Kim Jong-Il, the Dear Leader of North Korea is slowly dying of pancreatic cancer according to South Korean news reports mentioned in a www.breakingnews.com report. The article makes the case for re-unification between north and south, covering some of the advantages ” low cost labor for the south, access to minerals and control of the nuclear weapons the north is widely believed to have developed. It also explores many of the challenges, not least of which is cultural (ask the Germans) and economic. The cost has been estimated at $2-3 trillion by the World Bank.
On balance of course the benefit to the starving and impoverished north would make even such a monumental enterprise worthwhile but our interest was (typically) stirred by the prospect of access to previously little exploited metals resources. Just what does North Korea produce and what lies untapped under its 46,500 square miles?
North Korea has been a significant producer of iron ore, anthracite coal, lead, zinc and magnesite, a magnesium bearing mineral used in ceramics and steel making. Iron ore production has been expanded this decade with help from China where most of the ore was exported. According to the USGS, Tonghua Iron & Steel of Jilin Province, China, has signed a 50 year exploration deal to develop the Musan ore body. With estimated reserves of between 3 and 7 billion metric tons, Musan is reported to be the largest iron ore reserve in Asia, although current production is estimated by the USGS as just 7 mn tons per annum. Steel production should be much higher than the 5.5 mn tons produced in 2007. The country is rich in coal but due to underinvestment, produces only some 25 mn tons per annum much of which goes into power production.
Fears have been raised about the level of involvement of Chinese firms in North Korea’s mineral wealth. According to North Korea Economy Watch, since 2002 China has invested more than 70% of its total investment in North Korea, in iron, copper and molybdenum mines dominating the sector.
Zinc and lead remain the principal non ferrous metals refined and exported by the country although neither are LME deliverable brands. Some 80 kt tons per annum of zinc are produced from ore bodies grading nearly 5% Zn. China is a major importer of lead concentrates from North Korea but refined metal numbers appear low.
In the late 80’s and early 90’s a joint venture with Japan and China was set up to mine monazite, a rich source of rare earth metals, with some $20m of finds from the International Trading Corporation of Japan. The plant, with a capacity of 1,500 tons per annum officially ceased operations in 1997 but in 2002 was said to still be in operation and employing over 100 technicians. Almost certainly the product is finding its way to China.
China’s growing involvement in mineral extraction may be one reason why they have been so reluctant to get involved with reconciliation with the west, the current status quo suites them rather well.