C O N F I D E N T I A L BAGHDAD 001088

SIPDIS

SIPDIS

USDOE FOR GEORGE PERSON
DOE FOR AL HEGBERG
DOE FOR JOANNA SELLEN

E.O. 12958: DECL: 04/07/2018
TAGS: ECON IZ
SUBJECT: TUWAITHA YELLOWCAKE NEGOTIATIONS UPDATE

REF: BAGHDAD 845

Classified By: CETI Ambassador Charles Ries, reasons 1.4 b,d,h


1. (C) SUMMARY: The Minister of Science and Technology held
a conference call on April 6 at the Embassy to finalize
contract negotiations with Cameco, the Canadian buyer of the
uranium yellowcake. Negotiations went well, and the contract
once finalized and reviewed by the parties may be signed as
early as April 11, pending clarification from the USG of
delivery plans. END SUMMARY


2. (SBU) On Sunday April 6, Iraq Minister of Science and
Technology Riad Fahmi held a conference call at the Embassy
with the Canadian company CAMECO. Additional participants
included Dr. Fadhel Jawad, MOST legal advisor; Deputy
Minister of Industry Sami Alarjee; MOST Deputy Minister Fouad
Shati; Tayseer Mohammed and Mohammed Mahmood from the Trade
Bank of Iraq.


3. (C) The Iraq delegation spent about 45 minutes prior to
the call organizing their thoughts and discussing their
negotiating posture. During the call, Fahmi went through the
contract and letter of credit paragraph by paragraph to reach
agreement on all terms of the contract. Points of discussion
included the question of whether the force majeure clause
would affect the sale price (Iraq insisted it should not
after delivery, and CAMECO agreed); whether partial payment
would be due for partial delivery (this resulted in a
question that CAMECO promised to pursue with the USG
concerning the mode of delivery, number of shipments, and
port of entry); whether USG notice of delivery would serve as
confirmation of delivery; placing a time limit for purposes
of payment on the independent analysis of the material; and
the question of how to deal with any rejected material. The
two main points were the questions of delivery and the
disposition of rejected material. On the latter point, the
resolution was that Iraq agreed disposal would be at its
cost, and CAMECO would support efforts to locate a disposal
site. Disposal procedures will not hinder or delay payment
for the accepted material.


4. (C) The discussion ended with the parties stating their
intent to have a completed final draft by Wednesday April 9
and an exchange of signed documents by April 11. After the
meeting, the Iraq delegation appeared to be in good spirits
and optimistic.


5. (C) One area of concern remains the question of the mode
of delivery. We had understood that delivery would be
arranged by air in no more than four separate shipments to
Montreal, which precipitated the Iraq demand for partial
payments on partial delivery. However, we have now heard
that DOE plans to make one delivery via sea. The parties
would benefit from clarification of the delivery details.
BUTENIS