on the management of the Uruguay River.

It also seeks to halt building while further environmental studies are done -- something Buenos Aires has repeatedly sought in failed bilateral talks with its tiny neighbour.

The dispute came to a head after months of protests by Argentine environmentalists and residents that have cost Uruguay's economy some $400 million. The $1.7 billion project is Uruguay's largest industrial investment.

Uruguay says the pulp companies, Finland's Metsa-Botnia and Spain's Ence, will use the latest technology to avoid pollution.

In April, the World Bank's private-sector arm decided to withhold approval of about $400 million in funding for the mills until it completes studies on the project's social and environmental impact.

REUTERS SK VC0607