Changchun, China — As Daily NK previously reported on July 30, at the end of last month the Chinese investor in a North Korean-Chinese joint mining project in Hyesan withdrew, leaving the future of a mine previously responsible for 80% of North Korean copper production in jeopardy once again. Now, a Chinese-North Korean source close to the project has revealed more details on the reasons behind the collapse of the deal.
The source, who worked in Hyesan managing the joint venture company, known as “Hyejung Mining Corporation,” met with an on-site reporter in China, where he relayed news that the venture was abandoned by the Chinese between July 8th and July 20th, after which he himself returned to China.
According to the source, Mr. Kim, the root cause of the withdrawal was obstinate North Korean wage demands.
The joint venture was for the redevelopment of Hyesan Youth Copper Mine, which is under the auspices of the North Korean Extraction Industries Ministry. The mine should be one of the top copper mines in North Korea, estimated to contain as much as 420,000 tons of the mineral. Called simply the “Hyesan Mine” by average North Korean citizens, it is located approximately three kilometers west of Hyesan in the direction of Samsu and Kim Jong Suk counties.
However, the mine flooded first as a result first of electricity shortages during the March of Tribulation, and then again after the ill-advised construction of the nearby Samsu hydroelectric power plant, rendering it inoperable.
Hyejung Mining Corporation was created as a result of a deal between Chinese Mining International Investment, a natural resource development company in China, and Korea Mining Trading Development Corporation (KOMID), in order to pump out the mine and bring it back into use.
The two enterprises entered into a contract at a 51:49% ratio in favor of KOMID in Pyongyang in November, 2006.
Chinese Mining International Investment initially put two hundred million Yuan (equivalent to 36 billion South Korean won) into the mine. According to plans, it was supposed to start producing in September, after the completion of renovations.
Originally, it was negotiated that a 40 euro monthly wage would go to the workers and 15% of production volume would be given to the North Korean authorities. However, the North Koreans subsequently demanded a doubling of the wage and 20~25% of the production volume or immediate withdrawal, and sent an official document to the Chinese Commercial Affairs Bureau to that effect. The Chinese refused the wage demands and, even though 70% of the renovations had been completed, they swiftly began evacuating workers, leaving six of thirty maintenance personnel behind to oversee the evacuations.
As also previously reported by Daily NK, Korea Mining Trading Development Corporation, or KOMID for short, was blacklisted by the U.S. Department of the Treasury on June 30th, calling it “North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.”
