China pressed iron ore traders to halt business even before U.N. sanctions

BEIJING/MANILA (Reuters) - China was pressuring its iron ore traders to stop buying the commodity from North Korea even before a United Nations Security Council vote this month to ban the trade as punishment for Pyongyang’s missile tests, two traders said.

FILE PHOTO: A North Korean iron ore mine (L) is seen near the North Korean town of Musan, in this general view taken May 11, 2013. REUTERS/John Ruwitch

The U.N. Security Council unanimously passed a resolution on Aug. 6 banning North Korea’s exports of coal, iron, iron ore, lead, lead ore and seafood, in a bid to choke off a third of Pyongyang’s $3 billion annual export revenue.

The U.S.-drafted resolution to crack down on major commodity exports was aimed as punishment for intercontinental ballistic missile (ICBM) tests in July and is due to take effect in early September.

But a veteran trader based at the port of Rizhao who deals in coking coal and anthracite and a Beijing-based iron ore trader with a company that handles North Korean iron ore said the government stopped issuing permits to bring in iron ore several weeks ago.

Both declined to be identified as they are not authorized to speak to the media.

The first source said authorities began the halt about two weeks ago and the second trader said it was enforced about 20 days ago.

The reason for the move, which was not publicly announced, was not clear, but it suggests Beijing was taking a tougher stance on trading with its northern neighbor even before the UN sanctions were announced.

The crackdown on North Korean iron ore exports is unlikely to cause big ructions on the global market and mills in the world’s top steel producer are likely to find alternative supplies.

But cutting off more of its major commodity exports is likely to tighten the screws on Pyongyang’s access to cash.

On Monday, Beijing issued an official ban on the imports effective from Tuesday as it moved to implement the sanctions.

China’s commerce ministry declined to comment on the clampdown before the sanctions vote, referring Reuters to its statement on the official ban on Monday.

In February, China suspended purchases of North Korean coal, its neighbor’s primary export, in a drastic step to punish Pyongyang for an intermediate-range ballistic missile test. Since March, customs data has shown no coal cargoes have arrived from North Korea in the world’s top user of the fuel.

“I do think China is committed to implementing the measures,” said Zhao Tong, a fellow at the nuclear policy program at the Carnegie-Tsinghua Centre for Global Policy in Beijing.

“There’s always a possibility of smugglers, but I think the government and state-owned companies and lawful private sector business will generally implement the government’s orders.”

North Korea was ranked 18th among China’s foreign iron ore suppliers last year, although volumes have jumped this year.

Imports were up an annual 60.3 percent at 1.34 million tonnes worth an estimated $68 million in the January-June period. [MTL/CHINA3]

That almost surpasses 2016’s total of 1.64 million tonnes, worth an estimated $90 million. But it was a fraction of the more than 1 billion tonnes of the steelmaking ingredient that China imported last year.


Iron ore cargoes from North Korea usually sell for about 100 yuan a tonne less than those from top suppliers, Australia and Brazil, a third China-based trader who handles iron ore but is not involved in North Korean business said.

It is usually in concentrate form with relatively high iron content of 60-63 percent, he said.

Last week, a senior customs officer at the port of Rizhao in Shandong, a major hub for iron ore imports, told importers and traders assembled at a gathering not to import iron ore from North Korea any more and stressed the risks of doing business with the country given the bans on trade, the trader said.

He attended the meeting and witnessed the speech and said he believed the comments reflected a broader nationwide message from government.

“The customs officer said traders and importers have to pay more attention to the risks,” the trader said after the meeting.

For a graphic on China's trade with North Korea, click: here

Additional reporting by Josephine Mason and Beijing bureau; Writing by Josephine Mason; Editing by Raju Gopalakrishnan