Heidi Zemach for Seward City News -
The captain and some of the 19 crew members from Crimson Monarch, a brand new cargo ship sailing under the Singapore flag, were feted with frosted cake, plaques and proclamations by the Seward Chamber of Commerce and City of Seward Monday, March 3rd, at Chinook’s Waterfront Restaurant. The trip to Seward was not only the ship’s maiden voyage from the shipyard in Singapore. It was also the first coal ship of the year for the city, which considers the Alaska Railroad Corporation and coal transfer facility important economic engines. Those greeting the ship’s crew included Seward City Manager Jim Hunt, Seward City Mayor Jean Bardarson, Seward Chamber of Commerce Director Cindy Clock, Alaska Railroad Dock Manager Louis BenCardino, and Aurora Energy Services General Manager Michael Hanson.
There are only three contracts completed for coal ships to Seward this year, but securing contracts is an ongoing process, and the Alaska Railroad expects to be able to contract with eight coal cargo ships from Seward, matching the number that docked here last year, Hanson said.
“We believe that 2015 will be a good turnaround year, and our exports will increase in 2015,” he said. The company has even been able to hire back a few of the workers who were laid off near the end of 2012 when the number of coal trains projected, and coal cargo ships, dropped considerably. Hanson voiced high expectations for the future.
“The coal market is stable in that it is certainly being used worldwide and here in the United States as well, but the coal prices internationally are down but we see them starting to rise.” AES provides 13-21 local jobs with comparatively better pay, benefits and stability than many other local jobs, he said. The company spends “a couple of million dollars annually in the community on things such as services, wages and benefits,” he said: “It’s a trickle-down effect really.”
The ship’s crew would have time to spend sightseeing, shopping, and eating at local restaurants, chaperoned by the Seward Seamen’s Mission, which provides a van for seafarers. Most of what they purchase would be partially taxed by the City of Seward and the Kenai Peninsula Borough through sales taxes, and excise taxes would be included for things like gasoline, alcohol, cigarettes and cell phones. No city or borough sales tax is collected from retail sales of coal in Seward however, making it the only tax-exempt fuel.
The railroad and transfer facility brings jobs, and the contract that the shipping company has with the Alaska Railroad helps the railroad with its own infrastructure, said Seward Mayor Jean Bardarson, things like ARRC’s planned rail and dock expansion. The amount of money that the railroad receives is probably proprietary information, she said. In addition to sales taxes, having foreign ships visit Seward also increases its visibility abroad as an ice-free Alaska port, she added.
The city doesn’t receive docking fees, or fees for having these cargo ships come and stay in their harbor, however, as they are parked at the Alaska Railroad’s Dock. Nor does the city receive tax income from storing the stockpile of coal from the Usibelli coal mine in the community, as that is also on private Alaska Railroad Corporation property.
The Crimson Monarch, which is comparable to the size of other coal cargo ships that dock in Seward, would be loaded with 68,400 metric tons of coal, said Captain Kadam Uday. It could carry up to 75,000 metric tons, were it not for the weight restrictions imposed by Chile.
The State of Alaska does collect some revenues from coal mining from taxes, rents and royalties. Rent is about $3 dollars per acre, per year, while royalties are 5% of Adjusted Gross Value (defined as price minus transportation costs) The mining license tax is $4,000 plus 7% net income (If it is over $100,000), according to a recent study in GroundTruthTreckking.org. So while the oil and gas industry pays around 20% of total revenues, coal mining pays only 5% and metals mining less than 2%. All extractive industries in Alaska receive subsidies from the state including roads, infrastructure, cheap land and tax breaks, the study said.
Many people from all walks of life opposed to coal export expansion projects in Oregon and Washington, have argued that the potential negative social, health and environmental impacts of coal also are costs that should be quantified when considering factors such as the economic benefits of such projects.
The Alaska Railroad has added a number of improvements to the Seward facility to help control coal dust, including more spray bars to its belt conveyors, wind fencing to help reduce wind that blows across the conveyors, and enclosing the transfer point known as Tower 13, said Hanson. He could not say how much fugitive coal dust escapes during transportation to Seward.
New cargo ships like the Crimson Monarch also are becoming more environmentally-friendly, said Captain Kulbar Singh, the shipping company’s quality superintendent. New emission regulations and fuel requirements are enforced by countries like the U.S. and Europe, and require the use of lower sulfur fuels near coastal areas.
Unfortunately, global shipping markets for coal and other items are still in a recession, Singh said. Not many ships are getting the higher prices they’re accustomed to receiving for their freight, so business is down. Some cargo ships sit idle, and their managers and crews have to find work on the limited number of ships still operating, he said.
For the past few weeks, the Chinese city of Beijing has been choking on abnormally high concentrations of smog pollution, at times particulate levels are more than eight times the World Health Organization’s recommended maximum exposure levels. In response, the government has reduced certain business operations, the number of private cars on the roads, and it’s seriously looking at a much greater response to smog prevention that may include their use of coal, and particularly the more polluting forms of coal. In efforts to ease smog, China’s National Energy Administration will promote upgrading fuel products, reducing coal usage, and strengthening coal quality management to control pollution, according to a statement on the administration’s website on Feb. 26, according to Bloomberg News.