North Korean state-run companies have begun hoarding molybdenum ore, causing the price of the high-tech industrial input to spike in a move that suggests that trade with China could resume soon, sources in the country told RFA.
Since January 2020, Beijing and Pyongyang closed their 880-mile border and suspended all trade to prevent the spread of coronavirus. The move has had disastrous effects for the North Korean economy, especially for those industries that rely on trade with China for raw materials or as a market to sell goods.
Molybdenum is a rare-earth metal with a very small yield that is essential for the manufacture of alloy steel and is used for its electromagnetic and heat-resistant properties in the semiconductor, precision machinery, high-speed train, and aviation industries. North Korea’s supply of molybdenum ore has been off-limits to China during the pandemic.
Hoping to cash in when the border reopens, trading companies have begun stockpiling molybdenum, which they anticipate will be in high demand.
“Since last week, the military-affiliated Kangsung trading company has been buying hundreds of tons of molybdenum ore concentrate that had been piled as high as a mountain at the Paegam mine,” a resident of North Korea’s central northern Ryanggang province told RFA’s Korean Service on March 10.
“All of the ore concentrate is transported to Hyesan, where the trading base of Kangsung is located,” said the source, who requested anonymity for security reasons.
Hyesan lies just across the border from China. Once trade resumes, the ore stored in Hyesan could be shipped across the border quickly.
“The border closure put a stop to the ore trade and smuggling. During that time the price of molybdenum fell to 5,000 yuan [about U.S. $770] per ton, and 30,000 yuan [about $4,600] per ton of molybdenum powder. But once Kangsung started hoarding it, molybdenum powder rose to 50,000 yuan [about $7,700] per ton,” said the source.
According to the source, Kangsung is a powerful company that is believed to have insider information that the border will reopen soon. People think the company is hoarding ore because it expects that trade will resume soon.
The source also said that Kangsung is using money from its Chinese trading partner to buy the ore, which points to a trade resumption sooner rather than later. By hoarding the ore, the company could manipulate prices and sell the ore at a substantial profit.
Another source, a resident of North Pyongan province in the county’s northwest, told RFA that other companies are looking to get in on molybdenum.
“As more and more trading companies want to buy molybdenum ore concentrate here in North Pyongan, the mines are beginning to focus on shipping their stockpiles of ore,” the second source said.
“Bags of the ore concentrate piled up in the open air for the duration of the coronavirus crisis are now transported one after another by truck,” the second source said.
The second source said a ton of molybdenum ore concentrate rose from 50,000 yuan to 70,000 yuan [about $10,700] in Sinuiju, a major trade city located across the border from Dandong, China.
“If border trade resumes in three months, and if they continue to buy ore concentrate right now, the profit will be considerable,” the second source said.
When trade was open before the coronavirus, molybdenum powder was worth almost 130,000 yuan (about $20,000) according to the second source, who anticipated that others would try to cash in on rare-earth element ores.
“While the powerful trading companies have taken the lead in hoarding ore concentrates, the wealthy class will probably look into hoarding some themselves.”
Reported by Hyemin Son for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Eugene Whong.