(S) NIAG 7011/7015/7016: EFFORTS BY AN

S E C R E T STATE 065749


E.O. 12958: DECL: 05/14/2032
TAGS: PARM PREL MNUC PK CH HK
SUBJECT: (S) NIAG 7011/7015/7016: EFFORTS BY AN
UNSAFEGUARDED NUCLEAR PROGRAM TO OBTAIN ASSISTANCE FROM
CHINESE ENTITIES

REF: A. 06 STATE 8869

B. 06 BEIJING 1300

C. 06 STATE 113997

D. 05 STATE 117729

E. 05 BEIJING 10266

F. 05 BEIJING 13327


Classified By: EAP DAS Thomas Christensen;
Reasons 1.4 (b),(c),and (d).



1. ACTION REQUEST: Post is requested to approach
appropriate Chinese officials regarding ongoing attempts by
an unsafeguarded nuclear program to obtain technology for the
program from Chinese entities. Post should provide new
information about continued activities by this program to
seek enrichment related inputs in China, and also should seek
information on actions the Government of China has taken in
response to previous demarches. Post should draw from
background and objectives below.

--------------
BACKGROUND
--------------


2. (S//REL China) Since 2005, the USG has engaged the
Chinese government about ongoing attempts by an unsafeguarded
nuclear program to procure enrichment-related items in China
(refs. D-F). Most recently, we informed Chinese officials in
January 2006 that Chinese national Gao Yiming (alternate
spelling: Gao Yi Ming) was engaging in efforts to provide
enrichment-related items to an unsafeguarded nuclear program
(Ref A). These efforts included:

-- Supplying approximately 1000 meters of aluminum alloy 6061
(AA6061) T6 tubes matching molecular pumps known to be used
in gas centrifuges for uranium enrichment;

-- Coordinating the transfer of samarium ingots of 99.9
percent purity, which could be used for producing ring
magnets for gas centrifuges;

-- Coordinating the supply of an aluminum production line,
which would include a 55 mega-newton double acting horizontal
aluminum extrusion press from China's Taiyuan Heavy Industry
Company; and

-- Transferring up to 500 tons of AA6061 aluminum cast
billets, likely to be used as feed stock for the extrusion
press. NOTE: The aluminum billets and the extrusion press
can be used to produce thick-walled aluminum tubes, which
could assist the recipient country's development of an
indigenous capability to manufacture uranium centrifuge
components.


3. (S/REL China) We still have not received a formal
response from the Chinese government regarding the
information provided in January 2006. During the most recent
session of our nonproliferation dialogue in June 2006, we
stressed to Chinese Foreign Ministry Director General for
Arms Control Zhang Yan that the transfer of the aluminum
production line continued to move forward.


4. (S/REL China) Washington would like to emphasize our
concern that the recipient country's unsafeguarded nuclear
program is seeking to become self-reliant and is turning to
Chinese entities to reach that objective. Additional
information indicating that this unsafeguarded nuclear
program is seeking to become self reliant with the assistance
of Chinese entities include the following examples:

-- Officials associated with the unsafeguarded nuclear
program sought approximately 70 metric tons of tributyl
phosphate (TBP) of 99.5 percent purity through Taihe (Hong
Kong) Limited. We are not aware whether this TBP has already
been shipped, but it would be shipped via sea from Shanghai.
In addition, Taihe was discussing with the unsafeguarded
nuclear program requirements for a TBP plant.

-- TBP is used in reprocessing operations to extract
plutonium and to purify uranium by solvent extraction, a
necessary front-end purification step prior to further
chemical conversion to UF6 for enrichment plant feed. We
assess that the TBP would be used by the unsafeguarded
nuclear program for one of these purposes, and that the
unsafeguarded nuclear program is also seeking to develop
indigenous TBP production capabilities.

--Taihe Limited also operates under the name Chlight
Corporation. The company's mailing address in China is 1703
Flat A, World Trade Centre, 9 Shuncheng Street, Chengdu,
Sichuan 610016. It also has a Hong Kong address, which is
MST2090, Room 1007, 10/F, Ho King Center, No. 2-17 Fa Yuen
Street, Mongkok.

-- China's Westways Technologies Ltd. had previously supplied
the unsafeguared nuclear program's tube plant with a cold
rolling mill, and in September 2006 sent a team of engineers
to repair the equipment. Westways continued to discuss
defects in the mill with the unsafeguarded nuclear program as
of late 2006. The tube plant supports unsafeguarded
plutonium production reactors in the recipient country
through indigenous tubing manufacturing, which is likely used
for the reactors, fuel rods.

-- Lastly, the unsafeguarded nuclear program has been
soliciting the purchase of a hydrogen peroxide plant from two
Chinese companies - Tianjin Universal Machinery Import and
Export Corporation and Jingjiang Jinyuan International Trade
Company Ltd. We are not aware that a contract has been
negotiated yet, but as of late 2006 the companies were
corresponding with representatives associated with the
unsafeguarded nuclear program about potential costs,
technology, training and visits to Chinese factories and
operational plants.

-- Tianjin Universal Machinery Import and Export Corporation
is located at Heping District, Tianjin, 18 Zhangde Road, Room
318, 300042.

-- The address of Jingjiang Jinyuan International Trade
Company Ltd. is 6th Floor, Jingjiang Entry-Exit Inspection
Bureau, Jingjiang, Jiangsu.

-- Although hydrogen peroxide is widely used in industry, it
is on the reprocessing watchlist that the U.S. circulated to
NSG participating governments because it has several nuclear
uses. For example, hydrogen peroxide can be used to
precipitate uranium or plutonium out of solution. It is also
used in uranium purification, uranium ore concentration, and
plutonium recovery and purification.

-- We believe that the unsafeguarded nuclear program would
use the hydrogen peroxide plant it is seeking to obtain in
China for these purposes. We are aware that the
unsafeguarded nuclear program had been seeking a large amount
of hydrogen peroxide for use in material processing
consistent with various nuclear-related applications.
Development of a hydrogen peroxide plant would obviate the
need to import this material.

-- Our information does not indicate whether these Chinese
companies are aware that the end-user of their products will
be an unsafeguarded nuclear program. It is possible that the
unsafeguarded nuclear program may be communicating with the
Chinese companies through front companies or middle men.

--------------
OBJECTIVES
--------------


5. (S) Post should:

-- Encourage Chinese officials to investigate these transfers
to the unsafeguarded nuclear program.

-- Urge Chinese officials to take appropriate and necessary
measures to ensure that Chinese companies are not assisting
an unsafeguarded nuclear program in its efforts to become
self-reliant.

-- Encourage Chinese officials to share with us the results
of their investigations in a timely manner.

--------------
REPORTING REQUIREMENT AND POC
--------------


6. (U) Please report delivery of demarche and any immediate
response by 18 May.


7. (U) Washington points of contact for follow-up
information is Mark Felipe, (202) 647-5376,
felipem2@state.sgov.gov, and Renee Pan, (202) 736-7939,
panrs@state.sgov.gov. Please slug all responses for ISN, T,
EAP, and SCA. Washington appreciates Post's assistance.


RICE