Coal Prices Fuelling Chilly Times

The price of coal in North Korea’s cities is rising once again as the entire Korean Peninsula gets embroiled in the first real cold snap of the year. Temperatures dipped as low as -8°C at midday on the 4th in a number of locations, with Samjiyeon at the foot of Mt. Baekdu recording a low of -22°.

A source from frigid North Hamkyung Province reported to Daily NK early on Tuesday, “The price of coal has risen to the point that most people in urban areas wouldn’t even dream of buying it. Last year it was about 150,000 won per ton, but right now it is up to 300,000 won in some places.”

According to the source, the rising price of coal in city markets is symptomatic of inflationary pressures across the board, but is being exacerbated by supply limitations as winter arrives. Simply, there is markedly less coal on the open market than there once was.

This, according to the source, is partly because production is declining while transit costs have risen substantially. Coal reserves in older mines in Saybyeol and Onsung counties are close to exhaustion, meaning that there is an urgent need to develop new mines. However, there is also a lack of domestic resources with which to do so.

Equally, as reported by Daily NK in November 2011, the amount of coal being exported to the northeast of China is higher than it once was. Mines that are lucky enough to receive Chinese inputs of capital and technology are the only ones that can readily develop new shafts and improve production efficiency, but much of that production then leaves the country.

According to statistics published by the Korean Trade Association in late 2011, coal exports from North Korea to China in the nine months to September that year were worth USD$830 million, double the 2010 figure and four times that of the year before. While a percentage of that may have derived from new or more efficient production, it is clearly enough to put significant strain on domestic supply.

The knock-on effect of rising coal prices has once again become visible on sparsely wooded local hills. According to the source, “Poor families aren’t buying coal because it is too expensive, meaning that they have to spend time preparing firewood. There have even been clashes between families over it.”

As coal prices rise and supplies diminish, many people living in traditional coal mining areas are reportedly risking life and limb to reenter closed mine shafts and bring ordinarily uneconomical brown coal to market.

At the time of writing, this coal can be bought at source for $150-$200 per ton. Wholesalers then sell it on in regional centers like Chongjin for up to $300. However, according to Daily NK’s source, “They even say that $300 leaves them with little profit, given the cost of transportation.”

In 2011, Chinese traders reported that the North Korean authorities eventually banned all coal exports in order to boost domestic supply during the coldest winter months. It is unclear whether this will occur again this winter.

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