Connecting Alaska by Railroad

I asked Mr. George Koumal, chairman of the Interhemispheric Bering Strait Tunnel and Railroad Group, to comment on my post regarding President Obama's trip to Canada and the Alaska-Canada Rail Link. Here is what he sent me by email. The image below is of the car carrier Cougar Ace, after it overturned off the Aleutian Islands on July 26, 2006, spilling its cargo of nearly 5,000 vehicles into the sea. (source: U.S. Fish and Wildlife Service)

Tim:

My comment would be as follows:

The Canada-Alaska rail connection was indeed analyzed in 2007*, and the result of this analysis showed that it would make enough money to pay the operating cost but not enough by far to pay for the cost of capital. If anything, the situation with regard to financing is even more unfavorable today than it was in 2007.

There are two other factor involved: the development of oil in Alaska, whether on-shore or off-shore, does not involve railroad. Oil companies are quite comfortable with establishing cheap roads for trucks driven by Kamikaze drivers. A railroad would be a permanent feature of transport, and the oil companies have no interest in permanency. After the oil deposit is depleted, they just move on.

As far as the lure of mineral development is concerned, modern advances in sea shipping make it possible to ship a ton of metal concentrate for about a nickel to the US from anywhere in the world. "Anywhere" in the world the mineral deposits may be of higher grade, there is much cheaper labor and one does not have to deal with endless environmental questions and law suits. 

The development of the Kensington gold mine near Juneau is a sad example of both: Coeur d'Alene mining company spent nearly 300 millions of dollars at Kensington, completed the mine and concentrator development only to see the mine production held up by environmentalists in the 9th District Court.

With today's depressed commodities prices, the future of Alaska-Canada rail connection is more than bleak.

The picture changes considerably, if you look on Alaska-Canada connection as part of the intercontinental railway connecting Asia, Europe and the North American continents. You enter transport function for the railroad in northern Pacific basin, perhaps the largest freight shipping market in the World today. 

More than 6,000 super container freighters ply the so called Northern Circle Route, a shipping lane that follows the Aleutian Chain of islands. The railroad to Asia would supplement and replace this sea shipping and avoid frequent shipwrecks** in perhaps the most violent waters in the World known to a sailor. Railroad is safe, fast, door to door, all year transport mode. The fact that this railroad will also open up for development the resource hidden in the nearly 7 million square miles of the Arctic. Nowhere is the frosting on the cake!

 

Tim, all the Best, George Koumal

 

p.s Did we find the mode of cooperation between IBSTRG and the Foundation for Peace? It seems like that we did.

 

* I have done such analysis in 1998 with identical results

** several per year. A ship load of Mazdas landed on Kodiak island beaches not too long ago, washed up from a shipwrecked cargo vessel.