CONTINUED ASSISTANCE TO IRAN'S MISSILE PROGRAM

S E C R E T STATE 111099


E.O. 12958: DECL: 08/08/2017
TAGS: PARM MTCRE PREL ETTC CH IR

SUBJECT: CONTINUED ASSISTANCE TO IRAN'S MISSILE PROGRAM
BY THE CHINESE FIRM LIMMT/DALIAN SUNNY (S)

REF: A. 06 BEIJING 2983

B. 06STATE 38396

C. 06 BEIJING 4561

D. 06 BEIJING 4854

E. 06 STATE 118552

F. 06 STATE 167376

G. 06 BEIJING 21333

H. STATE 28429

I. BEIJING 1625

J. MAY 18

K. 2007 ZARING - JOHNSON EMAIL

L. BEIJING 5039

Classified By: ISN/MTR DIRECTOR PAMELA K. DURHAM
REASONS 1.4 (B),(C) AND (D).


1. This is an action request. Embassy Beijing, please see
paragraph 4.


2. (S) BACKGROUND/OBJECTIVE: Since February 2006, we have
repeatedly discussed with China our concerns regarding the
proliferation-related trading activities of the Chinese firm
Dalian Sunny Industry, which is also known as LIMMT
(Reftels). This activity has included supplying Iran's
solid-fuelled ballistic missile developer Shahid Bakeri
Industrial Group (SBIG) with graphite cylinders and tungsten
powder likely controlled by the Missile Technology Control
Regime (MTCR),as well as attempting to provide SBIG with
tungsten copper alloy ingots that could be used to produce
missile jet vanes. In response to this information, Chinese
officials have indicated that they have initiated enforcement
actions against LIMMT and its proprietor Karl Lee, but we
have yet to receive a detailed readout on China's efforts in
this case (Refs I - K).


3. (S) We now would like to share with the PRC information
indicating that LIMMT/Dalian Sunny recently was working to
fill new orders of graphite, tungsten-copper alloy plates,
and tungsten powder to SBIG. We want to alert Chinese
officials to these activities and ask that they use all
available measures to prevent the transfer of these materials
to Iran's missile program. In particular, we want to draw
their attention to a shipment of MTCR-controlled graphite to
an entity affiliated with Iran's SBIG that is scheduled to
occur in mid-August 2007. We want to emphasize that taking
action immediately to halt these exports would be consistent
with United Nations Security Council Resolutions 1737 and

1747. Finally, we want to advise PRC officials that these
transfers potentially could result in the imposition of
sanctions against LIMMT/Dalian Sunny under U.S. legal
authorities.


3. (S) Action Request: Request Embassy Beijing approach
appropriate host government officials to deliver talking
points in paragraph 4 and report response. Talking points
also may be provided as a non-paper.


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

(SECRET REL CHINA)

-- Since February 2006, we have repeatedly discussed with you
our concerns regarding the proliferation-related trading
activities of the Chinese firm Dalian Sunny Industry (which
is also known as LIMMT (Dalian) Metallurgy and Minerals Co.
Ltd, or LIMMT (Dalian FTZ) Economic and Trade Organization).

-- This activity has included supplying Iran's solid
propellant ballistic missile developer Shahid Bakeri
Industrial Group (SBIG) with graphite cylinders and tungsten
powder likely controlled by the Missile Technology Control
Regime (MTCR),as well as attempting to provide SBIG with
tungsten copper alloy ingots that could be used to produce
missile jet vanes.

-- When we discussed this issue with you in March and May
2007, you indicated that enforcement actions were pending
against LIMMT and its official Karl Lee. We most recently
asked you about the status of your efforts in this case in
August 2007.

-- We now want to alert you to information indicating that
LIMMT/Dalian Sunny recently was working to fill new orders of
graphite, tungsten-copper alloy plates, and tungsten powder
on behalf of SBIG.

-- First, we have learned that in June 2007, LIMMT/Dalian
Sunny was attempting to finalize shipping arrangements for
electrical discharge machining (EDM) graphite to SBIG.
Dalian Sunny had previously shipped samples of this graphite
to Iran in January 2007.

-- We understand that this order includes types EDM-11B and
EDM-14A graphite, which are likely controlled by both the
MTCR and China's export control regulations and can be used
in Iran's missile program to produce nose tips for re-entry
vehicles and nozzle throat inserts for rocket motors.

-- In addition, our information indicates that one of the
shipments being prepared by LIMMT/Dalian Sunny consists of
370 cylinders of EDM-11B graphite ordered by Iran's Aban
Commercial and Industrial Co., which is a cover name for SBIG.

-- LIMMT/Dalian Sunny is procuring this graphite from the
Liaoning Industry and Trade Co. Ltd.

-- We understand that the delivery of these cylinders could
occur as early as mid-August 2007.

-- Because this shipment appears to be imminent, we urge you
to immediately investigate this information and use all
available measures to stop this key material from being
supplied to Iran's missile program.

-- Second, we understand that in June 2007, SBIG submitted an
order for 400 tungsten-copper alloy plates to LIMMT/Dalian
Sunny. SBIG specified that it required the same type of
tungsten-copper alloy that Dalian Sunny previously supplied
to Iran.

-- You will recall from our discussion of earlier
tungsten-copper alloy shipments that this material is likely
being used by SBIG to produce missile jet vanes or as an
insulator for other missile components.

-- SBIG is coordinating this transaction through the Ministry
of Defense and Armed Forces Logistics (MODAFL) representative
at the Iranian embassy in Beijing, Kazem Mirzai.

-- Like the EDM graphite described above, LIMMT/Dalian Sunny
was planning to procure these tungsten-copper plates from
Liaoning Industry and Trade Co. and has informed this company
that these plates are being purchased by Iran's Aban
Commercial and Industrial Co.

-- In addition, while facilitating this new sale to SBIG,
LIMMT/Dalian Sunny was attempting to secure the export of 60
tungsten copper plates, which we understand had been detained
by the PRC's Customs service.

-- Finally, we have information that LIMMT/Dalian Sunny was
working to supply SBIG with 15,000 kg of tungsten powder.

-- You will recall that in March 2007, we informed you that
LIMMT/Dalian Sunny had shipped 2,000 kg of tungsten powder to
SBIG in late 2006.

-- As in the case of the 2006 transfer, this latest
consignment of tungsten powder is controlled by the MTCR and
China's missile export control list. We believe SBIG intends
to use this powder, which also is being sought from Liaoning
Industry and Trade Co., for missile jet vane production or to
manufacture rocket motor nozzle throat inserts.

-- We urge you to use this latest information on LIMMT/Dalian
Sunny's activities to support your ongoing enforcement
efforts against this firm and its official Karl Lee.

-- Again, given that these materials will be used by SBIG to
support Iran's ballistic missile development efforts and that
at least one of these exports could occur in the very near
future, we urge you to investigate this information and
immediately take measures to prevent the transfer of these
materials to Iran's SBIG.

-- Taking such action would be consistent with United Nations
Security Council Resolutions 1737 and 1747. As you know,
SBIG is designated in the Annex of UNSCR 1737.

-- We also want to advise you that each of the transfers
described above could result in the imposition of sanctions
against LIMMT/Dalian Sunny under U.S. legal authorities.

-- We look forward to future cooperation on nonproliferation
issues and to hearing the results of your inquiries at the
earliest possible time.

End talking points/non-paper.


5. (U) Washington POC is ISN/MTR James Mayes (Phone:
202-647-3185). Please slug any reporting on this issue for
ISN and EAP.


6. (U) A word version of this document will be posted at
www.state.sgov.gov/demarche.
RICE


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End Cable Text