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Mat-Su pushing Port MacKenzie rail spur as concerns emerge over sustainability

Suzanna Caldwell
Working on the Port MacKenzie rail extension project Loren Holmes photo

The Matanuska-Susitna Borough is pitching to finish its $275-million dollar Port MacKenzie rail extension as soon as possible. That means Don Dyer, the borough's economic development director, is traveling the state, seeking public and private support, with two dozen meetings scheduled between September and February.

The goal? Secure $101.5 million dollars to finish a 32-mile line connecting the Alaska Railroad to Port MacKenzie, billed by supporters as the “northernmost deep draft dock” in America. All the money that's gone toward the project – more than $170 million -- has come from the state -- through either appropriations or general obligation bonds.

At the Anchorage Chamber of Commerce luncheon Monday, Dyer outlined what he considered the benefits of the project, the biggest of which may be diversifying Alaska's economy.

Shipping minerals more easily

Today, Alaska is funded primarily by oil taxes and the federal government. Dyer said the rail extension and Port MacKenzie could diversify the economy by providing an easy way to move Alaska minerals out of state.

According to the borough, Port MacKenzie could add shipping opportunities for Alaska’s Usibelli coal mined in Healy (most is shipped by rail to Seward), limestone for cement from a prospect near Livengood, as well as numerous rare earth minerals that could be developed along the Railbelt, the most populated section of the 49th state running north from its biggest city to Fairbanks, the second largest.

Dyer said that with Asia’s middle class growing exponentially, the demand for those rare earth minerals – many of which are used in cell phones and other electronics -- will skyrocket. Who's in the best position to supply that? Dyer said that's Alaska, thanks to its strategic location.

A map from the borough showed dozens of mining prospects along the rail line, which runs the roughly 400-miles from Fairbanks to the Mat-Su. Dyer said the land around Port MacKenzie has been zoned for industrial use, which means the area could support manufacturing and processing of the minerals, increasing their value to the local economy.

“The only thing keeping them from tidewater is the 32-mile (spur) line,” Dyer told the audience. Groundbreaking for the project occurred in June of this year.

Dyer also noted that there's no plan to create a port that competes with such other southcentral Alaska ports as Anchorage, Whittier and Seward. Seward is already maxed out, he said. Anchorage, with its emphasis on container shipments, would only benefit from the rail extension because Port MacKenzie will add jobs and expand the economy -- meaning more shipping containers full of stuff to buy.

Critics: Wishful thinking economics

With most regulatory hurdles cleared, the biggest challenge to finishing the project is getting money fast enough to build the line, Dyer said.

That effort angers project critics. In August, Cook Inletkeeper Executive Director Bob Shavelson sent a letter to Gov. Sean Parnell detailing fiscal concerns his organization has about the project. He wants the state to conduct an audit. Initially, Shavelson’s concerns revolved around impacts to sensitive fish and wildlife habitats in the region of the rail extension. But while looking into those issues, the economics jumped out.

He noted that much of the operating revenues that are assumed will pay for the project rest upon an economic analysis that relies mostly on “theoretical or unlikely” mining developments in the Railbelt corridor. It's a matter of putting the cart before the horse in some ways, he said -- ironic given the struggles the borough has had with its Susitna Ferry project.

“(The rail extension) just doesn't make economic sense,” Shavelson said Monday.

Contact Suzanna Caldwell at suzanna(at)alaskadispatch.com. Follow her on Twitter @suzannacaldwell.