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DPRK issues KWP commemorative coins–now being traded

Wednesday, March 9th, 2011

UPDATE: The Daily NK (2011-3-7) reports that the DPRK’s recently minted commemorative coins have been been appearing in the markets:

Chosun Workers’ Party cadres who attended the Delegates’ Conference in Pyongyang on September 28th were each presented with a commemorative gold coin. Now, however, some of the same coins have begun to appear on the open market, according to a source from North Pyongan Province who spoke with The Daily NK on Sunday.

The commemorative coins were minted from gold, silver and nickel by the Chosun Central Bank, and form part of a tradition of coin presentation for state events or to commemorate notable national achievements which began with the 75th birthday of Kim Il Sung in 1987 and continued with the joint 50th anniversary of the Party founding and 50th anniversary of the liberation of the country from Japanese rule in 1995.

The money needed to obtain the raw materials for the 2010 coins was apparently gathered by Bukang Trading Company, which operates under the Workers’ Party.

“The Delegates’ Conference commemorative coins which have appeared on the market are mostly being sold by people who trade with China,” the source explained. “They are not pure gold, but there is a good amount of gold in them, so the price is reasonably high.”

Kim, who defected to South Korea in the second half of the 1990s, said that such coins used to be treated with the greatest of respect, explaining, “When I was in North Korea, I saw a number of commemorative coins. Even until the end of the 1990s, people looked after them at home as a precious thing and a source of great pride. The coin itself was evidence of a person’s status.”

However, recently people’s values have changed a great deal. The source from North Pyongan said, “In those days, even a starving man wouldn’t sell a ‘gift’ from the Suryeong or the General. But now, no matter how precious the gift may be, people will sell it in the market without a second thought.”

“Watches with Kim Il Sung’s name on and various commemorative coins do appear in the market sometimes,” he went on, adding, “Things which were beyond our wildest dreams in the olden days are becoming normal. Sellers point out, ‘What am I supposed to do with possession of this kind of thing?’ Having something to eat is better.”

More than being a simple indication of difficult economic times, the act of selling something which was intended to be thought of as a personal gift from a benevolent leader appears to present compelling evidence of the deteriorating authority of the regime and its control of social discipline. This seems to be particularly so given that the commemorative coins must be being sold by cadres, in theory the most loyal group of North Korean citizens and certainly one which needs to remain loyal if the regime is to maintain its grip on power in the long term.

ORIGINAL POST (2010-10-4): The DPRK is issuing gold and silver coins to commemorate the 65th anniversary of the founding of the Worker’s Party.

Images courtesy of Daylife.com.

Posted in General markets (FMR: Farmers Market), Gold, Mining/Minerals, Political economy, Worker's Party | Comments Closed

Some interesting things…

Monday, February 28th, 2011

On January 18th, 2011, Kim Jong-il visited the “technologically updated” January 18 General Machinery Plant (1월18일기계종합공장, pictured above on Google Earth). Usually when dates are incorporated into facility names they are public holidays (April 25th House of Culture–4.25 is KPA founding day) or the day Kim Il-sung visited the facility. Since I cannot find a North Korean Holiday on 1.18, I assume this is the day Kim Il-sung first visited the facility.

According to KCNA:

General Secretary Kim Jong Il gave field guidance to the technologically updated January 18 General Machinery Plant.

He went round the inside and outside of the plant to learn in detail about its technological updating and production there.

The workers of the plant have finished the work for its modernization and scientification based on the latest technology by their own efforts and wisdom and energetically developed new technologies to bring about a radical change in production.

Leader Kim Jong Il expressed great satisfaction over this success, watching the production processes equipped with home-made CNC-based machines and new machinery.

The plant has undergone radical changes to meet the need of the knowledge-based economy era thanks to the brisk mass technical innovation movement conducted by its officials, workers and technicians true to the Party’s policy of attaching importance to science and technology, he said, adding: This signal advance is a display of the great mental power of the heroic Korean workers who have always won victories through progress and innovation.

He also made the rounds of newly-built canteen and other cultural and welfare facilities for the workers to acquaint himself with the cultural life and supply service at the plant.

Seeing neat and clean dining room, kitchen, bean store and processing room, he noted that the plant has made signal changes in the supply service in a few years through its careful arrangement and redoubled efforts with the proper viewpoint on the workers. And he expressed great satisfaction over the provision of good living conditions to the workers.

The plant has an important role to play in the development of the nation’s machine building industry, he said, advancing the tasks for it.

Its most important task is to keep the production of machinery going at a high rate and produce more new-type efficient machinery, he said. He set the goal for the plant to hit in the near future and indicated orientation and ways to do it.

The officials of the plant should energetically guide the masses as the supporter and implementer of the Party’s policies and the fighter standing in the van of the drive to devotedly carry out the tasks set forth by the Party, he urged.

He expressed great expectation and conviction that the workers of the plant would creditably perform their role as the vanguard and shock brigade in implementing the WPK’s economic policy.

This factory goes by several similar names, but NTI reports:

According to a source in the South Korean military, this factory produces Scud missile engines. Han Tŏk Su, former chairman of the pro-North Korean General Federation of Korean Residents in Japan (Choch’ongnyŏn), reportedly visited the January 18th Machine Factory in April 1987. His guide told him the facility had been built under an apartment complex, and that very few people living in Kaech’ŏn knew about the factory. Han was also told that the factory mainly produced missiles, tanks and motors. According to the South Korean Ministry of Unification, this factory produces rocket engines.

This was Kim’s second official visit to the factory. The first was on June 10, 1998.

And…

On January 3, 2011, North Korean television broadcast from the Pongchang District Coal Mine (봉창지구탄광). This is interesting because the mine is located inside Kwan-li-so 18. Pictured above is the perimeter of the facility identified in The Hidden Gulag. I posted the relevant television footage to YouTube here which you can use to match up with Google Earth satellite imagery if you wish. The DPRK might like to give the impression that it is an ordinary coal mine, but most of their other mines do not have security perimeters.

Posted in Coal, Energy, Google Earth, Military, Mining/Minerals, Political economy, Uncategorized | Comments Closed

Increase in DPRK’s mineral resources exports to China expected again for this year

Monday, February 28th, 2011

Institute for Far Eastern Studies (IFES)
2/24/2011

The trade volume between North Korea and China has steadily increased, reaching its record high of USD 3.4 billion in 2010. Total exports amounted to 1.19 billion USD while imports doubled that figure to USD 2.22 billion. Imports have continued to grow, increasing by 2.4 times over the previous year.

Since the Cheonan incident and the implementation of May 24 sanctions, inter-Korean economic cooperation has come to a halt, naturally resulting in rise in exports to China. In particular, a significant growth in anthracites exports was observed. The monthly anthracites exports that averaged around USD 10 million surpassed USD 70 million mark last August and maintained USD 50 million monthly average between September to November. In addition, cost-per-ton of anthracite in March which was USD 52.2, jumped to USD 82.8 in November, a climb of 60 percent. This boost is attributed to its increased export.

The current supply of electric power consists mostly of hydroelectric power — reaching over 60 percent– but during the winter season most of the hydropower plants are unoperational due to frozen facilities from harsh winter weather. Anthracites were the alternative resource to fill this gap. Sacrificing power production and exporting great amount of anthracites despite severe winter is a strong indication of the poor foreign currency situation in North Korea.

In its New Year’s joint editorial, North Korea placed heavy emphasis on its anthracite export that took up 60 percent of its total exports. In the statement, four vanguard sectors of coal, electricity, metals, and railroads were highlighted as important industries as “rich underground resources that will help with securing funds and resolving raw material problems.” This is the first time in 13 years – that is, since the Arduous March — for coal to be mentioned first in the New Year’s message.

North Korea also began to lift export restraints of mineral resources like coal and silver from the latter half of last year and ordered to increase imports of rice and corns in place of minerals.

The reason food procurement is placed first at the expense of its mineral resources is believed to be associated with the implementation of the succession involving Kim Jong Un, and to keep North Korean people’s dissatisfaction under control and manage the domestic situation.

North had placed restraints on coal, gold, silver, lead, and zinc exports from 2007 through adopting export control of mineral resources.

In addition, North Korea and China will meet in Beijing to sign an agreement on joint development of underground resources. This agreement will include Musan Mine and rare-earth mines that POSCO (The Pohang Iron and Steel Company of South Korea) has shown interest in in the past for development. China’s moves in this sector are suspected as China’s attempt to monopolize the DPRK’s underground resources.

The DPRK’s Joint Venture and Investment Guidance Bureau and China’s Ministry of Commerce were expected to meet on February 15 to discuss agreements related to underground resources development. On the agenda was Musan Mine, abundant in gold and anthracite, and other mines rich in rare-earth elements. Other mines are also known to be specified in the agreement.

China is expected to bring private companies into the underground resources development project after reaching an agreement with the DPRK. According to our source, “both parties will establish a joint venture investment corporation in Hong Kong after signing the agreement.”

Construction of a highway connecting Heilong City of Yanbian Korean Autonomous Prefecture to Nampyong and Chongjin of North Korea and railway system linking the cities of Heilong, Nampyong, and Musan are currently underway, expected to be in operation by end of this year. Jilin Province and Ministry of Railways of China began construction of this railway system from October 2010 investing CNY 1.19 billion, which runs a distance of 41.68 km. However, it is expected to extend further onto Chongjin and is considered to become the major transportation hub, integrating economic cooperation between the two countries.

Musan Iron Mine is known as the largest outdoor iron mine in Asia and Tonghua Iron and Steel Group along with three other Chinese corporations acquired 50-year development rights of Musan Iron Mine. They are bringing in about 120 tons of iron ore each year and more is expected to be brought in once the Heilong-Musan rail link is completed.

Posted in Automobiles, China, Coal, Copper, Dams/hydro, Energy, Gold, Graphite, International trade, Joint Venture Investment Committee (JVIC), Mining/Minerals, Statistics, Trade Statistics, Transportation | Comments Closed

Chinese publish DPRK trade data

Thursday, February 17th, 2011

According to Bloomberg:

North Korea’s exports to China jumped 51 percent to $1.2 billion last year, led by iron ore, coal and copper, Chinese government data show. China’s sales to its ally rose 21 percent to $2.3 billion from a year earlier, with supplies of wheat and oil helping ease chronic shortages of fuel and food. Two-way trade fell 4 percent in 2009, when the United Nations tightened sanctions after Kim’s regime carried out a second nuclear test.

The revival in commerce contrasts with U.S. efforts to isolate North Korea after a year in which 50 South Koreans died in attacks that roiled markets. Kim needs China to meet a pledge to put “rice with meat soup” on every table and build a “thriving nation” by 2012, the centennial of his father and the nation’s founder, Kim Il Sung.

“Even if North Korea’s front door is firmly locked, there is every reason to think the regime can gain what it needs to survive with impunity as long as the back door is open to China,” said Scott Snyder, an adjunct senior fellow for Korea studies at the New York-based Council on Foreign Relations. China’s trade risks making sanctions “ineffective,” he said.

…

China sold $325.8 million of crude oil to North Korea last year, up 37 percent from 2009. China’s coal imports jumped 54 percent to $394.4 million, while iron ore purchases doubled to $195 million, according to China’s customs department.

Two-way trade of $3.5 billion was still dwarfed by China’s $207.2 billion commerce with South Korea.

London’s Telegraph added this little nugget to the story:

However analysts added that the North’s two-way trade of $3.5 billion – dwarfed by China’s $207.2 billion commerce with South Korea – would still give the regime little more than life support.

Read the full stories here:
North Korea Exports to China Show Birthday-Boy Kim’s `Back Door’ Reprieve
Bloomberg
Bomi Kim
2/16/2011

Posted in China, International trade, Mining/Minerals, Statistics, Trade Statistics | 1 Comment »

Chinese investment and trade with the DPRK

Sunday, February 13th, 2011

Writing at his new blog, Marcus Noland argues that KOTRA overstates the percentage of the DPRK’s trade coming from China.

According to Noland, there are several problems with KOTRA data that makes it less than ideal for drawing policy conclusions. KOTRA counts DPRK-ROK trade as a domestic exchange, not international trade. Once corrections are made for South Korean trade and a few other tweaks, China’s share of North Korean trade falls from appx 80% to 30%.

In a different but related story, Yonhap reports on research findings by Drew Thompson, director of China Studies at the Nixon Center. According to the report:

China’s investment in North Korea was less than US$100 million between 2003 and 2009, indicating Beijing’s investment projects in the reclusive country are still relatively small, a U.S. scholar said Thursday.

Drew Thompson, director of China Studies at the Washington-based Nixon Center, said Chinese investment in North Korea totaled $98.3 million over the seven-year period, compared to $1.2 billion in South Korea during the same period.

It was also less than China’s investments in other neighboring states, including $273 million in Thailand, $473 million in Vietnam, $729.8 million in Myanmar and $890.7 million in Mongolia over the same period.

The majority of Chinese investors in North Korea are small and medium enterprises, though some smaller firms enjoy brand recognition, such as Nanjing Panda Electronics Co., China Minmetals Corp. and Wanxiang Group, the scholar said.

The majority of Chinese investors in North Korea are not state-owned enterprises (SOEs) controlled by the Chinese central government, but privately owned companies and provincial-, prefecture- and municipal-owned SOEs.

Of the 138 Chinese-North Korean joint ventures established between 1997 and August 2010, 41 percent engage in mining, 38 percent in light industry, 13 percent in services and 8 percent in heavy industry, he said.

Thompson said Chinese investors in North Korea are geographically concentrated in the two northeastern provinces bordering North Korea.

Twenty-eight percent of Chinese companies involved in joint ventures are from Jilin, with 34 percent from Liaoning. The rest are from other regions, including Beijing, Shandong and Shanghai.

Jilin and Liaoning share a 1,400 kilometer border with North Korea and are increasingly focused on foreign trade and on achieving competitive economic advantages through their proximity to North Korea.

“(North Korea’s) joint ventures with China are an important aspect of the bilateral relationship, because in addition to propping up the regime in Pyongyang, they contribute to economic development in China’s northeastern ‘rust belt,'” the scholar said in an emailed note.

China’s northeastern region is seen as the country’s rust belt, covered with obsolete and unprofitable factories.

Posted in Economic reform, Foreign direct investment, International trade, Mining/Minerals, Statistics, Trade Statistics | Comments Closed

DPRK-Chinese mining deal

Monday, February 7th, 2011

According to Yonhap:

North Korea and China are expected to sign an agreement on joint development of the North’s underground resources in the middle of this month in Beijing, a source here said Sunday.

“It has been learned that Pyongyang and Beijing are expected to conclude a deal to jointly develop North Korea’s underground resources on Feb. 15, one day before the birthday of North Korean leader Kim Jong-il,” said the source, noting the accord will be signed in Beijing between China’s Commerce Ministry and the North’s Joint Venture Investment Committee.

“Specifically, the two sides may agree to jointly develop natural resources such as gold, anthracites and rare earths under the bilateral deal. Following the agreement, the two countries are likely to establish a joint venture company in Hong Kong,” said the source, asking to remain anonymous.

Trade between North Korea and China reached US$3.06 billion in the first 11 months of last year, which marked a rise of 9.6 percent from the 2008 annual volume of $2.7 billion. Mineral resources like coals and iron ores account for over 30 percent of the North’s exports to China.

Chinese mining investors have had mixed results in the DPRK despite geographical proximity and monopsony purchasing power (the Chinese can offer lower prices because in many cases they are the only purchaser/investor).

At one point, a Chinese firm had a controlling share of the DPRK’s Hyesan Youth Copper mine (Satellite image here). As best I can tell, the mine is no longer operable because of flooding from nearby dam construction.

A Chinese firm had also invested in the Musan Mine, the DPRK’s largest, conveniently located on the Chinese border (Satellite image here). This deal also fell trough (see here).

I have heard informally that Chinese mining investors do not particularly like doing business in the DPRK because their North Korean business partners routinely violate contract terms and local officials need to be bribed repeatedly. Today Chinese mining firms operate across the world in both developing and developed countries, so why bother with the DPRK?

The particular deal mentioned in this Yonhap article is interesting because it hints that the Chinese and North Korean central governments are setting the terms for mining investment in the DPRK for the first time. This will give local officials less room for post-contractual rent-seeking behavior and could smooth the way for regular/predictable business operations in the DPRK.

Again, centralized corruption is preferable to decentralized corruption for investors.

Read the full Yonhap story here:
N. Korea, China likely to ink deal on joint resource development
Yonhap
2/6/2011

Posted in Copper, Economic reform, Foreign direct investment, Gold, International trade, Iron Ore, Joint Ventures, Mining/Minerals, Statistics, Trade Statistics | Comments Closed

North Korea increasing coal production – seeking to ease power shortages and boost exports

Wednesday, February 2nd, 2011

Pictured Above: Pongchon Coal Mine (Google Earth)

Institute for Far Eastern Studies (IFES)
NK Brief No. 11-01-18
1/28/2011

The DPRK Workers’ Party’s newspaper, the Rodong Sinmun, recently featured a front-page editorial urging the North Korean people to increase coal production. On January 26, the KCNA reiterated the call, reporting that the newspaper editorial highlighted fertilizer, cotton, electricity, and steel as products suffering from a lack of coal, and that “coal production must be quickly increased in the Jik-dong Youth Mine, the Chongsong Youth Mine, the Ryongdeung Mine, the Jaenam Mine, Bongchon Mine [Pongchon Mine] and other mines with good conditions and large deposits.”

The editorial also emphasized that “priority must be placed on the equipment and materials necessary for coal production,” and, “the Cabinet, national planning committee, government ministries and central organizations need to draft plans for guaranteeing equipment and materials and must unconditionally and strongly push to provide,” ensuring that the mines have everything they need. It also called on all people of North Korea to assist in mining endeavors and to support the miners, adding that those responsible for providing safety equipment for the mines and miners step up efforts to ensure that all necessary safety gear is available.

In the recent New Year’s Joint Editorial, coal, power, steel and railways were named as the four ‘vanguard industries’ of the people’s economy. Of the four, coal took the top spot, and all of North Korea’s other media outlets followed up the editorial with articles focusing on the coal industry. On January 15, Voice of America radio quoted some recent Chinese customs statistics, revealing that “North Korea exported almost 41 million tons of coal to China between January and November of last year, surpassing the 36 million tons exported [to China] in 2009.” It was notable that only 15.1 tons were exported between January and August, but that 25.5 tons were sent across the border between August and November.

North Korea’s coal exports to China earned it 340 million USD last year, making the coal industry a favorite of Pyongyang’s economic and political elites. Increasing coal production is boosting output from some of the North’s electrical power plants, while exports to China provide much-needed foreign capital. However, even in Pyongyang, where the electrical supply is relatively good, many houses lack heating and experience long black-outs. Open North Korea Radio, a shortwave radio station based in the South, reported on January 24, “As electrical conditions in Pyongyang worsen, now no heating is available.” Farming villages can find nearby timber to use as firewood, but because prices are so high in Pyongyang, even heating has become difficult. Some in the city even wish for rural lifestyles, just for the access to food and heat.

Posted in Cabinet, China, Coal, Domestic publication, Energy, Google Earth, International trade, Mining/Minerals, Planning and Fiscal Affairs (KWP), Railways, Statistics, Trade Statistics, Transportation | Comments Closed

Rumor of DPRK plans to focus on light industry

Friday, January 7th, 2011

According to the Choson Ilbo,

The North Korean regime wants to divert some of budget for the all-powerful military to the civilian sector and increase exports of mineral resources to China in its Quixotic quest to become “a powerful and prosperous nation” by 2012.

A senior member of the Workers Party who attended a meeting held in Chongjin, North Hamgyong Province on Monday was quoted by Radio Free Asia as saying, “This year, the party decided to divert some of the budget earmarked for the munitions industry to the people’s economy to develop the light industry.”

“People will undergo a sea change in their lives next year when we reach the goal to become an economic power,” the U.S.-funded broadcaster quoted a senior party official from North Pyongan Province as saying. “There’ll be big investments.”

The North did not even reduce military spending even during the famine of the mid to late 1990s, when more than a million people starved to death, telling people to “tighten belts until the peninsula is reunited.” The regime’s annual military spending is estimated at about US$1.7 billion.

A South Korean security official said the North managed to overcome a food shortage early last year by releasing some rice from its military stockpiles, “but it may not be as easy this year.”

Meanwhile, the regime has been increasing exports of mineral resources to China to earn hard currency.

“In 2009, Kim Jong-il banned exports of coal after receiving a report that factories weren’t working due to coal shortage, but the regime sold $300 million worth of coal to China in 2010,” a North Korean source said.

Coal accounted for 30 percent of the North’s total exports to China of about $900 million last year.

A Chinese businessman dealing with the North said in early December last year, a delegation from Resources Development Corporation of the North’s National Defense Commission agreed with the Chinese province of Liaoning on the development of 350 million yuan worth of graphite in the North. He added Chinese officials last November looked around Pyoksong, Yonchon and Haeju in Hwanghae Province, which have abundant graphite deposits.

The regime ordered officials to earn hard currency by selling coal from Pukchang, South Pyongan Province, and iron ore from Unyul, Hwanghae Province, to China, a member of a North Korean defectors organization said.

Read the full story here:
N.Korea Diverts Military Budget to Light Industry
Choson Ilbo
1/7/2011

Posted in Coal, Energy, Finance, Graphite, Light Industry, Manufacturing, Military, Mining/Minerals, National Defense Commission, Songun | 1 Comment »

ROK goods saturate DPRK

Thursday, January 6th, 2011

According to the Hankyorey:

A report on major North Korean indicators released by Statistics Korea on Wednesday revealed that South Korean products are becoming increasingly popular in North Korea, and that there are hardly any North Korean urban youth who do not watch South Korean TV dramas or movies.

In the report, Statistics Korea said it is becoming a fad for young people in major North Korean cities like Pyongyang and along the border with China to watch South Korean television dramas and films using MP3 players or laptop computers. Statistics Korea said MP3 players with 1G of memory cost 60,000 North Korean Won (estimated $419), while a used laptop costs about 2 million North Korean Won. A memory chip with two or three movies costs 10,000 North Korean Won if it is an original, and 5,000 North Korean Won if its a copy.

The report also said many South Korean products are in circulation in North Korea, including blenders, portable heaters, gas ranges, butane cans, lunch trays, gas heaters, rice cookers, dishrags and gloves. According to the report, South Korean shampoo and conditioner is popular with the wives of high-ranking North Korean officials in Pyongyang. Some 470g bottles of South Korean shampoo and rinse go for 40-50 yuan (8,000-10,000 South Korean Won) in Pyongyang. The report said the popularity of South Korean products was also reflected in other goods. South Korean necklaces are sold for about $500 and earrings for about $70-80, while South Korean products like perfume, deodorant, car air fresheners, refrigerator deodorizer and bathroom air fresheners are also selling well.

South Korea’s nominal GNI in 2009 was $837.2 billion, 37.4 times that of North Korea’s $22.4 billion. North Korea’s economic power, all told, is no more than the level of the South Korean city of Gwangju (about 22 trillion Won). South Korea’s per capita income of $18,175 was 17.9 times that of North Korea’s $960. South Korea also conducted $686.6 billion in total trade, 201.9 times that of North Korea, which conducted only $3.4 billion. The only sectors in which North Korea topped South Korea were production of iron ore and coal and length of railroads. North Korea’s iron ore production was 4.955 million tons, ten times that of South Korea (455,000 tons), and its coal production was 25.5 million tons, 10 times that of South Korea (2.519 million tons). North Korea also had 5,242km of railroads, 1.4 times that of South Korea’s 3,378km. North Korea is also believed to have 7 quadrillion Won in underground mineral wealth.

I have been unable to locate the original on the Statistics Korea page. If any readers can find it, please let me know.

Read the full story here:
In limited N.Korean market, furor for S.Korean products
Hankyoreh
Hwangbo Yon
1/6/2011

Posted in Art, Civil society, Coal, Cosmetics, Energy, Film, GDP statistics, Iron Ore, Mining/Minerals, Music, Railways, Statistics, Television, Trade Statistics, Transportation | 2 Comments »

DPRK elevates status of national resource development office

Tuesday, December 28th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-12-22
12/22/2010

On December 1, the North Korean Supreme People’s Assembly Standing Committee announced an order to elevate the position of the National Resource Development Office, which is overseen by the Cabinet’s Ministry of Extractive Industry, to the Ministry of National Resource Development. According to the Korea Central News Agency, this measure is aimed at increasing development and export of underground resources as international sanctions against the North further limit Pyongyang’s access to foreign capital.

The regime’s focus on increasing earnings can be seen in Kim Jong Il’s on-site guidance trips, as well. The KCNA reported on December 3 that Kim had recently visited Danchon, South Hamgyong Province, touring the Danchon Magnesia Factory, the Danchon Mining Equipment Factory, and the Danchon Port facilities. During his visit to the magnesia factory, Kim Jong Il emphasized the need for increasing the production of quality asphalt. In addition, after receiving a report on the status of implementation of CNC in the Danchon Mining Equipment Factory, he stated, “The factory needs to normalize at a high level of mass production to turn out the necessary numbers of mining and processing equipment.” Upon reviewing the Danchon Port facilities, Kim Jong Il urged staff to work towards ensuring a loud chorus of boat whistles in the port for the upcoming 100th anniversary of the birth of Kim Il Sung in 2012.

U.S. financial sanctions levied against the North have made it difficult for Pyongyang to collect export earnings from its mining efforts, one of its key earners of foreign capital. In May of last year, when sanctions were strengthened in response to North Korea’s second nuclear test, European and even Chinese banks froze money transfers to North Korea. The [North] Korea Magnesia Clinker Manufacturing Group could not collect 4.6 million USD in earnings from the export of zinc to Europe. It appears that the North has tried to compensate for these losses by increasing the export of iron ore from Musan. Exports to China passing through the Musan customs office have more than doubled, rising from 1200 to 2500 tons per day.

The mines of Musan, holding more than seven billion tons of iron ore, are the North’s primary vehicle for earning foreign capital. In 2004, China’s Tonghua Steel and Iron Group signed a contract with North Korean authorities granting the group 50-year development rights at some key North Korean mines, and is planning to invest seven billion Yuan in developing the sites. Beijing plans to use the access to North Korean mines to meet some of the expected 80 million ton shortfall of iron ore in 2010. However, there are rumors that North Korea has canceled the contract with no explanation, causing much speculation about the direction of Pyongyang’s export strategy.

Posted in Finance, Fiscal & monetary policy, Institute for Far Eastern Studies, International trade, Iron Ore, Mining/Minerals, Ministry of Extractive Industries, Ministry of National Resource Development, National Resources Development Council, Supreme Peoples Assembly | Comments Closed

North Korean Economy Watch