- The Washington Times
Sunday, January 23, 2011

The State Department in 2009 sought the Chinese government’s help in blocking a sale to Iran of 25 tons of specialty steel for Tehran’s defense industry to be used in building nuclear-related centrifuges, according to a classified department cable.

“Post is instructed to inform appropriate-level Chinese officials of this transaction, and request that they investigate the entity and individuals involved,” according to the cable, which is labeled “secret.” It noted that the Chinese were to be told that the company faces sanctions for the proposed sale under U.S. law.

“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,” the cable said.

It is not known from the cable whether the shipment of maraging steel, a high-strength metal used in centrifuges and missile components, was transferred to Iran. However, the company involved was indicted in New York three months later, and court papers in that case indicate the steel and other banned goods were sold to Iran.

The cable provides new details on China’s role as a supplier of materials for Iran’s nuclear program. An earlier State Department cable revealed that China helped North Korea ship goods to Iran through Chinese airports.

“What this shows is that China has been a consistent problem in U.S. efforts to tighten the noose around Iran’s nuclear program,” said Gary Milhollin, head of the Wisconsin Project on Nuclear Arms Control. “Chinese companies have been a conduit for goods going to Iran.”

A CIA report to Congress last year said Chinese companies, both state-owned and private, continued in 2009 to sell weapons-of-mass-destruction goods to Iran.

China also covertly sold to Pakistan in 1996 specialty ring magnets that U.S. officials later determined were used in the core of that country’s nuclear weapons program, specifically its centrifuges that spin uranium gas into highly enriched uranium for nuclear weapons.

The Jan. 14, 2009, cable was partially censored by the anti-secrecy website WikiLeaks, which released it Friday.

However, the identities of the sellers and buyers involved in the 25-ton deal for maraging steel were disclosed in an April 2009 indictment by New York City’s district attorney of a Chinese metallurgical production company called LIMMT and its owner, Li Fangwei.

The cable stated that U.S. intelligence agencies had learned of an Iranian agent linked to Iran’s Defense Industries Organization (DIO) who was “making arrangements with [a] Chinese entity … 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,” the cable said, noting that the export was controlled by the Nuclear Suppliers Group, an international organization that seeks to limit exports of products that can be used in nuclear-weapons development.

The cable said U.S. Embassy officials were ordered to supply details of the planned sale to Chinese officials and urge them to “thoroughly investigate the transfer and the entities involved” and share the results.

The Iranians involved were “linked to Iran’s DIO” that was sanctioned under U.N. Security Council resolutions (UNSCR).

The cable said that U.S. officials were to tell the Chinese that “given Iran’s continuing nuclear and missile related activities, now is not the time for business as usual with Iran.”

In diplomatic talking points, the cable disclosed that the Chinese sale includes about 25 metric tons of maraging steel and that an invoice identified the shipment as “maraging steel rods with a diameter of 38.1 mm and 450.2 millimeters long.”

The specifications also listed the grade of the steel and said it would be packed in “seaworthy standard wooden boxes.”

The price of the shipment was $75.55 per kilogram, and 50 percent of the payment was to be made by wire transfer in advance with the remaining 50 percent “by cash at delivery, to be paid after the cargo has been received and the quality and quantity confirmed,” the cable said.

The delivery was to be made 80 to 140 days from the first payment and shipped from “any Chinese port.”

“We believe that other deals are also being discussed between these parties, possibly involving other forms of maraging steel,” the cable said.

“Although the solid maraging steel rods described previously are not explicitly controlled [on international agreement] 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,” the cable said.

The cable said the “proliferation related activities” of the Chinese company were discussed with China’s government “on a number of occasions” and that the company “could be sanctioned under U.S. law for these activities.”

The indictment stated that a front company of LIMMT called SC (Dalian) Industry & Trade Co. sold Iran 25 tons of maraging steel. The buyer was identified as the Amin Industrial Complex, which has two addresses, a telephone number and a fax number identical to those of Khorasan Metallurgy, an Iranian firm that, according to the United Nations, produces centrifuge parts. Khorasan is linked to Iran’s Ministry of Defense and has been sanctioned by the European Union and the United Nations.

Mr. Li was identified by prosecutors as the manager of LIMMT, who was sanctioned by the Treasury Department in 2006 for sales of weapons-of-mass- destruction goods to Iran.

The company also was charged with selling Iran tungsten used in missile parts, graphite cylinders used in centrifuges and other nuclear arms uses, and high-strength aluminum also used in manufacturing centrifuges.

The indictment stated that Mr. Li on June 16, 2008, sent an invoice to an agent of Iran’s Amin Industrial Complex, described as “a subsidiary of the DIO in Iran.”

The invoice was on SC (Dalian) Industry and Trade Co. Ltd. letterhead for 24,500 kilograms of maraging steel rods for more than 1,440,000.00 euros.

“This maraging steel, in the dimensions and DIN grade specified in this particular invoice, is controlled for export internationally by the Nuclear Supplier’s Group,” the indictment said.

The indictment also said that on July 23, 2008, the Iranian agent for the Amin Industrial Complex “acknowledged that Amin Industrial Complex had paid 50 percent of the purchase price of the maraging steel rods in advance of shipment.”

A Chinese Embassy spokesman could not be reached for comment on the case.

Mr. Li also could not be reached for comment. However, in April 2009, he told Dow Jones Newswires that the charges against him were false and based on false U.S. intelligence and that none of the goods he sold had military applications.

• Bill Gertz can be reached at bgertz@washingtontimes.com.

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