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PacRim lease moves forward

Posted: Sunday, March 29, 2009

Twenty-two years after the Kenai Peninsula Borough first entered into a lease-option contract concerning Ladd Landing, PacRim Coal LLP will exercise that option.

PacRim sent an e-mail to Borough Mayor Dave Carey dated Wednesday, stating its intent to exercise the option to lease.

Carey said Friday that though he did receive the e-mail, nothing is official until the borough receives a hard copy of PacRim's intent to exercise the option in the mail.

"We've gone forward and exercised it," said PacRim Vice President Joe Lucas about the option.

"The major thing we have to do now is do work on the ground lease," Carey said.

The ground lease involves providing and defining the terms of the lease, which will be reviewed by the legal department, Carey said.

Lucas said PacRim will work with the borough to finalize the lease.

Once that is done, Lucas said PacRim has several permits to attain before moving ahead with the project.

"We've been in the permitting process for many years," Lucas said. "We're just in the process of moving forward."

Called the Chuitna Coal Project, PacRim is exploring a future strip mine coal operation in the Beluga Coal Fields on the west side of upper Cook Inlet. The company has a state lease on more than 20,000 acres of land northwest of Tyonek estimated to contain one billion tons of ultra-low sulfur, sub-bituminous coal.

PacRim hopes to mine that deposit over the course of several decades, beginning with a 5,000-acre section that could produce 12 million metric tons a year for 25 years.

Most of the coal would likely be shipped overseas from a dock facility to be built at Ladd Landing.

The borough first entered a lease-option contract in 1987 with Tidewater Services Corp., which merged with Midgard Energy Co. in 1994. The option has since been assigned to PacRim Coal.

Over the years, the option on the lease has been extended and amended five times, most recently in April 2008.

The assembly voted down a five-year extension of the lease option at its March 3 meeting. PacRim had until April 9 to exercise its option.

Carey said protection of the environment is a primary concern of the borough in regards to the Chuitna project.

"We're going to be cordial but we're going to be good stewards and behalf of the people of this borough," Carey said. "We look forward to a positive relationship with this economic activity."

Lucas said Mount Redoubt's eruptions have not had an effect on the project as no crew members are presently on site at Ladd Landing. He said PacRim plans to conduct fish monitoring this summer.

Mike Nesper can be reached at mike.nesper@peninsulaclarion.com.



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