NKorea Investment Boom: “The Steel Horse Wants to Run”

NKorea Investment Boom: “The Steel Horse Wants to Run”

At SKorea’s northernmost train station, the tracks stop abruptly ahead of the demilitarized zone that marks the NKorean border. A sign reads: “The steel horse wants to run.”

That may soon become a reality as US President Trump and NKorea’s Chairman Kim Jong Un prepare for a @nd summit next week in Vietnam.

The outcome is expected to include some easing of sanctions in return for steps toward denuclearization with a rail link 1st mooted more than 15 years ago one of several Key inter-Korean projects that might finally get approved.

In a phone call with President Trump this week, President Moon Jae-in said SKorea was ready to move forward with the rail link and other unspecified economic projects if it helped the negotiations.

The talks may also include opening the Gaeseong inter-Korean industrial complex, where more than 120 of the nation’s companies were operating before it was closed in Y 2016 because of rising tensions.

Since declaring a halt to missile and bomb tests last year, Chairman Kim has sought to convince the world to lift punitive sanctions that prohibit investment, severely curtail exports and limit oil and gas imports. Trump has so far insisted that Kim give up his nuclear weapons before sanctions are lifted.

Messrs Kim and Moon have laid the groundwork for the rail link over the past year, holding a ceremony in December on modernizing lines in the east and west of the Peninsula, which will be followed by additional studies and drawing up designs.

While the move would benefit Chairman Kim, SKorea also wants to connect with the rest of Asia by land and ultimately link up with Chinese President Xi Belt and Road Initiative designed to boost trade between Europe and Asia.

Restoring the connection and modernizing NKorea’s railways would allow SKorea to run trains into Russia, China and beyond, reducing the shipping costs for its export-heavy economy.

Improved infrastructure would also help NKorea lift barriers to monetizing its mineral resources, which could be worth $6-T, according to a Y 2013 estimate by the NKorea Resources Institute in Seoul.

It is also home to what might be the world’s single-biggest deposit of rare earth minerals, crucial for producing Key elements of electronic car engines and many high-tech gadgets that SKorea produces.

NKorea’s rail network and signaling hasn’t changed much from when it was rebuilt after the 1950-53 Korean War. It has 5 lines that link with China, Russia and SKorea. The 2 lines with China has been the most active and probably the most modern in the North.

The rail agreement could benefit SKorean companies from construction to rolling stock makers such as Hyundai Engineering & Construction Co. and Hyundai Rotem Co, putting them in a better position against rivals from China that may also want to jump in.

SKorean companies have already done research and are ready to move in once sanctions ease, according to Kim Young Hui, a NKorea-born economist at the Korea Development Bank in Seoul.

“The mood has calmed down as things didn’t pan out well, but the fire is being rekindled at this point,” she said. “Now they quietly wait and see.”

Stay tuned…

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