This record is a partial extract of the original cable. The full text of the original cable is not available.

S E C R E T SECTION 01 OF 02 VILNIUS 001352 
 
SIPDIS 
 
STATE FOR EUR/NB, EUR/PRA (DLINNET, CRHODES), ISN/CPI, 
EUR/SE 
 
E.O. 12958: DECL: 12/29/2015 
TAGS: ETTC LH MARR MCAP PREL LT IR CY
SUBJECT: NO SIGNS OF PROLIFERATION RISKS ASSOCIATED WITH 
ACHEMA'S PURCHASE OF FERTILIZER PRODUCTION EQUIPMENT 
 
REF: A. STATE 27651 
 
     ¶B. NICOSIA 1861 
     ¶C. NICOSIA 1893 
 
Classified By: Economic Officer Scott Woodard, for reasons 1.4 (a) and 
(d) 
 
¶1. (S) SUMMARY:  We discussed Achema's purchase of the 
fertilizer production equipment described in reftels with 
company representatives, and are reassured by what they told 
us.  Achema plans to relocate 90-95 percent of the purchased 
equipment from Cyprus to its production facility in Lithuania 
so that it can begin production of 
nitrogen-phosphate-potassium (NPK) fertilizer.  The company 
determined that it is not economically advantageous to 
transport the remaining 5-10 percent of the equipment, which 
it plans to scrap in Cyprus.  Achema's representative told us 
it has no plans to sell or transfer any of the equipment to a 
third country and that it had no knowledge that the equipment 
might have been used to process phosphate ore from South 
Africa with significant uranium content.  END SUMMARY. 
 
ACHEMA:  LITHUANIA'S THIRD LARGEST COMPANY 
 
¶2. (U) Achema, founded in the 1960s, has been publicly traded 
on the Lithuanian stock exchange since 1994.  Measured by 
revenue, it is the third largest company in Lithuania (USD 
520 million in revenues for 2004), and the largest producer 
of nitrogen fertilizers in the Baltics.  The company employs 
some 1,200 people and produces resins, glues, and dyes in 
addition to fertilizer and other industrial chemicals. 
Achema is a member of the European Fertilizer Manufacturers 
Association and the International Fertilizer Association. 
 
OPENING A NEW PRODUCTION LINE 
 
¶3. (S) We visited the Achema facility in Jonava, Lithuania 
(approximately 120 km northwest of Vilnius) on December 29. 
We spoke with the Achema's Technical Director Juozas 
Tunaitis, who helped negotiate the deal to purchase the 
fertilizer production equipment from Hellenic Industries in 
Cyprus.  Tunaitis met with us on short notice, less than 24 
hours after we first contacted Achema. 
 
¶4. (S) Tunaitis explained to us that Achema is purchasing the 
fertilizer production equipment as part of the company's 
plans to begin production of NPK fertilizer in mid-2007.  He 
said that Achema is currently only able to produce urea, 
ammonium nitrate, and urea/ammonium nitrate fertilizers.  He 
said that his company's dependence on these production lines 
left it vulnerable to market fluctuations.  He added that 
although the equipment was 20 years old, Hellenic Industries 
had only operated it for about seven years, so much of it was 
in good shape. 
 
¶5. (S) Tunaitis told us that Achema plans to relocate 90-95 
percent of the purchased equipment from Cyprus to Achema's 
facility in Jonava.  He said that it was not economically 
advantageous to transport the remaining 5-10 percent because 
it would be cheaper to purchase substitutes in Lithuania than 
to transport it from Cyprus.  He added that Achema plans to 
scrap the 5-10 percent of equipment that it will not take to 
Lithuania and that Hellenic Industries will be responsible 
for the ultimate disposal of this leftover equipment. 
 
¶6. (S) Tunaitis showed us the area where Achema will locate 
the new production line, which is currently a square, 
grass-covered lot, approximately 200 meters by 200 meters, 
directly adjacent to a current production line.  He said that 
Achema will construct a new building to house the relocated 
equipment. 
 
ACHEMA NOT NEW TO USED EQUIPMENT 
 
¶7. (S) Tunaitis said that Achema had purchased second-hand 
equipment before, showing us a production facility that the 
company had purchased in Germany and relocated to Lithuania. 
He said that this facility had been up-and-running in Jonava 
for two years and that it was the model for what Achema plans 
to do with the Hellenic Industries equipment: transfer to 
Lithuania the bulk of the equipment and scrap the rest 
locally. 
 
¶8. (S) Tunaitis also said that Achema is in final 
negotiations with U.S.-based Louisiana Chemical, a 
second-hand equipment dealer, to buy a urea production line 
currently located at a facility in Italy.  He expected Achema 
to have this line installed and producing in Lithuania in the 
spring of 2008. 
 
NO KNOWLEDGE OF URANIUM-RICH PHOSPHATES 
¶9. (S) Tunaitis said he was unaware of the possibility that 
the Hellenic Industries equipment might have been used to 
process South African phosphates with a high uranium content. 
 He said that he was not aware of the ability of the Hellenic 
Industries equipment to process uranium or produce uranium 
by-products. 
 
NO CONNECTION TO THIRD COUNTRIES 
 
¶10. (S) Tunaitis said that this deal did not involve any 
third country, nor any companies operating in a third country. 
 
COMMENT:  NO INDICATION OF PROLIFERATION RISK 
 
¶11. (S) Achema answered all of our questions directly, 
promptly, and openly and gave us a very reasonable 
explanation for its purchase of the equipment from Hellenic 
Industries.  While we admittedly have only a limited ability 
to assess Achema's ultimate intentions or the capabilities of 
the equipment in question, we can say that this blue-chip 
company would be taking tremendous risks by engaging in 
covert schemes to transfer dual-use equipment to Iran.  We 
see no signs indicating that Achema is prepared to take such 
a risk, and we have every reason to believe that this is a 
straightforward transaction based on legitimate business 
interests. 
KELLY