If Washington isn’t serious about the rare earth resources of North Korea, then the winner, once again, could be Beijing.
When looking at contemporary geopolitics, often energy and related resource questions are key in the struggle for influence amongst world powers, as energy can drive or amplify underlying tensions. Today, the attractiveness of traditional oil exploration loses ground with the emergence of new energies and technologies, often produced by “Rare Earths” and the elements they contain.
The DPRK could have a high concentration of rare earth elements, but given that it is a reclusive country, it has not yet exploited these resources, which could upset the current global order. Just as the Cold War split the world along ideological lines, this new struggle for resources will create fissures between those who have access to rare metal resources and those who do not. Because entire industries are built on a few rare metals, disruptions to their supply can have profound global implications while providing some countries with tremendous leverage.
Erbium, Thulium, Cerium, Samarium, Lithium . . . these are some of the elements that under the “rare earth” label. Many of the technological advances that have been realized over the past several decades have elements derived from the seventeen elements of the periodic table.
Not insignificantly, rare earth elements are also an essential component for the arms industry. “Neodymium” is used to produce bombs, lasers, radars and sonars, “Dysprosium” for missile guidance and video systems, and “Terbium” is used for electric motorization. The United States owns the third largest reserve in the world, with the Mountain Pass rare earth mine in California. That mine was the world’s leading producer until the 1980s, which is when China entered the element market and created a near global monopoly. The main factors in this market takeover were the availability of cheap labor and a lack of concern over environmental and work conditions. Currently, it is estimated that China controls more than 95 percent of the world’s production of rare earth minerals, with about fifty-five million tons of deposits.
Recent studies suggest that North Korea could have the world’s largest rare earth reserves. These deposits cannot at present be exploited due to a lack of significant demand and crippling sanctions—the country being cut off from external markets and having not yet developed a society based on mass consumption. Today’s new projects need more experienced infrastructures, which increases the costs of starting projects, creates higher operating costs, and leads to the production of more expensive metals—an investment North Korea cannot afford.
The Jongju site, in North Korea, is home to nearly 216.2 million tons of rare earth oxides, double the known world reserves. In terms of monetary value, if these figures are accurate, South Korea estimates the value of the mineral resources of its North Korean neighbor at $2,800 billion. In comparison, the GDP of South Korea was about 1,530,75 trillion in 2017. According to the Korea Resources Corporation (KORES) report, North Korea could hold vast amounts of magnesite (six billion tons), graphite (two billion tons), iron ore (five billion tons) and tungsten (250,000 tons). The country could become a key player in the rare earth industry, as demand peaks for smartphones, semiconductors and related products. Pyongyang said it could exploit up to twenty million tons of these seventeen elements, with China as its potential buyer. Rare earth metallurgy is also essential for United States, Russian and Chinese weapons systems. The U.S. Terminal High Altitude Air Defense (THAAD) system requires rare earth elements, as do Russia’s S-400 and S-500 missile defense systems.
Nothing seems to be able to unblock the exploitation of North Korea’s subsoil minerals for external purposes, except through possible international agreements, the lifting of sanctions, or, in an extreme case, military intervention. These elements offer new insights on the geopolitical situation that surrounds North Korea.
While China is gaining distance from its former ally, drastically reducing its import of coal from North Korea on the grounds of “non-compatibility with their new anti-pollution standards,” Russia, on the other hand, is increasingly eyeing the rare earth resources of the country. South Korean companies could also consider new economic agreements to exploit these resources.
During the 1990s and 2000s, North Korea’s immense energy potential has pushed several South Korean conglomerates, including KORES, to invest in mining projects in the North and to consider the development of infrastructures to facilitate rare earth exploitation. The Kim regime has neither the financial means nor the technological expertise necessary to exploit these mines on their own. KORES has analyzed that Pyongyang has already signed a total of forty investment agreements with foreign entities—90 percent with China, despite ongoing sanctions.
Several South Korean officials have been alarmed by Beijing’s interest. According to South Korean parliamentarian Park Young-sun, “The Government must act quickly because China has already secured many mineral resources in North Korea. If South Korea can import mineral resources from North Korea, it could use it stably for several decades.” Since South Korean President Moon Jae-in and North Korean leader Kim Jong-un have resumed talks, South Korean authorities are openly talking about a further extension of the North-South railway infrastructure project. The DPRK could be on the verge of being integrated into a vast supply chain infrastructure via a Metal Silk Road-a strategic partnership between Russia and China investing simultaneously in railways, pipelines and ports parallel to a Chinese like North-South Korea Special Economic Zones (SEZ) which is a geographically delineated area subject to unique regulations and administration from the host country in which it resides, in order to attract foreign direct economic investment that could not otherwise be achieved. Four specific regions in North Korea could be considered national priorities—Rason, Unjong, Wonsan and Sinuiju. These zones, with a variety of intended functions and ostensibly foreign-friendly regulations, signal a willingness of the Kim regime to explore economic policy options. Although the Kim regime may be promoting special economic zones as a key piece of its economic development strategy, there is still a long way to go to ultimately make these zones successful.
The first UN Sanctions against North Korea date back to 1993 and they have been counterproductive, as they pressured Pyongyang further in attempting to blackmail the world with its nuclear weapons and missile tests. North Korea has opted today for a predictable deterrence strategy, namely, to increase their missile tests to demonstrate its determination, but also its defense capabilities in an international environment which they deem hostile.
One way out of this crisis could be a potential de facto recognition of North Korea’s nuclear power status, similar to India, Pakistan or Israel, that obtained nuclear weapons sans international approvals. This option would be an admission of failure of nonproliferation policies but could break the stalemate that pushes Pyongyang to move further in its nuclear program and missile threats. An agreement in 1994 had already raised many expectations and hopes for a way out of the crisis: North Korea was required to give up its nuclear program in exchange for energy assistance from South Korea, Japan, Russia, and the United States who had committed to building two light water nuclear power plants in North Korea. This agreement failed in the absence of commitments from the different stakeholders.
It is no exaggeration to consider that the “Art of Negotiation” also applies to rare earth elements. If Washington isn’t serious about the rare earth resources of North Korea, then the winner, once again, could be Beijing. Moscow, too, could benefit from Washington’s loss given that China needs continued access to energy resources in Russia and Central Asia, as well as to Russia's advanced military technologies. China’s attempts at energy acquisition constitute a significant challenge to American policy. The puzzle can therefore revolve around who offers the best return on investment, only not on real estate, but rather on rare metals, with Kim Jong-un able to potentially collect a huge fortune. Is China able to match a possible U.S. agreement? Would another summit provide an opening for a second chance?
