While most reporters are scrambling to cover Ri Yong Ho’s sudden dismissal and analysts are busy giving us the 101 signs of where North Korea is going based on this single event, business people closer to the action in North Korea might be having a different consideration in mind. North Korea is supposedly rich in mineral resources, and there is no shortage of investors salivating at the opportunity to exploit these resources. Andray and I have argued that the “resource curse” can end up supporting marketization in North Korea, while not leading to sustained economic development or political reform, if the resource development process is uncontrolled and poorly parceled out to the various fiefdoms in North Korea. We are wondering whether a serious investor might be moving in big-time to exploit the resources sector in North Korea.
Orascom runs North Korea’s telecom networks, in addition to having a stake in the Ryuggyong Hotel. They also used to own cement production facilities in the country, although this has been sold to Lafarge as part of a broader sale of the construction portfolio of the Sawiris family. North Korean investment policymakers we have talked to often trumpet Orascom as a success story for foreign investment.
Recently, Orascom Telecom Chairman Naguib bought a Canadian gold exploration and production company La Mancha. Given the many places in Africa, in addition to North Korea, that Orascom has businesses in, it could be possible that he might be trying to leverage his existing access in North Korea (and these other places) to develop resource assets with his new acquisition. This is a development worth monitoring.
North Korea's mining sector has for many years produced and sold gold bullion on the London markets. However, resource investments in North Korea has been plagued by overlapping jurisdictions, lack of access, and high political and expropriation risks. There have been horror stories of multiple investors being sold the same exclusive rights. If Orascom decides to move into this sector in North Korea, they might be able to leverage their visibility in the country, existing ground operations, political connections, and deep pockets to exploit opportunities that smaller investors are not able to.