DPRK military strenghtens hold on economic interests

UPDATE: IFES has contacted us with an update to this report:

“North Korea exports between 2-3 million tons of coal, collecting approximately 200 million USD.”

Original Post:
Institute for Far Eastern Studies (IFES)
NK Brief No. 09-6-9-1

The North Korean military, which has recently taken a hard-line position internationally with rocket launches, a nuclear test and inter-continental ballistic missile (ICBM) launch preparation, appears to be strengthening its position domestically, as well. It has reportedly taken charge of coal exports, previously the responsibility of the Cabinet, and other key economic interests.

According to sources inside North Korea, authority to export anthracite, the North’s most valuable export item, was transferred from a trading company under the control of the Cabinet to a military trading company earlier this year. North Korea exports between 200-300 tons of coal each year, collecting approximately two billion USD in foreign currency. Previously, this was shared among branches of the government, with the military, the Korean Workers’ Party and the Cabinet all similar export quotas.

One source stated, “Recently, China’s trade minister signed a contract for 60,000 tons of coal from a military-run trading company, and delivered one million USD-worth of corn as payment,” noting, “previously, North Korea’s trade partner [with China] was the Cabinet-controlled trade company.” The same source went on to note that it was “exceptional that as North Korea suffers from foreign capital shortages, it demands payment not in cash, but in corn…it looks like it is measure for military use.”

Other sources reported that, as of this year, the military has also taken control of the Bukchang Thermoelectric Power Plant, the country’s largest steam-powered electrical station. The Bukchang plant, built with Soviet supplies in 1968, can produce up to 2 million kW of electricity. It was formerly operated by the Ministry of Electric Power Industry, which is under the control of the Cabinet, but at the beginning of year, some authorities were purged on charges of bribe-taking and providing power designated for government facilities to foreign capital enterprises and other businesses. Since then, the military has run the plant.

The increased number of economic assets in control of the military reflects the military’s recently-strengthened position within the regime. The North Korean economy can be divided into several sectors: Kim Jong Il’s private fund, managed by Party operations; the military-industrial ‘second economy’; and the official economy, under the control of the Cabinet. The military’s increasing control over the official economy appears to be a move to completely implement ‘Military-first Politics.’


5 Responses to “DPRK military strenghtens hold on economic interests”

  1. chris green says:

    Note that due to a mistranslation by IFES from the original Korean, the profitability of coal starts to look disconcertingly good. I think we can all agree that if someone wanted to give us $2 billion for 300 tons of coal, we’d all become miners!

    “Coal exports are worth around US$200 million per year to the North Korean economy, which exports 2 to 3 million tons of coal annually,” is how we reported it at Daily NK after reference to the original Korean.

    Australian metallurgical coal currently sells for approximately US$130 per ton.

  2. chris green says:

    This suggests a price of between $65 and $100 a ton. However, if the corn was really worth just $1 million, then that would value the 60,000 tons of coal at just $17 a ton.

    Quite a good deal for the Chinese, if true.

  3. Alan B. Barley says:

    Indeed there is something wrong with the numbers presented in this article. In the 2nd paragraph: “North Korea exports between 200-300 tons of coal each year”. In the 3rd paragraph: China’s trade minister signed a contract for 60,000 tons of coal from a military-run trading company. This one contract alone is 300 times larger than the nation’s entire annual output. I don’t think that the military can increase coal output by 30,000 per cent.

  4. Neil says:

    If they can we’ve seriously underestimated Kim Jong-Il’s Military First Politics!!!!

  5. IFES says:

    Thank you for catching the discrepency. Indeed, seveal zeros didn’t make the cut during translation.

    North Korea exports between 2-3 million tons of coal, collecting approximately 200 million USD.