Usibelli sits tight

WASILLA — A sputtering global market for coal is forcing the state’s only operating coal mine to sit tight and look to future export opportunities, a company official told the Greater Wasilla Chamber of Commerce Tuesday.

Lorali Simon, a Valley native and Usibelli Coal Mine’s vice president for external affairs, told the chamber the Healy company’s production was down, as were its workforce numbers. Usibelli also recently idled its Seward Coal Loading Facility after a 75,000-ton shipment in July.

In the last two years, a strong U.S. dollar, low natural gas prices and cheaper coal from countries like Australia and Indonesia has kept the market constrained.

Locally, Simon said the ongoing battle over the Wishbone Hill mining project near Sutton remains in the courts. Once a more favorable global market returns, Wishbone Hill could be part of the company’s long-term export goals, she said.

More recently, environmental and Alaska Native groups have sued to block progress on the mine, and for now, the project remains in litigation after U.S. District Court judge Sharon Gleason issued a July ruling putting the Usibelli permits on hold upon review.

Simon said there has been a motion for reconsideration filed in the case.

“She did not invalidate the permits, but basically said that the federal office of surface mining needed to coordinate better with the state on some paperwork issues …. and to work toward a clean slate,” Simon said.

Usibelli has sought to retain permits for mining in the area originally issued to Idemitsu Alaska, and extended through the ownership of the North Pacific Mining Corp. in the 1990s.

The Department of Natural Resources ruled that the 1991 permits could still be used for mining, and in 2015, the federal Office of Surface Mining Reclamation and Enforcement upheld the DNR’s ruling that the permits could proceed.

Opposition groups cheered Gleason’s July decision, saying that that the DNR and OSM should not have allowed what they called an outdated permit to remain in place.

“Right now we are ensconced in what I can only call frivolous litigation,” Simon said. “For a company that purchased the leases and permits to have those permits being challenged is a very tenuous position for us. We have invested millions of dollars in this project under the assumption that we were properly permitted.”

Usibelli supplies the state’s six coal-fired power plants, largely located in the Interior, but also relies on an export market to longtime clients South Korea, Japan and Chile.

“We supply 100 percent of the in-state demand, so for us to grow as a company we have to be in the export market,” Simon said. “So we will continue to look for the opportunity to sell Alaska coal on the world export market.”

Simon said Alaska’s low-sulphur, low-mercury “clean” coal was used as a blend in countries like South Korea to reduce its power generation emissions. Alaska subbituminous coal also is a low BTU variety, which means it burns with less heat, which requires more volume.

Simon said an added wrinkle to the depressed world coal market has come from South Korea, which increased its coal import tax in 2014 on both high- and low-BTU coal.

“They have been getting some pressure from some of their international neighbors to make some green changes to their power generation,” Simon said. “They use our coal as a blend to help reduce their emissions, but now they are taxing the lower BTU coal even though ours is low in sulphur. That is something we are looking at on an international level to help them understand that they are not reaching their carbon targets by using less of our coal.”

Simon said along with the market challenges, Usibelli also faces the hurdles of operating in a high-cost northern environment along with increased federal regulations.

“Business people know that it costs more to do business in Alaska or in any other northern environment,” Simon said. “Transportation, logistics, energy costs — you name it.”

Simon added that the federal regulations handed down during the Obama administration have been burdensome.

“They have not improved environmental quality, have not further protected public health and the environment … and have not made coal mining more efficient,” she said. “They have just made it more difficult for us to do our jobs with rising costs and greater delay.”

Contact reporter Steven Merritt at 352-2269 or steven.merritt@frontiersman.com