march, 2008 w.j. chung korea energy economics institute
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North Korea’s Mineral Resources and Inter-Korean Cooperation. March, 2008 W.J. Chung Korea Energy Economics Institute. Contents. Mineral Industry in North Korea Inter-Korean Mineral Cooperation Summary. 1.Mineral Industry in North Korea. Reserve of Mineral Resources. - PowerPoint PPT PresentationTRANSCRIPT
March, 2008
W.J. Chung
Korea Energy Economics Institute
North Korea’s Mineral Resources and Inter-Korean Cooperation
Contents
Mineral Industry in North Korea
Inter-Korean Mineral Cooperation
Summary
1.Mineral Industry in North Korea
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Reserve of Mineral Resources
The value of mineral resource in DPRK is 24 times than that of South Korea
- Reserved more than 360 kinds of minerals
Minerals within 10th in the world in terms of reserve in North Korea
- Magnesite, Tungsten, Graphite, Gold, Molybdenum and etc * Magnesite is the first or second following China in the world
Mineral Grade (%) unitReserve
Value (100million Won)
ROK DPRK ROK DPRK
Gold Au 100 kT 0.03 2 4,690 234,500
Silver Ag 100 kT 1.2 4 2,960 10,077
Copper Cu 100 kT 41 2,155 551 28,961
Lead Pb 100 kT 305 6,000 1,174 23,095
Zinc Zn 100 10MT 0.04 42 2,648 90,273
Iron Fe 50 102MT 0.2 30 4,849 738,426
Tungsten WO3 65 kT 100 200-300 869 2,173
Molybdenum
MoS2 90 kT 10 2 2,086 417
Manganese Mn 40 kT 123 100-300 208 65
Nickel Ni 3 kT - 15 - 36
Mineral Grade (%) UnitReserve
Value (100million Won)
ROK DPRK ROK DPRK
Graphite kT 1,837 6,000 11,834 38,652
Limestone 102MT 65.5 1,000 652,486 9,964,965
Kaolin kT 74,357 2,000 11,438 308
Talc kT 5,451 600 5,451 600
Asbestos kT 511 13 552 14
Flourite kT 345 500 530 768
Barite kT 712 2,100 755 2,227
Magnesite MgO 45 102MT - 35 - 1,260,000
Anthracite 102MT 3.4 117 247,216 8,626,386
BituminousCoal
102MT - 30 - 1,853,400
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Map of Mineral Reserves
Major mineral reserves
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Mines and Iron MillMusan iron mine Musan iron mine
Kimchek steel mill Suncheon cement factory
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Zinc
Graphite
CopperMagnesite
iron
Gold
Mineral Productions
The productions of almost minerals have decreased since early the‘90
- Lack of electricity and fuels, materials, equipments for producing
- Heavy flood and droughts in the middle of the 90
The productions have slowly recovered since 2000, but still in difficuty
< Production of Mineral Resources, 1990=100 >
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Mineral Exports
The minerals is the most important export commodity in North Korea - Accounting for 15~34% of total export (but, volume fluctuates greatly)
- Major trading countries : South Korea, China, Japan (Taiwan, Russia)
Export refinery mineral products than raw ores for more values
Total export Ore, Lime, Slack
Precious metal
Metal goods
2001 650 25.2(3.9%) 14.1(2.2%) 60.2(9.3%)
2002 735 30.5(4.2%) 14.5(2.0%) 58.3(7.9%)
2003 777 33.8(4.4%) 16.0(2.1%) 89.7(11.5%)
2004 1,020 67.3(6.6%) 5.7(0.6%) 164.3(16.1%)
2005 998 98.0(9.8%) 4.6(0.5%) 187.0(18.7%)
2006 947 119.6(12.6%) 40.0(4.2%) 136.6(14.4%)
< Export of minerals and related products in DPRK, million USD >
Source : Korea Trade Agency
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Supply-Demand of Minerals in South Korea
Total Metallic Nonmetallic
Demand
Domestic(A) 11,542.5 10,026.9 1,515.6
Export 1,308.9 1,257.9 51.1
Inventory 451.7 398.2 53.4
Total Demand 13,303.1 11,683.0 1,620.1
Supply
Production
Domestic(B) 1,171.4 65.4 1,106.0
By-products 1,262.2 1,262.2 0
Sub-total 2,433.7 1,327.6 1,106.0
Import 10,070.3 9,611.5 458.8
Carry –over 799.1 743.8 55.3
Self-sufficient rate(B/A) 10.15% 0.65% 72.98%
[ 단위 : Billion Won]
* Coal is not included
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Mineral Imports in South Korea (as raw ore)
10. 5
6. 937. 94
6. 1
4. 54. 65. 1
0
2
4
6
8
10
12
00 01 02 03 04 05 06
NonMetallic Metallic Import
[billion USD]
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Steel Making and Mineral Refining Facility
Unit NorthNo. of
refinery SouthNo. of
refinery
Steel Million ton 5.4 6 48 34 Posco: 30 mill.
Ton
Copper th.ton 90 4 510 1 2nd In the world(LS Nikko)
Lead th.ton 87 4 200 2
Zinc th.ton 240 n.a 400 1
< Comparison of Iron-Making and Metallic- Refineries Between Two Koreas>
The North : rich mineral reserves, small refinery (small steel Industry)
The South : poor mineral reserves, large refinery ( big steel Industry)
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North Korea’s Mineral Industry
Production falling and low operations in most mines
- lack of electricity, materials and aged production equipments
Many mines but a few competitive mines
- Almost mines are small and their pits are getting deeper due to a long-time production
Uncertainty on the qualities of minerals produced in North Korea
Old and small steel-manufacturing and mineral refining facilities- North Korea’s technologies fitting to the minerals produced in its mines - Many facilities but small unit scales
High potential to increase the production of minerals when new equipments are employed and electricity is sufficiently supplied to the mines
2.Inter-Korea Mineral Resource Cooperation
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Mineral Trades
0
20
40
60
80
100
1989 1991 1993 1995 1997 1999 2001 2003 2005
[million USD]
0
10
20
30
40
50
[%]
Amount(mi l l i on USD)Rati o(%)
The minerals are a leading commodity of the North’s exports to the South
-11.5% of the North Korea’s export to South Korea in 2006
Major export minerals : zinc, magnesite, gold (about 12 minerals)
The export amounts have been fluctuated as years
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Graphite Project(1)
The first inter-Korean development in
the mineral resource
- ROK provided facilities and technologies,
costing $5.2 million
The facility was completed in April, 2006
- Mining operation was delayed due to a shortage of electricity
The South takes 50% of the mine’s annual graphite production
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Graphite Project(2)
Heochun Hydro#1
성산광산 (연 ,아연 )
Heochun Hydro #2
Refinery
단천마그네공장
Dancheon Port
광천광산 (중석 ,코발트 ,몰리브덴 )
Ryeungyang Magnesite)
Kumduck Zinc
Deaheung Magnesite무학광산
(마그네사이트 )
Railroad station여해진 North
South
RailroadCoast lineMineHydro Power
Heochung Hydro #3
Heochun Hydro #4
Danchon Project Dancheon is most promising area of mineral resources in North Korea - Many mines with more than 20 mineral resources closely located within 100km - Well organized infrastructures (railroad, hydro power, port), but aged and worn-out - A lot of skilled workers and downstream facilities
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Agreement Between Two Koreas (July, 2007)
- The South provides raw materials for light industry such as shoes and soap
- The North gives a mining right of development for reimbursement
The Implementation of Agreement
- Two Koreas have surveyed three existing mines in Dancheon for investment
• Ryoungyang magnesite mine (reserve : 770 million ton, world first)
• Daeheung magnesite mine (reserve : n.a, the first in the east Asia )
• Komduck zinc mine (270 million ton)
The South is examineting the data from the survey for investment
- Economic viability and other variables are reviewing for the investment -
Danchon Project (history)
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Komduck zinc mine
Ryongyang magnesite mine Dancheon magnesite refinery
Komduck zinc mine
Danchon Project (mines and refinery)
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Danchon Project (Obstacles for investment)
Institutional transparency - The south does not involved in both of foreign law or domestic law in the North - Economy cooperation law between the North and South : very loose to adapt
Economic viable on the infrastructure - Low rate of return with the investment of infrastructure (electricity, railroad and port)
Production of zinc[10th. ton/Y]
100 3000
50
100
150
200
250
Production of magnesite(10 th. ton)
50078.6% 84.7%
45.1%
70.6%
68.0%
63.7%
78.8%
76.8%
73.1%
68.7%
53.6%
50.0%
100 3000
50
100
150
200
250
500
-3.23% 6.76% 9.94%
-3.32%
-3.14%
-2.58%
6.64%
6.70%
4.37%
9.85%
9.87%
10.0%
Production of magnesite(10 th. ton)
Production of zinc[10th. ton/Y]
< Trial IRR of Dancheon Project, KEEI>
( Without investment of infrastructure) ( With investment of infrastructure)
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Mineral resources would play a leading role for North Korea to escape its economic crisis when new equipment are employed and electricity is sufficiently supplied in the mines
- It is estimated that the value is $2 billion in current international prices if the minerals are produced with their full capacities in the North Korea ‘s major 7 mines
Mineral resource is a strategic investment field for mutual prosperities of two Koreas
- The South : Contributing to stable and lower cost supply of resources - The North : Contributing to economic development by itself (without supports and aids)
Unstable institutions and poor infrastructures are the biggest obstacles for the South to invest in the mines of North Korea
- It requires a political compromise between two Koreas and a large scale investment for economic scale on the rehabilitation of infrastructures.
Summary
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Thank You for your attention !