O 142315Z JAN 09
FM SECSTATE WASHDC
TO AMEMBASSY BEIJING IMMEDIATE

S E C R E T STATE 003943

E.O. 12958: DECL: 01/14/2032
TAGS: PARM PREL MNUC IR CH

SUBJECT: (S) NIAG 8233: TRANSFER OF MARAGING STEEL FROM CHINA TO IRAN

Classified By: ISN ACTING A/S PATRICIA A. MCNERNEY, REASONS 1.4 (B), (C), AND (D) 
 
SUMMARY 
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 ¶1. (S//REL China) We have received information that XXXXXXXXXXXX associated with XXXXXXXXXXXX was making arrangements with Chinese entity XXXXXXXXXXXX to purchase maraging steel. The steel was to be partially machined in order to disguise it as mechanical parts in order to evade Chinese customs officials. Certain types of maraging steel are controlled by the Nuclear Suppliers, Group’s Dual Use List, under item 2. C. 11.  

¶2. XXXXXXXXXXXX
 
ACTION REQUEST 
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¶3. (S//REL China) Post is instructed to inform appropriate-level Chinese officials of this transaction, and request that they investigate the entity and individuals involved. Post should also remind the PRC that XXXXXXXXXXXX could be sanctioned under U.S. law. Post may draw from Summary, Objectives, and Talking Points/Non-Paper below, as appropriate.  
 
OBJECTIVES 
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 ¶4. (S//REL China) Post should pursue the following:  
-- Provide information regarding the transfer and encourage Chinese officials to thoroughly investigate the transfer and the entities involved.  
-- Encourage Chinese officials to share the results of their investigation with us.  
-- Emphasize that the Iranian entities involved are linked to Iran’s DIO, a designated entity under UNSCR 1737.  
-- Note that, given Iran’s continuing nuclear and missile related activities, now is not the time for business as usual with Iran.  
 
TALKING POINTS/NON-PAPER 
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¶5. (S//REL China) Begin talking points/non-paper:  
-- We would like to share with you information regarding a transfer of maraging steel from the XXXXXXXXXXXX.  
-- Our information indicates that XXXXXXXXXXXX
XXXXXXXXXXXX  
XXXXXXXXXXXX
-- The purchase was to consist of approximately 25 metric tons of maraging steel, which was to be machined so as to be disguised as mechanical parts in order to evade Chinese customs. 
-- The pro forma invoice for this shipment includes the following details:  --- Commodity: maraging steel rods, diameter: 38.1 mm, length: 450.2 mm  --- Technical Standards/Specifications/Requirements: According to grade DIN. 1.270 (X3NiCoMoTi18-9-5) or AISI 18 Ni  --- Packing: in seaworthy standard wooden boxes  --- Price: free on Board (FOB) Chinese main port: 58.85 euro ($75.47) PER KG, Cost and Freight (CFR) XXXXXXXXXXXX: 59 euro ($75.55) per kg  --- Partial shipment allowed, transshipment not allowed  --- Shipment: By vessel in container 
 
--- Payment: 50 percent by telegraphic transfer prepaid and remaining 50 percent by cash at delivery, to be paid after the cargo has been received and the quality and quantity confirmed.  
--- Delivery time: within 80-140 days from the date of receipt of 50 percent prepaid payment  --- Port of loading: any Chinese port  
--- XXXXXXXXXXXX We believe that other deals are also being discussed between these parties, possibly involving other forms of maraging steel.  
-- Certain types of maraging steel are subject to control by 
the Nuclear Suppliers, Group Dual Use List, under item 2. C. 11, and by the Missile Technology Control Regime under item 
6C8 of Category II. 
 
-- Furthermore, supply to Iran,s nuclear and missile programs of certain types of maraging steel are prohibited under UNSCR 1737 as specified in the lists of UNSCR documents S/2006/814 and S/2006/815.  -- Although the solid maraging steel rods described previously are not explicitly controlled on these lists, the circumstances surrounding this case, i.e., deceptive practices involving a proscribed entity and prospects for further deals between the parties, suggest that the transfer of this material would be inconsistent with China’s obligations under UNSCR 1737.  -- Moreover, certain types of maraging steel are prohibited by UNSCR 1803 from being transferred to Iran.  
-- As you are aware, we have discussed the proliferation related activities of XXXXXXXXXXXX with the Chinese Government on a number of occasions. XXXXXXXXXXXX could be sanctioned under U.S. law for these activities.  -- Given the urgent nature of this nuclear-related transfer, we request that you investigate this transfer and take all necessary measures, consistent with your laws and authorities, to prevent it.  -- We hope your government will provide us with the results of this investigation.   END POINTS.  

REPORTING REQUIREMENT 
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 ¶6. (U) Post is requested to report results of its efforts within five business days of receipt of this cable.  

XXXXXXXXXXXX

¶8. (U) Department thanks Post for its assistance. Please slug responses for EAP, ISN, NEA, and T. RICE