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Coal racking up record shipments

Posted: Monday, December 27, 2010

ANCHORAGE - One of Alaska's major exports - coal - has been racking up record shipments over the past couple of years.

Coal developers buoyed by Asia's energy boom and soaring coal prices are contemplating even more expansion in Alaska.

Two new coal strip-mine proposals are under serious study in Southcentral Alaska. Also, the state's single coal producer, Healy-based Usibelli Coal Mine Inc., is weighing expansion.

The bigger of the proposed new mines, called the Chuitna project, would ratchet up the state's total coal exports from about 1 million tons per year to 12 million tons. Exporting coal from the mine, about 45 miles southwest of Anchorage, would require building a massive dock for oceangoing cargo ships on the west side of Cook Inlet.

Coal development plans are triggering an intense land-use debate in various parts of South-central, where some small communities are fearful about major industrial expansion, particularly mining.

Deep-seated opposition in Chickaloon, for example, persuaded a Canadian company to abandon its coal exploration leases on 230,000 acres several years ago.

The debate is still raging over the two pending coal projects, Chuitna and Wishbone Hill, a small mine that could reopen north of Palmer.

The proposed mines have aroused local concerns about increased industrial traffic, reduced air quality and potential risk to Southcentral's salmon runs due to pollution and loss of habitat.

Chuitna and Wishbone Hill opponents have asked the state to declare the two locations as unsuitable for mining. The state rejected the Wishbone Hill petition, but the Chuitna petition is still pending.

Both mines remain under study with no final development plans published yet.

The United States has the second-biggest coal reserves in the world, after South Africa. Alaska contains half of the U.S. coal reserves, though relatively little of it is mined.

Alaska's coal remains largely untapped because most of the deposits scattered throughout the state are difficult to access by land or water, the coal is low grade or both.

The Asian boom is changing the economics of Alaska coal, possibly for decades to come.

Global demand for low-rank coal - so-called because it burns less efficiently - is increasing. The low-rank coal from Usibelli's Healy coal leases and from Cook Inlet's massive Beluga coal field is less dirty in one respect: Burning it creates smaller amounts of sulfur dioxide, a noxious air pollutant.

But burning it still generates the carbon dioxide emissions implicated in global warming.

The price of coal exported to Asia - a main destination for Alaska's coal for the past 25 years - has more than doubled in the past five years. The United States exported 51 percent more coal in the first six months of this year than it did for the entire 2009.

Despite increased attempts to curb carbon dioxide emissions, and growing opposition to coal-fired power plants, Lower 48 and Alaska coal mines so far have had little trouble finding new customers overseas.

In 1985, Usibelli began exporting low-grade coal from its Healy mine to South Korea. The company put the coal on trains to Seward, then the coal was loaded on ships. At the time, Usibelli says, it was the only company in the world shipping low-rank coal by sea.

This year, Usibelli, founded in the 1940s, exported about 1 million tons of coal via Seward to South Korea and Chile, where it is mainly used for power generation. Usibelli expects to export slightly more in 2011.

China, the world's fastest growing major economy, has colossal coal reserves, but the country's energy consumption is growing so rapidly that last year China began importing more coal than it exports.



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