Chinese Worry About Investments in Stone Quarries in North Korea

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north-korea-rally-against-sanctions-pyongyang-sept23-2017.jpg North Koreans participate in a mass rally against international sanctions in Kim Il-Sung Square in Pyongyang, Sept. 23, 2017.

Chinese businesspeople who have invested in marble and granite mining in neighboring North Korea are worried that they may lose money under current United Nations sanctions that restrict the export of certain natural resources.

North Korea is making an effort to attract Chinese investors to its stone mines, though it remains unclear whether the marble and granite are restricted exports under the current U.N. sanctions.

North Korea insists that rock from its quarries is not included on the sanctions list and argues that there should be a clearer explanation of the range of minerals that are prohibited from export, which specifies whether marble and granite are included in the ban.

Some Chinese who invested in North Korean rock-mining activities in the past say that marble and granite stones are not currently restricted items under the latest round of sanctions. Others, however, say they will be restricted, according to a Chinese dealer who recently took a weeklong business trip to mountains where marble and granite stones are quarried near North Korea’s capital Pyongyang and in Hwanghae province in the southwestern part of the country.

“There is no way to check with the U.N. Security Council, so this concerns me,” he said.

The U.N. sanctions, imposed on North Korea in August over its repeated missile and nuclear tests in defiance of a ban on nuclear-related activity, prohibit the country from exporting coal, iron, iron ore, lead, lead ore, and seafood.

The sanctions also prohibit countries from increasing their current number of North Korean laborers who work abroad, ban new joint ventures with North Korea, and freeze new investments in current joint ventures.

“Though North Korea insists that stones are not an item restricted by the U.N.’s sanctions, I am cautious about a possible negative outcome from the investment,” said the Chinese dealer who spoke to RFA’s Korean Service on condition of anonymity.

North Korea has offered to provide all necessary labor and oversee the stone quarrying in return for Chinese investments in mining machinery and equipment, he said.

“They offered to split the processed products 50-50,’ he said. “It is definitely an attractive offer.”

Lessons from a worm exporter

A Chinese trader who used to import North Korean lugworms, or sandworms, surmised that marble and granite are included on the list of restricted exports because of his experience with the worms — a natural resource whose export to China is restricted by the country’s maritime customs officials because it is considered a fishery product.

“It’s a foolish idea to invest in something by accepting North Korea’s word since [the country] is in urgent need of foreign currency,” said the trader who spoke on condition of anonymity.

The Chinese trader also said he had a bad experience investing in quarries in Hwanghae province that contained serpentine rocks, high-quality marble whose texture and color resemble snakeskin, but not on account of export restrictions.

“I once invested in the stone mines, but had to close down the business,” he told RFA. “It was not a matter of restrictions. Investing in stone mines in North Korea requires the utmost circumspection.”

“There are no investors who have made a profit from North Korean mines, and probably only two out of 10 investors get back the money they invest,” he said.

Investing in rock quarries presents unexpected obstacles because of the nature of the resource, which must be extracted from the ground, and a constant need for funding for the investment, he said.

“Quite a few businesspeople give up in the middle of mining projects because of funding issues,” the source said.

Even if the export of marble and granite are allowed under the sanctions, a recent close-down of Chinese-North Korean joint ventures will likely affect Chinese investments in stone quarries in North Korea, sources said.

China’s Ministry of Commerce announced on Sept. 28 that such joint ventures in North Korea and elsewhere will be shuttered within 120 days from Sept. 12, based on China’s enforcement of the U.N. sanctions against the North.

Reported by Joonho Kim for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Roseanne Gerin.


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