NOTICES

                                     DEPARTMENT OF COMMERCE

                                International Trade Administration

                                            (C-122-815)

                   Preliminary Results of Changed Circumstances Administrative Reviews: Pure
                          Magnesium and Alloy Magnesium From Canada

                                      Monday, October 19, 1992

*47619
                                     (Cite as: 57 FR 47619, *47619)

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

EFFECTIVE DATE: October 19, 1992.


                                     (Cite as: 57 FR 47619, *47619)

FOR FURTHER INFORMATION CONTACT:Roy A. Malmrose or Rick Herring, Office of Countervailing Investigations, Import
Administration, U.S. Department of Commerce, room 3099, 14th Street and Constitution Avenue NW., Washington, DC
20230; telephone: (202) 482-5414 or 482-3530, respectively.

Preliminary Results

The Department preliminarily determines that the amended contract between Hydro Quebec, the provincially-owned utility
company, and Norsk Hydro Canada Inc. (NHCI) does not confer a subsidy.

Analysis

In our Final Affirmative Countervailing Duty Determinations: Pure and Alloy Magnesium From Canada (57
FR 30946, July 13, 1992) we determined that the contract between NHCI and Hydro Quebec for the provision of electricity
conferred a countervailable benefit. That contract was subsequently amended and the purpose of this changed circumstances
review is to analyze whether the amended contract continues to confer a subsidy.
The amended contract was approved on August 5, 1992, by the Quebec government and was made effective retroactive to
January 1, 1992. Under the amended 
                                     (Cite as: 57 FR 47619, *47619)

contract, NHCI's electricity payments reflect fixed and variable elements, where the variable portion is a function of the
relationship between NHCI's average selling price for pure and alloy magnesium and a "target price." As such, the
contract continues to be a Risk and Profit Sharing contract.
In our final determinations, we described our approach to evaluating whether electricity is being provided on preferential
terms:
As a general matter, the first step the Department takes in analyzing the potential preferential provision of
electricity--assuming a finding of specificity--is to compare the price charged with the applicable rate on the power
company's non-specific rate schedule. If the amount of electricity purchased by a company is so great that the rate schedule
is not applicable, we will consider whether the price charged is consistent with the power company's standard pricing
mechanism applicable to such companies. If the rate charged is consistent with the standard pricing mechanism and the
company under investigation is, in all other respects, essentially treated no differently than other industries which purchase
comparable amounts of electricity, we would probably not find a countervailable subsidy.
In this instance, the power available to NHCI under its amended contract with Hydro Quebec is 350 MVA. In contrast, the
maximum power available under the general rate schedule for large users ("Rate L") is 175 MVA. Therefore, the amount of
electricity being made available to NHCI is so large that the rate 
                                     (Cite as: 57 FR 47619, *47619)

schedule is not applicable to that company. As a result, it is necessary to examine whether the price being charged to NHCI
for electricity is consistent with Hydro Quebec's standard pricing mechanism and whether NHCI is being treated differently
than other producers which purchase comparable amounts of electricity.
In its 1987-1989 Development Plan, Hydro Quebec discusses its pricing policies or coming years. In particular, the report
states that the utility is seeking a 13 percent return on its investment. Moreover, one of the guiding principles in establishing
rates is to "have rates reflect the costs of supply associated with various products delivered to various rate categories." Thus,
over the coming years, Hydro Quebec's goal is to charge different customer categories rates which cover the costs of
supplying those categories of customers, including a 13 percent rate of return.
Based on information submitted in this changed circumstances review, the revenue Hydro Quebec can expect to receive
under the amended contract is consistent with rate of return and rate setting principles described above. Therefore, we
preliminarily determine that the price being charged to NHCI for electricity is consistent with Hydro Quebec's standard
pricing mechanism.
Moreover, we have compared numerous aspects of the amended contract with other Risk and Profit Sharing contracts. In
terms of the amounts of electricity purchased, these companies are the most comparable to NHCI. From one aspect to 
                                     (Cite as: 57 FR 47619, *47619)

another, the contracts can vary widely. However, in total, we have found no basis to conclude that NHCI is being treated
differently than other producers which purchase comparable amounts of electricity.
Based on the analysis above, we preliminarily determine that as a result of the amended contract the Government of Quebec
is not providing NHCI with electricity at preferential rates. Because we have determined that the rate is not preferential, we
do not need to address whether Risk and Profit Sharing customers as a group comprise a "specific enterprise or industry or
group of enterprises or industries," within the meaning of section 771(5) of the Act.

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                                     (Cite as: 57 FR 47619, *47620)

Public Comment

In accordance with 19 CFR 355.36 of the Department's regulations, we will hold a public hearing, if requested, on October 30,
1992, at 10:00 a.m. in room 3708, to afford interested parties an opportunity to comment on these preliminary results.
Individual parties who wish to request or participate in a hearing must submit a request within ten days of the publication of
this notice in the Federal Register to the Assistant Secretary for Import Administration, U.S. Department of Commerce, room
B099, 14th Street and Constitution Avenue NW., Washington, DC 20230. Requests should contain: (1) The party's name,
address, and telephone number; (2) the number of 
                                     (Cite as: 57 FR 47619, *47620)

participants; (3) the reason for attending; and (4) a list of issues to be discussed. Parties should confirm by telephone the
time, date, and place of the hearing 48 hours before the scheduled time.
In accordance with 19 CFR 355.38 (c) and (d), ten copies of the business proprietary version and five copies of the
nonproprietary version of the case briefs must be submitted to the Assistant Secretary no later than October 21, 1992. Ten
copies of the business proprietary version and five copies of the nonproprietary version of the rebuttal briefs must be
submitted to the Assistant Secretary no later than October 28, 1992. An interested party may make an affirmative
presentation only on arguments included in the party's case or rebuttal briefs. If no hearing is requested interested parties
still may comment on these preliminary results in the form of case and rebuttal briefs. Written arguments should be
submitted in accordance with § 355.38 of the Department's regulations and will be considered if received within the time
limits specified in this notice.
This notice is published in accordance with 19 CFR 355.22(h)(1)(v).
Dated: October 9, 1992.

Alan M. Dunn,

Assistant Secretary for Import Administration.

                                     (Cite as: 57 FR 47619, *47620)


(FR Doc. 92-25304 Filed 10-16-92; 8:45 am)

BILLING CODE 3510-DS-M