By Sarah Hurst
Mining News Editor 

Alaska attorney general resigns in Taiwan coal affair

Gregg Renkes owned shares in company he was promoting to dry Alaska's coal for sale to Taiwan; KFx not impacted

 

Last updated 2/27/2005 at Noon



Alaska's attorney general, Gregg Renkes, resigned in February following an investigation into his role in promoting the sale of coal to Taiwan. The Bundy report concluded that Renkes had not violated the state ethics code, but added that it was a "close question," and there were immediate calls from lawmakers to tighten up the ethics code.

While negotiating the sale of Alaska coal to Taiwan on behalf of Gov. Frank Murkowski, Renkes owned stock worth $126,125 in KFx, the Denver-based company that is developing an experimental coal-drying process. Renkes proposed that KFx technology could be used to decrease the moisture content of sub-bituminous coal from the Beluga-Chuitna deposit on the west side of Cook Inlet, making it economical for the Taiwanese to purchase.

As Alaska's ethics code does not state specifically how much stock in a company a state employee may own before a conflict of interest arises, investigator Robert Bundy let Renkes off the hook, calling Renkes' interest in KFx "insignificant." He did point out that many states set limits ranging from $5,000 to $100,000, although others define a conflict based on the percentage of ownership of the company's issued stock. Moreover, Renkes muddied the waters by deleting a large number of emails from his office computer when the Anchorage Daily News began writing about his link with KFx last October.


Renkes had a personal, as well as a financial interest in KFx. "Mr. Renkes has known the founding principals of KFx, John and Ted Venners, for years, having first become acquainted with them when Mr. Renkes served on Senator Murkowski's staff," the Bundy report said. "Over the years, Mr. Renkes became personal friends with John Venners, whose principal business was as a consultant and lobbyist on energy matters, headquartered near Washington, D.C. Mr. Renkes' and Mr. Venners' families were friends and, until his divorce, Mr. Venners lived in the same neighborhood as Mr. Renkes and his family."


Constantine Metals Palmer copper VMS zinc silver gold Haines Southeast Alaska

Bundy: Wyoming key to KFx success

Mitigating circumstances in the case include the fact that the Alaska-Taiwan coal talks may not have affected the financial condition or prospects of KFx, Bundy said: "KFx's financial well-being depends almost exclusively on the success of its Wyoming processing facility.

That facility's success depends on sales to power generating facilities in the Lower 48 states, which in turn depends on the spread (including tax credits) between the end-user price of eastern bituminous coal and the end-user price of western sub-bituminous coal.


KSM gold-copper project, Golden Triangle British Columbia, Courageous Lake gold, Northwest Territories

If the spread is big enough the western coal can compete, even allowing for the costs of processing and transportation.

If KFx cannot successfully market its processed coal in the Lower 48, there is little chance its K-Fuel process would allow a facility in Alaska to operate economically."

The investigation into Renkes does not appear to have had a damaging effect on KFx. Its share price has soared from a high of $9.61 in September 2004 to a high of around $14.35 in February 2005. Renkes sold his stock in KFx and donated the proceeds to charity when the investigation began.


Contango ORE is an Alaska gold exploration and mining company.

Bundy: Alaska coal long-term development

Neither the Taiwanese government, nor the utility Tai Power made a firm commitment to purchase Alaska coal - they simply agreed to consider the idea, if the moisture content of the coal could be reduced. "Any prospect of profits on Alaska coal is also long-range," Bundy said. "According to Stan Foo of the Alaska Division of Mining, it will take at least four and a half years to develop the coal mine and transportation infrastructure alone."

During his investigation Bundy reviewed over 6,000 pages of documents and took sworn depositions from numerous people including Gov. Murkowski, Renkes, Foo, Ida Yao (Alaska's trade representative to Taiwan), Bob Stiles (manager of the Beluga coal field leaseholders), John Venners, Ted Venners and Dale Anderson, Renkes' broker with Salomon Smith Barney in Juneau.


Murkowski sent Renkes a letter of reprimand after the Bundy report was published, but on Feb. 5 Renkes resigned anyway. "Four months ago, a newspaper story leveled allegations at me setting in motion an ugly trial by media," Renkes wrote in his resignation statement. "I submitted myself to an exhaustive investigation, which cleared my name concluding there was no intent to personally profit but my task was simply to encourage development of Alaska's resources at the direction of the Governor. Unfortunately, even in the wake of that conclusion, the partisan personal attacks continue."

Renkes now plans to focus attention on his wife and two small children, he said. Murkowski has appointed Scott Nordstrand, a deputy attorney general with the Department of Law's civil division, as interim attorney general. In November Mike Barry of the Alaska Industrial Development and Export Authority took over from Renkes as the state's representative in coal talks with Taiwan.

 

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