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Coal from Russia arrives via North

Chinese ship bound for Pohang kicks off Rajin-Khasan project

Nov 29,2014
For the first time ever, Russian coal shipped through a North Korean port will reach South Korea on Saturday morning .

According to the Ministry of Unification on Friday, 45,000 tons of Siberian bituminous coal, transported from the Siberian town of Khasan via a new 54-kilometer (33.5-mile) railroad to Rajin in northeastern North Korea, left Thursday on a Chinese ship for the southeastern port of Pohang in South Korea.

It is the first shipment of the so-called Rajin-Khasan project, a trilateral trade agreement among Russia and the two Koreas proposed at the Korea-Russia presidential summit in November 2013.

The project aims to reinvent Rajin as a trade hub. The Khasan-Rajin railway is the product of a Russia-North Korea venture started in 2008. Railway construction and the port’s renovation were completed in September.

A South Korean business consortium of Posco, Korail and Hyundai Merchant Marine reportedly has decided to join the Rajin-Khasan project by acquiring 50 percent of shares owned by Russia. The stake is estimated to be worth between 180 billion won and 200 billion won ($162 million and $180 million).

The project was broached during a November summit last year between President Park Geun-hye and her Russian counterpart Vladimir Putin on the so-called Eurasia Initiative, in which Park proposed a new Silk Road railway network that would connect the Korean Peninsula, China and Russia.

Park and Putin shared the view that involving North Korea in economic development should be a significant part of the initiative.

South Korea hopes the Rajin-Khasan project will be a starting point for the resumption of economic exchanges with Pyongyang that were suspended after the Lee Myung-bak government imposed sanctions on the North on May 24, 2010, in the wake of the sinking of the Cheonan.

“This is not just a business project concerned mostly with economic value. It also has political value by contributing to peace in Northeast Asia,” said Lee Seung-ryul, director general at the Russia Trade Division under the Trade Ministry.

“The project will be a good example for South Korean businesses interested in Siberia. Russia, and Siberia in particular, has a close economic relationship with North Korea, so South Korean companies that join the relationship will help both economic and political relations among all three countries.”

The Chinese vessel was initially scheduled to leave Rajin on Friday morning, but the transportation and loading process went smoothly and it left at 9:30 p.m. Thursday, the Unification Ministry spokesman confirmed.

The vessel was scheduled to arrive at Pohang between 5 a.m. and 6 a.m. Saturday, said the ministry. Unloading of Siberian coal will start Monday morning.

Fourteen South Korean government officials and representatives of the private-sector consortium are returning Saturday from a five-day trip to Rajin to observe the shipping process.

According to the JoongAng Ilbo, Posco, Korea’s largest steelmaker, imports two million tons of Siberian coal annually through the Russian port of Vladivostok.

Russia, which accounts for 8 to 9 percent of Posco’s coal purchases, is the fourth-largest supplier country after Australia, Canada and the United States. Posco told the JoongAng Ilbo it hopes to use Rajin in the future, as Siberia is known to have large coal reserves and using the North Korean port would reduce shipping costs.

BY KIM JI-YOON, LEE YOUNG-JONG AND LEE SANG-JAE [jiyoon.kim@joongang.co.kr]


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