Egypt's Orascom to invest in North Korea plant

Egypt's Orascom Construction Industries (OCI) said yesterday it would invest $115 million in a North Korean cement plant amid growing hopes that Pyongyang's disarmament will lead to more foreign investment in the impoverished country.

North Korea said over the weekend it had shut its Soviet-era Yongbyon nuclear reactor under an energy-for-disarmament deal agreed in February. It will receive oil, security assurances and will be better able to conduct international trade if it completely scraps its nuclear arms programme.

OCI, a cement and construction group, said in a statement it had agreed with North Korea's state-owned Pyongyang Myongdang Trading Corporation to take a 50 per cent stake in Sangwon Cement.

Cairo-based OCI said it would use proceeds generated by the investment to modernise and upgrade the cement plant, boosting its annual capacity from 2.5 million tonnes to 3 million tonnes.

North Korea, with a decaying infrastructure largely built during Japan's 1910-1945 colonial rule, is not well equipped to support a modern factory complex and also suffers power shortages.

A large part of the reclusive communist country's recent economic development has come through cooperation with South Korea. For foreign investors, North Korea's lure lies in abundant minerals as international prices rocket, but political uncertainties and financial sanctions have been stifling deals.

The North was hit with UN sanctions last year after it defied international warnings by firing a volley of missiles and conducting its first nuclear test.