Proposal for a Council Regulation amending Regulation (EEC) No 3068/92 imposing a definitive anti-dumping duty on imports of potassium chloride originating in Belarus or the Russian Federation
Date: 2005-10-17
Institutions: European Commission
Subjects: Belarus, Russia, anti-dumping duty, chemical salt, dumping, import, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 17.10.2005 
COM(2005)496 final 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EEC) No 3068/92 imposing a definitive anti-dumping duty on 
imports of potassium chloride originating in Belarus or the Russian Federation 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

110 

•  Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  No  384/96  of  22 
December 1995 on protection against dumped imports from countries not members of 
the European Community, as last amended by Council Regulation (EC) No 461/2004 
of  8  March  2004  ('the  basic  Regulation')  in  the  proceeding  concerning  imports  of 
potassium chloride originating, inter alia, in Russia. 

120 

•  General context 

This proposal is made within the context of the implementation of the basic Regulation 
and  is  the  result  of  enquiries  carried  out  in  line  with  the  substantive  and  procedural 
requirements laid out in the basic Regulation.  

130 

•  Existing provisions in the area of the proposal 

141 

219 

229 

230 

By  Regulation  (EC)  No  3068/92,  the  Council  imposed  definitive  anti-dumping 
measures  on  potassium  chloride  originating  inter  alia  in  Russia.  By  Regulation  (EC) 
No 858/2005, the Commission accepted price undertakings from, inter alia, companies 
in Russia. 

•  Consistency with the other policies and objectives of the Union 

Not applicable. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

The  interested  parties  concerned  have  already  had  the  possibility  to  defend  their 
interests, in line with the provisions of the basic Regulation. 

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

This proposal is the result of the implementation of the basic Regulation. 

The  basic  Regulation  does  not  foresee  a  general  impact  assessment  for  the 
circumstances surrounding the present proposal. 

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3)  LEGAL ELEMENTS OF THE PROPOSAL 

305 

•  Summary of the proposed action 

By Regulation (EEC) No 3068/92, the Council imposed definitive anti-dumping duties 
on  imports  of  potassium  chloride  originating,  inter  alia,  in  Russia  ('the  existing 
measures').  

In January 2004, separate requests were received from JSC  Silvinit  and  JSC  Uralkali 
('the  applicants')  for  individual  partial  interim  reviews  of  the  existing  measures 
pursuant to Article 11(3) of the basic Anti-Dumping Regulation.  

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed for the initiation of partial interim reviews, the Commission published notices 
of initiation and commenced an investigation. 

The attached draft Regulation amends Regulation 3068/92 and contains the results of 
the partial interim review investigations. The main findings concern reduced dumping 
margins  for  the  companies  concerned.In  addition,  an  exemption  to  the  anti-dumping 
duties is now granted subject to certain conditions as undertakings have been accepted 
by the Commission from the Russian companies concerned.  

The  Member  States  were  consulted  on  this  course  of  action.  23  Member  States 
supported the proposal. 2 Member States abstained. 

It is therefore proposed that the Council adopts the attached proposal for a Regulation. 

310 

•  Legal basis 

Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection  against 
dumped  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended by Council Regulation (EC) No 461/2004 of 8 March 2004.  

329 

331 

332 

•  Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

The proposal complies with the proportionality principle for the following reasons: 

The form of action is described in the above-mentioned basic Regulation and leaves no 
scope for national decision. 

Indication  of  how  financial  and  administrative  burden  falling  upon  the  Community, 
national governments, regional and local authorities, economic operators and citizens is 
minimized and proportionate to the objective of the proposal is not applicable. 

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341 

342 

•  Choice of instruments 

Proposed instruments: Regulation. 

Other means would not be adequate for the following reason(s): 

Other  means  would  not  be  adequate  because  the  basic  Regulation  does  not  foresee 
alternative options. 

4)  BUDGETARY IMPLICATION 

409 

The proposal has no implication for the Community budget. 

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Proposal for a 

COUNCIL REGULATION 

amending Regulation (EEC) No 3068/92 imposing a definitive anti-dumping duty on 
imports of potassium chloride originating in Belarus or the Russian Federation 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection 
against dumped imports from countries not members of the European Community1 (the ‘basic 
Regulation’) and in particular Article 11 (3) thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after  consulting  the  Advisory 
Committee,  

Whereas: 

A. 

1. 

(1) 

(2) 

(3) 

1 

2 
3 
4 

PROCEDURE 

Previous investigations and existing measures 

Following  an  investigation  (‘the  previous  investigation’),  the  Council,  by  Regulation 
(EC)  No  969/20002,  amended  the  measures  originally  imposed  by  Regulation  (EEC) 
No 3068/923 on imports of potassium chloride originating, inter alia, in Russia (‘the 
existing measures’). 

In March 2004, by means of a notice published in the Official Journal of the European 
Union4, the Commission launched, on its own initiative, a partial interim review of the 
existing measures to examine whether they should be amended to take account of the 
enlargement  of  the  European  Union  to  25  Member  States  on  1  May  2004 
(‘Enlargement’). 

The  results  of  that  partial  interim  review  showed  that  it  was  in  the  interests  of  the 
Community to provide for the temporary adaptation of the existing measures so as to 
avoid a sudden and excessively negative impact on importers and users in the ten new 
Member States immediately following Enlargement. 

OJ L 56, 6.3.1996, p.1. Regulation as last amended by Council Regulation (EC) No 461/2004 (OJ L 77, 
13.3.2004, p.12). 
OJ L 112, 11.5.2000, p.4.  
OJ L 308, 24.10.1992, p.41.  
OJ C 70, 20.3.2004, p.15. 

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(4) 

(5) 

2. 

(6) 

(7) 

(8) 

3. 

(9) 

To  this  end,  in  May  2004,  by  Regulation  (EC)  No  1002/20045,  the  Commission 
accepted  undertakings  from  two  exporting  producers  in  Russia,  namely  JSC  Silvinit 
and  JSC  Uralkali  for  a  period  of  one  year.  In  June  2005,  by  Regulation  (EC)  No 
858/20056 new undertakings, which expire on 13 April 2006, were accepted from the 
two exporting producers in Russia. In addition, in order to provide for the exemption 
from  the  anti-dumping  duties  imposed  by  Regulation  (EEC)  No  3068/92  on  imports 
made  under  the  terms  of  the  undertakings,  Regulation  (EEC)  No  3068/92  was 
amended by Regulation (EC) No 992/20047. 

It should also be noted that all references to ‘the Community’ or ‘the Community of 
15’ in the present Regulation shall be taken to mean, unless otherwise specified, the 
Community as constituted immediately before Enlargement. 

Grounds for the present reviews 

In January 2004, separate requests were received from JSC Silvinit and JSC Uralkali 
(‘the  applicants’)  for  individual  partial  interim  reviews  of  the  existing  measures 
pursuant to Article 11(3) of the basic Regulation.  

The applicants alleged and provided sufficient prima facie evidence that a comparison 
of normal value based on their own costs/domestic prices and their export prices to the 
Community would lead to a removal of dumping. Therefore, the continued imposition 
of  the  existing  measures  at  the  existing  levels,  which  were  based  on  the  level  of 
dumping previously established, were no longer necessary to offset dumping. 

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed for the initiation of partial interim reviews, the Commission published notices 
of initiation and commenced an investigation8.  

Period of Investigation  

The investigation was limited to dumping and covered the period from 1 April 2003 
until 30 March 2004 (the ‘investigation period’ or ‘IP’). 

4. 

Parties concerned by the investigation 

(10)  The  Commission  officially  advised  the  representatives  of  the  exporting  country,  the 
applicants  and  the  Community  industry  of  the  initiation  of  the  interim  reviews  and 
gave  all  parties  directly  concerned  the  opportunity  to  make  their  views  known  in 
writing  and  to  request  a  hearing.  The  Commission  also  sent  questionnaires  to  the 
applicants.  Questionnaires  replies  were  received  from  the  applicants  and  from  an 
exporting trader in Russia related to one of the applicant companies. 

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6 
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8 

OJ L 183, 20.5.2004, p.16. Regulation as last amended by Commission Regulation (EC) No 588/2005 
(OJ L 98, 16.4.2005, p.11).  
OJ L 143, 7.6.2005, p.11. 
OJ L 182, 19.5.2004, p.23. 
OJ C 93, 17.4.2004, p.2 and p.3.  

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(11)  The  Commission  sought  and  verified  all  information  it  deemed  necessary  for  the 
purpose of the determination of dumping and carried out verifications of the replies to 
the questionnaire at the premises of the following companies: 

(a) Exporting producers in Russia:  

JSC Silvinit, Solikamsk, Perm Region, Russia, 

JSC Uralkali, Berezniki, Perm Region, Russia, 

(b) Related exporter to JSC Silvinit: 

International Potash Company, Moscow, Russia 

B. 

1. 

PRODUCT CONCERNED AND LIKE PRODUCT 

Product concerned 

(12)  The product is the same as in previous investigation, i.e. potassium chloride (‘potash’ 
or  KCl)  and  is  generally  used  as  agricultural  fertiliser,  directly,  blended  with  other 
fertilisers  or  after  transformation  into  a  complex  fertiliser  known  as  NPK  (nitrogen, 
phosphorus,  potassium).  The  potassium  content  is  variable  and  is  expressed  as  a 
percentage of the weight of potassium oxide (K2O) on the dry anhydrous product. It is 
also used as a raw material in the manufacture of certain industrial and pharmaceutical 
products. 

(13)  Potash  is  generally  commercialised  in  either  a  standard/powder  form  (‘standard 
potash’) or in other than standard form that includes - but is not limited to - a granular 
form  (‘granular  potash’).  The  product  is  generally  classified  into  three  basic 
categories, based on the K2O content, namely: 

-potassium content not exceeding 40% K2O - falling within Combined Nomenclature 

(‘CN’) code 3104 20 10, 

-potassium content exceeding 40% K2O but less than or equal to 62% - falling within 

CN code 3104 20 50, 

-potassium content over 62% K2O - falling within CN code 3104 20 90. 

(14) 

It  should  be  recalled  that  in  the  previous  investigation  it  was  found  that  imports  of 
certain special mixtures or blends with an unusually high content of potash which do 
not  fall  under  any  of  the  CN  codes  for  potash  indicated  above,  should  also  be 
considered  as  the  product  concerned.  This  conclusion  was  reached  as  such  mixtures 
and blends shared the same basic physical and chemical characteristics and have the 
same  uses  as  the  basic  categories  mentioned  above.  Accordingly,  such  mixtures  or 
blends falling within CN codes ex 3105 20 10, ex 3105 20 90, ex 3105 60 90, ex 3105 
90 91 and ex 3105 90 99 were also included in the present investigation and constitute 
part of the product concerned. 

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2. 

Like product 

(15) 

C. 

1. 

It  was  established  that,  as  there  were  no  differences  in  the  physical  or  chemical 
properties  between  the  product  exported  from  Russia  to  the  Community  and  the 
product  produced  in  Russia  and  sold  on  the  Russian  domestic  market,  they  were 
considered to be like products for the purposes of the present investigation. 

DUMPING WITH REGARD TO THE APPLICANTS 

Normal value 

(16)  As  far  as  the  determination  of  normal  value  is  concerned,  it  was  first  established 
whether  the  total  volume  of  each  of  the  applicants’  total  domestic  sales  of  the  like 
product  were  representative  in  comparison  with  their  respective  total  export  sales 
volumes to the Community. In accordance with Article 2(2) of the basic Regulation, 
domestic  sales  were  considered  to  be  representative  when  each  of  the  applicants’ 
domestic sales volumes of the like product constituted at least 5% of their respective 
total export sales volumes to the Community during the investigation period. On this 
basis, for both applicants, overall domestic sales of the product concerned during the 
IP were found to have been made in representative quantities. 

(17)  Subsequently,  by  defining  the  product  types  in  accordance  with  the  TARIC  codes 
under  which  the  product  is  classified  (i.e.  by  standard  grade  or  other  than  standard 
grade,  including  granular)  and  by  the  packing  or  form  in  which  it  is  shipped  (i.e.  in 
bulk, in bags or in containers), an analysis was made as to whether the domestic sales 
of each product type were representative. Domestic sales of a particular product type 
were  considered  sufficiently  representative  when  the  total  domestic  sales  volume  of 
that  type  during  the  IP  represented  5%  or  more  of  the  total  sales  volume  of  the 
comparable product type exported to the Community.  

(18)  As a result of this analysis, it was found that one exporting producer, JSC Silvinit, had 
only  sold  one  exported  product  type  in  representative  quantities  on  the  domestic 
market. For the other exporting producer, JSC Uralkali, it was found that all exported 
product types had been sold in representative quantities on the domestic market.  

(19)  An examination was also made as to whether the domestic sales of each product type 
could be regarded as having been made in the ordinary course of trade by establishing 
the proportion of profitable sales to independent customers of the type in question.  

(20) 

In this regard, it was found for JSC Uralkali that its domestic sales prices for the best 
sold product type exported to the Community (the ‘best sold export type’) accounting 
for over 99% of such exports, showed unusual trends during the investigation period. 
It was established that, during the investigation period, 77% of domestic sales of the 
best  sold  exported  type  had  been  made  to  one  customer  in  Russia  and  that  the  sales 
price to this particular customer had, in the space of one month in the middle of the 
investigation period, more than doubled. Price rises for the same product type sold to 
other domestic customers also rose at the same time, but only by a margin of around 
40%.  Examination  of  price  rises  for  other  potash  types  sold  domestically  showed 
similar price increases of around 40% during the investigation period.  

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(21) 

In view of this particular market situation with regard to pricing for a key product type 
used to calculate the dumping margin, pursuant to Article 2(3) of the basic Regulation 
it  is  considered  that  such  sales  do  not  permit  a  proper  comparison.  Given  the 
significance of such sales in the domestic sales volumes of the type in question, and 
the  importance  of  this  type  in  the  overall  export  volume  of  potash  exported  by  the 
company concerned to the Community, it is considered reasonable to disregard these 
specific  sales  to  the  customer  in  question.  The  remaining  domestic  sales  of  this 
product type to other customers were found to be below the 5% threshold considered 
necessary for them to be regarded as representative. Accordingly, normal value for this 
product  type  was  calculated  on  the  basis  of  the  cost  of  production  of  the  exporting 
producer concerned, plus a reasonable amount for selling, general and administrative 
costs  and  profit.  The  amounts  for  selling,  general  and  administrative  costs  and  for 
profit  were  based  on  actual  data  pertaining  to  production  and  sales,  in  the  ordinary 
course of trade, of the like product, by the exporting producer under investigation in 
accordance with the first sentence of Article 2(6) of the basic Regulation. 

(22) 

It was submitted by Uralkali that the “particular market situation” foreseen in Article 
2(3) of the basic Regulation is not applicable for the sales of the product concerned to 
the  customer  in  question  and  therefore  the  domestic  prices  for  the  product  type 
concerned  should  have  been  used  to  establish  normal  value.  In  this  regard  it  was 
argued (i) that the provision of Article 2(3) of the basic Regulation would not apply in 
case  of  “artificially  high  prices”  and  (ii)  that  special  conditions  applied  to  only  one 
specific client could not be considered to constitute a “particular market situation” for 
the Russian domestic market as a whole. Moreover, it was claimed that the prices in 
question were resulting from “market forces” and reflected “the actual situation on the 
market”. 

(23)  With  regard  to  the  above,  it  should  be  noted  that  the  particular  market  situations 
referred  to  in  article  2(3)  of  the  basic  Regulation  are  not  exhaustive  and  that  the 
particularity  of  the  market  should  be  assessed,  inter  alia,  in  light  of  price  variations 
and trends rather than solely on the basis of the absolute level of the prices. In this case 
both low priced sales transactions and high priced transactions were excluded from the 
calculations  since  they  did  not  reflect  a  level  of  prices  of  a  lasting  nature  and  since 
those prices did not appearto reflect market forces as such trends were not found for 
any other product type or for any other client of Uralkali. Secondly, Article 2(3) of the 
basic  Regulation  provides  that  normal  value  may  be  constructed  in  situations  where 
“…because  of  a  particular  market  situation  such  sales  do  not  permit  a  proper 
comparison…”. This clearly allows that, as in the current situation, sales to a customer 
which are considered not to permit a proper comparison may be disregarded as a basis 
for establishing normal value. This conclusion does not relate to the Russian market as 
a whole but rather to these sales of Uralkali.  

(24)  As  concerns  JSC  Silvinit,  where  the  sales  volume  of  one  product  type,  sold  at  a  net 
sales  price  equal  to  or  above  the  unit  cost,  represented  more  than  80 %  of  the  total 
sales volume of that type, and where the weighted average price of that type was equal 
to  or  above  the  adjusted  unit  cost,  normal  value  was  based  on  the  actual  domestic 
price,  calculated  as  a  weighted  average  of  the  prices  of  all  domestic  sales  of  that 
product type made during the IP, irrespective of whether these sales were profitable or 
not.  

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(25)  For the other product type of JSC Silvinit, which was sold in insufficient quantities for 
the domestic prices to provide an appropriate basis for the establishment of the normal 
value,  another  method  had  to  be  applied.  In  this  case,  constructed  normal  value  was 
used,  in  accordance  with  Article  2(3)  of  the  basic  Regulation.  Normal  value  was 
constructed  by  adding  to  the  adjusted  unit  cost  of  the  exported  type,  a  reasonable 
percentage for selling, general and administrative expenses and a reasonable margin of 
profit,  on  the  basis  of  actual  data  pertaining  to  production  and  sales,  in  the  ordinary 
course of trade, of the like product, by the exporting producer under investigation in 
accordance with the first sentence of Article 2(6) of the basic Regulation. 

(26) 

It was claimed by Uralkali that the profit margin used in the construction of the normal 
value did not properly take into account the adjustments of the gas costs, as the profits 
used  for  the  constructed  normal  values  were  derived  form  the  company’s  accounts 
before  adjustments.  However,  this  claim  could  not  be  accepted  since  in  accordance 
with the chapeau of Article 2(6) the actual profit amounts realised by the company in 
the domestic market should be used for the construction of the normal value.  

(27)  As  concerns  energy  costs,  such  as  electricity  and  gas  used  in  the  mining  and 
production processes of the product concerned, the investigation established that these 
costs  form  a  significant  proportion  of  the  total  cost  of  manufacturing  of  potash 
producers, not only in Russia but in other producing countries as well. In this regard, it 
was submitted by the Community industry that the energy cost per unit of electricity 
and gas paid by the  Russian companies to their utilities suppliers did not reasonably 
reflect the actual production cost of the electricity and gas purchased.  

(28) 

In view of these allegations, it was considered appropriate in the present case to also 
compare  the  applicants’  energy  purchase  costs  per  unit  to  those  of  another  major 
potash  producer  with  similar  production  methods,  output  levels  and  similar  natural 
advantages. As there are no other producers of potash in Russia, this information was 
sought and obtained from a large producer of potash in Canada.  

(29)  The data provided showed that the energy requirements of the Canadian producer were 
similar  to  those  of  the  applicant  Russian  producers  and  that  electricity  and  gas 
purchased  by  this  company  was  derived  from  domestic  hydro-electric  power  and 
major  gas  fields,  as  is  the  electricity  and  gas  used  by  the  Russian  companies.  The 
comparison showed that the cost per unit for electricity paid by the Canadian producer 
was not too dissimilar to that paid by the Russian producers. 

(30)  As concerns gas supplies, it was established on the basis of data found in the published 
annual  report  for  2003  of  the  Russian  gas  provider  OAO  Gazprom  (whose  regional 
distributor  was  also  the  supplier  to  the  exporting  producers  in  question),  that  the 
domestic price of gas paid by the two Russian Producers was around one fifth of the 
export price from Russia. The same report clearly stated that “OAO Gazprom did not 
make  any  profit  in  the  domestic  market”.  While  there  is  no  officially  available 
information as to the profitability of Russian domestic gas prices, quotes from Russian 
government sources in the press together with data obtained from specialized market 
intelligence sources and governmental websites all strongly suggest that the gas prices 
charged  to  domestic  customers  were  made  at  prices  far  from  cost  recovery  levels. 
Moreover, the price of gas paid by the two Russian Producers was significantly lower 
than the gas price paid by the Canadian producers.  

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(31) 

In  view  of  the  above,  it  was  therefore  considered  that  the  prices  charged  by  the 
regional  Russian  gas  provider  to  the  Russian  potash  producers  in  the  investigation 
period  could  not  reasonably  reflect  the  costs  associated  with  the  production  of  gas 
when compared to the exported price of gas from Russia and the price of a Canadian 
gas  provider  to  a  major  industrial  user  in  Canada.  In  accordance,  therefore,  with 
Article 2(5) of the basic Regulation, an adjustment to the cost of production for each 
of  the  applicants  was  made.  In  the  absence  of  any  other  reasonable  basis,  such  an 
adjustment was made using information concerning the price of gas for export, net of 
transport costs, customs export tax, value added tax and excise duty. 

(32) 

In this regard, it was submitted by one of the applicants that the charges for gas were 
properly  reflected  in  its  accounting  records,  therefore  no  adjustment  was  warranted 
under  Article  2(5)  of  the  basic  Regulation.  In  response  to  this  argument  it  is  not 
disputed that the company has correctly accounted for the invoiced prices paid, rather 
the  adjustment  is  justified  by  the  fact  that  the  price  of  the  gas  purchased  does  not 
reasonably reflect the cost of production and distribution of the gas. 

(33)  On the adjustment for the gas costs, it was also submitted by the Russian Authorities 
that  the  Commission  had  not  taken  into  account  the  different  transportation  costs 
between the gas sold domestically for industrial usage and the gas sold for export. It 
should be recalled (see recital (31) that the comparison which has led to the adjustment 
has been made between the gas prices actually paid by the companies and the export 
prices charged by the Russian gas provider OAO Gazprom for export from Russia, net 
of transport costs, customs export tax, value added tax and excise duty. Therefore, this 
claim was rejected.  

(34)  One of the applicants submitted that it had a significantly lower unit cost of production 
during the first quarter of 2004 (i.e. the last quarter of the investigation period) due to 
increased efficiency and lower maintenance costs and that this lower unit cost should 
be considered as the basis for the cost of production for the whole investigation period. 
This request was not granted as the appropriate basis for establishing such costs is the 
full investigation period, rather than costs occurring in an exceptional, shorter, period.  

(35)  As also concerns cost of production, it was submitted by the Community industry that 
depreciation  of  capital  assets  should,  for  the  purpose  of  the  applicants’  cost  of 
production, be based on the replacement costs of such assets (e.g. new mine shafts and 
machinery etc). In this regard, it was argued that depreciation based conventionally on 
the  acquisition  (historical)  value  of  the  capital  assets  would  not,  in  accordance  with 
Article  2(5)  of  the  basic  Regulation,  reasonably  reflect  the  costs  associated  with  the 
production  of  the  product  concerned.  It  was  submitted,  therefore,  that  an  upward 
adjustment to the Russian producers’ costs was required. 

(36)  As  concerns  this  submission,  it  was  noted  that  depreciation  based  on  the  acquisition 
value  and  residual  economical  life  of  capital  assets  appears  to  be  in  line  with 
accounting  practices  in  the  mining  industry.  Therefore,  in  order  to  establish  whether 
the depreciation included in the cost of production data reasonably reflected the costs 
associated with the production of the product concerned, the investigation focused on 
the way the historical values of the assets had been established.  

(37) 

In this regard, the on-spot verification visits to the Russian producers showed that the 
original value of their assets had been determined on the basis of valuations carried out 

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during  the  privatization  process  which  took  place  in  1993.  These  asset  values  were 
subsequently  revised  between  1993  and  1997  as  a  result  of  the  application  of 
‘Revaluation  Coefficients’ 
to  deal  with 
hyperinflation.  At  the  end  of  1997,  following  a  Decree  of  the  Russian  Government, 
independent  valuations  of  assets  were  carried  out  by  independent  evaluators.  Three 
basic  criteria  were  adopted  in  establishing  these  asset  values,  one  of  which  was  the 
replacement  value  of  the  asset.  The  result  of  these  independent  assessments  are 
reflected in the opening Balance Sheet of the applicants in 1998. 

the  Russian  Government 

issued  by 

(38)  Nevertheless, despite this upward valuation of the original values, it was noted that the 
asset values of the applicants, when expressed as a ratio of production to value of the 
assets,  still  appear  to  be  significantly  lower  than  the  asset  values  of  the  companies 
comprising the Community Industry and a major producer with similar extraction and 
production  capacity  in  Canada.  Such  an  assessment,  however,  does  not  take  into 
account  the  obsolescence  and  lower  technological  level  of  the  assets  of  the  Russian 
producers obtained prior to the privatisation which took place in 1993. 

(39)  Therefore  in  the  absence  of  any  substantive  evidence  showing  that  depreciation  had 
not  been  correctly  reflected  in  the  accounts  of  the  exporting  producers,  it  is  not 
considered possible at the present time to make any adjustment to depreciation costs in 
the cost of production data used for establishing the normal value of the applicants. 

(40)  The  Community  industry  also  submitted  that  an  allocation  for  environmental 
protection  costs  comparable  to  those  incurred  by  the  Community  producers  should 
also be factored into the cost of production calculations. It was found, however, that 
the  applicants  had  incurred  such  costs  and  had  accounted  for  them  in  the  cost  of 
production  calculations.  With  regard  to  whether  such  costs  should  be  of  a  similar 
proportion or magnitude to those of the Community producers, it is considered that as 
long as the applicants have met the environmental protection levels prescribed by the 
Russian  authorities  and  that  the  costs  involved  in  meeting  such  levels  are  correctly 
reflected in their records, no adjustment is required. As this was found to be the case 
for both of the applicants, no adjustment was warranted for environmental costs. 

2. 

Export price 

JSC Silvinit (‘Silvinit’) 

(41)  With regard to Silvinit, it was found that most of the company’s sales of potash to the 
Community  in  the  investigation  period  were  made  via  an  unrelated  Swiss  trading 
comapny. For the purposes of the present investigation and pursuant to Article 2(8) of 
the  basic  Regulation,  the  prices,  actually  paid  or  payable  to  Silvinit  by  this  trading 
company, were taken as the basis for calculating the export price. 

(42)  However, it was found that two transactions were made via Silvinit’s related Russian 
trading  company,  International  Potash  Company  (‘IPC’),  to  a  related  company  in 
Belgium  called  Ferchimex  AS  (‘Ferchimex’),  which  processed  the  imported  potash 
into a product not covered by the investigation. In accordance with Article 2(9) of the 
basic Regulation, the prices charged by IPC to Ferchimex may be disregarded if they 
are considered to be unreliable. It was noted that for both of the transactions, the sales 
price  to  Ferchimex  were  at  a  broadly  similar  price  for  the  same  types  when  sold  to 
independent  customers  in  the  Community.  Moreover,  both  transactions  concerned 

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only minor quantities. Therefore, they were both included in the overall determination 
of the export price. 

JSC Uralkali (‘Uralkali’) 

(43)  As  concerns  Uralkali,  it  was  found  that  all  of  the  company’s  sales  of  potash  to  the 
Community  in  the  investigation  period  were  made  directly  to  a  trader  situated  in 
Cyprus called  Fertexim Ltd which acted as an exclusive distributor for Uralkali. For 
such  sales,  the  export  price  was  established  in  accordance  with  Article  2(8)  of  the 
basic Regulation, i.e. on the basis of the prices actually paid or payable by Fertexim. 

3. 

Comparison 

(44)  The normal value and export prices for both of the applicants were compared on an ex-
works basis. For the purpose of ensuring a fair comparison between the normal value 
and  the  export  price,  due  allowance  was  made  for  differences  which  affect  price 
comparability in accordance with Article 2(10) of the basic Regulation.  

(45)  Accordingly,  allowances  for  differences  in respect  of  discounts,  transport,  insurance, 
handling,  loading  and  ancillary  costs,  packing  and  credit  costs  have  been  granted 
where applicable and supported by evidence.  

4. 

Dumping margin 

(46) 

In accordance with Article 2(11) of the basic Regulation, for each exporting producer 
the  adjusted  weighted  average  normal  value  by  product  type  was  compared  to  the 
adjusted  weighted  average  export  price  of  each  corresponding  type  of  the  product 
concerned sold to the Community.  

(47)  The  comparison  showed  the  existence  of  dumping  for  both  of  the  companies 
concerned, however, at significantly lower levels than those established previously. As 
a weighted average of all types exported to the Community, expressed as percentages 
of  the  total  CIF  Community  frontier  price,  duty  unpaid,  the  dumping  margins 
established were as follows: 

Exporting Producer 

% Dumping Margin 

JSC Silvinit 

JSC Uralkali 

23,0% 

12,3%  

D. 

LASTING NATURE OF CHANGED CIRCUMSTANCES 

(48) 

In accordance with Article 11(3) of the basic Regulation, an analysis was made as to 
whether  the  circumstances  with  regard  to  dumping  had  changed  significantly  and  if 
any change could be said to be of a lasting nature. In this regard, it was found that the 
change in the dumping margins resulted from a lowering of the normal values of the 
applicants. 

(49) 

In  this  regard,  it  should  be  noted  that  in  the  present  investigation,  normal  value  was 
established on the basis of the applicants’ costs and prices. Moreover, contrary to the 
findings  in  the  previous  investigation,  domestic  consumption  for  potash  has  been 

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steadily increasing in the last few years and, overall, the domestic sales prices of both 
Russian producers are profitable.  

(50)  As  concerns  the  lasting  nature  of  export  sales  prices  on  markets  other  than  the 
Community,  neither  of  the  applicants  was  able  to  provide  detailed  data  on  a 
transaction-by-transaction  basis  at  producer  level.  Aggregated  data  was,  however, 
provided by country of destination and by product type. This was considered sufficient 
for the purposes of the present partial interim review as an exact determination of sales 
prices on such markets is not an absolute requirement. In the absence of detailed data, 
and  in  view  of  (i)  the  variety  of  delivery  terms  used  for  such  sales  (e.g.  CIF,  FOB, 
FCA  etc)  (ii)  the  different  logistical  arrangements  and  combinations  (e.g.  rail  +  sea, 
rail  only  etc)  (iii)  the  differences  in  distances  and  transport  and  handling  costs  to 
various destinations in Asia and South America, the Commission was not in a position 
to  determine  with  exactitude  the  sales  prices  to  each  country.  There  were,  however, 
indications  that  sales  price  levels  to  the  non-Community  markets  were,  allowing  for 
transport costs, of the same order of magnitude as sales to the Community.  

(51) 

In view of all these factors, it is considered appropriate to amend the existing measures 
insofar  as  they  concern  the  applicants  by  lowering  the  dumping  margins  to  those 
established in the present investigation. 

(52)  According  to  Article  9(4)  of  the  basic  Regulation,  the  amount  of  the  anti-dumping 
duties should not exceed the margins of dumping established, but they should be less 
than those margins if such lesser duties would be adequate to remove the injury of the 
Community Industry. As the existing duties for the applicants had been calculated on 
the basis of the dumping margins, and as the new dumping margins are lower than the 
ones  previously  calculated,  the  duties  should  be  adjusted  to  the  lower  dumping 
margins found in this investigation, namely 23,0% for JSC Silvinit and 12,3% for JSC 
Uralkali. 

(53)  The  interested  parties  were  informed  of  the  essential  facts  and  considerations  on  the 
basis of which it was intended to recommend that the anti-dumping duties originally 
imposed by Council Regulation (EEC) No 3068/92 be amended. They were given the 
opportunity to comment and to request a hearing. All comments received were taken 
into consideration where appropriate. 

E. 

UNDERTAKINGS 

(54)  Following disclosure of the essential facts and considerations on the basis of which it 
was  intended  to  recommend  that  the  anti-dumping  duties  originally  imposed  by 
Council  Regulation  (EEC)  No 3068/92  be  amended,  both  of  the  applicants  offered 
price undertakings in accordance with Article 8(1) of the basic Regulation. 

(55)  The Commission, by Decision 2005/…/EC9, accepted the undertakings offered by the 

applicants. The reasons for accepting these undertakings are set out in that Decision. 

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F. 

FORM OF THE MEASURES WITH REGARD TO THE APPLICANTS 

(56)  The existing measures are applicable to eight CN codes and comprise fixed amounts 
ranging from 19,61 €/tonne to 40,63 €/tonne, depending on the product type. During 
the current investigation period, however, it was found that almost all the exports by 
the applicants to the Community were limited to a product type falling under one CN 
code. 

(57)  Accordingly, in view of the absence of information on the other product types, and as 
the  particular  type  of  potash  concerned  appears  now  to  be  the  most  commercialised, 
the most reasonable approach for implementing the amended duties is considered to be 
the replacement of all the fixed amounts with a single ad valorem duty for all potash 
types manufactured by the applicants. 

HAS ADOPTED THIS REGULATION: 

Article 1 

1. In Regulation (EEC) No 3068/92, the first paragraph of Article 1 of shall be amended to 
read: 

‘A definitive anti-dumping duty is hereby imposed on imports of potassium chloride 
falling within CN codes 3104 20 10, 3104 20 50, 3104 20 90, and on special 
mixtures falling within CN codes ex 3105 20 10 (TARIC codes 3105 20 10 10 
and 3105 20 10 20), ex 3105 20 90 (TARIC codes 3105 20 90 10 and 3105 20 
90 20), ex 3105 60 90 (TARIC codes 3105 60 90 10 and 3105 60 90 20), ex 
3105 90 91 (TARIC codes 3105 90 91 10 and 3105 90 91 20), ex 3105 90 99 
(TARIC  codes  3105  90  99  10  and  3105  90  99  20),  originating  in  Belarus  or 
Russia.’ 

2. In Regulation (EEC) No 3068/92, the heading for the table relating to ‘Russia’ in the third 
paragraph of Article 1 of shall be amended as follows:  

‘Russia (all companies excluding JSC Silvinit and JSC Uralkali – TARIC additional 
code A999)’ 

3. In Regulation (EEC) No 3068/92, the following shall be inserted as the fourth paragraph of 
Article 1: 

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‘For  the  imports  of  the  exporting  producers  mentioned  below,  the  rate  of  the  anti-
dumping  duty  applicable  to  the  net,  free-at-Community-frontier  price,  before  duty, 
for the products described in paragraph 1 shall be as follows: 

Rate of 
duty 

TARIC 
additional 
code 

Company: 

- JSC Silvinit, Solikamsk, Russia 

23,0% 

A665 

- JSC Uralkali, Berezniki, Russia 

12,3% 

A666 

’ 

4.  In  Regulation  (EEC)  No  3068/92,  Article  1,  paragraphs  4  and  5  shall  be  renumbered 
paragraphs 5 and 6 respectively. 

5. In Regulation (EEC) No 3068/92, Article 1a, paragraph 1 shall be amended as follows: 

‘Imports  declared  for  release  into  free  circulation  shall  be  exempt  from  the  anti-dumping 
duties  imposed  by  Article  1,  provided  that  they  are  produced  by  companies  from  which 
undertakings are accepted by the Commission and whose names are listed in the Commission 
Regulation (EC) No 858/2005 and in Commission Decision No 2005/[INSERT]/EC, as from 
time to time amended, and have been imported in conformity with the provisions of the same 
Commission acts. 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the Council 
The President 

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