[Federal Register Volume 66, Number 83 (Monday, April 30, 2001)]
[Notices]
[Pages 21319-21325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10685]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-821-813]


Notice of Preliminary Determination of Sales at Not Less Than 
Fair Value: Pure Magnesium From the Russian Federation

<BD>AGENCY: <RM>Import Administration, International Trade 
Administration, Department of Commerce.

<BD>EFFECTIVE DATE: <RM>April 30, 2001.

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

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act) are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to 19 CFR part 351 (2000).

Preliminary Determination

    We preliminarily determine that pure magnesium from the Russian 
Federation (Russia) is not being, nor is likely to be, sold in the 
United States at less than fair value (LTFV), as provided in section 
733(b) of the Act.

[[Page 21320]]

Case History

    Since the initiation of this investigation (<IT>Initiation of 
Antidumping Duty Investigations: Pure Magnesium from Israel, the 
Russian Federation, and the People's Republic of China<RM>, 65 FR 68121 
(Nov. 14, 2000) (<IT>Notice of Initiation<RM>)), the following events 
have occurred:
    On December 1, 2000, the United States International Trade 
Commission (ITC) issued an affirmative preliminary injury determination 
in this case. <IT>See <RM>ITC Investigation No. 731-TA-895-897 
(December 2000).
    Also on December 1, 2000, the petitioners in this case (<IT>i.e., 
<RM>the Magnesium Corporation of America (Magcorp) and the United Steel 
Workers of America, Locals 482 and 8319) requested that the Department 
modify the scope of this investigation to exclude certain magnesium 
products that are prepared solely for use as a desulfurizer in steel-
making from the scope of the investigation. On December 4, 2000, we 
received comments on the scope of the investigation from ESM Group, 
Inc. (ESM), a U.S. manufacturer of magnesium powder and desulfurizing 
reagents. In its submission, ESM requested that the Department should 
exclude from the scope: (1) Magnesium-based reagents, in accordance 
with the petitioners' intention not to capture such products; and (2) 
pure magnesium in granular form, because it is a separate class or kind 
of merchandise from magnesium ingots. For further discussion, see the 
``Scope of Investigation'' and ``Comments on Scope'' sections of the 
notice, below.
    On December 11, 2000, we issued an antidumping questionnaire to the 
Trade Representative of the Russian Federation in the United States and 
requested that the Trade Representative forward the questionnaire to 
all companies which manufactured and/or exported the subject 
merchandise during the period of investigation (POI). We also sent 
courtesy copies of the questionnaire to all companies which were 
identified in the petition as possible exporters/producers of the 
subject merchandise during the POI. The letters provided to the Trade 
Representative and those companies identified in the petition as 
producers and/or exporters of pure magnesium set out the deadlines for 
responses to the different sections of the questionnaire.
    In January 2001, the Department received responses from two U.S. 
trading companies which are exporters of Russian magnesium (<IT>i.e., 
<RM>Greenwich Metals Inc. (Greenwich) and Interlink Metals, Inc. 
(Interlink)), and two Russian producers/exporters of magnesium 
(<IT>i.e., <RM>Avisma Titanium Magnesium Works (Avisma) and Solikamsk 
Magnesium Works (SMW)). In January, February, and March 2001, we issued 
supplemental questionnaires to Avisma, Greenwich, and SMW and received 
responses to these supplemental questionnaires during January, 
February, and March 2001.
    Also in January 2001, the Department requested that Interlink 
provide additional information concerning the proper date of sale for 
its U.S. sales. On January 24, 2001, we received a response to this 
supplemental questionnaire. In addition, we received comments from the 
petitioners and SMW regarding the appropriate date of sale in this 
case. Based on this information, we concluded that Interlink had no 
sales of subject merchandise during the POI. Consequently, we have not 
analyzed Interlink's response for purposes of this investigation. 
<IT>See <RM>the ``Period of Investigation'' section of the notice, 
below, for further discussion.
    On January 19, 2001, the Department invited interested parties to 
comment on surrogate country selection and to provide publicly 
available information for valuing the factors of production. We 
received responses to this letter from the petitioners, Avisma, and 
Interlink on February 9, 2001. Each of these parties filed rebuttal 
comments on surrogate country and surrogate value information on 
February 20, 2001.
    On March 1, 2001, pursuant to 19 CFR 351.205(e), the petitioners 
made a timely request to postpone the preliminary determination. We 
granted this request and, on March 6, 2001, postponed the preliminary 
determination until no later than April 23, 2001. <IT>See Notice of 
Postponement of Preliminary Determinations of Sales at Less Than Fair 
Value: Pure Magnesium From Israel, the Russian Federation, and the 
People's Republic of China and Alignment of Final Countervailing Duty 
Determination With Final Antidumping Duty Determinations: Pure 
Magnesium From Israel, <RM>66 FR 14546 (Mar. 13, 2001).

Scope of Investigation

    The scope of this investigation includes imports of pure magnesium 
products, regardless of chemistry, form, or size, including, without 
limitation, ingots, raspings, granules, turnings, chips, powder, and 
briquettes.
    The scope of this investigation includes: (1) Products that contain 
at least 99.95 percent primary magnesium, by weight (generally referred 
to as ``ultra-pure'' magnesium); (2) products that contain less than 
99.95 percent but not less than 99.8 percent pure magnesium, by weight 
(generally referred to as ``pure'' magnesium); (3) chemical 
combinations of pure magnesium and other material(s) in which the pure 
magnesium content is 50 percent or greater, but less than 99.8 percent, 
by weight, that do not conform to an ``ASTM Specification for Magnesium 
Alloy''\1\ (generally referred to as ``off-specification pure'' 
magnesium); and (4) physical mixtures of pure magnesium and other 
material(s) in which the pure magnesium content is 50 percent or 
greater, but less than 99.8 percent, by weight, except that mixtures 
containing 90 percent or less pure magnesium, by weight, when mixed 
with lime, calcium metal, calcium silicon, calcium carbide, calcium 
carbonate, carbon slag coagulants, and/or fluorspar, are excluded.
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    \1\ The meaning of this term is the same as that used by the 
American Society for Testing and Materials in its <IT>Annual Book of 
ASTM Standards: Volume 01.02 Aluminum and Magnesium Alloys<RM>.
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    The merchandise subject to this investigation is classifiable under 
8104.11.00, 8104.19.00, and 8104.30.00 of the Harmonized Tariff 
Schedule of the United States (HTSUS). Although the HTSUS subheading is 
provided for convenience and customs purposes, the written description 
of the merchandise under investigation is dispositive.

Comments on Scope

    In accordance with our regulations, we set aside a period of time 
for parties to raise issues regarding product coverage and encouraged 
all parties to submit such comments within 20 calendar days of 
publication of the <IT>Notice of Initiation<RM>. <IT>See Notice of 
Initiation<RM>, 65 FR at 68123. On December 1, 2000, the petitioners 
requested that the Department clarify that the scope of this 
investigation excludes finished mixtures containing pure magnesium and/
or off-specification pure magnesium prepared solely for use as a 
desulfurizer in steel-making, unless such mixtures contain only minimal 
amounts of non-magnesium materials in order to circumvent an 
antidumping order. On December 4, 2000, ESM submitted a letter 
supporting the petitioners' position that magnesium-based reagents 
should not be included in the scope of the Department's investigation. 
On January 30, 2001, the petitioners submitted proposed language to 
further clarify their intent with respect to the scope of this 
investigation. Based on this submission, we have revised the scope to 
exclude reagent magnesium.

[[Page 21321]]

    In its December 4 submission, ESM also argued that pure magnesium 
ingot and granular magnesium constitute separate classes or kinds of 
merchandise and that the Department should exclude granular magnesium 
from the scope of the investigation. However, because (1) the 
respondents only sold pure magnesium ingot during the POI, and (2) we 
have made a preliminary finding of no sales at less than fair value, we 
have not addressed this issue for purposes of the preliminary 
determination. In the event that we make an affirmative final 
determination, we will consider this issue then.
    On April 10, 2001, Rossborough Manufacturing Co., L.P., requested 
that the Department amend the scope of this investigation to exclude 
certain additional reagent mixtures and imports of granular magnesium 
used for making reagent mixtures. Rossborough's submission was filed 
too late to be given proper consideration for purposes of the 
preliminary determination, but we will consider these issues for the 
final determination.

Period of Investigation

    Pursuant to 19 CFR 351.204(b)(1), the POI for an investigation 
involving merchandise from a non market economy is the two most recent 
fiscal quarters prior to the month of the filing of the petition 
(<IT>i.e., <RM>October 2000). Therefore, in this case, the POI is April 
1, 2000, through September 30, 2000.
    Both Interlink and SMW requested that the Department extend the POI 
to cover shipments of pure magnesium made pursuant to long-term 
contracts signed in the fourth quarter of 1999 and the first quarter of 
2000. Pursuant to 19 CFR 351.204(b)(1), the Department may examine 
merchandise sold during any additional or alternate period that the 
Department concludes is appropriate. However, based on the arguments 
and evidence presented on this issue, the Department does not believe 
it is appropriate to extend the POI in this investigation. Thus, we 
have continued to use the six-month period defined by 19 CFR 
351.204(b)(1). For further discussion, see the March 23, 2001, 
memorandum from Christopher Priddy to Richard W. Moreland entitled 
``Date of Sale for Long-Term Contracts and Period of Investigation.''

Nonmarket Economy Country Status for Russia

    The Department has treated Russia as a nonmarket economy (NME) 
country in all past antidumping duty investigations and administrative 
reviews. <IT>See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality Steel Products 
from the Russian Federation<RM>, 64 FR 38626 (July 19, 1999); 
<IT>Titanium Sponge from the Russian Federation: Final Results of 
Antidumping Administrative Review<RM>, 64 FR 1599 (Jan. 11, 1999); 
<IT>Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon Steel Plate from the Russian 
Federation<RM>, 62 FR 61787 (Nov. 19, 1997); <IT>Notice of Final 
Determination of Sale at Less Than Fair Value: Pure Magnesium and Alloy 
Magnesium from the Russian Federation<RM>, 60 FR 16440 (Mar. 30, 1995) 
(<IT>Magnesium from Russia Original Investigation Final 
Determination<RM>). A designation as a NME remains in effect until it 
is revoked by the Department. <IT>See <RM>section 771(18)(C) of the 
Act.
    When the Department is investigating imports from a NME country, 
section 773(c)(1) of the Act directs us to base normal value (NV) on 
the NME producer's factors of production, valued in a comparable market 
economy that is a significant producer of comparable merchandise. The 
sources of individual factor prices are discussed under the ``Normal 
Value'' section, below.
    No party in this investigation has requested a revocation of 
Russia's NME status. We have, therefore, preliminarily continued to 
treat Russia as a NME.

Separate Rates

    It is the Department's policy to assign all exporters of subject 
merchandise in an NME country a single rate, unless an exporter can 
demonstrate that it is sufficiently independent so as to be entitled to 
a separate rate. Avisma and SMW have submitted separate rates 
information in their section A responses, have stated that there is no 
element of government ownership or control, and have requested a 
separate, company-specific rate.
    Regarding Greenwich, this exporter is located in a market-economy 
country and is not affiliated with a Russian producer or exporter. 
Consequently, we do not need to perform a separate rates test for 
Greenwich, and we are calculating a separate rate for it in accordance 
with our practice. <IT>See Notice of Final Determination of Sales at 
Less Than Fair Value: Bicycles From the People's Republic of China<RM>, 
61 FR 19026, 19027 (Apr. 30, 1996).
    The Department's separate rate test is unconcerned, in general, 
with macroeconomic/ border-type controls (<IT>e.g., <RM>export 
licenses, quotas, and minimum export prices), particularly if these 
controls are imposed to prevent dumping. The test focuses, rather, on 
controls over the investment, pricing, and output decision-making 
process at the individual firm level. <IT>See Certain Cut-to-Length 
Carbon Steel Plate from Ukraine: Final Determination of Sales at Less 
than Fair Value, <RM>62 FR 61754, 61757 (Nov. 19, 1997); <IT>Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, from the 
People's Republic of China: Final Results of Antidumping Duty 
Administrative Review, <RM>62 FR 61276, 61279 (Nov. 17, 1997); and 
<IT>Honey from the People's Republic of China: Preliminary 
Determination of Sales at Less than Fair Value, <RM>60 FR 14725, 14726 
(Mar. 20, 1995).
    To establish whether a firm is sufficiently independent from 
government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under a test arising out of the 
<IT>Final Determination of Sales at Less Than Fair Value: Sparklers 
From the People's Republic of China, <RM>56 FR 20588 (May 6, 1991), as 
modified by <IT>Final Determination of Sales at Less Than Fair Value: 
Silicon Carbide From the People's Republic of China, <RM>59 FR 22585 
(May 2, 1994) (<IT>Silicon Carbide<RM>). Under the separate rates 
criteria, the Department assigns separate rates in NME cases only if 
the NME respondents can demonstrate the absence of both de jure and de 
facto governmental control over export activities. <IT>See Silicon 
Carbide <RM>and <IT>Final Determination of Sales at Less Than Fair 
Value: Furfuryl Alcohol From the People's Republic of China, <RM>60 FR 
22545 (May 8, 1998).
1. Absence of De Jure Control
    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies.
    Regarding Avisma and SMW, these companies have placed on the record 
a number of documents to demonstrate absence of de jure control, 
including: (1) The Federal Law on Joint Stock Companies (Nov. 24, 
1995); (2) the Russian Federation Federal Act on State Regulation of 
Foreign Trade Activity (July 7, 1995) (amended as Federal Law No. 32-FZ 
(Feb. 10, 1999)); (3) the President of the Russian Federation's Decree 
No. 721 (July 1, 1992); and (4) the Russian Federation Civil Code (Oct. 
21, 1994) at Articles 49 and 50.
    In prior cases, the Department has analyzed these laws and found 
that they establish an absence of de jure control. <IT>See, e.g., 
Notice of Preliminary

[[Page 21322]]

<RM>Determination of Sales at Less Than Fair Value: Cold-Rolled Flat-
Rolled Carbon-Quality Steel Products From the Russian Federation, 64 FR 
61261, 61268 (Nov. 10, 1999); <IT>see <RM>also <IT>Notice of 
Preliminary Determination of Sales at Less Than Fair Value: Solid 
Fertilizer Grade Ammonium Nitrate From the Russian Federation, <RM>65 
FR 1139, 1142 (Jan. 7, 2000).\2\ We have no new information in this 
proceeding Federation, 65 FR 1139, 1142 (Jan. 7, 2000).\3\ We have no 
new information in this proceeding which would cause us to reconsider 
this determination.
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    \2\ The Department's findings in the preliminary determinations 
of these proceedings were unchanged in the final determinations. 
<IT>See Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products 
From the Russian Federation, <RM>65 FR 5510, 5518 (Feb. 4, 2000) 
(<IT>Russian Cold-Rolled Final Determination<RM>) and <IT>Notice of 
Final Determination of Sales at Less Than Fair Value; Solid 
Fertilizer Grade Ammonium Nitrate From the Russian Federation, 
<RM>65 FR 42669, 42671 (July 11, 20000).
    \3\ The Department's findings in the preliminary determinations 
of these proceedings were unchanged in the final determinations. 
<IT>See Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products 
From the Russian Federation, <RM>65 FR 5510, 5518 (Feb. 4, 2000) 
(<IT>Russian Cold-Rolled Final Determination<RM>) and <IT>Notice of 
Final Determination of Sales at Less Than Fair Value; Solid 
Fertilizer Grade Ammonium Nitrate From the Russian Federation, 
<RM>65 fr 42669, 42671 (July 11, 2000).
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    According to Avisma and SMW, pure magnesium exports are not 
affected by export licensing provisions or export quotas. Avisma and 
SMW claim to have autonomy in setting the contract prices for sales of 
pure magnesium through independent price negotiations with their 
foreign customers without interference from the Russian government. 
Based on the assertions of Avisma and SMW, we preliminarily determine 
that there is an absence of de jure government control over the pricing 
and marketing decisions of Avisma and SMW with respect to these 
companies' pure magnesium export sales.
2. Absence of De Facto Control
    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by, or 
subject to, the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts, and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of its management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses.
    Avisma and SMW have asserted the following: (1) Each company 
establishes its own export prices; (2) each company negotiates 
contracts without guidance from any governmental entities or 
organizations; (3) each company makes its own personnel decisions; and 
(4) each company retains the proceeds of its export sales and uses 
profits according to its business needs. Additionally, Avisma's and 
SMW's questionnaire responses indicate that company-specific pricing 
during the POI does not suggest coordination among exporters. This 
information supports a preliminary finding that there is an absence of 
de facto governmental control of the export functions of these 
companies. Consequently, we preliminarily determine that Avisma and SMW 
have met the criteria for the application of separate rates.

Russia-Wide Rate

    As in all NME cases, the Department implements a policy whereby 
there is a rebuttable presumption that all exporters or producers 
located in the NME comprise a single exporter under common government 
control, the ``NME entity.'' The Department assigns a single NME rate 
to the NME entity unless an exporter can demonstrate eligibility for a 
separate rate.
    Information on the record of this investigation indicates that 
Avisma and SMW were the only Russian producers and/or exporters of the 
subject merchandise with sales or shipments to the United States during 
the POI. Based upon our examination and clarification of Customs data, 
we have determined that there are no other Russian producers and/or 
exporters of the subject merchandise and consequently none which were 
required to respond to the Department's questionnaire. <IT>See <RM>the 
memorandum from Christopher Priddy to the file entitled ``Examination 
of Customs Data for Pure Magnesium Russian Imports During the Period of 
Investigation'' dated April 23, 2001. For this reason, we have not 
assigned a Russia-wide rate in this investigation.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by Avisma, 
Greenwich, and SMW to or within the United States were made at LTFV, we 
compared the export price (EP) or the constructed export price (CEP), 
as appropriate, to NV based on an NME analysis, as described below. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI-
wide weighted-average EPs and CEPs to the NVs.

Export Price and Constructed Export Price

A. Avisma
    For Avisma, we used EP methodology in accordance with section 
772(a) of the Act because the subject merchandise was sold directly to 
unaffiliated customers in the United States prior to importation and 
CEP methodology was not otherwise appropriate. We made no deduction 
from the starting price to account for either export taxes paid by 
Avisma to the Russian government or export procedure fees because (a) 
the actual amounts paid are an internal expense within an NME country 
and (b) there is no quantifiable good or service factor for which a 
surrogate value can be determined. <IT>See Notice of Preliminary 
Determinations of Sales at Less Than Fair Value and Postponement of 
Final Determinations: Pure and Alloy Magnesium From the Russian 
Federation, <RM>59 FR 55427, 55430 (Nov. 7, 1994) (<IT>Pure and Alloy 
Magnesium from Russia<RM>).\4\
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    \4\ This was unchanged in the final determination. <IT>See 
Magnesium from Russia Original Investigation Final Determination, 
<RM>60 FR 16442.
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    We calculated EP based on packed CFR \5\ prices to the first 
unaffiliated purchaser in the United States. Where appropriate, we made 
deductions from the starting price for inland freight from the factory 
to the port of export, foreign brokerage and handling, third-country 
freight, third-country warehousing, ocean freight, and marine 
insurance, in accordance with section 772(c)(2)(A) of the Act. We 
valued Avisma's movement provided by NME suppliers using South African 
freight rates; for those freight services provided by market-economy 
companies, we used the actual prices which Avisma paid to the freight 
supplier in our EP calculation. For further discussion of our use of 
surrogate data in an NME proceeding, as well as selection of South 
Africa as the appropriate surrogate country, see the ``Normal Value'' 
section of this notice, below.
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    \5\ ``CFR,'' an official INCO Term for international trade and 
shipping, denotes that the seller is responsible for the cost of the 
freight expenses to the named port of destination but is not 
responsible for insurance expenses.
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B. Greenwich
    For Greenwich, we used CEP methodology in accordance with section 
772(b) of the Act, because sales to the first unaffiliated purchaser in 
the United States took place after importation. In accordance with our 
practice, we excluded trial shipments from our

[[Page 21323]]

analysis for purposes of the preliminary determination because they 
were made in small quantities. <IT>See, e.g., Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled 
Carbon-Quality Steel Products from Japan, <RM>64 FR 8291, 8295 (Feb. 
19, 1999). For further discussion, see ``Preliminary Determination of 
Antidumping Duty Investigation of Pure Magnesium from the Russian 
Federation Concurrence Memorandum'' (<IT>Concurrence Memorandum<RM>) 
dated April 23, 2001.
    We calculated CEP based on ex-dock, ex-warehouse, CIF, or delivered 
prices to unaffiliated purchasers in the United States. We deducted 
from the starting price amounts for foreign inland freight from the 
Russian plant to the reseller's warehouse, foreign inland freight in 
the country of exportation, foreign brokerage and handling, ocean 
freight, marine insurance, U.S. inland freight, U.S. warehousing, U.S. 
inland insurance, U.S. terminal charges, and U.S. customs brokerage 
fees and duties in accordance with section 772(c)(2)(A) of the Act. We 
valued Greenwich's movement expenses provided by NME suppliers using 
South African freight rates; for those freight services provided by 
market-economy companies, we used the actual prices which Greenwich 
paid to the freight supplier in our CEP calculation.
    We made additional deductions from CEP for credit expenses, and 
U.S. indirect selling expenses, including U.S. inventory carrying costs 
and other indirect selling expenses, in accordance with section 
772(d)(1) of the Act. We recalculated credit expenses for one sale for 
which Greenwich had not received payment as of the date of its last 
questionnaire response. As the date of payment for this sale, we used 
the date of the preliminary determination.
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. We calculated 
the CEP profit ratio for Greenwich based on the financial data reported 
in its income statement for the year ended June 30, 2000.
C. SMW
    For SMW, we used CEP methodology in accordance with section 772(b) 
of the Act, because sales to the first unaffiliated purchaser in the 
United States took place after importation. We made no deduction from 
the starting price to account for either export taxes paid by SMW to 
the Russian government or export procedure fees because (a) the actual 
amounts paid are an internal expense within an NME country and (b) 
there is no quantifiable good or service factor for which a surrogate 
value can be determined. <IT>See Pure and Alloy Magnesium from Russia, 
<RM>59 FR at 55430. We calculated CEP based on ex-dock, ex-warehouse, 
CIF or delivered prices to unaffiliated purchasers in the United 
States. Where appropriate, we adjusted the starting price for billing 
adjustments. We also deducted from the starting price amounts for 
foreign inland freight, foreign brokerage and handling, foreign inland 
insurance, ocean freight, marine insurance, U.S. inland freight, U.S. 
warehousing, U.S. terminal charges, U.S. customs brokerage fees and 
duties, and U.S. warehousing, in accordance with section 772(c)(2)(A) 
of the Act. We valued SMW's movement provided by NME suppliers using 
South African freight rates; for those freight services provided by 
market-economy companies, we used the actual prices which SMW paid to 
the freight supplier in our CEP calculation. With respect to ocean 
freight and marine insurance, we note that SMW used a freight forwarder 
located in Russia to ship certain of its products. Because SMW was 
unable to establish that the expenses incurred for these transactions 
were set by a market-economy supplier in a market-economy currency, we 
have not used them for purposes of the preliminary determination. 
Rather, we have based the amount of these expenses on the amounts 
incurred by SMW on its other transactions arranged by freight 
forwarders located in a market-economy. For further discussion, see 
<IT>Concurrence Memorandum.
    <RM>We made additional deductions for credit expenses and U.S. 
indirect selling expenses, including U.S. inventory carrying costs and 
other indirect selling expenses, in accordance with section 772(d)(1) 
of the Act. We based the amount for indirect selling expenses incurred 
by SMW's U.S. affiliate on facts available because SMW did not report 
these expenses on a POI-basis, despite requests in two supplemental 
questionnaires that it do so. As facts available, we used the total 
indirect selling expense amount reported by SMW, which represents all 
indirect expenses incurred during 2000. For further discussion, see 
<IT>Concurrence Memorandum.
    <RM>Pursuant to section 772(d)(3) of the Act, we further reduced 
the starting price by an amount for profit to arrive at CEP. We 
calculated the CEP profit ratio using the financial data reflected on 
the income statement of a South African producer of zinc. For further 
discussion of the financial statements of this surrogate producer, see 
the ``Normal Value'' section of this notice, below.

Normal Value

A. Surrogate Country
    Section 773(c)(4) of the Act requires the Department to value the 
NME producer's factors of production, to the extent possible, in one or 
more market-economy countries that: (1) are at a level of economic 
development comparable to that of the NME country, and (2) are 
significant producers of comparable merchandise. The Department has 
determined that Poland, Venezuela, South Africa, Turkey, Colombia, and 
Tunisia are countries comparable to Russia in terms of overall economic 
development. <IT>See <RM>the January 12, 2001, memorandum from Jeffrey 
May to Louis Apple.
    According to the available information on the record, we have 
determined that South Africa meets the statutory requirements for an 
appropriate surrogate country for Russia. For purposes of the 
preliminary determination, we have selected South Africa as the 
surrogate country, based on the quality and contemporaneity of the 
currently available data. Accordingly, we have calculated NV using 
South African values for Russian producers' factors of production 
except, as noted below, in certain instances where an input was sourced 
from a market economy country and purchased with a market-economy 
currency. We have obtained and relied upon publicly available 
information wherever possible.
B. Factors of Production
    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by Avisma and SMW for the POI. 
To calculate NV, the reported per-unit factor quantities were 
multiplied by publicly available South African surrogate values.
    For purposes of calculating NV, we valued Russian factors of 
production, in accordance with section 773(c)(1) of the Act. Factors of 
production include, but are not limited to: (1) Hours of labor 
required; (2) quantities of raw materials employed; (3) amounts of 
energy and other utilities consumed; and (4) representative capital 
cost, including depreciation. In examining surrogate values, we 
selected, where possible, the publicly available value which was: (1) 
An average non-export value; (2) representative of a range of prices 
within the POI or most contemporaneous with the POI; (3) product-
specific; and (4) tax-exclusive.

[[Page 21324]]

For a more detailed explanation of the methodology used in calculating 
various surrogate values, see the ``Preliminary Determination Factors 
Valuation Memorandum from the Team to the File,'' dated April 23, 2001. 
In accordance with this methodology, we valued the factors of 
production as follows:
    In selecting the surrogate values, we considered the availability, 
quality, specificity, and contemporaneity of the data. As appropriate, 
we adjusted input prices by including freight costs to make them 
delivered prices. We added to South African surrogate values a 
surrogate freight cost using the shorter of the reported distance from 
the domestic supplier to the factory or the distance from the nearest 
seaport to the factory. This adjustment is in accordance with the Court 
of Appeals for the Federal Circuit's decision in <IT>Sigma Corporation 
<RM>v. <IT>United States, <RM>117 F. 3d 1401, 1407-08 (Fed. Cir. 1997). 
Where a producer did not report the distance between the material 
supplier and the factory, we used as facts available the longest 
distance reported (<IT>i.e., <RM>the distance between the Russian 
seaport and the producer's location). To value rail freight rates, we 
used a rate for aluminum slabs or ingots provided by Spoornet, a South 
African rail company. As we were unable to identify a surrogate value 
for freight by truck, we valued trucking freight expenses using the 
surrogate value for rail freight. For those values not contemporaneous 
with the POI, we adjusted for inflation using producer price indices or 
wholesale price indices published in the International Monetary Fund's 
International Financial Statistics.
    We valued the following inputs using United Nation's Harmonized 
System import data for South Africa: sodium chloride, magnesium 
chloride, calcium flouric (flourspar), barium chloride, potassium 
chloride, potash, and shaped timber/sawn wood.
    We valued technical salt, sulphur, and slag using data from the 
World Trade Atlas of the South African Revenue Service. We valued 
carnallite concentrate using a price quote provided by a South African 
raw dolomite producer, and we multiplied the dolomite price quote by a 
factor of 20 as an estimated value for dehydrated carnallite. We valued 
sulfuric acid using United Nations commodity trade statistics for 
imports. The surrogate value for petroleum coke was based on an average 
of data obtained from the World Trade Atlas of the South African 
Revenue Service and United Nations commodity trade statistics. We 
valued magnesium scrap using Customs Union trade import statistics for 
aluminum scrap. We valued boric acid using data from the U.S. 
Geological Survey.
    We valued both natural gas and heavy oil using data from the 
International Energy Agency. We valued electricity using the 1999 
average electricity rate charged to industrial users by Eskom, a South 
African electric utility company.
    We valued the following packing materials using data from the World 
Trade Atlas of the South African Revenue Service: nails, tape, labels, 
wire, thermo-shrinking bags, and silica gel. The surrogate value for 
steel strips/metal straps was based on United Nations Commodity Trade 
Statistics. We used the Monthly Abstract of Trade Statistics from the 
Republic of South Africa in order to value polyethylene film/plastic.
    We valued labor based on a regression-based wage rate in accordance 
with 19 CFR 351.408(c)(3).
    To determine factory overhead, SG&A expenses, and profit, we relied 
on rates derived from the 1998 financial statements of Zinc Corporation 
of South Africa, a South African producer of comparable merchandise.
    Based on the information submitted by Avisma and SMW, we have 
determined that chlorine gas and potassium chloride flux are by-
products. Because they are by-products, we subtracted the sales revenue 
of chlorine gas and potassium chloride flux from the estimated 
production costs of pure magnesium. This treatment of by-products is 
consistent with generally accepted accounting principles. <IT>See Cost 
Accounting: A Managerial Emphasis (1991) <RM>at pages 539-544. We used 
a South African price quote to value chlorine and United Nation's 
Harmonized System data to value potassium chloride.

Currency Conversions

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

Verification

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

Suspension of Liquidation

    Because the estimated weighted-average dumping margins for all the 
examined companies are 0.00 percent, we are not directing the Customs 
Service to suspend liquidation of entries of pure magnesium from 
Russia.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
pursuant to section 735(b)(3) of the Act, the ITC will determine within 
75 days after our final determination whether these imports are 
materially injuring, or threaten material injury to, the U.S. industry.

Disclosure

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

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the verification reports. Rebuttal 
briefs must be filed within five days after the deadline for submission 
of case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW., Washington, DC 20230. Parties should confirm by telephone 
the time, date, and place of the hearing 48 hours before the scheduled 
time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs. If 
this investigation proceeds normally, we will make our final 
determination within 75 days of this preliminary determination.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act. Effective January 20, 2001, 
Bernard T. Carreau is fulfilling the duties of the Assistant Secretary 
for Import Administration.


[[Page 21325]]


    Dated: April 23, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-10685 Filed 4-27-01; 8:45 am]
BILLING CODE 3510-DS-P