CHINESE VANADIUM SEIZURE FOLLOW-UP

C O N F I D E N T I A L SECTION 01 OF 02 SHENYANG 000137

SIPDIS

E.O. 12958: DECL: 07/31/2019
TAGS: CH ECON KN KS PGOV PREF PEL RS
SUBJECT: CHINESE VANADIUM SEIZURE FOLLOW-UP

REF: SHENYANG 134

Classified By: CONSUL GENERAL STEPHEN B. WICKMAN. RESONS 1.4 B/D


1. (C)Summary. On July 30 Congenoffs went to Dandong to
observe land port inspections and meet with Foreign Affairs
Office (FAO) officials regarding the discovery of an attempt
to smuggle vanadium concealed in fruit containers (reftel).
Officials clarified that the vanadium had actually been
discovered on July 22 (not July 24) and that the case is now
being handled by the Anti-Smuggling Bureau. Through business
contacts, CGOffs heard that a worker at a Dandong
chemical-export company had helped procure the vanadium. No
other details were available. CGOffs observed that
DPRK-licensed vehicles underwent much more scrutiny than
their Chinese equivalents. Land port authorities seemed
caught off guard by our presence. End Summary.


2. (C)On July 30 Pol/Econ Chief called on Dandong FAO
Consular Chief Jiang and Deputy Zhao to discuss the recent
interception of vanadium at Dandong Land Port. When we noted
Dandong Port officials, unwillingness to meet with us, Jiang
apologized, demurring that high-level Port Authority
officials were on travel in Shenyang and Dalian or busy
with pressing matters of the port., Jiang noted that he was
authorized to speak on behalf of the Land Port Authority and
would provide us with any information we might need.

Definitely Not Bananas.


3. (C) According to the FAO, Dandong officers discovered the
vanadium during a routine inspection of outbound vehicles on
July 22, not July 24, as has been widely reported. The X-ray
machine through which the trucks are scanned showed that the
contents were not bananas,, as the export declaration
stated, and thus the cargo underwent further inspection.
Secondary inspection confirmed the shipment to be a suspect
metallic substance in glass containers. Following their
routine procedures, Dandong officials forwarded the materials
to the Dalian Port Authority, which oversees the Dandong, for
testing and confirmation. Dalian authorized the release of
information on the discovery on July 27. The delay in making
the information public, the FAOs opined, was a function the
internal confirmation process, not political maneuvering.
Investigation Underway.


4. (C) Jiang reiterated the routine nature of the discovery,
explaining that per Chinese export rules, vanadium is a
tightly controlled item. Exporters may apply for permits to
export the metal legally, but not to the DPRK. Jiang
recalled that some international companies had recently
complained about how Chinese producers control this metal.
While unable to provide the name of the export company
implicated in the smuggling attempt, Jiang said this is the
first time the company in question has ever been cited in any
smuggling case of any kind. According to the law, Jiang
said, the company,s license will be yanked and further
action would ensue. The Chinese Anti-Smuggling Bureau will
now conduct a thorough investigation as to how the operation
proceeded.


5. (C) Officials do not yet have details on how the purchase
was carried out, and the level of the Chinese export
company,s involvement. A CGOff contact in Dandong,s export
industry told us a Dandong chemical-products export company
executive named Jun Wang had procured the vanadium. Our
contact had no further information on how the vanadium made
its way into the discovered banana boxes or how many other
individuals may have been involved.

Why All the Attention?


6. (C) When asked about the UN 1874 implications of the bust,
the FAO said customs officers believe the case to be nothing
special, the result of routine inspections and unrelated to
any political overtures. Dandong authorities are
uncomfortable with the high level of media attention the case
has received and blamed an overzealous media for blowing such
a routine discovery out of proportion. The FAOs also griped
at length about troublesome South Korean media, reports
that are just rumors that cause trouble and make our work
difficult.

Seeing for Ourselves

SHENYANG 00000137 002 OF 002




7. (C) Prior to and after meeting with the FAO, CGOffs went
to the Dandong Land Port Inspection yard to observe traffic.
Morning traffic, mostly empty or lightly-loaded trucks from
the DPRK, was normal (in accord with our prior observations
at the port). DPRK trucks predominated, and a number of
company agents were lined up awaiting the completion of
official port authority inspection and clearance. Afternoon
traffic was comprised chiefly of empty Chinese-licensed
trucks. The disparity in the level of scrutiny given the
Chinese-licensed trucks coming from the DPRK and those
bearing DPRK licenses was like night and day. DPRK cargo and
passenger vehicles were thoroughly inspected inside and out,
passengers and drivers were asked to exit the vehicles to
allow closer inspection, and on one occasion, the engine was
examined. One North Korean family and their Chinese driver
were audibly griping to each other about the delay in the
inspection of their Mercedes SUV. While by no means a cursory
check, the inspection of the Chinese-licensed trucks was less
thorough. Inspectors, however, did look inside the vehicles
and open the doors.


8. (C) Initially, the land port authorities seemed surprised
by our presence, which had not been previously coordinated
with the Liaoning Provincial FAO. Within a minute of
entering the inspection area, an officer asked why we were
present and kept a watchful eye on our movements around the
area. Plainclothes surveillance was almost immediate, and
officials from inside the administration area came out on
occasion, noting our presence. That being said, we were not
asked to leave and we were allowed to walk around and observe
as much as we wanted, including a close inspection of a
large, DPRK-bound flatbed full of Chinese tile and wall
materials.

WICKMAN