The Japanese economy continued its moderate recovery in 2005. Improvements in employment and income continue.

Alaska’s seafood exports to Japan increased 12 percent to $826 million in 2005, the second year in a row of double digit percentage increases. The growth in value in the past few years results from several factors. Japan’s economy is improving; consumer confidence is increasing; the yen has been relatively strong and stable for several years; and Alaska’s production is increasingly efficient as producers’ harvesting technology continues to advance. Another factor may be the addition of new ways to prepare and present traditional seafood product from Alaska. For example, new styles of roe preparation, some of which include marinades, have helped to attract younger consumers and broaden the consumer base for roe. Although not a major emphasis in Japan yet, a growing awareness of the value of natural and organic products is slowly finding its way into the Japanese market, preparing consumers to develop a preference for wild seafood.

Alaska exported $68 million of zinc and lead ore to Japan in 2005, compared to $73 million in 2004 and $56 million in 2003. Alaska is home to the world’s largest producer of zinc concentrate, Red Dog Mine. Owned and operated by Teck Cominco, under a development agreement with NANA Regional Corporation, Inc., an Alaska native corporation, the mine is located in the DeLong Mountains of Alaska’s Brooks Range approximately 90 miles north of Kotzebue.

Japan’s market for minerals continues to grow. The Alaska mineral industry connection has strong ties to Japan through Japanese companies’ investment as well as through export.

One of Governor Murkowski’s primary goals in public service, first as a U.S. senator for 22 years and now as Governor, has been to create attractive and stable development conditions in Alaska for international investment. The Pogo Gold Mine, a project of Sumitomo Metal Mining and Teck Cominco, has benefited from the Governor’s support. In 2004, the Governor helped to resolve an outstanding environmental issue so that construction could resume. The mill was completed in 2005 and the first feed was introduced to the mill in January 2006, marking the culmination of an 11-year process from discovery, data gathering, permitting, design and construction to production. Annual gold production of 350,000 to 500,000 ounces is expected over the 10-year life of the project. Exploration work on the property was restarted in 2005.

Driven by growth of Japan’s automobile production and electric industries, the country’s mining and trading firms continue to review metal mining opportunities in Alaska.

Alaska forest products export to Japan increased 10 percent to $62 million in 2005. This increase in value is welcome against a backdrop of challenges for Alaska’s forest products industry. Alaska’s log producers compete with Canada, Finland, the Baltic countries, Indonesia, New Zealand, and Russia for a share in Japan’s changing market for wood products. Trends in Japanese construction have altered and consumer preferences have shifted. Japanese sawmills have closed as a result of competition from China’s mills.

Alaska exported $203 million of petroleum products to Japan in 2005. $136 million of the total petroleum products export value was liquefied natural gas from the Kenai Peninsula plant owned by Marathon and ConocoPhillips. The LNG loading facility in Nikiski, Alaska and the regasification facility in Negishi, Japan were the two terminals that pioneered LNG marine transport in 1969. Alaska LNG export to Japan has been continuous since then. The current LNG contract is for five years, 2004 through the first quarter of 2009.

Japan is Alaska’s number two international visitor market. Both Alaskan Vacations and Japan Air Lines operated charter flights in summer 2005. In December 2005 Japan Air Lines also began a series of winter charters, directly flying Japanese visitors to Fairbanks for the exceptional aurora borealis viewing opportunity in interior Alaska.