Pictured above is the new plant. Learn more about it on this new article at 38 North.
Archive for the ‘Energy’ Category
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.
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.
Read the full Yonhap story here:
China didn’t export crude oil to N. Korea in Q1
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
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
Seol Song Ah
According to the Institute for Far Eastern Studies (IFES):
Grain Imports Decrease, Rare-Earth Mineral Exports Increase in the First Half of 2014
It has been reported that Chinese grain imports in North Korea have fallen drastically in the first half of 2014. According to the Korean Foreign Trade Association (KFTA), Chinese exports of grain to North Korea totaled 58,387 tons in the first half of 2014, totaling a mere 47 percent of the grain exported in the first half of the previous year (124,228 tons).
China’s most heavily exported grain product to North Korea is flour, which made up 68.8 percent (40,142 tons) of all total grain exports for the first half of 2014. China also exported 13,831 tons of rice and 3,420 tons of corn to North Korea. Corn exports did not even reach twenty percent of the amount exported at the same time last year (17,655 tons).
It is postulated that China’s sharp decrease in grain exports to North Korea is due to the souring relations between the two nations in 2014. Another theory is that the decrease in exports could be due to North Korea’s recent increase in agricultural productivity over previous years.
In the first half of 2014 China exported 109,531 tons of fertilizer to North Korea, 21.3 percent less than the amount exported during the same timeframe last year (139,161 tons). In the first three months of 2014, North Korea aggressively imported Chinese fertilizer at a rate of twenty thousand tons over its monthly average. However, this decreased markedly in the months of April, May and June.
Meanwhile, North Korea has been exporting large quantities of rare-earth resources (which are used in manufacturing high-tech products) to China over the last few months. Reportedly, in May of 2014, North Korea exported 550,000 dollars’ worth of rare-earth ore to China. This figure more than doubled the following month, reaching 1.33 million USD in June.
This comes as a bit of a surprise, as North Korean rare-earth resource exports to China had come to a standstill after the first round of exports (totaling 24.7 thousand USD) in January 2013. Suddenly, after fifteen months, North Korea has exported 1.88 million USD worth of rare-earth ore (approx. 1.93 billion KRW, 62.66 thousand kilograms) over the last two months.
Since 2011, North Korea has in fact been exporting rare-earth carbonate mixtures to China; however total exports of these products have only reached 170 thousand USD over the last three and a half years.
North Korea has been placing attention on these underground rare-earth resources, of which the nation reportedly has ample quantities of in various deposits around the country. Recently, much effort has been put into surveying for deposits of these so-called “vitamins of the 21st century’s high-tech industry.” In 2013 a company for the development of rare-earth materials in North Pyongan Province was established with the cooperation of the international private equity firm “SRE Minerals.”
In July 2011, the Choson Sinbo, a news affiliate of the General Association of Korean Residents in Japan, reported in an interview with top executives from the National Resources Development Council that rare-earth resource deposits in North Korea total approximately 20 million tons. The drastic increase seen in rare-earth resource exports can be attributed to North Korea’s attempt to diversify its resource exports. In other words, the DPRK is investing in rare-earth material exports in order to reduce its dependency on other leading mineral exports such as anthracite, iron ore, and lead.
Exports of anthracite to China decreased by 23 percent in the first half of 2014 (compared to last year), totaling approximately 571 million USD. Iron ore exports, North Korea’s second leading resource export, reached approximately 121 million USD in the same time period – a drop of 5 percent when compared to the same time period last year.
According to the Korea Herald (Yonhap):
North Korea’s trade with its economic lifeline China fell 2.1 percent on year to US$2.89 billion in the first six months of this year, data compiled by South Korea’s government trade agency showed Monday, in another sign that strained political ties between the two nations have affected their economic relations.
During the six-month period, North Korea’s exports to China declined 3.9 percent to $1.31 billion and imports slipped 0.6 percent to $1.58 billion, according to the data provided by the Beijing unit of South’s Korea Trade and Investment Promotion Agency (KOTRA).
“Despite the six-month absence of oil shipments, the scale of North Korea’s decline in imports is minimal,” the source said on condition of anonymity.
Meanwhile, North Korea’s exports of rare earth to China jumped 153.7 percent on year during the January-June period, the data showed, without providing the value of the exports.
Read the full story here:
N. Korea’s trade with China falls 2.1 pct in H1
Korea Herald (Yonhap)
According to the Korea Times:
North Korea has increased its rare earth exports to China amid worries within the international community that its mineral exports could weaken the effect of sanctions imposed on the reclusive state.
The cash-strapped communist country exported goods to the value of $550,000 and $1.33 million in May and June, respectively, according to the Korea International Trade Association (KITA).
Last January, the North exported elements worth nearly $25,000 to China for the first time and continued them this year. The country has an estimated 20 million tons of rare earth elements.
The North’s resources exploitation have stirred speculation that the impoverished state may further diversify mineral exports to China, where it has previously mostly exported anthracitic and iron ore.
The KITA report identified the changing trend in North Korea’s earnings from mineral exports.
In the first half of this year, earnings from anthracitic and iron ore exports decreased 23 percent and 5 percent, respectively.
These earning deficits were compensated for by exports of rare earth elements. There has been a sharp increase in global demand over the last recent decade because several high-tech devices, including smartphones, and other high technology devices use them in core components. Rare earth elements are a group of 17 elements on the periodic table referred to by the US Department of Energy as “technology metals” because of their use and application.
The communist country relies heavily on mineral exports as a major source of hard currency after international sanctions were imposed on the Pyongyang regime for its continuing missile launches and testing of nuclear weapons.
Natural resources account for 73 percent of North Korea’s bilateral trade with China in 2012. The North exports 11 million tons of anthracitic to China annually.
North Korea exported rare-earth elements worth $1.87 million to China from May to June, resuming outbound shipments of the crucial industrial minerals to its key ally and economic benefactor in 15 months, data showed Sunday.
North Korea shipped rare-earth minerals worth $550,000 and $1.32 million to China in May and June, respectively, which amounted to a total of 62,662 kilograms, according to the Korea International Trade Association based in Seoul.
The communist regime first exported rare-earth metals worth $24,700 to China in January 2013 and had stopped selling them until recently.
Separately, Pyongyang has sold carbonate-containing rare-earth compounds to China since 2011, but the size of outbound shipments is small, with the total amount is estimated at about $170,000 over a period of three and a half years.
The impoverished nation is known to have large reserves of rare-earth minerals, which are crucial ingredients used in many tech products as well as the military and medical sectors.
The latest move comes as the North has stepped up developing rare-earth deposits to support its moribund economy.
Last year, the North’s state-owned Korea Natural Resources Trading Corporation signed a 25-year deal with British Islands-based private equity firm SRE Minerals Limited to mine deposits in Jongju, northwest of the capital, Pyongyang.
Experts said the recent surge in North Korea’s rare-earth shipments may be part of its attempts to diversify sources of mineral exports, which account about half of its total exports.
The North’s export of anthracite coal fell 23 percent in the first half of this year to $571.2 million from a year ago, while ironstone declined 5 percent to $120 million in the cited period, according to trade data.
“The rare-earth minerals sold to China were valued at $30 per kilogram, and they were considered to be processed iron concentrates or oxidized substances,” said Choi Kyung-soo, chief of the Seoul-based North Korea Resource Institute. “It could be seen as an attempt to diversify items of mineral resource exports, but it remains to be seen whether the North will start exporting large volumes of rare-earth minerals.”
Read the full stories here:
Rare earth elements boost NK income
N. Korea exports US$1.8 mln worth of rare earth to China in May-June
North Korea encourages completion of large-scale projects to coincide with 2015 Party Foundation DayThursday, June 12th, 2014
Institute for Far Eastern Studies (IFES)
North Korea is attempting to complete the construction of a large scale stockbreeding base and a power plant as symbols of “self-rehabilitation” by October 10, 2015 to coincide with the 70th anniversary of the foundation of the Worker’s Party of Korea (WPK). Adorned with these economic achievements, next year’s Party Foundation Day will seek to inspire confidence in the North Korean people and strengthen the foundation of the Kim Jong Un regime.
The Choson Sinbo, a news affiliate of the pro-North Korean General Association of Korean Residents in Japan, published an article on June 2, 2014 which introduces the Sepho County area of Kangwon Province and the current situation of construction at the stockbreeding complex, reporting that “all construction is planned to be completed by next year’s Party Foundation Day.” Sepho Tableland Construction Company, which began construction of the Sepho County stockbreeding complex toward the end of 2012, is a national company propagandized by Kim Jong Un as the “Great Plan for the Transformation of Nature.”
The construction of the North Pyongan Chongchon River Power Plant, another one of North Korea’s large scale projects, began in January 2013 and is also projected to be finished by next year’s anniversary. Secretary of the Worker’s Party of Korea Kim Ki Nam was quoted at an April 10, 2014 Pyongyang mass rally, saying, “We must magnificently complete the Chongchon River Power Plant and Sepho County Stockbreeding Base by the Party’s 70th anniversary as a proud gift to our motherland.”
The Chongchon River Power Plant and the Sepho Tableland have been chosen as the two main tasks to be completed in celebration of next year’s anniversary of the foundation of the WPK. The news outlet of the Worker’s Party, the Rodong Sinmun, pointed out in a May 11, 2014 article that the Chongchon River Power Plant will help alleviate the nation’s electricity shortage and stand as a symbol for the nation’s “self-rehabilitation spirit.”
In the past, North Korea has revealed new buildings and symbolic structures before and after major anniversaries in order to brighten the public mood; however, the Kim Jong Un regime’s decision to undertake two large-scale construction projects and finish them both by the anniversary date is worthy of attention.
North Korea is expected to raise their agricultural production goals based on the successful completion of the Sepho Tableland and Chongchon River Power Plant. In his letter to the National Conference of Agricultural Subworkteam Leaders in February 2014, Kim Jong Un stated, “From the year 2015, when we will greet the 70th anniversary of the founding of the Workers’ Party of Korea, [the agricultural sector] must hit higher grain production targets.”
Coinciding with the projected agricultural increase, the Choson Sinbo reported that production of livestock will also increase with the completion of the Sepho Tableland: “Annual meat production is expected to increase in stages, from five thousand tons in 2017 to ten thousand tons annually by the year 2020.” Provided that these two large-scale projects can be completed according to plan and produce successful results, it is expected that Kim Jong Un’s position within the Party will be strengthened considerably.
As much as the Sepho Tableland and Chongchon River Power Plant give confidence to the North Korean people that their food shortage problem is being solved, it is also assumed that Kim Jong Un will use the success of these projects in order to begin a legacy of his own “achievements.”
The Nautilus Institute has published a report on energy supply in the DPRK by David F. von Hippel and Peter Hayes. You can read it here.
Here is a small section of the paper:
Overall energy use per capita in the DPRK as of 1990 was relatively high, primarily due to inefficient use of fuels and reliance on coal. Coal is more difficult to use with high efficiency than oil products or gas. Based on our estimates, primary commercial energy use in the DPRK in 1990 was approximately 70 GJ per capita, approximately three times the per capita commercial energy use in China in 1990, and somewhat over 50 percent of the 1990 per capita energy consumption in Japan (where 1990 GDP per-capita was some ten to twenty times higher than the DPRK). This sub-section provides a brief sketch of the DPRK energy sector, and some of its problems. Much more detailed reviews/estimates of energy demand and supply in the DPRK in 1990, 1996, and particularly in 2000, 2005, and 2008 through 2010, are provided in later chapters of this report.
The industrial sector is the largest consumer of all commercial fuels—particularly coal—in the DPRK. The transport sector consumes a substantial fraction of the oil products used in the country. Most transport energy use is for freight transport; the use of personal transport in the DPRK is very limited. The residential sector is a large user of coal and (in rural areas, though more recently, reportedly, in urban and peri-urban areas as well) biomass fuels. The military sector (by our estimates) consumes an important share of the refined oil products used in the country. The public/commercial and services sectors in the DPRK consume much smaller shares of fuels supplies in the DPRK than they do in industrialized countries, due primarily to the minimal development of the commercial sector in North Korea. Wood and crop wastes are used as fuels in the agricultural sector, and probably in some industrial subsectors as well.
Key energy-sector problems in the DPRK include:
*Inefficient and/or decaying infrastructure: Much of the energy-using infrastructure in the DPRK is reportedly (and visibly, to visitors to the country) antiquated and/or poorly maintained. Buildings apparently lack significant, and often any, insulation, and the heating circuits in residential and other buildings for the most part apparently cannot be controlled by residents. Industrial facilities are likewise either aging or based on outdated technology, and often (particularly in recent years) are operated at less-than-optimal capacities (from an energy-efficiency point of view).
*Suppressed and latent demand for energy services: Lack of fuels in many sectors of the DPRK economy has apparently caused demand for energy services to go unmet. Electricity outages are one obvious source of unmet demand, but there are also reports, for example, that portions of the DPRK fishing fleet have been idled for lack of diesel fuel. Residential heating is reportedly restricted in the winter (and some observers report that some public-sector and residential buildings have not received heat at all in recent years) to conserve fuel, resulting in uncomfortably cool inside temperatures.
The problem posed by suppressed and latent demand for energy services is that when and if supply constraints are removed there is likely to be a surge in energy (probably particularly electricity) use, as residents, industries, and other consumers of fuels increase their use of energy services toward desired levels. (This is a further argument, as elaborated later in this report, for making every effort to improve the efficiency of energy use in all sectors of the DPRK economy as restraints on energy supplies are reduced.)
*Lack of energy product markets: Compounding the risk of a surge in the use of energy services is the virtual lack of energy product markets in the DPRK. Without fuel pricing reforms, there will be few incentives for households and other energy users to adopt energy efficiency measures or otherwise control their fuels consumption. Recent years have seen limited attempts by the DPRK government to reform markets for energy products. Some private markets exist for local products like firewood, and some commercial fuels have in recent years reportedly been traded “unofficially” (on the black market), but for the most part, energy commodity markets in the DPRK essentially do not exist. Energy consumers are also unlikely, without a massive and well-coordinated program of education about energy use and energy efficiency, to have the technical know-how to choose and make good use of energy efficiency technologies, even when and if such technologies are made available.
The DPRK’s energy sector needs are vast, and at the same time, as indicated by the only partial listing of problems many of these needs are sufficiently interconnected as to be particularly daunting to address. The DPRK’s energy sector needs include rebuilding/replacement of many of its power generation and almost all of its substation equipment, repair, replacement, and/or improvement of coal mine production equipment and safety systems, updating of oil refineries, improvement or replacement of most if its energy-using equipment, including coal-fired boilers, electric motors and drives, transport systems, and many other items, modernization of energy use throughout the country, rebuilding of the DPRK forest stocks, and a host of other needs. As one example of the interrelations of energy problems in the DPRK, renovating the DPRK’s coal mining sector is made more difficult because coal mines lack electricity due to electricity sector problems, and electricity generators in some cases have insufficient coal to supply power demand because of coal mine problems and problems with transporting coal to power plants.
Pictured above (Google Earth): The coal-covered Taean Port on the Taedong River
Who knew that Rodong Sinmun was involved in the coal export business?
According to the Daily NK:
Gwangbokseongdae Co. [광복성대?], a hard currency-earning arm of the operator of the Party daily Rodong Sinmun, recently resumed coal exports through the West Sea port of Nampo, Daily NK has learned. Exports had been halted upon the orders of the Chosun Workers’ Party in October 2013.
The Kim regime is believed to have resumed exports to open up additional flows of hard currency for accounts earmarked for regime maintenance. Coal is one of North Korea’s biggest export industries, with almost all the coal produced in the country sent to China (though a percentage of it is coked and returned for use in North Korean power stations).
A source from South Pyongan Province reported the story to Daily NK on the 3rd, explaining that “Gwangboksongdae Co. has started exporting coal again; it was originally stopped by the Party last October.”
The source then went on to add, “So as to match the timing of [incoming] vessels and increase export volumes, the company is leasing its trucks to people.”
“It costs US$350 per day to lease the trucks. They travel from storage yards [owned by people who lease land from farms and use it for the storage and sale of coal] in mining areas of South Pyongan Province to Daean Port in Nampo. Vessels start coming in March, so leased trucks are again transporting coal for export.”
Companies exporting coal to China must have an export trade license from the North Korean authorities. Then they can use planned exports to China as security against the cost of leasing the trucks. From the point of view of the company, subcontracting in this manner, a practice that began in the mid-2000s, makes more sense than employing drivers directly.
There are many conditions attached to truck rental from Gwangboksongdae Co., however. According to the source, not only must lessees prove that they have $3000 with which to purchase coal; they must also have ten years of trucking experience and, of course, good connections in the Central Party.
But it is worth it. “The original price of a ton of coal is roughly $12,” he said. “This can then be sold at the storage yards in Nampo and Taean Port for $32, giving the driver a clear profit of $20 on each ton. If he carries an average load of 30t, he will earn $540. If we factor in the lease fee of $350 and cost of fuel, there is around $100 left per load.”
“Normally, drivers make around three trips per week,” he went on. “But truck repair costs are born by the lessee. If a vehicle is damaged, the lessee ends up with a significant burden as they can be held liable for compensation.”
According to trade statistics compiled by the Korean International Trade Association (KITA) in January 2014, North Korea exported 16.5 million tons of anthracite to China in 2013. This total, which marked a year-on-year increase of 39.7%, brought in approximately US$ 1.373bn, a 15.5% increase over 2012.
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Trucks for Rent as Coal Exports Soar
Seol Song Ah
In order to solve the nation’s chronic energy shortage, North Korea has been focusing on the development and utilization of science and technology as much as possible. Recent technological advancements are being reported one after another, and further development of alternative energy sources has resulted in technology that will reduce the nation’s oil and fossil fuel consumption.
The Choson Sinbo, a news outlet published by the pro-North Korean General Association of Korean Residents in Japan, reported on March 22 that the research staff of North Korea’s National Academy of Sciences contributed to a reduction in coal consumption by successfully developing and implementing the use of compressed biomass fuel in several factories in Pyongyang. The article also reported the invention of a new navigation program at Pyongyang Machinery College that searches for and displays the shortest possible routes between destinations. Transportation facilities in Pyongyang are said to have seen a 5 to 10 percent savings in fuel consumption since the introduction of the program.
Earlier this month, the Choson Sinbo also reported that the urban management division at the Central Heating Research Institute developed a new, more efficient solar heating system that has already been installed in homes along Pyongyang’s Kwangbok Street. The new system utilizes the leftover water heated during the day to provide warmth for homes at night, and, unlike the previously used system, can do so without consuming electricity.
Such efforts to mobilize domestic natural resources can be interpreted as an earnest attempt at solving the nation’s chronic energy shortage. In his new year’s address, Kim Jong Un emphasized the need to more effectively utilize domestic natural resources such as wind, geothermal, solar, and especially hydro power to remedy the nation’s electricity shortage.
He also stressed the need to endure the struggle to save energy with strength and resolve, calling on all sectors of the economy to conserve each and every watt of electricity, gram of coal, and drop of water where possible. Although North Korean efforts to solve the nation’s energy shortage have been ongoing for some time, the regime seems to be putting additional weight on the role of science and technology.
This call for technological development, with particular regard to alternative energy, is directly connected to Kim Jong Un’s preferential policy toward scientists and technicians. The best example of this can be seen in the construction of Unha Scientists’ Street, a housing complex built in September of last year specifically for personnel who have contributed to missile and nuclear tests and additional construction has begun for Satellite Scientists’ Street which will serve as a residential and research complex for the scientists of North Korea’s national satellite program. The construction of these sites shows that the regime understands the importance of science and technology in raising the efficiency of not only the energy sector, but also the North Korean economy. Furthermore, this move stems not only from the preferential policy toward scientists and technicians, but from the larger context of reforming the nation’s educational system.