Russia To Revamp North Korea's Rail System, Eyes Mineral Resources

Russia and North Korea are considering a deal that would allow Russia access to the pariah nation’s mineral resources. Moscow reported that in exchange for access to the North’s mineral-rich lands, Russia would invest $25 billion into revamping the country’s dated railway network.

According to Russia’s state-run Rossiskaya Gazeta, which quoted Russia’s minister for development of Far Eastern Russia, Alexander Galushka, the project would take on the task of updating roughly 3,000 km, or about 1,875 miles, of the North’s railroads over the span of 20 years.

“It is a commercial project that is mutually advantageous,” Galushka told the newspaper. The railways being updated would also include those that provide access to the North’s mineral deposits and other natural resources.

North Korea is thought to be the home a vast amount of resources and a significant portion of the world’s rare minerals, based on independent studies. Earlier this year, British firm SRE Minerals Limited found that samples from Jongju, North Korea, could mean the nation holds an estimated 216 million tons of rare earth oxides, more than double of the value of the world’s current stockpiles. The country counts its minerals as its top exports, and a significant factor in driving the economy mostly through trade with the Communist nation's largest economic partner, China.

There are some precedents when it comes to foreign mining in North Korea.

For the most part, the issue is accessing the resources in a country with dated or ill-equipped infrastructure. According to SRE, the company Pacific Century Rare Earth Minerals Limited, based in the British Virgin Islands, is currently involved in a 25-year contract to develop and mine the Jongju deposits, which includes building out mining infrastructure on site, like processing plants, and assisting with transportation costs.

While North Korea seems to be opening up its mineral resources to the world, the country does have a reputation of abruptly cancelling contracts with foreign companies. According to a report by the Diplomat, in the past, political instability between the governments of the home nations of foreign companies and Pyongyang was enough cause to pull the plug on long-term contracts, seemingly on a whim. For example South Korean mineral companies lost out on investments after tensions between the two Koreas resurfaced, when the South's "Sunshine Policy" of openness to the North in the 1990s fell through.