Russia is significant trading partner for North Korea
In 2016, the almost $1.2 billion value of North Korean coal exports accounted for about 40 per cent of their total export revenue, according to the U.S. Energy Information Administration.
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 Feb. 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.
In Nov. 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 Dec. 2016, this cap was 1.1 million short tons or $53.5 million, whichever is lower.
Beginning Jan. 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 per cent 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 Nov. 2016—after the March U.N. resolution—were 13 per cent higher than in 2015.
In Dec. 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 Dec. imports to a time lag between the issuance and implementation of the sanctions.
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 Feb., 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.
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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.
