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Viewing cable 10WINDHOEK7, Namibia's Rossing Uranium -- A USG Evaluation

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Reference ID Created Released Classification Origin
10WINDHOEK7 2010-01-25 15:03 2011-02-01 21:09 CONFIDENTIAL Embassy Windhoek
DE RUEHWD #0007/01 0251507
R 251507Z JAN 10
E.O. 12958: DECL: 2020/01/25 
SUBJECT: Namibia's Rossing Uranium -- A USG Evaluation 
REF: 09 WINDHOEK 348; 09 WINDHOEK 159 CLASSIFIED BY: Dennise Mathieu, Ambassador; REASON: 1.4(B), (E), (G)

------- Summary -------

1. (SBU) A combined National Nuclear Security Administration (NNSA) and State Department team visited Rio Tinto's Rossing Uranium Mine and received a detailed briefing on the September 2009 theft of uranium oxide (reftel A), reviewed the company's mitigation measures to prevent future thefts, and discussed Rossing's compliance with UN Security Council Resolutions (UNSCRs) on Iran. The team was provided full access to Rossing's facilities and Rossing officials provided candid and detailed responses to the team's questions. The team focused most of its attention on Rossing's most vulnerable area, the Final Product Recovery (FPR) facility where the September 2009 incident occurred. The team came away encouraged that Rossing has taken the September 2009 theft very seriously; that the company has a detailed and well designed security plan to prevent future uranium thefts; and, that Rossing is fully compliant with U.S. laws and UNCSR requirements with regards to Iran. End Summary.

---------------- Visit Background ----------------

2. (SBU) Following the theft from Rossing Uranium of 170 kgs of U308 in September 2009, Rossing's Managing Director (MD) Mike Leech approached Ambassador Mathieu to seek USG assistance in evaluating Rossing's security environment (reftel A). In response, officials from the Department of Energy's (DOE) National Nuclear Security Administration (NNSA), Phil Robinson (DOE Headquarters), Mike Itamura (Sandia National Lab), and Doug Sweeney (Lawrence Livermore National Lab), as well as the State Department's Risa Mongiello from the Bureau of International Security and Nonproliferation (ISN), and Embassy Windhoek's econoff Frank DeParis, visited the Rossing Uranium Mine and Corporate Offices in Swakopmund, Namibia January 18-20. The team had access to the senior levels of Rossing's management xxxxxxxxxxxx. Team members were permitted to ask questions of any Rossing employee they encountered. While the team had full access to the Rossing Mine and downstream shipment (the rail and port) facilities used for product delivery, much attention was focused on security and access controls surrounding the Final Product Recovery (FPR) area where the September 2009 incident occurred.

------------------------ The September 2009 Theft ------------------------

3.(C) xxxxxxxxxxxx provided a detailed account of the September 2009 theft. Rossing employee xxxxxxxxxxxx and Rossing contractor xxxxxxxxxxxx who worked in Rossing's Final Product Recovery (FPR) area orchestrated the theft. FPR is where uranium impregnated solution is converted and packaged into final product (U3O8). According to xxxxxxxxxxxx, Namibian police (NAMPOL) initiated the illicit purchase with the goal of determining if uranium could be smuggled out of the mine. NAMPOL appears to have targeted Rossing employees (and presumably employees with access to the FPR) and offered them exorbitant amounts of money (several thousands of dollars per kilo) to purchase U3O8. WINDHOEK 00000007 002 OF 004

4.(C) The two employees exploited their knowledge of the various vulnerabilities within the FPR and elsewhere at the mine to perpetrate the theft. External access to the FPR was strictly controlled and physical security around the FPR area was generally adequate, but employees with access to the FPR were largely unmonitored and had free reign to all areas of the FPR. xxxxxxxxxxxx removed the finished U3O8 from a damaged finished product drum as they knew that controls on damaged drums were not as strict as on regular drums. Rossing senior management believes the drum was intentionally damaged to allow for the removal of the product. One or both then moved the "damaged drum" to an enclosed area within the FPR where there was no closed circuit TV (CCTV) supervision. Once in the unmonitored area, the U3O8 was scooped into individual plastic bags and transferred to a trash dumpster for removal.

5.(C) Thereafter, xxxxxxxxxxxx circumvented a number of controls on waste removal from the FPR. xxxxxxxxxxxx used a hauling truck to take the dumpster to Rossing's dump site. Neither Maasdorp nor Isaak were authorized to drive the hauling truck and the truck should never have entered or exited the FPR without a security escort. Furthermore, the two drove the hauling truck outside its normal schedule. Once the bags of U3O8 were "deposited" at Rossing's dump site, the material was largely unprotected and unsupervised as the dump is normally only used for disposing of Rossing's non-hazardous waste. xxxxxxxxxxxx , xxxxxxxxxxxx and/or perhaps their third partner xxxxxxxxxxxx xxxxxxxxxxxx, picked up the bags from the dump site at a later date/time.

6.(C) Rossing's finished uranium oxide (U3O8) is packaged in steel drums which can hold a maximum of 485 kgs (gross weight including the drum). Average gross drum weight is around 420 kgs. The police caught the thieves when they attempted to sell 170 kgs (24 bags) of U308. xxxxxxxxxxxx acknowledged the thieves likely removed another 250 kgs which the company cannot account for, but the company and NAMPOL are still investigating. In theory, xxxxxxxxxxxx and xxxxxxxxxxxx could have returned the missing material back into the legitimate stock, but Rossing's CFO admitted that that was highly unlikely. Rossing has conducted a search of all likely sites where the material might have been stored on the mine site, but have yet to find any of the presumed missing material.

7.(C) Five other employees worked on the same FPR shift as xxxxxxxxxxxx and xxxxxxxxxxxx . The five have not been directly implicated and to date there is only circumstantial evidence to link them to the crime. Nevertheless, xxxxxxxxxxxx and xxxxxxxxxxxx believe the five likely had knowledge that something illicit was happening during their shifts at the FPR, and that some of the five (if not all) were likely complicit. In order for xxxxxxxxxxxx to have exploited so many vulnerabilities, others on shift would have had to have (at a minimum) witnessed their activity. Under Namibian labor law and mining union rules, Rossing cannot dismiss the five other shift employees without proof of wrongdoing. The five continue to work at the FPR but remain under close watch/investigation by both Rossing and the police. CCTV cameras should have caught some of xxxxxxxxxxxx activity and that of other shift workers who may have participated, but the two were caught three weeks after the material was removed. By the time of their arrest, the CCTV recording from the day of the theft had already been overwritten.

----------------------- The Security Evaluation -----------------------

8. (SBU) The combined USG team reviewed the security surrounding the entire lifecycle of Rossing's uranium business - from excavation of the ore to the port of Walvis Bay where containerized finished product is loaded on to ships for delivery to end customers (enrichment facilities in North America, Europe, and Asia). While the team reviewed the security features for the entire mine site and delivery chain, the team focused most of its WINDHOEK 00000007 003 OF 004 evaluation/assessment on the Final Product Recovery (FPR) facility. This FPR is where the final processing, packaging, and storage of uranium oxide (U3O8) occurs. Access to finished U3O8 is most readily accessible within the FPR, and thus the FPR is Rossing's most highly vulnerable site. The team received a full (escorted) tour of the FPR and observed (in addition to the processing) the security in place at the facility.

9.(SBU) Rossing management provided a full rundown of the actions the company has taken to prevent future U3O8 thefts. Rossing has conducted a thorough security audit using both Rio Tinto security experts and expertise from other mining companies including Anglogold Ashanti. The USG team was provided a copy of the results of the audit. The audit appeared very thorough and revealed 54 security findings which Rossing has already begun addressing through a security improvement action plan. Most of the findings were consistent (or in certain cases exceeded) what the DOE NNSA team observed. Rossing has contracted two security experts from DeBeers, one who oversees the security of the entire Rossing complex, while the other who has responsibility for FPR. Rossing has also contracted with a third individual to implement their security improvement action plan. CFO Carlson told the USG team that capital has been allocated for implementation of the plan and that he envisioned all upgrades would be in place by June or July 2010. Implemented and future upgrades include but are not limited to:

- Tightened access controls on the entire site and specifically the FPR

- Improved/increased use of biometrics (retinal scanners)

- Additional closed circuit TVs and CCTV storage media

- Physical segregation of drums (empty, filled, and damaged drums).

- Improved drum identification systems (bar codes, labels)

- Tamper-proof seals on finished drums

- Improved fencing and gates/access points

- New procedures for waste product removal

- Increased security training

- Intrusion detection system on perimeter fencing and at critical locations

10.(SBU) The DOE NNSA team provided Rossing a series of suggestions, many of which are captured within the Rossings security improvement plan. The team's recommendations emphasized policies and procedures, access control, physical security at the FPR, waste removal procedures, finished product controls, background checks on personnel, and implementation of vulnerability assessments. Rossing was pleased with the recommendations and did not ask many questions of the U.S. team regarding their suggested security changes. Rossing's primary response was that the presentation made it clear how intensely the company must focus on the issue of security in the future. When offered a chance for a similar team to review the implementation of Rossing's security improvements later this year, Rossing MD Mike Leech immediately accepted.

-------------------- The Iranian Catch 22 --------------------

11.(SBU) State (ISN) inquired about Rossing's awareness of the UNSCRs on Iran and about the government of Iran's 15 percent stake in Rossing through the Iran Foreign Investment Company (IFIC). Both the xxxxxxxxxxxx responded that they have engaged WINDHOEK 00000007 004 OF 004 with the Namibian Ministry of Mines and Energy as well as U.S. government and private organizations (their customers) and believe that they are in full compliance with the UNSCRs. The CFO and MD explained that for the past two years, since the adoption of UNSCR 1803, Rossing has cut-off all financial payments and dividends to the IFIC because the Bank of Namibia (BoN) will not allow it. Currently, all Iranian dividends are sitting in a Namibian bank account controlled by Rossing (approximately USD $6 million), and appear on Rossing's financial statements as unpaid dividends. Even if the IFIC were granted access to open a local bank account to access their dividends - which the BoN has blocked - the BoN would prevent the IFIC from converting the Namibian dollar denominated dividends into hard currency for repatriation to Iran.

12.(SBU) Rossing expressed an interest in buying Iran's share in the company, but they are unable to do so because they are prohibited from transferring any funds to Iran. The CFO specifically requested guidance on how to deal with this issue because the legal advice they are receiving in Namibia has not been clear. The CFO also requested guidance on whether or not Rossing could accept an offer from Iran to provide Rossing with a free supply of sulfuric acid for the mine. Rossing would be obligated to pay the transportation cost of the acid. [NOTE: Iran has offered the sulfuric acid to Rossing because Iranian companies allegedly have "excess supply." END NOTE] Rossing has not yet responded and were strongly urged by the ISN rep not to take Iran up on their offer as it may cause further reputational risk. Rossing also inquired about whether or not there was anything preventing Iran from increasing its share in the company, and the U.S. team agreed to help find an answer. According to the CFO, the IFIC views increasing its share in Rossing as one way it can spend (claim) its dividends. Finally, xxxxxxxxxxxx and the xxxxxxxxxxxx reiterated that Rossing does not supply uranium product to Iran, that Iran has no off take rights, and that the IFIC stakeholder has not expressed (at least overtly to them) an interest in acquiring Rossing's uranium.

13.(SBU) Action Request: Rossing would be happy to rid itself of its Iranian stakeholder, as the IFIC stake always causes company difficulty when entering into sales contracts with customers. Rossing believes that current sanctions prevent them from buying the IFIC's stake in the company, since it would provide financial assistance to the GOI. Post requests information on whether there is way for Rossing (or another entity) to buy Iran's 15 percent stake in the company without violating existing U.S. laws and UNSCRs.

14.(SBU) Comment: Rossing's Senior Management was extremely open with the USG team about the September 2009 incident, and the lapses in its security. The USG team came away satisfied and very encouraged that Rossing is extremely serious about improving its security and that the actions taken (and the actions which remain to be implemented) will more than adequately address their most serious security threats. End Comment MATHIEU