“North Korea can expect tremendous economic benefits once it improves the processing facilities for underground resources,” said NKRI President Choi Kyung-soo, adding that change is unlikely unless the international sanctions currently imposed on North Korea are lifted. (image: KobizMedia/ Korea Bizwire)
SEOUL, Jan. 19 (Korea Bizwire) – A recent report by the North Korea Resource Institute, based in Seoul, revealed that despite the abundance of natural resources in North Korea, the country is failing to make best use of its assets due to the poor state of the country’s processing facilities and a shortage of electric power.
Underground resources are either merchandised directly after mining, as is the case for coal, or commercialized after the materials are processed. The report said that the processing usually consists of three or four stages until the material reaches its full value in the market.
According to the institute, the average rate of operation for first-stage processing facilities (of copper, zinc, magnesite, and lead) in North Korea was 28.3 percent, while the rate for second-stage processing plants (copper, zinc, and lead) was 16.9 percent.
Such rates lead to poor competitiveness of North Korea’s processing industry, and by trading more of the unprocessed resources of lower value, the country is making up to $258 million in annual losses from exports of copper, zinc, and lead alone, the report said.
The institute further noted that the unit costs of export for North Korea’s underground resources were also below the international average. Zinc concentrates from North Korea were traded at 56 percent of the international price, while the rates were 24 percent for copper and 42 percent for magnesite, all exported after first stage processing.
However, materials traded after the second processing stage were closer to the international prices, or even higher. Zinc bars were exported at 89 percent of the international rate, lead bars at 119 percent, and copper bars at 99 percent.
“North Korea can expect tremendous economic benefits once it improves the processing facilities for underground resources,” said NKRI President Choi Kyung-soo, adding that change is unlikely unless the international sanctions currently imposed on North Korea are lifted.
“Modernization of the facilities is essential for North Korea to export processed goods instead of raw materials,” he said. “Adopting overseas processing technologies and stable power supply are also a must.”
By Lina Jang (linajang@koreabizwire.com)
