NAMIBIA: URANIUM THEFT PROMPTS ROSSING RESPONSE

C O N F I D E N T I A L SECTION 01 OF 02 WINDHOEK 000348 SENSITIVE SIPDIS PLEASE PASS TO THE DEPARTMENT OF ENERGY, NUCLEAR REGULATORY COMMISSION (NRC) STATE FOR ISN (NMENKHOFF),T, INR/AA, AND AF/S E.O. 12958: DECL: 09/21/2019 TAGS: KNNP MNUC PARM ENRG EMIN ETTC PREL IR WA SUBJECT: NAMIBIA: URANIUM THEFT PROMPTS ROSSING RESPONSE REF: A. WINDHOEK 296 ¶B. WINDHOEK 202 ¶C. WINDHOEK 200 ¶D. WINDHOEK 198 ¶E. WINDHOEK 159 Classified By: AMBASSADOR DENNISE MATHIEU for 1.4 (b) and (d). ¶1. Action request - please see para 11. -------------- Summary -------------- ¶2. (C) The recent theft of 170 kilograms of uranium oxide from Rio Tinto's Rossing Uranium facility has forced the company to strengthen its security posture, Rossing Uranium's Managing Director Mike Leech told Ambassador Mathieu on September 21. Two Rossing employees and a third individual have been arrested, but there was likely collusion among other employees as well. Namibian police believe the incident might be connected to a burgeoning black market for uranium based in South Africa. Leech stressed that Rio Tinto is taking the theft very seriously, and that the incident had been a wake-up call for the entire Namibian uranium industry. Uranium mining companies have reached out to the IAEA for assistance and have begun collaborating on security matters. Leech clearly understands that the incident, coupled with the Iranian government's 15 percent share in Rossing Uranium, could elicit increased international scrutiny of Rossing. End Summary. -------------- Background -------------- ¶3. (SBU) Rossing Uranium Managing Director Mike Leech called on the Ambassador on September 21 to convey security-related concerns. He noted media reports that three individuals had been arrested on September 4 in possession of 170 kilograms of uranium oxide stolen from Rio Tinto's Rossing Uranium mine. The three detained suspects - Riaan Maasdorp, a Rossing employee, Abraham Isaak, a Rossing contractor, and David Shindinifa, a member of the Namibian Defense Forces - are being held without bail. According to Leech, this theft represents the largest theft of uranium from Rossing for many years. (Note: In 1991, 1,110 kilograms of uranium oxide were stolen from a Rossing warehouse facility, but were later recovered. End Note). -------------- How the Theft Occurred -------------- ¶4. (C) Leech stated that the three men arrested were not the only people involved in the theft; he expected the arrest of at least four others, including Rossing security guards. It was clear, he said, that those involved were extremely familiar with the mine's internal security procedures. The stolen uranium was somehow transferred from a normal steel barrel used to transport uranium to a waste oil barrel. Leech acknowledged that the thieves had to know that the removal of waste oil barrels from the Rossing facility is not rigorously monitored and controlled like that of the uranium barrels. ¶5. (C) To transfer the uranium to the waste oil drum, the thieves either colluded to render a security camera inoperable at the warehouse that used to store the finished uranium oxide product - or they simply took advantage of a time when the camera was inoperable. In addition to the security camera coverage, Rossing has a guard posted at the warehouse. Investigators have questioned the guards that worked at the warehouse, but none so far have admitted to seeing any unusual activity. -------------- A South African Black Market for Uranium? -------------- ¶6. (C) Diamond mines, Leech pointed out, accept that three to four percent of their output will be stolen. Such a threshold, he added, is clearly not permissible in the uranium industry, however. Namibian authorities have shared with uranium industry insiders, like Leech, that a "black market" for uranium is emerging in South Africa. The authorities believe that a group (or groups) within South WINDHOEK 00000348 002 OF 002 Africa is trying to obtain uranium "even in small quantities" from the region for shipment to third countries. He indicated that a theft at Langer Heinrich mine, of a small amount of yellow cake, earlier this year, might be linked to the South African black market. Furthermore, according to Leech, Namibian police believe that uranium smugglers seek to route Namibian product via Botswana to reach the South African black market, but that they are confident the smugglers have not yet been successful. -------------- Response to the Theft -------------- ¶7. (C) Leech remarked that the arrests were a result of a "sting" operation carried out by the police, with the cooperation of Rossing. He also pointed out that Rossing has pressed for imposition of the maximum possible sentence as a deterrent to future thefts. Rossing will also redesign and strengthen its internal security controls, Leech emphasized. He asked the Ambassador if the Embassy might be able to provide some form of technical assistance as Rossing reviews its security program. The Ambassador offered to have the Embassy's RSO contact Rossing's head of security and to ask Washington whether any additional technical assistance might be possible. ¶8. (C) Leech added that he, as chair of the Namibian Chamber of Mines, had met recently with the managing directors of the other operational uranium mining companies - Paladin Energy (Langer Heinrich mine) and Areva (Trekkopje mine) - to discuss ways in which they can collectively bolster their security controls. They discussed development of a joint information gathering (intelligence) capability to counter potential risks. In addition, the three companies have solicited the assistance of the International Atomic Energy Agency (IAEA) through their affiliation with the Namibian Uranium Stewardship Committee and Namibia's Nuclear Regulatory Authority, both of which are led by Woton Swiegers. Leech noted that Swiegers had recently returned to Namibia following meetings with the IAEA in Vienna where he requested additional IAEA assistance for Namibia. The three companies are also renewing public education efforts highlighting the dangers of casual (unprotected) contact with uranium oxide as a way to deter would-be smugglers. -------------- Iranian Connection -------------- ¶9. (C) Leech noted that the Government of Iran (GOI) has refused all offers to date to buy its 15.01 percent stake in Rossing, even though the Bank of Namibia has banned the remittance of Rossing's dividends to GOI-owned banks since 2008, in compliance with UN sanctions. Without a way to repatriate its earnings, Leech noted, the ban has in effect created an incentive for the GOI to reinvest its dividends in Namibia, including the purchases of available Rossing shares from small shareholders, said Leech. The GOI is also rumored to be interested in purchasing Namibian land, he told us. -------------- Comment -------------- ¶10. (C) Rossing has elicited close scrutiny from the USG and others in recent months because of the Iranian government's stake in the company. Leech clearly believed the recent theft would spark additional concerns and felt the need to reach out to the Ambassador to emphasize they were taking the incident very seriously and were taking rigorous steps to prevent future problems. Rossing clearly has a compelling incentive to safeguard its product -- fear of losing one if its biggest customers. The United States represents 30 percent of Rossing's sales. -------------- Action Requested -------------- ¶11. Post would appreciate Department's guidance on how to respond to Leech's request for U.S. assistance in strengthening Rossing's security system. MATHIEU