Pictured above is the new plant. Learn more about it on this new article at 38 North.
Archive for the ‘Coal’ Category
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
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.
Read the full story here:
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.
For North Korea, anthracite exports are a major means of foreign currency earnings and the country’s top export item to China. Exports are expected to continue to rise this year.
China’s year-on-year import of anthracite from North Korea increased 39.7 percent (16.49 million tons) from the previous year, accounting for 41.5 percent of the total amount of anthracite import for China (39.66 million tons). North Korea has now surpassed Vietnam as the top exporter of anthracite to China.
Other than natural resources, North Korea has virtually no other major export commodities to offer. The recent standstill in inter-Korean economic cooperation and toughened international sanctions has made it difficult for North Korea to earn foreign currency. Thus, North Korea has pushed for a steady increase in its hard coal exports to China. North Korean anthracite is considered to be of relatively high quality, maintaining a higher unit price (10 USD/ton) than Vietnamese anthracite.
Currently, China’s steel industry is the largest consumer of the North Korean anthracite, with the main consumers being local steel companies in Liaoning, Hebei, and Shandong Provinces, as they are geographically closer to North Korea and have easy access to shipping ports.
The market for North Korean anthracite is expected to expand. Since last year, the Chinese government began to implement wide-ranging air-pollution management measures. As a result, Chinese authorities designated the Hebei Province and the surrounding areas of Beijing and Tianjin municipalities as key areas to improve and control air pollution. With the help of allocated subsidies from the central government, local governments began to distribute hard coal briquettes to homes in farming villages. China’s major anthracite producing areas are in remote mountainous regions. So the demand for North Korean anthracite briquettes is anticipated to increase.
Late last year, the former head of the (North) Korean Workers’ Party Jang Song Thaek was accused, charged and executed for, among other “anti-state activities,” selling the country’s “precious [natural] resources” (presumably to China) at very cheap prices. But his execution does not appear to have made a significant impact on the anthracite trade between the DPRK and China. With China’s growing demand for North Korean anthracite, the export volume is expected to rise.
However, some argue that despite the growing demand North Korea’s coal production capacity is limited and will experience difficulties. Currently, North Korea has already suppressed significantly its domestic demand in order to meet the export volume. North Korea’s mining facilities are said to be old and badly in need of repairs, but large investments from Chinese companies that could be put toward this endeavor are reported to have dried up.
More measurement of the importance of markets in the DPRK: residential and public sector energy consumptionMonday, February 3rd, 2014
According to Yonhap (via the Korea Herald):
A fuel ration system in North Korea seems to have been dismantled due to a chronic fuel shortage, a report said Monday.
The report by the state-run Korea Energy Economics Institute (KEEI) said a majority of households in North Korea secure their fuel for heating and cooking on the black market or by themselves, hinting that the country’s fuel ration system might have been scrapped.
The report was made on the basis of data compiled from a poll of 350 North Korean defectors who fled the country after 2011.
According to the report, 51.1 percent of the North’s households bought their heating and cooking fuel on the market, with 42 percent gathering their fuel, such as firewood, by themselves.
Only 6.8 percent of them were provided with fuel for heating and cooking through the country’s fuel ration channel.
The energy consumption of a North Korean household was estimated at 0.291 tons of oil equivalent (TOE) as of 2011. The TOE is a unit of energy which is equivalent to the amount of energy released by burning one ton of crude oil.
The consumption of energy gaining from coal briquettes accounted for 36.8 percent of the total, reaching 0.107 TOE, followed by wood with 0.069 TOE, electricity with 0.038 TOE, oil products with 0.025 TOE and propane gas with 0.023 TOE.
The energy consumption for heating took up 50.9 percent of the total, amounting to 0.148 TOE.
The KEEI said a program for fuel aid to North Korea should be mapped out on the basis of exact data on the energy consumption in the North’s private sector.
Read the full story here:
Fuel ration seems to have been dismantled in N. Korea: report
Despite North Korea’s stunning execution of the leader’s uncle in December, its trade with China remained solid in January, up 16 percent from a year earlier, data showed Friday.
Jang Song-thaek, the country’s No. 2 man and leader Kim Jong-un’s uncle, had played an important role in dealing with Beijing before being executed late last year on treason charges. The political upheaval raised concerns over a possible instability that could spill over into other areas of the reclusive country’s moribund economy and society.
Still, trade volume between North Korea and its major trading partner China came to US$546 million in January, compared with $471 million from a year earlier, according to the data compiled by the Korea International Trade Association (KITA).
North Korean exports to China jumped 18 percent on-year to $223 million, with imports rising 14.5 percent to $323 million, the data showed.
Anthracite was the No. 1 export item for the impoverished country to its communist neighbor, selling some $101 million worth of the natural resource last month, up 21.3 percent from a year ago.
North Korea’s anthracite exports are a major source of income, and China is virtually the only destination for the shipments.
Inbound shipments of China-made cell phones soared 28 percent on-year to $14.4 million in January, the data showed.
“Trade volume between the two countries is expected to rise further given China’s growing demand for minerals for its project to develop its three northeastern provinces of Heilongjiang, Jilin and Liaoning,” said Lim Eul-chul, a research professor at Kyungnam University.
“Such political variables as Jang’s execution would not likely affect the trend,” he added.
The heavily sanctioned North Korea has been increasingly reliant on China, though the Asian giant has become frustrated with its wayward neighbor, particularly after Pyongyang’s third nuclear test early last year.
In 2013, trade volume between the two reached a record $6.45 billion last year, up 10.4 percent from the previous year, according to KITA data.
The Wall Street Journal notes:
“Bilateral trade has probably yet to feel the impact of Mr. Jang’s execution,” said Cho Bong-hyun, research fellow at Seoul-based IBK Economic Research Institute.
“Both sides are still acting on trade contracts that have already been signed and usually take effect for six months,” Mr. Cho said.
Mr. Cho said he expects the impact from Mr. Jang’s purge will begin to appear in the data from the second quarter of this year. North Korea may also increasingly turn to trade with South Korea following a thawing of ties and the reopening of a jointly run Kaesong industrial park, he said.
The KITA data show inter-Korean trade volume shrank 42% to an eight-year low of $1.15 billion last year, when the Kaesong complex was closed for several months after North Korea pulled out its workers.
North Korean-Chinese trade volume hit a record high of $6.54 billion last year, according to KITA, as North Korea exported natural resources such as coal and iron ore, while importing fuel and electronics goods.
The Korea Trade-Investment Promotion Agency, Seoul’s state-funded trade agency, said in a report last year that North Korea’s bilateral trade with China accounted for 88% of Pyongyang’s entire external trade in 2012, up from 53% in 2005.
Read the full stories here:
N. Korea, China trade unaffected by stunning execution: data
Jang Purge Yet to Hurt North Korea-China Trade
Wall Street Journal
According to Yonhap:
Trade volume between North Korea and its major trading partner China reached a record US$6.45 billion last year, up 10.4 percent from a year earlier, data showed Saturday.
North Korean exports to China jumped 17.2 percent on-year, while imports from China increased 5.4 percent, according to the data from the Korea International Trade Association.
Pyongyang’s trade deficit recorded $721 million, a 25 percent decrease compared with the previous year, the data showed.
North Korea’s major export items were minerals, with $1.37 billion worth of anthracite and $294.1 million of iron ore shipped to China last year.
North Korea’s anthracite exports are a major source of income, and China is virtually the only destination for the shipments.
The isolated socialist state heavily relied on China for crude oil, buying $598.1 million from its sole financial and diplomatic backer.
Inbound shipments of China-made cell phones fell to $44 million last year, shrinking by 26.6 percent from a year ago.
The latest data showed the heavily sanctioned North Korea is increasingly reliant on China, even though the Asian giant has become frustrated with its wayward neighbor, particularly after Pyongyang’s third nuclear test early last year.
Since these numbers are aggregated, we cannot observe if the purge of Jang song-thaek and his patronage network had any effect on DPRK/China trade at the end of the year.
The DPRK also increased oil imports from China in 2013. According to Yonhap (2014-2-10):
Shipments of crude oil to North Korea from China increased 11.2 percent on-year in 2013, a South Korean government report showed Monday, the latest sign that Beijing still gives Pyongyang access to the vital commodity despite its defiant pursuit of nuclear weapons.
North Korea imported a total of 578,000 tons of crude oil from China last year, compared with 520,000 tons in 2012, according to the report based on China’s customs data.
Monthly shipments of crude oil from China to North Korea were absent in February, June and July last year, but Beijing exported “a large amount of crude oil” to Pyongyang in the second-half of last year, the report said.
In 2013, trade between North Korea and China rose 8.9 percent on-year to reach US$6.54 billion, with the North’s exports to China jumping 18 percent to $2.91 billion, the report showed.
“Our overall analysis is that international sanctions against North Korea’s nuclear and missile programs have not reduced or shrunk the North’s trade with China,” a South Korean diplomat said on the condition of anonymity.
Read the full stories here:
Trade between N. Korea, China hits record $6.45 bln in 2013
N. Korea’s crude oil imports from China rise 11.2 pct in 2013
According to Yonhap:
North Korea’s exports of anthracite coal to China grew 15.5 percent in 2013 from a year earlier, data showed Friday.
North Korea shipped a total of US$1.37 billion worth of anthracite to China last year, compared with $1.19 billion sold to the neighbor a year earlier, according to the data from the Korea International Trade Association.
North Korea exported only $162.6 million worth of the coal to China In 2007, but the figure has grown every year since then, according to the data.
The total anthracite exported to China last year was measured at 16.5 million tons, up 39.7 percent from what was exported in 2012, the data also showed, indicating that the North sold the coal to China at cheaper prices last year.
In December alone last year, the North shipped $118.06 million worth of anthracite, almost the same amount as November’s $121.45 million.
This means North Korea continued anthracite exports to China after executing leader Kim Jong-un’s once-powerful uncle Jang Song-thaek in early December for allegedly attempting to overthrow the regime and committing anti-state crimes, including selling North Korean natural resources abroad at excessively low prices.
North Korea’s anthracite exports are one of its major income sources and China is virtually the only destination for the shipments.
Read the full story here:
N. Korea’s coal exports to China up 15.1 pct in 2013