[Federal Register Volume 69, Number 235 (Wednesday, December 8, 2004)]
[Notices]
[Pages 71011-71014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3558]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-351-824]


Silicomanganese From Brazil: Preliminary Results of Antidumping 
Duty Administrative Review

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

SUMMARY: The Department of Commerce is conducting an administrative 
review of the antidumping duty order on silicomanganese from Brazil in 
response to a request from manufacturers/exporters, Rio Doce Manganes 
S.A. (RDM), Companhia Paulista de Ferroligas (CPFL), and Urucum 
Mineracao S.A. (Urucum) (collectively RDM/CPFL).\1\ This review covers 
the period December 1, 2002, through November 30, 2003.
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    \1\ We collapsed RDM, CPFL, and Urucum for purposes of this 
segment of the proceeding and have calculated a single dumping 
margin for them. See the ``Collapsing'' section.
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    We have preliminarily determined that RDM/CPFL did not make sales 
to the United States at prices below normal value during the period of 
review. We invite interested parties to comment on these preliminary 
results. Parties who submit comments are requested to submit with each 
comment a statement of the issue and a brief summary.

EFFECTIVE DATE: December 8, 2004.

FOR FURTHER INFORMATION CONTACT: Dmitry Vladimirov at (202) 482-0665 or 
Minoo Hatten at (202) 482-1690, AD/CVD Operations, Office 5, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230.

SUPPLEMENTARY INFORMATION:

Background

    On December 22, 1994, the Department of Commerce (the Department) 
published in the Federal Register the antidumping duty order on 
silicomanganese from Brazil. See Notice of Antidumping Duty Order: 
Silicomanganese from Brazil, 59 FR 66003, (December 22, 1994). On 
December 2, 2003, we published in the Federal Register a notice of 
opportunity to request an administrative review of the antidumping duty 
order on silicomanganese from Brazil covering the period December 1, 
2002, through November 30, 2003. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 68 FR 67401, (December 3, 2003). On December 31, 
2003, RDM/CPFL requested that the Department conduct an administrative 
review of its sales. On January 22, 2004, the Department published in 
the Federal Register a notice of initiation of this antidumping duty 
administrative review. See Initiation of Antidumping and Countervailing 
Duty Administrative Reviews and Request for Revocation in Part, 69 FR 
3117 (January 22, 2004).
    On August 17, 2004, the Department extended the due date for the 
preliminary results of this review until no later than November 30, 
2004. See Silicomanganese From Brazil: Extension of Time Limit for the 
Preliminary Results of the Antidumping Duty Administrative Review, 69 
FR 51062 (August 17, 2004).
    The Department is conducting this review in accordance with section 
751 of the Tariff Act of 1930, as amended (the Act).

Scope of Review

    The merchandise covered by this order is silicomanganese. 
Silicomanganese, which is sometimes called ferrosilicon manganese, is a 
ferroalloy composed principally of manganese, silicon and iron, and 
normally contains much smaller proportions of minor elements, such as 
carbon, phosphorous, and sulfur. Silicomanganese generally contains by 
weight not less than 4 percent iron, more than 30 percent manganese, 
more than 8 percent silicon, and not more than 3 percent phosphorous. 
All compositions, forms, and sizes of silicomanganese are included 
within the scope of this review, including silicomanganese slag, fines, 
and briquettes. Silicomanganese is used primarily in steel production 
as a source of both silicon and manganese.
    Silicomanganese is currently classifiable under subheading 
7202.30.0000 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Some silicomanganese may also currently be classifiable under 
HTSUS subheading 7202.99.5040. This scope covers all silicomanganese, 
regardless of its tariff classification. Although the HTSUS subheadings 
are provided for convenience and customs purposes, the written 
description of the scope remains dispositive.

Verification

    From October 4, 2004, through October 15, 2004, in accordance with 
section 782(i) of the Act, the Department verified the sales and cost 
information provided by RDM/CPFL using standard verification 
procedures, the examination of relevant sales and financial records,

[[Page 71012]]

and selection of original documentation containing relevant 
information. Our verification results are outlined in the public and 
proprietary versions of the verification reports. See memoranda 
entitled ``Home-Market and U.S. Sales Verification of Information 
Submitted by Rio Doce Manganes S.A. (RDM), Companhia Paulista de Ferro-
Ligas (CPFL) and Urucum Minera[ccedil][atilde]o S.A. (Urucum) 
(collectively, RDM/CPFL),'' dated November 18, 2004 (Sales Verification 
Report), and ``Verification Report on the Cost of Production and 
Constructed Value Data Submitted by Rio Doce Manganes S.A. (RDM), 
Companhia Paulista de Ferro-Ligas (CPFL) and Urucum 
Minera[ccedil][atilde]o S.A. (Urucum) (collectively, RDM/CPFL),'' dated 
November 30, 2004 (Cost Verification Report), on file in the Central 
Records Unit (CRU), Room B-099 of the main Department of Commerce 
building.

Collapsing

    The Department's regulations at section 351.401(f) outline the 
criteria for collapsing (i.e., treating as a single entity) affiliated 
producers for purposes of calculating a dumping margin. The regulations 
state that we will treat two or more affiliated producers as a single 
entity where (1) those producers have production facilities for similar 
or identical products that would not require substantial retooling of 
either facility in order to restructure manufacturing priorities, and 
(2) we conclude that there is a significant potential for the 
manipulation of price or production. In identifying a significant 
potential for the manipulation of price or production, the Department 
may consider the following factors: (i) The level of common ownership; 
(ii) the extent to which managerial employees or board members of one 
firm sit on the board of directors of an affiliated firm; and, (iii) 
whether operations are intertwined, such as through the sharing of 
sales information, involvement in production and pricing decisions, the 
sharing of facilities or employees, or significant transactions between 
the affiliated producers. See 19 CFR 351.401(f)(2).
    For the reason that RDM and Urucum are wholly owned subsidiaries of 
Companhia Vale de Rio Doce (CVRD), and CPFL is a wholly owned 
subsidiary of RDM, pursuant to section 771(33)(E) of the Act, CVRD is 
affiliated with RDM and Urucum, and RDM is affiliated with CPFL. 
Furthermore, based on CVRD's investment interest in both companies, we 
find that CVRD is in the position legally and/or operationally to 
exercise restraint or direction over RDM, CPFL, and Urucum, and thus, 
has direct or indirect control within the meaning of section 771(33)(F) 
of the Act. As such, we further determine that RDM, CPFL, and Urucum 
are affiliated pursuant to section 771(33)(F) of the Act.
    With respect to the first criterion of section 351.401(f) of the 
Department's regulations, the information currently on the record 
indicates that RDM, CPFL, and Urucum use similar production facilities, 
in terms of production capacities and type machinery, and employ 
virtually identical production processes to produce identical or 
similar silicomanganese products. Because the companies could shift the 
production requirements from one facility to the other without 
incurring prohibitive costs, we find that RDM's, CPFL's, or Urucum's 
facilities would not require substantial retooling in order to 
restructure manufacturing priorities.
    We also find that there exists a significant potential for 
manipulation of prices, production costs, and production priorities 
pursuant to section 351.401(f)(2) of the Department's regulations. 
Specifically, the information on the record indicates that CVRD has a 
direct and indirect involvement in RDM's, CPFL's, and Urucum's 
activities associated with the transportation of raw materials, 
production, and sales; all three companies share the expertise of an 
executive officer; and all three companies have heavily intertwined 
operations. Therefore, for the purposes of this administrative review, 
we find that RDM, CPFL, and Urucum are affiliated and have collapsed 
them into one entity pursuant to section 771(33) of the Act and section 
351.401(f) of the Department's regulations. For a more complete 
discussion of this issue, see the November 30, 2004, Memorandum to Mark 
Ross, entitled ``Collapsing of Affiliated Producers,'' which is on file 
in the CRU.

Affiliation of Parties

    Pursuant to sections 771(33)(E) and (F) of the Act, the Department 
has preliminarily determined that certain customers to whom RDM/CPFL 
sold silicomanganese during the period of review (POR) and whom RDM/
CPFL identified as unaffiliated parties are, in fact, affiliated with 
RDM/CPFL. Specifically, the Department has determined that RDM/CPFL and 
some of its home-market customers are under the common control of CVRD, 
RDM/CPFL's parent company. According to section 771(33)(F) of the Act, 
two or more persons under common control with any other person shall be 
considered affiliated. Thus, we have preliminarily found these 
companies to be affiliated with RDM/CPFL. For a complete discussion of 
this issue, see the November 30, 2004, Memorandum to the File, entitled 
``Analysis Memorandum for the Preliminary Results of the Administrative 
Review of the Antidumping Duty Order on Silicomanganese from Brazil'' 
(Preliminary Results Analysis Memo), which is on file in the CRU.

Comparisons to Normal Value

    To determine whether sales of silicomanganese from Brazil were made 
in the United States at less than normal value, we compared the export 
price (EP) to the normal value.
    When making comparisons in accordance with section 771(16) of the 
Act, we considered all products sold in the home market, as described 
in the ``Scope'' section of this notice, that were in the ordinary 
course of trade (i.e., sales which passed the cost test) for purposes 
of determining appropriate product comparisons to U.S. sales.

Merchandise

    The construction of control numbers is based on two product 
characteristics, quality grade and size. In its questionnaire 
responses, RDM/CPFL stated that, in the normal course of business, it 
classifies silicomanganese products into three grades: 12/16, 15/20, 
and 16/20. According to RDM/CPFL's description of these grades of 
silicomanganese, 12/16 has a silicon content between 12% and 16% (by 
weight), 15/20 has a silicon content between 15% and 20%, and 16/20 has 
a silicon content between 16% and 20%. RDM/CPFL also reported 
production costs segregated by these grades, as tracked in its cost 
accounting system. In its questionnaire response, RDM/CPFL explained 
that it assigned a quality grade to each home-market and U.S. sale 
based on silicomanganese quality grade standards as suggested by 
Brazilian Associacao Brasileira de Normas Technicas (ABNT). We found 
that the ABNT grade classification does not distinguish quality grades 
based on silicon content. In our July 20, 2004, supplemental 
questionnaire, we instructed RDM/CPFL to refine the assignment of the 
quality grade to each sale based on quality standards imposed by the 
American Society of Testing and Materials (ASTM), which requires 
quality grades of silicomanganese distinguished by silicon content. We 
further instructed RDM/CPFL to distinguish the assignment of a quality 
grade based on two grades and each grade's silicon content. In its 
assignment of a quality grade to each sale, RDM/

[[Page 71013]]

CPFL did not round the silicon content of each sale as suggested by 
ASTM standards. As such, we had to reconstruct control numbers to 
reflect the proper assignment of the quality grade based on the 
rounding procedures specified by ASTM standards. For more information 
on this topic, see the Preliminary Results Analysis Memo.

Export Price

    For the price to the United States, we used EP, as defined in 
section 772(a) of the Act, because the subject merchandise was sold 
directly to the first unaffiliated purchaser in the United States prior 
to the date of importation. We based EP on the F.O.B. price to the 
first unaffiliated purchaser in the United States. We made deductions, 
where appropriate, consistent with section 772(c)(2) of the Act.

Normal Value

A. Home-Market Viability

    Based on a comparison of the aggregate quantity of home-market and 
U.S. sales we determined that the quantity of foreign like product sold 
by RDM/CPFL in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a) of the Act. RDM/CPFL's quantity of 
sales in its home market was greater than five percent of its sales to 
the U.S. market. Therefore, in accordance with section 773(a)(1)(B)(i) 
of the Act, we based normal value on the prices at which the foreign 
like product was first sold for consumption in the exporting country in 
the usual commercial quantities and in the ordinary course of trade.

B. Arm's-Length Sales

    RDM/CPFL made sales in the home market to affiliated and 
unaffiliated customers. The Department may calculate normal value based 
on a sale to an affiliated party only if it is satisfied that the price 
to the affiliated party is comparable to the price at which sales are 
made to parties not affiliated with the exporter or producer, i.e., 
sales at arm's-length prices. See 19 CFR 351.403(c). We excluded sales 
to affiliated customers for consumption in the home market that we 
determined not to be at arm's-length prices from our analysis. To test 
whether these sales were made at arm's-length prices, the Department 
compared the prices of sales of comparable merchandise to affiliated 
and unaffiliated customers, net of movement charges, direct selling 
expenses, and packing. Pursuant to section 351.403(c) of the 
Department's regulations and in accordance with the Department's 
practice, when the prices charged to an affiliated party were, on 
average, between 98 and 102 percent of the prices charged to 
unaffiliated parties for merchandise comparable to that sold to the 
affiliated party, we determined that the sales to the affiliated party 
were at arm's-length prices. See Antidumping Proceedings: Affiliated 
Party Sales in the Ordinary Course of Trade, 67 FR 69186 (November 15, 
2002). We included in our calculation of normal value those sales to 
affiliated parties that were made at arm's-length prices.

C. Cost of Production Analysis

    Because the Department disregarded all of RDM/CPFL's home-market 
sales that failed the cost test in the most recently completed 
administrative review, we had reasonable grounds to believe or suspect 
that sales of the foreign like product under consideration for the 
determination of normal value in this review may have been made at 
prices below the cost of production (COP) as provided by section 
773(b)(2)(A)(ii) of the Act. Therefore, pursuant to section 773(b)(1) 
of the Act, we conducted the COP investigation of sales by RDM/CPFL in 
the home market.
    Based on the respondent's request, we allowed the cost-reporting 
period (CRP) to correspond with the 2003 calendar year, which is also 
RDM's fiscal year. Before making any price comparisons, we conducted 
the COP analysis described below.
1. Calculation of COP
    We calculated COP, in accordance with section 773(b)(3) of the Act, 
based on the sum of the costs of materials and fabrication employed in 
producing the foreign like product, plus amounts for home-market 
selling, general, and administrative expenses. For the preliminary 
results of review, we relied on the COP information submitted by RDM/
CPFL in its questionnaire responses, except, as stated below, in 
specific instances where the submitted costs were not appropriately 
quantified or valued. For a more detailed explanation of calculations 
described below and worksheets illustrating the calculations see the 
Preliminary Analysis Memo.
    a. We weight-averaged the reported manufacturing costs for product 
reported as 16/20 grade silicomanganese and 15/20 grade silicomanganese 
to account for the refinements in the assignment of one product 
characteristic, quality grade, as described in the ``Merchandise'' 
section above.
    b. We adjusted RDM/CPFL's reported cost of manufacturing (COM) to 
reflect the actual depreciation costs recorded in its financial 
accounting system.
    c. We adjusted RDM/CPFL's reported COM to reflect the actual costs 
of inventory losses and other inventory adjustments recorded in its 
financial accounting system.
    d. We adjusted RDM/CPFL's reported COM to include the omitted 
quantities for certain silicomanganese products that were manufactured 
during the CRP.
    e. We adjusted RDM/CPFL's reported COM to account for purchases of 
certain types of manganese ore from affiliated parties at non-arm's-
length prices.
    f. We adjusted RDM/CPFL's reported COM to account for purchases of 
certain transportation services from affiliated parties at non-arm's-
length prices, as well as other revisions to reported transportation 
costs.
    g. We adjusted RDM/CPFL's reported COM to account for the revision 
to the submitted allocation methodology for conversion costs.
    h. We adjusted RDM/CPFL's reported general and administrative 
expenses to exclude income items related to credits of PIS/COFINS taxes 
paid on purchases of raw materials that were used in the production of 
exported products.
    i. We adjusted RDM/CPFL's reported COM to reflect additional 
exhaustion costs incurred in the production of charcoal.
    j. We adjusted RDM/CPFL's reported COP value to reflect minor 
revisions to financial expenses and packing expenses.
    k. Because we determined that the value assigned by RDM/CPFL to 
ferromanganese slag does not reasonably reflect the cost associated 
with the production and sale of silicomanganese, we, in our November 
10, 2004, letter to interested parties, invited comments with respect 
to the valuation of ferromanganese slag. Based on the information 
submitted by RDM/CPFL and the petitioners in their November 17, 2004, 
letters, we calculated a value for ferromanganese slag. We adjusted 
RDM/CPFL's reported COM to reflect the calculated value for 
ferromanganese slag.
2. Test of Home-Market Prices
    In accordance with section 773(b)(1) of the Act, we tested whether 
home-market sales of the foreign like product were made at prices below 
the COP within an extended period of time in substantial quantities and 
whether such prices permitted the recovery of all costs within a 
reasonable period of time. We compared model-specific COPs to the

[[Page 71014]]

reported home-market prices less any applicable movement charges.
3. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, when less than 20 
percent of the respondent's sales of the foreign like product were at 
prices less than the COP, we did not disregard any below-cost sales of 
that product because the below-cost sales were not made in substantial 
quantities within an extended period of time. When 20 percent or more 
of the respondent's sales of the foreign like product during the POR 
were at prices less than the COP, we disregarded the below-cost sales 
because they were made in substantial quantities within an extended 
period of time pursuant to sections 773(b)(2)(B) and (C) of the Act 
and, based on comparisons of prices to weighted-average COPs for the 
POR, we determined that these sales were at prices which would not 
permit recovery of all costs within a reasonable period of time in 
accordance with section 773(b)(2)(D) of the Act. Based on this test, we 
disregarded below-cost sales for RDM/CPFL.

D. Calculation of Normal Value

    Because we were able to find contemporaneous home-market sales made 
in the ordinary course of trade for a comparison to EP sales, in 
accordance with section 773(a)(1)(B) of the Act, we based normal value 
on the prices at which the foreign like product was sold for 
consumption in the home market. Home-market prices were based on ex-
factory or delivered prices to unaffiliated purchasers. When 
applicable, we made adjustments for differences in packing and for 
movement expenses in accordance with sections 773(a)(6)(A) and (B) of 
the Act. We also made adjustments for differences in circumstances of 
sale in accordance with section 773(a)(6)(C)(iii) of the Act and 
section 351.410 of the Department's regulations. Specifically, we made 
circumstances-of-sale adjustments by deducting home-market direct 
selling expenses from and adding U.S. direct selling expenses to normal 
value.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that a margin 
of 0.00 percent exists for RDM/CPFL for the period December 1, 2002, 
through November 30, 2003.
    Pursuant to section 351.224(b) of the Department's regulations, the 
Department will disclose to parties calculations performed in 
connection with these preliminary results within five days of the date 
of publication of this notice. Any interested party may request a 
hearing within 30 days of publication of this notice. A hearing, if 
requested, will be held at the main Department building. We will notify 
parties of the exact date, time, and place for any such hearing.
    Issues raised in hearings will be limited to those raised in the 
respective case and rebuttal briefs. Case briefs from interested 
parties may be filed no later than 30 days after publication of this 
notice. Rebuttal briefs, limited to the issues raised in case briefs, 
may be submitted no later than five days after the deadline for filing 
case briefs. Parties who submit case or rebuttal briefs in this 
proceeding are requested to submit with each argument (1) a statement 
of the issue, and (2) a brief summary of the argument with an 
electronic version included.
    The Department will publish a notice of final results of this 
administrative review, which will include the results of its analysis 
of issues raised in the case briefs, within 120 days from the 
publication of these preliminary results.

Assessment

    The Department shall determine, and Customs and Border Protection 
(CBP) shall assess, antidumping duties on all appropriate entries. Upon 
completion of this review, the Department will issue appraisement 
instructions directly to the CBP.
    Further, the following deposit requirements will be effective upon 
publication of the notice of final results of administrative review for 
all shipments of silicomanganese entered, or withdrawn from warehouse, 
for consumption on or after the date of publication, as provided by 
section 751(a)(1) of the Act: (1) The cash-deposit rate for RDM/CPFL 
will be the rate established in the final results of review; (2) for 
previously reviewed or investigated companies not mentioned above, the 
cash-deposit rate will continue to be the company-specific rate 
published for the most recent period; (3) if the exporter is not a firm 
covered in this review, a prior review, or the less-than-fair-value 
investigation (LTFV), but the manufacturer is, the cash-deposit rate 
will be the rate established for the most recent period for the 
manufacturer of the merchandise; and (4) if neither the exporter nor 
the producer is a firm covered in this review, a prior review, or the 
LTFV investigation, the cash deposit rate shall be 17.60 percent, the 
all-others rate established in the LTFV investigation. See Notice of 
Final Determination of Sales at Less than Fair Value: Silicomanganese 
from Brazil, 59 FR 55432 (November 7, 1994). These deposit 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: November 30, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
 [FR Doc. E4-3558 Filed 12-7-04; 8:45 am]
BILLING CODE 3510-DS-P