By Farnaz Fassihi

UNITED NATIONS -- The United Nations Security Council on Wednesday is set to adopt a U.S.-led resolution aimed at slashing North Korea's coal export revenues by 60% in response to the country's nuclear test in September, U.S. officials said.

The officials said the new sanctions represent a "significant step forward" in closing existing loopholes and squeezing Pyongyang of hard-currency revenues it needs to keep its military and nuclear programs afloat.

The resolution, negotiated between U.S. and China over two months, is considered a milestone in the Security Council's efforts to hold North Korea accountable for repeated violations of sanctions, imposed since 2006, that prohibit the country from conducting ballistic missile and nuclear activities.

The U.N. will monitor and report the amount of coal imported from North Korea by every member state on a monthly basis, according to the 17-page resolution, reviewed by The Wall Street Journal.

Coal exports would be capped at about $400 million, or 7.5 million metric tons a year. North Korea currently earns over $1 billion a year from coal exports, its single highest source of income, according to diplomats and data from Global Trade Atlas.

China is the only country that imports coal from North Korea, according to U.S. officials. The officials say a provision in the last round of sanctions in March was loosely interpreted by China, allowing it to keep importing coal as the exports were defined as needed for "livelihood purposes."

China's imports of coal from North Korea have steadily increased since 2009, from a value of$200 million a year to the more than $1.2 billion projected for 2016, according to Global Trade Atlas data. U.S. officials said North Korean coal constitutes a very small portion of Chinese coal consumption and can be easily replaced by other sources.

China has traditionally been reluctant to embrace harsh economic sanctions on its neighbor, fearing that regime instability would result in a flood of refugees across their shared border. Diplomats insisted that the new sanctions targeted regime operatives and not ordinary people.

Under the resolution, countries would inform the U.N. of the quantity and value of coal they purchase from North Korea each month and the U.N. would in turn publish the list on a public website. The U.N. would then warn member states that the cap was close to reaching its limit. Violators could be referred to the Security Council or its sanctions panel of experts.

The resolution also would impose additional punitive measures, including a ban on exports of copper, nickel, silver and zinc that provide an additional $100 million a year in revenues; a ban on exports of decorative statues, a major industry; and a ban on income from properties owned by North Korea abroad.

The resolution also would further restrict banking transactions and sanction 10 individuals and 11 entities involved in nuclear and ballistic missile programs.

North Korea's nuclear ambitions remain a security challenge both for the U.N. and the incoming U.S. administration. President Barack Obama has warned President-elect Donald Trump that the threat posed by North Korea's nuclear program is a top priority for U.S. national security, according to U.S. officials.

U.S. and foreign diplomats acknowledge that sanctions have failed to stop North Korea's illicit military and nuclear programs, but they say the sanctions have impeded the pace of weapons development.Without the U.N. measures, North Korea "would have a lot more sensitive technology and a lot more money to buy things," a U.S. official said.

The Pentagon believes North Korea is now capable of making a miniaturized nuclear warheads, a steep needed to complete development of a nuclear-tipped missile. Pyongyang in September carried out its fifth and largest nuclear test, prompting the current effort to toughen sanctions to force Pyongyang to the negotiating table.

"It's high time for the Security Council to come together to tighten up the sanctions regime," U.K. Ambassador Matthew Rycroft said last week about the upcoming vote.

Write to Farnaz Fassihi at farnaz.fassihi@wsj.com

(END) Dow Jones Newswires

November 28, 2016 21:47 ET (02:47 GMT)

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