Archive for the ‘Energy’ Category

China rejects DPRK coal shipment (Again)

Saturday, April 4th, 2015

UPDATE 1 (2015-4-4): For the second time this year, the Chinese have rejected a shipment of North Korean coal. According to the Korea Herald (Yonhap):

China has returned a shipment of anthracite coal to North Korea because it failed to meet standards for mercury emissions, according to a local report on Saturday.

This appears to be the second rejection by China of the North Korean mineral this year.

The shipment arrived at the Longkou port of China’s northern coastal province of Shandong late last month, but was returned as its quality did not satisfy China’s environmental regulations, iQiru.com, a local Shandong Internet news site, reported, citing an unnamed Longkou port official.

The report did not elaborate further or include the volume of the rejected North Korean coal.

In September last year, China announced strict regulations against the sale and import of coal with high toxic pollutants, including mercury and sulfur, to improve the country’s air and water quality.

Anthracite coal accounted for 39.8 percent of North Korea’s total exports to China last year.

China’s imports of North Korean coal plunged 53.2 percent from a year earlier to 16.78 million tons in January this year, according to Chinese customs data.

ORIGINAL POST (2015-3-9): Back in October of 2014, Kevin Stahler was the first person to point out (as far as I am aware) that the DPRK’s coal exports to China were in decline. Quoting Kevin:

However, this year North Korea’s anthracite exports to China are on course for a hard landing. The total value of imported anthracite is down 23 percent in the first half of 2014 compared to a year earlier. That’s an annualized $340 million hit to North Korea’s balance of payments. But North Korea is not alone: China has seen a double-digit decline in both the value and volume of its total world coal imports from January – August 2014.

On March 4, 2015, Yonhap reported that China returned a shipment of coal to the DPRK for reasons related to domestic environmental protection regulations:

China has rejected imports of some North Korean anthracite coal because the coal failed to meet domestic standards for mercury emissions, a local newspaper reported Wednesday, in what appeared to be China’s first rejection of North Korean minerals over environmental concerns.

The shipment was returned to North Korea on Feb. 27 from the Rizhao port of China’s northern coastal province of Shandong, the National Business Daily newspaper reported, citing an unnamed port official.

The report did not elaborate further, or include the volume of the rejected North Korean coal.

After three decades of rapid industrialization, China regularly sees hazardous air pollution with levels of particulate matter rising to nearly 40 times the limits set by the World Health Organization during the winter months.

In September, China announced strict regulations against the sale and import of coal with high toxic pollutants, including mercury and sulfur, to improve the country’s air and water quality.

Anthracite coal accounted for 39.8 percent of North Korea’s total exports to China last year.

In January, China’s imports of North Korean coal plunged 53.2 percent from a year earlier to 16.78 million tons, according to Chinese customs data.

On March 9, UPI reported on one of the key aspects of China’s new environmental policies and how it will affect the DPRK:

China’s crackdown on coal-related pollution will take a heavy toll on the North Korean economy, South Korean newspaper Donga Ilbo reported Monday.

China’s plan is to drastically reduce coal consumption by 160 million tons in the next five years. The plan, presented at the National People’s Congress in Beijing, aims to reduce the fossil energy use that is contributing to severe pollution in big cities, The Australian reported.

Countries exporting coal to China are all affected, but the plan could create an economic crisis in impoverished North Korea. Coal and iron-ore exports are two of North Korea’s biggest exports to China, its biggest trading partner.

According to the Donga Ilbo, more than 97 percent of North Korean exports are shipped to China*, and coal, iron ore comprise 60 percent of all North Korean exports.

China’s anti-pollution policy is affecting North Korean cargo. A North Korean ship delivering coal to China was turned away at the coastal city of Rizhao on Feb. 27. The Donga Ilbo reported the coal did not satisfy China’s environmental regulations.

The rising ban and other factors are placing the impoverished North Korean economy in a tight squeeze.

Anna Fifield also covered this story for the Washington Post and Guardian.

*The article reports that China accounts for 97% of the DPRK’s international trade. This is only true if one excludes South Korean trade–which South Korea does because they consider North-South trade as “inter-korean” trade.

Share

DPRK-Russia trade in 2014

Wednesday, March 18th, 2015

UPDATE 1 (2015-3-18): Although overall trade volume between the DPRK and Russia was down in 2014, North Korea’s exports to Russia were up. According to Yonhap:

North Korea’s exports to Russia soared nearly 32 percent in 2014 from a year earlier, a report showed Wednesday, amid Pyongyang’s efforts to bolster ties with Moscow.

According to the report by the Korea Trade Investment Promotion Agency, North Korea’s outbound shipments to Russia reached US$10.17 million in 2014, up 31.9 percent from a year earlier.

By item, textile exports came to $4.7 million, or 46.2 percent of the total, followed by machinery with $1.6 million, musical instruments with $1.37 million and electrical equipment with $670,000.

Pyongyang also sold $250,000 worth of cars to Russia last year, 2.3 times more than the previous year, with shipments of optical devices soaring more than 60 times to $190,000.

Bilateral trade volume, however, fell 11.4 percent on-year to $92.34 million last year as Pyongyang’s imports from Russia shrank 14.9 percent to $82.17 million.

Crude imports dropped 7.9 percent on-year to $33.98 million last year, taking up the largest 41.7 percent share of the total imports.

“North Korea has been striving to strengthen economic cooperation with Moscow, though it will take time for the North to diversify its trade markets due to its heavy dependence on China in the past,” said Cho Bong-hyun, a senior research fellow at the state-run Industrial Bank of Korea (IBK) in Seoul.

Last year, more than 90 percent of its exports were bound for China. Bilateral trade between North Korea and China, however, fell 2.4 percent from 2013 to $6.39 billion in 2014, marking the first annual decline since 2009, according to Seoul data.

The 2014 figure is seen as signaling that the strained political ties between the two nations, particularly after the North’s third nuclear test in February 2013, have affected their economic relations.

Amid such languid ties with Beijing, North Korea has been ramping up efforts to forge a closer relationship with Russia, with the two nations declaring 2015 as a year of friendship.

ORIGINAL POST (2014-12-4): According to Yonhap, trade between North Korea and Russia (imports and exports)dropped significantly in the first three quarters of 2014:

Trade between North Korea and Russia dropped significantly this year, despite Pyongyang’s efforts to step up economic cooperation with Moscow, data showed Thursday.

Russia’s exports to North Korea reached US$59.01 million in the first nine months of this year, down 10.1 percent from the same period last year, according to the data by the Vladivostok office of the state-run Korea Trade-Investment Promotion Agency (KOTRA).

In particular, Russia’s exports of flour to North Korea plunged 72.2 percent on-year to $770,000.

Russia’s imports from its neighbor also fell 7.9 percent on-year to $6.46 million during the January-September period.

North Korea’s imports of electronics and coal from Russia also tumbled 61 percent and 44.6 percent, respectively, according to the data.

Russia’s imports of North Korean nuclear reactors, boilers and other machinery, meanwhile, shrank 57.1 percent on-year to reach $451,000,

Bucking the overall decline, Russia’s imports of North Korea-made clothes soared 35.5 percent on-year to $3.61 million, maintaining an uptrend of recent years.

North Korea has been intensifying efforts to expand economic cooperation with Russia, recently deciding to use the Russian ruble as a trade currency as well as launching a fledgling logistics project to link Russia’s border city of Khasan to the North’s port of Rajin.

Read the full story here:
N. Korea-Russia trade shrinks this year
Yonhap
2014-12-4

Share

North Koreans discuss curbs to outflow of natural resources

Thursday, March 5th, 2015

The Institute for Far Eastern studies (IFES) published the article below:

The Issue of Regulating Coal and Iron Ore Exports Raised in North Korea

There is a growing sense inside North Korea for a need to regulate the export of underground resources such as coal through imposing export tariffs or other trade barriers.

An overwhelming percentage of the country’s exports consist of underground resources and there is rising speculation that North Korea is pushing forward long-term transformation of its trade and industrial structure.

An article in a recent edition (published October 20, 2014) of Kim Il Sung University’s school newspaper has argued that “We need to protect the country’s precious resources by applying different tariff rates.”

The article stressed that “The subjects of export tariff first need to be selected for raw materials and energy resources that is urgently needed for the construction of a socialist economic powerhouse.”

In other words, there is a need to prevent the excessive exportation of goods through levying a high export tariff rate on underground resources.

The article specifically picked out coal and iron ore as underground resources which are important for economic development, and pointed out that “We need to do all we can to prohibit the export [of these resources].”

According to KOTRA (the Korea Trade-Investment Promotion Agency), in 2013 the percentages of coal and iron ore among North Korea’s total exports were, respectively, 42.9 percent and 9.3 percent, which amount to over half of all exports.

North Korea’s consideration of regulating the export of underground resources in such a situation is seen as an attempt to achieve long-term industrial development, which may decrease its foreign currency earnings in the short-run.

The Kim Il Sung University newspaper article also argued that “We must actively protect our country’s resources so that we can develop a vibrant and self-reliant national economy.”

The fact that last year North Korea’s export of anthracite* to China dropped for the first time in 8 years is also thought to be a product of such a policy consideration.

North Korea’s push to regulate the export of underground resources is viewed as an effort to reduce its dependence on China, but many are skeptical regarding how effectively North Korea will implement such a policy with its urgent need for foreign currency.

The article is interesting for three reasons.

The first is that DPRK policy-makers may find it preferable to impose a tariff on exports rather than actually control the number of organizations that are legally allowed to export natural resources. This raises a government capacity point. Alternatively, this could be seen as a tool to draw resources from the privileged JVCs and trading companies that are outside the control of the cabinet. In a sense, a tariff, if effectively implemented, could improve the fiscal position of the people’s economy by “taxing” all the trading companies under the control of different sectors of the party and military.

Second, Chinese environmental policies may be inadvertently accomplishing this policy outcome without the DPRK having to actually do anything. The amount of coal being exported to China is down significantly in 2014, and there are questions as to whether 2013 numbers will be achieved again in the near-term. However, Chinese environmental policies which reduce imports from the DPRK have a negative fiscal effect for Pyongyang since no trade actually takes place. Indeed, if Chinese imports of DPRK resources continue to fall, a tariff will make less and less sense.

And third, one of Kim Il-sung’s strategic concerns was that fraternal socialist countries would not invest in industrial production in the DPRK, and it would only become a valuable member of the communist trading block as a source of natural resources. Kim Il-sung was worried about what would happen to his country when the natural resources were all gone. Perhaps imposing an export tariff can be seen as a sign that there is a coalition in the leadership that wants to move away from natural resource exports and into a greater reliance on SEZ’s, domestic production, etc.

Share

DPRK-China trade in 2014

Monday, January 26th, 2015

According to Yonhap, DPRK-China trade drops slightly in 2014:

North Korea’s annual trade with its economic lifeline, China, fell 2.4 percent from a year ago in 2014, marking the first decline since 2009, data compiled by South Korea’s government trade agency showed Monday.

North Korea’s trade with China totaled US$6.39 billion last year, compared with $6.54 billion in 2013, according to the data provided by the Beijing unit of South’s Korea Trade and Investment Promotion Agency (KOTRA).

The annual trade figures between North Korea and China provided a fresh sign that strained political ties between the two nations have affected their economic relations.

At least on paper, there were also no shipments of crude oil from China to North Korea for all of last year.

A South Korean diplomatic source with knowledge of the matter, however, cautioned against reading too much into the official trade figures because China has provided crude oil to North Korea in the form of grant aid and such shipments were not recorded on paper.

Here is coverage in the Daily NK.

I have been unable to locate the KOTRA report, but the Choson Ilbo adds this:

China’s exports to the North were down 3.1 percent on-year and its imports from the North 1.5 percent, the diplomatic source in Beijing said quoting Chinese trade statistics.

Yonhap followed up with this from a Chinese foreign ministry press briefing:

Asked about the official absence of crude oil delivery to North Korea, China’s foreign ministry spokeswoman, Hua Chunying, referred the question to “competent authorities.”

“You mentioned a specific issue concerning trade between China and North Korea. I would like to refer you to competent authorities,” Hua told reporters during a regular press briefing.

“But, I want to highlight that the economic cooperation and trade between China and North Korea are normal,” Hua said.

Yonhap also provided the following information on oil shipments from China to the DPRK:

In previous years, China’s official shipments of crude oil to North Korea had been absent for several months, particularly after the North’s nuclear tests. However, it was extremely unusual that, at least on paper, China sold no crude oil to North Korea for all of last year.

In 2014, China’s exports of petroleum products to North Korea jumped 48.22 percent from a year earlier to US$1.54 million, according to the data based on Chinese trade statistics and compiled by the Beijing unit of South’s Korea Trade and Investment Promotion Agency.

“Although final statistics show that China’s exports of crude oil to North Korea were counted as ‘zero’ in 2014, experts suggest that the possibility of China’s suspension of crude oil exports to North Korea remains low,” the agency said in a statement.

South Korean diplomatic sources in Beijing have also cautioned against reading too much into the official Chinese trade figures because China has provided crude oil to North Korea in the form of grant aid and such shipments were not recorded on paper.

There has been no clear indication that the 2014 trade figures reflect China’s willingness to use crude oil as leverage to press North Korea to change course in its nuclear ambition.

Yonhap (via Korea Times) also reports that anthracite exports to China are down in 2014:

North Korea’s exports of anthracite to China tumbled nearly 18 percent in 2014 from the previous year, the first annual drop in eight years, data showed Friday.

North Korea exported US$1.13 billion worth of anthracite to China last year, down 17.6 percent from a year earlier, according to data from the Korea International Trade Association.

It was the first on-year decline in North Korea’s anthracite exports to China since 2006.

The volume of anthracite exports also decreased 6.4 percent on-year to 15.43 million tons last year, according to the KITA.

Despite the drop, anthracite accounted for 39.8 percent of North Korea’s total exports to China in 2014.

According to the data, North Korea’s exports of iron ore to China plunged 25.7 percent on-year to $218.6 million last year, the smallest amount since 2010.

For lots more data on the DPRK’s international trade, see also these eight great posts:
1. North Korea-China Trade Update: Coal Retreats, Textiles Surge
2. How Has the Commodity Bust Affected North Korea’s Trade Balance? (Part 1)
3. How Has the Commodity Bust Affected North Korea’s Trade Balance? (Part 2)
4. Nicholas Eberstadt’s “Dependencia, North Korea Style” (I would have gone with “Our Style Dependencia”)
5. NK News on coal shipments in 2014.
6. Radio Free Asia on coal shipments.
7. N. Korea’s smartphone imports from China hit record
8. China’s exports of jet fuel to N. Korea rebounds in 2014

Read the full story here:
N. Korea’s 2014 trade with China marks 1st drop in 5 years
Yonhap
2015-1-26

Share

Ten power plants on Chongchon River under construction to increase power supply to Pyongyang

Friday, December 19th, 2014

Institute for Far Eastern Studies (IFES)

Japan-based pro-North Korea media outlet Choson Sinbo reported on December 11 that ten hydroelectric dams were being constructed along the Chongchon River stretching over a hundred kilometers.

According to the news, Chongchon River (217 km long) is one of the largest rivers in North Korea’s central region, and derives its name from its crystal clear water.

Multi-tiered power plants are being constructed, a project which runs across Jagang, North and South Pyongan Provinces, spanning approximately 77km. The project consists of ten small and medium-sized power plants of varying generating capacity.

The construction of the dams on the Chongchon River began in January 2013 and is considered as a second phase construction following the completion of the Huichon Power Station (in Jagang Province) in April 2012.

Huichon Power Station 1 and 2 were built in the first phase. The ten plants currently under construction can somewhat be considered as Huichon Power Stations No. 3 to 12.

The Huichon Power Stations 1 and 2 have a maximum power generation capacity of 300,000 kilowatts (KW). Stations 3 to 12 are expected to generate about 120,000 KW. Like the Huichon Power Stations No. 1 and No. 2, the new power plants are expected to provide power to Pyongyang City through direct transmission lines. It is expected that this will address the power shortage problem in Pyongyang.

The city, provincial, and central government agencies are overseeing the construction of the power plants and about 14,000 people have been mobilized for this project. The news reported that “young women’s shock brigades” were seen at the construction sites.

The news reported that many slogan banners are posted across the construction sites that read, “Once Determined, Korea (Choson) Will Accomplish!”, “All towards the Creation of Choson Speed”, and “Let Us Take Charge of Pyongyang’s Night lights.”

The Chongchon River power plants are expected to be completed by next October on the occasion of celebrating the 70th anniversary of the founding of the Workers’ Party of Korea.

Share

DPRK building new coal-powered plant in Pyongyang

Tuesday, November 25th, 2014

Kangdong-plant-2014-3-20

Pictured above is the new plant. Learn more about it on this new article at 38 North.

Share

North Korea shows great interest in micro hydropower

Thursday, November 13th, 2014

According to the Institute for Far Eastern Studies (IFES):

North Korea, which has been focusing its efforts on increasing energy production, is currently paying close attention to micro hydropower systems. Micro hydropower is a type of hydroelectric power system which can effectively harness industrial water and/or hydroelectric resources from water and sewage systems to produce electricity.

A November 2, 2014 article published in the North Korea Workers’ Party’s official newspaper, the Rodong Sinmun, reported on the advantages and efficiency of micro hydropower, of which it claims North Korea has implemented and is currently using. The harnessing of industrial and sewer system water was once a mere point of interest for North Korea; but according to the newspaper article, a variety of micro hydropower equipment has since been installed and is currently generating up to 100kW of power for the nation.

The newspaper explained, “Industrial waste water used for cooling or cleaning in factories has a fixed height and pressure, and can be used as a water power resource to produce electricity due to its stable quantity and flow rate. . . . In water and sewage systems, catchment areas and sewage purification plants have freefalling water which can be used as a water power resource, and in air conditioning systems, the circulating cooling water can also be potentially utilized.”

The article also praised micro hydropower systems for their low initial investment cost and operation fees.

According to the Rodong Sinmun, construction costs for the levees used in a hydroelectric power plant can account for over fifty percent of the total construction costs of the system. But, because micro hydropower systems can be installed and connected directly to existing pipes, costs are reduced dramatically, and the low-flow, low-pressure nature of the micro hydropower system allows for additional savings on materials such as waterwheels and generators.

The costs of installing a micro hydropower system may be double that of a diesel-powered generator, but when taking the cost of fuel into account, micro hydropower systems are said to be much more economical in the long term.

The newspaper also reported about one micro hydropower facility which even utilizes the piping and freefalling water from their service-water purifier. According to the article, the system produces enough electricity to power the water purification and also net a 55kW energy surplus.

Share

DPRK oil imports from China in 2014 (UPDATED)

Tuesday, November 4th, 2014

UPDATE 8 (2014-11-14): Yonhap speculates on Chinese oil exports to the DPRK:

China appears to be continuing to provide North Korea with crude oil, contrary to its customs data, officials here said Friday.

China exported not a single drop of crude oil to North Korea in the first nine months this year, according to formal data.

If true, it might reflect widespread speculation that the relations between the communist allies have been strained to some extent due to Pyongyang’s repeated provocative acts.

South Korean officials, however, believe China is continuing to send crude oil to North Korea either in hidden trade or in the form of aid.

“Without China’s provision of crude oil, the operation of many of North Korea’s industrial facilities and vehicles would be suspended. But there has been no such indication yet,” an intelligence official said.

Beijing may be deliberately excluding its crude oil shipments to Pyongyang from the customs data in a bid to give the world the impression that it is joining the international community’s efforts to put pressure on it, another government official said.

He dismissed the view that the North has replaced China with Russia as its main source of crude oil imports.

“North Korea has brought in more crude oil from Russia this year, but the total amount is still less than 100,000 tons,” he said.

North Korea used to import an annual average of half a million tons of crude oil from China. (Yonhap)

UPDATE 7 (2014-11-4): According to Yonhap, North Korea’s jet fuel imports from China have begun to rebound this year.

North Korea imported 13,000 tons of jet fuel from China between January and September, a sharp rise from 359 tons in the same period last year, the unification ministry official told reporters.

But the amount is still far short of past tallies: 38,000 tons in the same period of 2011 and 39,000 tons in that of 2012, he noted, citing formal data from China’s customs authorities

UPDATE 6 (2014-8-23): For what it is worth, China recorded zero oil exports to North Korea in July. According to Yonhap:

According to the Chinese data analyzed by the Beijing unit of the Korea Trade and Investment Promotion Agency, there were no shipments of crude oil from China to North Korea from January to July.

Diplomatic sources with knowledge of the matter cautioned against reading too much into the official trade figures because China has been providing crude oil to North Korea in the form of grant aid and such shipments have not been recorded on paper.

In the first seven months of this year, China’s exports to North Korea rose 1.8 percent from a year ago to US$1.95 billion, while imports fell 4.3 percent to $1.57 billion, according to the data.

UPDATE 5 (2014-8-4): The Hankyoreh weighs in on Chinese oil exports to the DPRK:

However, there are also other experts who counter that suspending the supply of crude oil ought not to be read as a sign of deteriorating relations between North Korea and China. They say that, while the statistics read zero, the supply of crude oil is actually continuing. In fact, the price of gasoline and other petroleum products in North Korea remains stable, reports have indicated.

Radio Free Asia reported that gasoline was selling recently for around 10 to 11 won per kilogram at North Korea’s markets, around the same as the 11 won price from 2012. The price of diesel also remained steady at 6 to 7 won, the broadcaster said.

The South Korean government believes that while China may have reduced its crude oil exports, it is continuing to supply North Korea with oil as a form of aid. “China has been supplying North Korea with 500,000 tons in trade, along with a similar amount of free oil. It appears to be providing North Korea with enough crude oil to prevent problems from occurring in North Korean society,” said a senior Ministry of Unification official on condition of anonymity.

But many experts believe that relations between North Korea and China are not in such a bad state that China would shut off the supply of crude oil. “Relations between North Korea and China are not normal, but they should not be seen as especially bad, either. From the viewpoint of a superpower, China appears to be steadily observing North Korea’s behavior, without grief or joy,” said Lee Hui-ok, professor at Sungkyunkwan University.

Indeed, aside from interaction between senior officials, other sectors appear to be operating normally without any major disturbances. Trade between North Korea and China in the first half of the year remained at levels similar to 2013. Chinese exports to the North from January to May of this year were US$1.27 billion, down slightly from US$1.33 billion last year. But a big rebound in June brought the first half figures up to US$1.58 billion, nearly the same as the US$1.59 billion posted last year.

In the area of tourism, China also appeared to be taking a more aggressive attitude in the first half of the year than in 2013, running new tourism programs using bicycles and trains, reports said. In the area of personnel exchange, working-level contact is continuing, despite the lack of meetings between senior officials.

“There are virtually no senior political officials from North Korea visiting China. However, technical and economic officials continue to visit China for inspections and training,” said an official at the South Korean embassy in China, on condition of anonymity.

“It is dangerous to read too much into the temporary fluctuations and the sluggish mood recently affecting relations between North Korea and China. That would be a false diagnosis of their relationship,” said Lee Nam-ju, professor at Sungkonghoe University.

“Since North Korea and China understand each other, it does not appear likely that their relations will be suddenly damaged,” Lee said.

UPDATE 4 (2014-7-14): NK News reports on Chinese petrol exports to the DPRK:

China has increased deliveries of oil products to North Korea during the first five months of 2014 according to the latest Chinese customs data, which also confirms the widely reported halt in crude oil shipments.

However, data from the Chinese General Administration of Customs shows that the oil-products being delivered to North Korea only cover a fraction of the supplies of crude once shipped, with total deliveries falling by over 60 percent.

Experts were unsure over whether this constituted a warning from Beijing in response to North Korea’s regional provocations or whether the slow-down was due to the DPRK’s aging refineries. Crude oil must be refined into petroleum products such as fuel oil, diesel and aviation fuel before being used.

In total, China exported more than 88,000 tons of refined products to the DPRK between January and May 2014, with more than half of the growth caused by spikes in gasoline and kerosene shipments. Gasoline, is primarily used as a fuel for motor vehicles, while kerosene is used to power jet engines and as a heating fuel in North East Asia.

“[This] is somewhat over half of the recorded exports from China to the DPRK in 2010, and somewhat over a quarter of the net petroleum products imports that we estimated for the DPRK from all nations in 2010.  So there may be a real shift in petroleum products exports going on,” David Von Hippel a Senior Associate at the Nautilus Institute for Security and Sustainability told NK News.

Kerosene, used as an aviation fuel, saw the sharpest spike in exports increasing by 5131% when compared to the same period last year. The North Koreans imported more than a hundred thousand barrels, mostly in one bulk shipment in March, amidst news published in early July by Reuters that the DPRK was looking to restart domestic flights.

Gasoline exports also rose by 84% to approximately 280 thousand barrels when compared to the  January – May period in 2013.

DPRK imports of diesel rose to 63,000 barrels and mark the first time China has exported the petroleum product since 2011, although no data is available before this point. The exports remain at a low level however, representing only a few percent of total DPRK yearly usage.

China also upped exports of Butane by 28%, which is used primarily as fuel gas or in gasoline blending. “[Butane] is more likely used as an input to bottled gas (for example, liquefied petroleum gas, LPG), which is, we have heard, increasingly used for cooking in urban households that can afford it in the DPRK.” Von Hippel told NK News.

UPDATE 3 (2014-5-24): This Daily NK article further highlights why we should be skeptical of official reports of the DPRK’s oil imports from China:

Daily NK has confirmed that China is currently supplying oil to North Korea through a pipeline running between the two. Though there have been cases where Beijing has suspended such shipments in response to North Korean intransigence, particularly over nuclear issues, but this has not happened recently.

On April 10th, Daily NK visited an oil storage and pipeline facility in Dandong. There, our team interviewed Chinese Ministry of Public Security officials guarding the facility, which is owned by a subsidiary of China National Petroleum Corporation, or CNPC.

When asked about oil assistance to North Korea, one of the officers acknowledged, “We are continuously supplying oil (to North Korea),” but “cannot say how much we send each month or how much remains as of now.”

Oil deliveries to be transferred to North Korea are received at this facility from a larger nearby facility, Basan, and then are shipped to a partner storage facility at Baekma in Pihyun Couunty, North Pyongan Province. The pipeline is 11km long.

According to sources, these deliveries are not recorded in Chinese customs data, or in foreign trade statistics. The oil from the pipeline is rather characterized as de facto aid, either in the form of low interest loans or free of charge.

This is why, on April 24th, Korean agency KOTRA released a figure of ‘zero’ for oil exports from China to North Korea for the first quarter of 2014, basing it on Chinese customs data. The data says zero for commercial transfers; however, supplies in the form of aid and assistance may not have stopped at all.

In this regard, a diplomatic source said, “China has the ability to stop the oil supplies whenever they want, but they’ve never done so for a long period of time.” He went on, “Above all, China places as much importance on security as North Korea places on nuclearization, and it doesn’t want to see disorder in the North Korean regime. This explains why China keeps providing this assistance.”

Meanwhile, Chinese trade statistics show that 520,000 tons of oil was exported to North Korea every year from 2009 to 2012. Mostly small North Korean tankers shipped this oil.

UPDATE 2 (2014-5-26): The DPRK officially did not import any oil from China as of April 2014. According to Yonhap:

China sold no crude oil to North Korea in the first four months of this year, data compiled by South Korea’s government trade agency showed Monday, in an unusual four-month absence of oil shipments amid the North’s threats of a nuclear test.

The Beijing unit of the South’s Korea Trade and Investment Promotion Agency (KOTRA) said in a report, citing data from China’s customs authorities, that there were no oil shipments from China to North Korea from January to April this year.

A four-month absence of oil shipments from China to North Korea was also reported in 2009, when the North conducted its second nuclear test.

However, a diplomatic source in Beijing cautioned against reading too much into the official trade figures.

“The Chinese side has provided crude oil to North Korea in the form of grant aid, which is not recorded on paper,” the source said on condition of anonymity.

North Korea also appears to have been trying to diversify its source of oil imports, through countries such as Russia, the source said.

UPDATE 1 (2014-4-24): DPRK official imports from China in Q1 of 2014: zero.

According to Yonhap:

China did not export any crude oil to North Korea in the first three months of this year, data compiled by South Korea’s government trade agency showed Thursday, in an unprecedented three-month absence of oil shipments amid North Korea’s threats of a nuclear test.

Monthly shipments of crude oil from China to North Korea were absent in February, June and July last year, but it was the first time that China apparently stopped exports of crude oil to North Korea for three consecutive months.

The Beijing unit of the South’s Korea Trade and Investment Promotion Agency (KOTRA) said in a report, citing data it collected from China’s customs authorities, that there were no oil shipments from China to North Korea from January to March this year.

“To my knowledge, it is the first time that China did not export crude oil to North Korea for three consecutive months and that would impact the North Korean economy,” a diplomat at the South Korean Embassy in Beijing said on the condition of anonymity.

Also worth highlighting from the report:

China’s total trade with North Korea fell 2.83 percent to US$1.27 billion in the January-March period, compared with the same period a year ago, according to the KOTRA report.

Additional information:

1. DPRK – China trade statistics following the Jang Song-thaek purge.

2. DPRK – China trade at all time high in 2013.

3. DPRK diversifying energy sources.

4. DPRK does not import any oil from China in January 2014.

Read the full Yonhap story here:
China didn’t export crude oil to N. Korea in Q1
Yonhap
2014-4-24

ORIGINAL POST (2014-3-10): DPRK oil imports from China in January 2014: Zero!

According to Yonhap:

North Korea did not import any crude oil from China in January, marking the first absence of monthly deliveries from China in five months, a Seoul government report showed Monday.

It was not immediately clear whether the January absence of crude shipments to North Korea from China was linked to Beijing’s growing frustration with Pyongyang over its nuclear program, but it followed the execution of the once-powerful uncle of North Korean leader Kim Jong-un last December.

Last year, monthly shipments of crude oil from China to North Korea were absent in the months of February, June and July. However, annual shipments of crude oil to North Korea from China rose 11.2 percent on-year to 578,000 tons in 2013.

Read the full story here:
No crude import from China to N. Korea in Jan.: report
Yonhap
2014-3-10

Share

Russian investment into DPRK railway

Sunday, October 26th, 2014

Most of Russia’s current investment in the DPRK has been limited to Rason: Rason Port, Rason-Russia Railway. But there has been movement in bilateral relations this year.

In March of 2014, the North Koreans and the Russians announced bilateral trade would be conducted in Rubles and they discussed additional economic opportunitiesInter-Korean transportation, gas pipeline, and the Kaesong Industrial Complex.

On October 20, 2014, ITAR TASS reported the following:

Russian construction compnay NPO Mostovik has developed a plan of designing and upgrading railways and ore enriching plants, as well as developing and processing natural resources in North Korea, CEO Vladimir Shishov told PRIME on Monday.

“These are two interconnected and quite complex processes. But the NPO has lots of experience in designing, and we will promote our experience and technologies in this region,” Shishov said.

About 7,000 kilometers of North Korean railways require modernization, and 3,500 kilometers of them must be modernized urgently.

North Korea “has a large industrial and economic potential, the realization of which requires solving infrastructural problems.” Without the development of railways and roads and electrification, “it is impossible to solve the whole range of tasks, connected with the development of North Korea’s economy,” he said.

KCNA followed up on October 23:

Talks Held between DPRK Minister of External Economic Relations and Minister of Development of Far East of Russia

Pyongyang, October 23 (KCNA) — Talks between Minister of External Economic Relations Ri Ryong Nam who doubles as chairman of the DPRK side to the Inter-Governmental Committee for Cooperation in Trade, Economy, Science and Technology between the DPRK and Russia and Minister of Development of Far East of Russia Alexandr Galushka who doubles as chairman of the Russian side to the committee were held here on Thursday.

Present there from the DPRK side were Ju Jae Dok, vice-minister of Railways, and officials concerned and from the opposite side were the party of the minister of Development of Far East, Alexandr Timonin, Russian ambassador to the DPRK, and a staff member of his embassy.

Discussed at the talks were the issues of boosting the economic and trade cooperation between the two countries.

And on October 26:

Delegation of Ministry of Railways Back Home

Pyongyang, October 26 (KCNA) — The delegation of the Ministry of Railways led by Minister Jon Kil Su returned home Sunday after taking part in an international seminar held in Sochi, Russia.

However, while North Korea’s foreign minister and railway minister were in Russia, the North Koreans and Russians held a ground-breaking ceremony to announce the rebuilding of the Jaedong-Kangdong-Nampho railway line. According to KCNA:

A ground-breaking ceremony of rebuilding the section of Jaedong-Kangdong-Nampho railway stations took place at East Pyongyang Railway Station Tuesday.

Present there were Minister of External Economic Relations Ri Ryong Nam who doubles as chairman of the DPRK side to the Inter-Governmental Committee for Cooperation in Trade, Economy, Science and Technology between the DPRK and Russia, officials concerned and working people in the city.

Also on hand were Minister of Development of Far East of Russia Alexandr Galushka who doubles as chairman of the Russian side to the Inter-Governmental Committee for Cooperation in Trade, Economy, Science and Technology between the DPRK and Russia, and his party, Alexandr Timonin, Russian ambassador to the DPRK, staff members of his embassy and foreign diplomatic envoys here.

Oleg Shishov, director general of the Russian Bridzh Group, and Won Phil Jong, senior vice-minister of Railways of the DPRK, made speeches at the ceremony.

They said that they were pleased that the ceremony of weighty significance in economic development between the two countries was being held in Pyongyang this year marking the 66th anniversary of the establishment of diplomatic relations between the DPRK and Russia.

The project for remodeling railways, the first stage of realizing the large-scale cooperation project which is in line with the common development and interests of the peoples of the two countries, marked an important occasion in developing economic cooperation between the two countries, they noted.

Alexandr Galushka and Ri Ryong Nam made congratulatory speeches.

They said that Marshal Kim Jong Un is paying deep attention to boosting the bilateral friendly relations.

The relations of economic cooperation between the two countries are growing stronger with each passing day, they said, hoping for bigger successes in the work to develop the bilateral cooperative relations in the future, too.

A reception was given that day.

According to supplementary information in Yonhap:

A Russian broadcaster earlier reported that Pyongyang and Moscow signed a US$25 billion deal to modernize a combined 3,500-kilometer stretch of railways in North Korea. If confirmed, it would cover 60-70 percent of the North’s railways.

Russia Beyond the Headlines reports the following information:

The implementation of the Russian-North Korean project Pobeda (Victory) will make it possible for North Korea to start exporting metallurgical coal in 2015, one of the participants in the project, LLC NPO Mostovik CEO Oleg Shishov believes.

“We’re already discussing this with the North Korean government, that everything will go to [third countries], and they agree. The volume is tens of millions of tonnes at the initial stage, and then we’ll see. Let’s take the first step,” Shishov told reporters.

He said the North Korea stands out by its almost complete absence of sulfur. “This is a very important indicator for metallurgical production, particularly for production of high quality steels,” Shishov said.

“Mining is already underway there, only with such methods that little is being mined. the methods are very inefficient, unproductive. Modern mining equipment will be delivered there and this will increase production manifold. The reserves there are huge,” Shishov said.

He did not specify who would be investing in the development of North Korean coal fields or the countries that would be importing the coal.

Russia and North Korea are now beginning to implement the Pobeda project, which calls for the development of mineral resources and comprehensive reconstruction of North Korea’s railway network. A number of Russian companies are participating in the project, including Mostovik. The other participants have not been named.

Here is a Google Earth image of the proposed train route:

Jaenam-Nampho-Railway-GE

The total length of this route is approximately 175km.

Here is the proposed route relative to other railway lines in the area:

Railway-line-vs-whole-railway

The obvious interpretation of the image is that the railway renovations will be used to facilitate coal exports. Jaenam Station exclusively serves the Sinchang Youth Coal Mine under the Sunchon Area Youth Coal Mine Complex Enterprise. Additoinally, the area surrounding Jaenam Station is doimated by coal mines. The Kangdong Station is not in the town of Kangdong, but just to the east where it services the Kangdong Area Coal Mine Complex Enterprise. Coal in these areas will supposedly be carried more efficiently to the port of Nampho where a coal terminal already exists.

Nampho-coal-port

If indeed this is the primary purpose of the project, then the obvious loser will be China (on multiple fronts). Currently Chinese state-owned mining companies are the only serious investors in North Korea’s extraction industries. Because of their unique relationship with and proximity to the DPRK, they are able to purchase coal and other resources at a bargain price (monopsony). North Korea can only strengthen its bargaining position with these companies by finding other buyers of its produce. Russia’s investment could help them accomplish this goal.

However there are two domestically-related uses that renovation of this railway route could facilitate.

The first is domestic steel production. Russian sources highlight the importance of sulfur-free coal for the production of steel, and this railway line passes directly by the Chollima Steel Mill, one of the largest smelters in the country. Increased steel production has long been a goal of North Korea’s economic policymakers going back to the “heavy-industry” days of the 1950s. With a renovated railway track that connects the correct kind of coal with Chollima Steel Mill, the DPRK may be able to produce more steel for both domestic use or for export.

A second potential domestic use could be the increase in energy supply to Pyongyang. As I highlighted in 38 North, the DPRK is constructing a new coal power plant in Kangdong. This new power plant, as well as the Pyongyang and East Pyongyang Thermal Power Plants lie along the Jaenam-Nampho line. Increased coal supplies to these mills could have significant impact on power supply in Pyongyang.

Are there any other potential uses? Maybe, but these are more difficult to see right now and may only become evident at a later date. After examining the composition of facilities along the track between Pyongyang and Jaenam, I cannot identify any other specific industries that may benefit, other than potential military factories that lie along the route. These, of course, are worth of examination, but I am not the most qualified to carry that out.

On November 6, 38 North Published this article on DPRK-Russia relations.

Share

Electricity consumption in the summer

Friday, August 8th, 2014

According to the Daily NK:

“The authorities began to provide us with about five hours of electricity per day when the rainy season came; but they also began to take usage charges on it,” a source in the region told Daily NK on August 7th. “It resulted in verbal clashes between residents and the officers dispatched by the Urban Management Office to gather the fees.”

According to sources inside North Korea, the summer rainy season usually brings improved electricity provision: from 1-2hrs per day up to as much as 4-5hrs, as the country’s key hydroelectric turbines are able to operate at a higher capacity. Consumption is charged at a subsidized sum, approximately 80-100 KPW per month; although families with television sets, VCRs or DVD players, fans, rice cookers, etc. pay a surcharge of 100 KPW per device.

Though pleased with the boost in supply, residents are resentful at calls from the revenue collectors. The “we gave it to you, and now you should pay” approach of the authorities is annoying for people who are accustomed to getting by without power the majority of the time.

At the same time, electricity supplies to enterprises and households in North Korea often depend upon bribery; one must give to the local department that oversees the supply in order to get more of the power. The homes of key Party officials are themselves bribed into overlooking this with an unrestricted supply.

Moreover, even in periods where electricity is not going to residential homes, it is possible to bribe the Land Management Office or local enterprises for power, but this is something that only private businesspersons and affluent families are likely to do. A middleman system has emerged, where residents who are able may pay third parties to get a larger share.

The source explained that it all means you can easily pick out the districts where Chosun Workers’ Party officials reside, as they are the ones with well-lit apartments. “The annoyance you feel when you’ve gone through your life without much electricity and you watch them use it late into the night is indescribable,” she said.

“We have no use for electricity in the middle of the night, either, and find it irksome when the lights suddenly come on,” she also added.  “They don’t think about the people who are having a hard time surviving, and while they are trading the nation’s electricity supply, only the wealth of officials and the donju is growing; and only they can use it,” the source pointed out.

And yet, “The paradox is that without this system, the nation would probably be devoid of any kind of electricity provision at all,” she concluded. “Transformers are on sale in the market [at 150,000 KPW average, with larger models costing up to 1,500,000 KPW] but even the cheapest ones are beyond the lower classes.”

Read the full story here:
More Electricity Leads to Growing Aggravation
Daily NK
Seol Song Ah
2014-8-8

Share