As Pyongyang Papers have previously reported, North Korea exporting coal new. As UN Security Council Resolution 2371 states: “The DPRK is prohibited from supplying, selling, transferring .. coal” and “All Member States are prohibited from procuring such material from the DPRK. by their nationals, or by using their flag vessels or aircraft, whether or not originating in the territory of the DPRK.” Of course, this hasn’t stopped China!

Is coal the ultimate export for North Korea

Our sources have told us that Chinese company called Smart Legend Management Limited (駿成管理有限公司), which may also be known as General Success management Limted has agreed nearly $7 Million to buy 100,000 tons of anthracite coal from Korea O-IL Trading Corporation, formally known as Korea 51 Trading Corporation. This isn’t the first time the company has been involved in sanction breaking activity as Korea 51 Trading Corporation was also mentioned in the August 2020 UN Panel of Experts report as they were involved in employment of 292 DPRK workers abroad.

In 2022, the DPRK smuggled in excess of 525,000 tons of coal to China confirming China’s disregard for the UN by repeatedly purchasing sanctioned goods and services from North Korea. China’s willingness to deal with the North Korean regime has not gone unoticed. Recently, the G7 countries plus three other countries collectively asked China to stop allowing North Korean sanctions evasion in its waters!

North Korea continue to export coal to their allies despite shortages of coal at home, causing hardship for their own population. Kim Jong Un even instructed in his 2019 New Year’s address that coal exports would be redirected for domestic use for North Korea to become self-sufficient. The income from their 5 billion tons of anthracite reserves must be worth much more to the regime via sanctioned exports than their own citizens energy supply. Pyongyang Papers believes the regime would rather earn money for its nuclear and ballistic missle program than help its own citizens!

So how do you deliver 100,000 tons of anthracite coal?

North Korea use multiple ship-to-ship transfers via the yellow sea from Nampo Port. The ship-to-ship transfers are an effort to avoid detection although it has been widely that sales have continued since the sanctions were imposed. It is also believed that they are getting braver with their exports and avoiding ship-to-ship transfers, with Chinese ships collecting the coal from Nampo port direct!

In 2021 Coal exports from North Korea to China rose due to severe shortages causing rolling blackouts in many parts of China. Sadly, for the two countries the 2022 total is down mainly due to the COVID pandemic positive cases within China throughout the year.

Going back even further, 38 North conducted analysis looking at satellite imagery of the coal mines in North Korea between 2015-2019. They found a considerable increase in activity with noticeable growth of spoil piles around the mines and improvements to transport system to get coal to ports like Nampo. These images show that the sanctions have not affected North Korea’s coal export industry and none of its infrastructure has collapsed. In January 2023 Korean Central News Agency announced that DPRK coal production had increased “by intensifying the ideological work to arouse the masses”!

Nampo-Tae-Phyong-2
Tae Phyong 2 docks at the North Korean port of Nampo – August 2021

Why China?

North Korea and China have a difficult relationship. Although they are allies their relationship has deteriorated with Kim Jung Un’s missile testing and deliberate timing close to big Chinese events. It is questionable why Kim Jong Un would decide to do this as China has a hand on North Korea’s economic power and stopping trade with them would be extremely disruptive. China could easily import their coal from other countries but due to political intentions and economic benefits for China, the risk of being caught sanction breaking is outweighed by the advantages. A North Korean defector told one news outlet that North Korea would only last a month without its trade deals with China! So, no wonder why the two countries are so keen to continue supporting each other.

If you know any more information about these coal deals and the companies involved in them, please get in contact with Pyongyang Papers through the ‘Contact Us’ page!

Pyongyang Papers has recently reported on DPRK illicit sanction breaking activity which involves North Korean officials brokering deals and netting $millions in commission, which is funneled back to the regime’s ballistic weapons money pot. Since our last article, we have been busy investigating more million $ commission-based dealings with Chong Sang-Hun and Chong Hyok.

China’s Port of Ningbo-Zhoushan

The latest deal we have been investigating involves thousands of tonnes of copper cathodes being delivered to China’s port in Ningbo, over a 12-month period. The port is located in Ningo and Zhoushan, on the coast of the East China sea and is the busiest port on the world in terms of cargo tonnage, however it has faced much disruption since the COVID-19 pandemic began.

Ningbo-Zhoushan port
The port of Nigbo-Zhoushan

The copper cathodes deal is between a Indonesia-based trading company International Investment Trading (IIT) and China-based Liaoning Zhongwo Petrochemical Co., Ltd. (LZPC.) IIT have been commodity re-traders since 2019, specializing in the gold, copper, steel and oil products. Chief Exec Mr Micheal E Jones claims to ‘believe in transparency’, ‘are hungry to grow’ and are ‘proud to offer their clients and suppliers a fair deal at a reasonable price’. LZPC have been operating since 2021. Here at Pyongyang Papers we wonder if IIT’s clients are aware of their illicit involvement which in turn supports the DPRK’s nuclear program?

Coking Coal from Russia to China

Sang-Hun and Hyok have also facilitated another deal on behalf of China involving hundreds of thousands of tonnes of coke, originating from Russia. China, the world’ biggest coal consumer, is drastically increasing it’s domestic coal output. However, the quality o the fuel produced from its own mines is low and unsuitable. Metallurgical coal is key feed stock for steel making, meaning Chinese steel-makers are still dependent on overseas suppliers for coking coal.

After the US, Russia is the second in line with the World’s largest coal reserves. However, following the Russian invasion of Ukraine, many buyers in Europe along with Japan had already significantly reduced their dealings with Russia. Coupled with this, since August Russian coal imports have been subject to a ban in the European Union.

This has resulted in Russia significantly discounting their cargo – well below rates from other suppliers, like Indonesia and Mongolia.

Not to miss out on an offer, China have seized their opportunity. Reuters reported in May on record surges of coking coal imports from Russia to China, with a Beijing-based coal trader stating ‘Chinese and Indian traders are snapping up Russian cargoes as Western companies scale back, even though the embargo has not officially taken affect yet’.

According to Chinese customs data, Coking coal imports from Russia to China jumped to 2.5 million tonnes in September, from about 900,000 tonnes in the same month last year and 1.9 million tonnes in August.

DPRK earn Commission on China Cole Deal

The coke deal brokered by the North Korean officials is being delivered to China’s port in Longkou, with China Rozhao Le Song Trading Co., Ltd being the recipient. Longkou port is a artificial deep-water international seaport located in the province of Shandong, which imports and exports mainly consist of cargoes from the petrochemical industry.

Pyongyang Papers wonders whether the embargo will have any effect on Russia. Especially as China are more than happy to increase trading. Even if they are not involved in the deals directly, the DPRK will find any way possible to earn some quick money and break sanctions. If you are aware of any deals involving the DPRK, please get in touch with us through our ‘Contact Us’ page.

Since 2017, The United Nations has listed coal amongst the goods and services sanctioned against the DPRK. The Security Council decided the “DPRK shall not supply, sell or transfer, directly or indirectly from its territory any coal“. The resolutions also state “All states shall prohibit the procurement of such material from the DPRK”.

Despite sanctions the DPRK have continued to trade coal illicitly. This has been done through a network of illegal overseas business transactions and deceptive maritime ship-to-ship transfers with states who are willing to assist in sanction breaking activity.

Foreign currency

As reported previously, coal is North Korea’s major export and foreign currency earner. Most of North Korea’s coal is exported through China in a clear breach of UN sanctions. Estimates for DPRK coal reserves at around 4.5 billion tonnes worth in the region of $600 billion.

According to UN report in 2020, North Korea exported 3.7 million metric tons of coal between January & August 2019 despite sanctions, with estimated earnings of $370 million through these exports. However, exports did drop during the COVID-19 pandemic as North Korea closed its borders to slow the spread of the virus, having resumed again since. It has been reported that the DPRK exported several dozen shipments of illegal coal to Chinese waters and ports between September 2020 and October 2021, data and satellite imagery sourced to an unspecified UN member state indicated in the report.

According to a DailyNK report, coal mines in DPRK were ordered to engage in a week long campaign in February to generate foreign currency, scrambling coal to the port of Nampo for export. Although DPRK has an abundance of coal for burning, it is known that DPRK does not have any reserves of coking coal which is used mainly in iron ore smelting for making steel, the hermit state has a long history of importing this commodity. For a long time the DPRK has been trying to develop its own technology to produce coking coal from its own anthracite. if only it was that easy!

Coking Coal?

Although the DPRK has no coking coal, it does have substantial reserves of anthracite in the city of Anju and other areas of production. So where and how do the DPRK regime get their coking coal if they don’t have any? Pyongyang Papers has been investigating a Mongolian based company named Hanne Ulaan LLC who we believe to be involved.

It appears we aren’t the only ones to have looked into this company, according to the 2021 UN report, Choi Chon Gon (Mr. Choi) is a resident of the Russian federation and traveled to Mongolia in January 2019 for the purpose of setting up Hanne Ulaan LLC. Following the Mongolian investigations, it was noted that the company’s registration documentation was forwarded to an address in Moscow that matches that of the embassy of the DPRK. Subsequently, Hanne Ulaan LLC has been identified as a DPRK front company for the purpose of evading sanctions and was subject to frozen bank accounts by the Mongolian authorities.

Russian & Bulgarian involvement

Through Pyongyang Papers sources, we understand that Choi Chon Gon the general director of Mongolia-based Hanne Ulaan LLC worked with a Bulgarian based company named StaCom Inc. Ltd to purchase Russia-origin coking coal worth millions of dollars. Enabling the regime to produce steel, likely for their weapons program and the construction industry. StaCom Inc. Ltd is an exporter of coal, coke & petroleum products and have been trading since 1990. Stayko Georgiev Staykov is listed as the manager of StaCom Inc. Ltd with the company name appearing to change several times since 1990. Its clear StaCom place profit margins above the UN’s desire to stop the regimes ambitions for global instability. Even though the companies Bulgarian registry listing states they “trade in coal and coke, as well as any other activity with goods and services not prohibited by law.”

We believe that Mr. Choi is an associate of an individual named So Myong, a Hanne Ulaan, LLC representative located at the DPRK consulate in Vladivostok, Russia, involved with large deliveries of coking coal. There remains the question of how the commodity makes its way to DPRK, it is known that this is done through ship to ship transfers and we suspect that the port of Posyet may be used for loading the product before it makes its journey towards North Korea. Posyet port is conveniently located just north of the North Korea-Russia border on the east coast, making logistics fairly straightforward.

Posyet Port, Russia.

China

As Pyongyang Papers has previously mentioned, China remains one of the DPRK’s key allies in illicit trade deals. It has been reported that China is currently experiencing coal shortages due to a reduction in imports and decreased domestic production. The DPRK are all too willing to aid their energy-hungry neighbor and continue to export coal across the border.

When investigating Hanne Ulaan, LLC, Pyongyang Papers came across additional illicit activity in Mongolia. We have found that a likely DPRK front company named Uran Tech LLC, located in Mongolia, is to sell 50,000 metric tons of coal to the Dandong based Chinese trading corporation China Dandong Jinquan Import and Export Trading Co., Ltd. (丹东金泉进出口贸易有限公司). Dandong is the largest Chinese border city located on the western border of North Korea, facing Sinuiju, North Korea, with the two cities connected by the Sino-Korean Friendship Bridge. It is hardly a surprise that this would be likely location for cooperation between DPRK and China and we have previously reported on the use of Dandong in many illicit DPRK-China trade deals. The Mongolia-based North Korean official Han Cho’ng-kyu is to share commission with a Chinese business partner Tian Mingxing on the deal which is worth nearly $3 million.

What it all burns down to?

Pyongyang Papers investigations once again show how the regime continue to prevail in their sanction breaking activity. There is no doubt that what has been highlighted above is only a small portion of the overall activity and with so much revenue generated, the regime will not be burning out any time soon. It remains a sad and desperate image of the regime as they continue to focus on fueling their weapons program rather than looking after the health & prosperity of their people. Especially as recent reports from the regime have confirmed a surge in potential COVID-19 cases. Pyongyang Papers will continue to highlight the illegal activity involving the DPRK. If you have any information related to this activity that could expose the DPRK, please do contact us.

Our regular readers will be aware from previous Pyongyang Papers reports that coal is a major generator of revenue for North Korea– historically, the DPRK was the global leader in anthracite coal exports. However due to the DPRK regime’s persistent refusal to decommission their WMD scheme, coal is included in the UN list of sanctioned commodities since 2017. Meaning, North Korea are banned in exporting coal, and all member states prohibited from procuring coal from the DPRK.

Despite this, the 2021 Midterm Panel of Experts report details the DPRK’s continued disregard for sanctions and reports on the high level of illicit coal exports still being carried out at the request of the regime. According to the report, at least 364,000 metric tons of coal were exported by the DPRK between February and May 2021. The report also noted that this was significantly lower than in 2020, which estimated 4.8 million metric tons of coal were exported to China!

Although the numbers are lower than in 2020, it looks like the North Korean trade is not going to stop anytime soon and may soon increase massively. the Midterm report also notes that as of April 2021, 32 DPRK flagged vessels were docked at Taean Port with all but three of the vessels laden with coal! Pyongyang Papers has been investigating North Korean coal exports and has uncovered some further upcoming trade plans between North Korea and China. Korea Investment Development Group located in Pyongyang is planning to sell anthracite coal to a Chinese company China Shenyang Samsinmangro Science and Technology Co., Ltd. Our investigation is still ongoing but negotiations focus on 100,000 metric tons of coal per month loaded from either Nampo or Taean Port and delivered to China.

Pyongyang Papers wonders if any of the vessels located at Taean Port were on standby as part of the proposed deal. We estimate the profit from this contract would be in excess of $6.5 million per month– a substantial sum which will likely be used by the North Korean regime to fund the nuclear and ballistic missile program instead of providing for its citizens.

DPRK-flagged vessels laden with coal, Taean Port, DPRK, 4 April 2021- as seen in S/2021/777 UN PoE report.

Coal shortages

China is the world’s largest coal consumer. Recent flooding in Shanxi, their main coal-producing province, has impacted Chinese coal supplies. As a result, more than half the regions in Mainland China managed by the State Grid implemented power consumption rations in September 2021.

It is no surprise that China has once again turned to North Korea, given their history of illicit trade. North Korean coal is still under half the international price, despite attempts to increase price in line with international demand, making them an attractive trading partner for China. Following this, DailyNK reported that there have been more requests for coal from Chinese traders, according to their source in Pyongyang. This includes Beijing increasingly approving transactions with private North Korean traders, instead of limiting imports to official North Korean trading bodies. There are also reports that provincial civil servants in China are advising traders to take care and not get photographed when shipping coal. This could suggest that the Chinese government are well aware they are breaking international sanctions and that the international community are watching!

China Cover Up?

The evidence against China is well documented and it is highly likely there is a huge amount of activity still to be uncovered even with China’s underhand tactics to put pressure on the UN Panel of Experts to remove or edit content that may be seen as damaging to Beijing. A recent article from Foreign Policy details how the strategy of sanitizing investigations and blocking the reappointment of panel experts has been expanded to now include limiting financial resources available to sanctions experts (along with Russia) and ensuring all requests from Hong Kong based entities are channeled through the China mission to the UN, with the ultimate aim of slowing down the panels investigations. Along with the recent proposal from China and Russia to ease the sanctions on North Korea with the intent of enhancing the livelihood of the civilian population, you can clearly see that China will try anything to portray itself as an honest member of the UN whilst disregarding sanctions entirely.

The True Cost of Coal Production

China’s ongoing imports of North Korean coal undermines UN sanctions, encourages the DPRK in developing their nuclear and ballistic missile programs, and turns a blind eye to ongoing human rights abuses.

A 2021 investigation by Citizen’s Alliance for North Korean Human Rights’ (NKHR) found that the export supply chain is dependent on using enslaved labor of men, women and children in detention camps. This investigation shows that the extractive industries, particularly coal production, are fueled by a ‘pyramid-scheme’ involving political prisoners and citizens being forced to produce quotas of coal and other commodities whilst trapped in a system of slavery. NKHR argues that a full analysis of North Korea’s export supply chain is needed to understand the humanitarian impact of ongoing coal exports.

With the recent global shortages leading Kim Jong Un to call for further investment into electricity and coal production, the use of forced labor is likely to increase in order to meet demand, suggesting a bleak future for the citizens of North Korea. The DPRK continues to ignore sanctions in order to fund the development of their ballistic missiles, at a great humanitarian cost, whilst China continues to ignore international sanctions and North Korea’s human rights violations, in return for cheap coal.

Pyongyang Papers will continue to highlight countries and companies enabling sanction violations – as always please get in touch if you have any information that may help us.

Since 2017 the United Nations has listed coal amongst the goods and services sanctioned against North Korea as shown in our previous article. The security council declared that the “DPRK shall not supply, sell or transfer, directly or indirectly from its territory any coal”. The resolutions go on to say “all states shall prohibit the procurement of such material from the DPRK”.

Despite UN sanctions, trade in coal continued to be a huge revenue generator for the regime, with the DPRK continuing to export the coal illegally via deceptive maritime practices such as ship to ship transfers. This trade contributes vast sums of money to aid the DPRK regime in its proliferation of prohibited nuclear and ballistic missile program. Coal is North Korea major export and foreign currency earner with most of North Korea’s coal being exported through China in a clear breach of UN sanctions. Estimates for DPRK coal reserves at around 4.5 billion tonnes worth in the region of $600 billion.

Due to the worldwide COVID-19 pandemic, North Korea shut its borders in early 2020, resulting in a decrease in trade of up to 81%. However, it has been reported that trade between North Korea and China has resumed as of April 2021, with no doubt coal being a priority for the DPRK.

Chinese Involvement

Pyongyang papers has been investigating Chinese involvement in helping break sanctions against North Korea for some time. In 2016 police in China announced a criminal investigation into Chinese company that conducts extensive trade with North Korea. During this investigation Chinese authorities discovered that for a long time a company named Dandong Hongxiang Industrial Development Co. Ltd. engaged is suspected economic crimes during trading activities.

Dandong is the largest Chinese border city and located on the western border of North Korea, facing Sinuiju, North Korea, with the two cities connected by the Sino-Korean friendship bridge along with rail links to Shenyang and Sinuiju. Dandong Hongxiang Industrial Development operates the commodity distribution business and has a number of front companies associated with it. Dandong Hongxiang was sanctioned by the US in September 2016 and Dandong Hongxiang personnel were indicted by the US on sanctions evasion charges in June 2019. It appears that the head of Dandong Hongxiang, Ma Xiaohong, and a number of her colleagues were accused of violating the international Emergency Economic Powers Act on a conspiracy to defraud the United States and launder money. According to the indictment, Dandong Hongxiang is a Chinese company whose core business was trade with North Korea, and had at its disposal at least 20 front companies to obscure illicit financial dealings on behalf of sanctioned DPRK entities that were involved in the proliferation of weapons of mass destruction.

Ma Xiaohong, head of Dandong Hongxiang

Pyongyang Papers has received information about Dandong Hongxiang’s recent sanctions breaking activity. Our investigation would suggest that Dandong Hongxiang have not learnt from the past and have used the Chinese vessel “Hong Rui 8899” for the transportation of anthracite coal from Taean Port, North Korea. Korea Hangsong Trading Corporation was listed as the shipping company for the cargo. During our investigation Pyongyang papers has also discovered another vessel involved in transporting anthracite coal this time through Daean Port. The “Jang An” traveled from North Korea and performed a ship to ship transfer in the sea waters outside of Shanghai.

Reporting in the latest UN Panel of Experts report proves that the activity highlighted above is only the tip of the iceberg and with the DPRK regime suggesting that North Korean orphans are ‘volunteering’ to work in coal mines it is clear that the regime is willing to do anything to generate revenue. Even if this includes forced child labor and sanctions evasion!

If you have any information that could expose DPRK sanctions evasion, please get in touch.