Russia eyes railway-for-resources project with North Korea

MOSCOW (AFP) - Russia is eyeing a project worth about US$25 billion (S$31 billion) to overhaul North Korea's railway network in return for access to mineral resources in the hermit state, Moscow's government daily reported on Thursday.

The mammoth project would involve the modernisation of about 3,000km of the Stalinist nation's ageing railroads over a 20-year period, minister for development of Far Eastern Russia Alexander Galushka told state-run Rossiskaya Gazeta.

"It is a commercial project that is mutually advantageous," Galushka was quoted as saying.

The railway upgrades would focus first on the sections near deposits of natural resources, said the minister.

Income from the exploitation of deposits would then go to a joint Russian-Korean company to fund the railroad overhaul, he said.

North Korea is thought to be lying on vast reserves of resources, including uranium, iron ore, magnesium and other minerals.

North Korea had warm ties with the former Soviet Union based on shared ideology. Russia retains relatively close ties with its neighbour but has backed Western powers in dealing with Pyongyang's nuclear ambitions.

In May, Russian President Vladimir Putin signed a law cancelling 90 per cent of North Korea's US$10.94 billion debt to Russia from Soviet-era loans.

Moscow has looked to boost ties with Asia in the face of harsh sanctions from the EU and US over its role in the Ukraine crisis.