Mining operations at the Gumya Youth Mine in South Hamgyong province. (Yonhap News Agency)
North Korea has recently taken steps to expand its mineral trade despite international sanctions.
According to a Daily NK source in China recently, a large trading company affiliated with the ruling party’s Munitions Industry Department asked China to analyze samples of rare metals and invited a businessperson interested in buying them to Pyongyang.
Before inviting the businessperson, the trading company explained that they had requested an analysis of the samples and proposed phone negotiations on potential mineral deals. In the process, the trading company stressed that it believed it could produce one to three tons of rare metals per month.
If North Korea were to export one to three tons of rare metals a month, it would earn significant amounts of foreign currency.
The rare metals North Korea mentioned — the platinum metals palladium and rhodium — sell for more than $1,400 and $4,000 a troy ounce, meaning that if North Korea were to produce even a single ton, it could make tens of millions or even hundreds of millions of dollars.
If North Korea were to continuously produce a ton each of palladium and rhodium every month, it could make more than $2 billion a year.
Offer may be based on ‘potential reserves’ of rare metals
However, North Korea likely can’t produce more than a ton of these rare metals every month. Total global production of palladium is about 200 metric tons a year, while that of rhodium — a much rarer metal — is just 20 to 30 tons.
If North Korea can actually produce this amount, the country would be among the world’s major rare metal producers. However, no reports or statements exist that North Korea has produced these rare metals, nor is there any basis to believe the country sits on large reserves of them.
Taking this into consideration, the North Korean government’s offer does not appear based on the country’s actual reserves of rare metals or production capacity. Instead, Pyongayng appears to be searching for buyers based on “potential reserves.”
Metals such as palladium or rhodium are classified as strategic materials with industrial applications. They are a key material in cutting-edge industries such semiconductors, automotive catalytic converters and aerospace.
Besides securing foreign exchange, another reason the North Korean authorities are moving to export these metals is to establish grounds for technological exchanges and joint-development projects with overseas companies.
“(The government) must be trying to earn foreign exchange in new ways and form technological joint ventures through rare metal exports as North Korea’s foreign currency shortage grows protracted due to the sanctions,” the source said.
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