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

China’s Influence Grows With New Infrastructure Bank

Multibillion-dollar China-backed and BRICS-supported Asian Infrastructure Investment Bank seen as possible challenger to such lenders as IMF, World Bank More

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

Rabbi Michel Serfaty makes the rounds in his friendship bus to encourage dialogue and break down barriers between the two groups More

Post-deal Iran Leaders Need 'Economic Momentum' to Solidify Power Base

Economists say deal could inject more than $100 billion into coffers - not enough to entirely rescue ailing economy - but maybe adequate to create 'economic momentum' More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Gay Marriage Ruling Yields Real-life Impacti
X
Michael Bowman
June 28, 2015 10:05 PM
Friday’s landmark Supreme Court decision legalizing same-sex marriage throughout the United States is an outcome few thought possible just years ago, and shows a nation that increasingly tolerates and even celebrates the hopes and aspirations of gay people. VOA’s Michael Bowman spoke to a same-sex couple that will benefit from the high court ruling, and to a Christian scholar who is apprehensive about its potential consequences for America’s faith community.
Video

Video US Gay Marriage Ruling Yields Real-life Impact

Friday’s landmark Supreme Court decision legalizing same-sex marriage throughout the United States is an outcome few thought possible just years ago, and shows a nation that increasingly tolerates and even celebrates the hopes and aspirations of gay people. VOA’s Michael Bowman spoke to a same-sex couple that will benefit from the high court ruling, and to a Christian scholar who is apprehensive about its potential consequences for America’s faith community.
Video

Video Syrians Flee IS Advance in Hasaka

The Syrian government said Monday it has taken back one of several districts in Hasaka overrun by Islamic State militants. But continued fighting elsewhere in the northern city has forced thousands of civilians from their homes. In this report narrated by Bill Rodgers, VOA Kurdish Service reporter Zana Omer describes the scene in Amouda, where some of the displaced are taking refuge.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video S. Korea Christians Protest Gay Rights Festival

The U.S. Supreme Court decision mandating marriage equality nationwide has energized gay rights supporters around the world. Gay rights remain a highly contentious issue in a key U.S. ally, South Korea, where police did a deft job Sunday of preventing potential clashes between Christian protesters and gay activists. Kurt Achin reports from Seoul.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video Nubians in Kenya Face Land Challenges

East Africa's ethnic Nubians have a rich cultural history that dates back thousands of years, but in Kenya they are facing hardships, including the loss of lands they have lived on for generations. They say the government has reneged on its pledge to award them title deeds for the plots. VOA's Lenny Ruvaga reports.
Video

Video Syrian Refugees Return to Tal Abyad

Syrian refugees in Turkey confirm they left their hometown of Tal Abyad because of intense fighting and coalition airstrikes, not because Kurdish fighters were engaged in ethnic cleansing, as some Turkish officials charged. VOA Kurdish Service reporter Zana Omer, in Tal Abyad, finds that civilians coming back to the town agree, as we hear in this report narrated by Roger Wilkison.
Video

Video Military Experts Question New Russian Tank Capabilities

Russia has been showing off its new tank design – the Armata T-14. Designers claim it is 20 years ahead of current Western designs - and driving it feels like playing a computer game. But military analysts question those assertions, and warn the cost could be too heavy a burden for Russia’s struggling economy. Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.
Video

Video In Syrian Crisis, Social Media Offer Small Comforts

Za’atari, a makeshift city in Jordan, may be the only Syrian refugee camp to tweet its activities, in an effort to keep donors motivated as the war in Syria intensifies and the humanitarian crisis deepens. Inside the camp, families say mobile phone applications help hold together families that are physically torn apart. VOA’s Heather Murdock reports.
Video

Video Chemical-Sniffing Technology Fights Australia's Graffiti Vandals

Cities and towns all over the world spend huge amounts of resources battling graffiti writers who deface buildings, public transport vehicles and even monuments. Authorities in Sydney, Australia, hope a new chemical-sniffing technology finally will stop vandals from scribbling on walls in the passenger areas of commuter trains. VOA’s George Putic has more.
Video

Video Cambodia Struggling to Curb Child Labor

Earlier this year a United Nations report found 10 percent of Cambodian children aged 7-14 are working – one of the highest rates in the region – and said one in four children in that age bracket are forced to quit school to help their families. Although the child labor rate has dropped over the past decade, Cambodia has a lot more to do – including keeping more children in school. Robert Carmichael reports for VOA from Phnom Penh.

VOA Blogs

World Currencies

EUR
USD
0.8926
JPY
USD
123.71
GBP
USD
0.6358
CAD
USD
1.2364
INR
USD
63.600

Rates may not be current.