Strategic Value, but Limited Prospects: North Korea’s Cement Industry
In recent months, Kim Jong Un has focused significant attention on the cement industry; he specifically highlighted it in his speech to the Eighth Party Congress in January and set a cement production goal of eight million tons in the recently announced five-year economic plan. Nonetheless, as of now, the industry is not likely to become a cornerstone of the North Korean economy. The current border closure and lack of hard currency make it difficult for the country to import key materials for expanding the industry in a meaningful way, and cement production is unlikely to reach sufficient quality for export anytime soon.
The Cement Industry
The cement industry has a long tradition in North Korea. Cement became a favored construction material early in the country’s history. Forests on the peninsula were badly damaged during the Korean War (1950–1953), and wood was thus in short supply as a building material. Most construction in the country, therefore, is done with cement as well as brick and stone, which require mortar (where cement is a central ingredient).
The cement industry has figured prominently in Kim Jong Un’s recent remarks and North Korean media coverage of the Eighth Party Congress; in his concluding speech there, Kim declared that the state must provide “10,000 tons of cement to every local city and county” every year. The emphasis on cement is in part tied to one of the key production targets of the recently announced five-year economic plan: construction of 50,000 new apartments in Pyongyang (or 10,000 per year), as well as 25,000 new flats in Komdok, a mining town badly hit by flooding last year. To underscore the importance of hitting this target, in late March, Kim attended a groundbreaking ceremony for the construction of 10,000 new apartments in Pyongyang.
To meet these targets, the state has set goals to update existing factories and build new ones to produce eight million tons of cement and ensure self-sufficiency in construction materials within the five-year plan. These plans also have a political rationale: to show the general public that the state takes seriously its promises to improve the quality of life. An increase in cement production is a means toward this end—and, therefore, to bolstering Kim’s legitimacy.
Cement is used for an array of construction projects, including hospitals, commercial buildings, housing, new roads, and dams to control water flow and provide essential hydroelectric power to help meet the country’s energy needs. Cement is also likely used for asphalt in North Korea to a greater extent than in other countries since asphalt manufacturing requires crude oil, which North Korea has long struggled to import in sufficient quantities.
Given its natural resource assets, cement production in many ways makes sense for North Korea. It has an estimated 100 billion tons of limestone, one of the central components for cement manufacturing. Moreover, North Korea’s high-quality river sand, used in the making of concrete, is equally plentiful.
In early March of this year, a North Korean business delegation visited central China to inspect several chemical industry companies, including a cement producer. Such visits have been extremely rare since North Korea closed its border to China in early 2020 due to the COVID-19 pandemic and show that the state currently prioritizes the industry.
The numerous construction projects that dot the North Korean landscape, often with high propaganda value, require large amounts of cement, making cement production capacity vital. In addition to the promised apartment construction, the Pyongyang General Hospital is another example of the connection between cement production and highly publicized construction projects. In Rodong Sinmun in March 2020, the manager of the Sunchon Cement Complex—one of the country’s largest cement-producing facilities—wrote an article with the headline “More Cement to Pyongyang!” vowing to heed Kim’s call to speed up production efforts for the hospital.
Like much of the recent five-year plan, the emphasis on the cement industry is likely born out of necessity. The quantitative goal of eight million tons would entail only a modest increase of about one-third from the current production level of six million tons per year. Furthermore, domestic manufacturing of cement is relatively easy to control; production can be accelerated quickly to meet quantitative goals, providing Kim with an easy “win” where other economic gains are difficult to achieve.
In the past, North Korea has both imported and exported cement, almost solely in trade with China. These exports, however, have amounted to only a few hundred thousand tons per year, around five percent of the annual production. It is unlikely the government envisions any serious increase in cement exports. Any wholesale upgrade of the industry would require expensive investments in equipment that would also be difficult to acquire during the current border closure and sanctions regime. Moreover, operating costs such as electricity have reportedly risen with the higher cost of fuel. The use of anthracite coal for cement manufacturing requires heavy fuel oil as an input, which forced the state early last year to order factories, when oil supplies dwindled, to change to a different sort of coal that needs less fuel oil. In other words, North Korea’s main goal is domestic manufacturing and use; indeed, studies show that the quality of its cement is not sufficient for export to customers other than ones whose main concern is to find the lowest possible price.
The North Korean government has emphasized increased cement production since the Eighth Party Congress. While there is a real domestic need for enhanced cement production, it is unlikely to contribute significantly to the economy as a whole. However, it appears that the cement industry has a higher priority on the government’s agenda primarily because meeting increased production targets can be accomplished relatively easily even under the dismal economic conditions the country faces, and with mostly domestically sourced inputs.
I am very grateful to David von Hippel at the Nautilus Institute for valuable information and comments. All opinions and errors belong solely to the author. See also: “Great Programme for Struggle Leading Korean-style Socialist Construction to Fresh Victory On Report Made by Supreme Leader Kim Jong Un at Eighth Congress of WPK,” DPRK Ministry of Foreign Affairs, January 9, 2021, http://www.mfa.gov.kp/en/on-report-at-eighth-congress-of-wpk/.
“WPK General Secretary Kim Jong Un Makes Concluding Speech at Eighth Congress of WPK,” Korean Central News Agency, January 13, 2021.
“Great Programme for Struggle Leading Korean-style Socialist Construction to Fresh Victory On Report Made by Supreme Leader Kim Jong Un at Eighth Congress of WPK,” DPRK Ministry of Foreign Affairs.
“On Report Made By Supreme Leader Kim Jong Un at 8th Congress of WPK,” Korean Central News Agency, January 9, 2021.
I am grateful to David von Hippel to providing me with this information.
Estimates are from 2009. See Choi Kyung-soo, “The Mining Industry of North Korea,” Nautilus Peace and Security (NAPSNet) Special Reports, August 04, 2011, https://nautilus.org/napsnet/napsnet-special-reports/the-mining-industry-of-north-korea/.
See: “더 많은 세멘트를 평양으로!,” KCNA, March 20, 2020; and Jeongmin Kim, “North Korean officials vow ‘all-night battle’ to build new Pyongyang hospital,” NK News, March 20, 2020, https://www.nknews.org/2020/03/north-korean-officials-vow-to-wage-all-night-battle-to-build-new-hospital/.
I am grateful to David von Hippel for providing me with these figures.