IRANIAN COMPANY EFFORTS TO PROCURE STEEL FROM

S E C R E T STATE 067405 E.O. 12958: DECL: 06/04/2033 TAGS: PARM MTCRE PREL SF IR SUBJECT: IRANIAN COMPANY EFFORTS TO PROCURE STEEL FROM SOUTH AFRICAN COMPANY Classified By: ISN/MTR DIRECTOR PAM DURHAM FOR REASON 1.4 (C). ¶1. (U) This is an action request. Please see paragraph 4. ¶2. (S) Background: The USG has information that in July 2007, a company affiliated with Iran's Shahid Hemmat Industrial Group (SHIG) concluded a contract with the Iranian firm Taghtiran Kashan Company to purchase South African-origin steel. This steel was to be obtained from the South African firm Columbus Stainless (Pty) Ltd and was likely to be used to support Iran's ballistic missile development efforts (as SHIG is the organization responsible for Iran's development and production of liquid propellant ballistic missiles). While the type of steel sought from Columbus Stainless is not controlled by the Missile Technology Control Regime (MTCR),it has been associated with the production of Scud engine components. ¶3. (S) Objective: Given the end user's involvement with Iran's ballistic missile program, we want to raise this matter with South African authorities and urge that they investigate this information and work to ensure that South African firms are not involved in the supply of missile-sensitive materials to Iran. ¶4. (S) Action Request: Request Embassy Pretoria approach appropriate host government officials to deliver talking points in paragraph 5 below and report response. Talking points also may be provided as a non-paper. ¶5. (S) Begin talking points/non-paper: (SECRET//REL SOUTH AFRICA) -- In the spirit of our nonproliferation partnership, we would like to alert you to a matter of proliferation concern and request your assistance in investigating this activity. -- The U.S. has information that, in July 2007, a company associated with Iran's Shahid Hemmat Industrial Group (SHIG) had concluded a contract with the Iranian firm Taghtiran Kashan Company to purchase over $6,000,000 of South African-origin steel. Under the terms of this contract, Taghtiran Kashan Company was to obtain this steel from the South African firm Columbus Stainless (Pty) Ltd. -- We are bringing this information to your attention because this steel is likely intended to support Iran's ballistic missile development efforts. -- SHIG is the organization responsible for Iran's development and production of liquid propellant ballistic missiles. SHIG also is an entity designated as subject to targeted sanctions under United Nations Security Council Resolution 1737. -- The steel sought from Columbus Stainless is type 304L stainless steel. While this type of steel is not controlled by the Missile Technology Control Regime (MTCR),it has been used in the production of SCUD engine components for SCUD missiles. -- Paragraph 4 of UNSCR 1737 requires all States to prevent the transfer to Iran of any item a State determines would contribute to the development of nuclear weapon delivery systems. -- We also note that paragraph 12 of UNSCR 1737 requires all States to freeze assets of and prevent provision of economic resources to not only entities designated under that resolution, but also those acting on their behalf. Provision of steel to an entity acting on behalf of SHIG would trigger these requirements. -- We hope you will use this information to investigate this activity and take all appropriate measures to prevent both this and future cooperation between this South African company and intermediaries working on behalf of Iran's missile program. -- We look forward to future cooperation on nonproliferation issues and to hearing any results of your investigation into this matter at the earliest possible time. End talking points/non-paper ¶6. (U) Washington POC is ISN/MTR Sarah Beane (Phone: 202-647-4019 - beanesa@state.sgov.gov). Please slug any reporting on this issue for ISN/MTR. ¶7. (U) A word version file of this document will be posted at www.state.sgov.gov/demarche. RICE NNNN End Cable Text