[Federal Register Volume 69, Number 191 (Monday, October 4, 2004)]
[Notices]
[Pages 59187-59197]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2478]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-896]


Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of the Final Determination: Magnesium Metal From the 
People's Republic of China

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

EFFECTIVE DATE: October 4, 2004.

FOR FURTHER INFORMATION CONTACT: Lilit Astvatsatrian or Laurel 
LaCivita, Import Administration, International Trade

[[Page 59188]]

Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
6412 or 482-4243.

Preliminary Determination

    We preliminarily determine that magnesium metal 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 Tariff Act of 1930, as amended (``the Act''). The 
estimated margins of sales at LTFV are shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    On February 27, 2004, the Department of Commerce (``Department'') 
received a petition on imports of magnesium metal from the PRC, filed 
in proper form by the U.S. Magnesium Corporation LLC, United 
Steelworkers of America, Local 8319, and Glass, Molders, Pottery, 
Plastics & Allied Workers International, Local 374 (collectively, 
``Petitioners'') on behalf of the domestic industry and workers 
producing magnesium metal. See Petition for the Imposition of 
Antidumping Duties: Magnesium Metal from the People's Republic of 
China, dated February 27, 2004 (``the Petition''). This investigation 
was initiated on March 25, 2004. See Initiation of Antidumping Duty 
Investigation: Magnesium Metal from the People's Republic of China, 69 
FR 15293 (March 25, 2004) (``Notice of Initiation'').
    On April 16, 2004, and April 26, 2004, the Department requested 
quantity and value (``Q&V'') information from a total of one hundred 
and forty-two producers of magnesium metal in the PRC which were 
identified in the petition and for which the Department was able to 
locate contact information. On April 16, 2004, the Department also sent 
the Government of the PRC a letter requesting assistance in locating 
all known Chinese producers/exporters of magnesium metal who exported 
magnesium metal to the United States during the period of investigation 
(``POI''), July 1, 2003, through December 31, 2003.
    On April 26, 2004, the Department received Q&V responses from two 
Chinese producers/exporters of magnesium metal, the RSM companies 
(``RSM'') and Tianjin Magnesium International Co., Ltd. (``Tianjin''). 
The Government of the PRC did not respond to the Department's April 16, 
2004, letter requesting assistance in identifying producers and 
exporters of the subject merchandise in the PRC.
    On April 30, 2004, the Department determined that India, Pakistan, 
Indonesia, Sri Lanka, the Philippines, Morocco, and Egypt are countries 
comparable to the PRC in terms of economic development. See Memorandum 
from Ron Lorentzen, Acting Director, Office of Policy to Robert 
Bolling, Program Manager, Group III, Office 9: Antidumping Duty 
Investigation of Magnesium Metal from the People's Republic of China 
(PRC): Request for a List of Surrogate Countries, dated April 30, 2004 
(``Office of Policy Surrogate Countries Memorandum'').
    On May 6, 2004, we issued Sections A, C, D, and E of our 
questionnaire to Tianjin and RSM, the only two companies that responded 
to our request for Q&V information. In addition, on May 6, 2004, we 
issued a Section A, C, D, and E questionnaire to the Government of the 
PRC through the Ministry of Commerce and the Chinese Embassy in 
Washington, DC.
    On May 17, 2004, the United States International Trade Commission 
(``ITC'') issued its affirmative preliminary determination that there 
is a reasonable indication that an industry in the United States is 
materially injured by reason of imports from China and Russia of pure 
magnesium and magnesium alloy. The ITC's determination was published in 
the Federal Register on May 21, 2004. See Investigation Nos. 731-TA-
1071-1072 (Preliminary), Magnesium from China and Russia, 69 FR 29329 
(May 21, 2004).
    On May 19, 2004, the Department issued its respondent selection 
memorandum, officially selecting RSM and Tianjin as the two mandatory 
respondents in this investigation. See Memorandum from Laurel LaCivita, 
Senior Case Analyst, Office IX, to Edward Yang, Office Director, Office 
IX, Antidumping Duty Investigation of Magnesium Metal from the People's 
Republic of China: Selection of Respondents for the Antidumping Duty 
Investigation of Magnesium Metal from the People's Republic of China, 
dated May 19, 2004 (``Respondent Selection Memorandum'').
    On May 10, 2004, the Department requested that the parties submit 
comments on surrogate country selection. On May 24, 2004, we received 
comments regarding our selection of a surrogate country from the 
Petitioners. On June 2, 2004, we received comments regarding our 
selection of a surrogate country from RSM and Tianjin. Petitioners 
argued that India is the appropriate surrogate country for this 
investigation because India is at a comparable level of economic 
development with the PRC based on gross national income (``GNI'') and 
contains the only producer of primary magnesium located in any of the 
countries identified by the Department as surrogate countries.
    RSM and Tianjin provided information identifying Kazakhstan, 
Russia, and Brazil as potential surrogate countries in this 
investigation and contended that, according to the World Bank, 
Kazakhstan, Russia, and Brazil each have a per-capita GNI comparable to 
that of the PRC. RSM and Tianjin stated further that, according to the 
World Bank, neither India nor any of the other countries named in the 
Office of Policy Surrogate Countries Memorandum is at a stage of 
economic development comparable to the PRC.
    We received rebuttal comments concerning the selection of a 
surrogate country from Petitioners and respondents on June 14, 2004, 
June 28, 2004, and July 9, 2004.
    We provided a one-week extension until June 1, 2004 to all 
interested parties that requested an extension for submitting a 
response to our Section A questionnaire. Additionally, we provided an 
extension until June 16, 2004, to all mandatory respondents to respond 
to sections C, D, and E of the questionnaire. For a detailed discussion 
on specific mandatory respondent extensions, please see the company-
specific section for each mandatory respondent below.
    On June 3, 2004, we received a Section A questionnaire response 
from Beijing Guangling Jinghua Science & Technology Co., Ltd. 
(``Guangling''), which requested a separate rate.
    On June 2, 2004, and June 4, 2004, we received a request from 
Petitioners, RSM, and Tianjin, respectively, to extend the deadline for 
supplying surrogate-value information until two weeks after the 
submission of Section D data. On July 6, 2004, we extended the time 
period for interested parties to provide surrogate values for factors 
of production until July 12, 2004. On July 8, 2004, RSM and Tianjin 
requested an extension until two weeks after the Department decided the 
surrogate country to submit their surrogate-value information.
    On June 17, 2004, RSM requested that the Department excuse it from 
reporting certain U.S. further-manufacturing activities. On June 21, 
2004, we informed RSM that we did not have sufficient information on 
the record to exempt it from reporting sales and cost for merchandise 
further manufactured in the United States and requested RSM to report 
the further-manufactured

[[Page 59189]]

downstream sales of its affiliate by June 28, 2004. On June 22, 2004, 
RSM requested additional guidance concerning the information the 
Department required it to provide in order to grant RSM an exemption 
from responding to the Section E questionnaire (for a detailed 
discussion of this issue, please see the RSM company-specific section 
below).
    On June 28, 2004, Petitioners made a timely request pursuant to 19 
CFR 351.205(e) for a fifty-day postponement of the preliminary 
determination or until September 24, 2004. On July 21, 2004, the 
Department published a postponement of the preliminary antidumping duty 
determination on magnesium metal from the PRC. See Notice of 
Postponement of the Preliminary Determinations in Antidumping Duty 
Investigations of Magnesium Metal from the People's Republic of China 
and the Russian Federation 69 FR 43561 (July 21, 2004).
    On August 3, 2004, the Department determined that India was the 
appropriate surrogate country to use in this investigation. See 
Memorandum to Laurie Parkhill, Office Director, from Laurel LaCivita 
and Lilit Astvatsatrian, Case Analysts, through Robert Bolling, Program 
Manager: Antidumping Duty Investigation on Magnesium Metal from the 
People's Republic of China, dated August 3, 2004 (``Surrogate-Country 
Selection Memorandum''). We received comments regarding our selection 
of India as the surrogate country from interested parties (for a 
detailed discussion of the comments regarding the surrogate country, 
please see the ``Surrogate Country'' section below). On August 3, 2004, 
we informed Petitioners, RSM, and Tianjin that the due date for 
submitting surrogate-value information was August 10, 2004. On August 
6, 2004, RSM and Tianjin requested that the Department extend the 
deadline for submitting surrogate-value information until September 1, 
2004. On August 9, 2004, we extended the deadline for submitting 
surrogate-value information until August 17, 2004. We then extended the 
deadline for submitting surrogate-value information until August 19, 
2004. On August 19, 2004, Petitioners, RSM and Tianjin submitted 
surrogate-value comments. Petitioners filed rebuttal comments 
concerning RSM and Tianjin Magnesium's August 19, 2004, submission on 
August 30, 2004. RSM and Tianjin submitted additional, unsolicited 
surrogate-value information on September 10, 2004, and September 13, 
2004. On September 10, 2004, and September 14, 2004, Petitioners 
objected to RSM's and Tianjin's September 10, 2004, and September 13, 
2004, submissions of surrogate-value information, and requested that 
the Department withdraw them from the record. On September 16, 2004, we 
responded that we would not use RSM's and Tianjin's surrogate-value 
submissions of September 10, 2004, and September 13, 2004, for the 
preliminary determination of this investigation, but would consider the 
information for the final determination. See Memorandum to The File 
from Laurel LaCivita Senior Case Analyst, Through Robert Bolling, 
Program Manager, AD/CVD Enforcement, Magnesium Metal from the People's 
Republic of China: Untimely Submissions of Surrogate Value Information, 
dated September 16, 2004.

Company-Specific Chronology

    As described above, the Department staggered its issuance of 
sections of the antidumping questionnaire to the mandatory respondents. 
Upon receipt of the various responses, the Petitioners provided 
comments and the Department issued supplemental questionnaires. The 
chronology of this stage of the investigation varies by respondent. 
Therefore, the Department has separated by company the following 
discussion of its information-gathering process after issuance of the 
questionnaire.

 RSM

    RSM submitted its Section A questionnaire response on June 4, 2004. 
On June 17, 2004, RSM requested that the Department excuse it from 
reporting certain further-manufacturing activities in the United 
States, arguing that the value added in the United States ``exceeds 
substantially'' the value of the imported subject merchandise and that 
there were sufficient sales to unaffiliated U.S. customers upon which 
to conduct a constructed-export-price (``CEP'') analysis. On June 21, 
2004, the Department responded that it did not have sufficient 
information to exempt RSM from reporting its sales of further-
manufactured merchandise in the United States. On June 22, 2004, RSM 
requested further guidance concerning the types of information that the 
Department needed to grant its request. Petitioners submitted comments 
concerning RSM's June 22, 2004, request on June 23, 2004, claiming that 
RSM did not explain fully its affiliations with Toyota Tsusho America, 
Inc. (``TAI''), its affiliated reseller in the United States, and its 
further-manufacturer in the United States. Petitioners claimed further 
that RSM applied an incorrect methodology to determine the value added 
in the United States. On June 25, 2004, RSM responded that it need only 
address the value-added arguments in Petitioners' June 23, 2004, 
submission. RSM submitted its Section C and D questionnaire responses 
on June 21, 2004. On June 25, 2004, Petitioners submitted comments on 
RSM's Section A response. RSM submitted its Section E questionnaire 
response on June 29, 2004. Petitioners submitted deficiency comments on 
RSM's Section C and D questionnaire responses on July 2, 2004, and on 
RSM's Section E questionnaire response on July 13, 2004. The Department 
issued a supplemental questionnaire concerning Sections A-E of RSM's 
questionnaire responses on July 23, 2004. RSM submitted a supplemental 
section A through E questionnaire response on August 20, 2004. The 
Department issued a second supplemental questionnaire covering RSM on 
September 2, 2004. RSM provided its second supplemental questionnaire 
response on September 15, 2004. On September 21, 2004, the Department 
provided a memorandum to the file explaining that, although it was not 
rejecting RSM's September 15, 2004, submission, it would not be able to 
use the information provided in its second supplemental questionnaire 
response for the preliminary determination. See Memorandum from Laurel 
LaCivita, Senior Case Analyst, to the File, through Robert Bolling, 
Program Manager, AD/CVD Enforcement, Magnesium Metal from the People's 
Republic of China: The Use of RSM's September 14, 2004 Second 
Supplemental Section A, C & D Questionnaire Response for the 
Preliminary Determination, dated September 20, 2004.

Tianjin

    On June 4, 2004, Tianjin submitted its Section A questionnaire 
response. On June 18, 2004, Tianjin submitted its response to Section C 
of the Department's May 6, 2004, questionnaire. On June 21, 2004, 
Tianjin submitted its response to Section D of the Department's 
questionnaire. On July 2, 2004, Petitioners submitted deficiency 
comments on Tianjin's responses to Sections A, C, and D of the 
questionnaire. On July 23, 2004, the Department issued a supplemental 
Sections A, C, and D questionnaire. On August 13, 2004, Tianjin 
submitted its response to the supplemental Sections A, C, and D 
questionnaire. On August 23, 2004, the Department issued a second 
supplemental Sections A, C, and D questionnaire. On September 2, 2004, 
Tianjin submitted its response to the second supplemental Sections A, 
C, and D questionnaire. On September 3, 2004,

[[Page 59190]]

Tianjin provided corrected versions of certain exhibits included in its 
September 2, 2004, submission. On September 13, 2004, Tianjin submitted 
electronic copies of its supplemental Sections A-D questionnaire 
responses.

 Guangling Jinghua

    Guangling Jinghua submitted its Section A response on June 3, 2004. 
Petitioners provided comments on Guangling Jinghua's Section A response 
on July 8, 2004. The Department issued a supplemental Section A 
questionnaire on August 12, 2004. Guangling provided its supplemental 
Section A response on August 26, 2004.

Postponement of Final Determination

    Section 735(a) of the Act provides that a final determination may 
be postponed until no 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 Petitioners. 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 an extension of the 
provisional measures from a four-month period to not more than six 
months.
    On September 14, 2004, RSM requested that, in the event of an 
affirmative preliminary determination in this investigation, the 
Department postpone its final determination by 60 days until 135 days 
after the publication of the preliminary determination. Accordingly, 
because we have made an affirmative preliminary determination and the 
requesting parties account for a significant proportion of the exports 
of the subject merchandise, we have postponed the final determination 
until no later than 135 days after the date of publication of the 
preliminary determination and are extending the provisional measures 
accordingly.

Period of Investigation

    The period of investigation (``POI'') is July 1, 2003, through 
December 31, 2003. This period corresponds to the two most recent 
fiscal quarters prior to the month of the filing of the petition 
(February 27, 2003). See 19 CFR 351.204(b)(1).

Scope of Investigation

    The products covered by this investigation are primary and 
secondary alloy magnesium metal, regardless of chemistry, raw material 
source, form, shape, or size. Magnesium is a metal or alloy containing 
by weight primarily the element magnesium. Primary magnesium is 
produced by decomposing raw materials into magnesium metal. Secondary 
magnesium is produced by recycling magnesium-based scrap into magnesium 
metal. The magnesium covered by this investigation includes blends of 
primary and secondary magnesium.
    The subject merchandise includes the following alloy magnesium 
metal products made from primary and/or secondary magnesium including, 
without limitation, magnesium cast into ingots, slabs, rounds, billets, 
and other shapes, and magnesium ground, chipped, crushed, or machined 
into raspings, granules, turnings, chips, powder, briquettes, and other 
shapes: products that contain 50 percent or greater, but less than 99.8 
percent, magnesium, by weight, and that have been entered into the 
United States as conforming to an ``ASTM Specification for Magnesium 
Alloy'' \1\ and thus are outside the scope of the existing antidumping 
orders on magnesium from the PRC (generally referred to as ``alloy'' 
magnesium).
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    \1\ 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 scope of this investigation excludes the following merchandise: 
(1) All forms of pure magnesium, including chemical combinations of 
magnesium and other material(s) in which the pure magnesium content is 
50 percent or greater, but less that 99.8 percent, by weight, that do 
not conform to an ``ASTM Specification for Magnesium Alloy'' \2\; (2) 
magnesium that is in liquid or molten form; and (3) mixtures containing 
90 percent or less magnesium in granular or powder form, by weight, and 
one or more of certain non-magnesium granular materials to make 
magnesium-based reagent mixtures, including lime, calcium metal, 
calcium silicon, calcium carbide, calcium carbonate, carbon, slag 
coagulants, fluorspar, nephaline syenite, feldspar, alumina (Al203), 
calcium aluminate, soda ash, hydrocarbons, graphite, coke, silicon, 
rare earth metals/mischmetal, cryolite, silica/fly ash, magnesium 
oxide, periclase, ferroalloys, dolomite lime, and colemanite.\3\
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    \2\ This material is already covered by existing antidumping 
orders. See Antidumping Duty Orders: Pure Magnesium from the 
People's Republic of China, the Russian Federation and Ukraine; 
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); Antidumping Duty Order: Pure 
Magnesium in Granular Form from the People's Republic of China, 66 
FR 57936 (Nov. 19, 2001).
    \3\ This third exclusion for magnesium-based reagent mixtures is 
based on the exclusion for reagent mixtures in the 2000-2001 
investigations of magnesium from the PRC, Israel, and Russia. See 
Final Determination of Sales at Less Than Fair Value: Pure Magnesium 
in Granular Form From the People's Republic of China, 66 FR 49345 
(September 27, 2001); Final Determination of Sales at Less Than Fair 
Value: Pure Magnesium From Israel, 66 FR 49349 (September 27, 2001); 
Final Determination of Sales at Not Less Than Fair Value: Pure 
Magnesium From the Russian Federation, 66 FR 49347 (September 27, 
2001). These mixtures are not magnesium alloys because they are not 
chemically combined in liquid form and cast into the same ingot.
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    The merchandise subject to this investigation is classifiable under 
items 8104.19.00 and 8104.30.00 of the Harmonized Tariff Schedule of 
the United States (``HTSUS''). Although the HTSUS items are provided 
for convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known exporter and producer of the 
subject merchandise. Section 777A(c)(2) of the Act gives the Department 
discretion, when faced with a large number of exporters/producers, to 
limit its examination to a reasonable number of such companies if it is 
not practicable to examine all companies. Where it is not practicable 
to examine all known producers/exporters of subject merchandise, this 
provision permits the Department to investigate either (1) a sample of 
exporters, producers, or types of products that is statistically valid 
based on the information available to the Department at the time of 
selection or (2) exporters/producers accounting for the largest volume 
of the merchandise under investigation that can reasonably be examined. 
Only two of the twenty-four exporters identified in the petition 
responded to the Department's questionnaire. Therefore, the Department 
determined that it has the resources available to investigate all 
responding parties in this investigation and that there is no reason to 
limit the number of respondents to be examined in this investigation 
pursuant to section 777A(c)(2) of the Act. See Respondent Selection 
Memorandum at 3. Consequently, in this investigation, we have examined 
both Tianjin and RSM,

[[Page 59191]]

the only two exporters of subject merchandise who responded to the 
Department's Q&V questionnaire. The two Chinese producers/exporters 
(Tianjin and RSM) accounted for a significant percentage of all exports 
of the subject merchandise from the PRC during the POI and were 
selected as mandatory respondents. See Respondent Selection Memorandum 
at 3.

Non-Market-Economy Country

    For purposes of initiation, the Petitioners submitted LTFV analyses 
for the PRC as a non-market economy. See Notice of Initiation at 15295. 
In every case conducted by the Department involving the PRC, the PRC 
has been treated as an Non-Market-Economy (``NME'') country. In 
accordance with section 771(18)(C)(i) of the Act, any determination 
that a foreign country is an NME country shall remain in effect until 
revoked by the administering authority. See also Tapered Roller 
Bearings and Parts Thereof, Finished and Unfinished, From the People's 
Republic of China: Preliminary Results 2001-2002 Administrative Review 
and Partial Rescission of Review, 68 FR 7500 (February 14, 2003). 
Therefore, we have treated the PRC as an NME country for purposes of 
this preliminary determination.

Surrogate Country

    When the Department is investigating imports from an NME, section 
773(c)(1) of the Act directs it to base normal value (``NV''), in most 
circumstances, on the NME producer's factors of production valued in a 
surrogate market-economy country or countries considered to be 
appropriate by the Department. In accordance with section 773(c)(4) of 
the Act, in valuing the factors of production, the Department shall 
utilize, to the extent possible, the prices or costs of factors of 
production in one or more market-economy countries that are at a level 
of economic development comparable to that of the NME country and are 
significant producers of comparable merchandise. The sources of the 
surrogate values we have used in this investigation are discussed under 
the NV section below.
    The Department determined that India, Pakistan, Indonesia, Sri 
Lanka, the Philippines, Morocco, and Egypt are countries comparable to 
the PRC in terms of economic development. See Office of Policy 
Surrogate Countries Memorandum. Customarily, we select an appropriate 
surrogate country based on the availability and reliability of data 
from the countries.
    The Department received arguments from interested parties on the 
surrogate country. Petitioners argue that India is the appropriate 
surrogate country for this investigation because India is at a 
comparable level of economic development with the PRC based on gross 
national income (``GNI''). Petitioners contend that the Department has 
consistently found that India meets these statutory requirements for a 
surrogate country for the PRC, citing Pure Magnesium and Alloy 
Magnesium at 55425 and 55426 and Pure Magnesium From the People's 
Republic of China: Preliminary Results of Antidumping Duty New Shipper 
Administrative Review, 62 FR 55215, 55217 (October 23, 1997). 
Petitioners argue that India is a significant producer of aluminum, 
which the Department has determined previously to be the product most 
comparable product to magnesium, citing Pure Magnesium and Alloy 
Magnesium From the People's Republic Of China: Final Results of 
Antidumping Duty New Shipper Administrative Review, 63 FR 3085, 3087 
(January 21, 1998) (``Pure Magnesium New Shipper Review'').
    Respondents identified Kazakhstan, Russia, and Brazil as potential 
surrogate countries for the PRC in this investigation. Respondents 
argue that neither India nor the other countries identified in the 
Office of Policy's List of Surrogate Countries produce the subject 
merchandise nor comparable merchandise. Respondents claim further that, 
among the developing countries other than China, only Kazakhstan, 
Russia, and Brazil are significant producers and exporters of magnesium 
and magnesium alloys. See the Selection of a Surrogate Country 
Memorandum dated August 3, 2004, for a complete description of the 
interested parties surrogate-country arguments.
    The Department found that none of the countries on the List of 
Surrogate Countries are significant producers of the subject 
merchandise, magnesium metal. In past cases, the Department has 
determined that aluminum is comparable merchandise to magnesium. See 
Pure Magnesium and Alloy Magnesium at 55425 and 55426 and Pure 
Magnesium From the People's Republic of China: Preliminary Results of 
Antidumping Duty New Shipper Administrative Review, 62 FR 55215, 55217 
(October 23, 1997). The Department also adopted this decision in Pure 
Magnesium From the People's Republic of China: Final Results of 
Antidumping Duty New Shipper Administrative Review, 63 FR 3085, 3088 
(January 21, 1998). In Pure Magnesium and Alloy Magnesium, the 
Department explained that, ``{a{time} lthough the material inputs used 
to produce magnesium and aluminum are different, according to both U.S. 
Bureau of Mines and Department of Commerce experts, both (1) are light 
metals in terms of molecular weight; (2) are electricity-intensive 
products; (3) are produced using an electrolytic process, and (4) share 
some common end uses (e.g., die casting).'' Similarly, in the 1998 new 
shipper review of Pure Magnesium we determined that aluminum 
constituted comparable merchandise in the context of surrogate 
selection for magnesium for the reasons specified in Pure Magnesium and 
Alloy Magnesium, supra.
    Consequently, we have made the following determination about the 
use of India as a surrogate country: (1) It is a significant producer 
of comparable merchandise, aluminum; (2) it is at a similar level of 
economic development pursuant to 733(c)(4) of the Act; and (3) we have 
reliable data from India that we can use to value the factors of 
production. See Selection of a Surrogate Country Memorandum. Thus, we 
have calculated NV using Indian prices when available and appropriate 
to value the factors of production of the magnesium metal producers. We 
have obtained and relied upon publicly available information wherever 
possible. See Memorandum to the File from Laurel LaCivita, Lilit 
Astvatsatrian and Steven Winkates, Case Analysts, through Robert 
Bolling, Program Manager, and Laurie Parkhill, Office Director: 
Magnesium Metal from the People's Republic of China: Factors Valuation 
Memorandum for the Preliminary Determination, dated September 24, 2004 
(``Factor-Valuation Memorandum'').
    In accordance with 19 CFR 351.301(c)(3)(i), for the final 
determination in an antidumping investigation, interested parties may 
submit publicly available information to value the factors of 
production within 40 days after the date of publication of the 
preliminary determination.

Affiliation

    Section 771(33) of the Act states that the Department considers the 
following entities to be affiliated: (A) Members of a family, including 
brothers and sisters (whether by whole or half blood), spouse, 
ancestors, and lineal descendants; (B) Any officer or director of an 
organization and such organization; (C) Partners; (D) Employer and 
employee; (E) Any person directly or indirectly owning, controlling, or 
holding with power to vote, 5 percent or more of the outstanding voting 
stock or shares of any organization and such

[[Page 59192]]

organization; (F) Two or more persons directly or indirectly 
controlling, controlled by, or under common control with, any person; 
and (G) Any person who controls any other person and such other person.
    For purposes of affiliation, section 771(33) of the Act states that 
a person shall be considered to control another person if the person is 
legally or operationally in a position to exercise restraint or 
direction over the other person. In order to find affiliation between 
companies, the Department must find that at least one of the criteria 
listed above is applicable to the respondents.
    The Statement of Administrative Action accompanying the Uruguay 
Round Agreements Act (``SAA''), H.R. Doc. 103-316 (1994), indicates 
that stock ownership is not the only evidentiary factor that the 
Department may consider to exercise restraint or direction to determine 
whether a person is in a position to control and that control may be 
established through corporate or family groupings. See SAA at 838. 
Thus, the statute and the SAA expressly envision affiliation based on 
family shareholdings, consistent with our practice. See e.g., Certain 
Fresh Cut Flowers from Colombia; Final Results of Antidumping Duty 
Administrative Review, 61 FR 42833, 42853 (August 19, 1996), and 
Certain Welded Carbon Steel Pipes and Tubes from Thailand: Final 
Results of Antidumping Duty Administrative Review, 62 FR 53808, 53810 
(October 16, 1997). Moreover, as stated in its final regulations, the 
Department examines issues of affiliation by family groupings closely. 
See Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final 
Results of Antidumping duty Administrative Review, 62 FR 53808, 53810 
(October 16, 1997).
    To the extent that the affiliation provisions in section 771(33) of 
the Act do not conflict with the Department's application of separate 
rates and the statutory NME provisions in section 773(c) of the Act, 
the Department will determine that exporters and/or producers are 
affiliated if the facts of the case support such a finding. See Certain 
Preserved Mushrooms From the People's Republic of China: Preliminary 
Results of Sixth New Shipper Review and Preliminary Results and Partial 
Rescission of Fourth Antidumping Duty Administrative Review, 69 FR 
10410, 10413 (March 5, 2004) (``Mushrooms'').
    Following these guidelines, we have considered whether we should 
determine that the seven members of the RSM Group (``RSM''): Nanjing 
Yunhai Special Metals Co., Ltd. (``Yunhai Special''), Nanjing Welbow 
Metals Co., Ltd. (``Welbow''), Nanjing Yunhai Magnesium Co., Ltd. 
(``Yunhai Magnesium''), Shanxi Wenxi Yunhai Metals Co., Ltd. (``Wenxi 
Yunhai''), Shanxi Wenxi Bada Magnesium Co., Ltd. (``Bada Magnesium''), 
Yuncheng Wenxi Welfare Magnesium Plant (``Welfare Magnesium''), and 
Nanjing Yunhai Metals Plant (``Yunhai Metals'') are affiliated and 
should be collapsed. Moreover, we considered whether these companies 
should be collapsed with China National Nonferrous Metals I/E Corp., 
Jiangsu Branch (``Jiangsu Metals''), and TAI, thus considering these 
companies as a single entity for the purposes of the antidumping 
investigation of magnesium metal from the People's Republic of China 
(``PRC''). See Memorandum to Laurie Parkhill, Director, Office 8, NME/
China Group, Through Robert Bolling, Program Manager, From Laurel 
LaCivita, Senior Case Analyst, Antidumping Duty Investigation of 
Magnesium Metal From the People's Republic of China: Affiliation and 
Collapsing of Members of the RSM Group and Its Affiliated U.S. 
Reseller, Toyota Tsusho America, Inc., dated September 24, 2004 
(``Collapsing Memorandum'').
    In its original questionnaire responses, RSM also reported that its 
affiliated reseller in the United States made sales of subject 
merchandise to an affiliated further-manufacturer in the United States 
that incorporated the subject merchandise into steering wheel 
armatures. In its supplemental questionnaire response, RSM argued that 
TAI was not affiliated with its downstream further-manufacturer. 
Therefore, we considered whether TAI and its downstream further-
manufacturer are affiliated for the purposes of this investigation. See 
the proprietary Memorandum to Laurie Parkhill, Director, Office 8, NME/
China Group, Through Robert Bolling, Program Manager, From Laurel 
LaCivita, Senior Case Analyst, Antidumping Duty Investigation of 
Magnesium Metal From the People's Republic of China: Affiliation and 
Collapsing of Members of the RSM Group and Its Affiliated U.S. 
Reseller, Toyota Tsusho America, Inc., dated September 24, 2004 
(``Affiliation Memorandum'').
    RSM reported that the members of RSM Group that produced or 
exported the subject merchandise are Yunhai Special, Welbow, Yunhai 
Magnesium, Wenxi Yunhai, Bada Magnesium, Welfare Magnesium, and Yunhai 
Metals. In addition, in its original questionnaire response, RSM 
claimed that it was affiliated with its U.S. reseller, TAI, during the 
POI and that all of the U.S. sales made through TAI should be treated 
as CEP sales. In its supplemental response, however, RSM argued that 
TAI was affiliated with only one member of the RSM group, Yunhai 
Magnesium, through TAI's parent company. Consequently, RSM reclassified 
all of its U.S. sales, except those originating with Yunhai Magnesium, 
as export-price (``EP'') sales.
    Based on our examination of the evidence presented in RSM's 
questionnaire responses, we have determined that Yunhai Special, Wenxi 
Yunhai, Welbow, Yunhai Magnesium, Bada Magnesium, Welfare Magnesium, 
and Yunhai Metals are affiliated under sections 771(33)(B), (E), (F), 
and (G) of the Act. We found, however, that only Yunhai Special, 
Welbow, Yunhai Magnesium, and Wenxi Yunhai either produced the subject 
merchandise during the POI, or were capable of producing the subject 
merchandise. Thus, we determined that Yunhai Special, Welbow, Wenxi 
Yunhai, and Yunhai Magnesium are affiliated and should be collapsed and 
treated as a single entity for purposes of calculating a dumping margin 
in this investigation for the following reasons: (1) Yunhai Special 
controls a majority or near-majority of Welbow, Wenxi Yunhai, and 
Yunhai Magnesium based on stock-ownership; (2) Yunhai Special, Welbow, 
Wenxi Yunhai, and Yunhai Magnesium share the same general manager and a 
common board member; and (3) RSM reported that the operations of Yunhai 
Special and Welbow cannot be distinguished since the two companies 
share the same general manager, production facilities, and employees.
    We also determined that Jiangsu Metals is affiliated with the RSM 
Group, under sections 771(33)(E) and (F) of the Act, because RSM 
reported that Jiangsu Metals, an exporter of the subject merchandise, 
held more than 5 percent of the outstanding stock in Yunhai Magnesium 
and is therefore affiliated with Yunhai Magnesium pursuant to section 
771(33)(E) of the Act. In addition, we found that Jiangsu Metals and 
Yunhai Special both own shares of Yunhai Magnesium as joint-venture 
partners. Consequently, we determined that Jiangsu Metals and Yunhai 
Special are affiliated in accord with section 771(33)(F) of the Act.
    We determined further that, in contrast to RSM's arguments in its 
supplemental questionnaire response, TAI is also affiliated with the 
RSM Group under sections 771(33)(E) and (F) of the Act because the role 
that TAI and its parent corporation play in RSM's sales process 
indicates that TAI is

[[Page 59193]]

legally and operationally in a position to exercise control over the 
RSM Group in accordance with section 771(33)(F) of the Act.
    We did not analyze whether Jiangsu Metals, an affiliated exporter, 
meets the criteria for collapsing with the RSM group because the 
company did not produce the subject merchandise during the POI. As a 
result, we have not collapsed Jiangsu Metals with the members of the 
RSM group for the purposes of calculating the antidumping duty margin. 
We have considered Jiangsu Metals for a separate rate in its own right.
    We examined the information on the record with respect to TAI and 
its further-manufacturer and determined that TAI was affiliated with 
its downstream further-manufacturer, under section 771(33)(E) and (F) 
of the Act, for several reasons. RSM reported that TAI and its further-
manufacturer are both subsidiaries of the same parent corporation in 
Japan and, thus, are affiliated in accord with section 771(33)(E) of 
the Act. See the proprietary discussion of this issue in the 
Affiliation Memorandum at 3. RSM demonstrated further that the parent 
corporation's ownership share held a very substantial stock ownership 
share in both TAI and its further-manufacturer, and is therefore in a 
position to exercise control over both entities. Because we determined 
that TAI and its further-manufacturer are affiliated under sections 
771(33)(E) and (F) of the Act, we have not used the sales of subject 
merchandise from TAI to its affiliated further-manufacturer in our 
margin analysis because such sales do not represent the sales to the 
first unaffiliated customer in the United States. See Affiliation 
Memorandum. We did not examine the downstream sales of the subject 
merchandise made by the affiliated further-manufacturer because we 
determined that the subject merchandise sold to the further-
manufacturer was incorporated into products whose value exceeded 
substantially the value of the imported subject merchandise. See 
Memorandum to the File, through Laurie Parkhill, Director, Office 8, 
NME/China Unit, and Robert Bolling, Program Manager, From Laurel 
LaCivita, Senior Case Analyst, Magnesium Metal From the People's 
Republic of China: The Use of RSM's Sales of Further-Manufactured 
Merchandise in the U.S. Market for the Preliminary Determination, dated 
September 24, 2004.

Separate Rates

    In proceedings involving NME countries, the Department begins with 
a rebuttable presumption that all companies within the country are 
subject to government control and, thus, should be assigned a single 
antidumping duty deposit rate. It is the Department's policy to assign 
all exporters of merchandise subject to investigation in an NME country 
this single rate unless an exporter can demonstrate that it is 
sufficiently independent so as to be entitled to a separate rate. The 
two mandatory respondents and the Section A respondent have provided 
company-specific information and each has stated that it meet the 
standards for the assignment of a separate rate.
    We have considered whether each company based in the PRC is 
eligible for a separate rate. The Department's separate-rate test to 
determine whether the exporters are independent from government control 
does not consider, in general, 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 Cut-to-Length 
Carbon Steel Plate From Ukraine: Final Determination of Sales at Less 
Than Fair Value, 62 FR 61754, 61757 (November 19, 1997), and 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 (November 17, 1997).
    To establish whether a firm is sufficiently independent from 
government control of its export activities to be entitled to a 
separate rate, the Department analyzes each entity exporting the 
subject merchandise under a test arising from the Final Determination 
of Sales at Less Than Fair Value: Sparklers from the People's Republic 
of China, 56 FR 20588 (May 6, 1991) (``Sparklers''), as amplified by 
Final Determination of Sales at Less Than Fair Value: Silicon Carbide 
From the People's Republic of China, 59 FR 22585 (May 2, 1994) 
(``Silicon Carbide''). In accordance with the separate-rates criteria, 
the Department assigns separate rates in NME cases only if respondents 
can demonstrate the absence of both de jure and de facto governmental 
control over export activities.

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) other formal 
measures by the government decentralizing control of companies. See 
Sparklers, 56 FR at 20589.
    Our analysis shows that the evidence on the record supports a 
preliminary finding of de jure absence of governmental control for 
Tianjin, Guangling Jinghua, Jiangsu Metals, and the RSM companies 
consisting of Yunhai Special, Welbow, Wenxi Yunhai, and Yunhai 
Magnesium based on the criteria listed above. See Memorandum to Laurie 
Parkhill, Office Director, China/NME Group, through Robert Bolling, 
Program Manager, from Laurel LaCivita, Senior Case Analyst and Lilit 
Astvatsatrian, Case Analyst, Magnesium Metal from the People's Republic 
of China: Separate Rates Memorandum (``Separate-Rates Memorandum''), 
dated September 24, 2004.

2. Absence of De Facto Control

    Typically the Department considers the following 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 are subject to the approval of a governmental agency; (2) whether 
the respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses. See Silicon Carbide, 59 FR at 22586-87; see also 
Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol 
From the People's Republic of China, 60 FR 22544, 22545 (May 8, 1995). 
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.
    We determine that, for Tianjin, Guangling Jinghua, Jiangsu Metals, 
and the RSM companies consisting of Yunhai Special, Welbow, Wenxi 
Yunhai, and Yunhai Magnesium, the evidence on the record supports a 
preliminary finding of de facto absence of governmental control based 
on record statements and supporting documentation showing the 
following:

[[Page 59194]]

(1) Each exporter sets its own export prices independent of the 
government and without the approval of a government authority; (2) each 
exporter retains the proceeds from its sales and makes independent 
decisions regarding disposition of profits or financing of losses; (3) 
each exporter has the authority to negotiate and sign contracts and 
other agreements; and (4) each exporter has autonomy from the 
government regarding the selection of management.
    Therefore, the evidence placed on the record of this investigation 
by Tianjin, Guangling Jinghua, Jiangsu Metals, and the RSM companies 
consisting of Yunhai Special, Welbow, Wenxi Yunhai, and Yunhai 
Magnesium demonstrates an absence of government control, both in law 
and in fact, with respect to each of the exporter's exports of the 
merchandise under investigation in accordance with the criteria 
identified in Sparklers and Silicon Carbide. As a result, for the 
purposes of this preliminary determination, we have granted separate, 
company-specific rates to the mandatory respondents and the Section A 
respondent which shipped magnesium metal to the United States during 
the POI. For a full discussion of this issue, please see the Separate-
Rates Memorandum.

PRC-Wide Rate

    The Department has data that indicates there were more exporters of 
magnesium metal from the PRC during the POI than those which responded 
to the Q&V questionnaire. See Respondent Selection Memorandum at 1. 
Although we issued the Q&V questionnaire to 142 known Chinese exporters 
of the subject merchandise, we received only two Q&V questionnaire 
responses, which were from the two mandatory respondents. Also, on May 
6, 2004, we issued our complete questionnaire to the Chinese Government 
(i.e., Ministry of Commerce). Although all exporters were given an 
opportunity to provide information showing they qualify for separate 
rates, not all of these other exporters provided a response to either 
the Department's Q&V questionnaire or its Section A questionnaire. 
Therefore, the Department determines preliminarily that there were 
exports of the merchandise under investigation from PRC producers/
exporters that did not respond to the Department's questionnaire. We 
treated these PRC producers/exporters as part of the countrywide 
entity. Further, the Government of the PRC did not respond to the 
Department's questionnaire.
    Section 776(a)(2) of the Act provides that, if an interested party 
(A) withholds information that has been requested by the Department, 
(B) fails to provide such information in a timely manner or in the form 
or manner requested, subject to subsections 782(c)(1) and (e) of the 
Act, (C) significantly impedes a proceeding under the antidumping 
statute, or (D) provides such information but the information cannot be 
verified, the Department shall, subject to subsection 782(d) of the 
Act, use facts otherwise available in reaching the applicable 
determination.
    Pursuant to section 782(e) of the Act, the Department shall not 
decline to consider submitted information if all of the following 
requirements are met: (1) The information is submitted by the 
established deadline; (2) the information can be verified; (3) the 
information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; and 
(5) the information can be used without undue difficulties.
    Information on the record of this investigation indicates that 
there are numerous producers/exporters of magnesium metal in the PRC. 
As described above, all exporters were given the opportunity to respond 
to the Department's questionnaire. Based upon our knowledge of the 
volume of imports of subject merchandise from the PRC and the fact that 
information indicates that the responding companies did not account for 
all imports into the United States from the PRC, we have preliminarily 
determined that certain PRC exporters of magnesium metal failed to 
respond to our questionnaires. As a result, use of adverse facts 
available (``AFA'') pursuant to section 776(a)(2)(A) of the Act is 
appropriate. Additionally, in this case, the Government of the PRC did 
not respond to the Department's questionnaire, thereby necessitating 
the use of AFA to determine the PRC-wide rate. See Preliminary 
Determination of Sales at Less Than Fair Value, Affirmative Preliminary 
Determination of Critical Circumstances and Postponement of Final 
Determination: Certain Frozen Fish Fillets from the Socialist Republic 
of Vietnam, 68 FR 4986 (January 31, 2003).
    Section 776(b) of the Act provides that, in selecting from among 
the facts available, the Department may employ adverse inferences if an 
interested party fails to cooperate by not acting to the best of its 
ability to comply with requests for information. See 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 (February 4, 2000). See also ``Statement of 
Administrative Action'' accompanying the URAA, H.R. Rep. No. 103-316, 
870 (1994) (``SAA''). We find that, because the PRC-wide entity did not 
respond to our request for information, it has failed to cooperate to 
the best of its ability. Therefore, the Department preliminarily finds 
that, in selecting from among the facts available, an adverse inference 
is appropriate.
    Section 776(b) of the Act authorizes the Department to use AFA 
information derived from the petition, the final determination from the 
LTFV investigation, a previous administrative review, or any other 
information placed on the record. As AFA, we have assigned to the PRC-
wide entity a margin based on a calculated margin derived from 
information obtained in the course of the investigation and placed on 
the record of this proceeding. In this case, we have applied a rate of 
177.62 percent.
    Consequently, we are applying a single antidumping rate--the PRC-
wide rate--to producers/exporters that failed to respond to the Q&V 
questionnaire or Section A questionnaire. This rate will also apply to 
exporters which did not demonstrate entitlement to a separate rate. 
See, e.g., Final Determination of Sales at Less Than Fair Value: 
Synthetic Indigo from the People's Republic of China, 65 FR 25706, 
25707 (May 3, 2000). The PRC-wide rate applies to all entries of the 
merchandise under investigation except for entries from the two 
mandatory respondents and the Section A respondent.
    Because this is a preliminary margin, the Department will consider 
all margins on the record at the time of the final determination for 
the purpose of determining the most appropriate final PRC-wide margin. 
See Preliminary Determination of Sales at Less Than Fair Value: 
Saccharin from the People's Republic of China, 67 FR 79049, 79054 
(December 27, 2002).

Margin for Section A Respondent

    Guangling Jinghua, the only exporter which submitted a response to 
Section A of the Department's antidumping questionnaire and had sales 
of the subject merchandise to the United States during the POI but was 
not selected as mandatory respondent in this investigation (``Section A 
respondent''), has applied for a separate rate and provided information 
for the Department to consider for this purpose. Therefore, we have 
established a weighted-average margin based on the rate we have 
calculated for the two mandatory respondents, excluding any

[[Page 59195]]

rates that are zero, de minimis, or based entirely on adverse facts 
available. That rate is 140.09 percent. Guangling Jinghua is identified 
by name in the ``Suspension of Liquidation'' section of this notice.

Date of Sale

    Section 351.401(I) of the Department's regulations state that, ``in 
identifying the date of sale of the subject merchandise or foreign like 
product, the Secretary normally will use the date of invoice, as 
recorded in the exporter or producer's records kept in the normal 
course of business.'' After examining the sales documentation placed on 
the record by the mandatory respondents, we preliminarily determine 
that date of purchase order is the most appropriate date of sale for 
RSM and Tianjin. In their submissions, RSM and Tianjin stated that they 
establish the date of sale on their purchase order date because all of 
their sales terms are finalized by the purchase order date. 
Additionally, RSM and Tianjin provided no evidence to suggest that 
their sales terms changed after the purchase order was established. 
Based on record evidence, we have determined that RSM's and Tianjin's 
sales terms did not change after the purchase-order date, and thus we 
have used purchase order date as the date of sale for the preliminary 
determination for RSM and Tianjin.
    The Department intends to examine the date-of-sale issue at 
verification thoroughly and may reconsider its position for the final 
determination based on the results of verification.

Fair Value Comparisons

    To determine whether sales of magnesium metal to the United States 
by the two mandatory respondents were made at less than fair value, we 
compared EP or CEP to NV, as described in the ``Export Price,'' ``U.S. 
Price,'' and ``Normal Value'' sections of this notice.

U.S. Price

    In accordance with section 772(a) of the Act, we used EP for 
Tianjin, as appropriate, because the subject merchandise was first sold 
(or agreed to be sold) before the date of importation by the producer 
or exporter of the subject merchandise outside the United States to an 
unaffiliated purchaser in the United States or to an unaffiliated 
purchaser for exportation to the United States and because the use of 
CEP was not otherwise indicated. In accordance with section 772(b) of 
the Act, we used CEP for RSM and Jiangsu Metals because the subject 
merchandise was sold in the United States after the date of importation 
by a U.S. reseller affiliated with the producer. In addition, we did 
not use sales made by the U.S. reseller to an affiliated further-
manufacturer because RSM reported that all of those sales were destined 
for further manufacturing in the United States where the value added 
substantially exceeded the value of the merchandise imported. See 
Memorandum to The File, Through Laurie Parkhill, Director, Office 8, 
NME/China Unit, and Robert Bolling, Program Manager, From Laurel 
LaCivita, Senior Case Analyst, Magnesium Metal from the People's 
Republic of China: The Use of RSM's Sales of Further-Manufactured 
Merchandise in the U.S. Market for the Preliminary Determination, dated 
September 24, 2004.
    We calculated EP and CEP based on the packed F.O.B., C.I.F., or 
delivered price to unaffiliated purchasers in, or for exportation to, 
the United States. We made deductions, as appropriate, for any movement 
expenses (e.g., foreign inland freight from the plant to the port of 
exportation, domestic brokerage, ocean freight, marine insurance, U.S. 
brokerage, and inland freight from warehouse to unaffiliated U.S. 
customer) in accordance with section 772(c)(2)(A) of the Act. For a 
detailed description of all adjustments, see Memorandum to The File 
Through Robert Bolling, Program Manager, China/NME Group, from Lilit 
Astvatsatrian, Case Analyst, Analysis for the Preliminary Determination 
of Magnesium Metal from the People's Republic of China: Tianjin 
Magnesium International Co., Ltd. (``Tianjin''), dated September 24, 
2004, and Memorandum to the File Through Robert Bolling, Program 
Manager, China/NME Group, From Laurel LaCivita, Senior Case Analyst, 
Analysis for the Preliminary Determination of Magnesium Metal from the 
People's Republic of China: the RSM Companies, dated September 24, 
2004.
    In accordance with section 772(d)(1) of the Act and the SAA at 823-
824, we calculated the CEP by deducting selling expenses associated 
with economic activities occurring in the United States, for which RSM 
includes U.S. customs duty.
    We compared NV to weighted-average EPs and CEPs in accordance with 
section 777A(d)(1) of the Act. For RSM, in accordance with sections 
772(d)(3) and 772(f) of the Act, we deducted CEP profit. For a detailed 
description of all adjustments, see the Company-Specific Analysis 
Memoranda dated September 24, 2004.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine the NV using a factors-of-production methodology if the 
merchandise is exported from an NME and the information does not permit 
the calculation of NV using home-market prices, third-country prices, 
or constructed value under section 773(a) of the Act. The Department 
bases NV on the factors of production because the presence of 
government controls on various aspects of these economies renders price 
comparisons and the calculation of production costs invalid under its 
normal methodologies.
    The Department's questionnaire requires that the respondent provide 
information regarding the weighted-average factors of production across 
all of the company's plants that produce the subject merchandise, not 
just the factors of production from a single plant. This methodology 
ensures that the Department's calculations are as accurate as possible. 
See e.g., Final Determination of Sales at Less Than Fair Value and 
Critical Circumstances: Certain Malleable Iron Pipe Fittings From the 
People's Republic of China, 68 FR 61395 (Oct. 28, 2003); Issues and 
Decision Memorandum, Comment 19 (Oct. 20, 2003). Therefore, for 
Tianjin, the Department calculated the factors of production using the 
weighted-average factor values for all of the facilities involved in 
producing the subject merchandise. For RSM and Jiangsu Metals, the 
Department used the weighted-average factor values reported for the RSM 
group members which it determined were affiliated and which it 
collapsed. See the Collapsing Memorandum.

Factor Valuations

    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by respondents for the POI. To 
calculate NV, we multiplied the reported per-unit factor-consumption 
rates by publicly available Indian surrogate values (except as 
discussed below). 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. Specifically, we added to Indian import surrogate 
values a surrogate freight cost using the shorter of the reported 
distance from the domestic supplier to the factory or the distance from 
the nearest seaport to the factory where appropriate. This adjustment 
is in accordance with the

[[Page 59196]]

Court of Appeals for the Federal Circuit's decision in Sigma Corp. v. 
United States, 117 F. 3d 1401 (Fed. Cir. 1997).
    For this preliminary determination, in accordance with past 
practice, we used data from the Indian Import Statistics in order to 
calculate surrogate values for the mandatory respondents' material 
inputs. In selecting the best available information for valuing factors 
of production in accordance with section 773(c)(1) of the Act, the 
Department's practice is to select, to the extent practicable, 
surrogate values which are non-export average values, most 
contemporaneous with the POI, product-specific, and tax-exclusive. The 
record shows that data in the Indian Import Statistics represents 
import data, is contemporaneous with the POI, is product-specific, and 
is tax-exclusive. See Manganese Metal From the People's Republic of 
China; Final Results and Partial Rescission of Antidumping Duty 
Administrative Review, 63 FR 12441, 12442 (March 13, 1998). 
Additionally, there is no record evidence which indicates that any of 
the factors being valued are of low value compared to other items in 
the basket categories; thus, our use of these statistics does not 
result in a distortion in favor of higher values. Further, the Indian 
Import Statistics contain values at both ends of the spectrum (i.e., 
high value and low value), indicating further that the Indian Import 
values are not distorted when taken as an average, as we are doing in 
this case. Therefore, we determined that the Indian Import Statistics 
provide the best available information for valuing the factors of 
production. Consequently, we valued raw material inputs for each 
mandatory respondent using the weighted-average unit import values 
derived from the World Trade Atlas[reg] online (``Indian Import 
Statistics''), published by the DGCI&S, Ministry of Commerce of India, 
which were reported in rupees and are contemporaneous with POI. See 
Factor-Valuation Memorandum. Where we could not obtain publicly 
available information contemporaneous to the POI with which to value 
factors, we adjusted the surrogate values using, where appropriate, the 
Indian Wholesale Price Index (``WPI'') or the Indian Producer Price 
Index (``PPI'') as published in the International Financial Statistics 
of the International Monetary Fund.
    Furthermore, with regard to both the Indian import-based surrogate 
values and the market-economy input values, we have disregarded prices 
that we have reason to believe or suspect may be subsidized. We have 
reason to believe or suspect that prices of inputs from Indonesia, 
South Korea, and Thailand may have been subsidized. We have found in 
other proceedings that these countries maintain broadly available, non-
industry-specific export subsidies and, therefore, it is reasonable to 
infer that all exports to all markets from these countries are 
subsidized. See Amended Final Determination of Sales at Less Than Fair 
Value: Automotive Replacement Glass Windshields From the People's 
Republic of China, 67 FR 11670 (March 15, 2002). We are also directed 
by the legislative history not to conduct a formal investigation to 
ensure that such prices are not subsidized. See H.R. Rep. 100-576 at 
590 (1988). Rather, Congress directed the Department to base its 
decision on information that is available to it at the time it makes 
its determination. Therefore, we have not used prices from these 
countries either in calculating the Indian import-based surrogate 
values or in calculating market-economy input values. In instances 
where a market-economy input was obtained solely from suppliers located 
in these countries, we used Indian import-based surrogate values to 
value the input. See Final Determination of Sales at Less Than Fair 
Value: Certain Automotive Replacement Glass Windshields From The 
People's Republic of China, 67 FR 6482 (February 12, 2002), and 
accompanying Issues and Decision Memorandum at Comment 1.
    We used the Indian Import Statistics to value the following raw 
material inputs, energy, by-products, and packing materials that RSM 
and Tianjin used to produce the subject merchandise during the POI: 
Ferrosilicon, dolomite, No.2 flux, fluorite powder, sulfur powder, 
primary magnesium, magnesium scrap, zinc, AlBe5, AlBe1, manganese 
powder, magnesium, aluminum-magnesium alloy, sulfuric acid manganese 
chip, magnesium chloride, potassium chloride, barium chloride, 
aluminum, sulfur dioxide, nitrogen, argon, coal, bituminous coal, 
anthracite, liquified petroleum gas (``LPG''), propane, steel strap, 
LDPE sheet, printing ink, printing ink solvent, particle board, pallet, 
little steel sheet, steel band, and plastic bags. For a detailed 
description of all surrogate values used for respondents, see Factor-
Valuation Memorandum.
    To value electricity, we used data from the International Energy 
Agency (``IEA'') Key World Energy Statistics (2003 edition), submitted 
by the Petitioners in Exhibit 5 of their August 19, 2004, submission. 
Because the value was not contemporaneous with the POI, we adjusted the 
rate for inflation. See Factor-Valuation Memorandum.
    To value heavy oil and diesel fuel, we used data from IEA's Key 
World Energy Statistics (2003 edition) which was submitted by 
Petitioners in their August 19, 2004, submission. Because the value was 
not contemporaneous with the POI, we adjusted the rate for inflation. 
See Factor-Valuation Memorandum.
    For direct, indirect, and packing labor, consistent with 19 CFR 
351.408(c)(3), we used the PRC regression-based wage rate as reported 
on Import Administration's home page, Import Library, Expected Wages of 
Selected NME Countries, revised in September 2003, http://ia.ita.doc.gov/wages/01wages/01wages.html. The source of these wage-
rate data on the Import Administration's Web site is the Yearbook of 
Labour Statistics 2002, ILO (Geneva: 2002), Chapter 5B: Wages in 
Manufacturing. Because this regression-based wage rate does not 
separate the labor rates into different skill levels or types of labor, 
we have applied the same wage rate to all skill levels and types of 
labor reported by the respondent.
    The respondents also reported packing inputs. We used Indian Import 
Statistics data from the period July 2003 to December 2003 to value 
these inputs. See Factor-Valuation Memorandum.
    RSM reported magnesium alloy slag as by-product of the production 
process. We used Indian Import Statistics data from the period July 
2003 to December 2003 to value this by-product. See Factor-Valuation 
Memorandum.
    We used Indian transport information in order to value the 
transportation of raw materials. To calculate domestic inland freight 
for trucking services, we selected freight values from Chemical Weekly. 
Some inputs were transported by market-economy transportation firms and 
paid for in a market-economy currency. Where this was the case, we 
added the actual market-economy transportation expense to the valuation 
of the factor of production.
    We used Indian rail freight information in order to value the 
transportation of raw materials. To value the rail freight, we used two 
price quotes from November 1999 for steel shipments within India. 
Because the value was not contemporaneous with the POI, we adjusted the 
rate for inflation. See Factor-Valuation Memorandum.
    To value factory overhead, selling, general, and administrative 
expenses, and profit, we used the audited financial statements for the 
fiscal year ending March 31, 2003, from the following aluminum 
producers in India: National Aluminium Company Limited;

[[Page 59197]]

Indian Aluminium Company; Limited, Bharat Aluminium Company Limited; 
the Madras Aluminium Company Limited; and HINDALCO Industries Limited. 
See Factor-Valuation Memorandum for a full discussion of the 
calculation of these ratios from these financial statements.

Currency Conversion

    We made currency conversions into U.S. dollars, in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales as certified by the Federal Reserve Bank.

Verification

    As provided in section 782(I)(1) of the Act, we intend to verify 
the information upon which we will rely in making our final 
determination.

Preliminary Determination

    The weighted-average dumping margins are as follows:

                      Magnesium Metal From the PRC
------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Manufacturer/exporter                        margin
                                                              (percent)
------------------------------------------------------------------------
Tianjin....................................................       177.62
RSM........................................................       128.11
Jiangsu Metals.............................................       117.41
Guangling..................................................       140.09
China-Wide Rate............................................       177.62
------------------------------------------------------------------------

Disclosure

    We will disclose the calculations performed within five days of the 
date of publication of this notice to parties in this proceeding in 
accordance with 19 CFR 351.224(b).

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we will instruct U.S. 
Customs and Border Protection (``CBP'') to suspend liquidation of all 
entries of subject merchandise, entered, or withdrawn from warehouse, 
for consumption on or after the date of publication of this notice in 
the Federal Register. We will instruct CBP to require a cash deposit or 
the posting of a bond equal to the weighted-average amount by which the 
normal value exceeds U.S. price, as indicated above. The suspension of 
liquidation will remain in effect until further notice.

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our preliminary affirmative determination of sales at less than 
fair value. Because we have postponed the deadline for our final 
determination to 135 days from the date of publication of this 
preliminary determination, section 735(b)(2) of the Act requires the 
ITC to make its final determination as to whether domestic industry in 
the United States is materially injured, or threatened with material 
injury, by reason of imports of wooden bedroom furniture, or sales (or 
the likelihood of sales) for importation, of the subject merchandise 
within 45 days of our final determination.

Public Comment

    Case briefs or other written comments may be submitted to the 
Assistant Secretary for Import Administration no later than seven days 
after the date of the final verification report is issued in this 
proceeding and rebuttal briefs limited to issues raised in case briefs 
no later than five days after the deadline date for case briefs. A list 
of authorities used and an executive summary of issues should accompany 
any briefs submitted to the Department. This summary should be limited 
to five pages total, including footnotes.
    In accordance with section 774 of the Act, we will hold a public 
hearing, if requested, to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs. If a request 
for a hearing is made, we intend to hold the hearing three days after 
the deadline of submission of rebuttal briefs at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230, at a time and location to be determined. Parties should confirm 
by telephone the date, time, and location of the hearing two days 
before the scheduled date.
    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 after the date of publication of this notice. See 
19 CFR 351.310(c). Requests should contain the party's name, address, 
and telephone number, the number of participants, and a list of the 
issues to be discussed. At the hearing, each party may make an 
affirmative presentation only on issues raised in that party's case 
brief and may make rebuttal presentations only on arguments included in 
that party's rebuttal brief.
    We will make our final determination no later than 135 days after 
the date of publication of this preliminary determination, pursuant to 
section 735(a)(2) of the Act.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: September 24, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
 [FR Doc. E4-2478 Filed 10-1-04; 8:45 am]
BILLING CODE 3510-DS-P