September 07, 2008

China feared grabbing up resources in North Korea

It is reported in 2006 China's Zhaoyuan Gold signed a 25 year contract with North Korea for a 50% share of operational rights to North Korea's largest copper mine, the Hyesan Youth Copper Mine in Yanggang Province. The Chinese firm invested EUR 8 million.

In 2005, the Department of Commerce of China's Jilin Province bought a 50 year contract for mining rights to North Korea's largest iron mine, Musan Iron Mine in North Hamgyong Province for CNY 7 billion. The deal gives China the right to mine and haul 10 million tonnes of iron ore per year from Musan.

Many experts are raising concerns about China's recent attempts to sweep up North Korea's mineral resources. They are stressing the importance of getting involved in the development of mineral resources in the North at a time when international prices of raw materials are soaring.

According to a report released recently by the Korea Chamber of Commerce and Industry, China imported some USD 274.53 million in mineral resources from North Korea last year, concentrating 70% of its investment in the North on resource development. By contrast, South Korea imported just USD 59.73 million worth of resources from the North, a mere 21.8% of China's level.

South Korea has been hesitant and unfocused in this area, concentrating instead on wrestling with the North Korean nuclear issue and studying the profitability of development in the North. China meanwhile has been working to snap up the nation's underground deposits.