RESULTS OF BLUE LANTERN LEVEL 3 PRE-LICENSE

UNCLAS TEL AVIV 003242 SIPDIS SIPDIS SENSITIVE STATE FOR PM/DTCC (BLUE LANTERN COORDINATOR, STITZIEL) STATE FOR NEA/IPA (PECCIA) E.O. 12958: N/A TAGS: ETTC KOMC IS SUBJECT: RESULTS OF BLUE LANTERN LEVEL 3 PRE-LICENSE END-USE CHECK ON APPLICATION 050061813 REF: STATE 135268 -------------- SUMMARY -------------- ¶1. (SBU) Acting on instructions in reftel, Embassy Tel Aviv Blue Lantern Officer visited Dead Sea Magnesium (DSM), Limited's magnesium plant in Sodom, Israel on November 6, and interviewed DSM's Procurement and Contracts Manager, Itzik Ben-Lulu, and the head of DSM's Electrolysis and Chlorination Plant, Dima Bakman. Blue Lantern Officer also saw firsthand the lithium sulfur dioxide batteries that DSM wishes to procure, and how they are being used for the blowers on individual protection suits. Based on what Blue Lantern Officer observed during the site visit, the proposed transaction appears legitimate, and Blue Lantern Officer recommends issuance of the required export license. END SUMMARY. -------------- - RESULTS OF SITE VISIT TO DSM'S MAGNESIUM PLANT -------------- - ¶2. (U) During Blue Lantern Officer's November 6 site visit to DSM's magnesium plant -- located on the southern shore of the Dead Sea in Sodom -- DSM Procurement and Contracts Manager Itzik Ben-Lulu provided an overview of the plant's history and function. Construction on the magnesium plant began in 1994 and was completed in 1996. It is a joint venture between Israel Chemicals, Limited (ICL) -- a public company traded on Israel's stock exchange and owning 65 percent of DSM's equity -- and Volkswagen AG, which owns 35 percent of DSM's equity. ICL is a multinational mining company with numerous mining operations, production plants and worldwide sales and marketing organizations. ICL's corporate headquarters are located in Tel Aviv. Volkswagen AG is one of the world's leading automotive manufacturers. ¶3. (U) DSM's facilities are integrated into the larger ICL industrial complex on the southern shore of the Dead Sea. This complex includes the 75-year old Dead Sea Works -- a global producer of five different types of potash -- and Dead Sea Bromine, the largest producer of bromine in the world. Magnesium chloride is also produced on the complex's grounds. DSM's annual production capacity is 35,000 tons of magnesium. It produces ingots and T-bars of various sizes that are used in the alloying of aluminum, die casting, and cathodic protection alloys. ¶4. (SBU) Dima Bakman, DSM's head of its Electrolysis and Chlorination Plant, gave Blue Lantern Officer a brief tour of the plant, and explained that the magnesium is extracted from Dead Sea salts through electrolysis, a byproduct of which is the production of chorine gas. The 10 workers on site who oversee the electrolysis wear white "Supergum" personal protection suits that include masks and a BL 90 blower unit they wear on their backs like a small backpack. Each of these units is powered by a Model 5800 BT lithium sulfur dioxide battery of the type that DSM wishes to procure from Saft America, Incorporated through its agent in Israel, UMS. Bakman showed Blue Lantern Officer how the batteries fit into and power the blowers. He explained that each of the ten workers uses one battery per month, and so DSM needs approximately 120 batteries per year. Ben-Lulu said that DSM has ordered these kinds of batteries once or twice before, and that DSM also used different blowers in the past. Bakman lamented that he has to continually order these disposable batteries, and said he would prefer if he could obtain rechargeable batteries. (NOTE: "Supergum" -- the producer of the personal protection suits -- is an Israeli company. The BL 90 blower is an essential element of the suits they produce. The suits that Blue Lantern Officer observed were white-colored variants of the military suits featured on Supergum's website, at www.global-defence.com/2003/supergum profile.htm. END NOTE.) Ben-Lulu said that the batteries, once received, will be stored in a locked room in a warehouse on DSM's property. The warehouse is guarded, and one of DSM's employees is responsible for accounting for the items stored in it. ¶5. (SBU) After the tour, Ben-Lulu reviewed the paperwork on the proposed battery order. He provided Blue Lantern Officer a copy -- in Hebrew -- of DSM's purchase order to UMS. Page 2 of the purchase order shows that the order is for Model 5800 BT lithium sulfur dioxide batteries, and notes that they will be used to power pressure blowers. (NOTE: Blue Lantern Officer has sent this two-page document by FAX to PM/DTCC, care of Judd Stitziel. END NOTE.) ¶6. (SBU) Ben-Lulu noted that DSM has imported other controlled items requiring export licenses, including some Wilden pumps, which are used in the pumping of hydrogen chloride solution. He provided Blue Lantern Officer with copies of a procurement order from DSM to Wilden for pumps, as well as an end-use certificate for the pumps. These documents -- as well as those noted in paragraph 5 -- were printed off of his computer. Blue Lantern Officer observed that Ben-Lulu keeps hard copies and electronic copies of documentation related to DSM's procurement operations, and knows how to access them. (NOTE: The two documents concerning the Wilden pumps were sent by FAX to Judd Stitziel in PM/DTCC. END NOTE.) -------------- CONCLUSION -------------- ¶7. (SBU) Embassy Blue Lantern Officer believes DSM's proposal to procure the 48 lithium sulfur dioxide batteries is legitimate, and that the batteries will be used in the blowers that are part of the personal protection suits worn by the workers in DSM's electrolysis and chlorination plant. Embassy Blue Lantern Officer therefore recommends issuing the export licenses. Ben-Lulu would welcome any clarification that could be provided on whether he can receive a "blanket export license" to cover future orders of Model 5800 BT lithium sulfur dioxide batteries, as well as the Wilden pumps that DSM is ordering. ********************************************* ******************** Visit Embassy Tel Aviv's Classified Website: http://www.state.sgov.gov/p/nea/telaviv You can also access this site through the State Department's Classified SIPRNET website. ********************************************* ******************** JONES