MTAG: MISSILE-RELATED STEEL TO DPRK AND

S E C R E T STATE 039514


E.O. 12958: DECL: 03/10/2016
TAGS: PARM PREL ETTC MTCRE KSCA CH KN KS PK

SUBJECT: MTAG: MISSILE-RELATED STEEL TO DPRK AND
RING-ROLLING MACHINES TO PAKISTAN (S)

REF: BEIJING 13327

Classified By: ISN ACTING DAS DONALD A. MAHLEY FOR REASONS 1.4
(B) AND (D).


1. (U) This is an action request, Embassy Beijing
please see Para 6.


2. (S) BACKGROUND: We want to bring information about
additional potentially missile-related transfers to
North Korea and Pakistan to China's attention. First,
in August 2005, we shared with the PRC information
indicating that the Chinese entity Dandong Xinshidai
Trading Company Ltd. shipped several tons of stainless
steel in May and June 2005 to North Korea's primary
weapons trader, the Korea Mining Development
Corporation (KOMID)(Ref). We now understand that, in
July 2005, Dandong Xinshidai Trading Company may have
shipped another order of 1CR18NI9TI steel to North
Korea's Korea Kuelaksae Trading Company, which was
likely acting on behalf of a procurement agent for
KOMID.


3. (S) Second, we also want to advise Chinese
authorities of new information indicating that, in July
2005, other North Korean firms were engaged in similar
efforts to procure missile-related specialty steels -
1CR18NI9TI in particular - from Chinese companies.


4. (S) Although not controlled by the Missile
Technology Control Regime (MTCR) or China's missile-
related export controls, 1CR18NI9TI steel can be used
in the production of Scud rocket motor combustion
chambers and other missile components. Considering the
likely end-users of this material, we want to urge
China to use its catch-all control authorities to
ensure that the North Korean missile program does not
obtain support from Chinese entities.


5. (S) Third, in a separate matter, we want to inform
the Chinese government of our understanding that, in
late October 2005, the Chinese firm Jinan JFMMRI Metal
Forming Machinery Engineering Company, Ltd. (JFMMRI)
was working to supply Pakistan's Heavy Mechanical
Complex (HMC) with a ring-rolling machine. Our
information also indicates that this ring-rolling
machine may be intended for use in Pakistan's missile
program. Although not controlled under the MTCR, ring-
rolling machines can be used to produce stiffener rings
for ballistic missile airframes. They can also be used
in conjunction with flow forming machines to
manufacture solid rocket motor cases. We want Chinese
authorities to investigate this activity and to closely
scrutinize all exports by JFMMRI to HMC to ensure that
Chinese firms do not supply equipment that supports
MTCR Category I missile programs in Pakistan.


6. (S) Action Request: Department requests Embassy
Beijing approach appropriate host government officials
to deliver talking points in para 7 and report
response. Talking points also may be provided as a
non-paper. (Note: Post should be aware that we only
have the STC rendering for Dandong Xinshidai Trading
Company. End Note.)


7. (S) Begin talking points/non-paper:

(SECRET//REL CHINA)

-- In the spirit of our nonproliferation cooperation,
we would like to raise with you several matters of
proliferation concern and request your assistance in
investigating this activity.

-- First, in August 2005, the U.S. shared with you
information that the Chinese firm Dandong Xinshidai
Trading Company shipped several tons of stainless steel
to North Korea in May and June 2005.

-- Dandong Xinshidai Trading Company is located at No.
272-2, Jiangcheng Dajie Yuanbao Qu, Dandong, Liaoning
Province, China. The standard telegraphic code (STC)
for this company is the following: 0030 2639 2450 2514
0108 6319 2496 2589 7098 0361 0674.

-- This steel, known as 1CR18NI9TI steel, was being
procured by a firm associated with North Korea's
primary weapons trader, Korea Mining Development
Corporation (KOMID),and could be used to produce Scud
rocket motor combustion chambers and other Scud
components.

-- We now have information that Dandong Xinshidai
Trading Company may have shipped another order of
1CR18NI9TI steel to North Korea's Korea Kuelaksae
Trading Company in July 2005.

-- As with the May and June 2005 shipments, we believe
that Kuelaksae Trading Company was purchasing this
steel on behalf of the Korea Heungjin Trading Company,
which acts as a procurement agent for KOMID.

-- We hope this information will be useful to you in
your ongoing investigation of Dandong Xinshidai Trading
Company. We would be interested to hear the results of
this investigation, when completed.

-- Second, we would like to provide you with
information indicating that, in July 2005, other North
Korean firms were engaged in similar efforts to procure
missile-related specialty steels from Chinese
companies.

-- North Korea's Lyongaksan 5 Trading Corporation
obtained a price quotation from the China Dalian
Yong Xing Trading Corporation for 1CR18NI9TI
stainless steel tubes and sheets. Lyongaksan 5
may also use the name Korea Ryonbong General
Corporation, and is the trading arm of North
Korea's External Economic General Bureau of the
Second Economic Committee (China Dalian Yong Xing
Trading Corporation is located at: No 201-04, 174
Huale Street, Zhongsan District, China)

-- North Korea's Tosong Technology Trading
Company, which has also been associated with
KOMID, ordered 1CR18NI9TI stainless steels from
the China Shenyang Sigma Trading Company, Ltd
(China Shenyang Sigma Trading Company Ltd. is
located at: Room 112, No 63 Ningshanzhong Road,
Huanggu District, Shenyang, China)

-- the Korea Ryonhap Trading Association, an
entity subordinate to the Second Economic
Committee of the Korean Workers' Party Central
Committee, received a quotation for 1CR18NI9TI
stainless steel from China Shanghai Zhejiang
International Trading Company, Ltd. (Harcourt
Overseas Limited) (International Trading Company
address of China Shanghai Zhejiang Ltd. is: Room
1-501 Dongyuan Mansion, 2 Dashu Road, Hangzhou)

-- North Korea's Korea Tangun Trading Corporation
likely concluded a contract for 1CR18NI9TI sheets
and tubes with China's Liaoning Economic Xiang
Long and Trade Co. Ltd.

-- KOMID, the Tosong Technology Trading Company and
Korea Ryonbong General Corporation are all entities the
U.S. has designated under the new Executive Order on
proliferation financing for their direct involvement in
North Korean missile proliferation.

-- This steel may not be listed on the Missile
Technology Control Regime (MTCR) Annex or on China's
missile-related export control list, but we urge you to
investigate this information and use your catch-all
authorities to ensure that Chinese entities are not
involved in supplying missile-related specialty steels
to North Korea.

-- Third and finally, the U.S. has information that, in
late October 2005, the Chinese firm Jinan JFMMRI Metal
Forming Machinery Engineering Company, Ltd. (JFMMRI)
was working to supply Pakistan's Heavy Mechanical
Complex (HMC) with a ring-rolling machine.

-- HMC's purchase of this machine was being coordinated
by another Chinese firm, Jinan Tri-Tiger Technology
Development Company Ltd.

-- This machine was to be shipped to Pakistan before
October 2006.

-- We believe this ring-rolling machine may be used in
Pakistan's missile program.

-- Although not MTCR-controlled, ring-rolling machines
can be used to make stiffener rings for ballistic
missile airframes.

-- This ring-rolling machine may be used in conjunction
with a flow-forming machine in the production of solid
rocket motor cases. We believe that in 2003 the
Beijing Machinery Import-Export Corporation (BMIEC)
acquired a flow forming machine.

-- Flow forming machines, which are used to manufacture
missile end-domes and nozzles, are controlled under the
MTCR and China's missile-related export control list.

-- Given Pakistan's previous willingness to evade
China's export controls to procure such equipment, we
hope you will investigate this information and closely
scrutinize all exports by JFMMRI to HMC to ensure that
Chinese firms do not provide equipment that supports
Pakistan's MTCR Category I missile programs.

-- We look forward to continued cooperation on missile
nonproliferation matters and would appreciate hearing
the results of your inquiries.

END TALKING POINTS.


8. (U) Please start response with "MTAG" and slug
reporting on this or other missile nonproliferation
issues for ISN/MTR and EAP/CM.
RICE


NNNN




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