Japanese economic recovery can benefit Alaska

Posted: Thursday, June 24, 2004

ANCHORAGE Alaska may be benefiting from a Japanese economic recovery, trade officials and economists said Tuesday.

Japan, the state's biggest trade partner, has expanded its economy in the first quarter this year by an annual rate of 6.1 percent after years of deflation and slow growth.

With that rise has come an increase in the amount of seafood, energy and materials Alaska exports there. And state officials hope that investments, such as Sumitomo Metal Mining Co.'s partnership in the Pogo Mine development, will mean opening further Alaska's minerals market to Japan and the rest of the Pacific Rim.

Alaska exported $331.7 million to Japan in the first quarter of 2004, up from $239.1 million for the same period last year.

State economist Mark Edwards said while some of the increase may be due to seasonal fluctuations, the signs are good for growth.

''Seafood is up, energy is up,'' Edwards said. ''The trends domestically in Japan are positive.''

Alaska exported $2.7 billion in goods worldwide last year. Exports to Japan were just over $1 billion, or about 42 percent of Alaska's exports. Korea is second, with $567 million of Alaska goods bought last year.

Exports are just a small part of the state economy, which totaled about $28 billion in 2001 (the latest number available), but Edwards said the multiplier effect of jobs and capital investment could add another $600 million to the economy for every $1 billion spent.

State trade officials are looking to expand sales of other goods with Japan and the Pacific Rim, especially minerals, said Margy Johnson, director of international trade for the Alaska Department of Commerce and Economic Development.

''We're going to have to look at coal as another increasing commodity,'' Johnson said.

While no new coal deals have yet been made, Johnson said Taiwan's commercial trade and investment director will visit Anchorage this week to meet about a coal project and to talk to business leaders.

Steve Denton, vice president of business development for Usibelli Coal Mine Inc., says China's rapidly expanding economy has pushed up the demand for coal throughout the Pacific Rim. That's resulted in price increases of more than 200 percent compared to a year ago, Denton said.

The price of shipping the coal also has increased, but ''in balance, I think we have gained substantially,'' he said.

Usibelli exports about 40 percent of its coal, most of that going to Korea. Denton said because of the demand, Usibelli has been getting inquiries about exporting more.

Then there is the latest Japanese investment in Alaska. The Pogo Mine, a joint venture between Sumitomo Metal Mining Co., SC Minerals Inc., and Teck Cominco, is about 38 miles northeast of Delta Junction in Alaska's Interior.

The project promises to create about 360 jobs in the area while the mining activities pursue an estimated 5.6 million ounces of gold.

State trade officials also are focusing on China, hoping to tap into its huge population base as a new market for Alaska seafood. Exports to China from Alaska rose 6.9 percent from the first quarter 2003 to 2004.

''Ultimately, we're seeing one hopeful growth in the middle class in China, if we can penetrate the markets with seafood,'' Edwards said.

Alaska is not the only state with a renewed interest in Asia. In September, the state will host an annual conference for government leaders from the West to discuss trade with the Pacific Rim.

''There's an enormous interest now,'' Johnson said.

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