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North Korea trades rare earth mine rights to China for investment in solar plants

Solar panel farm. (Pixabay/Released)
October 22, 2019

This article was originally published by Radio Free Asia and is reprinted with permission.

Authorities in North Korea have reached out to China to invest in solar plant projects as a potential solution to the country’s ongoing power shortage problems. Sources say that in exchange, Chinese companies would gain the rights to a rare earth mineral mine in North Pyongan province.

Rare earth minerals are ores containing rare earth elements, metals that are highly sought after for use in the manufacture of electronics. The onset of the smartphone era over the last decade and a half has led to an explosion in demand for the metals, which also have uses for military equipment.

A North Korean trade official in Shenyang, China said that the push for Chinese investment comes as the two allies mark a key anniversary in their relations.

“As there has been a series of events this month celebrating 70 years of diplomatic relations between North Korea and China, it has become easier to negotiate with our Chinese counterparts,” the official said.

“Our Chinese counterparts used to give us rather frosty responses, but they are now asking us for economic exchange proposals,” the official added.

Authorities in North Korea have been looking to capitalize on the important anniversary, even sending envoys to China to secure deals, the source said.

“The Central Committee [of the Korean Workers’ Party] has been urging trade workers to take advantage of the current situation, as bilateral cooperation between North Korea and China has been discussed at length and agreed upon,” the source said, adding that they have been encouraged to “draw investment from China.”

“Perhaps encouraged by [the anniversary], a trade representative from Pyongyang [who is affiliated with the North Korean military,] met with his Chinese counterparts in Dandong a few days ago to discuss a first round of investment projects,” the source said.

The source said that he had seen documents that were discussed in the meeting, and they revealed North Korea’s bargaining chip that it would use to secure investment.

“If China invests in the construction of solar power plants in inland areas like North and South Pyongan provinces, the right to develop the rare earth mine in Cholsan, North Pyongan will be handed over to China and any rare earth ores produced there will be taken to China as repayment for investment,” the source said.

“Building a solar power plant capable of producing 2.5 million kilowatts of electricity each day in inland areas like North Pyonagan would cost around $2.5 billion,” the source said.

Another source, a trade official from North Pyongan said that China was getting a good deal in the potential exchange.

“The rare earth ore buried in Cholsan is very valuable because it has a much higher rare earth content than rare earth ore [that can be found] in China,” the second source said.

“If we hand over our rights to develop these high-quality rare earth mines to attract Chinese investment in solar power, it means we are giving China valuable land resources at bargain prices,” the second source added.

Any such trade in rare earths would violate U.S. and U.N. sanctions aimed at depriving North Korea of cash and resources that could be funneled into its nuclear and missile programs forbid the transfer of certain resources into and out of North Korea.

U.N. Security Council resolution 2270, adopted shortly after North Korea’s fourth nuclear test in 2016, bans North Korean exports of gold, titanium ore, vanadium ore, and rare earth minerals.

The North Korean public appears not to favor of the arrangement. They say that North Korean authorities are giving up too much to solve a problem that they themselves have created.

“Now the party is stressing [to the public] that to prepare for long-term economic sanctions by the U.S. and to ease the impact of power shortages, we must be aggressive in our strategy to generate electricity using sunlight,” the second source said.

“But economics workers are expressing their dismay, saying the authorities are the ones who made the international community impose the sanctions in the first place by carrying out nuclear tests and firing missiles. Now they are selling off valuable land resources to China to overcome the sanctions,” the second source said.