[Federal Register Volume 62, Number 240 (Monday, December 15, 1997)]
[Notices]
[Pages 65656-65665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32631]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-821-807]


Ferrovanadium and Nitrided Vanadium From the Russian Federation: 
Notice of Final Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative 
review.

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SUMMARY: On August 7, 1997, the Department of Commerce published in the 
Federal Register the preliminary results of its administrative review 
of the antidumping duty order on ferrovanadium and nitrided vanadium 
from the Russian Federation (62 FR 42492). This review covers the 
period January 4, 1995, through June 30, 1996. Based on our analysis of 
the comments received from interested parties, we have made certain 
changes to our preliminary results, including corrections of errors. 
Therefore, the final results differ from the preliminary results. The 
final weighted-average dumping margin is listed below in the section 
entitled ``Final Results of Review.''
    We have determined that sales have been made below normal value 
during the period of review. Accordingly, we will instruct the U.S. 
Customs Service to assess antidumping duties based on the difference 
between export price and normal value.

EFFECTIVE DATE: December 15, 1997.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Mary Jenkins, 
AD/CVD Enforcement Group II, Office 5, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone 
(202) 482-4136 or (202) 482-1756, respectively.

[[Page 65657]]

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended, (the Act) are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Rounds Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the regulations as codified at 19 CFR Part 353 (April 1, 1997).

Background

    The Department of Commerce (the Department) published an 
antidumping duty order on ferrovanadium and nitrided vanadium from the 
Russian Federation (Russia) on July 10, 1995 (60 FR 35550).
    The Department published a notice of ``Opportunity To Request an 
Administrative Review'' of the antidumping duty order for this review 
period on July 8, 1996 (61 FR 35712). We received a timely request for 
review and on August 15, 1996, we published a notice of initiation of 
the review (61 FR 42416).
    This review covers one exporter of the subject merchandise, Galt 
Alloys, Inc. (Galt).
    On August 7, 1997, the Department published in the Federal Register 
the preliminary results of its administrative review of the antidumping 
duty order on ferrovanadium and nitrided vanadium from Russia, as well 
as a recission of the review for a second exporter, Odermet Ltd., which 
had no shipments during the period of review (POR) (62 FR 42492). Galt 
and the petitioner, Shieldalloy Metallurgical Co., Inc., submitted case 
and rebuttal briefs in September 1997. In response to the Department's 
October 15, 1997, letter, the petitioner submitted additional surrogate 
value data on October 27, 1997, and Galt submitted comments related to 
this submission on November 3, 1997. As the Department placed 
additional surrogate value information on the record on November 6, 
1997, we allowed comments on this information from the petitioner, 
submitted on November 14 and 18, 1997, and rebuttal comments from Galt 
submitted on November 20, 1997, in accordance with section 782(g) of 
the Act.
    The Department has now completed this review in accordance with 
section 751(a) of the Act.

Scope of the Review

    The products covered by this administrative review are 
ferrovanadium and nitrided vanadium, regardless of grade, chemistry, 
form or size, unless expressly excluded from the scope of this order. 
Ferrovanadium includes alloys containing ferrovanadium as the 
predominant element by weight (i.e., more weight than any other 
element, except iron in some instances) and at least 4 percent by 
weight of iron. Nitrided vanadium includes compounds containing 
vanadium as the predominant element, by weight, and at least 5 percent, 
by weight, of nitrogen. Excluded from the scope of this order are 
vanadium additives other than ferrovanadium and nitrided vanadium, such 
as vanadium-aluminum master alloys, vanadium chemicals, vanadium waste 
and scrap, vanadium-bearing raw materials, such as slag, boiler 
residues, fly ash, and vanadium oxides.
    The products subject to this order are currently classifiable under 
subheadings 2850.00.20, 7202.92.00, 7202.99.5040, 8112.40.3000, and 
8112.40.6000 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and customs purposes, our written description of the scope is 
dispositive.

Period of Review

    The period of review (POR) is January 4, 1995, through June 30, 
1996. The review covers one exporter, Galt.

Facts Available

    In accordance with section 776(a) of the Act, we have determined 
that the use of adverse facts available (FA) is appropriate for sales 
of merchandise produced by Chusovoy, as discussed in the Preliminary 
Results of Antidumping Duty Administrative Review of Ferrovanadium and 
Nitrided Vanadium from the Russian Federation (62 FR 42494, August 7, 
1997) and below at Comment 1.

Analysis of Comments Received

    Comment 1: Application of Facts Available to Chusovoy-produced 
Merchandise.
    Galt contends that the use of an adverse facts available rate of 
88.63 percent for Galt's sales of merchandise produced by Chusovoy, a 
non-cooperative party to the proceeding, is contrary to the statutory 
requirements and Department precedent, and punishes the wrong party for 
non-cooperation. Galt cites section 776(b) of the Act which provides 
that adverse FA may be applied when an interested party has failed to 
cooperate by not acting to the best of its ability to comply with a 
request for information. Accordingly, while Chusovoy may be 
uncooperative, Galt notes that it has cooperated to the best of its 
ability, and thus adverse FA cannot be applied in calculating its 
margin. In a recent case with a similar fact pattern, Final Results of 
Antidumping Duty Administrative Review: Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, from the People's Republic of 
China, 62 FR 6173 (February 11, 1997) (PRC TRBs), Galt states that the 
Department did not apply adverse FA from the less than fair value 
(LTFV) investigation petition for the merchandise from the 
uncooperating producers sold by the cooperating exporter, as was 
applied in these preliminary results, but rather used the facts 
available from other producers in that proceeding to calculate normal 
value (NV) for those sales. Galt thus argues that the margin for these 
sales should be calculated using Galt's actual sales prices for export 
price (EP) and the information obtained from the other producer in this 
proceeding, Tulachermet, or, alternatively, Chusovoy's data from the 
LTFV investigation, to calculate NV.
    The petitioner argues that the Department properly considered 
Chusovoy an uncooperative respondent in the preliminary results and 
correctly applied adverse FA to sales of Chusovoy's merchandise. Given 
the absence of the required data from Chusovoy, the petitioner contends 
that the petition rate properly constitutes the ``facts otherwise 
available'' in accordance with section 776(b) of the Act. This 
approach, the petitioner continues, is consonant with the Department's 
established, and judicially approved, pre-URAA two-tiered ``best 
information available'' (BIA) methodology, and the Department's 
practice regarding facts available under the URAA. With regard to 
Galt's proposed alternatives to the LTFV petition rate, the petitioner 
claims that Chusovoy's data from the LTFV segment of the proceeding 
cannot be considered in this segment because Galt improperly submitted 
the information on this record without Chusovoy's consent or knowledge. 
The petitioner also notes that the facts in this case are different 
from those in PRC TRBs, where, the petitioner contends, the amount of 
usable information was much greater than in this instance.
    DOC Position: We find no basis to change our finding in the 
preliminary results that the use of adverse FA is warranted for 
Chusovoy's factors of production. As we stated in the preliminary 
results, we find that, pursuant to section 782(e) of the Act, the 
limited information that Chusovoy

[[Page 65658]]

submitted is so incomplete that it cannot serve as a reliable basis for 
reaching a determination in this review. Further, by failing to 
respond, Chusovoy is an interested party which has not cooperated to 
the best of its ability under section 776(b) of the Act. Therefore, we 
have continued to use an adverse inference in selecting from the facts 
available to determine the margins for Galt's sales of Chusovoy-
produced merchandise and applied the 88.63 percent margin used in the 
preliminary results for these sales.
    With regard to Galt's reference to a different approach applied in 
PRC TRBs, we note that the facts in PRC TRBs are distinguishable from 
the instant situation in a number of ways. Premier purchased the 
subject merchandise from eight suppliers, two of which did not 
cooperate; here, Galt purchased only from two suppliers, of which one 
did not cooperate. Premier's six cooperating suppliers reported little 
variation in factor-utilization rates; thus, using their data to 
calculate the unreported factor data for the same model may have been 
appropriate for that case. Here, we only have one cooperating 
producer's fully reported factors of production to consider and thus an 
insufficient basis to conduct a similar evaluation of variation in 
consumption rates. Under these circumstances, it is inappropriate to 
allow Chusovoy (or any producer) to benefit for not cooperating in a 
proceeding.
    With regard to petitioner's comment concerning Galt's submission of 
Chusovoy data from the LTFV investigation, we do not agree that the 
information was improperly submitted. The information in question was 
originally obtained by Galt and submitted to the Department by counsel 
common to Galt and Chusovoy. Galt did not obtain the information 
through a violation of the administrative protective order, but rather 
had direct access to the information and thus was in a position to 
submit it for this record.
    Comment 2: Valuation of Chusovoy's Vanadium Slag for Facts 
Available Rate.
    The petitioner contends that the Department cannot use 
Tulachermet's purchase price of South African vanadium slag to value 
Chusovoy's consumption of vanadium slag. According to the petitioner, 
Department precedent and policy establish the Department's intent to 
apply the price paid by an NME producer for a market economy input only 
to that producer's own consumption of the input. The petitioner also 
claims that, in applying the facts available rate as NV for Galt's 
sales of Chusovoy merchandise, the Department improperly concluded that 
Chusovoy procured all of its slag requirements from Russian suppliers 
and thus improperly applied a quality adjustment in valuing vanadium 
slag. As facts otherwise available, the petitioner holds that the 
Department should adversely assume that this uncooperative respondent 
did not purchase any of its vanadium slag requirements from Russian 
suppliers of low grade vanadium slag, but rather consumed high grade 
vanadium slag such as South African slag, containing 23 percent 
vanadium pentoxide, and thus apply, without adjustment, the LTFV margin 
of 108 percent to all of Galt's sales of subject merchandise produced 
by Chusovoy.
    Galt objects to the use of the unadjusted petition value for 
vanadium slag (i.e., the price paid by Shieldalloy for South African 
slag exported to the United States) because it relates to sales to a 
different market and is thus less accurate than a price to the Russian 
market. According to Galt, the price paid by Tulachermet for South 
African vanadium slag imported into Russia is the best available 
information to value Chusovoy's slag.
    DOC Position: We have not valued Chusovoy's consumption of vanadium 
slag based on Tulachermet's South African purchase, but rather we 
applied the LTFV investigation margin rate, adjusted to reflect the 
quality of Russian-sourced vanadium slag as we did for the preliminary 
results of this administrative review, for all of Galt's sales of 
Chusovoy-produced merchandise. We disagree with the petitioner that the 
Department must make an adverse assumption of the facts available that 
Chusovoy obtained higher quality South African slag for all of its 
vanadium slag consumption. The facts available in this segment include 
all of the relevant information obtained and verified during the LTFV 
segment of the proceeding, and placed specifically on the record prior 
to the preliminary results, as well as information in the public 
record. In the LTFV investigation, Chusovoy reported, and the 
Department verified, that none of its slag was obtained from market 
economy sources. The LTFV investigation established that Chusovoy 
obtained slag from two sources: as a by-product of its production of 
other goods, and from a steel manufacturer in Nizhni-Tagil in Russia. 
There is no basis to assume, adversely or otherwise, that Chusovoy has 
completely changed its supply pattern and relies exclusively on 
foreign-sourced vanadium inputs.
    Comment 3: Application of Facts Available to Galt and Tulachermet 
Data.
    The petitioner claims that Galt's and Tulachermet's data as well as 
Chusovoy's should be disregarded for the final results because of 
numerous deficiencies and failure to provide requested data. Moreover, 
the petitioner argues that these parties are also uncooperative and 
adverse FA must be applied for the final results. The petitioner cites 
the following areas as the basis for its claim:
    (a) Failure to meet certification requirements--The petitioner 
contends that the respondents failed to comply with the Department's 
certification requirements of 19 CFR 353.31(i) by omitting 
certifications from Chusovoy or its counsel, or by submitting 
certifications that were merely copies of faxes used in previous 
submissions and have never replaced them with original signed 
certifications.
    (b) Galt failed to report all of its POR sales--The petitioner 
contends that Galt failed to report all of its sales during the POR 
because it did not report data for merchandise sold from a shipment 
that allegedly entered the United States prior to suspension of 
liquidation. The petitioner claims that in order to exclude these 
sales, Galt must meet the stringent requirements outlined in Final 
Results of Antidumping Duty Administrative Review: Certain Stainless 
Steel Wire Rod from France, 62 FR 7206 (February 18, 1997) (SSWR), 
namely that such sales may be excluded only if the Department 
determines that these sales (1) entered the United States prior to 
suspension of liquidation, and (2) that there is sufficient linkage 
between the entry and the POR sales. The petitioner argues that Galt 
had provided insufficient documentation to establish the date of entry 
as being prior to the suspension of liquidation, and that Galt has not 
adequately demonstrated linkage between this entry and corresponding 
sales.
    (c) Galt failed to provide all required audited financial 
statements--The petitioner states that Galt never provided the audited 
financial statement for Galt International for the fiscal year ending 
September 30, 1996, as requested by the Department. The internal 
financial documents Galt submitted, the petitioner contends, were 
untimely and inadequate.
    (d) Tulachermet failed to provide critical information--The 
petitioner contends that Tulachermet did not adequately respond to the 
Department's questionnaire because it did not provide full translations 
of production worksheets, revealed late in this proceeding that it 
produced an intermediate product, limestone, in making the subject 
merchandise, failed

[[Page 65659]]

to provide complete packing materials and labor factor data for the 
POR, and omitted other information specifically requested by the 
Department.
    Galt counters that it has fully cooperated with the Department. 
Galt's responses to the petitioner's comments are as follows:
    (a) Failure to meet certification requirements--Galt contends that 
all submissions included the necessary certifications for factual 
information and that no submission has been rejected by the Department 
because of the absence of a proper certification. Galt adds that the 
petitioner is incorrect in its understanding of the certification 
regulation in that it does not specify the particular form of 
certification that the petitioner is demanding. Accordingly, there is 
no reason to reject Galt's and Tulachermet's submission on this basis.
    (b) Galt failed to report all of its POR sales--Galt replies that 
it has adequately demonstrated that the sales in question were properly 
excluded from its reporting because the merchandise entered the United 
States prior to suspension of liquidation. Galt states that, although 
the petitioner insists that Galt has supplied insufficient 
documentation, the petitioner fails to identify what piece of 
documentation, other than the actual entry documents, Galt should have 
submitted. Galt asserts that the entry summary provided to U.S. Customs 
sufficiently establishes the date of entry for this merchandise. 
Further, Galt argues that it has already established during the LTFV 
investigation verification that it keeps records in the ordinary course 
of business that enables it to link entered merchandise and sales.
    (c) Galt failed to provide all required audited financial 
statements--Galt responds that there is no audited financial statement 
for its affiliate Galt International for the fiscal year ending 
September 30, 1996; thus, Galt cannot be said to be uncooperative in 
this regard.
    (d) Tulachermet failed to provide critical information--Galt states 
that Tulachermet reported all inputs to the Department. The production 
summary worksheet translations are adequate, Galt states, because each 
monthly summary has year-to-date cumulative calculations, so that by 
providing translations for December 1995 and June 1996, Tulachermet has 
provided translations for the entire POR. With regard to Tulachermet's 
own production of lime from limestone, Galt states that the necessary 
information was immediately submitted to the Department after the 
Department raised the issue, and that the labor and energy consumed in 
the production of lime already had been included in the reporting of 
vanadium pentoxide production. Galt states that Tulachermet's packing 
input reporting is complete in that a comparison of the response for 
the POR to the verified response in the LTFV investigation shows that 
the petitioner's claim that all of its packing materials were not 
reported is baseless, and that the petitioner has failed to identify 
even one material that is missing.
    DOC Position: We continue to hold, as we stated in our preliminary 
results, that Galt and Tulachermet have fully cooperated with the 
Department and that the information submitted by Galt and Tulachermet 
meets the requirements of section 782(e) of the Act in that:
    (1) the information is timely;
    (2) the information is verifiable;
    (3) the information is not so incomplete that it cannot serve as a 
reliable basis for our determination;
    (4) these parties have acted to the best of their abilities in 
providing the requested information; and
    (5) the information can be used without undue difficulties.
    Accordingly, we have relied upon the information submitted by Galt 
and Tulachermet for the final results. We address the specific areas 
raised by the petitioner as follows:
    (a) In our review of Galt's submissions, we found that all 
submissions that required certifications were accompanied by a 
certification that meets the regulatory requirement. Most of these 
certifications were of the faxed, copied type. While this type may not 
be ideal, there is no regulatory or statutory basis for rejecting such 
certification.
    (b) The Department is satisfied that the ``unreported sales'' 
claimed by the petitioner are for pre-antidumping duty order entries. 
We disagree with the petitioner that Galt failed to meet the two-prong 
test as articulated in SSWR from France. The first prong of the test is 
established by showing that the merchandise entered the United States 
before the suspension of liquidation. Galt met this part of the test by 
submitting entry documents for the sales in question which established 
that the merchandise entered the United States prior to suspension of 
liquidation. In addition, the second part of the test was met because a 
comparison of the lot number for the entry to the lot numbers supplied 
in the sales listing confirms that Galt has been able to link specific 
sales to entries. We verified in the LTFV investigation that Galt is 
able to link specific sales to specific entries of the subject 
merchandise and we have no reason to believe that circumstances have 
changed with regard to Galt's ability to link these entries and sales.
    (c) We find no basis to conclude that Galt has withheld any 
financial statements. Galt has stated that there is no financial 
statement for its affiliate and we have no reason to dispute this 
assertion.
    (d) With respect to Tulachermet's provision of information, the 
information provided is timely, verifiable, complete to the extent that 
it serves as a reliable basis for our determination, and can be used 
without undue difficulty. Galt provided Tulachermet's production 
worksheets in full compliance with the Department's instructions, and 
provided adequate translations for them. The information on lime 
production, which constitutes only a small portion of NV, by value, was 
provided in a timely manner for this segment of the proceeding. The 
information provided for the relatively minor packing factors is 
sufficient to serve as a reliable basis for our final results.
    Comment 4: ``Combination Rates'' for Galt.
    Galt contends that, if the Department applies adverse FA to sales 
of Chusovoy merchandise, it should do so in a way that punishes 
Chusovoy for its non-cooperation, but not Galt. Accordingly, Galt 
advocates establishing separate deposit rates for each producer/
exporter combination (``combination rates'')--i.e., a deposit rate for 
Chusovoy (producer) and Galt (exporter) based on adverse FA, and a 
deposit rate for Tulachermet (producer) and Galt (exporter) based on 
the Department's margin calculations using the submitted data. Galt 
also advocates a different basis for assessment purposes using the 
actual sales information from Galt.
    The petitioner argues that the issuance of a single dumping margin 
for Galt is proper and consistent with the Department's practice. 
Indeed, it would be inappropriate and improper for the Department to 
issue separate combination rates, according to the petitioner. The 
petitioner cites a number of past determinations where the Department 
has refused to establish producer/exporter combination rates, except 
where a producer/exporter margin is found to be zero or de minimis and 
thus excluded from an antidumping duty order. The petitioner further 
contends that the issuance of a single dumping margin for Galt 
facilitates administration of the antidumping duty order. Finally, the 
petitioner notes that establishing assessment and deposit rates on

[[Page 65660]]

different bases would have the effect of rewarding Chusovoy for its 
failure to cooperate since, under Galt's proposal, little or no 
antidumping duties would be assessed on the sales already made, while 
there would be no impact for future sales since Chusovoy has shown no 
further interest in exports to the United States.
    DOC Position: We have followed our long-established practice and 
calculated a single rate applicable to the exporter, Galt, consistent 
with our approach in similar cases (see, e.g., Final Determination of 
Sales at Less Than Fair Value: Pure Magnesium From Ukraine, 60 FR 
16433, March 30, 1995). As the rate calculated merely reflects the 
margins determined on all of Galt's U.S. sales, we are not persuaded 
that there is a compelling reason to deviate from our normal practice.
    Comment 5: Whether Verification Should Have Been Conducted in this 
Proceeding.
    The petitioner claims that it established a compelling and apparent 
need for verification of the sales and factors of production responses 
in this proceeding, based on, inter alia, the changes in Galt's 
distribution system since the LTFV investigation, alleged deficiencies 
in Galt's and Tulachermet's responses, and Tulachermet's failed 
verification in the LTFV investigation. The petitioner further contends 
that the respondents have ``ducked'' verification by claiming that 
verification would be a needless expense and that all required 
information could be provided without verification. Instead, the 
petitioner argues, the respondents have provided an incomplete and 
contradictory record; they should not benefit from their objection to 
verification.
    The respondents counter that they have not ``ducked'' verification, 
but rather contend that it would be an unnecessary expense for the 
Department and for the respondents to conduct on-site verifications 
again in this review when the Department could achieve the same ends 
through written submissions. The respondents also contend that the 
petitioner failed to meet the deadline for requesting verification in 
this review and therefore has no standing to object to the Department's 
decision not to conduct a verification in this instance.
    DOC Position: As stated in section 782(i)(3) of the Act, the 
Department shall verify information relied on for the final results of 
an administrative review if (A) there is a timely request for 
verification, and (B) no verification was made during the two 
immediately preceding reviews and investigations, unless good cause for 
verification is shown. Under the applicable regulation, 19 CFR 
353.36(a)(v)(A), the petitioner's request was not timely, as it was 
made more than 120 days after the initiation of this administrative 
review. However, 19 CFR 353.36(a)(iv) also provides for verification if 
the Department determines that good cause for verification exists. In 
response to the petitioner's assertions, we do not find that good cause 
exists for verification in the instant segment of the proceeding.
    Both Galt and Tulachermet were verified in the LTFV investigation, 
which immediately preceded this review. While Tulachermet failed 
verification of its sales response in the LTFV investigation, its 
reported factors of production were successfully verified and used to 
calculate foreign market value for an unaffiliated exporter. Although 
Galt has made changes in its distribution system since our last 
verification, it has fully responded to our requests for information 
and provided sufficient data in this review for the Department's 
analysis and reliance upon for the final results. We do not consider a 
change in a respondent's distribution system, in and by itself, 
sufficient cause to require a verification. In sum, we are satisfied 
that the data provided by Galt and Tulachermet is sufficiently reliable 
under section 782(e) of the Act so as to form the basis of our final 
results without conducting verification.
    Comment 6: Surrogate Value for Vanadium Slag.
    In the preliminary results, the Department valued Tulachermet's 
Russian-sourced vanadium slag based on the price Tulachermet paid for a 
purchase of South African slag immediately prior to the POR, adjusted 
for the quality difference between the South African and Russian 
material using the methodology applied in the LTFV final determination. 
The petitioner contends that the use of a single, pre-POR purchase of 
vanadium slag, which is of an insignificant quantity in comparison to 
Tulachermet's consumption of Russian slag, is an inadequate basis for 
the surrogate value. The petitioner claims that the Department rejected 
its valuation proposal--the weighted-average of the petitioner's own 
South African vanadium slag purchases during the POR--because of the 
Department's faulty mathematical analysis of the petitioner's 
purchases. Because its South African vanadium slag purchases are of the 
material to be valued, and cover the entire POR, the petitioner argues 
that these prices are the appropriate basis for the surrogate value. 
With regard to vanadium price data obtained from the South African 
Minerals Bureau subsequent to the preliminary results (see fax dated 
November 6, 1997), which includes the domestic average price for 
vanadium slag, the petitioner objects to this source because the 
petitioner believes that the South African values stated are likely to 
be distorted by intracompany transfers not conducted at arm's length, 
and thus do not represent market value.
    Galt claims that the use of Tulachermet's purchase price as the 
basis for the vanadium slag surrogate value is consistent with the 
Department's policy and practice, as embodied in section 351.408(c)(1) 
of the Department's new regulations, which states that the Department 
will base surrogate value on a market economy purchase when an input is 
sourced from both market economy and NME suppliers. Galt asserts that 
Tulachermet made bonafide, substantial purchases for Tulachermet's 
production, and not a de minimis purchase meant to distort a dumping 
margin; thus, this purchase is a reasonable basis for valuing Russian 
sourced slag in accordance with the Department's policy. The use of the 
petitioner's prices for vanadium slag, Galt further contends, would be 
unfair and unpredictable because this business proprietary information 
is unavailable when the respondents make sales. Thus, argues Galt, how 
could Tulachermet know if Shieldalloy purchased slag at the beginning, 
at the end, or anytime at all during the POR, and in what quantities? 
And, how could Galt even attempt to price fairly if it must guess at 
the value of an important input rather than use a figure that is 
readily accessible? Galt also notes that relying on the petitioner's 
purchase prices would involve the use of prices to the United States 
rather than to an appropriate surrogate country, contrary to section 
773(c)(4) of the Act. Finally, with regard to petitioner's contentions 
regarding the use of the vanadium slag price data from the South 
African Minerals Bureau, Galt claims that its analysis shows that any 
price distortion that exists in this value would be to respondents' 
detriment and the value should be adjusted accordingly if it were to be 
used.
    DOC Position: Vanadium slag is the single most important input for 
production of ferrovanadium. Tulachermet obtained nearly all of its 
vanadium slag consumed during the POR from a Russian source, which 
provided the material at a grade of approximately 15-16 percent 
contained vanadium pentoxide. Tulachermet purchased a relatively small 
amount of vanadium slag from South Africa immediately prior to the POR 
for POR

[[Page 65661]]

consumption. This market economy purchase was of 22-24 percent 
contained vanadium pentoxide. As in the preliminary results, we valued 
the quantity purchased from South Africa at the purchase price for this 
material. Because this material is different from the Russian-sourced 
material, on the basis of the vanadium pentoxide content, we did not 
apply this price to the remainder of the vanadium slag consumed by 
Tulachermet, nor did we assign this price as the basis for the vanadium 
slag surrogate value (prior to adjustment), as we did in the 
preliminary results. As explained further below and in the Final 
Results Valuation Memorandum dated December 4, 1997 (FRVM), we have 
applied a different surrogate value and adjustment methodology (see 
Comment 7) for the final results.
    The Department's stated practice in determining which surrogate 
value to use for valuing each factor of production is to select, where 
possible, publicly available information which is: (1) an average non-
export value; (2) representative of a range of prices within the POR if 
submitted by an interested party, or most contemporaneous with the POR; 
(3) product-specific; and (4) tax-exclusive (see, e.g., Final Results 
of Antidumping Duty Administrative Review: Sebacic Acid From the 
People's Republic of China, 62 FR 10530, 10534, March 7, 1997 (Sebacic 
Acid), and Preliminary Results of Antidumping Administrative Review: 
Manganese Metal From the People's Republic of China, 62 FR 60226, 
60227, November 7, 1997). The Department has also articulated a 
preference for a surrogate country's domestic prices over import values 
(see, e.g., Final Determinations of Sales at Less Than Fair Value: 
Brake Drums and Brake Rotors From the People's Republic of China, 62 FR 
9160, 9163, February 28, 1997).
    As we have noted throughout this proceeding (see, e.g., Preliminary 
Results Valuation Memorandum (PRVM) at page 3), we have not been able 
to identify a market economy surrogate value for vanadium slag with 16 
percent contained vanadium pentoxide from any source. Indeed, our 
research indicates that vanadium slag of this quality is not produced 
outside of Russia and, perhaps, the People's Republic of China. 
Accordingly, the Department must identify the most comparable surrogate 
match.
    Based on the available choices, we have rejected both the values 
offered by the petitioner based on its own purchases of South African 
vanadium slag, and the value based on Tulachermet's December 1994 South 
African purchase. These values are not product-specific (i.e., are for 
vanadium slag of a different quality than that obtained by Tulachermet 
from its Russian supplier), and are export prices. We are also 
concerned that the use of the petitioner's proprietary purchase prices, 
unavailable to Galt and its suppliers, as the surrogate value for a 
major input would effectively allow the petitioner to directly 
influence our calculation of NV and hinder the exporter from adjusting 
its prices to eliminate dumping. As for Tulachermet's price, we agree 
with the petitioner that the use of a single price quote from December 
1994 does not adequately represent the price levels of vanadium 
products experienced during the POR.
    In this proceeding, we obtained data from the South African 
Minerals Bureau on the vanadium industry and price levels for a variety 
of products. Some of this information was in published form (see PRVM), 
while other data was obtained directly from the Bureau (see fax dated 
November 6, 1997). In addition, the South African Minerals Bureau, the 
petitioner, and Galt have provided information from the industry 
publication Metal Bulletin on vanadium pentoxide and ferrovanadium 
prices in the world market. We have relied on these public, independent 
sources as the bases for valuing vanadium slag and other vanadium 
products.
    For vanadium slag, we have used as the base value the POR-average 
South African FOB value for 24 percent vanadium pentoxide content slag, 
as reported by the South African Minerals Bureau in the November 6 fax. 
This value is a domestic South African price for a material that is 
most comparable to the product among the publicly available values. The 
value calculated is an average of 1995 and 1996 values and is thus 
representative of the range of prices during the POR. Moreover, it is 
derived from the only source of public data for vanadium slag (of any 
grade) we have obtained in the course of this proceeding.
    In our view, the inferences, speculations, and assumptions the 
petitioner and Galt applied in their respective analyses of the South 
African domestic prices fail to establish that these South African slag 
values are not market values. A comparison of the annual averages of 
the South African slag prices to the annual averages of CIF Europe spot 
prices for vanadium pentoxide shown in the November 6 fax, which are 
market-based prices, shows a consistent relationship of about 20 to 25 
percent (i.e., the slag price is about 20-25 percent of the European 
market price for vanadium pentoxide). Given the absence of any other 
public source for slag prices, based on the available information, we 
have no basis to conclude that, to the extent a market exists for 
vanadium slag, these prices are not the South African market prices for 
vanadium slag.
    Comment 7: Quality Adjustment to Vanadium Slag Surrogate Value.
    The petitioner disagrees with the Department's adjustments for what 
it considers alleged quality differences between the South African and 
Russian inputs. The petitioner contends that the record evidence does 
not support the Department's position in its preliminary results that 
Russian-sourced vanadium slag, of approximately 15-16 percent vanadium 
pentoxide content must be valued lower than South African slag of 
approximately 22-24 percent vanadium pentoxide, on a contained-vanadium 
basis 1. The petitioner objects to the use of a quality 
adjustment methodology based on a ratio derived from the prices of 
Russian (i.e. NME) goods. Such a use of NME prices, the petitioner 
contends, is contrary to the Department's established policy and 
practice. Finally, if the Department were to make a quality adjustment 
to the South African input value, the petitioner states that the 
adjustment must be based on POR data and proposes an adjustment factor 
of .96, derived from Metal Bulletin news articles during the POR, 
rather than the .7292 factor derived from 1993-94 Metal Bulletin price 
comparisons. Alternatively, the petitioner suggests that, if the 
Department believes it has insufficient information from market economy 
countries to value the vanadium slag consumed by Tulachermet, the 
Department should base NV on the sales of South African ferrovanadium 
to other countries.
---------------------------------------------------------------------------

    \1\ ``Contained vanadium basis'' refers to adjusting the price 
or value of the material based solely on the amount of vanadium 
contained, regardless of the content of other materials. Thus, 
products with varying percentages of contained vanadium or vanadium 
pentoxide can be compared on an equal basis.
---------------------------------------------------------------------------

    Galt agrees with the Department's approach to adjusting the 
surrogate value for quality differences between the South African 
material and the Russian-sourced material. Galt states that, contrary 
to the petitioner's assertion, the statute does not prohibit the use of 
NME-based value information to adjust a market-based surrogate value. 
Galt notes that this case differs from the Final Determination of Sales 
at Less than Fair Value: Refined Antimony Trioxide from the People's 
Republic of China, 57 FR 6801 (February 26, 1992),

[[Page 65662]]

cited by the petitioner in that (1) the non-market prices in question 
are being used to determine an adjustment factor, not to determine the 
base price to be used, and (2) there are no market economy prices 
available. Thus, Galt contends, under these conditions the Department 
has no choice but to use the available information in order to make the 
adjustment to the vanadium slag surrogate value that the record 
overwhelmingly shows is necessary. Galt also objects to the 
petitioner's proposed alternative methodology using POR price quotes, 
claiming that the information is anecdotal and does not adequately 
identify the Russian merchandise to allow for proper calculation of the 
quality adjustment ratio.
    DOC Position: As we stated in the PRVM, the record throughout this 
proceeding overwhelmingly demonstrates that vanadium slag with a 
vanadium pentoxide content below 24 percent is lower quality than the 
24 percent product, and its value to consumers cannot be quantified in 
terms of a straight-line adjustment based on relative percentages of 
vanadium pentoxide, as argued by the petitioner. Principally, the 
Russian-sourced vanadium slag contains a higher level of impurities 
than the 24 percent vanadium pentoxide content slag, which, in turn, 
results in higher processing and waste disposal costs. We concluded in 
the LTFV investigation that the South African slag value should be 
adjusted in order to properly value the Russian-sourced vanadium slag 
to account for the latter's lower quality. Our finding and methodology 
was upheld in Shieldalloy Metallurgical Corp. v. United States, 975 
F.Supp. 361 (Ct. Int'l Trade 1997) and Shieldalloy Metallurgical Corp. 
v. United States, 947 F.Supp. 525 )Ct. Int'l Trade 1996). In this 
review, we continue to believe that Russian-sourced slag must be valued 
lower than the 24 percent vanadium pentoxide slag, on a contained 
vanadium basis.
    The petitioner has never convincingly refuted the fact that the 
Russian-sourced slag is of an inferior quality to the South African 
slag upon which surrogate values have been based. The petitioner's 
claims and speculations that the inferior Russian vanadium slag should 
be valued the same as the higher quality South African material, on a 
contained vanadium basis, do not stand up against the weight of 
information to the contrary developed throughout this proceeding. Given 
that no market economy value exists to our knowledge for vanadium slag 
of a comparable quality to the Russian-sourced material, a quality 
adjustment must be made to the South African vanadium slag value in 
order to arrive at a surrogate value that fairly represents the 
material to be valued.
    The petitioner has argued that the Department's quality adjustment 
methodology used in the LTFV final determination and the preliminary 
results of this review is flawed because it is based on NME prices, and 
is based on noncontemporaneous price data. We acknowledged in the 
preliminary results that, subsequent to the LTFV investigation and CIT 
litigation, we learned that the 90% vanadium pentoxide prices published 
in Metal Bulletin and used to calculate our adjustment ratio were based 
on Russian prices. However, since we have been unable to identify any 
other information suitable for making this adjustment, we must continue 
to use the ratio between vanadium pentoxide prices, including the 
prices of Russian vanadium pentoxide of lower quality, as a facts 
available basis for the quality adjustment methodology. We emphasize 
that we are not using any NME prices to arrive at the surrogate value, 
but rather the relationship between prices for internationally-traded 
goods in market economies, where some of these goods were produced in a 
NME country, and applying the resulting ratio to a South African value. 
Although this methodology may not be ideal because it involves the use 
of NME price data, it is, nevertheless, the best available information. 
To fail to apply a quality adjustment to the surrogate value would be, 
in our view, a far greater distortion to the valuation of Russian-
sourced vanadium slag.
    Its other objections aside, the petitioner proposes using POR 
vanadium pentoxide price information to recalculate the quality 
adjustment. We agree with the petitioner that this approach is 
preferable. However, we agree with Galt's concerns about the Russian 
vanadium pentoxide prices the petitioner selected from Metal Bulletin. 
These quotes are anecdotal citations chosen by the petitioner that 
include no information about the quality of the product allegedly sold. 
In contrast, the LTFV methodology relied on market research data by an 
independent source for vanadium pentoxide of a known purity (see 
Attachment 9 to PRVM). While the data is not contemporaneous, it is 
otherwise more reliable than the information proffered by the 
petitioner.
    For the final results, we have revised our methodology from the 
preliminary results to incorporate more recent data from Metal 
Bulletin, as submitted by Galt on December 13, 1996. This submission 
includes 98 percent and 90 percent vanadium pentoxide price data for 
the last quarter of 1994--the last period that Metal Bulletin published 
90 percent vanadium pentoxide prices and the quarter immediately prior 
to the POR. Thus, for the final results, we have applied the ratio 
between 98 percent vanadium pentoxide and 90 percent vanadium pentoxide 
prices reported for the fourth quarter of 1994, .9437, as the quality 
adjustment for the vanadium slag value. Our calculation is shown in the 
FRVM.
    Comment 8: Contemporaneity of Vanadium Slag Surrogate Value.
    The petitioner contends that a surrogate value based on a single 
purchase of vanadium slag immediately prior to the POR is inappropriate 
in this proceeding due to the price fluctuations of vanadium products 
during the POR. In support of its position, the petitioner provided 
information showing the rise and fall of world vanadium pentoxide and 
ferrovanadium prices during the POR, and that the Tulachermet purchase 
price is unrepresentative of prices during the POR. The petitioner 
asserts that the Department must make appropriate adjustments to ensure 
that the values of vanadium inputs accurately represent POR prices, 
otherwise the dumping calculation will be distorted. Accordingly, the 
petitioner claims that the surrogate value should be based on a 
weighted-average of prices during the POR, such as the weighted-average 
of the petitioner's vanadium slag purchases, or, if the Department 
continues to rely on Tulachermet's slag purchase price, an adjustment 
to that price must be made to reflect the difference between prices at 
the time of the purchase and the average prices during the POR.
    Galt asserts that Tulachermet's purchase of the South African slag, 
although immediately prior to the POR, was for inputs consumed during 
the POR and thus is an appropriate value for the POR. Galt claims that 
to adjust the slag value for the vanadium price increases over the POR 
without ensuring that appropriate costs, prices, and production factors 
are matched will create distortions. In this case, Galt continues, the 
Department does not have the data on the record to link Tulachermet's 
actual production to its shipments to Galt, as such information was 
never requested by the Department. Therefore, Galt states that the only 
alternative is to find that there is no basis on the record to find 
this type of price inflation for the sales at issue and thus no time 
period adjustment need be made to Tulachermet's purchase price for 
vanadium slag.

[[Page 65663]]

    DOC Position: We agree with the petitioner that, in this instance, 
it is inappropriate to base the surrogate value for vanadium slag on 
Tulachermet's single purchase price and have not done so for these 
final results (see Comment 6).
    Comment 9: Sulfuric Acid Valuation.
    The petitioner argues that Tulachermet's consumption of sulfuric 
acid should be adjusted to correct the Department's treatment of this 
input in diluted form. In fact, the petitioner contends that 
Tulachermet reported that it consumed sulfuric acid at 100 percent 
concentration. Thus, the petitioner states that, for the final results, 
Tulachermet's consumption of sulfuric acid should be valued based on 
the ratio of Tulachermet's 100 percent concentration consumption to the 
``standard concentration of commerce'' of 93-98 percent, as identified 
by the Department. In addition, the petitioner states that the price 
used in the preliminary results was not the intended value identified 
by the Department as provided by a South African vanadium producer, and 
instead was a different value that was outside the POR. For the final 
results, the petitioner states that this error should be corrected.
    DOC Position: We agree with the petitioner that Tulachermet has 
reported its consumption of sulfuric acid in undiluted form and that we 
erred in adjusting the consumption factor by the amount of dilution, 
which Tulachermet performs in the course of its production process. We 
also agree that the Department erred in its preliminary results in 
identifying the value source selected as a South African vanadium 
producer, while actually using the value obtained from the South 
African Chemical and Allied Industries Association. For the final 
results, we have continued to use the value for 98% sulfuric acid from 
the Association, which is a POR average provided to the Department in 
response to our specific request to the Association (see FRVM). The 
values obtained from both the Association and the vanadium producer 
were equally contemporaneous domestic tax-exclusive prices for the same 
material, but we selected the Association value as it is from a more 
publicly available source than a price quote from a company whose name 
cannot be revealed in our public documents.
    Finally, we have adjusted Tulachermet's consumption factor to match 
the 98% concentration of the sulfuric acid surrogate value, as 
suggested by the petitioner.
    Comment 10: Valuation of Small-Quantity Inputs.
    In the preliminary results, the Department was unable to obtain 
surrogate values for boron anhydride and ammonium sulphite, and also 
did not include boron acid in its NV calculation. The petitioner claims 
that these chemicals are important, individually and in the aggregate, 
to the production of the subject merchandise, and thus their omission 
understates Galt's dumping margin. Accordingly, the petitioner contends 
that the Department should value these inputs based on U.S. price data 
it submitted, or on the highest surrogate value for any input. In 
addition, the petitioner asserts that the Department must also continue 
to assign the farthest distance reported by Tulachermet for any 
supplier to calculate the freight value cost for all inputs for which 
Tulachermet failed to provide the distance from its supplier.
    Galt argues that disregarding these inputs is justified under 
section 777A(a)(2) of the Act, under which ``the administering 
authority may decline to take into account adjustments which are 
insignificant in relation to the price or value of the merchandise.'' 
In addition, Galt opposes the application of the U.S. values for these 
inputs presented by the petitioner because these values are not from 
the primary surrogate country, South Africa, or from any other 
appropriate surrogate country identified by the Department.
    DOC Position: Although the inputs in question are consumed in small 
quantities, we have accepted the petitioner's position in calculating 
NV for the final results. Department practice is to attempt to value 
all inputs in an NME NV for which there is available information. The 
U.S. price data is the only surrogate value information on the record 
for these inputs and thus may be used as facts available to value these 
materials. While the values identified by the petitioner for boric acid 
and ammonium sulfide acid are not the same as the boron (or boric) 
anhydride and ammonium sulphite consumed by Tulachermet (see ``Telcon 
with ITC Chemical Industry Analyst Re: Tulachermet Chemical Inputs,'' 
Memorandum to the File dated October 22, 1997), as facts available, we 
have accepted the petitioner's contention in its October 27, 1997, 
letter that these values are for materials similar enough for surrogate 
valuation purposes, and that the values are, if anything, conservative 
measures of surrogate value.
    Comment 11: Valuation of Factors Unreported by Tulachermet.
    The petitioner claims that Tulachermet did not accurately report 
all of its inputs and omitted several of these inputs from its factors 
of production response, based on the petitioner's analysis of 
Tulachermet's production summary worksheets. As AFA, the petitioner 
contends that the Department should apply the highest consumption 
factor reported for any input, and apply the highest surrogate value 
for any input. The petitioner also argues that Tulachermet did not 
report its consumption of ``technological electricity''; therefore, the 
Department should use adverse facts available to increase Tulachermet's 
reported consumption of electricity.
    Galt argues that Tulachermet has accounted for all materials 
consumed and that the inputs cited by the petitioner either are already 
reported and accounted for, or are recycled materials.
    DOC Position: We agree with Galt that certain inputs consumed and 
listed on the production worksheets--``metal skull,'' ``metal 
riddlings,'' limestone, steam, compressed air, water, and ``technical 
water''--are already accounted for in the factors of production 
worksheet. Tulachermet reported its consumption of vanadium and metal-
based inputs on a gross, rather than net, basis. The production 
worksheets show that metal and vanadium waste was generated in the 
course of production and then re-used. Tulachermet's consumption of 
limestone has been reported separately in accounting for its lime 
production (see submission of March 7, 1997). Tulachermet's energy 
reporting accounts for the energy consumed to generate steam and 
compressed air. Water inputs are normally considered a factory overhead 
item and the Department usually does not value water separately (see, 
e.g., Final Determination of Sales at Less Than Fair Value: Saccharin 
from the People's Republic of China From PRC, 59 FR 58818, November 15, 
1994).
    The production worksheets indicate consumption of certain other 
inputs--silicovanadium, vanadium aluminum alloy,2 and 
``technological electricity''--which we agree should have been included 
in the factors of production worksheet. We have calculated consumption 
factors for these inputs, based on the data in the production 
worksheets submitted on February 7,

[[Page 65664]]

1997, and included them in the calculation of NV. We valued 
silicovanadium and vanadium aluminum alloy, on a contained vanadium 
basis, based on the POR average South African price for vanadium 
products, as reported by the South African Minerals Bureau. Because 
Tulachermet did not report the distance from the suppliers of these 
items to its factory, we have applied the distance from the farthest 
supplier, as facts available, to calculate the freight expense incurred 
in transporting these inputs.
---------------------------------------------------------------------------

    \2\ Galt claims that it has reported vanadium aluminum alloy as 
``pre-alloyed material.'' However, our analysis of the questionnaire 
response reveals that ``pre-alloyed material'' in the factors of 
production worksheet corresponds to ``iron-vanadium'' alloy in the 
production worksheets.
---------------------------------------------------------------------------

    Finally, we note that Tulachermet also consumed a very small amount 
of ``poliacrid'' during the POR, as indicated by the petitioner. 
However, there is no surrogate value for this material on the record. 
Therefore, we have not included a value for this material in our 
calculation of NV, although we have included a freight amount for this 
item, calculated in the same manner as discussed above.
    Comment 12: Freight and Insurance costs for Surrogate Values 
derived from the Customs Union of Southern Africa (SACU) Import 
Statistics.
    The petitioner contends that, in the preliminary results, the 
Department used surrogate values derived from SACU for factors whose 
input value did not include the cost of insurance and freight. The 
petitioner argues that the Department has thus understated the values 
for those inputs.
    Galt responds that the Department already has made freight and 
insurance adjustments in its input freight value that is shown in its 
margin calculation. Galt states that to make additional adjustments to 
freight or insurance would be double counting.
    DOC Position: We agree with Galt. In Sigma Corp. v. United States, 
No. 95-1509, 96-1036, 95-1510, 06-1037, 1997 U.S. App. LEXIS 16506 
(Fed. Cir. July 7, 1997) (Sigma), the United States Court of Appeals 
for the Federal Circuit (CAFC) held that the calculated freight costs 
for PRC-made materials may not exceed the calculated freight costs of 
shipping the material from respondents' importing seaports in the PRC 
to their factories. The CAFC's decision in Sigma requires that we 
revise our calculation of source-to-factory-surrogate freight for those 
material inputs that are based in CIF import values in the surrogate 
country. Accordingly, we have added to CIF surrogate values from South 
Africa a surrogate freight cost using the shorter of the reported 
distances from either the closest reported port to the factory (i.e., 
Ventspils, Latvia), or the domestic supplier to the factory.
    Comment 13: Factory Overhead, Selling, General and Administrative 
Expenses.
    The petitioner argues that, in calculating the surrogate value for 
factory overhead based on the 1995 Annual Report of Highveld Steel and 
Vanadium Corporation Limited (Highveld), the Department erred in 
excluding the figure for ``net provision for renewal and replacement of 
fixed assets'' from overhead expenses. Consistent with the Department's 
approach in Final Determination of Sales at Less Than Fair Value: 
Sulfur Vat Dyes from the People's Republic of China, 58 FR 7557, 
(February 8, 1993), the Department should include in the overhead ratio 
depreciation and all other elements of overhead that are identified in 
the Highveld's 1995 Annual Report. The petitioner further contends that 
because the Department verified separate cost centers for Tulachermet 
in the LTFV investigation, the surrogate overhead ratio should be 
applied to each cost center (i.e. vanadium pentoxide and ferrovanadium 
production centers). With regard to selling, general and administrative 
(SG&A) expenses, the petitioner states that the Department should 
include the amount spent on research and development, which was not 
included in the preliminary results calculation.
    Galt states that the factory overhead figure calculated from the 
annual report is from the consolidated financial statement and 
represents the total overhead of all Highveld operations. To apply this 
percentage to each of Tulachermet's cost centers would result in 
double-counting overhead, according to Galt. To insure an ``apples to 
apples'' comparison, Galt contends that the Department should continue 
to apply the consolidated percentage to the consolidated factor.
    DOC Position: We agree with the petitioner with respect to the 
omitted expenses in our factory overhead and SG&A calculations, and 
have made the corrections. These corrections result in revised 
surrogate percentages for factory overhead, SG&A expenses and profit 
(see FRVM).
    We agree with Galt with respect to the application of factory 
overhead to the total of materials, labor, and energy values, rather 
than at each stage of production. Because our surrogate percentage is 
calculated on the basis of the total overhead of Highveld's production, 
the factory overhead percentage must be applied in the same manner to 
avoid double-counting (see Final Determination of Sales at Less Than 
Fair Value: Polyvinyl Alcohol From PRC, 61 FR 14057,14056, March 29, 
1996).
    Comment 14: Surrogate Profit Calculation.
    The petitioner argues that the Department should calculate profit 
based on ``net income before taxation,'' as reported in Highveld's 1995 
Annual Report. The petitioner also contends that the Department erred 
in using ``net sales turnover,'' rather than ``cost of production,'' as 
the denominator for the surrogate profit calculation and should correct 
it for the final results.
    Galt argues that the Department should calculate the surrogate 
profit percentage on the same basis it used to calculate the cost of 
production from Highveld's 1995 Annual Report. Galt contends that 
calculating the profit percentage on a different basis than the cost of 
production would violate the statutory requirement by exceeding the 
amount of profit normally realized by market economy exporters or 
producers.
    DOC Position: We agree with the petitioner with regard to our 
surrogate profit calculation. We calculated profit based on the net 
sales turnover in the report, less cost of production, and applied the 
resulting ratio to the cost of production. Because of the changes to 
factory overhead and SG&A, noted above, the resulting profit figure, 
calculated as the difference between net sales and net costs per the 
Highveld 1995 Annual Report, differs from that cited by the petitioner 
(see FRVM).
    Comment 15: Galt's SG&A and CEP Profit Calculations.
    The petitioner contends that Galt has ignored the Department's 
explicit instructions and followed its own method of reporting and 
adjusting SG&A and profit used to calculate CEP expenses. The 
petitioner argues that Galt did not disclose the methodology for its 
numerous ``revisions'' or provide computations, beginning with the 
financial statement. Moreover, according to the petitioner, Galt did 
not provide any indication that its SG&A and profit calculations took 
proper account of the required antidumping duty.
    Galt states that it responded to the petitioner's arguments 
regarding its SG&A expenses in its letter to the Department of May 21, 
1997. Galt states that it explained how the figures are traced into the 
financial statements and provided additional background information on 
the figures. Galt objects to the petitioner's implication that the 
Department should examine backup documentation for financial statements 
that have already been certified as audited. In addition, Galt claims 
that it has thoroughly explained to the

[[Page 65665]]

Department its methodology regarding management fees and the petitioner 
has provided no meaningful criticism of Galt's approach.
    DOC Position: We agree with Galt with respect to its presentation 
of the information. Based on our analysis, we have accepted Galt's SG&A 
calculations for adjustments to CEP sales, as described in Galt's May 
21, 1997, submission. We have, however, made corrections to these 
calculations for mathematical errors (see Memorandum to the File dated 
December 3, 1997.) As in the preliminary results, we revised the SG&A 
calculation to reflect a value-based, rather than unit-based, amount.
    In addition, we have revised the calculation of CEP profit to meet 
the requirements of section 772(d)(3) and 772(f) of the Act. 
Accordingly, we calculated the profit allocable to selling and 
distribution activities in the United States based on the data in 
Galt's audited financial statements for the two fiscal years that 
included the POR (see Memorandum to the File dated December 3, 1997). 
Pursuant to section 772(f)(C)(iii) of the Act, this information is the 
data on the record for calculating CEP profit that comprises the 
narrowest category of merchandise sold in all countries which includes 
the subject merchandise.
    Comment 16: Valuation of Railway Freight and Insurance.
    In lieu of the 1993 South African rail rate information from the 
LTFV investigation used in the preliminary results, the petitioner 
contends that the Department should apply the railway rate and 
insurance data from the POR that the petitioner obtained in a fax from 
a South African railway source.
    Galt states the petitioner's fax is an unreliable basis for this 
information as it does not contain published rail rates and is largely 
a handwritten note from someone, apparently in South Africa, which 
appears to be cut and pasted. Accordingly, Galt contends that the 
Department should continue to use the rail rates from the LTFV 
investigation in the absence of any other reliable information.
    DOC Position: In this instance, we are asked to choose between the 
only two available surrogate values for freight--a figure derived from 
publicly available published data of rail rates for a representative 
list of destinations, but non-contemporaneous to the POR; or a rail 
rate quote contemporaneous with the POR obtained by an interested party 
for a specific route. While the latter choice has the advantage of 
being contemporaneous with the POR, the rate proffered by the 
petitioner is based on transport of 144 kilometers, while the rate 
calculated by the Department for the LTFV investigation is based on 
transport of 468 to 1,342 kilometers (see PRVM at page 10). Most 
transport to be valued covers distances of hundreds to thousands of 
kilometers. Therefore, we find that the rate from the LTFV 
investigation, although non-contemporaneous, is a more representative 
surrogate value for Tulachermet's movement expenses and we have 
continued to apply it in the final results.
    Comment 17: Valuation of ``Vanadium Pre-alloyed Material''.
    The petitioner agrees with the Department's selection of 
ferrovanadium prices to determine the surrogate value for ``vanadium 
pre-alloyed material.'' However, the petitioner argues that the 
Department erred by applying the exchange rate conversion from South 
African rand to U.S. dollars for this value as the value was already 
expressed in U.S. dollars.
    DOC Position: We agree with the petitioner that we made an error in 
applying an exchange rate to this value reported in U.S. dollars. 
However, for the final results, we have selected a different source for 
the ferrovanadium price. We have used the 1995-96 average South African 
FOB value for ferrovanadium reported by the South African Minerals 
Bureau in its November 6, 1997, fax. In applying this value, we have 
adjusted the consumption factor to reflect the maximum vanadium content 
of the input, as reported by Tulachermet in the February 7, 1997 
response.
    Final Results of Review: As a result of the comments received, we 
have changed the results from those presented in our preliminary 
results of review. Therefore, we determined that the following margin 
exists as a result of our review:

------------------------------------------------------------------------
                                                                 Margin 
                 Exporter                        Period        (percent)
------------------------------------------------------------------------
Galt Alloys, Inc.........................     1/4/95-7/31/96      34.66 
------------------------------------------------------------------------

    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. Individual differences 
between EP and NV may vary from the percentages stated above. The 
Department will issue appraisement instructions directly to Customs.
    Further, the following deposit requirements will be effective upon 
publication of these final results for all shipments of ferrovanadium 
and nitrided vanadium from Russia entered, or withdrawn from warehouse, 
for consumption on or after the publication date as provided by section 
751(a)(1) of the Act: (1) the cash deposit rate for Galt will be the 
rate established in the final results of this administrative review; 
(2), for merchandise exported by manufacturers or exporters not covered 
in this review but covered in the original LTFV investigation and have 
a separate rate, the cash deposit rate will continue to be the most 
recent rate published in the final determination or final results for 
which the manufacturer or exporter received a company-specific rate; 
(3) for Russian manufacturers or exporters not covered in the LTFV 
investigation, the cash deposit rate will continue to be the Russia-
wide rate of 108.00 percent; and (4) the cash deposit rate for non-
Russian exporters of subject merchandise from Russia who were not 
covered in the LTFV investigation or in this administrative review, 
will be the rate applicable to the Russian supplier of that exporter. 
These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.

Notification to Interested Parties

    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26(b) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entries during these review periods. Failure to comply with 
this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification 
of the return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and published in 
accordance with section 777(i).

    Dated: December 5, 1997.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-32631 Filed 12-12-97; 8:45 am]
BILLING CODE 3510-DS-P