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Pramod Mittal eyes stake in DPRK mines

Sunday, April 4th, 2010

According to the Economic Times of India:

Pramod Mittal, the younger sibling of steel tycoon LN Mittal and head of Global Steel Holdings, is negotiating with the North Korean government for a stake in the country’s Musan Iron Ore mines, estimated to hold reserves of more than seven billion tonnes. The move by Global Steel is aimed more at accessing the mineral resource, as the ore is in sharp demand with steelmakers expanding capacity and iron ore miners moving to a quarterly price regime to meet growing markets in Asia and Africa.

Mr Mittal, who is chairman of Global Steel, a closely-held company of the Mohan Lal Mittal family, had visited Pyongyang last week to talk to senior government officials to work out the modalities of a share of Musan’s reserves. The ML Mittal family consists of elder son LN Mittal, Pramod Mittal and younger brother Vinod Mittal, who looks after the Mumbai-based Ispat Industries. When contacted, Pramod Mittal declined to comment. “Our visit to North Korea is to further business interests. We are not looking for any stake in Musan,” he told ET .

According to people familiar with the development, Global Steel could likely be negotiating with Pyongyang for development rights to Musan for a fixed peiod, where Global Steel would do the mining and get to buy an agreed portion of the reserves. Typically, in the mining industry, such development rights are for a long term period of 20 to 50 years.

Global Steel, which is registered in the tax haven Isle of Man, has steelmaking operations in Bulgaria and Nigeria and a 20-year management contract to operate Zimbabwe Iron & Steel. Although Global Steel has a small steelmaking capacity of just more than 2 million tonnes, iron ore from Musan would not be used for Global Steel’s operations. Global Steel also owns two coal blocks in Mozambique where ArcelorMittal, controlled by elder brother LN Mittal, also has coal mines. While the Mittal family has maintained that Global Steel has no link to ArcelorMittal, the world’s largest steel company has been reportedly keen on Global Steel’s assets.

Two years ago, North Korea had granted development rights on Musan to China’s Tonghua Iron & Steel Group for a period of 50 years. However, Pyongyang recently terminated that agreement without offering any reason. People connected with the issue said Global Steel is negotiating with Musan on the amount of investment needed for developing the mines and also on building infrastructure, which is integral to any mining activity.

While the talks with Pyongyang is at an initial stage, under the previous agreement with Tonghua, the Chinese company had reportedly agreed to put in about 7 billion yuan, and had also planned to produce 10 million tonnes of iron ore each year. Of the total investment, about $240 million was for building roads and railways from Musan to Tonghua in China. The Musan iron ore mines are close to the Chinese border. The secretive North Korean government has recently been sending out feelers to global mining companies for developing its vast mineral deposits, said to contain one of the world’s largest reserves, closely rivalling Brazil.

The Musan Mine is the DPRK’s largest and satellite imagery of it can be seen here.

Here is a story about Tonghua’s Musan deal. 

Read the full story here:
Pramod Mittal eyes stake in North Korea’s Musan mines
The Economic Times
MV Ramsurya
4/5/2010

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Posted in China, Foreign direct investment, India, Mining/Minerals, Musan Mine, Tonghua-Dandong Economic Zone | 1 Comment »

Jin Hualin, Yanbian University, on Chinese investment in DPRK.

Sunday, April 4th, 2010

Jin Hualin, dean of the College of Economics and Management at Yanbian University, talks about Chinese investment in Rason in China’s Global Times.  Here is an excerpt:

GT: If China does continue to rent Rajin harbor for another 10 years, what will the effects be?

Jin: China has reached an agreement to rent a pier at Rajin Port for another decade. A Dalian-based Chinese company has invested 26 million yuan ($3.8 million) in the reconstruction of Rajin Port No.1 Pier. Park also said that China may enjoy more favorable conditions there, such as more berths.

I think Chinese companies’ participation is good for promoting the North Korean economy and building logistical infrastructure in the area, which is beneficial to China, North Korea and the Northeast Asian countries.

When the Sino-Mongolia route is finished, raw materials and natural resources from Mongolia can be shipped to Japan and South Korea via Rajin harbor, and then China’s northeastern regions and North Korea can both benefit.

GT: What should China do to promote Northeast Asian cooperation and devel-opment?

Jin: I suggest Chinese governments at all levels consider the following issues. They should accelerate trade and tourism and build cooperation on logistics, and support Chinese companies going global and investing in North Korea.

Actually, China now has many companies capable of investing abroad. The point is foreign countries’ investment environment.

We should strengthen cooperation on education with North Korean universities and colleges, sending students to study there and exploring research in new areas together.

We can also strengthen regional cooperation. We can designate China’s Hunchun city and North Korea’s Rason city as pilot cities and permit China’s commercial banks to open yuan-based accounts in Rason’s commercial banks.

Relations between Northeast Asian countries are subtle and complicated because of geopolitical contradictions, different political systems, the influence of the Cold War, historical issues, territorial disputes and sentiments caused by historical and territorial issues.

Mutual distrust fundamentally hinders cooperation. China needs to take the responsibility to promote regional cooperation and make it institutionalized and legally guaranteed as soon as possible.

GT: How do you evaluate the political and economic risks for Chinese companies going into North Korea? What advantages do Chinese companies have?

Jin: There are always political and economic risks involved in trade between different countries. The first major solution is to establish a mutual investment guarantee agreement, so that the two countries’ economic cooperation will be protected legally.

We hope that North Korea can keep the stability and consistency of its policies and issue development policies that is in line with international conventions. As long as North Korea adopts consistent policies, Chinese companies won’t encounter great political and economic risks there.

China and North Korea are believed to enjoy good mutual trust. China has experience from its reform and opening-up and plenty of investment capability. North Korea has a good educational foundation, low labor costs, and rich natural resources.

Chinese companies are active participants in investing in North Korea and I believe they’ll do well there.

Read the full interview here. Hat tip to Adam.

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Posted in Automobiles, Aviation, China, Foreign direct investment, Mongolia, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Sea shipping, Special Economic Zones (Established before 2013), Transportation | 1 Comment »

DPRK-PRC plan two more Yalu River dams

Sunday, April 4th, 2010

UPDATE: According to Michael Rank:

Two power stations are under construction on the Yalu river between China and North Korea, a Chinese website reports.

They are both small plants with an installed capacity of 40,000 kilowatts and both are situated near the border town of Ji’an 集安 in southwestern Jilin province, near the border with Liaoning.

The dams are set to be finished in 2013. Negotiations concerning construction have been protracted: a preliminary agreement was reached in July 2004, followed by a further agreement in August 2008 and a final accord last January.

The Wangjianglou or Lintu 望江楼（林土）dam will be based on the Chinese side of the river with investment totalling 600 million yuan ($88 million), while the Wenyue or Changchuan 文岳（长川）dam will be based on the North Korean side with investment put at $500 million ($73 million). The report did not say how power, or costs, would be shared between the two countries.

A ceremony marking the beginning of construction was held on March 31, attended by North Korean vice-minister of electricity industry Kim Man-su and Jilin vice-governor Chen Weigen.

The plants will each produce 154 million kilowatt-hours per year. The Wangjianglou dam is 397 metres long and 16 metres high, while Wenyue is 602.7 metres long and 15.5 metres high. They are 36 and 24 km from Ji’an, respectively and are 1.5 and 5.5 km from North Korean railway stations (Rinto린토 and Mun’ak 문악 – these are the Korean names of the dams).

These dams are very small scale compared with the world’s largest dams, which run into thousands of megawatts (440 kW is just 0.44 MW).

ORIGINAL POST: According to the AFP:

China and North Korea will build two hydro-electric dams on the Yalu River that marks their border, Chinese state media reported on Thursday.

The dams will cost a total of 1.1 billion yuan (161 million dollars) and generate a combined 308 million kilowatt hours of electricity when completed, China Central Television reported.

The announcement came amid reports that North Korean leader Kim Jong-Il would soon visit China in a trip that could revive talks on ending Pyongyang’s nuclear drive.

Xinhua news agency said one dam would be built at Wangjianglou in China’s northeastern Jilin province and the other at Changchuan.

Electricity from the dams would help “drive economic growth in Jilin and North Korea,” it added.

It was not immediately clear how the two sides would share the cost of the projects or the electricity.

Construction would begin this year.

North Korea, desperately poor after decades of isolation and Stalinist economic policies, is heavily dependent on China for trade and aid.

South Korea’s government said this week there was a “high level of possibility” that Kim would pay a visit to China, the reclusive regime’s closest ally.

The South’s Yonhap news agency cited diplomatic sources saying he might leave for China as early as Thursday or Friday.

China’s foreign ministry declined to confirm the reports.

After an October visit to Pyongyang by Chinese Premier Wen Jiabao, Kim said his nation would rejoin the six-nation denuclearisation talks which the North stormed out of in April of last year.

The talks group hosts China, the two Koreas, Japan, the United States, and Russia.

Adam Cathcart offers a translation of the Xinhua dispatch:

中朝两国在鸭绿江新合建的两座水电站开工   // China and North Korea to Begin Construction on Two New Shared Hydroelectric Plants

Huanqiu Shibao, April 2, 2010 [translated by Adam Cathcart]

新华网吉林频道3月31日电(记者李双溪)31日， 中国与朝鲜在界河鸭绿江上共同建设的两座水电站开工。这两座电站总投资为11亿元人民币 ，建成后年发电量达3.08亿千瓦时。其中，望江楼(朝鲜称林土)电站计划投资6亿元，发电厂位于中方一侧，电站主要由混凝土重力坝、泄水闸、电站厂房及变电站等部分组成。On Jilin’s newschannel on 31 March, Xinhua’s reporter Li Shuangxi broadcast that China and North Korea would start joint construction on two hydropower plants in the border areas of the Yalu River. Investment on these two power plants will total 1.1 billion yuan, and the year after completion, they are projected to have a power generation capacity of 308 million kilowatts.  Among these plants are the Wangjiang Station (called Lintu by the Koreans), which is slated for 6oo million RMB of investment.   The power plant on the Chinese side will be a concrete gravity dam with a sluice gate and substation components.

[Lots of details follow on dam dimensions, projected electric output…It seems clear that China will bear all of the cost, though.]
2004年7月中朝双方审查通过了两座电站的初步设计，2006年中国有关部门批准了建设方案。2010年1月，双方在朝鲜签署了《中朝建设鸭绿江望江楼和文岳电站第九次会议纪要》，一致同意两电站开工建设。 In July 2004, China and the DPRK jointly reviewed the preliminary design of the two power stations.   In 2006, the Chinese authorities approved the construction plan.  In  January 2010, the two sides signed an agreement in North Korea known as the “Minutes of the Ninth Meeting on Sino-North Korean Construction of Yalu River Dams at Wangjianglou and Wenbing,” in which it was agreed to commence with the construction of the two power stations.

发源于长白山主峰、总长约795公里鸭绿江水能资源丰富，流经过吉林省和辽宁省。 目前在吉林省境内中朝双方已建有云峰、渭源两座水电站。 望江楼、文岳电站将成为双方共同受益的水电站，对开发鸭绿江、拉动吉林省和朝鲜的经济增长将起到积极的促进作用。Originating in the main peak of the Changbai Mountain range, with a total length of 795 km, the Yalu River is a rich resource flowing through Jilin and Liaoning provinces.  Currently, on the borders of Jilin Province, China and the DPRK have already built two jointly benefitted-from hydropower plants called Yunfeng and Weiyuan.  The Wangjianglou and Wenbing power stations will be built for of mutual benefit, developing the Yalu River, driving forward continued economic development between Jilin province and North Korea, playing a positive role.

I am not sure where these dams are going just yet.  The DPRK and China already share 4 dams across the Yalu. Here are satellite images of them (Dam 1, Dam 2, Dam 3, Dam 4).  Unfortunately I do not know the names of most of them, but Dam 2 is now known as the Suphung Dam.  It used to be called the Suiho Dam and it was bombed during the Korean war:

Read the full story here:
China, N.Korea plan Yalu hydropower dams: reports
AFP
4/1/2010

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Posted in China, Dams/hydro, Electricity, Energy, Foreign direct investment | 2 Comments »

DPRK looking to greater Chinese investment

Thursday, April 1st, 2010

According tot he Washington Post:

Squeezed by food shortages and financial sanctions, North Korean leader Kim Jong Il appears to be reaching out to China and Chinese investors in a way that could mark an extraordinary opening in the insular nation’s shuttered economy.

Kim might soon travel to China, according to the office of South Korea’s president and U.S. officials. They cited preparations that appear to be underway in the Chinese border city of Dandong and in Beijing. The Chinese Foreign Ministry said Thursday it does not have information on whether Kim will visit China.

…

“The North is now planning to open foreign-owned factories not just in closed-off special economic zones, but in major cities like Nampo and Wonsan,” Lim said. Until now, the government has confined nearly all foreign business operations to sealed-off economic zones, such as Kaesong near the South Korean border. “The military is closely cooperating with the State Development Bank to try to increase foreign investment.”

Although the repressive power of the army and security forces remains strong, the North’s command-style economy is a ruin. There were unconfirmed reports of starvation deaths in some areas this winter.

Kim, 68, and showing the effects of a 2008 stroke, is in the early stages of handing power over to his untested 27-year-old son, Kim Jong Eun. But the legitimacy of the succession — and of the state itself — is being weakened by the growth of the markets and increased public access to foreign media.Refugee surveys show that many North Koreans blame Kim’s government for food shortages, corruption and incompetence.

…

In South Korea and China, there is widespread skepticism about North Korea’s willingness to create modern banking systems and enforce laws that allow foreign companies to operate under standardized accounting rules.

Companies that have invested in North Korean mineral ventures have complained for years of corruption and outright theft by the government.

Read the full story here:
Overtures to China may signal opening of North Korea’s economy
Washington Post
Blaine Harden
4/2/2010

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Posted in China, Economic reform, Foreign direct investment, Joint Ventures | 1 Comment »

Hermit economics hobbles Pyongyang

Wednesday, March 31st, 2010

Aidan Foster-Carter writes in the Financial Times about some poor decision-making coming out of Pyongyang:

Great Leader? Pyongyang’s fawning hagiography not only grates, but is singularly unearned. Even by its own dim lights, North Korea’s decision-making is going from bad to worse.

Last year saw two spectacular own goals. Missile and nuclear tests were a weird way to greet a new US president ready to reach out to old foes. The predictable outcome was condemnation by the United Nations Security Council, plus sanctions on arms exports that are biting.

Domestic policy is just as disastrous. December’s currency “reform” beggars belief. Did Kim Jong-il really fail to grasp that redenomination would not cure inflation, but worsen it? Or that brazenly stealing people’s savings – beyond a paltry minimum, citizens only got 10 per cent of their money back – would finally goad his long-suffering subjects into rioting? Forced to retreat, officials even apologised. One scapegoat was sacked – and possibly shot.

By his own admission, Mr Kim does not do economics. In a speech in 1996, when famine was starting to bite, the Dear Leader whined defensively that his late father, Kim Il-sung, had told him “not to get involved in economic work, but just concentrate on the military and the party”.

That awful advice explains much. Incredibly, North Korea was once richer than the South. In today’s world, this is the contest that counts. “It’s the economy, stupid” is no mere slogan, but a law of social science.

Having taken an early lead, Kim senior threw it all away. He built the world’s fourth largest army, crippling an economy that he refused to reform, viewing liberalisation as betrayal. His own personality cult was and is a literally monumental weight of unproductive spending.

Used to milking Moscow and Beijing, in the 1970s North Korea borrowed from western banks – and promptly defaulted. That was not smart; it has had to pay cash up front ever since.

Pyongyang also resorts to less orthodox financing. In 1976 the Nordic nations expelled a dozen North Korean diplomats for trafficking cigarettes and booze. In December a Swedish court jailed two for smuggling cigarettes. More than 100 busts worldwide over 30 years, of everything from ivory and heroin to “supernotes” (fake $100 bills), leave scant doubt that this is policy.

Yet morality aside, it is stupid policy. Pariahs stay poor. North Korea could earn far more by going straight. The Kaesong Industrial Complex (KIC), where South Korean businesses employ Northern workers to make a range of goods, shows that co-operation can work. Yet Pyongyang keeps harassing it, imposing arbitrary border restrictions and demanding absurd wage hikes.

Now it threatens to seize $370m (€275m, £247m) of South Korean assets at Mount Kumgang, a tourist zone idle since a southern tourist was shot dead in 2008 and the north refused a proper investigation. Even before that, Pyongyang’s greed in extorting inflated fees from Hyundai ensured that no other chaebol has ventured north. Contrast how China has gained from Taiwanese investment.

In this catalogue of crassness, the nadir came in 1991 when the dying Soviet Union abruptly pulled the plug on its clients. All suffered, but most adapted. Cuba went for tourism; Vietnam tried cautious reform; Mongolia sold minerals. Only North Korea, bizarrely, did nothing – except watch its old system crumble. Gross domestic product plunged by half, and hunger killed up to a million. Now famine again stalks the land. The state cannot provide, yet still it seeks to suppress markets.

All this is as puzzling as it is terrible. China and Vietnam show how Asian communist states can morph towards capitalism and thrive. Kim Jong-il may fear the fate of the Soviet Union if he follows suit. True, his regime has survived – even if many of its people have not. Yet the path he is on is patently a dead end. Mr Kim’s own ill-health, and a belated bid to install his unknown third son as dauphin, only heighten uncertainty. Militant mendicancy over the nuclear issue – demanding to be paid for every tiny step towards a distant disarmament, then backsliding and trying the same trick again – will no longer wash. North Korea has run out of road; the game is finally up.

What now? A soft landing, with Mr Kim embracing peace abroad and reform at home, remains the best outcome. But if he obdurately resists change, we need a plan B. The US and South Korea have contingency plans for the north’s collapse. So does China, separately. Tacit co-ordination is urgent, lest future chaos be compounded by a clash of rival powers – as in the 1890s. Koreans have a rueful proverb: when whales fight, the shrimp’s back is broken.

But Beijing will not let it come to that. China is quietly moving into North Korea, buying up mines and ports. Some in Seoul cry colonialism, but it was they who created this vacuum by short-sightedly ditching the past decade’s “sunshine” policy of patient outreach. President Lee Myung-bak may have gained the Group of 20 chairmanship, but he has lost North Korea.

Nor will Mr Kim nuzzle docile under China’s wing, though his son might. As ever, North Korea will take others’ money and do its own thing. In early 2010 new fake “super-yuan” of high quality, very hard to detect, started appearing in China. They wouldn’t, would they?

Read the full article here:
Hermit economics hobbles Pyongyang
Financial Times
Aidan Foster-Carter
3/30/2010 

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Posted in Arms shipment, Banking, China, Counterfeiting, Drug smuggling, Finance, Fiscal & monetary policy, Foreign direct investment, Illicit activities, International Governments, International trade, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Private property | 6 Comments »

Some Chinese weary of supporting Pyongyang

Wednesday, March 31st, 2010

According to Voice of America:

Peking University Professor Zhu Feng, one of the forum participants, issued a frank warning to the North not to expect any large handouts from China.

“Bailing out North Korea’s economy [is] easy.  We have the capability.  We have no intention,” said Zhu.

Three decades after opening its economy and encouraging market activity, Beijing is one of the three largest economies in the world.  In November, Pyongyang enacted what economists say is the mirror opposite of the Chinese reforms; clamping down on markets, and extinguishing the savings of small traders with a surprise currency revaluation.

Reports from North Korea indicate the measures strangled economic activity and sparked hyperinflation in prices for basic foods.

Zhu says Pyongyang needs to adjust its course, and unless it does, China will not help.

“Offering North Korea sizable aid, and keeping it [afloat], without any change to their very bizarre policy, is detrimental to the China national interest,” said Zhu.

Soon after North Korea invaded the South in 1950, China sent hundreds of thousands of troops to aid the North.  In the past, the two countries have said their relationship was as close as “lips and teeth.”  Zhu says times have changed.

“The Korean War is over.  Beijing changed tremendously.  Our relation also altered almost completely,” he said.

Zhu says China will continue to engage with the North on humanitarian issues to prevent mass starvation.  However, he says Beijing’s North Korea policy is not centered on preserving Kim Jong Il’s rule.

“China is now ready for any form of very substantive change in North Korea – including collapse,” he said.

It is not clear if the Chinese government backs Zhu’s comments. But such blunt language from China about North Korea is unusual. Beijing has been Pyongyang’s biggest economic supporter for nearly 20 years, and, regional security experts say, it wants to avoid an economic collapse in North Korea that would send hundreds of thousands of refugees across the border.

Read the full story here:
Chinese Continued Financial Support of N. Korea Questioned
Voice of America
Kurt Achin
3/31/2010

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Posted in Banking, China, Finance, Fiscal & monetary policy, Uncategorized | Comments Closed

DPRK food imports from China triple in January

Friday, March 12th, 2010

According to Yonhap:

North Korea brought in 13,834 tons of grain from the neighboring ally in January, a 3.6-fold increase from 3,869 tons in January last year, said Kwon Tae-jin, a senior researcher on the North’s agricultural sector at the South’s Korea Rural Economic Institute in a posting on his blog.

Rice accounted for about 61 percent or 8,425 tons of the North’s grain import from China, followed by corn with 3,448 tons, beans with 1,553 tons and wheat with 304 tons, Kwon said, citing data from the Korea International Trade Association.

“The big rise in imports of corn and beans, which the North didn’t bring in last year, appears to be not only because corn harvests were not good, but it also suggests the North increased imports over concerns about possible food shortages,” he said.

Kwon also said that the North’s regime could have increased imports to enlarge state food rations after last year’s currency reform caused strains on the country’s food supply system.

North Korea has relied on foreign handouts to feed its 24 million population after natural disasters and mismanagement devastated its economy. The situation worsened in recent years as South Korea halted regular food aid to the North after President Lee Myung-bak took office in early 2008 under a policy to link aid to Pyongyang’s process in ending its nuclear weapons programs.

… 

The U.N. food agency, Food and Agriculture Organization, said early this month that the North is expected to be short of about 1-1.2 million tons of food this year.

I think the data for this story came from this KITA web page, but I can’t be sure since my Korean is exceptionally limited. Here is a description of the KITA page in English.

On a personal note, I wish the major South Korean media outlets  would get into the habit of posting links to their sources.  It is not difficult to do this.  

Read the full article here:
N. Korea’s food imports from China more than triple in January: expert
Yonhap
3/12/2010

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Posted in Agriculture, China, Food, International trade, Trade Statistics | Comments Closed

China border tourism to North Korea set to rise, South Korean airlines may be involved

Thursday, March 11th, 2010

By Michael Rank

Chinese officials have announced plans to increase the number of Chinese tourists visiting North Korea from the border region of Yanbian 延边 and are hoping to involve South Korean airlines and to include Vladivostok on the itinerary, a Chinese website reports.

The head of the Yanbian tourism bureau, Jin Chengwen 金成文 (Kim Seong-mun), was quoted as saying they were investigating plans for tours starting in the main city in the region, Hunchun 珲春, which would take in the Russian Pacific port of Vladivostok and Baekdusan 백두산, a mountain on the Sino-Korean border that is the purported birthplace of leader Kim Jong-il, as well as tours from the North Korean port of Rajin 라진 to Pyongyang and Panmunjom.

He said he hoped Korean Air and other South Korean and Chinese airlines would become involved, but gave no details. It was hoped that Chinese tourists would not need passports to visit North Korea, he added.

Another Yanbian tourism official said there were already tours from the border town of Sanhe 三合 to the industrial city of Chongjin 청진 and Baekdusan and to Samji lake (Samjiyeon 삼지옌), a scenic spot near Baekdusan, and Pyongyang, and they were hoping to add a Rajin-Pyongyang-Panmunjom tour. “North Korea is hoping more Chinese tourists will come and tour their country,” he added.

The report said the tourism plans were connected to an agreement announced this month under which China gained the use of a pier at the port of Rajin 라진 for 10 years to help the development of the border region and give Jilin province access to the Pacific.

As NKEW reported last year, Chinese officials are also talking about cruises from Hunchun to the North Korean port of Raseon 라선 (Rasŏn/Naseon/Nasŏn) (which somewhat confusingly seems to be the same as Rajin), Sokcho 속초 in South Korea, just south of the DMZ, and Vladivostok.

North Korea is also hoping to attract tourists from southern China, and has cast its eye on Guangdong province as well as Shanghai.

Also see “China to Offer Railway Tours to N.Korea” in the Choson Ilbo:

A new train service is being offered in China for tours to North Korea. One news website based in China’s Zhejiang Province reported on Wednesday that a large travel agency in the region will offer railway trips from Hangzhou to Sinuiju from April 20.

The trains have 14 sleeper carriages and can transport 800 passengers. They pass Beidahu in Hebei Province and Dandong, Liaoning Province before arriving in Sinuiju, where Chinese passengers will transfer to a North Korean train and embark on an 11-day tour that includes stops in the border truce village of Panmunjom, Mt. Myohyang and the childhood home of former North Korean leader Kim Il-sung. The tours will cost 5,280 yuan for first-class compartments and 4,680 yuan for regular ones.

“Until now, people in Zhejiang Province visited North Korea by flying from Hangzhou either to Beijing or Shenyang and transferring to trains,” said a spokesman for the tour agency. “But the train tours are both cheaper than existing options and offer more sightseeing stops including Beidahu and Dandong, so more than 300 people have signed up already.” China halted tours to North Korea in February of 2006 but decided to start them again this year.

Chinese tourists will not be able to bring mobile phones into North Korea and will also be banned from carrying cameras with zoom lenses and face restrictions on traveling alone in the communist country.

Finally, more information on Chinese tourism has been published in the Donga Ilbo:

Tours of North Korea for Chinese tourists resuming next month have started to be sold in Beijing and Guangdong province, the China Daily said yesterday.

Five to six licensed tour agencies are recruiting Chinese tourists for travel in North Korea in mid-April. As many as 200 people from Beijing alone will visit next month, the daily said.

A few tour packages are up for grabs. A Chinese state-run travel agency is offering a six-day package and a three-day package. For both, tourists will travel by plane but must do so via Hangzhou, Beijing, the North Korean capital of Pyongyang, and Shenyang, so two full days will be needed to get to and from North Korea.

The three-day package is a brief visit to Pyongyang and costs 3,380 yuan (495 U.S. dollars). The six-day tour costing 6,280 yuan (920 U.S. dollars) covers many parts of North Korea. Tourists will visit the day after their departure Mansudae Grand Monument and Chollima Statue in Pyongyang. From the third day, they will go to Panmunjom in Kaesong, beaches in Wonsan, Mount Kumgang, and then back to Pyongyang.

The six-day package could also include a tour to Mount Myohyang. Tourists can also choose to attend a performance celebrating the birthday of North Korea’s late leader Kim Il Sung April 15.

The tourists will also receive a long list of “don’ts.” They will be banned from making noise, mimicking Kim’s postures in front of his statue, and commenting on North Korea’s leaders, politics, military and economy.

Another big no-no is the taking of photos on the trip from Shinuiju to Pyongyang, streets and markets, and images conveying a negative impression of the communist country.

Tourists also must call South Korea “South Korea” instead of the Republic of Korea. They will also be required to leave at immigration offices mobile phones, products with the South Korean or U.S. flag and other symbols of these nations on them, and magazines with open covers upon entering North Korea.

The list also says few public phones are on North Korean streets, adding tourists can make phone calls only at hotels for 16 yuan (2.30 dollars) per minute.

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Posted in China, Railways, Tourism, Transportation | 4 Comments »

DPRK seeks foreign capital through Rajin Port Development

Wednesday, March 10th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No.10-03-11-1
3/11/2010

North Korea is actively looking into further development of Rajin Port by extending China’s lease on port facilities for another decade, and granting Russia 50-year rights to Rajin port facilities, as well. Li Longxi, a deputy of the National People’s Congress and head of Jilin Province’s Yanbian Korean Autonomous Prefecture, revealed to a Yonhap News reporter in Beijing on March 8, “The North gave Russia the right to use Pier 3 for 50 years, and is actively looking into extending the right to use Pier 1 granted to China in 2008 for another 10 years.”

Rajin Port has five piers, with Pier 3 being larger than Pier 1. The rights to Pier 1 were granted to the Changli Group, which specializes in the manufacture of environmental materials in Dalian. 10-year use and development rights had already been granted to this company. Deputy Li explained, “China gained rights to Pier 1 in 2008, and is now in negotiations with North Korea over extending those rights for 10 years.” Therefore, if this agreement is reached, China will have exclusive rights to the pier until 2028.

Li added, “Currently, China is in the process of constructing the facilities necessary to use the pier, and will begin to move goods through the port when construction is complete.” It appears China has invested tens of millions of Yuan into this project. Li also pointed out that by being able to use Rajin Port, Yanbian, currently lacking export avenues, will be able to transport Jilin Province’s abundant coal resources, not only through the Yellow Sea to Shanghai and other domestic cities, but to Japan and other countries in the Asia Pacific region.

On February 28, Sun Zhengcai, CCP Secretary of Jilin Province met with North Korean Kim Yong Il, head of the Korean Workers’ Party International Department, and introduced to him China’s ‘Greater Tumen Initiative’ development project. At the time, it was reported that Sun explained to Kim that Jilin provincial authorities had reached an agreement with North Korea for joint venture to construct a network of roads and basic infrastructure facilities. Jilin provincial and city officials, as well as Changchun city representatives, are involved in the project. China is focused on the Tumen river basin and Rajin Port because of their strategically valuable economic role in developing the country’s straggling northeast region.

Russia is also eyeing Rajin Port, because if the port is developed, it could serve as an outlet to export Sakhalin and Siberian crude oil and natural gas to neighboring countries. In July of last year, Russia and North Korea reached an agreement to repair the rail connection between Rajin and Hasan and to improve Rajin Port facilities, investing 1.4 billion Euros. Japanese newspaper Sankei Sinbun quoted a source within North Korea as reporting that Jang Song Thaek, Party administrative chief and brother-in-law of Kim Jong Il, had recently travelled to Rasun (Rajin + Sunbong) and declared that the area would be fully developed within the next 6 months.

The Korea Daepung International Group, serving as North Korea’s window to foreign capital, is said to have a plan to entice international investment in order to support the Tumen river development plan, and plans to develop Rasun Special City and Chongjin Port into key outlets for DPRK-PRC-Russian trade and commerce in Northeast Asia. However, the participation, and investment, of private-sector enterprises will likely depend on the success of the Rajin Port development.

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Posted in China, Foreign direct investment, Korea Taepung International Investment Group (Daepung Investment Group), Rason Economic and Trade Zone (Rajin-Sonbong), Russia, Sea shipping, Special Economic Zones (Established before 2013), Transportation, Tumen River Area Development Programme (TRADP) | Comments Closed

China leases Rason port for 10 years

Monday, March 8th, 2010

UPDATE:  According to Defense News:

Fears that China will establish a naval presence at a port facility at North Korea’s Rajin Port appear unfounded.

An agreement with a Chinese company to lease a pier at Rajin for 10 years was reported by the Chinese state-controlled Global Times on March 10.

The Chuangli Group, based at Dalian in China’s Liaoning province, invested $3.6 million in 2009 to rebuild Pier No. 1 and is constructing a 40,000-square-meter warehouse at the port. The leasing agreement has given way to suggestions China could be attempting to establish its first naval base with access to the Sea of Japan.

The North Korean Navy does use Rajin as a base for smaller vessels, such as mine warfare and patrol vessels, but for the time being, it appears economics are the primary motivation for the Chinese company’s presence there, said Bruce Bechtol, author of the book “Red Rogue: The Persistent Challenge of North Korea.”

“Chinese investment has increased a great deal in North Korea in the past five years,” he said. “It would not be a military port for the Chinese – as the North Koreans would be unlikely to ever allow such a thing.” He noted there are no Chinese military installations in North Korea.

The Rajin facility will give Chinese importers and exporters direct access to the Sea of Japan for the first time. “It is the country’s first access to the maritime space in its northeast since it was blocked over a century ago,” the Global Times reported.

China lost access to the Sea of Japan during the Qing Dynasty in the 19th century after signing treaties under duress from Japan and Russia.

Various media in Japan and South Korea have suggested the lease might give China an opportunity to place a naval base at Rajin, but Bruce Klingner of the Heritage Foundation in Washington, D.C., also downplayed the notion, saying North Korea’s negative attitudes toward China and a fear of excessive Chinese influence would negate any chance Beijing could establish a naval presence there.

Klingner also said he doubts North Korea would make a success out of the agreement. “Pyongyang’s aversion to implementing necessary economic reform and its ham-fisted treatment of investors suggests the new effort to turn Rajin into an investment hub will be as much a failure as the first attempt in the 1990s.”

ORIGINAL POST: According to the Choson Ilbo:

China has gained the use of a pier at North Korea’s Rajin Port for 10 years to help development of the bordering region and establish a logistics network there.

Lee Yong-hee, the governor of the Yanbian Korean Autonomous Prefecture in China’s Jilin province, made the announcement to reporters after the opening of the People’s Congress at the Great Hall of People in Beijing on Sunday.

He was quoted by the semi-official China News on Monday as saying, “In order for Jilin Province to gain access to the East Sea, a private company in China in 2008 obtained the right to use Pier No. 1 at Rajin Port for 10 years. Infrastructure renovation is currently underway there.”

In an interview with Yonhap News on Monday, Lee said, “We’re considering extending the contract by another 10 years afterward.”

Jilin abuts the mouth of the Duman (Tumen) River in the southeast but its access to the East Sea is blocked by Russia and North Korea. “We hope that an international route to the East Sea will be opened via Rajin Port,” he added.

Lee did not specify which Chinese company obtained the right and which North Korean agency awarded the concession. The Chinese Foreign Ministry on Feb. 25 said business investment in the North Korea-China border area is a normal business deal and does not therefore run counter to UN sanctions against the North.

According to Yonhap:

South Korea is keeping a close watch over North Korea’s efforts to draw greater foreign investment to one of its ports, as the move might indicate Pyongyang is opening up to the outside world and signal its return to stalled international nuclear talks, officials said Tuesday.

The North has agreed to give a 50-year lease on its Rajin port to Russia, and the country is also in talks with a Chinese company on extending its 10-year lease by another decade, according to an official from China’s Jilian Province, currently in Beijing for the National People’s Congress.

The North’s opening of the port on its east coast has a significant meaning for China as it will give the latter a direct access to the Pacific, but it also means millions of dollars, at the minimum, in investment for the cash-strapped North.

Officials at Seoul’s foreign ministry said the North’s opening of its port or its economy was a positive sign, but that it was too early to determine whether the move will also have a positive effect on international efforts to bring North Korea back to the nuclear negotiations.

“We are trying to confirm the reports, though they appear to be true because they were based on China’s official announcement,” an official said, asking not to be identified due to the sensitivity of the issue.

“We are trying to find out the exact details of the contracts (between North Korea and Russia and China),” the official added.

Additional information 

1. A previous report indcated that there were 250 Chinese companies registered in Rason.  The North Koreans reportedly closed out the insolvent and inoperable businesses. I do not know how many are there now. Read more here.

2. The Russian government recently built a Russian-gauge railway line from Kashan to Rason. Read more here.  It will be interesting to see if China upgrades roads and railways which could connect Rason to China.

3. Rason is sealed off by an electric fence. Read more here.

4. Many other stories about Rason here.

Read the full stories here:
China’s Jilin Wins Use of N.Korean Sea Port
Choson Ilbo
3/9/2010

Seoul closely watching N. Korea’s opening of port to China: officials
Yonhap
Byun Duk-kun
3/9/2010

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Posted in China, Foreign direct investment, International trade, Rason Economic and Trade Zone (Rajin-Sonbong), Russia, Sea shipping, Special Economic Zones (Established before 2013), Transportation | 5 Comments »

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