66 FR 49345, September 27, 2001

                                                            A-570-864
                                                        Investigation
                                                POI: 4/1/00 - 9/30/00
                                                      Public Document
                                                           IA I/2: DM


MEMORANDUM TO: Faryar Shirzad
               Assistant Secretary 
                 for Import Administration

FROM:          Richard W. Moreland
               Deputy Assistant Secretary, Group I
               Office of AD/CVD Enforcement

DATE: September 14, 2001

SUBJECT:       Issues and Decision Memorandum for the Antidumping Duty
               Investigation of Pure Magnesium in Granular Form from 
               the People's Republic of China

Summary

We have analyzed the case and rebuttal briefs of interested parties in
the investigation of sales at less than fair value of pure magnesium in
granular form from the People's Republic of China. As a result of our
analysis, we have made changes in the margin calculations for the final
determination. We recommend that you approve the positions we have
developed in the "Discussion of the Issues" section of this memorandum.
Below is the complete list of the issues in this investigation for which
we received comments from interested parties:

Comment 1: Separate Rate for Minmetals 
Comment 2: The Use of a Combination Rate
Comment 3: The Proper Surrogates for Overhead, SG&A and Profit Ratios
Comment 4: Calculation of Overhead and SG&A Ratios Applied to HEBI
Comment 5: Valuation of Steam Coal 
Comment 6: Valuation of Ferrosilicon and Dolomite
Comment 7: Marine Insurance Adjustment for Inflation
Comment 8: Ocean Freight
Comment 9: Treatment of Fluorite Powder as Overhead Expense vs. Direct
           Material Input
Comment 10: Valuation of Taiyuan's July 2000 Electricity Consumption Factor
Comment 11: Correction of Taiyuan's Direct Labor Hours
Comment 12: Correction of HEBI's Packing Material Weights
Comment 13: Treatment of Magnesium Shreds
Comment 14: Revision to the Scope of the Investigation
Comment 15: Reconsideration of Industry Standing

Background 

On April 30, 2001, the Department of Commerce (the Department) published
the Notice of Preliminary Determination of Sales at Less Than Fair Value
and Postponement of Final Determination: Pure Magnesium in Granular Form
from the People's Republic of China, 66 FR 21314 (Preliminary
Determination). We invited parties to comment on our preliminary
determination. The petitioners and a domestic interested party,
Rossborough Manufacturing Co. LP. (Rossborough), each requested a public
hearing, which was held at the Department on August 2, 2001. The period of
investigation (POI) is April 1, 2000 through September 30, 2000. 

Margin Calculations 

We calculated export price and normal value using the same methodology
stated in the preliminary determination, except as follows:

1. We revised our margin calculations for the sole respondent, Minmetals
   Precious & Rare Minerals Import and Export/China National Nonferrous
   Metals Industry Trading Group Corp (Minmetals), to take into account our
   findings at verification. For further discussion, see the September 14,
   2001, memorandum from Dinah McDougall to the file entitled "U.S. Price
and
   Factors of Production Adjustments for the Final Determination." 

2. For the magnesium producers Taiyuan Shi Geng Yang Enterprise Company,
   Ltd. (Taiyuan) and Wealth (HEBI) Co., Ltd. (HEBI) we changed the
surrogate
   financial ratios for factory overhead, selling, general and
administrative
   (SG&A) expense, and profit. See Comment 3 and Comment 4. 

3.  For marine insurance, we have not adjusted the rate for inflation. See
    Comment 7. 

4.  We used facts available to value the July 2000 electricity consumption
    rate of Minmetals' supplier Taiyuan. See Comment 10. 


Discussion of the Issues

Comment 1: Separate Rate for Minmetals 

In the preliminary determination, the Department assigned Minmetals a
separate rate, based on the conclusion that the company sufficiently
demonstrated the absence of both de jure and de facto control by the
People's Republic of China (PRC) government over its export activities.
The petitioners argue that the Department should reverse this decision for
the final determination because the PRC government does, in fact, exercise
control over Minmetals.

The petitioners base their argument primarily on statements made by an
official of the Chinese Magnesium Association (CMA) which were published
in Platts Metal Week. According to the petitioners, this official
indicated that the CMA would coordinate with other PRC exporters and
producers to export subject merchandise through Minmetals. Specifically,
the petitioners note that this official made the following two statements:
1) PRC magnesium companies might export through Minmetals this year to
avoid the high antidumping duties imposed on them; and 2) the United
States would remain the PRC's key magnesium market if Minmetals manages to
export there this year. The petitioners contend that both of these
statements lead to the conclusion that the PRC government, through the
CMA, exercises de facto control over Minmetals' export activities, because
they contradict Minmetals' assertion that it does not coordinate with
other exporters in setting prices or in determining which companies will
sell to which markets.

The petitioners contend that the Department has previously determined
that one company's participation in the setting or negotiation of prices
charged by another company demonstrates that the company is legally or
operationally in a position to exercise restraint or direction over the
other company. See Certain Welded Stainless Steel Pipe From Taiwan; Final
Results of Administrative Review, 62 FR 37543, 37549 (July 14, 1997) (WSSP
from Taiwan). (1) The petitioners maintain that the Court of International
Trade affirmed the Department's finding in WSSP from Taiwan, stating that
the ability to set the prices charged by another company is a "strong
indicator" of one person's ability to control the other. See Ta Chen
Stainless Steel Pipe Co. v. United States, No 97-08-01344, Slip Op. 99-117
at 27, 28 (CIT Oct. 28, 1999). Thus, the petitioners argue that the
Department cannot ignore the publicly available, record evidence
demonstrating the degree of PRC governmental de facto control over
Minmetals.

Minmetals contends that the Department was correct in assigning it a
separate rate for the preliminary results. According to Minmetals, the
facts on the record clearly demonstrate that Minmetals has complete
control over its business activities, including establishing its own
export prices, negotiating contracts without governmental guidance; making
its own personnel decisions; and retaining the proceeds of its sales.
Minmetals maintains that the Department confirmed each of these facts at
verification, and the petitioners have not presented any credible evidence
to the contrary.

Minmetals disagrees with the petitioners' assertion that the CMA, and by
extension the PRC government, exercises control over the company's export
activities. Minmetals notes that the CMA is merely a trade association
which performs the functions normally performed by any trade association.
Minmetals contends that the CMA is not related to any governmental
entities, nor does it have the authority to direct any exports through
Minmetals. According to Minmetals, even assuming, arguendo, that other
companies will be exporting through Minmetals, the Department's
anticircumvention mechanisms and administrative proceedings are well-
equipped to address fraud and dumping. Therefore, Minmetals contends that
the Department should continue to grant it a separate rate for the final
determination.

Department's Position:

At verification, we reviewed Minmetals' claim for a separate rate with
company officials. In addition, we extensively reviewed the company's
sales documents, and we examined the company's internal sales target plan
for 2001, which indicates the projected sales target on a product-specific
basis for each quarter. We found no evidence to contradict Minmetals'
contentions that it is solely responsible for setting its export prices
and that it does not coordinate with other producers or exporters
regarding sales of subject merchandise.

Contrary to the petitioners' assertions, we find that statements made by
the CMA do not in any way contradict our findings at verification. Rather,
these statements merely appear to be speculation on the part of a CMA
official about what "might" happen in the future. In Asociacion Colombiana
Exportadores de Flores v. United States, 40 F. Supp. 2d 466, 472 (CIT
1999), the Court of International Trade held that speculation cannot
constitute substantial evidence. (2) Moreover, while these statements may
suggest how producers and exporters might act in the future, they do not
support the contention that Minmetals' export activities are controlled by
the central government. We further note that the article in question did
not provide any link between the CMA and the government, nor any link
between Minmetals and either the CMA or the government. As such, we find
that statements by an employee of the CMA do not provide compelling
evidence which would lead us to reverse our separate rates decision for
Minmetals. Therefore, absent clear evidence that the government of the PRC
is involved in the controlling of Minmetals' export activities, we
determine that Minmetals continues to be entitled to a separate rate in
this case.

We find that the petitioners' reliance on WSSP from Taiwan is similarly
misplaced. In that case, the Department found that the respondent was
affiliated with one of its customers, based in part on a finding that the
respondent was able to set the prices for resales by one of its U.S.
distributors. In contrast, we find no evidence here that the PRC
government is setting prices or controlling price negotiations for
Minmetals. 

Comment 2: The Use of a Combination Rate

The petitioners contend that, if the Department continues to grant
Minmetals a separate rate, it should, at a minimum assign a combination
rate to Minmetals and its one known supplier, Taiyuan. According to the
petitioners, the Department's duty in administering the antidumping law is
to prevent producers receiving high rates from evading the effect of an
order by exporting merchandise through non-producing trading companies
with lower dumping margins. In support of this assertion, the petitioners
cite Jia Farn Mfg. Co. v. United States, 817 F. Supp 969, 975 (CIT 1993).

The petitioners acknowledge that the Department's normal practice in non-
market economy (NME) cases is to examine and assign margins to exporters
located in the NME, rather than NME producers. On the one hand, the
petitioners maintain that this policy is reasonable because it is the
exporter who actually determines the price at which the subject
merchandise is sold to the United States. Nonetheless, they contend that
the policy is also unreasonable because it is not consistent with the
Department's policy regarding trading companies in market economy cases.

Specifically, the petitioners maintain that, in market economy cases
involving trading companies which export to the United States without
their suppliers' knowledge, the Department's practice has been to assign
the exporters rates in combination with the suppliers in question.
According to the petitioners, should the exporter later make sales of
merchandise produced by a different supplier, those exports will receive
the supplier's rate, or, if the supplier has no rate, the "all others"
rate. The petitioners assert that the Department only deviates from this
policy in instances where the potential for circumvention has been high,
and then only to eliminate the incentive to circumvent antidumping duties.
See Final Determination of Sales at Less Than Fair Value: Stainless Steel
Sheet and Strip in Coils From Taiwan, 64 FR 30592, 30605 (June 30, 1999)
(Sheet and Strip from Taiwan). According to the petitioners, the
Department's approach in NME cases should not be any different.

The petitioners concede that the Department's regulations allow it to
assign combination rates in NME cases only in limited circumstances (i.e.,
involving exclusions from an antidumping order). See Antidumping Duties;
Countervailing Duties; Final Rule, 62 FR 27295, 27303 (Preamble).
Nonetheless, the petitioners contend that this policy is contrary to the
reality of NME proceedings and the requirements of the law. According to
the petitioners, the Department has never offered any coherent explanation
for distinguishing between NME and market economy cases in this respect.
However, they state that administrative inconvenience is not a reasonable
distinction because it is possible to devise a test to identify exporters
for whom combination rates are most appropriate. Although the petitioners
decline to suggest any criteria for such a test, they maintain that
Minmetals and its supplier would qualify under any conceivable standard.
Similarly, they contend that the basis for normal value (i.e., factors of
production or home market price) is not a legitimate distinction because
the Department only compares U.S. prices produced by a particular company
to either the factors of production of the same supplier (in an NME case)
or the home market prices of the same supplier (for a market economy case).

The petitioners assert that the conduct of future administrative reviews
by the Department does not provide an effective remedy to the problem of
producers selling through exporters with a low cash deposit rate, because
the first administrative review is not concluded until at least two years
after the final determination in an investigation. The petitioners contend
that, during this time, other producers can ship through the exporter to
the United States using the lowest rate possible. According to the
petitioners, it is not appropriate for the domestic industry to bear the
burden of assessing whether an exporter has become a conduit for new
producers.

Finally, the petitioners contend that the situation in this investigation
is unique because there is evidence on the record that Minmetals intends
to circumvent the order. (3) See the petitioners' argument in Comment 1,
above. The petitioners contend that the problem is further heightened in
this case because the difference between Minmetals' rate and the PRC-wide
rate is considerably greater than the difference between respondents'
rates and PRC-wide rates in previous NME investigations. According to the
petitioners, if Minmetals does not intend to act as a conduit for exports
for other PRC companies, the assignment of a combination rate would not
harm Minmetals in any way. Thus, the petitioners argue that the Department
should "act forcefully within the bounds of the statute" to preclude
circumvention of antidumping duties, just as it does in every similar
market economy case, and assign a combination rate to Minmetals and
Taiyuan.

According to Minmetals, a combination rate is applicable only if the
Department calculates a zero or de minimis margin for a particular
exporter, in accordance with 19 CFR 351.107(b). Minmetals contends that
the Department's combination rate policy in market economy cases is not
applicable to NME cases, because the same factual circumstances do not
exist in the two types of proceedings. Specifically, Minmetals notes that
the Department applies a knowledge test in market economy cases, whereby
the Department considers a U.S. sale to have been made by the first
company in the sales process (usually the producer) who has knowledge that
the shipment is destined for the United States. Minmetals maintains that
the Department assigns combination rates to non-producing exporters in
market economies solely to prevent the circumvention of an order by
producers to whom the Department has assigned a high dumping margin (i.e.,
to prevent these producers from shipping through trading companies
assigned lower rates). Minmetals asserts that NME cases are different,
however, because producers not acting as exporters cannot receive their
own dumping rates. Therefore, Minmetals concludes that knowledge of
destination plays no role in NME cases, and thus no fraud can be
perpetuated by NME producers - obviating the need to apply a combination
rate. 

Minmetals disagrees with the petitioners that the facts in this case are
analogous to those in Sheet and Strip from Taiwan. According to Minmetals,
in Sheet and Strip from Taiwan, the Department had on the record actual
evidence of middleman dumping and had initiated a separate middleman
dumping investigation. However, Minmetals contends that no such evidence
of circumvention exists here.

Minmetals also disagrees that the administrative review process does not
provide an effective remedy to the petitioners' concerns regarding
circumvention. Minmetals notes that all of its future U.S. exports will
remain subject this process, which can be legally triggered by the
petitioners. According to Minmetals, should the Department find that the
company is dumping after the completion of this review, the Department
will assess additional duties and require it to pay higher cash deposit
rates for future entries. Thus, Minmetals asserts that, absent any
tangible evidence of circumvention on the record, it would be improper and
premature for the Department to subject it to a combination rate. 

Finally, Minmetals contends that assigning it a combination rate would
harm the company's business, because this would effectively exclude any
exports to the United States purchased from other suppliers. According to
Minmetals, under U.S. antidumping law, a company is permitted to select a
different supplier for its merchandise as long as it does so while
complying with the antidumping order. Minmetals asserts that it is
entitled to a single dumping rate because it makes its own pricing
decisions, regardless of the identity of its supplier. Minmetals further
contends that, if it selects a different supplier, it must adjust its
prices accordingly in order to avoid being assessed additional duties.
Thus, Minmetals contends that it would be unreasonable to limit its choice
of suppliers by subjecting it to a combination rate for purposes of the
final determination.

Department's Position:

The Department's policy regarding the assignment of combination rates in
NME cases is set forth in the preamble to the Department's current
regulations. Specifically, the preamble states the following:

    if sales to the United States are made through an NME trading 
    company, we assign a noncombination rate to the trading company
    regardless of whether the NME producer supplying the trading 
    company has knowledge of the destination of the merchandise. 
    One exception to this NME practice occurs where we find no dumping
    and exclude an exporter from an AD order. Where exclusions are 
    involved, we publish a combination rate to address the same 
    concerns described above regarding redirection of exports 
    through an excluded trading company. Nothing in  351.107(b)(1)
    is intended to change our policy for assigning rates in NME 
    proceedings.

See Preamble, 62 FR at 27303.

We find that this policy continues to be appropriate in this case. As we
indicated in our response to Comment 1, we find that statements made by
the CMA merely constitute speculation on the part of a CMA official about
what "might" happen in the future. However, as noted above, speculation
cannot constitute substantial evidence and we have not treated it as such
here. Thus, contrary to the petitioners' characterization of this
situation as "unique," we do not find that the circumstances in this case
are distinguishable from those in other proceedings in which the
Department has considered, and rejected, the assignment of combination
rates to NME exporters which have not been excluded from a potential
antidumping order.

We also disagree with the petitioners that the administrative review
process is not the appropriate forum for determining whether Minmetals has
changed its pricing practices. As we stated in Final Determination of
Sales at Less Than Fair Value: Disposable Pocket Lighters from the
People's Republic of China, 60 FR 22359, 22364 (May 5, 1995):

    Where a producer/exporter combination is found not to be dumping, 
    it is appropriate to publish a rate that applies to that producer/
    exporter combination because they are excluded from the order and,
    therefore, future administrative reviews. However, all other 
    exporters remain subject to the order and administrative reviews.
    Hence, contrary to petitioner's assertion, those exporters have no
    incentive to export the output of producers that might yield a high
    FMV unless they adjust their U.S. prices accordingly. If they fail 
    to do so, an administrative review would result in an assessment of
    additional duties, with interest, and a higher cash deposit rate 
    for future entries.

Thus, because Minmetals will be liable for any increase in its rate of
dumping, we find that it is unlikely that it will allow PRC suppliers to
use it as a "conduit" for their exports without also controlling the U.S.
price of those shipments. Indeed, we found at verification that Minmetals
currently has complete control over the prices at which it sells to the
United States, and we have no reason to believe that this fact will change
at any point in the future. (4)

Finally, we disagree with the petitioners' contention that the
Department's combination rates policies in NME and market economy cases
are inconsistent. Although we may use combination rates in market-economy
cases, we usually do not. Further, we note that, unlike in market- economy
proceedings, the Department generally does not apply a "knowledge test" in
NME cases, but rather assigns separate rates only to entities that export
to the United States. (5) That is, in NME cases we only examine sales by
exporters and assign rates to those exporters. We do not determine rates
for their suppliers. In contrast, in market-economy proceedings, the
knowledge test determines whether the supplier or the exporter is the
appropriate respondent, which is significant because the respondent is the
entity which is the potential price discriminator in any given case.
Therefore, in accordance with our NME policy, we have not assigned a
combination rate to Minmetals for purposes of the final determination.

Comment 3: The Proper Surrogates for Overhead, SG&A and Profit Ratios

In the preliminary determination, the Department derived the surrogate
ratios for factory overhead and SG&A expense from the financial statements
of an Indian producer of pure magnesium, Southern Magnesium and Chemicals
Ltd. (Southern Magnesium). However, since Southern Magnesium's financial
data showed a loss for that year, the Department based the surrogate
profit ratio on a different set of financial data. For the profit ratio,
the Department used the 1998-1999 financial aggregates and ratios data for
the general category of "other nonferrous metals" producers in India,
published by the Centre for Monitoring Indian Economy (CMIE).

Minmetals maintains that in selecting the appropriate surrogate values,
the Department's practice is to disregard surrogate values that are
aberrational or deemed to be outside the ordinary course of business, as
discussed in the Preamble (see 62 FR at 27366) and Freshwater Crawfish
Tail Meat from the People's Republic of China; Final Results of New
Shipper Review, 64 FR 27961 (May 24, 1999). The respondent argues that
close examination of Southern Magnesium's 1998-1999 annual report reveals
that the company did not operate according to its normal course of
business, because the company suffered a major disruption in the sourcing
of a critical material resulting in substantially decreased production for
the year. Therefore, since the company's production for the 1998-1999
fiscal year was aberrational, the respondent contends that it is
inappropriate for the Department to use Southern Magnesium's financial
statement as a basis for the surrogate ratios for overhead and SG&A. 

Minmetals also asserts that the Department should not value the profit
ratio from a source which is separate from that used to value the overhead
and SG&A ratios. Minmetals contends that, since profit is calculated based
on the revenue and expenses of the same company, the same set of financial
data should be used to link all three ratios. Consequently, Minmetals
proposes that the Department base all surrogate ratios on the CMIE data,
which has been used as a reliable source in other cases, such as Manganese
Metal from the People's Republic of China; Final Results of Antidumping
Duty Administrative Review, 66 FR 15076 (Mar. 15, 2001) (Manganese Metal).

Finally, Minmetals notes that the petitioners have requested the
Department to base profit on the financial statements of various aluminum
producers in India (see below). According to Minmetals, however, these
financial statements do not provide a proper basis for surrogate data
because the dominating presence of a government-owned and controlled
aluminum company suggests that the entire aluminum industry in India is
subject to market distortions. (6) Moreover, Minmetals counters the
petitioners' argument to use the financial data of four copper and zinc
producers to value profit by pointing out that there is no evidence to
suggest that these companies, hand-picked by the petitioners, more closely
represent the experience of magnesium producers than the industry-
aggregate data reported by the CMIE. Accordingly, the respondent argues
that all alternative surrogate choices suggested by the petitioners are
unreliable and, therefore, Minmetals urges the Department to base all
surrogate ratios on the CMIE data.


The petitioners agree with the Department's use of Southern Magnesium's
financial data for the surrogate ratios for overhead and SG&A. The
petitioners argue that since Southern Magnesium produces identical
merchandise, the use of this data is reasonable and consistent with the
Department's practice of using data from producers of identical or
comparable merchandise, as discussed in Glycine from the People's Republic
of China; Final Results of New Shipper Administrative Review, 66 FR 8383
(Jan. 31, 2001) and accompanying decision memorandum at Comment 1 (Glycine
from the PRC), and Notice of Final Determination of Sales at Less Than
Fair Value; Polyvinyl Alcohol from the People's Republic of China, 61 FR
14057, 14061 (Mar. 29, 1996) (PVA from the PRC). On the other hand, the
petitioners contend that the CMIE data is not an appropriate choice, since
it does not incorporate any financial data from producers of identical or
comparable merchandise, and the "Other Nonferrous Metals" category
consists of unspecified producers of zinc, lead and copper. 

Moreover, the petitioners claim that Minmetals has failed to provide any
evidence that the decline in Southern Magnesium's production has resulted
in a distortion of the per-unit costs. Indeed, the petitioners note that a
comparison of Southern Magnesium's 1998-1999 financial data to the
previous year's data reveals that the increase in the per-unit cost
between the two years not only is insignificant but it is also less than
the inflation factor indicated by the World Price Index for India during
this time. Therefore, the petitioners contend that the Department should
reject Minmetals' claim that the 1998-1999 financial data are
aberrational. 

The petitioners also argue that the Department is not required to value
financial ratios using surrogate data from a single source. According to
the petitioners, there have been instances when the benefit of comparing
data of an industry most comparable to the subject merchandise has
outweighed the Department's preference to value all of the financial
ratios from a single source, such as in Tapered Roller Bearings and Parts
Thereof, Finished or Unfinished, From Romania; Final Results of
Antidumping Duty Administrative Review, 62 FR 37194 (July 11, 1997) and
Notice of Final Determination of Sales at Less Than Fair Value: Beryllium
Metal and High Beryllium Alloys from the Republic of Kazakstan, 62 FR 2648
(Jan. 17, 1997).

As a surrogate for the profit ratio, the petitioners suggest that the
data from the aluminum industry is appropriate, because aluminum is a
comparable product to magnesium and the data is contemporaneous with the
POI. The petitioners refute Minmetals' claim of market distortion, stating
that even if Minmetals had identified which aluminum producer is
government-owned, it would be simple for the Department to exclude this
company's data from the average. The CMIE cannot be so easily adjusted,
according to the petitioners, because the Department cannot infer from the
CMIE data that no government-owned entities have been included. 

In the event that the Department finds that non-ferrous metals are more
comparable to magnesium than aluminum, the petitioners suggest that using
the financial statements of certain non-ferrous metals producers to derive
a surrogate value for profit would be more reliable than using the all-
inclusive CMIE data. In support of this argument, the petitioners cite to
Pure Magnesium from the People's Republic of China: Final Results of
Antidumping Duty New Shipper Administrative Review, 63 FR 3085, 3088 (Jan.
21, 1998) (Pure Magnesium), and Notice of Final Determination of Sales at
Less Than Fair Value: Creatine Monohydrate from the People's Republic of
China, 64 FR 71104, 71108 (Dec. 20, 1999) (Creatine) and accompanying
decision memorandum at Comment 1, in which the Department has previously
indicated that it prefers to use company-specific data or more narrowly
defined industry averages over averages based on a broad-range of similar
industries. Moreover, the petitioners suggest that the relatively low
profit ratio provided by the CMIE data indicates that the aggregate data
includes information from companies which have experienced negative
profitability For these reasons, the petitioners maintain that the use of
several financial statements of the same types of producers contained in
the CMIE data would be more reliable than the CMIE average itself, since
they are more contemporaneous to the POI, are not government-owned
entities, and all have experienced a positive profit rate.

Department's Position:

Section 351.408(c)(4) of the Department's regulations directs the
Department to value overhead, general expenses, and profit using non-
proprietary information gathered from producers of identical or comparable
merchandise in the surrogate country. In this proceeding, we have the
following Indian industry experience on the record:

   a.  the 1998-1999 annual report of a producer of pure magnesium, 
       which shows a negative profit figure (Southern Magnesium); 

   b.  1998-1999 data contained in the June 2000 report of Industry 
       Financial Aggregates and Ratios data for non-ferrous metals 
       producers (copper, lead and zinc), which includes positive 
       ratios for overhead, SG&A and profit (CMIE); 

   c.  the 1999-2000 profit figures from certain Indian aluminum 
       producers derived from financial data posted on an online 
       source; (7) and 

   d.  the 1999-2000 financial statements of four Indian producers 
       of copper and zinc. 


We agree with Minmetals that Southern Magnesium's 1999 fiscal year (FY)
data was aberrational. Significantly, the Directors Report at page 3 of
Southern Magnesium's 1999 financial statements indicates that the company
experienced a production volume that was substantially lower than normal,
which resulted in an "inadequate contribution towards fixed expenses..."
This statement was borne out by the fact that, as a percentage of
materials, labor and energy, the company's 1999 overhead rate increased by
over 30 percent from the previous year." (8) Because we have concluded
that the 1999 data was not representative of Southern Magnesium's normal
production experience, we considered the factory overhead and SG&A on the
company's 1998 data, which is also included in its 1998-1999 financial
report.

Under our current NME practice, the Department has a preference for
selecting producers of identical merchandise as the source for surrogate
data, provided that the surrogate data is not distorted or otherwise
unreliable. See, e.g., Persulfates from the People's Republic of China:
Final Results of Antidumping Administrative Review, 66 FR 42628 (Aug. 14,
2001) and accompanying decision memorandum at Comment 5 (Persulfates). Of
the choices available in this case, only Southern Magnesium produces
identical merchandise and, moreover, the vast majority of its business is
the production of magnesium. Although the 1998 financial data is not the
most contemporaneous data available, it differs from the 1999 data by only
one year and is consistent with previous years' experience. As a
consequence, we find that Southern Magnesium's 1997-1998 data constitutes
the best source of surrogate information in this case, and we have
continued to use it as a basis for valuing factory overhead and SG&A for
purposes of the final determination. 

We note that the Department's preference is to value factory overhead,
SG&A, and profit using a single source where possible. However, we
recognize that, in cases where the preferred financial statements do not
reflect a profit for a given period, we may use an alternative source for
profit in accordance with our practice. See Silicomanganese from Brazil,
Final Results of Antidumping Administrative Review, 62 FR 37877-37878
(July 15, 1997); Notice of Final Determination of Sales at Less Than Fair
Value: Steel Concrete Reinforcing Bars from the People's Republic of
China, 66 FR 33522 (June 22, 2001) and accompanying decision memorandum at
Comment 8; and Persulfates at Comment 5. In this case, because Southern
Magnesium's 1998 financial statements reflect a loss for the year, we have
looked to an alternative source for profit.

Of the three remaining choices for valuing profit, our preference is to
base our selection on the comparability of the merchandise, rather than
the number of producers included in the surrogate data source. See
Creatine, 64 FR at 71108 ("[W]e prefer producer- or industry-specific data
for overhead, SG&A and profit."). Because we seek information that
pertains as narrowly as possible to the subject merchandise, the
Department, in most cases, has used the producer-specific data since the
industry-specific data available to the Department tends to be broader in
terms of merchandise included. (9)

In this case, we find that the product which is most comparable to
magnesium is aluminum. See Pure Magnesium, 63 FR at 3087. We have
available FY 2000 data from four Indian producers, whose business is
predominantly or exclusively the production of aluminum, to value profit
for purposes of the final determination. (10) This information has the
additional advantage of being the most contemporaneous data on the record
of this proceeding. Therefore, we have relied on the profit information
from these four financial statements.

Regarding Minmetals' argument that the dominating presence of the Indian
government in the aluminum industry renders its data unusable, we find
that Minmetals has provided no evidence of market distortion in this case.
Thus, we find that this argument does not provide an adequate basis to
rejecting the financial data from the four aluminum producers in question. 


Comment 4: Calculation of Overhead and SG&A Ratios Applied to HEBI

During the POI, Minmetal's supplier, Taiyuan, produced magnesium ingots.
Taiyuan used HEBI to grind its ingots into the subject merchandise and
packing it into bags. In the preliminary determination, the Department
calculated surrogate overhead and SG&A ratios for HEBI based on the
financial statement of Southern Magnesium. Minmetals contends that these
ratios were incorrectly calculated, because the basis of the numerator
used in each calculation was inconsistent with that of the denominator. As
a result, the respondent asserts that the Department's calculations
grossly inflated the surrogate overhead and SG&A ratios for HEBI.

Minmetals explains that, as a grinding subcontractor, HEBI only incurs
energy and labor costs. The respondent argues that dividing Southern
Magnesium's total overhead costs solely by its energy costs overstated the
resulting overhead ratio of 70.21 percent because Southern Magnesium's
overhead consists of expenses that are unrelated to energy costs, such as
indirect materials, stores and spares, and the depreciation of unrelated
fixed assets. Similarly, Minmetals argues that the SG&A ratio of 63.41
percent is inflated because the use of Southern Magnesium's total SG&A in
the numerator unfairly includes types of selling and administrative
expenses that a simple grinding operation would never incur.

Minmetals acknowledges that it would be difficult to segregate only
energy-related overhead and SG&A expenses from the surrogate financial
data on the record. Consequently, Minmetal's proposes that the Department
apply to HEBI the same overhead and SG&A ratios as those used for Taiyuan.
Minmetals maintains that this practice would be consistent with the
Department's valuation of subcontractor costs in Manganese Metal, as
discussed in the Factors Memorandum of that case at Attachment 12.

The petitioners agree with the Department's calculation methodology,
arguing that it is consistent with both the Department's practice in NME
cases and the facts of this case. Citing to 19 CFR 351.408(c)(4), the
petitioners claim that the Department appropriately based the amounts for
overhead and SG&A on the financial data from a producer of identical or
comparable merchandise. Moreover, the petitioners claim that the
Department's calculation of these ratios as a percentage of non-labor
direct costs is consistent with the Department's practice, as set forth in
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from
the People's Republic of China; Final Results of 1996-1997 Antidumping
Duty Administrative Review and New Shipper Review and Determination Not To
Revoke Order in Part, 63 FR 63842, 63849 (Nov. 17, 1998).

The petitioners contend that Minmetals' argument that the amount for
HEBI's total overhead and SG&A should only reflect those costs related to
energy consumption is without merit because, as Minmetals has
acknowledged, the record does not contain sufficient information to
determine what portion of Southern Magnesium's costs are related to
energy. The petitioners argue that it would be inappropriate for the
Department to arbitrarily attempt to subdivide Southern Magnesium's total
overhead and SG&A expenses into elements related to energy or other cost
elements.

With regard to Minmetals' suggestion that the Department apply to HEBI
the same overhead and SG&A expenses that were used for Taiyuan, the
petitioners allege that the proposal is an attempt to significantly
understate those expenses that are applicable to HEBI. The petitioners
explain that because the ratios calculated for Taiyuan divide the expenses
incurred by Southern Magnesium by the sum of energy and material costs
(which HEBI does not incur), the application of the Taiyuan ratios to the
non-labor costs incurred by HEBI would result in a mismatch between the
basis for the ratio and the value to which it is being applied. Instead,
the petitioners assert that the denominator used in calculating the ratios
should contain the cost elements reflected in the value to which the ratio
will be applied.

Finally, the petitioners argue that the Department's margin calculation
program used in the preliminary determination correctly identifies the non-
labor direct expenses incurred by HEBI, and that there is complete
consistency between the basis used to derive the ratio and the value
against which the ratio is applied. For the final determination, the
petitioners urge the Department to reject Minmetals' argument and apply
the same calculations as were used in the preliminary determination.

Department's Position:

Upon further consideration, the Department agrees with the respondent
that the surrogate overhead and SG&A expense ratios for HEBI calculated in
the preliminary determination are overstated. However, in calculating
overhead and SG&A, it is the Department's practice to accept data from the
surrogate producer's financial statements in toto, rather than performing
a line-by-line analysis of the types of expenses included in each
category. For further discussion, see Notice of Final Determination of
Sales at Not Less Than Fair Value: Pure Magnesium from the Russian
Federation, and accompanying decision memorandum at Comment 2, issued on
September 14, 2001, and published concurrently with this notice.
Therefore, even assuming that Southern Magnesium's financial statements
contained sufficient detail to allow us to exclude certain costs, we would
not do so in this case in accordance with our practice.

Nonetheless, we also agree that it is not appropriate to derive the
overhead and SG&A ratios for HEBI using denominators containing only
energy costs. We believe that overhead and SG&A are not a function of
energy costs alone. Consequently, we have, as in other NME cases,
expressed those ratios as a percentage of materials and electricity costs.
Accordingly, we have applied the same surrogate overhead and SG&A ratios
based on the financial statements of Southern Magnesium to both HEBI and
Taiyuan for the final determination. 


Comment 5: Valuation of Steam Coal

In the preliminary determination, we based the valuation of coal on
Indian import prices for the year 1998-1999, as reported in Monthly
Statistics of the Foreign Trade of India (March 1999), which we adjusted
for inflation. These prices were also used in the most recently completed
antidumping duty administrative review of Persulfates. See Persulfates
from the People's Republic of China: Preliminary Results of Antidumping
Duty Administrative Review, 66 FR 18439, 18442 (Apr. 9, 2001), unchanged
in the final results.

Minmetals argues that the Department should value steam coal using a
price quote submitted in its February 13, 2001, submission on surrogate
values, because the price quote: (1) is more contemporaneous to the POI
than the Indian import statistics; (2) is more product-specific than the
categorized information reported in the Indian import statistics; and (3)
is more accurate because it will obviate the need to adjust for inflation.

The petitioners agree with the Department's use of Indian import
statistics to value steam coal. According to the petitioners, the
Department's practice is to base surrogate values for direct material
inputs on broad-based market averages rather than single price quotes
where possible, as discussed in the preamble to the antidumping duty
regulations. See Preamble, 63 FR at 27366. To support this assertion, the
petitioners cite Manganese Metal at Comment 9; Notice of Final Results and
Partial Recission of Antidumping Duty Administrative Reviews: Heavy Forged
Hand Tools from the People's Republic of China, 65 FR 43290 (July 13,
2000) (Hand Tools) and accompanying decision memorandum at Comment 6; and
Creatine at Comment 1. The petitioners contend that the publicly-available
Indian import statistics are representative of a broad range of non-export
based values, and therefore, any short-term price distortions resulting
from the use of a single price quotation would be eliminated. 

Department's Position:

As discussed in the preamble to our regulations, the Department generally
prefers to use a range of prices for the input being valued, rather than a
single price quote. (See the Preamble, 63 FR at 27366.) Specifically, the
preamble states the following: "when compared to a publicly available
price that reflects numerous transactions between many buyers and sellers,
a single input price reported by a surrogate producer may be less
representative of the cost of that input in the surrogate country." In
this case, the Indian import statistics include data based on one full
year of imports of steam coal from two market-economy countries. Thus, we
find that an average based on a broad range of prices, rather than one
price quote from a single point in time, provides a more representative
surrogate value, despite the fact that the price quote is more
contemporaneous. 

We disagree with Minmetals that the price quote is more product-specific
than the import statistics used in the preliminary determination.
Specifically, we note that the statistics contain a sub-category of coal
data labeled "steam coal." Accordingly, we have continued to value steam
coal using the relevant data from the Indian import statistics for
purposes of the final determination, in accordance with our practice.

Comment 6: Valuation of Ferrosilicon and Dolomite

In the preliminary determination, the Department based the surrogate
values for ferrosilicon and dolomite on price quotations from an Indian
ferro-alloy producer, Tata International Limited (Tata).

The petitioners argue that the Department's use of these single price
quotations is contrary to its established practice of using a range of
prices to value raw material inputs. To illustrate their argument, the
petitioners cite the preamble to the Department's regulations (see Comment
5, above) as well as to Glycine from the PRC at Comment 2, Manganese Metal
at Comment 9, Hand Tools at Comment 6, Creatine at Comment 1, and Sebacic
Acid from the People's Republic of China; Final Results of Antidumping
Duty Administrative Review, 62 FR 10,530, 10534 (Mar. 7, 1997) (Sebacic
Acid).


The petitioners contend that the Department should instead value
ferrosilicon and dolomite using annual average financial report data
submitted in their February 13, 2001, submission on surrogate values and
in the petition. Specifically, the petitioners provided summary financial
data from the website www.indiainfoline.com, which shows total consumption
and costs of these raw materials for various Indian companies. (11)
Therefore, the petitioners maintain that the use of their data better
represents the Department's longstanding practice of choosing surrogate
values that represent broad-based industry averages when valuing raw
materials, and that it is less distortive than the single price quotations
used by the Department in the preliminary determination. 

Minmetals agrees with the Department's use of the Tata price data in the
preliminary determination, claiming that it is the most contemporaneous
and product-specific data available on the record. The respondent counters
the petitioners' argument by stating that the Department normally does not
base the surrogate value for material inputs on a producer's financial
statements if more reliable data is available. Moreover, the respondent
alleges that the cases cited by the petitioners, such as Manganese Metal
and Creatine, do not support their position because the cases generally
involved the selection of aggregate import statistics, rather than data
collected from individual financial statements. According to Minmetals,
the financial statements submitted by the petitioners are unreliable
because they lack details regarding the specifications and sales terms of
the products, as well as information about the source countries.

Citing to Manganese Metal, Minmetals reiterates that the Department has
preferred price quotes over aggregate data in cases where price quotes
were more product-specific, reliable or contemporaneous with the POI. In
this case, the respondent claims that the use of the petitioners' data is
inappropriate because it is less contemporaneous than the Tata price
quote, in addition to being less reliable and product-specific. Therefore,
the respondent argues that the Department should continue to base the
surrogate values for ferrosilicon and dolomite on the Tata price
information for the final determination.

Department's Position: 

As noted in our position to Comment 5 above, the Department generally
prefers to use a range of prices for the input being valued, rather than a
single price quote. However, the Department may prefer the use of a price
quote over an aggregate price range if the price quote is more product-
specific or otherwise more representative of the input being valued than
the aggregate price data. See Manganese Metal at Comment 9.

We agree with the petitioners that average yearly data, such as the data
which might be available in annual reports, could provide a better choice
for a surrogate value than a single price quote. However, in this case, we
find that the financial data provided by the petitioners, although
publicly available online, does not provide enough information for the
Department to ascertain its appropriateness. Specifically, we cannot
determine from the website any specific details about whether the inputs
were bought domestically or imported, from which countries the inputs may
have been imported, whether the reported costs are inclusive or exclusive
of taxes, or any specifications about the inputs in question. 

On the other hand, the Tata price quotes provided by Minmetals are
exclusive of Indian taxes and represent domestic prices for ferrosilicon
and dolomite during the POI. Therefore, we have continued to value
ferrosilicon and dolomite using the Tata price quotes.

Comment 7: Marine Insurance Adjustment for Inflation

In the preliminary determination, the Department valued marine insurance
using information used in Tapered Roller Bearing and Parts Thereof,
Finished and Unfinished, From the People's Republic of China: Preliminary
Results of 1998-1999 Administrative Review, Partial Rescission of Review,
and Notice of Intent to Revoke Order in Part, 65 FR 41944, 41948 (July 7,
2000). These rates were adjusted for inflation.

Minmetals argues that the Department should not adjust marine insurance
for inflation. The respondent claims that, since marine insurance charges
are expressed as a percentage of the value of the cargo, it is
inappropriate to adjust the rate for inflation unless there is evidence
that marine insurance rates increased at a greater pace than sales
revenue. 

The petitioners did not comment on this issue.

Department's Position:

We agree with Minmetals. The selected surrogate value represented a
marine insurance rate, rather than a per-unit expense. Accordingly, for
the final determination, we have not adjusted the marine insurance rate to
account for inflation because we have no reason to believe that this rate
changed over time due to inflation. 

Comment 8: Ocean Freight

Minmetals reported in its questionnaire response that it shipped subject
merchandise to the United States using market economy carriers and that it
paid for these expenses in a market economy currency. For purposes of the
preliminary determination, however, we found that Minmetals failed to
establish a link between the prices charged by the market economy carriers
and the prices paid by the respondent. Nonetheless, we used the submitted
ocean freight expenses as surrogate values because they were POI prices
set by market economy suppliers in U.S. dollars, and, as such, they
represented better surrogate values than the other surrogate information
on the record for ocean freight. 

Minmetals asserts that, during verification, it was able to demonstrate
to the Department that ocean freight charges were incurred in U.S. dollars
and paid to a Hong Kong freight forwarder. Thus, Minmetals argues that the
Department should deem Minmetals' ocean freight transactions as market
economy transactions and use Minmetals' actual ocean freight expenses in
the margin calculation.

The petitioners did not comment on this issue.

Department's Position:

In accordance with 19 CFR 351.408(c)(1), in NME cases the Department
values inputs which a respondent purchased from a market economy supplier
in a market economy currency using the actual price paid by the
respondent. In this case, we reviewed the documents presented by Minmetals
at verification and found that these documents establish that Minmetals
purchased ocean freight from market-economy carriers and paid for the
freight in a market-economy currency. (12) Therefore, for purposes of the
final determination, we have accepted the ocean freight expenses reported
by Minmetals, in accordance with our practice.

Comment 9: Treatment of Fluorite Powder as Overhead Expense vs. Direct
Material Input

In its questionnaire response, Minmetals reported fluorite powder as a
direct material. Accordingly, for purposes of the preliminary
determination, the Department valued fluorite powder using surrogate value
data. 

Minmetals argues that the Department should reconsider this treatment and
classify fluorite powder as part of overhead expenses.  Minmetals stated
that it informed the Department that it had classified this material as a
direct input in error, and that the Department examined this issue at
verification. Specifically, Minmetals notes that the verification report
reflects that fluorite powder is used merely to "line the molds that hold
the pure magnesium which is formed into ingots," and is not physically
incorporated into the finished magnesium product. Moreover, Minmetals
points out that Taiyuan's accounting records show that the company treats
fluorite powder as an auxiliary material instead of a direct raw material,
and that fluorite powder is described as an "auxiliary material" in the
cost table in Exhibit 5 of the Taiyuan verification report. 

Minmetals maintains that fluorite powder is consistent with the type of
materials that the Department has previously classified as indirect, such
as reducing vessels in Pure Magnesium, and brake molds in Final
Determination of Sales at Less Than Fair Value: Brake Drums and Brake
Rotors from the People's Republic of China, 62 FR 9160, 9169 (Feb. 28,
1997) (Brake Rotors). The respondent also contends that the Department
should consider fluorite powder as a minor indirect material to be
included as a component of overhead expense, consistent with its practice
as discussed in Synthetic Indigo from the People's Republic of China;
Notice of Final Determination of Sales at Less Than Fair Value, 65 FR
25706 (May 3, 2000) and accompanying decision memorandum at Comment 8. 

The petitioners agree with the Department's treatment of fluorite powder
as a direct material input, and assert that such treatment is consistent
with the Department's practice in other proceedings, as well as the
magnesium industry's treatment of the input in general. The petitioners
argue that the Department has established clear standards for
distinguishing direct from indirect inputs. Citing to the Preliminary
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length
Carbon Steel Plate from the People's Republic of China, 62 FR 31972, 31977
(June 11, 1997) and Brake Rotors, the petitioners assert that in previous
cases, the Department has referred to the definition contained in the
"Compendium of Statements and Standards: Accounting (India)," which states
that to be considered as part of factory overhead, a material must "assist
the manufacturing process, but...not enter physically into the composition
of the finished product." The petitioners also contend that the Department
has noted elsewhere that inputs are generally considered to be direct
materials when "they are required for a particular segment of the
production process," for which a standard item will not suffice, such as
in the Final Determination of Sales at Less Than Fair Value: Manganese
Metal from the People's Republic of China, 60 FR 56045, 56051 (Nov. 6,
1995) and the Final Determination of Sales at Less Than Fair Value:
Saccharin from the People's Republic of China, 59 FR 58818, 58824 (Nov.
15, 1994). 


The petitioners also maintain that such treatment is consistent with
Minmetals' treatment of fluorite powder in its February 27, 2001,
supplemental questionnaire response, as well as Taiyuan's classification
of the item in its accounting records, as discussed in the Taiyuan
verification report. Citing the verification report issued for Taiyuan in
this case, the petitioners claim that the Department verified that the
powder is included in Taiyuan's "direct material costs that are
transferred to the company's cost of production." The petitioners allege
that Minmetals requested the reclassification of this input after the
preliminary determination for the sole purpose of lowering its factors
values, and thus its dumping margin. 

The petitioners counter Minmetals' claim that fluorite powder constitutes
the same type of material that the Department has classified as indirect
in previous cases. The petitioners explain that, unlike the molding
materials at issue in Brake Rotors, the fluorite powder used to line the
molds is actually subsumed into the magnesium ingot during the production
process. In contrast, the petitioners note that brake molds are not
incorporated into the final product and, moreover, are classified as
indirect materials by Indian accounting standards. Likewise, the
petitioners contend that, because fluorite powder is exhausted in the
production of the magnesium ingot, it is different from the reducing
vessels used in Pure Magnesium. Finally, the petitioners also state that
in the previous investigation and reviews of pure magnesium, (13) the
Department has classified fluorite powder as a direct material input. For
these reasons, the petitioners urge the Department to continue to treat
fluorite powder as a direct material input for purposes of the final
determination.

Department's Position:

During verification, the Department observed that Tiayuan does not treat
fluorite powder as an auxiliary material in its normal books and records.
Specifically, the Tiayuan verification report states that "[d]uring the
review of the company's accounting system, we noted that Taiyuan includes
fluorite powder costs in its direct materials costs that are transferred
to the company's cost of production." This statement is supported by the
cost table presented by Tiayuan during the verification, which is included
in verification exhibit 7, which indicates that costs and consumption of
fluorite powder are tracked separately, and are added into the total cost
of raw materials used to derive the total cost of production. See the June
26, 2001, Memorandum for Louis Apple from Jim Nunno and Jennifer Gehr
entitled Verification of the Questionnaire Responses of Taiyuan Shi Geng
Yang Enterprise Company, Ltd. in the Antidumping Duty Investigation of
Granular Pure Magnesium from the People's Republic of China, at page 1 and
exhibit 7.

In addition, there is no evidence that fluorite powder is treated as
factory overhead by Southern Magnesium. Therefore, we consider Taiyuan's
treatment of the input as a direct input as an indication that the input
should be valued separately and not treated as factory overhead.
Accordingly, we have continued to classify fluorite powder as a direct
material input for purposes of the final determination. We further note
that our treatment of fluorite powder as a direct material input is
consistent with our classification of this input in prior reviews of pure
magnesium. See Pure Magnesium, 63 FR at 3090. 

Comment 10: Valuation of Taiyuan's July 2000 Electricity Consumption Factor

According to the petitioners, the Department was unable to verify the
electricity consumption factor reported by Taiyuan for July 2000. The
petitioners assert that Taiyuan's failure to prepare properly for the
verification, despite having received the agenda prior to verification,
amounts to a failure by Taiyuan to cooperate to the best of its ability
with the Department. Therefore, the petitioners argue that the Department
must resort to facts available for this information, in accordance with
the statute. Consequently, the petitioners urge the Department to apply
the highest energy consumption factor for any month reported by Taiyuan
during the POI as the electricity factor for July.

Minmetals states that the use of adverse facts available is not
appropriate since the information submitted was verifiable. The respondent
argues that Taiyuan fully cooperated with the Department at verification
by preparing and presenting source documents as noted in the verification
agenda, providing supplemental documentation requested by the Department,
and providing explanations of these documents. Minmetals claims that the
Department officials failed to notify the company that they were unable to
reconcile the electricity figures for July 2000, and that the Department
opted not to continue verifying energy consumption due to time
constraints. Moreover, the respondent claims that company officials at
Taiyuan were prepared to continue verifying any item requested by the
Department, but were not given the opportunity to do so due to time
constraints imposed by the Department officials.

In any event, Minmetals argues that the use of facts available is
unwarranted because the energy consumption factors for July 2000 can be
verified using the source documents contained in the Department's
verification exhibits. Specifically, Minmetals provided as an attachment
to its rebuttal brief certain documents which were purportedly examined
during verification. Minmetals then tied these invoices to the reported
consumption factor for July 2000 in Minmetals' questionnaire response. 


Department's Position:

In Attachment 2 of Minmetal's rebuttal brief, the respondents included
copies of several electricity invoices bearing the same invoice numbers as
the documents examined during verification and included in Verification
Exhibit 8 of the Taiyuan verification report. However, upon the
Department's subsequent examination of the invoices in question, it
appears that several invoices included in the verification exhibit have
been excluded from the respondent's calculation in its rebuttal brief.
Moreover, with respect to one invoice number in particular, (14) it
appears that the kilowatt hour consumption number on the copy of the
invoice given to the Department at verification is different from, or
altered from, the kilowatt consumption number on the invoice that
Minmetals has supplied in its rebuttal brief. In light of this
discrepancy, the Department must rely on the document as it was presented
at verification. Therefore, the Department continues to find, as stated in
the Taiyuan verification report, that it is unable to link the electricity
consumption number reported for Taiyuan to source documentation.


We disagree with Minmetals' argument that unfair time constraints were
imposed at verification. Indeed, we note that the Taiyuan verification was
actually extended by an extra day over the total time which had been
scheduled, in order to provide the company additional time to complete
several of the outstanding items. (15) As both the petitioners and the
respondent have pointed out, an agenda was provided to Taiyuan prior to
the verification explaining precisely which source documents the
Department intended to review. We also note that the source documents were
readily accessible to the respondents, as the relevant documents were
presented at verification and have also been included in Minmetals'
rebuttal brief.

Section 776(a)(2) of the Act provides that if a respondent fails to
provide necessary information in a timely manner or provides information
which cannot be verified, the Department may rely on facts otherwise
available. Section 776(b) of the Act provides that in cases where the
respondent "fails to cooperate by not acting to the best of its ability to
comply with a request for information," the Department may use an
inference that is adverse in selecting from among the facts otherwise
available in reaching the applicable determination. In this case, Taiyuan
possessed the necessary documentation to support the July 2000 electricity
consumption figure but failed to provide it, despite the advance notice of
the verification item and the extra time provided by the Department
officials. Therefore, we conclude that Taiyuan's electricity consumption
figure could not be verified, requiring application of facts available
under section 776(a)(2) of the Act. Moreover, because it is apparent that
Taiyuan had the information necessary to permit verification of this
figure, but did not provide it, Taiyuan has not acted to the best of its
ability. Because Taiyuan did not cooperate with the Department to the best
of its ability, we find that it is appropriate for us to resort to adverse
facts available for the July 2000 electricity consumption factor for
Taiyuan. As adverse facts available we have applied the highest monthly
consumption amount of any other month verified for Taiyuan in this
investigation.


Comment 11: Correction of Taiyuan's Direct Labor Hours

Minmetals claims that an error was made by the Department in Taiyuan's
verification report, which should be corrected for the record. Minmetals
argues that the Department's recalculation of Taiyuan's labor hours,
discussed at page 10 of the verification report, was arithmetically
incorrect. Consequently, Minmetals has submitted a corrected calculation
for the Department's review, which has been included as Attachment 3 to
Minmetal's case brief dated July 9, 2001.

The petitioners did not comment on this issue.

Department's Position:

Upon careful re-examination of the Department's calculation of Taiyuan's
labor hours, we have concluded that no error was made on the part of the
Department. Rather, upon examination of the recalculation submitted by
Minmetals, it appears that the monthly total for April 2000 was excluded
from the POI total. We note that, by summing the monthly totals in
Minmetals' spreadsheet for all six months of the POI, we arrive at the
same number which is contained in the Department's verification report.
Therefore, for the final determination, we have based Taiyuan's direct
labor hours on our verification findings, as described in the Taiyuan
verification report.

Comment 12: Correction of HEBI's Packing Material Weights

Minmetals notes that, during the verification of HEBI, the Department
noted a number of corrections in the weights of packing materials, as
cited in Appendix III of the HEBI verification report. Minmetals contends
that the Department should use the corrected weights to value packing
materials for the final determination.

The petitioners did not comment on this issue.

Department's Position:

We agree. For the final determination, we have revised our calculations
for packing materials to use the weights which are set forth in Appendix
III of the HEBI verification report. 



Comment 13: Treatment of Magnesium Shreds

In the preliminary determination, the Department did not grant HEBI an
offset to its production costs related to the quantity of magnesium shreds
generated in the process of grinding magnesium ingot into powder, due to
the lack of sufficient information regarding the ultimate disposition of
the shreds. (16) 

Minmetals contends that, during the HEBI verification, the Department
noted that both shreds and powder were included in the company's finished
goods ledger. Minmetals argues that because the shreds were tracked in the
finished goods inventory ledger, the Department was able to verify that
the shreds are in fact salable goods. Minmetals also argues that because
costs are incurred in the grinding process for both granular magnesium and
magnesium shreds, excluding shreds from the total production quantity
would improperly attribute all raw materials to granular magnesium.
Therefore, Minmetals asserts that the Department should not deduct the
quantity for shreds from the total production quantity in the final
determination. 

The petitioners argue that the Department should continue to exclude
magnesium shreds from HEBI's total production volume. The petitioners
claim that, contrary to Minmetals' argument, the Department was not able
to verify that magnesium shreds were actually sold as a separate product.
While the verification report indicates that the shreds were "kept in
separate bags" from the magnesium powder, the petitioners contend that
this does not indicate that the shreds were in fact anything more than a
mere waste product. The petitioners further argue that since HEBI failed
to demonstrate at verification that shreds were actually sold as a
separate product, no cost should be allocated to the shreds generated in
the production of magnesium powder.

Department's Position:

We examined this issue at verification and found that HEBI did not
receive any revenue for the sale of magnesium shreds during the POI.
Moreover, we were unable to discern the ultimate disposition of the shreds
from HEBI's books and records. Because HEBI was unable to demonstrate that
it sold shreds during the POI, we continued not to allow an offset for
shreds in the final determination.

Comment 14: Revision to the Scope of the Investigation 

The scope of the investigation currently excludes certain magnesium-based
reagent mixtures. Specifically, the relevant language states the following:

mixtures containing 90 percent or less pure magnesium, by weight, when
mixed with lime, calcium metal, calcium silicon, calcium carbide, calcium
carbonate, carbon slag coagulants, and/or fluorspar, are excluded.

See the Preliminary Determination, 66 FR at 21315. 


We received comments on the scope definition from two parties, ESM Group,
Inc. (ESM) and Rossborough. Both of these companies are U.S. producers of
magnesium-based reagent mixtures and importers of magnesium products.
According to ESM and Rossborough, the Department has defined the reagent
mixtures excluded from the scope too narrowly. Specifically, both parties
contend that the Department failed to exclude mixtures made with any of
the following additional additives: magnesium oxide, periclase,
ferroalloys, dolomitic lime, nepheline syenite, feldspar, aluminum,
alumina (Al2O3), calcium aluminate, soda ash, hydrocarbons, graphite,
coke, silicon, rare earth metals/mischmetal, cryolite, colemanite, and
silica/fly ash.

Moreover, both ESM and Rossborough contend that the Department should
clarify that the above list of additives is illustrative only and that any
mixtures containing additional additives used to make magnesium-based
reagents are excluded from the scope. For example, ESM notes that

both melamine and silicone oil are added to pure magnesium to make
desulfurization reagents, as are certain other combinations of additives
used in the production of proprietary reagent mixtures. Consequently, ESM
proposes that the Department add the following language to clarify that
all magnesium-based reagents are excluded: ". . . and/or any other non-
magnesium granular material(s) to make desulfurization reagents, are
excluded." Similarly, Rossborough proposes that the Department delete the
list noted above and substitute the following language: "except that
mixtures containing 90 percent or less pure magnesium, by weight are
excluded." 

In addition, Rossborough requests that the Department should insert an
"actual use" provision into the scope in order to exclude magnesium in
granular form imported for use in producing reagent mixtures. According to
Rossborough, the U.S. granular magnesium industry has been adversely
affected by the provisional measures entered under the antidumping and
countervailing duty laws in response to the current petition. Rossborough
contends that all domestic producers of reagent mixtures depend upon
imports of magnesium (principally granular magnesium) for their grinding
and mixing operations to remain competitive, and that if the antidumping
and countervailing duty orders are put into place, then reagent mixtures
would simply be imported in finished form and the domestic industry
producing those reagent mixtures would be devastated. As a result,
Rossborough argues that the petitioners would, in turn, have no domestic
or export market for future sales of pure magnesium to producers of
mixtures, whether in ingot or granular form.

Rossborough acknowledges that the petitioners have previously opposed an
"actual use" provision in their June 20 letter, but it asserts that the
petitioners' arguments on this matter are without merit, since the
petitioners do not produce granular magnesium and will most likely be
unable to supply the needs of the U.S. granular magnesium industry in the
foreseeable future, regardless of the outcome of the antidumping and
countervailing duty investigations. Rossborough also maintains that while
"actual use" provisions are not common in U.S. tariff law generally, they
are not unprecedented and have been adopted to achieve particular
objectives. Rossborough further argues that U.S. tariff law contains
established procedures for the effectuation of actual use procedures which
would be available for the purpose contemplated here. (17) According to
Rossborough, the burden of proof of the actual use would fall on the
importer, and because the U.S. Customs Service may liquidate entries
adversely to the importer if satisfactory and timely proof of the required
use is not shown, the established actual use procedures contain safeguards
against possible circumvention. Moreover, Rossborough argues that false
certifications of use would subject the importer to substantial penalties
under 19 U.S.C.  1592 and other provisions of the law.


The petitioners have agreed to a clarification of the scope that results
in the exclusion of all known magnesium-based reagent mixtures.
Furthermore, the petitioners do not object to the inclusion of additional
substances in the comprehensive list of known magnesium-based reagent
mixtures in the proposed scope language. However, the petitioners object
to the inclusion of both melamine and silicone oil in this list because
they may easily be separated from granular pure magnesium by being "burnt-
off" from the granular pure magnesium. (18) According to the petitioners,
once burnt-off, they would leave little residue that would alter the
chemical composition or purity of the pure magnesium. The petitioners
assert that, because this would allow these mixtures to be used in place
of pure magnesium in applications where pure magnesium is normally used,
with little cost consequences, there would be the potential for easy
circumvention of any resulting order through mixing of subject merchandise
with these substances.

Moreover, the petitioners oppose the alternative scope language proposed
by ESM, which would make the list of additive illustrative rather than
comprehensive. The petitioners argue that the Department should deny ESM's
request on the grounds that it would require the U.S. Customs Service to
determine the actual use of the imported mixture on a case-by-case basis,
and it would make the order difficult to administer properly. For those
companies which may have reagent mixtures which are proprietary in nature,
the petitioners suggest that they should submit the information to the
Department under an administrative protective order, and then the
Department could share this information with U.S. Customs on a
confidential basis. However, the petitioners maintain that U.S. Customs
should not be permitted to make scope determinations independently of the
Department at the time of entry. Alternatively, the petitioners agree to
ESM's proposal under the condition that the Department also explicitly
state in the scope language that it will require importers to seek a scope
ruling from the Department regarding reagent mixtures composed of
materials not specifically provided for in the scope. The petitioners note
that this language has three advantages: 1) it will protect against
circumvention through the importation of non-legitimate reagent mixtures;
2) it is enforceable by U.S. Customs; and 3) it creates a transparent
process in which all parties are accorded due process. Consequently, the
petitioners propose the following additional language: 

and/or any other non-magnesium granular material(s) to make magnesium-
based reagent mixtures, are excluded. If an imported mixture contains 90
percent or less pure magnesium, by weight, and any other non-magnesium
granular materials not identified in the above list, the importer is
required to seek a scope clarification from the Department of Commerce
before such a mixture will be excluded from the scope of this order.

The petitioners note that the above language is slightly altered from
ESM's proposal to reflect the fact that magnesium-based reagent mixtures
are possibly used in applications other than steel desulfurization, such
as in organic chemistry applications. According to the petitioners, as
long as the reagent mixture imported is a legitimate mixture used in
specific applications, it should be considered a downstream product which
should be excluded from the scope of this investigation.

The petitioners oppose Rossborough's proposal that all granular
magnesium, if imported for use in producing reagent mixtures, be excluded
from the scope of the order. The petitioners argue that the very purpose
of the inclusion of granular pure magnesium in the petition against
imports of pure magnesium from the PRC is to obtain relief from such
imports, which have unfairly displaced domestic production of magnesium-
based reagent mixtures for the desulfurization segment of the market.
Moreover, the petitioners note that granular magnesium has been included
in the scope of the petitions against pure magnesium from the Russian
Federation and Israel to prevent circumvention of the order through the
simple mechanical process of grinding the subject ingot into granular
form. (19) The petitioners contend that any alteration of the scope of the
investigation to exclude granular pure magnesium imported for use in
magnesium-based reagent mixtures would directly contradict the express
intent of the petition. 

Citing to the decision reached in Mitsubishi Heavy Industries, Ltd. v.
United States, 986 F. Supp 1428, 1432-33 (CIT 1997) (Mitsubishi Electric),
the petitioners assert that, although the Department has the authority to
alter the scope of an investigation, the Court of International Trade has
recognized that any alterations must reflect the intent of the petition.
Based on that finding, the petitioners argue that the Department may not
alter the scope in the manner suggested by Rossborough, because it would
contradict the express intent of the petition. 


Minmetals opposes altering the scope of the investigation. Minmetals did
not provide any reasoning to support this position, however.

Department's Position: 

It is well established that the Department has the ultimate authority
under the statute to define the class or kind of merchandise subject to
its proceedings. (20) Thus, the Department has the authority both to limit
and to expand the class or kind alleged in the petition. (21) This
authority notwithstanding, it has generally been the policy of the
Department to accept the class or kind of merchandise alleged in the
petition absent some overarching reason to modify that class or kind. This
policy stems from the fact that the domestic industry is in the best
position to identify the imports that they compete against and believe to
be unfairly traded.

In letters dated January 30, June 20, and August 27, 2001, the
petitioners stated that they had no objection to clarifying the scope to
exclude mixtures made using each of the additives noted by Rossborough,
given that their intent was to exclude all legitimate magnesium-based
reagent mixtures from the scope of the investigation. Therefore, we have
added each of these materials to the list contained in the existing scope.
We have not included melamine or silicone oil in this list, however,
because: (1) the petitioners' object to their inclusion; and (2)
sufficient information does not exist on the record at this time to
evaluate whether these materials are used to make legitimate magnesium-
based reagents. (22)


Concerning Rossborough's proposal that all granular magnesium, if
imported for use in producing reagent mixtures, be excluded from the scope
of the order, we note that the petitioners revised their position on this
issue in their August 27, 2001, submission. In that submission, the
petitioners state that they do not object, in theory, to the idea that the
list of excluded magnesium-based reagents is "illustrative only" and not
comprehensive, as originally intended. Petitioners agree that legitimate
reagent mixtures should be excluded from the scope of the orders, but are
concerned about possible circumvention through the importation of non-
legitimate reagent mixtures. The petitioners have agreed not to limit the
exclusions to reagent mixtures explicitly identified in the above list
under the condition that the Department revise the scope language to
require that importers seek a scope ruling from the Department regarding
reagent mixtures composed of materials not specifically provided for in
the scope. The petitioners note that this language has three advantages:
1) it will protect against circumvention through the importation of non-
legitimate reagent mixtures; 2) it is enforceable by U.S. Customs; and 3)
it creates a transparent process in which all parties are accorded due
process. In their August 27, 2001, submission, the petitioners proposed
that the Department insert at the end of the list of reagent mixture
substances the following additional scope language: 

and/or any other non-magnesium granular material(s) to make magnesium-
based reagent mixtures, are excluded. If an imported mixture contains 90
percent or less pure magnesium, by weight, and any other non-magnesium
granular materials not identified in the above list, the importer is
required to seek a scope clarification from the Department of Commerce
before such a mixture will be excluded from the scope of this order.

According to the petitioners, as long as the reagent mixture imported is
a legitimate mixture used in specific applications, it should be
considered a downstream product which should be excluded from the scope of
this investigation.

Because petitioners' position is in accordance with the intent of the
petition (i.e., it provides for the exclusion of magnesium-based
reagents), we are amending the scope to account for this. We note that the
addition of language instructing importers to request scope rulings by the
Department in cases where the mixtures in question contain additives other
than those specifically identified above addresses the petitioners'
concern that the Department might otherwise be improperly delegating to
Customs the authority to determine the scope of the order.


Regarding Rossborough's proposed "actual use" provision, we disagree with
Rossborough's proposal that we exclude granular magnesium imported for use
as an input into the production of magnesium-based reagents. In this case,
we find that such an exclusion is not only contrary to the intent of the
petition, but it is particularly inappropriate because it would allow
companies to circumvent the intent of the dumping order (should one be
issued). Specifically, we find that Rossborough's argument in its simplest
form is that the U.S. reagent industry needs a continuous source of
cheaply-priced (i.e., dumped) magnesium in order to survive. We find that
this argument fails because U.S. antidumping law does not allow the
Department to consider the effect of dumping duties on downstream
industries. Indeed, given its remedial nature, we find that the
Department's active sanctioning of dumping of products intended to be
covered by the scope of a petition would be contrary to both the spirit
and the letter of the law.

The purpose of the antidumping law is to allow domestic industries to
compete for sales at prices that are fair. This allows companies to
maintain employment and profit levels that they would otherwise not
achieve, which benefits the U.S. economy as a whole. For this reason, the
Department generally follows the intent of a petition in determining what
products are covered, and this practice has been upheld by the courts.
See, e.g., Mitsubishi Electric. Because the intent of the petition is
clear in this case, we have continued to include granular magnesium in the
scope, regardless of the use for which it is imported.


Comment 15: Reconsideration of Industry Standing

Rossborough argues that the Department should recognize that granular
magnesium and nongranular magnesium are not the same class or kind of
merchandise. Rossborough maintains that granular magnesium is used
principally as a desulfurization agent or in the production of magnesium
reagent mixtures, whereas magnesium ingots cannot be used for such
applications. As such, Rossborough states that there is no overlap between
the domestic producers of magnesium ingot and the domestic producers of
granular magnesium. Citing to past cases such as Notice of Preliminary
Determination of Sales at Less Than Fair Value: Pure and Alloy Magnesium
from Norway, 57 FR 6092 (Feb. 20, 1992) and Preliminary Determination of
Sales at Less Than Fair Value: Pure and Alloy Magnesium from Canada, 57 FR
6094-5 (Feb. 20, 1992), Rossborough argues that the Department has
excluded granular magnesium from the scope of previous investigations,
having determined that granular and non-granular magnesium are "two
distinct products appealing to completely different markets" and that
these two products are not the same class or kind of merchandise.
Therefore, Rossborough urges the Department to rescind the initiation of
the investigation with respect to granular magnesium. 


Rossborough argues that the petitioners in this case lack standing to
represent the interests of the granular magnesium industry. Rossborough
claims that because one of the petitioners (i.e., MagCorp) has stated
publicly that is does not produce granular magnesium and it does not
intend to do so, it is not a member of the granular magnesium industry and
should not be deemed to represent the interests of that industry in this
investigation.

Rossborough contends that the petitioners do not meet the standing
requirements of the statute. Specifically, Rossborough claims that for
purposes of industry support as stipulated by section 732(c)(4)(A) of the
Act, the petition lacks the support of producers or workers accounting for
at least 25 percent of the total domestic production of granular
magnesium, or at least 50 percent of the total production of the granular
domestic like product produced by that portion of the granular magnesium
industry expressing support for, or opposition to, the petition.

The petitioners argue that as a matter of law, the Department is
prohibited from revisiting the issue of standing. According to the
petitioners, the statute provides that an interested party may challenge
the domestic industry's support for a petition prior to initiation of an
investigation, but may not revisit the issue after initiation. In support
of their argument, the petitioners cite to sections 732(c)(4)(E) and
702(c)(4)(E) of the Act, which state that "after the administering
authority makes a determination with respect to initiating an
investigation, the determination regarding industry support shall not be
reconsidered." The petitioners also cite to the Statement of
Administrative Action (SAA) accompanying the Uruguay Round Agreements Act
(23), which states that "the question of industry support will be resolved
conclusively at the outset of a proceeding, thereby eliminating the burden
on petitioners under current law of potentially rearguing this issue after
initiation." The petitioners note that in prior investigations, the
Department has indicated that this statutory language prohibits
reconsideration of the petitioners' standing, even in cases where parties
have argued that petitioners would lack standing as a result of a
redefinition of the scope of the investigation. To illustrate their point,
the petitioners cite to Final Determination of Sales at Less Than Fair
Value: Certain Preserved Mushrooms from Chile, 63 FR 56613, 56616 (Oct.
22, 1998), Notice of Final Determination of Sales at Less Than Fair Value:
Fresh Atlantic Salmon from Chile, 63 FR 31411, 31419 (June 9, 1998)
(Salmon from Chile), and Notice of Preliminary Affirmative Countervailing
Duty Determination and Alignment with Final Antidumping Duty
Determination: Low Enriched Uranium from France, 66 FR 24325-6 (May 14,
2001).

The petitioners further assert that the scope of the petition was
intended to cover pure magnesium, regardless of chemistry, form, or size,
and was written to include magnesium in both ingot and granular form. The
petitioners maintain that they have already submitted evidence
demonstrating that pure magnesium in ingot and granular form comprise a
single domestic like product, and that under this definition of scope the
petitioners have industry standing. Moreover, the petitioners point out
that challenges to the petition's definition of scope and to the
petitioners' standing have already been submitted by interested parties
prior to the initiation of this investigation. The petitioners cite to the
November 6, 2000, memorandum from the team to Richard W. Moreland, Deputy
Assistant Secretary, entitled "Like Product and Industry Support
Determinations in the Antidumping Duty Investigations of Pure Magnesium
from Israel, the People's Republic of China, and the Russian Federation
and the Countervailing Duty Investigation of Pure Magnesium from Israel,"
(the Like Product Memo), in which the Department concluded that "pure
magnesium in all forms" constituted a single like product and that the
petition was supported by the requisite share of the domestic industry
according to the Act. The petitioners assert that, since Rossborough
merely references arguments it submitted prior to the Department's
initiation of this investigation, and no new evidence or argument has been
placed on the record to support a re-examination of the Department's
determinations of like product and industry standing, the Department has
no reason to change its determinations.

The respondent did not comment on this issue.

Department's Position:

Section 732(c)(4)(E) of the Act provides that, after the administering
authority determines that it is appropriate to initiate an investigation,
the determination regarding industry support shall not be reconsidered.
Therefore, consistent with our decision in Salmon from Chile, we have not
reconsidered our determination regarding industry support in this
investigation. We refer interested parties to our notice of initiation and
companion memorandum, which set forth in detail the methodologies followed
in establishing industry support. See Initiation of Antidumping Duty
Investigations: Pure Magnesium from Israel, the Russian Federation, and
the People's Republic of China, 65 FR 68121 (Nov. 6, 2000), and the Like
Product Memo. 

Regarding Rossborough's argument that pure magnesium in ingot and
granular forms represent two classes or kinds of merchandise, we note that
this argument is not relevant because the scope of this investigation
includes only granular magnesium. As a consequence, Rossborough's comments
provide no basis for altering this final determination.


RECOMMENDATION 

Based on our analysis of the comments received, we recommend adopting all
of the above positions and adjusting all related margin calculations
accordingly. If these recommendations are accepted, we will publish the
final determination in the Federal Register.


Agree ______ Disagree ______





______________________

Faryar Shirzad
Assistant Secretary
for Import Administration 


______________________
(Date)





_____________________________________________________________________
footnotes:


1. We note that the petitioners miscited this case as Welded Stainless
Steel Butt-Weld Pipe Fittings from Taiwan. 

2. See also Asociacion Colombiana de Exportadores de Flores v. United
States, 13 CIT 13, 15, 704 F. Supp. 1114, 1117 (1989), aff'd, 901 F.2d
1089 (Fed. Cir. 1990). 

3. The petitioners claim that in other NME cases where the issue of
combination rates has been raised, the arguments were based entirely on
speculation. See, e.g., Manganese Metal From the People's Republic of
China; Final Results and Partial Rescission of Antidumping Duty
Administrative Review, 63 FR 12440, 12448-9 (Mar. 13, 1998); and Notice of
Final Determination of Sales at Less Than Fair Value: Persulfates From the
People's Republic of China, 62 FR 27222, 27228 (May 19, 1997). 

4. Regarding the petitioners' argument that they should not bear the
burden of assessing whether an exporter has become a conduit for new
producers, we note that because Minmetals is the only exporter to whom the
Department has granted a separate rate, the burden required of the
petitioners in determining whether to request an administrative review for
Minmetals should be minimal. 

5. The only exception to this rule is when an NME entity exports to a
third country reseller with knowledge that the reseller will ship the
merchandise to the United States. 

6. Minmetals further explains this argument in its letter to the
Department dated April, 17, 2001. 

7. Publicly available financial data for Hindalco Industries Ltd.
National Aluminum Co. Ltd, and Indian Aluminum Co. Ltd. can be accessed
online at www.indiainfoline.com. In addition, publicly available financial
data for Bharat Aluminum Company Limited can be accessed online at
www.balcoindia.com. 

8. Specifically, in 1999 the company's overhead represented 14.21 percent
of its cost of materials, labor, and energy, while it represented only
10.79 percent of these costs in the following year. 

9. This, however, does not mean that we would always prefer the producer-
specific data, if we were presented with industry and producer data that
were equally specific in terms of the merchandise produced. See Notice of
Final Determination of Sales at Less Than Fair Value: Bulk Aspirin From
the People's Republic of China, 65 FR 33805 (May 25, 2000) and
accompanying decision memorandum at Comment 4. 

10. According to the website www.indiainfoline.com, there are five
aluminum producers in India. Data from three of these producers was placed
on the record by the petitioners in their March 30, 2001, submission. We
obtained data on an additional company from its own website at
www.balcoindia.com. Based on the most recent production data shown on
www.indiainfoline.com, these four producers represent the vast majority of
aluminum production in India. 

11. For ferrosilicon, the petitioners have identified several Indian
industrial users that reported recent data on their raw material usage in
their financial statements for the year ending in March 2000, including
Steel Authority of India Ltd., Tata Iron and Steel Co. Ltd., Electrosteel
Castings Ltd., and Lakshmi Machine Works. For dolomite, the petitioners
assert that publicly available information for Steel Authority of India
Ltd. indicates that the average unit values of its dolomite use in 2000 is
comparable to the values reported in Southern Magnesium's and Hira Ferro
Alloy's financial statements for previous years. 

12. See the June 21, 2001, Minmetals/CNNMIT verification report at pages
13-15 and Exhibit 7. 

13. The petitioners cite to Pure Magnesium, 63 FR at 3087, Pure Magnesium
from the People's Republic of China: Preliminary Results of New Shipper
Review, 62 FR 55215, 55218 (Oct. 23, 1997), and Volume II of the petition
filed in this case at page 3 of Exhibit 2. 

14. The Department refers to the second invoice number listed at the top
of page 11 of the respondent's July 17, 2001, rebuttal brief. Because
Minmetals claimed business proprietary treatment for this number, we are
unable to disclose it here. 

15. The verification, which originally had been scheduled for two days,
was extended over the weekend in order to give the company a chance to
complete outstanding items. The Department officials also accommodated the
Taiyuan company officials by allowing them, at their request, extra time
during lunch breaks to prepare certain verification items, such as the
electricity consumption figures. 

16. See Concurrence Memorandum, dated April 23, 2001, at page 8. 

17. Rossborough refers to the Additional U.S. Rule of Interpretation
1(b), HTSUS (2001), and 19 CFR 10.131-10.139. 

18. The petitioners' comments on this topic were made on August 27, 2001,
in a response to a request from the Department that the petitioners
clarify their intent with respect to the scope. 

19. The petitioners cite to arguments contained in their October 17, 2000
Petition, Vol. I at pages 31, 33 and 78-79, and Exhibit 24. 

20. See Mitsubishi Elec. Corp. v. United States, 898 F.2d 1577, 1582
(Fed. Cir. 1990); and Diversified Products Corp. v. United States, 572
F.Supp. 883, 887 (1983). See also Smith-Corona Group v. United States, 713
F.2d 1568, 1582 (Fed. Cir. 1983), cert. denied, 465 U.S. 1022 (1984). 

21. See Mitsubishi Elec. Corp. v. United States, 700 F.Supp. 538, 555
(1988), aff'd, 898 F.2d 1577 (Fed. Cir. 1990); and Torrington Co. v.
United States, 745 F.Supp. 718, 721 n4 (CIT 1990). 

22. On September 4, 2001, ESM responded to the petitioners' August 27
scope clarification letter. In this submission, ESM provided additional
details on the uses of the mixtures in question. However, this submission
did not contain sufficient information to allow us to determine
conclusively that these mixtures should be excluded from the scope of this
investigation. We note that, if ESM chooses to do so, it may raise this
issue again in the form of a scope inquiry in the event that an
antidumping duty order is issued in this proceeding. 

23. The petitioners refer to the SAA, H.R. Doc No. 103-316, Vol. I, 103d
Cong., 2d Sess. At 861-63 (1994).