UMG: I’m here today with Daily NK’s Kang Mi Jin to talk about North Korea’s market trends. Today were going to talk about gold, right?
Kang Mi Jin (Kang): Yes, many of the sources I’m speaking with are talking a lot about mining for gold, so I thought I would discuss it in today’s show. Gold can sometimes be used in place of cash, and the same is true in North Korea.
Gold is produced throughout North Korea. I lived in Ryanggang Province, so I’ll focus on that region today. There’s a gold mine around 8 kilometers from the seat of the provincial government, Hyesan, called Taebong Mine. There are also mines in both Kimjongsuk and Kimhyungkwon counties that mine lower purity gold.
UMG: Tell us about the Daebong Mine.
Kang: The gold mined at Taebong Mine is 98.7% pure – the best in the country. The Taesong General Bureau, which is under the Workers’ Party of Korea’s Room 39, runs the mine. Taebong Mine was also well-known during the Japanese occupation period and North Korean historians write that Japanese colonialists mined vast amounts of it. North Korean movies also tell this story.
The miners onsite are divided into three mining ‘companies’, one that concentrates the ore, one responsible for stone-cutting, and one that includes a security unit, a repair shop, transportation unit, a limestone unit, a resource unit, and management department. In 2009, the total number of employees at the mine was between 1,800 to 2,000 people. The mine is close to the Japanese colonial-era Jungpyong Mine. On the orders of Kim Jong Il, the North Korean authorities began re-exploring the area for gold in the early 1990s, and from the early 2000s large numbers of ordinary North Koreans began efforts to mine gold in the area.
UMG: How is the gold mined?
Kang: Gold is extracted from rocks, and there are reportedly deposits of gold underground in the upstream and midstream areas of the Unchong River. The extracted gold is then refined using special methods.
Miners use the cyanide process to extract gold from the rocks. They dilute 700 grams of potassium cyanide per ton of ore and add additional cyanide into the ore every 20 minutes. The gold and other byproducts are then passed through activated carbon to separate from the cyanide. The water from the process is spread over the ore again 20 minutes later, before the whole process is repeated over a period of a week and the gold is extracted from the ore.
Then the activated carbon that absorbed the gold is combined with flour or corn powder, and the smelting process begins. Miners heat it up to more than 1,200 degrees to create pure gold. This ‘molten gold’, however, may still contain impurities, and the miners do their best to thoroughly remove all impurities in the gold being sent up to the central authorities.
UMG: How is the finished gold sent up the line to earn foreign currency for the regime?
Kang: The mine is required to produce at least 12 kilos of gold per month. The smelted, finished gold has a purity of 98%. When I lived near Taebong Mine in 2008, I saw six armed soldiers from Room 39 and two WPK officials put the finished gold into a steel safe and load it onto a vehicle for transport.
I also remember seeing the mine’s management department busily preparing for party officials who would visit the mine at the end of each month.
UMG: How are the working conditions for miners?
Kang: Taebong miners are generally are better off than those at other mines because they are able to actually produce gold from just a few rocks. Miners receive gifts from the WPK at the end of each year ranging from refrigerators to fans or televisions.
These gifts are supposed to be given to highly productive miners, but generally all miners get them. Taebong Mine treats its workers quite well and veins of gold found in just one rock can provide enough work for the miners over a year. North Koreans who were previously living in areas affected by flooding are sometimes moved to the mine for work. Ore is sometimes provided to the workers regardless of whether veins of gold are found.
UMG: Do people living near the mine sell the gold?
Kang: They sell to wholesalers who combine all of their alluvial and smelted gold and sell it to traders who conduct business with Chinese merchants. The gold is then smuggled into China.
The Taebong Mine area also has large deposits of tungsten and scheelite, so residents looking to earn some cash are mining for what they can. They then export what they’ve found to China. Many people make a good living this way.
People also pan for gold. Anybody can do this. Business people who have failed in other regions of the country try to pan for gold in the Taebong Mine area, so there are a lot of people from all over the country around the mine – even more than locals!
UMG: What is the price of the gold mined at Daebong Mine?
Kang: One gram of gold mined from Daebong Mine changes slightly in price every year. In 2011, it went for 100,000 won per gram, but in 2015 the price went up to 260,000 won. In 2016, it was 300,000 won but in 2018 the price fell somewhat. Sources tell me that the price of gold in 2019 is slightly more than in 2018.
I understand that the price of gold where it’s mined is slightly cheaper than in the wholesale markets in Hyesan. One gram of gold goes for around 43,000 South Korean won. In South Korea, 3.75 grams of gold goes for 230,000 won, but the same amount is only 161,000 won in North Korea. So all else equal, and when not taking the purity of the gold into account, gold is cheaper in North Korea.