Korea’s new affluent middle-class, the donju, are expanding their operations
into the mining industry, bribing Party cadres to acquire mining and mineral
rights from small and medium-sized mines that are out of service.
“For years, donju have set their sights on abandoned mines as sources of investment, considering them a conduit through which to bring in foreign currency,” a source in South Pyongan Province reported to Daily NK on April 9th. “Coal exports to China have been stagnant lately, but the potential to earn foreign currency is still high, so powerful state bodies take bribes and in return grant operation rights for these mines.”
State enterprises, the only organizations officially eligible for
mining development rights, typically extract only the coal available at shallow depths rather than digging deep down into the earth, a prohibitively expensive practice for enterprises beset by financial difficulties–as most, if not all, are.
To the donju, however, financial constraints are less of an issue, and with
a healthy head start on the digging, these abandoned mines are considered a
treasure trove for them. Officials
with the state-run enterprises will sometimes even register a relatively new mine site as
abandoned or discarded to reap in more kickbacks from the donju, who are eager to expand their operations.
are hundreds of abandoned state-run mines in the Jikdong area of South Pyongan
Province, according to the source. Sales of closed mines have become a more
frequent occurrence by the Ministry of People’s Armed Forces [MPAF] and other state
agencies since the late ‘90s after proving to be a lucrative source of foreign
currency. Small and medium-sized mines are run directly by provincial and state
organizations such as the MPAF, General Political Bureau, Ministry of State
Security, and Ministry of People’s Security.
rights for these small or mid-scale mines are being sold to the donju for about
3,000 USD; however, these rights alone are insufficient to revive operations
at shuttered mines—mineral rights are of equal importance.
State agencies such as the MPAF provide the paperwork required for the donju to secure mining rights–and therefore de facto ownership–but digging up the coal and selling it requires mineral rights from the Ministry of Mining Industries. This is why, said the source, mining officials generally receive the initial bribes while other agencies provide the mining rights paperwork in order to receive a steady stream of kickbacks from the coal sales down the line.
As the donju increasingly step in on this game, officials with the Ministry of Mining Industries calibrate the price of the bribes required for their approval to reflect the demand: mineral rights now run an individual up to thousands of dollars. Coupled with the cost of bribes to secure mining rights the financial burden is steep, prompting many of the donju to operate without mineral rights despite the risk.
“Some of the donju have given up attaining mineral
rights due to the exorbitant costs and are extracting coal illegally. This is
why officials frequently inspect mineral rights, and those caught
mining illegally are stripped of both the coal and the entire mine
itself,” she explained.