By Jeyup S. Kwaak
SEOUL--South Korea is scheduled to receive a shipment of coal
from a North Korean port on Saturday, a rare movement of trade
between the two countries following the suspension of almost all
commercial ties after a deadly naval incident in 2010.
About 40,000 tons of Russian coal departed from the North Korean
port of Rajin, close to the Russian border, on Thursday. South
Korean steelmaker Posco will receive the shipment at the port of
Pohang, according the company.
An official at South Korea's Unification Ministry, which
coordinates inter-Korean affairs, said payment will be made to
Moscow's national rail company, Russian Railways, with some of the
money going to North Korea for use of its port and railway. Calls
to Russian Railways went unanswered on Friday.
Based on current coal prices, the shipment is worth around $4
million. North Korea is likely to receive 30% of that payment,
according to South Korean media reports. A spokesman for Posco
declined to comment on the cargo value or the payment
structure.
The deal, while described by all parties involved as a trial,
marks the first major business transaction in years involving North
Korea receiving South Korean money outside of a joint industrial
zone near their border. Other commercial ties were severed when
Seoul barred investment and participation in North Korean business
ventures following the sinking of a South Korean naval warship in
2010.
That incident killed 46 sailors and was attributed by Seoul and
an international investigation to a North Korean torpedo attack.
Pyongyang has denied any involvement.
A Unification Ministry official said that since the structure of
the deal involves payment via a third country it isn't subject to
Seoul's sanctions against Pyongyang. The official, who requested
customary anonymity, said the exception was also made in order to
promote President Park Geun-hye's "Eurasian Initiative," which aims
to link Europe and East Asia with energy and transport
networks.
Since 2010, the sole major money transfers from South Korea to
North Korea have been payments at the Kaesong Industrial Complex at
a North Korean border town, where South Korean companies
manufacture basic products such as clothing and household goods
using North Korean labor. Seoul pays Pyongyang about $90 million a
year as wages for about 50,000 workers at the plant.
The deal also comes despite a nose dive in inter-Korean
relations following two incidents of North Korean troops firing
over the border in recent weeks.
The planned delivery follows an agreement by Ms. Park and
Russian President Vladimir Putin last year for a South Korean
consortium to help develop the North Korean port and upgrade the
North's railway network linking it to Russia, and potentially South
Korea.
Mr. Putin has for many years sought to develop the Russian Far
East. The ultimate goal has been to extend the trans-Siberian
Railway and gas pipelines to the Korean Peninsula--across North
Korea to South Korea--becoming a key carrier for cargo and energy
between East Asia and Europe.
For North Korea, the project is an opportunity to earn hard
currency and have others help upgrade its infrastructure. Rajin
port is ice-free year-round, making it attractive for Russia and
potentially China for cargo use.
Posco's coal imports from Russia normally leave from the port of
Vladivostok, north of Rajin. The Posco spokesman declined to
comment on the relative merits of using Rajin and Vladivostok.
Employees of the three South Korean companies in the consortium,
Posco, shipper Hyundai Merchant Marine and state-owned rail
operator Korail traveled to Rajin to study the project and prepare
the shipment, according to the ministry. A Hyundai spokeswoman
declined to comment. A Korail spokesman couldn't be reached for
comment.
The coal shipment also follows a meeting last week between Mr.
Putin and Choe Ryong Hae, a close aide of North Korean leader Kim
Jong Un. Details of their talks haven't been made public, but
analysts say Pyongyang has turned to Moscow for more strategic
support because of its concerns about Beijing's warming ties with
Seoul.
Chinese President Xi Jinping and Ms. Park have met multiple
times since they came to power early last year. Earlier in November
they announced the outline of a bilateral free-trade deal.
--Alastair Gale and Rhiannon Hoyle contributed to this
article.
Write to Jeyup S. Kwaak at jeyup.kwaak@wsj.com
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