Yonhap news agency said officials of the two countries will sign a deal to jointly develop the North's mineral deposits in Beijing on February 15, a day before the birthday of Pyongyang's leader Kim Jong-Il.

South Korea estimates the total value of mineral deposits in North Korea at 6.3 trillion dollars.

"The agreement contains a specific list of mines to be developed...including gold, anthracite coal and rare earth mineral mines," Yonhap quoted a source familiar with North Korean affairs as saying.

Under the agreement the two communist nations will open a Hong Kong-based firm to seek investment from private Chinese companies, the source was quoted as saying.

As well as being North Korea's sole major ally, China is its biggest trade partner and has been actively exploring investment opportunities in the neighbouring country, sometimes gaining strategic benefits.

Pyongyang's dependence on Beijing has grown amid a nuclear stand-off with the United States and its allies, and China reportedly gained rights in 2008 to use a pier at the northeastern port of Rason, securing access to the Sea of Japan (East Sea).

Yonhap said bilateral trade in the first 11 months of 2010 stood at 3 billion dollars, breaking the previous record of 2.7 billion dollars for the whole of 2008.

The North's botched efforts in 2009 to revalue its currency further worsened the state-controlled economy, which had already been tumbling after years of mismanagement and international sanctions over the nuclear weapons programme.

earlier related report
China, Japan, S. Korea to sign investment accord: report
Tokyo (AFP) Feb 6, 2011 - China, Japan and South Korea will sign a treaty in May to boost cross-border investment and better protect intellectual property, a report said Sunday.

The deal is expected to be sealed when leaders of the three countries meet in Tokyo, four years after negotiations were launched, the Nikkei said, stepping up cooperation between nations that have not always enjoyed easy ties.

The trilateral accord adds to existing bilateral investment deals among the three, the Nikkei said.

Under the existing Japan-China investment accord, Japanese companies have to rely on Chinese laws to protect their intellectual property.

The planned trilateral deal would enable settling intellectual property disputes under international frameworks, the newspaper said.

It would also allow companies to demand a clear explanation when the Chinese government applies or changes its law in an opaque manner, the Nikkei said.

The three nations are expected to reach a broad agreement before the May summit, it said, adding that they will seek to bring the accord into effect by the end of 2012.

Separately, the three nations will continue studying the possibility of forming a trilateral free trade agreement, the newspaper added.

An investment deal is easier to negotiate than a free trade agreement, which liberalises a wide range of areas from tariffs to customs procedures.

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