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

    Top US General: Turkish Media Report ‘Absurd'

    General Dunford rejects ‘irresponsible' claims of coup involvement by former four-star Army General Campbell, who led NATO forces in Afghanistan before retiring earlier this year

    Video Saving Ethiopian Children Thought to Be Cursed

    'Omo Child' looks at efforts of one African man to stop killings of ‘mingi’ children

    Protests Over Western Troops Threaten Libyan 'Unity' Government

    Fears mount that Islamist foes of ‘unity' government plan to declare a revolutionaries' council in Tripoli

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    London’s Financial Crown at Risk as Rivals Eye Brexit Opportunitiesi
    X
    VOA News
    July 25, 2016 5:09 PM
    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Four Brother Goats Arrive in Brooklyn on a Mission

    While it's unusual to see farm animals in cities, it's become familiar for residents of Brooklyn, New York, to see a little herd of goats. Unlike gas-powered mowing equipment, goats remove invasive weeds quietly and without adding more pollution to the air. As Faiza Elmasry tells us, this is a pilot program and if it proves to be successful, the goat gardener program will be extended to other areas of New York. Faith Lapidus narrates.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9093
    JPY
    USD
    104.27
    GBP
    USD
    0.7612
    CAD
    USD
    1.3233
    INR
    USD
    67.329

    Rates may not be current.