News / Economy

North Korea's Rare Earths Could be Game Changer

Daniel Schearf
A recent geological study indicates North Korea could hold some 216 million tons of rare earths, minerals used in electronics such as smartphones and high definition televisions.
 
If verified, the discovery would more than double global known sources and be six times the reserves in China, the market leader.
 
British Islands-based private equity firm SRE Minerals Limited announced the study results in December, along with a 25-year deal to develop the deposits in Jongju, northwest of the capital, Pyongyang.
 
The joint venture, called Pacific Century Rare Earth Mineral Limited, is with state-owned Korea Natural Resources Trading Corporation.
 
The potential bonanza could offer the isolated and impoverished North a game-changing stake in the rare earths industry.
 
North Korean rare earths challenge China’s monopoly?
 
Scott Bruce, an associate of the East-West Center in Hawaii, said the deposits could not only shake China's hold on the market but also improve relations with Japan and South Korea, two of the biggest importers of the minerals.
 
China's near monopoly on rare earths, 90 percent of the world market, led prices to skyrocket when Tokyo accused Beijing of capping exports because of political tensions.
 
Prices have since dropped to more sustainable levels, but Beijing's control of the market has spurred a search for other sources.
 
“If North Korea was able to launch this program and develop its own industry,” Bruce said, “it could potentially leverage them to integrate with its neighbors and no longer be the black hole in the center of northeast Asia.”
 
North Korea's mineral wealth has for years been estimated to be worth trillions of dollars. The Jongju venture could be the first to exploit its rare earths.
 
However, enormous political hurdles stand in the way of the potential benefits.
 
Foreign firms face steep risks in North Korean ventures
 
Pyongyang has no formal relations with Tokyo and remains, technically, at war with Seoul. Both countries restrict trade and investment with North Korea because of its frequent provocations and pursuit of nuclear weapons.
 
North Korea's controlled economy, isolation, and sanctions have left its infrastructure in tatters with poor roads and unreliable energy supplies. Bruce said foreign mining companies would have to factor in those costs, along with the political risk.
 
“The last company that really went in big in the North was of course South Koreans during the Sunshine Policy,” he said. “And you had KORES, the Korean resource group, that invested heavily in a few joint mineral projects in the north. And, then, when the political relationship between North and South deteriorated,” he continued, “they lost any word of what was happening in those mines.”
 
As part of the joint venture, Pacific Century will build a rare earths processing plant in Jongju. North Korea's poor working conditions, including forced labor, could subject Pacific Century to rights abuse charges.
 
Pacific Century has said it is an ethical mining company with multiple procedural controls in place to ensure it adheres to international standards.
 
Pyongyang more interested in survival than development
 
Leonid Petrov, a Korean studies researcher at the Australian National Studies University's College of Asia and the Pacific, said Pyongyang has no interest in making the necessary reforms to sustain foreign investment in its economy.
 
“The two conditions of its survival, the constant crisis and the isolation which are needed for the maintenance of the regime, would be jeopardized,” he said. “Something like that already happened during the ten years of Sunshine Policy when South Korea-North Korea started trading, started cooperating. Some exchange was going on. But soon they realized for South Korea it was too expensive. For North Korea,” he said, “it was too dangerous.”
 
In an e-mail interview with VOA, Pacific Century's Director of Operations, Louis Schurmann, said the company plans for its North Korean venture to solve the rare earths market problems.
 
However, Petrov argues that Pyongyang would not risk change by further opening its mining sector and would likely continue selling minerals to China to earn foreign currency for the elites.
 
“I believe that rare earth metals will remain in control by the Chinese government and the Chinese economic clout will continue protecting North Korea both militarily, logistically.” Also, Petrov said, “soft power from China is not going to betray the regime, which is used by China as a buffer state. So, this newly discovered mineral is going to buttress the regime.”
 
Rare earths seen as helping to bankroll a reunified Korea
 
The East-West Center’s Bruce said South Korea opposes mining the minerals because they could be a valuable resource to help bankroll a future re-unification of the Korean peninsula.
 
“The extent to which they're being packaged and sold off now is of great concern to the South,” Bruce said, “because it's effectively taking the economic benefit of re-absorbing the North, if they're able to do that at some point, and selling it off now.”
 
However, there are signs Pyongyang's policy on selling minerals on the cheap to China could change.
 
Petrov said the December execution of Jang Song Thaek, Kim Jong Un's uncle and second in command, demonstrated disagreement within the leadership on concessions to foreign countries.
 
“If you look at the list of accusations and charges against Jang Song Thaek,” he said, “you will see that one point was actually addressing the issue of selling natural resources to a foreign country too cheaply.”
 
Size of rare earth discovery questioned
 
Other analysts question the estimated size of the deposit.
 
Choi Kyung-soo, president of the North Korea Resource Institute in Seoul, is among the skeptics.
 
“If you look at what SRE Minerals announced, it seems like North Korea has the largest amount of rare earths in the world,” he said. “But I do not think the amount is that large.”
 
The U.S. Geological Survey, which compiles data on sources of minerals, said there was insufficient information to comment on the significance of the announcement.
 
SRE acknowledges the rare earth estimates are conceptual and not yet proven. It plans, through its joint venture, to take further samples in April to better assess North Korea's rare earth potential.
 
VOA Seoul Bureau Producer Youmi Kim contributed to this report.

You May Like

US Imposes Sanctions on Alleged Honduran Drug Gang

Treasury department alleges Los Valles group is responsible for smuggling tens of thousands of kilograms of cocaine into US each month More

At 91, Marvel Creator Stan Lee Continues to Expand his Universe

Company's chief emeritus hopes to interest new generation of children in superheroes of all shapes and sizes by publishing content across multiple media platforms More

Photogallery New Drug Protects Against Virus in Ebola Family

Study by researchers at University of Texas Medical Branch, Tekmira Pharmaceuticals is first looking at drug's effectiveness after onset of symptoms More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
African Media Tries to Educate Public About Ebolai
X
George Putic
August 20, 2014 8:57 PM
While the Ebola epidemic continues to claim lives in West Africa, information technology specialists, together with radio and TV reporters, are battling misinformation and prejudice about the disease - using social media to educate the public about the deadly virus. VOA’s George Putic has more.
Video

Video African Media Tries to Educate Public About Ebola

While the Ebola epidemic continues to claim lives in West Africa, information technology specialists, together with radio and TV reporters, are battling misinformation and prejudice about the disease - using social media to educate the public about the deadly virus. VOA’s George Putic has more.
Video

Video Ferguson Calls for Justice as Anger, Violence Grips Community

Violence, anger and frustration continue to grip the small St. Louis suburb of Ferguson, Missouri. Protests broke out after a white police officer fatally shot an unarmed black teenager on August 9. The case has sparked outrage around the nation and prompted the White House to send U.S. Attorney Eric Holder to the small community of just over 20,000 people. VOA’s Mary Alice Salinas has more from Ferguson.
Video

Video Beheading Of US Journalist Breeds Outrage

U.S. and British authorities have launched an investigation into an Islamic State video showing the beheading of kidnapped American journalist James Foley by a militant with a British accent. The extremist group, which posted the video on the Internet Tuesday, said the murder was revenge for U.S. airstrikes on militant positions in Iraq - and has threatened to execute another American journalist it is holding. Henry Ridgwell has more from London.
Video

Video Family Robots - The Next Big Thing?

Robots that can help us with daily chores like cooking and cleaning are a long way off, but automatons that serve as family companions may be much closer. Researchers in the United States, France, Japan and other countries are racing to build robots that can entertain and perform some simpler tasks for us. VOA’s George Putic reports.
Video

Video In Ukraine, Fear and Distrust Remain Where Fighting has Stopped

As the Ukrainian military reclaims control of eastern cities from pro-Russian separatists, residents are getting a chance to rebuild their lives. VOA's Gabe Joselow reports from the town of Kramatorsk in Donetsk province, where a sense of fear is still in the air, and distrust of the government in Kyiv still runs deep.
Video

Video Five Patients Given Experimental Ebola Drug Said to Be Improving

The World Health Organization has approved the use of experimental treatments for Ebola patients in West Africa. The Ebola outbreak there is unprecedented, the disease deadly. The number of people who have died from Ebola has surpassed 1,200. VOA's Carol Pearson reports on the ethical considerations of allowing experimental drugs to be used.
Video

Video China Targets Overseas Assets of Corrupt Officials

As China presses forward with its anti-graft effort, authorities are targeting corrupt officials who have sent family members and assets overseas. The efforts have stirred up a debate at home on exactly how many officials take that route and how likely it is they will be caught. Rebecca Valli has this report.
Video

Video Leading The Fight Against Islamic State, Kurds Question Iraqi Future

Western countries including the United States have begun arming the Kurdish Peshmerga forces in northern Iraq to aid their battle against extremist Sunni militants from the Islamic State. But there are concerns that a heavily-armed Kurdistan Regional Government, or KRG, might seek to declare independence and cause the break-up of the Iraqi state. As Henry Ridgwell reports from London, the KRG says it will only seek greater autonomy from Baghdad.
Video

Video In Rural Kenya, Pressure Builds Against Female Circumcision

In some Kenyan communities, female genital mutilation remains a rite of passage. But activists are pushing back, with education for girls and with threats of punishment those who perform the circumcision. Mohammed Yusuf looks at the practice in the rural eastern community of Tharaka-Nithi.

AppleAndroid

World Currencies

EUR
USD
0.7492
JPY
USD
102.27
GBP
USD
0.5960
CAD
USD
1.0950
INR
USD
61.300

Rates may not be current.