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North Korea’s Office 39 diverts electricity to gold production

North Korean leader Kim Jong Un. (Yonhap News/Newscom/Zuma Press/TNS)
August 14, 2020

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

The North Korean “secret” organization that oversees Kim Jong Un’s slush funds and foreign currency is looking to cash in on record gold prices by diverting scarce electricity to facilities that produce the precious metal, sources in North Korea told RFA.

Although gold exports are prohibited under UN sanctions aimed at depriving Pyongyang of cash and resources that could be channeled into its nuclear and missile programs, Office 39 has made a push to produce more gold, which is fetching nearly $2,000 an ounce, officials familiar with mining operations said.

“The central Party ordered the priority supply of electricity to gold production facilities under Office 39,” an official who requested anonymity for security reasons told RFA Tuesday.

Formally the Central Committee Bureau 39 of the Workers’ Party of Korea, the organization charged with procuring slush funds for Kim Jong Un was set up in the late 1970s under the rule of regime founder Kim Il Sung, Kim Jong Un’s grandfather.

The office operates departments in each province, which are responsible for the production and export of gold and silver to raise funds for the party.

“The gold production plant under the Kumgang department in North Pyongan province, where I work, has been supplied with electricity for more than 12 hours per day all this year,” the official said Tuesday. The Kumgang unit handles gold.

“Gold plants in North Pyongan province’s Kumgang department are located in the Unsan county area, including in Chonma county. The mines in this area have gold of high purity,” the source added. North Pyongan lies in western North Korea on the border with China.

North Korea is starved for resources and must ration electricity, leading to frequent blackouts in residential areas. Refugees who have fled North Korea have described to Western media situations where blackouts lasted months at a time.

The extra electricity comes as Office 39 seeks to recoup losses from the previous year, the source said.

“Last year, gold production fell because electricity was only supplied for one to two hours a day, and sometimes there was no electricity at all. But this year production is up a little as electricity is being normally supplied,” the source said.

“Knowing that not only electricity, but also coal is in short supply, the central Party has ordered the Kaechon Area Coal Mining Complex to produce high-calorie coal and directly supply it to the gold production facilities since June, the source added.

But despite the Party’s emphasis on gold production, not all of the province’s gold plants are getting as much electricity as needed.

“There are many gold production facilities in North Pyongan, under the Ministry of People’s Armed Forces, provincial security department, and the Ministry of Public Security. But only the gold mines under Office 39 are getting supplied with sufficient electricity and coal,” the source said.

Another source, a resident of South Hwanghae province’s Ongjin county told RFA that the office’s mines in that area were also fully supplied with electricity.

“The authorities are suddenly normalizing the operation of the Ongjin mine, because prolonged sanctions on North Korea and the coronavirus crisis have dried up the party’s sources of funds it used to generate from trade between North Korea and China,” the second source said.

According to a report by the South Korea-based Korean Resource Corporation, North Korea’s gold reserves are believed to be the sixth largest in the world at an estimated 2,000 tons.

The UN Security Council’s North Korea Sanctions Committee did not respond to RFA’s requests for comment as of Wednesday evening.

After closing at an all-time high of $2,063 per troy ounce on August 6 the price of gold fell about seven percent over the following week, closing at $1,914 per troy ounce on Wednesday, according to figures from Business Insider, up 25 percent since the beginning of the year.