US Northwest tools up for coal trade with Asia

Japan, Taiwan, and South Korea are expected to be buying 150 million tons of coal a year in world markets by 1995, and the first facility in the Northwestern United States for loading coal for shipment to those countries has been promised for January 1984.

Today, only the Pacific coast ports of Long Beach, Calif., and Los Angeles are loading coal for Asian destinations. But a major argument in support of a Columbia River coal loading facility has been the lower cost of shipping coal by rail from Montana and Wyoming, especially, to the Columbia River ports.

The Port of Portland has accepted a proposal for building a $60 million facility on a 100-acre site from Pacific Coal Corporation, a newly organized subsidiary of American Guaranty Corporation, a Portland-based insurance company.

In making its bid, Pacific Coal aimed for January 1984 as the date when the 10 million-ton-a-year setup will go into operation.

The positive step by Pacific Coal would now appear to have opened the door to long-term coal contract negotiations with Pacific rim coal-buying countries, particularly Japan and Korea. Heretofore, a sort of "chicken or the egg" situation has existed as US coal mine operators and their potential customers discussed possible sales.

Japanese businessmen, particularly, have wanted to see some concrete evidence of a willingness to build the necessary West Coast facilities before entering coal contracts.

James Anderson, however, chairman and president of American Guaranty, noting the absence of any firm contracts now for Western coal, anticipates that with the new loading facility agreed on, contracts will be forthcoming.

To assist in financing construction of the facility, the Commissioners of the Port of Portland have approved issuance of $100 million in industrial revenue bonds, which are to be guaranteed by American Guaranty. Initially, some $63 million of the new revenue bonds will be offered investors.

Rental payments on the 100-acre site will bring the port $750,000 a year, or about $20 million over the life of the facility. There also will be income to the port from dockage fees levied on the ships arriving to load coal, expected to be around $40,000 or more annually.

But even with the first steps taken to construct a coal loading facility in Portland, the Columbia River ports of Astoria (Oregon's port at the mouth of the Columbia) and Kalama (Wash.), downstream from Portland, are also active in seeking coal loading facilities.

Loading requirements for meeting anticipated Pacific rim demand for Western US coal were a focus of attention here recently when Sen. Bob Packwood (R) of Oregon, chairman of the Senate Commerce Committee, held a one-man hearing late in August on Northwest port development.

At the Packwood hearing the point was emphasized that not one, but at least two, Northwest coal loading ports will be needed. It was noted that so-called Panama ships, of 50,000 to 60,000 deadweight tons, could be readily loaded at Portland without any deepening of the present river channel and that Astoria is favorably situated for dredging of a much deeper channel and should be developed as the port to handle anticipated supercolliers of 100,000 to 150,000 deadweight tons.

Although Taiwan and Korea, and even Hong Kong, Singapore, and Malaysia, are seen as future markets for Western US coal, Japan is generally expected to be the largest customer, offering a 50 million-ton-a-year market to coal sellers by 1990. Today Japan imports about 20 million tons each year, largely from South Africa and Australia, and some from Canada.

The probability of two Northwest ports offering coal loading facilities had first been raised at a public meeting early in 1980 by F. Glenn O'Dell, president of a Portland-based consulting firm, Seton, Johnson & O'Dell. He said the immediate need was for a terminal capable of handling 10 to 15 million tons a year, to be in place by 1985. By 1990, he added, a second facility with capacity of 20 million tons a year should be in operation. But Mr. O'Dell suggested no particular location.

Every discussion of building a coal loding setup has touched the question of the required permits: federal, state, and local.

The Port of Portland, probably in anticipation of an early firm offer, took steps to secure the main permits several months ago. Now it is awaiting action on its requests for permits from the State Department of Environmental Quality (air and water purity); state lands division (to use state-owned tidelands); and the US Army Corps of Engineers (use of the navigable waterway). No problem was foreseen with any of these requests.

But the permit problems is a big one. Robert M. Bressler, president of the Burlington Northern Railroad, told the Packwood hearings of "the incredible number of permts which must be obtained" for a coal loading facility. Subsequent inquiry put that total at 80.