North Korea earning foreign currency by selling river sand

Sand at Sinuiju port for regional construction projects (taken in September 2019)
Sand at Sinuiju port for regional construction projects (taken in September 2019). Image: Daily NK

North Korea has recently concluded an agreement to export sand to China, Daily NK sources have reported. Sand is explicitly prohibited for export by UN sanctions, however, and the two countries will likely face international censure for the agreement.

“A North Korean trading company entered into an agreement with a Chinese trading company in mid-July to export sand to China,” a North Pyongan Province-based source told Daily NK.

According to the source, the sand referred to in the agreement will be sourced from the Chongchon River in Huichong County, North Pyongan Province. Sand from the river is considered to be of outstanding quality due to the thickness and shape of the grains, and has long been used in the country’s construction industry.

South Korea’s construction industry, by contrast, has found it difficult to reliably source supplies of sand and gravel. Since coming to power, the Moon Jae I administration has expressed interest in importing North Korean sand.

As the two Koreas began engaging in dialogue following the inter-Korean summit in September, the former head of South Korea’s Ministry of Oceans and Fisheries, Kim Young Choon, mentioned a plan to import sand dredged from North Korea’s Haeju and Nampo ports, in tandem with South Korean assistance to increase the depth of those ports.

During the Roh Moo Hyun administration in 2004, around 10 South Korean sand and gravel-related companies imported approximately 5,600 tons of North Korean sand. Following the sinking of the Cheonan cruiser in March 2010, however, the Lee Myung Bak administration halted the import of North Korean sand as part of the so-called March 24 Measure.

The UN Security Council designated sand as a prohibited item in Resolution No. 2397, which was passed in December 2017, rendering North Korean sand exports illegal. The recent signing of the agreement by the trading companies in China and North Korea violates this resolution.

The price of sand to be exported to China through the agreement is three USD per cubic meter.

“Chinese sand is expensive and poor quality. Chinese traders have had a lot of interest in North Korean sand, but North Korean traders have not been interested in selling because the Chinese wanted to buy it too cheaply,” a separate source in North Pyongan Province told Daily NK.

“Now, because of the sanctions, North Korean traders are desperate and need money, so they are selling the sand for just three dollars [per cubic meter].”

Three years ago, Chinese traders tried to engage in negotiations with the North Koreans for sand exports. The Chinese demanded the North Koreans sell the sand at the ridiculously low figure of 1.50 USD per cubic meter. The North Koreans refused the offer.

This time, however, the Chinese doubled the price and agreed to import 100,000 cubic meters of sand, the source said. Through the deal, the North Koreans will earn at least three million USD.

North Korea must export the sand by December this year. Once enough sand is dredged from the river, a Chinese vessel will ship the sand to China. The North Koreans will receive payment once the dredged sand is loaded onto the Chinese ship.

Some North Koreans who caught wind of the deal expressed hope that it will help put some money into their own pockets.

“Mining for coal is dangerous and takes a long time, but sand just sits there, waiting to be dredged up. Dredging sand is not as dangerous,” the source explained. “People mobilized to take part in the dredging of the sand are lucky because they’ll be able to earn money without too much trouble.”

There is even a joke circulating around that “sand is pricier than coal in North Korea,” he said.

A North Korean defector familiar with North Korea’s foreign trade told Daily NK that the export of sand to China seems to be a temporary tactic by the regime to sidestep international sanctions and earn some foreign cash.

He added, however, that there is only a limited amount of sand available and the price is not that attractive.

“[The export of sand] does not resolve the issue of finding long term sources of foreign currency,” he noted.

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