Smuggling in the Sino-North Korean border region has peaked following Kim Jong Un’s fourth visit (Jan. 7-10) to China in the past year. The North Korean authorities have been involved in smuggling, including the buying and selling of minerals and oil, violating international sanctions.
“Copper and zinc concentrate produced in the Hyesan Mine (in Masan-dong) is being smuggled en masse into China,” said a Ryanggang Province-based source on January 14. “After Kim Jong Un’s last trip to China, smuggling crackdowns have relaxed a bit.”
North Korea’s Kangsong Trading Company, Yonun Company, and Mirim Company, among others, have received rights to export minerals on behalf of the North Korean government and are buying concentrated minerals (i.e. material without impurities) from mines and individual mine workers. The companies are paying six yuan per kilo and sending 100-ton batches of the concentrate into China. according to the source.
He continued, noting that “after the leader’s visit, a lot of minerals have been going into China. People living near the Hyesan Mine are earning a living by selling their own concentrate.”
The Rearguard General Bureau and the 8th General Bureau under the North Korean military and South Korea Liaison Office, among other organizations, have been setting up stations in Masan Mine (in Kanggu-dong, Hyesan) and, with permission from the government, exporting minerals to China while importing diesel and petroleum into North Korea, a separate source in Ryanggang Province said.
“Without any of their products going through customs, these organizations are increasingly receiving help from border sentries […] 70% of what they’re exporting is zinc, copper, tungsten, molybdenum, magnesia clinker, gold, and silver concentrates, along with wood and medicinal plant products. They are importing flour, soybean oil, sugar and other manufactured foodstuffs along with car and motorcycle parts,” he explained.
“Locals are referring to the trade as ‘state smuggling,’ and at least 30 trading companies that have headquarters or offices in Hyesan are involved in these activities.”
That being said, minerals have recently started going through North Korean customs during the process of export. This indicates that the North Korean state is directly involved in the smuggling of such products abroad.
The export of minerals from North Korea, however, is a clear violation of international sanctions on the country. The import of fuel from China is also potentially a violation of sanctions.
The UN Security Council adopted Resolution 2321 in November 2016, which prohibited the export of minerals such as silver, copper, zinc and nickel, while Resolution 2397, which was passed a year later, restricts North Korea to importing just 50,000 barrels of fuel each year.
The purity of Hyesan Mine’s copper concentrate is greater than 52%, which means that Chinese mineral companies are actively looking to invest or set up joint ventures with the mine. Copper concentrate is generally only 20% pure, which means that Hyesan Mine’s copper concentrate is more than twice as pure as regular copper concentrate.
According to the sources, Chinese companies are likely trying to engage in business opportunities in North Korea early, given the high quality of material they can obtain from North Korean mines and the expectation that sanctions will soon be relaxed.
