Last summer, economic duress in Interior Alaska directly impacted economic growth on the Kenai Peninsula when Healy-based Usibelli Coal Mine Inc. lost a major long-term sales contract to South Korean client Hyundai Merchant Marine Co. While the loss meant a 30 percent work force reduction for the company, it also curtailed coal export from the Alaska Railroad freight terminus in Seward, taking some effect on jobs there.
Change may be in the winds, however, although the initial effect of the end of the 18-year coal export operation put a dent in the city's economy.
"We all felt really bad when the coal contract ended," said Helen Marrs, executive director for the Seward Chamber of Commerce. "We had some folks that found themselves unemployed."
She pointed out that the bigger impact was on the railroad that delivered nearly 700,000 tons of coal per year, about 40 percent of Usibelli's business.
"We took a pretty big hit," said Alaska Railroad spokesperson Patrick Flynn of the three weekly train loads the state-owned railroad hauled to the Port of Seward, accounting for nearly $4 million of its revenue. "The majority of freight on the south end was coal."
But Flynn and Marrs said there may be a light at the end of the tunnel.
Usibelli general manager Steve Denton said intercession on the part of U.S. Sen. Ted Stevens, R-AK, has reopened doors to negotiations between Hyundai and Usibelli.
"Sen. Stevens made a trip to South Korea and told them how important he felt this business was," Denton said. "And he asked them to reconsider the termination of the contract. As a result, the (South) Koreans came back to the table."
Usibelli submitted a new proposal to Hyundai in December for a contract to deliver 400,000 tons per year. The new amount would be roughly one-third of the company's overall output and send one or two trains per week down to Seward.
Denton said there still were no guarantees at this point, though.
"We're not sure when or if it would resume," he said. "We expect (the proposal) to go back and forth a time or two for counter proposal."
For Seward, this would mean that more freight trains -- above and beyond just coal trains -- would travel with greater frequency to the Port of Seward, because having consistent traffic from the coal transport would justify winter maintenance on the rails.
"We do still have some freight customers in Seward," Flynn said. "But they generally don't have time-sensitive deliveries. So if there is a (snow) slide on the tracks, they can wait for a train to stop and return another day."
But Flynn said the railroad is not putting a lot of hope in a revived coal export operation.
"We are cautiously optimistic that there is a possibility of a return to coal export service," Flynn said. "But we're not banking on it."
In the meantime, Alaska Railroad dock manager Louie Bencardino said new projects are keeping his seven longshoremen and other dock workers going strong. He said bimonthly trips from Sitka-based Sampson Tug and Barge Co. and a nearly 8,000-ton shipment for Spenard Builders Supply will help keep dock workers on the job. But alternative uses for the conveyor-belt loading dock -- which is too narrow for trucks to traverse -- are slim should coal not return, he said.
"We have shipped gravel out of here," Bencardino said. "That's one option."
Marrs said the deep-water port still could attract more business in lieu of renewed coal shipping.
"The port here in Seward has such potential that at some point there has to be a right combination," she said.
Bencardino echoed Marrs' optimism.
"Something's going to work out," he said.
