Iranian Entity: Kalaye Electric Company

On July 12, 2007, added to the U.S. "Entity List" of end users whose activities impose "a risk of diverting exported and re-exported items into programs related to weapons of mass destruction," or that have been sanctioned by the U.S. State Department; listed by the Japanese government in 2007 as an entity of concern for proliferation related to nuclear weapons; listed by the British government in 2007 as an entity of potential concern for WMD-related procurement; added to the Specially Designated National (SDN) list maintained by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) on February 16, 2007, freezing its assets under U.S. jurisdiction and prohibiting transactions with U.S. parties, pursuant to Executive Order 13382, which targets proliferators of weapons of mass destruction (WMD) and their delivery systems; described by the U.S. Treasury Department as an entity that is "either owned or controlled by the Atomic Energy Organization of Iran (AEOI)" or that acts "for or on its behalf;" listed in an annex to U.N. Security Council resolution 1737 of December 23, 2006, as an entity involved in Iran's proliferation-sensitive nuclear activities; with some exceptions, the U.N. designation requires states to freeze financial assets on their territories which are owned or controlled by the entity, by its agents, or by entities it owns or controls; the U.N. designation also requires states to ensure that any funds, financial assets or economic resources are prevented from being made available by their nationals or by any persons or entities within their territories, to or for the benefit of the entity.

As of November 2004, a dismantled pilot enrichment facility that was being converted by Iran for use in centrifuge enrichment research and development; according to the U.N Security Council, "provider for" the pilot fuel enrichment plant (PFEP) at Natanz; subject to inspection by the International Atomic Energy Agency (IAEA); according to Iranian authorities, from 1997 through 2002, used for the assembly and testing of centrifuges for uranium enrichment; the equipment used in these tests was suitable for pilot scale uranium isotope separation; the IAEA was first permitted limited access to the facility in March 2003, and then was given access to the entire facility in May 2003; in a subsequent visit on August 9-12, 2003, inspectors were permitted to take environmental samples; inspectors noticed that there had been considerable modification to the facility since their visit in March 2003; the renovation was undertaken by Iran to conceal its centrifuge enrichment activities and has affected the IAEA's ability to resolve issues related to Iran's enrichment program; the samples revealed the presence of highly enriched uranium and low enriched uranium particles which were not consistent with the nuclear material declared by Iran; one room in Building 3 at Kalaye was predominantly contaminated with uranium enriched to 36% U-235; this level of enrichment was also found on a vertical balancing machine transferred from Kalaye to Farayand Technique; according to the IAEA, 36% enriched uranium is typically used in certain research reactors outside Iran; samples taken at Kalaye and from balancing machines used there also revealed contamination of up to 70% U-235, with almost no depleted uranium; some particles of between 50-60% U-235 were also found at Kalaye; Iranian authorities attribute the presence of the enriched uranium particles to contamination from imported centrifuge components; however, the levels of contamination suggest the presence of more than just trace amounts found on imported components; all major imported and domestically produced centrifuge components, along with some manufacturing equipment were sampled by the IAEA in October 2003; sample results suggest that imported centrifuge components may have been the source of the enriched uranium contamination at Kalaye, however the IAEA continues to investigate other possible explanations.

Iran initially claimed that it had not tested any centrifuges at Kalaye using nuclear material; then in October 2003, Iranian officials admitted that the 1.9 kg of UF6 missing from the 1,000 kg Iran had imported in 1991, reportedly from China, and did not declare to the IAEA until February 26, 2003, was used in testing centrifuges at Kalaye between 1999 and 2002; Iran claims that in 2002, up to 19 centrifuges were tested with nuclear material; according to Iranian officials the tests achieved an enrichment level of 1.2% U-235; the IAEA conducted further visits to centrifuge component manufacturing workshops in January 2004; the IAEA also carried out complementary access at Kalaye between January 10-28, 2004, and visited again on May 13 and May 22, 2004.

Iran first acquired P-1 centrifuge designs and sample components in 1987; a second set of P-1 designs, along with components for 500 centrifuges, were delivered between 1994 and 1996; according to a former official at the AEOI interviewed by the IAEA, the designs and components were delivered through intermediaries in two shipments: the first in March 1994 and the second in July 1996; in 1997, intermediaries also allegedly supplied bellows to replace poor quality bellows provided previously.

Kalaye belongs to the AEOI; its subsidiaries include Farayand Technique, located near Esfahan, and Pars Trash in Tehran; the P-1 centrifuge equipment from Kalaye was dismantled in the spring of 2003, concealed from the IAEA and stored at Pars Trash until being presented to the IAEA at the Natanz enrichment site in October 2003; the 1.9 kg of UF6 used in enrichment experiments at Kalaye is currently declared as hold-up in dismantled equipment stored at Natanz; the remaining UF6 imported in 1991 is also at Natanz.

According to the National Council of Resistance of Iran (NCRI), Kalaye is a front company for procuring equipment for the initially secret Natanz nuclear plant in Iran; company officials allegedly made trips to India and China in 2001 in search of equipment for the project; allegedly run by Davood Aqajani, who is also the head of the Natanz project; according to the NCRI, "Behzad," an expert on centrifuges at the AEOI, is in charge of the production department; the facility reportedly contains two large workshops and several office buildings; reportedly registered as a watch-making factory in Ab-Ali, 18 miles east of Tehran.