70 FR 24530, May 10, 2005

DEPARTMENT OF COMMERCE

International Trade Administration

C-122-815

Pure Magnesium and Alloy Magnesium from Canada: Preliminary 
Results of Countervailing Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

SUMMARY: The Department of Commerce is conducting administrative 
reviews of the countervailing duty orders on pure magnesium and alloy 
magnesium from Canada for the period January 1, 2003, through December 
31, 2003. We preliminarily find that certain producers/exporters have 
received countervailable subsidies during the period of review. If the 
final results remain the same as these preliminary results, we will 
instruct U.S. Customs and Border Protection to assess countervailing 
duties as detailed in the ``Preliminary Results of Reviews'' section of 
this notice. Interested parties are invited to comment on these 
preliminary results (see the ``Public Comment'' section of this 
notice).

EFFECTIVE DATE: May 10, 2005.

FOR FURTHER INFORMATION CONTACT: Andrew McAllister, AD/CVD Operations, 
Office 1, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington DC 20230; telephone (202) 482-1174.

SUPPLEMENTARY INFORMATION:

Case History

    On August 31, 1992, the Department of Commerce (``the Department'') 
published in the Federal Register the countervailing duty orders on 
pure magnesium and alloy magnesium from Canada (see Final Affirmative 
Countervailing Duty Determinations: Pure Magnesium and Alloy Magnesium 
from Canada, 57 FR 39392 (``Magnesium Investigation'')). On August 3, 
2004, the Department published a notice of ``Opportunity to Request 
Administrative Review'' of these countervailing duty orders (see 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request Administrative Review, 69 FR 
46496). We received timely requests for review from Norsk Hydro Canada, 
Inc. (``NHCI'') and from the petitioner, U.S. Magnesium, LLC for 
reviews of NHCI and Magnola Metallurgy, Inc. (``Magnola''). On 
September 1, 2004, we received a request for review from Magnola. On 
September 7, 2004, we asked Magnola to explain the circumstances which 
led to its late filing. On September 10, 2004, Magnola responded to the 
Department's request and explained its circumstances. On September 16, 
2004, the Department rejected Magnola's September 1, 2004, request for 
review, but the review with respect to Magnola continued based on the 
request of the petitioner. On September 22, 2004, we initiated these 
reviews covering shipments of subject merchandise from NHCI and Magnola 
(see Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Request for Revocation in Part, 69 FR 56745).
    On October 6, 2004, we issued countervailing duty questionnaires to 
NHCI, Magnola, the Government of Qu[eacute]bec (``GOQ''), and the 
Government of Canada (``GOC''). We received questionnaire responses 
from GOQ on November 8, 2004, from GOC and Magnola on November 12, 
2004, and from NHCI on December 22, 2004.

Scope of the Orders

    The products covered by these orders are shipments of pure and 
alloy magnesium from Canada. Pure magnesium contains at least 99.8 
percent magnesium by weight and is sold in various slab and ingot forms 
and sizes. Magnesium alloys contain less than 99.8 percent magnesium by 
weight with magnesium being the largest metallic element in the alloy 
by weight, and are sold in various ingot and billet forms and sizes.
    The pure and alloy magnesium subject to the orders is currently 
classifiable under items 8104.11.0000 and 8104.19.0000, respectively, 
of the Harmonized Tariff Schedule of the United States (``HTSUS''). 
Although the HTSUS subheadings are provided for convenience and customs 
purposes, the written descriptions of the merchandise subject to the 
orders are dispositive.
    Secondary and granular magnesium are not included in the scope of 
these orders. Our reasons for excluding granular magnesium are 
summarized in Preliminary Determination of Sales at Less Than Fair 
Value: Pure and Alloy Magnesium From Canada, 57 FR 6094 (February 20, 
1992).

[[Page 24531]]

Period of Review

    The period of review (``POR'') for which we are measuring subsidies 
is January 1, 2003, through December 31, 2003.

Subsidies Valuation Information

    Discount rate: As noted below, the Department preliminarily finds 
that NHCI and Magnola benefitted from countervailable subsidies during 
the POR. In accordance with 19 CFR 351.524(d)(3), it is the 
Department's preference to use a company's long-term, fixed-rate cost 
of borrowing in the same year a grant was approved as the discount 
rate. However, where a company does not have any debt that can be used 
as an appropriate basis for a discount rate, the Department's next 
preference is to use the average cost of long-term fixed-rate loans in 
the country in question. In the investigation and previous reviews, the 
Department determined that NHCI received and benefitted from 
countervailable subsidies from the Article 7 grant from the 
Qu[eacute]bec Industrial Development Corporation (``Article 7 grant''). 
See Magnesium Investigation. In line with the Department's practice, we 
used NHCI's cost of long-term, fixed-rate debt in the year in which the 
Article 7 grant was approved as the discount rate for purposes of 
calculating the benefit pertaining to the POR.
    In the Final Results of Pure Magnesium from Canada: Notice of Final 
Results of Countervailing Duty New Shipper Review (``New Shipper 
Review''), 68 FR 22359 (April 28, 2003), we found that Magnola 
benefitted from grants under the Emploi-Qu[eacute]bec Manpower Training 
Measure Program (``MTM Program''). Magnola did not have any long-term 
fixed-rate debt during the years the grants were approved. Therefore, 
consistent with our treatment of these grants in previous 
administrative reviews, we continue to use long-term commercial bond 
rates for purposes of calculating the benefit attributable to the POR.
    Allocation period: In the investigations and previous 
administrative reviews of these cases, the Department used as the 
allocation period for non-recurring subsidies the average useful life 
(``AUL'') of renewable physical assets in the magnesium industry as 
recorded in the Internal Revenue Service's 1977 Class Life Asset 
Depreciation Range System (``the IRS tables''), i.e., 14 years. 
Pursuant to section 351.524(d)(2) of the Department's regulations, we 
use the AUL in the IRS tables as the allocation period unless a party 
can show that the IRS tables do not reasonably reflect either the 
company-specific or country-wide AUL for the industry. During this 
review, none of the parties contested using the AUL reported for the 
magnesium industry in the IRS tables. Therefore, we continue to 
allocate non-recurring benefits over 14 years.
    For non-recurring subsidies, we applied the ``0.5 percent expense 
test'' described in section 351.524(b)(2) of the Department's 
regulations. In this test, we compare the amount of subsidies approved 
under a given program in a particular year to sales (total or export, 
as appropriate) in that year. If the amount of the subsidies is less 
than 0.5 percent of sales, the benefits are expensed in their entirety, 
in the year of receipt, rather than allocated over the AUL period.

Analysis of Programs

I. Programs Preliminarily Determined to Confer Countervailable 
Subsidies
    A. Article 7 Grant from the Qu[eacute]bec Industrial Development 
Corporation (``SDI'')
    SDI (Soci[eacute]t[eacute] de D[eacute]veloppement Industriel du 
Qu[eacute]bec) administers development programs on behalf of the GOQ. 
SDI provides assistance under Article 7 of the SDI Act in the form of 
loans, loan guarantees, grants, assumptions of costs associated with 
loans, and equity investments. This assistance is provided for projects 
that are capable of having a major impact upon the economy of 
Qu[eacute]bec. Article 7 assistance greater than 2.5 million dollars 
must be approved by the Council of Ministers and assistance over 5 
million dollars becomes a separate budget item under Article 7. 
Assistance provided in such amounts must be of ``special economic 
importance and value to the province.'' (See Magnesium Investigation, 
57 FR at 30948.)
    In 1988, NHCI was awarded a grant under Article 7 to cover a large 
percentage of the cost of certain environmental protection equipment. 
In the Magnesium Investigation, the Department determined the Article 7 
grant confers a countervailable subsidy within the meaning of section 
771(5) of the Tariff Act of 1930, as amended (``the Act''). The grant 
is a direct transfer of funds from the GOQ bestowing a benefit in the 
amount of the grant. We previously determined that NHCI received a 
disproportionately large share of assistance under this program, and, 
on this basis, we determined that the Article 7 grant was limited to a 
specific enterprise or industry, or group of enterprises or industries, 
within the meaning of section 771(5A)(D)(iv) of the Act. In these 
reviews, neither the GOQ nor NHCI has provided new information which 
would warrant reconsideration of this determination.
    In the Magnesium Investigation, the Department determined that the 
Article 7 assistance received by NHCI constituted a non-recurring grant 
because it represented a one-time provision of funds. In the current 
reviews, no new information has been placed on the record that would 
cause us to depart from this treatment. To calculate the benefit, we 
performed the expense test, as explained in the ``Allocation period'' 
section above, and found that the benefits approved were more than 0.5 
percent of NHCI's total sales. Therefore, we allocated the benefits 
over time. We used the grant methodology as described in section 
351.524(d) of the Department's regulations to calculate the amount of 
benefit allocable to the POR. We then divided the benefit attributable 
to the POR by NHCI's total sales of Canadian-manufactured products in 
the POR. On this basis, we preliminarily determine the countervailable 
subsidy from the Article 7 grant to be 1.21 percent ad valorem for 
NHCI.
    B. Emploi-Qu[eacute]bec Manpower Training Program
    The MTM Program is a labor-focused program designed to improve and 
develop the labor market in the region of Qu[eacute]bec. It is 
implemented by the Emploi-Qu[eacute]bec (``E-Q''), a labor unit within 
Qu[eacute]bec's Ministry of Employment and Solidarity (Minist[eacute]re 
de L'Emploi et de la Solidarit[eacute] sociale), and funded by the GOQ. 
The Program provides grants to companies in Qu[eacute]bec that have 
training programs approved by the E-Q. Up to 50 percent of a company's 
training expenses, normally over a period of 24 months, are reimbursed 
under the MTM program if the training programs satisfy the E-Q's five 
policy objectives of job preparation, job integration, job management, 
job stabilization, and job creation.
    Once the five objectives are met, companies with small-scale 
projects are eligible to receive reimbursement of 50 percent of their 
labor training expenses, up to a maximum reimbursement of $100,000. 
Major economic projects are required to: (1) create either 50 jobs or 
100 jobs in 24 months, depending on whether the company is a new 
company or a company that has been in operation; (2) have the approval 
of the Ministry's Commission des partenaires du marche du travail; and 
(3) agree to close monitoring by the E-Q. The $100,000 reimbursement 
limit does not apply to major economic projects. (See New Shipper 
Review and accompanying

[[Page 24532]]

Issues and Decision Memorandum at ``Analysis of Programs.'')
    In 1998 and 2000, the E-Q approved grants to reimburse 50 percent 
of Magnola's training expenses. Magnola received the MTM grants in 
1999, 2000 and 2001. In the New Shipper Review, the Department found 
that the MTM program assistance received by Magnola, constituted 
countervailable benefits within the meaning of section 771(5) of the 
Act. The assistance is a direct transfer of funds from the GOQ 
bestowing a benefit in the amount of the grants. We also found Magnola 
received a disproportionately large share of assistance under the MTM 
program and, on this basis, we found the grants to be limited to a 
specific enterprise or industry, or group of enterprises or industries, 
within the meaning of section 771(5A)(D)(iv) of the Act. In accordance 
with 19 CFR 351.524(c)(1) and (2), we treated the grants as non-
recurring.
    In the current reviews, no new information has been provided that 
would warrant reconsideration of these determinations. To calculate the 
benefit, we performed the expense test, as explained in the 
``Allocation period'' section above, and found that the benefits 
approved were more than 0.5 percent of Magnola's total sales. 
Therefore, we allocated the benefits over time. We used the grant 
methodology as described in section 351.524(d) of the Department's 
regulations to calculate the amount of benefit allocable to the POR. We 
then divided the benefit attributable to the POR by Magnola's total 
sales in the POR. On this basis, we preliminarily find the net subsidy 
rate from the MTM program to be 5.40 percent ad valorem for Magnola.
II. Programs Preliminarily Determined To Be Not Used
    We examined the following programs and preliminarily determine that 
neither NHCI nor Magnola applied for or received benefits under these 
programs during the POR:
 St. Lawrence River Environment Technology Development Program
 Program for Export Market Development
 The Export Development Corporation
 Canada-Qu[eacute]bec Subsidiary Agreement on the Economic 
Development of the Regions of Qu[eacute]bec
 Opportunities to Stimulate Technology Programs
 Development Assistance Program
 Industrial Feasibility Study Assistance Program
 Export Promotion Assistance Program
 Creation of Scientific Jobs in Industries
 Business Investment Assistance Program
 Business Financing Program
 Research and Innovation Activities Program
 Export Assistance Program
 Energy Technologies Development Program
 Transportation Research and Development Assistance Program
III. Program Previously Determined To Be Terminated
 Exemption from Payment of Water Bills

Adjustment of Countervailing Duty Cash Deposit Rate

    In its December 3, 2004, submission, NHCI contends that the 
Department should set the countervailing duty cash deposit rate to zero 
for pure and alloy magnesium produced by NHCI in Canada and entered on 
or after January 1, 2005. NHCI asserts that, as of that date, the only 
subsidy at issue for NHCI will have been fully amortized, and there 
will be no legal basis or need for collecting cash deposits from NHCI. 
On December 9, 2004, the GOQ made a submission supporting NHCI's 
arguments. On December 14, 2004, the petitioner argued that the 
Department should deny NHCI's request and complete the administrative 
review before setting future cash deposit rates.
    On December 14, 2004, the Department responded to NHCI's request by 
stating that we do not have the authority to modify deposit rates 
outside of the administrative review process. Therefore, we are not 
changing the deposit rate for NHCI effective January 1, 2005.

Preliminary Results of Reviews

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for each producer/exporter subject to these 
administrative reviews. For the period January 1, 2003, through 
December 31, 2003, we preliminarily find the net subsidy rates for 
producers/exporters under review to be those specified in the chart 
shown below. If the final results of these reviews remain the same as 
these preliminary results, the Department intends to instruct U.S. 
Customs and Border Protection (``CBP'') to assess countervailing duties 
at these net subsidy rates. We will disclose our calculations to the 
interested parties in accordance with section 351.224(b) of the 
Department's regulations.

                    Net Subsidy Rate: Pure Magnesium
------------------------------------------------------------------------
                Manufacturer/Exporter                       Percent
------------------------------------------------------------------------
Norsk Hydro Canada, Inc.............................        1.21 percent
Magnola Metallurgy, Inc.............................        5.40 percent
------------------------------------------------------------------------


                    Net Subsidy Rate: Alloy Magnesium
------------------------------------------------------------------------
                Manufacturer/Exporter                       Percent
------------------------------------------------------------------------
Norsk Hydro Canada, Inc.............................        1.21 percent
Magnola Metallurgy, Inc.............................        5.40 percent
------------------------------------------------------------------------

Cash Deposit Instructions

    The Department also intends to instruct CBP to collect cash 
deposits of estimated countervailing duties at the rate specified on 
the f.o.b. value of all shipments of the subject merchandise entered, 
or withdrawn from warehouse, for consumption on or after the date of 
publication of the final results of these administrative reviews.
    We will instruct CBP to continue to collect cash deposits for non-
reviewed companies (except Timminco Limited, which was excluded from 
the orders during the investigations) at the most recent company-
specific or country-wide rate applicable to the company. Accordingly, 
the cash deposit rate that will be applied to non-reviewed companies 
covered by these orders is that established in Pure and Alloy Magnesium 
From Canada; Final Results of the Second (1993) Countervailing Duty 
Administrative Reviews, 62 FR 48607 (September 16, 1997) or the 
company-specific rate published in the most recent final results of an 
administrative review in which a company participated. These rates 
shall apply to all non-reviewed companies until a review of a company 
assigned these rates is requested.

Public Comment

    Interested parties may submit written arguments in case briefs 
within 30 days of the date of publication of this notice. Rebuttal 
briefs, limited to issues raised in case briefs, may be filed not later 
than five days after the date of filing the case briefs. Parties who 
submit briefs in this proceeding should provide a summary of the 
arguments not to exceed five pages and a table of statutes, 
regulations, and cases cited. Copies of case briefs and rebuttal briefs 
must be served on interested parties in accordance with 19 CFR 
351.303(f).
    Interested parties may request a hearing within 30 days after the 
date of

[[Page 24533]]

publication of this notice. Any hearing, if requested, will be held two 
days after the scheduled date for submission of rebuttal briefs. The 
Department will publish a notice of the final results of these 
administrative reviews within 120 days from the publication of these 
preliminary results.
    We are issuing and publishing these results in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: May 3, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-2296 Filed 5-9-05; 8:45 am]