North Korea has evaded sanctions since 2016 by exporting its coal disguised as Russian product and receiving payment in installments, U.S. broadcaster Radio Free Asia reported Monday.
When the UN banned coal exports, the North took a 30 percent deposit from coal importers beforehand in case shipments were confiscated at sea, a source in the Chinese city of Dandong told RFA.
The North took another 30 percent when a ship sailed to an importing country from a Russian port, and the rest when the shipments reached a port in the importing country. Pyongyang used bank accounts of Chinese companies and paid fees for the service, the source added.
The UNSC capped North Korea's coal exports at 7.5 million tons a year in November 2016 and banned them completely in August last year. But since then shipments have made their way even into South Korean ports disguised as Russian product.
A source in North Pyongan Province said North Korean trading firms would first ship their coal to the Russian ports of Nakhodka and Vladivostok and doctor documents.
After U.S. and international sanctions were imposed, the North moved its coal storage yards from Nampo and Songnim, which are close to China, to Chongjin and Wonsan, which are nearer to Russia, he said.
When North Korean coal arrives at Nakhodka, a Russian company was busy preparing documents to disguise it as Russian product. One of them was Greenwich, which did the job for a fee of US$2 per ton.
North Korea is going all out to export coal by illicit means despite UN Security Council sanctions because it is a major cash cow for the military and other organs.
Hong Song-won, who headed a military coal mine in the North until he defected in 2008, told the Chosun Ilbo on Sunday, "If coal exports stop, foreign-currency revenues will dry up and the coal mines will close."
"Coal has been a steady source of foreign currency since the Kim Jong-il era," Hong said. "When coal exports started generating lots of money starting in the mid-2000s, the North Korean military and other agencies got in on the action and started their own mining businesses."
Premier Pak Pong-ju advised Kim Jong-il against selling the North's resources, but was silenced by Jo Myong-rok, the then head of the powerful Army politburo, who challenged Pak to come up with an alternative to feed, clothe and supply fuel for 1 million soldiers.
North Korea slashed prices after the 2013 execution of new leader Kim Jong-un's uncle Jang Song-taek, who was in charge of business, but then vastly increased output to make up for the price decline.
Hong said high-grade coal for export has a calorific value of between 5,500 to 6,500 kcal/kg and is mined in Dokchon, Jikdong, Kaechon and Sunchon coal mines in South Pyongan Province.
"If we don't export coal, we can't import materials for coal production, such as belts, mining pillars, trolleys, rails, explosives and tungsten alloy," so the mines will have to shut down.