[Federal Register Volume 73, Number 87 (Monday, May 5, 2008)]
[Notices]
[Pages 24541-24547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-9889]


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DEPARTMENT OF COMMERCE

International Trade Administration

(A-821-819)


Magnesium Metal from the Russian Federation: Preliminary Results 
of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to timely requests, the Department of Commerce 
(the Department) is conducting an administrative review of the 
antidumping duty order on magnesium metal from the Russian Federation 
for the period of review (POR) April 1, 2006, through March 31, 2007. 
The review covers two respondents, PSC VSMPO-AVISMA Corporation 
(AVISMA) and Solikamsk Magnesium Works (SMW).
    The Department preliminarily determines that AVISMA and SMW made 
sales to the United States at less than normal value. If these 
preliminary results are adopted in the final results of this 
administrative review, we will instruct U.S. Customs and Border 
Protection (CBP) to assess antidumping duties on entries of AVISMA's 
and SMW's merchandise during the POR. The preliminary results are 
listed below in the section titled ``Preliminary Results of Review.''

EFFECTIVE DATE: May 5, 2008.

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

SUPPLEMENTARY INFORMATION:

Background

    The Department published the antidumping duty order on magnesium 
metal from the Russian Federation on April 15, 2005. See Notice of 
Antidumping Duty Order: Magnesium Metal from the Russian Federation, 70 
FR 19930 (April 15, 2005) (Antidumping Duty Order). On April 2, 2007, 
the Department published in the Federal Register a notice of 
opportunity to request an administrative review of the antidumping duty 
order on magnesium metal from the Russian Federation. See Antidumping 
or Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 72 FR 15650 (April 2, 
2007). On April 30, 2007, AVISMA, a Russian Federation producer of the 
subject merchandise, requested that the Department conduct an 
administrative review. On April 30, 2007, U.S. Magnesium Corporation 
LLC, the petitioner in this proceeding, also requested that the 
Department conduct an administrative review with respect to AVISMA and 
SMW, another Russian Federation producer of the subject merchandise. On 
May 30, 2007, the Department published a notice of initiation of an 
administrative review of the antidumping duty order on magnesium metal 
from the Russian Federation for the period April 1, 2006, through March 
31, 2007. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Request for Revocation in Part, 72 FR 29968 
(May 30, 2007).
    On December 18, 2007, the Department extended the deadline for the 
preliminary results of this antidumping duty administrative review from 
December 31, 2007, to April 29, 2008. See Notice of Extension of Time 
Limit for Preliminary Results of Antidumping Duty Administrative 
Review: Magnesium Metal From the Russian Federation, 72 FR 71620 
(December 18, 2007).

Scope of the Order

    The merchandise covered by the order is magnesium metal (also 
referred to as magnesium), which includes primary and secondary pure 
and 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 the order includes blends of primary 
and secondary magnesium.
    The subject merchandise includes the following pure and 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: (1) products that contain at least 99.95 
percent magnesium, by weight (generally referred to as ``ultra-pure'' 
magnesium); (2) products that contain less than 99.95 percent but not 
less than 99.8 percent magnesium, by weight (generally referred to as 
``pure'' magnesium); and (3) chemical combinations of magnesium and 
other material(s) in which the magnesium content is 50 percent or 
greater, but less that 99.8 percent, by weight, whether or not 
conforming to an ``ASTM Specification for Magnesium Alloy''.
    The scope of the order excludes: (1) magnesium that is in liquid or 
molten form; and (2) 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

[[Page 24542]]

ash, magnesium oxide, periclase, ferroalloys, dolomite lime, and 
colemanite.\1\
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    \1\ This second exclusion for magnesium-based reagent mixtures 
is based on the exclusion for reagent mixtures in the 2000-2001 
investigations of magnesium from China, Israel, and Russia. See 
Notice of 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); Notice of Final Determination of 
Sales at Less Than Fair Value: Pure Magnesium From Israel, 66 FR 
49349 (September 27, 2001); Notice of 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 the order is currently classifiable 
under items 8104.11.00, 8104.19.00, 8104.30.00, and 8104.90.00 of the 
Harmonized Tariff Schedule of the United States (HTSUS). Although the 
HTSUS item numbers are provided for convenience and customs purposes, 
the written description of the merchandise covered by the order is 
dispositive.
    On November 9, 2006, in response to U.S. Magnesium Corporation 
LLC's request for scope rulings, the Department issued final scope 
rulings in which it determined that the processing of pure magnesium 
ingots imported from Russia by Timminco, a Canadian company, into pure 
magnesium extrusion billets constitutes substantial transformation. 
Therefore, such alloy magnesium extrusion billets produced and exported 
by Timminco are a product of Canada and thus are not within the scope 
of the order. See November 9, 2006, Memorandum for Stephen J. Claeys, 
Deputy Assistant Secretary for Import Administration, from Barbara E. 
Tillman, Director, Office 6, and Wendy Frankel, Director, Office 8, 
China/NME Group, AD/CVD Operations: Pure Magnesium from the People's 
Republic of China (A-570-832), Magnesium Metal from the People's 
Republic of China (A-570-896), and Magnesium Metal from Russia (A-821-
819): Final Ruling in the Scope Inquiry on Russian and Chinese 
Magnesium Processed in Canada.

Use of Facts Otherwise Available

    For the reasons discussed below, we determine that the use of 
adverse facts available (AFA) is appropriate for the preliminary 
results of this review with respect to SMW.
A. Use of Facts Available
    Section 776(a)(2) of the Tariff Act of 1930, as amended (the Act), 
provides that, if an interested party withholds information requested 
by the administering authority, fails to provide such information by 
the deadlines for submission of the information and in the form or 
manner requested, subject to subsections (c)(1) and (e) of section 782, 
significantly impedes a proceeding under this title, or provides such 
information but the information cannot be verified as provided in 
section 782(i), the administering authority shall use, subject to 
section 782(d) of the Act, facts otherwise available in reaching the 
applicable determination. Section 782(d) of the Act provides that, if 
the administering authority determines that a response to a request for 
information does not comply with the request, the administering 
authority shall promptly inform the responding party and provide an 
opportunity to remedy the deficient submission. Section 782(e) of the 
Act states further that 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; (5) the information can be used without 
undue difficulties.
    On July 11, 2007, SMW notified the Department that it would not 
participate in this administrative review. As such, SMW failed to 
respond to our questionnaire, thereby withholding, among other things, 
home-market and U.S. sales information necessary for reaching the 
applicable results. Such information is imperative to calculate an 
antidumping margin for the preliminary results of the review. Because 
SMW failed to provide the information requested and thus significantly 
impeded the proceeding, we find that we must base its margin on facts 
otherwise available pursuant to sections 776(a)(2)(A), (B), and (C) of 
the Act. Further, sections 782(d) and (e) of the Act are inapplicable 
because SMW decided not to provide the Department with any information.
B. Application of Adverse Inferences for Facts Available
    In applying the facts otherwise available, section 776(b) of the 
Act provides that, if the administering authority finds that an 
interested party has failed to cooperate by not acting to the best of 
its ability to comply with a request for information from the 
administering authority, in reaching the applicable determination under 
this title the administering authority may use an inference adverse to 
the interests of that party in selecting from among the facts otherwise 
available.
    Adverse inferences are appropriate ``to ensure that the party does 
not obtain a more favorable result by failing to cooperate than if it 
had cooperated fully.'' See Statement of Administrative Action 
accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316, 
vol.1 (1994) at 870 (SAA). Further, ``affirmative evidence of bad faith 
on the part of a respondent is not required before the Department may 
make an adverse inference.'' See Antidumping Duties; Countervailing 
Duties, 62 FR 27296, 27340 (May 19, 1997). Because SMW has not provided 
any information in response to our questionnaire and has notified us 
that it would not participate in this review, we find that SMW has not 
acted to the best of its ability in providing us with relevant 
information which is under its control. This constitutes a failure on 
the part of SMW to cooperate to the best of its ability to comply with 
a request for information by the Department within the meaning of 
section 776(b) of the Act. Based on the above, the Department has 
preliminarily determined that, in selecting from among the facts 
otherwise available, an adverse inference is warranted. See, e.g., 
Notice of Final Determination of Sales at Less than Fair Value: 
Circular Seamless Stainless Steel Hollow Products from Japan, 65 FR 
42985, 42986 (July 12, 2000) (the Department applied total AFA where 
the respondent failed to respond to the antidumping questionnaire).
C. Selection and Corroboration of Information Used as Facts Available
    Section 776(b) of the Act provides that the Department may use as 
AFA information derived from the petition, the final determination in 
the investigation, any previous review, or any other information placed 
on the record. When selecting an AFA rate from among the possible 
sources of information, the Department's practice has been to ensure 
that the margin is sufficiently adverse to induce respondents to 
provide the Department with complete and accurate information in a 
timely manner. See, e.g., Certain Steel Concrete Reinforcing Bars from 
Turkey; Final Results and Rescission of Antidumping Duty Administrative 
Review in Part, 71 FR 65082, 65084 (November 7, 2006). In selecting an 
appropriate AFA rate for SMW, the Department considered the following 
rates from the proceeding: 1) the rates alleged in the petition which 
range from 54.40 to 68.94 and 86.54 to 101.24 percent (when taking into 
account

[[Page 24543]]

adjustments for electricity; see Notice of Initiation of Antidumping 
Duty Investigations: Magnesium Metal From the People's Republic of 
China and the Russian Federation, 69 FR 15293 (March 25, 2004)); 2) the 
rates we calculated for the final determination of the investigation 
which ranged from 18.65 to 21.71 percent (see Antidumping Duty Order); 
and 3) the rates we calculated in the first administrative review (the 
most recently completed review), 0.41 and 3.77 percent (see Magnesium 
Metal from the Russian Federation: Final Results of Antidumping Duty 
Administrative Review, 72 FR 51791 (September 11, 2007)).
    Section 776(c) of the Act provides that the Department shall 
corroborate, to the extent practicable, secondary information used for 
facts available by reviewing independent sources reasonably at its 
disposal. With respect to the rates alleged in the petition, 
information from prior segments of the proceeding constitutes secondary 
information. See SAA at 870 and Final Results of Antidumping Duty 
Administrative Reviews, Rescission of Administrative Reviews in Part, 
and Determination to Revoke Order in Part: Antifriction Bearings and 
Parts Thereof From France, Germany, Italy, Japan, Singapore, and the 
United Kingdom, 69 FR 55574, 55577 (September 15, 2004) (AFBs 14). The 
word ``corroborate'' means that the Department will satisfy itself that 
the secondary information to be used has probative value. Id.; see also 
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, 
from Japan, and Tapered Roller Bearings Four Inches or Less in Outside 
Diameter, and Components Thereof, from Japan: Preliminary Results of 
Antidumping Duty Administrative Reviews and Partial Termination of 
Administrative Reviews, 61 FR 57391, 57392 (November 6, 1996). To 
corroborate secondary information, the Department will examine, to the 
extent practicable, the reliability and relevance of the information 
used.
    Because SMW did not submit information we requested in this review 
we do not have such information to consider in determining whether the 
petition rates are relevant to SMW. To determine whether the petition 
rates are reliable and relevant in this administrative review, we 
compared the transaction-specific margins of AVISMA for the POR to the 
petition rates and found that the petition rates were not relevant for 
use in this administrative review and, therefore, do not have probative 
value for use as AFA.
    In addition, we find that the weighted-average rates we calculated 
for respondents in the previous, as well as in the instant review, are 
not sufficiently high as to effectuate the purpose of the facts-
available rule (i.e., we do not find that any of these rates are high 
enough to encourage participation in future segments of this proceeding 
in accordance with section 776(b) of the Act). Therefore, as facts 
available with an adverse inference, we have selected the rate of 21.71 
percent for SMW, the weighted-average margin the Department calculated 
for JSC AVISMA Magnesium-Titanium Works (a predecessor to PSC VSMPO-
AVISMA Corporation) in the original investigation (see Antidumping Duty 
Order); it is the highest rate the Department has calculated in any 
segment of the proceeding. We consider the 21.71 percent rate to be 
sufficiently high so as to encourage participation in future segments 
of this proceeding.
    With respect to corroboration of other rates from the proceeding, 
unlike other types of information such as input costs or selling 
expenses, there are no independent sources for calculated dumping 
margins. The only source for margins is administrative determinations. 
Thus, with respect to an administrative review, if the Department 
chooses as facts available a calculated dumping margin from a prior 
segment of the proceeding, there is no practical manner to test the 
margin's reliability further and the Department considers the rate 
reliable. See AFBs 14 at 55577.
    With respect to the relevance aspect of corroboration the 
Department will consider information reasonably at its disposal as to 
whether there are circumstances that would render a margin not 
relevant. Where circumstances indicate that the selected margin is not 
appropriate as AFA, the Department will disregard the margin and 
determine an appropriate margin. See Fresh Cut Flowers from Mexico; 
Final Results of Antidumping Duty Administrative Review, 61 FR 6812, 
6814 (February 22, 1996), where the Department disregarded the highest 
dumping margin as best information available because the margin was 
based on another company's uncharacteristic business expense resulting 
in an unusually high margin.
    We examined individual transactions made by AVISMA in the current 
review and the margins on those transactions in order to determine 
whether the rate of 21.71 percent was probative. We found a number of 
sales with dumping margins above the rate of 21.71 percent. Further, to 
support our corroboration, because SMW did not provide us with any 
information in this review, we examined individual transactions made by 
SMW during the immediately preceding (2005-06) administrative review 
period and the margins we determined for that review on those 
transactions in order to determine whether the rate of 21.71 percent 
was probative. See Preliminary Results of Antidumping Duty 
Administrative Review: Stainless Steel Wire Rod from the Republic of 
Korea, 72 FR 32074, 32076 (June 11, 2007) (unchanged in Final Results 
of Antidumping Duty Administrative Review: Stainless Steel Wire Rod 
from the Republic of Korea, 72 FR 46035 (August 16, 2007)). We found a 
number of sales by SMW during the 2005-06 period with dumping margins 
above the rate of 21.71 percent. Thus, the AFA rate is relevant as 
applied to SMW for this review because it falls within the range of 
AVISMA's transaction-specific margins in the current review period and 
SMW's own transaction-specific margins in the prior review period. See 
Ta Chen Stainless Steel Pipe, Inc. vs. United States, 298 F.3d 1330, 
1340 (CAFC 2002) (``Because Commerce selected a dumping margin within 
the range of Ta Chen's actual sales data, we cannot conclude that 
Commerce overreached reality'.'') We have detailed the corroboration of 
the AFA rate in the memorandum from the analyst to Laurie Parkhill 
entitled ``The Use of Facts Available and Corroboration of Secondary 
Information for Solikamsk Magnesium Works in the 2006/2007 
Administrative Review of the Antidumping Duty Order on Magnesium Metal 
from the Russian Federation,'' dated April 29, 2008. Therefore, we find 
this rate to be both reliable and relevant. As such, the Department 
finds this rate to be corroborated to the extent practicable consistent 
with section 776(c) of Act.

Date of Sale

    AVISMA reported invoice date as the date of sale for all sales in 
both markets, consistent with our conclusions in earlier segments of 
the proceeding regarding both spot sales and sales made according to 
short and long-term agreements. See Magnesium Metal from the Russian 
Federation: Notice of Final Determination of Sales at Less Than Fair 
Value, 70 FR 9041 (February 24, 2005), and accompanying Issues and 
Decision Memorandum at Comment 14. After analyzing AVISMA's response 
and the sample sales documents it provided, we preliminarily determine 
that invoice date is the appropriate date of sale for all U.S. and 
home-market sales subject to analysis in this review.

[[Page 24544]]

Constructed Export Price

    AVISMA identified all of its sales to the United States as 
constructed export-price (CEP) sales because the U.S. sales were made 
for the account of AVISMA by AVISMA's U.S. affiliate, VSMPO-Tirus, 
U.S., Inc. (Tirus US), to unaffiliated purchasers in the United States. 
AVISMA and Tirus US are affiliated because Tirus US is a wholly owned 
subsidiary of AVISMA. See section 771(33)(E) of the Act. U.S. sales to 
the first unaffiliated party were made in the United States by the U.S. 
affiliate, thus satisfying the legal requirements for CEP sales. See 
section 772(b) of the Act.
    We calculated CEP based on the packed, C.I.F price to unaffiliated 
purchasers in the United States. In accordance with section 772(c)(2) 
of the Act, for AVISMA's CEP sales we made deductions from price for 
movement expenses and discounts, where appropriate. More specifically, 
we deducted early-payment discounts, expenses for Russian railway 
freight from plant to port, freight insurance, Russian brokerage, 
handling, and port charges, international freight and marine insurance, 
U.S. customs duties, U.S. brokerage, handling, and port charges, U.S. 
warehousing, and U.S. inland freight.
    In accordance with section 772(d)(1) of the Act we deducted direct 
selling expenses and indirect selling expenses related to commercial 
activity in the United States. See also SAA at 823-824. Pursuant to 
sections 772(d)(3) and 772(f) of the Act, we made an adjustment for CEP 
profit allocated to expenses deducted under section 772(d)(1) of the 
Act. In accordance with section 772(f) of the Act, we computed profit 
based on the total revenues realized on sales in both the U.S. and home 
markets, less all expenses associated with those sales. We then 
allocated profit to expenses incurred with respect to U.S. economic 
activity based on the ratio of total U.S. expenses to total expenses 
for both the U.S. and home markets. See the memorandum to the file 
entitled ``Administrative Review of the Antidumping Duty Order on 
Magnesium Metal from the Russian Federation - Preliminary Results 
Analysis Memorandum for PSC VSMPO-AVISMA Corporation'' (April 29, 2008) 
(AVISMA Analysis Memorandum).

Normal Value

    Based on a comparison of the aggregate quantity of home-market and 
U.S. sales and absent any information that a particular market 
situation in the exporting country did not permit a proper comparison, 
we determined that the quantity of foreign like product sold by AVISMA 
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. AVISMA'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 considered basing 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 and, to the extent practicable, at the same level of trade as 
the CEP sales.
    In accordance with section 771(16)(A) of the Act, we considered all 
products produced by AVISMA that are covered by the description in the 
``Scope of the Order'' section, above, and that were sold in the home 
market during the POR to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. In 
accordance with sections 771(16)(B) and (C) of the Act, where there 
were no sales of identical merchandise in the home market to compare to 
U.S. sales, we considered comparing U.S. sales to the most similar 
foreign like product on the basis of the product characteristics we 
determined to be the most appropriate for purposes of product matching.

Cost-of-Production Analysis

    We disregarded below-cost sales in accordance with section 773(b) 
of the Act in the last completed review with respect to AVISMA. See 
Magnesium Metal from the Russian Federation: Preliminary Results of 
Antidumping Duty Administrative Review, 72 FR 25740, 25743 (May 7, 
2007) (unchanged in Magnesium Metal from the Russian Federation: Final 
Results of Antidumping Duty Administrative Review, 72 FR 51791 
(September 11, 2007)). Therefore, we have 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 a COP investigation of sales by AVISMA in the 
home market.
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP based on the sum of the cost of materials and 
fabrication for the foreign like product, plus amounts for home-market 
selling, G&A expenses, interest expense, and packing expenses.
    In the original investigation and in the first administrative 
review, AVISMA's cost-reporting methodology was based on its normal 
books and records which treated magnesium metal as the main product and 
chlorine gas as a by-product of the manufacturing process. On January 
1, 2007, during the current POR, AVISMA changed its normal books and 
records to treat magnesium as the by-product of its titanium operations 
(chlorine is consumed in titanium production). Raw magnesium and 
chlorine gas are produced jointly during the third major processing 
step, the electrolysis stage (i.e., the split-off point), during which 
both products become identifiable physically. In its cost responses, 
AVISMA claims that its acquisition by VSMPO, a titanium producer, has 
shifted its operational focus to the production of titanium sponge. 
Accordingly, it contends, the company determined that the production of 
chlorine gas, which is a significant and a critical input in the 
production of titanium sponge, is the main goal of production while 
magnesium production is now treated as a secondary product. As such, 
AVISMA claims, it has reduced its magnesium production to the minimum 
levels needed to support the titanium- sponge production based on its 
new operational focus. AVISMA claims that the reduction in magnesium 
production is apparent through its reduction or cessation of its 
practice of burning off excess chlorine gas.
    In its original cost response AVISMA included only the costs from 
the further-processing steps (i.e., only the costs incurred after the 
split-off point and none of the joint costs of the electrolysis and 
prior stages) in its COP database.
    In its supplemental cost responses AVISMA provided alternative cost 
calculations in which it treated raw magnesium and chlorine gas as co-
products. Under this approach, AVISMA calculated the value of chlorine 
at the split-off point by starting with sale prices of titanium sponge 
and then deducting the post-split-off titanium-processing costs; AVISMA 
calculated the value of raw magnesium at the split-off point using the 
starting sale prices of magnesium metal and then deducted the post-
split-off costs of the magnesium-metal processing. AVISMA then 
allocated the joint costs under the net-realizable-value (NRV) 
methodology.
    We requested that AVISMA provide another set of cost calculations 
based on a co-product methodology which relies

[[Page 24545]]

on the sales or market values of the joint products, i.e., magnesium 
and chlorine gas (for the one-year period prior to the original period 
of investigation) instead of the sales values of the downstream 
products (i.e., titanium sponge). AVISMA provided the requested cost 
data based on a co-product methodology of allocating joint costs in 
which it determined the value of chlorine gas (with certain 
adjustments) at the split-off point using the current market prices of 
liquid chlorine and the value of raw magnesium at the split-off point 
using the sales prices for magnesium products for the period predating 
the period of original investigation. AVISMA allocated joint costs 
based on the relationship between the NRV of raw magnesium and the NRV 
of chlorine gas.
    We analyzed the data on the record to determine whether to judge 
the joint products appropriately as co-products or byproducts. In doing 
so, we conservatively considered the lowest per-metric-ton value of 
chlorine gas during the POR; for raw magnesium we considered the 
average per-metric-ton value for the period prior to the period of 
investigation (i.e., prior to a period in which dumping was alleged). 
We evaluated the significance of each product at the split-off point 
and found that chlorine gas represented a significant percentage of the 
total value of all products at the split-off point. Consequently, based 
on our review of the combination of factors (the takeover of AVISMA by 
VSMPO, the cessation of the burning off of excess chlorine gas, and our 
examination of the relative values of the joint products in question), 
we have preliminarily determined that it is appropriate to treat 
chlorine gas and raw magnesium as co-products for purposes of 
allocating the common costs of these joint products for the entire 
cost- reporting period.
    We have relied on AVISMA's cost database based on the co-product 
methodology of allocating joint costs for the preliminary results. We 
made certain adjustments to AVISMA's cost data - we revised the value 
of chlorine gas to reflect the company's purchases of liquid chlorine 
less freight costs and further-processing costs\2\ and we increased the 
total pool of joint costs to be allocated to the co-products to include 
the costs associated with the disposal of excess chlorine gas.\3\ For 
more details, see Memorandum to Neal M. Halper, Director, Office of 
Accounting, through Michael P. Martin, Lead Accountant, from Heidi K. 
Schriefer, Senior Accountant, entitled ``Cost of Production and 
Constructed Value Calculation Adjustments for the Preliminary Results - 
PSC VSMPO-AVISMA Corporation and VSMPO - Tirus US Inc,'' dated April 
29, 2008.
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    \2\ AVISMA added the cost of evaporating liquid chlorine to the 
sales value of liquid chlorine in order to arrive at the estimated 
value of chlorine gas. In the absence of a cost value associated 
with liquefying chlorine gas, as a proxy, we subtracted the 
evaporation costs from the sales value of liquid chlorine to 
estimate the NRV of chlorine gas at the split-off point.
    \3\ AVISMA burned off excess chlorine gas for part of the POR. 
By November 2006, AVISMA was no longer producing excess chlorine 
gas.
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    After calculating the COP and 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 reported home-market prices less any 
applicable movement charges, discounts, and rebates. Pursuant to 
section 773(b)(2)(C) of the Act, when less than 20 percent of a 
respondent's sales of a given product were at prices less than the COP, 
we do 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 a respondent's 
sales of a given product were at prices less than the COP, we disregard 
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 because, based on comparisons of prices to weighted-
average COPs for the period of review, such 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 all of AVISMA's home-market sales of magnesium 
metal because all such sales failed the cost test. See AVISMA Analysis 
Memorandum.

Constructed Value

    Section 773(a)(4) of the Act provides that, where normal value 
cannot be based on comparison-market sales, normal value may be based 
on constructed value. Accordingly, because all home-market sales of 
magnesium metal failed the sales-below-cost test, we based normal value 
on constructed value.
    Section 773(e) of the Act provides that constructed value shall be 
based on the sum of the cost of materials and fabrication for the 
imported merchandise, plus amounts for selling, general and 
administrative expenses (G&A), interest expense, profit, and U.S. 
packing costs. We calculated the cost of materials and fabrication 
based on the methodology described in the ``Cost- of-Production 
Analysis'' section above.
    Because we disregarded all home-market sales as below-cost sales 
there are no sales made in the ordinary course of trade that we can use 
to calculate selling expenses and profit for constructed value pursuant 
to section 773(e)(2)(A) of the Act for AVISMA. In cases where actual 
data are not available to use in the calculation of selling expenses 
and profit, section 773(e)(2)(B)(i) of the Act provides the alternative 
of calculating such expenses using ``actual amounts incurred and 
realized by the specific exporter or producer in connection with the 
production and sale of merchandise that is in the same general category 
of products as the subject merchandise.'' This option is not available 
to us for these preliminary results because the record information, 
such as the financial information AVISMA submitted in this review, is 
not sufficiently detailed to permit a calculation of selling expenses 
and profit specific to subject merchandise or specific to a category of 
products in the same category as the subject merchandise.
    Another alternative at section 773(e)(2)(B)(ii) of the Act suggests 
calculating the amounts in question using ``the weighted average of the 
actual amounts incurred and realized by exporters or producers that are 
subject to the investigation or review (other than the exporter or 
producer described in clause (i)) `` This alternative is not applicable 
in this review because AVISMA is the single cooperating respondent in 
this review and there are no other participating exporters/producers in 
this review.
    Another statutory alternative of calculating the amounts in 
question provided at section 773(e)(2)(B)(iii) of the Act suggests 
``any other reasonable method `` Therefore, pursuant to section 
773(e)(2)(B)(iii) of the Act, we have calculated an estimate of direct 
and indirect selling expenses and profit for AVISMA in this review 
using the selling expenses and profit we calculated for AVISMA in the 
2005-06 administrative review. See AVISMA Analysis Memorandum.
    When appropriate, we made adjustments to constructed value in 
accordance with section 773(a)(8) of the Act, 19 CFR 351.410, and 19 
CFR 351.412 for circumstance-of-sale differences and level-of-trade

[[Page 24546]]

differences. We made circumstance-of-sale adjustments by deducting 
home-market direct selling expenses from constructed value. Because we 
calculated constructed value at a level of trade different from the CEP 
level trade, we made a CEP-offset adjustment in accordance with 
sections 773(a)(7)(B) and 773(a)(8) of the Act. See ``Level of Trade'' 
section below.

Level Of Trade

    In the U.S. market, AVISMA made CEP sales. In the case of CEP 
sales, we identified the level of trade based on the price after the 
deduction of expenses and profit under section 772(d) of the Act. 
Although the starting price for CEP sales was based on sales made by 
the affiliated reseller to unaffiliated customers through two channels 
of distribution, sales to end-users and distributors, AVISMA reported 
similar selling activities associated with all sales to the affiliated 
reseller (i.e., at the CEP level of trade).
    AVISMA reported one channel of distribution in the home market, 
sales to end-users. We found that this channel of distribution 
constitutes a single level of trade in the home market. When normal 
value is based on constructed value, the level of trade is that of the 
sales from which we derive selling, G&A, and profit figures.
    To determine whether home-market sales were made at a different 
level of trade than U.S. sales, we examined stages in the marketing 
process and selling functions along the chain of distribution between 
the producer and the unaffiliated customer. We found that there were 
significant differences between the selling activities associated with 
the CEP level of trade and those associated with the home-market level 
of trade and, thus, we found the CEP level of trade to be different 
from the home-market level of trade. Further, we found the CEP level of 
trade to be at a less advanced stage of distribution than the home-
market level of trade.
    Because AVISMA reported no home-market levels of trade that were 
equivalent to the CEP level of trade and because we determined that the 
CEP level of trade was at a less advanced stage than the home-market 
level of trade, we were unable to determine a level-of-trade adjustment 
based on the respondent's home-market sales of the foreign like 
product. Furthermore, we have no other information that provides an 
appropriate basis for determining a level-of-trade adjustment. For 
AVISMA's CEP sales, we made a CEP-offset adjustment in accordance with 
sections 773(a)(7)(B) and 773(a)(8) of the Act. The CEP-offset 
adjustment to constructed value was subject to the offset cap, 
calculated as the sum of home-market indirect selling expenses up to 
the amount of U.S. indirect selling expenses deducted from CEP (or, if 
there were no home-market commissions, the sum of U.S. indirect selling 
expenses and U.S. commissions). For a description of our level-of-trade 
analysis for these preliminary results, see AVISMA Analysis Memorandum.

Currency Conversion

    For purposes of the preliminary results and in accordance with 
section 773A of the Act, we made currency conversions based on the 
official exchange rates in effect on the dates of the U.S. sales as 
certified by the Federal Reserve Bank of New York. See also 19 CFR 
351.415.

Preliminary Results of Review

    As a result of this review, we preliminarily find that the 
following weighted-average
    dumping margins exist:

------------------------------------------------------------------------
                Manufacturer/Exporter                  Margin (percent)
------------------------------------------------------------------------
PSC VSMPO-AVISMA Corporation........................               17.68
Solikamsk Magnesium Works...........................               21.71
------------------------------------------------------------------------

Disclosure and Public Comment

    Pursuant to 19 CFR 351.224(b), the Department will disclose to any 
party to the proceeding the calculations performed in connection with 
these preliminary results within five days after the date of 
publication of this notice. Pursuant to 19 CFR 351.309, interested 
parties may submit written comments in response to these preliminary 
results. Case briefs are due within 30 days after the date of 
publication of this notice. Rebuttal briefs, limited to arguments 
raised in case briefs, may be submitted no later than five days after 
the time limit for filing case briefs. Parties who submit arguments in 
this proceeding are requested to submit with the argument a statement 
of the issues, a brief summary of the argument, and a table of 
authorities. Case and rebuttal briefs must be served on interested 
parties in accordance with 19 CFR 351.303(f).
    Also, pursuant to 19 CFR 351.310(c), within 30 days of the date of 
publication of this notice, interested parties may request a public 
hearing on arguments to be raised in the case and rebuttal briefs. If 
requested, the hearing will be held two days after the date for 
submission of rebuttal briefs. Parties will be notified of the time and 
location. The Department will publish the final results of this 
administrative review, including the results of its analysis of issues 
raised in any case brief, rebuttal brief, or hearing no later than 120 
days after publication of these preliminary results.

Assessment Rates

    The Department shall determine, and U.S. Customs and Border 
Protection (CBP) shall assess, antidumping duties on all appropriate 
entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an 
importer-specific assessment rate for AVISMA reflecting these 
preliminary results of review. We divided the total dumping margins for 
the reviewed sales by the total entered value of those reviewed sales 
for the importer. We will instruct CBP to assess the importer-specific 
rate uniformly on all entries of subject merchandise made by the 
relevant importer during the POR. See 19 CFR 351.212(b). The Department 
will issue instructions to CBP 15 days after the publication of the 
final results of review.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) (Assessment 
of Antidumping Duties). This clarification will apply to entries of 
subject merchandise during the POR produced by AVISMA for which AVISMA 
did not know its merchandise was destined for the United States. In 
such instances, we will instruct CBP to liquidate unreviewed entries of 
AVISMA-produced merchandise at the all-others rate if there is no rate 
for the intermediate company(ies) involved in the transaction. For a 
full discussion of this clarification, see Assessment of Antidumping 
Duties.
    Because we are relying on total AFA to establish SMW's dumping 
margin, we preliminarily determine to instruct CBP to apply a dumping 
margin of 21.71 percent to all entries of subject merchandise during 
the POR that were produced and/or exported by SMW.

Cash-Deposit Requirements

    If these preliminary results are adopted in the final results of 
review, the following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication of the final 
results of this administrative review, as provided in section 751(a)(1) 
of the Act: 1) the cash-deposit rate for the reviewed firms will be 
those established in the

[[Page 24547]]

final results of this review; 2) for previously reviewed or 
investigated companies not covered in this review, 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 (LTFV) 
investigation but the manufacturer is, the cash-deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the subject merchandise; and 4) if neither the exporter nor the 
manufacturer is a firm covered in this or any previous segment of the 
proceeding, the cash-deposit rate will continue to be the all-others 
rate established in the LTFV investigation, which is 21.01 percent. See 
Antidumping Duty Order. These cash-deposit requirements, when imposed, 
shall remain in effect until further notice.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under
    19 CFR 351.402(f)(2) 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.
    The preliminary results of this administrative review and this 
notice are issued and
    published in accordance with sections 751(a)(1) and 777(i)(1) of 
the Act.

    Dated: April 29, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-9889 Filed 5-2-08; 8:45 am]
BILLING CODE 3510-DS-S