Here come North Korean minerals

Posted on : 2007-05-09 14:11 KST Modified on : 2019-10-19 20:29 KST

South Korea and North Korea held working-level talks to cooperate on light manufacturing and development of underground resources on May 2-4 in the Northern city of Kaesong (Gaeseong) During the talks, the two sides agreed to conduct a joint study on three mines in the North - Komdok (Geomdeok), Ryongyang (Yongyang) and Taehung (Daeheung) - from June 26 to July 6.

This was in response to South Korea 's June 27 decision to provide 500 tons of polyester fiber to North Korea, essentially taking the first step to utilizing each other 's resources. The move came 22 months after the two Koreas agreed on the concept at their 10th meeting on economic cooperation in July 2005.

North Korean mines are believed to hold about 360 varieties of minerals, according to the Korea Resources Corp. In particular, some 40 mineral resources, including coal, iron ore, zinc and magnesite, are estimated to be economically competitive. As of 2005, North Korea generated 24 percent of its total exports, or US$243.67 million, from mineral resources.

Despite its reserves, North Korea's natural resources have barely been developed. Production at North Korean mines is believed to be between 50 to 20 percent of what it was in the 1980s due to a lack of electricity and fuels, aged production facilities and equipment, and difficulty in buying new equipment because of a shortage in foreign-currency reserves. The difficulty prompted North Korea to propose the United States to invest into a mine in Tanchon (Dancheon) in 1994, back when the two sides were negotiating the "agreed framework" on denuclearization.

It is easy to see why North Korea has invited South Korean investors to get involved. South Korea is 99.7 percent imports dependent for its metal needs. To stabilize its supply of minerals, South Korea is turning its eye to North Korea.

South Korea is particularly eyeing the North's magnesite and zinc. South Korea imports all of what it uses of both, and the North already has a high production capacity for them. As of 2005, South Korea imports about $1.8 million worth of magnesite, some $40.5 million worth of magnesia clinker and some $570 million worth of zinc.

Three mines in North Hamgyong (Hamgyeong) Province - Komdok, Ryongyang and Taehung - are believed to be some of the world ' s biggest mines for magnesite and zinc. Net reserves of magnesite in the North were estimated to be 6.5 billion tons, accounting for 40 percent to 50 percent of worldwide reserves. Reserves at a mine in Ryongyang Province were 3.6 billion tons, in what some officials say has to be the world's largest magnesite mine. A mine in Taehung is believed to have several billion tons of the mineral. Zinc reserves at a mine in Komduk amount to about 300 million tons.

The three mines are closely located each other. Infrastructure costs could be reduced because there is a railway from the area to the port at Tanchon. Access to electricity and water is believed to be relatively easy because the three mines are also close to the Hochon (Heocheon) River), the Jangjin River and the Pujon (Bujeon) River.

However, economic viability can only be determined after reviewing North Korea's data on the three mines. The North is scheduled to submit the data on facility and equipment in the mines by June 12. Kim Yeong-yun, a senior research at the Korea Institute for National Unification, said, "The cost of developing those resources will be reflected in future agreements once costs are determined."

"South Korea needs to demand of the North that it will create an environment in which the South can take the lead in development," Kim added.

Please direct questions or comments to [englishhani@hani.co.kr]

Most viewed articles