U.N. Cutting North Korean Coal Exports Could Decrease North Korean Export Earnings

In 2016, North Korea exported about $1.2 billion of coal – about 40% of the country’s total export revenue. But the U.N. is about to impose a new $400 million cap on North Korean coal exports – about one-third of the previous average.
This article details the data behind the decision. Left unsaid is the affect it will have on a desperate country that is willing to ignore the U.N. ban of its nuclear testing program. Clear is the intersection of geopolitics and energy once again.

(EIA) – In 2016, the almost $1.2 billion value of North Korea’s coal exports accounted for about 40% of their total export revenue. A cap imposed by the United Nations (U.N.) on imports of coal from North Korea would limit North Korea’s coal export earnings to about US $400 million in 2017, about one-third of the previous five-year average.In March 2016, U.N. Resolution 2270 condemned North Korea’s January 2016 nuclear test and its February 2016 ballistic missile launch. As part of the resolution, the U.N. decided that all member nations should prohibit imports of coal from North Korea. However, Resolution 2270 included two exclusions: first, U.N. members are permitted to import coal that originates outside of North Korea and transits North Korea’s port of Rajin, and second, U.N. members are permitted to import coal for humanitarian purposes.

Source: U.S. Energy Information Administration, based on reported trade data from North Korea’s trade partners, as accessed through Global Trade Tracker

In November 2016, U.N. Resolution 2321 reaffirmed the earlier imposed sanctions, and it placed a cap on total coal imports for humanitarian purposes to all U.N. member countries. For December 2016, this cap was 1.1 million short tons or $53.5 million, whichever is lower. Beginning January 1, 2017, total annual coal imports for humanitarian purposes was capped at 8.3 million short tons or $400.9 million, whichever is lower.

More than 99% of reported coal exports from North Korea went to China in 2016. According to Chinese trade data, Chinese imports of coal from North Korea from April through November 2016—after the March U.N. resolution—were 13% higher than in 2015.

In December 2016, the first month when U.N. Resolution 2321 was in effect, China reported importing slightly more than 2.2 million short tons of coal originating in North Korea, an amount more than twice the United Nations’ volume limit, with a total value of $184 million, a value more than three times the United Nations’ value limit. China attributed the excess December imports to a time lag between the issuance and implementation of the sanctions.

Source: U.S. Energy Information Administration, based on United Nations Procurement of DPRK coal by Member States

In the first two months of 2017, China’s reported imports of coal originating in North Korea were more than one-third of the annual U.N. volume cap and more than half of the annual U.N. value cap. In late February, China announced that it was banning imports of North Korean coal for the rest of the year. U.N. data indicate that one unidentified country imported a minimal amount of coal from North Korea in March.

Russia is also a significant trading partner for North Korea. In 2014, the railroad line between Russia and the North Korean port of Rajin was renovated, and the coal facilities at the port were modernized. Rajin, near North Korea’s border with Russia and China, is part of the Rason Special Economic Zone. After completion of the rail and port project, the level of Russian coal transiting North Korea increased sharply, from 0.1 million short tons in 2014 to 1.1 million short tons in 2015 and 1.5 million short tons in 2016. Reported North Korean imports of Russian coal in the first quarter of 2017 were slightly higher than in the first quarter of 2016.

EIA does not have a basis for assessing the accuracy of reported trade data or determining whether or not all of the coal moving through Rajin that is sold pursuant to the exemption for coal originating outside of North Korea is actually sourced from abroad.

Source: U.S. Energy Information Administration, based on reported trade data from North Korea’s trade partners, as accessed through Global Trade Tracker

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This article was originally published here on Today in Energy.

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