Groundfish a bright spot in grim ore, forest, fish picture

PHOTO/Lisa Seifert/For the Journal
There’s not much good news out there for Alaska’s mining, timber and fisheries industries, according to a panel of speakers at the Resource Development Council for Alaska Inc.’s annual conference Nov. 29-30 in Anchorage.

Depressed resource commodity markets, made worse by recession, and in the case of fishing, competition from farmed salmon, make for a bleak outlook.

One bright spot, however, is in the big groundfish industry in the Bering Sea, where harvests of pollock and cod have increased this year and are set to be up again in 2002, according to Frank Kelty, resource specialist for the City of Unalaska.

Kelty, one of three speakers on the panel, also said crab populations are on the comeback. Adult opilio crab populations are still depressed, but juveniles are increasing rapidly.

"Juvenile crab populations are up 73 percent. That’s a good sign," Kelty said.

It means in three or four years, opilio harvests may increase back toward historic levels. Crab has been one of the big-money fisheries in the Bering Sea, but has seen hard times because of depressed populations and harvests, he said.

Halibut and sablefish, or black cod, are another bright spot for the state.

The 2001 halibut season closed out with 26.4 million pounds harvested. Though prices softened toward the end of the season, fishermen still earned $200 million from halibut and sablefish this year, Kelty said.

Things don’t look good for other fisheries, however. The Bristol Bay sockeye harvest is predicted to be 9 million salmon, one of the lowest levels in years, and salmon harvests in other areas of Western Alaska will remain depressed.

Timber faces challenging times, too, according to Rick Rogers, vice president for land and resources for Chugach Alaska Corp.

Japan, Alaska’s top customer for forest products, remains economically depressed, but fundamental changes in the nation’s construction industry also bode ill for Alaska, Rogers said.

More homes are being built with western-style construction methods using two-by-four boards rather than the traditional Japanese wood-beam building.

The wood-beam building that is being done is relying more on laminated, manufactured wood that uses less expensive European softwoods rather than the high quality, more expensive Alaska spruce, he said.

There are also supply problems in Alaska. Restrictions on harvesting in the big Tongass National Forest have cut into the supply of available logs, although logging on private, Native-owned lands in Southeast Alaska continued, Rogers said.

Alaska still has ample forest lands with good-quality timber, particularly in Interior Alaska. Much of this is owned by the state of Alaska and Alaska Native corporations, he said.

For example, the Tanana State Forest in the Interior has a new timber management plan that could make available 60 million board feet of timber yearly, if markets were available, Rogers said.

That’s as much as is being harvested in the Tongass this year, he said.

Rogers thinks Alaskans should investigate the potential for manufactured wood products using the ample lower-quality, small-diameter trees that are available in Southcentral and Interior Alaska.

This is the strategy Scandinavian forest operators are following, who are now selling in Alaska’s key market, Japan.

The picture for minerals is similar. The world’s mining industry is in dire straits, but Alaska is positioned as well as can be expected given the circumstances, according to John Rense, chief operating officer for NANA Development Corp.

The state has abundant prospects, a good track record with large, successful mines like Red Dog, Greens Creek, Fort Knox and the Usibelli coal mine, and a friendly state government and supportive political environment.

Still, metals prices have been declining for several years in real terms. Prices for copper and zinc are at historic lows, in inflation-adjusted terms, Rense said.

That is a result of fundamental changes in the economies of western nations, where technology changes have pushed almost all basic commodity prices to low levels.

"Commodity prices have been pushed down so the value can be taken in processing and manufacturing," Rense said. "In a macro sense, that’s a logical policy that’s politically popular because it results in a lot of jobs," Rense said.

No turnaround should be expected in the basic price structure of metals markets until some major change affects these fundamentals, he said.

Depressed prices and surpluses in metals markets have brought about consolidations and a general hunkering-down in the mining industry. "Managements have focused on return on capital, which means controlling costs," and concentrating on producing properties rather than exploring for new deposits, Rense said.

12/09/2001 - 8:00pm