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September startup.

September Startup September Startup. McKinley Mining Consultants, a Palmer firm on contract as project manager for Idemitsu Kosan Alaska Inc.'s Wishbone Hill coal project about 12 miles northeast of Palmer, is expected to begin construction of mine facilities in September. Fred Mrkonjich, engineering manager, says the project's launch depends on permitting, which should be complete by Sept. 1. He reports Idemitsu Alaska, a subsidiary of the Japan-based Idemitsu Kosan, is finalizing marketing agreements to provide the mine's bituminous coal to new Pacific Rim power-generating facilities slated to begin operations in 1991 and 1992.

Exploration and development of the mine site began in 1983, and to date has cost about $7 million. Provided that work does begin in September, McKinley Mining predicts coal production and shipping will begin in late 1991. The surface mine is expected to produce 1 million metric tons, or 1.1 million short tons, annually during its 15-year life. Employment should reach 200 people at full production, supporting a $10 million annual payroll. Mrkonjich notes in addition to the jobs created, Idemitsu will pay an estimated $900,000 per year in royalty payments to the state and $250,000 per year in property tax to the Matanuska-Susitna Borough.

Before its May adjournment, the legislature provided for $9 million to cover the cost of rail equipment to move the coal to Seward. Idemitsu will spend about $1.7 million that will be combined with state and federal funds to upgrade the Glenn Highway for the 12-mile segment connecting the mine and the rail loading site. Improvements will include widening and building climbing lanes.

According to McKinley Mining's Mrkonjich, because the Palmer coal deposit is geologically complex, it is more costly to produce coal per yard than for a typical Wyoming coal mine. He notes that incentive tariffs from Lower 48 railroads have reduced transportation costs that, combined with lower mining costs and the availability of excess capacity, enable some mines to produce coal for as little as $3 per ton. By contrast, the Wishbone Hill project's costs are 10 times higher, he adds.
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Title Annotation:Alaska Business Briefs: Mining; coal mine facilities
Publication:Alaska Business Monthly
Date:Jul 1, 1990
Previous Article:Charge it.
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