[Federal Register Volume 60, Number 61 (Thursday, March 30, 1995)]
[Notices]
[Pages 16440-16450]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7777]
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DEPARTMENT OF COMMERCE
(A-821-805, A-821-806)
Notice of Final Determinations of Sales at Less Than Fair Value:
Pure Magnesium and Alloy Magnesium From the Russian Federation
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: March 30, 1995.
FOR FURTHER INFORMATION CONTACT: Ellen Grebasch, Dorothy Tomaszewski or
Erik Warga, Office of Antidumping Investigations, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230; telephone: (202) 482-3773, (202) 482-0631 or (202) 482-0922,
respectively.
Final Determination
We determine that imports of pure magnesium and alloy magnesium
from the Russian Federation are being, or are likely to be, sold in the
United States at less than fair value (``LTFV''), as provided in
section 733 of the Tariff Act of 1930, as amended (``the Act''). The
estimated margins are shown in the ``Continuation of Suspension of
Liquidation'' section of this notice.
Case History
Since the preliminary determination on October 27, 1994 (59 FR
55420, November 7, 1994), the following events have occurred:
In December 1994, we issued sections A and C of our antidumping
questionnaire1 to respondent exporters Amalgamet Canada, Greenwich
Metals, and Hochschild Partners. These companies provided responses to
these questionnaires in December 1994 and January 1995.
\1\Section A requested general information on each company; and
section C requested information on, and a listing of, U.S. sales
made during the period of investigation (``POI'').
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All participating respondents' (in each proceeding) supplemental
questionnaire responses were received and verifications were conducted
as detailed in Appendix I.
On January 31, 1995, we amended our preliminary determinations to
correct for certain ministerial errors (60 FR 7519, February 8, 1995).
Certain respondents (Amalgamet Canada, AVISMA, SMW, Gerald Metals,
Greenwich Metals and Hochschild Partners) and petitioners filed case
briefs. Rebuttal briefs were submitted by petitioners and the following
respondents: Amalgamet Canada, AVISMA, SMW, Razno, Interlink, & AIOC,
Gerald Metals, Greenwich Metals, and Hochschild Partners. A public
hearing was held on February 28, 1995.
Scopes of Investigations
The scopes of these investigations have been modified since the
preliminary determination in order to clarify the distinctions between
pure magnesium and alloy magnesium. See Comment 9 in the ``Interested
Party Comments'' section of this notice, below.
A. Pure Magnesium
The product covered by this investigation is pure primary magnesium
regardless of chemistry, form or size, unless expressly excluded from
the scope of this investigation. Primary magnesium is a metal or alloy
containing by weight primarily the element magnesium and produced by
decomposing raw materials into magnesium metal. Pure primary magnesium
is used primarily as a chemical in the aluminum alloying,
desulfurization, and chemical reduction industries. In addition, pure
primary magnesium is used as an input in producing magnesium alloy.
Pure primary magnesium encompasses:
(1) products that contain at least 99.95% primary magnesium, by
weight (generally referred to as ``ultra-pure'' magnesium);
(2) products containing less than 99.95% but not less than 99.8%
primary magnesium, by weight (generally referred to as ``pure''
magnesium); and
(3) products (generally referred to as ``off-specification
pure'' magnesium) that contain 50% or greater, but less than 99.8%
primary magnesium, by weight, and that do not conform to ASTM
specifications for alloy magnesium.
``Off-specification pure'' magnesium is pure primary magnesium
containing magnesium scrap, secondary magnesium, oxidized magnesium or
impurities (whether or not intentionally added) that cause the primary
magnesium content to fall below 99.8% by weight. It generally does not
contain, individually or in combination, 1.5% or more, by weight, of
the following alloying elements: aluminum, manganese, zinc, silicon,
thorium, zirconium and rare earths.
Excluded from the scope of this investigation are alloy primary
magnesium, primary magnesium anodes, granular primary magnesium
(including turnings and powder), and secondary magnesium.
Granular magnesium, turnings, and powder are classifiable under
Harmonized Tariff Schedule of the United States (HTSUS) subheading
8104.30.00. Magnesium granules and turnings (also referred to as chips)
are produced by grinding and/or crushing primary magnesium and thus
have the same chemistry as primary magnesium. Although not susceptible
to precise measurement because of their irregular shapes, turnings or
chips are typically produced in coarse shapes and have a maximum length
of less than 1 inch. Although sometimes produced in larger sizes,
granules are more regularly shaped than turnings or chips, and have a
typical size of 2mm in diameter or smaller.
Powders are also produced from grinding and/or crushing primary
magnesium and have the same chemistry as primary magnesium, but are
even smaller than granules or turnings. Powders are defined by the
Section Notes to Section XV, the section of the HTSUS in which
subheading 8104.30.00 appears, as products of which 90 percent or more
by weight will pass through a sieve having a mesh aperture of 1mm. (See
HTSUS, Section XV, Base Metals and Articles of Base Metals, Note 6(b).)
Accordingly, the exclusion of magnesium turnings, granules and powder
from the scope includes products having a maximum physical dimension
(i.e., length or diameter) of 1 inch or less.
The products subject to this investigation are classifiable under
subheadings 8104.11.00, 8104.19.00 and 8104.20.00 of the HTSUS.
Although the HTSUS subheadings are provided for convenience and customs
purposes, our written description of the scope is dispositive.
B. Alloy Magnesium
The product covered by this investigation is alloy primary
magnesium regardless of chemistry, form or size, unless expressly
excluded [[Page 16441]] from the scope of this investigation. Primary
magnesium is a metal or alloy containing by weight primarily the
element magnesium and produced by decomposing raw materials into
magnesium metal.
Alloy magnesium products are produced by adding alloying elements
to pure magnesium in order to alter the mechanical and physical
properties of the magnesium to make it suitable for use as a structural
material. Alloy magnesium is used primarily for casting or in wrought
form. It is harder and stronger than pure magnesium and may possess a
higher corrosion resistance.
This investigation covers alloy primary magnesium which contains
50% or greater, but less than 99.8%, primary magnesium, by weight, and
one or more of the following: Aluminum, manganese, zinc, silicon,
thorium, zirconium and rare earths in amounts which, individually or in
combination, constitute not less than 1.5% of the material, by weight.
Products that meet the aforementioned description but do not conform to
ASTM specifications for alloy magnesium are not included in the scope
of this investigation. In addition to primary magnesium, alloy
magnesium may contain magnesium scrap, secondary magnesium, or oxidized
magnesium in amounts less than the primary magnesium itself.
Alloy primary magnesium is cast and sold in various physical forms
and sizes, including ingots, slabs, rounds, billets and other shapes.
Excluded from the scope of this investigation are pure primary
magnesium, primary magnesium anodes, granular primary magnesium
(including turnings and powder), and secondary magnesium.
Granular magnesium, turnings, and powder are classifiable under
Harmonized Tariff Schedule of the United States (HTSUS) subheading
8104.30.00. Magnesium granules and turnings (also referred to as chips)
are produced by grinding and/or crushing primary magnesium and thus
have the same chemistry as primary magnesium. Although not susceptible
to precise measurement because of their irregular shapes, turnings or
chips are typically produced in coarse shapes and have maximum length
of less than 1 inch. Although sometimes produced in larger sizes,
granules are more regularly shaped than turnings or chips, and have a
typical size of 2mm in diameter or smaller.
Powders are also produced from grinding and/or crushing primary
magnesium and have the same chemistry as primary magnesium, but are
even smaller than granules or turnings. Powders are defined by the
Section Notes to Section XV, the section of the HTSUS in which
subheading 8104.30.00 appears, as products of which 90 percent or more
by weight will pass through a sieve having a mesh aperture of 1mm. (See
HTSUS, Section XV, Base Metals and Articles of Base Metals, Note 6(b).)
Accordingly, the exclusion of magnesium turnings, granules and powder
from the scope include products having a maximum physical dimension
(i.e., length or diameter) of 1 inch or less.
The products subject to this investigation are classifiable under
subheadings 8104.19.00 and 8104.20.00 of the HTSUS. Although the HTSUS
subheadings are provided for convenience and customs purposes, our
written description of the scope is dispositive.
Periods of Investigation
The POI in both proceedings is October 1, 1993, through March 31,
1994.
Fair Value Comparisons
A. Participating Respondents
To determine whether sales of pure magnesium to the United States
by AIOC, Gerald Metals, Greenwich Metals, Hochschild Partners, HDM,
Interlink, MG Metals, and Razno, and sales to the United States of
alloy magnesium by Amalgamet, Gerald Metals, and SMW, were made at less
than fair value, we compared the United States price (``USP'') to the
foreign market value (``FMV''), as specified in the ``United States
Price'' and ``Foreign Market Value'' sections of this notice.
Verification revealed that, for its POI sales to U.S. companies,
there were no instances where Greenwich Metals' role in the sales
process was that of being the first company to sell Russia-produced
alloy magnesium to a U.S. customer. That is, all subject merchandise
purchased by Greenwich was done so on terms that made Greenwich the
U.S. customer of its supplier. Accordingly, Greenwich will be subject
to the ``Russia-wide'' deposit rate for alloy magnesium.
Amalgamet Canada is closely related to W&O Bergmann in that a large
percentage of each company's shares are owned by a common owner
(Preussag). Bergmann was sent an antidumping questionnaire in August,
but, despite its close relationship to Amalgamet, never apprised us of
Amalgamet's POI U.S. sales of subject merchandise.2
\2\Until just prior to our preliminary determinations, the
record showed that Bergmann by itself was a mandatory respondent;
this changed (albeit temporarily given Amalgamet's post-preliminary-
determination revelation that it had made U.S. sales) when Bergmann
stated in an October 1994 fax that earlier-disclosed sales of
subject merchandise, although to a U.S. company, were sold ``fob
Rotterdam, Antwerp or Zeebrugge'' without knowledge of destination
on Bergmann's part.
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The questionnaire sent to Bergmann clearly instructed Bergmann to
report ``the names and addresses of all related companies in all
countries dealing'' with the subject merchandise. Had Bergmann properly
participated in these investigations, Amalgamet would have been
identified in a timely fashion, and would have been instructed to
respond to the questionnaire. Amalgamet and Bergmann should have known
that Amalgamet's participation in these proceedings was mandatory based
on Bergmann's receipt of the questionnaire. Accordingly, Amalgamet and
Bergmann will be assigned a deposit rate based on the best information
available (``BIA'') based on their failure to participate despite early
notice of the investigations.
B. All Other Companies
In both proceedings, there is nothing on the record to indicate
that any exporters within Russia failed to report U.S. sales of subject
merchandise during the POI. The only Russian exporter to have sold
either product to the United States during the POI is SMW. Because
SMW's calculated margin in both proceedings is zero, we have based the
``Russia-wide'' deposit rate on a simple average of the rates
applicable to all companies considered mandatory respondents, excluding
calculated rates that are zero or de minimis. In these proceedings,
because all such companies' margins are based on BIA, the ``Russia-
wide'' rate is also based entirely on BIA.
In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns lower
margins to respondents that cooperated in an investigation and margins
based on more adverse assumptions for those respondents, like the non-
participating respondents in this investigation, which did not
cooperate in an investigation. As outlined in Coumarin,3 where, as
here, a company refuses to provide the information requested in the
form required, or otherwise significantly impedes the Department's
investigation, it is appropriate for the Department to assign to that
company the higher of (1) the highest calculated rate of any respondent
in the investigation, (2) the [[Page 16442]] highest margin alleged in
the petition, or (3) the margin from the preliminary determination for
that firm. Accordingly, we have set the Russia-wide deposit rate at
100.25 percent and 153.65 percent, ad valorem, in the pure magnesium
and alloy magnesium, respectively. These margins represent the highest
margin in the petition, as recalculated by the Department for purposes
of initiating this proceeding and as further adjusted to account for
factors of production listed in the petition that were not valued at
the time of initiation, but for which information is on the record upon
which to base a surrogate value.
\3\Final Determination of Sales at Less Than Fair Value:
Coumarin from the People's Republic of China (59 FR 66895, December
28, 1994).
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United States Price
As detailed below, we based USP on purchase price, in accordance
with section 772(b) of the Act, when the subject merchandise was sold
directly by the exporters to unrelated parties in the United States
prior to importation into the United States and because exporter's
sales price (``ESP'') methodology was not indicated by other
circumstances.
We based USP on ESP, in accordance with section 772(c) of the Act,
when the subject merchandise was sold to the first unrelated purchaser
after importation into the United States.
Both purchase price and ESP were based on packed prices to
unrelated purchasers in the United States, according to the applicable
delivery terms, with appropriate price adjustments. The following is a
summary of U.S. price calculations for each exporter, with an asterisk
(``*'') designating price adjustments applicable to some but not all
sales (see Final Calculation Memorandum, on file in room B-099 of the
Main Commerce Department Building, for details of these adjustments).
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Exporter Terms of sale Price adjustments
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Pure Magnesium
AIOC (PP, ESP)................... CIF, FOB, Delivered.............. Foreign inland freight, storage charges,
inspection charges*, sample costs
charges*, document charges*, other
foreign inland freight, dunnage, ocean
freight, seaway tolls, U.S. duty,
stevedoring, wharfage*, unloading
charges*, warehousing*, U.S. inland
freight.
Interlink (PP)................... Delivered, In-Warehouse.......... Foreign insurance, ocean freight, marine
insurance, procedure fees, harbor
maintenance fees, U.S. inland freight,
U.S. inland insurance*, U.S. brokerage.
Gerald (PP)...................... In-Warehouse, Delivered, FOT Foreign brokerage, foreign inland
Warehouse. freight*, ocean freight, U.S. inland
freight*, U.S. brokerage, oxidation
credits.*
Greenwich (PP, ESP).............. Delivered, FOT, In-warehouse..... Discounts*, foreign brokerage, ocean
freight, marine insurance, U.S. duty,
U.S. inland freight*, U.S. inland
insurance, U.S. brokerage, third party
payments.*
Hochschild (PP).................. Delivered........................ Foreign brokerage, ocean freight, marine
insurance, U.S. duty*, U.S. inland
freight*, U.S. brokerage*, third party
payments.*
HDM (ESP)........................ Delivered........................ Ocean freight, U.S. duty*, U.S. inland
freight, U.S. brokerage*, repacking*,
U.S. containerization*, other
containerization.
MG (PP, ESP)..................... Delivered........................ Foreign brokerage*, foreign inland
freight, ocean freight, marine insurance,
U.S. duty, U.S. inland freight, U.S.
inland insurance, U.S. brokerage,
repacking.*
Razno (PP)....................... CIF, FOB......................... Foreign brokerage, foreign inland freight,
oxidation credits.*
SMW (PP)......................... FOB.............................. Foreign brokerage, foreign inland freight.
Alloy Magnesium
SMW (PP)......................... FOB.............................. Foreign brokerage, foreign inland freight.
Gerald (PP)...................... In-Warehouse, Delivered FOT Foreign brokerage*, foreign inland
Warehouse. freight*, ocean freight, U.S. duty*, U.S.
inland freight, U.S. brokerage, third
party payments.
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From each exporter's U.S. price, we also deducted foreign inland
freight between the factory and the reported intermediate destination
(e.g., Rotterdam) as follows: For SMW and Razno, we used reported
distances and transport modes to calculate an appropriate surrogate
factory-to-border freight amount on the basis of surrogate freight
rates in Brazil; for all other exporters, we deducted the per-ton
foreign inland freight amount reported in the petition as best
information available because those exporters did not in their
questionnaire responses information with respect to such charges. We
made no deduction from USP to account for exporter-incurred selling
expenses, nor did we deduct export taxes paid by Russian companies to
the Russian government because the actual amounts paid are an internal
expense within an NME country. We adjusted reported marine insurance
and ocean freight charges for Razno as follows: a reported figure that
was an extended value (i.e., an amount applicable to the entire
transaction) was adjusted to reflect a per-unit amount.
The following adjustments were made to the reported U.S. sales of
these exporters pursuant to our findings at verification (see Final
Calculation Memorandum, for details of these adjustments):
AIOC (Pure Magnesium): AIOC's final U.S. sales listing was adjusted
to exclude certain sales that verification revealed had been improperly
included. Based on verification findings, minor corrections to reported
figures for inspection fees, sample costs, dunnage, ocean freight,
seaway tolls, U.S. duties, unloading. Additionally, we deducted an
amount for marine insurance based on verification.
Gerald Metals (Pure Magnesium and Alloy Magnesium): Minor
corrections to reported figures for foreign brokerage, foreign inland
freight, ocean freight, U.S. brokerage, third party payments, and
oxidation credits were made based on verification findings.
Hochschild Partners (Pure Magnesium): Hochschild's final U.S. sales
listing was adjusted to exclude certain sales that verification
revealed had been improperly included. An additional unreported U.S.
sale was discovered at verification and included in its final sales
listing. For purposes of calculating a unit margin for this sale, we
applied the highest reported charges for ocean freight, foreign
brokerage and marine insurance, as well as the highest reported U.S.
movement charges applicable to the delivery terms of this sale. Minor
adjustments to reported figures for foreign brokerage, ocean freight,
and marine insurance were also made based on verification findings.
Finally, third party payment figures relating to certain sales were
disclosed at verification. [[Page 16443]]
Hunter Douglas (Pure Magnesium): Minor corrections to reported
figures for ocean freight, U.S. duty, U.S. brokerage, and U.S.
containerization charges were made based on verification findings.
Interlink (Pure Magnesium): Interlink's final U.S. sales listing
was adjusted (a) to exclude certain sales that had been improperly
included and (b) to include certain sales that had been improperly
excluded. Additionally, minor corrections to reported figures for ocean
freight and U.S. brokerage were made based on verification findings.
Razno Alloys (Pure Magnesium): Razno's final U.S. sales listing was
adjusted (a) to exclude certain sales that had been improperly included
and (b) to include certain sales that verification revealed had been
improperly excluded. Additionally, although we considered Razno a
Russian company for our preliminary determination because its sales
office is in Moscow, we have determined that Razno would more properly
be characterized as a Swiss company. It is registered in Switzerland,
its accounts are kept in Switzerland, and its ownership is majority
non-Russian. Finally, minor corrections were made to reported figures
for foreign brokerage based on verification.
Foreign Market Value
For sales of magnesium produced by Avisma and SMW, we calculated
FMV based on factors of production cited in the preliminary
determination, making adjustments based on verification findings (see
Final Calculation Memorandum). To calculate FMV, the verified factor
amounts were multiplied by the appropriate surrogate values for the
different inputs. We have used the same surrogate values used in the
preliminary determination with the exception of certain corrections
made based on verification or interested party comments.
Based on verification, we adjusted certain factors' value to
reflect the actual purity used in the production of subject
merchandise.
We recalculated certain inland freight distances between factory
and input supplier based on verified distances.
We calculated FMV based on factors of production reported by the
factories which produced the subject merchandise for the above-
mentioned exporters. The factors used to produce pure and alloy
magnesium include materials, labor, and energy. To calculate FMV, the
reported quantities were multiplied by the appropriate surrogate values
for the different inputs. (For a complete analysis of surrogate values,
see our Final Calculation Memorandum.) A factory overhead figure was
also included in the FMV calculation based on a percentage of
materials, labor and energy. We also granted certain by-product offsets
against the cost of manufacturing (i.e., the sum of materials, labor,
energy and factory overhead). We then added the statutory minimum
amounts for general expenses and profit, the cost of containers and
coverings, and other expenses incident to placing the merchandise in
condition packed and ready for shipment to the United States.
We used the same methodology as in the preliminary determination to
value factors of production, with the following exceptions: (1) We used
a publicly available, published Brazilian rate for unskilled labor; (2)
we used a publicly available, published Brazilian unit price for
natural gas; and (3) we applied a publicly available, published
Brazilian industrial rate for electricity used by electricity-intensive
industries with comparable levels of electricity consumption and
capacity as magnesium producers.
A. Market Reforms in the Russian Federation
In accordance with section 773(c) of the Act, the Department
normally uses a factor valuation methodology to calculate foreign
market value when the country involved is an NME country and the
Department determines that it cannot determine foreign market value
based on the respondent's prices or costs. Alternatively, an NME-
country respondent may argue that market-driven prices characterize its
particular industry and, therefore, despite NME status, that foreign
market value should be calculated by using actual home market prices or
costs (a market-oriented industry or ``MOI'' claim).
In these investigations, the Russian manufacturers, Avisma and SMW,
claim that economic conditions now prevalent throughout Russia warrant
revocation of Russia's NME-country status, effective January 1, 1994.
Alternatively, the two companies claim MOI for the magnesium industry
in Russia.
Regarding the revocation of NME status, the Department's analysis
centers around a government's role in economic activity. See Final
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length
Carbon Steel Plate from Poland (58 FR 37205, July 9, 1993). Consistent
with the factors described in section 771(18), the Department considers
the extent to which resources are allocated by the market or
government, taking into account government involvement in currency and
labor markets, pricing, and production and investment decisions. Where
resources are not allocated by the market, it would be difficult to
conclude that home market prices or costs should be used to calculate
fair value.
Evidence provided in these proceedings indicates that Russia is in
the process of implementing extensive reforms to achieve its goal of
becoming a market economy. The freeing of most prices in December 1991
and the privatization of most enterprises formerly within the state-
planning system are important steps in moving Russia towards a market
economy.
We cannot conclude, however, based on the information in this
record that Russia should be treated as a market economy for purposes
of the antidumping duty law. The Russian economy, having emerged from a
centrally-planned system, is in a state of transition. Many of the
state controls have been abandoned, but that does not mean that
functioning markets have replaced controls. Because the evidence does
not demonstrate that prices and costs in Russia adequately reflect
market considerations, we cannot at this time alter Russia's
designation as a nonmarket economy.
Regarding the MOI claim, information on the record suggests that
the government continues to be involved in the Russian magnesium
sector. For example, the Russian Federal Committee on Metallurgy, a
successor to the Ministry of Industry (Metallurgy Department),
indicated in an official statement that it controls activity in the
magnesium industry in Russia, noting particularly that it coordinates
production, exports, and prices. Also, although the two producers under
investigation have been privatized, this same statement indicates that
the Committee may be using the remaining government interest in these
companies to carry out its intentions with respect to pricing and
production. For these reasons, as stated in the preliminary
determination, we determine that the prices or costs of producing
magnesium in Russia should not be used to calculate fair value. No new
information has been presented since then to alter this conclusion.
B. Separate Rates
In each of these proceedings, SMW requested that the Department
calculate a dumping margin and assign a deposit rate separate from
other potential Russian exporters. For our preliminary determination,
we decided that we did not need to address the issue because (1) SMW
was the only Russian exporter of alloy magnesium; and (2) we decided
that SMW's pure magnesium exports were too small to consider in margin
[[Page 16444]] calculations. However, we have now reconsidered our
position that SMW's status as the only Russian company to sell to the
United States obviates the need for a separate rates analysis when a
separate rates claim has been put forward. SMW has claimed that
government ownership and control are absent and, therefore, as a POI
exporter, it is entitled to consideration of its claim.4
\4\Although Avisma also made a separate rates claim, it did not
make any POI direct U.S. sales. It is, for good reason,
unprecedented for the Department to entertain separate rates claims
from companies that have not made direct sales to the United States:
Analyzing and verifying separate rates claims from such companies
would be a great burden, and government involvement in export sales
operations could be hard to fully evaluate absent sales to the
United States.
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Further, we no longer consider SMW's pure magnesium sales
insignificant because we have determined, as discussed above, that
Razno Alloys, preliminarily found to be a Russian company, is actually
a Swiss company. Razno's redefined status as a Swiss company renders
SMW's pure magnesium exports significant in that SMW was the only
company in Russia to have exported any pure magnesium directly to the
United States. Thus, SMW is the only Russian company that exported
either pure or alloy magnesium to the United States.
To establish whether a firm is sufficiently independent to be
entitled to a separate rate, the Department employs the criteria
developed in the Final Determination of Sales at Less Than Fair Value:
Sparklers from the People's Republic of China (56 FR 20588, May 6,
1991) (Sparklers) and amplified in Silicon Carbide. Under this
analysis, the Department assigns a separate rate only when an exporter
can demonstrate the absence of both de jure5 and de facto6
governmental control over export activities.
\5\Evidence supporting, though not requiring, a finding of de
jure absence of central control includes: (1) An absence of
restrictive stipulations associated with an individual exporter's
business and export licenses; (2) any legislative enactments
decentralizing control of companies; or (3) any other formal
measures by the government decentralizing control of companies.
\6\The factors considered include: (1) whether the export prices
are set by or subject to the approval of a governmental authority;
(2) whether the respondent has authority to negotiate and sign
contracts and other agreements; (3) whether the respondent has
autonomy from the government in making decisions regarding the
selection of management; and (4) whether the respondent retains the
proceeds of its export sales and makes independent decisions
regarding disposition of profits or financing of losses (see Silicon
Carbide).
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Ownership
SMW is a joint-stock company (``JSC'') that was state-owned until
1992, when a transition to private and employee ownership was begun. At
the end of the POI, the Perm Regional Fund of State Property (``Perm
Fund'') owned 20 percent of SMW's shares, with the rest of shares owned
by a workers collective--51 percent--or private companies (e.g.,
investment funds). Verification supported SMW's account of its
ownership status.
Control
Government control over SMW's export operations (both de jure and
de facto) is absent. Specifically:
The July 1, 1992, Decree of the President of the Russian
Federation: Measures for the Organization and Reconstruction of State
Enterprises, and the Transferring of State Enterprises into Joint Stock
Companies (``Decree 721''), establishes that JSCs are ``out of the
control of Ministries, State and Local administrative organs and
authorities.''
The July 3, 1991, law, ``On Privatization of State-Owned and
Municipal Enterprises,'' is divided into three sections dealing with
general principles, procedures and means, and concluding principles. It
is also divided into 31 articles. Significant articles include:
Article 6, which establishes Russian Federal Property Fund to
act as temporary ``possessor of RSFSR [Russian Federation] deeds to
enterprises'' and to sell shares and deeds to enterprises. Limits
Fund's voting rights to a maximum of 20 percent of shares. States
that Fund may not ``interfere in the operations of enterprises
except in cases stipulated by enterprises' founding documents and
the legislation of the RSFSR * * *''; and
Article 9, which forbids buying of enterprises undergoing
privatization by state entities or certain state-held companies/
funds.
With respect to de facto aspects of government control over export
activities, SMW sets its own prices7 and ``has free access to''
the proceeds and profits of its export sales, would finance its own
losses if they occurred, and could purchase foreign currency with
rubles or otherwise dispose of assets (but has never actually had done
so). Verification of sales transactions revealed no evidence of
government involvement in the disposition of SMW's proceeds from export
sales aside from the already-reported requirement that SMW convert half
of foreign exchange earnings to rubles.
\7\Although an export license was required in order to make
export sales, and the nominal purpose was to allow the licensing
authority to approve the export price, SMW characterized this
procedure as pro forma. Verification revealed no indication that
such control had ever been exercised: export licenses that had been
issued, examined in the context of reviewing SMW's sales, appeared
to reflect without exception prices negotiated between SMW and its
customers. The price negotiation process did not appear to involve
any government authorities.
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As a shareholder, the Perm Fund was able to appoint one of SMW's 15
Board members and votes in the appointment of the general director. The
other 14 Board members are employees. In fact, minutes of SMW's 1993
Board meeting, examined at verification, did not appear to indicate
participation by a representative associated with the Perm Fund or with
any other government entity.
Although the Board of shareholders did not appoint SMW's general
director, it did, based on the minutes of its 1993 meeting, reaffirm
the basic terms of SMW's contract with the general director, who had
been appointed before SMW became a JSC. This reaffirmation indicates
that the Board controlled decisions regarding the appointment of
management even though it did not choose to make a management change
upon becoming a JSC.
In summary, the evidence favors a finding that government control
is absent and, accordingly, we find that SMW should be considered a
separate company for purposes of assigning a deposit rate.
C. Surrogate Country Selection
We selected Brazil as the appropriate surrogate country for the
reasons set forth in our preliminary determinations. Since we find no
compelling reason to change this selection, we have continued to base
FMV on the values of the appropriate factors of production as valued in
Brazil.
D. Factors of Production
For sales of magnesium produced by Avisma and SMW, we calculated
FMV based on factors of production cited in the preliminary
determination, making adjustments based on verification findings (see
Final Calculation Memorandum). To calculate FMV, the verified factor
amounts were multiplied by the appropriate surrogate values for the
different inputs. We have used the same surrogate values used in the
preliminary determination with the exception of certain corrections
made based on verification or interested party comments.
Based on verification, we adjusted certain factors' value to
reflect the actual purity used in the production of subject
merchandise.
We have adjusted the surrogate inland freight charge for
transporting factor inputs from supplier to factory to reflect the
surrogate value for the actual quantity being transported. We
[[Page 16445]] recalculated inland freight distances between factory
and input supplier based on verified distances.
We calculated FMV based on factors of production reported by the
factories which produced the subject merchandise for the above-
mentioned exporters. The factors used to produce pure and alloy
magnesium include materials, labor, and energy. To calculate FMV, the
reported quantities were multiplied by the appropriate surrogate values
for the different inputs. (For a complete analysis of surrogate values,
see our final calculation memorandum.) We then added amounts for
general expenses and profit, the cost of containers and coverings, and
other expenses incident to placing the merchandise in condition packed
and ready for shipment to the United States.
We used the same methodology as in the preliminary determination to
value the raw materials, except where corrections were possible or
necessary.
Verification
As provided in section 776(b) of the Act, we verified the
information submitted by respondents for use in our final
determination. We used standard verification procedures, including
examination of relevant accounting and production records and original
source documents provided by respondents.
Critical Circumstances
In accordance with section 735(a)(3) of the Act, we determine that
critical circumstances exist with respect to imports of alloy magnesium
from the Russian Federation. No new information has been placed on the
record since our preliminary determination. Therefore, we continue to
find that critical circumstances exist with respect to all imports of
alloy magnesium except those of Gerald Metals and SMW.
Interested Party Comments
Comment 1: Russian Manufacturers' Knowledge of Destination
Petitioners contend that Avisma and SMW should be assigned BIA
margins because they knew at the time of sale to third-country
resellers that the merchandise was destined for the United States.
Petitioners note that the producers completed GSP forms, sold to
customers that had U.S. addresses, and were explicitly told by some
customers of merchandise's destination. Because of this knowledge on
Avisma's and SMW's part, petitioners argue, resellers claiming to be
the first to sell to a U.S. customer in the sales process should be
assigned the ``Russia-wide'' rate.
Avisma and SMW argue that they did not know at the time of sale
that merchandise was destined for the United States. The companies
assert that the GSP forms were filled out by the producers after the
sales were made, indicating that at the time of sale the producers did
not know the destination. Avisma and SMW argue that the customer's
address is irrelevant because magnesium is a commodity product that can
be sold anywhere in the world. Finally, the companies point out that
verification confirmed that there was no indication that either Avisma
or SMW failed to report any U.S. sales.
DOC Position
We agree with Avisma and SMW. Based on our examination of sales and
export documents at verification, we found nothing to indicate any
unreported instances of merchandise being sold with the knowledge at
the time of sale that the ultimate destination was the United States.
We verified that simply because a purchaser's address is in the United
States does not mean that the merchandise is destined for the United
States. In fact, magnesium sold to purchasers with U.S. addresses was
frequently shipped to non-U.S. destinations. Although SMW did, as some
exporters stated, eventually learn of some of its merchandise's sale to
U.S. customers, this knowledge always came after SMW had sold the
merchandise.
Comment 2: Completeness and Accuracy of Various Resellers' Reporting of
U.S. Sales
Petitioners contend that total or partial BIA is warranted for
AIOC, Razno, Interlink, Hochschild and Greenwich Metals because these
companies made various errors in reporting U.S. sales that were not
revealed until just prior to, or during, verification. Petitioners also
advocate total BIA for each exporter for which any verification
revealed that the exporter failed to report sales of the subject
merchandise, as well as for all companies that refused verification.
The companies argue that BIA is not warranted because the errors
made were not serious and were corrected.
DOC Position
We agree with petitioners in part.
We determined that the errors cited by petitioners for AIOC, Razno,
and Interlink were inadvertent and were, in the end, verified. There is
nothing to indicate that the omission of these sales would have had any
impact on these companies' margins. Further, we are satisfied that the
record is now complete and accurate as to these companies' POI sales of
subject merchandise. Accordingly, the reported information, as
corrected based on verification, is the appropriate basis for our
respective LTFV determinations for AIOC, Razno, and Interlink.
We disagree that BIA is warranted for Hochschild's failure to
report a pre-POI contract discovered at verification; instead, we have
included in Hochschild's sales listing information gathered at
verification regarding this sale.
We agree with petitioners that Hochschild and Greenwich Metals
incorrectly reported certain sales as U.S. sales. Verification
demonstrated that the contracts setting terms of sale by these
companies' suppliers included an identification of the shipment
destination. This fact outweighs the contention that the companies had
the option of transshipping the merchandise to another country.
Accordingly, we determine that Greenwich did not make any U.S. sales of
alloy magnesium during the POI and we have not calculated a company-
specific alloy magnesium margin for Greenwich. Instead, Greenwich will
be subject to the ``Russia-wide'' rate. We have also eliminated these
improperly included sales from Hochschild's sales listing and have
assigned the appropriate margin to Hochschild's European supplier.
Finally, with the exception of those participating exporters that
have remedied reporting deficiencies, any exporter that improperly did
not report POI sales is subject to suspension of liquidation at the
``Russia-wide'' rate (which is based entirely on BIA), as are all
companies that reported having made no sales.
Comment 3: Scope
Petitioners contend that the Department should clarify the scopes
in these proceedings. Petitioners argue that ``off-specification'' pure
magnesium (i.e., magnesium that is less than 99.8% pure magnesium but
that otherwise can be and is considered pure magnesium by consumers)
should be considered within the scope of the pure magnesium proceeding
instead of within the scope of the alloy magnesium proceeding.
Petitioners propose revised scopes to achieve this end.
Greenwich argues that the proposed revised scopes are flawed
because they appear to include secondary magnesium (i.e., magnesium
that has been remelted and recast) as subject merchandise.
DOC Position
We agree with petitioners some magnesium, despite not meeting the
normal definition (based on magnesium content) of pure magnesium,
nevertheless may be used in [[Page 16446]] applications that normally
require pure magnesium. In fact, the records in the concurrent
antidumping investigations of pure and alloy magnesium from the
People's Republic of China show sales of such magnesium were supplied
to fulfill orders for pure magnesium.
We therefore have revised the scopes of these investigations to
include this off-specification pure magnesium within the definition of
pure magnesium, described as any product (1) that is 50 percent or more
primary magnesium, and (2) that does not meet any ASTM definition of
alloy magnesium (based on specific percentages of one or more alloying
agents).
We note that our consultations with the Bureau of Mines established
that the industry standards for alloy magnesium are ASTM standards.
(See Final Calculation Memorandum.) Consequently, we have not adopted
petitioner's proposed scope language that would describe off-
specification pure magnesium as any product, inter alia, that does not
meet ASTM standards or other industry standards.
Although ASTM standards define pure magnesium as not less than 99.8
percent magnesium, metal with a primary magnesium content below that
level should be captured in the scope of the pure magnesium
investigations if it cannot legitimately be defined as a specific ASTM
alloy magnesium.
The fact that both scopes capture only merchandise with primary
magnesium content of 50 percent or greater means that merchandise
composed of 50 percent or more secondary magnesium would not fall
within either scope.
Comment 4: Surrogate Value for Electricity
Avisma and SMW contend that published, public information indicates
that large industrial users of electricity in Brazil receive a lower
electricity rate (compared to other types of users). Respondents assert
that information on the record indicates that Avisma and SMW are
``large industrial users'' of electricity and, as such, would receive a
lower electricity rate if they bought electricity in Brazil. Therefore,
respondents argue the appropriate value for electricity is $0.0235/Kwh.
Petitioners contend that the Department should continue to use the
$0.055/Kwh rate for electricity value because the record does not show
that the rate advocated by Avisma and SMW is the rate actually paid by
the magnesium industry in Brazil. Petitioners charge that the record
shows that the Brazil ``large industrial user'' rates are (1) below
cost because they are subsidized, and (2) generally not applicable
because they are established pursuant to individual negotiations. Even
if the Department were to accept Brazil electricity rate schedules
submitted by Avisma and SMW, petitioners contend, there would be no way
to determine which rate would be appropriate for Avisma and SMW.
DOC Position
We agree with Avisma and SMW that the Brazil ``large industry
user'' rate is the rate they would have received had they been
electricity consumers in Brazil during the POI. For each company, the
record contains verified figures on both POI magnesium production and
the number of kilowatt hours needed to produce one metric ton. Dividing
the total number of kilowatt hours used in POI magnesium production by
the number of hours in the POI clearly shows that, at least during the
POI, the kilowatt capacity of each user was significantly higher than
the minimum necessary to receive the ``large industrial user'' rate in
effect in Brazil during the POI. Although subsidization would not
necessarily render a surrogate value inappropriate, petitioners have
not in this instance presented evidence of subsidization (providing
only a vague reference to possible subsidies in the Amazon region).
Comment 5: By-Product Offset Methodology
Petitioners contend that the Department's decision to permit an
offset to material surrogate values to account for by-products of the
magnesium production process was erroneous for the following reasons:
(1) The producers were unable to demonstrate for the record that any
economic benefit accrued to the firm and that the benefit was linked to
the production of the subject merchandise; (2) the surrogate value used
was incorrect in that it did not correspond to the actual purity level
of the by-product produced and was not calculated net of transportation
and processing costs; and (3) any adjustment determined to be
appropriate should have been made to the cost of manufacture rather
than cost of materials so as not to understate factory overhead,
general expenses, and profit.
Avisma and SMW argue that there is nothing on the record indicating
that they should not qualify for by-product offsets. With respect to
valuation, the companies do not dispute that an appropriate purity
level adjustment should be made, but contend that there are no
processing costs associated with the by-products which are not captured
in costs associated with primary product production. Finally, Avisma
and SMW argue that an adjustment to cost of materials is the
appropriate adjustment because the Department is using the factors-of-
production methodology to calculate FMV.
DOC Position
We agree with petitioners in part and with Avisma and SMW in part.
First, because the by-products result from the production process and
are either used by the magnesium producer or sold for use by some other
company in the NME country, we agree with Avisma and SMW that they are
a factor whose value must be taken into account in our calculation of
the fair value against which to test U.S. prices. Second, we have
adjusted surrogate CIF import value of the by-products to reflect
concentration differences. However, no adjustment to value for
transportation costs is appropriate. For by-products, as for material
factors of production consumed in the production process, we consider
the import values used to be surrogates for ex-factory, freight-
exclusive prices from suppliers to consumers. Third, we agree with
petitioners that the proper adjustment is a reduction in the cost of
manufacture. This adjustment increases the surrogate overhead amount
commensurately with the value of the by-product, thereby eliminating
the need for valuing any additional processing-related elements.
Additionally, an adjustment to cost of manufacture is consistent with
Department practice in other NME investigations (see, e.g.,
Coumarin8).
\8\Final Determination of Sales at Less Than Fair Value:
Coumarin from the People's Republic of China (59 FR 66895, December
28, 1994)
---------------------------------------------------------------------------
Comment 6: Surrogate Factory Overhead
Petitioners contend that the Department must account for costs
associated with the rebuilding of electrolytic cells by adjusting
upward the surrogate overhead percentage used in the preliminary
determinations. Petitioners suggest using their own experience as to
the cost of cell rebuilds expressed as a percentage of the sum of
material, labor, and energy costs. Petitioners also suggest that the
Department should, in calculating FMV, use an overhead ratio that
includes energy in the numerator since verified energy amounts for the
producers represent only energy directly related to production.
Avisma, SMW, Interlink, Razno, and AIOC argue that an adjustment to
[[Page 16447]] overhead based upon petitioners' cell rebuild experience
would be inconsistent with both the Act and Department practice and is,
therefore, unwarranted. With respect to energy, these respondents argue
that (1) inclusion in the denominator of the overhead ratio should be
limited to indirect energy costs, and (2) only direct energy should be
included in the base to which the overhead percentage is applied in
calculating surrogate overhead.
DOC Position
We agree with respondents that the adjustment proposed by
petitioners is not appropriate in this instance. Although we may take
into account petitioners' experience in extraordinary circumstances, we
generally do not consider petitioners' costs as an appropriate
benchmark by which to test the accuracy of surrogate country values.
Further, the fact that one element (i.e, cell rebuild) of factory
overhead has significant cost associated with it does not invalidate
the overhead percentage used. Factory overhead is a combination of
elements, some of which may be more or less expensive depending on the
product or even the company. The Department has rejected item-by-item
evaluation of overhead components in the past (see the final
determination of Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, from the Socialist Republic of Romania, (52 FR 17433,
17436, May 8, 1987)), and we see no reason to alter this practice in
this case.
Further, there is no contrary evidence which indicates that the
overhead percentage used for the preliminary determinations is an
inappropriate surrogate figure. In the absence of an actual overhead
for Brazil's magnesium industry, the Department will continue to rely
on the surrogate overhead percentage used in the preliminary
determination.
Comment 7: Surrogate General Expenses and Profit
Petitioners argue that the percentage used to account for
producers' general expenses in calculating FMV should be changed from
the statutory minimum to 26.92 percent, which is the ratio of SG&A
expenses to cost of goods sold based on figures reported in the 1992
financial statement of an aluminum manufacturer in Brazil. Petitioners
also argue that an additional amount should be included in FMV
calculations in order to reflect general expenses incurred and profit
realized by each reseller involved in the sales process. Petitioners
argue that, because the responding resellers failed to provide their
selling expenses (despite a Departmental request to do so in the
questionnaire), the Department should add an amount based on financial
statements submitted by resellers.
With respect to surrogate SG&A for manufacturers, Avisma, SMW,
Interlink, Razno and AIOC argue that the figures put forward by
petitioner are bogus because they involve application to an inflation-
adjusted base of a percentage that is based on figures that have not
been adjusted for inflation. These respondents argue that their own
submitted surrogate information is superior to petitioners' information
because it is inflation-adjusted. With respect to the question of
whether to include in FMV an amount for reseller general expenses, the
five aforementioned respondents, along with Greenwich, Hochschild, and
Gerald Metals, assert that petitioners have provided no convincing
rebuttal to the Department's recent rejection of such a request in
Coumarin.
DOC Response
With respect to the question of the appropriate surrogate for
manufacturer general expenses, we agree with Avisma, SMW, Interlink,
Razno and AIOC that use of inflation-adjusted figures is the most
appropriate basis for calculating the SG&A ratio. Accordingly, we have
used either an appropriate figure from the record or the statutory
minimum (10%), whichever is greater.
We also agree with respondents that addition to FMV of actual
reseller general expenses would be inappropriate. Given that Russia is
an NME and the Russian magnesium industry has not been found to be
market oriented, section 773(c) of the Act requires that the Department
measure U.S prices against the factors of production (materials, labor,
energy, and overhead) used in producing the merchandise, valued in an
appropriate surrogate country, plus general expenses, profit and
containers. The Act's only specific guidance as to the valuation of
general expenses, profit and containers is to establish minima for the
first two. Our regulations, meanwhile, instruct us to ``include in this
calculation of constructed value an amount for general expenses and
profit, as required by section 773(e)(1)(B) of the Act. (19 CFR
353.52(c)) The Department has not interpreted the Act and the
regulations as requiring use of actual expenses and profit for these
FMV components when FMV is based on factors of production; the
Department has also explicitly rejected such adjustments in prior NME
proceedings (see, e.g., Coumarin and Sparklers9). Moreover, to do
so simply does not make sense because it amounts to a comparison of
apples and oranges. In NME proceedings, the FMV is normally based
completely on factors valued in a surrogate country (without regard to,
for example, actual selling expenses) on the premise that the actual
experience cannot be meaningfully considered. Were the question simply
one of ``traditional'' dumping by trading companies, the market-economy
price-to-price or price-to-CV methodology would appropriately be
employed; actual selling expenses would have been accounted for on both
U.S. prices and foreign market prices (or, if appropriate, constructed
value, in which case other general expenses and profit would also have
been taken into account). Accordingly, we have continued to value
general expenses and profit by simply applying to the surrogate-based
cost of manufacture the greater of either appropriate surrogate
percentages or the statutory minima.
\9\ Final Determination of Sales at Less Than Fair Value:
Sparklers from the People's Republic of China (56 FR 20588, May 6,
1991)
---------------------------------------------------------------------------
Comment 8: Market Orientation (Russia and Magnesium Industry)
Avisma and SMW contend that, although they ``do not expect the
magnesium investigation[s] to result in the revocation of Russia's NME
status,'' consideration of whether to revoke Russia's NME status should
hinge upon whether there are concrete indicators of market-driven
activity rather than on the degree to which the market has moved toward
``an orderly Western-style brand of capitalism.'' The companies also
state for the record that they demonstrated that the Russian magnesium
industry is market oriented, but opted not to pursue this tack because
they anticipated favorable outcomes using factors of production valued
in a surrogate country.
Petitioners state that the records in these investigations offer no
basis for determining that Russia is no longer an NME for purposes of
these investigations, nor do the records support a finding that the
magnesium industry is market oriented.
DOC Position
As discussed in the ``Foreign Market Value'' section, above, we
have determined that it would be inappropriate to alter Russia's
designation as an NME, and that the Russian magnesium sector is not a
market-oriented industry. Should these [[Page 16448]] issues arise in
future antidumping proceedings involving merchandise from the Russian
Federation, the status of market reforms and market orientation of
specific industries will be carefully evaluated if raised by parties in
those proceedings.
Comment 9: Separate Rates
Petitioners argue that Avisma and SMW are subject to de jure and de
facto government control and thus do not warrant separate rates.
SMW and Avisma counter that they are fully entitled to separate
rates.
DOC Position
We agree with respondents in part. As is detailed above, we find
that SMW has demonstrated the absence of de jure and de facto
government control and thus is entitled to a separate rate in both
proceedings. However, because Avisma did not make any POI U.S. sales of
subject merchandise in either proceeding, it is not necessary to
address the question of whether Avisma should be assigned a separate
rate since such an action would result in no difference in the deposit
rate that would apply to any future direct U.S. sales by Avisma.
Comment 10: Export Taxes
Petitioners argue that a tax imposed by the Russian government on
magnesium exports must be accounted for in making LTFV comparisons
because (1) section 772(d)(2)(B) requires deduction from U.S. price of
export taxes, and (2) the tax imposition had the effect of reducing net
receipts to the Russian producers selling their magnesium.
DOC Position
We disagree, and have not accounted for the export tax in our LTFV
calculations. With respect to the reduction of net receipts to Russian
producers, the premise in determining values in NME proceedings is that
pecuniary aspects of internal transactions are considered meaningless
and thus ignored. The export tax paid to an NME government is an intra-
NME transfer of funds between a Russian producer and the Russian
government. As such, it is inappropriate to account for such transfers
in our LTFV analysis just as it is NME prices and costs.
The Department has interpreted section 772(e)(2), another paragraph
dealing with the general question of reductions to U.S. price, as not
requiring the deduction of selling expenses from ESP when FMV is based
on factors of production. The issue of the export tax is analogous.
Similarly, we interpret 772(d)(2)(B) as not requiring the deduction of
an intra-NME transfer of funds, even if it is in the form of an export
tax. Finally, we note that, in these proceedings, even if a reduction
to USP to account for the export tax had been deemed appropriate, it
would not have resulted in positive margins for any company receiving a
calculated rate.
Comment 11: Surrogate Country Selection
Avisma and SMW contend that Poland, not Brazil, is the more
appropriate surrogate country because Poland is the market economy
country that most resembles the Russian Federation in economic terms
and because Poland produces comparable merchandise. The companies
assert that, in selecting a surrogate country, economic similarity
should outweigh production of the investigated product.
Petitioners argue that Brazil is the appropriate surrogate country
citing, among other factors weighing against selection of Poland, the
fact that Poland produces an insignificant quantity of aluminum and no
magnesium.
DOC Response
We agree with petitioners. Selection of a proper surrogate country
must be made on case-by-case basis, in consideration of the
Department's judgment of how to weigh facts on the record within the
parameters prescribed by statute and regulations, as well as case
precedent. Based on our experience in this case and previous
proceedings involving magnesium, we judged electricity use to be a very
important factor and thus gave it great weight under the rubric of
product comparability. Given the economic comparability of Brazil to
the Russian Federation, and since Brazil is a significant producer of
electricity-intensive products such as magnesium and aluminum, we
continue to find that Brazil is the most appropriate surrogate country
in this case.
Comment 12: Quantity and Surrogate Value of Natural Gas, Liquid
Petroleum Gas, and Heavy Oil
Petitioners contend that the Department should correct for a
mathematical error made in converting a surrogate value for natural gas
from a price per cubic meter to a price per metric ton. Petitioners
also suggest a value of $290/MT to be the appropriate surrogate value
for liquid petroleum gas. Petitioners claim that, for both Avisma and
SMW, reported usage of heavy oil and natural gas appears to represent
theoretical amounts that do not account for thermal losses (which
petitioners suggest should be at least 30 percent).
Avisma, SMW, AIOC, Interlink and Razno argue that a value of
$142.86/MT is correct because of an error in the source of petitioners'
figure.
DOC Position
We agree with Avisma et al. as to the proper conversion of natural
gas quantities. We do not need to address the question about the
appropriate value for LPG because we are basing the value for this
factor on natural gas. With respect to actual use of heavy oil and
natural gas, we did not discover the error claimed by petitioners at
verification and thus have not changed the reported quantities.
Comment 13: Quantity and Surrogate Value for Timber
Petitioners contend that the Department, in calculating FMV, should
use the information on the record to value the timber used by Avisma
and SMW and convert from cubic meters to kilograms.
Avisma, SMW, AIOC, Interlink and Razno advocate conversion of
reported figures to board feet rather than kilograms, and use of the
POI value of lumber per board foot in the United States.
DOC Position
We agree with petitioners and have valued timber based on their
suggested methodology. With respect to the contention of Avisma et al.,
use of U.S. values for production factors is not appropriate in NME
proceedings, particularly when surrogate-country values are available.
Comment 14: Surrogate Values of Carnallite Concentrate and Dehydrated
Carnallite
Petitioners argue that the price of dolomite is not an appropriate
surrogate for carnallite concentrate and dehydrated carnallite (which,
unlike dolomite, are processed materials). Petitioners advocate
increasing the dolomite value used in the preliminary determinations to
account for processing associated with the manufacture from raw
carnallite of either concentrated carnallite or dehydrated carnallite.
Avisma and SMW argue that the price of dolomite is a reasonable
surrogate for the price of carnallite concentrate because the two
materials have similar magnesium contents and the processing necessary
to transform raw carnallite into carnallite concentrate is minimal. The
companies contend that the value for calcinated dolomite is not a
suitable [[Page 16449]] surrogate for carnallite concentrate because
the two materials have completely different chemistries (chiefly, the
absence of magnesium chloride in calcinated dolomite) and are used in
substantially different magnesium production processes. The two
companies advocate calculation of a value for dehydrated carnallite
used by SMW based on Avisma's factors of production for that commodity.
DOC Position
We agree with Avisma and SMW. We used the price of dolomite in
Brazil, as provided in the petition, as the surrogate for carnallite
concentrate. Dolomite, with a comparable magnesium chloride content, is
the most appropriate substitute available in the absence of an actual
price in Brazil for carnallite concentrate. We have also calculated a
value for dehydrated carnallite based on Avisma's factors of
production.
Comment 15: Quantity and Surrogate Value of Labor
Petitioners advocate corrections to reported labor figures based on
verification findings. Petitioners also argue that the Department
should use as a surrogate 1993 wage rates in Brazil to value unskilled
labor.
DOC Position
We agree with petitioners and have both corrected the reported
labor figures and adopted the alternative value for unskilled labor.
Comment 16: Inflation Adjustments for Brazil Values
Petitioners contend that 1992 Brazil values used as surrogate
values should be adjusted for inflation.
Avisma, SMW, AIOC, Interlink and Razno argue that no adjustment is
appropriate since dollar-denominated prices of commodity chemicals
cannot be assumed to have risen between 1992 and the POI.
DOC Position
We disagree with petitioners. Since we do not know the dates or
exchange rates used to convert these values into dollars, an
appropriate adjustment (if any) for dollar inflation cannot be
determined. Further, the magnitude of any adjustment would likely be
small since the data are nearly contemporaneous with the POI.
Comment 17: Concentration/Purity Levels of Material Inputs
Petitioners contend that appropriate adjustments should be made for
differences in concentration or purity between surrogate values on the
one hand and materials used in production on the other hand. However,
petitioners also argue that the Department should not assume that
surrogate values represent 100 percent concentration and therefore
should make no adjustment where the concentration applicable to a
surrogate value cannot be determined.
DOC Position
Where we have been able to determine the purity or concentration
applicable to a surrogate value, we have adjusted for differences, if
any, between the surrogate and the actual material. Otherwise, we have
attempted no adjustment for purity or concentration.
Continuation of Suspension of Liquidation
In accordance with section 735(c)(4)(A) of the Act, we are
directing the Customs Service to continue to suspend liquidation of all
entries of pure magnesium from the Russian Federation that are entered,
or withdrawn from warehouse, for consumption on or after November 7,
1994, which is the date of publication of our notice of preliminary
determination in the Federal Register. The following companies will be
excepted from these instructions because their sales of pure magnesium
were found not to have been sold below fair value: AIOC, Amalgamet,
Gerald Metals, Greenwich Metals, Hochschild Partners, Hunter Douglas,
Interlink, MG Metals, Razno Alloys, or SMW. These companies will be
excluded from an antidumping duty order should one be issued.
We are also directing the Customs Service to suspend liquidation of
all entries of alloy magnesium from the Russian Federation entered, or
withdrawn from warehouse, for consumption on or after August 9, 1994
(i.e., the date that is 90 days prior to the date of publication of
this notice in the Federal Register). Gerald Metals and SMW will be
excepted from these instructions because their sales of alloy magnesium
were found not to have been sold below fair value. The Customs Service
shall, in each proceeding, require a cash deposit or posting of a bond
equal to the estimated amount by which the FMV exceeds the USP as shown
below. These suspension of liquidation instructions will remain in
effect until further notice.
The weighted-average dumping margins are as follows:
A. Pure Magnesium
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer/producer margin
percentages
------------------------------------------------------------------------
AIOC*...................................................... 0.00
AIOC/Other................................................. 100.25
Gerald Metals*............................................. 0.00
Gerald Metals/Other........................................ 100.25
Greenwich Metals*.......................................... 0.00
Greenwich Metals/Other..................................... 100.25
Hochschild Partners*....................................... 0.00
Hochschild Partners/Other.................................. 100.25
Hunter Douglas*............................................ 0.00
Hunter Douglas/Other....................................... 100.25
Interlink*................................................. 0.00
Interlink/Other............................................ 100.25
MG Metals/Avisma........................................... 0.00
MG Metals/SMW.............................................. 0.00
MG Metals/Other............................................ 100.25
Razno Alloys/SMW........................................... 0.00
Razno Alloys/Other......................................... 100.25
SMW/SMW.................................................... 0.00
[[Page 16450]]
SMW/Other.................................................. 100.25
Russia-wide................................................ 100.25
------------------------------------------------------------------------
*This company has not disclosed for the public record the identity of
its supplier or suppliers in Russia. Upon public disclosure of this
information to the Department, we will notify the Customs Service that
sales through certain supply channels have an LTFV margin of zero and
thus an exclusion from any order resulting from this investigation.
Until and unless such disclosure is made, all entries will be subject
to the ``Russia-wide'' deposit rate.
B. Alloy Magnesium
------------------------------------------------------------------------
Weighted
average Critical
Manufacturer/producer/exporter margin circumst.
percentages
------------------------------------------------------------------------
Gerald Metals*.............................. 0.00 No.
Gerald Metals/Other......................... 153.65 Yes.
SMW/SMW..................................... 0.00 No.
SMW/Other................................... 153.65 Yes.
Russia-wide................................. 153.65 Yes.
------------------------------------------------------------------------
*This company has not disclosed for the public record the identity of
its supplier or suppliers in Russia. Upon public disclosure of this
information to the Department, we will notify the Customs Service that
sales through certain supply channels have an LTFV margin of zero and
thus an exclusion from any order resulting from this investigation.
Until and unless such disclosure is made, all entries will be subject
to the ``Russia-wide'' deposit rate.
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determinations. As our final determinations are affirmative,
the ITC will within 45 days determine whether imports of either product
are materially injuring, or threaten material injury to, the U.S.
industry. In each proceeding, if the ITC determines that material
injury, or threat of material injury does not exist, that proceeding
will be terminated and all securities posted will be refunded or
cancelled. If, in either proceeding, the ITC determines that such
injury does exist, the Department will issue an antidumping duty order
for the appropriate proceeding directing Customs officials to assess
antidumping duties on all imports of the subject merchandise entered
for consumption on or after the effective date of the suspension of
liquidation.
These determinations are published pursuant to section 735(d) of
the Act and 19 CFR 353.20(a)(4).
Susan G. Esserman,
Assistant Secretary for Import Administration.
Appendix I
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CASE rus. Supp. QR filing Verif. Verif. end
Company Rus. pure alloy date start date date Location
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Hunter Douglas............................... X ............ ................ 12/8 12/8 Chicago.
MG Metals.................................... X ............ ................ 12/6 12/7 Chicago.
Gerald Metals................................ X X 11/1, 30........ 12/13 1/25 Lausanne and Stamford CT.
Interlink.................................... X ............ 11/8............ 12/15 1/10 Fribourg and NYC.
SMW.......................................... X X ................ 1/18 1/19 Solikamsk, Russia.
AVISMA....................................... X ............ ................ 1/16 1/17 Berezniki, Russia.
Razno........................................ X ............ ................ 1/23 1/24 Zurich.
Hochschild Partners.......................... X ............ ................ 1/26 1/27 NYC.
Greenwich Metals............................. X X ................ 1/30 1/31 Greenwich, CT.
Amalgamet.................................... X X 1/4............. 2/1 2/2 Toronto.
AIOC......................................... X ............ 11/21........... 12/15 2/9 NYC.
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[FR Doc. 95-7777 Filed 3-29-95; 8:45 am]
BILLING CODE 3510-DS-P