North Korean Economy Watch

Pictured above: (L) A low-resolution image of the Hyeasn-China bridge (Google Earth) (R) A ground level photo of the bridge.

According to the Daily NK:

Construction work on a bridge connecting Hyesan in Yangkang Province and Changbai in China’s Jilin Province is raising hackles in the corridors of Sino-North Korean economic cooperation.

According to a source in China, both China and North Korea recognize that the existing ‘Friendship Bridge’ spanning the Yalu River between the two cities cannot handle increasing trade volumes. In particular, increasing copper ore production from Hyesan Youth Mine (which has been developed with Chinese capital) is putting it under unsustainable strain.

However, while China wants North Korea to expand and reinforce the existing bridge, North Korea is apparently pushing for the construction of an entirely new bridge in a different location using Chinese capital.

North Korea’s reason is supposedly one of revolutionary history. According to the source, “Chosun is opposed to the expansion of the bridge because right next to the bridge on the Hyesan side there is a stone commemorating a visit by Kim Jong Il.”

The 5m x 2m granite stone in question was set in place to commemorate the time on June 5th, 1956 when Kim Jong Il and his Pyongyang No. 1 Senior Middle School comrades stopped there during a trip to Mt. Baekdu and looked around an old royal building.

However, money also appears to be an issue. “In particular,” according to the source, “they are stubbornly insisting that ‘if you need a bridge, you should bear the burden of its construction.’”

In any case, the limitations of the bridge in its current condition are perfectly clear. It only has one lane, meaning that transit in both directions is impossible, and, though only built in 1985, there are very real concerns that its concrete structure cannot handle the Chinese heavy vehicles transporting copper ore away from the mine.

One other problem for North Korea is that the bridge is connected to Hyesan Customs House; the road off the bridge passes through the middle of the blue-roofed customs house, while the second floor houses the customs office itself. Therefore, expansion of the bridge would also involve redesigning the customs house. Due to fast flowing waters to the east, the only direction in which it is possible to expand is to the west; however, that is exactly where the commemorative stone is. Not only that, it is also the location of the local Kim Il Sung Revolutionary History Museum and Kim Jong Suk Art Theater.

Therefore, the source said North Korea has put forward an area around 4km east of the existing Hyesan Customs House as a possible candidate location for a new bridge. However, the suggested area is relatively unfavorable in terms of river width and topography, which would drive up construction costs. Given that North Korea is demanding that China bear the weight of these costs, it seems unlikely that agreement will be reached under the current conditions.

In the words of the source, “Chosun is making totally nonsensical demands. No conclusion is likely for the time being.”

This is not the first time that bridges spanning the Sino-North Korean border have been a source of friction between the two countries. Following a similar spat in 2005, China simply completed reinforcement work on its own half of a bridge between Hoiryeong and Sanhe, leaving the other half in its original state.

Related material:
1.  A Chinese company has mad a substantial investment into the Hyesan Youth Mine.

2. China is building a new bridge to the DPRK just west of the bridge linking Dandong and Sinuiju.

Read the Daily NK story here:
A Troubled Bridge between Friends
Daily NK
By Kang Mi Jin
2011-11-1

Back in 2002 the price of gold was approximately US$300/oz. Today it is closer to US$1,600/oz. Here is a chart:

The rapid increase in the price of gold is having a supply side effect of stimulating more gold mining across the planet, and North Korea is no exception.  Though the DPRK leadership has traditionally kept a watchful eye on the nation’s gold mines, reports began surfacing back in March that individual North Koreans were getting into the prospecting business:

Located at the base of Mt. Nokbong, near Hyesan in Yangkang Province, one particular village of 24 households saw its schools, public facilities and all other vestiges of welfare disappear following the construction of the Samsoo Power Station in 2004, which deprived the area of power.

And yet this village is now overflowing with people. They are here from all over the country, cramming homes and the nearby valley with one purpose in mind; searching for gold. Housewives, workers, university students, farmers, children, drifters, criminals, soldiers and bureaucrats; men and women alike from all different classes are living in this one place with the same aim.

The majority of people dig, without permission from the authorities and with only rudimentary tools. Their only wish is to avoid having to leave town and, hopefully, find some gold. The soldiers and bureaucrats, on the other hand, do not dig, instead using their authority to cream a share of others’ profits. (Daily NK)

It appears that the gold rush continues to this day, though it may be a bit more organized, at least officially.  A recent visitor to the DPRK took the following picture:

The caption of the photo reads:

“There are hundreds of people working certain rivers in North Korea in what can only be described as a gold rush. The government is buying gold from people who work the rivers. This has expanded considerably from past years when dozens were working the rivers. In one area I saw heavy equipment used to mine the river. The guides explained what was going on yet I cannot help but think this is a form of individual capitalism since it is individuals and families doing the mining.”

I would be interested to know more about what mechanisms the DPRK is employing to manage (control) “spontaneous” gold prospecting–an industry that would be hard for any central authority to police (particularly a poor country with high levels of corruption).  Given the limited amount of information, I can conceive of  two broad institutional arrangements:

Option number 1: Individual families and/or groups are simply registering their “mining companies” as branch enterprises or subsidiaries of existing state owned enterprises and mines.  In this way they take on the legal protection of the state in exchange for some defined percentage of their output.  This is the way many de-facto private North Korean businesses are run.   Under conditions of weak oversight (likely), this would imply that substantial profits from mining can be retained at the lower levels of production (with the firm “owner” or the miners themselves).  Pyongyang would have to be policing the rivers pretty hard and effectively auditing all the enterprises involved if expected to see a substantial increase in revenue from these “spontaneous” mining operations.

Option number 2: The North Korean government has essentially set up a “gold board” that sets a single legal domestic price for the purchase of gold from its people (just as many [exploitative] agriculture boards are set up in developing countries).  The DPRK government would earn revenue by keeping the difference between the amount paid to the domestic miners and the international price at which it sells the gold abroad. This option might make more fiscal sense in a weak institutional environment because the only thing the DPRK needs to police really well is the Chinese border. Under this system, the government does not need to worry about who mines the gold (or where or how) since the “gold board” would ultimately be selling it abroad and retaining the earnings.

I have not heard anything about such and institution existing, however, so until I am told differently I am more inclined to believe that option 1 is being utilized despite its fiscal shortcomings. This would imply that the increase in gold prices will translate to a real increase in wealth for a number of “ordinary” North Koreans. Though the work is not likely to be long lasting, it will provide some with savings or potential operating capital for the next business idea down the line.

Are you aware of other options or do you have some specific knowledge on how the DPRK is managing (controlling) freelance prospecting and mining? Please let me know.

Pictured above (Google Earth): Hyesan Youth Copper Mine.  See in Google Maps here.

According to Xinhua (China):

Hyesan-China Joint Venture Mineral Company, a large joint project between China and the Democratic People’s Republic of Korea (DPRK), started operation at Hyesan of Ryanggang province on Monday.

The mineral company was jointly set up by Wanxiang Resources Limited Company of China and the Ministry of Mining Industries of the DPRK on Nov. 1, 2007. Its main business was to produce and sell copper.

DPRK Mining Industries Minister Kang Min Chol and Chinese ambassador Liu Hongcai attended the opening ceremony.

Kim Chol, chairman of the people’s committee of the Ryanggang province, said at the ceremony that the joint venture was one of the symbols of the development of the DPRK-China friendship and would be a model of modernization, science and economic benefits.

Liu believed the company would make profits for both sides, benefit the two peoples and promote traditional China-DPRK friendship.

According to Reuters:

The mine was located a few miles from the Chinese city of Changbai in the northeastern province of Jilin and was 51 percent owned by Wanxiang, a source with direct knowledge of the project told Reuters on Tuesday.

The mine had a designed annual capacity of 50,000-70,000 tonnes of copper concentrate, expected to contain 20-30 percent copper, he added.

“All the concentrate will be sold to China,” the source said.

The source said the joint venture would conduct second-phase construction to expand the capacity of the mine if production ran smoothly, but did not give details on timing or expanded capacity.

China is the world’s top copper consumer but does not produce sufficient concentrate to meet demand. The country imported 3.4 million tonnes of copper concentrate in the first seven months of 2011, down 11 percent from a year earlier.

According to KCNA:

The Hyesan Youth Mine in Ryanggang Province was successfully updated as required by the new century.

The workers and technicians of the mine together with Chinese technicians and skilled workers completed the vast modernization project and successively ensured their commissioning.

The modernization of various production processes including mining, carriage and ore dressing made it possible to boost mineral production and thus contribute to economic development and the improvement of the standard of people’s living.

A ceremony for the completion of the modernization project at the Hyesan Youth Mine and the Hyesan-China Joint Venture Mineral Company was held on Monday.

Present there were Kang Min Chol, minister of Mining Industry, Kim Hi Thaek and officials concerned, Liu Hongcai, Chinese ambassador to the DPRK, and staff members of his embassy and Han Youhong, president of the Wanxiang Resources Co., Ltd. of China, and personages concerned.

Ri Mun Yong, manager of the Ryanggang Provincial Mining Complex, made an address to be followed by congratulatory and other speeches.

At the end of the ceremony, the participants went round production processes.

That day a reception was given in connection with the ceremony.

Although foreign investors and aid groups frequently build/ repair / upgrade North Korea’s state owned enterprises, it is rare that they are given any credit for their work in the official media.

Previous posts about the Hyesan Mine:
1. Poor electricity supply (2011-5-16)

3. Mine is flooded (2007-11-1)

4. China investing in mine (2007-4-12)

5. Chinese investing in mine (2006-12-24)

Additional mining information:
1. DPRK – China minerals for food program (2011-8-19)

2. DPRK looking to export rare earths (2011-7-23)

3. DPRK – China trade: 1995 – 2009 (2011-6-7)

4. Increase in DPRK’s mineral resources exports to China expected again for this year (2011-2-28)

5. DPRK – China mining deal (2011-2-6)

6. China expanding mining rights in DPRK (2010-1-15)

Pictured above (Google Earth): The Musan Mine, the DPRK’s largest.  See in Google Maps here.

According to the JoongAng Daily:

During his surprise May visit to China, North Korean leader Kim Jong-il secured free fertilizer and discounted food to help alleviate the impoverished country’s chronic food shortages.

A source in Beijing who monitors North Korea-China relations told the JoongAng Ilbo on Monday that Chinese officials agreed to provide 200,000 tons of fertilizer free of charge as well as 500,000 tons of corn at a discount in exchange for rights to North Korea’s abundant natural resources.

“When 200,000 tons of fertilizer is planted on North Korean soil, it can bring about a three-fold increase in the harvest,” the source said. “This can be the equivalent of giving 600,000 tons of food.”

The source added that China agreed to sell the 500,000 tons of corn for half of the international rate, which would be $30 per ton.

The corn, the source said, had already crossed the border into North Korea from northeastern China.

In exchange, Kim will allow China access to his country’s natural resources.

“The two parties agreed to participate in the extraction of buried rare earth minerals in Musan in Hamgyong Province,” the source said. “It’s quite a profit for China as it is thirsty for materials.”

North Korea is estimated to have around 20 million tons of rare earth minerals, which are vital in the production of high-tech goods.

The Beijing-based source said the agreement gives China the responsibility for the cost of building roads to transport the natural resources as well as lending equipment.

In exchange, North Korea will hand over 50 percent of the extracted rare earth minerals free of charge to China, with the rest to be sold to China at international market rates.

Meanwhile, other sources said that Kim also received a health checkup during his stay in China.

“When Kim Jong-il was visiting Yangzhou, he received a special examination from an oriental medicine doctor that the highest Chinese elite have gone to over the years,” a source familiar with North Korean issues said

The source added: “Kim Jong-il has never trusted China’s Western medicine. I heard from a Chinese official that Kim received an oriental medicine diagnosis by taking his pulse and that it did not involve drawing blood.”

Additional Information:

1. Here is a post linking to all the major DPRK food stories this year.

2. The media has reported on other DPRK food barter deals with Cambodia and Myanmar.

3. The role of the Musan Mine in DPRK-PRC relations has been quite interesting.  Here are previous posts on the mine.

Read the full story here:
North got fertilizer on Kim’s trip to China
JoongAng Daily
Chang Se-jeong
2011-8-19

Andrei Lankov provides some anecdotal evidence and a taxonomy of the DPRK’s growing entrepreneurial class (perhaps one of the most interesting and least reported aspects of the DPRK).  He also gives us a glimpse of how the North Korean version of the “infant industry” mindset can impede economic reform.

Here is a great blurb from the article in the Asia Times:

Who are they – the North Korean new rich? The upper crust of this social group consists of high-level officials. Some of them have gained their wealth through illegal means, but many have seen their business activities permitted and even actively encouraged by the government. Most of the money is made in foreign trade, with China being by the far the most significant partner.

Many North Korean companies, despite being technically owned by the state, are effectively private and are run by top officials and their relatives.

That said, these people are not that frequently seen on the streets of Pyongyang. They live in their own enclosed world, of which not much is known.

But if we go one or two steps down, we will encounter a very different type of North Korean entrepreneur – somebody who has made his or her (yes, surprising many of them are women) money more or less independent of the state.

Complete independence is not possible because every North Korean businessman has to pay officials just to make sure that they will not ask too many questions and turn a blind eye to activities that are still technically illegal. In many cases, North Korean entrepreneurs prefer to disguise their private operations under the cover of some state agency.

Take for example Pak. In his early 40s, he runs a truck company together with a few friends. The company has seven trucks and largely specializes in moving salt from salt ponds on the seacoast to major wholesale markets. The company employs a couple of dozen people, but officially it does not exist. On paper, all trucks are owned by state agencies and Pak’s employees are also officially registered as workers of state enterprises.

Pak bought used trucks in China, paying the Chinese owners with cash. He then took them to North Korea where he had the vehicles registered with various government agencies (army units are the best choice since military number plates give important advantages). Pak paid officials for their agreement to “adopt” the trucks. This is so common in the North that there is even an established rate of how much fake registration of a particular type of vehicle costs at which government agency.

Kim was a private owner of a gold mine. The gold mine was officially registered as a state enterprise. Technically, it was owned by a foreign trade company that in turn was managed by the financial department of the Party Central Committee. However, this was a legal fiction, pure and simple: Kim, once a mid-level police official, made some initial capital through bribes and smuggling, while his brother had made a minor fortune through selling counterfeit Western tobacco.

Then they used their money to grease the palms of bureaucrats, and they took over an old gold mine that had ceased operation in the 1980s. They restarted the small mine and hired workers, bought equipment and restarted operations. The gold dust was sold independently (and, strictly speaking, illegally) to Chinese traders.

The brothers agreed with the bureaucrats from the foreign trade company on how much money they should pay them roughly between 30-40% and the rest was used to run the business and enjoy life.

One step below we can see even humbler people like Ms Young, once an engineer at a state factory. In the mid-1990s, she began trading in second-hand Chinese dresses. By 2005 she was running a number of workshops that employed a few dozen women.

They made copies of Chinese garments using Chinese cloth, zippers and buttons. Some of the materials was smuggled across the border, while another part was purchased legally, mostly from a large market in the city of Raseon (a special economic zone which can be visited by Chinese merchants almost freely).

Interestingly, Ms Young technically remained an employee of a non-functioning state factory from which she was absent for months on end. She had to pay for the privilege of missing work and indoctrination sessions, deducting some $40 as her monthly “donation”. This is an impressive sum if compared with her official salary of merely US$2.

The North Korean new rich might occasionally feel insecure. They might be afraid of the state, because pretty much everything they do is in breach of some article of the North Korean criminal code. A serious breach indeed – technically any of the above described persons could be sent to face an execution squad at the moment the authorities change their mind.

And before we all get our hopes up that this emergent entrepreneurial class will eventually push the leadership to adopt economic reforms, Lankov reminds us how they could just as well serve to prolong the regime’s life:

Paradoxically, the long-term interests of the emerging North Korean business class might coincide with that of the Kim regime. Unlike normal people in the North, both groups – officials and entrepreneurs – have an interest in maintaining a separate North Korean state. Unification with the South is bound to spell disaster for both groups.

A person who is now running a couple of small shops might eventually, if North Korean capitalism continues uninterrupted growth, become an owner of a supermarket chain. If unification comes, he or she would be lucky to survive the competition with the South Korean retail giants and keep the few corner shops they had.

The full story is well worth reading here:
The secret world of North Korea’s new rich
Asia Times
Andrei Lankov
2011-8-10

Last week the Nautilus Institute posted a paper on the DPRK mining industry written by Choi Kyung-soo.  You can see the full report here.  A couple of the mine locations were incorrectly reported, so I thought I would correct the record (as I understand it), as well as offer coordinates and satellite imagery of all the facilities mentioned in the paper:

Sangnong Mine (상농광산)
40°36’0.38″N, 128°43’35.40″E
Sangnong Worker’s District, Hochon County, South Hamgyong Province. According to the paper, the mine is located in the “Dancheon district of Hamgyeongnam-do”.

Holdong Mine (홀동광산)
38°52’18.15″N, 126°26’21.98″E
Holdong Worker’s District, Yonsan County, North Hwanghae

Hyesan Youth Mine (해산청년광산)
41°21’52.36″N, 128° 9’28.35″E
Hyesan City, Ryanggang Province

Komdok (Geumdeok) Mine (검덕광산)
40°55’9.41″N, 128°49’13.76″E
Kumgol-dong, Tanchon, South Hamgyong Province

Taehung (Daeheung) Mine (대흥청년영웅광산)
41° 4’24.63″N, 128°51’4.68″E
Taehung-dong, Tancheon City, South Hamgyong

Musan Mine Complex (무산광산련합기업소)
42°14’16.22″N, 129°15’59.70″E
Musan, North Hamgyong

Oryong Mine (어룡광산?)
42°18’13.59″N, 129°22’51.70″E (estimated)
According to the paper, the Oryong Mine is near Ryungchon-ri (42°20’18.19″N, 129°24’39.48″E) in Hoeryong and opened in 2007. The satellite imagery of the area is from 2006 and shows an area under construction near the village. Another source claims this mine is located in Obong-dong, closer to the city of Hoeryong and is a uranium mine.

Jongchon Graphite Mine (정촌광산)
37°55’7.23″N, 126° 6’49.34″E
Jongchon-ri, Yonan County, South Hwanghae.  The paper claims the mine is located in “Jeongchon-gun”, which does not exist.

2.8 Jiktong Youth Coal Mine (2.8직동 청년 탄광)
39°29’42.68″N, 126° 2’3.50″E
Jiktong, Sunchon, South Pyongan

Kogonwon (Gogeonwon) Mine (고건원탄광)
42°40’25.03″N, 130°12’47.28″E
Kogonwon Worker’s District, Saepyol County, North Hamgyong Province

Apdong Mine (압동광산)
38°25’6.96″N, 127°21’8.17″E
Apdong-ri, Phyonggang County, Kangwon Province

Pictured above (Google Earth): Kumsong Tractor Plant (금성뜨락또르공장).  See in Google Maps here.

According to Reuters:

North Korea wants to import Cambodian rice to try to ease food shortages and has offered in return to provide machinery and expertise to develop Cambodia’s fledgling mining and energy sectors, a Cambodian official said on Wednesday.

A North Korean delegation led by Deputy Trade Minister Ri Myong-san visited Cambodia this week and the country is keen to import rice as soon as possible, said Ouch Borith, Cambodia’s secretary of state for foreign affairs.

It would help Cambodia develop its mining sector and invest in hydropower dams.

The amount of rice North Korea wanted to import was not disclosed, he said. Further specific details, such as how North Korea would fund its purchases and investments, were not available.

Cambodia is the world’s 15th biggest producer of rice and has set a target of exporting 1 million tonnes of the grain within the next four years.

According to the Economic Institute of Cambodia (EIC), an independent think tank, the country is expected to ship about 100,000 tonnes of milled rice this year, up from 50,000 tonnes in 2010. More goes to Vietnam to be milled and shipped from there.

North Korea is one of the world’s poorest countries and it rarely produces enough food to feed its 24 million people, often as a result of bad weather affecting harvests.

International sanctions over its nuclear weapons programme combined with neighbouring South Korea’s refusal to provide help have led to a substantial decline in food aid from its traditional donors.

Although Cambodia and North Korea have no trade ties, they have a diplomatic relationship. Cambodia’s former King Norodom Sihanouk has a house in North Korea and was once a special guest of the country’s late ruler, Kim Il-sung.

Ouch Borith said North Korea had offered to sell agricultural machinery to Cambodia, such as tractors, at cheaper prices than Western countries and wanted to provide expertise in developing mines.

“We have only small and medium-sized enterprises, not big industries, but Cambodia’s natural resources are huge, such as minerals, gold, iron and aluminum,” he told reporters.

“Our friends the Koreans said they would do studies and use their experience to help Cambodia make an industry from these natural resources.”

Agriculture forms the biggest part of Cambodia’s $10 billion economy, followed by tourism and garment manufacturing, but it is also trying to develop its energy and mining sectors.

Read the full story here:
N. Korea wants to buy Cambodian rice, invest in mining
Reuters
2011-7-27

According to Yonhap:

South and North Korea can drastically reduce the costs of their potential unification by taking advantage of natural and human resources in the North, a [South Korean] state-run institute said Tuesday.

North Korea has about 300 kinds of mineral resources, including magnesite, iron ore and rare earths, the Korea Institute for National Unification said in a report.

The potential value of North Korean mineral resources is as much as 6,984 trillion won (US$6.6 trillion), which could far outweigh the costs of unification, it said.

Experts estimate it could cost South Korea about US$1 trillion to $5 trillion to unify with the impoverished North, whose per capita income is about 5 percent the size of Asia’s fourth-largest economy.

Still, the institute said the benefits of unification could far outweigh its costs as the unified Korea could enjoy unimaginable economic synergy effects of their economic integration.

The think tank forecast the unification cost can be reduced to one-tenth of the estimates, as long as the North embraces the Chinese-style reform and opening policies.

The potential unification would marry South Korean capital and technology with cheap North Korean labor and rich natural resources, a prospect that could make the unified Korea an economic powerhouse, the institute said.

The institute also held out the prospect of building social infrastructure in North Korea and linking Russia’s gas pipeline to the peninsula as well as rebuilding houses in the North.

The report comes amid no clear signs that the two Koreas, divided for nearly six decades, could be reunited anytime soon.

…

Seoul has been working on the details of a special tax that would help finance the costs of potential unification. The move came as President Lee Myung-bak last year floated the idea of using taxpayers’ money to cushion the cost of unification.

North Korea, which has long suspected that Seoul could seek to absorb the North, has lashed out at the proposed unification tax.

Read the full story here:
Think tank says unification cost can be reduced to one-tenth of estimates
Yonhap
2011-7-26

UPDATE 2 (2011-7-23): The Choson Sinbo, a pro-Pyongyang news service based in Tokyo, has published an article on rare-earths development in the DPRK.  You can see a PDF of the original Korean article here.

According to coverage of the article in Bernama:

According to resource development senior officials, the amount of rare earth buried in the North amounts to approximately 20 million tonnes.

Estimates on the amount could rise fo the current digging work finds new burial grounds or more elements deeper in existing sites, said the Tokyo-based paper, which serves as a channel for Pyongyang to deliver messages.

So far, no exact amount of rare earth deposits in the reclusive communist nation has been confirmed. The largest burial deposit was located in North Pyeongan Province the paper said, while the rest of the elements were distributed in the southern and northern parts of the nation.

The North is working on using the rare earth minerals in manufacturing industries and is considering joint projects with other nations, Kim Heung-joo, vice chief of the state-run resource development agency, was quoted as saying by the paper.

The government will put limits on its output aqnd exports of rare earth materials, Kim added.

According to coverage in the AFP:

China has 90 million tonnes of rare earth deposits, Russia has 21 million tonnes while the United States has 14 million tonnes, the report said.

…

The largest deposit was discovered in North Pyongan Province, the paper said, while the rest of the elements were distributed in southern and northern parts of the country.

A senior North Korean official of the state natural resource development agency told the newspaper that North Korea was encouraging joint ventures with other countries to develop rare earth metals.

“It is important that these elements be processed in the country before being exported,” the official, Kim Hung-Ju, was quoted as saying by the Chosun Shinbo.

…

Currently, China produces more than 95 percent of the world’s rare earths — 17 elements critical to manufacturing everything from iPods to low-emission cars and missiles.

cdcd

UPDATE 1 (2011-6-23): Here is the story in KCNA:

DPRK Makes Full Use of Rare-earth Minerals

Pyongyang, June 20 (KCNA) — An effective utilization of rare-earth minerals is of weighty significance in economic growth, said an official of the Ministry of State Resource Development.

Kim Hung Ju, vice department director of the ministry, told KCNA the DPRK government has paid much effort to the exploitation and utilization of rare-earth minerals.

The country has large deposits of high-grade rare-earth minerals in west and east areas.

Prospecting work and mining have been launched in the areas and detailed exploration of new deposits is going on in a far-sighted way in areas with favorable mining conditions.

Meanwhile, scientific institutes have intensified researches in various rare-earth elements.

KCNA has previously boasted about rare-earths development.  See 2002-11-18, 2004-7-29, and 2010-4-9.

ORIGINAL POST (2011-6-23): According to Yonhap:

North Korea is showing a growing interest in developing rare earth minerals, in an apparent bid to earn much-needed cash from selling the materials abroad.

Rare earth minerals are compounds of rare earth metals, including cerium and neodymium, which are used as a crucial element in semiconductors, cars, computers and other advanced technology areas. Some types of rare earth materials can be used to build missiles.

In a report carried by North Korea’s official Korean Central News Agency (KCNA) earlier this week, the communist state said it is working on developing rare earth minerals for economic growth.

“An effective utilization of rare earth minerals is of weighty significance in economic growth,” the report said, quoting Kim Hung-ju, vice department director of the North’s Ministry of State Resource Development.

“The DPRK government has paid much effort to the exploitation and utilization of rare earth minerals,” it said, referring to North Korea by the acronym of its official name, the Democratic People’s Republic of Korea.

The report added that there are large deposits of high-grade rare earth minerals in the western and eastern parts of the country, where prospecting work and mining have already begun. It also said the rare earth elements are being studied in scientific institutes, while some of the research findings have already been introduced in economic sectors.

The article follows another KCNA report in July 2009 that described North Korean leader Kim Jong-il’s inspection of a semiconductor materials plant, saying he stressed the importance of producing more rare earth metals.

Until now, North Korea’s official media have mostly reported on the use of rare earth minerals in medicine and fertilizers. But its new focus on developing and using the materials appears to stem from the country’s interest in selling the metals for a high price on the international market, according to experts.

Rare earth elements are becoming increasingly expensive, as China, the world’s largest rare earth supplier, puts limits on its output and exports.

“It appears that North Korea only recently started taking an interest in rare earth materials,” said Choi Gyeong-su, head of the North Korea Resources Institute in Seoul. “The country does not have the technology to even determine the exact amount of its reserves, so it doesn’t seem likely anytime soon that the rare earth materials will be used to produce goods for the high-tech industry.”

Read the full story here:
N. Korea seen exploiting rare earth minerals for exports
Yonhap
2011-6-23

Imports from North Korea: Existing Rules,Implications of the KORUS FTA, and the Kaesong Industrial Complex
Mark E. Manyin, Coordinator, Jeanne J. Grimmett, Vivian C. Jones, Dick K. Nanto, Michaela D. Platzer, Dianne E. Rennack
Congressional Research Service (CRS)
June 2, 2011

Download the PDF here.  This publication has been added to the list of previous CRS reports on the DPRK here.

________

Trade with China 1995-2009
Nathaniel Aden
Nautilus Institute
June 7, 2011

View the paper here.  A link to this paper has been added to the DPRK Economic Statistics Page. The Nautilus Insitute has also posted links to some very interesting presentations from the 2010 DPRK Energy and Minerals Working Group.

________

[Book] The Contemporary North Korean Politics: History, Ideology, and Power System (현대 북한의 정치: 역사, 이념, 권력체계)
Jong Song-Jang (정성장)
More information TBA, but see here and here (Korean).

________

[Book] Architekturführer Pjöngjang (German: Pyongyang Architecture Guide)
Philipp Meuser
Order here at Amazon. More here and here.