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US bill targets North Korea coal, oil trade

04 May 2017 20:52 (+01:00 GMT)
US bill targets North Korea coal, oil trade

Washington, 4 May (Argus) — The US House of Representatives today approved a bill that would tighten restrictions on exports of coal from North Korea and impose penalties on companies supplying crude oil and products to that country.

The bill would give President Donald Trump's administration the authority to impose financial sanctions on entities buying coal, iron or iron ore from North Korea. It would also penalize companies supplying crude oil, natural gas, jet fuel and other refined products to North Korea, with limited humanitarian exemptions. Imposing such sanctions allows the US Treasury to confiscate the US assets of such entities, and prevents them from using the US financial system.

"North Korea poses an urgent threat to the US and our allies," House Foreign Affairs Committee chairman Ed Royce (R-California) said. "This bill gives the administration a powerful tool to cut off North Korea's funding by going after those who do business with the regime." Royce cited estimates that suggest North Korea derived about 35pc of its foreign currency earnings from exports of coal.

China in February stopped importing coal from North Korea, in compliance with the UN sanctions, after imports totaled 2.68mn t in January-February. North Korea is typically China's third-largest coal supplier after Indonesia and Australia. It shipped 22.6mn t of coal to China in 2016.

The US Energy Information Administration estimates North Korea's refining capacity at 64,000 b/d and suggests a 20pc utilization rate for that capacity, with China and Russia as the main suppliers of crude and products.

Russia last year exported 1,000 b/d of gasoil and 300 b/d of gasoline to North Korea, Russian government data show. Fuel oil exports from China into North Korea amounted to 2,443 b/d last year. North Korea appears to have stopped crude oil imports from China in 2013, when those shipments averaged 15,000 b/d.

Trump's administration presents North Korea as a key challenge facing the US. The administration has decried its predecessors' policy of diplomatic engagement with North Korea as ineffective. But Pyongyang appears to have shrugged off threats of military force from the new administration and continues to stage missile tests, most recently last week.

The US administration's own strategy is pressure China to use its influence with North Korea's leader Kim Jong-un — whom Trump last week described as a "smart cookie" — to force Pyongyang to give up nuclear weapons.