CHINA'S LIMMT PREPARING POSSIBLE IMMINENT DELIVERY OF GYROSCOPES AND ACCELEROMETERS TO BEIJING-BASED MODAFL REP FOR USE BY IRANIAN MISSILE ENTITY (S)

S E C R E T STATE 118099



SIPDIS



E.O. 12958: DECL: 11/04/2033

TAGS: PARM, MTCRE, PREL, ETTC, CH, IR

SUBJECT: CHINA'S LIMMT PREPARING POSSIBLE IMMINENT

DELIVERY OF GYROSCOPES AND ACCELEROMETERS TO BEIJING-BASED

MODAFL REP FOR USE BY IRANIAN MISSILE ENTITY (S)



REF: A. 06 BEIJING 2983

B. 06 STATE 38396

C. 06 BEIJING 4561

D. 06 BEIJING 4854

E. 06 STATE 118552

F. 06 STATE 167376

G. 06 BEIJING 21333

H. 07 STATE 28429

I. 07 BEIJING 1625

J. 07 BEIJING 5039

K. 07 STATE 111099

L. 07 BEIJING 5269

M. 07 BEIJING 5361

N. 07 BEIJING 7630

O. BEIJING 189

P. STATE 14066

Q. BEIJING 481

R. BEIJING 609

S. BEIJING 716

T. BEIJING 886

U. BEIJING 2322

V. STATE 64254

W. BEIJING 2391

X. BEIJING 2550

Y. STATE 111597

Z. BEIJING 4064



Classified By: ISN/MTR ACTING DIRECTOR JAMES MAYES FOR REASONS

1.4 (B),(C),AND (D).



1. (U) This is an action request. See paragraph 6.



2. (S) Background: Since February 2006, we have

repeatedly discussed with China our concerns

regarding the proliferation-related trading

activities of the Chinese firm Dalian Sunny

Industries, which is also known as LIMMT (Refs A -

Z). LIMMT's 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) and

China's missile-related items export control list.

LIMMT has also supplied SBIG with tungsten copper

alloy ingots that could be used to produce missile

jet vanes. We have made clear to Chinese officials

on numerous occasions that LIMMT's activities could

result in the imposition of sanctions pursuant to

U.S. law, and have made frequent requests that they

provide us with detailed information on their

investigation or any actions they have taken against

LIMMT. Despite the PRC's investigation and Chinese

assurances that enforcement measures have been

imposed against LIMMT, the firm continues to engage

in procurement activity in support of Iranian

entities of proliferation concern.



3. (S) In late October, we advised PRC officials

that in May 2008, LIMMT provided SBIG with drawings

of accelerometers and dynamically tuned gyroscopes

manufactured by the Chinese firm God Arrow Sensor

(also known as Chongqing God Arrow Sensor) (Ref Y).

We now have additional information indicating that as

of September 2008, LIMMT had provided SBIG with

samples of gyroscopes and as of mid-October, Karl

Lee, LIMMT's commercial manager, had made

arrangements for a late October delivery of a

quantity of accelerometers and gyroscopes to the

Beijing representative of Iran's Ministry of Defense

and Armed Forces Logistics (MODAFL). We also

understand that a second consignment of gyroscopes

and accelerometers was being prepared for delivery to

MODAFL's Beijing representative, and that this

delivery could occur as early as November 8.

Additional monthly shipments are also being prepared

for delivery to MODAFL, which would then forward the

equipment to SBIG in Iran.



4. (S) We also understand that Karl Lee was

arranging additional shipments of tungsten copper,

graphite, and possibly aluminum to SBIG, and that he

may have planned to have future consignments of

tungsten copper blocks or plates machined to look

like mechanical parts, believing that this would

facilitate clearance by Chinese customs. SBIG also

provided specifications for a computer numerically

controlled (CNC) cold flow forming machine to Lee,

who agreed to seek a machine matching SBIG's

requirements from a Chinese supplier. (Note: Any

machine matching SBIG's requirements would be

controlled by the MTCR. End note.)



5. (S) Objectives: We want to share this information

with Chinese officials to make clear to them that,

despite the steps they have taken, LIMMT's

procurement activities on behalf of SBIG continue

unabated. We are especially concerned about the

potentially imminent delivery of the gyroscopes and

accelerometers to MODAFL's Beijing representative,

and want to urge Chinese authorities to take

appropriate action to prevent the supply of this and

follow-on consignments of these items. We also want

to advise Chinese officials of LIMMT's possible

supply to SBIG of the tungsten copper, graphite,

aluminum and CNC flow forming machine. Finally, we

want to follow up on our request that China provide a

written summary of actions it has taken against

LIMMT, as well as any written advisories it issues to

Karl Lee informing him that he will be subject to

applicable penalties if he continues his assistance

to Iranian entities of proliferation concern.



6. (U) Action Request: Request Embassy Beijing

approach appropriate host government officials to

deliver talking points in paragraph 7 and report

response. Talking points may also be left as a non-

paper.



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



(SECRET REL CHINA)



-- On many occasions since February 2006, we have

discussed with you our serious 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 tungsten

copper alloy ingots that could be used to produce

missile jet vanes. These transfers appear to be

contrary to China's export control laws and United

Nations Security Council Resolutions.



-- As you are aware, sanctions could be imposed

against LIMMT for its activities in support of Iran's

ballistic missile program.



-- We now want to share additional information

concerning LIMMT's proliferation-related activities.



-- We recently advised you that LIMMT and SBIG were

negotiating the sale of gyroscopes and accelerometers

probably manufactured by the Chongqing firm God Arrow

Sensor.



-- We now understand that as of September 2008, LIMMT

had provided SBIG with samples of gyroscopes and as

of mid-October, Karl Lee, LIMMT's commercial manager,

had made arrangements for a late October delivery of

accelerometers and gyroscopes to the Beijing

representative of Iran's Ministry of Defense and

Armed Forces Logistics (MODAFL).



-- While LIMMT may have already provided these items,

we also understand that a second consignment of

gyroscopes and accelerometers was being prepared for

delivery to MODAFL and that the delivery date could

be as early as November 8.



-- Additional monthly shipments would be prepared for

delivery to MODAFL, which would then forward the

equipment to SBIG in Iran.



-- We are concerned that SBIG intends to use these

gyroscopes and accelerometers in the guidance systems

of its solid-fueled ballistic missiles.



-- We strongly urge you to take immediate steps to

prevent LIMMT from supplying SBIG or MODAFL with the

accelerometers and gyroscopes it plans on providing

in early November, as well as any follow-on

deliveries of this equipment.



-- We also want to advise you of other procurement

activities by LIMMT on behalf of SBIG.



-- For example, in August and September 2008, Karl

Lee was arranging additional shipments of tungsten

copper, graphite, and possibly aluminum to SBIG.



-- LIMMT may machine future consignments of tungsten

copper blocks or plates to appear as mechanical

parts, believing that this will facilitate clearance

by Chinese customs.



-- We also have information indicating that SBIG

provided specifications for a computer numerically

controlled cold flow forming machine to LIMMT. Lee

agreed to seek a machine matching SBIG's requirements

from a Chinese manufacturer.



-- A machine with the characteristics required by

SBIG would be capable of producing rocket motor cases

for medium range ballistic missiles and would be

controlled by the MTCR.



-- We want to strongly encourage you to take steps to

curtail LIMMT's ability to supply gyroscopes,

accelerometers, tungsten copper, graphite, aluminum

and any other ballistic missile-relevant items

(including flow forming machines) to SBIG.



-- We wish to again ask for demonstrable action

against LIMMT by your government and remain

interested in receiving any further information you

can provide on your investigations or actions

concerning LIMMT.



-- As described in the non-paper our Ambassador

provided to VFM He on October 27, it will help to

facilitate our consideration of sanctions if we

receive a written summary of actions your government

has taken against LIMMT, as well as any current or

future written advisories your government issues to

Karl Lee informing him that he will be subject to any

applicable penalties under Chinese law if he

continues his assistance to Iranian entities of

proliferation concern.



-- We look forward to future cooperation on

nonproliferation issues and to hearing the actions

your government takes in response to this

information.



End talking points/non-paper.



8. (U) Department POC is ISN/MTR John Paul Herrmann

(Phone: 202-647-1430). Please slug any reporting on

this issue for ISN and EAP.



9. (U) A word version of this document will be posted

at www.state.sgov.gov/demarche.

RICE