[Federal Register Volume 66, Number 83 (Monday, April 30, 2001)]
[Notices]
[Pages 21314-21319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10684]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-864]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Pure Magnesium in 
Granular Form From the People's Republic of China

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

EFFECTIVE DATE: April 30, 2001.

FOR FURTHER INFORMATION CONTACT: James Nunno or Christopher 
Priddy, AD/CVD Enforcement Group I, Office 2, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-0783 or (202) 482-1130, respectively.

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 Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to 19 CFR part 351 (2000).

Preliminary Determination

    We preliminarily determine that pure magnesium in granular form 
(granular pure magnesium) from the People's Republic of China (PRC) is 
being, or is likely to be, sold in the United States at less than fair 
value (LTFV), as provided in section 733 of the Act. The estimated 
margins of sales at LTFV are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    Since the initiation of this investigation (Initiation of 
Antidumping Duty Investigations: Pure Magnesium from Israel, the 
Russian Federation, and the People's Republic of China, 65 FR 68121 
(Nov. 14, 2000)) (Notice of Initiation), the following events 
have occurred:
    On December 1, 2000, the United States International Trade 
Commission (ITC) issued an affirmative preliminary injury determination 
in this case (see ITC Investigation No. 731-TA-895-897).
    Also on December 1, 2000, the petitioners in this case (i.e., 
the Magnesium Corporation of America (Magcorp) and the United Steel 
Workers of America, Locals 482 and 8319) requested that the Department 
modify the scope of this investigation to exclude certain magnesium 
products that are prepared solely for use as a desulfurizer in steel-
making from the scope of the investigation. On December 4, 2000, we 
received comments on the scope of the investigation from ESM Group, 
Inc. (ESM), a U.S. manufacturer of magnesium powder and desulfurizing 
reagents. In its submission, ESM requested that the Department exclude 
from the scope: (1) Magnesium-based reagents, in accordance with the 
petitioners' intention not to capture such products; and (2) pure 
magnesium in granular form, because it is a separate class or kind of 
merchandise from magnesium ingots. For further discussion, see the 
``Scope of Investigation'' and ``Comments on Scope'' sections of the 
notice, below.
    On December 11, 2000, the Department issued an antidumping 
questionnaire to the Ministry of Foreign Trade and Economic Cooperation 
(MOFTEC) and requested that MOFTEC forward the questionnaire to all 
companies which manufactured and/or exported the subject merchandise 
during the period of investigation (POI). We also sent courtesy copies 
of the antidumping duty questionnaire to the China Chamber of Commerce 
of Metals, Minerals, and Chemicals Importers and Exporters, and to each 
of the companies identified in the petition as possible exporters/
producers of the subject merchandise during the POI. The letters 
provided to MOFTEC and those companies identified in the petition as 
producers and/or exporters of pure magnesium provided deadlines for 
responses to the different sections of the questionnaire.
    On January 9, 2001, the Department received a section A 
questionnaire response from Minmetals Precious & Rare Minerals Import 
and Export (Minmetals/CNNMIT).\1\ On January 23, 2001, the Department 
received section C and D questionnaire responses from Minmetals/CNNMIT 
and its suppliers, Taiyuan Shi Geng Yang Enterprise Company, Ltd. 
(Taiyuan) and Wealth (HEBI) Co., Ltd. (HEBI). We issued supplemental 
questionnaires to Minmetals/CNNMIT, Taiyuan, and HEBI and received 
responses to these supplemental questionnaires in February and March 
2001.
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    \1\ As of February 15, 2001, Minerals Precious & Rare Minerals 
Import and Export changed the name of its company to China National 
Nonferrous Metals Industry Trading Group Corp.
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    On January 19, 2001, the Department invited interested parties to 
comment on surrogate country selection and to provide publicly 
available information for valuing the factors of production. We 
received responses from both the petitioners and Minmetals/CNNMIT on 
February 13, 2001. The petitioners and Minmetals/CNNMIT filed rebuttal 
comments on surrogate values in February and March 2001.
    On March 1, 2001, pursuant to 19 CFR 351.205(e), the petitioners 
made a timely request to postpone the preliminary determination. We 
granted this request and, on March 6, 2001, postponed the preliminary 
determination until no later than April 23, 2001. See Notice of 
Postponement of Preliminary Determinations of Sales at Less Than Fair 
Value: Pure Magnesium From Israel, the Russian Federation, and the 
People's Republic of China and Alignment of Final Countervailing Duty 
Determination With Final Antidumping Duty Determinations: Pure 
Magnesium From Israel, 66 FR 14546, 14547 (Mar. 13, 2001).

Postponement of the Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    On April 12, 2001, Minmetals/CNNMIT requested that, in the event of

[[Page 21315]]

an affirmative preliminary determination in this investigation, the 
Department postpone its final determination until 135 days after the 
publication of the preliminary determination. Minmetals/CNNMIT also 
included a request to extend the provisional measures to not more than 
six months. Accordingly, since we have made an affirmative preliminary 
determination, we have postponed the final determination until not 
later than 135 days after the date of the publication of the 
preliminary determination.

Scope of Investigation

    There is an existing antidumping duty order on pure magnesium from 
the PRC. See Notice of Antidumping Duty Orders: Pure Magnesium From 
the People's Republic of China, the Russian Federation and Ukraine; 
Notice of Amended Final Determination of Sales at Less Than Fair Value: 
Antidumping Duty Investigation of Pure Magnesium From the Russian 
Federation, 60 FR 25691 (May 12, 1995). The scope of this 
investigation excludes pure magnesium that is already covered by the 
existing order, and classifiable under 8104.11.00 and 8104.19.00 of the 
Harmonized Tariff Schedule of the United States (HTSUS).
    The scope of this investigation includes imports of pure magnesium 
products, regardless of chemistry, including, without limitation, 
raspings, granules, turnings, chips, powder, and briquettes, except as 
noted above.
    Pure magnesium includes: (1) Products that contain at least 99.95 
percent primary magnesium, by weight (generally referred to as ``ultra-
pure'' magnesium); (2) products that contain less than 99.95 percent 
but not less than 99.8 percent pure magnesium, by weight (generally 
referred to as ``pure'' magnesium); (3) chemical combinations of pure 
magnesium and other material(s) in which the pure magnesium content is 
50 percent or greater, but less than 99.8 percent, by weight, and that 
do not conform to an ``ASTM Specification for Magnesium Alloy'' \2\ 
(generally referred to as ``off-specification pure'' magnesium); and 
(4) physical mixtures of pure magnesium and other material(s) in which 
the pure magnesium content is 50 percent or greater, but less than 99.8 
percent, by weight, except that mixtures containing 90 percent or less 
pure magnesium, by weight, when mixed with lime, calcium metal, calcium 
silicon, calcium carbide, calcium carbonate, carbon slag coagulants, 
and/or fluorspar, are excluded.
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    \2\ The meaning of this term is the same as that used by the 
American Society for Testing and Materials in its Annual Book of 
ASTM Standards: Volume 01.02 Aluminum and Magnesium Alloys.
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    The merchandise subject to this investigation is classifiable 
under 8104.30.00 of the HTSUS. Although the HTSUS subheading is 
provided for convenience and customs purposes, the written description 
of the merchandise under investigation is dispositive.

Comments on Scope

    In accordance with our regulations, we set aside a period of time 
for parties to raise issues regarding product coverage and encouraged 
all parties to submit such comments within 20 calendar days of 
publication of the Notice of Initiation. See Notice of Initiation, 
65 FR at 68123. On December 1, 2000, the petitioners requested that 
the Department clarify that the scope of this investigation excludes 
finished mixtures containing pure magnesium and/or off-specification 
pure magnesium prepared solely for use as a desulfurizer in steel-
making, unless such mixtures contain only minimal amounts of non-
magnesium materials in order to circumvent an antidumping order. On 
December 4, 2000, ESM submitted a letter supporting the petitioners' 
position that magnesium-based reagents should not be included in the 
scope of the Department's investigation. On January 30, 2001, the 
petitioners submitted proposed language to further clarify their intent 
with respect to the scope of this investigation. Based on this 
submission, we have revised the scope to exclude reagent magnesium.
    In its December 4 submission, ESM also argued that pure magnesium 
ingot and granular magnesium constitute separate classes or kinds of 
merchandise and that the Department should exclude granular magnesium 
from the scope of the investigation. However, we note that the scope of 
the investigation includes only granular magnesium. As a consequence, 
ESM's comments provide no basis for altering the scope.
    On April 10, 2001, Rossborough Manufacturing Co., L.P., requested 
that the Department amend the scope of this investigation to exclude 
certain additional reagent mixtures and imports of granular magnesium 
used for making reagent mixtures. Rossborough's submission was filed 
too late to be given proper consideration for purposes of the 
preliminary determination, but we will consider these issues for the 
final determination.

Period of Investigation

    Pursuant to 19 CFR 351.204(b)(1), the POI for an investigation 
involving merchandise from a non-market economy is the two most recent 
fiscal quarters prior to the month of the filing of the petition 
(i.e., October 2000). Therefore, in this case, the POI is April 
1, 2000, through September 30, 2000.

Nonmarket Economy Country Status

    The Department has treated the PRC as a nonmarket economy (NME) 
country in all past antidumping investigations. See, e.g., Final 
Determination of Sales at Less Than Fair Value: Certain Preserved 
Mushrooms from the People's Republic of China, 63 FR 72255, 72256 
(Dec. 31, 1998) (Mushrooms). A designation as a NME remains in effect 
until it is revoked by the Department. See section 771(18)(C) 
of the Act.
    When the Department is investigating imports from a NME country, 
section 773(c)(1) of the Act directs us to base normal value (NV) on 
the NME producer's factors of production, valued in a comparable market 
economy that is a significant producer of comparable merchandise. The 
sources of individual factor prices are discussed under the ``Normal 
Value'' section of the notice, below.
    No party in this investigation has requested a revocation of the 
PRC's NME status. We have, therefore, preliminarily continued to treat 
the PRC as a NME.

Separate Rates

    Minmetals/CNNMIT is owned by ``the whole people'' and has provided 
the separate rates information in its section A response. Minmetals/
CNNMIT has stated that there is no element of government ownership or 
control and has requested a separate company-specific rate.
    As stated in Notice of Final Determination of Sales at Less 
Than Fair Value: Silicon Carbide from the People's Republic of China, 
59 FR 22585, 25586 (May 2, 1994) (Silicon Carbide) and 
Notice of Final Determination of Sales at Less Than Fair Value: 
Furfuryl Alcohol from the People's Republic of China, 60 FR 22544, 
25545 (May 8, 1995) (Furfuryl Alcohol), ownership of the 
company by ``all the people'' does not require the application of a 
single rate. Accordingly, Minmetals/CNNMIT is eligible for 
consideration of a separate rate.
    The Department's separate rate test is not concerned, in general, 
with macroeconomic/border-type controls (e.g., export licenses, 
quotas, and minimum export prices), particularly if these controls are 
imposed to prevent dumping. The test focuses, rather, on controls over 
the investment, pricing, and output decision-making process at the 
individual firm level. See Certain

[[Page 21316]]

Cut-to-Length Carbon Steel Plate from Ukraine: Final Determination 
of Sales at Less than Fair Value, 62 FR 61754, 61757 (Nov. 19, 1997); 
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, 
from the People's Republic of China: Final Results of Antidumping Duty 
Administrative Review, 62 FR 61276, 61279 (Nov. 17, 1997); and 
Honey from the People's Republic of China: Preliminary 
Determination of Sales at Less than Fair Value, 60 FR 14725, 14726 
(Mar. 20, 1995).
    To establish whether a firm is sufficiently independent from 
government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under a test arising out of the 
Final Determination of Sales at Less Than Fair Value: Sparklers 
from the People's Republic of China, 56 FR 20588, 20589 (May 6, 
1991), as modified by Silicon Carbide. Under the separate rates 
criteria, the Department assigns separate rates in NME cases only if 
the respondents can demonstrate the absence of both de jure and 
de facto governmental control over export activities. See 
Silicon Carbide and Furfuryl Alcohol.
1. Absence of De Jure Control
    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies.
    Minmetals/CNNMIT has placed on the record a number of documents to 
demonstrate absence of de jure control, including the ``Law of the 
People's Republic of China on Industrial Enterprises Owned By the Whole 
People,'' and the 1992 regulations that supplemented it, ``Provisions 
on Changing the Systems of Business Operations for State Owned 
Enterprises.''
    In prior cases, the Department has analyzed these laws and found 
that they establish an absence of de jure control. See, e.g., 
Notice of Preliminary Determination of Sales at Less Than Fair Value 
and Postponement of Final Determination: Certain Partial-Extension 
Steel Drawer Slides With Rollers From the People's Republic of 
China, 60 FR 29571, 29573 (June 5, 1995); \3\ Notice of Final 
Determination of Sales at Less Than Fair Value: Manganese Metal From 
the People's Republic of China, 60 FR 56045, 56046 (Nov. 6, 1995). 
We have no new information in this proceeding which would cause us to 
reconsider this determination. For the purposes of this investigation 
and in prior cases, the Department has also analyzed the ``Industrial 
Enterprises Law'' and found that this law establishes mechanisms for 
private control of companies which indicate an absence of de jure 
control. See Pure Magnesium from the People's Republic of China: 
Final Results of New Shipper Review, 63 FR 3085, 3086 (Jan. 21, 
1998).
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    \3\ This was unchanged in the final determination. See 
Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Partial-Extension Steel Drawer Slides with Rollers from the 
People's Republic of China, 60 FR 54472, 54474 (Oct. 24, 1995)
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    According to Minmetals/CNNMIT, pure magnesium exports are not 
affected by export licensing provisions or export quotas. Minmetals/
CNNMIT claims to have autonomy in setting the contract prices for sales 
of granular pure magnesium through independent price negotiations with 
its foreign customers without interference from the PRC government. 
Based on the assertions of Minmetals/CNNMIT, we preliminarily determine 
that there is an absence of de jure government control over the pricing 
and marketing decisions of Minmetals/CNNMIT with respect to its 
granular pure magnesium export sales.
2. Absence of De Facto Control
    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. 
See Mushrooms, 63 FR at 72257. Therefore, the Department has 
determined that an analysis of de facto control is critical in 
determining whether respondents are, in fact, subject to a degree of 
governmental control which would preclude the Department from assigning 
separate rates.
    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (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 its 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 Id.
    Minmetals/CNNMIT has asserted the following: (1) It establishes 
its own export prices; (2) it negotiates contracts without guidance 
from any governmental entities or organizations; (3) it makes its own 
personnel decisions; and (4) it retains the proceeds of its export 
sales, uses profits according to its business needs, and has the 
authority to sell its assets and to obtain loans. Additionally, 
Minmetals/CNNMIT's questionnaire responses indicate that it does not 
coordinate with other exporters in setting prices or in determining 
which companies will sell to which markets. This information supports a 
preliminary finding that there is an absence of de facto governmental 
control of the export functions of these companies. Consequently, we 
preliminarily determine that Minmetals/CNNMIT has met the criteria for 
the application of separate rates.

PRC-Wide Rate and Use of Facts Otherwise Available

    As in all NME cases, the Department implements a policy whereby 
there is a rebuttable presumption that all exporters or producers 
located in the NME comprise a single exporter under common government 
control, the ``NME entity.'' The Department assigns a single NME rate 
to the NME entity unless an exporter can demonstrate eligibility for a 
separate rate.
    Information on the record of this investigation indicates that 
there are numerous producers/exporters of the subject merchandise in 
the PRC. As noted in the ``Case History'' section above, all exporters 
were given the opportunity to respond to the Department's 
questionnaire. Based upon our knowledge of PRC exporters and the fact 
that U.S. import statistics show that responding companies did not 
account for all imports into the United States from the PRC, we have 
preliminarily determined that PRC exporters of granular pure magnesium 
failed to respond to our questionnaire.
    Section 776(a)(2) of the Act provides that if an interested party 
or any other person (A) withholds information that has been requested 
by the administering authority; (B) fails to provide such information 
by the deadlines for the submission of the information or in the form 
and manner requested, subject to subsections (c)(1) and (e) of section 
782 of the Act; (C) significantly impedes a proceeding under this 
title; or (D) provides such information but the information cannot be 
verified as provided in section 782(i) of the Act, the

[[Page 21317]]

administering authority shall, subject to section 782(d) of the Act, 
use the facts otherwise available in reaching the applicable 
determination under this title.
    Section 776(b) of the Act further provides that adverse inferences 
may be used when a party has failed to cooperate by not acting to the 
best of its ability to comply with a request for information. The 
producers/exporters that decided not to respond to the Department's 
questionnaire failed to act to the best of their ability in this 
investigation. Absent a response, we must presume government control of 
these companies. See, e.g., Notice of Final Determination of Sales 
at Less Than Fair Value: Bicycles from the People's Republic of 
China, 61 FR 19026, 19028 (Apr. 30, 1996); Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Flat-Rolled Carbon-Quality Steel Products From the Russian 
Federation, 65 FR 5510, 5518 (Feb. 4, 2000). Moreover, the 
Department has determined that, in selecting from among the facts 
otherwise available, an adverse inference is warranted.
    In accordance with our standard practice, as adverse facts 
available, we are assigning as the PRC-wide rate the higher of: (1) The 
highest margin stated in the notice of initiation; or (2) the highest 
margin calculated for any respondent in this investigation. See, 
e.g., Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Cold-Rolled Carbon Quality Steel Products from the People's 
Republic of China, 64 FR 34660 (May 31, 2000) and accompanying 
decision memorandum at Comment 1. In this case, the preliminary 
adverse facts available margin is 305.56 percent, which is the highest 
margin stated in the notice of initiation. See Notice of 
Initiation, 65 FR at 68124.
    Section 776(b) of the Act states that an adverse inference may 
include reliance on information derived from the petition. See 
also SAA at 870. Section 776(c) of the Act provides that, when the 
Department relies on secondary information (such as the petition) in 
using the facts otherwise available, it must, to the extent 
practicable, corroborate that information from independent sources that 
are reasonably at its disposal.
    The SAA clarifies that ``corroborate'' means that the Department 
will satisfy itself that the secondary information to be used has 
probative value. See SAA at 870. The SAA also states that 
independent sources used to corroborate such evidence may include, for 
example, published price lists, official import statistics, and customs 
data, and information obtained from interested parties during the 
particular investigation. See SAA at 870.
    In order to determine the probative value of the margins in the 
petition for use as adverse facts available for purposes of this 
determination, we examined evidence supporting the calculations in the 
petition. In accordance with section 776(c) of the Act, to the extent 
practicable, we examined the key elements of the export price (EP) and 
NV calculations on which the margins in the petitions were based.
    In order to corroborate the petition's EP calculations, we compared 
the prices in the petition for granular pure magnesium to the prices 
submitted by Minmetals/CNNMIT. In order to corroborate the petitioners' 
NV calculation, we compared the petitioners' factor consumption and 
surrogate value data for granular pure magnesium to the data reported 
by Taiyuan and HEBI for the most significant factors--material inputs, 
energy, labor, factory overhead, and selling, general, and 
administrative (SG&A) expenses, and profit--and to the values selected 
for the preliminary determination, as discussed below.
    As discussed in the April 23, 2001, memorandum from the team to the 
file entitled ``Corroboration of Data Contained in the Petition for 
Assigning an Adverse Facts Available Rate,'' we found that the U.S. 
price and factors of production information in the petition to be 
reasonable and of probative value. As a number of the surrogate values 
selected for the preliminary determination differed from those used in 
the petition, notably the values for ferrosilicon, dolomite, 
electricity, and coal, we compared the petition margin calculations to 
the calculations based on the selected surrogate values wherever 
possible and found they were reasonably close. Therefore, we 
preliminarily determine that the petition information continues to have 
probative value. Accordingly, we find that the highest margin stated in 
the notice of initiation, 305.56 percent, is corroborated within the 
meaning of section 776(c) of the Act.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by Minmetals/
CNNMIT for export to or within the United States were made at LTFV, we 
compared the EP to the NV, as described in the ``Export Price,'' and 
``Normal Value'' sections of this notice, below. In accordance with 
section 777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-
average EPs to the NV.

Export Price

    For Minmetals/CNNMIT, we used EP methodology in accordance with 
section 772(a) of the Act because the subject merchandise was sold 
directly to unaffiliated customers in the United States prior to 
importation and constructed export price methodology was not otherwise 
appropriate. We calculated EP based on packed CIF prices to the first 
unaffiliated purchaser in the United States. Where appropriate, we made 
deductions from the starting price for foreign inland freight from the 
plant to the port of export, foreign brokerage and handling, marine 
insurance, and ocean freight. As certain of these movement services 
were provided by NME suppliers, we valued them using Indian rates. For 
further discussion of our use of surrogate data in an NME proceeding, 
as well as selection of India as the appropriate surrogate country, see 
the ``Normal Value'' section of this notice, below.
    For foreign inland freight we used price quotes obtained by the 
Department from Indian truck freight companies in November 1999. These 
price quotes were recently used in the administrative review of 
persulfates from the PRC, and were also used in the investigation of 
bulk aspirin from the PRC. See Persulfates from the People's 
Republic of China: Preliminary Results of Antidumping Duty 
Administrative Review, and Partial Rescission of Administrative Review, 
66 FR 18439, 18441 (Apr. 9, 2001) (Persulfates 1999-2000 
Preliminary Results); Notice of Preliminary Determination of Sales at 
Less Than Fair Value: Bulk Aspirin From the People's Republic of China, 
65 FR 116, 118 (Jan. 3, 2000).
    With respect to foreign brokerage and handling, marine insurance 
and ocean freight, Minmetals/CNNMIT asserted that it used market-
economy suppliers for its shipments of granular pure magnesium. 
However, based on the submitted information, we could not establish 
that the brokerage and handling and marine insurance expenses 
Minmetals/CNNMIT paid reflect prices set by market-economy carriers. 
Specifically, we found that Minmetals/CNNMIT was unable to demonstrate 
that its brokerage and handling expenses were invoiced in a market-
economy currency. Furthermore, marine insurance was paid to a PRC 
company, not a market-economy supplier. Regarding ocean freight, while 
Minmetals/CNNMIT did provide an invoice from a market-economy supplier 
in a market-economy currency, it was

[[Page 21318]]

unable to demonstrate that it paid for this expense in such 
currency.\4\ For further discussion, see the April 23, 2001, 
concurrence memorandum from the team. Therefore, in accordance with our 
practice, we based these charges on surrogate values. See, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Non-Frozen Apple Juice Concentrate from the People's Republic of China, 
65 FR 19873 (Apr. 13, 2000) and accompanying decision memorandum at 
Comment 3; and Sebacic Acid From the People's Republic of 
China: Final Results of Antidumping Duty Administrative Review, 65 
FR 49537 (Aug. 14, 2000) (Sebacic Acid 1998-1999 Final Results) 
and accompanying decision memorandum at Comment 8.
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    \4\ Nonetheless, we have used this information as a 
surrogate value because it is a price set by a market-economy 
supplier in U.S. dollars for transporting the subject merchandise 
during the POI. As such, we find that it represents a better 
surrogate value than the other surrogate information on the record 
of this case (i.e., the 1996 data obtained from the Federal 
Maritime Commission found in the IA website and used in the 
petition).
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    Accordingly, we valued foreign brokerage and handling expenses 
using public information reported in the new shipper review of 
stainless steel wire rod from India. See Certain Stainless Steel 
Wire Rod From India; Preliminary Results of Antidumping Duty 
Administrative and New Shipper Reviews, 63 FR 48184, 48185 (Sept. 
9, 1998); see also the ``Preliminary Determination Factors 
Valuation Memorandum from the Team to the File,'' dated April 23, 2001, 
at page 6 (Factors Memorandum). For marine insurance we used 
the June 1998 marine insurance data used in Tapered Roller Bearings 
and Parts Thereof, Finished and Unfinished, From the People's Republic 
of China; Preliminary Results of 1998-1999 Administrative Review, 
Partial Rescission of Review, and Notice of Intent To Revoke Order in 
Part, 65 FR 41944, 41948 (July 7, 2000).\5\ For ocean freight we 
used the freight expense reported by the respondent as a surrogate 
value, for the reasons noted above. Where appropriate, we adjusted the 
values to reflect inflation up to the POI using the wholesale price 
indices (WPI) or producer price indices (PPI) published by the 
International Monetary Fund (IMF).
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    \5\ This was unchanged in the final results. See Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From the 
People's Republic of China; Final Results of 1998-1999 
Administrative Review, Partial Rescission of Review, and 
Determination Not To Revoke Order in Part, 66 FR 1953 (Jan. 10, 
2001) (TRBs 1998-1999 Final Results).
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Normal Value

A. Surrogate Country
    Section 773(c)(4) of the Act requires the Department to value the 
NME producer's factors of production, to the extent possible, in one or 
more market economy countries that: (1) Are at a level of economic 
development comparable to that of the NME country, and (2) are 
significant producers of comparable merchandise. The Department has 
determined that India, Pakistan, Indonesia, Sri Lanka, and the 
Philippines are countries comparable to the PRC in terms of overall 
economic development. See Memorandum from Jeffrey May to Louis 
Apple, dated January 18, 2001.
    According to the available information on the record, we have 
determined that both India and Indonesia meet the statutory 
requirements for an appropriate surrogate country for the PRC. For 
purposes of the preliminary determination, we have selected India as 
the surrogate country, based on the quality and contemporaneity of the 
currently available data. Accordingly, we have calculated NV using 
Indian values for the PRC producers' factors of production. We have 
obtained and relied upon publicly available information wherever 
possible.
B. Factors of Production
    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by Minmetals/CNNMIT for the 
POI. To calculate NV, the reported per-unit factor quantities were 
multiplied by publicly available Indian surrogate values.
    For purposes of calculating NV, we valued PRC factors of 
production, in accordance with section 773(c)(1) of the Act. Factors of 
production include, but are not limited to: (1) Hours of labor 
required; (2) quantities of raw materials employed; (3) amounts of 
energy and other utilities consumed; and (4) representative capital 
cost, including depreciation. In examining surrogate values, we 
selected, where possible, the publicly available value which was: (1) 
An average non-export value; (2) representative of a range of prices 
within the POI or most contemporaneous with the POI; (3) product-
specific; and (4) tax-exclusive. For a more detailed explanation of the 
methodology used in calculating various surrogate values, see the 
Factors Memorandum. In accordance with this methodology, we 
valued the factors of production as follows:
    In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the data. As appropriate, we 
adjusted input prices by including freight costs to make them delivered 
prices. We added to Indian surrogate values surrogate freight costs 
using the shorter of the reported distance from the domestic supplier 
to the factory or the distance from the nearest seaport to the factory. 
This adjustment is in accordance with the Court of Appeals for the 
Federal Circuit's decision in Sigma Corporation v. United 
States, 117 F. 3d 1401, 1407-08 (Fed. Cir. 1997). For foreign 
inland freight on inputs we used price quotes obtained by the 
Department from Indian truck freight companies in November 1999. As 
noted above, these price quotes were used in Persulfates 1999-2000 
Preliminary Results, and were also used in the investigation of 
bulk aspirin from the PRC. With regard to rail freight, we based our 
calculation on information from the Indian Railway Conference 
Association. Where appropriate, we adjusted the values to reflect 
inflation up to the POI using the WPI published by the IMF.
    We valued fluorite powder using 1998 Indian import statistics as 
published by the United Nations. We valued ferrosilicon and dolomite 
using price quotes obtained by Minmetals/CNNMIT from Tata International 
Limited, an Indian producer of ferro-alloys. Where appropriate, we 
adjusted the values to reflect inflation up to the POI using the WPI 
published by the IMF.
    We valued labor based on a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3).
    To value coal, we relied on import prices contained in the March 
1999 issue of Monthly Statistics of the Foreign Trade of India. 
These data were used in the antidumping duty administrative review 
of persulfates from the PRC. See Persulfates 1999-2000 Preliminary 
Results, 66 FR at 18442. We adjusted the values to reflect 
inflation up to the POI using the WPI published by the IMF. For 
electricity, we derived a surrogate value based on 1998/1999 
electricity price data published by Tata Energy Research Institute. 
These data were used in the antidumping duty administrative review of 
manganese metal from the PRC. See Notice of Final Results of 
Antidumping Duty Administrative Review of Manganese Metal from the 
People's Republic of China, 66 FR 15076 (Mar. 15, 2001) and 
accompanying decision memorandum at Comment 10. See also 
Persulfates 1999-2000 Preliminary Results, 66 FR at 18442. We 
adjusted the electricity values to reflect inflation up

[[Page 21319]]

to the POI using the electricity-specific price index published by the 
Reserve Bank of India.
    We valued grinding services provided by a subcontractor using the 
factors of production reported for this company, because we were unable 
to obtain a surrogate value for its services. Specifically, we valued 
the labor and electricity factors of production using the same sources 
noted above. In addition, we added amounts for factory overhead, 
depreciation, SG&A expenses, and interest expenses derived from the 
financial statements of Southern Magnesium and Chemicals Ltd., an 
Indian magnesium metal producer. This information was supplied by the 
petitioners in the petition. Because these financial statements showed 
a loss, we calculated a profit ratio using the 1998/1999 financial 
aggregates and ratios data published by the Economic Intelligence 
Service and the Centre for Monitoring Indian Economy. This information 
was supplied by Minmetals/CNNMIT in its February 13, 2001, surrogate 
value submission. For further discussion, see the April 23, 2001, 
concurrence memorandum from the team.
    To value plastic bags, plastic wrapper, and wooden pallets 
(i.e., the packing materials reported by the respondent), we 
used import values from the Monthly Statistics.
    To determine factory overhead, depreciation, SG&A expenses, and 
interest expenses, and profit for the finished product, we relied on 
rates derived from the financial statements noted above.

Verification

    As provided in section 782(i) of the Act, we intend to verify all 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the Customs Service to suspend liquidation of any entries of pure 
magnesium from PRC entered, or withdrawn from warehouse, for 
consumption on or after the date on which this notice is published in 
the Federal Register. We will instruct the Customs Service to 
require a cash deposit or the posting of a bond equal to the weighted-
average amount by which the NV exceeds the EP, as indicated in the 
chart below. These suspension of liquidation instructions will remain 
in effect until further notice.

------------------------------------------------------------------------
                                                                 Percent
                     Manufacturer/exporter                       margin
------------------------------------------------------------------------
Minmetals Precious & Rare Minerals Import and Export/China          8.76
 National Nonferrous Metals Industry Trading Group Corp.......
PRC-wide......................................................    305.56
------------------------------------------------------------------------

    The PRC-wide rate applies to all entries of the subject merchandise 
except for entries from exporters/producers that are identified 
individually above.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding within five days of the publication of this notice. 
See 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the verification reports. Rebuttal 
briefs must be filed within five days after the deadline for submission 
of case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW, Washington, DC 20230. Parties should confirm by telephone 
the time, date, and place of the hearing 48 hours before the scheduled 
time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs. If 
this investigation proceeds normally, we will make our final 
determination by 135 days after the publication of this notice in the 
Federal Register.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act. Effective January 20, 2001, 
Bernard T. Carreau is fulfilling the duties of the Assistant Secretary 
for Import Administration.

Bernard T. Carreau,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-10684 Filed 4-27-01; 8:45 am]
BILLING CODE 3510-DS-P