China Halts Joint Venture with N. Korea

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CBS/AP
A Chinese investment company has abruptly suspended a joint project with a North Korean firm that has been targeted under U.N. sanctions, a news report said Thursday.

The suspension comes as the United States has been mustering international support for strict enforcement of the sanctions aimed at depriving North Korea of financing and material for its nuclear weapons program.

The U.S. and Chinese officials discussed North Korean issues during high-level talks that ended Tuesday in Washington. China's cooperation in enforcing sanctions against its ally is seen as crucial to increasing pressure on North Korea to return to nuclear disarmament talks.

Zhongkuang International Investment signed a deal with North Korea's Mining Development Trading Corporation, or KOMID, in 2006 to develop a bronze mine in the North and commissioned NHI Shenyang Mining Machinery, another Chinese company, to build facilities for the mine, South Korea's Chosun Ilbo newspaper said.

The investment company, however, sent a letter to NHI earlier this month demanding it stop construction of the facilities, the newspaper reported, citing Chinese steel industry officials it did not identify.

NHI had hurried construction so that production could start in September after Chinese Vice President Xi Jinping pledged full support for the development of the mine during his trip to Pyongyang in June last year, the newspaper said, citing an unidentified industry official.

But the Chinese government appeared to have exercised influence on the investment company to stop the project, the newspaper said, citing the industry official.

The investment firm reportedly told NHI that it could not disclose reasons for the suspension, according to the report.

A man surnamed Jin at the general office of Zhongkuang International Investment deferred comment to an assistant CEO for the company whom he said would return Monday.

KOMID is one of three North Korean companies targeted under U.N. sanctions in April in response to the North's rocket launch earlier that month. North Korea insisted it sent a satellite into orbit, while the U.S. and its allies said it was actually a long-range missile test.

KOMID is an arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons, according to the U.S. Treasury Department.

Separately, Chinese customs authorities said earlier this week that they seized a stash of vanadium, a strategic metal used to strengthen steel, hidden in fruit boxes on a truck bound for North Korea.

Vanadium has defense and nuclear applications - alloys with vanadium are used in missile casings - but it was not clear what the shipment was to be used for.