After watching cargo cranes sit silently for years, the Port of San Francisco is angling to be a player in international cargo trade again.
But with the commodities most in demand for shipping — fossil fuels like coal and oil — out of the question, the Port wants to handle the raw material needed at Chinese steel mills.
Iron ore dug up from Nevada and shipped to the Bay Area via Union Pacific Railroad could be loaded onto China-bound cargo ships at Pier 96 just south of Islais Creek near Hunters Point, as soon as 2016, under current Port plans.
The Port plans to ask for bids to build a new bulk-freight terminal at the deep-water berth at the pier early next year.
A new bulk-cargo terminal would give cargo traffic at the Port — which has declined by half over the last decade — a needed boost.
The work loading iron ore from trains onto ships would be a boon for workers at the International Longshore and Warehouse Union locals 5 and 10 as well as for the Port, which has set increasing maritime activity as one of its goals.
But all this depends on whether Australia-headquartered mining company Nevada Iron digs a mine in rural Nevada and then selects San Francisco as the port from which to ship the raw material.
CARGO DAYS HERE AGAIN?
The Port's cargo heyday came before the advent of containerization. The ships stacked with steel boxes that pass under the Golden Gate Bridge head to the Port of Oakland, which — thanks to bigger capacity and better tractor-trailer and rail access — has an unbeatable competitive advantage over San Francisco.
That leaves the Port of San Francisco to handle bulk cargo. Bulk shipping here includes one-off shipments like industrial machinery for electric car company Tesla and the massive drill bits used to dig the Central Subway.
On a day-to-day basis, the Port of San Francisco handles construction materials — including wood and metal for housing and gravel and rocks for paving — rendered animal fat and restaurant grease, and The City's recycling.
But the Port's cargo business is not entirely efficient. Pier 80, for example, almost entirely deals in imports.
“These containers are coming in full and leaving empty,” Port Commissioner Mel Murphy observed recently. “We definitely got to change that.”
For years, however, the Port has been looking to transform an old container terminal at Pier 96 into a bulk-cargo terminal, but has yet to receive any takers.
One of the major bulk cargoes shipped worldwide is petroleum products, but under pressure from environmental groups and Supervisor Malia Cohen, who represents the southeast part of The City where the cargo would be handled, the Port of San Francisco has pledged not to handle fossil fuels.
An alternative is the iron ore Nevada Iron plans to mine from a deposit called Buena Vista, located 21 miles south of Lovelock, Nev., about a 5½-hour drive northeast from The City.
Iron ore is the main raw material in steel. Chinese steel is used in construction worldwide, including in the eastern span of the Bay Bridge that opened last year.
Near the Buena Vista deposits are Union Pacific Railroad lines that lead to Northern California ports.
The Port of San Francisco could rake in as much as $5.5 million a year from a fully operational iron ore terminal, according to Port documents, and support as many as 15 jobs as long as the mine is open.
Other ports expected to compete with San Francisco to handle Nevada Iron's business include West Sacramento, Stockton, Richmond and Oakland, although each has unique limitations.
Ships can't be loaded to full capacity in shallower inland ports like Stockton. And despite its container-shipping dominance, Oakland's ability to handle bulk cargo is limited.
Making Pier 96 into an iron ore hub for weekly visits from ships handling up to 60,000 tons of cargo that would be shipped via train would take outside investments, possibly from Union Pacific and a mining company.
The Port of San Francisco received a $3 million grant from the federal government to improve access to local rail lines, which iron-carrying cargo trains would have to share with commuter traffic such as Caltrain.
However, the price of iron may need to rise significantly before the pier will see any iron-shipping activity.
Building the Buena Vista mine is feasible for Nevada Iron only if iron ore can fetch $110 per metric ton on the market, according to feasibility papers filed in Nevada by the company last year. Currently, iron ore is trading below $70 per metric ton, the lowest price for that commodity in five years, according to Bloomberg News.
Bill Dean, Nevada Iron's president, said Tuesday that the mine will still be dug at $70 per metric ton. However, the lower the price, the tougher it would be to justify the cost of building the iron ore terminal in San Francisco.
It could cost anywhere from $50 million to $130 million to build such a terminal, Dean said.
“It's a bit of a chicken-and-egg thing,” Dean said.
Meanwhile, Chinese steel mills are using the cheaper iron ore from mines already in operation in Brazil and Australia.
If the iron plans don't pan out, there are a few other cargo options; the Port may also move to build an asphalt plant at Pier 84.
Anything except coal. But if The City were to change its environmental tune …
“The Port could literally be at capacity with that commodity alone,” Dean said.