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

    No More Space Race for US, Rivalry Gives Way to Collaboration

    What began as a struggle for dominance in space between two world powers has changed entirely to one of joint efforts

    Beijing Warns Critics Over South China Sea Dispute

    Official warns critics that the more they challenge China's position regarding disputed territories in one of world’s busiest waterways, the more it will push back

    Move Over Millennials, Here Comes iGeneration

    How the first generation to be born, almost literally, with a smartphone in hand, might change America

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Image Recognition Market Seen Doubling by 2020i
    X
    Ramon Taylor
    May 05, 2016 10:05 PM
    From auto tagging on Facebook to self-driving cars, image recognition technology as it exists today is still in its beginning phases, experts say — and will soon change the way users and corporations interact with the physical world. VOA's Ramon Taylor reports.
    Video

    Video Image Recognition Market Seen Doubling by 2020

    From auto tagging on Facebook to self-driving cars, image recognition technology as it exists today is still in its beginning phases, experts say — and will soon change the way users and corporations interact with the physical world. VOA's Ramon Taylor reports.
    Video

    Video Child Labor in Afghanistan Remains a Problem

    With war still raging in Afghanistan, the country also faces the problem of child labor as families put their school-age children to work to help make ends meet. But, thanks to VOA's Afghan Service, two families whose children had been working in a brick-making factory - to earn their livings and pay off family debts - now have a new lease on life. Zabihullah Ghazi reports.
    Video

    Video Kurdish Troops Recount Firefight Which Killed US Navy SEAL

    A U.S. Navy SEAL killed Tuesday, when Islamic State fighters punched through Kurdish lines in northern Iraq, was part of a quick reaction force sent to extract other U.S. troops trapped by the surprise offensive. VOA's Kawa Omar spoke with Kurdish troops in the town of Telskuf -- the scene of what U.S. officials called a "dynamic firefight."
    Video

    Video British Lawmakers Warn EU Exit Talks Could Last A Decade

    Leaving the European Union would mean difficult negotiations that could take years to complete, according to a bipartisan group of British lawmakers. While the group did not recommend a vote either way, the lawmakers noted trade deals between the EU and non-EU states take between four and nine years on average. Henry Ridgwell reports on the mounting debate over whether Britain should stay or exit the EU as the June vote approaches.
    Video

    Video NASA Astronauts Train for Commercial Space Flights

    Since the last Shuttle flight in 2011, the United States has been relying on Russian rockets to launch fresh crews to the International Space Station. But that may change in the next few years. NASA and several private space companies are developing advanced capsules capable of taking humans into low orbit and beyond. As VOA's George Putic reports, astronauts are already training for commercial spacecraft in flight simulators.
    Video

    Video US Worried Political Chaos in Iraq Will Hurt IS Fight

    The White House is expressing concern about rising political chaos in Iraq and the impact it could have on the fight against the Islamic State. The U.S. says Iraq needs a stable, central government to help push back the group. But some say Baghdad may not have a unified government any time soon. VOA's White House correspondent Mary Alice Salinas reports.
    Video

    Video Press Freedom in Myanmar Fragile, Limited

    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Taliban Threats Force Messi Fan to Leave Afghanistan

    A young Afghan boy, who recently received autographed shirts and a football from his soccer hero Lionel Messi, has fled his country due to safety concerns. He and his family are now taking refuge in neighboring Pakistan. VOA's Ayaz Gul reports from Islamabad.
    Video

    Video Major Rubbish Burning Experiment Captures Destructive Greenhouse Gases

    The world’s first test to capture environmentally harmful carbon dioxide gases from the fumes of burning rubbish took place recently in Oslo, Norway. The successful experiment at the city's main incinerator plant, showcased a method for capturing most of the carbon dioxide. VOA’s Deborah Block has more.
    Video

    Video EU Visa Block Threatens To Derail EU-Turkey Migrant Deal

    Turkish citizens could soon benefit from visa-free travel to Europe as part of the recent deal between the EU and Ankara to stem the flow of refugees. In return, Turkey has pledged to keep the migrants on Turkish soil and crack down on those who are smuggling them. Brussels is set to publish its latest progress report Wednesday — but as Henry Ridgwell reports from London, many EU lawmakers are threatening to veto the deal over human rights concerns.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8742
    JPY
    USD
    107.09
    GBP
    USD
    0.6893
    CAD
    USD
    1.2820
    INR
    USD
    66.504

    Rates may not be current.