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Coal: abundant, but not easily converted to cash.

Alaska's clean burning, low-sulfur coal could help ignite a bright future for Alaska's coal industry. But no one knows for sure when, if ever, Alaska will become a major international coal exporter, say industry representatives, university researchers and trade officials.

P.D. Rao, associate director of the Mineral Industry Research Laboratory at the University of Alaska Fairbanks, is optimistic. "Alaska's coal future should be very good," Rao says. "We have a very-high-quality coal that is quite competitive. The future looks very good."

Indeed, Alaska is poised with bountiful coal reserves. The state holds more than half of the nation's coal deposits, more than 160 billion tons. Also to its advantage, Alaska coal contains extremely low levels of sulfur -- far less than 1 percent and the kind likely to become more desirable as tougher clean-air standards take effect in Eastern Europe and Asia.

Usibelli Coal Mine, the state's only operating coal mine, hopes to cash in on those markets. Its mine near Healy in central Alaska ships 700,000 to 800,000 tons of subbituminous coal, worth some $30 million, to Korea each year.

"It's possible there could be more markets in Asia and Europe," says Charlie Green, marketing assistant at Usibelli. "Europe is adopting tougher clean-air standards which will require the use of low-sulfur coal or expensive technologies to reduce emissions. We may be able to capitalize on the changes and make the most of these markets. We are interested in getting our oar in the water in Europe."

But to its disadvantage, Alaska coal contains high levels of moisture, in excess of 25 percent. High moisture translates to less energy per ton of coal and boosts transportation costs.

"In other words, about every fourth ship we send out is carrying water, not energy. It makes it harder to compete," says William Noll, who until December was the state's deputy commissioner of international trade. Noll left the post amid a reshuffling at the Alaska Department of Commerce and Economic Development. To combat the moisture problem, Usibelli researchers are working on ways to dry the coal in hopes of attracting more markets.

Also looming large in Alaska's coal future are the proposed Wishbone Hill and Beluga coal fields in Southcentral Alaska. Together these mines could produce some 11.5 million tons each year. Even so, those figures still don't qualify Alaska as a major exporter of coal, industry analysts say.

"It's a very competitive market," says Bill Aberle of the University of Alaska Anchorage's Alaska Center for International Business. "Australia will be Alaska's major rival for Asian markets. They currently produce huge quantities of coal -- more than 100 million tons annually, most of which go to Japan."

Whether Alaska ever becomes a major coal exporter also depends on the price of oil. Countries such as Japan, Korea and Taiwan, among others, are engaged in a slow conversion of their power and manufacturing plants to coal. It's a step they see as insurance against unpredictable oil prices.

"I'm not the crystal-ball guy," says Usibelli's Green. "But you have to realize that Australia produced just a couple of million tons of coal each year in the early 1970s. It grew from almost nothing to what it is now in just 20 years."
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Title Annotation:Alaska's coal industry
Author:Schneider, Douglas
Publication:Alaska Business Monthly
Article Type:Industry Overview
Date:Feb 1, 1992
Previous Article:Southcentral ports polish expansion plans.
Next Article:New angles shape Alaska's engineering trade.

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