North Korean Economy Watch

Oh My News
Robert Neff
2/21/2007

(Check out the original post for photos)
Many people’s impression of North Korea is that of a poor country unable to feed its own people and desperate for cash. Other than selling weapons, printing counterfeit money, and engaging in the production of illegal drugs, it is thought that it has very little means of obtaining hard currency. Yet, recently, it has received a great deal of the media’s attention for its sale of gold to Thailand. Many people forget that North Korea has always had an abundance of mineral wealth — including gold.

Korea’s wealth had long been known not only in the Far East, but also in the Middle East. Ibn Khordadzbeh (844-848), an Arab, wrote that “there is a mountainous country named Silla and divided into numerous principalities. Gold abounds there.” Another Arab, Ibn Rosteh, repeated this claim in the 10th century when he pronounced Silla was very rich with gold. Arab merchants traveled from their own countries, along with the Chinese, and traded with Korean merchants along the Yesong River during the Koryo period. Most of Korea’s trade with these merchants was mainly gold and silver utensils, copper, ginseng, paper, fans and swords.

Eventually, as Korean foreign policy changed and it began to avoid most intercourse with foreign nations, this trade died, but the legends of Korea’s wealth didn’t. In 1867, Ernest Oppert, a Prussian trader from Shanghai, China, may have used Korea’s reputation for being abundant with gold, and the common belief amongst the Westerners that Korean kings were buried in coffins of solid gold, to hire a band of mercenaries to assist him in his infamous failed attempt to exhume the Korean regent’s father’s tomb and hold his remains as ransom.

Although gold is found throughout the Korean peninsula, it was, for the most, primarily mined and panned for in the mountainous regions of the northern provinces of Korea and along the eastern coast using primitive methods. This mining has gone on for literally centuries, but it wasn’t until the 1880s when several attempts, Korean and Western, were made to mine gold using “modern” methods. These efforts failed primarily because of the lack of finances, skilled labor, infrastructure and the resolve of the Korean government.

It wasn’t until 1896 when the first large mining concession was granted to a couple of American businessmen that “modern” gold mining in Korea began. This was the origin of the Oriental Consolidated Mining Company [OCMC], the first, longest running, and the richest of the Western mining concessions in Korea, and one of the richest in the world. It was soon followed by British, German, French, Italian, and of course, Japanese concessions, but none of them could compare to the wealth and size of the OCMC.

Although these mining concessions have been condemned by many modern Korean scholars as tools of exploitation by the Japanese and the West; it is also important to remember that they brought employment, education, and even higher living standards to thousands of Korean miners and their families.

The pictures accompanying this article are of the Seoul Mining Company located at Su’an (in present day North Korea) in 1915. The Seoul Mining Company was established in 1907 when two American businessmen, H. Collbran and H.R. Bostwick, leased Su’an mine from a British mining syndicate. The British had grown disenchanted with the mine and were convinced that it was not very profitable — they were wrong. Within the first six years of its operation it had produced nearly $3,000,000 worth of gold. Although the Seoul Mining Co., at first appeared to be one of, if not, the richest gold mining operations in Korea, by the early 1920s it was apparent that the gold was nearly depleted and in 1924 the mine was closed.

One of the chief problems for the early mining companies was transportation. Most of these gold mining sites had few, if any, crude roads or paths to them. It was often easier to transport supplies and equipment by flat-bottomed boats up the river to the landing nearest the mines. Then, depending on what was being transported, Korean ponies or bulls were used to manhandle the equipment and supplies to the mines.

The Korean bull was a slow moving powerful animal that was extremely docile and easily handled by its mapoo (handler), the ponies on the other hand were described as “swell-made spirited little beasts [but] generally vicious.” One early Westerner described his first encounter with his pony:

“As soon as the creature saw me approaching to mount, it reared and kicked furiously, and opened its mouth and flew at me like a tiger.”

So violent were these little ponies that a missionary remarked: “I love to see the pony shod, see him pinioned teeth and nail, in one hard knot, lying on his back under the spreading chestnut tree, with the village smithy putting tacks into him that brings tears to his eyes.”

In addition to transportation problems there was the lack of timber. Timber was essential to mining operations. In the beginning it was used as fuel to run the stamps (grinding equipment), to construct the buildings and to support the mine shafts, but timber was not always readily available in large quantities. Without timber the mines were doomed. By about 1910, most of the mines participated in reforestation programs, but for most of them they would not be around long enough to profit from these actions.

Most of the mines were in remote places, far from civilization. Obtaining enough miners to work the mines was usually not a problem, as they were generally paid better than the average Korean. However, these remote sites were home to large populations of big predatory animals — chiefly, tigers, leopards, and wolves.

Occasionally, tigers, especially ones that were too old to hunt the fleet-footed deer, would attack a lone Korean miner returning to his home at night. Often very little of the victim was found in the morning save a few pieces of ripped clothing and scuffle and blood marks on the ground. Surprisingly the animal that caused the most fatalities and was arguably the most feared was the wolf.

Sometimes wolves would creep into the small mining settlements at night and snatch children on their way to and from the outhouses. There are even accounts of wolves forcing their way into the flimsier hovels and dragging away children from the safety of their beds.

By 1939 all of the large Western gold mining concessions had been sold to the Japanese, and only a few very small mines were still operated and owned by Westerners, and even these were eventually taken over by the Japanese when Japan entered World War II. During World War II many of the mines fell into disrepair due to the negligence of their Japanese managers, and their failure to pay their Korean miners. During the Korean War, American soldiers reported that the OCMC mines were flooded and unworkable.

It has been more than 50 years since the Korean War has ended. During this time, North Korea has made great effort and progress in reopening some of these mines from the past and developing new ones. Today Western financing and expertise are still being used to aid the extraction of gold from the mountains of the north.