Almost half of U.S. coal reserves are in Alaska and the Cook Inlet area west of Anchorage holds proven reserves of about 2 billion tons of sub-bituminous coal. This low-sulfur, low-ash coal is attractive environmentally, but has long been considered too wet for Asian markets -- until now.
Technological progress and political will are changing the equation. A Colorado firm, KFx Inc., has patented a way to use pressure and temperature to convert high-moisture coal into an attractive fuel. This "K-Fuel" process really works. KFx is building a plant in Wyoming that will eventually process 8 million tons per year, proving technology can make Cook Inlet coal marketable, if there's a willing buyer.
Taiwan is that buyer. This island economy is an international industrial powerhouse with growing hunger for energy to generate power, make steel and manufacture plastics. Over 27 visits to Taiwan over 25 years as senator and governor, I've been encouraging Taiwan to buy our resources, especially coal.
Coal has been a key topic during my two visits to Taiwan in the past year, during my exchange of visits with Taiwan President Chen Shui-Bien last fall and during a March visit by representatives of Taiwan's government-owned power and steel companies. On Sept. 16, I joined a delegation of 15 top Taiwan officials authorized by President Chen to sign two Memorandums of Understanding, the first of them committing Alaska and Taiwan to facilitate long-term sale of large quantities of processed Cook Inlet coal.
Taiwan has the need. Its national electric utility, Taiwan Power, alone could use up to 4 million tons per year, and other users like China Steel and Formosa Plastics have significant energy needs. If we can supply quality fuel at a reasonable price, Taiwan will do the deal.
This kind of commitment is critical to making this large-scale project a reality. Kanturk Partners, a Taiwan-Washington, D.C., merchant bank, and KFx envision building a plant west of Anchorage capable of processing 12 million tons of raw coal into 8 million tons of product per year. The new mine, plant and port would cost an estimated $1 billion, and could create up to 600 construction jobs and 250 year-round jobs.
The state could help by facilitating permitting and by encouraging infrastructure development, although the coal's proximity to tidewater means less need for transportation links and significantly lower costs. The project would mean a new industry in Southcentral Alaska, good-paying jobs for Alaskans and -- with the 5 percent state coal royalty -- more revenue for the state.
The second MOU creates the Taiwan-Alaska Trade and Investment Cooperation Council. With public and private members on both sides, it will meet regularly to seek new ways to encourage trade in energy, tourism, fisheries, forest products and agriculture.
Taiwan's national air carrier, China Airlines, has already announced it will encourage tourism by offering new daily stops in Anchorage. Eighteen Taiwan tour operators, airline officials and media concluded a weeklong familiarization tour in Alaska early this month, and we will see increased numbers of tours from Taiwan by the end of September.
Taiwan officials also are considering developing a wood products facility using timber from state land to make engineered veneer lumber for sale in Taiwan and for export to other nations. There also is high interest in Taiwan for Alaska's wild salmon. Even carrots and seed potatoes from the Matanuska Valley are of interest to the Taiwanese and may soon make their way to shelves in Taiwan.
I made a commitment to work to build Alaska's wealth by responsibly developing our natural resources for the benefit of the state and its people. By signing these agreements with Taiwan aimed to develop a new Asian market for our abundant Cook Inlet coal, and by encouraging new trade in other areas, I am making good on that commitment.
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