FAIRBANKS (AP) -- Usibelli Coal Mine Inc. said it has not been able to reach a contract agreement with a South Korea power company and, as a result, will proceed with the planned layoff of one-third of its work force this month.
By the end of May the mine will cut about 30 people from its payroll, company officials told the Fairbanks Daily News-Miner.
The layoffs are cause for concern in the small, Parks Highway community of Healy, where the mine is located. About 1,000 people live in Healy.
''That's a huge impact to our community,'' said Jo-Ann Wallace, president of the Greater Healy/Denali Chamber of Commerce. ''It could be pretty darn severe.''
Usibelli announced in March that it would lay off a third of its work force because it was not able to renew its coal contract with South Korea.
About half of the mine's production -- roughly 700,000 tons a year -- goes to South Korea.
Usibelli has been trying to get a new coal contract with the South Koreans since the end of last year.
There is slim hope that the South Koreans could renew the contract, said Steve Denton, Usibelli Coal Mine's general manager. And if the South Koreans opt to make short-term purchases on the spot market, Usibelli could compete for those sales, he said. The company felt it had no choice but to move ahead with the layoffs.
''We're working with the people to try to find ways to mitigate the losses,'' Denton said. Some may take an early retirement option, and some job losses may be due to attrition, he said.
Usibelli's problems come from Indonesia and China, where coal is produced cheaply and is close to needy Asian markets. It's a matter of supply and demand, Denton said.
''There are too many suppliers in the world,'' Denton said.
Denali Borough Mayor John Gonzales predicts the layoffs will trickle down into the community.
''I suppose most will try to find jobs elsewhere, but there are not many other jobs in the community,'' Gonzales said.
Some people are hoping that the Healy Clean Coal plant will be brought into operation and bring jobs back, but that is at least a year off, Gonzales said. Congress has authorized $125 million to retrofit the plant, which has not operated since December 1999, due to technical problems.
A complete retrofit could provide jobs for 35 to 50 years, said Steve Haagenson, president of Golden Valley Electric Association. GVEA would operate the plant and purchase its power if the plant was retrofitted, he said.
Wallace, the chamber of commerce president, said ''home for sale'' fliers are already popping up on bulletin boards around town.
''We may see some population changes,'' she said.
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