North Korean Economy Watch

Radio Free Asia
Jeong Young
10/9/2009

As millions go short of food in the last bastion of Stalinism, the privileged political elite of North Korea are drinking heavily: not wine, brandy, or even rice liquor, but instant coffee from rival South Korea.

Coffee first arrived on the Korean peninsula in 1895 as a gift from a Russian diplomatic envoy to the court of Emperor Gojong. It was furthered popularized in the South by U.S. troops during the 1950-53 Korean War.

Now high-ranking North Korean officials and their families are tipping back the beverage in a form that might surprise aficionados in more privileged economies: three-in-one instant coffee sachets.

These are so highly prized that they’re smuggled across the border from China, disguised as passenger luggage to evade Chinese customs controls.

China imposes restrictions on the amount of coffee that can be imported from South Korea, and that is why coffee is loaded on passenger ships at the South Korean port of Incheon and sent to the northeastern Chinese city of Dandong, to bypass the Chinese quota system.

“The coffee we send to Dandong sells for KRW 1,200 to 1,500 (U.S. $1.00-1.50),” a South Korean coffee trader said.

Smuggled in

“This coffee is sent across the China-Korea Friendship Bridge connecting Dandong in China and Shinuiju in North Korea, and subsequently smuggled into North Korea,” he said.

Another trader, Kim Tae-Sung of the Youngshin Trading Co., said even large containers are sent to China packed with instant coffee via this route.

“Small shipping companies can load and ship containers of all sizes on passenger ships,” Kim said. “One kilogram of coffee costs KRW 1,800 (U.S. $1.50).”

According to traders, since the South Korean coffee has to get through North Korean customs, they remove the original outside wrapper and put the sachets into a different jar.

They then bribe North Korean customs officials to turn a blind eye to their illicit cargo.

The sachets, often the South Korean Maxim brand, are then quietly sold at markets in the larger cities.

Glamorous and costly

A North Korean trader who recently arrived in China said that a growing number of household commodities are now available at unofficial markets in the North, but that most are well beyond the reach of ordinary North Koreans, who still struggle to find basic foodstuffs for their families.

“A lot of commodities are sold at markets, including coffee and milk,” he said. “There are big packs of coffee. There’s coffee imported from China or from Japan.”

“Generally, it’s the upper class people who drink it … How could the ordinary people afford to buy coffee?”

While the elite sips the sweet brew produced by a combination of coffee powder, creamer, and sugar, ordinary people are still unsure exactly what coffee is, according to North Koreans now living in Seoul.

Do Myung Hak, a North Korean defector who arrived in South Korea two years ago, said ordinary North Koreans had mostly come across coffee in a popular war movie, “Unsung Heroes,” in which characters ask, “Would you care for a cup of coffee?” giving it a glamorous image.

“But most people have never had a chance to taste coffee. They have no idea what it is or what it tastes like,” Do said.

“Some even believe that it’s an alcoholic drink that can make you drunk, while some believe that it’s so bitter and so dark that it can turn one’s entrails dark,” he said.

“Most North Koreans haven’t tasted coffee, so they’re simply clueless about it.”

North Korea’s elite first acquired the taste for the three-in-one brew after visiting tourists left surplus sachets behind them.

Later, in the jointly run Kaesong Industrial Zone, South Koreans continued to share the beverage with their co-workers from the North.

And a popular political joke says that customs officials drink coffee to stave off the hunger pangs that are a common experience for many ordinary people in North Korea.

According to Blaine Harden in the Washington Post (excerpts):

North Korea has massively increased its special operations forces, schooled them in the use of Iraqi-style roadside bombs and equipped them to sneak past the heavily fortified border that divides the two Koreas.

In a conflict, tens of thousands of special forces members would try to infiltrate South Korea: by air in radar-evading biplanes, by ground through secret tunnels beneath the demilitarized zone (DMZ), and by sea aboard midget submarines and hovercraft, according to South Korean and U.S. military analysts.

Their primary mission, in the event of war, is to leapfrog the DMZ and create chaos among the 20.5 million residents of greater Seoul, while harassing South Korean and U.S. forces in rear areas, military and intelligence experts said.

South Korea and the United States agree that the number of North Korean special forces is rising, but they disagree on how much.

The number is now 180,000, according to the South Korean Defense Ministry. That’s a 50 percent increase since the South’s last official count three years ago. But Sharp, the U.S. commander here, puts the number at 80,000 (although that still dwarfs the special forces of any country, including the United States, which has about 51,000.)

Much of the difference appears to be a dispute over the definition of special forces. North Korea has retrained and reconfigured about 60,000 infantry troops as special forces in the past three years, South Korea says. The United States agrees that this reconfiguring has occurred, but it “does not count [retrained infantry] as special forces,” according to Maj. Todd Fleming, a spokesman for U.S. forces in Korea.

Whatever the number, there is widespread agreement that the North’s special forces are increasingly formidable. Sharp describes them as “tough, well-trained and profoundly loyal,” while being capable of illicit activities, strategic reconnaissance and attacks against civilian infrastructure and military targets across Northeast Asia.

But the capacity of North Korea to protect and maintain that frontline armor has declined since the 1990s. Flight hours for the North’s military aircraft have plummeted for lack of fuel, as has training of mechanized ground forces.

North Korea has also begun to question the utility of the tanks and armor it can afford at the front, after seeing the ease with which U.S. precision weapons shredded Saddam Hussein’s armored forces in Iraq, according to a South Korean Defense Ministry report.

“They were really shocked watching how the Americans destroyed Iraq’s tanks,” said Kim, the military affairs editor.

What North Korea still has in extraordinary abundance are boots on the ground, thanks to universal conscription and a mandatory 10 years of military service for men, seven years for women.

“The North Koreans made a decision based on the resources they have,” said Kwon Young-hae, a former director of South Korea’s National Intelligence Service. “The best way for them to counterbalance the South’s technological advantage is with special forces. When Kim Jong Il gives pep talks to these troops, he says, ‘You are individually, one by one, like nuclear weapons.’ “

The full article is worth reading here.

I  cant help but see the Iranian government involved in this, but that is entirely speculative.

And a personal aside—I recommend that everyone (including Americans) visit Iran.  Despite the reputation of the Iranian government in the west, the country is one of the friendliest and most beautiful places I have been fortunate enough to visit. My only regret with regards to my trip there is that I could not spend more time enjoying the company of her beautiful people.

UPDATE 4:  Vice Unification Minister Hong Yang-ho chimes in on the DPRK succession issue.  According to Yonhap:

Kim, 67, who reportedly suffered a stroke in August last year, is believed to have named his third and youngest son, Kim Jong-un, as his successor and to be now grooming him for an official debut as the next leader.

“North Korean media continued to broadcast reports that appeared to indicate the legitimacy of a hereditary succession since the end of 2008, but such reports were put on hold after July 15, 2009,” Hong said at a closed-door civic forum on North Korea policy. A transcript of his remarks was released by the ministry.

North Korean media often employed phrases like “bloodline of Mount Paektu,” Kim Jong-il’s supposed birthplace, or “inheritance” when lauding the country’s leadership, something analysts here saw as a reference to the planned succession. The use of such terms also peaked around the time the senior Kim was being trained as heir, they say.

Kim Jong-un, believed to be born in 1984 to the leader’s third wife Ko Yong-hui, is said to most resemble his father in appearance and temperament among the three sons. His older brother, Jong-chol, is 28, and half-brother, Jong-nam, is 38.

While references to the succession have subsided, the vice minister said, North Korea appeared to be intensifying social control to maintain national unity around the senior Kim. Media reports of Kim’s public activities totaled 110 as of Oct. 1, compared to 74 reported during the same period last year, the vice minister noted.

Also, a statement by Kim regarding the building of a “prosperous” nation by 2012 was reported five times over the span of five days from Aug. 24 to 28, he noted.

Such intense publicity on Kim “shows he is in firm control” and “puts emphasis on traditional ideology to protect the regime,” he said.

The current leader was internally designated as successor at age 32 in 1974 during a Workers’ Party meeting and publicly declared as the heir to his father during a party convention in 1980. His father and the country’s founder, Kim Il-sung, died of a heart attack in 1994.

Despite the drop in media references, watchers say the succession process is picking up pace internally. A Taiwanese photographer recently posted a photo on the Internet taken in the northern North Korean town of Wonsan last month, showing a poster that carried the heir’s name in red alongside his father’s name.

Cheong Seong-chang, an expert with the non-governmental Sejong Institute south of Seoul, said the North is now directing the succession process in a more subtle way, in contrast to its earlier nuclear and missile tests that were believed to have been aimed at supporting the power transition.

Read the full article here:
N. Korea halts media propaganda for heir apparent: Seoul official
Yonhap
Kim Hyun
10/8/2009

UPDATE 3: As I mentioned below, I am reluctant to post much on the succession issue. There is much speculation out there and not much concrete information which is ‘actionable’. Evey now and then, however, some nuggets of information come out.  Such as this…

On September 19, a tourist to the Chonsam Cooperative Farm (location here) snapped a photo of a local propaganda poster (click here for full sized version).  According to the Choson Ilbo, and confirmed by my crack translator, G, the poster reads, “Kim Jong-eun (김정은), [NOT Jong-un] a young leader who succeeds the lineage of Mangyongdae and Mt. Baekdu,” along with the full lyrics of a song related to the succession.

Read more below:
N.Korean Poster Seems to Confirm Succession
Choson Ilbo
9/30/2009

Why N.Korean Regime Succession Is a Delicate Matter
Choson Ilbo
9/30/2009

UPDATE 2: Fox News reports on a Yonhap story which claims that Pyongynag residents have heard KJU’s name mentioned via their “cable radios” (these devices are built into the homes in many Pyongyang residencies, and you can see them in the documentary A State of Mind):

North Korea has mentioned Kim Jong Un by his full name — which it had not done in the past — and his qualifications in broadcasts through speakers installed in each house, Yonhap news agency reported, citing an unidentified source on North Korean affairs.

The broadcast campaign was launched in Pyongyang about two months, but it was not clear if it had been extended to other parts of the country, Yonhap said.

North Koreans are obligated to install speakers in their homes to listen to broadcasts on policy of the ruling Workers’ Party and its propaganda, according to North Koreans who have defected to the South.

UPDATE 1: Blane Harden has added additional information in the Washington Post.

ORIGINAL POST: In general I have avoided discussion of the DPRK succession issue because much of it is based on speculation and rumor. Lankov, however, managed to chime in on the topic with some interesting facts and insight. Quoting from the article:

However, by April there were no doubts: Kim Jong-un, Kim’s youngest son, began to be frequently mentioned in the North Korean classified propaganda materials. These publications are off-limits for common North Koreans, but the message was clear: the virtues of the “brilliant comrade” Kim Jong-un were extolled in way which would be proper only for the next leader. So, Kim Jong-il finally made up his mind about succession – or at least that is what most observers came to believe.

But in August the situation took an unexpected turn; today, the prospect of a power transition to Kim Jong-un looks far less certain than a month ago.

These days, while North Korean borders are transparent enough, it takes a few weeks for the rest of the world to learn what is going on behind the closed doors of supposedly “classified” indoctrination sessions for junior officials (the situation at higher levels is far less transparent). But a few days ago, entrepreneurial journalists smuggled from North Korea classified propaganda materials which were issued in July for military indoctrinators.

The materials describe the charisma of the “Young General Kim” and call him a “genius of military affairs”. They also explained his strategy was “the strategy of shock and offense” and told their listeners that the boldness of the “young general” caught the “enemy” (obviously, the United States) by surprise.

It is hinted that the missile launch in April and nuclear test in May were manifestations of the brilliant new strategy, created by Kim Jong-un.

Meanwhile, members of the North Korea’s Communist Youth Union were instructed to sing “Footsteps”, a new song that extolled the virtues of an unnamed young general, whose surname happened to be Kim. North Koreans got the message: the titles which were used in the song are different from those which are normally applied to any of two older “General Kims”, so the person must have been a new Kim.

Functionaries of the Communist Youth were also told that the ongoing “150 days battle” (a Maoist-style shock labor campaign, quite normal for North Korea) is managed by Kim Jong-un and hence will certainly lead to a major success.

Interestingly, the North Korea material reported that Kim Jong-un was 30 years old: obviously, any idea of an heir who just turned 26 was seen as offensive in a Confucian country.

Nonetheless, no references to Kim Jong-un’s name, let alone to his promotion, have appeared in North Korea’s general access media. The propaganda campaign was conducted behind closed doors, and targeted either military personnel (largely officers) or activists of the Party Youth. The average North Korean still has no clue about who Kim Jong-un is. If he or she does, it is probably due to exposure to marketplaces where merchants actively exchange rumors that have filtered in from overseas.

However, about a month ago the entire campaign was halted abruptly. Sources inside North Korea report that since early August the name of Kim Jong-un is not heard any more. Even “Footsteps”, his “promotional song”, suddenly ceased to be performed, and people are now advised not to sing it – for the time being, at least. The “150 day battle” continues, but without references to the decisive role of Kim Jong-un’s managerial genius.

No explanations have been given – this is North Korea, after all. In a different country such turn of events would produce a tidal wave of rumors, but North Koreans are well aware that matters of succession (as well as things related to Dear Leader’s family and health) are too dangerous to be discussed or even mentioned.

The article goes on to offer reasons why the succession machinery has apparently ground to a halt and it is all well worth reading.

Find the full article here:
North Korea’s Succession gets twisted
Asia Times
Andrei Lankov
9/11/2009

UPDATE: Although South Korea has signaled willingness to increase spending in North Korea (below), it appears they have come nowhere close to spending their current budget.  According to Yonhap:

South Korea has so far this year spent less than 5 percent of its annual budget earmarked to promote reconciliation with North Korea, the Unification Ministry’s data showed Wednesday.

The meager spending of the inter-Korean cooperation budget mirrored stagnant economic exchanges yet to be enlivened despite a recent thaw in political relations.

The data showed that South Korea has set aside 1.16 trillion won (US$990.94 million) for this year’s inter-Korean cooperation budget, which includes 43 billion won transferred from last year, to support joint business projects and provide industrial and humanitarian aid to the North.

The budget spending as of the end of September amounted to 55.9 billion won, 4.8 percent of the total, according to the data.

In a detailed breakdown of expenditures, the ministry spent 10.6 billion won, or 11.3 percent of the 93.8 billion won budget earmarked for the South Korean-run factory park in the North’s border town of Kaesong. Planned projects to build a dormitory for North Korean workers and modernize roads there have also not begun. The Kaesong park hosts about 110 South Korean firms with 40,000 employees from the North.

Humanitarian aid was the area in which funds were held back most. Out of the earmarked 819.8 billion won, the ministry has spent a meager 0.9 percent, or 7.7 billion won, so far. Unification Minister Hyun In-taek said in a parliamentary audit Tuesday that Seoul will decide when to resume its rice and fertilizer aid, crucial to food supplies in the North, after “considering the climate of future inter-Korean relations.”

For social and cultural exchanges, the ministry spent 2.2 billion won, or 25.3 percent of the earmarked 8.7 billion won. Loans for inter-Korean cooperation projects amounted to 11.3 percent, or 21 billion won out of 186.6 billion won.

ORIGINAL POST: According to Yonhap:

South Korea’s government proposed a 30 percent increase in its budget spending aimed at supporting inter-Korean economic cooperation projects for next year, the finance ministry said Tuesday.

According to the Ministry of Strategy and Finance, the budget set aside for inter-Korean economic cooperation next year will amount to 398.2 billion won (US$339.6 million), compared with 304.6 billion won assigned for this year.

Citation:
Seoul proposes 30 pct increase in budget for inter-Korean economic cooperation
Yonhap
10/6/2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-10-7-1
10/7/2009

The March 2009 issue of the North Korean Journal Economic Research emphasized that with the strengthening of international economic sanctions against the North, actively participating in the “Battle for Savings” was essential in all sectors in order to construct a “strong and prosperous nation.”

The recently obtained academic journal called on readers to broaden the “savings battle” in an article titled, “Strongly Spreading the Battle for Savings Is an Important Measure for the Construction of an Economically Strong Socialist Nation.” The article stressed that the “savings battle” was necessary for the successful completion of large-scale industrial construction projects, such as the Huicheon Power Plant, as well as the construction of hundreds of thousands of private homes and pubic facilities. North Korean authorities consider these projects essential to the successful construction of a ‘strong and prosperous nation’ by 2012, the year marking the 100th anniversary of the birth of the late Kim Il Sung.

The journal reported that Kim Jong Il had ordered, “Instances of waste among workers and laborers is to be eliminated and the Battle for Savings strengthened.” It also offered, “The ‘Battle for Savings’ is one of the conditions necessary to be able to overcome the economic difficulties created by the Imperialists’ sanctions.”

The journal accused the United States of “villainously daring to carry out military pillaging and economic sanctioning measures” in order to blockade the North and reported that “American and Japanese Imperialists are not only sanctioning imported and exported goods, but are going as far as to interfere with loan accounts.” These statements may provide some insight into the economic and social difficulties the international sanctions are causing for North Korea.

The article went on to say that these circumstances demand that all people “Raise the revolutionary spirit of self-reliance and strenuous efforts while strengthening to new heights of the savings battle throughout all sectors of the People’s Economy.”

Furthermore, it stated that if the “Battle for Savings,” was strengthened, “The capital saved could increase the number, quality and variety of products, increasing the export base,” and, “foreign capital can be saved by closely managing and efficiently using materials which must be imported, such as crude petroleum and some raw materials and equipment.”

The article also evaluated the implementation of savings plans in factories and enterprises, stating, “Pilot projects to increase production need to be expanded through schemes such as prizes and money for saving of raw materials and increasing output by introducing overtime pay schedules.”

According to the Daily NK:

North Korean citizens are not only sensitive to the style of their clothing or shoes, but also the brands of their accessories such as bicycles and MP3 players.

The reason behind the North Korean special emphasis on such items is apparent in the North Korean adage, “What one eats is not as important as what one wears.” It is not particularly evident whether one has eaten or not in the short term, but attire gives away the level of wealth in a household.

Just as household affluence is determined by the type of vehicle or house one owns in a capitalist society, the type of clothing or shoes that one wears, the particular brand of cigarettes in the pocket of a person or the kinds of objects one owns indicates the wealth of a person in North Korea and even decides the way in which a person is treated.

Two examples are the USB memory sticks and MP3 players which have started circulating there.

An inside source in North Korea testified, “Teenagers nowadays may not know how a computer works, but will carry at least one USB memory stick along with their keys. Middle school students living in cities have to own at least one MP3 player in order to be acknowledged as coming from a middle class background.”

So, in order to cement or exaggerate their social positions, youths go out and get an MP3 player, even if it means foregoing meals, and the parents who do not want to see their children getting alienated will save every penny to buy these ‘essential’ items.

Read the full story below:
Teenagers, the Generation Keeping up with the Times
Daily NK
Moon Sung Hwee, from Jagang in 2006
10/7/2009

According to the Financial Times:

North Korea’s mineral wealth is receiving close scrutiny, with South Kor­ea’s government this week valuing reserves at $6,000bn (€4,070bn, £3,670bn). Encouraged by data on metals, Goldman Sachs last month predicted the economy of a unified Korea could rival Japan’s by 2050.

…

Trade with China is growing, reaching $2.8bn last year from about $2bn in 2007. But military authorities in North Korea are perceived as hostile to the changes in society and infrastructure that foreign investment could bring.

“If the North opens its mineral resources to foreign countries, that is tantamount to taking a military, social and political gamble, jeopardising their security,” said Lim Eul-chul, of Seoul’s Institute of Far Eastern Studies.

A South Korean diplomat closely involved with nuc­lear talks doubted Pyong­yang would allow China to make big investments inside its border. “They cannot permit that kind of influence,” he said.

Although they were long communist allies, North Korea and China have a mutual mistrust, partly tied to territorial claims.

Still, limited foreign investment in the sector is not impossible. Colin McAskill, executive chairman of Koryo Asia, says he has signed a letter of intent and memorandum of understanding to invest in North Korean metals and argues his model would not interfere with sovereignty issues that concern Pyongyang.

Switzerland’s Quintermina has posted reports on its website saying it is looking to extract magnesite in North Korea.

Chinese investors are believed to have some metals interests and are also involved in coal mining.

“The Chinese companies that have tried to do business in North Korea complain a lot that the regulations change frequently and that the power supply is erratic,” said a Chinese academic in Beijing.

One quote in this article struck me as a little off:

A South Korean diplomat closely involved with nuc­lear talks doubted Pyong­yang would allow China to make big investments inside its border. “They cannot permit that kind of influence,” he said.

First of all, China has already made plenty of investments inside the DPRK and the Chinese government and companies already exert influence.  There is a difference between having influence and being in control.  Secondly, China is the largest market for North Korean exports.  Even though they might not “own” the North Korean assets from which they purchase the goods, the North Koreans are limited in terms of who will/can trade with them.  In this sense China earns surplus through either bulk purchase discounts or monopsony power.

Read the full story here:
China eyes N Korea’s mineral wealth
Financial Times
Christian Oliver
10/6/2009

July 1, 2009
Download the full report here. Download other CRS reports here.

Summary: The United Nations Security Council unanimously passed Res. 1874 on June 12, 2009, in response to North Korea’s second nuclear test. The resolution puts in place a series of sanctionson North Korea’s arms sales, luxury goods, and financial transactions related to its weapons programs, and calls upon states to inspect North Korean vessels suspected of carrying such shipments. The resolution does allow for shipments of food and nonmilitary goods. As was the case with an earlier U.N. resolution, 1718, that was passed in October 2006 after North Korea’s first nuclear test, Res. 1874 seeks to curb financial benefits that go to North Korea’s regime and its weapons program. This report summarizes and analyzes Res. 1874.

On the surface, financial sanctions aimed solely at the Democratic People’s Republic of Korea (DPRK, the official name of North Korea) and its prohibited activities are not likely to have a large monetary effect. Governments will have to interpret the financial sanctions ban of the resolution liberally in order to apply sanctions to the bank accounts of North Korean trading corporations. A key to its success will be the extent to which China, North Korea’s most important economic partner, implements the resolution. In summary, the economic effect of Resolution 1874 is not likely to be great unless China cooperates extensively and goes beyond the requirements of the resolution and/or the specific financial sanctions cause a ripple effect that causes financial institutions to avoid being “tainted” by handling any DPRK transaction. A ban on luxury goods will only be effective if China begins to deny North Korea lucrative trade credits.

Provisions for inspection of banned cargo on aircraft and sea vessels rely on the acquiescence of the shipping state. In the case of North Korean vessels, it is highly unlikely that they would submit to searches. Resolution 1874 is vague about how its air cargo provisions are to be implemented, in contrast to the specific procedures set forth regarding inspecting sea-borne cargo. While procedures are specified for sea interdictions, the authority given is ambiguous and optional. Further, DPRK trade in small arms and ammunition is relatively insignificant, and therefore the ban on those exports is unlikely to have a great impact.

According to Yonhap:

North Korea has received some 2.7 trillion won (US$2.29 billion) from South Korea and international partners since 1994 in return for false promises to scrap its nuclear program, according to a lawmaker on Monday.

For the Geneva Framework Agreement reached in 1994, the North received $1.98 billion worth of support from South Korea, the U.S., Japan and the European Union, which was mostly used in building light-water reactors, Rep. Kwon Young-se of the ruling Grand National Party said, citing a report submitted by the foreign ministry.

Read the full story here:
N. Korea received US$2.3 billion through past nuke agreements: lawmaker
Yonhap
Tony Chang
10/5/2009

Radio Free Asia
Junho Kim
10/6/2009

North Korea is launching a crackdown on official corruption in its key mineral export sector, a crucial source of foreign exchange for a country where millions go hungry and the ruling party has total control of resources.

“[North Korea] is currently restructuring mineral exporting companies, because such trading entities have been found to be corrupt and inefficient and involved in various abuses,” said the China-based representative of a company importing minerals from North Korea.

The source added that many importers dealing with North Korean exporters had been negatively affected by their lack of professionalism and reliability.

“The overwhelming majority of North Korean trading companies are involved in exports of minerals, so the need to revamp them is evident and understandable,” the source said.

More than 58 percent of North Korea’s U.S. $1.13 billion exports in 2008 consisted of minerals and mining products.

The restructuring would target companies with unexplained gaps in their financial accounts and those that embezzled funds during the export process, the China-based source said.

Investigation slows exports

North Korea is a key source of magnesite, a mineral used in steel-making, synthetic rubber production, and the preparation of magnesium chemicals and fertilizers.

A China-based ethnic Korean businessman surnamed Nam said Chinese importers are having trouble filling orders for molybdenum, a metal used to make heat-resistant aircraft parts, electrical contacts, industrial motors and filaments.

“For about a month, discussions on imports of molybdenum from North Korea to China were suspended at the request of the North Korean authorities, who asked their Chinese counterparts to be patient and wait a little more,” Nam said.

In an attempt to further tap abundant mineral resources, the authorities are attempting a clean-up of the mineral export sector, the China-based source said.

Following an investigation of corrupt and inefficient mineral-exporting North Korean companies, export quotas might be assigned to such companies, and those found guilty of abuse could be imprisoned, the source said.

Swiss-based mining venture Quintermina was recently formed to secure magnesia materials from North Korea, the company said on its Web site.

It said the magnesite resources of North Korea, an extension of the magnesite-talc belt from the northeastern Chinese province of Liaoning, China, are estimated at 3 billion tons, and capable of producing around 100,000 tons per year.