An Egyptian group has sealed a $115 million deal to invest in a North Korean cement plant, press reports and Pyongyang's state media said on Monday.
Orascom Construction Industries and the Pyongyang Myongdang Trading Corporation have signed a joint venture agreement to renovate and operate the Sangwon plant, the Korean Central News Agency said.
Britain's Financial Times said Orascom would invest $115 million in a 50% stake in Sangwon with the aim of raising its annual capacity to three million tonnes.
Apart from South Korean-funded projects, foreign investment in the hardline communist state is relatively small. A US commercial embargo has also deterred other potential Western investors.
But relations have eased since the North agreed in principle to scrap its nuclear weapons programme. It closed its Yongbyon reactor Saturday.
Orascom also intends to invest in the Rason industrial zone in the northeast near the China border, the agency said.
The Financial Times said Orascom's investment would cover mining operations related to cement production and a dedicated hydroelectric power station near the plant.
Chief executive Nassef Sawiris was quoted as saying the group is discussing projects in the industrial zone and that it would be able to use North Korean labour on some Middle East projects.
Sawiris said he saw significant growth potential in North Korea.
"The deal has been structured with a Western-style governance agreement," he was quoted as saying.
"North Korea is very keen to develop the infrastructure in the country and that would significantly drive up demand for cement."
Much of North Korea's economy is in a desperate state due to the shortcomings of its command economy, power outages, diversion of funds to the military and the end of Soviet aid in the early 1990s.
The most significant special economic zone is at Kaesong just north of the inter-Korean border. It opened in 2004 and now has 23 South Korean factories employing some 12,000 North Koreans.
Publisher: I-Net Bridge
Source: I-Net Bridge
