North Korea eludes coal export ban via Vietnam
Shipping records show a steady stream of North Korean coal shipments to Vietnam's Cam Pha port, from where the fuel is likely re-exported in violation of UN sanctions
To carry coal to Newcastle is an old English idiom meaning to do something that’s obviously superfluous, as the northeastern English city is renowned for its coal-mining.
But the saying has new meaning in Southeast Asia’s context as security analysts in the region have recorded frequent arrivals of North Korean ships loaded with coal to the north Vietnamese port city of Cam Pha, in northern Quang Ninh province bordering China, from where coal is generally exported not imported.
Vietnam is a leading supplier of coal in the Asia-Pacific region and there would seemingly be no need for the country to import coal from North Korea. According to official statistics, Vietnam exported more than two million metric tons of coal worth US$295 million in 2017, with the main importers being Indonesia, Japan, Malaysia, South Korea and Thailand.
The security analysts suspect that North Korean coal is being shipped to Vietnam and then re-branded and re-exported as Vietnamese coal to circumvent international sanctions against Pyongyang. Vietnam, an old communist ally with limited transparency and accountability, would be an ideal location for such re-shipments, the security analysts contend.
According to a series of UN Security Council resolutions aimed at preventing North Korea from funding its nuclear and ballistic missile programs, exports of coal, iron, lead, textiles and seafood are banned. The sanctions also include a cap on North Korea’s imports of crude oil and refined petroleum products.
The most recent expanded UN sanction, implemented on December 22 last year, states that member states are required to “address the DPRK’s (Democratic People’s Republic of Korea) illicit exports of coal and other prohibited items as well as illicit imports of petroleum through deceptive maritime practices…[and] to seize, inspect and freeze any vessel in their ports and territorial waters for involvement in prohibited activities.”
Even so, a recently leaked confidential UN report states that North Korea earned US$200 million last year alone from banned commodity exports. And more than any other item, coal is believed to provide Pyongyang with badly needed foreign exchange.
Official international shipping records reviewed by Asia Times show that on August 31, 2017, the Panama-flagged Kai Xiang loaded coal in the North Korean port of Nampo and finally reached Cam Pha on September 18. Three days later, another ship, Xin Sheng Hai, this one registered in Belize, also reached Cam Pha loaded with North Korean coal.
A third ship, Xin Guang Hai, flying the flag of Togo, loaded coal in Songnim in North Korea with the declared final port of call being the larger Vietnamese port city of Haiphong. In late October, yet another ship bound for Cam Pha and loaded with coal, Asia Bridge 1, registered in Tanzania, departed North Korea. The Panama-flagged Forever Lucky ship full of North Korean coal left the country on December 9 and reached the Vietnamese coast on December 22, the records show.
The shipments underline a clear pattern and trend of obfuscation. The use of different flags of convenience and ships leaving North Korea with coal destined for Vietnam have been noticed since China suspended imports of North Korean coal in February last year.
Although smaller quantities of coal are known to be moved across North Korea’s northern border with petrol flowing the other way, China is believed to have adhered strictly to the UN’s sanctions policy.
Vietnam, which maintains close ties to North Korea as a fellow socialist regime, appears to be the main country through which North Korean coal is re-exported. But according to well-placed sources in the shipping industry, there has also been a recent rise in the number of shipments from ports on North Korea’s east coast, presumably to Nakhodka in nearby Russia.
Little is known about those shipments, but they are believed to include coal and possibly also scrap metal, which could be re-exported to other countries. Chinese companies have for years imported scrap metal from dismantled factories in the Russian Far East, and it would be easy to include North Korean scrap metal in those sales which are often conducted over remote land borders between Russia and China.
On January 26, Reuters reported that North Korea shipped coal to Russia in 2017, which was later delivered to South Korea as Russian coal.
North Korea has vast coal deposits including rich stores of anthracite, the purest form of the sedimentary rock. Total reserves of anthracite may total over 4.5 billion metric tons, according to a 2011 report by the US-based Nautilus Institute for Security and Sustainability, a think tank.
A major mine is located at Jikdong in North Korea’s South Pyongan province which has estimated reserves of 330 million tons of lignite, believed to be one of the largest such reserves of the power plant fuel source in Asia.
Another major mine is located at Gogeonwon in North Hamgyong, the northernmost province of North Korea bordering China. Much of the coal mined at those two locations is used domestically in North Korea’s own thermal power plants. But in 2013 – before sanctions came into force and China stopped its imports – North Korea briefly surpassed Vietnam as the world’s top exporter of anthracite.
Apart from missile technology and weapons, coal used to be one of North Korea’s most lucrative exports. Notoriously killed in the art of dodging international sanctions, it appears that North Korea has found new ways and means to continue exporting coal.
It is not known who might be the middlemen in Cam Pha, but all coal in Vietnam is owned by the state through a holding company known as Vietnam National Coal-Mineral Group, or Vinacomin. Vietnam’s Department of Geology and Minerals under the Ministry of Natural Resources and the Environment administers all mining activities in the authoritarian-run country.
Analysts monitoring the situation say the situation is complicated at Cam Pha, where local private subcontractors could be involved in the apparent illicit shipments.
Nor is it apparent that the US defense establishment is aware of the sanctions-busting coal shipments. US Secretary of Defense Jim Mattis praised Vietnam’s “leadership” on adhering to the sanctions against North Korea during his visit to Hanoi on January 24.
North Korea’s network of contacts also likely goes beyond the immediate region. In December, Choi Han Chan, a 59-year old ethnic Korean, was arrested in Australia for allegedly breaching UN sanctions and Australian federal law, according to news reports.
He stands accused of brokering sales of North Korean missile components and coal on the international market through entities in Indonesia and, not surprisingly, Vietnam. No precise details have been publicly disclosed in that case, the first involving a broker in a foreign country involved in illicit North Korean exports.
But whatever is happening behind North Korea’s closed doors and within its networks of agents across the region, it is clear there is no reason why Vietnam should import North Korean coal unless it was meant for re-export.