North Korea’s Cement Industry: Further Concrete Leads – 38 North

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After not one but two articles this month already on North Korea’s cement industry, 38 North readers might feel that this is all the, ahem, concrete information they need, or which exists.

Not quite. Benjamin Katzeff Silberstein gives a fine overall summary of this key sector. Peter Makowsky, Jenny Town, Michelle Y. Kae and Samantha J. Pitz add more depth and a wealth of illustrations of the various cement works and related mines dotted around the DPRK. They allow that the bird’s-eye view offered by satellite imagery can’t tell us everything: a point reinforced by Martyn Williams’ vivid screengrabs from Korean Central Television (KCTV) (Figure 7). Satellites reveal the big picture: the lay of the land. But we need ground-level data as well; and it can be mined.

What else do we know, or might be known, about North Korean cement? Potentially, quite a lot. My aim here is to complement these excellent pieces by pointing to additional lines of inquiry, which I hope others will explore further. (Or maybe they already have: let us know!)

Broadly, there are three such strands. First, local media, official and unofficial, can add valuable detail if used with care. Second, in some instances, historical sources are available, including personal memoirs. And above all, thirdly, there are foreigners out there who know a lot about the DPRK cement industry—because they built it, installed it, and in at least two cases actually owned a chunk of it.

In this instance, as in many, Juche is a lie—or at best a half-truth and aspiration. North Korea did not build a cement industry on its own. The oldest facilities predate the peninsula’s 1945 partition. The newest, world-class at the time, were foreign-bought; and later, for a time, foreign-owned.

This short article draws on such diverse additional resources. Using them can give us more detailed, concrete (sorry) insights into North Korea’s cement industry, both historically and in the present day. Yet it barely scratches the surface: I hope this will inspire others to dig more deeply. To that end, I suggest pointers for further research—including foreign companies involved, who should be easier to access than the DPRK itself.

Triangulating Sunghori

Using the internet to triangulate different sources yields fascinating and varied insights. Take Sunghori, just east of Pyongyang—or actually part of it until 2010, when the DPRK capital was downsized as an administrative unit by over one-third. Now in North Hwanghae, Sunghori has—or perhaps had—a small cement works for a hundred years. What do we know about it?

Missionary nuns, for starters. (You didn’t expect that.) Let’s travel back in time to a very different Korea: occupied by Japan since 1910, and not yet cut in two. Back then, Pyongyang was called “Jerusalem of the East,” as the Christianity preached by mainly US missionaries since the 1880s flourished, especially there. It helped that the new churches also pioneered modern education and health care. Evoking a Pyongyang childhood during the late 1930s in this milieu, the late Dr. Joseph Song, later a distinguished pathologist in the US, mentions in his vivid 2008 memoir My Mother, “three nun-physicians at the cement factory in…Sunghori.” Over 20 years, this American trio learned Japanese, passed medical exams in that language, then looked after the Sunghori cement workers and their families. By 1940 they were exhausted (no wonder), and Japan—which never liked the missionaries; it was mutual—wanted foreigners out; so back to the US they went. A glimpse of a vanished world.

By then, the Sunghori Cement Factory was already two decades old. Established by Onoda of Japan, its early years are tracked in a fascinating monograph (partly available online) and article by Soon Won Park, focused on industrialization and labor relations. (She also covers post-1945 developments at Onoda’s historically important Samcheok (Samchok) plant in South Korea, later owned by Tongyang and since 2015 part of Sampyo Cement, the ROK’s fourth-largest producer.)

Onoda built two further cement plants that are still going strong in North Korea: at Chonnaeri in Kangwon, said to have recently doubled output; and Komusan in North Hamgyong, which after problems in 2019 reportedly devised a substitute for gypsum in 2020.[1]

Back to Sunghori. After 1945 the Soviet military kept on 35-40 Japanese engineers as trainers and supervisors, some for three years. The next foreigners on the scene, a decade later, were Romanians offering post-Korean War reconstruction aid: part of a whole phalanx of Russian, Chinese and East European assistance in the 1950s.[2] Pyongyang today is silent on all that, but scholars should fight this false erasure. If not too late, records and reminiscences from the countries and persons involved would be invaluable: not only to historians but also for understanding North Korea’s industrial landscape today.

As for Sunghori Cement, two years ago, Daily NK claimed it was “facing shutdown”; being old, geographically inconvenient, technologically outmoded and overshadowed by the much newer Sangwon Cement Complex—on which more below.[3] But 2019’s three-month closure, attributed to electricity shortages, seems to have been temporary. With at least four mentions so far this year in DPRK media, Sunghori Cement is still steaming away in its second century.[4]

Yet Sunghori has indeed become a minor player. The big guns—they like that metaphor[5]—in DPRK cement today are at Sunchon and Sangwon, with a reported annual capacity of 3.5 and perhaps 3 million tons, respectively. The rest of this article will focus mainly on Sangwon: still, I think, the DPRK’s newest major cement facility. Its origins and ownership are unusual, interesting and promising for researchers—given its successive diverse foreign connections.

Sangwon, It’s Been Good To Know You

Sangwon Cement Factory (Source: KCTV via Martyn Williams)

I visited the Sangwon Cement Complex in 1990, when it was new. Even to a non-expert eye, it looked impressively modern, if less so than Posco’s jaw-dropping steelworks in the ROK.[6] Since I was nominally a tourist, my request had raised eyebrows at Ryohaengsa—“A cement works? Why a cement works?”—but my guide, Mr. Kim, was a born fixer, and off we went.

Sangwon was interesting because of its provenance. From the 1970s, the DPRK realized it needed better technologies than the Soviet bloc could offer, and sought them in the West (as well as Japan). Buying mostly on credit, it soon fell into arrears. By the 1980s, the world had wised up: terms for Pyongyang were payment upfront, in full. So to get an ultra-modern cement works from West Germany’s KHD, they paid cash: $160 million, if memory serves.[7]

It should therefore be easy in principle to approach KHD, and/or former staff members who arranged the sale, installed the equipment, and perhaps had a continuing role. Maybe that has already been done; perhaps there are books, PhDs or other studies in German out there. But if not, someone should get to work before those involved go to the great blast furnace in the sky—as must already be true for many of the hundreds (thousands?) of East European and Soviet comrades who helped rebuild the DPRK in the 1950s. Hopefully, these too already have their chroniclers, in Russian and other languages. And no doubt the Korean Central Intelligence Agency (KCIA) was on the case. Does its successor, the National Intelligence Service (NIS), ever unlock some of its older, less compromising archives? Presumably, these form part of what the Bank of Korea (BOK), the ROK central bank, draws on when compiling its own estimates of DPRK economic data.

The 1980s grow distant now, but Sangwon Cement’s first foreign link was not its last. Fast forward two decades. In July 2007, Egypt’s Orascom paid $115 million for a 50-percent stake. A rare instance of inward foreign direct investment (FDI) by a major multinational, Orascom’s first North Korea venture has garnered much less scrutiny than Koryolink, its mobile phone foray, which began a year later. Telecoms was the big prize for Orascom, though it would also prove a headache. Maybe starting with cement was a sweetener or loss-leader, to show Kim Jong Il that the Sawirises had serious money to invest and meant business. It worked.

Yet this proved short-lived. Just months later, in January 2008, Orascom sold its stake in Sangwon to France’s Lafarge, the world’s largest cement maker. Far from a DPRK play as such, this was a tiny part of a very big deal: Lafarge bought Orascom’s entire global cement portfolio, paying $15 billion. The Middle East was the main lure, but Lafarge did not neglect its slightly accidental North Korean acquisition. In 2015, DPRK media praised it for adding two new furnaces at Sangwon. But in 2017, what was now the Franco-Swiss LafargeHolcim made its exit. Details were sparse, but no doubt the reason was 2016’s tightened United Nations (UN) and other sanctions; presumably, a DPRK entity bought it back. At all events, a large Western company has a wealth of recent first-hand data on the DPRK’s flagship cement plant. All this could and should be explored by researchers. Or maybe the research is out there en français?

Sangwon’s foreign ownership episode is unique in the cement sector, and very rare—even before sanctions—for the DPRK overall. Foreign technology, however, is another matter. According to one industry yearbook, the Sunchon Cement Complex—North Korea’s largest, built in 1977 with an annual capacity of three million tons—uses a dry-process plant supplied in the 1980s by Denmark’s FLSmidth, another leading global company. Unlike KHD’s transaction with Sangwon, this is not well-known. If confirmed, presumably FLSmidth too was paid a huge sum in cash. Was there a continuing relationship? All this can and should be explored.

Not Much, Not Much Good

Finally, the two Qs: Quantity and quality. How much cement does North Korea produce? And is it any good? Short answer: Not a lot, and not very. OECD’s useful 2020 working paper on the DPRK economy includes 28-year data runs (citing BOK) for coal, steel and cement.

Koen, V. and J. Beom, “North Korea: The last transition economy?”, OECD Economics Department Working Papers, No. 1607 (2020): 9. Source: Bank of Korea.

Having produced six million tons of cement in 1990 already, the disastrous famine of the 1990s meant this was not re-attained until 2006. Since then, output has fluctuated in the six-seven million ton range. As Silberstein observes, Kim Jong Un’s target of eight million tons is thus not overly ambitious. In stark contrast, South Korea’s annual cement output is 52 million tons, almost nine times more.

Silberstein also cites a detailed ROK analysis (text in Korean, tables in English) which found northern cement deficient in quality compared to southern. That is unsurprising, and perhaps unimportant. With scant chance of exports and plentiful demand at home, cement is above all a domestic industry. All they need is enough, and good enough. On quantity, it remains to be seen if innovations touted in recent media reports succeed in raising output. Insofar as these involve sanctions-related substitutions (e.g., lignite for anthracite), skepticism seems in order. As for quality: the Pyongyang skyline is quite impressive, even if on closer inspection some of the finish (and more) can be a bit slapdash. But that’s Juche and speed battles for you.

To conclude: As often with North Korea, there are more questions than answers. Yet by using sources as yet little mined, we can cement our knowledge and render it ever more concrete.

The post North Korea’s Cement Industry: Further Concrete Leads appeared first on 38 North.

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