Council Regulation (EC) No 221/2008 of 10 March 2008 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain manganese dioxides originating in South Africa
Date: 2008-03-10
Institutions: Council of the European Union
Subjects: South Africa, anti-dumping duty, anti-dumping legislation, import, manganese, non-ferrous metal, originating product

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

I

REGULATIONS

COUNCIL REGULATION (EC) No 221/2008

of 10 March 2008

imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on
imports of certain manganese dioxides originating in South Africa

THE COUNCIL OF THE EUROPEAN UNION,

B. SUBSEQUENT PROCEDURE

Having regard to the Treaty
Community,

establishing the European

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 Community (1)
(the basic Regulation), and in particular Article 9 thereof,

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

(3)

(4)

Following the imposition of a provisional anti-dumping
duty on imports of electrolytic manganese dioxides origi-
interested parties received
nating in South Africa, all
disclosure of the facts and considerations on which the
provisional measures were based. They were also granted
an opportunity to be heard. Some interested parties
submitted comments in writing and one party which
asked to be heard was granted a hearing.

The Commission continued to seek and verify all infor-
mation it deemed necessary for its definitive findings.
After the imposition of provisional measures, an on-
spot verification visit was carried out at the premises of
in order to verify their
Delta EMD Australia Pty Ltd.
profits on the domestic market.

Whereas:

A. PROVISIONAL MEASURES

The Commission, by Regulation (EC) No 1066/2007 (2)
(the provisional Regulation) imposed a provisional anti-
dumping duty on imports of electrolytic manganese
dioxides
(i.e. manganese dioxides produced
through an electrolytic process) not heat-treated after
the
falling within CN code
ex 2820 10 00 (TARIC code 2820 10 00 10) and origi-
nating in South Africa.

electrolytic

process,

(EMD)

(1)

(2)

(6)

the

period

It is recalled, as set out in recital 8 of the provisional
Regulation, that the investigation of dumping and injury
covered
2005 to
30 September 2006 (investigation period or IP). The
examination of the trends relevant for the assessment
of injury covered the period from 1 January 2002 to
the end of the investigation period (period considered).

from 1 October

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation

(EC) No 2117/2005 (OJ L 340, 23.12.2005, p. 17).

(2) OJ L 243, 18.9.2007, p. 7.

(5)

The oral and written comments submitted by the parties
were considered and, where appropriate,
the findings
were modified accordingly.

C. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

It

One user argued that because carbon zinc EMD cannot
be used in alkaline batteries, alkaline and carbon zinc
EMD are not interchangeable and therefore not a single
product.
should be recalled that, unlike natural
manganese dioxides, chemical manganese dioxides or
heat-treated electrolytic manganese dioxides, the carbon
zinc grade EMD and alkaline grade EMD share the same
basic physical, chemical and technical characteristics.
Though they are not
alkaline
battery production,
they are both used for essentially
the same purposes, i.e. in dry cell battery manufacture.
Therefore, the above argument had to be rejected.

interchangeable

for

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(7)

In the absence of any other comments and evidence,
recitals 9 to 13 of
the provisional Regulation are
hereby confirmed.

2. Export prices

(13)

In the absence of any comments concerning the export
prices, the export prices as set out in recitals 29 and 30
of the provisional Regulation are confirmed.

2. Like product

3. Comparison

(8)

In the absence of any comments concerning the like
product, recitals 14 and 15 of the provisional Regulation
are hereby confirmed.

(14)

absence of

concerning the
In the
comparison, the comparison as set out in recital 31 of
the provisional Regulation is confirmed.

any comments

D. DUMPING

1. Normal value

(9)

In the absence of any comments concerning the meth-
odology used to determine the normal value, recitals 16
to 26 of
the provisional Regulation are hereby
confirmed.

4. Dumping margin

(15)

In the light of the above, the definitive weighted average
dumping margin expressed as a percentage of the cif
Community frontier price, duty unpaid, is:

Company

Dumping margin

Delta E.M.D. (Pty) Ltd.

17,1 %

(10)

factors.

In these

found that

In particular,

Following comments received with regard to the estab-
lishment of profit as described in recitals 27 and 28 and
further on-spot verification, the methodology has been
revised.
the profit
it was
achieved by the related company Delta EMD Australia
Pty Ltd could not be used, since it did not relate to
the product concerned. With regard to the USA, it was
considered that the profit margin might be affected by
other
it has been
considered more appropriate to base the profit margin
on data relating to the country under investigation, and
interest
in particular the long-term lending commercial
rate of 10,75 % applied in South Africa during the IP. In
the absence of any other reliable data relating to the
profit margin achievable for the product concerned this
method was considered conservative, reasonable and the
most appropriate within the meaning of Article 2(6)(c) of
the basic Regulation. Furthermore, it is in the same range
as the profit found in India for the like product.

circumstances,

(11)

the

Following the provisional disclosure,
exporting
producer claimed a number of adjustments related to
in particular
the costs included in the normal value,
the purchase price of raw materials
waste treatment,
and some allocation in the SG&A reported for
the
group expenses. None of these claims were considered
justified, since they were either unverifiable or in contra-
diction with the accounting.

(16)

(17)

(18)

absence of

any comments

concerning the
In the
countrywide dumping margin applicable to all other
exporters in South Africa, the methodology for the deter-
mination of the countrywide dumping margin as set out
in recital 34 of the provisional Regulation is confirmed.

E. INJURY

1. Community production and Community industry

absence of

In the
Community
recitals 35 to 38 of
confirmed.

production

any comments

concerning the
industry,
the provisional Regulation are

and Community

2. Community consumption

absence of

In the
Community consumption, recitals 39 and 40 of
provisional Regulation are confirmed.

concerning the
the

any comments

3. Imports into the Community from the country

concerned

(19)

In the absence of any comments concerning the imports
into the Community from the country concerned, recitals
41 to 46 of
the provisional Regulation are hereby
confirmed.

(12)

The company also claimed a reduction in the SG&A
expenses used to construct normal value to remove a
provision for a compensation claim made on a sale
to the IP. This claim was verified based on
prior
evidence provided and the
SG&A expenses were
adjusted as claimed.

4. Situation of the Community industry

(20)

In the absence of any comments concerning the situation
of the Community industry, recitals 47 to 65 of the
provisional Regulation are hereby confirmed.

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5. Conclusion on injury

(21)

In the absence of any comments concerning this aspect,
recitals 66 to 72 of the provisional Regulation are hereby
confirmed.

period considered. Furthermore, the volume of exports
decreased during the
IP by 18 percentage points
(compared to 2005), while the ratio of exports in the
production volume of the Community industry remained
constant throughout the period considered.

F. CAUSATION

1. Effect of the imports from South Africa

(22)

In the absence of new information or arguments in this
respect, recitals 73 to 78 of the provisional Regulation
are hereby confirmed.

(28)

In the absence of new information or other arguments in
this respect, recitals 82 and 83 of the provisional Regu-
lation are hereby confirmed.

Other Community producers

(23)

(24)

(25)

(26)

2. Effect of other factors

Imports from other third countries

Several parties argued that although the volume of EMD
imports from the People’s Republic of China (PRC)
during the IP were negligible, their mere presence as a
source of cheap EMD and the global oversupply of EMD
in the world has put prices under pressure in the
Community market and worldwide.

It should be noted that the investigation also showed, as
stated by some other parties in their submissions, that
EMD imports from the PRC are currently not an alter-
native for users, especially in the small cell battery sector.
Indeed, switching from one EMD source to another
(qualification)
finance-intensive. This
and
prevents the users from being flexible in their choice of
EMD source.

time-

is

It should be noted that this conclusion is confirmed by
the low level of EMD imports from the PRC, which
shows that this source of imports, despite prices much
below the average import prices, has not been considered
by users as an alternative during the IP and could not
the
have
Community
is
rejected and the findings
in recitals 79 to 81 are
hereby confirmed.

to the
injury
industry. Therefore,

suffered by
the

contributed

argument

Export performance of the Community industry

the decrease in
It was argued by some parties that
IP by the Community
domestic
sales during the
that
the Community
industry was due to the fact
industry concentrated on the
export market. This
argument had to be rejected, since it was found that
even though the export volume of
the Community
industry increased by 9 % during the whole period
considered (2002 to IP), the export performance could
in no way have contributed to the injury suffered by the
Community industry, as explained below.

it was not

the aforementioned Community producer

(29) After the provisional disclosure Delta argued that the
the other Community producer
non-cooperation of
CEGASA was an indication that
injured.
This argument was rejected as it is a pure allegation.
Firstly,
is
primarily a captive user of EMD for its own battery
production, hence the sales of EMD are not its primary
business. Secondly, as this Community producer did not
cooperate, no conclusions on the injury factors or
motives for non-cooperation can be drawn. Moreover,
from the user questionnaire replies,
it could be estab-
lished at the provisional stage that the sales of other
Community producers decreased in parallel with the
increased volume of dumped imports from South Africa.

(30)

In the absence of new information in this respect, recitals
the provisional Regulation are hereby
84 to 86 of
confirmed.

Contraction in demand

(31)

It was argued by some parties that
the loss in sales
volumes by the Community industry was caused by the
offshoring of parts of production by one of the users that
the
purchased from the Community industry. Thus
contraction in demand would have caused the loss in
sales volumes.

(32) Although one of the main users did indeed relocate some
parts of its production to the PRC in 2005 and 2006
and in parallel the Community industry’s sales volumes
to this user decreased in the IP, this loss accounted for a
small part of the total
loss in volume during the IP.
Moreover, the volume sold by the Community industry
to this user during the IP remained at the same level as
two years before — in 2004 — and then increased in
2005, when offshoring started, while the total EC sales of
the Community industry decreased dramatically by 61
percentage points from 2004 to the IP (39 percentage
points in 2005 and 22 in the IP). Therefore the argument
was rejected.

(27)

Firstly, as established provisionally, the export sales of the
the
Community industry were profitable throughout

(33)

In the absence of new information or other arguments in
this respect, recital 87 of the provisional Regulation is
hereby confirmed.

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Increase in raw material prices

(34)

It was argued by the exporting producer that due to its
competitive advantage of being located close to the
manganese ore mines and advantageous contractual
conditions with the supplier, a related company, it did
not have any difficulty absorbing the increase in the price
of raw materials.

(35)

This argument was rejected as irrelevant to the causality
examination, as it has been established that despite its
alleged competitive advantages, the exporting producer
practiced dumped pricing.

(36)

In the absence of new information or other arguments in
this respect, recitals 88 to 90 of the provisional Regu-
lation are hereby confirmed.

Global oversupply of EMD

(37)

In the absence of new information or other arguments in
this respect and taking into account the findings under
recitals 23, 24 and 25 above, the recitals 91 to 92 of the
provisional Regulation are hereby confirmed.

Increasing competition among battery producers

(38) After

the provisional disclosure Delta contested the
finding that the EMD producers had significant power
to negotiate prices with the battery producers because
i.e. only in battery
of
production. Thus it was alleged that due to competition
pressure channelled through the negotiating power the
battery producers imposed low prices on EMD producers.

the limited uses of EMD,

(39)

Though it cannot be denied that the limited use of EMD
could to some extent restrict the price-setting power of
the EMD producers, it is far from offsetting the power of
EMD producers deriving from the EMD users’
limited
flexibility in switching the supply sources and the avail-
ability of high purity EMD (see recitals 23, 24 and 25
above). The only considerable power in negotiations for
battery producers with regard to the price could come
from the relative transparency of the EMD market, as
they engage in annual supply negotiations with various
EMD producers simultaneously. However, the benefits of
transparency were again outweighed by the limited
choice of EMD producers whose EMD was already
qualified by battery producers — Delta and Tosoh.
Therefore, the argument was rejected.

(40)

Several users have argued that the prices Delta charged
them were not dumped and that
they did not exert
pressure on the Community industry. In this regard it
should be noted that
the injury to the Community
industry is assessed as a whole; particular companies

cannot be singled out as their situation is outweighed
by the others.

(41)

In the absence of other arguments in this respect, recitals
93 and 94 of
the provisional Regulation are hereby
confirmed.

(42)

(43)

Self-inflicted injury

It has been argued by Delta that
the injury to the
Community industry has been self-inflicted because of
Tosoh’s restructuring decisions and investments which
led to a decrease in employment and profitability.

It was established in the provisional Regulation that the
decrease in employment was mainly due to Tosoh’s
restructuring. However, the allegation that profitability
decreased because of
investment has to be rejected.
Firstly, most of Tosoh’s restructuring and investment
took place in 2004, a year which was accompanied by
positive profitability and a good return on investment. As
a result of these investments Tosoh considerably reduced
its unit cost of production. However, despite these efforts
Tosoh was unable to benefit from its investments in the
following years. Due to increasing volume of dumped
imports from South Africa made at prices below the
cost of production Tosoh’s profitability,
return on
investment and cash flow decreased, reaching strongly
negative levels as established in the provisional Regu-
lation.

(44) Delta has further argued that the injury to profit was self-
inflicted because of the management decisions by the
Community industry involving ‘unusually long payment
and ‘excessively high
deferrals
commissions
arguments were
rejected on the following basis.

agent’. These

customers’

to the

to its

(45)

(46)

It was not found that payment deferrals had a substantial
impact on the liquidity or cash flow of the Community
industry. Moreover, the extended payment deferrals were
granted in an attempt to obtain slightly higher prices and
therefore mitigate the impact of dumped imports on
prices. Therefore, extended payment deadlines cannot
be considered as causing self-inflicted injury.

Furthermore, apart from the fact that the commission
paid to the agent was not found to be unusual for the
sector, this argument is not relevant since the cost of
production and profitability of the Community industry
was calculated on the basis of costs incurred by both
Tosoh and its related companies receiving a commission.
The commission itself is an intra-company payment and
therefore its level has no impact on the consolidated
profit which was used in the injury calculation.

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3. Conclusion on causation

(47)

In the absence of new information or other arguments in
this respect, recitals 95 to 97 of the provisional Regu-
lation are hereby confirmed.

G. COMMUNITY INTEREST

1. Interest of the Community industry

(48)

In the absence of new information or other arguments in
this particular respect, recitals 100 to 104 of the pro-
visional Regulation are hereby confirmed.

2. Interest of users

the disap-
It has been argued by some parties that
pearance of Tosoh will not harm the battery industry
given Delta’s existence as an alternative source and
hence that the maintenance of a Community producer
is not in the Community interest. This argument was
rejected on the following grounds.

taking into account

the low prices practiced by Delta cannot be
Firstly,
regarded as sustainable, as they are below the cost of
production. Secondly,
the limited
flexibility of the users to switch from one source of
EMD to another as they have to test (qualify) the suit-
ability of the ‘new’ EMD for their battery production,
they have only a limited negotiating power against the
EMD producers, which will be weakened even more
should Tosoh disappear.

It was established in the provisional Regulation that the
cost of EMD constitutes 10 to 15 % of the total cost of
battery production. Two out of three cooperating users
contested this finding but no evidence was provided to
support their claim. As the user who did not contest this
figure was the only one whose data could be verified in
this proceeding, the provisional findings in recital 107 of
the provisional Regulation are hereby confirmed.

(58)

The users of EMD have argued repeatedly that they will
not be able to absorb the anti-dumping duty as an
increase in the cost of EMD. They are under pressure
because of
increases in the costs of other important
raw materials and claim they cannot afford further
pressure from an increase in the cost of EMD.

(53) However, notwithstanding the findings in recital 107 of
the provisional Regulation, the level of the anti-dumping
duty does not seem to be even comparable to the cost
increase in the other materials used in battery production
which took place between January 2006 and January
2007 (the price of copper rose by 119,73 %, nickel
it can be
252,89 % and zinc 181,10 %). Therefore,

(54)

(55)

confirmed definitively that the measures will have little
impact on the competitiveness of this industry.

It was also argued that the financial situation of the
Community users varies significantly.
In this regard it
should be noted that
the situation of users in the
Community interest test is assessed as a whole.

submitted that

Several users
the battery producers
employ far more people than the Community industry
and that due to the anti-dumping measures they may be
forced to lay off workforce and even to relocate the
production plants. While it has been confirmed that
the number of employees of battery producers is much
larger than that of the Community industry, no evidence
has been submitted that the imposition of duties would
result in loss of employment. Therefore, against the back-
ground of findings under recital 52 and the provisional
Regulation, that the duties will not have a significant
impact on the users, the argument was rejected.

(56)

It was argued by several parties that the Community
industry could not meet the Community demand. This
the duty
argument was rejected. Given the level of
proposed,
imports from South Africa will continue to
be able to enter the Community market, albeit at non-
dumped prices.

(57)

In the absence of other arguments in this particular
respect, recitals 105 to 109 of the provisional Regulation
are hereby confirmed.

3. Interest of unrelated importers/traders in the

Community

The importer Traxys France (agent of Delta) argued that
the measures will force its supplier Delta out of business
which will result in the loss of 5 to 25 % of profits and
jobs. This argument was rejected on the grounds that,
given the
(battery
producers)
force Delta out of
business but simply counteract the unfair competition,
preserve Tosoh on the Community market and create a
level playing field to the benefit of all EMD suppliers and
the battery producers.

limited impact on the players
the measures will not

(59)

In the absence of new information or evidence in this
respect, recitals 110 and 111 of the provisional Regu-
lation are hereby confirmed.

4. Conclusion on Community interest

(60)

In the absence of new information or other arguments in
this respect, recitals 112 to 114 of the provisional Regu-
lation are hereby confirmed.

(49)

(50)

(51)

(52)

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(61)

(62)

(63)

(64)

H. DEFINITIVE ANTI-DUMPING MEASURES

1. Injury elimination level

In view of
the conclusions reached with regard to
resulting injury, causation and Community
dumping,
interest, definitive measures should be imposed in order
to prevent further injury being caused to the Community
industry by the dumped imports.

In the absence of new information or other arguments in
this respect, recitals 115 to 117 of the provisional Regu-
lation are hereby confirmed. The injury margin was
significantly higher than the dumping margin found.

2. Definitive measures

it is considered that,

in
In the light of the foregoing,
accordance with Article 9 of the basic Regulation, a defi-
nitive anti-dumping duty should be imposed at the level
of the dumping margin since it is lower than the injury
margin calculated above.

In view of the magnitude of the dumping margin and in
the light of the injury to the Community industry, it is
considered necessary that the amounts secured by way of
the provisional anti-dumping duty imposed by the provi-
sional Regulation should be definitively collected.

(65) On the basis of the above, the proposed definitive duty

rates are:

Delta E.M.D (Pty) Ltd.

All other companies

17,1 %

17,1 %

3. Undertaking

(66)

Following the disclosure of essential facts and consid-
erations on the basis of which it was intended to
recommend the imposition of definitive anti-dumping
duties, the exporting producer in South Africa offered a
price undertaking in accordance with Article 8(1) of the
basic Regulation. The Community industry was informed
about this offer and submitted its comments.

(67)

The offer was examined and it has been decided to reject
it on the following grounds.

(68)

is noted that

It
there are only a limited number of
suppliers in the Community EMD market and that the
South African exporter holds a significant market share
(60 to 70 %). This grew by 81 % during the period
considered for injury assessment and was achieved by
the aggressive pricing of exports at
levels below the
exporter’s costs of production during the IP.

(69) Additionally, despite the volatility of the prices of the
main inputs, such as manganese ore and energy, the
prices of the product concerned and the like product
were relatively stable. It is considered that due to the
costs of
dumping practices,
production was not
the
product concerned.

the
reflected in the prices of

volatility

in the

(70)

Therefore, measures based on a fixed minimum price
may not be effective in addressing changes in the price
of EMD that might result from changes in the prices of
the main raw materials once the pressure exerted on
prices by the dumped products is initially remedied by
the measure itself. Moreover, as there is only a limited
number of EMD buyers in the Community market, there
is a risk that any measure based on a minimum price
could become a reference price on the market and
thereby reduce competition, which would not be in the
Community interest,

HAS ADOPTED THIS REGULATION:

Article 1

A definitive anti-dumping duty is hereby imposed on
1.
imports of electrolytic manganese dioxides (i.e. manganese
dioxides produced through an electrolytic process) not heat-
treated after the electrolytic process,
falling within CN code
ex 2820 10 00 (TARIC code 2820 10 00 10) and originating
in South Africa.

2.
The rate of the definitive anti-dumping duty applicable to
the net, free at Community frontier price, before duty, of the
products manufactured by the companies below shall be:

Company

Anti-Dumping Duty

TARIC Additional Code

Delta E.M.D. (Pty) Ltd.

All other companies

17,1 %

17,1 %

A828

A999

Unless otherwise

3.
concerning customs duties shall apply.

specified,

the provisions

in force

Article 2

Amounts secured by way of provisional anti-dumping duties
pursuant to Commission Regulation (EC) No 1066/2007 on
imports of electrolytic manganese dioxides (i.e. manganese
dioxides produced through an electrolytic process) not heat-
treated after the electrolytic process,
falling within CN code
ex 2820 10 00 (TARIC code 2820 10 00 10) and originating
in South Africa shall be definitively collected.

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

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

Done at Brussels, 10 March 2008.

For the Council
The President

D. RUPEL