Archive for the ‘Steel’ Category

DPRK trades steel for food

Tuesday, January 4th, 2011

According to the Daily NK:

North Korean trading companies operated by several organs have been selling steel to China in exchange for food.

One Chinese trader who does business with North Korea reported to The Daily NK on Monday, “China-based North Korean workers in charge of trading with China for Cheongusan Trading Company (under the Escort Command), say that this year Chosun is expanding the volume of its steel sales with China.”

The trader said, “In November last year, the analysis table of steel quality was delivered to us, and accordingly a contract has also already been signed.” He added, “In Chosun, the company is waiting for a permit to trade from an upper organ after having loaded materials on freight trains.”

He explained further, “For the price of the steel, Chosun has asked for rice, flour, noodles and also construction materials,” adding, “Food in bulk can enter Chosun.”

He explained that since North Korea is facing a serious lack of food, cement and other construction materials due to isolation from the international community, the country is trying to barter steel for food with China, from which the North is able to import.

Another trader in China verified the story, explaining, “Recently in Dandong, workers from Kangsung General Trading Company (under the General Staff) and other companies visited China for the purpose of selling steel.”

He added, “From now on, our company is going to do only steel trade with Chosun. We have decided not to do business in other things because our experiences have shown that there is no credit there.”

He went on, “North Korean trading units may have suffered from limitations put on items by Chinese companies,” going on, “If Chosun does not make a deal with us, they will starve to death this year. Even though they emphasize independent rehabilitation, when have they ever been rehabilitated?”

North Korea’s media frequently emphasizes the glorious production of “Juche” steel at Kim Chaek Steel Mill and Gangsun Steel Mill. Indeed, the Common Editorial issued on the first day of this year stated that, “By the power of the realization of the faith and model of Kim Steel (steel from Kim Chaek Steel Mill) and Juche steel, let’s have waves of victories.”

According to KOTRA, South Korea’s trade statistics agency, from January to October, 2010, North Korea exported steel to China worth $82 million.

One potentially positive aspect to this story is the recognition by the DPRK of the benefits of comparative advantage in trade.  Rather than aiming to produce all of its own food, the DPRK can instead specialize in steel production and trade for Chinese produced food.  Through trade, China and the DPRK could both consume more steel and food than if each country practiced autarchy.  Unfortunately the DPRK’s recent history has demonstrated a callous disregard for comparative advantage and has instead focused on increasing domestic food production and aid while limiting international trade.  Lets hope to see more rational policies prevail in the future.

Read the full story here:
North Korea Bartering Steel for Food
Daily NK
Im Jeong Jin


Download glitch fixed: North Korea Google Earth (version 11)

Thursday, August 14th, 2008

The most authoritative map of North Korea on Google Earth
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, markets, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the eleventh version.

Additions include: Mt. Paegun’s Ryonghung Temple and resort homes, Pyongyang’s Chongryu Restaurant, Swiss Development Agency (former UNDP office), Iranian Embassy, White Tiger Art Studio, KITC Store, Kumgangsan Store, Pyongyang Fried Chicken Restaurant, Kilju’s Pulp Factory (Paper), Kim Chaek Steel Mill, Chongjin Munitions Factory, Poogin Coal Mine, Ryongwun-ri cooperative farm, Thonggun Pavilion (Uiju), Chinju Temple (Yongbyon), Kim il Sung Revolutionary Museum (Pyongsong), Hamhung Zoo, Rajin electrified perimeter fence, Pyongsong market (North Korea’s largest), Sakju Recreation Center, Hoeryong Maternity Hospital, Sariwon Suwon reservoir (alleged site of US massacre), Sinpyong Resting Place, 700 Ridges Pavilion, Academy of Science, Hamhung Museum of the Revolutionary Activities of Comrade Kim Il Sung, South Hamgyong House of Culture, Hamhung Royal Villa, Pork Chop Hill, and Pyongyang’s Olympic torch route. Additional thanks go to Martyn Williams for expanding the electricity grid, particularly in Samjiyon, and various others who have contributed time improving this project since its launch.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.  Additionally, this file is getting large and may take some time to load.


POSCO looks north

Thursday, June 26th, 2008

Kim Dong-Jin, head of South Korean steel company POSCO‘s China branch, visited Pyongyang Tuesday for talks on purchasing more of the DPRK’s coal, iron ore, and other raw materials.

According to the AFP

POSCO, the world’s fourth largest steelmaker, has imported 200,000 tons of coal from North Korea every year.

South Korea’s investment in the North’s rich mineral resources has been sluggish due to the standoff over the North’s nuclear programme and mixed views on whether such investment can be profitable.

North Korea has promoted raw material exports as a means of generating much needed hard currency for some time.  Unfortunately, this development strategy will bring the fewest benefits to the North Korea people. Look at any oil-exporting country for comparison.  Raw materials exports generally enrich the politically connected—and workers, who in North Korea are unable to leave their jobs or negotiate their wages, generally (pun alert) get the shaft.

South Korean firms operating in the North, however, do tend to offer better working conditions than North Korean or Chinese firms.  If POSCO launches operations in North Korea, hopefully public pressure and the profit motive will see an increase in productivity, wages, and working conditions for the DPRK’s miners.

South Korea apparently also operates a graphite mine in North Korea.  If anyone has any information on this, please send it my way.

Read the full story here:
POSCO eyes NKorea raw materials


South to Send Steel Plates to North

Sunday, December 9th, 2007

Korea Times
Yoon Won-sup

South Korea will provide 5,100 tons of steel plates to North Korea on Dec. 17 in a six-party deal that involves the provision of energy or alternatives to North Korea in exchange for the North’s disablement of its nuclear facilities by year’s-end, government officials said Sunday.

U.S. President George W. Bush sent a personal letter to North Korean leader Kim Jong-il last week urging him to keep his word on the disablement and declaration by Dec. 31.

The shipment is the first alternative to oil sent to the North under the agreement, although participants in the six-way talks have been taking turns to provide 50,000 tons of heavy fuel oil to the North every month recently.


Google Earth North Korea (version 6)

Sunday, November 11th, 2007

The most authoritative map of North Korea on Google Earth
North Korea Uncovered: Version 6
Download it here

kissquare.JPGThis map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the sixth version.

Additions to the newest version of North Korea Uncovered include: Alleged Syrian nuclear site (before and after bombing), Majon beach resort, electricity grid expansion, Runga Island in Pyongyang, Mt. Ryongak, Yongbyon historical fort walls, Suyang Fort walls and waterfall in Haeju, Kaechon-Lake Taesong water project, Paekma-Cholsan waterway, Yachts (3), and Hyesan Youth Copper Mine.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.


A Year in Waiting for Steel Plates

Wednesday, September 19th, 2007

Daily NK
Kim Chan Ku
Institute for Far Eastern Studies

(UPDATE: On Oct. 23, [2008] the State Department blacklisted two North Korean companies, Korea Mining Development Corp. and Korea Taesong Trading Co., for violating U.S. bans on the sale of equipment used in building missiles or other weapons of mass destruction to Iran and Syria. Citation: “North Korean Plane Was Grounded at U.S. Request “, Wall Street Journal, Jay Solomon, 11/1/2008 )

Kimchaek boasts one of the largest steel factories and fishing ports in North Korea especially that of Daesung General Company’s east coast headquarters.

However, at once-famous seaport everything including ship, freezer, packing factory was obsolete and rust. Most of the Soviet-built machines in factories were at least 20 to 30 years old. And there were neither enough spare parts to fix machinery nor job orders, so the factories had stood still for a long time.

I consulted with local North Korean officials in Kimchaek and reached an agreement: ship repair dock will be built in Kimchaek, steel products necessary for building floating dock would be Daesung General Company’s responsibility, and other issues concerning building land factory and management of joint-stock company would be decided in Pyongyang.

Also we finished negotiation over fish export and Pollack fishing by trawler. Thus basic problems were solved.

I came back to Pyongyang on September 30. And another businessperson, Mr. Kim Sung Chan of Pamco Trading, told me his will to invest fifty percent of the capital.

All of sudden, Daesung General Company notified us that among our previous agreements, only the site of repair dock was decided and asked us to wait, promising final decision would delivered in one month.

To start first phase of building factories, it was most critical to have steel products ordered from state. We believed the promise from the North (to take responsibility of providing iron plates) and returned to America.  However, after two month had passed, there was no news from Pyongyang. Curious, I called back and was told to visit North Korea as soon as possible.

On December 9, 1989 I arrived at Sun An International Airport. In Pyongyang, vice president of Daesung General Company (president was absent, traveling abroad) said “we asked the state for iron plates, but production plan was omitted in 1990 fiscal year so one more year of waiting is inevitable, or send us steel plates.”

In other words, our business plan was totally embarrassed and we had to make a new one.  Again, I conferred with Mr. Kim and found out a solution, which was to buy a used floating dock from an American port. There was a fifty-year old used floating dock in Miami, Florida that we were able to buy. If repaired, it seemed available for another twenty years.

Finally, two obstacles had our plan failed. Firstly, it was supposed take at least three month and five hundred thousands US dollars (twice the price of dock) to convey the floating dock by sea. Secondly, (and more fundamental problem) the US government would not permit to sell the dock to North Korea. We were not even possible to transport the dock to Hong Kong and then to North Korea.

Because acquisition of required steel plate for floating dock was failed ultimately, the daring business had gone nowhere. Wasted much money and more than a year of time, I was so depressed at that time[.]


Kim Cheak Iron and Steel Complex operations suspended

Tuesday, July 11th, 2006

From the Daily NK:

Workers secretively selling iron pigs in order to live

It has been discovered, that the most of Kim Cheak Iron and Steel Complex Operations in Chongjin, North Korea are in a crisis of suspension.

In a recent newsletter, Good Friends, a support organization for North Korea explained that “Equipment had severely deteriorated and original resources such as coal and coxtan are not supplied.”

As a result the rationing, workers meagerly received was ceased and living conditions became even harder.

Kim Cheak Iron and Steel Complex Operations has approximately 50,000 workers and is a special complex where people are stationed for 3 months for discipline and reform. However as factory operations decline, a situation is occurring where most of the workers steal the iron pigs and sell them for a living.

Men cannot really come forward to do this work and so wives are taking direct action. In order to obtain the iron pigs, a river in front of the complex 100m in width, must be crossed numerously throughout the night.

The newsletter reported that the iron pigs sell for 200~240won per 1kg, and if you are having a lucky day and obtain 80kg, an income of about 16,000~20,000won($5.3~6.7) can be earned in one night.

If protection or inspection officers are bribed, more iron pigs can be acquired by transporting them by bicycle. But, even if you manage to cross the dangerous river at high tide it is easy for other protection or inspection officers to catch you.

The newsletter reported that if a person is caught 1~2 times, the penalty is a fine and if caught more than 2~3 times, forceful punishment in addition to a fine is given. However, it is unlikely that this larcenous act will stop as selling stolen iron pigs is a way of earning money, even if one is caught and has to pay a fine.


Minerals, railways draw China to North Korea

Friday, November 18th, 2005

From the Asia Times:
By Michael Rank

Chinese companies are venturing into North Korea, and both countries hope to reap the rewards. North Korea’s heavy industry is in a desperate state, but Pyongyang is hoping that Chinese investment will come to its rescue, while China sees the North as a convenient source of minerals, from coal to gold.

China’s increasing investment also means that North Korea is casting off its rigid juche, or self-sufficiency, policy and overcoming its deep historical suspicion of its giant northern neighbor.

Border trade in consumer items from televisions to beer has been booming since the 1990s, but now the focus is turning to the industrial sector. Deals are being reached on mines, railways and leasing a North Korean port to a Chinese company, but North Korea is notoriously secretive and few details have been published outside China. The deals include an agreement to “completely open” North Korea’s railways to a Hong Kong millionaire, as well as moves to revive ailing coal, iron and gold mines.

Tumen-Chongjin rail link rumored
Hong Kong businessman Qian Haomin is reported to have reached a US$3 billion deal with North Korea that also involves the Chinese Railways Ministry building a new rail link between the Chinese border city of Tumen and the North Korean port of Chongjin. The agreement marks an end to long-running tension between the Chinese and North Korean state railway authorities over North Korea’s retention of up to 2,000 Chinese goods wagons and reluctance to repay loans.

The Hong Kong news magazine Yazhou Zhoukan recently reported that these issues had been resolved and that Qian’s grandly named company Hong Kong International has agreed to provide the North Koreans with 500 to 1,000 freight wagons. Qian told the magazine that “after six months of effort, there are now hopes of solving the railway transport bottleneck between China and North Korea”, and this would help to integrate the economy of the entire northeast Asian region.

Qian’s ambitions are not limited to railways. Not only has he expressed interest in investing in a North Korean coal mine, but Yazhou Zhoukan also reported that he hopes to set up a special economic zone in the North Korean border city of Sinuiju. He has clearly not been deterred by the unhappy case of Yang Bin, a Dutch-Chinese multi-millionaire who was made head of a similar development zone in 2002. Before Yang could take up his post, he was arrested by the Chinese authorities for tax evasion and other economic crimes and jailed for 18 years.

Qian, aged 41, is originally from the southern Chinese province of Guangdong and moved to Hong Kong in 1993. He has been involved in North Korea since the early 1990s, and has apparently established a fruitful relationship with Prime Minister Pak Pong-ju. He has said that “to invest in North Korea has been my dream” because three of his uncles fought in the Korean war; one was killed and one was seriously wounded. The Hong Kong investor has signed a plastics, tire and battery recycling agreement with North Korea and has expressed interest in investing in the country’s largest anthracite coal mine, which now produces only 1 million tons a year, compared with 3 million tons at its peak.

Tonghua Steel looks North
Meanwhile, state-owned Tonghua Steel or Tonggang, based in the northeastern city of Tonghua, expects to sign a 7 billion yuan ($865 million), 50-year exploration rights deal with the Musan iron ore mine, said to be North Korea’s largest iron deposit. Tonggang, Jilin province’s largest steelmaker, hopes to receive 10 million tons of iron ore a year from Musan as part of its plans to increase steel production from a projected 5.5 million tons in 2007 to 10 million tons in 2010.

The planned deal reflects China’s immense and growing appetite for steel. Although the country already produces 30% of global output, it is heavily reliant on imports and is concerned about rising prices. A Jilin provincial trade official said importing iron ore from North Korea was attractive because of low transport costs, which would increase Tonghua’s competitiveness.

Tonggang officials say they expect the deal to be signed soon, and that of the 7 billion yuan (US$866.1 million) pledged, 2 billion yuan will be invested in transport and power lines. Company president An Fengcheng said agreement had already been reached with China Development Bank on 800 million yuan worth of soft loans and 1.6 billion yuan of hard loans, while “the remaining investment will come in in stages”.

Rajin deal to give China Sea of Japan access
China’s export boom is one of the great economic success stories of the past 25 years, but it is constrained by a lack of suitable ports. In particular, the country lacks a port on the Sea of Japan, but after attempted deals with Russia came to nought, the inland Chinese border city of Hunchun has reached an agreement for a 50-year lease with the nearby North Korean port of Rajin.

The ceding of Rajin, an ice-free port with a handling capacity of 3 million tons a year, will give access to the sea to inland areas of northeast China which, at present, must send freight long distances by rail to the port of Dalian on the Bohai gulf. The agreement also provides for the construction of a 5-10 square kilometer industrial zone and a 67 kilometer highway, and envisages that the Rajin area will become a processing zone for Chinese goods which will then be re-exported to southeast China.

A Hunchun economic official stressed that the leasing of the port is “a business deal and not a government deal”. The South China Morning Post reported from Hunchun that the man behind the deal is Fan Yingsheng, a property developer from Hunan province who put up half the initial capital investment of 60 million euros (US$70 million). The sum could not be denominated in dollars for political reasons.

The paper quoted the United Nations Development Program as saying this sum would only be enough to build the road to Rajin, and far more would be needed to rejuvenate the port. The deadline for final agreement is December 30, 2006, and it remains to be seen if a final deal will be reached in time.

An unusually frank North Korean trade official noted the possible pitfalls as well as the advantages of such deals. Kim Myong-chol, head of the Korean Council for the Promotion of Foreign Trade, said the deals would have to involve importing “highly advanced technology and equipment”, and added: “These agreements are not easy to put into actual practice and can run into many problems so far as funding and bilateral cooperation are concerned.”

“Because the amount of money involved in these cooperative projects is quite large and [North] Korea will be investing ports, roads, etc, there are rather great risks in such investment, and in addition because the domestic Korean economy and its policies, laws and regulations, etc, are unclear, many problems are likely to arise in carrying out these plans,” Kim told a Chinese website.

Coal and gold
Such concerns may have been in the mind of the president of China Minmetals Corp, Zhou Zhongshu, when he signed “an agreement on setting up a joint venture in the coal sector of the DPRK” [North Korea]. The deal was signed in October when Chinese deputy premier Wu Yi visited Pyongyang, and is said to be the first of its kind. North Korean Vice Minister for Foreign Trade Ri Ryong-nam urged the Chinese side to “provide advanced technology and set up a good model for other joint ventures and cooperation between the two countries”.

North Korea also has substantial gold deposits, and a Chinese company plans to invest in a “semi-paralyzed” North Korean gold mine and refine the metal at its base in Zhaoyuan in Shandong province. Guoda Gold Co Ltd reached a preliminary agreement last year with Sangnongsan gold mine, which is said to have gold deposits totaling at least 150 tons.

Guoda deputy manager Lin Deming said his company was attracted to North Korea because of low labor, energy and transport costs as well as the “highly favorable” investment terms offered, but gave no details. Chinese investment in North Korea is certainly increasing, but final agreement on a number of deals has not yet been reached, and political factors such as uncertainty over Pyongyang’s nuclear weapons program may well discourage Chinese companies from moving too fast.

Michael Rank is a former Reuters correspondent in China, now working in London.