Decreasing profits at mines due to international sanctions on coal exports are making them less attractive to potential managers
North Korean party officials are refusing appointments to some of the country’s coal mines because of falling productivity and profits due to international sanctions on North Korean coal exports, Daily NK has learned.
“The cadre department [human resources department] in the Kaechon Area Coal Mining Complex’s party committee is currently unable to appoint a primary party committee chairman,” a South Pyongan Province source told Daily NK on Jan. 28. “Every candidate they approach is making excuses not to go, so [the cadre department] is full of worry right now.”
The source explained that the previous primary party committee chairman of the mine was dismissed for failing to effectively meet state-set quotas. A successor has yet to be found.
In the past, chairmanship of a coal mine’s primary party committee was a highly coveted position because it came with opportunities for significant financial gain. Such positions have lost their glamour in recent years due to the negative impact of protracted economic sanctions on the productivity and profitability of coal mines, Daily NK sources said.
“When coal exports didn’t face sanctions, chairmen could make money since coal commanded a high price. Now that exports are no longer possible, nobody wants to go to the mines,” one source said. “It’s hard to get someone to take over management of a mine these days given all the economic difficulties.”
North Korean authorities have also failed to effectively entice new managers to the mines because they are not promising a steady supply of electricity or improvements to the existing facilities.
The Kaechon Area Coal Mining Complex, for its part, was reportedly unable to meet national goals last year.
“Coal production at the complex last year did not meet expectations,” reported Rodong Sinmun, the WPK’s official newspaper on Jan. 14.
“While there are some work units such as the Kaechon Mine or Choyang Mine within the Kaechon Area Coal Mining Complex that overcame the difficulties and exceeded coal production goals, there were also mines that fell short of goals every month,” the newspaper added.
THE BITE OF INTERNATIONAL SANCTIONS
Some analysts have highlighted the difficulties that North Korea’s coal industry faces due to international sanctions.
Lim Soo-ho, a senior researcher at the Institute for National Security Strategy, recently published an article in the Korea Development Institute’s “Review of the North Korean Economy” periodical where he argued that “economic sanctions are fatally damaging North Korea’s export-oriented anthracite and iron ore production businesses and other businesses associated with coal production…Coal for export drastically [typically] drops in value when sold domestically (in North Korea), so profits continue to fall the more coal is produced.”
Most anthracite coal produced in North Korea is sold to businesses and are subject to extremely low state-set prices – so low, in fact, the coal is more or less given away for free, Lim added.
He further wrote that the price of export coal falls precipitously when it’s released into the domestic market because of the availability of alternate fuel sources for heating, such as firewood.
North Korea continues to encourage the mining of coal despite these difficult circumstances for the industry.
On Jan. 14, Rodong Sinmun covered the entirety of page four with articles extolling the benefits and necessity of the coal industry – all under the broad idea that “Coal is the ‘fuel’ [that makes] industry grow.” The newspaper then called for North Koreans to “engage in a bold effort to produce even more coal.”