REPORT

North Korea seeking foreign direct investment in mining, energy sector: website

Funds will go towards reconstruction and modernization of facilities at the Anju Area Mining Complex.

A North Korean organization is seeking foreign capital to help enhance the productivity of a coal-mining complex and begin operating a thermal power station, among other plans, a DPRK state-run website revealed this week. The investment proposal, released by the Ministry of External Economic Relations-run Korea Foreign Investment and Economic Cooperation Committee, will see funds go towards the reconstruction and modernization of the Chongnam Shaft of the Anju Area Mining Complex in South Pyongan Province. Through the investment, the committee aims to increase annual coal production capacity, as well as complete a set of thermal power generating facilities — though the precise amount of money needed is not stated.

The Anju Area Mining Complex also hopes to use the thermoelectric power plant to fuel households and to “produce gasoline, diesel oil” using “the high caloric coal” abundant in the area. The construction of a coal preparation plant “with an annual capacity of several million tons” will be also covered by the foreign funds, the committee said in an English-language plan, in investment which can take the form of either an equity or a contractual joint venture.

The DPRK’s power problems are well-documented, with leader Kim Jong Un in his New Year’s speech emphasizing the importance of the coal-mining industry as a “primary front in developing the self-supporting economy” and in overcoming the country’s electricity shortages. Kim urged the entire country to provide support to coal mines and take “stringent steps” to provide facilities and materials needed for coal production and favorable conditions for miners. Following the leader’s orders, ruling party organ the Rodong Sinmun earlier this month reported that workers in the coal-mining industry had exceeded planned mining output in January. The miners, the newspaper reported, had achieved 102.9 percent of their production quota as of January 29, as coal-mining complexes, including in Anju, “vigorously engaged in the struggle to increase production.”

The DPRK is also seeking €12 million for the Ssangryong Mine in Kimchaek City I Photo: Foreign Trade of DPR of Korea

But while plans for investment in the Anju Area Mining Complex do not list the amount of funds the new project needs to get off the ground, another bid listed on the trade website this week hopes to bring in €12 million (USD$13.6 million) in investments to modernize the Ssangryong Mine in Kimchaek City, North Hamgyong Province. A Korean-language bid says the purpose of the investment is to produce apatite concentrate, required to manufacture phosphate fertilizer.

The production of magnetic iron concentrate is another goal of the project, with funds set to pay for a “complete set of mining and concentrating facilities including excavator, automobile, bulldozer, and winch.” Like the previous proposal, the North says investment can take the form of either an equity or contractual joint venture, currently prohibited under UN Security Council Resolution 2375 adopted in September 2017. The production of magnetic iron concentrate is linked to the development of the metallurgical industry — also singled out for praise by the DPRK leader in his New Year speech as one of the country’s “two pillars in economic construction.”

Kim Jong Un urged the industry to lower the costs of production “as much as possible” and set out a plan to secure supplies of iron ore, refractories, and ferroalloys to increase production capacity. The building of the phosphatic factory was also cited as part of broader plans to develop the DPRK chemical industry. Plans for the Anju Area Mining Complex and Ssangryong Mine come amid a slew of bids by North Korean organizations hoping to attract foreign investment. January saw the same Ministry of External Economic Relations-run website release plans for €43 million (USD$48 million) in investment towards the renovation and modernization of the DPRK’s “electric power sector.” A set of proposals uploaded in December, too, sought over €6.8 million (USD$7.7 million) in foreign direct investment in a range of projects across the domestic economy.

One North Korea watcher said the investment projects were noteworthy given their focus on satisfying domestic needs. “The focus on energy and agricultural supplies is very much in keeping with North Korean developmental priorities,” Peter Ward, a writer and researcher on the North Korean economy, told NK News. “Energy was a major focus of Kim Jong Un’s New Year’s Address. Fertilizer and other agricultural supplies present a major bottleneck in North Korea’s food system, so the emphasis on improving supply of essential inputs makes sense.”

https://www.nknews.org/2019/02/north-korea-seeking-foreign-direct-investment-in-mining-energy-sector-website/

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