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Stability is key to Koreas-Russia shipment project: official

All Headlines 13:54 November 21, 2014

By Lee Chi-dong

SEOUL, Nov. 21 (Yonhap) -- As the two Koreas and Russia speed up a groundbreaking joint logistics project, a government official here said Friday that a key question is whether it can be operated with stability.

Inter-Korean economic cooperation has often been hamstrung by military tensions on the peninsula, noted the unification ministry official.

He confirmed the government's view that the Rajin-Khasan project is not in breach of bilateral and U.N. sanctions on the North.

Under the envisioned program, South Korea's top steelmaker POSCO will bring in Russian coal via the North Korean port of Rajin. Two other South Korean firms -- Hyundai Merchant Marine Co. and Korail Corp. -- are joining the project.

"Since it is a normal international commercial trade, it's my understanding that there is no problem with the U.N. sanctions," the official told reporters on background.

It is also a "special case" as far as Seoul's bilateral sanctions on Pyongyang are concerned, he added.

The South maintains the May 24th Measure, effectively blocking all inter-Korean economic projects except for the Kaesong Industrial Complex. The sanctions were imposed for the North's deadly torpedo attack on a South Korean warship in 2010.

Once the trilateral program is formally launched, he admitted, the North will be able to secure a stable supply of cash.

The three countries are poised for the first test run of the project next week, in which POSCO will import 40,500 tons of coal from a Russian mine in the West Siberian region.

The 54-kilometer railway between the North Korean city of Rajin and Russia's Khasan will be used and then a Chinese-flagged 56,000-ton ship will carry the coal to the South's port in Pohang.

The ship is scheduled to depart Rajin on Nov. 27 for about a 36-hour voyage.

If the project proves cost-effective, the South Korean consortium will hold further talks with the Russian side for a formal contract. It would be hard to ink the deal within this year, though, given the time needed for the relevant process, said the official.

POSCO brings in some 2 million tons of Russian coal every year by way of Vladivostok.

The Rajin-Khasan project is expected to cut shipment costs by 10-15 percent in the long term, according to the ministry official.

"But the stability (of its operation) is the key to its success," he said, citing the possibility of political setbacks amid Pyongyang's unpredictable behavior.

Meanwhile, a team of 13 South Korean delegates plans to visit Rajin and Khasan next week to monitor the pilot run worth US$4 million. The delegation is composed of a unification ministry official and a dozen related company officials.

The ministry said it approved their trip to the North earlier Friday.

South Korea has an ambition of linking its railway network with that of Europe through North Korea.

lcd@yna.co.kr

leechidong@gmail.com
(END)

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