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UPDATE 2-Draft U.N. resolution would slash N.Korea exports by a third -diplomat

-diplomat@ (Recasts with draft U.N. resolution)

UNITED NATIONS, Aug 4 (Reuters) - A U.S.-drafted United Nations Security Council resolution aims to slash by a third North Korea's $3 billion annual export revenue by banning the country's trade of coal, iron, iron ore, lead, lead ore and seafood, a council diplomat said on Friday.

The diplomat, speaking on condition of anonymity, said there was a "high confidence" that North Korea ally China and Russia would support the draft resolution, which was circulated to the 15-Security Council members on Friday.

The United States is aiming for a vote on Saturday to impose the stronger sanctions over North Korea's two intercontinental ballistic missile (ICBM) tests in July, though Russia and some other council members are asking for more time, diplomats said.

A resolution needs nine votes in favor, and no vetoes by the United States, China, Russia, France or Britain, to be adopted.

The draft resolution would also prohibit countries from increasing the current numbers of North Korean laborers working abroad, ban new joint ventures with North Korea and any new investment in current joint ventures, said the diplomat.

"These are export sectors where this money is viewed as a critical, critical source of hard currency that the North immediately turns around into its fantastically expensive war machine and these just amazingly expensive ballistic missile and nuclear weapons programs," the diplomat said.

"These sanctions are not targeted at the people of North Korea," the diplomat said.

The United States and China have been negotiating the draft text for the past month. Typically, they agree sanctions on North Korea before formally involving other council members.

U.S. President Donald Trump's administration has been frustrated that China has not done more to rein in North Korea and Washington has threatened to impose new sanctions on Chinese firms doing business with Pyongyang.

China has also been upset by possible moves by the Trump administration to exert trade pressure on Beijing.

HARD CURRENCY

The United States had been informally keeping Britain and France in the loop on the bilateral negotiations, while U.S. Ambassador to the United Nations Nikki Haley said China had been sharing the draft and negotiating with Russia.

It has not been clear if poor relations between Russia and the United States, which imposed new unilateral sanctions on Moscow on Wednesday, would hamper negotiations.

Moscow has disagreed with assessments by Western powers that Pyongyang launched two long-range missiles, saying they were mid-range. Diplomats say China and Russia only view a test of a long-range missile or a nuclear weapon as a trigger for further possible U.N. sanctions.

North Korea has been under U.N. sanctions since 2006 over its ballistic missile and nuclear programs and the Security Council has ratcheted up the measures in response to five nuclear weapons tests and two long-range missile launches.

The U.N. diplomat said North Korea has been estimated to earn in 2017 $400 million from coal, $251 million from iron and iron ore, $113 million from lead and lead ore and $295 million from seafood. The diplomat said it was difficult to estimate how much North Korea was earning from sending workers abroad.

A United Nations human rights investigator said in 2015 that North Korea has forced more than 50,000 people to work abroad, mainly in Russia and China, earning the country between $1.2 billion and $2.3 billion a year for the government.

"It's been called slave labor ... It's clearly a humanitarian issue but it's also an increasing source of hard currency that the North is using for its illicit programs," the diplomat said. (Reporting by Michelle Nichols; Editing by Toni Reinhold and James Dalgleish)